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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
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*[May 2024] 00-Diagnostic Examination
Diagnostic Examination
Taxation (TAX)
Submissions
Here are your latest answers:
Question 1
Proceeds of insurance taken by ABC Corporation on the life of Nicanor, Chief Financial Officer of the company, to indemnify Inday, the wife and only
beneficiary of Nicanor against loss in case of his death is:
S1: Exempt from income tax
S2: The premium paid is exempt from income tax, but the excess of premium received by Inday upon death of Nicanor is taxable as part of her gross income.
S3: The whole amount is part of gross income subject to regular income tax
Response: b. Only S2 is true
Feedback: Reason: S2 – all proceeds received from life insurance are exclusions from gross income on the part of Inday. S3 - proceeds from life insurance are
EXCLUSIONS from gross income.
Correct answer: a. Only S1 is true
Score: 0 out of 1 No
Question 2
Percentage tax is:
S1: A business tax
S2: An ad valorem tax
Response: a. Only S1 is true
Correct answer: c. Both are true
Score: 0 out of 1 No
Question 3
Jeff Bezos, the world's richest person is an american based in the California.
Response: RA
Correct answer: NRANETB
Score: 0 out of 1 No
Question 4
If a professional is both a CPA and a Doctor, he has to pay two professional taxes
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 5
Capital loss can be deducted from any gross income.
Response: True
Feedback: Can be deducted only up to capital gain
Correct answer: False
Score: 0 out of 1 No
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Question 6
Juicy Wiggle Corporation will remove from customs 50 cases of Four Seasons Powdered Juice using caloric and non-caloric sweetener containing 144 packs by
25 grams. Each 25 grams pack can make 1 Liter (per serving suggestion appearing on the label)
How much is the total excise tax to be paid before removal?
Response: P 21,600
Feedback:
No. of Cases
Multiplied by no. of bottle per case
Total no. of bottles
Multiplied by content per bottle
Total Volume in Liter
Multiplied by Specific Tax Rate
Total excise tax to be paid before removal
50
144
7,200
1L
7,200L
6.00
P43,200
Correct answer: P 43,200
Score: 0 out of 1 No
Question 7
On August 12, 2022, Nicanor called John and told him that he intends to donate his car worth P 1,0000,000 to him (John). Within the same day, John accepted
Nicanor’s offer. On August 15, 2022, they executed a deed of donation, and the car was delivered by Nicanor to John. The 30-day period of filing and paying the
donor’s tax will run after August 15, 2022.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 8
As a result of the accident, Nicanor was paid money. The money he received is:
Response: Exclusions from Gross Income
Correct answer: Exclusions from Gross Income
Score: 1 out of 1 Yes
Question 9
Statement 1: Phil Health is exempted from corporate income tax.
Statement 2: Cebu Pot Authority, a Government-Owned and Controlled Corporation is exempted from corporate income tax.
Response: Statement 2 is true but, Statement 1 is false
Correct answer: Statement 1 is true but, Statement 2 is false
Score: 0 out of 1 No
Question 10
Nicanor won Php 5,000 in Philippine Lotto. The amount is?
Response: Subject to final tax in the amount of 20%
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Correct answer: Exempt from taxation
Score: 0 out of 1 No
Question 11
Proceeds of life insurance taken by the decedent upon his own life are included in the gross estate if the designation of a third person as a beneficiary is
irrevocable.
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 12
Banko De Pera, earned parking fees from leasing its spaces to some of its regular bank customers. Banko De Pera is liable to 7% Gross Receipts Tax.
Response: True
Feedback: Basis: Section 121, NIRC.
Correct answer: True
Score: 1 out of 1 Yes
Question 13
BKTD Corporation, a domestic corporation, holds 20% of the stocks of EU Corporation, a non-resident foreign corporation. BKTD is a wholly owned subsidiary
of GKCM Corporation, a non-resident foreign corporation. BKTD’s holding in EU Corporation started in 2018, and the holding period is uninterrupted. On July
1, 2021, BKTD Corporation received dividends from EU Corporation amounting to P 2,000,000 and subsequently paid out dividends on December 31, 2022, in
the amount of P 1,500,000. The remaining P 500,000 has not been used in any qualified activity for exempt foreign-sourced dividends.
The P 1,500,000 portion of dividend income shall be treated as tax exempted since this was properly utilized within 2022.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 14
What is the maximum number of days a taxpayer can submit the documents related to BIR tax audit without being issued a subpoena?
Response: 30 days
Feedback: Checklist is 10 days, First Notice 10 days, Final Notice 10 days
Correct answer: 30 days
Score: 1 out of 1 Yes
Question 15
Statement 1: A donation inter vivos by husband and wife, jointly during the marriage is a donation of community property that will require one computation of
the donor’s tax, if the spouses are under the system of absolute community of property.
Statement 2: A donation inter vivos by husband and wife, jointly during the marriage is a donation of exclusive property by the either spouse that will require one
computation of the donor’s tax, if the spouses are under the system of conjugal partnership of gains.
Response: Both statements are false
Correct answer: Both statements are false
Score: 1 out of 1 Yes
Question 16
Koya Sotto, a young and promising Filipino basketball player was invited to play professionally in the United States. He was paid $1 Million. His income is
derived from ____ and it is:
Response: Within, Taxable
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Correct answer: Without, Exempt
Score: 0 out of 1 No
Question 17
The provincial, city or municipal governments are not subject to taxation. This is based on
Response: Inherent limitation
Correct answer: Inherent limitation
Score: 1 out of 1 Yes
Question 18
ABC., Co. gave fringe benefits to employees as follows:
To its Clerks and Janitors
P 100,000
To its Area Managers
650,000
How much is the total of the deductions of ABC., Co.?
Response: P 1,000,000
Feedback:
Monetary value
P 650,000
Divided by
65%
Gross-up monetary value
1,000,000
Multiply by Fringe benefit rate
35%
Fringe benefit tax
P 350,000
Fringe benefit given to Clerks and Janitors (Rank and File)
P 100,000
Fringe benefit given to Area Managers
(Managers
)
Fringe benefit tax (please refer to the computation above)
Total Deductions
650,000
350,000
P 1,100,000
Correct answer: P 1,100,000
Score: 0 out of 1 No
Question 19
Nicanor earned interest income from the 10-year time deposit he made in December 2019 in the amount of Php 10,000 at XYZ Bank, a local bank. Due to
emergency, he cancelled the deposit and paid bank charges for early termination in 2021. The interest income is subject to?
Response: 10% final tax
Correct answer: 20% final tax
Score: 0 out of 1 No
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Question 20
Statement 1: Resident foreign corporations are subject to income tax based on net income from sources within and without the Philippines.
Statement 2: Non-resident foreign corporations are subject to income tax based on net income from sources within the Philippines.
Response: Both statements are false
Correct answer: Both statements are false
Score: 1 out of 1 Yes
Question 21
ABC Corp. is a domestic corporation. It sold goods to XYZ Corp., a PEZA-registered export enterprise based in Cavite Economic Zone. ABC Corp. billed XYZ
Corp. Php 1,000,000 upon delivery to XYZ Corp. XYZ Corp. paid Php 1,000,000. Subsequently, XYZ Corp. exported the goods to GHI Corp. based in the
United States. The sale by XYZ Corp. is:
Response: Subject to percentage tax
Correct answer: Subject to 0%
Score: 0 out of 1 No
Question 22
ABC Corp. owns a chain of restaurant business. It receives royalties from franchising regularly based from sales. Royalty income is:
Response: Passive income subject to final tax
Correct answer: Inclusions in / Items of Gross Income
Score: 0 out of 1 No
Question 23
One Piece Corporation (OPC) was identified as a top withholding agent by the BIR. One day, the accounting department, headed by Rico, requested the company
to treat all of its staff a McDonalds meal amounting to P 1,000 because it is already tax season, and the employees are working 18-hours a day. The company
granted the request. Within the taxable year, the company transacted with McDonalds seven times for buying McDonalds meals with a total amount of Php 8,000.
As a result of purchases during the taxable year, the company is not required to withhold 2% expanded withholding tax.
Response: False
Feedback: McDonalds is considered as deemed a regular supplier. RR-11-2018 requires a minimum of 6 transactions before a supplier be considered as a regular
supplier. Thus, OPC is required to withhold.
Correct answer: False
Score: 1 out of 1 Yes
Question 24
Tax treaty relief application (TTRA) shall be filed with:
Response: International Tax Affairs Division (ITAD)
Correct answer: International Tax Affairs Division (ITAD)
Score: 1 out of 1 Yes
Question 25
If the payor/withholding agent failed to make the withholding, he/it is excused if the payee/income earner reported the income and paid the tax due thereon.
Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 26
Sale of apple by a local vendor in wet market is subject to VAT
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Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 27
In 2022, XYZ Corporation paid for the monthly rental of a residential house of Nicanor, its senior manager, amounting to P 65,000. How much is the gross-up
monetary value of the fringe benefit for the first quarter of the year 2022?
Response: a. P 195,000
Feedback: Answer: P 150,000
Solution:
Monetary value (per quarter) P 97,500
Divided by 65%
Gross-up monetary value P 150,000
Correct answer: d. Some other answer.
Score: 0 out of 1 No
Question 28
Nicanor, a Filipino citizen residing in the United States invested in XYZ Corporation established under the laws of the Philippines. The Corporation, which
earned gross income (for the last three years) in the United States amounting to Php 100M and another Php 200M within the Philippines declared dividends.
Nicanor will receive Php 100,000.00. XYZ Corp is:
Response: RFC
Correct answer: DC
Score: 0 out of 1 No
Question 29
Decision of a Division of the CTA may be reversed or modified except by the affirmative vote of ________________ of the CTA en banc acting on the case.
Response: 6 Justices
Correct answer: 4 Justices
Score: 0 out of 1 No
Question 30
The party who desires to introduce in evidence voluminous documents or long accounts must, upon motion and approval by the Court, refer the voluminous
documents to an independent Certified Public Accountant (CPA). The authority to conduct an audit and, thereafter, testify relative to such summary and
certification is given by the Court by issuing a:
Response: Authorization Letter
Correct answer: Commission
Score: 0 out of 1 No
Question 31
Which is FALSE?
S1- If the BIR received no reply to the PAN, it will issue the FLD/FAN after the lapse of the fifteen day period
S2-If the taxpayer replied to the PAN, the BIR can issue the FLD/FAN even before the lapse of the fifteen day period
S3 - PAN is mandatory in all cases of assessment otherwise there is violation of due process
S4 - The taxpayer is not required to reply to the PAN
Response: S4
Correct answer: S3
Score: 0 out of 1 No
Question 32
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Nicanor acquired his principal residence in 2011 at a cost of php 2,000,000.00. He sold the property on January 1, 2022, with a fair market value of Php
10,000,000.00 (zonal is higher than assessed) for a consideration of Php 8,000,000.00. Within the 18-month reglementary period, he purchased his new principal
residence at a cost of Php 14,000,000.00.
Compute the Adjusted Cost Basis of New Principal Residence:
Response: c. P 6,000,000
Feedback: Solution
Historical cost of OLD 2,000,000
Add: Additional cost to acquire NEW:
Cost to acquire NEW 14,000,000
Less: GSP of OLD 8,000,000 6,000,000
ADJUSTED COST BASIS OF NEW PR 8,000,000
Correct answer: b. P 8,000,000
Score: 0 out of 1 No
Question 33
A domestic corporation made available the following financial information covering TY 2021:
Statement of Financial Position Statement of Comprehensive Income
Assets: Gross receipts 10,000,000
Current 200,000,000 Cost of service 6,000,000
Non-current (land/bldg) 500,000,000 Gross profit 4,000,000
Liabilities 250,000,000 Expenses 2,000,000
Stockholders’ Equity 450,000,000 Net income 2,000,000
The income tax due is:
Response: b. P 400,000
Feedback: Statement of Comprehensive Income
Gross receipts 10,000,000
Cost of service 6,000,000
Gross profit 4,000,000
Expenses 2,000,000
Net income 2,000,000
CITR 25%
Income tax due 500,000
Correct answer: a. P 500,000
Score: 0 out of 1 No
Question 34
Wisely So, a Filipino Chess Wizard was born in the Philippines and then went to the United States where he was later naturalized as an American. He traveled all
over the world, won championships and received the cash prizes. His income is derived from _____ and it is:
Response: Without, Exempt
Correct answer: Without, Exempt
Score: 1 out of 1 Yes
Question 35
Nicanor sold his land worth P 5,000,000 to Inday. Assuming Nicanor is engaged in the business of real estate, the sale of land is subject to capital gains tax.
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 36
Hyun Bin or Captain Ri, a South Korean Actor, travelled to the Philippines from January 1, 2019 to June 30, 2019. In December 1, 2019, he returned to the
Philippines to travel again. He left on December 30, 2019. Hyun Bin is classified as:
Response: Non-resident alien not engaged in trade or business
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Correct answer: Non-resident alien engaged in trade or business
Score: 0 out of 1 No
Question 37
ABC Bank collects charges from its Dollar Account depositors for any bank-related services. The charges are:
Response: VAT-exempt
Correct answer: VAT-exempt
Score: 1 out of 1 Yes
Question 38
Nicanor is a managerial employee of ABC Corp. ABC Corp. provides 20 vacation leave credits and 10 sick leave credits which can be monetized at the option of
the employee.
The monetization of the 10 days vacation leave credits is:
Response: Taxable
Correct answer: Exempt
Score: 0 out of 1 No
Question 39
A standard deduction in the amount of Php 5,000,000 shall be allowed for a non-resident alien without the need of substantiation.
Response: False
Feedback: P 500,000
Correct answer: False
Score: 1 out of 1 Yes
Question 40
XYZ Corporation, a newly organized corporation in the Philippines, issued on November 07, 2021 10,000(par value @ P 50.00 per share) shares of stocks to one
of its incorporators, Mr. Nicanor for P 800,000.
Supposing after 10 months, Nicanor sold the said shares for P 1,000,000, how much is the documentary stamp tax due on the sale transaction made by Nicanor, if
any?
Response: a. P 7,500
Feedback: Solution:
Par value of shares (10,000 x 50) P 500,000
Divided by 200
Total 2,500
Multiply by 1.5
DST due 3,750
Correct answer: a. P 7,500
Score: 1 out of 1 Yes
Question 41
Statement 1: Deductions are liberally construed in favor of the taxing authority.
Statement 2: Deductions are strictly construed against the taxpayers.
Response: Both statements are false
Correct answer: Both statements are true
Score: 0 out of 1 No
Question 42
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Which of the following statements is/are true regarding transfer taxes?
I. A donation mortis causa conveys no title or ownership to the transferee before the death of the transferor.
II. Strictly speaking, the assessment of an inheritance tax directly involves the administration of a decedent’s estate.
III. The law in force at the time of death of the decedent is controlling, notwithstanding postponement of the actual possession or enjoyment of the property
by the beneficiary.
Response: I and III
Correct answer: I and III
Score: 1 out of 1 Yes
Question 43
S1: Lubricating oils and greases produced from basestocks and additives on which the excise tax has already been paid shall be subject to excise tax.
S2: Unless otherwise provided by special laws, if the denatured alcohol is mixed with gasoline, the excise tax on which has already been paid. only the alcohol
content shall be subject to the tax herein prescribed.
S3: The removal of denatured alcohol of not less than one hundred eighty degrees (180') proof (ninety percent (90%) absolute alcohol) shall be deemed to have
been removed for motive power unless shown otherwise.
Response: Only S3 is false
Feedback: S1: Lubricating oils and greases produced from basestocks and additives on which the excise tax has already been paid shall no longer be subject to
excise tax. RR-2-2018
Correct answer: Only S1 is false
Score: 0 out of 1 No
Question 44
:On July 16, 2018, Nicanor executed a deed of donation in favor of inday (Nicanor’s girlfriend), wherein he will donate his house and lot to the latter. Being a
stranger, the proper donor’s tax rate that Nicanor will have to pay is 30% of the net gift.
Response: True
Feedback: Answer is False. Train Law is the law in force at the time of completion of gift
Correct answer: False
Score: 0 out of 1 No
Question 45
In 2019, ABC corporation thru its board of directors, approved a resolution which gives its supervisors a free use of the company’s residential condominium in
Makati City.
The following data were revealed in the resolution about the condominium:
Fair Market value of the condominium (per tax declaration), P 1,000,000
Zonal Value (per BIR assessment), P2,000,000
Fair market value (per Appraisal value), P2,500,000
Assume that the residential condominium was purchased by the company in installment for the supervisors’ free use. Acquisition cost exclusive of interest is P
3,000,000. At what amount should the company report as the quarterly monetary value of fringe benefit?
Response: P 18,250
Feedback:
Highest is P 3M
= P3,000,000 x 5% x 50% / 12 mos = P6,250 x 3 mos = P 18, 250
Correct answer: P 18,250
Score: 1 out of 1 Yes
Question 46
Nicanor is an architect. His reported total gross receipts in 2023 amounted to Php 5,400,000.00 (net of applicable withholding tax) while the cost of service and
operating expenses were Php 2,550,000.00 and Php 1,550,000.00, respectively. Since he does not keep receipts of his purchases, his Accountant advised to avail
of the 40% OSD in his 1st Quarter ITR. Total tax withheld (expanded withholding tax) by his clients is equivalent to 10% from which he received tax certificates
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(BIR Form 2307s).
During filing annual ITR, without getting professional advice, he filed his own return and opted 8% preferential taxation. What is Nicanor’s CORRECT income
tax payable in 2023? Disregard payment in his original return filed.
Response: a. Php 282,500
Feedback: Solution:
Gross receipts 6,000,000 (5.4M/.90% [100% -10% wtxrate])
OSD (40% of GR) 2,400,000
Taxable income 3,600,000
Tax due
2M-8M P 402,500
30% of excess of 2M (1.6M x 30%) 480,000
Income tax due 882,500
Less: 2307 600,000
Income tax payable 282,500
Correct answer: a. Php 282,500
Score: 1 out of 1 Yes
Question 47
The province may levy and collect not more than ten percent (10%) of fair market value in the locality per cubic meter of ordinary stones, sand, gravel, earth, and
other quarry resources. The share of the province in the proceeds of the tax on sand, gravel and other quarry resources is:
Response: 25%
Correct answer: 30%
Score: 0 out of 1 No
Question 48
What is the effect if the taxpayer replied to the PAN within the prescriptive period to reply?
Response: The BIR may issue a follow-up letter
Correct answer: The BIR may issue the FLD/FAN at any time after the reply
Score: 0 out of 1 No
Question 49
The following are non-fiscal incentives of a BOI registered enterprise, except:
S1. Foreign nationals may be employed in supervisory, technical or advisory positions within five (5) years from a project’s registration
S2. Income tax holiday for a number of years depending on whether the status of the registrant is a pioneer or non-pioneer
S3. Registered export-oriented enterprise shall have access to the utilization of the bonded warehousing system in all areas.
S4. Simplification of customs procedures for the importation of equipment, spare parts, raw materials, and supplies and exports of processed products of
registered enterprises in the operations of their bonded warehouses.
S5. There shall be no restrictions on the use of consigned equipment provided a re-export bond is posted.
Response: S3
Correct answer: S2
Score: 0 out of 1 No
Question 50
Output VAT may be computed by Purchase price (VAT inclusive) multiply 3/28.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 51
ABC Corp wants to shift its accounting period from calendar to fiscal. The CIR has the power to change the accounting period
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Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 52
Inday, an employee of Beshie Corp., is receiving daily compensation in the amount of P2,500, net of mandatory contributions.
Assuming the Company has twenty-four working days (or equivalent to four weeks) January 2022, the total monthly withholding tax on compensation required to
be withheld for Inday’s salary is:
Response: d. P 10,765.44
Feedback: Solution:
Total taxable compensation ₱ 2,500.00
Less: Compensation Range (Minimum) 2,192.00
Excess ₱ 308.00
Withholding tax shall be computed as follows:
Predetermined Tax on ₱2,192.00 ₱ 356.16
Add: Tax on the excess (₱308.00 x 30%) 92.40
Total daily withholding tax ₱ 448.56
Multiply by (working days) 24
Total Monthly withholding tax 10,765.44
Correct answer: d. P 10,765.44
Score: 1 out of 1 Yes
Question 53
Facts: 7-Ilivin Ni Inday, a VAT registered entity sold P 224 (gross of VAT) worth of goods to Nicanor, a Non-VAT registered individual.
How much output VAT will 7-Ilivin Ni Inday will be remitted to the BIR as a result of the transaction?
Response: c. P 12
Feedback: Solution:
Gross receipt P 224 (gross of VAT)
Divided by 1.12
Gross receipt 200
Multiply by 12%
Output VAT 24
Correct answer: b. P 24
Score: 0 out of 1 No
Question 54
Nicanor, a Filipino citizen residing in the Philippines borrowed money from Inday, a Filipino working abroad. Interest income is Php 10,000.00. Inday is
Response: NRC
Correct answer: NRC
Score: 1 out of 1 Yes
Question 55
S1: All persons who are engaged in business shall secure from the Bureau of Internal Revenue an authority to print receipts or sales or commercial invoices
before a printer can print the same.
S2: No authority to print receipts or sales or commercial invoices shall be granted unless the receipts or invoices to be printed are serially numbered and shall
show, among other things, the name, business style, Taxpayer Identification Number (TIN) and business address of the person or entity to use the same, and such
other information that may be required by rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner.
Response: Both are true
Feedback: Specific rule under Section 238 of NIRC, as amended.
Correct answer: Both are true
Score: 1 out of 1 Yes
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Question 56
S1: Purely electric vehicles shall be exempt from the excise tax on automobiles.
S2: Hybrid vehicles shall be exempt from the excise tax on automobiles.
Response: Both are false
Feedback: S2: Hybrid vehicles shall be subject to 50% of the applicable excise tax on automobiles. RR-24-2018
Correct answer: Only S2 is false
Score: 0 out of 1 No
Question 57
S1. An instrument, document or paper with unpaid DST, shall still be recorded, and shall it or any copy thereof or any record of transfer of the same, it will be
admitted or be used in evidence in any court, provided the taxpayer will pay the same.
S2: Certificates of oaths administered by any government official in his official capacity or acknowledgement by any government official in performance of his
official duty is subject to DST.
Response: Both are false
Correct answer: Both are false
Score: 1 out of 1 Yes
Question 58
. John is an OCW based on Saudi Arabia. From January to June 2022, he earned Php 2 Million from his business in the Philippines and another Php 2 Million
from his employment abroad. On July 1, 2022, he returned to the Philippines to live permanently herein. Upon his return and until the end of the year, he earned
Php 1 Million from his business and another Php 1 Million from sources outside the Philippines.
How much is John’s total taxable income?
Response: c. P 2,000,000
Feedback: Solution
Income from business (Jan-Jun 2022) P 2,000,000
Income from business (Jul-Dec 2022) 1,000,000
Income from outside the Phil (Jul-Dec 2022) 1,000,000
Total income from within P 4,000,000
Correct answer: a. P 4,000,000
Score: 0 out of 1 No
Question 59
For purposes of computing the tax, gross Income means the gross sales or gross revenues derived from business activity within the ECOZONE, net of sales
discounts, sales return and allowances and minus costs of sales or direct costs but before any deduction is made for administrative expenses or incidental losses
during a given taxable period.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 60
In the filing of income tax returns for non-individual taxpayers (assuming the taxpayer employs calendar year), the deadlines are:
1st quarter ITR 60 days after quarter
2nd quarter ITR 60 days after quarter
3rd quarter ITR 60 days after quarter
Annual ITR Apr 15 (the following year)
Response: True
Correct answer: True
Score: 1 out of 1 Yes
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Question 61
Due to pandemic, the BIR allowed the filing of returns even outside the revenue jurisdiction of Revenue District Offices (RDOs). This is in accordance with the
principle related to Sound Tax System.
Response: True
Feedback: True. Administrative feasibility
Correct answer: True
Score: 1 out of 1 Yes
Question 62
Due to the confusion on the change of Percentage Tax rate under CREATE Law, the BIR may issue _____ to guide taxpayers on the application of the new rule
Response: Revenue Ruling
Correct answer: Revenue Memorandum Circular
Score: 0 out of 1 No
Question 63
1st - Withholding tax on compensation is computed using the graduated tax table based on daily, weekly, semi-monthly or monthly payments agreed upon by the
employer and the employee.
2nd - In annualization, annual tax is computed using the annual graduated tax table for individual taxpayers.
Response: Both are false
Correct answer: Both are true
Score: 0 out of 1 No
Question 64
The watch which was given to Nicanor as gift for his birthday considered as income for income tax purposes
Response: False
Feedback: The watch given to Nicanor falls under the definition of income as it gave Nicanor a flow of wealth. However, such income is excluded from the
computation of Gross income under Section 32 (b) (3) of the NIRC. In the final analysis, when asked if the watch given is an income, the answer is yes. But,
when asked if it is taxable, the answer is no under section 32 (b) (3) of the NIRC.
Correct answer: True
Score: 0 out of 1 No
Question 65
The Board of ABC Corp. (NRFC), located in USA, declared that all stockholders of record as of December 31, 2020 shall receive Php 100,000. XYZ Corp., a DC
is one of the stockholders. The dividends are?
Response: Subject to final tax in the Philippines
Correct answer: Subject to regular corporate income tax
Score: 0 out of 1 No
Question 66
Top Withholding Agents (TWAs) are not required to withhold if purchase of goods/services is casual and is made from a non-regular supplier.
Response: False
Feedback: If purchase is made to REGULAR SUPPLIER (six transaction during the current or previous year) even if amount is less than 10,000, withholding is
required.
Correct answer: True
Score: 0 out of 1 No
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Question 67
Under CREATE Law, the interest expense of a domestic corporation which is subject to 20% corporate income tax rate, will be deducted from its gross income in
its full amount since there is no difference in the income tax rate on the taxable income (20%) with the tax rate applied on the interest income subjected to final
tax (20%).
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 68
Non-VAT registered whose sales for the year exceed P 3,000,000 is
Response: c. Subject to percentage tax under Section 109 of the tax code, as amended by train law
Correct answer: d. Subject to 12% VAT under the tax code, as amended by train law
Score: 0 out of 1 No
Question 69
The purpose of requiring payments for applications of license is revenue generation.
Response: False
Feedback: Purpose is regulatory hence secondary only
Correct answer: False
Score: 1 out of 1 Yes
Question 70
ABC Corp. pays its accountant a monthly retainer fee of Php 10,000. Compute the EWT to be withheld: Note: Assume that accountant is registered as non-VAT
but has failed to submit the Sworn Declaration of Income to ABC Corp. at the start of the year.
Response: 2,000
Correct answer: 1,000
Score: 0 out of 1 No
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Home
*[May 2024] 00-Diagnostic Examination
Diagnostic Examination
Taxation (TAX)
Submissions
Here are your latest answers:
Question 1
Under Revenue Regulations 3-2022, Proprietary Educational Institutions (RA 11635) - refer to any private schools maintained and administered by private
individuals or groups, with an issued permit to operate as the case may be in accordance with existing laws and regulations from the: Department of Education
(DepEd); Commission on Higher Education (CHED); or Technical Education and Skills Development Authority (TESDA)
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 2
The following is the journal entry made by the Accounting Clerk of PRTC., INC.
(Debit) Fringe benefit expense
P650,000
(Debit) Fringe benefit tax expense
175,000
(Credit) Cash
P650,000
(Credit) Fringe benefit tax payable
175,000
Based on the said journal entry, the grossed-up monetary value of the fringe benefits given to the PRTC’s Manager is?
Response: P500,000.
Feedback:
Monetary value
P 325,000
Divided by
65%
Gross-up monetary value
Multiply by Fringe benefit rate
Fringe benefit tax
500,000
35%
P 175,000
Work Back approach
P 175,000 / 35%
= P 500,000 (GMV)
Correct answer: P500,000.
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Score: 1 out of 1 Yes
Question 3
Ms. Bea a licensed real estate broker comes to you with the following records and transactions:
Transaction #1. Land with TCT NO. 1900238 was sold to Mr. Bean for P 5,000,000 by Mr. Budotz on September 08, 2022, in Manila evidenced by a deed of sale
executed in Bulacan. The cost of the land is P 2,000,000 which is equal to its market value stated in the tax declaration and the property is located in Makati.
Transactions #2. Land with TCT No. 1877234 was sold to Mr Gerarld for P 10,000,000 by Mr. Joshua on November 04, 2022, in Cavite evidenced by a deed of
sale executed in Caloocan. The cost of the land is P 6,000,000 which is equal to its market value stated in the tax declaration and the property is located in Manila
Additional Information
• Bea called the respective RDO’s of each transaction to determine how much is the zonal value of each land sold. RDO’s reply is P 6,000,000 and P 9,800,000,
respectively.
• On December 14, 2022, Ms. Bea P 1,500,000 received her commission income from the above stated sellers. She incurred P 120,000 expenses in connection with
her work and P 20,000 for her cosmetics and make-ups for her appealing appearance. Ms. Bea is currently residing in Cubao.
In relation to transaction #1, How much is the capital gains tax due, if any?
Response: b. P 360,000
Feedback: Final tax of 6% based on higher of Gross selling price or current fair market value as determined in accordance with Section 6(E)
Solution:
Gross selling price = P 5,000,000
FMV per Tax declaration = P 2,000,000
Zonal Value = P 6,000,000
ZV of P 6,000,000 (Highest) x 6% = B. P 360,000
Correct answer: b. P 360,000
Score: 1 out of 1 Yes
Question 4
For income tax purposes, the profit from Nicanor’s investment in his asset is considered as income.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 5
Income tax paid can be claimed either as a tax credit or an expense at the option of the taxpayer.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 6
. John is an OCW based on Saudi Arabia. From January to June 2022, he earned Php 2 Million from his business in the Philippines and another Php 2 Million from
his employment abroad. On July 1, 2022, he returned to the Philippines to live permanently herein. Upon his return and until the end of the year, he earned Php 1
Million from his business and another Php 1 Million from sources outside the Philippines.
How much is John’s total taxable income?
Response: c. P 2,000,000
Feedback: Solution
Income from business (Jan-Jun 2022) P 2,000,000
Income from business (Jul-Dec 2022) 1,000,000
Income from outside the Phil (Jul-Dec 2022) 1,000,000
Total income from within P 4,000,000
Correct answer: a. P 4,000,000
Score: 0 out of 1 No
Question 7
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The Commissioner of Internal Revenue issued a BIR ruling to the effect that the transaction is liable to income tax and value added tax. Upon receipt of the ruling,
a taxpayer does not agree thereto. What is his proper remedy?
Response: a) File a petition for review with the Court of Tax Appeals within thirty (30) days from receipt thereof;
Feedback: Basis: Section 4, NIRC.
Correct answer: c) File an appeal to the Secretary of Finance within thirty (30) days from receipt thereof;
Score: 0 out of 1 No
Question 8
Compensation income earner is disqualified from availing the 8% optional income tax.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 9
S1. An instrument, document or paper with unpaid DST, shall still be recorded, and shall it or any copy thereof or any record of transfer of the same, it will be
admitted or be used in evidence in any court, provided the taxpayer will pay the same.
S2: Certificates of oaths administered by any government official in his official capacity or acknowledgement by any government official in performance of his
official duty is subject to DST.
Response: Both are false
Correct answer: Both are false
Score: 1 out of 1 Yes
Question 10
Interest income of Nicanor from peso bank deposit in ABC Bank is Php 10,000. The final tax required to be withheld is?
Response: 0
Correct answer: 2,000
Score: 0 out of 1 No
Question 11
Pamela, a resident citizen, made the following donations during the current taxable year:
· House and lot in the Philippines, not classified as a capital asset, acquired three years ago at a cost of P5,500,000 with a fair market value of P7,000,000 at the
time of donation.
· Bonds with a face value of P5,000,000 issued by a foreign corporation with business situs in the Philippines and quoted at 105 in the stock market.
· A five-hectare fishpond, located in Cebu City, currently valued at P3,000,000 to his daughter for her marriage to be celebrated on June 28 of the same year. The
property is mortgaged with the First Commercial bank for P500,000 which will be assumed by the donee.
· Commercial building in Australia with a prevailing market value of P5,000,000 to his son as a birthday gift. The donor’s tax paid in Australia was P450,000.
· Shares of stocks of a foreign corporation with a total quoted price of P3,000,000 as an additional gift to the marriage of his daughter in march 20. The principle
of reciprocity applied to this property and the foreign corporation has 35% of its business operation in the Philippines.
· A parcel of land located in Mandaue City with a fair market value of P5,000,000 was sold for P3,000,000. The land is used in business by the taxpayer. The
BIR found out that the it was given to his son with the real intention to give it for free.
If the donor is a non-resident alien and there is reciprocity, how much is the gross gift?
Response: P20,250,000
Correct answer: P12,000,000
Score: 0 out of 1 No
Question 12
A domestic corporation made available the following financial information covering TY 2021:
Statement of Financial Position Statement of Comprehensive Income
Assets: Gross receipts 15,000,000
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Current 20,000,000 Cost of service 5,000,000
Non-current (land/bldg) 10,000,000 Gross profit 10,000,000
Liabilities 5,000,000 Expenses 5,000,000
Stockholders’ Equity 25,000,000 Net income 5,000,000
Based on the foregoing, the proper corporate income tax rate that is applicable is:
Response: a. 20%
Feedback: Reason: Total assets excluding the land did not exceed P 100,000,000 and the Net income did not exceed the P 5,000,000
Correct answer: a. 20%
Score: 1 out of 1 Yes
Question 13
Martin, a resident citizen, is an employee of AMC Corporation. He received the following from his employer in 2023:
Basic monthly compensation P 75,000
13th month pay 75,000
Transportation allowance (P 5,000 per month) 60,000
Productivity incentive bonus 10,000
Christmas bonus 30,000
Uniform allowance 26,000
Actual medical allowance 10,000
Rice subsidy 36,000
Note: There is no labor organization in the company. Ergo, no Collective Bargaining Agreement.
How much exempt 13th month pay, and other benefits will you deduct from the gross compensation of Martin as non-taxable/exempt compensation?
Response: b. P 75,000
Feedback: Solution:
De minimis Excess de minimis
Christmas bonus 5,000 25,000
Uniform allowance 6,000 20,000
Actual medical allowance 10,000 0
Rice subsidy 24,000 12,000
Total 45,000 57,000
Excess de minimis 57,000
13th month pay 75,000
Productivity incentive pay 10,000
Total 13th month pay and other benefits 142,000
Exempt 13th month pay and other benefits 90,000 (max exempt 13th month pay and other benefits under train law)
Correct answer: a. P 90,000
Score: 0 out of 1 No
Question 14
No person shall be denied equal protection of the law.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 15
The following are not considered as allowable deductions in determining the net taxable estate, except:
Response: Pabling, died on June 12, 2019, issued a promissory on June 9, 2016 to Marcus. The note was duly notarized, however, the executor of the estate of
Pabling was not able to trace how Pabling disposed the proceeds of the loan.
Correct answer: Narcing, died on August 18, 2018, obtained a loan from Yvonne on January 1, 2016. Narcing and Yvonne were not able to visit a notary public.
Janine, the daughter of Narcing, the executor, was able to submit a statement indicating that the proceeds were used to pay her tuition fee.
Score: 0 out of 1 No
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Question 16
Nicanor is a professional while Inday is engaged in the sale of goods. If both earn income, both should be taxed alike. This is based on equity in taxation
Response: True
Feedback: This is UNIFORMITY in taxation not EQUITY in taxation
Correct answer: False
Score: 0 out of 1 No
Question 17
Nicanor took a life insurance at 21 years old requiring him to pay Php 30,000 per year. The term of the policy is ten years. If he dies at any time, his beneficiary will
get the proceeds. He outlived the policy. Upon reaching the age of 60, he took out insurance getting Php 2M in the process. The Php 300,000 is:
Response: Capital gains subject to capital gains tax
Correct answer: Exclusions from Gross Income
Score: 0 out of 1 No
Question 18
In 2019, Nicanor created two (2) trusts for his daughter, Julia. During the year, the two trusts earned net income as follows:
Trust 1 P 4,000,000
Trust 2 P 6,000,000
Each of the trust filed their own income tax return and paid the corresponding income tax due as computed in their separate returns.
How much is the additional income tax payable of Trust 1?
Response: P 96,000
Feedback:
TRUST 1
Taxable Net income
P4,000,000
Tax due:
1st P2,000,000
P 490,000
Excess @ 32%
Tax due/paid
640,000
1,130,000
Versus allocated tax due
1,244,000**
Income Tax Payable-Trust 1
P 114,000
Share in the Consolidated Tax due:
Trust 1
(4/10) x P3,110,000*
1,244,000**
Correct answer: P 114,000
Score: 0 out of 1 No
Question 19
ABC Corporation, a keeper of garage, earned a gross revenue of P 4,000,000 in 2023. In 2024, it is now liable to:
Response: b. Common carrier’s tax
Feedback: Basis: Section 117, NIRC. Regardless of the amount of gross receipts, keepers of garage are liable to 3% common carrier’s tax
Correct answer: a. Value Added Tax
Score: 0 out of 1 No
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Question 20
In 2021, ABC Corp. borrowed money from the bank in the amount of Php 1 Million with an interest rate of 10%. ABC Corp. has interest income from bank
deposits in the amount of Php 50,000.00 from which final tax was withheld. Assume ABC Corp.’s tax rate is 25%. How much is the allowable interest expense?
Response: b. Php 100,000
Feedback: Solution:
Interest expense 100,000
Less: Interest income (FT) 50,000
Rate 20% 10,000
Allowable interest expense 90,000
Correct answer: a. Php 90,000
Score: 0 out of 1 No
Question 21
S1: John who is an Overseas Filipino Worker. He is required to pay annual registration fee of P 500 with the BIR.
S2: Katy is a purely compensation earner individual. She is required to pay annual registration fee of P 500 with the BIR.
Response: Both are false
Feedback: Section 236 (B) of the NIRC, as amended provides An annual registration fee in the amount of Five hundred pesos (P500) for every separate or distinct
establishment or place of business, including facility types where sales transactions occur, shall be paid upon registration and every year thereafter on or before the
last day of January: Provided, however, That cooperatives, individuals earning purely compensation income, whether locally or abroad, and overseas workers are
not liable to the registration fee herein imposed.
Correct answer: Both are false
Score: 1 out of 1 Yes
Question 22
Train law provides that starting January 1, 2023, the filing and payment of VAT shall now be done on a quarterly basis, within 25 days following the close of each
taxable quarter.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 23
Nicanor won Php 5,000 in Philippine Lotto. The amount is?
Response: Exempt from taxation
Correct answer: Exempt from taxation
Score: 1 out of 1 Yes
Question 24
Nicanor, a resident Filipino citizen invested in PA-MINE CORPORATION, a foreign corporation. The corporation, which has sales in the United States amounting
to Php 100M and another Php 200M in the Philippines declared dividends. The dividend income is derived from ____ and it is:
Response: Within, Taxable
Correct answer: Within, Taxable
Score: 1 out of 1 Yes
Question 25
The following are documents not subject to DST, except:
Response: Certificates of the administration of oaths to any person as to the authenticity of any paper required to be filed in court by any person or party thereto,
whether the proceedings be civil or criminal
Feedback: Specific rule under Section 188 of the NIRC, as amended.
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Correct answer: Certificates of Damage or otherwise and Certificate or document issued by any customs officers, marine surveyor, notary public and certificate
required by law or by rules and regulations of a public office
Score: 0 out of 1 No
Question 26
Martin, a resident citizen, is an employee of AMC Corporation. He received the following from his employer in 2023:
Basic monthly compensation P 75,000
13th month pay 75,000
Transportation allowance (P 5,000 per month) 60,000
Productivity incentive bonus 10,000
Christmas bonus 30,000
Uniform allowance 26,000
Actual medical allowance 10,000
Rice subsidy 36,000
Note: There is no labor organization in the company. Ergo, no Collective Bargaining Agreement.
How much is the excess de minimis benefits?
Response: a. P 57,000
Feedback: Solution:
De minimis Excess de minimis
Christmas bonus 5,000 25,000
Uniform allowance 6,000 20,000
Actual medical allowance 10,000 0
Rice subsidy 24,000 12,000
Total 45,000 57,000
Correct answer: a. P 57,000
Score: 1 out of 1 Yes
Question 27
Ms. Bonga, the manager of ABC Co. borrowed from the latter the amount of P280,000, deductible from his salaries at P 23,333,33 every end of the month . Since
Ms. Bonga has an outstanding performance in the company, ABC Co. did not charged any interest to the loan.
How much is the fringe benefit tax is?
Response: P
9,036.15
Feedback:
Principal loan
fringe benefit interest
Monetary Value
Divided by
GMV
Multiply by Fringe benefit rate
Fringe benefit tax
P 280,000
12%
33,600
65%
51,692.31
35%
P 18,092.31
Correct answer: P 18,092.31
Score: 0 out of 1 No
Question 28
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1st statement - A duly registered BMBE shall be exempt from income tax on income arising purely from its operations as such BMBE
2nd statement - Income tax exemption shall not apply to interest, including those from any currency bank deposit and yield or any other monetary benefit from
deposit substitutes and from trust funds and similar arrangements
Response: Both are true
Correct answer: Both are true
Score: 1 out of 1 Yes
Question 29
ABC Corp. is a direct exporter. The input tax attributable to zero-rated sales were applied for refund. The Commissioner of Internal Revenue however denied the
application due to technicality. The remedy of ABC Corp. is?
Response: File an appeal with the Court of Appeals
Correct answer: File a petition for review with the Court of Tax Appeals
Score: 0 out of 1 No
Question 30
ABC Corp. is a domestic corporation. It sold goods to XYZ Corp., a PEZA-registered export enterprise based in Cavite Economic Zone. ABC Corp. billed XYZ
Corp. Php 1,000,000 upon delivery to XYZ Corp. XYZ Corp. paid Php 1,000,000. Subsequently, XYZ Corp. sold the goods to GHI Corp., a PEZA-registered
export enterprise based Calamba, Laguna. The sale by XYZ Corp. is:
Response: VAT-exempt
Correct answer: Subject to 0%
Score: 0 out of 1 No
Question 31
Donation is a tax imposed on the gratuitous transfer of property between two or more persons who are living at the time of the transfer. It shall apply whether the
transfer is in trust or otherwise, whether the gift is direct or indirect and whether the property is real or personal.
Response: True
Feedback: Definition of Donor’s tax
Correct answer: False
Score: 0 out of 1 No
Question 32
For income tax purposes, all kinds of partnerships are taxable as corporations.
Response: False
Feedback: General Professional Partnership is a pass thru entity and is exempt from income tax
Correct answer: False
Score: 1 out of 1 Yes
Question 33
The following information were given to you by Ms. Reyes, a prominent independent contractor who offers architectural and engineering services for the
taxable year 2020:
Total gross receipts from architectural designs
P 1,250,000
Total gross receipts from engineering services
3,000,000
Total cost of services
2,150,000
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Total operating expenses
1,000,000
Assume the same facts except that Ms. Reyes opted to be taxed at 8% income tax regime, what is the proper BIR Form that Ms. Reyes will file with the BIR on or
April 15, 2021?
Response: BIR form 1701-A
Feedback: The gross receipts exceeded P3M, hence, the taxpayer is not qualified for the optional 8% tax. Thus, the appropriate tax return is still BIR Form 1701.
Correct answer: BIR form 1701
Score: 0 out of 1 No
Question 34
S1: The excise tax imposed on cosmetic procedures shall not apply to procedures necessary to ameliorate a deformity arising from or directly related to a
congenital or developmental defect or abnormality.
S2: Cases and treatments covered by the National Health Insurance Program shall not be subject to excise tax.
S3: Non-invasive cosmetic procedure shall not be subject to excise tax.
Response: Only S1 is false
Feedback: Specific rule under RR-2-2019.
Correct answer: All is true
Score: 0 out of 1 No
Question 35
ABC Corporation sold goods amounting to P 50,000 to XYZ Corporation. The latter paid thru the medium of bank transfer. The P 50,000 which is now credited to
the bank account of ABC Corporation is an example of constructive income.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 36
Minimum initial investment within ECOZONE
Response: $250,000
Correct answer: $150,000
Score: 0 out of 1 No
Question 37
In general, Compensation income of Minimum Wage Earners (MWEs) who work in the private sector and being paid the Statutory Minimum Wage (SMW), as
fixed by Regional Tripartite Wage and Productivity Board (RTWPB)/National Wages and Productivity Commission (NWPC), applicable to the place where he/she
is assigned are exempted from the requirement of withholding tax on compensation
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 38
A system where income is not subject to final income tax are grouped together and after deducting allowable deductions, a single tax rate is used to determine the
tax liabilities. For income tax subject to final income tax, different ax rates apply.
Response: d. Progressive tax system
Correct answer: c. Semi-global or Semi Schedular system
Score: 0 out of 1 No
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Question 39
The Philippine Economic Zone Authority (PEZA) Board is an attached agency of:
Response: National Economic and Development Authority (NEDA)
Correct answer: Department of Trade and Industry (DTI)
Score: 0 out of 1 No
Question 40
Real properties owned by a real estate developer may be converted to capital assets even if the assets are abandoned after two (2) years.
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 41
ABC Corp. is a domestic corporation. It sold goods to XYZ Corp., a non-resident foreign corporation based in the United States of America. ABC Corp. billed
XYZ Corp. Php 1 Million upon actual export. The sale is:
Response: Subject to percentage tax
Correct answer: Subject to 12%
Score: 0 out of 1 No
Question 42
ABC Bank collects charges from its Dollar Account depositors for any bank-related services. The charges are:
Response: Subject to 1 percentage tax
Correct answer: VAT-exempt
Score: 0 out of 1 No
Question 43
Nicanor is the owner of a restaurant in Manila. On May 02, 2023, he made payments amounting to P 56,000 (inclusive of vat) to Michael, Nicanor’s independent
accountant, for the latter’s professional fee for rendering accounting and taxation services to Nicanor’s business.
How much withholding tax, if any, will Wendel withhold to his payment to Michael, assuming Wendel is not classified by the BIR as top withholding agent?
Response: a. P 2,500
Feedback: Solution:
P 56,000/1.12 = P 50,000 x 10% = P 5,000
Regardless of whether or not Nicanor is a top withholding agent, RR-11-2018 provides that income payment of professional fees is subject to either 5% or 10%
withholding tax. Since Michael is a VAT registered person, he is not qualified to avail the 5% ewt as it presumed that his gross receipts exceed the 3M VAT
threshold.
Correct answer: b. P 5,000
Score: 0 out of 1 No
Question 44
General renunciation by the surviving spouse of his/her share in the conjugal partnership or absolute community is subject to donor’s tax
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 45
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In 2022. ABC Corporation leased the whole first and second floors of Aleng Nenang’s building in Manila. On May 03, 2022, while preparing its first quarter
Income Tax Return, ABC Corporation demanded from Aling Nena an official receipt for the whole amount it paid to her amounting to P 300,000 representing the
corporation’s rent.
Aling Nena without hesitation issued the requested official receipt. However, ABC Corporation did not withheld the necessary 5% expanded withholding tax.
Assuming Aling Nena reported the said income and pays the tax due thereon and ABC Corporation pays the tax including the interest incident to the failure to
withhold the tax and surcharges, if applicable, at the time of the audit/investigation or reinvestigation/reconsideration. How much Rent Expense will the claim as
an allowable deduction?
Response: b. P 315,000
Feedback: RR: 06-2018 provides that as general rule: An income payment which is otherwise deductible under the Code shall be allowed as a deduction from the
payor's gross income only if it is shown that the income tax required to be withheld has been paid to the Bureau.
As an exception, a deduction will also be allowed in the following cases where no withholding of tax was made: (A) The payee reported the income and pays the
tax due thereon and the withholding agent pays the tax including the interest incident to the failure to withhold the tax. and surcharges, if applicable, at the time of
the audit/investigation or reinvestigation/reconsideration. xxx.
Correct answer: a. P 300,000
Score: 0 out of 1 No
Question 46
Statement 1: Persons subject to VAT are likewise subject to percentage tax.
Statement 2: Persons exempted from VAT are likewise always exempted from other percentage tax.
Response: Both of the statements are false.
Correct answer: Both of the statements are false.
Score: 1 out of 1 Yes
Question 47
Nicanor, a resident citizen, owns a small grocery in Manila. The following information for the year 2023 are made available:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Annual
Gross sales 50,000 60,000 100,000 100,000 310,000
(From business)
Cost of goods sold 15,000 18,000 30,000 30,000 93,000
Gross income 35,000 42,000 70,000 70,000 217,000
Business expenses 5,000 6,000 4,000 20,000 35,000
Assuming Nicanor has no other income and he opted 8% income tax rate on his first quarterly income tax return, how much total allowable deductions may
Nicanor deduct from his gross sales in his first quarterly income tax return?
Response: d. P 62,500
Feedback: Reason: RMC 50-2018, Q24: For filing quarterly ITR for individuals earning purely from practice of profession [and sole proprietorship] who opted
for 8% income tax, how can the P 250,000 be deducted. Is it gross receipts for the quarter less P 62,500 (250k/4) equals taxable income?
A24: There is no need to divide the amount of P 250,000 allowed as reduction into four quarters. The said amount was considered in the design of the revised
quarterly income tax return (Form 1701Q) which reflect a cumulative quarterly computation.
Correct answer: b. P 50,000
Score: 0 out of 1 No
Question 48
Mr. BUHIPA, a resident citizen, has a gross estate of P6,000,000, which was physically present at the time of his death. Prior to his death, he transferred the
following properties:
· A three-hectare agricultural land to Ms. Claire, youngest daughter of Mr. Chu, where the value at the time of transfer was P900,000. This property was
acquired by Mr. Buhipa from the predecessor decedent, Mr. Chu, with the condition that should Mr. Buhipa transfer the property, it should be given to the
youngest daughter of Mr. Chu. At the time of death, the fair market value of the property was P1,200,000.
· A 400-square meter vacant commercial lot to Ms. Mylene valued at P1,200,000 at the time of transfer. The transfer imposed a condition that the transferor
has power to revoke or amend the terms of the transfer. While still alive, the decedent did not exercise the power to revoke. The fair market value at the time of
death was P1,500,000.
· 15,000 shares of stocks, par P100 to Ms. Susan for a cash consideration of P1,800,000 when the market share was at P200 per share. The shares were issued
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by a foreign corporation with 60% operation in the Philippines. At the time of death, the share were quoted in the stock market at P210. It was noted that this
transfer is in contemplation of death.
The value of the gross estate should be increased by:
Response: P3,750,000
Correct answer: P2,850,000
Score: 0 out of 1 No
Question 49
For purposes of computing the tax due, identify which of the following is an allowable deduction of a PEZA export enterprise?
Response: Salary, wages and labor expense
Correct answer: Raw materials used in the manufacture of products
Score: 0 out of 1 No
Question 50
Preliminary Assessment Notice is not part of due process as it merely contains the proposed assessment, and the facts, law, rules, and regulations or jurisprudence
on which the proposed assessment is based and not the assessment per se which the law requires to be issued (Final Assessment Notice)
Response: True
Feedback: Answer: F. Reason: PAN is part of due process. It gives both the taxpayer and the Commissioner of Internal Revenue the opportunity to settle the case
at the earliest possible time without the need for the issuance of a FAN. (CIR v. Unioil Corporation, G.R. No. 204405, August 04, 2021, J. Hernando)
Correct answer: False
Score: 0 out of 1 No
Question 51
S1: Excise tax is an internal revenue tax that is levied on the sale of specific goods and services, such as alcohol, fuel and tobacco.
S2: Specific tax refers to the excise tax which is based on selling price or other specified value of the goods/articles.
Response: Only S1 is true
Correct answer: Only S1 is true
Score: 1 out of 1 Yes
Question 52
Expanded Withholding Tax (EWT) is a type of creditable withholding tax.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 53
Additional compensation such as commissions, honoraria, fringe benefits, benefits in excess of the allowable statutory amount of ₱90,000.00, taxable allowances,
and other taxable income given to an MWE by the same employer other than those which are expressly exempt from income tax shall be subject to withholding
tax using the withholding tax table.
Response: True
Feedback: Basis: RR-11-2018
Correct answer: True
Score: 1 out of 1 Yes
Question 54
Nicanor is the owner of a restaurant in Manila. On May 02, 2023, he made payments amounting to P 56,000 (inclusive of vat) to Michael, Nicanor’s independent
accountant, for the latter’s professional fee for rendering accounting and taxation services to Nicanor’s business.
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How much withholding tax, if any, will Wendel withhold to his payment to Michael, assuming Wendel is classified by the BIR as top withholding agent?
Response: b. P 5,000
Feedback: Solution:
P 56,000/1.12 = P 50,000 x 10% = P 5,000
Regardless of whether or not Nicanor is a top withholding agent, RR-11-2018 provides that income payment of professional fees is subject to either 5% or 10%
withholding tax. Since Michael is a VAT registered person, he is not qualified to avail the 5% ewt as it presumed that his gross receipts exceed the 3M VAT
threshold.
Correct answer: b. P 5,000
Score: 1 out of 1 Yes
Question 55
Members of the BlackPink, a popular band in Korea held a one-night concert in the Philippines and were paid Php 1 Million. Members of the BlackPink are:
Response: NRANETB
Correct answer: NRAETB
Score: 0 out of 1 No
Question 56
A person whose business is to keep automobile for hire or keep them stored for use or order
Response: a. Common carriers
Feedback: Note: Keepers of garage is the more specific definition.
Correct answer: b. Keepers of garage
Score: 0 out of 1 No
Question 57
The CIR can reverse the ruling issued by his predecessor
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 58
If the method of deduction is itemized, the senior citizen (SC) discounts granted by the seller of qualified goods and services shall be treated as:
Response: An ordinary and necessary expenses deductible from the gross income of the seller
Correct answer: An ordinary and necessary expenses deductible from the gross income of the seller
Score: 1 out of 1 Yes
Question 59
No person will be imprisoned for non-payment of tax.
Response: False
Feedback: Non-payment of tax is punishable by law (tax evasion). Non-payment of POLL tax is not.
Correct answer: False
Score: 1 out of 1 Yes
Question 60
ABC Corp., a TWA, purchased goods from Nicanor Enterprises in the amount of Php 20,000. If the purchase is a single purchase and Nicanor Enterprises is not
considered a regular supplier, ABC Corp. is not required to make the withholding.
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Response: True
Feedback: Purchase is over 10,000 hence withholding is required
Correct answer: False
Score: 0 out of 1 No
Question 61
Zesto Asia, a domestic corporation engaged in local and international operations has the following data for the year 2019 (use the old rate):
Gross income from international operations
Expenses from international operations
P 30,000,000
24,000,000
Assume Zesto Asia is an international carrier (resident foreign corporation), the income tax due is?
Response: P 750,000
Feedback: Gross income from international operation P 30,000,000 x 2.5% = P 750,000
Correct answer: P 750,000
Score: 1 out of 1 Yes
Question 62
S1: Excise tax is a tax on the production, sale, or consumption of a commodity in a country.
S2: Ad Valorem Tax – refers to the excise tax which is based on selling price or other specified value of the goods/articles.
S3: In general, the time of payment of excise tax on domestic products is after removal from the place of production.
Response: Only S3 is false
Feedback: S3: In general, the time of payment of excise tax on domestic products is after removal from the place of production.
Correct answer: Only S3 is false
Score: 1 out of 1 Yes
Question 63
PRTC INC., a corporation engaged in business in the Philippines and abroad has the following data (apply the old rate):
Gross Income, Philippines
P 975,000
Expenses, Philippines
750.000
Gross Income, Thailand
770,000
Expenses, Thailand
630,000
Interest on bank deposit
25,000
How much in the income tax due if PRTC INC., assuming it is a non- resident foreign corporation?
Response: P 292,500
Feedback:
NRFC
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Gross Income, Philippines
P975,000
Expenses, Philippines
Gross Income, Malaysia
Expenses, Malaysia
Interest on bank deposit
Taxable income
25,000
P 1,000,000
Tax Rate
30%
Tax Due
300,000
Correct answer: P 300,000
Score: 0 out of 1 No
Question 64
Nicanor, a non-resident Filipino citizen borrowed money from Inday, an Overseas Filipino Worker (OFW/OCW). The interest income is derived from ____ and it
is:
Response: Without, Exempt
Correct answer: Without, Exempt
Score: 1 out of 1 Yes
Question 65
Nicanor is engaged in retail business. He received a deficiency tax assessment from the BIR containing only the computation of the deficiency tax and the
penalties, without any explanation of the factual and legal bases for the assessment.
Is the assessment valid?
Response: c The assessment is valid but Nicanor can still contest it.
Correct answer: b The assessment is invalid; the law requires a statement of the facts and the law upon which the assessment is based.
Score: 0 out of 1 No
Question 66
The following items comprised the gross estate of Mr. McHeart, a non resident alien decedent:
House and lot located in Australia, P 6,000,000
Sedan car located in the Philippines, 1,800,000
3 door apartment in Australia, 5,000,000
Shares of stock of SMC Corp., Philippines, 4,000,000
Shares of stock of foreign corporation with business situs
in the Philippines, 2,000,000
Franchise exercisable in Australia, 1,000,000
How much is the gross estate to be reported by Mr.McHeart?
Response: P 3,800,000
Correct answer: P 7,800,000
Score: 0 out of 1 No
Question 67
The Notice of Informal Conference has been changed to Notice of Discrepancy. To make this rule effective, the DOR upon recommendation of the CIR must issue
Response: Revenue Memorandum Orders
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Correct answer: Revenue Regulations
Score: 0 out of 1 No
Question 68
If a professional is both a CPA and a Doctor, he has to pay two professional taxes
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 69
The following are non-fiscal incentives of a BOI registered enterprise, except:
S1. Foreign nationals may be employed in supervisory, technical or advisory positions within five (5) years from a project’s registration
S2. Income tax holiday for a number of years depending on whether the status of the registrant is a pioneer or non-pioneer
S3. Registered export-oriented enterprise shall have access to the utilization of the bonded warehousing system in all areas.
S4. Simplification of customs procedures for the importation of equipment, spare parts, raw materials, and supplies and exports of processed products of registered
enterprises in the operations of their bonded warehouses.
S5. There shall be no restrictions on the use of consigned equipment provided a re-export bond is posted.
Response: S4
Correct answer: S2
Score: 0 out of 1 No
Question 70
Interest income of Nicanor from peso bank deposit in ABC Bank is Php 10,000. The net cash which Nicanor can withdraw with respect to the deposit is
Response: 7,500
Correct answer: 8,000
Score: 0 out of 1 No
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Home
*[May 2024] 00-Diagnostic Examination
Diagnostic Examination
Taxation (TAX)
Submissions
Here are your latest answers:
Question 1
The following information were given to you by Ms. Reyes, a prominent independent contractor who offers architectural and engineering services for the taxable
year 2020:
Total gross receipts from architectural designs
P 1,250,000
Total gross receipts from engineering services
3,000,000
Total cost of services
2,150,000
Total operating expenses
1,000,000
Based on the foregoing information, how much is Ms. Reyes’ taxable income?
Response: P 1,100,000
Feedback:
Solution:
Total gross receipts
P 4,250,000
Less: Cost of services
2,150,000
Gross income
2,100,000
Less Opex
1,000,000
Taxable income
1,100,000
Correct answer: P 1,100,000
Score: 1 out of 1 Yes
Question 2
Lotto winnings are required to be reported by the winner in their annual ITR
Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 3
The Commissioner or his authorized representative cannot force a taxpayer to produce his records especially during pandemic.
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Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 4
Nicanor is a government employee. The government agency/employer provides 20 vacation leave credits and 10 sick leave credits which can be monetized at the
option of the employee.
The monetization of the excess 10 days vacation leave credits is:
Response: Taxable
Correct answer: Exempt
Score: 0 out of 1 No
Question 5
Constructive receipt occurs when the money consideration or its equivalent is placed at the control of the person who rendered he services without restrictions by
the payor.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 6
Nicanor deposited money in Banko De Kano, a commercial bank established under the laws of the United States of America. The money earns interest income.
Such interest income needed to be reported in the Income tax return as it is an ordinary income.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 7
One Piece Corporation was identified as a top withholding agent by the BIR. One day, the marketing department, headed by Nicanor, requested the company to
treat all of its staff, Kenny Rogers meal amounting to Php 9,000 because in May 2023, the company sales increased to 5% due to the efforts of the department, and
the employees are working a minimum of 15-hours a day. The company granted the request. The transaction is not required to withhold expanded withholding tax
of 2%.
Response: False
Feedback: The income is not one of those income subject to final tax
Correct answer: True
Score: 0 out of 1 No
Question 8
Due to excessive earnings, the Company declared property dividends where the Board of Directors, in a resolution, resolved to distribute Php 100,000.00 worth of
facemasks to the stockholders of record which they can use against Covid-19. The distribution is:
Response: VAT-exempt as it is used against Covid-19
Correct answer: A constructive sale subject to 12% VAT
Score: 0 out of 1 No
Question 9
The imposition of tax by the legislature is called:
Response: levy
Correct answer: levy
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Score: 1 out of 1 Yes
Question 10
If no documents are available for the audit and the BIR has completed all the legal remedies to compel the taxpayer to produce documents, the BIR:
Response: May issue an assessment against the taxpayer
Correct answer: May issue an assessment against the taxpayer
Score: 1 out of 1 Yes
Question 11
Mr. Barrera, a decedent was married at the time of his death and under the system of absolute community of property
Among the properties in the gross estate were:
Land, inherited before the marriage, fair market value P 5,000,000
Family home built by the spouses on the inherited land 8,000,000
How much is the allowed family home deduction based on the foregoing facts?
Response: c. P 10,000,000
Feedback: ANS: P 6,500,000 (lower of Actual FMV V. P 10,000,000 threshold)
Solution
Land brought into marriage (Absolute Community Property) (5M/2) P 2,500,000
Family home built by spouses (Absolute Community Property) (8M/2) 4,000,000
Total Allowable Family home deduction 6,500,000
Correct answer: b. P 6,500,000
Score: 0 out of 1 No
Question 12
A domestic corporation made available the following financial information covering TY 2021:
Statement of Financial Position Statement of Comprehensive Income
Assets: Gross receipts 15,000,000
Current 20,000,000 Cost of service 5,000,000
Non-current (land/bldg) 10,000,000 Gross profit 10,000,000
Liabilities 5,000,000 Expenses 5,000,000
Stockholders’ Equity 25,000,000 Net income 5,000,000
Based on the foregoing, the proper corporate income tax rate that is applicable is:
Response: a. 20%
Feedback: Reason: Total assets excluding the land did not exceed P 100,000,000 and the Net income did not exceed the P 5,000,000
Correct answer: a. 20%
Score: 1 out of 1 Yes
Question 13
Corporation exempt from income tax are not subject to income tax on income received which are incidental or necessarily connected with the purposes for which
they were organized and operating.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 14
The following are documents not subject to DST, except:
Response: Policies of insurance or annuities made or granted by a fraternal or beneficiary society, order, association, or cooperative company, operated on the
lodge system or local cooperation plan and organized and conducted solely by the members thereof for the exclusive benefit of each member and not for profit
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Feedback: Specific rule under Section 188 of the NIRC, as amended.
Correct answer: Certificates of Damage or otherwise and Certificate or document issued by any customs officers, marine surveyor, notary public and certificate
required by law or by rules and regulations of a public office
Score: 0 out of 1 No
Question 15
There is no taxable income until there is a separation from capital of something of exchangeable value, thereby supplying the realization or transmutation which
would result in the receipt of income.
The foregoing is based on what test in determining income?
Response: d. All events test
Correct answer: a. Realization/Severance Test
Score: 0 out of 1 No
Question 16
Mr. Patty made a revocable transfer of his stock investment on July 4, 2018 in favor of his brother, Metro. Patty died on December 2, 2018.
The stocks had the following values:
July 4, 2018
P 1,200,000
August 20, 2018
1,100,000
December 15, 2018
1,600,000
Assuming Patty did not revoke the property until the date of his death, what is the amount subject to transfer tax and the type of transfer tax to apply?
Response: P 1,100,000.00; estate tax
Correct answer: P 1,600,000.00; estate tax
Score: 0 out of 1 No
Question 17
Deductions partake the nature of an exemption.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 18
Basel Manadil (a.k.a. The Hungry Syrian Wanderer) is a Syrian vlogger based in the Philippines. For taxation purposes, he is classified as?
Response: RA
Correct answer: RA
Score: 1 out of 1 Yes
Question 19
The CIR is bound to follow a previously issued ruling by his predecessor
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 20
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ECOZONE Service Enterprise is a business entity or concern within the ECOZONE whose income derived within the ECOZONE shall be subject to taxes under
the National Internal Revenue Code.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 21
Martin, a resident citizen, is an employee of AMC Corporation. He received the following from his employer in 2023:
Basic monthly compensation P 75,000
13th month pay 75,000
Transportation allowance (P 5,000 per month) 60,000
Productivity incentive bonus 10,000
Christmas bonus 30,000
Uniform allowance 26,000
Actual medical allowance 10,000
Rice subsidy 36,000
Note: There is no labor organization in the company. Ergo, no Collective Bargaining Agreement.
How much is the total taxable compensation of Martin for the year 2023?
Response: a. P 1,012,000
Feedback: Solution:
De minimis Excess de minimis
Christmas bonus 5,000 25,000
Uniform allowance 6,000 20,000
Actual medical allowance 10,000 0
Rice subsidy 24,000 12,000
Total 45,000 57,000
Excess de minmis 57,000
13th month pay 75,000
Productivity incentive pay 10,000
Total 13th month pay and other benefits 142,000
Exempt 13th month pay and other benefits 90,000
Taxable 13th month pay and other benefits 52,000
Basic compensation (P 75k x 12) P 900,000
Transportation allowance (P 5,000 per month) 60,000
Total taxable compensation 1,012,000
Note:
1. If Company has no CBA but nonetheless provided productivity incentive bonus, the amount given can be reported under the 13th month pay and other benefits
2. Fixed allowances shall be treated as part regular compensation, part of taxable compensation
Correct answer: a. P 1,012,000
Score: 1 out of 1 Yes
Question 22
Ordinary loss can be deducted from any gross income.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 23
PRTC INC., a corporation engaged in business in the Philippines and abroad has the following data (apply the old rate):
Gross Income, Philippines
P 975,000
Expenses, Philippines
750.000
Gross Income, Thailand
770,000
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Expenses, Thailand
Interest on bank deposit
630,000
25,000
How much in the income tax due of PRTC INC., assuming it is a resident foreign corporation?
Response: P67,500
Feedback:
RFC
Gross Income, Philippines
P975,000
Expenses, Philippines
(750,000)
Gross Income, Malaysia
Expenses, Malaysia
Interest on bank deposit
Taxable income
225,000
Tax Rate
30%
Tax Due
67,500
Correct answer: P67,500
Score: 1 out of 1 Yes
Question 24
ABC Corp. filed a case against XYZ Corp. and engaged OKRA Law Offices, the biggest law firm in the country, agreeing to pay Php 5 Million. OKRA Law sent
Atty. Nicanor, one of its partners, to represent the Company and the Firm in litigation. The EWT required to be withheld is?
Response: 0
Feedback: OKRA Law is a general professional partnership that is exempt from income tax, hence, professional fee is not subject to withholding
Correct answer: 0
Score: 1 out of 1 Yes
Question 25
Nicanor is registered as a non-VAT taxpayer engaged in on-line selling. He opted for 8% income taxation when he filed his 1st quarterly income tax return. His
“pa-mine” business made him earn a gross amount of Php 5 million. Statement: Nicanor can still partly avail 8% on his income and partly graduated tax rate on the
excess of the Php 3 million.
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 26
S1: The excise tax imposed on cosmetic procedures shall not apply to procedures necessary to ameliorate a deformity arising from or directly related to a
congenital or developmental defect or abnormality.
S2: Cases and treatments covered by the National Health Insurance Program shall not be subject to excise tax.
S3: Non-invasive cosmetic procedure shall not be subject to excise tax.
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Response: Only S2 is false
Feedback: Specific rule under RR-2-2019.
Correct answer: All is true
Score: 0 out of 1 No
Question 27
It is a written notice informing a taxpayer that the findings of the audit conducted on his books of accounts and accounting records indicate that additional taxes or
deficiency assessments may have to be paid.
Response: Final Assessment Notice (FAN)
Correct answer: Notice of Discrepancy (NOD)
Score: 0 out of 1 No
Question 28
In November 25, 2021, Nicanor, one of the board of directors of ABC Corporation, will not be able to attend the company’s election of new auditor. But instead,
he executes a proxy letter appointing Inday to represent his vote in the election.
How much is the documentary stamp tax due as a result of the execution of the proxy?
Response: P 1,000
Feedback: Specific rule RR 04-2018
Correct answer: P 30
Score: 0 out of 1 No
Question 29
Piyu Corporation, a domestic corporation, owns twenty (20%) of the outstanding share of NTZ Corporation, a non-resident foreign corporation (NRFC) since
August 15, 2015. On June 30, 2021, it received dividends amounting to P 1,000,000 from the said NRFC. The said dividend has not been used until January 13,
2023, to which in the said year, the income is reinvested in the business operation of Piyu Corporation.
The dividend income shall be declared as income for the taxable year 2021.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 30
ABC Bank collects charges from its Dollar Account depositors for any bank-related services. The charges are:
Response: VAT-exempt
Correct answer: VAT-exempt
Score: 1 out of 1 Yes
Question 31
The taxable base in computing the Output VAT of a dealer in securities is based on Gross receipts (gross selling price less cost of securities)
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 32
Sale of "Cheeks to Go" a roasted chicken is:
Response: Subject to 12%
Correct answer: VAT-exempt
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Score: 0 out of 1 No
Question 33
Real properties owned by a real estate developer may be converted to capital assets even if the assets are abandoned after two (2) years.
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 34
Any taxpayer can use either calendar or fiscal year provided that it is consistently applied in accordance with the Accounting standards and that change in
accounting period can only be made upon prior approval by the Commissioner or his authorized representative.
Response: True
Feedback: Individual taxpayers can use only calendar year period
Correct answer: False
Score: 0 out of 1 No
Question 35
Generally, the BIR can collect the taxes due from the taxpayer in how many _____ years?
Response: 10
Correct answer: 5
Score: 0 out of 1 No
Question 36
____ are selected areas with highly developed or which have the potential to be developed into agri-industrial, industrial, tourist, recreational, commercial,
banking, investment and financial centers whose metes and bounds are fixed or delimited by Presidential Proclamations. An ECOZONE may contain any or all of
the following: industrial estates (IEs), export processing zones (EPZ), free trade zones and tourist / recreational centers.
Response: ECOZONES or Special Economic Zones
Correct answer: ECOZONES or Special Economic Zones
Score: 1 out of 1 Yes
Question 37
Martin, a resident citizen, is an employee of AMC Corporation. He received the following from his employer in 2023:
Basic monthly compensation P 75,000
13th month pay 75,000
Transportation allowance (P 5,000 per month) 60,000
Productivity incentive bonus 10,000
Christmas bonus 30,000
Uniform allowance 26,000
Actual medical allowance 10,000
Rice subsidy 36,000
Note: There is no labor organization in the company. Ergo, no Collective Bargaining Agreement.
How much is the excess de minimis benefits?
Response: c. P 52,000
Feedback: Solution:
De minimis Excess de minimis
Christmas bonus 5,000 25,000
Uniform allowance 6,000 20,000
Actual medical allowance 10,000 0
Rice subsidy 24,000 12,000
Total 45,000 57,000
Correct answer: a. P 57,000
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Question 38
The output VAT on goods or properties sold may be imposed even in the absence of actual sale
Response: True
Feedback: Reason: In case of deemed sale, VAT may be imposed even in the absence of actual sale.
Correct answer: True
Score: 1 out of 1 Yes
Question 39
Facts: Nicanor and Inday, husband and wife, donated a communal parcel of land located in Manila to their son, Junior who was getting married within 7 months
after the date of donation. Below are the details about the fair market value of the parcel of land:
Fair market value at the time of donation P 5,000,000
Fair market value at the time of marriage P 5,500,000
Additional information:
• The property is subject to mortgage amounting to P 1,000,0000 which was assumed by Junior
How much is the taxable net gift of Nicanor?
Response: a. P 1,750,000
Feedback: Solution:
Gross gift (P5Million/2) P 2,500,000
Less: Mortgage assumed 500,000 ( P 1,000,000)
Net gift 2,000,000
Less: Exempt gift 250,000
Taxable net gift 1,750,000
Correct answer: a. P 1,750,000
Score: 1 out of 1 Yes
Question 40
President Dowterte alleged that Senator Dequatro did not pay her taxes. He instructed the Secretary of Justice to file tax evasion charges against the Senator. The
DOJ Secretary may file the case under the circumstances.
Response: False
Feedback: Commissioner has to approve
Correct answer: False
Score: 1 out of 1 Yes
Question 41
Ningning, married to Dodong, died during the current taxable year leaving the following properties:
· Two door commercial building inherited from her father 10 years before marriage valued at P4,000,000 at the time of death.
· Seven-hectare agricultural land planted with coconut and other high-value crops donated by her mother during marriage with a fair market value of
P2,000,000 at the time of death.
· House and lot acquired during marriage with a fair market value of P5,000,000 at the time of death.
· Three-door apartment owned by Ningning before marriage with a current value of P5,000,000. Ningning has a child from her ex-boyfriend before she got
married with Dodong.
· Four-hectare fishpond owned by Dodong before marriage valued at P4,500,000 at the time of death.
· Cash of P6,000,000 representing income from various properties that cannot be identified to which properties it pertains.
· Fruits earned from the following properties:
PROPERTY
BEFORE MARRIAGE
AFTER MARRIAGE
Commercial Building
P 1,600,000
Agricultural land
P 1,500,000
Apartment
P 2,000,000
Fishpond
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P 500,000
P 1,000,000
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How much is the total gross estate if they got married on August 3, 1988?
Response: P 35,500,000
Correct answer: P 33,100,000
Score: 0 out of 1 No
Question 42
Interest income of Nicanor from dollar bank deposit in ABC Bank is Php 10,000. The final tax required to be withheld is?
Response: 1,500
Correct answer: 1,500
Score: 1 out of 1 Yes
Question 43
Many is an operator of cockpit arena in Batangas. He also operates a restaurant and a convenience store inside the cockpit. Data for particular quarter follow:
Gross receipts:
Cockpit operations
P 5,000,000
Restaurant operations
300,000
Convenience store operations
125,000
The amusement tax due of Many Is:
Response: P 750,000
Feedback:
Gross receipts:
Cockpit operations
P 5,000,000
Restaurant operations
300,000
Convenience store operations
125,000
Total
OPT rate
Amusement tax
5,425,000
18%
P 976,500
Correct answer: P 976,500
Score: 0 out of 1 No
Question 44
The Income Statement of ABC Corp., a Top Withholding Agent (TWA) disclosed the following:
Gross Sales - Php 5,000,000
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Less: Cost of Sales:
Merchandise Inventory (beg) - 1,000,000
Add: Purchases of inventories - 2,000,000
Available for Sale - 3,000,000
Merchandise Inventory (end) - 500,000
Cost of sales - 2,500,000
Gross Profit - 2,500,000
Administrative and Operating expenses:
Salaries and wages - 500,000
Professional fees (GPP) – 100,000
Professional fees (made to small time practitioners-STP) – 100,000
Rent – 100,000
Janitorial expenses (agency fee is 50,000) - 300,000
Security expenses (agency fee is 50,000) - 300,000
Utility expense (electricity) - 100,000
Net Income 1,000,000
Compute the EWT on security service:
Response: 6,000
Feedback:
Correct answer: 1,000
Score: 0 out of 1 No
Question 45
The following information appeared in the 2022 BIR Form 2316 (Certificate of Compensation Payment/Tax Withheld) of Nicanor, a purely compensation income
earner:
Gross compensation income Php 400,000.00
13th month pay and other benefits 40,000.00
SSS 10,000.00
Philhealth contributions 10,000.00
Pagibig contributions 10,000.00
Union dues 10,000.00
Commission 50,000.00
Amount of taxes withheld (by the employer) 30,000.00
The total non-taxable portion to be deducted from gross compensation income of Nicanor is:
Response: a. Php 80,000
Feedback: Solution:
13th month pay and other benefits 40,000.00
SSS 10,000.00
Philhealth contributions 10,000.00
Pagibig contributions 10,000.00
Union dues 10,000.00
TOTAL 80,000.00
Correct answer: a. Php 80,000
Score: 1 out of 1 Yes
Question 46
Inday, an employee of Beshie Corp., is receiving daily compensation in the amount of P2,500, net of mandatory contributions.
Determine the total daily withholding tax on compensation for the year 2022.
Response: c. P 320.56
Feedback: Solution:
Total taxable compensation ₱ 2,500.00
Less: Compensation Range (Minimum) 2,192.00
Excess ₱ 308.00
Withholding tax shall be computed as follows:
Predetermined Tax on ₱2,192.00 ₱ 356.16
Add: Tax on the excess (₱308.00 x 30%) 92.40
Total daily withholding tax ₱ 448.56
Correct answer: a. P 448.56
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Score: 0 out of 1 No
Question 47
S1: Hybrid electric vehicles shall refer to a motor vehicle powered by fuel energy, with or without provision for off vehicle charging in combination with gasoline,
diesel, or any other power.
S2: Hybrid electric vehicle must be able to propel itself from as stationary condition using solely electric motor.
Response: Only S1 is false
Feedback: S1: Hybrid electric vehicles shall refer to a motor vehicle powered by electric energy, with or without provision for off vehicle charging in combination
with gasoline, diesel, or any other power. RR-5-2018
Correct answer: Only S1 is false
Score: 1 out of 1 Yes
Question 48
Charlita gave the following donations:
05/10/2020
To legitimate son on account of marriage on 8/15/20 with P100,000 mortgage assumed by the donee
08/15/2020
To his legitimate daughter on account of marriage on 8/15/2020
10/20/2020
Lot donated to the National Government to be used for public purpose
11/15/2020
To his brother on account of marriage on 11/15/2020
P300,000
8,000
100,000
5,000
How much is the total exemption and deductions from the total gross gift?
Response: P 118,000
Correct answer: P 100,000
Score: 0 out of 1 No
Question 49
Statement 1: PAL Co., a domestic common carrier by air is subject to VAT on its gross receipts from its transport of passengers, goods, or cargoes from one place
in the Philippines to another place in the Philippines.
Statement 2: : PAL Co., a domestic common carrier by air is subject to either 0% VAT, VAT exempt, or 3% common carrier’s tax depending on whether or not it is
a VAT registered.
Response: Only the second statement is true.
Correct answer: Only the first statement is true.
Score: 0 out of 1 No
Question 50
Nicanor, an employee of ABC Corp., is receiving regular monthly compensation in the amount of P 165,000 net of mandatory contributions, with supplementary
compensation in the amount of P 5,000 for the month.
Determine the total monthly WTC for the year 2022.
Response: d. P 41,833.23
Feedback: Solution:
Total taxable P 165,000
Less Compensation range (4th bracket) 66,667
Excess 98,333
Add: supplementary compensation 5,000
Total 103,333
Using 4th bracket
Predetermined tax on P 66,667 P 10,833.33
Add: Tax on excess (P103,333 x 30%) 30,999.90
Total monthly WTC 41,833.23
Correct answer: d. P 41,833.23
Score: 1 out of 1 Yes
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Question 51
Banko De Pera invested stocks on ABC Corporation. In 2023, ABC Corporation declared dividends and Banko De Pera received P 100,000 as its share in the
dividends. Banko De Pera is liable to 7% Gross Receipts Tax.
Response: True
Feedback: Basis: Section 121, NIRC. It should be 0%
Correct answer: False
Score: 0 out of 1 No
Question 52
Nicanor sold his land worth P 5,000,000 to Inday. Assuming Nicanor is not engaged in the business of real estate but the land he sold is used in his business, the
sale of land is subject to capital gains tax.
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 53
Sarah G, a Filipina singer/actress held a one-night concert in Canada. She was paid Php 1 Million ($20,000). Tax withheld and paid is Php 300,000.00 ($6,000).
Sarah G is:
Response: RC
Correct answer: RC
Score: 1 out of 1 Yes
Question 54
Ningning, married to Dodong, died during the current taxable year leaving the following properties:
· Two door commercial building inherited from her father 10 years before marriage valued at P4,000,000 at the time of death.
· Seven-hectare agricultural land planted with coconut and other high-value crops donated by her mother during marriage with a fair market value of
P2,000,000 at the time of death.
· House and lot acquired during marriage with a fair market value of P5,000,000 at the time of death.
· Three-door apartment owned by Ningning before marriage with a current value of P5,000,000. Ningning has a child from her ex-boyfriend before she got
married with Dodong.
· Four-hectare fishpond owned by Dodong before marriage valued at P4,500,000 at the time of death.
· Cash of P6,000,000 representing income from various properties that cannot be identified to which properties it pertains.
· Fruits earned from the following properties:
PROPERTY
BEFORE MARRIAGE
AFTER MARRIAGE
Commercial Building
P 1,600,000
Agricultural land
P 1,500,000
Apartment
P 2,000,000
Fishpond
P 500,000
P 1,000,000
How much is the conjugal/communal property if they got married on August 2, 1988?
Response: P 17,000,000
Correct answer: P 17,100,000
Score: 0 out of 1 No
Question 55
Proceeds of insurance taken by a corporation on the life of an executive to indemnify the latter’s beneficiaries against loss in case of his death.
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The premiums paid by the corporation is deductible expense of the corporation.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 56
1: Meralco issued a Billing Statement (BS) to ABC Corporation amounting to P 65,000, inclusive of P 6,600 input vat. In its filing of its 2550M VAT Return, ABC
Corporation can claim the input VAT of P 6,600 as evidenced by the BS issued by Meralco.
S2: Maynilad issued a Billing Statement (BS) to ABC Corporation amounting to P 65,000, inclusive of P 6,600 input vat. In its filing of its 2550M VAT Return,
ABC Corporation cannot claim the input VAT of P 6,600 as evidenced by the BS issued by Maynilad.
Response: Both are true
Feedback: Input VAT can only be claimed on the basis of either Sales Invoices or Official Receipts.
Correct answer: Only S2 is true
Score: 0 out of 1 No
Question 57
Bureau of Internal Revenue (BIR) grants all of its employees 20 days’ sick leave for the whole year 2023. Such sick leave may be converted into cash before the
end of the year. Jack, one of BIR's rank-and-file employees, who is earning a rate of P 600 per day, monetized his unused sick leave of P 6,600 at the end of the
year. The whole amount of P 6,600 monetized unused vacation is partly treated taxable compensation and partly exempt from income tax.
Response: False
Feedback: Reason: Monetized unused vacation and sick leave of a government employee is exempted from income tax as they are de minimis benefits.
Correct answer: False
Score: 1 out of 1 Yes
Question 58
Koya Sotto, a young and promising Filipino basketball player was invited to play professionally in the United States. He was paid $1 Million. His income is
derived from ____ and it is:
Response: Within, Taxable
Correct answer: Without, Exempt
Score: 0 out of 1 No
Question 59
No person will be imprisoned for non-payment of tax.
Response: True
Feedback: Non-payment of tax is punishable by law (tax evasion). Non-payment of POLL tax is not.
Correct answer: False
Score: 0 out of 1 No
Question 60
Which of the following article shall be subject to specific excise tax?
Response: Excise tax on automobiles
Correct answer: Excise tax on sweetened beverages
Score: 0 out of 1 No
Question 61
Installment payment of income tax is allowed regardless of amount.
Response: False
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Correct answer: False
Score: 1 out of 1 Yes
Question 62
It refers to a business entity or concern duly registered with and / or licensed by the PEZA to develop, operate and maintain an ECOZONE or any or all of the
component IE, EPZ, Free Trade Zone or Tourist / Recreational Center and the required infrastructure facilities and utilities such as light and power system, water
supply and distribution system, sewerage and drainage system, pollution control devices, communication facilities, paved road network, administration building
and other facilities as may be required by the PEZA. The term shall include the PEZA and / or the Local Government Unit when by the themselves or in joint
venture with a qualified private entity, shall act as the Developer / Operator of the ECOZONES. As such, they shall be entitled to the same incentives under Rule
XIV of these Rules in accordance with the pertinent provisions of the Act and the Code.
Response: Developer or Operator
Correct answer: Developer or Operator
Score: 1 out of 1 Yes
Question 63
The CTA may sit
Response: En banc and in two divisions
Correct answer: En banc or in divisions
Score: 0 out of 1 No
Question 64
Nicanor invested in ABC Corp. buying unlisted shares of stocks in the amount of Php 1 Million. He sold the same for Php 1.2 Million. The Php 200,000 is:
Response: Passive income subject to final tax
Correct answer: Capital gains subject to capital gains tax
Score: 0 out of 1 No
Question 65
Which of the following is not included in the definition of a corporation under the CREATE law?
Response: None of the above
Correct answer: None of the above
Score: 1 out of 1 Yes
Question 66
Necessary step before going to the CTA en banc:
Response: File motion for reconsideration and new trial with the En banc
Correct answer: File motion for reconsideration or new trial with the Division
Score: 0 out of 1 No
Question 67
Nusseir Yassin is a popular Palestinian-Israeli blogger using the page “Daily Nas”. Under Philippine taxation, he is classified as?
Response: NRAETB
Correct answer: NRANETB
Score: 0 out of 1 No
Question 68
Guidant Resources Corporation, a corporation registered in Norway, has a 50 MW electric power plant in San Jose, Batangas. Aside from Guidant's income from
its power plant, which among the following is considered as part of its income from sources within the Philippines?
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Response: b. Interests earned on its dollar deposits in a Philippine bank under the Expanded Foreign Currency Deposit System.
Correct answer: a. Gains from the sale to an Ilocos Norte power plant of generators bought from the United States.
Score: 0 out of 1 No
Question 69
ABC PTE Ltd. is an eco-zone developer / operator and facility enterprise. It is subject to 5% gross income taxation. Which of the following is NOT an allowable
deduction in computing its tax?
Response: Rent and utility charges for buildings and capital equipment
Correct answer: Salaries of product supervisor
Score: 0 out of 1 No
Question 70
Wendel, a resident citizen, is an owner of a sticker printing service in Manila. On January 5, 2023, he purchased goods amounting to P 56,000 (inclusive of vat) to
Papel Corporation.
How much withholding tax, if any, will Wendel withhold to his payment to Papel Corporation, assuming Wendel is classified by the BIR as top withholding agent?
Response: b. P 500
Feedback: Solution:
P 56,000/1.12 = P 50,000 x 1% = P 500
RR -11-2018 provides that a top withholding agent, as a rule, is required to withhold 1% on his/her/its payment for purchases of goods.
Correct answer: b. P 500
Score: 1 out of 1 Yes
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Home
*[May 2024] 00-Diagnostic Examination
Diagnostic Examination
Taxation (TAX)
Submissions
Here are your latest answers:
Question 1
In her desire to improve her body shape, Ms. Lumba decided to undergo liposuction procedure. She sought the services of Dr. P, an individual practitioner
operating a clinic inside a hospital. The Hospital bills Ms. Lumba other fees (for the use of operating room., etc.) in the amount of P 20,000, in addition to the fees
charged by Doctor P of P 50,000 (inclusive of 12% VAT, excluding excise) for the services performed.
How much excise tax will the hospital remit to the BIR?
Response: P 6,232.14
Feedback:
Billings by hospital (VAT Exempt)
Excise tax rate for invasive procedures
P20,000
5%
Excise tax payable for hospital
Doctor’s Fee (P50,000/1.12)
Excise tax rate for invasive procedures
Excise tax payable for Doctor
Total excise tax
P1,000
P44,642.86
5%
2,232.14
P3,232.14
Correct answer: P 3,232.14
Score: 0 out of 1 No
Question 2
:On July 16, 2018, Nicanor executed a deed of donation in favor of inday (Nicanor’s girlfriend), wherein he will donate his house and lot to the latter. Being a
stranger, the proper donor’s tax rate that Nicanor will have to pay is 30% of the net gift.
Response: False
Feedback: Answer is False. Train Law is the law in force at the time of completion of gift
Correct answer: False
Score: 1 out of 1 Yes
Question 3
XYZ Corporation, a newly organized corporation in the Philippines, issued on November 07, 2021 10,000(par value @ P 50.00 per share) shares of stocks to one
of its incorporators, Mr. Nicanor for P 800,000. How much is the documentary stamp tax due?
Response: P6,000
Feedback:
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Par value of shares (10,000 x 50)
Divided by
Total
Multiply by
DST due
P 500,000
200
2,500
2
5,000
Correct answer: P5,000
Score: 0 out of 1 No
Question 4
The following information appeared in the 2022 BIR Form 2316 (Certificate of Compensation Payment/Tax Withheld) of Nicanor, a purely compensation income
earner:
Gross compensation income Php 400,000.00
13th month pay and other benefits 40,000.00
SSS 10,000.00
Philhealth contributions 10,000.00
Pagibig contributions 10,000.00
Union dues 10,000.00
Commission 50,000.00
Amount of taxes withheld (by the employer) 30,000.00
The net taxable compensation income to be used in computing the tax is:
Response: c. Php 450,000
Feedback: Solution:
Gross compensation income 400,000.00
Less:
13th month pay and other benefits 40,000.00
SSS 10,000.00
Philhealth contributions 10,000.00
Pagibig contributions 10,000.00
Union dues 10,000.00 80,000.00
Net taxable compensation income 320,000.00
Correct answer: a. Php 320,000
Score: 0 out of 1 No
Question 5
A person whose business is to keep automobile for hire or keep them stored for use or order
Response: a. Common carriers
Feedback: Note: Keepers of garage is the more specific definition.
Correct answer: b. Keepers of garage
Score: 0 out of 1 No
Question 6
In 2020, Nicanor inherited 1,000 ABC Corp.'s shares of stocks par value 100 from his late father who bought the shares in 2015. The stocks are valued at the time
of inheritance Php 1 Million. Currently, the book value is appraised at Php 3 Million. He sold the shares of stocks for Php 2 Million. The capital gains tax is?
Response: 285,000
Feedback:
Correct answer: 150,000
Score: 0 out of 1 No
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Question 7
Nicanor has placed a bet in the illegal on-line "talpakan", a cockfighting event. He won Php 100,000. The amount is
Response: exempt from taxation
Correct answer: an ordinary or active or item of gross income
Score: 0 out of 1 No
Question 8
Federico, a Filipino citizen, migrated to the United States some six years ago and got a permanent resident status or green card. He should pay his Philippine
income taxes on
Response: c. the gains derived from the sale in the New York Stock Exchange of shares of stock in PLDT, a Philippine corporation.
Correct answer: c. the gains derived from the sale in the New York Stock Exchange of shares of stock in PLDT, a Philippine corporation.
Score: 1 out of 1 Yes
Question 9
ABC Corporation, a resident foreign corporation sold its real property classified as capital asset, which is located in Makati, to XYZ Corporation. The sale of
property is subject to regular income tax.
Response: True
Feedback: T. Real property located in the Philippines, regardless of classification, sold by a resident foreign corporation shall be subject to ordinary income tax.
Correct answer: True
Score: 1 out of 1 Yes
Question 10
Facts: Nicanor and Inday, husband and wife, donated a communal parcel of land located in Manila to their son, Junior who was getting married within 7 months
after the date of donation. Below are the details about the fair market value of the parcel of land:
Fair market value at the time of donation P 5,000,000
Fair market value at the time of marriage P 5,500,000
Additional information:
• The property is subject to mortgage amounting to P 1,000,0000 which was assumed by Junior
How much is the gross gift of Nicanor?
Response: a. P 5,000,000
Feedback: ANS: P 2,500,000
Solution:
Gross gift (fair market value at the time of donation = P 5Million/2 = P 2,500,000
Correct answer: d. Some other answer
Score: 0 out of 1 No
Question 11
Manuel, an accounting clerk of JMC Marketing Corp., received P 5,000 fringe benefits from the company. The fringe benefits received by Manuel is subject to
fringe benefits tax.
Response: False
Feedback: fringe benefits received by a rank-and-file employee is treated as an additional compensation subject to withholding tax on compensation.
Correct answer: False
Score: 1 out of 1 Yes
Question 12
The CTA, as one of the Courts comprising the Philippine Judiciary, is under the supervision of:
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Response: The Supreme Court
Correct answer: The Supreme Court
Score: 1 out of 1 Yes
Question 13
Nicanor is an owner of a stock dealer. During the covid-19 pandemic, because of the government’s imposition of lockdown, he suffered losses. During the same
year, he decided to close his business. Thus, he sold some of his stocks to Kathy, his friend, for P 3,000,000. At the time of sale, the fair market value of the stocks
is P 4,000,000. The stocks were purchased by Nicanor 3 years ago at a cost of P 2,000,000.
Based on the foregoing facts, what is the tax implication of selling the stocks? (choose the best answer)
Response: a. The insufficient consideration is subject donor’s tax
Feedback: Reason: Ordinary asset of stocks is not covered by section 100 of the tax code as it is a sale in an arm’s length of transaction.
Correct answer: a. The insufficient consideration is subject donor’s tax
Score: 1 out of 1 Yes
Question 14
Nicanor is the owner of grocery store in Manila. On October 05, 2023, he made rent payments amounting to P 112,000 (inclusive of vat) to Aling Marites, the
owner of the building which Wendel is currently occupying the whole 1st floor.
How much withholding tax, if any, will NIcanor withhold to his payment to Aling Marites, assuming Nicanor is not classified by the BIR as top withholding
agent?
Response: b. P 5,000
Feedback: Solution:
P 112,000/1.12 = P 100,000 x 5% = P 5,000
Regardless of whether or not Nicanor is a top withholding agent, RR-11-2018 provides that income payment of rental is subject to 5% withholding tax
Correct answer: b. P 5,000
Score: 1 out of 1 Yes
Question 15
Nicanor is registered as a non-VAT taxpayer engaged in on-line selling. He opted for 8% income taxation when he filed his 1st quarterly income tax return. His
“pa-mine” business made him earn a gross amount of Php 5 million. Statement: Nicanor can still partly avail 8% on his income and partly graduated tax rate on the
excess of the Php 3 million.
Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 16
Situs is the place or jurisdiction of taxation.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 17
It is a proceeding in the nature of attachment wherein the credits, properties or effects of a delinquent taxpayer in the hands of a third person/entity may be made to
satisfy the collection of his/her/its tax liabilities being enforced by a warrant issued by the Bureau of Internal Revenue (BIR).
Response: Seizure
Correct answer: Garnishment
Score: 0 out of 1 No
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Question 18
ECOZONE Service Enterprise is a business entity or concern within the ECOZONE whose income derived within the ECOZONE shall be subject to taxes under
the National Internal Revenue Code.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 19
Under the LGC, the real property shall be classified, valued and assessed on the basis of its _____________ regardless of where located, whoever owns it, and
whoever uses it.
Response: Actual use
Correct answer: Actual use
Score: 1 out of 1 Yes
Question 20
John as Trustor entrusted his real property in Makati to Big Trust Corp. (trustee) with Kate as the beneficiary.
The trustee invested the property in different money-making ventures . The following information were made available for the year 2022:
Trust
Gross income P 2,000,000
Business expenses 1,200,000
Income distributed to Kate (in gross amount) 100,000
Assuming Kate has no other source of income, compute the income tax due of Trust.
Response: b. P 90,000
Feedback: Solution:
Gross income P 2,000,000
Less:
Business expenses 1,200,000
Special deduction:
Income distributed to Kate 100,000
Taxable income 700,000
Income tax due
400k-800k P 30,000
25% of excess over 400k 75,000
Total income tax due 105,000
Correct answer: a. P 105,000
Score: 0 out of 1 No
Question 21
It is a system where the tax treatment views indifferently the tax base and generally treats in common all categories of taxable income of the taxpayer
Response: d. Progressive tax system
Correct answer: a. Global tax system
Score: 0 out of 1 No
Question 22
Tax avoidance is unlawful if intentionally done
Response: True
Feedback: Tax avoidance is NOT illegal. Hence, whether intentionally made or not, no violation can be attributed to the taxpayer
Correct answer: False
Score: 0 out of 1 No
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Question 23
Which is subject to VAT? Sale or importation of prescription drugs and medicines for:
Response: High cholesterol
Correct answer: Heart attack
Score: 0 out of 1 No
Question 24
For income tax purposes, all kinds of partnerships are taxable as corporations.
Response: True
Feedback: General Professional Partnership is a pass thru entity and is exempt from income tax
Correct answer: False
Score: 0 out of 1 No
Question 25
Below is the summary of sales made by Nicanor to Inday in the year 2021:
Date of transaction
Description
August 1, 2021
Nissan Almera, Car
August 1, 2021
Golden ring
October 28, 2021
Vacant lot – Macabebe Pampanga (FMV
15,000,000)
Amount
P 900,000
50,000
6,000,000
In relation to the sale on October 28, 2021, when is the deadline for the payment of DST?
Response: November 5, 2021
Feedback: Deadline is 5th day following the month of sale
Correct answer: November 5, 2021
Score: 1 out of 1 Yes
Question 26
Claims of the decedent against insolvent persons are included in the gross estate at their uncollectible portion.
Response: False
Feedback: Full amount
Correct answer: False
Score: 1 out of 1 Yes
Question 27
Statement 1: Propriety Educational Institutions refer to any private schools, which are non-profit for the purpose of these Regulations, maintained and
administered by private individuals or groups, with an issued permit to operate from the Department of Education (DepEd) or the Commissioner on Higher
Education (CHED) or the Technical Education and Skills Development Authority (TESDA), as the case maybe, under existing laws and regulations.
Statement 2: Propriety Hospitals refer to any private hospitals, which are non-profit for the purpose of these Regulations, maintained and administered by private
individuals or groups.
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Response: a. Only S1 is true
Feedback: RR 3-2022 defines Proprietary Educational Institutions as any private schools, maintained and administered by private individuals or groups, with an
issued permit to operate as the case may be, under existing laws and regulations from any of the following:
• Department of Education (DepEd) or
• Commission on Higher Education (CHED) or
• Technical Education and Skills Development Authority (TESDA)
the provisions on the “nonprofit” qualification of proprietary educational institutions was deleted.
Correct answer: b. Only S2 is true
Score: 0 out of 1 No
Question 28
Statement no.1: Gross-up monetary value is reflected in the books of account as fringe benefit expense and fringe benefit tax expense.
Statement no. 2: Fringe benefits subject to fringe benefit tax cover only those fringe benefit given or furnished to a managerial or rank-and-file employee.
Statement no. 3: Rice subsidy of P 2,000 or 1 sack of 50 kg rice per year amounting not more than P 2,000 pesos is an exempt de minimis benefits.
Response: Statements 1 and 2 are false, but Statement number 3 is true
Correct answer: Statement 1 is true, but Statements 2 and 3 are false
Score: 0 out of 1 No
Question 29
S1: Unless otherwise provided by special laws, if the denatured alcohol is mixed with gasoline, the excise tax on which has already been paid, the alcohol content
shall be subject to the tax herein prescribed. The removal of denatured alcohol of not less than one hundred eighty degrees ( I80˚) proof (ninety percent (90%)
absolute alcohol) shall be deemed to have been removed for motive power. unless shown otherwise.
S2: The excise tax paid on the purchased basestock (bunker) used in the manufacture of excisable articles and forming part thereof shall be credited against the
excise tax due thereon. For purposes of these regulations. any excess of excise taxes paid on raw materials resulting from manufacturing, blending. processing,
storage, and handling losses shall not give rise to a tax refund or credit.
Response: Only S2 is true
Feedback: Specific rule under RR-2-2018
Correct answer: Both are true
Score: 0 out of 1 No
Question 30
On June 23, 2023, Nicanor received a letter from the BIR demanding him to pay a penalty of P 5,000 for his late payment of his tax return which he previously
filed thru eFPS platform but was not able to pay on time. The breakdown of the penalty is as follows: 1. Surcharges of P 3,500; 2. Interest of P 500; and 3.
Compromise penalty of P 1,000.
You were hired by Nicanor as his accountant and you were about to file his second quarter income tax return. How much of the above penalties will you include as
deductions from gross income of Nicanor, assuming Nicanor opted itemized deductions?
Response: d. P 500
Feedback: Only the interest penalty is allowed to be deducted from gross income of Nicanor. The surcharges and compromise penalty are not allowable
deductions under the the NIRC.
Correct answer: d. P 500
Score: 1 out of 1 Yes
Question 31
1st statement – A sole proprietor can register as a BMBE.
2nd statement – A corporation can register as a BMBE.
3rd statement – A partnership can register as a BMBE.
4th statement – A cooperative can register as a BMBE.
Which is True?
Response: Only one
Correct answer: Only one
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Score: 1 out of 1 Yes
Question 32
Martin, a resident citizen, is an employee of AMC Corporation. He received the following from his employer in 2023:
Basic monthly compensation P 75,000
13th month pay 75,000
Transportation allowance (P 5,000 per month) 60,000
Productivity incentive bonus 10,000
Christmas bonus 30,000
Uniform allowance 26,000
Actual medical allowance 10,000
Rice subsidy 36,000
Note: There is no labor organization in the company. Ergo, no Collective Bargaining Agreement.
How much is the total 13th month pay and other benefits?
Response: c. P 75,000
Feedback: ANS: P 142,000
Solution:
De minimis Excess de minimis
Christmas bonus 5,000 25,000
Uniform allowance 6,000 20,000
Actual medical allowance 10,000 0
Rice subsidy 24,000 12,000
Total 45,000 57,000
Excess de minimis 57,000
13th month pay 75,000
Productivity incentive bonus 10,000
Total 13th month pay and other benefits 142,000
Note: If Company has no CBA but nonetheless provided productivity incentive bonus, the amount given can be reported under the 13th month pay and other
benefits
Correct answer: d. Some other answer
Score: 0 out of 1 No
Question 33
Upon receipt of 1st Notice in BIR audit, how many days does a taxpayer have to submit his/its documents before issuance of a 2nd and Final Notice?
Response: 20 days
Correct answer: 10 days
Score: 0 out of 1 No
Question 34
Juicy Wiggle Corporation will remove from customs 50 cases of Four Seasons Powdered Juice using caloric and non-caloric sweetener containing 144 packs by 25
grams. Each 25 grams pack can make 1 Liter (per serving suggestion appearing on the label)
How much is the total excise tax to be paid before removal?
Response: P 21,600
Feedback:
No. of Cases
Multiplied by no. of bottle per case
Total no. of bottles
Multiplied by content per bottle
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50
144
7,200
1L
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Total Volume in Liter
Multiplied by Specific Tax Rate
Total excise tax to be paid before removal
7,200L
6.00
P43,200
Correct answer: P 43,200
Score: 0 out of 1 No
Question 35
1st statement - A motion for new trial may be based on fraud, accident, mistake, excusable negligence.
2nd statement – A motion for new trial may be based on newly discovered evidence, which he could not, with reasonable diligence, have discovered and produced
at the trial and, which, if presented, would probably alter the result.
Response: only 2nd is true
Correct answer: Both are true
Score: 0 out of 1 No
Question 36
Due to closure, ABS Corporation (DC) sold its assets to CBN Corporation (RFC). The gain is derived from ____ and it is:
Response: Within, Taxable
Correct answer: Within, Taxable
Score: 1 out of 1 Yes
Question 37
The following are non-fiscal incentives of a BOI registered enterprise, except:
S1. Foreign nationals may be employed in supervisory, technical or advisory positions within five (5) years from a project’s registration
S2. Income tax holiday for a number of years depending on whether the status of the registrant is a pioneer or non-pioneer
S3. Registered export-oriented enterprise shall have access to the utilization of the bonded warehousing system in all areas.
S4. Simplification of customs procedures for the importation of equipment, spare parts, raw materials, and supplies and exports of processed products of registered
enterprises in the operations of their bonded warehouses.
S5. There shall be no restrictions on the use of consigned equipment provided a re-export bond is posted.
Response: S4
Correct answer: S2
Score: 0 out of 1 No
Question 38
A domestic corporation made available the following financial information covering TY 2021:
Statement of Financial Position Statement of Comprehensive Income
Assets: Gross receipts 15,000,000
Current 20,000,000 Cost of service 5,000,000
Non-current (land/bldg) 10,000,000 Gross profit 10,000,000
Liabilities 5,000,000 Expenses 5,000,000
Stockholders’ Equity 25,000,000 Net income 5,000,000
The income tax due is:
Response: a. P 1,000,000
Feedback: Solution:
Statement of Comprehensive Income
Gross receipts 15,000,000
Cost of service 5,000,000
Gross profit 10,000,000
Expenses 5,000,000
Net income 5,000,000
CITR 20%
Income tax due 1,000,000
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Correct answer: a. P 1,000,000
Score: 1 out of 1 Yes
Question 39
Nicanor, a Filipino citizen residing in the Philippines invested in XYZ Corporation established under the laws of the United States. The Corporation, which earned
gross income (for the last three years) in the United States amounting to Php 200M and another Php 100M within the Philippines declared dividends. Nicanor will
receive Php 100,000.00, XYZ Corp is
Response: NRFC
Correct answer: Cannot be determined
Score: 0 out of 1 No
Question 40
In an administrative appeal, which is FALSE?
S1. If the motion for reconsideration has not been acted upon by the Commissioner, the taxpayer has within 30 days after the lapse of the 180 day period to file an
appeal to the Court of Tax Appeals
S2. If the motion for reconsideration is denied by the Commissioner, the taxpayer has 30 days within which to file a petition for review before the Court of Tax
Appeals
S3. If there is inaction on the part of the Commissioner and the taxpayer failed to file an appeal to the CTA within the prescriptive period, the remedy is to just
await the decision of the Commissioner
S4. Without the Commissioner acting the motion for reconsideration within 180 days, and the taxpayer failed to elevate to the CTA within 30 days after the lapse
thereof, the remedy is to go to Supreme Court (Division and then En Banc)
Response: S3
Correct answer: S4
Score: 0 out of 1 No
Question 41
The taxpayer/withholding agent/payor is required to attach the Quarterly Alphalist of Payees (QAP) and submitted thru the BIR e-submission facility.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 42
Interest income of Nicanor from peso bank deposit in ABC Bank is Php 10,000. The net cash which Nicanor can withdraw with respect to the deposit is
Response: 8,000
Correct answer: 8,000
Score: 1 out of 1 Yes
Question 43
Sale of electricity by Meralco or the Electric Cooperatives based in provinces are:
Response: Subject to 12%
Correct answer: Subject to 12%
Score: 1 out of 1 Yes
Question 44
A dealer in securities has the following for the year 2020:
Sales of securities for the sale in the ordinary course P 4,000,000
Cost of securities held for sale in the ordinary course 2,500,000
Supplies expenses, net of vat 300,000
Rent expenses, net of vat 500,000
Determine the VAT Payable
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Response: c. P 384,000
Feedback: Answer: P 84,000
Solution:
Output VAT (4,000,000 – 2,500,000) x 12% P 180,000
Input VAT (P800,000) x 12% (96,000)
VAT Payable P 84,000
Correct answer: d. Some other answer
Score: 0 out of 1 No
Question 45
Nicanor operates a convenience store while he offers bookkeeping services to his clients. In 2023, his sales amounted to Php 2,000,000.00, in addition to his gross
receipts from bookkeeping services of Php 500,000.00. His recorded cost of goods sold, and operating expenses were P1,200,000.00 and P550,000.00,
respectively. His clients issued him BIR Form 2307 for withholding taxes amounting to P 25,000.
If Nicanor will opt to avail of the OSD, compute the income tax payable:
Response: c. P 252,500
Feedback: Solution:
Gross sales – Convenience store P 2,000,000
Gross receipts – Bookkeeping services 500,000
Total 2,500,000
Multiply by 60%
Net taxable income 1,500,000
On 800k-2M P 102,500
Excess of 800k ([1.5M – 800k] x 25%) 175,000
Tax due 277,500
Less: Tax credit (BIR FORM 2307) 25,000
Income tax payable 252,500
Correct answer: c. P 252,500
Score: 1 out of 1 Yes
Question 46
A domestic corporation made available the following financial information covering TY 2021:
Statement of Financial Position Statement of Comprehensive Income
Assets: Gross receipts 10,000,000
Current 200,000,000 Cost of service 6,000,000
Non-current (land/bldg) 500,000,000 Gross profit 4,000,000
Liabilities 250,000,000 Expenses 2,000,000
Stockholders’ Equity 450,000,000 Net income 2,000,000
The income tax due is:
Response: a. P 500,000
Feedback: Statement of Comprehensive Income
Gross receipts 10,000,000
Cost of service 6,000,000
Gross profit 4,000,000
Expenses 2,000,000
Net income 2,000,000
CITR 25%
Income tax due 500,000
Correct answer: a. P 500,000
Score: 1 out of 1 Yes
Question 47
A standard deduction in the amount of Php 5,000,000 shall be allowed for either a citizen or resident (RCD, NRCD, RAD) without the need of substantiation.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
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Question 48
Nicanor, an employee of ABC Corp., is receiving regular monthly compensation in the amount of P 165,000 net of mandatory contributions, with supplementary
compensation in the amount of P 5,000 for the month.
Determine the total monthly WTC for the year 2023.
Response: a. P 34,375.05
Feedback: Solution:
Total taxable P 165,000
Less Compensation range (4th bracket) 66,667
Excess 98,333
Add: supplementary compensation 5,000
Total 103,333
Using 4th bracket
Predetermined tax on P 66,667 P 8,541.80
Add: Tax on excess (P103,333 x 25%) 25,833.25
Total monthly WTC 34,375.05
Correct answer: a. P 34,375.05
Score: 1 out of 1 Yes
Question 49
P 406 billion ill-gotten wealth received by government officers A, B, C, D, E, and F, is not a taxable income because they will eventually return the money to the
government when ordered by the Court.
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 50
. John is an OCW based on Saudi Arabia. From January to June 2022, he earned Php 2 Million from his business in the Philippines and another Php 2 Million from
his employment abroad. On July 1, 2022, he returned to the Philippines to live permanently herein. Upon his return and until the end of the year, he earned Php 1
Million from his business and another Php 1 Million from sources outside the Philippines.
How much is John’s total taxable income?
Response: c. P 2,000,000
Feedback: Solution
Income from business (Jan-Jun 2022) P 2,000,000
Income from business (Jul-Dec 2022) 1,000,000
Income from outside the Phil (Jul-Dec 2022) 1,000,000
Total income from within P 4,000,000
Correct answer: a. P 4,000,000
Score: 0 out of 1 No
Question 51
Ching Chong Bank has the following data for the first month of the current year:
Interest, commissions, and discounts from lending activities (remaining maturity of 5 years)
P 5,000,000
Income from finance leasing (remaining maturity is more than 5 years)
3,000,000
Dividends and equity shares in net income of subsidiaries
1,000,000
Rentals of properties
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500,000
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Net trading gains within the taxable year on foreign currency
300,000
How much is the gross receipt tax?
Response: P 306,000
Feedback:
OPT rate
GRT
Interest income from lending activities with
remaining terms of:
5 yrs and less
5Million
5%
P 250K
More than 5 yrs
3Million
1%
30K
Dividends and equity shares
1Million
0%
0
Rental Income
500K
7%
35K
Net trading gains
300K
7%
21K
Total GRT
P 336K
Correct answer: P 336,000
Score: 0 out of 1 No
Question 52
S1: All persons who are engaged in business shall secure from the Bureau of Internal Revenue an authority to print receipts or sales or commercial invoices before
a printer can print the same.
S2: No authority to print receipts or sales or commercial invoices shall be granted unless the receipts or invoices to be printed are serially numbered and shall
show, among other things, the name, business style, Taxpayer Identification Number (TIN) and business address of the person or entity to use the same, and such
other information that may be required by rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner.
Response: Only S2 is true
Feedback: Specific rule under Section 238 of NIRC, as amended.
Correct answer: Both are true
Score: 0 out of 1 No
Question 53
21. The Inter-Agency Task Force on Emerging Infectious Disease, as the government arm in combatting COVID-19, imposed a rule banning all minors and senior
citizens from going out the households. Any person violating the rule will be penalized in the amount of Php 10,000 or suffer imprisonment. The rule is in
accordance with what power of the State? This is about Police Power
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 54
Sale of apple by a local vendor in wet market is subject to VAT
Response: False
Correct answer: False
Score: 1 out of 1 Yes
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Question 55
The CIR has the power to promulgate revenue regulations for the effective implementation of a tax law
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 56
It refers to a business entity or concern within the ECOZONE duly registered with and / or franchised / licensed by the PEZA with or without the incentives
provided under Republic Act No. 6957, as amended, (the Build-Operate-Transfer Law) and / or with or without financial exposure on the part of the PEZA, such
as contractors/operators of light and power systems, water supply and distribution systems, communications and transportation systems within the ECOZONE and
other similar or ancillary activities as may be determined by the Board.
Response: Utilities Enterprise
Correct answer: Utilities Enterprise
Score: 1 out of 1 Yes
Question 57
Nicanor operates a convenience store while he offers bookkeeping services to his clients. In 2023, his sales amounted to Php 2,000,000.00, in addition to his gross
receipts from bookkeeping services of Php 500,000.00. His recorded cost of goods sold, and operating expenses were P1,200,000.00 and P550,000.00,
respectively. His clients issued him BIR Form 2307 for withholding taxes amounting to P 25,000.
If Nicanor opted 8% income tax rate in his first quarter return, compute his income tax payable:
Response: a. P 180,000
Feedback: Solution:
Gross sales – Convenience store P 2,000,000
Gross receipts – Bookkeeping services 500,000
Total 2,500,000
Less 250,000
Net taxable income 2,250,000
Multiply by 8%
Tax due 180,000
Less: Tax credit (BIR FORM 2307) 25,000
Income tax payable 155,000
Correct answer: d. P 155,000
Score: 0 out of 1 No
Question 58
Facts: Nicanor, single, who died in 2020 has left the following bank deposits:
1. Bank of the Pelepens with account no. CA12345 – Php 5 Million
2. Bank of Macabibi with account no. SA54321– Php 5 Million
Which of the following is False?
Response: b. If the heirs of Nicanor opted for alternative taxation, the net estate of Nicanor that is subject to final estate tax amounts to P 5,000,000 only.
Feedback: Reason: should have been regular estate tax.
Correct answer: a. If the heirs of Nicanor opted for alternative taxation (6% final withholding tax), the heirs will save P 300,000 taxes
Score: 0 out of 1 No
Question 59
Non-VAT registered whose sales for the year exceed P 3,000,000 is
Response: c. Subject to percentage tax under Section 109 of the tax code, as amended by train law
Correct answer: d. Subject to 12% VAT under the tax code, as amended by train law
Score: 0 out of 1 No
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Question 60
ABC Corp. is a domestic corporation. It sold goods to XYZ Corp., an export domestic enterprise. ABC Corp. billed XYZ Corp. Php 1,000,000 upon delivery to
XYZ Corp. XYZ Corp. paid Php 1,000,000. Subsequently, XYZ Corp. exported the goods to GHI Corp. based in the United States. The sale by ABC Corp. is:
Response: Subject to 12%
Correct answer: Subject to 0%
Score: 0 out of 1 No
Question 61
The reason why cigarettes manufacturer are taxed heavily is based on the theory:
Response: power of taxation
Correct answer: the power to tax includes the power to destroy
Score: 0 out of 1 No
Question 62
Expanded Withholding Tax (EWT) is a type of creditable withholding tax.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 63
In 2019, Nicanor created two (2) trusts for his daughter, Julia. During the year, the two trusts earned net income as follows:
Trust 1
P 4,000,000
Trust 2
P 6,000,000
Each of the trust filed their own income tax return and paid the corresponding income tax due as computed in their separate returns.
How much is the consolidated tax due of the Trust?
Response: P 1,113,000
Feedback:
Consolidated:
Taxable Net income
P10,000,000
Tax Due (Consolidated):
1st P8,000,000
P 2,410,000
Excess @ 32%
Total Consolidated TAX DUE
700,000
P3,110,000*
Less Paid:
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Trust 1
(1,130,000)
Trust 2
(1,770,000)
Consolidated Income Tax Payable
210,000
Correct answer: P 3,110,000
Score: 0 out of 1 No
Question 64
Basel Manadil (a.k.a. The Hungry Syrian Wanderer) is a Syrian vlogger based in the Philippines. For taxation purposes, he is classified as?
Response: RA
Correct answer: RA
Score: 1 out of 1 Yes
Question 65
If in respect of a particular employee, the regular compensation is exempt from withholding tax because the amount thereof is below the compensation level, but
supplementary compensation is paid during the calendar year; or the supplementary compensation is equal to or more than the regular compensation to be paid; or
the employee was newly hired and had a previous employer/s within the calendar year, other than the present employer doing this cumulative computation, the
present employer shall determine the tax to be deducted and withheld in accordance with the cumulative average method
Response: True
Feedback: Basis: RR-11-2018
Correct answer: True
Score: 1 out of 1 Yes
Question 66
RSDV Corporation, a domestic corporation, owns 20% of the outstanding shares of UK Corporation, a non-resident foreign corporation (NRFC) since August 1,
2015. On May 1, 2021, it received amounting to P 1,000,000 from the said NRFC. On September 1, 2022, RSDV Corporation utilized P 800,000 for its dividend
payments. On January 1, 2023, it utilized the remaining P 200,000 for its working capital requirements.
The P 200,000 portion of dividend income shall be declared as taxable income for the taxable year 2021, subject to surcharges, interest, and penalty since it was
not utilized within the next table year, which is 2022.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 67
Statement 1: Fringe benefits tax is a final tax.
Statement 2: Fringe benefits may be in the form of service.
Response: Statement 2 is true but, Statement 1 is false
Correct answer: Both statements are true
Score: 0 out of 1 No
Question 68
Income to be taxable the gain must not be excluded by law or treaty from taxation
Response: True
Correct answer: True
Score: 1 out of 1 Yes
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Question 69
In case the money deposited in the bank in Philippines earns interest income, the said income is subject to final withholding tax and the bank, who is the
withholding agent, has the obligation to withhold the proper taxes.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 70
Wendel, a resident citizen, is an owner of a sticker printing service in Manila. On January 5, 2023, he purchased goods amounting to P 56,000 (inclusive of vat) to
Papel Corporation.
How much withholding tax, if any, will Wendel withhold to his payment to Papel Corporation, assuming Wendel is classified by the BIR as top withholding agent?
Response: d. P 1,120
Feedback: Solution:
P 56,000/1.12 = P 50,000 x 1% = P 500
RR -11-2018 provides that a top withholding agent, as a rule, is required to withhold 1% on his/her/its payment for purchases of goods.
Correct answer: b. P 500
Score: 0 out of 1 No
https://learn.teamprtc.com.ph/learner_quiz_assessment/submissions/268225
17/17
Taxation (TAX)
Question 1
Under the Train Law, at the option of the decedent, his/her bank deposits may be subjected
to 6% final tax within one (1) year from his, her death.
Response: True
Feedback: At the option of the executor, administrator, or heirs
Correct answer: False
Score: 0 out of 1 No
Question 2
PRTC INC., a corporation engaged in business in the Philippines and abroad has the following data (apply
the
old
rate):
Gross Income, Philippines
P 975,000
Expenses, Philippines
750.000
Gross Income, Thailand
770,000
Expenses, Thailand
630,000
Interest on bank deposit
25,000
How much in the income tax due of PRTC INC., assuming it is a resident foreign corporation?
Response: P67,500
Feedback:
RFC
Gross Income, Philippines
P975,000
Expenses, Philippines
(750,000)
Gross Income, Malaysia
Expenses, Malaysia
Interest on bank deposit
Taxable income
225,000
Tax Rate
30%
Tax Due
67,500
Correct answer: P67,500
Score: 1 out of 1 Yes
Question 3
Which is subject to VAT? Sale or importation of prescription drugs and medicines for:
Response: Heart attack
Correct answer: Heart attack
Score: 1 out of 1
Question 4
Martin, a resident citizen, is an employee of AMC Corporation. He received the following
from his employer in 2023:
Basic monthly compensation P 75,000
13th month pay 75,000
Transportation allowance (P 5,000 per month) 60,000
Productivity incentive bonus 10,000
Christmas bonus 30,000
Uniform allowance 26,000
Actual medical allowance 10,000
Rice subsidy 36,000
Note: There is no labor organization in the company. Ergo, no Collective Bargaining
Agreement.
How much is the total exempt de minimis benefits?
Response: d. Some other answer
Feedback: Solution:
Christmas bonus 5,000
Uniform allowance 6,000
Actual medical allowance 10,000
Rice subsidy 24,000
Total P 45,000
Note: If Company has no CBA but nonetheless provided productivity incentive bonus,
the amount given can be reported under the 13th month pay and other benefits
Correct answer: b. P 45,000
Score: 0 out of 1 No
Question 5
Registration Agreement is the final agreement executed by the PEZA and the ECOZONE
Enterprise setting forth the terms and conditions for the latter's operation of business or
engaged of economic activity within the ECOZONE.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 6
Nicanor, a resident Filipino citizen invested in PA-MINE CORPORATION, a foreign
corporation. The corporation, which has sales in the United States amounting to Php 100M
and another Php 200M in the Philippines declared dividends. The dividend income is derived
from ____ and it is:
Response: Within, Taxable
Correct answer: Within, Taxable
Score: 1 out of 1 Yes
Question 7
Inday, an employee of Beshie Corp., is receiving daily compensation in the amount of
P2,500, net of mandatory contributions.
Determine the total daily withholding tax on compensation for the year 2022.
Response: a. P 448.56
Feedback: Solution:
Total taxable compensation ₱ 2,500.00
Less: Compensation Range (Minimum) 2,192.00
Excess ₱ 308.00
Withholding tax shall be computed as follows:
Predetermined Tax on ₱2,192.00 ₱ 356.16
Add: Tax on the excess (₱308.00 x 30%) 92.40
Total daily withholding tax ₱ 448.56
Correct answer: a. P 448.56
Score: 1 out of 1 Yes
Question 8
Any benefit that increases a taxpayer’s net worth, whatever may have been the mode by
which it is affected, is taxable.
The foregoing is based on what test in determining income?
Response: d. All events test
Correct answer: c. Economic Benefit Test
Score: 0 out of 1 No
Question 9
A domestic corporation made available the following financial information covering TY 2021:
Statement of Financial Position Statement of Comprehensive Income
Assets: Gross receipts 25,000,000
Current 200,000,000 Cost of service 10,500,000
Non-current (land/bldg) 500,000,000 Gross profit 14,500,000
Liabilities 250,000,000 Expenses 6,000,000
Stockholders’ Equity 450,000,000 Net income 8,500,000
Based on the foregoing, the proper corporate income tax rate that is applicable is:
Response: a. 20%
Feedback: Reason: Total assets excluding the land exceeded P 100,000,000 and the
Net income exceeded the P 5,000,000
Correct answer: b. 25%
Score: 0 out of 1 No
Question 10
Statement 1: Profit sharing and benefits under CBA up to P10,000 is an exempt de minimis
benefits.
Statement 2: Uniform and clothing allowance – not exceeding P6,000 per annum is an
exempt de minimis benefits.
Statement 3. Actual Medical Assistance, e.g. medical allowance to cover medical and
healthcare needs, annual medical/executive check-up, maternity assistance, and routine
consultations – not exceeding P10,000 per annum is an exempt de minimis benefits.
Response: Statement 1 is false, but Statements 2 and 3 are true.
Correct answer: Statement 1 is false, but Statements 2 and 3 are true.
Score: 1 out of 1 Yes
Question 11
Income to be taxable there must be a gain
Response: True
Correct answer: True
Score: 1 out of 1
Question 12
In case of failure to pay the basic real property tax or any other tax levied, the interest rate is
____ per month on the unpaid amount or a fraction thereof, until the delinquent tax shall
have been fully paid: Provided, however, that in no case shall the total interest on the unpaid
tax or portion thereof exceed thirty-six (36) months.
Response: 2%
Correct answer: 2%
Score: 1 out of 1 Yes
Question 13
If an income payment is exempted from taxation, it is also exempted from withholding tax.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 14
S1: In general, DST is levied on the exercise by persons of certain privileges conferred by law
for the creation, revision, or termination of specific legal relationships through the execution
of specific instruments.
S2: DST is It is an excise tax on the exercise of a right or privilege to transfer obligations,
rights or properties incident thereto
S3: It is a tax on documents, instruments, loan agreements and papers evidencing the
acceptance, assignment, sale or transfer of an obligation, right or property incident thereto.
Response: All is true
Correct answer: All is true
Score: 1 out of 1 Yes
Question 15
Nicanor and Inday sold their conjugal residence for Php 10M. Zonal value is 5M. Sale is
Response: Subject to percentage tax
Correct answer: VAT-exempt
Score: 0 out of 1 No
Question 16
Excess de minimis of a managerial employee shall form part of the Php 90,000 threshold
(13th month pay and other benefits)
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 17
Non-life insurance premiums are exempt from VAT.
Response: True
Correct answer: False
Score: 0 out of 1
Question 18
Amount received by heirs under R.A. No. 4917 should be included first in the computation of
gross estate to claim its appropriate deduction.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 19
Compensation income earner is disqualified from availing the 8% optional income tax.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 20
All national internal revenue taxes can be allowed as a deduction from gross income.
Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 21
S1: Purely electric vehicles shall be exempt from the excise tax on automobiles.
S2: Hybrid vehicles shall be exempt from the excise tax on automobiles.
Response: Both are true
Feedback: S2: Hybrid vehicles shall be subject to 50% of the applicable excise tax on
automobiles. RR-24-2018
Correct answer: Only S2 is false
Score: 0 out of 1 No
Question 22
In general, holder of franchise for the supply of electricity is liable to pay other percentage
taxes.
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 23
ABC Corp., a TWA, purchased goods from Nicanor Enterprises in the amount of Php 20,000.
If the purchase is a single purchase and Nicanor Enterprises is not considered a regular
supplier, ABC Corp. is not required to make the withholding.
Response: False
Feedback: Purchase is over 10,000 hence withholding is required
Correct answer: False
Score: 1 out of 1 Yes
Question 24
In 2019, Nicanor created two (2) trusts for his daughter, Julia. During the year, the two trusts
earned net income as follows:
Trust 1 P 4,000,000
Trust 2 P 6,000,000
Each of the trust filed their own income tax return and paid the corresponding income tax
due as computed in their separate returns.
How much is the additional income tax payable of Trust 2?
Response: P 1,770,000
Feedback:
Net income
P6,000,000
Tax due:
1st P2,000,000
P490,000
Excess @ 32%
1,280,000
Tax due/paid
1,770,000
Versus Share
1,866,000***
Income Tax Payable-Trust 2
P96,000
Share in the Consolidated Tax due:
Trust 2 (6,000,000/10,000,000) x P 3,110,000* 1,866,000***
Correct answer: P 96,000
Score: 0 out of 1 No
Question 25
For income tax purposes, all kinds of partnerships are taxable as corporations.
Response: True
Feedback: General Professional Partnership is a pass thru entity and is exempt from
income tax
Correct answer: False
Score: 0 out of 1 No
Question 26
It is the authority granted to internal revenue officers to distraint personal property of
whatever character and to levy upon the real property and interest in or rights to real
property of a delinquent taxpayer.
Response: Warrant of Distraint and/or Levy
Correct answer: Warrant of Distraint and/or Levy
Score: 1 out of 1 Yes
Question 27
Nicanor is classified as a non-resident citizen since 2001. In the height of the pandemic, he
decided to return in March 2020 and live permanently in the Philippines. In 2020, Nicanor is
classified as:
Response: Filipino citizen
Correct answer: Non-resident citizen
Score: 0 out of 1 No
Question 28
Nicanor bought 1,000 shares of stock of ABC Corp. amounting to Php 1,000,000.00 in 2015.
The par value of each share is Php 1,000. He sold the same to Inday for Php 2,000,000 in
2021. The Book Value is at Php 3,000 per share. Compute the capital gains tax.
Response: 300,000
Feedback:
Correct answer: 150,000
Score: 0 out of 1 No
Question 29
Income from winnings from “talpakan na!” an online gambling which is not registered with
PAGCOR is a taxable income
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 30
ABC., Co. gave fringe benefits to employees as follows:
To its Clerks and Janitors, P100,000
To its Area Managers, P650,000
How much is the fringe benefit tax?
Response: P 227,500
Feedback:
Monetary value
Divided by
P 650,000
65%
Gross-up monetary value
1,000,000
Multiply by Fringe benefit
rate
35%
Fringe benefit tax
P 350,000
Correct answer: P 350,000
Score: 0 out of 1 No
Question 31
Corporations exempt from income tax are subject to income tax on income of whatever kind
and character from any of their properties (real or personal) or from any other activity
conducted for profit regardless of the disposition of such income.
Response: True
Feedback: Basis: last paragraph of Section 30 of the NIRC
Correct answer: True
Score: 1 out of 1 Yes
Question 32
The Income Statement of ABC Corp., a Top Withholding Agent (TWA) disclosed the following:
Gross Sales - Php 5,000,000
Less: Cost of Sales:
Merchandise Inventory (beg) - 1,000,000
Add: Purchases of inventories - 2,000,000
Available for Sale - 3,000,000
Merchandise Inventory (end) - 500,000
Cost of sales - 2,500,000
Gross Profit - 2,500,000
Administrative and Operating expenses:
Salaries and wages - 500,000
Professional fees (GPP) – 100,000
Professional fees (made to small time practitioners-STP and submitted sworn declaration) –
100,000
Rent – 100,000
Janitorial expenses (agency fee is 50,000) - 300,000
Security expenses (agency fee is 50,000) - 300,000
Utility expense (electricity) - 100,000
Net Income 1,000,000
Compute the EWT on professional fees:
Response: 5,000
Feedback: GPP is exempt. STP - 5%.
Correct answer: 5,000
Score: 1 out of 1 Yes
Question 33
For purposes of computing the tax, gross Income means the gross sales or gross revenues
derived from business activity within the ECOZONE, net of sales discounts, sales return and
allowances and minus costs of sales or direct costs but before any deduction is made for
administrative expenses or incidental losses during a given taxable period.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 34
Nicanor, a resident citizen, owns a small grocery in Manila. The following information for the
year 2023 are made available:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Annual
Gross sales 50,000 60,000 100,000 100,000 310,000
(From business)
Cost of goods sold 15,000 18,000 30,000 30,000 93,000
Gross income 35,000 42,000 70,000 70,000 217,000
Business expenses 5,000 6,000 4,000 20,000 35,000
Assuming Nicanor has no other income and he opted 8% income tax rate on his first quarterly
income tax return, compute for his annual income tax payable.
Response: b. P 4,800
Feedback: Solution
Annual Gross sales 310,000
Less: allowable deductions 250,000
Taxable income 60,000
Rate 8%
Income tax due and payable 4,800
Correct answer: b. P 4,800
Score: 1 out of 1 Yes
Question 35
16. Which of the following is TRUE if the motion for reconsideration or for new trial is
denied?
S1. A second motion for reconsideration or for new trial of a decision, final resolution or order
may be made
S2. Elevate the case to the Court of Appeals
S3. Elevate the case to the Supreme Court
S4. No second motion for reconsideration or for new trial of a decision, final resolution or
order can be made
Correct answer: S4
Score: 0 out of 1 No
Question 36
Income tax paid can be claimed either as a tax credit or an expense at the option of the
taxpayer.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 37
Nicanor received reward for giving information leading to the collection of Twenty Million
Pesos (Php 20 M). The BIR will withhold a final tax of?
Response: 0
Correct answer: 100,000
Score: 0 out of 1 No
Question 38
If Johnny is a non-VAT taxpayer, which of the following books of accounts is not required to
be registered.
Response: Journal
Feedback: Subsidiary sales journal and subsidiary purchase journal are required only on
VAT taxpayers.
Correct answer: Subsidiary Sales Journal
Score: 0 out of 1 No
Question 39
S1: Excise tax is a tax on the production, sale, or consumption of a commodity in a country.
S2: Ad Valorem Tax – refers to the excise tax which is based on selling price or other
specified value of the goods/articles.
S3: In general, the time of payment of excise tax on domestic products is after removal from
the place of production.
Response: Only S1 is false
Feedback: S3: In general, the time of payment of excise tax on domestic products is
after removal from the place of production.
Correct answer: Only S3 is false
Score: 0 out of 1 No
Question 40
Goldie, an employee of Silver Corp., is receiving weekly compensation in the amount of
₱9,500, net of mandatory contributions.
Assuming the Company has twenty-four working days (or equivalent to four weeks) January
2022, the total monthly withholding tax on compensation required to be withheld for
Golide’s salary is:
Response: c. P 4,115.68
Feedback: Total taxable compensation ₱ 9,500.00
Less: Compensation Range (Minimum) 7,692.00
Excess ₱ 1,808.00
Withholding tax shall be computed as follows:
Predetermined Tax on ₱7,692.00 ₱ 576.92
Add: Tax on the excess (₱1,808.00 x 25%) 452.00
Total weekly withholding tax ₱ 1,028.92
Multiply by (weeks in a month) 4
Total monthly withholding 4,115.68
Correct answer: c. P 4,115.68
Score: 1 out of 1 Yes
Question 41
Donor’s tax is property tax.
Response: True
Feedback: The donor’s tax is not a property tax, but is a tax imposed on the transfer of
property by way of gift inter vivos.
Correct answer: False
Score: 0 out of 1 No
Question 42
Only accrual accounting is allowed under the Tax Code
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 43
The CIR has changed the rules on application of Tax Treaties. In this regard, to guide all
concerned taxpayers, he may issue
Response: Revenue Rulings
Correct answer: Revenue Memorandum Order
Score: 0 out of 1 No
Question 44
The output VAT on goods or properties sold may be imposed even in the absence of actual
sale
Response: False
Feedback: Reason: In case of deemed sale, VAT may be imposed even in the absence
of actual sale.
Correct answer: True
Score: 0 out of 1 No
Question 45
The CTA may sit
Response: En banc and in two divisions
Correct answer: En banc or in divisions
Score: 0 out of 1 No
Question 46
The CIR can impose tax upon persons or properties to ensure steady revenue stream
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 47
As a result of the accident, Nicanor paid hospital expenses which he was able to reimburse later. The money
he received as a result of reimbursement is:
Response: None of the Above
Correct answer: Exclusions from Gross Income
Score: 0 out of 1 No
Question 48
BOI registered enterprises are exempted from the payment of income taxes reckoned from
the scheduled start of commercial operations as follows, except:
S1. Expansion projects for thirty (30) years
S2. New or expansion projects in less developed areas (LDAs) - for six (6) years regardless of
status
S3. New projects with a non-pioneer status - for four (4) years
S4. New projects with a pioneer status - for six (6) years
Response: S2
Correct answer: S1
Score: 0 out of 1 No
Question 49
Nicanor is an owner of a stock dealer. During the covid-19 pandemic, because of the
government’s imposition of lockdown, he suffered losses. During the same year, he decided
to close his business. Thus, he sold some of his stocks to Kathy, his friend, for P 3,000,000.
At the time of sale, the fair market value of the stocks is P 4,000,000. The stocks were
purchased by Nicanor 3 years ago at a cost of P 2,000,000.
Based on the foregoing facts, what is the tax implication of selling the stocks? (choose the
best answer)
Response: d. The insufficient consideration is exempt from donor’s tax
Feedback: Reason: Ordinary asset of stocks is not covered by section 100 of the tax
code as it is a sale in an arm’s length of transaction.
Correct answer: a. The insufficient consideration is subject donor’s tax
Score: 0 out of 1 No
Question 50
S1. An instrument, document or paper with unpaid DST, shall still be recorded, and shall it or
any copy thereof or any record of transfer of the same, it will be admitted or be used in
evidence in any court, provided the taxpayer will pay the same.
S2: Certificates of oaths administered by any government official in his official capacity or
acknowledgement by any government official in performance of his official duty is subject to
DST.
Response: Only S1 is true
Correct answer: Both are false
Score: 0 out of 1 No
Question 51
All are nature of tax, except:
Response: burden
Correct answer: discretionary
Score: 0 out of 1 No
Question 52
Nicanor is registered as a non-VAT taxpayer engaged in on-line selling. He opted for 8%
income taxation when he filed his 1st quarterly income tax return. His “pa-mine” business
made him earn a gross amount of Php 5 million. Statement: Nicanor can still partly avail 8%
on his income and partly graduated tax rate on the excess of the Php 3 million.
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 53
Interest income of Nicanor from peso bank deposit in ABC Bank is Php 10,000. The final tax
withheld is creditable in nature
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 54
During his lifetime, Nicanor, a resident of Manila, lend P 50,000 to Inday. At that time, Inday
was insolvent. When Nicanor dies, his heirs now claiming the P 50,000 loan from inday but
the latter refused to pay and flew to Cebu and hide there for 10 years.
S1: The estate of Nicanor can claim the P 50,000 as claims against insolvent person.
S2: From the foregoing facts, the estate of Nicanor cannot claim any deductions from its
gross estate.
Response: a. Only S1 is true
Feedback: S1: Inday absconded. S2: Nicanor can claim standard deductions
Correct answer: d. Both statements are false
Score: 0 out of 1 No
Question 55
Nicanor is the owner of a restaurant in Manila. On May 02, 2023, he made payments
amounting to P 56,000 (inclusive of vat) to Michael, Nicanor’s independent accountant, for
the latter’s professional fee for rendering accounting and taxation services to Nicanor’s
business.
How much withholding tax, if any, will Wendel withhold to his payment to Michael, assuming
Wendel is not classified by the BIR as top withholding agent?
Response: b. P 5,000
Feedback: Solution:
P 56,000/1.12 = P 50,000 x 10% = P 5,000
Regardless of whether or not Nicanor is a top withholding agent, RR-11-2018 provides
that income payment of professional fees is subject to either 5% or 10% withholding
tax. Since Michael is a VAT registered person, he is not qualified to avail the 5% ewt as
it presumed that his gross receipts exceed the 3M VAT threshold.
Correct answer: b. P 5,000
Score: 1 out of 1 Yes
Question 56
Donation is a tax imposed on the gratuitous transfer of property between two or more
persons who are living at the time of the transfer. It shall apply whether the transfer is in
trust or otherwise, whether the gift is direct or indirect and whether the property is real or
personal.
Response: True
Feedback: Definition of Donor’s tax
Correct answer: False
Score: 0 out of 1 No
Question 57
The first step in the BIR audit process is:
Response: The submission of documents
Correct answer: The issuance of Letter of Authority
Score: 0 out of 1 No
Question 58
ABC Corp. is a domestic corporation. It sold goods to XYZ Corp., a PEZA-registered export
enterprise based in Cavite Economic Zone. ABC Corp. billed XYZ Corp. Php 1,000,000 upon
delivery to XYZ Corp. XYZ Corp. paid Php 1,000,000. Subsequently, XYZ Corp. exported the
goods to GHI Corp. based in the United States. The sale by XYZ Corp. is:
Response: Subject to 0%
Correct answer: Subject to 0%
Score: 1 out of 1 Yes
Question 59
Cebu Pot Authority, a Government-Owned and Controlled Corporation is exempted from
corporate income tax.
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 60
San Miguelito Corporation (SMC) was paid to build the Skyway Stage 3. The income of SMC
is derived from _____ and it is:
Response: Within, Taxable
Correct answer: Within, Taxable
Score: 1 out of 1 Yes
Question 61
Soda Cola Manufacturing Corp. will remove from the place of production 100 cases of Super
Cola using HFCS and non-caloric sweetener. Each contains 6 bottles of 1.5 liters each.
How much is the total excise tax to be paid before removal?
Response: P 10,800
Feedback:
No. of Cases
Multiplied by no. of bottle per case
100
6
Total no. of bottles
600
Multiplied by content per bottle
1.5L
Total Volume in Liters
900L
Multiplied by Specific Tax Rate
Total excise tax to be paid before removal
12.00
P10,800
Correct answer: P 10,800
Score: 1 out of 1 Yes
Question 62
Nicanor earned interest income from the time deposit he made in 2013 in the amount of
Php 10,000 at XYZ Bank, a local bank. The final tax required to be withheld is?
Response: 1,500
Correct answer: 0
Score: 0 out of 1 No
Question 63
Tax amnesty is provided by
Response: Commissioner of the BIR
Correct answer: Congress of the Philippines
Score: 0 out of 1 No
Question 64
Nicanor is an architect. His reported total gross receipts in 2023 amounted to Php
5,400,000.00 (net of applicable withholding tax) while the cost of service and operating
expenses were Php 2,550,000.00 and Php 1,550,000.00, respectively. Since he does not
keep receipts of his purchases, his Accountant advised to avail of the 40% OSD in his 1st
Quarter ITR. Total tax withheld (expanded withholding tax) by his clients is equivalent to 10%
from which he received tax certificates (BIR Form 2307s).
During filing annual ITR, without getting professional advice, he filed his own return and
opted 8% preferential taxation. What is Nicanor’s CORRECT income tax payable in 2023?
Disregard payment in his original return filed.
Response: d. Some other answer
Correct answer: a. Php 282,500
Score: 0 out of 1 No
Question 65
You were hired by ABC Corporation to file its necessary VAT returns for the month of July
2023. On August 20, 2023 (assuming eBIR platform), you are required to file the necessary
monthly VAT return (BIR Form 2550M) for the month.
Response: True
Feedback: Basis: RMC-52-2023 (May 20,2023). TP has the option to file monthly VAT
returns
Correct answer: False
Score: 0 out of 1 No
Question 66
In 2022. ABC Corporation leased the whole first and second floors of Aleng Nenang’s
building in Manila. Aleng Nena told Nicanor, the General Manager of ABC Corporation, that
her business of leasing her building is not registered with the government (such as the
Manila City Hall, BIR, and DTI).
On May 03, 2022, while preparing its first quarter Income Tax Return, ABC Corporation
demanded from Aling Nena an acknowledgement receipt for the whole amount it paid to her
amounting to P 300,000 representing the corporation’s rent. Aling Nena without hesitation
gave the corporation the requested acknowledgement receipt. Knowing that Aling Nena’s
business is not registered with the BIR, Inday, the accountant of company advised the latter
to shoulder the mandatory 5% expanded withholding tax in order to claim the necessary Rent
Expense.
Assuming ABC Corporation shouldered the 5% expanded withholding tax, how much Rent
Expense will the claim as an allowable deduction?
Response: b. P 315,000
Feedback: Reason: Section 34 (B) of the NIRC provides No deduction from gross
income shall be allowed under Subsection (A) hereof unless the taxpayer shall
substantiate with sufficient evidence, such as official receipts or other adequate
records. xxx.
Correct answer: c. P 0
Score: 0 out of 1 No
Question 67
Imported vehicles are taxed according to value. This is an example of:
Response: property tax
Correct answer: ad valorem tax
Score: 0 out of 1 No
Question 68
In February 2019, Nicanor, a rich kid, bought an Iphone-11 in the amount of Php 80,000. In
November 2019, he sold the same for only Php 50,000 because he wants to upgrade to
Iphone-12. In the December 2019, he bought the Iphone-12 for Php 100,000.00 which he
sold in the same day to Inday for Php 120,000.
In March 2020, Nicanor bought a laptop – an HP Spectre for Php 100,000. In April 2020, he
sold the laptop to Jose for Php 150,000. In September, Nicanor bought a PS5 in the amount
of Php 60,000 which he eventually sold for Php 40,000 in December.
How much is the net capital loss in 2019?
Response: 30,000
Feedback:
Correct answer: 10,000
Score: 0 out of 1 No
Question 69
Private establishments employing SCs shall be entitled to additional deduction from their
gross income equivalent to ______________________ of the total amount paid as
salaries and wages to Senior citizens
Response: 25%
Correct answer: 15%
Score: 0 out of 1 No
Question 70
Nicanor a seller of Vegetables in wet market, earned P 2,000,000 in 2022. Nicanor is liable
to percentage tax.
Response: True
Feedback: Reason: VAT exempt transaction.
Correct answer: False
Score: 0 out of 1
1/20/24, 10:32 AM
Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
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*[May 2024] 00-Diagnostic Examination
Diagnostic Examination
Taxation (TAX)
Submissions
Here are your latest answers:
Question 1
Nicanor died leaving a house and lot in Cavite which he purchased 3 years ago from Inday, his sister. The house and lot were included in Nicanor’s gross estate. For
purposes claiming vanishing deductions (property previously taxed), what applicable vanishing rate will you apply?
Response: a. 20%
Feedback: 1st transfer is by onerous not gratuitous
Correct answer: b. 0%
Score: 0 out of 1 No
Question 2
S1: All persons who are engaged in business shall secure from the Bureau of Internal Revenue an authority to print receipts or sales or commercial invoices before a printer
can print the same.
S2: No authority to print receipts or sales or commercial invoices shall be granted unless the receipts or invoices to be printed are serially numbered and shall show, among
other things, the name, business style, Taxpayer Identification Number (TIN) and business address of the person or entity to use the same, and such other information that
may be required by rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner.
Response: Both are true
Feedback: Specific rule under Section 238 of NIRC, as amended.
Correct answer: Both are true
Score: 1 out of 1 Yes
Question 3
The CIR has the power to open bank accounts of taxpayers during audit
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 4
For taxpayers with PWD dependent, the amount of additional exemption which may be claimed is:
Response: Php 0
Feedback: The Php 25,000 additional exemption is old rule. The exemption was removed under TRAIN Law and is covered as part of Php 250,000 deduction
Correct answer: Php 0
Score: 1 out of 1 Yes
Question 5
For income tax purposes, compensation (salary) received by Nicanor from his employer is considered as an income
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 6
Nicanor earned interest income from the short term deposit in the amount of Php 10,000 at XYZ Bank, a bank located in Singapore. The interest income is?
Response: Passive income subject to final tax
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Correct answer: Active / ordinary income subject to regular tax
Score: 0 out of 1 No
Question 7
The grossed-up monetary value of the fringe benefit is the actual amount received by the employee.
Response: True
Feedback: Monetary value
Correct answer: False
Score: 0 out of 1 No
Question 8
ABC Corp. is a non-resident foreign corporation based in Canada. As part of an expansion plan in Asia, it engaged the services of XYZ Corp., a domestic business and
consultancy firm to conduct a feasibility study of opening a business in Manila. It was agreed that ABC Corp. shall pay XYZ Corp. Php 1 million for the service. The sale of
service by XYZ Corp. is:
Response: Subject to 12%
Correct answer: Subject to 12%
Score: 1 out of 1 Yes
Question 9
Nicanor, an individual taxpayer reported the following for the year 2019:
Gross Income
Cost of Sales
P 5,000,000
3,000,000
Salaries of employment net of P100,000 withholding tax and P50,000 SSS, Medicare and Pag-ibig premiums contribution
800,000
Fringe benefits given to rank and file employees
300,000
Fringe benefits given to managerial employees
130,000
Representation and entertainment expenses (all business
connected)
Rent expense
100,000
Donation to religious and charitable institutions
500,000
120,000
How much is the allowable fringe benefit tax expense?
Response: P 200,000
Feedback:
Monetary value received by Managerial employees
Divided by
Gross-up monetary value
Multiply by FBT rate
Allowable Fringe Benefit Tax Expense
P 130,000
65%
200,000
35%
P 70,000
Correct answer: P 70,000
Score: 0 out of 1 No
Question 10
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
S1: Purely electric vehicles shall be exempt from the excise tax on automobiles.
S2: Hybrid vehicles shall be exempt from the excise tax on automobiles.
Response: Only S2 is false
Feedback: S2: Hybrid vehicles shall be subject to 50% of the applicable excise tax on automobiles. RR-24-2018
Correct answer: Only S2 is false
Score: 1 out of 1 Yes
Question 11
Bibi Corporation was identified as a top withholding agent by the BIR. In case the company engages the services of Charlie Agency Corporation, a security agency
company, to provide security guards to the former, Bibi Corporation is required to withhold 2% expanded withholding tax for the amount billed by Charlie Agency
Corporation (excluding the salaries of the guards)
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 12
Nicanor, a Filipino citizen residing in the United States borrowed money from Inday, a Filipino working abroad. Interest income is Php 10,000.00. Nicanor is:
Response: NRC
Correct answer: NRC
Score: 1 out of 1 Yes
Question 13
Which of the following is subject to the 3% common carrier’s tax?
Response: MJ Trucking services on their transport of goods or cargoes.
Correct answer: Jeepney owned by Mang June for the transport of passengers
Score: 0 out of 1 No
Question 14
The output VAT on goods or properties sold may be imposed even in the absence of actual sale
Response: False
Feedback: Reason: In case of deemed sale, VAT may be imposed even in the absence of actual sale.
Correct answer: True
Score: 0 out of 1 No
Question 15
The President of the Philippines has the power to enter into a compromise settlement of tax liabilities on behalf of the BIR.
Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 16
Tax is intended for common good and cannot be exercised to further private interest.
Response: Inherent limitation
Correct answer: Inherent limitation
Score: 1 out of 1 Yes
Question 17
The BIR recently introduced the chatbot named REVIE, the BIR's Digital Assistant, an artificial intelligence, that can be accessed 24/7 from the BIR website. Questions
about e-services, registration requirements can be asked from Revie. In rolling this out and informing the taxpayer regarding Revie, the BIR may issue
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Response: Revenue Memorandum Circular
Correct answer: Revenue Memorandum Circular
Score: 1 out of 1 Yes
Question 18
S1: On October 15, 2020, Nicanor donated laptops to his high school teachers in Mataas na Paaralan ng Pelepenas, a public school in Manila, which will be used for online
teaching during pandemic period. The donation is subject to donor’s tax.
S2: On October 15, 2020, Nicanor donated laptops to his high school teachers in Mataas na Paaralan ng Pelepenas, a private school in Manila, which will be used for online
teaching during pandemic period. The donation is subject to donor’s tax.
Response: c. Both are true
Correct answer: b. Only S2 is true
Score: 0 out of 1 No
Question 19
Franchise grantees of gas and water utilities are liable to 3% Other percentage tax.
Response: False
Feedback: Answer: franchise tax of 2%
Correct answer: False
Score: 1 out of 1 Yes
Question 20
In 2021, ABC Corp. borrowed money from the bank in the amount of Php 1 Million with an interest rate of 10%. ABC Corp. has interest income from bank deposits in the
amount of Php 50,000.00 from which final tax was withheld. Assume ABC Corp.’s tax rate is 25%. How much is the allowable interest expense?
Response: c. Php 83,500
Feedback: Solution:
Interest expense 100,000
Less: Interest income (FT) 50,000
Rate 20% 10,000
Allowable interest expense 90,000
Correct answer: a. Php 90,000
Score: 0 out of 1 No
Question 21
Zesto Asia, a domestic corporation engaged in local and international operations has the following data for the year 2019 (use the old rate):
Gross income from international operations
Expenses from international operations
P 30,000,000
24,000,000
The income tax due of Zesto Asia corporation is?
Response: P 1,800,000
Feedback:
Gross income from international operations
P 30,000,000
Expenses from international operations
( 24,000,000)
Taxable Income
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6,000,000
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CITR
Income Tax Due
30%
1,800,000
Correct answer: P 1,800,000
Score: 1 out of 1 Yes
Question 22
For income tax purposes, the profit from Nicanor’s investment in his asset is considered as income.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 23
On May 14, 2021, Nicanor, single and a resident citizen died. The following day, you were engaged by the heirs of Nicanor to assist them in filing the estate tax return.
Below are the properties left by Nicanor:
House and lot located in Makati (family home) P 10,000,000
Montero Sports car 2,000,000
Bank deposits – Banko De Pelpens 6,000,000
Assuming after computing the estate tax, you report the amount the be paid the to the heirs. They told you that they do not have sufficient money to pay for the estate tax
due. So, you advised [them] to withdraw money from the Bank deposits of Nicanor. The following day, the heir’s fill-up BIR Form 1904 and have it verified in the BIR. The
said form together with a copy of Nicanor’s death certificate was submitted to the Banko De Pelepens. The bank allows the heirs to withdraw P 1,000,000 from Nicanor’s
bank deposits.
After withdrawing the said P 1,000,000 bank deposit, how much is the estate tax due, if any?
Response: c. P 0
Feedback: Solutions
*New Gross estate (excluding P 1Million) P 17,000,000
Less: Allowable deductions
Family Home 10,000,000
Standard deduction 5,000,000
Net Taxable Estate 2,000,000
Estate tax rate 6%
Estate tax due P 120,000
*The P 1,000,000 which was withdrawn by the heirs was already subjected to FWT. Hence, it will no longer form part of the Gross estate.
Correct answer: a. P 120,000
Score: 0 out of 1 No
Question 24
16. Which of the following is TRUE if the motion for reconsideration or for new trial is denied?
S1. A second motion for reconsideration or for new trial of a decision, final resolution or order may be made
S2. Elevate the case to the Court of Appeals
S3. Elevate the case to the Supreme Court
S4. No second motion for reconsideration or for new trial of a decision, final resolution or order can be made
Response: S3
Correct answer: S4
Score: 0 out of 1 No
Question 25
The following are No-Ruling Areas as far as the TTRA are concerned, except:
Response: Past transactions
Correct answer: Past transactions
Score: 1 out of 1 Yes
Question 26
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
These are taxes on goods manufactured or produced in the Philippines for domestic sales or consumption or for any other disposition and to things imported as well as
services performed in the Philippine, which tax shall be in addition to the value added tax.
Response: Excise Taxes
Correct answer: Excise Taxes
Score: 1 out of 1 Yes
Question 27
PRTC., Inc. (PRTC) a prestigious review center, is planning to expand its business by building a new branch in Makati. So, it hired Boss Vic., Co., Inc a well-known
construction company in the Philippines to construct a building for its (PRTC) new review center branch for a contract price of Php 20 Million. It was agreed that PRTC will
procure the necessary construction materials. The following are the information pertaining to the construction for the for the month of May 2021:
PRTC., Inc. (PRTC) a prestigious review center, is planning to expand its business by building a new branch in Makati. So, it hired Boss Vic., Co., Inc a well-known
construction company in the Philippines to construct a building for its (PRTC) new review center branch for a contract price of Php 20 Million. It was agreed that PRTC will
procure the necessary construction materials. The following are the information pertaining to the construction for the for the month of May 2021:
Amount of billings Payments
Service rendered Php 2 Million Php 1.5Million
Construction Materials Php 1.3 Million Php 1 Million
Assume the same facts except that it is Boss Vic., Co., Inc who provides the construction materials. How much is the creditable input tax?
Response: b. Php 360,000
Feedback: Solution:
Service rendered (P1.5M x 12%) 180,000 (Based on OR)
Materials ( P1.M x 12%) 120,000 (Based on OR)
Creditable input tax 300,000
Basis: Definition of Gross receipts.
Correct answer: d. Php 300,000
Score: 0 out of 1 No
Question 28
Wendel, a resident citizen, is an owner of a sticker printing service in Manila. On January 5, 2023, he purchased goods amounting to P 56,000 (inclusive of vat) to Papel
Corporation.
How much withholding tax, if any, will Wendel withhold to his payment to Papel Corporation, assuming Wendel is classified by the BIR as top withholding agent?
Response: d. P 1,120
Feedback: Solution:
P 56,000/1.12 = P 50,000 x 1% = P 500
RR -11-2018 provides that a top withholding agent, as a rule, is required to withhold 1% on his/her/its payment for purchases of goods.
Correct answer: b. P 500
Score: 0 out of 1 No
Question 29
Ms. Bea a licensed real estate broker comes to you with the following records and transactions:
Transaction #1. Land with TCT NO. 1900238 was sold to Mr. Bean for P 5,000,000 by Mr. Budotz on September 08, 2022, in Manila evidenced by a deed of sale executed
in Bulacan. The cost of the land is P 2,000,000 which is equal to its market value stated in the tax declaration and the property is located in Makati.
Transactions #2. Land with TCT No. 1877234 was sold to Mr Gerarld for P 10,000,000 by Mr. Joshua on November 04, 2022, in Cavite evidenced by a deed of sale
executed in Caloocan. The cost of the land is P 6,000,000 which is equal to its market value stated in the tax declaration and the property is located in Manila
Additional Information
• Bea called the respective RDO’s of each transaction to determine how much is the zonal value of each land sold. RDO’s reply is P 6,000,000 and P 9,800,000, respectively.
• On December 14, 2022, Ms. Bea P 1,500,000 received her commission income from the above stated sellers. She incurred P 120,000 expenses in connection with her work
and P 20,000 for her cosmetics and make-ups for her appealing appearance. Ms. Bea is currently residing in Cubao.
In transaction #2, how much is the capital gains tax due?
Response: d. P 600,000
Feedback: Final tax of 6% based on higher of Gross selling price or current fair market value as determined in accordance with Section 6(E)
Solution:
Gross selling price = P 10,000,000
FMV per Tax declaration = P 6,000,000
Zonal Value = P 9,800,000
Gross selling price of P 10,000,000 (Highest) x 6% = B. P 600,000
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Correct answer: d. P 600,000
Score: 1 out of 1 Yes
Question 30
The following information appeared in the 2022 BIR Form 2316 (Certificate of Compensation Payment/Tax Withheld) of Nicanor, a purely compensation income earner:
Gross compensation income Php 400,000.00
13th month pay and other benefits 40,000.00
SSS 10,000.00
Philhealth contributions 10,000.00
Pagibig contributions 10,000.00
Union dues 10,000.00
Commission 50,000.00
Amount of taxes withheld (by the employer) 30,000.00
The total non-taxable portion to be deducted from gross compensation income of Nicanor is:
Response: a. Php 80,000
Feedback: Solution:
13th month pay and other benefits 40,000.00
SSS 10,000.00
Philhealth contributions 10,000.00
Pagibig contributions 10,000.00
Union dues 10,000.00
TOTAL 80,000.00
Correct answer: a. Php 80,000
Score: 1 out of 1 Yes
Question 31
In 2019, Nicanor created two (2) trusts for his daughter, Julia. During the year, the two trusts earned net income as follows:
Trust 1 P 4,000,000
Trust 2 P 6,000,000
Each of the trust filed their own income tax return and paid the corresponding income tax due as computed in their separate returns.
How much is the additional income tax payable of Trust 2?
Response: P 114,000
Feedback:
Net income
P6,000,000
Tax due:
1st P2,000,000
P490,000
Excess @ 32%
1,280,000
Tax due/paid
1,770,000
Versus Share
1,866,000***
Income Tax Payable-Trust 2
P96,000
Share in the Consolidated Tax due:
Trust 2 (6,000,000/10,000,000) x P 3,110,000* 1,866,000***
Correct answer: P 96,000
Score: 0 out of 1 No
Question 32
Nicanor, a VAT-registered taxpayer, sold to Inday its merchandise amounting to Php 1,000.00. The sale shall be subject to 12% if Inday:
Response: none of the above
Correct answer: Is a national athlete
Score: 0 out of 1 No
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Question 33
In 2019, ABC corporation thru its board of directors, approved a resolution which gives its supervisors a free use of the company’s residential condominium in Makati City.
The following data were revealed in the resolution about the condominium:
Fair Market value of the condominium (per tax declaration), P 1,000,000
Zonal Value (per BIR assessment), P2,000,000
Fair market value (per Appraisal value), P2,500,000
Assume that the residential condominium was purchased by the company in installment for the supervisors’ free use. Acquisition cost exclusive of interest is P 3,000,000. At
what amount should the company report as the quarterly monetary value of fringe benefit?
Response: P 12,500
Feedback:
Highest is P 3M
= P3,000,000 x 5% x 50% / 12 mos = P6,250 x 3 mos = P 18, 250
Correct answer: P 18,250
Score: 0 out of 1 No
Question 34
XYZ Corporation, a newly organized corporation in the Philippines, issued on November 07, 2021 10,000(par value @ P 50.00 per share) shares of stocks to one of its
incorporators, Mr. Nicanor for P 800,000. How much is the documentary stamp tax due?
Response: P6,000
Feedback:
Par value of shares (10,000 x 50)
Divided by
Total
Multiply by
DST due
P 500,000
200
2,500
2
5,000
Correct answer: P5,000
Score: 0 out of 1 No
Question 35
PRTC INC., a corporation engaged in business in the Philippines and abroad has the following data (apply the old rate):
Gross Income, Philippines
P 975,000
Expenses, Philippines
750.000
Gross Income, Thailand
770,000
Expenses, Thailand
630,000
Interest on bank deposit
25,000
How much in the income tax due of PRTC INC., assuming it is a domestic corporation?
Response: P 67,500
Feedback:
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) Domestic
Gross Income, Philippines
P975,000
Expenses, Philippines
(750,000)
Gross Income, Malaysia
Expenses, Malaysia
Interest on bank deposit
Taxable income
770,000
(630,000)
365,000
Tax Rate
30%
Tax Due
P109,500
Correct answer: P 109,500
Score: 0 out of 1 No
Question 36
If the CIR wants to issue a simplified guideline on how to apply for computerized accounting system, the CIR may issue
Response: Revenue Memorandum Order
Correct answer: Revenue Memorandum Order
Score: 1 out of 1 Yes
Question 37
A proposed assessment which is a result of the determination that there exists sufficient basis to assess the taxpayer for any deficiency tax or taxes. It shall show in detail the
facts and the law, rules and regulations, or jurisprudence on which the proposed assessment is based.
Response: NIC
Correct answer: PAN
Score: 0 out of 1 No
Question 38
Donor’s tax paid to a foreign country is deductible from gross gifts.
Response: False
Feedback: Subject to limitations, it may be deducted from donor's tax due.
Correct answer: False
Score: 1 out of 1 Yes
Question 39
Nicanor, a resident Filipino citizen borrowed money from Inday, an Overseas Filipino Worker (OFW/OCW). The interest income is derived from ____ and it is:
Response: Within, Exempt
Correct answer: Within, Taxable
Score: 0 out of 1 No
Question 40
Any tax assessment issued without an LOA is a violation of the taxpayer's right to due process and is therefore "inescapably void"
Response: False
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Feedback: Ans: T. Basis: Medicard Philippines, Inc. v. CIR, G.R. No. 222743 (2017); Revenue Memorandum Circular No. 78-2018
Correct answer: True
Score: 0 out of 1 No
Question 41
It refers to a business entity or concern duly registered with and / or licensed by the PEZA to develop, operate and maintain an ECOZONE or any or all of the component IE,
EPZ, Free Trade Zone or Tourist / Recreational Center and the required infrastructure facilities and utilities such as light and power system, water supply and distribution
system, sewerage and drainage system, pollution control devices, communication facilities, paved road network, administration building and other facilities as may be
required by the PEZA. The term shall include the PEZA and / or the Local Government Unit when by the themselves or in joint venture with a qualified private entity, shall
act as the Developer / Operator of the ECOZONES. As such, they shall be entitled to the same incentives under Rule XIV of these Rules in accordance with the pertinent
provisions of the Act and the Code.
Response: Service Enterprise
Correct answer: Developer or Operator
Score: 0 out of 1 No
Question 42
Sarah G, a Filipina singer/actress held a one-night concert in Canada. She was paid Php 1 Million ($20,000). Tax withheld and paid is Php 300,000.00 ($6,000). Sarah G is:
Response: NRC
Correct answer: RC
Score: 0 out of 1 No
Question 43
A domestic corporation made available the following financial information covering TY 2021:
Statement of Financial Position Statement of Comprehensive Income
Assets: Gross receipts 15,000,000
Current 20,000,000 Cost of service 5,000,000
Non-current (land/bldg) 10,000,000 Gross profit 10,000,000
Liabilities 5,000,000 Expenses 5,000,000
Stockholders’ Equity 25,000,000 Net income 5,000,000
Based on the foregoing, the proper corporate income tax rate that is applicable is:
Response: a. 20%
Feedback: Reason: Total assets excluding the land did not exceed P 100,000,000 and the Net income did not exceed the P 5,000,000
Correct answer: a. 20%
Score: 1 out of 1 Yes
Question 44
The following information were given to you by Ms. Reyes, a prominent independent contractor who offers architectural and engineering services for the taxable year 2020:
Total gross receipts from architectural designs
P 1,250,000
Total gross receipts from engineering services
3,000,000
Total cost of services
2,150,000
Total operating expenses
1,000,000
Based on the foregoing information, how much is Ms. Reyes’ taxable income?
Response: P 1,100,000
Feedback:
Solution:
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Total gross receipts
P 4,250,000
Less: Cost of services
2,150,000
Gross income
2,100,000
Less Opex
1,000,000
Taxable income
1,100,000
Correct answer: P 1,100,000
Score: 1 out of 1 Yes
Question 45
Nicanor died. Inday received the Php1M proceeds of life insurance as the designated beneficiary. The php 1M is:
Response: Capital gains subject to capital gains tax
Correct answer: Exclusions from Gross Income
Score: 0 out of 1 No
Question 46
Which is True?
S1 - BIR has four Deputy Commissioners
S2 - Bureau of Customs has six Deputy Commissioner
Response: Both are false
Correct answer: Both are true
Score: 0 out of 1 No
Question 47
Who can register as a BMBE?
Response: Glenn & Maggie’s Walking Alive, a shop with a total assets (excluding land) of Php 5Million
Correct answer: Rick and Daryl Beauty Shop, a partnership of professional beauticians
Score: 0 out of 1 No
Question 48
Nicanor, a Filipino citizen residing in the Philippines invested in XYZ Corporation established under the laws of the United States. The Corporation, which earned gross
income (for the last three years) in the United States amounting to Php 200M and another Php 100M within the Philippines declared dividends. Nicanor will receive Php
100,000.00, XYZ Corp is
Response: NRFC
Correct answer: Cannot be determined
Score: 0 out of 1 No
Question 49
ABC Corp. pays its accountant a monthly retainer fee of Php 10,000. Compute the EWT to be withheld: Note: Assume that accountant is registered as non-VAT and has
submitted the Sworn Declaration of Income to ABC Corp. at the start of the year.
Response: 500
Feedback: Sworn Declaration is required to be submitted before the 5% rate can be applied. If no sworn declaration is submitted or if the professional is VAT-registered, the
rate is 10%
Correct answer: 500
Score: 1 out of 1 Yes
Question 50
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San Miguelito Corporation (SMC) was paid to build the Skyway Stage 3. The income of SMC is derived from _____ and it is:
Response: Within, Taxable
Correct answer: Within, Taxable
Score: 1 out of 1 Yes
Question 51
A senior citizen may claim additional exemption in the amount of Php 25,000.00 if he has a qualified dependent.
Response: False
Feedback: The additional exemption is an old rule. It was removed under the TRAIN Law.
Correct answer: False
Score: 1 out of 1 Yes
Question 52
The following situations are subject to donor’s tax except:
Response: Rhea, a resident citizen, donated a real property in Singapore to a non-resident alien
Correct answer: Faith gives her husband a Rolex watch amounting to P150,000 as a birthday gift
Score: 0 out of 1 No
Question 53
Bureau of Internal Revenue (BIR) grants all of its employees 20 days’ sick leave for the whole year 2023. Such sick leave may be converted into cash before the end of the
year. Jack, one of BIR's rank-and-file employees, who is earning a rate of P 600 per day, monetized his unused sick leave of P 6,600 at the end of the year. The whole amount
of P 6,600 monetized unused vacation is partly treated taxable compensation and partly exempt from income tax.
Response: False
Feedback: Reason: Monetized unused vacation and sick leave of a government employee is exempted from income tax as they are de minimis benefits.
Correct answer: False
Score: 1 out of 1 Yes
Question 54
Which of the following is/are not a condition for a foreign sourced dividends received by a domestic corporation from a resident foreign corporation to be exempted from the
payment of RCIT?
S1: The dividends actually received or remitted into the Philippines are reinvested in the business operations of the domestic corporation within the next taxable year from
the time the foreign-source dividends were received or remitted
S2: The dividends received shall only be used to fund the working capital requirements, capital expenditures, dividend payments, investment in domestic subsidiaries, and
infrastructure project
S3: The domestic corporation holds directly at least twenty percent (20%) in value of the outstanding shares of the foreign corporation and has held the shareholdings
uninterruptedly for a minimum of two (2) years at the time of the dividend’s distribution. In case the foreign corporation has been in existence for less than two (2) years at
the time of dividends distribution, then the domestic corporation must have continuously held directly at least twenty percent (20%) in value of the foreign corporation's
outstanding shares during the entire existence of the corporation.
Response: d. None of the above
Feedback: Basis: Section 5 of RR-5-2021
Correct answer: d. None of the above
Score: 1 out of 1 Yes
Question 55
Nicanor earned interest income from the time deposit he made in 2013 in the amount of Php 10,000 at XYZ Bank, a local bank. The interest income is?
Response: Passive income subject to ordinary tax
Correct answer: Passive income exempt from final tax
Score: 0 out of 1 No
Question 56
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
S1: The time for the filing and payment of the Documentary Stamp tax shall be within tenth (10th) day after the close of the month when the taxable document was made,
signed, issued, accepted, or transferred, and the tax thereon shall be paid at the same time the aforesaid return is filed.
S2: DST is to be file within the territorial jurisdiction of the Revenue District Office which has jurisdiction over the residence or principal place of business of the taxpayer.
Response: Both are true
Feedback: S1: should be on the fifth (5th) day
Correct answer: Only S2 is true
Score: 0 out of 1 No
Question 57
Ningning, married to Dodong, died during the current taxable year leaving the following properties:
· Two door commercial building inherited from her father 10 years before marriage valued at P4,000,000 at the time of death.
· Seven-hectare agricultural land planted with coconut and other high-value crops donated by her mother during marriage with a fair market value of P2,000,000 at the
time of death.
· House and lot acquired during marriage with a fair market value of P5,000,000 at the time of death.
· Three-door apartment owned by Ningning before marriage with a current value of P5,000,000. Ningning has a child from her ex-boyfriend before she got married with
Dodong.
· Four-hectare fishpond owned by Dodong before marriage valued at P4,500,000 at the time of death.
· Cash of P6,000,000 representing income from various properties that cannot be identified to which properties it pertains.
· Fruits earned from the following properties:
PROPERTY
BEFORE MARRIAGE
AFTER MARRIAGE
Commercial Building
P 1,600,000
Agricultural land
P 1,500,000
Apartment
P 2,000,000
Fishpond
P 500,000
P 1,000,000
How much is the conjugal/communal property if they got married on August 4, 1988?
Response: P 17,000,000
Correct answer: P 17,000,000
Score: 1 out of 1 Yes
Question 58
ABC Corp., a TWA, purchased goods from Nicanor Enterprises in the amount of Php 20,000. If the purchase is a single purchase and Nicanor Enterprises is not considered a
regular supplier, ABC Corp. is not required to make the withholding.
Response: False
Feedback: Purchase is over 10,000 hence withholding is required
Correct answer: False
Score: 1 out of 1 Yes
Question 59
ABC., Co. gave fringe benefits to employees as follows:
To its Clerks and Janitors
To its Area Managers
P 100,000
650,000
How much is the total of the deductions of ABC., Co.?
Response: P 1,000,000
Feedback:
Monetary value
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P 650,000
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Divided by
65%
Gross-up monetary value
1,000,000
Multiply by Fringe benefit rate
35%
Fringe benefit tax
P 350,000
Fringe benefit given to Clerks and Janitors (Rank and File)
P 100,000
Fringe benefit given to Area Managers
(Managers
)
Fringe benefit tax (please refer to the computation above)
Total Deductions
650,000
350,000
P 1,100,000
Correct answer: P 1,100,000
Score: 0 out of 1 No
Question 60
Real properties owned by a real estate developer cannot be converted to capital assets even if the assets are abandoned after two (2) years.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 61
Which of the following is not subject to 3% percentage tax.
Response: MCWD, a franchise grantee of water utilities.
Correct answer: MCWD, a franchise grantee of water utilities.
Score: 1 out of 1 Yes
Question 62
Assuming on-line "talpakan", a cockfighting event, is sanctioned by the government, on-lines winnings should be
Response: subject to final tax
Correct answer: subject to final tax
Score: 1 out of 1 Yes
Question 63
Inday, an employee of Beshie Corp., is receiving daily compensation in the amount of P2,500, net of mandatory contributions.
Assuming the Company has twenty-four working days (or equivalent to four weeks) January 2022, the total monthly withholding tax on compensation required to be
withheld for Inday’s salary is:
Response: c. P 12,320.56
Feedback: Solution:
Total taxable compensation ₱ 2,500.00
Less: Compensation Range (Minimum) 2,192.00
Excess ₱ 308.00
Withholding tax shall be computed as follows:
Predetermined Tax on ₱2,192.00 ₱ 356.16
Add: Tax on the excess (₱308.00 x 30%) 92.40
Total daily withholding tax ₱ 448.56
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Multiply by (working days) 24
Total Monthly withholding tax 10,765.44
Correct answer: d. P 10,765.44
Score: 0 out of 1 No
Question 64
Which is FALSE?
Response: Taxpayer is required to protest to the FLD/FAN within 30 days from receipt
Correct answer: Taxpayer is required to reply to the PAN within 15 days from receipt
Score: 0 out of 1 No
Question 65
Goldie, an employee of Silver Corp., is receiving weekly compensation in the amount of ₱9,500, net of mandatory contributions.
Determine the total weekly withholding tax on compensation for the year 2022.
Response: c. P 4,115.68
Feedback: Total taxable compensation ₱ 9,500.00
Less: Compensation Range (Minimum) 7,692.00
Excess ₱ 1,808.00
Withholding tax shall be computed as follows:
Predetermined Tax on ₱7,692.00 ₱ 576.92
Add: Tax on the excess (₱1,808.00 x 25%) 452.00
Total weekly withholding tax ₱ 1,028.92
Correct answer: a. P 1,028.92
Score: 0 out of 1 No
Question 66
PRTC INC., a corporation engaged in business in the Philippines and abroad has the following data (apply the old rate):
Gross Income, Philippines
P 975,000
Expenses, Philippines
750.000
Gross Income, Thailand
770,000
Expenses, Thailand
630,000
Interest on bank deposit
25,000
How much in the income tax due of PRTC INC., assuming it is a resident foreign corporation?
Response: P67,500
Feedback:
RFC
Gross Income, Philippines
P975,000
Expenses, Philippines
(750,000)
Gross Income, Malaysia
Expenses, Malaysia
Interest on bank deposit
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Taxable income
225,000
Tax Rate
30%
Tax Due
67,500
Correct answer: P67,500
Score: 1 out of 1 Yes
Question 67
Which of the following non-essentials services shall be subject to excise tax?
Response: Cases or treatments covered by the National Health Insurance Program.
Correct answer: Performance of services, net of excise tax and value added tax, on invasive cosmetic procedures, surgeries, and body enhancement directed solely towards
improving, altering, or enhancing the patient’s appearance and do not meaningfully promote the proper function of the body or prevent or treat illness or disease.
Score: 0 out of 1 No
Question 68
Proceeds of insurance taken by a corporation on the life of an executive to indemnify the latter’s beneficiaries against loss in case of his death.
The premiums paid by the corporation is deductible expense of the corporation.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 69
Train law provides that starting January 1, 2023, the filing and payment of VAT shall now be done on a quarterly basis, within 25 days following the close of each taxable
quarter.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 70
Nicanor is an architect. His reported total gross receipts in 2023 amounted to Php 5,400,000.00 (net of applicable withholding tax) while the cost of service and operating
expenses were Php 2,550,000.00 and Php 1,550,000.00, respectively. Since he does not keep receipts of his purchases, his Accountant advised to avail of the 40% OSD in his
1st Quarter ITR. Total tax withheld (expanded withholding tax) by his clients is equivalent to 10% from which he received tax certificates (BIR Form 2307s).
During filing annual ITR, without getting professional advice, he filed his own return and opted 8% preferential taxation. What is Nicanor’s CORRECT taxable income in
2023? Disregard payment in his original return filed.
Response: c. Php 5,750,000
Feedback: Solution:
Gross receipts 6,000,000 (5.4M/.90% [100% -10% wtxrate])
OSD (40% of GR) 2,400,000
Taxable income 3,600,000
Correct answer: b. Php 3,600,000
Score: 0 out of 1 No
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*[May 2024] 00-Diagnostic Examination
Diagnostic Examination
Taxation (TAX)
Submissions
Here are your latest answers:
Question 1
Wendel, a resident citizen, is an owner of a sticker printing service in Manila. On August 15, 2023, he made payments amounting to P 56,000 (inclusive of vat) to Mang
Danny for the repairs of all his machines.
How much withholding tax, if any, will Wendel withhold to his payment to Mang Danny, assuming Wendel is classified by the BIR as top withholding agent?
Response: e. P 2,240
Correct answer: c. P 1,000
Score: 0 out of 1 No
Question 2
ABC Corp. pays monthly rent of Php 100,000 on his place of business located in a mall owned by Alaya Land, Inc. (ALI) The net cash to be received by ALI is?
Response: 100,000
Correct answer: 95,000
Score: 0 out of 1 No
Question 3
In 2021, ABC Corp., established in 2015 reported the following information:
Balance Sheet:
Asset - Php 50,000,000
Liability - Php 30,000,000
Stockholders' Equity - Php 20,000,000
Income Statement:
Gross sales - Php 50,000,000
Cost of sales – Php 40,000,000
Operating Expenses - Php 20,000,000
Until when can ABC Corp carry-over the loss against its gross income?
Response: a. 2023
Feedback: Pursuant to Section 4 (bbb) of Bayanihan II and as implemented under RR 25-2020, the net operating losses of a business or enterprise incurred for taxable years
2020 and 2021 can be carried over as a deduction from gross income for the next five consecutive taxable years following the year of such loss.
Correct answer: d. 2026
Score: 0 out of 1 No
Question 4
JMC Marketing Corporation and Senior Vice-President Nicanor negotiated for the purchase of a motor vehicle amounting to Php 8 Million to be used by the latter. Both
agreed to share half of the purchase price. The monetary value to be used in computing the fringe benefit tax is:
Response: c. P 4,000,000
Feedback: Solution:
P 8,000,000/2 = P 4,000,000 share of JMC Marketing Corporation
Correct answer: c. P 4,000,000
Score: 1 out of 1 Yes
Question 5
A domestic corporation made available the following financial information covering TY 2021:
Statement of Financial Position Statement of Comprehensive Income
Assets: Gross receipts 20,000,000
Current 80,000,000 Cost of service 12,000,000
Non-current (land/bldg) 50,000,000 Gross profit 8,000,000
Liabilities 40,000,000 Expenses 4,000,000
Stockholders’ Equity 90,000,000 Net income 4,000,000
Based on the foregoing, the proper corporate income tax rate that is applicable is:
Response: c. 30%
Feedback: Reason: Total assets excluding the land did not exceed P 100,000,000 and the Net income did not exceed the P 5,000,000
Correct answer: a. 20%
Score: 0 out of 1 No
Question 6
In 2019, ABC corporation thru its board of directors, approved a resolution which gives its supervisors a free use of the company’s residential condominium in Makati City.
The following data were revealed in the resolution about the condominium:
Fair Market value of the condominium (per tax declaration), P 1,000,000
Zonal Value (per BIR assessment), P2,000,000
Fair market value (per Appraisal value), P2,500,000
How much is the Fringe benefit tax?
Response: P 33,654
Feedback: MV = P 50,000/65% x 35% = P 26,923
Correct answer: P 26, 923
Score: 0 out of 1 No
Question 7
Nicanor took a life insurance at 21 years old requiring him to pay Php 30,000 per year. The term of the policy is ten years. If he dies at any time, his beneficiary will get the
proceeds. He outlived the policy. Upon reaching the age of 60, he took out insurance getting Php 2M in the process. The Php 1.7 Million is:
Response: Inclusions in / Items of Gross Income
Correct answer: Inclusions in / Items of Gross Income
Score: 1 out of 1 Yes
Question 8
The CIR can terminate the accounting period of Nicanor if he finds out that Nicanor, who is engaged in business and is under BIR audit, was discreetly transferring his
properties to his family members or friends
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 9
Boat Ferrari is a common carrier by sea. During a particular quarter, its receipts consist of the following (exclusive of taxes):
Transportation of passengers
P 2,000,000
Transportation of goods
3,000,000
Transportation of cargoes
1,500,000
The output VAT due is for the quarter is?
Response: P 780,000
Feedback: (6.5M x 12% = P 780,000 VAT; 0 OPT) Exceeding VAT Threshold
Correct answer: P 780,000
Score: 1 out of 1 Yes
Question 10
The principles of sound tax system are required to be applied.
Response: True
Feedback: These are GENERAL PRINCIPLES only hence not really required to be followed
Correct answer: False
Score: 0 out of 1 No
Question 11
Jeff Bezos, the world's richest person is an american based in the California.
Response: NRANETB
Correct answer: NRANETB
Score: 1 out of 1 Yes
Question 12
The Income Statement of ABC Corp., a Top Withholding Agent (TWA) disclosed the following:
Gross Sales - Php 5,000,000
Less: Cost of Sales:
Merchandise Inventory (beg) - 1,000,000
Add: Purchases of inventories - 2,000,000
Available for Sale - 3,000,000
Merchandise Inventory (end) - 500,000
Cost of sales - 2,500,000
Gross Profit - 2,500,000
Administrative and Operating expenses:
Salaries and wages - 500,000
Professional fees (GPP) – 100,000
Professional fees (made to small time practitioners-STP) – 100,000
Rent – 100,000
Janitorial expenses (agency fee is 50,000) - 300,000
Security expenses (agency fee is 50,000) - 300,000
Utility expense (electricity) - 100,000
Net Income 1,000,000
Compute the EWT on other services:
Response: 15,000
Feedback:
Correct answer: 2,000
Score: 0 out of 1 No
Question 13
In 2021, ABC Corp. borrowed money from the bank in the amount of Php 1 Million with an interest rate of 10%. ABC Corp. has interest income from bank deposits in the
amount of Php 50,000.00 from which final tax was withheld. Assume ABC Corp.’s tax rate is 25%. How much is the allowable interest expense?
Response: b. Php 100,000
Feedback: Solution:
Interest expense 100,000
Less: Interest income (FT) 50,000
Rate 20% 10,000
Allowable interest expense 90,000
Correct answer: a. Php 90,000
Score: 0 out of 1 No
Question 14
JMC Marketing Corp. grants its employees 20 days vacation leave for the whole year. Such vacation leave may be converted into cash before the end of the calendar year
2023. Manuel, an accounting clerk of the company, who is earning a rate of P 600 per day, monetized his unused vacation leave of P 6,600 at the end of the year. The whole
amount of P 6,600 monetized unused vacation is part of Manuel’s taxable compensation.
Response: False
Feedback: P 6,000 is exempt (600 x 10 days monetized unused vacation leave (MUVL) is de minimis benefits) the P 600 excess de minimis benefits (in excess of 10 days
MUVL will be subjected to the 90k ceiling of 13th month pay and other benefits.
Correct answer: False
Score: 1 out of 1 Yes
Question 15
Nicanor bought 1,000 shares of stock of ABC Corp. amounting to Php 1,000,000.00 in 2015. The par value of each share is Php 1,000. He sold the same to Inday for Php
2,000,000 in 2021. The Book Value is at Php 1,500 per share. Compute the donor's tax.
Response: 30,000
Feedback:
Correct answer: 0
Score: 0 out of 1 No
Question 16
S1: The certificate or receipts showing payment of taxes issued to a person engaged in a business subject to an annual registration fee shall be kept conspicuously exhibited
in plain view in or at the place where the business is conducted; and in case of a peddler or other persons not having a fixed place of business, shall be kept in the possession
of the holder thereof, subject to production upon demand of any internal revenue officer.
S2: Any business for which the annual registration fee has been paid may, subject to the rules and regulations prescribed by the Secretary of Finance, upon recommendation
of the Commissioner, be removed and continued in any other place without the payment of additional tax during the term for which the payment was made.
Response: Both are true
Feedback: Specific rule under Section 241 and Section 243 of the NIRC, as amended.
Correct answer: Both are true
Score: 1 out of 1 Yes
Question 17
Zygomite Minerals, Inc., a corporation registered and holding office in Australia, not operating in the Philippines, may be subject to Philippine income taxation on
Response: d. interests derived from its dollar deposits in a Philippine bank under the Expanded Foreign Currency Deposit System.
Correct answer: b. gains it derived from sale in Australia of shares of stock of Philex Mining Corporation, a Philippine corporation.
Score: 0 out of 1 No
Question 18
Below is the summary of sales made by Nicanor to Inday in the year 2021:
Date of transaction
Description
August 1, 2021
Nissan Almera, Car
August 1, 2021
Golden ring
October 28, 2021
Vacant lot – Macabebe Pampanga (FMV 15,000,000)
In relation to the sale on October 28, 2021, when is the deadline for the payment of DST?
Response: December 31, 2021
Feedback: Deadline is 5th day following the month of sale
Amount
P 900,000
50,000
6,000,000
Correct answer: November 5, 2021
Score: 0 out of 1 No
Question 19
1st statement - A motion for new trial may be based on fraud, accident, mistake, excusable negligence.
2nd statement – A motion for new trial may be based on newly discovered evidence, which he could not, with reasonable diligence, have discovered and produced at the trial
and, which, if presented, would probably alter the result.
Response: Both are true
Correct answer: Both are true
Score: 1 out of 1 Yes
Question 20
The ___________ may levy an annual professional tax on each person engaged in the exercise or practice of his profession requiring government examination as such
amount and reasonable classification as the Sangguniang Panlalawigan may determine.
Response: City
Correct answer: Province
Score: 0 out of 1 No
Question 21
Nicanor is an Overseas Contract Worker based in Dubai. His salary is:
Response: Exclusions from Gross Income
Correct answer: None of the Above
Score: 0 out of 1 No
Question 22
In 2022. ABC Corporation leased the whole first and second floors of Aleng Nenang’s building in Manila. Aleng Nena told Nicanor, the General Manager of ABC
Corporation, that her business of leasing her building is not registered with the government (such as the Manila City Hall, BIR, and DTI).
On May 03, 2022, while preparing its first quarter Income Tax Return, ABC Corporation demanded from Aling Nena an acknowledgement receipt for the whole amount it
paid to her amounting to P 300,000 representing the corporation’s rent. Aling Nena without hesitation gave the corporation the requested acknowledgement receipt. Knowing
that Aling Nena’s business is not registered with the BIR, Inday, the accountant of company advised the latter to shoulder the mandatory 5% expanded withholding tax in
order to claim the necessary Rent Expense.
Assuming ABC Corporation shouldered the 5% expanded withholding tax, how much Rent Expense will the claim as an allowable deduction?
Response: b. P 315,000
Feedback: Reason: Section 34 (B) of the NIRC provides No deduction from gross income shall be allowed under Subsection (A) hereof unless the taxpayer shall
substantiate with sufficient evidence, such as official receipts or other adequate records. xxx.
Correct answer: c. P 0
Score: 0 out of 1 No
Question 23
Which of the following is not included in the definition of a corporation under the CREATE law?
Response: d. None of the above
Correct answer: d. None of the above
Score: 1 out of 1 Yes
Question 24
The sources of revenue should be sufficient to meet the demands of public expenditures:
Response: fiscal adequacy
Correct answer: fiscal adequacy
Score: 1 out of 1 Yes
Question 25
A person who has paid the corresponding professional tax shall be entitled to practice his profession in any part of the Philippines without being subjected to any other
national or local tax, license, or free for the practice of such profession.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 26
Interest income of Nicanor from peso bank deposit in ABC Bank is Php 10,000. The withholding agent is
Response: ABC Bank
Correct answer: ABC Bank
Score: 1 out of 1 Yes
Question 27
ABC Corp. is a domestic corporation. It sold goods to XYZ Corp., a non-resident foreign corporation based in the United States of America. ABC Corp. billed XYZ Corp. $
50,000 upon actual export. XYZ Corp. remitted the amount in Philippine Peso. The sale is:
Response: Subject to percentage tax
Correct answer: Subject to 12%
Score: 0 out of 1 No
Question 28
S1: Excise tax is an internal revenue tax that is levied on the sale of specific goods and services, such as alcohol, fuel and tobacco.
S2: Specific tax refers to the excise tax which is based on selling price or other specified value of the goods/articles.
Response: Both are true
Correct answer: Only S1 is true
Score: 0 out of 1 No
Question 29
If in respect of a particular employee, the regular compensation is exempt from withholding tax because the amount thereof is below the compensation level, but
supplementary compensation is paid during the calendar year; or the supplementary compensation is equal to or more than the regular compensation to be paid; or the
employee was newly hired and had a previous employer/s within the calendar year, other than the present employer doing this cumulative computation, the present employer
shall determine the tax to be deducted and withheld in accordance with the cumulative average method
Response: True
Feedback: Basis: RR-11-2018
Correct answer: True
Score: 1 out of 1 Yes
Question 30
Tulong Para sa Masa, a non-profit charitable organization, imported relief goods from abroad that will be given by the organization to the poorest of the poor/indigenous
people. Such importation is exempt from VAT.
Response: True
Feedback: The importation of goods is not one of those VAT exempt transaction under Section 109 of the NIRC
Correct answer: False
Score: 0 out of 1 No
Question 31
In 2019, Nicanor created two (2) trusts for his daughter, Julia. During the year, the two trusts earned net income as follows:
Trust 1 P 4,000,000
Trust 2 P 6,000,000
Each of the trust filed their own income tax return and paid the corresponding income tax due as computed in their separate returns.
How much is the additional income tax payable of Trust 2?
Response: P 1,770,000
Feedback:
Net income
P6,000,000
Tax due:
1st P2,000,000
P490,000
Excess @ 32%
1,280,000
Tax due/paid
1,770,000
Versus Share
1,866,000***
Income Tax Payable-Trust 2
P96,000
Share in the Consolidated Tax due:
Trust 2 (6,000,000/10,000,000) x P 3,110,000* 1,866,000***
Correct answer: P 96,000
Score: 0 out of 1 No
Question 32
Nicanor, an employee of ABC Corp., is receiving regular monthly compensation in the amount of P 165,000 net of mandatory contributions, with supplementary
compensation in the amount of P 5,000 for the month.
Determine the total monthly WTC for the year 2022.
Response: c. P 42,770.80
Feedback: Solution:
Total taxable P 165,000
Less Compensation range (4th bracket) 66,667
Excess 98,333
Add: supplementary compensation 5,000
Total 103,333
Using 4th bracket
Predetermined tax on P 66,667 P 10,833.33
Add: Tax on excess (P103,333 x 30%) 30,999.90
Total monthly WTC 41,833.23
Correct answer: d. P 41,833.23
Score: 0 out of 1 No
Question 33
Any tax assessment issued without an LOA is a violation of the taxpayer's right to due process and is therefore "inescapably void"
Response: True
Feedback: Ans: T. Basis: Medicard Philippines, Inc. v. CIR, G.R. No. 222743 (2017); Revenue Memorandum Circular No. 78-2018
Correct answer: True
Score: 1 out of 1 Yes
Question 34
Nicanor, a resident Filipino citizen invested in PA-MINE CORPORATION, a foreign corporation. The corporation, which has sales in the United States amounting to Php
100M and another Php 200M in the Philippines declared dividends. The dividend income is derived from ____ and it is:
Response: Within, Taxable
Correct answer: Within, Taxable
Score: 1 out of 1 Yes
Question 35
ABC Corp., is engaged in resort operations. In 2020, the Board of Directors decided to sell a residential beach house and lot located in Boracay for Php 20 Million. They
bought the property and developed it for "stay-cation" renting it for private use. The resort has been closed since March 2020 and has been idle till today. BIR zonal value for
the lot is Php 10 Million while Assessor's Fair Value per Tax Declaration of the lot is Php 5 Million while the house is valued at Php 5 Million. How much is the capital gains
tax?
Response: 1,200,000
Feedback:
Correct answer: 0
Score: 0 out of 1 No
Question 36
Nicanor bought a car at Php 1 Million. He sold the same for Php 1.2 Million. The Php 1 Million is:
Response: Capital gains subject to capital gains tax
Correct answer: None of the Above
Score: 0 out of 1 No
Question 37
Nicanor deposited money in Banko De Kano, a commercial bank established under the laws of the United States of America. The money earns interest income. Such interest
income need not be reported in the income tax return as it was already subjected to Final Withholding Tax.
Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 38
A preliminary Assessment Notice (PAN) is NOT required to be issued by the BIR before issuing a Final Assessment Notice (FAN) on one of the following cases:
Response: b) When the finding for any deficiency tax is the result of mathematical error in the computation of the tax as appearing on the face of the return;
Feedback: Basis: Section 228, NIRC
Correct answer: b) When the finding for any deficiency tax is the result of mathematical error in the computation of the tax as appearing on the face of the return;
Score: 1 out of 1 Yes
Question 39
Statement 1: A donation inter vivos by husband and wife, jointly during the marriage is a donation of community property that will require one computation of the donor’s
tax, if the spouses are under the system of absolute community of property.
Statement 2: A donation inter vivos by husband and wife, jointly during the marriage is a donation of exclusive property by the either spouse that will require one
computation of the donor’s tax, if the spouses are under the system of conjugal partnership of gains.
Response: Only Statement 2 is true
Correct answer: Both statements are false
Score: 0 out of 1 No
Question 40
The tax burden should be proportionate to the taxpayer’s ability to pay.
Response: theoretical justice
Correct answer: theoretical justice
Score: 1 out of 1 Yes
Question 41
The BIR announced that meeting with BIR can be done online using the e-appointment. This is in accordance with administrative feasibility
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 42
S1: In computing the DST, the taxable due per unit of Bonds, Debentures, Certificate of Stock or Indebtedness issued in foreign Countries is P.75 based on fair market value
of such bonds, debentures, Certificate of Stock or Indebtedness.
S2: In computing the DST, the taxable due per unit of All Bills of Exchange or Drafts is P.60 based on Face value of any such bill of exchange or draft.
Response: Only S2 is true.
Correct answer: Only S2 is true.
Score: 1 out of 1 Yes
Question 43
Piyu Corporation, a domestic corporation, owns twenty (20%) of the outstanding share of NTZ Corporation, a non-resident foreign corporation (NRFC) since August 15,
2015. On June 30, 2021, it received dividends amounting to P 1,000,000 from the said NRFC. The said dividend has not been used until January 13, 2023, to which in the
said year, the income is reinvested in the business operation of Piyu Corporation.
The dividend income shall be declared as income for the taxable year 2021.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 44
Installment payment of income tax is allowed regardless of amount.
Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 45
S1: Hybrid electric vehicles shall refer to a motor vehicle powered by fuel energy, with or without provision for off vehicle charging in combination with gasoline, diesel, or
any other power.
S2: Hybrid electric vehicle must be able to propel itself from as stationary condition using solely electric motor.
Response: Only S1 is false
Feedback: S1: Hybrid electric vehicles shall refer to a motor vehicle powered by electric energy, with or without provision for off vehicle charging in combination with
gasoline, diesel, or any other power. RR-5-2018
Correct answer: Only S1 is false
Score: 1 out of 1 Yes
Question 46
The Income Statement of ABC Corp., a Top Withholding Agent (TWA) disclosed the following:
Gross Sales - Php 5,000,000
Less: Cost of Sales:
Merchandise Inventory (beg) - 1,000,000
Add: Purchases of inventories - 2,000,000
Available for Sale - 3,000,000
Merchandise Inventory (end) - 500,000
Cost of sales - 2,500,000
Gross Profit - 2,500,000
Administrative and Operating expenses:
Salaries and wages - 500,000
Professional fees (GPP) – 100,000
Professional fees (made to small time practitioners-STP) – 100,000
Rent – 100,000
Janitorial expenses (agency fee is 50,000) - 300,000
Security expenses (agency fee is 50,000) - 300,000
Utility expense (electricity) - 100,000
Net Income 1,000,000
Compute the EWT on purchase of goods:
Response: 20,000
Correct answer: 20,000
Score: 1 out of 1 Yes
Question 47
It refers to a business entity or concern duly registered with and / or licensed by the PEZA to develop, operate and maintain an ECOZONE or any or all of the component IE,
EPZ, Free Trade Zone or Tourist / Recreational Center and the required infrastructure facilities and utilities such as light and power system, water supply and distribution
system, sewerage and drainage system, pollution control devices, communication facilities, paved road network, administration building and other facilities as may be
required by the PEZA. The term shall include the PEZA and / or the Local Government Unit when by the themselves or in joint venture with a qualified private entity, shall
act as the Developer / Operator of the ECOZONES. As such, they shall be entitled to the same incentives under Rule XIV of these Rules in accordance with the pertinent
provisions of the Act and the Code.
Response: Facilities Enterprise
Correct answer: Developer or Operator
Score: 0 out of 1 No
Question 48
The party who desires to introduce in evidence voluminous documents or long accounts must, upon motion and approval by the Court, refer the voluminous documents to an
independent Certified Public Accountant (CPA). The authority to conduct an audit and, thereafter, testify relative to such summary and certification is given by the Court by
issuing a:
Response: Letter of Authority
Correct answer: Commission
Score: 0 out of 1 No
Question 49
Excess de minimis of a managerial employee shall form part of the Php 90,000 threshold (13th month pay and other benefits)
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 50
ABC Corp. is a domestic corporation. It sold goods to XYZ Corp., a PEZA-registered export enterprise based in Cavite Economic Zone. ABC Corp. billed XYZ Corp. Php
1,000,000 upon delivery to XYZ Corp. XYZ Corp. paid Php 1,000,000. Subsequently, XYZ Corp. sold the goods to GHI Corp., a PEZA-registered export enterprise based
Calamba, Laguna. The sale by XYZ Corp. is:
Response: VAT-exempt
Correct answer: Subject to 0%
Score: 0 out of 1 No
Question 51
Nicanor signified his intention to be taxed at 8% income tax rate on gross sales in his 2021 1st Quarter Income Tax Return. He has no other source of income. His total sales
for the first three (3) quarters amounted to P3,000,000.00 with 4th quarter sales of P3,500,000.00. Other information was made available:
st
1 Quarter
(8%)
2
nd
Quarter
(8%)
rd
3 Quarter (8%)
th
4 Quarter
TOTAL
Total sales
500,000.00
500,000.00
2,000,000.00
3,500,000.00
6,500,000.00
Less: COS
300,000.00
300,000.00
1,200,000.00
1,200,000.00
3,000,000.00
Gross
income
200,000.00
200,000.00
800,000.00
2,300,000.00
3,500,000.00
Less: Opex
120,000.00
120,000.00
480,000.00
720,000.00
1,440,000.00
Taxable
income
80,000.00
80,000.00
320,000.00
1,580,000.00
2,060,000.00
How much is the percentage tax payable for 2021?
Response: P 60,000
Feedback:
2021
1st – 3rd Quarters
Gross receipts
3,000,000
Rate
1%
PT
30,000
Correct answer: P 30,000
Score: 0 out of 1 No
Question 52
Renunciation by the surviving spouse of his/her share in the conjugal partnership or absolute community after the dissolution of the marriage in favor of the heirs of the
deceased spouse or any other person/s is subject to donor’s tax.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 53
In case of fraud or intent to evade payment of the tax, the action may be instituted within ________ years from the discovery of such fraud or intent to evade payment.
Response: 10
Correct answer: 10
Score: 1 out of 1 Yes
Question 54
Nicanor is an architect. His reported total gross receipts in 2023 amounted to Php 5,400,000.00 (net of applicable withholding tax) while the cost of service and operating
expenses were Php 2,550,000.00 and Php 1,550,000.00, respectively. Since he does not keep receipts of his purchases, his Accountant advised to avail of the 40% OSD in his
1st Quarter ITR. Total tax withheld (expanded withholding tax) by his clients is equivalent to 10% from which he received tax certificates (BIR Form 2307s).
During filing annual ITR, without getting professional advice, he filed his own return and opted 8% preferential taxation. What is Nicanor’s CORRECT income tax due in
2023? Disregard payment in his original return filed.
Response: a. Php 1,002,000
Feedback: Solution:
Gross receipts 6,000,000 (5.4M/.90% [100% -10% wtxrate])
OSD (40% of GR) 2,400,000
Taxable income 3,600,000
Tax due
2M-8M P 402,500
30% of excess of 2M (1.6M x 30%) 480,000
Income tax due 882,500
Correct answer: b. Php 882,500
Score: 0 out of 1 No
Question 55
Wisely So, a Filipino chess super-grandmaster, applied for an American citizenship a few years ago when he migrated in the USA. The US government approved his
application. Wisely took his oath of allegiance to the US on February 2021. Wisely So is now classified as:
Response: NRC
Correct answer: NRANETB
Score: 0 out of 1 No
Question 56
Nicanor a seller of Vegetables in wet market, earned P 2,000,000 in 2022. Nicanor is liable to percentage tax.
Response: True
Feedback: Reason: VAT exempt transaction.
Correct answer: False
Score: 0 out of 1 No
Question 57
Capital loss can be deducted from any gross income.
Response: True
Feedback: Can be deducted only up to capital gain
Correct answer: False
Score: 0 out of 1 No
Question 58
Claims of the decedent against insolvent persons are included in the gross estate at their full amount and are deducted from the gross estate to the extent of the collectible
portion.
Response: True
Feedback: deducted from the gross estate to the extent of uncollectible amount
Correct answer: False
Score: 0 out of 1 No
Question 59
ABC Corp. is a non-resident foreign corporation based in Canada and is engaged in the sale of meat products like chicken and other meat products. It sold goods to DEF
Corp. (DC) in the amount of $50,000. DEF Corp., in turn, sold the same to XYZ Corp. which is DC operating a chain of supermarkets in the Philippines. XYZ Corp. sells
the same to consumers. The sale by XYZ Corp. to consumers is:
Response: Subject to percentage tax
Correct answer: VAT-exempt
Score: 0 out of 1 No
Question 60
Train law provides that starting January 1, 2023, the filing and payment of VAT shall now be done on a quarterly basis, within 25 days following the close of each taxable
quarter.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 61
The effect of the taxpayer’s failure to reply to the PAN:
Response: The BIR will issue the FLD/FAN after the lapse of the 15-day period
Correct answer: The BIR will issue the FLD/FAN after the lapse of the 15-day period
Score: 1 out of 1 Yes
Question 62
The Board of ABC Corp. (DC) declared that all stockholders of record as of December 31, 2020 shall receive Php 100,000. The amount XYZ Corp. will actually receive
from ABC Corp is?
Response: 85,000
Correct answer: 100,000
Score: 0 out of 1 No
Question 63
Juicy Wiggle Corporation will remove from customs 50 cases of Four Seasons Powdered Juice using caloric and non-caloric sweetener containing 144 packs by 25 grams.
Each 25 grams pack can make 1 Liter (per serving suggestion appearing on the label)
How much is the total excise tax to be paid before removal?
Response: P 43,200
Feedback:
No. of Cases
50
Multiplied by no. of bottle per case
144
Total no. of bottles
7,200
Multiplied by content per bottle
Total Volume in Liter
1L
7,200L
Multiplied by Specific Tax Rate
Total excise tax to be paid before removal
6.00
P43,200
Correct answer: P 43,200
Score: 1 out of 1 Yes
Question 64
1st statement - A duly registered BMBE shall be exempt from income tax on income arising purely from its operations as such BMBE
2nd statement - Income tax exemption shall not apply to interest, including those from any currency bank deposit and yield or any other monetary benefit from deposit
substitutes and from trust funds and similar arrangements
Response: Both are true
Correct answer: Both are true
Score: 1 out of 1 Yes
Question 65
Facts: Nicanor and Inday, husband and wife, donated a communal parcel of land located in Manila to their son, Junior who was getting married within 7 months after the
date of donation. Below are the details about the fair market value of the parcel of land:
Fair market value at the time of donation P 5,000,000
Fair market value at the time of marriage P 5,500,000
Additional information:
• The property is subject to mortgage amounting to P 1,000,0000 which was assumed by Junior
How much is the donor’s tax due of Nicanor?
Response: c. P 105,000
Feedback: Solution:
Gross gift (P5Million/2) P 2,500,000
Less: Mortgage assumed 500,000 ( P 1,000,000/2)
Net gift 2,000,000
Less: Exempt gift 250,000
Taxable net gift 1,750,000
Multiply by 6%
Donor’s tax due 105,000
Correct answer: c. P 105,000
Score: 1 out of 1 Yes
Question 66
Which of the following separation pay is most likely to be subjected to income tax?
S1: Pay by reason of death
S2: Pay by reason of other physical disability
S3: Pay by reason of sickness
S4: Pay by reason of redundancy or bankruptcy
Response: d. S4
Feedback: Reason: S3 – to be exempt, sickness should be serious
Correct answer: c. S3
Score: 0 out of 1 No
Question 67
As a general rule, the intangible properties of a nonresident alien at the time of his death or donation, as the case may be, transferred but situated outside the Philippines
shall:
Response: Not be considered as part of his gross estate or gross gift, hence, not subject to estate tax or donor’s tax.
Correct answer: Not be considered as part of his gross estate or gross gift, hence, not subject to estate tax or donor’s tax.
Score: 1 out of 1 Yes
Question 68
Claims of the decedent against absconded persons are included in the gross estate at their full amount and are deducted from the gross estate to the extent of the uncollectible
portion.
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 69
Statement 1: Resident foreign corporations are subject to income tax based on net income from sources within and without the Philippines.
Statement 2: Non-resident foreign corporations are subject to income tax based on net income from sources within the Philippines.
Response: Statement 2 is true but, Statement 1 is false
Correct answer: Both statements are false
Score: 0 out of 1 No
Question 70
Nicanor, a Filipino Citizen residing in Manila, had the following data for the taxable year 2021:
Gross income from rent of commercial spaces,
net of P 60,000 withholding tax P 1,140,000
Dividend income:
From domestic corporation 50,000
From resident foreign corporation 60,000
From non-resident foreign corporation 20,000
Interest income:
On notes receivable 6,000
On Philippine bank deposit, net of FWT 4,800
On Phil bank deposit under FCDU 4,000
On bank deposit abroad 5,000
On long-term bank deposit 20,000
Royalty income:
From literary works 10,000
Other than literary works 12,000
Information on disposition of capital assets:
Capital gain on sale of unlisted shares of stock of ABC Corp 200,000
On sale of vacation house in Gapan City
• Acquisition Cost - 5,500,000
• Selling price - 6,000,000
• Zonal Value - 4,000,000
• FMV per tax declaration 5,000,000
Business expenses 691,000
How much is the total passive income subject to final tax (excluding those subjects to capital gains tax)?
Response: d. Php 82,000
Feedback: Solution:
Dividend income
From domestic corporation 50,000
Interest income:
On Philippine bank deposit, net of FWT (4,800/80%) 6,000
On Phil bank deposit under FCDU 4,000
Royalty income:
From literary works 10,000
Other than literary works 12,000
Total passive income subject to final tax 82,000
Correct answer: d. Php 82,000
Score: 1 out of 1 Yes
1/20/24, 12:36 PM
Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Home
*[May 2024] 00-Diagnostic Examination
Diagnostic Examination
Taxation (TAX)
Submissions
Here are your latest answers:
Question 1
The Board of ABC Corp. (DC) declared that all stockholders of record as of December 31, 2020 shall receive Php 100,000. XYZ Corp., an NRFC which is based in the USA
with whom the Philippine Government has existing bilateral agreements, will most likely receive the amount of?
Response: 100,000
Correct answer: 85,000
Score: 0 out of 1 No
Question 2
1st statement - The Court of Appeals retains exclusive appellate jurisdiction to review by appeal, the Decisions of the Commissioner of Internal Revenue in cases involving
disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the National Internal
Revenue Code or other law or part of law administered by the Bureau of Internal Revenue.
2nd statement - The Court of Tax Appeals’ original appellate jurisdiction includes criminal cases involving violations of the National Internal Revenue Code and the Tariff
and Customs Code
Response: Both are true
Correct answer: Only S2 is true
Score: 0 out of 1 No
Question 3
1st statement - A motion for reconsideration may be based on fraud, accident, mistake, excusable negligence.
2nd statement – A motion for reconsideration may be based on newly discovered evidence, which he could not, with reasonable diligence, have discovered and produced at
the trial and, which, if presented, would probably alter the result.
Response: only 2nd is true
Correct answer: Both are false
Score: 0 out of 1 No
Question 4
The prescriptive period in the collection of basic real property tax and any other tax _______ years from the date they become due.
Response: 3
Correct answer: 5
Score: 0 out of 1 No
Question 5
S1: Unless otherwise provided by special laws, if the denatured alcohol is mixed with gasoline, the excise tax on which has already been paid, the alcohol content shall be
subject to the tax herein prescribed. The removal of denatured alcohol of not less than one hundred eighty degrees ( I80˚) proof (ninety percent (90%) absolute alcohol) shall
be deemed to have been removed for motive power. unless shown otherwise.
S2: The excise tax paid on the purchased basestock (bunker) used in the manufacture of excisable articles and forming part thereof shall be credited against the excise tax
due thereon. For purposes of these regulations. any excess of excise taxes paid on raw materials resulting from manufacturing, blending. processing, storage, and handling
losses shall not give rise to a tax refund or credit.
Response: Both are false
Feedback: Specific rule under RR-2-2018
Correct answer: Both are true
Score: 0 out of 1 No
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Question 6
Inday, an employee of Beshie Corp., is receiving daily compensation in the amount of P2,500, net of mandatory contributions.
Assuming the Company has twenty-four working days (or equivalent to four weeks) January 2022, the total monthly withholding tax on compensation required to be
withheld for Inday’s salary is:
Response: a. P 7,693.44
Feedback: Solution:
Total taxable compensation ₱ 2,500.00
Less: Compensation Range (Minimum) 2,192.00
Excess ₱ 308.00
Withholding tax shall be computed as follows:
Predetermined Tax on ₱2,192.00 ₱ 356.16
Add: Tax on the excess (₱308.00 x 30%) 92.40
Total daily withholding tax ₱ 448.56
Multiply by (working days) 24
Total Monthly withholding tax 10,765.44
Correct answer: d. P 10,765.44
Score: 0 out of 1 No
Question 7
John is an OCW based on Saudi Arabia. From January to June 2022, he earned Php 2 Million from his business in the Philippines and another Php 2 Million from his
employment abroad. On July 1, 2022, he returned to the Philippines to live permanently herein. Upon his return and until the end of the year, he earned Php 1 Million from
his business and another Php 1 Million from sources outside the Philippines.
How much is John’s total income from sources within the Philippines?
Response: b. P 3,000,000
Feedback: Solution:
Income from business (Jan-Jun 2022) P 2,000,000
Income from business (Jul-Dec 2022) 1,000,000
Total income from within P 3,000,000
Correct answer: b. P 3,000,000
Score: 1 out of 1 Yes
Question 8
Nicanor earned interest income from the time deposit he made in 2013 in the amount of Php 10,000 at XYZ Bank, a local bank. The final tax required to be withheld is?
Response: 0
Correct answer: 0
Score: 1 out of 1 Yes
Question 9
In 2019, ABC corporation thru its board of directors, approved a resolution which gives its supervisors a free use of the company’s residential condominium in Makati City.
The following data were revealed in the resolution about the condominium:
Fair Market value of the condominium (per tax declaration), P 1,000,000
Zonal Value (per BIR assessment), P2,000,000
Fair market value (per Appraisal value), P2,500,000
How much is the Fringe benefit tax?
Response: P 33,654
Feedback: MV = P 50,000/65% x 35% = P 26,923
Correct answer: P 26, 923
Score: 0 out of 1 No
Question 10
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Many is an operator of cockpit arena in Batangas. He also operates a restaurant and a convenience store inside the cockpit. Data for particular quarter follow:
Gross receipts:
Cockpit operations
P 5,000,000
Restaurant operations
300,000
Convenience store operations
125,000
Assume that the restaurant and convenience store are owned by another taxpayer, Jayvee, who is a non-VAT registered and whose annual gross receipt does not exceed the
VAT threshold. The correct amusement tax due of Jayvee is:
Response: P 54,000
Correct answer: P 0
Score: 0 out of 1 No
Question 11
Statement 1: Propriety Educational Institutions refer to any private schools, which are non-profit for the purpose of these Regulations, maintained and administered by
private individuals or groups, with an issued permit to operate from the Department of Education (DepEd) or the Commissioner on Higher Education (CHED) or the
Technical Education and Skills Development Authority (TESDA), as the case maybe, under existing laws and regulations.
Statement 2: Propriety Hospitals refer to any private hospitals, which are non-profit for the purpose of these Regulations, maintained and administered by private individuals
or groups.
Response: a. Only S1 is true
Feedback: RR 3-2022 defines Proprietary Educational Institutions as any private schools, maintained and administered by private individuals or groups, with an issued
permit to operate as the case may be, under existing laws and regulations from any of the following:
• Department of Education (DepEd) or
• Commission on Higher Education (CHED) or
• Technical Education and Skills Development Authority (TESDA)
the provisions on the “nonprofit” qualification of proprietary educational institutions was deleted.
Correct answer: b. Only S2 is true
Score: 0 out of 1 No
Question 12
In February 2019, Nicanor, a rich kid, bought an Iphone-11 in the amount of Php 80,000. In November 2019, he sold the same for only Php 50,000 because he wants to
upgrade to Iphone-12. In the December 2019, he bought the Iphone-12 for Php 100,000.00 which he sold in the same day to Inday for Php 120,000.
In March 2020, Nicanor bought a laptop – an HP Spectre for Php 100,000. In April 2020, he sold the laptop to Jose for Php 150,000. In September, Nicanor bought a PS5 in
the amount of Php 60,000 which he eventually sold for Php 40,000 in December.
How much is the net capital loss in 2019?
Response: 30,000
Feedback:
Correct answer: 10,000
Score: 0 out of 1 No
Question 13
For income tax purposes, the profit from Nicanor’s investment in his asset is considered as income.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 14
No person will be imprisoned for non-payment of tax.
Response: False
Feedback: Non-payment of tax is punishable by law (tax evasion). Non-payment of POLL tax is not.
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Correct answer: False
Score: 1 out of 1 Yes
Question 15
The following information taken from the books of Ms. Paredes; a VAT-registered person was provided to you today, November 16, 2020:
Domestic sales of goods P 3,000,000
Sales of packaging materials to an export oriented
enterprise whose export sales exceed 70% of the 2,000,000
total annual production
Consignment of goods (consigned last September 12, 2020
to Ms. Purificacion and was not yet returned as of today) 200,000
Goods transferred for personal use by Ms. Paredes 100,000
How much is the total vatable sales?
Response: b. P 5,300,000
Feedback: Domestic sales of goods P 3,000,000
Sales of packaging materials to an export oriented
enterprise whose export sales exceed 70% of the 2,000,000
total annual production
Consignment of goods (consigned last September 12, 2020
to Ms. Purificacion and was not yet returned as of today) 200,000
Goods transferred for personal use by Ms. Paredes 100,000
Total Vatable sale P 5,300,000
Correct answer: b. P 5,300,000
Score: 1 out of 1 Yes
Question 16
S1: The excise tax imposed on cosmetic procedures shall not apply to procedures necessary to ameliorate a deformity arising from or directly related to a congenital or
developmental defect or abnormality.
S2: Cases and treatments covered by the National Health Insurance Program shall not be subject to excise tax.
S3: Non-invasive cosmetic procedure shall not be subject to excise tax.
Response: Only S3 is false
Feedback: Specific rule under RR-2-2019.
Correct answer: All is true
Score: 0 out of 1 No
Question 17
Installment payment of income tax is allowed regardless of amount.
Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 18
Nicanor bought 1,000 shares of stock of ABC Corp. amounting to Php 1,000,000.00 in 2015. The par value of each share is Php 1,000. He sold the same to Inday for Php
2,000,000 in 2021. The Book Value is at Php 3,000 per share. Compute the donor's tax.
Response: 0
Feedback:
Correct answer: 45,000
Score: 0 out of 1 No
Question 19
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Nicanor operates a convenience store while he offers bookkeeping services to his clients. In 2023, his sales amounted to Php 2,000,000.00, in addition to his gross receipts
from bookkeeping services of Php 500,000.00. His recorded cost of goods sold, and operating expenses were P1,200,000.00 and P550,000.00, respectively. His clients
issued him BIR Form 2307 for withholding taxes amounting to P 25,000.
If Nicanor opted 8% income tax rate in his first quarter return, compute his income tax payable:
Response: a. P 180,000
Feedback: Solution:
Gross sales – Convenience store P 2,000,000
Gross receipts – Bookkeeping services 500,000
Total 2,500,000
Less 250,000
Net taxable income 2,250,000
Multiply by 8%
Tax due 180,000
Less: Tax credit (BIR FORM 2307) 25,000
Income tax payable 155,000
Correct answer: d. P 155,000
Score: 0 out of 1 No
Question 20
Judicial expenses refers to expenses incurred during the settlement of the estate but not beyond the last day prescribed by law, or the extension thereof, for the filing of
the estate tax return, include the following:
I. Clerk hire
IV. Selling price of the estate
II. Court fees
V. Fees of executor or administrator
III. Publication charges
Response: I, II, V
Correct answer: None of the items is deductible
Score: 0 out of 1 No
Question 21
If a self-employed individual opted for 8%, the cost of sales/service is rendered irrelevant.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 22
Nicanor, a resident Filipino citizen borrowed money from Inday, an Overseas Filipino Worker (OFW/OCW). The interest income is derived from ____ and it is:
Response: Within, Exempt
Correct answer: Within, Taxable
Score: 0 out of 1 No
Question 23
In 2021, ABC Corp., established in 2015 reported the following information:
Balance Sheet:
Asset - Php 50,000,000
Liability - Php 30,000,000
Stockholders' Equity - Php 20,000,000
Income Statement:
Gross sales - Php 50,000,000
Cost of sales – Php 40,000,000
Operating Expenses - Php 20,000,000
Until when can ABC Corp carry-over the loss against its gross income?
Response: c. 2025
Feedback: Pursuant to Section 4 (bbb) of Bayanihan II and as implemented under RR 25-2020, the net operating losses of a business or enterprise incurred for taxable years
2020 and 2021 can be carried over as a deduction from gross income for the next five consecutive taxable years following the year of such loss.
Correct answer: d. 2026
Score: 0 out of 1 No
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Question 24
Corporation exempt from income tax are not subject to income tax on income received which are incidental or necessarily connected with the purposes for which they were
organized and operating.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 25
Rappy Tulpo and Iguana Alawee are popular resident Filipino bloggers. They were paid by Youtube based on the “views and subscriptions of their followers” from the
content they post using the platform. The income they earn are derived from ____ and it is:
Response: Within, Taxable
Correct answer: Within, Taxable
Score: 1 out of 1 Yes
Question 26
For purposes of computing the tax due, identify which of the following is an allowable deduction of a PEZA export enterprise?
Response: Salary, wages and labor expense
Correct answer: Raw materials used in the manufacture of products
Score: 0 out of 1 No
Question 27
The Income Statement of ABC Corp., a Top Withholding Agent (TWA) disclosed the following:
Gross Sales - Php 5,000,000
Less: Cost of Sales:
Merchandise Inventory (beg) - 1,000,000
Add: Purchases of inventories - 2,000,000
Available for Sale - 3,000,000
Merchandise Inventory (end) - 500,000
Cost of sales - 2,500,000
Gross Profit - 2,500,000
Administrative and Operating expenses:
Salaries and wages - 500,000
Professional fees (GPP) – 100,000
Professional fees (made to small time practitioners-STP) – 100,000
Rent – 100,000
Janitorial expenses (agency fee is 50,000) - 300,000
Security expenses (agency fee is 50,000) - 300,000
Utility expense (electricity) - 100,000
Net Income 1,000,000
Compute the EWT on security service:
Response: 30,000
Feedback:
Correct answer: 1,000
Score: 0 out of 1 No
Question 28
In case of importation, in general, the importer is liable for the VAT and not the person who shall buy the imported goods
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 29
Nicanor is the owner of a restaurant in Manila. On May 02, 2023, he made payments amounting to P 56,000 (inclusive of vat) to Michael, Nicanor’s independent accountant,
for the latter’s professional fee for rendering accounting and taxation services to Nicanor’s business.
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How much withholding tax, if any, will Wendel withhold to his payment to Michael, assuming Wendel is not classified by the BIR as top withholding agent?
Response: b. P 5,000
Feedback: Solution:
P 56,000/1.12 = P 50,000 x 10% = P 5,000
Regardless of whether or not Nicanor is a top withholding agent, RR-11-2018 provides that income payment of professional fees is subject to either 5% or 10% withholding
tax. Since Michael is a VAT registered person, he is not qualified to avail the 5% ewt as it presumed that his gross receipts exceed the 3M VAT threshold.
Correct answer: b. P 5,000
Score: 1 out of 1 Yes
Question 30
ABC Corp. pays monthly rent of Php 100,000 on his place of business located in a mall owned by Alaya Land, Inc. (ALI) The net cash to be received by ALI is?
Response: 95,000
Correct answer: 95,000
Score: 1 out of 1 Yes
Question 31
ABC Corp. is a domestic corporation. It sold goods to XYZ Corp., a PEZA-registered export enterprise based in Cavite Economic Zone. ABC Corp. billed XYZ Corp. Php
1,000,000 upon delivery to XYZ Corp. XYZ Corp. paid Php 1,000,000. Subsequently, XYZ Corp. sold the goods to GHI Corp., a PEZA-registered export enterprise based
Calamba, Laguna. The sale by XYZ Corp. is:
Response: Subject to 12%
Correct answer: Subject to 0%
Score: 0 out of 1 No
Question 32
Nicanor is an architect. His reported total gross receipts in 2023 amounted to Php 5,400,000.00 (net of applicable withholding tax) while the cost of service and operating
expenses were Php 2,550,000.00 and Php 1,550,000.00, respectively. Since he does not keep receipts of his purchases, his Accountant advised to avail of the 40% OSD in his
1st Quarter ITR. Total tax withheld (expanded withholding tax) by his clients is equivalent to 10% from which he received tax certificates (BIR Form 2307s).
During filing annual ITR, without getting professional advice, he filed his own return and opted 8% preferential taxation. What is Nicanor’s CORRECT income tax due in
2023? Disregard payment in his original return filed.
Response: c. Php 377,500
Feedback: Solution:
Gross receipts 6,000,000 (5.4M/.90% [100% -10% wtxrate])
OSD (40% of GR) 2,400,000
Taxable income 3,600,000
Tax due
2M-8M P 402,500
30% of excess of 2M (1.6M x 30%) 480,000
Income tax due 882,500
Correct answer: b. Php 882,500
Score: 0 out of 1 No
Question 33
The reglamentary period to file motion for reconsideration or new trial is within __________ from the date he received notice of the decision, resolution or order of the CTA
in question.
Response: 90 days
Correct answer: 15 days
Score: 0 out of 1 No
Question 34
Donor’s tax is property tax.
Response: False
Feedback: The donor’s tax is not a property tax, but is a tax imposed on the transfer of property by way of gift inter vivos.
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Correct answer: False
Score: 1 out of 1 Yes
Question 35
Nicanor is the owner of a small grocery store in Manila. His annual gross sales did not exceed the P 3Million VAT threshold. If he opted to choose itemized deductions as his
mode of deduction from his gross income in his annual income tax return, he is not required to submit to the BIR an Audited Financial Statements.
Response: True
Feedback: T. Specific rule under RR-8-2018
Correct answer: True
Score: 1 out of 1 Yes
Question 36
The books of a corporation show the following for the taxable year 2022
Philippines
Gross Income
Deductible expense
Total asset*
P 4,000,000
P 2,000,000
P 50,000,000
United States of America
2,000,000
1,000,000
20,000,000
Thailand
2,000,000
1,500,000
15,000,000
England
1,000,000
500,000
20,000,000
USA
Thailand
England
P 120,000
P140, 000
P60, 000
*excluding land where the office is located
Taxes paid on net income
If the corporation is a domestic corporation, how much is the tax payable?
Response: P800,000
Feedback:
Correct answer: 695,000
Score: 0 out of 1 No
Question 37
S1: Excise tax is a tax on the production, sale, or consumption of a commodity in a country.
S2: Ad Valorem Tax – refers to the excise tax which is based on selling price or other specified value of the goods/articles.
S3: In general, the time of payment of excise tax on domestic products is after removal from the place of production.
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Response: Only S2 is false
Feedback: S3: In general, the time of payment of excise tax on domestic products is after removal from the place of production.
Correct answer: Only S3 is false
Score: 0 out of 1 No
Question 38
ABC Corp evaded the payment of tax for the years 2018-present. The CIR has the power to prosecute tax evaders
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 39
For income tax purposes, all kinds of partnerships are taxable as corporations.
Response: False
Feedback: General Professional Partnership is a pass thru entity and is exempt from income tax
Correct answer: False
Score: 1 out of 1 Yes
Question 40
1st statement – Actual Distraint refers to the act of enforcing/executing the Warrant of Distraint, and/or Levy (WDL) through the actual confiscation of the personal
property/ies of a delinquent taxpayer.
2nd statement – Constructive Distraint refers to the act of listing down the personal properties of the taxpayer requiring the taxpayer or any person having possession or
control of such property/ies not to dispose the properties distrained without the express authority of the CIR or his duly authorized representative.
Response: Both are true
Correct answer: Both are true
Score: 1 out of 1 Yes
Question 41
S1: Nicanor obtained a loan from a Banko de Pelepens in the amount of Php 1M. The documentary stamp tax to be paid amounts to P 7,500.
S2: In 2024, ABC Corporation has made advances to its affiliate company, GHI Corporation of P 5,000,000. The transaction is exempted from documentary stamp tax as it is
considered as inter-company transaction.
Response: Only S2 is true
Feedback: S1: T(1M x 1.5/200). S2: F. it is subject to P 37,500 DST (5M x 1.5/200)
Correct answer: Only S1 is true
Score: 0 out of 1 No
Question 42
As a result of the accident, Nicanor paid hospital expenses which he was able to reimburse later. The money he received as a result of reimbursement is:
Response: Inclusions in / Items of Gross Income
Correct answer: Exclusions from Gross Income
Score: 0 out of 1 No
Question 43
What is the effect if the taxpayer replied to the PAN within the prescriptive period to reply?
Response: The BIR may issue the FLD/FAN only after the lapse of the reglementary period to file a reply
Correct answer: The BIR may issue the FLD/FAN at any time after the reply
Score: 0 out of 1 No
Question 44
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Nicanor, a Filipino citizen residing in the Philippines borrowed money from Inday, a Filipino working abroad. Interest income is Php 10,000.00. Nicanor is:
Response: RC
Correct answer: RC
Score: 1 out of 1 Yes
Question 45
The Income Statement of ABC Corp., a Top Withholding Agent (TWA) disclosed the following:
Gross Sales - Php 5,000,000
Less: Cost of Sales:
Merchandise Inventory (beg) - 1,000,000
Add: Purchases of inventories - 2,000,000
Available for Sale - 3,000,000
Merchandise Inventory (end) - 500,000
Cost of sales - 2,500,000
Gross Profit - 2,500,000
Administrative and Operating expenses:
Salaries and wages - 500,000
Professional fees (GPP) – 100,000
Professional fees (made to small time practitioners-STP) – 100,000
Rent – 100,000
Janitorial expenses (agency fee is 50,000) - 300,000
Security expenses (agency fee is 50,000) - 300,000
Utility expense (electricity) - 100,000
Net Income 1,000,000
Compute the EWT on Janitorial service:
Response: 1,000
Feedback:
Correct answer: 6,000
Score: 0 out of 1 No
Question 46
Classification of property as residential, agricultural, commercial, industrial, mineral, or special is vested with:
Response: City or Municipal Sanggunian
Correct answer: City or Municipal Sanggunian
Score: 1 out of 1 Yes
Question 47
The transfer of property by gift is perfected from the moment the donor knows of the acceptance by the donee.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 48
Phil Corporation gave Manager A, a resident citizen grocery allowance worth P 39,000. Assume that Manager A is Non-resident alien not engaged in trade or business. How
much is the fringe benefit tax?
Response: P 13, 650
Feedback: Solution: P 39,000/75% = P 52,000 GMV. GMV = P 52,00 x 25% = P 13,000
Correct answer: P 13,000
Score: 0 out of 1 No
Question 49
This refers to persons, corporations, firms, or associations engaged in the business of carrying of transportation passengers or goods or both, by land, water, and air, for
compensation, offering their services to the public and shall include transportation contractors.
Response: a. Common carriers
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Correct answer: a. Common carriers
Score: 1 out of 1 Yes
Question 50
Nicanor is rich, hence he should pay more. Inday on the other hand is a minimum wage earner. The taxation of higher rate on the income of Nicanor and exemption of
income of Inday is consistent with ability to pay principle
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 51
Nicanor won Php 5,000 in Philippine Lotto. The amount is?
Response: Subject to final tax in the amount of 20%
Correct answer: Exempt from taxation
Score: 0 out of 1 No
Question 52
In general, shares, obligations or bonds issued by Kate Spada, a foreign corporation, shall be considered as intangible personal property situated in the Philippines.
Response: False
Feedback: Condition: 85% of the business situated in the Phil.
Correct answer: False
Score: 1 out of 1 Yes
Question 53
Which of the following is not an income for income tax purposes?
Response: b. Excess of selling price over the cost of an asset sold
Correct answer: c. Collection of loans receivable
Score: 0 out of 1 No
Question 54
The primary purpose of taxation is to:
Response: prevent inflation
Correct answer: collect tax
Score: 0 out of 1 No
Question 55
It is the authority granted to internal revenue officers to distraint personal property of whatever character and to levy upon the real property and interest in or rights to real
property of a delinquent taxpayer.
Response: Warrant of Distraint and/or Levy
Correct answer: Warrant of Distraint and/or Levy
Score: 1 out of 1 Yes
Question 56
Non-VAT registered whose sales for the year exceed P 3,000,000 is
Response: d. Subject to 12% VAT under the tax code, as amended by train law
Correct answer: d. Subject to 12% VAT under the tax code, as amended by train law
Score: 1 out of 1 Yes
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Question 57
Income tax is an excise tax
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 58
The % share of the national government in gross income taxation of PEZA locators is:
Response: 25%
Correct answer: 3%
Score: 0 out of 1 No
Question 59
Li Mean Who, a South Korean actor and model, was contracted to model for Lasa-Duh, a domestic company known for e-commerce. He worked in the Philippines for two
days. He is classified as:
Response: Non-resident alien engaged in trade or business
Correct answer: Non-resident alien engaged in trade or business
Score: 1 out of 1 Yes
Question 60
Inday, an employee of Beshie Corp., is receiving daily compensation in the amount of P2,500, net of mandatory contributions.
Determine the total daily withholding tax on compensation for the year 2022.
Response: d. P 10,765.44
Feedback: Solution:
Total taxable compensation ₱ 2,500.00
Less: Compensation Range (Minimum) 2,192.00
Excess ₱ 308.00
Withholding tax shall be computed as follows:
Predetermined Tax on ₱2,192.00 ₱ 356.16
Add: Tax on the excess (₱308.00 x 30%) 92.40
Total daily withholding tax ₱ 448.56
Correct answer: a. P 448.56
Score: 0 out of 1 No
Question 61
The tax laws should be capable of convenient, just and effective administration:
Response: administrative feasibility
Correct answer: administrative feasibility
Score: 1 out of 1 Yes
Question 62
Manuel, an accounting clerk of JMC Marketing Corp., received P 5,000 fringe benefits from the company. The fringe benefits received by Manuel is subject to fringe
benefits tax.
Response: True
Feedback: fringe benefits received by a rank-and-file employee is treated as an additional compensation subject to withholding tax on compensation.
Correct answer: False
Score: 0 out of 1 No
Question 63
The taxable base in computing the Output VAT of a dealer in securities is based on Gross receipts without any deductions therefrom.
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Response: True
Feedback: gross selling price less cost of securities
Correct answer: False
Score: 0 out of 1 No
Question 64
If compensation under employer-employee relationship is an item of gross income, it means that transportation, rental, and other expenses of an employee can be deducted
from the salaries.
Response: False
Feedback: No deduction if gross income is compensation. Specific in Sec 34.
Correct answer: False
Score: 1 out of 1 Yes
Question 65
It is an excise tax on the exercise of a right or privilege to transfer obligations, rights or properties incident thereto
Response: Documentary Stamp Taxes
Correct answer: Documentary Stamp Taxes
Score: 1 out of 1 Yes
Question 66
Nicanor was born in Pampanga. He resides in Quezon City. He works in Manila. He suffered an accident in Pasay. He was brought to Makati Medical Center in Makati City
where he was pronounced dead. His only property is located in Caloocan City. Where is the venue of the filing of the estate tax return?
Response: b. Quezon City
Correct answer: b. Quezon City
Score: 1 out of 1 Yes
Question 67
Nicanor, a real estate lessor, leases his residential house and lot in Manila, Due to Covid-19 pandemic, he stopped leasing his residential house and lot and sold the same for
P 2,000,000 to Inday. The sale is subject to 12% VAT.
Response: True
Feedback: The taxpayer is engaged in real estate business when real property is sold. Thus, the sale of the real property is subject to VAT.
Correct answer: True
Score: 1 out of 1 Yes
Question 68
Mang Juan transferred a property with a fair value of P1,000,000. Title to the property was reserved by Mang Juan until death. Subsequently Mang Juan died. The property
was worth P800,000 at the date of his death. Which is correct?
Response: The property is subject to estate tax at P800,000.00
Correct answer: The property is subject to estate tax at P800,000.00
Score: 1 out of 1 Yes
Question 69
Nicanor is an employee of ABC Corporation. In the same taxable year, he resigned from ABC Corporation and transferred to XYZ Corporation.
S1: Nicanor is not required to file an Income tax return as he is qualified for substituted filing.
S2: Nicanor must register his TIN where his new employer, XYZ Corporation is registered.
Response: Only S2 is true
Feedback: S1: Nicanor is required to file BIR Form 1700 as he has two employers within the taxable year. S2: In case of transfer or change of employer, registration or TIN
shall be transferred to the RDO which has jurisdiction over the place of employee’s residence and NOT to the RDO of new employer.
Correct answer: Both are false
Score: 0 out of 1 No
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Question 70
Statement 1: Profit sharing and benefits under CBA up to P10,000 is an exempt de minimis benefits.
Statement 2: Uniform and clothing allowance – not exceeding P6,000 per annum is an exempt de minimis benefits.
Statement 3. Actual Medical Assistance, e.g. medical allowance to cover medical and healthcare needs, annual medical/executive check-up, maternity assistance, and routine
consultations – not exceeding P10,000 per annum is an exempt de minimis benefits.
Response: Statements 1, 2, and 3 are true
Correct answer: Statement 1 is false, but Statements 2 and 3 are true.
Score: 0 out of 1 No
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Submissions - *[May 2024] 00-Diagnostic Examination - Taxation (TAX) -
Home
*[May 2024] 00-Diagnostic Examination
Diagnostic Examination
Taxation (TAX)
Submissions
Here are your latest answers:
Question 1
Statement 1. A fringe benefit which is subject to the fringe benefit tax is taxable income of the
employee.
Statement 2. A fringe benefit which is not subject to the fringe benefit tax is taxable income of the employee.
Response: First statement is false while second statement is true.
Correct answer: First statement is false while second statement is true.
Score: 1 out of 1 Yes
Question 2
It refers to a tract of land subdivided and developed according to a comprehensive plan under a unified continuous management and with provisions for basic infrastructure
and utilities, with or without pre-built standard factory buildings and community facilities for the use of a community of industries.
Response: Industrial Estate
Correct answer: Industrial Estate
Score: 1 out of 1 Yes
Question 3
The following acquisitions and transmissions shall be exempt from estate tax, except:
Response: The transmission from the first heir, legatee or done in favor of the same beneficiary, in accordance with the desire of the predecessor.
Correct answer: The transmission from the first heir, legatee or done in favor of the same beneficiary, in accordance with the desire of the predecessor.
Score: 1 out of 1 Yes
Question 4
Sarah G, a Filipina singer/actress held a one-night concert in Canada. She was paid Php 1 Million ($20,000). Tax withheld and paid is Php 300,000.00 ($6,000). Sarah G is:
Response: RC
Correct answer: RC
Score: 1 out of 1 Yes
Question 5
ABC Corp is under BIR audit with valid e-Letter of Authority. The CIR has the power to obtain information of sales or purchases from third persons like the suppliers
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 6
Statement 1: Persons subject to VAT are likewise subject to percentage tax.
Statement 2: Persons exempted from VAT are likewise always exempted from other percentage tax.
Response: Both of the statements are false.
Correct answer: Both of the statements are false.
Score: 1 out of 1 Yes
Question 7
ABC PTE Ltd. is an eco-zone developer / operator and facility enterprise. It is subject to 5% gross income taxation. Which of the following is NOT an allowable deduction
in computing its tax?
Response: Rent and utility charges for buildings and capital equipment
Correct answer: Salaries of product supervisor
Score: 0 out of 1 No
Question 8
S1: If the consideration received is less than adequate and full consideration, the value to be included in the gross estate shall be the excess of the fair value of the property at
the time of the decedent’s death and the fair market value at the time of sale.
S2: If the transfer is not shown to have been made in contemplation of death or to take effect upon the decedent’s demise, the transfer is subject to donor’s tax.
Response: c. Both are correct.
Feedback: Reason: S1: should be @ consideration received not FMV @ time of sale.
Correct answer: b. Only S2 is correct.
Score: 0 out of 1 No
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Question 9
The existence of the government is a necessity is a theory founded on
Response: lifeblood doctrine
Correct answer: lifeblood doctrine
Score: 1 out of 1 Yes
Question 10
Under Revenue Regulations 3-2022, the grant of per diems such as transportation allowance in attendance of meetings, compensation and/or endowments for services
rendered, or any other similar emoluments to the Board of Trustees, officers, employees, or any members of the above-mentioned institutions (Non-Stock, Non-Profit
Educational Institutions, Hospitals which are for Non-Profit, Non-Stock Corporations) shall not be prohibited and shall not necessarily be considered a private inurement that
would negate the status of the institutions as non-profit; Provided, that such per diems, compensation or emoluments are subject to proper liquidation or reimbursement
procedures, and commensurate to the functions and services rendered. ln such a case, the same shall be considered as legitimate and reasonable expenses incurred in
furtherance of the duties and responsibilities of the trustees, officers, employees, members, or any persons, and ultimately, the objectives of the organization
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 11
Deductions from gross income as opposed to exclusions from gross income, refers to the flow of wealth to the taxpayer that are not treated as part of gross income.
Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 12
Piyu Corporation, a domestic corporation, owns twenty (20%) of the outstanding share of NTZ Corporation, a non-resident foreign corporation (NRFC) since August 15,
2015. On June 30, 2021, it received dividends amounting to P 1,000,000 from the said NRFC. The said dividend has not been used until January 13, 2023, to which in the
said year, the income is reinvested in the business operation of Piyu Corporation.
The dividend income shall be declared as income for the taxable year 2021.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 13
Pamela, a resident citizen, made the following donations during the current taxable year:
· House and lot in the Philippines, not classified as a capital asset, acquired three years ago at a cost of P5,500,000 with a fair market value of P7,000,000 at the time of
donation.
· Bonds with a face value of P5,000,000 issued by a foreign corporation with business situs in the Philippines and quoted at 105 in the stock market.
· A five-hectare fishpond, located in Cebu City, currently valued at P3,000,000 to his daughter for her marriage to be celebrated on June 28 of the same year. The property
is mortgaged with the First Commercial bank for P500,000 which will be assumed by the donee.
· Commercial building in Australia with a prevailing market value of P5,000,000 to his son as a birthday gift. The donor’s tax paid in Australia was P450,000.
· Shares of stocks of a foreign corporation with a total quoted price of P3,000,000 as an additional gift to the marriage of his daughter in march 20. The principle of
reciprocity applied to this property and the foreign corporation has 35% of its business operation in the Philippines.
· A parcel of land located in Mandaue City with a fair market value of P5,000,000 was sold for P3,000,000. The land is used in business by the taxpayer. The BIR found
out that the it was given to his son with the real intention to give it for free.
How much is the gross gift?
Response: P25,250,000
Correct answer: P25,250,000
Score: 1 out of 1 Yes
Question 14
The following information were given to you by Ms. Reyes, a prominent independent contractor who offers architectural and engineering services for the taxable year 2020:
Total gross receipts from architectural designs
P 1,250,000
Total gross receipts from engineering services
3,000,000
Total cost of services
2,150,000
Total operating expenses
1,000,000
Based on the foregoing information, how much is Ms. Reyes’ taxable income?
Response: P 1,000,000
Feedback:
Solution:
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Total gross receipts
P 4,250,000
Less: Cost of services
2,150,000
Gross income
2,100,000
Less Opex
1,000,000
Taxable income
1,100,000
Correct answer: P 1,100,000
Score: 0 out of 1 No
Question 15
If Johnny is a non-VAT taxpayer, which of the following books of accounts is not required to be registered.
Response: Cash Receipt
Feedback: Subsidiary sales journal and subsidiary purchase journal are required only on VAT taxpayers.
Correct answer: Subsidiary Sales Journal
Score: 0 out of 1 No
Question 16
The books of a corporation show the following for the taxable year 2022
Philippines
Gross Income
Deductible expense
Total asset*
P 4,000,000
P 2,000,000
P 50,000,000
United States of America
2,000,000
1,000,000
20,000,000
Thailand
2,000,000
1,500,000
15,000,000
England
1,000,000
500,000
20,000,000
USA
Thailand
England
P 120,000
P140, 000
P60, 000
*excluding land where the office is located
Taxes paid on net income
If the corporation is a domestic corporation, how much is the tax payable?
Response: 1,000,000
Feedback:
Correct answer: 695,000
Score: 0 out of 1 No
Question 17
A person whose business is to keep automobile for hire or keep them stored for use or order
Response: d. Taxicab operators
Feedback: Note: Keepers of garage is the more specific definition.
Correct answer: b. Keepers of garage
Score: 0 out of 1 No
Question 18
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ABC Corp., a local enterprise, exported $1 Million worth of merchandise to a firm located in Canada. Input taxes attributable to the sale is Php 3 Million.
Details of the transactions are seen below:
Date of export May 30, 2021
Date of filing of monthly VAT declaration June 20, 2021
Date of receipt of remittance of payment July 10, 2021
Date of filing of quarterly VAT return July 24, 2021
When is the deadline of the filing of application for refund of the input tax?
Response: July 25, 2023
Correct answer: June 30, 2023
Score: 0 out of 1 No
Question 19
San Miguelito Corporation (SMC) was paid to build the Skyway Stage 3. The income of SMC is derived from _____ and it is:
Response: Within, Taxable
Correct answer: Within, Taxable
Score: 1 out of 1 Yes
Question 20
The power to tax is absolute
Response: False
Feedback: Not absolute because it has LIMITATIONS (inherent and constitutional)
Correct answer: False
Score: 1 out of 1 Yes
Question 21
The document which authorizes a Revenue Officer to examine the records of a taxpayer:
Response: Letter of Authority
Correct answer: Letter of Authority
Score: 1 out of 1 Yes
Question 22
ABC Corp., a TWA, purchased goods from Nicanor Enterprises in the amount of Php 20,000. If the purchase is a single purchase and Nicanor Enterprises is not considered a
regular supplier, ABC Corp. is not required to make the withholding.
Response: False
Feedback: Purchase is over 10,000 hence withholding is required
Correct answer: False
Score: 1 out of 1 Yes
Question 23
Nicanor provided an information leading to the capture of the Philippines' Most Wanted criminal. As a result, he received Php 10 Million. The amount is subject to final tax
as it is an informer's reward.
Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 24
Nicanor, single, received the following in 2022:
Proceeds of his life insurance paid at annual premium of P 15,000 within 25 years (outlived the policy) P 2,000,000
Proceeds of Inday’s (Mother of Nicanor) life insurance paid at an annual premium of P 10,000 within 20 years 1,000,000
House and lot from inherited properties 4,000,000
Rent income from inherited properties 200,000
For income tax purposes, how much of the above items must be excluded from Nicanor’s gross income?
Response: c. P 1,000,000
Feedback: Annual premium (15k x 25 yrs) 375,000
Proceeds of Inday’s (Mother of Nicanor) life insurance paid at an annual premium of P 10,000 within 20 years 1,000,000
House and lot from inherited properties 4,000,000
Total exclusions from gross income 5,375,000
Correct answer: a. P 5,375,000
Score: 0 out of 1 No
Question 25
Wendel, a resident citizen, is an owner of a sticker printing service in Manila. On March 5, 2023, one of his machines was destroyed due to mechanical defects. Thus, he was
forced to outsource his products to Chengqua Corporation, to which pays P 112,000 (inclusive of VAT).
How much withholding tax, if any, will Wendel withhold to his payment to Chenqua Corporation, assuming Wendel is classified by the BIR as top withholding agent?
Response: b. P 1,000
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Feedback: Solution:
P 112,000/1.12 = P 100,000 (gross amount) x 2% = P 2,000
Regardless of whether or not Wendel is a top withholding agent, RR-11-2018 provides that income payment to certain contractors is subject to 2%
Correct answer: c. P 2,000
Score: 0 out of 1 No
Question 26
Which statement is correct? The collection of a deficiency tax assessment by distraint and levy:
Response: a. May be repeated, if necessary, until the full amount due, including all expenses, is collected
Feedback: Basis: Section 217, NIRC
Correct answer: a. May be repeated, if necessary, until the full amount due, including all expenses, is collected
Score: 1 out of 1 Yes
Question 27
Nicanor acquired his principal residence in 2011 at a cost of php 2,000,000.00. He sold the property on January 1, 2022, with a fair market value of Php 10,000,000.00
(zonal is higher than assessed) for a consideration of Php 8,000,000.00. Within the 18-month reglementary period, he purchased his new principal residence at a cost of Php
14,000,000.00.
Compute the capital gains tax:
Response: c. P 600,000
Feedback: Reason: The transaction is exempt from the CGT since the entire proceeds of the sale has been fully utilized to acquire his new principal residence.
Correct answer: a. P 0
Score: 0 out of 1 No
Question 28
One Piece Corporation (OPC) was identified as a top withholding agent by the BIR. One day, the accounting department, headed by Rico, requested the company to treat all
of its staff a McDonalds meal amounting to P 1,000 because it is already tax season, and the employees are working 18-hours a day. The company granted the request.
Within the taxable year, the company transacted with McDonalds seven times for buying McDonalds meals with a total amount of Php 8,000. As a result of purchases during
the taxable year, the company is required to withhold 1% expanded withholding tax.
Response: True
Feedback: False. McDonalds is considered as deemed a regular supplier. Thus OPC under RR-11-2018 is required to withhold 2% not 1 %, EWT for the purchase of
services (McDonalds sells services not goods)
Correct answer: False
Score: 0 out of 1 No
Question 29
PICPA, a non-stock, non-profit organization, sells its services to its members and non-members, who are Certified Public Accountants by conducting seminars. Such services
are exempt from value added tax.
Response: False
Feedback: The phrase “in the course of trade or business” means the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental
thereto, by any person regardless of whether or not the person engaged therein is a non-stock, nonprofit private organization (irrespective of the disposition of its net income
and whether or not it sells exclusively to members or their guests), or government entity.
Correct answer: False
Score: 1 out of 1 Yes
Question 30
Interest income of Nicanor from peso bank deposit in ABC Bank is Php 10,000. The final tax withheld is considered as an advance payment of tax
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 31
The grossed-up monetary value of the fringe benefit is the actual amount received by the employee.
Response: False
Feedback: Monetary value
Correct answer: False
Score: 1 out of 1 Yes
Question 32
Kuya Wheel, in his game show, awarded the top prize of Php 1 Million to Nicanor. Kuya Wheel, thru his program, will withhold the amount of?
Response: 200,000
Correct answer: 200,000
Score: 1 out of 1 Yes
Question 33
Nicanor, a Filipino citizen residing in the United States borrowed money from Inday, a Filipino working abroad. Interest income is Php 10,000.00. Nicanor is:
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Response: NRC
Correct answer: NRC
Score: 1 out of 1 Yes
Question 34
XYZ Corporation, a newly organized corporation in the Philippines, issued on November 07, 2021 10,000(par value @ P 50.00 per share) shares of stocks to one of its
incorporators, Mr. Nicanor for P 800,000.
Supposing after 10 months, Nicanor sold the said shares for P 1,000,000, how much is the documentary stamp tax due on the sale transaction made by Nicanor, if any?
Response: d. P 10,000
Feedback: Solution:
Par value of shares (10,000 x 50) P 500,000
Divided by 200
Total 2,500
Multiply by 1.5
DST due 3,750
Correct answer: a. P 7,500
Score: 0 out of 1 No
Question 35
Income tax paid can be claimed either as a tax credit or an expense at the option of the taxpayer.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 36
For income tax purposes, a one-person corporation is taxable as an individual taxpayer.
Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 37
Martin, a resident citizen, is an employee of AMC Corporation. He received the following from his employer in 2023:
Basic monthly compensation P 75,000
13th month pay 75,000
Transportation allowance (P 5,000 per month) 60,000
Productivity incentive bonus 10,000
Christmas bonus 30,000
Uniform allowance 26,000
Actual medical allowance 10,000
Rice subsidy 36,000
Note: There is no labor organization in the company. Ergo, no Collective Bargaining Agreement.
How much is the total exempt de minimis benefits?
Response: b. P 45,000
Feedback: Solution:
Christmas bonus 5,000
Uniform allowance 6,000
Actual medical allowance 10,000
Rice subsidy 24,000
Total P 45,000
Note: If Company has no CBA but nonetheless provided productivity incentive bonus, the amount given can be reported under the 13th month pay and other benefits
Correct answer: b. P 45,000
Score: 1 out of 1 Yes
Question 38
The share of the Component City or Municipality in the proceeds of the tax on sand, gravel and other quarry resources is:
Response: 40%
Correct answer: 30%
Score: 0 out of 1 No
Question 39
Banko De Pera, earned parking fees from leasing its spaces to some of its regular bank customers. Banko De Pera is liable to 7% Gross Receipts Tax.
Response: False
Feedback: Basis: Section 121, NIRC.
Correct answer: True
Score: 0 out of 1 No
Question 40
Nicanor gave Inday P 4,000 cash as a gift. The donation and acceptance may be done in writing
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Response: True
Feedback: Oral donation is allowed by law in case of donation of personal property with fair market value less than 5k, but is not mandated. Hence, donation and
acceptance may be in writing.
Correct answer: True
Score: 1 out of 1 Yes
Question 41
The following information were given to you by Ms. Reyes, a prominent independent contractor who offers architectural and engineering services for the taxable year
2020:
Total gross receipts from architectural designs
P 1,250,000
Total gross receipts from engineering services
3,000,000
Total cost of services
2,150,000
Total operating expenses
1,000,000
Assume the same facts except that Ms. Reyes opted to be taxed at 8% income tax regime, how much is her taxable income?
Response: P 1,100,000
Feedback: P 1,100,000 (Gross receipts exceeds the P 3M VAT Threshold, hence not allowed to opt 8%)
Correct answer: P 1,100,000
Score: 1 out of 1 Yes
Question 42
Goldie, an employee of Silver Corp., is receiving weekly compensation in the amount of ₱9,500, net of mandatory contributions.
Assuming the Company has twenty-four working days (or equivalent to four weeks) January 2022, the total monthly withholding tax on compensation required to be
withheld for Golide’s salary is:
Response: b. P 794.20
Feedback: Total taxable compensation ₱ 9,500.00
Less: Compensation Range (Minimum) 7,692.00
Excess ₱ 1,808.00
Withholding tax shall be computed as follows:
Predetermined Tax on ₱7,692.00 ₱ 576.92
Add: Tax on the excess (₱1,808.00 x 25%) 452.00
Total weekly withholding tax ₱ 1,028.92
Multiply by (weeks in a month) 4
Total monthly withholding 4,115.68
Correct answer: c. P 4,115.68
Score: 0 out of 1 No
Question 43
Which of the following article shall be subject to specific excise tax?
Response: Excise tax on automobiles
Correct answer: Excise tax on sweetened beverages
Score: 0 out of 1 No
Question 44
If de minimis benefit is not included among the list of exempt de minimis benefits, the benefit is subject to FBT if recipient is a managerial employee or withholding tax on
compensation if recipient is a rank-and-file employee.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 45
If in respect of a particular employee, the regular compensation is exempt from withholding tax because the amount thereof is below the compensation level, but
supplementary compensation is paid during the calendar year; or the supplementary compensation is equal to or more than the regular compensation to be paid; or the
employee was newly hired and had a previous employer/s within the calendar year, other than the present employer doing this cumulative computation, the present employer
shall determine the tax to be deducted and withheld in accordance with the cumulative average method
Response: True
Feedback: Basis: RR-11-2018
Correct answer: True
Score: 1 out of 1 Yes
Question 46
Li Mean Who, a South Korean Actor was paid money for his professional services when he filmed his commercial ad in the Philippines with e-commerce network
ADDTUCART Corporation, a domestic company. His income is derived from _____ and it is:
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Response: Without, Taxable
Correct answer: Within, Taxable
Score: 0 out of 1 No
Question 47
S1: In case of donation, under the law, it is the donor who is liable to pay the Documentary stamp tax.
S2: in case of sale, under the law, it is the seller who is liable to pay the Documentary stamp tax.
Response: Both are true
Feedback:
PERSON LIABLE
1. Person issuing the document
2. Payor
3. Payee
4. Any of the parties in the transaction
Note: if the other party is exempted from the payment of the DST, the other party who is not exempt is the one liable
Correct answer: Both are false
Score: 0 out of 1 No
Question 48
It refers to an area within the ECOZONE where tourist accommodation facilities such as hotels, apartelles, tourist inns, pension houses, resorts, sports and / or recreational
facilities are provided to render tourism services for both local and foreign tourists, travellers and investors in accordance with the guidelines issued by the PEZA.
Response: Tourist or Recreational Center
Correct answer: Tourist or Recreational Center
Score: 1 out of 1 Yes
Question 49
The following are essential elements of a tax, except:
Response: it must be payable in money
Correct answer: it must be payable in money
Score: 1 out of 1 Yes
Question 50
As a result of the accident, Nicanor was paid money. The money he received is:
Response: Capital gains subject to capital gains tax
Correct answer: Exclusions from Gross Income
Score: 0 out of 1 No
Question 51
The transfer of property by gift is perfected from the moment the donor knows of the acceptance by the donee.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 52
The following are issued by the BIR Commissioner except:
Response: Revenue Memorandum Orders
Feedback:
Correct answer: Revenue Regulations
Score: 0 out of 1 No
Question 53
Nicanor bought 1,000 shares of stock of ABC Corp. amounting to Php 1,000,000.00 in 2015. The par value of each share is Php 1,000. He sold the same to Inday for Php
2,000,000 in 2021. The Book Value is at Php 1,500 per share. Compute the donor's tax.
Response: 10,000
Feedback:
Correct answer: 0
Score: 0 out of 1 No
Question 54
On January 15, 2019, Johnny Walker Co., VAT-registered, sold on account goods for P 224,000 to Global Corp. The term was 3/10, n/5. Payment was made on January 19,
2019.
How much output vat will Johnny Walker Co., remit to the BIR?
Response: c. P 22,800
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Feedback: Solution:
Gross sales P 224,000 (Vat Inclusive)
Sales discount (6,720) (224k * 3%)
Net sales 217,280
Divided by 1.12
Gross sales sales (Net of VAT) 194,000
Multiply by 12%
Output VAT 23,280
Correct answer: b. P 23,280
Score: 0 out of 1 No
Question 55
Under CREATE Law, the interest expense of a domestic corporation which is subject to 20% corporate income tax rate, will be deducted from its gross income in its full
amount since there is no difference in the income tax rate on the taxable income (20%) with the tax rate applied on the interest income subjected to final tax (20%).
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 56
In case of failure to pay the basic real property tax or any other tax levied, the interest rate is ____ per month on the unpaid amount or a fraction thereof, until the delinquent
tax shall have been fully paid: Provided, however, that in no case shall the total interest on the unpaid tax or portion thereof exceed thirty-six (36) months.
Response: 20%
Correct answer: 2%
Score: 0 out of 1 No
Question 57
The prescriptive period to file for administrative or judicial appeal is:
Response: 60 days
Correct answer: 30 days
Score: 0 out of 1 No
Question 58
Income tax is a proportional tax.
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 59
Nicanor is the owner of a restaurant in Manila. On May 02, 2023, he made payments amounting to P 56,000 (inclusive of vat) to Michael, Nicanor’s independent accountant,
for the latter’s professional fee for rendering accounting and taxation services to Nicanor’s business.
How much withholding tax, if any, will Wendel withhold to his payment to Michael, assuming Wendel is classified by the BIR as top withholding agent?
Response: c. P 10,000
Feedback: Solution:
P 56,000/1.12 = P 50,000 x 10% = P 5,000
Regardless of whether or not Nicanor is a top withholding agent, RR-11-2018 provides that income payment of professional fees is subject to either 5% or 10% withholding
tax. Since Michael is a VAT registered person, he is not qualified to avail the 5% ewt as it presumed that his gross receipts exceed the 3M VAT threshold.
Correct answer: b. P 5,000
Score: 0 out of 1 No
Question 60
The following are No-Ruling Areas as far as the TTRA are concerned, except:
Response: Based on hypothetical transactions
Correct answer: Past transactions
Score: 0 out of 1 No
Question 61
ABC Corp. is a domestic corporation. It sold goods to XYZ Corp., an export domestic enterprise. ABC Corp. billed XYZ Corp. Php 1,000,000 upon delivery to XYZ Corp.
XYZ Corp. paid Php 1,000,000. Subsequently, XYZ Corp. exported the goods to GHI Corp. based in the United States. The sale by ABC Corp. is:
Response: Subject to 12%
Correct answer: Subject to 0%
Score: 0 out of 1 No
Question 62
S1: Unless otherwise provided by special laws, if the denatured alcohol is mixed with gasoline, the excise tax on which has already been paid, the alcohol content shall be
subject to the tax herein prescribed. The removal of denatured alcohol of not less than one hundred eighty degrees ( I80˚) proof (ninety percent (90%) absolute alcohol) shall
be deemed to have been removed for motive power. unless shown otherwise.
S2: The excise tax paid on the purchased basestock (bunker) used in the manufacture of excisable articles and forming part thereof shall be credited against the excise tax
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due thereon. For purposes of these regulations. any excess of excise taxes paid on raw materials resulting from manufacturing, blending. processing, storage, and handling
losses shall not give rise to a tax refund or credit.
Response: Only S1 is true
Feedback: Specific rule under RR-2-2018
Correct answer: Both are true
Score: 0 out of 1 No
Question 63
Soda Cola Manufacturing Corp. will remove from the place of production 100 cases of Super Cola using HFCS and non-caloric sweetener. Each contains 6 bottles of 1.5
liters each.
How much is the total excise tax to be paid before removal?
Response: P 5,800
Feedback:
No. of Cases
100
Multiplied by no. of bottle per case
6
Total no. of bottles
600
Multiplied by content per bottle
1.5L
Total Volume in Liters
900L
Multiplied by Specific Tax Rate
Total excise tax to be paid before removal
12.00
P10,800
Correct answer: P 10,800
Score: 0 out of 1 No
Question 64
Jordan Clarkson, with Filipino mother playing in the NBA, was paid $1M for playing with Utah Jazz. JC is:
Response: NRANETB
Correct answer: NRC
Score: 0 out of 1 No
Question 65
Compensation income earner is disqualified from availing the 8% optional income tax.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 66
On May 14, 2021, Nicanor, single and a resident citizen died. The following day, you were engaged by the heirs of Nicanor to assist them in filing the estate tax return.
Below are the properties left by Nicanor:
House and lot located in Makati (family home) P 10,000,000
Montero Sports car 2,000,000
Bank deposits – Banko De Pelpens 6,000,000
How much is the gross estate of Nicanor?
Response: d. P 3,000,000
Feedback: Solutions
House and lot located in Makati (family home) P 10,000,000
Montero Sports car 2,000,000
Bank deposits – Banko De Pelpens 6,000,000
Gross estate 18,000,000
Correct answer: a. P 18,000,000
Score: 0 out of 1 No
Question 67
The business establishment giving sales discount to qualified SCs is required to keep a separate and accurate record of sales.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 68
Sale of mango by a local restaurant to its customers is subject to VAT
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Response: True
Feedback: The sale of Mango by a restaurant is considered as an incidental transaction. Thus, subject to VAT.
Correct answer: True
Score: 1 out of 1 Yes
Question 69
Cebu Pot Authority, a Government-Owned and Controlled Corporation is exempted from corporate income tax.
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 70
For income tax purposes, the profit from Nicanor’s investment in his asset is considered as income.
Response: False
Correct answer: True
Score: 0 out of 1 No
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Home
*[May 2024] 00-Diagnostic Examination
Diagnostic Examination
Taxation (TAX)
Submissions
Here are your latest answers:
Question 1
Wendel, a resident citizen, is an owner of a sticker printing service in Manila. On January 5, 2023, he purchased goods amounting to P 56,000 (inclusive of vat) to Papel
Corporation.
How much withholding tax, if any, will Wendel withhold to his payment to Papel Corporation, assuming Wendel is not classified by the BIR as top withholding agent?
Response: c. P 1,000
Feedback: Reason: Wendel is not a top withholding agent. Thus, he is not required to withhold taxes on his payments to his purchases of goods.
Correct answer: a. P 0
Score: 0 out of 1 No
Question 2
Nicanor, an employee of ABC Corp., is receiving regular monthly compensation in the amount of P 165,000 net of mandatory contributions, with supplementary
compensation in the amount of P 5,000 for the month.
Determine the total monthly WTC for the year 2023.
Response: c. P 42,770.80
Feedback: Solution:
Total taxable P 165,000
Less Compensation range (4th bracket) 66,667
Excess 98,333
Add: supplementary compensation 5,000
Total 103,333
Using 4th bracket
Predetermined tax on P 66,667 P 8,541.80
Add: Tax on excess (P103,333 x 25%) 25,833.25
Total monthly WTC 34,375.05
Correct answer: a. P 34,375.05
Score: 0 out of 1 No
Question 3
It refers to a business entity or concern duly registered with and / or licensed by the PEZA to develop, operate and maintain an ECOZONE or any or all of the component IE,
EPZ, Free Trade Zone or Tourist / Recreational Center and the required infrastructure facilities and utilities such as light and power system, water supply and distribution
system, sewerage and drainage system, pollution control devices, communication facilities, paved road network, administration building and other facilities as may be
required by the PEZA. The term shall include the PEZA and / or the Local Government Unit when by the themselves or in joint venture with a qualified private entity, shall
act as the Developer / Operator of the ECOZONES. As such, they shall be entitled to the same incentives under Rule XIV of these Rules in accordance with the pertinent
provisions of the Act and the Code.
Response: Utilities Enterprise
Correct answer: Developer or Operator
Score: 0 out of 1 No
Question 4
The reply to the Preliminary Assessment Notice must be made within? Select best answer
Response: 15 days
Correct answer: Reply is not required
Score: 0 out of 1 No
Question 5
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This refers to persons, corporations, firms, or associations engaged in the business of carrying of transportation passengers or goods or both, by land, water, and air, for
compensation, offering their services to the public and shall include transportation contractors.
Response: a. Common carriers
Correct answer: a. Common carriers
Score: 1 out of 1 Yes
Question 6
Nicanor was born in Pampanga. He resides in Quezon City. He works in Manila. He suffered an accident in Pasay. He was brought to Makati Medical Center in Makati City
where he was pronounced dead. His only property is located in Caloocan City. Where is the venue of the filing of the estate tax return?
Response: b. Quezon City
Correct answer: b. Quezon City
Score: 1 out of 1 Yes
Question 7
1st statement – A sole proprietor can register as a BMBE.
2nd statement – A corporation can register as a BMBE.
3rd statement – A partnership can register as a BMBE.
4th statement – A cooperative can register as a BMBE.
Which is True?
Response: Only one
Correct answer: Only one
Score: 1 out of 1 Yes
Question 8
In 2022, Nicanor received P 8,000 as his uniform allowance from ABC Corporation (Nicanor's employer). The excess Php 2,000.00 of the allowable uniform allowance
where Nicanor’s actual 13th month pay and other benefits of amounted to Php 25,000.00, is taxable.
Response: True
Feedback: The excess Php 2,000.00 of the allowable uniform allowance shall form part of the 90k 13th month pay and other benefits ceiling
Correct answer: False
Score: 0 out of 1 No
Question 9
Nicanor signified his intention to be taxed at 8% income tax rate on gross sales in his 2020 1st Quarter Income Tax Return. He has no other source of income. His total sales
for the first three (3) quarters amounted to P3,000,000.00 with 4th quarter sales of P3,500,000.00. Other information was made available:
st
1 Quarter
(8%)
2
nd
Quarter
(8%)
rd
3 Quarter (8%)
th
TOTAL
4 Quarter
Total sales
500,000.00
500,000.00
2,000,000.00
3,500,000.00
6,500,000.00
Less: COS
300,000.00
300,000.00
1,200,000.00
1,200,000.00
3,000,000.00
Gross
income
200,000.00
200,000.00
800,000.00
2,300,000.00
3,500,000.00
Less: Opex
120,000.00
120,000.00
480,000.00
720,000.00
1,440,000.00
Taxable
income
80,000.00
80,000.00
320,000.00
1,580,000.00
2,060,000.00
How much is the percentage tax payable for 2020?
Response: P 50,000
Feedback:
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1st and 2nd
Quarters
Gross
receipts
3rd Quarter
only
1,000,000
2,000,000
3%
1%
30,000
20,000
Rate
PT
Total
Php 50,000
Correct answer: P 50,000
Score: 1 out of 1 Yes
Question 10
If the bank deposits were subjected to final tax, the deposits shall no longer form part of the gross estate of the decedent (hence not reportable in estate tax return).
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 11
ABC Corp. (DC) declared cash dividends on March 31, 2021 to its stockholders of record on December 31, 2020. ABC Corp. paid the stockholders on June 30, 2021. The
final tax will accrue on?
Response: July 10, 2021 which is the day Sir Rian will get married
Correct answer: March 31, 2021 which is the date of declaration of dividends
Score: 0 out of 1 No
Question 12
Senior citizens are not required to file income tax returns.
Response: True
Feedback: Remember the rule. If a taxpayer has a taxable income (business income), even if exempt, he/it is still required to file because exemption from tax does not
follow exemption from filing
Correct answer: False
Score: 0 out of 1 No
Question 13
A domestic corporation made available the following financial information covering TY 2021:
Statement of Financial Position Statement of Comprehensive Income
Assets: Gross receipts 15,000,000
Current 100,000,000 Cost of service 5,000,000
Non-current (land/bldg) 200,000,000 Gross profit 10,000,000
Liabilities 50,000,000 Expenses 5,000,000
Stockholders’ Equity 250,000,000 Net income 5,000,000
Based on the foregoing, the proper corporate income tax rate that is applicable is:
Response: c. 30%
Feedback: Reason: Total assets excluding the land did not exceed P 100,000,000 and the Net income did not exceed the P 5,000,000
Correct answer: a. 20%
Score: 0 out of 1 No
Question 14
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Nicanor bought 1,000 shares of stock of ABC Corp. amounting to Php 1,000,000.00 in 2015. The par value of each share is Php 1,000. He sold the same to Inday for Php
2,000,000 in 2021. The Book Value is at Php 3,000 per share. Compute the donor's tax.
Response: 45,000
Feedback: SP 2M
BV 3M
Implied donation 1M (Sold at lower than BV)
Less: 250,000
Taxable donation 750,000
x 6%
45,000
Correct answer: 45,000
Score: 1 out of 1 Yes
Question 15
The National Basketball Association opened an NBA store in the Philippines. It earned Php 1M. The NBA in the United States of America may be classified as
Response: NRFC
Correct answer: NRFC
Score: 1 out of 1 Yes
Question 16
Preliminary Assessment Notice is not part of due process as it merely contains the proposed assessment, and the facts, law, rules, and regulations or jurisprudence on which
the proposed assessment is based and not the assessment per se which the law requires to be issued (Final Assessment Notice)
Response: True
Feedback: Answer: F. Reason: PAN is part of due process. It gives both the taxpayer and the Commissioner of Internal Revenue the opportunity to settle the case at the
earliest possible time without the need for the issuance of a FAN. (CIR v. Unioil Corporation, G.R. No. 204405, August 04, 2021, J. Hernando)
Correct answer: False
Score: 0 out of 1 No
Question 17
Martin, a resident citizen, is an employee of AMC Corporation. He received the following from his employer in 2023:
Basic monthly compensation P 75,000
13th month pay 75,000
Transportation allowance (P 5,000 per month) 60,000
Productivity incentive bonus 10,000
Christmas bonus 30,000
Uniform allowance 26,000
Actual medical allowance 10,000
Rice subsidy 36,000
Note: There is no labor organization in the company. Ergo, no Collective Bargaining Agreement.
How much is the total taxable compensation of Martin for the year 2023?
Response: b. P 937,000
Feedback: Solution:
De minimis Excess de minimis
Christmas bonus 5,000 25,000
Uniform allowance 6,000 20,000
Actual medical allowance 10,000 0
Rice subsidy 24,000 12,000
Total 45,000 57,000
Excess de minmis 57,000
13th month pay 75,000
Productivity incentive pay 10,000
Total 13th month pay and other benefits 142,000
Exempt 13th month pay and other benefits 90,000
Taxable 13th month pay and other benefits 52,000
Basic compensation (P 75k x 12) P 900,000
Transportation allowance (P 5,000 per month) 60,000
Total taxable compensation 1,012,000
Note:
1. If Company has no CBA but nonetheless provided productivity incentive bonus, the amount given can be reported under the 13th month pay and other benefits
2. Fixed allowances shall be treated as part regular compensation, part of taxable compensation
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Correct answer: a. P 1,012,000
Score: 0 out of 1 No
Question 18
S1: Excise tax is a tax on the production, sale, or consumption of a commodity in a country.
S2: Ad Valorem Tax – refers to the excise tax which is based on selling price or other specified value of the goods/articles.
S3: In general, the time of payment of excise tax on domestic products is after removal from the place of production.
Response: Only S1 is false
Feedback: S3: In general, the time of payment of excise tax on domestic products is after removal from the place of production.
Correct answer: Only S3 is false
Score: 0 out of 1 No
Question 19
Charlita gave the following donations:
05/10/2020
To legitimate son on account of marriage on 8/15/20 with P100,000 mortgage assumed by the donee
08/15/2020
To his legitimate daughter on account of marriage on 8/15/2020
10/20/2020
Lot donated to the National Government to be used for public purpose
11/15/2020
To his brother on account of marriage on 11/15/2020
P300,000
8,000
100,000
5,000
How much is the total exemption and deductions from the total gross gift?
Response: P 100,000
Correct answer: P 100,000
Score: 1 out of 1 Yes
Question 20
Zygomite Minerals, Inc., a corporation registered and holding office in Australia, not operating in the Philippines, may be subject to Philippine income taxation on
Response: c. dividends earned from investment in a foreign corporation that derived 40% of its gross income from Philippine sources.
Correct answer: b. gains it derived from sale in Australia of shares of stock of Philex Mining Corporation, a Philippine corporation.
Score: 0 out of 1 No
Question 21
The EWT is treated as an advance payment of tax.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 22
President Dowterte alleged that Senator Dequatro did not pay her taxes. He instructed the Secretary of Justice to file tax evasion charges against the Senator. The DOJ
Secretary may file the case under the circumstances.
Response: False
Feedback: Commissioner has to approve
Correct answer: False
Score: 1 out of 1 Yes
Question 23
The BIR recently introduced the chatbot named REVIE, the BIR's Digital Assistant, an artificial intelligence, that can be accessed 24/7 from the BIR website. Questions
about e-services, registration requirements can be asked from Revie. In rolling this out and informing the taxpayer regarding Revie, the BIR may issue
Response: Revenue Memorandum Order
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Correct answer: Revenue Memorandum Circular
Score: 0 out of 1 No
Question 24
John is an OCW based on Saudi Arabia. From January to June 2022, he earned Php 2 Million from his business in the Philippines and another Php 2 Million from his
employment abroad. On July 1, 2022, he returned to the Philippines to live permanently herein. Upon his return and until the end of the year, he earned Php 1 Million from
his business and another Php 1 Million from sources outside the Philippines.
How much is John’s total income from sources within the Philippines?
Response: a. P 4,000,000
Feedback: Solution:
Income from business (Jan-Jun 2022) P 2,000,000
Income from business (Jul-Dec 2022) 1,000,000
Total income from within P 3,000,000
Correct answer: b. P 3,000,000
Score: 0 out of 1 No
Question 25
IF the assessment is arbitrary, the CIR can cancel the payment of the tax
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 26
Statement 1: Bribes and kickbacks are taxable are not deductible.
Statement 2: Bribes and kickbacks are taxable income.
Response: Statement 1 is true but, Statement 2 is false
Correct answer: Both statements are true
Score: 0 out of 1 No
Question 27
Tulong Para sa Masa, a non-profit charitable organization, imported relief goods from abroad that will be given by the organization to the poorest of the poor/indigenous
people. Such importation is exempt from VAT.
Response: True
Feedback: The importation of goods is not one of those VAT exempt transaction under Section 109 of the NIRC
Correct answer: False
Score: 0 out of 1 No
Question 28
Taxes are imposed only for purposes of raising revenues.
Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 29
Income Tax Holiday (ITH) for New ECOZONE Export or Free Trade Enterprises for Expanding Firms:
Response: 3 years
Correct answer: 3 years
Score: 1 out of 1 Yes
Question 30
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Necessary step before going to the CTA en banc:
Response: File motion for reconsideration or new trial with the En banc
Correct answer: File motion for reconsideration or new trial with the Division
Score: 0 out of 1 No
Question 31
PRTC INC., a corporation engaged in business in the Philippines and abroad has the following data (apply the old rate):
Gross Income, Philippines
P 975,000
Expenses, Philippines
750.000
Gross Income, Thailand
770,000
Expenses, Thailand
630,000
Interest on bank deposit
25,000
How much in the income tax due if PRTC INC., assuming it is a non- resident foreign corporation?
Response: P
67,500
Feedback:
NRFC
Gross Income, Philippines
P975,000
Expenses, Philippines
Gross Income, Malaysia
Expenses, Malaysia
Interest on bank deposit
Taxable income
25,000
P 1,000,000
Tax Rate
30%
Tax Due
300,000
Correct answer: P 300,000
Score: 0 out of 1 No
Question 32
Nicanor, a restaurant owner, owns a vacant lot situated in Manila. He sold the same for P 4,000,000 to Inday. The sale is subject to 12% VAT.
Response: True
Feedback: Subject to capital gains tax.
Correct answer: False
Score: 0 out of 1 No
Question 33
Nicanor, an employee of ABC Corp., suffered an accident at work and died. The following are information were made available by the employer:
Basic salary Php 600,000.00
13th month pay and other benefits 100,000.00
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Commission 100,000.00
Separation Pay 500,000.00
Gross compensation income Php 1,300,000.00
How much is the total exclusions from gross income?
Response: b. P 500,000
Feedback: SOLUTION:
13th month pay and other benefits 90,000.00
Separation Pay 500,000.00
Total 590,000.00
Correct answer: c. P 590,000
Score: 0 out of 1 No
Question 34
Nicanor sold his personal laptop to Michael for P 50,000 in 2022. Nicanor is liable to pay percentage tax in 2022.
Response: True
Feedback: Reason: Isolated transactions are not subject to percentage tax.
Correct answer: False
Score: 0 out of 1 No
Question 35
A security deposit to ensure the faithful performance of certain obligations of the lessee to the lessor is an example of a constructive receipt.
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 36
The primary purpose of taxation is to:
Response: collect tax
Correct answer: collect tax
Score: 1 out of 1 Yes
Question 37
Li Mean Who, a South Korean actor and model, was contracted to model for Lasa-Duh, a domestic company known for e-commerce. He worked in the Philippines for two
days. He is classified as:
Response: Non-resident alien engaged in trade or business
Correct answer: Non-resident alien engaged in trade or business
Score: 1 out of 1 Yes
Question 38
Sale of mango by a local restaurant to its customers is subject to VAT
Response: True
Feedback: The sale of Mango by a restaurant is considered as an incidental transaction. Thus, subject to VAT.
Correct answer: True
Score: 1 out of 1 Yes
Question 39
One Piece Corporation (OPC) was identified as a top withholding agent by the BIR. One day, the accounting department, headed by Rico, requested the company to treat all
of its staff a McDonalds meal amounting to P 1,000 because it is already tax season, and the employees are working 18-hours a day. The company granted the request.
Within the taxable year, the company transacted with McDonalds seven times for buying McDonalds meals with a total amount of Php 8,000. As a result of purchases during
the taxable year, the company is not required to withhold 2% expanded withholding tax.
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Response: False
Feedback: McDonalds is considered as deemed a regular supplier. RR-11-2018 requires a minimum of 6 transactions before a supplier be considered as a regular supplier.
Thus, OPC is required to withhold.
Correct answer: False
Score: 1 out of 1 Yes
Question 40
S1: Direct double taxation is prohibited by the Philippine Constitution.
S2: Indirect double taxation not prohibited by the Philippine Constitution.
Response: c. Both are true
Feedback: Reason: The Constitution has provisions on taxation. There is no provision that prohibits double taxation
Correct answer: b. Only S2 is true
Score: 0 out of 1 No
Question 41
As a result of the accident, Nicanor paid hospital expenses which he was able to reimburse later. The money he received as a result of reimbursement is:
Response: Inclusions in / Items of Gross Income
Correct answer: Exclusions from Gross Income
Score: 0 out of 1 No
Question 42
Which of the following is/are not a condition for a foreign sourced dividends received by a domestic corporation from a resident foreign corporation to be exempted from the
payment of RCIT?
S1: The dividends actually received or remitted into the Philippines are reinvested in the business operations of the domestic corporation within the next taxable year from
the time the foreign-source dividends were received or remitted
S2: The dividends received shall only be used to fund the working capital requirements, capital expenditures, dividend payments, investment in domestic subsidiaries, and
infrastructure project
S3: The domestic corporation holds directly at least twenty percent (20%) in value of the outstanding shares of the foreign corporation and has held the shareholdings
uninterruptedly for a minimum of two (2) years at the time of the dividend’s distribution. In case the foreign corporation has been in existence for less than two (2) years at
the time of dividends distribution, then the domestic corporation must have continuously held directly at least twenty percent (20%) in value of the foreign corporation's
outstanding shares during the entire existence of the corporation.
Response: b. Only S2
Feedback: Basis: Section 5 of RR-5-2021
Correct answer: d. None of the above
Score: 0 out of 1 No
Question 43
As a result of the accident, Nicanor was paid money. The money he received is:
Response: Passive income subject to final tax
Correct answer: Exclusions from Gross Income
Score: 0 out of 1 No
Question 44
For income tax purposes, Domestic corporation shall account separately in their Annual Financial Statements (AFS) the cost of the land on which the particular business
entity’s office, plant and equipment are situated, and shall not lump the same in one account title nor consolidate its cost with fixed asset account.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 45
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Mang Juan transferred a property with a fair value of P1,000,000. Title to the property was reserved by Mang Juan until death. Subsequently Mang Juan died. The property
was worth P800,000 at the date of his death. Which is correct?
Response: The property is subject to estate tax at P800,000.00
Correct answer: The property is subject to estate tax at P800,000.00
Score: 1 out of 1 Yes
Question 46
If no documents are available for the audit and the BIR has completed all the legal remedies to compel the taxpayer to produce documents, the BIR:
Response: May collect the taxes directly to the taxpayer
Correct answer: May issue an assessment against the taxpayer
Score: 0 out of 1 No
Question 47
S1: Purely electric vehicles shall be exempt from the excise tax on automobiles.
S2: Hybrid vehicles shall be exempt from the excise tax on automobiles.
Response: Both are true
Feedback: S2: Hybrid vehicles shall be subject to 50% of the applicable excise tax on automobiles. RR-24-2018
Correct answer: Only S2 is false
Score: 0 out of 1 No
Question 48
Output VAT is computed by multiplying the gross selling price by 12%, or multiplying the total amount indicated in the invoice by 12/1.12 if vat inclusive.
Response: False
Correct answer: True
Score: 0 out of 1 No
Question 49
Nicanor, a Filipino citizen residing in the United States invested in XYZ Corporation established under the laws of the Philippines. The Corporation, which earned gross
income (for the last three years) in the United States amounting to Php 100M and another Php 200M within the Philippines declared dividends. Nicanor will receive Php
100,000.00. XYZ Corp is:
Response: RFC
Correct answer: DC
Score: 0 out of 1 No
Question 50
It refer to an individual, association, partnership, corporation or other business organization duly registered with the PEZA proposing to engaged in the establishment and
operation of tourist-oriented accommodations, restaurants operated as an integral part of a tourism facility (e.g., hotels, resorts, recreational centers), sports and recreational
facilities within the ECOZONE.
Response: Tourist or Recreational Zone
Correct answer: Tourist Enterprise
Score: 0 out of 1 No
Question 51
Corporation exempt from income tax are not subject to income tax on income received which are incidental or necessarily connected with the purposes for which they were
organized and operating.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 52
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Statement 1. A fringe benefit which is subject to the fringe benefit tax is taxable income of the
employee.
Statement 2. A fringe benefit which is not subject to the fringe benefit tax is taxable income of the employee.
Response: Both statements are true.
Correct answer: First statement is false while second statement is true.
Score: 0 out of 1 No
Question 53
Nicanor won Php 100 Million in the last Lotto draw. Upon presentation of the winning ticket to the PCSO, he should expect to receive the amount of?
Response: 75 Million
Correct answer: 80 Million
Score: 0 out of 1 No
Question 54
Marcus dies on December 31, 2017. For estate tax purposes, the funeral expenses and judicial expenses are allowed as deductions from gross estate.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 55
S1: Nicanor obtained a loan from a Banko de Pelepens in the amount of Php 1M. The documentary stamp tax to be paid amounts to P 7,500.
S2: In 2024, ABC Corporation has made advances to its affiliate company, GHI Corporation of P 5,000,000. The transaction is exempted from documentary stamp tax as it is
considered as inter-company transaction.
Response: Both are true
Feedback: S1: T(1M x 1.5/200). S2: F. it is subject to P 37,500 DST (5M x 1.5/200)
Correct answer: Only S1 is true
Score: 0 out of 1 No
Question 56
Real properties owned by a real estate developer may be converted to capital assets even if the assets are abandoned after two (2) years.
Response: True
Correct answer: False
Score: 0 out of 1 No
Question 57
The following are documents not subject to DST, except:
Response: Policies of insurance or annuities made or granted by a fraternal or beneficiary society, order, association, or cooperative company, operated on the lodge system
or local cooperation plan and organized and conducted solely by the members thereof for the exclusive benefit of each member and not for profit
Feedback: Specific rule under Section 188 of the NIRC, as amended.
Correct answer: Certificates of Damage or otherwise and Certificate or document issued by any customs officers, marine surveyor, notary public and certificate required by
law or by rules and regulations of a public office
Score: 0 out of 1 No
Question 58
Statement 1. The fringe benefit tax is deductible from the gross income of the employer.
Statement 2. The fringe benefit tax is withheld by the employer.
Response: Both statements are false.
Correct answer: Both statements are true.
Score: 0 out of 1 No
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Question 59
Nicanor, an individual taxpayer reported the following for the year 2019:
Gross Income
P 5,000,000
Cost of Sales
3,000,000
Salaries of employment net of P100,000 withholding tax and P50,000 SSS, Medicare and Pag-ibig premiums contribution
800,000
Fringe benefits given to rank and file employees
300,000
Fringe benefits given to managerial employees
130,000
Representation and entertainment expenses (all business
connected)
Rent expense
100,000
Donation to religious and charitable institutions
500,000
120,000
The amount that Nicanor will report as taxable net income for 2019?
Response: P 3,054,600
Feedback:
Correct answer: P 3,051,000
Score: 0 out of 1 No
Question 60
The following information were given to you by Ms. Reyes, a prominent independent contractor who offers architectural and engineering services for the taxable year 2020:
Total gross receipts from architectural designs
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P 1,250,000
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Total gross receipts from engineering services
3,000,000
Total cost of services
2,150,000
Total operating expenses
1,000,000
Based on the foregoing information, how much is her tax due?
Response: P 220,000
Feedback:
Solution:
On 800k
P 130,000
On excess of 800k (300k x 30%)
90,000
Tax due
220,000
Correct answer: P 220,000
Score: 1 out of 1 Yes
Question 61
Mang Juan transferred a property with a fair value of P1,000,000. Title to the property was stipulated to be transferred immediately. Subsequently Mang Juan died. The
property was worth P800,000 at the date of his death. Which is correct?
Response: The property is subject to estate tax at P1,000,000
Correct answer: The property is subject to donor’s tax at P1,000,000
Score: 0 out of 1 No
Question 62
In general, Compensation income of Minimum Wage Earners (MWEs) who work in the private sector and being paid the Statutory Minimum Wage (SMW), as fixed by
Regional Tripartite Wage and Productivity Board (RTWPB)/National Wages and Productivity Commission (NWPC), applicable to the place where he/she is assigned are
exempted from the requirement of withholding tax on compensation
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 63
The Board of ABC Corp. (DC) declared that all stockholders of record as of December 31, 2020 shall receive Php 100,000. The amount XYZ Corp. will actually receive
from ABC Corp is?
Response: 80,000
Correct answer: 100,000
Score: 0 out of 1 No
Question 64
ABC Corp. ABC Corp. is engaged in the manufacture and sale of facemasks. As a protective measure, it distributed for free 1 box of face masks to all employees which they
can use only when they work in the company. The distribution is:
Response: Subject to percentage tax
Correct answer: A constructive sale subject to 12% VAT
Score: 0 out of 1 No
Question 65
S1: Those whose gross annual sales, earnings, receipts or output exceed ₱3,000,000 shall have their books of accounts audited and examined yearly by independent CPAs
and their ITRs accompanied with a duly accomplished Account Information Form (AIF).
S2: Nicanor is an accountant of ABC corporation. At the same time, he also renders taxation and audit services to his personal clients. In the filing of his annual income tax
return, Nicanor shall file BIR Form 1701-A.
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Response: Both are true
Correct answer: Only S1 is true
Score: 0 out of 1 No
Question 66
Mr. X, an owner of a business which imports goods from abroad, gave bribe to Mr. S, a government official, in order to facilitate the release of Mr. X’s imported goods from
the custody of the government.
For income tax purposes, the bribe given should be included as part of Mr. S’s gross income.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 67
Rappy Tulpo and Iguana Alawee are popular resident Filipino bloggers. They were paid by Youtube based on the “views and subscriptions of their followers” from the
content they post using the platform. The income they earn are derived from ____ and it is:
Response: Without, Exempt
Correct answer: Within, Taxable
Score: 0 out of 1 No
Question 68
Wendel, a resident citizen, is an owner of a sticker printing service in Manila. On August 15, 2023, he made payments amounting to P 56,000 (inclusive of vat) to Mang
Danny for the repairs of all his machines.
How much withholding tax, if any, will Wendel withhold to his payment to Mang Danny, assuming Wendel is classified by the BIR as top withholding agent?
Response: c. P 1,000
Feedback: Solution:
P 56,000/1.12 = P 50,000 x 2% = P 1,000
RR -11-2018 provides that a top withholding agent, as a rule, is required to withhold 2% on his/her/its payment for purchases of services.
Correct answer: c. P 1,000
Score: 1 out of 1 Yes
Question 69
These are taxes on goods manufactured or produced in the Philippines for domestic sales or consumption or for any other disposition and to things imported as well as
services performed in the Philippine, which tax shall be in addition to the value added tax.
Response: Percentage Taxes
Correct answer: Excise Taxes
Score: 0 out of 1 No
Question 70
In 2019, Nicanor created two (2) trusts for his daughter, Julia. During the year, the two trusts earned net income as follows:
Trust 1
P 4,000,000
Trust 2
P 6,000,000
Each of the trust filed their own income tax return and paid the corresponding income tax due as computed in their separate returns.
How much is the consolidated tax due of the Trust?
Response: P 1,770,000
Feedback:
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Consolidated:
Taxable Net income
Tax Due (Consolidated):
1st P8,000,000
Excess @ 32%
Total Consolidated TAX DUE
P10,000,000
P 2,410,000
700,000
P3,110,000*
Less Paid:
Trust 1
(1,130,000)
Trust 2
(1,770,000)
Consolidated Income Tax Payable
210,000
Correct answer: P 3,110,000
Score: 0 out of 1 No
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