Tax Reviewer
Tax Reviewer
Tax Reviewer
Answer: D
Answer: D
Answer: B
Answer: A
Answer: D
8. Statement 1: Corporations exempt from income tax are not subject to income tax on incomes
received which are incidental or necessarily connected with the purposes for which they were
organized and operating.
Statement 2: Corporations exempt from income tax are subject to income tax on income of
whatever kind and character from any of their properties(real or personal) or from any other
activity conducted for profit, regardless of the disposition of such income.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statement are correct
d. Both statement are incorrect
Answer: C
9. Which of the following statements is incorrect? “Joint Stock Companies” are constituted when a
group of individuals, acting jointly, establish and operate business enterprise
a. Under an artificial name
b. With an invested capital divided into transferable shares
c. An elected board of directors, and other corporate characterisrics
d. Operating with formal government authority
Answer: D
10. A “Joint Account” is constituted when one interests himself in the business of another by/and
I. Contributing capital thereto.
II. Sharing in the profits or losses in the proportion agreed upon.
III. They are not subject to any formality.
IV. It may be privately contracted orally or in writing.
a. I and II only
b. I, II and III only
c. I, II, III and IV
d. None of the above
Answer: C
11. Statement 1: Joint ventures, regardless of the purpose by they were created, are generally
exempt from corporate income tax.
Statement 2: The share of a co-venturer corporation in the net income of tax exempt joint
venture or consortium is sibjected to corporate income tax.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statement are correct
d. Both statement are incorrect
Answer: B
Answer: C
Answer: A
14. Which of the following is taxable based on income from all sources, within and without?
a. Domestic Corporations
b. Resident Foreign Corporations
c. Non-resident Foreign Corporations
d. All of the choices
Answer: A
15. The term applies to a foreign corporation engaged in trade or business in the Philippines.
a. Resident foreign corporation
b. Nonresident foreign corporation
c. Multinational corporation
d. Petroleum contractor
Answer: A
1 . A domestic corporation had the following data on income and expenses during the year
2018:
a. P3,540,000
b. P3,530,000
c. P3,440,000
d. P2,480,000
Answer: B
Solution:
Gross income, Philippines 10,000,000
Gross income, China 5,000,000
Business expenses, Philippines (2,000,000)
Business expenses, China (1,500,000)
Interest income, Shanghai Banking Corporation, China 100,000
Rent income, net of 5%withholding tax 200,000
(190,000/95%) ___________
Taxable net income 11,800,000
X RCIT % 30%
___________
Income Tax Due 3,540,000
Less. CWT on rental income (10,000)
___________
INCOME TAX PAYABLE 3,530,000
2. Hananiah Corporation, a corporation engaged in business in the Philippines and abroad has
the following data for the current year:
Gross Income, Philippines 975,000
Expenses, Philippines 750,000
Gross Income, Malaysia 770,000
Expenses, Malaysia 630,000
Interest on bank deposit 25,000
Answer: B
Solution:
Domestic RFC NRFC
Gross Income, Phil. 975,000 975,000 975,000
Expenses, Phil. (750,000) (750,000)
Gross Income, Malaysia 770,000
Expenses, Malaysia (630,000)
Interest on bank deposit 25,000
Taxable Income 365,000 225,000 1,000,000
Tax rate 30% 30% 30%
Tax Due 109,500 67,500 300,000
3. Ace, Inc., Philippines is engaged in research and development services and product development
related to computer and aircraft parts. During the year, Ace reported the following income and
expenses:
Sales 10,000,000
Cost of sales 4,000,000
Operating expenses 2,500,000
Interest income, net of final tax 200,000
Dividend income, tax-exempt 800,000
Sales 10,000,000
Less. COS 4,000,000
Gross income 6,000,000
Less. Operating Expenses 2,500,000
Net taxable income 3,500,000
X by: applicable tax rate 10%
Income tax due 350,000
4. The following data were provided by Air Jordan, an international air carrier doing business in the
Philippines.
Gross ticket sales in China were excluded because the flight did not originate in the Philippines
Gross ticket sales in the Philippines for Manila to L.A. flight were apportioned or allocated by 5/2
because the flight is considered interrupted in Tokyo. Thus, only the amount proportionate to
Philippine to Tokyo flight should be included in the determination of GPB.
Infotech College is a private educational institution. It owns a six (6) storey building where the first 3
floors are being used for its operations and the other 3 floors are being rented by other entities. During
the taxable year, its icome and expenses are as follows:
Answer: P3,000,000
> The related income < unrelated income. Consequently, the educational
institution is subject to normal corporate tax of 30% based on net income.
2015 2016
Sales P1,700,000 P2,300,000
Cost of sales 1,050,000 1,425,000
Operating expenses 615,000 480,000
A. P 13,000 C. P 35,000
B. 12,250 D. 10,500
Answer: A
A. P 118,500 C. P 116,000
B. 17,500 D. 137,500
Answer: C
Solution:
NOLCO may be deductible from gross income for the next three succeeding years only. The
remaining NOLCO of P50,000 from 2014 is already beyond the allowable 3-year period in 2018,
hence, no longer deductible.