INCOME TAXATION – FINALS QUIZ

1. Which is not an exclusion criterion on employee 8. The Php90,000 threshold is applicable to

benefits? All employees
Necessity of the employee rule
9. Which is not included in the gross taxable
2. A private employee had the following compensation income of an employee?
remuneration in 2019: 13th month pay and other benefits not in
Gross salary, net of mandatory contribution ---- 314K excess of P90,000
Fixed RATA --------------------------------------------- 12,000
Cost-of-living allowance --------------------------- 24,000 10. Meal allowance is taxable when given
13th month pay -------------------------------------- 28,000
As incentive to all employees
Christmas gift ------------------------------------------ 5,000
Laundry allowance (Php500/month)-------------- 8,000
11. Which is usually an employee?
A director who is at the same time the Chief
What is total exempt de minimis benefit?
Executive Officer
8,600

12. A private employee had the following

3. Which is not subject to the Php90,000
remuneration in 2019:
exemption threshold for a private employee?
Gross salary, net of mandatory contribution ---- 314K
Profit sharing bonus
Fixed RATA --------------------------------------------- 12,000
Cost-of-living allowance --------------------------- 24,000
4. A private employee had the following 13th month pay -------------------------------------- 28,000
remuneration in 2019: Christmas gift ------------------------------------------ 5,000
Gross salary, net of mandatory contribution ---- 314K Laundry allowance (Php500/month)-------------- 8,000
Fixed RATA --------------------------------------------- 12,000
Cost-of-living allowance --------------------------- 24,000 What is the taxable compensation income?
13th month pay -------------------------------------- 28,000
350,000
Christmas gift ------------------------------------------ 5,000
Laundry allowance (Php500/month)-------------- 8,000
13. A sale by a dealer of securities of domestic
shares wherein 20,000 shares were disposed at
What is the total exempt benefit?
a loss of Php40,000 were subsequently covered
41,000
up within the 30-day period by purchase of
15,000 share for Php12/share.
5. Which of the following remuneration is an item
of compensation income?
The loss on sale is
Commissions to a minimum wage earner

6. Mr. COC had the following income in 2019:

14. Which of the following, when sold, is not
Compensation income, net of Php77,000
subject to capital gains tax?
SSS,PHIC,HDMF and Union Dues - Php300,000
Boarding House
Supplemental compensation income -30,000
Warehouse
13th month pay and other benefits - 25,000

15. If not covered by the substituted filing system,

What is the taxable compensation income?
employed individual taxpayers shall report their
330,000
regular income
Annually
7. De minimis benefits are generally
Taxable in excess of P90,000
 INCOME TAXATION – FINALS QUIZ
16. COC sold domestic shares directly to buyer. The
following relates to the sale:
Fair market value of shares ----- 400,000
Selling price ------------------------- 300,000
Cost ----------------------------------- 150,000
Compute the capital gains tax.
22,500
17. Mr. COC having a convenience store, sold a
portion of his parking lot for Php2,000,000. The
lot has a zonal value of Php2,500,000 and
appraisal value of Php1,800,000. The capital
gains tax on the sale of the lot is
18. Mr. BA, a non- resident alien, sold domestic
stocks directly to a buyer at a net gain of
70,000. Compute the capital gains tax.
10,500
19. Which is not an ordinary asset?
Personal laptop of the taxpayer
20. Which of these pay the 6% capital gains tax?
Security dealer
21. Mr. COC having a convenience store, sold his
house and lot for Php3,000,000. The lot has a
zonal value of Php3,500,000 and appraisal value
of Php2,900,000. The capital gains tax on the
sale of the lot is
22. The sale of listed shares may be subjected to
23. A wash sale of domestic shares wherein 20,000
shares were disposed at a loss of Php40,000
were subsequently covered up within the 30-
day period by purchase of 15,000 share for
Php12/share.
The deductible capital loss against capital gain
on wash sale is
10,000
24. Which statement is incorrect?
Capital loss can be deducted from ordinary
gain
25. A VAT taxpayer collected P66,600, inclusive of
P7,200 VAT and net of P600 withholding tax.
Compute the gross income subject regular
income tax.
60,000
26. Jerik, a self-employed employee with ten
dependent children, had the following items of
income and expenses in 2020:
Sales 900,000
Less: Cost of sales 400,000
Gross profit 500,000
Interest income net of 20% final tax 16,000
Interest income from clients notes 12,000
Expenses
Salaries expense 100,000
Depreciation expense 15,000
Rent & other expenses 50,000
Interest expense 30,000
Net Income 333,000
Compute the income tax due if Jerik opted to
use the 8% optional income tax.
72,000
27. A non-VAT taxpayer collected P45,000 net of
P5,000 withholding tax. Compute the gross
income subject to regular tax.
50,000
28. Mr. Pedro reported the following income and
expenses in 2020:
Compensation income 400,000
Gross income from business 500,000
Fully deductible contributions 50,000
Deductible contributions with limit 75,000
Other allowable deductions 200,000
Mandatory deduction and exempt income
75,000
What is the net income?
175,000
 INCOME TAXATION – FINALS QUIZ
29. On September 30, 2020, a taxpayer borrowed
P1,000,000 at 10% annual interest to finance his Compute the deductible business expense.
acquisition of a luxury car. Compute the 188,400
deductible interest expense in 2020.
0 36. Jerik, a self-employed employee with ten
dependent children, had the following items of
30. A corporation which started operations in 2015 income and expenses in 2020:
reported the following: Sales 900,000
2019 2020 Less: Cost of sales 400,000
Gross income from operations 500,000 1,000,000 Gross profit 500,000
Rent income 200,000 200,000 Interest income net of 20% final tax 16,000
Less: Business expenses 820,000 850,000
Interest income from clients notes 12,000
Expenses
What is the tax due in 2019?
Salaries expense 100,000
14,000
Depreciation expense 15,000
Rent & other expenses 50,000
31. The sale of non-listed shares may be subjected
Interest expense 30,000
to
Net Income 333,000
15% Capital gains tax only
Jerik shall report a taxable income of
32. For which of the following taxpayers is the
322,280
holding period ignored?
Corporations
37. The following relate to the compensation
income of a private rank and file employee
33. Which of the following is an individual whose
during the year:
residence is within the Philippines but who is
Annual compensation income 540,000
not a citizen thereof?
13th month pay 45,000
Resident aliens
14th month pay 45,000
Total of monthly rice allowances during the year
34. The gross income for MCIT purposes covers
26,000
Any of these
Commission from employer 12,000
Christmas gift 8,000
35. Jerik, a self-employed employee with ten
SSS, PhilHealth and HDMF contributions 21,000
dependent children, had the following items of
income and expenses in 2020:
Compute the supplemental compensation.
Sales 900,000
17,000
Less: Cost of sales 400,000
Gross profit 500,000
38. Mr. Bosun disposed various stocks at a total
Interest income net of 20% final tax 16,000
consideration of P400,000 and paid thereon
Interest income from clients notes 12,000
stock transactions tax of P2,000. Aggregate
Expenses
gains realized totaled P98.000 after the stock
Salaries expense 100,000
transaction tax. What is the capital gains tax?
Depreciation expense 15,000
0
Rent & other expenses 50,000
Interest expense 30,000
39. Deductions from gross income are
Net Income 333,000
Business expenses
 INCOME TAXATION – FINALS QUIZ
40. Mr. Pedro reported the following income and
expenses in 2020:
Compensation income 400,000
Gross income from business 500,000
Fully deductible contributions 50,000
Deductible contributions with limit 75,000
Other allowable deductions 200,000
Mandatory deduction and exempt income
75,000
What is the taxable income?
545,000
41. Compute the taxable gain on the December 7
sale.
60,000
42. Which of the following statement best
distinguishes deductions from exclusions from
gross income?
Deductions are outflows from gross income
while exclusions are not outflows from gross
income.
43. Which constitute a taxable item of gross
income?
Gain from sale of government bonds
44. What is Mr. Monreal's net income from
business?
300,000
45. What is Mr. Monreal's taxable income?
558,000
46. Statement 1: Ordinary gains and losses are
offset.
Statement 2: Capital gains and losses are offset.
Which statement is correct?
Statement 1
47. MCIT shall commence on the
4th taxable year following the year of start of
operation
48. Tapas Corporation granted ownership of several
housing units to the following employees on its
foundation day:
Name Position Property value
Mr. Magdiwang Accounting manager 3,000,000
Mrs. Calatrava Marketing supervisor 2,000,000
Mr. Romblon Machine operator 1,500,000
Mrs. Sta. Fe Electrical staff 1,000,000
Compute the total monetary value of housing
benefits that are subject to fringe benefits tax.
5,000,000
49. Which is correct with respect to exclusions from
gross income?
They are not considered in the computation of
taxable income
50. Which is not part of compensation income?
Fringe benefits of managerial or supervisory
employees
51. A fitness gym catering to senior citizens
recorded a total gross revenue of P345,000
from senior citizens. The gym provides 24%
discount in excess of the legal requirements.
What is the deductible amount of senior
citizen's discount?
90,789
52. The following income relates to a proprietorship
registered as BA
Gross income from sales Php 400,000
Dividend income - domestic 9,000
Interest on deposits 6,800
Compute the total exclusions in gross income
subject to final tax.
15,800
53. Which is not subject to final tax?
Share in the net income of GPP
 INCOME TAXATION – FINALS QUIZ
54. Who is not allowed the option to be taxed at
8%?
Compensation income earner
55. ABC Company owns a residential lot which was
purchased for 800,000, eight years ago. The lot
was sold to a supervisory employee for only
500,000 when it was worth 1,200,000.
Compute the fringe benefit expense.
300,000
56. When should individual income taxpayers
submit their annual or consolidated return for
April 15, 2021
57. Excess MCIT is a tax credit that can be carried
3 consecutive years
58. A corporation which started operations in 2015
reported the following:
2019 2020
Gross income from operations 500,000 1,000,000
Rent income 200,000 200,000
Less: Business expenses 820,000 850,000
what is the tax due and payable in 2020?
55,000
59. Mandaue reimbursed the following expense
liquidation of its managerial employee:
Purchase of office supplies 20,000
Personal meals and groceries 15,000
Gasoline for transportation (1/2 for business)
8,000
Office electricity, water, and telephone bills
12,000
Compute the monetary value of fringe benefits.
19,000
60. The fringe benefit tax by nature is a
Final tax
61. All of these are exempt benefits of a minimum
wage earner except
Vacation pay
62. The personal car of the taxpayer had the
following data:
Fair market value 6,000,000
Purchase price 5,000,000
Estimated useful life 10 years
What is the deductible annual depreciation
expense?
0
63. Corporate OSD is in lieu of all expenses such as
the following except
Cost of sales or cost of services
64. Tapas Corporation granted ownership of several
housing units to the following employees on its
foundation day:
Name Position Property value
Mr. Magdiwang Accounting manager 3,000,000
Mrs. Calatrava Marketing supervisor 2,000,000
Mr. Romblon Machine operator 1,500,000
Mrs. Sta. Fe Electrical staff 1,000,000
Compute the total monetary value of all fringe
benefits.
7,500,000
65. The following relate to the compensation
income of a private rank and file employee
during the year:
Annual compensation income 540,000
13th month pay 45,000
14th month pay 45,000
Total of monthly rice allowances during the year
26,000
Commission from employer 12,000
Christmas gift 8,000
SSS, PhilHealth and HDMF contributions 21,000
Compute the total non-taxable compensation
income
 INCOME TAXATION – FINALS QUIZ
140,000
66. Bad debts expenses include
Uncollectible debts due to the taxpayer
67. ABC Company owns a residential lot which was
purchased for 800,000, eight years ago. The lot
was sold to a supervisory employee for only
500,000 when it was worth 1,200,000.
Compute the fringe benefits tax.
376,923
68. Which is not part of compensation income
subject to regular tax?
Portion of salary contributed to SSS
69. Which is not a deductible loss by a security
dealer?
Loss on the sale of bonds with more than 5
years maturity
70. Anderson disposes a vacant lot for P3,000,000.
The lot has an Assessor's fair value P2,800,000,
a zonal value of P3,200,000, and an appraisal
value of 3.500.000 What is the capital gains tax?
192,000
71. The minimum tax for corporate taxpayer is
2% of gross income
72. Which of these items is subject to fringe benefit
tax?
Fringe benefit of managerial or supervisory
employees
73. Mr. Pedro reported the following income and
expenses in 2020:
Compensation income 400,000
Gross income from business 500,000
Fully deductible contributions 50,000
Deductible contributions with limit 75,000
Other allowable deductions 200,000
Mandatory deduction and exempt income
75,000
What is the taxable compensation income?
325,000
74. The de minimis benefits not exceeding their
thresholds are
Exempt from income tax
75. Which is an ordinary asset?
Office supplies
76. Which is an incorrect statement?
The capital gains tax on the disposition of
capital stock presumes the existence of gain on
the sales transaction
77. An individual taxpayer, reported P800,000 net
income after the following:
Cost of sales 600,000
Administrative expense 300,000
Selling expenses 400,000
What is the net income under OSD?
1,260,000
78. Mr. Monreal earned a gross compensation
income of Php200,000, exclusive Php20,000
non-taxable compensation income, and gross
business income Php500,000 before expenses
of Php200,000. He also earned book royalties of
Php10,000 and Php8,000 interest income from
clients’ promissory notes. Mr. Monreal has
personal expenses of Php170,000 during the
year. What is Mr. Monreal's taxable
compensation income?
200,000
79. Which is a correct statement?
Score: 0 out of 1 No
80. Which interest income will not be included in
the income tax return?
Interest income from notes
 INCOME TAXATION – FINALS QUIZ
81. A taxpayer had the following dealings in
properties:
Capital gain 100,000
Ordinary gain 200,000
Capital loss 120,000
Ordinary loss 150,000
What is the total net gain which will be
ultimately included in net income?
50,000
82. The results of operations of the taxpayer
resulted in the following:
Gross sales revenue 7,200,000
Beginning inventory 300,000
Purchases 5,800,000
Ending inventory 1,400,000
Other operating revenues 100,000
Non-operating income 20,000
What is the OSD if the taxpayer is a
corporation?
1,048,000
83. Statement I: Only depreciable assets of business
qualifies as ordinary assets.
Statement 2: Land used in business is a capital
asset since it is not subject to depreciation.
Which of the following is correct?
A, B, and C
84. The carry-over of NOLCO is allowed when
There is a change in the controlling
shareholder representing 51% ownership
85. Mr. Herman had the following dealings in
capital assets:
Short-term capital gain 200,000
Long-term capital gain 100,000
Short-term capital loss 100,000
Long-term capital loss 150,000
Compute the reportable net capital gain.
75,000
86. The results of operations of the taxpayer
resulted in the following:
Gross sales revenue 7,200,000
Beginning inventory 300,000
Purchases 5,800,000
Ending inventory 1,400,000
Other operating revenues 100,000
Non-operating income 20,000
Assuming the taxpayer is an individual, what is
the optional standard deduction?
2,920,000
87. An individual taxpayer, reported P800,000 net
income after the following:
Cost of sales 600,000
Administrative expense 300,000
Selling expenses 400,000
Compute the optional standard deductions.
840,000
88. Edwin purchased the life insurance policy of
Paulo for P50,000. He continued the policy by
paying P20,000 premium after which Paulo
died. Edwin collected the P500,000 proceeds of
the policy.
How much will Edwin exclude from his gross
income?
70,000
89. A taxpayer paid the following salaries during the
year:
Salaries of administrative employees 80,000
Salaries of sales and marketing employees
70,000
Salaries of factory production workers 120,000
Compute the deductible salaries expense.
150,000
90. Which is correct regarding gains from capital
assets?
Subject to either regular tax or capital gains
tax
 INCOME TAXATION – FINALS QUIZ
400,000
91. An individual income taxpayer reported the
following: 95. In 2020, a taxpayer finally posted a P1,000,000
Capital loss - current year 50,000 operating profit after four years of continuous
Capital gain - current year 200,000 losses. The results of operations in prior years
Net capital loss - last year 70,000 were:
2016 (800,000)
Compute the total capital loss deductible 2017 (400,000)
against capital gain in the current year. 2018 (200,000)
120,000 2019 (100,000)

92. The following income relates to a proprietorship Compute the deductible NOLCO in 2020.
registered as BA 700,000
Gross income from sales Php 400,000
Dividend income - domestic 9,000 96. A taxpayer had a P300,000 net income before
Interest on deposits 6,800 the following dealings in properties:
Ordinary gain 80,000
Compute the gross income subject to regular Capital gain 60,000
tax. Ordinary loss 90,000
415,800 Capital loss 70,000

93. An employee had the following details of
compensation income in 2019:
Regular compensation income 780,000
Overtime pay 43,000
13th month pay 65,000
De minimis benefits:
Medical assistance to employee 22,000
Total of other de minimis benefits 32,000
Compute the taxable compensation income if
the employee is a managerial or supervisory
employee.
836,000
94. Percy, Inc, a domestic corporation, reported the
following income in 2018:
Philippines Abroad
Service fees 400,000 300,000
Interest income - bank 40,000 70,000
Royalties - franchise 80,000 30,000
If Precy Inc. is a resident foreign corporation,
compute the gross income subject to regular
tax.
If the taxpayer is a corporation, compute the
taxable income.
290,000
97. All of these are items of gross income subject to
regular tax except one. Select exception.
Interest income from long-term bank deposits
98. The MCIT is not due when
RCIT is greater than MCIT
99. Which is incorrect with regard to the net
operating loss carry-over (NOLCO)?
40% of cost of goods sold or direct cost of
services
100. Which of the following ordinary assets
cannot be depreciated?
Land
101. Which is not deductible against gross
income?
All of these
 INCOME TAXATION – FINALS QUIZ
102. Which is not included in the gross
taxable compensation income of an employee?
13th month pay and other benefits not in
excess of 90,000
103. Losses on property are not deductible
unless
Sustained in an actual or completed
transaction
104. An individual income taxpayer reported
the following:
Capital loss - current year 50,000
Capital gain - current year 200,000
Net capital loss - last year 70,000
Suppose the taxpayer is a corporation, compute
the deductible capital loss against capital gain.
200,000
105. Who cannot claim deductions?
Self-employed professional taxpayers
106. Which is incorrect regarding the 8%
optional income tax?
May be opted to if the taxpayer claimed
optional standard deduction
107. Koron Company, a trading company,
made the following transactions during the year
involving the stocks of Xurpas, a domestic
corporation:
Date Transaction Shares Net Price
6/15/2020 Purchase 10,000 Php 30
9/30/2020 Sale 8,000 Php 28
10/3/2020 Purchase 15,000 Php 25
12/7/2020 Sale 10,000 Php 32
Koron uses the FIFO method in costing the
Xurpas stocks.
Compute the deductible loss on the September
30 sale.
0 Less: Cost of sales 400,000
108. Mandaue reimbursed the following
expense liquidation of its managerial employee:
Purchase of office supplies 20,000
Personal meals and groceries 15,000
Gasoline for transportation (1/2 for business)
8,000
Office electricity, water, and telephone bills
12,000
Compute the fringe benefit tax if the
managerial employee is a resident citizen?
10,231
109. A taxpayer had a P300,000 net income
before the following dealings in properties:
Ordinary gain 80,000
Capital gain 60,000
Ordinary loss 90,000
Capital loss 70,000
If the taxpayer is an individual, compute the
taxable net income?
290,000
110. Statement 1: A minimum wage earner
who loses the benefit of exemption by
transferring to a region with a lower minimum
wage is taxable on all income during the year.
Statement 2: A minimum wage earner who
qualifies as such during the year is exempt from
tax on all income earned during the year.
Which is correct?
Both statements are incorrect
111. The optional standard deduction for
individual taxpayers is
40% of gross sales or gross receipts
112. Jerik, a self-employed employee with
ten dependent children, had the following items
of income and expenses in 2020:
Sales 900,000
Gross profit 500,000
 INCOME TAXATION – FINALS QUIZ
Interest income net of 20% final tax 16,000
Interest income from clients notes 12,000
Expenses
Salaries expense 100,000
Depreciation expense 15,000
Rent & other expenses 50,000
Interest expense 30,000
Net Income 333,000
Compute the taxable income if Jerik opted to
use the optional standard deduction.
547,200
113. What percentage of the depreciation
value is considered fringe benefit in the free
usage of employer's real properties?
50%
114. Mr. Dionisio sold domestic stocks
directly to a buyer at a markup on cost of
Php200,000. He paid Php5,000 broker's
commission and Php8,000 documentary tax on
the sale. Compute the capital gains tax.
28,050
115. The following relate to the
compensation income of a private rank and file
employee during the year:
Annual compensation income 540,000
13th month pay 45,000
14th month pay 45,000
Total of monthly rice allowances during the year
26,000
Commission from employer 12,000
Christmas gift 8,000
SSS, PhilHealth and HDMF contributions 21,000
Compute the taxable compensation income.
536,000
116. Which is not a business expense?
Depreciation value of properties designated
for the use of company managers and
supervisors which are subjected to fringe
benefits tax
117. Statement I: Capital gains may arise
from sale, exchange, and other disposition
movable properties used in business.
Statement 2: Ordinary gains may arise from
sale, exchange, and other disposition of real
properties not used in business.
Which is true?
Both statements are false
118. Which of the following is subject to
income tax?
Voluntary contribution to SSS, PHIC, and HDMF
119. Which is not a supplemental
compensation income?
De minimis benefits
120. Percy, Inc, a domestic corporation,
reported the following income in 2018:
Philippines Abroad
Service fees 400,000 300,000
Interest income - bank 40,000 70,000
Royalties - franchise 80,000 30,000
Compute the total gross income subject to
regular income tax.
800,000
121. Kalibo Company purchased a residential
unit for 3,000,000 and transferred ownership to
its supervisory employee. The property has a
zonal value of 3,500,000. Compute the
monetary value.
3,500,000
122. Who is not subject to withholding tax
on compensation?
Minimum wage earner
123. The following relate to the
compensation income of a private rank and file
employee during the year:
Annual compensation income 540,000
13th month pay 45,000
14th month pay 45,000
 INCOME TAXATION – FINALS QUIZ
Total of monthly rice allowances during the year
26,000
Commission from employer 12,000
Christmas gift 8,000
SSS, PhilHealth and HDMF contributions 21,000
Compute the exempt de minimis benefits.
29,000
124. Callisto, employed, derived the
following income during the year:
Gross salaries Php 400,000
13 month pay and other benefits 40,000
SSS, PhilHealth, and Pag-Ibig contributions
20,000
Deductions for loans repayments 50,000
Deductions for withholding tax 60,000
Compute the compensation income to be
reported in the annual income return.
380,000
125. All items of passive income earned
abroad are subject to regular tax to
A resident citizen and domestic corporations
126. A non-resident alien is considered
engaged in trade or business in the Philippines
if he stayed therein for
More than 180 days
127. Which is not subject to the 6 capital
gains tax?
Donation of property
128. Mr. Herman had the following dealings
in capital assets:
Short-term capital gain 200,000
Long-term capital gain 100,000
Short-term capital loss 100,000
Long-term capital loss 150,000
If Herman is a corporate taxpayer, compute the
reportable net capital gain.
50,000
129. Gawan Merchandising paid 400,000 to
employees, net of 60,000 total withholding tax
on compensation. What is the deductible
amount of expense to the employer?
460,000
130. Which of the following is subject to final
tax?
Score: 0 out of 1 No
131. The actual value of benefits realized by
the managerial or supervisory employee is
referred to as the
Monetary value
132. Mr. Conner purchased a life annuity for
P1,000,000 which will pay him P100,000 a year.
What will Mr. Conner include in his gross
income on the 11th year of the policy?
100,000
133. The policyholder of a life insurance
contract outlived his insurance policy. He was
paid P300,000 upon maturity of the policy. He
paid P250,000 total premium. What is the
inclusion in gross income?
50,000
134. Which is a correct statement?
Gains between related parties are taxable
135. An employee had the following details
of compensation income in 2019:
Regular compensation income 780,000
Overtime pay 43,000
13th month pay 65,000
De minimis benefits:
Medical assistance to employee 22,000
Total of other de minimis benefits 32,000
Compute the taxable compensation income if
the employee is a rank and file.
842,000
 INCOME TAXATION – FINALS QUIZ
136. A taxpayer had the following dealings in
properties:
Capital gain 100,000
Ordinary gain 200,000
Capital loss 120,000
Ordinary loss 150,000

How much shall be included in gross income?

300,000

137. The regular corporate income tax is

30% of taxable income