14.0 Final Quiz 1 Tax On Individuals

Final Quiz 1 – Income Tax on Individuals
1. Macoy, married with two dependent children, had the following income and expenses for 2019:
Salary, net of withholding tax of P 5,000 P 155,000

13th month pay 5,000
Gross receipts from profession, net of WT of P 7,000 83,000
Rent income, net of 5% withholding tax 57,000
Gross receipts from business 125,000
Professional and business expenses 56,500
Premiums on health insurance 6,000
The income tax payable by Macoy if he availed itemized deduction is –

a. P 25,700
b. P 10,700
c. P 13,700
d. P 20,700
Solution:
Salary, net of withholding tax of P 5,000 P 160,000

Gross receipts from profession, net of WT of P 7,000 90,000
Rent income, net of 5% withholding tax 60,000
Gross receipts from business 125,000
Professional and business expenses (56,500)
Taxable income P 378,500
Income tax P 25,700

Withholding tax (15,000)
Income tax payable P 10,700
2. Mrs. L Cruz owns a parcel of land worth P 500,000 which she inherited from her father in 2018
when it was worth P 300,000. Her father purchased it in 2014 for P 100,000. If Mrs. Cruz
transfers this parcel of land to her wholly owned corporation in exchange for shares of stocks of
said corporation worth P 450,000. Mrs. Cruz taxable gain is –
a. Zero
b. P 50,000
c. P 150,000
d. P 350,000
3. Mr. Pedro de Juan transferred his commercial land with a cost of P 500,000 but with a fair
market value of P 750,000 to JDC Corporation in exchange of the stocks of the corporation with
par value of P 1,000,000. As a result of the transfer he became the major stockholder of the
corporation.
a. The recognized gain is the difference between the fair market value of the shares of
stocks and the cost of the land.
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b. The recognized gain is the difference between the par value of the of the stocks and the
fair market value of the land.
c. No recognized gain because the land was in exchange of purely stocks and Mr. Pedro
de Juan became the majority stockholder.
d. No recognized gain because the land was in exchange of stocks of the corporation.
4. Mr. de Guzman purchased a life annuity for P 200,000 which will pay him P 20,000 a year. The life
expectancy of Mr. de Guzman is 12 years. How much is the amount of exclusion from gross
income?
a. P 200,000
b. P 20,000
c. P 40,000
d. P 240,000
5. Spouses Sonny and Nora, government employees, had the following data in 2018:
Sonny Nora
13th month pay and other benefits P 18,949 P 8,605.00
SSS, PHIC and HDMF 14,549.76 4,559.75
Basic salary 310,438.24 68,465.25
Representation and travel allowance 96,000
Personnel Economic Relief Allowance 6,000.00
Overtime pay 2,450.35 4,457.04
Holiday pay 1,783.25
Hazard pay 6,000.00
Additional exemption 50,000
Total amount of taxes withheld 7,046.40
The income tax payable by Sonny is –

a. P 9,667.77
b. P 12,577.72
c. P 5,531.32
d. P 2,621.37
Solution:
Basic Salary 310,438.24
Overtime pay 2,450.35
Contribution (14,549.25)
Taxable income 298,339.34
Income tax due 9,667.89

Withheld (7,046.40)
Income tax payable 2,621.49
6. The taxable income of Nora is –

a. P 68,465.25
b. P 86,705.54
c. P 82,145.79
d. None
Solution:
7. Marga, an official of Sunlife Corporation asked for an earlier retirement because she was
emigrating to Ecuador. She was paid P1 million as a separation pay in recognition of her valuable
services to the corporation.
Maxine, another official of the same company was separated for occupying a redundant
position, she was given P 800,000 as separation pay.
Shiela was separated due to her failing eyesight. She was given P 350,000 as separation
pay.
All of the three (3) were not qualified to retire under the BIR approved pension plan of
the corporation.
Q1. Is the separation pay given to Marga subject to income tax?
Q2. How about the separation pay received by Maxine?
Q3. How about the separation pay received by Sheila?
a. Yes to all questions
b. Yes to 2nd question
c. No toll questions
d. Yes to 1st question
8. Mary has the following data from his employment on 2018:

Monthly salary P 12,000
Taxes withheld 8,000
Pag ibig fund contributions 1,500
Union dues 2,400
Philhealth contributions 720
SSS premiums 480
th
13 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 Mary is a
rank and file employee is –
a. P 5.100
b. P 34,100
c. P 29.000
d. None
9. On October 1, 2015, Samantha inherited properties worth P 3,000,000 from her mother. The
properties are earning income of P 90,000 a month. How much income is to be reported by
Samantha in 2015?
a. P 3,090,000
b. P 3,000,000
c. P 3,270,000
d. P 270,000
For questions 10– 13:
Coco Martin and Julia Montes are partners in the following partnerships with 60% and 40 interest
respectively. Data are as follows:
Partnerships Gross Income Expenses Withdraw by Coco Withdraw by Julia

Prof. Partnership A P 400,000 P 250,000 P 60,000 P 40,000
Prof. Partnership B 300,000 500,000
Bus. Partnership C 500,000 200,000 40,000 20,000
Bus. Partnership D 200,000 300,000
The partnerships remitted to the BIR the corresponding withholding taxes on the withdrawals of
Coco and Julia. The partner’s personal income and expenses are shown below:
Coco Julia
Gross income from sole proprietorship P 400,000 P 600,000
Business expenses 250,000 370,000
Other income:
Rent, net of 5% w/tax 57,000
Royalty 50,000
Dividend from domestic corp. 30,000 50,000
10. The income tax payable of Coco is (taxable income) –

a. P 177,000
b. P 210,000
c. P (3,000)
d. P 180,000
Solution:
Gross income from sole 400,000
Rent (57,000/95%) 60,000
Share in GPP (400T-250+300T-500T) x 60% (30,000)
Expenses (250,000)
Taxable income 180,000
Exempt
Tax credit (60,000 – 57,000) 3,000
11. The income tax payable of Julia is –

a. P 230,000
b. P 210,000
c. P 180,000
d. P0
Solution:
Gross income from sole 230,000
Share in the GPP (20,000)
Taxable income 210,000
Exempt
12. Final taxes due of Coco is –

a. P 3,000
b. P 4,000
c. P 7,000
d. P 22,000
13. Final taxes due of Julia is –

a. P 17,000
b. P 14,600
c. P 22,200
d. P 15,200
14. Janine sold her principal residence for P 5,000,000 when its fair market value was P 6,000,000. The
house was purchased five (5) years ago for P 3,000,000. Out of the proceeds of P 5,000,000 Janine
realized the P 4,000,000 for the purchase of a new residential house. The capital gains tax on the sale is –
a. P 360,000
b. P 300,000
c. P 72,000
d. P 60,000
Solution:
6M x 6% = 360,000 x 1M/ 5M = 72,000
16. Who can avail 8% Gross Sales or Receipts Tax?

a. Self – employed with gross receipts or sales exceeding 3,000,000.
b. Compensation earners with gross compensation income not exceeding 3,000,000.
c. Mixed income earners with gross receipts or sales and other income not exceeding
3,000,000.
d. All of the above.
17. Which of the following fringe benefits is taxable?

a. Those benefits which are given to rank and file employees.
b. Contributions of the employer for the benefit of the employee to retirement, insurance,
and hospitalization benefit plans.
c. Benefits given to supervisory employees under a collective bargaining agreement.
d. De minimis benefits
18. Individuals shall be tax exempt on:

a. Gross income not exceeding P 250,000
b. Gross income exactly P 250,000
c. Taxable income not exceeding 250,000
d. Taxable income exactly 250,000 and below.
19. Which of the following income is subject to final tax if received by an individual taxpayer?
a. Share of a partner in the net income of a business partnership.

b. Cash dividend received by a stockholder from a domestic corporation.
c. Winnings in lotto not exceeding P 10,000.
d. Raffle prizes amounting to P 6,000.
i. I and II
ii. III and IV
iii. I, II and IV
iv. I, II, III, and IV
20. Macky and Maui, husband and wife, have the following data in 2018:
Macky Maui
Compensation income P 180,000 P 60,000
Rent income (net of 5% WT) 76,000
Royalties of books 70,000
Interest income of FCDS 20,000
Interest income on deposit substitute 15,000
Dividend income from domestic corp. 20,000
Withholding tax on compensation 10,000
During the year, the spouses had an income of P 120,000 and expenses of P 65,000 which cannot
be identified as solely earned by the wife or the husband.
The income tax payable/ overpayment of Macky is –

a. P 7,500
b. P (2,500)
c. P (6,500)
d. P 3,500
21. Mr. Mar Bautista, an employee of Fortune Corporation is receiving a monthly salary (net of 10%
withholding tax) of P 18,000. Due to an outstanding accomplishment in July 2018, the corporation gave
him 200 shares of stock of the corporation with a par value of P 100 per share and a fair market value of
P 150. The fair value on the date if receipt is P 152 per share. How much is the income of Mr. Baustita in
2018?
a. P 50,000
b. P 270,400
c. P 270,000
d. P 240,000
22. JESSICA, a self-employed resident citizen provided the following data for 2018: (ok)
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 bank deposit under FCDS 120,000
Gain on direct sale to buyer of shares of stock

of a domestic corporation held as capital asset 150,000
Gain on sale of land in the Philippines held as capital asset

with cost of 1,500,000 when the zonal value is 1,200,000 500,000
How much is the total income tax expense of Jessica assuming she opted to be taxed at 8%?
a. 321,500
b. 380,500
c. 351,500
d. 374,000
23. A single taxpayer has the following income, expenses and transactions in 2014:
Gross income P 150,000
Business expenses 75,000
Selling price, partnership interest
(investment in 2012 was P20,000) 60,000
Gain on sale of personal car held for 3 years 10,000
Loss on sale of jewelry for personal use held
for 6 months 5,000
Loss on account to exercise two-month option to buy 4,000
Liquidating dividends(investment in 2014, P100,000) 80,000
Gain on short sales 2,000
How much is the taxable net income?
24. Shekinah received the following income in 2018:

Business income, Philippines P 300,000
Business income, USA 250,000
Expenses, Philippines 200,000
Expenses, USA 125,000
Interest on deposit with Metrobank 3,000
Interest on deposit in USA(1$= P 40) $ 500
Cash prize won in a local contest P 6,000
Cash prize won in a contest in USA 10,000
Winnings in Lotto Phil 20,000
Winnings in Lotto in USA 50,000
Dividends from SMC, a Domestic Company 25,000
a. 311,000
b. 291,000
c. 336,000
d. 316,000
25. Rich Company owns a fleet of motor vehicles. In 2018, one of the cars which was acquired at a cost f
P 400,000 was allowed as service vehicle by one of its officials. During the year, its book value amounted
to P 375,000. How much was the fringe benefit tax due thereon?
a. P 43,076
b. P 21,538
c. P 17,647
d. P 20,192
400,000 x 50% X 20% = 40,000/.65 x 35% = 21,538
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Final Quiz 1 – Income Tax on Individuals

Salary, net of withholding tax of P 5,000 P 155,000

The income tax payable by Macoy if he availed itemized deduction is –

Salary, net of withholding tax of P 5,000 P 160,000

Income tax P 25,700

The income tax payable by Sonny is –

Income tax due 9,667.89

6. The taxable income of Nora is –

8. Mary has the following data from his employment on 2018:

For questions 10– 13:

Partnerships Gross Income Expenses Withdraw by Coco Withdraw by Julia

10. The income tax payable of Coco is (taxable income) –

11. The income tax payable of Julia is –

12. Final taxes due of Coco is –

13. Final taxes due of Julia is –

16. Who can avail 8% Gross Sales or Receipts Tax?

17. Which of the following fringe benefits is taxable?

18. Individuals shall be tax exempt on:

a. Share of a partner in the net income of a business partnership.

The income tax payable/ overpayment of Macky is –

Interest income from peso bank deposit 80,000

Gain on direct sale to buyer of shares of stock

Gain on sale of land in the Philippines held as capital asset

How much is the taxable net income?

24. Shekinah received the following income in 2018:

400,000 x 50% X 20% = 40,000/.65 x 35% = 21,538

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