12/2/21, 6:13 PM Submissions - B-BTAX211 BSA22 1st Sem ( 2021-2022 ) - 1st Final Summative Assessment - DLSU-D College/GS

Question 1
All of the following are requisites for charitable and other contributions to be deductible, except:

Response: No income of the donee institution must inure to the benefit of any public stockholder or individual.

Score: 2 out of 2 Yes

Question 2
Which stage of wasting asset activity pertains to the process of actual extraction, processing and sale?

Response: Commercial production

Score: 2 out of 2 Yes

Question 3
Which of the following GOCC is subject to corporate income tax?

Response: Landbank of the Philippines

Score: 2 out of 2 Yes

Question 4
Past service costs are:

Response: Amortized over a period of 5 years.

Score: 0 out of 2 No

Question 5
Government-Owned or Controlled Corporations, Agencies or Instrumentalities are taxable in their:

Response: Net income.

Score: 2 out of 2 Yes

Question 6
Lalisa, a resident citizen, purchased a parcel of land, measuring 1,000 square meters at a price of P2,000,000 on
January 5, 2021. Due to the construction of a subway station a few hundred meters away from Lalisa's parcel of
land, the fair market value of the land increased to P15,000,000 by 2022. Lalisa procured an appraiser to
determine the new value of the land, and the appraiser affirmed the increase to P15,000,000. The land was used
as a collateral to secure a loan amounting to P10,000,000 by way of a real estate mortgage. The proceeds of the
loan were used by Lalisa to construct buildings on the land for leasing. Is Lalisa subject to income tax?

Response: No. The increase in value of the land is not subject to income tax.

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Score: 2 out of 2 Yes

Question 7
All of the following are requisites for interest expense to be deductible, except:

Response: Interest may be legally due.

Score: 2 out of 2 Yes

Question 8
Transit earned the following items of income for the taxable year ending December 31, 2021:

- Dividends from domestic corporation - P480,000

- Receipts from rental of machinery - P330,000

- Interest income from expanded foreign currency

deposit system - P140,000
- Royalties from literary compositions - P190,000

If Transit is a resident foreign corporation, how much is the final withholding tax?

Response: P59,000

Score: 2 out of 2 Yes

Question 9
Beginning July 1, 2020, as a general rule, what is the effective corporate income tax rate?

Response: 25%

Score: 2 out of 2 Yes

Question 10
All of the following may be included in the term "corporation" under the Tax Code, except:

Response: Law firm

Score: 2 out of 2 Yes

Question 11
The situs of service income is:

Response: Where the services are performed.

Score: 2 out of 2 Yes

Question 12
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All of the following are requisites for bad debts to be allowed as deduction to gross income, except:

Response: The taxpayer can either be using the accrual basis of accounting or cash basis accounting.

Score: 2 out of 2 Yes

Question 13
Interest income of resident citizens from short-term currency bank deposits is subject to a final withholding tax
rate of 20%. As a result:

Response: Such interest income need not be declared as part of the gross income of the resident citizen taxpayer
in his/her annual income tax return.

Score: 2 out of 2 Yes

Question 14
All of the following statements are not incorrect, except:

Response: Intangible explorations and development costs incurred in mining operations include any incidental
and necessary costs of drilling wells or preparing wells for petroleum production and which have no salvage
value.

Score: 2 out of 2 Yes

Question 15
Proprietary income of a non-stock, non-profit educational institution is subject to:

Response: Exempt from tax

Score: 0 out of 2 No

Question 16
All of the following statements are correct, except:

Response: The related party rule states that in income taxation, only business expenses that are incurred for the
generation of items of gross income subject to regular tax are deductible.

Score: 2 out of 2 Yes

Question 17
What tax remedy is provided by the Tax Code to minimize the impact of indirect double taxation on those
income that have already been subject to tax in other countries but still taxable in the Philippines?

Response: Tax credit

Score: 2 out of 2 Yes

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12/2/21, 6:13 PM Submissions - B-BTAX211 BSA22 1st Sem ( 2021-2022 ) - 1st Final Summative Assessment - DLSU-D College/GS

Question 18
Lalisa, a resident citizen, purchased a parcel of land, measuring 1,000 square meters at a price of P2,000,000 on
January 5, 2021. Due to the construction of a subway station a few hundred meters away from Lalisa's parcel of
land, the fair market value of the land increased to P15,000,000 by 2022. Lalisa procured an appraiser to
determine the new value of the land, and the appraiser affirmed the increase to P15,000,000. The land was used
as a collateral to secure a loan amounting to P10,000,000 by way of a real estate mortgage. The proceeds of the
loan were used by Lalisa to construct buildings on the land for leasing. Under the realization test, under which of
the following scenarios would Lalisa be subject to income tax?

Response: Foreclosure of the real estate mortgage.

Score: 2 out of 2 Yes

Question 19
Which of the following is not a requisite for the deductibility of Entertainment, Amusement and Recreation
expenses?

Response: For taxpayers engaged in the sale of goods or properties, they may claim 0.5% of net revenues.

Score: 2 out of 2 Yes

Question 20
Minimum corporate income tax may be carried forward:

Response: For the three immediately succeeding taxable years.

Score: 2 out of 2 Yes

Question 21
Fearless Corporation, a dealer in sugar under the brand Mr. Perfectly Refined Sugar, has gross sales of
P1,400,000,000 with cost of sales of P560,000,000 and allowable deductions of P150,000,000 for calendar year
2020. Fearless Corporation began operating in 1989. Fearless Corporation's total assets of P180,000,000
includes land and building in which the business is situated, amounting to P50,000,000 and P25,000,000,
respectively. Applying the CREATE Law, how much is Fearless Corporation's income tax due?

Response: P189,750,000

Score: 2 out of 2 Yes

Question 22
It is defined as a commercial undertaking by two or more persons, differing from a partnership in that it relates
to the disposition of a single lot of goods or the completion of a single project.

Response: Joint venture

Score: 2 out of 2 Yes

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Question 23
In this type of tax, non-payment is constitutionally exempted from imprisonment.

Response: Poll tax

Score: 2 out of 2 Yes

Question 24
All of the following statements are incorrect, except:

Response: The burden of proof in establishing the reasonableness and validity of an expense rests upon the
taxpayer.

Score: 2 out of 2 Yes

Question 25
For regular corporate income tax purposes, what is the tax base for resident foreign corporations?

Response: Taxable income

Score: 2 out of 2 Yes

Question 26
Which of the following special entities are now subject to regular income tax by virtue of the CREATE Law?

Response: Offshore Banking Units

Score: 2 out of 2 Yes

Question 27
Which of the following taxes cannot be considered as deductions to gross income?

Response: Estate tax

Score: 2 out of 2 Yes

Question 28
All of the following are elements of a valid tax, except:

Response: It must be uniform or equitable.

Score: 2 out of 2 Yes

Question 29
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Which of the following deductions is subject to a limit expressed as a percentage of net sales or receipts?

Response: Entertainment, amusement and recreational expense

Score: 2 out of 2 Yes

Question 30
The Lifeblood Doctrine is also called as the:

Response: Theory of Taxation

Score: 2 out of 2 Yes

Question 31
What is the income tax rate on presumed capital gain on sale of real properties classified as capital assets which
are located within Philippine territory?

Response: 6% on selling price or fair market value or zonal valuation, whichever is the highest.

Score: 2 out of 2 Yes

Question 32
Under the CREATE Law, what percentage is the arbitrage limit for interest expense as deduction to Gross
Income?

Response: 20%

Score: 2 out of 2 Yes

Question 33
What is the final tax rate on cash dividend received by resident citizens from domestic corporations?

Response: 10%

Score: 2 out of 2 Yes

Question 34
As distinguished from deductions, tax credit is:

Response: A deduction on tax due

Score: 2 out of 2 Yes

Question 35

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Mr. A loaned a corporation in the amount of P800,000. After three taxable period, the corporation became
bankrupt. The entire principal and accrued interest of P200,000 became totally worthless. Assume that Mr. A
uses the cash basis of accounting, how much deductions to gross income is he allowed to claim?

Response: P800,000

Score: 2 out of 2 Yes

Question 36
Sale of shares of stock of a domestic corporation listed and traded through the local stock exchange is subject to
what percentage of corporate tax?

Response: 25%

Score: 2 out of 2 Yes

Question 37
Transit earned the following items of income for the taxable year ending December 31, 2021:

- Dividends from domestic corporation - P480,000

- Receipts from rental of machinery - P330,000

- Interest income from expanded foreign currency

deposit system - P140,000
- Royalties from literary compositions - P190,000

If Transit is a partnership constituted in the Philippines, which of the following statements is true?

Response: P330,000 will be subject to regular income tax at the rate of 25%

Score: 2 out of 2 Yes

Question 38
A non-resident foreign corporation is taxable in its:

Response: Gross income from sources within the Philippines.

Score: 2 out of 2 Yes

Question 39
Which of the following prizes is subject to regular income tax?

Response: Prizes received by a domestic corporation, P100,000.

Score: 2 out of 2 Yes

Question 40
All of the following are not requisites for the deductibility of interest as allowable deduction, except:

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Response: The interest is reduced into writing.

Score: 2 out of 2 Yes

Question 41
All of the following are requisites for a deduction to gross income to be considered legitimate, except:

Response: Considered as a capital expenditure

Score: 2 out of 2 Yes

Question 42
Which of the following is not a deductible tax?

Response: Estate tax

Score: 2 out of 2 Yes

Question 43
All of the following statements are not incorrect, except:

Response: Losses actually sustained during the taxable year and compensated by insurance or other indemnity
shall be allowed as deductions.

Score: 2 out of 2 Yes

Question 44
Which of the following types of income is no longer required to be reported in the income tax return?

Response: Income already subjected to final withholding tax

Score: 2 out of 2 Yes

Question 45
What is the maximum reward that may be given to an informer of tax evasion?

Response: 10% of the revenues, surcharges or fees recovered and/or fine or penalty imposed and collected or
P1,000,000 per case, whichever is lower.

Score: 2 out of 2 Yes

Question 46
All of the following are depreciable properties, except:

Response: Land
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Score: 2 out of 2 Yes

Question 47
Which of the following does not describe a defined contribution plan?

Response: Actuarial computation would be necessary to determine the employer’s contributions to ensure that
the promised benefits to covered employees will be met in due time.

Score: 2 out of 2 Yes

Question 48
Which winnings of a resident citizen is subject to ordinary income tax?

Response: Winnings in illegal jueteng

Score: 2 out of 2 Yes

Question 49
The situs of income from sale of real property is determined by:

Response: The place where the real property is located.

Score: 2 out of 2 Yes

Question 50
Fearless Corporation, a dealer in sugar under the brand Mr. Perfectly Refined Sugar, has gross sales of
P1,400,000,000 with cost of sales of P560,000,000 and allowable deductions of P150,000,000 for calendar year
2020. Fearless Corporation began operating in 1989. Fearless Corporation's total assets of P180,000,000
includes land and building in which the business is situated, amounting to P50,000,000 and P25,000,000,
respectively. Applying the CREATE Law, how much is Fearless Corporation's minimum corporate income tax?

Response: P8,400,000

Score: 0 out of 2 

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