FINALS - IDENTIFICATION

Question 1

A legal arrangement in which a trustee manages property for the benefit of a beneficiary.

Answer 1

TRUST

Question 2

A tax on the transfer of the estate of a deceased person.

Answer 2

Estate Tax

Question 3

The person for whose benefit a trust is created.

Answer 3

Beneficiary

Question 4

The person who establishes a trust

Answer 4

Trustor / Grantor

Question 5

A person or corporation that holds in trust an estate for another person.

Answer 5

Fiduciary

Question 6

A trust that can be altered or revoked by the grantor.

Answer 6

Revocable Trust

Question 7

The income received by an estate or trust, similar to that of individuals.

Answer 7

Gross Income

Question 8

The arrangement created when income from an estate is shared by co-owners not under judicial settlement.

Answer 8

Co-ownership

Question 9

Income held in trust for an unborn or unascertained beneficiary.

Answer 9

Income Accumulated in Trust

Question 10

A trust that cannot be changed or canceled, both as to corpus and income.

Answer 10

Irrevocable Trust

Question 11

A partnership formed by professionals to practice their common profession, not involved in any trade or business

Answer 11

General Professional Partnership (GPP)

Question 12

The optional deduction that a GPP can claim, up to 40% of gross income, instead of itemized deductions

Answer 12

Optional Standard Deduction (OSD)

Question 13

The tax classification of partnerships that operate as corporations, with partners regarded as stockholders

Answer 13

General Co-Partnership (Compania Colectiva)

Question 14

A legal relationship where partners contribute money, property, or industry to divide profits.

Answer 14

Partnership

Question 15

Income classification for the share received by partners in GPP, taxed at the individual level.

Answer 15

Distributive Share

Question 16

Partners’ deduction method limited to either itemized deductions or OSD, based on the practice of profession.

Answer 16

Tax Deduction Choice

Question 17

A shared ownership that is not subject to income tax unless used for profit-generating activities.

Answer 17

Co-ownership

Question 18

Document required by GPPs to report income, deductions, and partners’ distributive shares.

Answer 18

Annual Information Return

Question 19

The deduction choice that cannot be further claimed once distributive shares in GPP income are received

Answer 19

Itemized Deduction or OSD

Question 20

Tax classification applied to partnerships involved in profit-based activities, resulting in corporate tax treatment.

Answer 20

Corporation

Question 21

The total compensation received for services performed under an employer-employee relationship

Answer 21

Compensation Income

Question 22

Income derived from the exercise of a profession or trade.

Answer 22

Gross Income from Trade or Business

Question 23

Payments made to the owner of intellectual property for its use.

Answer 23

Royalties

Question 24

A share of profits distributed by a corporation to its shareholders

Answer 24

Dividends

Question 25

Payments received from **tenants** for the use of property.

Answer 25

Rents

Question 26

Earnings from the **sale of assets at a higher price than their purchase price.**

Answer 26

Gains from dealings in property

Question 27

Period during which **compensation is ordinarily paid.**

Answer 27

Payroll period

Question 28

A **partner's share of the net income** of a general professional partnership

Answer 28

Partner's distributive share

Question 29

A payment made periodically to **retirees** as part of a pension plan.

Answer 29

Pensions

Question 30

Interest earned from financial investments.

Answer 30

Interest

Question 31

What type of income are **tips or gratuities paid directly to an employee?**

Answer 31

Taxable income but not subject to withholding.

Question 32

Who pays tips directly to employees?

Answer 32

Customers

Question 33

Tips not reported to the employer are considered as _______.

Answer 33

Taxable Income

Question 34

What law governs the taxation of tips in the Philippines?

Answer 34

National Internal Revenue Code

Question 35

Define **“gratuities”** in tax context

Answer 35

Payments from customers as voluntary appreciation of services.

Question 36

What type of tax applies to tips not subject to withholding?

Answer 36

Income Tax

Question 37

What type of income includes tips or gratuities paid directly to an employee by a customer?

Answer 37

Taxable Income

Question 38

Are tips or gratuities subject to withholding tax if **paid directly to an employee?**

Answer 38

No

Question 39

What is the **tax treatment** of tips or gratuities **not accounted** for by the employee to the employer?

Answer 39

Considered taxable income but not subject to withholding.

Question 40

A **monetary gift** voluntarily given by a customer to an employee.

Answer 40

Gratuity

Question 41

Is a **service charge automatically** included in the computation of tips or gratuities?

Answer 41

No

Question 42

What is the **basis of taxation for tips** in the Philippines?

Answer 42

Taxable income but not subject to withholding.

Question 43

Are tips **required** to be declared in the employee's income tax return?

Answer 43

Yes

Question 44

Can **gratuities** be considered part of regular compensation?

Answer 44

No

Question 45

Who pays withholding tax on gratuities?

Answer 45

Not applicable (not subject to withholding tax).

Question 46

What documentation is required to account for employer-paid tips?

Answer 46

None, if tips are directly paid by customers

Question 47

The **final tax rate imposed on dividends distributed** to resident citizens, non-resident citizens, and resident aliens.

Answer 47

10% final tax

Question 48

The tax rate for dividends received by a **non-resident alien not engaged in business** in the Philippines

Answer 48

25% final tax

Question 49

The tax rate applied to dividends distributed to a **domestic corporation**

Answer 49

Income tax exempt

Question 50

The law that governs the **reduced tax rate** for Non-Resident Foreign Corporations (NRFC) under specific conditions

Answer 50

CREATE Act

Question 51

The condition where a non-taxable stock dividend **does not alter a stockholder's proportionate interest** in a corporation's net assets.

Answer 51

Non-taxable stock dividend

Question 52

The **portion** of an annuity payment that is taxable.

Answer 52

The portion representing interest

Question 53

The final tax rate imposed on PCSO winnings exceeding PHP 10,000.

Answer 53

20% final tax

Question 54

The location of income for dividends received from a **domestic corporation**

Answer 54

Within the Philippines

Question 55

**Tax refunds** that are **not considered taxable income.**

Answer 55

Philippine income tax

Question 56

The final tax rate applied to prizes and winnings from commercial contests if the amount is above PHP 10,000

Answer 56

20% final tax