Clincher

CAT CUP THREE
CLINCHER ROUND
Clincher 1.Mrs. Evangelista owns a parcel of land worth P500,000 which she inherited from her
father in 2008 when it was worth P300,000. Her father purchased it in 1998 for P100,000. If Mrs.
Evangelista transfers this parcel of land to her wholly owned corporation in exchange for shares
of stocks of said corporation worth P450,000, Mrs. Evangelista's taxable gain is
a. Zero c. P150,000
b. P50,000 d. P350,000
ANS: A
Value of property acquired P450,000
Less: Value of property given 300,000
Gain on exchange 150,000
Clincher 2.If an individual performs services for a creditor who in consideration thereof cancels the
debt, the cancellation of indebtedness may amount:
a. To a gift c. To a donation inter vivos
b. To a capital contribution d. To a payment of income
ANS: D
Clincher 3. On October 1, 2008, Samantha inherited properties worth P3,000,000 from her mother.
The properties are earning income of P90,000 a month.
How much income is to be reported by Samantha in 2006?

a. P3,090,000 c. P3,270,000
b. P3,000,000 d. P270,000
ANS: D
Taxable income (P90,000x3) P270,000
Inheritance of properties is not subject to income tax because it is an acquisition by gratuitous

title. In fact, subject to estate tax. However, the income of these properties are subject to
income tax.
Clincher 4. Villamayor, an employee of a cooperative was regularly receiving a monthly salary and
allowance of P3,500 and P1,000 respectively. On June 1, 2008, he was retrenched by the
cooperative paying him a separation pay of P125,000. He decided to use this money in buying
trimobile. For a six (6) month period, he earned a net income of P24,000. How much income
should Villamayor declare in 2006 for income tax purposes?
a. P48,750 c. P173,750
b. P46,500 d. P171,000
ANS: B
Annual salary (P3,500+1,000)x5 P22,500
Income from trimobile 24,000
Total income P46,500
Clincher 5. After working for 30 years and due to old age, Rufino retired from his employment on
December 31, 2008 as a rank-and-file employee of Tumagay Corporation. As a consequence of
his retirement, he received the following from his employer:
11TH REGIONAL MID YEAR CONVENTION

CAT CUP THREE
CLINCHER ROUND
Salary for 2008 P250,000

Christmas gift 25,000
Anniversary bonus 2,500
Loyalty award 10,000
Retirement pay 750,000
Based on the above data, the amount subject to tax of Rufino is -

a. P250,000 c. P252,500
b. P257,500 d. P1,037,500
ANS: C
Salary P250,000
Add: Taxable other benefits
Christmas gift P25,000
Anniversary bonus 2,500
Total 27,500
Less: De minimis benefit 5,000 P22,500
Loyalty award 10,000
Total other benefits 32,500
Less: Exemption 30,000 2,500
Amount subject to tax P252,500
Clincher 6..Mulry had the following data from his employment in 2008:
Monthly salary P12,000

Taxes withheld 8,000
Pag-ibig fund contributions 1,500
Union dues 2,400
Philhealth contibutions 720
SSS premiums 480
13th month pay 12,000
Mid-year bonus 12,000
Loyalty award 5,000
The portion of compensation which is excluded from the gross compensation income if Mulry is
a rank-and-file employee is -
a. P5,100 c. P29,000
b. P34,100 d. None
ANS: B
Pag-ibig fund contributions P1,500
Union dues 2,400
Philhealth contributions 720
SSS premiums 480
Other benefits:
13th month pay P12,000
Mid year bonus 12,000
Loyalty award 5,000 29,000
Total exemptions P34,100

CAT CUP THREE
CLINCHER ROUND
Clincher 7.. Ditso is employed by Holy Cross Hospital as an ambulance driver with a salary of
P4,000 a month. In addition, he is given free meals with a monthly value of P1,500 and living
quarters within the hospital compound with an equivalent value of P1,000 a month.
The monthly value compensation income of Ditso is-

a. P6,500
b. P4,000
c. P5,000
d. P5,500
ANS: A
Salary P4,000
Value of free meals 1,500
Value of free living quarters 1,000
Monthly compensation income P6,500
The equivalent value of the free meals and lodging is a fringe benefit. However, it is not subject
to fringe benefit tax because it is given to a rank and file employee.
Clin. The following statement is true, except:

a. Fringe benefit tax shall be treated as a final income tax on the employee withheld
and paid by the employer on a quarterly basis
b. The grossed-up monetary value of the fringe benefit is the actual amount received
by the employee
c. The grossed-up monetary value of the fringe benefit shall be determined by
dividing the monetary value of the fringe benefit by the gross monetary value
factor
d. The person liable for fringe benefit tax is the employer, whether he is an
individual, professional partnership or a corporation regardless of whether the
corporation is taxable or not or the government and its instrumentalities
ANS: B
C9. Withholding of VAT is not applicable when payment is:

a. P1,000 and above. c. P8,000 and above.
b. P1,000 and below. d. P15,000 and above.
ANS: B
C10. Value added tax is a/an:

a. Indirect tax c. Local tax
b. Direct tax. d. Personal tax
ANS: A

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CAT CUP THREE

How much income is to be reported by Samantha in 2006?

Inheritance of properties is not subject to income tax because it is an acquisition by gratuitous

11TH REGIONAL MID YEAR CONVENTION

Salary for 2008 P250,000

Based on the above data, the amount subject to tax of Rufino is -

Monthly salary P12,000

11TH REGIONAL MID YEAR CONVENTION

The monthly value compensation income of Ditso is-

Clin. The following statement is true, except:

C9. Withholding of VAT is not applicable when payment is:

C10. Value added tax is a/an:

11TH REGIONAL MID YEAR CONVENTION

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