CPA REVIEW SCHOOL OF THE PHILIPPINES
TAXATION
Transfer Taxes
1. Transfer Tax is a tax imposed on the privilege to transfer property ownership:
A. gratuitously.
C. mortis causa.
B. inter vivos.
D. through a will.
Donor’s Tax
2. A, an individual, sold to B, his brother-in-law, his residential lot with a market value of
P1,000,000 for P600,000.00. A’s cost in the lot is P100,000.00. B is financially capable of
buying the lot. What tax should be imposed and collected from A as a result of the
transaction?
A. Donor's Tax.
C. Real properly Tax.
B Presumed capital gains Tax.
D. Tax on the transfer of real property.
3.
Who among the following donations is considered a stranger for purposes of donor's
taxation?
A. A first cousin of the donor.
C. The donor's great grandchild.
B. The brother of the donor's father.
D. The mother of the donor's spouse.
Estate tax
4. Which of the following should be treated as real property?
A. A Porshe sports car
B. An Amorsolo painting
C. Shares of stock of San Miguel Corporation
D. A contract for the construction of public road
5.
A died in 1990 leaving all real estate owned by him with direction that such real property shall
not be sold or disposed of for a period of 10 years after his death and ordered that the
property be given to B upon the expiry of that period. In 1999, the estate left by A had BIR
zonal value of P500,000.00. In 2009, the fair market value of said estate increased to
P2,500,000.00, it was declared for taxation in 2009 for P1,500,000.00 and the BIR zonal
valuation was P3,000,000.00. What value should be used for the purpose of estate taxation?
A. P 500,000.00
C. P2,500,000.00.
B. P1,500,000.00
D. P3,000,000.00
Business Taxes
Value-Added Tax
6. Mr. Andres, VAT registered real estate dealer, transferred a parcel of land field for sale to his
son as gift, on account of his graduation. For VAT purposes, the transfer is:
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A.
B.
C.
D.
not subject to VAT because it is a gift.
not subject to VAT because it is subject to gift tax.
subject to VAT because it is considered an actual sale.
subject to VAT because it is a deemed sale transaction.
7.
If two or more adjacent lots are sold or disposed in favor of one buyer, for the purpose of
utilizing the lots as one residential lot, the sale shall be exempt from VAT only if the
aggregate value of the lots does not exceed:
A. P1,919,500.
C. P3,199,200.
B. P2,559,200
D. P3,838,900.
8.
The sale of parking lot by a VAT-registered real estate dealer shall be subject to VAT
A. regardless of the amount of selling price.
B. only when it is included as part of the sale of condominium unit.
C. only when it is sold separately from the sale of condominium unit.
D. provided the amount of selling price exceeds the threshold amount.
9.
Which of the following sales to senior citizens shall not be exempt from VAT?
A. Sale of single serving seat meals with beverage for an individual senior citizen
B. Bulk orders which are within the context of pre-contracted or pre-arranged group meals
or packages
C. Sale of medicines from drug stores, hospital pharmacies, medical and optical clinics and
similar establishments including non-traditional outlets dispensing medicines
D. Sale of food, drinks, dessert and other consumable items served by the establishments,
including value-meals and promotional meals, offered for consumption of the general
public
10. During a particular year, the following gross sales/receipts subject to VAT are recorded by a
taxpayer who is not VAT-registered:
Gross receipts, transport of goods and cargoes
P 1,000,000
Gross receipts, practice of profession
700,000
Gross sales, grocery store
800,000
Gross sales, agricultural food products in their original state
300,000
Based on the above data, will he be subject to VAT?
A. No, he is not subject to VAT because- he is not VAT-registered.
B. No, he is not subject to VAT because his sales/receipts in each business do not exceed
the VAT threshold amount.
C. Yes, he is subject to VAT because aside from the practice of his profession, he also
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derives revenue from other lines of business which are subject to VAT and applying the
aggregation rule his combined gross sales /receipts subject to VAT exceed the threshold
amount.
D. Answer not given.
11. A VAT-registered company acquired one vehicle for land transport for the use of an official or
employee valued at P2,400,000. Which of the following statements is correct?
A. The input tax on the purchase of the vehicle for land transport as well as the input taxes
on maintenance expenses incurred on the said vehicle shall be allowed as input tax
credit.
B. The input tax on the purchase of the vehicle for land transport as well as the input taxes
on maintenance expenses incurred on the said vehicle shall not be allowed as input, tax
credit.
C. The input tax on the purchase of the vehicle for land transport shall be allowed as input
tax credit while the input taxes on maintenance expenses incurred on the said vehicle
shall not be allowed as input tax credit.
D. The input tax on the purchase of the vehicle for land transport shall not be allowed as
input tax credit while the input taxes en maintenance expenses incurred on the said
vehicle shall be allowed as input tax credit.
12. VAT withheld by a resident withholding agent on payments to non-residents shall be remitted
within how many days following the end of the month the withholding was made?
A. 10 days
C. 20 days
B. 15 days
D. 25 days
13. When shall the application for tax credit certificate or refund be filed?
A. Within fifteen (15) days after the close of the month
B. Within twenty (20) days after the close of the quarter
C. Within two (2) years after the close of the taxable month when such sales were made
D. Within two (2) years after the close of the taxable quarter when such sales were made
14
In proper cases, the Commissioner of Internal Revenue shall grant a tax credit certificate or
refund for creditable input taxes within how many days from the date of submission of
complete documents in support of the application filed?
A. One hundred (100) days
C. One hundred twenty-live (125) days
B. One hundred twenty (120) days
D. One hundred thirty (130) days
15. A VAT-registered person shall issue for every sale, barter or exchange of goods or properties
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TAXATION
a:
A. VAT credit certificate.
B. VAT invoice.
C. VAT official receipt.
D. VAT refund.
16. Which of the following statements is incorrect?
A. The amount of VAT shall be shown as a separate item in the invoice or receipt.
B. If the sale is exempt from VAT, the term "VAT-exempt sale" shall be written or printed
prominently on the invoice or receipt.
C. If the sale is subject to zero percent (0%) VAT, the term "zero-rated sale" shall be written
or printed prominently on the invoice or receipt.
D. The VAT-subject seller does not have the option to issue separate invoices or receipts
for the taxable, exempt, and zero-rated components of the sale.
17. "A", at the time of retirement, had 1,000 pieces of merchandise which was deemed sold at a
value of P20,000.00 with an output tax of P2,400.00. After retirement, "A" sold to "B" 500
pieces of these for P12,000.00. In the contract of sale or invoice, "A" stated the sales
invoice number wherein the output tax on "deemed sale" was imposed and the corresponding
tax. paid on the 500 pieces. He prepared the following invoice:
Gross selling price
P 10,800
VAT previously paid on "deemed sale:
1,200
Total
P 12.000
How much is the input tax of "B"?
A. P1,000
C. P2.400
B. P1,200
D. None of the choices
18. The VAT-registered purchaser in a transaction where a seller who is not VAT-registered
issues an invoice or receipt showing his TIN, followed by the word "VAT":
A. shall be liable to the percentage taxes applicable to the transaction.
B. shall claim a refund for the erroneous VAT provided the requisite information required
under the Regulations is shown on the invoice or receipt.
C. shall recognize as an input tax credit the "passed on VAT" provided the requisite
information required under the Regulations is shown on the invoice or receipt.
D. none of the choices.
19. If a VAT-registered person issues a VAT invoice or VAT official receipt for a VAT-exempt
transaction, but fails to display prominently on the invoice or receipt the words "VAT-exempt
sale", the transaction shall
A. still be exempt from value-added tax.
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TAXATION
B. be effectively subject to zero percent.
C. be considered erroneous transaction and must be disregarded.
D. become taxable and the issuer shall be liable to pay VAT thereon.
20. All persons liable to VAT such as manufacturers, wholesalers, service-providers, among
others, shall be required to submit summary lists of purchases if their quarterly purchases:
A. exceed P1,000,000.
B. amount to P1,000,000 or less.
C. regardless of the amount of quarterly purchases.
D. answer not given.
Questions 21 thru 23 are based on the following information.
LBH Corporation sold capital goods on installment on October 1, 2014. It is agreed that the selling
price, including the VAT, shall be payable in five (5) equal monthly installments. The data pertinent
to the sold assets are as follows:
Selling price (exclusive of VAT)
P5,000,000
Passed-on VAT
600,000
Original cost of the asset
3,000,00.0
Accumulated depreciation at the time of sale
1,000,000
Unutilized input tax on sold asset
100,000
21.
How much is the gain on sale of asset? [1]
A. P2,000,000
B. P2,600,000
22. How much is the VAT payable? [2]
A. P200,000
B. P300,000
C. P3,000,000
D. P3,600,000
C. P400.000
D. P500.000
23. How much is the creditable withholding tax of the buyer in this case? [3]
A. P 8,333.33
C. P100,000.00
B. P10,000.00
D. P500.000.00
Other Percentage Taxes
24. Who shall be liable to the amusement taxes under Section 125?
A. Patrons of amusement places
B. Lessors of amusement places
C. Proprietor, lessees, or operator of amusement places
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D. None of the choices
25. Who of the following is not subject to tax on winnings under Section 126?
A. Winners in cockfighting
B. Owners of winning race horses
C. Person who wins in horse races
D. Winners from double, forecast/quinella and trifecta bets
26. Which of the following statements is incorrect?
A. The percentage taxes are generally paid monthly.
B. The percentage taxes are basically on sale of services.
C. The percentage taxes may be shifted to customers or clients.
D. An isolated transaction not in the course of trade or business will not result in a liability
for a percentage tax.
27. Which of the following is incorrect? The percentage tax is:
A. imposed on a sale of goods.
B. a tax on a sale of sale of services.
C. imposed together with the excise tax.
D. imposed together with the value-added tax.
Tax Remedies
28. (Phil. CPA) In which of the following cases where civil penalties of 25% or 50% imposed by
the Tax Code is not applicable?
A. In case of false or fraudulent return
B. Failure to file certain information required by the Tax Code
C. Failure or willful neglect to file the tax return within the period prescribed by law
D. Failure to pay the full amount of tax shown on any return required to be filed under the
law
29. The amount still due and collectible from a taxpayer upon audit or investigation.
A. Deficiency
C. Interest
B. Delinquency
D. Surcharge
30. Except for the provision in Section 222, internal revenue taxes shall be assessed within how
many years after the last day prescribed by law for the filing of the return?
A. Two (2) years
C. Four (4) years
B. Three (3) years
D. Five (5) years
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31. (Phil. CPA) The Commissioner of Internal Revenue cannot:
A. abate or cancel tax liability.
B. compromise payment of internal revenue taxes.
C. credit or refund taxes erroneously or illegally collected.
D. compromise the criminal aspect of tax violation.already filed in court.
TAXATION
I - Appeal to the CTA within thirty (30) days after the expiration of the one hundred eighty
(180)-day period.
II - Await the final decision of the Commissioner's duly authorized representative on the
disputed assessment.
A. I only
C. Both I and II
B. II only
D. Neither I nor II
32. (Phil. CPA) Ms. J. Cruz filed an income tax return for the calendar year 2002 on March 10,
2003. The BIR issued a deficiency assessment income tax on April 10, 2004, which has
become final. When is the last, day for the BIR to collect?
A. March 10, 2006
C. April 15, 2008
B. April 15, 2006
D. April 10, 2009
37. The power to interpret the provision of the Tax Code and other tax laws shall be under the
exclusive and original jurisdiction of the Commissioner of Internal Revenue subject to review
by:
A. Court of Appeals.
C. Municipal Courts.
B. Court of Tax Appeals.
D. Secretary of Finance.
33. It refers to a plea of re-evaluation of an assessment on the basis of existing records without
need of additional evidence. It may involve both a question of fact or of law or both.
A. Request for compassion
C. Request for reconsideration
B. Request for informal conference
D. Request for reinvestigation
Income Taxes
38. A married individual deriving income within the Philippines whose spouse is unemployed or is
a nonresident citizen deriving income from foreign sources, shall be entitled to a personal
exemption of:
A. P40,000 only.
C. P64,000 only.
B. P50,000 only.
D. P100,000 only.
34. It refers to a plea of re-evaluation of an assessment on the basis of newly discovered or
additional evidence that a taxpayer intends to present. It may also involve a question of fact
or of law or both.
A. Request for compassion
C. Request for reconsideration
B. Request for informal conference
D. Request for reinvestigation
35. If the protest is not acted upon by the Commissioner's duly authorized representative within
one hundred eighty (180) days counted from the date of filing of the protest in case of a
request for reconsideration, the taxpayer may either:
I - Appeal to the CTA within thirty (30) days after the expiration of the one hundred eighty
(180) -day period.
II - Await the final decision of the Commissioner's duly authorized representative on the
disputed assessment.
A. I only
C. Both I and II
B. II only
D. Neither I nor II
36. If the protest is not acted upon by the Commissioner's duly authorized representative within
one hundred eighty (ISC') days counted from date of submission by the taxpayer of the
required documents within sixty (60) days from the date of filing of the protest in case of a
request, for reinvestigation, the taxpayer may either:
October 2014 Preweek
39. Which of the following shall entitle the taxpayer to an additional exemption during the year?
A. A legitimate child, 24 years old, who got married during the year
B. A legally adopted child, 21 years old, who gained employment in the previous year
C. A legitimate child, 25 years did. who was insane at the beginning of the year but who
became well within the year
D. A married minor daughter whose marriage was annulled during the year and now lives
with and depends upon her parents for chief support
40. A benefactor has a qualified dependent senior citizen. For income tax purposes, which of the
following statements is incorrect?
A. The benefactor shall be entitled to both basic personal exemption and additional
exemption.
B. The benefactor shall be entitled only to the basic personal exemption allowed to head of
family.
C. If required to file an income tax return (ITR), the benefactor shall state therein the name,
birthday and Office for Senior Citizen Affairs (OSCA) ID number of the dependent senior
citizen,
D. The benefactor shall register the senior citizen as his dependent and himself/herself as
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benefactor in the RDO having jurisdiction over the place where he/she and the senior
citizen resident.
41. What is the minimum corporate income tax (MCIT) rate imposed upon any domestic
corporation on its gross income within and without the Philippines?
A. Two percent (2%)
C. Ten percent (10%)
B. Five percent (5%)
D. Fifteen percent (15%)
42. A domestic corporation was registered with the BIR on January 1, 2014: What year would the
first MCIT be imposed on such corporation?
A. 2014
C. 2018
B. 2017
D. 2020
43. A tax imposed in the nature of a penalty to the corporation to deter tax avoidance of
shareholders who avoid paying the dividends tax on the earnings distributed to them by the
corporation.
A Capital gains tax
C. Minimum corporate income tax
B. Improperly accumulated earnings tax
D. Optional corporate income tax
44. When shall a tax-exempt organization file its annual information return?
A. On or before April 15 of each year
B. On or before June 15 of each of year
C. On or after December 31 of each year
D. None of the choices
45. (Phil. CPA) Lots being rented when subsequently sold are classified as:
A. capital assets.
C. liquid assets.
B. fixed assets.
D. ordinary assets.
46. Which of the following retirement benefits received from private firms is not taxable?
A. Received from an employer under its reasonable pension plan, employee is 51 years old
and has served the company for 9 years
B. Received from an employer under its reasonable pension plan, employee is 52 years
old and has served the company for 11 years
C. Received from an employer under its reasonable pension plan employee is 49 years old
and has served the company for 12 years
D. Received from an employer which has no reasonable pension plan, employee is 53
years old and has served the company for 12 years
October 2014 Preweek
TAXATION
47. A VAT-registered drugstore sells ten (10) pieces of prescription medicine to a Senior Citizen
at an undiscounted selling price of P5.00 per piece. It issues the following receipt:
Selling price (VAT-exempt) of 10 pcs. @ P5.00 each
P50..00
Less: 20% discount
10,00
Amount payable by the Senior Citizen
P40.00
How much is the deductible amount from the gross income of the drug store?
A P10.00
C. P50.00
B. P40.00
D. None
48. The taxpayer's otherwise allowable deduction for interest expense shall be reduced by how
much starting January 1.2009?
A. Twenty-five percent (25%) of the interest income subjected to final tax
B. Thirty-three percent (33%) of the interest income subjected to final tax
C. Forty-two percent (42%) of the interest income subjected to final tax
D. Forty-five percent. (45%) of the interest income subjected to final tax
49. Which of the following shall be allowed as a deduction from the gross income?
A. Depreciation for vehicle for land transport used in the business the value of which
exceeds P2,400,000
B. Depreciation for vehicle for land transport used for personal purposes the value of which
does not exceed P2,400,000
C. Depreciation for airplanes and/or aircrafts the value of which exceeds P2,400,000 where
the taxpayer's main line. of business is sale of goods and properties and the vehicles
purchased are used in said operations
D. Depreciation for land vehicles the value of which exceeds P2,400,000 where the
taxpayer's main line of business is transport operations or lease of transportation
equipment and the vehicles purchased are used in said operations
50. In lieu of the itemized deductions, an individual subject to tax under Section 24, other than a
nonresident alien, may elect a standard deduction in an amount not exceeding:
A. ten percent (10%) of his gross income.
B. forty percent (40%) of his gross income.
C. forty percent (40%) of his gross sales or gross receipts.
D. twenty percent (20%) of his gross sales or gross receipts.
51. This is designed to prevent the exclusion from taxable income of items, the actual receipt of
which could, at the option of a taxpayer on the cash basis, be deferred or indefinitely
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postponed.
A. Cross Border Principle
B. Destination Principle
TAXATION
C. Doctrine of Constructive Receipt
D. Separability Doctrine
52. A minimum wage earner (MWE) was promoted during the latter part of the year (e.g.
December) and was given a raise in salary which is beyond the minimum wage.
Is the entire salaries earned during the calendar year taxable?
A. Yes, the entire salaries during the calendar year is taxable because they exceeded the
statutory minimum wage.
B. No, the minimum wage earner shall be subject to income tax only in the following year
after he exceeded the statutory minimum wage.
C. Yes, as a rule, the moment the statutory minimum wage is exceeded the entire salaries
during the calendar year shall be subject to income tax.
D. No, the minimum wage earner shall still be exempted from income tax during the time
that his salary does not exceed the statutory minimum wage.
53. Under this system, the amount of income tax withheld by the withholding agent is constituted
as a full and final payment of the income tax due from the payee on the said income.
A. Creditable withholding tax
C. Global tax system
B. Final withholding tax
D. Schedular tax system
54. Under this system, taxes withheld on certain income payments are intended to equal or at
least approximate the tax due of the payee on said income.
A. Creditable withholding tax
C. Global tax system
B. Final withholding tax
D. Schedular tax system
55. These are issuances signed by the Secretary of Finance, upon recommendation of the
Commissioner of Internal Revenue, that specify, prescribe or define rules and regulations for
the effective enforcement of the provisions of the National Internal Revenue Code (NIRC)
and related statutes.
A. Revenue Memorandum Circulars
C. Revenue Memorandum Rulings
B. Revenue Memorandum Orders
D. Revenue Regulations
56. These are issuances that publish pertinent and applicable portions, as well as amplifications,
of laws, rules, regulations and precedents issued.by the BIR and other agencies/offices.
A. Revenue Memorandum Circulars
C. Revenue Memorandum Rulings
B. Revenue Memorandum Orders
D. Revenue Regulations
October 2014 Preweek
57. ASEAN means:
A. Association of South East Asian Nations.
B. Accountants in the Service of All Nations.
C. Accountants in South East Asian Nations.
D. Association of South East Asian Accountants.
58. The ASEAN MRA is an agreement of all ten. ASEAN countries to facilitate movement of
accountants among ASEAN member states. MRA means:
A. Membership of Recognized Accountants.
C.
Mutual Recognition Agreement.
B. Movement for Regional Accountants.
D. Mutual Recognition Arrangement.
59. Any person required to file a tax return, statement or document shall be registered and
assigned a TIN. What does TIN mean?
A. Tax Identification Number
C. Tax Informers Number
B. Tax Information Number
D. Temporary Identification Number
60. If after review and evaluation by the Commissioner or his duly authorized representative, as
the case may be, it is determined that there exists sufficient basis to assess the taxpayer for
any deficiency tax or taxes, the said Office shall issue to the taxpayer a PAN. What is meant
by PAN?
A. Preliminary Assessment Notice
C. Preliminary Assessment Number
B. Post Assessment Notice
D. Previous Assessment Number
61. If the taxpayer fails to respond within fifteen (15) days from the date of receipt of the PAN or if
the taxpayer, within fifteen (15) days from date of receipt of the PAN, responds that he/it
disagrees with the findings of deficiency tax or taxes FAN shall be issued. What, is meant by
FAN? [4]
A. Fiscal Assessment Notice
C. Final Assessment Number
B. Final Assessment Notice
D. Formal Assessment Notice
62. Under the Tax Code, how much shall be taken into account in computing the net income, if a
gain is realized by an individual taxpayer from the sale or exchange of capital assets (other
than real properties and shares of stock) held for more than twelve months? (M)
A. 5% of the capital asset sold
C. P5,000
B. 50% of the net capital gain
D. P50,000
63. Which of the following statements is incorrect? (M)
A. Actual sale, barter or exchange of capital assets must always transpire before capital
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gains and losses are recognized.
B. Gains and losses from short sales of property shall be considered as gains or losses
from sale or exchange of capital assets.
C. If securities become worthless during the taxable year and are capital assets, the loss
shall be considered as a loss from the sale, barter or exchange of capital assets on the
last day of each taxable year.
D. Amounts received by the holder upon the retirement of bonds, debentures or other
evidence of indebtedness issued by any corporation including those issued by the
Government with interest coupon or in registered from, shall be considered as amounts
in exchange thereof, and may result to capital gains or losses.
64. Rowena expects that within a week, the market price of Angeles Corporation shares, which is
selling at P10 per share, will go down. She does not. have Angeles Corporation shares so
she calls up her stockbroker and asks him to sell for her 10,000 shares of Angeles
Corporation shares. Rowena and the stockbroker agree that the sold shares are to be
replaced within one week after the sale. The stockbroker sells for Rowena the 10,000 shares
at P10 per share. One week after, when the sold shares are about to be replaced, the selling
price of Angeles Corporation shares rises to P16 per share, contrary to Rowena's
expectation. Nevertheless, she orders her stockbroker to buy for her 10,000 Angeles
Corporation shares to cover the same number of shares she borrowed a week ago.
How much is the capital gain (loss) from the short sale? (M) [5]
A. P60,000 loss
C. P 50,000 gain
B. P30,000 loss
D. P100,000 gain
65. The term shall mean an alternative form of obtaining funds from the public other than
deposits, through the issuance, endorsement, or acceptance of debt instruments for the
borrowers own account, for the purpose of relending or purchasing of receivables and other
obligations, or financing their own needs or the needs of their agent or dealer. (M)
A. Banking activities
C. Deposit substitutes
B. Mutual funding
D. Quasi-banking activities
66. Which of the following is not included in the term "deposit substitutes'?
A. Promissory notes
B. Bankers' acceptances
C. Debt instruments issued for interbank call loans with maturity of not more than five (5)
days to cover deficiency in reserves against deposit liabilities, including those between
or among banks and quasi-banks
D. Repurchase agreements, including reverse repurchase agreements entered into by and
October 2014 Preweek
TAXATION
between the Bangko Sentral ng Pilipinas (BSP) and any authorized agent bank,
certificates of assignment or participation and similar instruments with recourse
67. First statement: The tax on interest income from foreign currency deposit shall be imposed
unless the depositor who is a nonresident citizen or nonresident alien can present
documentary evidence that he is not a resident of the Philippines.
Second statement: To be entitled to an exemption from the tax on interest income on foreign
currency deposit, the Foreign Currency Bank Account shall be in the name of the nonresident
individual or nonresident corporation. (M)
A.
B.
C.
D.
1st Statement
Correct
Correct
Incorrect
Incorrect
2nd Statement
Correct
Incorrect
Correct
Incorrect
68. Which of the following valuation of fringe benefits is incorrect? (M)
A. If the fringe benefit is granted in money, or is directly paid for by the employer, then the
value is the amount granted or paid for.
B. If the fringe benefit is granted or furnished by the employer in property other than money
but ownership is not transferred to the employee, the value of the fringe benefit is equal
to the depreciation value of the property.
C. If the fringe benefit is granted or furnished by the employer in property other than money
and ownership is transferred to the employee, then the value of the fringe benefit shall
be equal to the fair market value of the property as determined in accordance with the
authority of the Commissioner to prescribe real property values.
D. None of the choices
69. The grossed-up monetary value of the fringe benefit shall be determined by dividing the
actual monetary value of the fringe benefit by: (E)
a. 66%.
c. 68%.
b. 67%.
d. 70%.
70. The fringe benefit furnished to employees who are nonresident aliens not engaged in trade or
business within the Philippines shall be taxed at: (E)
A. 15%.
C. 32%.
B. 25%.
D. 33%.
71.
During the current year, a nonresident alien not engaged in trade or business, came to the
Philippines to fulfill a contract commitment. He stayed at one of the five-star hotels in Makati
City. His local contact paid him P500.000 for the services rendered and P90,000 for his
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hotel bills. How much is the fringe benefit tax, if any? [6] (E)
A. P 30,000
C. P196,667
B. P125,000
D. None
72. An alien manager employed by an offshore banking unit in the Philippines received fringe
benefits amounting to P680,000 during the first quarter of the current year. How much was
the fringe benefit tax, if any? [7] (E)
A. P 120,000
C. P 226,667
B. P 217,600
D. None
Questions 73 thru 76 are based on the following information.
(Difficult) XYZ Corp. owns a condominium unit. During the year 2011, the said corporation
furnished and granted the said property for the residential use of its Assistant Vice President. The
fair market, value of the property per BIR amounts to P10,000,000 while its fair market value as
shown in its current Real Property Declaration amounts to P8.000,000
73. How much is the value of the fringe benefit? [8]
A. P 400,000
C. P 8,000,000
B. P 500,000
D. P 10,000,000
74. How much is the monetary value of the fringe benefit? [9]
A. P 200,000
C. P4,000,000
B. P 250,000
D. P 8,000,000
75. How much is the monthly fringe benefit expense?
A. None
C. P 20,833
B. P 16,667
D. P 41,667
76. How much is the monthly fringe benefit tax expense? [10]
A. P 7,843
C. P16,667
B. P9,804
D. None
77. The cost of educational assistance extended by an employer to the dependents of an
employee shall be treated as taxable fringe benefits of the employee unless the assistance
was (M)
A. given through the employee-parent of the dependent.
B. paid directly to the school where the dependents are studying.
C. provided through a competitive, scheme under the scholarship program of the company.
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D. none of the choices.
78. A VAT-registered trader sold goods to a person with disability. The amount of sales, net of
VAT, is P100. How much is the total amount to be paid by the person with disability? [11] (M)
A. P80.00
C. P112.00
B. P 89.60
D. None of the choices
79. One of the following is not deductible as bad debts (M)
A. Difference between the amount received in distribution of assets of a bankrupt company
and the amount of claims against the said company.
B. Difference between the amount received by a creditor of a decedent in distribution of the
assets of the decedent's estate and the amount of his claim.
C. Difference between the purchase price and the indebtedness, where under foreclosure
of a mortgage, the mortgagee buys the mortgaged property and credits the indebtedness
to the purchase price.
D. Worthless debts arising from unpaid wages, salaries, rents and similar items of taxable
income, the income such items represent has been included in the returns of income for
the year in which the deduction for bad debt is sought to be made, or in a previous year.
80. Which of the following statements is incorrect? (M)
A. The responsibility of establishing the existence of such facts and circumstances shall
rest with the Government at all times.
B. Any change in the agreed rate and useful life of the depreciable property as specified in
the agreement shall not be effective for taxable years prior to the taxable year in which
notice in writing by certified mail or registered mail is served by the party initiating such
change to the other party to the agreement.
C. Where the taxpayer has adopted such useful life and depreciation rate for any
depreciable and claimed the depreciation expenses as deduction from his gross income,
without any written objection on the part of the Commissioner or his duly authorized
representatives, the aforesaid useful life and depreciation rate so adopted by the
taxpayer for the aforesaid depreciable asset shall be considered binding for purposes of
depreciation.
D. Where under rules and regulations prescribed by the Secretary of Finance upon
recommendation of the Commissioner, the taxpayer and the Commissioner have entered
into an agreement in writing specifically dealing with the useful life and rate of
depreciation of any property, the rate so agreed upon shall be binding on both the
taxpayer and the National Government in the absence of facts and circumstances not
taken into consideration during the adoption of such agreement.
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81. Which of the following shall be deductible in full? (M)
A. Donations made for the use of the Government of the Philippines or any of its agencies
or any political subdivision exclusively for public purpose
B. Donations made to accredited domestic corporations or associations organized and
operated exclusively for religious, charitable, scientific, youth and sports development,
cultural or educational purposes or rehabilitation of veterans
C. Donations to foreign institutions or international organizations in pursuance of or in
compliance with agreements, treaties, or commitments entered into by the Government
of the Philippines and the foreign institutions or international organizations or in
pursuance of special laws
D. None of the choices
82. Research and development expenses treated as deferred expenses shall be allowed as
deduction ratably distributed over a period of not less than: (E)
A. 60 months beginning with the month ending the taxpayer's taxable year.
B. 6 months beginning with the month in. which the taxpayer first realizes benefits from
such expenditures.
C. 30 months beginning with the month in which the taxpayer first realizes benefits from
such expenditures.
D. 60 months beginning with the month in which the taxpayer first realizes benefits from
such expenditures.
83. Any amount, paid or payable which is otherwise deductible from, or taken into account in
computing gross income or for which depreciation or amortization may be permitted, shall be
allowed as a deduction only if it is shown that the tax required to be deducted and withheld
there from has been: (M)
A. claimed as deduction by the taxpayer from his gross income.
B. correctly computed in accordance with the provisions of the Tax Code.
C. paid to the Bureau of Internal Revenue in accordance with the provisions in the Tax
Code.
D. none of the choices.
84. In lieu of the itemized deductions, an individual subject to tax under Section 24, other than a
nonresident alien, may elect a standard deduction in an amount not exceeding: (E)
A. ten percent (10%) of his gross income.
B. forty percent (40%) of his gross income.
C. forty percent (40%) of his gross sales or gross receipts.
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D. twenty percent (20%) of his gross sales or gross receipts.
85. In the case of domestic corporation or a resident foreign corporation, it may elect a standard
deduction in an amount not exceeding (E)
A. ten percent (10%) of its gross income.
B. forty percent (40%) of its gross income.
C. forty percent (40%) of its gross sales or gross receipts.
D. twenty percent (20%) of its gross sales or gross receipts.
Questions 86 & 87 are based on the following information.
A retailer of goods, whose accounting method is under the accrual basis, has a gross sales of
P1,000,000 with a cost of sales amounting to P800,000 for year 2009. The taxpayer is qualified to
choose OSD as deductions.
86. How much is the net taxable income assuming the taxpayer is a single individual with no
dependents? [12] (M)
A. P120,000
C. P550,000
B. P200.000
D None of the choices
87. How much is the net taxable income c. arming the taxpayer is a corporation? [13]
A. P120,000
C. P550.000
B. P200,000
D. None of the choices
88. Case 1- A family corporation paid the premiums on the life insurance policy of its president
and named his wife as beneficiary.
Case II- A corporation paid the premiums on the insurance policy covering the lives of its two
executives naming each other the beneficiary.
Which of the above premiums paid shall be deductible? (M)
A. I only
C. Both I and II
B. II only
D. Neither I nor II
89. Mr. Tony Dee created a trust in favor of his son, Tony II. He appointed Atty. Mars Bona as a
trustee. Mr. Conrad Oh also created a trust in favor of his mother, Connie. Mr. Oh
appointed Mr. Ging Aye as trustee. Atty. Mars Bona sold his business car to Mr. Ging Aye at
a loss. Can Atty. Bona deduct the loss from the sale of the car? (M)
A. No, because Atty. Bona does not have a capital gain.
B. Yes, because losses as a rule are always deductible.
C. No, because both Atty. Bona and Mr. Aye were both fiduciaries of trusts.
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D. Yes, because Atty. Bona and Mr. Aye are fiduciaries hot of the same grantor.
90. The request for approval of the change in accounting period should be filed at anytime not
less than how many days prior to the beginning of the proposed new accounting period? (E)
A. Fifteen (15) days
C. Sixty (60) days
B. Thirty (30) days
D. Ninety (90) days.
91. The certification approving the adoption of a new accounting period must be released within
how many working days from the date of receipt of the complete documentary requirements?
(E)
A. Fifteen (15) days
C. Sixty (60) days
B. Thirty (30) days
D. Ninety (90) days.
92. Ms. Achie Dizon sold a personal property, a capital asset., for P600,000 on March
27, 2011 payable as follows:
Down payment
P 100,000
Installment due, 2012
200,000
Installment due, 2013
200,000
The property was purchased on May 19. 2010 at a cost of P270.000.
It was mortgaged
with a balance of P100,000, which was to be assumed by the buyer.
The commission
on the sale was P30.000.
How much was the returnable capital gain of Ms. Dizon in 2011? [14] (D)
A. P 15,000
C. P 60,000
B. P 30,000
D. P 90,000
93. The Bureau of Internal Revenue is using the Net Worth Method of investigation on Mr. Art
Angeles, a married taxpayer with two (2) qualified dependents. The investigation covers the
years 2007 to 2011. There are no discrepancies discovered for the years 2007 to 2010.
However, the BIR discovers discrepancies for 2011. Mr. Angeles paid P20,500 income tax
on the income declared for 2011.
The assets, liabilities and net worth at the end of 2010 and 2011 follow:
12.31.10
12.31.11
Assets
P 700,000
P 900,000
Liabilities
200,000
100,000
Net worth
P 500,000
P 800,000
The following data pertain to 2011:
Personal, family and living expenses
72,000
Other non-deductible expenses
30,000
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TAXATION
Philippine Lotto winnings
Other non-taxable income
How much is the deficiency income tax per investigation? [15] (D)
A. P6,090
C. P 32,500
B. P 12,000
D. None of the choices
100,000
22,000
94. A capital gains tax return for the sale or exchange of shares of stock not traded through a
local stock exchange as prescribed under Section 24(c) by an individual shall be filed within
(E)
A. ten (10) days after each transaction.
C. twenty (20) days after each transaction.
B. fifteen (15) days after each transaction. D. thirty (30) days after each transaction.
Questions 95 & 96 are based on the following information.
A taxpayer, widower, and his five (5) children have the following data for the year 2009:
Gross business income (taxpayer)
P 120,000
Business expenses
30,000
Income of children:
Abigail,16 years old, salary
70,000
Beth, 14 years old, income from property inherited from her uncle
50,000
Cathy, 12 years old, income from property received as gift from the taxpayer
(donor's tax has been paid)
60,000
Desiree, 10 years old, income from property received as gift from the taxpayer
(exempt from donor's tax)
65,000
Emily, 8 years old, income from property received as gift from the taxpayer
(donor's tax not yet paid)
80,000
95. How much is the total gross income of the taxpayer? [16] (M)
A. P120.000
C. P330,000
B. P200,000
D. P375,000
96. How much is the total personal exemptions of the taxpayer? [17] (M)
A. P50.000
C. P150,000
B. P 75,000
D. None of the choices
97. If the sum of the quarterly tax payments made during the said taxable year is notequal to the
total tax due on the entire taxable income of that year, what shall the corporation do? (E)
A. Carry-over the excess credit
B. Pay the balance of tax still due
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CPA REVIEW SCHOOL OF THE PHILIPPINES
C. Be credited or refunded with the excess amount paid
D. Any of the choices
98. This refers to the system developed and. maintained by the Bureau of Internal Revenue
(BIR) for electronically filing tax returns, including attachments, if any, and paying taxes
thereon, specifically through the internet. (E)
A. Manual Filing and Payment System
B. Electronic Filing and Payment System
C. Up-to-date Filing and Payment System
D. Advance Technological Filing and Payment System
99. (Easy) Who of the following taxpayers shall file their return and pay their taxes through EFPS:
(E)
I - Large taxpayers.
II - The volunteering 200 or more Non-large Taxpayers previously identified by the BIR.
A. I only
C. Both I and II
B. II only
D. Neither I nor II
100. Under this system, taxes withheld on certain income payments are intended to equal or at
least approximate the tax due of the payee on said income. (E)
A. Creditable withholding tax
C. Global tax system
B. Final withholding tax
D. Schedular tax system
101. For both large and non-large taxpayers, the withholding tax return, whether creditable or final
(including final withholding taxes on interest from any currency bank deposit and
yield or
any other monetary benefit from deposit substitutes and from trust funds and similar
arrangements) shall be filed and payments should be made, within how many days after the
end of each month (except December)? (E)
A. five(5) days
C. fifteen (15) days
B. ten (10) days
D. twenty (20) days
102. For both large and non-large taxpayers, the withholding tax return, whether creditable or final
(including final withholding taxes on interest from any currency bank deposit and yield or any
other monetary benefit from deposit substitutes and from trust funds and similar
arrangements) for the month of December of each year, shall be filed on or before: (E)
A. January 10 of the following year.
C. January 31 of the following year.
B. January 15 of the following year.
D. March 15 of the following year.
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103. With respect to taxpayers, whether large or non-large, who availed of the electronic filing and
payments (EFPS), the deadline for electronically filing the applicable withholding tax returns
and paying the taxes due via the EP'PS shall be: (E)
A. five (5) days later than the deadlines set for manual filing and payment.
B. ten (10) days later than the deadline set for manual filing and payment.
C. fifteen (15) days later than the deadline set for manual filing and payment.
D. twenty (20) days later than the deadline set for manual filing and payment.
104. For final withholding taxes, the statement should be given to the payee on or before: (E)
A. January 10 of the succeeding year.
B. January 15 of the succeeding year.
C. January 31 of the succeeding year.
D. March 15 of the succeeding year.
105. If in lieu of the automatic application of his excess credit, the taxpayer wants a cash refund
or a tax credit certificate for use in payment of his other national internal revenue tax
liabilities, he shall make a written request therefor, within: (E)
A. two (2) years after the payment of the tax.
B. three (3) years after the payment of the tax.
C. five (5) years after the payment of the tax
D. none of the choices.
106. The penalty for non-issuance of receipts or invoices are as follows: (E)
A. Fine of not less than P1,000 but not more than P50,000
B. Imprisonment for not less than two (2) years but not more than four (4) years.
A. A only
C. Both A and B
B. B only
D. Neither A nor B
107. Which of the following persons is required to issue a receipt? (E)
A. Those whose value of merchandise sold or the service rendered is P100 or more
B. Those exempted b> the Commissioner of Internal Revenue under meritorious cases
C. Market vendors selling exclusively domestic meat, fruits, vegetables, game, poultry, fish
and other food products
D. Those whose value of merchandise sold or the service rendered is less than P25, and
whose gross sales or receipts in the preceding year do not exceed P30,000
108. These are issuances that provide directives or instructions; prescribe guidelines; and outline
processes, operations, activities, workflows, methods and procedures necessary in the
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CPA REVIEW SCHOOL OF THE PHILIPPINES
implementation of stated policies, goals, objectives, plans and programs of the Bureau in all
areas of operations, except auditing. (E)
A. Revenue Memorandum Circulars
C. Revenue Memorandum Rulings
B. Revenue Memorandum Orders
D. Revenue Regulations
TAXATION
A.
B.
C.
D.
Car revocably transferred by the decedent before he died to his son
Shares of stock inherited by the decedent's surviving spouse during the marriage
Land inherited during the marriage from the father who predeceased the decedent
Jewelry purchased during the marriage using the exclusive money of the decedent.
109. Which of the following transactions in the course of trade or business requires actual payment
of VAT before an input tax is allowed as tax credit from the output tax? (E)
A. Purchase of services
B. Transactions deemed sale
C. Domestic purchase of goods for use as raw materials supplied in the sale of services
D. Domestic purchase of goods for use in trade or business for which deduction for
depreciation or amortization is allowed under the Tax Code
113. One of the following is an intangible personal property situated in the Philippines. (M)
A. Franchise which is exercised in a foreign country
B. Shares or rights in a partnership established in Malaysia by
Filipinos
C. Shares, obligations or bonds issued by a foreign corporation 80% of the business of
which is situated in the Philippines
D. Shares, obligations or bonds issued by a corporation organized and constituted in the
Philippines in accordance with its laws
110. A VAT-registered company acquired one vehicle for land transport for the use of an official or
employee valued at P2,400,000. Which of the following statements is correct? (M)
A. The input tax on the purchase of the vehicle for land transport as well as the input taxes
on maintenance expenses incurred on the said vehicle shall be allowed as input tax
credit.
B. The input tax on the purchase of the vehicle for land transport as well as the input taxes
on maintenance expenses incurred on the said vehicle shall not be allowed as input tax
credit.
C. The input tax on the purchase of the vehicle for land transport shall be allowed as input
tax credit while the input taxes on maintenance expenses incurred on the said vehicle
shall not be allowed as input tax credit.
D. The input tax on the purchase of the vehicle for land transport shall not be allowed as
input tax credit while the input taxes on maintenance expenses incurred on the said
vehicle shall be allowed as input tax credit.
114. Mr. Octavio Paz transferred his properties to his relatives to provide independent income for
them. This is an example of: (M)
A. Transfer for insufficient consideration
B. Transfer not in contemplation of death
C. Transfer with retention or reservation of certain rights
D. Transfer passing under general power of appointment
111. A VAT-registered domestic carrier operating air, land and sea transport equipment acquired
vehicles for use in its operation to transport goods and cargoes. The domestic carrier: (E)
A. can claim input taxes on the said acquisitions.
B. cannot claim input taxes on the said acquisitions.
C. can claim input taxes only on the acquisition of land transport vehicles.
D. can claim input taxes only on the acquisitions of air and sea transport vehicles.
112. Which of the following is not included in the gross estate of a resident decedent who is under
conjugal partnership of gains? (M)
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115. Mr. Julian Cruz procured a life insurance upon his own life. He designated his nephew as a
beneficiary. For estate tax purposes, the proceeds of life insurance is: (M)
A. Not included in the gross estate of Mr. Julian Cruz because the designation of the
beneficiary is not clear.
B. Not included in the gross estate; because, as a rule, proceeds of life insurance are
generally not subject to estate tax.
C. Included in the gross estate of Mr. Julian Cruz because when a relative is a beneficiary
the designation is always revocable.
D. Included in the gross estate of Mr. Julian Cruz because the designation of the
beneficiary is not clear, hence, it is revocable.
116. Mr. Nolasco de la Paz dies leaving a residential lot in an exclusive subdivision. The value per
tax declaration and the zonal value at the time of death are P3,000,000 and P4,000,000
respectively. An adjacent lot is sold by another lot owner for P5,000,000 on the date Mr. de la
Paz dies. For estate tax purposes, the value that shall be included in the gross of the
decedent is (E)
A. P3,000,000
C. P5,000,000
B. P4,000,000
D. Some other amount
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TAXATION
Questions 117 & 118 are based on the following:
(Difficult)
Questions 6 & 6 are based on the following information.
A decedent dies on January 15, 2013. The interment is on January 31, 2013. The gross estate of
the decedent is P4,000,000. The following expenses are presented to you:
Expenses during the wake borne by relatives and friends
P30, 000
Mourning clothing of the widow and unmarried minor children
20,000
Obituary notice in a newspaper
50, 000
Card of thanks published in a newspaper
30,000
Burial plot
80,000
Flowers placed on top of the burial lot when relatives visited on February 14, 2015 5,000
Expenses during a family's gathering to commemorate the 40th day
after death of the decedent on February 23, 2013
15,000
Accountant's fee in gathering the assets of the decedent incurred on February 15, 2013
50,000
Lawyer's fee in representing the estate in case filed on August 15, 2013
70,000
Executor's fee:
January 15, 2013 to July 15, 2013
P120,000
July 16, 2013 to December 31, 2013
120,000
240,000
117. The deductible funeral expenses are [18]
A. P150,000.
C. P200,000.
B. P180,000.
D. none of the choices.
118. The deductible judicial expenses are [19]
A. P170,000.
B. P240,000.
C. P360,000.
D. none of the choices
119. The following taxes are claimed as deduction from the gross estate of a decedent who dies
on July 1, 2013.
Income tax on income earned from January 1 to June 30, 2103
P100,000
Income tax on income earned from July 1, 2013 to December 31, 2013120,000
Real estate tax paid, January 1 to June 30, 2013
50,000
Unpaid real estate tax, July 1 to December 31, 2013
50,000
Unpaid property tax, January 1 to June 30, 2013
60,000
The correct amount of deductible taxes shall be (D) [20]
A. P170.000.
C. P380,000.
B. P210,000.
D. none of the choices.
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120. Which of the following shall be allowed as deduction from the gross estate of a non-resident
alien decedent? (E)
A. Family home deduction
C. Standard deduction
B. Medical expenses
D. Transfer for public use
121. The estate tax is paid (E)
A. as the return is filed.
B. after the tax due is properly determined.
C. six (6) months following the death of. the decedent.
D. on the day an administrator is appointed by the court.
122. One of the following is not allowed as deduction from the gross gifts of a non-resident alien
donor. (E)
A. Gifts made on account of marriage
B. Gifts made in favor of a religious corporation.
C. Gifts made to or for the use of the National Government
D. Encumbrance on the property donated assumed by the done
123. Which of the following inter vivos transfers is not subject to donor's tax. (M)
A. Transfer for insufficient consideration of a personal car
B. Transfer for insufficient consideration of an apartment house
C. Transfer for insufficient consideration of a residential house and lot
D. Transfer of real property by a real estate dealer to a son who is getting married
124. Donation is completed (E)
A. when the donor's tax is finally paid.
B. when it is determined that' the donor has the capacity to make donations.
C. when the property donated is delivered actually or constructively to
the donee.
D. when the donee accepts the donation and the acceptance is made known to the donor.
125. Which of the following statements is incorrect when a conjugal property is donated? (M)
A. The husband and wife shall be considered as separate and distinct taxpayers for
purposes of donor's tax.
B. Neither spouse may donate any community property or conjugal property without the
consent of the other and this is without any exception.
C. The husband and wife may each claim the dowry deduction if the
donation
of
conjugal property is made on account of marriage of a
legitimate child.
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CPA REVIEW SCHOOL OF THE PHILIPPINES
D. If what was donated is a conjugal property and only the husband signed the Deed of
Donation, there is only one donor for donor's tax purposes, without prejudice to the right
of the wise to question the validity of the donation without her consent pursuant to the
pertinent provisions of the Civil Code of the Philippines and the Family Code of
the Philippines.
126. Donor's return shall be filed within (E)
A. six (6) months after the date the gift is made.
B. thirty (30) days after the date the gift is made.
C. thirty (30) days after the donor pays the donor's tax.
D. thirty (30) days after the donor executes a Deed of Donation.
127. A restaurant owner v/ho sells food and drinks in his restaurant is (E)
A. a seller of goods.
C. not subject to value-added tax.
B. a seller of services.
D. a seller of both goods and services.
128. A VAT-registered store owner who sells different VAT-subject goods decides to replace his
old store furniture and equipment. He sells them as pre-owned store furniture and equipment.
The sale is: (M)
A. not subject to VAT because he is not a dealer of store furniture and equipment.
B. subject to VAT because he is considered a dealer of store furniture and equipment.
C. not subject- to VAT because the store furniture: and equipment may be fully
depreciated.
D. subject to VAT because the sale of store furniture and equipment falls under the
definition of "in the course of trade or business
129. In case where output tax is greater than the input tax, the difference will be recognized as a
(E)
A. current asset.
C. deductible expense.
B. current liability.
D. miscellaneous income.
130. First statement: Only VAT-registered taxpayers are required to pay Value-Added Tax.
Second statement: Taxpayers whose gross annual sales or receipts exceed the VAT
threshold amount are required to pay Value-Added Tax in all cases. (M)
A.
B.
C.
D.
1st Statement
Correct
Correct
Incorrect
Incorrect
2nd Statement
Correct
Incorrect
Correct
Incorrect
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TAXATION
131. A VAT-registered taxpayer is able to harness wind to produce power which he sells to the
community. This is an example of a: (E)
A. VAT-exempt transaction.
B. Zero-rated VAT-subject transaction.
C. Transaction subject to percentage tax.
D. VAT-subject transaction subject to the 12% VAT.
132. A VAT-registered lessor of apartment houses has the following gross rentals for the first
quarter of the current year:
Gross rentals of
30 units at P10,000 per month per unit
P3,600,.000
Gross rentals of
10 units at P15,000 per month per unit
1,800,000
Total
P5,400,000
The VAT-registered lessor of apartment houses shall be: (M)
A. exempt from VAT on his total gross rentals.
B. subject to VAT on his gross rentals of P1,800,000.
C. subject to VAT on his gross rentals of P3,600,000
D. subject to VAT on his gross rentals of P5,400,000.
133. Which of the following is a creditable input tax? (E)
A. VAT oh importation of goods for personal use
B. VAT on purchase on account of goods evidenced by a VAT invoice
C. VAT- on unpaid bill on services rendered by a VAT-registered service-provider
D. VAT on purchase of furniture for use in the residential house of a VAT-registered person
134. The following transactions during the month of January, 2013 are recorded in the Books of a
VAT-registered taxpayer:
Purchase of three 3) office equipment at'P150,000 each
Purchase of five (5) office furniture at P50,000 each
Importation of vehicle for transport used in business, P1,500,000
Based on the above data (D)
A. The total input taxes on the above transactions shall be amortized.
B. The input tax on office equipment and office furniture shall be credited in full.
C Only the VAT on importation of vehicle for land transport shall be amortized,
D. The total input taxes on the above transactions may be amortized or credited in full
depending on the choice of the taxpayer.
135. Which of the following is allowed presumptive input tax? (E)
A. Processor of canned fruits
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CPA REVIEW SCHOOL OF THE PHILIPPINES
B. Manufacturer of raw sugar
C. Processor of sardines, mackerel and milk
D. Manufacturer of packed instant champorado
136. The quarterly VAT return is filed (E)
A. When the VAT payable is finally determined.
B. Within sixty (60) days following the end of the quarter.
C. Within twenty (20) days following the end of the quarter.
D. Within twenty-five (25) days following the end of the quarter.
137. One of the following is subject to the 3% percentage tax under Sec. 116 (M)
A. Seller of canned fish whose annual gross sales exceed the VAT threshold amount
B. Seller of refined sugar whose annual gross sales do not exceed the VAT threshold
amount
C. Seller of fresh mangoes whose annual gross sales do not exceed the VAT threshold
amount
D. Seller of office supplies who is VAT-registered but whose gross annual sale's do not
exceed the VAT threshold amount
138. Which of the following is subject to common carriers tax? (E)
A. Person who transports passengers by air
B. Person who transports goods and cargoes by sea
C. Domestic carrier by land relative their transport of passengers.
D. Transportation contractors by land on their transport of goods and cargoes
139. Which of the following is not subject to franchise tax? (E)
A. Franchise grantee of electric utilities
B. PAGCOR and its licensees and franchisees
C. Franchise grantees of gas and water utilities
D. Franchise grantee of radio and/or television broadcasting whose gross annual receipts
of the preceding year does not exceed P10,000,000
140. Rentals of property, real or personal, received by bank and non-bank financial intermediaries
performing quasi-banking functions are (E)
A. not subject- to any tax.
B. subject to Value-added Tax at 12%.
C. subject to Gross Receipts Tax at 7%.
D. subject to Gross Receipts Tax if the annual gross rentals do not exceed the VAT
October 2014 Preweek
TAXATION
threshold amount.
141. Which of the following is not subject to amusement tax? (E)
A. Lessee jai-alai and racetracks
C. Operator of cockpits
B. Lessee of bowling alleys
D. Proprietor of videoke bars
142. A non-resident alien individual who shall come to the Philippines and stay therein for an
aggregate period of more than 180 days during any calendar year shall be deemed a (E)
A. tourist.
B. resident alien.
C. non-resident alien doing business in the Philippines.
D. non-resident alien not doing business in the Philippines.
143. An individual who is a pure compensation income earner is allowed to deduct the following
from his gross compensation income except: (E)
A. Personal expenses.
B. Additional exemption.
C. Basic personal exemption.
D. Premium payment on health and/or hospitalization insurance.
144. Who among the following is taxed on income from sources within and outside the
Philippines? (E)
A. Resident citizen
B. Resident alien
C. Non-resident citizen
D. Non-resident alien engaged in trade or business.
145. One of the following cannot avail of the optional standard deduction. (E)
A. Estate and trust
C. Non-resident citizen
B. Non-resident alien
D. Resident citizen
146. Who of the following is not considered a nuclear family? (E)
A. Single person living alone
B. Single parent with children
C. Father, mother, unmarried children living together as one household
D. None of the choices
147. Who of the following dependents will entitle the taxpayer/benefactor to additional exemption?
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CPA REVIEW SCHOOL OF THE PHILIPPINES
(M)
A.
B.
C.
D.
Senior citizen
A child who is naturally adopted
Person with disability who is not related to the benefactor
Person with disability who is legitimate, illegitimate or legally adopted child, whether
minor or of legal age.
148. Which of the following will change the status of the taxpayer? (M)
A. Death during the year of the taxpayer's spouse
B. Birth during the year of the taxpayer's fourth child.
C. Marriage during the year of a qualified dependent child
D. Employment during the year of a qualified dependent child
149. An- individual who avails of optional standard deduction cannot deduct the following except:
(M)
A. cost of sales.
B. business expenses.
C. premium on health and/or hospitalization insurance.
D. basic personal exemptions and additional exemption.
TAXATION
 Fatima, child, 12 years old
 George, child by natural adoption, 15 years old
The following information pertain to his income and expenses in the year 2014:
Salary, net of P20,000 withholding tax
Rent expense, apartment house
Health insurance premium paid (P500 per month starting July, 2014)
Gross receipts from practice of profession
Cost of services
Business expenses
Gain from sale of shares of stock listed and traced
in the local stock exchange (gross selling price is P100,000)
153. The deductible health insurance premium is (D)
A. P1,200.
C. P3,000.
B. P2,400.
D. None. Not qualified.
154. The output tax assuming the taxpayer is not VAT-registered. [22] (D)
A. P144,000
C. P240,000
B. P180,000
D. None. Not VAT-registered.
151. The husband shall be the proper claimant of the additional exemption for qualified dependent
children except when: (M)
A. he is employed but his wife's salary is greater than his.
B. he explicitly waives his additional exemption in favor of his wife.
C. he is a non-resident citizen deriving income from foreign sources.
D. he and his wife agree to let the wife claim the additional exemption.
155. The stock transactions tax is [23] (D)
A. P250
B. P 500
October 2014 Preweek
50,000
152. The total additional exemptions for the year are (D) [21]
A. P50,000.
C. P100,000.
B. P 75,0'00.
D. None of the choices.
150. The personal exemption allowed to estate and trust is: (E)
A. P20,000
C. P50,000
B. P25,000
D. none. Not allowed personal exemption.
Questions 152 thru 157 are based on the following information.
A married resident citizen has the following dependents for the taxable year 2104:
 Aida, child, 25 years old, person with disability, dies previous year
 Benigna, child of his wife in a previous marriage, 18 years old
 Carlos, child, becomes 21 years old on January 1, 2014
 Dennis, child, 21 years old, lives with the taxpayer's parents
 Edna, person with disability, 13 years, illegitimate child
P230,000
36,0.00
3,000
2,00,000
500,000
300,000
C. P2,500
D. none. Not subject to percentage tax.
156. The deductible amount assuming the taxpayer opts to avail of the optional standard
deduction is [24] (D)
A. P600,000.
C. P900,000.
B. P800,000.
D. none. Cannot avail of OSD.
157. The total taxable net income is: [25] (D)
A. P1,297,600.
B. P1,300,000.
C. P1,350,000.
D. none of the choices
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CPA REVIEW SCHOOL OF THE PHILIPPINES
TAXATION
Questions 158 & 159 are based on the following: (Difficult)
Questions 47 thru 50 are based on the following information.
A VAT-registered real estate dealer sold the following during the month of January 2014:
One (1) residential lot valued at
P 2,000,000
Two (2) adjacent condominium units covered by separate titles sold to one buyer,
each unit is valued at P1,500,000 (exclusive of two (2) parking spaces
valued at P300,000 each)
3,000,000
He also had the following acquisitions during the month:
Domestic purchase of supplies, net of VAT
100,000
Domestic purchase of three (3) units of office computers
valued at P50,000 each, net of VAT (4 years estimated life)
150,000
Importation of one vehicle for land transport used
in business (5 years estimated life)
2,500,000
Maintenance expenses, vehicle for land transport, net of VAT
70,000
Office rental, net of VAT
100,000
158. How much is the output VAT?
A. P312,000
B. P600,000
164. Politics (is, are) the cause of too much mudslinging among dishonest politicians. [29]
A. Is
C.
Either
B. Are
D. Neither
165. Earl and (me, I) are having a lively discussion about the new BIR regulations.
A. Me
C. Either
B. I
D. Nither
1.
Answer is (C)
Selling price
Less: Book value (3,000,000 - 1,000,000)
Gain on sale of assets
2.
Answer is (C)
Output tax
Less: Unutilized input tax on sold asset
VAT payable
3.
Answer is (B) Creditable input tax (600,000/ 60 months) = P10,000
4.
Note: Also known as FLD (Formal Letter of Demand)
5.
Answer is (A)
Selling price (P10.000 X 10)
Less: Cost (P10,000 X 16)
Loss on short sales
C. P672,000
D. None of the choices
159. How much is the creditable input tax on vehicle for land transport?
A. P5,000
C. P300,000
B. P120,000
D. None
Grammar
160. The financial statements (that, which) are presented by the Chief Accountant are in office of
the VP-Treasury. [26]
A. That
C. Either
B. Which
D. Neither
161. The company is importing (new machinery, a new machinery, new machineries). [27]
A. New machinery
C. New machineries
B. A new machinery
D. None of the choices
162. The auditor has (much evidence, many evidence, much evidences, many evidences) to
warrant a full blown forensic audit. [28]
A. Much evidence
C. Much evidences
B. Many evidence
D. Many evidences
October 2014 Preweek
163. The student went, to see the Dean for (advice, an advice, advise, an advise)
A. Advice
C. Advise
b. An advice
D. An advise
6. Answer is (A)
Grossed-up monetary value of the fringe benefit (P90,000/75%)
Tax rate
P5,000,000
2,000,000
P3,000,000
P500,000
100,000
P400,000
P100,000
( 160.000)
(P 60.000)
P120,000
25%
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CPA REVIEW SCHOOL OF THE PHILIPPINES
TAXATION
Fringe benefits tax
7.
P30,000
Answer: A
Grossed-up monetary value of the fringe benefit (P680,000/85%)
Tax rate
Fringe benefits tax
P 800,000
15%
P 120.000
8. Answer is (B). (5% X P10,000,000) = P500,000
9. Answer is (B) (50% X P500,000) = P250,000
10. Answer is (B) (P250.000 / 68% X 32% / 12 months) = P9,804
11. Answer is (B)
Amount of sales
P100.00
Less: 20% discount
20.00
VATable sale
80.00
Add:
12% VAT (12% x 80)
9.60
Total amount to be paid
P89.60
Persons with disability do not enjoy VAT exemption unlike Senior Citizens.
12. Answer is (C).
Gross sales
Less: Cost of sales
Gross sales / Gross income
Less: OSD
Basic personal exemption
Taxable net income
13. Answer is (A).
Gross sales
Less: Cost of sales
Gross sales / Gross income
Less: OSD
October 2014 Preweek
Individual
P 1,000.000
.
1,000.000
(400,000)
(50,000)
P550,000
Corporation
P 1,000,000
( 800.000)
200,000
80,000)
.
P120,000
Individual
P 1,000.000
.
1,000.000
(400,000)
Corporation
P 1,000,000
( 800.000)
200,000
80,000)
Basic personal exemption
Taxable net income
(50,000)
P550,000
14. Answer is (C)
Selling price
Less: Cost
P 270,000
Commission
30,000
Capital gain (short term)
2011 - P300,000/P500,000 X P100.000
a.) Selling price
Cash received
FMV, property received
Installment obligations
Mortgage assumed
Selling price
b.) Contract price
Selling price
Less: Mortgage assumed
Balance
Add: Excess of mortgage assumed over cost
Contract price
c.) Initial payments
Downpayment
Add: Installments, year of sale
Excess of mortgage assumed over cost
Initial payments
d.) Initial payments over selling price (P100,000/P600,000) = 16.67%
15. Answer is (B)
Net worth, 12.31.11
Net worth, 12.31.10
Increase in net worth
Add (Deduct):
Personal, family and living expenses
Other non-deductible expenses
Philippine Lotto winnings
.
P120,000
P 600,000
( 300,000)
P 300,000
P60,000
P 100,000
400,000
100.000
P 600.000
P 600,000
( 100.000)
500,000
500,000
P 100,000
P 100,000
800,000
500.000
300,000
72,000
30,000
(100,000)
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CPA REVIEW SCHOOL OF THE PHILIPPINES
Other non-taxable income-.
Net income per investigation
Less: Basic personal exemption
Additional exemption
Taxable net income per investigation
Tax due Sec. 24 (A)
Less: Income tax paid per return
Deficiency income tax
TAXATION
P 50.000
50.000
( 22,000)
P 280,000
100.000
P 180.0.00.
P32,500
( 20,500)
P12,000
16. Answer is (B)
Gross business income (taxpayer)
Add: Income from property received as gift from the taxpayer by Emily
Total gross income
17. Answer is (B)
Basic personal exemption
Additional exemption (Emily only)
Total personal exemptions
18. Answer is (A)
Mourning clothing of the widow and unmarried minor children
Obituary notice in a newspaper
Burial plot
Total actual funeral expenses
Limit (5% x P4,000,000)
Allowed funeral expenses (lower)
P 120,000
80.000
P 200,000
P50,000
25,000
P75.000
P 20,000
50,000
80,000
P150,000
P200,000
P150,000
19. Answer is (A).
Accountant's fee in gathering the assets of the decedent
incurred on February 15, 2013
Executor's fee: January 15, 2013 to July 15, 2013
Deductible judicial expenses
P 50,000
120,000
P170,000
20. Answer is (B)
Income tax on income earned from January 1 to June 30, 2103
Unpaid real estate tax, July 1 to December 31, 2013
P10C000
50,000
October 2014 Preweek
60,000
P210.000
Unpaid property tax, January 1 to June 30, 2013
Deductible taxes
21. Answer is (C)
Benigna, child of his wife in a previous marriage, 18 years old
Carlos, child, becomes 21 years old on January 1, 2014
Edna, person with -disability, 18 years, illegitimate child
Fatima, child, 12 years old
Total
22. Answer is (C)
Gross receipts from practice of profession
Tax rate
Output tax
P 25,000
25,000
25,000
25,000
P100,000
P2,000,000
12%
P 240,000
23. Answer is (B)
Gross selling price (shares listed and traded)
Tax rate
Stock transactions tax
P100,000
.05
500
24. Answer is (B)
Gross receipts from practice of profession
Optional standard deduction rate
Output tax
P2,00,000
40%
P 800,000
25. Answer is (B)
Gross compensation income
Less: Basic personal exemption
Additional exemption
Taxable compensation income
Gross receipts
Less: Cost of services
Gross income
Less: Expenses
Total taxable net income
50,000
100,000
2,000,000
500,000
1,500,000
300,000
P250,000
150,000
100,000
1,200,000
P1,300,000
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CPA REVIEW SCHOOL OF THE PHILIPPINES
TAXATION
26. That is the defining, or restrictive, pronoun, which the non-defining, or nonrestrictive.
27. The following are examples of non-countable nouns also sometimes referred to as mass
nouns. These take singular form have no plural form.
(Equipment, furniture, jewelry, luggage, baggage, machinery, scenery, decor, houseware,
glassware, dinnerware, hardware, merchandise, garbage, traffic, school wear, men's wear,
children's wear, evidence, legislation and applause.)
28. We do not use many or few to describe or modify mass or non-countable nouns. Instead, we
use much or little.
29. Some nouns look plural, but are actually singular. Here are a few examples. (Ethics,
politics, physics. Phonetics, statistics, economics, aeronautics, rabies, mumps, rickets,
measles, meningitis, AIDs, news, billiards, checkers, a shambles)
October 2014 Preweek
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