PWC Cup – ELIMINATION ROUND

EASY1. Which is not false? A non-resident citizen is a Filipino:

a. who establishes the fact of his physical presence abroad with a definite
intention to be a citizen therein
b. who leaves the Philippines to reside abroad, either as an immigrant or for
employment on a temporary basis
c. who works and derives income from abroad and whose employment thereat requires
him/her to be physically present abroad most of the time
d. All the statements are false.

PWC Cup – ELIMINATION ROUND

EASY2. A non-resident alien can be the following except one:
a. A Chinese who engages in trade or business
b. A Japanese national who stays in the Philippines for 180 days
c. A Filipino who speaks Korean and goes out of the Philippines for more than 183
days
d. An American businessman who goes to the Philippine for a business trip

PWC Cup – ELIMINATION ROUND

EASY3. Who among the following is considered a qualified dependent?
a. 19-year old son, currently employed as a Manager at San Miguel Corporation
b. Daughter who just turned 21 this year and got married in the previous year
c. 16-year old son, making money by doing assignments of her classmates
d. Self-employed but dependent with parents for her lavish lifestyle

PWC Cup – ELIMINATION ROUND

EASY4. All the following individuals are taxable based only on their Philippine-source
income, except one:
a. Resident citizen engaged in business
b. Non-resident citizen
c. Non-resident alien
d. Resident alien

PWC Cup – ELIMINATION ROUND

EASY5. Which of the following is not an exclusion or deduction in the computation of the
net taxable compensation income of an employee?
a. Basic personal exemption
b. Ordinary and necessary business expenses
c. SSS/PhilHealth/HDMF contributions
d. Bonus not exceeding Php30,000
PWC Cup – ELIMINATION ROUND
EASY6. Which is not a de minimis benefit?
a. Rice subsidy of Php1,500 or 1 sack of 50-kg. rice per month amounting to not
more than Php1,500
b. Monetized unused sick leave credits of private employees not exceeding 10 days
during the year
c. Uniform and clothing allowance not exceeding P5,000 per annum
d. Laundry allowance not exceeding P300 per month

PWC Cup – ELIMINATION ROUND

EASY7. Which of these statements is/are true?
Statement 1
The deadline for filing the individual income tax return is 15th day of April of each
year covering the preceding taxable year.
Statement 2
An individual may opt to file his tax return on two (2) equal installments if his tax
due is more than Php2,000.
Statement 3
Filipinos employed foreign embassies and other international organizations such as Asian
Development Bank (ADB) are exempt from tax.

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AVERAGE1. The following individuals are required to file an income tax return, except:
a. Non-resident alien engaged in trade or business
b. Non-resident alien not engaged in trade or business
c. Resident citizen
d. Non-resident citizen

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AVERAGE2. A person who earns both compensation and business income:
a. Is allowed to deduct business-related expenses on his business income
b. Can no longer claim personal and additional exemption
c. Is allowed to use the optional standard deduction with respect to his business
and compensation income
d. Is taxable only on the compensation income

PWC Cup – ELIMINATION ROUND

AVERAGE3. Which of these two (2) statement(s) is/are correct?
Statement 1
A cash prize of Php10,000 received by a resident alien shall be subject to graduated tax
rates of 5-32%.
Statement 2
Prizes amounting to P20,000 received by a non-resident alien engaged in trade or
business shall be subject to 25% final tax.
PWC Cup – ELIMINATION ROUND
AVERAGE4. Which of these two (2) statement(s) is/are correct?
Statement 1
Any contributions made by an employee to Social Security Systems shall be excluded from
its gross compensation income.
Statement 2
All individuals earning purely compensation income shall be allowed to claim Php30,000
bonus exemption.
a. Statement 1 is correct.
b. Statement 2 is correct.
c. Both statements are correct.
d. Both statements are incorrect

PWC Cup – ELIMINATION ROUND

AVERAGE5. Junnel, a resident citizen of the Philippines has the following income
information for taxable year 2013:
Gross sales Php 50 million
Cost of sales 30 million
Business expenses 10 million

If Junnel elected optional standard deduction, his net taxable income for 2013 would be:

PWC Cup – ELIMINATION ROUND

AVERAGE6. Which is correct?
a. A resident citizen is taxed at graduated rates of 5-32% based on the net taxable
income.
b. A non-resident alien engaged in trade or business is taxed at a flat rate of 25%
based on gross taxable income.
c. A resident alien is taxed based on his worldwide income.
d. All is correct

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AVERAGE7. Fringe benefits granted to rank and file employees are generally subject to:
a. Fringe benefits tax
b. Donor’s tax
c. Compensation tax
d. None of the above

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DIFFICULT1. Reese sold her principal residential house costing Php 6 million for Php 10
million. She has informed the BIR Commissioner within 30 days of her intention to avail
of the tax exemption. She utilized only Php 8 million of the total proceeds. What is
the basis of the new principal residence?
PWC Cup – ELIMINATION ROUND
DIFFICULT2. Which of the two (2) cases below is/are correct?
Case 1
Rodolfo, engaged in rental business, sold his five (5)-door apartment for Php10 million.
The monthly rental per unit is P20,000. This sale is subject to capital gains tax.
Case 2
Jose bought a lot for Php6 million, in which he intended to construct his dream house.
After 10 years, he abandoned his plan and subdivided the lot to three parts (Lots A, B
and C). He sold Lot A for Php3 million. Lots B and C are held in inventory. The sale
is subject to capital gains tax.
a. Statement 1 is correct
b. Statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

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DIFFICULT3. Geraldine, a Filipino, single and with no relatives, has the following data
for the year:

Compensation income (inclusive of Php 20,000 bonus) Php 250,000

Loss from stocks becoming worthless 100,000
Transportation expense 50,000
Health insurance premium 3,000

The total deductible amount from her gross income for ITR purposes would be:

PWC Cup – ELIMINATION ROUND

DIFFICULT4. Spouses Ann and Leo, with 6 dependent children, have the following data in
2012:
Ann Leo
Gross compensation income (Assume no bonus) Php125,000 Php60,000
Rent income 76,000
Royalties on books 70,000
Withholding tax on compensation 10,000 4,000

During the year, they earned a revenue of Php120,000 and incurred expenses of P65,000,
which cannot be identified as solely earned and incurred either of the spouses.
Assuming all withholding taxes are correctly withheld and remitted to the Bureau of
Internal Revenue, compute for the respective net taxable income of Ann and Leo.

PWC Cup – ELIMINATION ROUND

DIFFICULT5. A non-resident alien died, leaving behind properties in the Philippines and
the US amounting to P600,000 and P400,000, respectively. Actual funeral expenses
incurred in the Philippines totaled P20,000, while that in the US amounted to P10,000.
How much is the deductible funeral expense?
PWC Cup – ELIMINATION ROUND
DIFFICULT6. Which of the following statements is/are correct?
Statement 1
A non-resident alien engaged in trade or business is covered by the substituted filing
regulation of the BIR.
Statement 2
Compensation income earned by Minimum Wage Earners (MWE) exempt from tax includes, among
others, overtime pay, holiday pay, night shift differential pay, and hazard pay.
a. Statement 1 is correct.
b. Statement 2 is correct.
c. Both statements are correct.
d. Both statements are incorrect.

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DIFFICULT7. Kristine is the accountant of PxC Company. During the year, she prepared the
below journal entry:

DR. Fringe benefit expense 750,000

CR. Cash 574,000
CR. FBT Payable 176,000

Note that all fringe benefits are lumped under the fringe benefit expense account.
Analyze the above entry and determine how much of the monetary value was given to rank
and file.

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CLINCHER1. The preferential tax rate applicable to employees occupying managerial or
technical positions in a Regional headquarters (RHQ) or Regional Operating Headquarters
(ROHQ) of a foreign entity in the Philippines is:
a. 15% on net taxable income
b. 25% on gross taxable income
c. 15% on gross taxable income
d. 5%-32% on net taxable income

PWC Cup – ELIMINATION ROUND

CLINCHER2. Which statement(s) is/are correct?
Statement 1
In the case of two or more trusts created by different grantors but with the same
beneficiary, the taxable income of all trusts shall be consolidated, and the tax shall
be computed based on the consolidated income.
Statement 2
General Professional Partnerships are subject to improperly accumulated earnings tax.
a. Statement 1 is correct
b. Statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
PWC Cup – ELIMINATION ROUND
CLINCHER3. Which of the following may reduce the taxable estate but not the inheritance?
a. Claims against the estate
b. Judicial expense
c. Family home
d. Unpaid mortgage

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CLINCHER4. JR’s residence was totally destroyed by fire. The property had an adjusted
basis and a fair market value of Php130,000 before the fire. During 2013, he received
insurance reimbursement of Php120,000 for the destruction of his home. His 2013
adjusted gross income was Php70,000 and had no casualty gains. What amount of the fire
loss was he entitled to claim as an itemized deduction on his income tax return?

PWC Cup – ELIMINATION ROUND

CLINCHER5. Rodolfo had the following transactions in ABC Corporation’s ordinary shares
classified as capital asset:

January 10, 2013 Purchased 9,000 shares at P50 per share

January 20, 2013 Purchased 5,000 shares at P50 per share
February 10, 2013 Purchased 5,000 shares at P45 per share
February 14, 2013 Sold 8,000 shares at P40 per share (FIFO)

Compute for the nondeductible capital loss for the month of February.

PWC Cup – ELIMINATION ROUND

CLINCHER6. Loren, an Indian national, was on a short-term assignment in the Philippines
from October 1-December 31, 2012. He was granted foreign shares on April 1, 2013 on
account of his assignment. His equity income details are as follows:

Number of shares: 1,000

FMV per share: US$15
US$1 = Php42

Calculate his 2013 Philippine tax due: