EA#15

LEGEND: 9. For taxpayers involved in the sale of services,

YELLOW- CORRECT gross income means gross receipts less returns,
GREEN-TRY allowances, discounts and cost of services
RED WRONG
10. Which of these concept is not relevant to
1. Which of the following entities is improper corporations? Personal exemption
accumulation of profits not presumed? Finance
companies 11. The regular corporate income tax is 30% of
taxable income
2. The classification rule is not relevant to a
12. Which of these is deducted in the computation
a. Cooperative
of the improperly accumulated profits?
b. Farmers association
Corporate income tax
c. Farmers association
d. Profit-oriented agricultural organization
13. Which of the following tax credit is not always
creditable in the current accounting period?
3. Which is included in the MCIT base?
MCIT excess prior year
a. Ordinary gains
b. Royalty income
14. Which is exempt from the corporate income
c. Interest income from banks
tax? Non-profit corporations
d. Dividend income from domestic
corporations
15. Which is subject to corporate income tax?
a. Philippine charity sweeptakes office
4. The MCIT applies to: domestic and resident
b. Joint venture engaged in oil exploration
corporations
c. A charitable medical hospital
d. Joint venture engaged in construction
5. The branch profit remittance tax is 15% of the
total profits
16. Which of these foreign corporations is subject
a. Of the current year
to the 30% regular corporate tax?
b. Actually remitted to the home office
a. International carrier
abroad, net of the tax
b. Call center
c. Of the current year earned for remittance
c. Regional operating headquarters of the
including investment income
multinational company
d. Earmarked for remittance without
d. Offshore banking unit
deducting the tax
17. Which of these entities is exempt from the
6. The optional standard deduction for corporation
branch profit remittance tax?
a. Includes personal exemption
a. International carriers
b. Excludes actual items deductions
b. PEZA-registered entities
c. Excludes cost of goods and cost of services
c. OBU’s and FCDUs
d. Includes cost of goods sols and cost of sales
d. Regional operating headquarters of
multinational companies
7. Exempt corporations are subject to MCIT on
18. The MCIT shall not apply to which of the
their income from unrelated activities
following residents foreign corporations? A,B,C
and D

8. The minimum tax for corporate taxpayers is 2% of 19. Benguet State University, public educational
gross income institution is:
a. Subject to income tax at regular rate
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 b. Subject to income tax at preferential rate 30. As a rule, non-profit, non-stock corporations are
c. Exempt from corporate income tax exempt from income tax. Which of these non-
d. Subject to both regular and referenatial rate profit entities is subject to income tax?
a. Hospital
20. What percentage of profit will shareholders
ultimately receive from corporate earnings? 31. MCIT shall commence on the: 4th taxable year
a. 70% of taxable income following the year of start of operation
b. 63% of taxable income
32.Which of these is subject to improperly
c. 63% of gross income number 17
accumulated earnings tax?
d. 70% of gross income
a. a PEZA registered entity
21. Excess MCIT is valid as a tax credit over 3 years b. a private educational institution
c. a business partnership
22. Which of these is special corporate taxpayer? d. a general professional partnership
a. Private school
33. Which is not exempt from the improperly
23. The optional gross income tax is accumulated earnings tax
a. 15% of gross income a. dealers of security
b. 10% of gross income
c. 2% of gross income 34. Which is not an exempt corporation?
d. 30% of gross income a. Government owned and controlled corporation
b. Phil Health Insurance
24. When applicable, the 10% preferential tax rate c. Home Development
applies to income from: d. SSS
a. Unrelated activities
b. Neither 35. Legitimate business reverses shall include losses
c. Related activities number14 sustained
d. both
both A and B

25. Which of the following income is not a related 36.A domestic lessor of aircraft and other
trade, business or activity of a domestic equipments is subject to
proprietary educational institution? Income
a. 4.5 % tax on Philippine gross income
from rent of available office space
b. 30% tax on global taxable income
c. 7.5% tax on global taxable income
26. Generally, private proprietary education
d. 30% tax on Philippine gross income
institution are: subject to preferential income
tax 37. The minimum lock in period under the corporate
gross income tax is
27. A non-resident foreign corporation is taxable on:
a. 4 years
Philippine gross income
b. 2 year
c. 3 year
28. Which of these can claim the corporate OSD
d. 5 years
against gross income?
a. Retail stores 38. What is the minimum percentage of gross
income under the corporate gross income tax?
29. A resident foreign corporation is taxable on:
Philippine taxable income a. 6.75%

39. Private Schools and Non Private Hospital may be

subject to MCIT when
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 a. they are subject to 10% preferential rate a. Multinational Company
b. their income from related activities exceed 50% b. None of the above
of their total revenue from all sources c. Offshore banking unit
c. they are subject to 30% RCIT d. Petroleum Service Contractor and subcontractor
d. they are exempt from income on related
48. Which is not requisite of the gross income tax
activities
a. 40% income tax collection on the total tax
40. The exemption of non-profit corporations are
revenue (mali to kela mariel)
exempt from income tax.Which of these non-profit
b. 10% govt debt to asset ratio
entities is subject
c. 20% tax ratio on gnp
a. both related and unrelated activities d. 4% Vat
b. related activities
49. Generally, government owned and controlled
c. unrelated activities
corporations are:
d. related parties
a. subject to regular income tax
41. Non-resident film owner, distributor or lessor is
b. subject to both regular income tax and
subject to 25% tax on Philippine gross income
preferential income tax
42. The MCIT is not due when c. exempt from income tax
d. subject to preferential income tax
a. Taxable income is zero
b. Taxable income is negative 50. Which of these may grant relief from the MCIT?
c. MCIT is greater than RCIT Secretary of Finance
d. RCIT is greater than MCIT
51. Which is a correct statement?
43. The maximum cost ratio for corporations to avail
a. Resident foreign corporations shall elect either
the gross income tax is
GIT or RCIT
a. 55 b. Domestic corporations shall elect either GIT or
RCIT
44. Residents Foreign Corporations
c. Domestic corporation shall elect either MCIT or
a. are subject to IAET and branches remittance tax RCIT
b. shall elect either GIT or RCIT d. Resident foreign corporations are liable to RCIT
c. are limited to RCIT subject to MCIT or GIT
d. shall elect either RCIT OR MCIT
52. The minimum corporate income tax (MCIT) does not
45. A domestic corporation is taxable on apply if: A only

a. Philippines gross income 53. If a foreign corporation operates a branch in the PH

b. world gross income but transacts business directly with PH residents, the
c. world taxable income corporation is:
d. Philippine taxable income number 26
a. Automatically reclassified into a non-resident
46.Which is subject to or can be subjected to MCIT foreign corporation
b. A non-resident foreign corporation for all
a. non-resident lessor of aircraft or vessel transactions, including those made by it’s
b. private schools branch in the PH
c. Non-profit hospital c. Taxable on net income
d. exempt corporation d. A non-resident foreign corporation with respect
47. A branch,subsidiary, affiliate or foreign banking to the transaction only
corporation which duty is etc hehe xori tinamad ako 54. Which is not taxable on unrelated activities?
magtype OFFSHORE BANKING UNIT
a. None of the given corporation
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 b. Government agencies 65. A domestic proprietary educational institution
c. Government owned and controlled corporations improved its library facilities by adding a new wing to its
d. Non-profit corporations old library building. The capital outlay on library
improvement, for income tax purposes, may be:
55. Which of the following is subject to income tax?
capitalized or expensed outright at the option of the
Philippine Amusement and Gaming Corporation
school owners
(PAGCOR)
66. A non-resident lessor of vessels chartered by Filipino
56. Exempt corporation are nevertheless subject to 30%
nationals is subject to: 4.5% tax on its gross rentals from
tax on income from: Unrelated activities
Filipino nationals
57. Excess MCIT is a tax credit that can be carried over
67. 43. Offshore Banking Unit (OBUs) are tax exempt on
to the next 3 consecutive years
income derived from:
58. Which of the following is not a direct cost of services
A. Foreign currency transactions with local commercial
of a corporate car-parking operator?
banks
a. Cashier salaries
B. Foreign currency transactions with branches of
b. Depreciation of parking building
foreign banks authorized by BSP.
c. Security guard salaries
d. Marketing expenses C. Interest income derived from foreign currency loans
granted to residents
59. Which taxpayer is subject to the MCIT?
a. B and C only
a. Private schools
b. A and B only
b. Offshore banking units
c. A only
c. Government-owned and controlled
d. B only
corporations
d. International carriers 68. A resident foreign corporation is:

60. The resident and non-resident classification do not a. not subject to 30% tax on foreign income
apply to domestic corporation
69. Domestic carrier is subject to tax on: world taxable
61. An allocation of common expenses between related income
and unrelated activities is made to properly reflect
70. Which of the following is not a deduction in the
taxable income: This procedure is required only of:
computation of the income tax payable or refundable?
exempt corporation
final withholding tax on passive income
62. Which is subject to the Improperly Accumulated
71. The quarterly income tax return is due on or before
Earnings tax? domestic corporations
a. 45 days following the end of the quarter
63. An exempt corporation with no taxable income is
b. 30 days following the end of the quarter
delinquent in filing its tax return. Which penalty is it
c. 15 days chuchu
liable to? Interest
d. 60 days following the end
64. The income from properties of exempt corporations
72. Force Majeure includes the following except: a cause
is considered income from:
due to the irresistible force as by act of God
a. unrelated activities
b. either related or unrelated activities at the 73. Resident Foreign Corporations
discretion of the examiner
c. a. shall elect either GIT or RCIT
d. related activities b. shall elect either RCIT or MCIT
e. either related or unrelated activities depending c. are subject to IAET and branch profit remittance
on the nature of the properties concerned tax
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 d. limited to RCIT subject to the MCIT c. they are exempt from income on related activities

74. Which is deductible in the computation of the MCIT? d. their income form related activities exceed 50% of
their total revenue from all sources
a. Marketing expenses
79. International carrier are taxable on their gross
b. loss on sale of assets
income or receipts from: outgoing shipments or flights
c. office utilities
80. Non-resident lessor of aircraft is subject to: 7.5%
d. salaries of employees engaged in rendering the
81. Gross receipts, as compare with gross sales, include:
service
cash collection only
75. Substantial losses from a “prolonged labor disputes”
which of the following is least likely included in the “cost
means:
of services” for the bank
a. losses arising from a strike stages by the employees
salaries of tellers
w/c lasted for more than 6 months w/in the taxable year
depreciation of bank premises
b.the strike resulted to temporary shutdown of business
bad debts expense on loans
c. ALL ANSWERS GIVEN ARE INCORRECT.
interest expense
d. both A and B

76. Which of the following corporations is not subject to

income tax? which is deductible in computation of mcit

a. (depEd) salaries of employees chuchu

b. (GOCCc) office utilities

c. Closely-hel dcorporations

d. Regionalor area headquarters (in the ph) of a A domestic corporation is not subject to 30% regular
multinational company income tax on

77. What is the minimum tax as a percentage of gross  Gross income

income under the corporate gross income tax?

a. 15% the preferential tax rate of 10% on taxable income

b. 7.5% applies to
proprietory hospital
c. 6.75%
non profit assosciation
d. 10%
non profit school
78. Private schools and non-profit hospitals may be
subject to MCIT when: proprietory school

a. they are subject to the 30% RCIT

b. they are subject to the 10% preferential rate

in the quarterly income tax return, excess mcit prior
year is deductible only when:

the mcit exceeds the RCIT for that quarter

(continuation of 78..)
the rcit exceeds the mcit for that quarter
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 the cumulative mcit exceeds the cumulative rcit…..

the cumulative rcit exceeds the cumulative mcit…..

the gross income for mcit purposes covers:

those from related activities only

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