Name: Score: 0 / 75 points (0%) 3.Individual Income Taxation Quizzer Multiple Choice Identify the choice that best completes the statement or answers the question. a 1. Statement 1: The theory in citizenship that the Philippines follow is jus soli Statement 2: Under jus sanguinis, the citizenship of a person is determined by his or her parents. a. Only Statement 1 is true. b. Only Statement 2 is true. c. Both statements are true. 4. Both statements are not true. ANSWER: B POINTS: — 0/1 FEEDBACK: 2, Who among following is not a Filipino citizen? a. Bobbie, bom on August 11, 1965. Her father is German, and her mother is Filipino. She lected Philippine citizenship upon reaching the age of majority. b, Gabbie, born on September 3, 1968. Her father is Filipino, and her mother is Indonesian, She did not elect Philippine citizenship upon reaching the age of majority. c. Teddie, born on December 15, 1972. Her father is French, and her mother is Italian. She elected Philippine citizenship upon reaching the age of majority. 4. Alex, born on January 27, 1976. Her father is Brazilian, and mother is Filipino, She did not elect Philippine citizenship upon reaching the age of majority. ANSWEI POINT! FEEDBACK: c or 3. Aresident citizen is a a. Atleast one year. b. At least 183 days. ©. Atleast 180 days. d. At least 90 days. zen whose stay here in the Philippines is: ANSWER: B POINTS: 0/1 FEEDBACK: 4, Which of the following taxpayers is taxable on income derived from sources within and outside the Philippines? a. Resident citizen. b. Resident alien. c. Resident citizen and resident alien. d. Resident alien and non-resident citizen, ANSWEI POINT: FEEDBACK: A ol ____ 5. Anon-resident alien engaged in trade or business is one whose stay in the Philippines is: a. Atleast 180 days b. More than 180 days©. Atleast 183 days 4. More than 183 days ANSWER: B POINTS: 0/1 FEEDBACK: 2 6. Seamen are classified as: “~~ “a. Resident citizen b, Non-resident citizen ¢. Resident alien d. Non-resident alien engaged in trade or business B on FEEDBACK: = ___ 7. Statement 1: A non-resident alien not engaged in trade or business is subject to income tax at a rate of 0% to 35% depending on his/her taxable income. Statement 2: All resident citizens are required to file a quarterly income tax return aside from their annual income tax returns. a. Only Statement 1 is true. b. Only Statement 2 is true. ¢. Both statements are true. 4, Both statements are not true. D on FEEDBACK: ___. 8, Namjoon is a non-resident alien. He stayed in the Philippines for a period of 70 days from * March to May, went abroad, and returned to the Philippines for a period of 120 days from August to December. For tax purposes, is Namjoon considered as a non-resident alien engaged in trade or business? a. Yes, considering that his longest stay in the Philippines was for a continuous period of 120 days. b. Yes, considering that he stayed in the Philippines for an aggregate period of 190 days. ¢. No, considering that his longest stay in the Philippines was only a continuous period of 120 days. d. No, considering that he stayed in the Philippines only for an aggregate period of 190 days. ANSWER: B POINT! o/1 FEEDBACK: _____ 9, Which is true regarding the taxation of non-resident aliens not engaged in trade or business? * a. They are subject to the final tax of 30% based on gross income. b. They are subject to the final tax of 30% based on taxable income. c. They are subject to the final tax of 25% based on gross income. d. They are subject to the final tax of 25% based on taxable income. Cc on FEEDBACK: if — 10. Who among the following taxpayers can avail ofthe special ineome tax rate? a. VAT registered domestic corporations b. Non-VAT registered non-resident alien not engaged in trade or business¢. VAT-registered resident citizens 4. Non-VAT registered non-resident citizens ANSWER: D POINTS: 0/1 FEEDBACK: Who among the following is most likely to be classified as a mixed income eamer? a, Sakura, who is a part-time service crew at a fastfood store and a part-time saleslady at two different department stores. b. Tomoyo, who eams income from her freelance photography stints and is engaged on a per-contract basis by different companies. c. Yukito, who is a full-time Vice President for Human Resources at a multinational company and a lessor of a five-floor apartment. 4. Toya, who is still a college student and has income from his gigs with his rock band. ANSWER: C POINTS: 0/1 FEEDBACK: Statement 1: A purely compensation income earner is required to file his second quarter income tax return on August 15 Statement 2: A mixed income eamer is required to file his third quarter income tax return on December 15. Only Statement 1 is true. Only Statement 2 is true. Both statements are true. Both statements are not true. eee ANSWER: D POINTS: 0/1 FEEDBACK: Who among the following individual taxpayers is qualified under substituted filing, assuming they are all resident citizens? a. Lisa, who is employed as an accounting teacher in two universities in Cavite. b, Jennie, who sells cupcakes in her free time. c. Rosé, who is employed as a chef in a five-star restaurant, but at the same time, won the lottery in the current taxable year amounting to P200,000,000. d. Jisoo, who receives professional fees as a singer. ANSWEI POINTS: FEEDBACK: c ofl Married taxpayers are: a. Required to file separate tax returns. b. Required to file a joint tax return and aggregate their income in the process of computing their income tax due. c. May file a joint tax return but are required to aggregate their income in the process of computing their income tax due. 4. May file a joint tax return but are required to compute their income tax due separately. ANSWER: D POINTS: — 0/1 FEEDBACK: Statement 1: An individual taxpayer whose only income is interest from bank deposits need not file his income tax return.Statement 2: A minimum wage earner who has derives no other income aside from his minimum wage employment need not file his income tax return. a. Only Statement 1 is true. b. Only Statement 2 is true. c. Both statements are true. 4. Both statements are not true. ANSWER: C POINT: O/1 FEEDBACK: G_ —16-All of the following can be deducted from a purely compensation income eamer’s income, - except: Union dues Mandatory PAGIBIG contributions Private health insurance contributions Mandatory SSS contributions eooe FEEDBACK: 17. Ifa mixed income earner avails of the 8% income tax option, then: a. He is entitled to deduct P250,000 as exempt compensation. b. He is entitled to deduct P250,000 from his compensation as exempt compensation, and another P250,000 as exempt income from trade or business. c. He is entitled to deduct P250,000 from his compensation as exempt compensation, and another P250,000 as exempt income from trade or business, at his option. 4. He is no longer entitled to any exemption. ANSWER: A POINTS: 0/1 FEEDBACK: » __ 18, The income tax rates for individuals can be characterized as: a. Proportional b. Progressive c. Regressive 4. Reportional ANSWER: B POINTS: 0/1 FEEDBACK: » ___ 19. Who among the following can most likely claim of the 8% income tax option? a. Aregistered Barangay Micro Business Enterprise b. APEZA-tegistered entity subject to the special corporate income tax (SCIT) c. Aregistered service-oriented sole proprietorship subjected to the 2% withholding tax rate d, A PEZA-tegistered entity enjoying income tax holiday FEEDBACK: . 20, Statement 1: A non-VAT registered taxpayer whose annual gross receipt is 4,500,000 cannot “ avail of the 8% income tax option. Statement 2: A VAT-registered taxpayer whose annual gross receipt is P2,500,000 cannot avail of the 8% income tax option.a. Only Statement 1 is true, b. Only Statement 2 is true. c. Both statements are true. 4. Both statements are not true. ANSWER: C POINTS: 0/1 FEEDBACK: 21, Which of the following statements is true? a. Prior to the passage of CREATE, a non-resident alien not engaged in trade or business is ‘exempt from income tax in his/her PCSO/Lotto winnings b. Prior to the passage of CREATE, a non-resident alien engaged in trade or business is subject to 20% final withholding tax in his/her PCSO/Lotto winnings Prior to the passage of CREATE, a non-resident alien not engaged in trade or business is subject to 20% final withholding tax in his/her PCSO Lotto winnings d. Prior to the passage of CREATE, a non-resident alien engaged in trade or business is subject to 20% final withholding tax in his/her PCSO/Lotto winnings ANSWER: D POINTS: 0/1 FEEDBACK: 22, Which of the following should be included as part of gross income subject to regular income tax of a resident citizen taxpayer? a. Royalties from literary compositions eared in the Philippines b. Royalties from films showed in France ©. Prizes amounting to P40,000 d. PCSO winnings amounting to P6,000 FEEDBACK: » ___ 23. Which of the following is exempt from income tax for a resident citizen taxpayer? a. Royalties from literary compositions earned in the Philippines b. Royalties from films showed in France c. Prizes amounting to P40,000 4. PCSO winnings amounting to P6,000 FEEDBACK: = ___24. All of the following items of interest income are subject to final tax for a resident citizen income - eamer, except: a. Interest income from government securities b. Interest income from privately issued promissory note c. Interest income from deposits under expanded foreign currency deposit system d, Interest income from short-term currency bank deposit ANSWER: B POINTS: 0/1 FEEDBACK: : 25, Which of the following item of interest income is exempt from income tax? a. Interest income earned by a non-resident alien engaged in trade or business from short- term currency bank deposit26, 27, 28, 29, b, Interest income on currency bank deposits received by a resident foreign corporation from a local commercial bank c. Interest income eared by a non-resident citizen on expanded foreign currency deposit system. 4. Interest income on currency bank deposits earned by a resident citizen from a Danish bank abroad. ANSWER: C POINT or FEEDBACK: Which of the following is an inclusion to gross income? a. Proceeds of life insurance b, Interest in the proceeds of life insurance ©. Property insurance recovery, proceeds equal to book value of property perished 4. Health insurance proceeds ANSWEI POINT FEEDBACK: B on Which of the following is not an inclusion in gross income? a. Payment for lost salaries b. Payment for loss of earning capacity c. Recovery of bad debts previously written off d. Moral damages ANSWEI POINTS: FEEDBACK: D ol Generally, which of the following types of income is subject to final withholding tax? a. Compensation income b, Business income c. Passive income d. Construction income FEEDBACK: Which of the following types of return? a. Income alr .come is no longer required to be reported in the income tax - dy subjected to final withholding tax b. Income already subjected to creditable withholding tax c. Illegal income d, Income outside Philippine territory ANSWER: A POINTS: 0/1 FEEDBACK: » ___ 30. Which of the following gains is subject to capital gains tax? a a. Gain on sale of shares of stocks of domestic corporation by dealer of securities b. Gain on sale of unquoted shares of stocks of domestic corporation by nondealer of securities ©. Gain on sale of quoted shares of stocks of domestic corporation thru the facilities of Philippine Stock Exchange 4. Gain on sale of quoted shares of stocks of foreign corporation directly to buyerANSWER: B POINT! o/1 FEEDBACK: = ___31. Which fringe benefit may be subjected to fringe benefit tax? a. De minimis fringe benefits given to rank and file employees b. De minimis fringe benefits given to supervisory or managerial employees c. Fringe benefits in excess of de minimis fringe benefits given to rank and file employees 4. Fringe benefits in excess of de minimis fringe benefits given to supervisory or managerial employees D on FEEDBACK: 32. What is the income tax rate on presumed capital gain on sale of real properties classified as capital assets which are located within Philippine territory? a. 15% on gain on sale b, 6% on gain on sale €. 15% on selling price or fair market value or zonal valuation, whichever is the highest 4. 6% on selling price or fair market value or zonal valuation, whichever is the highest FEEDBACK: » ___ 33. Which individual taxpayer is taxable for his income from within and from without Philippine sources? a. Resident citizen b. Nonresident citizen c. Resident alien d. Nonresident alien ANSWER: A POINTS: 0/1 FEEDBACK: > 34, Based on the scheduler rate of individual income taxation, how much annual income is exempted from income tax? a. P250,000 b. P500,000 ©. P1,000,000 4. P1,500,000 ANSWER: A POINT! or FEEDBACK: » ___ 35. What is the final withholding tax rate for the royalty income of resident citizen coming from his books, literary works and musical compositions? a. 10% b. 15% ©. 20% d. 25% ANSWER: A POIN or FEEDBACK:36, What is the final withholding tax rate for the gross income of a non-resident alien not engaged in trade or business? 10% b. 15% ©. 20% d. 25% ANSWER: D POINT or FEEDBACK: 37. How much prize income from within of a citizen or resident alien is subject (o ordinary income tax of 20%-35%? P10,000 50,000 100,000 PS500,000 neoe ANSWER: A POINT: ofl FEEDBACK: 38, What is the final withholding tax rate of cash dividend income of a non-resident alien engaged in trade or business? a. 10% b. 15% c. 20% d. 25% c on FEEDBACK: 39. Which income of a minimum wage earner is subject to income tax? a. Holiday pay b. Overtime pay c. Night shift differential pay FEEDBACK: 40. When is a non-resident alien considered engaged in trade or business in the Philippines? a. Ifhe stays in the Philippines for a period of at least 180 days during the year. b. Ifhe stays in the Philippines for a period of at least 181 days during the year. ¢. Ifhe stays in the Philippines for a period of at least 182 days during the year. 4. Ifhe stays in the Philippines for a period of at least 183 days during the year. FEEDBACK: 41, What is the final tax rate on royalty income from music and literary compositions r Resident Citizens from within Philippine sources? a. 10% b. 20% c. 7.5% d. 25% ived by& ANSWER: A POINT: of FEEDBACK: 42. Which of the following taxpayers may avail of the 8% optional gross income taxation? a b, c a. Pure compensation income earner Individual business income earner Corporation Partnership ANSWER: B POINT: ol FEEDBACK: 43. Which interest income of a resident citizen is subject to ordinary income tax (schedular rate)? a b. c 4. FEEDBACK: Interest income in 3-year time deposit invested in a domestic bank Interest income in PAGIBIG Fund MP2 Savings program Interest income in 5-year bond indenture Interest income in a gambling debt 44, Which winnings of a resident citizen is subject to ordinary income tax (schedular rate)? PCSO lotto winnings Winnings in illegal jueteng Fortune Tobacco raffle winnings Coca-cola promotional winnings ANSWER: B POINTS: 0/1 FEEDBACK: 45, What is the maximum reward that may be given to informer of tax evasion? a, b. 10% of the revenues, surcharges or fees recovered and/or fine or penalty imposed and collected or one million pesos (P1,000,000.00) per case whichever is lower. 20% of the revenues, surcharges or fees recovered and/or fine or penalty imposed and collected or two million pesos (P2,000,000.00) per case whichever is lower. 30% of the revenues, surcharges or fees recovered and/or fine or penalty imposed and collected or three million pesos (P3,000,000.00) per case whichever is lower: 40% of the revenues, surcharges or fees recovered and/or fine or penalty imposed and collected or four million pesos (P4,000,000.00) per case whichever is lower. ANSWER: A POINT! or FEEDBACK: 46, What is the final tax rate on the resident citizen informer's reward? a. b. ce 4, 10% 20% 30% 25% ANSWER: A POINTS: 0/1 FEEDBACK:a 47. What is the final tax rate on cash dividend received by Resident Citizens from domestic corporation? a, 10% b. 20% ©. 15% d. 25% ANSWER: A POINT or FEEDBACK: 48, What is the quantitative threshold for the taxpayer to avail of the 8% optional gross income taxation? Gross sales or receipts not exceeding P1,000,000 Gross sales or receipts not exceeding P2,000,000 Gross sales or receipts not exceeding P3,000,000 Gross sales or receipts not exceeding P4,000,000 neoe ANSWER: C POINT: of FEEDBACK: 49. Which of the following individuals is subject to gross income tax? a. Resident citizen b. Nonresident citizen c. Resident alien d, Nonresident alien not engaged in trade or business ANSWER: D POINT: on FEEDBACK: 50. Which of the following individual income taxpayers is taxable for his income from within and without Philippine sources? a. Resident citizen b. Nonresident citizen c ident alien 4. Nonresident alien FEEDBACK: 51. The compensation income of which of the following is exempted from income tax? a. Minimum wage income earner b. Senior citizen c. Either A or B d. Neither Anor B A or FEEDBACK: 52. In which income of an individual mixed income earner is he income taxation’ a. Compensation income b, Business income c. Both Aand B d. Neither A nor B lowed to avail of 8% grossa 53. 54, ANSWER: B POINT: ofl FEEDBACK: Situational Problem No, 1: For items 53 to 55, refer to the following information: Kathlyn, of Norwegian parentage, went to the Philippines for a short lecture series wherein she lectured about how to avoid bullying. The lecture series lasted for four weeks. The following details pertain to Kathlyn's lecture series in the Philippines: Professional fees for lecture (P80,000 a week) P 320,000 Income from onsite bookselling 140,000 Travel expenses incurred, with receipts 120,000 Food and accommodation expenses incurred, with receipts 100,000 Kathlyn is a: a. Resident citizen b. Resident alien c. Non-resident alien engaged in trade or business 4. Non-resident alien not engaged in trade or business ANSWER: D POINTS: 0/1 FEEDBACK: How much is Kathlyn's Philippine income tax due? a. 25,000 b. 55,000 c. 110,000 4. 115,000 ANSWER: D Solution: Professional fees for lecture (P80,000 P a week) 320,000 Income from onsite bookselling 140,000 Gross income 460,000 Tax rate 25% Income tax due 115,000) POINTS: 0/1 FEEDBACK: Statement 1: The food and accommodation expenses can be claimed by Kathlyn as a deductible expense for purposes of computing Philippine income tax. Statement 2: The travel expenses can be claimed by Kathlyn as a deductible expense for purposes of computing Philippine income tax. a. Only Statement 1 is true. b. Only Statement 2 is true c. Both statements are true. 4. Both statements are not true. ANSWER: D POINTS: 0/1 FEEDBACK: Situational Problem No. 2: For items 56 to 58, refer to the following information:& 56. 31. Industrious as he is known, Arthur, a non-VAT registered resident citizen, works as a government employee at daytime and accepts clients for accounting work after office hours. At the same time, Arthur maintains a t-shirt printing shop to cam more. For the taxable year ending December 31, 2021, Arthur earned the following amounts: yxable compensation income P 850,000 ross receipts from accounting work 1,500,000 ‘T-shirt printing shop Gross sales P 1,400,000 Cost of sales (800,000) Gross income 600,000 Operating expenses (400,000) Net income P__ 200,000 Upon filing his first quarter income tax return, Arthur availed of the 8% income tax option: Is his availment of the 8% income tax option correct? a. No, because the 8% income tax option is available only for VAT- registered taxpayers. b. No, because Arthur is not a purely compensation income earner. c. No, because Arthur's gross receipts exceeded the threshold allowed to avail of the 8% income tax option. 4. Yes. ANSWER: D POINTS: 0/1 FEEDBACK: ‘Assuming that the availment of the 8% income tax option is proper, how much is Arthur's income tax due? a. 232,000 b. 300,000 ©. 357,000 d. 377,000 ANSWER: D Solution: Taxable compensation 850,000 income (800,000) 130,000 50,000 130% — 15,000 Income tax on 145,000 compensation Gross receipts from 1,500,000 accounting work Gross sales on t-shirts 1,400,000 Total gross sales/receipts “2,900,000 Tax rate 8% Income tax on businesses Income tax on 145,000 compensation Income tax on businesses __ 232,000 Income tax due 377,000, ol58. FEEDBACK: How much is Arthur's percentage tax due? ANSWER: A POINT: FEEDBACK: Situational Problem No. 3: For items 59 to 62, refer to the following situation: Taravel Industries, a non-VAT registered sole proprietorship engaged in the transport of passengers, operates two liners: Philippine Cheetah Bus Lines is engaged in the domestic transport of passengers by land while Philippine Dolphin Ferries is engaged in the domestic transport of passengers by sea, During the taxable year 2021, the following revenues and expenses were presented to you: Philippine Philippine Cheetah Dolphin receipts 4,000,000 2,000,000 Cost of Services 3,200,000) (1,400,000) Gross income 300,000 600,000 Less: Allowable (500,000) (400,000) deductions ‘Taxable income 300,000 200,000 Can Taravel Industries avail of the 8% income tax oj a. No. Taravel Industries is subject to Other Percentage Taxes other than the 3% percentage tax (temporarily 1% under CREATE) No. Taravel Industries has exceeded the VAT threshold of P3,000,000. c. No. Taravel Industries is a non-VAT registered taxpayer. a. Yes. ANSWER: A Discussion: No. Taravel Industries is not entitled to avail of the 8% income tax option, The option to be taxed at 8% income tax rate is not available to a taxpayer who is subject to Other Percentage Taxes under Title V of the Tax Code, as amended, except those subject under Section 116 of the same Title (Section 3(C), Revenue Regulations No, 08-18). Since the gross receipts of Philippine Cheetah is subject to the 3% common carrier's tax under Section 117, Taravel Corporation cannot avail of the 8% income tax option. POINTS: 0/1 FEEDBACK: How much is income tax due? 31,500 b. 55,000 c. 125,000 d. 460,000 ANSWER: B Solution: Taxable income, 300,000 Philippine CheetahTaxable income, 200,000 Philippine Dolphin Taxable income 500,000 £400,000) 30,000 100,000 25% 25,000 Income tax due 35,000 POINT o/1 FEEDBACK: How much is output VAT? a 0 b. 240,000 . 480,000 d. 720,000 ANSWER: A Discussion: Taravel Industries’ Output VAT is zero. The gross receipts are subject to percentage taxes, moreso because Taravel Industries is a non-VAT registered taxpayer whose gross VAT-subject sales or receipts did not exceed P3,000,000. POINTS: o/1 FEEDBACK: How much is percentage tax duc? a0 b. 60,000 ©. 120,000 d. 180,000 ANSWER: D Solution: Gross receipts, Philippine Cheetah 4,000,000 Tax rate (Sec. 117, Common 3% carrier's tax) Common carrier's tax due 120,000 Gross receipts, Philippine Dolphin 2,000,000 Tax rate (Sec. 116, Other 3% Percentage Tax) Other percentage tax due 60,000 Common carrier's tax due 120,000 Other percentage tax due 60,000 Total percentage tax due 180,000 POINTS: 0/1 FEEDBACK: Situational Problem No, For items 63 to 64, refer to the following information Doctor Victoria Bellissima is a VAT-registered professional plastic surgeon. Before TRAIN and CREATE Law, she normally bills her customers P150,000, for a buttocks augmentation procedure, an invasive cosmetic procedure which involves altering the appearance of a person's buttocks, most commonly by giving it more prominence. In addition, Doctor Victoria Bellissima likewise provides painkilling medicines in the amount of P20,000, and laboratory services for P30,000,| —63.Can Doctor Victoria Bellissima avail of the 8% income tax option assuming her gross - ales/receipts do not exceed P3,000,000? a. Yes, but only as to the P150,000 buttocks augmentation procedure. b. Yes, but only as to the receipts from painkilling medicines and laboratory services. c. No, because the doctor is a VAT-registered doctor. d. No, because the doctor is a purely compensation income earner. ANSWER: C POINT on FEEDBACK: » ___ 64, Statement 1: Considering that the invasive cosmetic procedure of Doctor Victoria is subject to excise tax, such disqualifies her from availing of the 8% income tax option. Statement 2: The payment of the excise tax on invasive cosmetic procedure is in lieu of income taxes. a. Only Statement 1 is true. b, Only Statement 2 is true. c. Both statements are true. d. Both statements are not true. D on FEEDBACK: Situational Problem No. 5: For items 65 to 68, refer to the following situation: A taxpayer received the following items of income during the taxable year 2021 Interest income from BPI - Espana Branch from P 62,000 checking account Interest income from BDO - Intramuros Branch from 38,500 savings depos Interest income from PNB - Quiapo Branch from foreign currency deposit account under the expanded 42,000 currency deposit system Interest income from dollar deposit on Bank of New Jersey in the United States, 130,000 Interest income from promissory note of Mr X, 58,400 Philippines Interest income from promissory note of Mr. X, United 62,000 States Yield from deposit substitute, Philippines 87,000 Interest from Philippine government securities 21,000 Interest income from long-term deposits, Philippines 57,000 Interest income from long-term deposits, Egypt 62,500 Royalties from books, Philippines 16,000 Royalties from paintings, Philippines 60,000 Royalties from musical compositions, Japan. 50,000 __. 65. If the taxpayer is a resident citizen, how much is the final withholding tax? a, 57,400 b. 61,600 ©. 63,200 d. 66,600 ANSWER: B Solution: FIT% _FWT.& POINTS: FEEDBACK: on Interest income from BPI- Espana Branch 62,000 20% from checking account Interest income from BDO - Intramuros 38,500 20% Branch from savings deposit Interest income from PNB - — Quiapo Branch from foreign currency deposit 42,000 15% account under the expanded currency deposit system Yield from deposit 87,000 20% substitute, Philippines Interest from 21,000 20% Philippine government securities Royalties from 16,000 10% books, Philippines Royalties from 60,000 20% paintings, Philippines Total 12,400 7,700 6,300 17,400 4,200 1,600 12,000 66, If the taxpayer is a resident citizen, how much income is subject to regular income tax? a b. c 4. 300,400 312,900 304,500 362.900 ANSWER: POINTS: FEEDBACK: D Solution: or Interest income from dollar deposit on Bank of New Jersey in the United States Interest income from promissory note of Mr. X, Philippines Interest income from promissory note of Mr. X, United States Interest income from long-term deposits, Egypt Royalties from musical compositions, Japan Total 130,000 58,400 62,000 62,500 50,000 362,900, » __ 67. Ifthe taxpayer is a non-resident citizen, how much is the final withholding tax? a b. c 37,900 51,100 55,300d. 61,600 ANSWER: C Solution: FWT Interest income from BPI- Espana Branch 62,000 20% «© 12,400 from checking account Interest income from BDO - Intramuros 38,500 20% =©——7,700 Branch from savings deposit Yield from deposit 87,000 20% 17,400 substitute, Philippines Interest from 21,000 20% = 4,200 Philippine government securities Royalties from 16,000 10% 1,600 books, Philippines Royalties from 60,000 20% += -12,000 paintings, Philippines Total POINTS: 0/1 FEEDBACK: If the taxpayer is a non-resident citizen, how much income is subject to regular income tax? a. 58,400 b. 100,400 c. 108,400 d. 120,400 ANSWER: A Discussion: Only the interest income from promissory note of Mr. X with situs in the Philippines is subject to Philippine regular income tax. POINTS: 0/1 FEEDBACK: Situational Problem No. For items 69 to 73, refer to the following information: Kara sold to Mia shares of stock of a foreign corporation at a selling price of P1,000,000 with an acquisition cost of P380,000. On the same date, Kara sold to Mia shares of a stock of a domestic corporation at a selling price of P600,000, and an acquisition cost of P400,000. If Kara is a resident citizen and is not a dealer in securities, and the shares were sold directly to ‘Mia, how much is the capital gains tax due of Kara from the transaction? a 0 b. 30,000 ©. 93,000 d. 123,000 ANSWER: B Solution: Selling price 600,000Acquisition cost, (400,000) ital gain 200,000 CGT rate 15% CGT due 30,000 Only the sale of shares of a domestic corporation is subject to capital gains tax. POIN OL FEEDBACK: » ___ 70, If Kara is a resident citizen and is not a dealer in securities, and the shares were sold directly to - Mia, how much of Kara's income is subject to regular income tax? a 0 b. 200,000 c. 620,000 d. 820,000 ANSWER: C Solution: Selling price 1,000,000 Less: Acquisition cost (380,000) Net capital gain 620,000 POINTS: 0/1 FEEDBACK: = ___71. If Kara is a resident citizen and is a dealer in securities, and the shares were sold directly to Mia, how much is the capital gains tax due of Kara from the transaction? a0 b. 30,000 c. 93,000 d. 123,000 ANSWER: A Discussion ‘The transactions are subject to regular income tax, considering that for a dealer in securities, the shares are presumed to be ordinary assets POINTS: o/1 FEEDBACK: __ 72. Which of the following statements is true? ” a. IfKara is a dealer in securities and she sold the shares of a domestic corporation through the local stock exchange, any gain from the sale is subject to capital gains tax. b. If Kara is a dealer in securities and she sold the shares of a domestic corporation through the local stock exchange, the sale is subject to value-added tax. If Kara is a dealer in securities and she sold the shares of a domestic corporation through the local stock exchange, the sale is subject to stock transaction tax. d. IfKara is a dealer in securities and she sold the shares of a domestic corporation through the local stock exchange, any gain from the sale is subject to final withholding tax. B on FEEDBACK: Ge 73. Statement 1: Kara's sale of the shares of a foreign corporation will never be subject to capital gains tax under any circumstance. Statement 2: If Kara sold the shares of a domestic corporation through the local stock exchange, it will always be subject to stock transaction tax. a. Only Statement 1 is true.b, Only Statement 2 is true. c. Both statements are true. 4, Both statements are not true ANSWER: A POINT! or FEEDBACK: Situational Problem No. 7: For items 74 to 75, refer to the following information: It was an eventful year for Aleck. A lot of things happened: his favorite uncle died, he graduated from college, he figured in a car accident, and he won in a libel case Aleck received the following amounts during the taxable year 2021 Inheritance from his favorite uncle, a car with cost of 1,200,000 (amount presented is the FMV) P 6,200,000 Proceeds of life insurance from uncle's death; Aleck is the named beneficiary 2,500,000 Graduation gift, a condominium unit 4,000,000 Proceeds from accident insurance due to injuries 150,000 Payment for damages caused by tortfeasor 200,000 Reimbursement of hospital bills for the accident paid by 300,000 tortfeasor Payment for damaged property in the accident; value of damage, P40,000 50,000 Payment for lost salaries 250,000 Moral damages from libel case 1,000,000 Total 14,650,000 Statement 1: If Aleck's favorite uncle (or properly, his administrator, executor, or legal heirs) fail to pay the estate tax due within the period provided by law, Aleck will be required to declare the inheritance as part of his gross income subject to regular income tax. Statement 2: If the condominium unit received by Aleck as a graduation gift qualifies as a capital asset under Section 39 of the Tax Code, Aleck shall pay the capital gains tax due on such transfer within 30 days from receipt thereof. a. Only Statement 1 is true. b. Only Statement 2 is true. c. Both statements are true. d. Both statements are not true. ANSWER: D POINT: ofl FEEDBACK: How much of the enumerated amounts are subject to income tax? 260,000 300,000 460,000 600,000 peop ANSWER: A Solution: Payment for damaged property in the accident; value of damage, P40,000 10,000 (50,000-40,000) Payment for lost salaries 250,000Total 260,000 POINT: FEEDBACK: ofl iv Retake Test