(Luzon) Manila 733: Visayas) Bacolod Cit Mindanao) Cagayan TAXATION TAX.2309-Gross Income ‘A. GROSS INCOME, DEFINED Gross Income means all income derived from whatever source, including, but not limited to, the following items: (Section 32, RA 8424) 1) Compensation for services in whatever form paid, including, but not limited to fees, salaries, wages, ‘commissions, and similar items; 2). Gross income derived from the conduct of trade or business or the exercise of a profession; 3) Gains derived from dealings in property: 4) Interests; 5) Rents; &) Royalties; 7) Dividends; 8) Annuities; 9) Prizes and winnings; 10) Pensions; and 11) Partner's distributive share from the net income of the general professional partnership. B. RENTAL INCOME VALUATION. Rental Payments PXXX Expenses of the lessor assumed by the lessee XXX Income from leasehold improvements XXX Total Rental Income PXXX RENTAL PAYMENTS, Rental income shall be taxable on the year received, whether earned or unearned, provided, there is no restriction as to its use, and regardless of method of ‘accounting employed. ‘SECURITY DEPOSIT ‘Security deposit shall be taxable: 1). Upon forfeiture in favor of the lessor; or 2). Upon application as rental payments, LEASEHOLD IMPR¢ 1S Improvements made by the lessee shall be treated as. Income of the lessor. If 1). The improvements will be owned by the lessor at the end of the lease; " 2) The lessor is not required to pay the lessee the value of such improvements. Income from leasehold improvements is reported 2s follows: METHOD VALUATION OF INCOME Fair Market Value of provements Book Vaiue at the end of lease term/Remaining Ty Outright 1344/7347903 * Calamba, Lagu 034) 4346214 + Cebu City (032) 2537900 loc. 2 (Gra tty (088) 3055075 bivart 280888 CPA REVIEW LECTURE NOTES: c Db. (049) 5453807 java0 City (082) 2250049 Seer SIA/TABAG OCTOBER 2017 DIVIDEND INCOME KINDS: 1) Cash Dividends 2) Property Dividends 3). Stock Dividends 4) Uiguidating Dividends (CASH.& PROPERTY DIVIDENDS Cash and property dividends shall be taxable upon declaration, STOCK DIVIDENDS, GENERAL RULE: Distribution of stock dividend is not taxabte because they are not realized income. EXCEPTION: A stock dividend constitutes income if it gives the shareholder an interest different from that which his former stockholdings represented. LIQUIDATING DIVIDENDS Liquidating dividends are exempt up to the extent of the cost of investment being a mere return of capital. However, anything in excess of the cost shall be considered income and therefore taxable, If the amount received by the stockholder in liquidation is less than the cost of investment, the loss in the transaction is deductible to the extent allowed for capital losses. GROSS INCOME FROM WHATEVER SOURCE DERIVED The law imposes a tax on income from whatever source which means that it Includes income whether coming from legal or illegal sources, EXAMPLES! 1) Income from jueteng 2). Income from swindling ‘activities 3) Recovery of bad debts 4) Refund of taxes 5) Unutilized/excess campaign funds 6) Forgiveness of indebtedness RECOVERY OF In order for recovery of bad debts to be considered income, the following must be complied 1) Bad debts were written off in the previous year/s; 2) Such bad debts were deducted in arriving at taxable income; 3) There is a resulting tax benefit on the deduction. REFUND OF TAX: The following are the requirements before refund of taxes be considered income: 1) There is payment of tax in the previous year/s; 2) The tax paid was deducted in arriving at the taxable income; Tay 27003) There is a resulting tax benefit on the deduction. )RGIVENESS OF INDEBTEDNES: Debtor performs services to the creditor Creditor desires to Benefit (Ss debtor without any itt consideration Creditor is a corporation and the debtor is a stockhalder’of | Dividend Income such corporation E, EXCLUSIONS FROM GROSS INCOME ‘The following items shall not be included in gross income and shall be exempt from income tax: 1) Life Insurance 2} Amount Received by Insured as Return of Premium 3) Gifts, Bequests, and Devises 4) Compensation for Injuries or Sickness 5) Income Exempt under Treaty 8) Retirement Benefits, Pensions, Gratuities, etc. 7), Miscellaneous Items 3) Income Derived by Foreign Government b) Income Derived by the Government or its Political Subdivisions ). Prizes and Awards @)_ Prizes and Awards in Sports Competition fe) 13th Month Pay and Other Benefits f)_ GSIS, $85, Medicare and Other Contributions @) Gains from the Sale of Bonds, Debentures or other Certificate of Indebtedness hy. Gains from Redemption of Shares in Mutual Fund LIFE INSURANCE GENERAL RULE: Exempt from tax since jt Is 2 mere reimbursement for the loss of life EXCEPTION: The following shall be taxable 1} The beneficiary was chosen for 2 valuable consideration. 2) The interest earned on the insurance policy. RETURN OF PREMIUM ‘The amount received by the insured, as a return of premiums paid by him under life insurance, Prdowment, or annuity contracts, either during the term or at the maturity of the term mentioned in the contract or upon surrender of the contract. (Return of Premium —___| Exempt Tn excess Income GIETS, BEQUESTS & DEVISES The value of property acquired by gift, bequest, devise, or descent: Provided, however, That income from such property, as well as gift, bequest, devise, or Hescent of Income from any property, in cases of transfers of divided interest, shall be included in gross income. Property inherited or] Exempt received as gift S Tincome of above | Taxable | properties ‘Compensation Income | Amounts received, through Accident or Health Insurance or under Workmen's Compensation Acts, a5 compensation for personal injuries or sickness, plus the amounts of any damages received, whether by suit ‘or agreement, on account of such injuries or sickness. INCOME EXEMPT UNDER TREATY Income of any kind, to the extent required by any treaty obligation binding upon the Government of the Philippines. RETIREM NEFITS, PENSIONS, GRATUIT 1) Retirement benefits received under Republic Act No. 7641 2) Those received by officials and employees of private firms, whether individual or corporate, in becordance with @ reasonable private benefit plan maintained by the employer: Provided b.That the retiring official or employee has been inthe service of the same employer for at least ‘een (10) years} b. At least fifty (50) years of age at the time of his retirement; and c. That the benefits granted shall be availed of by an official or employee only once. 3) Any amount received by an official or employee or by his heirs from the employer as a consequence Of separation of such officiel or employee from the ‘service of the employer because of: a. Death; b. Sickness; ©. Other physical disability “or for any cause beyond the control of the said official or ‘employee. The following are considered involuntary separation, and therefore not taxable: 1. The installation of labor-saving devices; 2. Redundancy 3. Retrenchment 4. Cessation of the employer's business. 4) Social security benefits, retirement gratuities, pensions and other similar benefits received by Fesident or nonresident citizens of the Philippines OF aliens who come to reside permanently in the Philippines from foreign goverfiment agencies and other institutions, private or public. 5) Payments of benefits due or to become due to any person residing in the Philippines under the laws of the United States administered by the United States Veterans Administration 6) Benefits received from or enjoyed under the Socis! Security System in accordance with the provisions of Republic Act No. 8282 7) Benefits received from the GSIS under Republic Act. No. 8291, including. retirement gratuity received by government officials and employees. MISCELLANEOUS ITEMS. 1) Income derived from investments in the Philippines in loans, stocks, bonds or other domestic securities, or from interest on deposits in banks in the Philippines by:F ‘a. Foreign governments b. Financing institutions owned, controlled, or enjoying refinancing from foreign governments; and International ‘or regional financial institutions established by foreign governments. 2) Income derived from any public utility or from the exercise of any essential governmental function accruing to the Government of the Philippines or to any political subdivision thereof. 3) Prizes and awards made primarily in recognition of religious, charitable, scientific, educational, artistic, literary, or civic achievement but only if: a.. The recipient was selected without any action fon his part to enter the contest or proceeding; and b. The recipient is not required to render substantial future services as @ condition to receiving the prize or award. 4) All prizes and awards granted to athletes in’local ‘and international sports competitions and tournaments whether held in the Philippines or abroad. and sanctioned by their national sports associations. 5) Gross benefits from 13" month pay and other benefits received by officials and employees of public and private entities up to the extent of 82,000. 6) GSIS, SSS, Medicare and Pag-Ibig contributions, and union dues of individuals. 7) Gains realized from the sale or exchange or retirement of bonds, debentures or other certificate of indebtedness with a maturity of more than five (5) years. 8) Gains realized by the investor upon redemption of shares of stock in a mutual fund company as Gefined in Section 22(88) of this Code. SOURCE OF INCOME CLASSIFICATION OF INCOME AS TO SOURCE i) Income from sources within the Philippines 2) Income from sources partly within or partly without the Philippines 3) Income from sources without the Philippines INCOME EROM SOURCES WITHIN THE PHILIPPINES 1) Interests derived from sources within the Philippines, and interest on bonds, notes or other interest-bearing obligations of residents, corporate or otherwise; 2). Dividends from ‘2, Domestic Corporation b. Foreign Corporation, IF at least 50% of gross income for the three year period ending with the close of Its taxable year preceding the deciaration of such dividends (or for such part ff such period as the corporation has been in existence) was derived from sources within the Philippines, Dividend Income Pr. Multiply by: (GI, Ph/GI, World) _X9, Dividend Income, Ph PXXX 3) Compensation for labor or personal services performed in the Philippines; 4) Rentals and royalties from property located in the Philippines or from any interest in such property; 5) Gains, profits.and income from the sale of real property located In the Philippines; 6) Gains, profits and income from sale of personial property: 7 a. If purchased, only if soid in the Philippines; b. If manufactured, only if manufactured and sold within the Philippines. INCOME FROM SOURCES PARTLY WITHIN OR PARTLY WITHOUT, 1). Gains, profits and income from the sale of personal property produced (in whole or in part) by the taxpayer within and sold without the Philippines; or 2) Produced (in whole or in part) by the taxpayer without and sold within the Philippines. | MULTIPLE CHOICE EXERCISES 1, _Which of the following is a characteristic of income? A 8 GO Increase i ue True ‘True False taxpayer's wealth Realization of gain True False False False Return on True True False False texpayer's wealth, 2. For income tax purposes, gains dérived from the following transactions shall be recognized: a. Transactions between related taxpayers b. legal transactions ¢. Both “a” and “b” d._ Neither "a" nor “bY 3, Which of the following compensation will be subject to graduated rates? ‘@ Basic salary whether or not the employee Is a minimum wage earner b. Basic salary only if the employee is not a minimum wage earner c. 13" month pay and other benefits not exceeding 82,000 4. Fringe benefits received by supervisory or managerial employee 4, Which of the following items that reduces salaries of ‘employees is not an exclusion fram gross income? 3. GSIS or SSS Contributions b. Pag-ibig Contributions ¢. Labor Union Dues d. None of the choices 5. One of the following compensation income of an individual taxpayer Is not an exclusion from gross Income: 2, Monetized vacation leaves not exceeding 10 days a year. b. Separation pay of an employee who resigned from his employment, c. Retirement: benefits of an employee who has worked for an employer for at least 10 years, who at the time of retirement is not less than 50 years of age, and. who avails of the retirement for the first time. d, All of these.19. an 12. Which of the following statements is incorrect? a b « q Income from business is never subject to final withholding tax Income from exercise of profession may be exempt from income tax Income from business may be subject to capital gains tax Income from exercise of profession may be subject to income tax Which of the following dealings in property is subject to normal income tax? a b. « 4, Sale of ordinary assets Sale of real property, located in the Philippines, Classified as capital asset Sale of shares in a domestic corporation sold outside the local stock exchange All of the choices Donald Trump received royalty fees from Viva Records Corporation, a domestic corporation, for his musical compositions under the album “There's no Other Way". Dor ald is an American composer and has never set foot in the Philippines. The royalty fee shail be subject to: a b c q Clifford Rama 15% final withholding tax 20% final withholding tax 25% final withholding tax 5-32% graduated tax rate received P100,000. winnings from orseracing. Determine his tax liability 1. Subject to basic income tax 11, Subject to 20% final tax on passive income Mm D, Subject to 10% OPT a. Lonly c. Wonly b. only 6. Tand Ir a member of the Philippine boxing team received the following during the taxable year: prize for winning gold in the Asian 500,000 games Athlete of the year award 100,000 ‘winnings from Philippine lotto 400,00 Prize - Me Donald raffle promo 10,000 Cash gift from SM Foundation 100,000 ‘The amount not subject to income tax is a, P1,000,000 cc. P2,110,000 b, Pt,100,000 d, P1,010,000 Prizes and awards received shall be exempt from income tax when the following conditions are met, except Te is given in recognition of religious, charitable, scientific, educetional, artistic, literary or civic achievernent. b, The recipient of the award or prize is not required to render substantial future services as a concition in receiving the prize or award. cc. The recipient of the award was selected without any action on his part to enter the contest or proceeding. 4d. None of the above Statement 1 Representation and transportation allowance given regularly on a monthly basis are not taxable fringe benefits but taxable es compensation income subject to basic tax under Sec. 24(A) of the Tax Code. Statement 2: Expenses in connection with attending business meeting or convention in the Philippines such as food, beverages and transportation are nontaxable beriefits of the employee 3. Only statement 1 is correct b. Only statement 2 is correct Both statements are correct 4G. Both stateménts are incorrect 13, Pedro is a regular college professor of Mapagpala 14, 15, 16, 17. 18. 19, uni ‘versity. All tenured instructors and professors of the university regularly receive a fixed daily meal allowance of P250 per day for a total of twenty six (26) ‘wor rking days per month. The meal allowance is: 2. Exempt from basic income tax 'b. Subject to fringe benefit tax if the recipient is @ rank and file employee c. Subject to fringe benefit tax if the recipient is a managerial employee 4. Subject to basic income tax Which of the following statements regarding thirteenth (13® month pay is correct? a. Thirteenth (13° month pay and other benefits, received by officials and employees of public ‘and private entities are exempt from income tax ‘and creditable withholding tax on compensation, provided that the _ total exclusion shall not exceed P&2,000. b. “The excess of de minimis benefits over the ceiling would form part of an individual's gross income only if the total excess benefits including bonuses exceeds P82,000 and would be subject to income tax and applicable final withholding taxes c. Statements “2” and "b" are correct 4. Neither statement "a" nor "b” is correct Proceeds of insurance taken by @ corporation on the life ‘of an executive to indemnify the latter's beneficiaries against loss in case of his death is: a b c 4, Exempt from income tax Part pf taxable income Subject to final tax Partly exempt, bartly taxable ‘The premiums paid by the corporation in the preceding nu un a b. d imber is a: . Taxable income of the executive Deductible expense of the corporation Both “a” and “b” Neither “a” nor “b" .der the global system of income taxation: There is no need for classification of income as all taxpayers are subject to a single rate. ‘There are cifferent categories of taxable income. There are different tax rates. Individuals are subject to different tax treatments. ‘One of the following income shall be returned in the year received. b 4. Interest earned on bank deposit. Share in the net income of a general partnership. Stock dividend Rentals for 2015, 2016 and 2017 received in 2015 by a lessor under accrual method: (On july 1, 2014, Mr. V leased his vacant lot for @ pe °2, fall riod of 12. years 400,000. lowing: + 'P4,800,000 representing rental payment for two (2) years. Subsequent rental payments will be made every July 1 of the applicable year. + Security deposit of P2,400,000, + Annual real property tax of P30,000. to Mr..J at an annual cate of It was also agreed that Mr. J will pay theThe lease contract provides, among others that the lessee will construct a S-storey building for parking purposes at a cost of 936,000,000. Ownership of the bullding shall belong to the lessor upon the expiration or termination of the lease contract. The bullding was completed on July 1, 2016 with an estimated useful life of 15 years. Mr. V shall report total income from the lease for 2014 at 3. 92,430,000 . 4,830,000 b. 82,400,000 d, 2,640,000 20. Assuming Mr. V will use outright method in recognizing Income from leasehold improvements, how much is the total income from lease for year 2016? 2. 3,030,000 . P38,430,000 b. _P3,630,000 4. 82,400,000 21. Assuming Mr. V will use spread-out method in recognizing income from leasehold improvements, how much Is the total income from lease for year 20167 2. 3,030,000 ‘¢. PL4,430,000 b. 3,630,000 d. 2,400,000 22, Assuming that due to the fault of the lessee, the lease contract was terminated on January 1, 2018, how much income is to be reported by the lessor in 2018? a. P32,400,000 ., P34,830,000 b. 30,600,000 d. 33,030,000 23. (Phil. CPA) If a corporation distributes its assets to its stockholders upon dissolution, this kind of corporate distribution will result in: a. stock dividend b. property dividend c. cash dividend d. liquidating dividend 24. Which among the following dividend income is tax exempt? Dividend income received from 1. Adomestic corporation by a domestic corporation. I, A domestic corporation by @ resident foreign corporation III. A domestic corporation by a nonresident foreign corporation. IV, A-tesident’ foreign corporation by a domestic corporation. a. All of the above c. Land If only b.None ofthe above — d. I, Il and III only 25. Which among the following’ dividend income Is tax exempt? 1. Pure stock dividend I. * Pure liquidating dividend a.tonly ¢. Land Il only b. I only d. None of the choices 26. A cash dividend of P100,000 received by a taxpayer in 2010 from a foreign corporation whose income from Philippine sources is 40% of its total income is Statement 1: partly taxable if he is a resident citizen, Statement 2: Partly taxable if he is a non-resident alien a. Statements 1 & 2 are false b. Statement 1 is true but statement 2 is false ¢. Statement 1 Is false but statement 2 is true d, Statements 1 and 2 are true 27. Annuity payments recelved by a taxpayer represent a part which is taxable and not taxable. Which of the following statement is correct? a, If annuity received represents interest, it is a taxable income. ae b. If annuity received represents return of premium, it is not a taxable income. ., Both statements are correct 4. Both statements are not correct 28. Mr. Santiago purchased @ life annuity for P100,000 ‘which will pay him ®40,000 a year. The life expectancy of Mr. Santiago is 12 years. Which of the following will Mr. Santiago be able to exclude from his gross income? a. 400,000 . P20,000) b. 10,000 d. 120,000 29. The following data were provided to you by ABC Company for the current year: ‘Amount, 2013 Income Amount written-off in (Loss) before Recovered in. 2013 write off 2014 50,000 350,000 20,000 10,000. (50,000) 410,000 30,000 20,000 30,000 ‘The Income from bad debt recovery during 2014 Is: 2. PO b._P40,000 c. P50,000 d. P60,000 30. Which of the following is not a taxable income? a. Bad debts previously written off and recovered subsequently. b. Tax expense previously disallowed, as deduction from taxable income, fully refunded subsequently. . Income from gambling, d. Income from usurious financing, 31. The following are not taxable, except a. Refund of fringe benefits tax b. Refund of Philippine income tax Refund of estate or donor's tax 4d. Refund of special assessment 32, Which of the following tax refunds Is taxable? a. Percentage tax on person's exempt from VAT b. Estate or donor's tax Stock transaction tax d. Income tax paid to a foreign country if claimed as tax credit during the year. 33. If an individual performs services for @ creditor who in consideration thereof cancels the debt, the cancellation of indebtedness may amount: a. Toagitt b. Toa capital contribution ¢. Toa donation inter vivos 4. To a payment of income 34, An operator of an illegal horse betting business, single, has the following data: Receipt from illegal bets 600,000 Rent of space where bets are received, _ 120,000 gross of 5% withholding tax Salaries of assistants, gross of creditable 100,000 withholding tax Bribe money to obtain protection from $0,000, arrest and prosecution How much is the taxable income 3. 380,000 . P180,000 b. 330,000 d. 150,000 35, Pedro, single received the following during the taxable year: Proceeds of his life insurance paid at 2,000,000 an. annual premium of 15,000 within 25 years36, 37, 38, 38. 40, 4 42 Proceeds of his mother’s life 1,000,000 insurance paid at an annual premium of P10,000 within 20 years House and lot Inherited from his 4,000,000 mother Rent income from inherited 200,000, properties. For income tax purposes, how much of the above items must be included in his gross income? a. 7,200,000 . P200,000 b. 1,200,000 d. 1,825,000 Corazon insured her life with Malayan Insurance ‘company, Under the contract, she will pay a monthly premium’ of P2,000 for 10 years: In case of death before the 10th year, her beneficiary will recelve an indemnification in the amount of P150,000. If she is still living on the 10th year, she will receive P500,000. If Corazon dies on the Sth year, her beneficiary will report an income of: ‘a, P500,000 b. P150,000 . P260,000 J. Exempt Suppose Corazon dies on the Sth year and her beneficiary was offered to receive the P150,000 in cash fr to receive it in installment of P20,000 for ten (10) monthly installment payments and the beneficiary ‘chose the 2nd option, she will report an income of: 2, 500,000 .,P50,000 b. P150,000 d. Exempt If Corezon survives the policy and is able to receive the P500,000, she will report an income of: 1a, P500,000 ‘¢, P150,000 . P260,000 d. None Which of the following Is taxable? a, Property acquired through donation b. Inherited properties , Income from letter “a” and "b” d. None of the choices The following are examples of, compensation for injuries, except. a. Actual damages for injuries suffered. b. Compensatory damages for unrealized profits. c. Moral damages for grief, anxiety and physicat sufferings d. Exemplary damages. nontaxable Which of the following is taxable? a. Income derived by a political subdivision of the government performing essential function of the government. b. Income derived by foreign government in the Philippines, c. Both “a” and "b”. d. Neither “a” nor “b Marlon was hit by @ car driven by Jaysee causing severe injuries to the former. It was found out during trial that the driver was drunk at the time of the Incident. After trial, the court awarded the following + P1,500,000 actual damages for hospitalization + P300,000 exemplary damages + P500,000 for loss of income, and + P100,000 moral damages, Marion also received a cash gift of P100,000 from Jaysee. The taxable income received by Marton is 2. 2,400,000.... + $P1500000 en as b. P1,900,000 d. 500,000 43. In order for gains realized from the sale or exchange or retirement of bonds, debentures or other certificate of indebtedness be exempt from income taxation, what is the prescribed length of its maturity? 5 years or more b. 5 years or less. ¢. More than 5 years d. Exactly 5 years, 44.Gains realized by the investor upon redemption of shares of stock in a mutual fund company is: a. Exempt b. Subject to final withholding tax cc. Subject to basic tax d. Ani of the choices 45. A cash dividend of P100,000 received by a taxpayer in 2010 from a foreign corporation whose incame from Philippine sources is 40% of Its total income is: Statement 1: partly taxable if he is a resident citizen. Statement 2: Partly taxable if he is a non-resident alien, a. Statements 1 & 2 are false b, Statement 1 is true but statement 2 is false c. Statement 1 Is false but statement 2 is true d, Statements 1 and 2 are true 46. Sandara, a nonresident Korean stockholder, received a dividend income of 300,000 in 2015 from Super Bow! Corporation, a foreign corporation. doing business in the Philippines. The gross income of the foreign corporation from within and without the Philippines for the past three years preceding 2015 were as follows: Source 2012 2013 2014 Philippines 16,000,000 P12,000,000 P14,000,000 Abroad 8,000,000 14,000,000 16,000,000 ‘The amount of income subject to tax should be: a. PO ‘c. P157,500 b. 30,000 4. 300,000 47, Assuming Super Bowl is a domestic corporation, the ‘amount of income subject to tax of Sandara should be: a. PO ¢. P157,500 b. 90,000 d. P300,000 Ise the following data for the next two (2) questions: ‘resident alien had the following data in 2014: Gross income, Philippines 2,000,000 Business expenses 1,200,000 Dividends received: From domestic corporation (net) ‘60% of its income came from 90,000 the Philippines 40% of its income came from the Philippines From resident foreign (gross) 60% of its income the Philippines 40% of its income the Philippines 72,000 corporation came from 50,000 came from 40,000 48. The taxpayer's taxable income is a. P750,000 ‘c. 796,000 b. 780,000 d. 800,000 49, The final withholding taxes on dividends amount to, a. Pi6,200 . P25,200 b. P18,000 d. 26,000low F5 Corporation, a domestic corporation had following data during the calendar year 2012 Gross Income, Philippines 910,000,000 Allowable 4,000,000 deductions/expenses Dividend income FROM: a) Domestic corporation ') Foreign corporation, of its gross income serived from Philippines ©) Foreign corporation, of its gross income derived from Philippines Foreign corporation, ‘of its gross income derived from Philippines ta for the fext wuestion: the itemized 1,000,000 80% 1,000,000 were the 60% were the 800,000 4 25% the "400,000 50. The taxable income is a, P9,200,000 b. 97,500,000 c. 8,200,000 d. 7,430,000 51. Assume that F5 Corporation Is @ resident foreign corporation, how much is the taxable income? ‘a. 9,200,000 . P8,200,000 . P7/500,000 6. 7,280,000 52. For gains realized from the sale or exchange oF retirement of bonds, debentures or other certificate of indebtedness, Its maturity must be: a, More than S years b. Atleast 5 years c. More than 3 years ¢, At least 3 years Which of the following Is taxable? ’2. Interest on long-term deposit or investment b. Gain on sale of 10-year bond Prize not exceeding P10,000 d. PCSO Lotto winnings 54, Situs of taxation on income from sale of property purchased. a. Place of the seller b. Place of sale c. Place of buyer d. As determined by the Commissioner 55, Which of the following test of. source of Income is incorrect? 3. Interest Income - residence of the debtor . Income from services ~ place of performance C. Royalties ~ place of use of intangible d. Gain on sale of real property ~ place of sale. 56. Which of the following Income |s derived from sources within the Philippines: '2. Dividends received from a non-resident foreign corporation; b. Gain on sale of personal property (movable) manufactured in the Philippines and sold outside of the Philippines. Gains on sale of real property located in Malaysia d. Rayalty income arising from use in the Philippines of technical know-how whereby the ‘owner and developer Is situated in Japan 57. Which of the following is included in the gross income of 2 non-resident alien not engaged in trade or business in the Philippines: '3. Payments earned from services rendered. in Australia 'b. Interest on loan whereby the debtor is domiciled in Japan Rent income on condominium unit at Serendra at the Fort, Taguig City d. Gain on sale of real property, located in San juan city, Philippines, inherited from his grand father 58. Assume the following: Gain on sale of personal property 400,000 purchased in the Philippines and sold in Hongkong Compensation received for personal 200,000 services in the Philippines Rent income from real property in 300,000 Malaysia Gain from sale in the Philippines of 100,000 shares of a foreign corporation Deductions identified with Philippine income 80,000 Foreign income 120,000 Deductions unidentified with any 40,000 particular income The Philippine net income is a. 220,000 c. P190,000 b. 211,000 d. 111,000