Quiz Allowable Deductions

Quiz 8 - General Rules on Deductions, Expenses, Interests and Taxes
Question 1 of 20
Business Registration Renewal with the BIR 500.00
Renewal of Mayor's Permit at the City Treasurer 15,200.00
Community Tax or Cedula paid to the City Treasurer for the incomes earned during the previous year 1,400.00
Payments to Bureau of Fire and Protection 2,500.00
Payments to Secure Sanitary Permit 1,600.00
Real Property Tax for the real property used for the company office 5,400.00
Penalties on late payments of real property tax 1,500.00
Income Tax for the last quarter - paid to BIR 6,000.00
Remittance to SSS, Philhealth and Pag-IBIG for the Employees' Contributions 13,000.00
Penalties on late payments for the remittances (SSS, PHIC and Pag-IBIG) 4,500.00
TOTAL 51,600.00
A taxpayer paid the following amounts during the month of January 2021:
Compute the allowabe deduction under 'Taxes'.
Select the correct response:
 P 6,800.00
 P 28,100.00
 P 41,100.00
 P 26,600.00
Question 2 of 20
Which of the following cannot be deducted as a business expense?
 Losses arising during a typhoon.
 Tuition fees, board, and lodging incurred by a medical doctor while attending a continuing professional
education seminar.
 Cost of financial accounting and PFRS books used by a CPA in the practice of his profession.
 Entire amount spent for meals, lodging, and travel in connection with own business.
Question 3 of 20
Juan, widower with three (3) qualified dependent children and a practicing accountant has the following receipts and
expenditures for the calendar year ended December 31, 2019:
Cash Receipts:
Professional fees from the practice of profession, net of 10% CWT P 450,000
Allowance as director of Marvel’s Corp. 125,000
Interest on time and savings deposits, net 6,000
Commissions from extra business, net of 10% EWT 7,500
Cash Disbursements:
Salaries of Assistants, net of P 20,000 withholding tax remitted to the BIR 96,000
Partial payment of Loan

20,000
Interest on the loan 3,850
Traveling Expenses 11,000
Light and Water, Office 7,890
Light and Water, Residence 6,500

Stationaries and Supplies 1,960
Office Rent, VAT-inclusive, net of 5% EWT 64,200
Contributions exclusively for religious purposes 38,500
Interest on a loan used to construct the office building 3 years ago where Juan opted to capitalized 25,000
Entertainment and recreation for office team building activities and meals 17,500

Compute the net income after deducting expenses and interest.

 P 381,075
 P 425,075
 P 430,108
 P 437,575
Question 4 of 20
Which of the following items is not part of “expenses in general” from gross income?
 Entertainment expenses
 Grossed-up monetary value of fringe benefit furnished by the employer to the employee
 Unused office supplies
 Electricity bill for consumed power of the preceding taxable period but not yet actually paid
Question 5 of 20
ABC Corporation, a domestic company, has an average annual business income P 1,500,000 and the annual average allowable
deduction is P 1,000,000. It has acquired a loan from a bank for P 1,000,000 with an annual interest of 10%, and invested the
same in a time deposit where it earns 12% interest income per year.
If there is no limitation on the deductibility of the interest expense, assuming our Tax Code does not provide limitations, how
much is the tax savings of ABC Corporation?
 P 11,880
 P 39,600
 P 6,000
 P 20,100
Question 6 of 20
Which of the following taxes is allowed for deduction against the gross income of the taxpayer?
 Dividends tax on dividends declared by a corporation.
 Professional tax paid by a CPA.
 Final tax on interest earned from bank deposits.
 Tax on the sale of real properties held as capital assets.
Question 7 of 20
ABC Corporation incurred the following travel expenses:

 Plane tickets and hotel bills of its officers who were sent to business seminars:
In Cebu P 50,000
In Japan 200,000
 Transportation expenses of its officers from home to office and vice versa as part of their employment contract, P
65,000 from which the final tax of P 35,000 was remitted.
 Transportation expenses of messengers from office to several clients' places at P 40,000, inclusive of meals amounting
to P 25,000.
How much is the total allowable travel expense that could be claimed by ABC Corporation?
 P 290,000
 P 365,000
 P 250,000
 P 265,000
Question 8 of 20
Which of the following items may be claimed as a deduction from gross income?
 Interest paid by Y on the indebtedness of his friend secured by a mortgage on Y’s apartment building in order to
avoid foreclosure
 Interest paid by Z to his sister on the loan contracted by Z to supply additional capital to his buy-and-sell
business
 Interest paid by X in advance on his bank loan to remodel his house; the indebtedness was fully paid in the same
year was incurred (cash basis in reporting income is adopted by X)
 Fines and penalties for late payment of taxes
Question 9 of 20
One of the following is not requisite for an expense to be claimed as a deduction from gross income:
 It must be connected with the taxpayer’s trade, business or profession.
 It must be ordinary and necessary.
 It must be reasonable.
 It must be actually paid during the taxable year.
Question 10 of 20
A taxpayer has multiple sources of income within and outside of the Philippines. The records show the following information:

Philippines Singapore US Consolidated
Gross Sales 5,000,000.00 3,000,000.00 2,000,000.00 10,000,000.00
Cost of Sales 2,800,000.00 1,100,000.00 700,000.00 4,600,000.00
Gross Income 2,200,000.00 1,900,000.00 1,300,000.00 5,400,000.00
Business Expenses Claimed 1,450,000.00 815,000.00 645,000.00 2,910,000.00
Taxable Income 750,000.00 1,085,000.00 655,000.00 2,490,000.00
Income Tax Paid During the Year 310,000.00 88,000.00 398,000.00
Income Tax Due on Consolidated Income 622,500.00
Compute the income tax due and payable.

 P 224,500.00
 P 263,250.00
 P 359,250.00
 P 187,500.00
Question 11 of 20
Who among the following individual taxpayers is not allowed to claim deductible expenses as a deduction from his gross
income?
 Resident alien
 Non-resident alien not engaged in trade or business in the Philippines
 Non-resident alien engaged in trade or business in the Philippines
 Non-resident citizen
Question 12 of 20
A taxpayer paid the following amounts during the month of January 2021:
Business Registration Renewal with the BIR 500.00
Renewal of Mayor's Permit at the City Treasurer 15,200.00
Community Tax or Cedula paid to the City Treasurer for the incomes earned during the previous year 1,400.00
Payments to Bureau of Fire and Protection 2,500.00
Payments to Secure Sanitary Permit 1,600.00
Real Property Tax for the real property used for the company office 5,400.00
Penalties on late payments of real property tax 1,500.00
Income Tax for the last quarter - paid to BIR 6,000.00
Remittance to SSS, Philhealth and Pag-IBIG for the Employees' Contributions 13,000.00
Penalties on late payments for the remittances (SSS, PHIC and Pag-IBIG) 4,500.00
TOTAL 51,600.00

Compute the allowabe deduction under 'Taxes and Licenses'.
 P 6,800.00
 P 41,100.00
 P 26,600.00
 P 28,100.00
Question 13 of 20
Juan, a resident citizen, earned and paid the following expenses for the taxable year 2020:
Compensation as a supervisor P 350,000
Rent Expenses 60,000
Utilities 20,000
Repairs and Maintenance 30,000
Transportation and Travel 20,000

From the above expenses, how much is allowed for deduction against Juan's income?
 P 110,000
 Zero
 P 130,000
 P 60,000
Question 14 of 20
Cash Receipts:
Cash Disbursements:
Partial payment of Loan 20,000

Compute the amount to be claimed as interest expense.
 P 1,870
 P 1,375
 P 26,870
 P 26,375
Question 15 of 20
A taxpayer has multiple sources of income within and outside of the Philippines. The records show the following information:

Philippines Singapore US Consolidated
Gross Sales 5,000,000.00 3,000,000.00 2,000,000.00 10,000,000.00
Cost of Sales 2,800,000.00 1,100,000.00 700,000.00 4,600,000.00
Gross Income 2,200,000.00 1,900,000.00 1,300,000.00 5,400,000.00
Business Expenses Claimed 1,450,000.00 815,000.00 645,000.00 2,910,000.00
Taxable Income 750,000.00 1,085,000.00 655,000.00 2,490,000.00
Income Tax Paid During the Year 310,000.00 88,000.00 398,000.00
Income Tax Due on Consolidated Income 622,500.00
Compute the allowable deduction under 'Taxes'.

 P 435,000.00
 Zero
 P 359,250.00
 P 398,000.00
Question 16 of 20
Which of the following items of interest expense cannot be deducted from gross income?
 Interest on scrip dividend declared by the corporation.
 Interest on delinquent taxes.
 Interest on delayed installment payments for the purchase of home theatre equipment.
 Interest paid on a business loan contracted by the taxpayer from his wealthy uncle.
Question 17 of 20
Cash Receipts:
Cash Disbursements:

Compute the gross income subject to normal or regular tax.
 P 633,333
 P 582,500
 P 625,000
 P 588,500
Question 18 of 20

Cash Receipts:

Cash Disbursements:

Compute the total amount to be claimed as deduction under "expenses".
 P 198,550
 P 186,050
 P 206,050
 P 201,850
Question 19 of 20
ABC Manufacturing incurred additional expenditures of P 130,000 for its business fixed assets, as follows:
Change in motor air condition P 60,000
Repainting of building 10,000
Expansion of Store 50,000
Cleaning computers 9,000
Repair of Furniture 1,000

The amounts to be immediately expensed and capitalized are:
 P 10,000 and P 120,000, respectively.
 P 60,000 and P 70,000, respectively
 Zero, and P 130,000 respectively
 P 20,000 and P 100,000, respectively.
Question 20 of 20
Which of the following statements will qualify an interest expense as a deduction from gross income?
 The indebtedness is incurred to fund petroleum exploration.
 The indebtedness is incurred to finance the taxpayer’s residential house.
 The indebtedness is supported by a promissory note that was executed fifteen years ago.
 The indebtedness is incurred between second cousins.
Question 1 of 15
A loss that is suffered in connection with the taxpayer’s trade, business, or practice profession, in order to be deductible from
gross income, must be reported to the Bureau of Internal Revenue within:
 30 days from discovery of the loss
 30 days from occurrence of the loss
 45 days from discovery of the loss
 45 days from the occurrence of the loss
Question 2 of 15
The loss from sale or exchange of property is deductible from gross income where the sale or exchange is:
 Between the fiduciary of a trust and the fiduciary of another trust if the having the same grantor.
 Between the fiduciary of a trust and the beneficiary of such trust.
 Between an individual and his cousin.
 Between an individual and a corporation if the former owns more than 50% in value of the outstanding capital
stock of the latter.
Question 3 of 15
Juan dela Cruz, Filipino, who is estranged from his previous marriage, Maria dela Cruz, and living with him is his 5-year-old
grandson. He has the following transactions for the current year, 2020:
Gross Operating Income P 500,000
Business Expenses, 15% is evidenced by delivery receipts 260,000
Loss from wager 10,000
Other transactions:
Selling price, partnership interest 180,000
Investment in partnership in 2018 90,000
Gain in sale of capital asset held for 4 years 10,000
Loss on sale of capital asset held for 8 months 12,000
Loss on account of failure to exercise 2-month option to buy property, purchased

2,000
on July 7, 2020
Liquidating dividend from ABC Corporation, received on April 2020 150,000
Cost of investment in ABC Corporation in September 2019 100,000
Interest Income from Installment Sale on Account, gross 7,000
Interest Income on Peso Deposit in Metrobank, ne 20,000
Interest in foreign currency deposit in an FCDS, gross 16,000
Doubtful accounts, 20% is written-off, after which there was a net increased in the
80,000
allowance for doubtful accounts of P 100,000
Capital loss from sale of bonds acquired 8 months ago 30,000
Capital loss from sale of stocks directly to buyer with an acquisition cost of P
15,000
75,000
Interest on delinquent taxes from 2017 15,000
Interest on bank loans used in business 20,000

Last year, Juan had a net income of P 65,000 and a net capital loss of P 92,000.
How much is the total allowable deductions from the above?
 P 260,120
 P 270,120
 P 264,120
 P 258,470
Question 4 of 15
Juan dela Cruz claimed a bad debt of P 150,000 as a deductible expense in the taxable year 2019 when Juan suffered a net loss
of P 30,000 after the bad debt. The debt was of Pedro's who defaulted the payment in 2019 due to unemployment. In 2020,
Juan was able to recover only P 60,000 from the bad debt previously claimed as a deduction after Pedro died from COVID-19.
Which of the following statements regarding this situation is correct?
 Juan may claim net operating loss carry-over of P 30,000 from 2019.
 Juan must report a taxable income of P 30,000 from the recovery of the debt.
 Juan must report the P 60,000 recovery as a taxable income in 2020.
 Juan may claim the P 90,000 as a bad debt expense in 2020.
Question 5 of 15
The records of a domestic corporation organized in 2020 show:

2017 2018 2019 2020
Gross Operating Income P 3,120,000 P 3,560,00 P 3,100,000 P 4,125,000
Business Expenses duly supported, 5% of which

3,270,000 3,450,000 3,220,000 3,900,000
represents bad debts written off
Recovery of Bad Debts:
From 2017 23,000

Compute the net operating loss to be forwarded in 2018, and the net taxable income in 2020.
 P 123,500 and P 78,500
 P 150,000 and P 88,000
 P 133,000 and P 88,000
 P 163,500 and P 105,000
Question 6 of 15
A bad debt may be deductible under the following circumstances, except:
 When the debtor is a first degree cousin of the taxpayer's wife.
 When after the efforts to collect the debt, the debtor is nowhere to be found.
 When the debtor is a subsidiary which has been declared by the court as bankrupt.
 When the debtor is declared by court as insolvent.
Question 7 of 15
Which of these losses due to the demolition of an old building is deductible from gross income?
 None of the three other choices given.
 The old building is demolished because it became unsafe.
 The old building is demolished after a catastrophe which destroyed almost 90% of the building, which is covered
by an insurance.
 The land with an existing old building was purchased with the intention of demolishing the old building in order
to construct a new one.
Question 8 of 15
Other transactions:

2,000
on July 7, 2020
Interest Income on Peso Deposit in Metrobank, net 20,000
80,000
15,000
75,000

How much is Juan's net taxable income?
 P 63,530
 P 61,880
 P 25,880
 P 21,880
Question 9 of 15
One of the following is not a requisite in order that a bad debt may be claimed as a deductible expense:
 The debt must be past due for at least one year prior to being claimed as deduction.
 The debt must be connected with the taxpayer’s trade, business or profession.
 The debt must be ascertained to be worthless.
 The debt must be written off during the taxable year.
Question 10 of 15

Other transactions:

2,000
on July 7, 2020
Interest Income on Peso Deposit in Metrobank, net 20,000
80,000
15,000
75,000

How much is the net capital loss to be forwarded in 2020?
 P 92,000
 P 8,000
 P 65,000
 P 56,000
Question 11 of 15
A non-dealer of securities had the following transactions on its shares of stocks:
Date Transactions
October 1, 2020 Purchase of 2,000 shares from XYZ Company at P 15.00 each.
October 15, 2020 Purchase of 1,700 shares from ABC Company at P 16.00 each.
October 25, 2020 Purchase of another 1,500 identical shares from XYZ Company for P 14.50 each.
November 3, 2020 20% Stock dividend was issued by XYZ Company.
November 10, 2020 Sell 2,800 shares at P 11.00 each.
November 21, 2020 Purchase 500 identical shares from XYZ Company for P 12.00 each.

Using FIFO method, how much is the non-deductible loss?
 P 2,880.95
 P 3,423.65
 P 4,033.33
 P 3,313.10
Question 12 of 15
Which of the following statements relative to “net operating loss carry-over” is false?
 The net operating loss of a particular taxable year may be carried over to the next three consecutive taxable
years.
 Net operating loss means the excess of allowable deductions including expenses personally incurred and paid by
the taxpayer over his taxable gross income.
 Mining operators are allowed to carry over any net operating loss during the first ten years of operations for the
next five consecutive years.
 There must not be any substantial change in the ownership of the business.
Question 13 of 15
If a bad debt, previously written off and claimed as a deduction against the taxable gross income, is subsequently recovered,
which of the following statements is correct?
 The amount shall be taxable to the extent that it benefited the previous year.
 The taxpayer may ignore such recovery because the tax has already been paid.
 The recovered amount shall be deducted in the year of recovery.
 The same full amount shall be taxable added back to the gross income of the year of recovery.
Question 14 of 15
Which of the following losses is deductible for income tax purposes?
 Loss form an illegal transactions
 Loss incurred in selling a used delivery truck to the brother of the taxpayer's mother
 Loss from a wash sale
 Loss from a business receivable from a customer which is doubtful of collection
Question 15 of 15
Which of the following statements does not reflect the nature of a wash sale?
 Any loss arising therefrom is not deductible from gross income.
 The sale is made by a dealer in securities in the ordinary course of his trade or business.
 Identical stocks or securities are acquired within 30 days before or after the sale of the stocks or securities.
 It involves a sale of stocks or securities at a loss.
Question 1 of 23
Which of the following assets shall be subject to depletion?
 Commercial land
 Machinery
 Goodwill
 Land containing ore deposit
Question 2 of 23
On January 1, 2019, ABC Company leased a portion of commercial lot owned by XYZ Company for 12 years for a month rent of P
10,000. The lessee constructed a building improvement amounting to P 2,300,000 which was completed on July 1, 2019. The
building has an estimated life of 20 years. The building was eventually used in the business on October 1, 2019. The
depreciation expense of ABC Company for the year 2019 is:
 P 57,500
 P 95,833
 P 191,667
 P 100,000
Question 3 of 23
The amount spent on exploration of an area for research purposes prior to mining operation is treated as a deferred cost
amortizable for 60 months.
 True
 False
Question 4 of 23
Which among the following statements about depreciation is correct?
 Taxpayers are never allowed to deduct depreciation for yachts and helicopters.
 Expenses pertaining to vehicles disallowed for depreciation can never be allowed for deduction as well.
 Any loss or gains arising from the sale of non-depreciable properties shall likewise not be allowed as a deduction
from or addition to gross income.
 There can be an allowance for depreciation for vehicles assigned to an employee provided that the aggregate
cost of the vehicles does not exceed P 2.4 million.
Question 5 of 23
ABC Company, a mining business, reported the following data for the year 2019:
Depletable Cost as of January 1, 2019 P 12,500,000
Probable reserves 5,000,000 units
Cost and expenses:
Mining Costs P 2,000,000
Milling Costs P 3,000,000
Marketing Costs P 1,500,000
Depreciation expenses P 1,000,000
Exploration Costs P 1,000,000
Intangible Development Costs P 1,500,000

Other information during 2019:
 Additional probable reserves were determined to be 2,500,000 units.
 Actual production in 2019 was 1,200,000 units.
 The selling price per unit is P 12.00.
Compute the depletion expense for 2019 if the exploration and development cost is treated as part of the adjusted cost basis of
the depletable amount.
 P 3,600,000
 P 2,856,000
 P 2,400,000
 P 3,000,000
Question 6 of 23
A domestic corporation made a P 20,000 donation to an accredited social welfare institution. Its business income for 2019 is P
500,000. The related business expenses inclusive of the gift is P 150,000. The allowable deduction for charitable contribution is:
 P 17,500
 P 20,000
 P 18,500
 P 24,000
Question 7 of 23
Which of the following statements is correct about depreciation?
 The SYD method uses a constant rate to compute the depreciation per year
 It is the amortization of the property's depreciable amount using the output method.
 The default depreciation method to be used by a taxpayer is the declining balance method because it represents
the appropriate exhaustion of the property in the earlier years than in the later years.
 The capital expenditure to acquire or construct a property of the taxpayer who is a PEI may be deducted in full
amount.
Question 8 of 23
ABC Company conducted research on its existing products for a possible improvement. On May 29, 2019, it spent a total of P
10,000,000, 10% of which was spent to acquire a lot adjacent to the research facility, 30% was used to expand its facility, while
the remaining 60% was spent for other research purposes. It is an accounting policy of the company to use an 8-year useful life
and allocate 10% of the depreciable amount of the property as the salvage value which were duly approved by the CIR. On
March 1, 2020, the company began accruing benefits from the research conducted in the previous year. Compute the total
deductible amount in 2020.
 P 1,350,000
 P 1,337,500
 P 1,450,000
 P 1,237,500
Question 9 of 23
Maria is retiring from ABC Company after 36 years of service. Her last salary rate was P 75,570 per 30-day month as an
accounting senior. ABC Company, with an approved pension plan, also decided to give Maria 150% of the minimum retirement
pay. How much is the non-taxable amount of retirement pay to be paid by ABC Company to Maria?
 P 3,060,585
 P 2,040,390
 P 2,142,410
 P 2,992,572
Question 10 of 23
On January 4, 2020, ABC Company, on its 11th year of operation, closed a deal with XYZ Company, an investment and mutual
fund company, whereby the former would set up a retirement plan for its employees. The trust fund requires ABC Company to
pay the past 10 years for a total of P 500,000, with the breakdown shown in the schedule below, and an annual premium
payment of P 112,000.

Premium Payment for Prior Years Amount
To cover 1st - 3rd years (paid on April 1, 2020) P 250,000
To cover 4th - 7th years (paid on August 31, 2020) P 150,000
To cover 8th - 10th year (paid on December 1, postdated check due on January 20, 2021 P 100,000

Compute the total deductible premium for pension trust fund for the year 2020.
 P 152,000
 P 162,000
 P 135,750
 P 136,583
Question 11 of 23
ABC Oils fixed assets are as follows:
Property Estimated Useful Life Acquisition Cost
Land Infinite P 500,000

Oil Drilling Machines 8 years P 800,000
Oil Extracting Machine 20 years P 900,000
Computers used in the Office 4 years P 100,000
Delivery Trucks 10 years P 200,000

If all depreciable assets would have a salvage value of 10%, how much is the annual depreciation?
 P 270,000
 P 250,000
 P 229,500
 P 225,000
Question 12 of 23
Research and development costs are always deducted in a full amount from the taxpayer's gross income.
 True
 False
Question 13 of 23
Cost and expenses:

Assuming the taxpayer elects to deduct directly the exploration and development costs against its gross income in the year
2019, what amount would be deferred and charged against the gross income in the succeeding year?
 Zero
 P 1,000,000
 P 625,000
 P 775,000
Question 14 of 23
would be the allowable deduction for the P 15,000 contribution made by a domestic corporation to a religious organization
from its P 200,000 net income before contribution?
 P 10,750
 P 9,250
 P 10,000
 P 15,000
Question 15 of 23
In 2020, ABC Colleges, a private educational institution, constructed a building with a contract price of P 10,000,000. The
building has an estimated useful life of 50 years with a salvage value of 10%. How much is the deductible expense must ABC
Colleges declare in its return to avail the maximum tax benefit?
 P 10,000,000
 P 9,000,000
 P 180,000
 P 200,000
Question 16 of 23
ABC Company conducted research on its existing products for a possible improvement. On May 29, 2019, it spent a total of P
10,000,000, 10% of which was spent to acquire a lot adjacent to the research facility, 30% was used to expand its facility, while
the remaining 60% was spent for other research purposes. It is an accounting policy of the company to use an 8-year useful life
and allocate 10% of the depreciable amount of the property as the salvage value which were duly approved by the CIR. On
March 1, 2020, the company began accruing benefits from the research conducted in the previous year. Compute the total
deductible amount in 2019.
 P 337,500
 P 262,500
 P 196,875
 P 826,875
Question 17 of 23
ABC Company acquired a mining property for P 6,000,000 believed to have estimated gold ore deposits of 5,000,000 tons. It is
estimated that the property has a salvage value of P 1,000,000 after the P 300,000 restoration cost.
If ABC Company was able to produce 800,000 tons of gold ore, how much is the deductible depletion expense?
 P 960,000
 P 848,000
 P 800,000
 P 752,000
Question 18 of 23
The costs spent to acquire and construct facilities are amortized over 60 months or 5 years.
 True
 False
Question 19 of 23
The term “depletion” applies to:
 Building
 Improvements
 Patent
 Timberland
Question 20 of 23
Which of the following contributions is deductible in full for income tax purposes?
 Contributions to LGUs for road construction
 Contribution to street beggars

 Contribution to International Rice Research Institute of the Philippines
 Contribution to the Parish Church
Question 21 of 23
On January 4, 2020, ABC Company, on its 11th year of operation, closed a deal with XYZ Company, an investment and mutual
fund company, whereby the former would set up a retirement plan for its employees. The trust fund requires ABC Company to
pay the past 10 years for a total of P 500,000, with the breakdown shown in the schedule below, and an annual premium
payment of P 112,000.

Premium Payment for Prior Years Amount
To cover 1st - 3rd years (paid on April 1, 2020) P 250,000
To cover 4th - 7th years (paid on August 31, 2020) P 150,000
To cover 8th - 10th year (paid on December 1, postdated check due on January 20, 2021 P 100,000

Compute the total deductible past service cost for the year 2020.
 P 24,583
 P 50,000
 P 23,750
 P 162,000
Question 22 of 23
Cost and expenses:

Compute the new depletion rate if the additional exploration and development costs will be part of the adjustment on
depletable amount.
 P 2.50
 P 2.38
 P 2.00
 P 3.00
Question 23 of 23
2 Points
Cost and expenses:

Compute the new depletion rate if the additional exploration and development costs will be directly deducted against the
taxpayer's gross income.
 P 1,725,000
 P 1,000,000
 P 625,000
 P 2,500,000

Quiz Allowable Deductions

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Quiz Allowable Deductions

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Quiz 8 - General Rules on Deductions, Expenses, Interests and Taxes

Renewal of Mayor's Permit at the City Treasurer 15,200.00

Payments to Bureau of Fire and Protection 2,500.00

Payments to Secure Sanitary Permit 1,600.00

Penalties on late payments of real property tax 1,500.00

Income Tax for the last quarter - paid to BIR 6,000.00

 Losses arising during a typhoon.

Allowance as director of Marvel’s Corp. 125,000

Interest on time and savings deposits, net 6,000

Commissions from extra business, net of 10% EWT 7,500

Partial payment of Loan

Interest on the loan 3,850

Traveling Expenses 11,000

Light and Water, Office 7,890

Light and Water, Residence 6,500

Office Rent, VAT-inclusive, net of 5% EWT 64,200

Contributions exclusively for religious purposes 38,500

 Dividends tax on dividends declared by a corporation.

 Professional tax paid by a CPA.

 Final tax on interest earned from bank deposits.

 Tax on the sale of real properties held as capital assets.

ABC Corporation incurred the following travel expenses:

 Fines and penalties for late payment of taxes

 It must be connected with the taxpayer’s trade, business or profession.

 It must be ordinary and necessary.

 It must be actually paid during the taxable year.

Income Tax Due on Consolidated Income 622,500.00

Compute the income tax due and payable.

 Non-resident alien not engaged in trade or business in the Philippines

 Non-resident alien engaged in trade or business in the Philippines

Renewal of Mayor's Permit at the City Treasurer 15,200.00

Payments to Bureau of Fire and Protection 2,500.00

Payments to Secure Sanitary Permit 1,600.00

Penalties on late payments of real property tax 1,500.00

Rent Expenses 60,000

Repairs and Maintenance 30,000

Transportation and Travel 20,000

Allowance as director of Marvel’s Corp. 125,000

Interest on time and savings deposits, net 6,000

Commissions from extra business, net of 10% EWT 7,500

Partial payment of Loan 20,000

Interest on the loan 3,850

Traveling Expenses 11,000

Light and Water, Office 7,890

Light and Water, Residence 6,500

Stationaries and Supplies 1,960

Office Rent, VAT-inclusive, net of 5% EWT 64,200

Contributions exclusively for religious purposes 38,500

Philippines Singapore US Consolidated

Income Tax Due on Consolidated Income 622,500.00

Compute the allowable deduction under 'Taxes'.

 Interest on scrip dividend declared by the corporation.

 Interest on delinquent taxes.

Allowance as director of Marvel’s Corp. 125,000

Interest on time and savings deposits, net 6,000

Commissions from extra business, net of 10% EWT 7,500

Partial payment of Loan 20,000

Interest on the loan 3,850

Traveling Expenses 11,000

Light and Water, Office 7,890

Light and Water, Residence 6,500

Stationaries and Supplies 1,960

Office Rent, VAT-inclusive, net of 5% EWT 64,200