Tax

A General Professional Partnership (GPP) is subject to income tax just like a corporation. False

General Professional Partnership is a non-taxable “pass through” entity the income of which is
ultimately taxed to its partners True

For purposes of computing the distributive share of the partners, the net income of the General
Professional Partnership shall be computed in the same manner as a corporation. True

If a taxable partnership sustain a net operating loss, the partners shall be entitled to deduct their
respective shares in the net operating loss from their individual gross income. True

A partner can claim OSD out of his share in the net income of a general professional partnership
provided the partnership is using itemized deduction. FALSE

The distributive share of a partner in the net income of a taxable partnership is equal to each
partner’s distributive share of the net income declared by the partnership for a taxable year before
deducting the corresponding corporate income tax. FALSE\

Where the result of partnership operation is a loss, the loss will be divided as agreed upon by the
partners but if there is no agreement as to division of losses but there is as to profits, the losses shall
be distributed according to the profit sharing ratio. TRUE

A partner can claim OSD out of his share in the net income of a general professional partnership
provided the partnership is not using OSD. FALSE

Partners of a taxable partnership are considered as stockholders and profit distributed to them by
the partnership are considered as dividends. TRUE

A general professional partnership as such is not subject to income tax but is require to file return of
its income. TRUE

In a contract of partnership, the partners agree to contribute money, property or industry to a

common fund with the intention of dividing the profit among themselves. TRUE

A general co-partnership is one which is not a general professional partnership. TRUE

Partnerships (other than general professional partnerships), whether registered or not, are
considered as corporations and are therefore taxed as corporation. TRUE

A partner can claim OSD out of his share in the net income of a general professional partnership.
FALSE

Persons engaging in business as partners in a general professional partnership shall be liable for
income tax in their separate and individual capacities TRUE

Mr. Santos is a partner of SOS and Co., a general professional partnership who owns 35% therein.
For taxable year 2019, the gross receipts of the partnership amounted to P8,750,000; cost of
services and other operating expenses were P 3,600,000 and P 1,900,000 respectively. Determine
the income tax liability of Mr. Santos for 2019, if SOS and Co. uses the optional standard deduction.
P214,450

Mr. Santos is a partner of SOS and Co., a general professional partnership who owns 35% therein.
For taxable year 2019, the gross receipts of the partnership amounted to P8,750,000; cost of
services and other operating expenses were P 3,600,000 and P 1,900,000 respectively. Determine
the income tax liability of Mr. Santos for 2019, If SOS and Co. uses the itemized deduction.
P231,250

Mr. Santos is a partner of SOS and Co., a taxable partnership who owns 50% therein. For taxable
year 2019, the gross receipts of the partnership amounted to P8,750,000; cost of services and other
operating expenses were P 3,600,000 and P 1,900,000 respectively. Determine the tax due on Mr.
Santos' share in the net income of the partnership 2019, if SOS and Co. uses the optional standard
deduction. P108,150

Mr. Santos is a partner of SOS and Co., a taxable partnership who owns 50% therein. For taxable
year 2019, the gross receipts of the partnership amounted to P8,750,000; cost of services and other
operating expenses were P 3,600,000 and P 1,900,000 respectively. Determine the tax due on Mr.
Santos' share in the net income of the partnership 2019, if SOS and Co. uses the itemized
deduction. P113,750

MCIT is computed as 2% of the gross income from operations. TRUE

If an entity started operations on June 2011, MCIT shall commence on June 2015. TRUE

The gross income tax applies only to corporation subject to regular income tax. TRUE

Non-resident foreign corporation are subject to minimum corporate income tax. FALSE

The gross income tax cannot apply if the gross profit rate falls below 45%. TRUE

Both the regular corporate income tax and the gross income tax are subject to the minimum
corporate income tax. FALSE

The MCIT applies only when income is zero or when there is an operating loss. FALSE

Domestic corporation under the gross income tax, including REITs, are exempt from MCIT. TRUE

Special domestic corporation and special resident foreign corporation are exempt from MCIT.
TRUE

Exempt corporation are subject to MCIT with respect to their income subject to regular corporate
income tax. TRUE

MCIT does not apply to foreign corporation. TRUE

As a rule, corporations always pay tax even if there is a loss effective from the fourth year of their
operations FALSE

Resident foreign corporation are subject to either gross income tax or regular corporate income tax.
FALSE

A partnership organized under Philippine law is a domestic corporation for purposes of taxation.
TRUE

Domestic corporation are subject to either gross income tax or regular corporate income tax. TRUE

MCIT is applied on a quarterly, but not on an annual basis FALSE

MCIT excess can be deducted only against the excess of RCIT over the MCIT in any of the
succeeding three years. TRUE
Investment companies and insurance companies are prima facie presumed improperly accumulating
profits. FALSE

The improperly accumulate earnings tax does not cover holding companies publicly listed
companies and banks. FALSE

MCIT can be suspended for a taxpayer suffering from prolonged labor dispute, force majeure, or
legitimate business reverses. TRUE

Whenever MCIT is payable, there is a Net operating Loss Carry-Over. FALSE

Whenever MCIT is payable, there is a Net operating Loss Carry-Over. TRUE

The excess MCIT of previous years can be deducted against the RCIT of any quarter of the year if
RCIT is greater than MCIT. TRUE

An appropriation involves setting aside of earnings for immediate needs of the business. FALSE

The branch profit remittance tax covers remittance of special resident foreign corporation except
PEZA-registered entities. TRUE

Resident foreign corporation LIMITED TO RCIT SUBJECT TO THE MCIT

Which is exempt from the corporate income tax? Non PROFIT CORPORATIONS

Which is not a requisite of the gross income tax? 10% GOVERNMENT DEBT TO ASSET
RATIO

The regular corporate income tax is 30% OF TAXABLE INCOME

The minimum tax for corporate taxpayer is 2% OF GROSS INCOME

The MCIT applies to DOMESTIC AND RESIDENT CORPORATION

The optional gross income tax is 15% OF GROSS INCOME

The maximum cost ratio for corporations to avail of the gross income tax is 55%

What is the minimum tax as percentage of gross income under the corporate gross income? 15%

The minimum lock-in period under the corporate gross income tax is THREE YEARS

The MCIT is not due when RCIT IS GREATER THAN MCIT

Exempt corporations are subject to MCIT on their income from UNRELATED ACTIVITIES

MCIT shall commence on the 3RD TAXABLE YEAR FOLLOWING

Excess MCIT is a tax credit that can be carried over to the next 3 CONSECUTIVE YEARS

Which is deductible in the computation of the MCIT? SALARIES OF EMPLOYEES DIRECTLY

ENGAGED

Which of these may grant relief from the MCIT? SECRETARY OF FINANCE

For taxpayers involved in the sale of goods, gross income means GROSS SALES LESS SALES
RETURNS, DISCOUNTS AND COSTS OF GOOD SOLD
Gross receipts, as compared with gross sales, include BOTH CASH AND ON ACCOUNT
TRANSACTION

The quarterly income tax return is due on or before 60 DAYS FOLLOWING

Which of the following is not a deduction in the computation of the income tax payable or refundable.
FINAL WITHOLDING TAX ON PASSIVE INCOME

Which of the following tax credit is not always creditable in the current accounting period?
ESTIMATED QUARTERLY INCOME TAX PAYMENT

In the quarterly income tax return, Excess MCIT prior year is deductible only when THE RCIT
EXCEEDS THE MCIT FOR THAT QUARTER

Excess MCIT is valid as a tax credit over THREE YEARS

Which of the following entities is improper accumulation of profits not presumed? BANKS

For taxpayers involved in the sale of services, gross income means GROSS RECEIPTS LESS
RETURNS, ALLOWANCES, DISCOUNTS AND COST OF SERVICES

The Paluan Corporation had the following excess MCIT in prior years: Excess MCIT – 2016 P
80,000 Excess MCIT – 2017 40,000 Excess MCIT – 2018 50,000 Excess MCIT – 2019 10,000 In
2020, the RCIT and MCIT were respectively P230,000 and P210,000. What is the income tax due
and payable? P130,000

The following are the composition of the total gross income of a domestic corporation which is
subject to MCIT: Sales, net of discounts and allowances P 4,000,000 Less: Cost of sales 2,400,000
Gross income from operations P 1,600,000 Dividend income 100,000 Royalty income 250,000 Gain
on sale of building 150,000 Total gross income P 2,100,000 What is the minimum corporate income
tax? P35,000

In the immediately preceding problem, what is the regular corporate income tax if the corporation
has a total allowable deduction of P 1,700,000? P15,000

The Calintaan Corporation had the following historical MCIT and RCIT data: Calintaan Corporation
had the following historical MCIT and RCIT data: 2017 2018 2019 2020 MCIT P 120,000 P 200,000
P 190,000 P 170,000 RCIT P 110,000 P 220,000 P - 0- P 180,000 Basing solely on the information
provided, what is the tax due and payable respectively in 2017 and 2018? P120,000 , P210,000

he Calintaan Corporation had the following historical MCIT and RCIT data: Calintaan Corporation
had the following historical MCIT and RCIT data: 2017 2018 2019 2020 MCIT P 120,000 P 200,000
P 190,000 P 170,000 RCIT P 110,000 P 220,000 P - 0- P 180,000 Basing solely on the information
provided, , What is the tax due and payable respectively in 2019 and 2020? P190,000 , 0

A corporation reported its first profits in 2020 since its start-up in 2017. The following summarizes its
results of operations: Sales, net of discounts and allowances P 5,000,000 Less: Cost of sales
3,000,000 Gross income P 2,000,000 Regular allowable deductions P 1,200,000 Special allowable
deductions 200,000 NOLCO 500,000 1,900,000 Net income P 100,000 What is the income tax due?
P30,000

A corporate taxpayer had the following data on its fifth year of operation: Philippines Abroad Total
Sales P 2,000,000 P 3,000,000 P 5,000,000 Less: Cost of services 1,200,000 1,800,000 3,000,000
Gross income from operation P 800,000 P 1,200,000 P 2,000,000 Interest on deposits 50,000
250,000 300,000 Total income P 850,000 P 1,450,000 P 2,300,000 Less: Business expenses
800,000 1,300,000 2,100,000 Net income P 50,000 P 150,000 P 200,000 What is the tax due
assuming the taxpayer is a domestic corporation? P45,000

A domestic corporation reported the following income in its fifth year of operation: Within Without
Total Gross income P 4,000,000 P 3,000,000 P 7,000,000 Less: Deductions 3,500,000 3,400,000
6,900,000 Gross income P 500,000 (P 400,000) P 100,000 Compute the income tax due
P140,000

A corporation which started operations in 2015 reported the following: 2019 2020 Gross income from
operations P 500,000 P 1,000,000 Rent Income 200,000 200,000 Less: Business expenses 820,000
850,000 What is the tax due in 2019? P10,000

A corporation which started operations in 2015 reported the following: 2019 2020 Gross income from
operations P 500,000 P 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? P69,000.