CAT CUP THREE

AVERAGE ROUND
Average 1. Taxpayers are husband and wife. The gross compensation
income of the wife is P60,000 while the business income of the husband
is P100,000. They have six (6) qualified dependent children but within
the years one child died. Their total exemptions is -
a. P61,000 c. P64,000
b. P100,000 d. P96,000

ANS: B
Basic personal exemptions:
Wife P50,000
Husband 50,000 P100,000
Additional exemptions 100,000
(P25,000 x 4)
Total exemptions P200,000
Average 2. In 2008, Padolino's wife died of a car accident. His
dependents are as follows:
A, child, 22 years old, employed on July 12, 2008
B, child, 21 years old on January 2, 2008.
C, child 18 years old, married on January 31, 2008.
D, child, 17 years old, gainfully employed on October 1, 2008.
E, child, 15 afflicted with sore eyes on May 6, 2008.
F, child 13 died of an accident in 2008.
G, brother, 28 paralytic.

For taxable year 2008, Padolino can claim additional exemptions of -

a. P8,000 c. P24,000
b. P32,000 d. 100,000

ANS: D
Padolino is entitled to an additional exemption on F, E, D, C and B.
However, the law allows only a maximum number of four (4) dependents.
He can, therefore, claim an additional exemption of P100,000 only.

Average 3. Which of the following income derived from within the

Philippines by a resident individual is not subject to the rates in
Section 24 (A) of the NIRC?
a. Salary received by a managing partner of a general
professional partnership.
b. A passive income in the form of a price won in a raffle
amounting to P4,000.
c. A gain from sale of a motor vehicle as another income of a
taxable who is a compensation income earner.
d. A gain on sale of a real property for private use of the
family of the taxpayer.

ANS: D
The salary of a managing partner of a general professional partnership
is included in gross income. Hence it is subject to the graduated
rates of tax on income.

11TH REGIONAL MID YEAR CONVENTION

 CAT CUP THREE
AVERAGE ROUND
Average 4. Maliksi, single, supporting his 58-year old mother, is a
business income earner. During the year, his net income was P150,000.

Gross compensation income P150,000 He also paid a total

Less: Deductions premium of P3,000 to
Health insurance P 2,400 an insurance company
(maximum) for his health
Basic personal 50,000 52,400 insurance. How much is
Taxable income P97,600 his taxable income?
a. P127,600 c. P122,600
b. P127,000 d. P97,600

ANS: D

Average 5.In 2007, Rustom, Filipino, legally separated from his wife,
Mina, left for the united States with his daughter, Robina, to
permanently reside therein. In 2008 he earned P2 million as income
from his beauty parlor in that country.
Which of the following statements is correct?
a. For Philippine income tax purposes, Rustom may deduct from his gross
income his personal exemption of P25,000 or the amount allowed in
that country, whichever is lower.
b. For Philippine income tax purposes, Rustom's gross income is subject
to a creditable withholding tax of 10%.
c. Rustom's gross income of P2 million is not taxable in the
Philippines.
d. For Philippine income tax purposes, he is no longer entitled to
claim additional exemption on Robina because he is already
classified as a nonresident alien engaged in business in foreign
country.

ANS: C
Average 6 One of the following is not a transaction deemed sale:
a. Transfer, use or consumption not in the course of business of goods
or properties originally intended for sale or for use in the course
of business.
b. Distribution or transfer to shareholders or investors of goods or
properties as share in the profits of a VAT-registered person or
creditors in payment of debt.
c. Retirement from or cessation from business, with respect to all
goods on hand as of the date of such retirement or cessation.
d. Consignment of goods if actual sale is made within 60 days following
the date such goods were consigned.

11TH REGIONAL MID YEAR CONVENTION

 CAT CUP THREE
AVERAGE ROUND

ANS: D
Average 7. Tax credit for input taxes shall be allowed if:
a. Both the seller and the purchaser are VAT-registered.
b. Either one of the seller or the purchaser is VAT-registered.
c. Neither one of the seller or the purchaser is VAT-registered as long
as VAT invoice is issued.
d. The seller is VAT-registered regardless of whether the purchaser is
VAT-registered or not.

ANS: A

Average 8. An 80% learning curve was in effect for a certain

industry. The first time the task was performed, it required a time of
800 minutes. When the task was performed for the eighth time, the
cumulative average time per task, rounded to the nearest minute,
equaled:
a. 6,400 minutes
d. 800 minutes
c. 512 minutes
d. 410 minutes

ANS: D

SUPPORTING CALCULATION:
Task Cumulative Average Time/Task
1 800
2 640 (800 x .8)
4 512 (640 x .8)
8 409.6 (512 x .8)

Average 9. Mr. Maasikaso, single, has the following dependents who are
living with and entirely dependent upon him for chief support:
Adrea, child with ex-girlfriend
Barbara, legitimate child of his sister, legally adopted by Mr.
Maasikaso
Carida, Mother, 85 years old, widow, bedridden
Donata, godmother, 80 years old

Mr. Maasikaso can claim additional personal exemption on -

a. Andrea only c. Andrea, Barbara and Caridad
b. Andrea and Barbara d. Andrea, Barbara, Caridad and
Donata

ANS: B
An illegitimate child is a qualified dependent for purposes of

11TH REGIONAL MID YEAR CONVENTION

 CAT CUP THREE
AVERAGE ROUND
additional exemption.

An adopted child is qualified if legally adopted; children by natural

adoption do not qualify as dependent for purposes of additional
exemption.
Average 10. Which of the following income is subject to final tax if
received by an individual taxpayer?
I. Share of a partner in the net income of a business partnership.
II. Cash dividend received by a stockholder from a domestic
corporation.
III. Winnings in lotto.
IV. Raffle prizes amounting to P6,000.
a. I and II c. I,II and IV
b. III and IV d. I,II,III and IV

ANS: A

11TH REGIONAL MID YEAR CONVENTION