GLOBAL RECIPROCAL COLLEGE

INCTAX-1 FINAL EXAMINATION

1st Semester, SY 2020-2021

Problem 1
Which of the following is subject to fringe benefit tax?
A. Compensation of the rank and file employee.
B. Compensation of the supervisory and managerial employee.
C. Fringe benefit of the rank and file employee.
D. Fringe benefit of the supervisory and managerial employee.

Problem 2
The following statements about fringe benefits are false. Which is the exception?
A. The amount of de minimis benefits given to rank-and-file employees are
not subject to fringe benefits tax.
B. The amount of de minimis benefits given to managerial employees are
subject to fringe benefits tax.
C. The equivalent value of free meals and living quarters which are given
to an employee for the convenience-of4he-employer are considered as
fringe benefits subject to fringe benefits tax.
D. The fringe benefit tax is not deductible from groSs income in computing
the taxable income of the employer.

Problem 3
The following earnings are subject to fringe benefit tax, except:
A. Salary of rank and file employee
B. Housing necessary for the trade and for the convenience of the employer.
C. Food allowance for the convenience of the employer and necessary in
the conduct of the business.
D. All of the above

Problem 4
PRT Corp. purchased a residential house & lot with a swimming pool in an upscale subdivision and required the company
president to stay there without paying rent; it reasoned out that the company president must maintain a certain image
and be able to entertain guests at the house to promote .the company's business. The company president declared that
because they are childless, he and his wife could very well live in a smaller house.
Was there a taxable fringe benefits (BEQ)
A. There was no taxable fringe benefit since it was for the convenience of
the employer and was necessary for its business.
B. There was a taxable fringe benefit since the stay at the house was for free.
C. There was a taxable fringe benefit because the house was very luxurious.
D. There was no taxable fringe benefit because the company president
was only required to stay there and did not demand free housing.

Problem 5
ABC Corporation gave fringe benefits to Benny, one, of its employees. The benefits given shall not be subject to fringe
benefits tax if Benny is a -
A. rank and file employee C. managerial employee
B. supervisory employee D. CEO of the corporation

Problem 6
Fringe benefits tax is imposed on —
A. Rank and file employees C. Supervisory and managerial employees
B. De minimis benefits D. Fringe benefitS granted for the convenience of
the employer:
Problem 7
Ditso is employed by Holy Cross Hospital as an ambulance driver with a salary of P4,000 amOnth. In addition, he is given
free meals with a monthly value of P1,500 arid, living quarters within the hospital compound with an equivalent value of
P1,000 a month.
The monthly taxable compensation income of Ditso is -
A. P 6,500 B. 4,000 C. 5,000 D. 5,500

Problem 8
If the benefits given to Ditso in Number 7 above is furnished by his employer so that his services could easily be availed
of whenever some patients will need the urgent services of an ambulance, his monthly compensation income is
A. P 6,500 C. B. 4,000 c. P 5,000 D. 5,500

Problem 9
The following statements are true, except:
A. Fringe benefit tax shall be treated as a final income tax on the employee
withheld and paid by the employer on a quarterly basis.
B The grossed-up monetary value of the fringe benefit is the actual amount
received by the employee.
C. The grossed-up monetary value of the fringe benefit shall be determined
by dividing the monetary value of the fringe benefit by the gross monetary
value factor.
D. The person liable for fringe benefit tax is the employer, whether he is an
individual, professional partnership or a corporation regardless of whether
the corporation is taxable or not or the government and its
instrumentalities.

Problem 10
Statement 1: A fringe benefit that is exempt from fringe benefit tax is likewise exempt from any other form of inc tax.
Statement 2: Any amount given by the employer as de minimis benefits to its employees, shall not constitute as
deduction upon such employer.
Which of the above statements is/are true?
a. Statement 2 c. Statements 1 and 2
b. Statement 1 d. Neither statements

Problem 11
Sarah, married with three (3) qualified dependent children, a regular employee of Confederate Inc., receives on July 6,
2019 P30,000 as regular monthly salary and half of his 13th month Pay amounting to P15,000 plus other benefits
such as rice allowance for July of P2,000, incentive pay of P20,000, hazard pay of P1,000, overtime pay of P4,000 and
night shift differential of P2,000.
Compute the income subject to withholding tax in July.
A. 57,000 B. 30,000 C. P 45,500 D. 72,500

Problem 12
Mayaman Company owns a fleet of motor vehicles. During the year, one of the cars which was acquired at a cost of
P400,000 was allowed as service vehicle by one of its officials. Its book value amounted to P375,000. How much was
the fringe benefit tax due thereon?
A. P 96,969 B. 18,823 C. P 17,767 D. 88,235

Problem 13
Based on the data in Number 10 above, suppose Mayaman Company is just leasing the car that is being used partly for
personal and for business purposes and is paying an annual rental of P100,000. The annual fringe benefit tax is —
A. P 28,229 B. 23,529 C. P 73,529 D. 25,760
Problem 14
In May 2019, a non-stock, non-profit university provided a 3-day vacation trip to Boracay Island to the university's
Executive Vice-President. The totalexpenses incurred by the school was P20,000. The fringe benefit tax is —
A. P 6,400 B. 9,412 C. P 10,303 D. None

Problem 15
XYZ Corporation assigned Mr. Passo one of its employees in the head office in Manila to manage their branch office in
Dagupan. The company provided for the residential house of the manager paying a monthly rental of P 34,000.
The monthly fringe benefit tax thereon is —
A. P 16,000 B. 10,880 C. P 25,000 D. 8,000

Problem 16
Based on the same data in No. 13 above, the deductible expense from the gross income of XYZ Corporation is -
A. P 8,000 B. 25,000 C. 42,000 D. 34,000

Problem 17
Xtra Corporation furnished & granted the use of its condominium unit to its Executive Vice-President.
The fair market value of the property is P4,800,000 while the acquisition cost is P3,000,000.
The monthly fringe benefit tax due thereon is —
A. P 2,941.18 B. 4,705.88 C. P 88;235.00 D. 58,823.53

Problem 18
Based on the data in Number 15 above, the deductible expense from the gross income of Xtra Corporation is —
A.P 14,705.88 B.4,705.88 C. P 12,132.35 D. 2,941.18

Problem 19
Bernard Company provided fringe benefit to its managerial employees in the amount of P136,000 and to its rank and file
employees amounting to P50,000.
The deductible expense by Bernard Company is —
A.P 186,000 B.136,000 C. P 50,000 D. 250,000

Problem 20
Ivy Corporation had the following journal entry on fringe benefits:
Fringe benefit expense 186,000
Fringe benefit tax expense 64,000
Cash. 186,000
Fringe benefit tax payable 64,000

Based on the above accounting entry, the amount of fringe benefit given to rank and file employees —
A.P 64,000 B.50,000 C. P 186,000 D. 250,000

Problem 21
Adrian, a supervisory employee of Nognog Corporation borrowed P50,000 from the company payable in four (4) months
thru salary deduction. If the corporation is charging 4% interest per annum on the loan, the fringe benefit tax expense is
A. 2,000.00 B.666.67 C. P 627.45 D. 313.73
Problem 22
Which of the following compensation payments to a minimum wage earner is subject to income tax?
A.Holiday pay B.Overtime pay C. Night differential pay D. None of the above

Problem 23
After working for 30 years and due to old age, Rufino retired from his employment on December 31, 2015 as a rank-and-
file employee of Tumagay Corporation. As a consequence of his retirement, he received the following from his employer:
Salary for 2019 250,000
Christmas gift 25,000
Anniversary bonus 2,500
Loyalty award 10,000
Retirement pay 750,000

Based on the above data, the amount subject to tax of Rufino is-
A.P 250,000 B.257,500 C. P 252,500 D. 1,037,500

Problem 24
Which of the following statements is wrong about fringe benefit?
A. The fringe benefit tax does not apply to rank-and-file employees.
B. The rule on de minimis •• benefit does not apply to rank-and-file employees.
C. The monetary value received by an official or employee is presumed to be net of the fringe benefit tax.
D. If the recipient of a fringe benefit is a non-resident alien not engaged in trade or business, the monetary
value shall be divided by 75% in order to arrive at the grossed-up monetary value.

Problem 25
Villamayor, an employee of a cooperative was regularly receiving a monthly salary and allowance of P3,500 and P1,000,
respectively. On June 1, 2019, he was:retrenched by the cooperative paying him a separation pay of P125,000. He
decided to use this money in buying a tricycle. For a six (6) month period, he earned a net income of P24,000.
How much income should Villamayor declare in 2014 for income tax purposes'?
A.P 48.750 B.46,500 C. P 173,750 D. 171,000

Problem 26
Raquel Montero was retired by her employer — corporation in 2019 and paid P2,000,000 as a retirement gratuity
without any deduction of withholding tax. The corporation became bankrupt in 2016. Can the BIR subject the
P2,000,000 retirement gratuity to income tax?
1 st Answer: No, if the retirement gratuity was paid based on a reasonable
pension plan where Montero was 60 years old and has served the corporation for 9 years.
2nd Answer: Yes, if Montero was forced by the corporation to resign due to retrenchment.
A.Both answers are wrong. C.First answer is correct, the second is wrong.
B.Both answers are correct. D.First answer is wrong, the'second is correct.

Problem 27
On October 1, 2019, Samantha inherited properties worth P3,000,000 from her mother. The properties are earning
income of P90,000 a month. How much income is to be reported by Samantha in 2019?
A.P 3,090,000 B.3,000,000 C P 3,270,000 d. 270,000

Problem 28 Problem 28-30: Give the 3 types of business organization subject to income tax.
Problem 29
Problem 30