Principles of Taxation & its Remedies

1. Basis of Taxation 8. Although the power of taxation is basically legislative in character, it is NOT the function of
A. Benefit-protection theory C. Necessity theory Congress to
B. Lifeblood theory D. Reciprocal theory A. Identify who should collect the tax
B. Collect the tax levied under the law
2. Which theory in taxation states that without taxes, a government would be paralyzed for lack C. Fix with certainty the amount of taxes
of power to activate and operate it, resulting in its destruction? D. Determine who should be subject to the tax
A. Lifeblood theory C. Sumptuary theory
B. Power to destroy theory D. Symbiotic theory 9. The power to tax is exclusively lodged with the legislature but the following exceptions are
provided by the constitution, except
3. This is not a purpose of taxation A. Power of local government units to levy taxes, fees and charges
A To reduce inequalities of wealth B. Delegation to private entities the levy and enforcement of tax laws
B. To expropriate property for the promotion of the general welfare C. Delegation to administrative agencies of the implementation and collection of taxes
C. To encourage the growth of home industries through the proper use of tax incentives D. Authority of the President to fix tariff rates, import and export quotas, tonnage and
D. As protective tariff on imported goods to protect local producers against foreign wharfage dues and other duties and imposts
competition
10. As regards a revenue bill, which of the following is not correct?
4. A scope of the power of taxation which means that taxation covers many things A. The President may recommend a revenue bill to Congress
A. Comprehensive C. Supreme B. The House of Representatives may propose amendments if the bill originates from the
B. Plenary D. Unlimited Senate
C. The Senate may propose amendments if the bill originates from the House of
5. Taxation, just like other fields of human learning is dynamic, not static, keeps on changing; so Representatives
we must all study, otherwise we might be facing the battles of today with the antiquated D. A House of Representatives version and a Senate version approved separately and then
weapons of yesterday. consolidated with both houses approving the consolidated version
Regardless of economic and business conditions, a sound tax system should provide for the
collection of sufficient revenue to run the government. 11. This rule is not applicable on the construction of tax laws
A. B. C. D. A. If the law is repealed taxes assessed before repeal of the law may no longer be collected
Statement 1 True True False False B. Provisions intended for the security of the taxpayer or to insure equality or uniformity of
Statement 2 True False True False taxation are mandatory.
C. Where the intent to tax is clear and the taxpayer claims he is exempt from the tax
6. Any amount subsequently received on account of a bad debt previously charged off and obligation, the tax shall be construed against the taxpayer
allowed as a deduction from gross income for prior years must be included in gross income D. If the intent of the tax is not clear as to whether the taxpayer is covered by the tax
for the taxable year in which received This is obligation, the law shall be construed against the government.
A. Destination of income test C. Equitable doctrine of tax benefit
B. End-result doctrine D. Severance theory 12. Statement 1 - The levying, imposition and collection of tax are legislative in character
Statement 2 - The aspects of taxation are shared by the legislative and executive branches
7. One of the following is the least principle of sound tax system. of the government
A. Administrative feasibility C. Fiscal adequacy A. B. C. D.
B. Economic consistency D. Theoretical justice Statement 1 True True False False
 Statement 2 True False True False B. Taxes are enforced charges and contributions.
C. Taxes are levied by the executive branch of the government.
13. The power to tax is the power to destroy. Is this always so? D. Taxes are imposed on persons and property within the territorial jurisdiction of a State.
A. No. The Supreme Court may nullify a tax law, hence, property rights are not affected.
B. No. The Executive Branch may decide not to enforce a tax law which it believes to be 19. Statement 1 - A tax is generally unlimited because it is based on the needs of the state
confiscatory. Statement 2 - One of the essential characteristics of tax is it is unlimited in amount
C. Yes. Tax laws should always be enforced because without taxes the very existence of A. B. C. D.
the State is endangered Statement 1 True True False False
D. Yes. The tax collectors should enforce a tax law even if it results to the destruction of the Statement 2 True False True False
property rights of a taxpayer.
20. Which of the following is not an internal revenue tax?
14. This is an inherent limitation on the power of taxation. A. Documentary stamp tax C. Real estate tax
A. The rule on taxation shall be uniform and equitable B. Excise tax D. Value Added tax
B. No law impairing the obligations of contracts shall be enacted
C. The tax laws cannot apply to the property of foreign governments 21. Donor's tax is a (an)
D. Charitable institutions^ churches, personages or convents appurtenants thereto, mosque A. Excise tax C. Property tax
and non-profits cemeteries and all kinds of lands, buildings and improvements actually, B. Progressive tax D. Proportional tax
directly and exclusively used for religious or charitable purposes shall be exempt from
taxation 22. Estate tax is
A. A percentage tax C. An excise tax
15. This is a constitutional limitation on the power of taxation B. A sales tax D. An income tax
A. The power of taxation cannot be delegated
B. No person shall be imprisoned for debt or non-payment of a poll tax 23. This is not an example of excise tax
C. The power of taxation is limited to the territorial jurisdiction of the taxing state A. Income tax C. Sales tax
D. Exemption of government instrumentalities and agencies through which the government B. Real property tax D. Transfer tax
exercised sovereign powers from taxation
24. Value added tax is an example of
16. One of the characteristics of a tax is that it is A. Graduated tax C. Proportional tax
A. Legislative in implementation B. Progressive tax D. Regressive tax
B. Generally unlimited in amount
C. Based on the taxpayers ability to pay 25. Will not raise money for the government
D. Superior to the non-impairment clause of the constitution A. Eminent domain C. Police power
B. License fee D. Power of taxation
17. The following are the objects of taxation, except
A. Citizens C. Intangible property 26. Similarities of police power, power of taxation and power of eminent domain, except
B. Corporations D. Municipal halls A. Sovereign powers of the government C. There is compensation
B. Superior to the non-impairment clause D. There is taking of property
18. In our jurisdiction, which of the following statements may be erroneous?
A. Taxes are pecuniary in nature 27. Taxation as distinguished from police power and eminent domain
 A. Limited to cover the cost to regulate A. Where the tax rate increases as the tax base decrease
B. May be exercised by private individuals B. Where the revenue from direct taxes is greater than indirect taxes
C. May be exercised only by the government C. Where persons who desire to avail of government services or benefits are required to
D. Generally no limit as to the amount that may be imposed pay for their cost in the form of taxes
D. Where persons who possess more in wealth or income are required to bear the cost of
28. Police power as distinguished from power of taxation government corresponding to such capacity
A. The amount collected is limited to the cost of regulation
B. The compensation received in the protection given by the state 35. An example of a tax where the concept of progressivity finds application is the
C. It exist independent of the constitution being an inherent power of the state A. Amusement tax on boxing exhibitions C. Income tax on individuals
D. It involves the taking of property of individuals affected by the exercise of the power B. Excise tax on petroleum products D. Value-added tax on certain articles

29. Money collected from taxation shall not be paid to any religious dignitary EXCEPT when 36. Which of the following is not an element of double taxation?
A. It is part of a lawmaker's pork barrel. A. Same amount C. Same year
B. It is paid by a local government unit. B. Same subject matter D. Two taxes
C. The payment is passed in audit by the CO A.
D. The religious dignitary is assigned to the Philippine Army. 37. Double taxation in its general sense means taxing the same subject twice during the same
taxing period. In this sense, double taxation
30. Tax as distinguished from license fee A. Violates substantive due process.
A. Amount imposed is limited C. For regulation purpose B. Violates the right to equal protection
B. Exercise of police power D. For revenue purposes C. Does not violate substantive due process.
D Does not violate the right to equal protection
31. The following are the characteristics of special assessment, except
A. It is levied only on land 38. The following forms of escape from taxation result to loss of revenue to the government,
B. Did not result to personal liability of the person assessed except
C. It is based solely on the benefits derived by the owners of the land A. Avoidance C. Exemption
D. It is based on the government's need of money to support its legitimate objectives B. Evasion D. Shifting

32. Which statement is wrong? 39. Which among the following concepts of taxation is the basis for the situs of income taxation?
A. Customs duty is a tax C. A tax is a demand of sovereignty A. Compensatory purpose of taxation C. Sumptuary purpose of taxation
B. A special assessment is a tax D. A toll is a demand of ownership B. Lifeblood doctrine of taxation D. Symbiotic relation in taxation

33. Tariff may generally be defined as
A. Amounts imposed on goods entering the imposing country
B. Amounts which are levied on goods leaving the imposing country
C. List of commodities with corresponding duties collectible therefrom
D. Amounts, imposed on goods passing through the imposing country, but destined
ultimately to another country
34. A progressive system of taxation means a tax structure
40. Due to an uncertainty whether or not a new tax law is applicable to printing companies, ABC
Printers submitted a legal query to the BIR on that issue. The BIR issued a ruling that printing
companies are not covered by the new law. Relying on this ruling, ABC Printers did not pay
the said tax. Subsequently however, the BIR reversed the ruling and issued a new one
stating that the tax covers printing companies. Could the BIR assess ABC Printers for back
taxes corresponding to the years before the new ruling?
A. No, the B)R is not allowed to reverse its ruling
B. Yes, because taxes are the lifeblood of the government
 C. Yes, because taxation is the rule and exemption is the exception 48. Using the preceding number, but the optional Standard deduction took effect
D. No, reversal of a ruling shall not be given a retroactive application if it will be prejudicial A. January 1, 2008 C. July 6, 2008
to the taxpayer B. July 1, 2008 D. January 1, 2009

41. Congress passed a law imposing taxes on income earned out of a particular activity that was 49. Incidence of taxation means
not previously taxed. The law, however, taxed incomes already earned within the fiscal year A. Imposition of tax C. Refunds of tax
when the law took effect. Is the law valid? B. Payment of tax D. Shifting of tax
A. Yes, since tax laws are the lifeblood of the nation.
B. No, because laws are intended to be prospective, not retroactive, 50. Elorde a famous boxer intends to convert his boxing gymnasium into a cockpit arena. Elorde
C. Yes, tax laws are an exception; they can be given retroactive effect. summons you to give him advise to go over his tax exposures, as a certified public
D. No, the law is arbitrary in that it taxes income that has already been spent. accountant you will recommend to Mr. Elorde which following reference/documents?
A. Local Government Code C. Revenue Regulations of me NIRC
42. Which of the following has no power to impose taxes? B. National Internal Revenue Code D. Tariff and Customs Code
A. Barangays C. President
B. Cities D. Provinces 51. Your client, Mr Aegis, is a local trader inquired what laws will have most relevance in his daily
transactions. Having several laws to take into consideration which laws do you recommend
43. Which of the following are NOT usually imposed when there is a tax amnesty? for Mr. Aegis to read?
A. Civil and criminal penalties A. Local Government Code.
B. Civil and administrative penalties B. Tariff and Customs Code.
C. Criminal and administrative penalties C. National Internal Revenue Code.
D. Civil, criminal, and administrative penalties D. Implementing Rules and Regulation of NIRC.

National Internal Revenue Code 52. The actual effort exerted by the government to effect the exaction of what is due from the
44. The Tax Reform Act of 1997 is taxpayer is known as
A CA 466 C. RA 9337 A. Assessment C. Levy
B. RA 8424 D. RA 9504 B Collection D. Payment

45. Using the preceding number, it took effect on 53. Which of the following statements is not correct?
A. January 1, 1997 C. January 1,1998 A. Taxes are neither political nor penal in nature
B. December 11,1997 D. July 6, 2008 B. The application of a constitutional limitation may disregard an inherent limitation
C. The power to collect taxes is not lost even if foreign invaders are in control of our country
46. The Tax Reform Act of 1997 was partly amended by (latest) D. Taxes should be prospective and should not be given retroactive effect because they are
A. RA 7506 C. RA 9337 burdens
B. RA 8424 D. RA 9504
Powers & Authority of the CIR under Section 4 to 7, Title 1 of the Tax Code
47. Using the preceding number, it took effect on 54. The powers and duties of the BIR include the following, except
A. January 1,2008 C. July 6, 2008 A. The assessment and collection of all national and local revenue taxes
B. July 1, 2008 D. January 1, 2009 B. The execution of judgment in all cases decided in its favor by the Court of Appeals and
ordinary courts
 C. To enforce all forfeitures, penalties and fines in connection with the collection of national II. The tax or any portion thereof appears to be unjustly or excessively assessed.
internal revenue taxes III. The financial position of the taxpayer demonstrates a clear inability to pay the assessed
D. To effect and administer the police and supervisory powers conferred by the Tax Code tax
and other related laws A. I and II C. II and III
B. l and III D. I, II and III
55. The power to interpret the provisions of the Tax Code and other tax laws shall be under the
exclusive and original jurisdiction of the 61. The Commissioner of Internal Revenue may abate or cancel the tax liability when
A. Commissioner of Internal Revenue C. Regional Trial Court I. The administration and collection costs involved do not justify the collection of the
B. Court of Tax Appeals D. Secretary of Finance amount due
II. A reasonable doubt as to the validity of the claim against the taxpayer exists
56. The power to interpret the provisions of the Tax Code and other tax laws is subject to review III. The tax or any portion thereof appears to be unjustly or excessively assessed
by IV. The financial position of the taxpayer demonstrates a clear inability to pay the assessed
A. Commissioner of Internal Revenue C. Regional Trial Court tax.
B. Court of Tax Appeals D. Secretary of Finance A. Only I C. I and lll
B. I and II D I and TV
57. Who makes revenue regulations?
A. Secretary of Finance Tax Remedies
B. Board of Accountancy Remedies of the government
C. House Representatives 62. The RATE program of the Bureau of Internal Revenue is to eradicate?
D. Commissioners of Bureau of Internal Revenue A. Evaders. C. Underground economy.
B. Smugglers. D. Unregistered taxpayers.
Authority of the Commissioner to Compromise Tax Payments, Abate or Cancel Tax Liability
& Refund or Credit Taxes 63. The Board of Directors of RAPC Corporation received a subpoena from the Department of
58. The power to decide disputed assessments, refunds of internal revenue taxes, fees or other Justice involving tax fraud. The Chairman of the Board summon you to attend the regular
charges, penalties imposed in relation thereto, or other matters arising under the Tax Code or Board of Directors meeting to address whose signature must appear before a withholding tax
other laws or provisions thereof administered by the BIR is vested in the returns and consequently be held imprisoned in case of fraud?
A. Commissioner of Internal Revenue C. Regional Trial Court A. President and Treasurer.
B. Court of Tax Appeals D. Secretary of Finance B. Internal Auditor and Comptroller.
C. Treasurer and Corporate Secretary.
59. The power to decide disputed assessments, refunds of internal revenue taxes, fees or other D. Corporate Secretary and Internal Auditor.
charges, penalties imposed in relation thereto, or other matters arising under the Tax Code or
other laws or provisions thereof administered by the BIR is subject to the exclusive appellate 64. The official action of an officer authorized by law in ascertaining the amount of tax due under
jurisdiction of the the law from a taxpayer is
A. Commissioner of Internal Revenue C. Regional Trial Court A. Assessment C. Deficiency
B. Court of Tax Appeals D. Secretary of Finance B. Delinquency D. Distraint

60. The Commissioner of Internal Revenue may compromise the payment of any internal 65. The amount still due and collectible from a taxpayer upon audit or investigation
revenue tax when A. Assessment C. Delinquency
I. A reasonable doubt as to the validity of the claim against the taxpayer exists B. Deficiency D. Distraint

66. The failure of the taxpayer to pay tax due on the date fixed by law or indicated in the
assessment notice or letter of demand
A. Assessment C. Delinquency
B. Deficiency D. Distraint
67. The period of limitation for assessment of taxes is not suspended
A. There is failure to file the required return
B. The taxpayer and the CIR agreed on the extension of the period
C. The return filed is fraudulent and made with the intent to avoid the tax.
D. The return filed contained inaccuracies due to omissions and mistakes
68. What should the BIR do when the prescriptive period for the assessment of a tax deficiency is
about to prescribe but the taxpayer has not yet complied with the BIR requirements for the
production of books of accounts and other records to substantiate the claimed deductions,
exemptions or credits?
A. Call the taxpayer to a conference to explain the delay.
B. Issue a jeopardy assessment coupled with a letter of demand.
C. Immediately conduct an investigation of the taxpayer's activities.
D. Issue a notice of constructive distraint to protect government interest.
69. Jeopardy assessment is a valid ground to compromise a tax liability
A. Because of doubt as to the validity of the assessment.
B. Involving deficiency income taxes only, but not for other taxes.
C. Only when there is an approval of the National Evaluation Board.
D. If the compromise amount does not exceed 10% of the basic tax.
70. The date the notice of informal conference was received by the taxpayer was September 4,
2011. The last day for the taxpayer to respond is
A. September 19, 2011 C. October 19, 2011
B. October 4, 2011 D. September 4, 2012
71. The last day for the taxpayer to respond if the date of pre-assessment notice was received on
June 14, 2011 is
A. June 29, 2011 C. July 29, 2011
B, July 14, 2011 D. June 14, 2012
72. Which among the following circumstances negates the prima facie presumption of
correctness of a BIR assessment?
A. The BIR assessment was seasonably protested within 30 days from receipt.
B. No preliminary assessment notice was issued prior to the assessment notice.
C. Proof that the assessment is utterly without foundation, arbitrary, and capricious.
D. The BIR did not include a formal letter of demand to pay the alleged deficiency.
73. On July 31, 2015, Esperanza received a preliminary assessment notice from the BIR
demanding that she pays P180,000.00 deficiency income taxes on her 2013 income. How
many days from July 31, 2015 should Esperanza respond to the notice?
A 15 days C. 60 days
B. 30 days D. 180 days
74. There is prima facie evidence of a false or fraudulent return where the
A. Tax return was filed beyond the reglementary period.
B. Taxpayer changed his addess without notifying ihe BIR.
C. Deductions claimed exceed by 30% the actual deductions.
D. Tax return was amended after a notice of assessment was issued.
75. Ka Tato owns a parcel of land in San Jose, Batangas declared for real property taxation, as
agricultural. In 1990, he used the land for a poultry feed processing plant but continued to
declare the property as agricultural. In March 2011, the local tax assessor discovered Ka
Tato's change of use of his land and informed the local treasurer who demanded payment of
deficiency real property taxes from 1990 to 2011. Has the action prescribed?
A. No, the deficiency taxes may be collected within five years from when they fell due.
B. Yes. More than 5 years had lapsed for the collection of the deficiency taxes for the
period 1990 up to 2005.
C. No. The deficiency taxes for the period 1990 up to 2011 may still be collected within 10
years from March 2011.
D. Yes. More than 10 years had lapsed for the period 1990 up to 2000, hence the right to
collect the deficiency taxes has prescribed.
76. No action shall be taken by the BIR on the taxpayer's disputed issues until the taxpayer has
paid the deficiency taxes
A. Attributable to the undisputed issues in the assessment notice.
B. When the assessment was issued against a false and fraudulent return.
C. If there was a failure to pay the deficiency tax within 60 days from BIR demand.
D. If the Regional Trial Court issues a writ of preliminary injunction to enjoin the BIR.
77. On March 30, 2014 Miguel Foods, Inc. received a notice of assessment and a letter of
demand on its April 15, 2011 final adjustment return from the BIR. Miguel Foods then filed a
 request for reinvestigation together with the requisite supporting documents on April 25,
2014. On June 2, 2014, the BIR issued a final assessment reducing the amount of the tax 83. The ITR of the individual taxpayer for the calendar year 2008 was filed on April 15, 2009, the
demanded. Since Miguel Foods was satisfied with the reduction, it did not do anything BIR discovered that fraud was committed by the taxpayer, so an assessment for deficiency
anymore. On April 15, 2019 the BIR garnished the corporation's bank deposits to answer for tax was issued on July 15, 2016. The last day for the BIR to collect by judicial or summary
the tax liability. Was the BIR action proper? proceedings is
A. No. The taxpayer did not apply for a compromise. A. July 15, 2019
B. Yes. The BIR has 5 years from the filing of the protest within which to collect. B. July 15, 2021
C. Yes. The BIR has 5 years from the issuance of the final assessment within which to C. July 15, 2026
collect. D. No more because there is prescription on the right of the BIR to make the assessment
D. No. Without the taxpayer's prior authority, the BIR action violated the Bank Deposit
Secrecy Law. 84. When a BIR decision affirming an assessment is appealed to the CTA, the BIR's power to
garnish the taxpayer's bank deposits
78. The ITR of the individual taxpayer for the calendar year 2008 was filed on April 1, 2009, the A. Is suspended to await the finality of such decision.
last day for the BIR to assess is B. Is not suspended because only final decisions of the BIR are subject to appeal.
A. April 1, 2012 C. April 1, 2014 C. Is suspended given that the CTA can revise BIR decisions when prejudicial to the
B. April 15, 2012 D April 15, 2014 taxpayer.
D. Is not suspended since the continued existence of government depends on tax
79. The ITR of the individual taxpayer for the calendar year 2008 was filed on April 1, 2009, the revenues.
last day for the BIR to collect without prior assessment is
A. April 1, 2012 C. April 1, 2014 85. The following are the requisites for the exercise of the remedy of distraint and levy, except
B. April 15, 2012 D. April 15, 2014 A. The tax due should be at least P1,000
B. The period to collect the tax has not yet prescribed
80. The ITR of the individual taxpayer for the calendar year 2008 was filed on April 30, 2009, the C. The taxpayer failed to pay the tax at the time required
last day for the BIR to assess is D. The taxpayer must be delinquent in the payment of tax
A. April 15, 2012 C. April 15, 2014
B. April 30, 2012 D. April 30, 2014 86. The BIR could not avail itself of the remedy of levy and distraint to implement, through
collection, an assessment that has become final, executory, and demandable where
81. The ITR of the individual taxpayer for the calendar year 2008 was filed on April 30, 2009, the A. The subject of the assessment is an income tax.
last day for the BIR to collect without prior assessment is B. The amount of the tax involved does not exceed P100.00.
A. April 15, 2012 C. April 15, 2014 C. The taxpayer is an individual compensation income earner.
B. April 30, 2012 D. April 30, 2014 D. The corporate taxpayer has no other uncollected tax liability,

82. The ITR of the individual taxpayer for the calendar year 2008 was filed on July 15, 2009. 87. The seizure by the government of real property to enforce the payment of taxes to be
Assessment was made by the BIR on June 15, 2012. The last day for the BIR to collect by followed by its public sale if the taxes are not voluntarily paid
judicial or summary proceedings is A. Assessment C. Distraint
A. July 15, 2014 B. Delinquency D. Levy
B. June 15, 2015
C. June 15, 2017 88. The seizure by the government of personal property to enforce the payment of taxes to be
D. No more because there is prescription on the part of the BIR to make the assessment followed by its public sale if the taxes are not voluntarily paid
 A. Assessment C. Distraint
B. Delinquency D. Levy
89. The revenue district office can carry out proceedings of a distraint of personal property when
the tax liability is not more than
A. P100 C. P100,000
B. P1,000 D. P1,000,000
90. Which of the following statements is not correct?
A. If with prior assessment, collection of the tax can be by judicial proceedings
B. If with prior assessment, collection of the tax can be by summary proceedings
C. If without prior assessment, collection of the tax can be by judicial proceedings
D. If without prior assessment, collection of the tax can be by summary proceedings
Remedies of the taxpayer
91. The following reasons maybe given by a taxpayer in refusing to pay his tax liability. Which is
not acceptable for legally refusing to pay the tax?
A. That there is no territorial jurisdiction
B. That he will derive no benefit from the tax
C. That he has been deprived of due process of law
D. That the prescript on period for the collection of tax has lapsed
92. Mia, a compensation income earner filed her income tax return for the taxable year 2012 on
March 30, 2013. On May 20, 2016, Mia received an assessment notice and letter of demand
covering the taxable year 2012 but the postmark on the envelope shows April 10, 2016. Her
return is not a false and fraudulent return. Can Mia raise the defense of prescription?
A. No. The prescriptive period started to run on March 30, 2013, hence, the 3year period
expired on April 10, 2016.
B. Yes. Since the 3-year prescriptive period started to run on March 30, 2013, it already
expired by May 20, 2016.
C. No. The 3 year prescriptive period started to run on April 15, 2013, hence, it has not yet
expired on April 10, 2016.
D. Yes. The 3 year prescriptive period started to run on April 15, 2013, hence, it had already
expired by May 20, 2016.
93. A filed his income tax return for 2009 on April 15, 2010 and paid the tax of P 20,000. Upon
audit by the BIR an assessment notice was issued on May 15, 2012 requiring him to pay a
deficiency tax of P40,000 not later than July 15, 2012. A may
A. Go to the CTA to appeal the assessment made by the BUR
B. Request for an extension of time to pay the deficiency income tax.
C. Go to the Supreme Court if the issues involved are pure questions of law
D. Ignore the assessment as the date of collection is beyond 3 years as the taxable year
covers 2009.
94. The taxpayer reasonably filed his protest together with all the supporting documents. It is
already July 31, 2015, or 180 days from submission of the protest but the BIR Commissioner
has not yet decided his protest. Desirous of an early resolution of his protested assessment,
the taxpayer should file his appeal to the Court of Tax Appeals not later than
A. August 1, 2015 C. August 30, 2015
B. August 15, 2015 D. August 31, 2015
95. The last day for the taxpayer to file a protest with the CIR, if the formal letter of demand and
assessment was received by the taxpayer on November 10. 2011 is
A. December 5, 2011 C. December 25, 2011
B. December 10, 2011 D January 10, 2012
96. What is the effect on the tax liability of a taxpayer who does not protest an assessment for
deficiency taxes?
A. The taxpayer's liability remains suspended for 180 days from the expiration of the period
to protest.
B. The BIR could already enforce the collection of the taxpayer's liability if it could secure
authority from the CTA.
C. The taxpayer's liability becomes fixed and subject to collection as the assessment
becomes final and collectible.
D. The taxpayer may appeal his liability to the CTA since the assessment is a final decision
of the Commissioner on the matter
97. As a general rule, within what period must a taxpayer elevate to the Court of Tax Appeals a
denial of his application for refund of income tax overpayment?
A. Within 2 years from payment of the income taxes sought to be refunded.
B. Within 30 days from receipt of the denial or within two years from payment.
C. Within 30 days from receipt of the Commissioner's denial of his application for refund.
D. Within 30 days from receipt of the denial which must not exceed 2 years from payment of
income tax.
98. Anion, Inc. received a notice of assessment and a letter from the BIR demanding the
payment of P3 million pesos in deficiency income taxes for the taxable year 2014. The
financial statements of the company show that it has been suffering financial reverses from
 the year 2015 up to the present. Its asset position shows that it could pay only P500,000.00
which it offered as a compromise to the BIR. Which among the following may the BIR require
to enable it to enter into a compromise with Anion, Inc. ?
A. Anion must show it has faithfully paid taxes before 2015.
B. Anion must waive its right to the secrecy of its bank deposits.
C. Anion must immediately deposit the P500,000.00 with the BIR
D. Anion must promise to pay its deficiency when financially able.
Expanded Jurisdiction of the Court of Tax Appeals (limited to jurisdiction)
99. Statement 1 - The CTA is now considered as having the same level as the CA, and shall be
composed of 1 presiding justice and 8 associate justices-
Statement 2 - The CTA may sit in en banc or in 3 divisions composed of three justices for
each division.
A. B. C. D.
Statement 1 True True False False
Statement 2 True False True False
100. Date the national internal revenue tax was paid - April 10, 201.0. Claim for refund was filed
with the Bureau of Internal Revenue - March 10,2011. Date decision of denial of refund was
received - March 21, 2012. Last day to appeal to the Court of Tax Appeals.
A. April 10, 2012 C. April 20, 2012
B. April 15, 2012 D. April 21, 2012
Comprehensive
101. P, a Filipino citizen residing in Makati City, owns a vacation house and lot in San Francisco,
California, USA, which he acquired in 2000 for P15M. On January 10, 2012, he sold said real
property to J, another Filipino citizen residing in Quezon City for P20M. On February 9, 2012,
P filed the capital gains tax return and paid P1.2M representing 6% capital gains tax. Since P
did not derive any ordinary income, no income tax return was filed by him in 2012. After the
tax audit conducted in 2013, the BIR officer assessed P for deficiency income tax computed
as follows: P5M ( P20M less P15M) x 30% = P1.5M, without the capital gains tax paid being
allowed as tax credit. P consulted a real estate broker who said that the P1.2M capital gains
tax should be credited from the P1.5M deficiency income tax. Is the BIR officer's tax
assessment correct?
A. Yes, because the vacation house is located in USA
B. No, because the 30% tax rate applies to corporations
C. Yes, assessment issued by the BIR is presumed correct
D. No, the capital gains tax paid should have been deducted from the P1. 5M deficiency
income tax
102. The Bureau of Internal Revenue may use "Oplan Kandado'" against the following taxpayer,
except?
A. VAT registered person who fails to issue receipts.
B. VAT registered person who fails to file VAT returns.
C. VAT registered person who overstates its purchase by 30%.
D. VAT registered person who understates its taxable sales by 30%.
103. In "Operation Kandado," the BIR temporarily closed business establishments, including New
Dynasty Corporation that failed to comply with VAT regulations. New Dynasty contends that it
should not be temporarily closed since it has a valid and existing VAT registration, it faithfully
issued VAT receipts, and filed the proper VAT returns. The contention may be rejected if the
BIR investigation reveals that
A. The taxpayer used falsified documents to support its application for refund of taxes.
B. The taxpayer has not been regularly filing its income tax returns for the past 4 years".
C. There was an understatement of taxable sales or receipts by 30% or more for the
taxable quarter.
D. The taxpayer deliberately filed a false and fraudulent return with deliberate intention to
evade taxes.
104. Which of the following statements is not correct?
A. The prescription of a tax credit certificate shall be within 5 years from the date of issue,
unless revalidated
B. The prescription of a refund check or warrant shall be within 5 years from the date the
said warrant of check was mailed or delivered
C. As a rule, no court shall have the authority to grant an injunction to restrain the collection
of any national internal revenue tax, fee or charge imposed by the NIRC
D. The CTA in the interest of the government and/or the taxpayer may suspend the
collection of a tax and require the taxpayer either to deposit the amount claimed or to file
a surety bond for not more than the amount due with the court
105. Which of the following propositions may now be untenable?
A. The court should construe a law granting tax exemption strictly against the taxpayer.
B. The Supreme Court has jurisdiction to review decisions of the Court of Tax Appeals.
C. The court should construe a law granting a municipal corporation the power to tax most
strictly.
D. The Court of Tax Appeals has jurisdiction over decisions of the BIR Commissioner in
cases involving national internal revenue taxes.
Income Tax B. A resident alien not engaged in trade or business in the Philippines.
Individual Taxpayer & Tax Base C. A non-resident alien engaged in trade or business in the Philippines.
106. In 2014, Caruso, a resident Filipino citizen, received dividend income from U.S-based D. A non-resident alien not engaged in trade or business in the Philippines.
corporation which owns a chain of Filipino restaurant in the West Coast, U.S.A. The dividend
remitted to Caruso is subject to U.S withholding tax with respect to a non-resident alien like 110. Mr. Araki, a non-resident alien stockholder, received a dividend income of P300,000 in 2015
Caruso. The dividend is subject to: from a foreign corporation doing business in the Philippines. The gross income of the foreign
A. Basic income tax C. Exempt from tax corporation from within and without the Philippines for three years preceding 2015 is as
B. Capital gains tax D. Final income tax follows:
Source of income 2012 2013 2014
107. Federico, a Filipino citizen, migrated to the United States some six years ago and got a From within the Philippines P 20,000,000 P 12,000,000 P20,000,000
permanent resident status or green card. He should pay his Philippine income taxes on From without the Philippines 18,000,000 14,000,000 16,000,000
A. The gains derived from the sale in California, U.S.A. of jewelry he purchased in the How much of the dividend income received by Mr. Araki is considered income from sources
Philippines. within the Philippines?
B. The gains derived from the sale in the New York Stock Exchange of shares of stock in A. Zero C. P156,000
PLDT, a Philippine corporation. B. P144.000 D. P300,000
C. Dividends received from a two year old foreign corporation whose gross income was
derived solely from Philippine sources. 111. Which of the following is not correct?
D. The proceeds he received from a Philippine insurance company as the sole beneficiary A. An alien individual is taxable only on income derived from sources within the Phils.
of life insurance taken by his father who died recently. B. A citizen of the Phils, is taxable on income derived from sources within and without the
Phils.
108. Alain Descartes, a French citizen permanently residing in the Philippines, received several C. An individual citizen of the Phils, who is working and deriving income from abroad as an
items during the taxable year. Which among the following is NOT subject to Philippine overseas contract worker is taxable only on income from sources within the Phils.
income taxation? D. A seaman who is a citizen of the Phils, and who receives compensation for services
A. Interests from his deposits in a local bank of foreign currency earned abroad converted rendered abroad as a member of the complement of a vessel engaged exclusively in
to Philippine pesos. international trade shall be treated as an overseas contract worker.
B. Gains derived from the sale of his condominium unit located in The Fort, Taguig City to
another resident alien. Corporate Taxpayer & Tax Base
C. Consultancy fees received for designing a computer program and installing the same in 112. Shares, obligations or bonds issued by a foreign corporation shall be considered as
the Shanghai facility of a Chinese firm intangible personal property situated in the Phils if, how many percent of its business is
D. Dividends received from an American corporation which derived 60% of its annual gross located in the Phils?
receipts from Philippine sources for the past 7 years. . A. 33% C. 75%
B. 50% D. 85%
109. Pierre de Savigny, a Frenchman, arrived in the Philippines on January 1, 2015 and continued
to live and engage in business in the Philippines. He went on a tour of Southeast Asia from 113. What is the rule on the taxability of income that a government educational institution derives
August 1 to November 5, 2015. He returned to the Philippines on November 6, 2015 and from its school operations? Such income is
stayed until April 15,2016 when he returned to France. He earned during his stay in the A. Subject to 10% tax on its net taxable income as if it is a proprietary educational
Philippines a gross income of P3 million from his investments in the country. For the year institution.
2015, Pierre's taxable status is that of B. Exempt from income taxation in the same manner as government-owned and controlled
A. A resident alien engaged in trade or business in the Philippines. corporations.
 C. Exempt from income taxation if it is actually, directly, and exclusively used for B. 10% D. 30%
educational purposes.
D. Subject to the ordinary income tax rates with respect to incomes derived from 118. In case of taxable dividends, what is the rate of tax if the recipient stockholder is non-resident
educational activities. alien engaged in business from a domestic corporation?
A. Exempt C. 20%
114. Aplets Corporation is registered under the laws of the Virgin Islands. It has extensive B. 10% D. 30%
operations in Southeast Asia. In the Philippines, Its products are imported and sold at a
mark-up by its exclusive distributor, Kim's Trading, Inc. The BIR compiled a record of all the Partnership, Joint Venture & Co-ownership
imports of Kim from Aplets and imposed a tax on Aplets net income derived from its exports 119. The share in the profits of a partner in a general professional partnership is regarded as
to Kim. Is the BIR correct? received by him and thus taxable although not yet distributed. The principle is known as
A. No. The tax should have been computed on the basis of gross revenues and not net A. Accrual method of accounting C. Advance reporting of income
income. B. Actual receipt of income D. Constructive receipt of income
B. Yes. Aplets is a non-resident foreign corporation engaged in trade or business in the
Philippines. Estates & Trusts
C. No. Aplets is a non-resident foreign corporation not engaged in trade or business in the 120. Amount receivable by the estate of the deceased his executor or administrator as an
Philippines. insurance under policy taken by the decedent upon his own life is
D. Yes. Aplets is doing business in the Philippines through its exclusive distributor Kim's A. Excluded from gross income
Trading. Inc. B. Part of gross income if the beneficiary is revocable
C. Part of gross income if the beneficiary is irrevocable
115. Guidant Resources Corporation, a corporation registered in Norway, has a 50MW electric D. Part of gross income whether the beneficiary is revocable or irrevocable
power plant in San Jose, Batangas. Aside from Guidant's income from its power plant, which
among the following is considered as part of its income from sources within the Philippines? Cooperatives
A. Gains from the sale to an Hocos Norte power plant of generators bought from the United 121. Magayon Cooperative had the following:
States. COOPERATIVE
B. Royalties from the use in Brazil of generator sets designed in the Philippines by its Account Related Activities Not-related activities Totals
engineers. Sales Php3M Php 1.2M Php 4.2M
C. Interests earned on its dollar deposits in a Philippine bank under the Expanded Foreign Cost of Sales 2M JM 2.7M
Currency Deposit System. Gross Income Php 1M Php 500,000 Php 1.5M
D. Dividends from a two-year old Norwegian subsidiary with operations in Zambia but Operating Expense .6M 300,000 .9M
derives 60% of its gross income from the Philippines. Net Income Php 400,000 Php 200,000 Php 600,000
In compliance with the Cooperative Development Act, Magayon appropriate/10% of profit to
116. In case of taxable dividends, what is the rate of tax if the corporation is domestic and the reserve fund plus 30% in other optional funds. The taxable net income is:
recipient stockholder is another domestic corporation? A. Php0 C. Php 180,000
A. Exempt C. 20% B. Php 120,000 D. Php 200,000
B. 10% D. 30%
Compensation Income
117. In case of taxable dividends, what is the rate of tax if the recipient stockholder is a. resident 122. Which of the following does not represent compensation income?
citizen and the declaring corporation is domestic? A. Emergency leave pay C. Honorarium as a guest speaker
A. Exempt C. 20% B. Vacation and sick leave pay D. Gratuitous condonation of obligation
 128. A worked for a manufacturing firm but due to business reverses, the firm offered a voluntary
123. The following are examples of non-taxable compensation for injuries, except. redundancy program in order to reduce overhead expenses. Under the program, an
A. Exemplary damages employee who offered to resign would be given separation pay equivalent to his 3 months
B. Actual damages for injuries suffered, basic salary for every year of service. A accepted the offer and received P800,000 as
C. Compensatory damages for unrealized profits separation pay under the program. After all the employees who accepted the offer were paid
D. Moral damages for grief, anxiety and physical sufferings the firm found its overhead still excessive. Hence, it adopted another program, where various
unprofitable departments were closed. As a result, B was separated from the service, B also
124. Dondon and Helena were legally separated. They had six minor children, all qualified to be received P800,C00 as separation pay. At the time of separation both A and B have rendered
claimed as additional exemptions for income tax purposes. The court awarded custody of two at least 10 years of service but A was 55 years old while B was only 45 years old. As a result,
of the children to Dondon and three to Helena, with Dondon directed to provide full financial A. Only Mr. A is subject to income tax C. Both amounts are subject to income tax
support for them as well. The court awarded the 6th child to Dondon's father with Dondon B. Only Mr. B is subject to income tax D. Both amounts are exempt from income tax
also providing full financial support. Assuming that only Dondon is gainfully employed while
Helena is not, for how many children could Dondon claim additional exemptions when he files 129. A was selected as the most outstanding teacher in her region. Her name was submitted by
his income tax return? the school principal without her knowledge. She received atrophy and a cash award of
A. Two children C. Five children P15,000.
B. Three children D. Six children A. Exempt from income tax C. Partly taxable, partly exempt
B. Subject to final tax D. Taxable ineome
Gross Income
125. Income is considered realized for tax purposes when 130. One of the following does not form part of gross income?
A. the taxpayer retires from the business without approval from the BIR. A. Annuities C. Interest
B. the taxpayer has been paid and has received in cash or near cash the taxable income. B. Gifts, bequest and devices D. Royalties
C. it is recognized as revenue under accounting standards even if the law does not do so.
D the earning process is complete or virtually complete and an exchange has taken place. 131. The following are not taxable, except:
A. Refund of estate or donor's tax C. Refund of Philippine income tax
126. Which of the following is included in gross income? B. Refund of fringe benefits tax D. Refund of special assessment
A. Life insurance proceeds
B. Compensation for injuries or sickness 132. This will not result to a taxable gain or loss
C. Amounts received by insured as return of premium . A. The issuance by a corporation of its bonds at a premium.
D Share in the net income of a general professional partnership. B. The sale by a corporation of its treasury stock over its cost or other basis of acquisition
C. The sale by a corporation of its shares of stock from the unissued stock over its par or
127. Statement 1 - The prizes received by Manny Pacquiao and Floyd Mayweather Jr. in their last stated value.
fight are subject to Philippine income tax D. The purchase and retirement by a corporation of its bonds at a price less than the issue
Statement 2 - If the fight between Pacquiao and Mayweather Jr. is a world championship price or face value.
fight promoted by Bob Arum, the gross receipts will be exempt from
percentage tax 133. Cash dividend received by a domestic corporation from a domestic corporation is
A. B. C. D. A. Exempt from income tax C. Partly exempt, partly taxable
Statement 1 True True False False B. Part of taxable income D. Subject to final tax
Statement 2 True False True False
134. The proceeds received under a life insurance endowment contract is NOT considered part of
 gross income sanctioned by their respective sport associations.
A. If it is so stated in the life insurance endowment policy.
B. If the price for the endowment policy was not fully paid 139. Zeus a Domestic Corporation has incurred Rent Expense amounting to Php120,000.00 Zeus
C. Where payment is made as a result of the death of the insured. paid the lessor a total Php120,000.00 without withholding 5% tax therefrom. How much rent
D. Where the beneficiary was not the one who took out the endowment contract. expense can Zeus claim as an allowable deductions?
A. Zero C. 120,000
Questions 135 & 136 are based on the following information. B. 60,000 D. None of the above.
A took a life insurance policy for P5M where the annual premium is P20,000. The proceeds will be
paid to A after 25 years or to A's estate should A dies before completing 25 years of payment. 140. In computing allowable deduction for purposes of income taxation:
1st Statement: Beginning the year 2005 interest expense in connection with taxpayer's
135. If A outlived the policy, which of the following is correct? business shall be reduced by an amount equal to forty two percent (42%) of interest income
A. The proceeds will be part of A's gross estate subjected to final tax
B. The proceeds will be part of A's taxable income 2nd Statement: Interest incurred on money used to acquire property to be used in trade shall
C. The proceeds will be partly taxable estate and partly exempt only be allowed as a capital expenditure.
D. The proceeds will be partly taxable income and partly exempt A. B. C. D.
1st Statement True True False False
136. After paying the annual premiums for 10 years, A transferred the policy to B for P250,000 and 2nd Statement True False True False
B paid the annual premiums as they mature. After 10 years, A died. Which of the following is
correct? 141. A domestic corporation made a borrowing from ABC bank thereby incurring a business
A. The proceeds will be part of A's gross estate connected interest expense of P60,000 for taxable year 1999. During the same year, the
B. The proceeds received by B is part of his taxable income corporation earned an interest income subject to final tax in the amount of P100,000. The
C. The amount received by A from B is part of A's taxable income deductible interest is
D. The amount received by A from B is partly taxable income and partly exempt A. P0 C. P21,000
B. P19,000 D. P60,000
137. In 2015, Juliet Ulbod earned P500,000.00 as income from her beauty parlor and received
P256,000.00 as Christmas gift from her spinster aunt. She had no other receipts for the year. 142. For ordinary contributions, an individual may be allowed to claim as deductions an amount
She spent PI50,000.00 for the operation of her beauty parlor. For tax purposes, her gross not to exceed.
income for 2015 is A. 10% of the net income after contributions
A. P350,000 C. P600,000 B. 5% of the net income before contributions
B. P500,000 D. P750,000 C. 5% of the net income after the contributions
D. 10% of the net income before contributions
Deductions & exemptions from gross income
138. Which of the following expenses is deductible from gross income? 143. Anktryd, Inc., bought a parcel of land in 2009 for P7 million as part of its inventory of real
A. Premiums paid by the self-employed employer for the life insurance of his employees properties. In 2010, it sold the land for P12 million which was its zonal valuation. In the same
B. Contribution to the construction of a chapel of a university that declares dividends to its year, it incurred a loss of P6 million for selling another parcel of land in its inventory. These
stockholders were the only transactions it had in its real estate business. Which of the following is the
C. Contribution to a newspaper fund for needy families when such newspaper organizes a applicable tax treatment?
drive solely for charitable purposes. A. Anktryd shall be subject to a tax of 6% of P12 million.
D. Donation of prizes and awards to athletes in local and international competitions and B. Anktryd could deduct its P6 million loss from its P5 million gain..
 C. Anktryd's gain of P5 million shall be subject to the holding period. their products
D. Anktryd's P6 million loss could not be deducted from its P5 million gain. C. When an electric light and power franchise holder is exempt under its franchise from
property tax on its poles, wires and transformers, its exemption does not extend to the
144. In March 2015, Tonette, who is fond of jewelries, bought a diamond ring for P750,000.00, a VAT of its importation of said articles.
bracelet for P250,000.00, a necklace for P500,000.00, and a brooch for P500,000.00. D. Where a taxpayer receives as payment for the land expropriated by the government tax
Tonette derives income from the exercise of her profession as a licensed CPA. In October exempt bonds, such tax exempt bonds should be included in the total price to determine
2015, Tonette sold her diamond ring, bracelet, and necklace for only P1.25 million incurring a correct taxable profit therefrom
loss of P250,000.00. She used the P1.25 million to buy a solo diamond ring in November
2015 which she sold for P1.5 million in September 2016. Tonette had no other transaction in 149. The excess of allowable deductions over gross income of the business in a taxable year is
jewelry in 2016. Which among the following describes the tax implications arising from the known as
above transactions? A. Net deductible loss C. NOLCO
A. Tonette may deduct his 2015 loss only from her 2015 professional income. B. Net operating loss D. Ordinary loss
B. Tonette may carry over and deduct her 2015 loss only from her 2016 gain.
C Tonette may not deduct her 2015 loss from both her 2016 professional income and her 150. In 2015, ABC Corp. paid total premiums of P1,000 for the life insurance policy of the vice
gain. president, where the beneficiary is the corporation. At the end of the year, ABC received
D. Tonette may carry over and deduct her 2015 loss from her 2016 professional income as dividend of P100 because of the policy. In 2015, the corporation should indicate a claim for a
well as from her gain, deduction for life insurance premium of
A Zero C. P1,000
145. Political campaign contributions are NOT deductible from gross income B. P900 D. P1,100
A. If they are not reported to the Commission on Elections.
B. If the candidate supported vrins the election because of possible corruption. 151. How much is the allowable deduction from business income of a domestic corporation which
C. Since they do not help earn the income from which they are to be deducted. granted and paid P99,000 fringe benefits to its key officers in 1998?
D. Since such amounts are not considered as income of the candidate to whom given. A. P65,000 C. P100,000
B. P99,000 D. P150,000
146. The following taxes maybe deducted from gross income, except:
A. Business tax C. Excise tax 152. What would be the allowable deduction for P8,000 contribution made by a resident citizen to
B. Documentary stamp tax D. Income tax a religious organization from his P70,000 net income after contribution?
A. P3,500 C. P7,800
147. A bought a condominium unit under installment basis, to be used as his office in the practice B. P7,000 D. P8,000
of his profession and paying P10,000 monthly. For income tax purposes, the P10,000
monthly payment shall be 153. In 2014, X Corporation incurred the following expenses in connection with the conduct of its
A. Treated as ordinary business expense business
B. Treated as business rental, hence deductible A) Plane tickets and hotel bills of its employees who were sent to
C. Treated as depreciation expense, hence deductible business seminars P100,000
D. Treated as capital expenditure, hence not deductible B) Transportation allowances of its officers from home to office and
vice versa as part of their employment contract net of P64,000 136,000
148. Which of the following statements on tax exemptions is not correct? C) Transportation expenses of messengers from office to several
A. The salaries of the CIR and the four deputy CIR are exempt from income tax clients 80,000
B. Exemption granted to cooperatives does not extend to be members thereof in the sale of The allowable expenses that could be claimed by X Corp. is
 A. P180,000 C. P316,000 profits and excess profits taxes that he has paid or has accrued to a foreign country
B. P244,0O0 D. P380,000 A. Tax consolidation C. Tax deduction
B. Tax credit D. Tax exemption
Taxable Income
154. There is no taxable income until such income is recognized. Taxable income is recognized 159. All of the following taxpayers are not entitled to foreign tax credit, except
when the A. Resident citizen with income only from abroad
A. Income has been received, either actually or constructively. B. Resident citizen with income only from the Phils
B. Taxpayer fails to include the income in his income tax return. C. Resident alien with income from within and without the Phils
C. Transaction that is the source of the income is consummated. D. Non-resident citizen with income from within and without the Phils
D. Income has been actually received in money or its equivalent.
Passive income subject to final tax
155. One of the following is a taxable income 160. Passive income includes income derived from an activity in which the earner does not have
A. Proceeds of life insurance any substantial participation. This type of income is
B. Compensation for injuries and sickness A. Exempt from income taxation. C. Usually subject to a final tax
C. Amounts received as returns of premium B. Included in the income tax return D. Taxable only if earned by a citizen
D. Income derived from gifts, bequest and devices
161. Cash dividend received by a non-resident foreign corporation from a domestic corporation is
156. A, married to M had the following during the taxable year: A. Exempt from income tax C. Partly exempt, partly taxable
Gross Income B. Part of taxable income D. Subject to final tax
From the practice of profession P 700,000
Rental income of their conjugal property 300,000 162. Which of the following dividends shall be exempt from tax?
Allowable deductions A. Inventory Dividend C. Scrip Dividend
For the practice of profession 520,000 B. Property Dividend D. Stock Dividend
For the property rented to tenants 140,000
The taxable income before exemptions of A is 163. One of the following is not subject to final tax
A P170,000 C. P 260,000 A. Royalties C. Professional fees paid to individuals
B. P180,000 D. P340,000 B. Interest on savings deposit D. Prizes amounting to more than P 10,000

157. SysRq a Resident Corporation provided you the following information for the year 2015: 164. Income derived by a depository bank under the expanded foreign currency deposit system
Sales net of withholding tax in the Philippines Php4,45 5,000 from foreign currency transaction with local commercial bank, including branches of foreign
Sales without the Philippines Php 5,500,000 banks that maybe authorized by the Bangko Sentral ng Pilipinas, shall be subject to a final
Capital Gains 500,000 tax on such income at
Direct Cost 3,800,000 A. 7.5% C. 15%
Dividends paid to stockholders 650,000 B. 10% D. 20%
Determine the Taxable Income:
A. 2,790,000 C. 6,200,000 165. Agustos is a Greek company that manufacturers keratonin. Its Philippine exclusive distributor
B. 4,500,000 D. 6,700,000 is Loom Industries Philippines Incorporated. Agustos receives royalty income from sources
within the Philippines. As a Certified public Accountant, which of the following is correct with
158. A privilege granted a taxpayer to deduct or set-off against Phil, income tax, the income, war regard to the applicable tax impose upon the royalty income?
 A. Subject to final withholding tax of 10%. P1.3M. Payments shall be; P100,000 on the date of sale and the balance shall be paid in
B. Subject to final withholding tax of 20%. equal monthly installments beginning Jan 1, 2015. The capital gains tax for 2014 is
C. Subject to final withholding tax of 30%. A. P24,000 C. P48,000
D. Subject to profit remittance tax of 15%. B. P36,000 D. P120,000

Capital gains on sale of real property 171. A transferred his commercial land which he acquired for P10M to B Corporation and as
166. A feature of ordinary gains as distinguished from the capital gains: consideration he received shares of stock of B Corporation with a fair market value of P10.2M
A. No holding period and cash of P3G0,000. As a result, A acquired control of B Corporation. Two months later, A
B. Sources are capital assets sold the B Corporation shares for P10.5M. The gain to be recognized on the transfer and on
C. May or may not be taxable in full the sale is
D. Gains from sale of assets not stock in trade A. B. C. D.
Transfer P300,000 P300,000 P500,000 P500,000
167. On capital gains tax on real property, which of the following statements is not Correct? Sale P300,000 P500,000 P300,000 P500,000
A. The initial payment maybe more than down payment
B. The tax should be paid, if in one lump sum, within 30 days from the date of the sale 172. A transferred his land in Manila which he acquired for P2M. to B. Corporation and as
C The tax maybe paid in installment if the initial payment does not exceed 25% of the consideration he received snares of stock of B Corporation with fair market value of P1.8M
contract price and as a result A gained control of B Corporation. Later, A transferred his land in Makati
D. The installment payment of the tax should be made within 30 days from receipt of each which he acquired for P3M to C Corporation and as consideration he received shares of
installment payment on the selling price stock of C Corporation with fair market value of P2.7M. Even before the transfer, A already
owns 51% of C Corporation outstanding shares. The loss to be recognized by A is
168. In January 1970, A bought one hectare of agricultural land in Laguna for PI00,000. This A. B. C. D.
property has a current fair market value of P10M in view of the construction of a concrete B Corp. P0 P0 P200,000 P200,000
road traversing the property. A, agreed to exchange his agricultural lot in Laguna for a 1/2 C Corp. P0 P300,000 P0 P300,000
hectare residential property located in Batangas, with a fair market value of P10M, owned by
B, a domestic corporation engaged in the purchase and sale of real property. B acquired the Questions 173 & 174 are based on the following information.
property in 2014 for P9M. Which of the following statements is correct? Spouses A and B sold their family home, a capital asset for P5,000,000. It was acquired in 1980 at
A. Both real properties are capital assets P2,000,000. The fair market value as determined by the BIR is P6,000,000 but the fair market
B. Both real properties are ordinary assets value as shown in the schedule of values of the City Assessor is P5,500,000. Later, the spouses
C. The residential land is an ordinary asset utilized P4,000,000 for the acquisition of their new family home.
D. The agricultural land is an ordinary asset
173. The capital gains tax due is
169. K sold for P10M her Baguio rest house with a FMV of P12M to buy a new principal residence. A. P60,000 C P300,000
If K utilized P8M of the proceeds of the sale in acquiring a new principal residence, the capital B. P72,000 D. P360,000
gains tax payable is
A. P120,000 C. P600,000 174. The cost basis of the new family home is
B. P144,000 D. P720,000 A. P400,000 C. P1,600,000
B. P1,000,000 D. P4,000,0000
170. On August 12, 2014 A sold a land held as capital assets for P2 M with a FMV of P1.8M. A
acquired the land for P1M and at the time of sale, the property was subject to a mortgage of Questions 175 & 176 are based on the following information.
A sold 3 parcels of land held as capital assets, as follows: to surrender his shares of stock of A Corporation which C acquired for P200,000 and in
Land 1 Land 2 Land 3 exchange he received shares of stock of B Corporation with a fair market value of P220,000
Selling price P160,000 P160,000 P160.000 plus cash of P30,000. After the merger, C later sold his B Corporation shares fir P240.00G. C
Cost 100,000 100,000 100,000 will recognize a gain of:
Installment payments: A. B. C. D.
Year 1 (year of sale) 40,000 40,000 30,000 Merger P30,000 P30,000 P50,000 P50,000
2 120,000 60,000 20,000 Sale P20,000 P40,000 P20,000 P40,000
Assumption of mortgage 0 60,000 110,000
Questions 181 & 182 are based on the following information.
175. The capital gains tax to be paid in year 1 is: A and B are stockholders in corporations which are being consolidated into a new corporation, had
A. P12,640 C. P19,840 the following data on their shares of stock:
B. P15,840 D. P28,000 A B
Consideration received:
176. The capital gains tax to be paid in year 2 is Fair market value of shares P 75,000 P 81,000
A. P8,960 C. P16,160 Fair market value of property 5,000 5,000
B. P12,960 D. P19,200 Cash 10,000 4,000
Cost of shares surrendered 80,000 80,000
Capital gains tax on sale of shares of stock
177. Gain on sale of domestic shares of stock in New York is 181. The gain or (loss) to be recognized by A is
A. Exempt from income tax C. Income within the Phils A. P(5,000) C. P 10,000
B. Income party within and without D. Income without the Phils B. P0 D. P 15,000

178. Zygomite Minerals, Inc., a corporation registered and holding office in Australia, not operating 182. The gain or (loss) to be recognized by B is
in the Philippines, may be subject to Philippine income taxation on A. P 0 C. P 9,000
A. Gains it derived from sale in Australia of shares of stock of Philex Mining Corporation, a B. P 1,000 D. P 10,000
Philippine corporation.
B. Dividends earned from investment in a foreign corporation that derived 40% of its gross Final income tax on fringe benefits tax
income from Philippine sources. 183. If a friend inquires whether or not the cost of educational assistance to the employee and /or
C. Gains it derived from sale in Australia of an ore crusher it bought from the Philippines his dependents which are borne by the employer be taxable. What will your answer be?
with the proceeds converted to pesos. First Answer - A scholarship grant to the employee by the employer shall not be treated as
D. Interests derived from its dollar deposits in a Philippine bank under the Expanded taxable fringe benefit if the education or study involved is directly connected with the
Foreign Currency Deposit System. employer's trade, business or profession and there is a written contract between them that
the employee is under obligation to remain in the employ of the employer for a period of time
179. A operates a retail store and owns the following properties. Which of the following is capital that they have mutually agreed upon.
assets in the hand of A Second Answer - The cost of educational assistance extended by an employer to the
A Trade accounts receivable C. Building which houses the retail store dependents of an employee shall be treated as taxable fringe benefits of the employee
B. Fixtures used in the retail store D. Inventory on hand at the end of the year unless the. assistance was provided through a competitive scheme under the scholarship
program of the company,
180. A Corporation was merged with B Corporation. G, a stockholder of A Corporation was asked A. B. C. D.
 1st Answer True True False False
2nd Answer True False True False 188. 1st Statement - Uniforms and clothing allowance not exceeding five thousand pesos per
annum is an exempt de minimis benefit.
184. 1st Statement - Monetized unused vacation leave credits not exceeding 10 days is an exempt 2nd Statement - Actual medical benefits not exceeding P 10,000 per annum is an exempt de
de minimis benefit. minimis benefit,
2nd Statement - Daily meal allowance for overtime work not exceeding twenty five (25%) A. B. C. D.
percent of the basic minimum wage is exempt fringe benefit 1 Statement
st True True False False
A. B. C. D. 2nd Statement True False True False
1st Statement True True False False
2nd Statement True False True False Accounting methods
189. JB bookstore is using cash method of accounting in recognizing its taxable income and
185. 1st Statement - Laundry allowance not exceeding P300 per month is exempt de minimis deductions. For the current year, JB decided to adopt the accrual method of recognizing
benefit. income and expenses. The application for permission to change the method of accounting
2nd Statement - Medical cash allowance to dependents of employees not exceeding P750 employed and the basis; upon which return is made shall be filled to the BIR within:
per employee per semester, or one hundred twenty five pesos (P125) per month is exempt A. 15 days C. 60 days
de minimis benefit, B. 30 days D. 90 days
A. B. C. D.
1st Statement True True False False Accounting periods
2nd Statement True False True False 190. Which among the following taxpayers is required to use only the calendar year for tax
purposes?
186. 1st Statement - Flowers, fruits and books or other similar token items given to employees A. Joint account (cuentas en participacion) engaged in the trading of mineral ores.
under certain circumstances are exempt de minimis benefits. B. Joint-stock company formed for the purpose of undertaking construction projects.
2nd Statement - Gifts given during Christmas and major anniversary celebrations not C. Business partnership engaged in energy operations under a service contract with the
exceeding P5,000 per employee per annum is an exempt de minimis benefit, government.
A. B. C. D. D. Partnership exclusively for the design of government infrastructure projects considered
1 Statement
st True True False False as practice of civil engineering.
2nd Statement True False True False
191. A corporation may change its taxable year to calendar or fiscal year in filing its annual income
187. 1st Statement - Rice subsidy of one thousand five hundred pesos or one sack of 50 kg. rice tax return, provided
per month amounting to not more than one thousand five hundred pesos is an exempt de A. Its constitution and by-laws authorizes the change.
minimis benefit. B. It simultaneously seeks BIR approval of its new accounting period.
2nd Statement - Employee achievement awards, e.g., for length of service, or safety C. It seeks prior BJR approval of its proposed change in accounting period.
achievement, which must be in the form of a tangible personal property other than cash or gift D. It should change its accounting period two years prior to changing its taxable year.
certificate, with an annual monetary value not exceeding ten thousand pesos received by an
employee under an established written plan which does not discriminate in -favor of highly 192. As regards taxable year, one of the following statements is not correct
paid employees is an exempt de minimis benefit, A. The taxable year is the accounting period
A. B. C. D. B. The taxable year maybe less than 12 months.
1st Statement True True False False C. The taxable year of a domestic corporation maybe fiscal or calendar year.
2nd Statement True False True False D. The taxable year of a sole proprietorship business maybe fiscal or calendar year

193. When may the Bureau of Internal Revenue terminate taxing period. EXCEPT?
A. When the taxpayer went abroad.
B. When the taxpayer hides or conceals his property.
C. When the taxpayer removes his property from Philippines.
D. When the taxpayer is retiring from business subject to tax.
Tax return preparation & tax payments
194. As a Certified Public Accountant what would you tell if a domestic corporation asked you
where to file first its financial statements and income tax returns?
A. Bureau of Internal Revenue.
B. Authorized Accredited Agent Banks.
C. Securities and Exchange Commission.
D. Local Municipal City Treasurer where the corporation has a principal address.
199. Ayer domestic corporation hired Velayo, Goires and Santos accounting firm to conduct its
annual audit for the year 2013. Ayer corporation paid VGS & Co., an engagement fees
equivalent to Php100 Million. Such payment to VGS & Co. Shall be:
A. Exempt from withholding tax.
B. Subject to 1% withholding tax on its gross payment.
C. Subject to 2%withholding tax on its gross payment.
D. Subject to 5% withholding tax on its gross payment.
200. CRP is one of the Philippines registered top 20,000 private corporation. As the company's
accountant you were tasked to account for all payments made local/resident suppliers. What
percentage of withholding tax rates of income payments made by top 20,000 private
corporations to their local/resident suppliers of goods?
A. 1% of the gross payments. C. 3% of the gross payments
B. 2% of the gross payments D. 4% of the gross payments

195. When will a self-employed individual file its 1st quarter income tax return? 201. Tan Torres a non-stock and non-profit charitable institution pays for its regular repairs and
A. April 15 of current year. C. July 15 of the current year. maintenance of its facilities to Carmel Manpower Service Incorporated. As the accountant of
B. May 31, of the current year. D. August 15 of the current year. the exempt entity, how much withholding tax will you impose to its supplier (Carmel) for the
repairs and maintenance expense?
196. With regard to the question, how may financial statement and tax return copies are filed with A. Exempt from withholding tax.
the Bureau of Internal Revenue? B. 1% withholding tax on its gross payment.
A. Triplicate C. 2%withholding tax on its gross payment.
B. Duplicate D. 5% withholding tax on its gross payment.
C. Quadruplicate
D. As many as required by the revenue officer. Compliance requirements
202. One of the following is required to issue receipts or sales invoice
197. An individual taxpayer, other than a corporation may elect to pay the income tax due in two A. Seller of merchandise whose sales amounted to P 25 or more
equal installments if the tax due is B. Seller of merchandise whose sales amounted to less than P 25.
A. More than P100 C. More than P 2,000 C. Seller who is exempted by toe commission of Internal Revenue in meritorious cases
B. More than P1,000 D. More than P 5,000 D. Market vendors exclusively selling domestic meat, vegetables, fruits, poultry, fish and
other food products.
Withholding taxes
198. The payor of passive income subject to final tax is required to withhold the tax from the 203. Which of the following statements is incorrect with regard to large taxpayers?
payment due the recipient. The withholding of the tax has the effect of A. Business establishment with VAT paid or payable of at least one million (P 1,000,000)
A. A credit from the recipient's income tax liability. for the preceding taxable year.
B. A deduction in the recipient's income tax return, B. Business with annual income tax paid or payable of at least one million (P1,000,000) for
C. A final settlement of the tax liability on the income. the preceding taxable year.
D. Consummating the transaction resulting in an income. C. Business establishment with withholding tax payment of at least one million (P1,000,000)
for the preceding taxable year.
 D. Business establishment with excise tax paid or payable of at least one million 210. Amount receivable by the beneficiary other than estate, executor or administrator as an
(P1,000,000) for the preceding taxable year. insurance under policy taken by the decedent upon his own life is
A. Excluded from gross estate
204. From the date of the last entry in each book, book of accounts and other accounting records B. Part of gross estate if the beneficiary is revocable
should be preserved by the taxpayer for a period of at least C. Part of gross estate if the beneficiary is irrevocable
A. 2 years C. 4 years D. Part of gross estate whether the beneficiary is revocable or irrevocable
B. 3 years D. 5 years
211. J, a Filipino citizen, married to M, died in a vehicular accident in NLEX on April 10, 2012. The
spouses owned among others a 100-hectare agricultural land in Sta. Rosa, Laguna with
Transfer taxes current fair market value of P20M, which was the subject matter of a Joint Venture
Estate tax Agreement about to be implemented with Star Land Corporation, a well known real estate
205. A mode of acquisition by virtue of which, the property, rights and obligations, to the extent of development company. He bought the said real property for P2M fifty years ago. On January
the value of the inheritance, of a person are transmitted through his death to another either 5, 2013, the administrator of the estate and SLC jointly announce their big plans to start
by his will or by operation of law. conversion and development of the agricultural lands in Sta. Rosa, Laguna, into first class
A. Acquisititive prescription C. Extinctive prescription residential and commercial centers. As a result, the prices of real properties in the locality
B. Donation mortis causa D. Succession have doubled. The administrator of the estate of J filed the estate tax return on January 9,
2013 by including in the gross estate the real property at P2M. After 9 months, the BIR issued
206. The location of property is important in determining whether the property shall be included or deficiency estate tax assessment, by valuing the real property at P40M. As a result, the real
not in the gross estate of a decedent who was a property should be valued
A. Non-resident alien C. Resident alien A. P2M C. P20M
B. Non-resident citizen. D. Resident citizen B. P10M D P40M

207. Joanne married James, a person with no known relatives. Through James' hard work, he and 212. Tong Siok, a Chinese billionaire and a Canadian resident, died and left assets in China
his wife Joanne prospered When James died his estate alone amounted to P100 million. If, in valued at P80 billion and in the Philippines assets valued at P20 billion. For Philippine estate
his will, James designates Joanne as his only heir, what will be the free portion of his estate? tax purposes the allowable deductions for expenses, losses, indebtedness, and taxes,
A. Joanne gets 1/2; the other half is free portion property previously taxed, transfers for public use, and the share of his surviving spouse in
B. Joanne gets all; estate has no free portion left. their conjugal partnership amounted to PI5 billion. Tong's gross estate for Philippine estate
C. Joanne gets 1/3; the remaining 2/3 is free portion tax purposes is
D. Joanne gets 1/4; the remaining 3/4 is free portion. A. P5 billion C. P85 billion
B. P20 billion D. P100 billion
208. Which among the following reduces the gross estate (not the net estate) of a citizen of the
Philippines for purposes of estate taxation? 213. Which of the following is not directly reducing the inheritance?
A. Capital of the surviving spouse C. Standard deduction of P1M A. Claims against the estate C. Standard deduction
B. Property previously taxed D. Transfers for public use B. Funeral expense D. Unpaid mortgage

209. Which of the following may reduce the taxable estate but not the inheritance? 214. One of the following is not correct as regards property subject to vanishing deduction. If the
A. Family home C. Judicial expense decedent was
B. Funeral expense D. Losses A. A resident citizen, the property maybe located anywhere.
B. A resident alien, the property should be located in the Phils.
 C. A resident of the Phils, the property should be located in the Phils. B. 60 days D. 6 months
D. Not a resident of the Phils, the property should be located in the Phils.
222. Gerardo died on July 31, 2015. His estate tax return should be filed within
215. A died leaving the property acquired by donation from B who died 3 ½ years ago. Property is A. Six months from filing of the notice of death.
now part of A's gross estate. The estate's vanishing deduction rate is B. Sixty days from the time he died on July 31, 2015.
A. 0 C. 40% C. Six months from the time he died on July 31, 2015.
B. 20% D. 60% D. Sixty days from the appointment of an administrator.

216. What can be allowed as deduction from the Gross Estate? 223. Don Fortunato, a widower, died in May, 2015. In his will, he left his estate of PI 00 million to
A. Family Home C. Share of the Surviving Spouse his four children. He named his compadre, Don Epitacio, to be the administrator of the
B. Optional Standard Deductions D. Vanishing Deductions estate. When the BIR sent a demand letter to Don Epitacio for the payment of the estate tax,
he refused to pay claiming that he did not benefit from the estate, he not being an heir.
217. One of the following is not correct Forthwith, he resigned as administrator. As a result of the resignation, who may be held liable
Deduction Maximum for the payment of the estate tax?
A. Family home P2,000,000 A. The person designated by the will as the one liable.
B. Funeral expenses 200,000 B. The eldest child who would be reimbursed by the others.
C. Medical expenses 500,000 C. Don Epitacio since the tax became due prior to his resignation.
D. Standard deduction 1,000,000 D. All the four children, the tax to be divided equally among them.

218. Deduction for funeral expenses shall be allowed except: 224. While driving his car to Baguio, P, together with his wife, A, and only son J, met an accident
A. Only if paid out of the estate that caused the instantaneous death of J. The followng day, A also died in the hospital. The
B. Shall in no case to exceed P200,000 spouses and their son had the following assets and liabilities at the time of death:
C. Shall in no case to exceed 5% of the gross estate A (Exclusive) Conjugal J (Exclusive)
D. For a non-resident alien limited to amount that was actually incurred in the Philippines Cash P10,000,000 P1,200,000
Cars P2,000,000 500,000
219. One of the following is not an ordinary deduction for purposes of Net Taxable Estate, Land 5,000,000 2,000,000
A. Funeral expense C. Medical expense Residential house 4,000,000
B. Judicial expense D. Taxes Mortgage payable 2,500,000
Funeral expenses 300,000
220. A - Expenses on the death anniversary of the deceased are not deductible expenses from Which of the following statements is correct?
the gross estate A. The estate of J will pay corresponding estate tax
B - Attorney's fees incurred by an heir from appearance at the trial to oppose the probate of B. The administrator of J's estate will claim vanishing deduction
the will of the decedent is deductible expense from the gross estate C. A CPA certificate as regards the valuation of A's estate is required.
A. B. C. D. D. The administrator of both estate will file one consolidated estate tax return.
Statement A True True False False
Statement B True False True False 225. One of the following is not correct
A. Vanishing deduction is subject to limitation
221. For purposes of filing estate tax return, the deadline for filing from the death of decedent is: B. The estate must be valued at the time of death of the decedent
A. 30 days C. 1 month C. Real estate situated in foreign countries will be included in the gross estate of a resident
 alien decedent
D. The Commissioner shall have authority to grant, in meritorious cases, a reasonable 230. Which of the following statement is wrong? The deduction for donation on account of
extension not exceeding 6 months for filing the return marriage is allowed for a donation by.
A. A resident citizen to a resident donee
226. Which of the following statements is not correct? B. A resident alien to a non-resident donee
A. The sharing of heirs in testamentary succession must satisfy the rules on legitime C. A non-resident alien to a resident donee
B. When a compulsory heir is given by will less than his legitime, the provisions of the will D. A non-resident resident citizen to a non-resident donee
should be modified in such a way that lie will receive his legitime
C. The P500,000 standard deduction for medical expenses for estate tax purposes is a 231. Spouses J and C, both Filipino citizens are owners of a residential house and lot in Quezon
legal mechanism to further exempt the less privileged estate and heirs from tax burden City. After the recent wedding of their son, M to N, the spouses donated the said real property
D. The CIR may examine the bank deposit of a decedent for the purpose of determining his to them. At the time of donation, the real property has a fair market value of P2M Which of
gross estate even if the estate did not request for a compromise on the ground of the following statements is correct?
financial incapacity A. C's taxable gift to N is P500,000
B. J's taxable gift to M is P500,000
Donor’s tax C. M and N are both subject to donor's tax
227. This maybe subject to donor's tax. Donation to D. M and N are subject to income tax for the value of the real property donated to them
A. The Development Academy of the Phils
B. The International Rice Research Institute 232. For donor's tax purposes, this is a stranger
C. The Ramon Magsaysay Award Foundation A. Daughter of a brother C. Mother of a godson
D Social welfare, cultural and charitable institution B. Grandson of son' s granddaughter D Son of an uncle

228. In a transfer in contemplation of death, revocable transfer and transfer under a general power
of appointment, there are rules to observe to determine what amount to include in the gross
estate, which is not a rule to observe?
A. If the transfer was in the nature of a bona fide sale for an adequate and full consideration
in money or money's worth, no value shall be included in the gross estate
B. If there was no consideration received on the transfer as in donation inter-vivos, the
value to include in the gross estate shall be the fair market value of the property at the
time of transfer
C. If there was no consideration received on the transfer as in donation mortis causa, the
value to include in the gross estate shall be the fair market value of the property at the
time of the decedent's death
D. If the consideration received on the transfer was less than adequate and foil, the value to
include in the gross estate shall be the excess of the fair market value of the property at
the time of decedent's death over the consideration received
229. Exempted from donor's taxation are gifts made
A. For the use of the barangay C. To a for-profit government corporation
B. In consideration of marriage D. To a school which is a stock corporation
233. Which of the following is a stranger to the donor? If the donee is the
A. Brother of the donor's grandfather
B. Grandson of the donor's half-sister
C. Grandfather of the donor's great grandfather
D. Granddaughter of the sister of the donor's mother
234. For donor's tax purposes, this is not a stranger
A. Daughter of godson C. Grandson of the sister of donor's mother
B. Granddaughter of the donor' s sister D. Son-in-law
235. A non-stock, non-profit school always had cash flow problems, resulting in failure to recruit
well-trained administrative personnel to effectively manage the school. In 2010, Don Leon
donated P100 million pesos to the school, provided the money shall be used solely for paying
the salaries, wages, and benefits of administrative personnel. The donation represents less
than 10% of Don Leon's taxable income for the year. Is he subject to donor's taxes?
A. Yes, because the donation is to be wholly used for administration purposes.
B. No, because the donation does not exceed 10% of his taxable income for 2010.
C. Yes, since he did not obtain the requisite NGO certification before he made the donation.
 D. No, since the donation is actually, directly, and exclusively used for educational 239. 1st Statement - Any contribution in cash or in kind to any candidate, political party or coalition
purposes. of parties for campaign purposes shall be governed by the election code and not the tax
code.
236. Levox Corporation wanted to donate P5 million as prize money for the world professional 2nd Statement - When, the donee or beneficiary is a stranger, the tax payable by the donor
billiard championship to be held in the Philippines. Since the Billiard Sports Confederation of shall be thirty percent (30%) of the gross gifts,
the Philippines does not recognize the event, it was held under the auspices of the A. B. C. D.
International Professional Billiards Association, Inc. Is Levox subject to the donor's tax on its 1 Statement
st True True False False
donation? 2nd Statement True False True False
A. Yes, since the national sports association for billiards does not sanction the event.
B. No, so long as the donated money goes directly to the winners and not through the Questions 240 thru 243 are based on the following information.
association. Mrs. Mapagbigay made the following donation for taxable year 2015?
C. No, because it is donated as prize for an international competition under the billiards February: to a legitimate daughter who got married on Valentine's Day amounting to
association, Php290,000.
D. Yes, but only that part that exceeds the first P100,000.00 of total Levox donations for the July : to legitimate son's birthday celebration amounting to Phpl50,000.
calendar year. : to an adopted child who got married Php9,500

237. Celia donated P110,000.00 to her friend Victoria who was getting married. Celia gave no 240. Compute the Donor's tax due for month of February?
other gift during the calendar year. What is the donor's tax implication on Celia's donation? A. Php 900 C. Php5,600
A. Celia shall pay a 30% donor's tax on the PI 10,000.00 donation. B. Php5,200 D. Php6,000
B. The P100,000.00 portion of the donation is exempt under the rate schedule for donor's
tax. 241. Compute Donor's tax due for month of July?
C. The P100,000.00 portion of the donation is exempt since given in consideration of A. Php5,200 C. Php6,000
marriage. B. Php5,600 D. Php11,200
D. A P10,000.00 portion of the donation is exempt being a donation in consideration of
marriage. 242. Compute donor's tax due for month of July if the gift given to the son was split into two
Php75,000 in July and Php 75,000 in August 2016?
238. The spouses Helena and Federico wanted to donate a parcel of land to their son Dondon A. Php2,600 C. Php3,000
who is getting married in December, 2011. The parcel of land has a zonal valuation of B. Php2,800 D. Php5,100
P420,000.00. What is the most efficient mode of donating the property?
A. Spread the donation over a period of 5 years by the spouses donating PI00,000.00 each 243. Compute Donor's tax due for month of August 2016?
year from 2011 to 2015. A. Exempt C. Php2,800
B. The spouses should each donate a P110,000.00 portion of the value of the property in B. Php2,600 D. Php3000
2011 then each should donate P100,000.00 in 2012.
C. The spouses should first donate in 2011 a portion of the property valued at P20,000.00 DONOR TAX RATES
then spread the P400,000.00 equally for 2012, 2013, 2014 and 2015.
D. The spouses should each donate a P100,000.00 portion of the value of the property in Net Gift Over But not Over The Tax Shall be Plus Of the Excess Over
2011, and another P100,000.00 each in 2012. Then, in 2013, Helena should donate the 100,000.00 exempt
remaining P20,000.00. 100,000.00 200,000.00 2% 100,000.00
200,000.00 500,000.00 P 2,000.00 4% 200,000.00
 500,000.00 1,000,000.00 14,000.00 6% 500,000.00 A. Importation of fuel, goods and supplies by persons engaged in international shipping or
1,000,000.00 3,000,000.00 44,000.00 8% 1,000,000.00 air transport operations
3,000,000.00 5,000,000.00 204,000.00 10% 3,000,000.00 B. Sale of real property not primarily held for sale to customers or held for lease in the
5,000,000.00i 10,000,000.00 404,000.00 12% 5,000,000.00 ordinary course of business
10,000,000.00 and over 1,004,000.00 15% 10,000,000.00 C. Importation of passenger or cargo vessel and aircrafts, including engine, equipment and
spare parts thereof for domestic or international transport operation
Donation made to a stranger is subject to 30% of the net gift. D. Importation of personal or household effects belonging to the residents of the Philippines
returning from abroad and non-resident citizen coning to resettle in the Philippines where
Business Taxes such goods were subjected to customs duties
Value-added tax
244. Any person who, in the course of trade or business, sells, barters, exchanges, leases goods 250. The export sale of a VAT registered enterprise is
or properties, renders services, and any person who imports goods shall be subject to: A. Exempt from the VAT C. Subject to the 12% vat
A. Business tax C. Other percentage tax B. Subject to percentage tax D. Subject to the 0% VAT
B. Excise tax D. VAT
251. Sale of orchids by a flower shop which raises its flower in Tagaytay. Is subject to:
245. A VAT-registered person whose total sales for the year did not exceed P 1,919,500 is A. Exempt from VAT C. 12% VAT
A. Exempt from VAT C. Subject to 0% VAT B. 0%VAT D. None of the above
B. Subject to percentage tax D. Subject to 12% VAT
252. Which of the following is a zero-rated transaction?
246. A non-VAT registered whose total sales for the year exceeded P 1,919,500 is A. Export sale of non-VAT registered individuals.
A. Exempt from VAT C. Subject to 0% VAT B. Sale of power or fuel generated through renewable sources of energy.
B. Subject to percentage tax D. Subject to 12% VAT C. Sale by agricultural cooperatives duly registered with Cooperative Development
Authority.
247. Which of the following is VAT-able? D. Sales by non-agricultural, non-electrical and non-electrical and non-credit cooperatives
A. Dental and Veterinary services paid to professionals. duly registered with cooperative development authority.
B. Sale or importation of fertilizer, ordinary feeds, seeds, seedlings and fingerlings;
C. Services of agricultural contract growers and milling for others of palay into rice, corn into 253. Which of the following are zero-rated transactions?
grits and sugar cane to raw sugar; A. Sale of gold to Bangko Sentral ng Pilipinas.
D. Importation of -professional instruments and implements wearing apparel, domestic B. Sale of services to Asian Development Bank
animals and personal household effects; C. Sale of services to International Rice Research Institute.
D. Sale of services to duly registered and accredited enterprises with Philippines Economic
248. Which of the following transactions is subject to value-added-tax? Zone Authority.
A. Sale of coal and natural gas.
B. Lending activities by credit cooperatives. 254. Which of the following transactions is subject to zero-rated value-added-tax?
C. Services subject to other percentage tax. A. Foreign currency denominated sales
D. Educational services "duly approved by Department of Education, CHED and TESDA or B. Generation, transmission and distribution of electricity.
those operated by the Government. C. Services rendered by banks, non-bank financial intermediaries.
D. Services rendered by professionals such as CPAs, Physicians and Lawyers
249. Which of the following is subject to VAT?
255. Sale of raw materials or packing materials to export-oriented enterprise is considered export 261. Which of the following transactions is exempt from value-added-tax?
sales when export sales of such enterprise A. Legal services.
A. Exceed 50% of total annual production B. Services arising from employee-employer relationship.
B. Exceed 70% of total annual production C. Services rendered by domestic air transport companies.
C. Exceed 33 1/3% of total annual production D. Medical services such as dental and veterinary services rendered by professionals.
D. Exceed 66 2/3% of total annual production
262. Export sales of non-VAT registered person is
256. Which of the following transactions is subject to zero-rated value-added-tax? A. Exempt from VAT C. Subject to 0% VAT
A. Sale to Philippine Economic Zone Authority. B. Subject to percentage tax D. Subject to 12% VAT
B. Sales by non-agricultural, non-electric, non-credit cooperatives.
C. Services by regional or area headquarters of multi-national corporations. 263. Diety is non-stock, non-profit organization made an importation of agricultural food product in
D. Importation of professional instruments and implements by settlers in the Philippines. its original state a Chinese farmer amounting to P2,240,000.00. If you are the Customs
Collector how will you treat such importation, will it be?
257. Refers to a local sale of service by VAT-registered person to a person or entity who was A. Exempt from VAT
granted indirect tax exemption under the special laws or international agreement? B. Subject to 12% VAT
A. Automatic zero-rated transactions. C. VAT exempt transaction. C. Subject to zero rated VAT
B. Effective zero-rated transactions. D. Zero-rated transactions. D. Subject to 3% other percentage tax

258. Which of the following is an effectively zero-rated transaction?
A. Sale of services to Asian Development Bank.
B. Services of banks, non-bank, financial intermediaries.
C. Educational services rendered by private educational institutions duly accredited by
DEPED, CHED and TESDA.
D. Services rendered by regional or area headquarters established in the Philippines by
multinational corporations which act as supervisory communication and coordinating
centers.
259. Construction by XYZ Construction Co. of concrete barrier for the Asian Development Bank in
Ortigas Center to prevent car bombs from ramming the ADB gates along ADB Avenue in
Mandaluyong City. Is subject to what business tax?
A. Exempt from VAT C. 12% VAT
B. 0%VAT D. None of the above
260. Call Center operated by a domestic enterprises in Makati that exclusively the reservations of
a hotel chain which are all located in North America. The services are paid for in US$ and
duly accounted for, with the Bangko Sentral ng Pilipinas. Is subject to:
A. Exempt from VAT C. 12% Vat
B. 0%VAT D. None of the above
264. Mr. San Diego approached you and asked for your professional help with regard to a sale of
his ancestral house and lot in the amount of Php5,000,000.00. Your advise would be: Such
transaction will be subject to?
A. 3% other percentage tax. C. Zero rated VAT.
B. Exempt from VAT. D. 12% VAT.
265. Which of the following is exempt from VAT?
A. Export sale by non-VAT individuals.
B. Foreign Currency Denominated Transactions.
C. Sale to Ramon Magsaysay Awards Foundation.
D. Sale of services to entities duly registered with PEZA.
266. Which of the following transactions is exempt from value-added-tax?
A. Services rendered by artist, actors and athletes.
B. Generation, transmission and distribution of electricity.
C. Services rendered by professionals such as CPAs, Physicians and Lawyers.
D. Services rendered by international shipping or air passenger transport operations.
267. Which of the following is exempt from VAT?
A. Importation by persons who are not vat registered
B. Sale of fuel, goods and supplies by persons engaged in international shipping or air
 transport operations C. Refunded or Converted into tax credit certificates.
C. Sale of professional instruments and implements wearing apparel, domestic animals and D. Used as payment of other internal revenue tax, except, withholding tax.
personal household effect
D. Sale of passenger or cargo vessels and aircraft, including engine, equipment and spare 274. When may VAT registered person claim input taxes as an allowable deductions from his
parts thereof for domestic or international transport operations income tax return?
A. Input taxes from capital goods. C. Input taxes from export sale.
268. Which of the following transactions is exempt from value-added-tax? B. Input taxes from exempt sales. D. Input taxes from zero-rated sales.
A. Sale of cotton and cotton seeds.
B. Sale of agricultural food products in their original state. 275. Which of the following statements is wrong on claim for input tax on depreciable capital
C. Sale of non-food agricultural products in their original state. goods?
D. Sale of non-food marine and forest products in their original state. A. Where the aggregate acquisition cost (exclusive of vat) of depreciable capital goods
during any calendar month does not exceed P1,000,000, the total input tax is creditable
269. Which of the following transactions is exempt from value-added-tax? against output tax in the month acquired
A. Sale of work of art. B. Where the aggregate acquisition cost (exclusive of vat)of depreciable capital goods
B. Sale of literary works during any calendar month exceeds P1,000,000, the input tax shall be spread evenly
C. Sale of musical composition over 60 months starting in the calendar month acquired
D. Sale of books, newspaper and magazines, C. If the depreciable capital goods is sold or transferred prior to the exhaustion of the
amortizable input tax thereon, the entire unamortized input tax on the capital good sold
270. This shall be considered a livelihood activity only and shall not be considered doing business, or transferred can be claimed as input tax credit in the month v/hen the sale or transfer
if the gross sales or receipts in one year does not exceed was made
A. P 60,000 C. P 200,000 D. Where the aggregate acquisition cost (exclusive of vat) of depreciable capital goods
B. P 100,000 D. P 550,000 during any calendar month exceeds PI,000,000, the input tax shall be spread evenly
over the actual number of months of estimated useful life, starting in the calendar month
271. Which of the following businesses is allowed a presumptive input value-added-tax? acquired if the estimated useful life of the depreciable capital goods is less than 5 years
A. Manufacturer of dried fish
B. Manufacturer of canned goods. 276. 1st Statement: The input value-added-tax on purchase of capital goods valued at PI,000,000
C. Manufacturer of packed juices. shall be spread over 60 months if the life of property is equivalent to 5 years or more.
D. Manufacturer of packed noodle based instant meals 2nd Statement: The input value-added tax on purchase of capital goods valued at
PI,000,000 shall be spread over the life of property if the life of properly is less than 5 years,
272. What input taxes may be credited? A. B. C. D.
A. Input taxes from non-VAT suppliers. Statement 1 True True False False
B. Input taxes from purchase of direct labor. Statement 2 True False True False
C. Input taxes from importation of goods for sale.
D. Input taxes from importation of personal and household effects. 277. The VAT on goods
A. Is not based on net sale
273. The input taxes on zero-rated sales of goods may at the option of the VAT-registered person B. Is a selling expense of the trader
be, except: C. Is imposed on goods for domestic consumption
A. Credited. D. Maybe due even if there is no actual sale of the goods
B. Carried over to the next year quarter.
278. Who are allowed to withhold VAT from its VAT suppliers? B. Within 25 days from September 30 D. Within 45 days from September 30
A. Non-resident individuals and corporation.
B. Resident Foreign Corporation doing in the Philippines. Questions 283 thru 285 are based on the following information.
C. Government or any of its instrumentalities including government owned and controlled A, a VAT taxpayer, made the following purchases of capital goods from vat registered sellers for
corporation. use in his business (amounts are net of vat) for the 3rd quarter
D. Entities, organization, business or corporation duly registered with Philippine Economic Year 2011 Estimated Life Cost
Zone Authority. July 10 - Machine 1 2 years P 200,000
16 - Machine 2 6 years 900,000
Questions 279 & 280 are based on the following information. Aug. 8 - Machine 3 2 years 400,000
HWPD is the winning bidder to exclusively supply construction materials for the construction of 20 - Machine 4 6 years 500,000
Makati Parking Building 2, for the month it has the following: Sept. 14 - Machine 5 7 years 2,000,000
Sales.net Php 400,000
Purchases of merchandise 80,000 283. Machine 1 was retired on September 30,2011. The input tax in July is
Purchases of deliver^ equipment 5 years life 1,200,000 A P2,200 C. P108,000
PLDT bill 30,000 B. P2,800 D. P132,000

279. How much can the local government of Makati City withhold VAT from its payments to 284. The input tax in August is
HWPD? A. P3,000 C. P108,000
A. None. C. 22,400 B. P5,800 D P110,800
B. 20,000 D. 24,000
285. The input tax for September is
280. How much VAT payable for the month: A. P4,000 C. P26,000
A. 10,000 C. 32,400 B. P6,800 D. P27,800
B. 13,600 D. 36,000
Questions 286 thru 288 are based on the following information.
281. During the month of May, XYZ Corporation had domestic sales amounting to P 1,680,000 TAN Corporation has the following sales during the month:
and export sales amounting to P1,500,000. During the same month, XYZ's total purchases Sale to private entities 224,000.00
directly attributable to domestic sales amounted to PI,120,000 and total purchases directly Sale to export-oriented enterprise 100,000.00
attributable to export sales Pl,008,000. For the month of May, XYZ Corporation's VAT Sale of exempt goods 100,000.00
payable: The following input taxes were passed on by its VAT suppliers during the month:
A. (48,000) C. 60,000 Input tax on taxable goods 5,000.00
B. 54,000 D 62,000 Input tax on zero-rated sales 3,000.00
Input tax on sale of exempt goods 2,000.00
282. Ka Pecking Matibag, a sole proprietor, buys and sells "kumot at kulambo" both of which are Input tax on depreciable capital good not
subject to value-added tax. Since he is using the calendar year as his taxable year, bis attributable to any specific activity 20,000.00
taxable quarters end on the last day of March, June, September, and December. When
should Ka Pecking file the VAT quarterly return for his gross sales or receipts for the period of 286. The output VAT for the month:
June 1 to September 30? A. 24,000 C. 36,000
A. Within 15 days from September 30 C. Within 30 days from September 30 B. 26,880 D. 48,000
287. The input VAT for the month: 293. Effect of failure to affix a documentary stamp which is required by law, except
A. 5,000 C. 15,000 A. Shall not be valid
B. 8,000 D. 23,000 B. Shall not be recorded in the proper registry
C. Shall not be admitted as evidence in any court
288. The VAT payable for the month: D. No notary public or other officer authorized to administer oaths shall add his jurat or
A. 1,000 C. 9,000 acknowledgement
B. 7,200 D. 16,000
Real Property Tax
Percentage taxes 294. Lualhati Educational Foundation, Inc., a stock educational institution organized for profit,
289. Which of the following is subject to other percentage tax? decided to lease for commercial use a 1,500 sq. m. portion of its school. The school actually,
A. Unregistered VAT enterprises. directly, and exclusively used the rents for the maintenance of its school buildings, including
B. Businesses who engaged in importation. payment of janitorial services. Is the leased portion subject to real property tax?
C. Businesses who are engaged in sale of services and goods. A. Yes, since Lualhati is a stock and for profit educational institution.
D. Business with annual gross receipts do not exceed Php1,919,500 B. No, but it may be subject to income taxation on the rents it receives.
C. No, since the school actually, directly, and exclusively used the rents for educational
290. Keyrand, Inc., a Philippine corporation, sold through the local stock exchange 10,000 PLDT purposes.
shares that it bought 2 years ago. Keyrand sold the shares for P2 million and realized a net D. Yes, since the leased portion is not actually, directly, and exclusively used for
gain of P200,000.00. How shall it pay tax on the transaction? educational purposes.
A. It shall pay a tax of one-half of 1% of the P2 million gross sales.
B. It shall report the P200,000.00 in its corporate income tax return adjusted by the holding 295. The head priest of the religious sect Tres Personas Solo Dios, as the corporation sole, rented
period. out a 5,000 sq. m. lot registered in its name for use as school site of a school organized for
C. It shall pay 5% tax on the first P100,000.00 of the P200,000.00 and 10% tax on the profit The sect used the rentals for the support and upkeep of its priests. The rented lot is
remaining P100,000.00. A. Not exempt from real property taxes because the user is organized for profit.
D. It shall declare a P2 million gross income in its income tax return, deducting its cost of B. Exempt from real property taxes since it is actually, directly, and exclusively used for
acquisition as an expense. religious purposes.
C. Not exempt from real property taxes-since it is the rents, not the land, that is used for
Documentary Stamp Tax religious purposes.
291. A documentary stamp tax is necessary in: D. Exempt from real property taxes since it is actually, directly, and exclusively used for
A. Donation of real property. C. Inheritance of real property. educational purposes.
B. Estate tax payment. D. Sale of real property.
Community Tax
292. If the required documentary stamp is not affixed on a document, one of the following is 296. What is Characteristics of Community Tax?
correct. The document A. Fee C. License
A. Will be notarized because the document is still valid B. Identification Card D. Tax
B. Will not be admitted as evidence in court because the document is void
C. Will not be registered in the proper registry even if the document is valid 297. Who has authority to collect Community Tax?
D. Is still valid and if already notarized should be registered and admitted as evidence in A. Bureau of Customs C. Local Government Unit
court B. Bureau of Internal Revenue D. National Treasury
 I. Part of the gross estate irrespective of whether or not the insured retained the power of
298. For the given year 2015 the following information from business: revocation
Gross Receipts from business Php900,000 II. Not part of the gross estate if the beneficiary is irrevocable.
Rental Income 650,000 III. Part of the gross income if the designation of the beneficiary is revocable TV. Not part of
Operational Expenses 400,000 the gross income irrespective of whether or not the insured retained the power of
Real Properties 17,000,000 revocation
Compute Individual Community tax? A. only l C. I and III
A. 1,155 C. 5,005 B. l and II D. I and IV
B. 1,555 D. 5,200
304. Value Added Tax is imposed on sale of goods or services while Percentage tax is imposed
299. Compute Corporate Community Tax? on sale of services only.
A. 1,120 C. 7,920 Donation mortis causa and inter-vivos are both acts of liberality by the person disposing of
B. 7,560 D. 10,500 gratuitously a property or a right in favor of another who accepts it
A. B. C. D.
Comprehensive Statement 1 True True False False
300. Which of the following statements is not true? Statement 2 True False True False
A. Support of an illegitimate child is against exclusive property
B. Gambling losses during the marriage are against community property 305. A merchant of stock or securities, whether an individual, partnership or corporation, with an
C. Gambling winnings during the marriage constitute community property established place of business, regularly engaged in the purchase of securities and the resale
D. Expenses of successful litigation between spouses are against community property thereof to customers; and who, as a merchant, buys securities aid resells them to customers
with a view to the gains and profits that may be derived there from.
301. A donated a parcel of land to B, his 15 year old son on account of B's graduation. A did not A. Dealer in securities C. Stock merchants
pay the gift tax on the property donated. Then, B took possession of the property and B. Stock brokers D. Underwriters
received the rental derived from it. In 2015, an assessment on the income derived from the
property was issued against B, which is correct? 306. Your client Mr. Irving Ackerman, consulted you on how he can transfer all his properties to his
A. The assessment against B is correct lone son with a minimum tax consequence. What will you advise Mr. Irving Ackerman?
B. The assessment against B should be deferred A. Sell all his properties in favor of his son.
C. The income should be included in A's income tax return B. Liquidate, convert all his properties into cash.
D. A validly effected a transfer of the property to B by virtue of delivery C. Incorporate and give all stockholdings to his son.
D. Get a life insurance, the proceeds there from will cover the tax consequence.
302. The gross estate includes properties located in USA of a non-resident citizen
The gross income includes income earned in USA of a Filipino citizen
A. B. C. D.
Statement 1 True True False False
Statement 2 True False True False

303. Proceeds of life insurance to the extent of the amount receivable by the estate of the
deceased, his executor or administrator under policies taken out by the decedent upon his
own life shall be