1.

The Philippines adopted the semi-global tax system, which means that:

● All taxable incomes, regardless of the nature of income, are added together to
arrive at gross income, and all allowable taxable income;
● All taxable incomes from sources within and without the Philippines are liable to
income tax.
● All taxable incomes are subject to final withholding taxes under the schedular tax
system;
● All incomes subject to final withholding taxes are liable to income tax under the
schedular tax system, while all ordinary income as well as income not subject to
final withholding taxes are liable to income tax under’ the, global tax system;

2. The payor of passive income subject to final tax is required to withhold the tax from
the payment due the recipient. The withholding of the tax has the effect of

● a credit from the recipient's income tax liability.

● a deduction in the recipient's income tax return.
● a final settlement of the tax liability on the income.
● consummating the transaction resulting in an income

3. Who among the following individual taxpayers is taxable on income within and
without?

● Alcazar, a native of General Santos City, working as overseas contract worker in

Iraq
● Philander Rudyman, naturalized Filipino citizen and married to a Filipina. He had
been living in Olongapo City since 1970
● Rodrigo de la Hoya, Spanish citizen, a resident of Madrid, Spain, spent a one-
week vacation trip in Boracay
● Dao Ming So, Taiwanese singer, held a 3-day concert in Manila

4. Which of the following individual taxpayers is taxed on income from sources within
and without the Philippines?

● An individual citizen of the Philippines who is working and deriving income

abroad as an overseas contract worker
● A citizen of the Philippines residing therein
● A non-resident citizen
● An alien individual, whether a resident or not of the Philippines
5. All of the following, except one, are taxable on income within only:

● Nonresident citizen
● Resident citizen
● Nonresident alien
● Resident alien

6. For Philippine income tax computation, which of the following individual is taxable
also for income earned outside the Philippines?

● Resident citizen
● Nonresident citizen
● Resident alien
● Nonresident alien

7. Which of the following is taxable only for income earned within?

I Resident citizen
II Nonresident alien not doing business in the Philippines
III Nonresident alien not doing business in the Philippines

● I, II
● I, II, III
● III
● II

8. For taxation purposes, a Filipino citizen who stayed outside the Philippines and
worked abroad for 182 days during the taxable year is classified as

● Overseas contract worker

● Resident citizen
● Special citizen
● Nonresident citizen

9. Which of the following is not a nonresident citizen?

● A citizen of the Philippines who establishes to the satisfaction of the Commission

the fact of his physical presence abroad with a definite intention to reside therein
 ● A citizen of the Philippines who works and derives income from sources abroad
and whose employment, thereat requires him to be physically present abroad
most of the time during the taxable year
● A citizen of the Philippines who goes on a business trip abroad and stays therein
most of the time during the year
● A citizen of the Philippine who leaves the Philippines during the taxable year to
reside abroad, either as an immigrant or for employment on a permanent basis

10. A citizen who has been previously considered as nonresident citizen and who
arrives in the Philippines at any time during the taxable year to reside permanently in
the Philippines shall likewise be treated as a nonresident citizen for the taxable year in
which he arrives in the Philippines with respect to his

● Income derived from sources within the Philippine

● Income derived from sources within and outside the Philippines
● Income derived from sources abroad until the date of his arrival in the Philippines
● Income derived from sources abroad until the last day of the calendar year

11. Kitty, non-resident citizens, arrives in the Philippine on July 1, 2011 to reside here
permanently after working as a nurse in the United State of America for many years. For
income tax purposes, she will be classified as:

● Nonresident citizen for the year 2011 with respect to her income derived from
sources abroad from January 1, 2011 until the date of her arrival in the
Philippines
● Nonresident citizen for the whole year of 2011
● Resident citizen for the whole year of 2011
● Neither resident nor nonresident citizen for the year 2011

12. Chris, a staff auditor of Punongbayan and Araullo took and passed the examination
for Certified Internal Auditor. The following year, he resigned from his job and left the
Philippines on April 10, 2020 to work as an internal auditor in a big establishment in
Melbourne, Australia. For income tax purposes, which of the following statements is
correct with respect to Chris’ classification?

● He shall be classified as nonresident citizen for the year 2020 with respect to his
income derived from sources without from April 10, 2020
● He shall be classified as nonresident citizen for the year 2020 with respect to his
income derived from sources without from April 11, 2020.
 ● His classification as a nonresident citizen will start in 2011
● He shall be classified as nonresident citizen for the whole year of 2020

13. A citizen of the Philippines was a non-resident citizen in 2019. On May 15, 2020, he
arrived in the Philippines to reside permanent in the Philippines.

His income for the year was:

A From January 1, 2020 to May 14, 2020

B From May 15, 2020 to December 31, 2020

Which of the following is wrong?

● He is considered a resident citizen on A and B income

● He is considered a resident citizen on B income
● He is considered a non-resident citizen on A income
● He is not taxable on A income.

14. In 2020, Rustom, Filipino, legally separated from his wife, Mina, left for the United
States with his daughter, Robina, to permanently reside therein. In 2020, he earned, P2
million as income from his beauty parlor in that country. Which of the following is
correct?

● For Philippine income tax purposes, he is no longer entitled to claim additional

exemption on Robina because he is already classified as a nonresident alien
engaged in business in foreign country.
● For Philippine income tax purposes, Rustom may deduct from his gross income
the tax paid to the foreign country
● Rustom’s gross income of P2 million is not taxable in the Philippines
● For Philippine income purposes, Rustom’s gross income is subject to a creditable
withholding tax of 10%

15. Denzell Wetta, an American management expert is hired by a Philippine corporation

to assist in its organization and operation for which he has to stay in the Philippines for
6 months. He came to the Philippines for this definite purpose, but the Philippine
corporation require him to extend his stay and live temporarily in the Philippines. The
American management expert intends to leave the Philippines as soon as his job is
done.
For income tax purposes, the American management expert shall be classified as

● Nonresident alien engaged in trade or business

● Nonresident alien not engaged in trade or business
● Resident alien
● Resident citizen

16. Who among the following is a non-resident alien?

● An alien who comes to the Philippines for a definite purpose which in its nature
may be promptly accomplished
● An alien who comes to the Philippines for a definite purpose which in its nature
would require an extended stay
● An alien who has acquired residence in the Philippines
● An alien who lives in the Philippines with no definite intention as to his stay

17. There shall be levied, collected and paid for each taxable year upon the entire
income received by every nonresident alien individual not engaged in trade or business
within the Philippines from

● All sources within and without the Philippines

● None of the choices
● All sources without the Philippines
● All sources within the Philippines

18. Palito Lippi, an American singer, was engaged to sing for one week at the Sofitel
Philippines Plaza after which he returned to USA. For income tax purposes, Palito Lippi
should be classified as

● Nonresident alien not engaged in trade or business

● Resident citizen
● Resident alien
● Nonresident alien engaged in trade or business

19. A foreign individual who have stayed in the Philippines during the taxable year for
more than 180 days but less than one year is considered a

● Resident alien doing business in the Philippines

● Nonresident alien not doing business in the Philippines
 ● Nonresident alien doing business in the Philippines
● Resident alien

20. Pierre de Savigny, a Frenchman, arrived in the Philippines on January 1, 2010 and
continued to live and engage in business in the Philippines. He went on a tour of
Southeast Asia from August 1 to November 5, 2010. He returned to the Philippines on
November 6, 2010 and stayed until April 15, 2011 when he returned to France. He
earned during his stay in the Philippines a gross income of P3 million from his
investments in the country. For the year 2010, Pierre ‟s taxable status is that of

● a non-resident alien not engaged in trade or business in the Philippines.

● a resident alien engaged in trade or business in the Philippines.
● a non-resident alien engaged in trade or business in the Philippines
● a resident alien not engaged in trade or business in the Philippines.

21. Which of the following individual shall not be subject to income tax under section
24(A) on their income from Philippine sources?

● Individual citizen of the Philippines residing outside the Philippine including

overseas contract workers
● Individual citizen of the Philippines residing therein
● Individual alien who is not a resident of the Philippines
● Individual alien who is a resident of the Philippines

22. Who is not a Philippine income taxpayer?

● A resident citizen of the Philippines with income from within the Philippines only
● A non-resident citizen of the Philippines with income from outside the Philippines
only
● A resident citizen of the Philippines with income from within and outside the
Philippines
● A non-citizen of the Philippines with income from within the Philippines only

23. Which of the following is not required to file an income tax return?

● Nonresident alien with respect to his business income earned within the
Philippines
● Resident citizen with respect to his business income earned outside the
Philippines
 ● An employee with only one employer and whose compensation income is fully
collected with creditable withholding tax
● Non-resident citizen with respect to his compensation income earned within the
Philippines

24. A corporation whose income within and without the Philippines are both taxable.

● Domestic corporations
● Resident foreign corporation
● Nonresident foreign corporation
● Foreign corporation

25. Which of the following statements is not correct?

● A domestic corporation is taxed only on its net income from within the
Philippines.
● For domestic corporation, the capital gain tax on sale of real property applies
whether the property is within or outside the Philippines.
● Dividends received by a domestic corporation from a domestic corporation
subject to tax is exempt from the income tax of the domestic corporation
receiving the dividend.
● For domestic corporations, the capital gain tax on sale of shares of stock are the
same as the capital gain tax on such assets of resident citizens of the
Philippines.

26. The term applies to a foreign corporation engaged in trade or business within the
Philippines.

● Multinational corporation
● Resident foreign corporation
● Nonresident foreign corporation
● Petroleum contractor

27. A resident foreign corporation is one that is:

● Organized under the laws of the Philippines that engages business in special
economic zone;
● Organized under the laws of the Philippines that does business in another
country;
 ● Organized under the laws of a foreign country that engages in business in Makati
City, Philippines.
● Organized under the laws of a foreign country that sets up a regional
headquarter in the Philippines doing product promotion and information
dissemination;

28. The term applies to a foreign corporation not engaged in trade or business within
the Philippines

● Nonresident foreign corporation

● Petroleum contractor
● Multinational corporation
● Resident foreign corporation

29. Which of the following statements is incorrect?

● In the case of corporation adopting the fiscal year accounting period, the taxable
income shall be computed without regard of the specific date when specific
sales, purchases and other transactions occur
● None of the choices
● The corporate income tax rate shall be applied on the amount computed by
multiplying the number of months covered by the new rate within the fiscal year
by the taxable income of the corporation for the period, divided by twelve
● The corporation’s income and expense for the fiscal year shall be deemed to
have earned and spent equally for each month of the period

30. All foreign corporations are taxable only for income earned within the Philippines

All Filipino citizens are taxable for their income earned within and outside the
Philippines

● False True
● True, True
● True, False
● False, False

31. Aplets Corporation is registered under the laws of the Virgin Islands. It has extensive
operations in Southeast Asia. In the Philippines, Its products are imported and sold at a
mark-up by its exclusive distributor, Kim's Trading, Inc. The BIR compiled a record of all
the imports of Kim from Aplets and imposed a tax on Aplets net income derived from its
exports to Kim. Is the BIR correct?

● No. The tax should have been computed on the basis of gross revenues and not
net income.
● No. Aplets is a non-resident foreign corporation not engaged in trade or business
in the Philippines.
● Yes. Aplets is doing business in the Philippines through its exclusive distributor
Kim's Trading. Inc.
● Yes. Aplets is a non-resident foreign corporation engaged in trade or business in
the Philippines.

32. One of the following earnings is not considered as income of a nonresident foreign
corporation subject to normal tax of 30% on the gross amount.

● Capital gains from sale of shares of stock

● Rent of aircraft chartered by Philippine Nationals
● Interest dividend and royalty income
● Gains, profits, and income from casual sales

33. Which of the following corporation is taxable?

● Cooperatives
● Chamber of commerce
● Partnerships in general
● Government educational institutions

34. Which of the following is not subject to tax as a corporation?

● Business partnerships
● Insurance companies
● Joint stock companies
● General professional partnership

35. A partnership formed by persons for the sole purpose of exercising their common
profession, no part of the income of which is derived from engaging in any trade or
business

● General professional partnership

 ● Joint accounts
● Trading partnership
● Joint venture

36. Which statement above does NOT properly refer to a GGP? (sabog na yata si sir sa
tanong)

● That derives professional income and rental income from property owned by it.
● That exclusively derives income from the practice of the common profession;
● That is registered as such with the Securities and Exchange Commission and the
Bureau of Internal Revenue;
● That is composed of individuals who exercise a common profession;

37. A general professional partnership that is reporting an operating loss on its 5th year
of operation is still liable to pay its annual income tax for such year.

● False, False
● True, False
● True, True
● False, True

38. Which of the following is not classified as corporations?

● Joint accounts
● General professional partnerships
● Insurance companies
● Associations

39. One of the following is a general professional partnership

● A partnership organized by a group of CPAs for the common practice of

accountancy
● A partnership organized by a group of CPAs for the purpose of selling real
properties
● Partnership organized by a lawyer, engineer and a CPA to provide professional
advice
● General partnership organized by a group of engineers engaged in
manufacturing of equivalent
40. Which of the following statements is correct?

● A joint venture for engaging in petroleum, coal, geothermal, and other energy
operations pursuant to an operating or consortium agreement under a service
contract with the Government is taxable as a corporation.
● A general professional partnership in trade is not taxable as a corporation
● A general professional partnership is not taxable as a corporation
● Joint venture for construction projects is taxable as a corporation

41. A general professional partnership as such shall not be subject to the income tax.

Persons engaging in business as partners in a General professional partnership shall

be liable for income tax only in their separate and individual capacities.

● Only the second statement is correct

● Both statements are incorrect
● Both statements are correct
● Only the first statement is correct

42. A general professional partnership is exempt from income tax and as such is not
required to file its income tax return.

The share of partners in the general professional partnership is subject to income tax
rate for individual.

● True, False
● False, True
● True, True
● False, False

43. The general professional partnership is not subject to income tax, but is required to
file a return in order to

● Provide information regarding the share of the partners in the net income of the
partnership to be included in their tax return
● Provide information regarding the business of the partnership
 ● Comply with the requirement of the Securities and Exchange Commission
● Comply with the requirements of the taxing agency

44. For purposes of computing the distributive share of the partners, the net income of
the partnership shall be computed in the same manner as a corporation.

Each partner shall report as gross income his distributive share, actually, or
constructively received, in the net income of the partnership.

● Only the second statement is correct

● Both statements are incorrect
● Both statements are correct
● Only the first statement is correct

45. It is a commercial undertaking by two or more persons, but it is different from a

partnership in that it involves the disposition of a single lot of goods or the completion of
a single project.

● Joint stock companies

● Joint accounts or cuentas en participation
● Associations
● Joint ventures

46. Which of the following is a party in a joint venture?

● Co-venturers
● Co-owners
● Partners
● Shareholders

47. When two corporation from a joint venture in their transportation business in the
Philippines, there comes about three corporations, the original two corporations, and the
joint venture as a new corporation.

The share of a member of the joint venture above, in the net income of the joint venture,
shall be exempt from income tax because it is in the nature of a dividend received from
a domestic corporation.
 ● False, True
● True, True
● True, False
● False, False

48. Which of the following joint ventures is subject to corporate income tax?

● Joint venture for selling real property in the ordinary course of trade or business
● Joint venture for the purpose of undertaking construction projects pursuant to an
operating or consortium agreement under a service contract with the
Government
● Join venture for engaging in petroleum, coal, geothermal and other energy
operations pursuant to an operating or consortium agreement under a service
contract with the Government
● None of the choices

49. All joint ventures regardless of the purpose these are created are exempt from
income taxation.

The term “domestic” when applied to corporation means created or organized in the or
under the laws of a foreign country as long as it maintains a Philippine branch

● Both statements are correct

● Only the second statement is correct
● Both statements are incorrect
● Only the first statement is correct

50. They are constituted when one interest himself in the business of another by
contributing capital thereto, and sharing in the profits or losses in the proportion agreed
upon

● Joint stock companies

● Associations
● Joint accounts or cuentas en participation
● Joint ventures
51. They include all organizations with substantially all the salient features of a
corporation and are taxable as a corporation.

● Joint stock companies

● Joint accounts or cuentas en participation
● Joint ventures
● Associations

52. This is formed whenever the ownership of an undivided thing or right belongs to
different persons?

● Partnership
● Co-ownership
● Joint account
● Joint ownership

53. Which of the following shall qualify as co-ownership?

I Succession by several heirs to an estate, the estate is not under administration

II Donation of property to two or more beneficiaries

● II only
● I only
● Neither I nor II
● Both I and II

54. The income of co-owned inheritance is tax exempt

The share of the co-owner in the income of co-ownership is also exempt from income
tax
● False, True
● True, True
● False, False
● True, False

55. Mr. Juan Cruz and Ms. Joan Cruz inherited an apartment house from their dearly
departed father. The property was not under administration. They decided not to divide
the property, and simply continued collecting rentals from it. The rentals were divided
equally between them. Mr. Juan was appointed as the person-in-charge. This was an
example of a/an:

● Co-ownership
● unregistered partnership.
● corporation
● general professional partnership.

56. Which of the following co-ownership is subject to income tax?

● income of co-owned property acquired as donation

● income of property acquired as inheritance
● income of general professional partnership
● income of voluntarily established co-ownership

57. A piece of land near a beach was donated to Mr. James Jayme and Mr. Jorge
Jayme by their father. The donees decided to improve the property by investing in the
development of the property into a beach resort. They earned rentals from the cottages
and sale of food to guests. For income taxation, the beach resort would be created as a

● Corporation
● Co-ownership
● General professional partnership
● Joint venture

58. The net income received by a partner of a general co-ownership is subject to

● A final tax on dividends

● An individual normal tax
● Corporate tax
● A capital gains tax
59. Which of the following co-ownership is not subject to tax as a corporation?

● Undivided property of co-ownership for more than 10 years without an attempt to

divide the property among the co-owners
● Agreed co-ownership
● Undivided property of co-ownership for more than 10 years with an attempt to
divide the property among the co-heirs
● Co-ownership with investments of co-owners
60. A co-ownership that exists for more than 10 years is exempt from income tax

The share of co-owners from tax-exempt co-ownership is taxable against the co-
owners. (false)

● False, False
● True, False
● False, True
● True, True

61. Income of co-ownership per agreement is taxable. (false?)

The share of the co-owner in the income of co-ownership is also exempt from income
tax.

● True, False
● False, True
● False, False
● True, True

62. A mass of all property, rights, and obligations, which are not extinguished by death,
of a person existing at the time of his death, and includes those which have accrued
since the opening of succession

● Estate
● Co-ownership
● Partnership
● Trust

63. Which of the following is included in the income of the estate of a decedent?

● Appreciation in the value of property passed to the executor or administrator

upon death of decedent
● Excess of selling price over the appraised value placed upon the property at the
time of death, where the property was sold after the settlement of the estate
● Income received by the estate of a deceased person during the period of
administration or settlement of the estate
 ● Delivery of property in kind to legatee or distribute

64. A right of property, real or personal, held by one person for the benefit of another

● Trust
● Estate
● Co-ownership
● Partnership

65. The tax imposed upon individuals shall apply to the income of estate or any kind of
property held in trust including

● Income received be estates of deceased persons during the period of

administration or settlement of the estate
● Income accumulated in trust for the benefit of unborn or unascertained person or
persons with contingent interests and income accumulated or held for future
distribution under the terms of the will or trust
● Income which is to be distributed currently by the fiduciary to the beneficiaries,
and income collected by a guardian of an infant which is to be held or distributed
as the court may direct
● All of the choices

66. Any amount actually distributed to any employee or distribute shall be taxable to him
in the year in which it was so distributed to the extent that it exceeds the amount
contributed by such employee or distribute.

The tax shall be computed upon the taxable income of the estate or trust and shall be
paid by the fiduciary, except as provided in Section 63 (relating to revocable trusts) and
Section 64 (relating to income for the benefit of the grantor)

● Only the second statement is correct

● Both statements are incorrect
● Both statements are correct
● Only the first statement is correct

67. A trust where the income and the corpus of which do not revert to the grantor, its
income is accumulated and held for distribution to the beneficiary

● Ordinary trust
 ● Irrevocable trust
● Employee’s trust
● Revocable trust

68. A trust in which the power to revest in the grantor, title to any part of the corpus of
the trust, is vested in the grantor himself or in any person not having any substantial
adverse interest in the trust corpus or in its income.

● Revocable trust
● Ordinary trust
● Employee’s trust
● Irrevocable trust

69. The grantor is liable for the income of a revocable trust.

A revocable trust exists when the grantor revokes his power to change at any time
any part of the terms of the trust. (true)

● True, False
● False, True
● True, True
● False, False

70. All wealth that flows into the taxpayer’s hand other than mere return of capital is
income

All earnings are taxable with income tax.

● False, False
● True, False
● False, True
● True, True

71. Which of the following is classified as income?

● Excess of selling price over costs of assets sold

● Return of capital
● Damage recovery due to physical injuries
● Gift received
72. Which of the following is not a characteristic of income?

● Increase in taxpayer’s wealth

● Realization of receipt of gain
● Return of taxpayer’s wealth
● Earnings of constructively received

73. Which of the following items is not included in the determination of taxable income?

● Realized loss
● Income derived from the gift
● Realized gain
● Gift

74. Income is considered realized for tax purposes when

● the taxpayer has been paid and has received in cash or near cash the taxable
income.
● the earning process is complete or virtually complete and an exchange has taken
place.
● it is recognized as revenue under accounting standards even if the law does not
do so.
● the taxpayer retires from the business without approval from the BIR.

75. Which of the following is not a criterion of an income to be taxable?

● The gain need not be actually received

● The law as treaty from taxation must exclude the gain
● The gain must be included by the law as treaty from taxation
● There must be gain
76. If a property is received in lieu of cash compensation, the basis of tax is the

● Salvage value of the property received

● Supposed amount of cash to be received
● Fair market value of the property received
● Agreed value of the property received
77. If an individual renders services for a creditor who in consideration thereof cancels
his existing debt, the cancellation of indebtedness may amount to a

● Donation inter vivos

● Payment of income
● Capital contribution
● Gift

78. If services are rendered for the cancellation of debt, the basis of tax is the

● Fair market value of the service rendered

● Amount of obligation omitted
● Fair market value of the debt cancelled
● Supposed amount of cash to be received

79. Which of the following business is/are normally reporting income on accrual basis?

● Professional partnership
● Trading business
● Brokerage
● Real property lessor

80. Which of the following is/are generally subject to final tax?

I Compensation
II Business Income
III Passive Income
IV Capital Gain

● I, II
● III, IV
● III
● I, II, III, IV

81. ABC Corp. was dissolved and liquidating dividends were declared and paid to the
stockholders. What tax consequence follows?

● The dividends are exempt from tax

● ABC Corp. should withhold a 10% creditable tax.
 ● ABC Corp. should deduct a final tax of 10% from the dividends.
● The stockholders should declare their gain from their investment and pay income
tax at the ordinary rates.

82. In 2010, Mr. Platon sent his sister Helen $1 ,000 via a telegraphic transfer through
the Bank of PI. The bank's remittance clerk made a mistake and credited Helen with
$1,000,000 which she promptly withdrew. The bank demanded the return of the
mistakenly credited excess, but Helen refused. The BIR entered the picture and
investigated Helen. Would the BIR be correct if it determines that Helen earned taxable
income under these facts?

● Yes, income is income regardless of the source.

● No, she had no income because she had no right to the mistakenly credited
funds.
● No, it was not her fault that the funds in excess of $1,000 were credited to her
● No, the funds in excess of$1,000 were in effect donated to her.

83. Aleta sued Boboy for breach of promise to marry. Boboy lost the case and duly paid
the court's award that included, among others, Pl00,000 as moral damages for the
mental anguish Aleta suffered. Did Aleta earn a taxable income?

● She had no taxable income because it was a donation.

● She had a taxable income of P100,000 since income is income from whatever
source
● She had taxable income since she made a profit.
● She had no taxable income since moral damages are compensatory.

84. The “all events test” refers to:

● A person who uses the accrual method, whereby an expense is deductible for the
taxable year in which all the events had occurred which determined the fact of
the liability and the amount thereof could be determined with reasonable
accuracy;
● A person who uses the instalment sales method, where the full amount of
consideration is paid in full by the buyer thereof within the year of sale;
● A person who uses the cash method where all sales have been fully paid by the
buyers thereof;
● A person who uses the completed method, whereby the construction project has
been completed during the year the contract was signed.
85. It is important to know the source of income for tax purposes because

● Export sales are not subject to income tax

● Some individual taxpayers are citizen while others are aliens
● The Philippines imposes income tax only on income from sources within
● Some individuals and corporate taxpayers are taxed on their worldwide income
while others are taxable only upon income from sources within the Philippines

86. For income tax purposes, the source of the service income is important for the
taxpayer, who is a:

● Filipino citizen residing in Makati City;

● Non-resident Filipino citizen working and residing in London, United Kingdom;
● Domestic corporation.
● Japanese citizen, naturalized, then married to a Filipina citizen and residing in
their family home located in Fort Bonifacio, Taguig City;

87. As to source, the Tax Code classifies income into:

● all of the choices.

● income which is derived in full from sources within the Philippines.
● income which is derived in full from sources outside the Philippines.
● income which is derived partly from sources within and partly from sources
outside Philippines.

88. Income from the performance of service is treated as income from within the
Philippines, if:

● The service is actually performed in the Philippines;

● The recipient of service income is a resident of the Philippines
● The payment of compensation for the service is made in the Philippines;
● The contract calling for the performance of service is signed in the Philippines;

89. Which of the following dividends shall be considered as income not from sources
within the Philippines?
 ● Dividends from a foreign corporation where less than fifty percent of the gross
income of such foreign corporation for the three-year period preceding the
declaration of such dividends was derived from sources within the Philippines.
● Dividends from a foreign corporation where more than eighty-five percent (85%)
of the gross income of such foreign corporation for the three-year period
preceding the declaration of such dividends was derived from sources within the
Philippines
● None of the choices
● Dividends from a domestic corporation

90. Which of the following interests shall be considered as income from sources within
the Philippines?

● All of the choices

● Interests on bonds and notices of residents, corporate or otherwise
● Interests derived from sources within the Philippines
● Interests on other interest-bearing obligation of residents corporation or
otherwise

91. Mr. Arai Nakurot, a Japanese engineer residing in Tokyo, Japan, was contracted by
a domestic corporation to assemble in the Philippines an equipment it bought in Japan.
He started the work in Japan and spent 10 days there. The assembling job was
completed in the Philippines for another 20 days. He was paid P300,000 for his job.

How much was the income from Philippine source?

● P300,000
● P100,000
● None
● P200,000

92. Gains, profits and income from the sale of personal property, purchased without and
sold within the Philippines shall be treated as income which is derived:

● None of the choices

● In full from sources within the Philippines
● Partly from sources within and partly from sources outside the Philippines
● In full from sources outside the Philippines
93. Which of the following statements is correct?

● From the items of gross income derived from sources within the Philippines,
there shall be deducted the expenses, losses and other deductions properly
allocated to such income from sources within.
● From the items of gross income derived from sources within the Philippines,
there shall be deducted a ratable part of expenses, interests, losses and other
deductions effectively connected with the business or trade conducted
exclusively within the Philippines which cannot definitely be allocated to some
items or class of gross income.
● Items of deductions shall be allowed only if fully substantiated by all the
information necessary for its calculation.
● All of the choices.

94. Guidant Resources Corporation, a corporation registered in Norway, has a 50 MW

electric power plant in San Jose, Batangas. Aside from Guidant's income from its power
plant, which among the following is considered as part of its income from sources within
the Philippines?

● Dividends from a two-year old Norwegian subsidiary with operations in Zambia

but derives 60% of its gross income from the Philippines.
● Gains from the sale to an Ilocos Norte power plant of generators bought from the
United States.
● Interests earned on its dollar deposits in a Philippine bank under the Expanded
Foreign Currency Deposit System.
● Royalties from the use in Brazil of generator sets designed in the Philippines by
its engineers.

95. Federico, a Filipino citizen, migrated to the United States some six years ago and
got a permanent resident status or green card. He should pay his Philippine income
taxes on

● dividends received from a two year old foreign corporation whose gross income
was derived solely from Philippine sources.
● the gains derived from the sale in California, U.S.A. of jewelry he purchased in
the Philippines.
● the gains derived from the sale in the New York Stock Exchange of shares of
stock in PLDT, a Philippine corporation.
 ● the proceeds he received from a Philippine insurance company as the sole
beneficiary of life insurance taken by his father who died recently.

96. Which of the following shall be considered income from sources outside the
Philippines?

● All of the choices

● Rentals or royalties from property located outside the Philippines or from any
interest in such property including rentals or royalties for the use of or for the
privilege of using outside the Philippines, patents, copyrights, secret processes
and formulas, goodwill, trademarks, trade brand, franchises, and other like
properties
● Compensation for labor or personal services performed outside the Philippines
● Gains, profits, and income from the sale of real property located outside the
Philippines

97. Zygomite Minerals, Inc., a corporation registered and holding office in Australia, not
operating in the Philippines, may be subject to Philippine income taxation on

● dividends earned from investment in a foreign corporation that derived 40% of its
gross income from Philippine sources.
● gains it derived from sale in Australia of shares of stock of Philex Mining
Corporation, a Philippine corporation.
● interests derived from its dollar deposits in a Philippine bank under the Expanded
Foreign Currency Deposit System.
● gains it derived from sale in Australia of an ore crusher it bought from the
Philippines with the proceeds converted to pesos.

98. Which of the following shall be considered as income partly within and partly without
the Philippines?

● Gains, profit, and income from the sale of personal property produced (in whole
or in part) by the taxpayer without and sold within the Philippines
● All of the choices
● Income from services performed partly within and partly without the Philippines
● Gains, profits and income from the sale of personal property produced (in whole
or in part) by the taxpayer within and sold without the Philippines
99. Which of the following shall be treated as derived entirely from sources without the
Philippines?

● Gains, profits and income derived from the purchase of personal property without
and its sale within the Philippines
● All of the choices
● Gains, profits, and income derived from the purchase personal property within
and its sale without the Philippines
● Gam from the sale of shares of stock in a domestic corporation regardless of
where the said shares are sold

100. Alain Descartes, a Chinese citizen permanently residing in the Philippines,

received several items during the taxable year. Which among the following is NOT
subject to Philippine income taxation?

● Gains derived from the sale of his condominium unit located in The Fort, Taguig
City to another resident alien.
● Dividends received from an American corporation which derived 60% of its
annual gross receipts from Philippine sources for the past 7 years.
● Consultancy fees received for designing a computer program and installing the
same in the Shanghai facility of a Chinese firm.
● Interests from his deposits in a local bank of foreign currency earned abroad
converted to Philippine pesos.