Professional Documents
Culture Documents
A resident citizen, single, with 4 qualified dependent illegitimate children had the following during the calendar year:
The taxable income for the year before personal and additional exemption is
______________
5. If the taxpayer is a non-resident alien engaged in business in the Philippines married and his country allows reciprocity
of P30,000, as personal exemption for married individuals, his taxable income is
6. If the taxpayer is a non-resident alien engaged in business in the Philippines, married, and his country grants P35,000
as personal exemption for married individuals, his taxable income is
7. A, a Frenchman, arrived in the Philippines on January 1, 2014 and continued to live and engage in business in the
Philippines. He went on a tour of Southeast Asia from August 1 to November 5, 2014. He returned to the Philippines
on November 6, 2014 and stayed until April 15, 2015 when he returned to France. He earned during his year in the
Philippines a gross income of P3 million from his investments in the country. For the year 2014, Pierre’s taxable status
is that of
a. A non-resident alien no engaged in trade or business in the Philippines.
b. A non-resident alien engaged in trade or business in the Philippines.
c. A resident alien not engaged in trade or business in the Philippines.
d. A resident alien engaged in trade or business in the Philippines.
8. A citizen of the Philippines who works and derives income from abroad is a resident citizen if he stayed outside the
Philippines
12. A, single, earned P200,000(net of P50,000 withholding tax) compensation income from employment from July to
December 2014. He has a legally adopted child as qualified dependent and paid P3,000 as health and hospitalization
insurance premiums from July to December. For 2014, he can deduct premiums for health and hospitalization
insurance of:
14. In 2015, Nelia Gomez, a MWE, received from her employer an annual minimum wage salary of P99,702. Aside from
this, she also received P8,000 for holiday pay, overtime pay, and night shift differential pay. Furthermore, she received
P8,303 as her 13th month pay. What amounts shall she be taxable on?
15. Nelia in Number 14 above was promoted in June 2016, and starting the same month was given a raise in salary which
is more than the statutory minimum wage. Will her entire compensation during 2016 bw taxable and subject to
withholding tax?
a. Yes. Her entire earnings shall be taxable.
b. No. Her entire earnings shall not be taxable.
c. Only her earnings from June 2016 to December 2016 shall be taxable and subject to withholding tax.
d. None of the above.
16. Kaino sold his residential house and lot located in Manila on January 5, 2015 for P8,000,000. The property was
purchased in 2005 for P3,000,000. The current market value of the property at the time of sale was:
BIR Commissioner’s zonal valuation - P9,000,000
City Assessor’s schedule of values - P6,000,000
17. If Kaino in number 16 above, within 6 months after the sale, purchases another residence for P8,000,000, what will be
the capital gains tax on the sale and what would be the cost(basis) of the new residence for income tax purposes?
19. Suppose Kaino in number 16, within the 18-month reglementary period instead purchases a new residence at a cost of
P5,000,000. What will be the capital gains tax on the sale?
20. In number 19, what would be the cost (adjusted basis) of the new residence for income tax purposes?
21. The power to acquire private property upon payment of just compensation for public purpose.
22. It is the privilege of not being imposed a financial obligation to which others are subject
24. The use of illegal or fraudulent means to avoid or defeat the payment of tax
a. Shifting c. Transformation
b. Exemption d. Capitalization
27. The following items are exclusions from gross income, except
29. Gross benefits received by officials and employees of public and private entities as 13 th month pay and other benefits
such as productivity bonus, services incentive pay and Christmas bonus shall be excluded from taxable income up to
a. P20,000 b. P82,000 c. P40,000 d. P90,000
30. Dividends paid by a domestic corporation may be taxable but subject to final tax, except
31. PCSO and Philippine lotto winnings are excluded from gross income because they are subject to final tax.
Prizes, awards, winnings are excluded from gross income because they are subject to final tax.
32. Income tax payments to foreign country, in the case of a resident citizen may be claimed as
a. Tax credit and deduction from gross income c. Tax credit or deduction from gross income
b. Tax credit only d. Deduction from gross income only
33. Which payments made by the lessee under such terms of the lease contract should be considered as additional rent
income of the lessor?
A. If a lessee paid directly to the government the real estate tax on the property of the lessor
B. If the amount received by the lessor is in the nature of a security deposit for the faithful compliance by the lessee
of the terms of the contract
C. If the amount received by the lessor is in nature of a loan extended by the lessee to the lessor.
34. After 10 years of romantic relationship, A decided to end his relationship with B which made B very angry. B with anger
in her eyes boxed, kicked and berated A. A tried to pacify B, but B slipped, lost control and fell to the ground requiring
hospitalization. To buy peace, A decided to shoulder the medical expenses for the injuries suffered by B. the amount is
35. In 2014, A inherited pieces of jewelry from her father with a FMV of P500,000. Her father acquired the property in
1975 for P200,000. If A sells these pieces of jewelry in 2014 for P550,000, A’s gross profit is
36. Using the preceding number, except that A acquired the property as a birthday gift from her father, A’s gross profit is
37. A purchased a life annuity for P1,000,000 which will pay him P100,000 a year. The life expectancy of A is 12 years.
Which of the following will A be able to exclude from his income?
39. The records of ABC Corporation, organized in 2004 showed the following data for 2014.
Gross Income P2,000,000
Less: Allowable business expenses(other than bad debts) P 1,850,000
Bad debts written off 100,000 1,950,000
Taxable net income P 50,000
In 2015, 80% of the bad debts written off in 2014 was collected
40. Using the information from the preceding number, which of the following statement is correct?
a. There is a deficiency income tax of P24,000 for 2014
b. The taxable net income should be corrected to P130,000
c. There is a taxable recovery amounting to P80,000 in 2015
d. The bad debts expense is 2014 should be reduced to P20,000.
41. The following may be allowed to claim optional standard deduction, except
44. No deductions shall be allowed where the transaction is between “related taxpayers” for
A. Losses from sales or exchanges of property
B. Interest expense
C. Bad debts
47. For individuals, premiums paid during the taxable year for health and/or hospitalization insurance taken out by him on
himself, including his family shall be allowed as deductions from gross income, provided that the family has a gross
income of
48. Interest expense incurred to acquire property used in trade or business or exercise of profession is
a. Not allowed as a deduction against gross income.
b. Required to be treated as a capital expenditure from the part of the cost of the asset.
c. Allowed as a deduction or treated as a capital expenditure at the option of the taxpayer
d. Allowed as a deduction or treated as a capital expenditure at the option of the government.
49. A Corp. had net sales of P1M. the actual entertainment, amusement and recreation expense amounted to P20,000.
The deductible “EAR” expense is
50. A Corp. had net revenues of P1M. the actual entertainment, amusement and recreation expense amounted to
P20,000. The deductible “EAR” expense is
51. I. An expense which is necessary but nt ordinary, or ordinary but not necessary is deductible from gross income.
II. The taxpayer must signify his intention to elect the itemized deduction, otherwise, he is deemed to have shosen the
optional standard deduction.
52. I. The cost of leasehold improvements shall be deductible by the lessee by spreading the cost of the improvements
over the life of the improvements or the remaining term of the lease, whichever period is shorter.
II.Contributions by the emplolyer to a pension trust for past service cost is deductible in full in the year that the
employer made the contributions.
53. A, dedicated and honest employee of ABC Corp. for the past 10 years was advised that he is to be retrenched as the
company was losing heavily but that he would be given the separation pay provided by law. To avoid implication of
inefficiency, A was advised to file a letter of resignation instead of being retrenched. If A files a letter of resignation and
receives the separation pay, such amount is
54. Using the preceding number, if A is retrenched and receives the separation pay, such amount is
55. A building was partially destroyed by fire in 2009. The building had a book value of P5M. the insurance company was
willing to pay P4M, which was refused by the owner. Finally, the claim was settled in 2011 for P4.6M. The proceeds will
be
56. One of the following is not correct for deductibility of losses from gross income
a. Must arise from fire, storm or other casualty, robbery, theft or embezzlement.
b. Must not be compensated by insurance or other form of indemnity.
c. A declaration of loss by casualty should be filed with the Bureau of Internal Revenue.
d. Must have been claimed as deduction in the estate return of the taxpayer.
57. The net operating loss, which had not been previously offset as deduction from gross income shall be carried over as
deduction from gross income for the next
a. 2 consecutive taxable years immediately following such loss.
b. 3 consecutive taxable years immediately following such loss.
c. 4 consecutive taxable years immediately following such loss.
d. Taxable year immediately following such loss.
58. Mr. Santos, a retailer of goods, uses the accrual method in reporting his income and expenses. His transactions show:
If the calendar year is 2015, the net income before exemption using OSD is
59. Using the preceding number, but using ID, the net income before exemption is
61. The records of Manila Bus Corp. show salaries and wages paid for its rank and file employees:
To non-senior citizens P1,800,000
To senior citizen 200,000
62. For mines other than oil and gas wells, a net operating loss without the benefit of incentives under Executive Order
226, as amended, otherwise known as Ombinus Investment Code of 1987, maybe carried over as a deduction from
taxable income, if incurred in any of the
63. Using the preceding number, such net operating loss can be carried as a deduction from taxable income, within how
many years immediately following the year of such loss?
65. If the gross income from unrelated activity exceeds 50% of the total gross income derived by any private educational
institution, the tax rate shall be the regular 30% based on the entire taxable income. This is known as the
Quarter Normal Income Tax MCIT per Quarter Taxes Withheld Excess MCIT Prior Excess Withholding
per Quarter per Quarter Year Tax Prior Year
First P100,000 P80,000 P20,000 P30,000 P10,000
Second 120,000 250,000 30,000
Third 250,000 100,000 40,000
Fourth 200,000 100,000 35,000
66. The income tax due and income tax payable, respectively, for the first quarter are
67. The income tax due and income tax payable, respectively, for the second quarter are
68. The income tax due and income tax payable, respectively, for the third quarter are
69. The income tax due and income tax payable, respectively, for the year are
70. Using the preceding problem except that the normal income tax for the fourth quarter is P50,000 (instead of
P200,000), the income tax still due for the year is
71. A CPA University, a proprietary educational institution organized in 2000, had the following data for 2012.
Tuition P850,000
Rental Income(net of 55% cwt) 142,500
School related expenses 820,000
72. CPA Airlines, a resident foreign international carrier has the following records of income for the period. (The income
represents gross billings.)
a. Continuous flight from Manila to Tokyo = 1,000 tickets at P2,000 per ticket
b. Flight from Manila to Taipei; transfer flight (on CPAR Airlines) from Taipei to Tokyo = 2,000 tickets at P2,000 per
ticket
c. Continuous flight from Manila to Taipei -= 3,000 at P1,000 per ticket
The income tax due is
For items 73-82. The Corporation provided date for the calendar year ending December 31, 2012. ($1 = P50)
Philippines Abroad
Gross Income P4,000,000 $40,000
Deductions P2,500,000 $15,000
Income Tax Paid $ 3,000
76. If it is a domestic corporation, but it opts to claim the tax paid abroad as deduction from gross income, its income tax is
80. If it is a non-resident lessor of aircrafts, machineries and equipment, its income tax is
81. If it is a resident foreign corporation but its expenses within and outside the Philippines is P3M, unallocated (disregards
original data on expense) its income tax is
82. If it is a resident foreign corporation and it remitted 60% of its net profit to its head office abroad, its total tax liability is
(Original data)
83. The record of a closely-held domestic corporation show the following data for 2014:
Gross income P1,500,000
Business expenses 600,000
Gain on sale of business asset 60,000
Interest on deposits with Metrobank, net of tax 5,000
Sale of shares of stocks, not listed and traded:
Selling price 150,000
Cost 115,000
Dividends from Victory Corporation, domestic 35,000
Dividends paid during the year 120,000
Reserved for building acquisition 300,000
In 2013, the corporation suffered an operating loss of P130,000. This amount was carried forward and claimed as
deduction from gross income 2014. The income tax due in 2014 is
84. Using the preceding number, the improperly accumulated earnings tax