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Deductions are included in the amount of gross income.
Deductions are included in the amount of gross income.
True
Interest income from bonds is considered an item of gross income.
Interest income from bonds is considered an item of gross income.
True
Cooperatives that only transact with members are always subject to income tax.
Cooperatives that only transact with members are always subject to income tax.
False
Non-stock, non-profit entities are taxable on income from unrelated activities.
Non-stock, non-profit entities are taxable on income from unrelated activities.
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The gain on the sale of long-term bonds with a maturity of 5 years is an exclusion in gross income.
The gain on the sale of long-term bonds with a maturity of 5 years is an exclusion in gross income.
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Items of passive royalty income are subject to regular income tax.
Items of passive royalty income are subject to regular income tax.
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The share in a general professional partnership is subject to regular income tax.
The share in a general professional partnership is subject to regular income tax.
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Items of income included in gross income subject to final tax are also included in gross income subject to regular tax.
Items of income included in gross income subject to final tax are also included in gross income subject to regular tax.
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The loss of the partnership can be claimed by the partners as deduction in their income tax returns.
The loss of the partnership can be claimed by the partners as deduction in their income tax returns.
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The accounting period of the taxpayer does not affect the amount of gross income to be reported.
The accounting period of the taxpayer does not affect the amount of gross income to be reported.
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The situs of taxation has no impact on the extent of reportable gross income.
The situs of taxation has no impact on the extent of reportable gross income.
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Credit withholding taxes are subtracted from the amount of reportable gross income.
Credit withholding taxes are subtracted from the amount of reportable gross income.
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The output VAT must be included as part of gross income of VAT taxpayers.
The output VAT must be included as part of gross income of VAT taxpayers.
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Transfer pricing between associated enterprises must be made at arm's length.
Transfer pricing between associated enterprises must be made at arm's length.
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Under the accrual basis of accounting, items of gross income are reported when they are earned.
Under the accrual basis of accounting, items of gross income are reported when they are earned.
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MCIT applies to foreign corporations.
MCIT applies to foreign corporations.
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There are 2 types of regular income tax; proportional income tax for corporations and progressive income tax for individuals.
There are 2 types of regular income tax; proportional income tax for corporations and progressive income tax for individuals.
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NRA-NETBs and NRFCs are also subject to regular income tax.
NRA-NETBs and NRFCs are also subject to regular income tax.
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All taxpayers are subject to final tax.
All taxpayers are subject to final tax.
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Taxable income is synonymous to net income.
Taxable income is synonymous to net income.
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Employed taxpayers can claim expenses from their employment as deductions against their compensation income.
Employed taxpayers can claim expenses from their employment as deductions against their compensation income.
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The gross income from business is measured as sales or gross receipts less cost of sales or cost of services.
The gross income from business is measured as sales or gross receipts less cost of sales or cost of services.
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Every individual taxpayer is exempt from income tax on compensation up to P250,000 annually but the same exemption does not apply to business income.
Every individual taxpayer is exempt from income tax on compensation up to P250,000 annually but the same exemption does not apply to business income.
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The proceeds of life insurance received by the heirs of the insured upon his death are subject to regular income tax.
The proceeds of life insurance received by the heirs of the insured upon his death are subject to regular income tax.
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Foreign MSMEs can claim 20% corporate income tax.
Foreign MSMEs can claim 20% corporate income tax.
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The MCIT applies only when income is zero or when there is an operating loss.
The MCIT applies only when income is zero or when there is an operating loss.
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The cost of services of banks includes interest expense.
The cost of services of banks includes interest expense.
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MCIT is applied on a quarterly, but not on an annual basis.
MCIT is applied on a quarterly, but not on an annual basis.
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For purposes of the MCIT, the cost of services includes all direct costs and expenses incurred in acquiring or manufacturing the goods.
For purposes of the MCIT, the cost of services includes all direct costs and expenses incurred in acquiring or manufacturing the goods.
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Items of passive income subject to final tax are included in the basis of the MCIT.
Items of passive income subject to final tax are included in the basis of the MCIT.
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The gross receipts of service providers include advances from clients or customers.
The gross receipts of service providers include advances from clients or customers.
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An unused excess MCIT will expire in the fourth year of operation.
An unused excess MCIT will expire in the fourth year of operation.
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The income of FCDU or EFCDU from foreign sources is subject to regular income tax.
The income of FCDU or EFCDU from foreign sources is subject to regular income tax.
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Exempt corporations are required to file income tax returns because they do not pay tax.
Exempt corporations are required to file income tax returns because they do not pay tax.
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Joint ventures formed for undertaking construction projects are taxable as corporations.
Joint ventures formed for undertaking construction projects are taxable as corporations.
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A non-profit hospital is an exempt corporation taxable only on income from unrelated activities.
A non-profit hospital is an exempt corporation taxable only on income from unrelated activities.
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PEZA-registered enterprises are exempt from corporate tax.
PEZA-registered enterprises are exempt from corporate tax.
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Government-owned and controlled corporations are subject to corporate income tax.
Government-owned and controlled corporations are subject to corporate income tax.
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The income of OBU from foreign sources is exempt from income tax.
The income of OBU from foreign sources is exempt from income tax.
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Exempt corporations who filed late are subject to penalties even if they have no tax due.
Exempt corporations who filed late are subject to penalties even if they have no tax due.
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A non-resident owner or lessor of a vessel is subject to tax at 7.5% of the gross rental.
A non-resident owner or lessor of a vessel is subject to tax at 7.5% of the gross rental.
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A regional area headquarters is exempt from tax because it does not derive income.
A regional area headquarters is exempt from tax because it does not derive income.
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A non-stock, non-profit institution must be organized for religious, charitable, scientific, athletic, cultural, or for the rehabilitation of veterans.
A non-stock, non-profit institution must be organized for religious, charitable, scientific, athletic, cultural, or for the rehabilitation of veterans.
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The exemption of non-stock and non-profit corporations or associations shall commence when they secure their tax exemption ruling.
The exemption of non-stock and non-profit corporations or associations shall commence when they secure their tax exemption ruling.
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Local water districts are exempt from income tax.
Local water districts are exempt from income tax.
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Expenses of an exempt corporation not directly traceable to either related or unrelated operations are allocated based on the ratio of gross income.
Expenses of an exempt corporation not directly traceable to either related or unrelated operations are allocated based on the ratio of gross income.
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Cooperatives that transact business with non-members are taxable on income allocated to interest on members' capital when their accumulated reserve exceeds P10,000,000.
Cooperatives that transact business with non-members are taxable on income allocated to interest on members' capital when their accumulated reserve exceeds P10,000,000.
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All cooperatives, regardless of classification, are subject to income tax on their income from unrelated activities.
All cooperatives, regardless of classification, are subject to income tax on their income from unrelated activities.
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Study Notes
Chapter 7: Introduction to Regular Income Tax
- Two types of regular income tax exist: proportional for corporations and progressive for individuals.
- NRA-NETBs and NRFCs are also subject to regular income tax (False).
- All taxpayers are subject to final tax (False).
- Taxable income is the same as net income (False).
- Taxable income for all taxpayers is gross income less capital gains tax and final tax items, minus allowable deductions (True).
- All taxpayers are subject to regular income tax (True).
- Employed taxpayers can deduct employment expenses from compensation income (False).
- Items of gross income subject to final tax and capital gains tax are excluded from regular income tax (True).
- The P250,000 income tax exemption for individuals is not designed to be a substitute for personal and business expenses (False - only personal expenses);
- Non-taxable compensation is excluded from gross income (True).
Chapter 8: Exclusion From Gross Income
- Taxable compensation is calculated by subtracting non-taxable compensation from gross compensation (True).
- The deadline for filing corporate and individual quarterly income tax returns are not the same (False).
- Deductions related to business are not applied against all types of gross income (False).
- No deductions are allowed against certain taxable income (True).
- Only corporations can make deductions against their gross income (False).
- Gross business income is calculated as sales/gross receipts minus cost of goods/services (True).
- Individual tax due is determined using a schedule of tax rates (True).
- Corporate tax due is calculated by multiplying gross income by 30% (True).
- Corporate and individual annual income tax deadlines are the same (True).
- Every individual taxpayer is exempt from income tax on compensation up to P250,000 annually, but this exemption does not apply to business income (True).
Chapter 9: Inclusion in Gross Income
- Items of gross income subject to regular and capital gains tax are reportable to the government (True).
- Rent is a passive income, but not subject to final tax (True).
- Interest from bank-issued bonds is subject to final tax (False).
- Gains from capital assets are generally subject to regular income tax (True).
- Income from tax-holiday operations included in gross income, but treated as deductions (False).
- Shares in business partnerships are subject to final tax, while those in general professional partnerships are subject to regular income tax (True).
- Gains from ordinary assets are subject to regular income tax (True).
- Passive royalty income is subject to final tax but active royalty income is subject to regular income tax (True).
- Compensation income is included in gross income subject to tax, except for special aliens (True).
- Reportable gross income for business or profession is calculated after deducting cost of goods sold or services (True).
Additional Information (Chapters 7, 8, and 9)
- Prizes paid to corporations are included in gross income, subject to final tax (True).
- Only the mandatory portions of GSIS, SSS, and PhilHealth are excluded from gross compensation (True).
- Social security benefits, retirement gratuities, and foreign government benefits are excluded from gross income (True).
- Stock redemption gains are excluded from gross income when subjected to capital gains tax (False).
- The P90,000 limit applies to many benefits (False).
- Items of income subject to final tax or capital gains tax are excluded from regular income tax (True).
- Various other points about inclusions and exclusions in different situations.
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Description
This quiz covers Chapter 7 of the income tax curriculum, focusing on regular income tax, including the differences between corporate and individual taxes. Participants will evaluate various statements about taxable income, exemptions, deductions, and employee compensation. Test your understanding of the principles behind these tax regulations.
