BASIC INCOME TAXATION & BUSINESS TAX QUIZ

1. An alien received 200,000 compensation income in the Philippines and 300,000 rental income from abroad. How
much will be subject to Philippine income tax?

a. None

b. 200,000

c. 300,000

d. 500,000

2. Total assets minus total liabilities is equal to

a. Net worth

b. Owner's capital

c. Shareholder's equity

d. All of the above

3. The principal amount of time deposit the bank (point of view of depositor) is an/a

a. Income

b. Revenue

c. Capital

d. Receipt

4. Which of the following is classified as income?

a. Damage recovery due to physical injuries

b. Return of capital

c. Excess of selling price over cost

d. Gift received

5. If a property is received in lieu of cash compensation, the basis of tax is the

a. Supposed amount of cash to be received

b. Agreed value of the property received

c. Fair market value of the property received

d. Salvage value of the property received

6. ALE Company insured the life of its president for 2,000,000. A total of 500,000 in premium was paid before the
president died. The company collected the total proceeds. Compute the return on capital.
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 a. 0

b. 1,500,000

c. 500,000

d. 2,000,000

BASIC INCOME TAXATION & BUSINESS TAX QUIZ

7. Which of the following is a taxable compensation income?

a. Retirement pay under BIR approved retirement plan

b. Separation pay due to resignation

c. Terminal pay by fact of death

d. Unused vacation leave credits of 10 days or less

8. Which of the following is considered as taxable compensation income?

a. Transportation allowance paid to rank and file employee

b. Social security system benefits

c. Retirement pay under a duly BIR approved benefit plan

d. Retrenchment pay

e. Gifts, bequest and devisees

9. Which of the following will result to earning of income by the debtor?

a. Cancellation of existing payables without any financial consideration

b. Cancellation of existing payables for services rendered to creditor

c. Cancellation of existing payable to offset the equivalent amount of collectible

d. Cancellation of existing payable due to bankruptcy of the debtor

e. All of the above will result to earning income by the debtor

10. Which is not a natural person?

a. Resident citizen

b. Taxable estate

c. Non-resident alien engaged in trade or business

d. Non-resident alien not engaged in trade or business

11. The BIR is under the supervision of the

a. Department of Budget
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 b. Bureau of Customs

c. Department of Finance

d. Department of Trade and Industry

12. Cost of services may be defined as

a. Cost of services to provide services

b. Cost of facilities directly utilized to provide services

c. All direct costs and expenses necessary to provide services

d. No cost involved in providing services

e. All of the above are cost to provide services

BASIC INCOME TAXATION & BUSINESS TAX QUIZ

13. In year 1, X invested in real property the amount of 1,000,000. In year 2, the fair value of the real property is
1,500,000. In year 3, the property was sold for 1,800,000 and incurred disposal cost of 50,000. The amount of income
for each year would be

a. Year 1 - 0; Year 2 - 500,000; Year 3 - 300,000

b. Year 1 - 0; Year 2 - 250,000; Year 3 - 250,000

c. Year 1 - 0; Year 2 - 0; Year 3 - 750,000

d. Year 1 - 250,000; Year 2 - 250,000; Year 3 - 250,000

e. Year 1 - 500,000; Year 2 - 300,000; Year 3 - 750,000

14. From January to March of 2018, Mr. C’s salary from employment in the Philippines amounted to 250,000, net of
50,000 withholding tax. From April to December 2018 his total income from employment in Japan where he resided
for the rest of the year, amounted to peso equivalent of 630,000, net of foreign income tax of 70,000. If Mr. C is a
Filipino citizen and an overseas contract worker (OCW), how much is his total reportable income from Philippines.

A. 250,000

B. 300,000

C. 880,000

D. 1,000,000

E. 700,000

15. Atty. Ruth Cal received a second-hand car from his employer Jihad Law Office for successfully defending a criminal
case. The car has a cost of 400,000 and its accumulated depreciation amounts to 300,000. The prevailing market value
of the car of the same model is 120,000, but the new model is 500,000. How much is the reportable income of Atty.
Cal?

a. 100,000

b. 120,000

Thisc. 400,000
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 d. 500,000

e. 200,000

16. All of the following are income within, except

a. Dividends declared by domestic corporation

b. Salaries earned by Filipino overseas contract worker

c. Interest on bonds issued by domestic corporation

d. Income from business located in the Philippines

BASIC INCOME TAXATION & BUSINESS TAX QUIZ

17. What is the final tax rate on interest income earned from a regular savings deposit?

a. 5%

b. 10%

c. 20%

d. 25%

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

a. Interest income from savings account

b. Royalty income from franchise

c. Royalty income from patent

d. Royalty income from literary works

19. Statement 1. Income that is not realized is not taxable, but illegal income is taxable.Statement 2. Income received
under a mistake of fact or law is to be included as part of the gross taxable income.

a. Only statement 1 is correct

b. Only statement 2 is correct

c. Both statements are correct

d. Both statements are incorrect

20. Who is the current Commissioner of the BIR?

Caesar Dulay

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