1.

Income, for tax purposes:

I. Means all income from legal source alone, unless specifically excluded under the Tax
Code.
II. Means all wealth which flows into the taxpayer including the return of capital.
III. Is recognized in the year it is actually received in cash exclusively.
a. I and II only
b. II and III only
c. I and III only
d. None of the above

2. Which of the following test of source of income is incorrect?

a. Gain on sale of real property – place of sale
b. Interest income – residence of the debtor
c. Income from services – place of performance
d. Royalties – place of use of intangible

3. George earned interest income from a promissory note issued to him by Primo, a resident of
Amsterdam, Netherlands. Assuming that George is a nonresident citizen, the interest income is:
a. Subject to regular income tax
b. Subject to final income tax
c. Not subject to income tax
d. Partly subject to regular and partly subject to final tax

4. Jasper, a member of the Philippine boxing team, received the following during 2022:
Prize for winning gold in the SEA games - P600,000
Athlete of the year award – P100,000
Winnings from Philippine lotto – P250,000
Prize – Jollibee raffle promo – P10,000
Cash gift from his SM Foundation – P300,000
The amount NOT subject to income tax is:

A: P1M (600k+100k+300k)

5. Mrs. Fiero died, and her heirs collected the P10,000,000 proceeds of her life insurance policy.
The decedent previously paid a total payment of P900,000 in premiums. How much will be
excluded in gross income?

A: P10,000,000

6. Ms. Rosqueta had the following income during the year:

Gross compensation income
(including P30,000 13th month pay) P500,000
Less: Tardiness or absences (15,000)
Net compensation income P485,000
 SSS deductions 14,000
PhilHealth deductions 10,000
Pag-IBIG deductions 11,000
Union dues 7,000
Withholding tax 50,000
Net Pay P393,000

Compute the total exclusions from gross income.

A: P72,000 (30k+14k+10k+11k+7k)

7. Mr. Bulan retired from his job after 25 years of service. He joined the company at the age of 23
and was promoted from an accounting clerk to VP Finance. He was paid P3,000,000 total
retirement pay from the employer’s contributory pension plan which was duly registered with
the BIR. Out of the total proceeds, Mr. Garcia contributed P900,000. This was Mr. Bulan’s first
retirement from employment. How much is excluded from gross income?

A: P900,000

8. Ms. Sumampong, a professional practitioner, received the following from her clients:

Collections for past services rendered P50,000

Advances for future services to be rendered 100,000
Reimbursements for client expenses 60,000
Reimbursement for out-of-pocket expenses 15,000

How much will be included in Ms. Sumampong’s gross income for regular income tax purposes?

A: P165,000 (50k+100k+15k)

9. Mr. Balonzo owns 20% interest in a joint venture (JV) engaged in construction projects. In 2022,
the JV reported profits of P800,000, inclusive of 15,000 from time deposits. Compute the total
income to be reported in gross income of Mr. Balonzo?

A: P160,000

10. Mr. Oliveros, with 6 dependent children, had the following data for his income tax return in
2021:

Sales P 590,000
Gross compensation income 220,000
Cost of sales 300,000
Non-taxable compensation 90,000
Administrative and selling expenses 160,000
Personal expenses 109,000
Compute the taxable income.

A: P260,000 (590k+220k-300k-90k-160k)