MEDIUM

QUESTIONS
 MEDIUM - QUESTION NO. 1
60 SECONDS

Juan Tamad is a resident citizen, married to Maria Makiling and is

living in Mandaluyong City. They had six (6) beautiful children
namely:

Luntian a legitimate child, 25 years old, unemployed,

married to Prince Charming but still living with her mother
and father in Mandaluyong City
Liwanag a legitimate child, 23 years old, incapable of self-
support because of physical disability
Luwalhati a legitimate child, 20 years old, gainfully
employed 2 years ago
Ligaya a legally adopted child, 18 years old, currently
studying at University of Saint Timothy and is supported
chiefly by her father
Cinderella an illegitimate child, 16 years old
Snow White an illegitimate child, 12 years old, who died
last taxable year because of food poisoning

The husband and wife had the following Common Properties,

unless otherwise stated, on their income and expenses for the
taxable year 2015:

Salary of the husband, net of Php50,000.00

Php 500,000.00
withholding tax
Salary of the wife, gross of Php60,000.00
450,000.00
withholding tax
Professional income, husband, net of 10%
450,000.00
withholding tax
Expenses, practice of profession 100,000.00
Premium payment for health insurance paid
2,400.00
by the wife
Gross business income, wife 550,000.00
Business expenses, wife 375,000.00
Rent income, lease of common property,
500,000.00
gross of 5% withholding tax
Expenses, leased common property 215,000.00
Royalties, book published and sold in
55,000.00
Singapore
Royalties, book published and sold in Mexico,
90,000.00
Pampanga
Interest income, BPI-Manila 25,000.00
Prizes, USA 15,000.00
Prizes, Manila 10,000.00
Interest income received under Expanded
50,000.00
Foreign Currency Deposit System (EFCDS)

Compute the tax payable of the husband.

A. 296,275.00 C. 296,175.00
B. 174,900.00 D. 287,400.00
 MEDIUM - QUESTION NO. 2
60 SECONDS

Rudolfo Gonzales a resident citizen with three dependent children

at the beginning of 2015 and has the following data for the year:

Gross business income, Phils. (Gross sales

Php 530,000.00
P1,200,000.00)
Business expenses, Phils. 195,000.00
Gross business income, USA (Gross sales
915,000.00
P1,500,000.00)
Business expenses, USA 325,000.00
Interest income from bank deposit, Phils. 52,000.00
Interest income from bank deposit, USA 71,000.00
Interest income from domestic depository
95,000.00
bank under EFCDS
Interest income from a debt instrument not
within the coverage of a deposit substitute,
50,0000.00
Philippines (Gross of 20% creditable
withholding tax)
Interest income from a debt instrument
within the coverage of a deposit substitute, 60,000.00
Phils.
Royalty on book published in the Phils. 97,000.00
Prize in a contest he joined in the Phils. 5,000.00
Philippine Charity Sweepstakes winnings 100,000.00
Gain from sale of shares of stock not traded
180,000.00
through the local stock exchange
Dividend received from a domestic
20,000.00
corporation
Tax payments, first three (3) quarters 105,000.00
Capital gain (capital asset held for 12
66,000.00
months)
Capital loss (capital asset held for more than
27,000.00
12 months)

Rudolfo, a manager from A Third Chance Company, had the

following information relating to compensation for CY 2015:

Salary, net of P10,000.00 withholding tax,

P2,400.00 SSS contributions, P2,000.00
Php 206,000.00
Philhealth contributions and P1,500.00 union
dues
13th month pay 18,000.00
Rice subsidy (P1,500.00 x 12) 18,000.00
Uniform and clothing allowance 5,000.00
Benefits under a collective bargaining
6,000.00
agreement (CBA)
Monetized unused sick leave credits (12
6,000.00
days)
Actual medical benefits 15,000.00
Productivity incentive scheme 4,500.00
Christmas gift 10,000.00
Laundry allowance (P400.00 x 12) 4,800.00
Monetary gift given on account of birth of a
5,000.00
child during the year
Separation pay from a previous employer
150,000.00
(terminated due to redundancy)
Interest income from a long term deposit
which was pre-terminated (remaining 40,000.00
maturity is 4 years)
Dividend from regional operating
headquarters of a multinational corporation in 10,000.00
the Phils

How much is his total De Minimis Benefits? (Open-ended)

 MEDIUM - QUESTION NO. 3
60 SECONDS

Yaman na Bait Pa Corporation has a soft spot for senior citizens.

As such, it hires senior citizens to work in the company for a period
of at least six (6) months. The corporation has likewise adopted
ABC College, a school operated by the government and accredited
by the Commission on Higher Education (CHED) in its efforts to
promote its social responsibility. Further, the Company has entered
into a Memorandum of Agreement (MOA) with the provincial school
and CHED.

The following data are provided by the corporation:

Sales Php 7,000,000.00

Cost of Sales 3,750,000.00
Gain from sale of an office equipment 20,000.00
Gain from sale of land not used in business
100,000.00
(selling price P300,000.00)
Gain from sale of building used in business
100,000.00
(selling price P300,000.00)
Gain from sale of shares of stock directly to
50,000.00
the buyer
Gain from sale of shares of stock through
the stock exchange (selling price 10,000.00
P200,000.00)
Interest income from bank deposit 40,000.00
Yield from debt instrument not within the
80,000.00
coverage of deposit substitute, Phils
Yield from debt substitute, Phils. 80,000.00
Interest income received from depository
60,000.00
bank under the EFCDS, Phils.
Interest income from bank deposit,
400,000.00
Thailand
Interest from long-term deposit, Phils. 30,000.00
Rent income (with unearned rent income of
P400,000.00 which is part of the advance 200,000.00
rents for 3 years), Phils.
Royalties, Phils. 70,000.00
Royalties, Thailand 300,000.00
Property dividend received from domestic
150,000.00
corporation
Cash dividend received from a foreign
350,000.00
corporation
Stock dividend received from a domestic
100,000.00
corporation
Prizes and winnings, Phils. 400,000.00
Refund of Philippine percentage tax 100,000.00
Refund of value-added tax 100,000.00
Bad debt recovery 50,000.00
Operating expenses (including salaries of
P500,000.00 given to senior citizen
2,500,000.00
employees but excluding assistance to
schools)

During the same period the corporation also allows 20% discount
to senior citizens who buy goods from the Company. The discount
is on the P1,200,000.00 sales (part of the gross sales above)
summarized as below:

Selling price (VAT-exempt) Php 1,200,000.00

Less: 20% discount 240,000.00
Amount payable by the senior citizen Php 960,000.00
Yaman na Bait Pa Corporation provided the following assistance to
ABC College:

Cash to improve school facilities Php 396,000.00

Computers (acquisition cost) 471,000.00

How much is the total allowable itemized deductions? (Open-

ended)
 MEDIUM - QUESTION NO. 4
60 SECONDS

From the following data, compute the income tax still due from a
domestic corporation engaged in merchandising business. For the
calendar year 2014, the net income per books is P180,000.00 after
considering among others:

Non-taxable income (others) Php 6,300.00

Inter-corporate dividends 4,750.00
Net capital loss 2,500.00
Non-deductible expenses (others) 12,450.00
Contribution to an accredited non-profit
13,000.00
domestic religious corporation
Contribution to government's priority program
by the National Economic and Development 2,200.00
Authority
Quarterly income tax payments 67,000.00
Provision for bad debts 7,900.00

The net income per books should be reconciled with the provisions
of the Tax Code, meaning, items which are not taxable must be
excluded and items which are not deductible are to be added back.

How much is the tax payable?

A. 11,090.00
B. 6,098.00
C. 10,640.00
D. 6,758.00
 MEDIUM - QUESTION NO. 5
60 SECONDS

The record of a closely held corporation, registered with the BIR in

2009, reveals the following:

2014 Gross income Php

3,200,000.00
Less: Expenses 4,100,000.00
Net operating loss (900,000.00)
Accumulated retained earnings, end
5,750,000.00
of 2014

2015 Gross income 5,250,000.00

Expenses 3,150,000.00
Rent income, net of 5% withholding
500,000.00
tax
Interest income from a debt
instrument within the coverage of a
87,000.00
deposit substitute, net of 20% final
withholding tax
Inter-corporate dividends received 430,000.00
Dividends paid by the corporation 1,342,000.00
Retained earnings appropriated for
200,000.00
sinking fund

It had a paid-up capital stock of P6,000,000.00 as of December 31,

2015.

Upon examination of the 2015 return, the BIR concludes that there
is an improper accumulation of profit. The corporation fails to show
proof to prove the contrary.

Assuming that the taxable net income is Php1,726,316.00

How much is the companys improperly accumulated earnings?
A. 823,916.00
B. 841,316.00
C. 754,316.00
D. 1,041,316.00
 MEDIUM - QUESTION NO. 6
10 SECONDS

If the protest is denied in whole or in part, or is not acted upon within

one hundred eighty (180) days from submission of documents, the
taxpayer adversely affected by the decision or inaction may appeal
to the Court of Tax Appeals, or from the lapse of one hundred
eighty (180) day period within how many days from receipt of the
said decision?
A. Sixty (60) days
B. Thirty (30) days
C. Twenty (20) days
D. Ten (10) days
 MEDIUM - QUESTION NO. 7
10 SECONDS

All taxpayers are required to preserve their books of accounts,

including subsidiary books and other accounting records, for a
period of ______ years reckoned from the day following the
deadline in filing a return, or if filed after the deadline, from the date
of the filing of the return, for the taxable year when the last entry
was made in the books of accounts.
A. 3 years
B. 5 years
C. 7 years
D. 10 years
 MEDIUM - QUESTION NO. 8
10 SECONDS

Which of the following is not an element of double taxation?

A. Same taxing authority
B. Same subject matter
C. Same taxable year
D. Same amount