.
EXCLUSION FROM GROSS
INCOME
Source: Income Taxation by Rex Banggawan
(2015 edition)
Submitted by: BLANCAVER, JO MARIE T
Exclusion from Gross Income
Multiple Choice – Problems
1. Mr. Chua collected the P 1,000,000 insurance proceeds of Mr. Sy which he bought from the latter for P 400,000. Before
the death of Mr. Sy, Mr Chua paid a total premium of P 200,000. What is the exclusion in gross income and inclusion in
gross income, respectively?
a. P 1,000,000; P 0
b. P 600,000; P 400,000
c. P 400,000; P 600,000
d. P 0; P 1,000,000
2. Mr. Bisligo surrendered his life insurance policy and received a cash surrendered value of P 800,000 after contributing
P 700,000 in annual premiums. Determine the total exclusion in gross income and the inclusion in gross income,
respectively?
a. P 800,000; P 0
b. P 700,000; P 100,000
c. P 100,000; P 700,000
d. P 0; P 800,000
3. Mr. Cateel died. His heirs collected the P 2,000,000 proceeds of his life insurance policy. Mr. Cateel previously paid a
total payment of P 500,000 in premiums. What is the exclusion in gross income?
a. P 3,000,000
b. P 500,000
c. P 2,000,000
d. P 0
4. Mr. Malalag collected the P 5,000,000 fire insurance proceeds of his buildings which was destroyed by fire. The
building had a tax basis of P 4,500,000 at the occurrence of the fire. What is the total exclusion in gross income?
a. P 5,000,000
b. P 4,500,000
c. P 0
d. P 500,000
5. Mr. Kabacan insured his crops for a P 1,000,000 insurance cover against calamities. He paid P 100,000 insurance
premium. What is the amount to be included in gross income?
a. P 1,000,000
b. P 900,000
c. P 100,000
d. P 0
6. Mr. Dimataling was one of the passengers who were hurt in a bus accident. He received a total indemnity of P 800,000
from the insurer of the bus. Mr. Dimataling paid P 250,000 in hospital bills due to the accident. Compute the total amount
to be excluded in gross income.
a. P 0
b. P 250,000
c. P 550,000
d. P 800,000
7. At the age of 54, Mrs. Reyes was awarded with a retirement gratuity of P 2,000,000 for his 30 years of service. The
employer’s retirement benefit plan was with an employee participation feature where Mrs. Reyes contributed a total
premium of P 800,000 in the fund. Mrs Reyes also received P 500,000 benefit from the SSS. Compute the total exclusion
in gross income.
a. P 800,000
b. P 1,300,000
c. P 1,700,000
d. P 2,500,000
8. Mrs. Canadoni retired for the government after 30 years of service at the age of 55. He received a total retirement pay of
P 1,800,000 plus P 400,000 GSIS benefits. How much will be excluded in gross income?
a. P 0
b. P 400,000
c. P 1,800,000
d. P 2,200,000
9. The Professional Regulation Commission collected a total sum of P 100,000,000 from professional license fees. It also
collected P 5,000,000 from rentals at government properties. What is the total exclusion in gross income?
a. P 0
b. P 5,000,000
c. P 100,000,000
d. P 105,000,000
10. Mr. Alvarez had the following income during the year:
Gross compensation income
Including P 25,000 13th month pay
Less: Tardy or absences
Net compensation income
SSS Deductions
PhilHealth deductions
Pag ibig deductions
Union dues
Withholding tax
P 325,000
( 10,000)
P 315,000
P 12,000
P 9,000
P 10,000
P 5,000
P 40,000
P 239,000
Compute the total exclusions from gross income?
a. P 36,000
b. P 61,000
c. P 66,000
d. 71,000
11. Mr. Henares received the following:
Donated properties
Income of donated property before donation
Income of donated property after donation
Inherited properties
How much is taxable to Mr. Henares?
a. P 380,000
b. 80,000
c. P 50,000
d. P 30,000
P 200,00
P 50,000
P 30,000
P 100,000
12. Mr. Tacurong has the following data during the year:
Basic Salary
P 400,000
Income tax withheld
P 50,000
13TH month pay
P 40,000
SSS
P 2,000
PhilHealth
p 1,800
Pag – Ibig
P 1,700
Union dues
P 500
Capital contribution
P 2,000
Compute the total exemtions and exclusions from gross income:
a. P 56,000
b. 46,000
c. 38,000
d. 36,000
13. Mang Antonio collected P 2,000,000 from the fire insurance company that insured his building which has a tax basis
of P 1,800,000 when the fire occurred. During the same period, he also collected P 300,000 crop insurance proceeds
pertaining to his crop destroyed by frost. The total item of gross income is
a. P 2,300,000
b. P 500,000
c. P 300,000
d. P 200,000
14. The policy holder of a life insurance contract outlived his insurance policy. He was paid P 300,000 upon maturity of
the policy. He paid P 250,000 total premium. What is the inclusion I gross income?
a. P 300,000
b. P 250,000
c. P 50,000
d. P 0
15. Ms. Henson retired from her job after 25 years of service. She joined the company at the age of 23 and was promoted
from a clerk to VP Finance. She was paid P 2,000,000 total retirement pay from the employes’s contributory pension plan.
Out of the total proceeds, Ms Henson contributed P 600,000. This was Ms Henson’s first retirement from employment.
How much is excluded in gross income?
a. P 2,000,000
b. P 1,400,000
c. P 600,000
d. P 0
16. The following related to the compensation income of Ms. Lamitan in 2015.:
Compensation
P 2,400,000
Contribution to SSS, Philhealth, HDMF:
- Mandatory contributions
P 125,000
- Voluntary contributions
P 150,000
Creditable withholding taxes
P 190,000
Employer’s share in SSS, PhilHealth, HDMF
P 105,000
What is the total exclusion in gross income?
a. P 125,000
b, P 230,000
c. P 275,000
d. P 465,000
17. The following income related to a proprietorship registered as BMBE:
Gross income from sales
P 400,000
Dividend income – domestic
P 9,000
Interest on deposits
P 6,800
Compute the total exclusion in gross income subject to regular tax?
a. P 415,000
b. P 400,000
c. P 15,800
d. P 0
18. Compute the total inclusion in gross income subject to final tax.
a. P 0
b. P 9,000
c. P 6,800
d. P 15,800
19. KKB, a credit cooperative, had the following:
Income from related activities
Income from unrelated activities
- Dividends from stocks
- Income from time deposits
- Rent income
Compute the total exclusion in gross income.
a. P 0
b. P 38,000
c. P 400,000
d. P 438,000
P 400,000
P 20,000
P 18,000
P 60,000
20. In the immediately preceding problem, compute the total inclusion in gross income subject to regular tax.
a. P 460,000
b. P 98,000
c. P 60,000
d. P 38,000
21. A charity received the following:
Contributions from the public
P 1,400,000
Income for the sale of merchandise
P 500,000
Gain on sale of properties
P 300,000
What is the total exclusion in gross income?
a. P 2,200,000
b. P 1,900,000
c. P 1,400,000
d. P 1,300,000
22. Mr. Santiago purchased a life annuity For P 100,000 which will pay him P 10,000 a year. The life expectancy of Mr
Santiago is 12 years. Which of the following will Mr. Santiago be able to exclude from his gross income?
a. P 10,000
B. p 20,000
c. P100,000
d. P 120,000
23. A non profit organization received the following during 2015
Contributions from the public
P 1,900,000
Income for the sale of merchandise
P 500,000
Gain on sale of properties
P 300,000
What is the total exclusion in gross income?
a. P 2,200,000
b. P 1,900,000
c. P 1,400,000
d. P 1,300,000
24. Mr. Ketchum collected the P 1,000,000 fire insurance proceeds of Mr. Brock which he bought from the latter for P
400,000. Before the death of Mr. Brock, Mr Ketchum paid P 300,000 for the premium. What is the exclusion in gross
income?
a. P 7,000,000
b. P 300,000
c. P 400,000
d. P 0
25. Team Rocket surrendered their life insurance policy and received a cash surrendered value of P 800,000 after
contributing P 900,000 in annual premiums. Determine the total exclusion in gross income?
a. P 800,000
b. P 900,000
c. P 100,000
d. P 0