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Tax Implications of Leasehold Improvements

The document contains a tax quiz with 5 multiple choice questions. Question 1 asks about the tax treatment of a company that bought land for $7 million in 2015, sold it for $12 million in 2017, and incurred a $6 million loss from selling another parcel of land in 2017. Question 2 asks about the tax treatment of passive income. Question 3 asks about calculating an individual's gross income for tax purposes given their business and personal income. Question 4 asks about items that are not included in gross income. Question 5 asks about the tax implications of a lease agreement where one individual built a house on a leased property.

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756 views2 pages

Tax Implications of Leasehold Improvements

The document contains a tax quiz with 5 multiple choice questions. Question 1 asks about the tax treatment of a company that bought land for $7 million in 2015, sold it for $12 million in 2017, and incurred a $6 million loss from selling another parcel of land in 2017. Question 2 asks about the tax treatment of passive income. Question 3 asks about calculating an individual's gross income for tax purposes given their business and personal income. Question 4 asks about items that are not included in gross income. Question 5 asks about the tax implications of a lease agreement where one individual built a house on a leased property.

Uploaded by

BLACKPINKLisaRoseJisooJennie
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
  • InTax Quiz 2
  • Tax Reporting and Deductions

InTax Quiz 2

1. Winterfell, Inc., bought a parcel of land in 2015 for P7 million

as part of its inventory of real properties. In 2017, it sold the

land for P12 million which was its zonal valuation. In the same

year, it incurred a loss of P6 million for selling another parcel

of land in its inventory. These were the only transactions it had

in its real estate business. Which of the following is the

applicable tax treatment?

a. Winterfell shall be subject to a tax of 6% of P12 million.

b. Winterfell could deduct its P6 million loss from its P5 million gain.

c. Winterfell’s gain of P5 million shall be subject to the holding period.

d. Winterfell's P6 million loss could not be deducted from its P5 million gain.

2. Passive income includes income derived from an activity in which

the earner does not have any substantial participation. This type

of income is

a. Usually subject to a final tax.

b. Exempt from income taxation.

c. Taxable only if earned by a citizen.

d. Included in the income tax return.

3. In 2017, Alice earned P500,000 as income from her beauty parlor

and received P250,000 as Christmas gift from her aunt. She had no

other receipts for the year. She spent P150,000 for the operation

of her beauty parlor. For tax purposes, her gross income for 2017

is

a. P750,000 c. P350,000

b. P500,000 d. P600,000

4. Which of the following items is not part of gross income to be


reported in the income tax return?

a. Increase in value of land

b. Gambling winnings

c. Prize of P10,000

d. Gain from sale of store’s air conditioner

5. Mr. Yu leased his lot to Mr. Uy. The contract calls for Mr. Uy to

construct a house which would serve as the residence of the

latter, the ownership thereof to be vested in Mr. Yu after the

expiration of the lease. When the house was completely

constructed, the remaining term of the lease was 10 years. The

residential house had an estimated useful life of 15 years.

What is the tax implication of the leasehold improvement?

a. Mr. Yu derives taxable income on the improvement; Mr. Uy can

claim depreciation expense as a deduction from gross income.

b. Mr. Yu derives taxable income on the improvement; Mr. Uy

cannot claim depreciation expense as a deduction from gross

income.

c. Mr. Yu does not derive taxable income on the improvement;

Mr. Uy cannot claim depreciation expense as a deduction from

gross income.

d. Mr. Yu does not derive taxable income on the improvement;

Mr. Uy can claim depreciation expense as a deduction from

gross income.

InTax Quiz 2 1. Winterfell, Inc., bought a parcel of land in 2015 for P7 million as part of its inventory of real properties
reported in the income tax return? a. Increase in value of land b. Gambling winnings c. Prize of P10,000 d. Gain from sal

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