TAX05-04 Corporate Income Tax
TAX05-04 Corporate Income Tax
San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]
1. For purposes of income taxation, the following are considered “Corporation”, except:
2. The following are not “Corporation” under the National Internal Revenue Code, except:
a. Gains from the sale to an Ilocos Norte power plant of generator delivered in the United
States
b. Interests earned on its dollar deposits in a Philippine bank under the Expanded Foreign
Currency Deposit system
c. Dividends from a three-year old Norwegian subsidiary with operations in the Philippines and
derives 60% of its gross income from the Philippines
d. Royalties from the use in Brazil of generator sets designed in the Philippines by its engineers
4. Villasis, Inc. bought a parcel of land in 2020 for P7 million as part of its inventory of real
properties. In 2021, it sold the land for P12 million which was its zonal valuation. In the same
year, it incurred a loss of P6 million for selling another parcel of land in its inventory. These were
the only transactions it had in its real estate business. Which of the following is the applicable
tax treatment?
5. Samsang Tech Corporation is registered under the laws of the British Virgin Islands. It has
extensive operations in Asia. In the Philippines, its products are imported and sold at a mark-up
by its exclusive distributor, Somewell, Inc.’s products The BIR compiled a record of all the imports
of Somewell from Samsang and imposed a tax on Samsang’s net income derived from its exports
to Somewell. Is the BIR correct?
6. The following government owned and controlled corporations are exempt from income tax,
except:
8. All of the following are taxable on income derived from sources within the Philippines only, except:
9. First Statement - Non-Resident Foreign Corporations are not required to file any income tax
return.
Second Statement - Tax exempt corporations are also required to file an ITR for administrative
purposes only.
a. True, True
b. False, True
c. False, False
d. True, False
10. The following passive income, from sources within the Philippines, received by a domestic
corporation shall be subject to 20% final withholding tax, except:
11. A depository bank under Foreign Currency Deposit System has the following income from foreign
currency transactions (Exchange Rate $1=P50):
How much is the final withholding tax applicable on the above income?
a. P225,500
b. P95,000
c. P150,000
d. P545,000
12. Interest income of a domestic commercial bank derived from a peso loan to a domestic
corporation in 2021 is:
a. Subject to the 25% income tax based on its net taxable income
b. Subject to the 20% final withholding tax.
c. Subject to the 15% final withholding tax.
d. Subject to 10% final withholding tax.
On April 15, 2021, Aishin Corporation sold shares of stocks of Abu Co., a domestic corporation. It
was sold at its fair market value of P5,000,000 when its cost to the seller was P2,000,000
13. Assuming Aishin Corporation is a domestic corporation, the capital gains tax on the transaction
is:
a. P450,000
b. P295,000
c. P750,000
d. P345,000
14. Assuming Aishin Corporation is a foreign corporation, the capital gains tax on the transaction is:
a. P450,000
b. P295,000
c. P750,000
d. P345,000
15. Assuming Aishin Corporation is a domestic corporation and the shares were sold at a price of
P4,000,000, when its fairmarket value at the time was P5,000,000. The cost of the shares
remain at P2,000,000. The total tax liability of the seller is:
a. P450,000
b. P295,000
c. P750,000
d. P345,000
2% July 1, 2023
For corporations with net taxable 20% July 1, 2020 1% July 1, 2020 to
income not exceeding Five Million June 30, 2023
Pesos (P5,000,000) AND total
assets not exceeding One Hundred
Million (P 100,000,000), excluding 2% July 1, 2023
the land on which the particular
business
entity’s office, plant and equipment
are situated
Proprietary Educational Institutions 1% July 1, 2020 Not Applicable
and Hospitals to June 30, 2023
10% July 1, 2023
Foreign Corporation [on taxable income(e.g., net or gross income,
as applicable) derived from all sources within the Philippines]:
Resident Foreign Corporation 25% July 1, 2020 1% July 1, 2020 to
June 30, 2023
2% July 1, 2023
The higher between the “Regular” or “Minimum Corporate
Type of Corporation Income Tax (MCIT)” rates
Regular MCIT
Rate Effectivity Rate Effectivity
Offshore Banking Unit (OBUs) (Note: 25% Upon the 1% Upon the
OBUs shall now be taxed as resident effectivity of the effectivity of
foreign corporation upon effectivity of CREATE the CREATE
the CREATE) until June 30,
2023
2% July 1, 2023
2% July 1, 2023
16. A Domestic Corporation was registered with the Bureau of Internal Revenue. Its Certificate of
Registration (BIR Form 2303) indicates it was registered on December 27, 2020. It had a soft
opening and made its first sale on January 7, 2021. It can be liable to the Minimum Corporate
Income Tax on the year:
a. 2022
b. 2023
c. 2024
d. 2025
17. The following corporations are exempt from the MCIT, except
18. One of the following is not a ground for exemption from MCIT:
19. Corporation A’s regular corporate income tax for CY 2021 is:
a. P172,500,000
b. P8,400,000
c. P138,000,000
d. P0
20. Corporation A’s minimum corporate income tax for the CY 2021 is:
a. P172,500,000
b. P8,400,000
c. P138,000,000
d. P0
21. The amount of tax Corporation A is liable for the CY 2021 is:
a. P172,500,000
b. P8,400,000
c. P138,000,000
d. P0
22. Took Mall Corporation, a domestic corporation and in its 7th year of operation in 2018, provided
you with the following data:
Assuming that for the year ended 2020, Took Mall’s total asset is amounting to P250,000. The
income tax due after tax credit, if any for taxable year 2020 is:
a. P10,000
b. P60,000
c. P30,000
d. P90,000
Jiff Free Corporation has the following information for the taxable year ended December 31, 2020:
Creditable
Quarter RCIT MCIT
Withholding Tax
First 200,000 160,000 40,000
Second 240,000 500,000 60,000
Third 500,000 150,000 80,000
Fourth 300,000 200,000 70,000
Additional Information:
a) Excess MCIT for 2019, P60,000;
b) Excess tax credits from 2019 amounts to P20,000.
23. How much was the income tax payable for the first quarter?
a. P200,000
b. P120,000
c. P160,000
d. P80,000
24. How much was the income tax payable for the second quarter?
a. P660,000
b. P200,000
c. P460,00
d. P60,000
25. How much was the income tax payable for the third quarter?
a. P860,000
b. P600,000
c. P120,000
d. P140,000
a. P1,260,000
b. P230,000
c. P390,000
d. P930,000
27. If the gross income from unrelated activity exceeds 50% of the total gross income derived by any
private educational institution, the rate shall be 25% based on the entire taxable income. This
principle is known as:
a. Constructive receipt
b. Tax benefit rule
c. End result doctrine
d. Predominance test
Umbrella Academy, a proprietary educational institution organized in 1972, had the following data
for 2020.
a. P2,400
b. (P5,700)
c. P10,500
d. P46,500
29. Assuming the year is 2021, the income tax due is:
a. P2,400
b. (P5,700)
c. P10,500
d. P46,500
30. Assuming the year is 2023, the income tax due is:
a. P2,400
b. (P5,700)
c. P10,500
d. P46,500
31. Assuming the year is 2024, the income tax due is:
a. P2,400
b. (P5,700)
c. P10,500
d. P46,500
32. Xavier School for Gifted Youngsters, a proprietary educational institution organized in 2004, had
the following data for 2020.
a. P16,500
b. (P9,500)
c. (P10,875)
d. P20,000
The Legacy Corporation provided the following data for the calendar year ending December 31, 2021
($1=P50).
Philippines USA
Gross Income P4,000,000 $40,000
Deductions 2,500,00 15,000
Income Tax Paid 3,000
33. If it is a domestic corporation, its income tax after tax credit is:
a. P812,500
b. P537,500
c. P962,500
d. P400,000
34. If it is a domestic corporation and its total assets amount to P95,000,000, its income tax after
tax credit is:
a. P812,500
b. P537,500
c. P962,500
d. P400,000
35. If it is a resident foreign corporation and its total assets amount to P95,000,000, its income tax
is:
a. P40,000
b. P450,000
c. P375,000
d. P525,000
a. P730,000
b. P1,280,000
c. P1,000,000
d. P1,400,000
37. If it is a domestic corporation, but it opts to claim the tax paid abroad as deduction from gross
income, its income tax is:
a. P910,000
b. P832,000
c. P237,000
d. P650,000
38. If it is a resident international carrier, assuming the gross income from the Philippines is the gross
Philippine billing, its income tax is:
a. P100,000
b. P 10,000
c. P 37,000
d. P125,000
a. P1,000,000
b. P 100,000
c. P 300,000
d. P 128,000
a. P100,000
b. P180,000
c. P300,000
d. P128,000
41. If it is a non-resident lessor of aircrafts, machineries, and equipment, its income tax is:
a. P100,000
b. P180,000
c. P300,000
d. P128,000
42. If it is a resident foreign corporation but its expenses within and outside the Philippines is P3M,
unallocated (disregard original data on expense) its income tax is:
a. P640,000
b. P700,000
c. P480,000
d. P500,000
43. If it is a resident foreign corporation and it remitted 60% of its net profit to its head office abroad,
its total tax liability is (Original data)
a. P480,000
b. P571,800
c. 476.250
d. P612,750
44. Banco De Adamantium, a domestic corporation had the following data for the taxable year ended
December 31, 2020:
a. P600,000
b. P550,000
c. P400,000
d. P0
45. Generally, dividend income received by a domestic corporation from a foreign corporation is
includible as gross income of the recipient domestic corporation and subject to corporate income
tax. However, said foreign corporation dividend is exempt from income tax provided the following
requisites are met, except:
a. The dividends actually received or remitted into the Philippines are reinvested in the
business operations of the domestic corporation within the next taxable year from the
time the foreign-source dividends were received or remitted.
b. The dividends received shall only be used to fund the working capital requirements, capital
expenditures, dividend payments, investment in domestic subsidiaries, and infrastructure
project.
c. The domestic corporation holds directly or indirectly at least twenty percent (20%) in value
of the outstanding shares of the foreign corporation.
d. The domestic corporation has held the shareholdings uninterruptedly for a minimum of two
(2) years at the time of the dividends distribution. In case the foreign corporation has been
in existence for less than two(2) years at the time of dividends distribution, then the
domestic corporation must have continuously held directly at least twenty percent (20%) in
value of the foreign corporation's outstanding shares during the entire existence of the
corporation.
46. The following are exempt from the Improperly Accumulated Earnings Tax, except?
47. It is a test used in determining the reasonable needs of a business to justify the accumulation of
earnings which will exempt the corporation from paying Improperly Accumulated Earnings Tax:
a. Urgency test
b. Immediacy test
c. Reasonable needs test
d. Control test
48. JCU Corporation, a domestic corporation had the following data for taxable year 2020:
Sales P5,000,000
Cost of goods sold 2,000,000
General selling and administrative expenses 500,000
Interest income from Philippine bank deposit 100,000
Rental income (net of 5% withholding tax) 190,000
Dividend Income:
From domestic corporation 60,000
From foreign corporation 50,000
Capital gains from sale of domestic shares of stocks sold Directly to buyer 75,000
Dividend declared and paid during the year 500,000
Retained earnings, 12/31/2019 1,000,000
Par Value of outstanding shares 500,000
a. P825,000
b. P899,200
c. P746,250
d. P819,200
49. Based on the foregoing problem, the Improperly accumulated earnings tax was:
a. P208,125
b. P219,750
c. P108,125
d. P105,125
50. MNC Corporation, a domestic corporation, has unappropriated retained earnings in excess of its paid-up
capital stock amounting to P20,000,000 and P50,000,000 as of thefiscal years ending June 30, 2020
and June 30, 2021, respectively. MNC Corporation shall be subject to the 10% improperly accumulated
earnings tax on the following fiscal years ending, except:
Asian Spirit, an international air carrier showed the following gross receipts for 2019:
Additional information:
▪ Thirty Five percent (35%) of the shipments from the Philippines to the United States were
later shipped to the Soviet Union.
▪ 25% of all its revenues were from transport of cargoes and goods.
a. P127,500
b. P200,000
c. P170,000
d. P150,000
52. How much is the income tax payable for 2019 assuming the Philippines and U.S. entered into a
tax treaty subjecting international carriers to 1% income tax rate?
a. P68,000
b. P60,000
c. P80,000
d. P150,000
53. How much is the income tax payable for 2019 assuming that Philippine carriers are exempt from
payment of income tax in the United States?
e. P125,000
f. P60,000
g. P0
h. P80,000
The Company also sold a land classified as capital asset for P2,000,000. The cost of the land is
P1,000,000 while its Zonal Value is P3,000,000.
a. P578,000
b. P963,600
c. P683,500
d. P821,500
55. Based on the above problem, its income tax on all income if it is a resident foreign corporation,
ignoring sale of land:
a. P278,000
b. P663,600
c. P383,500
d. P509,000
56. And if it is a non-resident foreign corporation and there is tax sparing, its income tax on all income
is (ignore sale of land):
a. P378,000
b. P663,600
c. P383,500
d. P509,000
57. A domestic corporation may employ, as a basis for filing its annual corporate income tax return
the: