BAM 127: Income Taxation for BA

Teachers’ Guide Module #14

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

Quiz No. 2 Materials:

Coverage: FLM Activity Sheets
1. Gain on Sale, Exchange and Other Disposition of Real
Property
2. Scope of Regular Income Tax and classifications of
Gross Income.
3. Inclusions in Gross Income

Hi! I hope you’re having an amazing day! Today, we will be having an assessment of your learning
on the previous lessons. I hope that you have studied very well.

This is a 6 paged test and is composed of 3 sections and have a total score of fifty six (56) points.
You have forty (45) Minutes to finish this assessment. Carefully read the instructions before answering.
Strictly No Erasures – any forms of erasure will invalidate your answers.

Now, let’s start!

I – MCQ – Write the letter of your answer before each number. (1 pt. each)

1. A taxpayer purchased a building to be used as a future plant site. The building remained
unused for 3 years due to significant decline in customer’s demand in product of the taxpayer. The
taxpayer eventually disposed the property. What is the classification of the property?
a. Ordinary asset c. Either A or B at the discretion of BIR
b. Capital Asset d. Either A or B depending on the intent of the buyer

2. Assuming the sane data in the preceding number except that the property was not disposed of
but the same was used as a sales outlet after which it became vacant for more than 2 years. What is
the classification of the property?
a. Ordinary asset, regardless of the taxpayer
b. Capital asset, regardless of the taxpayer
c. Ordinary asset, if the taxpayer is not engage in real estate business
d. Capital asset, if the taxpayer is not engaged in real estate business

This document is the property of PHINMA EDUCATION

 BAM 127: Income Taxation for BA
Teachers’ Guide Module #14

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

3. Anderson disposes a vancant lot for P 3,000,000. The lot has an Assessor’s fair value of
P2,800,000, a zonal value of P 3,200,00, and an appraisal value of P3,500,00. What is capital gains tax?
a. P 0 c. P 192,000
b. P 180,000 d. P 210,000

4. Puerto Princessa Company 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 the sale of the lot is
a. P 0 c. P 192,000
b. P 180,000 d. P 210,000

5. Mr. Antonio disposed his principal residence for P 2,000,000 and imeediately acquired a new
one for P1,800,000. The old residence cost Mr. Antonio P 1,000,000 and had a fair market value of P
2,500,000 on the date of sale.

Compute the capital gains tax to be deposited in escrow.

a. P 0 c. P 120,000
b. P 60,000 d. P 150,000

6. On August 15, 2020, Ms. Mones sold a 500-square meter residential house and lot for
P3,000,000. The house was acquired in 2005 at P2,000,000. The assessor’s fair market values of the
house and lot, respectively were P1,500,000 and P1,000,000. The zonal value of the lot was P5,000
per square meter.
How much is the capital gains tax?
a. P 180,000 c. P 150,000
b. P 120,000 d. P 240,000

7. Manny, a resident Filipino citizen, sold his principal residence (house and lot) at its original
purchase price of P 11,000,000. The property had a P13,000,000 fair market value at that time.

If the proceeds of the sale were not invested in the new principal residence but, instead, new
funds of P15,000,000 were used to construct it, the capital gains tax is
a. P 0 c. P 750,000
b. P 660,000 d. P 780,000

This document is the property of PHINMA EDUCATION

 BAM 127: Income Taxation for BA
Teachers’ Guide Module #14

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

Numbers through 8 to 9 are based on the following information:

Mr. Pepito sold his residential land in Manila with fair market value of P 12,000,000 for P
10,000,000.

8. If Mr. Pepito utilized all of the P10,000,000 in buying a house and lot to be used as his new
principal residence, the final tax due from him is
a. P 720,000 c. P 120,000
b. P 600,000 d. P 0

9. If Mr. Pepito utilized only P 7,000,000 from the proceeds of the sale in acquiring a new
residence, the final tax due from him is
a. P 720,000 c. P 180,000
b. P 216,000 d. P 0

10. The general rule in income taxation is

a. Final income tax c. Regular income tax
b. Capital Gains tax d. Fringe benefit tax

11. Active income is subject to

a. Regular tax c. Final tax
b. Capital gains tax d. Any of these

Question 12 & 13 are based on the following

A. Regular Tax B. Final Tax C. Capital Gains Tax

12. Which of the foregoing are passive incomes are subject to?
a. A only c. Both A and B
b. B only d. Either A or B

13. Which of the foregoing are capital gains subject to?

This document is the property of PHINMA EDUCATION

 BAM 127: Income Taxation for BA
Teachers’ Guide Module #14

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

a. A only c. Both A and B

b. B only d. Either A or B

14. The net amount of regular income subject to regular tax is called
a. Taxable income c. Net Income
b. Compensation income d. Gross Income

15. Which is not generally subject to regular income tax?

a. Compensation income c. Professional income
b. Business income d. Passive income

16. Which is not true with the creditable withholding tax?

a. Advances to the annual tax due c. Need to file annual income tax return
b. No need to pay further taxes d. Applicable to items of regular income

17. Progressive income tax is applicable to

a. Corporate taxpayers c. Compensation earners only
b. Individual taxpayers d. Individuals in business only

18. Proportional regular income tax is applicable to

a. Corporations only c. Individuals engaged in business
b. Compensation earners only d. Both individuals and corporations

19. Which of the following individual taxpayers is not subject to tax on taxable income?
a. Non-resident citizen c. NRA-NETB
b. Resident Alien d. Non-resident alien engaged in business

20. Which of the following corporate taxpayers is not subject to tax on taxable income?
a. Domestic corporation c. Non-resident foreign corporation
b. Business Partnership d. Resident Foreign Corporation

This document is the property of PHINMA EDUCATION

 BAM 127: Income Taxation for BA
Teachers’ Guide Module #14

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

II – True or False – Write “True” if the statement is correct otherwise write “False”

_____________1. Items of gross income subject to regular income tax and capital gains tax are
reportable to the government.
_____________2. Rent is a passive income, but not subject to final tax.
_____________3. The interest income from bonds issued by banks is subject to final tax
_____________4. Gains from dealings in capital assets are generally subject to the regular income.
_____________5. The gross income from operations enjoying a tax holiday are included in gross
income subject to regular tax, but are presented as deductions in the income tax return.
_____________6. The share in a business partnership is subject to final tax, but the share in a general
professional partnership is subject to regular income tax.
_____________7. Gains from dealings in ordinary assets are subject to regular income tax.

_____________8. Items of passive royalty income are subject to final income tax while items of active
royalty income are subject to regular income tax.
_____________9. Compensation income is an inclusion in gross income subject to regular tax except
compensation income of special aliens.
_____________10. The reportable gross income from business or the exercise of a profession is net
of the cost of goods sold or cost of services.
_____________11. Items of income which are included in gross income subject to final tax are
excluded in gross income subject to regular income tax.
_____________12. Imputed interest income is an item of gross income subject to regular income tax.
_____________13. Advanced rentals are income in the year received.
_____________14. Real property tax and insurance on the property if assumed by the lessee
constitute income to the lessor.
_____________15. Corporate winnings are exclusions in gross income; hence, they are exempt from
income tax.
_____________16. Stock dividends are never subject to income tax.
_____________17. Pensions or retirement benefits are inclusions in gross income subject to regular
income tax if the employee is terminated due to any cause within his control.
_____________18. Prizes in athletic competitions sanctioned by the Philippine government are

This document is the property of PHINMA EDUCATION

 BAM 127: Income Taxation for BA
Teachers’ Guide Module #14

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

exclusions in gross income subject to final tax, but are inclusions in gross income subject to regular
income tax.
_____________19. Corporate prizes are exclusions in gross income subject to final tax but are
inclusions in gross income subject to regular income tax.
_____________20. Stock splits are never subject to income tax.

III – Problem Solving – Compute what is being asked. Provide your solutions. (2 pts. Each)

Problem 1 - Lesde, Inc. had the following income in 2020:

1. Compute the taxable income if Lesde Inc. was a domestic corporation.

2. Compute the income tax due in the immediately preceding problem.

3. Compute taxable income assuming Lesde Corporation was a resident foreign corporation.

4. Compute the income tax due in the immediate preceding number.

5. Compute the tax due if Lesde, Inc. was a non-resident foreign corporation. Assume that tax
sparring is not applicable.

This document is the property of PHINMA EDUCATION

 BAM 127: Income Taxation for BA
Teachers’ Guide Module #14

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

Problem 2 – Mr. Allan derived the following income in 2019:

6. Compute the total passive income subject to final tax

7. Compute the total passive income subject to regular tax

8. Compute the capital gain subject to capital gains tax.

This document is the property of PHINMA EDUCATION

 BAM 127: Income Taxation for BA
Teachers’ Guide Module #14

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

Key Answers

I - MCQ - Answers
1. A 11. A
2. D 12. D
3. C 13. D
4. A 14. A
5. D 15. D
6. D 16. B
7. D 17. B
8. A 18. A
9. A 19. C
10. C 20. D

II – True or False
1. True 11. True
2. True 12. False
3. False 13. True
4. True 14. True
5. False 15. False
6. True 16. False
7. True 17. True
8. True 18. False
9. True 19. True
10. True 20. True

III – Problem Solving

1. P 3,700,000 5. P 3,039,000
2. P 1,110,000 6. P 170,000
3. P 1,300,000 7. P 630,000

This document is the property of PHINMA EDUCATION

 BAM 127: Income Taxation for BA
Teachers’ Guide Module #14

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

4. P 390,000 8. P 40,000

This document is the property of PHINMA EDUCATION