Final Exam

Please show solution (if necessary).

I.

What are the salient features of CREATE law?

II.
Give instances of short accounting period for tax purposes?

III.

Mr. X sold his principal residence for P2M. What are the requisites to claim exemption from CGT on the
sale of his house?

IV.

Mr. X invested in the stocks of ABC Corporation, a domestic corporation, by purchasing 1,000 shares for
P100,000 on July 1, 2016. ABC declared a P10/share cash dividend on November 12, 2021 payable on
January 12, 2021 for stockholders of record December 12, 2021. On December 8, 2021, Mr X disposed of
his share investment for a total consideration of P120,000. Explain the tax treatment in the transaction.

V.

A taxpayer reported the following:

Capital loss – current year P50,000

Capital gain – current year 200,000
Net capital loss – last year 70,000

Q1. Assuming the taxpayer is an individual, compute the capital loss deductible against capital gain in
the current year.

Q2. Assuming the taxpayer is a corporation, compute the capital loss deductible against capital gain in
the current year.

VI.

Mr. Z, a manufacturer of goods under accrual basis, opted to claim optional standard deduction. Aside
from manufacturing, Mr. Z also leases a portion of his business to other businesses. The following relate
to his income:

Gross Sales P4,000,000

Sales returns and allowances 200,000
Rental Income 300,000
Interest Income from bond investment 15,000
Interest Income from customers’ notes 100,000
Gain on sale of old equipment 20,000
Dividend from a domestic corporation 18,000

What is the amount of taxable income?

NOTE: In computing OSD, non-operating income such as interest from bonds and gain on sale of
equipment shall be excluded.
 VII.

A taxpayer under the cash basis had the following expenditures:

Acquisition of office equipment at the

Middle of the year (5-year useful life) P200,000
Payment of employee salaries 40,000
Payment for office utilities expenses 60,000

How much is the claimable deductible expenses for the year?

VIII.

True or False.

1. The sick leave credit of private employees up to 10 days is exempt de minimis benefits.
2. A non-stock, non-profit entity is subject to tax on income from unrelated activities.
3. Personal expenses can be claimed as part of itemized deductions.
4. The tax sparing rule is applicable to RFC and NRFC.
5. General Professional Partnerships are subject to final tax but not to regular income tax.

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