30.
Any amount subsequently received on account of a bad debt previously charged off and allowed as a
deduction
from gross income in prior years must be included in gross income in the taxable year in which received.
This is
a. Severance test c. Destination of income test
b. Life-blood theory d. Equitable doctrine of tax benefit
31. INIWAN, a dedicated and honest employee of PAASA Corp. For the past 20 years was advised that he
is to be
retrenched as the company was losing heavily but that he would be given the separation pay provided
by law.
To avoid implication of inefficiency INIWAN was advised to file a letter of resignation instead of being
retrenched. If INIWAN files a letter of resignation and receives the separation pay, such amount is
a.Taxable in full c. Exempt from income tax
b.Partly taxable, partly exempt d. Subject to final tax
32. Using the preceding no. If INIWAN is retrenched and receives the separation pay, such amount is
a. Taxable in full c. Exempt from income tax
B.Partly taxable, partly exempt d. Subject to final tax
33. May consider capital expenditures as revenue expenditures
a.Resident citizen c. Private educational institutions
b.Domestic corporation d. Resident alien
34. May claim tax credit for income taxes paid to foreign country
a.Resident citizen c. Non-resident citizen
b.Resident alien d. Non-resident alien
35. A building was partially destroyed by fire in 2018. The building had a book value of P5M the
insurance company
was willing to pay 4M, which was refused by the owner. Finally, the claim was settled in 2020 for P4.6M.
the
proceeds will be
a. Exempt from income tax c. Subject to final tax
/etd
b. Part of taxable income d. Partly exempt, partly taxable
36. One of the following is not correct for deductibility of losses from gross income
a. Must arise from fire, storm or other casualty, robbery, theft or embezzlement
b. Must not be compensated by insurance or other form of indemnity
c. A declaration of loss by casualty should be filed with the Bureau of Internal Revenue
d. Must have been claimed as deduction in the estate return of the taxpayer
37. The net operating loss, which had not been previously offset as deduction from gross income shall
be carried
over as deduction from gross income for the next
a. 2 consecutive taxable years immediately following such loss
b.3 consecutive taxable years immediately following such loss
c. 4 consecutive taxable years immediately following such loss
d.Taxable year immediately following such loss
38-39
A taxpayer engaged in business incurred a partial loss of property as follows:
Asset 1 Asset 2
Book value of the asset at the time of loss P200, 000 P200,000
Cost to restore the property back to its normal operating condition 120,000 300,000
Insurance Recovery 50, 000 None
Salvage none 40, 000
38. The deductible loss for asset 1 is
a. P120, 000 b. P170, 000 c. P30,000 d. P80,000
39. The deductible loss for asset 2 is
a. P300, 000 b. P40, 000 c. P160,000 d. P240,000
