Quiz Income Taxation – Tax on Individual

Pedro, a resident citizen, received the following during 2020:

Proceeds from copyright royalty, net of tax P11,250

Proceeds from mineral claim royalty, net of tax 12,000
Share from trading partnership, net of withholding tax 270,000
How much is the income tax still due and payable of Pedro in 2020?
 P0
A taxpayer received in 2018 the following passive income within Philippines, net of applicable
tax, if any:
Interest on bank deposit under FCDU P212,500
Royalty on books 94,500
Dividend income from a domestic corporation 144,000
If taxpayer is a resident alien, the final tax on the above passive income would amount to
 P64,000
A taxpayer received in 2018 the following passive income within Philippines, net of applicable
tax, if any:

Interest on bank deposit under FCDU P212,500

Royalty on books 94,500
Dividend income from a domestic corporation 144,000
If taxpayer is a non-resident alien engaged in business, the final tax on the above passive
income would amount to
 P46,500
Statement 1: There is capital gain tax on shares of stock only if the Snares are those of a
domestic corporation held as capital asset and not listed and traded in a local stock exchange.
Statement 2: The capital gain tax on shares of stock is paid within thirty days from the date of
sale.
 Statements 1 and 2 are true
Which of the following transactions is exempt from capital gain tax?

Case 1-Sale of the principal residence of the taxpayer where he entire proceeds is used to
purchase a vacation lot in Tagaytay.
Case 2- Sale of a beach lot of the taxpayer where the entire proceeds is used to construct his
principal residence.
Case 3-The sale of the principal residence of the taxpayer availing tax exemption for the second
time in ten (10) years to purchase another principal residence.
Case 1 Case 2 Case 3
 No No No
Pedro inherited from his parents a large parcel of undeveloped land acquired by them years ago
with total cost of P2,500,000. Pedro now sells all of these parcels for P25,000,000.
How much of the gains should Pedro report in his income tax return for the year?
 None, because the properties are capital assets and the transaction is subject to capital gain
tax and not basic tax.
Pedro inherited from his parents a large parcel of undeveloped land acquired by them years ago
with total cost of P2,500,000. Pedro now sells all of these parcels for P25,000,000.

Suppose that when Pedro inherited these parcel of land, they were already developed real
estate subdivisions with small lots being sold on installment basis. He sold the property for
P25,000,000. How much of the gains should Pedro report in his income tax return for the year?
 P22,500,000 because the properties are classified as ordinary assets. Thus, the gain shall also
be reported in Pedro’s income tax return.
If the proceeds are from the disposition of principal residence and fully utilized in acquiring or
constructing a new principal residence, the capital gain is not subject to tax if the
 All of the above
Juan is a resident of QC. He sold his family home for P4,000,000 which was previously acquired
for P2,000,000. Juan complied all BIR requirements to avail of tax exemption and spent
P2,500,000 in acquiring new family home. How much is the capital gains tax to be paid by Juan?
 P90,000
Cliff is a self-employed and/or professional. He provided the following information for 2020
taxable year

Gross sales P1,650,000

Cost of sales 500,000
Business expenses 425,000
Rental income (net) 308,750
Philippine charity sweepstakes winnings 500,000
Royalty income books 120,000
Other royalty income – Philippines 60,000
Dividend income- domestic corporations 40,000
Interest income, BDO QC 100,000
Interest income received from a depository bank 50,000
under FCDS, Philippines
Creditable withholding tax from business income 65,000
Quarterly tax payments 82,500

How much is the income tax payable of Cliff?

 P57,500
Cliff is a self-employed and/or professional. He provided the following information for 2020
taxable year

Gross sales P1,650,000

Cost of sales 500,000
Business expenses 425,000
Rental income (net) 308,750
Philippine charity sweepstakes winnings 500,000
Royalty income books 120,000
Other royalty income – Philippines 60,000
Dividend income- domestic corporations 40,000
Interest income, BDO QC 100,000
Interest income received from a depository bank 50,000
under FCDS, Philippines
Creditable withholding tax from business income 65,000
Quarterly tax payments 82,500
How much is the income tax payable of Cliff assuming he opted to taxed at 8% income tax rate?
 (P9,500)
Cliff is deriving compensation and business income. He provided the following information for
2020 taxable year

Gross compensation income P600,0000

Gross sales 1,650,000
Cost of sales 500,000
Business expenses 425,000
Rental income (net) 308,750
Philippine charity sweepstakes winnings 500,000
Royalty income books 120,000
Other royalty income - Philippines 60,000
Dividend income domestic corporations 40,000
Interest income, BDO QC 100,000
Interest income received from a depository 50,000
bank under FCDS Philippines
Creditable withholding tax from business income 65,000
Quarterly tax payments 82,500
How much is the income tax payable of Cliff assuming he opted to De taxed at 8% income tax
rate?
 P90,500
Michael Cabarles, single, has the following income and expenses for the year 2020. He supports
an eight-year-old illegitimate child.

Professional Income, net of P60,000 P540,000

withholding tax
Rental income (net) 47,500

Rewards as BIR informer 30,000

Wagering gains 50,000
Kickbacks received from suppliers of clients 40,000
Interest income on time deposit (net) 32,000
Dividend income from domestic corporations 75,000
Professional expenses 325,000
Household expenses 24,000
Premium payment on health insurance 4,000
Facilitation fees paid to government agencies 15,000
Compute the amount of his taxable income subject to basic tax for 2018?
 P415,000
A resident citizen, married, with two (2) qualified dependent children has the following data for
the year 2020:

Gross sales, Philippines P5,000,000

Sales returns and allowances, Philippines 500,000
Cost of sales, Philippines 1,500,000
Gross sales, Ukraine 3,000,000
Sales returns and allowances, Ukraine 200,000
Cost of sales, Ukraine 800,000
Business expenses, Philippines 500,000
Business expenses, Ukraine 300,000
Interest income, peso bank deposit BDO-Marikina 20,000
Interest income, US dollar deposit, BDO-Mandaluyong 50,000
Gain from sale of residential house and lot 500,000
(selling price, P3,000,000; FMV, time of sale, P5,000,000)
Gain from sale of shares of stock listed and traded in the 30,000
local stock exchange (selling price, P100,000)
Gain from sale of shares of stock not traded in the local 150,000
stock exchange
How much is the total final tax on passive income?
 P11,500
A resident citizen, married, with two (2) qualified dependent children has the following data for
the year 2020:

Gross sales, Philippines P5,000,000

Sales returns and allowances, Philippines 500,000
Cost of sales, Philippines 1,500,000
Gross sales, Ukraine 3,000,000
Sales returns and allowances, Ukraine 200,000
Cost of sales, Ukraine 800,000
Business expenses, Philippines 500,000
Business expenses, Ukraine 300,000
Interest income, peso bank deposit BDO-Marikina 20,000
Interest income, US dollar deposit, BDO-Mandaluyong 50,000
Gain from sale of residential house and lot 500,000
(selling price, P3,000,000; FMV, time of sale, P5,000,000)
Gain from sale of shares of stock listed and traded in the 30,000
local stock exchange (selling price, P100,000)
Gain from sale of shares of stock not traded in the local 150,000
stock exchange
How much is the capital gains tax due?
  P322,500
A resident citizen, married, with two (2) qualified dependent children has the following data for
the year 2020:

Gross sales, Philippines P5,000,000

Sales returns and allowances, Philippines 500,000
Cost of sales, Philippines 1,500,000
Gross sales, Ukraine 3,000,000
Sales returns and allowances, Ukraine 200,000
Cost of sales, Ukraine 800,000
Business expenses, Philippines 500,000
Business expenses, Ukraine 300,000
Interest income, peso bank deposit BDO-Marikina 20,000
Interest income, US dollar deposit, BDO-Mandaluyong 50,000
Gain from sale of residential house and lot 500,000
(selling price, P3,000,000; FMV, time of sale, P5,000,000)
Gain from sale of shares of stock listed and traded in the 30,000
local stock exchange (selling price, P100,000)
Gain from sale of shares of stock not traded in the local 150,000
stock exchange
How much is the taxable net income?
 P4,200,000
Which of the following income is required to be filed in a quarterly income tax return?
 Business income
The following are the requirement for substituted filing of income tax return, except
 He had consecutively filed his income tax return for the past five years.
Statement 1: If an employee had multiple employers within the year, an income tax return must
be filed at the end of the year.
Statement 2: If an employee had three employers, on succession, for each of the past three
years, substituted filing of tax return is not allowed.
 Statement 1 is true but statement 2 is false
Who of the following individual taxpayers may avail of substituted fling of Income Tax Return
(ITR)?
Rianne:

 Deriving compensation income from ABC Company, his only employer for the taxable
year.
· The correct amount of tax was withheld by ABC Company.
· He also derived interest income from his peso Bank deposit in BPI and the sale of his shares
in DEF Corporation (a closely-held domestic corporation) to Brian resulted to a gain of
P100,000.

Leomar:
 Deriving purely compensation income from XYZ Corporation, his only employer for the
taxable year.
· The correct amount of tax was withheld by XYZ
· Leomar's spouse is engaged in business

Rianne Leomar
 Yes No
Statement 1: Taxable income from self-employment (business and profession) is reported on a
quarterly and annual basis.

2nd statement: The quarterly income tax return shall be filed and the tax paid as follows: 1 Q -
st

not later than April 15, 2 Q - not later than August 15, 3 Q - not later than September 15.
nd rd

 Statement 1 is true but statement 2 is false

Pedro's income tax due for the year amounted to P80,000. He may elect to pay the tax due on
installment as follows:
 All of the above
1 statement: If any installment payment of income tax is not paid on or before the date fixed
st

for its payment, the whole amount of the unpaid tax becomes due and payable, together with
the delinquency penalties to be reckoned from on the original date when the tax is required to
be paid.

2 statement: Installment payment of income is not allowed to self-employed and/or

nd

professional who are availing the 8% income tax rate

 Statement 1 is true but statement 2 is false