Font size
WorksheetsBAC3-Taxation Midterm Exam
Total questions: 60
Worksheet time: 31mins
Which statement is incorrect?
every person must contribute his share in government costs
the existence of government is expected to improve the lives of the people
the government provides protection and other benefits while people provide support
only those who are able to pay tax can enjoy the privileges and protection of the government
Income tax may be imposed for the following purposes, except
to provide large amounts of revenues
to limit corruption
to offset regressive sales and consumption taxes
to mitigate the evils arising from the inequalities in this distribution
Which is not an item of gross income because of the absence of an undertaking from the taxpayer?
proceeds of a life insurance policy
forgiveness indebtedness as an act of gratuity
revaluation surplus on properties
service fees
Which is subject to income tax?
proceeds of life insurance policy received by the family of the insured
excess of proceeds over the premiums paid received by the taxpayer
life insurance proceeds received by the corporation from the insurance of deceased offer
none of these
Which of the following is not constructive receipt of income?
forgiveness of indebtedness in consideration of service
matured detachable interest coupons
deposit of income to tax payer's bank accounts
cash salar of an employee
A resident alien naturalized in accordance with Philippine law is a
resident citizen
resident alien
non-resident alien engaged in trade or business
non-resident alien not engaged in trade or business
A Filipino who has been abroad for more than 183 days is classified as a
resident alien
non-resident alien
non-resident citizen
non-resident citizen not engaged in trade or business
An alien who stayed less than one year in the Philippines is classified as a non-resident alien not engaged in trade or business if he stayed herein for less than
180 days
183 days
1 year
2 years
An American showed proof to the satisfaction of the Commissioner of Internal Revenue of his intention to stay in the Philippines as immigrant is classified as a
resident citizen
resident alien
NRA-ETB
NRA-NETB
A Japanese who is staying in the Philippines for 183 days is a
resident alien
non-resident alien
non-resident alien engaged in trade
non-resident alien not engaged in trade or business
A Canadian who is staying in the Philippines for more than one year is a
resident alien
non-resident alien
non-resident alien engaged in trade or business
non-resident alien not engaged in trade or business
A corporation incorporated according to the Philippines laws is a
Domestic corporation
Resident corporation
Non-resident corporation
De jure corporation
A foreign corporation which is not authorized to conduct business in the Philippines is a
Domestic corporation
Resident corporation
Non-resident corporation
De jure corporation
A foreign corporation that operates branch in the Philippines is a
Domestic corporation
Resident foreign corporation
Non-resident foreign corporation
De jure corporation
Which of the following taxpayers is taxable only on income earned from the Philippines?
Resident corporation
Domestic corporatin
Resident alien
All of these
Genesis, a non-resident citizen, lent money to Shino, a resident Chinese. The indebtedness was collateralized by a property located in Japan. The income is earned in
the Philippines
China
Japan
Japan,China, and the Philippines
Which is an incorrect statement regarding situs of income?
service income is earned in the domicile of the taxpayer
interest income is earned in the residence of the debtor
royalty is earned where the intangible is employed
rent is earned in the location of the property
Which statement is correct regarding situs of income?
the gain of the sale of real property is earned in the location of the property
the gain on sale of any property is earned in the place of sale
merchandising income is earned in the residence of the proprietor
manufacturing income is earned in the place of sale
Jan, a resident alien, bought a car manufactured in the Philippines and exported the same at gain to Carla, a non-resident citizen. Which is correct?
The gain is subject to tax in the Philippine since the commodity involved is manufactured in the Philippines.
The gain is subject to tax in the Philippines since the buyer is a citizen of the Philippines.
The gaiin is both subject to tax in the Philippines and abroad since the commodity involved is manufactured in the Philippines.
The gain is taxable in the Philippines since it is sold in the Philippines.
Juan, a resident alie,, and Pedro,a non-resident alien, executed a contract of sale in Japan whereby Pedro shall purchase the lot owned by Juan in the Philippines. Juan gains Php1,000,000 in the exchange.
The gain is exempt since the gain is derived outside the Philippines
The gain is not subject to Philippine tax since Juan is a resident alien.
The gain is subject to Philippine tax because Juan is a resident alien.
The gain is subject to Philippine tax because the property is in the Philippines.
A Japanese who married a beautiful Filipina and has been residing in the Philippines for 2 years.
Resident citizen
Resident alien
Non-resident alien
Resident corporation
Which of the following properties when classified as capital asset is subject to capital gains tax?
domestic stocks sold directly to buyer
real property
both domestic stocks sold directly to buyer and real property
none of these
Capital asset means
real properties used in business
personal properties used in business
real properties notused in business
any property, real or personal, not used in business
Which is not an item of passive income?
royalties
prizes
deposit interest income
professional income
These are accounting techniques or conventions used to measure income
accounting methods
accounting periods
accrual basis
cash basis
These are distinct and equaltime periods over which income is measured
accounting methods
accounting periods
crop year basis
cash basis
Income is recognized when received rather than when earned
cash basis
installment basis
accrual basis
deferred payment basis
Income is recognized when earned regardless of when received
cash basis
accrual basis
installment method
percentage of completion
Which statement is correct?
dealer of real properties canuse the installment method without limitation
dealers of personal properties can use the installment method without limitation
non-dealers of propeties can use the installment method if initial payment exceeds 25% of the selling price
dealers of properties can use the installment method only if initial payment does not exceed 25% of the selling price
Income is reported by reference to the extent of project completion in
deferred payment method
installment method
percentage of competion method
completed contract method
Statement 1: The excess of mortgage assumed by the buyer over the basis of the properties sold is the amount of the gain on the sale.
Statement 2: Any collection from an installment contract where the mortgage exceeds the tax basis of the properties received constitutes collection of income.
Which statement is true?
Statement 1 only
Statement 2 only
Both statements are true
Neither statement is true
Which is correct regarding the crop year method
crop year method is an accounting period
crop year method recognizes farming income when the next planting commenced.
crop year method matches e xpenses with the income upon harvest
crop year method recognizes cropping expenses when incurred and harvest income when realized
Which is not a special feature of regular income taxation?
use of accounting methods
use of accounting periods
annual payment of income tax
final withholding tax at source
Which is an incorrect statement regarding the use of the accounting periods?
individuals can either choose the calendar year or fiscal year accounting period
the regular accounting period for any taxpayer is 12 months
individual taxpayers are not allowed to report income using fiscal accounting period
corporations may opt to use either calendar or fiscal accounting period
Under which of the following will short accounting period not arise?
change of accounting period by a corporate taxpayer
change of accounting period by individual taxpayer
death of a taxpayer
dissolution and liquidation of a business
A corporation reporting on a fiscal year ending every March 31 shall file its 2021 income tax return not later than
April 15, 2021
June 15, 2021
July 15, 2021
April 15, 2022
An individual income taxpayer shall file his or her incometax on or before the
15th day of the fourth month of the same calendar year
15th day of the fourth month of the following calendar year
15th day of the fourth month of the same fiscal year
15th day of the fourth month of the following fiscal year
Which is not generally subject to regular income tax?
Compensation income
Business income
Professional income
Passive income
The general rule in income taxation is
final income taxation
capital gains taxation
regular income taxation
fringe benefit taxation
The net amount of regular income subject to regular tax is called
taxable income
compensation income
net income
gross income
What are allowable deductions against gross income?
Business expenses
Family support
Personal expenses by the taxpayer
Expenses of employment
Which is not a feature of the regular income tax?
net income tax
final withholding tax
annual tax
creditable withholding tax
Which is a source of income subject to regular income tax?
employment
casual sales transactions
trade or business or exercise of a profession
all of these
Which is an incorrect statement?
Business expenses are deductible by individuals and corporations
Purely employed taxpayers are not allowed deductions from gross income
Personal exemptions are deductible by individuals, estates, and trusts
deductions are considered in the determination of net income.
Which is a correct statement regarding exclusion in gross income?
They are included in gross income subject to regular income tax
They are ignored in the determination of gross income.
They are presented in gross income but are presented as deductions
They are subject to final tax
Which is not considered an operating income?
consignment commission income by a retail score
fees from the rendering of services
interest incomefrom advances to employees
sale of scrap
Who are required to file quarterly declaration of income?
individual engaged in business
corporations and individuals engaged in business
corporations
all individuals and corporations
Mr. Peralta wishes to file his 2021 income tax return. To avoid penalty, he must file his return on or before
April 15, 2021
April 15, 2022
August 15, 2022
November 15, 2022
Which of these taxpayers is required to file an income tax return?
an employee covered by the substituted filling system
a taxpayer deriving purely passive income subject to final tax
aliens classified as NRA-NETBs
a resident citizen whp derives his entire income from sources outside the Philippines
The taxable income of corporate taxpayer is the
taxable compensation income plus net income from business
taxable compensation income
net income from business less personal exemption
net income from busines
The taxable income of a pure compensation income earner is the
net income from business less personal exemption
taxable compensation income plus net income from business
taxable compensation income
net income from business
the taxable income of a mixed income earner is the
net income from business less personal exemption
net income from business
taxable compensation income
taxable compensation income plus net income from business
The taxable income of a pure professional income earner is the
net income from business
taxable compensation income
taxable compensation income plus net income from business
net income from professional profession less personal exemption
Statement 1: Individuals wth higher income are subject to higher tax rates.
Statement 2: Corporations with higher income are subject to higher tax rates.
Which is correct regarding the regular income tax?
Statement 1 only
Statement 2 only
Both Statements 1 and 2
Neither Statements 1 and 2
Statement 1: Corporations with the same net income may not have the same tax due.
Statement 2: Individuals with the same net income may not have the same tax due.
Which statement is incorrect regarding the regular income tax?
Statement 1
Statement 2
Both Statements 1 and 2
None
Juana is insured in a Php1M life insurance policy with annual premium payments of Php20,0000 for 10years. If Juana outlives the policy after 10th year, he will be paid a Php500,000 maturity value.. Then, Juana died on the 7th year of coverage and his heirs collected the Php1M proceeds. Is the proceeds taxable?
The entire insurance proceeds of Php1M is taxable
The entire insurance proceeds of Php1M is not taxable
The portion of insurance proceeds of Php1M is taxable
The portion of insurance proceeds of Php1M is taxable
Mr Joy's brand new car which he bought for Php1.2Mwas totally wrecked in a car collision. Mr Joy escaped unharmed. He was paid Php1.3M for the accident. Is the excess of indemnity subject to gross income?
Php100,000 excess indemnity is item of final tax.
Php100,000 excess indemnity is item of gross income.
Php100,000 excess indemnity is not item of gross income.
Php100,000 excess indemnity is excluded as item of gross income.
Mr Swan is a retired US serviceman from Iraqui was. He married beautiful Filipina and settled in the Philippines. He is receiving a $1,000 monthly benefit from the USVA. Is the benefit excluded in gross income?
The USVA benefit is excluded in gross income
The USVA benefit is included in gross income
The USVA benefit is excluded in final income
The USVA benefit is excluded in final tax
Alladin, registered scale miner, produced 100 grams of gold. He sold 50 grams to a jeweler for Php240,000 and another 50 grams for Php230,000 to a registered gold trader. The Php240,000 is subject to income tax?
The Php230,000 is an exclusion in gross income.
The Php230,000 is an inclusion in gross income.
The Php230,000 is an exclusion in final income.
The Php230,000 inclusion in gross income.
Upperland Miners Mining Cooperative (UMMC) is cooperative organization established operated by small-scale miners with a mining area registered as a Minahang Bayan. During the year, UMMC earned a total of Php900M selling gold to the BSP.
selling of gold proceeds to the BSP is exempt from taxation
selling of gold proceeds to the BSP is not exempt from taxation
selling of gold proceeds to the BSP is subject taxation
selling of gold proceeds to the BSP is exempt from final taxation
