THEORIES

RITX Individual
1. Statement 1: Husband and wife shall compute their individual income tax separately based on
their respective taxable income.
Statement 2: Taxable income for compensation earners is the gross compensation income less
non-taxable income/ benefits such as but not limited to the 13th month pay and other benefits.
a. Only statement 1 is correct
b. only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
*Revenue Regulation No. 8, Sec. 3
2. The following items are exclusions in reducing employees’ salaries except:
a. IOUs
b. Pagibig Contributions
c. SSS and GSIS contributions
d. Labor union dues
*Revenue Regulation No. 8, Sec. 3
3. The option to be taxed at 8% income tax rate is not available to a ________.
a. VAT registered taxpayer
b. NON-Vat registered taxpayer
c. Both b and c
d. None of the above
*Revenue Regulation No. 8, Sec. 3

RITX Corporation
1. The allowable deduction of 40% for corporations who avail the Itemized Deduction is based on
__________.
a. Net income
b. Gross sales/receipts
c. Gross income
d. None of the above
* www.bir.gov.ph > Tax Information > Income tax
2. A domestic corporation is taxable on all income derived from sources are _________.
A. within Philippines
b. without Philippines
C. Both a and b
d. None of the above
** www.bir.gov.ph > Tax Information > Tax code
3. An income tax of _____ is imposed upon the taxable income derived during each taxable year
from all sources within and without the Philippines.
a. 35%
b. 30%
c. 25%
d. 20%
* RA10653, Chap 4, Sec. 27
FINAL TAX
1. What is the rate of royalties for books, literary works and musical compositions for individual
taxpayers?
a. 10%
b. 15%
c. 20%
d. 25%
*NIRC, Sec 24
CAPITAL GAINS TAX
1. The term capital asset includes:
a. Property used in trade or business of the taxpayer and subject to the depreciation.
b. Property primarily for sale to customers in the ordinary course of his trade or business.
c. Stock in trade or other property included I the taxpayer’s inventory.
d. Real property not used in the trade or business of taxpayer.
*NIRC, Sec 39
COMPUTATIONS
RITX Individual
1. Ms. ABC operates a convenience store while she offers bookkeeping services to her clients. In
2018, her gross sales amounted to 900,000.00, in addition to her receipts from bookkeeping services
of 200,000.00. She already signified her intention to be taxed at 8% income tax rate in her 1 st quarter
return. Compute the income tax due.
a. 88,000
b. 68,000
c. 108,000
d. 54,000
*Revenue Regulation No. 8, Sec. 3

2. Mr. Dizon is a prominent independent contractor who offers architectural and engineering
services. Since his career flourished, his total gross receipts amounted to 5,250,000 for taxable year
2018. Her recorded cost of service and operating expenses were 1,500,000 and 2,000,000,
respectively. What is the taxable income?
a. 2,500,000
b. 3,750,000
c. 1,750,000
d. 3,250,000
Gross Receipts 5,250,000
Less: Cost of Service 1,500,000
Gross Income 3,750,000
Less: Operating expenses 2,000,000
Taxable Income 1,750,000
*Revenue Regulation No. 8, Sec. 3

RITX Corporation
1. Speed Inc. had the following income in 2018:
Philippines Thailand
Gross Income 7,500,000 10,000,000
Expenses 5,000,000 6,500,000
Dividend Passive 20,000
Compute the taxable income if Speed Inc was a domestic corporation:
a. 11,500,000
b. 2,500,000
c. 3,500,000
d. 6,000,000
Sol. Total Gross Income (7,500,000+10,000,000) 17,500,000
Total expenses (5,000,000 +6,500,000) (11,500,000)
Taxable income 6,000,000
**NIRC, Sec 27

2. A domestic corporation, in its fifth year of operations in 2001 had the following data:
Sales 3,000,000
Cost of Sales 1,000,000
Business expenses 900,000
The income tax of the corporation is:
a. 330,000
b. 500,000
c. 430,000
d. 250,000
3,000,000 - 1,000,000 - 900,000 = 1,100,000 x 30% = 330
*NIRC, Sec 27

FINAL TAX
1. Jackie Chen, a resident citizen, deposited 3,000,000 in the 180-day time deposit of national bank.
The deposit pays 8% interest. Compute the final tax on maturity of the deposit.
a. 24,000
 b. 34,000
c. 44,000
d. 54,000
Sol. 3,000,000 x 8% x 6/12 = 120,000
120,000 x 20% = 24,000
*NIRC, Sec. 24
CAPITAL GAINS TAX
1. Carlo, a non-resident alien, sold domestic stocks directly to a buyer at a net gain of 65,000.
Compute the Capital Gains Tax.
a. 3,050
b. 3,150
c. 3,250
d. 3,350
65,000 x 5% = 3,250
*NIRC, Sec. 39