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TAXATION
FINAL INCOME TAXATION
Exception Tests:
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Driven for real excellence! Tax by Rex B. Banggawan, CPA, MBA Tax 5 Batch HQ04
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Northern CPAR: Taxation II Final Income Tax
taxpayer
Necessity for a consolidated None Required
return
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Driven for real excellence! Tax by Rex B. Banggawan, CPA, MBA Tax 5 Batch HQ04
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Northern CPAR: Taxation II Final Income Tax
10.The prizes on the following award or competition is generally taxable
a. Prize in a chess competition sponsored by an organization sanctioned by the
Philippine Olympic Committee.
b. Most Charitable Person of the Year
c. Nobel Prize Winner
d. Pageant competition
11.Interest income from foreign currency deposits made abroad by a resident citizen is
subject to
a. 20% final tax b. 7 % final tax c. 4 % final tax d. regular tax
12.Royalties on musical composition is subject to
a. 20% final tax b. 10% final tax c. 0% final tax d.
regular tax
13.The interest income on long-term deposit that is pre-terminated on the third year is
subject to
a. 0% b. 12% c. 20% d. 5%
14.Armando is a partner in a business partnership. At the end of 2010, he has a total of
P300,000 profit sharing on the after tax income of the partnership inclusive of
P120,000 salaries as a managing partner. Compute the amount final tax to be withheld
from Armandos profit sharing.
a. P12,000 c. P30,000
b. P18,000 d. P 0
15.Assuming the same information above except that the partnership is a general
professional partnership, compute the final tax to be withheld? ______
16.Final taxes are generally withheld at source and does not require an income tax
return, which is an exception
a. Final tax on interest income from deposit
b. Final tax on royalties
c. Final tax on capital gain on sale of domestic shares of stock directly to buyer
d. Final tax on dividends
17.Which of the following is not subject to 20% final tax?
a. Interest income on long-term deposit of domestic corporation
b. Interest income on foreign loans
c. Interest income from money market placements or trust funds
d. Lotto winnings
18.Compute the total amount of income subject to final tax.
Yield from deposit substitute P
10,000
Interest income from bonds of a domestic 23,000
corporation
Property dividend declared by a foreign 40,000
corporation
Stock dividend declared by a domestic 50,000
corporation
Compensation income, net of P10,000 80,000
withholding tax
Prize on Search for Mr. Sexy Body 15,000
Royalties from books 24,000
Interest income on personal loans granted 8,000
to a friend
Salaries from a general professional 30,000
partnership
Salaries from a business partnership 20,000
a. P89,000 b. P99,000 c. P49,000 d. P69,000
19.Determine the total amount of income tax withheld if the taxpayer received the
following passive income during the year:
Interest on Peso bank deposit P
90,000
Royalties 36,000
Dividends 63,000
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Driven for real excellence! Tax by Rex B. Banggawan, CPA, MBA Tax 5 Batch HQ04
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Northern CPAR: Taxation II Final Income Tax
Share in the distributive income of a 72,000
joint venture
a. P46,000 b. P53,000 c. P38,700 d. P46,500
20.On January 1, 2008, Kevin purchased 1,000 P1,000 face value bonds of a domestic
corporation at face value. The bonds were dated January 1, 2007 and mature on
January 1, 2011. The bonds pay 12% annual interest every January 1. If Kevin
disposed of this investment directly to buyer on December 31, 2008 at 102, how much
is the total final tax due?
a. P24,000 b. P25,000 c. P1,000 d. P0
21.On January 1, 2005, Helen invested P1,000,000 to RCBC Commercial Banks 5-year,
tax-free time deposit. The long-term deposit pays 15% annual interest every January
1. In need of cash, Helen pre-terminated her investment on July 1, 2008. How much is
the final tax due and the proceeds of Helens investment?
a. P9,000; P1,066,000 c. P18,750; P1,056,250
b. P63,000; P1,012,000 d. P30,000; P1,345,000
22.How much final tax is withheld in the interest income paid by the bank on January 1,
2006?
a. P0 b. P18,000 c. P30,000 d. P7,500
23.Assuming the same information in the problem above, except that the investment was
made by a domestic corporation, how much final tax is withheld in the year of pre-
termination and the proceeds to the corporation?
a. P15,000; P1,060,000 c. P18,750; P1,056,250
b. P45,000; P1,030,000 d. P30,000; P1,345,000
20.Benito Mojica invested in an 8-year long-term deposit in Rizal Commercial Banking
Corporation amounting to P2,000,000 paying 10% interest semi-annually. How much
is the final tax to be withheld by Rizal Commercial Banking Corporation if Benito
Mojica pre-terminated his investment at the just after the end of the third year?
a. P0 c. P30,000
b. P72,000 d. P120,000
21.What if Benito Mojica pre-terminates it just after the end of the fifth year?
a. P0 c. P50,000
b. P72,000 d. P200,000
22.Benedict rendered advisory services to Alexander in connection with the latters tax
compliance from May 2, to July 2, 2006. In July 2, 2006, Alexander paid him a note
with a face value of P100,000 payable a year after. The same note could be discounted
at the bank for 15% at the time of receipt. How much compensation income and
interest income is to be included in gross income?
a. P85,000; P0 c. P85,000; P7,500
b. P100,000; P15,000 d. P100,000; P0
23.Andromeda, a non-resident alien, rendered professional services to Philippine
company, a domestic corporation. The total consultancy fees agreed were P1,000,000.
How much should Philippine company withhold?
a. P100,000 b. P200,000 c. P250,000 d. P 0
24.Andromeda, a non-resident alien, invests in the 60-day Peso time deposit of Metro
Pilipino Bank. Andromeda earned P100,000 interest income. How much final tax
should Metro Pilipino Bank withhold?
a. P 0 b. P20,000 c. P25,000 d. P 30,000
25.Assuming the same information in the preceding problem except that Andromeda is a
non-resident corporation. How much final tax is to be withheld?
a. P 0 b. P20,000 c. P25,000 d. P 30,000
27.Sunrise Bank, a non-resident foreign bank, has substantial foreign currency deposit at
the FCDU unit of Banco Italiano, a resident foreign bank, totaling $5,000,000. Total
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Driven for real excellence! Tax by Rex B. Banggawan, CPA, MBA Tax 5 Batch HQ04
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Northern CPAR: Taxation II Final Income Tax
interest credited to Sunrise Bank was $600,000 equivalent to P28,800,000 at the time
of payment. How much is the final tax on the interest received by Sunrise Bank?
a. P10,080,000 b. P5,760,000 c. P2,880,000 d. Exempt
28.The Gambling World, Inc. a foreign corporation, Inc. has been trying its luck with the
Philippine Charity Sweepstakes lotto. It spent P800,000 for losing PCSO lotto tickets.
Luckily, one ticket costing P10 won the P218,000,000 Superlotto 6/49 draw on July 24,
2007. How much is the deductible expense and the taxable amount of winnings?
a. P10; P47,999,990 c. P800,000; P0
b. P800,000; P47,999,990 d. P0; P0
30.The system of tax compliance wherein the employees does not have to make
computations nor file an income tax return at the end of the year
a. Final withholding tax scheme c. Substituted Filing of Tax Returns
b. Creditable withholding tax scheme d. Self-Assessment Method
31.The substituted Filing of Tax Return is applicable where (choose the exception)
a. The employee earns pure compensation income
b. The employee has only one employer
c. The tax withheld by the employer is correct
d. The employee is also engaged in the exercise of a profession
32.Creditable withholding tax rates shall not be less than ____ but not more than ____
a. 5%; 20% c. 1%; 32%
b. 1%; 20% d. 2%; 15%
35.The return for final withholding tax by withholding agent shall be filed not later than
a. 20 days from the close of each calendar quarter
b. 25 days from the close of each calendar quarter
c. 23 days from the close of each calendar quarter
d. 60 days from the close of each calendar quarter
36.The return for creditable withholding tax by withholding agent shall be filed not later
than
a. the first day of the month following the close of the quarter during which
withholding was made
b. the 15th day of the month following the close of the quarter during which
withholding was made
c. the 25th day of the month following the close of the quarter during which
withholding was made
d. the last day of the month following the close of the quarter during which
withholding was made
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Driven for real excellence! Tax by Rex B. Banggawan, CPA, MBA Tax 5 Batch HQ04
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