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/€ìSIS 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