INCOME TAX PREFINALS

BSBA401

I. Identification. Identify the terms based on the definition below.

Domestic Corporation1. This is a corporation organized and existing under

Philippine laws. It includes government- owned and controlled corporations or

instrumentalities engaged in a similar business industry or activity.

Foreign Corporation2. This is a corporation organized and exists under the laws of

the foreign country irrespective of nationality of its stockholders.

30% 3. What is the normal tax rate for corporations?

2% 4. What is the MCIT percentage?

25% 5. This is the tax rate imposed on nonresident cinematographic fil owner, lessor,

or distributor.

Depreciation6. This is the reduction in service value of the property used in business

or trade arising from exhaustion, wear and tear, and obsolescence.

Depletion of oil wells, gas wells, and mines7. This is the exhaustion of natural

resources like mines and oil and gas wells because of production or severance from

such mines and wells.

Charitable and other contributions8. These are contributions to an organization,

which is officially created for charitable, religious, organizations, scientific, artistic,

literary, or other good works.

6% 9. A final tax rate of ______% is imposed on the gain presumed to have been

realized on the sale, exchange, or disposition of lands, and/or buildings which are not
actually used in business of a corporation and are treated as capital assets, based on

gross selling price of fair value as determined in accordance with Section 6(E)of the

Tax Code, whichever is higher, of such lands and/or buildings.

Research and development10. These are expenditures paid or incurred by the

taxpayer during the taxable year in connection with his trade, business, or profession.

These are considered as ordinary and necessary expenses, which are not chargeable to

capital account.

II. Computation