Gross Income Quiz with answer key PDF

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Sapphire Bank has the following items: Interest Income from loans 3,000, Interest income from loan deposit with other banks 400, Interest Income from notes rediscounting 100, Interest income from Treasury Notes issued by BSP 50, How much income is subject to Regular Income Tax? A. 3,000, B. 3,100, C...

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1. Sapphire Bank has the following items: Interest Income from loans Interest income from loan deposit with other banks Interest Income from notes rediscounting Interest income from Treasury Notes issued by BSP

3,000,000 400,000 100,000 50,000

How much income is subject to Regular Income Tax? A. 3,000,000 B. 3,100,000 C. 3,150,000 D. 3,550,000 2. Using the data on no. 1, how much is the income subject to Final Tax? A. 450,000 B. 400,000 C. 550,000 D. 500,000

3. Under the Iba leasing corp. standard lease contract, leases shall run for a non-preterminable 12month period for a monthly rental of 25,000. The lessee shall pay 3 months rental in advance plus one month security deposit. The rent for the last two months of the lease shall be taken from the advance while the security deposit will be returned if there are no damages sustained by the property during the lease term. How much of advance payment and security deposit is subject to regular income tax? A. 0 B. 100,000 C. 50,000 D. 75,000 4. Forest Software is a distributor of a computer program and earn royalties from its licensed users. Computer programs are specifically tailored to each client and regular continuing maintenance services are provided. During the year, client users remitted a total of 500,000 royalty payments. A. The 500,000 payment is subject to Final Tax B. The 500,000 payment is subject to Regular Income tax C. The 500,000 payment is tax exempt D. Half is final tax while the other half is regular income tax

5. The following data on net income, bad debt, write off and recovery show: 2015 Case A Case B

Case C

Net income before write off Less: Bad debts written off Net Income after write off

80,000 50,000 30,000

40,000 60,000 (20,000)

(20,000) 70,000 (90,000)

2016 Subsequent Recovery

50,000

50,000

50,000

The taxable recovery Case A A. 50,000 B. 50,000 C. 50,000 D. 50,000

Case B 50,000 0 40,000 30,000

Case C 50,000 0 20,000 0

6. A feature of Ordinary Gains as distinguished from capital gains A. Gain from sale of assets not stock in trade B. May or may not be taxable in full C. Sources are capital assets D. No holding period

7. Which of the following taxpayers is allowed to observe the “no holding period and no carry over of net capital loss” A. Individual B. Estates C. Corporation D. Trusts 8. Statement 1: Capital losses are deductible only from ordinary gains Statement 2: Corporations are not allowed to observe the holding period A. Only statement 1 is correct B. Only statement 2 is correct C. Both statements are correct D. Both statements are incorrect

9. Josa Sese, had the following data on income and losses: 2018 2019

Ordinary Business Income Interest on time deposit, PNB Short-term capital gain Long-term capital gain Short-term capital loss Long-term capital loss

56,700 2,000 5,000 3,600 8,000 4,400

60,800 3,000 8,500 5,200 2,900 0

How much is the taxable income in 2019? A. 56,700 B. 60,800 C. 65,600 D. 0

10. Rose, had the following data on income and losses 2018 Net Income 25,000 Capital Gains 8,000 Capital Losses 40,000

2019 95,000 40,000 5,000

The Taxable Income in 2019? A. 98,000 B. 55,000 C. 115,000 D. 105,000

11. A bought from B corporations ten shares of stock. Sixty days thereafter, the corporation was adjudged bankrupt and its stock as worthless. The loss of A to be reported for income tax purposes is classified as: A. a wagering loss B. non-deductible loss C. short term capital loss D. ordinary loss Malou has the following data in 2019: Sale of property Apartment Houses Residential House Vacant Lot Jewelry for personal use Jewelry in jewelry store Car for personal use Transportation equipment

Holding Period 10 years 6 years 12 years 6 months 2 months 4 years 12 months

Gain/(Loss) 35,000 120,000 72,500 4,200 8,000 (20,000) (10,000)

The proceeds from sale of residential house shall be used in acquiring a new residence. During the year Malou had a net income from business (other than mentioned above) in the amount of 5,000. 12. How much is the Capital Gains tax due? A. 7,200 B. 6,000 C. 0 D. 5,000 13. The taxable income of Malou in 2019 is? A. 38,000 B. 39,000 C. 40,000 D. 41,000 14. Which is not subject to income tax? A. Gain from sale of shares in mutual funds by the investor B. Prizes in recognition of civic, religious achievements C. PCSO and lotto winnings D. All of the above 15. Which is an item of gross income subject to regular tax? A. Gain on sale of lot by a realty dealer B. Interest income from bank deposits C. Passive royalty income D. Capital gain on the sale of domestic stocks 16. Which is not an item of gross income subject to final tax? A. Dividends from a domestic corporation B. Prizes in excess of 10,000 by an individual C. Share in the income of a GPP D. Winnings 17. Which of these employee benefits is subject to final tax? A. Fringe benefits to rank and file employees B. Regular pay of supervisory and managerial employees C. Fringe benefits to supervisory and managerial employees D. Regular pay of rank and file employees 18. All of these are items of gross income to regular tax except one, which is it? A. Compensation Income B. Interest income from long term bank deposits C. Ordinary gain on sale of properties D. Interest on Notes receivable

19. Which is an income exempt from income tax? A. Share of Income from a GPP B. Foreign Dividends C. Taxes collected by the government D. Income of GOCC’s 20. Which is not part of compensation income subject to regular tax? A. Director’s fees B. Bonuses and fixed allowances C. Portion of salary contributed to SSS D. Portion of salary used to pay salary loans 21. Which is included in the gross income subject to regular tax of a resident alien? A. Gross income from the sale of goods abroad B. Interest income from promissory note of resident clients’ C. Interest income from relative abroad D. Gain from sale of domestic stocks directly to buyer 22. Which individual taxpayer is not subject to progressive tax? A. NRA-ETB B. NRA-NETB C. Resident Alien D. Resident Citizen? 23. Which is subject to progressive tax to on individual taxpayer? A. Proceeds of life insurance policy B. Gifts C. Amounts receive by the insured in excess of premiums paid D. Compensation for personal injuries? 24. Which is subject to regular tax to a non-resident foreign corp or non-resident alien not engaged in trade or business? A. Business Income from the PH B. Capital gain from the sale of stocks directly to a buyer C. Dividends from domestic corp D. none of these 25. Which of the following could be subjected to regular tax to a resident foreign corporation? A. Service fees abroad B. Gain from sale of real property capital assets in the Philippines C. Dividends from a domestic Corporation D. Gain from dealings in properties abroad

26. Statement 1: All prizes earned abroad are subject to regular tax Statement 2: All prizes in the Philippines are subject to final tax which statement is/are correct? A. Statement 1 B. Statement 2 C. Both 1 and 2 D. Neither 1 and 2 27. Which of the followings items is not part of gross income to be reported in the income tax return? A. Increase in value of land B. Gambling winnings C. Prize of 10,000 D. Gain from sale of store’s air conditioner 28. Lessor had the following information in 2018 Cost of leasehold improvement 1,000,000 Annual Rent 100,000 The estimated life of leasehold improvement is 50 years. The term of the lease is 40 years. At the end of the twentieth (20th) year, the lease was terminated for valid causes done by the lessee. What is the income to be reported by the lessor at the end of the 20th year? A. 100,000 B. 125,000 C. 605,000 D. 600,000 29. Liquidating dividends are return of shareholder’s investment. Which of the following is false? A. The excess of liquidating dividend over cost of shares surrendered is taxable. B. If a shareholder sustains a loss brought about by the liquidating dividend, such loss is deductible C. If a shareholder sustains a loss brought about by the liquidating dividend, such loss is not deductible D. All of the above.

Zef and Siegfried practice their profession in a General professional partnership and share profits 60:40. Their firm reported the following:

Gross Receipts Less: Professional expenses Net Income from operations Interest from bank deposits Distributive Net Income

2,000,000 1,200,000 800,000 20,000 820,000

30. How much is the final tax due from the shares of net income of Zef and Siegfried? Zef Siegfried A. 49,200 32,800 B. 48,000 32,000 C. 0 0 D. 45,000 30,000 31. How much should be included in the taxable income of Zef and Siegfried from their shares in the net income of the GPP? Zef Siegfried A. 0 0 B. 480,000 320,000 C. 492,000 328,000 D. 450,000 300,000 32. Roman is one of several heirs of a business estate of his father which is under judicial settlement. The administrator distributed the following income for the support of Roman: Domestic Dividends 22,500 Business Income 70,000 How much should Roman include in his taxable net income? A. 70,000 B. 92,500 C. 22,500 D. 0 33. Horace received the following income distributions in his capacity as beneficiary to an irrevocable trust designated by his grandmother: Net Capital gains on sale of domestic stocks 9,500 Rental Income 12,000 How much should Horace include in his taxable net income? A. 0 B. 12,000 C. 21,500 D. 9,500 34. A taxpayer incurred a 90,000 write off in 2015 out of which 45,000 was recovered in 2016. 2015 2016 Net Income/(loss) before write-off/recovery 70,000 (15,000)

(Write off)/Recovery Net Income/(loss) after write-off/recovery

(90,000) (20,000)

45,000 ?

How much is taxable net income for 2016? A. 10,000 B. 0 C. 30,000 D. 45,000 35. Statement 1: Gains from dealings in capital assets are generally subject to regular income tax. Statement 2: The share in a business partnership is subject to final tax, but the share in a general professional partnership is subject to regular income tax. Which of the statements are/is true A. Statement 1 B. Statement 2 C. Both Statements D. Neither statements 36. Statement 1: Advance Rentals are income in the year received Statement 2: Security Deposits are taxable on the year received. Which of the statements are/is true A. Statement 1 B. Statement 2 C. Both Statements D. Neither statements 37. Statement 1: Real property tax and insurance on the property if assumed by the lessee constitute income of the lessor. Statement 2: Corporate winnings are exclusions in gross income, hence they are exempt from income tax. Which of the statements are/is true A. Statement 1 B. Statement 2 C. Both Statements D. Neither statements 38. Statement 1: Stock dividends are never subject to income tax Statement 2: Stock splits are never subject to income tax. Which of the statements are/is true A. Statement 1 B. Statement 2 C. Both Statements D. Neither statements

39. Statement 1: Corporate prizes are exclusions in gross income subject to final tax but are inclusions in gross income subject to regular income tax. Statement 2: Prizes in athletic competitions sanctioned by the Philippine Government are exclusions in gross income subject to final tax, but are inclusions in gross income subject to regular income tax. Which of the statements are/is true A. Statement 1 B. Statement 2 C. Both Statements D. Neither statements 40. Statement 1: The recovery of deduction from an exempt year is subject to tax Statement 2: An indebtedness cancelled by the creditor out of mercy is income to the debtor. Which of the statements are/is true A. Statement 1 B. Statement 2 C. Both Statements D. Neither statements Andres leases a building to a client. During the year, he received the following remittance from the lessee: Rental Net of 5% creditable withholding tax 1,900,000 Real property tax of the leased building 50,000 Reimbursement for utilities used by the lessee paid by Andres 200,000 41. How much will be included in gross income subject to regular tax? A. 2,050,000 B. 2,250,000 C. 2,000,000 D. 1,950,000 42. How much is the income tax payable? A. 475,000 B. 538,000 C. 480,000 D. 506,000

Corazon resigned in 2015 after 12 years of service. She had the following income during the year: Salary, net of 80,000 CWT, 20,000 SSS 18,000 Philhealth and 40,000 13th month pay 480,000

Separation Pay

1,000,000

43. How much is her net taxable income? A. 1,480,000 B. 1,560,000 C. 560,000 D. 480,000 44. How much is her income tax payable? a. 278,000 b. 358,000 c. 334,000 d. 0 45. Which of the following could be subjected to regular tax to a resident foreign corporation? A. Service fees abroad B. Gain from sale of real property capital assets in the Philippines C. Dividends from a domestic Corporation D. Gain from dealings in properties abroad...