CORPORATION

1. For income taxation purposes, the term “corporation

6” excludes one of the following :
A. Ordinary partnership
B. An incorporated business organization
C. General professional partnership
D. Business partnership

2. Which of the following is subject to the corporate income tax?

A. a non- stock and non profit educational institution
B. Public educational institution
C. Private cemeteries
D. Civic league or organization not organized for profit and operated exclusively for the
promotion of social welfare

3. A corporation organized and created under the laws of a foreign country and is authorized to
do business/ trade in the Phil. is:
A. Domestic corporation C. Non-resident foreign corporation
B. Resident foreign corporation D. General co-partnership

4. One of the general principles of income taxation:

A. A foreign corporation engaged in business in the Phil. is taxable on all income
derived from sources within and without the Phil.
B. A foreign corporation engaged in business in the Phil. is taxable on all income
derived from sources within the Phil. only.
C. A domestic corporation is taxable on income derived from sources within the Phil. only.
D. A domestic corporation is taxable on income derived from sources without the Phil. only.

5. One of the following doesn’t fall under the definition of a “corporation” for income tax
purpose:
A. General partnership
B. Joint stock company
C. Insurance company
D. Sole partnership

6. Which of the following is classified as Special Corporation subject to preferential corporate

income tax rate?
A. Social security System C. Phil. Charity Sweepstakes Office
B. Proprietary Educational Institution D. Government Service Insurance System

7. A corporation which may be classified as either a resident corporation or non-resident

Corporation is
A. Domestic corporation C. Government owned and controlled corporation
B. Foreign corporation D. Non-profit hospital

8. The Phil. Health Insurance Corporation, a government owned corporation is:

A. Exempt from the corporate income tax
B. Subject to the preferential corporate income tax for special corporations.
C. Subject to the basic corporate income tax.
D. Subject to final tax.

9. Public educational institutions, like the University of the Philippines is deemed by law:
A. subject to preferential corporate income tax for special corporations.
B. Subject to the basic corporate income tax
C. Subject to both the preferential income tax and the basic corporate income tax.
 2

D. Exempt from the corporate income tax.

10. Which is not correct? The following are exempt from the corporate income tax:
A. Philippine Charity Sweepstakes Office C. Gov’t. owned or controlled corp.
B. Bureau of Internal Revenue D. Social Security System

11. Which of the following maybe subject to the corporate income tax?
A. A non-profit educational institution C. A private educational Institution
B. A public educational Institution D. Government Service Insurance System

12. A domestic corporation may employ, as a basis for filing its annual corporate return the:
A. Calendar year only C. Either calendar or fiscal year
B. Fiscal year only D. Neither calendar nor fiscal year

13. A corporation files a quarterly return within

A. 30 days after the end of each of the 3 quarters
B. 60 days after the end of each of the first 3 quarters
C. 30 days after the end of each of the first 4 quarters
D. 60 days after the end of each of the first quarters

14. A final or annual return is filed on or before the 15th day of the?
A. Month following the close of the taxable year
B. 2nd month following the close of the taxable year.
C. 3rd month following the close of the taxable year.
D. 4th month following the close of the taxable year

15. A corporation on a fiscal year ending March 31, should file its annual return
A. On or before April 15 of the same year C. On or before July 15 same year
B. On or before April 15 of the following year D. on or before July 15 of the ff. year

16. The improperly accumulated earnings tax shall apply to

A. Publicly held corporation C. Insurance companies
B. Banks and other non-bank financial D. Private corporations

17. Which of the following statements is not correct?

A. MCIT is not applicable to non-resident foreign corporations
B. The corporate quarterly return shall be filed within 60 days following the close of each of
the first three quarters of the taxable year.
C. Resident foreign corporations would be taxed on net income from within the Phil only
D Non-resident foreign corporations are taxed on gross income from within and without
the Phils..

18. The following income are subject to final tax, except?

A. Royalty income received by a domestic corporation from a domestic corporation
B. Cash dividends received by a non-resident foreign corporation from a domestic corp.
C. Cash dividends received by a domestic corporation from a domestic corporation.
D. Interest income received by resident foreign corporation from a Phil. bank.

19. The MCIT shall not apply to the following resident foreign corporations, except
A. RFC engaged in business as int’l carrier subject to 2 ½ 0/0 of their Gross Phil billings
B. RFC engaged in business as offensive Banking Units on their income from foreign
currency transactions with local commercial banks.
C. RFC engaged in business as regional operating headquarters
D. RFC engaged in hotel, motel and resort operations

20. Which of the following is not correct? The gross income tax
A. Is optional to qualified corporation
 3

B. Is available if the ratio of costs of sales to gross sales or receipts from all sources does
not exceed 55%
C. Shall be irrevocable for three consecutive taxable years that the corporation is qualified
under the scheme
D. Is compared with the normal income tax and minimum corporate income tax

(?)21. A Corporation’s records show:

Normal Taxes Excess MCIT Express withholding
Quarter Income Tax MCIT Withheld Prior Year Tax Prior Year
First P100, 000 P80, 000 P20, 000 P30 000 P10, 000
Second 120, 000 250,000 30, 000
Third 250, 000 100, 000 40, 000
Fourth 200, 000 100, 000 35, 000

The income tax due for the second quarter is

A. P100, 000 B. P80, 000 C. P50, 000 D. P40, 000

22. The income tax due for the second quarter is

A. P120, 000 B. P250, 000 C. P150, 000 D. P230, 000

23. The income tax due for the third quarter is

A. P250, 000 B. P100, 000 C. P140, 000 D. P70, 000

24. The income tax due for the year is

A. P200, 000 B. P100, 000 C. P135, 000 D. 165, 000

25. Using the preceding problem except that the normal income tax for the fourth quarter is
P50, 000 (instead of P200, 000), the income tax due for the year is
A. P120, 000 B.P55, 000 C. P45, 000 D.P75, 000

26. One of the following is not acceptable as basis of relief from the MCIT
A. Prolonged labor dispute C. Legitimate business reverse
B. Force majeure D. Law suits filed by the company

27. Which is not one of the characteristics of corporate income tax

A. Progressive tax C. Direct tax
B. General tax D. National tax

28. CPA University, a private educational institution organized in 2000, had the following data
For 2007.
Tuition fees P 850, 000
Rental income 150, 000
School related expenses 820, 000

The income tax due for 2007 is

A. P 57, 000 B. P 9, 600 C. P 18, 000 D. P 20, 000

29. CPA college, a private educational institution organized in 2000, had the following data for
2007.
Tuition fees P 480 000
Rental income 520, 000
School related expenses 450, 000

The income tax due for 2007 is

A. P 17, 600 B. P 5, 500 C. P 100, 000 D. P 165, 000

30. CPA Airlines, a resident foreign international carrier has the following records of income for
 4

the period. (The income represents gross Phil. billings)

A. Continuous flight from Manila to Tokyo=1, 000 tickets at P 2, 000 per ticket
B. Flight form Manila to Singapore ; transfer flight from Singapore to Tokyo=2, 000
Tickets at P 2, 000 per ticket
C. Continuous flight from Manila to Singapore= 3, 000 tickets at P1,000 per ticket

The income tax due is

A. P225, 000 B. P125, 000 C. P100, 000 D. P 175, 000

31-46 The A corporation provided the following data for calendar year ending December 31,
2009 ($ 1= P50).
Philippines Abroad
Gross income P4, 000, 000 $ 40, 000
Deductions 2, 500, 000 $ 15, 000
Income Tax Paid $ 3, 000

31. If it is a domestic corporation, its income tax after tax credit is

A. P675,000 B. P832, 000 C. P962, 500 D. P480, 000

32. If it is a resident corporation, its income tax is

A. P730, 000 B. P1, 280, 000 C. P480, 000 D. P450, 000

33. If it is a non-resident corporation, its income tax is

A. P370, 000 B. P1,280,000 C.P880,000 D.P1,200,000

34. Under No. 31, but it opts to claim the tax paid abroad as deduction from gross income, its
income tax is
A. P780,000 B.P832, 000 C.P275,000 D.P150,000

35. If it is private educational institution, its income tax due after tax credit
A. P730, 000 B.P832, 000 C.P275,000 D.P150,000

36. If it is a non-profit hospital, its income tax credit is

A. P730, 000 B.P832,000 C.P275,000 D.P150,000

37. If it is a resident international carrier, its income tax is

A.P100,000 B.P10,000 C.37,000 D.P125,000

38. If it is a non-resident cinematographic film owner/lessor, its income tax is

A.P1,000,000 B.P100,000 C.P300,000 D.P128,000

39. If it is a non-resident lessor of vessels,its income tax is

A.P100,000 B.P180,000 C.P300,000 D.P128,000

40. If it is a non-resident lessor of aircrafts, machineries and equipments, its income tax is
A. P100,000 B.P180,000 C.P300,000 D.P128,000

41. If it is a resident corporation but its expenses within and outside the Philippines is P3M,
Unallocated (disregard original data on expenses), its income tax is
A.P640,000 B.P700,000 C.P480,000 D.P128,000

42. If it is a resident corporation and remitted 60% of its net profit to its head office abroad, its
total tax liability is (Original data).
A. P480,000 B.P571,800 C. P196,000 D.P612,750

43. If it is a private educational institution but P3.5M of its total gross income is from lease and
 5

restaurant business, its income tax is

A.P730,000 B.P275,000 C.P150,000 D.P812,500

44. If it is a domestic corporation, but its total expenses is P5,800,000 (disregard original data on
expenses), its income tax is
A.P730,000 B.P64,000 C.P120,000 D.P85,000

45. Under No.44, but the domestic corporation is non-profit hospital (disregard tax paid abroad ),
Its income tax is
A.P20,000 B.P64,000 C.P10,909 D.P120,000

46. If the corporation is a non-stock educational; institution, which uses all its revenues or
income for educational and charitable purposes , its income is
A. P0 B.P730,000 C.P120,000 D.P64,000

(?)47. A domestic corporation organized in 1998 provided the following information:

2003 2004 2005 2006 2007
Net Sales P4,000,000 P5,000,000 P6,000,000 P7,000,000 P8,000,000
Cost of sales 2,000,000 2,500,000 2,800,000 4,000,000 5,200,000
Business Expenses 1,900,000 2,350,000 2,900,000 3,100,000 2,300,000

The tax due after tax credit, if any for 2005

A.P86, 000 B. P95, 000 C.P87,500 D.P97,500

48. Using the above data, the tax due after tax credit, if any for 2007
A. P115,000 B.P140,000 C.P175,000 D.P80,000

49. A corporation , a resident corporation, provided the following data for taxable year 2006
Philippines USA
Gross income P40M P20M
Dividends from:
Domestic corporation 5M
Foreign corporation 4M
Business expenses 12M 8M

The corporation remitted to its head office the P5M dividend income and 40% of its net profit
to its head office in USA. The corporation’s total tax liability including the tax on the profit
remitted is
A.P10,240,000 B.P11,545,600 C.P15,960,000 D.P12,448,000

50. In the foregoing problem, if it is registered with PEZA, its total tax liability is
A.P10,240,000 B. P0 C.P11,200,000 D.P15,960,000

51. A corporation has the following data for the year 2007:
Gross Income, Philippines P1,000,000
Gross income, USA 500,000
Gross income, Japan 500,000
Expenses, Philippines 300,000
Expenses, USA 200,000
Expenses, Japan 100,000
Other Income:
Dividend from San Miguel Corp 70,000
Dividend from Ford Motors, USA 120,000
Gain, sale of San Miguel shares directly to buyer 150,000
Royalties, Philippines 50,000
Royalties, USA 100,000
Interest (other than from banks) 60,000
 6

Rent, land USA 250,000

Other rent income 100,000
Prize, contest in Manila 200,000
Land sold in the Philippines (selling prize) 2,000,000

The cost of the land which is not used in business is P1M, while FMV is P3M, Its total tax
liability as a domestic corporation is:
A. P780,500 B. P913,600 C. P963,600 D. P980,500

52. Based on the above problem, its total tax liability if it is a resident corporation is
A. P721,000 B. P679,200 C. P659,200 D.P741,000

53. And if it is a non-resident corporation, its total tax liability is

A. P843,500 B.791,700 C. P791,200 D.P846,000

54. A domestic corporation had the following data:

Gross income Deductions
1998 P1,000,000 P1,200,000
1999 2,000,000 1,900,000
2000 3,000,000 2,950,000
2001 1,000,000 1,100,000
2002 980,000 500,000

The taxable income in 2002 is:

A. P380,000 B. P330,000 C. P100,000 D. P50,000