1.

The following data relates to a corporate taxpayer:

Philippines Abroad Global

Gross receipts P 4,000,000 P 3,000,000 P 7,000,000
Direct cost of services 2,000,000 1,500,000 3,500,000
Expenses 1,200,000 1,000,000 2,200,000
Net income P 800,000 P 500,000 P 1,300,000
Income tax paid P 165,000

Compute the income tax due if the taxpayer is an international carrier

a. P 105,000 c. P 60,000
b. P 100,000 d. P 20,000

2. The Calintaan Corporation had the following historical MCIT and RCIT data:

2013 2014 2015 2016

MCIT P 120,000 P 200,000 P 190,000 P 170,000
RCIT P 110,000 P 220,000 P 0 180,000

Basing solely on the information provided, what is the tax due and payable respectively in 2013 and 2014?
a. P120,000; P220,000 c. P120,000; P210,000
b. P120,000; P100,000 d. P110,000; P220,000

3. The following relates to Gandabebe Co., a domestic corporation:

Minimum corporate income tax P 164,000

Allowable deductions 7,600,000
Creditable withholding tax 52,000
Estimated income tax payments 87,000

What is the income tax still due to be filed through BIR Form 1702-RT?
a. P 0 c. P 41,000
b. P 25,000 d. P112,000

4. A corporate taxpayer had the following data on its fifth year of operation:
Philippines Abroad Total
Sales P 2,000,000 P 3,000,000 P 5,000,000
Less: Cost of services 1,200,000 1,800,000 3,000,000
Gross income from operation P 800,000 P 1,200,000 P 2,000,000
Interest on deposits 50,000 250,000 300,000
Total Income P 850,000 P 1,450,000 P 2,300,000
Less: Business expenses 800,000 1,300,000 2,100,000
Net income P 50,000 P 150,000 P 200,000

What is the tax due assuming the taxpayer is a domestic corporation?

a. P 60,000 c. P45,000
b. P 46,000 d. P40,000

5. In the immediately preceding problem, what is the tax due if the corporation is a resident foreign corporation?
a. P 0 c. P16,000
b. P15,000 d. P17,000

6. If refunded, this is taxable

A. Estate tax C. Special assessment
B. Donor’s tax D. Fringe benefit tax

7. Who of the following need not file income tax return?

a. A taxable corporation, if with a net loss.
b. A taxable partnership, if with a net loss.
c. A business partnership, with a net income or net loss.
d. An employee with a gross compensation income of P48,500 when the withholding tax by an employee was correct.
8. Included in the compensation package of an executive was the free use of the company’s residential
condominium unit in Makati City, Philippines. Data on the condominium unit follow:
Fair market value in the Real Property Declaration P 1,000,000
Zonal value 2,000,000
Fair market value 2,500,000

How much is the fringe benefit tax?

a. P326,400. b. P705,832.35.
c. P1,960.78. d. P945,176.47.
e. None of the choices

9. If an individual performs services for a creditor who in consideration thereof cancels the debt, the cancellation
of indebtedness may amount:
a. To a gift.
b. To a capital contribution.
c. To a donation inter vivos.
d. To a payment of income.

10. Dividends received by a domestic corporation or by a resident foreign corporation from a domestic corporation
shall:
a. Not be subject to tax
b. Be subject to fifteen percent (15%) final tax
c. Be subject to ten percent (10%) final tax
d. None of the choices

11. Which of the following government-owned or controlled corporations shall be subject to the corporate income
tax?
I - Philippine Amusement and Gaming Corporation (PAGCOR);
II - National Development Corporation (NDC);
III - Philippine Charity Sweepstakes Office (PCSO);
IV - Social Security System (SSS).
a. All of the above; c. I and II only
b. II only; d. None of the above.
 The record of a closely held corporation, already in operation since 2010, reveals the
following:
2013: Gross income P 3,000,000
Less: Expenses 3,800,000
Net operating loss (P800,000)

2014: Gross income P 5,000,000

Expenses 4,000,000
Rent income, gross of 5% withholding tax 50,000
Interest on money market placement,
net of 20% withholding tax 80,000
Inter-corporate dividends received 500,000
Dividends paid by the corporation 1,000,000
Tax paid, first three (3) quarters 50,000

Upon examination of the 2014 return, the BIR concludes that there is improper accumulation
of profit. The corporation fails to show proof to prove the contrary.

12. Using 30% tax rate, how much is the tax payable of the corporation in 2013 and 2014?
2013 2014
a. Zero P30,000;
b. Zero P47,500;
c. P60,000 P80,000;
d. P60,000 P30,000;

13. Using the data in the preceding number, how much is the tax on the improperly accumulated
income in 2014?
a. P55,000; c. P3,000;
b. P53,000; d. Zero.

14. A domestic corporation has the following data for the fiscal year starting June 1,2008 and
ending May 31,2009:
Gross income, Philippines P 5,000,000
Gross income, USA 10,000,000
Deductions, Philippines 2,000,000
Deductions, USA 4,000,000

How much is the income tax due for the fiscal year ending May 31,2009?
a. P3,150,000
b. 2,962,500
c. P2,880,000
d. P 2,700,000

Panday Corporation’s computed normal income tax and MCIT, and creditable income taxes withheld
from 1st to 4th quarters including excess MCIT and excess witholding taxes from prior year/s are as
follows:

Quarter Normal Taxes Excess MCIT Excess

Income Tax MCIT Withheld Prior Year Witholding Tax
Prior Year
1st P100,000 P80,000 P20,000 P30,000 P10,000
2nd 120,000 250,000 30,000 - -
3rd 250,000 100,000 40,000 - -
4th 200,000 100,000 35,000 - -

15. How much is the income tax payable for the first quarter?
a. 100,000 c. 60,000
b. 80,000 d. 40,000

16. How much is the income tax payable for the second quarter?
a. 330,000 c. 100,000
b. 230,000 d. 80,000

17. How much is the annual income tax payable?

a. 670,000 c. 165,000
b. 505,000 d. 100,000
 18. Proprietary educational institutions and hospitals which are non profit shall pay a tax of how
much on their taxable income at what percent?
a. Thirty percent (30%) c. Fifteen percent (15%)
b. Twenty five percent (25%) d. Ten percent (10%)

19. A proprietary private educational institution has presented the following data for the year
2014:

Gross income, related parties P 5,000,000

Gross income, unrelated activities(including P2,000,000 rent
from commercial spaces, gross of 5% witholding tax) 7,000,000
Expenses, related activities 2,000,000
Expenses, unrelated activities 3,000,000
Dividend from a domestic corporation 100,000

How much is the tax payable?

a. 2,100,000 c. 1,100,000
b. 2,000,000 d. 1,000,000

20. The following data are presented to you:

Year Normal Income Tax MCIT
2012 P 50,000 P75,000
2013 60,000 100,000
2014 100,000 60,000
How much is the tax payable for the years 2012, 2013 and 2014?
a. 2012-P75,000 2013-P100,000 2014-P35,000
b. 2012-P75,000 2013-P60,000 2014-P100,000
c. 2012-P50,000 2013-P100,000 2014-P35,000
d. 2012-P50,000 2013-P60,000 2014-P100,000

21. Aliw Service Corporation, registered with BIR in 2007, has the following data for the year
2014:

Gross receipts P1,000,000

Discounts given 100,000
Return and allowances 150,000
Salaries of personnel directly involved in the supply of services 300,000
Fees of consultants directly involved in the supply of services 50,000
Rental of equipment directly used in the supply of services 70,000
Operating expenses 420,000

How much is the income tax due and payable?

a. P27,000 c. Zero
b. P6,600 d. None of the choices
22. Shendelzare Silkwood, an American management expert is hired by a Philippine Corporation to assist in its
organization and operation for which he has to stay in the Philippines for 5 months. He came to the Philippines for this
definite purpose but the nature of his job may require him to extend his stay and live temporarily in the Philippines.
The American management expert intends to leave the Philippines as soon as his job is done.

For income tax purposes, the American management expert shall be classified as

a.RA b.NRAETB
c.NRANETB d.NRC

23. Mr. Santiago purchased a life annuity for P100,000 which will pay him P10,000 a year. The life expectancy of Mr.
Santiago is 12 years. Which of the following will Mr. Santiago be able to exclude from his gross income?
a. P100,000. c. P20,000
b. P10,000. d. Answer not given.

Theresita Guadalupe insured his life with an insurance company. Under the contract, she will pay a monthly premium of
P2,000 for 10 years. In case of death before the 10th year, his beneficiary will receive an indemnification in the amount of
P150,000. If he is still living on the 10th year, he will receive the face value of P500,000.

24. If Theresita Guadalupe dies on the 5th year, his beneficiary will report an income of:
a. P500,000 b. 150,000 c. 260,000 d. Exempt

25. Suppose Theresita Guadalupe, dies on the 5th year and his beneficiary was offered to receive the P150,000 in lump
sum or to receive it at P20,000 a month for ten (10) months and the beneficiary chose the 2nd option, she will report
an income of
a. 500,000 b. 150,000 c. 50,000 d. Exempt

26. Suppose Theresita Guadalupe survived the policy and was able to receive P500,000, she will report an income of
a. 500,000 b. 260,000 c. 150,000 d. None

27. Bea Binene won a gold medal and P50,000 cash prize for swimming competition in the Palarong Pambansa. How much
final tax should be withheld from the prize?
a. P 20,000 c. P5,000
b. P 10,000 d. P 0

28. Cleveland Champions Company insured the life of its president for P2,000,000. A total of P500,000 in premiums was
paid before the president died. The company collected the total proceeds.
Compute the return on capital.
a. P2,000,000 c. P500,000
b. P1,500,000 d. P 0

29. Which of the following is subject to regular income tax?

a. Gain on redemption of shares in mutual funds
b. Gains on sale of long-term bonds with maturity of more than 5 years
c. Sale of foreign stocks directly to buyer
d. Compensation for personal injuries or sickness

30. Withholding taxes through value added tax is filed using BIR FORM ____
a. 2551 b. 2301 c. 1601-V d. 2550

31. Refer to the previous number, the deadline of the form stated in number 63 is on or before
a. 10th day of the following month
b. 15th day of the following month
c. 20th day of the following month
d. 25th day of the following month

32. Mr. A, a resident citizen of the Philippines, had the following data for 2015 and 2016:
2018: Gross income from business 600,000

Business expenses 350,000

Gain on sale of capital asset held for six years 40,000

Loss on sale of capital asset held for three months 25,000

2019: Gross income from business 400,000

Business expenses 460,000

Gain on sale of capital asset held for ten months 120,000

 The taxable income for 2019 before the exemption of P250,000?

a. 55,000
b. 5,000
c. 95,000
d. 40,000

33. A citizen of the Philippines, with a two-year-old legitimate child, had the following data in a calendar year:
Gross income from business 1,000,000

Business expenses 900,000

Gain on sale of capital asset held for six months 50,000

Gain on sale of capital asset held for two years 20,000

Loss on sale of capital asset held for nine months 30,000

Loss from fire of capital asset held 6 months 40,000

The taxable income for the year before the exemption of P250,000:

a. 130,000
b. 55,000
c. 140,000
d. 100,000

34. Nikki Corporation has the following transactions during the year:
Gross income, Philippines business P1,600,000
Gross income, Hongkong business 400,000
Business expense, Philippines 900,000
Business expense, Hongkong 100,000
Interest connected with Philippine business 60,000
Interest connected with Hongkong business 40,000
Interest connected with business in the Phil. and Hongkong 100,000
Business expense which cannot be allocated 120,000
If taxpayer is a resident foreign corporation, its net income subject to tax in the Philippines is:

a. P464,000 b. P530,000 c. P640,000 d. P940,000

35. A resident, single with qualified dependent illegitimate children had the following during the calendar year.
Gross compensation income P250, 000
Expenses related to his employment 120, 000
SSS premium contributions 3, 600
Philhealth contribution 2, 400
Pag-ibig contributions 2, 000
Union dues 1, 000
Premiums on health insurance 4, 000
The taxable income before exemption is

A. P237, 000 B. P241, 000 C. P238, 600 D. P117, 000

36. do business/ trade in the Phil. is:

a. Domestic corporation C. Non-resident foreign corporation
b. Resident foreign corporation D. General co-partnership

37. A corporation files a quarterly return within

a. 30 days after the end of each of the 3 quarters
b. 60 days after the end of each of the first 3 quarters
c. 30 days after the end of each of the first 4 quarters
d. 60 days after the end of each of the first quarters

38. The improperly accumulated earnings tax shall apply to

A. Publicly held corporation C. Insurance companies
B. B. Banks and other non-bank financial D. Private corporations

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

39. The income tax due for the second quarter is

A. P100, 000 B. P80, 000 C. P50, 000 D. P40, 000

40. The income tax due for the second quarter is

A. P120, 000 B. P250, 000 C. P150, 000 D. P230, 000

41. The income tax due for the third quarter is

A. P250, 000 B. P100, 000 C. P140, 000 D. P70, 000

42. The income tax due for the year is

A. P200, 000 B. P100, 000 C. P135, 000 D. 165, 000

43. Using the preceding problem except that the normal income tax for the fourth quarter is
P50, 000 (instead of P200, 000), the income tax due for the year is

A. P120, 000 B.P55, 000 C. P45, 000 D.P75, 000

The A corporation provided the following data for calendar year ending December 31, 2019 ($ 1= P50).

Philippines Abroad

Gross income P4, 000, 000 $ 40, 000

Deductions 2, 500, 000 $ 15, 000
Income Tax Paid $ 3, 000

44. If it is a domestic corporation, its income tax after tax credit is

A. P675,000 B. P832, 000 C. P962, 500 D. P480, 000

45. If it is a resident corporation, its income tax is

A. P730, 000 B. P1, 280, 000 C. P480, 000 D. P450, 000

46. If it is a non-resident corporation, its income tax is

A. P370, 000 B. P1,280,000 C.P880,000 D.P1,200,000

47. Under No. 31, but it opts to claim the tax paid abroad as deduction from gross income, its income tax is
A. P780,000 B.P832, 000 C.P275,000 D.P150,000

48. If it is private educational institution, its income tax due after tax credit
A. P730, 000 B.P832, 000 C.P275,000 D.P150,000

49. If it is a non-profit hospital, its income tax credit is

A. P730, 000 B.P832,000 C.P275,000 D.P150,000

50. If it is a resident international carrier, its income tax is

A.P100,000 B.P10,000 C.37,000 D.P125,000

51. If it is a non-resident cinematographic film owner/lessor, its income tax is

A.P1,000,000 B.P100,000 C.P300,000 D.P128,000

52. If it is a non-resident lessor of vessels,its income tax is

A.P100,000 B.P180,000 C.P300,000 D.P128,000

53. If it is a non-resident lessor of aircrafts, machineries and equipments, its income tax is
A. P100,000 B.P180,000 C.P300,000 D.P128,000

54. If it is a resident corporation but its expenses within and outside the Philippines is P3M,
Unallocated (disregard original data on expenses), its income tax is A.P640,000 B.P700,000
C.P480,000 D.P128,000

55. If it is a resident corporation and remitted 60% of its net profit to its head office abroad, its total tax liability is
(Original data).
a. P480,000 B.P571,800 C. P196,000 D.P612,750

56. If it is a private educational institution but P3.5M of its total gross income is from lease and restaurant business,
its income tax is
A.P730,000 B.P275,000 C.P150,000 D.P812,500

57. If it is a domestic corporation, but its total expenses is P5,800,000 (disregard original data on expenses), its income
tax is
A.P730,000 B.P64,000 C.P120,000 D.P85,000

58. Under No.44, but the domestic corporation is non-profit hospital (disregard tax paid abroad ), Its income tax is
A.P20,000 B.P64,000 C.P10,909 D.P120,000

59. If the corporation is a non-stock educational; institution, which uses all its revenues or
income for educational and charitable purposes , its income is

a. P0 B.P730,000 C.P120,000 D.P64,000

60. As a rule, this is not part of taxable

income
A. Profit sharing C. Overtime pay
B. Hazard pay D. 13th month pay

61. This is taxable income

A. Retrenchment pay C. Separation pay due to resignation
B. SSS/GSIS benefits D. Refund of Philippine Income tax

62. Exclusions from gross income, except:

A. Interest on the price of the land covered by the Presidential Decree on land reform.
B. Interest payments on proceeds of life insurance held by the insurer
C. GSIS/SSS, Philhealth and Pag-ibig contributions and Union dues of individuals
D. Gains realized by an investor upon redemption of shares of stock in a mutual fund company.

63. A taxpayer engaged in business incurred a partial loss of property as follows:

Asset 1 Asset 2
Book value of the asset at the time of loss P200,000 P200,000
Cost to restore the property back to its normal operating condition 120,000 300,000
Insurance recovery 50,000 None
Salvage None 40,000

The deductible loss for asset 1 is

A. P120,000 C. P30,000
B. P 70,000 D. P80,000
64. The deductible loss for asset 2 is

A. P300,000 C. P160,000
B. P200,000 D. P240,000

65. X acquired a machine at a cost of P250,000. Scrap value is P20,000 and the estimated useful life was 25 years. After
depreciating the asset for 20 years using the straight-line method, it was determined that the remaining life is not five
years. The annual depreciation
from the 21st year assuming a remaining life of 10 years without scrap is

a. P10,000 C. P9,200
b. P11,500 D. P6,600

66. One of the following is not correct for deductibility of losses from gross income

a. Must arise from fire, storm or other casualty, robbery, theft or embezzlement
b. Must not be compensated by insurance or other form of indemnity
c. A declaration of loss by casualty should be filed with the Bureau of Internal Revenue
d. Must have been claimed as deduction in the estate return of the taxpayer

67. Which of the following statements is not correct?

a. The optional standard deduction is an amount equal to forty percent (40%) of the Gross income
from business or practice of profession of the taxpayer.
b. The optional standard deduction is not available against compensation income arising Out of an employer-
employee relationship
c. The election of Optional Standard Deduction is irrevocable for the taxable year for Which the choice is
made.
d. Unless the taxpayer signifies in his return his intention he shall be considered as having availed of the
itemized deduction.
68. The following may be allowed to claim optional standard deduction, except

a. Resident citizen C. Resident alien

b. Non-resident citizen D. Non-resident alien

69. The following may elect optional standard deduction or itemized deduction, except

a. Taxable estates and trusts C. General professional partnership

b. Domestic corporation D. Foreign corporation

70. Z took a life insurance policy of P2M naming his wife as beneficiary. The policy provides that the insurance
company will pay Z the amount of P2 M after the 25th year of the policy and his beneficiary, should he die
before this date. The premiums paid on the policy is P1.5M. If Z outlived the policy and received the
proceeds of P2M, such proceeds will be:

A. Taxable in full
B. Exempt from income tax
C. C. Partly taxable, partly exempt
D. Subject to final tax.