Quizzes - Miidter Module - Income Taxation

MARICEL SARSALE QUIZZES
BSBA- 3 HRMD MIDTERM REQUIREMENTS

HRAC 103- INCOME TAXATION INSTRUCTRESS: MS. RUFFA MAE SANCHEZ, CPA
Quiz 1 – Dealings in Properties
1. Statement 1: Capital losses are deductible from ordinary gains but net capital loss is not deductible from
ordinary gains
Statement 2: Ordinary losses are deductible only to the extent of the capital gains but the net capital
loss is not deductible from ordinary gai n.
a) True, True
b) True, False
c) False, True
d) False, False
Answer
Explanation
 Net capital gains are added to ordinary gains. However, If the result is a net capital loss, such
loss can only be deducted from the capital gain. This is to ensure that only costs or expenses
incurred in earning the income shall be deductible for income tax purposes consonant with
the requirement of the law that only necessary expenses are allowed as deductions from
gross income.
 An ordinary loss is fully deductible to offset income thereby reducing the tax owed by a
taxpayer.
2. Which of the following is a capital asset?
a) A residential land previously foreclosed by PNB and is now being offered for sale to the public
b) A commercial building foreclosed by a lending institution
c) A 10-door apartment unit owned by a retired government employee
d) A residential land owned by a practicing CPA
Answer
Explanation
 A residential land owned by a practicing CPA, it is a real property of the CPA owner and it is not
used in trade or business or held for sale by the tax payer and it is called a capital asset.
3. Vincent sold a residential house and lot held for P10,000,000 to his friend. Its FMV, when he inherited it
from his father was P12,000,000 although its present FMV is P15,000,000. The tax on the above
transaction is:
a) P720,000 capital gains tax

b) P900,000 capital gains tax
c) 30% donor’s tax
d) Value added tax
Answer
Explanation
 Selling Price or FMV P15,000,000

Taxable rate x 6%
P 900,000
 TAXABLE BASE IS THE SELLING PRICE OR FMV WHICHEVER IS HIGHER VALUE.
4. Mike, a resident citizen taxpayer owns a property converted into apartment units with a monthly rental
of P10,000 per unit. He subsequently sold the property to Leomar, a resident alien taxpayer. The sale
shall be subject to:
a) 6% capital gains tax

b) Basic income tax
c) 6% capital gains tax or basic income tax at the option of Mike
Income Taxation - Midterm

Second Term / Second Semester 2020-2021
1|P a g e
d) 6% capital gains tax or basic income tax at the option of Leomar
ANSWER
EXPLANATION
 THE SALE SUBJECT TO BASIC INCOME TAX , FOR THE REASON THAT MIKE A RESIDENT CITIZEN
AND HIS PROPERTY, AS HIS SOURCE OF PASSIVE INCOME WHICH IS THE APARTMENT IT IS
SITUATED IN THE PHILIPPINES. AND PROPERTY SOLD TO RESIDENT ALIEN AND THE TRANSACTION
DONE IN THE PHILIPPINES.
5. Which of the following sale transactions will be subject to capital gains tax?
a) Sale of shares of stock by a dealer in securities
b) Sale of shares of stock during an Initial Public Offering
c) Sale of shares of stock not through the local stock exchange by a person who is not a dealer in
securities
d) Sale of shares of stock through the local stock exchange by a person who is not a dealer in
securities.
ANSWER
EXPLANATION
 Sale of shares of stock not through the local stock exchange by a person who is not a dealer in
securities, it is subject to capital gain tax and it is a share that sold directly to the buyer and to the
local stock exchange.
 Capital Gains Tax is a tax imposed on the gains presumed to have been realized by the seller from
the sale, exchange, or other disposition of capital assets located in the Philippines, including pacto
de retro sales and other forms of conditional sale.
6. Statement 1: Proceeds of sale of real property classified as capital asset may be exempt from the 6%
capital gains tax
Statement 2: Gain from sale of real property classified as capital asset to the Government may be taxed
under Section 24 (A) at the option the individual taxpayer
a) Only statement 1 is correct

b) Only statement 2 is correct
c) Both statements are correct
Answer
Explanation
 Final Capital Gains Tax Return (For Onerous Transfer of Real Property Classified as Capital Assets
-Taxable and Exempt).
 "(2) Exception. - The provisions of paragraph (1) of this Subsection to the contrary
notwithstanding, capital gains presumed to have been realized from the sale or disposition of
their principal residence by natural persons, the proceeds of which is fully utilized in acquiring
or constructing a new principal residence within eighteen (18) calendar months from the date
of sale or disposition, shall be exempt from the capital gains tax imposed under this
Subsection.
7. On September 30, 2020, Juan sold a piece of land to Pedro who correctly computed the applicable gains
tax of P1,440,000 on the transaction. The latter withheld the applicable capital gains tax and remitted
the same to the BIR before the statutory deadline. The selling price of land is P20,000,000. Which of the
following is not correct?
a) The fair market value of the land is P24,000,000

b) Juan received cash of P18,560,000 from Pedro
c) Juan applied the tax rate to the fair market value of the land, not to its selling price of
P20,000,000.
d) The land sold by Juan is classified as an ordinary asset.
Answer
Explanation
 The land sold by Juan is classified as an ordinary asset, is not correct.

 And theres no computation of the said statement of the problem.

2|P a g e
8. Which capital asset is not subject to regular taxes?
a) Real property held for sale by a dealer

b) Real property held as investment by a non-realty dealer
c) Domestic stocks held by a security dealer
d) Foreign stocks
Answer
Explanation
 Real property held as investment by a non-realty dealer, it is a capital asset but not subject to regular
tax.
 Capital assets shall refer to all real properties held by a taxpayer, whether or not connected with his
trade or business, and which are not included among the real properties considered as ordinary assets
under Sec. 39(A)(1) of the Code
9. Which of the following is subject to P6% of capital gains tax?
a) Sale of condominium units by a real estate dealer

b) Sale of real property utilized for Office use
c) Sale of apartment houses
d) Sale of vacant lot by employee
Answer
Explanation
 Sale of vacant lot by employee it imposed on the gain presumed to have been realized on the
sale, exchange or disposition of lands and/or buildings which are not actually used in the
business of a corporation and are treated as capital assets and it is subject to 6% of capital gain
tax.
10. Josefa provided the following data on the sale of her personal property sold in 2018 held by her for 15
months:
Cost P225,000
Mortgage assumed by buyer 270,000
Installment collection:
2018 67,500
2019 67,500
2020 45,000
How much is the selling price?
a) 450,000
b) 270,000
c) 180,000
d) 225,000
Answer
Explanation
Mortgage assumed by buyer 270,000

Installment collection:
2018 67,500
2019 67,500
2020 45,000
Selling Price P 450,000
11. Based on No. 11, How much is the income subject to income tax in 2018, 2019, and 2020?
a) P56,250, P33,750, and P22,500, respectively

b) P112,500, 67,500 mad P45,000, respectively
c) P225,000, P0 and P0, respectively

3|P a g e
d) None of the above
Answer : bonus
12. A taxpayer had the following dealings in properties
Short term capital gain P200,000

Long term capital gain 100,000
Short term ordinary gain 50,000
Long term ordinary gain 150,000
Short term capital loss 100,000
Long term capital loss 150,000
Short term ordinary loss 200,000
Long term ordinary loss 120,000
Assuming the taxpayer is an individual, compute respectively the total items of gross income and and
the total items deductible from gross income
a) P200,000, P260,000
b) P200,000 P320,000
c) P275,000, P320,000
d) P275,000 260,000
% RECOGNIZED Total recognized as

capital gains/losses
Short term capital gain 200,000 50% 100,000
Long term capital gain 100,000 100% 100,000
Short term capital loss (100,000) 50% (50,000)
Long term capital loss (150,000) 50% (75,000)
Total Net Capital Gains P75,000
as an item to gross
income(To ITR)
Net capital gains (above) 75,000

Short term ordinary gain 50,000
Long term ordinary gain 150,000
Total gross income P275,000
Short term ordinary loss 200,000

Long term ordinary loss 120,000
Total deductions to gross
P320,000
income
13. Ayala Mall Cebu sold its parking lot for P2,000,000. The lot has a zonal value of P2,500,000 and appraisal
value of P1,800,000. The capital gains tax on sale of lot is:
a) 0
b) 108,000
c) 120,000
d) 150,000
Answer.
 TAXABLE BASE IS THE SELLING PRICE OR FMV WHICHEVER IS HIGHER VALUE.

4|P a g e
14. Mateo sold his principal residence for P5,000,000. His principal residence was acquired at 200,000,000
and has a fair value of P6,000,000 at the date of sale. within 18 months, he reconstructed a new
principal residence of P4500,000.
a) P270,000
b) P300,000
c) P360,000
d) P0
Answer.
 Selling Price or FMV P6,000,000

Taxable rate x 6%
P 360,000
15. Sarah Geronimo is a stock broker and holds 10,000 ordinary stock of San Miguel Corporation, a domestic
corporation, acquired at P100 per share. Her valuation for San Miguel Corporation indicates that San
Miguel’s stocks will decline in the near future. If Sarah sells her stock investment directly to a buyer,
Divine, at P115 per share, how much is the capital gains tax payable on the transaction?
a) P5,000
b) P10,000
c) P5,750
d) P22,500
ANSWER
 Selling Price ( 10,000 x 115) P 1,150,000
Cost (10,000 X 100) P 1,000,000
Gross income P150,000
X 15%
CGT PAYABLE P 22,500
Quiz 1 –Individuals
1. A Filipino Citizen is a natural person who is/has

I. Born by birth with father and mother as a Filipino Citizen
II. Born before January 17, 1973 of Filipino mother who elects Philippine citizenship upon reaching
the age of majority
III. Acquired Philippine citizenship after birth (naturalized) in accordance with Philippine laws
a) I only
b) I and II only
c) I and III only
d) I, II and III
Answer
Explanation
 All of the following describes the Citizenship of a Filipino, Under Section I, Article III of the Philippine
Constitution
2. Determine the correct classification of the following:

I. Manny, a Filipino businessman, went on a business trip abroad and stayed there most of the
time during the year
II. Kyla, a Filipino professional singer, held a series of concerts in various countries around the
world during the current taxable year. She stayed abroad most of the time during the year
III. Efren, a Filipino “cue” artist went to Canada during the taxable year to train and participate in
the world cup of pool. He stayed there most of the time during the year.
A B C D
a) NRC RC RC RC
b) NRC NRC RC RC
c) NRC NRC NRC RC

5|P a g e
Answer
Explanation
 All of the following are correct classification of Resident Citizen , they are still considered as RC for
that taxable year, regardless that they are abroad for work.
3. Rihanna, an American singer, was engaged to sing for one week at the Western Philippine Plaza after
which she returned to USA. For income tax purposes, she shall be classified as:
a) Resident alien
b) Nonresident alien engaged in trade or business
c) Nonresident alien not engaged in trade or business
d) Resident Citizen
Answer
Explanation
 Nonresident alien not engaged in trade or business.

 Rihana is not a Filipino Citizen and not a resident, she just came for a purpose which is to sing for one
week at the Western Philippine Plaza.
4. Which of the following is correct?

I. A citizen of the Philippines residing therein is taxable on all income derived from sources within
and without the Philippines
II. A non-resident citizen is taxable only on income derived from sources within the Philippines
III. An alien individual, whether a resident or not of the Philippines is taxable only on income
derived from sources within the Philippines
IV. A seaman who is a citizen of the Philippines and who receives compensation for services
rendered abroad as a member of the complement of a vessel engaged in international trade
shall be treated as an overseas contract worker
a) I, II and III only b) I, II and IV only

b) I, III and IV only c) I, II III and IV
Answer
Explanation
 Individual Taxpayers are natural persons with income derived from within the territorial jurisdiction
of a taxing authority and Under the Tax Code National Internal Revenue Code of 1997 (NIRC)
5. Which of the following individual taxpayers is taxable on income derived from sources within and
without the Philippines?
a) Pedro, a native of Bacolod City, working as overseas contract worker in Iraq

b) George, naturalized Filipino citizen and married to a Filipina. He had been living in Pampanga
since 1990
c) Pao Gasul, Spanish citizen, a resident of Madrid Spain, spent one-week vacation in Boracay
d) Lee Minho, Korean singer, held a 3-day concert in Manila
Answer
Explanation
 George, naturalized Filipino citizen and married to a Filipina. He had been living in Pampanga since
1990. He is taxpayer, and a pure Filipino Citizen , and his source of income just derived only within
the Philippines.
6. Allen, married, with two dependent children, received the following income:
Rent, Philippines P1,000,000

Rent, Hongkong 200,000
Interest, peso deposit, MBTC 100,000
Interest, US$ deposit (BDO $10,000 X P42) 420,000
Interest deposit in Hongkong (HK$10,000 x P5) 50,000

6|P a g e
Prize (cash) won in a local contest 8,000
Prize (TV) won in a local lottery 50,000
PCSO/Lotto winnings 2,000,000
Prize won in contest in US 300,000
Lotto winning in US 100,000
Dividend, domestic company 600,000
Assuming the taxable year is 2018, determine the taxable net income assuming he is:
RC NRC RA NRAETB
a) P80,000 P180,000 P830,000 P180,000
b) 180,000 80,000 1,000,000 1,000,000
c) 1,558,000 908,000 908,000 908,000
d) 1,658,000 1,008,000 1,008,000 1,008,000
Answer
Explanation
RC
Interest deposit in Hongkong (HK$10,000 x P5) 50,000
Rent, Hongkong 200,000
Prize won in contest in US 300,000
Lotto winning in US 100,000
Taxable Net Income P1,658,000
NRC
RA
NRAETB
7. Based on the immediately preceding problem, assume the taxable year is 2018, determine the total final
tax assuming he is:
RC NRC RA NRAETB
a) P553,000 P490,000 P150,000 P937,500
b) 121,500 90,000 121,500 150,000
c) 131,000 90,000 90,000 90,000
d) 553,000 490,000 550,000 687,500
Answer
Explanation
RC
Interest, peso deposit, MBTC (100,000 x 20%) P20,000
Interest, US$ deposit (BDO $10,000 X P42) (420,000 x 15%) 63,000
Prize (TV) won in a local lottery (50,000 x 20%) 10,000

7|P a g e
PCSO/Lotto winnings (2,000,000 x 20%) 400,000
Dividend, domestic company (600,000 x 10%) 60,000
TOTAL FINAL TAX P553,000
NRC
RA
NRAETB
Rent, Philippines (P1,000,000 x 25% P250,000
Interest, peso deposit, MBTC (100,000 x 25%) 25,000
8. Ana, self-employed resident citizen provided for the following data for 2020 taxable year:
Sales P2,800,000
Cost of Sales 1,125,000
Business Expenses 650,000
Interest income from peso bank deposit 80,000
Interest income from bank deposit under FCDS 120,000
Gain on sale of land in the Philippines held as
Capital asset with cost of P1,500,000 when the
Zonal value is P1,200,000 500,000
How much is the total income tax expense?

a) P321,500
b) P342,500
c) P351,500
d) P358,000
ANSWER
Sales P2,800,000
(Cost of sales) (1,125,000)
(Business expenses) (650,000)
Net Income P1,025,000
Basic Income Tax P197,500
Basic Income Tax 197,500
Interest income from peso bank deposit (80,000 x 20%) 16,000
Interest income from bank deposit under FCDS (120,000 x 15%) 18,000
CGT on real property (2,000,000 x 6%) 120,000
Income tax expense P351,500

8|P a g e
9. How much is the total income tax of Ana assuming she opted to be taxed at 8%?
a) P321,500
b) P342,500
c) P351,500
d) P358,000
ANSWER
Gross sales P2,800,000
(Tax exempt income) (250,000)
Taxable net income 2,550,000
Multiply to: tax rate 8%
Tax due 204,000
Basic income tax 204,000
Final income tax on Interest income from peso bank deposit (80,000 x 20%) 16,000
Final income tax on Interest income from bank deposit under FCDS (120,000 x 18,000
15%)
Total income tax expense 358,000
10. Ana, is a mixed income earner. She is a self-employed resident citizen and currently the Finance
manager of Omega Corporation. The following data were provided for 2018 taxable year:
Compensation Income P1,800,000

Sales 2,800,000
Cost of Sales 1,125,000
Business Expenses 650,000
Interest income from peso bank deposit 80,000
Interest income from bank deposit under FCDS 120,000
Gain on sale of land in the Philippines held as
With cost of 1,500,000 when the zonal value is
P1,200,000 500,000
How much is her total income tax expense assuming she opted to be taxed at 8%?
a) P321,500
b) P788,500
c) P808,000
d) P358,000
ANSWER
On his compensation income:

Tax on
First P800,000 P130,000
In excess of 800,000

9|P a g e
(1.8k-8k= P1,000,000x 30%) 300,000 P430,000
On his business income
**(P2.8M x 8%) 224,000
TOTAL Tax Due P654,000
BASIC INCOME TAX 654,000
Final income tax on Interest income from peso bank deposit (80,000 x 20%) 16,000
Final income tax on Interest income from bank deposit under FCDS (120,000 x 15%) 18,000
Income tax expense 808,000
11. A Malaysian, occupying a managerial position in an Offshore Banking Unit located in Taguig had the
following data for the taxable year 2018
Salaries received P120,000
Other emoluments 50,000
De minimis benefits 5,000
Interest income from deposit substitutes 20,000
Interest income from long-term Philippine Bank Deposit 10,000
Dividend income from a domestic corporation 150,000
Gain from sale of shares of stock of a domestic corporation
Held as investment sold outside of the local stock exchange 175,000
The total income tax expense of the taxpayer is:

a) P73,000 c) P57,000
b) P70,500 d) P83,000
 Answer: D
 15% Preferential Tax (P170k x 15%) P25,500
25% on other income (P180k x 25%) 45,000
CGT [(100k x 5%) + (75k x 10%)] 12,500
Total taxes expense P83,000
 NRAs-NETB and SAEs are not exempt from tax on their interest income derived from long-term bank
deposit in the Philippines.
12. Which of the following shall not be subject to the 20% final tax?
a) Amount of interest from any currency bank deposit and yield or any other monetary benefit
from deposit substitutes and from trust funds and similar arrangements
b) Winnings other than Philippine Charity Sweepstakes and Lotto winnings, regardless of amount
c) Philippine Charity Sweepstakes and Lotto winnings exceeding P10,000
d) Prizes amounting to ten thousand pesos (P10,000) or less.
Answer:
 It is not subject to 20% final tax because it exempted for tax, prize winning lesser than 10,000 is
exempted from the tax. Refer to table 2.3.
13. A taxpayer received during the taxable year the following passive income derived from within the
Philippines:
Interest on bank deposit under FCDU (net) P231,250

Royalty on a software application (gross) 95,000
Dividend income RFC (gross) 150,000
If taxpayer is a non-resident alien engaged in business, the final tax on the above passive income would
amount to

10 | P a g e
a) P52,750 c) P28,250
b) P19,000 d) P37,750
Answer:
Interest on bank deposit under FCDU (net) exempt exempt
Royalty on a software application (gross) ( 95,000 x 20%) P19,000
Dividend income RFC (gross) exempt exempt
Final Tax P19,000
14. Statement 1: Any income of nonresident individual taxpayers from transactions with depository banks
under the expanded foreign currency deposit system shall be exempt from income tax
Statement 2: Any income of nonresident individual taxpayers from transactions with offshore banking
units shall be exempt from income tax
d) Both statements are incorrect
Answer
 Interest Income received from depository bank under expanded foreign currency deposit system.
 Only non residents are exempted from this particular income.
15. If the amount of PCSO/Philippine lotto winnings received by a resident citizen in 2020 did not exceed
P10,000, what type of income tax will apply?
a) Final withholding tax on passive income
b) Capital gains tax
c) Basic income tax
d) Exempt
Answer
 For the PCSO /lotto winnings the amount is lesser than 10,000 or did not exeed 10k is exempted for
the tax.
Quiz 3 – INCOME TAX ON CORPORATIONS
1. The term “Corporation” shall include:
I. Partnerships, no matter how created or organized

II. Joint stock companies
III. Joint accounts (cuentas en participation)
IV. Associations
V. Insurance companies
VI. Mutual fund companies
VII. Regional operating headquarters of multinational corporations
a) I and II only c) I, II, III, IV and V only

b) I, II and III only d) All of the above
Answer:
 For purposes of income taxation, the Tax Code provides that, the term "corporation" shall include
partnerships, no matter how created or organized, joint stock companies, joint accounts (ceuntas en
participacion), associations, or insurance companies. It also includes mutual fund companies, regional
operating headquarters of multinational corporations, and joint accounts.
2. Statement 1: Corporations exempt from income tax are not subject to income tax on incomes received
whish are incidental or necessarily connected with the purposes for which they were organized and
operating.

11 | P a g e
Statement 2: Corporations exempt from income tax are subject to income tax on income of whatever
kind and character from any of their properties (real or personal) or from any other activity conducted
for profit, regardless of the disposition of such income.

d) Both statements are incorrect
Answer:
 Both statement are correct, thus, a corporation claiming tax exemption must be able to show clearly
that it is organized and operated for the purposes under Section 30 of the NIRC, and that its income is
derived pursuant thereto.
3. Which of the following statements is correct?

I. The term “domestic” when applied to a corporation, means created or organized in the
Philippines or under the laws of a foreign country as long as it maintains a Philippine branch
II. A corporation which is not domestic may be a resident (engaged in business in the Philippines)
or nonresident corporation (not engaged in business in the Philippines).
III. Resident foreign corporations are subject to income tax based on net income sources within the
Philippines
a) I only c) II and II only

b) II only d) I, II and III
Answer
 Corporations, for tax purposes, are classified as domestic (DC), resident foreign corporations (RFC) and
nonresident foreign corporations (NRFC). Domestic Corporations are corporations created or
organized in the Philippines or under its laws. A foreign corporation is a corporation which is not
domestic, and may be a resident (engaged in business in the Philippines) or nonresident corporation
(not engaged in business in the Philippines). Domestic and foreign corporations may also be classified
as special corporations..
4. Which of the following is taxable based on income from all sources, within and without?
a) Domestic Corporations
b) Resident Foreign Corporation
c) Non-resident Foreign Corporations
d) All of the choices
Answer:
 It is domestic corporation, because all the sources of income is done and situated within the
Philippines.
5. The following passive income received by a domestic corporation shall be subject to 20% final
withholding tax, except:
a) Interest income from peso bank deposit

b) Yield from deposit substitutes
c) Dividend Income from another domestic corporation
d) Royalties
6. Lenovo, Inc., a resident foreign corporation, has earned the following during the year 2018:
DIVIDEND INCOME FROM:
 Microsoft, a non-resident foreign corporation P500,000
 Intel, a resident foreign corporation (ratio of Philippine
income over world income for the past 3 years is 40%) 400,000
 Panday, a domestic corporation 300,000
INTEREST INCOME FROM:
 Current account, BDO 600,000
 Savings deposit, ABN-AMRO bank, UK 700,000
 FCDU deposits 800,000
ROYALTY INCOME from various domestic corporations 100,000
The total final tax on passive income for the taxable year is:

12 | P a g e
a) P200,000 c) P328,000
b) P260,000 d) P1,088,000
Solution:
Interest income – BDO (P600,000 x 20%) P120,000

Interest income – FCDU deposits (P800,000 x 7.5%) 60,000
Royalty income from various domestic corp. (P100,000 x 20%) 20,000
Total Final Taxes on passive income P200,000
Note:
 Dividend income received by a foreign corporation (assuming the situs of the dividend is Philippines)
from foreign corporations (resident or non-resident), is subject to basic income tax/regular corporate
income tax (RCIT).
 A dividend income received by an RFC from a DC is tax-exempt (intercorporate dividend)
 The interest income from a bank deposit abroad is considered an income derived abroad, subject to
basic tax if received by resident citizen or domestic corp
7. A domestic corporation had the following data on income and expenses during the year 2018:
Gross income, Philippines P10,000,000
Business expenses, Philippines 2,000,000
Gross income, China 5,000,000
Business expenses, China 1,500,000
Interest income, Metrobank Philippines 300,000
Interest income, Shanghai Banking Corporation, China 100,000
Rent Income, net of 5% withholding tax 190,000
How much was the income tax payable?

a) P3,540,000 c) P3,440,000
b) P3,530,000 d) P2,480,000
Solution:
Gross income, Philippines P 10,000,000
Gross income, China 5,000,000
Business expenses, Philippines (2,000,000)
Business expenses, China (1,500,000)
Interest income, Shanghai Banking Corporation, China 100,000
Rent income, net of 5%withholding tax 200,000
(190,000/95%) ___________
Taxable net income 11,800,000
X RCIT % 30%
___________
Income Tax Due 3,540,000
Less. CWT on rental income (10,000)
___________
INCOME TAX PAYABLE P 3,530,000
8. Hannah Corporation, a corporation engaged in business in the Philippines and abroad has the following
data for the current year:
Gross income Philippines P975,000
Expenses, Philippines 750,000
Gross Income, Malaysia 770,000
Expenses, Malaysia 630,000
Interest on bank deposit 25,000
Determine the income tax due is the corporation is

Domestic Resident Foreign Corp Nonresident Foreign Corp
a) P116,800 P72,000 P320,000
b) P109,500 P67,500 P 300,000
c) P312,000 P515,850 P116,800
d) P109,500 p72,000 P300,000
13 | P a g e
Solution:
Domestic RFC NRFC
Gross Income, Phil. 975,000 975,000 975,000
Expenses, Phil. (750,000) (750,000)
Gross Income, Malaysia 770,000
Expenses, Malaysia (630,000)
Interest on bank deposit 25,000
Taxable Income 365,000 225,000 1,000,000
Tax rate __ 30% 30% 30%__
Tax Due P 109,500 P 67,500 P 300,000
9. The following information were taken from the records of ABC, Inc., a domestic corporation already in
its 5th year of operations:
Gross profit from sales P3,100,000
Capital gain on sale directly to buyer of
shares in a domestic corporation 100,000
Dividend from:
Domestic Corporation 20,000
Resident Foreign Corporations 10,000
Interest on:
Bank deposit 20,000
Trade Receivable 50,000
Business expenses 2,100,000
Income tax withheld 115,000
Quarterly income tax payments 160,000
Income tax payable per quarter (10,000)
The income tax payable at the end of the quarter:

a) P33,000
b) P43,000
c) P63,000
d) P318,000
Soulution
Gross profit from sales P3,100,000

Resident Foreign Corporations 10,000
Trade Receivable 50,000
Business expenses ( 2,100,000)
P1,060,000
X 30%
318,000
Income tax withheld (115,000)
Quarterly income tax payments (160,000)
Income tax payable per quarter (10,000)
Income Tax Payable P33,000
10. Bahala College, a proprietary educational institution provided the following data for 2018:
Income from tuition fees P3,000,000
School miscellaneous fees 250,000
Income from canteen operations 750,000
Dividend Income:
Domestic Corporation 100,000
Foreign Corporation 50,000
Rent Income (net) 5,700,000
Operating Expenses 4,125,000
Quarterly Income tax payments 250,000
The income tax payable of the school is:

14 | P a g e
a) P37,500
b) P337,750
c) P1,212,500
d) P1,227,500
Income Tax payable - 1,227,500

 The unrelated income exceeds 50% of the total income, hence, the proprietary educational institution is
not entitled to the 10% tax rate.
 solution
Income from tuition fees P3,000,000
School miscellaneous fees 250,000
Income from canteen operations 750,000
Foreign Corporation 50,000
Rent Income (net) 6,000,000
GROSS SUBJECT TO TAX 10,050,000
Operating Expenses 4,125,000
Taxable Net Income P 5,925,000
Regular Corporate Tax Rate X 30%
Income Tax Due P1,777,500
Quarterly Income Tax Payments (250,000)
Creditable WithHolding Tax (300,000)
Income Tax Payable P1,227,500

15 | P a g e

Quizzes - Miidter Module - Income Taxation

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Quizzes - Miidter Module - Income Taxation

Uploaded by

Copyright:

Available Formats

MARICEL SARSALE QUIZZES

BSBA- 3 HRMD MIDTERM REQUIREMENTS

Quiz 1 – Dealings in Properties

2. Which of the following is a capital asset?

a) P720,000 capital gains tax

 Selling Price or FMV P15,000,000

 TAXABLE BASE IS THE SELLING PRICE OR FMV WHICHEVER IS HIGHER VALUE.

a) 6% capital gains tax

Income Taxation - Midterm

a) Only statement 1 is correct

a) The fair market value of the land is P24,000,000

 The land sold by Juan is classified as an ordinary asset, is not correct.

Income Taxation - Midterm

8. Which capital asset is not subject to regular taxes?

a) Real property held for sale by a dealer

a) Sale of condominium units by a real estate dealer

How much is the selling price?

Mortgage assumed by buyer 270,000

a) P56,250, P33,750, and P22,500, respectively

Income Taxation - Midterm

12. A taxpayer had the following dealings in properties

Short term capital gain P200,000

% RECOGNIZED Total recognized as

Net capital gains (above) 75,000

Short term ordinary loss 200,000

Income Taxation - Midterm

 Selling Price or FMV P6,000,000

1. A Filipino Citizen is a natural person who is/has

2. Determine the correct classification of the following:

Income Taxation - Midterm

 Nonresident alien not engaged in trade or business.

4. Which of the following is correct?

a) I, II and III only b) I, II and IV only

a) Pedro, a native of Bacolod City, working as overseas contract worker in Iraq

Rent, Philippines P1,000,000

Income Taxation - Midterm

Income Taxation - Midterm

How much is the total income tax expense?

(Cost of sales) (1,125,000)

(Business expenses) (650,000)

Net Income P1,025,000

Basic Income Tax P197,500

Basic Income Tax 197,500

Interest income from peso bank deposit (80,000 x 20%) 16,000

CGT on real property (2,000,000 x 6%) 120,000

Income tax expense P351,500

Income Taxation - Midterm

Gross sales P2,800,000

(Tax exempt income) (250,000)

Taxable net income 2,550,000

Multiply to: tax rate 8%

Tax due 204,000

Basic income tax 204,000

CGT on real property (2,000,000 x 6%) 120,000

Total income tax expense 358,000

Compensation Income P1,800,000

On his compensation income:

Income Taxation - Midterm

BASIC INCOME TAX 654,000

CGT on real property (2,000,000 x 6%) 120,000

Income tax expense 808,000

The total income tax expense of the taxpayer is: