Palawan State University

PSU-PCAT
Long Quiz in Income Taxation

Name: ___________________________________ Score: _________________

Course & Year: ____________________________ Date: __________________

Part I. True or False

1. The return on capital that increases net worth is income subject to income tax.
2. Any compensation received in consideration for the loss of health such as compensation
for personal injuries or tortuous acts is deemed a return of capital.
3. The loss of capital results in decrease in net worth while the loss of profits does not
decrease net worth.
4. The term “benefit” means any form of advantage derived by the taxpayer.
5. The term realized means earned.
6. Unilateral transfers are simply referred to as “exchanges” while bilateral transfers are
called “transfers.”
7. Juridical persons are living persons while natural persons are those created by law such
as partnerships and corporations.
8. Actual receipt involves no actual physical taking of the income but the taxpayer is
effectively benefited.
9. Constructive receipt involves actual physical taking of the income in the form of cash or
property.
10. The term “taxable income” refers to certain items of gross income plus deductions and
personal exemptions allowable by law.

II. Matching Type

A.

1. It is a Filipino citizen who resides or stays in the Philippines permanently or stays outside
the Philippines for less than 183 days during a particular taxable year.
2. It is a Filipino citizen who leaves the Philippines due to a contract of employment which
is renewed from time to time, and whose employment requires him/her to physically
present abroad most of the time.
3. For income tax purposes, these are those taxpayers who are considered foreigners, or
who have not acquired Filipino citizenship under the Philippine Constitution.
4. It refers to an individual who resides in the Philippines, but is not a citizen thereof.
5. It means a foreigner who does not reside in the Philippines and who is not a citizen
thereof.
6. Estate refers to the properties, rights, and obligations of a deceased person not
extinguished by his death.
7. It is an arrangement whereby one person (grantor or trustor) transfers (i.e. donates)
property to another person (beneficiary), which will be held under the management of a
third party (trustee or fiduciary).
8. It is a corporation that is organized in accordance with Philippine laws. It includes one-
person corporations (OPC) owned and registered by resident citizens in the Philippines.
9. It is a foreign corporation which does not operate or conduct business in the Philippines
10. It is the place of taxation of income. It is the jurisdiction that has the authority to impose
tax upon the income.

B.

a. Situs of income
b. NRFC
c. Domestic corporation
d. Trust
 e. Estate
f. Non-resident alien
g. Resident alien
h. Aliens
i. Overseas contract worker
j. Resident citizen

III. Enumeration
1-3. Give the three income taxation schemes under NIRC.
4-6. Give three examples of passive income.
7-9. Give three examples of active income.
10 – Give at least one type of accounting period.

IV. Identification

1. Under this method, income is recognized when earned regardless of when received.
Expense is recognized when incurred regardless of when paid.
2. Under this method, income is recognized when received and expense is recognized
when paid.
3. These are advanced payment for expenses of future /taxable periods
4. It is any combination of accrual basis, cash basis, and/or other methods of accounting.
5. It means total payments by the buyer, in cash or property, in the taxable year the sale
was made.
6. It means the entire amount for which the buyer is obligated to the seller.
7. It is the amount receivable in cash or other property from the buyer.
8. It is a variant of the accrual basis and is used in reporting income when a non-interest-
bearing note is received as consideration in a sale.
9. Farming income is recognized as the difference between the proceeds of harvest and
expenses of the particular crop harvested.
10. It is an amount paid in lieu of criminal prosecution over a tax violation.

V. Illustration. Below is classification of individual taxpayers based on citizenship and based on

filing status. Supply the necessary data in the diagram (including the arrows).

CLASSIFICATION OF INDIVIDUAL TAXPAYERS

Based on filing status

Based on citizenship

1.
Citizen of the Philippines 2.
1. 3.
2.

Alien
1.
2.
a.
b.
c.