CPA REVIEW SCHOOL. OF THE PHILIPPINES Manila PARTNERSHIPS, JOINT VENTURE AND CO-OWNERSHIP Dela Cruz /De Vera / Loper/ Liamado |, As tegards a business partnership, which of the following is not comrect? i The partnership mus file quarterly and year end income tax returns. : b. The distrbuable income available to the parnes is the taxable income les the income tax thereon, ‘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 ofa partner inthe distributive net income whether actualy received or nos subject 10 final withholding tax on dividends, : 2. The following statements regarding taxable partnerships are cores, except | ‘Thy ile quarterly and year-end income tax returns bb They are subject to the rules on corporation for capital gains tx, final tax on passive income, normal income tax, MTT and gross income tax. The partners’ share inte distributable nt income is subject to final tx. 4. They are subject othe improperly accumulated earings tx 3. Regarding a general professional partnership, which ofthe following is not correct? a It shall not be subject to income tax : 'b. The partners shal be liable for income tax on their respective distributive shares. ‘¢. Each partner shall report as gross income his distributive share inthe perinership net income. 4. The share of a partner shall be subject to a creditable withholding tax of 10% if his distributive share is below P720,000 and 15% if atleast P720,000. 4. If a partner, on his own transactions, is on the cash method of accounting while the general profesional parnersip i on the cera! method of accounting, nthe partner's determination of bis taxable inca for he yar , a Must convert his income from the partnership into cash method. | 1b Mest comer his own income ino cerul method. Does not report bis income fom he partership because the partersipis exempt fom income re 4 Can consolidate his share in the net income ofthe partnership under accra! method with his ov income under te cash method 5. Which ofthe following statement isnot corac?? i 4 When the co-owners invest he income ofthe propery co-owned ina business or in any income producing properties or asivtes consituting themselves into a business parmership, such Tarership i consequely subject to tax a a compration \ bb As arue, 1 cocwerhip snot subject to income tx because the activities ofthe co-owners ae limited to the preservation and eqjoyment of the property and the collection of the income therefrom. ! . A-co-owner is subject to income ax on his share in the nt income ofthe co-cmership actually or constructively received. All partnerships, no mater bow created or organized are considered corporations subject to corporate income 6. Astegard an ordinary partnership, which ofthe following statements i correct? Parner’ shares are subject to final tax, hence the partnership need not fil an ITR. i. Subject to improperly accurmulated earings tax. . ‘Treated like corporations, hence partners have limited liability 4. Parmer’ shares even if distributed wil not be included in their ITR. Tax 86-047. As regards a general professional partnership, which of the following statements is correct? ‘8. Treated like «corporation, tence itis subjet tothe corporate income tax. ' Itisexempt from income tax, hence it need not file an ITR, Partners’ shares are subject final tax. 4. Partners’ shares willbe included in ther respective ITRs whether distributed or not 8 Statement 1 ~ A CPA and a Lawyer may form « general co-partnership to sell law and accounting books. Statement 2 ~ Parnerships and Corporations have separate juridical personalities distinct from the ‘owners, Therefore, partners and stockholders are not liable to creditors ofthe business. a. Tne, tne b. Fabs, false ©. False tue a Truc; false 9. Statement 1 - The general professional partnership may claim itemized deductions in computing its fet income anda partner may also claim itemized deduction in computing his netincome, ‘Statement 2 ~ The general professional permershp may claim the optional standard deduction in ‘et income wail partner may claim itemized deductions in computing his net income. ce. False, true a False; false 10, Statement 1 - The general profesional partnership may claim itemized deductions in computing its fet income while a partne: may claim the optional stsnderd deduction in computing his net income. ‘Statement 2 - The general professional partuership may claim the optional standard deduction in ‘competing its net income and a partner may also claim the optional standard deduction in computing his nt income. a Tree, me b. True, false © False, rue False, false 11, The net share received by a partner in a general professional partnership is a Part of his texeble income in his TR. Exempt fom income tax © Subject 10 10% ereditable withholding tax Subject to final tax 12. The net share received by a partner in a general co-partnership is a. Par of his teuble income ‘Exempt from income tax Subject to 10% creditable withholding tax Subject to final tax 13.~ 16. AB parmership with A and B as partners (both resident citizens) had a net professional income amounting to P500,000 for 2018. Is other income included bank interc=t income of PS,000, net of final withholding tax and royalty income of P10,000, net ofthe final withbolding tax. A is single and has his own separate entery business. In 2018, his business had net sales of 1,000,000, cos of sales of 500,000, and operating expenses of 300,000, 13, The net share ofA inthe income ofthe GPP is Tax 86-08$0,000 «& Php225,000 F900 | d. Php233,100 14. The net taxable income and income tax payable of A wo shares profit and loss equally with Bin their 3. P4S0,000; Pie, . 400,000; Pt0,450 | & Piss: p.670 i ~r 15, Using the preceding number, but i is a business partnership, te taxable income of the pyitnershipis . P518,000 | i . 500,000 | . P510,000 | | 508,900 | 16. Using the preceding number, the net distributable share of B (resident citizen) is a. P162,500 b. 137,500 : ©. P165,600 dd. PIS4,350 17. A and B are partners in Partnership which realized a gross income of P 800,000 with 'P350,000 in expenses in the year 2018. A is married with 2 quslified dependent. ‘vith 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, singe, alo has his own business generating P450,000 in net sales, and incurring cast of sales and deductible expenses of 200,000 and P50,000; respectively. ‘They share profits and losses of their partnership at 46. Ifthe parmership isa GPP, the txable income of A who avails ofthe OSD is: a P420,000 bP 70,000 i ©. P 302,000 4. None ofthe above 18, And the taxable income of B who itemizes deductions is a P150,000 b. P470,000 © P4S0,000 4. None of the above. a P 144,000 b, P 148,500 fe. P135;000 4. P1S7,500 19. Ifthe partnership is an OP, its tax due is | 20. 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 his defense, he obtained the services of ACCRA, the biggest law partnership in the Philippines. ACCRA asked for a fee of P10,000,000 for its legal services in defending him. How ‘much should the lawyer withhold as CWT from ACCRA’ fee? Tax 86-08Pr 2, 8) 10% b) 15% © 6) 5%) None ‘Aand B are co-owners by vitue ofa property given to them by thet fther. The co ownership had 8 {30s rental income of PS00,000 and expenses related io rental activity of P300,000 but 10% is not deductible fr the year 2018. A and B share inthe profits at 75% and 25%, respectively. A withdrew 50,000 from the co-owmnership met income forthe year B did not withdraw any amount. A and B are both single. The income tax liability ofthe co-owmerhip is a 102.400 « £80,000 bP 76.800 aro ‘A's share in the net income ofthe co-owmership i: a PITS b. P150,000 & P122,500 a P -0- 23, Suppose A und B did ot divide bot insta invested the entre profit in anther business venture whet they eared ant income after deductions of 450,000, the tax de ofthe o-ownership it a. P 135,000 ’. P 148,000 ¢. P157,500 a P -0- 24. X and Y are partners (both resident citizens) in the following partnerships: Gross Income “ P00,000 Desivtible expenses: 300,000 Personal Income and Expenses x Gross Income 400,000 Deductible expenses 250,000 Dividend from domestic corporation 20,000 Dividend from foreign corporation 10,000 Prize, supermaricet fle 15,000 Royalty, books 10,000 Partners agreed t share partarship income and losses as follows: X= 40% (Partver X is marcod with 2 cualitied dependent childreu) ional 'P 400,000 180,000 x 260,000 120,000 30,000 8,000 8,000 12,000 Y= 60% (Parner ¥ i sine hut supporting her 18 yea old boyftend living with and dependent upon her for his chief support) Determine the respective taxable incomes of pariners X and Y in their ITRs 148,000, P258,000 88,000, P132,000, 248,000, P30, 000 None of the above. ese Tee 86-0825. A Co. and B Co., domestic corporations, both in the construction business, formed a joint venture to ‘build houses forthe poor, a government project, with an agreed equal sharing in net income. The joint etiue, A Co, and B Co, ae all ceed bythe PCAB, Data on income and expenses forthe year Aoint Venture ACo BCo, Gross income 80,000,000 2,000,600 3,000,600 Expenses 60,000,000 1,200,000 2,000,000 Determine 4) The income tx liability ofthe joint venture. P 6,000,000 ©. 1,800,000 '. 20,000,000 4 Po i) The income tax liblity before ax credits of A Co: a P 3,240,000 ©. P 7560,000 '. P16,800,000 4. ‘6,000,000 26.A Co. nd B Co., domestic conportion, both engaged inthe transportation business with operations in Norther and Cental Luzon formed joint venture agreing to distribute the net income of the joint ‘venture equally. In taxable year, the joint venture had a gross income of P5,000,000 and expenses of 3,500,000. Determine: 4) The income tax liability ofthe joint venture, a P 450,000 ©. 1,050,000 ’. P5,000,000 4 Po ii) The share of A Co. in the distributable net income of the JV: a. P525,000 ©. P 472500 b. P $2,500 P,050,000 i) Final tax on the share of A Co. inthe distributable net income of the JV: a. P 52,500 ©. P78,750 ’. P105,000 do