ae Management Firm of Professional Review and Training Center (PRTC) — (Luzon) Manila 733-9344/734-7903 * Calamba, Laguna (049) 5453807 (Visayas) Bacolod City (034) 434-6214 * Cebu City (032) 235-7900 Loc. 21: (Mindanao) Cagayan de Oro City (088) 309-3073 * Davao City (082) 225-0049 ‘seal tose Professional Services, Inc. CPA REVIEW OPEN FINAL PRE-BOARD EXAMINATIONS TAXATION Exam Coverage [Basic Principles, Estate Tax, Donor's Tax, VAT, Percentage | |Tax, and other topics | Nae: Otner topics Exam Code _ TAX.OpentstPB.1016 _ | Date {July 30,2016 Time |8:00 AM to 11:00 AM No. of Questions |70 SET A stat ooTaxation SETA INSTRUCTIONS: Select the best answer for each of the following questions. Mark only one answer for each item on the answer sheet provided. Strictly NO ERASURES ALLOWED. Erasures will render your examination answer sheet INVALID. Use PENCIL NO. 2 only, GOODLUCK!®@ xX. In our jurisdiction, which of the following statements may be erroneous? a. Taxes are pecuniary in nature. b. Taxes are enforced charges and contributions. c. Taxes are imposed on persons and property within the territorial jurisdiction of a State. d. Taxes are levied by the executive branch of the government. 2. Well-known authors describe that the exercise of taxation has three aspects, which of the following isnot: a. Research c. Assessment b. Levy d. Collection 3 The statement “Taxes are what we pay for a civilized society” describes: a. Lifeblood doctrine b. Benefits-protection theory c. Necessity theory d. None of the choices 4, Raising revenue is the primary purpose of taxation, which of the following is not_one of the secondary purposes of taxation: a. Reduction of social inequality b. Encourage economic growth by granting incentives and exemptions ¢. Promotion of general welfare d. Protection of foreign interests Page 2 of 25 ‘wiww.prte.com.ph -| TAX.OpenistPB1016Taxation SETA Ee A municipality, 8B, has an ordinance which requires that all stores, restaurants, and other establishments selling liquor should pay a fixed annual fee of P20,000. Subsequently, the municipal board proposed an ordinance imposing a sales tax equivalent to 5% of the amount paid for the purchase or consumption of liquor in stores, restaurants and other establishments. Which of the following statements is correct? a. The impositions are of the same nature and character. b. The fixed annual fee is in the nature local tax imposed through the exercise of taxing powers. c. The above case is not a violation of the rule against double taxation. d. The 5% tax on purchase or consumption is a license fee. Fe 7 vl X, a multinational corporation not doing business in the Philippines, donated 100 shares of stock of said corporation to Mr. “Y", a Filipino citizen. What is the tax liability, if any, of “X" corporation? a. The donation is not subject to donor's tax. b. The donation is subject to 30% donor’s tax based on net ift. €. oe donation is subject to graduated rates based on net ift. d. the donation is subject to 30% donor's tax based on gross gift. If Congress decides to impose transfer taxes on properties of non-resident aliens located abroad, what will be the status of Such law? — a. Valid b. Void c, Voidable d. Unenforceable Page 3 of 25 www.pric.com.ph TAX.OpenistPB1016 |Taxation SETA 8. Which of the following statements is incorrect pertaining to tax exemption of properties for religious, charitable and educational purposes? a. Exemptions of religious, charitable and educational institutions applies to real property tax and income tax only. b. In case of property tax exemption, the test is usage, not ownership. The word “exclusive” means primarily rather than solely. What is exempted is not the institution itself but the lands, buildings and improvements actually, directly and exclusively used for religious, charitable and educational purposes. ao Bank A deposited money with Bank B which earns interest that was subjected to the 20% final withholding tax. At the same time, Bank A is subject to the 5% gross receipts tax on its interest income on loan transactions to customers. Which statement below INCORRECTLY describes the transaction? a. There is double taxation because two taxes - income tax and gross receipts tax are imposed on the interest income described above, and double taxation is prohibited under the 1987 Constitution. b. There is no double taxation because the first tax is income tax, while the second is a business tax. c. There is no double taxation because the income tax is on the interest income of Bank A on its deposits with Bank B (passive income), while the gross receipts tax is on the interest income received by Bank A from loans to its debtor-customers (active income). d. Income tax on interest income of deposits of Bank A is a direct tax, while GRT on interest income on loan transaction is an indirect tax. Page 4 of 25 ‘wow. prtc.com.ph | TAX.OpenistPB1016Taxation SETA A 10. In cases of deductions and exemptions on income tax returns, doubts shall be resolved a. Strictly against the taxpayer b. Strictly against the government c. Liberally in favor of the taxpayer d. Liberally against the government 11. It is a well settled rule that estate taxation is governed by the statute in force at the time of: a. Creation of the last will testament or death of the decedent in case of intestate succession b. Death of the decedent c. Filing of estate tax return d. Either letter “b” or “c” whichever will result to higher estate tax liability A prs Part of the estate left by A are preference shares of MERALCO. The shares are listed _and-traded in the Philippine Stock Exchange. Which of the following rules of valuation is correct? a. The preference shares will be valued using the arithmetic mean between the highest and lowest quotation at the date nearest the date of death, if none is available on the date of death itself. b. The preference shares will be valued based on their book value. c. The preference shares will be valued based on their par value. d. The preference shares will be valued based on their fair market value as determined by the Commissioner of Internal Revenue Page 5 of 25 www. prtc.com.ph e a ~~ TAX.OpentstPB1016Taxation SETA 13. 1A. 16. A resident alien decedent left a gross estate amounting to 1,200,000, which of the following statements is correct? a. The estate may be liable to estate tax. b. The estate may not be liable to estate tax. c. The estate is absolutely not liable to estate tax. d, The estate is absolutely liable to estate tax. Deductible claims against the estate or indebtedness in respect of property may arise out of, except: a. Contract c. Operation of law b. Tort d. None of the choices . Mr. Pobre is in need of money to start a small business. However, he has no property to secure a loan from a bank so he sought the help of his good friend Mr. Rich. Mr. Rich then obtained a loan from Banco de Uro amounting to 1million pesos secured by a real property worth 2million pesos to accommodate the request of Mr. Pobre. If subsequent to securing the loan and delivering to Mr. Pobre the proceeds, Mr. Rich died, how much gross estate should be reported? a. 1,000,000 c. P3,000,000 b. ?2,000,900 d. zero Ms. Ty bought a condominium from Ayala Corporation, Based on the contract to sell executed between the parties, the buyer is obligated to secure a life insurance designating the seller as the irrevocable beneficiary. The insurer is mandated to pay whatever is the unpaid obligation of the buyer to the seller in the event of untimely death of the former. Unfortunately, Ms, Ty died while there is still an unpaid obligation to the seller amounting to 3,000,000. The zonal value of the condominium at the time of death is P6,000,000. How should be included in the gross estate? Page 6 of 25 a TAX.OpenistPB1016Taxation SETA a. P9,000,000 c. P3,000,000 b. 6,000,000 d. zero 17. Based on the preceding number, how much is the deductible 6: y. 20. claims against the estate? a. ?9,000,000 c. P3,000,000 b. 6,000,000 d. zero In determining the gross estate of a married decedent, which of the following should be excluded? a. Exclusive properties of the decedent b. Share in the common properties by the decedent c. Share in the common properties by the surviving spouse d, None of the above The following properties will be classified uniformly under Conjugal Partnership of Gains and Absolute Community of Property, except: a. Property inherited or received as donation during the marriage b. Property acquired from labor, industry, work or profession of spouses c. Fruits or income due or derived during the marriage coming from common properties d. Fruits or income due or derived during the marriage coming from exclusive properties The following deductions are also part of the gross estate, except: a. Claims against the estate Claims against insolvent persons Transfer for public use Death benefits under Republic Act. 4917 aoc Page 7 of 25 waww.prtc.com.ph TAX.OpenistPB1016Taxation SETA 21. Which of the following decedents can never claim family home allowance as deduction? a. b. Non-resident citizen c. Non-resident alien Resident alien d. Both “a” and “c” 22. The following items may be considered in the determination of net share of the surviving spouse, except: a. b. c. qd Unpaid taxes at the time of death Unpaid medicai expenses at the time of death Unpaid judicial expenses at the time of death Devise to the Government for public use in the last will and testament 23: Dr. B suffered a heart attack while attending a seminar in the New York which resulted to his death. The following expenses were incurred: Transportation expenses in bringing the decedent to the Philippines 30,000 Funeral parlor expenses 25,000 Casket 100,000 Mourning apparel of his surviving spouse 5,000 Mourning apparel of his only daughter who is already-married 5,000 Burial lot donated by one his patients 150,000 Upkeep of the mausoleum 3,000 Prayers, mass and entertainment during his first death anniversary 30,000 Assuming his gross estate is P3,500,000, how much is the deductible funeral expense? a. b P130,000 c. P175,000 P168,000 d. P200,000 Page 6 of 25 yoww.prtc.com.ph TAX. OpenistPB1016 get]Taxation SETA 24. 26. D borrowed 10,000,000 from Bank C which remained unpaid at the time of death. The heirs negotiated with the Bank to settle the loan for 7,000,000 only due to financial constraints. How much can be claimed as deduction by the estate of D in the determination of estate tax liability? a. ?3,000,000 c. 210,000,000 b. P7,000,000 d. zero . One of the properties left by a decedent was gutted by fire during the settlement of the estate. The executor decided to claim the losses in computing income tax of the estate. One of the heirs objected to the executor since even before deducting the said losses, the taxable income of the estate is already zero. However, the executor stood his ground and insisted on claiming the losses as deduction in computing income tax. Which of the following statements is correct? a. The losses can no longer be deducted in computing the estate tax b. The losses can still be claimed as deduction in computing the estate tax since there is no prohibition against it under the tax laws, rules and regulations, ¢. The losses can still be claimed as deduction in computing the estate tax since there was no tax benefit resulted in the deduction in the computation of income tax. d. The losses cannot be claimed as deduction both in the computation of estate tax and income tax since it occurred during the settlement of the estate. Which of the following allowable deductions of a non-resident alien decedent should be prorated? a. Net share of the surviving spouse b. Transfers for public use c. Unpaid mortgage d. Property previously taxed Page Sof25 = www.prtc.com.ph . 2 -OpenistPB1016Taxation SETA ZT: 28. 2. When the Commissioner finds that the payment of the estate tax or of any part thereof would impose undue hardship upon the estate or any of the heirs, he may extend the time for payment. Which of the following cases will not. be a sufficient ground for the Commissioner to deny the request for extension? a. Simple negligence b. Gross negligence c. Intentional disregard of rules and regulations d. None of the choices Where the request for extension for payment is granted, which of the following consequences is incorrect? a. The Commissioner or his duly authorized representative may require the executor, or administrator, or beneficiary, as the case may be, to furnish a bond not exceeding double the amount of the tax. b. Sureties must be furnished. c. Any amount paid after the statutory due date of the tax, but within the extension period, shall ‘be subject to interest and surcharge but not to penalties. d. All the statements are correct. If the estate is settled judicially, the allowed extension for filing is: a. Within 30 days from the statutory due date b. Within six (6) months from the statutory due date c. Within two (2) years from the statutory due date d. Within five (5) years from the statutory due date Fage 10 of 25 yew prtecom.ph a TAX OpenistPBI016Taxation SETA 30. Who has the subsidiary responsibility for the payment of estate tax? a. The estate as a juridical person b. Executor or Administrator c. Heir or beneficiary d. Surviving spouse 3 Ms. Inah Tahkeh, a resident alien married to a Filipino, died leaving the following: Family home (500 sq. meters, zonal value is P10,000 per square meter) ~ 4,500,000 Life insurance proceeds, beneficiary is the wife who is the executor, designation is irrevocable 900,000 Life insurance proceeds, beneficiary is his son, designation is irrevocable 200,000 Donation to the City of Tacloban made in the will 1,000,000 Claims against an insolvent debtor (40% uncollectible) 100,000./ Funeral expenses 250,000 Judicial expenses 260,000 Medical expenses (40% was incurred 2 yrs. prior to death), properly supported 1,000,000 How much is the gross estate? a, P600,000 c. P6,100,000 b. 3,800,000 d. #7,000,000 32. Based on the preceding problem, how much is the total deductions? a. P6,750,000 c. PS,750,000 b. P4,000,000 d. 3,000,000 Page 11 of 25 weww.prte.com.ph a TAX, OpenistPB1016- *Taxation SETA Questions 33 to 35 are based on the following information: Big B. died just died today, leaving the following properties donated to him by his brother on July 29, 2019: Properties Valuation on 7-29-14 Valuation today Family home 1,000,000 1,500,000 Car 800,000 200,000 Farm lot 2,000,000 2,300,000 Big B. just got married during_the year. Consumed by so much love and affection, Agreement on the property relationship was set aside. The following records were also disclosed by the surviving spouse: Funeral expenses 170,000 Unpaid mortgage on the family home (P800,000 at the time of acquisition) 300,000 Medical expenses 200,000 33. How much is the vanishing deduction? a. P953,100 c. P582,450 b. P1,164,990 d. P476,550 34. How much is the gross estate? a. P4,000,000 c. 3,200,000 b. 23,800,000 d. P4,600,000 35. How much is the estate tax payable? a. 797,414 c. P25,414 b. PL,414 d. zero Page 12 of 25 Www.prte.com.ph a TAX.OpenistPB1016Taxation SETA 36. BF. 38. 39. Which of the following is a donation to stranger for donor's tax purposes? a. Gift to an ancestor b. Gift to a lineal descendant c. Donation to a nephew d. Donation to a sister company Mac has a 1-hectare property in Basilan. Since the location of the land is known to be the area of operation by the Abu Sayaff group, its value is only 1.00. He donated the said property to Abu through a deed of donation written in banana leaves. What is the status of the donation? a. Valid c. Voidable b. Void d. Unenforceable Cito Yu has a building located in Shorthorn Quezon City currently leased to various tenants. Since he is old already and wants to retire from active business, he sold the same to Janjan, his son, for 20 million pesos. The value of the building at the time of sale is 40 million pesos. Which of the following statements is correct? a. The sale is for sufficient consideration b. The sale is for insufficient consideration subject to donor’s tax c. The sale is for insufficient consideration but exempt from donor's tax since the object is a real property d. The sale is subject to capital gains tax and donor's tax Mr. Adelantado donated to his son a community property However, only Mr. Adelantado signed the deed of donation For donor's tax purposes, how many donations were made? a. One c. Four b. Two d. none Page 13 of 25 wwew.prtc.com.ph a TAX.OpenistPB1016Taxation SETA 40. Mr. & Mrs. Smith (American citizens residing in the US) made the following donations on April 18, 2014 to their only son Black Smith on account of his marriage last April 19, 2013: EMv Condominium in Tagaytay (Zonal value is 6M) PS,000,000 Subaru car in the Phils. (mortgaged for 1M, assumed by Black) 3,000,000 Shares of stock in Subaru Cars Inc. (Foreign Corp.), 80% of.the business is located in the Phiis. 2,000,000 They also transferred the following properties: Selling FMV Price Condominium in Fort Bonifacio 5,000,000 6,000,000 House and Lot in New York 10,000,000 15,000,000 Porsche sports car in Fort Bonifacio 3,000,000 5,000,000 How much is the Net Gift of Mr. Smith? a. ?5,490,000 c. 5,500,000 b. 10,990,000 d. P11,000,000 41. The Republic of Korea, as an act of goodwill, does not impose business taxes to Philippine carriers. Korean Air is operating in the Philippines having two flights a week. If you were engaged by Korean air as its tax consultant and asked you whether it is liable to percentage tax, which of the following will be your advise? a. Korean Air is liable to percentage tax based on gross receipts from passengers, goods, cargoes and mails. b. Korean Air is liable to percentage tax based on gross receipts from passengers only. Page 14 of 25 www .prte.com.ph TAX. OpenistPB1016Taxation SETA c. Korean Air is liable to percentage tax based on gross receipts from goods, cargoes and mails only. d. Korean air is not liable to percentage based on the principle of reciprocity. #2. Tubigan ni Juan Inc. is authorized to engaged in the business of a water utility pursuant to a franchise duly issued by the Government. Its gross receipts of the preceding year exceeded the 10 million pesos’ threshold. What business tax will apply to Tubigan ni Juan Inc. in the present year? a. Value-added tax b. Percentage tax c. Value-added tax or percentage tax at the option of Tubigan ni Juan Inc. d. Value-added tax or percentage tax at the option of the Bureau of Internal Revenue (BIR) 43. Philippine Bank of Communications has the following records of its trading transactions: January 100,000 February (150,000) March 100,000 April 80,000 May (50,000) June 90,000 How much trading gain subject to percentage tax should be reported by the Bank for the month of June? a. P170,000 c. P70,000 b. 90,000 d. P40,000 i50f25 ~~ www.prtc.com.ph a ~~ TAX. OpenistPBi016Taxation SETA 44 s a 46. A purely cooperative company doing life insurance business is subject to what kind of business tax? a. Value-added tax b. Percentage tax c. Value-added tax or percentage tax depending on the gross receipts for the year d. Exempt from Value-added tax and Percentage tax Manny Pacquiao fought Floyd Mayweather Jr. in Legazpi City, Philippines for the vacant World Boxing Council Welterweight Title. The showdown was titled Lindol sa Bicol wherein Manny sent Floyd to the canvass on the 12™ round, the latter's first defeat in his entire career. The fight was promoted by Top Rank Promotions, 60% owned by Bob Arum and other americans, which is 40% owned by Manny Pacquiao. The event generated the following staggering revenues: Admission Fees 10,000,000 Pay per view 100,000,000 How much percentage tax is due on the above revenues? a. P11,000,000 c. P1,000,000 b. P10,000,000 d. zero If a radio and/or television broadcasting company who is not mandatorily required to register under the VAT system chose to be a VAT taxpayer, its choice is: a. Revocable after 2 years b. Revocable after 3 years c. Revocable after 5 years d. Irrevocable Page 16 of 25 veww.prtc.com.ph 3 _‘TAX.OpenistPBi016Taxation SETA 47. Which of the following is not subject to value-added tax? a. A resident citizen who performs services in the Philippines, the performance of services is not regular. b. A non-stock, non-profit private organization engaged in trade or business. c. A government owned or controlled corporation engaged in trade or business d. A non-resident person who performs services in the Philippines, the performance of services is not regular, 48.Rommel is an operator of taxi cabs. During a particular month, he purchased from Mahindra, a VAT-registered car dealer, 10 sedan type units for a total selling price of 5 million pesos. The estimated useful life of each vehicle is four (4) years. How much will be the amount due from Rommel? a. ?5,600,000 c. P5,000,000 b. 5,150,000 d. P4,480,000 49. Based on the preceding number, how much input tax can be claimed by Rommel? ~ a. 600,000 c. P12,500 b. P150,000 d. zero 50. Rey Ocampo is a well known author in Financial Accounting and Auditing Problems. His revised book in Financial Accounting contained a one-page advertisement promoting PRTC as one of the leading review centers in the country. What will be the tax treatment of the sale of books for VAT Purposes? a. Subject to 12% VAT Subject to 0% VAT b c. Exempt from VAT d. Exempt from VAT but subject to percentage tax. Page 7025 wawrwaprte.com.ph a “TAX. OpenistPB1016Taxation 51. Which of the following is not considered an export sale? a. Sale of goods, supplies, equipment and fuel to persons engaged in international shipping or international air transport operations. . Sale of gold to Bangko Sentral ng Pilipinas. c. Sale of raw materials or packaging materials to an export oriented enterprise whose export sales is at least seventy percent (70%) of the total annual production. d. Sale of raw materials or packaging materials to a non- resident buyer for delivery to a local export-oriented enterprise to be used in manufacturing, processing, packing or repacking in the Philippines of the said buyer’s goods. 52. In a lease contract, advance payments may be: “I. Aloan to the lessor from the lessee; IL. An option money for the property; III. A security deposit to insure the faithful performance of certain obligations of the lessee to the lessor; or IV. Prepaid rental. Which of the above enumerated items will be subject to_ value-added tax upon receipt by the lessor? oe a. II, Il and IV only b. ILand IV only c. Hl and IV only d. Wonly t 53. An importer of flowers from abroad: a. Is liable for VAT, if it registers as a VAT person; b. Is exempt from VAT, because the goods are treated as agricultural products; Page 18 of 25 www.prtc.com.ph : d TAX.OpentstPB1016Taxation SETA c. Is exempt from VAT, provided that his total importation of flowers does not exceed ?1,919,500; d. Is liable for VAT, despite the fact that it did not register as a VAT person and. his total annual sales of flowers do not exceed F1,919,500. 54.A resident Filipino citizen (not a dealer in securities) sold shares of stocks of a domestic corporation that are listed and traded in the Philippine Stock Exchange. a. The sale is exempt from income tax but subject to the Vz of 1% stock transaction tax; b. The sale is subject to income tax cornputed at the graduated income tax rates of 5% to 32% on net taxable income; c. The sale is subject to the stock transaction tax and income tax; d. The sale is both exempt from the stock transaction tax and income tax. J Pp A taxpayer decided to cancel its vat-registration at the time when it has unused input tax. What is the available remedy? a. Apply for the issuance of tax credit certificate or refund within two (2) years from the date of cancellation of VAT registration, at the option of the taxpayer. b. Apply for issuance of tax credit certificate within two (2) years from the date of cancellation of VAT registration, however, he shall only be entitled for refund if he has no internal revenue tax liabilities. c. Apply for the issuance of tax credit certificate or refund within two (2) years from the quarter in which the unused input tax was sustained, at the option of the taxpayer. d. Apply for issuance of tax credit certificate within two (2) years from the quarter in which the unused input tax was Fageisor2s wwew.prtc.com.ph a a TAX.OpenistPBi016—Taxation SETA sustained, however, he shall be entitled for refund only if he has no internal revenue tax liabilities. 56. Lola Trining brought her granddaughter to Jollibee for a treat. “Her granddaughter requested that they both order kiddie meals so that the latter will have two (2) new toys since each meal have a free one. The price of each meal is F120, net of VAT. How much is the amount due from Lola Trining? ‘a. P268.80 c. 7230.40 b. 7240.00 d. P192.00 3) Sugar Inc. is a trader of sugar. It has the following data: Sales: Local sales of refined sugar to private entities ® 3,000,000 Local sales of refined sugar to Government 1,000,000 Export sales of refined sugar 1,000,000 Local sales of muscovado 1,000,000 Purchases common to all activities: Purchases of sugar cane 3,000,000 Purchases packaging materials VAT suppliers 500,000 Purchases of capital goods, useful life is 6 years 1,500,000 57. How much is the output tax? a. £720,000 ~ c. 2480,000 b. P600,000 d. P360,000 58. How much is the creditable input tax? a. ?222,500 c. P183,000 b. P192,000 d. P152,500 Page 200725 ~—~—~—SCwww.prtc.com.ph TAX. OpenistPB1016Taxation 59. How much is the final withholding VAT? a. ?70,000 b. 50,0007 d. zero 60. BOBA Residences Inc. is a domestic corporation engaged in real estate business. It has the following data for the last quarter of 2015: Installment Sale of a Townhouse: Realized gross profit (GPR is 30%) Gross selling price Zonal value Deferred Sale of a Parking Lot: Gross selling price Fair market value Rental income Rent receivable, beg. Rent receivable, end Importation of materials used in the construction How much is the VAT due or payab!e? c. 20,000 SETA 300,000 4,000,000 5,000,000 1,000,000 1,500,000 800,000 300,000 100,000 2,625,000 a. P285,000 c. P261,000 b. P135,000 d. 111,000 St. A.M. Yu & Associates, a VAT-registered Firm, sold its office building together with the lot thereon to Cabarles, Sia, Yu & Associates, another VAT-registered Firm, for 60million pesos. Of the total selling price, 40 million pesos pertains to the building. The useful life of the building is estimated to be 30 years. Assuming the buyer paid in lump sum, how much output tax should be paid by the seller in the month of sale? a. ?7,200,000 c. P2,480,000 b. 4,800,000 d. P2,400,000 Page 21 of 25 TAX.OpentistPB1016 |Taxation SETA 62. 64. Based on the preceding number, how much input tax can be claimed by the buyer in the month of purchase? a. ®7,200,000 c. 22,480,000 b. P4,800,000 d, P2,400,000 . Rica Cosmetics Inc. started its business paying percentage tax. Later on as its business improves, it registered under the VAT system. The following information were taken from its records on the last month as a non-VAT taxpayer: Inventory beginning: Raw material 250,000 Work in process 540,000 Finished goods 460,000 Supplies (20,000 pertains to fresh fruits given for free during lunchtime) 70,000 Property, plant and equipment 5,000,000 Intangible Assets 1,000,000 Input tax: Inventory beginning 25,200 Property, plant and equipment 90,000 Intangible assets 34,800 How much is the transitional input tax? a. 150,000 c. P26,400 b. P60,000 d. P26,000 Pilipinas Shell sold fuel to an international shipping carrier whose voyage is from a port in the Philippines directly to a foreign port without docking or stopping at any other port in the Philippines. What is the treatment of the transaction for VAT purposes? a. Exempt b. Zero-rated transaction c. Subject to 12% VAT d. Either “b” or “c” Page 22 of 25 ‘www. pric.com.ph 7 TAX.OpenistPB1016 |Taxation SETA 65. 67. When is the deadline for manual filing of the quarterly VAT return? a. Ten (10) days from the end of the quarter b. Twenty (20) days from the end of the quarter c. Twenty-five (25) days from the end of the quarter d. Thirty (30) days from the end of the quarter . When a VAT-registered person retires from business, all goods on hand, whether capital goods, stock in trade, supplies or materials as of the date of such retirement shall be considered sold. The value-added tax shall be computed based on: a. Cost b. Fair market value c. Cost or fair market value whichever is higher d. Cost or fair market value whichever is lower Abel Corporation is a merchandising concern and has an inventory of goods for sale amounting to Php 1 million. Nel Corporation, a real estate developer, exchanged its real estate properties for the shares of stocks of Abel Corporation resulting to the acquisition of corporate control. The inventory of goods owned by Abel Corporation (Php 1 million worth) is: a. Subject to 12% VAT b. Subject to 0% VAT c. Exempt from VAT d. Subject to percentage tax Page 23 of 25 Www.prt.comph a TAX. OpenistPB1016—2. Taxation SETA *k 68. Based on the preceding number, the exchange of real estate properties held for sale or for lease, for shares of stocks is: a. Subject to 12% VAT b. Subject to 0% VAT c. Exempt from VAT d. Subject to percentage tax . Casa Leticia, VAT registered, is engaged in hotel business. It started operation in November 20151 and had the following selected information from its records for the month: Service Revenue 500,000 Unearned Revenue 20,000 Purchases from VAT registered entities: Goods 150,000 Services (20% still unpaid) 200,000 Importation of generator with useful life of 7 years: Dutiable value 1,200,000 Custom’s duties 100,000 Excise tax 50,000 Other charges within the Bureau of Customs 50,000 How much VAT did the Company remit to the BIR? a. P25,200 c. P17,600 b. 22,400 d. zero Vikings Manpower Agency has the following gross receipts \ from various clientele in a particular month broken down as follows (net of VAT) Salaries of personnel 400,000 Agency fee 100,000 How much is the output tax? a. P60,000 c. 248,000 b. 12,000 d. nil Page 24 of 25 www.prtc.com.ph | TAX.OpenistPB1016Taxation SETA But not over |The taxshallbe] Plus | Of the __| excess over | | "44,000 __204,000_ 404,000 1,004,000 Of the 7 be | Excess Over —___| ~P 200,000 Exempt 7 P 200,000 500,000, Oo | 5% 500,000 2,000,000 P_15,000 2,000,000 5,000,000 135,000 5,000,000 10,000,000 _ 465,000. 10,000,000 s lL 1,215,000 But Not Over 500,000. 20% _| 10,000,000_ - end of examination - Please submit your answer sheet Keep the questionnaire. Thank you for taking the PRTC Open Pre-Board Examinations! © Page 25 of 25 won. prtc.com.ph | TAX. OpenistPB1016PRTC Managed by Excel Professional Services, Inc. OPEN FIRST PREBOARD (July 30 and 31, 2016) LETTER ANSWERS. TAXATION BUSINESS LAW Nos, 36 37 Nos. Nos. SL Nos. dD B 52 38 39 40 41 53 54 55 56 57 B 42 43 dD 44 45 10 11 60 61 10 11 12 13 14 15 16 12 18 19 20 21 46 47 D 12 13 62 48 49. 63 14 15 16 17 18 19 20 at 64 65 D 66 67 $2 53 54 55 56 57 68 69 70 71 22 23 72 73 74 75 22 23 58 So) 60 61 0 24 25 24 25 26 27 28 29 26 27 28 29 76 77 62 63 64 Dd 78 79 80 30 31 dD 30 31 66 67 d 81 BORD 32 82 32 68 os 34 83 33 34 35 69 84 70 86 87 36 37 38 39 40 41 BORD Cc 88 89 90 91 pt Dd D 92 42 93 94 43 B 44 45 D 95. 96 97 46 47 bo B 98 oF a8 49 50 100Solution 1st Preboard Taxation 31 Family Home Life insurance proceeds Donation to the City of Tacloban Claims.against an insolvent debtor Gross Estate 32 Claims against an insolvent debtor (100T x 40%) Funeral expenses Judicial expenses Donation to the City of Tacloban Total Ordinary Deductions Standard deduction Family Home Medical expenses Share of surviving spouse (Note 1) Total Deductions Note 1: Common properties Common deductions Net common properties Share of surviving spouse 33 Family home Car Farm lot Initial value Mortgage paid (800T - 3007) Initial basis Proportional deduction (2.7M/4™) x 470T) Final basis Vanishing deduction 34 Family home Car Farm lot Gross estate 35 Gross estate Funeral expenses Unpaid mortgage Vanishing deduction Share of surviving spouse Medical expenses Family home allowance (1.5M/2) Standard deduction Net taxable estate 40 Condominium in Tagaytay (6M/2) Exclusive 1,000,000.00 1,000,000.00 Exclusive 1,000,000,00 1,000,000.00 6,000,000.00 (500,000.00) 5,500,000.00 50% 2,750,000.00 1,000,000.00 200,000.00 2,000,000.00 3,200,000.00 (500,000.00) 2,700,000.00 (317,250.00) 2,382,750.00 20% 476,550.00 aces oereaneee 1,500,000.00 200,000.00 2,300,000.00 4,000,000.00 Exclusive 3,000,000.00 Common Total 5,000,000.00 5,000,000.00 900,000.00 900,000.00 e 1,000,000.00 100,000.00 100,000.00 6,000,000.00 _7,000,000.00 Common Total 40,000.00 40,000.00 200,000.00 200,000.00 260,000.00 260,000.00 = 1,000,000,.00 500,000.00 1,500,000.00 1,000,000.00 1,000,000.00 500,000.00 2,750,000.00 Community Total 4,000,000.00 4,000,000.00 (170,000.00) ~— (170,000.00) (300,000.00) (300,000.00) (476,550.00) (476,550.00) 3,053,450.00 3,053,450.00 (1,526,725.00) (200,000.00) (750,000.00) (1,000,000.00)Subaru Car (3M/2) Porsche sports car (6M-3M)/2 Gross Gift Unpaid mortgage (1M/2) Net Gift 43 January February March April May June Accumulated Net Trading Gain Declared in previous months (100T + 30T) Taxable Net trading gain, June 45 Admission fees Pay per view Percentage tax 48 Selling price VAT Amount due 56 Selling price (120 x 2) VAT (240T x 12%) Amount due 57 Local sales (3M + 1M) Output tax 58 Private: Sugar cane (3M x 4%) Packaging materials (SOOT x 12%) Capital goods (1.5M x 12% = 180T/60) Government (1M x 7%) Creditable input tax 59 Sales to government Final withholding VAT 60 Installment sales [(300T/30%) x SM/4M} Deferred sales Collection of rent (Note 1) Total Output tax Input tax (2,625,000 x 12%) VAT due or payable 1,500,000.00 1,500,000.00 6,000,000.00 (500,000.00) 5,500,000.00 100,000.00 (150,000.00) 100,000.00 80,000.00 (50,000.00) 90,000.00 170,000.00 (130,000.00) 40,000.00 10,000,000.00 100,000,000.00 110,000,000.00 10% 11,000,000.00 5,000,000.00 600,000.00 5,600,000.00 —— 240,00 28.80 268.80 4,000,000.00 12% 480,000.00 120,000.00 60,000.00 3,000.00 183,000.00 2/3 122,000.00 70,000.00 192,000.00 1,000,000.00 5% 50,000.00 1,250,000.00 1,500,000.00 1,000,000.00. 3,750,000,00 12% 450,000.00 (315,000.00) 135,000.00Note 1: Rent receivable, beg. Rental income Total Rent receivable, end Collection 61 Selling price Output tax 62 Land (20M x 12%) Building {(40M x 12%) / 60] Creditable input tax 63 Raw materials Work in process Finished goods Supplies (70T - 207) Actual Transitional input tax 69 Service Revenue Unearned revenue Output tax Input tax: Local: Goods (150T x 12%) Services (200T x 80% x 12%) Importation: Dutiable value Custom's duties Excise tax Other charges w/in BOC VAT Payable 70 Salaries personnel Agency fee Total Output tax 300,000.00 800,000.00 1,100,000.00 (100,000.00) 60,000,000.00 12% 7,200,000.00 2,400,000,00 80,000.00 2,480,000.00 250,000.00 540,000.00 460,000.00 50,000.00 1,300,000.00 2% 26,000.00 25,200.00 26,000.00 1,200,000.00 100,000.00. 50,000.00 50,000.00 1,400,000.00 12% 168,000.00 (2,800.00) 60.00 400,000.00 ___100,000.00_ 500,000.00 12% 60,000.00 500,000.00 20,000.00 520,000.00 12% 62,400.00 (18,000.00) (19,200.00)