PARTNERSHIP, CO-OWNERSHIP, JOINT VENTURE Flashcards
1
Q
- For purposes of taxation, partnership is
I. Classified into two major categories, ordinary partnership (OP) and general professional partnership (GPP)
II. Ordinary partnership is treated as corporate taxpayer
III. General professional partnership is exempt from income tax
a. I, II and III
b. I and II only
c. I and III only
d. I only
A
A
2
Q
- The members of this form of business organization shall be liable for income tax only on their individual capacity, and their share in the profits, whether distributed or otherwise, shall be returned for taxation. This applies to
a. Duly registered general co-partnership
b. Unregistered general co-partnership
c. General professional partnership
d. Joint-stock companies
A
C
3
Q
- Statement 1: A general professional partnership is exempt from income tax, but a partner shall be taxable on his share in the partnership net income, that he should consolidate with his own income from other sources.
Statement 2: A partnership that is not a general professional partnership is taxable as a corporation, and a partner shall report his share in the partnership net income, as dividend income, whether actually received or not.
a. Both statements are correct
b. Both statements are wrong
c. The first statement is correct but the second statement is wrong
d. The first statement is wrong but the second statement is correct
Final answer: C (Statement 2 is incorrect)
Rationale: Dividend income of a partner under ordinary partnership is subject to 10% FWT;
hence, it will not form part of the partner’s personal income tax return (ITR). Since it is subject
to FWT, the partnership will act as a withholding agent and pay the respective liability of the
partner.
A
C
4
Q
- Which of the following statements is false?
a. A partner’s share in the net profits of a general professional partnership is not
compensation income
b. A limited partnership is considered for tax purposes as a corporation, and the partnerships thereof likened to stockholders
c. Tax income taxation rules application to corporations likewise apply to informal
partnerships
d. Registered general professional partnerships are subject to income tax
A
D
5
Q
- Statement 1: 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 in the partnership for a taxable
year after deducting the corresponding corporate tax.
Statement 2: If a taxable partnership sustains net operating loss, the partners shall be entitled to deduct their respective shares in the net operating loss from their individual gross income.
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true
A
B; IF GPP PWEDE IDEDUCT YUNG LOSS
6
Q
- Statement 1: For purposes of computing the distributive share of the partners of a general professional partnership, the net income of the partnership shall be computed in the same manner
as a corporation.
Statement 2: Partners of a taxable partnership are considered as shareholders and profits distributed to them by the partnership are considered as dividends.
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true
A
D
7
Q
- Statement 1: The share of the partner in the gross income of the GPP is added to his own gross income.
Statement 2: The share of the partner in the net income of a GPP is also considered passive income.
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true
A
A; IT SHOULD BE ADDED NET INCOME NOT GROSS
8
Q
- The share of a partner in the profits of a general professional partnership is regarded as received by him and thus taxable although not yet distributed. This principle is known as
a. Advance reporting of income
b. Actual receipt of income
c. Accrual method of accounting
d. Constructive receipt of income
A
D
9
Q
- Statement 1: Under RA10963, an individual partner of a GPP applying optional standard deduction is not allowed for any deduction on his distributive shares.
Statement 2: Under RA10963, an individual partner of a GPP may avail of 8% tax on his distributive share, in lieu of graduated tax rate.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
A
A
10
Q
- If a general professional partnership is on the accrual method of accounting, and a partner, on his own transactions, is on the cash method of accounting, in the partner’s determination of his
taxable income for a year
a. He can consolidate his share in the net income of the partnership, determined by the partnership under the accrual method, with his own income determined under the cash method
b. He must convert his income from the partnership into cash method before consolidating
it with his own income on the cash method
c. He must convert his own income into accrual method before consolidating it with his own
income from the partnership under the accrual method
d. He does not have to report his income from the partnership because the partnership is
exempt from income tax
A
A
11
Q
- A general professional partnership is exempt from income tax, but is required to file an income tax return
a. For statistical purposes
b. Because the net income of the partnership will be traced into the income tax return of the
partners
c. Because all income earners are required to file income tax return
d. None of the above
A
B
12
Q
- It arises when two or more heirs or beneficiaries inherit an undivided property from a decedent, or when a donor makes a gift of an undivided property in favor of two or more donees
a. Partnership
b. Trust
c. Joint account
d. Co-ownership
A
D
13
Q
- 1st Question: Is a co-ownership taxable? No, because the activities of the co-owners are limited to
the preservation of the property and the collection of income therefrom.
2nd Question: is the share of a co-owner in the net income of a co-ownership taxable? Yes, because
each co-owner is taxed individually on his distributive share in the income of the co-ownership.
a. Answers to both questions are correct.
b. Answer to Question 1 is wrong, answer to Question 2 is correct
c. Answer to Question 1 is correct, answer to Question 2 is wrong
d. Answers to both questions are wrong
A
A
14
Q
- Which of the following statements is correct?
a. A joint venture for undertaking construction projects is not taxable as a corporation
b. A consortium for energy operations pursuant to an operation consortium agreement under a service contract with the government is not taxable as a corporation
c. A co-ownership where the activities of the co-owners are limited to the preservation of property and collection of income from the property is not taxable as a corporation
d. All of the above
A
D
15
Q
- 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.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
A
B
