TAX SUMMATIVE 02

1. Money Hays Bank credited Depositor - Taxpayer Tokyo B, with P1,600 interest income on the savings
deposit for the month of October 2020. The final withholding tax that Money Hays should remit to BIR
pertaining to this payment is
400

2. For purposes of taxation, which of the following is correct?

I. Classified into two major categories, partnership in trade and general professional partnership
II. Partnership in trade is treated as a corporate taxpayer
III. GPP is exempt from tax
I and II only

3. In a general professional partnership (GPP)

The GPP shall report total partnership income and each individual partner’s share of that
income

4. The YZ and Co. is a general partnership in trade, in its fifth year of operations. In one calendar year it
had a gross profit from sales and business expenses of P2,000,000 and P1,000,000. Respectively Y
and Z share equally in the profits and losses of the partnership. The income tax of the partnership is
300,000

5. Mr A receives the following income from two properties:

Rental income
Property A P500,000
Property B P300,000
If property A will be held in trust for any of Mr. A’s beneficiary, how much is the amount of tax savings?
65,000

6. Statement 1: Only business expenses may be deducted from the gross income of taxpayers
Statement 2: Itemized deductions from gross income should be duly supported by vouchers or receipts
Both statements are true

7. In 2020, Sherlock, the sales manager of Holmes Furniture, was reimbursed by his employer for the total
salary he paid to his house help amounting to P15,000 for the year and P30,000 traveling expenses he
incurred in attending sales conferences.

The total fringe benefits expense to be claimed as deduction should be:

23,076.92

How much would be the fringe benefit tax for the year to be remitted by the employer?
23,076.92
8,076.92

8. Which statement is false?

A grant of police power to a unit of local government carries with it a grant of the power to tax

9. A fundamental rule in taxation is that the property of one country may be taxed by another country. This
is known as -
International comity
10. A general professional partnership is exempt from income tax, but is required to file an income tax
return
Because the net income of the partnership will be traced into the income tax return of the
partners

11. Which of the following is not an example of excise tax

Real property tax

12. Journal entry: (Debit) Fringe benefit expense 650,000

(Debit) Fringe benefit tax expense 350,000
(Credit) Cash 650,000
(Credit) Fringe benefit tax payable 350,000
Means that the grossed-up monetary value of the fringe benefits to supervisory personnel had a
monetary value of:
650,000

13. The following data pertains to the transactions of Phoebe, a resident citizen, for the year 2019:
Total net sales from training business 500,000
Cost of sales 300,000
Sale of vacant lot used as an open warehouse for his trading business acquired two years ago for
P150,000 200,000
Sale of residential house and lot - acquired 12 years ago for P800,000 1,000,000
How much is the total gross income reported for income tax purposes?
250,000

14. Which of the following is allowed as a deduction from business income of an individual taxpayer?
None

15. Which of the following is allowed as business deduction from annual compensation income of P300,000
earned by an individual resident citizen taxpayer?
None

16. Selling price of land in the Philippines held as capital asset 1,700,000
Fair market value of the land at the time of sale 2,000,000
Cost of land 800,000
The capital gains tax is:
120,000

17. Which of the following is not gross compensation income?

Honorarium of P20,000 of an employee who is a member of the board of directors of a corporation
Salary of P20,000 of an employee
Bonus of P20,000 of an employee
Salaries of P20,000 of a partner of a general partnership in trade

18. Which of the following statements is wrong?

A general partnership in trade is not taxable as a corporation
19. Which statement is not true? The tax should be based on the taxpayer’s ability to pay...
No person shall be imprisoned for non-payment of a tax
As a basic principle of taxation, this is called “theoretical justice”
A graduated tax table is in consonance with this rule
As a theory of taxation, this is called “ability-to-pay theory”

20. Statement 1: All partnerships are taxed in the same manner as a corporation.
Statement 2: The income of a general partnership is also subject to MCIT or RCIT whichever is
applicable.
Only statement 2 is true

21. During the last quarter of 2019, Mr. X and Miss Y inherited income-producing properties from their
mother with a reported value of P1,000,000 to the court and the Bureau of Internal Revenue. The
estate remained undistributed and in 2019 it earned net income of P40,000. In 2020, it again earned a
net income of P70,000, from which P15,000 was distributed to each of the heirs. In the same year,
estate tax was paid within the deadline and they subsequently sold the property for P3,000,000. Which
of the following statements is correct?
In 2020, Mr. X and Miss Y each had an income of P15,000 from the estate reported in their
income tax return as individual taxpayers.

22. Statement 1: Fringe benefit given to rank-and-file employee is part of gross compensation income of
the receiving employee.
Statement 2: Fringe benefit given to managerial or supervisory employee is not part of the gross
compensation income to all employee receiving it.
True, True

23. Which of the following withholding income tax should be remitted to the BUreau of Internal Revenue as
a final tax?
Withholding income tax on certain passive income

24. Which of the following fringe benefits is not subject to the fringe benefits tax?
Contributions of the employer for the benefit of the employee to retirement, insurance and
hospitalization benefit plans

25. A tax must be imposed for a public purpose. Which of the following is not a public purpose?
None of the above

26. Which statement is wrong? The amount on which the fringe benefit tax is applied is:
The monetary value of the fringe benefit

27. Joey has earned the following income in 2020:

Salary as a professor net of withholding tax of 20,000, 280,000
Income from practice of profession 200,000
Per diem as board of director, 120,000
Thirteen month pay 35,000
How much is the gross taxable compensation income?
420000
28. Included in the compensation package of an executive was the free use of the company’s residential
condominium unit in Makati City, Philippines. How much is the monthly fringe benefit tax?
2243.59

29. Included in the compensation package of an executive was the free use of the company’s residential
condominium unit in Makati City, Philippines. How much is the monthly gross monetary value of the
fringe benefit?
4166.67

30. Stranger Things Company paid 120,000 Cash Fringe Benefit for the year 2020 to its Security Manager.
The required tax to be remitted by Stranger Things to be able to claim business expense deductions
should be:
64,615.38

31. Statement 1: A tax that is allowed by law to be passed on by a taxpayer to another is called indirect tax.
Statement 2: Business taxes which are not allowed by law to be passed on by sellers of goods and
services to buyers are nonetheless imperceptibly passed on because they are factored in on the selling
price.
True, true

32. In 2019, CaptRi. Inc., a Philippine corporation, sold through the local stock exchange 10,000 PLDT
shares that it bought 2 years ago. CaptRi sold the shares for 2 million and realized a net gain of
200.000. How shall it pay tax on transaction?
It shall pay a tax of 6/10 of 1% of the 2 million gross sales.

33. Mr. Bing died in June 1, 2020. Monica, her wife survived her. Upon his death, the estate includes
business income of 800,000 earned. The business expense amounted to 260,000. The estate has not
been transferred. Monica also earned 120,000 compensation income for the year. How much would be
the total tax savings if the estate will distribute 150,000 to Monica?
26000

34. A management employee borrowed from his employer (advances against salaries) 120,000, payable
from his salaries at 5,000 every payday (fifteen days). Since check-off was to be made against salaries,
there was no interest charged to the loan. Legal interest is 12 percent.

The grossed up monetary value is:

22,153.85

The fringe benefit tax is:

7,753.85

35. Which statement is correct? A revenue regulation as a source of tax law, is

Promulgated by the Department of Finance upon the recommendation of the Bureau of Internal
Revenue
36. The YZ & Co. is a general partnership in trade, in its fifth year of operations. In one calendar year it had
a gross profit from sales and business expenses of 2,000,000 and 1,000,000. Respectively Y and Z
share equally in the profits and losses of the partnership.The income tax of Mr. Y as a consequence of
being a partner in the YZ Partnership is:
0

37. Statement 1: If the amount to be distributed to a partner of a GPP is more than 720,000 it is to be
withheld with 15% creditable withholding tax.
Statement 2: The share of a partner in a GPP is subject to FWT of 10% if the amount is below 720,000.
Statement 3: The distributive share of a partner in a commercial partnership is subject to final tax of
10%.
Only statement 2 is false

38. Mr. A, married, had the following data for a taxable year:
Gross income, Philippines 380,600.28
Gross income, US 255,304.65
Expenses, Philippines 194,269.03
Expenses, US 193,248.39
If the taxpayer was non-resident alien not engaged in business in the Philippines who is married, the
taxable income is:
380,600.28
186,331.25
635,904.43
0

If the taxpayer is a resident citizen of the PH who is married, his taxable income is
248,387.51

39. The term “capital assets” includes.

Real property not used in trade or business of the taxpayer

40. Statement 1: Direct double taxation is prohibited by the Philippine Constitution.

Statement 2: Indirect double taxation is allowed by the Philippine Constitution.
True, true
False, false
True, False
False, true

41. As a basic principle of taxation, that “Taxes must be based on the taxpayer’s ability to pay” is called:
Theoretical Justice

42. A citizen of the Philippines sold his principal residence in the Philippines at a selling price equal to its
fair market value of 4,000,000. The basis or cost of the property was 2,500,000. If the entire proceeds
of the sale is immediately invested in acquiring a net principal residence, the capital gains tax is:
200,000
0
Some other amount
240,000
43. The following data pertain to taxpayer A:
Salary for the year 2019, net of 42,500 withholding tax on wages 197,500
Interest income net of 5,000 Final tax 20,000
A net taxable income is:
240,000

44. The taxable income of estates and trusts is to be computed the same manner as
Individuals

45. Which of the following is allowed as business deduction from annual compensation income of 300,000
earned by an individual resident citizen taxpayer?
None

46. A citizen of the PH was a non-resident citizen in 2019. He arrived in the PH from US in May 14, 2020 to
reside here permanently
A. Income in US from Jan 1, 2020 to May 14, 2020
B. Income in US from May 15, 2020 to Oct 31, 2020
Which of the following is wrong?
He is considered a resident citizen on “A” and “B” income

47. Stanli died in year 2020 survived by his wife and two children. His estate’s gross income for the year
amounted to P120,000. The itemized deductions amounted to P20,000. His estates net taxable income
for the year if 60% of the net income before distribution was equally distributed to the surviving heirs
40,000

48. In general professional partnership (GPP)

The GPP shall be taxed on its income in the same manner as private partnerships
The partners are not liable for taxes on income withdrawn from the partnership
The GPP shall report total partnership income and each individual partner’s share of that income
All statements are incorrect

49. The properties left by the decedent transferable to the successors are called
Estate

50. One of the characteristics of our internal revenue laws is that they are
Generally prospective in operation although the statute may nevertheless operate
retrospectively provided it is clearly the legislative intent

51. Which of the following is not a scheme of shifting the incidence of taxation?
Changing the terms of the sale like FOB shipping point in the Philippines to FOB destination
abroad, so that the title passes abroad instead of in the Philippines,

52. Net income received by a partner of a GP is subject to

10% final tax on dividends

53. Which among the following is a non-resident alien?

An alien who comes to the Philippines for a definite purpose which in its nature may be
promptly accomplished
54. Statement 1: A non resident citizen is taxable on his income from within the PH
Statement 2: A non resident citizen is not taxable on his income from outside the PH
Statement 3: A non resident citizen is taxable on his income from within and outside the PH
True, true, false

55. Which of the following may not raise money for the government?
Eminent domain

56. The beneficiary of the income of estate has the status of a/an
Self employed

57. No person shall be imprisoned for non-payment of this.

Poll Tax

58. Which of the following is not an element of direct double taxation?

Same Amount

59. Thirteenth month pay P30,000

Christmas bonus P30,000
Productivity incentives pay P8,000
The taxable compensation income from the benefits is
P0

60. Patrick Dempsey, a resident citizen, is an owner of a car worth Php600,000. The car has an estimated
useful life of 10 years. This was acquired in March 1, 2020. How much would be his taxable income for the
year 2020 if his total annual compensation income is P260,000 including 13th month pay of P20,000.
240,000

61. Who is not a Philippine income taxpayer?

A non-resident citizen of the Philippines with income from outside the Philippines only

62. Statement 1: A GPP is exempt from income tax and as such is not required to file its income tax return.
Statement 2: The share of partners in a GPP is subject to income tax on individuals.
Statement 2 is not false

63. It is important to know the source of income for tax purposes (i.e., from within or without the
Philippines) because
Some individual and corporate taxpayers are taxed on their worldwide income while others are
taxable only upon income from sources within the Philippines

64. How much is the allowable business deduction of a DC from business income which reimbursed
P65,650 personal expenses to its manager in year 2020?
35,350
65,650
101,000
30,300
65. Statement 1: The value-added tax is a property tax.
Statement 2: The estate tax is a direct tax.
False, True

66. In cases of deductions and exemptions on income tax returns, doubts shall be resolved:
Strictly against the taxpayer

67. Which of the following items that reduce salaries of employees is not an exclusion from gross income?
IOUs

68. Statement 1: Tax evasion, which is the use of means to escape a tax that is already a liability, is
prohibited by law, and is punishable.
Statement 2: Tax avoidance which is the use of means to prevent an accrual of a tax, or to minimize a
tax that may accrue, is likewise prohibited by law and is punishable.
True, False

69. The power of taxation is inherent in sovereignty being essential to the existence of every government.
Hence, even if not mentioned in the Constitution the state can still exercise the power.
It is essentially a legislative function. Even in the absence of any constitutional provision, taxation
power falls to Congress as part of the general power of law-making.
True, True

70. In case of conflict between tax laws and generally accepted accounting principles (GAAP).
Tax laws shall prevail over GAAP

71. The amount required is dictated by the needs of the government in:
Tax

72. Mr. A married, had the following data for a taxable year:
Gross income, Philippines P380,600.28
Gross income, United States P255,304.65
Expenses, Philippines P194,269.03
Expenses, United States P193,248.39
If the taxpayer was a citizen of the Philippines with residence in the United States who is married, the
taxable income is:
186,331.25
FRINGE BENEFITS TO BOTH MANAGERIAL AND RANK-AND-FILE
An employer gave fringe benefits to both managerial and rank-and-file employees as follows:
Fringe benefit given to rank-and-file employees 65,000
Fringe benefit given to managerial employees 656,500

● How much is the fringe benefit tax?

353,500

● How much is the total deductions of the employer?

1,075,000

MONICA AND CHANDLER

Monica and Chandler are partners with profit and loss sharing of 70% and 30%, respectively. The summary of
partnership income and expense during the year are as follows:
Net income from operations P1,400,000
Interest income, net of final tax P80,000

● If the partnership is a GPP, how much is the income tax due and payable per ITR of the partnership?
0

● If the partnership is a GPP, how much is the income tax still due and payable of partner Monica per
ITR assuming that the appropriate creditable withholding tax was withheld on the distribution?
184,000

● If the partnership is a GPP, how much is Chandler’s distributive share in the partnership?
439,200

● If the partnership is a GP, how much is Chandler’s distributive share in the partnership?
318,000

● If the partnership is a GPP, how much is the income tax still due and payable of partner Chandler per
ITR assuming that the appropriate creditable withholding tax was withheld on the distribution?
35,000

● If the partnership is a GP, how much is Monica’s distributive share in the partnership?
730,800

● If the partnership is a GPP, how much is Monica’s distributive share in the partnership?
1,024,800

● If the partnership is a GP, how much is the income tax of the partnership?
420,000
ENOLA HOLMES
Enola Holmes, resident citizen, had the following data for 2019:
Sales P2,000,000
Dividend from domestic corporation P20,000
Interest on PH currency bank deposit P100,000
Royalty from patented invention P60,000
Royalty from books P30,000
Capital gains on asset held
On sale directly to buyer of shares of DC (SP-P1.200,000) P135,000
On sale thru the PH Stock Exchange of shares of DC (SP-1,250,000) P60,000
On sale thru a real estate broker of land in PH
FMV P2,800,000
Selling Price P3,000,000 P500,000
On sale of vacation house and lot in Malaysia P200,000
Business expense P500,000

● The stock transaction tax is

7,500

● Total capital gains tax on enola’s income is

200,250

● Total gross income of Enola is

1,220,000

● Tax due and payable of Enola is

406,000
400,000
340,000
110,000

● Final tax on Enola’s income is

37,000

● Taxable income of Enola is

720,000
MR. DAMI PERA
Mr. Dami Pera created 2 trusts for his son, Ubos. During the year, the two trusts earned net income as follows:
Trust 1 P6,000,000
Trust 2 P8,000,000
Distribution to Ubos Trust 1, P100,000
Each trust filed their own income tax return and paid corresponding income tax due as computed in their
separate returns.

● How much is the income tax already remitted by Trust 2?

2,410,000

● How much was the tax remitted by Trust 1?

1,738,000

● How much is the tax still due and payable for Trust 1?
193,654.68

● How much is the tax still due and payable for Trust 2?
165,539.57

● How much is the consolidated tax of the trust?

4,475,000

CAPT. RI
Capt Ri, a citizen and resident of the Philippines, married to Mrs. Emily Ri, had the following data for 2020
Gross income from business, Mr. Ri P220,000
Gross income from profession, net income of a 10% WHT, Mrs. Ri P180,000
Rent income from land and building, Mr. and Mrs. Ri P48,000
Dividend from domestic corporation, Mr. and Mrs. Ri P10,000
Interest on notes receivable, Mr Ri. P2,000
Interest on notes receivable, Mrs. Ri P1,000
Interest on PH currency bank deposit, Mr. Ri P3,000
Interest on PH currency bank deposit, Mrs. Ri P2,000
Interest on PH currency bank deposit, Mr. and Mrs. Ri P8,000
Capital gain on sale directly to buyer at P280,000 of shares of DC, Mr. Ri P80,000
Capital gain on sale directly to buyer at P2,000,000 of land in PH, Mr&Mrs P300,000
Income tax withheld on rent at 5%, P2,400
Expenses, business/profession, Mr. Ri P150,000
Expenses, business/profession, Mrs. Ri P120,000
Expenses, business/profession, Mr and Mrs. Ri P10,000

● The total final taxes on the income of the spouses is:

3,600

● The total tax credits to be deducted from the tax due of Mrs. Ri:
21,200

● The total tax credits to be deducted from the tax due of Mr. Ri:
1,200
 ● The capital gain taxes paid by the spouses within the year:
120,000
12,000
132,000
30,000

● Mrs. Ri’s total gross income subject to income tax:

224,000
105,000
181,000
225,000

● Mr. Ri’s total gross income subject to income tax:

246,000

MR. HINI MATAY

Mr. Hini Matay died in June 1, 2020. After his death, his estate has a gross business receipts of P400,000.
There are also P120,000 and P50,000, business and personal expenses associated to the estate. He is
survived by his daughter who received P10,000 from the estate aside from her compensation of P200,000.
● How much is the income tax due of the estate?
4,000

● How much is the net income of the estate subject to income tax?
270,000

● How much is the income tax due of the Mr. Matay’s daughter?
4,000
10,000
0
8,000

BLACK AND PINK <333

Black and Pink partnership reported for the year 2020 a net professional income amounting to Php400,000. Its
other income included interest income loan receivables of P4,000.

● Mr. Black has a compensation income of P240,000. The net taxable income of Mr. Black for the year, if
he shares 60% of profits and losses in the partnership:
482,400

● The income tax on the distributive share of Black, who shares profit and loss equally with Pink, in the
earnings of the partnership is?
0

● The final tax on the distributive share of Pink, who shares profit and loss equally with Black, in the
earnings of the partnership is?
14,700
RACHEL BERDE
The following are the transactions of Rachel Berde, resident citizen, for the year 2020
Sale of shares of stock of FRIENDS corporation which she acquired previously at P100/ share.
> 1,000 shares sold in the stock exchange at P105 per share
> 1,000 shares sold outside the stock exchange at P110 per share
● How much is the capital gains to be remitted in related to the above transactions?
1,500

● The stock transaction tax on the above transactions amount to:

630

AB GENERAL PROFESSIONAL PARTNERSHIP

AB is a general professional partnership, with A, married, and B, single, participating equally in the income and
expenses. The following are data for the partnership and the partners in a calendar year:

Details of AB
Gross income 600,000
Expenses 350,000

Details of A
Gross income 150,000
Expenses 70,000

Details of B
Gross income 200,000
Expenses 65,000

● The gross income of A from the partnership is:

125,000

● The taxable income of A is:

205,000

● Tax due and payable of B is

2,000

ESTATE UNDER ADMINISTRATION

The following are details of an estate is under administration for the year 2019:
Gross income from properties in the estate 700,000
Expenses on the properties 150,000
Distribution out of the year’s income.
To Heir no. 1 50,000
To Heir no. 2 45,000

● Income tax due of the estate is:

43,750
 ● Taxable income of the estate is:
455,000

DR. ROSS GELLER

Dr. Ross Geller, resident citizen, had the following transactions pertaining to sale of real properties for the year
2020:
1. Sale of vacant lot used as an open warehouse for his trading business, 500,000. This was acquired
two years ago at 200,000.
2. Sale of his residential lot for 1,000,000, the zonal value at date of sale is 1,200,000. This was
purchased 3 years ago at 400,000.

● How much is the capital gains tax for these real estate transactions?
72,000

● How much will be included as other income/gain subject to income tax?

300,000