Far Eastern University

Institute of Accounts, Business, and Finance

Department of Accountancy
Christian Joshua D. Corcuera, CPA, CTT
Income Taxation – Taxation on Individuals
_____________________________________________________________________________

[Individual Income Tax; Taxable Income]

1. Joshi, a CPA professor, had the following data for 2024:
Salary from employment income P 400,000
Professional income from exercise of profession 250,000
Professional expenses 100,000

1. What is the taxable income of Joshi?

a. P400,000 b. P650,000 c. P550,000 d. P750,000

For items 2 to 4, refer to the data below:

Jhaz had the following data for 2024, assume that $1 is equal to P50.
Philippines Abroad
Business income P 1,000,000 $ 20,000
Professional income 400,000 10,000
Salaries 200,000 ---
Business and professional expenses 250,000 8,000
Income tax paid 4,000

2. What is the taxable income of Jhaz if he is a resident citizen?

a. P1,350,000 b. P1,600,000 c. P2,450,000 d. P2,250,000

3. What is the taxable income of Jhaz if he is a resident alien?

a. P1,350,000 b. P1,600,000 c. P2,450,000 d. P2,250,000

4. What is the taxable income of Jhaz if he is a non-resident citizen?

a. P1,350,000 b. P1,600,000 c. P2,450,000 d. P2,250,000

[Individual Income Tax; Compensation Income]

5. Ayen works for JPI and she is not engaged in any business or any other source of income other than her employment. In
2024, she earned a total taxable compensation income of P1,060,000. How much is her income tax liability?
a. P208,000 b. P167,500 c. P84,800 d. P64,800

[Individual Income Tax; Business or Professional Income]

6. Peter operates a convenience store while he offers bookkeeping services to his clients. In 2024, his gross sales amounted
to P800,000, in addition to his receipts from bookkeeping services of P300,000. Moreover, he incurred cost of sales of
P600,000 and operating expenses of P200,000. He signified his intention to be taxed at 8% income tax rate in his first quarter
return. How much is the income tax liability for the year?
a. P68,000 b. P88,000 c. P24,000 d. P4,000
7. Peter operates a convenience store while he offers bookkeeping services to his clients. In 2024, his gross sales amounted
to P800,000, in addition to his receipts from bookkeeping services of P300,000. Moreover, he incurred cost of sales of
P600,000 and operating expenses of P200,000. He failed to signify his intention to be taxed at 8% income tax rate in his first
quarter return. How much is the income tax liability for the year?
a. P5,000 b. P10,000 c. P7,500 d. P68,000

[Individual Income Tax; Business or Professional Income; Itemized Deduction and Optional Standard Deduction]
For items 8 to 11, refer to the data below:

Andy operates a Korean merchandise shop while he offers accounting services to his clients. In 2024, his gross sales
amounted to P1,800,000, in addition to his gross receipts from accounting services of P400,000. His recorded cost of goods
sold and operating expenses were P1,325,000 and P320,000, respectively.

8. How much is the taxable income of Andy if he opted to avail of the OSD?
a. P2,200,000 b. P555,000 c. P1,320,000 d. P333,000

9. How much is the tax due of Andy if he opted to avail of the OSD?
a. P232,500 b. P286,000 c. P53,500 d. P12,450

10. Assuming Andy did not avail of the OSD, how much is the income tax liability of Andy if he signified his intention to
be taxed at 8% income tax rate in his 1 st quarter return?
a. P44,400 b. P24,400 c. P105,600 d. P85,600

11. Assuming Andy did not avail of the OSD and did not signify his intention to be taxed at 8% income tax rate in his 1 st
quarter return, how much is the income tax liability of Andy?
a. P176,000 b. P156,000 c. P462,500 d. P53,500

[Individual Income Tax; Business or Professional Income; Quarterly and Annual Income Tax]
For items 12 to 18, refer to the data below:
For the year 2024, Tine signified her intention to be taxed at 8% income tax rate on gross sales in her first quarter income
tax return. However, her gross sales during the taxable year exceeded the VAT threshold.

Q1 Q2 Q3 Q4
Total sales P 500,000 P 500,000 P 2,000,000 P 3,000,000
Less: Cost of sales 300,000 300,000 1,200,000 1,200,000
Operating expenses 120,000 120,000 480,000 720,000

12. What is the income tax payable for the second quarter?
a. P20,000 b. P40,000 c. P60,000 d. P160,000

13. What is the income tax due for the third quarter?
a. P60,000 b. P160,000 c. P220,000 d. P40,000

14. What is the income tax payable for the final return?
a. P72,500 b. P220,000 c. P292,500 d. P160,000
15. What is the percentage tax, if any, for the third quarter?
a. P20,000 b. P60,000 c. P90,000 d. P0

16. What is the value-added tax, if any, for the year?

a. P360,000 b. P720,000 c. P90,000 d. P0

17. When is the due date of the second quarter income tax return?
a. May 15 b. July 15 c. July 31 d. August 15

18. What is the income tax payable for the first quarter?
a. P20,000 b. P40,000 c. P60,000 d. P160,000

[Individual Income Tax; Mixed Income Earner]

For items 19 and 20, refer to the data below:

Stephy, a senior manager of a huge real estate company, earned an annual gross compensation income of P1,700,000 in
2024. Not yet included here is the 13th month pay and other benefits of P50,000. Total mandatory contributions to SSS, PAG-
IBIG, and PhilHealth amounted to P10,000.

Aside from employment income, Stephy also owns a Korean store with gross sales of P2,600,000, sales discount of P120,000,
sales returns and allowances of P80,000, cost of sales of P1,200,000, operating expenses of P400,000, respectively, and other
non-operating income of P80,000.

19. If Stephy decided to avail of the 8% option, what is her income tax payable for 2024?
a. P503,400 b. P325,000 c. P517,000 d. P523,400

20. If Stephy decided to be taxed at the progressive income tax rate, the income tax payable for 2024 is?
a. P573,500 b. P672,400 c. P659,600 d. P736,400

For items 21 and 22, refer to the data below:

In 2024, Deng, a financial controller of Aye Company, earned annual compensation of P1,500,000, inclusive of 13 th month
pay and other benefits of P120,000, but already net of mandatory contributions.

Aside from compensation income, Deng owns a convenience store with gross sales of P2,400,000, cost of sales of P1,000,000,
operating expenses of P600,000, and non-operating income of P100,000.

21. If Deng opted to be taxed at 8% income tax rate of her gross sales for her income from business, how much is her tax
due for 2024?
a. P352,500 b. P255,000 c. P455,000 d. P435,000

22. If Deng did not opt to be taxed at 8% income tax rate of her gross sales for her income from business, how much is her
tax due for 2024?
a. P352,500 b. P582,200 c. P455,000 d. P495,500
[Individual Income Tax; Impact of Classification of Individuals on Taxation; Income Tax Credit]
For items 23 to 27, refer to the data below:

Jhaz had the following data for 2024, assume that $1 is equal to P50.
Philippines Abroad
Business income P 1,000,000 $ 20,000
Professional income 400,000 10,000
Salaries 200,000 ---
Business and professional expenses 250,000 8,000
Income tax paid 4,000

23. What is the income tax payable of Jhaz if he is a resident citizen?

a. P337,500 b. P434,000 c. P537,500 d. P240,000

24. What is the income tax payable of Jhaz if he is a resident alien?

a. P337,500 b. P434,000 c. P537,500 d. P240,000

25. What is the income tax payable of Jhaz if he is a non-resident citizen?

a. P337,500 b. P434,000 c. P537,500 d. P240,000

26. What is the income tax payable of Jhaz if he is a non-resident alien engaged in trade or business?
a. P337,500 b. P434,000 c. P537,500 d. P240,000

27. Disregard professional and business income, the total income tax that should be withheld from Jhaz if he is a non-
resident alien not engaged in trade or business?
a. P50,000 b. P18,500 c. P31,500 d. P338,500

[Individual Income Tax; Capital Gains Tax; Final Withholding Tax]

For items 28 to 32, refer to the data below:

JP, a Filipino who lived in Navotas since birth, has the following data for the year 2024:

Gross sales, Philippines P 1,250,000

Gross sales, USA 750,000
Cost of sales, Philippines 375,000
Cost of sales, USA 200,000
Business expenses, Philippines 125,000
Business expenses, USA 75,000
Interest income, peso bank deposit – BPI – Makati 10,000
Interest income, US dollar deposit – BPI – Makati 25,000
Gain from sale of residential house and lot
(selling price P900,000, FMV P1,000,000 at date of sale) 125,000
Gain from sale of shares of stock listed and traded
In the local stock exchange (selling price, P100,000) 30,000
Gain from sale of shares of stock not traded in the
Local stock exchange 150,000
28. How much is the taxable income subject to the graduated tax table?
a. P1,250,000 b. P625,000 c. P1,225,000 d. P1,175,000

29. How much is the income subject to final tax?

a. P10,000 b. P25,000 c. P35,000 d. P185,000

30. How much is the total final tax on passive income?

a. P5,000 b. P5,750 c. P6,500 d. P7,000

31. How much is the income subject to capital gains tax?

a. P275,000 b. P155,000 c. P305,000 d. P185,000

32. How much is the capital gains tax due?

a. P64,500 b. P82,500 c. P60,000 d. P185,000

[Individual Income Tax; Capital Gains Tax on Real Property]

33. HMT sold his mansion in Ayala Alabang to Atty. Joshi. The selling price was P150,000,000, its zonal value is
P135,000,000, its assessed value is P140,000,000, and its appraised value is P160,000,000. What is the capital gains tax?
a. P9,000,000 b. P9,600,000 c. P22,500,000 d. P24,000,000

[Individual Income Tax; Capital Gains Tax on Shares of Stock]

34. Faye sold her shares of stock, not listed in the local stock exchange, belonging to a Jhaz Company, a domestic
corporation. The selling price was P100,000 and the cost was P70,000. How much is the capital gains tax on this transaction?
a. P30,000 b. P1,800 c. P4,500 d. No capital gains tax

35. Refer to the previous item, assume the same facts except that the shares of stock was listed in the local stock exchange.
How much is the capital gains tax on this transaction?
a. P30,000 b. P1,800 c. P4,500 d. No capital gains tax

[Individual Income Tax; Minimum Wage Earner]

For items 36 and 37, refer to the data below:
Ann is a minimum wage earner with a basic minimum wage of P150,000 for the year, she also received the following
benefits:
De minimis, P60,000 (P20,000 over the ceiling)
13th month pay and other benefits, P112,000
Holiday pay, P30,000
Overtime pay, P10,000
Night shift differential, P15,000
Hazard pay, P5,000

36. How much is the income tax due of Ann?

a. P48,000 b. P40,900 c. P82,000 d. P0

37. How much is the income tax due of Ann in 2024 assuming she also earned P450,000 derived from her business?
a. P48,000 b. P40,900 c. P82,000 d. P0
[Individual Income Tax; Tax Credits]
38. Bianca had the following income and expenses in 2024:
Salary, net of withholding tax of P5,000 P 155,000
13 month pay
th 12,900
Gross receipts from profession, net of withholding tax of P1,800 88,200
Rent income, net of 5% withholding tax 57,000
Gross receipts from business 125,000
Professional and business expense 56,500

The income tax payable of Bianca if she availed of itemized deductions is?
a. P9,475 b. P25,700 c. P44,900 d. P41,360

[Individual Income Tax; Final Withholding Tax; Interest Income; Before CMEPA]
For numbers 39 to 42, refer to the data below:

Rozen, a resident citizen, earned the following items for the year 2024:
Interest income from peso bank deposit – BPI, Makati P 150,000
Interest income from dollar bank deposit – BDO, Manila 230,000
Interest income from won bank deposit – Woori Bank, Seoul 100,000
Interest income from trade receivables 300,000

39. How much is the interest income subject to regular income tax?
a. P100,000 b. P230,000 c. P300,000 d. P400,000

40. How much is the final withholding tax?

a. P30,000 b. P34,500 c. P64,500 d. P79,500

41. Assuming that Rozen is a non-resident citizen, how much is the final withholding tax?
a. P30,000 b. P34,500 c. P64,500 d. P79,500

42. Assuming that Rozen is a non-resident alien not engaged in trade or business, how much tax will be withheld from
Rozen?
a. P37,500 b. P95,000 c. P170,000 d. P195,000

[Theories on Individual Income Tax]

43.
I. A citizen of the Philippines residing therein is taxable on all income derived from sources within and without the
Philippines.
II. A non-resident citizen is taxable on income derived from sources within the Philippines only.
Which statement/s are true?
a. I only b. II only c. Both I and II d. Neither I nor II

44. A resident citizen is taxable on all income derived from sources:

a. Within the Philippines only c. Parly within and partly without
b. Without the Philippines only d. Within and without the Philippines
45. A non-resident citizen is taxable on all income derived from sources:
a. Within the Philippines only c. Parly within and partly without
b. Without the Philippines only d. Within and without the Philippines

46. A resident alien is taxable on all income derived from sources:

a. Within the Philippines only c. Parly within and partly without
b. Without the Philippines only d. Within and without the Philippines

47. A non-resident alien engaged in trade or business is taxable on all income derived from sources:
a. Within the Philippines only c. Parly within and partly without
b. Without the Philippines only d. Within and without the Philippines

48. A non-resident alien not engaged in trade or business is taxable on all income derived from sources:
a. Within the Philippines only c. Parly within and partly without
b. Without the Philippines only d. Within and without the Philippines

49. Mitzi is a self-employed individual or professional. She has the options to be taxed at:
a. Graduated tax table
b. 8% of gross sales and non-operating income
c. 8% of gross sales and non-operating income in excess of P250,000
d. Either options A or C

50. Len is a full-time employee and has a business. For her compensation income, she has the options to be taxed at:
a. Graduated tax table
b. 8% of gross sales and non-operating income
c. 8% of gross sales and non-operating income in excess of P250,000
d. Either options A or C

51. Len is a full-time employee and has a business. For her business income, she has the options to be taxed at:
a. Graduated tax table
b. 8% of gross sales and non-operating income
c. 8% of gross sales and non-operating income in excess of P250,000
d. Either options A or B

52. Pavie has income derived from her business or exercise of profession. She wanted to be taxed at 8% of her gross sales
and non-operating income. Which of the following scenarios would prevent her from exercising this option?
a. Her gross sales for the year did not exceed P3,000,000
b. She is not VAT-registered
c. She is subject to pay OPT under Section 116 of the NIRC
d. She is subject to pay percentage taxes under Section 117 onwards of the NIRC

53. Minimum wage earners are taxable on which of the following?

a. Compensation
b. Hazard pay
c. Overtime pay
d. Commission
54. All passive income are subject to final withholding tax?
a. True. Passive income is subject to final withholding tax.
b. False. Only passive income earned by resident citizens are subject to final withholding tax.
c. False. All passive income earned within the Philippines is subject to final withholding tax.
d. False. Only certain passive income earned within the Philippines is subject to final withholding tax.

55. All capital gains are subject to capital gains tax?

a. True. Capital gains must be subject to capital gains tax.
b. False. Only capital gains from sale of unlisted shares of stock of a domestic corporation is subject to capital gains tax.
c. False. Only capital gains from sale of real property held as capital asset in the Philippines is subject to capital gains tax.
d. False. Only capital gains from (1) sale of unlisted shares of stock of a domestic corporation, and (2) sale of real property
held as capital asset in the Philippines are subject to capital gains tax.

Annual tax table effective January 1, 2023