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TAX.02 Exercises On Individual Taxation

1. The document provides examples of different classifications of individuals for Philippine income tax purposes including resident citizen, nonresident citizen, resident alien, and nonresident alien. It also provides examples of income subject to final tax versus normal income tax. 2. The questions test understanding of key concepts in individual Philippine taxation such as determining residency status, types of income subject to different tax rates/treatments, exemptions, deductions, and computing tax liability for compensation and business income. 3. The document aims to help individuals understand how different sources and types of income are treated for Philippine income tax compliance. It provides practical examples and questions to illustrate important taxation concepts and calculations.

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280 views5 pages

TAX.02 Exercises On Individual Taxation

1. The document provides examples of different classifications of individuals for Philippine income tax purposes including resident citizen, nonresident citizen, resident alien, and nonresident alien. It also provides examples of income subject to final tax versus normal income tax. 2. The questions test understanding of key concepts in individual Philippine taxation such as determining residency status, types of income subject to different tax rates/treatments, exemptions, deductions, and computing tax liability for compensation and business income. 3. The document aims to help individuals understand how different sources and types of income are treated for Philippine income tax compliance. It provides practical examples and questions to illustrate important taxation concepts and calculations.

Uploaded by

leon gumboc
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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EXERCISES ON INDIVIDUAL TAXATION

1. One of them is not considered non-resident citizen.


a. A citizen of the Philippines who establishes to the satisfaction of the
Commissioner the fact of this physical presence abroad with a definite
intention reside therein.
b. A citizen of the Philippines who leaves the Philippines during the taxable
year to reside abroad, either as an immigrant or for employment on
permanent basis.
c. A citizen of the Philippines who works and derives income from abroad
and whose employment thereat requires him to be physically present
abroad most of the time during the taxable year.
d. A citizen of the Philippines who went on a business trip abroad and stayed
therein most of the time during the year.

2. A, nonresident citizen, arrived in the Philippines on July 1, 2000 to reside here


permanently after working as nurse in the United States of America for many
years.

Which of the following statements is correct with respect to Ms. A’s classification
for income tax purposes?
a. She shall be classified as nonresident citizen for the year 2000 with
respect to her income derived from sources abroad from January 1, 2000
until the date of her arrival in the Philippines.
b. She shall be classified as nonresident citizen for the whole year of 2000.
c. She shall be classified as resident citizen for the whole year of 2000.
d. She shall be classified as neither resident nor nonresident citizen for the
year 2000.

3. B, an Expert Physicist was hired by a Philippines corporation to assist in its


organization and operation for which he had to stay in the Philippines for an
indefinite period. His coming to the Philippines was for a definite purpose which
in its nature would require an extended stay and to that end makes his home
temporarily in the Philippines. The American management expert intends to
leave the Philippines as soon as his job is finished.

For income tax purposes, the American management expert shall be classified
as:
a. Resident alien.
b. Nonresident alien engaged in trade or business.
c. Nonresident alien not engaged in trade or business.
d. Resident citizen.

4. C, an American singer, was engaged to sing for one week at the Western
Philippine Plaza after which she returned to USA. For income tax purposes, she
shall be classified as:
a. Resident alien.
b. Nonresident alien engaged in trade or business.
c. Nonresident alien not engaged in trade or business.
d. Resident citizen.

5. Situs of taxation is world/global taxation?


a. Resident citizen.
b. Resident alien.
c. Nonresident citizen.
d. Nonresident alien.

6. It is important to know the source of income for tax purposes (i.e. from within and
without the Philippines) because:
a. Some individuals and corporate taxpayers are taxed on their worldwide
income while others are taxable only upon income from sources within the
Philippines.
b. The Philippine imposes income tax only on income from sources within.
c. Some individual taxpayers are citizens while others are aliens.
d. Export sales are not subject to income tax.

7. Individuals shall be tax exempt on:


a. Gross income not exceeding 250,000
b. Gross income exactly 250,000
c. Taxable Income not exceeding 250,000
d. Taxable Income exactly 250,000

8. Who may avail tax exemption of 250,000?


a. Compensation earners
b. Purely in business or Professionals
c. Mixed earners
d. All of the above

9. An individual shall be subject to maximum income tax rate of?


a. 6%
b. 8%
c. 32%
d. 35%

10. Who can avail 8% Gross Sales or Receipts Tax?


a. Self-employed with Gross Receipts or Sales not exceeding 3,000,000.
b. Compensation earners with Gross compensation not exceeding 3,000,000
c. Mixed income earners with Gross Receipts or Sales and other income not
exceeding 3,000,000
d. All of the above.
11. Interest income from foreign currency deposit system shall be subject to a final
tax of?
a. 7.5%
b. 15%
c. 20%
d. 35%

12. PCSO and lotto winnings are:


a. Exempt from tax
b. Subject to 20% final tax
c. Exempt from tax not exceeding 10,000 any in excess will be subject to
20% final tax.
d. Half will be exempt half will be tax.

13. The amount of 13th month pay not taxable is?


a. 82,000
b. 90,000
c. 250,000
d. No limit

14. 1st Statement: A partner of a General Professional Partnership may avail


Optional Standard Deductions even when GPP avail already OSD.

2nd Statement: A GPP and the partner may avail OSD only once.
a. True, True
b. True, False
c. False, False
d. False, True

15. An individual tax due in excess of 2,000 may avail installment payment, when is
the 2nd installment due?
a. July 15
b. August 15
c. September 15
d. October 15

16. 1st Statement: Life insurance premiums paid by an individual taxpayer is


deductible from gross income for an maximum amount of P2,400 provided the
family’s gross income for the year does not exceed P 250,000.

2nd Statement: The premium on health and/or hospitalization insurance is


deductible by the spouse who claimed the additional exemption in case of
married taxpayers.
a. True, True
b. True, False
c. False, False
d. False, True

17. An individual who sell shares of stock not traded thru the local stock
exchange is liable to pay:
a. Capital gains tax of 5%
b. Capital gains tax of 5% first 100,000 and in excess 10%.
c. Capital gains tax of 15%
d. Capital gains tax of 5% if gain is less 100,000 and 10% if gain is more
than 100,000.

18. 1st Statement: 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 % of gross compensation income in the Philippines.

2nd Statement: Generally, nonresident aliens not engaged in trade or business


are subject to 25% final tax on their gross income in the Philippines.
a. True, True
b. False, False
c. True, False
d. False, True

19. “Global system of income taxation” means:


a. All types of income except those subject to final tax are aggregated to
arrive at gross income.
b. Separate graduated rates are imposed on different types of income.
c. Capital gains are excluded in determining gross income.
d. Compensation income and business/professional income are taxed at
different places in the world.

20. 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 corporation.
c. Share in the net income of a general professional partnership received by
a resident alien.
d. Dividend received by a non-resident alien from a domestic corporation.

21. 1st Statement: Interest received by nonresident individuals from a depository


bank under the expanded foreign currency deposit system is exempt from tax.

2nd Statement: Passive income received by a resident citizen from sources


outside the Philippines shall be generally subject to normal income tax and not
to final tax.
a. True, True
b. True, False
c. False, False
d. False, True
22. Sale of real property located outside of Philippines shall be:
a. Subject to capital gains tax of 6% on selling price or fair market value
whichever is higher.
b. Subject to capital gains tax of 15% on the net capital gain.
c. Exempt from tax if the taxpayer is resident citizen.
d. Subject to net income tax if taxpayer is resident citizen or domestic
corporation.

23. Which of the following statements is incorrect?


a. To be subject to final tax passive income must be from Philippine sources.
b. Passive income earned outside of the Philippines is not subject to final tax
but subject to progressive Net Income Tax.
c. An income which is subject to final tax is excluded from the computation of
income subject to Section 24 (A) Net Income Tax.
d. An income which is subject to creditable withholding tax is excluded in the
computation of income subject to Section 24 (A).

24. 1st Statement: Proceeds of sale of real property classified as principal residence
and capital asset are exempt from the 6% capital gains tax if used to build or
buy a new principal residence within 18 months from the date of sale or of
disposition.

2nd Statement: Gain from sale of real property classified as capital asset to the
Government may be taxed under Section 24 (A) or capital gains tax at the
option of the individual taxpayer.
a. True, True
b. True, False
c. False, False
d. False, True

25. Mr. Stark in the year 2020 had compensation income of P1,600,000.00,
including 13th month pay of P100,000.00 and 10-day leave credits of
P10,000.00. Mr. Stark has a barbeque stand, which earns a total gross receipts
of P5,000.00 per day with cost of sales P2,800.00 per day. Operating expenses
of P700.00 per day. Compute Mr. Stark’s income tax due.
a. P505,200.00
b. P540,400.00
c. P474,250.00
d. P506,000.00

26. Compute Mr. Stark’s income tax under the optional 8% gross receipt tax.
a. P489,000.00
b. P407,240.00
c. P487,000.00
d. P519,000.00

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