QUESTIONS
1. A filed his income tax return for calendar year 2015 on March 31, 2016. When is the last day for the BIR
to collect assuming A did not pay the tax due upon filling?
a. March 31, 2019
b. April 15, 2018
c. April 15, 2019
d. March 31,2021
2. Select the incorrect statement.
a. The power to tax includes the power to exempt.
b. Exemption is construed against the taxpayer and in favor of the government.
c. Tax statues are construed against the government in case of doubt.
d. Taxes should be collected only for public improvement.
3. A filed his 2014 income tax return late on April 25, 2015 and the return is not fraudulent, when is the
last day for the BIR to make an assessment?
a. April 20, 2018
b. April 25, 2018
c. April 15, 2019
d. April 25, 2020
Numbers 4-7
Sarah Angels Service Corporation, registered with BIR in 2012, has the following date for the year 2016?
Gross receipt
P 1,000,000
Discount given
100,000
Returns and allowances
150,000
Salaries of personal directly involved in the supple of service
300,000
Sales of office personnel (including salaries of P100,000 given to senior citizen)
250,000
Acquisition of cost equipment used in the supply of service (estimated life is 5 years)
250,000
Fees of consultant directly involved in the supply of service
300,000
Fees of consultant directly involved in the supply of service
50,000
Rental of equipment directly use in the supply of service
70,000
Assistance given to a state university under the Adopt-A-School program
100,000
Other operating expense
120,000
4. How much is the total cost of service
a. P670,000
b. P540,000
c. P480,000
d. None of the choices
5. How much are the total operating expenses?
a. P585,000.00
b. P535,000.00
c. P520,000.00
d. None of the choices
6. How much the income tax due and payable using optional standard deduction?
a. P63,000
QUESTIONS
b. P95,400
c. P46,600
d. None of the choice
7. How much is the amount subject to VAT?
a. P1,000,000
b. P 900,000
c. P750,000
d. None of the choices
8. Which of the following is not an inherent limitation of the power to tax?
a. Tax should be levied for public purpose.
b. Taxation is limited to its territorial jurisdiction.
c. Tax laws shall be uniform and equitable.
d. Government agencies and instrumentalities are exempt from tax.
9. If the BIR issued a deficiency income tax return assessment on March 10, 2010 and assuming the
assessment is valid, when is the last day for the BIR to collect?
a. March 10, 2013
b. April 15, 2013
c. March 10, 2015
d. April 15, 2015
10. Taxpayer A was required by the BIR to sign and submit a waiver of the statute of limitations on the
assessment period, to give the BIR more time to complete its investigation. The BIR accepted the
waiver but failed to indicate the date of its acceptance. What is the legal status of the waiver?
a. The waiver is valid because the date of acceptance is immaterial and unimportant
b. The waiver is invalid, the taxpayer cannot be required to waive the statute of limitation
c. The waiver is invalid; the date of acceptance is crucial in counting the start of the period of
suspension of the prescriptive period
d. The waiver is valid, having been accepted by the BIR
11. Taxpayer Andy received on January 3, 2010 a preliminary assessment notice (PAN) from the BIR,
stating that he had fifteen days from its receipt to comment or to file a protest. Eight days later, before
he could comment or file a protest, Andy received the final assessment notice (FAN). Decide on the
validity of the FAN?
a. The FAN is invalid; Andy was not given the chance to respond to the PAN, in violation of his due
process rights
b. The FAN is invalid for being premature
c. he FAN is valid since it was legal requirement that the FAN should await the protest to the PAN
because protest to the PAN is not mandatory
12. Which of the following acts in taxation is administrative by nature?
a. Determination of the amount to be imposed
b. Fixing the allocation of the amount to be collected between the local government and the
national government
c. Levy or distraint of taxpayers’ property for tax delinquency
d. Determining the purpose of the tax to impose
QUESTIONS
13. 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?
a. File a petition for review with the Court of Tax Appeals within days from receipt thereof
b. File a motion for the reconsideration with the Commissioner of Internal Revenue
c. File an appeal to the Secretary of Finance within 30 days from receipt thereof
d. File an appeal to the Secretary of Justice within 30 days from receipt thereof
14. In case of full or partial denial of the written claim for refund or excess input tax directly attributable to
zero rated sales, or the failure on the part of the Commissioner to act on the application within 120
days from the date of submission of complete documents, an appeal must be filed with the CTA
a. Within 30 days after filing the administrative claim with the BIR
b. Within 60 days after filing the administrative claim with the BIR
c. Within 120 days after filing the administrative claim with the BIR
d. Within 30 days from the receipt of the decision denying the claim or after the expiration of the
120 day period
15. Which is the most incorrect statement regarding taxes?
a. Taxes are necessary for the continued existence of the government.
b. The obligation to pay tax does not rest upon the privilege enjoyed by or the protection afforded
to the citizen of the government but upon the necessity of money for the support of the State.
c. There should be personal benefit enjoyed from the government before one is required to pay
tax.
d. Taxes should be collected without unnecessary delay but its collection should not be tainted
with arbitrariness.
16. The submission of the required documents within 60 days from the filing of the protest is available only
where
a. The taxpayer previously filed a Motion for Reconsideration with the BIR official
b. The taxpayer previously filed a request for reconsideration with the BIR official
c. The taxpayer previously filed a request for reinvestigation with the BIR official
d. The taxpayer previously filed an extension to file a protest with the BIR official
17. A filed his ITR for 2011 on April 15, 2012 and will pay his tax liability in installment. The return shows an
income tax due of P100,000 and income tax return withhold of P60,000. If A pays the 2nd the
installment only on October 15, 2012, the amount to be paid (excluding compromise penalty) is
a. P26,000
b. P35,000
c. P55,000
d. P52,000
18. Due to financial difficulties, ABC Corp. requested that its 2011 income tax liability of P400,000 be paid
in four (4) equal monthly installments, starting April 15, 2012. Its requests for installment payment was
approved on April 8, 2010. The tax due on May 15, 2012 is
a. P100,000
b. P101,667
c. P105,000
d. P106,667
QUESTIONS
19. An educational institution operated by a religious organization was being required by a local
government to pay real property tax. Is the assessment valid?
a. Yes, with respect to all properties held by such educational institution.
b. Yes, with respect to properties not actually devoted to educational purposes.
c. No, with respect to any properties held by such educational institution.
d. No, with respect to properties not actually devoted to educational purposes.
20. XYZ Corporation filed its income tax return and paid the tax due for calendar year 2011 showing a tax
liability of P175,000. However, upon audit, it was discovered that its income tax return was false or
fraudulent because it did not report other taxable income. Per investigation the correct income tax due
is P350,000. The corporation was duly informed of this finding through a preliminary assessment
notice. Failing to protest on time against the preliminary assessment notice, a formal letter of demand
and assessment notice was issued on May 31, 2013 calling for payment of the deficiency income tax on
or before July 15, 2013. The amount due on July 15, 2013 is
a. P306,250
b. P218,750
c. P341,250
d. P612,500
21. A’s income tax liability for 2011 was P75,000. She filed the return and paid the total amount due but
not with the proper internal revenue district office on July 15, 2012. The amount payable (ignoring
compromise penalty) is
a. P97,500
b. P112,500
c. P116,250
d. P135,000
22. Compute for the VAT Base of the following:
Selling price
Bulk purchase discount (volume discount)
Discount to be given if paid within 60 days
Trade discount (granted at the time of sale and
stated on the face of the invoice)
a.
b.
c.
d.
P 1,200,000
55,000
75,000
125,000
P 945,000.00
P 1,000,000.00
P 1,075,000.00
P 1,200,000.00
23. Determine the VAT base to be used by the buyer given the following data:
Security deposit paid (may be applied as last month’s lease payment)
0 two months advance lease payment (prepaid rentals P20,000 x 2)
a.
b.
c.
d.
P 60,000.00
P 20,000.00
P 40,000.00
None of the above
P 20,000
40,000
QUESTIONS
24. B23 Company is non-VAT registered company. On February 6, 2010, it purchased equipment
amounting to P360,000.00. The VAT invoice showed as follows:
Selling price
P 321,420.71
VAT
38,570.48
Total invoice amount
360,000
How much should B23 pay to the supplier and how much input VAT can it claim?
a. P360,000 and P38,570.48
b. P360,000 and P0
c. P321,420.71 and P0
d. P321,420.71 and P38,570
25. 21. ABC Security Services billed its client for security services rendered in Feb 2010 by issuing a billing
statement broken down as follows:
Security Guard’s salaries
P 382,628
Agency fee
151,515
Assume that this is exclusive of VAT. How much input VAT can the client recognize?
a. P 45,915.36
b. P 18,181.80
c. P 64,097.16
d. P 0
26. Mr. Abella, a seller of merchandise, had the following transactions of goods, inclusive of VAT, during
the third month of his business:
Sales on account
P 336,000
Goods out on consignment – January 10
112,000
February 15
224,000
March 10
168,000
With the given information above, how much is the output tax for the month?
a. 100,800
b. 90,000
c. 54,000
d. 48,000
27. The following statement is correct, except
a. VAT is an indirect consumption tax
b. The seller is the one statutorily liable to pay the vat but he can pass on the vat to the buyer
c. Destination principle is the same with cross border doctrine principle which says that goods are
vatable if they are consumed here in the Philippines or services are vatable if they are rendered
here in the Philippines
d. A person who engages in vatable transaction but does not register himself is called “vat
registrable person”
e. The main object of vat is the person
28. Which of the following are vatable transactions in general?
a. Sale of goods or properties
QUESTIONS
b.
c.
d.
e.
Lease of goods or properties
Importation of goods, regardless for business or for personal consumption
Render of services
All of the above
29. For sale of goods or properties to be vatable, the following criteria have to be met, except:
a. There must be sale, actual or deemed
b. The goods must be consumed in the Philippines
c. The sale must be in the course of trade or business
d. There must be collection of sale
30. X, partner of XYZ Merchandising Partnership a vat registered partnership, withdrew for his personal
use, goods with acquisition cost of P5,000 (market value is P6,000) out of XYZ’s inventory available for
sale. How much is the output vat that XYZ will have to pay?
a. 600
b. 720
c. 0
d. 120
31. Vat will apply to the following transactions, except:
a. Change of business activity from VAT taxable status to VAT-exempt status
b. Approval of a request for cancellation of registration due to reversion to exempt status
c. Change of control of a corporation by the acquisition of the controlling interest of such
corporation by another stockholder or group of stockholders
d. Approval of a request for cancellation of registration due to a desire to revert to exempt status
after the lapse of three (3) consecutive years
e. Approval of a request for cancellation of registration of one who commenced business with the
expectation of gross sales or receipts exceeding P3,000,000, but who failed to exceed this
amount during the first twelve months of operation
32. Which of the following situs of service is incorrect?
a. Professional and or technical
Where the service is actually and physically carried out
consultancy
b. Service to develop the technology
Where the service is actually and physically carried out
c. Technology
Where the service is actually and physically carried out
d. Lease of tangible properties
Where the property is leased
e. Lease of tangible properties
Where the right or privilege to use is exercised
33. Which of the following statement is incorrect for zero rate vat and vat-exempt sales
a. Both sales do not result in output tax amount
b. Input tax on purchase related to zero sale can be claimed as tax credit or refund but Input tax
on purchases related to exempt sales cannot be claimed as tax credit or refund
c. Vat exempt sales provide complete relief from Vat versus zero vat sales which provides only
partial relief
d. Both type of sales are provided or enumerated specifically in the tax code and in special laws
QUESTIONS
34. The following statement is correct for VAT Base deduction for sale of goods (gross selling price),
except:
a. Sales Returns and Allowances may only be deducted from gross sales for the month or quarter
in which a refund is made and a credit memorandum is issued.
b. Sales Discounts may only be deducted from gross sales or receipts within the same month or
quarter it was given
c. Sales discounts may be deducted if it is determined and granted at the time of sale
d. Sales discounts may be deducted if it is expressly indicated in the invoice and the amount
thereof should form part of gross sales
e. Sales discounts may be granted even subject to condition as long as the condition is actually
fulfilled by the customer
35. ABC Corporation sold a parcel of land to XYZ Company on July 2, 2006 for P1,000,000.00, plus the
output VAT, with a monthly installment payment of P10,000.00 (plus the output VAT), beginning in the
month of sale. The zonal value of the subject property at the time of sale amounted to P1,500,000.00.
How much is the amount of vat in the month of sale?
a. 15,000
b. 1,800
c. 12,000
d. 1,200
36. MNO corp sold to a government entity vatable sale of P112,000 inclusive of vat of 12%. For the same
month it had purchases with input vat of P3,000. Compute the amount of vat to be withheld by govt,
the claimable input vat and the amount of input vat to be closed to income and expense account
a. 5,000 and 3,000 and zero
b. 5,000 and 7,000 and 4,000 income
c. 5,000 and 7,000 and 4,000 expense
d. Zero and 3,000 and 4,000 income
37. Which of the following extends the 3-year prescriptive period to make an assessment?
a. Failure of the taxpayer to file a return.
b. Waiver by the taxpayer of the statutes of limitation.
c. Filing by the taxpayer of a fraudulent return.
d. All of the above
38. Documents are required to support a
a. Request for reconsideration
b. Request for re-investigation
c. Both A and B
d. Neither A nor B
39. On March 5, 2015, the BIR discovered a deficiency value added tax for the quarter ended September
2008. The deficiency did not arise from error or fraud.
Which is correct?
a. The BIR must send the assessment notice before March 5, 2018.
b. The BIR must send the assessment notice before September 30, 2018.
c. The BIR must send the assessment notice before March 5, 2025.
d. The BIR has no more remedies since the tax prescribed.
QUESTIONS
40. Mr. A has a tax obligation to the government amounting to P80,000. Since he is leaving the country, he
entered into a contract with Mr. B wherein Mr. B shall pay the P80,000 tax in his behalf. On due date,
Mr. B failed to pay the tax. The BIR sent a letter of demand to Mr. A which he refused to pay. Which of
the following statements is correct?
a. The government cannot enforce collection charges against Mr. A since he has validly
transferred his obligations to B under the contract.
b. The government can no longer run after Mr. A because he is already outside the Philippine
territory.
c. The government should wait until Mr. B becomes solvent again.
d. The government should force Mr. A to pay because taxes are non-assignable.
41. A, a VAT registered taxpayer made the following acquisition of capital goods from VAT registered
suppliers (net a vat) during the quarter
Date
Cost
Estimated life
July
2 P 1,500,000
8 years
10
500,000
2 years
August
5
400,000
3 years
20
500,000
4 years
September
10
500,000
4 years
15
600,000
6 years
The July 2 acquisition was retired in September. The input tax for July is
a. P4,275
b. P5,500
c. P63,000
d. P240,000
42. Using the above data, the input tax for August is
a. P2,583
b. P8,083
c. P108,000
d. P113,000
43. Using the above data, the input for September is
a. P2,450
b. P132,000
c. P178,950
d. P231,450
Numbers 44-45
GILEAD Company received a bill for P27,440 from a VAT registered service provider. The payment for the
service is subject to 2% creditable withholding tax. The above amount is vat inclusive. Withholding tax is still
not deducted from the amount.
44. What is the deductible expense and the amount of creditable tax if GILEAD is a non-VAT taxpayer?
a. P 0 for both
b. P 26,950, P490
QUESTIONS
c. P27,440, P490
d. P24,500, P490
45. If GILEAD is a VAT taxpayer, what is the deductible expense?
a. P 0
b. P 26,950
c. P 27,440
d. P 24,500
46. Which of the following substantiation is not compliant to the VAT regulations?
a. Sale of goods – Invoice
b. Sale of services – Official receipt
c. Lease of goods or properties - Invoice
d. Sale of real property – Invoice or Official Receipt
47. Which of the following statement is incorrect?
a. A person who enters into a “taxable transaction” makes him a person liable to VAT and is
referred to as a “taxable person”.
b. Services rendered in the Philippines by non-resident foreign persons shall not be considered as
being rendered in the course of trade or business.
c. Input tax amortization is only applicable to purchases of capital goods and not services.
d. Security deposits are not subject to VAT upon receipt by the lessor
e. VAT is designed to be borne by consumers/buyers, with sellers acting merely as tax collectors.
48. Select the incorrect timing of claiming input vat
a. Upon consummation of purchase for goods
b. Upon payment for services
c. Upon every installment for sale of real property on installment
d. Upon consummation of purchase for lease of goods or properties
49. Which is a national tax?
a. Real property tax
b. Community tax
c. Income tax
d. Professional tax
50. A tax that is imposed upon the performance of an act, the enjoyment of a privilege or the engagement
in a profession is known as
a. Income tax
b. License
c. excise tax.
d. transfer tax.
51. The power to enforce proportional contribution from the people for the support of the government is
a. Taxation
b. Police power
c. Eminent domain
d. Exploitation
QUESTIONS
52. What is the theory of taxation?
a. Reciprocal duties of support and protection
b. Necessity
c. Constitutionality
d. Public purpose
53. J, a Filipino citizen married to M, died in a vehicular accident in SLEX on April 10, 2018. The spouses
owned, among others a 100-hectare agricultural land in Sta. Rosa, Laguna with current fair market
value of P20M, which was the subject matter of a Joint Venture Agreement about to be implemented
with Star Land Corporation (SLC), a well-known real estate development company. He bought the said
real property for P2M years ago. On January 5, 2019, the administrator of the estate and SLC jointly
announced their big plans to start conversation and development of the agricultural lands in Sta. Rosa,
Laguna, into first class residential and commercial centers. As a result, the prices of real properties in
the locality have doubled. The administrator of the estate of J filed the estate tax return on January 9,
2019 by including in the gross estate the real property at P2M. After 9 months, the BIR issued
deficiency estate tax assessment, by valuing the real property at P40M. As a result, the real property
should be value
a. P2M
b. P40M
c. P10M
d. P20M
54. Fringe Benefits Taxation/Tax (FBT). Which of the following statements is incorrect?
Scenario: A motor vehicle was purchased by the employer in the name of the employer (ER); but, to be
used by the employee who is a sales supervisor and at the same time does operational work, and by
the end of the 5th year, said employee shall have the right (option to buy) to purchase such vehicle at
book value, assuming the salvage value is at P100,000, how should the fringe benefit tax be computed,
if any?
a. During the 5 year period, there was no fringe benefit if proven that the same is for the
convenience of the employer or for the nature of trade and business of the employer?
b. After the 5 yr period, the sale to the employee shall then be accounted for as a separate sales
transaction (if employee opted to buy) subject to VAT on gross and income tax on the gain.
c. If it is proven that the employee also benefits and is being used also for personal use, the FBT is
computed at (50% x [FMV/5 yrs]). The result is the annual FBT. If the employee then buys after
the 5th yr, then, that is a separate sales transaction but, not subject to VAT being sold to an
employee, although subject to income tax on the gain.
d. If it is proven that the employee also benefits and is being used also for personal use, the FBT is
computed at( 50% x [FMV/5 yrs]) . The result is the annual FBT. If the employee then buys after
the 5th yr, then, that is a separate sales transaction subject to VAT on gross sale, and income
tax on the gain.
55. Which statement is incorrect:
a. The salaries of partners of a General Professional Partnership (GPP) is considered as ordinary
business income of the individual partners. These incomes do not qualify as salaries.
b. GPP partners are qualified to receive de minimis benefits (exempt from income tax).
QUESTIONS
c. GPP partners are subjected to expanded withholding tax of 10% if not exceeding P720,000
gross revenues; and 15% if exceeding P720,000 gross revenues – Under the TRAIN LAW.
d. None of the above.
56. Sarah Hazel Service Corporation, registered with the BIR in 2012, has the ff. data for year 2016
Gross receipts
1,000,000
Discounts given
100,000
Returns and allowances
150,000
Salaries of personnel directly involved in the supply of services
300,000
Salaries of office personnel (inc. salaries of P100,000 given to senior citizens)
250,000
Acquisition cost of office equipment (est. life is 5yrs)
250,000
Acquisition cost of equipment used in the supply of services (est. life is 5
300,000
years)
Fees of consultants directly involved in the supply of services
50,000
Rental of equipment directly used in the supply of services
70,000
Assistance given to a state university under the adopt-a-school program
100,000
Other operating expenses
120,000
57. How much is the cost of services?
a. P670,000
b. P540,000
c. P480,000
d. None of the choices
58. An employee receives the following for the current year:
Statutory minimum wage, inclusive of the 13th month pay
Overtime pay
Night-shift differential
Commission from the same employer
Total
P 175,000
40,000
25,000
20,000
P 260,000
How much is the exempt amount?
a. 20,000
b. 240,000
c. None of the choices
d. 260,000
59. Mitzie is employed and is also a part-time real estate agent for a real estate broker. In addition to the
SMW of P180,000 she received from her employer, she likewise received P75,000 as commission from
her real estate dealings for the year 2018.
How much is the income tax due if she under the 8% income tax regime?
a. Some other amount
b. 0
c. 20,400
d. 6,000
QUESTIONS
60. A business owner owns a night club and videoke bar, with gross sales/receipts of P2,500,000 for the
period under consideration. His cost of sales and operating expenses are P1,000,000 and P160,000,
respectively, and with non-operating income of P100,000.
How much is the business tax due?
a. 450,000
b. 250,000
c. 375,000
d. 750,000
61. Stephen, married, the resident citizen with two qualified dependent children, has the following data
for the year 2018:
Salaries, net of P50,000 withholding tax
P 200,000
Tuition of children
10,000
Rent of apartment
24,000
Household expenses
60,000
Health and hospitalization insurance premium paid
3,400
How much is the taxable compensation income?
a. 47,600
b. 147,600
c. 200,000
d. 250,000
62. A business owner owns a night club and videoke bar, with gross sale/ receipts of P2,500,000 for the
period under construction. His cost of sales and operating expenses are P1,000,000 and P600,000,
respectively, and with non-operating income of P100,000.
How much is his taxable compensation income for 2018?
a. 1,230,000
b. 1,200,000
c. 3,100,000
d. 1,100,000
63. On March 1, 2018, Ms. Samira Aquino donated a piece of land to her best friend, Mar Roxas. She also
donated to a non-profit religious organization. The donation to her friend was a piece of land that had
an assessed value of P1,000,000 and zonal value of P800,000 at the time of donation. The donations to
a non-profit religious organization were cash amounting to P 200,000 and an automobile with a
purchase of P700,000. The piece of land was encumbered with an unpaid mortgage of P300,000, which
was not assumed by the donee. Also, the done agreed to pay the applicable donor’s tax of P210,000.
How much was the donor’s tax due?
a. None of the choices
b. 60,000
c. 114,000
d. 45,000
64. On March 1, 2018, Mr. Pantaleon donated piece of land to his best friend, German. He also donated to
a non-profit religious organization. The donation to his friend was a piece of land that had an assessed
value of P1,000,000 and zonal value of P800,000 at the time of donation. The automobile with a
QUESTIONS
purchase price of P700,000. The piece of land was encumbered with an unpaid mortgage of P300,000
which was assumed by the done. Also, the done agreed to pay the applicable donor’s tax of P210,000.
How much is the donor’s tax due?
a. 42,000
b. None of the choices
c. 27,000
d. 210,000
65. LA Corporation donated P1,000,000 to a government agency that was created to generate profit for
the government. The agency’s total expenses amounted to P15,000,000, 30% of which were for
administrative purposes? How much was exempt gifts?
a. 3,000,000
b. 1,000,000
c. None of the choices
d. 4,500,000
66. A resident citizen of the Philippines made the following donations on one date:
Donations on account of marriage:
To legitimate son
To a legitimate daughter and her husband-to-be on account of marriage
To a recognized natural son
To an adopted child
To an illegitimate daughter
To a sister
To a charitable institution
P 100,000
15,000
30,000
60,000
40,000
12,000
20,000
The deductions from the gross gift are:
a. 60,000
b. 57,500
c. 67,500
d. 20,000
67. On January 15, 2018, Daisy gave a piece of land to her brother-in-law, who is getting married on
February 14, 2018. The assessed value and zonal value of the land were P750,000 and P1,000,000,
respectively. The land had an unpaid mortgage of P200,000, which was not assumed by the done and
an unpaid reality tax of P10,000, which was assumed by the done.
How much was the donor’s tax due?
a. 297,000
b. 31,400
c. 44,400
d. 237,000
68. A stockholder of a closely held corporation owns 100,000 shares before the IPO. The cost of the share
is P1,000,000. During the IPO, the shares are selling at P12 per share. His broker friend advises him not
to sell his shares during the IPO but instead wait until after the IPO. After the IPO, the outstanding
shares of the closely held corporation are P1,000,000 shares and are now selling at P14 per share at
the local stock exchange.
QUESTIONS
The stockholder of the closely held corporation approaches you to seek your advice because he is also
planning to sell the shares directly to his friend and, therefore, not traded the local stock exchange at
P15 per share.
How much is the percentage tax if he sold his shares during the IPO on January 2, 2018?
a. None of the choices
b. 36,000
c. 48,000
d. 12,000
69. A proprietor of bowling alleys has the following gross receipts during July 2018
Gross receipts from bowling operations
P 2,000,000
Gross receipts from the sale of food and drinks inside the bowling alley
1,000,000
Gross receipts of stalls inside the bowling alley
500,000
How much is the amusement tax?
a. 630,000
b. 1,050,000
c. 525,000
d. None of the choices
70. A telephone company has the following data for the following data for the first quarter of 2018:
Payments for overseas calls originating from the Philippines made by the Philippine
P 500,000
government
Payments for personal overseas calls originating from the Philippines (individual callers)
800,000
Payments for business overseas calls originating from the Philippines (individual callers)
600,000
Overseas communication tax shall be:
a. 190,000
b. 60,000
c. 140,000
d. None of the choices
71. A franchise grantee of water utilities has the following gross receipts for the first quarter of the current
year:
Gross receipts, sale of water
P 3,500,000
Gross receipts, rent of office spaces
3,500,000
Expenses, sale of water
1,000,000
Expenses, rent of office spaces
500,000
How much is the business tax of the same water?
a. 105,000
b. 70,000
c. 50,000
d. None of the choices
72. A common domestic carrier has the following data on gross receipts and expenses for the first quarter
of 2018:
Gross receipts, sale of water
P1,500,000
Gross receipts, rent of office spaces
1,500,000
QUESTIONS
Expenses, sale of water
Expenses, rent of office spaces
300,000
300,000
How much is the business tax if it is a common domestic carrier by water, VAT Registered?
a. 90,000
b. 37,350
c. 45,000
d. None of the choices
73. A taxpayer is engaged in VAT subject transactions, but his annual gross sales do not exceed the VAT
threshold. Hence, he did register under VAT system. However, during the current year, his quarterly
gross sales follow:
First-quarter
P 1,000,000
Second-quarter
1,000,000
Third-quarter
1,000,000
Forth-quarter
1,000,000
How much is the percentage tax due?
a. 120,000
b. 90,000
c. 480,000
d. None of the choices
74. A PEZA- registered enterprise under a 5% Gross Income Tax [special tax regime] engaged as an expert
enterprise provided you with the following information for the taxable year 2018:
Export sales
P 40,000,000
Direct costs
20,000,000
Administrative expenses
5,000,000
Marketing Expenses
2,500,000
Other operating expenses
1,200,000
Incidental losses
400,000
How much is the tax due to the city or municipality where the enterprise is located?
a. 400,000
b. 1,000,000
c. 600,000
d. None of the choices
75. A lessor rents his 20 residential units for P14,500 per month. During the taxable year, his accumulated
gross receipts amounted to P3,480,000. Is the lessor subject to VAT?
a. Subject to VAT
b. Exempt from VAT and Perc. Tax.
c. Subject to Percentage Tax
d. Zero-rated VAT
76. A lessor rents his 15 residential units for P15,500 per month. During the taxable year, his accumulated
gross receipts amounted to P2,790,000. Is the lessor subject to VAT?
a. Subject to VAT
QUESTIONS
b. Exempt from VAT and Perc. Tax.
c. Subject to Percentage Tax (Perc. Tax)
d. Exempt from VAT but, subject to Perc. Tax.
77. A lessor rents his 20 residential units for P15,500 per month. During the taxable year, his accumulated
gross receipts amounted to P3,720,000. Is the lessor subject to VAT?
a. Subject to VAT
b. Exempt from VAT and Perc. Tax.
c. Subject to Percentage Tax (Perc. Tax)
d. Exempt from VAT but, subject to Perc. Tax.
78. A lessor rents his two commercial and ten residential units for monthly rent of P60,000 and P15,000
per unit, respectively. During the taxable year, his accumulated gross receipts amounted to P3,240,000
(P 1,440,000 from commercial units and P 1,800,000 from residential units). What are the VAT
implication?
a. P1,440,000 is Subject to VAT
b. P1,440,000 is Subject to Percentage Tax (Perc. Tax)
c. P1,400,000 is subject to Perc.Tax. while the P1,800,000 is VAT and Perc. Tax exempt
d. Both amounts are Exempt from VAT but, subject to Perc. Tax.
79. A lessor rents his two commercial and ten residential units for monthly rent of P60,000 and P15,000
per unit, respectively. During the taxable year, his accumulated gross receipts amounted to P5,400,000
(P 3,600,000 from commercial units and P 1,800,000 from residential units). What are the VAT
implication?
a. P3,600,000 is Subject to VAT
b. P3,600,000 is Subject to Percentage Tax (Perc.Tax)
c. P3,600,000 is Subject to VAT and P1,800,000 from residential units is exempt from Percentage
tax and VAT.
d. P1,800,000 is exempt from both VAT and Percentage Tax.
80. A lessor rents his five commercial and ten residential units for monthly rent of P60,000 and P15,500
per unit, respectively. During the taxable year, his accumulated gross receipts amounted to P5,460,000
(P 3,600,000 from commercial units and P 1,860,000 from residential units). What are the VAT
implication?
a. Both amounts are Subject to VAT
b. Both are Exempt from VAT and Perc. Tax.
c. Only P1,860,000 is Subject to Percentage Tax (Perc. Tax)
d. P3,600,000 is Exempt from VAT but, subject to Perc. Tax.
81. 82. A taxpayer is a rice dealer. His total annual gross sale and receipts do not exceed Three million
(P3,000,000). What will he do if he is a VAT exempt taxpayer?
a. He may elect to avail of the optional registration for VAT of exempt person under Section 236
(H) of the 1997 Tax Code, as amended.
b. He may elect to avail of the optional registration for VAT of exempt person under Section 236
(H) of the 1997 Tax Code, as amended. Upon the election of such option, he shall not be
entitled to cancel his VAT registration for the next three (3) years.
c. He may elect to avail of the optional registration for VAT of exempt person under Section 236
(H) of the 1997 Tax Code, as amended. Upon the election of such option, he shall still be
QUESTIONS
entitled to cancel his VAT registration within the year and need not wait for 3 years for
registration as Non-VAT.
d. He is automatically VAT Exempt taxpayer and there is no need to register as VAT Exempt
because he is a rice dealer selling an agricultural product in its original state when sold to
customers.
82. A taxpayer is a rice dealer. His total annual gross sale and receipts do not exceed Three million
(P3,000,000). What will he do if he will opt for 8% tax rate?
a. He may elect to pay the 8% commuted tax rate gross sales or receipts and other non operating
income instead of the graduated income tax rates and the percentage tax since his gross sale or
receipts did not exceed Three million Pesos (P3,000,000) during the taxable year. If he elects to
pay the 8% commuted tax, he shall not be allowed to avail of the optional registration for VAT
of exempt person.
b. He is not qualified to elect 8% tax rate. He may elect to avail of the optional registration for VAT
of exempt person under Section 236 (H) of the 1997 Tax Code, as amended. Upon the election
of such option, he shall still be entitled to cancel his VAT registration within the year and need
not wait for 3 years for registration as Non-VAT.
c. He is automatically VAT Exempt taxpayer and there is no need to register as VAT Exempt
because he is a rice dealer selling an agricultural product in its original state when sold to
customers.
d. None of the choices.
Too Big Company, a public service company, is a holder of a franchise to engage in the business of supplying
water to several towns and cities in Luzon. As recorded in its books during the month, its total gross receipts
from the sale of water amounted to P 2,550,000, while the receipts from rental of equipments and other
services was P280,000. The operating expenses amounted to P2,000,000, 11% of which was paid to VAT
registered persons
83. The percentage tax due is –
a. P51,000
b. P5,000
c. P16,500
d. P56,500
84. The value-added tax payable for the month is –
a. P33,600
b. P5,000
c. P16,500
d. P7,200
85. A tax on the right or privilege to enter places of amusement
a. VAT
b. Franchise tax
c. Amusement tax
d. Income tax
86. One of the following is not subject to amusement tax on gross receipts
a. Disco houses
QUESTIONS
b. Cockpits
c. Professional basketball
d. Bowling alleys
87. A operates a cockpit. Inside the cockpit, he also operates a restaurant. Data for the particular quarter
follow
Gross receipts:
Cockpit operations
P 500,000
Restaurant operation:
Sale of foods
100,000
Sale of liquor
150,000
The amusement tax due from A is
a. P90,000
b. P135,000
c. P225,000
d. P75,000
88. Using the above data, except the restaurant is not owned by A but is owned by another person, B, not
VAT registered and whose annual gross sales never exceeded P3,000,000. The amusement tax due
from A is
a. P90,000
b. P135,000
c. P225,000
d. P75,000
89. Continuing the preceding number, the percentage tax due from B is
a. P90,000
b. P135,000
c. P225,000
d. P7,500
90. A promoted a world boxing championship in Manila featuring B, a Filipino champion. Gate receipts
amounted to P3,000,000and additional receipts from television coverage was P2,000,000. The
amusement tax due is
a. None
b. P500,000
c. P300,000
d. P900,000
ANSWERS
1. A filed his income tax return for calendar year 2015 on March 31, 2016. When is the last day for the BIR
to collect assuming A did not pay the tax due upon filling?
a. March 31, 2019
b. April 15, 2018
c. April 15, 2019
d. March 31,2021
2. Select the incorrect statement.
a. The power to tax includes the power to exempt.
b. Exemption is construed against the taxpayer and in favor of the government.
c. Tax statues are construed against the government in case of doubt.
d. Taxes should be collected only for public improvement.
3. A filed his 2014 income tax return late on April 25, 2015 and the return is not fraudulent, when is the
last day for the BIR to make an assessment?
a. April 20, 2018
b. April 25, 2018
c. April 15, 2019
d. April 25, 2020
Numbers 4-7
Sarah Angels Service Corporation, registered with BIR in 2012, has the following date for the year 2016?
Gross receipt
P 1,000,000
Discount given
100,000
Returns and allowances
150,000
Salaries of personal directly involved in the supple of service
300,000
Sales of office personnel (including salaries of P100,000 given to senior citizen)
250,000
Acquisition of cost equipment used in the supply of service (estimated life is 5 years)
250,000
Fees of consultant directly involved in the supply of service
300,000
Fees of consultant directly involved in the supply of service
50,000
Rental of equipment directly use in the supply of service
70,000
Assistance given to a state university under the Adopt-A-School program
100,000
Other operating expense
120,000
4. How much is the total cost of service
a. P670,000
b. P540,000
c. P480,000
d. None of the choices
5. How much are the total operating expenses?
a. P585,000.00
b. P535,000.00
c. P520,000.00
d. None of the choices
6. How much the income tax due and payable using optional standard deduction?
a. P63,000
ANSWERS
b. P95,400
c. P46,600
d. None of the choice
7. How much is the amount subject to VAT?
a. P1,000,000
b. P 900,000
c. P750,000
d. None of the choices
8. Which of the following is not an inherent limitation of the power to tax?
a. Tax should be levied for public purpose.
b. Taxation is limited to its territorial jurisdiction.
c. Tax laws shall be uniform and equitable.
d. Government agencies and instrumentalities are exempt from tax.
9. If the BIR issued a deficiency income tax return assessment on March 10, 2010 and assuming the
assessment is valid, when is the last day for the BIR to collect?
a. March 10, 2013
b. April 15, 2013
c. March 10, 2015
d. April 15, 2015
10. Taxpayer A was required by the BIR to sign and submit a waiver of the statute of limitations on the
assessment period, to give the BIR more time to complete its investigation. The BIR accepted the
waiver but failed to indicate the date of its acceptance. What is the legal status of the waiver?
a. The waiver is valid because the date of acceptance is immaterial and unimportant
b. The waiver is invalid, the taxpayer cannot be required to waive the statute of limitation
c. The waiver is invalid; the date of acceptance is crucial in counting the start of the period of
suspension of the prescriptive period
d. The waiver is valid, having been accepted by the BIR
11. Taxpayer Andy received on January 3, 2010 a preliminary assessment notice (PAN) from the BIR,
stating that he had fifteen days from its receipt to comment or to file a protest. Eight days later, before
he could comment or file a protest, Andy received the final assessment notice (FAN). Decide on the
validity of the FAN?
a. The FAN is invalid; Andy was not given the chance to respond to the PAN, in violation of his due
process rights
b. The FAN is invalid for being premature
c. he FAN is valid since it was legal requirement that the FAN should await the protest to the PAN
because protest to the PAN is not mandatory
12. Which of the following acts in taxation is administrative by nature?
a. Determination of the amount to be imposed
b. Fixing the allocation of the amount to be collected between the local government and the
national government
c. Levy or distraint of taxpayers’ property for tax delinquency
d. Determining the purpose of the tax to impose
ANSWERS
13. 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?
a. File a petition for review with the Court of Tax Appeals within days from receipt thereof
b. File a motion for the reconsideration with the Commissioner of Internal Revenue
c. File an appeal to the Secretary of Finance within 30 days from receipt thereof
d. File an appeal to the Secretary of Justice within 30 days from receipt thereof
14. In case of full or partial denial of the written claim for refund or excess input tax directly attributable to
zero rated sales, or the failure on the part of the Commissioner to act on the application within 120
days from the date of submission of complete documents, an appeal must be filed with the CTA
a. Within 30 days after filing the administrative claim with the BIR
b. Within 60 days after filing the administrative claim with the BIR
c. Within 120 days after filing the administrative claim with the BIR
d. Within 30 days from the receipt of the decision denying the claim or after the expiration of the
120 day period
15. Which is the most incorrect statement regarding taxes?
a. Taxes are necessary for the continued existence of the government.
b. The obligation to pay tax does not rest upon the privilege enjoyed by or the protection afforded
to the citizen of the government but upon the necessity of money for the support of the State.
c. There should be personal benefit enjoyed from the government before one is required to pay
tax.
d. Taxes should be collected without unnecessary delay but its collection should not be tainted
with arbitrariness.
16. The submission of the required documents within 60 days from the filing of the protest is available only
where
a. The taxpayer previously filed a Motion for Reconsideration with the BIR official
b. The taxpayer previously filed a request for reconsideration with the BIR official
c. The taxpayer previously filed a request for reinvestigation with the BIR official
d. The taxpayer previously filed an extension to file a protest with the BIR official
17. A filed his ITR for 2011 on April 15, 2012 and will pay his tax liability in installment. The return shows an
income tax due of P100,000 and income tax return withhold of P60,000. If A pays the 2nd the
installment only on October 15, 2012, the amount to be paid (excluding compromise penalty) is
a. P26,000
b. P35,000
c. P55,000
d. P52,000
18. Due to financial difficulties, ABC Corp. requested that its 2011 income tax liability of P400,000 be paid
in four (4) equal monthly installments, starting April 15, 2012. Its requests for installment payment was
approved on April 8, 2010. The tax due on May 15, 2012 is
a. P100,000
b. P101,667
c. P105,000
d. P106,667
ANSWERS
19. An educational institution operated by a religious organization was being required by a local
government to pay real property tax. Is the assessment valid?
a. Yes, with respect to all properties held by such educational institution.
b. Yes, with respect to properties not actually devoted to educational purposes.
c. No, with respect to any properties held by such educational institution.
d. No, with respect to properties not actually devoted to educational purposes.
20. XYZ Corporation filed its income tax return and paid the tax due for calendar year 2011 showing a tax
liability of P175,000. However, upon audit, it was discovered that its income tax return was false or
fraudulent because it did not report other taxable income. Per investigation the correct income tax due
is P350,000. The corporation was duly informed of this finding through a preliminary assessment
notice. Failing to protest on time against the preliminary assessment notice, a formal letter of demand
and assessment notice was issued on May 31, 2013 calling for payment of the deficiency income tax on
or before July 15, 2013. The amount due on July 15, 2013 is
a. P306,250
b. P218,750
c. P341,250
d. P612,500
21. A’s income tax liability for 2011 was P75,000. She filed the return and paid the total amount due but
not with the proper internal revenue district office on July 15, 2012. The amount payable (ignoring
compromise penalty) is
a. P97,500
b. P112,500
c. P116,250
d. P135,000
22. Compute for the VAT Base of the following:
Selling price
Bulk purchase discount (volume discount)
Discount to be given if paid within 60 days
Trade discount (granted at the time of sale and
stated on the face of the invoice)
a.
b.
c.
d.
P 1,200,000
55,000
75,000
125,000
P 945,000.00
P 1,000,000.00
P 1,075,000.00
P 1,200,000.00
23. Determine the VAT base to be used by the buyer given the following data:
Security deposit paid (may be applied as last month’s lease payment)
0 two months advance lease payment (prepaid rentals P20,000 x 2)
a.
b.
c.
d.
P 60,000.00
P 20,000.00
P 40,000.00
None of the above
P 20,000
40,000
ANSWERS
24. B23 Company is non-VAT registered company. On February 6, 2010, it purchased equipment
amounting to P360,000.00. The VAT invoice showed as follows:
Selling price
P 321,420.71
VAT
38,570.48
Total invoice amount
360,000
How much should B23 pay to the supplier and how much input VAT can it claim?
a. P360,000 and P38,570.48
b. P360,000 and P0
c. P321,420.71 and P0
d. P321,420.71 and P38,570
25. 21. ABC Security Services billed its client for security services rendered in Feb 2010 by issuing a billing
statement broken down as follows:
Security Guard’s salaries
P 382,628
Agency fee
151,515
Assume that this is exclusive of VAT. How much input VAT can the client recognize?
a. P 45,915.36
b. P 18,181.80
c. P 64,097.16
d. P 0
26. Mr. Abella, a seller of merchandise, had the following transactions of goods, inclusive of VAT, during
the third month of his business:
Sales on account
P 336,000
Goods out on consignment – January 10
112,000
February 15
224,000
March 10
168,000
With the given information above, how much is the output tax for the month?
a. 100,800
b. 90,000
c. 54,000
d. 48,000
27. The following statement is correct, except
a. VAT is an indirect consumption tax
b. The seller is the one statutorily liable to pay the vat but he can pass on the vat to the buyer
c. Destination principle is the same with cross border doctrine principle which says that goods are
vatable if they are consumed here in the Philippines or services are vatable if they are rendered
here in the Philippines
d. A person who engages in vatable transaction but does not register himself is called “vat
registrable person”
e. The main object of vat is the person
28. Which of the following are vatable transactions in general?
a. Sale of goods or properties
ANSWERS
b.
c.
d.
e.
Lease of goods or properties
Importation of goods, regardless for business or for personal consumption
Render of services
All of the above
29. For sale of goods or properties to be vatable, the following criteria have to be met, except:
a. There must be sale, actual or deemed
b. The goods must be consumed in the Philippines
c. The sale must be in the course of trade or business
d. There must be collection of sale
30. X, partner of XYZ Merchandising Partnership a vat registered partnership, withdrew for his personal
use, goods with acquisition cost of P5,000 (market value is P6,000) out of XYZ’s inventory available for
sale. How much is the output vat that XYZ will have to pay?
a. 600
b. 720
c. 0
d. 120
31. Vat will apply to the following transactions, except:
a. Change of business activity from VAT taxable status to VAT-exempt status
b. Approval of a request for cancellation of registration due to reversion to exempt status
c. Change of control of a corporation by the acquisition of the controlling interest of such
corporation by another stockholder or group of stockholders
d. Approval of a request for cancellation of registration due to a desire to revert to exempt status
after the lapse of three (3) consecutive years
e. Approval of a request for cancellation of registration of one who commenced business with the
expectation of gross sales or receipts exceeding P3,000,000, but who failed to exceed this
amount during the first twelve months of operation
32. Which of the following situs of service is incorrect?
a. Professional and or technical
Where the service is actually and physically carried out
consultancy
b. Service to develop the technology
Where the service is actually and physically carried out
c. Technology
Where the service is actually and physically carried out
d. Lease of tangible properties
Where the property is leased
e. Lease of tangible properties
Where the right or privilege to use is exercised
33. Which of the following statement is incorrect for zero rate vat and vat-exempt sales
a. Both sales do not result in output tax amount
b. Input tax on purchase related to zero sale can be claimed as tax credit or refund but Input tax
on purchases related to exempt sales cannot be claimed as tax credit or refund
c. Vat exempt sales provide complete relief from Vat versus zero vat sales which provides only
partial relief
d. Both type of sales are provided or enumerated specifically in the tax code and in special laws
ANSWERS
34. The following statement is correct for VAT Base deduction for sale of goods (gross selling price),
except:
a. Sales Returns and Allowances may only be deducted from gross sales for the month or quarter
in which a refund is made and a credit memorandum is issued.
b. Sales Discounts may only be deducted from gross sales or receipts within the same month or
quarter it was given
c. Sales discounts may be deducted if it is determined and granted at the time of sale
d. Sales discounts may be deducted if it is expressly indicated in the invoice and the amount
thereof should form part of gross sales
e. Sales discounts may be granted even subject to condition as long as the condition is actually
fulfilled by the customer
35. ABC Corporation sold a parcel of land to XYZ Company on July 2, 2006 for P1,000,000.00, plus the
output VAT, with a monthly installment payment of P10,000.00 (plus the output VAT), beginning in the
month of sale. The zonal value of the subject property at the time of sale amounted to P1,500,000.00.
How much is the amount of vat in the month of sale?
a. 15,000
b. 1,800
c. 12,000
d. 1,200
36. MNO corp sold to a government entity vatable sale of P112,000 inclusive of vat of 12%. For the same
month it had purchases with input vat of P3,000. Compute the amount of vat to be withheld by govt,
the claimable input vat and the amount of input vat to be closed to income and expense account
a. 5,000 and 3,000 and zero
b. 5,000 and 7,000 and 4,000 income
c. 5,000 and 7,000 and 4,000 expense
d. Zero and 3,000 and 4,000 income
37. Which of the following extends the 3-year prescriptive period to make an assessment?
a. Failure of the taxpayer to file a return.
b. Waiver by the taxpayer of the statutes of limitation.
c. Filing by the taxpayer of a fraudulent return.
d. All of the above
38. Documents are required to support a
a. Request for reconsideration
b. Request for re-investigation
c. Both A and B
d. Neither A nor B
39. On March 5, 2015, the BIR discovered a deficiency value added tax for the quarter ended September
2008. The deficiency did not arise from error or fraud.
Which is correct?
a. The BIR must send the assessment notice before March 5, 2018.
b. The BIR must send the assessment notice before September 30, 2018.
c. The BIR must send the assessment notice before March 5, 2025.
d. The BIR has no more remedies since the tax prescribed.
ANSWERS
40. Mr. A has a tax obligation to the government amounting to P80,000. Since he is leaving the country, he
entered into a contract with Mr. B wherein Mr. B shall pay the P80,000 tax in his behalf. On due date,
Mr. B failed to pay the tax. The BIR sent a letter of demand to Mr. A which he refused to pay. Which of
the following statements is correct?
a. The government cannot enforce collection charges against Mr. A since he has validly
transferred his obligations to B under the contract.
b. The government can no longer run after Mr. A because he is already outside the Philippine
territory.
c. The government should wait until Mr. B becomes solvent again.
d. The government should force Mr. A to pay because taxes are non-assignable.
41. A, a VAT registered taxpayer made the following acquisition of capital goods from VAT registered
suppliers (net a vat) during the quarter
Date
Cost
Estimated life
July
2 P 1,500,000
8 years
10
500,000
2 years
August
5
400,000
3 years
20
500,000
4 years
September
10
500,000
4 years
15
600,000
6 years
The July 2 acquisition was retired in September. The input tax for July is
a. P4,275
b. P5,500
c. P63,000
d. P240,000
42. Using the above data, the input tax for August is
a. P2,583
b. P8,083
c. P108,000
d. P113,000
43. Using the above data, the input for September is
a. P2,450
b. P132,000
c. P178,950
d. P231,450
Numbers 44-45
GILEAD Company received a bill for P27,440 from a VAT registered service provider. The payment for the
service is subject to 2% creditable withholding tax. The above amount is vat inclusive. Withholding tax is still
not deducted from the amount.
44. What is the deductible expense and the amount of creditable tax if GILEAD is a non-VAT taxpayer?
a. P 0 for both
b. P 26,950, P490
ANSWERS
c. P27,440, P490
d. P24,500, P490
45. If GILEAD is a VAT taxpayer, what is the deductible expense?
a. P 0
b. P 26,950
c. P 27,440
d. P 24,500
46. Which of the following substantiation is not compliant to the VAT regulations?
a. Sale of goods – Invoice
b. Sale of services – Official receipt
c. Lease of goods or properties - Invoice
d. Sale of real property – Invoice or Official Receipt
47. Which of the following statement is incorrect?
a. A person who enters into a “taxable transaction” makes him a person liable to VAT and is
referred to as a “taxable person”.
b. Services rendered in the Philippines by non-resident foreign persons shall not be considered as
being rendered in the course of trade or business.
c. Input tax amortization is only applicable to purchases of capital goods and not services.
d. Security deposits are not subject to VAT upon receipt by the lessor
e. VAT is designed to be borne by consumers/buyers, with sellers acting merely as tax collectors.
48. Select the incorrect timing of claiming input vat
a. Upon consummation of purchase for goods
b. Upon payment for services
c. Upon every installment for sale of real property on installment
d. Upon consummation of purchase for lease of goods or properties
49. Which is a national tax?
a. Real property tax
b. Community tax
c. Income tax
d. Professional tax
50. A tax that is imposed upon the performance of an act, the enjoyment of a privilege or the engagement
in a profession is known as
a. Income tax
b. License
c. excise tax.
d. transfer tax.
51. The power to enforce proportional contribution from the people for the support of the government is
a. Taxation
b. Police power
c. Eminent domain
d. Exploitation
ANSWERS
52. What is the theory of taxation?
a. Reciprocal duties of support and protection
b. Necessity
c. Constitutionality
d. Public purpose
53. J, a Filipino citizen married to M, died in a vehicular accident in SLEX on April 10, 2018. The spouses
owned, among others a 100-hectare agricultural land in Sta. Rosa, Laguna with current fair market
value of P20M, which was the subject matter of a Joint Venture Agreement about to be implemented
with Star Land Corporation (SLC), a well-known real estate development company. He bought the said
real property for P2M years ago. On January 5, 2019, the administrator of the estate and SLC jointly
announced their big plans to start conversation and development of the agricultural lands in Sta. Rosa,
Laguna, into first class residential and commercial centers. As a result, the prices of real properties in
the locality have doubled. The administrator of the estate of J filed the estate tax return on January 9,
2019 by including in the gross estate the real property at P2M. After 9 months, the BIR issued
deficiency estate tax assessment, by valuing the real property at P40M. As a result, the real property
should be value
a. P2M
b. P40M
c. P10M
d. P20M
54. Fringe Benefits Taxation/Tax (FBT). Which of the following statements is incorrect?
Scenario: A motor vehicle was purchased by the employer in the name of the employer (ER); but, to be
used by the employee who is a sales supervisor and at the same time does operational work, and by
the end of the 5th year, said employee shall have the right (option to buy) to purchase such vehicle at
book value, assuming the salvage value is at P100,000, how should the fringe benefit tax be computed,
if any?
a. During the 5 year period, there was no fringe benefit if proven that the same is for the
convenience of the employer or for the nature of trade and business of the employer?
b. After the 5 yr period, the sale to the employee shall then be accounted for as a separate sales
transaction (if employee opted to buy) subject to VAT on gross and income tax on the gain.
c. If it is proven that the employee also benefits and is being used also for personal use, the FBT is
computed at (50% x [FMV/5 yrs]). The result is the annual FBT. If the employee then buys after
the 5th yr, then, that is a separate sales transaction but, not subject to VAT being sold to an
employee, although subject to income tax on the gain.
d. If it is proven that the employee also benefits and is being used also for personal use, the FBT is
computed at( 50% x [FMV/5 yrs]) . The result is the annual FBT. If the employee then buys after
the 5th yr, then, that is a separate sales transaction subject to VAT on gross sale, and income
tax on the gain.
55. Which statement is incorrect:
a. The salaries of partners of a General Professional Partnership (GPP) is considered as ordinary
business income of the individual partners. These incomes do not qualify as salaries.
b. GPP partners are qualified to receive de minimis benefits (exempt from income tax).
ANSWERS
c. GPP partners are subjected to expanded withholding tax of 10% if not exceeding P720,000
gross revenues; and 15% if exceeding P720,000 gross revenues – Under the TRAIN LAW.
d. None of the above.
56. Sarah Hazel Service Corporation, registered with the BIR in 2012, has the ff. data for year 2016
Gross receipts
1,000,000
Discounts given
100,000
Returns and allowances
150,000
Salaries of personnel directly involved in the supply of services
300,000
Salaries of office personnel (inc. salaries of P100,000 given to senior citizens)
250,000
Acquisition cost of office equipment (est. life is 5yrs)
250,000
Acquisition cost of equipment used in the supply of services (est. life is 5
300,000
years)
Fees of consultants directly involved in the supply of services
50,000
Rental of equipment directly used in the supply of services
70,000
Assistance given to a state university under the adopt-a-school program
100,000
Other operating expenses
120,000
57. How much is the cost of services?
a. P670,000
b. P540,000
c. P480,000
d. None of the choices
58. An employee receives the following for the current year:
Statutory minimum wage, inclusive of the 13th month pay
Overtime pay
Night-shift differential
Commission from the same employer
Total
P 175,000
40,000
25,000
20,000
P 260,000
How much is the exempt amount?
a. 20,000
b. 240,000
c. None of the choices
d. 260,000
59. Mitzie is employed and is also a part-time real estate agent for a real estate broker. In addition to the
SMW of P180,000 she received from her employer, she likewise received P75,000 as commission from
her real estate dealings for the year 2018.
How much is the income tax due if she under the 8% income tax regime?
a. Some other amount
b. 0
c. 20,400
d. 6,000
ANSWERS
60. A business owner owns a night club and videoke bar, with gross sales/receipts of P2,500,000 for the
period under consideration. His cost of sales and operating expenses are P1,000,000 and P160,000,
respectively, and with non-operating income of P100,000.
How much is the business tax due?
a. 450,000
b. 250,000
c. 375,000
d. 750,000
61. Stephen, married, the resident citizen with two qualified dependent children, has the following data
for the year 2018:
Salaries, net of P50,000 withholding tax
P 200,000
Tuition of children
10,000
Rent of apartment
24,000
Household expenses
60,000
Health and hospitalization insurance premium paid
3,400
How much is the taxable compensation income?
a. 47,600
b. 147,600
c. 200,000
d. 250,000
62. A business owner owns a night club and videoke bar, with gross sale/ receipts of P2,500,000 for the
period under construction. His cost of sales and operating expenses are P1,000,000 and P600,000,
respectively, and with non-operating income of P100,000.
How much is his taxable compensation income for 2018?
a. 1,230,000
b. 1,200,000
c. 3,100,000
d. 1,100,000
63. On March 1, 2018, Ms. Samira Aquino donated a piece of land to her best friend, Mar Roxas. She also
donated to a non-profit religious organization. The donation to her friend was a piece of land that had
an assessed value of P1,000,000 and zonal value of P800,000 at the time of donation. The donations to
a non-profit religious organization were cash amounting to P 200,000 and an automobile with a
purchase of P700,000. The piece of land was encumbered with an unpaid mortgage of P300,000, which
was not assumed by the donee. Also, the done agreed to pay the applicable donor’s tax of P210,000.
How much was the donor’s tax due?
a. None of the choices
b. 60,000
c. 114,000
d. 45,000
64. On March 1, 2018, Mr. Pantaleon donated piece of land to his best friend, German. He also donated to
a non-profit religious organization. The donation to his friend was a piece of land that had an assessed
value of P1,000,000 and zonal value of P800,000 at the time of donation. The automobile with a
ANSWERS
purchase price of P700,000. The piece of land was encumbered with an unpaid mortgage of P300,000
which was assumed by the done. Also, the done agreed to pay the applicable donor’s tax of P210,000.
How much is the donor’s tax due?
a. 42,000
b. None of the choices
c. 27,000
d. 210,000
65. LA Corporation donated P1,000,000 to a government agency that was created to generate profit for
the government. The agency’s total expenses amounted to P15,000,000, 30% of which were for
administrative purposes? How much was exempt gifts?
a. 3,000,000
b. 1,000,000
c. None of the choices
d. 4,500,000
66. A resident citizen of the Philippines made the following donations on one date:
Donations on account of marriage:
To legitimate son
To a legitimate daughter and her husband-to-be on account of marriage
To a recognized natural son
To an adopted child
To an illegitimate daughter
To a sister
To a charitable institution
P 100,000
15,000
30,000
60,000
40,000
12,000
20,000
The deductions from the gross gift are:
a. 60,000
b. 57,500
c. 67,500
d. 20,000
67. On January 15, 2018, Daisy gave a piece of land to her brother-in-law, who is getting married on
February 14, 2018. The assessed value and zonal value of the land were P750,000 and P1,000,000,
respectively. The land had an unpaid mortgage of P200,000, which was not assumed by the done and
an unpaid reality tax of P10,000, which was assumed by the done.
How much was the donor’s tax due?
a. 297,000
b. 31,400
c. 44,400
d. 237,000
68. A stockholder of a closely held corporation owns 100,000 shares before the IPO. The cost of the share
is P1,000,000. During the IPO, the shares are selling at P12 per share. His broker friend advises him not
to sell his shares during the IPO but instead wait until after the IPO. After the IPO, the outstanding
shares of the closely held corporation are P1,000,000 shares and are now selling at P14 per share at
the local stock exchange.
ANSWERS
The stockholder of the closely held corporation approaches you to seek your advice because he is also
planning to sell the shares directly to his friend and, therefore, not traded the local stock exchange at
P15 per share.
How much is the percentage tax if he sold his shares during the IPO on January 2, 2018?
a. None of the choices
b. 36,000
c. 48,000
d. 12,000
69. A proprietor of bowling alleys has the following gross receipts during July 2018
Gross receipts from bowling operations
P 2,000,000
Gross receipts from the sale of food and drinks inside the bowling alley
1,000,000
Gross receipts of stalls inside the bowling alley
500,000
How much is the amusement tax?
a. 630,000
b. 1,050,000
c. 525,000
d. None of the choices
70. A telephone company has the following data for the following data for the first quarter of 2018:
Payments for overseas calls originating from the Philippines made by the Philippine
P 500,000
government
Payments for personal overseas calls originating from the Philippines (individual callers)
800,000
Payments for business overseas calls originating from the Philippines (individual callers)
600,000
Overseas communication tax shall be:
a. 190,000
b. 60,000
c. 140,000
d. None of the choices
71. A franchise grantee of water utilities has the following gross receipts for the first quarter of the current
year:
Gross receipts, sale of water
P 3,500,000
Gross receipts, rent of office spaces
3,500,000
Expenses, sale of water
1,000,000
Expenses, rent of office spaces
500,000
How much is the business tax of the same water?
a. 105,000
b. 70,000
c. 50,000
d. None of the choices
72. A common domestic carrier has the following data on gross receipts and expenses for the first quarter
of 2018:
Gross receipts, sale of water
P1,500,000
Gross receipts, rent of office spaces
1,500,000
ANSWERS
Expenses, sale of water
Expenses, rent of office spaces
300,000
300,000
How much is the business tax if it is a common domestic carrier by water, VAT Registered?
a. 90,000
b. 37,350
c. 45,000
d. None of the choices
73. A taxpayer is engaged in VAT subject transactions, but his annual gross sales do not exceed the VAT
threshold. Hence, he did register under VAT system. However, during the current year, his quarterly
gross sales follow:
First-quarter
P 1,000,000
Second-quarter
1,000,000
Third-quarter
1,000,000
Forth-quarter
1,000,000
How much is the percentage tax due?
a. 120,000
b. 90,000
c. 480,000
d. None of the choices
74. A PEZA- registered enterprise under a 5% Gross Income Tax [special tax regime] engaged as an expert
enterprise provided you with the following information for the taxable year 2018:
Export sales
P 40,000,000
Direct costs
20,000,000
Administrative expenses
5,000,000
Marketing Expenses
2,500,000
Other operating expenses
1,200,000
Incidental losses
400,000
How much is the tax due to the city or municipality where the enterprise is located?
a. 400,000
b. 1,000,000
c. 600,000
d. None of the choices
75. A lessor rents his 20 residential units for P14,500 per month. During the taxable year, his accumulated
gross receipts amounted to P3,480,000. Is the lessor subject to VAT?
a. Subject to VAT
b. Exempt from VAT and Perc. Tax.
c. Subject to Percentage Tax
d. Zero-rated VAT
76. A lessor rents his 15 residential units for P15,500 per month. During the taxable year, his accumulated
gross receipts amounted to P2,790,000. Is the lessor subject to VAT?
a. Subject to VAT
ANSWERS
b. Exempt from VAT and Perc. Tax.
c. Subject to Percentage Tax (Perc. Tax)
d. Exempt from VAT but, subject to Perc. Tax.
77. A lessor rents his 20 residential units for P15,500 per month. During the taxable year, his accumulated
gross receipts amounted to P3,720,000. Is the lessor subject to VAT?
a. Subject to VAT
b. Exempt from VAT and Perc. Tax.
c. Subject to Percentage Tax (Perc. Tax)
d. Exempt from VAT but, subject to Perc. Tax.
78. A lessor rents his two commercial and ten residential units for monthly rent of P60,000 and P15,000
per unit, respectively. During the taxable year, his accumulated gross receipts amounted to P3,240,000
(P 1,440,000 from commercial units and P 1,800,000 from residential units). What are the VAT
implication?
a. P1,440,000 is Subject to VAT
b. P1,440,000 is Subject to Percentage Tax (Perc. Tax)
c. P1,400,000 is subject to Perc.Tax. while the P1,800,000 is VAT and Perc. Tax exempt
d. Both amounts are Exempt from VAT but, subject to Perc. Tax.
79. A lessor rents his two commercial and ten residential units for monthly rent of P60,000 and P15,000
per unit, respectively. During the taxable year, his accumulated gross receipts amounted to P5,400,000
(P 3,600,000 from commercial units and P 1,800,000 from residential units). What are the VAT
implication?
a. P3,600,000 is Subject to VAT
b. P3,600,000 is Subject to Percentage Tax (Perc.Tax)
c. P3,600,000 is Subject to VAT and P1,800,000 from residential units is exempt from Percentage
tax and VAT.
d. P1,800,000 is exempt from both VAT and Percentage Tax.
80. A lessor rents his five commercial and ten residential units for monthly rent of P60,000 and P15,500
per unit, respectively. During the taxable year, his accumulated gross receipts amounted to P5,460,000
(P 3,600,000 from commercial units and P 1,860,000 from residential units). What are the VAT
implication?
a. Both amounts are Subject to VAT
b. Both are Exempt from VAT and Perc. Tax.
c. Only P1,860,000 is Subject to Percentage Tax (Perc. Tax)
d. P3,600,000 is Exempt from VAT but, subject to Perc. Tax.
81. 82. A taxpayer is a rice dealer. His total annual gross sale and receipts do not exceed Three million
(P3,000,000). What will he do if he is a VAT exempt taxpayer?
a. He may elect to avail of the optional registration for VAT of exempt person under Section 236
(H) of the 1997 Tax Code, as amended.
b. He may elect to avail of the optional registration for VAT of exempt person under Section 236
(H) of the 1997 Tax Code, as amended. Upon the election of such option, he shall not be
entitled to cancel his VAT registration for the next three (3) years.
c. He may elect to avail of the optional registration for VAT of exempt person under Section 236
(H) of the 1997 Tax Code, as amended. Upon the election of such option, he shall still be
ANSWERS
entitled to cancel his VAT registration within the year and need not wait for 3 years for
registration as Non-VAT.
d. He is automatically VAT Exempt taxpayer and there is no need to register as VAT Exempt
because he is a rice dealer selling an agricultural product in its original state when sold to
customers.
82. A taxpayer is a rice dealer. His total annual gross sale and receipts do not exceed Three million
(P3,000,000). What will he do if he will opt for 8% tax rate?
a. He may elect to pay the 8% commuted tax rate gross sales or receipts and other non operating
income instead of the graduated income tax rates and the percentage tax since his gross sale or
receipts did not exceed Three million Pesos (P3,000,000) during the taxable year. If he elects to
pay the 8% commuted tax, he shall not be allowed to avail of the optional registration for VAT
of exempt person.
b. He is not qualified to elect 8% tax rate. He may elect to avail of the optional registration for VAT
of exempt person under Section 236 (H) of the 1997 Tax Code, as amended. Upon the election
of such option, he shall still be entitled to cancel his VAT registration within the year and need
not wait for 3 years for registration as Non-VAT.
c. He is automatically VAT Exempt taxpayer and there is no need to register as VAT Exempt
because he is a rice dealer selling an agricultural product in its original state when sold to
customers.
d. None of the choices.
Too Big Company, a public service company, is a holder of a franchise to engage in the business of supplying
water to several towns and cities in Luzon. As recorded in its books during the month, its total gross receipts
from the sale of water amounted to P 2,550,000, while the receipts from rental of equipments and other
services was P280,000. The operating expenses amounted to P2,000,000, 11% of which was paid to VAT
registered persons
83. The percentage tax due is –
a. P51,000
b. P5,000
c. P16,500
d. P56,500
84. The value-added tax payable for the month is –
a. P33,600
b. P5,000
c. P16,500
d. P7,200
85. A tax on the right or privilege to enter places of amusement
a. VAT
b. Franchise tax
c. Amusement tax
d. Income tax
86. One of the following is not subject to amusement tax on gross receipts
a. Disco houses
ANSWERS
b. Cockpits
c. Professional basketball
d. Bowling alleys
87. A operates a cockpit. Inside the cockpit, he also operates a restaurant. Data for the particular quarter
follow
Gross receipts:
Cockpit operations
P 500,000
Restaurant operation:
Sale of foods
100,000
Sale of liquor
150,000
The amusement tax due from A is
a. P90,000
b. P135,000
c. P225,000
d. P75,000
88. Using the above data, except the restaurant is not owned by A but is owned by another person, B, not
VAT registered and whose annual gross sales never exceeded P3,000,000. The amusement tax due
from A is
a. P90,000
b. P135,000
c. P225,000
d. P75,000
89. Continuing the preceding number, the percentage tax due from B is
a. P90,000
b. P135,000
c. P225,000
d. P7,500
90. A promoted a world boxing championship in Manila featuring B, a Filipino champion. Gate receipts
amounted to P3,000,000and additional receipts from television coverage was P2,000,000. The
amusement tax due is
a. None
b. P500,000
c. P300,000
d. P900,000