Taxation

Thursday, September 11, 2014
2014 Quizzers on Philippine Corporate Taxation
Instruction: Determine the best answer per question given. This quizzer is intended
to test your knowledge on Corporate Taxation under the Philippine Income Tax
System.
Estimated time: One (1) hour
(1) Hungry Shark corporation, in its third year of operations, had the following
data:
Gross Income, Philippines P

2,000,000.00
Gross Income, foreign

1,000,000.00
Expenses, Philippines
1,000,000.00
Expenses, foreign
500,000.00
If the corporation is a domestic corporation, the taxable income is:
(a) P1,000,000
(b) P2,000,000
(c) P500,000
(d) P1,500,000
(2) One of the following statements is not correct. Which is it?
(a) For domestic corporations, the capital gain tax on sale of shares of stock are
the same as the capital gain on such assets of resident citizens of the Philippines.
(b) The final tax on interest on foreign currency deposit under the expanded
foreign currency deposit system for domestic corporations is the same as that of
resident citizens of the Philippines at seven and one-half percent (7 %)
(c) Dividend received by a domestic corporation from a domestic corporation
subject to tax is exempt from income tax of the corporation receiving the dividend.
(d) Prizes exceeding P10,000 received by a domestic corporation is subject to a

final tax of twenty percent (20%)
(3) A domestic corporation, in its fourth year of operations, had the following data
for the year:
Net sales P
2,000,000.00
Capital gain on direct sale at P500,000 to a buyer of shares of
a domestic corporation
200,000.00
Capital gain on sale thru a real estate broker of land and building
outside Philippines for P5,000,000

1,000,000.00
Dividend from a domestic corporation 50,000.00
Interest on bank deposit

40.000.00
Cost of sales
600,000.00
Quarterly corporate income tax paid

190,000.00
Operating Expenses
500,000.00
The income tax still due at the end of the year is:
(a) P125,000
(b) P80,000
(c) P270,800
(d) P220,800
(4) Statement 1: The minimum corporate income tax of a trading or
manufacturing concern is based on gross profit from sales.
Statement 2: The minimum corporate income tax of a service concern is based on

net revenues or receipts less direct costs of services.
(a) Both statements are true
(b) Both statements are false
(c) The first statement is true but the second statement is false
(d) The first statement is false but the second statement is true
(5) The following are true, except one. Which is exception:
(a) A domestic corporation is subject to MCIT on gross income from within and
outside the Philippines.
(b) A resident corporation is subject to the MCIT on gross income from within the
Philippines.
(c) A non-resident corporation is not subject to the MCIT
(d) The optional gross income tax (GIT) applies to domestic and resident
corporations.
(6) Selected cumulative balances were taken from the records of Flappy Bird
Corporation, a domestic corporation, in its fourth year of operations in 2013, which
had an income tax refundable of P10,000 for a preceding year for which there is a
certificate of tax credit.
The income tax due (or refundable) at the end of the year:
(a) P321,000
(b) P371,000
(c) P43,000
(d) P76,000
(7) Which of the following statements is wrong?
(a) The quarterly income tax of a corporation for any of the first, second or third
quarters is filed, and the tax due is paid, within sixty (60) days after the close of the
quarter.
(b) The annual income tax return of a corporation is filed, and the tax due is paid
on or before the fifteenth day of the fourth month following the close of the taxable
year
(c) There can be an income tax refundable in a quarterly income tax return of a
corporation
(d) There can be an income tax refundable in the final income tax return of a
corporation
(8) One of the following statements is wrong. Identify. The improperly

accumulated earnings tax imposed on corporations:
(a) Is calculated to force corporations to pay-out dividends
(b) Is computed on the improperly accumulated income over several years
(c) Is based on the net income per books after the income tax
(d) Is based on a statutory formula for improperly accumulated income
(9) All, except one, of the following, are not subject to the improperly accumulated
earnings tax (IAET). Which is the exception?
(a) Publicly-held corporations
(b) Banks and other financial intermediaries
(c) Insurance Companies
(d) Service Enterprises
(10)The following except one, give rise to the presumption that a corporation is
improperly accumulating profits. Identify the exception:
(a) The corporation is mere holding company

(b) The corporation is an investment company
(c) The corporation permits its profit to accumulate beyond the reasonable needs
of the business
(d) The corporation is a service enterprise
(11)Angry Birds Inc., a domestic corporation, had the following selected data for
2009, the accumulated earnings for which year the Bureau of Internal Revenue (BIR)
considered to be improper:
Cost of Sales P 2,000,000.00
Minimum Corporate Income Tax 110,000.00
Business expenses 1,000,000.00
Interest on Philippine currency bank deposit 50,000.00
Capital gain on sale directly to buyer of shares 120,000.00
Dividend income from domestic corporation 60,000.00
Dividends declared and paid during the year 500,000.00
Maturing bonds in 2010 150,000.00
The improperly accumulated earnings tax (IAET) is:
(a) P175,000 (b) P264,300 (c) P256,300

(d) 380,300
(12)A mother corporation is abroad, with business in the Philippines through its
branch in the Philippines. Which of the following statements is wrong?
(a) In a year, the branch in the Philippines is subject to a profit remittance tax on
its remittance of profits to the mother company abroad, even if the profits from
which the remittance was made was a prior years profits.
(b) The profit remittance tax is fifteen (15%) percent of the total amount or profit
for remittance, as applied for with the bank.
(c) The bank with which the application for remittance was filed would be the
withholding agent of the Bureau of Internal Revenue
(d) Even activities registered with the Philippine Economic Zone Authority (PEZA),
from the profits from which the remittance is applied for, will be subject to the profit
remittance tax.
(13)Statement 1: A private educational institution is a special corporation subject to
income tax on all its income at ten percent (10%)
Statement 2: A private educational institution may be treated as an ordinary

corporation subject to all the income tax rules on corporation.
(c) First statement is true but second statement is false
(d) First statement is false but second statement is true
(14)Statement 1: Corporations, agencies or instrumentalities owned or controlled by

the government shall pay the income tax as their counterpart private corporations.
Statement 2: The Government Service Insurance System and the Social Security
System are subject to income tax.
(15)Corporations exempt from income tax are enumerated under Section 30 of the
National Internal Revenue Code.
Statement 1: They are not subject to income tax on income received which are
incidental or necessarily connected with the purposes for which they were
organized and are operating.
Statement 2: They are subject to income tax on income of whatever kind and
character from any of their properties, real or personal, or from any activity
conducted for profit, regardless of the disposition of such income.

(16)Which of the following is treated as a corporation?
(a) General partnership in trade
(b) General professional partnership
(c) Joint venture or consortium for construction project
(d) Joint venture or consortium for engaging in energy operations under a service
contract with the government.
(17)Temple Run Company is a general professional partnership for gaming

applications, with Mr. Temple and Mr. Run as partners and equally participating in
the income and expenses. The following are the data for the partnership and the
partners in the calendar year:
The net taxable income of Temple Run Company is:
(a) P250,000 (b) P410,000 (c) P60,000

(d) P -0-
(18)Using the information on question 17, what is the income tax due of Temple Run
Company:
(a) P75,000 (b) P123,000 (c) P18,000

(d) P -0-
(19)Using the information on question 17, what is the net taxable income of Mr.
Temple:
(a) P80,000 (b) P250,000 (c) P125,000

(d) P -0-
(20)Using the information on question 17, what is the net taxable income of Mr. Run:
(a) P80,000 (b) P250,000 (c) P125,000

(d) P -0-
(21)Zombie Tsunami Corp., a domestic corporation, is engaged in architectural

design services. The following are pertinent data:
Gross receipts P 5,000,000.00
Sales returns and allowances 200,000.00
Sales discounts 250,000.00
Cost of services 2,250,000.00
Deductions 1,000,000.00
The Optional Corporate Income Tax or Gross Income Tax of Zombie Tsunami is:
(a) P345,000 (b) P195,000 (c) P682,500

(d) P750,000
(22)Candy Crush Inc., a domestic corporation has the following data in 2013:
Gross Sales P 4,000,000.00
Cost of Sales 1,500,000.00
Business Expenses 1,000,000.00
The Gross Income Tax of Candy Crush assuming it is a trading business:
(a) P375,000 (b) P600,000 (c) P480,000

(d) P125,000
(23)Using the same information on question 22, the Optional Corporate Income Tax
of Candy Crush assuming it is a service business:
(a) P375,000 (b) P600,000 (c) P480,000

(d) P125,000
Use the following information for question 24 through 27

In 2006, Skater Boy Corporation, a resident foreign corporation, was on its sixth
year of operation. The following data pertain to its operation in the Philippines for
the years 2006 and 2007:
(24)The regular corporate income tax for 2006 is:
(a) P6,000
(b) P12,000
(c) P14,000
(d) P15,000
(25)The income tax due for 2006
(a) P6,000
(b) P12,000
(c) P14,000
(d) P15,000
(26)The minimum corporate income tax for 2007:
(a) P6,000
(b) P12,000
(c) P14,000
(d) P15,000
(27)The normal corporate income tax for 2007:
(a) P6,000
(b) P12,000
(c) P14,000
(d) P15,000
(28)Reasonable needs of the business is inconsistent with the concepts of IAET

when:
(a) The direct correlation of anticipated needs to the accumulation of profits is

proved.
(b) It is not necessary for the purpose of the business considering all the
circumstances of the case
(c) The immediacy test under the American jurisprudence is adopted in

Philippine jurisdiction
(d) Construed as immediate needs of the business including reasonable

anticipated needs
(29)For purposes of determining the Improperly Accumulated Taxable Income for a

taxable year, the following, except one, are added to that years taxable income.
Which one?
(a) Income exempt from tax
(b) Income excluded from gross income
(c) Income subject to final withholding tax
(d) The amount of net operating loss carry-over (NOLCO)

taxable year, the following except one, are reduced from that years taxable income
after appropriately adding certain items. Which one?
(a) 10% improperly accumulated earnings tax
(b) Income tax paid/ payable for the taxable year
(c) Dividends actually or constructively paid/ issued
(d) Amount reserved for the reasonable needs of the business
(31)Which of the following is not true?

(a) For purposes of the MCIT, the taxable year in which business operations
commenced shall be the year in which the domestic corporation registered with the
BIR.
(b) Firms which were registered with BIR in 1994 and earlier years shall be covered
by the MCIT beginning January 1, 1998.
(c) Firms which were registered with the BIR in any month in 1998 shall be
covered by the MCIT in 2002 after the lapse of three (3) calendar years from 1998.
(d) None of the above
(32)The MCIT applies to which of the following domestic corporations?
(a) Proprietary Educational Institutions
(b) Non-profit Hospitals
(c) Depository banks under the Expanded Foreign Currency Deposit System
(FCDS) on income from foreign currency transactions with the local commercial
banks.
(d) Firms that are taxed under a special income tax regime
(e) All of the above
(f) None of the above
(33)Which of the following need not be deducted from gross sales to arrive at gross
income for purposes of computing MCIT of a merchandising/ manufacturing
concern?
(a) Sales returns and allowances
(b) Sales discounts
(c) Cost of sales
income for purposes of computing MCIT of a service concern?

(b) Sales discounts
(c) Cost of sales
income for purposes of computing OCIT or GIT of a merchandising/ manufacturing
concern?
(b) Sales discounts
(c) Cost of sales
income for purposes of computing OCIT or GIT of a service concern?
(b) Sales discounts
(c) Cost of sales
(37)A PEZA-registered enterprise has a registered and an unregistered activity.

The MCIT shall apply to the:
(a) Registered activity
(b) Unregistered activity
(c) Both activities
(d) Neither registered nor unregistered activity
(38)The minimum corporate income tax of a domestic or resident corporation is:
(a) 15% of gross income

(b) 2% of gross sales
(c) 2% of gross income
(d) 2% of gross income for Domestic Corporations while Resident Foreign

Corporations are exempted from MCIT computation.
(39)The records of DOTA Inc., a closely-held corporation, show the following

calendar years:
2011: Gross Income P 3,000,000.00
Less: Expenses 2,500,000.00
Net Income 500,000.00
2012: Gross Income 5,000,000.00
Expenses 3,000,000.00
Other income
Rent, net of 5% withholding tax

475,000.00
Interest on money market, net 80,000.00
Inter-corporate dividends 500,000.00
Additional information:
Dividends paid 1,500,000.00
Tax payments, 1st to 3rd quarter 50,000.00
How much is the improperly accumulated earnings tax in 2012?
(a) P70,500 (b) P83,000 (c) P101,900

(d) P103,900
Use the following information for questions 40 to 44
Cut the rope Corporation, a domestic corporation, was registered with the BIR in
1997. The following data on income taxes during the years 2004 to 2011 were made
available.
(40)Income tax payable for 2004
(a) P25,000 (b) P100,000 (c) P75,000

(d) P -0-
(a) P130,000 (b) P150,000 (c) P20,000

(d) P-0-
(a) P60,000 (b) P150,000 (c) P105,000

(d) P-0-
(a) P8,000 (b) P40,000 (c) P32,000

(d) P -0-
(a) P150,000 (b) P50,000 (c) P118,000

(d) P -0-
(45)Bubble Blast Company, a domestic corporation, has the following income taxes
computation for the year 2013 as follows:
Year 2013: RCIT - P50,000
MCIT - P12,000
The journal entry for in 2013 to record Income Tax is:
(a) Income Tax Expense P 50,000
Income Tax Payable P 50,000
(b) Deferred Charges MCIT P 12,000
(c) Income Tax Expense P 50,000
Deferred Charges MCIT 12,000
(d) Income Tax Expense P 50,000
Income Tax Payable 38,000
(46)A tax imposed whether a corporation has zero or negative taxable income or
whenever the minimum income tax is greater than the normal income tax due from
such corporation:
(a) Improperly accumulated earnings tax (IAET)
(b) Optional Corporate Income Tax (OCIT)
(c) Capital Gains Tax (CGT)
(d) Minimum Corporate Income Tax (MCIT)
(47)A corporation which was registered with the Bureau of Internal Revenue in May
2007 shall be covered by MCIT in:
(a) 2008 (b) 2009 (c)
2010 (d) 2011
(48)The BIR form used by corporations to file quarterly income tax returns:
(a) 1702 (b) 1702Q (c)

2550 (d) 2550Q
(49)The BIR form used by corporations to file its annual income tax return:
(a) 1702 (b) 1702Q (c)

2550 (d) 2550Q
(50)According to tax code, the last payment of filing income tax returns for all
corporations having calendar year or fiscal year of reporting is:
(a) At the end of every taxable year
(b) Once the income tax return, regardless of the month, is completed, it may be
filed at any day of the year immediately following the taxable year
(c) Every April 15 immediately following the taxable year for all corporations
having calendar year and fiscal year of reporting
(d) On the 15th day of the fourth (4th) month immediately following the taxable
year
_________________________________________________________________________________
ANSWERS:
(1) Hungry Shark corporation, in its third year of operations, had the following
data:
Gross Income, Philippines P

2,000,000.00
Gross Income, foreign

1,000,000.00
Expenses, Philippines
1,000,000.00
Expenses, foreign
500,000.00
If the corporation is a domestic corporation, the taxable income is:
(a) P1,000,000
(b) P2,000,000
(c) P500,000
(d) P1,500,000
Answer: (d)
Gross Income, Philippines P 2,000,000.00
Less: Expenses, Philippines 1,000,000.00

P 1,000,000.00
Gross Income, foreign P 1,000,000.00
Less: Expenses, foreign

500,000.00 500,000.00
Taxable
Income
P 1,500,000.00
(2) One of the following statements is not correct. Which is it?
(a) For domestic corporations, the capital gain tax on sale of shares of stock are
the same as the capital gain on such assets of resident citizens of the Philippines.
(b) The final tax on interest on foreign currency deposit under the expanded
foreign currency deposit system for domestic corporations is the same as that of
resident citizens of the Philippines at seven and one-half percent (7 %)
(c) Dividend received by a domestic corporation from a domestic corporation

subject to tax is exempt from income tax of the corporation receiving the dividend.
(d) Prizes exceeding P10,000 received by a domestic corporation is subject to a
final tax of twenty percent (20%)
Answer: (d)
(3) A domestic corporation, in its fourth year of operations, had the following data
for the year:
Net sales P
2,000,000.00
Capital gain on direct sale at P500,000 to a buyer of shares of
a domestic corporation
200,000.00
Capital gain on sale thru a real estate broker of land and building
outside Philippines for P5,000,000

1,000,000.00
Dividend from a domestic corporation 50,000.00
Interest on bank deposit

40.000.00
Cost of sales
600,000.00
Quarterly corporate income tax paid

190,000.00
Operating Expenses
500,000.00
The income tax still due at the end of the year is:
(a) P125,000
(b) P80,000
(c) P270,800
(d) P220,800
Answer: (b)
Net sales P 2,000,000

Less: Cost of sales 600,000
Gross Profit from sales 1,400,000
Less: Operating Expenses 500,000
Taxable Income for the year 900,000
MCIT P 28,000
RCIT P 270,000
Whichever is higher on RCIT or MCIT
Less Income taxes paid 190,000
Income tax due P 80,000
(4) Statement 1: The minimum corporate income tax of a trading or

manufacturing concern is based on gross profit from sales.
Statement 2: The minimum corporate income tax of a service concern is based on

net revenues or receipts less direct costs of services.
(c) The first statement is true but the second statement is false
(d) The first statement is false but the second statement is true
Answer: (a)
(5) The following are true, except one. Which is exception:
(a) A domestic corporation is subject to MCIT on gross income from within and
outside the Philippines.
(b) A resident corporation is subject to the MCIT on gross income from within the
Philippines.
(c) A non-resident corporation is not subject to the MCIT
(d) The optional gross income tax (GIT) applies to domestic and resident
corporations.
Answer: (d)
(6) Selected cumulative balances were taken from the records of Flappy Bird
Corporation, a domestic corporation, in its fourth year of operations in 2013, which
had an income tax refundable of P10,000 for a preceding year for which there is a
certificate of tax credit.
The income tax due (or refundable) at the end of the year:
(a) P321,000
(b) P371,000
(c) P43,000
(d) P76,000
Answer: (c) P43,000 [page 2-19 quizzer on tax]
(7) Which of the following statements is wrong?
(a) The quarterly income tax of a corporation for any of the first, second or third
quarters is filed, and the tax due is paid, within sixty (60) days after the close of the
quarter.
(b) The annual income tax return of a corporation is filed, and the tax due is paid
on or before the fifteenth day of the fourth month following the close of the taxable
year
(c) There can be an income tax refundable in a quarterly income tax return of a
corporation
(d) There can be an income tax refundable in the final income tax return of a
corporation
Answer: (c)
(8) One of the following statements is wrong. Identify. The improperly

accumulated earnings tax imposed on corporations:
(a) Is calculated to force corporations to pay-out dividends
(b) Is computed on the improperly accumulated income over several years

(c) Is based on the net income per books after the income tax
(d) Is based on a statutory formula for improperly accumulated income
Answer: (b)
(9) All, except one, of the following, are not subject to the improperly accumulated
earnings tax (IAET). Which is the exception?
(a) Publicly-held corporations
(b) Banks and other financial intermediaries
(c) Insurance Companies
(d) Service Enterprises
Answer: (d)
(10)The following except one, give rise to the presumption that a corporation is
improperly accumulating profits. Identify the exception:
(a) The corporation is mere holding company
(b) The corporation is an investment company
(c) The corporation permits its profit to accumulate beyond the reasonable needs
of the business
(d) The corporation is a service enterprise
Answer: (d)
(11)Angry Birds Inc., a domestic corporation, had the following selected data for
2009, the accumulated earnings for which year the Bureau of Internal Revenue (BIR)
considered to be improper:
Cost of sales P 2,000,000.00
Minimum Corporate Income Tax 110,000.00
Business expenses 1,000,000.00
Interest on Philippine currency bank deposit 50,000.00

Capital gain on sale directly to buyer of shares 120,000.00
Dividend income from domestic corporation 60,000.00
Dividends declared and paid during the year 500,000.00
Maturing bonds in 2010 150,000.00
The improperly accumulated earnings tax (IAET) is:
(a) P175,000 (b) P264,300 (c) P256,300

(d) 380,300
Answer: (c) P256,300 [page 2-21 quizzer on tax]
(12)A mother corporation is abroad, with business in the Philippines through its
branch in the Philippines. Which of the following statements is wrong?
(a) In a year, the branch in the Philippines is subject to a profit remittance tax on
its remittance of profits to the mother company abroad, even if the profits from
which the remittance was made was a prior years profits.
(b) The profit remittance tax is fifteen (15%) percent of the total amount or profit
for remittance, as applied for with the bank.
(c) The bank with which the application for remittance was filed would be the
withholding agent of the Bureau of Internal Revenue
(d) Even activities registered with the Philippine Economic Zone Authority (PEZA),
from the profits from which the remittance is applied for, will be subject to the profit
remittance tax.
Answer: (d)
(13)Statement 1: A private educational institution is a special corporation subject to

income tax on all its income at ten percent (10%)
Statement 2: A private educational institution may be treated as an ordinary

corporation subject to all the income tax rules on corporation.

Answer: (a)
(14)Statement 1: Corporations, agencies or instrumentalities owned or controlled by

the government shall pay the income tax as their counterpart private corporations.
Statement 2: The Government Service Insurance System and the Social Security
System are subject to income tax.
Answer: (c)
(15)Corporations exempt from income tax are enumerated under Section 30 of the
National Internal Revenue Code.
Statement 1: They are not subject to income tax on income received which are
incidental or necessarily connected with the purposes for which they were
organized and are operating.
Statement 2: They are subject to income tax on income of whatever kind and
character from any of their properties, real or personal, or from any activity
conducted for profit, regardless of the disposition of such income.
Answer: (a)
(16)Which of the following is treated as a corporation?
(a) General partnership in trade

(b) General professional partnership
(c) Joint venture or consortium for construction project
(d) Joint venture or consortium for engaging in energy operations under a service
contract with the government.
Answer: (a)
(17)Temple Run Company is a general professional partnership for gaming

applications, with Mr. Temple and Mr. Run as partners and equally participating in
the income and expenses. The following are the data for the partnership and the
partners in the calendar year:
The net taxable income of Temple Run Company is:
(a) P250,000 (b) P410,000 (c) P60,000

(d) P -0-
Answer: (d) Zero
(18)Using the information on question 17, what is the income tax due of Temple Run
Company:
(a) P75,000 (b) P123,000 (c) P18,000

(d) P -0-
Answer: (d) Zero
(19)Using the information on question 17, what is the net taxable income of Mr.
Temple:
(a) P80,000 (b) P250,000 (c) P125,000

(d) P -0-
Answer: (c)
(20)Using the information on question 17, what is the net taxable income of Mr. Run:
(a) P80,000 (b) P250,000 (c) P125,000

(d) P -0-
Answer: (c)
(21)Zombie Tsunami Corp., a domestic corporation, is engaged in
architectural design services. The following are pertinent data:
Gross receipts P 5,000,000.00
Sales returns and allowances 200,000.00
Sales discounts 250,000.00
Cost of services 2,250,000.00
Deductions 1,000,000.00
The Optional Corporate Income Tax or Gross Income Tax of Zombie Tsunami is:
(a) P345,000 (b) P195,000 (c) P682,500

(d) P750,000
Answer: (c) P682,500
(22)Candy Crush Inc., a domestic corporation has the following data in 2013:
Gross Sales P 4,000,000.00
Cost of Sales 1,500,000.00
Business Expenses 1,000,000.00
The Gross Income Tax of Candy Crush assuming it is a trading business:
(a) P375,000 (b) P600,000 (c) P480,000

(d) P125,000
Answer: (a)
(23)Using the same information on question 22, the Optional Corporate Income Tax
of Candy Crush assuming it is a service business:
(a) P375,000 (b) P600,000 (c) P480,000

(d) P125,000
Answer: (b)
(24)In 2006, Skater Boy Corporation, a resident foreign corporation, was on its sixth
year of operation. The following data pertain to its operation in the Philippines for
the years 2006 and 2007:
The regular corporate income tax for 2006 is:
(a) P6,000
(b) P12,000
(c) P14,000
(d) P15,000
Answer: (a)
(25)The income tax due for 2006
(a) P6,000
(b) P12,000
(c) P14,000
(d) P15,000
Answer: (b)
(26)The minimum corporate income tax for 2007:
(a) P6,000
(b) P12,000
(c) P14,000
(d) P15,000
Answer: (c)
(27)The normal corporate income tax for 2007:
(a) P6,000
(b) P12,000
(c) P14,000
(d) P15,000
Answer: (d)
(28)Reasonable needs of the business is inconsistent with the concepts of IAET

when:
(a) The direct correlation of anticipated needs to the accumulation of profits is
proved.
(b) It is not necessary for the purpose of the business considering all the
circumstances of the case
(c) The immediacy test under the American jurisprudence is adopted in

Philippine jurisdiction
(d) Construed as immediate needs of the business including reasonable

anticipated needs
Answer: (b)

taxable year, the following, except one, are added to that years taxable income.
Which one?
(a) Income exempt from tax
(b) Income excluded from gross income
(c) Income subject to final withholding tax
(d) The amount of net operating loss carry-over (NOLCO)
Answer: (d)

taxable year, the following except one, are reduced from that years taxable income
after appropriately adding certain items. Which one?
(a) 10% improperly accumulated earnings tax
(b) Income tax paid/ payable for the taxable year
(c) Dividends actually or constructively paid/ issued
(d) Amount reserved for the reasonable needs of the business
Answer: (a)
(31)Which of the following is not true?
(a) For purposes of the MCIT, the taxable year in which business operations
commenced shall be the year in which the domestic corporation registered with the
BIR.
(b) Firms which were registered with BIR in 1994 and earlier years shall be covered
by the MCIT beginning January 1, 1998.
(c) Firms which were registered with the BIR in any month in 1998 shall be
covered by the MCIT in 2002 after the lapse of three (3) calendar years from 1998.
Answer: (d)
(32)The MCIT applies to which of the following domestic corporations?
(a) Proprietary Educational Institutions
(b) Non-profit Hospitals
(c) Depository banks under the Expanded Foreign Currency Deposit System
(FCDS) on income from foreign currency transactions with the local commercial
banks.
(d) Firms that are taxed under a special income tax regime
(e) All of the above
(f) None of the above
Answer: (f)
income for purposes of computing MCIT of a merchandising/ manufacturing
concern?
(b) Sales discounts
(c) Cost of sales
Answer: (d)
income for purposes of computing MCIT of a service concern?
(b) Sales discounts
(c) Cost of sales
Answer: (d)
income for purposes of computing OCIT or GIT of a merchandising/ manufacturing
concern?
(b) Sales discounts
(c) Cost of sales
Answer: (d)
income for purposes of computing OCIT or GIT of a service concern?
(b) Sales discounts
(c) Cost of sales
Answer: (c)
(37)A PEZA-registered enterprise has a registered and an unregistered activity.

The MCIT shall apply to the:
(a) Registered activity
(b) Unregistered activity
(c) Both activities
(d) Neither registered nor unregistered activity
Answer: (b)
(38)The minimum corporate income tax of a domestic or resident corporation is:
(a) 15% of gross income
(b) 2% of gross sales
(c) 2% of gross income
(d) 2% of gross income for Domestic Corporations while Resident Foreign

Corporations are exempted from MCIT computation.
Answer: (b)
(39)The records of DOTA Inc., a closely-held corporation, show the following

calendar years:
2011: Gross Income P 3,000,000.00
Less: Expenses 2,500,000.00
Net Income 500,000.00
2012: Gross Income 5,000,000.00
Expenses 3,000,000.00
Other income
Rent, net of 5% withholding tax

475,000.00
Interest on money market, net 80,000.00
Inter-corporate dividends 500,000.00
Additional information:
Dividends paid 1,500,000.00
Tax payments, 1st to 3rd quarter 50,000.00
How much is the improperly accumulated earnings tax in 2012?
(a) P70,500 (b) P83,000 (c) P101,900

(d) P103,900
Answer: (b) P83,000
Use the following information for questions 40 to 44
Cut the rope Corporation, a domestic corporation, was registered with the BIR in
1997. The following data on income taxes during the years 2004 to 2011 were made
available.
(a) P25,000 (b) P100,000 (c) P75,000

(d) P -0-
Answer: (b)

(a) P130,000 (b) P150,000 (c) P20,000
(d) P-0-
Answer: (b)
(a) P60,000 (b) P150,000 (c) P105,000

(d) P-0-
Answer: (d)
(a) P8,000 (b) P40,000 (c) P32,000

(d) P -0-
Answer: (b)
(a) P150,000 (b) P50,000 (c) P118,000

(d) P -0-
Answer: (b)
(45)Bubble Blast Company, a domestic corporation, has the following income taxes
computation for the year 2013 as follows:
Year 2013: RCIT - P50,000
MCIT - P12,000
The journal entry for in 2013 to record Income Tax is:
(a) Income Tax Expense P 50,000
(b) Deferred Charges MCIT P 12,000
(c) Income Tax Expense P 50,000

(d) Income Tax Expense P 50,000
Income Tax Payable 38,000
Answer: (a)
(46)A tax imposed whether a corporation has zero or negative taxable income or
whenever the minimum income tax is greater than the normal income tax due from
such corporation:
(a) Improperly accumulated earnings tax (IAET)
(b) Optional Corporate Income Tax (OCIT)
(c) Capital Gains Tax (CGT)
(d) Minimum Corporate Income Tax (MCIT)
Answer: (d)
(47)A corporation which was registered with the Bureau of Internal Revenue in May
2007 shall be covered by MCIT in:
(a) 2008 (b) 2009 (c)

2010 (d) 2011
Answer: (d)
(48)The BIR form used by corporations to file quarterly income tax returns:
(a) 1702 (b) 1702Q (c)

2550 (d) 2550Q
Answer: (b)
(49)The BIR form used by corporations to file its annual income tax return:
(a) 1702 (b) 1702Q (c)

2550 (d) 2550Q
Answer: (a)
(50)According to tax code, the last payment of filing income tax returns for all
corporations having calendar year or fiscal year of reporting is:
(a) At the end of every taxable year

(b) Once the income tax return, regardless of the month, is completed, it may be
filed at any day of the year immediately following the taxable year
(c) Every April 15 immediately following the taxable year for all corporations
having calendar year and fiscal year of reporting
(d) On the 15th day of the fourth (4th) month immediately following the taxable
year
Answer: (d)

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Thursday, September 11, 2014

2014 Quizzers on Philippine Corporate Taxation

Estimated time: One (1) hour

Gross Income, Philippines P

Gross Income, foreign

If the corporation is a domestic corporation, the taxable income is:

(2) One of the following statements is not correct. Which is it?

(d) Prizes exceeding P10,000 received by a domestic corporation is subject to a

Capital gain on direct sale at P500,000 to a buyer of shares of

outside Philippines for P5,000,000

Dividend from a domestic corporation 50,000.00

Interest on bank deposit

Quarterly corporate income tax paid

Statement 2: The minimum corporate income tax of a service concern is based on

(a) Both statements are true

(b) Both statements are false

(5) The following are true, except one. Which is exception:

(c) A non-resident corporation is not subject to the MCIT

(8) One of the following statements is wrong. Identify. The improperly

(a) Is calculated to force corporations to pay-out dividends

(b) Is computed on the improperly accumulated income over several years

(d) Is based on a statutory formula for improperly accumulated income

(a) Publicly-held corporations

(b) Banks and other financial intermediaries

(c) Insurance Companies

(d) Service Enterprises

(a) The corporation is mere holding company

(d) The corporation is a service enterprise

Cost of Sales P 2,000,000.00

Minimum Corporate Income Tax 110,000.00

Business expenses 1,000,000.00

Interest on Philippine currency bank deposit 50,000.00

Capital gain on sale directly to buyer of shares 120,000.00

Dividend income from domestic corporation 60,000.00

Dividends declared and paid during the year 500,000.00

Maturing bonds in 2010 150,000.00

The improperly accumulated earnings tax (IAET) is:

(a) P175,000 (b) P264,300 (c) P256,300

Statement 2: A private educational institution may be treated as an ordinary

(a) Both statements are true

(b) Both statements are false

(c) First statement is true but second statement is false

(d) First statement is false but second statement is true

(14)Statement 1: Corporations, agencies or instrumentalities owned or controlled by

(a) Both statements are true

(b) Both statements are false

(c) First statement is true but second statement is false

(d) First statement is false but second statement is true

(a) Both statements are true

(b) Both statements are false

(c) First statement is true but second statement is false

(16)Which of the following is treated as a corporation?

(a) General partnership in trade

(b) General professional partnership

(c) Joint venture or consortium for construction project

(17)Temple Run Company is a general professional partnership for gaming

The net taxable income of Temple Run Company is:

(a) P250,000 (b) P410,000 (c) P60,000

(a) P75,000 (b) P123,000 (c) P18,000

(a) P80,000 (b) P250,000 (c) P125,000

(a) P80,000 (b) P250,000 (c) P125,000

(21)Zombie Tsunami Corp., a domestic corporation, is engaged in architectural

Gross receipts P 5,000,000.00