1.

The term “capital assets” includes:

A. Stock in trade or other property included in the taxpayer’s inventory

B. Real property not used in the trade or business of the taxpayer
C. Property primarily for sale to customers in the ordinary course of trade or business
D. Property used in the trade or business of the taxpayer and subject to depreciation

2. Tino died January 1, 2023. He left a gross estate with a cost of P400,000 but valued at
P2,500,000 under an administrator. During the year, the gross income derived from the
business of the estate was P600,000 while the related expenses amounted to P150,000.
Beneficiaries Allyssa and Jelisa were given P100,000 each. The income tax due on the
estate of Tino is:

A. P30,000
B. P2,500
C. P5,500
D. Exempt

3. Lots being rented when subsequently sold are classified as:

A. Capital assets
B. Liquid assets
C. Ordinary assets
D. Fixed assets

4. A person called to the succession either by the provision of the will or by operation of
law:

A. Devisee
B. Legatee
C. Heir
D. Trustor

5. Which of the following corporations is subject to income tax?

A. Philhealth
B. PAGCOR
C. Local water districts
D. Home Development Mutual Fund

6. The optional standard deduction on individual is –

A. 40% of taxable income

B. 40% of business and/or professional including compensation income
C. 40% of gross sales/receipts from business and/or professional income
D. 10% of business and/or professional excluding compensation income
7. Refers to all the property, rights, and obligations of a person which are not extinguished
by his death and those which have accrued thereto since the opening of the succession:

A. Trust
B. Fiduciary
C. Estate
D. Beneficiary

8. How much is the income tax due in 2023 if Escleto Corporation is a nonresident foreign
corporation?

A. P1,440,000
B. P960,000
C. P1,200,000
D. P672,000

9. Which of the following statements is correct about a non-resident alien?

A. Taxable on income within and without.

B. Maybe entitled to claim personal exemption.
C. Subject to tax based on taxable income
D. Shall be taxable on income derived from sources within the Philippines.

10. The arrangement created by will or an arrangement under which title to property is
passed to another for conservation or investment with the income therefrom and
ultimately the corpus (principal) to be distributed in accordance with the directions of the
creator as expressed in the governing instrument:

A. Trust
B. Fiduciary
C. Testament
D. Last Will

11. Diane Carilla and Stephanie Santos, CPAs, a partnership of Certified Public Accountants,
had gross receipts of P220,000 and expenses of P85,000 in 2018.
Diane: Share in profit and loss ratio: 75%, Income from other business: P125,000,
Expenses: P80,000, Amounts withdrawn from partnership: P30,000, Filing status:
Married, Dependent Children: None
Stephanie: Share in profit and loss ratio: 25%, Income from other business: P325,000,
Expenses: P190,000, Amounts withdrawn from partnership: P12,500, Filing status:
Unmarried, Dependent Children: 2
The income tax payable by the partnership is:

A. P72,000
B. P45,900
 C. P44,550
D. None

12. The following are classifications of income as to source, except:

A. Income derived in full from sources within.

B. Income derived in full from sources without.
C. Income derived partly from sources within and partly from sources without.
D. Income derived in full from sources within and partly from sources without.

13. General professional partnerships are not subject to tax.

A. They are not also required to file income tax return.

B. Hence, the partners are exempt also from tax.
C. The share of the partners in the profit of the partnership are subject to final tax.
D. However, the shares of the respective partners in the partnership profit are taxable.

14. The person for whose benefit the trust has been created is called:

A. Heir
B. Trustee
C. Beneficiary
D. Trustor

15. All of the following, except one, are taxable on income within only:

A. Resident Alien
B. Nonresident Citizen
C. Resident Citizen
D. Nonresident Alien

16. Iso Corporation had the following data during the year:
Gross sales: P1,540,000
Cost of Sales: P645,000
Expenses: P460,460
If Iso Corporation availed of the OSD, the taxable income shall be:

A. P537,000
B. P434,540
C. P741,000
D. P279,000

17. Mr. Iso operates a retail store and owns the following properties. Which of the following
properties is a capital asset in the hands of Mr. Iso?
 A. The building which houses the retail store
B. Fixtures used in the retail store
C. Inventory on hand at the end of the year
D. Trade accounts receivable

18. Hare has been contracted in the Philippines by Claire Corporation, a domestic
corporation, to work in Dubai. The contract provides that Hare’s monthly salary of
P100,000 in Dubai will be paid to his family in the Philippines. The classification of
income to sources is:

A. Place of performance
B. Place of Hare’s residence
C. Place of Employer’s business
D. Place of origin

19. The income tax payable by Newell if he availed of the Optional Standard Deductions
(OSD) –

A. P1,450
B. P15,000
C. Exempt
D. P5,250

20. Corporations can claim Optional Standard Deduction (OSD) in an amount not exceeding:

A. 10% of gross income

B. 10% of gross sales or gross receipts, as the case may be
C. 40% of gross sales or gross receipts, as the case may be
D. 40% of gross income

21. Escleto Corporation had a total gross income of P4,800,000 and deductible expenses of
P3,800,000. If the total assets of the corporation (excluding the land on which the
building which houses its office, and equipment) is P80,000,000, how much is the
income tax due on Escleto Corporation in 2023?

A. P330,000
B. P300,000
C. P360,000
D. P240,000

22. A person who inherits personal property by will is called:

A. Legatee
B. Beneficiary
C. Devisee
D. Trustor
23. The income tax payable by Newell if he availed of the itemized deductions:

A. P25,700
B. P15,900
C. P19,275
D. P9,475

24. Which of the following is subject to income tax?

A. SSS and GSIS

B. Philippine Health Insurance Corporation (PHIC)
C. Local water districts
D. Philippine Amusement and Gaming Corporation (PAGCOR)

25. The share of the partners in a professional partnership will be included in their respective
income tax returns, whether distributed or not:

A. It is considered as a corporation, hence, subject to corporate income tax.

B. The share of the partners in the profit are subject to final income tax.
C. It is exempt from income tax, hence, it need not file an income tax return.
D. The share of the partners will be included in their respective income tax returns,
whether distributed or not.

26. The portion of the decedent’s estate which the law reserves to his compulsory heirs is
called:

A. Inheritance
B. Legitime
C. Free portion
D. Will

27. The following are the kinds of deductions from gross income, except:

A. Ordinary allowable itemized deductions

B. Special allowable itemized deductions
C. Optional standard deductions
D. Mandatory standard deductions

28. One of the following is taxed on gross income:

A. Domestic Corporations
B. Resident Foreign Corporations
C. Non-Resident Foreign Corporations
D. Resident foreign corporations not engaged in trade or business (Philippines)
29. How about if the total net assets (excluding the land) of Escleto Corporation in 2023 is
P115,000,000. How much is the income tax due in 2023?

A. P240,000
B. P300,000
C. P360,000
D. P240,000

30. Taxable net income received during each year from all sources” is the tax base for
income tax purposes of this class of taxpayers:

A. Domestic Corporations
B. Resident Corporations
C. Resident foreign corporations engaged in trade or business (Philippines)
D. Resident foreign corporations not engaged in trade or business (Philippines)

31. The income of Diane and Stephanie is:

A. P96,250 and P68,750

B. P146,250 and P168,750
C. P101,250 and P33,750
D. P13,000 and P94,000

32. It is important to know the source of income for tax purposes (i.e., from within or without
the Philippines) because:

A. Some individual and corporate taxpayers are taxed on their worldwide income while
others are taxable only from sources within the Philippines.
B. The Philippines imposes income tax only on income from sources within.
C. Some individual taxpayers are citizens while others are aliens.
D. Export sales are not subject to income tax.

33. Which is an example of a capital asset?

A. Computer set in an accounting office

B. Parcels of land for sale by a real estate broker
C. Office building
D. Account Receivable

34. For purposes of income taxation, which of the following is not considered as a
corporation?

A. General Professional Partnership

B. Business partnership
C. Unregistered partnership
D. Joint stock companies
35. The person who establishes a trust is called:

A. Grantor
B. Trustee
C. Decedent
D. Administrator