Regular income tax

Question 1

Regular Corporate Income Tax

Answer 1

30% on taxable income

Question 2

What are the exclusions from gross income?

Answer 2

Premium gift of life treaty injuries pensions misc

Misc items
Inc of foreign gov’t, gov’t, prizes for some awards (no effort or sports competition accredited), mandatory contrib to SSS GSIS Philhealth pagibig union dues, 13th month pay and other benefits not exceeding 90K, gains from sale of bonds maturity is more than 5 yrs, gains from redemption of shares in mutual fund

Question 3

Requisites for exemption of retirement benefit

Answer 3

1. In the service for at least 10 yrs.
2. At least 50 yrs. old
3. First time availment

Question 4

PEZA and TIEZA registered is subject to

Answer 4

5% Gross Income Tax

Question 5

Gains from dealings in properties treatment

Answer 5

Ordinary gain = + to GI
Ordinary loss = - to GI
Net capital gain from other capital assets = + to GI
Net capital loss from other capital assets = not an item of deduction against GI

Question 6

Stock dividends rate

Answer 6

Exempt

Question 7

Most universal rule of taxation

Answer 7

CGT tax on sale of stocks directly to buyer, applied to all taxpayers regardless of classification

Question 8

Holding period rule for capital asset held by individual for not more than 1 year (short term)

Answer 8

100% of capital gain or loss is recognized

Question 9

Holding period for capital asset held by individual for more than 1 year (long term)

Answer 9

50% of capital gain or loss is recognized

Question 10

Real and other properties acquired by banks are considered

Answer 10

Ordinary assets

Question 11

Limit for net capital loss carry over

Answer 11

Limit 1: net income before dealings in capital assets in the year the net capital loss was sustained

Limit 2: The available net capital gain in the following year

Question 12

Net capital loss carry over can only be availed for a period of? And who can avail?

Answer 12

One year only and applicable only to individual taxpayers

Question 13

Holding period rule for capital asset held by corporation for not more than 1 year (short term)? For more than 1 year (long term)?

Answer 13

Regardless of the term, 100% of capital gain or loss is recognized

Question 14

The following contributions are fully deductible

Answer 14

PTA

1. Donation to gov’t for Priority activities
2. Donation to foreign org in compliance with Treaties
3. Donation to Accredited domestic non gov’t org

Question 15

Contributions to accredited NGOs can be fully deductible as long as the NGO makes utilization of contrib (period)

Answer 15

Not later than the 15th day of 3rd month after close of its taxable period

Admin exp of NGO should also not exceed 30% of total exp

Question 16

For contributions subject to limit

Limit for individuals and corp

Answer 16

10% - Individuals
5% - Corporations

Based on taxable income derived from trade, business or profession before deduction of any contributions

So BUSINESS net inc only

Question 17

Rules in deductibility of pension expense
For contribution for current service cost
For contribution for past service cost

Answer 17

For contribution for current service cost - deductible in full
For contribution for past service cost - amortized over 10 yrs

Question 18

Ceiling on deduction for entertainment, amusement and recreation expense

Answer 18

For taxpayers engaged in
~ sale of goods or prop = 0.5% of net sales
~ sale of services = 1% of net revenues

Question 19

Ordinary Standard Deduction rate and base

Answer 19

40%

Individuals - 40% of gross sales or receipt

Corporation - 40% of gross income

The tax concept of “gross sales” is the accounting concept of “net sales”
(Sales + other taxable inc from OPERATION not subj to final tax) x 40%

Gross Income : Sales - COGS + other taxable inc not subj to final tax

Question 20

Ordinary Standard Deduction replaces cost of sales. yes or no?

Answer 20

Yes for individual
No for corporation

Corporations can claim cost of sales or cost of services while individuals cannot under OSD

Question 21

Optional gross receipts tax

Answer 21

8% of gross sales/receipts plus non-operating income