Quiz 4

Question 1

1.The following taxes are not deductible:

A. Donor’s tax
B. Estate tax
C. All are incorrect.
D. Income tax
E. Income tax paid abroad if claimed as tax credit
F. All are correct.

Answer 1

F. All are correct.

Question 2

2. Properties not directly related to production can be depreciated using this method.

*
Cost-depletion method
Declining-balance method
Directly to expense
All are correct.
Straight line method
All are incorrect.

Answer 2

Straight line method

Question 3

3. It is the excess of actual contributions over the normal cost.

*
Pension liability
Insurance
Past service cost
tax

Answer 3

Past service cost

Question 4

4. It means the excess of allowable deduction over gross income of the business in a taxable year.

*
Income tax
Net operating loss
Salaries
Donor’s tax
Interest

Answer 4

Net operating loss

Question 5

5. Worthless securities can be deductible if

*
-The same is charged off after
the taxable year
- All are correct.
- Securities are not ascertained
to be worthless
- All are incorrect.
- It must be a capital asset

Answer 5

It must be a capital asset

Question 6

6. The taxes paid or incurred within the taxable year in connection with the taxpayer’s profession, trade or business, shall not be allowed as deduction.

True
False

Answer 6

False

Question 7

7. The amount of any charitable contribution of property other than money shall be based
   on the ___________.

*
Acquisition cost
Market value
Any of the choices
None of the choices

Answer 7

Acquisition cost

Question 8

8. Requisites for deductibility in general includes:

**

• Supported by sufficient evidence
• All are correct.
• Paid or incurred during the taxable year;
• Connected with trade, business or practice of profession;
• All are incorrect.
• Not against the law, morals, public policy or public applicable.
• Must be ordinary and necessary;

Answer 8

All are correct.

Question 9

9. Requisites for interest does not include:

• There must be an indebtedness
• The indebtedness must be that of
  the taxpayer
• There must not be legal liability to
  pay interest;
• It must be paid or incurred during
  the taxable year.

Answer 9

• There must not be legal liability to
  pay interest;

Question 10

10. Non-deductible items include:

**
- Personal, living or family expenses

-Any amount paid out for new buildings or for permanent improvements, or betterments made to increase the value of any property or estate

-Interest between family members

• All are incorrect.
• All are correct.

Answer 10

• All are correct.

Question 11

11. Capital invested in oil and gas wells or mines may be amortized using this method.

*
- Straight line method

• All are incorrect.
• Declining-balance method
• All are correct.
• Directly to expense
• Cost-depletion method

Answer 11

• Cost-depletion method

Question 12

12. Requisites for casualty losses does not include:

• Actually sustained during the taxable year

-Incurred in trade, profession or business

-Claimed as deduction for estate tax purposes

-Not compensated for by insurance or other forms of indemnity

Answer 12

-Claimed as deduction for estate tax purposes

Question 13

13. Ordinary and necessary trade, business or professional expenses excludes:

*
- Salaries and wages paid to the employee

• Travel expenses for business trips
• Rentals for the house of the owner
• Other necessary business expenses

Answer 13

• Rentals for the house of the owner

Question 14

14. Proprietary (private) educational institutions may capitalize and claim depreciation as deduction the cost incurred for the expansion of school facilities.

True
False

Answer 14

True

Question 15

15. Pension liability is equivalent to Normal Cost.True
    False

Answer 15

False

Present value of a future pension

Question 16

16. Losses from wagering transactions shall be allowed only to the extent of the gains from such transactions.

*
True
False

Answer 16

True

Question 17

17. Interest on tax delinquency or deficiency, provided, the tax is related to trade, business or practice of profession shall be 100% deductible.

*
True
False

Answer 17

True

Question 18

18. Allowance for obsolescence may be deducted in addition to reasonable allowance for the exhaustion, wear and tear.

*
True
False

Answer 18

True

Question 19

19. Domestic corporation may claim optional standard deduction.

*
True
False

Answer 19

True

Question 20

20. Non-resident alien may claim optional standard deduction.

*
True
False

Answer 20

False

*not eligible to claim the standard deduction

Question 21

21. For properties directly related to production, Useful life to be used is shorter period between 10 years; or its useful life.

*
True
False

Answer 21

True

Question 22

22. All donations to the government of the Philippines or to any of its agencies or political subdivisions can be deducted in full amount.

*
True
False

Answer 22

False

**Cannot be

Question 23

23. Bribes, kickbacks and other similar payments are deductible.

*
True
False

Answer 23

False

Question 24

24. Optional Standard Deduction can be claimed in lieu of itemized deductions.

*
True
False

Answer 24

True

Question 25

25. The amount deductible for entertainment, amusement and recreation expense should be higher amount between actual and limit depending on the nature of the business.

*
True
False

Answer 25

False