Corporations

A domestic corporation was registered with the BIR in 2018. What year would the first MCIT will be imposed on such corporatio?

2022

As a rule, there is no income tax if there is no income. Which of the following is the exception? A. CGT on Sale of Land/and or building B. CGT on sale of share of stock outside LSE C. Tax on passive income D. regular corporate income tax

A. CGT on Sale of Land/and or building

Which of the following is taxable based on income from all sources, within and without? A. Domestic Corporations B. Resident Foreign Corporations C. Non Resident Foreign Corporations D. All of these

A. Domestic Corporations

Gross income taxation results to: A. Less discretion on the part of tax examiners B. Lower income tax revenues C. More graft and corruptions D. More complicated tax computations

A. Less discretion on the part of tax examiners

Which is not a characteristic of corporate income tax? A. Progressive Tax B. Direct Tax C. General tax D. National Tax

A. Progressive tax

The term "corporation" shall include: I. Partnerships, no matter how created or organized II. Joint Stock Companies III. Joint Accounts (Ceuntas en Participacion) IV. Associations V. Insurance Companies VI. Mutual Fund Companies VII. Regional Operating Headquarters of multinational Corporations

All of the above

Lenovo, Inc., a resident foreign corporation, has earned the following income during the year: DIVIDEND INCOME FROM: - Microsoft, a non-resident foreign corporation, 500,000 - Intel, a resident foreign corporation 400,000 - Panday, a domestic corporation 300,000 INTEREST INCOME FROM: - Current account, BDO 600,000 - Saving deposit, ABN-AMRO bank, UK 700,000 - US Dollar Deposit (FCDU) - BPI Makati 800,000 ROYALTY INCOME from various domestic corporations of 100,000 How much is the total income tax expense of Lenovo?

Answer: 272,000 BASIC TAX: DI-Intel, A FC (400K x 60% x 30%) 72,000 FWT on PASSIVE INCOME Interest Income - BDO @20% 120,000 FCDS Deposit @ 7.5% 60,000 Royalty Income @ 20% 20,000 EQUAL 200,000 BASIC TAX 72,000 FWT on PASSIVE INCOME 200,000 CAPITAL GAINS TAX - EQUAL Total Income Tax Expense 272,000

Lenovo, Inc., a Domestic corporation, has earned the following income during the year: DIVIDEND INCOME FROM: - Microsoft, a non-resident foreign corporation, 500,000 - Intel, a resident foreign corporation (ratio of Philippines income over world income for the past 3 years is 40%) 400,000 - Panday, a domestic corporation 300,000 INTEREST INCOME FROM: - Current account, BDO 600,000 - Saving deposit, ABN-AMRO bank, UK 700,000 -FCDU deposits 800,000 ROYALTY INCOME from various domestic corporations of 100,000 how much is its total income tax expense?

Answer: 740,000 RCIT: DI-Microsoft (500k x 30%) 150,000 DI-Intel (400k x 30%) 120,000 Savings deposit, ABN-AmRO-UK at 30% 210,000 FWT DI-IBM exempt Interest Income - BDO @ 20% 120,000 FCDS deposit at 15% 120,000 Royalty income @20% 20,000 EQUAL Total Income Tax Expense 740,000

In 2018, a domestic corporation declared and paid dividends to its shareholders as follows: To Apol, a resident citizen P100,000 To Alex, a nonresident citizen P100,000 To George, a resident alien 100,000 To LJ, a nonresident alien engaged in trade in the Philippines 100,000 To Francis, a nonresident alien not engaged in trade in the Philippines 100,000 To Chen, a domestic corporation 100,000 To a resident foreign corporation 100,000 To a nonresident foreign corporation (with tax sparing) 100,000 how much final tax shall be withheld by the corporation?

Answer: 90,000 To Apol(100k x 10%) 10,000 To Alex, (100k x 10%) 10,000 To George, (100k x 10%) 10,000 To LJ, (100k x 20%) 20,000 To Francis, (100k x 25%) 25,000 To Chen, exempt To a resident foreign corp, exempt To a nonresident foreign corporation (100k x 15%) 15,000 = Total P90,000

Kris inc. sold its vacant lot to Moca Corp. for 10,000,000 which it acquired at a costs of 5,000,000. the FMV of the said property per tax declaration is 12,000,000, while its zonal value is 15,000,000. How much is the income tax applicable on the transaction?

Answer: 900,000 15M x 6% = 900,000

Lenovo, Inc., a resident corporation, has earned the following income during the year: DIVIDEND INCOME FROM: - Microsoft, a non-resident foreign corporation, 500,000 - Intel, a resident foreign corporation (ratio of Philippines income over world income for the past 3 years is 40%) 400,000 - Panday, a domestic corporation 300,000 INTEREST INCOME FROM: - Current account, BDO 600,000 - Saving deposit, ABN-AMRO bank, UK 700,000 -FCDU deposits 800,000 ROYALTY INCOME from various domestic corporations of 100,000 The total final tax on passive income assuming the taxable year is:

Answer: P200,000 Interest Income - BDO (600k x 20%) 120,000 Interest Income, FCDU Deposits (800K x 7.5%) 60,000 Royalty income from various domestic corporation (100,000 x 20%) 20,000 EQUAL Total Final Taxes on PASSIVE Income: P200,000

During the 2018. a domestic corporation derived the following items of revenues: A. Gross receipts from trading business, P500,000 B. Interest from money placements in the banks, P30,000 C. Dividends from its stock investments in domestic corporations, P20,000 D. Gains from stock transactions through the Philippine Stock Exchange, P50,000 E. Proceeds under an insurance policy on the lost of goods. P100,000 How much should the corporation report as taxable income?

Answer: P500,000

______________________ it includes all organizations which have substantially the salient features of a corporation to be taxable as a "corporation"

Associations

Based on the preceding number, if the buyer of the property is the PH government or one of its owned or controlled corporations, what type of income tax will apply on the transaction? A. Basic income tax B. Capital gains Tax

B. CGT

A domestic proprietary educational institution improved its library facilities by adding a new wing to its old library building. The capital outlay on library improvement, for income tax purposes, may be? A. Deducted at full at the time of completion of the improvement B. Capitalized or expensed outright at the option of the school owners C. Capitalized and depreciated over the estimated life of the improvement D. Capitalized or expensed outright at the option of the Government

B. Capitalized or expensed outright at the option of the school owners

A domestic corporation is generally liable for Minimum Corporate Income Tax. However, the Secretary of Finance may suspend the imposition of MCIT on any corporation which suffers losses on account of any of the following, except: A. Prolonged labor dispute B. Mismanagement C. Force Majeure D. Legitimate business reverses

B. Mismanagement

Which of the following is not a taxable corporation? A. Ana, Lorna and Fe agreed to contribute their money into a common fund to engage in the business of buying and selling consumer goods. their total investment amounted to P300,000 and they did not bother to register their business with the DTI, and the SEC B. Pedro, Juan, and Luna, all certified public accountants, agreed to contribute their money, property and industry to a common fund with the sole intention of jointly exercising their common profession. they have registered with the SEC. C. Victorious Bus Company and California Bus Company owns separate franchises to operate a public utility covering the area of Northern Luzon. To achieve maximum efficiency of utilizing their assets and to avoid the negative effects of competition, the two companies agreed to pool their resources together and operate as a single company. D. Rody and Alla, lawyer and certified public accountants, respectively, agreed to contribute money, property and industry to a common fund to render service of business process outsourcing.

B. Pedro, Juan, and Luna, all certified public accountants, agreed to contribute their money, property and industry to a common fund with the sole intention of jointly exercising their common profession. they have registered with the SEC.

The share of a con-venturer corporation in the net income of a tax exempt joint venture or consortium is : A. Subject to final withholding tax of 20% B. Subject to regular corporate income tax of 30% C. Subject to capital gains tax D. Exempt from income tax

B. Subject to regular corporate income tax of 30%

Statement 1: Corporations exempt from income tax are not subject to income tax on income received which are incidental or necessarily connected with the purpose for which they were organized and operating Statement 2: Corporations exempt from income tax are subject on income of whatever kind and character from any of their properties (real or personal) or from any other activity conducted for profit, regardless of the disposition of such income

Both statements are correct.

One of the following is wrong. Which is it? The gross income tax on corporation is: A. Applicable to domestic corporations B. Applicable to resident corporations C. Applicable to non resident corporations D. May begin only beginning on taxable year 2000

C. Applicable to non resident corporations

One of the following is wrong. Which is it? The gross income tax on corporation is: A. Applicable to domestic corporations B. Applicable to resident corporations C. Applicable to non resident corporations D. May begin only beginning on taxable year 2000.

C. Applicable to non resident corporations

Substantial Losses from a "prolonged labor dispute" mean A. Losses arising from a strike staged by the employees which lasted for more than six (6) months within a taxable period B. The strike resulted to temporary shutdown of business operations C. Both of the above D. None of the above

C. Both of the above

The minimum corporate income tax is imposed on" A. Proprietary Educational Institutions B. General Professional Partnerships C. Business Partnerships D. All of the above

C. Business Partnerships

The following passive income received by a domestic corporation shall be subject 20% final withholding tax, except: A. Interest income from peso bank deposit B. Yield from deposit substitutes C. Dividend income from another domestic Corporation D. Royalties

C. Dividend income from another domestic Corporation

One of the following is exempt from income tax? A. Proprietary educational institutions B. Private cemeteries C. Government Educational Institutions D. Mutual Savings Bank

C. Government Education Institutions

The term applies to a foreign corporation engaged in trade or business in the Philippines A. Resident foreign corporation B. Non Resident Foreign Corporation C. Non Resident Foreign Corporation D. All of these

C. Non Resident Foreign Corporation

Which of the following corporations shall pay a tax equal to 30% of the gross income during taxable year from all sources within the Philippines? A. Domestic Corporations B. Resident Foreign Corporations C. Non Resident Foreign Corporations D. None of these

C. Non Resident Foreign Corporations

Which of the following does not have the benefit of claiming deductions in computing income tax? A. Domestic corporations B. Resident Foreign Corporations C. Non Resident Foreign Corporations D. All of the choices.

C. Non Resident Foreign Corporations

Aside from the ordinary corporate income tax of 30%, what other tax(es) may be imposed on corporations under the Philippine income tax laws? A. Minimum corporate income tax B. Passive Income Tax C. Capital Gains Tax D. All of the above

D. All of the above

Force majeure includes A. A cause due to irresistible force as by "Act of God" B. Lighting, earthquake, storm, flood, and the like C. Armed conflicts like war or insurgency D. All of the above

D. All of the above

The minimum corporate income tax (MCIT) does not apply to a corporation, if A. Imposition was suspended by the secretary of finance due to a corporation's heavy losses arising from prolonged labor dispute B. Corporation is in its initial year of operation C. Corporation is exempt from income tax by virtue of tax holidays granted to it by the Board of Investement D. All of the above

D. All of the above

Which of the following is not treated as corporation? A. GPP B. A joint venture or consortium formed for the purpose of undertaking construction period C. A joint or consortium for engaging in petroleum, coal, geothermal and other energy operations pursuant to an operating consortium agreement under a service contract with the government D. All of the above

D. All of the above

The share of a co-venturer corporation is the net income after tax of a joint venture or consortium taxable as a corporation is A. Subject to Final Withholding tax of 20% B. Subject to Regular Corporate income tax of 30% C. Subject to Capital gains Tax D. Exempt from income tax

D. Exempt from income tax

If the taxpayer is a seller of services, which of the following shall not form part of its cost of services? A. Salaries and supplies B. Employee Benefits C. Depreciation and Rental Expenses D. Interest Expense

D. Interest Expense

Which statement is wrong? The gross income tax? A. Is optional to a qualified corporation B. Available only if ratio of the cost of sales does not exceed fifty-five percent C. The choice shall be irrevocable for three consecutive years that the corporation is qualified under the scheme D. Is always computed to compare with the normal income tax and minimum corporate income tax

D. Is always computed to compare with the normal income tax and minimum corporate income tax

one of the following is not accepted basis for relief from the MCIT: A. Prolonged labor dispute B. Force majeure problems C. Legitimate business reverses D. Law suits filed by the company

D. Law suits filed by the company

Which of the following statements is incorrect? "Joint Stock Companies" are constituted when a group of individuals, acting jointly, establish and operate business enterprise A. Under an artificial name B. With an invested capital dividend into transferable shares C. An elected board of directors, and other corporate characteristics D. Operating with formal government authority

D. Operating with formal government authority

Which of the following is subject to income tax? A. SSS and GSIS B. PHIC C. Local Water Districts D. PAGCOR

D. PAGCOR

Which of the following statements is incorrect? A. Resident foreign corporations are subject to income tax based on net income from sources within the Philippines B. Domestic Corporations are subject to income tax based on net income from all sources. C. Nonresident foreign corporations are subject to income tax based on gross income from sources within the Philippines D. Private educational corporations are subject to income tax based on the net income from the sources within the Philippines at the tax rate of 10%

D. Private educational corporations are subject to income tax based on the net income from the sources within the Philippines at the tax rate of 10%

Interest income received from a depository bank under expanded foreign currency deposit system beginning January 1, 2018 or upon effectivity of the TRAIN law shall be subject to: DC: ___ RFC: ___ NRFC: ____

DC: 15% RFC: 15% NRFC: Exempt

Royalty Income received by a corporation beginning January 1, 2018 or upon effectivity of the TRAIN law shall be subject to: DC: RFC: NRFC

DC: 20% RFC: 20% NRFC: 30%

Royalty income from books received by a corporation beginning January 1, 2018 or upon effectivity of the TRAIN Law shall be subject to: DC: RFC: NRFC:

DC: 20% RFC: 20% NRFC: 30%

Interest income on bank deposit or investment with maturity period of at least five (5) years received by a corporation is subject to: Domestic: ____ Resident Foreign Corporation: ____ Non Resident Foreign Corporation: ____

Domestic: 20% Resident Foreign Corporation: 20% Non Resident Foreign Corporation: 30%

The president upon the recommendation of the secretary of finance may allow corporation the option to be taxed on gross income, provided I. The tax rate rate is 15% II. Available to firms whose ratio of cost of sales to gross sales or receipt from all source does not exceed 55% III. Shall be irrevocable for 3 consecutive years during which the corporation is qualified under the scheme

I, II and III must be complied

Which of the following statements is correct? I. A minimum corporate income tax (MCIT) of 2% of gross income as of the end of the taxable year is imposed upon any domestic corporation beginning the 4th taxable year immediately following the taxable year in which such corporation commenced its business operations II. MCIT shall be imposed whenever such corporation has zero or negative taxable income, or when the amount of MCIT is greater than normal income tax due from such corporation III. The computation and the payment of MCIT. shall likewise apply at the time of filing the quarterly corporate income tax

I, II, III

A "Joint Account" is constituted when one interests himself in the business of another by/and I. Contributing capital thereto II. Sharing in the profits or losses in the proportion agreed upon III. They are not subject to any formality IV. It may be privately contracted orally

I, II, III and IV

Which of the following shall be considered related to income of proprietary education institutions? I. Income from tuition fees and miscellaneous school fees II. Income from hospital where medical graduates are trained from residency III. Income from canteen situated within the school campus IV. Income from bookstore situated within the school campus

I, II, III and IV

which of the following statements is correct? I. The term "domestic", when applied to a corporation, means created or organized in the Philippines or under the laws of a foreign country as long as it maintains a Philippine branch II. A corporation which is not domestic may be a resident (engaged in business in the Philippines) or non resident corporation (not engaged in business in the Philippines) III. Resident foreign corporations are subject to income tax based on net income from sources within the Philippines

II and III only

_____________________ is constituted when one interests himself in the business of another by contributing capital thereto and sharing in the profits and losses in the proportion agreed upon. They are not subject to any formality and may be privately contracted orally or in writing

Joint Account

______________ are constituted when a group of individuals, acting jointly, establish and operate business enterprise under an artificial name, with an invested capital divided into transferable shares, an elected board of directors, and other corporate characteristics but operating without formal government authority.

Joint Stock Companies

The MCIT Shall apply to which of the following resident foreign corporations? I. International Carrier II. Offshore banking units (OBUs) on their income from foreign currency transactions with local commercial banks III. Regional Operating Headquarters

None of the above

Statement 1: Gain on sale of all kinds of capital assets are subject to the final tax on capital gains Statement 2: Gain from sale of real property classified as capital asset and located in Miami, Florida is not subject to the final tax on capital gain

Only Statement 2 is correct

Statement 1: Joint Ventures, regardless of the purpose by they were created, are generally exempt from corporate income tax Statement 2: The share of a co-venturer corporation in the net income of tax exempt joint venture or consortium is subject to corporate income tax

Only Statement 2 is correct

Statement 1: Partnership, no matter how created or organized, are taxable as corporations for income tax purposes Statement 2: Associations and mutual fund companies, for income tax purposes, are excluded in the definition of corporations

Only statement 1 is correct

The 15% gross income tax is applicable to: Proprietary educational institutions: ___ Resident foreign corporations: ___ International carriers where reciprocity is applicable: ___

Proprietary educational institutions: False Resident foreign corporations: True International carriers where reciprocity is applicable: False

Statement 1: Non resident foreign corporation applies to a foreign corporation engaged in trade or business within the Philippines Statement 2: Resident foreign corporation applies to foreign corporation not engaged in trade or business in the Philippines

Statement 1 and 2 are false

Statement 1: Passive income are subject to separate and final tax rates Statement 2: Passive income are included in the computation of taxable net income from business operations of a corporation

Statement 1 is true and Statement 2 is false

If the property is located abroad, what type of income tax will apply on the transaction? A. Basic income tax B. Capital gains Tax

A. Basic Income Tax