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Income tax > Identification > Flashcards

Identification Flashcards

1
Q

A legal arrangement in which a trustee manages property for the benefit of a beneficiary.

A

Trust

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2
Q

A tax on the transfer of the estate of a deceased person

A

Estate Tax

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3
Q

The person for whose benefit a trust is created

A

Beneficiary

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4
Q

The person who establishes a trust

A

Trustor/Grantor

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4
Q

A person or corporation that holds in trust an estate for another person.

A

Fiduciary

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5
Q

A trust that can be altered or revoked by the grantor

A

Revocable Trust

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6
Q

The income received by an estate or trust, similar to that of individuals

A

Gross Income

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7
Q

The arrangement created when income from an estate is shared by co-owners not under judicial settlement.

A

Co-ownership

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8
Q

Income held in trust for an unborn or unascertained beneficiary

A

Income Accumulated in Trust

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9
Q

A trust that cannot be changed or canceled, both as to corpus and income

A

Irrevocable Trust

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10
Q

A partnership formed by professionals to practice their common profession, not involved in any trade or business.

A

General Professional Partnership (GPP)

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10
Q

The optional deduction that a GPP can claim, up to 40% of gross income, instead of itemized deductions.

A

Optional Standard Deduction (OSD)

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11
Q

The tax classification of partnerships that operate as corporations, with partners regarded as stockholders.

A

General Co-Partnership (Compania Colectiva)

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12
Q

A legal relationship where partners contribute money, property, or industry to divide profits.

A

Partnership

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13
Q

Income classification for the share received by partners in GPP, taxed at the individual level.

A

Distributive Share

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14
Q

Partners’ deduction method limited to either itemized deductions or OSD, based on the practice of profession.

A

Tax Deduction Choice

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15
Q

A shared ownership that is not subject to income tax unless used for profit-generating activities.

A

Co-Ownership

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16
Q

Document required by GPPs to report income, deductions, and partners’ distributive shares.

A

Annual Information Return

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17
Q

The deduction choice that cannot be further claimed once distributive shares in GPP income are received

A

Itemized Deduction or OSD

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18
Q

Tax classification applied to partnerships involved in profit-based activities, resulting in corporate tax treatment.

A

Corporation

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19
Q

The total compensation received for services performed under an employer-employee relationship.

A

Compensation income

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20
Q

Income derived from the exercise of a profession or trade.

A

Gross income from trade or business

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21
Q

Payments made to the owner of intellectual property for its use.

A

Royalties

22
Q

A share of profits
distributed by a corporation to its shareholders.

A

Dividends

23
Q

Payments received from tenants for the use of property.

A

Rents

24
Q

Earnings from the sale of assets at a higher price than their purchase price.

A

Gains from dealings in property

25
Q

Period during which compensation is ordinarily paid.

A

Payroll period

26
Q

A partner’s share of the net income of a general professional partnership.

A

Partner’s distributive share

27
Q

A payment made periodically to retirees as part of a pension plan.

A

Pensions

28
Q

Interest earned from financial investments.

A

Interest

29
Q

What type of income are tips or gratuities paid directly to an employee?

A

Taxable income but not subject to withholding.

30
Q

Who pays tips directly to employees?

A

Customers.

30
Q

Tips not reported to the employer are considered as _______.

A

Taxable income.

30
Q

What law governs the taxation of tips in the Philippines?

A

National Internal Revenue Code.

31
Q

Define “gratuities” in tax context.

A

Payments from customers as voluntary appreciation of services

32
Q

What type of tax applies to tips not subject to withholding?

A

Income tax.

33
Q

Are tips or gratuities subject to withholding tax if paid directly to an employee?

A

No.

33
Q

What type of income includes tips or gratuities paid directly to an employee by a customer?

A

Taxable income.

34
Q

What is the tax treatment of tips or gratuities not accounted for by the employee to the employer?

A

Considered taxable income but not subject to withholding.

35
Q

Is a service charge automatically included in the computation of tips or gratuities?

A

No.

35
Q

A monetary gift voluntarily given by a customer to an employee.

A

Gratuity

36
Q

What is the basis of taxation for tips in the Philippines?

A

Taxable income but not subject to withholding.

37
Q

Are tips required to be declared in the employee’s income tax return?

A

Yes.

37
Q

Can gratuities be considered part of regular compensation?

A

No.

38
Q

Who pays withholding tax on gratuities?

A

Not applicable (not subject to withholding tax).

39
Q

The final tax rate imposed on dividends distributed to resident citizens, non-resident citizens, and resident aliens.

A

(10% final tax)

39
Q

What documentation is required to account for employer-paid tips?

A

None, if tips are directly paid by customers.

40
Q

The tax rate for dividends received by a non-resident alien not engaged in business in the Philippines.

A

(25% final tax)

41
Q

The tax rate applied to dividends distributed to a domestic corporation.

A

(Income tax exempt)

42
Q

The law that governs the reduced tax rate for Non-Resident Foreign Corporations (NRFC) under specific conditions.

A

(CREATE Act)

43
Q

The condition where a non-taxable stock dividend does not alter a stockholder’s proportionate interest in a corporation’s net assets.

A

(Non-taxable stock dividend)

44
Q

The portion of an annuity payment that is taxable.

A

The portion representing interest

45
Q

The final tax rate imposed on PCSO winnings exceeding PHP 10,000.

A

20% final tax

45
Q
  1. The location of income for dividends received from a domestic corporation.
A

Within the Philippines

46
Q

Tax refunds that are not considered taxable income.

A

Philippine income tax

46
Q

The final tax rate applied to prizes and winnings from commercial contests if the amount is above PHP 10,000.

A

20% final tax

Income tax (2 decks)

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