FIRST CITY PROVIDENTIAL COLLEGE

Brgy. Narra, Francisco Homes, City of San Jose Del Monte, Bulacan

Subject: PCA6 Taxation Reviewer #4

Topic: Income Taxation on Individuals Instructor: Diana T. Cad

Choose the letter of the correct answer.

DIVIDEND INCOME

01. The following taxpayers who received dividend income from a domestic corporation will received
net of 10% final withholding tax, except:
a. Resident citizen
b. Non-resident citizen
c. Resident alien
d. Non-resident alien engaged in trade or business

02. Which of the following cash and/or property dividends actually or constructively received by an
individual shall not be subject to final tax but to regular income tax for individuals?
a. Cash and/or property dividends from a domestic corporation or from a joint stock company.
b. Cash and/or property dividends from insurance or mutual fund companies
c. Cash and/or property dividends from regional operating headquarters of multinational
companies.
d. Cash and/or property dividends from a non-resident foreign corporation

03. Which of the following income of non-resident citizen will be taxed differently if the taxpayer is
non-resident alien engaged in trade or business?
a. Interest income
b. Royalties
c. Dividends
d. Prizes

CAPITAL GAINS TAX – SHARES OF STOCK

04. Which of the following sale transactions will be subject to capital gains tax?
a. Sale of shares of stock by a dealer in securities
b. Sale of shares of stock during an Initial Public Offering
c. Sale of shares of stock not through the local stock exchange by a person who is not a dealer
in securities.
d. Sale of shares of stock through the local stock exchange by a person who is not a dealer in
securities.
Use the following data for the next four (4) questions:
On March 2021, Johnson sold the following shares of stock of domestic corporations which he bought
for investment purposes:
Listed and Traded Not Listed and Traded
Selling Price 250,000 140,000
Cost 118,000 80,000

05. How much is the capital gains tax?

a. 3,000
b. 6,000
c. 9,000
d. 12,000

06. Assume that Johnson is a dealer in securities, The capital gains tax should be:
a. 0
b. 3,000
c. 6,000
d. 12,000

07. Assume the shares sold were issued by foreign corporations, the capital gains tax should be:
a. 0
b. 3,000
c. 6,000
d. 12,000

08. Assume the shares not listed and traded in the local stock exchange were only sold for 60,000, the
capital gains tax should be:
a. 0
b. 6,000
c. 9,000
d. 12,000

CAPITAL GAINS TAX – REAL PROPERTY

09. Which of the following transactions is subject to 6% capital gains tax:

a. Sale of condominium units by real estate dealer
b. Sale of real property utilized for office use
c. Sale of apartment houses
d. Sale of vacant lot of an employee

10. Vincent sold a residential house and lot held for 10,000,000 to his friend, Its FMV when he
inherited it from his father was 12,000,000 although its present FMV is 15,000,000.
The tax on the above transaction is:
a. 720,000 capital gains tax
b. 900,000 capital gains tax
 c. 30% donor’s tax
d. Value added tax
11. Assuming the house and lot was Vincent’s principal residence and he used ½ of the proceeds to
buy a new principal residence within eighteen (18) months after the above sale. Assume further that
Vincent properly informed the BIR about the sale. It shall be:
a. Exempt from capital gains tax
b. Subject to 300,000 capital gains tax
c. Subject to 450,000 capital gains tax
d. Subject to 600,000 capital gains tax

SELF-EMPLOYED and/or PROFESSIONALS (SEP)

12. Statement 1: Self-employed is a sole proprietor or independent contractor who reports income
earned from self-employment. S/he control who s/he works for, how the work is done and when it is
done.
Statement 2: A Professional is a person formally certified by a professional body belonging to a
specific profession by virtue of having completed a required examination or course of studies and/or
practice, whose competence can usually be measured against an established set of standards.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are in-correct
13. Statement 1: A Professional also refers to a person who engages in some art or sport for money, as
a means of livelihood, rather than as a hobby.
Statement 2: Professional includes but is not limited to doctors, lawyers, engineers, architects, CPA’s,
professional entertainers, artists, professional athletes, directors, producers, insurance agents, insurance
adjusters, management and technical consultants, bookkeeping agents, and other recipients of
professional, promotional and talent fees.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are in-correct

Use the following data for the next four (4) questions:
Bruno owns a nightclub and a videoke bar, with gross receipts of 2,500,000. His cost of direct services
and operating expenses are 1,000,000 and 600,000 respectively, and with non-operating income of
200,000.

14. Which of the following statements is correct?

 a. Bruno has no option to avail the 8% income tax rate.
b. Bruno’s income tax shall be computed using the graduated tax rate.
c. Aside from income tax computed using the graduated tax rate, Bruno is liable to
prescribed business tax, which, under this case is Amusement Tax under Sec. 125 of the tax Code, as
amended.
d. All of the above.

15. Bruno’s income tax payable for the year shall be:

a. 188,000
b. 208,000
c. 220,000
d. 250,000

16. Bruno’s business tax due for the year shall be:

a. 196,000
b. 216,000
c. 480,000
d. 486,000

17. Bruno’s total tax due for the year shall be:

a. 706,000
b. 486,000
c. 216,000
d. 188,000