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INCOME TAXATION > CHAPTER 4-6 > Flashcards

CHAPTER 4-6 Flashcards

1
Q

True or False:

If the operations of a corporation result in a net loss, it will subject to the NIT.

A

False, It is subjected to MCIT

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2
Q

It can become subject to the MCIT at the rate of 2% of gross income, beginning on the 4th taxable year

A

Corporation

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3
Q

It is imposed upon any domestic corporation beginning the 4th taxable year

A

MCIT

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4
Q

shall mean the income tax rates prescribed under sections 27 (A) and 28(A)(1) of the code.

A

Normal Income Tax

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5
Q

It shall include only sales contributory to income taxable under section 27(A) of the Code

A

Gross Sales

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6
Q

shall include the purchase price or cost to produce the merchandise and all expenses directly incurred to bring them to their present location and use.

A

Cost of Goods Sold

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7
Q

It means amounts actually or constructively received during the taxable year

A

Gross Receipts

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8
Q

It means all direct costs and expenses necessarily incurred to provide the services required by the customers and clients

A

Cost of Services

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9
Q

It means losses arising from a strike staged by the employees which lasted for more than 6 months within a taxable period and which has caused the temporary shutdown of business operations

A

Substantial losses from a prolonged labor dispute

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10
Q

A cause due to an irresistible force as by ‘Act of God’ like lightning, earthquake, storm, flood and the like.

A

Force Majeure

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11
Q

It include substantial losses sustained due to fire robbery, theft or embezzlement, or for other economic reason as determined by the Secretary of Finance

A

Legitimate business reverses

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12
Q

Any amount paid as excess MCIT shall be recorded in the corporation’s books as an asset under account title ____?

A

Deferred Charges-MCIT

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13
Q

This asset account shall be carried forward and may be credited against the NIT due for a period not exceeding 3 taxable years immediately succeeding the taxable year/s in which the same has been paid

A

Deferred Charges-MCIT

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14
Q

True or False:

If in the computation of the annual income tax due, the computed annual MCIT due appears to be lower than the annual NIT due, what may be credited against the annual MCIT due shall only be the quarterly MCIT payments of the current taxable quarters, the quarterly NIT payments the quarters in the quarters of the current taxable year, the expanded withholding taxes in the current year and excess expanded withholding taxes in the prior year.

A

False, the annual MCIT should be higher than the annual NIT due

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15
Q

True or False:

The minimum corporate income tax shall apply only to domestic corporations subject to the normal corporation income tax.

A

True

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16
Q

True or False:

Non-Resident Foreign Corporations are not subject to MCIT.

A

True

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17
Q

Which of the following may not be deducted from gross receipts to arrive at gross income for purposes of computing the MCIT of a taxpayer engaged in the sale of services under the cash basis?

a. Sales discount
b. Cost of Services
c. Sales returns and allowances
d. None of the above

A

b. Cost of Services

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18
Q

The minimum corporate income tax of a domestic or resident trading or manufacturing corporation is

a. 1% of gross income [July 1,2020 to June 30,2023]
b. 2% of gross sales [July 1,2023]
c. 15% of gross income
d. 15% of gross sales

A

a. 1% of Gross Income [July 1. 2020 to June 30,2023]

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19
Q

The term “normal income tax” shall mean the income tax rates prescribed

a. under Section 27(A) of the Code
b. under Section 28(A) (1) of the Code
c. at 25% effectively July 1, 2020
d. all of the above

A

a. under Section 27(A) of the Code

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20
Q

Legitimate business reverses shall include substantial losses sustained

a. due to fire, robbery, theft or embezzlement
b. for other economic reasons as determined by the Secretary of Finance
c. both of the above
d. none of the above

A

c. both of the above

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21
Q

Which of the following may not be deducted from gross receipts to arrive at gross income for purposes of computing the MCIT of a taxpayer engaged in the sale of services under the accrual basis?

a. Sales discount
b. COGS
c. Sales returns and allowances
d. All of the above

A

b. COGS

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22
Q

The MCIT shall not apply to which of the following resident foreign corporations?

a. Regional Operating Headquarters (before Jan. 1,2022)
b. International Carrier
c. Firms that are taxed under a special income tax regime
d. OBUs on their income from foreign currency transactions with local commercial banks
e. All of the above
f. None of the above

A

e. All of the above

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23
Q

It refers to all the properties, rights and obligations of a person which are not extinguished by his death and also those which have accrued thereto since the opening of the succession

A

Estate or Inheritance

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24
Q

It is an agreement created by will or an agreement under which title to property is passed to another for conservations or investment with the income therefrom and ultimately the corpus or principal to be distributed in accordance with the directives of the creator as expressed in the governing instrumen

A

Trust

25
Q

It is the person who establishes a trust

A

Trustor or Grantor

26
Q

It is the person for whose benefit the trust has been created.

A

Beneficiary

27
Q

It is any corporation that holds in trust an estate of another person(s).

A

Fiduciary

28
Q

True or False:

When an individual is alive, income on his or her property is taxed to that individual.

A

True

29
Q

True or False:

When the individual dies, future income on that property still be taxed to that individual.

A

False, it will be taxed to those who inherit the property.

30
Q

True or False:

Income on property is taxable to the heirs only after they receive the property

A

True

31
Q

Who is taxed on income realized from the decedent’s property during the time lag between the time a person dies and when final settlement of the estate?

A

The Estate itself is taxed

32
Q

Are legal entities that exist for the purpose of managing and distributing the deceased person’s property to the heirs

A

Estate

33
Q

Are estates of deceased persons under judicial settlement

A

Taxable estates

34
Q

True or False:

Taxation of an estate begins from the time of death

A

True

35
Q

It is a unique form of legal entity

A

Trust

36
Q

True or False:

For a trust to be taxable then it must be revocable.

A

False, it must be irrevocable

37
Q

True or False:

In a revocable trust the trust itself is subject to income tax.

A

False, the grantor is the one who is taxable

38
Q

True or False:

The income of trust or estate may be deductible from gross income

A

True

39
Q

True or False:

The items of gross income of estates and trusts are different from the gross income of individuals as provided in the Tax Code.

A

False, same

40
Q

True or False:

The income tax rates for corporate taxpayers apply to taxable estates and trusts

A

True

41
Q

True or False:

Income received by estates of deceased persons during the period of administration or settlement of the estate, and income which, in the discretion of the fiduciary, may be either distributed to the beneficiaries or accumumulated, are taxable to the fiduciary

A

True

42
Q

True or False:

The taxable year of estates and trust shall be the fiscal year.

A

False, it shall be the calendar year

43
Q

True or False:

Estates and trust are required to file a declaration of estimated income for the current taxable year on or before Dec. 31 of the same taxable year

A

False, on or before April 15

44
Q

True or False:

The taxable income of an estate or trust shall be computed in the same manner and on the same basis as in the case of a corporation

A

True

45
Q

One formed by persons for the sole purpose of exercising their common profession, no part of the income of which is derived from engaging in any trade or business

A

General Professional Partnership

46
Q

A general partnership which is not a general professional partnership

A

General co-partnership (Compania Colectiva)

47
Q

Shall not be subject to the income tax but is required to file annual income tax return/annual information return for the purpose of furnishing information as to the items of gross income.

A

General Professional Partnership

48
Q

In a GPP, shall be liable for income tax in their separate and individual capacities.

A

Partners

49
Q

True or False:

A GPP may avail of the OSD multiple times, both by the GPP and the partners comprising the partnership.

A

False

50
Q

True or False:

Pursuant to Sec. 26 of the Tax Code, GPP is not subject to income tax

A

True

51
Q

It is only an acting as a “pass-through” entity where its income is ultimately taxed to the partners comprising it.

A

GPP

52
Q

True or False:

Partnership (other than GPPs), whether registered or not, are considered as corporations and are therefore taxed as corporations.

A

True

53
Q

They are considered are stockholders

A

Partners

54
Q

What are the profits distributed to partners by a partnership considered as?

A

Dividends

55
Q

True or False:

A co-ownership shall not be subject to income tax if the activities of the co-owners are limited to the preservation of the property and the collection of the income therefro.

A

True

56
Q

True or False:

If a taxable partnership sustains a net operating loss, the partners shall be entitled to deduct their respective shares in the net operating loss from their individual gross income

A

True

57
Q

True or FalseL

The share of an individual partner in a taxable partnership is subject to a final tax of 6% to be increased to 8% in 1999 and 10% in 2000.

A

True

58
Q

True or False:

The distributive share of a partner in the net income of a taxable partnership is equal to each partner’s distributive share of the net income declared by the partnership for a taxable year before deducting the corresponding corporate income tax.

A

False, it is after.

59
Q

A General Professional Partnership (GPP)

a. may claim simultaneously the itemized deductions and Optional Standard Deduction
b. may claim the itemized deduction
c. may avail of the Optional Standard Deduction
d. either of b or c
e. neither of b or c.

A

a. may claim simultaneously the itemized deductions and Optional Standard Deduction

INCOME TAXATION (9 decks)

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