Updated EA#4 Business & Professional Income (FnB and MC)

1. A managerial employee received the following benefits during the year:

Taxable compensation income is : _____

Answer: 1445000 = 1080000 + 360000 + 5000

INCOME + TOTAL ALLOWANCE GIVEN (TAXABLE because excess has not been returned to the company)
+ EXCESS from 13th month pay (max 90k)

2. An employee received the following compensation during the year:

Taxable compensation income is: ______

Answer: 138800

Solution:
132000 + 12000 – 5200 = 138800

GROSS COMPENSATION (11,000 x 12) + OVERTIME PAY – MANDATORY BENEFITS

(do not mind withholding tax)
 3. A government employee received the following benefits in 2019:

Taxable compensation income is: _____

Answer: 1009200
Try: 1130000, 97000, 980000, 1042200, 980200, 1070200 WRONG

4. Colleen a government employee received a full 13 th month pay of P20,000, exclusive of P14,000
and other benefits. He was deducted P18,000 during the year for premium for his SSS,, PHIC and
HDMF contributions.
Taxable compensation income is: _____

Answer: 222000 WRONG

5. Mr. Julian had the following income in 2019:

Taxable compensation income is _____

Answer: 330000 WRONG

COMPENSATION INCOME + SUPPLEMENTAL COMPENSATION INCOME (TAXABLE!)

 6. A managerial employee received the following remunerations:

Taxable compensation income is: ______

Answer: 1335000 WRONG

GROSS SALARIES + PROFIT SHARING BONUS + EXCESS TO 13TH MONTH PAY

7. The following relates to an annual payroll of the employee:

Taxable compensation income is ______

Answer:
1069000 WRONG

GROSS COMPENSATION – CONTRIBUTION TO BENEFITS (44k) + ADDITIONAL COMPENSATION

8. A managerial employee received the following benefits during the year:

Taxable compensation income is _____

Answer:

Try:

Try: 1445000 = 1080000 + 360000 + 5000

COMPENSATION INCOME + HOUSING ALLOWANCE (TAXABLE because he did not return excess) +
EXCESS TO 13TH MONTH PAY (max of 90k)
9. If husband and wife are both employed, which is correct regarding their income tax exemption in
the tax table?
Answer: Each spouse shall be entitled to a P250,000 income tax exemption in the tax table

10. Mr. Rodney presented the following schedule of income in 2019:

Compute the tax still due and payable if Mr. Rodney opted to the optional 8% tax

Answer: 19,500

11. Mr. Ricky, owner of Ricke’s Sports Shop has opted to be taxed at 8% income tax rate. He has no
other source of income aside from his shop. For the first three (3) quarters of 2019, shop’s total
sales amount to P3,000,000 while for the 4 th quarter, it is P2,300,000. Below are the cost of sales
and operating expenses for the four quarters of 2019.

Compute the total taxable income at the end of 2019:

Answer: P2,050,000
 12. Which is not included in the tax basis of the 8% income tax?
Answer: net income from operation

13. Kaytee receive the following income from her employment in 2019

Compute kaytee’s income tax due using graduated tax table.

Answer: P21,600
TAXABLE INCOME: 358,000 – 250,000 = 108,000
108,000 x 20% = 21,600

14. A married taxpayer had the following income within and outside the Philippines.

What is the taxable income assuming the taxpayer is a resident citizen?

Answer: 495000

RC = tax base: net income, where: within and without

Passive income derive from Philippine source are subject to Final withholding tax thus not included in
regular income

280000 + 50000 + 100000 + 25000 + 40000 = 495000

15. Who is not required to file quarterly income tax return?

Answer: Pure compensation income earner

16. Which is incorrect regarding the 8% optional income tax?

Answer: may be opted to if the taxpayer claimed optional standard deductions

17. The following income earned by a minimum wage earners are exempted from income tax
except:

Answer: Business and/or professional income

18. Mr. Banal had the following data for 2019:

The taxable income of Mr. Banal is he a resident citizen is ______

Answer: 4520000
Solution: 4000000+6000000+40000+80000-2000000-3600000 = 4520000
RC = tax base: net income, where: within and without

19. A minimum wage earner who is subjected to withholding tax shall:

Answer: File an adjustment return and claim tax refund

Solution: minimum wage earner shall not be subjected to withholding tax

20. Cameron a sole proprietor has the following data in 2018, its first year of merchandising:

Cameron’s gross income is: ______

Answer: 200000
(solution: 300000-150000+50000 = 200000)
21. The following relate to the compensation income of a private rank and file employee during the
year.

Total taxable compensation income is: ______

Answer: 536000

22. A taxpayer, married without qualified dependent child, had the following data for taxable year
2018:

If the taxpayer is a non-resident alien, engage in trade or business in the Philippines his taxable
income is: ______

Answer: 400000
Solution: NRA ETB = tax base: net income, where: within
800000 - 400000 = 400000

23. Mr. Banal had the following data for 2019:

The taxable income of mr. Banal is he a non-resident citizen is: ______

Answer: 2040000
Solution: NRC = tax base: net income, where: within
4000000 + 40000 – 2000000 = 2040000
24. A taxpayer, married without qualified dependent child, had the following data for taxable year
2018:

If the taxpayer is a non-resident alien, not engage in business in the Philippines his taxable
income is: ______

Answer: 800000
Solution: NRA NETB = tax base: gross income, where: within

25. Mr. Ricky, owner of Ricke’s Sports Shop has opted to be taxed at 8% income tax rate. He has no
other source of income aside from his shop. For the first three (3) quarters of 2019, shop’s total
sales amount to P3,000,000 while for the 4 th quarter, it is P2,300,000. Below are the cost of sales
and operating expenses for the four quarters of 2019.

Compute the total tax already paid by mr. Ricky for the first three quarters of 2019
Answer: 220,000

26. A private employee had the following remuneration in 2019

Total taxable compensation income is ______

Answer: 338000
285000 WRONG
330400
326000
27. Mr. Rodney presented the following schedule of income in 2019:

Compute the income tax still due:

Answer: P2,500 payable

28. Ms. Aya is the owner of Pabebe favors store. She also works as a party host. In 2019 her store’s
gross sales amounted to P1,200,000 while her gross receipts as party host amounted to
P450,000. Cost of sales incurred in 2019 amounted to P850,000 while operating expenses was
P380,000. Aya failed to signify her intention to be taxed at 8% income tax rate in her first
quarter income tax return.

How much is Aya’s taxable income?

Answer: P420,000

29. Ms. Aya is the owner of Pabebe favors store. She also works as a party host. In 2019 her store’s
gross sales amounted to P1,200,000 while her gross receipts as party host amounted to
P450,000. Cost of sales incurred in 2019 amounted to P850,000 while operating expenses was
P380,000. She has signified her intention to be taxed at 8% income tax rate in her first quarter
income tax return.
How much is Aya’s taxable income?

Answer: 1,400,000

30. Ms. Aya is the owner of Pabebe favors store. She also works as a party host. In 2019 her store’s
gross sales amounted to P1,200,000 while her gross receipts as party host amounted to
P450,000. Cost of sales incurred in 2019 amounted to P850,000 while operating expenses was
P380,000. She has signified her intention to be taxed at 8% income tax rate in her first quarter
income tax return.
 How much is Aya’s income tax liability?

Answer: 112000
Solution:
1200000 + 450000 – 250000 = 1400000 * 0.08 = 112000

31. Ms. Aya is the owner of Pabebe favors store. She also works as a party host. In 2019 her store’s
gross sales amounted to P1,200,000 while her gross receipts as party host amounted to
P450,000. Cost of sales incurred in 2019 amounted to P850,000 while operating expenses was
P380,000. Aya failed to signifiy her intention to be taxed at 8% income tax rate in her first
quarter income tax return.

How much is Aya’s income tax liability?

Answer: 35,000 WRONG

32. A taxpayer, married without qualified dependent child, had the following data for taxable year
2018:

If the taxpayer is a non-resident citizen, married, his taxable income is _____

Answer: 400000

33. Revenue regulations 10-2008 considers the following workers in hazardous workplaces except:

Answers: workers that exposes guest entertainers, bar attendants, etc. to unruly and nasty
behavior which can trigger rumble or fights among customers and staff as well as possible
inquiry and searches of health inspection authority

34. The following relate to the compensation income of a private rank and file employee during the
year.

Total exempt de minimis benefits is: ______

 Answer: 29000
3K RICE + 5K CHRISTMAS GIFT + MANDATORY DEDUCTIONS

35. If the husband is employed with P700,000 taxable income while his wife unemployed, he shall
will be actually subject to tax on.

Answer: 450000 of income

36. Mr. Rodney presented the following schedule of income in 2019:

The total deductible expenses against gross income is:

Answer: P230,000
(solution: 30,000 + 120,000 + 80,000 = 230,000)

37. Which is an item of income subject to regular tax?

Answer: gain on sale of equipment
Solution: others are subject to final withholding tax

38. Who is not subject to withholding tax on compensation?

Answer: minimum wage earner

39. The following relate to the compensation income of a private rank and file employee during the
year.

Total supplemental compensation is _____

 Answer: 17000

40. Cameron a sole proprietor has the following data in 2018, its first year of merchandising:

Cameron’s taxable income is ____

Answer: 176000
Solution: 300000 + 50000 – 150000 – 20000 – 4000 = 176000

41. Statement 1: There is no need to file a consolidated return if the withholding tax on
compensation and the expanded withholding tax is correctly withheld.
Statement 2: A businessman who is deriving income from a sole customer need not file a
consolidated return if the customer correctly withheld any expanded withholding tax.
Answer: Both statements are false

42. Mr. Ricky, owner of Ricke’s Sports Shop has opted to be taxed at 8% income tax rate. He has no
other source of income aside from his shop. For the first three (3) quarters of 2019, shop’s total
sales amount to P3,000,000 while for the 4 th quarter, it is P2,300,000. Below are the cost of sales
and operating expenses for the four quarters of 2019.

Compute the income tax still due at the end of 2019

Answer: 286,000

43. A husband earned P450,000 taxable income. His wife also earned P100,000 taxable income.
Which is true?
Answer: The husband pays tax while the wife is exempt
44. Who is not allowed the option to be taxed at 8%?
Answer: compensation income earner

45. A taxpayer, married without qualified dependent child, had the following data for taxable year
2018:

If the taxpayer is a resident alien, married, his taxable income is _____

Answer: 400000

46. Mr. Rodney presented the following schedule of income in 2019:

The taxable net income of Mr. Rodney is:

Answer: 420000

47. The following relate to the compensation income of a private rank and file employee during the
year.

Total non-taxable compensation income is _____

Answer: 140000
48. A taxpayer, married without qualified dependent child, had the following data for taxable year
2018:

If the taxpayer is a resident citizen, married, his taxable income is _____

Answer: 700000
solution: RC = tax base: net income, where: within & without
800000 + 600000 - 400000 – 300000 = 700000

49. An employee received the following remunerations aside from the basic pay:

If the employee is a regular employee, the total supplemental compensation is ______

Answer: 56000
solution: 12000 + 12000 + 8000 + 24000 = 56000
NIGHT SHIFT + HAZARD + HONORARIA + PROFIT SHARING

50. A married taxpayer had the following income within and outside the Philippines.

What is the taxable income assuming the taxpayer is a resident alien?

Answer: 330000
 51. A private employee had the following remuneration in 2019:

Total de minimis benefits is ______

Try: 8600

52. Which statement is incorrect?

Answer: A VAT-Registered taxpayer whose gross sales or gross receipts do not exceed the VAT Threshold
of P3,000,000

53. John received a salary of P73,000 during the year consisting of: P60,000 basic salary, P8,000
overtime pay and P5,000 13th month pay.

John’s taxable income using contemporary regulations is _____

Answer: 0 WRONG

Try:
60000
52000
47000
65,000
68000
63000

54. Kaytee receive the following income from her employment in 2019
 How much is kaytee’s taxable compensation income.
Answer: 358000

GROSS SALARIES – SSS – PHILHEALTH – PAG-IBIG – UNION DUES – TARDINESS & ABSENCES

55. Which of the following scenario will still require an adjustment return from the employee even if
the employers correctly withheld the tax on their compensation payments?
Answer: all scenarios are correct

56. A private employee had the following remuneration in 2019

Total exempt benefit is ______

Answer: 41000
13TH MONTH PAY + CHRISTMAS GIFT + LAUNDRY ALLOWANCE

57. An employee received the following remunerations aside from the basic pay:

If the employee is a minimum wage earner, the total supplemental compensation is ____

Answer:32000
HONORARIA + PROFIT SHARING