CPA REVIEW SCI-fOOL OF THE PHIcIPPI NES
ESTATES AND TRUSTS
De la Cruz / De Uer» 1 Lopez / Uhm.do
1. The property, ri8hts and obligations of a person which Ore not extinguished by his death and those
hich accrued thereto since the opening of succession.
d. Income
c. Estate
The lerm applied IO the ps£5on whose property is transmimd through succession, whether or not he
lefi a will
a Deeeai
b. Transferor
c. Transferee
d. ldDtO£
3. The ten applied to the answer in No. 2 if he left a will
a. Transferor
b. mentor
c. Donor
d. Testaior
The person called to tire succession either by the provision of a will of by operation o1’ law
a. Heir
b, Devised
c, Legaiee
d. Trustor
5. The person to whom a gift of real propertj is given by vio'ue pf a will
a. Heid
b. Dcvisec
c. f.egatee
the peison to whom a gift of T n 1
fl. Heil
b. Devisee
D
7. The parson wh
a. Herr
bli h
®
c
. The person in w
a. Devisee
b. Devisee
d
b. Trustee
rt is given by viftue of a will
c. Legatee
c. Legatae
d. 1”tustor
d. Trustor
as regards property for the benefit of another person
c. Legatee
d. Heir
The person for whose benefit the trusi has been created
a. Legaiee
b Herr
c. Beneficiary
d. Trusteu
10. For income tax purposes, any perspn or corporation that holds in trust an estate (or property) of another
person or persons
a. Beneficiary
b. Fiduciary
c, Legatee
d. Devises
l. Which Df the following statements is correct'?
a. Estates and trusts are allowed a personal exemption of PÖ,000 if the executor or trustee is marri&.
b. The income tax rates ffir coporate taxpayers apply to taxable estates and ousts. L !' ’ •nv
*
c. The taxable year of estates and ousts may be calendar or fi
.o^/
d, for a trust to be taxabie, it must be irrevocable, both as to corpus (principal) and income.
A died on January 2, 20 18, s urvived by his wife and four qualified dependent children. He let a net
esiate of P80,000,000 which is in the hands of an executor. In 2018, the estate gross receipts of
P7,000,000, cost of sees of f4,000,000, business expenses of P2,200,000, and con-operatin g income
Of’PIQ
The net taxable income of the estate in 2018 is.
8• P800,000
c. P900,000
b. P650,000
d. None of the above.
J3. A died on lanuaiy 2, °0l 8 fegving a aet estate of P4,000,Oßß. The
B, fl n@hew of A, married, is one of the heirs of A.
In 2Q19, the RStato had h @Oss income 0f
0 and expenses o P500,000 on
ests‹c
, hos his on gross Sales of P6 0 0
cost of sales of P400,000 and business expenses o1
P120,000. The execulor disuibuted io the following,
From
in the esmie
P250,000
From the current year’s income, net of l 5% CWT
85,000
8
’
OO
'”
Fot 2019, both the administrator of A’s estate, and B did not avail of the 8% ineome tax rate option.
Determina:
} 1oo,tW a. The taxBble income of the estate in 2019
q t J< b. The taxrbJe ncome of B in 2019
o c. Income tax pa5'ablNrefund of B in 2019
ao
O 0°#
g @o0D
14. fi cre‹ited two trusts, Trust I and Trust 2 with ditTerent trustees btlt with a coinnIon beneficiary. The
following data pertain to the trusts and the beneficiary's oui account:
Trust 1
P450,000
CrroSs Income
Allowable Deductiors
lncome disti'ibuteö to beneliciary
(gross of CWT)
( 75,000)
ust 2
P1 ,090,000
( 125.000Ü
Bene icizry
P250,00O
()00,000}
Required : Detennine the taxable income of:
In 2017, A created a ttusi für his d ht %, and appcinied C as thc trustee, A transfeired a 10-door
apartiiiciit when renmoderne of N
pm: month (mt pf i% wiJboJding,tax) was received by the
IJSt w'ith ccst of revenues o P400,000,) and deductible expenses o@580,00 In 2018, 30% of the
died
1-lis estatz is still under
administration. in 2018, the net estate, which includes an apartment, realized a total income of
P2,280,000 (in i’Jä tax). The execuior distributeß P200,000 and P300,000 to A’s da
respectively. 76' of the amount distributed came from the income of the estate whit 5°
ate
The estate also inched expenses amounting to P 1,?00,000, but 25% of which is a nondeductible expense. Required: Determine the tax still due from the estate in 2018.
am
[ dY 6QO
2q5 on‘
eslablished iii December 201 6, a trust for the bencfit of his grandsons, Yael and
Dingdong. He transferred to the trusi 2 income-producing pmperties:
(1) A vacant lot leased for P100,o0ñ monthly, ps of withholding tax of 5%; and
(2) An office building with a monthly rental income of P'23,750, ne1 of withholding tax of 5%.
He appointed Atry. W, fiwala as trustee. In 201 S, ordinary trust expcnses totaled PI.3 Million.
Income distributed to the benefici €4 amounted to I•75,000 each, gross of the 15% CWT. Compute
iCcome tax payable of the trust in to able year 2018.
The End!!!
>'
Tax 87-05
@ela 'ruz/ De Verb / f-oPcz / Ll•^ado
FRINGE BENEFITS. TLS
The fringe benefit tax is
A. ltilposed on the v•mployer B. Withheld at source
a. O»Jy A an‹t B
c. On)y B aAd C
6. 0Ny A md C
2.
C. Deductibi» expense by the employee
d. A, B. md C
Which of the fo1lo»’ing is Subject to the fringe bcnefit tax?
a. C'ompcnsct‹on income
racy1 and tile employees
b. Fringe the fit of the race and file employees
c. Compensation income of the manapcri3l cmplt›yees
d.- Fnnge benefit of the inanngcriai
3.
TI 0 fOlTO \viI\y cona|›t* denntc c
ployec8
rnj›tjnn hmm the fringc benefits tax, Oxcsyt
a. Convenience; of the cnjplci\cr
b. Nuc swig' tu the bush ners or lads
c Welfare and benefit u1”the cmpToyeet
d, De minimis hcnefia
\Vitli regnrd to the zmoiirt on which the fringe bencfit to tate is appl ied, w'hich
The Wx benefit rate iS *h9 i •‹ ^
c. The amount d«ductzblc be the cml[oyer trom gros, incumc
d. Both ant0urtts of rhe Frinyc benefit and the fringe benefit tax
folloninc fringe benefit archaic lo fringe benefit tax,
If rt;tjuir b)' the nature of or rig
to the trade, business or profession of the employer
b. ' Cootrition of the cmp!o›'et Inc the benefit of the employee to retirement, insurance and
hospitalmoon benefit plans
c. Benefits giv-•n to rank and file employees
d. If given for the convenience or advouge of a anagenal/supervisory
6. Basic rules on fringe benefit tax, x
z Fringe benefits given to tank and fire employees are not subject to fringe benefit tax
b. Ennge bencha yven to a super imp or man trial egplpyce are subject to lust b‹›‹rt tax
c. De minimis benefits whether even to rank and fi Ie employee or to a supervisory or managerial
empJos’ee are not subject to Ange benefit tax
d. Thy Ange benc6t tax is 8 Oh Imposed on the(managerial or supervisory employee) -• ‹n
Which of the follo'a'ing statements is correct*
I tI•3
s •
J °t'*
a. Fringe benefit given io employees is subject to fnn•ge bene fit tax.
h 8'•'
}r 6§ - io^^
b Figs bencfit ¿Even In erng]‹›yees is cxempt from Fringe benefit tax.
c. f£ the fringe Anefits is taxable. the tax will be paid h}’ tt›e c ziploycr.
d. Fringe bcjjefits may6
VW IO ilfi¥N2gCria), supervisory u d rank a«d file employees.
Daily' meal ailonancc for oi crtinic wqrk is a dv miniinis 6ensFt if act exceeding wWt put
basic mime um wage?
a
•
b. 1 5%
c. 20%
d. 25Si
of t6e
Faciiitics or priwleges fumishcd ter offered bv an employer to his employees that are of re(8tivefy
Antall blue and itfc offered o• funusted by' the em plot cr merely as a means of promoting the health,
B All, corllnotmctH, or ctficicnc ' of his employees
b. Ftirige benefit tax
t• - ’ Dc rninimis lunge benefii
4
GFQsscd-lJ]D utone
' x’aIu••
Tax 87-06
2
10. Which statement I
The fiinbenefittax İs
a. Imposed on the employer
b. Imposed on the rønk and file employee if the 8ïDOiiiß pt the benefit exceeds the ceiling allowed by
tin tax code -• <¢ ğĄJ To
c. Withheld at sourœ
d. Œductible by the employer
q,
t1. The following are cnnside
de minimis benefits gnnted to each employee except,
ltave credits of private employees not exceeding 10 days during the year
a. Monetized unused
6. Monenzed uøused vacaÕon leave cnóits of private employees not exceeding 10 days during the
c. Monetized value of vacation leave credits paid to government officials and employees
d. Monetized vaÍue of sick Íeave credits paid to government officials and employœs
considered as ”de mjnîmis” benefits7
Employees achievefDent awaTd for leBgtb of Sefviee or safety acbievement in the form
gift ceròficate not exceeòiog Pl0,000 per year
Medical cash allowance to depeoetnsd of employees not exceeding P3,000 per year
Grits given during Christmas and major anniversary celebrations not exceeding P5,000 per year
Medical allowance tø cover medïcał and healthcare needs, annual Ißedical/executive check-up,
maternity assistance and routine consultaúns not exceeding Pl0,000 per year
12. Which of the following is
a.
b.
c.
d.
l3. In 2018, A Corporaõon tdlowed its Saies Møziager to
expenses subject to reimbursement, as
follows.
Electricity (Meralco) - 70°ñ in the name of A Corporation
Water (Maynilad) — 70% in the name of A Corporation
Cîtocery (SM)
Gasoline of Company car
s i s
-
Representation and Trainportation — business trip
The amount søiijeci to fringe benefits tax is
a P48,000
b. P25,400
c. PI 5,400
d P16,600
14. Thu grossed-up monetary value of fringe benefit gubjœt to fringe benefit tax received by a ownresident alien individual not engaged in trade or business in the Philippines is computed by dividing
the monetary value of the fringe benefit by
a. 75P
b. 68%
c. 85%
d. tS%
t
IS. The following data belong to A Corp, for the year 2018
a. Edocatioøat assistance to supervisors and their children
b. Employer’s contri6mion for the benefit of the employees to retireœenĘ
insurance and hospitalization benefit plans 8xicd
c. Year’s rej;lai for an apartment paid b$ the corporation for the use of its
cotnpnoller
The fringe benefits tax due in 2018 is!
a P 75,294
c. P86,154
b. P103,529
d. None
16
q
d
O
n *c h
e be
120,000
0
60% of said amoøøt was given to rank and file employees
d0% of said amount was given to corporate officers as follows:
b.
c.
80,000
fab MNC or the Philippines provided its enjp]oyees cash
Total amount of ßing< benefits
a
P100,000
Pi,000,000
TOO.OOü
to iesjòent citizens (i8xØd 8t tegut8i rates)
to nomresident aliens not engaged in business in the Phils.
tø special gliens end Filipino employees
Tax 8746
The loci rBT dv i 2018 is.
b. P123,345
c. '34,4$
d. f•Icinc of the above
17. B Co.. owns a CO
° 0 il'i°^
j* *8 i S 6eing feed by the President of the corp.. It has a fair market
Property re Declarati0h Of P2, 100,000 and a zonal value nf P3,000,oo0
! ehinge f›ene/if iftres duc in 2ñ I R.
'
- A is a mining engineer employed 6y B Co„ a miaing firm. The company’s mine is in Mirdanao.
MA was pro id d t
c ery with living quarters at the mine site. The fair rental vatue of thc
quarters is P15,000 a month.
Dene inc the fringe benefit taxes due in 2018.
! - !° addition to other fringe 6enefitk 1fi 2018, Mr. B, a Chief Accountant, availed of the carIsa of his
employer, C Company. Under the plan, Mr. B shouldered only (50"Z) of the cost nf the car, with the
*ompany shouldering the other 50%. Mr. B paid P340,000 for the car. The car was registered in the
name of Mr. B.
Determine:
a. the fringe benefit tax due.
b. the deductible expense of the employer
20. In 2018, A company urchased a second hand car for its Chief Accountant as a fringe benefit. The
i
cash purc]iase price nf the car was P120,000. J’be compatty paid P30,000 as down payment plus foot
equal annuaf installment of P30,000 (I 20,00t3 plus P30,tJ00 interest). The ownership was transferred
to the cluet’Accountant.
Determine the f’inge benefit f‹ft’ due in 2U E.
21. In *018, A, the sales manager, purchased n brand sew car amounong to P500,000 of which PJ00 000
was contributed by the company aS his f* ^8* •a-•fi
determine the fringe benefit tax due.
22. In 2018, ABC Corp. hired Miss A as sales manager for cosmetics She was given the follomng
compensation and fringe benefits:
Salary
P200,000/month
4,000 per maid/month
â’hree maids
8,000.'month
Penoual driver
home owner’s Association. dues
I .200/year
88. Ifi 2018, A, the uwr:er of Victory Supermarket lent PI 00.000 to B, the supermark e t ltte
g , tt
stipulated in their agreement that the amouni should be paid in one year Wlth an gjjjiual interest o 3%.
Tax 87-06
9
,
4
24. In 2018, Mf. A, ltte Vice President for Finanyce qf
attending ^ tee-day foreign bilsiness convention:
(USA trace )
(USA)
As*w g i vo - r50
a. Wt let Jocumentory ei'idence
ñ.
b.
c.
Fringe Ben¢ljt Expense
Fringe Bo•neFR Tax Expense
Cash
P209,230
Fringe Benefit ExyeDse / 0›y Crg‹ng
Fringe Betie ñ
Cash
h inge Benefit Expense
Friage Benefit Tax C
Cash
P172,615
P68,000
36,615
HSE
P68,009
P1. 32,000
26 As
e
a.
b
c.
d
h.
a means of pr°n°tina ie Health,
wiJJ, en»:entnent and efficiency pt his employees,
o
ave rank and file em lo e
e following fringe benefits in 2018:
Monetized uiiascd vacañon lea›'e of days
P24,000 s
Rice subsidy
Uniform and clothing allowance
Achievement award for length of sefvjce ir the f rm of
pe‹u na1
20,000 „ , g
Gifts even during Chrisrmos and major anniveisa.ry celebrations
Medical beoefiis
Laundry ull»ance
13" month pay
Mid year boms
Production:f' bonus
•
20,000 i° or›
s o ° ° 12,000 ve
°°° ^ #°°
30,000
3,000 fs*)
o
t4s
Determine the amoant of.
{
27 Enrique Gil, filipino, is a manager of a PEZA-registered enterptjse. lie receives fringe benefits
oorniaiiy ara subject to the NDT. 1s the PM-rc@*tered enterprise str II liabl•• tn pay ihe FBT?
a) ho, if the PEZ A-registered enterprise is under 13 H. Th.c FRS’ is considered an iiicorne tax from
which the PEZA-rcgsteied enterprise is excmpt under the ITU.
b) No, if the PDA-registered eoteipnse is u.nder the *et GJT. After paying the 5% GJT, such
enterprise is exempt from the payment of all other taxes, iiatio0al or total, including the FBT.
c) Yes. If be PFMA-registered enterprise is under the 5% GST, the monetary value of the fringe
benefiis of Critique o ill first 6e yosseJ Us by dii’idi.'ip If b5*o, 8Dd the FBT is computed by
multiplying the G£MV by 5%.
d) Yes. The monetary value of the fringe ñenrfits of Enriqm all first be glossed up by dividing it
by 65%, and the FB"f •s compute by' m»ltiy1yin :be GL9vfV b y 3ñ*•.
The End!!!
Tax 87-06
1
GROSS INCOME
Tele Cm z / De Vera / Lopez f Llanisdo
a. Irltercst on the price of land covered 6y the Presidential Decree on land reform
b. Interest payments on proceeds of rife insunøice held by the insurer.
c. GSIS, SMS, Philhealth and Pag-ibig contributioßs and imîœi dues of indivìduats.
d, Gains realized by an ùlvestoi upon redemption pf shares of stock in a th
la
momy.
Wluch of the foilowing statements is
a, The power of taxation reaches even ke, citizens finædaW thoöincomeœmødboms0
s
outside the Píølippines.
Prints and ieti@ous insÕtuiions are exempt ff0fit income ind Pr0perty tøxes.
Separation Benefits received by teminatœt employees rosulling from a deadlock in their collective
bargaining ageement are exempt from incone
d, The iølue of property received as off, or under a will or testament or lÕ0ugh legßl SllcCßSSİOR IS
a. tii ts, bequests and devices Wś
b. .4moun•n received as reuarfis from giving Information instrumental in the discovery of vioIati0flS
nt thc To Co‹ł anJ aizwe of smuggled goods,
c. Ptoco‹ôs froo life insurance §Mf
¢Ł Separation pay received ł›y aa employee due æ g causc bcygnd his COłtDOf. 8+^^d
Which of the folloĞng statement is not correct?
a. Pzoccęós ot tife iasiJrance po)icius pa]d to bcoef ciańes upon the dGs‹t› of the i»surcd arc excluded
ff0m gross income rcgarßless of whether the proceeds are received as a single sum t in
b. In case of transfer for a valuable considemtiott by assigiunent or otherwise of a life insurance,
en ment or æniuip' contract or any interest therein, only the actual value of such consideration
and the ømount of be premium and tòe sums subsequently poid by the transferee arc cxempt front
income tax.
c. Marriage fees, baptismal offerings, suøss paid lor saying masses for the dead and other
contrib»ticns uteiv& ny a clergyman, evøngeilst or reliJpous wcrkci for services rendered is
iaxøble income.
d Monetizalioø of leave credits of einpioyees who were unable to go on
to Agencies of
the ice
constitutes taxabie in.come.
b.
c. Recovery of bad debt previously z'ritten off is part df taxable income.
d. As a rule, contest and
md prizes arc subject to 20% final tax if they amount to more
P10,000, otbenvise tbq will be part of taxable income.
Wiøcl of the following staunicnts i.ȚøDț)correct?
a.
*imum o a0* earners shall be e tript from the payment of income tax on tłicir SP'.
b. HOliday pay, ox erlime pay, night sbifl aimieat'al anò hazard pay shall be exempt from income
c P*zes And 8*'aIds țuaBted 1* athletes m 1J0.2Í and iotemaüonaf lports
and
mine:'at:um are cxc :' usi‹'r.s foot.i pt›ss income.
- B*nefi:s r°°*i •e8 t'"tn or • njoy‹: i undcr the 3ociai Smurvh' System are exclusions horn
1”ax 8 07
a, Comteosøtíon for damages
b. Th» sM of « partner in the
ra«k axd file employs for the con•*ni c"
the employ ivilege
smail value offend by the employer as
Facilities or pr
of
the healthy goodwill, ‹ » tentment, or efficiency of tln em ployœ * ^”' "
*
¡ø5 j
a.
b
c.
d.
e
JloldinS income &8
E.xpanded withholding inCome łan
Withholding income tax at SOWS
Withholding i»com tax on
•• •***° "
Withholding income tax on compensaÕofl fDCOTØ
9. As a ruie, his s
parł of taxable income
a, Pmfit sharing
b. Fíamrd pay
c. Overtime pay
d. ı3 month pay
i0. TWsötæaMixome
a. Retrenchment pay
b. SSS / GSI8 benefits
c. Separation pøy due to re i
to
Ó. Ítefuiid Of Phtl tppİ tie Iri coiße tax
11. Which of the following is taxable İfiCome7
a littS anÅ awatò3 &'aTi abate of Ration
ySßy ß tlld I'o dation
b. Damages awarded as a consequence of libel and slander suits I eb'e
12. which of tire following statements regaröng dividends is conœt?
a. Exempt from tax if rœeiveö by a resident citizen from a domeøic corporation
b. Exempt from tax if received by d resident alien fom a domestic corporaöoø
c. 9axable subject to year-end tax if received by a resident cities from a non-resident foreign
d, Taxø6le subject to final tax if received by a non•resident citizen from a non-resist foreign
OOIQOFBÒOO
Tbe following items are exclusions from gross income
a. Labor union du
b. SSS/ۓSIS premiums Goatribution
fOU
Pag-ibig pietaium contribution
14. Which of the folJowing js pøit of gross incømñ in the OR?
«. PCSO and Philippine 1.otto
i•w
b. Bank interest on long term de}nSit
Proceeds of life insurance u{xin deøtli of tòe insuredò RafDe pnze not exceedjpg P10,000
!
*w
Tax 87-07
15.
A) PCSO Td Philippine lotto winnings (of more tlm Pl0,000) of citizens and msident aliens ate
fuded borti gross incoinc in the US because they are exempt from tar.
B)
// ñzcs, awurds, winni his are axcludcd from gross incomc iij the ITR b cause ‹t›cy
b Boh am fae
c. Ony the fists rue
d. Qnly the second is true
17. Which of tfte following is
a. P 100,000 interest on
Of
investment
b. P 200,000 gain on sale of 10 4r bohrls
c. P 12,000 prize iH supermarket rafllc
d. P I0 000 windings in Phi1 ippine Tmtt‹i IBM
t*’
Gain realized frum the sale or exchange or retlieiiicnt ‹›l’ bunks, dehenturvs Or other certificate o
indebtedness is excluded from gross income if the same have o manirity of
a. More than 5 years
b. More than 7 years
c. More than 8 years
d. More than 10 years
Gross benefits received by officials and em plojees of public aid private entities as I 3th fnOTE Qfi\
and other benefits such as productivity bonus, serrices incentive pay arld Christmas bontis shttl 1 be
excluded from taxable income up lo
a. P20,000
b. P90,000
c. P40,000
6. P50.000
20 Advance rental in the nature of prepaid rental, received by fie lessor under a
or right, and
w4thoqt restric0on as to use is
a. Taxable income of the lesser in the year roreii'eJ if he is on the cash method ofaccnantiag.
b. Taxable kcome of the essor in tbe year me*sed if he is on tl.›e accrual method of accounting.
c. Taxable income of the lessor in the 5’ear received wbedier he is on the cash or accnnl method of
d Taxableñwomeoflele orup(o:heamoun1eAmuéintbeyevin«nn T›sreczived
H1›fct pz\aents made by fhe Issse« uad r suci› Rm s of the lease cortrac si›ouJd be cons dared 2s
*dditi4nal reTlt inCnrne c'f the lesSOf\’
O. If the amount resi›ed bv the lessor i 'n the nature ot z Securi9 deposit for the faithful
COmpliancc bj' ltte lCssde Of tbc trf7ttS Of’lbe cOñtIaC1
C. li be amount to cii ed by the lessor is ir' nnture o[ a loan exlvod>•d 8j ltte lessee to t(p• jggyr.
B.
h Ont› A and C
c.
ojj B end C
Should tte lessec mske perm8n6nt improvflmfltits on the pfopcrty leased uDder an agreement that tlpon
the expiratloo of the lease contract the improvements shall belong to the lenor, the lessor may
recognize income from the leasehold improvements
A. Al the titne when st›ch improvements as complete the fair market value of such improvements.
B. By spreading over the mmaining to of Ore lean the ostimaifi depreciated value of such
improvements at the termination of the lease and report as income for eanh year of the lease go
aliquot part thereof
a.
b,
c.
d.
A but not B is allowed
B but not A is ailowed
flither A or B is allowed
Neitber A nor B is al1ow&
23. After 10 years of romantic relationship, A dWldGd to end his relationship with B wkich made B rery
angry. B with anger in her eyes boxed, kiclred and berated .4. A tried to pacify B, but B slipped, lost
control and fell to the ground requiring hosp. tatzatioo To boy peace, A decided to shoulder the
medical expenses for the injuries suffered by b. 1’be amount is
a. Taxable income B
6. Deductible expense of A
24. In 2018. A inherited piers ofjGweiry from her raider with a CMV of P500,0(l0, Her father acquired
the property in 1985 for P200,000. lf A sells th•.se pines of jewelry in 2019 for P550,000, A’s gross
a.
b.
c.
d.
P350,000
P50,000
P550,000
P300,000
23. Usiog the P°** '°g Oumber, except that A acquired the properly as a bñthday gift from her fattier,
A’ s gmss profit is
a.
b.
c.
d.
q$$
P350,000
P50,000
P550,000
P300,000
26. One oftme following may be aben
e for a resident individual:
b. Cash received as thence *W
c. Ith
on Philippine lotto winnings
d. Benefits from the SSS an&'ni GSIS
,t *7, ORe Of tire fOl I0wing represents Idxable iilc0rne.
a Refund of overpaid rental expeos in prior year - tb1
b. Refund ofdonon' tax paid in prior year
c. Red pf jpcome tax in príor year
d Refund of speciai assessnieiit paid in pfior year
‹hcír del nd nLs sbaii be
a
;nc]ug‹xI as pari of Cross con›p•»saticn inc»r le
b. Ezcluded from gross conipensatÍ0n inGüm°
c. Partiv include, partly ekcludtxl from g*0SS *°°°@'
d. Sub)eci ni final tax
*^ *°*
*
Al M testimonial
SO SEC Aided to cancet Christian’s indebtedness to her. An 8 mS8!C
*m!tzod a taxable income as compensation for services
Chli !ia0 accepts the cancellation, he will pay donor’s *ax
* inc0mC
C risGan Received a gift from Pauline and ihcrefore is not par! of his
88 dlD0t4nt of indebtedness cancelled is partly taxa6ig, p;qrtly Txeljj t
30. A, W@ adjudged the best boxer in the ‹ecentIy conc]udcd Asian.gg
V' °nnance, he was awarded a trophy and a cash prize of P I M As a result,
be value of the trophy and the cash prize are p;jrt of his t8xabIc nGome
Only the value of we trophy is taxable
0015' the cash ptize is taxable
d. Both are cxcmpt from jncome tax
A purchased a life annuity for P1,000,00d winch will pay him P100.000 a year. The life expectancy of
A is l2 years. patch or the follornng will A b* able to cxclude from his i°come?
i P1,000,000
P 1,200,000
P 200,000
IOO,0O0
If air individual performs services for a creditor who in consideration thereof cancels the debt, the
Cancellation of iudebtedness may amount to I°&
'in
A capital connibution
d. Sitlary of P10,000 a monk of an employee
b. Fringe benefits of P10,000 a tenth
e. SaRry of PI 0,000 a month of a partner in a general professional partnership = “*
M! '
d. Hoooranum and allowances of P10,000 of a member of the hoard of directors of a corJx›ration
who i5 glso an employee of the corporation
hati the follow ig Sta
tbc year
Sates of livestock and hnn products taised
Sales of live4iock and rarm products purchased
Cost of raising livestock and Varn prodmts
Cost orli•»sit and fern gods o
gpd and old
Rental income of farm equipment
lb
' of 1i•estocl and farm products, Jan
j
kv»«iow »r1iv *rock ana M undue, ncwber a i
'
A, Using cash melted of accounting, the income is
i P2J 0
b. P 208.0(@
c. P 395,000
d. P 2ti2,0
P 270,000 )
180000
(lP0,000j
{J40,00@“
105,000
I 10.000
I 13,000
'
0
35, Give the income tax due (refund) far m taxable yeaf 2019:
& A a resident alieo, single bad the f»1lowing during the year.
Salaries (net of payoff deduction), P200,088
Allowances. P25,000 *
3. 13‘ tnonth paß, P269,000
4, Christmas casb gifi Pl0,000 *
5 14* month pay, P26,000 *
r¡T
qp
tp git
6. pg jJ
a. Withbolding tax on saJaiy, P16,500
b Cootributions for SSS, PHIC, PAG-IB£G, and Cabot unten docs, Pt6,000
c. Advences/Loans, P30,000
7. Premium on health and hospitalization insurance, P2,750
Bank interest income, net of 20% WT, P l,4ß0
b. A, resident citizen, single had the following ßuring ibe year 2019.
• P480,000
Gross compenss0on income
Deducfioos fiom compensation income:
SSS contributions
Pag-ibig Contributions
hilhealth Contributions
( P3,600)
Union dues
Pfemium payments on health insurance (P250,'month)
Other income:
PtifeS ând awards received as best athlete is the Palarong Pambaosa N-
Puts and awards renned for the silver medal in the South East Asiei games
Prize won in a Supemiarket raffie
Mid-year boous
lnterest on bank deJxnit (net of 20% Wf)
Inte
t(
c. D, a resideni citizen, manied, with 2 qualif¡ed
Professional fefs
Gross Income from rental of cmjugal properties
Expeoses connected with profenio0
Expenses connected with renal properties
can withheld on pmfessionat fees
Tax withheld on rent of pmperties
( 1,?00)
1,800)
2,40O}
3,X0
10,000
2J,000
* 10,ß00
20,000
45,000
110,000
45,000
16,000
10,000
nde c ldren, had tue following
600,Q›0c@
180.000
20OO0O
400@
30,000
Sales (net orPI , 0
and yay-ihig
P400,000
42,000
42,000
Produci ivity bonus
8 '°*um paymnnis oa health insiirancc
2,400
200,000
PeHonftl, fgt jji}y and lrving cxpcnses
)
36 RA 95o5, oiherwi know as PESA Aci orzc0*, i
o. Personal equity and refircmiefll daunt
b. Personal exemption md reciprc°ity aeti8n
c. Perwml exemption and rctir#*ne*t eccou^t
d.
PerSOnt 0()1iity a?td reCiQr0CiÜ 8*t t***
in UO publlc stf•tor are not sobjec °
f’ the 13* month pay ahd other benefits paid oL accrued duriag the year over P90,000
h. Représentation end transportstion alTo\vance (.RA’7A) grunted »nder the General Apj»oprjatjons
a. the
c. Personnel liconomic lielief Ailowaoce (PûRAj gmnmd to government personnel
d. Monetizcd value of leave credle paid io t;ovemment officials md employees
38. A holds 1,00d common shares of ADC, a domestic corporation, acquired at P110 per share f- ter, he
received o I0%i stock dividend in common shares md tliereaftsr, sold directly to a buyer 500
120 per sharee t
ig
e goi» (In.i.•) o.si'iimiriJ fAs shorec yre ardinory are**.
Mr. Billionoire
f•l0.000
MI, Handsorae
\ 0.000
Mr, Mscho
lvtr. G‹›nttemsu
30 00‹J
20,000
o§
*0,000
Mc.
ï
0?
Pt00,000
M›1ch o[ tf tc folTowing statcnlent is bue?
n01 recOg'tiZe amy renlal inc,ime ja 20 t9
b. The sharehoJders shaft ^cob'nize dividen J• tourne whieb thé I be *hcluded
üieir respective
c. “W. Rigar'* Aatty az!
boum recei•ed by the
d
Nom où ttJ•. abgvç
Tax 87. 07
40 i Tr•
o‹a
Asc corpotntion, organ@;d in 2007 show thc föllowing data for 2017.
Ciross Income
Less. Aljow-able business expenses
(othct than bad debts)
Bed debts written off
Tenable net income
P2,000,000
P1,850,000
100.000
1 950 000
P 50 000
In 2018, 80% of the bad de6ts writicn off in 2017 w0s collected
40. 1”he incomc trut ctu¢ i‹I 20 7
o. P40,000
b, ï›4S,000
c. PC 5,000
d. P25,000
41. In 20 t 8, which of the follomag statements is correct?
a. There is a dcficiency income tax of P24,000 for 20 17
b. The taxable net income should be cpireCled in Pl30,000
c. There is a taxable recovery amounting to P80,000 in 2018
d. The bad debts expense in 2017 should be
to P20,‹800
42. “A’ leased his land as follows
Lessee
Agreed annual rentai
Start of lease
Rentals received by the lessor on 1- I-2014 t*or 3 yens* rent)
Security deposit
Improvement introduced by the lessee (witl belong to tha tessor
upon expiration/terntination)
I.
P200,000
1-1-2014
600,000
200,000
t0kt
a) Income to be repofted by the lessor fn 2014 and 201f assuming be will spiead his
income on the imprevement over the term of the lease. '
gpg
je
6) DeducÖbie expease of lessee X in 2014 and 2Ol 5.
2. SupJxisc the lene was nninated ttuu the fault of the lessec ar the stan of the 19° vin, detenniiw
a) lncome to be reported by the lessor on the imprnvetnents t i,us,tit
Asswer: t !*”°. °
dedÎCaed:md
retrenched as de
+^t ^ P!‹›Y
Of AB
C CO‹p. for t be past ÿ0 ye8îS was adyiseü that he is to bc
öy [6^ To evoid implication of ioefficiency, was adviscd to file a terrer of rcsigaation instcad a7
bfling œtrencbed, If A £les a letter of resig;nation and receives the separation
^ 8mable in full
d. Subject to fîcaj
kslflg tllg Qfeceding number, if A
d. Table in full
b Portly taxable, parti'y exempt
C. EXfltopt from mcome tax
d Subject to final tax
the newly-wedded couple a blond rew car worth P800,000 M S
a. Taxfilc income to the newly-›vedded c0upie
b. Deduciblc expense of A
c. Noi taxable incoœe lo the newly-weddcd couple
daugbtei of a sepator, tte gave
'^fl zi0. The vNue of ibe car is
46. Statcæenl 1: Income derived Iïom iuvesmicnG in tju Philippines in IoariS, Sti rks, bords, orot6er
dt›niestic securi0es, cr from iotererl ori deposits if1 baftks in țlie Philippiocs includÎng 5dle of
mvestmenU, by foret govemmeats and fi^nci !8sofiñio^s whol y-owned, “* " ' or enjoying
financing from foreigo qovemnnro, ibill be exempt from income tax. and coosequendy
8tntement 2. Gams realized from the sale or exchange or retirement of bonds, debentures, ot other
rNfimi s of i•dehtedress with u maturité of
st 5 yeah, shall not 6e tamble to the invesior-
a) Statenieot I is ture.
b) Statement 2 is true.
c) Bol stanmeau xe iäsc.
d) Both statemenis afe tras.
47. Mike Reyes bas M an employer or Îvfalatag Stœlwotks Inc. for the last 25 years, His employer set
up z BIR proved privau benefit plan primarily for telirement qaymenu to its retiring employees.
His employer also set »p a est fund fur 12\s exclrisive bsoefit uf ih employees, and to wfñcfl the
e›op/ope3 Oan raake contributions. 8o ter, Alike kas contributed & total of f'40,000 to this trust I\u›d
When be retired at age 55, he recei›zd the following amounts front his empioye*: (I ) Pl25,000
representing his retirement 6enefiu and with was paid out of the BAR-apprm’ed benefit plan: and (2)
e dividend of P140.000 from tic mist fund.
Rich stalemetjt is cGz seth
a) Ont*' hile’s reiircmeci ixnefiu arg pg-etempi.
b) Both the retirement bene5ts and the diviscqld from the tnist fîinü are Iax- exeojpt,
c! The excess of ihe d'videofl usher k's centric it.i 'i th tI›-‘ trust ñJr‹t ef\all bs taxable, and inc)udib!c
** gross income in ins income tax return.
d.i Manc of the attune