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BACC 221 - Income Taxation
PRELIM:
- The Commissioner, when clarifying a specific provision of a law, shall issue. a. Revenue regulations b. Revenue memorandum order c. Revenue memorandum circular d. Revenue rulings
- Which is not an element of valid tax? a. it must be for public purpose b. it must be payable c. it must be proportional in character d. it must be uniform and equitable
- Which does not belong to the group? a. Due process of law b. Equal protection of law c. non-impairment of obligation and contract d. territoriality
- The first stage in the aspect/stage of taxation a. payment b. collection c. levy d. assessment
- The tax laws should be capable of convenient, just and effective administration a. administration feasibility b. fiscal adequacy c. uniformity d. theoretical justice
- An involuntarily fee levied on corporations or individuals that is enforced by a level of government to finance activities a. money b. fee c. penalty d. tax
- Sources of revenue should be sufficient to meet the demand for public expenditure (revenue=expense) a. theoretical justice b. fiscal adequacy c. lifeblood theory d. administrative feasibility
- A form of escape from taxation within the means sanctioned by law a. tax exemption b. tax evasion c. tax shifting d. tax avoidance
- Without taxes, government will be paralyzed is based on this theory a. lifeblood doctrine b. unity in taxation c. police power d. benefit-received theory
- Which is not a source of tax law? a. decisions of Court of tax appeals b. opinion of tax experts c. revenue regulations d. tax treaties
- Tax that is directly imposed to a taxpayer a. specific tax b. indirect tax c. ad valorem d. direct tax
- A type of tax in which tax rate increases as the tax base increases a. mixed tax b. progressive tax c. personal tax d. property tax
- Tax imposed on property, whether real/personal property a. excise tax
- Non-resident alien is considered as not engaged in trade or business if stay in the Philippines for an aggregate period of not more than a. 185 days b. 189 days c. 184 days d. 180 days
- A non-resident alien not engaged in trade/business is taxable from its a. taxable income within b. gross income within c. taxable income within and without d. gross income within and without
- Non-resident citizen engaged in trade/business has a tax base of a. graduated tax only b. 8% optional rate only c. graduated or 8% optional rate d. final tax rate
- Non-resident citizen is taxable from its income a. without only b. within and without c. within only D. exempted from tax
- Miya is employed in a company as a contract of service employee. For income tax purposes she is classified as a. mixed income earner b. self-employed c. purely compensation earner d. minimum wage earner
- Vexana is vlogger and social media content creator, therefore she is classified as a. self-employed b. minimum wage earner c. mixed income earner d. purely compensation earner
- The BIR form be used by a self-employed taxpayer is a. 1701
b. 1700-A c. 1710 d. 1701-A
- The income tax return of an individual taxpayer shall be filed a. after April 15 of the following year b. minimum wage earner c. on or before April 15 of the current year d. on or before April 15 of the following year
- Karrie is employed in Molegend Corporation in which she earned P300,000 during the taxable year 2022. Compute the income tax due a. 55, b. 190, c. 10, d. 490,
- Layla earned P20 Million as her compensation for the year 2022. Compute the income tax due for Layla. a. 700, b. 3,050, c. 3,110, d. 3,500,
- Miya during the taxable year 2023 earned P2 Million as her compensation from M Corporation. Compute her income tax due. a. 402, b. 490, c. 700, d. 350,
Inday operates a convenience store while she offers a bookkeeping services to her clients. In 2023, her gross sales amounted to P800,000 and gross receipts of P300,000. She already signified her intention to be taxed at 8% optional rate in her first quarter return.
- How much is her total taxable income? a. 800, b. 300, c. 1,100, d. 1,200,
- How much is her income tax due for year 2023 a. 68,
b. No; final tax c. No; graduated tax rate d. Yes but final tax
- Using the information above. If Rian failed to signify his intention to be taxed at 8% optional rate, how much is his total taxable income? (BONUS) a. 500, b. 3,900, c. 700, d. 2,400,
Possible Solution/Answer: 1,500,000 + 2,400,000 = 3,900,
3,900,000 - 1,600,000 = 2,300,
- Using the information above. If Rian failed to signify his intention to be taxed at 8% optional rate, how much is his income tax due? (BONUS) a. 82, b. 70, c. 105, d. 50,
Possible Solution/Answer: 2,300,000 -> tax table: 402,500 + 90,000* = 492,
- [(2,000,000 - 2,300,000) X 30%]
- Jong Kook, a non-resident alien not engaged in business deposited in a local bank, which he earned P10,000 interest income. Compute the final tax a. 3, b. 2, c. 2, d. 1,
- Interest income on long-term deposit earned by a resident alien is a. Subject to 25% final tax b. Subject to regular income tax c. exempt from final tax d. Subject to 20% final tax
- Jessica, a non-resident citizen earned dividend income amounting to P50,000 from CBN Corp., a domestic corporation. Calculate the net amount of to be received by Jessica. a. 45, b. 40, c. 42, d. 37,
- Juan Dela Cruz, a resident citizen, earned a cash prize of P10,000 from a competition. The income earned by him is a. Subject to 20% final tax b. Subject to 25% final tax c. subject to graduated tax d. Subject to corporate income tax
- Using the information above, how much is the final tax a. 2, b. 2, c. 0 d. 1,
- Income from winnings earned by a resident citizen are generally a. Subject to 25% final tax b. Subject to 20% final tax c. exempt from final tax d. Subject to 25% corporate income tax
- Bongvong informed the BIR which leads to the assessment of P3,000,000 but a collection of P2,500,000. Calculate the final tax due from informer’s tax reward a. 250, b. 500, c. 200, d. 100,
- The final tax rate applicable to a resident alien earning passive royalty from books, literary works, etc. a. 20% b. 25% c. 10% d. 15%
d. subject to fringe benefit
- Which of the following monetized leave credits is/are taxable? a. 10-day vacation leave only b. both vacation leave and sick leave c. sick leave only d. excess 10-day vacation leave and sick leave
During the year 2023, Macabebe Corp. gave a gift certificate as an employee achievement award worth P10,000 to Phillip, its managerial employee.
- The award received by the employee is a. taxable b. exempt c. subject to final tax d. Subject to fringe benefits tax
The following benefits were given to Juan Dela Cruz, a government employee during December 2022 Monetized vacation leave credits (20 days at P1,000 per day) Monetized sick leave credits (20 days at P1,000 per day) Uniform allowance - P10, Christmas cash gift - P10, Annual medical assistance - P10,
- Compute the total exempt de minimis benefits a. 70, b. 51, c. 61, d. 40,
- Compute the total taxable de minimis benefits a. 7, b. 9, c. 8, d. 6,
The following salaries and benefits were given to Pedro de Coco, a private employee during December 2023 Basic salary per month P30, 13th month pay P90, Monetized vacation leave credits (20 days at P1,000 per day)
Monetized sick leave credits (20 days at P1,000 per day) Uniform allowance - P10, Christmas cash gift - P10, Annual medical assistance - P10,
- How much is the total compensation income a. 550, b. 500, c. 510, d. 520,
- How much is the total taxable compensation income a. 400, b. 399, c. 450, d. 350,
- How much the non-taxable compensation income a. 41, b. 31, c. 21, d. 51,
- The tax due of Pedro de Coco is a. 21, b. 23, c. 22, d. 24,
ABC Corp. owns a condominium unit acquired in 2020 with a zonal value of P5,000,000. The company allowed its General manager to use the facility beginning January 1.
- Compute the fringe benefits tax if the employee is a resident citizen a. 67, b. 67, c. 76, d. 76,
- Compute the fringe benefits tax if the employee is a NRANETB a. 41, b. 41,
- The total taxable fringe benefits a. 50, b. 30, c. 40, d. 20,
- The fringe benefits tax if the General manager is a resident alien a. 26, b. 26, c. 26, d. 26,
- The fringe benefits tax if the employee is a NRANETB a. 16, b. 16, c. 16, d. 16,
- The ABC Corp. incurred the following expenses for business purposes which were paid its General manager Electricity bill - 20,000 Groceries - 20, Water bill - 5,000 Internet - 5, Compute the fringe benefits tax if the manager is a non-resident citizen a. 16, b. 26, c. 0 d. 250,
ABC Corp. purchases a brand-new Sports utility vehicle amounting to P5 Million for the use of its General Manager
- Compute the fringe benefits tax if the employee is resident citizen a. 269, b. 270, c. 270, d. 269,
- Compute the fringe benefits tax if the employee is a NRANETB a. 166, b. 156, c. 165,
d. 166,
- Aircrafts or helicopter owned and maintained by the employer for tax purposes are a. Subject to fringe benefits tax b. A type of de minimis benefit c. exempt from fringe benefits tax d. Subject to either fringe benefits tax or withholding tax on compensation
- Yacht whether owned or leased by the employer are taxable fringe benefits, and for tax purposes has a useful life of a. 5 years b. 15 years c. 20 years d. 25 years
- Generally, educational assistance granted by employer to its employee is a. exempt from fringe benefits tax b. taxable as fringe benefit c. a de minimis benefit d. A passive income subject to final tax
Test II. True or False
FALSE 29. The withholding tax on the sale of goods is 2%. FALSE 30. For rental income, the required withholding tax is 10% FALSE 31. Individual taxpayers rendering professional services with gross income of at least 3M shall withhold 10% of the fees paid. TRUE 32. General professional partnerships are subject to 0% withholding tax on its income earned from professional service TRUE 33. No withholding is necessary if casual purchase of goods/services from a non-regular supplier FALSE 34. Tres Corp. leased its property to Singko Enterprise for a monthly rental payment of P20,000. The rental income to be received by Tres Enterprise net of withholding tax is P18, FALSE 35. Supplementary compensation are those which are regularly given by employer to its employees. TRUE 36. Salary of a kasambahay is a exempted from withholding tax on compensation TRUE 37. Fringe benefits tax is computed by dividing the monetary value of the fringe benefits by either 65% or 75%, and then multiplied by 35% or 25% tax rate. TRUE 38. Fringe benefits tax is a final tax.
SEMI-FINAL
- S1 - Capital assets are assets not subject to depreciation S2 - Ordinary assets are ordinarily held for sale S3 - Capital assets and ordinary assets are subject to capital gains tax a. Only 1 statement is true b. All are true c. Only 1 statement is false d. All are false
- Gain from the sale of ordinary asset is a. subject to 15% CGT b. allowed as deduction c. part of the gross income d. subject to 6% CGT
- Sale of real property classified as capital asset and located within the Philippines is a. exempt from CGT if principal residence b. exempt from CGT if not a principal residence c. part of the gross income d. subject to 6% CGT
- Sale of real property classified as ordinary asset located outside the Philippines is a. exempt from CGT b. allowed as deduction c. part of the gross income d. subject to 6% CGT
- Sale of real property classified as capital asset, located within the Philippines, and not considered as principal is residence is a. subject to 15% CGT based on selling price or AV b. subject to 15% CGT based on capital gain c. subject to 6% CGT based on capital gain d. subject to 6% CGT based on selling price or AV
- Sale of personal property classified as capital asset other than domestic shares is a. subject to 15% CGT based on selling price b. subject to 15% CGT based on capital gain c. subject to 6% CGT based on capital gain d. subject to 6% CGT based on selling price
- If domestic shares are sold directly to buyer, it is a. subject to 15% CGT based on selling price b. subject to 15% CGT based on capital gain c. subject to 6% CGT based on capital gain d. subject to 6% CGT based on selling price
- Sale of real property classified as capital asset located outside the Philippines is a. subject to 15% CGT based on selling price b. subject to 15% CGT based on capital gain c. subject to 6% CGT based on capital gain d. subject to 6% CGT based on selling price
- Sale of domestic shares is a. subject to 15% CGT based on selling price b. subject to 15% CGT based on capital gain c. subject to 6/10 of 1% tax on selling price d. subject to 6/10 of 2% tax on selling price
- Capital gain is a. the excess of cost over selling price b. the excess of capital gain over capital loss c. the excess of selling price over cost d. the excess of capital loss over capital gain
- Mr. Dong Ramos bought shares from GJ Company for P400,000 (par value) and holds it as an investment. In the same calendar year, he decided to sell the shares he bought from GJ Company for P450,000. The shares were sold directly to the buyer. The capital gain/loss and capital gains tax a. (50,000); 0 b. 50,000; 3, c. (50,000); 7, d. 50,000; 7,
- Ms. Ding Ramos, a trader bought shares from GJ Company for P500,000 (par value) and holds it as an investment. In the same calendar year, he decided to sell the shares he bought from GJ Company for P650,000. The tax applicable to the said transaction is a. 22, b. 9, c. 3, d. 900
- How much is the compensation exempt from tax a. 100, b. 90, c. 140, d. 150,
- The income tax due for the year 2023 is a. 240, b. 255, c. 260, d. 235,
- The following items are included in the gross income, except a. gain from dealings in property b. dividends not subjected to final tax c. all types of royalty income d. Interest income not subjected to final tax
- S1 - Generally all income are subject to tax S2 - Gross income means all income derived from whatever sources S3 - If an income is exempted by law, then such would not form part in the gross income a. All are false b. Only 1 statement is true c. Only 2 statements are true d. All are true
The financial position for the year 2023 of MA Singko Enterprise, an entity engaged in the selling of goods shows the following: Cash 5,000,000 Accounts Payable 5,000, Accounts Receivable 3,000,000 Notes Payable 2,500, Building 2,000,000 Shareholders’ Equity 2,500,
During the year it earned a sales of P5,000,000. Incurred cost of goods sold of P3,000,000 and operating expenses amounting to P500,000. In the year 2024 its sales increased to P6,000, but still incurred the same expenses. Also, because of the good performance experienced by the company its total assets exceeded P100,000,000.
- How much is the total taxable income for the year 2023? a. 2,000, b. 1,000,
c. 1,500, d. 2,500,
- The income tax due for the year 2023 by MA Singko Enterprise is a. 375, b. 277, c. 450, d. 300,
- How much is the total taxable income for the year 2024? a. 2,000, b. 1,000, c. 1,500, d. 2,500,
- The income tax due for the year 2024 is a. 500, b. 625, c. 252, d. 550,
- Loss derived from the sale of an ordinary asset is a. subject to final tax b. part of gross income c. allowed as deduction d. exempt from tax
Evelyn Tui the owner of 7-Eleven, a sari-sari store had the following income and expenses for the year 2023: Gross Sales P3,000, Cost of sales P500, Utilities expense P10, Electricity expense P10,
Aside from its business income, she also earned a P20,000 monthly salary from his employer. During the annualization of compensation in December, it was determined that she also receive the following: Christmas bonus P5, 13th month pay & other benefits P100, Loyalty award P10,
