LAGUNA UNIVERSITY SET A

TAXATION
FIRST PREBOARD EXAMINATION
FEBRUARY 24, 2018

Problem 1
A, presented the following data regarding the items of income be earned
during taxable year2018:
Rental income (gross)
From an apartment unit in US P240,000.00
From a parcel of land in Makati P180,000.00
Royalties from book
Published in the Philippines P30,000.00
Published in USA P20,000.00
Interest income earned on notes receivable
From a debtor who resides in USA P15,000.00
From a debtor who resides in Manila P25,000.00
Gain/Losses
Capital gain holding period is more than 12 months P50,000.00
Capital loss holding period is 11 months (P30,000.00)
Ordinary gain from sale of PPE P25,000.00
Gain from vacation house sold, (FMV P500,000.00) P100,000.00
Net profit from sales, merchandising business
From a Philippine outlet P300,000.00
From USA outlet P200,000.00
Total Fringe Benefits from the employer( excluding
housing, vehicle, and foreign travel) P68,000.00
Prizes received from Supermarket raffle
From the Philippines
ABC Supermarket P8,000.00
DEF Superstore P12,000.00
From USA
UYW Supermarket P6,000.00
XYZ Supersavers P14,000.00
Winnings from lotto
Philippine lotto (Not PCSO) P200,000.00
USA lotto P100,000.00

1. If A is a resident citizen, single and a rank and file, his net

taxable income subject to graduated rates is?
a.P1,050,000.00
b.P1,126,000.00
c.P1,088,000.00
d.P1,180,000.00

2. If A is a resident citizen, single and a rank and file, his income

tax due is?
a.P301,000.00
b.P325,000.00
c.P313,160.00
d.P342,600.00

3. If A is a resident citizen, single and a manager, his net taxable

income subject to graduated rates is?
a.P982,000.00
b.P1,058,000.00
c.P1,020,000.00
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 d.P1,112,000.00

4. If A is a resident citizen, single and a manager, his income tax due?

a.P279,240.00
b.P303,560.00
c.P291,400.00
d.P320,840.00

5. If A is a resident citizen, single and a rank and file, total amount

subject to final tax is?
a.P867,000.00
b.P275,000.00
c.P335,000.00
d.P775,000.00

6. If A is a resident citizen, single and a manager, total amount

subject to final tax is?
a.P807,000.00
b.P899,000.00
c.P367,000.00
d.P343,000.00

7. If A is a resident citizen, single and a rank and file, his total

final tax is?
a.P48,000.00
b.P88,000.00
c.P86,400.00
d.P46,400.00

8. If A is a resident citizen, single, his capital gain tax is?

a.P30,000.00
b.P6,000.00
c.P36,000.00
d.P0.00

9. If A is a resident citizen, single, his total passive income not

subject to final tax is?
a.P167,000.00
b.P67,000.00
c.P63,000.00
d.P163,000.00

10. If A is a corporation its net capital loss capital gain is?

a.P45,000.00
b.P95,000.00
c.(P5,000.00)
d.P20,000.00

11. If A is a resident citizen its net capital loss carry over for
next year is?
a.P0.00
b.(P5,000.00)
c.(P20,000.00)
d.(P45,000.00)

12. If A is a corporation its capital loss carry over for next year
is?
a.P0.00
b.(P5,000.00)
c.(P20,000.00)
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 d.(P45,000.00)

13. If A is a resident citizen, single and a manager his fringe

benefit tax is?
a.P0.00
b.P32,000.00
c.P68,000.00
d.P100,000.00

14. If A is an NRA-NETB, single and a rank and file his fringe

benefit tax is?
a.P0
b.P32,000.00
c.P22,666.67
d.P12,000.00

15. If A is an Special Alien, single and a manager his fringe

benefit tax is?
a.P0
b.P32,000.00
c.P22,666.67
d.P12,000.00

Problem 2
Mr.and Mrs Hico, resident citizen have the following,

Income and Expenses:

Mr.Hico Gross compensation income as a Regional Accountant P433,590.00
Mr.Hico Gross compensation income as a Part Time Faculty P72,000.00
Mrs.Hico Gross compensation income as an Tax Assessor P242,148.00
Rent Expense of their Condominium P72,000.00
HHIP P10,000.00
13th month pay Mrs.Hico P20,179.00
13th month pay Mr.Hico P36,132.00
Phil. Prizes Mrs.Hico P15,000.00
Phil. Prizes Mr.Hico P7,000.00
Phil. Winnings Mrs.Hico P15,000.00
Phil. Winnings Mr.Hico P7,000.00

De minimis Benefits of the couple:

Mr.Hico Rice subsidy per month P2,000.00
Mrs.Hico Rice subsidy per month P3,000.00
Mr.Hico Uniform Allowance per annum P6,000.00
Mrs.Hico Uniform Allowance per annum P4,000.00
Mr.Hico Laundry allowance per month P1,000.00
Mrs.Hico Laundry allowance per month P1,000.00
Mr.Hico Performance based bonus P10,000.00
Mrs.Hico Performance based bonus P25,000.00

16. Net taxable income of Mr.Hico subject to regular income tax

before personal exemption is?
a.P505,590.00
b.P242,148.00
c.P469,590.00
d.P514,590.00

17. Net taxable income of Mrs.Hico subject to regular income tax

before personal exemption is?
a.P505,590.00
b.P242,148.00
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 c.P469,590.00
d.P206,148.00

18. Tax due of Mr.Hico is?

a.P126,788.80
b.P48,037.00
c.P115,877.00
d.P129,668.80

19. Tax due of Mrs.Hico is?

a.P126,788.80
b.P48,037.00
c.P115,877.00
d.P39,037.00

20. Total Final tax of the couple is?

a.P8,800.00
b.P6,000.00
c.P7,400.00
d.P0.00

21. Total part of the De minimis benefits of the couple included in

the “13th month pay and Other benefits” is?
a.P67,800.00
b.P57,800.00
c.P77,800.00
d.P0.00

Problem 3
Mr. Mann L. Oloko and Mrs. Dinna L. Oloko are husband and wife. Mr.Oloko
is a Manager in the accounting firm and Mrs.Oloko is an Assistant Lawyer
in a Law office.

The employer of both of them are very kind in terms of benefits, below
are the benefits received by the couple from their separate employer.

Mr.Oloko ask by his employer to travel abroad for a business meeting,

Mr.Oloko request if he can go with his wife, Mr.Oloko’s employer grant
his request.
• Lodging Cost P75,000.00
• Airfare, because of the lover’s quarrel of two they seated
separately, Mr.Oloko seat in the 1st class P50,000.00 and Mrs.Oloko
seat in the economy class P25,000.00
• The employer of Mr.Oloko bought a car in the name of Mr.Oloko
P450,000.00
• The employer of Mrs.Oloko bought a residential house on the
installment basis to be use by Mrs.Oloko P750,000.00

22. How much is the total fringe benefits subject to fringe benefit
tax/gross up monetary value of Mr.Oloko?
a.P465,000.00
b.P683,823.52
c.P775,735.27
d.P352,941.17

23. How much is the fringe benefit tax for Mr.Oloko?

a.P148,800.00
b.P218,823.52
c.P76,800.00
d.P248,235.28

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 24. How much is the total fringe benefits of Mrs.Oloko subject to
fringe benefit tax/gross up monetary value?
a.P0.00
b.P43,750.00
c.P27,573.52
d.P64,338.23

25. How much is the fringe benefit tax for Mrs.Oloko?

a.P26,470.58
b.P20,588.23
c.P0.00
d.P8,823.52

Problem 4
26. ABC Corporation concluded its eight year of operations. Its
fiscal year ended June 30, 2019. The net income from July 1, 2018 to
June 30, 2019 amounted to P1 million. The gross income for the same
period is P20 million. The income tax due for the taxable period is?
a. P300,000.00
b. P350,000.00
c. P325,000.00
d. P400,000.00

Problem 5
A domestic corporation has the following data for 2015:
Excess MCIT 2014 11,000

Q1 Q2
Income, net of 1% withholding tax 495,000 792,000
Deductions 480,000 700,000

27. How much is the income tax still due and payable in the second
quarter?
a. P3,000.00
b. P23,000.00
c. P13,000.00
d. P7,000.00

Problem 6
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

28. The income tax due for the second quarter is?
a. P100,000.00
b. P80,000.00
c. P50,000.00
d. P40,000.00

29. The income tax due for the second quarter is?
a. P120,000.00
b. P250,000.00
c. P150,000.00
d. P230,000.00

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 30. The income tax due for the second quarter is?
a. P250,000.00
b. P100,000.00
c. P140,000.00
d. P70,000.00

Theories
31. To record MCIT, the account deferred charges MCIT is:
a. Debited
b. Credited
c. Memo entry only
d. No entry required

32. To record expired portion of MCIT, what account is debited:

a. Retained earnings
b. Income tax payable
c. Deferred charges MCIT
d. Provision for income tax

33.1st Statement: MCIT shall apply to all corporations.

2nd Statement: IAET shall apply only to Domestic Corporation.
a. True,True
b. True,False
c. False,False
d. False,True

34. The following corporations are exempt from the Minimum Corporate
Income Tax, except:
a. Non-profit hospitals
b. Proprietary educational institutions
c. Non-stock, non-profit educational institutions
d. Resident corporations

35. Which of the following is not exempted from improperly accumulated

earnings tax:
a. Publicly-held corporations
b. Bank and other non-bank financial intermediaries
c. Insurance companies
d. Resident corporation

36. Premium paid for the health and hospitalization insurance shall be
allowed as a deduction:
a. The amount claimed does not exceed two thousand five hundred pesos
(P2,500) per year.
b. Must be claimed by each spouse separately.
c. Gross income of the family does not exceed Two hundred fifty thousand
pesos (P250,000).
d. The amounts of premium payment claimed is not exceeding two hundred
fifty pesos (P250) per month.

37. In computing net income, no deduction shall in any case be allowed in

respect to, except:
a. Personal, living or family expenses.
b. Any amount paid out for new building or for permanent improvements, or
betterments made to increase the value of any property or estate.
c. Any amount expended in restoring property or in making good the
exhaustion thereof which an allowance is or has been made.
d. Premiums paid on any life insurance policy covering the life of any
officer or employee, when the immediate family members of such employee
are directly the beneficiary.

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38. A operates a retail store and owns the following properties. Which of
the following is capital asset in the hand of A?
a. Building which houses the retail store
b. Fixtures used in the retail store
c. Inventory on hand at the end of the year
d. trade accounts receivable

39. A was selected as the most outstanding teacher in his region. His
namewas submitted by the school principal without his knowledge. He
received a trophy and a cash award of P15,000.
a. Taxable income
b. Subject to final tax
c. Exempt from income tax
d. Partly taxable, partly exempt

40. This will not result to a taxable gain or loss:

a. The sale by a corporation of its shares of stock from the unissued
stock over its par or stated value
b. The sale by a corporation of its treasury stock over its cost or
other basis of acquisition
c. The purchase and retirement by a corporation of its bonds at a price
less than the issue price or face value.
d. The issuance by a corporation of its bonds at a premium

41. One of the following is not subject to final tax:

a. Interest on savings deposit
b. Royalties
c. Vacation and sick leave pay
d. Gratuitous condonation of obligation

42. Which among the following fringe benefits is taxable?

a. Those benefits which are given to rank and file employees.
b. Contributions of the employer for the benefit of the employee to
retirement, insurance and hospitalization benefit plans.
c. Benefits given to supervisory employees under a collective bargaining
agreement.
d. De minimis benefits

43. 1st Statement: Monetized unused vacation leave credits not exceeding 10
days is an exempt de minimis benefit.

2nd Statement: Daily meal allowance for overtime work not exceeding
twenty five (25%) percent of the basic minimum wage is exempt fringe
benefit
a. True, False
b. True, True
c. False, True
d. False, False

44. 1st Statement: Laundry allowance not exceeding P300 per month is exempt
de minimis benefit.

2nd Statement: Medical cash allowance to dependants of employees not

exceeding P750 per employee per semester, or one hundred twenty five pesos
(P125) per month is exempt de minimis benefit.
a. True, False
b. True, True
c. False, True
d. False, False

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45. 1st Statement: Flowers, fruits, and books or other similar token items
given to employees under certain circumstances are exempt de minimis
benefits.

2nd Statement: Gifts given during Christmas and major anniversary

celebrations not exceeding P5,000 per employee per annum is an exempt de
minimis benefits.
a. True, False
b. True, True
c. False, True
d. False, False

46. 1st Statement: Rice subsidy of one thousand five hundred pesos or one
sack of 50 kg. rice per month amounting to not more than one thousand five
hundred pesos is an exempt de minimis benefit.

2nd Statement: Employee achievement awards, e.g., for length of service,

or safety achievement, which must be in the form of a tangible personal
property other than cash or gift certificate, with an annual monetary
value not exceeding ten thousand pesos received by an employee under an
established written plan which does not discriminate in favour of highly
paid employees is an exempt de minimis benefit.
a. True, False
b. True, True
c. False, True
d. False, False

47. 1st Statement: Uniforms and clothing allowance not exceeding five
thousand pesos per annum is an exempt de minimis benefit.
2nd Statement: Actual medical benefits not exceeding P10,000 per annum
is an exempt de minimis benefit.
a. True, False
b. True, True
c. False, True
d. False, False

48. In case of foreign travel of employees for the purpose of attending

business meeting or conventions:

1st Statement: Such travel expenses shall not be treated as taxable

fringe benefits regardless of its amount.

2nd Statement: The cost of the economy and business class airplane
ticket shall not be subject to the fringe benefit tax. However, 30 percent
of the cost of first class airplane ticket shall be subject to the fringe
benefit tax.
a. True, False
b. True, True
c. False, True
d. False, False

49. A feature of ordinary gains as distinguished from capital gains:

a. Gains 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

50. On capital gains tax on real property, which of the following

statements is not correct?
a. The tax should be paid, if in one lump sum, within 30 days from the
date of sale.
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b. The instalment payment of the tax should be made within 30 days from
the receipt of each instalment payment on the selling price.
c. The tax may be paid in instalment if the initial payment does not
exceed 25% of the contract price.
d. The initial payment may be more than the down payment.

INDIVIDUAL INCOME TAX TABLE

Anything you want good, you can have. So claim it. Work hard to get it. When you get it,
reach back, pull someone else up. Each one, teach one. Don’t just aspire to make a
living. Aspire to make a difference - DW