Quiz for Chapter 3

A. Exclusions from Gross Income

B. Inclusions in Gross Income

TRUE OR FALSE
DIRECTIONS: Write E is the statement is True and S if the statement is False.

1. Donated income is included in the gross income of the donee.

2. 13th month pay and other benefits are taxable only up to P90,000.

3. A BMBE must have a net asset not exceeding P3,000,000 to be exempt.

4. An employee can secure retirement benefit exemption only once in a lifetime.

5. Gross income from the conduct of trade, business, or exercise of a profession

is taxable.

6. Benefits of veterans of war or retired US army personnel are excluded in the

gross income.

7. GSIS and SSS benefits are included in the gross income to the extent they
exceed P90,000.

8. Compensation for injuries and sickness constitutes profit; hence, an inclusion

in the gross income.

9. Pensions and retirement benefits that fail to meet the exclusion criteria are not
subject to regular tax.

10. The income of the Philippine government from essential public functions is
exempt from any income tax.

11. Partner’s distributive share from the net income of general professional
partnership is not subject to tax.

12. It is sufficient that an employee rendered more than 10 years of service for his
retirement benefit to be exempt.

13. The amount received in excess of the premium paid in an insurance contract
constitutes an item of gross income.

14. Compensation for services in whatever form paid is not subject to tax and
therefore excluded in the gross income.

15. Prizes awarded upon the condition that the recipient shall render specified
future services is an item of gross income.

16. The proceeds of life insurance received by the heirs of the insured upon
his/her death is excluded from gross income.
 17. Only the mandatory portion of GSIS, SSS, PhilHealth, and union dues can be
excluded in the gross compensation income.

18. Social security benefits, retirement gratuities, and other similar benefits from
foreign government agencies are included in the gross income.

19. The insurance proceeds received by a company upon the death of its insured
employee is not taxable and therefore an item of gross income.

20. Interest income from lending activities to individuals and corporations by

banks, finance companies and other lenders are subject to regular income tax
and therefore included in the gross income.

TRUE OR FALSE
1. Donated income is included in the gross income of the donee.
Donor not donee
2. 13th month pay and other benefits are taxable only up to P90,000.
(not taxable)
3. A BMBE must have a net asset not exceeding P3,000,000 to be exempt.
(Total assets not net)
4. An employee can secure retirement benefit exemption only once in a lifetime.
5. Gross income from the conduct of trade, business, or exercise of a profession
is taxable.
6. Benefits of veterans of war or retired US army personnel are excluded in the
gross income.
7. GSIS and SSS benefits are included in the gross income to the extent they
exceed P90,000.
(13th month pay and not GSIS and SSS benefits)
8. Compensation for injuries and sickness constitutes profit; hence, an inclusion
in the gross income.
(exclusion not inclusion)
9. Pensions and retirement benefits that fail to meet the exclusion criteria are not
subject to regular tax.
(subject to regular tax)
10. The income of the Philippine government from essential public functions is
exempt from any income tax.
11. Partner’s distributive share from the net income of general professional
partnership is not subject to tax.
(subject to tax)
12. It is sufficient that an employee rendered more than 10 years of service for his
retirement benefit to be exempt.
(tenure and age should be considered)
13. The amount received in excess of the premium paid in an insurance contract
constitutes an item of gross income.
14. Compensation for services in whatever form paid is not subject to tax and
therefore excluded in the gross income.
(included)
15. Prizes awarded upon the condition that the recipient shall render specified
future services is an item of gross income.
16. The proceeds of life insurance received by the heirs of the insured upon
his/her death is excluded from gross income.
17. Only the mandatory portion of GSIS, SSS, PhilHealth, and union dues can be
excluded in the gross compensation income.
18. Social security benefits, retirement gratuities, and other similar benefits from
foreign government agencies are included in the gross income.
(excluded)
19. The insurance proceeds received by a company upon the death of its insured
employee is not taxable and therefore an item of gross income.
(not an item of gross income)
20. Interest income from lending activities to individuals and corporations by
banks, finance companies and other lenders are subject to regular income tax
and therefore included in the gross income.