Income Taxation Midterms

7/31/22, 10:37 AM Final Departmental Examination in ACCO 20133 Income Taxation 2SAY2122
Final Departmental Examination

in ACCO 20133 Income Taxation
2SAY2122
July 31, 2022
8:00 AM - 11:00 AM
INSTRUCTIONS
1. Read each question very carefully and CHOOSE or PROVIDE the answer for each question.
Please see format below.
2. Refrain from switching between or among various applications while taking the exam. This is
to avoid your computers or gadgets from freezing or not responding.
3. Be mindful of the remaining examination time.
4. Ensure that you have a stable internet connection for the duration of this examination.
5. It is advisable that you save a screenshot of your answers as proof that you submitted your
responses in case you encounter a potential problem in submitting this form.
6. Please follow the general guidelines provided by the College.
For problem-solving questions, follow below format:
Format for Peso Amount: P1,234,567; If your answer is zero, just put P0
Capital "P" as the peso sign,
Comma sign to separate values,
No space in between, and
Rounded off to the nearest peso.
Format for Date: January 1, 2022; January 25, 2022 (Month Day, Year)
For clarifications and concerns, please contact your instructor.
Hi, Gian Carlo. When you submit this form, the owner will see your name and email address.
https://forms.office.com/pages/responsepage.aspx?id=cYWpTercOUiPsQvdXclp-SuYSs84r5RJng0jngVGwpZUQjdYUkJCOTIzNzlRMTVVN1g2SENa… 1/31
* Required
1. Student Number *
Kindly enter your complete student number. Otherwise, the system may not capture your grade.
e.g., 2015-12787-MN-0
2020-03769-MN-0
2. Branches and Campuses *
Alfonso
Bataan
Binan
Lopez
Maragondon
San Juan
San Pedro
Sta. Maria
Sta. Mesa
Sta. Rosa
Sto. Tomas
Taguig
3. Course *
BSA
BSMA
4. Section *
10
11
12
13
14
15
16
5. Which of the following cases cannot be compromised?

* (1 Point)
Withholding tax cases
Criminal tax fraud cases
Delinquent accounts with duly approved schedule of installment payments
All of the above
6. Which of the following shall be considered related income of proprietary

educational institutions?
I. Income from tuition fees and miscellaneous school fees

II. Income from hospital where medical graduates are trained for residency
III. Income from canteen situated within the school campus
IV. Income from bookstore situated within the school campus
* (1 Point)
I only
I and II only
I, III and IV only
I, II, III and IV
7. Taxation is defined as:
Statement 1: an act of levying a tax.
Statement 2: the process or means by which the sovereign, through its judicial
body, raises revenue to defray the necessary expenses of the government.
* (1 Point)
True, True
True, False
False, False
False, True
8. Balong Corporation, a domestic corporation, has the following data for taxable
year 2021:
Sales, P5,000,000
Cost of goods sold, P1,500,000
General selling and administrative expenses, P500,000
Interest income from Philippine bank deposits, P100,000
Rental income (net of 5% withholding tax), P190,000
Dividend income from domestic corporation, P60,000
Dividend income from resident foreign corporation (income without), P50,000
Capital gains from sale of domestic shares of stock sold directly to the buyer,
P75,000
How much is the income tax still due and payable for the year 2021 if the
Corporation is subject to 25%? * (2 Points)
P790,000
9. TRAIN Corporation, a corporation engaged in business in the Philippines and

abroad has the following data for taxable year 2021:
Gross Income, Philippines, P975,000

Expenses, Philippines, P750,000
Gross Income, Thailand, P770,000
Expenses, Thailand, P630,000
Interest on bank deposit, P50,000
Total Assets, P50,000,000
Determine the income tax due assuming the corporation is a Non-Resident

Foreign Corporation.
* (2 Points)
P300,000
10. Which of the following statements relative to the optional standard deduction is
false? * (1 Point)
The method of deduction to be adopted by a taxpayer may be changed for every taxable
year.
The 40% deduction rate shall be multiplied to the gross sales or gross receipts in the case o
individual taxpayers.
The 40% deduction rate shall be multiplied to the gross income in case of corporate
taxpayers.
The taxpayer has the burden of proof in proving expenses by means of receipts and other
evidence.
11. Creative College, a private educational institution has presented the following data
for the year 2021:
Gross Income, related activities, P5,000,000

Gross income, unrelated activities (except rental income), P5,000,000
Rental income (gross of 5% EWT), P2,000,000
Expenses, related activities, P2,500,000
Expenses, unrelated activities, P3,500,000
Dividend income from a domestic corporation, P100,000
Quarterly income tax paid for the first 3 quarters, P500,000
How much is the income tax still due and payable in 2021? * (2 Points)
P2,070,000
12. GMA Company, a domestic corporation registered with the BIR since 2015, has the
following data:
Taxable Year 2021:
Gross receipts, P13,300,000

Discounts and allowances, P2,500,000
Salaries of personnel directly involved in rendering service, P3,000,000
Salaries of administrative personnel, P1,500,000
Fees of consultants directly involved in rendering service, P500,000
Rental of equipment used in rendering service, P700,000
Rental of office space for use of administrative personnel, P500,000
Other operating expenses, P5,000,000
Total Assets, P50,000,000
Taxable Year 2022:
Gross receipts, P120,000,000

Salaries of personnel directly involved in rendering service, P38,000,000
Salaries of administrative personnel, P12,000,000
Fees of consultants directly involved in rendering service, P16,000,000
Rental of equipment used in rendering service, P15,000,000
Rental of office space for use of administrative personnel, P5,000,000
Other operating expenses, P23,000,000
How much was the income tax due and payable in 2022?
* (2 Points)
P2,687,000
13. The following are sources of tax laws, except:

* (1 Point)
Presidential Decrees
Tax bills
Supreme Court Decisions
Tax Treaties
14. XYZ Inc., a domestic corporation, paid the following during the month of April
2022:
Merchandise, ABC Company (regular supplier), P150,000

Professional Fees – IT services, DEF IT Consulting Services, Inc. (one-time
transaction), P400,000
Security Agency Fee, GHI Agency Services, Inc., P25,000
Rentals, JKL Leasing Corporation, P200,000
Cash Dividends, Various shareholders (all are Filipino residents), P400,000
Selling price of the land purchased from the seller which held the land as a
capital asset, Juan dela Cruz, , P1,560,000
The land was sold when the zonal value was 2 million.
Compute the expanded withholding tax. * (2 Points)
P59,500
15. Which of the following is not a requisite for an expense to be claimed as a

deduction from gross income? * (1 Point)
It must be ordinary and necessary.
It must be actually paid during the taxable year.
It must be connected with the taxpayer’s trade, business, industry or profession.
It must be reasonable.
16. One of the following is not an inherent limitation of taxation:

* (1 Point)
Non-impairment of contracts
Tax exemption of the government
Situs of taxation
International Comity
17. A non-resident alien not engaged in trade or business derived P50,000 interest
income to his long-term bank deposit here in the Philippines. How much is the
income tax due of the said alien?
* (2 Points)
P12,500
18. When should a tax be considered Delinquent?

* (1 Point)
Failure to file request for reinvestigation/reconsideration within thirty (30) days from receipt
of the Final Assessment Notice (FAN)
Failure to submit documents in support of the request for reinvestigation within sixty (60)
days) from filing of the request
Decision / Resolution of the CTA / Supreme Court in favor of the BIR which became final and
executory
All of the above
19. Mr. L is the CEO of the prestigious Campuswise Cafe along Teresa St., Sta. Mesa.
Manila. Also, he writes books, self-publish them, and distributes them to different
bookstores in the Philippines. In the first week of January 2021, he resigned from
Campuswise Cafe to concentrate on his self-publishing business. His total
compensation income in 2021 amounted to P200,000 inclusive of other benefits
and non-taxable items of of P35,000.
In 2021, his self-publishing business had a gross sales of P2,500,000, cost of sales
of P431,000, and operating expenses of P233,000. It also had a non-operating
income of P143,000.
How much is his income tax due in 2021 if he avails of the 8% income tax rate? *
(2 Points)
P211,400
20. Rush Corporation, a domestic corporation, has the following record of income and
expenses during the year:
Gross income - P1,540,000;

Expenses - P654,000;
Dividend from a resident foreign corporation (income within) - P95,000;
Royalties, Philippines - P230,000;
Royalties, US - P175,000;
Interest on time deposit with Metrobank - P18,000;
Interest on money market placement - P25,000.
What is the taxable income of Rush Corporation?

* (2 Points)
P1,159,000
21. CREATE Company, a domestic corporation and a retailer of goods has gross sales
of P14,000,000 with a cost of sales of P7,500,000 and allowable deductions of
P2,500,000 for the calendar year 2021. It’s total assets of P150,000,000 as of
December 31, 2021 per Audited Financial Statements includes the land costing
P40,000,000 and the building of P30,000,000 in which business entity is situated,
with an aggregate amount of P70,000,000 as Fixed Assets.
How much is the income tax due in 2021? * (2 Points)
P4,000,000
https://forms.office.com/pages/responsepage.aspx?id=cYWpTercOUiPsQvdXclp-SuYSs84r5RJng0jngVGwpZUQjdYUkJCOTIzNzlRMTVVN1g2SEN… 10/31
22. Statement 1: Tax refers to the income derived from the regular system of taxation,
and as such, accrues more or less regularly every year.
Statement 2: Benefit-Received Theory of Taxation essentially states that without

taxes, the government would be paralyzed for lack of motive power to activate
and operate it.
* (1 Point)
True, True
True, False
False, False
False, True
23. X Corp, a private educational institution, PEI, was operating for almost 10 years,
with total assets of P19 million had the following data in CY 2022:
Tuition fees, P4,000,000

Rental revenue, P6,000,000
Cost of services, P2,000,000
Operating expenses, P7,800,000.
What is the income tax due of X Corp in CY 2022?

* (2 Points)
P80,000
24. The following statements relate to the rules on minimum corporate income tax.
Which of them is false?
* (1 Point)
It does not apply to nonresident foreign corporations.
If the corporation has commenced with its business operation in 2019, it shall be covered by
the rule effective 2023.
It shall be imposed whenever the operation of the corporation has resulted to a zero or
negative taxable income.
The imposable rate is 1% of taxable income.
25. Statement 1: A net operating loss is the excess of allowable deductions over the
gross income from business for a taxable year.
Statement 2: A net operating loss which had not previously been deducted from
gross income shall be carried over as a deduction only in the next year
immediately following the year of such loss.
* (1 Point)
True, True
True, False
False, False
False, True
26. X had the following during the year:
Compensation income (including 13th-month pay and other benefits of P120,000,

but net of SSS and Philhealth), P1,500,000
Gross sales, P2,400,000
Cost of sales, P1,000,000
Operating expenses, P600,000
How much is her income tax liability using the 8% income tax rate? * (2 Points)
P374,000
27. A resident foreign corporation presented the following data related to its
operations in the Philippines for the current taxable year:
Gross income in the Philippines, P1,000,000

Allowed deductions from gross income, P300,000
Profits earmarked for remittance (net of branch profit remittance tax), P425,000
Compute the branch profit remittance tax. * (2 Points)
P75,000
28. The income recipient subject to creditable withholding tax is still required to file an
income tax return to report the income and/or pay the difference between the tax
withheld and the tax due on the income.
Taxes withheld on income payments covered by the expanded withholding tax and
compensation income are creditable in nature. * (1 Point)
True, True
True, False
False, False
False, True
29. The prescriptive period for the collection of deficiency tax assessment will be
tolled: * (1 Point)
If the taxpayer files a request for reinvestigation that is approved by the Commissioner of
Internal Revenue
If a taxpayer files a request for reconsideration with the Assistant Commissioner
If the taxpayer changes his address in the Philippines that is communicated to the BIR
official
If a warrant of levy is served upon the taxpayer’s real property in Manila
30. Under this system the amount of income tax withheld by the withholding agent is
constituted as a full and final payment of the income tax due from the payee on
the said income. * (1 Point)
Creditable withholding tax
Global tax system
Final withholding tax
Schedular tax system
31. The following are the composition of the total gross income of ABC Corporation, a
domestic corporation subject to MCIT:
Sales, net of discounts and allowances, P4,000,000

Less: cost of sales, P2,400,000
Gross income from operations, P1,600,000
Dividend income, P100,000
Royalty income, P250,000
Gain on sale of building, P150,000
Total gross income, P2,100,000
Compute the minimum corporate income tax?

* (2 Points)
P16,000
32. Which of the following is deductible from gross income even if the payment is not
connected with business? * (1 Point)
Contribution of the employer to the pension trust of the employee.
Charitable contributions
Income tax paid in foreign country.
Traveling expenses
33. Mr. A has been assessed deficiency income tax of P1,500,000, exclusive of interest
and surcharge for the taxable year 2018. The tax liability has remained unpaid
despite the lapse of June 30, 2020, the deadline for payment stated in the notice
and demand issued by the Commissioner. The payment was made by the taxpayer
on February 10, 2021. Compute the total amount due on February 10, 2021. *
(2 Points)
P1,498,530
34. The withholding of creditable withholding tax shall apply to income payments
made to which of the following? * (1 Point)
National government and its instrumentalities, including provincial, city or municipal gov‐
ernments and barangays.
Government-owned and controlled corporations
Persons enjoying exemption from payment of income taxes
None of the choices
35. The following data are available for X Corp, a Domestic Corporation, with Total
Assets of P40 million, in Q1 and Q2 of CY 2022:
Quarter 1 resulted to income tax due of P20,000 (RCIT is higher under/using
OSD, as signified by the corporation in its ITR for the first quarter of CY 2022).
Quarter 2 shows cumulative gross income of P2,000,000 and cumulative
taxable net income of 50,000 under itemized deductions.
In CY 2021, total tax credits are P100,000 compared to income tax due of
P90,000.
What is the income tax payable in Quarter 2? * (2 Points)
P10,000
36. A resident citizen has the following data in 2021:
Gross receipts from services, P800,000

Cost of services, P200,000
Long term capital gain, P15,000
Short term capital loss, P5,000
Dividend from a domestic corporation, P15,000
Interest income from bank deposits, P10,000
Operating expenses, P20,000
Assuming the taxpayer chooses optional standard deduction, how much is the
taxable income? * (2 Points)
P482,500
37. Cool Corporation has the following data:
Year 2021
Sales in 2021 - P1,700,000;
Cost of sales in 2021 - P1,050,000;
Operating expenses in 2021 - P625,000.
Year 2022
Sales in 2022 - P2,300,000;
Cost of sales in 2022 - P1,425,000;
Operating expenses in 2022 - P480,000.
What is the income tax payable in 2022 if the corporation is subject to 25%? *
(2 Points)
P98,750
38. 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.
* (1 Point)
True, True
True, False
False, False
False, True
39. Mrs. Ryes, a sole proprietor doing business under the trade name “Cheesy Cakes’,
had seen her business booming because of the introduction of the hit flavor Red
Macaroon Velvet Cakes. However, a series of natural disasters and misinformed
business decisions had caused Mrs. Ryes to suffer losses, the details of which
follow:
An equipment with book value of P400,000 that was inundated by floods. The
equipment was not insured and can be repaired for P500,000 to be reusable
again.
Another equipment with a book value of P330,000 and a fair market value of
P440,000 swept by the same flood. The equipment is totally lost and is
insured only up to P100,000
Also swept in the same flood are Mrs. Reyes’ appliances inside her home. The
appliances were purchased two years ago at an aggregate cost of P1,000,000
with an expected useful life of 5 years
How much loss can be claimed by Mrs. Reyes as an allowable deduction?
* (2 Points)
P630,000
40. RJ, married, left the Philippines in the middle of the year on July 1, 2021 to go
abroad and work there for five (5) years. The following data were provided as of
December 31, 2021.
Philippines
Gross Income
January 1 - June 30, P300,000
July 1 - December 31, P600,000
Business Expense
Abroad
Gross Income
Business Expense
RJ’s taxable net income for 2021 should be:

* (2 Points)
P800,000
41. Which of the following statements is/are correct?
I. Beginning January 1, 20218 but prior to the effectivity of CREATE Law, PCSO
winnings of not more than P10,000 received by citizens, residents and non-
resident aliens engaged in trade or business are exempt from income tax.
II. Beginning January 1, 20218 but prior to the effectivity of CREATE Law, PCSO
winnings of not more than P10,000 received by citizens, residents and non-
resident aliens engaged in trade or business are subject to 20% final withholding
tax.
III. PCSO winnings of not more than P10,000 received by non-resident aliens not
engaged in trade or business are exempt from income tax.
IV. PCSO winnings of more than P10,000 received by non-resident aliens not
engaged in trade or business are exempt from income tax. * (1 Point)
I only
I and II only
I and IV only
All of the above
42. What is the effect on the tax liability of a taxpayer who does not protest an
assessment for deficiency taxes?
* (1 Point)
The taxpayer may appeal his liability to the CTA since the assessment is a final decision of
the Commissioner on the matter.
The BIR could already enforce the collection on the taxpayer's liability if it could secure au‐
thority from the CTA.\
The taxpayer's liability becomes fixed and subject to collection as the assessment becomes
final and collectible.
The taxpayer's liability remains suspended for 180 days from the expiration of the period to
protest.
43. Which of the following share in the net income received by an individual shall not
be subject to final tax but to regular income tax for individual? * (1 Point)
Share of an individual in the distributable net income after lax of a business partnership of
which he is a partner
Share of an individual in the distributable net income of a general professional partnership

of which he is a partner
Share of an individual in the distributable net income after tax of an association, a joint ac‐
count, or a joint venture or consortium taxable as a corporation of which he is a member or
co-venturer
None of the choices
44. The head priest of the religious sect Tres Personas Solo Dios, as the corporation
sole, rented out a 5,000 sq. m. lot registered in its name for use as school site of a
school organized for profit. The sect used the rentals for the support and upkeep
of its priests. The rented lot is
* (1 Point)
not exempt from real property taxes because the user is organized for profit.
exempt from real property taxes since it is actually, directly, and exclusively used for reli‐
gious purposes.
not exempt from real property taxes since it is the rents, not the land, that is used for reli‐
gious purposes.
exempt from real property taxes since it is actually, directly, and exclusively used for educa‐
tional purposes
45. Pepito filed her 2018 Income Tax Return (ITR) on April 10, 2019. On June 20, 2019,
she filed an amended return which is substantially different from the original
return. The last day to release, mail, or send an assessment is on:
* (2 Points)
June 20, 2022
46. Mike, a resident citizen, received the following income during 2021 taxable year:
Gross income, Philippines, P3,850,000

Gross income, Canada, P1,650,000
Business expenses, Philippines, P2,000,000
Business expenses, Canada, P725,000
Interest on bank deposit, Metrobank Taguig, P50,000
Capital gain on sale of shares of closely held domestic corporation, P180,000
Compute his Taxable Income. * (2 Points)
P2,775,000
47. A domestic corporation has the following data for three years.
Regular Corporate Income Tax

2020 - P50,000
2021 - P60,000
2022 - P100,000
Minimum Corporate Income Tax
2020 - P75,000
2021 - P100,000
2022 - P60,000
How much is the amount of tax payable for the year 2021? * (2 Points)
P100,000
48. Mr. Dela Cruz, a managerial employee, was given cash so he can purchase a car.
The car shall be in Mr. Dela Cruz’s name. The purchase price of the car amounts to
P750,000, while the cash provided amounts to P800,000. How much is the fringe
benefits tax on the transaction? * (2 Points)
P228,846
49. In which of the following scenarios can the taxpayer avail an 8% income tax rate? *
(1 Point)
The taxpayer is a pure compensation income earner
The taxpayer is VAT-registered
The taxpayer is partner of a general professional partnership
The taxpayer is subject to 3% percentage tax under Sec. 116, NIRC.
50. Company Z has a deposit with ABC Bank. It obtained a loan from ASAP Financing
Corp. in connection with the operation of its business. For the year 2021, assume
the following:
Company Z’s Net Income before Interest Expense (subject to 25%), P2,500,000
Interest Income (from ABC Bank, gross of FWT), P480,000
FWT on Interest Income, P96,000
Interest Expense, P200,000
How much is the taxable income of Company Z for 2021 after deducting interest
expense? * (2 Points)
P2,396,000
51. X, resident citizen, had the following information for the year 2022:
Gain from sale of office equipment, P20,000

Gain from sale of land not used in business (selling price of P300,000), P100,000
Gain from sale of shares of stock directly to the buyer, P50,000
Gain from sale of shares of stock through the stock exchange (selling price,
P200,000), P10,000
Bad debt recovery, P50,000
How much is the total capital gains tax? * (2 Points)
P25,500
52. Which of the following is not a taxable corporation? * (1 Point)
Pedro, Juan and Luna agreed to contribute their money into a common fund to engage in
the business of buying and selling consumer goods. Their total investment amounted to
P600,000 and they did not bother to register their business with DTI and the SEC.
Ana, Lorna and Fe all certified public accountants, agreed to contribute their money, prop‐
erty and industry to a common fund with the sole intention of jointly exercising their com‐
mon profession. They have registered with the SEC.
Florida Bus Company and Farinas Bus Company owns separate franchises to operate a pub‐
lic utility covering the area of Northern Luzon. To achieve maximum efficiency of utilizing
their assets and to avoid the negative effects of competition, the two companies agreed to
pool their resources together and operate as a single company.
Rody and Harry, lawyer and certified public accountants, respectively, agreed to contribute
their money, property and industry to a common fund to render service of business process
outsourcing.
53. The Pico Ganzo Corporation had the following historical MCIT and RCIT data:
Regular Corporate Income Tax

2018 - P110,000
2019 - P220,000
2020 - P0
2021 - P180,000
Minimum Corporate Income Tax

2018 - P120,000
2019 - P200,000
2020 - P190,000
2021 - P170,000
Based on the above information, what is the tax due and payable respectively in
2019: * (2 Points)
P50,000
54. In 2021, XYZ Company, a domestic corporation, recorded other income as follows:
Realized foreign exchange gain, P26,337,740

Dividend from PLDT, P17,213,965
Foreign exchange gain resulting from offsetting of accounts, P8,445,934
Gain on sale of real properties subjected to CGT, P1,000,000
Gain on sale of shares of stock subjected to CGT, P250,000
Gain on sale of shares of stock subjected to OPT, P100,000
Reversal of prior year provision for bad debts due to over recording in prior year
(not claimed as deduction in previous year), P250,000
Interest income – Peso deposits – gross of 20% FWT, P5,000,000
Interest income – foreign currency deposits – gross of 15% FWT, P3,500,000
Interest income from deposits abroad, P1,450,000
Interest income on loans to affiliates, P584,116
Share in equity earnings of Mabuhay Services, Inc., a local subsidiary, P6,188,779
Royalties already subjected to 20% FWT (Gross), P5,661,784
Insurance proceeds on casualty losses (recovery of lost profit), P2,358,226
How much is the total income not subject to regular corporate income tax in
2021?
* (2 Points)
P39,064,528
55. A resident international carrier has the following data for the current year:
Gross income of P10,000,000 and expenses of P6,000,000 from the Philippines;

Gross income of P5,000,000 and expenses of P1,000,000 from Hongkong.
How much is the income tax payable of the corporation? * (2 Points)
P250,000
56. An offshore banking unit had the following offshore banking transactions within
the Philippines during the taxable quarter ending September 30, 2021:
Income
With local commercial banks, P1,200,000
With domestic corporations, P3,400,000
With other offshore banking units, P4,700,000
With non-residents, P2,650,000
If the offshore banking unit can claim allowable deduction of P2,830,000, how
much is the offshore banking unit's income tax due?
* (2 Points)
P1,320,000
57. A domestic corporation was registered with the BIR on August 15, 2017. What year
would the first MCIT be imposed on the corporation?
* (1 Point)
2020
2021
2022
2023
58. The following were taken from the income statement of domestic corporation for
the taxable year 2021:
Gross profit on sales, P800.000

Less: Deductible expenses, P440.000
Provision for bad debts, 80,000
Net income before tax, P280.000
Additional information:
Accounts written-off during the year and charged to allowance for bad
debt, P50,000
Recoveries on accounts receivable previously written off in 2020 and
credited allowance for bad debts.
Allowed as deduction by the BIR, P30,000
Disallowed by the BIR as deduction, P20,000
The taxable income of the corporation in 2021 should be: * (2 Points)
P390,000
59. JAM Company recorded in its books taxes and licenses expenses amounting to
P51,055,000. The breakdown of the taxes and licenses account is as follows:
Payment of deficiency FBT, P25,000,000

CGT on sale of real properties, P200,000
CGT on sale of shares of stock, P50,000
Other percentage tax on sale of shares of stock, P5,000
Payment of surcharge, P6,250,000
Payment of interest on deficiency FBT, P1,250,000
Payment of compromise penalties, P300,000
Business taxes and licenses, P18,000,000
How much of the above payments are deductible from gross income? * (2 Points)
P44,250,000
60. Which of the following individual taxpayers is taxable on income derived from
within and outside the Philippines? * (1 Point)
Pedro, a native of Bacolod City, working as Overseas Contract Worker in Singapore.
Jennie, Korean singer, held a 3-day concert in Manila.
Pao Fiesta, Spanish Citizen and a resident of Barcelona, Spain, spent one (1) week vacation i
Boracay
George, naturalized Filipino citizen and married to a Filipina. He had been living in Bataan
since 1990.
61. A domestic corporation organized and operated as a non-stock non-

profit educational institution received P200,000 from tuition fees and
P300,000 from rentals to private concessionaires. The educational institution
used the P500,000 in order to buy books as part of its program of upgrading the
library. Which of the following statements is true? * (1 Point)
The entire amount of P500,000 is subject to 30% income tax.
The entire amount of P500,000 is subject to 10% income tax.
Only the amount of P300,000 is subject to 30% income tax.
The entire amount of P500,000 is exempt from income tax.
62. X earned P4,000,000 taxable compensation income for the year. He spent 40% of
his income on transportation to and from the office and his house in Laguna. How
much is his income tax due?
* (2 Points)
P1,130,000
63. Manolito Corporation, a domestic corporation and a retailer of goods, has gross
sales of P14,000,000 with the cost of sales of P7,600,000 and allowable deductions
of P2,500,000 for the calendar year 2021.
It has total assets of P150,000,000 as of December 31, 2021 per audited financial
statements excluding the land costing P40,000,000 and the building of
P30,000,000 in which the business entity is situated.
How much is the income tax due in 2021? * (2 Points)
P975,000
64. Individual taxpayers are
I. Natural persons with income derived within the territorial jurisdiction of a taxing
authority
II. Natural persons classified as citizens and aliens

* (1 Point)
True, True
True, False
False, False
False, True
65. Fortuna Hotel Inc., using calendar year accounting period, overpaid its 2020
second quarter income tax and it failed to correct the said overpayment on the
computation of its Annual Income Tax. How shall the taxpayer recover the excess
tax paid?
* (1 Point)
File a calm for refund with the BIR within three (3) years from August 29, 2020.
File a claim for refund with the BIR within three (3) years from April 15, 2021
File a claim for refund with the BIR within two (2) years from August 29, 2020.
File a claim for refund with the BIR within two (2) years from April 15, 2021.
66. A resident citizen asks you to assist him in computing his taxable net income for
the year 2020.
Gross professional income, net of 15% withholding tax, P800,000

Professional expenses, P300,000
Retirement benefits received from his previous employer that maintained a
reasonable private pension plan (he served the company for 12 years), P250,000
Lump sum benefits received from SSS, P200,000
Prize in a sports tournament sponsored by a group of businessmen promoting
health products, P50,000
Gain from sale of bonds (maturity period is 4 years), P10,000
Interest income from bonds (issued to more than 100 holders) with a maturity
period of 7 years, P20,000
Interest on long term deposits with maturity period of 5 years, P30,000
Philippine Lotto winnings, P500,000
Share in the net income of a business partnership, P100,000
How much is the total amount of excluded or exempted income? * (2 Points)
P500,000
67. I. A withholding tax system is one in which the payment of income tax is paid
upon the receipt of income by the taxpayer.
II. The withholding tax system was introduced to expedite collection process and
not delay the expenditures needed by the public.
III. Under the withholding tax system, the payor of income withholds a certain
percentage of income and remits the same to the BIR while the payee would
receive only the net amount, and will no longer have to pay income tax. * (1 Point)
Only statement 1 is correct
Only statements 1 and 2 are correct
Only statements 1 and 3 are correct
All statement are incorrect
68. Juan dela Cruz, a newly hired operations manager of ABC Company, wondered
how much would be his withholding tax on compensation per month. Due to lack
of technical knowledge on taxation, he consulted you and presented the following
information:
Basic monthly pay, P45,500.00

Monthly gas allowance, P1,000.00
Monthly rice subsidy, P2,500.00
Mobile load and internet allowance, P1,200.00
Monthly contributions:
SSS Contribution, P1,125.00
Pag-IBIG Contribution, P300.00
Philhealth Contribution, P1,800.00
Compute the withholding tax on compensation income of Juan dela Cruz using
this formula: 2,500 + (Excess of 33,333 * 25%) * (2 Points)
P5,542
69. Statement I: A one-person corporation is taxed in a similar way as a sole

proprietorship.
Statement 2: Due to their relatively small size, a one-person corporation is always

subject to 20% regular corporate income tax.
* (1 Point)
True, True
True, False
False, False
False, True
Submit
This content is created by the owner of the form. The data you submit will be sent to the form owner. Microsoft is not
responsible for the privacy or security practices of its customers, including those of this form owner. Never give out your
password.
Powered by Microsoft Forms | Privacy and cookies | Terms of use

Income Taxation Midterms

Uploaded by

Copyright:

Available Formats

You might also like

Income Taxation Midterms

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Income Taxation Midterms

Uploaded by

Copyright:

Available Formats

7/31/22, 10:37 AM Final Departmental Examination in ACCO 20133 Income Taxation 2SAY2122

Final Departmental Examination

For problem-solving questions, follow below format:

For clarifications and concerns, please contact your instructor.

2. Branches and Campuses *

5. Which of the following cases cannot be compromised?

Withholding tax cases

Criminal tax fraud cases

Delinquent accounts with duly approved schedule of installment payments

All of the above

6. Which of the following shall be considered related income of proprietary

I. Income from tuition fees and miscellaneous school fees

I, III and IV only

I, II, III and IV

7. Taxation is defined as:

Statement 1: an act of levying a tax.

9. TRAIN Corporation, a corporation engaged in business in the Philippines and

Gross Income, Philippines, P975,000

Determine the income tax due assuming the corporation is a Non-Resident

Gross Income, related activities, P5,000,000

Taxable Year 2021:

Gross receipts, P13,300,000

Taxable Year 2022:

Gross receipts, P120,000,000

13. The following are sources of tax laws, except:

Supreme Court Decisions

Merchandise, ABC Company (regular supplier), P150,000

Compute the expanded withholding tax. * (2 Points)

15. Which of the following is not a requisite for an expense to be claimed as a

It must be ordinary and necessary.

It must be actually paid during the taxable year.

It must be connected with the taxpayer’s trade, business, industry or profession.

16. One of the following is not an inherent limitation of taxation:

Tax exemption of the government

18. When should a tax be considered Delinquent?

All of the above

Gross income - P1,540,000;

What is the taxable income of Rush Corporation?

How much is the income tax due in 2021? * (2 Points)

Statement 2: Benefit-Received Theory of Taxation essentially states that without

Tuition fees, P4,000,000

What is the income tax due of X Corp in CY 2022?

It does not apply to nonresident foreign corporations.

The imposable rate is 1% of taxable income.

26. X had the following during the year:

Compensation income (including 13th-month pay and other benefits of P120,000,

Gross income in the Philippines, P1,000,000

Compute the branch profit remittance tax. * (2 Points)

If a taxpayer files a request for reconsideration with the Assistant Commissioner

If a warrant of levy is served upon the taxpayer’s real property in Manila

Creditable withholding tax

Global tax system

Final withholding tax

Schedular tax system

Sales, net of discounts and allowances, P4,000,000

Compute the minimum corporate income tax?

Contribution of the employer to the pension trust of the employee.

Income tax paid in foreign country.

Government-owned and controlled corporations