INCOME TAXATION

1. Which of the following is correct?

I. A citizen of the Philippines residing therein is taxable on all income derived from sources within and without the Philippines

II. A non-resident citizen is taxable only on income derived from sources within the Philippines

III. An alien individual, whether a resident or not the Philippines is taxable only on income derived from sources within the Philippines

IV. A seaman who is a citizen of the Philippines and who receives compensation for services rendered abroad as a member of the complement of a vessels engage in international trade shall be treated as an overseas contract worker.

a. I, II, and III only c. I, II, and IV only

b. I, III, and IV only d. I, II, III and IV

2. Mulry had the following data from his employment in 2018:

Monthly salary

P12,000

Taxes withheld

8,000

Pag-ibig fund contributions

1,500

Union dues

2,400

Philhealth contributions

720

SSS premiums

480

13th month pay

12,000

Mid-year bonus

12,000

Loyalty award

5,000

The portion of compensation which is excluded from the gross compensation income if Mulry is a rank-and-file employee is -

a.

P5,100

c.

P29,000

b.

P34,100

d.

None of the above

3. Global Corporation, a corporation engaged in business in the Philippines and abroad which is on its 3rd year of operation, has the following data in 2013:

Gross Income, Philippines

P 1,000,000

Expenses, Philippines

700,000

Gross Income, China

500,000

Expenses, China

350,000

Interest on peso bank deposit

50,000

Interest from Foreign Currency Deposit

80,000

Royalties from books

75,000

Dividend income from another Domestic Corp.

100,000

Income Tax Paid in China

60,000

Additional Information:

a) The Corporation sold its stocks in a domestic corporation directly to the buyer for P240,000. The cost of such shares is P80,000.

b) It sold a vacant lot, booked as investment property held for capital appreciation, for P2,800,000. Fair Market Value per Tax Declaration is P3,000,000 while zonal value is P3,300,000. The lot was acquired for P1,500,000.

How much is the income tax payable if the Corporation is domestic?

a. P90,000

b. P117,000

c. P166,000

d. P375,000

4. One of the following is a general professional partnership.

a.Partnership organized by a lawyer, engineer and a CPA to provide professional advice

b. A partnership organized by a group of CPAs for the common practice of accountancy

c. A partnership organized by a group of CPAs for the purpose of selling real properties

d. General partnership organized by a group of engineers engaged in manufacturing of equipment

5. First statement: A general professional partnership as such shall not be subject to the income tax.

Second statement: Persons engaging in business as partners in a general professional partnership shall be liable for income tax only in their separate and individual capacities.

a.Both statements are correct

b.Both statements are incorrect

c.Only the first statement is correct

d.Only the second statement is correct

6. Pedro Dela Cruz, nonresident citizen, arrived in the Philippines on July 1, 2018 to reside here permanently after working as a nurse in the United States for many years. Which of the following statements is correct with respect to his classification for income tax purposes?

a. He shall be classified as nonresident citizen for the year 2018 with respect to his income derived from sources abroad from January 1, 2018 until the date of his arrival in the Philippines,

b. He shall be classified as nonresident citizen for the whole year of 2018.

c. He shall be classified as resident citizen for the whole year 2018.

d. He shall be classified as neither resident nor nonresident citizen for the year 2018.

7. First statement: Gains or losses from short sales of property shall be considered as gains or losses from sales or exchanges of capital assets.

Second statement: Gains or losses attributable to the failure to exercise privileges or options to buy or sell property shall be considered as capital gains or losses.

a. Both statements are correct

b. Both statements are incorrect

c. Only the first statement is correct

d. Only the second statement is correct

8. Which of the following is taxable?

a. Interest on long-term deposit or investment by an individual taxpayer

b. Gain on sale of 10-year bond

c. Prize not exceeding P10,000

d. PCSO Lotto winnings not exceeding P10,000

9. Who of the following individual taxpayers is taxable on income derived from within and without the Philippines?

a. Pedro, a native of Bacolod City, working as overseas contract-worker in Iraq.

b. George, naturalized Filipino citizen and married to a Filipino. He had been living in Pampanga since 1990.

c. Pao Gasul, Spanish citizen, a resident of Madrid, Spain, spent a one (one) week vacation in Boracay.

d. Lee Min Ho, Korean singer, held a 3-day concert in Manila.

10. The income subject to this withholding tax is not including in the computation of taxable income

a.

Withholding tax on compensation income

b.

Creditable withholding tax

c.

Final withholding tax

d.

All of the above

11. One of the following is not accepted basic relief from the MCIT:

a. Prolonged labor dispute

b. Force majeure problems

c. Legitimate business reverse

d. Law suits filed by the company

12. Which is not a characteristics of corporate income tax:

a. Progressive tax

b. General tax

c. Direct tax

d. National tax

13. A retailer of goods has gross sales of P1,000,000 with a cost of sales amounting to P800,000. Assuming that the taxpayer is a corporation and opted to claim optional standard deduction, how much is the taxable income?

a. P600,000c. P120,000

b. P550,000d. P80,000

14. Donald Trump received royalty fees from Viva Records Corporation, a domestic corporation, for his musical compositions under the album Theres no Other Way. Donald is an American composer and has never set foot in the Philippines. The royalty fee shall be subject to:

a. 15% final withholding tax

b. 20% final withholding tax

c. 25% final withholding tax

d. 5-32% graduated tax rate

15. Which of the following statements is not correct?

a.

Taxes may be imposed to raise revenue or to provide disincentives to certain activities within the state

b.

The state can have the power of taxation even if the Constitution does not expressly give it the power to tax

c.

For the exercise of the power of taxation, the state can tax anything at any time

d.

The power of taxation in the Philippine Constitution are power and not limitations on taxing powers

16. There can be no tax unless there is a law imposing that tax is consistent with the principle of

a.

uniformity of taxation

b.

due process of law

c.

non delegation of the power to tax

d.

the power of taxation is very broad and the limitation is the sense of responsibility of the members of the legislature to their constituents

17. The City Council passed an ordinance imposing an occupation tax on an air-conditioning technician. Conde is the only person with such occupation in the city. He challenged the validity of the ordinance as being discriminatory since he is the only one adversely affected.

a.

The contention of Conde is tenable

b.

The ordinance is unconstitutional because Conde is denied of his right to equal protection of the law.

c.

The contention of Conde is not justified because the rule on uniformity is not violated considering that the ordinance would also be imposed on all air-conditioning technician who may come within the jurisdiction of the city

d.

The issue on validity or invalidity of the ordinance should be set aside

18. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the

a.

Office of the President

c.

Senate

b.

House of Representatives

d.

Supreme Court

19. No law granting any tax exemption shall be passed without the concurrence of

a.

Majority of all members of the Congress

b.

2/3 vote of all members of the Congress

c.

3/4 vote of all members of the Congress

d.

Unanimous vote of all members of the Congress

20. Schedular system of income taxation means

a. All types of income are added together to arrive at gross income.

b. Separate graduated rates are imposed on different types of income.

c. Capital gains are excluded in determining gross income.

d. Compensation income and business/professional income are added together in arriving at gross income.

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