PARTNERSHIPS, JOINT VENTURE AND CO-OWNERSHIP

1. As regards a business partnership, which of the following is not correct?

a. The partnership must file quarterly and year end income tax returns.
b. The distributable income available to the partners is the taxable income less the income tax thereon.
c. The share of a partner in the distributable net income, even if not actually received is considered
constructively received by the partner.
d. The share of a partner in the distributive net income whether actually received or not is subject to a final
withholding tax on dividends.
2. The following statements regarding taxable partnerships are correct, except
a. They file quarterly and year-end income tax returns.
b. They are subject to the rules on corporation for capital gains tax, final tax on passive income, normal income
tax, MCIT and gross income tax.
c. The partners’ share in the distributable net income is subject to final tax.
d. They are subject to the improperly accumulated earnings tax.
3. As regard a general professional partnership, which oft the following is not correct?
a. It shall not be subject to income tax.
b. The partners shall be liable for income tax on their respective distributive shares.
c. Each partner shall report as gross income his distributive share in the partnership net income.
d. The share of a partner shall be subject to a creditable withholding tax of 10% if his distributive share is below
P720,000 and 15% if at least P720,000.
4. If a partner, on his own transactions, is on the cash method of accounting while the general professional
partnership is on the accrual method of accounting, in the partner’s determination of his taxable income for the
year, he
a. Must convert his income from the partnership into cash method.
b. Must convert his own income into accrual method.
c. Does not report his income from partnership because the partnership is exempt from income tax.
d. Can consolidate his share in the net income if the partnership under accrual method with his own income
under the cash method.
5. Which of the following statements in not correct?
a. When the co-owners invest the income of the property co-owned in a business or in any income producing
properties or activities constituting themselves into a business partnership, such partnership is consequently
subject to tax as a corporation.
b. As a rule, a co-ownership is not subject to income tax because the activities of the co-owners are limited to
the preservation and enjoyment of the property and the collection of the income therefrom.
c. A co-owner is subject to income tax on his share in the net income of the co-ownership actually or
constructively received.
d. All partnerships, no matter how created or organized are considered corporations subject to corporate
income tax.
6. As regards an ordinary partnership, which of the following statements is correct?
a. Partners’ shares are subject to final tax, hence the partnership need not file an ITR.
b. Subject to improperly accumulated earnings tax.
c. Treated like corporations, hence partners have limited liability.
d. Partners’ shares even if distributed will not included in their ITR.
7. As regards a general professional partnership, which of the following statements is correct?
a. Treated like a corporation, hence it is subject to the corporate income tax.
b. It is exempt from income tax, hence it need not file an ITR.
c. Partners’ shares are subject to final tax.
d. Partners’ shares will be included in their respective ITRs whether distributed or not.
8. Statement 1 – A CPA and a Lawyer may form a general co-partnership to sell low and accounting books.
Statement 2 – Partnerships and Corporations have separate juridical personalities distinct from the owners.
Therefore, partners and stockholders are not liable to creditors of the business.
a. True; True
b. False; false
c. False; true
d. True; false
9. Statement 1 – The general professional partnership may claim itemized deductions in computing its net income
and a partner may also itemized deductions in computing his net income.
Statement 2 - the general professional partnership may claim the optional standard deduction in computing its
net income while a partner may claim itemized deductions in computing his net income.
 a. True; true
b. True; false
c. False; true
d. False; false
10. Statement 1 – The general professional partnership may claim itemized deductions in computing its net income
while a partner may claim the optional standard deductions in computing his net income.
Statement 2 – the general professional partners may claim the optional standard deduction in computing its net
income and a partner may also claim the optional standard deduction in computing his net income.
a. True; true
b. True; false
c. False; true
d. False; false
11. The net shares received by a partner in a general professional partnership is
a. Part of his taxable income.
b. Exempt from income tax
c. Subject to 10% creditable withholding tax
d. Subject to final tax
12. The net share received by a partner in a general co-partnership is
a. Part of his taxable income
b. Exempt from income tax
c. Subject to 10% creditable withholding tax
d. Subject to final tax
13 – 16. AB partnership with A and B as partners (both resident citizens) had a net professional income amounting
to a P500,000 for 2018. Its other income included bank interest income of P8,00, net of final withholding tax and
royalty income of P10,000, net of the final withholding tax.

A is single and has his own separate eatery business. In 2018, his business had net sales of P1,000,000, cost
of sales of P500,000, and operating expenses of P300,000
13. The net share of A in the income of the GPP is
a. Php 250,000
b. Php 259,000
c. Php 225,000
d. Php 233,100
14. The net income and income tax payable of A who shares profit and loss equally with B in their GPP is:
a. P450,000; P16,600
b. P400,000; P10,450
c. P439,000; P9,670
d. None of the above.
15. Using the preceding number, but it is a business partnership, the taxable income of the partnership is
a. P518,000
b. P500,000
c. P510,000
d. P508,000
16. Using the preceding number, the net distributable share of B (resident citizen) is
a. P162,500
b. P157,500
c. P165,600
d. P154,350
17. A and B are partners in a Partnership which realized a gross income of P800,000 with a corresponding P350,000
in expenses in the year 2018. A is married with 2 qualified dependent children, with his own business generating
net sales of P400,000, and incurring cost of sales and deductible expenses of P30,000 and P230,000, respectively.
B, single, also has his own business generating P450,000 in net sales, and incurring cost of sales and deductible
expenses of P200,000 and P50,000, respectively. They share profits and losses of their partnership at 4:6.
If the partnership is a GPP, the taxable income of A who avails of the OSD is:
a. P420,000
b. P70,000
c. P302,000
d. None of the above
 18. And the taxable income of B who itemizes deductions is:
a. P150,000
b. P470,000
c. P450,000
d. None of the above
19. If the partnership is an OP, its tax due is
a. P144,000
b. P148,500
c. P135,000
d. P157,500
20. A lawyer was rejected by his extremely sexy and gorgeous secretary. He became so enraged that he raped her 10
times within 15 minutes. Since then, he became known in the media as the “Machine Gun Rapist.” For this
defense, he obtained the services of ACCRA, the biggest law partnership in the Philippines. ACCRA asked for a fee
of P10,000,000 for its legal services in defending him. How much should the lawyer withhold as CWT from ACCRA’s
fee?
a. 10%
b. 15%
c. 5%
d. None.
21. A and B are co-owners by virtue of a property given to them by their father. The co-ownership had a gross rental
income of P500,000 (gross of 5% tax) and expenses related to rental activity of P300,000 but 10% is not deductible
for the year 2018. A and B share in the profits at 75% and 25%, respectively. A withdrew P50,000 from the co-
ownership net income for the year; B did not withdraw any amount. A and B are both single. The income tax
liability of the co-ownership is
a. P102,400
b. P76,800
c. P80,000
d. P -0-
22. A’s share in the net income of the co-ownership is:
a. P172,500
b. P150,000
c. P122,500
d. P -0-
23. Suppose A and B did not divide but instead invested the entire profit in another business venture where they
earned a net income after deductions of P450,000, the tax due of the co-ownership is
a. P135,000
b. P144,000
c. P157,500
d. P -0-
24. X and Y are partners (both resident citizens) in the following partnerships:

Ordinary
General Professional Partnership
Partnership
Gross Income P500,000 P400,000
Deductible expenses 300,000 180,000

Personal Income and Expenses

X Y
Gross Income P400,000 P280,000
Deductible expenses 250,000 120,000
Dividend from domestic corporation 20,000 30,000
Dividend from foreign corporation 10,000 8,000
Prize, supermarket raffle 15,000 8,000
Royalty, books 10,000 12,000

Partners agreed to share partnership income and losses as follows:

X= 40% (Partner X is married with 2 qualified dependent children
Y= 60% (Partner Y is single but supporting her 18 years old boyfriend living with and dependent upon her for his chief support)
Determine the respective taxable incomes of partners X and Y in their ITRs:
a. P148,000, P258,000
b. P88,000, P132,000
c. P248,000, P308,000
d. None of the above.

25. A Co. and B Co., domestic corporations, both in the construction business, formed a joint venture to build houses
for the poor, a government project, with an agreed equal sharing in net income. Data on income and expenses for
the year show:

Joint Venture A Co. B Co.

Gross Income P80,000,000 P2,000,000 P3,000,000
Expenses 60,000,000 1,200,000 2,000,000
Determine:
i) The income tax liability of the joint venture.
a. P6,000,000
b. P20,000,000
c. P1,800,000
d. P0
ii) The income tax liability before tax credits of A Co:
a. P3,240,000
b. P10,800,000
c. P7,560,000
d. P6,000,000
26. A Co. and B Co., domestic corporations, both engaged in the transportation business with operations in Northern
and Central Luzon formed a joint venture agreeing to distribute the net income of joint venture equally. In a
taxable year, the joint venture had a gross income of P5,000,000 and expenses of P3,500,000

Determine:
i) The income tax liability of the joint venture.
a. P450,000
b. P5,000,000
c. P1,050,000
d. P 0
ii) The share of A Co. in the distributable net income of the JV:
a. P525,000
b. P52,500
c. P472,500
d. P1,050,000
iii) Final tax on the share of A Co. in the distributable net income of the JV:
a. P52,500
b. P105,000
c. P78,750
d. 0
FRINGE BENEFITS TAX

1. The fringe benefit tax is

A. Imposed on the employer B. Withheld at source C. Deductible expense by the employee
a. Only A and B
b. Only A and C
c. Only B and C
d. A, B, and C
2. Which of the following is subject to the fringe benefit tax?
a. Compensation income of the rank and file employees
b. Fringe benefit of the rank and file employees
c. Compensation income of the managerial employees
d. Fringe benefits of the managerial employees
3. The following concepts denotes exemption from the fringe benefits tax, except
a. Convenience of the employer
b. Necessity to the business or trade
c. Welfare and benefit of the employees
d. De minimis benefits
4. With regard to the amount on which the fringe benefit tax rate is applied, which statement is wrong? The tax
benefit rate is applied on
a. The monetary value of the fringe benefit
b. The grossed-up monetary value of the fringe benefit
c. The amount deductible by the employer from gross income
d. Both amounts of the fringe benefit and the fringe benefit tax
5. The following fringe benefits are not subject to fringe benefit tax, except
a. If required by the nature of or necessary to the trade, business or profession of the employer
b. Contribution of the employer for the benefit of the employee to retirement, insurance and hospitalization
benefit plans
c. Benefits given to rank and file employees
d. If given for the convenience or advantage of a managerial/supervisory employee
6. Basic rules on fringe benefits tax, except
a. Fringe benefits given to a rank and file employees are not subject to fringe benefit tax
b. Fringe benefits given to a supervisory or managerial employee are subject fringe benefit tax
c. De minimis benefits whether given to rank and file employee or to a supervisory or managerial employee are
not subject to fringe tax
d. The fringe benefit tax is a tax to imposed on the managerial or supervisory employee.
7. Which of the following statements is correct?
a. Fringe benefits given to employees is subject to fringe benefit tax.
b. Fringe benefit given to employees is exempt from fringe benefit tax.
c. If the fringe benefits is taxable, the tax will be paid by the employer.
d. Fringe benefits may be given to managerial, supervisory and rank and file employees.
8. Daily meal allowance for overtime work is a de minimis benefit if not exceeding what percent of the basic
minimum wage?
a. 10% b. 15% c. 20% d. 25%
9. Facilities or privileges furnished or offered by an employer to his employees that are of relatively small value and
are offered or furnished by the employer merely as a means of promoting the health, goodwill, contentment, or
efficiency of his employees.
a. Fringe benefit
b. Fringe benefit tax
c. De minimis fringe benefit
d. Grossed-up monetary value
10. Which of statement is wrong? The fringe benefit tax is
a. Imposed on the employer
b. Imposed on the rank and file employee if the amount of the benefit exceeds the ceiling allowed by the tax
code
c. Withheld at source
d. Deductible by the employer
11. The following are considered as de minimis benefits granted to each employee except,
a. Monetized unused sick leave credits of private employee not exceeding 10 days during the year
b. Monetized unused vacation leave credits of private employees not exceeding 10 days during the year
 c. Monetized value of vacation leave credits paid to go government officials and employees
d. Monetized value of sick leave credits paid to government officials and employees
12. Which of the following is not considered as “de minimis” benefits?
a. Employees achievement award for length of service or safety achievement in the form of cash or gift
certificate not exceeding P10,000 per year
b. Medical cash allowance to dependents of employees not exceeding P3,000 per year
c. Gift given during Christmas and major anniversary celebrations not exceeding P5,000 per year
d. Medical allowance to cover medical and healthcare needs, annual medical/executive check-up, maternity
assistance and routine consultations not exceeding P10,000 per year
13. In 2018, A corporation allowed its Sales Manager to incur expenses subject to reimbursement, as follows:

Electricity (Meralco) - 70% in the same of A corporation 20,000

Water (Maynilad) - 70% in the name of A corporation 2,000
Grocery (SM) 10,000
Gasoline of Company car 12,000
Representation and Transportation - business trip 4,000
The amount subject to fringe benefits tax is
a. P48,000
b. P25,400
c. P15,400
d. P16,600
14. The grossed-up monetary value of fringe benefit subject to fringe tax received by a non-resident alien individual
not engaged in trade or business in the Philippines is computed by dividing the monetary value of the fringe
benefit by
a. 75%
b. 68%
c. 85%
d. 15%
15. The following data belong to A Corp. for the year 2018
a. Educational assistance to supervisors and their children 100,000
b. Employer’s contribution for the benefit of the employees to retirement, insurance and hospitalization benefit
plans 80,000
c. Year’s rental for an apartment paid by the corporation for the use of its comptroller

The fringe benefits tax due in 2018 is:

a. P75,294
b. P103,529
c. P86,154
d. None
16. A Corp., a regional operating headquarter of a MNC in the Philippines provided its employees cash and non-cash
fringe benefits in 2017 and 2018 as follows:
Total amount of fringe benefits P1,000,000
60% of said amount was given to rank and file employees
40% of said amount was given to corporate officers as follows:
a. To resident citizens (taxed at regular rates) 45%
b. To non-resident aliens not engaged in business in the Phils. 35%
c. To special aliens and Filipino employees 20%

The fringe benefits tax due is

a. P145,491; P186,667
b. P188,235; P123,345
c. P84,706; P34,456
d. None of the above
17. B Co., owns a condominium unit which is being used by the President of the corp.. It has a fair market value per
Real Property Tax Declaration of P2,100,000 and a zonal value of P3,000,000.
Determine the fringe benefit tax value in 2017 and 2018
18. Mr. A is mining engineer employed by B Co., a mining firm. The company’s mine is in Mindanao. Mr. A was
provided by the company with living quarters at the mine site. The fair rental value of the living quarters is P15,000
a month.
Determine the fringe benefit tax due in 2017 and 2018.
19. In addition to other fringe benefits in 2018, Mr. B, Chief Accountant, availed of the car plan of his employer, C
company. Under the plan, Mr. B shouldered only (50%) of the cost of the car, with the company shouldering the
other 50%. Mr. B paid P340,000 for the car. The car was registered in the name of Mr. B.
Determine:
a. The fringe benefit tax due
b. The deductible expense of the employer
20. In 2018, A company purchased a second hand car for its Chief Accountant as a fringe benefit. The cash purchase
price of the car was P120,000. The company was paid P30,000 as down payment plus four equal annual installment
of P30,000 (P120,000 plus P30,000 interest). The ownership was transferred to the chief accountant.
Determine the fringe benefit tax due.
21. In 2018, the sales manager, purchased a brand new car amounting to P500,000 of which P200,000 was contributed
by the company as his fringe benefit.
Determine the fringe benefit tax due.
22. In 2018, ABC Corp. hired Miss A as sales manager for cosmetics. She was given the following compensation and
fringe benefits:

Salary P200,000/month
Three maids 4,000 per main/month
Personal driver 8,000/month
Home owner's Association dues 1,200/year
Determine the annual fringe benefit tax due.
23. In 2018, A, the owner of Victory Supermarket lent P100,000 to B, the supermarket manager. It was stipulated in
their agreement that the amount should be paid in one year with an annual interest of 3%.
Determine the fringe tax due.
24. In 2018, Mr. A, the Vice President for Finance of X Corporation incurred the following expenses in attending a
three-day foreign business convention:

Plane tickets (USA travel) $1,000

First class 500
Economy

Hotel accomodation 2,700

Inlad travel 600

Assume $1.00 = P50

Determine the fringe benefit tax due assuming that the business convention was:
a. With documentary evidence b. Without documentary evidence
25. In 2018 ABC Corporation paid for the annual rental of a residential house used by its general manager amounting
to P136,000. The entry to record the benefit is

a. Fringe Benefit Expense P136,000

Fringe Benefit tax Expense 73,230
Cash P209,230

b. Fringe Benefit Expense P136,000

Fringe Benefit tax Expense 36,615
Cash P172,615

c. Fringe Benefit Expense P68,000

Fringe Benefit tax Expense 36,615
Cash P104,615

d. Fringe Benefit Expense P68,000

Fringe Benefit tax Expense 64,000
Cash P132,000
26. As a means of promoting the health, goodwill, contentment, and efficiency of his employees, employer A gave
rank and file employee B the following fringe benefits in 2018:

a. Monetized unused vacation leave of 15 days P24,000

b. Rice subsidy 36,000
c. Uniform and clothing allowance 12,000
d. Achievement award for length of service in the form of tangible personal property 20,000
e. Gifts given during Christmas and major anniversary celebrations 15,000
f. Medical benefits 20,000
g. Laundry allowance 12,000
h. 13th month pay 30,000
i. Mid year bonus 30,000
j. Productivity bonus 15,000

Determine the amount of:

a. Deductible expense of A b. Taxable benefits of B

27. Enrique Gil, Filipino, is a manager of a PEZA-registered enterprise. He receives fringe benefits which normally are
subject to FBT. Is the PEZA-registered enterprise still liable to pay the FBT?
a. No, if the PEZA-registered enterprise is under ITH. The FBT is considered as income tax from which the
PEZA-registered enterprise in exempt under the ITH
b. No, if the PEZA-registered enterprise is under the 5% GIT. After paying the 5% GIT, such enterprise is
exempt from the payment of all other taxes, national or local, including the FBT.
c. Yes. If the PEZA-registered enterprise is under the 5% GIT, the monetary value of the fringe benefits of
Enrique will first be grossed up by dividing it by 95%, and the FBT is computed by multiplying the GUMV
by 5%.
d. Yes. The monetary value of the fringe benefits of Enrique will first be grossed up by dividing it by 65%, and
the FBT is computed by multiplying the GUMV by 35%.