INCOME TAXATION (2ND Quiz)

Multiple Choice
Identify the choice that best completes the statement or answers the question.

______1. If the taxpayer is a resident citizen of the Philippines, which of the following is not subject to income
tax?
a. Rent income from property outside the Philippines.
b. Capital gain on shares of stock of a domestic corporation sold thru the Philippine Stock Exchange.
c. Capital gain on sale of real property in the Philippines.
d. Interest on bank deposit in the Philippines.

______2. On capital gain tax on real property, which of the following statements is not true?
a. The tax may be paid in instalment if the initial payments do not exceed 25% of the selling price.
b. The installment payment of the tax should be made within 30 days from receipt of each instalment
payment on the selling price.
c. The term “initial payment” is synonymous to “down payment”.
d. The tax should be paid, if in one lump sum, within 30 days from date of sale.

______3. Mr Garry Lacsamana is a citizen and resident of the Philippines who owns a piece of land and building
thereon (real property) in the Philippines that he acquired for Php 3,000,000, expenses of acquisition
included. He sold this for a selling price, net of selling expenses, of Php 2,800,000. The fair market
value (after deducting selling expenses) was Php 2,900,000. How much is the capital gain tax?
a. 174,000
b. 180,000
c. 0
d. 168,000

______4. Mr. Alden Richards, a resident citizen of the Philippines, had shares of stock of a domestic corporation held
as investment (capital asset) that he acquired for a purchase price of 250,000, not including
acquisition expenses of 7,500. The shares were not listed and traded in a local stock exchange. He sold
the shares directly to a buyer for a selling price of 500,000, when the fair market value was 450,000. He
incurred selling expenses of 13,500. How much is the capital gain tax?
a. 25,000
b. 22,900
c. 20,000
d. 17,900

_______5. Statement 1: Interest earned on Bangko Sentral treasury notes is subject to a final tax at 20%.
Statement 2: Interest earned on customers trade notes is not subject to final tax.
a. Both statements are true
b. Both statements are false
c. The first statement is true, but the second statement is false
d. The first statement is false, but the second statement is true

_______6. A resident citizen of the Philippines had the following data for the calendar year 2015:

Gross income from trading business 800,000

Expenses and losses in the trading business 450,000
Capital gain on a direct sale to buyer of shares of stock
of a domestic corporation 150,000
Capital gain on a sale of a piece of land in the Phils. on
 a selling price of 2,000,000 500,000
Dividend from domestic corporation 20,000

The taxable income at the end of year subject to the year-end graduated income tax for individuals is:

a. 830,000 b. 300,000 c. 330,000 d. 480,000

______ 7. Based on the given data on item no 6, how much is the tax due? _________

______ 8. Which statement is wrong?

a. A non-resident alien engaged in business in the Philippines has a final tax of twenty percent (20%)
on interest only if the interest is on bank deposits.
b. A non-resident alien engaged in business in the Philippines is subject to a final tax of twenty-five
(25%) on gross income from within the Philippines from cinematographic films.
c. A non-resident citizen is exempt from income tax on interest on foreign currency deposit under the
expanded foreign currency deposit system.
d. A resident citizen and a resident alien has a final tax of seven and one-half (7.5%) on interest on
foreign currency deposit under the expanded foreign currency deposit system.

______ 9. Maine had the following data for a taxable year:

Gross income, Philippines 380,600.28
Gross income, US 255,304.65
Expenses, Philippines 194,269.03
Expenses, US 193,248.39

If the taxpayer is a resident citizen of the Philippines his taxable income is:
a. 1,331 b. 198,387 c. 198,387.51 d. 216, 387

______ 10. A non-resident alien not engaged in business in the Philippines, but with income from the Philippines:

Statement 1: Is taxed at twenty-five percent (25%) of gross income from within the Philippines.
Statement 2: Is entitled to personal exemptions on the basis of reciprocity.

a. Both statements are true

b. Both statements are false
c. The first statement is true, but the second statement is false.
d. The first statement is false, but the second statement is true.

______ 11. The following, except one, may claim personal exemptions:

a. Non-resident alien not engaged in trade or business in the Philippines.

b. Non-resident alien engaged in trade or business in the Philippines.
c. Resident alien
d. Citizen

_______ 12. Which of the following taxpayers whose personal exemption is subject to the law on reciprocity
under the Tax Code?
a. Non-resident alien not engaged in trade or business in the Philippines whose country allows personal
exemption to Filipinos who are not residing but are deriving income from said country.
b. Resident alien deriving income from a foreign country.
c. Non-resident alien who shall come to the Philippines and stay therein for an aggregate period of
more than 180 days.
d. Non-resident citizen with respect to his income derived outside the Philippines.

_______ 13. Statement 1: If a taxpayer has dependents during the year, or dies during or his spouse dies during
the year, he/his estate may claim personal exemption in full for such year.
 Statement 2: If a dependent child dies within the year, or becomes twenty-one years old within the
year, the taxpayer may still claim additional exemption.
a. First statement is correct while second statement is wrong.
b. First statement is wrong while second statement is correct.
c. Both statements are wrong.
d. Both statements are correct.

_______ 14. Statement 1: A legitimate child who was insane at the beginning of the year, but who recovered his
sanity within the year is not a unit of additional exemption for the year.
Statement 2: A dependent child who marries within the year or who becomes gainfully employed
during the year is still a dependent with additional exemption for the year.

a. First statement is correct while second statement is wrong.

b. First statement is wrong while second statement is correct.
c. Both statements are wrong.
d. Both statements are correct.

_______ 15. The personal exemption of the non-resident alien engaged in trade or business in the Philippines is
equal to that allowed by:

a. The income tax law of his country allows to a citizen of the Philippines not residing there or the
amount provided by the NIRC to a citizen or resident alien, whichever is higher.
b. The National Internal Revenue Code to a citizen or resident.
c. The income tax law of his country to a citizen of the Philippines not residing there or the amount
provided by the NIRC to a citizen or resident, whichever is lower.
d. The income tax law of his country to a citizen of the Philippines not residing there.

_______ 16. Who among the following is a non-resident alien?

a. An alien who lives in the Philippines with no definite intention as to his stay.
b. An alien who has acquired residence in the Philippines.
c. An alien who comes to the Philippines for a definite purpose which in its nature would require an
extended stay.
d. An alien who comes to the Philippines for a definite purpose which in its nature may be promptly
accomplished.

_______ 17. A resident citizen of the Philippines had the following items:
Interest on Philippine peso savings deposit in Allied Bank 10,000
Interest on Philippine peso time deposit with maturity of
five years 30,000
Interest on US dollar deposit BDO
(under the expanded foreign currency deposit system) 5,000
Royalty from book copyrighted in the Philippines 15,000
Dividend from a domestic corporation 20,000

The final income tax withheld at source is:

a. 12,725 b. 6,475 c. 5,875 d. 11, 875

_______ 18. Statement 1: A minimum wage earner is a worker in the private sector paid the statutory minimum
wage.
Statement 2: A minimum wage earner is an employee in the public sector with compensation income
of not more than the statutory minimum wage in the non-agricultural sector where he or she is
assigned.

a. First statement is correct while second statement is wrong.

b. First statement is wrong while second statement is correct.
 c. Both statements are wrong.
d. Both statements are correct.

_______ 19. James Reid, a resident citizen, had the following data for a calendar year:
Regular wages 120,000
Overtime pay 20,000
13th Month Pay 10,000
SSS, PHIC & HDMF Contributions 5,000

The income tax due?

a. 0 b. 11,500 c. 13,500 d. 10,320

_______ 20. A resident citizen of the Philippines, an employee with 2 dependents, had the following data for
2015:
Gross salaries 240,000
Payroll deductions
SSS contributions 10,000
PHIC contributions 2,500
HMDF contributions 2,000
Union dues 1,500
Advances from employer 12,000

How much was the taxable income

a. 162,000 b. 124,000 c. 174,000.00 d. 0
______ 21. Mr. Gabby Conception, a citizen and resident of the Philippines, married to Mrs. Dawn Sese
Concepcion, with the mother of Mrs. Concepcion living with the spouse, had the following data for
2009:
Mr. Mrs. Mr. & Mrs.
Gross income from business 220,000
Gross income from profession,
net of a 10% withholding tax 180,000
Rent income from land and building
net of a 5% withholding tax 45,600
Dividend from domestic corporation 10,000
Interest on notes receivable 2,000 1,000
Interest on Phil. currency
bank deposit 3,000 2,000 8,000
Capital gain on direct sale to buyer of
shares of stock of a domestic corp 5,000
Income tax withheld on rent at 5% 2,400
Income tax withheld on professional
fees at 10% 20,000
Expenses, business/profession/rent 150,000 120,000 10,000
Quarterly income tax paid 2,000

How much is the taxable income of Mrs. Concepcion? 50,000

______22. Based on the given data on item no 21, how much is the income tax still due of Mr. Concepcion?
950

______23. Based on the given data on item no 21, for Mr. & Mrs. Concepcion, income tax still due or
refundable at the end of the year:
a. Refundable of 14,750 c. Still due of 15,050
b. Refundable of 13,000 d. Still due of 5,650

______ 24. A resident citizen of the Philippines had the following cumulative data on his practice of profession
 in 2009:

1st Q 2nd Q 3rd Q 4th Q

Gross revenues 100,000 230,000 370,000 500,000

Interest on bank deposit 2,000 4,000 6,000 8,000
Direct cost of services 30,000 69,000 110,000 150,000
Other costs/expenses 10,000 23,000 37,000 50,000

The income tax due at the end of the year is:

a. 50,000 b. 6,750 c. 13,750 d. 12,150

_______ 25. Based on the given data on item no. 24, assume the taxpayer has two dependents, how much is the taxable
income? 200,000