INCOME TAXATION 2- REGULAR INCOME TAX

Pre-test
1. Which of the following statements is not correct?
a. An individual citizens of the Philippines who is working and deriving income from
abroad as an overseas contract worker is taxable on income from sources within and
without the Philippines.
b. A seaman who is a citizen of the Philippines and who receives compensation for
services rendered abroad as a member of the complement of vessel engaged
exclusively in international trade shall be treated as a resident citizen.
c. A non- resident citizen who is not engaged in business in the Philippines is treated as
non-resident alien who is not engaged in business in the Philippines
d. An alien individual, whether a resident or not of the Philippines, is taxable only on
income derived from sources in the Philippines
2. A citizen of the Phils. who works and derives income from abroad is a resident if he stayed
outside the Phils.
a. For less than 180 days c. For more than 180 days
b. For 183 days or more d. For less 183 days
3. A citizen of the Phils. Who works abroad and whose employ ent requires him to be physically
present abroad most of the time during taxable years
a. Taxable on income within and without the Phils.
b. Taxable on income from without the Phils.
c. Exempt from income tax
d. Taxable income from within the Phils
4. On July 1, 2018, Jess left the Philippines to work in Iran for 5 years. The following information
were provided at year end:
Gross Income Business Expense
Local Abroad Local Abroad
01/01 to 06/30 300,000 200,000 100,000 50,000
07/01 to 12/31 600,000 400,000 150,000 50,000

The taxable income is:

a. 800,000 b. 1,000,000 c. 1,150,000 d. 600,000
5. Refer to the case of Jess above, assuming instead he arrived from abroad on July 1, 2018 to
resettle in the Philippines permanently, his taxable income is:
a. 800,000 b. 1,000,000 c. 1,150,000 d. 600,000
6. If he did not leave Philippine at all, his taxable income is:
a. 800,000 b. 1,000,000 c. 1,150,000 d. 600,000
Mr. and Mrs. Casagan, both CPAs and residents of the Philippines, with 5 minor children, had the
following data for taxable year 2018:
Salaries, wife P 150,000
13th and 14th Month- Wife 60,000
Professional fees (net of 10% wth) 450,000
Expenses- practice of profession (15% nondeductible) 120,000
Rental income (net of 5% wth) 190,000
Rental expenses 80,000
Other income husband 80,000
7. The taxable income of Mr. Casagan is:
a. 173,000 b. 275,000 c. 266,000 d. 323,000
8. The taxable income of Mrs. Casagan is:
a. 371,000 b. 409,000 c. 419.000 d. 510,000
9. As a rule, fringe benefit furnished or granted in cash or in kind by an employer to an
individual employee maybe subject to the fringe benefit tax, if given to
1. Rank and file employees
2. Managerial employees
3. Those holding supervisory positions
a. 1 and 2 only c. 2 and 3 only
b. 1 and 3 only d. 1, 2 and 3
10. The fringe benefit tax is
1. Imposed on the employer
2. Withheld at source
3. Deductible by the employer
 a. 1 and 2 only c. 2 and 3 only
b. 1 and 3 only d. 1, 2 and 3

Anthony, married, with two dependent children, received the following income:
Rent, Philippines 1,000,000 Interest, in pesos, BPI 100,000
Rent, Hongkong 200,000 Interest, in US dollars, BDO (42:1) 10,000
Prize in local contest 8,000 Interest, in HK dollars (5:1) 10,000
Prize in local lottery 50,000 PCSO/ Lotto winnings 2,000,000
Prize in US contest 300,000 Lotto winnings in US 100,000
Dividends, domestic 600,000

11. Assuming the taxable year is 2017, the total final tax is
RC NRC RA NRA-ETB
A 553,000 490,000 550,000 150,500
B 121,500 90,000 121,500 150,000
C 131,000 90,000 90,000 90,000
D 142,000 90,000 150,000 150,000
12. Assuming the taxable year is 2018, the taxable net income is
RC NRC RA NRA-ETB
A 553,000 490,000 553,000 150,000
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

13. Assuming the taxable year is 2017, the taxable net income is
RC NRC RA NRA-ETB
A 80,000 180,000 830,000 180,000
B 180,000 80,000 1,000 1,000,000
C 1,558,000 908,000 908,000 908,000
D 1,658,000 1,008,000 1,008,000 1,008,000
14. Assuming the taxable year is 2018, the taxable net income is
RC NRC RA NRA-ETB
A 80,000 180,000 830,000 180,000
B 180,000 80,000 1,000 1,000,000
C 1,558,000 908,000 908,000 908,000
D 1,658,000 1,008,000 1,008,000 1,008,000

Kate, a self employed resident citizen provided the following data for 2018 taxable year
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 20,000
Gain on sale of a land with cost of P 1,500,000 500,000
when the zonal value is P 1,200,000
15. How much is the basic income tax of Kate for the year?
a. 197,500 b. 160,000 c. 150,000 d. 190,000
16. How much is the total income tax expense?
a. 321,500 b. 342,500 c. 351,500 d. 358,000
17. How much is the total income tax of Kate is she opted to be taxed at 8%?
a. 321,500 b. 342,500 c. 351,500 d. 358,000
18. Assuming Kate is a VAT-registered taxpayer, how much is the total income tax of Kate is she
opted to be taxed at 8%?
a. 321,500 b. 342,500 c. 351,500 d. 358,000
19. Using the same date of Kate, except her gross sales for the year was 3,800,000, how much is
here total income tax expense assuming she opted to be taxed at 8% income tax rate?
a. 321,500 b. 342,500 c. 351,500 d. 652,000
Pearl is a self- employed resident citizen and currently the owner of AB Corporation. The
following data are provided for 2018
Compensation income P 1,800,000
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 sale of land in the Philippines held as capital asset, Cost: 1,500,000 500,000
Zonal Value 1,200,000

20. How much is the basic income tax expense of Pearl assuming she opted to be taxed at 8%?
a. 654,000 b. 404,000 c. 354,000 d. 454,000
21. How much is her total income tax expense?
a. 321,500 b. 768,500 c. 808,000 d. 358,000
Mr. Navarro created a trust naming his eldest son, Fred as beneficiary. If the eldest son could not
abide with his terms, Mr. Navarro has the power to cancel the trust.

For the current taxable year 2018, the trust earned net income of 1,000,000. On the other hand,
the Mr. Navarro earned 1,500,000 and business income of 1,000,000.
22. The taxable income of trust is:
a. 1,000,000 b. 980,000 c. 950,000 d. 0
23. How much is the taxable income of Mr. Navarro?
a. 3,450,000 b. 3,500,000 c. 2,450,000 d. nil
In 2018, Rody created 2 trusts for his minor son, Paulo. During the year, two trusts earned net
income before exemption as follows:
Trust 1 P 4,000,000
Trust 2 P 6,000,000
24. How much is the income tax payable by Trust 2?
a. 1,895,160 b. 1,899,000 c. 1,891,320 d. 1,866,000
XYZ Corporation is engaged in business in the Philippines and abroad with the following data for
the current year:
Gross income, Philippines 975,000
Expense, Philippines 750,000
Gross income, Iran 770,000
Expenses, Iran 630,000
Interest on bank deposit 25,000
25. The income tax due if XYZ Corporation is:
Domestic RFC NRFC
a. 116,800 72,000 320,000
b. 109,500 67,500 300,000
c. 312,000 515,850 116,800
d. 109,500 72,000 300,000
The following are the pertinent information for ABC Corporation for 2018:
RCIT MCIT CWT
First 200,000 160,000 40,000
Second 240,000 500,000 60,000
Third 500,000 150,000 80,000
Fourth 300,000 200,000 70,000

Additional notes: MCIT carry-over from prior year amounts to 60,000

Excess tax credits from prior year amounts to 20,000
26. How much was the income tax payable for the first quarter?
a. 200,000 b, 160,000 c. 120,000 d. 80,000
27. How much was the income tax payable for the second quarter?
a. 660,000 b. 460,000 c. 200,000 d. 160,000
28. How much was the income tax payable for the third quarter?
a. 860,000 b. 120,000 c. 600,000 d. 140,000
29. How much was the annual income tax payable?
a. 1,260,000 b. 390,000 c. 230,000 d. 930,000
30. Assuming the MCIT on the 4th quarter is 500,000, how much was the annual income tax
payable?
a. 330,000 b. 1,310,000 c. 380,000 d. 360,000