Quiz on Income tax for Corporation PDF

Preview

Summary

Quiz on Income tax for Corporation True or False. Write your answer, true or false, after each statement. 1. A domestic corporation is a corporation created or organized in the Philippines even under the laws of foreign country as long as it maintains a Philippine branch. 2. A corporation which is n...

Description

Quiz on Income tax for Corporation Name_____________________ True or False. Write your answer, true or false, after each statement. 1. A domestic corporation is a corporation created or organized in the Philippines even under the laws of foreign country as long as it maintains a Philippine branch. 2. A corporation which is not domestic may be a resident foreign corporation engaged in business in the Philippines or non-resident foreign corporation not engaged in business in the Philippines. 3. Resident foreign corporations are subject to income tax based on net income from sources within the Philippines. 4. A minimum corporate income tax (MCIT) of 2% of gross income as of the end of the taxable year is imposed upon domestic corporations, except those who are exempt, beginning the 2nd taxable year immediately following the taxable year in which such corporation commenced in business operations. 5. Minimum corporate income tax (MCIT) is imposed when a corporation has zero or negative taxable income, or when the amount of MCIT is greater than the regular income tax due from such corporation. 6. Corporations exempt from income tax are not subject to income tax on incomes received which are necessary or incidental with the purpose for which they were organized and operating. 7. Optional corporate income tax is imposed in the nature of penalty to the corporation to prevent the scheme of accumulating income rather than distribute the same to the stockholders for the purpose of avoiding taxes on dividends. 8. For gross income tax purposes of a manufacturing company, cost of goods sold shall include all costs of production of finished goods, such as raw materials used, direct labor, manufacturing overhead, freight costs, insurance premiums and other costs related to material handling. 9. Improperly accumulated earnings tax is applicable only to publicly listed companies. 10. The fact that a corporation is a mere holding company or investment company with no business activities is a prima facie evidence of a purpose to avoid tax upon its shareholders or members.

CHOOSE THE LETTER THAT CORRESPONDS TO YOUR ANSWER. MAKE YOUR ANSWER “BOLD” 11. The president upon the recommendation of the Secretary of Finance may allow corporation the option to be taxed on gross income provided that I. The tax rate is 15% II. Available to firms whose ratio of cost of sales to gross sales/receipts from all sources does not exceed 55% III. The option shall be irrevocable for three (3) years during which the corporation is qualified under the scheme

12.

13.

14.

15.

16.

a. Only I must be complied b. Only I & II must be complied c. I,II & III must be complied d. None of the above Which of the following statements about improperly accumulated earnings tax (IAET) is false? a. It is in the nature of penalty to the corporation for improperly accumulating earnings b. It aims to deter avoidance of tax on the part of the shareholders on earnings received c. If undistributed earnings are used for reasonable needs of the business, such earnings is not subject to IAET. d. It shall not be imposed despite determination that a corporation has accumulated beyond reasonable needs of the business. The following are correct statements about gross income tax (optional corporate income tax)on corporation , except a. It is applicable to domestic corporation b. It is applicable to resident foreign corporation c. It is applicable to non-resident corporation d. It is effective at beginning taxable year 2000. Which of the following is not a related trade, business or activity of a domestic proprietary educational institution? a. Income from students’ enrollment in the school. b. Income of the school’s canteen located within the campus. c. Income of the school’s bookstore situated within the campus. d. Income from rent of available office spaces. Philippine Air, a domestic corporation engaged in local and international operations has the following data for the current year. Gross income and expenses from its international operations are P10,000,000 and P4,000,000 respectively. The income tax due from the corporation is a. P 150,000 b. P 250,000 c. P 1,800,000 d. P 3,000,000 ABC Corporation, a corporation engaged in business in the Philippines and abroad has the following data for the current year Gross income Philippines P 975,000 Expenses, Philippines 750,000 Gross income, Malaysia 770,000 Expenses, Malaysia 630,000 Interest income, BDO Manila 25,000 Determine the income tax due if the corporation is domestic corporation. a. P 67,500 b. P 72,000 c. P 109,500 d. P 300,000

17. ABC Corporation, a corporation engaged in business in the Philippines and abroad has the following data for the current year Gross income Philippines P 975,000 Expenses, Philippines 750,000 Gross income, Malaysia 770,000 Expenses, Malaysia 630,000 Interest income, BDO Manila 25,000 Determine the income tax due if the corporation is resident foreign corporation. a. P 67,500 b. P 72,000 c. P 109,500 d. P 300,000 18. ABC Corporation, a corporation engaged in business in the Philippines and abroad has the following data for the current year Gross income Philippines P 975,000 Expenses, Philippines 750,000 Gross income, Malaysia 770,000 Expenses, Malaysia 630,000 Interest income, BDO Manila 25,000 Determine the income tax due if the corporation is non-resident foreign a. P 67,500 b. P 72,000 c. P 109,500 d. P 300,000 19. JBC Corp., a corporation organized under U.S. laws. For the taxable year, it earned/incurred the following income and expenses in the U.S. Gross Sales 5,400,000 Business Expenses 1,080,000 Dividend Income from US Corp. 270,000 Interest Income from Current Account, New York 54,000 How much is the Philippine income due? a. P – 0 b. P 1,296,000 c. P 1,620,000 d. P 1,717,200 20. ABC Company, a domestic corporation, had the following data on computations of regular corporate income tax and minimum corporate income tax: Year 4 Year 5 Year 6 Year 7 MCIT P100,000 P60,000 P50,000 P40,000 RCIT P30,000 P70,000 P60,000 P30,000

What are the income tax due for each year? a. b. c. d.

Year 4 – P 100,000; Year 5 – P 60,000; Year 6 –P 50,000; Year 7 –P 40,000 Year 4 – P 30,000; Year 5 – P 70,000; Year 6 – P 60,000; Year 7 – P 30,000 Year 4 – P 100,000; Year 5 – P 70,000; Year 6 – P 60,000; Year 7 – P 40,000 Year 4 – P 70,000; Year 5 – P 10,000; Year 6 – P 10,000; Year 7 – P 10,000...