PHINMA Education

Common Final Exam

BAM 031
Income Taxation

1. The principal purpose of taxation is

a. To encourage the growth of home industries through the proper use of tax exemptions and tax
incentives
b. To implement the police power of the state
c. The reduce excessive inequalities of wealth
d. To raise revenues for governmental needs

2. “Equality in taxation” means:

i. Progressive system of taxation shall be applied
ii. The tax laws and their application must be fair, just, reasonable and
proportionate to one’s ability to pay
iii. The tax laws shall give emphasis on direct rather than indirect taxes or on the
ability-to-pay principle of taxation
a. I only
b. II only
c. III only
d. I, II and III

3. Taxation as distinguished from police power and power of eminent domain

a. Property is taken to promote the general welfare
b. May be exercised only by the government
c. Operates upon the whole citizenry
d. There is generally no limit as to the amount that may be imposed

4. Which statement is wrong?

a. The power of taxation may be exercised by the government, its political subdivisions, and public
utilities
b. Generally, there is no limit on the amount of tax that may be imposed
c. The money contributed as tax becomes part of public funds
d. The power to tax is subject to inherent and constitutional limitations

5. Which of the following statements is/are false?

i. The power to tax is exclusively exercised by the legislature.
ii. The President has the authority to fix tariff rates, import and export quotas, tonnage and
wharfage duties, and other duties and imposts.
iii. Local government units have the power to levy taxes.
iv. Tax legislation may be delegated to administrative agencies.
a. II and III only
b. II and IV only
c. II, III and IV only
d. IV only

6. Which of the following is not a determinant of the place of taxation?

a. Source of the income
b. Citizenship of the taxpayer
c. Residence of the taxpayer
d. Amount of tax to be imposed
7. One of the following is a false statement about double taxation. Which is it?
a. There is no constitutional prohibition on double taxation
b. Direct duplicate taxation is a valid defense against a tax measure if it violates the equal protection
clause
c. Absence of any of the elements of direct taxation makes it indirect duplicate taxation
d. 20% final withholding tax on interest income on bank deposits and a 5% gross receipts tax on
banks is a direct duplicate taxation

8. Statement 1: Tax avoidance is a scheme used outside of those lawful means to escape tax liability
Statement 2: Tax avoidance is a tax saving device within the means sanctioned by law, and, when
availed of, it usually subjects the taxpayer to further or additional civil or criminal liabilities
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

9. The city council passed a tax ordinance imposing an occupation tax or profession or occupation of
an “industrial engineer”. GJ is the only person with such an occupation in the city. Which of the
following is correct?
a. GJ can successfully challenge the validity of the ordinance being discriminatory since he is the only
one adversely affected.
b. The ordinance violates the constitutional rule of equality in taxation
c. The ordinance is a “class legislation” since it does not subject to occupation tax the other industrial
engineers
d. The ordinance is a valid exercise of the council’s power to enact tax ordinance to raise revenue
under the Local Government Code.

10. Levying of local government taxes may be exercised by:

a. The local executive only
b. The legislative branch of the local government only
c. The local executive and the legislative branch of the local government only
d. Neither the local executive nor the legislative branch of the local government can exercise the
power

11. The basic principle of a sound taxation system, where “Taxes must be based on the taxpayer’s
ability to pay” is called:
a. Equality in taxation
b. Ability to pay theory
c. Theoretical justice
d. Equity in taxation

12. Which of the following statements on construction of tax laws is false?

a. A statute will not be construe as imposing a tax unless it does so clearly, expressly, and
unambiguously.
b. In case of doubt, it shall be construed most strongly against the government, and liberally in favor
of the government.
c. Tax laws are special laws and prevail over a general law.
d. Retroactive application of tax laws is not permitted.

13. Rule of “No estoppel against the government” means

a. Rule of law that in the performance of its governmental functions, the state cannot be estopped by
the neglect of its agents and officers
b. The government is not estopped by the mistakes or errors of its agents; erroneous application and
enforcement of law by public officers do not block the subsequent correct application of statutes
c. Both a and b
d. Neither a nor b

14. JJ is a mining operator. The tax he has to pay is based on the actual value of the gross output or
mineral products extracted is
a. Mining tax
b. Royalties
c. Rental
d. Ad valorem tax

15. The sources from which income is derived

A B C D
Labor True True True False
Gifts and True False False False
Inheritance
Use of Capital True True False False

16. Bu-dhoy, a Mongolian national, arrived in the Philippines on January 1, 2018 to visit his Filipina
girlfriend. He planned to stay in the country until December 31, 2020, by which time he would go back
to his legal wife and family in Mongolia. Bu-dhoy derived income during his stay here in the
Philippines. For 2018 taxable year, Bu-dhoy shall be classified as a:
a. Resident alien
b. Non-resident alien engaged in trade or business in the Philippines
c. Non-resident alien not engaged in trade or business in the Philippines
d. Special alien employee

17. Which of the following statements is not true?

a. Employee is an individual performing services under an employer-employee relationship.
b. Employer is any person for whom an individual performs or performed any service, of
whatever nature, under an employer-employee relationship.
c. Employer and employee relationships exist when a person for whom services are performed
has the right to control and direct the individual who performs the services, not only as to the result of
the work to be accomplished but also as to the details, methods and means by which it is
accomplished.
d. Gross receipts refer to the total sales transactions net of VAT, if applicable, reported during
the period, without any other deduction.

18. Statement 1: Where the estate is under judicial administration, the income of the estate shall be
taxable to the fiduciary or trustee.
Statement 2: Where the estate is not under judicial administration, the income of the estate shall be
taxable to the heirs and beneficiaries.
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true

19. This is not a requisite for business expense to be deductible

a. It must be reasonable
b. It must be paid during the taxable year
c. The withholding tax otherwise required have been deducted and remitted to the BIR
d. It must be ordinary and necessary

20. Pedro earned interest income from a promissory note issued to him by Juan, a resident of
California, USA. Assuming that Pedro is a nonresident citizen, the interest income is
a. Subject to basic income tax
b. Subject to final tax
c. Not subject to income tax
d. Partly subject to scheduler and partly subject to final tax

21. Which of the following cases may the taxable income be computed not on the basis of the
calendar year?
I. Taxpayer has no accounting period
II. Taxpayer does not keep books of accounts
III. Taxpayer is an individual taxpayer
IV. Taxpayer is a corporation
V. Taxpayer is a general partnership
a. IV only
b. IV and V only
c. III, IV and V only
d. None of the above

22. Which of the following instances may give rise to short accounting period?
a. When the corporation is newly organized using fiscal year
b. When a taxpayer dies
c. When a corporation changes accounting method
d. All of the above

23. Karen, a real estate dealer sold a house and lot for P600,000 on November 20, 2017. The cost of
the property is P375,000. Terms are:
Down payment P100,000
Balance Payable in monthly installments of P25,000 beginning December 20, 2017
How much is the income subject to income tax in 2018?
a. P112,500
b. P300,000
c. P56,250
d. Nil

24. The withholding agent of creditable value added tax is required to remit the amount of value
added tax withheld within
a. 25 days following the end of month the withholding was made
b. 20 days following the end of month the withholding was made
c. 15 days following the end of month the withholding was made
d. 10 days following the end of month the withholding was made

25. Which of the following statements is true?

a. The exemption of statutory minimum wage rates does not cover holiday pay, overtime pay,
night shift differential pays, and hazard pay earned by an MWE.
b. Mixed income earner is an individual earning compensation income from employment and
income from business, but not practice of profession.
 c. NRAETB refers to a non-resident alien who shall come to the Philippines and stay for an
aggregate period of more than spontaneous 180 days during any calendar year.
d. Rank and file employees refer to an employee holding neither managerial or supervisory
position as defined under existing provisions of the Labor Code of the Philippines.

26. Fortuna Hotel, Inc., using calendar year accounting period, overpaid its 2014 second quarter
income tax and it failed to correct the said overpayment on computation of its Annual Income Tax.
How shall the taxpayer recover the excess tax paid?
a. File a claim for refund with the BIR within three years from August 29, 2014
b. File a claim for refund with the BIR within three years from April 15, 2015
c. File a claim for refund with the BIR within two years from August 29, 2014
d. File a claim for refund with the BIR within two years from April 15, 2015

27. What is/are the penalty for non-issuance of receipts or invoices?

a. Fine of not less than P1,000 but not more than P50,000
b. Imprisonment for not less than two years but not more than four years
c. Both a and b
d. Either a or b

28. Which of the following statements is not true?

a. If a taxpayer is acquitted in a criminal violation of the Tax Code, this acquittal does not exonerate
him from his civil liability to pay the taxes
b. A conviction for tax evasion is not a bar for collection of unpaid taxes
c. A tax assessment is necessary to a criminal prosecution for willful attempt to defeat and evade
payment of taxes
d. Criminal proceedings under the Tax Code is now a mode of collection of internal revenue taxes,
fees or charges

29. Which is not a creditable withholding income tax?

a. Expanded withholding income tax
b. Withholding income tax on passive income
c. Withholding income tax at source
d. None of the above

30. Bogart is a resident citizen. Data on his 2018 income and expenses were provided as follows:
Gross business income P700,000
Business expenses 300,000
Royalty from books 40,000
Gain on direct sale to buyers of shares of domestic corporation held as capital asset 70,000
Loss on sale of land in the Philippines held as capital asset
with a zonal value of P1,200,000 500,000
How much is the total income tax expense for the year?
a. P6,000
b. P142,500
c. P116,500
d. P159,500

31. Philippine Chooks-to-go 3x3 basketball team led by Alvin Pasaol competed well during the
recently concluded FIBA 3x3 World Championshop held in Doha, Qatar on April 16-21, 2019. They
received $10,000 cash prize from International Basketball Federation (FIBA), the world governing
body of basketball, for reaching the quarterfinals of the tournament. By virtue of the honor brought to
the country, each team member also received P50,000 form Samahang Basketbolista ng Pilipinas
(SBP), the national sports association for basketball in the Philippines. The team captain, Alvin
Pasaol, likewise received P200,000 from “Chooks-to-go Bounty Agro Ventures, Inc.” for being one of
its new endorsers.
Statement 1: The $10,000 received from FIBA and P50,000 from SBP are exempt from income tax.
Statement 2: The P200,000 received from the Chooks-to-go is subject to 20% final withholding tax.
a. Only Statement is correct
b. Only Statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

32. Floramie Ancot – owner of Flor Merchandise, non-vat registered business, earning P2,000,000 for
2018, signified her intention on May 29, 2018 to avail the 8% income tax rate.
Christine Baco – employee of Lebunao Corporation earning P1,000,000 annually.
Arvin Bangalao – employee of Lomonsod Corporation earning P5,000,000 annually and owner of
Arvin Bazaar, vat-registered, earning P200,000 and signified his intention on the first quarter of filing
income tax return to avail the 8% income tax rate.
Chenny Magsalay – owner of Chen Store, earning P333,333.33 monthly signified her intention on the
first quarter income tax return to avail the 8% income tax rate.
Who can avail the 8% income tax rate?
a. Floramie
b. Floramie and Arvin
c. Floramie, Arvin and Chenny
d. None of them can avail

33. Joan Pineda has the following quarterly income:

Quarter 1 – P1,000,000
Quarter 2 – P1,500,000
Quarter 3 – P2,000,000
Quarter 4 – P2,500,000
Joan is qualified to avail 8% income tax rate option. Which of the following statements is applicable to
Joan?
a. The financial statements are not required to be attached in filing the final income tax returns.
b. Existing rules and regulations on bookkeeping and invoicing/receipting shall still apply.
c. His annual income tax shall be computed under the 8% income tax rates.
d. Joan can claim a refund for the previous quarter/s income tax payment/s under the 8%
income tax rate option.

34. Which of the following statements is least likely correct?

a. 8% income tax rate on gross sales/receipts and other non-operating income in excess of
P250,000 is available only to purely self-employed individuals and/or professionals.
b. The P250,000 is not applicable to mixed income earners since it is already incorporated in
the first tier of the graduated income tax rates applicable to compensation income.
c. Tax due from compensation is computed using the 8% income tax rates.
d. Under the said graduated rates, the excess of the P250,000 over the actual taxable
compensation income is not deductible against the taxable income from business/practice of
profession under the 8% income tax rate option.

35. Which of the following is least likely true?

a. Interest from any currency bank deposit and yield or any other monetary benefit from
deposit substitutes and from trust funds and similar arrangements – 20%
b. General royalties – 20%
c. Capital gains from the sale of shares of stock not traded in the stock exchange – 6%
 d. Cash and property dividends – 10%

36. Emilio, married, with 2 minor children, had the following data;
2016 2017
Business Income P106,700 P110,800
Interest on time deposit with 2,000 3,000
BPI
Short-term capital gain 10,000 90,500
Long-term capital gain 20,600 80,200
Short-term capital loss 90,000 20,900
Long-term capital loss 80,400
How much is the taxable income of Emilio assuming the current taxable year is 2018?
a. P13,800
b. P110,800
c. P213,800
d. P260,600

37. Bu-dhoy, a Mongolian national, arrived in the Philippines on January 1, 2018 to visit his Filipina
girlfriend. He planned to stay in the country until December 31, 2020, by which time he would go back
to his legal wife and family in Mongolia. Bu-dhoy derived income during his stay here in the
Philippines. For 2018 taxable year, Bu-dhoy shall be classified as a:
a. Resident alien
b. Non-resident alien engaged in a trade or business in the Philippines
c. Non-resident alien not engaged in a trade or business in the Philippines
d. Special alien employee

38. Bryan sold the following shares of stock of domestic corporations which he bought for investment
purposes:
Listed and Traded Not Listed and Traded
Selling Price P250,000 P143,680
Selling Expenses 12,000 3,680
Cost 118,000 80,000
Determine the capital gains tax assuming the sale was made in 2018 (upon effectivity of TRAIN Law)
a. P9,000
b. P3,000
c. P3,184
d. P9,552

39. Bryan sold the following shares of stock of domestic corporations which he bought for investment
purposes:
Listed and Traded Not Listed and Traded
Selling Price P250,000 P143,680
Selling Expenses 12,000 3,680
Cost 118,000 80,000
Assume Bryan is a dealer in securities, the capital gains tax in 2018 is
a. P9,000
b. P3,000
c. P9,552
d. P0
40. A religious order, a lessee of a piece of land constructed a seminary and church on a portion of
the land. On the portion of the land not used as seminary and church. It constructed a one-story
building that it sub-leased to private individuals selling religious materials, food refreshments. The
rent income is used to finance teaching at the seminary.
Statement 1. The rent income of the religious order is subject to income tax.
Statement 2. The exemption from taxation provided in the Philippine Constitution prohibits the
imposition of any tax on the religious order.
a. True, true
b. False, false
c. True, false
d. False, true

41. Rules on capital gains and losses of corporations, except:

a. Capital gains and losses are recognized to the extent of 100% regardless of the holding period
b. The net capital loss carry over is not applicable
c. Capital losses are deductible only to the extent of capital gains
d. There is a final tax of 5% on real property sold

42. Statement 1: Gain on sale of all kinds of capital assets are subject to the final tax on capital gains.
Statement 2: Gain from sale of real property classified as capital asset and located in Miami, Florida
is not subject to the final tax on capital gain.
a. Both statements are correct
b. Both statements are not correct
c. Only the first statement is correct
d. Only the second statement is correct

43. Which of the following is obliged to pay 15% FWT on interest earned under FCDS?
a. Resident Citizen
b. Non-resident Citizen
c. Non-resident Alien Engaged in Trade or Business
d. Non-resident Alien Not Engaged in Trade or Business
e. All answers are applicable except for NRANETB

44. Garcia, Ramos, Toribio and Co., CPAs (GRT and Co.), are partners of an accounting firm. The
2018 financial records of the firm disclosed the following:
Service Revenue P4,490,000
Cost of Services 1,610,000
Operating Expenses 800,000
Rental Income 500,000
Interest Income from Bank Deposit 200,000
Interest Income from FCDS Deposit 280,000
Ramos is also engaged in business with the following data for the year:
Sales P2,500,000
Cost of Sales 1,250,000
Operating Expenses 550,000
How much is the taxable income of Ramos in 2018?
a. P860,000
b. P1,510,000
c. P1,560,000
d. P2,580,000
45. An individual had two sources of income from self-employment, but no compensation income, as
follows:
Gross Sales, convenience store P1,800,000
Gross receipts, bookkeeping services 1,000,000
Cost of Sales/Cost of Service 300,000
Operating Expenses 100,000
Non-operating Income 200,000
Taxes paid (1st-3rd Quarters) ¾ of Tax Due
The taxpayer failed to signify to be taxed at 8%.
How much is the total income?
a. P2,800,000
b. P3,000,000
c. P2,600,000
d. P682,000
e. Answer not given

46. An individual had two sources of income from self-employment, but no compensation income, as
follows:
Gross Sales, convenience store P1,800,000
Gross receipts, bookkeeping services 1,000,000
Cost of Sales/Cost of Service 300,000
Operating Expenses 100,000
Non-operating Income 200,000
Taxes paid (1st-3rd Quarters) ¾ of Tax Due
The taxpayer failed to signify to be taxed at 8%.
How much is the income tax due?
a. P2,800,000
b. P3,000,000
c. P2,600,000
d. P682,000
e. Answer not given

47. Mr. Juan Kris is employed in CSO Corporation. He received the Statutory Minimum Wage for
2018 in the total amount of ₱175,000, inclusive of the 13th month pay. In the same year, he also
received overtime pay of ₱40,000 and night shift differential of ₱25,000. He also received commission
income from the same employer of ₱20,000, thus, total income received amounted to ₱260,000. How
much is the total exempt income?
a. No exempt income become he is not MWE.
b. P260,000
c. P240,000
d. P20,000
e. Irrational because some important facts of the case are not stated.

48. On January 1, 2017, Cathrina leased her land to Leah. The terms of the contract of lease is for
fifteen years and the rental fee is P360,000 a year. The contract provides that Leah will construct a
building and at the end of the term of the contract, the ownership of the building will be transferred to
Cathrina. The building, with useful life of 30 years, was completed on January 1, 2018 at a cost of
P6,000,000.
Assume Cathrine will spread his income over the term of the contract of lease. For income tax
purposes, Cathrina’s 2018 income is:
a. P360,000
b. P560,000
c. P760,000
d. P6,360,000

Eralaine, Filipina residing at Cugman, Cagayan de Oro City, is working from 8am to 5pm Monday to
Friday at Teleperformance and attends to her business every vacant times and days. The following
data were provided for 2018 taxable year:
Compensation income P1,800,000
Sales 2,800,000
Cost of sales 1,125,000
Business Expenses 650,000
Interest income from peso bank deposit 80,000
Interest income from Rupee at BPI 120,000
Gain on sale of land in the Philippines held
as capital asset with cost of P1,500,000
when the zonal value is P1,200,000 500,000
49. How much is the basic income tax if she opted at 8%?
a. P224,000
b. P430,000
c. P808,000
d. P654,000
e. Answer is not given

50. How much is the total final income tax on peso deposit?
a. P16,000
b. P18,000
c. P120,000
d. P9,000
e. Answer is not given

51. How much is the total final income tax on FCDS?

a. P16,000
b. P18,000
c. P120,000
d. P9,000
e. Answer is not given

52. How much is the capital gains tax?

a. P16,000
b. P15,000
c. P120,000
d. P9,000
e. Answer is not given

53. Anna Joy, the most beautiful Miss Cagayan de Oro ever, earns P365 a day. She/He/It is not
engaged in business nor has he had any other source of income other than his employment. Anna
Joy earned a total compensation income of P160,000. The taxpayer contributed to the SSS,
PhilHealth, and HDMF amounting to P3,000 and has received a 13th-month pay of P9,000. How
much is the tax due?
a. P172,000
b. P12,000
c. Exempt
d. P0
 e. Answer not given

Juan Carlos Geronimo, single, is a minimum wage earner working at Gazini Corporation. In addition
to his basic minimum wage of P180,000 for the year, he also received the following benefits for the
entire year: uniform allowance of P11,000; Christmas gift of P10,000; meal allowance for overtime
work of P50,000; service achievement award in the form of ring with a monetary value of P15,000;
and 13th month pay and other benefits of P112,000.
54. How much is the de minimis benefits – over the ceiling?
a. P90,000
b. P132,000
c. P20,000
d. P42,000
e. Answer not given

55. How much is taxable income?

a. P132,000
b. P42,000
c. P312,000
d. P292,000
e. Answer not given

56. How much is the income tax due?

a. Zero
b. Exempt
c. P8,400
d. P26,400
e. Answer not given

57. Who is primary liable in paying income tax?

a. Gazini Corporation
b. Juan Carlos
c. Shared by Juan Carlos and Gazini Corporation
d. Juan Carlos and wife
e. Juan Carlos, wife and Gazini Corporation

58. What is the threshold of the non-taxable 13th month pay and other benefits?
a. According to National Internal Revenue Code, taxation is unlimited in nature
b. P80,000
c. P82,000
d. P90,000
e. According to TRAIN Law, any amount as long as positive income

59. Mr. Juan Kris is employed in CSO Corporation. He received the Statutory Minimum Wage for
2018 in the total amount of ₱175,000, inclusive of the 13th month pay. In the same year, he also
received overtime pay of ₱40,000 and night shift differential of ₱25,000. He also received commission
income from the same employer of ₱20,000, thus, total income received amounted to ₱260,000.
How much is taxable income?
a. No exempt income become he is not MWE.
b. P260,000
c. P240,000
d. P20,000
e. Irrational because some important facts of the case are not stated.
60. A taxpayer received during the taxable year the following passive income derived from within the
Philippines:
Interest on bank deposit under FCDU (net) P231,250
Royalty on a software application (gross) 95,000
Dividend income from resident foreign corporation (gross) 150,000
If taxpayer is a non-resident alien engaged in business, the final tax on the above passive
income would amount to
a. P52,750
b. P28,250
c. P19,000
d. P0

61. The following are the instances when the co-ownership may be taxable, except:
a. The co-owners used the common properties and/or income derived therefrom as a common
fund with intent to make profits.
b. When the property remained undivided for more than five years and no attempt was ever
made to divide the same among the co-heirs, nor was the property under administration proceedings
nor held in trust.
c. In all other circumstances when the co-ownership activities are already beyond mere
preservation of the co-owned property.
d. Co-owners appoint an administrator who manages the affairs of the co-ownership by making
investments therein from which profits are realized.

62. Statement 1: Estates under judicial settlement is taxable as a separate entity.

Statement 2: Estate under extrajudicial settle, heirs and beneficiaries file the ITR of the estate and
pay the tax due thereon.
Statement 3: Irrevocable trust is taxable as a separate entity.
Statement 4: Trust in which income is for the benefit of the grantor, the income of the trust is to be
declared and taxed on the grantor.
Statement 5: In case of a trust administered in a foreign country, the income distributed to
beneficiaries is not deductible.
How many statements are true?
a. 4
b. 2
c. 0
d. Answer is not given.

63. Which of the following is a resident alien?

a. A Japanese computer expert was hired by a Philippine corporation to assist in its computer
system installation for which he had to stay in the Philippines for 6 months.
b. A Korean actor was engaged to perform in the Philippines for 2 weeks after which he
returned to his country.
c. An alien whose shares of stocks is in the Philippines.
d. Answer is not given.

For the next two items. On January 1, 2018, James established a trust fund for the benefit of his
comrade, Nadine. James appointed Atty. Issa as the trustee. The property transferred to the trust is a
piece of land with a dormitory earning rental income.
During the year, the trust earned P40,000,000 revenues and incurred expenses of P10,000,000. Out
of the trust’s income, Atty. Issa gave Nadine P10,000,000. In the same year, Nadine earned
compensation income of P3,000.
64. The taxable income of Nadine is
a. P13,000,000
b. P12,950,000
c. P10,000,000
d. Answer is not given.

65. The taxable income of the trust if it is administered abroad is

a. P30,000,000
b. P20,000,000
c. P0
d. Data on reciprocity is not given, thus, taxable income cannot be calculated.

66. Interest income on bank deposit or investment with maturity period of at least five years
received by a corporation is subject to:
DC RFC NRFC
a. 20% 20% 30%
b. Exempt Exempt Exempt
c. 20% 20% Exempt
d. 20% Exempt Exempt

67. Under TRAIN Law, interest income received from depositary bank under expanding foreign
currency deposit system shall be subject to:
DC RFC NRFC
a. 7.5% 7.5% 20%
b. 7.5% 7.5% Exempt
c. 15% 15% Exempt
d. 15% 7.5% Exempt

68. Under TRAIN Law, royalty income received by a corporation shall be subject to:
DC RFC NRFC
a. 20% 20% 20%
b. 20% 20% 30%
c. 20% 30% 30%
d. 20% 30% Exempt

For the next four items. Gianna, Inc., a corporation engaged in business in the Philippines and abroad
has the following data for the current year:
Gross Income, Philippines P975,000
Expenses, Philippines 750,000
Gross Income, Malaysia 770,000
Expenses, Malaysia 630,000
Interest on bank deposit 25,000
69. Determine the income tax due if the corporation is DC.
a. P116,800
b. P109,500
c. P312,000
d. Answer is not given.

70. Determine the income tax due if the corporation is RFC.

a. P72,000
b. P67,500
c. P515,850
 d. Answer is not given.

71. Determine the income tax due if the corporation is NRFC.

a. P320,000
b. P300,000
c. P116,800
d. Answer is not given.
72. The MCIT shall apply to which of the following RFC?
I. International carrier
II. OBU on their income from foreign currency transactions with local commercial banks
III. Regional operating headquarters
a. I only
b. I and II only
c. All the above
d. None of the above.

Facial Masque Inc., registered with BIR in 2012, has the following data for the year 2018:
Gross receipts P1,150,000
Discounts and allowances 250,000
Salaries of personnel directly involved in rendering service 300,000
Salaries of administrative personnel 100,000
Fees of consultants directly involved in rendering service 50,000
Rental of equipment used in rendering service 70,000
Rental of office space for use of administrative personnel 50,000
Other operating expenses 420,000
73. How much is the gross income?
a. P1,150,000
b. P900,000
c. P480,000
d. Answer is not given.

74. How much is the MCIT?

a. P23,000
b. P18,000
c. P9,600
d. Answer is not given.

75. How much is the allowable deductions on gross income?

a. P420,000
b. P570,000
c. P940,000
d. Answer is not given.

76. How much is the taxable net income?

a. P0
b. P480,000
c. (P90,000)
d. Answer is not given.

77. How much is the income tax due?

a. P0
b. P9,600
 c. P23,000
d. Answer is not given.

Air Asia Inc., a resident foreign corporation has the following data for the taxable year 2018:
Passengers airfare from China to Philippines P1,800,000
Passengers airfare from Philippines to China 1,500,000
Airfare for cargoes from China to Philippines 700,000
Airfare for cargoes from Philippines to China 1,300,000
78. How much is the income subject to income tax?
a. P1,500,000
b. P1,300,000
c. P2,800,000
d. Answer is not given.

79. How much is the income tax due and payable?

a. P37,500
b. P32,500
c. P70,000
d. Answer is not given.

80. Mara and Clara are partners in a business partnership sharing profits and losses in the ratio of
55:45. The following data on income and expenses of the partnership for 2018 show:
Gross Income P750,000
Expenses 200,000
Dividend received from a domestic corporation 20,000
Bank interest income, Metrobank (gross of withholding tax) 100,000
How much is the final tax withheld on the respective share of Clara in 2018 partnership income?
a. P38,500
b. P21,825
c. Cannot be calculated because data is lacking
d. Answer not given