Corporations

1. Pinoy, Inc. owned a piece of commercial land which was forcibly taken
by the city government for its highway expansion project in the exercise
of its power of eminent domain. This land was used by the corporation
as a parking area for its numerous delivery trucks and vans. A
compensation of P 10,000,000 was paid although the selling price in the
area amounted to P 12,000,000 for a similar property. The company
records showed that the land was bought by the company a few years
ago for only P 5,000,000. How shall the income tax liability, if any, of
Pinoy, Inc. on the foregoing transaction be computed?

30% corporate income tax rate based on the gross income of P

5,000,000
2. The MCIT shall not apply to the following resident foreign corporations,
except
RFC engaged in hotel, motel and resort operations
3. All, except one, of the following, are not subject to the improperly
accumulated earnings tax. Which is the exception?
Service enterprises.
4. Baguio Realty and Upland Developers formed a joint venture to carry out
a construction project under service contract with the government. The
following relates to the 2009 income of the Baguio Realty, Upland
Development and the joint venture:

Baguio Realty and Upland Developers hold equal ownership in the joint
venture. Compute the income tax due of Upland Developers.
P270,000
5. The AB Corporation, established in 1990, provided the following data for
calendar year ending December 31, 2010 ($1=P50)
 Assume AB Corp. is a non-resident corporation, its income tax is
P1,200,000
6. Baguio Meds is a non-profit hospital. The following shows its gross
receipts and business expenses in 2009:

Compute the income tax due of Baguio Meds.

P540,000
7. Which of the following is a feature or characteristics of the minimum
corporate income tax (MCIT)?
None of the foregoing.
8. Which of the following statements presented below is subject to MCIT?

First statement: The corporation is exempt from income tax by virtue of

tax holidays granted to it by the Board of Investment.

Second statement: The corporation is subject to 5% tax in lieu of all

types of taxes such as firms that are taxed under special income tax
regime such as PEZA registered firms.
Statement 1
Statement 2
No
No
9. In determining the "Gross Philippine Billings" of a resident foreign
corporation operating as an international air or shipping carrier, the
primary consideration is:
Place of original departure
10. Matatag Corporation, a Philippine Corporation, sold through the local
stock exchange 10,000 Smart shares that it bought 2 years ago. In 2018,
Matatag sold the shares forP2 million and realized a net gain of
P200,000. How shall it pay tax on the transaction?
It shall pay a tax of 6/10 of 1% of the P2 million gross sales.
11. What taxpayer is allowed to adopt the fiscal year as its taxable year?
Corporations
12. Which of the following taxpayers shall be subject to an income tax
equivalent to thirty percent of its taxable income derived in the
preceding taxable year from all sources within the Philippines?
Resident foreign corporation
13. In 200A, Bougati Inc., a branch of a foreign company doing business
in the Philippines, had the following income and expenses:

In early 200B, the branch earmarked for remittance to its head office
abroad the dividend received, the capital gain and P 10 million of its net
income in 200A.
The branch profits remittance tax and the total amount to be remitted to
its head office abroad are:
Branch profits remittance tax Remitted Amount to be

P1.500 million P9.140 million

14. Which of the following statements relative to the sale or exchange of
shares of stock by a closed corporation is false?

Its net capital gain is subject to the 15% final tax rates.
15. The AB Corporation, established in 1990, provided the following data
for calendar year ending December 31, 2010 ($1=P50)

If AB Corp. is a resident corporation but its expenses within and outside

the Philippines is P3M, unallocated (disregard original data on
expenses), its income tax is?
P600,000
16. Which of the following statements is not a feature of the "gross
income method"?
The 15% tax rate on gross income shall be applied in lieu of the regular
30% tax rate on net income whenever the latter is lower than the former.
17. Which is not correct? The following are exempt from the corporate
income tax:

Government owned or controlled corp

18. The following data were taken from the financial statements of
Kakushin Corp. for 2019:
 How much is the income tax due and payable assuming the corporation
is:
Dom. Corp. (DC)
Res. Foreign Corp. (RFC)

P 1,674,000
P 1,093,500
19. Which of the following circumstances does not suspend the
imposition of the minimum corporate income tax on the ground that the
corporation sustained substantial losses?
Losses due to strike lasting for three months
20. TriniHeights, Inc., a domestic corporation, declared P4,000,000
dividends to all its shareholders which include its parent company (the
only corporate shareholder) which holds 60% of its outstanding issued
shares. How much would Trini Heights withhold in final tax?

P160,000
21. Intercorporate dividend is exempt where the domestic dividend is
received by a:

Both a and b
22. Which of the following revenues constitutes the "Gross Philippine
Billings" of a resident foreign corporation operating as an international
air carrier?

Revenues on flight from Philippines to Japan; tickets sold in Japan

23. The minimum corporate income tax of a domestic or resident service
corporation is:

2% of gross income.
24. Using the same data in the preceding number, how much is the
improperly accumulated earnings tax?

P53,000
25. The AB Corporation, established in 1990, provided the following data
for calendar year ending December 31, 2010 ($1=P50)

If AB Corp. is a non-profit hospital, its income tax after tax credit is

P125,000
26. Determine which of the following taxpayers cannot pay the income
tax by installments:

Corporations
27. Tiger Airlines, a resident foreign international carrier has the
following records of income for the period. (The income represents
gross Phil. billings)
1. Continuous fight from Manila to Tokyo = 1,000 tickets at P2,000 per
ticket
2. Flight from Manila to Singapore; transfer flight from Singapore to
Tokyo = 2,000 tickets at P3,000 per ticket
3.Continuous flight from Manila to Singapore = 3,000 tickets at P1,000
per ticket
The income tax due is

P175,000
28. Which of the following is not correct? The gross income tax

Is compared with the normal income tax and minimum corporate

income tax
29. A Corporation has the following data for the year 2007
 The cost of the land which is not used in business is P1M, FMV is P3M.
Its total tax liability as a domestic corporation is:

P980,500
30. A minimum corporate income tax in the sum of P 300,000 was paid
for the taxable year 200A. Its regular income tax for that period
amounted to only P 100,000. The following data were gather: 200B
(regular income tax) P 100,000; 200C (regular income tax - P 50,000);
200D (MCIT - P 150,000). The income tax for the taxable year 200D shall
be:
P 150,000
31. One of the general principles of income taxation:

A foreign corporation engaged in business in the Philippines is taxable

on all income derived from sources within the Philippines only
32. Andrix Corporation reports P2,400,000 taxable income for the
calendar year 2009. This was earned 20%, 30%, 30% and 20% in the first
through fourth quarters of 2009. Assuming that the corporate income
 tax rate is changed from 35% to 30% effective April 1, 2009, compute
the corporate income tax for 2009.
P744,000
33. Nexus Bank, a domestic corporation has the following data for the
year:

The bank has total operating expenses of P12,000,000. How much was
the normal income tax for the year?

P 600,000
34. One of the following is wrong. Which is it? The gross income tax on
corporation is:
Applicable to non-resident corporation.
35. Which statement is wrong? The gross income tax:

Is always computed to compare with the normal income tax and

minimum corporate income tax?
36. The improperly accumulated earnings tax shall apply to

Private corporations
37. A corporation's records show:
 The income tax due for the first quarter is

P40,000
38. Which of the following corporations is subject to income tax?
Philippine Amusement and Gaming Corporation (PAGCOR)
39. A corporation files a quarterly return within

60 days after the end of each of the first 3 quarters

40. A final or annual return is filed
On or before the 15th day of the 4th month following the close of the
taxable year
41. A corporation's records show:

The income tax due for the year is?

P 55,000
42. Which is covered by MCIT?
Banks and insurance companies
43. Gross income taxation results to
Less discretion on the part of the tax examiners
44. Vilma met a vehicular accident while commuting in a taxicab and
was hospitalized for a month. In the suit for breach of contract of
carriage which he filed in court, the judge awarded Vilma the following
recovery of damages:
 The recovery of damages that is subject to income tax amounts to:

P 30,000
45. Nexus Bank, a domestic corporation has the following data for the
year:

The total income tax expense of Nexus Bank is:

P1,000,000
46. The 30% corporate income tax rate shall be applied on the gross
income of a:
Non-resident foreign corporation
47. A corporation which started operations in December 1, 2008 will be
covered by MCIT in
2012
48. One of the following does not fall under the definition of a
"corporation" for income tax rate?
Sole proprietorship
49. Assume AB Corp. is a domestic corporation, compute the income if it
opts to claim the tax paid abroad as deduction from gross income
 P780,000
50. The AB Corporation, established in 1990, provided the following data
for calendar year ending December 31, 2010 ($1=P50)

Assume AB Corp. is a domestic corporation. Compute the income tax

after tax credit.
P675,000
51. The AB Corporation, established in 1990, provided the following data
for calendar year ending December 31, 2010 ($1=P50)

If AB Corp. is a non-resident lessor of vessels, its income tax is

P1,000,000
52. For income taxation purposes, the term "corporation" excludes one of
the following:
General professional partnership
53. The domestic dividend received by a non-resident foreign corporation
cannot avail of the preferential 15% final tax rate under the tax sparing
principle if:
The country of the non-resident foreign corporation allows a tax credit
for taxes actually paid in the Philippines but does not allow any tax
credit for taxes deemed in the Philippines
54. A domestic corporation organized in 2003 provided the following
information
 The tax due after tax credit, if any for 2005
P48,750
55. The minimum corporate income tax is applicable to
Philippine Airlines, Inc.
56. One of the following statements is correct. Which is it? The minimum
corporate income tax of a corporation is computed:
In the annual income tax return only of the corporation
57. The improperly accumulated earnings tax which is a 10% surtax
imposed on the improperly accumulated taxable income of corporation,
is imposable on:
None of the foregoing
58. Which of the following is subject to the corporate income tax?
Private cemeteries
59. The Xue and Shu Company are equal co-joint venturers engaged in
the sale of machineries and equipment. During the year 2006, the
following data are made known to you:

How much is the taxable net income of the joint venture?

P3,094,500

60. A corporation's records show:

 The income tax due for the third quarter is
P70,000
61. The AB Corporation, established in 1990, provided the following data
for calendar year ending December 31, 2010 ($1=P50

If AB Corp. is a private educational institution, its income tax due after

tax credit

P125,000
62. Which statement is wrong? The gross income tax of the corporation
is:
15% of gross sales.
63. Which of the following is not covered by MCIT?
Offshore banking units
64. A corporation's records show:

The income tax due for the first quarter is

P230,000
65. The AB Corporation, established in 1990, provided the following data
for calendar year ending December 31, 2010 ($1=P50)
 Assume AB Corp. is a domestic corporation, compute the income if it
opts to claim the tax paid abroad as deduction from gross income

P780,000
66. The Philippine Health Insurance Corporation, a government owned
corporation, is:
Exempt from the corporate income tax
67. Excellence Unlimited started operations in 2004. The following
shows details of its income in 2010:

Operation had been profitable since the start of operation except that a
major strike in 2008 and 2009 caused major problems in business
operations. Consequently, MCIT was lifted for Excellence Unlimited in
2008 and 2009. Compute the income tax payable in 2010

P750,000
68. The following, except one, give rise to the presumption that a
corporation is improperly accumulating profits. Identify the exception:
The corporation is a service enterprise.
69. The AB Corporation, established in 1990, provided the following data
for calendar year ending December 31, 2010 ($1=P50)
 Assume AB Corp. is a resident corporation, its income tax is

P 450,000
70. A domestic corporation's records revealed the following regular
income tax of P 140,000 and a minimum corporate income tax of P
150,000 for the first taxable quarter of 2011. The corporation shall pay
an income tax of
P 140,000
71. The AB Corporation, established in 1990, provided the following data
for calendar year ending December 31, 2010 ($1=P50)

If AB Cop. is resident lessor of aircrafts, machineries and equipments,

its income tax is

P300,000
72. There is a prima facie presumption that a corporation is avoiding the
tax upon its shareholders or members and is, therefore, liable to the
improperly accumulated earnings tax if such corporation is formed as a
mere:
Either a or b
73. A domestic corporation had the following data
 The taxable income in 2009 is:
P380,000
74. The AB Corporation, established in 1990, provided the following data
for calendar year ending December 31, 2010 ($1=P50)

If AB Corp. is a non-stock educational institution, which uses all its

revenue or income for educational and charitable purposes, its income
tax is
РО
75. The "tax sparing principle", which entitles the taxpayer of the
preferential tax rate of only 15% on the dividends received from a
domestic corporation, may be applied to:
Non-resident foreign corporation
76. Which of the following revenues of exempt organizations shall be
subject nonetheless to income tax?
Both a and b
77. The AB Corporation, established in 1990, provided the following data
for calendar year ending December 31, 2010 ($1=P50)
 If AB Corp. is a resident corporation but its expenses within and outside
the Philippines is P3M, unallocated (disregard original data on
expenses), its income tax is

P300,000
78. The branch of Atlanta Corporation, a foreign corporation, reported
P500,000 taxable income in 2010. It also earned P100,000 dividend
income from a domestic corporation. Assuming the branch earmarked
the entire dividend and half of its profits for remittance to its head
office. Compute the net remittance.

P248,750
79. Andrix Corporation reports P2,400,000 taxable income for the fiscal
year 2009-2010. This was earned 20%, 30%, 30% and 20% in third
quarter of 2009 through the second quarter of 2010. Andrix
Corporations fiscal year-ends every June 30. Assuming that the
corporate income tax rate is changed from 35% to 30% effective
October 1, 2009, compute the corporate income tax for the fiscal year
ending June 30, 2010.
P750,000
80. Under the TRAIN Law, which of the following government-owned and
controlled corporations shall be subject to corporate income tax?
81. Philippine Amusement and Gaming Corporation (PAGCOR) National
Development Corporation

I, and II
82. One of the following statements is wrong. Identify. The improperly
accumulated earnings tax imposed on corporations:
Is computed on improperly accumulated income over several years.
83. Baguio Meds is a non-profit hospital. The following shows its gross
receipts and business expenses in 2009:
 If Baguio Meds is a non-profit educational institution accredited by
CHED, the income tax due is
P412,500
84. Gross income tax applies to
domestic corporations
85. Public educational institutions, like the University of the Philippines is
deemed by law:
Exempt from the corporate income tax
86. A corporation on a fiscal year ending March 31, should file its annual
return
On or before April 15 of the same year
87. A Corporation, a resident corporation, provided the following data for
taxable year 2006

The corporation remitted to its head office the P5M dividend income
and 40% of its net profit to its head office in USA. (85% of the income of
the foreign corporation which declared dividends is from the
Philippines.) The corporation's total tax liability including the tax on the
profit remitted is
 P12,448,000
88. Which of the following is not an income tax on corporation?
Stock transaction tax
89. The AB Corporation, established in 1990, provided the following data
for calendar year ending December 31, 2010 ($1=P50)

If AB Corp. is a resident corporation and it remitted 60% of its net profit

to its head office abroad, its total tax liability is (use original data)

P544,500
90. The following income are subject to the final tax, except
Cash dividends received by a domestic corporation from a domestic
corporation
91. The normal tax of an ordinary corporation effective January 1, 2000
is:
32%
92. Which of the following statements relative to a non-resident foreign
corporation is false?
None of the foregoing
93. Which of the following is classified as special corporations subject to
preferential corporate income tax rate?
Proprietary Educational Institution
94. A corporation which may be classified as either a resident
corporation or a non-resident corporation is
Foreign corporation
95. The record of a closely held corporation which is already in operation
in 2003, reveals the following:
 Upon examination of the 2007 return, the BIR concludes that there is
improper accumulation of profit. The corporation fails to show proof to
prove the contrary. Using 35% tax rate, how much is the tax payable of
the corporation in 2006 and 2007.
2006 2007

Zero P47,500
96. Which is not one of the characteristics of corporate income tax
Progressive tax
97. A domestic corporation organized in 2003 provided the following
information

Using the above data, the tax due after credit, if any for 2007

P45,000
98. A corporation organized and created under the laws of a foreign
country and is authorized to do business trade in the Philippines is:
 Resident foreign corporation
99. Bright University, a private educational institution organized in 2000,
had the following data for 2007

The income tax due for 2007 is

P20,000
100. One of the following is not acceptable as basis of relief from the
MCIT
Law suits filed by the company
101. The following data were taken from the financial statements of
Kakushin Corp. for 2019:
 How much is the total capital gains tax assuming the corporation is:
DC
RFC
NRFC

P 562,500
P 10,000
P10,000
102. The AB Corporation, established in 1990, provided the following data
for calendar year ending December 31, 2010 ($1=P50)
 If AB Cop. is a private educational institution but P3.5M of its total gross
income is from lease and restaurant business, its income tax is?

P675,000
103. The AB Corporation, established in 1990, provided the following data
for calendar year ending December 31, 2010 ($1=P50)

If AB Corp. is a resident international carrier its income tax is

P100,000
104.