lOMoARcPSD|51540469

1. Sapphire Bank has the following items:

Interest Income from loans 3,000,000
Interest income from loan deposit with other banks 400,000
Interest Income from notes rediscoun@ng 100,000
Interest income from Treasury Notes issued by BSP 50,000

How much income is subject to Regular Income Tax?

A. 3,000,000
B. 3,100,000
C. 3,150,000
D. 3,550,000

2. Using the data on no. 1, how much is the income subject to Final Tax?
A. 450,000
B. 400,000
C. 550,000
D. 500,000

3. Under the Iba leasing corp. standard lease contract, leases shall run for a non-preterminable 12-
month period for a monthly rental of 25,000. The lessee shall pay 3 months rental in advance
plus one month security deposit. The rent for the last two months of the lease shall be taken
from the advance while the security deposit will be returned if there are no damages sustained
by the property during the lease term. How much of advance payment and security deposit is
subject to regular income tax?
A. 0
B. 100,000
C. 50,000
D. 75,000

4. Forest SoTware is a distributor of a computer program and earn royal@es from its licensed
users. Computer programs are speciUcally tailored to each client and regular con@nuing
maintenance services are provided. During the year, client users remiVed a total of 500,000
royalty payments.
A. The 500,000 payment is subject to Final Tax
B. The 500,000 payment is subject to Regular Income tax
C. The 500,000 payment is tax exempt
D. Half is Unal tax while the other half is regular income tax

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5. The following data on net income, bad debt, write oW and recovery show:
2015 Case A Case B Case C
Net income before write oW 80,000 40,000 (20,000)
Less: Bad debts wriVen oW 50,000 60,000 70,000
Net Income aTer write oW 30,000 (20,000) (90,000)

2016
Subsequent Recovery 50,000 50,000 50,000

The taxable recovery

Case A Case B Case C
A. 50,000 50,000 50,000
B. 50,000 0 0
C. 50,000 40,000 20,000
D. 50,000 30,000 0

6. A feature of Ordinary Gains as dis@nguished from capital gains

A. Gain from sale of assets not stock in trade
B. May or may not be taxable in full
C. Sources are capital assets
D. No holding period

7. Which of the following taxpayers is allowed to observe the “no holding period and no carry over
of net capital loss”
A. Individual
B. Estates
C. Corpora@on
D. Trusts

8. Statement 1: Capital losses are deduc@ble only from ordinary gains

Statement 2: Corpora@ons are not allowed to observe the holding period
A. Only statement 1 is correct
B. Only statement 2 is correct
C. Both statements are correct
D. Both statements are incorrect

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9. Josa Sese, had the following data on income and losses:

2018 2019
Ordinary Business Income 56,700 60,800
Interest on @me deposit, PNB 2,000 3,000
Short-term capital gain 5,000 8,500
Long-term capital gain 3,600 5,200
Short-term capital loss 8,000 2,900
Long-term capital loss 4,400 0

How much is the taxable income in 2019?

A. 56,700
B. 60,800
C. 65,600
D. 0

10. Rose, had the following data on income and losses

2018 2019
Net Income 25,000 95,000
Capital Gains 8,000 40,000
Capital Losses 40,000 5,000

The Taxable Income in 2019?

A. 98,000
B. 55,000
C. 115,000
D. 105,000

11. A bought from B corpora@ons ten shares of stock. Sixty days thereaTer, the corpora@on was
adjudged bankrupt and its stock as worthless. The loss of A to be reported for income tax
purposes is classiUed as:
A. a wagering loss
B. non-deduc@ble loss
C. short term capital loss
D. ordinary loss

Malou has the following data in 2019:

Sale of property Holding Period Gain/(Loss)
Apartment Houses 10 years 35,000
Residen@al House 6 years 120,000
Vacant Lot 12 years 72,500
Jewelry for personal use 6 months 4,200
Jewelry in jewelry store 2 months 8,000

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Car for personal use 4 years (20,000)

Transporta@on equipment 12 months (10,000)

The proceeds from sale of residen@al house shall be used in acquiring a new residence. During the
year Malou had a net income from business (other than men@oned above) in the amount of 5,000.

12. How much is the Capital Gains tax due?

A. 7,200
B. 6,000
C. 0
D. 5,000

13. The taxable income of Malou in 2019 is?

A. 38,000
B. 39,000
C. 40,000
D. 41,000

14. Which is not subject to income tax?

A. Gain from sale of shares in mutual funds by the investor
B. Prizes in recogni@on of civic, religious achievements
C. PCSO and loVo winnings
D. All of the above

15. Which is an item of gross income subject to regular tax?

A. Gain on sale of lot by a realty dealer
B. Interest income from bank deposits
C. Passive royalty income
D. Capital gain on the sale of domes@c stocks

16. Which is not an item of gross income subject to Unal tax?

A. Dividends from a domes@c corpora@on
B. Prizes in excess of 10,000 by an individual
C. Share in the income of a GPP
D. Winnings

17. Which of these employee beneUts is subject to Unal tax?

A. Fringe beneUts to rank and Ule employees
B. Regular pay of supervisory and managerial employees
C. Fringe beneUts to supervisory and managerial employees
D. Regular pay of rank and Ule employees

18. All of these are items of gross income to regular tax except one, which is it?
A. Compensa@on Income
B. Interest income from long term bank deposits

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C. Ordinary gain on sale of proper@es

D. Interest on Notes receivable

19. Which is an income exempt from income tax?

A. Share of Income from a GPP
B. Foreign Dividends
C. Taxes collected by the government
D. Income of GOCC’s

20. Which is not part of compensa@on income subject to regular tax?

A. Director’s fees
B. Bonuses and Uxed allowances
C. Por@on of salary contributed to SSS
D. Por@on of salary used to pay salary loans

21. Which is included in the gross income subject to regular tax of a resident alien?
A. Gross income from the sale of goods abroad
B. Interest income from promissory note of resident clients’
C. Interest income from rela@ve abroad
D. Gain from sale of domes@c stocks directly to buyer

22. Which individual taxpayer is not subject to progressive tax?

A. NRA-ETB
B. NRA-NETB
C. Resident Alien
D. Resident Ci@zen?

23. Which is subject to progressive tax to on individual taxpayer?

A. Proceeds of life insurance policy
B. GiTs
C. Amounts receive by the insured in excess of premiums paid
D. Compensa@on for personal injuries?

24. Which is subject to regular tax to a non-resident foreign corp or non-resident alien not engaged
in trade or business?
A. Business Income from the PH
B. Capital gain from the sale of stocks directly to a buyer
C. Dividends from domes@c corp
D. none of these

25. Which of the following could be subjected to regular tax to a resident foreign corpora@on?
A. Service fees abroad
B. Gain from sale of real property capital assets in the Philippines
C. Dividends from a domes@c Corpora@on

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D. Gain from dealings in proper@es abroad

26. Statement 1: All prizes earned abroad are subject to regular tax
Statement 2: All prizes in the Philippines are subject to Unal tax
which statement is/are correct?
A. Statement 1
B. Statement 2
C. Both 1 and 2
D. Neither 1 and 2

27. Which of the followings items is not part of gross income to be reported in the income tax
return?
A. Increase in value of land
B. Gambling winnings
C. Prize of 10,000
D. Gain from sale of store’s air condi@oner

28. Lessor had the following informa@on in 2018

Cost of leasehold improvement 1,000,000
Annual Rent 100,000

The es@mated life of leasehold improvement is 50 years. The term of the lease is 40 years. At the
end of the twen@eth (20th) year, the lease was terminated for valid causes done by the lessee.

What is the income to be reported by the lessor at the end of the 20 th year?
A. 100,000
B. 125,000
C. 605,000
D. 600,000

29. Liquida@ng dividends are return of shareholder’s investment. Which of the following is false?
A. The excess of liquida@ng dividend over cost of shares surrendered is taxable.
B. If a shareholder sustains a loss brought about by the liquida@ng dividend, such loss is deduc@ble
C. If a shareholder sustains a loss brought about by the liquida@ng dividend, such loss is not
deduc@ble
D. All of the above.

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Zef and Siegfried prac@ce their profession in a General professional partnership and share proUts
60:40. Their Urm reported the following:
Gross Receipts 2,000,000
Less: Professional expenses 1,200,000
Net Income from opera@ons 800,000
Interest from bank deposits 20,000
Distribu@ve Net Income 820,000

30. How much is the Unal tax due from the shares of net income of Zef and Siegfried?
Zef Siegfried
A. 49,200 32,800
B. 48,000 32,000
C. 0 0
D. 45,000 30,000

31. How much should be included in the taxable income of Zef and Siegfried from their shares in the
net income of the GPP?
Zef Siegfried
A. 0 0
B. 480,000 320,000
C. 492,000 328,000
D. 450,000 300,000

32. Roman is one of several heirs of a business estate of his father which is under judicial seVlement.
The administrator distributed the following income for the support of Roman:
Domes@c Dividends 22,500
Business Income 70,000
How much should Roman include in his taxable net income?
A. 70,000
B. 92,500
C. 22,500
D. 0

33. Horace received the following income distribu@ons in his capacity as beneUciary to an
irrevocable trust designated by his grandmother:
Net Capital gains on sale of domes@c stocks 9,500
Rental Income 12,000
How much should Horace include in his taxable net income?
A. 0
B. 12,000
C. 21,500
D. 9,500

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34. A taxpayer incurred a 90,000 write oW in 2015 out of which 45,000 was recovered in 2016.
2015 2016
Net Income/(loss) before write-oW/recovery 70,000 (15,000)
(Write oW)/Recovery (90,000) 45,000
Net Income/(loss) aTer write-oW/recovery (20,000) ?

How much is taxable net income for 2016?

A. 10,000
B. 0
C. 30,000
D. 45,000

35. Statement 1: Gains from dealings in capital assets are generally subject to regular income tax.
Statement 2: The share in a business partnership is subject to Unal tax, but the share in a general

professional partnership is subject to regular income tax.

Which of the statements are/is true
A. Statement 1
B. Statement 2
C. Both Statements
D. Neither statements

36. Statement 1: Advance Rentals are income in the year received

Statement 2: Security Deposits are taxable on the year received.
Which of the statements are/is true
A. Statement 1
B. Statement 2
C. Both Statements
D. Neither statements

37. Statement 1: Real property tax and insurance on the property if assumed by the lessee
cons@tute income of the lessor.
Statement 2: Corporate winnings are exclusions in gross income, hence they are exempt from
income tax.
Which of the statements are/is true
A. Statement 1
B. Statement 2
C. Both Statements
D. Neither statements

38. Statement 1: Stock dividends are never subject to income tax

Statement 2: Stock splits are never subject to income tax.
Which of the statements are/is true
A. Statement 1

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B. Statement 2
C. Both Statements
D. Neither statements

39. Statement 1: Corporate prizes are exclusions in gross income subject to Unal tax but are
inclusions in gross income subject to regular income tax.
Statement 2: Prizes in athle@c compe@@ons sanc@oned by the Philippine Government are
exclusions in gross income subject to Unal tax, but are inclusions in gross income subject to regular
income tax.
Which of the statements are/is true
A. Statement 1
B. Statement 2
C. Both Statements
D. Neither statements

40. Statement 1: The recovery of deduc@on from an exempt year is subject to tax
Statement 2: An indebtedness cancelled by the creditor out of mercy is income to the debtor.
Which of the statements are/is true
A. Statement 1
B. Statement 2
C. Both Statements
D. Neither statements

Andres leases a building to a client. During the year, he received the following remiVance from the
lessee:
Rental Net of 5% creditable withholding tax 1,900,000
Real property tax of the leased building 50,000
Reimbursement for u@li@es used by the
lessee paid by Andres 200,000

41. How much will be included in gross income subject to regular tax?
A. 2,050,000
B. 2,250,000
C. 2,000,000
D. 1,950,000

42. How much is the income tax payable?

A. 475,000
B. 538,000
C. 480,000
D. 506,000

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Corazon resigned in 2015 aTer 12 years of service. She had the following income during the year:
Salary, net of 80,000 CWT, 20,000 SSS
18,000 Philhealth and 40,000 13th month pay 480,000
Separa@on Pay 1,000,000

43. How much is her net taxable income?

A. 1,480,000
B. 1,560,000
C. 560,000
D. 480,000

44. How much is her income tax payable?

a. 278,000
b. 358,000
c. 334,000
d. 0

45. Which of the following could be subjected to regular tax to a resident foreign corpora@on?
A. Service fees abroad
B. Gain from sale of real property capital assets in the Philippines
C. Dividends from a domes@c Corpora@on
D. Gain from dealings in proper@es abroad

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