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CPA REVIEW SCHOOL OF THE PHILIPPINES
Manila
TAXATION
FIRST PREBOARD
Thursday, February 18, 2021
9:00 am – 12:00 noon
Instruction: Choose the BEST answer for each of the following items. Mark only one answer for each
item on Special Answer Sheet provided. Strictly no erasure allowed.
1.
Which of the following items is an income of non-resident citizen subject to the basic tax
(schedular)?
a.
b.
c.
d.
2.
This income is part of taxable income subject to the basic tax
a.
b.
c.
d.
3.
Not part of the taxable income of the employees
Part of the taxable income of the employees
The monetary value is subject to fringe benefits tax
Maybe given to employees regardless of whether managerial, supervisor or rank and file
A general professional partnership and its partners are subject to the following rules, except
a.
b.
c.
d.
6.
P4M
P3.6M
P900,000
P1M
Which of the following statements on fringe benefits is correct?
a.
b.
c.
d.
5.
Fringe benefits given to rank and file employees
Fringe benefits given to managerial employees
Compensation for personal injuries or sickness
Proceeds of life insurance
Acting on the information given by A, the government seized and confiscated smuggled goods with
a fair market value of P40M. A received his reward amounting to
a.
b.
c.
d.
4.
Dividend received from a domestic corporation
Prizes from USA lotto
Interest income from PNB
Share in the net income of general professional partnership
The general professional partnership is not subject to income tax
The partners shall be liable for income tax only in their separate or individual capacities
Each partner shall report as gross income his distributive share in the partnership net income
The share of the partner shall be subject to a creditable withholding tax 10%
Consider the following statements
A. A special assessment is an enforced proportional contribution from the owners of real
property especially or peculiarly benefited by public instruments
B. The power of eminent domain maybe exercised even by the private individuals while the
power of taxation and police power maybe exercised only by the government
C. Unlike tax, a debt draws interest, if stipulated
D. The police power, power of taxation and power of eminent domain being fundamental
powers of the state maybe exercised by the government even without any constitutional grant
a.
b.
c.
d.
A and B are correct
Only C is not correct
B and D are correct
All are correct
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7.
Requiring a license for the right to engage in business to earn income is an exercise of:
a.
b.
c.
d.
8.
Situs of taxation literally means place of taxation. Which of the following statements about situs is
wrong?
a.
b.
c.
d.
9.
Taxation power
Power of eminent domain
Police power
People power
Poll tax may properly be levied upon persons who are inhabitants or residents of the state,
whether citizens or not.
Real estate is subject to taxation in the state in which it is located, whether the owner is a resident
or non-resident.
Tangible personal property is taxable where it has actual situs, or where it is physically located,
even if the owner resides in another jurisdiction.
Intangible personal property is taxable where the property is located
The ABC Bank is a domestic bank authorized by the BSP to operate as foreign currency deposit unit.
For the year 2020, it earned interest income of P100,000 from foreign currency transactions with
non-residents, OBUs, and other FCDUs. The rate of tax applicable to such interest income is
a.
b.
c.
d.
20%
25%
10%
7.5%
10. A cash dividend of P100,000 received by a taxpayer in 2020 from a foreign corporation whose
income from Philippine sources is 40% of its total income is
Statement 1- Partly taxable if he is a resident citizen
Statement 2- Partly taxable if he is a non-resident alien
a.
b.
c.
d.
Both statements are true
Both statements are false
Only Statement 1 is true
Only Statement 2 is true
11. Using the above data, which of the following is correct? The cash dividend is
a.
b.
c.
d.
Exempt from income tax if he is a resident citizen
Partly taxable if he is a resident alien
Taxable in full if he is a non- resident citizen
Exempt from income tax if he is a non- resident alien
12. Tips for gratuities paid directly to an employee by a customer of the employer which are not
accounted for by the employee to the employer are
Statement 1- Considered as passive income
Statement 2- Subject to creditable withholding tax
a.
b.
c.
d.
Both statements are true
Both statements are false
Only Statement 1 is true
Only Statements 2 is true
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13. Which of the following statements is correct?
a.
b.
c.
d.
The monetized value of unutilized vacation leave credits of ten (10) days or less which were
paid to the employee during the year are not subject to income tax and to withholding tax
The salary of an employee on vacation or on sick leave, which are paid notwithstanding his
absence from work is an exclusion from income.
Any amount which is required by law to be deducted by the employer from the compensation
of an employee excluding the withheld tax is considered as part of the employee’s compensation
and is deemed to be paid to the employee as compensation at the time the deduction is made
If living quarters or meals are furnished to an employee for the convenience of the employer,
the value thereof should be included as part of compensation income
14. Statement 1- Amounts received by reason of involuntary separation remain exempt from income tax
unless the official or employee at the time of separation, has rendered less than ten years of service
and/or is below fifty years of age
Statement 2- Any amount received by an official or employee or by his heirs from the employer due
to death, sickness or other physical disability or for any cause beyond the control of said official or
employee, such as retrenchment, redundancy, or cessation of business are exempt from income tax
a.
b.
c.
d.
True, true
True, false
False, true
False, false
15. Statement 1- The premiums on health and/or hospitalization insurance paid by an individual taxpayer
is deductible from gross income for maximum amount of P200.00 provided the family gross income
does not exceed P250,000 per month.
Statement 2- The premium on health and/or hospitalization insurance is not deductible by the spouse
who claimed the additional exemption in case of married taxpayers.
a.
b.
c.
d.
True, true
True, false
False, true
False, false
16. This income is subject to final tax
a.
b.
c.
d.
Fringe benefits given to employees of a domestic corporation
Marriage fees, baptismal offerings received by a clergyman, evangelists or religious workers for
services rendered
Dividend income from a domestic corporation by a non- resident foreign corporation
Share of an individual taxpayer from the distributable net income of a general professional
partnership
17. The monetary value of this fringe benefits is 100% of the value of the fringe benefit
a.
b.
c.
d.
The employer purchases the motor vehicle for the use of the employee
The employer provides the employee with cash for the purchase of a motor vehicle in the name
of the employer
The employer purchases the car in the name of the employee
The employer owns and maintains a fleet of motor vehicles for the use of the business and the
employees
18. The following, except one are the basic principles of a sound tax system. The exception is
a.
b.
c.
d.
It should be capable of being effectively enforced
It should consider the taxpayer’s ability to pay
It is levied by the lawmaking body of the state
The sources of revenue must be sufficient to meet government expenditures and other public
needs
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19. Interest income earned by a resident alien from outside the Philippines is
a.
b.
c.
d.
Subject to schedular tax
Not subject to income tax
Subject to final tax
Partly subject to schedular and partly subject to final tax
20. D Co. took two life insurance policies on the of its Executive Vice-President, Mrs. E. In one policy,
the beneficiary is the corporation and the other, designates Mr. F, the EVP’s husband, as revocable
beneficiary. The insurance premiums paid by D Co. is
a.
b.
c.
d.
Deductible, only in so far as the first policy is concerned
Deductible for both policies
Not deductible for both policies
Deductible in so far as the second policy is concerned
21. AB won the gold in the lightweight division in the recently concluded Asian Games. By virtue of
this single honor he brought to the country, he was given P1M by a car dealer.
Statement I- The prize received by AB is exempt from income tax
Statement II- The car dealer can deduct in full the gift for income tax purposes
a.
b.
c.
d.
True, true
True, false
False, true
False, false
22. The following are characteristics of special assessment, except
a.
b.
c.
d.
It is levied on lands only
It is based on the improvements introduced by the government
It is based on the benefit derived by the owners of the land
It is a personal liability of the persons assessed
23. As to scope of legislature power tax, which of the following is correct?
a.
b.
c.
d.
The power to tax is supreme, plenary, comprehensive and without any limit because the
existence of the government is a necessity
The discretion of Congress in imposing taxes extends to the mode, method and kind of tax, even
if the constitution provides otherwise
Congress has the right to levy a tax of any kind at any moment at it sees fit, even in the absence
of any constitutional provision
The sole arbiter of the purpose for which taxes shall be levied is Congress, provided the purpose
is the public and the courts may not review the levy of the tax to determine whether or not the
purpose is public
24. A resident citizen received a prize of P40,000. Which of the following statements is correct in
connection with the imposition of final tax on prize?
a.
b.
c.
d.
The first P10,000 is part of taxable income while, the remaining P30,000 is subject to 20% final
tax
The whole amount is part of taxable income
The whole amount of P40,000 shall be subject to 20% final tax
The first P10,000 shall be exempt from tax, the remaining P30,000 is subject to 20% final tax
25. A domestic proprietary educational institution improved its library improvement, for income tax
purposes, may be
a.
b.
c.
d.
Deducted in full at the time of completion of the improvement
Capitalized or expensed outright at the option of the school owner
Capitalized and depreciated over the estimated life of the improvement
Capitalized or expensed outright at the option of the government
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26. In our jurisdiction, which of the following statements may be erroneous?
a.
b.
c.
d.
Taxes are pecuniary in nature.
Taxes are enforced charges and contributions.
Taxes are imposed on persons and property within the territorial jurisdiction of a State.
Taxes are levied and collected by the legislative branch of the government
27. A bought a condominium unit under installment basis, to be used as his office in the practice of his
profession and paying P10,000 monthly. For income tax purposes, the P10,000 monthly payment
shall be
a.
b.
c.
d.
Treated as business rental, hence deductible
Treated as depreciation expense, hence deductible
Treated as capital expenditure, hence not deductible
Treated as ordinary business expense
28. A marketing incurred the following expenses in relation to its business during the taxable year:
Provision for bad debts
Research and development cost, treated as deferred expense
Contributions during the year:
The government for priority
The government for public purposes
To the Catholic church for charitable purposes
P 15,000
500,000
50,000
10,000
25,000
Additional Information:
A. Allowance for doubtful accounts per aging of accounts receivable revealed a beginning and
ending balances of P20,000 and P30,000, respectively.
B. Accumulated depreciation on machine at the beginning and end of the year amounted to
P100,000 and P110,000, respectively.
C. During the year, the firm sold a machine with a cost and accumulated depreciation of
P300,000 and P30,000, respectively.
D. The research and development cost was incurred in the preceding year but the benefit was
received during the taxable year
E. Taxable income before a to d and contributions amounted to P300,00
If A marketing is a sole proprietorship, the allowable deductions for contributions are:
a. P80,000
b. P85,000
c. P57,000
d. P65,500
29. Total allowable deductions:
a. P210,500
b. P220,500
c. P202,750
d. P225,000
30. Furthermore, the amount of taxable income
a. P220,000
b. P89,500
c. P97,250
d. P115,000
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31. A, single, had the following from January 1 to June 30, 2020
Compensation income (net of payroll deductions)
Deductions made by the employer:
SSS housing loan
SSS premiums contributions
Philhealth contributions
Pag-ibig contributions
Union dues
Premiums payments on Life insurance policy
Health insurance policy
P360,000
48,000
7,200
4,800
3,600
4,400
6,000
4,800
The taxable compensation income is
a.
b.
c.
d.
292,000
340,000
418,800
370,800
32. Which of the following statement/s is/are correct?
Statement A:
Non-resident citizens are taxable on all income derived from sources within the
Philippines.
Statement B:
Resident citizens and domestic corporations are taxable on all income derived from
sources within or without the Philippines.
Statement C:
Foreign corporations, whether engaged or not in trade or business in the Philippines
are taxable from sources within or without the Philippines.
Statement D:
Aliens, whether residents or not of the Philippines, are taxable only from sources
within the Philippines, are taxable only from sources within the Philippines.
a.
b.
c.
d.
Statements C and D are correct
Statements A, B and D are correct
Statements B, C and D are correct
Statements A and D are correct
33. Which of the following are basic principles of a sound tax system?
a.
b.
c.
d.
Fiscal Adequacy, Economic Feasibility and Theoretical Justice
Fiscal Adequacy, Administrative Feasibility and Theoretical Justice
Progressive Taxation, Ability to Pay, Symbiotic Relationship
Fiscal Deficit, Administrative Feasibility and Ability to Pay
34. How much discount is granted to a senior citizen on his purchase of basic and prime commodities,
subject to limitation?
a.
b.
c.
d.
20%
15%
10%
5%
35. The concept of “situs of taxation” is based on which limitation of taxation?
a.
b.
c.
d.
Territoriality
International comity
Exemption of the government
Public purpose
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36. Which of the following statements is/are CORRECT?
I. The power to license includes the power to tax.
II. The power to tax may not include the power to destroy
III. The power to tax includes the power to exempt.
a.
b.
c.
d.
II and III
I and II
III only
I only
37. The President of the Philippines and the Prime Minister of Japan entered into an executive agreement
on a loan facility to the Philippines from Japan whereby it was stipulated that interest on loans granted
by private Japanese financial institutions in the Philippines shall not be subject to Philippine income
tax laws. What basic characteristic of taxation has been violated by this agreement?
a.
b.
c.
d.
Theoretical justice
Inherent limitation
Legislative in character
Constitutional limitation
Buenas Corporation, a real estate dealer and lessor, on its first year of operation, has received a Letter
of Authority from the BIR. As a revenue officer, you were assigned to audit the Corporation’s income
tax for taxable year 2018. The audited financial statements show the Corporation’s income statement
as follow:
Revenues:
Rental income
Interest from bank
Gain on sale of land
Total
P 2,800,000
24,000
500,000
P 3,324,000
Expenses:
Depreciation
Salaries and wages
Taxes and licenses
Entertainment and representation
Interest expense
Office supplies
Total
P
800,000
200,000
180,000
40,000
60,000
20,000
P 1,300,000
Net income before income tax
Income tax expense
Net income
P 2,024,000
450,000
P 1,574,000
Income tax due for the year is computed as follows:
Net income before income tax
Less: Interest from bank
Gain on sale of land
Net taxable income
Multiply by: corporate income tax rate
Income tax expense
P 2,024,000
P 24,000
500,000
524,000
P 1,500,000
30%
P 450,000
After a detailed examination of the Corporation’s books, you have noted the following:



Balance sheet as of December 31, 2018 showed an outstanding balance of deferred rent income
amounting to P200,000, representing advance rent payments by tenants.
Interest from bank is net of 20% final withholding tax
Gain on sale of land, represents gain on sale of residential lot with selling price, amounting to
P2,000,000
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
Taxes and licenses in the Notes to Financial Statements
Showed the following breakdown




Withholding tax on sale of land, P120,000
Documentary stamp tax on sale of land, P30,000
Surcharge and penalties on late payment of tax, P10,000
Permits and licenses, P20,000
Interest expense includes interest on late payment of tax, amounting to P5,000.
38. How much should be reflected as net sales and revenue in the annual income tax return of the
Corporation?
a.
b.
c.
d.
P3,000,000
P5,000,000
P4,800,000
P3,300,000
39. How much should be the deductible taxes and licenses?
a.
b.
c.
d.
P20,000
P180,000
P30,000
P50,000
40. How is the deductible entertainment and representation expense?
a.
b.
c.
d.
P40,000
P33,333
P38,000
P34,000
41. How much is the basic deficiency income tax due?
a.
b.
c.
d.
P250,770
P252,200
P253,770
P250,800
BTS CORPORATION, is a registered enterprise with the Board of Investments and was granted an
Income Tax Holiday (ITH) Incentives for the first 4 years of operations as a non-pioneer firm. The
Corporation has not applied for an extension of its ITH incentives on its 5th year. On its 5th year of
operations, it reported the following:
Export Sales
Cost of goods manufactured and sold
Operating expenses
P120,000,000
70,000,000
20,000,000
Additional information were made available as follows:
 Cost of goods manufactured and sold include, imported raw materials with dutiable value of
P1,400,000. Pre-computed customs duties and other charges are as follows:
(a)
(b)
(c)
(d)
Customs duties – P200,000
Insurance – P10,000
Arrastre charges – P5,000
Wharfage dues – P7,000.
 Included under operating expenses are expenses incurred on the importation of the said
equipment as follows:
(a) Facilitation fee – P100,000
(b) Delivery expense to warehouse after release from Customs P11,200.
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 Cost of goods manufactured and sold include direct labor skilled and unskilled workers
amounting to P10,000,000 and P20,000,000, respectively. The project meets the prescribed
ration of capital equipment to number of workers set by the BOI.
 The Company incurred an accumulated net operating loss on the first 4 years of operations as
follows:
(a) 1st year – P2,000,000
(b) 2nd year – P1,600,000
(c) 3rd year – P800,000
(d) 4th year – P400,000.
42. How much is the deductible direct labor cost?
a.
b.
c.
d.
P35,000,000
P45,000,000
P40,000,000
P30,000,000
43. How much is the deductible net operating loss carry over?
a.
b.
c.
d.
None
P2,800,000
P400,000
P4,800,000
44. How much is the income tax due of the Company for the year?
a.
b.
c.
d.
P4,500,000
P1,750,000
P4,530,000
P1,869,000
John and Marcia inherited a commercial lot and building from their parents 2 years ago. In 2018 (current
year), the inherited property realized rental income of P300,000 per month, in which both shared the
revenues equally. The co-ownership remained unregistered with the Securities and Exchange
Commission. In addition, Jose and Maria reported their following personal income and expenses.
 John, gross compensation income (inclusive of 13th month and other benefits amounting to
P100,000), P1,300,000
 Marcia, net income from her laundry service business (net of cost and expenses of P600,000),
P200,000.
45. How much final withholding income tax should the co-ownership remit representing the revenue
distribution to the co-owners?
a.
b.
c.
d.
P360,000
P540,000
None
P180,000
46. How much is the income tax due of John in his annual income tax return, assuming optional standard
deduction is used in determining his expenses?
a.
b.
c.
d.
P582,500
P431,800
P253,000
P611,600
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47. How much is the income tax due of Marcia in his annual income tax return, assuming optional standard
deduction is used in determining his expenses.
a.
b.
c.
d.
P22,000
P322,000
P358,000
P250,000
48. When is the deadline for filling of the annual income tax return of the co-ownership for taxable year
2018?
a.
b.
c.
d.
April 15, 2018
May 15, 2019
Not applicable
April 15, 2019
ATTY. PAPA, is a practicing lawyer, is also a licensed real estate broker. Both businesses were
registered with the BIR and had the following data made available for year 2018 (months are gross of
withholding tax):
Revenues from his profession
Commission received
Cost of services
Business related expenses
Gain on sale of real property held for investment
Selling price of real property
Wagering gain
Wagering losses
Royalties from books published
Interest Income from banks
3,000,000
600,000
700,000
400,000
500,000
2,000,000
150,000
100,000
150,000
30,000
49. Compute Tax due, assuming ATTY. PAPA opted to use itemized deduction in computing his income
tax.
a.
b.
c.
d.
P810,000
P698,000
P666,000
P826,000
50. Compute OSD. Optional Standard Deductions
a.
b.
c.
d.
P2,240,000
P2,300,000
P1,460,000
P1,440,000
51. How much is the final withholding income tax of ATTY. PAPA, assuming 2/3 of interest income
from banks were realized from time deposits with maturity of 5 years?
a.
b.
c.
d.
P47,000
P17,000
P32,000
P137,000
52. A cash dividend of P100,000 received by a taxpayer in 2018 from a domestic corporation whose
income from Philippine source is 40% of its total income is
a. Partly taxable if he is a resident citizen
b. Exempt from final tax if he is a non-resident citizen
c. Partly taxable if he is a resident alien
d. Taxable in full if he is a non-resident citizen
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53. A cash dividend of P100,000 received by a taxpayer from a foreign corporation whose income
from Philippine source is 50% of its total income is
a.
b.
c.
d.
Exempt from income tax if it is a domestic corporation
Exempt from income tax if it is a foreign corporation
Taxable in full if he is a resident citizen
Taxable in full if he is a resident alien
54. Under this system, the amount of income tax withheld by the withholding agent is constituted as
full and final payment of the income tax due from the payee on the said income
a.
b.
c.
d.
Creditable withholding tax due from the payee on the said income
Final withholding tax
Global tax system
Schedular tax system
55. A domestic corporation has the following data for 2018:
Excess MCIT 2017- P15,000
Q1
Q2
Income, net of 1% withholding tax P495,000
P792,000
Deductions
480,000
700,000
How much is the income tax still due and payable in the second quarter?
a.
b.
c.
d.
P3,000
P4,000
P18,000
P2,000
56. Statement 1- Is a co-ownership taxable? Yes, because although the activities of the co-owners
limited to the preservation of the property they derived income therefrom
are
Statement 2- Is the share of a co-owner taxable? No, because each co-owner is taxed individually on
his distributive share in the net income of the co-ownership
a.
b.
c.
d.
57.
Both statements are correct
Both statements are wrong
Only Statements 1 is correct
Only statements 2 is correct
Jun Jon and Company, general co-partnership has the following data of income and expenses for
2018:
Gross incomeP 2,400,000
Expenses1,000,000
Dividend received from a domestic corporation 90,000
Interest on bank deposit (net)10,000
Partners Jun share profits and losses in the ratio of 80% and 20%, respectively.
The income tax payable by the partnership is
a.
b.
c.
d.
P420,000
P450,000
P447, 000
P423,000
58. The taxes withheld on the respective share of Jun and Jon in the 2018 partnership income are
a.
b.
c.
d.
Jun- P78,400 and Jon- P19,600
Jun- P117,600 and Jon- P19,600
Jun- P129,600 and Jon 21,600
Jun- P86,400 and Jon – P21,600
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59. Which of the following statements is not correct?
a.
b.
c.
d.
Compensation income of individuals that do not exceed the statutory minimum wage is exempt
from the requirement of withholding tax on compensation
Compensation income of individuals that do not exceed ten thousand pesos per month is exempt
from the requirement of withholding tax on compensation
Holiday pay, overtime pay and hazard pay received by individuals shall be exempt from income
tax
Minimum wage earners who are receiving only the statutory minimum wage are not subject to
withholding tax
60. On January 1, 2018, A leased his vacant lot for a period of 12 years at P240,000 per year. It was
agreed that the lessee will pay the following:
A. Rent of P480,000 (for 2018 and 2019)
B. Security deposit of P230,000
C. Real property tax at P20,000/year
The lease contract provides among others that the lessee will construct a 3-storey building for
parking purposes at a cost of P3,600,000 which shall belong to the lessor upon expiration or
termination of the lease. The building was completed on July 1, 2018, with an estimated useful of
15 years. A shall report for the year 2018, using the spread-out method, a total income from lease of
a. P296,543
b. P573,087
c. P536, 521
d. P333,087
61. Using the above data, the lessee in 2018 can deduct total expenses amounting to
a. P 656,521
b.
P553,043
c.
P416,521
d.
P573,043
62. Recovery of bad debt written off by a taxpayer:
No.1: P20,000 from accounts written off in a year which had a net income of P200,000 before writeoff. (write-off of the year was P20,000)
No.2: P5,000 from accounts written off in a year which had a net loss before write-off of P36,000
(write-off for the year was P5,000);
No.3: P10,000 from accounts written off in a year which had a net income of P8,000 before writeoff. (write-off for the year was P8,000).
The income from the bad debt recovery is:
a.
b.
c.
d.
P35,000
P20,000
P28,000
P30,000
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63. XYZ, a domestic corporation was determined to be improperly accumulating its earnings for the
taxable year 2018 based on its records as follows:
a.
b.
c.
d.
e.
f.
g.
Net income from business
Dividends actually or constructively paid
Income tax paid for the year
Income subjected to 20% final tax (net)
Income exempt from tax
Income excluded from gross income
Net operating loss (2017)
P1,000,000
150,000
270,000
60,000
50,000
10,000
100,000
The tax on improperly accumulated earnings is
a.
b.
c.
d.
P81,500
P71,500
P80,000
P70,000
64. An individual taxpayer, single, has the following data for the current year:
Ordinary income
P150,000
Long term capital gain
40,000
Short term capital loss
10,000
Wash Sale Loss
10,000
Loss from sale of real property
10,000
How much is the net taxable income
a.
b.
c.
d.
P110,000
P150,000
P140,000
P160,000
65. Mabuhay Corporation organized in 2016 has the following data:
2018
Sales
P1,700,000
Cost of sales
1,050,000
Operating expenses
615,000
2019
P2,300,000
1,425,000
480,000
The income tax payable in 2018 is
a.
b.
c.
d.
P13,000
P5,250
P10,500
P12,250
66. Using the above data, the income tax payable by Mabuhay Corporation in 2019 is
a.
b.
c.
d.
P118, 500
P110, 750
P116,000
P105,500
67. A, a resident taxpayer received the following during the taxable year:
I. P12,000 cash received as refund of excess insurance premiums paid to an insurance company
II. P10,000 worth of fire extinguisher for being most safety employee.
III. A computer unit with a fair market value of P48,000 which was awarded to him in recognition
of his outstanding achievement in scientific research
IV. P25,000 salary per month as an accounting supervisor
Which of the above items is (are) exclusion from taxable income subject to graduated rates?
a.
b.
c.
d.
II only
I and II
I, II and III
I and III
Page 14
68. Statement I- Government owned and controlled corporations are subject to tax unless expressly
exempted
Statement II- Government agencies performing governmental and proprietary functions are exempt
from tax unless expressly taxed
a.
b.
c.
d.
True, true
False, false
True, false
False, true
69. It is an aspect of taxation that is administrative in character and the power to exercise it is vested on
the Department of Finance
a.
b.
c.
d.
Levying
Collection
Imposition
Legislation
70. Mr. C, married, presented to you the following items of income for the taxable year
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
Salary as part time instructor (net of P14,000 w/tax)
Honorarium as member of the Board of ABC Corp.
Rental income of apartment house he purchased using his
income from salary and professional fees
Interest income from PNB
On deposit maintained under the expanded foreign
Currency deposit system (net)
On savings deposit (net)
Compensation income received as a CPA
Royalty income from book publication
Prizes received from supermarket raffle
Winnings from PSCO
Compensation for injuries suffered in an accident
Bonus and 13th month pay
If Mr. C is married, his taxable income after exemption is
a.
b.
c.
d.
P610,000
P670,000
P420,000
P360,000
-P186,000
-P100,000
-P120,000
-P2,000
-P40,000
-P250,000
-P300,000
-P120,000
-P1,000,000
-P200,000
-P90,000
Page 15
Beginning 1 January 2018:
Taxable Income (PHP)
Tax on column 1 (PHP)
Tax on excess (%)
Over
Not Over
0
250,000
-
0
250,000
400,000
-
20
400,000
800,000
30,000
25
800,000
2,000,000
130,000
30
2,000,000
8,000,000
490,000
32
2,410,000
35
8,000,000