HOLY TRINITY UNIVERSITY

MID-TERM EXAM
INCOME TAXATION

1. Which is not included in the classification of income taxpayers?

a. Individuals c. Corporations b. Partnerships d. Estate & Trusts

2. All are sources of income except:

a. Capital c. Sale or exchange of assets b. Labor d. Gifts, bequests or devices

3. The following individuals are taxable on their income from Philippines only except:
a. Resident Alien c. Non-resident Alien-ETB
b. Resident Citizen d. Non-resident Alien-Not ETB
4. Same choices in the preceding question-who is governed by Gross Income Taxation only?
___________________.
5. A taxpayer, unmarried but with 2 minor children living with him, provided the following
data:
Phil. Abroad ($1=P50)
Compensation Income P200,000 $2,000
Business Income 500,000 5,000
Other Income 100,000 1,000
Health Insurance Paid 5,000
Business Expenses 150,000 1,500
a. If he is a resident citizen, his TNI is _________________.
b. If he is a non-resident citizen, his TNI is _________________.
c. If he is a resident alien, his TNI is _________________.
d. If he is a non-resident alien, ETB, TNI is _________________.
e. If he is a non-resident alien, not-ETB his income
tax due is _________________.
f. If he is a Special, Alien, Employee, disregarding
Business and other income, his income tax due is _________________.
g. Under letter D (NRA-ETB) but with reciprocity
law, TNI is _________________.
h. If he is a resident citizen but assuming he has only
compensation income in Philippines as income for
the whole year, and no other income, his TNI is _________________.
i. Under letter A, but assuming he has paid income
tax abroad amounting to $1,500, his income tax
credit is _________________.
j. Under letter A again but assuming he opts to claim
the OSD, his TNI is _________________.
6. Q had the following data for taxable year 2005: (Exchange rate $1=P40)
Philippines Abroad
Salaries P165,000 $2,000
Income from merchandising 450,000 6,000
Business Expenses 120,000 1,500
Interest Income:
Personal receivables 10,000
From expanded FCDS $ 2,500
On bank deposits (20% longterm) P 25,000 3,000
Dividend Income:
From domestic corporation 7,000
From resident corporation 5,000
From non-resident 8,000
Winnings from charity sweepstakes 80,000
Shares of stocks of domestic corporation
sold to a buyer (cost P10,000) 30,000

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 Q is married with the following children as dependents:
R, born March 15, 1992, S, born April 5, 1993, T & U, born May 6, 1995, & V, born February 27,
1997. He also sold a condominium unit in Manila (residential) for P2M although its FMV is P3M
but with a zonal value of P4M.

A. The taxable income of Q is:

a. P884,000 b. P892,000 c. P724,000 d. P716,000

B. Q’s total final taxes on his passive income is:

a. P16,160 b. P16,020 c. P15,460 d. P8,520

C. His total capital gain’s taxes is:

a. P241,000 b. P251,720 c. P240,000 d. P257,000

D. If he is a NRC, his total final tax on passive income:

a. P16,020 b. P8,520 c. P16,160 d. P8,660

E. If he is a NRA-not ETB his total combined taxes on all income from Philippines is:
a. P83,000 b. P241,000 c. P324,000 d. P340,000

7. Mr. & Mrs. P, both CPA’s & residents of the Philippines had the following data for taxable year
2005:
Salaries 150,000
Bonus (13th month pay) Mrs. P. 42,000
Income from practice of profession, Mr. & Mrs. P.
(net of 10% withholding tax) 450,000
Expenses-professional practice 120,000
Rental income (net of 5% w/tax) 190,000
Rental expenses 80,000
Other income, Mr. P. 80,000

20% of the other income is non-taxable while 15% of the professional expenses is non-deductible. They
have 12 minor children.
The taxable income of Mrs. P is:
a. P259,000 b. P275,000 c. P266,000 d. P234,000

8. The taxable income of Mr. P is:

a. P389,000 b. P357,000 c. P419,000 d. P410,000
9. Pugo and Pogi are partners who provided the following data about their partnership and their own
data in their separate businesses:

Partnership Pugo Pogi

Gross Income P2,000,000 P1,000,000 P500,000
Deductions 500,000 300,000 100,000
P&L Ratio 4:6
Status Single Married
Drawing Account 200,000 100,000 100,000
Other Income 0 200,000 300,000

a. If the partnership is a GPP, the taxable income of the partnership is ___________.

b. And the TNI of Pugo is _____________.
c. And the TNI of Pogi is _____________.
d. If the partnership is an Ordinary Partnership its income tax due is ____________.
e. And the TNI of Pugo is ____________.
f. And the TNI of Pogi is _____________.
g. Under letter B but Pugo opts to claim the OSD, his TNI is __________________.

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11. The Rainbow Corp. provided the following data for calendar year ending December 31, 200A: ($1-
P50)
Philippines Abroad
Gross Income P4,000,000 $40,000
Deductions 2,500,000 15,000
Income tax Paid 3,000
A. If it is a domestic corporation, its income tax after tax credit is:
a. P730,000 b. P832,000 c. P880,000 d. P675,000

B. If it is a resident corporation, its income tax is:

a. P730,000 b. P1,280,000 c. P880,000 d. P450,000

C. If it is a non-resident alien corporation, its income tax is:

a. P730,000 b. P128,000 c. P880,000 d. P1,200,000

D. Under letter A, but it opts to claim the tax paid abroad as deductions from gross income, its
income tax is:
a. P730,000 b. P832,000 c. P880,000 d. P780,000

E. If it is a private educational institution like FEU, its income tax after tax credit is:
a. P730,000 b. P832,000 c. P275,000 d. P150,000

F. If it is a non profit hospital, its income tax after tax credit is:
a. P730,000 b. P832,000 c. P275,000 d. P150,000

G. If it is a resident international carrier, its income tax is:

a. P100,000 b. P10,000 c. P37,000 d. P125,000

H. If it is a non-resident cinematographic film owner/lessor, its income tax is:

a. P1,000,000 b. P100,000 c. P300,000 d. P128,000

I. If it is a non-resident lessor of vessel its income tax is:

a. P100,000 b. P180,000 c. P300,000 d. P128,000

J. If it is a non-resident lessor of aircrafts, machineries and equipment, its income tax is:
a. P100,000 b. P180,000 c. P300,000 d. P128,000

K. If it is a resident corporation but its expenses within and without is P3M, unallocated (disregard
original data on expenses), its income tax is:
a. P700,000 b. P320,000 c. P480,000 d. P600,000

L. If it is a resident corporation and it remitted 60% of its net profit to its head office
abroad, its total tax liability if (Original data)
a. P480,000 b. P571,800 c. P196,000 d. P544,500

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M. If it is a private educational institution but P3.5M of its total gross income is from lease and
restaurant business, its income tax is:
a. P730,000 b. P275,000 c. P150,000 d. P675,000

N. If it is a domestic corporation but its total expenses is P5,800,000 (disregard original data on
expenses), its income tax is:
a. P730,000 b. P64,000 c. P120,000 d. P85,000

O. Under letter N, but the domestic corporation is a non-profit hospital, (disregard tax paid abroad) its
income tax is:
a. P20,000 b. P64,000 c. P10,909 d. P120,000

P. If the corporation is a non-stock educational institution which uses all its revenues or income for
educational and charitable purpose, its income tax is:
a. P 0 b. P730,000 c. P120,000 d. P64,000

12. A domestic corporation provided the following data:

1998 1999 2000 2001

Gross Sales P2,040,000 P2,800,000 P3,000,000 P3,000,000
Sales Returns 40,000 100,000
COGS 1,000,000 700,000 1,500,000 1,500,000
Business Exp. 950,000 2,100,000 1,200,000 1,200,000

The income tax due after tax credit, if any for the taxable year 2000 is:
a. P21,000 b. P40,000 c. P64,000 d. P46,000

13. Aishah University, a domestic corporation, had the following data for taxable year
2005:
Sales P5,000,000
Cost of Goods Sold 2,000,000
General, Selling and Adiministrative Expenses 500,000
Interest Income from Phil. Bank Deposit 100,000
Rental Income (net of 5% withholding tax) 190,000
Dividend Income: From domestic corporation 60,000
From foreign corporation 50,000
Winnings from charity sweepstakes 1,000,000
Capital gains from sale of domestic share of stocks
Sold directly to buyer 75,000
Dividend declared and paid during the year 500,000
Retained earnings, beg. of the year (subjected to
IAE tax last year) 1,000,000

Note: The board of directors approved a resolution reserving P1,500,000 of its net profit for the
year for plant expansion.

The income tax due after credit if any is:

a. P880,000 b. P870,000 c. P962,500 d. P815,000