37. One of the following is wrong. Which is it? The gross income tax on corporation is:

a)Applicable to non-resident corporations

b)Applicable to domestic corporations

c)Applicable to resident corporations

d)May begin only beginning on taxable year 2000

40. Which of the following is/are prima facie instances of accumulation of profit beyond the reasonable needs of a business?

I.Investment of substantial earnings and profits of the corporation in unrelated business or in shares or securities of unrelated business.

II.Investment in bonds and other noncurrent securities.

III.Accumulation of earnings in excess of 100% of paid up capital not otherwise intended for the reasonable needs of the business as defined.

a)I only

b)I and II only

c)I, II and III

d)III only

41. Improperly accumulated earnings tax will not apply if the accumulation is for:

I.Additional working capital

II.Expansion, improvements and repairs

III.Debt retirement

IV.Acquisition of related business, or the purchase of stock related business where subsidiary relationship is established

a)I, II, III and IV should be present

b)Any two (2) of the conditions should be present

c)Any three (3) of the conditions should be present

d)Any of the conditions

42. Which of the following statements about improperly accumulated earnings tax is FALSE?

a)Shareholders are liable to income tax for corporate earnings received.

b)If corporate earnings are distributed to shareholders, such earnings shall not be subject to IAET

c)Once a corporation is subjected to corporate income tax, the IAET can no longer be imposed.

d)If there is no distribution of corporate earnings, not shareholders are liable for income tax on such earnings.

43. Which of the following corporations is not subject to income tax?

a)Government-owned and controlled corporations (GOCCs)

b)Proprietary educational institutions duly registered with the Department of education

c)Regional or area headquarters (in the Philippines) of a multi-national corporation

d)Closely-held corporations

44. Which of the following government-owned or controlled corporations shall be subject to the corporate income tax?

I.Philippine Amusement and Gaming Corporation (PAGCOR)

II.National Development Corporation (NDC);

III.Philippine Charity Sweepstakes Office (PCSO);

IV.Social Security System (SSS).

1.I and II only

2.None of the above

3.I, II, III and IV

4.II only