Professional Documents
Culture Documents
5. The power to enforce proportional contribution from the people for the support of
the government is
A. Taxation C. Eminent Domain
B. Police Power D. Public Properties
7. The courts cannot issue injunction against the governments effort to collect taxes is
justified by
A. Lifeblood doctrine C. Ability to pay theory
B. Imprescriptibility of taxes D. Doctrine of estoppel
8. This theory underscores that taxes are indispensable to the existence of the state.
A. Doctrine of equitable recoupment C. Lifeblood Doctrine
B. Benefit-received theory D. Holmes Doctrine
14. Statement 1: In the selection of the objects of taxation, the courts have no power
to inquire into the wisdom, objectivity, motive, expediency or necessity of a tax law.
Statement 2: An imposition can be both a tax and a regulation. Taxes may be levied to
provide means for rehabilitation and stabilization of threatened industry.
A. Only Statement 1 is true C. Both Statements are true
B. Only Statement 2 is true D. Both Statements are false
16. This refers to the privilege or immunity from a tax burden which others are
subject to:
A. Exclusion C. Tax holiday
B. Deduction D. Reciprocity
17. The process by which the sovereign raises income to defray the expenses of the
government is called
A. Subsidy C. Taxation
B. Tariff D. Tribute
19. One of the characteristics of internal revenue laws is that they are:
A. Criminal in nature
B. Penal in nature
C. Political in nature
D. Generally prospective in application
20. One of the characteristics of our internal revenue laws is that they are:
A. Political in nature
B. Penal in nature
C. Generally prospective in operation although the tax statute may nevertheless
operate retrospectively provided it is clearly the legislative intent
D. Criminal in nature.
21. In case of conflict between tax laws and generally accepted accounting principles
(GAAP)
A. Both tax laws and GAAP shall be enforced.
B. GAAP shall prevail over tax laws
C. Tax laws shall prevail over GAAP
D. The issue shall be resolved by the courts.
22. The following are similarities of the inherent power of taxation, eminent domain,
and police power, except.
A. Are necessary attributes of sovereignty
B. Interfere with private rights and property
C. Affect all persons or the public
D. Are legislative in implementation
24. Which of the following statement refers to police power as distinguished from
taxation?
A. It can only be imposed on specific property or properties
B. The amount imposed depends on whether the activity is useful or not.
C. It involves the taking of property by the government
D. The amount imposed has no limit
25. The distinction of a tax from permit or license fee is that a tax is
A. Imposed for regulation
B. One which involves an exercise of police power
C. One in which there is generally no limit on the amount that may be imposed
D. Imposed before engagement in those activities
27. Which of the following similarities of the three powers of the state, except.
A. They are all ways in which the State interferes with private rights and properties
B. They all exist independently with Constitution and are exercisable by the
government even without Constitution grant. However, the Constitution may impose
conditions or limits for their power.
C. The exercise of these powers by the local government units have no limits
D. They all presuppose an equivalent form of compensation received by the persons
affected by the exercise of the power.
29. Which of the following statements is not part of the Inherent limitations?
A. Non-delegation of the taxing power C. Territoriality of taxation
B. International comity D. Free worship rule
33. Which of the following statements is not correct about strict construction of tax
laws?
A. Vague tax laws are construed against the government and in favor of the taxpayers.
B. The claim for exemption is construed strictly against the taxpayer in accordance
with the lifeblood doctrine.
C. A well-founded doubt is fatal to the claim; it is only when the terms of the
concession are too explicit to admit fairly of any other construction that the
proposition can be supported.
D. A taxpayer claiming a tax exemption must not necessary to point a specific
provision of law conferring on the taxpayer, in clear and plain terms, exemption from
a common burden.
34. A feasibility study needs or needs to look into the taxes of different political
subdivisions of government which may be alternative sites of the business because
A. Provinces, cities, and municipalities must have uniform taxes between and among
themselves.
B. The local taxes of a political subdivision need not be uniform with the local taxes
of another political subdivision
C. Businesses that are subject to national taxes are exempted from local business taxes
D. Local business taxes may be credited against national business taxes.
36. Which of the following statements is not included about the importance of
taxation?
A. Taxation is very importance to regulate inflation, achieve economic and social
stability and for social control.
B. It is the primary source of government revenue that is used to effectively and
permanently perform government functions.
C. To raise revenue for the very existence of the government to serve the people for
whose benefits taxes are collected
D. To support other inherent powers of the State.
38. The reduction in the selling price of the income-producing property by an amount
equal to the capitalized value of future taxes that may be paid by the purchaser.
A. Transformation C. Tax Exemptions
B. Capitalization D. Shifting
39. Which of the following is not a scheme of shifting the incidence of the tax
burden?
A. Changing the terms of the sale like FOB shipping point in the Philippines to FOB
destination abroad, so that the title passes abroad instead of in the Philippines.
B. The manufacturer transfers the tax to the consumer by adding the tax to the selling
price of the goods sold
C. The purchaser asks for a discount or refuses to buy at regular price unless it is
reduced by an amount equal to the tax he will pay
D. The manufacturer transfers the sales tax to the distributor, to the wholesaler, to the
retailer and finally to the consumer.
45. Direct duplicate taxation is prohibited because it comprises imposition of the same
tax on the same property for the same purpose by the same state during the same
taxing period. Which of the cases where double taxation does not apply?
A. A tax imposed by the state and the local government upon the same occupation,
calling or activity
B. Taxes are imposed on the taxpayers final product and the storage of raw materials
used in the production of the final product.
C. A 5% tax on bank reserve deficiency and another 1% penalty per day as a
consequence of such reserve deficiency.
D. Real estate tax and income tax collected on the same real estate property leased for
earning purpose.
46. Which of the following cases will the law not allow the person to do compromise
on behalf of the government?
A. Only the BIR Commissioner is expressly authorized by the Tax Code to enter into
compromise for both civil and criminal liabilities subject to certain conditions.
B. The Local Government Code has no provision regarding compromise; however,
the tax liability is not prohibited from being compromised.
C. The BIR is given the power to compromise with respect to customs duties limited
to cases where legitimate authority is specifically granted, such as in the remission of
duties
D. The Customs Commissioner, subject to approval by the Secretary for Finance, has
the power to compromise cases involving the imposition of fines, surcharges, and
forfeitures.
47. Which of the following factors is not included in determining the situs of
taxation?
A. Amount of income
B. Sources of income being taxed
C. Place of the excise, privilege, business or occupation being taxed
D. Subject matter of the tax (either person, property, rights or activity)
48. Statement 1: Tax laws are given retroactive effect because the rule of ex-post
facto law is applicable for tax purposes.
Statement 2: Tax rulings of the Secretary of Finance are binding to the Courts because
the Department of Finance is the highest agency regarding tax administration.
A. Only Statement 1 is true C. Both Statements are true
B. Only Statement 2 is true D. Both Statements are false
53. Which of the following statements is not a requisite for non-taxable retirement
benefits under Republic Act No. 7641?
A. The retiring official or employee has been in the services of the same employer for
at least 10 uninterrupted years.
B. The employer maintains a reasonable private benefits plan and approved by the
BIR Commissioner.
C. Retiree should have been 50 years old at the time of retirement
D. It should have been availed of for the first time.
54. Which of the following statements is incorrect regarding the Revenue Regulations
20-2001 pertaining to the cooperatives?
A. Cooperatives that transact business purely with members are exempt from all taxes
and fees.
B. Income of cooperatives from business transactions to non-members are exempt
from all taxes and fees, provided the accumulated reserve and undivided savings do
not exceed 10, 000, 000.
C. Cooperatives will be exempt for a period of 10 years from the date of registration
with CDA, provided, that at least 25% of the net income of the cooperative is returned
to the members in the form of interest and or patronage refund and the accumulated
reserve and undivided saving do not exceed 10, 000, 000
D. Cooperatives are exempted from capital gains tax on sales or exchange of shares of
stock and real property classified as capital assets.
57. Which of the following statements is not exempted from regular income tax?
A. Social security benefits, retirement gratuitous and other similar benefits from
foreign government agencies and other institutions, private or public received by
resident or non-resident citizens or aliens who come to settle permanently in the
Philippines
B. Income derived from investments in the Philippines in loans, stocks, bonds, or
other domestic securities, or from interest on deposits in banks in the Philippines who
is enjoying refinancing from a foreign government.
C. Income derived by the government and its political subdivision from the exercise
of essential government function.
D. Income derived by the government-owned and controlled corporation (GOCCs)
engaged in income-producing activities which are proprietary or commercial in
nature.
59. Which of the following is incorrect regarding the Revenue Regulation No. 3-
2015?
A. This revenue regulation is promulgated to implement the provisions Republic Act
(RA) No. 10653.
B. Accordingly, the amount of 82, 000 shall ONLY apply to the 13th-month pay and
other benefits prescribed under the provisions of Section 2.78.1 (B) of RR No. 2-98,
as amended and shall apply ALSO to the Minimum Wage Earner.
C. It must be emphasized that this exclusion from gross income is not applicable to
self-employed individuals and income generated from the business.
D. The effective implementation of these Regulations all taxpayer-employers shall
ensure the correct computation and application of the said increase on the 13th month
and other benefits of the employees in the year-end adjustments and the same shall be
clearly indicated among others.
E. The said BIR form shall be issued by the employer to the employee on or before
January 31 of the succeeding calendar year of if the employment is terminated before
the close of such calendar year, on the day on which the last payment of compensation
is made.
F. In case the employee whose employment is terminated and subsequently employed
transferee shall immediately furnish the new employer the accomplished BIR form
issued by the previous employer for the appropriate withholding tax computation of
the employees regular compensation and subsequent year-end adjustment if any.
60. Which of the following items is not subject to regular income taxation?
A. Compensation income for services in whatever forms paid
B. Gross income from the conduct of trade, business or exercise of a profession
C. Gains derived from dealings in properties
D. Dealings in capital assets of domestic stocks and real properties
61. Which of the following interest incomes is not subject to regular income tax?
A. Income from lending activities to individuals and corporation by banks, finance
companies, and other lenders.
B. From bonds and promissory notes
C. Interest income earned by the landowners in disposing their lands to their tenants.
D. Interest income from banks deposits abroad
65. Which of the following statements is relatively correct regarding the partners
distributable share of the net income of the general professional partnership?
A. The general professional partnership is not subject to any kind of taxes.
B. The basis of income to be subject to regular income tax is not the net income but
the actual distribution.
C. If the items of gross income subjected to final tax and capital tax to the general
professional partnership are included as an item of gross income subject to regular
income tax when distributed to the partners.
D. Any income received by the partner from the general professional partnership are
not subjected to regular income tax but rather to a final tax of 10%-15% final tax rule.
66. Which of the following other sources of gross income is/are subject to regular
income tax?
I. Income distribution from taxable estates or trusts
II. Share from the net income of other pass-through entities
III. Farming income
IV. Recovery of past deduction
V. Reimbursement of expenses
VI. Cancelation of indebtedness for a consideration
A. I, IV and VI C. I, III, IV and VI
B. I, II, III, IV and VI D. I, II, III, IV, V and VI
67. Which of the following statements is incorrect regarding the recovery of past
deductions?
A. When past year deductions from gross income are subsequently recovered by the
taxpayer or when accrued expenses previously deducted are subsequently paid at an
amount less than the deduction claimed
B. Past deductions that created tax benefit to the taxpayer must be reverted back to
gross income in the year of recovery.
C. If the net income in the period the deduction was made exceeds the amount of the
deduction, all recoveries from the deduction are non-taxable.
D. If the net operating loss in the period the deduction was made exceeds the amount
of the deduction, all recoveries from the deduction is non-taxable.
68. The following items are the taxable recovery of past deductions, except.
I. Recovery of previously claimed bad debt expense
II. Refund of local tax expense
III. Stock transaction tax in disposing of stocks through the Philippine stock exchange
IV. Refund of foreign tax previously claimed as deduction
V. Income tax paid or incurred to a foreign country, if the taxpayer claimed a credit
for such tax in the year it was paid or incurred.
VI. Re-commissioning of abandoned petroleum service contracts or mining properties
VII. Release of reserve funds of insurance companies
VIII. Special assessment
A. III, IV, V-VII and VIII C. II, III, V and VIII
B. II, IV, VI and VIII D. III, V and VIII
70. Which of the following statements is incorrect regarding the Minimum Wage
Income Earner (MWE)?
A. When an employee become a minimum wage earner during the year, he shall be
subject to income tax only on compensation earned during the taxable year before
becoming a minimum wage earner.
B. When an employee ceases to be a minimum wage earner during the year due to
increase in salary, only the income for the rest of the year is taxable.
C. The employee ceases to a minimum wage earner during the year by
disqualification, the employer shall withhold income tax for the salaries of the
employee for the entire taxable year.
D. Under RMO 23-2011, COLA which forms part of the new wage rates prescribed to
be the statutory minimum wage should be treated as part of the minimum wage and
shall not be treated as separate or other benefits.
72. Which of the following de minimis benefits is/ are non-taxable from regular
income tax under RR8-2012?
I. Actual medical assistance not exceeding 10, 000 per annum
II. Employee achievement award in the form of tangible property other than cash or
gift certificates with an annual monetary value not exceeding 10, 000 received by the
employee under an established written plan which does not discriminate in favor of
highly paid employees.
III. Gifts are given during Christmas and major anniversary celebration not exceeding
10, 000 per annum
IV. Daily meal allowances for overtime work and night or graveyard shift not
exceeding 25% of the basic minimum wage on a per region basis.
V. Monetized unused vacation leave credits of private employees not exceeding not
exceeding 10 days during the year.
VI. Monetized unused terminal leave pay or the commutation of unused leave credits
due to involuntary separation from employment of the employee not exceeding 10
days leave credit limit.
VII. Benefits receive by an employee by virtue of a collective bargaining agreement
(CBA) and productivity incentive schemes provided that the total annual monetary
value receives from both CBA and productivity incentive schemes combined do not
exceed 10, 000 per employee per taxable year.
A. I, II, III, IV, V and VII C. I, II, III, IV, V, VI and VII
B. I, II, IV, V and VII D. I, II, IV, V, VI and VII
73. Which of the following statements is incorrect regarding the de minimis benefits?
A. Any benefits received by a rank and file employee will be treated as other
compensation income which is subject to RR3-2015 for the 13th-month pay and other
benefits not exceeding 82, 000.
B. Any excess of the statutory limit of the de minimis of managerial and supervisory
employees is subject to regular income tax.
C. For managerial and supervisory employees, any benefits are treated as fringe
benefits in which subject to final fringe benefits tax.
D. Medical cash allowance to dependents of employees not exceeding 750 per
employee per semester or 125 per month.
75. Which of the following statements does not qualify to as necessity of the
employer rule?
A. Necessary traveling, transportation, representation or entertainment expenses that
are subject to an accounting or liquidation in accordance with specific requirements of
substantiation of expense.
B. Representation and Transportation Allowance (RATA) of public officers and
employees under the General Appropriation Act.
C. Personnel Economic Relief Allowance (PERA)
D. Cost of Living Allowances (COLA)
76. Benefits or allowances which are intended for the furtherance of the interest of the
employers business or to ensure its smooth operations are exempt from income tax,
except.
A. Scholarship grant to an employee under contract to remain in service for a
specified period upon completion of the study.
B. Grant of housing privilege to employees working at distant or remote facilities
even if the dwelling is distanced from the facility in compliance with labor safety
standards.
C. Cellphone allowance is given to all employees by the employer
D. Car incentives to medical doctors on-call who are required to report on duty
anytime.
77. Which of the following statements below is incorrect regarding the fixed
allowance is given by the employer to the employees?
A. The cost of living allowance and other benefits paid to the employee every payroll
period are tax exempt.
B. Ordinary and necessary traveling, representation or entertainment expense of the
employee in the pursuit of his trade, business or profession is exempted from regular
tax under the necessity of the employer rule.
C. Expenses subjected to accounting or liquidation are tax exempt.
D. Any excess of the advances return to the employer are non-taxable
78. Which of the following statements is false regarding paid vacation and sick leave
allowances?
A. The paid absences of an employee applied for his vacation or sick leave credits
which are normally received as part of the regular salary is part of the regular
compensation.
B. Retainer fees of consultants, talents, and directors who have no management
function in the business are professional income not a compensation income of the
recipient.
C. Commissions to non-employees such as independent sales agent is part of his
compensation income.
D. Tips and gratuities paid directly to an employee by customers of the employer
which are not accounted for by the employee to the employer are not considered as
compensation income but are to be reported as other income on the income tax return
of the employee.
80. Which of the following items is not included in 13th-month pay and other benefits
as governed by the RR3-2015?
A. Christmas bonus of private employees
B. Cash gifts for the wedding anniversary of a private employee
C. Other Fringe benefits of rank and file employees
D. Personal Economic Relief Allowance (PERA)
83. Which of the following interest income is/are not subject to final tax?
i. Deposits substitute
ii. Government securities
iii. Cooperatives income
iv. Money market placements
v. Trusts funds
vi. Financial companies or lending institutions
vii. Other investments evidenced by certificates prescribed by the Bangko Sentral ng
Pilipinas.
A. i, ii, iv, and vii C. i, ii, iii, iv , vi and vii
B. i, ii, iv, vi, and vii D. i, ii, iv, v, and vii
84. Which of the following amount of winnings/ prizes is subject to a final tax of
20%?
A. P10,000 winnings outside the Philippines
B. P10,000 winnings earned within the Philippines
C. P1,000 Philippines Sweepstakes winnings
D. P9,000 first prize singing contest
88. Which of the following passive income from Philippine source is exempt from
Philippine income tax when received by non-resident Aliens and non-resident
citizens?
A. Royalties, in general
B. Yield or any other monetary benefit from deposit substitute
C. Interest income received from a depository bank under expanded foreign currency
deposit system
D. Other winnings
90. Which of the following statements is correct regarding the stock dividend?
A. If the stockholder has a preference to take cash or property dividends instead of
stock dividends it is subject to final tax.
B. Some stockholder exercised the option to take cash or property dividends is not
tax-exempt
C. Any different kind of stock received by stockholder will be subject to final tax of
10%
D. It is subject to tax if the exercise of option resulted in a change of the stockholders
proportionate share of the outstanding shares of the corporation.
95. On April 15, 2015, the following incomes of Mr. Jerome Chavez are:
Compensation income from his employer net of
withholding tax of 5, 750 19, 250
Interest income from his investment in UCPB 20, 000
Dividend income from ADFC 50, 000
Prize in a debate competition 15, 000
Royalties outside the Philippines 75, 000
Winnings from raffle sponsored by GMA 100, 000
Gain on sale of bonds with maturity date of less than 317, 650
Share from BDC a cooperative certified by CDA 6, 000
Interest income under EFCDS 20, 000
Interest income from Metrobank with a maturity date
of 6 years but pre-terminated within three years 80, 000
How much is the income subject to regular tax and final taxes from the passive
income?
96. Mr. Jude Capalar, a government rank, and file employee have the following
summary of his compensation and benefits in 2015.
Gross compensation income 324, 000
Less: Employee payroll deductions
Contribution to GSIS, PHIC and HDMF 32, 000
Deduction for Withholding tax 34, 000 66, 0000
Net Regular payroll 258, 000
Representation and Transportation Allowance 18, 000
Personnel Economic Relief Allowance 24, 000
Christmas bonus 37, 000
Uniform Allowance 10, 000
Honoraria 15, 000
Christmas Gift 5, 000
Additional compensation allowance 36, 000
Monetized value of vacation leave and sick leave (15 days) 7, 500
How much is the gross taxable compensation income of Mr. Jude Capalar for 2015?
A. 369, 500 C. 325, 000
B. 352, 500 D. 308, 000
97. Mr. Jerome Chavez, a private rank and file employee derived the following
remuneration and benefits in 2015.
Basic compensation income 300, 000
Less: Employees contribution to SSS, PHIC and HDMF 24, 000
Withholding tax 30, 000
Net compensation income 246, 000
Overtime Pay 21, 000
Productivity incentive 25, 000
Vacation expense paid by the employer 20, 000
Cost of living allowance (COLA) 24, 000
Pre-computed daily transportation allw. 18, 000
Rice Allowance 27, 600
13th month pay 25, 000
Monetized unused leave credit (16 days) 16, 000
Uniform allowance 15, 000
How much is the gross taxable compensation income of Mr. Chavez for 2015?
A. 249, 600 C. 364, 600
B. 312, 600 D. 394, 600
98. Mr. Montecina is preparing his income tax return from his employment and
business income are:
Basic compensation income 240, 000
Less: Contribution to SSS, PHIC and HDMF 20, 000
Withholding tax 40, 750
Net Payroll 186, 100
Add: Cost of Living Allowance 24, 000
Overtime Pay 6, 000
Night Shift Differential 8, 000
Holiday Pay 5, 000
Cash Gifts 5, 000
13th month pay 25, 000
Christmas bonus 15, 000
Other fringe benefits 20, 000
Laundry allowance 3, 000
Productivity Incentives 18, 000
Rice allowance 24, 000
Other reportable income:
Gross sales 240, 000
Less: cost of sales 100, 000
Gross income from business 140, 000
Less: Deductions * 100, 000
Taxable income from business 40, 000
Additional information:
a. On December 31, 2015, the taxpayer filed for the additional exemption of one (1)
qualified dependent child.
b. On June 20, 2015, the taxpayer donated a 10, 000 cash to Marasbaras, National
High School- a public school and 5, 000 to the non-accredited non-government
organization.
c. Mr. Montecina received 10, 000 interest income, net of final tax from Bank of the
Philippines.
d. All expenses are connected with the taxpayers trade or business.
How much is the tax due and payable or refund of Mr. Montecina during 2015?
A. 1, 000 C. (1, 000)
B. 500 D. (500)
99. Atty. Jose Aguinalde, 64 years, married with two qualified dependent children
with the following income below:
Gross professional income, net of 10% FWT 625, 500
Professional Expenses 200, 000
Retirement benefits 200, 000
Prize in a sports tournament 50, 000
Gain from sale of bonds with maturity period of 4 years 20, 000
Interest income from bank deposit, Philippines 10, 000
Interest income under EFCDS 60, 000
Royalties income from outside the Philippines 10, 000
Philippine Lotto Winnings 60, 000
Share in a commercial partnership 40, 000
Interest income from bonds with maturity period of 5 years 20, 000
Share in a general professional partnership 60, 000
Additional information:
a. Retirement benefits received from his previous employer that maintained a
reasonable private pension plan after his 12 years of services.
b. Prize in a sports tournament is sponsored by a group of businessmen promoting
health products.
c. The commercial partnership is subject to corporate income tax of 30% based on the
taxable income.
d. Inclusive to the amount received by the taxpayer from the general professional
partnership is the share in interest income which was subjected to a final tax of 20%
of 5, 000.
How much is the taxable net income subject to regular income tax of Atty. Aguinalde
during 2015?
A. 720, 000 C. 485, 000
B. 680, 000 D. 480, 000
100. How much is the total final withholding taxes on passive income?
A. 20, 500 C. 30, 500
B. 26, 500 D. 32, 500
102. Mr. Gerald Result, a resident citizen and supporting his two younger sisters has
the following data for the year 2015:
Gross sales 1, 000, 000
Sales returns and allowances 50, 000
Cost of sales 300, 000
Interest income from Metrobank 10, 000
Share in the net income of commercial partnership
net of 10% final withholding tax 90, 000
Salaries of employee, net of 30, 000 CWT 270, 000
Valued Added Tax (VAT) 100, 000
Business permit and licenses 5, 000
Community tax 10, 000
Contribution to pension trust 50, 000
Entertainment expense 10, 000
Interest expense 50, 000
Research and development cost (deferred)
benefits realized during July 1, 2015, 60, 000
Purchase of equipment with estimated life of 5
acquired on October 1, 2015 50, 000
Additional information:
a. Result bought a residential dwelling for 100, 000 and transferred ownership to his
supervisor. The property has 90, 000 zonal value.
b. 20, 000 of the contributions to pension trust covers past years cost.
c. Withholding taxes from the salaries of the employees are properly remitted to the
BIR.
104. How much is the taxable income of Mr. Resula if he chooses optional standard
deduction?
A. 175, 000 C. 368, 050
B. 255, 000 D. 495, 000
105. How much is the total expense to be claimed as part of the itemized deductions
from the fringe benefits given to his employees?
A. 15, 000 C. 68, 000
B. 32, 000 D. 100, 000
106. On January 2, 2014, Mr. Keneth Sajorda, a resident citizen who sold land as a
capital asset for 1, 800, 000 which had a cost to him of 600, 000. The property was
subject to a mortgage of 700, 000, which was assumed by the buyer. Of the remaining
1, 100, 000 of the consideration, 200, 000 was payable on the date of sale, 600, 000
on January 2, 2015, and 300, 000 on January 2, 2016.
How much is the capital gains tax?
A. 30, 000 C. 72, 000
B. 66, 000 D. 108, 000
107. Using problem #106, how much is the installment payment for January 2, 2015?
A. 27, 000 C. 54, 000
B. 34, 000 D. 108, 000
108. Which of the following statements best describe the characteristics of Taxable
Income?
A. There must be a sale of goods or properties
B. The gain must be realized and received
C. There is no law or treaty exempt such income from taxation
D. The gain received must be in form of cash
119. The following are the requisites for a non-resident alien individual doing
business in the Philippines may be granted personal exemptions, except.
A. The country of which the non-resident alien is a subject or a citizen has an income
tax law.
B. Such income tax law of the foreign country does not allow personal exemptions to
a Filipino citizen deriving income therefrom but not residing therein.
C. Such ITR is true and accurate, covering all income received from sources within
the Philippines
D. The non-resident alien files an income tax return in the Philippines in due time.
121. Which of the following statements is not a requisite for Additional Exemptions?
A. A taxpayers child, whether legitimate and legally adopted but not including
illegitimate.
B. Incapable of self-support child because of mental or physical who is more than 21
years old.
C. Chiefly depending for support on the taxpayer and living with the taxpayer
D. No married, not gainfully and not more 21 years old.
126. Which of the following statements is not correct regarding the RR2-98?
A. A non-resident alien engaged in trade or business or in the exercise of a profession
in the Philippines shall be applied to personal exemption in the amount equal to the
exemptions allowed in the income tax law in the country of which he is subject-or
citizen, to citizens of the Philippines not residing in such country, not to exceed the
amount fixed under Sec. 35 of NIRC.
B. Under Sec. 35 of NIRC can only claim a basic personal exemption-in which it does
not involve the additional exemptions.
C. If the reciprocity tax treaty stipulates to allow the only basic personal exemption,
the Philippines will only allow basic personal exemption subject to limit.
D. If the tax treaty stipulates that both basic personal and additional exemptions be
allowed as exemptions, based on reciprocity principle the Philippine will also grant
both basic and additional exemptions.
127. Which of the following statements is incorrect about the PHHI (Premium on
Health and or Hospitalization Insurance)
A. The premiums on health and or hospitalization insurance (PHHI) paid by the
taxpayer for himself, including h family, not exceeding P200 a month or P2, 400 a
year.
B. PHHI is claimed as a deduction against gross income provided that the family
income of such taxpayer shall not exceed P250, 000 for the taxable year.
C. To claim this deduction, the employee shall present the policy contract together
with the original receipt of the premium payment for the current year to the employer.
D. Total family income does not include primary and other income from sources
received by all members of the nuclear family.
128. Which of the following incorrect regarding the BIR Ruling 003-2005 about
trusts?
A. Tax treatment of UITFs should not be any different from CTFs since they are
considered similar products.
B. An irrevocable trust is treated as a separate and distinct taxable entity from the
person/s or parties that established the trust.
C. An irrevocable trust is subject to any applicable taxes on its investment income as
well as its investors, if and when the trust income is subsequently distributed to them.
D. The nature of UITF is that they are considered as irrevocable trusts since the
beneficial ownership in a UITF is maintained with the trustor-beneficiary, and
considering that in the case of death of the trustor, The UITF participation forms part
of the trustors estate subject to estate tax.
129. Which of the following is correct regarding the BIR Ruling 003-2005?
A. Income accumulated in trust for the benefit of an unborn or unascertained person
or persons with contingent interest, and income accumulated or held for future
distribution under the terms of the will or trust is exempted from tax.
B. Any income which is to be distributed currently by the fiduciary to the
beneficiaries but not including income collected by a guardian of an infant which is to
be held or distributed as the court may direct.
C. Income received by estates of deceased persons after the period of administration
or settlement of the estate is subject to tax.
D. Income which, in the discretion of the fiduciary, may be either distributed to the
beneficiaries or accumulated.
130. Which of the following is not a requisite of exemption of Employers trust under
the Sec. 60 (B) of NIRC?
A. Contributions are made to the trust by the employer, employees, or both for the
purpose of distributing to such employees the earning and principal of the fund
accumulated by the trust in accordance with such plan.
B. Under the trust instrument it is impossible, at any time prior to the satisfaction of
all liabilities with respect to employees under the trust, for any part of the corpus or
income to be used for, or diverted to, purposes other than for the exclusive benefit of
his employees.
C. Any amount actually distributed to any employee or distribute shall be taxable to
him in the year in which so distributed to the extent that it exceeds the amount
contributed by such employee or distribute.
D. Employees trust must be in forms part of a pension, stock bonus or profit-sharing
plan of an employer.
131. Which of the following conditions of the substituted filing system is not
included?
A. Amount of tax due from the employee at the end of the year equals the amount of
tax withheld by the employer
B. The employees spouse received purely compensation income from only one
employer in the Philippines with correct withholding tax
C. Employer files the annual information return (BIR Form No. 1604-CF)
D. The employer issues BIR Form No. 1601-E/2307 to each employee.
132. The filing of consolidated, annual or adjustment return is required under each of
the following circumstances, except.
A. Concurrent employment during the year
B. Successive employment during the year
C. Receipt of income distribution from a general professional partnership, taxable
trusts or taxable estates, exempt co-ownership or exempt joint ventures.
D. Taxpayerer with employment income only
134. Which of the following statements is true regarding the excess quarterly
estimated tax?
A. The excess quarterly estimated tax payments over the quarterly tax due may, at the
option of the taxpayer, be carried forward to quarters of the succeeding taxable year or
claimed through a tax refund.
B. The option must be indicated in the annual adjustment return.
C. Even the taxpayer decided to carry still it is revocable for that period.
D. The option to refund may be in the form of cash or tax credit certificate. If the
option to refund is selected, the excess refundable amount should not be carried over
as a tax credit to the succeeding quarters of the following year.
137. Which of the following statements is not a requirement of the annual information
return?
A. Individuals, estates or trusts, not engaged in business or those earning pure
compensation income, with sole earnings subject to final tax or whose sole income is
exempt-through BIR Form 1705 to be filed on or before May 15 of the following year.
B. Self-employed individuals, estates, and trusts engaged in business-through BIR
Form 1701AIF to accompany the annual income tax return.
C. Corporations and partnership in general-through BIR Form 1702AIF to accompany
the annual income tax return.
D. Pursuant to RMC No. 6-2001, corporation, companies or persons whose gross
quarterly sales, earnings, receipts or output exceed P1, 919, 500 may file their annual
income tax returns accompanied by balance sheets, profit and loss statement,
schedules listing income-producing properties and the corresponding income
therefrom, and other relevant statements duly certified by an independent CPA.
138. Which of the following statements is not correct regarding the filing of income
tax return?
A. The return shall be e-file and the tax e-paid on or before the 15th day of April of
each year covering the income for the preceding year using the eFPS facilities through
the BIR website.
B. For non-electronic filing and payment system (not-eFPS) taxpayers shall be filed
and the tax paid on or before the 15th day of April of each year covering the income
for the preceding year.
C. In the case of no payment returns, the same shall be filed with the RDo where the
taxpayer is registered/has his legal residence or place of business in the Philippine or
with the concerned RCO under the same RDO.
D. In case the taxpayer has no legal residence or place of business in the Philippines,
the return shall be filed by any authorized agent banks located within the jurisdiction
of the Revenue District Officer (RDO).
139. Which of the following individual taxpayers are required to file income tax
return that should be filed in triplicate, except?
A. Individual receiving purely compensation income from a single employer,
although the income of which has been correctly withheld, but whose spouse is not
entitled to substitute filing.
B. Individuals receiving income subjected to final tax
C. A trustee or a trust, guardian of a minor, executor/administrator of an estate, or any
person acting in any fiduciary capacity for any person, where such trust, estate, minor,
or person is engaged in trade or business.
D. An individual engaged in trade or business or in the exercise of their profession
and receiving compensation income as well.
140. The following taxpayers are not required to file income tax return, except.
A. An individual whose gross income does not exceed his total personal and
additional exemptions.
B. An individual whose compensation income derived from one employer does not
exceed 60, 000 and the income tax on which has been correctly withheld.
C. An individual who is not engaged in business or practice of profession whose gross
income does not exceed his personal and additional exemptions for dependents.
D. Every non-resident alien on his income derived within the Philippines.
141. Which of the following documents are necessary to be attached to the income tax
return upon filing, except.
A. Statement of Net Worth and Operations if the gross sales, receipts or output from
business do not exceed 50, 000 in any one-quarter
B. Balance sheet and profit and loss statements if the gross sales, earnings, receipts or
output from business in any one-quarter exceed 50, 000 but do not exceed 150, 000
C. Balance Sheet and profit-and-loss statements certified by an independent CPA and
comparative Profit-and-loss statement for current and preceding taxable years and
schedule of income producing properties and corresponding income therefrom if the
gross sales, earnings, receipts or output from business in any one-quarter exceed 150,
000.
D. Withholding tax form (BIR Form 2316) is necessary when the gross sales, receipts
or income is below 50, 000.
142. Which of the following is not required to file an income tax return?
A. Resident citizen with respect to his business earned outside the Philippines
B. An employee with only one employer and whose compensation income is fully
collected with creditable withholding tax
C. Nonresident citizen with respect to his compensation income earned within the
Philippines
D. Nonresident alien with respect to his business income earned within the
Philippines.
143. Which of the following corporations are exempt to the regular corporate tax,
except.
A. Labor, agricultural or horticultural organization established principally for profit.
B. Mutual savings bank is not having a capital stock represented by shares, and
cooperatives bank without capital stock organized and operated for mutual purposes
and without profit.
C. Cemetery Company owned and operated exclusively for the benefit of its
members.
D. Civic league or organization not organized for profit but operated exclusively for
the promotion of social welfare.
145. Which of the following statements is incorrect regarding the Minimum Corporate
Income Tax (MCIT)?
A. 2% MCIT is based on gross income not on taxable income after operating
expenses.
B. Passive income that has been subjected to a final tax shall not be included as a part
of gross income.
C. Any excess of the minimum corporate income tax over the normal tax shall be
carried forward and credited against the normal tax immediately for three succeeding
taxable years.
D. A taxpayer who is liable to MCI and at the same time has an expanded withholding
tax may deduct the EWT from MCIT and any excess will be a tax credit or refund
following taxable year.
146. Which of the following statements is not true regarding the capital gains tax of a
corporation derived within the Philippines?
A. Capital gains on the sale of shares of stock not traded in the local stock exchange
are subject to 5% and 10% based on net capital gains.
B. Net capital gains on sales or exchange or disposition of lands and or buildings
located outside the Philippine by the Resident Foreign Corporation is subject to 30%.
C. Capital gains on sale or exchange or disposition of lands and or buildings located
in the Philippines by a domestic corporation are subject to 6% of selling price or fair
market value, whichever is higher.
D. Percentage tax on the sale of shares of the stock traded on the local stock exchange
is subject to of 1% based selling price.
149. Minimum corporate income tax is imposed whenever the corporation has zero or
negative taxable income or whenever the MCIT is greater than the Normal Income tax
(NIT) due from such corporation. Which of the following statements regarding the
latter is incorrect?
A. The effectivity shall commence on the 4th taxable year immediately following the
year in which such corporation commenced its business operation
B. The tax rate to be imposed is 2% of taxable income
C. The computation and the payment shall apply at the time of filing the quarterly
corporation income tax
D. This tax applies only to domestic and resident foreign corporations
150. Statement 1: A final withholding tax of 15% of any profit remitted by the
Philippine branch of a foreign corporation to its head office based on the total profits
applied or earmarked for remittance without any deduction for the tax component
thereof.
Statement 2: A final withholding tax of 15% based on the gross amount thereof shall
be imposed on income derived from offshore banking units authorized by local
commercial banks and branches of foreign banks that may be authorized by the
Bangko Sentral ng Pilipinas to transact business with UBOs including interest income
derived from foreign currency loans granted to residents.
A. Both statements are correct C. Only the first statement is correct
B. Both statements are incorrect D. Only the 2nd statement is correct
151. This tax is imposed for each taxable year to every corporation formed or availed
for the purpose of avoiding the income tax with respect to its shareholders or the
shareholders or any other corporation.
A. Minimum Corporate Income Tax
B. Normal Corporate Income Tax
C. Improperly Accumulated Earnings Tax
D. Income Dividend Tax
152. The following organizations shall not be taxed in respect to income received by
them, except.
A. Labor, agricultural or horticultural organization not organized principally for profit
B. Cemetery company owned and operated exclusively for the benefit of its members
C. Non-stock corporation or association organized and operated exclusively for
religious, charitable, scientific, athletic, or cultural purposes, or for the rehabilitation
of veterans, no part of its net income or asset shall belong to or inure to the benefit of
any member, organizer or any specific person.
D. Philippine Amusement and Gaming Corporation
153. The following statements below describes the Minimum Corporate Income Tax
(MCIT), except
A. The computation and the payment of MCIT shall likewise apply at the time of
filing the quarterly corporate income tax
B. In the computation of the tax due for the taxable quarter, if the computed quarterly
MCIT is higher than the quarterly normal income tax (NCIT), the tax due to be paid
for such taxable quarter at time of filing the quarterly corporate income tax return
shall be the MCIT which is two percent (2%) of the gross income as of the end of the
taxable quarter.
C. In the payment of quarterly MCIT, excess over MCIT from the previous taxable
year(s) shall not be allowed to be credited
D. Expanded withholding tax, quarterly corporate income tax payments under the
normal income tax, payments under the normal income tax, and the MCIT paid in the
previous taxable quarter(s) are not allowed to be applied against the quarterly MICT
due.
The following items are the identified deductions from the gross income are:
Requirement: Compute the taxable income and tax due and payable.
157. The US embassy donated a vehicle to the Department of Foreign Affairs of the
Philippines. Which of the following statements is correct?
A. This transaction is exempted from payment of donors tax only.
B. This transaction is exempted only from payment of documentary stamp tax.
C. This transaction is exempted from payment of both donors tax and documentary
stamp tax.
D. This transaction is subject to both donors tax and documentary stamp tax.
158. A taxpayer gives the following reasons for refusing to pay a tax. Which of his
reasons is not acceptable for legally refusing to pay the tax?
A. That he has been deprived of due process of law.
B. That there is a lack of territorial jurisdiction.
C. That he derives no benefit from the tax.
D. That the prescriptive period for the tax has elapsed.
163. To spread the burden of taxation, the corresponding estimated tax is collected at
once every payroll period so that at the end of the taxable year, the amount of tax
withheld will be equal or approximate to the actual tax for the year. This taxation
system of the collection at source is based on what tax principle?
A. Fiscal adequacy C. Administrative feasibility
B. Theoretical justice D. Due process of law
167. Which of the following is not required to file an income tax return?
A. Resident citizen with respect to his business income earned outside the Philippines
B. An employee with only one employer and whose compensation income is fully
collected with creditable withholding tax
C. A non-resident citizen with respect to his compensation income earned within the
Philippines.
D. Non-resident alien with respect to his business income earned within the
Philippines
168. Which of the following amount of winnings/ prizes is subject to a final tax of
20%?
A. P10,000 winnings outside the Philippines
B. P10,000 winnings earned within the Philippines
C. P1,000 Philippines Sweepstakes winnings
D. P9,000 first prize singing contest
169. A Filipino special taxpayer is taxable on his gross compensation income if his
total earnings during the taxable year from multinational enterprises amounted to
more than P975, 000.
A. Yes, provided that the amount is to be reduced by personal exemption.
B. Yes, provided that the amount is said taxpayer has the option to be taxed at special
tax rate of 15% or normal tax
C. Yes, for as long as the tax rate applicable is 15%
D. No, because the special tax rate is applicable only to aliens classified as a special
taxpayer.
175. In a loan agreement between the Bangko Sentral ng Pilipinas (as borrower) and
private international banks (as lenders), it is stipulated that all payments of interest by
the Central Bank to the lenders shall be made free and clear from all Philippine taxes
which may be imposed thereon. Is the stipulation valid?
A. Yes, based on international comity.
B. Yes, based on the doctrine of non-taxability of the government.
C. No, violative of the inherent limitations.
D. No, violative of the constitutional limitations.
176. Montecina Inc., a Philippine Corporation, sold through the local stock exchange
10,000 PLDT shares that it bought 2 years ago. Montecina sold the shares for
P2,000,000 and realized a net gain of P200,000. How much shall it pay tax on the
transaction?
A. It shall declare a P2,000,000 gross income in its income tax return, deducting the
cost of acquisition as an expense.
B. It shall report the P200,000 in its corporate income tax return adjusted by the
holding period.
C. It shall pay 5% tax on the first P100,000 of the P200,000 and 10% tax on the
remaining P100,000.
D. It shall pay a tax of one-half of 1% if the P2,000,000 gross sales.
177. The basis or test of exemption of real properties owned by religious, or charitable
entities from real property taxes is:
A. Use of the real property
B. Ownership of the real property
C. Location of the real property
D. Ownership or location real property at the option of the Government
178. Transfer of the tax burden by one whom the tax is assessed to another.
A. Shifting C. Transformation
B. Capitalization D. Tax exemption
179. The method by which the manufacturer or producer upon whom the tax is
imposed pays the tax and strives to recover such expense through lower production
cost without sacrificing the quality of his product.
A. Shifting C. Transformation
B. Capitalization D. Tax exemption
181. During the year 2015, Western College University, a proprietary educational
institution registered with Securities and Exchange Commission (SEC) and the
Commission on Higher Education (CHED), spent P15,000,000 for the construction of
a new building. For income tax purposes, this amount may be:
A. Claimed entirely as deduction from its 2015 gross income
B. Classified as an asset or expensed outright, at the option of the government
C. Classified as an asset and claim an annual depreciation over the life of the building
D. Classified as an asset or expensed outright, at the option of the taxpayer
184. Which of the following passive income from Philippine source is exempt from
Philippine income tax when received by non-resident Aliens and non-resident
citizens?
A. Royalties, in general
B. Yield or any other monetary benefit from deposit substitute
C. Interest income received from a depository bank under expanded foreign currency
deposit system
D. Other winnings
185. How will the local government units be able to exercise their taxing powers?
A. By Local Legislation
B. By authority conferred by Congress
C. By the issuance of the Department of Finance
D. By the help of the Bureau of Internal Revenue
188. The following statements shall be sufficient causes for the disinheritance of
children and descendants, legitimate as well as illegitimate, except.
A. Has been convicted of adultery of concubinage with the spouse of the testator
B. Guilty of an attempt against the life of the testator, his or her spouse, descendants,
or ascendants.
C. There is a maltreatment of the testator by word or deed, by the child or descendant
D. Guilty of criminal offense
190. The following are the motives of a taxpayer that preclude the transfer in
contemplation of death, except one, is to
A. relieve the taxpayer of the burden of management
B. save income and property taxes
C. avoid payment of estate tax
D. make dependents financially independent
191. The following are transactions and acquisitions exempt from transfer tax, except.
A. Transmission from the first heir or done in favor of another beneficiary in
accordance with the desire of the predecessor
B. Transfer or delivery of the inheritance or legacy by the fiduciary heir or legatee to
the fideicommissary
C. The merger of usufruct in the owner of the naked title.
D. All bequests, devises, legacies or transfers to social welfare, cultural and charitable
institutions.
192. When a person dies and during the marriage the property relationship between
the husband and wife was that of conjugal partnership of gains, the gross estate of the
decedent would include
A. exclusive property only
B. All properties of husband and wife
C. exclusive properties and one-half of the conjugal properties
D. exclusive properties and all conjugal properties
193. Which of the following donations is not included as part of the gross estate of the
decedent?
A. revocable transfers
B. transfers in a contemplation of death
C. transfers with reservation of certain rights
D. transmission under a special power of appointment
194. Which among the following distinguishes an estate tax from other kinds of taxes
that are presently imposed under the provisions of the NIRC of 1997?
A. Tax imposed on the privilege to transfer property ownership
B. Tax that is imposed upon gratuitous transfers
C. It is a tax that is imposed on the net value of the properties that are transferred
D. It is imposed only upon the death of a person.
195. Mr. A died leaving several parcels of land. Before the properties are distributed
to his heirs, the tax to be paid is known as
A. Donors tax C. Inheritance tax
B. Estate tax D. Transfer tax
196. The estate tax is to be computed starting from the death of the decedent because
A. The provisions of the NIRC of 1997 require it
B. The privilege to transfer properties takes place upon death
C. It is only upon the decedents death that his heirs are known
D. At the time of death, that estate taxes are due
199. Which of the following unpaid taxes is not deductible from the gross estate?
A. Property taxes accrued prior to decedents date
B. Income taxes on income earned and received from the estate after decedents death
C. Gift taxes on life time gifts which remain unpaid at date of death
D. Capital gain tax on transfers before death and paid after date of death
200. Which of the following is deductible from the exclusive portion of the gross
estate?
A. Vanishing deduction pertaining to property inherited by the decedent prior to
marriage under conjugal property ownership
B. Transfer for public use pertaining to joint donation of husband and wife to the
government
C. Bad debts for uncollectible claims against insolvent person
D. Family home pertaining to house and lot acquired during marriage under absolute
community
201. Which of the following is allowed as a deduction from the gross estate of a
nonresident citizen?
A. Family home with respect to residential house located in the country
B. Standard deduction of P1,000,000
C. Prorated amount of medical expenses incurred 18 months prior to date of death
D. Vanishing deduction with respect to property located in the Philippines which was
acquired through gratuitous title 4 years prior to death of present decedent
202. Which of the following proceeds of life insurance is to be included in the taxable
gross estate?
A. Insurance proceeds from SSS and GSIS
B. Amount receivable by any beneficiary whose designation in the policy is
irrevocable
C. Proceeds of group insurance is taken out by a company for its employees
D. Amount receivable by any beneficiary designated in the insurance policy
203. Which of the following should be included as part of the gross estate of a
decedent resident alien?
A. The transmission from the first heir, legatee or done in favor or another
beneficiary, in accordance with the desire of the predecessor.
B. Reversion of the right of usufruct to the owner of the naked title
C. Property transferred under a general power of appointment
D. Property transferred for the use of the Government of the Republic of the
Philippines.
204. Which of the following items does not require that the value of the said
deductible amount should be included as part of decedents interest reflected in the
gross estate?
A. Claims against the insolvent person
B. Receivable under RA 4917
C. Claims against the estate
D. Accommodation loan
205. The following requisites are needed for the deductibility of claims against the
estate, except
A. All person obligations existing at the time of the decedents death, including
medical expenses prior to death.
B. The liability was contacted in good faith and for adequate and full consideration in
money or moneys worth
C. The creditors claim must be enforceable in court
D. The indebtedness was not have been condoned or prescribed
207. Which of the following item is considered situated outside the Philippines
A. Franchise in the name of the decedent which is exercised in the Philippines
B. Share of stock holdings of decedent in a foreign corporation whose business is
90% done in the Philippines
C. Bond certificate issued by a domestic corporation owned by a nonresident decedent
D. Foreign currency deposited in bank outside the Philippines
208. Problem: Read and analyze the problem below. Compute the total taxable estate
and the estate tax due and payable. Show your solution in a good form.
Mr. Tan Cruz died intestate on September 04, 1990. He was survived by his wife and
his two legitimate children. He and his wife were under the conjugal partnership of
gains.
On December 20, 2013, the administrator of Mr. Tan Cruz gathered the estates of the
decedents which include the cash in bank:
Savings Deposits 53, 750
Time Deposits (excluding the interest of 5, 756) 120, 000
Bank deposits, Security Savings representing
the amount received by heirs under RA 4917 500, 000
The identified personal and real properties of the decedents are as follows:
o Real properties inherited before the marriage from his father who died before the
present decedents death of 500, 000
o Received 1, 500, 000 real property given as a gift by his business partner during the
marriage 41/2 years before the present decedents death.
o Family car, cost of 1, 000, 000 (the fair market value at the date of death is 1, 125,
000)
o Household furniture and fixtures acquired during the marriage, the fair market
value, 580, 000.
o Land inherited during the marriage from his mother-in-law who died 6 years before
the present decedents death, 1,290, 890
o House and Lot at Tacloban, City, Philippines were his families live and resides
worth 2, 150, 000.
209. The spouses June and Elvira Sandoval purchases a parcel of land for P5, 000,
000 and included their two minor children as co-purchasers in the Deed of Absolute
Sale. The Commissioner of Internal Revenue (CIR) ruled that there was an implied
donation and assessed donors taxes against the spouses. Which of the following
statement is correct?
A. CIR is wrong because donation must be express
B. CIR is correct because the amount involved is huge and ultimately ends up with the
children
C. CIR is wrong because financial capacity is not a requirement for a valid sale.
D. CIR is correct because there was animus don and since the children had no
financial capacity to be co-purchasers
210. May-ann Makabenta, sold to Jan Vincent Vocal, her residential lot with a market
value of 1, 000, 000 for 600, 000. Makabentas cost in the lot is 100, 000. Mr. Vacal is
financially capable of buying the lot. What tax should be imposed and collected from
Ms. Makabenta as a result of the transaction?
A. Presumed capital gains tax C. Donors tax
B. Real Property tax D. Tax on the transfer of property
212. Ms.Quejada, a citizen, and resident of USA, donated $100, 000 worth of stocks
to her future daughter-in-law who is to be married to his only son in the Philippines.
Is the donation subject to Philippine donors taxes?
A. Yes, but only up to the extent that exceeds the allowable P10, 000 exemption for
donation by reason of marriage.
B. Yes, there is not showing in the problem that the marriage actually took place
within one (1) year from the date of the donation.
C. No, the donor is a non-resident alien hence he is not subject to the Philippine
donors tax law.
D. No, the donation took place outside of the Philippines hence not subject to the
Philippine donors tax law.
213. In 2014, Mr. Encarnacion, a retiree, bought 10, 000 CDA shares that are unlisted
in the local stock exchange for 10 per share. In 2015, the said shares had a book value
per share of 60. In view of a car accident in 2016, Mr. Encarnacion had to sell his
CDA shares but he could sell the same only for 50 per share. The sale is subject to tax
as follows:
A. 5% and 10% capital gains tax on the capital gain from the sale of 40 per share
which is the difference between 50 per share and 10 cost per share.
B. 5% and 10% capital gains tax on the capital gain from the sale of 50 per share
which is the difference between 60 per share and 10 cost per share.
C. 5% and 10% capital gains tax on the capital gain from the sale of 40 per share
which is the difference between 50 per share and 10 cost per share plus donors tax on
the excess of the fair market value of the shares over the consideration.
D. Graduated income tax rates of 5% to 32% on the net taxable income from the sale
of the shares.
214. Which of the following transactions is subject to the payment of the donors tax?
A. General renunciation of a surviving spouse in his/her share in the inheritance of the
deceased spouse
B. A general renunciation by the surviving spouse of his/her share in the conjugal or
absolute community upon its liquidation as a result of the death of the other spouse.
C. Regulatory donation where there are legally demandable obligations
D. Donation made outside the Philippines by a non-resident alien of property located
outside of the Philippines.
215. Which of the following is not allowed as a deduction from a gross gift?
A. Wedding gift by a nonresident alien to his only son who got married during the
year
B. Donation by a nonresident alien to the Philippine government
C. Donation by a nonresident alien to educational institution, 80% of which is for free
tuition fee of children of farmers
D. Donation by a domestic corporation to the National government
216. Which of the following needs to be in writing?
A. P2000 worth of jewelry is given as a gift to stranger
B. P1000 worth of toy car was given as birthday to a son
C. A parcel of land donated to the accredited charitable institution
D. P4000 credit written off in favor of debtor in the name of friendship
219. Rosanna gave her parents a gift of P200,000and made a donation of P70,000 to
her parish church. She also donated a parcel of land to the city government of Quezon
city. Which of the gift made may be subject to donors tax?
A. Donation to parish church
B. Donation to parents
C. Donation to the government of Quezon City
D. All of the above
221. A deed of donation was executed by Mr. A, a resident of Manila, in the City of
Manila, in favor of Mr. B, a resident of Quezon City. Mr. B executed a deed of
acceptance in Quezon City. The donors tax return must be filed with the Bureau of
Internal Revenue Office at the
A. Residence of the donor.
B. Residence of the donee
C. Residence of the donor or of the done, whichever the donor chooses
D. Location of the property
224. A resident makes the following gifts or donations. Which of them is exempt from
donors tax?
A. Dowries or gifts made on account of marriage and before its celebration or within
one year thereafter by parents to each of their legitimate, recognized natural or
adopted children to the extent of the first P10,000
B. Gifts made to or for the use of the National Government or any entity created by
any of its agencies which are conducted for profit, or to any political subdivision of
the said Government
C. Gifts in favor of an educational and/ or charitable, religious cultural or social
welfare corporation, institution, foundation, trust or philanthropic organization or
research institution or organization
D. All of the above
COMPREHENSIVE PROBLEMS:
PROBLEM 1: The following data are shown in the books of account of Dimalugi
Service Enterprises:
Collections Current Previous
Revenues
Accounts receivable
Advances
Bad debts recovery (previously written-off)
Claims from insurance
Proceeds of life insurance P 500,000
300,000
200,000
10,000
20,000
1,000,000 P300,000
100,000
20,000
5,000
The accounts receivable collected during the current period represents the revenue of
the previous period.
Required: Compute the total business taxes for the current and the previous period
assuming that Dimalugi is engaged in:
1. Common carrier of passengers
2. Race track
3. Boxing exhibitions
4. Water utilities
5. Life insurance
6. Life insurance as agent of foreign insurance companies
7. Overseas communication dispatches from the Philippines
PROBLEM 2: Mr. X and Mrs. XY made the following conjugal donations during the
year:
1. House and lot, to their nephew, in contemplation of death of the X spouses
(Their nephew, however, predeceased the donors due to vehicular accident), 1, 000,
000
2. Cash, to their daughter-in-law, on account of marriage to their son, 2, 000, 000
3. Business, to their son, on account of marriage, 5, 000, 000
4. Lot, for school building construction of TESDA, 500, 000
5. Car, to their church, 1, 000, 000
6. Shares of stock, to their daughter, who is still a minor. The investments are included
in the will of the spouses, 4, 000, 000
7. Car, to the Rotary Club of Tacloban Chapter, 600, 000
8. Cash, to the Liberal Party on account of the forthcoming election, 2, 000, 000
PROBLEM 3: Mr. X and Mrs. XY, Filipino citizen, made conjugal donations during
the taxable year as follows:
August 20, 2013, To their son on account of marriage of 300, 000
September 20, 2013, To their daughter-in-law on account of marriage, 100, 000
March 2, 2014, Liberal Party (Exclusive property of Mr. X), 500, 000
April 28, 2014, To Philippine Government and Chinese Government of 1, 200, 000
June 23, 2014, To their nephew on account of graduation of 50, 000
To their grandson on account of marriage of 100, 000
To their church of 200, 000
July 8, 2014, To their daughter, real property subject to suspensive
The condition of passing the CPA exam. The donee intends to take the exam on 2015
of 1, 000, 000
To their son, house and lot on account of marriage Last year August 25, 2013, subject
to mortgage of 400, 000 assumed by their son of 2, 000, 000
December 30, 2014, To Ramon Magsaysay Foundation of 500, 000
To their son of 500, 000
To their daughter-in-law of 100, 000
To their daughter of 500, 000
Requirement: Compute the amount of donors tax due of both spouses in each date.
229. Statement 1: the leasing of residential units is exempt from VAT if the annual
rental does not exceed 12, 800 per unit.
Statement 2: The sale of adjacent dwelling to different buyer shall be aggregated as
one
A. Only statement 1 is correct C. Both statements are correct
B. Only statement 2 is correct D. Both statements are incorrect
230. Statement 1: The sale fruits and vegetables is exempt from business tax
Statement 2: The sale of bread is exempt from business tax.
A. Only statement 1 is correct C. Both statements are correct
B. Only statement 2 is correct D. Both statements are incorrect
231. Statement 1: The 3% general percentage tax applies for non-VAT registered
taxpayers.
Statement 2: A seller is subject to percentage tax if he is non-VAT registered even if
his sales or receipt exceed the VAT threshold
A. Only statement 1 is correct C. Both statements are correct
B. Only statement 2 is correct D. Both statements are incorrect
233. Statement 1: Common carriers are subject to VAT on their transport of cargoes or
baggage.
Statement 2: Domestic sea or air carriers are subject to VAT on their transport of
passengers or cargoes.
A. Only statement 1 is correct C. Both statements are correct
B. Only statement 2 is correct D. Both statements are incorrect
235. Statement 1: The VAT applies to receipts or sales other than those exempted and
those specifically subject to percentage tax.
Statement 2: A person with vatable sales or receipts not exceeding the VAT threshold
may register as non-VAT taxpayers.
A. Only statement 1 is correct C. Both statements are correct
B. Only statement 2 is correct D. Both statements are incorrect
236. Statement 1: a non-VAT registered person who invoiced VAT on his sale shall be
subject to 12% VAT without the benefit of an input VAT, 3% percentage tax, and 25%
surcharge.
Statement 2: A VAT-registered person shall be subject to a final withholding VAT of
12% on sales to the government.
A. Only statement 1 is correct C. Both statements are correct
B. Only statement 2 is correct D. Both statements are incorrect
239. Statement 1: The vatable inventories and properties of a VAT taxpayer upon
retirement or cessation of business are subject to VAT as deemed as sales.
Statement 2: When a business changes its trade name, vatable items or properties in
its possession shall be deemed sold on the date of the change.
A. Only statement 1 is correct C. Both statements are correct
B. Only statement 2 is correct D. Both statements are incorrect
240. Statement 1: No appeal from a decision of the BIR on a claim for refund may be
made until other a decision on the claim has been received from the BIR.
Statement 2: The decision of the BIR on a claim for refund may be appealed to any
court
A. Only statement 1 is correct C. Both statements are correct
B. Only statement 2 is correct D. Both statements are incorrect
242. Statement 1: After the receiving the Notice of Informal conference, the taxpayer
has 15 days to respond on the latter.
Statement 2: Once the BIR found out that the assessment to the taxpayer is sufficient,
issuance of Pre-Assessment letter is to be followed wherein the taxpayer has 30 days
to respond to this letter.
A. Only statement 1 is correct C. Both statements are correct
B. Only statement 2 is correct D. Both statements are incorrect
243. Statement 1: If the protest of the taxpayer is denied, the taxpayer has a 30 days to
appeal his protest to Court of Tax Appeals.
Statement 2: If the protest of the taxpayer is still denied in the Court of Tax Appeals,
the taxpayer can elevate his protest to Supreme Court within 15 days.
A. Only statement 1 is correct C. Both statements are correct
B. Only statement 2 is correct D. Both statements are incorrect
246. One of the followings is not a major business internal revenue tax in the Tax
Code.
A. VAT C. Income tax
B. Excise tax D. Percentage tax
248. Georgia Baby is an operator of parking lots. What business tax is due on his
income from the business?
A. Brokers tax C. Common carriers tax
B. Caterers tax D. Value-added tax
249. Who shall be statutorily liable to pay for the tax on the sale of goods or
properties and sale of services and lease of properties?
A. Buyer C. Consumer
B. Seller D. None of the choices
250. Which of the following shall not be included in the term goods or properties?
A. Real properties not held primarily for sale to customers or not held for lease in the
ordinary course of trade or business.
B. The right or privilege to use patent, copyright, design or model, plan, secret
formula or process, goodwill, trademark, trade brand or other like property or right.
C. The right or the privilege to use any industrial, commercial or scientific equipment
D. The right or the privilege to use motion picture film, films, tapes, and discs
252. Mr. Lee Pong is a manufacturer of fermented liquors. In making sales, all taxes
on the products and transactions are passed on to the buyers. For purposes of the
value-added tax, which of the three taxes mentioned here that he pays forms part of
the gross selling price?
A. Excise tax C. Percentage tax
B. VAT D. None of the above
253. Mr. B is a dealer of liquors. On his sales in the Philippines, his tax is:
A. Excise tax C. Percentage tax
B. VAT D. None of the above
254. Sale of real property, the initial payments of which exceed twenty-five percent
(25%) of the gross selling price in the year of sale.
A. Sale of real property by a real estate dealer on a deferred payment basis, not on
installment
B. Sale of real property on installment plan
C. Initial payment
D. None of the choices
256. In which of the following cases shall the selling price be deemed inclusive of
VAT?
I. If the gross selling price is based on the zonal value or market value of the property
II. If the VAT is not billed separately
A. I only C. Both I and II
B. II only D. Neither I nor II
258. Which of the following is not a sale and, therefore, is not subject to the VAT?
A. Transfer, use or consumption not in the ordinary course of business of goods or
properties ordinarily intended for sale or use in the course of business.
B. Distribution or transfer to shareholders or investors of shares in the profits of a
VAT registered person
C. Distribution or transfer to creditors in payment of debt;
D. Consignment sales
259. Under the VAT law, which of the following sales may not be zero-rated?
A. Export sales
B. Foreign currency denominated sales
C. Sale of goods to the Asian Development Bank
D. Sale of goods to an export-oriented enterprise
262. For deemed sale transactions, other than retirement or cessation of business, the
output tax shall be based on the:
A. the selling price of the goods deemed sold as of the time of the occurrence of the
transactions
B. the market value of the goods deemed sold as of the time of the occurrence of the
transactions
C. acquisition cost of the goods deemed sold
D. acquisition cost or the current market price of the goods whichever is lower
263. Which one is not included in the tax base of VAT on importation?
A. value used by BOC in determining tariff and customs duties
B. customs duties
C. excise tax
D. other charges after the release of imported goods from BOC
264. Ms. Consuelo Dimagulo receives a package of goods from her sister who lives in
California, USA. Ms. Consuelo will use the goods for personal purposes. She is not
VAT-registered. Which of the following statements is correct in connection with the
receipt of a package?
A. Ms. Consuelo shall be subject to VAT on importation
B. Ms. Consuelo shall not be subject to VAT on importation because she is not VAT-
registered
C. Ms. Consuelo shall not be subject to VAT on importation but shall be subject to
VAT on sales
D. None of the choices
265. Bigay Gabay, Inc. enjoys tax exemption for its importations. During a particular
month, it imported goods from Japan. After the release from customs custody, Bigay
Gabay, Inc. transferred the imported goods to Todo Bigay Trading, a VAT registered
entity. For VAT purposes, the VAT on importation shall be paid by:
A. both Bigay Gabay, Inc. and Todo Bigay Trading
B. neither Bigay Gabay, Inc, nor Todo Bigay Trading
C. Bigay Gabay only
D. Todo Bigay only
267. One of the following statements is wrong. Identify. For a taxpayer who becomes
liable for the first time to the VAT:
A. There can be an input tax on purchases he made when not yet a VAT taxpayer
B. He must use a VAT invoice on the sale of the goods purchased when not yet a VAT
taxpayer
C. He must still use the Non-VAT invoice in use when he was not yet a VAT taxpayer
on the sale of goods on hand on the transition date
D. There will be an adjustment in the inventory valuation on the transition date
268. Which is correct? The inventory balance in the financial statements at any given
date of a VAT-registered person is:
A. Balance, net of input taxes
B. Balance, inclusive of input taxes
C. Balance on which the transitional input tax is computed annually
D. Balance where the value-added tax thereon may be calculated by multiplying it by
12%
270. Gaby, a Japanese residing in the Philippines, bought garments from ABC Corp, a
domestic corporation, and exported the same to Japan. The total value of exports is
P100,000. VAT (output tax) due on the transactions is:
A. P10,000 C. None, because 0% applies
B. P5,000 D. None, because the sale is exempt from VAT
272. Which of the following non-life insurance companies shall not be subject to
VAT?
A. crop insurance companies C. fidelity companies
B. surety companies D. bonding companies
273. Which of the following milling jobs shall not be exempt from VAT?
A. play into rice
B. corn into corn grits
C. wheat into flour
D. sugar cane into raw sugar
275. A VAT subject real estate dealer sold a residential lot on January 15, 2007. The
following information was made available on the terms of the sale:
Gross selling price P3,000,000
Initial payments on January 15, 2007 (consisting of down
payment and installment in the year of sale) 900,000
Balance to be paid in equal installment, installments starting
February 15, 2007 2,100,000
How much was the output tax using 12% VAT rate?
A. P120,000 c. P80,000
B. P100,000 d. None
277. Using the same data in the preceding number, how much was the output VAT on
the exchange of real properties held for sale for shares of stock using 12% VAT rate?
A. P120,000 c. P80,000
B. P100,000 d. None
278. The following information is taken from the books of a VAT registered enterprise
was provided to you:
Domestic sales of goods P3,000,000
Sales of packaging materials to an export-oriented
enterprise whose export sales exceed 70% of the
total annual production 2,000,000
Local sales of goods to Asian Development Bank 500,000
Consignment of goods (not returned within 60 days following
the date of consignment) 200,000
Goods transferred for the personal use of the owner 100,000
279. using the same data in the preceding number, how much was the output tax using
12% VAT rate?
A. P360,000 C. P456,000
B. P396,000 D. P696,000
281. Mr. C is a VAT registered person, with the following data for a taxable month,
VAT is not included: Sales, domestic, to consumers P600,000; Sales, direct exports
P300,000; Purchases, total invoice cost, from VAT registered persons: Of goods of
P550,000 and of services of P330,000.The services subject to the value added tax is:
A. P600,000 C. P300,000
B. P400,000 D. P900,000
282. Mr. Abnoy, a VAT taxpayer, on August 1, 2011, made the following purchases
from VAT sellers, for use in his business. The amounts stated not including VAT:
Machine 1, with a useful life of 19 years P3,000,000
Machine 2, with a useful life of 3 years 1,800,000
Patent, with usefulness of 2 years 600,000
The input tax on the purchases, available to Mr. Abnoy, for the month of August 2011:
A. P84,000 C. P51,000
B. P15,000 D. P62,000
283. Puss, VAT registered, made the following purchases during the month of January
2007:
How much was the total allowable input taxes of Puss for the month using 12% VAT
rate?
A. P38,688 C. P34,800
B. P35,337.60 D. P34,542.86