Taxation Reviewer
Sale of Real Property
136. Sale of Real Property by areal estate dealer, the initial payments of which do not exceed twenty five
percent (25%) of the gross selling price in the year of sale is considered.
a. Sale of real estate by a real estate dealer on a deferred basis.
b. Sale of real estate by a real estate dealer on installment basis.
c. Both “a” and “b”
d. Neither “a” nor “b”
137. In the case of sale of real properties on the installment plan, the real estate dealer that be subject to VAT
on the:
a. Selling price
b. Selling price or fair market value whichever is lower
c. Selling price of fair market value whichever is higher
d. Installment payments, including interest and penalties, actually or constructively received by the seller.
138. Statement 1. On a sale of real property on installments by a real estate dealer, the seller shall be subject
to VAT on the installment payment received, including interest and penalties for late payment.
Statement 2. On sale of real property on installments by real estate dealer, where the VAT is computed
not on the consideration in the deed of sale but on the higher fair market value, the VAT must be billed
separately with a specific mention that it is based on the market value of the property.
a.
b.
c.
d.
Both statements are correct
Both statements are not correct
Only the first statement is correct
Only the second statement is correct
139. Statement 1. In the case of sale on deferred payment basis not qualifying under the installment plan, the
transaction shall be treated as cash sale and the vat is payable on the month of sale.
Statement 2. In the case of a sale on deferred payment basis not qualifying under the installment
plan, payments subsequent to the initial payments shall no longer be subject to vat.
a. Both statements are correct
b. Both statements are not correct
c. Only the first statement is correct
d. Only the second statement is correct
140. Kaktus Realty Inc. developed a condominium in Manila. During the month of January 2013, it had the
following data (VAT included, if applicable):
Selling Price
Cash sale of a 3 bedroom unit
Sale of parking lot
P5,040,000
560,000
Installment sale of 2 bedroom unit (initial payments
Exceed 25% of the selling price)
3,920,000
The 3 bedroom unit sold for cash had a zonal value of P5,000,000 and the 2 bedroom unit had a fair market
value per Tax Declaration P3,000,000.
How much is the output tax for the month?
a.
b.
c.
d.
P920,000
P900,000
P1,020,000
P1,080,000
3 Bedroom unit
SP= P5,040,000/1.12 = P3,500,000
ZV=P5M
Output Vat= P5M x 12%
P600,000
2 Bedroom unit
SP= P3,920,000 = P3,500,000
ZV= P3,000,000
60,000
OV= P3.5M x 12%
420,000
TOTAL Output Vat
P1,080,000
141. West Star Realty Corp. sells a commercial lot in the month of November 2018 under the following terms
(including VAT):
Total contract price
P1,120,000
Down payment, 11-01-2018
112,000
First installment, 12-01-2018
112,000
The output VAT in November 2013 is:
a.
b.
c.
d.
P12,000
24,000
P30,000
P120,000
◊Ratio of initial payment over SP = 200/1M = 20%
◊Type of Sale = Installment Sale
◊Output Vat Nov. = P112,000 x 3/28 = P12,000
142.Bahay Kubo Inc. is a real estate dealer. Details of its sales during the year showed the following Date of
sale
June 2, 2014
Consideration in the deed of sale
P5,000,000
Fair market value in the assessment rolls
4,800,000
Zonal Value5,
200,000
Schedule of payments:
June 2, 2014
1,000,000
June 2, 2015
2,000,000
June 2, 2016
2,000,000
How much is the output tax to be recognized for the June 2, 2016 payment?
a.
b.
c.
d.
P0
P24,000
P249,000
P624,000
◊Ratio of initial payment over SP = 1/5 = 20%
◊Type of Sale = Installment Sale
◊Output Vat Nov. 2016 = 2/5 x 5,200,000 x 12% = P249,600
143.Assuming that the scheduled payment on June 2, 2014 is P2,000,000, how much is the output tax to be
recognized for the June 2, 2016 payment?
a. O
c. P249,600
b.P24,000
d. P624,000
◊Ratio of initial payment over SP = 2/5 = 40%
◊Type of sale = deferred sale; treated as cash sale
◊The entire output vat will be paid on 2014
◊Liability 2016 = PO
Use the following data for the next two (2) questions:J J i s a r e a l e s t a t e d e a l e r. D u r i n g t h e m o n t h o f
O c t o b e r 2 0 1 6 , h e s o l d t h r e e ( 3 ) commercial lots under the following terms:
LOT1
Lot 2
P250,000
150,000
100,000
P200,000
130,000
70,000
Down, Oct. 5
25,000
50,000
Due:12/05/2016
25,000
20,000
20,000
Year2017
200,000
130,000
240,000
Zonal Value
350,000
260,000
Selling price
Cost
Gain/Loss
Lot 3
P300,000
175,000
125,000
Terms:
40,000
250,000
144. How much is the Output tax for the month of October?
a. P26,500
b. P34,800
c. P31,500
d. P40,200
145.
The Output tax for December is
a.
b.
c.
d.
P5,400
P4,500
P6,600
None
Ratio
Type of Sales
Lot 1
20%
Installment
Lot 2
25%
Deferred
Lot 3
20%
Sale
TOTAL
20%
Sale
OCT
DEC
P4,200
4,200
31,200
none
4,800
2,400
40,200
6,600
146.
Statement 1: On a sale of real property on installment by a real estate dealer, the seller shall
be subject to VAT on the installment payment received, including interests and penalties for late
payment.
Statement 2: On sale of real property on installments by real estate dealer, where the Vat is computed
not on the consideration in the deed of sale but on the higher fair market value, the Vat must be
billed separately with a specific mention that is based on the market value of the property
a. Both statements are correct
b. Both statements are not
correct
c. Only the first statement is
correct
d. Only the second statement is
correct
147. Statement 1. In the case of sale on deferred payment basis not qualifying under the installment plan,
the transaction shall be treated as cash sale and the vat is payable on the month of sale.
Statement 2. In the case of a sale on deferred payment basis not qualifying under the installment
plan, payments subsequent to the initial payments shall no longer be subject to vat.
a.
b.
c.
d.
Both statements are correct
Both statements are not correct
Only the first statement is correct
Only the second statement is correct
Sale by a Dealer in Securities
148.
A dealer in securities has the following data for the quarter:
Sales, shares held as inventory
P5,000,000
Sales, shares held as investment
1,500,000
Cost, shares held as inventory
2,000,000
Cost, shares held as investment
500,000
Supplies expense, net of VAT
100,000
Rent expense, net of VAT
200,000
How much is the VAT payable?
A. 470,000
B. 324,000
C. 270,000
D. Not subject to VAT
Solution:
Sales, shares held as inventory
Cost of shares, held as inventory
Gross income
Vat rate
Output vat
Less: Input Vat
Supplies expense
Rent expense
Vat payable
P5,000,000
(2,000,000)
3,000,000
12%
P360,000
12,000
24,000
(36,000)
P324,000
VAT/ Discount on sale to Senior Citizen and PWDs
149.
Lola Lita, a senior citizen, bought a medicine with a selling price of P9,520 inclusive of VAT. How much
is the net amount to be paid by Lola?
a. P8,500
c. P6,916
b. P7,616
d. P6,800
Purchase price= P9,520/1.12
P8,500
Discount (P8,500 x 20%)
(1,700)
Amount to be pai by the SC
P6,800
JOURNAL ENTRY OF THE SELLER
Cash
P6,800
SC Discard Expense
Sales
1,700
P8,500
◊ Record the sales at undiscounted amount
◊ The 20% discount shall be recognized as part of operating expenses.
◊ Any input vat attributable to the sale to SC and PWDs shall be classified as operating expenses.
150. Lolo Sot, a senior citizen went to Jollibee to treat his 4 grandchildren on account of his retirement.
They consumed food and beverages with gross amount of P1,120 inclusive of VAT. How much is amount to
be paid by lolo Sot?
a. P896
b. P920
c. P1,056
d. P1,100
◊ Allocated the GC = P1,120 x 4/5 = P896
◊ Allocated to the SC = P1,120 x 1/5 /1.12 x 60% = P160
◊ Amount to be Paid = P896 + 160 = P1,056
151. Gabriana Clinic, a VAT-registered entity, performed a prosthetic surgery on the legs of Loyd, a person
with disability. The total cost of medical operation inclusive of vat was P560,000 . Being a disabled person,
Loyd received 20% discount from Gabriana. How much is the total amount to be paid by Loyd?
a. P400,000
b. P920
c. P1,056
d. P560
◊ Amount to be Paid = P500,000 x 80% = P400,0000
152.
Masbate Farm Inc. paid royalties to Karma Italia Inc., a manufacturer of foam based in Italy for
allowing the former to use the latter’s newly developed technology in manufacturing foam. Which of the
following statements is true as to the tax consequence of the said payment?
a.
b.
c.
d.
Masbate Foam Inc. will pay the the BIR 5% final withholding VAT
Kama Italia Inc. will pay the BIR 5% final withholding VAT
Masbate Foam Inc. will pay the BIR 12% creditable withholding VAT
Kama Italia Inc. will pay the BIR 12% creditable withholding VAT
153.
The Commissioner or his authorized representative is empowered to suspend the business
operations and temporarily close the business establishment of any person for:
a. Failure to issue receipts or invoices of a VAT-registered entity.
b. Failure to file a VAT-return for VAT-registered person as required by the tax code. c.
c. Understatement of taxable sales or receipts by thirty percent (30%) or more of his correct
taxable sales or receipts for the taxable quarter
d. All of
above
154.
1st Statement – Failure of any person to register as a VAT-entity shall result to his being
temporarily closed for the duration of not less than five (5) days and shall be lifted only upon compliance
with whatever requirements prescrived by the Commissioner in the closure order.
2nd Statement – A taxpayer may apply for VAT registration not later than ten (10) days before the
beginning of the calendar quarter and shall [ay the registration fee unless they have already paid at the
beginning of the year.
a. Both statements are correct
b. Both statements are incorrect
c. Only the first statement is correct
d. Only the second statement is correct
155.
The term “gross receipts” for hotel and restaurant business operators shall include
I.Service charges billed separately and actually distributed to waiters and employees.
II.Actual cost of long distance and overseas telephone calls, tax, cable, telex, and charges of the
telecommunication companies collected by the establishment for the customers/clients for
the concerned telecommunication companies, such as PLDT, which are earmarked for payment to the
latter.
III.Vat passed on to customers
IV.Local taxes
V.Rooms, laundry, valet services and food/beverages consumption
VI.Handling charges for providing telephone, cables or tax services
VII.Cake shop sales, lease to concessionaires and compensation for other service
a. V and VII only
b. II, III and VII only
c. V, VI and VII only
d. All of the above
156.
Which statement is correct?
a. The sales invoice that shows a total, with an indication that it includes the value added tax, even if
it does not show the tax separately, is a correctly prepared invoice.
b. The invoice which shows the selling price and the value added tax separately, and with a total which
is a correct amount is a properly prepared invoice.
c. An invoice which shows the selling price and the value added tax separately, but where the value
added tax is wrong, which is paid by the buyer, is a violation of the revenue regulations or issuance of
sales invoices.
d. A sales invoice by
a VAT taxpayer
can be used only
on a VAT sale.
157.
First Statement The transitional input tax shall be 2% of the value of the beginning inventory on hand,
or actual VAT paid on such goods, materials and supplies whichever is higher, which amount shall be
creditable against the output tax of VAT registered persons.
Second statement. The value allowed for income tax purposes on inventories shall be the basis for the
computation of the 2% transitional input tax, including goods that are exempt for VAT under Sec 109 of
the Tax Code.
a.
b.
c.
d.
158.
Both statements are correct
Both statements are incorrect
Only the first statement is correct
Only the second statement is correct
First statement. Unused input tax of persons whose registration had been cancelled may be converted
into tax credit certificate which may be used in payment of other NIRC taxes.
Second statement. Refund or tax credit certificate shall be granted within 25 days from the date of
submission of complete documents.
a.
b.
c.
d.
Both statements are correct
Both statements are incorrect
Only the first statement is correct
Only the second statement is correct
159.
If a person who is not VAT-registered issues an invoice or receipt showing his TIN- followed by
the word “VAT”, the erroneous issuance shall result to the following, except which one?
a. The non-VAT person shall be liable to the percentage taxes applicable to his transactions
b. The non-VAT person shall be liable to the VAT due on the transactions.
c. The non-VAT person shall have the benefit of input tax credit.
d. The non-VAT person shall be liable to a 50% surcharge under Sec. 248 (B) of the Tax Code
160.
Which of the following statement is not correct?
a. Under Vat, the consumption tax is borne by the
consumer.
b. Under Vat, the seller is merely serving as tax collector.
c. Under Vat, the buyer is claiming the input Vat.
d. Under Vat, the final consumer is claiming the input vat as
refund.
161.
What institution is required to deduct and withhold a final VAT of 5% on the purchase of goods
or services subject to VAT?
a. National government or any political subdivision
thereof
b. Government-owned or controlled corporations
c. Both (a) and
(b)
d. Neither (a)
nor (b)
162.
The withholding agent of creditable value added tax is required to remit the
amount of value added tax withheld within
a. 25 days following the end of month the withholding was made
b. 20 days following the end of month the withholding was made
c. 15 days following the end of month the withholding was made
d. 10 days following the end of month the withholding was
made
163.
A VAT-registered supplier sold goods amounting to P500,000 to a governmentcontrolled corporation during a particular quarter. Which of the following statements is
incorrect in relation to the sale in relation to the sale of goods?
a. The sale is subject to final withholding VAT.
b. The government-controlled corporation will withhold P25,000 withholding VAT.
c. The government-controlled corporation shall remit the withholding of VAT to the BIR
within 10 days following the end of the month the withholding was made.
d. The VAT-registered supplier may refuse the withholding of VAT as long as it is
willing to pay the full 12% VAT
163.
A VAT-registered supplier sold goods amounting to P500,000 to a governmentcontrolled corporation during a particular quarter. Which of the following statements is incorrect in
relation to the sale in relation to the sale of goods?
a. The sale is subject to final withholding VAT.
b. The government-controlled corporation will withhold P25,000 withholding VAT.
c. The government-controlled corporation shall remit the withholding of VAT to the BIR within 10
days following the end of the month the withholding was made.
d. The VAT-registered supplier may refuse the withholding of VAT as long as it is willing to pay
the full 12% VAT.