Armhyla O.

Olivar Feb 5, 2021

BSBA- FM- II-B Prof John Edgar Altares

True or False. If the statement is TRUE, write T on the space provided. Write F if the statement
is FALSE.

F 1. GSIS and SSS benefits are included in gross income to the extent they
exceed P90,000.
T 2. A general professional partnership can be registered as BMBE.
T 3. A BMBE must have a net asset not exceeding P3,000,000 to be exempt.
F 4. It is sufficient that the employee rendered more than 10 years of service
for their retirement benefit to be exempt.
F 5. Items of income subject to final tax or capital gains tax are exclusions in
gross income subject to regular income tax.
T 6. The proceeds of life insurance received by the heirs of the insured upon
his death is excluded in gross income.
T 7. The amount received in excess of the premium paid in an insurance
contract constitutes an item of gross income.
T 8. An employee can secure retirement benefit exemption only once in a
lifetime.
F 9. It is must that the employer maintains a reasonable pension benefit plan
for the retirement benefit to be exempt.
T 10. The income of the Philippine government from essential public functions
is exempt from any income tax.

Compute the following problems. Write the letter of your answer on the table provided.

1. A 6. C
2. D 7. C
3. A 8. C
4. C 9. A
5. A 10. C

1. Mr. Buguey was insured in a life insurance with his daughter, Ybon, as the irrevocable
beneficiary. Ybon was paid the entire proceeds when Mr. Buguey died. The proceeds
constitutes
a. A taxable inheritance
b. A taxable gift
c. A taxable income
d. An exclusion from gross income

2. Which is not a requisite of exemption of a retirement benefit plan?

a. 10 years of employment
b. The employer maintains a reasonable pension benefit plan
c. The retiree must be a senior citizen
d. First time availment of retirement exemption
 3. Termination benefits are exempt from income tax provided that the reason for
termination is
a. Beyond the employee’s control
b. Within the employer’s control
c. Within the employee’s control
d. Beyond the employer’s control

4. Which is not an item of exclusion from gross income?

a. SSS benefits
b. Income of the government and its political subdivisions
c. Income of government-owned and controlled corporations
d. Income of foreign governments

5. Which of the following is not an exclusion from gross income?

a. Income of government properties
b. Income taxes collected of BIR
c. Dividend income payable to a foreign government
d. Social Security benefits

6. Mr. Kabacan surrendered his life insurance policy and received a cash surrender value of
P800,000 after contributing P700,000 in annual premiums. Determine respectively the
total exclusion in gross income and the inclusion in gross income.
a. P800,000; P0
b. P0; P800,000
c. P100,000; P700,000
d. P7000,000; P100,000

Solution:

EXCLUSION: P800,000
-P700,000
-------------
P100,000

INCLUSION: P800,000
-P100,000
-------------
P700,000

7. Mr. Dimataling was hurt in a bus accident. He received a total indemnity of P800,000
from the insurer of the bus. Mr. Dimataling paid P250,000 in hospital bills due to the
accident. Mr. Dimataling paid P250,000 in hospital due to the accident. Compute the total
amount to be included in gross income.
a. P0
b. P250,000
c. P550,000
 d. P800,000

Solution:

INDEMNITY: P800,000
HOSPITAL BILL: P250,000
------------
P550,000

8. Mrs. Candy retired from the government after 30 years of service at the age of 55. She
received a total retirement pay of P1,800,000 plus P400,000 GSIS benefits. How much
will be excluded in gross income?
a. P0
b. P400,000
c. P2,200,000
d. P1,800,000
Solution:

P 1,800,000
+ P400,000
--------------
P,200,000
9. Mr. Tacurong has the following data during the year:

Basic Salary P 1,200,000

Income tax withheld 50,000
13th month pay 100,000
SSS 2,000
PhilHealth 1,800
Pag-Ibig 1,700
Union dues 500
Capital build up contribution in a social fund 2,000

Compute for the total exemptions and exclusions from gross income:
a. P106,000
b. P100,000
c. P96,000
d. P88,000

Solution:

13TH MONTH PAY: P100,000

SSS: P2,000
PhilHealth: P1,800
Pag-Ibig: P1,700
Union dues: P500
----------------------------------------
P106,000

10. A non-stock, non-profit charitable entity received the following during 2019:

Contributions from the public P 1,400,000

Income from the sale of merchandise 500,000
Gain on the sale of properties 300,000

What is the total exclusion from gross income subject to regular tax?
a. P2,200,000
b. P1,900,000
c. P1,400,000
d. P1,300,000

Solution:

P1,400,000
- 0
---------------
P1,400,000