THEORIES

RITX Individual
1. ________________ are individuals whose source of income is purely derived from an employer-
employee relationship.
a. Compensation Income Earners
b. Self-Employed
c. Professional Earners
d. Mixed Income Earners
Revenue Regulations No. 8 Section 2C

2. Statement 1 – Individuals earning income purely from self-employment and/or practice of profession are
generally taxed based on graduated rates.
Statement 2 – VAT-registered taxpayers earning income purely from self-employment and/or practice of
profession may elect the 8% income tax rate.
a. Only statement 1 is correct.
b. Only statement 2 is correct.
c. Both statements are correct.
d. Both statements are incorrect.
Revenue Regulations No. 8, Section 3C

3. These are items not included in gross income and shall be exempt from taxation.
a. Inclusions
b. Deductions
c. Exclusions
d. All of the above
Tax Code, Chapter 6, Section 32B

RITX Corporation
1. The allowable deduction of 40% for corporations who avail the Optional Standard Deduction is based
on _____________.
a. Gross Income
b. Gross Sales/Receipts
c. Both a and b
d. None of the above
www.bir.gov.ph > Tax Information > Income Tax

2. Corporations subject to tax on income derived from Philippines are:

a. Domestic Corporations
b. Foreign Corporations
c. Both a and b
d. None of the above
Tax Code, Title 2, Chapter 2, Section 23

3. If the Minimum Corporate Income Tax due of a Domestic Corporation is higher compared with its
Regular Income Tax due, then
a. Minimum Corporate Income Tax is imposed.
b. Regular Income Tax is imposed.
c. The corporation is exempt.
 d. None of the above
Tax Code, Chapter 4, Section 27E

Final Tax
1. The final tax rate imposed on the grossed up monetary value of fringe benefit granted to the employee
(except rank and file employees) by the employer, whether an individual or a corporation.
a. 20%
b. 35%
c. 65%
d. 30%
Primer on Republic Act No. 10963, page 4; Revenue Regulations No. 11 Section 1G

Capital Gains Tax

1. Tax imposed on the gains presumed to have been realized by the seller from the sale, exchange, or other
disposition of capital assets located in the Philippines is ___________
a. Final Tax
b. Capital Gains Tax
c. Regular Income Tax
d. None of the above
www.bir.gov.ph > Tax Information > Capital Gains Tax
PROBLEMS

REGULAR INCOME TAX INDIVIDUAL

Mr. DiBiEm is a prominent lawyer who offers legal services. His total gross receipts for the taxable
year 2018 amounted to P2,920,000.00. His recorded cost of service and operating expenses were
P1,570,000.00 and P730,000.00, respectively.

1. If Mr. DiBiEm failed to signify his intent to be taxed at 8% income tax option, how much is his
tax due?
a. P 620,000.00
b. P 55,000.00
c. P 820,000.00
d. P 85,000.00

Solution:
Gross Receipts P 2,920,000.00
Less Cost of Service 1,570,000.00
Gross Income P 1,350,000.00
Less Operating Expenses 730,000.00
Taxable Income P 620,000.00

Tax Due:
On P400,000.00 P 30,000.00
On Excess (P620,000.00-P400,000.00) X 25% 55,000.00
Income Tax Due P 85,000.00
Revenue Regulations No. 8-2018, Section 3C

2. If Mr. DiBiEm opted to avail the 8% income tax option, what is his income tax due if he has
other non-operating income amounting to P200,000.00?
a. P 229,600.00
b. P 490,278.40
c. P 848,400.00
d. P 249,600.00

Solution:
Gross Receipts P 2,920,000.00
Add Non-operating Income 200,000.00
Gross Income P 3,120,000.00
Less Amount allowed as deduction 250,000.00
Taxable Income P 2,870,000.00
 Income Tax Due:
8% of P 2,870,000.00 P 229,600.00
Revenue Regulations No. 8-2018, Section 3C

REGULAR INCOME TAX CORPORATION

The gross sales of BIG Corporation for 2018 amounted to P10,000,000.00, with a cost of sales
amounting to P5,500,000.00. Operating expenses incurred totaled P945,000.00. On the filing of its
First Quarter Income Tax Return, it signified its intention to avail of the Optional Standard
Deduction.

1. How much is BIG Corporation’s income tax due?

a. P 1,066,500.00
b. P 540,000.00
c. P 810,000.00
d. P 526,500.00

Solution:
Gross Sales P 10,000,000.00
Less Cost of Sales 5,500,000.00
Gross Income P 4,500,000.00
Less OSD (P4,500,000.00 X 40%) 1,800,000.00
Taxable Income P 2,700,000.00

Income Tax Due:

30% of P 2,700,000.00 P 810,000.00
Revenue Regulations No. 8-2018, Section 8

2. If BIG Corporation failed to signify his intention to avail the OSD, how much is the income tax
due?
a. P 1066,500.00
b. P 540,000.00
c. P 810,000.00
d. P 526,500.00

Solution:
Gross Sales P 10,000,000.00
Less Cost of Sales 5,500,000.00
Gross Income P 4,500,000.00
Less Operating Expenses 945,000.00
 Taxable Income P 3,555,000.00

Income Tax Due:

30% of P 3,555,000.00 P 1,066,500.00
Revenue Regulations No. 8-2018, Section 8

FINAL TAX
1. Jean, a famous singer, and an actress traveled from South Korea to conduct a week-long in the
Philippines. She earned P3,000,000.00, and incurred a cost of services and operating expenses of
P1,500,000.00 and P455,000.00 respectively. How much is the final tax Jean is subject to?
a. P
b. P
c. P
d. P

Solution:
Gross Receipts P 3,000,000.00
Multiplied with: Flight Risk rate x 25%
25% of P 3,000,000.00 P 750,000.00
Revenue Regulations No. 8-2018, Section 8

CAPITAL GAINS TAX

1. Curly Corporation sold domestic stocks directly to a buyer at a net gain of P90,000. Compute for
the capital gains tax.
a. P13,500
b. P6,000
c. P10,500
d. P4,500
Solution:
P90,000 * 15%= P 13,500
Revenue Regulations No. 11-2018, Section 1D