RIT INDIVIDUAL

Theories (3)
It refers to the total sales transactions net of VAT, applicable, reported during the period,
without any other deduction.
a. Gross Sales
b. Gross Income
c. Gross Receipts
d. Cost of Sales
Answer: A RR 8-2018 Section 2(h)
Statement 1: A Minimum Wage Earner refers to a worker earning compensation income
from employment and income from business, practice of profession and/or other sources aside
from employment.
Statement 2: A Rank and File Employee refers to an employee holding neither managerial
nor supervisory position.
a. Both statements are true.
b. Both statements are false.
c. Only statement 1 is true.
d. Only statement 2 is true
Answer: D. RR 8-2018 Section 2(i) and 2(m)
In general, it means all remuneration for services performed by an employee for his
employer under an employer-employee relationship.
a. De Minimis Benefits
b. Compensation Income
c. Professional Income
d. None of the above
Answer: B. RR 8-2018 Section 2(a)
Computation (2)
Ted Mosby is a professor at Columbia University while he offers architectural services to his
clients. His annual compensation in 2018 is P480,000, inclusive of 13th month and other benefits in
the amount of P150,000, but net of mandatory contributions to SSS and Philhealth. His gross
receipts amounted to P2,500,000. His cost of sales and operating expenses are P750,000 and
P525,000, respectively and with non-operating income of P128,000. Ted Mosby opted to be taxed at
8%. How much is his Taxable Compensation Income?
a. P210,240
b. P28,000
c. P390,000
d. P238,240
Answer: C. RR 8-2018 Section 3 Illustration 7
SOLUTION:
Total Compensation Income P480,000
Less: Non-taxable 13th month pay & other benefits (max) ( 90,000)
Taxable Compensation Income P390,000

Michael Scofield operates a Motorcycle Parts Store while he offers engineering services to
his clients. His gross sales amounted to P758,000, in addition to his receipts from engineering
services of P1,458,000 for taxable year 2018. He already signified his intention to be taxed at 8%
income tax rate in his 1st quarter return. How much is his Income Tax Due?
a. P157,280
b. P177,280
c. P116,640
d. P56,000
Answer: A. RR 8-2018 Section 3 Illustration 2
SOLUTION:
Gross Sales P 758,000
Gross Receipts 1,458,000
Total Sales/Receipts P2,216,000
Less: P250,000 deduction under Sec. 25(A)(2)(b) ( 250,000)
Taxable Income P1,966,000
Tax Due:
8% of P1,966,000 P 157,280
RIT CORPORATION
Theories (3)
Statement 1: GPP is subject to income tax imposed pursuant to Sec. 26, as amended.
Statement 2: The GPP is a taxable entity for income tax purposes since it is only acting as a
“pass-through” entity where its income is ultimately taxed to the partners comprising it.
a. Both statements are true.
b. Both statements are false.
c. Only statement 1 is true.
d. Only statement 2 is true.
Answer: B. RR 8-2018 Section 8, Illustration 12

Statement 1: Every corporation subject to tax herein imposed, except foreign corporations
not engaged in trade or business in the Philippines shall render, in duplicate, a true and accurate
quarterly income tax return and final or adjustment return.
Statement 2: A corporation subject to tax under Sections 27(A) & 28(A)(1), may elect a
standard deduction in an amount not exceeding 40% of its gross income.
a. Both statements are true.
b. Both statements are false.
c. Only statement 1 is true.
d. Only statement 2 is true.
Answer: A. RA No. 10963 Sec. 15. Section 52(A) of the NIRC & Sec. 11. Section 34(L) of the
NIRC

Statement 1: The partners comprising the GPP are not allowed to avail of the 8% income
tax rate option since their distributive share from the GPP is already net of cost and expenses.
Statement 2: The partners are not liable to pay income tax on their separate and individual
capacities for their respective distributive share in the net income of the GPP.
a. Both statements are true.
b. Both statements are false.
c. Only statement 1 is true.
d. Only statement 2 is true.
Answer: C. RR 8-2018 Section 8 Determination of the OSD for GPP and Partners of GPPs.
Computation (2)
The gross sales of Grey Sloan Corporation amounted to P7,000,000, with cost of sales
amounting to P3,600,000. It incurred operating expenses amounting to P1,580,000. It opted to avail
of the 40% OSD. How much is the Taxable Income?
a. P1,092,000
b. P4,200,000
c. P612,000
d. P2,040,000
Answer: D. RR 8-2018 Section 8 Illustration 14
SOLUTION:
Computation of OSD:
Gross Sales P7,000,000
Less: Cost of Sales ( 3,600,000)
Gross Income P3,400,000
Less: OSD (3,400,000 × 40%) ( 1,360,000)
Taxable Income P2,040,000

Mr. Sheldon Cooper is a partner of Big Bang Co., a general professional partnership. He
owns 20% interest. In 2018, the gross receipts of Big Bang amounted to P12,000,000. Its cost of
sales and operating expenses are P3,600,000 and P1,720,000, respectively. Big Bang Co. opted to
avail of the OSD. How much is the Net Income for distribution to partners?
a. P5,040,000
b. P4,800,000
c. P2,672,000
d. P1,008,000
Answer: A. RR 8-2018 Section 8 Illustration 15
SOLUTION:
Gross Receipts P12,000,000
Less: Cost of Sales ( 3,600,000)
Gross Income P 8,400,000
Less: OSD (8,400,000 × 40%) ( 3,360,000)
Net Income for distribution to partners P 5,040,000
FINAL TAX
Theories (1)
Interest income received by a resident citizen or a resident alien from a depository bank
under the Expanded Foreign Currency Deposit system has a final withholding tax rate of __?
a. 25%
b. 15%
c. 20%
d. 30%
Answer: B RR 11-2018 SECTION 1(A)(3) Income Payments Subject to Final Withholding Tax

Computation (1)
Denny Duquette Co. (a domestic company) granted Ms. Izzie Stevens (a Filipino branch
manager employee), in addition to her basic salaries, P5,500 cash per quarter for her membership
fees at Avery’s Fitness Club. How much is the fringe benefit tax that Denny Duquette Co.. should
withhold and remit to BIR per quarter?
a. P8,884.62
b. P8,461.54
c. P3,024.54
d. None of the Above
Answer: C. RR 11-2018 Section 1(G)
SOLUTION:
Value of FBT per quarter P 5,500
Gross-up Rate ÷ 65%
Gross-up Monetary Value P 8,461.54
Fringe Benefit Tax Rate × 35%
Fringe Benefit Tax per quarter P 3,024.54
CGT
Theories (1)
Interest income derived from a depository bank under the Expanded Foreign Currency
Deposit system for a Domestic Corporation has a final withholding tax rate of __?
a. 20%
b. 30%
c. 25%
d. 15%
Answer: D. RR 11-2018 Section 1 (D)(3)

Computation (1)
Cristina Yang sold her permanent residence for P5,000,000. The amount of the zonal value
was P4,000,000 and an assessed value of P3,700,000. How much is the Capital Gains Tax?
a. P222,000
b. P282,000
c. P300,000
d. P240,000
Answer: C.
SOLUTION:
Choose whichever is the highest.
P5,000,000 × 6% = P300,000