PSBA REFRESHER COURSE

SECOND HALF QUIZ

TAXATION

Instructions: Choose the BEST answer for each of the following items.

1-12. Christina, single, Filipino with 1 dependent child, received in taxable year 2020 the
following professional fees as an independent consultant:
Monthly Fees Less 5% CWT Net Monthly Fees
₱240,000 ₱12,000 ₱228,000

The monthly cost of her professional services amounted to ₱20,000, gross of the CWT.
The office rental expenses related to her consultancy business amounted to:
Monthly rental expense Less 5% CWT Monthly rental expense paid
₱30,000 ₱1,500 ₱28,500

She is not VAT-registered and instead pays 3% OPT on her gross receipts under Section 116
of the Tax Code.
Aside from her consultancy business, she is a faculty member of CPAR University from which
she received the following employment income for the same year:
Gross pay Less CWT Less SSS premiums Net Pay
and union dues
₱850,000 ₱60,000 ₱6,000 ₱784,000

The amount she received from CPAR University is inclusive of 13th Month Pay and other
benefits of ₱165,000.
Her car fuel expenses amounted to ₱10,000 per month. She used the car for her consultancy
business 40% of the time.
She also wrote a book entitled “SINGLE LIFE IS HEAVEN” which became a bestseller in
the Philippines. In 2020, she earned royalties from the book in the amount of ₱2,500,000, net
of the 10% final tax. Using this amount, she opened a time deposit with BDO which earned
interest income of ₱75,000, net of the 20% final tax.
She has excess tax credits from the prior year of ₱15,500.

1. Calculate her tax payable in the 1st Quarter of 2020?

a. 12,600
b. 48,600
c. 64,100
d. None of the above
2. Calculate her tax payable in the 2nd quarter of 2020?

a. 211,840
b. 147,740
c. 111,740
d. None of the above

3. Calculate her tax payable in the 3rd quarter of 2020?

a. 124,920
b. 248,420
c. 372,760
d. None of the above

4. Calculate her tax payable in the annual ITR for 2020?

a. 777,872
b. 309,112
c. 369,112
d. None of the above

1st Quarterly ITR 2nd Quarterly ITR 3rd Quarterly ITR Annual ITR
a) ₱12,600 ₱111,740 ₱124,920 ₱309,112
b) (₱10,500) ₱59,000 ₱28,000 ₱186,408
c) ₱10,500 ₱80,000 ₱7,500 ₱ 63,817
d) None of the above
 1st Quarter 2nd Quarter 3rd Quarter

Gross receipts 720,000 720,000 720,000

Less: Cost of services (60,000) (60,000) (60,000)
Gross income from operations 660,000 660,000 660,000
Less: Itemized deductions:
Rental expense (90,000) (90,000) (90,000)
OPT paid (21,600) (21,600) (21,600)
Transportation/fuel expense (12,000) (12,000) (12,000)
Net income from operations 536,400 536,400 536,400
Add: Taxable income/(loss) from previous quarter - 536,400 1,072,800
Share in GPP net income - - -
Non-operating income - - -
Net taxable income 536,400 1,072,800 1,609,200
Tax (table) 64,100 211,840 372,760
Less Credits:
(1) Excess tax credits (15,500) (15,500) (15,500)
(2) Tax payments for previous quarters - (12,600) (124,340)
(3) CWT for previous quarters (Form 2307) - (36,000) (72,000)
(4) CWT for this quarter (Form 2307) (36,000) (36,000) (36,000)
Tax Payable 12,600 111,740 124,920

Annual
Gross compensation income 850,000
Less: Exempt compensation:
SSS premiums, Pag-ibig, and union dues (6,000)
13th month pay and other benefits (90,000)
Taxable Compensation income 754,000
Add: Income from business:
Gross receipts 2,880,000
 Less: Cost of services (240,000)
Gross income from operations 2,640,000
Less: Itemized deductions:
Rental expense (360,000)
OPT paid (86,400)
Transportation/fuel expense (48,000)
Net income from operations 2,145,600
Add: Non-operating income -
Share in GPP net income - 2,145,600
Total taxable income 2,899,600
Tax (table) 777,872
Less Credits:
(1) Excess tax credits (15,500)
(2) Tax payments for previous quarters (249,260)
(3) CWT for previous quarters (Form 2307) (108,000)
(4) CWT for this quarter: Form 2307 (36,000)
Form 2316 (60,000)
Tax Payable 309,112

5. Calculate her tax payable in the 1st quarter if she chooses OSD (Optional Standard
Deduction)?
a. Zero
b. (13,500)
c. 38,000
d. 10,434

6. Calculate her tax payable in the 2nd quarter if she chooses OSD (Optional Standard
Deduction)?
a. 149,200
b. 97,700
c. 61,700
d. 48,200
7. Calculate her tax payable in the 3rd quarter if she chooses OSD (Optional Standard
Deduction)?
a. 93,600
b. 201,600
c. 263,300
d. 278,800

8. Calculate her tax payable in the annual ITR if she chooses OSD (Optional Standard
Deduction)?
a. 644,240
b. 628,740
c. 473,440
d. 269,440

9.1st Quarterly ITR 2nd Quarterly ITR 3rd Quarterly ITR Annual ITR
a) ₱0 ₱61,700 ₱93,600 ₱269,440
b) ₱0 ₱23,595 ₱24,343 ₱34,453
c) ₱10,434 ₱80,348 ₱7,534 ₱234,555
d) None of the above

Annual
Gross compensation income 850,000
Less: Exempt compensation:
SSS premiums, Pag-ibig, and union dues (6,000)
13th month pay and other benefits (90,000)
Taxable Compensation income 754,000
Add: Income from business:
Gross receipts 2,880,000
Less: Cost of services (0 if OSD) 0
Gross income from operations 2,880,000
Less: OSD (40%) (1,152,000)
Net income from operations 1,728,000
Add: Non-operating income -
Share in GPP net income - 1,728,000
Total taxable income 2,482,000
Tax (table) 644,240
 Less Credits:
(1) Excess tax credits (15,500)
(2) Tax payments for previous quarters (155,300)
(3) CWT for previous quarters (Form 2307) (108,000)
(4) CWT for this quarter: Form 2307 (36,000)
Form 2316 (60,000)
Tax Payable 269,440

1st Quarter 2nd Quarter 3rd Quarter

Gross receipts 720,000 720,000 720,000

Less: Cost of services - 0 if OSD 0 0 0
Gross income from operations 720,000 720,000 720,000
Less: OSD (40%) (288,000) (288,000) (288,000)
Net income from operations 432,000 432,000 432,000
Add: Taxable income/(loss) from previous quarter - 432,000 864,000
Share in GPP net income - - -
Non-operating income - - -
Net taxable income 432,000 864,000 1,296,000
Tax (table) 38,000 149,200 278,800
Less Credits:
(1) Excess tax credits (15,500) (15,500) (15,500)
(2) Tax payments for previous quarters - 0 (61,700)
(3) CWT for previous quarters (Form 2307) - (36,000) (72,000)
(4) CWT for this quarter (Form 2307) (36,000) (36,000) (36,000)
Tax Payable 0 61,700 93,600

9. Calculate her tax payable in the 1st Quarter if she avails of the 8% income tax option.

a. 57,600
b. 21,600
c. 6,000
d. None of the above
10. Calculate her tax payable in the 2nd quarter if she avails of the 8% income tax option.
a. 115,200
b. 27,700
c. 21,000
d. None of the above

11. Calculate her tax payable in the 3rd quarter if she avails of the 8% income tax option.
a. 172,800
b. 49,300
c. 21,600
d. None of the above

12. Calculate her tax payable in the annual ITR if she avails of the 8% income tax option.
a. 348,900
b. 176,100
c. 80,100
d. None of the above

1st Quarterly ITR 2nd Quarterly ITR 3rd Quarterly ITR Annual ITR
a) ₱6,100 ₱21,600 ₱21,600 ₱80,100
b) ₱0 ₱23,595 ₱24,343 ₱86,483
c) ₱10,434 ₱80,348 ₱7,534 ₱234,455
d) None of the above
Solution below:
 1st Q 2nd Q 3rd Q
Gross receipts in quarter 720,000 720,000 720,000
Add: Non-operating income - - -
Total income for the quarter 720,000 720,000 720,,000
Add: Total income from previous quarters - 720,000 1,440,000
Cumulative taxable income as of this quarter 720,000 1,440,000 2,160,000
Less: Amount allowed as deduction - - -
Taxable Income 720,000 1,440,000 2,160,000
Tax rate (8%) 8% 8% 8%
Tax due 57,600 115,200 172,800
Less tax credits:
(1) Excess tax credits (15,500) (15,500) (15,500)
(2) CWT Withheld (36,000) (72,000) (108,000)
(3) Taxes paid in previous quarters - (6,100) (27,700)
Tax still due or tax payable 6,100 21,600 21,600
 Annual
Gross compensation income 850,000
Less: Exempt compensation:
SSS premiums, Pag-ibig, and union dues (6,000)
13th month pay and other benefits (90,000)
Taxable Compensation income 754,000
Tax (table) 118,500

Add: Tax on business income

Gross receipts 2,880,000
Add: Non-operating income -
Total Income 2,880,000
Less: ₱250,000; 0 if mixed income earner 0
Taxable income (loss) 2,880,000
Tax (8%) 230,400
Total Tax Due 348,900
Less Credits:
(1) Excess tax credits (15,500)
(2) Tax payments for previous quarters (49,300)
(3) CWT for previous quarters (Form 2307) (108,000)
(4) CWT for this quarter: Form 2307 (36,000)
Form 2316 (60,000)
Tax Payable 80,100

Taxable income (PHP)

Tax on column 1 (PHP) Tax on excess (%)
Over Not over

0 250,000 - 0
 250,000 400,000 - 20

400,000 800,000 30,000 25

800,000 2,000,000 130,000 30

2,000,000 8,000,000 490,000 32

8,000,000 2,410,000 35

13. Statement 1: Provisions in the Philippine Constitution on Taxation are grants of power.
Statement 2: Due process of law in taxation in the Constitution is a grant of power.
a. If only the first statement is correct.
b. If only the second statement is correct.
c. If both statements are correct.
d. If both statements are incorrect.

14. Statement 1: An excise tax is also called privilege tax.

Statement 2: A tax which is neither personal nor property, is an excise tax.
a. If only the first statement is correct.
b. If only the second statement is correct.
c. If both statements are correct.
d. If both statements are incorrect.

15. Statement 1: Estate tax is a proportional tax.

Statement 2: A progressive tax is a tax, the rate of which is directly proportional to tax base.
\

a. If only the first statement is correct.

b. If only the second statement is correct.
c. If both statements are correct.
d. If both statements are incorrect.