TAXATION

Additional Quizzer
Income Taxation
1.

ATTY. MACMOD, C.P.A.

2017-Edition

Mr. Cortez, Filipino, single, has the following transactions

for the current year:
Business gross income
P200,000
Allowable deductions (including bad
debts of P10k, only was written
off)
60,000
Loss from gambling
10,000
Other transactions:
Selling price, partnership interest
100,000
Investment in partnership in 2005
20,000
Gain on sale of capital asset held for 5
years
10,000
Loss on sale of capital asset held for
10 months
12,000
Loss on account of failure to exercise 3
month option to buy property
2,000
Liquidating dividend from Z Co.
150,000
Cost of investment in Z Co. in 2014
60,000

4.

Gross sales
Sales returns and allowances
Cost of goods sold
Gain on sale of capital assets held for 7
months
Loss on sale of capital assets held for
15 months
Interest income (BPI)
Allowable business expenses
Income tax due is:
a. P8,800
b. P 7,500

2.

c. P106,000
d. P101,000

7.

On January 1, 2015, lessor leased a lot with a building

thereon for a period of 10 years. It was agreed that the
lessee will pay the following:
a) Rent of P240,000 per year
b) Fire Insurance premium in the building of P16,000 per
year
c) Real property tax of P10,000 per year
Lessee will also construct a warehouse on the land at
a cost P3,600,000 with a useful life of 10 years
completed on June 30, 2017, which shall belong to
the lessor at the end of the lease.

440,000
60,000

36,000
96,000

Taxpayer, individual, married but legally separated,

supporting his mother, has the following transactions for
the current year:
Sales
Cost of sales
Operating expenses
Interest income from BDO
Interest Expense
Other transactions:
a. Sale of office equipment held for 5
years:
Selling price
Cost
Accumulated deprecation
b. Sale of family van held for 3 years:
Selling price
Cost

P2,000,000
1,150,000
560,000
10,000
20,000

100,000
120,000
80,000
300,000
210,000

c. Sale of family car held for 18 months:

Selling price

480,000

Cost

500,000

Taxpayer will report a taxable income of:

a. P305,000
c. P360,000
b. P335,000
d. P318,300

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c. P12,000
d. P9,625

Lito an official of ABC Corporation asked for an earlier

retirement because he was emigrating to Canada, he was
paid to P2M separation pay in recognition of his valuable
services to the corporation plus P300,000 13 th month pay,
Nelson another official was separated due to his failing
eyesight. He was given P1M separation pay. Rico was
separated for violating company rules but was given
P300,000 separation pay. Ben opted to retire at 55 years
old after working for 10 years in the company. He received
P1M. The total income subject to withholding tax on the
above payment is :
a. P 2,600,000
c. P3,300,000
b. P2,270,00
d. P2,518,000

The taxpayer will report a taxable net income of:

a. P472,000
c. P445,400
b. P480,400
d. P278,400
3.

5,000
50,000
580,000

6.

P200,000
1,440,000
660,000

12,000
42,000

10,000

On October 1of current year, Dragon Girl Co. leased a

residential house for the use of one of its executives, Mr.
Kurukuru, a special alien employee. The rent agreed upon
was P170,000 per month. The FBT monthly is:
a. P 54,400
c. P40,000
b. P524,000
d. P15,000

A Taxpayer, married with a 2 year old child, has the

following transactions for the current year:
Salaries received as employee
Sales
Cost of goods sold
Deductions:
Operating Expenses
Loss due to fire (properly reported)
Contributions:
To a government priority project in
education
To Quiapo church
Other income:
Rent
Capital gain from sale of CAR Family
held for 3 years

P1,100,000
200,000
300,000

5.

Note: Last year, Mr. Cortez had a net income of P65,000 and a
net capital loss of P92,000.
The taxable net income is:
a. P196,000
b. P141,000

ABS Corporation, a domestic corporation now on its 5th

year of operation provided the following data:

The Lessor shall report for year 2017, as income from

lease the total amount of:
a. P 336,000
c. P 326,000
b. P 366,000
d. P 1,296,000
8.

Based on the above problem the lessee can deduct the

total rental expenses of:
a. P 516,000
c. P 636,000
b. P 506,000
d. P 756,000

9.

Mr. X insured himself for P1M. After several months he

died when he was able to pay a total amount of P100,000.
His beneficiary, his brother received the P1M insurance
proceeds. Mr. Y on the other hand insured himself for
P1M. After 20 years he survived the insurance policy and
received return on his premiums. He received P1M from
the insurance company although he was only able to pay
P700,000.
The total income subject to tax is _______________?
a. P 300,000
c. P 1,200,000
b. P 1,300,000
d. P 900,000

10. A tax payer was a victim of a vehicular accident who filed

a case against the offender. The court awarded him the
following;

P1.502A

a.

Actual damages for expenses paid in

the hospital
P 200,000
b. Attorneys fee he paid to his
lawyer
50,000
c. Actual damages for lost arm
250,000
d. Moral damages
100,000
e. Exemplary damages
100,000
f. Salaries for 6 months when the tax
payer was in theHospital, absent
from his job w/ a monthly salary of P 50,000
300,000
The total income subject to tax is _______________?
a. P 300,000
c. P 700,000
b. P 500,000
d. P 100,000
11. A tax payer provided the following data
Sales
Sales returns & discounts
COGS
Operating expenses

P
P
P
P

12M
2M
4M
2M

Using Optional Standard Deduction, the taxable net

income
if
the
taxpayer
is
a
corporation
is
_______________.
a. P 3,600,000
c. P 5,900,000
b. P 5,850,000
d. P 6,000,000

15. His Taxable Net Income is ________________

a. P350,000
c. P340,000
b.
320,000
d. P300,000
16. If he has no commission income, his Taxable Net Income
is ___________
a. P150,000
c. P120,000
b.
270,000
d. P100,000
17. If he has no commission income & professional income,
his Taxable Net Income is_______________
a. P70,000
c. P120,000
b.
50,000
d. P 0
18. Which is a taxable fringe benefit?
a. those given to rank and file employees
b. contribution of employer to health and hospitalization
and vacation expenses of employee
c. those exempted under special and laws.
d. De minimis benefits

12. Based on the same data above, using OSD, the taxable
net income if the taxpayer is individual, married w/5
minor children is ____________________.
a. P 5,900,000
c. P 3,600,000
b. P 5,100,000
d. P 5,050,000

19. Which of the following statements is incorrect?

a. To be subject to final tax passive income must be
from Philippine sources.
b. An income which is subject to final tax is excluded
from the computation of income subject to Section 24
(A).
c. Lotto winnings in foreign countries are exempt from
income taxation in the Philippines.
d. An income which is subject to non creditable
withholding tax is excluded in the computation of
income subject to Section 24 (A).

13. Mr. X provided the following data:

Salaries
Fringe benefits as Vice Pres.
Rice Subsidy for 1 yr(P2k x 12 mos.)
13th month pay& other bonuses
Representation and travel allowance
(RATA)
Int. inc. from BPI (30% longterm)
Royalty income (10% books)

20. Which of the following statements is not correct?

a. Interest income from long term deposit is exempt
from income tax.
b. Winnings from Philippine Charity Sweepstakes are
exempt from income tax.
c. Royalties on books, literary works and musical
composition are subject to 10% creditable withholding
tax.
d. A prize of P10,000 is subject tobasic tax.

P450,000
75,000
24,000
100,000
20,000
200,000
100,000

The salaries are net ofP50,000 withholding tax but gross

of P10,000 SSS, union dues &Pag-ibig contributions. Mr.
Mr. X is married with 5 minor children.
The Taxable Net Income is _____________.
a. P364,000
c. P664,000
b. P314,000
d. P382,000
14. The Final Tax (total) on Passive Income
a. P47,000
c. P50,000
b. P60,000
d. P48,000
Mr. Bayabas provided the following data.
Salary for the year (P10,000 for 12
months, MWE-P10,000/mo.)
Overtime pay
Hazard pay
Holiday pay
Commission income as additional
compensation income from the same
company
Professional income as dentist
Prof. expenses

P120,000
20,000
20,000
10,000
50,000
250,000
50,000

Tax payer is single with legally adopted child.

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21. Which of the following income of an individual taxpayer is

subject to final tax?
a. P10,000 prize in Manila won by a resident citizen.
b. Dividend received by a resident citizen from a resident
corporation.
c. Shares in the net income of a general professional
partnership received by a resident alien.
d. Dividend received by a non-resident alien from a
domestic corporation.
22. A Corp. prov. the following data:
Sales
P10,000,000
COGS
4,000,000
Other income
Rent
1,000,000
Int. Income, BPI
2,000,000
Royalty Income
500,000
Oper. Exp.
6,900,000
Compute:
a. NIT
b. MCIT
c. Income tax due excluding
Final taxes
d. Total taxes due
Including final taxes
e. Is your answer for Income Tax due (c)
Same if the Corp. is a hospital? Why?

P1.502A