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WorksheetsIncome taxation
Total questions: 50
Worksheet time: 10mins
1. Income to be taxable:
S1: There must be a gain.
S2: The gain must be realized or received.
S3: The gain must not be excluded by law or treaty from taxation.
a. Only S1 is true
b. Only S2 is true
c. Only S3 is true
d. All is true
2. S1: Salary received by Nicanor is considered as an income for income tax purposes
S2: The profit from Nicanor’s investment his asset is considered as income for income tax purposes
S3: The cost of Nicanor’s investment on his asset is considered as income for income tax purposes
S4: The watch which was given to Nicanor as gift for his birthday considered as income for income tax purposes
a. S1 and S2 are true but S3 and S4 are false
b. S1 and S2 are false but S3 and S4 are true
c. Only S3 is false
d. Only S4 is false
3. Which of the following is not an income for income tax purposes?
a. Condonation of debt for services rendered
b. Excess of selling price over the cost of an asset sold
c. Collection of loans receivable
d. None of the above
4. S1: Income tax is a national tax
S2: Income tax is an excise tax
S3: Income tax is a proportional tax.
a. Only S1 is false
b. Only S2 is false
c. Only S3 is false
d. All is true
5. It is a system where the tax treatment views indifferently the tax base and generally treats in common all categories of taxable income of the taxpayer:
a. Global tax system
b. Schedular tax system
c. Semi-global or Semi Schedular system
d. Progressive tax system
6. It is a system employed where the income tax treatment varies and made depend on the kind or category of taxable income of the taxpayer.
a. Global tax system
b. Schedular tax system
c. Semi-global or Semi Schedular system
d. Progressive tax system
7. A system where income is not subject to final income tax are grouped together and after deducting allowable deductions, a single tax rate is used to determine the tax liabilities. For income tax subject to final income tax, different ax rates apply.
a. Global tax system
b. Schedular tax system
c. Semi-global or Semi Schedular system
d. Progressive tax system
8. Which of the following is not an income as contemplated in Section 32 “gross income means all income derived from whatever source”
S1: Income arising expropriation of property by City Hall of Manila
S2: Income from winnings from “talpakan na!” an online gambling which is not registered with PAGCOR
S3: P 406 billion Ill-gotten wealth
S4: Recovery of receivable which were previously written-off by company XYZ
S5: Tax refunds
S6: P 50,000 given to Nicanor as compensation for injury suffered while working.
S7: Inday condoned the P 10,000 loan of Nicanor
a. Only S2
b. Only S3
c. Only S4
d. Only S3, S4 and S5
e. Only S7
9. S1: Constructive receipt occurs when the money consideration or its equivalent is placed at the control of the person who rendered he services without restrictions by the payor.
S2: A security deposit to ensure the faithful performance of certain obligations of the lessee to the lessor is an example of a constructive receipt.
S3: ABC Corporation sold goods amounting to P 50,000 to XYZ Corporation. The latter paid thru the medium of bank transfer. The P 50,000 which is now credited to the bank account of ABC Corporation is an example of constructive income.
a. Only S1 is false
b. Only S2 is false
c. Only S3 is false
d. All is true
10. There is no taxable income until there is a separation from capital of something of exchangeable value, thereby supplying the realization or transmutation which would result in the receipt of income.
The foregoing is based on what test in determining income?
a. Realization/Severance Test
b. Claim of Right Doctrine
c. Economic Benefit Test
d. All events test
11. It requires that the right to income or liability be fixed and the amount of such income or liability be determined with reasonable accuracy.
The foregoing is based on what test in determining income?
a. Realization/Severance Test
b. Claim of Right Doctrine
c. Economic Benefit Test
d. All events test
12. a taxable gain is conditioned upon the presence of a claim of right to the alleged gain and the absence of a definite unconditional obligation to return or repay that which would otherwise constitute
a gain
The foregoing is based on what test in determining income?
a. Realization/Severance Test
b. Claim of Right Doctrine
c. Economic Benefit Test
d. All events test
13. Any benefit that increases a taxpayer’s net worth, whatever may have been the mode by which it is affected, is taxable.
The foregoing is based on what test in determining income?
a. Realization/Severance Test
b. Claim of Right Doctrine
c. Economic Benefit Test
d. All events test
14. Which of the following is not a characteristic of income?
a. Increase in taxpayer’s wealth
b. Realization or receipt of gain
c. Earnings constructively received
d. Return of taxpayer’s wealth
15. S1: National Taxes include National Internal Revenue Taxes.
S2: National Internal Revenue Taxes include National Taxes.
a. Only S1 is true
b. Only S2 is true
c. Both are true
d. Both are false
16. Moira, a local actress and singer in the Philippines, went to abroad for a business trip. She stayed there most of the time during the taxable year. For income tax purposes, Moria should be classified as:
a. Resident citizen
b. Non-resident citizen
c. Resident alien
d. Non-resident alien not engaged in trade or business
e. Non-resident alien engaged in trade or business
17. Monney Paquito, a Filipino boxer, went to abroad to participate a world boxing competition. The competition will be held for 1 month. For income tax purposes, Monney Paquito should be classified as:
a. Resident citizen
b. Non-resident citizen
c. Resident alien
d. Non-resident alien not engaged in trade or business
e. Non-resident alien engaged in trade or business
18. Ariana Grabe, an American tax expert is hired by an ABC Corporation, a domestic corporation, to assist on how to file and pay taxes of its clients in the USA and teach its employees about Internal Revenue Services for which she has to stay in the Philippines for 5 months. She came to the Philippines for the definite purpose, but the nature of her job will require her to stay and live temporarily in the Philippines. Ariana Grabe intends to leave the Philippines as soon as her job is done. For income tax purposes, Ariana Grabe should be classified as:
a. Resident citizen
b. Non-resident citizen
c. Resident alien
d. Non-resident alien not engaged in trade or business
e. Non-resident alien engaged in trade or business
19. Kitty Perui, an American singer, was engaged to sing for one week at the Okada hotel Philippines after the event, she returned to the USA. For income tax purposes, Kitty Perui should be classified as:
a. Resident citizen
b. Non-resident citizen
c. Resident alien
d. Non-resident alien not engaged in trade or business
e. Non-resident alien engaged in trade or business
20. Mr. Taxman, is a well known professional Certified Public Accountant in the Philippines in the field of taxation and audit as self-employed practitioner and also a holder of a certificate from ACCA (Association of Chartered Certified Accountants) as chartered accountant. Due to his expertise, he was hired by a foreign company in Singapore to provide technical assistance to its company for two months from March to April. He was again hired for the months of July August and September to November. All of which occurred during the taxable year 2022. For income tax purposes, Mr. Taxman should be classified as:
a. Resident citizen
b. Non-resident citizen
c. Resident alien
d. Non-resident alien not engaged in trade or business
e. Non-resident alien engaged in trade or business
21. John lemon, an American citizen who is residing in the USA, established a business here in the Philippines named as “Johnny Lemon” After he established the business, he returned in the USA. For income tax purposes, John Lemon should be classified as:
a. Resident citizen
b. Non-resident citizen
c. Resident alien
d. Non-resident alien not engaged in trade or business
e. Non-resident alien engaged in trade or business
22. S1. A non-resident citizen is taxable on his income from within the Philippines.
S2. A non-resident citizen is not taxable on his income from outside the Philippines.
S3. A resident citizen is taxable on his income from within the Philippines only.
a. Only S1 is correct.
b. Only S3 is incorrect
c. Only S2 is incorrect.
d. All statements is correct.
23. 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 upon income 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.
24. Statement 1. A non-resident citizen is taxable on his income from within the Philippines.
Statement 2. A non-resident citizen is not taxable on his income from outside the Philippines.
Statement 3. A non-resident citizen is taxable on his income from within and outside the Philippines.
a. True, true, true.
b. False, false, false.
c. True, true, false.
d. False, false, true.
25. Which among the following is a non-resident alien?
a. An alien who comes to the Philippines for a definite purpose which in its nature be promptly accomplished.
b. An alien who comes to the Philippines for a definite purpose which in its nature would require an extended stay.
c. An alien who acquires residence in the Philippines.
d. An alien who lives in the Philippines with no definite intention as to his stay.
26. An individual taxpayer can opt for the 8% income tax in lieu of the graduated tax rates if the following conditions are complied. Except
a. his income is derived from business or occupation and/or practice of profession.
b. his income is derived from purely compensation
c. the annual gross sales/receipts and other non-operating income does not exceed the value added tax (VAT) threshold of P 3,000,000
d. he signifies intention to elect the 8% income tax rate in the 1st quarter percentage and/or 1st quarter income tax return or on the initial quarter return of the taxable year.
27. S1: During the taxable year, Rey derived income from the following: Compensation income from XYZ Company which withheld the correct amount of income tax; Interest income from bank deposit in Banko De Pelepens, a local bank in the Philippines; Dividend income from Excel Company, a domestic corporation; and royalties from publishing his books. Rey is required to file income tax return.
S2: During the taxable year, Ka Emong derived income from the following: Compensation income from XYZ Company which did not withhold the correct amount of income tax (tax due is not equal with monthly tax withheld); Interest income from bank deposit in Banko De Pelepens, a local bank in the Philippines; Dividend income from Excel Company, a domestic corporation; and royalties from publishing his books. Rey is required to file income tax return.
a. Only S1 is true
b. Only S2 is true
c. Both are true
d. Both are false
28. S1: Compensation income earner is disqualified from availing the 8% optional income tax.
S2: If a self-employed individual opted for 8%, the cost of sales/service is rendered irrelevant.
a. Only S1 is true
b. Only S2 is true
c. Both are true
d. Both are false
29. Dividends received by a XYZ Corp. (DC) from ABC Corp. (DC) – Php 100,000 is subject to final withholding tax of:
a. P 10,000
b. P 15,000
c. P 20,000
d. P 0
30. Royalty fee received by Jallibae Foods Corp. (DC) from ABC Corp. (DC) for use of its brand – Php 1 Million is subject to final withholding tax of:
a. P 100,000
b. P 150,000
c. P 200,000
d. P 0
31 Royalty fee received by Jallibae Foods Corp. (DC) from ABC Corp. (NRFC) for use of its brand – Php 1 Million is subject to final withholding tax of:
a. P 100,000
b. P 150,000
c. P 200,000
d. P 0
32. Prizes won by Nicanor during Christmas Party – Php 10,000 is subject to final withholding tax of:
a. P 1,000
b. P 1,500
c. P 2,000
d. P 0
33. S1: Nicanor deposited money in Banko De Kano, a commercial bank established under the laws of the United States of America. The money earns interest income. Such interest income needed to be reported in the Income tax return as it is an ordinary income.
S2: Nicanor deposited money in Banko De Kano, a commercial bank established under the laws of the United States of America. The money earns interest income. Such interest income need not be reported in the income tax return as it was already subjected to Final Withholding Tax.
a. Only S1 is true
b. Only S2 is true
c. Both are true
d. Both are false
34. S1: ABC Corporation was identified as a top withholding agent by the BIR. In case the company purchases raw material goods for its production, the company is required to withhold 1% expanded withholding tax for its purchases.
S2: ABC Corporation was identified as a top withholding agent by the BIR. In case the company purchases raw material goods for its production, the company is required to withhold 2% expanded withholding tax.
a. Only S1 is true
b. Only S2 is true
c. Both are true
d. Both are false
35. S1: The obligation of the payor to deduct and withhold the tax arises at the time an income payment is PAID or PAYABLE, or the income payment is ACCRUED or RECORDED as an expense or asset, whichever is applicable, in the payor’s books, whichever comes first.
S2: The obligation of the payor to deduct and withhold the tax arises at the time an income payment is PAID or PAYABLE, or the income payment is ACCRUED or RECORDED as an expense or asset, whichever is applicable, in the payor’s books, whichever comes later.
a. Only S1 is true
b. Only S2 is true
c. Both are true
d. Both are false
36. Interest income of P 10,000 earned by Nicanor, a resident alien, from a euro dollar bank deposit in BPI Morayta is subject to final withholding tax of:
a. P 1,000
b. P 1,500
c. P 2,000
d. P 0
37. Interest income of P 10,000 earned by Nicanor, a resident citizen, from a peso bank deposit in BPI Morayta is subject to final withholding tax of:
a. P 1,000
b. P 1,500
c. P 2,000
d. P 0
38. Interest income of P 10,000 earned by Abdhul Salalani, an Arab, for his loan extended to Nicanor, a Filipino living in Manila, is subject to final withholding tax of:
a. P 1,000
b. P 1,500
c. P 2,000
d. P 0
39. Dividend income of P 100,000 received by Nicanor, a resident citizen, from Far Eastern College- Manila, a domestic corporation is subject to final withholding tax of:
a. P 10,000
b. P 15,000
c. P 20,000
d. P 0
40. S1: A company, who is a top withholding agent as identified by the BIR, purchases goods from its regular supplier. The regular supplier has the obligation to withhold the proper withholding tax.
S2: ABC Corp, a domestic corporation, deposited money in BDO Unibank. The money earns interest income. The obligation to withhold taxes on the interest income lies on ABC Corp.
a. Only S1 is true
b. Only S2 is true
c. Both are true
d. Both are false
Mr. X, a Certified Public Accountant, renders tax and accounting services to ABC Corp. He was paid by the company the amount of P 2,000,000 for his professional fee.
Questions
41. Without any additional information, who is the withholding agent?
a. Mr. X
b. ABC Corporation
c. Some other answer
Mr. X, a Certified Public Accountant, renders tax and accounting services to ABC Corp. He was paid by the company the amount of P 2,000,000 for his professional fee.
Questions
42. How much withholding tax will the withholding agent withhold as a result of the transaction?
(a)
43. S1: Passive Incomes are subject to separate and final tax rates.
S2: Passive incomes which are subject to final tax are included in the computation of taxable income from compensation and/or business/professional income
a. Only S1 is true
b. Only S2 is true
c. Both are true
d. Both are false
44. S1: Final tax is generally withheld on passive income.
S2: Final tax is generally withheld from income derived from sources within the Philippines.
a. Only S1 is true
b. Only S2 is true
c. Both are true
d. Both are false
45. Nicanor, after passing CPALE, was employed as an accountant a private company in Makati. Nicanor is what kind of Individual Taxpayer?
a. Purely compensation income earner
b. Purely self-employed individual
c. Mixed income earner
d. Passive income earner
46. Nicanor is a lawyer who is engaged in the practice of law as a private practitioner rendering legal services to his personal clients and at the same time engaged in the business of selling different varieties of foods or “carenderia”. Nicanor is what kind of Individual Taxpayer?
a. Purely compensation income earner
b. Purely self-employed individual
c. Mixed income earner
d. Passive income earner
47. Randel, a CPA who is engaged in the practice of taxation and accounting and at the same time an employee of ABC Corporation. Randel is what kind of Individual Taxpayer?
a. Purely compensation income earner
b. Purely self-employed individual
c. Mixed income earner
d. Passive income earner
48. Which of the following statements is incorrect?
a. If at any time during a given taxable year, a taxpayer’s gross sales or receipts exceeded the VAT threshold (P3,000,000.00), he/she shall automatically be subjected to the graduated rates under Section 24 (A) (2) (a) of the Tax Code, as amended.
b. A non-VAT registered taxpayer who initially opted to avail of the 8% option but has exceeded the VAT threshold during the taxable year, shall be subject to 3% option Percentage Tax on the first P3,000,000.00 of his/her gross sales/receipts under Section 11 of the Tax Code, as amended, with imposition of penalty even if payment is timely made on the following month when the threshold is breached.
c. The excess of the threshold should be subjected to VAT prospectively, and the 8% income tax previously paid shall be credited to the Tax Due under the graduated rates provided in Section 24 (A) (2) (a) of the Tax Code, as amended.
d. None of the Choices.
49. Which is FALSE?
S1 – An individual employee cannot claim the Php 250,000 deduction on his taxable compensation
S2 – An individual engaged in trade who opted 8% tax is allowed to claim Php 250,000 deduction on his gross income
S3 – An individual purely engaged in practice of profession cannot claim the Php 250,000 deduction if he opted graduated tax
S4 – A mix income earner can either use 8% or graduated tax on his business income
a. S1
b. S2
c. S3
d. S4
50. Which is FALSE?
I. Adonis, a sari-sari store owner, opted commuted tax of 8%. He is allowed to claim deduction of Php 250,000.00 on his gross sales.
II. Inday, a social media influencer was paid Php 5,000,000. He is allowed to claim deduction of Php 250,000.00 on his gross receipts.
III. Mikey, a VAT-registered taxpayer, whose gross sales is only Php 1,000,000.00 is allowed to claim deduction of Php 250,000.00 on his gross sales.
a. I, II, III
b. II, III
c. III
d. II
