Self-Check

Basing on your readings, answer the following questions.

1.When is an item of receipt considered an item of gross income?

2.Who are the different income taxpayers? How do they differentiate in being taxable on their income?

3.When is a benefit considered realized?

4.What are the situs rules discussed in this module?

Exercise 3.1

TRUE OR FALSE

Determine whether the following statements are true or false.

___________1. Dividends received from a foreign corporation may be earned within the Philippines.

___________2. A citizen may be both a resident and non-resident in a taxable year.

___________3. There must be another party involved in an exchange transaction for a benefit to

be realized.

___________4. The situs of the gains on sale of domestic stocks is the place where the sale occurred.

___________5. In classifying individual taxpayers, the intention is evaluated first before applying rules

on length of stays.

Exercise 3.2

MULTIPLE CHOICE

Choose the best answer from the choices provided.

______1. Which of the following is there a benefit realized?

a. Receipt of proceeds of an approved bank loan

b. Receipt of a car from a deed of donation

c. Discovery of lost properties

d. Discovery of hidden treasures in a lot owned

e. None of the above

______2. Which of the following is taxable on their income earned abroad?

a. Resident Alien

b. Resident Citizen

c. Non-Resident Alien

d. Non-Resident Citizen

______3. When are holding gains subject to income tax?

a. Never subject to income tax

b. Once the value is determined

c. Once the asset is sold

d. Every yearend

______4. Which of the following is subject to income tax?

I. Return on Capital

II. Return of Capital

III. Recovery of Lost Capital

IV. Recovery of Lost Profits

a. I and III

b. I and IV

c. II and III

d. II and IV

______5. Dividends from this corporation is subject to the pre-dominance test.

a. Domestic Corporation

b. Resident Foreign Corporation

c. Non-Resident Foreign Corporation

d. Special Corporation

Exercise 3.3

TAXPAYER CLASSIFICATION

Determine the classification of each of the following taxpayers.

___________1. Liza Sober, a Filipino actress, visited Canada for 3 days to promote her movie "Darna"

___________2. Melania, a Russian beauty queen, stayed for in the Philippines for 181 days

___________3 Valak Caudian, an Ilongga dancer, left the Philippines on March 15 for Tokyo, Japan to

be an entertainer

___________4. Lala Pitan, a Cebuana, is employed in the Philippines in the regional headquarters of

McBonalds, a multinational company

___________5. Kim Chi, a Chinese, stayed in the Philippines for more than one year

___________6. Paul Lickett, an British citizen, has a business in the Philippines. He has been staying in

the Philippines since April 17 of the previous year

___________7. Coolie Tan, a Filipino citizen, works as a chef in a Chinese restaurant in Binondo

___________8. Sam Vanda, a Scottish, lives in the Philippines after being naturalized

___________9. Michael Angan, a Filipino, maintained his residence in Australia to live a life with his

wife

___________10. Moira dela Sobre, a Filipino citizen, has been residing abroad for 90 days as an

Overseas Filipino Worker

___________11. Jason Nonoa, an American citizen, left for South Korea on March 17 for a 50-day

vacation. After his vacation, he immediately boarded to the Philippines. He stayed in the

Philippines for 2 weeks for the finalization of some business deals

___________12. Stephen Agila, a Filipino Pharmacist, went to a 183-day backpacker adventure with his

friends in Iraq.

___________13. Lina Vaughn, a German, works as a Secretary for the German Ambassador to the

Philippines in the British Embassy

___________14. Dina Natuto, a Filipino CPA, went abroad for a vacation on September 5. She fell in

love with the country she visited so she decided to stay there for good.

___________15. Lone Lee, a Singaporean tourist, finding the beauty of the Philippines, stayed

therein for 180 days.

___________16. Lee Gon Na, a Korean Superstar, visited the Philippines for one week to promote a

major clothing line.