TEST BANK-INCOME TAXATION CHAPTER 1-GENERAL PRINCIPLES AND CONCEPTS OF TAXATION A.MULTIPLE CHOICE: THE PROCESS BY WHICH THE SOVEREIGN RAISES INCOME TO DEFRAY THE EXPENSES OF THE GOVERNMENT IS CALLED- (RPCPA) A B C D SUBSIDY TARIFF TAXATION TRIBUTE ONE OF THE CHARACTERISTICS OF INTERNAL REVENUE TAX IS THAT THEY ARE-(RPCPA) A) B) C) D) CRIMINAL IN NATURE PENAL IN NATURE POLITICAL IN NATURE GENERALLY PROSPECTIVE IN APPLICATION IN CASE OF CONFLICT BETWEEN THE TAX LAWS AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)-(RPCPA) A) B) C) D) BOTH TAX LAWS AND GAAP SHALL BE ENFORCED GAAP SHALL PREVAIL OVER TAX LAWS TAX LAWS SHALL PREVAIL OVER GAAP THE ISSUE SHALL BE RESOLVED BY THE COURT WHICH OF THE FOLLOWING HAS NO POWER OF TAXATION?(RPCPA) A) B) C) D) PROVINCES CITIES BARANGAYS BARRIOS “SCHEDULAR SYSTEM OF INCOME TAXATION” MEANS(RPCPA) A) ALL TYPES OF INCOME ARE ADDED TOGETHER TO ARRIVE AT GROSS INCOME B) SEPARATE GRADUATED RATES ARE IMPOSED ON DIFFERENT TYPES OF INCOME C) CAPITAL GAINS ARE EXCLUDED IN DETERMINING GROSS INCOME D) COMPENSATION INCOME AND BUSINESS/PROFESSIONAL INCOME ARE ADDED TOGETHER IN ARRIVING AT GROSS INCOME ONE OF THE FOLLOWING IS A PRIMARY PURPOSE OF TAXATION A)PROTECTION OF LOCAL INDUSTRIES AGAINST FOREIGN COMPETITION THROUGH IMPOSITION OF HIGH CUSTOMS DUTIES ON IMPORTED GOODS B)REDUCTION OF INEQUALITIES IN WEALTH AND INCOME BY IMPOSING PROGRESSIVELY HIGHER TAX RATES C) TO SECURE REVENUE FOR THE SUPPORT OF THE GOVERNMENT D) STRENGTHENING OF ANEMIC ENTERPRISES BY GIVING TAX EXEMPTION WHICH OF THE TAXATION? FOLLOWING IS NOT A SECONDARY PURPOSE OF A) TO SERVE AS KEY INSTRUMENT OF SOCIAL CONTROL B) TO EFFECT A MORE EQUITABLE DISTRIB UTION OF WEALTH AMONG PEOPLE C) TO ACHIEVE SOCIAL AND ECONOMIC STABILITY D) TO RAISE REVENUE TO DEFRAY THE NECESSARY EXPENSE OF THE GOVERNMENT WHICH IS THE BEST ANSWER? A TAX REFORM AT ANY GIVEN TIME UNDERSCORES THE FACT THAT-(RPCPA) A) B) C) D) TAXATION IS AN INHERENT POWER OF THE STATE TAXATION IS ESSENTIALLY A LEGISLATIVE POWER TAXATION IS A POWER THAT IS VERY BROAD THE STATE CAN AND SHOULD ADOPT PROGRESSIVE TAXATION THE LEGISLATIVE BODY CAN IMPOSE A TAX AT ANY AMOUNT UNDERSCORES THE LEGAL DICTUM THAT TAXATION IS – (RPCPA) A) B) C) D) AN INHERENT POWER OF THE TAX A VERY BROAD POWER OF THE STATE ESSENTIALLY A LEGISLATIVE POWER FOR PUBLIC PURPOSE 10 ALL OF THE FOLLOWING, EXCEPT ONE, ARE BASIC PRINCIPLES OF THE SOUND TAX SYSTEM A) FISCAL ADEQUACY B) THEORETICAL JUSTICE C) ADMINISTRATIVE FEASIBILITY D) INHERENT IN SOVEREIGNTY 11 UNDER THIS BASIC PRINCIPLE OF SOUND TAX SYSTEM, THE GOVERNMENT SHOULD NOT INCUR A DEFICIT-(RPCPA) A) B) C) D) THEORETICAL JUSTICE ADMINISTRATIVE FEASIBILITY FISCAL ADEQUACY NONE OF THE ABOVE 12 THE FOLLOWING, EXCEPT ONE, ARE BASIC PRINCIPLES OF A SOUND TAX SYSTEM A) IT SHOULD BE CAPABLE OF BEING EFFECTIVELY ENFORCED B) IT MUST BE PROGRESSIVE C) SOURCES OF REVENUE MUST BE SUFFICIENT TO GOVERNMENT EXPENDITURES AND OTHER PUBLIC NEEDS D) IT SHOULD BE EXERCISED TO PROMOTE PUBLIC WELFARE MEET 13 WHICH OF THE FOLLOWING IS NOT ONE OF THE CANONS OF A SOUND TAX SYSTEM? A) B) C) D) 14 QUANTIFIABILITY EQUALITY CERTAINTY CONVENIENCE THE POWER OF TAXATION CAN ONLY BE EXERCISED BY THE LAWMAKING BODY A) B) C) D) SUBJECT TO CONSTITUTIONAL AND INHERENT LIMITATIONS EQUALITY OR THEORETICAL JUSTICE LEGISLATIVE IN CHARACTER INHERENT IN SOVEREIGNTY 15 THE PRESIDENT OF THE PHILIPPINES AND THE PRIME MINISTER OF JAPAN ENTERED INTO AN EXECUTIVE AGREEMENTIN RESPECT OF A LOAN FACILITY TO THE PHILIPPINES FROM JAPAN WHEREBY IT WAS STIPULATED THAT INTEREST ON LOANS GRANTED BY PRIVATE JAPANESE FINANCIAL INSTITUTIONS IN THE PHILIPPINES SHALL NOT BE SUBJECT TO PHILIPPINE INCOME TAXES WHAT BASIC CHARACTERISTIC OF TAXATION HAS BEEN VIOLATED BY THIS AGREEMENT? A) B) C) D) INHERENT LIMITATION THEORETICAL JUSTICE LEGISLATIVE IN CHARACTER ADMINISTRATIVE FEASIBILITY 16 WHICH STATEMENT GIVES THE CORRECT ANSWER? THAT A FEASIBILITY STUDY NEEDS OR NEED TO LOOK INTO THE TAXES OF DIFFERENT POLITICAL SUBDIVISIONS OF GOVERNMENT WHICH MAY BE ALTERNATIVE SITES OF BUSINESS BECAUSE-(RPCPA) A) PROVINCES, CITIES AND MUNICIPALITIES MUST HAVE UNIFORM TAXES BETWEEN AND AMONG THEMSELVES B) THE LOCAL TAXES OF A POLITICAL SUBDIVISION NEED NOT BE UNIFORM WITH THE LOCAL TAXES OF ANOTHER POLITICAL SUBDIVISION C) BUSINESSES THAT ARE SUBJECT TO NATIONAL TAXES ARE EXEMPTED FROM LOCAL BUSINESS TAXES D) LOCAL BUSINESS TAXES MAY BE CREDITED AGAINST NATIONAL BUSINESS TAXES 17 STATE,MENT 1:THE POWER OF TAXATION IS INHERENT IN SOVEREIGNTY BEING ESSENTIAL TO THE EXISTENCE OF EVERY GOVERNMENT HENCE, EVEN IF NOT MENTIONED IN THE CONSTITUTION, THE STATE CAN STILL EXERCISE THE POWER STATEMENT 2:IT IS ESSENTIALLY A LEGISLATIVE FUNCTION EVEN IN THE ABSENCE OF ANY CONSTITUTIONAL PROVISION, TAXATION POWER FALLS TO CONGRESS AS PART OF THE GENERAL POWER OF LAWMAKING.-(RPCPA) A) B) C) D) FALSE, FALSE FALSE, TRUE TRUE, TRUE TRUE, FALSE 18 THOSE RESTRICTIONS ON THE EXERCISE OF THE POWER OF TAXATION THAT AREW FOUND IN THE CONSTITUTION OR IMPLIED FROM ITS PROVISIONS A) B) C) D) THEORETICAL JUSTICE LEGISLATIVE IN CHARACTER INHERENT LIMITATIONS CONSTITUTIONAL LIMITATIONS 19 WHICH OF THE FOLLOWING STATEMENTS IS NOT CORRECT?-(RPCPA) A) TAXES MAY BE IMPOSED TO RAISE REVENUE OR TO PROVIDE DISINCENTIVES TO CERTAIN ACTIVITIES WITHIN THE STATE B) THE STATE CAN HAVE THE POWER OF TAXATION EVEN IF THE CONSTITUTION DOES NOT NECESSARILY GIVE IT THE POWER TO TAX C) FOR THE EXERCISE OF THE POWER OF TAXATION, THE STATE CANJ TAX ANYTHING AT ANY TIME D) THE POWER OF TAXATION IN THE PHILIPPINE CONSTITUTION ARE GRANTS OF POWER AND NOT LIMITATIONS ON TAXING POWERS 20 ONE OF THE FOLLOWING IS NOT AN INHERENT LIMITATION ON THE EXERCISE OF THE POWER OF TAXATIONA) B) C) D) INTERNATIONAL COMITY DOUBLE TAXATION NON-DELEGATION OF THE LEGISLATIVE POWER TO TAX TERRITORIALITY 21 THE CITY COUNCIL PASSED AN ORDINANCE IMPOSING AN OCCUPATION TAX ON AN AIRCONDITIONING TECHNICIAN CONDE IS THE ONLY PERSON WITH SUCH OCCUPATION IN THE CITY HE CHALLENGED THE VALIDITY OF THE ORDINANCE AS BEING DISCRIMINATORY SINCE HE IS THE ONLY ONE ADVERSELY AFFECTED A) THE CONTENTION OF CONDE IS TENABLE B) THE ORDINANCE IS UNCONSTITUTIONAL BECAUSE CONDE IS DENIED OF HIS RIGHT TO EQUAL PROTECTION OF LAW C) THE CONTENTION OF CONDE IS NOT JUSTIFIED BECAUSE THE RULE ON UNIFORMITY IS NOT VIOLATED CONSIDERING THAT THE ORDINANCE WOULD ALSO IMPOSE ON ALL AIRCONDITIONING TECHNICIAN WHO MAY COME WITHIN THE JURISDICTION OF THE CITY D) THE ISSUE ON VALIDITY OR INVALIDITY OF THE ORDINANCE SHOULD BE SET ASIDE 22 TREATING PERSONS WHO ARE SIMILARLY SITUATED IN THE SAME MANNERA) B) C) D) UNIFORMITY OF TAXATION EQUALITY OF TAXATION DUE PROCESS OF LAW NON-DELEGATION OF LEGISLATIVE POWER 23 WHICH OF THE FOLLOWING IS VIOLATIVE OF THE UNIFORMITY RULE IN TAXATION? A) DIFFERENT TAX RATES ON BOARDING STABLES FOR RACEHORSES AND BOARDING HORSES THAT ARE NOT FOR RACING B) WHOLESALE DEALERS IN OIL ARE SUBJECT TO OCCUPATION TAX WHILE WHOLESALE DEALERS IN OTHER ARTICLES SCU AS SUGAR, BACON, COAL, IRON AND OTHER THINGS ARE NOT SO SUBJECT C) A ROAD USERS’ TAX IMPOSED ON ALL MOTOR VEHICLES REGISTERED AND OPERATING IN THE CITY OF MANILA BUT DOES NOT SUBJECT VEHICLES NOT REGISTERED THEREIN BUT ALSO OPERATING TEMPORARILY IN SAID CITY D) A TAX OF P2 PER SQM OR FRACTION THEREOF IS IMPSED ON EVERY BILLBOARD OR SIGN ANYWHERE IN THE COUNTRY 24 THE LUNG CENTER OF THE PHILIPPINES, A CHARITABLE INSTITUTION, IS ERECTED IN THE MIDDLE OF A 12-HECTARE LOT: I II III IV A BIG SPACE AT ITS GROUND FLOOR IS BEING LEASED TO PRIVATE PARTIES, FOR CANTEEN AND SMALL STORE SPACES, AND TO MEDICAL OR PROFESSIONAL PRACTITIONERS WHO USE THE SAME AS THEIR PRIVATE CLINICS FOR THEIR PATIENTS WHOM THEY CHARGE FOR THEIR PROFESSIONAL FEES THE REST OF THE PORTIONS OF THE BUILDING ARE USED FOR ITS PATIENTS, WHETHER PAYING OR NON-PAYING ALMOST ½ OF THE ENTIRE AREA OF THE LOT ON THE LEFT SIDE OF THE BUILDING IS VACANT AND IDLE A BIG PORTION ON THE RIGHT SIDE IS BEING LEASED FOR COMMERCIAL PURPOSES TO A PRIVATE ENTERPRISE KNOWN AS THE ELLIPTICAL ORCHIDS & GARDEN CENTER WHICH PORTION IS SUBJECT TO REAL PROPERTY TAX? A) B) C) D) I ONLY I AND II III AND IV I, III AND IV 25 STATEMENT 1:THE CONSTITUTIONAL EXEMPTION ON INCOME TAXES, PROPERTY TAXES AND CUSTOMS DUTIES IS ALLOWED ON NON-STOCK, NON-PROFIT EDUCATIONAL INSTITUTIONS ONLY STATEMENT 2: A BUILDING BEING LEASED BY ITS OWNER TO A PRIVATE EDUCATIONAL INSTITUTION FOR USE AS CLASSROOMS IS EXEMPT FROM PROPERTY YAX STATEMENT 3: INCOME OF A NON-STOCK, NON-PROFIT EDUCATIONAL INSTITUTION RUN BY THE ARCHDIOCESE IS EXMEPT FROM TAX PROVIDED THAT INCOMES ARE ACTUALLY, DIRECTLY AND EXCLUSIVELY USED FOR EDUCATIONAL PURPOSES WHICH OF THE STATEMENTS ARE CORRECT? A) B) C) D) STATEMENT ONLY STATEMENTS AND STATEMENT ONLY ALL OF THEM 26 WHICH OF THE FOLLOWING STATEMENTS IS NOT CORRECT?-(RPCPA) A) AN INHERENT LIMITATION OF TAXATION MAY BE DISREGARDED BY THE APPLICATION OF A CONSTITUTIONAL LIMITATION B) THE PROPERTY OF AN EDUCATIONAL INSTITUTION OPERATED BY A RELIGIOUS ORDER IS EXEMPT FROM PROPERTY TAX, BUT ITS INCOME IS SUBJECT TO INCOME TAX C) THE PROHIBITION OF DELEGATION BY THE STATE OF THE POWER OF TAXATION WILL STILL ALLOW THE BIR TO MODIFY THE RULES ON TIME FOR FILING OF RETURNS AND PAYMENT OF TAXES D) THE POWER OF TAXATION IS SHARED BY THE LEGISLATIVE AND EXECUTIVE DEPARTMENTS OF GOVERNMENT 27 ST BARNABAS COLLEGE (SBC) IS A NON-STOCK, NON-PROFIT EDUCATIONAL INSTITUTION IT OWNS A 5-HECTARE LOT ½ OF WHICH IS BEING USED AS ITS SCHOOL CAMPUS WHILE THE OTHER HALF IS VACANT TO COPE WITH THE INCREASING OPERATING COSTS AND TO UPGRADE ITS FACILITIES, SBC PLANS TO DO THE FOLLOWING EFFECTIVE JANUARY 1, 2006; 1) RENT OUT TO A MARKETING FIRM THE VACANT PORTION OF THE LAND; 2) INJCREASE TUITION FEES BY 10% IN ACCORDANCE WITH GOVERNMENT REGULATIONS;.3)IMPORT 20 SETS OF COMPUTERS FOR USE IN ITS COMPUTER COURSES WHICH OF THE FOLLOWING QUESTIONS IS ANSWERABLE BY “YES.”? A) IS SBC SUBJECT TO REAL ESTATE TAX ON THE ½ PORTION TO BE RENTED OUT TO A BUSINESS ESTABLISHMENT? B) WILL IT BE EXEMPT FROM INCOME TAX ON ITS RENTAL TO THE MARKETING FIRM? C) WILL THE INCREASE IN TUITION FEES BE SUBJECT TO INCOME TAX IF IT RESULTS TO NET INCOME FROM SCHOOL OPERATIONS? D) WILL IT BE SUBJECT TO CUSTOMS DUTIES ON THE IMPORTATION OF THE COMPUTERS? 28 THE QUEZON SCHOOL OF BUSINESS AND ARTS, A PROPRIETARY EDUCATIONAL INSTITUTION WHICH IS OFFERING PRIMARY, SECONDARY AND TERTIARY EDUCATIONB, IS REGISTERED AND ACCREDITED BY DEPED AND CHED WHICH OF THE FOLLOWING IS EXEMPT FROM TAX? WHAT KIND OF TAX? A) THE IMPORTATION OF LABORATORY EQUIPMENTS-FROM CUSTOMS DUTIES B) THE SCHOOL BEING RENTED BY THE SCHOOL-FROM REAL PROPERTY TAX C) A PORTION OF THE SCHOOL BUILDING BEING LEASED TO A FASTFOOD CHAIN-FROM REAL PROPERTY TAX D) THE INCOME FROM OPERATION-FROM INCOME TAX 29 IN RELATION TO NO 28 ABOVE, ASSUMING THAT THE SCHOOL IS A NON-STOCK, NON-PROFIT EDUCATIONAL INSTITUTION, WHICH OF THE FOLLOWING IS SUBJECT TO TAX ? WHAT KIND OF TAX? A) THE SCHOOL BUILDING OWNED BY THE SCHOOL-FROM REAL ESTATE TAX B) THE SCHOOL BUILDING BEING RENTED BY THE SCHOOLFROM REAL ESTATE TAX C) A PORTION OF THE SCHOOL BUILDING BEING LEASED TO A FASTFOOD CHAIN-FROM REAL PROPERTY TAX D) THE INCOME FROM OPERATION-FROM INCOME TAX 30 THE MUNICIPALITY OF SAN FRANCISCO HAS A 10HECTARE CEMETERY OF DIFFRRENT CEMETERIES WHICH ARE OWNED BY DIFFERENT ENTITIES WHICH OF THE FOLLOWING IS SUBJECT TO REAL ESTATE TAX? A) CEMENTERIO MUNICIPAL DEL SAN FRANCISCO-A GOV’T CEMETERY OWNED BY THE MUNICIPALITY WHICH WAS ESTABLISHED FOR THE PURPOSE OF USING IT AS BURIAL GROUND OF THE PAUPERS OF SAN FRANCISCO B) SAN FRANCISCO CATHOLIC CEMETERY-OWNED BY THE CATHOLIC CHURCH; PAYMENTS ARE REMITTED TO THE CATHOLIC CHURCH AND FOR THE IMPROVEMENT OF THE CEMETERY C) LAST TRIP MEMORIAL PARK-OWNED BY A CORPOR5ATION WHERE DIVIDENDS ARE DISTRIBUTED TO THE SHAREHOLDERS AT THE END OF THE YEAR D) QUITA-QUITA MEMORIAL PARK-OWNED BY AN ASSOCIATION CONSISTING OF 100 DIFFERENT FAMILIES; EACH FAMILY OWNS SEVERAL SQUARE METERS OF LOT; NOT A SINGLE PORTION IS HELD FOR SALE TO EITHER MEMBER OR NON-MEMBERS OF THE ASSOCIATION 31.ALL APPROPRIATIONS, REVENUE OR TARIFF BILLS, BILLS AUTHORIZING INCREASE OF PUBLIC DEBT, BILLS OF LOCAL APPLICATION, AND BILLS SHALL ORIGINATE EXCLUSIVELY IN THE(RPCPA) A) B) C) D) OFFICE OF THE PRESIDENT HOUSE OF REPRESENTATIVES SENATE SUPREME COURT 32 WHICH STATEMENT IS WRONG? TAX LAWS-(RPCPA) A) MUST ORIGINATE FROM THE HOUSE OF REPRESENTATIVES AND ON WHICH SAME BILL THE SENATE MAY PROPOSE AMENDMENTS B) MAY ORIGINATE FROM THE SENATE AND ON WHICH SAME BILL THE HOUSE OF REPRESENTATIVES MAY PROPOSE AMENDMENTS C) MAY HAVE A HOUSE VERSION AND SENATE VERSION APPROVED SEPARATELY D) MAY BE RECOMMENDED BY THE PRESIDENT TO CONGFRESS 33.CONGRESSMAN ERIN TANADA OF QUEZON AND SENATOR JUAN PONCE ENRILE SPONSORED A BILL IN THE HOUSE OF REPRESENTATIVES AND THE SENATE, RESPECTIVELY, INCREASING THE PERSONAL EXEMPTIONS OF INDIVIDUAL TAXPAYERS AS WELL AS GRANTING TAX EXEMPTION TO MINIMUM WAGE EARNERS WHICH OF THE FOLLOWING IS CORRECT? A) THE SENATE BILL SHOULD BE DISCUSSED AHEAD OF THE HOUSE BILL B) THE SENATE AND HOUSE BILLS MAY BE DISCUSSED AT THE SAME TIME IN BOTH HOUSES C) THE HOUSE BILL SHOULD BE DISCUSSED AHEAD NOF THE SENATE BILL D) NO PRIORITY; EACH BILL CAN BE DISCUSSED AHEAD OF THE OTHER 34.NO LAW GRANTING ANY TAX EXEMPTION SHALL BE PASSED WITHOUT THE CONCURRENCE OF-(RPCPA) A) B) C) D) MAJORITY OF ALL MEMBERS OF THE CONGRESS 2/3 VOTE OF ALL MEMBERS OF THE CONGRESS ¾ VOTE OF ALL MEMBERS OF THE CONGRESS UNANIMOUS VOTE OF ALL MEMBERS OF THE CONGRESS 35.WHICH OF THE FOLLOWING STATEMENTS IS INCORRECT? A) NO PERSON SHALL BE IMPRISONED FOR NON-PAYMENT OF DEBT OR NON-PAYMENT OF TAXES B) THE PASSAGE OF LAWS GRANTING TAX EXEMPTIONS REQUIRES THE CONCURRENCE BY A MAJORITY OF ALL THE MEMBERS OF CONGRESS C) THE SUPREME COURT’S JURISDICTION OVER TAX CASES CAN NOT BE IMPAIRED D) THE REVENUES AND ASSETS OF NON-STOCK, NON-PROFIT EDUCATIONAL INSTITUTIONS AND DONATIONS FFOR EDUCATIONAL PURPOSES ARE EXEMPTED FROM TAXES AND DUTIES 36.THEY RESTRICT THE EXERCISE OF THE POWER OF TAXATION ALTHOUGH THEY ARE NOT EMBODIED IN THE CONSTITUTION A) B) C) D) THEORETICAL JUSTICE LEGISLATIVE IN CHARACTER INHERENT LIMITATIONS CONSTUTIONAL LIMITATIONS 37 A TAX MUST BE IMPOSED FOR PUBLIC PURPOSE WHICH OF THE FOLLOWING IS NOT A PUBLIC PURPOSE?-(RPCPA) A) B) C) D) NATIONAL DEFENSE PUBLIC EDUCATION IMPROVEMENT OF SUGAR INDUSTRY NONE OF THE ABOVE 38 A FUNDAMENTAL RULE IN TAXATION IS THAT “THE PROPERTY OF ONE COUNTRY MAY NOT BE TAXED BY ANOTHER COUNTRY” THIS IS KNOWN AS-(RPCPA) A) INTERNATIONAL LAW B) (INITIAL PAYMENT/SELLING PRICE) X FINAL TAX DUE C) (FINAL TAX DUE/SELLING PRICE) X COLLECTION D) (INITIAL PAYMENT/CONTRACT PRICE) X FINAL TAX DUE NUMBERS 316 TO 318 ARE BASED ON THE FOLLOWING INFORMATION: ALONSO OWNS A PERSONAL CAR WHICH HE SOLD IN INSTALLMENT ON NOVEMBER 1, 2008 AS FOLLOWS: DATE OF ACQUISITIONACQUISITION COSTTERMS OF PAYMENT: DOWNPAYMENTDUE ON DUE ONDUE ON- MARCH 20, 2006 P300,000 NOVEMBER 1, 2008 DECEMBER 1, 2008JANUARY 1, 2009FEBRUARY 1, 2009- P50,000 50,000 150,000 150,000 316 THE INITIAL PAYMENT IN 2008 ISA) B) C) D) P50,000 100,000 300,000 400,000 317 THE AMOUNT OF GAIN TO BE REPORTED IN 2008 ISA) B) C) D) P50,000 25,000 37,500 12,500 318 THE AMOUNT OF GAIN TO BE REPORTED IN 2009 ISA) B) C) D) P50,000 25,000 37,500 12,500 NUMBERS 319 TO 323 ARE BASED ON THE FOLLOWING INFORMATION: MARLYN SOLD A VACANT LOT TO HER SISTER MICA THE DETAILS OF WHICH ARE AS FOLLOWS: ACQUISITION COST OF LAND, MARCH 5, 2006 CASH PAYMENTS: DATE OF SALE, DEC 15, 2008 P100,000 PAYMENT, JANUARY 15, 2009 100,000 MORTGAGE ASSUMED BY MICA 500,000 P450,000 319 THE INITIAL PAYMENT ISA) B) C) D) P100,000 250,000 150,000 200,000 320 THE SELLING PRICE OF THE PROPERTY ISA) B) C) D) P150,000 550,000 700,000 250,000 321 THE CONTRACT PRICE ISA) P150,000 B) 550,000 C) 700,000 D) 250,000 322 THE FINAL TAX PAYABLE IN 2008 ISA) B) C) D) P42,000 25,200 9,000 NONE 323 THE FINAL TAX PAYABLE IN 2009 ISA) B) C) D) P42,000 25,200 16,800 NONE NUMBERS 324 AND 325 ARE BASED ON THE FOLLOWING INFORMATION: ABUNDA SOLD HIS WAREHOUSE BUILDING TO ABELINDE THE PROPERTY WAS ACQUIRED BY HIM IN 2001 FOR P250,000 AT THE TIME OF SALE, ITS ACCUMULATED DEPRECIATION AMOUNT TO P50,000 THE TERMS OF THE SALE ARE AS FOLLOWS: CASH PAID, JUNE 1, 2008 INSTALLMENT, SEPT 1, 2008 INSTALLMENT, DEC 1, 2008 INSTALLMENT, MARCH 1, 2009 INSTALLMENT, JUNE 1, 2009 P50,000 20,000 20,000 155,000 155,000 324 THE INCOME TO BE REPORTED BY ABUNDA IN 2008 ISA) B) C) D) P45,000 90,000 200,000 NONE 325 THE INCOME TO BE REPORTED BY ABUNDA IN 2009 ISA) B) C) D) P200,000 155,000 45,000 NONE 326 JOSEPH SAN JOSE SOLD A COMMERCIAL BUILDING ON OCTOBER 15, 2008 FOR P2,000,000 THE COST OF THE PROPERTY WAS P1,200,000 WHILE THE ACCUMULATED DEPRECIATION WAS P400,000 THE TERMS OF THE SALE WERE: DOWN PAYMENT P300,000 BALANCE IS PAYABLE IN MONTHLY INSTALLMENTS OF P100,000 BEGINNING NOVEMBER 15, 2008 UNTIL FULLY PAID THE INCOME TO BE REPORTED IN 2008 – A) B) C) D) P75,000 300,000 45,000 30,000 SPECIAL TOPIC-FRINGE BENEFIT TAX 327 THE FRINGE BENEFIT TAX IS NOT IMPOSED ONI) RANK AND FILE EMPLOYEE J) SUPERVISORY EMPLOYEE K) MANAGERIAL EMPLOYEE L) ALL EMPLOYEES 328.FRINGE BENEFIT TAX IS IMPOSED ONA) B) C) D) RANK AND FILE EMPLOYEE DE MINIMIS BENEFITS SUPERVISORY AND MANAGERIAL EMPLOYEES FRINGE BENEFITS GRANTED FOR THE CONVENIENCE OF THE EMPLOYER 329 WHICH OF THE FOLLOWING IS SUBJECT TO FRINGE BENEFIT TAX?(RPCPA) A) COMPENSATION OF THE RANK AND FILE EMPLOYEE B) COMPENSATION OF THE SUPERVISORY AND EMPLOYEE C) FRINGE BENEFIT OF THE RANK AND FILE EMPLOYEE D) FRINGE BENEFIT OF THE SUPERVISORY OF EMPLOYEES MANAGERIAL MANAGERIAL 330 THE FOLLOWING EARNINGS ARE SUBJECT TO FRINGE BENEFIT TAX, EXCEPT:-(RPCPA) A) SALARY OF RANK AND FILE EMPLOYEE B) HOUSING NECESSARY FOR THE TRADE AND FOR THE CONVENIENCE OF THE EMPLOYER C) FOOD ALLOWANCE FOR THE CONVENIENCE OF THE EMPLOYER AND NECESSARY IN THE CONDUCT OF THE BUSINESS D) ALL OF THE ABOVE ITEMS 331 AND 332 ARE BASED ON THE FOLLOWING INFORMATION: 331 DITSO IS EMPLOYED BY HOLY CROSS HOSPITAL AS AN AMBULANCE DRIVER WITH A SALARY OF P4,000 A MONTH IN ADDITION, HE IS GIVEN MEALS WITH A MONTHLY VALUE OF P1,500 AND LIVING QUARTERS WITHIN THE HOSPITAL COMPOUND WITH AN EQUIVALENT VALUE OF P1,000 A MONTH THE MONTHLY COMPENSATION INCOME OF DITSO ISA) B) C) D) P6,500 4,000 5,000 5,500 332 IF THE BENEFITS GIVEN TO DITSO IN NUMBER 331 ABOVE IS FURNISHED BY HIS EMPLOYER SO THAT HIS SERVICES COULD EASILY BE AVAILED OF WHENEVER SOME PATIENTS WILL NEED THE URGENT SERVICES OF AN AMBULANCE, HIS MONTHLY COMOENSATION INCOME ISA) B) C) D) P6,500 4,000 5,000 5,500 333 THE FOLLOWING STATEMENTS ARE TRUE, EXCEPT:-(RPCPA) A) FRINGE BENEFIT TAX SHALL BE TREATED AS A FINAL INCOME TAX ON THE EMPLOYEE WITHHELD AND PAID BY THE EMPLOYER ON A QUATERLY BASIS B) THE GROSSED-UP MONETARYVALUE OF THE FRINGE BENEFIT IS THE ACTUAL AMOUNT RECEIVED BY THE EMPLOYEE C) THE GROSSED-UP MONETARY VALUE OF THE FRINGE BENEFIT SHALL BE DETERMINED BY DIVIDING THE MONETARY VALUE OF THE FRINGE BENEFIT BY THE GROSS MONETARY VALUE FACTOR D) THE PERSON LIABLE FOR FRINGE BENEFIT TAX IS THE EMPLOYER, WHETHER HE IS INDIVIDUAL, PROFESSIONAL PARTNERSHIP OR A CORPORATION REGARDLESS OF WHETHER THE CORPORATION IS TAXABLE OR NOT OR THE GOVERNMENT AND ITS INSTRUMENTALITIES 334 STATEMENT 1: A FRINGE BENEFIT THAT IS EXEMPT FROM BENEFIT TAX IS LIKEWISE EXEMPT FROM ANY OTHER FORM OF INCOME TAX STATEMENT 2: ANY AMOUNT GIVEN BY THE EMPLOYER AS DEMINIMIS BENEFITS TO ITS EMPLOYEES, SHALL NOT CONSTITUTE AS DEDUCTION UPON SUCH EMPLOYER A) B) C) D) STATEMENT STATEMENT STATEMENTS AND NEITHER STATEMENTS 335.SARAH BUKAS, MARRIED WITH THREE(3) QUALIFIED DEPENDENT CHILDREN, A REGULAR EMPLOYEE OF CONFEDERATE, INC., RECEIVES ON JULY 6, 2009 P30,000 AS REGULAR MONTHLY SALARY AND HALF OF HIS 13 TH MONTH PAY AMOUNTING TO P15,000 PLUS OTHER BENEFITS SUCH AS RICE ALLOWANCE FOR JULY OF P2,000, INCENTIVE PAY OF P20,000, HAZARD PAY OF P1,000, OVETRTIME PAY OF P4,000 AND NIGHT SHIFT DIFFERENTIAL OF P2,000 COMPUTE THE INCOME SUBJECT TO WITHHOLDING TAX IN JULY A) B) C) D) P57,000 30,000 45,500 72,500 336 MAYAMAN COMPANY OWNS A FLEET OF MOTOR VEHICLES IN 2008, ONE OF THE CARS WHICH WAS ACQUIRED AT A COST OF P400,000 WAS ALLOWED AS SERVICE VEHICLE BY ONE OF ITS OFFICIALS DURING THE YEAR, ITS BOOK VALUE AMOUNTED TO P375,000 HOW MUCH WAS THE FRINGE BENEFIT TAX DUE THEREON? A) B) C) D) P96,969 18,823 17,767 88,235 337 BASED ON THE DATA IN NUMBER 336 ABOVE, SUPPOSE MAYAMAN COMPANY IS JUST LEASING THE CAR THAT IS BEING USED PARTLY FOR PERSONAL AND FOR BUSINESS PURPOSES AND IS PAYINH AN ANNUAL RENTAL OF P100,000 THE ANNUAL FRINGE BENEFIT TAX ISA) B) C) D) P28,229 23,529 73,529 25,760 338 IN MAY 2008, A NON-STOCK, NON-PROFIT UNIVERSITY PROVIDED A 3DAY VACATION TRIP TO BORACAY ISLAND TO THE UNIVERSITY’S EVP THE TOTAL EXPENSES INCURRED BY THE SCHOOL WAS P20,000 THE FRINGE BENEFIT TAX ISA) B) C) D) P6,400 9,412 10,303 NONE ITEMS 339 AND 340 ARE BASED ON THE FOLLOWING DATA: 339 XYZ CORPORATION ASSIGNED MR PASSO ONE OF THE EMPLOYEES IN THE HEAD OFFICE IN MANILA TO MANAGE THEIR BRANCH OFFICE IN DAGUPAN THE COMPANY PROVIDED FOR THE RESIDENTIAL HOUSE OF THE MANAGER PAYING A MONTHLY RENTAL OF P34,000 THE MONTHLY FRINGE BENEFIT TAX THEREON ISA) P16,000 B) 10,880 C) 25,000 D) 8,000 340 BASED ON THE SAME DATA IN NO 339 ABOVE, THE DEDUCTIBLE EXPENSE FROM THE GROSS INCOME OF XYZ CORPORATION ISA) B) C) D) P8,000 25,000 42,000 34,000 NUMBERS 341 AND 342 ARE BASED ON THE FOLLOWING INFORMATION: 341 EXTRA CORPORATION FURNISHED AND GRANTED THE USE OF ITS CONDOMINIUM UNIT TO ITS EVP THE FAIR MARKET VALUE OF THE PROPERTY IS P4,800,000 WHILE THE ACQUISITION COST IS P3,000,000 THE MONTHLY FRINGE BENEFIT TAX DUE ISA) B) C) D) P2,941.18 4,705.88 88,235 58,823.53 342 BASED ON NUMBER 341 ABOVE, THE DEDUCTIBLE EXPENSE FROM THE GROSS INCOME OF EXTRA COPORATION ISA) B) C) D) P14,705.88 4,705.88 12,132.35 2,941.18 343 BRAVO COMPANY PROVIDED FRINGE BENEFIT TO ITS MANAGERIAL EMPLOYEES IN THE AMOUNT OF P136,000 AND TO ITS RANK AND FILE EMPLOYEES AMOUNTING TO P50,000 THE DEDUCTIBLE EXPENSE BY BRAVO COMPANY ISA) B) C) D) P186,000 136,000 50,000 250,000 344 THE CORPORATION GAVE A BRAND NEW CAR TO ITS SALES MANAGER THE FRINGE BENEFIT GIVEN ISA) SUBJECT TO FRINGE BENEFIT TAX BASED ON THE PROVISIONS OF THE TAX CODE B) SUBJECT TO FRINGE BENEFIT TAX BECAUSE IT WAS GIVEN TO A RANK-AND-FILE EMPLOYEE C) EXEMPT FROM THE FRINGE BENEFIT TAX BECAUSE IT IS REQUIRED BY THE NATURE OF OR NECESSARY TO THE TRADE OR BUSINESS OF THE EMPLOYER D) EXEMPT FROM THE FRINGE BENEFIT TAX BECAUSE IT WAS GIVEN FOR THE CONVENIENCE OF THE EMPLOYER 345 FRANCINE CORPORATION GAVE THE FOLLOWING FRINGE BENEFITS TO ITS EMPLOYEES: TO SUPERVISORY EMPLOYEES TO MANAGERIAL EMPLOYEES TO RANK-AND-FILE EMPLOYEES P220,000 120,000 60,000 THE ENTRY TO RECORD THE ABOVE TRANSACTION ISA) FRINGE BENEFITS TAX FRINGE BENEFIT EXPENSE CASH FRINGE BENEFIT TAX PAYABLE B) FRINGE BENEFIT TAX FRINGE BENEFIT TAX PAYABLE 56,471 400,000 400,000 56,471 400,000 400,000 C) FRINGE BENEFITS TAX 560,000 FRINGE BENEFIT TAX PAYABLE 560,000 D) FRINGE BENEFIT TAX EXPENSE 160,000 FRINGE BENEFIT EXPENSE 400,000 CASH 400,000 FRINGE BENEFIT TAX PAYABLE 160,000 346 IVY CORPORATION HAS THE FOLLOWING JOURNAL ENTRY ON FRINGE BENEFITS: FRINGE BENEFITS EXPENSE P186,000 FRINGE BENEFIT TAX EXPENSE 64,000 CASH 186,000 FRINGE BENEFIT TAX PAYABLE 64,000 BASED ON THE ABOVE ACCOUNTING ENTRY, THE AMOUNT OF FRINGE BENEFIT GIVEN TO RANK AND FILE EMPLOYEESA) B) C) D) P64,000 50,000 186,000 250,000 347 ADRIAN, A SUPERVISORY EMPLOYEE OF BOGBOG CORPORATION BORROWED P50,000 FROM THE COMPANY PAYABLE IN FOUR MONTHS THRU SALARY DEDUCTION IF THE CORPORATION IS CHARGING 4% INTEREST PER ANNUM ON THE LOAN, THE FRINGE BENEFIT TAX EXPENSE ISA) P2,000 B) 666.67 C) 627.45 D) 313.73 CHAPTER 2-TAX ADMINISTRATION, FILING AND PAYMENT TAX RETURNS, 348 WHICH OF THE FOLLOWING STATEMENTS IS FALSE? A) INDIVIDUAL TAXPAYERS SHALL FILE THEIR INCOME TAX RETURNS ON OR BEFORE APRIL 15 OF EACH YEAR B) EXTENSION OF TIME FOR FILING INCOME TAX RETURNS MAY BE GRANTED BY THE COMMISSIONER OF INTERNAL REVENUE(CIR) C) SECOND INSTALLMENT IN THE PAYMENT OF INCOME TAX MUST BE PAID ON OR BEFORE JULY 15 OF THE SAME YEAR D) IN PLACES WHERE THERE ARE NO ACCREDITED BANKS, THE RETURN CAN BE FILED WITH THE MUNICIPAL TREASURER WHERE THE PLACE OF BUSINESS IS LOCATED 349 THE INCOME TAX RETURN MUST BE FILED IN-(RPCPA) A) B) C) D) DUPLICATE TRIPLICATE QUADRUPLICATE QUINTUPLICATE 350 ONE OF THE FOLLOWING IS NOT AN ATTACHMENT TO THE INCOME TAX RETURN OF A COMPANY WHOSE GROSS QUARTERLY SALES IS P1,500,000 A) CERTIFIED BALANCE SHEETS B) PROFIT AND LOSS STATEMENTS C) SCHEDULE OF INCOME PRODUCING PROPERTIES D) SUMMARY OF TAXES PAID DURING THE TAXABLE YEAR 351 THE INCOME SUBJECT TO THIS WITHHOLDING TAX IS NOT INCLUDIBLE IN THE COMPUTATION OF TAXABLE INCOMEA) B) C) D) WITHHOLDING TAX ON COMPENSATIONN INCOME CREDITABLE WITHHOLDING TAX FINAL WTHHOLDING TAX ALL OF THE ABOVE 352 WHICH OF THE FOLLOWING INDIVIDUAL TAXPAYERS IS NOT REQUIRED TO FILE AN INCOME TAX RETURN? A) A CITIZEN RECEIVING COMPENSATION AND BUSINESS INCOME B) AN EMPLOYEE WHOSE SALARY GRADE IN THE GOVERNMENT IS C) AN EMPLOYEE RECEIVING PURELY COMPENSATION INCOME FROM TWO EMPLOYERS D) AN INDIVIDUAL RECEIVING PURELY COMPENSATION INCOME FROM ONE EMPLOYER, THE INCOME TAX OF WHICH HAS BEEN WITHHELD CORRECTLY, BUT WHOSE SPOUSE IS REQUIRED TO FILE AN INCOME TAX RETURN 353 ONE OF THE FOLLOWING INDIVIDUALS IS NOT SUBJECT TO WITHHOLDING TAX ON COMPENSATION A) AN INDIVIDUAL WHO DERIVES COMPENSATION FROM TWO OR MORE EMPLOYERS AT ANY TIME DURING THE TAXABLE YEAR B) AN INDIVIDUAL WHO HAS COMPENSATION AND BUSINESS INCOME C) AN INDIVIDUAL WHOSE GROSS INCOME IN A YEAR IS MORE THAN P220,000 D) AN INDIVIDUAL WHOSE MONTHLY GROSS COMPENSATION INCOME IS P8,000 354 THE SIGNATURE OF THE FOLLOWING PERSONS MUST APPEAR IN THE INCOME TAX RETURN OF A CORPORATION, EXCEPT:-(RPCPA) A) B) C) D) PRESIDENT GENERAL MANAGER TREASURER INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT 355 THE BOOKS OF ACCOUNTS OR RECORDS OF THE TAXPAYER MUST NOT BE KEPT IN THE FOLLOWING LANGUAGE- A) B) C) D) FILIPINO CHINESE ENGLISH SPANISH 356 ONE OF THE FOLLOWING IS REQUIRED TO ISSUE RECEIPTS A) THOSE WHOSE SALES ARE VALUED AT P25 OR MORE B) MARKET VENDORS SELLING ECLIUSIVELY VEGETABLES, DOMESTIC MEAT, FRUITS AND OTHER FOOD PRODUCTS C) WHEN THE VALUE OF THE MERCHANDISE SOLD IS P5 D) VENDORS GIVEN EXEMPTION BY THE COMMISSIONER OF INTERNAL REVENUE 357 STATEMENT 1: WHERE DONOR’ S TAX HAS BEEN PAID ON PROPERTY RECEIVED BY A MINOR FROM A LIVING PARENT, INCOME ON SUCH PROPERTY SHALL BE INCLUDED IN THE INCOME TAX RETURN OF THE PARENT STATEMENT 2: THE INCOME TAX RETURN OF A DISABLE PERSON MAY BE MADE BY A PERSON CHARGED WITH THE CARE OF HIS PROPERTY STATEMENT A) TRUE B) FALSE C) FALSE D) TRUE STATEMENT TRUE FALSE TRUE FALSE 358 HOW LONG MUST THE BOOKS OF ACCOUNT BE KEPT? A) UNTIL THE DEADLINE FOR FILING INCOME TAX RETURN B) FROM THE CURRENT TO THE LAST DAY OF THE NEXT TAXABLE YEAR C) FOR A PERIOD BEGINNING FROM THE LAST ENTRY IN EACH BOOK UNTIL THREE YEARS D) FOR A PERIOD BEGINNING FROM THE LAST ENTRY IN EACH BOOK UNTIL THE LAST DAY PRESCRIBED WITHIN WHICH THE COMMISSIONER IS AUTHORIZED TO MAKE AN ASSESSMENT 359 BEAUTY CORPORATION HAD A NET INCOME PER BOOKS ON DECEMBER 31, 2008 OF P220,000 INCLUDED IN THE NET INCOME ARE THE FOLLOWING ITEMS: -DIVIDEND INCOME FROM A DOMESTIC CORPORATION, P50,000 -INTEREST ON BANK DEPOSIT (NET OF TAX), P5,000 AND -PROVISION FOR BAD DEBTS, P35,000 THE TAXABLE INCOME OF THE CORPORATION FOR THE YEAR ENDED DECEMBER 31, 2008A) B) C) D) P130,000 200,000 220,000 165,000 360 THE FOLLLOWING 2009 DATA PERTAINS TO ANALYN COMPANY, A DOMESTIC CORPORATION: NET SALES COST OF GOODS SOLD GROSS PROFIT SUNDRY INCOME GROSS INCOME OPERATING EXPENSES AND OTHER CHARGES NET INCOME PER BOOKS P1,850,000 1,025,000 825,000 70,250 895,250 260,000 635,250 ADDITIONAL INFORMATION: 1.INCLUDED IN THE SUNDRY INCOME ARE THE FOLLOWING: -DIVIDENDS FROM DOMESTIC CORPORATION -DIVIDENDS RECEIVED FROM RESIDENT FOREIGN CORP -PROCEEDS FROM SALE OF COMPANY ASSETS P42,500 15,000 4,750 2.INCLUDED UNDER OPERATING AND OTHER CHARGES: -DONATION TO TYPHOOIN VICTIMS -PROVISION FOR DOUBTFUL ACCOUNTS -LOCAL TAXES AND LICENSES -PREMIUMS PAID ON INSURANCE OF BUILDINGS P12,000 17,500 8,620 4,500 3.THE COMPANY WROTE OFF IN 2008 AGAINST ALLOWANCE FOR BAD DEBTS UNCOLLECTIBLE RECEIVABLES AMOUNTING TO P15,000 WHICH WAS ALLOWED AS DEDUCTION FROM GROSS INCOME THIS AMOUNT WAS RECOVERED IN 2009 IN OCTOBER 2008, ONE OF THE COMNPANY’S BUILDINGS WAS TOTALLLY DESTROYED BY FIRE WHEN THE BOOK.VALUE WAS P260,000 THE LIABILITY OF THE INSURANCE COMPANY WAS SETTLED IN 2009 AND ANALYZE COMPANY WAS PAID P150,000 THE INCOME TAX PAYABLE IN 2009 BY ANALYN CORPORATION ISA) P158,320 B) 184,537.50 C) 35,763.50 D) 158,175 361 THE INCOME TAX RETURN(ITR) OF JANET, SINGLE, FOR TAXABLE YEAR 2009, REPORTED A TAXABLE INCOME OF P520,240 A CAREFUL SCRUTINY REVEALED THAT SOME ITEMS INCLUDED AS INCOME AND EXPENSES ARE THE FOLLOWING: INCOME: COMPENSATION INCOME P180,000 CASH DIVIDEND 122,800 STOCK DIVIDENDS 73,500 PROPERTY DIVIDENDS 27,000 GAMBLING WINNINGS 23,100 DONATION RECEIVED 16,000 GAIN ON SALE OF CAPITAL ASSETS-15 MONTHS 8,000 GAIN ON SALE OF HIS VACANT LOT 120,000 INCOME ON RICE LAND 60,000 TOTAL 630,400 EXPENSES: REAL ESTATE TAX P3,500 COMMUNITY TAX 945 SURCHARGE FOR LATE FILING OF 2008 ITR 12,000 INTEREST ON PERSONAL LOAN 24,000 GAMBLING LOSSES 32,000 PERSONAL AND LIVING EXPENSES 50,000 LOSS ON SALE OF CAPITAL ASSETS-8.5 MONTHS 5,000 LOSS ON CROPS DUE TO FLOOD 27,250 TOTAL 154,695 THE CORRECT AMOUNT OF JANET’S TAXABLE INCOME ISA) B) C) D) P246,940 236,840 66,040 256,840 TRUE OR FALSE QUESTIONS 1.THE BASIC PERSONAL EXEMPTION IS P50,000 REGARDLESS OF WHETHER THE INDIVIDUAL TAXPAYER IS SINGLE, MARRIED OR HEAD OF THE FAMILY 2.A BENEFACTOR OF A SENIOR CITIZEN CAN CLAIM A BASIC PERSONAL EXEMPTION OF P25,000 3.CORPORATIONS ARE ALLOWED DEDUCTION TO CLAIM OPTIONAL STANDARD 4.THE OPTIONAL STANDARD DEDUCTION ON INDIVIDUAL IS 40% OF GROSS INCOME THE MINIMUM CORPORATE INCOME TAX (MCIT) IS 2% OF GROSS INCOME ON SALES A SALE OF SHARES WHICH ARE LISTED AND TRADED THROUGH THE LOCAL STOCK EXCHANGE IS SUBJECT TO INCOME TAX IN COMPUTING THE CAPITAL GAINS OR LOSSES ON A SALE OF SHARES OF STOCK WHICH WERE ACQUIRED THROUGH PURCHASE, THE COST BASIS SHALL BE THE ACTUAL PURCHASE PRICE PLUS ALL COSTS OF ACQUISITION SUCH AS COMMISSIONS, DOCUMENTARY STAMP TAXES, TRANSFER TAXES, ETC THE WASH SALE PROHIBITION DOES NOT APPLY IN THE CASE OF A DEALER IN STOCK IF THE SALE OR OTHER DISPOSITION OF STOCK IS MADE IN THE ORDINARY COURSE OF THE BUSINESS OF SUCH DEALER PERSONS DERIVING CAPITAL GAINS FROM THE SALE OR EXCHANGE OF LISTED SHARES OF STOCK NOT TRADED THROUGH THE LOCAL STOCK EXCHANGE SHALL FILE A RETURN WITHIN 30 DAYS AFTER EACH TRANSACTION 10 THE CEILING OF DE MINIMIS BENEFITS ON RICE ALLOWANCE IS ONE SACK OF 50 KILOGRAMS RICE OR CASH OF P1,200 PER MONTH 11 AN EMPLOYEE IN THE PUBLIC SECTOR RECEIVING COMPENSATION INCOME EQUIVALENT TO SALARY GRADE AND BELOW ARE EXEMPT FROM WITHHOLDING TAX ON WAGES 12 MINIMUM WAGE EARNERS ARE NOT REQUIRED TO FILE AN INCOME TAX RETURN 13 HOLIDAY PAY, OVERTIME PAY, NIGHT SHIFT DIFFERENTIAL PAY AND HAZARD PAY RECEIVED BY AN EMPLOYEE WHO IS RECEIVING A MONTHLY BASIC PAY OF P20,000 ARE EXEMPT FROM INCOME TAX 14 THE COST OF CONSTRUCTION OF ADDITIONAL FACILITIES MAY BE CAPITALIZED OR DEDUCTED AS AN EXPENSE BY A PROPRIETARY EDUCATIONAL INSTITUTION, AT THE OPTION OF THE BIR 15 FOR PURPOSES OF HEALTH AND/OR HOSPITALIZATION INSURANCE, THE TERM “TOTAL FAMILY INCOME” INCLUDES PRIMARY INCOME AND OTHER INCOME FROM SOURCES RECEIVED ALL MEMBERS OF THE NUCLEAR FAMILY, I.E FATHER, MOTHER, UNMARRIED CHILDREN LIVING TOGETHER AS ONE HOUSEHOLD OR A SINGLE PARENT WITH CHILDREN A SINGLE PERSON LIVING ALONE IS CONSIDERED AS A NUCLEAR FAMILY 16 OTHER BENEFITS SUCH AS 13 TH MONTH PAY AND PRODUCTIVITY INCENTIVE PAY ARE NOT INCLUDED IN THE COMPUTATION OF MINIMUM WAGE 17 FRINGE BENEFITS RECEIVED BY MANAGERIAL EMPLOYEES ARE NOT SUBJECT TO INCOME TAX BUT THEY ARE SUBJECT TO FRINGE BENEFIT TAX 18 THERE IS AN INCOME TAX ON A SALE OF A VACANT LOT (CAPITAL ASSET) EVEN IF THERE IS A LOSS ON THE SALE OF THE PROPERTY 19 AS A RULE, STOCK DIVIDENDS ARE SUBJECT TO INCOME TAX 20 EXPENSES FOR THE ORGANIZATION OF CORPORATION SUCH AS INCORPORATION FEES, ATTORNEY’S FEES, AND ACCOUNTANT’S FEES ARE DEDUCTIBLE FROM GROSS INCOME 21 COMPENSATION INCOME EARNERS ARE ALLOWED TO USE FISCAL YEAR AS ACCOUNTING PERIOD 22 VALUE-ADDED TAX IS DEDUCTIBLE FROM GROSS INCOME 23 DEFERRED PAYMENT METHOD OF REPORTING INCOME IN INSTALLMENT IS AVAILABLE TO A TAXPAYER IF THE INITIAL PAYMENTS DO NOT EXCEED 25% OF THE SELLING PRICE 24 PROCEEDS OF LIFE INSURANCE ARE EXEMPT FROM INCOME TAX IF THE DESIGNATED BENEFICIARY IS IRREVOCABLE 25 TAX SPARING CORPORATIONS CREDIT APPLIES ONLY TO RESIDENT FOREIGN