CPA REVIEW SCHOOL OF THE PHILIPPINES Manila ee Dela Cruz / De Vera / Lopez / Llamado 1. As regards a business partnership, which of the following is not correct? a. The partnership must file quarterly and year end income tax returns. b “distributable income available to the partners is the taxable income less the income tax mea) Carn exempt Income c. The share of a partner in the distributable net income, even if not actually received is considered constructively received by the partner. 4, The share of a partner in the distributive net income whether actually received or not is subject to a final withholding tax on dividends. 2. The following statements regarding taxable partnerships are correct, except a. They file quarterly and year-end income tax returns. 'b. They are subject to the rules on corporation for capital gains tax, final tax on passive income, normal income tax, MCIT and gross income tax. The partners’ share in the distributable net income is subject to final tax. el ‘They are subject to the improperly accumulated earnings tax. 10 teiqned covnivgy 3. Regarding a general professional partnership, which of the following is not correct? a. Itshall not be subject to income tax. b. The partners shall be liable for income tax on their respective distributive shares. ¢. Each partner shall report as gross income his distributive share in the partnership net income. el of 4. If a partner, on his own transactions, is on the cash method of accounting while the general professional partnership is on the accrual method of accounting, in the partner's determination of his taxable income for the year, he a. Must convert his income from the partnership into cash method. b. Must convert his own income into accrual method. cc. Does not report his income from the partnership because the partnership is exempt from income tax. a eee eee 8 0, 5. Which of the following statements is not correct? a, When the co-owners invest the income of the property co-owned in a business or in any income producing properties or activities constituting themselves into a business partnership, such partnership is consequently subject to tax as a corporation. b. Asa rule, a co-ownership is not subject to income tax because the activities of the co-owners are limited to the preservation and enjoyment of the property and the collection of the income therefrom. c. A co-owner is subject to income tax on his share in the net income of the co-ownership actually or «ti an ow SSSR RAG SSacsitect 0 6. As regards an ordinary partnership, which of thewfollowing statements is correct? a. Partners’ shares are subject to final tax, hence Oe) b. Subject to improperly accumulated earnings tax. e Ti ms, hence partners have limited liability. a. (Baibebecen dese ail not bo noluded onal i Tax 87-087. As regards a general piolUssional partnership, which of the following statements is correct? a, Treated like a corporation, hence it is subject to the corporate income tax. b. Itis exempt from income tax, hence it need not file an ITR. ¢. Partners” shares are subject to final tax. 4. Partners’ shares will be included in their respective ITRs, whether distributed or not. 8. Statement 1 - A CPA and a Lawyer may form a general co-partnership to sell law and accounting books. ‘Statement 2 ~ Partnerships and Corporations have separate juridical personalities distinct from the owners, Therefore, partners and stockholders are not liable to creditors of the business. a. True; true b. False; false ©. False; true d. True; false 9, Statement 1 ~ The general professional partnership may claim itemized deductions in computing its net income and a partner may also claim itemized deductions in computing his net income. Statement 2 ~ The general professional partnership may claim the optional standard deduction in ‘computing its net income while a partner may claim itemized deductions in computing his net income. a True; true b. True; false c. False; true d. False; false 10, Statement 1 ~ The general professional partnership may claim itemized deductions in computing its net income while a partner may claim the optional standard deduction in computing his net income. Statement 2 - The general professional partnership may claim the optional standard deduction in is net income and a partner may also claim the optional standard deduction in computing his net income. c. False; true d. False; false 11. The net share received by a partner in a general professional partnership is a b. Exempt from income tax c. Subject to 10% creditable withholding tax d. Subject to final tax 12. The net share received by a partner in a general co-partnership is a. Part of his taxable income b. Exempt from income tax ¢. Subject to 10% creditable withholding tax a a4 16. AB partnership with A and B as partners (both resident citizens) had a net professional income amounting to P500,000 for 2018. Its other income included bank interest income of P8,000, net of final withholding tax and royalty income of P10,000, net of the final witbolding tax. A is single and has his own separate eatery business, In 2018, his business had net sales of 1,000,000, cost of sales of P500,000, and operating expenses of 300,000. Ber sae 13. The net share of A in the income of the GPP is Het MF. lowe 2 W.ncone (et) £ Tax 87-04 Royather (106)a. Php250,000 3 b. Php259,000 Php233,100 14. The net taxable income and income tax payable of As who shares profit and loss equally with B in their GPP is: Mesaes a ws (mn) b. P400,000; P10,450 ae ©. 439,000; P9,670 a 4. None of the above, vpener C30) 20m Taiaie nome %>—< cn A sf) PALS “259 Pl 15. Using the preceding number, but it is a business parinership, the taxable income of the partnership is a. PS518,000 b. ©. P510°000 wae More ~ 9m d. P508,000 16. Using the preceding number, the net distributable share of B (resident citizen) is a. P162,500 Mihece GatiaGnrn 99> b. P157,500 ner ee eh f es fos Inge th 3 ee d. P1S43500 Ba Gute) (ea) AD xh = TS. ome of P800,000 with a corresponding P350,000 in expenses in the year 2018. A is married with 2 qualified dependent children, with his own business generating net sales of P400,000, and incurring cost of sales and deductible expenses of 30,000 and P230,000, respectively. B, single, also has his own business generating P450,000 in net ssales, and incurring cost of sales and deductible expenses of 200,000 and P50,000, respectively. ‘They share profits and losses of their partnership at 4:6. If the Bana? is a GPP, the taxable income of A who avails of the OSD. a et Cole, #400 b. P_ 70,000 socane Meo) . P302,000 Sane Soninger {go (80-9) x40} Tikdble nome 400, 18. And the taxable income of B who itemizes deductions i a. P 150,000 Wek sie ie. b. coors (2 c. P450,000 | by Le) d. None of the above. Tauavie Prone seingyp ap, (ie oF ‘DAavk \acome AFD 19. If the partnership is an OP, its tax due is ae a. P 144,000 Gn home een b. P 148,500 begenes (a) c ‘asa come Pepe d PL aay Tos.due Pas 20. A lawyer was rejected by his extremely sexy and gorgeous secretary. He became so enraged that he raped her 10 times within 15 minutes. Since then, he became known in the media as the “Machine Gun Rapist.” For fetes fe ts of) or Philippines. asked for a fee of #10,000,000 for its much should the lawyer withhold as CWT from ACCRA’s fee? ) 10% =) 15%) 4) None,21. A and B are co-owners by virtue of property given to them by their father. The co ownership had a ‘gross rental income of P500,000 and expenses related to rental activity of P300,000 but 10% is not deductible for the year 2018. A and B share in the profits at 75% and 25%, respectively. A withdrew 50,000 from the co-ownership net income for the year; B did not withdraw any amount. A and B are both single. The income tax liability of the co-ownership is a. P 102,400 c. 80,000 bP 76800 8d. (BEE 22. A’s share in the net income of the co-ownership is: a. P 172,500 rut ene iname 150) b. P 150,000 terpenes (amsect) (20). c. P 122,500 420 dP -0- xis} 12s 23. Suppose A and B did not divide but instead invested the entire profit in another business venture where they eared a net income after deduetions of P450,000, the tax due of the co-ownership is, a b. P 144,000 Yoo X MI. = P25 0H c. P 157,500 dP -0- 24. X and Y are partners (both resident citizens) in the following partnerships: Ordinary Partnership General Professional Partnership Gross Income 500,000 P 400,000 Deductible expenses 300,000 180,000 Personal Income and Expense: x xX Gross Income P 400,000 P 280,000 Deductible expeitses 250,000 120,000 Dividend from domestic corporation 20,000 30,000 Dividend from foreign corporation 10,000 8,000 Prize, supermarket raffle 15,000 8,000 tartnan Io Royalty, books 10,000 12,000 Partners agreed to share partnership income and losses as follows: X = 40% (Partner X is married with 2 qualified dependent children) 'Y = 60% (Partner Y is single but supporting her 18 year old boyfriend living with and d ‘upon her for his chief support) Slice Determine the respective taxable incomes of partners X and Y in their ITRs for 2018: i oe. a, P148,000, P258,000 exe naeay bubintae “aa