TAXATION
DECEMBER 17, 2021
8:00AM – 11:00AM
Compiled By: 11 Supernova
DISCLAIMER: Not of all these questions are the exact questions itself on the said
CPALE but the concept behind those questions, exists HERE. The importance of the
concept/rationale is important. Padayon, future CPA’s!
P.S. Wag maniniwala sa chismis (BOA yern). Always believe in your preparation and
your efforts will never betray you. ^^
1.
A.
B.
C.
D.
Which of the following are basic principles of a sound tax system?
Fiscal deficit, Administrative feasibility and Ability to pay
Progressive taxation, Ability to pay, Symbiotic relationship
Fiscal adequacy, Economic feasibility, Theoretical justice
Fiscal adequacy, Administrative feasibility, Theoretical Justice
2. Which of the following statements is/are correct?
Statement A: DORA filed her 2014 ITR (not fraudulent nor false) on March 20,
2015. The last day for the BIR to collect the tax by judicial action if no
assessment was made is April 15, 2018.
Statement B: DADA’s 2014 ITR was filed and paid on May 8, 2015. The last day for
the BIR to send an assessment is April 15, 2018. May 8, 2015
Statement C: On July 20, 2015, DIDI filed an amended return which is
substantially different from the 2014 ITR which she filed on April 13, 2015. The
last day to send an assessment is April 15, 2018. July 20, 2018
A. Only statement A is correct.
B. Statement A and B are correct.
C. Statement A and C are correct.
D. Statement B and C are correct.
3.
A.
B.
C.
D.
The concept of “situs of taxation” is based on which limitation of taxation?
Exemption of the government
International comity
Public purpose
Territoriality
4. Which of the following statements is/are correct?
Statement A: Non-resident citizen are taxable on all income derived from sources
within the Philippines.
Statement B: Resident citizens and domestic corporation are taxable on all income
derived from sources within or without the Philippines.
Statement C: Foreign corporations, whether engaged or not in trade or business in
the Philippines are taxable from sources within or without the Philippines.
Statement D: Aliens, whether residents or not of the Philippines, are taxable
only from sources within the Philippines.
A. Statement A and D are correct.
B. Statements C and D are correct.
C. Statements A, B, and D are correct.
D. Statements B, C, and D are correct.
5. Mr. SMALL TIME’s piece of land measuring 500 sq. meters in Makati City was
assessed as commercial with a fair market value of P20,000 per sq. m. How much is
the highest possible amount of annual basic real property tax can be collected
from him?
A. P20,000
B. P40,000
C. P50,000
D. P100,000
6. PETRON INC. Installed underground tanks in its depot for the storage of its
oil and petroleum products. The City of Cebu assessed Petron for real property
tax on land and on the storage tanks. (Caltex Phil. Inc. VS. CBAA 114 SCRA 296)
A. Petron is not taxable.
B. Petron is taxable on the land only.
C. Petron is taxable on the storage tanks.
D. Petron is taxable both to the land and storage tanks.
7. The President of the Philippines and the Prime Minister of Japan entered into
an executive agreement on a loan facility to the Philippines from Japan whereby
it was stipulated that interest on loans granted by private Japanese financial
institutions in the Philippines shall not be subject to Philippine income tax
laws. What basic characteristic of taxation has been violated by this agreement?
a. Theoretical justice
b. Inherent limitation
c. Legislative in character
d. Constitutional limitation
8. Joseph provided the following data on sale of his personal property sold in
2021 held by him for 15 months:
Cost
Mortgage assumed by the buyer
Installment collection schedule:
2021
2022
2023
P225,000
270,000
67,500
67,500
45,000
How much is the contract price?
A. P450,000
B. P270,000
C. P180,000
D. P225,000
9. Which of the following statements is/are correct?
Statement A: The donation of movable property amounting to P5,000 or below may be
made orally or in writing.
Statement B: The donation of an immovable property shall be made in public
instrument regardless of the amount.
Statement C: The donation and acceptance should be in writing if the value of the
property donated is at least P5,000.
A. Statements B and C are correct
B. Statements A and B are correct
C. Statements A and C are correct
D. All of the above statements are true
10. Which of the following percentage taxes is filed monthly?
A. Stock transaction tax within 5 banking days from date of collection
B. IPO tax within 30 days from the date of listing in the local stock exchange
20th day following the close of taxable quarter
C. Amusement tax
D. Common carrier’s tax, sec 116-119,sec 121-124
11. Who are the persons liable for excise tax on sweetened beverages? (choose the
exception)
A. Local manufacturers of sweetened beverages
B. Person not having possession of domestically manufactured sweetened beverages
C. Owners or importers of sweetened beverages
D. Person having possession of imported manufactured
12. Which of the following is subject to specific and ad valorem tax?
A. Wines
B. Automobiles
C. Tobacco products
D. Cigars, distilled spirits, non-essential services
13. Zion Shoe’s head office is located in Ortigas, Pasig City. However, its
manufacturing plant is in Taytay, Rizal. As the company accountant you were asked
by Zion where to pay the 2% local business tax. Zion’s gross receipts is P10
million.
30% and 70%
A. Pay P200,000
at Taytay, Rizal
B. Pay P200,000 at Ortigas, Pasig City
C. Pay P60,000 at Ortigas, Pasig City and P140,000 at Taytay, Rizal
D. Pay P140,000 at Ortigas, Pasig City and P60,000 at Taytay, Rizal
14. If the taxpayer fails to respond within fifteen (15) days from the date of
receipt of the PAN, he shall be considered in default, in which case, what shall
be issued calling for payment of the taxpayer’s deficiency tax liability, inclusive
of the applicable penalties?
A. Final Assesment Notice
B. Notice of Informal Conference
C. Subpoena Duces Tecum
D. Formal letter of demand and assessment notice
15. S1 – If a taxpayer opted for graduated tax on his business income, he is
generally subject to percentage tax of 1% (old 3%).
S2 – Individual taxpayers can be entitled to 1% (old rate 3%) percentage tax if
their registration is non-VAT and their gross sales or receipts do not exceed the
VAT threshold and their transactions are not exempted from business tax.
A. Only S1 is true
B. Only S2 is true
C. Both are true
D. Both are false
16. If a sale of real property is made on February 28, the DST is required to be
shall be filed 5 days after the close of the month
paid on ______
A. February 28
B. March 5
C. March 26
D. March 28
17. The common carrier’s tax is imposed on
A. Transport of passengers by land
B. Transport of cargoes by land
12% VAT or 3% OPT
C. Transport of cargoes by sea within the Philippines 12% VAT or 3% OPT
D. Transport of passengers by air within the Philippines.12% VAT or 3% OPT
18. Transport of passengers by air within the Philippines is
A. Subject to 3% common carriers tax
B. Subject to 12% value added tax
C. Subject to 0% value added tax
D. Exempt from both common carriers tax and value added tax
19. Transport of cargoes by air from Philippines to abroad by international carriers
A. Subject to 3% common carriers tax
B. Subject to 12% value added tax
C. Subject to 0% value added tax
D. Exempt from both common carriers tax and value added tax
20. S1: Domestic air carriers may be subject to common carrier’s tax on certain
transactions.
S2: Domestic air carriers may be subject to franchise tax on certain transactions.
A. Only S1 is true
B. Only S2 is true
C. Both statements are true
D. Both statements are not true
21. Which of the ff is exempt from common carrier’s tax?
A. Pedicabs
B. Animal-drawn two wheeled vehicles
C. Tricycles
D. Jeepneys
22. Tyra Banks, a banking institution, had the following transactions for the
taxable month:
Interest from loans, 3 years before maturity – 5%
Interest from loans, 7 years before maturity – 1%
Dividends and equity shares in net income of subsidiaries – 0%
Royalties received – 7%
Rental payments received – 7%
Net trading gains 7%
Total
772,000
270,000
856,000
517,000
838,000
407,000
3,660,000
Compute for the bank’s gross receipts tax
A. P164,640
B. P173,200
C. P175,440
D. P180,080
23. Overseas Communication tax is imposed at the rate of
A. 2%
B. 3%
C. 5%
D. 10%
24. All of the ff are subject to 18% amusement tax, except
A. Cockpits
B. Cabarets
C. Day clubs
D. Jai-alai
30%
25. Sabungan sa Bambang is operated by Alfred Hitchcock. During the first quarter
of 2019,it had the ff receipts:
Entrance fees for audience
Registration fees for cockfighters
5,150,000
5,930,000
Receipts from restaurants owned by Hitchcock inside the cockpit
Lease payments made by private concessionaire with places inside
the cockpit
Advertisement fees
3,580,000
4,270,000
4,200,000
How much is the amusement tax due? 18%
A. P2,638,000
B. P2,775,600
C. P3,407,400
D. P4,163,400
26. The amounts withdrawn from the deposit accounts of a decedent subjected to
the 6% final withholding tax imposed under Section 97 of the NIRC, shall be:
A. Excluded from the gross estate for purposes of computing the estate tax.
B. Included from the gross estate for purposes of computing the estate tax.
C. Claimed as tax credit against estate tax due.
D. Claimed as deduction from the gross estate.
27. Which of the following statements is not correct?
a. Taxes may be imposed to raise revenues or to provide disincentives to certain
activities within the state
b. The state can have the power of taxation even if the Constitution does not
expressly give it the power to tax
c. For the exercise of the power of taxation, the state can tax anything at any
time
d. The provisions of taxation in the Philippine Constitution are grants of power
and not limitations on taxing powers
28. The least source of our tax laws.
a. Statutes
b. Court decisions
c. Constitution
d. BIR Rulings
29. Consider the following:
Statement I – Transport of passengers and cargo by domestic air or sea vessels from
the Philippines to a foreign country is subject to VAT at a rate of 0%
Statement II – Transport of passengers and cargo by domestic air or sea vessels
from Luzon to Visayas and Mindanao, vice versa, is subject to VAT at a rate of 0%. 12%
Statement III – There is VAT in an Importation by an importer-merchant even if he
does not intend to sell the imported article.
Statement IV – A person who is exempt from VAT may register under the VAT system.
a.
b.
c.
d.
Only one of the above statements is true
Two of the above statements are true
Three of the above statements are true
All of the above statements are true
Statements I, III, and IV
30. Kitetsu Corporation realized an ordinary gain of P1,000,000 from an asset
held for 5 years. Its capital asset transactions during the year are as follows:
Capital gain
Capital gain
Capital loss
Amount
P15,000
112,500
57,500
Holding period
6 months
2 years
12 months
Capital loss
70,000
10 years
What is ABC Corporation’s taxable income?
a. P1,210,000
b. P1,110,000 1,000,000
c. P1,088,750
d. P1,117,500
31. What is the basis of the documentary stamp tax to be imposed when one of the
contracting parties on the sale of property is the Government?
a. Consideration contracted to be paid for such realty.
b. Actual consideration
c. Consideration contracted or its FMV, whichever is higher
d. Consideration contracted or its FMV, whichever is lower.
32. On April 15, 2017, Yummerz Corporation paid cash dividends to its
stockholders, as follows:
Cash dividends paid
1) Resident Citizens 10%
P1,800,000
2) Resident Aliens 10%
600,000
3) Non-resident Citizens 10%
300,000
4) Non-resident aliens
a. Engaged in business in the Philippines 20%
320,000
b. Not engaged in business in the Philippines 25%
120,000
5) Domestic Corporations exempt
1,400,000
6) Foreign Corporations
a. Resident exempt
600,000
b. Non-resident 15%
85,000
How much should Delicious remit to the BIR as final withholding tax on the
dividends paid to its stockholders?
a. P376,750
b. P389,500
c. P435,000
d. P509,000
SOLUTION:
(1,800,000/90% x 10%)
(600,000/90% x 10%)
(300,000/90% x 10%)
(320,000/80% x 20%)
(120,000/75% x 25%)
(85,000/85% x 15%)
Total
P200,000
66,667
33,333
80,000
40,000
15,000
P435,000
33. A taxpayer gives the following reasons for refusing to pay a tax. Which of
his reasons is not acceptable for legally refusing to pay the tax?
a. That he has been deprived of due process of law.
b. That there is lack of territorial jurisdiction.
c. That the prescriptive period for the tax has elapsed.
d. That he will derive no benefit from the tax.
34. What is the prescribed minimum percentage of compromise in case of doubtful
validity of the assessment?
a. 40% of the basic assessed tax
b. 30% of the basic assessed tax
c. 20% of the basic assessed tax
d. 10% of the basic assessed tax
35. One of the following deductions physically diminishes the gross estate of the
decedent.
A. Standard deduction
B. Family home deduction
C. Vanishing deduction
D. Claims against the estate
36. Which
Statement
Statement
Statement
Statement
clause of
a.
b.
c.
d.
of the following statements is/are correct?
A: The power to tax includes the power to exempt.
B: The power to tax includes the power to destroy.
C: The power to license includes the power to tax.
D: The power to tax and police power are superior to the non-impairment
the Constitution.
Statements
Statements
Statements
Statements
A
B
A
C
and
and
and
and
C
D
B
D
are
are
are
are
correct.
correct.
correct.
correct.
37. On April 15, 2017, the BIR discovered a deficiency VAT equivalent to ¼ of the
VAT due for the quarter ended September 2010. If the BIR will send an assessment
notice, which of the following is correct?
a. The taxpayer should protest to the CIR within 30 days from receipt, otherwise
the assessment becomes final and executor.
b. The BIR must send the assessment notice on or before April 15, 2020.
c. The BIR must send the assessment notice on or before April 15, 2027
d. The tax payer can just ignore the assessment and may donate the amount involved
to the BIR.
38. Which statement is not correct?
a. The excess input taxes of a taxable period arising from local sales may be
refunded.
b. The excess input taxes of a taxable period arising from exports sales may be
refunded.
c. The excess input taxes of a taxable month arising from local sales may be carried
over the succeeding month.
d. The excess input taxes of a taxable quarter arising from local sales may be
carried over to the succeeding quarter.
39. Consider the following:
Statement 1: Monetized value of unused vacation and sick leave credits not
exceeding 10 days to private employees is a tax-exempt benefit.
Statement 2: Monetized value of unused vacation and sick leave credits not
exceeding 10 days to government employee is a tax-exempt benefit.
Statement 3: De minimis benefits of managerial employees within the ceiling is
exempt from income tax.
a.
b.
c.
d.
Only statement 1
Statements 2 and
Only statement 3
All of the above
is incorrect
3 are incorrect
is correct
statements are correct
40. Which of the following statements is/are correct?
Statement A: Jewelry purchased by the wife during marriage using the money inherited
from her mother during the marriage is exclusive property of the wife.
Statement B: Jewelry purchased by the husband during marriage using the money
inherited from his father during the marriage belongs to husband and wife
Statement C: Jewelry inherited by the wife before marriage from her father is
exclusive property of the wife.
Statement D: Jewelry inherited by the husband during marriage from his mother is
exclusive property of the husband.
a.
b.
c.
d.
Statements A, B, C, and D are correct.
Statements B, C, and D are correct.
Statements C and D are correct.
Statement D is correct.
41. Which of the following statements is incorrect in connection with excise tax?
A. Should domestic products be removed from the place of production without the
payment of the tax, the owner or person having possession thereof shall be liable
for the tax due thereon.
B. Unless otherwise specifically allowed, the return shall be filed and the excise
tax paid by the manufacturer or producer before removal of domestic products from
place of production.
C. Except as the Commissioner otherwise permits, the return shall be filed with and
the tax paid to any authorised agent bank or Revenue Collection Officer, or duly
authorised City or Municipal Treasurer in the Philippines.
D. Unless otherwise provided, the price, including the value-added tax, at which
the goods are sold at wholesale in the place of production or through their sales
agents to the public shall constitute the gross selling price.
42. X Company has been assessed deficiency income tax of P1,000,000, exclusive of
interest and surcharge, for taxable year 2015. The tax liability has remained unpaid
despite the lapse of June 30, 2017, the deadline for payment stated in the notice
and demand issued by the Commissioner. Payment was made by the taxpayer only on
February 10, 2018. How much is the total amount due on February 10, 2018?
a. P1,762,962.67
b. P1,491,643.83
c. P1,662,140.76
d. None of the choices
Basic tax due (income tax)
Add:
25% surcharge for late payment (25% x 1,000,000)
Interest on deficiency from April 16, 2016 to
June 30, 2017 (1,000,000 x 20% x 441/365 days)
Total amount due, June 30, 2017
Add:
20% interest on deficiency from July 1, 2017 to
December 31, 2017 (1,000,000 x 20% x 184/365 days)
20% interest on delinquency from July 1, 2017 to
December 31, 2017
(1,491,643.83 x 20% x 184/365 days)
12% interest on delinquency from January 1, 2018 to
February 10, 2018
(1,491,643.83 x 12% x 41/365 days)
Total amount due, February 10, 2018
P1,000,000.00
250,000.00
241,643.83
491,643.83
1,491,643.83
100,821.91
150,390.39
20,106.54
271,318.84
P1,762,962.67
In cases where the tax liabilities or deficiency taxes became due before the
effectivity of the TRAIN Law on January 1, 2018, and where the full payment will
only be accomplished after the effectivity date, the interest rates shall be
applied as follows:
Period
For the period up to December
31, 2017
For the period January 1, 2018
until full
payment of the tax liability
Applicable Interest Type and Rate
Deficiency and/or delinquency
interest at
20%
Deficiency and/or delinquency
interest at
12%
The double imposition of both deficiency and delinquency interest under Section
249 of the Tax Code prior to its amendment will still apply in so far as the
period between the date prescribed for payment until December 31, 2017.
43. The following are tax incentives afforded to micro business enterprises, except
a. Priority to a special credit window set up specifically for the financing
requirements of MBEs.
b. Exemption from the coverage of the minimum wage law, however its employees are
still entitled to the same social security and health care benefits as other
employees.
c. Exemption from income tax of all income arising from the operations of the
enterprises.
d. Technology transfer, production and management training, and marketing assistance
programs for MBE beneficiaries.
44. Given the following statements:
I – An applicant for a CPA Licensure Examination who is a resident of Cebu City may
validly secure community tax certificate in Davao City.
II – The community tax certificate for 2021 can still be validly used in filing the
income tax return on March 10, 2020.
III – An unemployed Filipino with seven children whose only source of livelihood
is to work in his own rice field measuring 1,000 square meters may be required to
pay community tax.
Which of the following statements is correct?
a. Only one of the above statements is true
b. Two of the above statements are true
c. Three of the above statements are true
d. None of the above statements are true
Statement I is incorrect.
45. Ms. Pina Asa bought a piece of land in Caloocan City in 2019. Thereafter she
discovered that it has unpaid real property tax for the year 2018. Is Ms. K. Wawa
liable to pay the unpaid real property tax for 2018?
a. Yes, because as the new owner, it will not be registered in her name.
b. Yes, because the buyer assumes the responsibility carried from the previous
owner.
c. No, because the real property tax attaches to the property. Therefore, it is the
property itself which is liable.
d. No, because the real property tax attaches to the property and is chargeable
against the person with actual or beneficial use and possession of the property
regardless of whether or not he is the owner.
46. Notwithstanding any contrary provision of R.A. No. 1405 and other general or
special laws, the Commissioner of Internal Revenue is authorized to inquire into
bank deposit:
Case 1 – of a decedent to determine his gross estate.
Case 2 – of any taxpayer who has filed an application for compromise of his tax
liability by reason of financial incapacity provided there is waiver of his
privilege under R.A. No. 1405 or under other general or special laws.
a.
b.
c.
d.
True in both cases
False in both cases
True only in the first case
True only in the second case
47. . If at
are paid to
distrained:
a. shall be
b. shall no
c. shall be
d. shall be
any time prior to the consummation of the sale all proper charges
the officer conducting the sale, the goods or effects
restored to the owner.
longer be restored to the owner.
brought to the Revenue District Officer.
brought to the Regional District Officer.
48. Under the TRAIN, how much of the net estate is exempt from estate tax?
A. P100,000 and below
B. P250,000 and below
C. P500,000 and below
D. None
49. For taxable year 2021, ECB Corp. incurred interest expense of P500,000 on its
bank loan. For the year, its gross assets amounted to P50,000,000, exclusive of the
land of P7,100,000. It registered a gross income of P10,000,000 and incurred
operating expenses of P6,000,000, inclusive of interest expense. It had interest
income earned for the same year amounting to P15,000. How much is the allowable
interest expense?
a. P500,000
b. P470,000
c. P150,000
d. None of the choices
Since the corporation’s taxable income did not exceed P5,000,000 and its total
assets did not exceed P100,000,000, exclusive of the land, the corporate income tax
(CIT) is 20%, and the final tax on interest income is also at 20%. There is no
interest arbitrage.
50. A certificate issued granting the authority to the registered BMBE to operate
and be entitled to the benefits and privileges accorded thereto
a. Certificate of Authority
b. BIR Certification of Registration
c. Certificate of Incorporation
d. DTI Certificate of Registration
51. Research and development expenses treated as a deferred expense shall be allowed
as deduction ratably distributed over a period of
a. Not more than 60 months beginning with the month in which the taxpayer first
realizes benefits from such expenditure
b. Not less than 60 months beginning with the month in which the taxpayer first
realizes benefits from such expenditure
c. Not less than 30 months beginning with the month in which the taxpayer first
realizes benefits from such expenditure
d. Not less than 6 months beginning with the month in which the taxpayer first
realizes benefits from such expenditure
52. A domestic corporation has an unappropriated retained earnings in excess of its
paid-up capital stock amounting to P20,000,000 and P50,000,000 as of fiscal year
ending June 30, 2020 and June 30, 2021, respectively. How much is improperly
accumulated earnings tax on June 30, 2020 and June 30, 2021?
June 30, 2020
June 30, 2021
a.
P2,000,000
P5,000,000
b.
None
P5,000,000
c.
P2,000,000
None
d.
None
None
53. Which tax cases need not be covered by an LA?
I – Cases involving civil or criminal tax fraud which fall under the jurisdiction
of the National Investigation Division (NID) under the Enforcement and Advocacy
Service (EAS) of the BIR.
II – Policy cases under audit by the special teams in the National Office
a.
b.
c.
d.
Both I and II
Neither I nor II
I only
II only
54. Who of the following is not subject to tax on winnings under Section 126?
a. Person who wins in horse races
b. Winners from double, forecast/quinella and trifecta bets
c. Winners in cockfighting
d. Owners of winning race horses
55. The Estate of Mang Tomas has the following condensed data:
Gross Estate
Total deductions
Taxable net estate
P500,000.00
(600,000.00)
(P100,000.00)
Based on the above data, is an Estate Tax Return required to be filed?
A. Yes, an estate tax return is required in all cases, where although exempt from
tax, the gross value of the estate exceeds two hundred thousand pesos (P200,000).
B. No, an estate tax return is required only in cases of transfers subject to the
tax or regardless of the gross value of the estate, where the said estate consists
of registered or registrable property.
C. Yes, an estate tax return is required in all cases without any exception.
D. No, an estate tax return is required only if the BIR knows of the death of a
person.
56. In general, in order to avail of relief from double taxation on income earned
within the Philippines in the form of decreased tax rates thereon or exemption
therefrom, what must be submitted by a non-resident alien to the International Tax
Affairs Division (ITAD) of the BIR?
a. Tax treaty law of the host country
b. Tax treaty relief application (TTRA)
c. Memorandum of agreement between the taxpayer and host country
d. None of the above
57. Which
A. Excise
B. Excise
C. Excise
D. Excise
of the
tax on
tax on
tax on
tax on
following is an example of ad valorem excise tax?
cigarettes packed by hand
cigarettes packed by machine
petroleum products
alcoholic products
58. For requests for reconsideration, the taxpayer shall submit all relevant
supporting documents in support of his protest within how many days from the date
of filing of his letter of protest, otherwise, the assessment shall become final?
a. 60 days request for reinvestigation
b. 30 days
c. 20 days
d. None of the above
59. EMZ Corporation, a domestic corporation, owns 20% of the outstanding shares of
CHZ Corporation, a non-resident foreign corporation (NRFC), since August 1, 2015.
On June 30, 2021, it received dividends amounting to P1,000,000 from the said NRFC.
EMZ Corporation utilized P800,000 for its dividend payments. On January 1, 2023,
it utilized the remaining P200,000 for its working capital. How much is tax-exempt
dividend?
a. P1,000,000
b. P800,000
c. P200,000
d. None of the choices
60. Consider the following:
Statement I – If the debit to the Output Taxes is an amount more than the credit
to the Input Taxes account, the balancing credit entry is an account VAT Payable.
Statement II – The credit to the Input Taxes account cannot be more than the debit
to the Output Taxes account.
Statement III – If after debit to Output Taxes account and credit to Input Taxes
account at concurring amounts, there is a credit balance (unused) of input taxes
the excess input taxes over the output taxes may remain in the Input Taxes account
for use in the next month.
Statement IV – If after debit to Output Taxes account and credit to Input Taxes
account at concurring amounts, there is a credit balance (unused) of input taxes
the excess input taxes over the output taxes may be credited with a debit to the
account Deferred Input Tax, and this new account with a balance which will be
credited against the output taxes of the succeeding month.
a.
b.
c.
d.
Only one of the above statements is true
Two of the above statements are true
Three of the above statements are true
All of the above statements are true
61. Which of the following shall not be exempt from donor’s tax?
a. Donation to the Integrated Bar of the Philippines (IBP)
b. Donation of parcel of land to the Government made by a Philippine Corporation
to be used as relocation site for the less fortunate
c. Donation to parish church where not more than 30% of the said gifts shall be
used by the parish church for administration purposes
d. Donation to a political party which failed to file a return of contributions
with the COMELEC
62. During an unusually strong typhoon in 2019, a warehouse was destroyed. The
owner filed a claim of P1,000,000, the book value of the warehouse, against the
insurance company. The insurance company was willing to pay P600,000. Finally,
the claim was settled in 2021 for P750,000, the insurance company paying that
amount in the same year. When would the loss of P250,000 be deductible?
a. 2019
b. 2020
c. 2021
d. 2022
63. A PEZA registered enterprise has a registered and an unregistered activity.
The MCIT shall apply to
a. Registered activity
b. Unregistered activity
c. Both activities
d. Neither registered nor unregistered activity
64. Mang Andoks sa Baliwag sells roasted chicken to customers who eat inside its
restaurant and to those who take out the roasted chicken.
Statement I – The sale of roasted chicken to customers who eat in its restaurant
is subject to VAT.
Statement II – The sale of roasted chicken to customers who take them out is
exempt from VAT.
a.
b.
c.
d.
Only
Only
Both
Both
the first statement is correct.
the second statement is correct.
statements are correct.
statements are incorrect.
For items 65 and 66:
LUGI Corporation, a domestic corporation, is being liquidated in order to settle
all of its corporate affairs. For this purpose, a liquidator was appointed by the
court to liquidate LUGI’s remaining assets. Pursuant to the court’s decision, LUGI’s
ordinary assets were ordered transferred to the liquidator. After 2 months,
properties of LUGI were transferred to the shareholders as liquidating dividends.
65. Is the transfer of LUGI’s properties to the liquidator subject to income tax,
VAT, and donor’s tax?
a. No, No, No
b. Yes, Yes, Yes
c. No, Yes, No
d. Yes, Yes, No
Income Tax – no; transfer of assets from corporation to the liquidator does not
give rise to any income.
VAT – no; not in the ordinary course of business, not a transaction deemed sale
Donor’s Tax – no; no donative intent on the part of the corporation, done
pursuant to court order
66. Is the transfer of LUGI’s properties to its shareholders as liquidating
dividend subject to the ordinary income tax and to VAT?
a. No, No
b. Yes, Yes
c. No, Yes
d. Yes, No
Income Tax – Yes; It is a liquidating dividend; Net capital gain
VAT – Yes; transaction deemed sale
67. For the donation to be considered valid, acceptance of the donation must be
made:
A. during the lifetime of the donor only.
B. during the lifetime of the donee only.
C. during the lifetime of the donor and the donee.
D. none of the above
68. Imposition of fixed license fee for the sale of Bible and other religious
items is a violation of
a. exemption of non-profit organization from taxation
b. non-infringement of religious freedom
c. exemption of religious organization from property taxation
d. no appropriation for religious freedom
69. Can the franchise grantee register under the VAT system?
a. Yes. Franchise grantees of radio and/or television broadcasting whose annual
gross receipts of the preceding year do not exceed P10,000,000 derived from the
business covered by the law granting the franchise may opt for VAT registration.
b. No. Franchise grantees of radio and/or television broadcasting whose annual
gross receipts of the preceding year do not exceed P10,000,000 derived from the
business covered by the law granting the franchise cannot opt for VAT registration.
c. Yes. As a rule, it is mandatory for franchise grantees of radio and/or television
broadcasting whose annual gross receipts of the preceding year do not exceed
P10,000,000 to register under the VAT system.
d. No. It is unwise to register because the taxpayer cannot claim input tax credits.
70. Consider the following:
Statement 1: The distributive share of a partner in the net income of a taxable
partnership is equal to each partner’s distributive share of the net income declared
in the partnership for a taxable year after deducting the corresponding corporate
tax.
Statement 2: If a taxable partnership sustains net operating loss, the partners
shall be entitled to deduct their respective shares in the net operating loss from
their individual gross income.
a.
b.
c.
d.
Statements 1 and 2 are false
Statement 1 is false but statement 2 is true
Statement 1 is true but statement 2 is false
Statements 1 and 2 are true
71. Receipt or invoice is issued, at least in duplicate, at the time the transaction
is effected for each sale or transfer of merchandise or for services rendered valued
at
a. P50 or more
b. P100 or more
c. P200 or more
d. P250 or more
72. Which statements is/are correct?
I – Equal protection of the law is the right of every taxpayer to be heard
II – Equality is the same as progressive taxation Equitability
Equitability
a.
b.
c.
d.
True, true
True, false
False, true
False, false
73. Which of the following is not included
A. Total amount of money or its equivalent
B. Delivery, freight and insurance paid by
C. Value-added tax passed on by the seller
D. Excise tax
in the term “gross selling price”?
paid by the purchaser
the purchaser
to the buyer
74. In what cases may the minimum compromise rate of 10% be imposed?
I – The taxpayer is suffering from a net worth deficit taken from the latest
audited financial statements
II – The taxpayer’s compensation with no other source of income and the family’s
gross monthly compensation does not exceed P10,500 per month if single; P21,000
per month if married.
III – The taxpayer is suffering from surplus/earnings deficit resulting to
impairment in the original capital by at least 50%.
a.
b.
c.
d.
True, false, true
False, false, true
True, true, false
True, true, true
75. Which business is required quarterly submission of Percentage Tax Return?
a. International Carriage
b. Banks
c. Overseas Communication
d. Amusement Places
76. The MCIT shall apply to which of the following resident foreign corporations?
I. International carrier
II. Offshore banking units (OBUs)
III. Regional operating headquarters
a.
b.
c.
d.
I and III only
I and II only
II and III only
I, II and III
77. 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:
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 acquisitions of air and sea transport vehicles.
d. can claim input taxes only on the acquisition of land transport vehicles.
No depreciation (and input taxes) shall be allowed for yachts, helicopters,
airplanes and/or aircrafts, and land vehicles which exceed P2,400,000, unless the
taxpayer’s main line of business is transport operations or lease of transportation
equipment and the vehicles purchased are used in said operations. (Sec. 3 C, Revenue
Regulations No. 12-2012)
78. Which is not a power of the BIR Commissioner?
a. Terminate taxable period
b. Promulgate rules and regulations
c. Make arrests and seizures
d. Prescribed real property values
79. The transitional input tax is
a. the higher between the 4% of the beginning inventory and actual input VAT on
beginning inventory
b. the lower between the 2% of the beginning inventory and actual input VAT on
beginning inventory
c. the lower between the 4% of the beginning inventory and actual input VAT on
beginning inventory
d. the higher between the 2% of the beginning inventory and actual input VAT on
beginning inventory
80. Mr. J Santos donated P500,000 to YZKK Foundation, a philantropic organization.
The organizations total administrative expenses amounted to P5,000,000 out of its
expenses of P20,000,000. How much was the exempt gift to the philantropic
organization?
a. P6,000,000
b. P5,000,000
c. P500,000
d. None
81. This income is subject to final tax
a. Fringe benefits given to employees of a domestic corporation
b. Marriage fees, baptismal offerings received by a clergyman, evangelists or
religious workers for services rendered
c. Dividend income from a domestic corporation by a non- resident foreign
corporation 15%
d. Share of an individual taxpayer from the distributable net income of a general
professional partnership
82. The books of account are required to be audited and examined yearly by an
independent CPA if the gross quarterly sales, earnings, receipts or output
exceed:
a. P5,000,000
b. P3,000,000
c. P2,500,000
d. P1,500,000
83. 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.
B. become taxable and the issuer shall be liable to pay VAT thereon.
C. be effectively subject to zero percent.
D. be considered erroneous transaction and must be disregarded.
84. Which of the following statements is wrong on corporations?
a. Domestic corporations, in general, are subject to a tax rate of twenty-five
percent (25%) effective July 1, 2020, on income derived from all sources within and
outside the Philippines
b. Proprietary educational institutions and hospitals which are nonprofit shall pay
a tax of one percent (1%) on their taxable income from all sources within and
outside the Philippines beginning July 1, 2020, until June 30, 2023, provided that
gross income from ‘unrelated activities’ exceeds fifty percent (50%) of the total
gross income derived from all sources
c. Resident foreign corporations are subject to a tax rate of twenty-five percent
(25%) effective July 1, 2020, on income derived from sources within the Philippines
d. Domestic corporations with net taxable income not exceeding Five Million Pesos
(P5,000,000) and total assets not exceeding One Hundred Million (P100,000,000),
excluding the land on which the particular business entity’s office, plant and
equipment are situated, are subject to a tax rate of twenty percent (20%) effective
July 1, 2020
85. 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?
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
86. Hidilyn Marcial won the gold in the boxing lightweight division in the recently
concluded Olympic Games. By virtue of this single honor, she brought to the country,
he was given P1M by a car dealer course thru the National Sports Commission.
Statement I- The prize received by AB is exempt from income tax
Statement II- The car dealer can deduct in full the gift for income tax purposes
a.
b.
c.
d.
True, true
True, false
False, true
False, false
87. Which of the following statements is/are CORRECT?
I. The power to license includes the power to tax.
II. The power to tax may not include the power to destroy
III. The power to tax includes the power to exempt.
a.
b.
c.
d.
II and III
I and II
III only
I only
88. The Withholding Tax System was devised for the following reasons, except:
a. To provide the taxpayer a convenient manner to meet his probable income tax
liability.
b. To ensure the collection of the income tax.
c. To improve the government’s cash flow.
d. To do away with the filing of income tax returns.
For numbers 89 and 90:
The decedent is a married man with a surviving spouse with the following data:
Conjugal real properties
P6,000,000
Conjugal family house
1,000,000
Exclusive family lot
400,000
Other exclusive properties
4,500,000
Conjugal ordinary deductions
1,500,000
Exclusive ordinary deductions
500,000
89. The taxable net estate is
a. P9,900,000
b. P3,750,000
c. P3,500,000
d. P1,250,000
90. How much is the estate tax payable?
a. P594,000
b. P225,000
c. P210,000
d. P75,000
91. Which of the following sales to senior citizens shall not be exempt from VAT?
A. 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.
B. Sale of single serving seat meals with beverage for an individual senior citizen.
C. Bulk orders which are within the context of pre-contracted or pre-arranged group
meals or packages.
D. Sale of medicines from drug stores, hospital pharmacies, medical and optical
clinics and similar establishments including non-traditional outlets dispensing
medicines.
92. The following are the requisites for vanishing deduction to be allowable,
except
a. The estate tax of the prior succession must have been finally determined and
paid.
b. The present decedent died within five years from date of death of the prior
decedent.
c. The property with respect to which deduction is sought can be identified as
having been received by the present decedent from the prior decedent.
d. The property must have formed part of the gross estate situated outside the
Philippines of the prior decedent.
93. Consider the following:
I – The computation of the donor’s tax is on a cumulative basis over a period of
one calendar year.
II – Husband and wife are considered as separate and distinct taxpayers for
purposes of the donor’s tax.
a.
b.
c.
d.
Both
Both
Only
Only
statements are correct.
statements are incorrect.
the first statement is correct.
the second statement is correct.
94. A city or municipality within the Metropolitan Manila Area may levy a real
property tax at a rate not exceeding
a. 1/2 of 1%
b. 1%
c. 1.5%
d. 2%
95. Mr. Kalan Say, a cemetery lot dealer sold real properties to different buyers
as follows:
Selling Price
Cost
House & Lot
P2,000,000
P1,250,000
Farm Lot
P800,000
P300,000
Cemetery Lot
P 45,000
P20,000
The house and lot was Mr. Kalan Say’s principal residence that was sold to
reacquire a new principal residence noting that the entire proceeds thereof was
utilized. What is Mr. Kalan Say’s capital gains tax?
a. P 48,000
b. P 50,700
c. P170,700
d. P168,000
96. Which is incorrect with respect to DST on original issue of shares of stock?
a. Par value stocks: P2.00 on every P200 or fractional part of the par value
b. No par value stocks: P2.00 on every P200 of the actual consideration
c. Stock dividends: Not subject to DST
d. None of the above
97. During the taxable year 2022, a domestic corporation may be held liable to
pay the following corporate income tax
I. Regular Corporate income tax of 25% or 20%
II. Capital gains tax on sale of shares of stocks of a domestic corporation at
15% of capital gains
III. Minimum Corporate Income Tax of 1%
IV. Improperly accumulated earnings tax of 10%
a.
b.
c.
d.
I or III, II and IV
I and III, II and IV
I, II and IV
I or III and II
98. This refers to any person who is required to register under the provisions of
the Tax Code but failed to register.
a. VAT – registered person
b. VAT – registrable person
c. Vat – exempt person
d. None of the above
99. When an indebtedness is cancelled without any service rendered by the debtor
in favor of the creditor, the forgiveness of debt will result to
a. taxable income
b. distribution of dividend
c. taxable indirect donation
d. taxable estate
100. Which of the following statements is incorrect?
a. Domestic corporations are subject to income tax based on net income from all
sources
b. Resident foreign corporations are subject to income tax based on net income from
sources within the Philippines
c. Non-resident foreign corporations are subject to income tax based on gross income
from sources within the Philippines
d. Proprietary educational institutions and hospitals for non-profit are subject
to income tax based on gross income from sources within the Philippines at a tax
rate of 10% beginning July 1, 2020 until June 30, 2023 (1%)
101. A lessor leases his 15 residential units for P14,500 per month and the other
15 residential units for P15,500 per month. During the taxable year, his accumulated
gross receipts amounted to P5,400,000. How much is the output VAT?
A. P648,000
B. P334,800
C. P313,200
D. None of the choices (OPT, total gross receipts subject to VAT does not exceed 3M)
102. In case the available cash of the estate is insufficient to pay the total
estate tax due, payment by installment shall be allowed:
a. Within two years from the statutory date for its payment without civil penalty
and interest.
b. Within two years from the statutory date for its payment with civil penalty and
interest.
c. Within one year from the statutory date for its payment without civil penalty
and interest.
d. Within six months from the statutory date for its payment without civil penalty
and interest.
103. Misty’s income from leasing his property reaches the maximum rate of tax under
the law. She donated one-half of his said property to a non-stock, non-profit
educational institution whose income and assets are actually, directly and
exclusively used for educational purposes, and therefore qualified for tax exemption
under Article XIV, Section 4 (3) of the Constitution and Section 30 (h) of the Tax
Code. Having thus transferred a portion of his said asset, Misty succeeded in paying
a lesser tax on the rental income derived from his property. Is there tax avoidance
or tax evasion?
a. There is tax avoidance. Misty has exploited a fully permissible alternative
method to reduce his income tax by transferring part of her rental income to a taxexempt entity through a donation of one-half of the income producing property.
b. There is tax evasion. Misty has exploited a non-permissible alternative method
to reduce her income tax by transferring part of his rental income to a tax exempt
entity through a donation of one-half of the income producing property.
c. There is tax dodging
d. None of the choices
104. Which of the following is not one of the benefits of a barangay micro business
enterprise (BMBE) under BMBE Act of 2002?
a. Exemption from the coverage of the Minimum Wage Law
b. Priority to special credit window set up specifically for the financing of BMBEs
c. Exemption from national and local internal revenue taxes
d. Technology transfer, production and management training, and marketing assistance
programs for BMBE beneficiaries
105. Which of the following is not one of the changes under the CREATE Law and
Bayanihan Act II?
a. Nondeductible interest expense was reduced from 33% to 20% of interest income
b. NOLCO incurred during taxable years 2020 and 2021 can be carried over for 5
years
c. Additional deduction can be claimed amounting to ½ of the value of labor training
expenses
d. Stock transactions tax of 6/10 of 1% has been repealed under the Bayanihan Act
II effective September 15, 2020
106. Which is not subject to local amusement tax under the Local Government Code?
a. Operators of theaters
b. Lessees of cinemas
c. Proprietors of boxing stadia
d. Operators of resorts
107. Which of the following are grounds to file an abatement?
I. Assessment is of doubtful validity
II. The tax appears to be unjustly or excessively assessed
III. Taxpayer’s clear inability to pay
IV. The administration or collection costs involved do not justify the collection
of the amount due
a.
b.
c.
d.
I and II
I and III
II and III
II and IV
108. Which stage of taxation will the legislative department be involved with?
a. Levy
b. Assessment
c. Collection
d. Imprisonment
109. Which of the following is not subject to excise tax?
a. Importation of perfumes
b. Manufacture of automobile
c. Hair restoration/Transplantation
d. Pre-packaged powdered coffee products
110. Which of the following is not one of the activities eligible for PEZA
registration?
a. Export manufacturing
b. Logistics and warehousing services
c. Facilities providers
d. Public infrastructures
111. On March 10, 2021, Inter-continental, Inc. received a preliminary assessment
notice(PAN) dated March 1, 2021 issued by the Commissioner of Internal Revenue
(CIR) for deficiency income tax for its taxable year 2019. It failed to protest the
PAN. The CIR thereupon issued a final assessment notice (FAN) with letter of demand
on April 30, 2021. The FAN was received by the corporation on May 10, 2021, following
which or on May 25, 2021, it filed its protest against it. The CIR denied the
protest on the ground that the assessment had already become final and executory,
the corporation having failed to protest the PAN. Is the CIR correct?
a. Yes. The FAN shall become final and executory upon failure of the taxpayer to
protest the PAN within 15 days from the receipt thereof
b. No. The issuance of preliminary assessment notice (PAN) does not give rise to
the right of the
taxpayer to protest. What can be protested by a taxpayer is the final assessment
notice (FAN) or the assessment issued following the PAN. Since the FAN was timely
protested, within 30 days from the receipt thereof, the assessment did not become
final and executory
c. Yes. The BIR has the sole discretion to accept or deny any protest from the
taxpayer
d. None of the above
112. DITO Communication, a telecommunication company, has its only office in Baguio
City, Benguet. Which is correct?
a. DITO Communication shall pay franchise tax in Baguio City and in the Province
of Benguet
b. DITO Communication shall pay franchise tax only in Baguio City
c. DITO Communication shall pay franchise tax only in the Province of Benguet
d. DITO Communication shall pay franchise tax in Baguio City and in the Province
of Benguet
113. Consider the following:
I – No person shall be imprisoned for debt or non-payment of tax
II – Tax laws are civil and penal in nature because there are criminal penalties
when they are violated
III – Taxes may be collected in an unlimited amount
IV – License fees may be collected in an unlimited amount
a.
b.
c.
d.
False, False, True, False
True, False, True, False
False, True, True, False
False, False, True, True
114. To record MCIT, the account deferred charges MCIT is:
a. Debited
b. Credited
c. Memo entry only
d. No entry required
115. To record application of excess MCIT vs. NORMAL income tax, what account is
credited:
a. Income tax payable
b. Cash in bank
c. Retained earnings
d. Deferred charges MCIT
116. To record expired portion of MCIT, what account is debited:
a. Retained earnings
b. Income tax payable
c. Deferred charges MCIT
d. Provision for income tax
117. What are the means employed in the assessment of taxes, EXCEPT?
a. Examination of tax returns
b. Inventory taking surveillance and use of presumptions gross sales or receipts
c. Prescription of real property values
d. Examination of bank deposits
118. Consider the following statements:
A. A special assessment is an enforced proportional contribution from the owners
of real
property especially or peculiarly benefited by public instruments
B. The power of eminent domain maybe exercised even by the private entities while
the power of taxation and police power maybe exercised only by the government
C. Unlike tax, a debt draws interest, if stipulated
D. The police power, power of taxation and power of eminent domain being fundamental
powers of the state maybe exercised by the government even without any
constitutional grant
a.
b.
c.
d.
A and B are correct
Only C is not correct
B and D are correct
All are correct
119. IMPROPERLY ACCUMULATED EARNINGS TAX was repealed on:
a. July 20, 2020
b. April 11, 2021
c. April 15, 2021
d. None of the above
120. A resident citizen had a family home in the Philippines. He worked abroad and
was temporarily absent from his family home when he died. The executor of the estate
inquired from you whether or not to claim family home deduction from the gross
estate for Philippine estate tax purposes. What would you tell him?
a. The estate would not be allowed family home deduction because he was abroad when
he died.
b. The estate would not be allowed family home deduction because he was a nonresident citizen when he died.
c. The estate would be allowed family home deduction because actual occupancy of
the family home was not interrupted or abandoned because of his temporary absence.
d. The estate would be allowed family home deduction because all decedents were
allowed family home deduction.
121. Suppose the accounting period adopted by the taxpayer is fiscal year ending
October 2018, when is the due date for the filing of his monthly VAT declarations
for the first and second month of the first fiscal quarter?
a. November 20, 2018 and December 20, 2019
b. August 20, 2018 and September 20, 2018
c. November 20, 2017 and December 20, 2017
d. December 20, 2017 and January 20, 2018
122. Mr. Jose San Jose owns a restaurant. His gross receipts for the for the first
month of the current year is P1,000,000. He asks you if he is required to register
under the VAT system. What will your advice be?
a. Mr. San Jose is not required to register under the VAT system because owners of
restaurant are generally exempted from VAT.
b. Mr. San Jose has to register under the VAT system because there is a reasonable
ground to believe that his gross receipts will exceed the VAT threshold amount
during the 12-month period.
c. Mr. San Jose may or may not register under the VAT system because it is not
clear that his gross receipts will exceed the VAT threshold amount during the year.
d. Mr. San Jose is not required to register under the VAT system because his gross
receipts will not exceed the VAT threshold amount during the year.
123. Consider the following
1st Statement: Real property is subject to taxation in the place in which it is
situated regardless of whether the owner is a resident or a non-resident therein.
Rule of Lex Rae Sitae.
2nd Statement: As far as personal property is concerned. The ancient rule of mobilia
sequntur personam applies. This means that the thing follows the law of the owner
thereof.
a. True; False
b. True; True
c. False; True
d. False; False
124. The Board of Directors of Dieya Corporation received a subpoena from the DOJ
involving fraudulent tax return. Because of the gravity of the offense, your legal
advice was sought as to whose signature must appear on the withholding tax returns
and face the possibility of being criminally liable in case of fraud?
a. President and Treasurer
b. President and Corporate Secretary
c. Treasurer and Corporate Secretary
d. Chairman and Chief Accountant
125. A non-profit hospital has the following data for the current calendar year:
Gross receipts, related activities
Cost of services, related activities
Allowable deductions from related activities
Gross receipts, unrelated activities
Cost of services, unrelated activities
Allowable deductions from unrelated activities
Payments, first three (3) quarters
P 15,000,000.00
6,000,000.00
3,250,000.00
18,000,000.00
5,000,000.00
2,000,000.00
2,000,000.00
How much is the tax payable?
a. P2,187,500
b. P1,350,000
c. (P325,000)
d. None, exempt from tax.
Related activities
Gross receipts
Less: Cost of
services
Gross income
Less: Allowable
deductions
Net
taxable
income
Tax rate*
Income tax due
Less: Payments,
first 3
quarters
Unrelated activities
Total
P15,000,000.00
6,000,000.00
P18,000,000.00
5,000,000.00
P33,000,000.00
11,000,000.00
9,000,000.00
3,250,000.00
13,000,000.00
2,000,000.00
22,000,000.00
5,250,000.00
P 5,750,000.00
P11,000,000.00
16,750,000.00
25%
4,187,500.00
2,000,000.00
Income
payable
tax
P2,187,500.00
* Tax rate is 25% because income from unrelated activities exceeds 50%
(13,000,000/22,000,000 = 59%) and taxable net income exceeds P5,000,000.00.
For items 126 and 127:
Abo Gado, a VAT-registered CPA received the following in 2019 (amounts are net of
VAT, if applicable).
Salary
Overtime pay
Holiday pay
13th month pay
Cash payment made by clients
Retainer fee of Php 10,000 per month from clients
Out of pocket expenses to be reimbursed by clients
Capital gains from sale of jewelry
P360,000
40,000
20,000
30,000
880,000
2,000,000
50,000
10,000
126. How much is Mr. Gado’s gross compensation income?
a. P420,000
b. P430,000
c. P450,000
d. P460,000
127. How much is Mr. Gado’s vatable transactions?
a. None
b. P2,880,000
c. P2,930,000
d. P2,940,000
128. A VAT-registered hotel owner contends that the sale of fresh fruits and
other agricultural food products to the hotel guests is not subject to VAT. Is his
contention correct?
a. Yes. His contention is correct because, as a rule, the sale agricultural products
is exempt from VAT.
b. No. His contention is incorrect because the sale of the agricultural products
is incidental to the sale of services of the hotel.
c. Yes. His contention is correct because his gross receipts may not exceed the VAT
threshold amount.
d. No. His contention is not correct but requires a clear BIR ruling.
129. Mr. Julian Reyes, transfers his car to his nephew on a condition that he passes
the CPA Licensure Examination. The nephew tops the CPA Licensure Examination. The
transfer is subject to:
a. Estate tax.
b. Donor’s tax.
c. Either donor’s tax or estate tax.
d. Neither donor’s tax nor estate tax.
130. Taxable income of proprietary educational institutions and hospitals whose
gross income from unrelated activities exceed 50% of its total gross income is ___.
a. Subject to a preferential rate of 10% from July 1, 2020 until June 30, 2023
b. Subject to a preferential rate of 1% from July 1, 2020 until June 30, 2023
c. Subject to regular corporate income tax
d. Exempt from tax
131. PVZ Corporation, domestic corporation, its total assets did not exceed P100
million had the following financial data for taxable year ending April 30, 2021:
Gross Sales
Cost of Sales
Allowable deductions
P15,000,000
8,500,000
2,500,000
Compute the corporation’s income tax due for the taxable year?
a. P866,667
b. P1,200,000
c. P800,000
d. None of the above
RCIT:
2/12 200,000 + 10/12 666,667 = 866,667
MCIT:
2/12 21,667 + 10/12 54,167 = 75,833
132. Manneh Paksiw is a Filipino world boxing champion. He will defend his crown
in Manila against the Thai challenger, Sawah Dikha. The boxing exhibition is
promoted by Unipak Promotions wholly owned by Filipinos. You are asked by the
promoters whether or not the boxing exhibition shall be subject to amusement tax
in the Philippines. What will your answer be?
a. The boxing exhibition is subject to Philippine amusement tax because only one
of the contenders is a Filipino.
b. The boxing exhibition is subject to Philippine VAT because boxing involves
professional boxers rendering service using physical faculty.
c. The boxing exhibition is not subject to Philippine amusement tax because one of
the contenders is a Filipino, involves world championship and is promoted by a
corporation wholly owned by Filipinos.
d. The boxing exhibition is not subject to Philippine amusement tax if a special
law is passed exempting such exhibition from the tax.
133. Under the TRAIN, the donor’s tax for gifts given to stranger for each calendar
year shall be:
a. six percent (6%) computed on the basis of the total gifts made during the
calendar year.
b. six percent (6%) computed on the basis of the total gifts in excess of Thee
hundred thousand pesos (P300,000) exempt gift made during the calendar year.
c. six percent (6%) computed on the basis of the total gifts including those made
in the previous calendar year in excess of Two hundred fifty thousand pesos
(P250,000) exempt gift made during the calendar year.
d. six percent (6%) computed on the basis of the total gifts in excess of Two
hundred fifty thousand pesos (P250,000)exempt gift made during the calendar year.
For numbers 134 and 135:
The following information pertains to the business equations of a taxpayer in 2019:
Gross Income:
From business
Rent
Cost of Sales
Operating Expenses
Real properties
P2,200,000
1,500,000
1,000,000
700,000
18,000,000
134. How much is the additional community tax, if individual?
a. Php 3,700
b. Php 5,600
c. Php 4,700
d. Php 21,700
135. How much is the additional community tax, if corporation?
a. Php 1,480
b. Php 8,680
c. Php 1,888
d. Php 9,080
134 – (2,200,000 + 1,500,000 + 1,000,000)/1,000 x 1 = P4,700
135 – (4,700,000 + 18,000,000)/5,000 x 2 = P9,080 Php2 for every
Php1 for every 1,000 of receipts
5,000 of receipts inc. properties
136. As a rule, Corporate Income Tax rate for year 2020 is?
a. 20%
b. 25%
c. 27.5%
d. 30%
137. . A corporation may change its taxable year to calendar or fiscal year in
filing its annual income tax return, provided
a. It seeks prior BIR approval of its proposed change in the accounting period.
b. It simultaneously seeks BIR approval of its new account period immediately after
the close of the taxable year.
c. It should change its accounting period two years prior to changing its taxable
year.
d. Its constitution and by-laws authorizes the change.
138. An unmarried decedent died leaving properties he inherited 4.5 years ago which
had fair market value of P800,000 at the time of his death (P650,000 at the time
of inheritance, and unpaid mortgage of P50,000, P20,000 of which paid by the present
decedent before he died). Other properties in his gross estate had fair market
value of P1,000,000. The total expenses, losses, indebtedness, taxes and transfer
for public purpose amounted to P300,000. How much was the vanishing deduction?
a. P225,000
b. P108,333
c. P102,900
d. P100,000
Value to take
Less: Mortgage paid
Initial basis
Less: Proportional deduction
(630,000/1,800,000 x 330,000)
Final basis
Rate
Vanishing deduction
P650,000
20,000
P630,000
115,500
P514,500
20%
P102,900
139. If the taxpayer is adversely affected by the resolution of the CTA in Division
on his Motion for Reconsideration, he may file a petition for review with the CTA
en banc within how many days?
a. 60 days
b. 30 days
c. 20 days
d. 15 days
140. All taxpayers are required to preserve their books of accounts, including
subsidiary books and other accounting records, for a period of how many 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. 20 years
b. 15 years
c. 10 years
d. 5 years
“Come unto me, all you who are weary and burdened, and I will give you rest.”
Matthew 11:28