Final Examination Quiz Instructions: NO YES

5/22/2021 Quiz: Final examination
Final examination
Started: May 22 at 10:07am
Quiz Instructions
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Good day! Here is your final exam. Should you have concerns/questions, don't hesitate to message me.
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Question 1 7 pts
Bonus question: I will take the final examination with integrity. I will not disclose any
information regarding the exam.
NO
YES
Question 2 1 pts
S1: Partnerships, no matter how created or organized, are taxable as corporations for
income tax purposes.
S2: Associations and mutual fund companies, for income tax purposes are included
in the definition of corporations.
S1 is true; S2 is false
S1 is false; S2 is true
S1 is false; S2 is false
S1 is true; S2 is true
https://feu.instructure.com/courses/65339/quizzes/642058/take 1/36
Question 3 1 pts
S1: Joint ventures, regardless of the purpose by which they were created, are exempt
from corporate income tax.
S2: Non-stock nonprofit educational institution and government educational institution

are tax exempt corporations.
Question 4 1 pts
S1: Resident foreign corporations are subject to income tax based on gross income
from sources within the Philippines.
S2: Domestic corporations are subject to income tax based on the net income from
sources within and without the Philippines.
Question 5 1 pts
S1: Minimum corporate income tax (MCIT )is always computed and compared to
RCIT starting on the fourth year of operations regardless of the classification of a
corporation. The higher amount should be the tax due for the taxable period.
S2: MCIT shall be imposed whenever domestic corporation has zero or negative
taxable income, or when the amount of RCIT is greater than the MCIT from such
corporation.
Question 6 1 pts
S1: Private educational institutions are subject to income tax based on the net
income from sources only within the Philippines at the tax rate of 10% or 30%.
S2: Regional operating headquarters are subject to 10% income tax on its net income
derived from the Philippines.
Question 7 1 pts
S1: Optional corporate income tax of 15% based on gross income may be applicable
to a all corporation whose ratio of cost of sales to gross sales from all sources does
not exceed 55%.
S2: For purposes of the optional corporate income tax, "Gross income" derived from
the business shall be equivalent to Gross sales less sales returns, discounts and
allowances.
Question 8 1 pts
S1: In addition to regular corporate income tax and minimum corporate income tax, a
corporation may be subjected to Final withholding tax and Capital gains tax.
S2: A Domestic corporation is subject to capital gains tax from capital gains from sale
of shares of stocks from a domestic corporation not traded in the local stock
exchange at a rate of 15%.
Question 9 1 pts
S1: Interest income in a bank deposit earned by a Domestic corporation from abroad
is subject to final withholding tax rate of 20%.
S2: Capital gains tax from capital gains realized by a foreign corporation from sale or
exchange or disposition of land/buildings located in the Philippines is not applicable.
Question 10 1 pts
S1: A general professional partnership are exempted on the basic income tax but
subject to final withholding tax and capital gains tax.
S2: Share of an individual in the net income of a general partnership is subject to final
withholding tax, and should be included in the computation of his/her taxable net
income.
Question 11 1 pts
S1: Gross income exclusion are flow of wealth to taxpayers which are not considered
as part of gross income for purposes of computing taxpayer's taxable income
because it is exempted by law or statute and it does not meet the definition of
income.
S2: Remuneration for services constitutes compensation income even if the

relationship of employer and employee does not exist any longer at the time when
payment is made as long as the related payment constitutes compensation for the
services rendered during the existence of an employer-employee relationship.
S1 is true; S2 is ture
Question 12 1 pts
S1: Fees received by professionals in their practice of profession are treated as

compensation income.
S2: Gifts, bequests and devises are subject to basic tax.
Question 13 1 pts
S1: Advance rentals representing option money as well as security deposits to insure
faithful performance of certain obligations of the lessee (refundable deposits) are
considered part of the lessee's taxable income.
S2: Obligations of the lessor to third persons paid or assumed by the lessee in
consideration of the lease contract is part of the former's taxable rental income.
Question 14 1 pts
Which of the following is not part of compensation income?
Fringe benefits not subject to fringe benefit tax
Honoraria
Vacation and sick leave pay
Allowances subject to liquidation
Question 15 1 pts
This refers to a specified income payable at stated intervals for a fixed or contingent
period, often for the recipient's life, in consideration of a stipulated premium paid
either in prior installment payments or in a single payment.
Pension
Gratuity
Royalty
Annuity
Question 16 1 pts
Annuity payments received by a taxpayer represent a part which is taxable and non
taxable. Which of the following statement is correct?
Return on premium is non-taxable
Both statements are correct
Both statements are not correct
Return of premium is taxable
Question 17 1 pts
This refers to earnings derive from depositing or lending money, goods or credits.
Dividend income
Interest income
Annuity income
Royalty income
Question 18 1 pts
Which of the following dividend income is tax exempt? Dividend income received
from:
I. A domestic corporation by a domestic corporation.
II. A domestic corporation by a resident foreign corporation.
III. A domestic corporation by a resident citizen.
IV. A resident foreign corporation by a domestic corporation.
I and II only
All of the above
I, II and III only
None of the above
Question 19 1 pts
Which of the following may be excluded from the gross income of a taxpayer?
Interest on proceeds of life insurance policies.
Interest income from a note receivable
Income derived from bequests and devises.
None of the above
Question 20 1 pts
Which of the following is not correct regarding NOLCO?
International air carrier is allowed with NOLCO
Net operating loss is the excess of allowable deductions over the gross income of the
business in a taxable year
Domestic and resident foreign corporations subject to RCIT is allowed with NOLCO
NOLCO is allowed as deductions from the gross income for the next 3 succeeding years
Question 21 1 pts
This is not a requisite for business expense to be deductible.
It must be paid during the taxable year
It must be reasonable
The withholding tax required have been deducted and remitted to the BIR
It must be necessary and ordinary
Question 22 1 pts
Which of the following is not deductible from gross income?
Net operating loss carry over
Allowance for bad debts
Casualty losses on properties connected in the conduct of trade or business.
Depreciation expense
Question 23 2 pts
A corporation engaged in business in the Philippines and abroad has the following
data for the 5th year of its operations:
Gross income, Philippines 4,700,000

Expenses, Philippines 3,500,000
Gross income, Malaysia 850,000
Expenses, Malaysia 550,000
Interest on bank deposit (Philippines) 20,000
Determine the income tax due on the ordinary income if the corporation is a
Domestic corporation:
366,000
450,000
360,000
456,000
Question 24 2 pts

Determine the income tax due on the ordinary income if the corporation is a
Resident foreign corporation.
456,000
360,000
366,000
450,000
Question 25 2 pts

Determine the income tax due on the ordinary income if the corporation is a Non-
resident foreign corporation.
1,410,000
360,000
366,000
1,416,000
Question 26 4 pts
The following data were taken from the financial statement of a corporation for the
3rd taxable taxable year:
Description Philippines Abroad
Gross sales 12,000,000 9,000,000
Sales returns 200,000 -
Sales discounts 500,000

Rent income (net of 5% expanded withholding
285,000 -
tax)
Cost of goods sold 3,000,000 2,000,000
Business expenses 2,500,000 1,200,000
Interest income from notes receivable 200,000 80,000
Interest income from BPI deposit 50,000 -
Interest income from BPI deposit - 70,000
Interest income - FCDU deposit 100,000 -
Interest income from money market placements 300,000 200,000
Interest income or yield from trust funds 50,000 60,000
Dividend income from domestic corporation 150,000 -
Dividend income from resident foreign corporation 85,000 -

Dividend income from non-resident foreign
- 60,000
corporation
Royalty income 70,000 50,000
Gain on sale on shares of stocks of a domestic
corporation held as capital asset thru local stock 150,000 -
exchange; selling price - 500,000
Selling price of real property in the Philippines not
used in business; cost - 5,000,000; Fair market 3,000,000 -
value - 6,000,000
Gain on sale of shares of stocks of a domestic
corporation held as capital asset directly to a 300,000
buyer; selling price - 650,000
Additional information:
Income tax paid for the 3 quarters of the year - 500,000
Determine the regular corporate income tax payable if the corporation is classified as
a domestic corporation.
3,278,500
3,311,500
3,296,500
3,811,500
Question 27 2 pts

Gross sales 12,000,000 9,000,000
Rent income (net of 5% expanded withholding tax) 285,000 -
Dividend income from non-resident foreign corporation - 60,000

Gain on sale on shares of stocks of a domestic corporation
held as capital asset thru local stock exchange; selling price - 150,000 -
500,000
Selling price of real property in the Philippines not used in
3,000,000 -
business; cost - 5,000,000; Fair market value - 6,000,000
Gain on sale of shares of stocks of a domestic corporation
held as capital asset directly to a buyer; selling price - 300,000
650,000
Determine the final tax due if the corporation is classified as a domestic corporation.
109,000
99,000
124,000
114,000
Question 28 2 pts

Gross sales 12,000,000 9,000,000

500,000
3,000,000 -
650,000
Determine the final tax due if the corporation is classified as non-resident foreign
corporation.
91,500
109,000
186,000
101,500
Question 29 2 pts

Gross sales 12,000,000 9,000,000
500,000
3,000,000 -
650,000
Determine the capital gains tax due if the corporation is classified as a domestic
corporation.
385,000
427,500
360,000
405,000
Question 30 2 pts

Gross sales 12,000,000 9,000,000
Gain on sale on shares of stocks of a domestic corporation 150,000 -
held as capital asset thru local stock exchange; selling price -

500,000
3,000,000 -
650,000
Determine the capital gains tax due if the corporation is classified as non-resident
foreign corporation.
405,000
385,000
25,000
Exempted
Question 31 2 pts
A domestic corporation started its operations in year 2008. The following data on
income taxes during the years 2012 to 2019 were made available:
YEAR RCIT MCIT

2012 15,000 85,000
2013 140,000 170,000
2014 230,000 200,000
2015 20,000 350,000
2016 120,000 70,000
2017 180,000 70,000
2018 10,000 50,000
2019 55,000 2,000
How much is the income tax payable for the year 2014 and 2015, respectively?
85,000; 170,000
130,000; 350,000
230,000: 350,000
130,000: 0
Question 32 2 pts
A domestic corporation started its operations in year 2008. The following data on
income taxes during the years 2012 to 2019 were made available:
YEAR RCIT MCIT

2012 15,000 85,000
2013 140,000 170,000
2014 230,000 200,000
2015 20,000 350,000
2016 120,000 70,000
2017 180,000 70,000
2018 10,000 50,000
2019 55,000 2,000
How much is the income tax payable for the year 2018 and 2019, respectively?
50,000; 55,000
10,000: 55,000
0; 0
50,000; 15,000
Question 33 2 pts
A Corporation's per quarter RCIT, MCIT, taxes withheld for 2020 and excess MCIT
and excess withholding taxes from prior year(s) were provided as follows:
2020 2019
QUARTER
RCIT MCIT Taxes withheld Excess MCIT Excess withholding
1st 310,000 230,000 50,000 90,000 30,000
2nd 380,000 650,000 90,000 - -
3rd 800,000 400,000 120,000 - -
4th 550,000 200,000 105,000 - -
How much is the income tax payable on the 4th quarter?
445,000
705,000
535,000
1,555,000
Question 34 2 pts
A Corporation provided the following data for calendar year ending December 31,
2020:

Gross income 6,000,000 1,500,000
Deductions 2,000,000 800,000
Determine the income tax due assuming the company is an international carrier.
150,000
Exempted
117,500
100,000
Question 35 2 pts
2020:

Gross income 6,000,000 1,500,000
Deductions 2,000,000 800,000
Determine the income tax due assuming the company is a proprietary educational
institution or non-profit hospital.
470,000
750,000
400,000
450,000
Question 36 2 pts
2020:

Gross income 6,000,000 1,500,000
Deductions 2,000,000 800,000
Determine the income tax due assuming the company is a non-resident owner or
lessor of vessel.
270,000
1,500,000
400,000
470,000
Question 37 2 pts
2020:

Gross income 6,000,000 1,500,000
Deductions 2,000,000 800,000
Determine the income tax due assuming the company is a regional headquarters of
multinational corporations.
400,000
270,000
470,000
Question 38 2 pts
2020:

Gross income 6,000,000 1,500,000
Deductions 2,000,000 800,000
Determine the income tax due assuming the company is a non-resident lessor of
aircraft, machinery and other equipment.
300,000
450,000
270,000
400,000
Question 39 2 pts
2020:

Gross income 6,000,000 1,500,000
Deductions 2,000,000 800,000
Determine the income tax due assuming the company is a domestic carrier.
470,000
187,500
150,000
1,410,000
Question 40 2 pts
A Private educational institution submitted the following data for the fiscal year ending
April 30,2020:
Tuition fees 10,000,000
Miscellaneous fees 1,500,000

Cash dividends from
70,000
domestic corporation
Income from
380,000
bookstore
Interests on bank
deposit earned from 90,000
abroad
Income of school
300,000
canteen
Salary, allowances
and bonus of 6,900,000
employees
Other operating
1,900,000
expenses
Other expenditures for
improvement of school
facilities:
Construction of
add'l class rooms
1,200,000
(depreciation;
P90,000)
Furniture and
equipment of library
500,000
(depreciation;
P80,000)
How much is the income tax payable for the fiscal year ending April 30,2020
assuming the school opted to allocate depreciation expense for capital expenditures
incurred?
177,000
180,000
330,000
321,000
Question 41 2 pts
A Private educational institution submitted the following data for the fiscal year ending
April 30,2020:
Tuition fees 10,000,000

Miscellaneous fees 1,500,000
Cash dividends from domestic corporation 70,000
Income from bookstore 380,000
Interests on bank deposit earned from abroad 90,000
Income of school canteen 300,000
Salary, allowances and bonus of employees 6,900,000
Other operating expenses 1,900,000
Other expenditures for improvement of school facilities:
Construction of add'l class rooms (depreciation; P90,000) 1,200,000
Furniture and equipment of library (depreciation; P80,000) 500,000
In addition, the entity earned additional 15,000,000 other income from unrelated trade
or business transactions. How much is the income tax payable for the fiscal year
ending April 30,2020 assuming the school opted to deduct in full its capital
expenditures during the year?
5,490,000
5,031,000
1,577,000
5,463,000
Question 42 2 pts
The following data were provided by Singapore airlines, an international carrier doing
business in the Philippines:
Gross ticket sales in Philippines (Manila-Singapore flight)

20,000,000
Gross ticket sales in Singapore (Singapore-Manila flight)

10,000,000
Gross ticket sales in Philippines (Singapore-Manila flight)

8,000,000
Gross ticket sales in Singapore (Manila-Singapore flight)

3,000,000
Gross ticket sales in Singapore (Manila-New Zealand flight) with
transshipment in Melbourne, Australia 3,000,000
Manila to Melbourne - 2 hrs.
Melbourne to New Zealand - 4 hrs.
Operating expenses, Philippines

10,000,000
How much is the income tax due of the international carrier, assuming the
transshipment was accommodated by a different airline company?
800,000
350,000
650,000
600,000
Question 43 2 pts
The following data were provided by Singapore airlines, an international carrier doing
business in the Philippines:
Gross ticket sales in Philippines (Manila-Singapore flight)

20,000,000
Gross ticket sales in Singapore (Singapore-Manila flight)

10,000,000
Gross ticket sales in Philippines (Singapore-Manila flight)

8,000,000
Gross ticket sales in Singapore (Manila-Singapore flight)

3,000,000
Gross ticket sales in Singapore (Manila-New Zealand flight) with
transshipment in Melbourne, Australia 3,000,000
Manila to Melbourne - 2 hrs.
Melbourne to New Zealand - 4 hrs.
Operating expenses, Philippines

10,000,000
How much is the income tax due of the international carrier, assuming the
transshipment was accommodated by the same airline company?
400,000
650,000
850,000
600,000
Question 44 2 pts
Data for 2020 taxable year of ML partnership (Domestic corporation) including

partner's own income (Resident citizens) are as follows:
Lunox
Mathilda
ML (70%
Description (30% P/L
partnership P/L
ratio)
ratio)
Compensation
- 500,000 300,000
income
Business income 1,000,000 580,000 -
Allowable
300,000 120,000 -
deductions
Interest income
from deposit in a 200,000 50,000 -
bank (Philippines)
Assume the partnership is a General partnership, compute for the total tax due (basic
tax and final tax) by the partnership.
40,000
250,000
210,000
Question 45 2 pts

ML Mathilda (30% Lunox (70%

Description
partnership P/L ratio) P/L ratio)
Compensation income - 500,000 300,000

Allowable deductions 300,000 120,000 -
Interest income from deposit in a
200,000 50,000 -
bank (Philippines)
Assume the partnership is a General professional partnership, compute for the total
tax due (basic tax and final tax) by the partnership.
40,000
210,000
250,000
Question 46 2 pts


Description
200,000 50,000 -
bank (Philippines)
Assume the partnership is a General partnership, compute for the total tax due (basic
tax and final tax) by Lunox.
10,000
45,500
55,500
Question 47 2 pts


Description
200,000 50,000 -
bank (Philippines)
Assume the partnership is a General professional partnership, compute for the total
tax due (basic tax and final tax) by Mathilda.
251,000
10,000
241,000
Question 48 2 pts
Gusion leased a facility from ML partnership in January 1, 2018. Terms of the lease
were as follows:
Annual rental 200,000

Annual real property tax assumed and paid by Claude 30,000
Security deposit 500,000
Lease term 7 years
On January 1, 2018, Gusion paid the annual rental for 2018, 2019 and 2020 including
the security deposit (non-refundable). In addition to annual rental and real property
taxes, part of the lease was for Gusion to improve the facility. The improvement was
completed on January 1, 2020. Details of the improvements were as follows:
Cost of leasehold improvement - 5,000,000
Estimated useful life of improvement - 10 years
Determine the income to be reported by ML partnership in 2020 assuming the

company opted to report income from improvement using the outright method.
5,200,000
5,000,000
5,030,000
5,230,000
Question 49 2 pts
Gusion leased a facility from ML partnership in January 1, 2018. Terms of the lease
were as follows:
Annual rental 200,000

Annual real property tax assumed and paid by Claude 30,000
Security deposit 500,000
Lease term 7 years
On January 1, 2018, Gusion paid the annual rental for 2018, 2019 and 2020 including
the security deposit (non-refundable). In addition to annual rental and real property
taxes, part of the lease was for Gusion to improve the facility. The improvement was
completed on January 1, 2020. Details of the improvements were as follows:
Cost of leasehold improvement - 5,000,000
Estimated useful life of improvement - 10 years
Determine the income to be reported by ML partnership in 2020 assuming the

company opted to report income from improvement using the spread-out method.
730,000
500,000
700,000
530,000
Question 50 4 pts
An individual (Resident citizen) earning compensation and business income provided

the following income (within the Philippines unless otherwise stated) for the year:
Basic salary (Net of withholding tax) 400,000

Withholding tax on salary 30,000
Director's fee 300,000
Business income 500,000
Rental income (gross of 15,000 expanded withholding tax) 300,000
Business expenses 150,000
Cash dividend from domestic corporation 90,000
Stock dividend from a domestic corporation 50,000
Cash dividend from resident foreign corporation 70,000
Interest from savings deposit 30,000
Royalty income in general 40,000
Prizes from contest won 5,000
PCSO winnings 8,000
13th month pay 50,000
Christmas bonus 22,000
Mid-year bonus 16,000

Compensation on damages from injuries and sickness 100,000
Proceeds from life insurance coverage of his deceased father 250,000
Vacation and sick leave pay 50,000
Proceeds from his life insurance (70,000 represents his total contribution) 150,000
Unused monetized vacation leave in excess of 10 days allowed de minimis
15,000
benefit
Bad debt recovery (From a previous write-off with a net income of 10,000
70,000
before write-off)
Local tax refund 20,000
Prizes received from a charitable activity 15,000
Properties received by gratuitous transfer (income from property, 8,000) 20,000
Determine the taxable net income for the year.
1,618,000
1,621,000
1,623,000
1,636,000
Question 51 2 pts
An individual (Resident citizen) earning compensation and business income provided

the following income (within the Philippines unless otherwise stated) for the year:
Basic salary (Net of withholding tax) 400,000
Withholding tax on salary 30,000
Director's fee 300,000
Business income 500,000

Rental income (gross of 15,000
300,000
expanded withholding tax)
Business expenses 150,000

Cash dividend from domestic
90,000
corporation
Stock dividend from a domestic
50,000
corporation
Cash dividend from resident foreign
70,000
corporation
Interest from savings deposit 30,000
Royalty income in general 40,000
Prizes from contest won 5,000
PCSO winnings 8,000
13th month pay 50,000
Christmas bonus 22,000
Mid-year bonus 16,000

Compensation on damages from
100,000
injuries and sickness
Proceeds from life insurance
250,000
coverage of his deceased father
Vacation and sick leave pay 50,000
Proceeds from his life insurance
(70,000 represents his total 150,000
contribution)
Unused monetized vacation leave in
excess of 10 days allowed de minimis 15,000
benefit
Bad debt recovery (From a previous
write-off with a net income of 10,000 70,000
before write-off)
Local tax refund 20,000
Prizes received from a charitable
15,000
activity
Properties received by gratuitous
transfer (income from property, 20,000
8,000)
Determine the final tax on passive income.
20,000
23,000
26,000
29,000
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5/22/2021 Quiz: Final examination

S2: Non-stock nonprofit educational institution and government educational institution

S2: Remuneration for services constitutes compensation income even if the

S1: Fees received by professionals in their practice of profession are treated as

S2: Gifts, bequests and devises are subject to basic tax.

considered part of the lessee's taxable income.

Which of the following is not part of compensation income?

Fringe benefits not subject to fringe benefit tax

Vacation and sick leave pay

Allowances subject to liquidation

Return on premium is non-taxable

Both statements are correct

Both statements are not correct

Return of premium is taxable

I. A domestic corporation by a domestic corporation.

II. A domestic corporation by a resident foreign corporation.

III. A domestic corporation by a resident citizen.

IV. A resident foreign corporation by a domestic corporation.

All of the above

I, II and III only

None of the above

Interest on proceeds of life insurance policies.

Interest income from a note receivable

Income derived from bequests and devises.

None of the above

Which of the following is not correct regarding NOLCO?

International air carrier is allowed with NOLCO

This is not a requisite for business expense to be deductible.

It must be paid during the taxable year

It must be necessary and ordinary

Which of the following is not deductible from gross income?

Net operating loss carry over

Allowance for bad debts

Casualty losses on properties connected in the conduct of trade or business.

Gross income, Philippines 4,700,000

Gross income, Philippines 4,700,000

Interest on bank deposit (Philippines) 20,000

Gross income, Philippines 4,700,000

Description Philippines Abroad

Gross sales 12,000,000 9,000,000

Sales returns 200,000 -

Sales discounts 500,000

Business expenses 2,500,000 1,200,000

Interest income from notes receivable 200,000 80,000

Interest income from BPI deposit 50,000 -

Interest income from BPI deposit - 70,000

Interest income - FCDU deposit 100,000 -

Interest income from money market placements 300,000 200,000

Interest income or yield from trust funds 50,000 60,000

Dividend income from domestic corporation 150,000 -

Dividend income from resident foreign corporation 85,000 -

Income tax paid for the 3 quarters of the year - 500,000

Description Philippines Abroad

Dividend income from non-resident foreign corporation - 60,000

Income tax paid for the 3 quarters of the year - 500,000

Description Philippines Abroad

Cost of goods sold 3,000,000 2,000,000

Income tax paid for the 3 quarters of the year - 500,000