Tax 2 Teachers' Day Quiz Night

Income subject to final tax refers to an income wherein_________________________.

When do we celebrate World Teachers' Day?

• October 5

• October 4

• October 8

• October 1

A feature of ordinary gains as distinguished from capital gains:

• Gains from sales of assets not stock in trade.

• May or may not be taxable in full.

• Sources are capital assets.

• No holding period.

The term “capital assets” includes:

• Stock in trade or other property included in the taxpayer’s inventory.

• Property primarily for sale to customers in the ordinary course of his trade or business.

• Real property not used in the trade or business of taxpayer.

• Property used in the trade or business of the taxpayer and subject to the depreciation.

Who among the following is a non-resident alien?

• An alien who comes to the Philippines for a definite purpose which in its nature may be promptly accomplished.

• An alien who comes to the Philippines for a definite purpose which in its nature would require an extended stay.

• An alien who lives in the Philippines with no definite intention as to his stay.

• An alien who has acquired residence in the Philippines.

A citizen of the Philippines was a non-resident citizen in 2003. On May 15, 2004, he arrived in the Philippines to reside permanently in the Philippines. His income for the year was:

A – From January 1, 2004 to May 14, 2004.

B – From May 15, 2004 to December 31, 2004.

Which of the following is wrong?

• He is considered a resident citizen on his “B” income.

• He is considered a resident citizen on his “A” and “B” income.

• He is considered a non-resident citizen on his “A” income.

• He is not taxable on his “A” income.

Which of the following is not treated as a corporation?

• General partnership and trade.

• General professional partnership.

• Mutual fund company.

• Regional operating headquarters of multi national company.

Distinguish an ordinary asset from a capital asset. Check all correct answers.

• As to taxability, an ordinary asset is subject to income tax; whereas, a capital asset is subject to capital gains tax

• As to nature, as a rule, an ordinary asset is regularly used in the normal course of trade or business; whereas, a capital asset is an asset not regularly used in the normal course of trade or business

• Under Sec. 39 of the NIRC, the term 'capital assets' means property held by the taxpayer (whether or not connected with his trade or business), but does not include stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year or property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business, or property used in the trade or business, of a character which is subject to the allowance for depreciation provided in Subsection (F) of Section 34; or real property used in trade or business of the taxpayer.

As a way to augment the income of the employees of DEF Inc., a private corporation, the management decided to grant a special stipend of P50,000.00 for the first vacation leave that any employee takes during a given calendar year. In addition, the senior engineers were also giving housing inside the factory compound for the purpose of ensuring that there are available engineers within the premises everytime there is a breakdown in the factory machineries and equipment.

Is the cash equivalent value of the housing facilities received by the senior engineers subject to fringe benefits tax?

• Yes

• No

According to the case of COMMISSIONER OF INTERNAL REVENUE vs. PHILIPPINE AIRLINES, INC., a domestic corporation must pay whichever is the higher of:

• the income tax under Section 27(A) of the NIRC of 1997, as amended, computed by applying the tax rate therein to the taxable income of the corporation

• the MCIT under Section 27(E), also of the same Code, equivalent to 2% of the gross income of the corporation

• none of the above