TAX Q1: UNIT 1
1. Which type of the double taxation is not expressly prohibited by the 1987 constitution of
the public at the Philippines? Both indirect and direct double taxation
2. When the House and Senate version of a tax bill has difference what/who will reconcile the
difference? The bicameral conference committee
3. Subject to inherit and constitutional limitations, the following are the general characteristic
of the power of taxation, except? Limited
4. Statement I: income of religious from their ordinary activities are exempted from taxes
Statement II: due to the separation of church and state taxes cannot be use for the
establishment of Cathedral both statements are true
5. The Marshall doctrine justifies: the use of taxation as an implement of police power
6. A is a resident citizen, B is a non-resident citizen, while C is a resident alien. Who among
them is subject to income tax only on income derived from sources outside the Philippines?
Neither a, b or c residents
7. Tax fix amount and imposed among all persons residing within a specified territory without
regard to their property or occupation may be engage to? Personal tax
8. What is the nature of tax laws? It is criminal in nature
9. In case of conflict between the tax code and the Philippine accounting standards or PFRS?
Tax code shall prevail over PAS/PFRS
10. Requires that all subjects or objects of taxation similarly situated are to be treated alike or
put on equal footing both in privileges and liabilities? Uniformity
11. Under credible withholding tax system which of the following statements is correct?
The recipient of the income is no longer required to file an income tax return as
prescribed under the tax code
12. Tax as distinguished rom license fee?
Non-payment does not necessarily render the
business illegal
13. Which of the following is the effect of the principle of international comity in taxation?
Foreign government cannot collect taxes from the Philippine government
14. Which of the following statement is true?
There is imprisonment for nonpayment of taxes
nonpayment of debt
but there is no imprisonment for
15. Which stage of taxation will the executive department be involved with? Collection
16. Statement I: the power of Taxation must first be expressly granted either by law or by
constitution before the state may validly exercise it
Statement II: the Philippine government may subject the land where embassies of foreign
governments are located to real property taxes. Both statements are false
17. Which of the following taxes is properly classified as indirect tax? Value added tax
18. Section 244 of the tax code provides that
shall promulgate all needful
rules and regulation for the effective enforcement of provision of NIRC.
The secretary of finance up on the recommendation of the commissioner of internal revenue
19. Statement I: the power to impose tariffs is exercise by the president and by the Congress
Statement II: the power to tax can be delegated to local government units
Only statement II is true
20. ABC corporation is a resident foreign corporation. Which of the following items of income is
not subject to tax?
I. income from Philippine operations
II. income from American operations
II ONLY
21. Income is considered realize for tax purposes when: The earning process is complete or
virtually complete and an exchange has taken place
22. The house of representatives is composed of 300 district and party list representatives. 200
attended the session dated June 5, 2020 on that particular session, house bill no. 3902, which
override the veto power of the president, was voted upon. How many votes are required to
pass the bill? 200 votes
23. Taxes must be proportionate, this means that: the tax to be imposed must be based on the
ability of the ta payer to pay
24. Philippine government recently passed RA 14023 otherwise known as bardagulan to heal as
one act, which penalized among others, violation of community quarantine rules in light of the
prevailing pandemic. this is an example of exercise of government of which inherent power?
Police power
25. A company insured the life of its president for 2 million a total of 500,000 premiums was
paid by the company before the president died. the total proceeds were collected by the
company. how much is the return on capital? 0
26. Which of the following constitutional rights is mainly violated by a tax law and enacted for
whereby it’s proceeds will be used to rehabilitate private corporation under financial distress?
Right to due process
27. A lease her land to B for 2 years beginning July 1, 2020. B would pay a monthly rental of
100,000. she paid rent up to October 2020 and then defaulted for the rest of the year. under
accrual method, how much was the income of A for 2020? 600K
28. Which of the following would most probably be allowed to use fiscal year in reporting
income? DEF company engage in selling computer software
29. The following is incorrect description of taxation? Supreme and absolute power of the
state
30. All sources of exemption or exclusion to income tax, except? Local ordinances
31. In 2020, A earned 500,000 as income from his barbershop and received 300,000 as a
Christmas gift from her aunt. he had no other receipts during the year. his gross income for
2020 is? 500,000
32. Who is the current department of finance secretary? Carlos Dominguez III
33. ABC corporation is a domestic corporation, which of the following items of income is
subjected to tax?
I. gain from sale of the personal property of the Philippines
II. gain from sale of personal property in South Korea
BOTH II & I
34. Statement I: The constitution prohibits that taxes must be paid in any other form than
money
Statement II: the bureau of internal revenue may accept real property as a way of compliance
of one tax’s obligations
Both statement are false
35. Who has the authority to veto the taxation bills passed by the Congress? President
TAX Q2: UNIT 2
1. Which of the following is exempt from income tax for resident citizen taxpayer? PCSO
winnings amounting to 6,000
2. Generally which of the following types of income is subject to final withholding tax? Passive
income
3. Which of the following types of income is no longer required to be reported in the income
tax return? Income already subjected to final withholding tax
4. Which of the following prizes is subjected to regular income tax? Prizes received by a
domestic corporation 100,000
5. Which of the following is/are subject to final income tax?
I.
Dividends received by a resident citizen from a domestic corporation
II.
dividends received by a resident citizen from a resident foreign incorporation
III.
dividends received by resident for incorporation from resident foreign incorporation
I AND III ONLY
6. Interest income from depository banks under the foreign currency deposit system earned by
a resident for incorporation is? Subject to final withholding tax of 15%
7. Which cash dividends is subject to final tax? Cash dividends from domestic corporation to
non-resident for incorporation
8. Which of the following statement is incorrect? lotto winning in foreign countries are
exempted from income tax in the Philippines
9. Which of the following interest income derived within the Philippines is subject to basic
income tax? Interest income from Loans
10. Which of the following statements is correct? Interest income on bank deposit or
investment with maturity. Interest income on bank deposit or investment with maturity of at
least five years is exempt from income tax
11. An instrument with the maturity of 10 years was held by A (resident citizen) for 2 years and
was transferred to B (resident alien) who in turn had it for 8 years. the final withholding tax
should be as follows:
I. A: 20% final tax
II. B: exempt
Both are true
12. A, Resident citizen receive the PCSO winnings in 2021 amount in 10,000 what type of
income tax will apply? Exempt
13.
I.
All royalty income derived from sources within the Philippines are subject to final
withholding tax
II.
All royalty income derived from sources outside the Philippines received by resident
citizen are subject to regular income tax
ONLY statement II is true
14. Which of the following sale transaction will be subject to capital gains tax?
Sale of shares of stock not through the local stock exchange by a person who is not a dealer in
securities
15. which of the following transaction is subject to 6% capital gains tax?
Sale of vacant lot by an employee
16.
I.
The determination of 6% capital gains tax on sale of real property is based on not capital
gains realized by the seller afraid property.
II.
Except for certain passive income and then resident and you’re not engage in trade of
business should be taxed at 25% of his gross income derived from sources within the
Philippines
Only statement II is true
17. A, resident citizen taxpayer owns a property converted into apartment units with the
monthly rental of 10,000 per unit he subsequently sold the property to B as a resident alien
taxpayer the sale shall be subject to? Regular income tax
18.
I.
Proceeds of sale of real property classified as capital as it may be exempt from that 6%
capital gains tax
II.
Things from sale of a property classified as capital asset to the government may be
taxed understands and 20 for eight at the option of individual taxpayer
Both statements are true
19. A sold the residential house and lot held for 10 million to his friend it’s FMV when he
inherited it from his father was 12 million Aldo it’s present FMV is 15 million attacks on above
transaction is? 900,000 capital gains tax
20. A sold a residential house and lot held for 10 million to his friend it’s FMB when he inherited
it from his father was 12 million although it’s percent FMV is 15 million the house and lot was a
principal residence and he use ½ of proceeds to buy a new principal at her students reading 18
months after the above sale. A also inform BIR about the sale. The sale shall be?
Subject to 450,000 capital gains tax
21.As a rule There is no income tax if there is no income, which of the following is exemption?
Capital gains tax in sale of land and/or building
22.
I.
Sale of principal residence is subject to alternative treatment of taxation as provided by
NIRC it can be subjected to capital gain tax or regular income tax
II.
Purchase of land by tenant farmers pursuant to the comprehensive agrarian reform
program of the government is exempt from imposition of capital gain tax
Only II is true
23. A sold B share of stocks of foreign corporation at the selling price of 1 million with an
acquisition cost of the 380,000 on the same date A solid B shares of stock domestic corporation
at a selling price of 600,000 and an acquisition cost of 400,000
If A is a residency this sentence is not a dealer insecurity and the shares were sold directly to B
how much is capital gain tax due of a from the transaction?
Solution: 600k - 400k =200k × 15% = 30,000
24. A taxpayer he saved during the taxable year the following parts of income derived from
within the Philippine:
231 250 net Press on bank deposit under FCDU
95,000 and gross royalty on cash app for application
150,000 gross dividend income from RFC
If the taxpayer is the resident alien engage in business the final tax on the above passive
income would amount to? Solution: 95K x 20% = 19,000
25. On January 1, 2018 and invested 1 million to BDO five years tax free time deposit the long
term deposit pass pays 10% annual interest every January 1 in need of cash pre-terminate his
investment on July 1, 2021 how much is the final text you in 2021?
Solution:
2020 interest income (1M X10%) = 100K
2021 interest income (1M X10%) =100K
2022 interest income (1M X10%) = 100K
2023 Accrued income (1M X10%) = 50K
Total interest income: 350K x12% =42,000
26. A sold 10,000 shares in ABC corporation closely how domestic corporation on June 30, 2021
for 1,250,000 shares were acquired by your ago for 1 million how much is capital gains tax?
Solution: 1,250,000 - 1,000,000 =250,000 x 15% = 37,500
27. On March 20 21 A sold the following shares of stock on domestic corporation which he
bought for investment purposes
I.
listed and pay: 250,000 selling price with 118K cost t
II.
NOT LISTED AND TRATED: 140,000 selling price and 80,000 cost
How much is the capital gains stocks?
Solutions: SP – Cost
I. 250,000 – 118,000 = 132,000
II. 140,000 – 80,000 = 60,000 x 15% = 9,000
28. A resident citizen receive a 72,000 dividend income from domestic corporation and 108,000
as winnings in game show in a local TV network how much is total final tax withheld?
Solution:
72,000 / 90% = 80,000
108,000 / 80% = 135,000
80,000 x 10% - 8,000
135,000 x 20% = 27,000
27,000 + 8,000 =35,000
29. A sold his residence 5 million when it’s fair market value was 6 million the house was
purchased for 3 million out of proceeds. A utilize the 4 million for purchase of your residential
house how much is the capital gains tax on sale?
Solution: 6Mx6%=360,000
1,000,000/5,000,000= 0.2 x 360,000 = 72,000
30. A sold his Baguio rest house for 10 million with fair market value of 9 million to buy a new
principal residence if A used 8 million of the proceeds of sale in acquiring a new principal
resident how much is capital gain tax payable? Solution: 10,000,000 x 6% = 600,000
31. Mr. A book author in Filipino resident after laxity receive P50 for every book sold by his
publisher for the year ending December 31, 2020 total book sold by publisher was 3000 capital
much amount to be held by publishing it relation with that or your kids to be received by Mr. A?
Solution: 50 x 3K = 150K x 10% = 15000
32. Mr. Inman resident gauge in business receive a dividend from a domestic corporation
amounting to 15,000 net a final tax because I’m out of dividend before withholding of tax
amounted to?
Solution: 15K/ 75% = 20,000
33. Mr. is so I let classified as capital asset so no value and farewell in assessor office rest done
this selling Mr. a paid 45,000 gain stock. how much is amount paid for documentary stamp tax?
Solution: 45K x 25% = 11,250
34. The resident citizen was declared as the first qualifier for semifinals for the annual singing
contest in there brgy. prize mounting to 10,000 was from is for her as a wiener the organizer is
to withhold a certain amount to file tax for her price how much will it be? 0
35. Which of the following is true regarding the capital gain tax liability of corporations?
I.
A resident for incorporation is subject to 15% capital gain tax on its capital gain on sale
of shares of its own chairs directly to buy
II.
A domestic corporation is subjected to 6% capital gains tax on gains of sale of any of in
capital asset suited in the Philippines
III.
A domestic corporation is not subject to 15% capital gains tax on its capital gain on sale
of shares of was made through the local stock exchange
III ONLY
TAX Q3: UNIT 3
PART I
1. 13th month, pay 14th month pay, 15th month pay etc.
ANSWER: D. Part of 13th month pay and other benefits subject to P 90,000 limit
2. Hazard pay for regular employees.
ANSWER: A. Regular and supplementary compensation subject to RIT
3. De minimis benefits in excess of the prescribe limit for rank & file employees.
ANSWER: D. Part of 13th month pay and other benefits subject to P 90,000 limit
4. Employers SSS/GSIS contribution.
ANSWER: E. Exempt or non- taxable benefits, other than de minimis benefits
5. Liquidated Representation and transportation Allowances
ANSWER: A. Regular and supplementary compensation subject to RIT
6. Uniform allowance amounting to P5,000 every year
ANSWER: B. De minimis benefits exempt from income tax
7. Use of Company registered car by the medical sales representative selling medicines the
various hospitals and doctors.
ANSWER: E. Exempt or non- taxable benefits, other than de minimis benefits
8. Educational assistance to dependence of employees were dependents applied for under
a competitive scholarship scheme.
ANSWER: E. Exempt or non- taxable benefits, other than de minimis benefits
9. Contributions to PERA accounts.
ANSWER: E. Exempt or non- taxable benefits, other than de minimis benefits
10. Separation pay of a resigned employee
ANSWER: A. Regular and supplementary compensation subject to RIT
11. 10 days monetized unused vacation leave credits for private employees
ANSWER: B. De minimis benefits exempt from income tax
12. Monthly rice allowance amounting to P2000
ANSWER: B. De minimis benefits exempt from income tax
13. Personal economic relief allowance of P2000 per month for government employees
ANSWER: E. Exempt or non- taxable benefits, other than de minimis benefits
14. Laundry allowance amounting to P1000 per month. The amount in excess of legal limit
ANSWER: B. De minimis benefits exempt from income tax
15. Stock options granted to employee for higher profit generated
ANSWER: A. Regular and supplementary compensation subject to RIT
16. Overtime pay of regular employees
ANSWER: A. Regular and supplementary compensation subject to RIT
17. SSS/GSIS benefits
ANSWER: E. Exempt or non- taxable benefits, other than de minimis benefits
18. Benefits received by an employee by virtue of collective bargaining agreement
ANSWER: B. De minimis benefits exempt from income tax
19. Monthly allowance for quarters and meals
ANSWER: A. Regular and supplementary compensation subject to RIT
20. Sales commission
ANSWER: A. Regular and supplementary compensation subject to RIT
21. Compensation for lost profits in Lost salaries
ANSWER: A. Regular and supplementary compensation subject to RIT
22. Profit sharing at year end
ANSWER: A. Regular and supplementary compensation subject to RIT
23. Night Shift differential pay for minimum wage earners
ANSWER: E. Exempt or non- taxable benefits, other than de minimis benefits
24. House maids and drivers provided to CEO of the company
ANSWER: C. Fringe benefits subject to FBT
25. Free postpaid mobile plans for department supervisors considered necessary for
business communication purpose.
ANSWER: E. Exempt or non- taxable benefits, other than de minimis benefits
Part II
1. 10 days monetized unused vacation leave credits for private employees
C. Exempt/exclusions from gross income
2. Compensation for personal injuries and sickness
C. Exempt/exclusions from gross income
3. Interest in Proceeds of life insurance
B. Regular income tax
4. Taxable prizes amounting to P10,000 and below
B. Regular income tax
5. Sales commission
B. Regular income tax
6. Overtime pay of regular employees
B. RIT
7. Property insurance proceeds in excess of tax base of the property insured
B. Regular income tax
8. SSS/GSIS benefits
C. Exempt/exclusions from gross income
9. Gain on redemption of mutual funds
C. Exempt/exclusions from gross income
10. Winnings from professional boxing by a professional boxer
B. Regular income tax
11. Compensation for lost profits and lost salaries
B. Regular income tax
12. Retirement benefits under RA 7641. The employee is only 45 years old upon retirement
B. Regular income tax
13. Prizes and awards from Anak TV Seal Award for Makabata Actor of the year
C. Exempt/exclusions from gross income
14. Proceeds from life insurance representing return on premiums
C. Exempt/exclusions from gross income
15. PCCSO Lotto Winnings amounting to 10k and below
C. Exempt/exclusions from gross income
Part III
1.) Employee is entitled to the following benefits for the year 2020.
13th mos pay 40,000
14th month pay 40,000
De minimis benefits in excess of the legal limits 20,000
Homoraria for special projects 10,000
Year end- end bonus and profit sharing 10,000
How much is the amount subject to regular tax after applying the exemption of 90,000
for 13th month pay and other benefits?
Answer: 30,000
2.) Mr. AAA has gross salaries amounting to P30,000 per month. The following deductions are
noted:
SSS Premiums P1,700
Phil health P300
HDMF P200
Union Dues P100
Withholding Tax P200
Salary deductions for loans P 2,000.
How much is the total exclusions from the gross salary income for the month?
Solution: 1,700 + 300 + 200 + 100 = 2,300
3.) XYZ Corporation paid for the monthly rental of residential house of its branch employee
amounting to P204,000. How much is the fringe benefit expense of the month?
Answer: 204,000
4.) Mr. A, a rank and file employee from private corporation monetized his unused vacation
leave credits for the year amounting to P15,000. Monetized leave is for 15 days accumulated
leaves. How much is the amount taxable on the monetization (ignore the P90,000 limit for the
13th month pay and other benefits)?
Answer: 5,000
Solution: 15000/15 days = 1000 x 5 = 5000
5.) Mr. A was awarded P400,000 by the court in its case against Mr. B who accidentally stabbed
Mr. A while eating in a restaurant. The P400,000 os broken down as follows:
Hospitalization bills and medicines P150,000
legal fees and other expenses P50,000
Physical damages, sleepless nights and similar damages P100,000
Lost salaries P100,000.
How much is the amount subject taxable?
Solution:
Gross
Hospital 150,000
Legal fees 50,000
Physical 100,000
Taxable=100,000
400,000
(300,000)
6.) XYZ Corporation extended a loan of its Chief Finance Manager amounting to P1,000,000
payable in one year. Interest imposed by the company is P40,000. Calculate the amount of
taxable interest forgone as a fringe benefit of the company to the CFM.
Answer: 1,000,000 x 0.12 = 120,000 – 40,000 = 80,000
7.) XYZ Corportion gave the following fringe benefits to its employees: P1,000,000 salaries to
rank and file employees; P1,800,000 salaries to managerial employees; P54,400 De minimis
benefits to rank and file employees; P27,200 De minimis benifits to managerial employees;
P102,000 Fringe benifit to rank and file employees; P170,000 Fringe benifits to managerial
employees. How much is the total allowable deduction from business income of the XYZ
Corporation?
Answer:
1,000,000 + 1,800,000 + 54,400 + 27,200 + 102,000 + 170,000 = 3,153, 600 + 91538 = 324,5138
8.) XYZ Corportion gave the following fringe benefits to its employees: P1,000,000 salaries to
rank and file employees; P1,800,000 salaries to managerial employees; P54,400 De minimis
benefits to rank and file employees; P27,200 De minimis benifits to managerial employees;
P102,000 Fringe benifit to rank and file employees; P170,000 Fringe benifits to managerial
employees. How much is the fringe benifit tax?
Answer: 170,000 / 65% x 35% = 91,538
Solving
1.A dealer in securities sold unlisted shares of stocks of a domestic corporation in 2018 and
derived a gain of 500,000 therefrom. The gain is
Answer: Taxable at 30% regular corporate income tax based on net taxable income
2.Lisa sold a residential house and lot held for 10,000,000 to her friend. Its FMV when she
inherited it from her father was 12,000,000 although its present FMV is 15,000,000. The tax on
the above transaction is:
Answer:900,000 Capital Gains Tax
Solution : 15,000,000 x 6% = 900,000
3.Alex, a resident citizen, disposed the following shares of stock of a domestic corporation
whose shares are not listed and traded in the local stock exchange:
Date of Sale
Jan. 15, 2019
Feb. 14, 2019
Cost
80,000
175,000
Selling Price
135,000
150,000
Mar. 30, 2019
256,000
360,000
The Capital Gains Tax on the Jan. 15, 2019 sales is?Answer:8,250Solution : 135k – 80k x 15% =
8,250
4.Lisa sold a residential house and lot held for 10,000,000 to her friend. Its FMV when she
inherited it from her father was 12,000,000 although its present FMV is 15,000,000. Assuming
the house and lot was Lisa’s principal residence and she used ½ of the proceeds to buy a new
principal residence with eighteen (18) months after the above sale. Assume further that Lisa
properly informed the BIR about the sale. It shall be:
Answer: Subject to 450,000 Capital Gains Tax
5M / 10M x 15M = 7.5M (Taxable portion) x 6% = 450,000
5. Alex, a resident citizen, disposed the following shares of stock of a domestic corporation
whose shares are not listed and traded in the local stock exchange:
Date of Sale
Jan. 15, 2019
Feb. 14, 2019
000Mar. 30, 2019
Cost
80,000
175,000
256,000
The Capital Gains Tax on the Feb. 14, 2019 sale is:
Answer:0
Solution: 150k – 175k = (25k) loss
Selling Price
135,000
150,000
360,000