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For the taxable year 2018, Ron and Nor, partners of a general professional
partnership agreed to divide profits and losses 60:40, respectively. Both are
married without qualified dependents. The following are the details of the
accounts.

The partners agree shall compute their own business income the same as
how the GPP computes its income:

 The share of Ron from the distributable net income of the partnership,
assuming itemized deduction is use is ANSWER: 690000
 The share of Ron from the distributable income of the partnership,
assuming that the partnership uses optional standard deduction (OSD)
is ANSWER: 622800
 Total income of Nor computed under itemized deductions is ANSWER:
640000
 The distributable income of the partnership, assuming partnership uses
optional standard deduction (OSD) is ANSWER: 1038000

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  The share of Nor from the partnership distributable net income of the
partnership, assuming the partnership uses optional standard deduction
(OSD) is ANSWER: 415200
 The total allowable deductions from the partnership gross, assuming the
partnership uses itemized deduction is ANSWER: 580000
 The total allowable deductions from the partnership gross, assuming the
partnership uses optimal standard deduction (OSD) is ANSWER:
692000
 The share of Nor from the partnership distributable net income of the
partnership, assuming the partnership uses itemized deduction is
ANSWER: 460000
 The distributable income of partnership assuming that partnership used
itemized deduction is ANSWER: 1150000
 The gross income of the partnership, assuming the partnership uses
optional standard deduction (OSD) ANSWER: 1730000
 Total income of Ron computed under optional standard deduction
(OSD) is
ANSWER: 1132800
 Taxable business income of Ron computed under optional standard
deduction (OSD) is ANSWER: 270000
 Total income of Nor income computed under optional standard (OSD)
deduction is ANSWER: 595200
 The taxable net income of the partnership, assuming that the
partnership uses itemized deduction is ANSWER: 0
 Income tax due and still payable on Nor’s taxable income computed
using itemized deduction is ANSWER: 90000, 390000
 The distributable net income of the partnership, assuming that the
partnership uses itemized deduction is INCORRECT ANSWER: 690000
TRY: 1150000
 Income tax due and still payable on Nor's taxable income computed
under optional standard deduction (OSD) is INCORRECT ANSWERS:
415200, 90000, 368000, 80560, 60800
 The total taxable income of Ron, under itemized deduction is
INCORRECT ANSWERS: 1005000, 1150000, 320,000, 785,000,
555,000, 1165000
TRY: 550000
 The total taxable income of Nor assuming itemized deduction is use
ANSWER: 640000, 495,000
TRY: 624,000
 Income tax due and still payable on Ron’s taxable income computed
under itemized deduction is INCORRECT ANSWERS: 191500,
201400, 132040
TRY: 85000
 The total taxable income of Ron, under optional standard deduction
(OSD) is
132040

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 Try: 867600,
 The taxable business income of the Ron, assuming he uses itemized
deduction is
INCORRECT ANSWERS: 145000, 270000, 0
 Total Income of Ron computed under itemized deduction is
INCORRECT ANSWER: 1380000
Try: 930,000, 1005000
 The total table income of Nor, under optional standard deduction (OSD)
is
INCORRECT ANSWER: 595200
TRY: 415,200
 Income tax due and still payable on Ron's taxable income computed
under OSD is
INCORRECT ANSWERS: 622800, 191500, 201,400, 85,700
 Taxable income of partnership assuming partnership uses optional
standard deduction (OSD) is TRY: 1038000
 The taxable income of the partnership assuming the partnership uses
optional standard deduction (OSD)
INCORRECT ANSWERS: 1038000, 692000
TRY: 0

Which of the following statements about partnerships is incorrect?

ANSWER: Right over profits and right over assets represent claims of
partners that are allocated based on partners’ capital accounts

If a taxable partnership sustains a net operating loss, the partners shall be

entitled to deduct their respective shares in the net operating loss from their
individual gross income. ANSWER: True

Partnership - other than general professional partnership - whether registered

or not, are considered as corporations and are therefore taxed as a
corporation. ANSWER: True

A partnership cannot use salary allowances or interest allowances as a way of

determining profit share if the operation is a net loss. ANSWER: False

The partner’s share in the profits of a general professional partnership is

regarded as received by the partnership although not yet distributed. This
concept of income reporting under the tax code is know as: ANSWER:
Constructive receipt basis of reporting income

Statement 1: In computing the taxable share of partners in a general

professional partnership, the accounting method used (accrual or cash
method) is an important factor to consider.
Statement 2: Only the share in the net income actually withdrawn by a partner
in a general professional partnership is taxable to him. ANSWER: Both
Statements 1 and 2 are incorrect

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 Statement 1: If the amount to be distributed to a partner of a GPP is more than
P720,000, it is to be withheld with 15% creditable withholding tax.
Statement 2: The share of a partner in a GPP is subject to final withholding tax
of 10% if the amount is below P720,000.
Statement 3: The distributive share of a partner in a commercial partnership is
subject to final tax of 10%. ANSWER: Only statement 2 is false

Statement 1: The distributive share of a partner in the net income of taxable

partnership is equal to each partner’s distributive share of the net income
declared by the partnership for a taxable year after deducting the
corresponding corporate tax.
Statement 2: If a taxable partnership sustains a net operating loss, the
partners shall be entitled to deduct their respective shares in the net operating
loss from their individual gross income.
TRY: Only Statement 1 is correct hehehe rawr

In a general professional partnership (GPP) ANSWER: the GPP shall report

total partnership income and each individual partnership’s share of that
income

When a partner leaves a partnership, the present partnership ends ANSWER:

True

In the absence of a partnership agreement, the Philippine law says that

income of a partnership will be shared equally by the partners. ANSWER:
False

Persons engaging in business as partners in a general professional

partnership shall be liable for income tax in their separate and individual
capacities. ANSWER: True

Statement 1: A general co-partnership is not subject to tax, but the partners

comprising such partnership are subject to income tax based on their
distributive share.
Statement 2: A partner in a general professional partnership is not subject to
tax on his/her share in the profits. ANSWER: Both Statements 1 and 2 are
incorrect

A general professional partnership is exempt from income tax, but is required

to file an income tax return. ANSWER: because the net income of the
partnership will be traced into the income tax return of the partners

A partnership is an unincorporated association of two or more people who

agree to carry on a business as co-owners for the purpose of earning profit.
ANSWER: True

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 Statement 1: Salaries received by a partner from a general professional
partnership is not considered gross compensation income but as part of his
share in the distributable net income after tax of the partnership.
Statement 2: Salaries received by a partner from a business partnership is
considered gross compensation income. ANSWER: Only Statement 1 is
correct

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 the taxable year before deducting the corresponding corporate
income tax. ANSWER: False

If the only source of income of the partner is his share in a general commercial
partnership, he is no longer required to file the annual income tax return.
ANSWER: True

Partners in a partnership are taxed on the amounts they withdraw from the
partnership, not the partnership income. ANSWER: False

The share of partners in the general professional partnership is taxable in the

conventional manner of computing the normal income tax of individual
ANSWER: False - minali ako dito mie
TRY: TRUE

Partners of a taxable partnership are considered as shareholders and profits

distributed to them by the partnership are considered as dividends. ANSWER:
True

Statement 2: A creditor can go after the personal properties of a limited

partnership
Statement 1: Each partner of a general professional partnership shall report
as gross income in his return, his distributive share in the net income of the
partnership, whether actually or constructively received. ANSWER: Only
statement 2 is correct

The share of a partner in the general professional partnership is subject to

final withholding tax of 10% if the amount is below P720,000. ANSWER: False

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

partnership. ANSWER: True

In a limited partnership the general partner has unlimited liability ANSWER:

True

Statement 1: For purposes of computing the distributive share of the partners

of a general professional partnership, the net income of the partnership shall
be computed in the same manner as a corporation.

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 Statement 2: Partners of a taxable partnership are considered as
shareholders and profits are distributed to them by the partnership are
considered as dividends. ANSWER: Both Statements 1 and 2 are correct

A co-ownership shall not be subject to income tax if the activities of the co-
owners are limited to the preservation of the property and the collection of the
income therefrom. ANSWER: True

For purposes of computing the distributive share of the partners of a general

professional partnership, the net income of the partnership shall be computed
in the same manner as a corporation. ANSWER: 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 profits among
themselves ANSWER: True

Statement 1: All partnerships are taxed in thsale same manner as corporation

Statement 2: The income of general commercial partnership is subject to
MCIT (minimum) or NCIT (normal) tax whichever is applicable ANSWER:
Only statement 2 is correct

Statement 1: Each partner of general professional partnership shall report as

gross income in his return, his distributive share in the net income of the
partnership, whether actually or constructively
Statement 2: If the partner of a GPP elects the itemized deductions, his tax
shall be based on his share of the net income of the GPP ANSWER: Both
statement 1 and 2 are correct

The income of general commercial partnership is also subject to MCIT or

NCIT whichever is applicable. ANSWER: True

The distributable share of a partner in a commercial partnership is subject to

final tax of 10% ANSWER: True

Which one of the following would not be considered a disadvantage of the

partnership form of organization? ANSWER: Ease of formation

If the amount to be distributed to a partner of a general professional

partnership is more than P720,000, it is to be withheld with 15% creditable
withholding tax ANSWER: True

Dividend income earned by general commercial partnership is no longer

taxable against the partner upon its distribution as share of the partner.
ANSWER: False

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 If the amount to be distributed to partner of a general professional partnership
is more than P720,000, it is to be withheld with 15% creditable tax.
ANSWER: True

In the absence of a partnership agreement, the law says that income (and
loss) should be allocated based on ANSWER: the ratio of capital investment

All partnership are taxed in the same manner as corporation. - ANSWER:

False

Statement 1: The share of the partners in the general co-partnership is not

subject to income tax. It is, however subject to final tax.
Statement 2: The nature of general co-partnership and co-ownership is
similar.
ANSWER: Only Statement 1 is correct

A partnership has an unlimited life. ANSWER: False

Co-owners are taxed individually on their distributive share in the income of

the co-owners. ANSWER: True

For purposes of taxation, which of the following statements regarding

partnership is incorrect? ANSWER: A, B, and C

A general professional partnership is not required to file its annual income tax.
ANSWER: FALSE

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

A partnership is formed by persons for sole purpose of exercising their

common profession, no part of the income of which derived from engaging in
any trade or business. ANSWER: general professional partnership

The share of an individual partner in a taxable partnership is subject to a final

tax ANSWER: True

Which of the following statements is wrong? ANSWER: a general partnership

in trade is not taxable as a corporation

Additional:
A general professional partnership is not required to file its annual income tax
return
ANSWER: TRUE
TRY: False

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 For purposes of taxation which of the ff statements regarding partnership is
correct:
A. Classified into 2 major categories partnership in trade and general
business..
B. Partnership in the trade is treated as corporate taxpayer
C. General professional partnership is exempt from income tax
ANSWER: A, B, and C

Partnership-other than general professional partnership-whether registered or

not, are considered as corporations and are therefore taxed as corporation-
ANSWER:TRUE

A general professional partnership as such is not subject to income tax but is

required to file a returns of its income.
ANSWER: TRUE

Statement 1: Partnership is created by mere agreement of partners.

Statement 2: Partners are liable to their capital contributions in general
partnership.
ANSWER: ONLY STATEMENT 1 IS CORRECT

A general professional partnership as such is not subject to income tax but is

required to file a returns of its income tax but is required to file a returns of ita
income ANSWER: TRUE

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