True or False. (1% each)
Gains realized by the investor upon redemption of shares of stock in a mutual fund company are exempt from income tax.
A corporation can claim the optional standard deduction equivalent to 40% of its gross sales or receipts, as the case may be.
Premium payment for health insurance of an individual who is an employee in an amount of P2,500 per year may be deducted from gross income if his gross salary per year is not more than P250,000.
The Tax Code allows an individual taxpayer to pay in two equal installments, the first installment to be paid at the time the return is filed, and the second on or before July 15 of the same year, if his tax due exceeds P2,000.
An individual taxpayer can adopt either the calendar or fiscal period for purposes of filing his income tax return.
The capitalization rules may be resorted to by the BIR in order to compel corporate taxpayers to declare dividends to their stockholders regularly.
Informer’s reward is subject to a final withholding tax of 10%.
A non-resident alien who stays in the Philippines for less than 180 days during the calendar year shall be entitled to personal exemption not to exceed the amount allowed to citizens of the Philippines by the country of which he is subject or citizen.
Suggested answer only. Not an official answer and not legal advice.
1) True. 2) False. 3) False. 4) False. 5) False. 6) False. 7) True. 8) False. Mutual fund redemptions are tax-exempt (Sec. 32(B)(7)(h)). Corporate OSD uses gross income (Sec. 34(L)). Health deductions and personal exemptions were repealed under TRAIN. Sec. 56(A)(2) sets
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Quick check
Are gains realized by an investor upon the redemption of shares of stock in a mutual fund company subject to income tax?
Section 32(B)(7)(h) of the Tax Code explicitly exempts gains from redemption of mutual fund shares from income tax.
What is the correct base for calculating the 40% Optional Standard Deduction for corporate taxpayers under Section 34(L)?
Section 34(L) specifies that corporate taxpayers calculate the optional standard deduction based on gross income.
What accounting period must an individual taxpayer adopt for filing income tax returns under the Tax Code?
Under Section 43 of the Tax Code, individual taxpayers must report income on a calendar year basis.
When is the second installment of income tax due for an individual taxpayer who elects installment payment under Section 56(A)(2)?
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What is the final withholding tax rate imposed on an informer's reward under Section 282 of the Tax Code?
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Learn more about these topics
1. Income Tax Exemptions
Gains realized by investors upon the redemption of shares of stock in a mutual fund company are expressly exempt from income tax under Section 32(B)(7)(h) of the Tax Code. Similarly, under Section 282, informer's rewards granted to persons instrumental in discovering tax violations are subject to a final withholding tax of ten percent.
2. Corporate Tax Deductions
Under Section 34(L) of the National Internal Revenue Code, a domestic or resident foreign corporation may elect an optional standard deduction equivalent to forty percent of its gross income, not gross sales or receipts. In contrast, individual taxpayers computing net income may claim an optional standard deduction of forty percent of gross sales or receipts.
3. Individual Income Accounting
Individual taxpayers are required under Section 43 of the Tax Code to report income using the calendar year accounting period. Moreover, under Section 56(A)(2), individual taxpayers whose tax due exceeds two thousand pesos may pay in two equal installments, with the second installment due on or before October fifteen, not July fifteen.