The taxpayer is a resident citizen, married, with gross income from business of P500,000, business expenses with supporting receipts of P40,000 and premiums on health insurance of P3,000

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The taxpayer is a resident citizen, married, with gross income from business of P500,000, business expenses with supporting receipts of P40,000 and premiums on health insurance of P3,000.

 

1. In choosing the itemized deductions of gross income, the taxable income is

a. P460,000                b.  P457,000                c. P300,000                 d.  Some other amount

 

2. If the taxpayer choose the optional standard deduction, the taxable income is

a.  P460,000                b.  P457,000                c. P300,000                 d.  Some other amount

 

 

Optional Standard Deduction.  The taxpayer is a married resident citizen with the following data in 2020:

 

            Revenues from services                                              P300,000

            Capital gain on sale of asset held for 2 years                  10,000

            Dividend from resident corporation                               15,000

            Direct costs of the services                                             22,000

            Capital loss on sale of asset held for 6 months                 5,000

 

3. In choosing the optional standard deduction, the taxable income is

a. P288,000                b.  P256,000                c.  P246,000                d. Some other amount

 

Capital Expenditure.  A store building was constructed on January 2, 2010 with a cost of P570,000, Its estimated useful life is 16 years with scrap value of P70,000 after 16 years.  In January 2015 replacement of some worn-out parts of the building costing P50,000 was spent.  After the repairs, the building was appraised with a fair market value of P770,000.

 

4. The allowable deduction for depreciation for the year 2015 assuming the straight-line method is used is

a. P35,795                  b.  P43,750                  c.  P49,432                  d.  P31,250

 

 

Overseas Filipino Worker

 

Fely, a caregiver, is under a three-year employment contract with a hospital in New Zealand.  Her husband, Peter and a minor child live in the Philippines.  In 2019, he earned P80,000 (converted) a month.

 

5. For the annual income of P960,000, Fely shall pay income tax

a. for the entire amount it being taxable in the Philippines.

b. for half the full amount because the other half pertains to his wife.

c. of nothing because as OFW, she is considered a nonresident citizen.

d. none of the above.

 

6. If Fely puts 30% of her earnings in a dollar deposit account with a local bank, interest income therein

a. is taxable for the full amount at 7.5% final withholding tax.

b. may be exempt from income tax provided he presents proof of non-residency to the bank.

c. of P144,000 shall be taxed at 7.5% final withholding tax.

d. none of the above.

 

7. If the dollar deposit account above is joint (with Peter) with the same percentage of earnings invested, interest income in that account

a. is taxable for the full amount at 7.5% final withholding tax.

b. may be exempt from the income tax provided he presents proof of non-residency to the bank.

c. of P144,000 shall be taxed at 7.5% final withholding tax

d. none of the above.

 

8. If Fely arrives in the Philippines on June 30, 2020 and luckily lands a job that pays her P30,000 a month, her income from August to December shall be

a. exempt because she is considered nonresident citizen for the entire year.

b. taxed based on the graduated income tax schedule (Section 24(A)).

c. taxed at 7.5% final withholding tax.

d. none of the above.

 

Leasehold.  In 2020, Mark leased a boutique space for four years to Pops.  As consideration, Pops paid him P960,000 for the whole term. 

 

9. If the lease started on January 1, 2020, how much expense may Pops deduct from her gross income annually?

a. P230,000                b.  P240,000                c.  P250,000                d.  P260,000