QUIZ

RIT II & RIT III

In 2021, Pedro, a business owner signified his intention to be taxed at 8% income tax rate on gross
sales in his 1st quarter income tax return. The ff. Are Pedro’s transactions:
Q1 Q2 Q3 Q4

Sales 500,000 500,000 600,000 300,000

Cost of sales (300,000) (300,000) (100,000) (200,000)

Gross income 200,000 200,000 500,000 100,000

Operating expenses (100,000) (100,000) (100,000) (50,000)

Net taxable income 100,000 100,000 400,000 50,000

1. How much is the quarterly income tax due in the second quarter ITR?
a. 50,000. b. 60,000. c. 70,000 d. None of the above
2. How much is the quarterly income tax due in the 4th quarter ITR?
a. 132,000. b. 4,000 c. 0 d. None of the above
3. How much is the income tax payable in the 3rd quarter ITR?
a. 48,000. b. 108,000. c. 120,000 d. None of the above
4. Andrew , a resident citizen, reported a world taxable income of
P400,000 and a tax due on world income of P22,500. P200,000 of the
taxable income was earned in Japan out of which he paid P10,000 in
income tax.
Compute Andrew’s foreign tax credit
a. 11,250
b. 30,000
c. 10,000
d. None of the above
5-6. Use the following data for the next two questions:
Namahinga Nah died leaving an estate worth P10,000,000. The estate is under
judicial administration in 2024, the properties in the estate earned a gross
income of P1,200,000 and the estate incurred expenses of P600,000. Felipe, the
only heir, received P200,000 from the income of the estate.
5. How much is the income tax due of the estate?
a. 30,000 b. 22,500 c. 40,000 d. None of the above
6. Assume that Felipe also earned a net income of P500,000 from his trading
business. What amount should Felipe report as his taxable income for the year?
a. P200,000 b. P530.000 c. P500,000 d. P700,000
7-8. During 2015 and 2016, Andre was not doing well in his business. Instead of earning an income,
he incurred a net loss of P100,000 in 2015 and a net loss of P200,000 in 2016. From 2017 onwards,
his business became profitable, and he earned an income of P100,000 in 2017, P220,000 in 2018,
and P500,000 in 2019. Andre signified his intention to claim OSD in 2017 taxable year only.
7. How much is the taxable net income in 2018?
a. 20,000
b. 0
c. 100,000
d. None of the above
8. How much is the taxable net income in 2019?
e. 300,000
f. 420,000
g. 500,000
h. None of the above
9-10. Mr. Nag-aalangan created a trust naming his eldest son, Kadudaduda as
beneficiary. If the eldest son could not abide with the terms provided in the trust
instrument, Mr. Nag. aalangan has the power to cancel the trust agreement.
For the current taxable year, the trust earned a net income of P1,000,000. On the other
hand, Mr. Nag-aalangan earned a compensation income of P1,500,000 and business
income of P 1,000,000.
9. The taxable income of the trust is
a. P1,000.000 b. P950,000. c. P980,000. d. nil

10. Based on the above data, how much is the taxable income of Mr. Nag-aalangan?
a. 3,450,000. b. P2,450,000 c. P3,500.000. d. Nil
 11-12. On January 1, 2023, Pedro established an irrevocable trust fund for the
benefit of his daughter, Ana . Pedro appointed Atty. Digong as the trustee. The
property transferred to the trust is piece of land with a dormitory earning rental
Income. During the year, the trust earned P40,000,000 revenues and incurred
expenses of P10,000,000 . Out of the trust's income, Atty. Digong transferred
P10,000,000 to Ana. During the year, Ana earned compensation income of
P2,500,000.

11. How much is the taxable net income of the trust?

a. P30,000,000 b.P19,980,000 c. P29,980,000 d. P20,000,000

12. How much is the taxable net income of Ana?

a. 2,950,000 b. 12,950,000 c. 12,500,000 d. 11,450,000
13-15. On the fifth year of operation in 2024, an MSME corporation with total asset excluding land
of 50,000,000 reported the ff. income

Within Without Total (world income)

Gross income 4,000,000 3,000,000 7,000,000

Less: deductions 3,500,000 2,000,000 5,500,000

Taxable net income 500,000 1,000,000 1,500,000

13. Compute the income tax due if the corporation is a domestic corporation
a.400,000. b. 375,000. c. 140,000. d.300,000
14. Compute the income tax due if the corporation is a resident foreign corporation
a. 125,000. b. 80,000. c. 100,000. d. None of the above
15. Compute the final tax if the corporation is a non-resident foreign corporation
a. 1,000,000. b. 1,500,000. c. 125,000. d. 80,000
16-17. A taxpayer has the following information
Gross sales 5,000,000

Cost of sales 4,000,000

Gross income 1,000,000

Deductions 500,000

Taxable income 500,000

Other information:
• The taxpayer has non-operating income (rent income) of Php 200,000.00
• The taxpayer has opted Optional Standard Deduction as method of deduction.

16. Assuming the taxpayer is an individual taxpayer, how much is the taxable income?
a. Php 700,000.00 b. Php 720,000.00 c. Php 3,200,000.00 d. Php 3,120,000.00
17. Assuming the taxpayer is a non-individual taxpayer, how much is the taxable income?
a. Php 720,000.00 b. Php 800,000.00 c. Php 3,120,000.00 d. Php 3,200,000.00
Fernando Macasaet, a CPA, is employed as an accounting professor in a university. On the side, he also provides
accounting services for select clients. One of these clients was so impressed with him that he was made a consultant
( no employer-employee relationship) for one of his companies engaged in agribusiness. For the yr 2024, he received
the following income and incurred the following costs:
Salary from university, net of CWT of 45,000. 268,000
Fees received as consultant, gross of 10% CWT. 80,000
Professional fees from clients, net of 15% CWT 850,000
Accounting staff salaries. 100,000
Admin staff salaries. 50,000
Quarterly income tax paid. 5,000

18. How much is Fernando’s income tax due if he opt to be taxed at graduated tax rates?
a. 213,250. b. 216,500. c. 300,000. d. None of the above
19. How much is Fernando's income tax due if he opt for 8% ?
a.101,550. b.98,550. c. 95,850 d. none of the above
20. How much is Fernando's income tax payable if he opt to be taxed at graduated rates?
a. 10,250. b. 12,250. c. 5,250 d. None on the above
21. Statement 1: The provision of the Tax Code, as amended, which allows an
8% income tax rate on gross sales/receipts and other non-operating income in
excess of P250,000 is available only to purely self-employed and/or
professionals.
Statement 2: The P250,000 mentioned in the 1st statement is not applicable to
mixed income earners since it is already incorporated in the first tier of the
graduated income tax rates applicable to compensation income.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
 22. The income tax due of a mixed income earner who opted to be
taxed at 8% income tax rate shall be:
a. The tax due from compensation, computed using the graduated tax
rate.
b. The tax due from self-employment and/or practice of profession,
resulting from the multiplication of the 8% income tax rate with the
total of the gross sales/receipts and other non-operating income.
C, Either “a” or “b’, at the option of the self-employed and/or
professional
d. The sum of a’ and b’
23. The following are the requirement for substituted filing of income
tax return, except
a. He had one employer only.
b. His Income was purely compensation income.
c, Income tax withheld by the employer is correct.
d. He had consecutively filed his income tax return for the past five
years
24. 1st statement: Taxable income from self-employment (business and profession) is
reported on a quarterly and annual basis
2nd statement: The quarterly income tax return shall be filed and the tax paid as
follows:
1Q—not later than May 15
2Q —not later than August 15,
3Q — not later than November 15.
a. Statements 1 and 2 are false .
b. Statement 1 is true but statement 2 is false
c Statement 1 Is false but statement 2 Is true
d. Statements 1 and 2 are true
25. Statement 1: Where the estate is under judicial administration, the
income of the estate shall be taxable to the estate
Statement 2: Where the estate is not under judicial administration, the
income of the estate shall be taxable to the heirs and beneficiaries
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true
26. The OSD of corporations under the cash basis is based on
a. gross sales
b. gross receipts
c. Total gross income
d. Total gross income from operations
27. Which is correct with optional standard deduction?
a. It replaces itemized deduction
b. It replaces P250,000 annual exemption for individuals
c. Both a and b
d. Neither a nor b
28.Which of the following individuals engaged in business cannot claim
optional standard deduction?
a. Resident citizen
b. Non resident citizen
c. Resident alien
d. NRA-NETB
29. When purely employed, who of the following can claim OSD?
a. Resident citizen
b. Non-resident citizen
c. Resident alien
d. None of these
30. Which of the following is not deductible from gross income?
a. Salaries and wages of employees
b. Depreciation expenses
c. Rental expenses
d. Bribes, kickbacks and other similar payments
31. One of the following is not creditable against the total computed per
ITR.
a. Income tax paid for the first three quarters for the business income
earned.
b. Creditable withholding tax on compensation
c. foreign income tax paid by resident citizen
d. Final withholding tax
32. Income taxes paid in a foreign country can be claimed as?

a. Deduction
b. Tax credit
c. Either Deduction or tax credit
d. Neither deduction nor tax credit
33. Tax credits for foreign tax paid is allowed on the ff. except?
a. Income tax paid by a resident alien in a foreign country
b. Income tax paid by a resident citizen in a foreign country
c. Income tax paid by a domestic corporation in a foreign country
d. All of the above are allowed to claim foreign tax credits
34. S1: NOLCO is applicable to both individuals and corporate taxpayers
subject to regular income taxes.
S2: NOLCO is carried over for the next three consecutive years
S3: if the taxpayer availed OSD as her/his allowable deduction, he/she
can also claim NOLCO

a.All statements are correct

b.Only one statement is incorrect
c.Two statements are correct
d.All statements are incorrect
35. S1- The MCIT is imposed beginning on the fourth taxable year immediately following
the year in which such corporation commenced its business operations
S2 - When the minimum corporate income tax is higher than the regular corporate
income tax during the period, the minimum corporate income tax shall be payable
S3 - Excess of minimum corporate income tax can be carried over and credited to the
regular income tax for the next three immediately succeeding taxable years
S4 - MCIT applies on quarterly Income Tax Returns
Which is TRUE?
a. Sl and S3
b. S1, S2 and S3 only
c. S1 and S2 only
d. All are true
36. Which is FALSE?
I. If an individual taxpayer opted for 8% taxation, he is disqualified from using OSD.
II. If an individual taxpayer opted OSD as his method of deduction, he is disqualified from availing
8% optional tax rate.
a. Only S1 is true
b. Both are true
c. Only S2 is true
d. Both are false
37. MCIT shall commence on the
a. 2nd year of operation.
b. 3rd year of operation.
c. 4th taxable year following the year of start of operation.
d. 3rd taxable year following the year of start of operation.

38. Excess MCIT is a tax credit that can be carried over to the next
e. 3 consecutive years.
f. 4 consecutive years.
c. 3 years including the year it arises
d. 2 consecutive years
SOLUTIONS
In 2024, Pedro, a business owner signified his intention to be taxed at 8% income tax rate on gross
sales in his 1st quarter income tax return. The ff. Are Pedro’s transactions:
Q1 Q2 Q3 Q4

Sales 500,000 500,000 600,000 300,000

Cost of sales (300,000) (300,000) (100,000) (200,000)

Gross income 200,000 200,000 500,000 100,000

Operating expenses (100,000) (100,000) (100,000) (50,000)

Net taxable income 100,000 100,000 400,000 50,000

1. How much is the quarterly income tax due in the second quarter ITR?
a. 50,000. b. 60,000 c. 70,000. d. None of the above
2. How much is the quarterly income tax due in the 4th quarter ITR?
a. 132,000. b. 4,000 c. 0 d. None of the above
3. How much is the income tax payable in the 3rd quarter ITR?
a. 48,000. b. 108,000 c. 120,000 d. None of the above
Quarterly income tax due- second quarter
Cumulative gross sales (Q1 & Q2). 1,000,000
Personal exemption. ( 250,000)
Taxable net income. 750,000
Multiply by: 8%
Quarterly income tax due- second quarter 60,000
2. Quarterly income tax due- fourth quarter = 0 (c.), no Q4 ITR.

3. Quarterly income tax payable – 3rd quarter

Cumulative gross sales (Q1,Q2,Q3). 1,600,000
Personal exemption. (250,000)
Taxable net income 1,350,000
Multiply by: 8%
Quarterly income tax due – 3rd quarter. 108,000
Quarterly income tax paid in Q1 & Q2 (60,000)
Quarterly income tax payable – 3rd quarter. 48,000
4. Andrew , a resident citizen, reported a world taxable income of P400,000 and a tax due on world income of
P22,500. P200,000 of the taxable income was earned in Japan out of which he paid P10,000 in income tax.
Compute Andrew’s foreign tax credit
a. 50,000 b. 30,000 c. 10,000 d. None of the above

Solution:

Limit = Foreign taxable income

x Philippine income tax due
World taxable income

11,250 = 200,000 foreign taxable income in Japan x 22,500

400,000 world income
Actual foreign income tax paid = 10,000
Foreign tax credit Limit = 11,250
Foreign tax credit (LOWER). = 10,000
5-6 Use the following data for the next two questions:
Namahinga Nah died leaving an estate worth P10,000,000. The estate is under
judicial administration in 2024, the properties in the estate earned a gross
income of P1,200,000 and the estate incurred expenses of P600,000. Felipe, the
only heir, received P200,000 from the income of the estate.
5. How much is the income tax due of the estate?
a. 30,000. b. P22,500 c. P40,000 d. None of the above
6. Assume that Felipe also earned net income of P500,000 from his trading
business. What amount should Felipe report as his taxable income for the year? .
a. P200,000 b. P530.000 c. P500,000 d. P700,000
5. Solution:
Gross income 1,200,000
OPEX. ( 600,000)
Income of the estate distributed to Felipe (200,000)
Estate’s taxable income 400,000
Income tax due (Tax table-2024 for individuals). 22,500 (b.)
6. Gross income from trading business P500,000
Amount received from the income of estate P200,000
Taxable net income of Felipe. P700,000 (d.)
During 2015 and 2016, Andre was not doing well in his business. Instead of earning an income, he
incurred a net loss of P100,000 in 2015 and a net loss of P200,000 in 2016. From 2017 onwards, his
business became profitable, and he earned an income of P100,000 in 2017, P220,000 in 2018, and
P500,000 in 2019. Andre signified his intention to claim OSD in 2017 taxable year only.
7. How much is the taxable net income in 2018?
a. 20,000
b. 0
c. 100,000
d. None of the above
8. How much is the taxable net income in 2019?
e. 300,000
f. 420,000
g. 500,000
h. None of the above
Solution
2015 2016 2017 2018 2019

Income (loss) (100,000) (200,000) 100,000 220,000 500,000

NOLCO 100,000 120,000 0 since in 2017, (100,000) from (80,000 )from

NOLCO carried NOLCO carried Andre opt for 2015 2016
over to 2018 over to 2018 OSD so he (120,000) from
Bal: 0 80,000 carried cannot claim 2016
over to 2019 NOLCO
Bal. 0
Taxable net 0 0 100,000 0 420,000
income
9-10 Mr. Nag-aalangan created a trust naming his eldest son, Kadudaduda as beneficiary. If the
eldest son could not abide with the terms provided in the trust instrument, Mr. Nag. aalangan has
the power to cancel the trust agreement.
For the current taxable year, the trust earned a net income of P1,000,000. On the other hand, Mr.
Nag-aalangan earned a compensation income of P1,500,000 and business income of P 1,000,000.

9. The taxable income of the trust is

a. P1,000.000 b. P950,000. c. P980,000. d. nil
If the trust agreement is revocable, its income shall be taxable to the grantor.

10. Based on the above data, how much is the taxable income of Mr. Nag-aalangan?
a. 3,450,000 b. P2,450,000 c. P3,500.000 d. Nil
Solution:
Gross income-trust. 1,000,000
Compensation income 1,500,000
Business income 1,000,000
Net Taxable Income-Grantor P3,500,000
11-12. On January 1, 2020, Pedro established an irrevocable trust fund for the benefit of his daughter,
Ana . Pedro appointed Atty. Digong as the trustee. The property transferred to the trust is piece of land
with a dormitory earning rental Income. During the year, the trust earned P40,000,000 revenues and
incurred expenses of P10,000,000 . Out of the trust's income, Atty. Digong transferred P10,000,000 to
Ana. During the year, Ana earned compensation income of P2,500,000.
11. How much is the taxable net income of the trust?
a. P30,000,000 b P19,980,000 c. P29,980,000 d. P20,000,000
Solution:
Gross income – trust 40,000,000
Expenses. . (10,000,000)
Income of the trust given to Ana. (10,000,000)
Taxable net income of the trust. 20,000,000
12. How much is the taxable net income of Ana?
a. 2,950,000 b. 12,950,000 c. 12,500,000 d. 11,450,000
Solution:
Compensation income. P2,500,000
Income of the trust distributed to Ana 10,000,000
Taxable net income of Ana 12,500,000
13-15. On this fifth year of operation in 2024, an MSME corporation with total asset excluding land
of 50,000,000 reported the ff. income

Within Without Total (world income)

Gross income 4,000,000 3,000,000 7,000,000

Less: deductions 3,500,000 2,000,000 5,500,000

Taxable net income 500,000 1,000,000 1,500,000

13. Compute the income tax due if the corporation is a domestic corporation
a.400,000. b. 375,000. c. 140,000. d.300,000
14. Compute the income tax due if the corporation is a resident foreign corporation
a. 125,000. b. 80,000. c. 100,000. d. None of the above
15. Compute the final tax if the corporation is a non-resident foreign corp
a. 1,000,000. b. 1,500,000. c. 125,000. d. 80,000
13. Income tax due of a Domestic corporation
The domestic corp qualifies for a
RCIT lower RCIT of 20% since the
World taxable income 1,500,000 corporation is an MSME with
Multiply by RCIT rate: 20% total assets not exceeding 100m
and taxable income not exceeding
Regular corporate income tax (RCIT) 300,000
5m

MCIT
Micro- small and medium sized
World gross income 7,000,000
enterprises (MSME) – entities with
Multiply by MCIT rate. 2% assets not exceeding 100m
Minimum corporate income tax (MCIT). 140,000 Large corporate taxpayer- entities
with assets exceeding 100m
Corporate income tax due- Domestic corp = D. 300,000 RCIT
( since it is higher)
14. Income tax due of a Resident foreign corporation

RCIT
PH taxable income 500,000
Multiply by RCIT rate: 25%
Regular corporate income tax (RCIT) 125,000
Lower regular corporate income tax of
20% applies only to DOMESTIC
MCIT CORPORATIONS that are MSMEs
with total assets, excluding land, not
PH gross income 4,000,000
exceeding 100m and taxable income not
Multiply by MCIT rate. 2%exceeding 5m.
Minimum corporate income tax (MCIT). 80,000

Corporate income tax due = 125,000 RCIT (since it is higher)

15. Final income tax of a Non- resident foreign corporation

SUBJECT TO FINAL TAX OF 25% ON PH GROSS INCOME

PH gross income. 4,000,000

Multiply by final tax rate 25%
Final income tax 1,000,000 (a)
 16-17.A taxpayer has the following information
Gross sales 5,000,000

Cost of sales 4,000,000

Gross income 1,000,000

Deductions 500,000

Taxable income 500,000

Other information:
• The taxpayer has non-operating income (rent income) of Php 200,000.00
• The taxpayer has opted Optional Standard Deduction as method of deduction.
16. Assuming the taxpayer is an individual taxpayer, how much is the taxable income?
a. Php 700,000.00 b. Php 720,000.00 c. Php 3,200,000.00 d. Php 3,120,000.00
17. Assuming the taxpayer is a non-individual taxpayer, how much is the taxable income?
a. Php 720,000.00 b. Php 800,000.00 c. Php 3,120,000.00 d. Php 3,200,000.00
16. Answer c. 3,200,000. 17. Answer is A. 720,000 if corporation
Gross sales 5,000,000 Gross sales 5,000,000

Less: OSD 2,000,000 Cost of sales 4,000,000

(5,000,000 x40%}
Gross income 3,000,000 Gross income 1,000,000

Add: NOI- Rent 200,000 Add: NOI – rent income 200,000

income
Taxable net 3,200,000 Total gross income 1,200,000
income
Less: OSD 480,000
(1,200,000 X 40%}
Taxable net income 720,000
Fernando Macasaet, a CPA, is employed as an accounting professor in a university. On the side, he also provides
accounting services for select clients. One of these clients was so impressed with him that he was made a consultant (no
employer-employee relationship) for one of his companies engaged in agribusiness. For the yr 2024, he received the
following income and incurred the following costs:
Salary from university, net of CWT of 45,000. 268,000
Fees received as consultant, gross of 10% CWT. 80,000
Professional fees from clients, net of 15% CWT 850,000
Accounting staff salaries. 100,000
Admin staff salaries. 50,000
Quarterly income tax paid. 5,000

18. How Much is Fernando’s income tax due if he opt to be taxed at graduated tax rates?
a. 213,250. b. 216,500. c. 300,000. d. None of the above
19. How much is Fernando's income tax due if he opt for 8% ?
a.101,550. b.98,550. c. 95,850 d. none of the above
20. How much is Fernando's income tax payable if he opt to be taxed at graduated rates?
a. 10,250. b. 12,250. c. 5,250 d. None on the above
18. How Much is Fernando’s income tax due if he opt to be taxed at graduated
tax rates?
Solution:
Compensation income. (268,000 + 45,000). 313,000
Fees received as consultant. 80,000
Professional fees from clients (850,000 ÷85%). 1,000,000
Less: cost of services- accounting staff salaries (100,000)
Less: business expenses- admin staff salaries (50,000)
Taxable net income. 1,243,000
Income Tax due (tax table). 213,250 (a.)
19.How much is Fernando's income tax due if he opt for 8% ?
Compensation income. (268,000 + 45,000). 313,000
Income Tax due –compensation (tax table). 9,450

Fees received as consultant. 80,000

Professional fees from clients (850,000 ÷85%). 1,000,000
Total gross fees. 1,080,000
Optional tax rate. 8%
Income tax due- practice of profession. 86,400

Total income tax due (9,450 + 86,400). 95,850 (c.)

20. How much is Fernando's income tax payable if he opt to be taxed at graduated rates?

Total income tax due

213,250
Less: tax credits
Cwt on compensation. 45,000
Cwt on Service income as consultants(80k x10% ). 8,000
CWT on professional fees received (850k ÷85% x 15%). 150,000
Quarterly income tax paid. 5,000. 208,000
Income tax payable.
5,250 (c.)
21. Statement 1: The provision of the Tax Code, as amended, which allows an
8% income tax rate on gross sales/receipts and other non-operating income in
excess of P250,000 is available only to purely self-employed and/or
professionals.
Statement 2: The P250,000 mentioned in the 1st statement is not applicable to
mixed income earners since it is already incorporated in the first tier of the
graduated income tax rates applicable to compensation income.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
 22. The income tax due of a mixed income earner who opted to be
taxed at 8% income tax rate shall be:
a. The tax due from compensation, computed using the graduated tax
rate.
b. The tax due from self-employment and/or practice of profession,
resulting from the multiplication of the 8% income tax rate with the
total of the gross sales/receipts and other non-operating income.
C, Either “a” or “b’, at the option of the self-employed and/or
professional
d. The sum of a’ and *b’
23. The following are the requirement for substituted filing of income
tax return, except
a. He had one employer only.
b. His Income was purely compensation income.
c, Income tax withheld by the employer is correct.
d. He had consecutively filed his income tax return for the past five
years
24. 1st statement: Taxable income from self-employment (business and profession) is
reported on a quarterly and annual basis
2nd statement: The quarterly income tax return shall be filed and the tax paid as
follows:
1Q—not later than May 15
2Q —not later than August 15,
3Q — not later than November 15.
a. Statements 1 and 2 are false .
b. Statement 1 is true but statement 2 is false
c Statement 1 Is false but statement 2 Is true
d. Statements 1 and 2 are true
25. Statement 1: Where the estate is under judicial administration, the income of the estate
shall be taxable to the estate
Statement 2: Where the estate is not under judicial administration, the income of the estate
shall be taxable to the heirs and beneficiaries
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true
Answer: D
Where the estate is under judicial administration, the income of the estate shall be taxable
to the estate. Where the estate is not under judicial administration, the income of the estate
shall be taxable to the heirs and beneficiaries.
26. The OSD of corporations under the cash basis is based on
a. gross sales
b. gross receipts
c. Total gross income
d. Total gross income from operations
27. Which is correct with optional standard deduction?
a. It replaces itemized deduction
b. It replaces P250,000 annual exemption for individuals
c. Both a and b
d. Neither a nor b
28.Which of the following individuals engaged in business cannot claim
optional standard deduction?
a. Resident citizen
b. Non resident citizen
c. Resident alien
d. NRA-NETB
29. When purely employed, who of the following can claim OSD?
a. Resident citizen
b. Non-resident citizen
c. Resident alien
d. None of these
30. Which of the following is not deductible from gross income?
a. Salaries and wages of employees
b. Depreciation expenses
c. Rental expenses
d. Bribes, kickbacks and other similar payments
31. One of the following is not creditable against the total computed per
ITR.
a. Income tax paid for the first three quarters for the business income
earned.
b. Creditable withholding tax on compensation
c. foreign income tax paid by resident citizen
d. Final withholding tax
32. Income taxes paid in a foreign country can be claimed as?

a. Deduction
b. Tax credit
c. Either Deduction or tax credit
d. Neither deduction nor tax credit
33. Tax credits for foreign tax paid is allowed on the ff. except?
a. Income tax paid by a resident alien in a foreign country
b. Income tax paid by a resident citizen in a foreign country
c. Income tax paid by a domestic corporation in a foreign country
d. All of the above are allowed to claim foreign tax credits
34. S1: NOLCO is applicable to both individuals and corporate taxpayers
subject to regular income taxes.
S2: NOLCO is carried over for the next three consecutive years
S3: if the taxpayer availed OSD as her/his allowable deduction, he/she
can also claim NOLCO

a.All statements are correct

b.Only one statement is incorrect
c.Two statements are correct
d.All statements are incorrect
35. S1- The MCIT is imposed beginning on the fourth taxable year immediately following
the year in which such corporation commenced its business operations
S2 - When the minimum corporate income tax is higher than the regular corporate
income tax during the period, the minimum corporate income tax shall be payable
S3 - Excess of minimum corporate income tax can be carried over and credited to the
regular income tax for the next three immediately succeeding taxable years
S4 - MCIT applies on quarterly Income Tax Returns
Which is TRUE?
a. Sl and S3
b. S1, S2 and S3 only
c. S1 and S2 only
d. All are true
36. Which is FALSE?
I. If an individual taxpayer opted for 8% taxation, he is disqualified from using OSD.
II. If an individual taxpayer opted OSD as his method of deduction, he is disqualified from availing
8% preferential tax.
a. Only S1 is true
b. Both are true
c. Only S2 is true
d. Both are false
37. MCIT shall commence on the
a. 2nd year of operation.
b. 3rd year of operation.
c. 4th taxable year following the year of start of operation.
d. 3rd taxable year following the year of start of operation.

38. Excess MCIT is a tax credit that can be carried over to the next
e. 3 consecutive years.
f. 4 consecutive years.
c. 3 years including the year it arises
d. 2 consecutive years