Income Taxation Quiz

The questions 1-2 are based on the following data:

Thalia received the following income during 2023 taxable year:

Gross income, Philippines P3,850,000

Gross income, Canada 1,650,000
Business expenses, Philippines 2,000,000
Business expenses, Canada 725,000
Interest on bank deposit, Metrobank Taguig 50,000
Capital gain on sale of shares of closely held domestic corporation 180,000

1. How much is the taxable net income of Thalia assuming he is a resident citizen?
Answer:
Gross income, Philippines P3,850,000
Gross income, Canada 1,650,000
Business expenses, Philippines (2,000,000)
Business expenses, Canada (725,000)
Taxable net income P2,775,000

2. How much is the taxable net income of Thalia assuming he is a resident alien?

Answer:
Gross income, Philippines P3,850,000
Business expenses, Philippines (2,000,000)
Taxable net income P1,850,000

3. Statement 1: Filipino as well as alien employees of regional or area headquarters established in the
Philippines by multinational companies shall be subject to final tax of 15% on the gross business in the
Philippines.
Statement 2: Generally, nonresident aliens not engaged in trade or business are subject to 25%
creditable withholding tax on their gross income in the Philippines.
a. True, True c. True, False
b. False, False d. False, True

4. Which of the following income of an individual taxpayer is subject to final tax?

a. P10,000 prize in Manila won by a resident citizen.
b. Dividend received by a resident citizen from a resident foreign corporation.
c. shares in the net income of a general professional partnership received by a resident citizen.
d. dividend received by a non-resident alien from a domestic corporation.

5. Statement 1: Interest received by nonresident individuals from a depository bank under the expanded
foreign currency deposit system is exempt from tax.
 Statement 2: Passive income received by a resident citizen from sources outside the Philippines shall
be generally subject to basic tax and not to final tax.
a. True, True c. True, False
b. False, False d. False, True

6. Which of the following statements is incorrect?

a. To be subject to final tax, passive income must be from Philippine sources.
b. An income which is subject to final tax is excluded from the computation of income subject to
Section 24(A).
c. Lotto winnings in foreign countries are exempt from income taxation in the Philippines.
d. An income which is subject to non-creditable withholding tax is excluded in the computation of
income subject to Section 24(A).
7. Which of the following statements is not correct?
a. Interest income from long term deposit is exempt from income tax.
b. Winnings from Philippine Charity Sweepstakes are exempt from income tax.
c. Royalties on books, literary works and musical compositions are subject to 10% non-creditable
withholding tax.
d. A prize of P10,000 is subject to 20% final tax.

AA had the following data from his employment in 2015:

Monthly salary P12,000
Taxes withheld 8,000
Pag-ibig fund contributions 1,500
Union dues 2,400
Philhealth contributions 720
SSS Premiums 480
13th month pay 12,000
Mid-year bonus 12,000
Loyalty award 5,000

8. The portion of compensation which is excluded from the gross compensation income if AA is a rank
and file employee:
a. P5,100 b. P34,100 c. P29,000 d. none

9. The gross compensation income of AA that is taxable in 2015:

a. P144,000 b. P150,000 c. P109,900 d. P138,900

10. BB is an employee in a firm that gives benefits to its rank and file employees. He received the
following in a year. Salaries, net of SSS, Philhealth and Pag-ibig contributions, and of labor union dues,
P360,000; Thirteenth month pay, P30,000; Productivity incentives pay; P30,000; Mid-year bonus,
P15,000; Christmas bonus, P30,000; Rice subsidy P20,000. The gross compensation income of BB subject
to income tax is:
a. P590,500 b. P443,000 c. P437,000 d. P385,000
11. Which statement is wrong? Deduction for premium on hospitalization and health insurance is:
a. Allowed a citizen with gross compensation income only.
b. Allowed a citizen with business or professional income only.
c. Allowed a citizen with mixed income.
d. Allowed only if the taxpayer is taking itemized deductions from gross income.
12. Which of the following is not a requisite for deductibility of health insurance?
a. The total family income is not more than P250,000
b. The maximum amount of premium deductible during the year is P2,400 per family or P 200 a
month.
c. In the case of married individual, the spouse claiming the additional exemption shall be entitled to
claim the health or hospitalization insurance premiums paid.
d. The taxpayer must be single.

13. Which statement is wrong? The deduction for premiums on hospitalization and health insurance is:
a. Not to exceed P2,400 a year per family.
b. Not to exceed P200 per month.
c. Not allowed if the family income exceeds P250,000.
d. In the case of married persons, can be claimed by either spouse.

14. CC, single, had the following in 2015:

Gross compensation income P180,000
Deductions made by the employer:
SSS housing loans P24,000
SSS premiums contributions 3,600
Philhealth (Medicare) contributions 2,400
Pag-ibig contributions 1,800
Union dues 2,200
Premiums payments on:
Life insurance policy 3,000
Health insurance policy 2,000 39,000
Amount received P141,000
The taxable compensation income is:
a. P91,000 b. P115,000 c. P118,000 d. P148,000

15. The following data in 2015 belong to a taxpayer who is a widower and presently supporting his live-
in partner and her 2-year old daughter:
Basic salary (gross) P180,000
Overtime pay 20,000
th
13 month pay/bonus/incentive pay 40,000
Taxpayer claimed the following deductions:
SSS premiums contributions 3,600
SSS loan 10,000
Philhealth premiums contributions 2,400
Pag-ibig premiums contributions 1,800
Union dues 2,000
Transportation expenses 4,000
Health and hospitalization insurance premiums 3,000
The taxable compensation income is:
a. P147,200 b. P147,800 c. P137,800 d. P177,800