QUIZ 7 Flashcards
1
Q
- Capital invested in oil and gas wells or mines may be amortized using this method.
**
- Directly to expense
- All are correct
- Declining- balance method
- Cost-depletion method
- Straight line method
- All are correct
A
- Cost-depletion method
2
Q
- The following taxes are not deductible:
*
- All are correct
- Income tax paid abroad if claimed
- as tax credit
- Estate tax
- Income tax
- All are incorrect
- Donor’s tax
A
- All are correct
3
Q
- It is the excess of actual contributions over the normal cost.*
**
Pension liability
Insurance
Past service cost
Tax
A
Past service cost
4
Q
- 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.
A
- All are correct.
5
Q
- It means the excess of allowable deduction over gross income of the business in a taxable year.
*
Donor’s tax
Net operating loss
Income tax
Salaries
Interest
A
Net operating loss
6
Q
- 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
A
- Claimed as deduction for estate tax purposes
7
Q
- 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.
A
- There must not be legal liability to pay interest;
8
Q
- 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
A
Rentals for the house of the owner
9
Q
- Requisites for deductibility in general includes:
*
- Supported by sufficient evidence
- Must be ordinary and necessary;
- All are incorrect.
- Not against the law, morals, public policy or public applicable.
- Paid or incurred during the taxable year;
- Connected with trade, business or practice of profession;
- All are correct.
A
- All are correct.
10
Q
- 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
A
False
11
Q
- Properties not directly related to production can be depreciated using this method.
*
- All are incorrect.
- Directly to expense
- All are correct.
- Straight line method
- Cost-depletion method
- Declining-balance method
A
- Straight line method
12
Q
- 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
A
Acquisition cost
13
Q
- Worthless securities can be deductible if:
*
- The same is charged off after the taxable year
- Securities are not ascertained to be worthless
- It must be a capital asset
- All are incorrect.
- All are correct.
A
- It must be a capital asset
14
Q
- Bribes, kickbacks and other similar payments are deductible.
True
False
A
False
15
Q
- 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
A
False
16
Q
- Non-resident alien may claim optional standard deduction.*
True
False
A
False
17
Q
- Optional Standard Deduction can be claimed in lieu of itemized deductions.
True
False
A
True
18
Q
- 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
A
False
19
Q
- Domestic corporation may claim optional standard deduction.
*
True
False
A
True
20
Q
- Losses from wagering transactions shall be allowed only to the extent of the gains from such transactions.
True
False
A
True
21
Q
- Pension liability is equivalent to Normal Cost.
True
False
A
True
22
Q
- Interest on tax delinquency or deficiency, provided, the tax is related to trade, business or practice of profession shall be 100% deductible.
True
False
A
True
23
Q
- For properties directly related to production, Useful life to be used is shorter period between 10 years; or its useful life.
True
False
A
True
24
Q
- Proprietary (private) educational institutions may capitalize and claim depreciation as deduction the cost incurred for the expansion of school facilities.
True
False
A
True
25
Q
- Allowance for obsolescence may be deducted in addition to reasonable allowance for the exhaustion, wear and tear.*
True
False
A
True
