DONOR’S TAX 6.

On January 15, 2014, Daisy gave a piece of land to her

brother-in-law who is getting married on February 14,
1. In February 2017, Bryan received a piece of land with fair 2014. The assessed value and the zonal value of the land
market value at P 100,000 from his wealthy best friend, were P 750,000 and P 1,000,000 respectively. The land had
Rianne, as a birthday gift. Since Bryan had no use of the said an unpaid mortgage of P 200,000, which was not assumed
donated land, he immediately sold it to gorgeous Mike for by the donee and an unpaid realty tax of P 10,000, which
only P 500,000. What is the tax liability of Bryan? was assumed by the donee. How much was the donor’s tax
a. P 150,000 c. P 210,000 due?
b. P 60,000 d. P 360,000 a. P 297,000 c. P 43,200
b. P 237,000 d. P 31,400
2. Based on the facts provided in the immediately preceding
item, if assuming Rianne required Bryan to pay him a token 7. Lolo Jose donated P 50,000 cash to his favorite grandson
amount to P 10,000, how much should Rianne report as who is getting married on June 16, 2016. For donor’s tax
gross gift in his donor’s tax return? purposes the exempt dowry should be:
a. P 1,000,000 c. P 490,000 a. P 50,000 c. P 5,000
b. P 990,000 d. P 0 b. P 10,000 d. none

8. A resident alien donor donated to a Philippine domestic

3. On January 10, 2016, Maria Reyes, single mother, corporation a property located abroad valued at P 500,000.
donated cash in the amount of P 50,000 to her daughter The foreign donor’s tax on the donation was P 100,000. A
Cristina, and on December 20, 2016, she donated another P donation earlier within the same calendar year, was
50,000 to Cristina. Which statement is correct? donated to a legitimate daughter, a property located in the
a. Maria Reyes is subject to donor’s tax in 2016 because Philippines valued at P 300,000. How much was the tax
gross gift is P 100,000. payable?
b. Maria Reyes is exempt from donor’s tax in 2016 a. P 58,500 c. P 56,250
because gross gift is not more than P 100,000. b. P 52,500 d. None of the above
c. Maria Reyes is exempt from donor’s tax in 2016 only to
the extent of P 50,000. ESTATE TAX
d. Maria Reyes is exempt from donor’s tax in 2016 only to
the extent of P 50,000. 9. An inventory of Mr. A’s properties was taken two years
after his death. He had the following properties during the
inventory taking.
4. Mr. Hamas, knowing fully well that he is to die within Cash (20% from income of A’s properties after death)
six (6) months due to brain cancer, sold its residential P4,000,000
property to his only son for P 5,500,000. The fair market Car (bought for P 2M one day before A’s death) P
value of the said property at the time of sale is P 5,000,000. 1,200,000
Which of the following statements is correct? House and Lot (FMV – P 8M on A’s death) P 10,000,000
a. The property should be included as part of the gross Business Interest (worth 6M on A’s death) P 7,000,000
estate since it falls under “transfer in contemplation of
death”, the purpose of which is paying capital gains tax of The following expenses and losses were incurred by the
6% which is cheaper than estate tax. estate.
b. The property should no longer be included in the gross Funeral Expenses P 800,000
estate. Judicial Expenses 400,000
c. The sale should be subject to value added tax and capital Loss of pieces of jewelry (8montsh after A’s death) P
gains tax. 1,000,000
d. The sale should be subject to percentage tax and capital Obligations of A paid using his estate P 2,000,000
gains tax.
The gross estate of A is:
5. On Feb. 14, 2015, Digong donated 2,000 shares of stock a. P 20,400,000 c. P 23,200,000
of Delima Corporation to Obama. Delima Corporation b. P 22,200,000 d. P 23,400,000
shares are listed in the stock exchange. The following are
the trading prices of each share on Feb. 14, 2015: 10. Ajino Moto, non-resident Japanese, died on July 27,
 Opening price P 800 2014 leaving the following:
 Highest trading price 880 Exclusive properties, Philippines P 1,400,000
 Lowest trading price 760 Conjugal Properties, Philippines 420,000
 Average Trading Price 820 Conjugal Properties, Abroad 1,820,000
 Last Trading Price 840 Deductions Claimed:
Funeral Expenses P 100,000
The gross gift is: Judicial Expenses 100,500
a. P 1,600,000 c. P 1,680,000 Unpaid Expenses 150,500
b. P 1,640,000 d. P 1,760,000 Losses which occurred 7 mos after death due to fire
P 120,000
Donation Mortis causa to Makati City Hall 180,000
Medical Expenses incurred in June 2014 P 550,000
Family Home in Tokyo (included above) 1,500,000
Standard deduction 1,000,000
The estate tax due is:
a. P 44,000 c. P 71,560
b. P 69,160 d. P 82,560
VALUE ADDED TAX
1. The Republic of Korea, as an act of goodwill, does
not impose business taxes to Philippine carriers.
Korean Air is operating in the Philippines having two
flights in a week. If you were engaged by Korean Air
as its tax consultant and asked you whether it is
liable to percentage tax, which of the following will
be your advice?
a. Korean Air is liable to percentage tax based on
gross receipts from passengers, goods,
cargoes, and mails.
b. Korean Air is liable to percentage tax based on
gross receipts from passengers only.
c. Korean Air is liable to percentage tax based on
gross receipts from goods, cargoes, and mails
only.
d. Korean Air is not liable to percentage tax based
on the principle of reciprocity.
2. A purely cooperative company doing life insurance
business is subject to what kind of business?
a. Value-added tax
b. Percentage tax
c. Value added tax or percentage tax depending
on the gross receipts for the year.
d. Exempt from value-added tax and percentage
tax.
3. If a radio or television broadcasting company who
is not mandatorily required to register under the
VAT system chose to be a VAT taxpayer, its choice
is:
a. Revocable after 2 years
b. Revocable after 3 years
c. Revocable after 5 years
d. Irrevocable
4. Which of the following is not subject to value-added
tax?
a. A resident citizen who performs services in
the Philippines, the performance of services is
not regular.
b. A non-stock, non-profit private organizations
engaged in trade or business.
c. A government owned or controlled
corporation engaged in trade or business.
d. A non-resident person who performs services
in the Philippines, the performance of services
is not regular.
5. Rommel is an operator of taxi cabs. During a
particular month, he purchased from Mahindra, a
VAT-registered car dealer, 10 sedan type units for a
total selling price of 5 million pesos. The estimated
useful life of each vehicle is four (4) years. How
much will be the amount due from Rommel?
a. P 5,600,000 c. P 5,000,000
b. P 5,150,000 d. P 4,480,000
6. Based on the preceding number, how much input
tax can be claimed by Rommel?
a. P 600,000 c. P 12,500
b. P 150,000 d. zero
7. Rey Valera is a well-known author in Financial
Accounting and Auditing Problems. His revised
book in Financial Accounting contained one-page
advertisement promoting NU as one of the leading
schools in accountancy in the country. What will be
the tax treatment of the sale of the books for that
purposes?
a. 12% VAT
b. 0% VAT
c. Exempt from VAT
d. VAT exempt but subject to % tax
8. Which of the following is not considered an export
sale?
a. Sale of goods, supplies, equipment and fuel to
persons engaged in international shipping or
international air transport operations.
b. Sale of gold to BSP
c. Sale of raw materials or packaging materials
to an export-oriented enterprise whose
export sales is at least seventy (70%) percent
of the total annual production.
d. Sale of raw materials or packaging materials to
a non-resident buyer for delivery to a local
export-oriented enterprise to be used in the
manufacturing, processing, packing or
repacking in the Philippines of the said buyer’s
goods.
9. Which of the following is subject to value-added tax
upon receipt by the lessor?
a. A loan to the lessor from the lessee
b. An option money for the property
c. A security deposit to insure the faithful
performance of certain obligations of the
lessee to the lessor
d. Prepaid rental
10. A taxpayer decided to cancel its VAT-registration at
the time when it has unused input tax. What is the
available remedy?
a. Apply for the issuance of tax credit certificate
or refund within two (2) years from the date of
cancellation of VAT registration, at the option
of the taxpayer.
b. Apply for the issuance of tax credit certificate
within two (2) years from the date of
cancellation of VAT registration, however he
shall only be entitled for refund if he has no
internal revenue tax liabilities.
c. Apply for the issuance of tax credit certificate
or refund within two (2) years from the quarter
 in which the unused input tax was sustained, at a. P 150,000 c. P 26,400
the option of the taxpayer b. P 60,000 d. P 26,000
d. Apply for the issuance of tax credit certificate 17. Pilipinas Shell sold fuel to an international shipping
within two (2) years from the quarter in which carrier whose voyage is from a port in the
the unused input tax was sustained, however, Philippines directly to a foreign port without
he shall be entitled for refund only if he has no docking or stopping at any other port in the
internal revenue tax liabilities. Philippines. What is the treatment of the
transaction for VAT purposes?
a. Exempt c. 12% VAT
b. Zero-rated d. Either “b” or “c”
Sugar Inc., is a trader of sugar. It has the following
18. When is the deadline for manual filing of the
data:
quarterly VAT return?
Sales: Local sales of refined sugar to government P a. Ten days from the end of the quarter
1,000,000; Export sales of refined sugar P1,000,000; b. Twenty days from the end of the quarter
local sales of muscovado, P 1,000,000; c. Twenty-five days from the end of the quarter
Purchases common to all activities: Purchases of d. Thirty days from the end of the quarter
sugar cane, P 3,000,000; Purchases of packaging 19. When a VAT – registered person retires from
materials VAT suppliers, P 500,000; purchases of business, all goods on hand, whether capital goods,
capital goods, useful life is 6 years, P 1,500,000. stock in trade, supplies, or materials as of the date
11. How much is the output tax? of such retirement shall be considered sold. The
a. P 720,000 c. P 480,000 VAT shall be computed based on:
b. P 600,000 d. P 360,000 a. Cost
12. How much is the creditable input tax? b. Fair market value
a. P 222,500 c. P 183,000 c. Cost of fair market value, whichever is higher
b. P 192,000 d. P 152,500 d. Cost of fair market value, whichever is lower
13. How much is the final withholding VAT? 20. Bikings Manpower Agency has the following gross
a. P 70,000 c. P 20,000 receipts from various clientele in a particular month
b. P 50,000 d. zero broken down as follows (net of VAT):
14. ABC Associates, a VAT-registered firm, sold its office Salaries of personnel P 400,000
building together with the lot thereon to DEF Agency Fee 100,000
associates, another VAT-registered firm, for 60
million pesos. Of the total selling price, 40 million How much is the output tax?
pesos pertains to the building. The useful life of the a. P 60,000 c. P 48,000
building is estimated to be 30 years. Assuming the b. 12,000 d. nil
buyer is paid in lump sum, how much output tax 21. Casa Leticia, VAT registered, is engaged in hotel
should be paid by the seller in the month of sale? business. It started operation in November 2105
a. P 7,200,000 c. P 2,480,000 and had the following selected information from its
b. P 4,800,000 d. P 2,400,000 records for the month:
15. Based on the preceding number, how much input Service Revenue P 500,000
tax can be claimed by the buyer in the month of Unearned Revenue 20,000
purchase? Purchases from VAT registered entities:
a. P 7,200,000 c. P 2,480,000 Goods P 150,000
b. P 4,800,000 d. P 2,400,000 Services (20% still unpaid) 200,000
16. Rica Customers Inc., started its business operations Importation of generator with
paying percentage tax. Later on, as its business Useful life of 7 years
improves, it registered under the VAT system. The Dutiable value 1,200,000
following information were taken from its records Customs Duties 100,000
on the last month as a non-VAT taxpayer: Excise Taxes 50,000
Inventory, beginning: Other Charges within the BOC 50,000
Raw Materials P 250,000
Work in Process 540,000 How much VAT did the company remit to the BIR?
Finished Goods 460,000 a. P 25,200 c. P 17,600
Supplies (20,000 pertains to fresh fruits b. P 22,400 d. zero
Given for free during lunchtime) 70,000 22. Matubig Corporation is vat registered and a holder
Property, Plant and Eqt. 90,000 of franchise from the government engaged in the
Intangible Assets 34,800 business of supplying water to several towns in the
region. As recorded in its books, its total gross
How much is the transitional input tax? receipts during the month from sale of water
 amounted to P 2,550,000 while the receipts from
rental od its equipment amounted to P 280,000.
The operating expenses amounted to P 2,000,000,
11% of which was paid to vat registered persons.
The percentage tax due is:
a. P 0 c. P 56,500
b. P 16,500 d. P 51,000
23. The VAT payable for the month is:
a. P 0 c. P 16,500
b. P 7,200 d. P 313,200
24. DMCI is a non-VAT registered real estate dealer and
lessor. If its monthly rental of residential units
exceeds P 12,800 per unit, the same shall be subject
to 12% VAT
a. True, without any further conditions
b. True, only If the total annual gross
receipts from rentals exceed P 1,919,500
c. True, only if the total annual gross receipts
from rentals and other operations exceed
P 1,919,500
d. False, DMCI is a non-VAT registered entity.
25. Assuming that the annual gross receipts in the
preceding number amounted to P 1,850,000, the
gross receipts from rentals shall be
a. Exempt from VAT subject to percentage
tax
b. Exempt from VAT and percentage tax
c. Subject to 12% vat
d. Subject to 0% VAT
26. Pedro, a non-VAT registered taxpayer is engaged in
the following activities:
 Trucking business with gross receipts of P
800,000.
 Lease of apartment house (monthly rental
is P 10,000 per unit) with gross receipts of
P 700,000
 Practice of profession with gross receipts
of P 900,000.
Which of the following statements is correct?
a.He is considered VAT registrable taxpayer
b.He is mandatorily required to register
under the VAT system
c. He can optionally register under the VAT
system
d. He is not subject to any percentage tax
27. Any input tax on the purchase or importation of
goods shall be creditable against the output tax if:
I. Evidence by a vat invoice or receipt
II. Issued by a vat registered seller
III. In the course of trade or business
a. Only I is required
b. Only I and II are required
c. Only I and III are required
d. I, II and III are required
28. Which of the following transaction is subject to
VAT?
1st - Importation of goods for personal use
by a person not engaged in trade or
business
2nd - Isolated services rendered in the
Philippines by nonresident foreign person
a. 1st only c. 1st and 2nd
b. 2nd only d. None of the above
29. In case of sale of real property on installment sales
by a real property dealer shall be subject to vat on:
a. Selling Price
b. Selling price of fair value whichever is
lower
c. Selling price or fair value whichever is
higher
d. Installment payments including interest
and penalties, actually or constructively
received by the seller.
30. Which of the following types of input VAT is
considered as tax incentives?
I. Transitional input VAT
II. Presumptive input VAT
III. VAT on importation
a. I and II only c. II and III only
b. I and III only d. I, II, and III
31. May a transitional input tax credit be claimed on
inventory of real property (including land),
regardless of whether input VAT was actually paid
on the purchase of such inventory?
a. Yes, inventory that forms part of the
valuation of the transitional tax credit
may include real properties provided that
these properties are included in the
products that the VAT registered persons
offer for sale to the public.
b. Yes, inventory that forms part of the
valuation of the transitional tax credit may
include real properties provided that these
properties are either used in business or
included in the products that the Vat
registered person offers to the public.
c. No, prior payment of input VAT is required
before a transitional input VAT is allowed
as tax credit.
d. None of the above
32. BOBA residences Inc. is a domestic corporation
engaged in real estate business. It has the following
data for the last quarter of 2015:
Installment sale of a town house: Realized Gross
Profit (GPR is 30%), P 300,000; Gross Selling Price, P
4,000,000; Zonal Value, P 5,000,000
Deferred Sale of a parking lot: Gross selling price, P
1,000,000; FMV, P 1,500,000;
Rental Income, P 800,000
Rent Receivable, beg. P 300,000;
Rent Receivable, end P 100,000;
Importation on materials used in the construction,
P 2,265,000
 How much is the VAT due or payable? For the following questions:
a. P 285,000 c. P 261,000
A VAT registered trader has the following
b. P 135,000 d. P 111,000
transactions:
33. Which of the following is not subject to VAT?
a. A resident citizen who performs services Sales of good to private entities, net of VAT P
in the Philippines, the performance of 2,500,000
services is not regular.
b. A non-stock, non-profit private Purchases of goods sold to private entities,
organization engaged in trade or business. gross of 12% VAT 896,000
c. A government owned or controlled
Sales to a government owned corporation
corporation engaged in trade or business.
(GOCC), net of VAT 1,000,000
d. A non-resident person who performs
services in the Philippines, the Purchases of goods sold to GOCC, net of 12%
performance of services is not regular. VAT 700,000
34. Clifford (vat registered) exported goods to
Singapore for sale. He is also subject to business tax 39. How much is the output tax?
of a. P 300,000 c. P 420,000
Excise Tax 3% tax b. P 120,000 d. nil
a. Yes Yes 40. How much is the standard input tax?
b. Yes No a. P 20,000 c. P 50,000
c. No No b. P 70,000 d. nil
d. No Yes 41. How much is the creditable input tax?
35. Which of the following input taxes is creditable? a. P 166,000 c. P 70,000
a. Input taxes from non-VAT suppliers b. P 96,000 d. P 180,000
b. Input taxes from purchase of direct labor 42. How much is the input tax closed to expense
c. Input taxes from importation of goods for (income)?
sale a. P 14,000 c. P (14,000)
d. Input taxes from importation of personal b. P 34,000 d. P (34,000)
and household effect 43. How much is the VAT payable to the BIR?
36. Pedro approached you and asked for your a. P 404,000 c. P 204,000
professional help with regard to the sale of his b. P 390,000 d. nil
ancestral house and lot in the amount of P A Vat- registered trader has the following
5,000,000. Your advice would be: transactions for the month of July 2014:
a. 12% VAT
b. 0% VAT Sale of goods to private entities, net of VAT P
c. 3% tax 2,500,000
d. Exempt from VAT
Purchases of goods sold to private entities, gross
37. A call center in Makati operated by a domestic
of 12% VAT 896,000
corporation provides hotel reservation services to
hotels operating in North America. The services are Sales to a government owned corporation (GOCC),
paid for in US$ and duly accounted for with the net of VAT 1,500,000
rulings of Bangko Sentral ng Pilipinas is subject to:
a. 12% VAT c. 3% Purchases of goods sold to GOCC, net of 12% VAT
b. 0% VAT d. VAT exempt 700,000
38. If the depreciable capital good is sold or transferred Purchases of Machineries, gross of VAT, useful life
a period of five years or prior to the exhaustion of is 6 years 11,200,000
the amortizable input tax thereon, the unamortized
input VAT on capital goods sold can be 44. How much is the VAT payable to the BIR?
a. Claimed as input tax credit on its entirety a. P 280,000 c. P 191,500
during the month or quarter when the b. P 224,000 d. P 300,000
sale or transfer was made. 45. Based on the preceding number, how much is the
b. Expensed outright in the month or quarter input tax closed to expense (income)?
the sale was made. a. P 13,500 c. P (13,500)
c. Amortized over the remaining life of the b. P 21,000 d. P (21,000)
capital good. 46. Using the provisions of the Train law, A lessor rents
d. Claimed as input tax credit in its entirety or his 2 commercial and 10 residential units for
amortized over the remaining life of the monthly rent of P 60,000, and P 15,000 per unit,
capital good at the option of the taxpayer. respectively. During the taxable year, his
 accumulated gross receipts amounted to P
3,240,000 (1,440,000 from commercial units and P
1,800,000 from residential units.)

How much is the business tax?

a. P 43,200 c. P 172,800
b. Zero d. 388,800
47. Using the same facts in # 46 under the train law,
assuming the lessor has 5 commercial units and his
accumulated gross receipts during the taxable year
amounted to P 5,400,000 (P 3,600,000 from
commercial units and P 1,800,000 from residential
units), how much is the business tax?
a. P 0 c. P 432,000
b. P 648,000 d. P 216,000
48. Same with number 46 and 47, but assuming the
lessor rents his 5 commercial and 10 residential
units for monthly rent of P 60,000 and P 15,500
per unit, respectively. During the year, his
accumulated gross receipts amounting to P
5,460,000 (P 3,600,000 from commercial units and
P 1,860,000 from residential units), how much is
the business tax?
a. P 655,200 c. P 432,000
b. P 223,200 d. P zero

For the next two questions: Alpha Corporation (vat

registered) has the following data for the month:

Sales – private entities and individuals (10% to

senior citizen) P 2,000,000
Sales – vat exempt goods 1,000,000
Sales – government 1,000,000

The following input taxes were passed-on by vat

suppliers to Alpha Corporation during the month:
Input vat on goods sold to private entities and
individuals P 120,000
Input vat on sale of exempt goods 20,000
Input vat on sale to government 100,000

49. The VAT payable for the month is:

a. P 216,000 c. P 96,000
b. P 108,000 d. P 36,000

50. The amount of input vat not available for tax credit
but may be recognized as cost or expense is:
a. P 20,000 c. P 62,000
b. P 50,000 d. nil