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Subject:LawPrice: Bought3
1. For income tax purposes, the form of the dividend income shall determine the valuation of dividend income. Which of the following rules on valuing dividend income is incorrect?
A. Cash dividend is valued and taxable to the extent of amount of money received by the shareholder.
B. Property dividend is valued and taxable on the extent of the fair market value of the property received at the time of distribution.
C. Stock dividend resulting to a change in a proportionate share of the shareholder is valued and taxable to the extent of the fair market value of the shares received.
D. Scrip dividend is taxable to the extent of its fair market value in the year when the warrant is issued.
2. Liquidating dividends are return of shareholders investment. Which of the following rules on liquidating dividend is incorrect?
A. The excess amount of liquidating over cost of shares surrendered is taxable
B. If a shareholder sustain a loss brought about by liquidating dividend, such loss is deductible
C. If a shareholder sustain a loss brought about by liquidating dividend, such loss is not deductible
D. All of the above
3. A stock dividend is not taxable
A. If there was no resulting change in the proportionate interest of the shareholders in the net assets of the corporation
B. If there was only one type of stock issued and outstanding at the time of the dividend
C. Since it is only capitalization of the accumulated profits
D. All of the above
4. Statement 1: Generally prizes, winnings are taxable income.
Statement 2: Prizes less than P10,000 is taxable the same manner as business income
A. Statement 1and 2 are false
B. Statement 1 is true but statement 2 is false
C. Statement 1 is false but statement 2 is true
D. Statement 1 and 2 are true
5. Which of the following is taxable?
A. Prize won in an essay contest
B. The nobel prize
C. Prize won as a member of mythical team in PBA
D. Award of being a model employee
6. George was selected as the most outstanding "barrio teacher" in Di Mahanap-hanap town of Tawi-Tawi region. His name was submitted by the school principal without his knowledge. He received a trophy and a cash reward of P500. The amount he received is
A. Subject to basic income tax
B. Subject to final tax
C. Exempt from income tax
D. Partly taxable, partly exempt
