Reviewer (Google Forms Answer Sheet)

2

A business partnership leased a condominium unit in Makati for use as itsoffice. The contract was properly classified as a capital lease. It paidP50,000 monthly to the condominium owner. For income taxation, the monthly payment was: deductible as payment of amortization. not deductible because the taxpayer was taking title and would become the owner of the condominium unit. not deductible because the payment was not reasonable.

3

A taxpayer is engaged in trucking business. He finds it more profitable toviolate the color-coding ordinance and other regulations restricting the use ofmotor vehicles on specified days or hours of the day. He regularly pays thelegal fines. For income taxation, the fines paid are: deductible because they are ordinary and necessary. not deductible because the amount is not specified. not deductible because the allowance thereof frustrates sharply defined public policy.

1

A taxpayer receiving a non-interest-bearing note as compensation shall treat as income the: fair discounted value of the note at that time. maturity value of the note at that time. fair market value of the note at that time.

2

Allowable deductions for mining operation shall not include: mining, milling and marketing expenses. expenditures for the acquisition or improvement of property of a character which is subject to the allowance for depreciation. depreciation of properties directly used in the mining operations.

3

Any amount paid or payable which is otherwise deductible from, or taken into account in computing gross income or for which depreciation or amortization may be permitted, shall be allowed as a deduction only if it is shown that the tax required to be deducted and withheld there from has been: correctly computed in accordance with the provisions of the Tax Code. claimed as deduction by the taxpayer from his gross income. paid to the Bureau of Internal Revenue in accordance with the provisions in the Tax Code.

All

At the election of the taxpayer and in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner, which of the following research and development expenditures may be treated as deferred expenses? Paid or incurred by the taxpayer in connection with his trade, business or profession. Not treated as ordinary and necessary expenses. Chargeable to capital account but not chargeable to property of a character which is subject to depreciation or depletion.

1

In the case of a nonresident alien individual engaged in trade or business in the Philippines or a resident foreign corporation, allowance for depletion of oil and gas wells or mines shall be authorized only in respect to oil and gas wells or mines located: within the Philippines. within and outside the Philippines. outside the Philippines.

2

It refers to the pertinent items of gross income less the deductions and/or personal and additional exemptions, if any, authorized for such types of income by the Tax Code or other special laws. Compensation income Taxable income Business income

1

One of the following is not a distinction between capital and income. Capital is to corporations, income is to individuals. Capital is a tree, income is the fruit. Capital is wealth, income is the service of wealth.

3

One of the following is not a requisite for the deductibility of business expenses. The expenses are directly attributable to the development management, operation and/or conduct of the trade, business or exercise of profession. The expenses are paid or incurred during the taxable year. As long as business related, the expenses do not necessarily have to be substantiated with sufficient evidence, such as official receipts or other adequate records.

None

One of the following is not a requisite for the deductibility of charitable and other contributions: It must not exceed 10% of the individual's taxable income and 5% of the corporation's taxable income before deducting the contributions. It must be made within the taxable year. The contribution must be actually paid or made to the Philippine Government or any political subdivision thereof or to any of the domestic corporations or associations specified in the Tax Code.

3

One of the following is not a requisite of a taxable income. There must be gain. The gain must not be excluded by law from taxation. The gain must be that of resident or nonresident citizen.

3

One of the following is not deductible from the gross income of the employer. Fringe benefits given to rank and file. De minimis benefits given to employees. Cost of advertising to influence legislation.

2

One of the following is not deductible from the gross income. Amounts paid as pensions to retired employees or their families or others dependent upon them, or on account of injuries received by employees and lump-sum amounts paid or accrued as compensation for injuries, not compensated for by insurance or otherwise. Ostensible salary paid by a corporation which is actually a distribution of dividends or part payment for a property. Salaries paid by employers to employees who are absent because they are in the military, naval or other service in the government, but who intend to return at the conclusion of such service.

1

Taxpayers earning compensation income arising from personal services rendered under an employer-employee relationship are allowed to deduct the following except: personal expenses paid or incurred during the year. additional exemption. premium payments on health and/or hospitalization insurance.

3

The amount of any charitable contribution of property other than money shall be based on the: fair market value or acquisition cost of said property, whichever is lower. fair market value of said property. acquisition cost of said property.

3

The following are examples of corporate expenses deductible from gross income, except: premiums on life insurance covering the life of an employee if the beneficiary is the heirs. representation expenses designated to promote business. contribution to drum up business, like contributions of soft drinks to barrio fiesta.

None

The following persons are constituted as withholding agents for purposes of the creditable tax required to be withheld on income payments, except: any juridical person, whether or not engaged in trade or business. all government offices including government-owned or controlled corporations, as well as provincial, city and municipal governments and barangays. an individual, with respect to payments made in connection with his trade or business.

1

To be deductible in full, certain accredited non-government organizations (NGO) or non-profit domestic corporations must meet certain requisites. One of the following is not a requisite: The level of administrative expense, conform with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner, but in no case to exceed forty percent (40%) of the total expenses. Organized and operated exclusively for scientific, research, educational, character building, youth and sports development, health, social welfare, cultural and charitable purposes or a combinations of these purposes. Not later than the 15th day of the third month after the close of the taxable year in which the contributions are received, makes utilization of the contributions directly for the purpose or function for which the organization is organized and operated.

2

Where assessments are made for the purpose of both construction andmaintenance or repairs, the burden is on the taxpayer to show the allocationof the amounts assessed for the different purposes. Which of the followingstatements is correct? If the allocation cannot be made, only the amount assessed for the purpose of constructing local benefits shall be deductible. If the allocation cannot be made, none of the amounts to be paid is deductible. If the allocation cannot be made, only the amount assessed for the purpose of maintenance or repair of local benefits shall be deductible..

All

Which of the following donations shall be deductible in full? Donations to the University of the Philippines and other state colleges and universities Donations to the Cultural Center of the Philippines Donations to The Artesian Well Fund

All

Which of the following expenses shall not be considered entertainment,amusement and recreation expenses? Expenses for bona fide business meeting of stockholders, partners or directors Expenses which are treated as compensation or fringe benefits for services rendered under an employer-employee relationship. Expenses for charitable or fund raising events.

None

Which of the following is not a requisite for the deductibility of entertainment, amusement and recreation expenses during the taxable year? Paid or incurred during the taxable year. Directly connected to the development, management and operation of the trade, business or profession of the taxpayer or related to or in furtherance of the conduct of his trade, business or exercise of a profession. Not contrary to law, morals, public policy or public order.

None

Which of the following is not a requisite for the deductibility of salaries, wages and other forms of compensation including the grossed-up monetary value offering benefit furnished or granted by the employer to the employee? Services are actually rendered Reasonable Withholding tax has been paid

None

Which of the following is not a requisite for the deductibility of the rentalsand/or other payments which are required as a condition for the continueduse or possession of property? Reasonable Incurred or paid for purposes of the trade, business or profession. Taxpayer has not taken or is not taking title

None

Which of the following is not a requisite for the deductibility of travelexpenses, here and abroad? Incurred or paid while away from home. Incurred or paid in the pursuit of trade, business or profession. Reasonable

2

Which of the following shall be deductible in full? Donations made to accredited domestic corporations or associations organized and operated exclusively for religious, charitable, scientific, youth and sports development, cultural or educational purposes or rehabilitation of veterans. Donations to foreign institutions or international organizations in pursuance of or in compliance with agreements, treaties, or commitments entered into by the Government of the Philippines and the foreign institutions or international organizations or in pursuance of special laws. Donations made for the use of the Government of the Philippines or any of its agencies or any political subdivision exclusively for public purpose.

None

Which of the following statements is incorrect? The actual exploration and development expenditures minus twenty-five percent (25%) of the net income from mining shall be carried forward to the succeeding years until fully deducted. The election by the taxpayer to deduct the exploration and development expenditures is irrevocable and shall be binding in succeeding taxable years. The amount deductible for exploration and development expenditures shall not exceed twenty-five percent (25%) of the net income from mining operations computed without the benefit of any tax incentives under existing laws.

3

Who of the following is an employee? Individuals who follow an independent trade, business, or profession, in which they offer their services to the public. An individual who is subject to the control or direction of another with regards to the result to be accomplished by the work but is free as to the means and methods for accomplishing the result. Officers and employees, whether elected or appointed, of the Government of the Philippines, or any political subdivision thereof or any agency or instrumentality.