ALLOWABLE DEDUCTION THEORIES

Question 1

The depreciation rate adopted by the taxpayer shall be approved by the BIR Commissioner.

Select one:

True

False

Question 2

Statement 1 Non-resident citizen, and resident alien can adopt the 40% optional standard deduction.

Statement 2 The taxpayer may revoke the 40% optional standard deduction opted in the return, and such revocation immediately becomes effective.

Select one:

Neither statement is correct.

Only Statement 1 is correct.

Only Statement 2 is correct.

Both statements are correct.

Question 3

Which of the following statements is not correct?

Select one:

Refund of taxes is taxable if the taxes paid are deductible.

Taxes to be deductible must be imposed directly to the taxpayer subject to certain exceptions.

No loss shall be allowed as a deduction if at the time of filing the return, the loss has been claimed as a

deduction in the estate tax return.

In case of loss, the taxpayer shall submit a declaration of loss not less than 45 days and not more than 120 days from the date of the loss.

Question 4

Interest expenses duly supported by necessary documents incurred between members of the family are allowable deductions.

Select one:

True

False

Question 5

Generally, net operating loss can be carried forward over a period of five years following the period of loss.

Select one:

True

False

Question 6

Which of the following is NOT a non-deductible taxes?

Select one:

Estate tax

Excise tax

Income tax

Value-added tax

Question 7

Which among the following taxpayers is NOT allowed to carry over net operating loss in the succeeding year?

Select one:

Estates and trusts

Self-employed individuals

Individuals earning purely from compensation

Resident foreign corporations

Question 8

Which of the following bad debts is NOT non-deductible?

Select one:

Bad debts not related to business or profession

Bad debts arising from unpaid wages or salaries

Bad debts arising from related parties

Bad debts that have been written off

Question 9

If the taxpayer is using the cash basis, interest discounted on loan borrowings is deductible at the time of full payment of indebtedness.

Select one:

True

False

Question 10

Statement1 Interest expenses relative to the acquisition of property for business operation may be deducted in full or added to the cost of the property acquired.

Statement 2 Under capital expenditure of treating interest expense, the interest is amortized over the terms of the borrowing.

Select one:

Only Statement 2 is correct.

Both statements are correct.

Only Statement 1 is correct.

Neither statement is correct.

Question 11

All taxes incurred and paid are deductible business expenses.

Select one:

False

True

Question 12

Payment for past pension trust is prorated over a period of five years.

Select one:

True

False

Question 13

Estimated uncollectible bad debts are allowable deduction from the gross taxable incomne

Select one:

False

True

Question 14

Non-resident citizens can adopt the 40% optional standard deduction.

Select one:

True

False

Question 15

Which of the following is NOT a limitations imposed on net operating loss carry-over?

Select one:

Unless there has been no material change in the capital ownership of the business, net operating loss

cannot be carried over.

Net operating loss carry-over shall be allowed only if there has been substantial change in the ownership of the business.

Net operating loss can be carried over only for the next three consecutive years immediately following the year of the loss.

Taxpayer exempted from income tax cannot deduct losses incurred during the year as carry-over losses

the following year.

Question 16

Coporate taxpayers may opt to use the 40% optional standard deduction.

Select one:

False

True

Question 17

Properties directly used in petroleum operations are depreciated over a period of five years or shorter as may be allowed by the BIR Commissioner.

Select one:

True

False

Question 18

Who among the following taxpayers may adopt the itemized deduction?

Select one:

Estates and trusts engaged in trade or business

General professional partnerships

Corporations, which may either be domestic or foreign

Individual taxpayers whose income is purely sourced from compensation

Question 19

Donations of individual taxpayers to the national or local government units are deductible in full amount.

Select one:

True

False

Question 20

Statement 1 Interest expense not reduced by interest income subject to 20% final tax is deductible in full.

Statement 2 Interest payment on tax deficiency is deductible in full amunt.

Select one:

Both statements are correct.

Only Statement 1 is correct

Neither statement is correct.

Only Statement 2 is correct.

Question 21

Donations of individual taxpayers to private educational colleges or universities are deductible subject to certain limitations.

Select one:

True

False

Question 22

Unreasonable business expenses, though necessary and ordinary, are non-deductible.

Select one:

False

True

Question 23

The 20% interests on late filing and late payment of tax return are deductible.

Select one:

False

True

Question 24

Interests paid on bonds and dividends are deductible business expenses.

Select one:

False

True

Question 25

Interest expense from bank borrowings is deductible in full, provided the taxpayer has no interest income subject to 20% final tax.

Select one:

True

False

Question 26

If there is a 100% loss, the amount of deductible loss is equal to the book value of the property.

Select one:

False

True

Question 27

The amount of limitations on charitable contributions is based on taxable income after personal exemptions.

Select one:

False

True

Question 28

Which among the following interest expenses paid is NOT deductible in full?

Select one:

Interest expenses between related taxpayers

Interest payment on scrip dividends

Interest paid by banks on deposits of customers

Interest payment of company issuing bonds

Question 29

The reduction in the value of shares of stock is deductible business expense.

Select one:

False

True

Question 30

Advance rent payment is deducible in full during the time of payment.

Select one:

False

True

Corporate income tax

Calix Corporation provided the following data for calendar year ending December 31, 2019 ($1= Php 50)