Mr. Cruz bought a residential house and lot in 1995 for P240,000.

In 2000, *1/1
Quiz on Intro to Income Tax and curious as to how much his property then cost, he asked a real estate
broker to reappraise the same. The real estate broker reported that the
Individuals value of his property has increased to P400,000. Should Mr. Cruz report
Total points 34/50 the P160,000 increase in his income tax return for the year 2000?

Yes, there is a gain of 160,000.

Email * No, there is no gain until after the sale or disposition of property.

[email protected]
Yes, this is a case of reappraisal surplus subject to tax.

No, because the amount is not yet final.

FULL NAME(LAST, First, MI) *

MAGAHIS, Axel John S.

Payment for casual labor which is occasional, incidental or not regular, or 0/1
not in the course of trade or business is considered as?

UNIQUE CODE compensation income subject to income tax

EDT78910
not compensation income, hence, exempt from income tax.

passive income subject to final tax.

capital gain subject to income tax.

Which of the following is not a requisite for income to be taxable? * 1/1

Correct answer

There must be a gain. not compensation income, hence, exempt from income tax.

The gain must be realized or received.

The gain must not be excluded by law from taxation.

The gain must be enumerated as gross income in Section 32 of the NIRC.

First statement: All estates and trusts are taxed like an individual. 1/1 An American who showed proof to the satisfaction of the CIR of his *1/1
Second statement: All partnerships are taxed like a corporation. intention to stay in the Philippines as an immigrant is classified as?

True, True Resident citizen

True, False Non-resident citizen

False, True Resident alien

False, False NRAETB

NRANETB

Who among the following individual taxpayers is taxable on income from *0/1
within and without the Philippines?
First statement: Taxable income refers to certain items of gross income *1/1
less deductions and.
Armand, a native of Bacolod, working as overseas contract worker in Dubai. Second statement: Gross income is defined as any inflow of wealth to
the taxpayer from whatever source, legal or illegal.
Berna, a resident of Manila and citizen of Australia; who has been working in the
Philippines for the past 10 years.

Chris, a resident and citizen of Puerto Rico, sent to the Philippines, as an employee True, True
of a local brewery for 5 months.
True, False
Dennis, a Filipino, who was sent by his employer to the United States for three
months. False, True

Correct answer False, False

Dennis, a Filipino, who was sent by his employer to the United States for three
months.
 Which of the following is not a test in determining whether income is *0/1 In 2023, Allen Manalo earned a net income of P5,000,000.00. How much *1/1
earned for tax purposes? is the income tax due thereon?

Realization test 402,500

Economic Benefit Test 490,000

Doctrine of Proprietary Interest 960,000

Severance Test 1,302,500

Benefits-Received Test 1,450,000

Correct answer 1,902,500

Benefits-Received Test

Which of the following is not a reportable income? * 1/1

First statement: An aline who come to the Philippines with a tourist visa *1/1
is classified as a resident alien. Gain from sale of ordinary property

Second statement: A citizen who come to the Philippines with an Stolen money

immigration visa would be classified as a resident alien upon his arrival.

Payment for services

Unrealized gain from foreign exchange

True, True

True, False

False, True
Who among the following individuals is subject to the 25% final *1/1
False, False withholding tax on his income from sources within the Philippines?

Resident alien

NRAETB

NRANETB

Non-resident citizen

The test in determining whether interest income is classified as income *1/1 Mr. Dela Cruz's internal accounting period ends on March 31, 2024. When *0/1
within or income without is the? does he need to file his ITR?

Residence of the creditor July 15, 2024

Residence of the debtor August 15, 2024

Place where the loan contract was executed April 15, 2024

Place where the payment of the loan was made June 15, 2024

May 15, 2024

Correct answer
The test in determining whether the gain on sale of personal property is *1/1
April 15, 2024
income within or income without is?

Residence of the parties

Place where the contract is perfected First statement: The 8% preferential tax is an income tax. *1/1
Second statement: A mixed income earner may avail of the 8%
Place where the property is located preferential tax.

None of the foregoing

True, True

True, False

False, True

False, False
 First statement: All passive income are subject to final tax. * 1/1 Mr. Lorenzo, a CEO of Lorenzo Corporation, earned an annual net income *0/2
Second statement: All capital gains are subject to capital gains tax. of 7,000,000 in 2023. On January 1, 2023, he elected to be taxed at 8%.
How much is his income tax liability for 2023?

True, True
540,000
True, False
560,000
False, True
1,500,000
False, False
1,902,500

Correct answer

First statement: A corporation, 80% of the stocks of which is held by *3/3 1,902,500
foreigners, is a foreign corporation even if incorporated under the laws of
the Philippines.

Second statement: An individual that establishes a one-person Atty. Micah Reyes, a partner at Reyes, Fajardo, Guillen Law Office, earned *2/2
corporation shall be taxable as a corporate taxpayer for the business an annual gross receipts of 5,000,000, and net income of P3,000,000 in
transactions of the OPC but he shall be subject to tax as an individual for 2023. On January 1, 2023, she elected to be taxed at 8%. How much is
his personal transactions. her income tax liability for 2023?

Third statement: A foreign corporation that transacts business with

residents through a resident branch is taxable on such transactions as a 0

resident foreign corpoation through its branch. However, if it transactions

240,000
directly to residents outside its branch, it is taxable as a non-resident
foreign corporation on the direct transactions. 400,000

1,302,500
True, True, True

True, False, False

False, True, True

False, False, True

False, False, False

True, False, True

Mr. Kenneth Domingo, a minimum wage earner, works for KD *2/2 For individuals earning mixed income, which of the following is true when *0/2
Corporation. He is not engaged in business nor has any other source of he/she elects the 8% tax?
income other than his employment. For 2018, Mr. Domingo earned a total
compensation income of P135,000. The taxpayer contributed to SSS,
The compensation income shall be subject to 8%.
Philhealth and HDMF amounting to P4,000 and has received a 1th month
pay of P10,000. How much is the taxable income? The compensation income shall be subject to graduated rates.

If the total of the compensation income and the business income does not exceed
119,000 P3,000,000, both income shall be subject to 8%.

121,000 If the total of the compensation income and the business income exceeds
P3,000,000, only the business income shall be subject to 8% tax..
135,000
Correct answer
145,000
The compensation income shall be subject to graduated rates.

VGS & Co., a professional firm, earned a net income of P200,000,000 for *0/2
The payor of passive income subject to final tax is required to withhold *1/1
2023. Its assets do not exceed P100,000,000 as of 2023. How much is
the tax from the payment due the recipient. The withholding of the tax
the income tax liability of VGS & Co.?
has the effect of

0
a full settlement of the tax liability on the income.
40,000,000
a credit from the recipient's income tax liability.
50,000,000
consummating the transaction resulting in an income.
Cannot be readily determine from the given facts.
a deduction in the recipient's income tax return.
Correct answer

0
 Mr. C is employed as a CEO of MNO Company, receiving an annual *0/2 Mr. Anton Aquino lists the following possible items of gross income: *3/3
compensation of P10,000,000.00 while Mr. S is a security guard in the
same company earning an annual compensation of P200,000.00. Both of Compensation income - 300,000
them source their income only from their employment with MNO Winnings from gambling - 200,000
Company. Increase in value of investments - 100,000
Building revaluation increment - 200,000
At the end of the year, is Mr. C personally required to file an annual Appreciation in the value of land owned - 100,000
income tax return? Proceeds of a bank loan - 300,000
Debt of Mr. Mendoza cancelled in exchange for his services to his
creditors - 200,000
No, because he is qualified for substituted filing of income tax return.

Yes, because his income breaches the threshold of 250,000.00 How much is the gross income?

No, because he is exempt from income tax.

500,000
Yes, because a CEO is considered a mix income earner.
600,000
Correct answer
700,000
No, because he is qualified for substituted filing of income tax return.
800,000

900,000

1,000,000

1,100,000

1,200,000

1,300,000

1,400,000

Ms. C, a resident citizen, bought ready-to-wear goods from Ms. B, a non- *2/2 A taxpayer has the following income: *3/3
resident citizen. If Ms. B is an alien individual and the goods were
produced in her factory in China, is Ms. B’s income from the sale of the Interest income from deposits in a foreign bank, P200,000
goods to Ms. C taxable in the Philippines? Interest income from deposits in BPI, a local bank, P300,000
Royalties from books published in the Philippines, P400,000
Rent income from properties abroad (the lease contracts were executed
Yes, assuming the sale was made in the Philippines.
in the Philippines), P200,000
No, because gains from sale of personal property produced by the taxpayer without Professional fees for services rendered in the Philippines to non-resident
and sold within the Philippines shall be treated as derived from sources without the clients, P300,000
Philippines. Gain on sale of domestic stocks, P400,000
Yes, because gains from sale of personal property produced by the taxpayer Gain on sale of foreign bonds, P200,000
without and sold within the Philippines shall be treated as derived from sources Gain on sale of commercial lot located in the US (sale was executed in
within the Philippines. the Philippines), P300,000
Gain on sale of car in the US, P400,000
No, B, being a non-resident citizen, is not taxable on income from sources without
the Philippines. Dividends on domestic stocks, P200,000

How much is the income earned within?

1,000,000

1,200,000

1,300,000

1,600,000
 First statement: An individual whose sole income has been subjected to *2/2 Mr. Domagoso operates a convenience store while offering bookkeeping *0/2
final withholding tax is not required to file income tax. services to his clients. In 2018, his gross sales amounted to P800,000, in
Second statement: An individual earning purely compensation income addition to his receipts from bookkeeping services of P300,000. He
whose taxable income does exceed P20,833.33 a month is not required already signified his intention to be taxed at 8% rate in his 1st quarter
to file an income tax return. return. How much did he save by electing the 8% tax, if any?

True, True 109,500

True, False 152,000

False, True 177,500

False, False 185,000

220,000

Correct answer
Mr. Cruz filed his ITR on April 15, 2024, showing a gross income of *0/2
185,000
350,000, with tax due of only 2,000. Mr. Cruz wants to pay it in two
installments. Which of the following is true?

Mr. Cruz is liable for the entire 2,000.00 on April 15, 2024.

Mr. Cruz can pay P1,000 on or before October 15, 2024.

Mr. Cruz can pay P1,000 on or before October 15, 2025.

Mr. Cruz is liable for the entire P2,000 on or before October 15, 2024.

Correct answer

Mr. Cruz is liable for the entire 2,000.00 on April 15, 2024.

A taxpayer has the following income: *3/3

Interest income from deposits in a foreign bank, P200,000

Interest income from deposits in BPI, a local bank, P300,000
Royalties from books published in the Philippines, P400,000
Rent income from properties abroad (the lease contracts were executed
in the Philippines), P200,000
Professional fees for services rendered in the Philippines to non-resident
clients, P300,000
Gain on sale of domestic stocks, P400,000
Gain on sale of foreign bonds, P200,000
Gain on sale of commercial lot located in the US, P300,000
Gain on sale of car in the US, P400,000
Dividends on domestic stocks, P200,000

How much is the income earned without?

1,300,000

1,600,000

1,700,000

1,900,000

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Forms
 Which of the following is not a correct principle of individual income *1/1
Individual Taxation Total points 32/50 taxation?

Resident Filipino citizens are taxable on all income from sources within and without
the Philippines.
Email *
Non-resident citizens are taxable only on income from sources within the
[email protected] Philippines.

Overseas Contract Workers (OCW) are taxable only on income from sources
without the Philippines.

FULL NAME (LAST, First Name, MI) * An alien individual, whether a resident or not of the Philippines, is taxable only on
income from sources within the Philippines.
Magahis, Axel John S.

Which of the following items is subject to Philippine income tax? * 1/1

UNIQUE CODE *

EDT78910
Salary of a Filipino citizen employed in Dubai

Prize won by a resident Filipino citizen from a professional golf competition

held in Singapore
A citizen of the Philippines was a non-resident citizen in year 2018. On *1/1
Apartment rental from building in China of a Chinese permanently residing in the
May 15, 2019, he arrived in the Philippines to reside permanently in the Philippines
Philippines. His income for the year 2019 were as follows:
Salary of a seaman
A – From January 1, 2019 to May 14, 2019;

B – From May 15, 2019 to December 31, 2019.

Which of the following statements is not correct?

He is considered a resident citizen on his “A” and “B” income.

He is considered a resident citizen on his “B” income.

He is considered a non-resident citizen on his “A” income.

He is not taxable on his “A” income.

A nonresident citizen arrives in the Philippines on July 31, 2022 to reside *1/1 Antonio disposed his principal residence for P2,000,000 and immediately *0/1
here permanently after many years of living abroad. The following data acquired a new one for P1,800,000. The old residence had an acquisition
for the year 2018 on his income are made available: cost of P1,000,000 and had fair market value of P2,500,000 on the date of
sale. Compute the tax on the sale.
Gross income, foreign sources (Jan 1 to July 31), P500,000
Gross income, Philippine sources, (Aug 1 to Dec 31), P300,000
0
Gross income, foreign sources, (Aug. 1 to Dec. 31), P400,000
12,000
How much is his taxable gross income in 2022?
15,000

300,000 150,000

400,000 Correct answer

700,000 15,000

800,000

Who cannot claim deductions? * 0/1

Which of the following can avail of the 8% income tax rate option? * 1/1
Compensation earners

Taxpayer subject to percentage tax on VAT-exempt persons under Sec. 116. Self-employed businessmen

VAT-registered seller of goods Self-employed professionals

Taxpayers subject to franchise tax under Sec. 119 None of the foregoing

Partners of general professional partnerships Correct answer

Compensation earners
Which is correct when a minimum wage earner derives other income *1/1 The income on sale of which of the following capital asset is not subject *0/1
outside his employment? to regular income tax?

He is subject to withholding tax and income tax. Real property held for sale by a dealer

He is neither subject to withholding tax nor income tax. Foreign stocks

He is exempt from withholding tax, but subject to income tax. Real property held as investment by a non-dealer of real property

He is subject to withholding tax, but exempt from income tax. Domestic stock held by a security dealer

Correct answer

Real property held as investment by a non-dealer of real property

Which of the following statements is incorrect with respect to minimum *1/1
wage earner?

Minimum wage earners shall be exempt from the payment of income tax on their Which of the following shall be considered "other benefits" includible in *0/1
taxable income. "13th month pay and other benefits" in full?

The holiday pay, overtime pay, night shift differential pay, and hazard pay received
by such minimum wage earners shall likewise be exempt from income tax. Tangible personal property given as Achievement Award exceeding P10,000

Any hazard pay paid to MWEs which does not satisfy certain criteria (i.e. actually
Uniform and clothing allowance exceeding P10,000
assigned to danger or strife-torn areas, disease-infested places, or in distressed or
isolated stations and camps, which expose them to great danger or contagion or Benefits received by an employee by virtue of a collective bargaining agreement
peril to life) is deemed subject to income tax and consequently, withholding tax on and productivity incentive scheme exceeding P10,000
the said hazard pay.
Medical benefits exceeding P10,000
Minimum wage earners who have business income in addition to their
minimum wage shall be subject to income tax on their business income and
Correct answer
minimum wage
Benefits received by an employee by virtue of a collective bargaining agreement and
productivity incentive scheme exceeding P10,000

The income subject to this withholding tax is not includible in the *1/1 An individual, who is a real estate dealer, sold a residential lot in Quezon *1/1
computation of taxable income. City at a gain of P100,000.00 (selling price of P900,000.00 and cost is
P800,00.00). The sale is subject to income tax as follows:

WIthholding tax on compensation

6% CGT on the gain
Creditable withholding tax
6% CGT on the gross selling price or FMV, whichever is higher
Final withholding tax
Ordinary income tax at the graduated rates
All of the foregoing
15% income tax on net taxable income

Individuals earning income purely from business/profession (those under *1/1

the graduated income tax rates with OSD as mode of deduction or those A resident Filipino citizen (not a dealer in securities) sold shares of *1/1
who opted to avail of the 8% flat income tax rate) shall use? stocks of a domestic corporation that are listed and traded in the
Philippine Stock Exchange.

BIR Form 1700

The sale is exempt from income tax but subject to the ½ of 1% stock
BIR Form 1701 transaction tax.

BIR Form 1701A The sale is subject to income tax computed at the new graduated income tax rates
on net taxable income
BIR Form 1701Q
The sale is subject to the stock transaction tax and income tax.

The sale is both exempt from the stock transaction tax and income tax.

The payor of passive income subject to final tax is required to withhold *1/1
the tax from the payment due the recipient. The withholding tax has the
effect of?

a final settlement of the tax liability on the income.

a credit from the recipient's income tax liability.

consummating the transaction resulting in an income.

a deduction in the recipient's income tax return.

 To start a business of his own, Mr. Anton de Antoni, 49 years old, opted *1/1 A stock dividend received from a domestic corporation by a non-resident *0/1
for an early retirement from Dayag Retrofitting Corporation, a private alien not engaged in trade or business in the Philippines and immediately
company, after ten (10) years of service. Pursuant to the company’s redeemed by the former is...
qualified and approved private retirement benefit plan, he was paid his
retirement benefit.
is not considered income within the Philippines.

Dayag Retrofitting Corporation should withhold income taxes from de Antoni’s is income sourced partly within the Philippines and partly without the Philippines.
retirement pay.
not subject to income tax.
De Antoni’s retirement pay is excluded from gross income.
subject to income tax.
Dayag Retrofitting Corporation should pay the tax on de Antoni’s retirement pay.
Correct answer
Since de Antoni voluntarily retired, the retirement pay he received was not
retirement in the true sense but was part of his compensation income subject to subject to income tax.
tax.

Which of the following is not passive income subject to final tax? * 1/1
The following statements are true about fringe benefits and fringe *0/1
benefits tax, except?
Royalty income from copyright used in the Philippines

Fringe benefit given to a rank-and-file employee is not subject to the fringe benefit Cash dividends received by individuals from domestic corporation
tax.
Winnings from lottery, raffle draws in the Philippines
Fringe benefit given to a supervisory or managerial employee is subject to the
fringe benefit tax. Prizes from a sports contest in the Phiippines amounting to P10,000

Fringe benefit tax is not imposed on de minimis benefits, whether given to rank-
and-file employees or to supervisory or managerial employees.

Fringe benefit tax can be imposed on resident citizens only.

Correct answer

Fringe benefit tax can be imposed on resident citizens only.

In the last quarter of 2024, Alexander, a Filipino supervisory employee, *1/1 Who among the following is required to file income tax return? * 0/1
was given P15,000 worth of groceries for personal use. How much is the
fringe benefit tax, if any?
Minimum wage earners

0 An individual whose monthly gross income does not exceed P250,000

7,000 Pure compensation earners qualified under the substituted filing system

5,250 Individuals whose income has been subjected to final withholding tax such as in
the case of NRANETBs
8,077
Correct answer

An individual whose monthly gross income does not exceed P250,000

A sole proprietorship business leases a residential house and lot for the *1/1
use of his business manager for P30,000 per month. How much is the
annual monetary value? Pantropiko Company declared a total of P3,000,000 dividends, 60% of *1/1
which is due to corporate shareholders, and the balance to individual
shareholders. How much is the final tax to be withheld by Pantropiko
90,000
Company?
180,000

270,000 0

360,000 120,000

240,000

300,000
 ABC Corporation declared a total of P2,000,000 dividends in March 2023. *0/2 Mr. Rodante Ampa made 3 bets to the PCSO lotto draws. All tickets won. *1/1
An analysis of the recipient shareholders is as follows: The details of the winning were as follows:

Resident citizens, P500,000 EZ2 - P6,000

Resident aliens, P500,000 6/42 - P10,000
Nonresident aliens engaged in trade or business, P500,000 6/45 - P30,000,000
Nonresident aliens not engaged in trade or business, P500,000.
How much is the tax due?
How much is the total final tax?

0
200,000
6,000,000
250,000
6,002,000
275,000
6,003,200
325,000

Correct answer

325,000 Mr. Kristal Guillermo, a resident citizen and employee of the BIR, provided *0/1
information to the BIR leading to the recovery of P15,000,000 taxes. The
cash reward, net of final tax, shall be?

Statement I: Stock dividends are subject to final tax. * 0/1 0

Statement II: Liquidating dividends are subject to final tax. 900,000

1,200,000
True, True
1,350,000
True, False
Correct answer
False, True
0
False, False

Correct answer

False, False

Mr. See, an Overseas Filipino Worker. He deposits all his savings in *1/1 Mr. Cruz filed his ITR on April 15, 2024, showing a gross income of *0/2
savings account under the foreign currency deposit unit of a domestic 350,000, with tax due of only 2,000. Mr. Cruz wants to pay it in two
bank. It is noted that the account was made in the name of his resident installments. Which of the following is true?
wife. During the month, the savings deposit account earned $1,000
interest with peso equivalent of P41,500. How much is the final tax on the
Mr. Cruz is liable for the entire 2,000.00 on April 15, 2024.
transaction, if any?
Mr. Cruz can pay P1,000 on or before October 15, 2024.

0
Mr. Cruz can pay P1,000 on or before October 15, 2025.

4,150
Mr. Cruz is liable for the entire P2,000 on or before October 15, 2024.

6,225
Correct answer
8,300 Mr. Cruz is liable for the entire 2,000.00 on April 15, 2024.

Mr. See, an Overseas Filipino Worker. He deposits all his savings in *1/1 The test in determining whether the gain on sale of personal property is *1/1
savings account under the foreign currency deposit unit of a domestic income within or income without is?
bank. It is noted that the savings account is actually a joint account with
his resident wife. During the month, the savings deposit account earned
$1,000 interest with peso equivalent of P41,500. How much is the final Residence of the parties

tax on the transaction, if any?

Place where the contract is perfected

Place where the property is located

0

None of the foregoing

3,112.50

6,225

8,300
Statement I: Personnel Economic Relief Allowance is not subject to *1/1 Statement I: Partner's share from income of general professional *1/1
income tax and withholding tax. partnership is subject to final tax.

Statement II: The monetization of vacation leave and sick leave credits of Statement II: Partner's share from income of general partnership is
government officials is an exempt de minimis benefit without regard to subject to graduated rates.
the number of days.

True, True
True, True
True, False
True, False
False, True
False, True
False, False
False, False

Which of the following items of income shall be subject to final *0/1

Ms. C, a resident citizen, bought ready-to-wear goods from Ms. B, a non- *1/1 withholding tax?
resident citizen. If Ms. B is an alien individual and the goods were
produced in her factory in China, is Ms. B’s income from the sale of the
Contractor's fee
goods to Ms. C taxable in the Philippines?
Dividend income received by a resident foreign corporation from a domestic
corporation
Yes, assuming the sale was made in the Philippines.
Royalty income of a resident citizen from books published and circulated in the
No, because gains from sale of personal property produced by the taxpayer without United States
and sold within the Philippines shall be treated as derived from sources without the
Philippines. Share of a non-resident alien engaged in trade or business in the Philippines from a
local business partnership
Yes, because gains from sale of personal property produced by the taxpayer
without and sold within the Philippines shall be treated as derived from sources Correct answer
within the Philippines.
Share of a non-resident alien engaged in trade or business in the Philippines from a
No, B, being a non-resident citizen, is not taxable on income from sources without local business partnership
the Philippines.

Mr. C is employed as a CEO of MNO Company, receiving an annual *1/1 Mr. Domagoso operates a convenience store while offering bookkeeping *2/2
compensation of P10,000,000.00 while Mr. S is a security guard in the services to his clients. In 2018, his gross sales amounted to P800,000, in
same company earning an annual compensation of P200,000.00. Both of addition to his receipts from bookkeeping services of P300,000. He
them source their income only from their employment with MNO already signified his intention to be taxed at 8% rate in his 1st quarter
Company. return. How much did he save by electing the 8% tax, if any?

At the end of the year, is Mr. C personally required to file an annual

109,500
income tax return?
152,000

No, because he is qualified for substituted filing of income tax return.

177,500

Yes, because his income breaches the threshold of 250,000.00

185,000

No, because he is exempt from income tax.

220,000

Yes, because a CEO is considered a mix income earner.

A mixed income earner realized P2,000,000 in sales, P100,000 in other *2/2

Which of the following may be subject to final tax? * 1/1
income subject to regular tax, and earned P150,000 compensation from
part-time employment. How much is the tax due if the taxpayer avails of
the 8% tax regime?
13th month pay and other benefits

Supplemental benefits 144,000

Fringe benefits 152,000

Regular compensation income 160,000

168,000
 An employee of a private corporation received the following de minimis *0/2 An employee of a private corporation received the following de minimis *0/2
benefits during the taxable year 2022: benefits during the taxable year 2022:

Monetized unused vacation leaves (10 days x P500), P5,000 Monetized unused vacation leaves (10 days x P500), P5,000

Uniform allowance for the year, P8,000 Uniform allowance for the year, P8,000

Laundry allowance (12 x P300), P3,600 Laundry allowance (12 x P300), P3,600

Rice subsidy (12 x 2,500), P30,000 Rice subsidy (12 x 2,500), P30,000

Actual medical benefits, P12,000 Actual medical benefits, P12,000

Benefits received by an employee by virtue of a collective bargaining Benefits received by an employee by virtue of a collective bargaining
(CBA) and productivity incentive schemes, P15,000 (CBA) and productivity incentive schemes, P15,000

Payroll record also revealed the following: Payroll record also revealed the following:

Basic salary (P40,000 x 12), P480,000 Basic salary (P70,000 x 12), P840,000

13th month pay, P40,000 13th month pay, P40,000

Christmas bonus, P30,000 Christmas bonus, P30,000

How much is the taxable 13th month and other benefits? How much is the tax payable (overpayment)?

0 0

5,000 51,250

90,000 73,750

95,000 143,500

Correct answer None of the choices

5,000 Correct answer

143,500

A taxpayer who is purely engaged in business had sales of P2,000,000, *2/2

net of P50,000 sales discounts, P100,000 other income subject to regular
income tax, and expenses of P840,000. If the taxpayer avails of the 8%
flat income tax, how much would be the taxpayer's tax due?

80,800

148,000

152,000

172,000

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Forms
 Which of the following statements about MCIT is not correct? * 0/1
Corporate Taxation Total points 35/50

The MCIT is imposed on a taxable corporation beginning on the fourth taxable year
of the corporation's business operations.

Email * The imposition of the MCIT on a corporation may be suspended by the Secretary of
Finance on the ground of legitimate business reverses.
[email protected]
If the MCIT is applicable, it should be computed and paid quarterly at the time
of filing of the quarterly corporate income tax.

A resident foreign corporation is subject to MCIT.

If the gross income from unrelated activity exceeds 50% of the total gross *1/1
income derived by any private educational institution, the tax rate shall be Correct answer
the RCIT based on the entire taxable income. This is known as the? The MCIT is imposed on a taxable corporation beginning on the fourth taxable year
of the corporation's business operations.

Constructive receipt test

Tax benefit rule

Statement I: A resident foreign corporation maintains a branch office or *0/1

End trust doctrine
offices in the Philippines.
Predominance test
Statement II: All income of a non-resident foreign corporation in the
Philippines shall be subject to the 25% final withholding tax.

True, True

True, False

False, True

False, False

Correct answer

True, False

Statement I: The gain from the sale of real property (capital asset) by all *0/1 The income tax due and income tax payable, respectively, for the third *1/1
foreign corporations, resident or non-resident, is subject to the 25% tax quarter are?
rate.

470,000; 70,000
Statement II: The exemption from income tax of intercorporate dividends
does not apply to non-resident foreign corporations. 470,000; 250,000

470,000; 100,000
True, True
470,000; 140,000
True, False

False, True

False, False
Which of the following shall not be subject to tax on dividends? * 0/1

Correct answer

True, True Cash dividends received by a non-resident foreign corporation from a domestic
corporation

Property dividends paid by a domestic corporation to a resident foreign corporation

Property dividends paid by a domestic corporation to a nonresident citizen

The tax sparing principle which entitles the taxpayer of a preferential tax *1/1
rate of only 15% on the dividends received from a domestic corporation Partner's share in the distributive income of a business partnership
may be applied to?
Correct answer

domestic corporation Property dividends paid by a domestic corporation to a resident foreign corporation

resident foreign corporation

non-resident foreign corporation

offshore banking units

 Cash dividends received from a domestic corporation are subject to a *0/1 Consider the following data culled from ABC Corporation's records: *1/1
final tax of 10% if such dividends are received by a?
The income tax due and income tax payable, respectively, for the first
quarter are?
RFC

NRANETB

RA

NRAETB

Correct answer

RA 100,000; 100,000

100,000; 80,000

100,000; 50,000
Statement I: In case of proprietary educational institutions and non-profit *0/1
100,000; 40,000
hospitals, the 10% tax rate shall be applied to school/hospital-related
income while the 25% tax rate shall be applied to school/hospital-
unrelated activities.

Statement II: There is no Gross Philippine Billings when a passenger is Which of the following revenue constitutes the Gross Philippine Billings *1/1
transshipped to another airline outside the PH even if the flight originated of an RFC operating as an international air carrier?
from the PH.

Revenue on flight from PH to Osaka, Japan, tickets sold in Japan.

True, True
Revenue on flight from US to PH, tickets sold in the PH.
True, False
Revenue on flight from Hongkong to South Korea (flight originated from the PH with
False, True transshipment in Hongkong), tickets sold in the PH.

False, False Revenue on a return flight from Singapore to the PH, round-trip ticket sold in the PH.

Correct answer

False, False

Jill Corporation, a domestic corporation, deposited P2,000,000 in the five- *1/1 A resident corporation is one that is: * 0/1
year time deposit of BPO Bank which pays 10% annual interest. Compute
Jill's net interest income in the first year of the deposit.
organized under the laws of the Philippines that does business in another country.

140,000 organized under the laws of a foreign country that sets up a regional
headquarter in the Philippines doing product promotion and information
160,000 dissemination

organized under the laws of the Philippines that engages business in a special
180,000
economic zone.

200,000 organized under the laws of a foreign country that engages in business in Makati
City, Philippines.

Correct answer

FULL NAME (LAST, First Name, MI) * organized under the laws of a foreign country that engages in business in Makati
City, Philippines.
Magahis, Axel John S.

Nihon Corporation, a non-resident corporation organized under and by *0/1

UNIQUE CODE * virtue of the laws of Japan, deposited USD500,000 at BDO, Makati City.
EDT78910 The interest income from the said deposit is subject to?

25% FWT

20% FWT

15% FWT

0% FWT

Correct answer

0% FWT
 A domestic corporation engaged in international air carriage has the *0/2 Which of the following statements relative to a non-resident foreign *1/1
following information relative to its flight during the taxable year: corporation is false?

USA to PH
It does not file an income tax return.
Tickets sold in the USA, P4,000,000
Tickets sold in the PH, P1,000,000 Its taxable income is always subject to final withholding tax.

PH to Saudi Arabia It is taxed only on income derived from sources within the Philippines.
Tickets sold in the PH
None of the above
Tickets sold in Saudi Arabia

PH to Russia, P3,000,000

Note: The flights from the PH to Russia transhipped the passengers in A Corporation provided the following data for the calendar year ending *2/2
Japan. Flight hours from PH to Japan cover 1/3 of the total flight hours December 31, 2018:
from PH to Russia.
Philippines
The GPB of the airline company for the taxable year is? Gross Income, P4,000,000
Deductions, P2,500,000

0
USA ($1:P50)
75,000 Gross income, $40,000
Deductions, $15,000
80,000 Income tax paid, $3,000

100,000
If it is a domestic corporation, its income tax after credit is?
Correct answer

0
480,000

537,500

675,000

962,500

All of the following are taxed at 25% of their gross income in the *1/1 The income tax due and income tax payable, respectively, for the year *1/1
Philippines, except? are?

Non-resident individual not doing business in the Philippines 670,000; 100,000

A foreign corporation whose only income in the Philippines is the gain from sale 670,000; 135,000
of shares of stock in the stock exchange
670,000; 165,000
Non-resident foreign cinematographic film owner/lessor
670,000; 200,000
A non-resident American whose only income earned in the Philippines is the
interest on peso time deposit

A Corporation provided the following data for the calendar year ending *2/2
A Corporation provided the following data for the calendar year ending *2/2 December 31, 2018:
December 31, 2018:
Philippines
Philippines Gross Income, P4,000,000
Gross Income, P4,000,000 Deductions, P2,500,000
Deductions, P2,500,000
USA ($1:P50)
USA ($1:P50) Gross income, $40,000
Gross income, $40,000 Deductions, $15,000
Deductions, $15,000 Income tax paid, $3,000
Income tax paid, $3,000
If it is a nonresident foreign corporation, its income tax is?
If it is a resident foreign corporation, its income tax is?
800,000

300,000
1,000,000

375,000
1,200,000

450,000
1,400,000

525,000
A general professional partnership is one: * 1/1 Corporations are allowed to report their income on... * 1/1

that is registered as such with the SEC and the BIR. a fiscal year

that is composed of individuals who exercise a common profession. a calendar year

that exclusively derives income from the practice of the common profession. either fiscal or calendar year

that derives professional income and rental income from property owned by it. a crop year

Which among the following taxpayers is required to use only the calendar *1/1 The income tax due and income tax payable, respectively, for the second *1/1
year for tax purposes? quarter are?

Partnership exclusively for the design of government infrastructure projects 330,000; 120,000
considered as practice of civil engineering.
330,000; 250,000
Joint-stock company formed for the purpose of undertaking construction projects.
330,000; 150,000
Business partnership engaged in energy operations under a service contract with
the government. 330,000; 230,000

Joint account (cuentas en participacion) engaged in the trading of mineral ores.

VGS & Co., a professional firm, earned a net income of P200,000,000 for *1/1
Which of the following is subject to income tax?Untitled Question * 1/1
2023. Its assets do not exceed P100,000,000 as of 2023. How much is
the income tax liability of VGS & Co.?

SSS and GSIS

0
Philippine Health Insurance Corporation
40,000,000
Local water districts
50,000,000
Philippine Amusement and Gaming Corporation
Cannot be readily determined from the given facts

The lower corporate income tax of 20% may be availed only if? * 1/1 What is the rule on the taxability of income that a government *1/1
educational institution derived from its school operations? Such income
is?
The gross income does not exceed P5M and the total assets does not exceed
P100M, excluding the land on which the entity's business office, plant, and
equipment are situated. subject to 10% tax on its net taxable income as if it is a proprietary educational
institution.
The net taxable income does not exceed P5M or the total assets does not exceed
P100M, excluding the land on which the entity's business office, plant, and exempt from income taxation if it is actually, directly, and exclusively used for
equipment are situated. educational purposes.

The net taxable income does not exceed P5M and the total assets does not subject to the ordinary income tax rates with respect to incomes derived from
exceed P100M, excluding the land on which the entity's business office, plant, educational activities.
and equipment are situated.
exempt from income taxation in the same manner as government-owned and
The net taxable income does not exceed P5M and the total assets does not exceed controlled corporations.
P100M, including the land on which the entity's business office, plant, and
equipment are situated.

Under the Tax Code, the term corporation excludes not only general *1/1
professional partnerships, but also...
Using the preceding problem except that the RCIT for the fourth quarter is *1/1
P50,000 (instead of 200,000), the income tax still due for the year is?
Joint stock companies

45,000 Insurance companies

55,000 Joint ventures formed for the purpose of undertaking construction projects with the
government
75,000
Joint ventures formed for the purpose of engaging in petroleum, coal,
120,000 geothermal and other energy operations pursuant to an operating consortium
agreement under a service contract with the Government.

None of the above

 Which of the following reduced tax rates shall end on June 30, 2023? * 1/1 A resident foreign corporation engaged in international air carriage has *2/2
the following information relative to its flight during the taxable year:

20% RCIT
USA to PH
1% MCIT
Tickets sold in the USA, P4,000,000
Tickets sold in the PH, P1,000,000
1% OPT under Section 116
PH to Saudi Arabia
Both 1% MCIT and 1% OPT under Sec. 116
Tickets sold in the PH
Tickets sold in Saudi Arabia

PH to Russia, P3,000,000
Which of the following statements is incorrect? * 1/1
Note: The flights from the PH to Russia transhipped the passengers in
Japan. Flight hours from PH to Japan cover 1/3 of the total flight hours
A general partnership in trade shall not be treated as a corporation for tax
from PH to Russia.
purposes.

A co-ownership where the activities of the co-owners are limited to the preservation The income tax due from the airline company is?
of property and collection of income from the property shall not be treated as a
corporation for tax purposes.

A co-ownership by investment of labor or capital shall be treated as a corporation

0
for tax purposes.
75,000
A regional operating headquarter of a multinational company may earn income
from the Philippines.
80,000

100,000

In determining the Gross Philippine Billings of a resident foreign *1/1 Which of the following corporations is subject to the Minimum Corporate *0/1
corporation operating as an international air or shipping carrier, the Income Tax (MCIT)?
primary consideration is?

Proprietary educational institution

Place of original departure
Proprietary hospital
Place of final destination
Offshore banking units
Place of sale of the passage or freight document
Domestic corporations subject to special tax rates
Nationality of the international carrier
Correct answer

Proprietary hospital

A private, non-profit hospital, has gross receipts of P15M with a cost of *0/1
P6M, and allowable deductions of P3,250,000 from related activities,
while for its unrelated activities, it incurred P5M and P2M as cost of sales Interest income from foreign currency loan extended to a Philippine *0/1
and allowable deductions, respectively, with a gross sales of 18M for CY domestic corporation received by a non-resident alien engaged in trade or
2021. How much is the tax due? business is?

167,500 exempt from income tax

1,675,000 subject to a final tax of 25%

3,350,000 subject to a final tax of 7.5%

4,187,500 subject to a schedular tax rate

Correct answer Correct answer

4,187,500 subject to a schedular tax rate
A resident foreign corporation engaged in international air carriage has *1/1 GDD Corporation, a domestic corporation, owns 20% of the outstanding *0/1
the following information relative to its flight during the taxable year: shares of DEE Corporation, an NRFC, since August 1, 2015. On May 1,
2021, it received dividends amounting to 1M from the said NRFC. On
USA to PH September 1, 2022, GDD Corporation utilized P800k for dividend payouts,
Tickets sold in the USA, P4,000,000 and on January 1, 2023, it utilized the remaining P200k for its working
Tickets sold in the PH, P1,000,000 capital. How much is tax-exempt dividend?

PH to Saudi Arabia
0
Tickets sold in the PH
Tickets sold in Saudi Arabia 200,000

PH to Russia, P3,000,000 800,000

1,000,000
Note: The flights from the PH to Russia transhipped the passengers in
Japan. Flight hours from PH to Japan cover 1/3 of the total flight hours
from PH to Russia.

The GPB of the airline company for the taxable year is? Statement I: Starting January 1, 2021, regional or area headquarters shall *1/1
be subject to RCIT.

Statement II: Starting January 1, 2021, regional operating headquarters

0
shall likewise be subject to RCIT.
3,000,000

True, True
3,200,000

True, False
4,000,000

False, True

False, False

Domex Corporation is a resident foreign corporation. It shows the *2/2 Statement I: The last paragraph of Section 30 of the NIRC is applicable to *0/1
following for the taxable year 2021: non-stock, non-profit educational institutions.

Philippines Statement II: The last paragraph of Section 30 of the NIRC is applicable
Gross income from business, P10,000,000 to government educational institutions.
Dividend income from domestic corporation, P50,000
Royalty income, P80,000
True, True
Business expenses, P8,700,000
True, False
Abroad
Gross income from business, P12,000,000 False, True
Dividend income from domestic corporation, P0
False, False
Royalty income, P200,000
Business expenses, P9,800,000 Correct answer

Compute the taxable income of Domex subject to the regular corporate False, True
income tax.

1,300,000
Effective July 1, 2020, Special Corporate Income Tax is? * 1/1
1,380,000

3,700,000 5% based on gross income earned, in lieu of all national and local taxes.

3,500,000 10% based on gross income earned, in lieu of all national and local taxes.

15% based on gross income earned, in lieu of all national and local taxes.

20% based on gross income earned, in lieu of all national and local taxes.

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Forms
 In computing gain or loss from the sale or other disposition of property *0/1
Gross Income Total points 34/65 acquired by gift or donation, the cost basis of the donee is?

The basis as if the property is in the hands of the donor

Email * Fair market value at the time of donation

[email protected]
Purchase price plus expenses of acquisition, including the VAT

Fair market value at the time of purchase

FULL NAME (LAST, First, MI) * Correct answer

The basis as if the property is in the hands of the donor

Magahis, Axel John S.

UNIQUE CODE * Which of the following statements is false? * 1/1

EDT78910
Income from personal service is considered derived from the country where the
services were rendered.

Rents or royalties are considered derived from the country where the property is
Statement I: Income derived from an unlawful source is always taxable. *1/1 located.

Income from sale of property is considered derived from the country where the
Statement II: Income derived from lawful source may or may not be
property is located.
taxable.
The source of interest income is the country where the creditor resides.

True, True

True, False

False, True

False, False

On November 10, 2010, Mr. and Mrs. Degullado sold their principal *1/1 Under the NIRC, which of the following transactions shall not be subject *0/1
residence in Makati City for P6,500,000. The following requirements must to tax on dividends?
be met in order that the capital gains presumed to have been realized
from such sale may not be subjected to 6% CGT, except:
Property dividends paid by a domestic corporation to a resident foreign corporation

Cash dividends received by a non-resident foreign corporation from a domestic

They must fully utilize the proceeds of the said sale to acquire or construct a
corporation
new principal residence immediately.

They must inform the BIR of the intention to avail of the tax exemption within 30 Property dividends paid by a domestic corporation to a non-resident citizen
days from the date of sale.
Partner's share in the distributive income of a business partnership
The property sold must not be used in business.
Correct answer
They can avail of the tax exemption only once every 10 years.
Property dividends paid by a domestic corporation to a resident foreign corporation

Ms. Bergantidos owns a door apartment with a monthly rental of P15,000 *0/1
De minimis benefits are one of those fringe benefits which are not *1/1
each residential unit. Later, she sold it as it was no longer generating
subject to income tax. Which of the following statements does not define
income. The value of the property before sale was P10M and was sold at
them?
P8M. Is Ms. Bergantidos liable to pay the capital gains tax?

These consist of facilities and privileges furnished or offered by an employer.

Yes, because the property sold is a capital asset in contemplation of law and the
capital loss is immaterial since again is presumed for sale.
These are relatively small in value.
No, because the property sold is an ordinary asset which is real property used in
business. These are taxable when received by managerial or supervisory employees.

Yes, because the property sold is a capital asset, located in the Philippines and These are offered by the employer merely as a means of promoting health, goodwill
not used in business as it ceased to be profitable. and contentment or efficiency of his employee.

No, because the apartment is considered to be a principal residence where the sale
thereof entitles the owner of the benefit of the exemption.

Correct answer

No, because the property sold is an ordinary asset which is real property used in
business.
Ms. Cortez, a retired public school teacher, relies on her pension from the *1/1 The share of the partner in the following income items of a general *1/1
GSIS and on the interest income from her time deposit of 800K with City professional partnership will no longer be subject to graduated income
Savings Bank. Is Ms. Cortez liable to apy any tax on her income? tax on the part of the partner, except:

She is exempt from tax on the pension from GSIS but the interest she receives Interest income on peso bank deposit in a domestic bank
from her time deposit is subject to 20% FWT.
Gain from sale of investment in a domestic corporation
She is exempt from tax on the pension from GSIS but the interest she receives from
her time deposit is subject to 10% FWT. Dividend income from investment in domestic shares

As a senior citizen, she is exempt from tax on both pension and on the interest she
Gain from sale of real property considered as ordinary asset
receives from her time deposit.

She is exempt from tax on the pension from GSIS but the interest income she
receives from her time deposit shall be included as part of her gross income.

Which of the following is not passive income subject to final tax? * 1/1

In determining the Gross Philippine Billings of a resident foreign *1/1 Winnings from lottery, raffle draws in the Philippines
corporation operating as an international air or shipping carrier, the
Royalty income from copyright used in the Philippines
primary consideration is:

Prizes from a sports contest in the Philippines amounting to P10,000

Place of original departure
Cash dividends received by individuals from domestic corporations
Place of sale of the passage or freight departure

Place of final destination

Nationality of the international carrier As a rule, proceeds of insurance are not taxable because they only *1/1
constitute a return of what was lost (return of capital). Which of the
following are taxable?

Proceeds of life insurance

Proceeds of crop insurance

Proceeds of accident or health insurance

Proceeds of property insurance

Which of the following is not taxable? * 1/1 Ms. Lamis, a resident alien employed in a domestic corporation, was *1/1
separated due to her falling eyesight. She was given P500,000.00 as a
separation pay. She contends that such pay is exempt from tax. Is her
Proceeds of life insurance received by a revocable beneficiary after the death of the
contention correct?
insured.

Amount received as compensation for unrealized salary for three months, whether
by suit or agreement, on account of an accident No, because the income of aliens is not subject to tax.

Proceeds of life insurance received by an irrevocable beneficiary after the death Yes, because the separation pay is an income derived from sources within the
of the insured Philippines.

Sale of lot which is a capital asset located in the Philippines No, because her separation is due to her disability, hence a cause attributable to her
own incapacity.

Yes, because her separation is due to her disability, hence, involuntary and for a
cause beyond her control.

Which of the following items earned by Mr. Magahis, a resident citizen, *1/1
shall be included in the gross income for income tax computation
purposes?
1. Realized gain from redemption of shares in mutual fund Interest income received by a non-resident citizen from a depository bank *1/1
2. Realized gain from sale of bonds with maturity of five years under the expanded foreign currency system shall be?

included, included Subject to final tax of 25%

included, excluded Exempt from tax

excluded, included Subject to Section 24(A) tax

excluded, excluded Subject to final tax of 20%

 Which of the following is not subject to final tax? * 0/1 Which of the following is a taxable? * 1/1

Interest income earned by lending institutions Separation pay received by a 50-year old employee due to the retrenchment
program of the employer.
Interest income from bank deposits received by a resident citizen
Retirement pay received from a benefit plan registered with the BIR where at the
Interest income from trust funds received by a non-resident alien engaged in time the employee retired, he was 55 years old, retiring from employment for
trade or business the first time in his life, and was employed with the employer from whom he is
retiring for 5 years prior to retirement.
Interest income from deposit substitutes received by a resident foreign corporation
Social security benefit received by a balikbayan from his employer abroad at the
age of 35.
Correct answer

Interest income earned by lending institutions SSS and GSIS benefits.

On January 3, 2018, Ms. Torres, a Filipino residing in the PH, purchased *0/1 On general rules on capital gains and losses, which of the following *0/1
100 shares of the capital stock of BCA Corporation, a domestic statements is false?
corporation. On January 3, 2020, BCA Corporation declared, out of profits
of the company earned after January 1, 2018, a 100% stock dividends on Capital gains and losses of corporations are always recognized in full.
all stockholders record as of December 31, 2019 as a result Ms. Torres'
holding in BCA Corporation became 200 shares. Are the stock dividends The net capital loss of one year can be carried over to the succeeding year by a
corporation.
received by Ms. Torres subject to income tax?
Capital losses are always deductible only against capital gains.

Yes, stock dividends are taxable since they are realized income.
The recognition of capital gains and losses for individuals takes into account the
holding period of the capital asset.
Yes, stock dividends are taxable as provide in the NIRC.
Correct answer
No, stock dividends are not realized income and are exempt from income tax.
The net capital loss of one year can be carried over to the succeeding year by a
No, stock dividends are not taxable even if these are equivalent to cash and corporation.
property dividends.

Correct answer

No, stock dividends are not realized income and are exempt from income tax.

Which of the following income payments is subject to final withholding *0/1 Which of the following is not subject to income tax? * 1/1
tax?

Moral damages awarded to litigant for mental anguish on account of libelous

Dividends received by a domestic corporation from a domestic corporation articles written about her.

Interest income on dollar deposit of a non-resident alien P5,000.00 received by a person from a raffle.

Informer's reward Excess remittance of dollar from a sister in the US due to bank's error whereby the
originally intended remittance was USD1,000 instead of the actually remitted
Interest on long-term deposits with maturity period exceeding five years USD1,000,000.

Interest income on P360,000 PCSO lotto winning.

Correct answer

Informer's reward

Mr. Solomon is an employee of ABC Corporation for five years. At the age *1/1
of 50, he retired from his work. Mr. Solomon received from the
Interest income earned by a resident Filipino outside the Philippines is? * 0/1 corporation his retirement benefits under the company's BIR-approved
private benefit plan. Are the benefits or pension subject to income tax?

subject to the graduated rates

Yes, it is subject to tax since Mr. Solomon had not satisfied the 10-year
subject to a final withholding tax requirement to avail the tax exemption.

subject to 15% special tax rate No, such pension is tax-exempt because Mr. Solomon had already served the
company for five years
not subject to income tax
Yes, because he must be at least 60 years old to avail of the tax exemption.
Correct answer
No, since Mr. Solomon is already 50 years old when he retired.
subject to the graduated rates
 Mr. Solomon is an employee of ABC Corporation for five years. At the age *1/1 Taylor Swift, an American residing in Hong Kong came to the PH to sing *1/1
of 50, he retired from his work. Mr. Solomon received from the the American national anthem on a professional boxing championship
corporation his retirement benefits under the company's BIR-approved match held at the MOA Arena. She was paid P2,000,000 as talent fee. Her
private benefit plan. Are the benefits or pension subject to income tax? PH income tax would be?

Yes, it is subject to tax since Mr. Solomon had not satisfied the 10-year 620,000
requirement to avail the tax exemption.
570,000
No, such pension is tax-exempt because Mr. Solomon had already served the
company for five years 500,000

Yes, because he must be at least 60 years old to avail of the tax exemption.
150,000

No, since Mr. Solomon is already 50 years old when he retired.

Statement I: The distributive share of a partner in the net income of a *0/1

Ms. Bueno is 67 years old, retired. During 2022, she received a retirement *0/1 taxable partnership is equal to each partner's distributive share of the net
pay from her former employer for 8 years in the amount of P400,000.00. income declared in the partnership for a taxable year after deducting the
Her net income from business is P2,000,000.00. What is Ms. Bueno's corresponding corporate tax.
taxable income?
Statement II: If a taxable partnership sustains net operating loss, the
partners shall be entitled to deduct their respective shares in the loss
0 from their individual gross income.

400,000
True, true
2,000,000
True, false
2,400,000
False, true
Correct answer
False, false
2,000,000
Correct answer

False, true

Statement I: GPPs are merely "pass-through entities" since it is the *1/1 Statement I: If proceeds of life insurance are held by the insurer under an *1/1
individual partners who are taxable in their separate and individual agreement to pay interest thereon, the interest payment shall be included
capacities. in the gross income.

Statement II: Professional fees paid to GPPs are not subject to the Statement II: The amount received by the insured, as a return of premium
creditable withholding tax on the theory that GPPs are not taxable paid by him under life insurance, endowment or annuity contracts, either
entities. during the term or at the maturity of the term mentioned in the contract or
upon surrender of the contract shall be excluded from gross income.

True, true
True, true
False, true
True, false
True, false
False, true
False, false
False, false

Statement I: The term "exclusions" refers to items that are not included in *1/1
the determination of gross income because they are subject to another Statement I: If the amounts, when added to amounts received before the *1/1
kind of internal revenue tax. taxable year under such contract, exceed the aggregate premium paid,
whether or not paid during the taxable year, then the excess shall likewise
Statement II: The term "exclusions" refers to items that are not included be excluded from gross income.
in the determination of gross income because they are income, gain, or
profit that are expressly exempt from income tax under the constitution, Statement II: In the case of a transfer for a valuable consideration by
tax treaty, Tax Code, or general or special law. assignment or otherwise, of a life insurance, endowment or annuity
contract or any interest therein, only the actual value of such
consideration and the amount of the premiums and the sums
True, true
subsequently paid by the transferee are exempt from taxation.
True, false

True, true
False, true

True, false
False, false

False, true

False, false
 Statement I: Participating dividends are treated as return of profit, and *0/1 Statement I: Recoveries of damages, representing compensation for *0/1
are, therefore subject to income tax. personal injuries arising from libel, defamation, slander, breach of
promise to marry, alienation of affection are not subject to income tax
Statement II: Income derived from investment, sale or otherwise from and shall be included in gross income.
property received as gift shall be included in the gross income.
Statement II: Any damage recovered by suit or agreement on account of
such injuries or sickness are similarly excluded from the gross income of
True, true
the individual injured or sick, if living (such as actual, moral, exemplary,
True, false and nominal damages) or of his estate or other beneficiaries entitled to
receive such damages, if dead.
False, true

False, false True, true

Correct answer True, false

False, true False, true

False, false

Correct answer
Statement I: Gift, bequest, devise or descent of income from any *0/1
True, true
property, in cases of transfers of divided interest, shall be excluded in the
gross income.

Statement II: Alimony or an allowance based on a separation agreement

is taxable income. Statement I: Terminal leave pay or commutation of leave credits is the *1/1
cash value of the officer's or employee's accumulated leave credits.

True, true
Statement II: Terminal leave pay is not considered salary but a retirement
True, false gratuity and is not subject to income tax.

False, true
True, true
False, false
True, false
Correct answer
False, true
False, false
False, false

Statement I: Holding period is the length of time capital assets are held *0/1 Statement I: Capital losses are deductible from both ordinary gains and *1/1
and covers the period from the date of acquisition to date of sale. capital gains.

Statement II: Holding period applies to both individuals and corporations. Statement II: Net capital loss carry-over is allowed to taxpayers other
than corporations, and this is carried over to the succeeding year as a
long-term loss.
True, true

True, false
True, true

False, true
True, false

False, false
False, true

Correct answer False, false

True, false

Statement I: The amount of net capital loss carry-over is the net capital *1/1
Statement I: Capital gain from sale of shares of stock not traded in the *1/1 loss or the net income in the year the net capital loss is sustained,
local stock exchange is subject to capital gains tax which is considered a whichever is lower.
final tax.
Statement II: Capital gains and losses of the general professional
Statement II: Presumed capital gain on sale of real property classified as partnership will be accounted for by the partners in proportion to their
capital asset is subject to final capital gains tax. interest in the partnership.

True, true True, true

True, false True, false

False, true False, true

False, false False, false

 Statement I: Gains or losses from short sales of property shall be *1/1 Statement I: As a rule, an employee lawfully dismissed is not entitled to a *1/1
considered as long-term gains or losses from sales or exchanges of separation pay.
capital assets.
Statement II: Any payment made by an employer to an employee on
Statement II: Gains or losses attributable to the failure to exercise account of lawful dismissal constitutes compensation regardless of
privileges or options to buy or sell property shall be considered as capital whether or not the employer is legally bound by contract, statute, or
gains or losses. otherwise, to make such payment.

True, true True, true

True, false True, false

False, true False, true

False, false False, false

Statement I: If securities become worthless during the taxable and are *0/1 Statement I: Benefits received from or enjoyed under the SSS and the *1/1
capital assets, the loss shall be considered as a loss from the sale, barter GSIS including retirement gratuity received by government officials and
or exchange of capital assets on the last day of each taxable year. employees are not included in the gross income.

Statement II: Amounts received by the holder upon the retirement of Statement II: Income derived by foreign governments, financing
bonds, debentures or other evidence of indebtedness issued by any institutions owned, controlled or enjoying refinancing from foreign
corporation including those issued by the Government with interest governments, and international or regional financial institutions
coupon or in registered from, shall be considered as amounts in established by foreign governments from investment in loans, stocks,
exchange thereof, and may result to capital gains or losses. bonds or other domestics securities, or from interest on deposits in
banks in the Philippines shall not be subject to Philippine income tax.

True, true
True, true
True, false
True, false
False, true
False, true
False, false
False, false
Correct answer

True, false

Statement I: Household furniture sold by a dealer are considered as *1/1 Statement I: If securities become worthless during the taxable year and *0/1
capital asset. are capital assets, the loss shall be considered as a loss from the sale,
barter or exchange of capital assets on the last day of each taxable year.
Statement II: Car used for personal purpose is a capital asset.
Statement II: Amounts received by the holder upon the retirement of
bonds, debentures or other evidence of indebtedness issued by any
True, true
corporation including those issued by the Government, with interest
True, false coupon or in registered from, shall be considered as amounts in
exchange thereof, and may result to capital gains or losses.
False, true

False, false True, true

True, false

False, true
Statement I: Representation and transportation allowance given regularly *0/1
False, false
on a monthly basis are not treated as taxable fringe benefits but taxable
as compensation income under Section 24(A).
Correct answer

Statement II: Representation and transportation allowance (RATA) True, false

granted to public officers and employees under the General
Appropriations Act and personal economic relief allowance (PERA) are
compensation not subject to withholding tax.

True, true

True, false

False, true

False, false

Correct answer

False, true
 Statement I: Gross benefits excluding basic salary and other allowances *0/2 Statement I: Where a public officer has complied with the statutory *2/2
received by officials and employees of public and private entities provided prerequisites for retirement with pay, his right to retire and draw salary
that the total exemption shall not exceed P82,000 under the TRAIN. becomes vested and may not thereafter be revoked or impaired.

Statement II: The P90,000 exclusion from gross income is not applicable Statement II: Retired public officers have a vested right right to accrued
to self-employed individuals and income generated from business. pensions due to them under the law.

Statement III: A minimum wage earner (MWE), receiving other benefits Statement III: The tax-exempt retirement benefits granted shall be availed
exceeding P90,000 limit shall be taxable on the excess benefits, but shall of by an official or employee every time he retires.
remain exempt as far as his minimum wage is concerned.

No statement is correct
No statement is correct
One statement is correct
One statement is correct
Two statements are correct
Two statements are correct
Three statements are correct
Three statements are correct

Correct answer

Two statements are correct Statement I: Real property acquired by banks through foreclosure sales is *0/2
an ordinary asset.

Statement II: Accounts receivables are considered as ordinary assets.

Statement III: Apartment house is an example of ordinary asset.

No statement is correct

One statement is correct

Two statements are correct

Three statements are correct

Correct answer

Two statements are correct

Statement I: Real property received as dividend from a corporation which *0/2 Which of the following statements are true? *2/2
is engaged in real estate business by the stockholders who are not
engaged in real estate business and who do not subsequently use such I. The MCIT takes effect on the third (3rd) taxable year immediately
real property in trade or business is not an ordinary asset. following the starting year of business operations.

Statement II: Real property, whether single detached, townhouse or II. The exemption from income tax of intercorporate dividends does not
condominium unit, not used in trade or business owned by an individual apply to non-resident foreign corporations.
engaged in business is an ordinary asset.
III. In the case of proprietary educational institutions and non-profit
Statement III: Real property initially acquired by a taxpayer engaged in the hospitals, the 1% tax rate shall be applied to school/hospital-related
real estate business shall not result in its conversion into a capital asset income while the 25% tax rate shall be applied to school/hospital-
even if the same is subsequently abandoned or becomes idle. unrelated activities.

IV. A corporation cannot claim a refund or tax credit for any excess
No statement is correct
income on any of the three quarterly income tax returns.
One statement is correct

Statements I and II
Two statements are correct

Statements II and III

Three statements are correct

Statements II and IV
Correct answer

Two statements are correct Statements III and IV

 The following income payments to a juridical entity are subject to 15% *0/2 Ms. Rata sold a painting, a capital asset, which she had purchased in *0/2
expanded withholding tax if said juridical entity's gross income exceeds 2018 at a cost of P30,000. She sold the painting to Ms. Azur with the
P720,000, except: following terms:

June 1, 2021, down payment, P10,000

Talent fee of artists
August 1, 2021 installment, P10,000
Professional fee for tax services of a general professional partnership October 1, 2021 installment, P20,000
October 1, 2022 installment, P40,000
Consultancy fee for consultancy services October 1, 2023 installment, P40,000

Service fee for bookkeeping services

For the year 2021, Ms. Rata will report a gross income of?
Correct answer

Professional fee for tax services of a general professional partnership P15,000

P30,000

P45,000

ABC Corporation's financial data for the taxable year 2010 revealed an *0/2
P90,000
excess income tax in the second quarter income tax return. After reading
Section 76 of the NIRC, what is the proper treatment of the excess Correct answer
income tax in the second quarter?
P45,000

Claim the excess income tax as a tax refund or tax credit

Claim the excess income tax as a tax refund only

Calim the excess income tax as a tax credit only

Do not claim the excess income tax as a tax refund or tax credit

Correct answer

Do not claim the excess income tax as a tax refund or tax credit

Richard leased a 216 square meter of idle land to Suzanne College of *0/2
Business (LCB), a proprietary educational institution, for a period of
twenty (20) years effective January 1, 2020.

The lease contract provides that Suzanne College of Business (LCB) will
erect a building thereon to be used as classroom, which it did on the lot
of Richard.

The agreement provides also that the building shall become the property
of the lessor at the end of the lease. The building was completed on June
30, 2022 at a cost of P1,800,000. The estimated life of the leasehold
improvement is thirty (30) years and will be occupied in the immediately
succeeding quarter following its construction.

It was further agreed that Suzanne College of Business (LCB) will pay the
real estate tax on the land assessed at P3,000 annually. On January 2,
2020, LCB paid Richard P120,000 consisting of rental covering the two (2)
year period (24 months) from 2020 to 2021.

On January 2, 2020, LCB paid RIchard 120,000 consisting of rental

covering the 2-year period from 2020 to 2021.

The income to be reported by Richard in 2023 under spread out method

is?

84,429

102,857

105,857

114,429

Correct answer

105,857

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 Which of the following expenses may be deducted from gross *1/1
Deductions Total points 57/70 compensation income?

Depreciation of permanent assets

Email * Premium payments on health/hospitalization insurance

[email protected]
Bad debts written off

40% OSD

None of the above

FULL NAME (LAST, First Name, MI) *

Magahis, Axel John S.

Which of the following taxes may be deducted from gross income? * 1/1

UNIQUE CODE *
Tax on royalty income
EDT78910

Tax on beauty pageant prizes

Stock transfer tax

Who among the following individual taxpayers is not allowed to claim *1/1
Registration fees on company vehicles
deductible expenses as a deduction from his gross income?

Resident citizen

Resident alien

Non-resident alien engaged in trade or business

Non-resident alien not engaged in trade or business

Which of the following losses is deductible for income tax purposes? * 0/1 The records of XYZ Corporation revealed the following: * 1/1

2001 Net operating loss, 200,000

Loss from an illegal transaction
2002 Net operating income, 70,000
Loss incurred in selling a used delivery truck to an uncle
2003 Net operating income, 50,000
2004 Net operating income, 60,000
Loss from a business receivable from a customer which is doubtful of
collection The taxable income(loss) for 2004 is?
Wash sale loss
20,000
Correct answer
(20,000)
Loss incurred in selling a used delivery truck to an uncle
60,000

(60,000)

Which of the following items is not part of "expenses in general", and *1/1
therefore, is not deductible from gross income?

ABC Corporation had the following data relative to its office equipment *1/1
Grossed-up monetary value of fringe benefit furnished by the employer to the
employee
partially destroyed by fire:

Electricity bill for consumed power of the preceding taxable period but not yet Acquisition cost, 500,000
actually paid
Accumulated depreciation, 100,000
Unused office supplies Insurance recovered, 200,000
Replacement cost, 550,000
Entertainment expenses
The deductible casualty loss is?

550,000

200,000

300,000

400,000
Statement I: Premiums paid on any life insurance policy covering the life *2/2 Statement I: In computing net income, no deduction shall in any case be *0/2
of any person financially interested in any trade or business carried on by allowed in respect of losses from sales or exchanges of property directly
the taxpayer, individual or corporate, when the taxpayer is directly or or indirectly between members of the family.
indirectly a beneficiary shall not be allowed as deduction from the gross
income Statement II: In computing net income, no deduction shall in any case be
allowed in respect of losses from sales or exchanges of property directly
Statement II: Premiums paid on any life insurance policy covering the life or indirectly between a grantor and the beneficiary.
of any person financially interest in any trade or business carried on by
the taxpayer, individual or corporate, when the family of the insured is
True, true
directly or indirectly a beneficiary is deductible from gross income.
True, false

True, true
False, true

True, false
False, false

False, true
Correct answer
False, false True, false

Statement I: A taxpayer can deduct an item or amount from the gross *2/2
income only if there is a law authorizing such a deduction.

Statement II: For income tax purposes, a taxpayer is free to deduct from
the gross income the full amount or a lesser amount of the deduction
allowed or not claim any deduction at all.

True, true

True, false

False, true

False, false

Statement I: Salaries paid by employers to employees who are absent *2/2 Expense I: Expenses paid by company for police protection against *2/2
because they are in the military, naval or other service in the government, troublesome workers on strike.
but who intend to return at the conclusion of such service are not
deductible from gross income. Expense II: Grossed-up monetary value of fringe benefit paid by company
for vacation break of its officers.
Statement II: Ostensible salary paid by a corporation which is actually a
distribution of dividends or part payment for a property are allowed as a
Deductible, deductible
deduction provided the employee renders actual services.
Deductible, non-deductible

True, true
Non-deductible, deductible

True, false
Non-deductible, non-deductible

False, true

False, false

Expense I: Facilitation fee paid to LTO official for the speedy registration *2/2
of a company vehicle.

Statement I: The term "entertainment, amusement and recreation *2/2 Expense II: Registration fee of practicing lawyer on continuing legal
expenses" includes representation expenses and/or depreciation or education seminar.
rental expense relating to entertainment facilities.

Deductible, deductible
Statement II: The term "entertainment facilities" shall refer to a yacht,
vacation home, or condominium and any similar item of real or personal Deductible, non-deductible
property used by the taxpayer primarily for the entertainment,
amusement or recreation of guests or employees. Non-deductible, deductible

Non-deductible, non-deductible
True, true

True, false

False, true

False, false
 Expense I: Restoration of damaged roof of the company's warehouse. *0/2 Expense I: Interest on preferred stock paid by a corporation to its *2/2
stockholders
Expense II: Real property tax assumed and paid by lessee on rented land
used as dwelling place of his prizes fighting cocks. Expense II: Interest on business-purpose loan from grandmother
evidenced by a duly notarized promissory note

Deductible, deductible
Deductible, deductible
Deductible, non-deductible
Deductible, non-deductible
Non-deductible, deductible
Non-deductible, deductible
Non-deductible, non-deductible
Non-deductible, non-deductible
Correct answer

Non-deductible, non-deductible

Statement I: Casualty denotes an accident, a mishap, some sudden *2/2

invasion by a hostile agency, and excludes the progressive deterioration
Expense I: Prepaid interest deducted on a commercial bank loan due two *0/2 of property through a steadily operating cause.
(2) years from now, income reported on cash basis
Statement II: A loss is actually sustained when it is evidenced by a closed
Expense II: Interest paid on documented loan from an uncle, the proceeds and completed transaction and there should be an identifiable event
of which were used to put up a clinic for medical practice which justifies the loss.

Deductible, deductible True, true

Deductible, non-deductible True, false

Non-deductible, deductible False, true

Non-deductible, non-deductible False, false

Correct answer

Non-deductible, deductible

Statement I: Interest incurred or paid by the taxpayer on all unpaid *0/2 Statement I: A taxpayer who claims the optional standard deduction shall *2/2
business-related taxes shall be fully deductible from the gross income not simultaneously avail of the deduction of the NOLCO.
and shall not be subject to reduction by an amount equal to certain
percentage of the interest income subject to final tax. Statement II: NOLCO shall be availed of on a first-in, first-out basis.

Statement II: At the option of the taxpayer, interest incurred to acquire

True, true
property used in trade or business or exercise of profession may be
allowed as a deduction or treated as a capital expenditure. True, false

False, true
True, true
False, false
True, false

False, true

False, false
Statement I: Domestic and resident foreign corporations cannot enjoy the *2/2
Correct answer benefit of NOLCO for as long as it is subject to MCIT in any taxable year.

True, true Statement II: The running of the three-year period for the expiry of NOLCO
is not interrupted by the fact that such corporation is subject to MCIT in
any taxable year during such three-year period.

Statement I: The term "losses" implies an unintentional parting with *2/2 True, true
something of value.
True, false
Statement II: Losses are deductible only by the corporation sustaining
False, true
them, thus, the loss suffered by a corporation which has a separate
personality from its stockholders, cannot be deducted by the latter. False, false

True, true

True, false

False, true

False, false
Statement I: An allowance for depreciation in respect of all properties *2/2 Statement I: Individuals other than non-resident aliens can avail of the *0/2
used in mining operations other than petroleum operations, shall be OSD.
computed at the normal rate of depreciation if the expected life is 10
years or less. Statement II: Corporations other than non-resident foreign aliens can
avail of the OSD.
Statement II: Properties not used directly in the production of petroleum
shall be depreciated under the straight-line method on the basis of an
True, true
estimated useful life of 5 years.
True, false

True, true
False, true

True, false
False, false

False, true
Correct answer
False, false True, true

Statement I: In the case of domestic corporation or a resident foreign *2/2 Which of the following is not a requisite for an expense to be claimed as *1/1
corporation, it may elect a standard deduction in an amount not a deduction from gross income?
exceeding 40% of its gross income.

Statement II: Passive income which have been subjected to a final tax at ordinary and necessary

source shall not form part of the gross income for purposes of
must be actually paid during the taxable year
computing the 40% OSD.
must be connected with the taxpayer's trade, business or profession

True, true must be reasonable

True, false

False, true

False, false

Which of the following assets shall be subject to depletion? * 1/1 A lawyer or professional partnership rendering actual free legal services *1/1
shall be entitled to an allowable deduction from gross income to the
lower of (a) the amount that could have been collected for the actual free
Machinery
legal services or (b) ___________________________________.
Land with ore deposit
10% of the gross income derived from the provision of legal services.
Commercial land
10% of the gross income derived from all sources.
Patent
10% of the gross receipts derived from the provision of legal services.

10% of the gross receipts derived from all sources.

Which of the following contributions is deductible in full for income tax *1/1
purposes?

Assuming a NOLCO accrued in 2019, and the taxpayer had operating loss *1/1
Contribution to the Parish Church
in 2020 and 2021, until when can the taxpayer use the NOLCO that
Contribution to street beggars
accrued in 2019?

Contribution to the Development Academy of the Philippines

2022
None of the above
2023

2024

2025
Private entities that employ disable persons either as regular employee, *1/1
apprentice or learner shall be entitled to an additional deduction from
gross income, equivalent to ____ of the total amount paid as salaries and
wages to disabled persons.

20%

25%

30%

50%
 A corporation enjoying 20% corporate tax rate shall reduce its interest *0/1 A revenue expenditure is... * 1/1
expense on loans equivalent to ___ of interest income subjected to final
tax.
usually incurred in the acquisition, betterment or permanent improvement of the
asset.
0%
capitalized and the cost is recovered through annual depreciation.
15%
ordinarily to benefit more than one accounting period.
20%
to benefit one accounting period and is a deduction from gross income in the
year paid or incurred.
33%

Correct answer

0%
This is not deductible from gross income. * 1/1

Transportation expenses from the main office to the branch

Under pertinent Revenue Regulations, within how many days should a *1/1
Transportation expenses from home to the office and from the office back to
loss be reported to the CIR?
home

Travel expenses on business trips

15 days
Travel expenses while away from home in the pursuit of trade, business or
20 days profession

30 days

45 days

60 days

90 days

not less than 30 days but not more than 90 days

No deductions shall be allowed where the transaction is between "related *1/1 Any amount subsequently received on account of a bad debt previously *1/1
taxpayers" under Section 36(B) of the NIRC, as amended, for... charged off and allowed as a deduction from gross in the taxable year in
(a) losses from sales or exchanges of property which received. This is called...
(b) interest expense
(c) bad debts
severence test

life-blood theory
A and B

destination of income test

B and C

equitable doctrine of tax benefit

A and C

A, B and C

This taxpayer may consider a capital expenditure as revenue expenditure. * 1/1

Beginning January 1, 2018, for individuals with purely gross *1/1

Resident citizen
compensation income, which of the following may not be deducted?

Domestic corporation
Personal exemptions
Private educational institution
Additional exemptions
Non-profit hospital
Premium payments on health and/or hospitalization insurance

All of the above

A building was partially destroyed by fire in 2017. The building had a book *1/1
value of 5 million. The insurance company was willing to pay 4 million,
which was refused by the owner. Finally, the claim was settled in 2018 for
4.6 million. The proceeds shall be?

exempt from income tax

subject to ordinary tax

subject to final tax

partly exempt, partly taxable

The net operating loss, which had not been previously offset as deduction *1/1 For mines other than oil and gas wells, a net operating loss without the *1/1
from gross income shall be carried over as deduction from gross income benefit of incentives under EO 226, as amended, otherwise known as the
for the next... Omnibus Investment Code of 1987, may be carried over as a deduction
from taxable income, if incurred in any of the...

2 consecutive taxable years immediately following such loss.

first 3 years of operation
3 consecutive taxable years immediately following such loss.
first 4 years of operation
4 consecutive taxable years immediately following such loss.
first 5 years of operation
taxable year immediately following such loss.
first 10 years of operation

The records of Manila Bus Corporation show salaries and wages paid for *1/1
its rank and file employees, to wit: ABC Corporation employees regular people, PWDs, and senior citizens as *1/1
employees, and pays the following compensation:
To non-senior citizens, P1,800,000
To senior citizen, P200,000 Regular employees, P800,000
PWD employees, P300,000
How much is total deductions? Senior citizen employee with salary grade
(a) above poverty level, P200,000
(b) below poverty level, P100,000
1,800,00

2,000,000 The total deductions is?

2,030,000
1,400,000
2,300,000
1,490,000

1,115,000

1,500,000

Mr. Allan Gregorio is engaged in the business of buying and selling of *1/1 Mr. Xian Lee, not happy with his present job, resigned and started his own *0/1
used cars. In the taxable year, he sold a used car to his first cousin business. The business requires her to travel so he used his car for the
thereby incurring a loss of P50,000. Allan's acquisition cost of the car was purpose. Assume that Lee started his business on April 1, and that he
P100,000. Can Allan deduct the loss in his ITR in computing his income uses the car for business 70% of the time. Assuming total expenses for
tax payable? the year for the use of the car is 300,000, the deductible expense is?

No, the loss is a personal and not connected with his business. 157,500

No, the loss is connected with his business, but the loss is between related parties 210,000
under Section 36(B) of the Tax Code.
225,000
Yes, the loss is a capital loss which can be offset against capital gains that are
includible in the ITR. 300,000

Yes, the loss is connected with his business, and is not between related parties.
Correct answer

157,500

The net operating loss incurred in taxable year during which the taxpayer *1/1
was exempt from income tax shall...
The OSD, a deduction from gross income allowed to be taken in lieu of *1/1
the itemized deductions, is...
be carried over as a deduction from gross income for the next taxable year.

be carried over as a deduction from gross income for the next 3 consecutive not available against compensation income of an individual taxpayer arising out
taxable years. of an employer-employee relationship.

be carried over as a deduction from gross income for the next 5 consecutive
not available to an individual taxpayer who is a self-employed resident alien.
taxable years.
available against compensation income of an individual taxpayer arising out of an
not be allowed as a deduction for the next taxable year.
employer-employee relationship.

available to an individual taxpayer who is a self-employed non-resident alien.

 Statement I: If the GPP claims OSD, then the partners cannot claim OSD *2/2
on share in partnership income.

Statement II: If the GPP claims OSD, then the partners can still claim OSD
on other income.

True, true

True, false

False, true

False, false

Statement I: If the GPP claims itemized deductions, then the partners *2/2
cannot claim OSD on their share in partnership income.

Statement II: If the GPP claims itemized deductions, then the partners
cannot claim itemized deductions on partnership expenses.

True, true

True, false

False, true

False, false

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