Mr. B, a member of the Philippine boxing team received the following during the taxable year:

Prize for winnings the Asian games medalP500,000

Athlete of the year award100,000

Winnings from Philippine lotto400,000

Prize- Mc Donald raffle promo10,000

Cash gift from his Godfather100,000

1.The amount not subject to income tax is

A.P1,000,000

B.P1,100,000

C.P1,110,000

D.P1,010,000

Alvin Culala, a national athlete received the following during the year:

Ramon Magsaysay awardP50,000

Athlete of the year award100,000

Prize - KFC raffle5,000

Prize for winning an Olympic Medal500,000

Gift from Mayor Alfredo Lim250,000

Car from Honda as a gift1,000,000

Winnings - Philippine lotto100,000

Gambling winnings500,000

1. The total winnings/award and prizes not subject to income tax is

A.P2,505,000

B.P2,000,000

C.P1,905,000

D.P1,900,000

3.For the tax purposes, which among the following rules shall be observed with respect to forgiveness of indebtedness?

I - If debtor rendered service in favor of the creditor, forgiveness of debt results in a taxable income to the debtor.

II- If the debtor did not render service in favor of the creditor, forgiveness of debt results in a taxable indirect gift.

III- If the debtor is a shareholder of a corporation, forgiveness of debt by the creditor-corporation results in dividends distribution.

A.I only

B.II only

C.I and II only

D.I, II and III

4.Which of the following will result to earnings of income by the debtor?

A.Cancellation of existing payables without any financial consideration.

B.Cancellation of existing payables for services rendered to the creditor.

C.Cancellation of existing payables to offset the equivalent amount of collectibles

D.Cancellation of existing payables due to bankruptcy of the debtor.