PHIL TAX SYSTEM AND INCOME TAX

FINALS

BY: MCFJMLN​ 💛
Note: Search only for the ​keywords​.

A sold his residential lot for P2,000,000. The said lot was acquired in 2000 at a cost of P1,700,000. The
fair market value of the property as determined by the BIRis P2,200,000 but the fair market value as
shown in the schedule of values of the City Assessors is P1,950,000. The entire proceeds were utilized
for the acquisition of A's principal residence. The final tax due is

Select one:

a. ​P120,000

b. P132,000

c. P117,000

d. P0

The Constitution grants exemption from all kinds of taxes to religious and charitable organizations.

Select one:

True

False

Opinions of legal personalities are sources of tax laws.

Select one:

True

False

The President can veto any particular item in a revenue or tariff bill, but the veto shall not affect the
items or items to which he does not object.

Select one:

True
False

Which of the following corporation is taxed based on gross income?

Select one:

a. Resident Foreign Corporation

b. ​Non Resident Foreign Corporation

c. Foreign Corporation

d. Domestic Corporation

The power of the State to tax exists by virtue of an express provision of the Constitution.

Select one:

True

False

The following statements are true except:

Select one:
a. A non-resident citizen with income purely from foreign sources is not entitled of the basuc personal
exemption

b. The maximum amount allowed for health and hospitalization premium is P2,400

c. ​Filipino citizen employed in an offshore banking unit in the Philippines is classified as special alien

d. A widower who supports his mother is classified as head of the family

During the year, Sico has the following benefits received from his employer:
Rice Subsidy of P1, 000 per month P12, 000
Free housing as a requirements to perform his duty 24, 000
Clothing allowance 1,000
Transportation allowance subject to liquidation 6,000
SSS employer contribution 3,000
How much is the taxable benefits received by Sico?

Select one:

a. 27,000
b. 46,000

c.​ ​P0

d. P30,000

Who among the following is a non-resident alien?

Select one:

a. An alien who has acquired residence in the Philippines

b. ​An alien who comes to the Philippines for a definite purpose which in its nature may be promptly
accomplished

c. An alien who lives in the Philippines with no definite intention as to his stay

d. An alien who comes to the Philippines for a definite purpose which in its nature would require an
extended stay

The following corporations are not subject to MCIT, except:

Select one:

a. Proprietary educational institutions

b. Corporations under a special income tax regim

c. ​Private and publicly listed corporations

d. Banking institutions under expanded foreign currency deposit system

Advance rental in the nature of prepaid rental, received by the lessor under a claim or right and without
restrictions as to use is

Select one:

a. ​Taxable income of the lessor

b. Taxable income of the lessee

c. Tax-exempt income of lessor

d. Tax-exempt income of lessee

How much shall be taken into account in computing the net income tax if a gain is realized by an
individual taxpayer from the sale or exchange of capital assets (other than shares of stocks)?
Select one:

a. 6% of the net capital gain

b. 5% for the first P100,000 and additional 10% for any excess of P100,000

c. ​6% of the selling price or fair market value whichever is higher

d. 5% of the net capital gain

The following tax payers with income within the Philippines may claim additional exemption, except:

Select one:

a. Resident citizen

b. Resident alien with qualified dependent children living in the Philippines

c. ​Non-resident alien with qualified dependent children living in the Philippines

d. Non-resident citizen

Revenue bills shall originate exclusively from the Senate.

Select one:

True

False

A corporation whose income within and without the Philippines is taxable

Select one:

a. Non Resident Foreign Corporation

b. Resident Foreign Corporation

c. ​Domestic Corporation

d. Foreign Corporation

X received the following prizes and winnings

1st prize - raffle draw P 50, 000
Philippine Lotto winnings 1, 000, 000
Gambling winnings 300, 000
Beauty contest winnings 100,000
How much is the taxable prizes and winnings?

Select one:

a. P350, 000

b. P300, 000

c. ​P450, 000

d. P50, 000

Juana, widow, earning an annual gross compensation income of P300,000 has the following dependent
children in 2017:

Aubrey - baby, born on January 31

Barbara - celebrated her 21st birthday last June 12

Cristeta - married on January 1

Diana - gainfully employed effective July 1

Eliza -died of dengue fever on September 30

Assuming Juana has two employers, her taxable income in 2017 is:

Select one:

a. P32,000

b. P100,000

c. ​P150,000

d. P63,000

Which of the following exemption was granted for qualified legitimate, illegitimate, legally adopted, and
natural children?

Select one:

a. Basic personal exemption only

b. Both basic and additional personal exemptions

c. ​Additional personal exemption only

d. Special deduction
How much of the following amounts received in 2017 will be included in the tax return for the year
2017?
Rent for year 2015 P480, 000
Rent for year 2016 480, 000
Rent for year 2017 480, 000
Refundable Deposit 120, 000

Select one:

a. P560, 000

b. P520, 000

c. ​P600, 000

d. P720, 000

The lease dated January 1, 2017 provided for constructions of improvements at the cost of the lessee,
and the ownership will belong to the lessor at the end of 5-year lease contract. The construction of
improvement which was completed at the end of the 3rd month of the contract amounted of P240, 500.
The improvement has an economic life of 8 years and estimated scarp value of P560.
The rent income on improvement for year 1 under each method is
Outright Spread- Out

Select one:

a. P147, 620 P22, 140

b. P239, 940 P14, 754.75

c. P -0- P18, 107.50

d. ​P240, 500 P18, 107.50

Which of the following real properties is classified as a capital asset?

Select one:
a. Real properties of the real estate lessor whether land and/or improvements, which are for lease or
being offered for lease.

b. ​Real property transferred through succession or donation to the heir or done who is not engaged in
the real estate business with respect to the real property inherited or donated and who does not
subsequently use such property in trade or business
c. Real property transferred through succession or donation to the heir or done who is not engaged in
the real estate business with respect to the real property inherited or donated and who subsequently
use such property in trade or business
d. Real property initially acquired by a taxpayer engaged in real estate business but subsequently
abandoned or become idle

A minimum wage earner is working at an advertising firm in Makati. During the year, she received
P10,000 a month as salary or a total of P120,000. In addition, she also received 13th month pay,
Christmas bonus, productivity bonus, mid-year bonus and 14th month pay amounting to P30,000. The
total deductions for her SSS premiums, PhilHealth, Pag-Ibig and Union dues contributions amounted to
P5,000. Her taxable income, if she is single with no qualified dependent is

Select one:

a. P90,000

b. P0

c. P95,000

d. P65,000 ​(Wrong Answer)

A taxpayer is classified as head of the family under the following situations, except:

Select one:

a. ​Widow with a minor child of her deceased husband on his first marriage dependent upon her for
chief support
b. Legally separated spouse with a brother who is not more than 21 years old, unmarried and not
gainfully employed

c. Unmarried woman with illegitimate daughter

d. Unmarried man with parents dependent upon him for chief support

X purchased a life insurance for P1,000,000 which will pay him P100,000 a year. The life expectancy of A
is 12 years. Which of the following will X be able to exclude from this income?

Select one:

a. ​P100,000

b. P1,000,000

c. P1,200,000

d. P200,000
During the taxable year, Mr. Francis Ko separated legally from his wife, Andrea. The legally separated
spouses have five qualified dependent children. Both spouses were earning with the following gross
taxable income: Mr. Francis Ko, P380,000; Ms. Andrea, P250,000. For custody, the court granted Mr. Ko
the two children and Ms. Andrea the remaining three children. Meanwhile, Mr. Francis Ko is supporting
his niece who is 21 years old, unmarried, and not gainfully employed. Both spouses have monthly
premium payment of P150 for health and insurance.

The allowable deduction for health and hospitalization insurance of Mr. Ko is:

Select one:

a. ​Zero

b. P1,800

c. P3,000

d. P2,400

What kind of income tax is subject to 2% of corporate gross income?

Select one:

a. ​Minimum Corporate Income Tax

b. Capital Gains Tax

c. Gross Income Tax

d. Normal Corporate Income Tax

The following are the gross royalty income of a resident citizen for the period:
Royalty income as authorP100,000
Royalty income from franchising200,000
Royalty income from gold mine500,000
Royalty income from the use of its patent100,000
The total final tax on Royalty income is

Select one:

a. P150,000

b. P100,000

c. ​P170,000

d. P130,000
Individual taxpayers are subject to the following types of income taxes, except:

Select one:

a. Basic or schedular tax

b. Final income tax

c. Capital gains tax

d. ​Donor's tax

The following are correct income tax, except:

Select one:

a. ​25% on gross receipts within received by foreign international carrier

b. 4.5% on gross income within earned by nonresident foreign lessor vessel chartered by Philippines
nationals

c. 25% on gross income within earned by nonresident foreign cinematographic film owner

d. 7.5% on gross income within earned by nonresident foreign lessor of aircraft

From the following data compute for the gross business income of a servicing business:
Professional fee, accounting service P500, 000
Salaries of accounting staff 150, 000
Salaries of office assistant 60, 000
Accounting Supplies 10, 000
General Supplies 5, 000

Select one:

a. P280, 000

b. ​P340, 000

c. P335, 000

d. P275, 000

Statement 1 Holiday pay, overtime pay, night differential pay and hazard pay of the minimum wage
earner paid on the statutory minimum wage are tax-exempt
Statement 2 Minimum wage earners who received additional compensation, such as commissions and
honoraria shall be subject to tax on their entire income

Select one:
a. ​Both statements are correct

b. Only Statement 1 is correct

c. Only Statement 2 is correct

d. Neither statement is correct

Statement I - Tax and toll are imposed primarily to raise revenue to sustain the needs of the State
Statement II - Tax and special assessment are both intended to raise revenue for the expenses of the
government

Select one:

a. ​Neither statement is correct

b. Only Statement I is correct

c. Only Statement II is correct

d. Both statements are correct

Mirabella's husband died in April 2016, leaving seven (7) unmarried children living with and wholly
dependent on her chief support. The ages of the children are as follows:

Children Ages Status

Aaa 24 jobless

Baa 22 mentally retarded

Caa 19 studying in Manila

Daa 10 studying in their hometown

Eaa 8 studying in their hometown

Faa 6 studying in their hometown

taken by the grandparents for full support

Gaa 3

For purposes of taxable year 2017, how much total personal exemptions would Mirabella be entitled to?

Select one:

a. P175,000

b. 50,000

c. P150,000
d.​ ​P100,000

In 2016, Pedro's wife died of a car accident. His dependents are as follows:
A, child, 22 years old, employed on July 12, 2016
B, child, 21 years old on January 2, 2016
C, child, 18 years old, married on January 31, 2016
D, child, 17 years old, gainfully employed on October 1, 2016
E, child, 15 afflicted with sore eyes on May 6, 2016
F, child, 13 died together with his wife in a car accident in 2016
G, sibling, 28 paralytic
For taxable year 2016, Pedro can claim additional exemptions of

Select one:

a. P75,000
b. P25,000

c.​ P100,000

d. P125,000

Juan dela Cruz, Filipino widower earning an annual compensation income of P1,200,000 has the
following dependent children in 2016:

Olaf: Baby, born on December 31

Elsa: Celebrated her 21st birthday on June 12

Ana: Married on January 1

Kristoff: Gainfully employed effective July 1

Hans: Died of dengue fever on September 30

Determine the following: Net taxable income for 2016

Select one:

a. ​P1,050,000

b. P1,125,000

c. P1,200,000

d. P1,000,000
A native of Davao City, supporting his legally adopted son, 18 years old, not gainfully employed, studying
Bachelor of Science in Accountancy at the Ateneo De Davao University, is entitled to a basic personal
exemptions of

Select one:

a. P25,000

b. Not determinable

c. ​P50,000

d. P75,000

Which payments made by the lessee under such terms of the lease contract should be considered as
additional rent income of the lessor?

Select one:

a. ​If a lessee paid directly to the government as a real estate tax on the property of the lessor
b. If the amount received by the lessor is in the nature of security deposit for the faithful compliance by
the lessee of the terms of the contract and will be refunded to the lessee at the end of contract term.

c. If the amount received by the lessor is in the nature of a loan extended by the lessee to the lessor

The taxpayers is not allowed to claim additional exemptions,

Select one:

a. Recognized natural son who celebrated his 21st birthday January 1 of the taxable year
b. ​Legitimate daughter who got married on December 30 of the taxable year, one day before she
turned 22

c. Legally adopted daughter, 25 years old but incapable of self support due to mental defect

d. Illegitimate son, minor who died January 1 of the taxable year

Miss Cruz had recently joined the ABC Corporation as sales executive. She was advised to be retrenched
because the company was losing heavily, but that she would be given a substantial separation pay. The
general manager, however, suggested to Miss Cruz to file a letter of resignation from the company,
instead of having been involuntarily separated as the latter would have implications of inefficiency on
her part. Miss Cruz chose to resign from the company and received the sum of P100,000 as separation
pay. The above amount is

Select one:
a. ​Taxable in full

b. Exempted from income tax

c. Partially taxable

d. Non-deductible expense on the part of the company

Statement I - Tax differs from debt, because tax is based on enacted laws while debt is based on contract
Statement II - Tax differs from custom duties because tax is imposed on persons, properties or rights
while custom duties are imposed only on persons and rights

Select one:

a. Both statements are correct

b. Only Statement II is correct

c. ​Only Statement I is correct

d. Neither statement is correct

Mabait, single, supporting his 58-year old mother, is a business income earner. During the year, his
income was P150,000. He also paid a total premium of P3,000 to an insurance company for his health
insurance. How much is his taxable income?

Select one:

a. P97,000

b. P122,600

c. P122,000

d. ​P97,600

Lands and buildings being used actually, directly and exclusively for religious and charitable purposes by
churches and charitable institutions are exempt from income tax and property taxes.

Select one:

True

False
Should the lessee make permanent improvements on the property leased under an agreement that
upon the expiration of the lease contract, the improvements shall belong to the lessor, the lessor may
recognize income from the leasehold improvements.

I. At the time when such improvements are completed at fair market value

II. By spreading over the term of the lease

Select one:

a.​ ​Either I or II

b. Both I and II

c. II only

d. I only

Statement I: Generally, prizes and winnings are taxable income

Statement II: Prizes less than P10,000 are taxable the same manner as business income

Select one:

a. Only statement I is correct

b. ​Both statements are correct

c. Only statement II is correct

d. Both statements are incorrect ​(Wrong Answer)

Which of the following income is/are earned through employee-employer relationship?

i.Professional fee
ii. Wages
iii. Pension pay
iv. Capital gain

Select one:

a. Professional fee,Wages,Pension pay only

b. Professional and Wages only

c. Wages only

d. ​Wages and Pension pay only

The British Aircraft, a non-resident foreign corporation, leased aircraft to Bacolod Golden Airlines, a
domestic corporation, presented the following data in its Philippine operation:
Gross taxable income P15,000,000
Operating expenses 9,750,000
The amount of income tax payable in the Philippines would be:

Select one:

a. P393,750

b. ​P1,125,000

c. P1,575,000

d. P4,500,000

Gorgeous reported the following separation pay:

First employment for 20 years at the age of 40 resigned P300, 000

Second employment for 10 years at the age of 50 - retrenchment 200, 000

Third employment for 10 years at the age of 60 retirement 100, 000

How much is the taxable separation pay?

Select one:

a. P -0-

b. P500, 000

c. ​P300,000

d. P600,000

Provisions in the Philippine Constitution on taxation are grants of power.

Select one:

True

False

The minimum corporate income tax shall be used in computing and paying corporate income tax if the
corporation has been

Select one:

a. The normal income tax is lesser than minimum corporate income tax

b. The normal income tax is equal than minimum corporate income tax
c. ​Incurred net loss or zero taxable income

d. In its third year

Statement I Ordinary resident foreign corporation is not subject to MCIT

Statement II Any excess amount of MCIT over NCIT shall be carried forward and credited against the
normal tax for the succeeding three years

Select one:

a. ​Only Statement II is correct

b. Neither statement is correct

c. Both statements are correct

d. Only Statement I is correct

During the taxable year, Mr. Francis Ko separated legally from his wife, Andrea. The legally separated
spouses have five qualified dependent children. Both spouses were earning with the following gross
taxable income: Mr. Francis Ko, P380,000: Ms. Andrea, P250,000. For custody, the court granted Mr. Ko
the two children and Ms. Andrea the remaining three children. Meanwhile, Mr. Francis Ko is supporting
his niece who is 21 years old, unmarried, and not gainfully employed. Both spouses have monthly
premium payment of P150 for health and insurance.

Mr. Francis Ko is classified during the taxable year as:

Select one:

a. It's complicated

b. ​Head of the family

c. Single

d. Married

For purposes of health and/or hospitalization insurance, the term "total family income" includes primary
income and other income from sources received by all members of the nuclear family.

Select one:

a. Either true or false

b. Neither true nor false

c. ​True
d. False

Juana, widow, earning an annual gross compensation income of P300,000 has the following dependent
children in 2017

Aubrey – baby, born on January 31

Barbara – celebrated her 21st birthday last June 12

Cristeta – married on January 1

Diana – gainfully employed effective July 1

Eliza – died of dengue fever on September 30

The taxable income of Juana in 2018 is:

Select one:

a. P87,000

b. ​P225,000

c. P120,000

d. P95,000

Which of the following ceilings of de minimis benefits is correct?

Rice SubsidyUniform Allowance

Select one:

a. P1,200 P3,000

b. ​P1,500 P4,000

c. P1,000 P4,000

d. P1,500 P3,500

Which of the following is taxable income?

Select one:

a. ​Damages awarded as a consequence of a libel and slander suits

b. Prizes and awards as an awardee of Ramon Magsaysay Award Foundation

c. Philippine lotto winnings

d. Amounts received as returns of premium

Which of the following is a taxable compensation income?

Select one:

a. ​Retrenchment pay due to habitual absences

b. Retirement pay under BIR approved retirement plan

c. Retrenchment pay due to bankruptcy of the company

d. Cost of living allowance

Sue reported the following retirement:

First employment for 30years received at the age of 50 P500, 000

Second Employment for 10 years received at the age of 60 400, 000

Third employment for 10 years received at the age of 70 300, 000

How much is the nontaxable retirement for Sue?

Select one:

a. P300, 000

b. ​P500, 00

c. P400, 000

d. P -0-

The "benefits-received theory" is the source of the "doctrine of symbiotic relationship".

Select one:

True

False

Which of the following is a qualified dependent for this year?

Select one:
a. ​A legitimate child who became of legal age last year

b. An illegitimate child who became a mother last year at age of 21

c. A legally adopted child who got married last year

d. A legitimate child who died last year at the age of 15

Which of the following is not taxable?

Select one:

a. P2,500 for 10 days sick leaves actually taken

b. P500 vacation leave included as part of salary not withstanding his absence from work.

c. P10,000 for unused vacation leave received as part of separation pay due to voluntary resignation

d. ​P12,500 for 5 days unused vacation leave converted into cash

Inherent powers are exercised primarily by the legislature.

Select one:

True

False

Congress may authorize the President to fix within specified limits, tariff rates, import and export
quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national
development program of the government.

Select one:

True

False

All of the following are subject to minimum corporate income tax, except:

Select one:

a. Domestic corporation

b. Resident foreign corporation

c. ​Nonresident foreign corporation

d. General commercial partnership

Pamela Lantes has earned the following income tax 2017:

Salary as professor P300, 000

Income from practice of profession 200, 000

Per diem as board director 120, 000

Thirteenth month pay 35, 000

First prize in essay writing contest 50, 000

What is the amount of gross taxable compensation income?

Select one:

a. P450, 000

b. P480, 000

c. P625, 000

d. ​P425, 000

Danville, an accounting clerk at a local company, resigned from his job and left the Philippines on April
10, 2017 to work as an accountant in Canada. For income tax purposes, which of the following
statements is correct with respect to Danville's classification

Select one:

a. He shall be classified as nonresident citizen for the year 2017 with respect to his income derived from
sources without from April 10, 2017
b. ​He shall be classified as nonresident citizen for the year 2017 with respect to his income derived
from sources without from April 11, 2017

c. His classification as a nonresident citizen will start in 2017

d. He shall be classified as nonresident citizen for the whole year of 2017

The theory of taxation is based on the lifeblood doctrine.

Select one:

True

False
A tax is a voluntary payment or donation to the government.

Select one:

True

False

As a rule, this is not part of taxable income

Select one:

a. Profit sharing

b. Overtime pay

c. Hazard pay

d. ​13th month pay

Statement 1 Laundry allowance not exceeding P300 per month is only exempted from income tax if
given to rank and file employees
Statement 2 Rice subsidy of P1,500 per month is an exempt de minimis benefits regardless of whether
the recipient employee is a rank and file or holding a managerial position

Select one:

a. Both statements are correct

b. Only Statement 2 is correct

c. Only Statement 1 is correct ​(Wrong Answer)

d. Neither statement is correct

The following statements are true, except:

Select one:

a. The husband is the proper claimant of the additional exemption for qualified dependent children

b. If a taxpayer dies during the year, his/her estate may claim the personal and additional exemption for
himself/herself and his/her dependents
c. A taxpayer with additional qualified dependent child during the year may claim the additional
exemption the following year
d. Natural born citizen does not have to perform any act to perfect his/her Philippine citizenship ​(Wrong
Answer)

In paying corporate income tax, the excess of minimum corporate income tax could be used as a
deduction within three immediate succeeding taxable years and such excess could only be deducted
from

Select one:

a. Minimum Corporate Income Tax

b. ​Normal Corporate Income Tax

c. Capital Gains Tax

d. Gross Income Tax

A minimum wage earner is working at an advertising firm in Makati. During the year, she received
P10,000 a month as salary or a total of P120,000. In addition, she also received 13th month pay,
Christmas bonus, productivity bonus, mid-year bonus and 14th month pay amounting to P30,000. The
total deductions for her SSS premiums, PhilHealth, Pag-Ibig and Union dues contributions amounted to
P5,000. Her taxable income, if she is single with no qualified dependent is

Select one:

a. P90,000

b. P95,000 ​(Wrong Answer)

c. P65,000

d. P0 ​(Not sure)

A benefactor of a senior citizen can claim an additional personal exemption of P25,000

Select one:

a. Either true or false ​(Wrong Answer)

b. True

c. False

d. Neither true nor false ​(Not sure)

The President of the Philippines is empowered to grant tax exemption on certain class of taxpayers.
Select one:

True

False

Statement I: Generally, prizes and winnings are taxable income

Statement II: Prizes less than P10,000 are taxable the same manner as business income

Select one:

a. ​Both statements are correct

b. Only statement I is correct

c. Only statement II is correct

d. Both statements are incorrect

During the taxable year, Mr. Francis Ko separated legally from his wife, Andrea. The legally separated
spouses have five qualified dependent children. Both spouses were earning with the following gross
taxable income: Mr. Francis Ko, P380,000; Ms. Andrea, P250,000. For custody, the court granted Mr. Ko
the two children and Ms. Andrea the remaining three children. Meanwhile, Mr. Francis Ko is supporting
his niece who is 21 years old, unmarried, and not gainfully employed. Both spouses have monthly
premium payment of P150 for health and insurance.

The filing status of Ms. Andrea is:

Select one:

a. Single x

b. It's complicated

c. ​Head of the family

d. Married

Which of the following compensation payments to a minimum wage earner is subject to income tax?

Select one:

a. Overtime pay

b. Night differential pay

c. Holiday pay
d. ​No correct answer

The net taxable income of regional operating headquarters by multinational companies engaged in
administrative services is
Select one:
a. Subject to 15% final tax
b. ​Subject to 10% income tax
c. Tax exempt
d. Subject to 30% corporate tax

Mirabella's husband died in April 2016, leaving seven (7) unmarried children living with and wholly
dependent on her for chief support. The ages of the children are as follows:

Children AgesStatus

Aaa24jobless

Baa22mentally retarted

Caa19studying in Manila

Daa10studying in their hometown

Eaa8studying in their hometown

Faa6studying in their hometown

Gaa3taken by the grandparents for full support

For purposes of taxable year 2017, how many are the qualified dependents?

Select one:

a. 4

b. 6

c. ​5

d. 7

Statement I - The President has the power to veto any appropriation, revenue or tariff bill

Statement II - The pocket veto of the President disapproves or affects only the item or items to which
he/she objects.

Select one:

a. Only Statement II is correct

b. ​Only Statement I is correct

c. Both statements are correct

d. Neither statement is correct

An alien individual asked you to assist him in the preparation of his tax return for his income in 2017. He
provided you the following information:

Gross business income, PhilippinesP1,000,000

Gross business income, Canada5,000,000

Business expenses, Philippines 300,000

Business expenses, Canada 800,000

Philippine Charity Sweepstakes winnings 500,000

Singapore sweepstakes winnings 400,000

Interest income - BDO in Canada 100,000

Interest income received from a depository bank

under foreign currency deposit system 300,000

The taxpayer is single, resident of Manila and had three (3) qualified dependent brothers. What amount
should be reported by him as his net taxable income for 2017?

Select one:

a. P5,300,000

b. P700,00

c. ​P650,000

d. P4,850,000

Statement I: All vacation leave and sick leave taken with pay are taxable compensation income

Statement II: All unused vacation leave converted into cash are taxable

Select one:

a. Both statements are incorrect

b. ​Only statement I is correct

c. Only statement II is correct

d. Both statements are correct

The major factors that determine the situs of taxation are the following except:

Select one:

a. Location of the income

b. ​Amount or level of income

c. Residence of taxpayer

d. Citizenship of the taxpayer

After 10 years of romantic relationship, A decided to end his relationship with B. B with anger in her
eyes, kicked and berated A. A tried to pacify B, but B slipped, lost control and fell to the ground requiring
hospitalization. To buy peace, A decided to shoulder the medical expenses for the injuries suffered by B.
Such transaction is

Select one:

a. Taxable income of B, subject to basic tax

b. Taxable income of B, subject to final tax

c. ​Exempt from income tax

Because the power to tax is unlimited, comprehensive, plenary and supreme, the power to tax can reach
over into any jurisdiction to seize upon person or property

Select one:

True

False

Hollywood Film, a non-resident foreign corporation distributing cinematographic films, had the following
data in its Philippine operation for 2017:

Gross receipts from film distributionP8,000,000

Cost of films and other distribution expenses5,000,000

Operating expenses1,500,000

The amount of income tax payable in the Philippines would be:

Select one:

a. P450,000

b. P375,000

c. P2,000,000

d. ​P750,000

The following are corporations exempt from income tax, except

Select one:

a. Government owned and controlled corporation

b. Government educational institution

c. Non-stock and non-profit educational institutions

d. ​Cooperatives

During the taxable year, Mr. Francis Ko separated legally from his wife, Andrea. The legally separated
spouses have five qualified dependent children. Both spouses were earning with the following gross
taxable income: Mr. Francis Ko, P380,000; Ms. Andrea, P250,000. For custody, the court granted Mr. Ko
the two children and Ms. Andrea the remaining three children. Meanwhile, Mr. Francis Ko is supporting
his niece who is 21 years old, unmarried, and not gainfully employed. Both spouses have monthly
premium payment of P150 for health and insurance.

The additional personal exemption of Ms. Andrea is:

Select one:

a. Zero

b. P25,000

c. ​P50,000

d. P75,000

During the taxable year, Mr. Francis Ko separated legally from his wife, Andrea. The legally separated
spouses have five qualified dependent children. Both spouses were earning with the following gross
taxable income: Mr. Francis Ko, P380,000; Ms. Andrea, P250,000. For custody, the court granted Mr. Ko
the two children and Ms. Andrea the remaining three children. Meanwhile, Mr. Francis Ko is supporting
his niece who is 21 years old, unmarried, and not gainfully employed. Both spouses have monthly
premium payment of P150 for health and insurance.
The allowable deduction for health and hospitalization insurance of Ms. Andrea is:

Select one:

a. Zero

b. P2,400

c. ​P1,800

d. P3,000

The following are the essential characteristics of taxes, except:

Select one:
a. TaxesStatement I - Tax differs from debt, because tax is based on enacted laws while debt is based on
contract

Statement II - Tax differs from custom duties because tax is imposed on persons, properties or rights
while custom duties are imposed only on persons and rights are enforced contributions
b. Taxes are levied for public purpose

c. Taxes are proportionate in amount

d. ​Taxes are arbitrary in amount

Which of the following is considered as taxable compensation income?

Select one:

a. Transportation allowance paid to rank and file employee, merely as a performance of his duties

b. SSS benefits

c. Retirement pay under BIR approved retirement plan

d. ​Excess and unliquidated amount of transportation allowance paid to rank and file employee,
merely as a performance of his duties

Which of the following is not correct income tax?

Select one:

a. 30% income tax on net taxable business income of resident foreign corporation

b. Minimum corporate income tax on domestic corporation incurring operating loss for the year

c. 10% income tax on proprietary educational institution

d. ​Zero income tax on business income of all government owned and controlled corporation such as
PAGCOR.

Mr. Ronald Baden, an American citizen and a resident of California, USA has business income derived in
the Philippines amounting to P500, 000 for the year. He is married and has 2 minor children.
How much will be allowed as his personal exemption for the computation of his income tax in the
Philippines, if his country's tax law is granting the same exemption to Filipino citizens, except for
additional exemption where his country's tax law is allowing P10, 000 per dependent child?

Select one:

a. P100, 000

b. ​P70, 000

c. P50, 000

d. P -0-

Statement I - Parents of the taxpayer can be both dependents and qualified dependents
Statement II - The wife can claim additional exemptions when the husband is a seaman on an
international vessel with income from foreign sources only

Select one:

a. Only Statement I is correct

b. ​Only Statement II is correct

c. Neither statement is correct

d. Both statements are correct

Which of the following statement is not correct?

Select one:

a. Prizes and awards granted to athletes in local and international sports competitions and tournaments
whether held in the Philippines or abroad and sanctioned by their national sports association are
exclusions from gross income

b. ​Minimum wage earners shall be exempt from the payment of income tax

c. Benefits received from or enjoyed under the Social Security System are exclusions from gross income.

d. Holiday pay, overtime pay, night shift differential and hazard pay shall be exempt from income tax
The classifications of the taxpayer according to filing status are the following except:

Select one:

a. Married

b. Head of the family

c. ​Exempted

d. Single

Juan, single is an OFW with a monthly income abroad amounting to P20, 000. He has a sari-sari store in
the Philippines with an average monthly income of P10, 000. If Juan returned in the Philippines from
March 1 of the taxable year and stayed to manage his sari-sari store, how much of his income is subject
to tax in the Philippines after personal exemption?

Select one:

a. ​P70, 000

b. P100, 000

c. P120, 000

d. P110, 000

Northern Medical College, a proprietary educational institution, had the following financial data for
2017:

Gross receipts from tuition fee paymentsP14,000,000

Itemized expenses 9,000,000

The income tax liability for 2017 would be:

Select one:

a. ​P500,000

b. P280,000

c. Tax exempt

d. P1,500,000

Which of the following is subject to 10% final tax?

Select one:

a. Interest income from savings account

b. Royalty income from patent

c. Royalty income from franchise

d. ​Royalty income from literary works

Fiscal adequacy means that revenue should always meet the demands of public expenditures even
during adverse economic condition.

Select one:

True

False

Statement 1 A child, regardless of age, qualifies as dependent if he/she is incapable of self-support

because of mental or physical defects

Statement 2 Married individual can each claim the basic and personal exemptions

Select one:

a. ​Only Statement 1 is correct

b. Both statements are correct

c. Neither statement is correct

d. Only Statement 2 is correct

A tax is a voluntary payment or donation to the government.

Select one:

True

False

The personal exemption of the nonresident alien engaged in trade or business in the Philippines is equal
to that allowed by:

Select one:
a. The income tax law of his country to a citizen of the Philippines not residing there or the amount
provided by the Tax Code to a citizen or resident whichever seems appropriate ​(Wrong Answer)

b. The income tax law of his country to a citizen of the Philippines not residing there or the amount
provided by the Tax Code to a citizen or resident whichever is lower
c. The income tax law of his country to a resident citizen of the Philippines not residing therein ​(Wrong
Answer)

d. The Tax Code to a citizen or resident

This is a taxable income

Select one:

a. Retrenchment pay

b. ​Separation pay due to resignation

c. Refund of Philippine Income Tax

d. SSS/GSIS benefits

A corporation which is taxable on business income after deducting business, except:

Select one:

a. ​Non Resident Foreign Corporation

b. Domestic Corporation

c. Foreign Corporation

d. Resident Foreign Corporation

How much is the special deduction allowed for the payment of a premium on health insurance during a
taxable year by a resident alien if the total amount paid is P3, 000, total family income is P200,000 and
payment was made in the month of December of current year covering one year period starting
December of current year, of taxable year.

Select one:

a. P200

b. P3, 000

c. ​P2, 400

d. P2, 000
Which of the following taxpayers whose personal exemption is subject to law on reciprocity under Tax
Code?

Select one:

a. Nonresident citizen with respect to his income derived from outside the Philippines

b. Nonresident alien not engaged in trade or business in the Philippines whose country allows personal
exemption to Filipinos who are not residing but are deriving income from said country.
c. ​Nonresident alien who shall come to the Philippines and stay herein for an aggregate period of
more than 180 days during any calendar year

d. Resident alien deriving income from a foreign country

Who among the following individual taxpayers is taxable on income within and without

Select one:
a. Lee Min How, Korean singer, held a 2-day concert in Newport Performing Arts Theater, Resorts World,
Manila

b. ManiePakyaw, a native of General Santos City, working as an overseas contract worker in Libya

c. Oscar delaHiya, German citizen, a resident of Luxemburg, spent 1 month vacation in the Philippines
d. ​Lebron Jaime, naturalized Filipino citizen and married to a Filipina. He had been living in Subic since
2000

The following are the sources of taxation laws ordinances except:

Select one:

a. Philippine Constitution

b. Statutes or Presidential Decree ​(Wrong Answer)

c. Judicial decisions ​(Wrong Answer)

d. Contracts or agreements

Statement 1 Holiday pay and hazard pay of employees in the public sector receiving compensation
income of minimum wage are not taxable
Statement 2 Holiday pay and hazard pay of employees in the private sector receiving compensation
income of minimum wage are not taxable
Select one:

a. Only Statement 1 is correct

b. ​Both statements are correct

c. Neither statement is correct

d. Only Statement 2 is correct

As a rule, which of the following is subject to 10% tax on net income

Select one:

a. Dividend received by a resident citizen from a domestic corporation

b. Royalty income from musical composition received by a resident alien

c. ​Proprietary educational institutions

d. Off-shore banking units

The following taxpayers with income within and outside the Philippines may claim basic personal
exemption, except:

Select one:

a. Resident alien

b. Citizen, whether resident or not

c. ​Non-resident alien engaged in trade or business

d. Resident alien engaged in trade or business

The ABC Bank is a domestic bank authorized by the BSP to operate as foreign currency deposit unit. For
the year 2017, it earned interest income of P100,000 from foreign currency transactions with
non-residents, OBUs and other FCDUs. The rate of tax applicable to such interest income is

Select one:

a. 25% ​(Wrong Answer)

b. 20% ​(Wrong Answer)

c. 7.5%

d. 10%
During the taxable year, Mr. Francis Ko separated legally from his wife, Andrea. The legally separated
spouses have five qualified dependent children. Both spouses were earning with the following gross
taxable income: Mr. Francis Ko, P380,000; Ms. Andrea, P250,000. For custody, the court granted Mr. Ko
the two children and Ms. Andrea the remaining three children. Meanwhile, Mr. Francis Ko is supporting
his niece who is 21 years old, unmarried, and not gainfully employed. Both spouses have monthly
premium payment of P150 for health and insurance.

The additional personal exemption of Mr. Francis Ko is:

Select one:

a. P75,000

b. Zero

c. ​P50,000

d. P25,000

The following are generally excluded from the gross taxable income except:

Select one:

a. Proceeds from sale of ordinary assets

b. Gifts, bequests, and devises ​(Wrong Answer)

c. Return of premium of life insurance policy ​(Wrong Answer)

d. Proceeds of life insurance policy

Mr. Roman Dinero (Single), a Spaniard who is resident general manager of Abbot Laboratories-a
multi-national company's regional operating headquarters established in the Philippines-received a
monthly salary of P250, 000

What is the amount of Mr. Dinero's income tax payable?

Select one:

a. P12, 500

b. P918, 000

c. P80, 000

d. ​P450, 000

Compensation income is earned when an employee-employer relationship exists. Which of the following
represents compensation income?
Select one:

a. ​All of the answers correct

b. Emergency pay

c. Honorarium of the company lawyer as guest speaker in company sponsored seminar

d. Sick leave pay

Which of the following is a taxable compensation income?

Select one:

a. ​Separation pay due to resignation

b. Separation pay due to disability

c. Terminal pay by fact of death

d. Retirement pay under BIR approved retirement plan

Which of the following statements on fringe benefits is correct?

Select one:

a. ​Maybe given to employees regardless whether managerial, supervisory or rank and file

b. Not part of the taxable income of the employees

c. Part of the taxable income of the employees

d. The monetary value is subject to fringe benefits tax

The following statements imply that the dependent is living with the taxpayer, except:

Select one:

a. The dependent child is away for school or on a visit

b. ​The dependent senior citizen stays where he/she likes to stay as his/her residence
c. The dependent children are cared for by relatives because the taxpayer is forced to be away by
circumstances beyond his/her control

d. The dependent parent is away from home because of work

Jake Galamay, single supporting the following:

Princess Ilaga, illegimitate daughter, 16 years old, studying in the University of Sydney in Australia and
living with Jake Galamay's diplomat brother in Sydney, Australia

Noemi Galamay, mother, living with him and giving 60% of the entire support needed: the other 40% is
being furnished by his sister, Tina Galamay

How much is the additional personal exemption to be recognized by Jake Galamay?

Select one:

a. P50,000

b. P75,000 ​(Wrong Answer)

c. P100,000

d. P25,000

Statement 1 Sale or disposition of shares of stock outside the local stock exchange is subject to final Tax
Statement 2 Gain on shares surrendered by the investor upon dissolution of the corporation is subject to
final tax

Select one:

a. ​Neither statement is correct

b. Only Statement 2 is correct

c. Both statements are correct

d. Only Statement 1 is correct

Which of the following is not a compensation income?

Select one:

a. Wages

b. Retirement pay

c. Allowances ​(Wrong Answer)

d. Professional fees

In 2016, Pedro's wife died of a car accident. His dependents are as follows:

A, child, 22 years old, employed on July 12, 2016

B, child, 21 years old on January 2, 2016

C, child, 18 years old, married on January 31, 2016

D, child, 17 years old, gainfully employed on October 1, 2016

E, child, 15, afflicted with sore eyes on May 6, 2016

F, child, 13, died together with his wife in a car accident in 2016

G, sibling, 28, paralytic

For taxable year 2017, Pedro can claim additional exemptions of:

Select one:

a. P125,000

b. P100,000 ​(Wrong Answer)

c. P25,000

d. P75,000