Prelim TAX 321-KEY 8be5641f5391bf0b88c82481 b4e94fb3 PDF

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PRELIM TAX 321-KEY A Filipino citizen is a natural person who is/has I. Born by birth with father and/or mother as Filipino citizens. II. Born before January 17, 1973 of Filipino mother who elects Philippine citizenship upon reaching the age of majority. III. Acquired Philippine citizenship after bi...

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PRELIM TAX 321-KEY

1. A Filipino citizen is a natural person who is/has I. Born by birth with father and/or mother as Filipino citizens. II. Born before January 17, 1973 of Filipino mother who elects Philippine citizenship upon reaching the age of majority. III. Acquired Philippine citizenship after birth (naturalized) in accordance with Philippine laws. a. I only b. I and II only c. I and III only d. I, II and III 2. Individual taxpayers are I. Natural persons with income derived within the territorial jurisdiction of a taxing authority. II. Natural persons classified as citizens and aliens a. I only b. II only c. I and II d. None of the above 3. Determine the correct classification of the following: I. Manny, a Filipino businessman, went on a business trip abroad and stayed there most of the time during the year. II. Kyla, a Filipino professional singer, held a series of concerts in various countries around the world during the current taxable year. She stayed abroad most of the time during the year. III. Efren, a Filipino “cue” artist went to Canada during the taxable year to train and participate in the world cup of pool. He stayed there most of the time during the year. D. A. B. C. I NRC RC RC RC II NRC NRC RC RC III NRC NRC NRC RC 4. Statement 1: Overseas Filipino Workers duly registered as such with the Philippine Overseas Employment Administration (POEA) with valid Overseas Employment Certificate (OEC) refer to Filipino citizens employed in foreign countries and whose salaries are paid by employers abroad and are not borne by entities or persons in the Philippines. Statement 2: Filipino citizen Seafares who receive compensation for services rendered abroad as a member of the complement of a vessel engaged exclusively for international trade are considered Overseas Filipino Workers provided they are duly registered as such with the Philippine Overseas Employment Administration (POEA) with a valid Overseas Employment Certificate (OEC) with Seafares Identification Record Book (SIRB) or Seaman’s Book issued by the Maritime Industry Authority (MARINA). A.

B.

C.

D.

Statement 1 True False True True Statement 2 True False False True 5. 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 6. Due to his expertise, Engr. Pedro D. Magiba ( a freelancer) was hired by a foreign petroleum contractor in Thailand to provide technical assistance for two months from February to March. He was hired again for the months of June-July and OctoberDecember of the same taxable year. Engr. Pedro D. Magiba is a: a. Resident alien b. Nonresident citizen c. Special Filipino employee d. None of the above 7. Statement 1: The intention with regard to the length and nature of stay of an alien determines whether he is a resident or nonresident. Statement 2: A foreigner who has acquired residency in the Philippines shall only become a nonresident when he actually departs with the intention of abandoning his residency in the Philippines. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect 8. On October 2018, Mr.Bald Nha, an American basketball coach was hired as a team consultant by one of the teams in the Philippine Basketball Association (PBA) for one conference which will last for a period of not more than three (3) months from October to December 2018. His coming to the Philippines was for a definite purpose. However, he was subsequently chosen to coach the Philippine men’s basketball team for a period of two (2) years. The American mentor intends to leave the Philippines as soon as his job is finished. For 2018 taxable year, the American coach shall be classified as: a. Resident alien b. Nonresident alien engaged in trade or business. c. Nonresident alien not engaged in trade or business. d. Resident citizen. 9. Rihanna, an American singer, was engaged to sing for one week at the Western Philippine Plaza after which she returned to USA. For income tax purposes, sha shall be classified as: a. Resident alien b. Nonresident alien engaged in trade or business. c. Nonresident alien not engaged in trade or business. d. Resident citizen. 10. Mr. Almansor Sebastian, an Iranian and a resident of Tehran, Iran stayed in the Philippines from Nov. 28 to Dec. 5, 2018 to watch the 2019 FIBA World Qualifying tournament held in MOA, Paranaque, Philippines. During his stay, he bought equity investments from Alpha and Delta Corporations ( domestic corporations). He likewise invested in a mutual fund of Banko de Isla de Pilipinas, a local bank. Mr. Almansor Sebastian is a:

a. Resident alien b. Nonresident alien engaged in trade or business. c. Nonresident alien not engaged in trade or business.

d. Resident citizen 11. It is important to know the source of income for income tax purposes (i.e. from within and without the Philippines) because: a. Some individuals and corporate taxpayers are taxable based on their worldwide income while others are taxable only on their income from sources within the Philippines. b. The Philippines imposes income tax only on income from sources within. c. Some individual taxpayers are citizens while others are aliens. d. Export sales are not subject to income tax. 12. Which of the following is correct? I. A citizen of the Philippines residing therein is taxable on all income derived from sources within and without the Philippines. II. A non-resident citizen is taxable on income derived from sources within the Philippine only. III. An alien individual, whether a resident or not of the Philippines, is taxable on income derived from sources within the Philippines only. IV. A seaman who is a citizen of the Philippines and who receives compensation for services rendered abroad as a member of the complement of a vessel engage in international trade shall be treated as an overseas contract worker. a. I, II and III only b. I, III and IV only c. I, II and IV only d. I, II, III and IV 13. Taxable only on income from sources within the Philippines, except a. Resident Citizen b. Nonresident citizen c. Resident alien d. Nonresident alien 14. Situs of taxation is world/global taxation C. D. A. B. Resident Citizen True False True True Resident alien True False False False Nonresident alien engaged in trade True False False True 15. Who of the following individual taxpayers is taxable on income derived from within and without the Philippines? a. Pedro, a native of Bacolod City, working as overseas contract worker in Iraq. b. George, naturalized Filipino citizen and married to a Filipina. He had been living in Pampanga since 1990. c. Pao Gasul, Spanishc citizen, a resident of Madrid, Spain, spent a one (one) week vacation on Boracay. d. Lee Min Ho, Korean singer, held a 3-day concert in Manila. 16. Pedro Dela Cruz, nonresident citizen, arrived in the Philippines on July 1, 2018 to reside here permanently after working as a nurse in the United States for many years. Which of the following statements is correct with respect to his classification for income tax purposes? a. He shall be classified as nonresident citizen for the year 2018 with respect to his income derived from sources abroad from January 1, 2018 until the date of his arrival in the Philippines.

b. He shall be classified as nonresident citizen for the whole year of 2018. c. He shall be classified as resident citizen for the whole year 2018.

d. He shall be classified as neither resident nor nonresident citizen for the year 2018. 17. Individual taxpayers are subject to the following income tax: I. Basic tax based on graduated tax table II. Final withholding tax on passive income derived from sources within the Philippines. III. Capital gains tax IV. Stock transaction tax of 6/10 of 1% of gross selling price a. I and II only b. I and III only c. I, II and III only d. All of the above 18. LJ, married, left the Philippines in the middle of the year on July 1, 2018 to go abroad and work there for five (5) years. The following data were provided as of December 31, 2018: Gross Business Income Business Expenses PERIOD Phls. Abroad Phls. Abroad Jan. 1 to June 30 P300,000 P200,000 P100,000 P50,000 July 1 to Dec. 31 600,000 400,000 150,000 50,000 His taxable income is: a. P800,000 b. P950,000 c. P1,100,000 d. P600,000 19. Based on the above problem, but assuming he arrived from abroad on July 1, 2018 to permanently resettle in the Philippines, after working abroad for 5 years, his taxable income as of December 31, 2018 is: a. P750,000 b. P1,000,000 c. P1,100,000 d. P600,000 20. If he did not leave Philippines at all, LJ’s taxable income is: a. P750,000 b. P950,000 c. P1,150,000 d. P600,000 21. Chris is a Filipino immigrant living in the United States for more than 15 years. He is retired and he came back to the Philippines as a balikbayan. Every time he comes to the Philippines, he stays here about a month. He regularly receives a pension from his former employer in the United States, amounting to US$2,000 a month. While in the Philippines with his pension pay from his former employer, he purchased three condominium units in Makati which he is renting out for P25,000 a month each. Does the US$2,000 pension become taxable because he is now in the Philippines? a. Yes, income received in the Philippines by the non-resident citizens is taxable b. Yes, income received in the Philippines or abroad by non-resident citizend is taxable. c. No, income earned abroad by non-resident citizens are not taxable in the

Philippines. d. No, the person is exempt from taxation being one of the exclusions from gross income.

22. Floyd, an American citizen who is married to a beautiful Filipina owns a building in the United States and leases the same to businesses owned by Filipino residents. Floyd has his residence in the Philippines and all his children are studying in top Philippine universities. Which of the following statements is true regarding the rental income? a. Taxable in the Philippines because he had his residence in the Philippines b. Taxable in the Philippines because his wife is a resident citizen and they are all residents of the Philippines. c. Taxable in the Philippines because he derives his income from Filipino resident lessees. d. Exempt in the Philippines because Floyd is resident alien. As such, he is taxable only on income derived from sources within the Philippines. The next four (4) questions are based on the following data: Carlo, married, with two dependent children, received the following income: Business income, Philippines P1,000,000 Business income, Hongkong 200,000 Interest, peso deposit, MBTC 100,000 Interest, US$ deposit, BDO ($10,000 x P42) 420,000 Interest, deposit in Hongkong (HK$10,000 x P5) 50,000 Prize (TV) won in a local lottery 50,000 PCSO/Lotto winnings 2,000,000 Prize won in contest in U.S. 300,000 Lotto winning in U.S. 100,000 Dividend, domestic company 600,00 23. Determine the taxable net income assuming he is: RC NRC RA

NRA-ETB

a. P80,000 P180,000 P830,000 P180,000 b. 180,000 80,000 1,000,000 1,000,000 c. 1,558,000 908,000 908,000 908,000 d. 1,650,000 1,000,000 1,000,000 1,000,000 24. Determine the total final tax assuming he is: RC NRC RA NRA-ET a. P553,000 P490,000 P150,000 P687,000 b. 121,500 90,000 121,500 150,000 c. 131,000 90,000 90,000 90,000 d. P553,000 P490,000 P550,000 P687,500 25. Assuming the taxable year is 2017, determine the taxable net income assuming he is : RC NRC RA NRA-ETB a. P80,000 P180,000 P830,000 P180,000 b. 180,000 80,000 1,000,000 1,000,000 c. 1,550,000 900,000 900,000 900,000 d. 1,650,000 1,000,000 1,000,000 1,000,000 26. Assuming the taxable year is 2017, determine the total final tax assuming he is: RC NRC NRAET NRA-ET a. P553,000 P490,000 P550,000 P150,500 b. 121,500 90,000 150,000 687,500 c. 131,000 90,000 90,000 90,000

d.

142,000

90,000

150,000

150,000

Use the following data for the next three (3) questions: Ana, a resident citizen, provided the following data for year current taxable year: Gross income from business (gross of P12,000 CWT) P700,000 Business Expenses 300,000 Royalty from books 40,000 Gain on direct sale to buyer of shares of stock of a domestic corporation held as capital asset 70,000 Loss 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 27. How much is the income tax payable of Ana? a. P12,000 b. P18,000 c. P30,000 d. nil 28. How much is the tital income tax expense of Ana? a. P116,500 b. P207,500 c. P159,500 d. P156,000 29. Assuming the taxable year is 2017, how much is the total income tax expense of Ana? a. P116,500 b. P207,500 c. P159,500 d. P156,000

Use the following data for the next eight (8) questions: Juan, married, supporting his three (3) minor children had the following data for The current taxable year (Exchanging Rate $1 = P50): Philippines Abroad Business income P1,000,000 $20,000 Professional income 400,000 10,000 Salaries 200,000 Business and professional expenses 250,000 8,000 Income tax paid 4,000 30. If Juan is a resident citizen and taxable year is 2017, his income tax payable is: a. P434,000 b. P570,500 c. P589,000 d. P509,000 31. If Juan is a resident citizen and taxable year is 2018, his income tax payable is: a. P434,000 b. P570,500 c. P589,000 d. P509,000 32. If he is a resident alien and the taxable year is 2017, his income tax payable is: a. P360,580

b. P358,020 c. P384,380 d. P357,000

33. If he is a non-resident citizen and the taxable year is 2017, his income tax due after tax credit, if any is:

a. P360,580 b. P358,020 c. P384,380 d. P357,000 34. If he is a non-resident citizen and the taxable year is 2018, his income tax payable is: a. P295,000 b. P358,020 c. P384,380 d. P357,000 35. If he is a non-resident alien engaged in trade or business in the Philippines but without the benefit of Reciprocity Law, the income tax payable assuming the taxable year is 2017 should be: a. P397,000 b. P378,500 c. P405,500 d. P338,500 36. If he is a non-resident alien not engaged in trade or business, disregarding professional & business data, the total income tax that should be withheld from his income is: a. P50,000 b. P18,500 c. P31,500 d. P338,500 37. If he is a Special Alien Employee, disregarding professional and business data, the total income tax that should be withheld from his income assuming thetaxable year is 2017 should be: a. P18,500 b. P30,000 c. P11,500 d. None 38. Mr. ad Mrs. Dela Cruz , both CPAs and residents of the Philippines, with 5 minor children, had the following data for 2018 taxable year. Salaries, wife P1,200,000 13th month pay and other bonuses,wife 140,000 Professional Fees, (net of 5% CWT) 1,710,000 Expenses-Practice of profession (15% nondeductible) 800,000 Rental Income (net of 5% withholding tax) 190,000 Rental expenses 80,000 Other income, husband (20% non-taxable) 80,000 The taxable income of Mr. Dela Cruz is: a. P48400 b. P684,000 c. P1,870,000 d. P2,554,000 39. The taxable income of Mrs. Dela Cruz is:

a. P371,000 b. P359,000 c. P1,870,000

d. P2,554,000 40. Statement 1: Self-employed is a sole proprietor or independent contractor who reports income earned from self-employment. S/he control who s/he works for, how the work is done and when it is done. Statement 2: A Professional is a person formally certified by a professional body belonging to a specific profession by virtue of having completed a required examination or course of studies and/or practice, whose competence can usually be measured against an established set of standards. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect 41. Statement 1: A Professional also refers to a person who engages in some art or sport for money, as a means of livelihood, rather than as a hobby. Statement 2: A Professional is a person formally certified by a professional body belonging to a specific profession by virtue of having completed a required examination or course of studies and/or practice, whose competence can usually be measured against an established set of standards. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect Use the following data for the next three (3) questions: Ana operate a pet shop and at the same time, offers interior design services to her clients. The following data were provided by Ana for 2018 taxable year: Pet Shop: P1,800,000 Gross sales 600,000 Cost of sales 200,000 Interior design services: Gross receipts Operating expenses

1,150,000 120,000 80,000

42. How much is her income tax liability for the year? a. P216,000 b. P345,000 c. P475,000 d. P540,000 43. Assuming Ana signified her intention to be taxed at 8% income tax rate on her initial quarterly income tax return, how much is her income tax liability for the year? a. P216,000 b. P300,000 c. P430,000 d. P540,000 44. Assume Ana is a vat registered taxpayer, how much is her income tax liability for the year under the 8% income tax regime? a. P216,000 b. P345,000

c. P475,000 d. P540,000 45. Which of the following statement is false? Transfer tax is...