Name: Santiago II, Cipriano Jeffrey F.

Homework 2 – Tax 1101 – Topic Income tax – Corporation Part 2

1. Lughey Lahgey Corporation, already in its 5th year of operation as of 2014, has the following data:
2019 2020
Sales 1,700,000 2,300,000
Cost of Sales 1,050,000 1,425,000
Operating Expenses 675,000 480,000
The income tax payable in 2019 was –
a. P13,000 c. P35,000
b. P10,500 d. nil
2. The income tax payable in 2020 is –
a. P111,000 c. P98,000
b. P17,500 d. nil

For Questions 3 to 6
Jolly Jeep Corporation has the following information for the taxable year 2019:
QUARTER RCIT MCIT Creditable
Withholding
Tax
First 200,000 160,000 40,000
Second 240,000 500,000 60,000
Third 500,000 150,000 80,000
Fourth 300,000 200,000 70,000
Additional Information:
a) MCIT carry-over amounts to P60,000;
b) Excess tax credits from prior year amounts to P20,000.
3. How much was the income tax payable for the first quarter?
a. P200,000 c. P120,000
b. P160,000 d. P80,000
4. How much was the income tax payable for the second quarter?
a. P660,000 c. P200,000
b. P460,000 d. P160,000
5. How much was the income tax payable for the third quarter?
a. P860,000 c. P600,000
b. P120,000 d. P140,000
6. How much was the annual income tax payable?
a. P1,260,000 c. P230,000
b. P390,000 d. P930,000

7. A domestic corporation, already in its 5th year of operation as of 2018, provided the following data:
2018 2019 2020
Gross Sales P2,040,000 P2,800,000 P3,000,000
Sales returns 40,000 100,000 -
Cost of goods sold 1,000,000 700,000 1,500,000
Business expenses 950,000 2,100,000 1,200,000
The income tax payable for taxable year 20120 was:
a. P15,000 c. P60,000
b. P20,000 d. P55,000
8. One of the following is not a ground for exemption from MCIT:
a. Prolonged labor dispute
b. Force majeure problems
c. Legitimate business reverse
d. Law suits filed by the company
9. If the gross income from unrelated activity exceeds 50% of the total gross income derived by any private
educational institution, the rate shall be 30% based on the entire taxable income. This principle is known as
a. Constructive receipt
b. Tax benefit rule
c. End result doctrine
d. Predominance test
10. Which of the following corporations shall pay a tax equal to thirty percent (30%) of the gross income
received during each taxable year from all sources within the Philippines?
a. Domestic corporation
b. Resident foreign corporation
c. Nonresident foreign corporation
d. None of the choices
11. Teri Yaki Corp., a Japanese Corp. having no business in the Philippines, is engage in ship building. It leases
some of its newly constructed ships to Super Fairy Inc., a Philippine Carrier. What income tax rate will
apply to the rental payments to the lessor?
a. 30% Basic Income Tax
b. 25% Final Withholding Tax
c. 7.5% Final Withholding Tax
d. 4.5% Final Withholding Tax
12. Which of the following income is subject to final tax if received by an individual taxpayer?
I. Share of a partner in the net income of a business partnership.
II. Cash dividend received by a stockholder from a domestic corporation.
III. Winnings in lotto.
IV. Raffle prizes amounting to P6,000.
a. I and II c. I,II and IV
b. III and IV d. I,II,III and IV
13. In the case of a proprietary educational institution, it shall be taxed as an ordinary domestic corporation if
its gross income from unrelated educational activities exceeds
a. 50 % of the entire gross income
b. 55 % of the entire gross income
c. 55 % of the entire net income
d. 50 % of the entire net income
14. The University of the East, a private educational institution duly recognized by DepEd has the following
data for the fiscal year ending October 31, 2006:
Tuition and other fees P 5,000,000
Rent income form canteen and bookstore concessionaires 50,000
Dividend from domestic corp. 500,000
Interest on bank deposit, net of tax 16,000
Operating expenses 1,500,000
During the year, the school constructed a 2 storey school building costing P2M. It opts to deduct this cost
in full during the taxable year, hence, it did not provide for any depreciation expense for the building during
the year.
The income tax due is:
a. P155,000 c. P500,000
b. P542,500 d. none of the above
15. Which of the following is subject to 10% income tax?
a. Taxable income in the Philippines of regional operating headquarters of multinationals;
b. Gross income from the Philippines of non-resident owner of vessel chartered by Philippine nationals;
c. Tax on branch profit remittances from the Philippines;
d. Interest income of offshore banking units derived from currency loans in the Philippines granted to
non-residents.
16. Effective in year 2008 and thereafter the application / computation of the minimum corporate income tax is
made:
a. In all four quarters of the year
b. In the 4th quarter of the year
c. In the 1st, 2nd, 3rd quarters only
d. No answer given
17. Which of the following statements regarding minimum corporate income tax (MCIT) is incorrect?
a. The MCIT is payable even if the corporation’s operation resulted in a loss.
a. The MCIT is 2% based on the gross income within and outside the Philippines in the case of domestic
corporations.
b. The MCIT is imposed beginning on the fourth taxable year immediately following the year in which
the corporation was registered with the BIR.
c. The Secretary of Finance is authorized to suspend the imposition of MCIT on any corporation
for any reason he deems fit.
18. The imposition of MCIT shall not be suspended whenever the corporation suffers losses due to
a. prolonged labor dispute
b. force majeure
c. legitimate business reverses
d. mismanagement
19. What is minimum corporate income tax of a domestic trading or manufacturing corporation?
a. 2% of gross income c. 15% of gross income
b. 5% of gross sales d. 15% of gross sales
20. What is the minimum corporate income tax of a domestic or resident service corporation?
a. 2% of gross receipts c. 15% of gross income
b. 2% of gross income d. 15% of gross receipts
21. Which of the following statements is correct, MCIT is computed
a. In the 1st 3 quarters and annual returns of the corporation
b. Only in the annual income tax return of the corporation
c. Only in the quarterly returns of the corporation
d. In all the taxable years of operations of the corporation
22. One of the following statements is correct. Which is it? The minimum corporate income tax of a
corporation is computed:
a. In the quarterly and the annual returns of the corporation
b. In the annual income tax return only of the corporation
c. In the quarterly returns only of the corporation
d. In all of the taxable years of operations of the corporation
23. Assuming all the requisites of its applicability are present, the following corporate income taxpayer/s are
liable to pay Minimum Corporate Income Tax (MCIT) of 2% based on their Gross Income.
a. Domestic Corporation
b. Resident Foreign Corporation
c. Non-Resident Foreign Corporation
d. Both a and b
24. The Secretary of finance may suspend the imposition of Minimum Corporate Income Tax (MCIT) on any
corporation which suffers losses due to the following except:
a. Prolonged labor dispute
b. Force Majeure
c. Legitimate business reverses
d. None of the above