REGULAR INCOME TAX

Multiple Choice - Problems 1

1. In 2015, Ms. Maya earned P450,000 compensation income but incurred

P120,000 net loss in her business. What is her taxable income assuming she incurred personal expenses
of P100,000? a. P450,000 c. P330,000

b. P550,000 d. P570,000

SOLUTION: Only the compensation income is the taxable income of Ms. Maya amounting to
P450,000

2. Mrs. Sipalay had a gross taxable compensation income of P400,000. She also earned an
additional P2,000 by investing her money in time deposits plus P3,000 interest income from lending
money to a friend. Compute for taxable income.

a. P303,000 c. P300,000

b. P302,000 d. P403,000

SOLUTION: P400,000 + P3,000 = P403,000

3. Ms. Santander had a business net income of P300,000. She also earned P5,000 commission
from selling cellular cards and P12,000 dividends from a domestic corporation. Compute her taxable
income.

a. P300,000 c. P305,000

b. P312,000 d. P317,000

SOLUTION: P300,000 + P5,000 = P 305,000

4. Mr. Cabilao earned total gross receipts of P800,000 and paid P300,000 in expenses in his accounting
practice. During the same year, he also earned a total of P60,000 net gain from the sale of domestic
stocks directly to a buyer. He also disposed a vacant lot at a net gain of P140,000. What is the taxable
income of Mr. Cabilao?

a. P400,000 c. P500,000

b. P460,000 d. P600,000

SOLUTION: P800,000 – P300,000 = P 500,000

5. Mr. Jagna earned a gross compensation income of P200,000 exclusive of P20,000 non-taxable
compensation income, and gross business income of P500,000 before expenses of P200,000. he
also earned book royalties of P10,000 and P8,000 interest income from clients’ promissory notes. Mr.
Jagna has personal expenses of P170,000 during the year. What is Mr. Jagna’s taxable income?

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a. P30,000 c. P200,000

b. P180,000 d. P220,000

SOLUTION: Only the gross compensation income amounting to P200,000 is included on Mr. Jagna’s
taxable income

6. What is Mr. Jagna’s net income from business?

a. P300,000 c. P310,000

b. P308,000 d. P518,000

SOLUTION: (P 500,000 – P 200,000) + P8,000 = P 308,000

7. What is Mr. Jagna’s taxable income?

a. P508,000 c. P558,000

b. P450,000 d. P468,000

SOLUTION: P200,000 + ( P500,000 – P200,000) + P8,000 = P508,000

8. Mr. Bangal earned a compensation income of P120,000 and net income from business of
P300,000. he also earned P8,000 prizes from a dancing competition and P45,000 royalties from his
musical composition. Mr. Bangal has P150,000 personal expenses. Compute the taxable income.

a. P473,000 c. P428,000

b. P465,000 d. P420,000

SOLUTION:

Compensation Income P120,000

Business Income 300,000

Taxable Income P 420,000

9. Mr. Jordan, with a P75,000 personal exemption, had the following data in

2021:

Compute the taxable income if Mr. Jordan is a resident citizen.

a. P4,480,000 c. P2,040,000

b. P4,520,000 d. P2,000,000

SOLUTION: (2,000,000 + 2,480,000 = P4,480,000) Philippines

Gross Income from sales P 4,000,000

Less: Deductions 2,000,000

P 2,000,000

Philippines Abroad Gross income from sales P4,000,000 6,000,000 Interest income on deposits 40,000
80,000 Less: Deductions 2,000,000 3,600,000

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Abroad

Gross Income From sales P 6,000,000

Less: Deductions 3,600,000

Interest Income on deposits 80,000 P 2,480,000

10. In the immediately preceding problem, compute the taxable income if Mr.

Jordan is a non-resident citizen. a. P4,520,000 c. P2,040,000

b. P4,480,000 d. P2,000,000

SOLUTION: Philippines Gross Income from sales P 4,000,000 Less: Deductions

(2,000,000) P 2,000,000