Assessment task 8: True or False

FALSE 1. Rank and file employees may be subject to fringe benefit tax.

FALSE 2. Fringe benefits are always subject to fringe benefit tax.

TRUE 3. The personal expenses of employees shouldered by the employer are fringe benefits.

TRUE 4. Managerial or supervisory employees are subject to fringe benefit tax.

TRUE 5. The tax base of the fringe benefit tax is the grossed-up monetary value of the fringe benefit.

FALSE 6. The fringe benefit tax is a creditable withholding tax presumed to have been withheld at

source by the employer from the fringe benefits of supervisory or managerial employees.

FALSE 7. The taxable fringe benefit subject to the fringe benefit tax is the excess of the de minimis

benefits over P90,000.

FALSE 8. Half of the benefits that are necessary to the trade of the employer's business are subject to

fringe benefit tax.

TRUE 9. Benefits in the form of properties transferred to the name of the employee are subject to

fringe benefit tax in full.

TRUE 10. Benefits provided by the employer for his convenience are exempt from fringe benefit tax.

FALSE 11. The annual depreciation value of a real property is presumed to be 10% of the value of the

property.

TRUE 12. The monetary value of benefits given in cash is the cash paid.

TRUE 13. The monetary value of benefits given in kind is 100% of the value of the property given.

TRUE 14. The monetary value of fringe benefits in the form of free usage of property is 50% of the

rental or depreciation value of the property.

FALSE 15. Employee benefits are employee expense by nature that are paid by the employer.

TRUE 16. The annual depreciation value of a movable property is 20% of the value of the property.

TRUE 17. When title over property is transferred, the monetary value is the fair value of the property

given.

TRUE 18. When the employer leases a house and lot as the usual residence of the supervisory or

managerial employee, the monetary value of the benefit is 50% of the rental payments.

TRUE 19. Educational assistance to the employee is exempt from fringe benefit tax if there is an

employee bond and the study is related to the trade or business of the taxpayer.
TRUE 20. Aircraft including helicopters are considered for business use and not subject to fringe

benefit tax.

TRUE 21. The monetary value of benefit from loans at less than market rate shall be the difference

between 12% and the actual rate charged.

FALSE 22. Lodging costs on foreign travel is a taxable fringe benefit regardless of amount.

TRUE 23. 30% of first-class tickets in foreign travel is a taxable fringe benefit.

TRUE 24. The expenses of family members of the employee shouldered by the employer constitute

taxable fringe benefit in full.

FALSE 25. An employee expense receipted in the name of the employer is considered a business

expense of the employer.

AT 8-2 Multiple Choice

1. Which is subject to fringe benefits tax?

a. Premiums of employee group insurance

b. Expenses of business travels

c. Housing for an employee to ensure his immediate availability

d. Housing for the family members of an employee

2. The de minimis benefits not exceeding their thresholds are

a. exempt from income tax.

b. subject to fringe benefit tax.

c. subject to regular tax.

d. deductions from gross income.

3. Select the answer which more accurately completes the statement. The taxable fringe

benefit of a supervisory employee is

a. subject to fringe benefit tax.

b. subject to regular income tax as compensation income.

c. the total of 13th month pay and other benefits not exceeding P90,000.

d. the total of 13th month pay and other benefits exceeding P90,000.

4. Who is subject to the fringe benefit tax?

a. An employer of rank and file employees

c. An employer of managerial or supervisory employees

d. Rank and file employees

5. An employer transferred title over property to the employee. What percentage of the benefit

is considered for purposes of the fringe benefit tax?

a. 100% b. 20% c. 50% d. 5%

6. For purposes of computing the annual value of benefits involving the free use of movable

properties, what percentage of the value of property is used?

a. 100% b. 20% c. 50% d. 5%

7. For purposes of computing the annual value of benefits involving the free use of immovable

properties, what percentage of the value of property is used?

a. 100% b. 20% c. 50% d. 5%

8. Which is not a characteristic of the fringe benefit tax?

a. final tax c. Payable by the employer

b. An income tax d. Imposed upon the monetary value of benefits

9. Which is correct with respect to the fringe benefit tax?

a. it is due monthly and quarterly.

b. It is a tax upon the compensation income of employee.

c. It is a tax upon the fringe benefit of any employee.

d. Employees do not need to file income tax returns to report the fringe benefit.

10. The actual value of benefits realized by the managerial or supervisory employee is referred

to as the

a. monetary value. c. grossed-up monetary value.

b. fair value. d. annual depreciation value.

11. Which is not an exempt housing benefit?

a. Housing within 50 meters from the perimeter of the employer's business

b. Housing benefit for four months

c. Military sleeping quarters

d. Temporary housing
12. Which is not subject to fringe benefit tax?

a. Personal expenses receipted in the name of the employee paid by the employer

b. Employee personal expense receipted in the name of the employer paid by the employer

c. Expenses of employees considered in furtherance of the employer's business

d. Personal expense receipted in the name of the employee reimbursed by the employer

13. ABC Company designated a residential property for the use of its managerial employee. The

lot has zonal value of P3,500,000 and P2,000,000 value per tax declaration. The assessed value

on the improvement on the lot was P1,500,000 . The lot was purchased at a cost of P2,000,000.

Compute the monetary value to be reported in the quarterly fringe benefit tax return.

a. P250,000 b. P 62,500 c. P125,000 d. P31,250

14. Kalibo Company purchased a residential unit for P3,000,000 and transferred ownership to

its supervisory employee. The property has a zonal value of P3,500,000. Compute the monetary

value.

a. P 3,000,000 b. P3,500,000 c. P 1,750,000 d. P 175,000

15. Celebes, Inc. owns a residential property it acquired for P 2,000,000. It transferred ownership

thereto to its managerial employee for P1,200,000 when its fair value was P 3,000,000. What is

the monetary value of the benefit?

a. P 3,000,000 b. P 2,000,000 c. P 1,800,000 d. P 800,000

16. Danao bought a car worth P800,000 and registered it in the name supervisory employee. It

was agreed that the same will be used partially for the business of Danao. Compute the monetary

value.

a. P 400,000 b. P 80,000 c. P800,000 d. P 0

17. In the immediately preceding problem, what is the fringe benefit tax assuming the employee

is a non-resident alien?

a. P376,471 b . P 188,235 c. P266,667 d. P 133,333

18. In July 2019, Naga purchased a P 1,200,000 car for the use of its managerial employee.

Compute the monetary value to be reported respectively for the calendar quarters ending

September and December 2019.

a. P 1,200,000; P 120,000 b. P240,000; P 120,000

19. Compute the fringe benefit tax if the employee is a resident citizen.

a. P 564,706; P 56,471 b. P 16,154; P 16,154

c. P 112,941; P 56,471 d. P 56,471; P 56,471

20. Maasin Carbon Plant acquired a PI,000,000-motor vehicle for the use of its field engineer,

a plant supervisor, assigned to a very remote facility from town. Compute the monetary value of

benefits subject to tax.

a. P 1,000,000 b. P 100,000 c. P200,000 d. P0

21. Dexter acquired a car for and transferred ownership to its supervisory employee for P400,000.

The car shall be used partly in the employer's business. Compute the monetary value.

a. P 80,000 b. P 800,000 c. P 240,000 d. 1,200,000

22. As part of its employee benefits plan, Zarraga Realty Corporation acquired a piece of

residential lot worth P2,000,000 for its Director of Finance and constructed upon it a house at a

cost of P4,000,000. Ownership of the house and lot was turned over to the director upon

completion of the construction. 40% of the value of the house and lot will be deducted from the

director's salary over a period of five years.

What is the monetary value of the fringe benefit?

a. P6,000,000 b. P2,400,000 c. P3,600,000 d. P1,600,000

Assessment task 9: TRUE or FALSE

TRUE 1. Capital gain is the gain derived from the sale or exchange of capital assets while capital

loss is the loss incurred from the sale or exchange of capital assets.

TRUE 2. In no case shall capital gains tax on stock transaction be allowed as deduction against

income or credited against income tax or any other taxes.

3. The Register of Deeds is prohibited from registering any document transferring real

property unless the Commissioner of Internal Revenue or his duly authorized

representative has certified that such transfer has been reported and the tax imposed, if

any, has been paid.

FALSE? 4. When a natural person disposes of his principal residence, he is exempt from the
payment of the capital gains tax due on the sale if the proceeds from the sale or

disposition of the principal residence are fully utilized in acquiring or constructing a new

principal residence within 18 months from the date of the sale or disposition.

TRUE 5. Sales, exchange, or disposition of lands and/or building by domestic corporations which are not
actually used in the corporate business and are treated as capital assets is subject to 6% capital gains
tax.

FALSE 6. Ordinary loss is the excess of expenses and losses over the income of the taxpayer excluding
capital gains and capital losses, or the loss incurred from the sale or exchange of an ordinary asset.

7. The Revenue District Officer (RDO) of the revenue district where the property being

transferred is located issues the corresponding Tax Clearance (TCL) or Certificate

Authorizing Registration (CAR) or the real property in favor of the transferee.

TRUE 8. Holding period is the duration for which the taxpayer held the capital asset.

FALSE 9. Expenses of disposition such as agent’s commission and other selling expenses are

additions to the selling price.

TRUE 10. Capital gains realized during each taxable year by individuals or corporations from sale,

exchange or disposition of shares of stock in any domestic corporation not traded through a local stock
exchange are subject to final tax of 5% for the first P100,000 and 10% for amount in excess of P100,000

FALSE 11. The final capital gains tax shall be composed on the basis of the entire amount of gain

realized from the sale or disposition of shares of stock and the tax so computed shall be

paid one time.

FALSE 12. A final consolidated return or an adjustment return covering all the stock transactions for

the last quarter of the taxable year shall be filed on or before April 15 of the following

taxable year.

TRUE 13. Sales, exchanges or other dispositions of real property classified as capital assets,

including pacto de retro sales and other forms of conditional sale, by individuals,

including estates, and trusts, are taxed at 6% based on the gross selling price or current

fair market value as determined by the Commissioner, whichever is higher.

14. Capital assets include all properties held by the taxpayer whether or not connected in

trade or business including those enumerated as ordinary assets.

FALSE 15. The net capital gains realized on stock transactions shall be included in the gross
income of the seller in computing his normal income tax liability.

TRUE 16. As a general rule, the entire amount of gain or loss arising from sale or exchange of real

or personal property shall be recognized such that a gain is taxable while a loss is

deductible.

FALSE 17. An individual is qualified to account for his gain on installment basis if the initial payment

exceeds 25% of the selling price.

FALSE 18. Stocks held by dealers in securities are classified as capital assets.

FALSE 19. If the cost or value of the property cannot be convincingly shown by the taxpayer, then

the fair market value shall be considered the gain.

TRUE 20. When disposing of a property, the nature of the same, i.e., a capital asset or an ordinary

asset, does not matter because capital and ordinary assets are given the same tax

treatment.