Cater Eacrss - Frage Bang li Tae TRUE OR FALSE Write True if the statement is correct, otherwise, write False other benefits furnished or 1. 10. 1. 12. 13. 14. 15. ‘A fringe benefit is any goods, service f granted by an employer in cash or in kin, including basic salaries to individual employees. . ‘A fringe benefit which is subject to the fringe benefit tax is taxable income of the employee. bject to the fringe benefit tax is taxable A fringe benefit which is not su! income of the employee. . Fringe benefits subject to fringe benefit tax cover only those tnnge Gena given or futnished to a managerial or supervisory employes, Fringe benefit tax shall be treated as a final income tax on the Employee withheld and paid by the employer on a quarterly basis. The grossed-up monetary value of the fringe benefit is tne actual ‘amount received by the employee The grossed-up monetary value of the fringe benef shall be Aoeerdined by dividing the monetary value of fringe benefit by the grossed up monetary value factor. Fhe person liable for fnnge benefit tax is the employer. whether he is an individual, professional partnership or a corporation regardless of uhether the corparation is taxable or not or the government and its instrumentalities A managerial employee is one who is vested with powers of prerogatives to lay down and execute management policies andlor to fire. transfer, suspend, lay-off, recall discharge, assign or discipline employees, of to effectively recommend such managerial actions. employee is exempt from tax if such ‘The grant of fringe benefits to the fe, business. grant is required by the nature of, or necessary to the trad or profession of the employer. The amount on which the fringe benefit tax rate is applied is the monetary value of the fringe benefit. The amount on which the fringe benefit tax rate is applied is the amount deductible by the employer from its gross income. Grossed-up monetary value is reflected in the books of accounts 25 fringe benefit expense and fringe benefit tax expense. Failure to withhold the required tax on salary is collectible from the employer. Failure to withhold the correct amount due to false information supplied by the employee shall be the liability of the employee. 176Chanter Exarsias ~ Uringe Beacfit 4 8“ a mutmpte crore Choose the lettor of the correct answer. Principios 1 nee owen er plang Io Be ose, nae ape ange, Dovel ranted 8) hg up monetany Memployee who Maks Manage oy ug Ba te Ss ale erect co ns tit owe beg sige esos on ae seca ce Sem es i a ee mtomenisis cone? 2. Statoment 1; Fringe benefts ae forms of incentives to employees, Statoment 2 Fonge benefis include salaries, services, or other benef given by employer to an individual employee, ‘2. Only statement fis correct B. Oni statement 2is correct Both statements ae corect Both statements are not correct 3. Which of the folowing statements regarding fringe benefit tax is wrong? ‘2. Frngo benefit taxis imposed on the employee . The employers the one lable forthe payment of fringe beneft tx . Both‘a'and“t" d. Nether‘a" nor"b* 4. This income of a resident aan holding managerial position is subject tobasic tax ‘a. Fringe benefit tx By Inlerest income fom Phippnecurency depos wih Securty 178 Chester Exercises brnge Buaoht Tee $0,000 winnings from PCSO and Philippine lots Paes tem SAR (P10 000), Gatun (P1000 (P0000) er ato tps ong NY © 100%) ant lta 5, Which of the following is a fringe benefit not covered fri yn by the fringe '2, De minimis benefit 'b, Housing priloges granted to rank and fle employees, © Fringe benefits granted as a result of the nature of the ‘business. trade, or profession of the employe. 4d. Allof these. ‘he folonn earings a subject ingo borat, & Te Eng of erarkaneie onpiyes nn ee 0: Housing recesary fer wade and ferhe convenience ofthe trier «. Food alowance athe convenience of he employer aed necessary me const he business 4. borne seove 7. Tho following are exempt ringe benefits, except for one ‘a. Fringe bonefts given to rank and fie employee. 'b. Fringe benefit given for the canvenience of the employes. When the fringe benefit is required by the nalure of or necessary to the trade, business or profession of the employer. 4. Rice benefit amounting o P1,500 a month. £8, Which ofthe folowing benefts is not subject tothe fringe benef tax? ‘a. Contributions of te employer for the benefit of the employee to retirement, insurance and hospitalization benefit plans b. Housing © Expense account . Vehiele of any kind 8. ‘Statement 1; Household of the employee borne by the employer such fas salaries of household help, personal driver and other sinlar personal expenses are taxable fringe benef. Statement 2: A trnge benefit which is not subject to the fringe benefit taxis returnable income of the employee, a. Slalements 1 and 2 ae false Statement 1 is rue but statement is false . Siatement 1s false but statement 2is we d. Siatements 1 and 2 are true 179Cte Tues Vioe Deft odo 10. Fnge ert x congue on oP 3 wonalay ve fre fng brat Book onl va of he fre beret Fava ofthe ne net 11. Whien of the folowing sitements garding $r0SSed-UP monetary watiala corect if the fringe benefit is si rp arta iat 8 90 BT jy 1 ger ee acca ee the net ar Sp neon ts he rt 1 Ta etn ey ran ea Oe a NS a ony veo the geben is ee ee echt eet (2. iat yt anata oe bt mut ater SL ancttn tga st Ce ee, asl it ra ete tee ates 13. both the fringe beneit expenso and the einge beni tax expense are alowed as deductons from ross income of a corporation, the ‘nt inthe books of account is Fringe benefit expense mx Fringe bene ax expense xe Cash ox », Fringe benefit tax expense mx Cash v0 ©. Fringe benef expenso ax Fringe benefit tax expense woe ‘Income constructively wax ‘received Cash 0 . Any ofthe above 180 Chapler Exersivs.- Fringe Bashi Tie 14, The monetary vale of fringe benef given in money is ‘Fair market value (BIR) or zonal value whichever is higher, Amount granted © Dopreciated valve 4. Acquistion cost plus other incidental costs 16 Stemert 1: tho employer dd na tod the tinge beet ox ad sibsequenty dscoverd and assessed by te Bs be lad tinge benet lx isnot atowed aa deductn fm ihe eoployers tyss come Stromort 2 Fog beet ax indus aera benefit the employer to the employees in addition to the basic : =e 2'Sniemwnt and rasa ®. Sitoment tue tt statment 2s ase Sttement false ut satoment wis 4 Sttmets tnd ae ov0 16. Statemont 1: The exemption of any tinge benef from the fenge ‘benefit tax shall not be interpreted to mean exemption from any other income lax imposed under the Tax Code excep ifthe same is tewise expressly exert ftom any other come tax imposed under the Tax Code or under any other existing law ‘Statemont 2. If the finge benefits exempted from the fringe benefit tax. the same may, however stil frm part of the employee's gross ‘compensation income which s subect to income tax. hente, thew'se subject 10 suthtoiding tax on compensation mcome payment 2. Slatemenis 1 and 2 are false 'b Statement 1's rue bul statement 2s false Statement 1s false but statement 2s rue 4. Statements 1 and 2 are tue 17. Cost of ile or health insurance and other non Ye insurance premiums bbome by the employer far his employee shail be treated as taxable fnege benef, except ‘Contributions ofthe employer forthe beneft ofthe employee ‘hussuant to provision of existing SSS and GSIS laws. Cost of promiums bome by the employer for the group insurance of his employees. Botha andb" None of the above |— EES - A es Drege Beach Te Coane Egorsos 1 ft Teg trog Boet an? At ven oft tong NH STS ch 8 er pe oe ty ree 1 oe tre pg we te oe Nes aay ecocnd ay EXCEPT when Pe en pe expenditures do Pet so epee Ono net raed undo i pote ne ge tne ta Iu. Tae exer rrieg ta ean exe Oe HO any Otter Aroge benaft from te fringe Benefit tay st NOT be Cree sve a imewse exes Dy ieore tn ariess De STO. an iy 2 1 ay @ Avotne above 19. Fringe peels NOT SUBJECT B finge Benet Lx include wich of Pee wort anions tom A Tin ncaa fb Bee ee cee est saneerermnaranrtin cn erp et s Bot gwen i arti oe Ny ie Alot the abos a teaiteny ¢ Alotine above hanctoy 4. None ole atove 120 Which othe fotown shat be subject to trnge benatts tax? ‘2 Housng prviege of Amped Forces of he Prsippives . Howsng unts stated nse of aacent 1 busines oF factory (ated win 30 meters tram te permite of he wusiness. Temporary neusing for an employee who stays n te housing Lunt or 3 months oF ess. 4. Housing priviege ofan alien employee of an ofshore banking unitin te Phippines Computation of FBT 21. How murh isthe alowable ceducton from business income of a domeste carporaton which granted and paid P7,500 fringe bene toitshey offers in 2021? ‘3 Ps0.000 . P100.000 «. P899,000, «. 65,000 182 > Chase Feces Hg Breoft ie 22 tn 202%, ABC Corporation gave tho fotowing fringe benefits to ts employees To managerial employeos To rank and fio employons 1,300,000 5,000,000 The altowable deduction trom the gross income ofthe corporation {or tho fringe benafits given to ompoyaes f ‘a, P2,000,000 , P85,320,000 bP2.148,000, . P7.000,000 23, 2021, ABC Corporation provided a 3-day vacation in Tagaytay foal ofits employens of which 80% are rank and fle Tatal expenses Incurted by the company for the sad vacation amounted to 1,200,000. The frnge benefit tax expense ts a PA70,588 © 84,000 b P376.470 d P120.201, 24. Using the above data the total deductible expanse is a P1294.118 ©. P1,284,000 b P238.118 4. Pr3e9231 so the focasndata forthe next two quastons: From a manageral employee for taxable year 2021 Salaries and wages> net ofthe folowing 681,200 ‘SSS and medicare contrbutions 12000 tax nhs 134,800 Total fed manthiy allowance (PS,000!m0,) 60,000 ‘Allowance. not subject fo iquiaton 48,000 Gasoline alowance, subject to hquidation 19° month pay, Chnstras Bonus 25, The gross compensation income subject to graduated rato Is ‘a. P440,000 ‘c P816,000 b P681,200 . P876,000 26. The fringe benef tax due from the above benefits 2. P36,706 c P2441 b. Pasata 6. 25,846 163tinge Beret Tie f tho Monetary Value fo, Special Rules on the Housing and Vehicle tax, te monetary value of a ei tempoyen where Wo Housing or urpones of ta a sual place of residence ried ty “ ent re ye 8 rt yw ora aenentor vero a Tre rea va which 5% ft fa mara ayn : : cr zonal v0, ae ¢. Wisol bmaraut ol doptecat Net book vale scan pi te weed we sn tt in a a reel Pe abe acai ch May COPED 68.759 3, PD : pate 750 nO ot 8 tt conan ee we ken vs 8 a ea anda wi akah Cy. Pores Baseman tt 202 abe elon i eve RoalPrpty Decwaton P1000 ian mana Ferma ue onan 28, How mach isthe monetary value ofthe fringe Benoit and the tanga ome tax, respectel/? 'a Pa.t67, P2244 © P2,000.000; 705.832 bs PE0.00D, P2623. PAT 45, POAS.T77 20, Assume the restental condominium unt was purchased by the company instalment forthe executive's feo use. Avawsition cost fexciusie of Inerest was P3,000.000. AL what arrount should the company repo as te monthly anelary value ofthe fonge benef and te hinge bani tx, respectively? 3. PSAGEET: P1961 €. P2.000,000; P705.252 . P1.500.000, P325.400 6, P6250; PS.265 te at 32 2 Us» tho indudea Cnt Ect Lent Bart Tie ‘Assur the residential condominium unit was purchased by tho company mn nstaliment, caneratip of wbich willbe transfered to the ueculi Acquusition cost exclusive of terest was P3,000,000 with a {onal valve dotermined at 5,000,000, AL what amount should the Company repo" as the manotary valun of the fringe banoft and the forge beni ta, eospoctvely? 12 PAN6667. P196.078 c. P2,000,000; P705,832 bs, P5,000,000,P2,692.308 4. P75,000, P236,294 ‘Ascume the residential condominium unit was. purchased by the company in nstaliment, oanership of which wil be transferred to lhe fexoculive: Acquiniton coat exclusive of interest was P3,000,000 with a ‘zonal value determined at P5 000,000. The employee ls required to pay P2,000,000 to the employer belore tha Wanster of awnarship Is mate At wt amount should the company report as the monetary ‘value of he fange beneft and the tinge benefit tax, respectively? ‘9 3,000,000: P1.615.385 c. P250,000, 117,647.05 1,500,000, P326,400° 6, P6,250; 2,941.10 ‘Assume the residential condominium unit fs located in Cebu and that tne eyeeutive is allowed to use the same for a period of three months ‘nile he 6 completing an evaluation of the overall performance of the ‘companys Cebu branch. “At what amount should the company report 2 he etary value of te feng Benet andthe onge bene ax, respecuecly? ‘4 P,1657.67, 1.961 . P1/509,000; 326,400 ‘e. P2,000,000, 705,632 4. PO; PO, nang data for tho nod ve questions: he compensation package of the Chie! Accountant is a car pan worth P1,000,000. The ownership wil bo transferred in the name of he employee xu. 3. ‘Assutrie the employer purchases the car in the name ofthe employee. ‘AL what amaunt should the employer report as. the grossed-up ‘monatary value of the fringe benefit and the tinge benefit tax, respectively? ‘3 P1,538.462; P536.462 '. 1,000,000; 320,000 ©, 735,294; P2735 294 «4. P500,000; 160,000 ‘Assume the employer provides PBQ0,000 to the employee to purchase ‘any veicle of hs interest, Ownership ofthe cars paced in the name the emplayee. The employee purchased a brand new car worth 1,200,000. "AI wat amount should the employor report as the 165Clete Exercises ~ fring Beng ht Te tinge benef andthe Finge bong, monetay vo «. P1280,769; P430,769 4 P#00,000; P256,000 arossedup nnd meet 764708 P4708 b, P1,470,588; p470,588 a be carn hatdnet inte ranet os amor Se eee te ere, A we emg bret one rg bere Ee ora 1 sear 5; PATO & Budpoutesmoo2 «, P130,000; P45, 500 <¢, P200,000: 64,000 EMIS BENET ens aa Facts poesia Dei ahs eapoyens al a ol avO sel cd eater Ltd yt ergot mer 28a meon, Yee lh ool, eaionmet © efceny of Re employees. set. Mins eet geno rank ad te employees a Stamogerl et soareay amples ere not subject 1 ta odds xine bene and culate wing tx. Silene doe e & Sato ee btetanent 21 ase ‘Shen s ee bt atten 215 wo 4. Smet an rene 38, Alpha Company rants grocery allowance of P5,000 per semester pet treoyee payaso eey et 9 an December 31 based on Ow ‘exiting Comprehensive Agreement wih is employees. The benelt ‘granted is ‘2. Exempt fom basic income tax but subject to 10% creditable ‘whaling tax. . Exemgt from basc income tax and to ereitable withholing tx © Subject to inge benefit tax ifthe recipent is @ rank and He employee 4. Subject to fringe benefit tax ifthe recipient is a manageral employes 50, Fe ay meal slovenes qrredenpayes a Exempt from income tax veesare be mplyee® Poel aif the eipent isa rank and le 186 ape Facies - Fae Bagh Tee Subject to fringe benefit tax ifthe recipient is @ managerial employee 4. Subject to basic income tax regardless of employee's rank 40. Statement 4: Uniforms and clothing atfowance not exceeding six thousand pesos (P6,000) per annum is an exempt de minimis benefit Statement 2: = Actual medical benefits nat exceeding P10,000 per ‘annum is an exempl de minimis benef. a. Statements 1 and 2 are false b,. Stalement tis tue but statement 2 i false €. Stolement 1 is false but statement 2s tue 4. Statements 1 and 2 are tue 41, Other benefits received by emplayees from an employer which are not in he lst of de minimis benefits under RR 8-2012, a8 amended, ae: a, Treated as de moimis ifthe benefits ate of relatively small value and are offeed or fumished by the employer merely as 1a means of promoting the heath, goodwil, conteniment, oF ciency of his employees, Treated as de minimis, regardless ofthe value, if such benefits are offered oF furnished by the employer marly as a means of promoting the health, goodwill, contentment, oF effciancy of his employees. © Not de minimis benefits because the lst as provided in the regulations ae al inclusive, 4. None of he above 42, Reasonable business expenses which ere paid forby the employer for the foreign travel of his employee to attend business meetings or Conventions are not taxable as fringe benefits. Which is NOT ire? |. Inland travel expenses (food, beverages, and local ‘rensportation) except lodoing cost in a hotel or similar ‘estabishment amounting to an average of USS300 oF less per dy, shall not be subject o@ fringe benef tax 4, The cost of economy and business class airplane ticket shall, ‘not be subject a finge benefit tax. However, 30% ofthe cost of fist class ane teket shall be subject to ange benefit tax The expenses should be supported by dacuments proving the ‘actual occurrences ofthe meetings or conventions, otherwise, they shall be treated taxable fringe benef. a. Fonly I land it . Land i only None ofthe above 187Cite Eur ~Viege Boo fi Tg veonme pe 0a ese eg' coterie, thousand pesos ig 99 ge achevement awards, €.0. for length gy 2 Statement - Empoyet Ay must nthe form ofa tanga Fe np anc ee Trvloye ‘see ‘an established written plan which does pg, erly, tet pp enens amexeIE Ce ining beret o utemens ‘2a Seeman ist tutsatenet2i se iste Statement 1s false but statement Statements 1 and 2 are tue 44. Tha ant of 6 ivi bene conforming 10 the ceing of de " minimis benefits shall be: re ecpl tom neare (x, regacess of the rank of he o,f consid in dteining the FBO000 ccna of fer tenets enced fom te gee come under tho Code a5 mended athe nat Neher ror 45. The excess of tho de minin’s benefits over thor rospective ceilings prescribed under he regulations shal be ‘8. Considered as part of ater benefits subject to tax only on he excess over he P30,000 cling. 1b. Not be considered in determining the PB2,000 caling of olher benefits excluded from the goss income under the Code, a5, 46. Mirimun Wage Eamers (MVYES) receiving “other benefs” exceeding ‘the P90,000 limit shal be 2. Taxable on the excess benefits only 3. Tasch nce bore 5 wel a is sli, ages ‘and alances, just Bke an employee receiving compensaion iname beyond sate minim wages . Exemp am income tax 4. None ofthe above 188 Chipe Exe ~ Vaiage Bengf Tie 47, Tho amount of 90,000 under “other benofis” which are excluded {rom gross income shall 1. Not be applicable to selt-employed individuals. |. Not be applicable to income generated ftom the conduct of trade or business, IML Shalt be applicable to all types of income ‘a tony © I lland th ». Vand tl only 4. None ofthe above 48, “Other Benetis” under revenue regulations include |. Christmas bonus II. Productvty incentive bonus HL Loyalty awards IM. Gis in eash orn kind and other benefits of similar nature actually received by officals and employees of both ‘ovemment and private offices a. Lonly 1, and i Land Il only 6.1 Mand iv 49, Which of the fotowing statements regarding thiteenth (13°! month pays correct? ‘a, Thirteenth (138 month pay and other benefits received by officials and employees of public and private enilies are ‘exempt from income tax and creditable ‘withholding tax on compensation, provided that the total exclusion ‘shall. nol exceed P30,000, . The excess of de minimis benefis over the celing would form Part of an individua’s gross income only i the total excess Denefis including bonuses exceeds 90,000 and would be ‘subject to income tax and appfcable final withholding taxes Statements a" and b" are correct ._ Neither statement“ nar "is correct 50. Pedro, single, is a minimum wage earner of EDT Manufacturing Corporation. in adaition to his basic minimum wage of 144,000 for 2020 taxable year, he also received the following benefis: Haliay pay, P25,000 * Overtime pay, 12,000 + Night sit ferential, 19,000 ‘The income subject to tax should be: ‘2. P56,000 «. P200,000 '. P31,000 dn 189sive Urge Becoft Tay ona Set a ernie wag of PLSA.O00 ones (p70.000 aver tho cena) nis, PRO.C00 (PEA ts, P122,000 shou be P52,000 4 PO Pese's nome ta 9" 320000 P3200 me ome eet sen aim a9 sent nae gn Pedro also engaged in trading various reas Con Pe pe ered it ron onset a oy 2020 abl ean aso ONS base srecrtng Os000 for 2020 table yes he Meise Ir a asatna nes HOM N's em pO}e in a0g00 it wthn te cin) + S5tapoy an eer boat, P5,000 Pedro's taxabie income should be: Posecoo «. Pst ono b. PS98.000 &. P350,000 190 Chapter 4 Co-Ownership, Estates and Trusts CO-OWNERSHIP Article 484 of the Civil Code provides that there is whenever the onership of an undivided thing of right belon persons. The portions belonging to the co-owners in the shall be presumed equal, unless the contrary is proved [Art Fox taxation purposes, there is co-ownership whe heirs oF beneficiaries inherit an undivided property trom « ‘when a donor makes a gift of an undivided property in ¢ ‘ore donees. Inheritance is subject to “Estate Tax’ wh Subject to “Donor's Tax’. Both taxes are not income taxe 28 “Transfer Taxes” which ate discussed in Volume 2 Business Taxation). Nonetheless, incomes from such subject to income tax Co-owners are taxed individually on their distibut income of the co-ownership.. Meaning, co-ownership itso for the reason that the activities of co-ownarship are gen {he preservation of the common property and the collect therelrom, Should the co-owners invest the income in bu {hey would be constituting thomsolvos into a partnership a ‘arable as a corporation as discussed in Chaptor 6 ~ Ii Partnorship. 191