/ CPA RE\lEW SCHOOL OF '!

'HE PHILIPPINES
Manila :·;iJ�;. '.i

PREWEEK LECTURE-- TAXATION ,.

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f'ART l GENERAL PRINCIPLES
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.. Taxes are i rnponant bee� use:

a. Lifoblood of the Uovernmem;

h.' Base<l on n e ces si ty:
c. !nhcren( po.,,v·�r of th1· State;
d. Exer cised by the legislature.

Which principle of sotmd tax system suggesls ·

that the soLrrces of revenue should be
sufficient to meet the rec.uirements of the govermr.r:nt expenditures?

.:1. Fiscal i\clequacy;

o. Administrative Feasibili ty ;
�. Theoretical Justice;
J. Uniformity of t3.xes .

. •. Tht.: following are the pc- wers of the Bure.vi ot Int.:mal Revenue (BIR), except:

u. · rlle as�cssmem and ;;ollectio n oi all nation al L 1lerna1 revenue taxes.

b. The exe cution of al I judgments in ail cr:Ses .decided in its favor by the CTA and the
ordinary courts.
c. The enforcement ot all fo rt eitures_ penalt:1e�: ai1d fines c b nnec ted with national �nternai
rcvenut; taxes. . •

d. The assessment and collection of custom;; dutie� and tariffs.

· L vyhen may the Bmeau cf Imem:il R e v ez:ue termi1pte t�xing P,eriod, EXCEPT?

a. When 1.he taxpayer is retiring from b usine�s :;t.bject to tax;

b. When i.he ta xpaye r went abroad:
c. When lhe taxpayer 1 cmoves his propezrty fr _om Philippines;
d. When che ·taxpayer Ii ides or conceals his prorwn:y;

). Which among t he follo'.ving powers of the C0mnissioner of the Bureau of Internal Revenue
may be deiegated'?

a. E11iorcement of forfeitures, penal ties a..nd Lnes i n connection with th e collection of

nalion:il internal revenue ta��es.
h. The po\\'Cr to recommend the promulgation o1f rules and regulations by the Secretary of
·

Financ:c.
c. The pc1wer to issut . e
ulings of first impres::;io:i. 1Jr to revers , revoke or modify any exi:>ting
ruling of the bureau.
d. The pnwer 1'o assil 11 1)r ;·e.'lsSi!rn imem;�! :·:· :cnue officers to establishments where the
article;; su�ject w ,;; ;.�ist La>.. arc prouuccu ,01 i.�pt.
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() The following are age1Jts and deputies for coll �ction of Natio n al Internal Revenue raxes;
except:

a. The Commissioner of Cu�iom� and his sut .'.Jrdinates with re spect to the collectic·n of
National Imemai R·:venue Taxes on imp one c goods.
b. The head of the appropriate government ofJ::ce and his subordinates with respe c t ti) the
collec1ion of energ�· tax. ·

c. Banks dul:t accreJ ited by the con::ims�1on1 r ·,:;,rith respect to receipts of pa yments of
internal revenue t ro: es a uthl) rized to be madt thru b2.nks.
d. City treasurer with regard to �o! lec:tion ol'rea! property tax.
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7. l sl Statement: The Commissioner. the DepUi:' Commissioners, the Revenue Regional

Directors, the Revenue� District Officers and • lther i n tern al revenue officers s h�l l have
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au thority to make arre.>i and seizures for � '1e vic?l�tiop of
any �enal law,· rule or regulatron
.

·administered by the Bureau of Internal Revenue r·ur�uant to the 1 ax Code.

Statement : An internal rev en ue officer assi�ned to estal)lishments where

articles subject
z"d
nt for more than four
to excis e tax are prod uc ed or kept shall in no ca:;c stay in his assignme
(4) years.

· a. True; false
b. True; True
· c. False; Tru e
d. False ; False

Revenue: Taxes
8. What kind of taxes, foes and charges are c onsi dered as National Internal
un der the National I nte rnal Revenue Code (NIRC)?

I. Income taxt:s
11. · Estate taxe!
III. Donor's taxes
IV. Value added taxes
V. Other p erc:e nt1g� ra:-;e�
VI. Excise taxes
VII. Documentary stamp taxes
VIIl. Community taxes or poll taxes
IX. Real property taxe�

a. I,lI, III, IV. V, VI

b. I, II, lll, IV, V ,VI, Vll
c. I, II, III, IV, V, VI. VII, VIII
cl. I, II, III, IV, v' VJ vn, VIII. IX

9. Which of the followin� st atements is wrong? A revenue bill

a. Maybe recommended by the President to Cc ngress

b. May have a House version and a Sen:ue version approved separately and then
consolidated with both houses approving 1ht': consolidated version.
c. May origi nate from the Senate and on whica same bili the House of Representatives.may
propose amendments.
d. Must originate from the House of Rep re sent atives and on which same bill the Sena1e may
·

propose amendments.

10. The Constitution provides, "charitable· institutions, churches, parsonages or convents

mosq ues, and non-prof,t cemetedes and all lands, building:>, and
appurtenant there to,
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_improvements actually, direcrly and �xclusivet,r us�d for � eligious, charitable or educmioncfl
purpose� shall be exe;npt from taxario:-i." This provision ex e mpts charitable in stituti on s and·
r eligious institutions from what kind of taxes?

a. Fr om all kinds of Laxes, i.e. incom�, vat,.cu:.iorns, l ocal taxes, and real property tax:
b. From income tax 1mly;
c. From value-adde<i-tax only;
d. From reai propert11 tax only.

11. The rule of ta'Xation snall, EXCEPT :

a. Evolve a p rogress ive system;

b. be Uniform·
be Equitabl�·
d. be Proportio�al.
c.

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:t>ART II INCOME TAX

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[2. One of them is not con:;idered non- re
side nt citize -::.
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a. A c itizen oi the Phi l ippin es who e s cabiis hes 0 the satisfa ct ion of the Commissioner the
fact Of this physical presence abroad -,vi th '.! 0: finite intentioa reside t herei n .
b. A citi2.e n of the Phi i ippine� \VllV h,;;, ,·(.:. u1_ ; ,:l! ppi ne�� during the taxable year (\) reside
abr oad, either as an 1h1migram or for emoloy::1ent an penna nent basis. •

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c. A citi:�en of the P .1ilippin<!S who \\·vrks ar: i derives inc ome from abroad and w'lose
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employmem thereat requires him to �e pl-,y'.>1;:�t!ly yresent abroad most of the time during
the taxable year. .
d. A citizen of the P h ili ppi nes who went 0r. ;,i t·usiness tri p :ibroad and stayed therein .nost
of the time du ri ng t·1e year.

·15. Z is a Filipino i mmigra nt l iving in the l:nitea.Su.tes for mo re than 10 ye ars . He is retired and •

. he came back to the P hi li pp ines as a bu/ikbcwan Eyery time he comes to the Philippines, he
stays here for about a month. He regularly rece ive s �- p en sion from his former employer in
the United States, arnountinl2. to US$ I ,OOO �. month. Whiie in the Philip pin es, with his
pension pay from h is former employer. he p m cha sed three condominium units in M:-.kati
which he is r1�ming out for Pl5,000 :i month each. Does the US$1,000 p en s i on b ec ome
taxable because he is now in the Philippine�:
,
a. Yes, Jncome recei,·cd in the Phiiippines by n,:-n-resident citizens is taxable.
b. Yes, l ncome received in the Ph ilipp in es or a.'iroad by non-resident citizens is taxable ..
c. No, Income eai:.1ed abroad by non-resiu:nt citizen s are no longer taxable i:i t he
Philippines.
cl. No, the pension is :xe;·npt fron� rax.. t:."ln btil!:l 011c 0f t!1c exclusions from gros:; income.
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14. Statement I: Income ,,f res ident citizen of· rhe :.> h ili ppines is taxable whether it is with in or
witho ut the Philippine:;.
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Statement 2: Non-res1dent aliens 11ot engaged .n b usiness are subject to a 25% fi nal tax on
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gross income from all sources 'Ni:hin the Ph.lipp'.nes.

a. True, false:
b. True, true;
c. False. true:
d. False, false

15. Minimum W age Earners shail rder to:

a. Only rho:".:: who � ;·e wor king in 1:1(· pri ·:�:!e sector being paid th e Statutory Minimum
Wage.
b. Only those who ar·:: wo!·king in the pubiii.: s;:;:;tor being paid the Statutory Mini m um Wage :
c. Only tho�,� who ire working in the non· :1gricultural sector b eing p ai d the Staruto ry
Minimum Wag,�.
d. Both ti1ose who "re worki ng in the privat: a nd pubfrc sector bein g paid the Starntory
Mi nimum W age. .
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16. Compensation of!Vl1nimum Wage Earners sh:�li be exempt from :

a. Withhoiding incc me tax;

b. Withholding final tax;
c. Wit hho lding capitai gains tax;
d. Withholding c ree :ita b le tax.

)7. Which of the following comp ensati oi of a•mir:imum wage earner shall be taxable?
:

a. Holiday pay;
b. . Overtime pay;
c. Night shift diffeientic.l pay;

d. Commission pa� . . .
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! J:3. S tatemen t l: A minimum wage earner is exempt from income tax .

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! Statement:'.: A minimum wa ge earner is not requi1 ed to file income tax return.
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a. True, true
b'. True, false
c. False, trne
d. False, false

19. St atement l: An i nd iv idu a l taxpayer is allowed iO claim a optional standard deduction of ·

40% of Gross Income.

Statement 2: A corporat.:-: taxpayer is allowed to claim optional standard deduction of 40% bf

Gross Income.

a. Tme, true
b. True, false
c. False, true
d. False, false

20. Which is correct?

a. Basic Pe·rsonal Exem11tion of a Sir:gle individuLI !s P20,000:

b. Basic Perso n al Exemption of a Head of Fam i ly is P25,000;·
•;. B asic P�:rsonal ExemJtion.ofMan-ied individud is P32,000: . .
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1l Additonal Personal E�emption per qualified dept:!ndent is P 25,000;

2 i. Mr.
.
Hand Mrs. W marri ed couple had the foliowi lg d:o.ta in year 20 l l.
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Only Mr. H has gainful ·�mploymem.

Two dependents. a legitimate son 21 .vear� uid ant daughter l 9 years old but newly- wed.

0The persona l and addifo1nal exemption ot.the couple:

a. H - P 100, 000; W - 1'50, 000

b. H - Pl C10, 000; W - :) O
c. H � P50, 000; W - P:50, 000
d. H - P5C1, 000; W - P 0

n. Which of following income earners is required to fiie income tax return?

a. Minimum wage earners;

b. Non-resident alien 1;0t engage in business;
c. An individual with respect to pure compen:;ation income deriving from such so urce s
\.vithin Lhe Prulippi1h:s. the i ncome tr:,_� on which ha:; been correctly withheld and thrn an
individual deriving compensation from one employer at any tirne�<iu.ing the taxable year;
d� General profossional partnership

23. Which a mong the following Goverrm1ent Owned and Controlled Corporations is taxable?

oraPon.
a. Philippine Amusement and Gaming Corp
b. Social Security Sys1em.
c. Philippine Health Ir:surance Company.
cl. Philippine Charity Sweepstakes Office.

e to pay inc Jme tax on its taxable i ncome by:

dom est i c corporation shall be liabl

a. Thirty-five percent C 5%) of its t&x ble� incomt;

: b. T hi ny percent (30%) of its tax able mco�

e:
. � mcu. rr.x,
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c. Twenty five p erc ent 125%) ofns tax ble
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. Fifteen percent ( J 5%) of its taxable ncome.
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 ��5. A dividend receive d by a domestic corporation from a nother domestic corporation shall
be-:

Part of the Gross Income·

�e;
a.

b . .Part of the Taxable luco

c. Part of Passive lncon1e·'
d. Exempt from incom e tax.

'.�6. A, corporation realized a gain from disposition.of its buil ding not u�-ed ine:>usiness, shall be: .

a. S ubj ec t to Income ta;� of 30%;

b. Subject to Minimum Corporate lnc0m.: tax of:�%:
c. Subject to final tax of 6%;
d. Exempt from incomC' tax.

27. The Secre tary of Finant:e is authorized to suspr nd th e impo si ti on of Minimum Corporate
In come Tax on any corporation which suffers los : es on ac cou nt of:

a. Economic Sabotage:
b. lnsolvency;
c. Force Majeure;
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d. Corporate Rehabilitmion.

28. The fo llowing organiza·lions sha l l not be taxed. e:-..cept?

a. Labor ugricultural .1r horticultural L':g.anizat;· m not org anized principally for profit;
b. Mutual savings hark not hav in g a capital sr 1ck represented by sha res, and cooperative
bank without capiu.l st4lck or g anized and uperated for munial purposes and without ·
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profit;
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c. A beneficiary :;oci1·ty, ord�r or ass-::•ciat;on l'perating for the �xclusive benefit of the
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members such as a fraternal organizatior, opc-,:ating under the lodge system, or m utua l aid · :
ass oc i ati on or a nor. stoc k corporation org;.-:niud by employees providing for the payment
of life, sicl�1ess, ac c ident, or other b:"!nefos .. xclusi vely to the members of such society,
order, or associatio11, or nonstock. corponnio11 or their dependents;
d. Cemetery c ompany owned and opc:rriced by a stock corporation.

29. Whi ch of the following is included in g ross i"nco.ne?

a. Amounts rece ived by i nsure d as return of pre. niwn;

b. Life ins uran ce procieds;
c. Comµ.::nsation for i,:ij.uries or sickl}ess; •

d. Share in the net inc .>me of a general protess1cnal pa1tnership.

30. Which of the following fringe benefit i s not subjl"tr tO fringe benefit tax?
i
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a. Housing 13enefit;

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h. l: x P·�n: ;e: Ar.·: ·::> L!nt:
c. De Minimis Bene fit ,
u. Yehicll' Benefit.
\ ) L In computing taxable 1 ncomc. rh.e .!aw alluws ta '>l!S to be deductible as long as it is ordinary ·

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and nec � ssary for trade Which am<Jng i:he follo1 �ing tax es can not be deducted in comp uting
taxable income?

a. Estate tax;
b. Value-add1::d-tax:
c. Excise tax;
d. Documentary stam p tax.
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P age · 6

'.i2. Premium paid for and hospitalization ir_surance sh all

healch be allowed as a de. duction
provided the following ,,�e m�t, which is the e xception: •
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a. The amount claimed as a deductioa does no, (; ceed two � thou sand four hundred p•!sos
(P2,400) per year.
b: Claimed by both spouses who avails basic per ;onal exernJ:Jtion.
c. Gross incorr.e of the fami ly do not exceeds tw) hu ndred fifty thou sa nd pesos (P250,000)
d. The amount of p!'emium payment c l aimed d.J not exceeds two hundred pesos (P200)"a
month.

33 .. Which of the following is deductible exP.ense·to arri�e at the taxable income?

a. Persona,
l living or family expenses. i
b. A'ny amount paid for new buildings or for permanent improvements, or bette1men� r.:iade_
to increase the value of any property orestate
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c. Any amo un t expended in restoring propeny or in making good the exhaustion t,hc re of
which nn allowance is or has been mad<::. :
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d. Premiums paid on any life insurance poiicy r nvering the life of any officer or employee, i
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when the immediate family member of the i nsured officer or employee is dire ctl:1 the
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beneficiary.

J4. in the case of a Laxpay1.:r, only the following pcri.:enca g45 of th!.! gain .,..
or. loss recognizeq upon I
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o.L. sale or exchange of a capital asset shalJ be taken
u1e into accou nt in computing ne1 capi tal
gain, net capital loss, and n et income:

· (Statement 1 ) One hur 1dred percen� ( 100%) if t.1e capit al asset has been held for not more
than twelve (12) montl-s by a taxpa ye r;
·

(Statement 2)Fifty percent (50%) if the capi tal a5set has been he l d for mo re than twelvE: (12�
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months b;1 a taxpayer;

a. True, true;
b. True, false;
c_ False, fals e ;
d. False, tru e ;
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35. A wor keci for a manufacturing firm but due to tus in e s:; reverses, the firm offered a volL,ntary
redundancy program in order to reduce overhea;l exp en s es. Under the progrfilt\, an employee·
who offered to resign would be giver. separatio11 p ay equivalent to his 3 months basic :;a,lary.
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for every year of sen ic e A .:iccepted the ofte: · and received P800, 000 as separario.>1 pay
.
unde r the pr ogram Atter all the emp lo yees whe acc e pted the offer were paid, the firm found
its overhead still excessive. Hence, it a do pted another program, where various unprotitable
departm e nt s were clo:;t;d. As a re sult, B was �epar?ted from the service, B also received .
. P800, 000 as separation pay. At the time of sepa'ration both A and B have rendered at least

] O years of se r v ice bu1 A was 55 years old whil� B \�as only 45 years old. As a re sul t , _

�. Both am ounts are e(empt from i n com e tax;

b. Both arnounrs are subjec t to inc ome rax:
c. Only Mr. A is su bj ec t to income tax ;
d. Only Mr. B is subject to income tax .•

PART III TRANSFER TAXES

e of a decedent:
36. Which of the following shall not be inclu ded in the Gross Estat

Dece d en t int erest;

Trander in Contemplation of Death;
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Revocable transfe·:
Claims a gai n s t an insolvent person .
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The followi ng shal l not be subjec t to estate tax. exc ept:

a. The m erger of usufruc t in the owner of the nake.d title;

b. Th e tramanis si on or delivery of the inlieritance ( r l eg acy by the fiduciary heir or legate t?
e
fideicommissary; '
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the ; .
c. The tran sm ission fror.1 the first heir, legatee or don e e in favor of another beneficiary, m

ac cordance with the oesire of the predecessor:

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· u. All bequests, devise�. le&actes or
,
transicrs ': > social welfare, cultur<U and charitabi�
in stitutions. · • '

T he Congregation of tht Mary Imm ac u lat e donatZ c a land and a dom1itory bu ildi1�g loc�ted
alon g Espana St. in favor of the Sisters t>f the Hay Cross, a grou p of n u ns operaung a free
0
clinic and h igh school te 2ch in g basic spiritua l valu1:s. ls the donation su bject to dono r's ta:<

a. Yes, the d on ation is subject tu donor's tax because lht· donee is a stranger. .,

h. Y es, the donati on is :;ubj ect to donor" s tax bec.rnse it lacks lhe essential requisites of not
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more than 30% of s aid donation shall be U!; :d by such instituition for administrative
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purpo se s.
c:. No, the donation is n .>t subject to d ono r's tax b !c ause the donee is a non - stock , non-profit
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oq�anization eng aged principally for religious rnd educational vocation.

d. No, such donati on is �>pecifically exen1p ted by £.\�.

39. Rem edios, a resi dt:nt citizen, died on N'ovember 10, 2006. Sh died leaving three e
condominit,m units in Q 1 1e zon City valued at PS l\. ii llion each. Rodolfo was her onl y heir. He
reported her cle:ith on D <:: cembe r 5, :2006 and filed the e state tax return on March 30, 2007.
13ccause he needed to se l l one unit of the condomi .1ium to pay for the estate tax, he asked the
Com missi oner of l nte rn al Revenue to give him one year to pay the estate tax due. -:�he
!�ommissioner approved the reques: for exte:lSlll! of time provided that the estate tax be
rnmputcJ 011 the basis l)I lhc 11alue or the prop1.:rl) LIL the tjmt: Ol pn.x1new of the tax. Does tne
Cammissioner of In terni: l R evenu e have the p,o\.ve1 [o ex t end the payrn� n � of estat e tax1

a. Yes, th1: Commi ssio : 1 er of Internal Revenue may extend the paymen t of es t ate tax for a
m ax imum period of :10 days for meritorio u s ca ;es.
b. Yes, the Conunissioner of lnt ernal Revenu e mw exten d the payment of tax for 2 year:; in
case of extra-judicial sett l em ent and for 5 year:: in case of judicial settlement.
No, the Commission..:r of Interna l Revenue ha; no po we r to extend pa ym e nt 'of estate tax
..:.
under all condition.
d. No, the Commissioner of Internal Revenue ha; no power w extend payment of esta t e tax
otherwise il will be encroachment upon exd u :; ve l egi slative autho rit y.

�.o. For donor's ta.'\'. purpose:;. one of the following is .L stranger.

.
.:i. Brother or s i ste r c. Uncle
i). Spouse d. Son-in- law

PART IV BUSINESS TAXES

L,l. W hic h nfthe foitowing ; ransaction s is ex .:mp t frnin valuc-.added-tax?

·

n. Medica l services such as dental and v�terinar" s erv i ces rendered by professionals.·
b. Legal services. . •

c: Services ari s i ng from ernplovee-employe\· rela:0idnship.

c. Service s rendered b) dom estic air transport co•11panies.

42. Vvnich of the fol l owi ng .ransactions is subj ect to :itro-rated value-added-tax?
a. Serv�ces rendered to persons engaged in interr::itional shipping or air transport operations.
b. Services rendered by banks, non-bank financic.I intermediaries.
c. Generation, transmi�sion and d istribu< ion ('j. eie c rrici ty .
d. Serv ice:; rendered b y pro fessio nals such a� CJ> As; Physicii;ms and Lawyers.

·13. Which of the following busin es ses is all�wed ::i. pr !s um p tive input value-added-tax?

a. Manufacturer of canned goods .

b. Manufacmrer or pacKed juices.
c. Manufacturer of packed noodles.
d. M�nuf acturer of dried fish.
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44. Transitional Input Tax Rate is:

a. 12% b. 10% c.4% Cl. 2%

b
45. 1 si Statement: Exc i se t 1xes imposed and ased )D weight or volum e capacity or any other
physical un i t of measur�ment shall he r e ferred to as ad valorem tax.

� imposed and based 'on selling price or other specified va lue- of

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2nd Statement: Excise ax e t
the good s ha ll be referr�d to as spec ific tax.

a. True; False
b. F a se ; Trne
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c. True; True
d. False; False

P�RT V REMEDIES OF STATE AND OF THE TAX.PAYER

46. The Commissioner o .. · I nte rnal Revenue may compromise the payment of any internal
revetme tax when

I. A reasonable doubt as to the validity of th� claim against the taxpayer exists
11. The tax or any p(lrtion thereo f appears to b! w1justly or excessively assessed.
Ill. The financial po:;ition of the taxpayer demonstrates a clear inability to pay the as�essed
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tax.

a. I and II c. II and III

b. 1 and nr c!. I. 11 anc\ Ir.
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47. The Commissioner of'Internal Revenue m ay ab:ne or cancel the tax liab ili ty when

The administration and collet:tion costs i1.voived do not justify the collection •)f the
·

I.
amount due
II. A reas o nable doubt as to the validity of the duim again st the taxpayer exists
III. The tax or any poi tion the reof appears to be unjustly or excessively assessed
IV. The financial position of the taxpayer demJnstrates a clear inability to pay the assessed
tax.

n. On ly I c. I and Ill
b. I and II d. I and IV

48. The by the governinent of real pro�erty to enforce the payment of taxes to be
se izure
followed by its public sa l e if the taxes are not v.J l unt arily paid

a. Assessment .::. Levy

b. Deli11quency J. Distraint

49. The seizure by the government

of pers on:il p1operty to en fo rce the payment of (axe:; to be
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taxes are .not vo ��ntaril y paid

. followeJ by itS public ·sale' if the

a. Assessment c. Levy
d. Disrraint •
. b. Delinquency

2,0 I 0 ..
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1 ed hi s annua t 1·ncome ra:x
rerum on 1';;av 22. 2011 for income earned during
)0 J ane fil
•

ber 1_5,
Jane for tax de,in q uency on Octo
·
2012 . Jane filed a
i
The BIL<.. ex lam iner as sessed .
Intern al
d evi'dencc: •on Nov. 8 , 2012 with the Corrumss1 0ner of the
Protest )JI us a l OClli!lentary . • . . .
e J ud gm en t on May 10, 2013 . ,,, vv hen 1s
· �· I endered its unfav orabl .
Revenue. The Comn11s.:.10ner •
d the Court of 1 ax of Ap p eats .•

the last ay to appeal the case to

c. May25,2013
a. Jun1!8,2013
b. ·June 10, 2013 . 22, :on
d . l'vlav
 CPA REVIEW SCHOO L or 1HE PHILIPPINES
'vl a nila
.

PREWEEK 21111 version · - Taxation BATCH 75

Revenues
Gro:;s Sales 4,000,000
l ntere�;t Jncurne 1 0 0.000
••
Divi dend Income from another Domestic C orporation . • SJ :• 20 0, 0 00
.
E�xpenses
Cos'. of sales 51)0,0 0 0 .
. • >
>

Bad Dehts Expense 20,000 · �

:
.. }
Depreciation Exi:c nse l OG.000 :j
21)0,000 . {��·
Charitable Contributions · .:
.

.. zj
I . How much is gross incom.e? .· ,,.. .

.
. . .

\�
.
a.
..
J,600,000
b. 4,000,000
c. 4, 1 00.000
d. 4,J00,000

..: . The dividend income shaii be:

a. Subject to income t.:.x · . ·\-:�
.

b. Subjecl to final Lax '.· �

c. Exempt from incoml! tax . .,. '

d. Partly caxable; Partl ,, exempt ·'-.

� . How much is allowable d�du dtions before charitabie'ooritribution?

-

a. 1 00,00C
b 520,000
. •

c. 600,00 0
d. 620,000

4. How much is the deductible charitable COJ'\tribw:ious?

a. 1 75,000
1). 200,000
c. Not deductible
d. None of the above

:i . I-low mucb j:; .taxable in•:ome?

..l. 3. 325.000
c). 3,300,000
1.; , 3,480,000
.•1. 3, 500,000

Mr. Jose, Fil ipino, married <lied leaving the tollo\ving .estate:

. Car acquired before m.1rriage by Mr. Jose - p 400,000

Car acqmred before nuniage by l'v,lrs. Jose - P 350,000
House and lot acquired during marriage p 1 ,500,000
Jewelries of Mrs .lose acquired before marnag..: ·
. 200,000
Personal properties inherited by Mr. Jose before marriage 550,000
Land i nheri te d by the ·.vife during marriage 1 ,000,000
Funeral Expenses 405 ,000
Medical '.:: xpenses incurred 2 years agl) 550,000

6. How much is gross esta.c under Con_iug;•. i P mner

:: ;hip of Gains is:
a. P 3,450,000 c.• P 2.80CJ,OOO
b. p 2,650.000 d. p 2,..+.::i 0.000
· .,
- �- -
-- - - ·� -

........ � ·.7 "' -•. - - �-:i •·r��·-c·- . . . ._...

. ._ . -·- ·-.- - -- .. -- . ,.
 - _ ---..---------- --

I
Pag e 2
\
I
·1
I
I
7 Under the same pro b lem , how much is tlie gross estate under Absolute Community of
l Property is:

a . P 2,800,000 c. p 3,250,000
b. p 3 ,000,000 d. p 4,000,000
;

I
I'
... Under lhe same problem, how m'lch standard de, ucti on and family home?
a. 1 ,000,000 c. 1 ,750,000.
b. 1 ,500,000 d. 2,000,00(i

I Under the same p rob lem, how much funerai ex p e nses and me d ic al expenses?
.
a. 200,000 c. 900,000
b. 700,000 d. 955,000

l 0. Ho w much is the net e•;tate under absolute commun i ty of property?

a. 1 ,050,000 c. -450 ,000
b. 200,000 d. 0

In year 20 1 3 , Skylar sold bis bachelor�s pad cond onin ium unit at the Co l umn s Place, Makati
City for P L 200,000 to acq.1ire a two bedro om loft 2t Princevi'lle co nd om ini um, Fort Bonifaci o
High s treets for P3, 200,000 with a rair market value c-f P 3 , 500,000.

I l . How much is the capital gains tax0

a. 72,000 c. 2 1 0,000
b. 1 92,000 d.. Zero ;
. .

0
12. 1,n the p re ceding numbc r, d Sk yl ar sold his printipal res i dence for the sole purp ose to
purchase a new principa, res i dence shall be exem;;t from tax if done:
a. Once every I 0 years ctnd reported to BIR wit h 1 1 1 8 months from sale;

b'. Once every 1 8 years :111d repo11ed to BIR withi 1 I 0 months from sale;
' ' c. O nce every 1 0 years .ind reported to BIR withi.1 2 months from sale;

d. Once every 1 0 years and reported to BlR withi 1 I mo nth from sale.

13. · In the same preceding situation, the p e r�ce ds .:- f

sal e of real propl!rty to purchase· a new

pri nc i p al residence shal! be exempt from. tax ifutilizl!d within'!

'a. 6 months c. I & months
b. 1 2 monl hf- d. 24 months

1 �. Using atl the preceding information, if Sky!� in! tead bough t a h ous e and lot in the amount
of P3, 1 99.. 200. such transactions shall be:
a. Subj ect to VAT;
b. Subject to income tzx;
c. Subject to capital gains tax;
d. Ex�mpt f o m ta:<:
r
·

o� ot" ifs bui1ding not nsed.in busi nes s, shall be:

; ) . /\. corporation realized a gain from ui spositi ·

a, Subject t0 In co me ta:.: of 30% ; •

. .

b. Subject to M in i mmn Corporate

Inc ome tax ot �%;
c . Subi ect w final tax of 6%;
d . Ex;mpt from income t.:.x.
the follo wing data in ye. ar 2 0 1 2 .
"'\ 11 1 . x and M I·s . y married co up le had
·

400,00(J
Mr. X compensation inco me . 20,000
Interest income from bank dep
osns
5,000
Dividend income from d o
me stic corporation
600,000
Business income 540,000
Mrs. Y com p ensation income .
�
Jeg1 t1ma te son ?3 y ea rs old mongol oid and daughter 2 1
· ·

The cou p l e has two dependents,

· .
a
.- .
ears old but died at the c lose of the year.
-----------
-------------
 Pagt 3

i 6· The maximum personal exe

mption of Mr. X::
a. 50,000 . .

. . 7 5 ,000
c. 1 00,000
d. 1 2 5,000

l 7. 111c maximum personal ex�mption of Mrs. Y

a. 50,0 00 ·

b. 7 5 ,000
c. 1 00,000
d. l 25,000

i �. H e w much is Mr. X Gro:;s income?

.'
n. 420,000 · 1�
b. 425 ,0(10
c. 700,000 ..
· -· .. ':

d. 1 .000,000 · '

1 9. How much is Mrs. Y Gnss Income?

a. 540,000 . ::�-
'
b. 550,000
c, 5 5 2,50)
. .
d. 840,00·)
. '

2U. How much Optional SHmdard Deduction can Mr.•X claim?

a. 1 20,000
. b. 240,000
c. 400,000
d . zero

2 1 . i-Tow much Optional Standard Deduction �an :virs. Y claim?

a. zero
b. 1 20.000
c. 1 96,000
d. 2 1 6.000
..
"' How much is the taxabk income of both :;pouses'.1
a. l , 1 50.000
b. 1 ,365 ,000
c. I ,390,000
d. 1 ,565,000

=: :.. in
. case of emission or fr.mdulem return, the BLR
.
:.1-1aii
.
impose a pet1alt:;1�f:
"· 1 0%
b. 25%
c. 40%
J. 50% .
..

�4. Which or following i 1 1 not required for mai<in� a BlR ruling of first impres�ion a valid •
one?
a. Must be reaso nable and within the authority conferred.
b. Must be germane tc the purpose of the law.
c. Must be published.
d. Must he retroactive in application.

2.1. Which of the following transactions i� exempt from val ue-adcled-tax?

a. Sale of' services subje1.;t t o other perce:nage r�x.
b. Sale of work of art.
c. Sale of literary wor_zs.
d. Sale of musical composition.

- --
- - - - - - - - - - - - - � � - - - -� -
 Ptge 4

26.Which of the following is a deemed sale transaction unaer ihe value added tax law?
a. Consignment of ;�oods made \vithin 60 da:h
.
b. Be g i nn i ng invemorri of close business. •
·. :
.
busmess
.

of
•

the course of g ood s ongmally intended

c. Transfer, use, cons¢npt ion not jn
for :;ale.
d . Disll'ibution to sl areholders of stock di vidr nds.
. .
21 .. Which of tht: following transactions is subject w value-added-tax?
a. Salt of petro l eum 'p roa ucts . · 1•

b. Sale of ordinary feeds, fe1tiliz.er and sec:d.s . ncl udi ng their ingredients.

\
c. Sak by agriculturnl contract growers.
· d. Sak of goods, services or importatior.." the a1muEi gross recei pts do not eJ<.c eed
P l ,9 1 9,500.

28. Which of the followin� tax s ys te m does the Phi : ippines adopts:
a. G l o b al system of income taxation.'
b. Schedular system of i ncome taxati on •

c. Partly Global; partly scheduler system.

d. None of the abov �-

29. Whi°ch of' fo llo wing is not a requisite of interest 1:xpenses?

a. Them must be ind,::btedness
I
b. Ther·� should be an interest e x p e nse paid or .ncurred on such indebtedness
<:. The i nterest. musr he duly notarized

cl. Th�· inten: s t must :ie legally due.

JO. To be all owed as a valid deductit)n, c hari tabl e ar,.f other comribution must not ex ceed :
u. 5% of taxable inco1 ie after charitabk com:·i;:i !1io11. in case t;f individuals.

b. l 0% ol' taxable i ncome after charitable comri1mtion, in case ofintffi1duals

'C. 5% of taxable incor,1e be fore charitable of contribution, in c ase of individuals.
d. 1 0% of taxable incc me before charitabie co nt ·ibution, in case of individuals .
.
ERA C o rp oratio n has the following sales d uri n g the month:

January February March

Sale to private i;ntities 224,000.00 33 6,0000 448,000
.
.
Sale to export-11riented enterprist: 1 00,000.00
Sale of exempt good s I 00,000.00

rbe following input taxes v•ere pas:>ed \•ti by ics \' A'f supp lie rs during the mo nth :

Inpm tax on tm.able goods 5,000.00 40,0000 1 2 ,0000

Input rax o n zero-rated sales 3,000.00
Input tax on sale of exemp t gocH.IS 2,000.00
Input tax on n e t attribmable to any sp�cific '20,000.00
ac.:ti vit:·
Input !a>-, on equipment used by · 1at ! 32,000 ·
t
ac i vity with use"ful iife of 10 y ears • · 1

J 1 . The VAT p:!yable for the mo n th of January:

•

"d. 1 ,000
b. 7,200 I
c.
cl.
9,000
1 6,000
I
i
:i2: The VAT payable for tbe month of february:,

a. 36,000
b. -4,000
 Page .s
:.···

The VAT payable for the month of March :

a. 26,800 . .
" . ·.'.,
.
. b. 29,800 . '
c. 36,000
d. zero
.. -
."
34. Input va1 not attri butable to any spec ific activ i ty s rnll be: · :·.�
·· :·
a. Creditable; .' ; -7'

b. Refundable: ... ..}

. .
· ·.
,•,

c. Conve1tible to tax w arrants;

d. Allocated to speci fic activity.

�·5. I nput vat on equipment used by vat activity shall 1ie:

a. Credi tabl e; y�� . .
b. Refundable:
f • • •

·:.�
c. Co nvert i ble to tax v.· arrants;
.

cl. Spread over its usefal life not exceeding 60 months.

.\6. Baker C orp .. a c al enda r - year corporation realized taxable income of P36,000 from its regular ·�
business operations for �alendar-year 20 l 3 . ln adfoion, Bak er had h�d the following capital · .�
....
t�
·.

gains and l•.)Sses during :O 1 3 .

ShorHenn capital gai11 • •
, •t:• P8,SOO·
ShorHcrm capita l loss (4,000)
Long-term capital gain 1 ,500
Long - term capital loss (3,50 0)
• .
Baker did not realize any o the r capital gains 0:· ·losses since it began operations. What is
Baker's total taxable income for 20 1 3 .
a. · P36,250
b. P3 8,500 ·

c. P39,500
d. P40,51l0

.3 7. improper AccL;imilated e arnings ta>'. is inappl ! c ab ie to:

a. Re:il estate companv
b. Leasiug company
c. Tradillg or manufac turing companx
d. Publidy-listed company

.38 . As regaros to ge neral professional partners ni p. '' hich o f'the following statements is corr�ct?
a. Treated Iii-..;; a co rpc; rat ion , nencc it ;;,; sub,1ect LO cotvorate inco me tax; •

. b. Exempt from income t�, hence need not tile i;1.cotne tax return;
c. P artners share in th.: profits are subject LO tin.11 tax;
d. Pa1tners share in the profits will be part of ta; :able> income.
.
:i �1. As regards to general professional parrne:s h i p . which of the following statements is
incorrect'!
a. Partners s hare will I:,. include in thei� resp�ct . . : income tax returns�
'b. A general professional partnership mj y cbim i : emized deduction in comput ing its'!'let
income while a partner may claim o ption!i! str nJru-d deduction in computing his taxable
.
income;
c. ii is exempt from in ;o me tax, hence , ned !10". i:i!e inco me tax return;
i

d. Partners must come from a c o mm on µrofessi1in.

:\(i, Pr ocee ds of Ii fe insura:ice are excluded frorn the gross estate if:
a. Benefaj,:ry i s the es tate and designated in-ever�ib!y;
.b. Be11t>fi�iary ts any 3'J person and des;gn:i�e<l . rrevocabl y
c . l3<!ne!i;:iary i .> the administrator and design:.m: J ��revocably;
d . Beneficiary is the e}:ccutor and designated im ·vocably;
- .._ �

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 �----- --- , ·-

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r-

I '

\ l Page 6
1;q'!
1· '� 1 . Requisite 1)f valid donation except:
a. An imo D od and i
\. b. Valid obj ec1
c. D el i very of the s ubj ect
J. Acceptanc e by done·:

\\:, 42. When donauon is perfe..:ted?

\1· :i. Acceptance doctrine
';�
...l '
j
1 · \;
b. Cognition Theory
c. C oncept of delivery
\.:. ,. d . Payment of don or ' s tax

; .' :
43. Morlis C au sa h app ens upon death of.the success»r.
Inter vivo�; happens up0n during life time of succ !SSOr.
a. True, true;
b. True; False
c. False; False
' ,
d. Fal se ; True.

·M . Income mx rates for special al i e n employee with an offsh o re b'ank?

a. 1 0% ..·

b. 1 5%
c. 25%
d. 30%
•. .

. .
.. i s . What is the remedy in case Bureau of lnternal
. R�itnue dc::n i es tax payer's 'refund?
. .
n. file a p ro t e s t wirh th.: C ommi s si on er of the BtR:

b. Appeal to Court of L.1x ap p eal s;

c. Asked for conversio�1 to tax warrant'certificat� s:
d. Apply for compromise.

·�6. for a tinding of "filing a frau d u l ent return" by th� BIR m pro s pe r:
· Statement 1 : Fraud must be intentionar, corrsisting of deception willfully and deli berately '

done or resorted to in order to avoid paymem of 'he. tax.

· Statement 2: Fraud cannot be pres um ea but mt.st be proved. Fraudulent intent can not be
deducted from mistakes however frequent they nay be, especially i f such mistakes ema.nate
from erroneous c l ass ific ation of items in accou.1ting methods utilized for d eterm i n at i on of
tax liabili ties.

a. True; False
b. True; Tn1e
c. False; True
d. False; False

n 1 51 Statemi�nc: General! : ·- internal revenue taxes •h:i.11 be assessed wi th in three years after the
: • ' 11:•
..
l.i:;L Jay pr·.:: scribed by lhw. • ,· · .
2.nd Statem ent: If the ret urn was amen
_

ded s u!)s t ant1ally, the counting of the peno d stru1s rrom

•
fi l ed .
the date the amended rerurn was
a. True; F&.lse
b. True; Trne
c. False; True
d. False; False
 Page 7

48. Sc�? eria Ferrari lnc, (SF!.) h,as been in business for the past 1 0 year�:for the year 2004, it
de cid ed to establish a pension fund for its en, pl o \o e es . The pertinent data of the fund are us.
follow:

Past Serv ice Cost (lump sµm paymf!nt) P J ,000,000

Present Service Cost 1 00,000

a. P 1 ,000,000 c. ) 200,000
b. p l , l 00,000 d. 1 00,000

49. l 51 Statement - Uniforms and c l oth ing allo\\'ance no : exceeding three thousand pesos per annum
is an exempt de minimis b1�nefit.

2"J Staternen1 - ;
Actual medical benefits received by nanageri l e mp l o ye e not exceeding P 1 0 ,000
per annum is an ex empt de minimis benefit.

a. True; Fal:;e c. False; True

b. True; True J. False; False

50. What are the requisites of J.usiness expense to be deductible, except? ·.

• I •
a. · Ord inary & Necessary;
· ·

b. Paid or ini;urred within the taxable ye ars;

. .
c. �ubstantial with official receipts;
. .....
d. · Must be reasonable

. ·�

. ·�·

.
_... ,
.
..
. '

" : •t: c

.· .....

. ,. :.:!· ;·:
-· ------
 CPA Review Sl-.ltool of tit•! Philippines
Manila

• May 2014
DO Dela Cruz ·
• I

�
Sr ous s A and B !iOld their family
�; _
home, a capital as��t for PS ,000,000 . It was ac ui red ir. 1 9 8 .a� � �
P O O :> oo
_, T he'.
a
t !Iqm r
a ket value as determin� d by the B IR' is P6, p00 ,000 but the fa
.
, u ma rket val ue . as
� ��hedule of value s of the Ci ty Assessor is P'..,500,000. Later, the spo uses utilized P·L000,00 (}
shown m th
.
for the acqulSltton of their new family h o me . The capital gtins tax due is • ·

a. P72,000 b. P60,000 c. p 300,000 d. P3•50,000

2. lJsing th� above data, the cost basis of the new farn°ily h�me
is
a. P 4 ,0QO,OOOO b. P l ,600,000 . • •
c. P l ,000,000 d. P400,000

3. /\ Corporati on was merged with B C orporation . C, a stoci.holder o f A Corporation was asked to surrende r
11is shares of sfock of A Corporation which C acquired for P200,000 and in exchange he received shares of
:>lock of B C orporat i on with a fair market value of P2:20.QCO plus cash of P30,000. After the merger, C later
sold h i s B Corp ora ti on shares fir P240.000. C will recognize a ga i n o f:
Merger Sale Merger Sale
a. P?.0.000 P 40,000 c. P30,000 p 20,000
b. P :·0 ,00 0 P20,000 d. P50,000 P 40,000

:1 . :\ transferred his commercial la rd which he :1cquired jn ' I OM co B Corporation and as consideration he.
11;:ceived sllares of stock of B Corporation with a fair rparl�et value of P 10:'.!M•nad cash of P300,000. As a
result. A acqui re d control of B Corporati on. Two months iaer, A sold the B Corporation shares· for PJ �.SM. ·
The gain to be recognized on the transfer and on the sale i�
Transfer Sale Jransfer Sale
a. P300.000 PS00,000 c. 1·;3 00,000 p 300,000
h. P500,000 P3 00 ,000 d. ! ':500,000 p 500,000

5. A transferred his land in Manilc. which he acquired for 1'2M to B C o rporation and as consideration he
a r
received shares of stock of B Corporation with fa.i r marke t value of P I . SM and as a result A gaim�d control
of B Corporation . Later, A transf�rred his land in Makati v1h.tch he acquired for P3M to C Corporation and
a� consideration he received shru-.;:s of stock of C C orpo rat r nc with fai.r market value of P2.7M. Even before
the tr:mster, A already owns 5 1 % of C Corpo�ation outstanding shares. The loss to be recognized by A is
B Corp. C Corp. B. Corp. C. Corp.
:L PC p 300,000 C. P200,000 p 300,000
b. PC P 0 d. P20_0,000 PO

Use 1hcfol/owing information for qw�stions 6 and 7.

A , sold 3 parce ls of land held as r npital as set s . as follows:
Land l Land 2 Lana 3
Seiling price P i �0 ,0,00 P l 60,000 P l 60,000
. '
.
Cost . 100,000 1 00,000 100,000
Installment payments:
40 00(.1
:
Year l (year of sale) 40,000 • 30,000
2 1 20,000 60 000 20,600
Assumption of mortgage 0 60,00() 1 10 ,000
6. The capital gains ta>; to be paid in year 1 is:
a. P28,000 b. P l 5 , 84(1 c. p 1 9,8-il) d. P 1 2 ,640
. .

7. The capi t;al gains tax to be paid in year 2 is .

a. P 1 2.960 b. P8,960 c. P J 6, l 61 ) d. Pl 9,200

P_W-T.A XdJ-lL _ :-.J_ . _ - - - -

 - -- -
-

Use the following infonnationfo.· q uestions 8 and. 9. .

ou,. had the
/, and .8 are stockJ1olders in cc rporations which are beug consolidated into a new corporat1
following data· on their shares of stock:
. A B
Consideration received :
I'air market vc:: lue of shares p 75,1)00 p 8 1 ,000
Fair market va.lue of property 5;)00 5,000
Cash 10;)00 4,000
Cost of shares surrenoered 80:)00 80,000

' a1 : •
lS.
• •

The gain or (loss) to be recognized by A is

a. P 1 O,O(fO b. p 1 5 ,0(!0 c. P (5,0C O) d. P O

9. The gain or (loss) to be recognized by B is

.
,i
b. P l O,OCiO c. p 1 ,0011.
I
I
. I
I
a. P 9,000 d. P O
ii :\
.
I •
I lO . A., a vat taxpayer, made the following purchases of capital goods from vat registered sellers for use in his

II'
business (amounts are net of vat) for the 3rc1 quarter
Year 201 1 Estimated l ife Cost

. �!
. .
July 1 0 - Machine I 2 years p 200,,:000
1 6 - Machine 2 6 years 900,000

'tI(
il l
1\
r·
· Aug. 8 - Machine 3
20 -- Machine 4
Sept. 1 4 -- Machine 5
2 years
6 years
7 years
400,000
500,000

(�f
I i
2,000,000
Machine I was retired on September 30, 20 1 1 . The inp·1t tax in July is
\\\
&.. P2,800 b. P l 08,000 c. P 1 32,000 d. P2.2-00
1 ,•
I "
1 1 . The input tax in Au1�ust is
\I IIi·,
I " a. Pl 08,000 b. PJ,000 c. PS,800 d'. Pl ! 0,800
I :1
. \
\' 1 2. The inpu! tax for September is
a. P4,000 b . P6,800
. c. P26,000 d. P2 7,800.

l J. The power to iax is exclusively Judged with the iegisiarure but the fol iowing exceptions are provicled by ht� t
constitution, except
a. Power of local government units to k\!y taxes, fees and charges
b . Auth_ority of the President to fix tariff rates, unpor� and export quotas, tonnage and wharfage dues anp
other duties and imposts
·

c. Delegation to administrative agencies of the implementation and collection of taxes

d. Delegation to private entities the levy and enforcement of tax laws

J 4. Statement 1 ...: The prizes received by Manny Pacquiao and Ricky Hatton in their last fight are :mbject to
Philippine income tax
Statement 2 - If the fight benv·�en Pacquiao and Cotto i s a world championship fight promoted. by Bob
Arum, the gross recei pt! : will be exempt from perc entage ta
'(
b. True. false c. Faise, false d. False, true
a. ·rrue, t rue

1 5 . This i:; an inherent hmitation

on me power of raxation.
orm and ;:qui table
Tht; rnle on taxa tion $hall he 1 mif
.
:i.
l)e ' a 1:•· ·

u. No law impairing rhe oblig

auons of contracts shal l eJi,ac ted ·

churcn es, personages or conve 11ts appurtenants t�ereto, mosque a�d non-p�ofits ·
c. Charitable institutions,
buildings and improv. :m�ms actually, dire ctly and exclusively used .for·
cemeteries and a l l kinds of lands,
rel i gious or charitable purposes shal
�
l be e).'.empt om ta xation
.
of foreign go·1�mments
The tax laws cannot apply to the property

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- - - - - - --- --
 . .

· s :s u constitutional limitation •.m the

power of ta....a tion
· Th· � i,l•JW1�r of taxation cannot :>e

state
delegated
TlJ.; power of taxati�n is l imitt:d to the territo
1�0
per�on sha� l be 1 m prisoned for debt or
rial junsd tc tion of the taxing
non- paymc: n: ) r ... po l l tax .. .
1�xem�tion oi government instrumentalitie
.

s and a15encies thfough which11i�e govemmeRt uxe rcised ·

sovereign powers from taxatio n

J7. Taxation as distinguished from poJ1ce power and

eminent d t main
a. May be exercised by private i n ·
dividuals .

�:. May be exercised only by the government

·
Limite d to cover the cost to regulate
'· .

d. Generally no limit as to the amount that may be impose11

ig Statement 1 -·The levying, i mpositio n and collection of ta.{ are legislative in character
_Statement 2 - The aspects of taxation are shared by ; he legislative and executive branche:; of the
government
a. True. true b True, fal se c. F al sl! , true d. Fals•!, false

19. Which of the following statements is not correct?

a . Tax�s are nei ther political nor penal i n nature ·

b . Taxes shoul d be p rospect ive an.J should not be given retmactive effect because they are burdens ·
c. Tht� power to col lect taxes is not l ost even if fore!gn inva, i ers are in cpntrol of our country
d . The application o f a constitutional lim itation may disregwd an inherent li mitation
·
. .

· . '
20. Police power as distinguished from power of taxation
a. Lt exist independent of the conslltution being an inherent jiower of the state
l> The c ompensation received in the protection gixen by the-. state
c. It involves the taking of property of individuals a ffected h v 1he exerci se of the power
d. The amount collected is l imited to the cost of regulation

2 1 . The fol l owing are the characteristic:; of special asses!imem. e.>. cept
a. rt is based on the governm ent' s need of money to supROI1 its legitimate objectives
b. lt is levied on ly on land
• •

c. l t is bas ed solely on the benefits derived by the O\vners or :Ile land

d. Did nor result to personal liabili1y of the person assessed

22. As r�gards a revenue bill, which of the following is not CQrrecc?

a. The �>enate may propos e amendments i f the bil l ori g inates from the House of Representatives
b. The House of Representatives may propose amendments i: · the biU originates from the Senate
c. The President may recommend a revenue bill to Congress
d. A House of Rep�esentatives version and a Senate version approved separately and then co nso!idated·
with both houses approving the wnsolidated versi on

3 ;.i1 2C04, < Corporation inc urred the mllowmg expenses in .connection with the· coit!\!ct of its busin�ss
A) Plane �ickets and hotel bills o f its employees
who were sent to busmess seminars . . . ... ... ... P 100,000
B) Transportation allowance s of its officers from
h<.•me to office and vice versa as part of their
employment contract net of P64,000 . . . . . . . . . . . 1 36,000
Cj Transportation expenses of messengers from
office to several cl ients . .. . .. . . . . . ... . . . . . . . . . . . . . . . . . . . . . . 80,000
The allowable expenses that could oe claimed by X Corp. is
a. Pl 80.000 b. P244,000 c. P 3 1 6,000 d. P380,000

....I'\.- _ _ __,..__ _
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_ _ __

....:. - - - - -_ D'\U
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24. Mr. Araki, a no n-resident alien stockholder, received a dividend income of P300,000 in :�010 fr9m a
foreign corporat ion doing bu!;ioess in the Philippines. The gross income of the foreign corpvration &om

I
within and without the Philippines for three years preceding 2010 i s as follows:
Source of income 21>07 2008 2009
From within the Philippim:s P 20,000,000 1 ' 1 2 ,000,0UO P20,000,000
From without. the Phil i pp ines 1 8,000,000 I 4 ,000 ,00 0 16,000,00Q .

How much of the dividend income received by :Nlr. Araki is considered income from source-s . wit1Un the .
Philippines? ·

a. Zero b. Pl 56,00t i c. P l 44,000 d. P300,000

2 5 . A, married to M had the following during the taxable ye.ir: . .

·

Gross Income · '

From the practice o f profe ss ion -------------.·---------------­
p 700,000
Rentai income of tbeir conj ugal property --
·-------------- 300,000
Allowable deducti ons
• ·

For th';! practice of pro fession

-- -- ------------- - ---- - ---------­
52 0,00 0
For the property rente d to tenants ------------ -------· ------­
1 40 ,000
The taxable in come before exemptions of A i s
a. P3-40,000 b. P 1 80,000 c . P 26 0 ,000 d. P l 70,000
' •

26. K sold' for P l OM her Baguio resthouse with a FMv ofF'l2M to b uy a new principal residence . £fK utilized
P8M of the proceeds of the sale in acquiring a new princ .palresidence, the capital gain s tax payable is
a. P720,000 . b. P600,000 c. P 14<'.,000 d. 120,000

"
17. On August 12, 20 1 0 A sol d a land held as capital assets for P2 M with a FMV of P l . 8M. A acquired t he
land for P I M, and at the time 1.1f sale, the property was ! ubject to a mortgage of P l .3M. P ayrne.ni:s shall be:.
P l00,000 on the date of sal e and the balance shall be 1 ni d in equal monthly installments beginning Jan -� .
20 J I . The capital gain s tax for 20 l 0 i s
:i . P 1 2 0,000 b. P24,000 c. P36,000 d. P4lLOOO

2::. A h101• a life 1

i 1surancc policy ; or PSM wht:re ilie ana� prenuum lS f'2G;OO�;fhe proceeds will be paid to
A after 25 years or to A's estr1te should A dies before i:ompleting 25 years of payme nt . If A outlived th:::
·
policy, which of the fol lowi ng 1s corTect?
•

a. The proceeds will be part o:. A's taxabl� mcome

b. The proceeds will be part o::· A's gross es,tate
c. The proceeds will be partly raxabl e income a.pd partl) ·exempt
ct.The proceeds will be partly taxable estate and par:ly t xempt

29. Using the preceding number, but after pa]'ing the annual premiums for 10 years, A transferred the poli cy to ·
B for P25 0 ,000 and B paid the annual premiums as they mat ure . After 10 years, A died. Which of. the
following is correct?
a. The amount re ceived by A from B is pan of A ' s taxable income
b. The proceeds received by B is pan of his taxabh: income
c. The amount rece ive d by A from B is partly ta.xa•)le income and partly exempt
J. The proceeds will be part of A ' s gross estate

30. The following forms of esca pe from �a�on re'sult to Josi of revenue to the government, except
_
· b. Shifting c. Avoidance d. E vas 1on
.
;J. Exemption

on, exL:ept
3 1 . The fol l o wing are the objects of taxati
b. Corporations c, lntan@ple property d. Municipal halls
a. · Citize ns

that taxatiZ·n co.vtrs many thing s

L.
. · · ? A scope of' the power of taxation whi ch means
· c.• supreme
·

b. Com prehe nsive d. Unlimited

a. Plenacy

3. This is not a purpose of taxation ·

a. To expropriate property for the promotion of the

genera1 we!tiare
.
b. To teduce i neq ual ities of we alth . .
· •

. .

producers against fore1gn �ompet 1tl0n

P..s protective tariff on imported goods to protect lgcai _
To encourage the growtb of ·nome m · dustries t1rrough the proper use of tax incentives

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·:�

1;1: of the characteristics of a .

: .
.

. . tax is that tt IS
:�upenor to the non-impairment clau
. •

se oftbe con suw. 10n

\Jcuerall y unlnnited in
amount
•·· based o� the taxpayers abiliry
to pay
d. Leg1slative in im pl ementati
·

on · '

35. Statement 1 - A tax is genera11 · •

· . d bec!!use It 1s
Y un i·urute lp sed'on the.needs ot" the state
·

Statcm�nt 2 - One of the esseHtial characteristics

of tax is it i s unli m ited in amount
a. True, true b. Tree, false c.'False, true d. False, false·

36. ln Jan �
ry 19?0, A bough t om hectare of
agriqultur�l w1d in Laguna for Pl00,000. This P.fOperty hli!': &
current fau market value of P IOM in view of the consrrm tion of a c oncrete road traversing the p:operty. A,
a�eed to. exchange his agricultural
lot in Laguna for' a �, , hectare residential property l ocated in Batangas .
with a f'a1r market value of P 1 OM, owned by
B, d domest c corporation engaged in the purchase and sale of
:·eal property. B acq uired the pmperty in 2007 for P9M. v, hi ch of
a. � oth real properties are ordinary assets
the following statements is correet?
c. The agricultural land is an ordinary asst:t
b. b oth real properties are capi1:al assets j The resi denti al land is an ord inary asset

J7. iit our j urisdiction. whi ch of the following statements ma:r be erroneous?
'L " .l axes are pecuniary in natur.::.
l1. Tax.es are enforced charges and contributions.
<:. Taxes a.re imposed on persocs and prop erty within the cc mtorial jurisdiction or a State.
d. T axe:; are levied by the execl ttive branch of the govern mem.

38. Inci dence.of taxation means

a.. Shifting of tax b. Refunds of tax c. Payrnrnt uftax d. Imposition of tax
.

39. This :ulc is not applicable on the construction.of t.ax laws

a. lfthc l aw is repealed, taxes assessed before repeal oftl .e law may no lo nger be collected
,,
b. U the intent of the tax is not clear as to whether the t.1xpayer is covered by the tax 'obligation, the law
shall be construed against the government.
-------
c. Where the intent to tax is cll!ar and the taxpayer dai,ns he is exempt from the tax obligation, the tax
shall be construed against the taxpayer
•
d. P rov isi ons intended for the security of the taxpayer o,- to insure equality or uniformity of taxation arc
mandatory .

40. lncome derived by a depository bank under .r.he expande d foreign cunency deposit system from foreign
..::irrency transaction with loca. commercial bank, inducing branches of foreign banks that m�ybe

.! authorized by the Bangko Sentral ng Pilipinas, s�all be sub. ect to a final tax a on such income at
a. 7.5% b. 10% c. l 5% d. 20%

4 l . A privi lege granted a taxpayer to deduct or set--0ff again;c Phil. incdme tax., the income, WM p':ofits and
,::-;ce!;:; profits taxes that he has paid or hasaccrued w a tor� tgn country · ·
· a. Tax e:ic emption b. Tax deduchon c. Tax eonsoii>'iation d. Tax credit

42. Tariff ma.y generally be defi ned a;

a A.moun{s which are levied o n goods l eavi ng tne imposii,g coW1try
b. Amounts imposed on goods elltering the i mposmg coumry
c. Amounts, imposed on goods passing through :he impc sing country, but destined ulti mately to ano ther .
country
d. List of com modities with corresponding du tie s collectih le therefrom

43. Any amount subsequently received on accow1t of a bad debt previously charged off and a llo• >ied as a
·
I deduction from gros:; income for xior years must he includ ::: d in gross in come for the taxab l_e, .year in which
.
:, · ,
receivi!d. This ii;
·

I a. End-re�ult docrrinl!

b. Desunation of income test

c. Severan c e Theory
.
I d. Equ itabi•! doctrine of tax benefit

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44. Taxation, j ust like other fields of human learning is dynami

c, not static, keeps on changing; so we must
all

study, otherwi se we mi ght be fac ing the battles of today \•ith the antiquated weapons of yesterday_
the collection of
.
Rega rdl ess of economi c and b:.isiness conditions, a sow1d tax system should provide for
suffici ent revenue to run the government .
a True, true b. True, folse c. False, false d. False, true

45. A progress ive system of taxati o1 1 means a tax. structure

a. Where the tax rate increase!> as the rax base increases
b. W here persons who desire 10 avail of government se -vices or benefits are required to pay for their cosr
in the form of taxes •

1:. Where persons who posse�·s more in h'ealtti or income ar7 require4. rQ ,\�ar the cost of government
· ·
.;;mcspond.ing m such capacity · ·
Whe1e the tax rate increase�-. as the tax base decr<!ase
·
cl.

46. Will not raise money for the gov.::rnment

u. Power of taxation b. Li1;ense fee c. Police power d. Eminent domain

47. Simi larities of police power, power of ta"Xation and power of eminent domain, except
a. There is compensation c. There is taking of property
b. Sovereign power�; of the govermnent d. Superior to the non-impainnent clause

48. Which of the following has no po wer to impose taxes?

a.Provinces b. Citie:; c. Baranga ys• d. Pres ident

49. Which state ment is wrong?

u . A m x i s a demand o f sovereig:ity c. /. special assessment is a tax
b. A toll is a demand of ownership d. C:iu;toms duty is a tax

50. Which of the fo llowi ng is not an element. of do u bl e taxanon >

a. Two taxes b. Same subject matter c . �iame year ,d. Same amow1t . .

.
�
5 1 . One of the.following i s the least pri nci le of sound tax 'systc �' · •

a. Fiscal adequacy b. Administrative foasibi l i ty c. lieor�tical ji).Stice <l. Economic consistency · ·

52. Basis of Taxation

a. L1 teblood theo�1 b. Neces� ity theo ry c. J3enetit-p :otection th eo ry d. Reciprocal theory

53. Tax as distinguished from license ice

a. For 1·egulation purpose c. For rcvenve p upp ses
_
b. Amo �t imposed is limited d. Exernise of police power

54. The following are exam ples of non··taxable compensation for i njuries, exc ept.
a. Actual da mages for inj uries suffered. c. Compensatory da mages for tmrealized profits
b. Exemplary damages d. Moral daIOOges for grief, anxiety and physical sufferings

How much is the allowable deductinn from business income of a domestic corporation which granted and ·

parn P99, 000 fringe benefits to its key officers Ill 1998?
a. P l 50,000 b. P I 00,000 c. P99,000 d. 65,000

What would be the allowable dedu c t io n for pg.000 comrib\.. uon made by a resident citizen to a religious
. · ' 11:�
i1rganizano11 from his 1'70,000 net iucome after contribution?
·

• •

a. P8,000 b. P7,000 c. P7,800 d. 3,500 •

A bough l a condom in i um unit under installment basis, to be used as his office in the practice nf his
profession and paying J>l 0,000 monthly For income tax pu:rp.lSeS, the P l 0,000 monthly payment shall be
. .
a. Treated as business rental,
henc e deductibl e ·

Trealed as capital expenditure, hence not deductible:

Treated as depreciation expensi;:, hence deductib l e
teated as ordinary
business expense

_
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. ....

e ;·)1 iowmg are not ta.xable, e:(cept:

a. l\.cfund of fringe benefits
t:ix c. Reftud of estate or donor's tax
b i{cfund of Philippine income tax d. Refu 1d of special assessment
. . . 11 :4
. . Which of t.he following does not represent compensati
9i1 in:ome?
.
a Honoranum as a guest speak
er c. Vacat10 rr and sick leave pay
..
b. Emergen cy leave pay d G ratuito us condonation of obligation

60. One of the following is not sub j ert to final tax ·

u. lnterest on savings deposit c. Prizes a:nounting to more than P I 0,000
b. Royalties d. Professi onal fees paid to individuals

6 1 . Gain on sale of domestic shares oJ° stock in N ew York 1 �

a . I ncome within the Phils .::. Income par;y within and without
b. 1 ncome without the Phils d. Ext!mpt t.'rom income tax

62. A was selected as t.he most outHtanding teacher m her n :gion. Her name was submitted by the school
principal without her knowl edge. ::lhe received a trophy anG.a cash award of P 1 5,000.
a. Taxabl e i nco me C. Exempt rom inco me tax. .
b. S ubj ect to final tax d. Partly ta.rnble, pa rt ly exempt

63 . T his will not result to a taxable ga 11 or loss

a.The sale by a corp oration of it�. shares of stock from the missued stock. over its par or stated value:
b. The sale by a corporation of it� trea:sury stock over its co st \Qr other basis of acqui sition
c. The purchase and re ti re me nt by a corporat i on of 1t:; bqnds at a price less than the issue price or f�cr,
value.
d.The issllfl!lce by a corporat ion of its bonds at a 'Premi um .'

64 . For ordinary contributions, an individual may be allowe d to claim as deductions an amo unt not to excee d .
a. 5% of the net income befo re C• mtributions c. 5% of the net income after the contributions
b. l 0% ef the net income before contributions d. 1 �o o f the net i ncome after co ntri butions •

· 65. One ofthe ·foJlowing 1.s a taxable in come

a. Compensation for i�juries and sickness c. P roc � ·e ds of life insurance
b. lncome derived from gifts, beq u est and devices d. Amo · mts received as returns of premium
.
66. A domesric corporati on made a bvrrowing from ABC bank thereby incurring a business connected ioterest
expense of P60,000.for .taxable year 1 999. D urin g the same .rear, the corporation earned an interest income
subj ect to final tax in the amount of Pl 00,0UO. The deductible interest is
a. P l9.000 b. P21 ,000 c P60,000 d.PO

67. The share in the profits of a partner in a general professio11ai partnership is regarded as receiv ed oy h im
and thus taxable alth ough not yet < J 1stnbuted. The pnnciple ,s .1CI1own as · · � 11:•
a. Actual r�ceipt of income c. Accrvai method of accounting
b. Advance reporting of income d. Con struc t iVe rece ipt of i ncome

, 68. Which of the fo llowing statements on tax exemptions 1s not ::orrect?

a. When an electric l ight and power franchise h older i5 ex !mpt under its. franchise from property tax on
its µoles, wires and transfonn�·rs, its exemption does no . extend to the VAT of its im):k>rtation of said
anicles.
b. Wher·! a taxpayer receives as paym entfor the land exprcipriated by the government tax exempt :)Onds,
such tax exempt bonds should be included m the to•al price to determine correct taxable profit .
therefrom
c. The sal aries of the CIR and the four deputy CIR are exempt from i ncome tax
d. Exemption granted to cooperahves does not extend to be members �hereof in th e sale of their products

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69. A donated a parcel of land to B, his 1 5 year old son rn account of B's graduati on. A did not P�Y the J5ift
ta,-x on the property don ate d. Then, B took possession •>f the property and received the ren� <ie� 1ved from
it. In 2007, an a ss essment on the income derived from :he property was i ss ued against B, which is correc.t?
a. The asse ssment against B is correct
b. The i ncome should be jnci uded in A's income tax re tum
c. The assessment against B �hould be deferred
d. A validly effected a transfor of the property to B by 1irtue of delivery
·

70. A feature of ordinary gains a� disti ng...ii s hed from the co pital gains :
a. Gains from sal e of assets not stock in trade c. Sources are capital assets
b . May or may not be taxabk in full d. No ho lding peri od
• I

71. On ca-pita! gains tax on real propeny, whic:h of the foll o.1ring statements is not correct?
·
a The tax should be pai d, if i.:1 one lump sum, within 3(1 days from.the date of the sale ·

b. The .installment payment of the tax shoulo be ma& withi n 30 days from receipt or each 1nstallmen·t
·

payment on the sel ling pri1.:e

c. The tax maybe paid in installment if the initial payment does not exceed 25% of the contract price
d. The initial payment maybe more than down payment
. .

\
I
l
72. A operates a retail store and
hand of A
o wns the following pro}Jerties� Which of the following is capital assets in the

a. Building which houses the retail store c. Inventc-ry on hand at the end of the year
I b. Fixtures µsed in the retail smre d. Trade ;.ccowits receivable
'

73. Amount receivable by the est�ite .of the deceased,· !tis !xecuto r or administrator as an insuranc e under
policy taken by the decedent upon his own life is
a. Part of gross in1:ome whether the beneficiary is revocal>le or irrevocable
b. Pan of gross income if the bt:neficiary is irrevocable
c. Part of i,rross income if the be-neficiary is revocable
d. Excluded from �oss income
.. �
. tt: •
7-i. Jn 21JO i', A.BC Corp. paid total premiums of Pl ,009 · for 'the life insurance policy of the viee presi<;ient, ·
where the beneficiary 1s the cor poration. At the end of the year. ABC received dividend of P 1 0 (1 because ·
of the policy. ln 2007, the corporation should indicate a c : lai m for a ded ucti on for life insurance premi�
.
�
a. P l ,000 b. P900 c. P l , 100 · d. Zero

75. Ir' a fri end inquires whether or not the cost of educational a::sistance to the employee and /or his deDendents ·

which are borne by the employer be taxabl e. What will your answer be?
]{irst Answer - A scho larsh ip g:ant to the emp l oyee by the empl oyer shall net be treated as taxable fringe
bene1"1t i f the e ducation or studv involved is directly con nected with the empl oyer ' s trade, bm:iness or·
profession and there is a written contracr between them th.it the �mployee is under obligation to remain in
ti1e employ of the employer for a period of time that they have mutuaUy agreed upon.
Second Answer - The cost of 1:ducatiooal assistance ext �n ded by 'an employer to the depen de n ts of an
employee s hall be r.reated as taxable fringe benefits of th.! employee unless the assistaJ)ce was provided
through a competitive scheme under the �cholarship program of the company.
3. True, True b. True, i�alse c.'False, True d. False , False

76. Al.l of the following taxpayers are r.ot entitled to foreign tax L rerut, except
a. Resident citizen with income only from the Phil:;
b. Resi dent citizen with i ncome o nly from abroad . · '.
c. ResideJtt alien with income from within and without the J.>hils
cl. NorHcs.ident citizen with income from with i n and v.itbo� 1t the Phils

g days is an exempt de minimis.

ed unusecl vacation leave credits nut exceedin
J. 1•' Statement _ Monetiz
10
.
benefit. .
Statement _ Daily meal allowimce for overtime work n ot exceed
ing twenty five (25o/)
:10 �
per ent. o f t he.-
•
Qd

·c mini mum wage is exempt fringe benefit

•

b. False, 1:-ue c. True. false d Fal

.. >e , .false
:rue. true

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L
. . Statement - Laundry allowance not e xceeding P300 1 1er �
m o th is exempt de minimis bene fit .
�:·� Statement - Medical cash allowance to dependents �f employee5t not exceeding P750 per e mpl oyee per
sem�ster or one hundred rwer .ty five pe sos (P i25
, ) per ::ionth is exempt de minirriis bene fi t. . ·

a. Tru�, true b. False, trite c . True, false d. ·fo.l se, false

under certain
J"1 Sirntement -
F lowers, fruits and books or other simt1ar
token items gi ven to employees
1;ircumstances are exempt de minimis benefits. ·
·
• ·

�°'1 Statement - Gifts given during Christmas and major :inniversary c el ebrations not e xceeding PS.'000 . ptr
!!mpioyee per annum is an exempt de minimis benefit .
a. True, true b. False, true c. True, false d. Faise, fal se

80. 1'1 Statement month

Rice subsidy nf one thousand tive -hun:iroo peso s or one sack of 50 kg. rice per
-

3 ffiOi..mtiug to not more than one thousand five htindred pesos is an e xempt de minimis benefit. . .
2nd Statement - Employee achievement awards, e.g., fc r length of service, or safety achiev�m�nt, whicn
musT be in tbe form of a tangible rsonal j,e property o· :her
than cash or gift certificate, an �h a�ual
monetary value not exceeding ten thousand pesos rece1 1ed by an empl oyee under e �tabhshed wntten �-
plan which does not discriminate in favo r of highly paid e mployees is an exempt d e m mmu s benefit.
b. F al se, true c.
·

a. frne, true True, false d. False. false

� 1 . t •1 :.�tatement - Uniforms anc: cl othing allowance not exceeding five thousand pe so s per annum i.s a:i
exempt de mi nimis benefit
211d Statement. - Actual medical benefits not exceed in g P 0.000 per annum is an exempt de mi ni mi s benefir
a. :·rue, true b. False, true c. True , false J. false,
. false .

82. Which of the fol lo wing is included in gross income?

a. Aroowlts received by insured as return of premium
b. life insurance proceeds ·
c. Compensation for injuries or sickness
d. Share in the net income ot a general professional partnership.

83. One of the following does not form pan of gross income·;
a. Interest b. Ro yalties 1..: . Annuiries d. Gifts, bequest and devi1;�s

84. ln C.:t)mputing al lowabk deduction for purposes of inc om e : taxation:

l •• Statement: Begirining the. year 2005 interest exper se in connecuon with taxpaye r' s business shall be
reduced by an amooor equal to forty two percent (42%) of intere�'t income subjected to final tax
2"d Statement: interest incurred on money used to 3.cquire property to be used in trade shall oipy t.e
allowed as a capi tal expenditure.
a. Tme, true b. False, true c. True, false' d. False, fulse

8 5 . Which of the following is not Cl)rrect?.

.i. An i ndivi aual citizen 01 .the Phils. who 1s workin g and deriving i nco me fr<>rn abroad as aR ove rs eas
is taxable only on income from sc icl-ces within the Phils.
..:ontract \Vorker
). A seaman who 1s a citi2en of the Phils. and who •eceives compensation for services rendered abro ad •
as a member of the complement of a vesse l e:1gaged exclusively in international trade snail b�
· · · ·
treated as an overseas contract worker.
. . An alien individual is tz.xable only on income der;ved from sotrrces within the Phils.
J A citizen of the Phils. i� ta."Xabl e on income deriv� d from sources within and without the F'hiis
.

86. A worked for a manufacturing firm but due to 'business reverses, the firm offered a voluntary redundancy ·
proi,rral)l in order to reduce overhead expense�. Urider the program, an employee who offered to resign
would be given separation pay equivalent to his 3 montts basic salary for every year of service. A accepted
the offer and received P800,00•J as separati on pay under the program. After a ll the employees whp accepted
the offer were paid, the finn found its overhead still ex : es sive. Hence, it adopted another program, where
vanous unprofitable dcpartmer.ts were closed. As a resu i'.. B was separated from the service, B al so received
P800,000 as separation pay. llt the time of separation both · A and B have rendered at least 1 0 years of
serv ice but A was 5 5 years ol d while B was only 4 5 year ; o ld. As a result.
:.. . Both amounts are exempt from income ux c. Only Mr. A is subject to income tax .
b. Both amounts are subject to income tax d. Only Mr. B is subject to income t.ax .

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87. Which of the following expen:>es is deductible irom.gro:;s income)

•

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a. · Contribution to a newspaper fund for n�edy· families when such newspaper orgaruzes a dnve solely
for charitable purposes
b. Premiums paid by the :;elf-employed employer for the life insurance of his employees ·
.

c. Contribution to the construction of a chapel of a university that declares dividends to its .;tockholders
d. Donation of prizes and awards to athletes ih local and international competitions anq sanctioned by
their respective sport associations.

88. Cash dividend received by a non-resident foreign corporation from a domestic corporation is
a. Exempt from income t.:1x c. Pan of taxable income
b . Subject to final tax d. Partly ex1:mpt, partly taxable

89. Cash diyi.dend received by a domestic corporation from rt domestic corp0rahHH is

a. Exempt from income t1x c. Part 'of taK.able income
b. Subject to final tax d. Partly exJ!mpt, partly taxable

90. Which of the following statements is not correct?

a. When a com pulsory heir 1s given by will less than h i s legitime, the provisions !Jf the w.ill should be
modified in such a way thHt he will receive his legitime
b. The CIR may examine th<;! bank deposit of a decedent for the purpose of determining his gross estate·
even if the estate did not wquest for a compromise on the ground of financial incapacity
c. The P500,000 standard deduction for medical expenses for estate tax purposes is a legal mechanism IO
·

further exempt the less pri·.rileged estate and heirs from ta.x burden
d. The sharing of heirs in testamentary succession mus� satisfy the rules on legitime

9 1 . In
J transfer in contemplation of death, revocable transl er and transfer under a general power o:�
appointment, there are rules tc observe to determine wh;1t amount to include in the gross estate, which is not
·

a rule to observe?
a. lf the transfer was in the mture ofa bona fide sale for an adequate and full consideration in money or
money's worth, no value shall be included in the grcss estate .
b. ff there was 110 consideration received �n the transfe r as in donation inter-vivos, the value to include in
the gross estate shall be th1!· fairmarket value of the ·.> rppe.rty at the time of transfer
·
·· ·
c. Jf fhe consideration receiv·�d on the transfer was l es� than adequate and full, the value to inc lude in the
gross estate shall be the excess of the fair market vaiue of the property at the time of decede rit's d�ath
over the consideration received
d. If there was no consideration received on the trans fer as in donation mortis causa., the value to inc hide
in the gross estate shall be the fair market v.alue oftl1e property at the time of the decedent's death
.

92. Which of the following is not directly reducing·the iuheritance?

a. Standard deduction b. Claims against the t:Stl\te c. Unpaid mortgage d. Funeral expense

93. Whjch of the following may n:duce the taxable estate but not the inheritance?
a. Funeral �xpense b. Losses c. Judicial expense d. Family home

94. Donor's tax is a 1 an)

a. Progressive tax b. Proportionai tax c. Property tax d. Excise tax

95. Vv1J.ich of the following is a stranger to the donor? If the donee is the
a. Grandfather of the donor'!; great grandfather
b. Granddaughter of the sister of the donor's mother
c. Grandson of the donor's h .tlf-sister
d. Brother ofthe donor's grandfather

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Fi lipino citizen, married to M. died in a veruc uiu dcc ident in NLEX on April 10, 20 1 2 . The spouse �
a
wned. amo ng others a 1 00-hec·tare agnc u1 ral l d in :: ii.
tu an t Rosa, Laguna with current fa ir market value o,"
-P20M, whi ch wa s the ·· ubi e
. ct rr aner of' a .Tomt \· .:nrurt ' ' �'reement about to be u np!emented WItl 1 s tar Lana
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L-Orporauon, a well known real

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estate development compa'"nv. He bought ti{e saY� real property. for P2M fift�!
year:> ag(j. On January 5, 20 1 3 ,
the administrator of.the 1�state an d SLC j oi n tly announce their big phins tj>
start converst�n
and deve lopm e·nt of the agri cu
ltural lancis in Sta. Laguna, into first cl ass residential
Rosa,
and c o mm rcial centers. As a
e result, the· prices of rc ii properties in the locality have doubled. The
a.dmnustrator of the estate of J filed the
estate tax return c•n ranuary 9, 2 0 1 3 by inc luding in the gross estate
the real property at P2M. After 9
months, the BIR i ssued deficiency estate tax assessment, by valui ng tht>
real pro-perty at P40M . As a result
, the real propeny should be valued
a. P2M b. P l OM c. P20M d. P40M

97. While driving hi!; car to Baguio, P, together with his

wi fe, A, and only son
J, met an acci dent that caus�d .
the mstantaneous death of
J. Th.� following day, A also d ed the hospital. The spouses and the ir son had
in
the following asset!; and liabilitits at
the time of death :
A (Exclusive) ! �'onjugal ·
.J {Exclusive)
Cash P I 0,000,000 P l ,200,000
Cars P2,000,000 • 500,000
Land 5,000,000 2,1)00,000
Residential house i,000,000
Mortgage payable �.500,UOO
Funeral expens�s 300,000 . .
W i1ich of the followmg statements.is correct?
. ,
a. The estate o f J will pay corresponding estate tin:
b.The administrator of J's estate will claim vanishimtdeduction
;;i
. · rhe administrator of both estate will file one con s idatcd estate tax return.
:.:

d.A CPA certi fi cate as regards the valuation of A s eHate is required.

9 8 . Spo u£es J and C, both Filipino CLtizens are: owners of a n.: adenti al house and lot in Quezon City. After �he ·
rccem wedding of their son, M ro N, the spouses do11J1t d the ::;aia real property to them. Al the time of
I
donat101i, the real property has a fair market value of �M. W J:i ch of the following statements is correct?

.J a. M an9 N are subject to income tax for the value of the r!!al propeny donated to them
b. M and N are both subject to donor's tax
c. h t axab le gift to M is P500,COO
d. C's taxabt e· gi ft 10 N is P500,000

99. \Vbich of the following statemen t is wrong? The deductio11 !or do nati on on account of marriage i:; .allowed
for a. donation by:
a l\ re si de nt citizen to a r·�s ident donee c. A non-1 esident resident citizen to a non-resident donee
b A resident al i en to a non-resident donee d. A non-resident alien to a resident donee

100. A m·:ide of acquisicion by virtue of which, the propert1, P ,;hts ar.d ooligations, to the excent of the v al ue of.
r
;ne inne:ritance, of a person a e cransmined through h.1$ oi:ath to another e'ithePl"Y his will or �y operation
oflaw. ·
a. Extinctive presc1iption c. Succession
b. Acquisititive prescription cl Donatic n morris causa

101 . Which of the following statemems is not r ! ue ?

a. Expenses of successful l itigat ion between spouses are .1gains1 c ommu nity propeny
b. Support of an illegitimate c h i ld is against exclusive property
c. G am bl i ng winnings duri ng the marriage constitute community property
d. Gambling losses during the 1narriage are against comn.unity property

1 02. One of the following is not corre' t

a. The estate must be valued at the time of death of the dt -cedem .
b. Real estate situated in foreig11 countries will be included iP. the gross estate of a resident alien decedent
l. The Commissioner shall have authority to 1:,rrant, i n · meritorious cases, a reasonable extension not
exceeding 6 months for filing the return
d. Vanishing deduction is subjei:t to limitation

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ninin whether the property shall be included �r not
in the
l03. The location of property is important in deteng
gross estate of a decedent whu was a
a.Resident citizen b. Non-:·esident citizen c. Rrndent alien d. Non-resident alien

104. 111e gross estate includes properties locatad in USA of;; non-resident ci�zen
The gross income includes income earned in USA of a :•ilipino citizen !
a. True, true b. True, : alse c. False. rrue I d. False, false

I lOS. This maybe subject to donor' !: tax. Donation to

a. The Ramon Magsuysay Award Foundation ;. The International Rice Research Institute
b. The Development Academy of the Phils i. S ocial we.lfar.e, cultural and charitpbk institution
. . .
106. For donor's tax purposes, this is not a stranger . , ·
.

a. Daughter of godson c. Grand ;on of the sister of donor's mother

b. Son-in-law d. Granddaughter of the donor's sister

107. For donor's tax purposes, this is a stranger

a. Daughter of a brother c. Grand ;on of son's granddaughter
b. Son of an uncle d. Mother of a godson

10&. One of the following is not co rrect as regards propetty SJbj�ct to vanishing deduction. Ifthe decedent W-as
a. A .resident of the Phils. the property should"be located in the Phils.
b. Not a r.esident of the Phils. the property should be lo :ated in the Phils.
c. A reside_nt ahen, the property should be located in the Phils.
d. A resident ci1izen, the property maybe located anyw;1ere.

!09. Amount receivable by the beneficiary other than estate , executor or administrator as an inswimce under
policy taken by the decedent upon his o\vn life i s
a. Pan: of !,'TOSS estate whether the beneficiary is revocable or irrevocable ·
b. Part of gross estate if the beneficiarv is irrevocable
c. Part of gross estate if the beneficiary is revocable
d. Excluded from gross estate

I J O. Estate tax is
a. An excise tax b . An income tax c. A per( eutage tax d. A sales tax

I I 1. A. - Expenses on the death anruversary of'the deceased are not deductible expenses from the gro0ss estate
B - A1torney's fees incurred b:,r an heir from appearance at the trial to oppose the probate of the will of the
decedent is deductible expense from the !,>TOSS estate ·

a. True, true b. True, false c. False, false d. False, true

1 12. One of the followi ng is not conect

Deduction Maximum
a. Funeral expenst:S p 200,000
b. Family home 2,000,000
c:. Medical expense$ 500,000
cl. Standard deduction 1,000.000'

1 13. Proceeds of l i fe insurance to the extent of the amount reei :ivable by the estate of the deceased, hii; executor
or adm inistrator unde r oolicies taken out by the decedem upon his O'W'll life shall be
I. �
Part of the gross state irrespective of whether or rn •t the insured retained the power of revocation
IL 1\iot part of the gross estate:: iftbe oeneficiary is irre,·pcab}e.
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III. Part of the gross income if the designation of the beneficiary is revocable
IV. Not part of the gross income irrespective of wlf!the� or not the insured retained the : power· 'Of
revocation
a. I and lr b. I and III c. I and l ' / d . only l
I
hiues. obligations or bonds is.sued by a foreign corpmation shall be considered as intangible personal ·
rty situated in the Ph i l s iC how many percent of its husiness is locatep in the Phils? i · .

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33% b 50
. % c. 1?, · 'Yo 5
8 % I .
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 ��tatemcnt - Any contributi1 •n m cash or in ;\.md
w <.. 1 y candi da te, political party or coali!ion of
parti es
for campaign purpose s shall h: governed by t he electic:I1 code and �ot the tax c ode. . ·
2"11 ;'tatcment - When the don�.e or. beneficiary is a stra ger the tax payable by ihe don or shall be thirty
�
perceni (30%) of"the gross gifk · '"' · '·
a. True; False b. Trm·, true t� False, ti'ue d. False, fa lse

d
1 16. For purposes of filing estate tax return, the dea line for fi�ing from the death of decedent is:
a. 30 days b. 60 days c. 1 month a. 6 mom1 s

One of.the following is not an ordinary deducti on for purr.oses of Net Taxable Estate.
i
1 1 7.
a. Funeral expenst! b. Medical expense c. J ud pial expense d. Taxes

1 1 8. Deduction for funeral expenses ;;hall be allowed. except: .

a. Oniy if paid out of the estak
b. ·;.·or a non'-resident alien limned to amount that was actually mcurred in the Philippines
c. :)hall in no case to excet: d 5 'Yo of the gross estate ·
d. :)hall in no case to exceed P 200,000

I i 9. A di·�d •eaving the property acq uired by do nat io n from B who died 3 �!:? ye ars ago. Prop erty is now part of
·

A's gross estate. The estate· s vuli stu.ng deduction rate i�

a. 60% b. 40% C. 20°/i d. 0

L20. Wh1ci1 of the following is subject to VAT? • · ' 111•

•

a. Importation of personal or household effects r,� lon nng to the ;esidents of the Philippines returning ·
from abroad and non-resident c itizen coning t0 r<!: ertle in the Philippines where such goods w.ere ·
subjected to custonis duties
ldmportation of passenger ur cargo ves�el and aircra(ts, including engine, equipment and spare parts
thereof for domestic or international transport open: jon .
< . Importation of fuel, go ods and supplies by persons •:ngaged in international s hi ppi ng or air transport
operati ons
cl Sale of real property not primarily held for sale w customers or held for lease in the ordinary c ourse
of business

i '.?. l . Which of the foll owing is exemp from \fAT'

a. Sale of pas senger or cargc• vessels and aircraft. incl uding engi ne , equipment and spare parts thereof
for domestic or imematio1;;1! transpon openmon�;
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b. Sale of professional instruments and implements ,·rearing apparel, domestic animals and personal
household effect
c. Sale of fueL goods and supplies by persons eng.1ged m international sh i pping or air transport
operations
d. importation by persons who are not vat registered

122. ff t he .required docum entary st�p is not affixed ·on a d{1cuine�t, one of the following is co nect. The
document
a. Will be no tanzed because :he document is.still valid, .
b. Wilf not be admitted as evidence in court because the documem is void
c. Will not be registered in the proper registry even if 1lie docwnent is valid
d. still valid and if already 'IOtarized should be registi:rcd and admined as evi de nce in court
ls

l23. The export sale ofa vat registered enterprise is

a. Exempt from the vat 'c. Subject to the 12% vat
b. Subject to the 0% vat d. Subjecr to percentage tax

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1 24. Whic h of the following statements is wroni; on claim for input tax on depreciable capital g� ods'.' ·

a. Where the aggregate acqui�:ition cost ( exc lusive of vc t ) of depreciable capital goods dunng_any c ;,i.lemt
w -, _

month does not exceed P l ,000,000, the total mput tax is creditable again st outpu t tax in the month
1cquired ·

b. Where the aggregate acquisition cost (exclusive ofv l !t)of depreciable capital goods during any calendar
:n on th exceed:; Pl ,000,000 . the input tax shall
be spr!ad evenly ov er 60 months starting in the calendar
·

month acquired
c. If the depreciable capital goods is sold or transferred Jrior to the e:v..hau stion of the amortizab1t: input �'
thereon, the entire w1amortized input ta" on the capit:\l good sold or transferred can be cl aim ed as i nput
tax credit i n th<! month wheJ1 the sale or tran sfer was n iade
·

:!. Where the aggregate acquis. t1on cost t exc lusi ve of vaJ of dep reci a ble c api tal goods .during any calendar

month exceed s P l,000,000, the input tax shall be sp:ead evenl y over the actual number of months of
estimated useful life, s tarti ng in the calendar month acquired, if the estimated useful l i fe of the
depreciable capital good s is - ess than 5 years

I 25. Effoct of fai l ure to affix a documentary stamp which 1s ;.!quired by Jaw, except
a. Shall not be recorded in th1:-proper registry · ,
b. Shlll not be admitted as ev i dence i n anv coun ·

c. Shall not be valid

d. No notary public or other officer authorized · to adm�ter oaths shal.l add his jurat or
acknowledgement

126 . Which of the foll o wing is not an internal revenue tax?

a. Val !Je Added tax b. Real es tate tax c: Excise tax d. Documentary stamp tax· .-

I 27. Thi�: is JlOt an example of excise tax

a, Transfer tax b. Sales tm: c. lncome tax d. Real property tax

128. Th i s shall be considered a liveli hood activity only and sh ill not be considered doing business, if the gross ·
5ales or receipts in one yeru do es not exceed
·

n. ? 100,000 b. P sso.ooo c. P 200.o::io d. P 60.000

1 29. Value Added Tax is im posed un sale of goods or serv 1 1 :es while Percentage tax is im posed on sale pf
�:ervices only.
Donation mortis causa and inter-vivos are both acts of licerality by the person disposing of gratui tously a

properiv or a right m favor of anoth er WiiO accept�: it

d. Tru\!, true b. True, false c. False, true a.· Fals�, false
l 30. The 'IAT on goods
s
a. Is n selling expen e of the trader c. 1s imposed on goods for domestic consumption
b. Is not based on n et sa lt! d. Wiaybe due ew.n if there i s no actual sale of the goods

1 3 1 . Value added tax is an example o f

a . Graduated tax b . P rogres sive tax c. Prnportiona l ta:1 d. Regressive tax

1 32 . The foilowing taxes maybe deduc red from gross income, ex cept:
a. Business tax b. Excise ta.><: c. Docum�r: tary stamp tax d. income tax

133. Which of the following siatement:; is incorrect with regard D large

taxpayers? _

.
n} usmess esrabl �;1 lffi t'.J11 '•··vi·u· 1 VAT paid or payable
a. i.
-
- .af at leasr one m1lhon (P 1 ,000,000) for the •

preceding t axa bl e year. .

1 . one mi·11·ion (Pl , 000 ,000) ror
.: t he
- h me.nt WI-th c;, -�xci·se tax patc:f or payab� e or at east
,.
G. Bus1uess establ 1s
preceding taxable yea ! r.
. Paid or payable of at l !3St
one mil·Lion (P 1 ,000,000) for the pn!ceding
B us mes:; with ar.nua. mcome :ax • . .

ta>:ab!e vear.
n (P 1,000,000) for the
Busllles� establish ment \vith \VJ.thholding rax pa\rmeni . (llf � least one millio
· ·

eceding taxable vear.

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A.ny person who, in the
·

.
course ot trade or .

business, si'.·1Js, barters, exchanges, leases goods or propet'ues,

.

reauers services a nd a
. ny pers on who unpons.. good' shall be subject to:
a. Business tax . . • .
b. VAT c. Other perce ntage tax d. Excise tax

A merchant of Htock
0r secw.ittes,
. . . . ..
· · whether an mdivi d l.al, partnership or corporat10n, with an estabhitheo
place of bu sm
. es .
h . s, regularly engaged m the pur.chast! o t securities and the resale thereof to cu stomers ; and
w o. as a m erchant , buys se
curities and resells them to c ustomers with a view to the gains and profits lhat
may b.e denved there fro • •

m. .
a. Dealer in securities ...
b. Stock brokers c. Underwri ters d. Stock merchants

on had domes '.ic sales amounting to P I ,680,000 and export salt:s

1 36 · Du�ing the month of May, XYZ C orporati
amounti. ng to P I . 500 .000. Dmmg the same
month,·XYL :'s total purchases directly attributabl e to domestic
sales amounted to P l ,120,000 and total purchases drrectly anributable to export sales P l ,008,00G. For the
month of May, X YZ Corporat ion ' s VAT p ayab
le :
a. ( 48.000.00) b. 54,000 C. 60,000 d 62,000

l 37. Which of the followi ng transacrions is exempt from valu·:-added-tax?

a. Ml!dical services such as d :mal anJ veteri na ry serv1( cs rendered by professionals.
' uu
b. Li.!gal service.; .
· ·

c. Services arising from employee-employer relationsh; p.

d. Services rendered by domestic air transport compani•!S.

1 3 8 . W hi ch of the foll owi ng transactions is exempt from vaJuf':added-tax?

a. Sale of non-food agricultural products in their original state .
b. Sale o f non�food marine and forest products in their original state.
c. Sale of cotton and cotton s� :eds .
d. Sale of agricultural food prvducts in their original stale.

1 39. Which of the following tran sact ions is exempt from value -added-tax?
a. Sale of books, newspaper a;1d magazines. c. Sale oi :iterary works
'
b. Sale of work of art. d. Sale of 11usi cal compos iti on

l ·�O. Whid1 of the followmg transactions is s ubject to value-adtled-tax?

a. . �erv ices subject to other percentage tax.
b. Educ ational services duly appro ved by Departme nt of Education, CHED and TESDA or those
1)perated by the Govemmen l
L:.::>aie of coal and narural gas .
.
d. !. ending activines by credit �OOPJ!ranves.
. '

of the following rransactJ ons is subject to zero-ratL j value-added-tax?

1 4 1 . Whid1 •

a. Foreign currency denom inat ed sales . .

b. Services rendered by banks, non-bank financial interr. 1ediaries.
c. G ene ration, transmission and distributi on of electricir "
d. Services rendered by profes.;ionals such as CPAs, Ph� sicians and Lawyers

142. Sale of raw matenal s or packing materials to e�port-ori1:nted enterprise is considered expo rt sales whe�
'
· •

export sales of such enterpri se

· a. · Exceed 50% of total annual production c. t:xceed 66 2/3% of total annual production
b. Exceed 33 J/3% of total annual production d Exceed 70% of total annual production

1 43. Which of the foll owing transactions is subj ec t to zero;rateii value-added-tax?

a. Se rvices by regional or area headquaners of multi-rational corporations .
b. Sale to P hilippi ne Economic Zone Authority.
c. Sales by non-agricultural, non-electric, non-credit cooperatives.
d. lmportation of professional instruments and implerr:ents by settlers in the Philippines.

144. Which of the following busi ness. �s is allowed a presumpm e input value-added-tax?
J. .'Y1a1.1ufacture1 of canned g{lOds. c. Manl!tacrµrer of packed noom
b. Man ufacturer of packed juices. d Manufacturer of dried fish

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145 . .ist Statement: The input value-added-� on purc 1ase of ca ital goods valued at P l ,OOC=,090 shah be
spread over 60 months if th e life of property is eqwvdent to 5 years or more. .
znd Statement: The input value-added tax on purc nas e of capital go ods val ued at P l ,OOG , 000 sh� ll b�
spread over the life of property if the life of prope"(ty is iess than 5 years.
·

a: True, true b. False, true c. True, false d. Fals ! false ·'

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!46. A V AT-registered person whose total sales for the yea: did not exceed P 1 ,9 19,500 is
a. Exem pt from VAT c. Subject t·) 0% VAT .
..
b. Subject to percentage 1.ax d. Subject n 12% VAT

147. A non-VAT re gi ste re d whoS<� total sales for the year ex ceeded P 1,91 9,500 is
a. Exempt from VAT c. S ubj ect to 0% VAT
o. Subject to percentage tctx d. Subject tc1 12% VAT

1 4 &. E>tport sales of non-VAT registered person is

;:i.. Exempt frnm \I AT c. Subject oc 0% VA1
b. Subject to percentage t.1 x d. Subj�ct tc ) 2% VAT

149. The ITR of the individual taxpayer for the calendar year 2008 was filed on Apri l 1 , 2009, the l as t d ay for
the B.IR to assess is
· ·

a. April 1 , 20 12 b. April J{ 20 1 2 c. April 1 , 20 1 4 d. April 15, 20t4

J 50. A ssum e that it was filed on April 1, 2009, the l ast day for the BIR to collect without prior assessment is
a. Ap ri l I, 20 1 2 b. April 1 5 , 20 1 : ! c. April 1 , 2 0 1 4 d. April 1 5,
2014

151. Assume that it was filed on April 30, 2009, the last day for th e BIR to assess is
a. April 15, 20 12 b. .o'\.pril 1 5, 20 1 -' c . Apri1 30, 20 1 2 d. April 30,
2014

l 52. Asswne t hat it was filed on April 30, '.?.00 9 . the last day ;or the BIR to collect without prior a sse �;sment is
a. April 1 5, 20 1 2 b. April 15. 20 1 4 c. April 30, 2012 d. April 30, 2 0 1 4

- -
1 53 . Assume th at it was filed on July 1 5, 2009. Assessment was made by the B IR on June 1 5 , 20 1 '2. The lasr
day fOr the DIR to col l ect by jt dicial or sum1na1y procec Jings is
·
·
a. J une 1 5, 20 1 5 · ,

b. June 1 5, 20 1 7
c. JJ.ly 15, 20 1 4
d. '
No more because there is prescription on-the part o� the BIR to· make th e assessment

1 54. Assume that it was filed on April 1 5, 2009, the BIR disc1>vered that fraud was committed by t he taxpayer, .
so an a ssessme nt for defi cienc: r tax was issued on J u l y 1 5. 20 16. The last day for the BIR to .;oJlect·b.v
judicial or summary proceedings is
•

a. July 1 5, 20 1 �>
b. JuJy 1 5 , 202 1
c. Ju°iy 1 5, 2026
d. No more because there is prescription on the right o:' the BIR to make the assessment

1 55. The date the notice of infonnal i.:onference was receiyed by the taxpayer was September 4, 20 1 1 . !he last
day for rhe taxpayer to respond i s
� . Sept ember 1 9, 20 1 1 b.
S eptember 4, 2 0 1 2 c . October 4, 201 1 d. October 1 9 , 20 1 1

56. The last day for th e taxpayer t<• respond if the date of l'.'fe-issessment notice was received on June 14,
' 201 I is
l June 29, 20 1 1 c. J �ly 29, 2Ql 1 , ,1:• d. June 14, 20129
a. Julv 1 4, 201 1

CIF ., if the formal letter of demand and as�;essment

.
lOr the taxpayer t o ·-1
1ast day & fl e a protest with th(!
·

.
received by the taxpayer on :�ovember 1 0, 201 1_ is
d. January 10 , 2012 d 0ecem
. ber -:•5
_. 201 1
11. Oecember lO, 20 1 1
· •

mber 5 20 1 1
,
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AB;;,led •1:•
• •

his income tax return

.1.1' an assessment ·
' or 2009 Ou l�pril 1 5 :
·
notice wa:; i ssued on May l �
�·'.J ": ;
and paid the tax of P 20 000.
' .
audit by th;.Upo�
' 20 I � re q u i r i ng him to pay a d eficie ncy tax of P40-,000
nor. l aier than July 1 5 , 20 1 2 . fc ma
y •

a. Go to the CTA to app

eal the assessmenr made by the .BIR
b. Go to the Supreme c ·
ourt 1 1· the issues rnvolved are p JTe quest.Jons of law
· .
·
.

c. ignore the assessment as

tbe date of collect1on 1s bevJnd 3 vears as the taxable year covers 2009.
d. Request for an extension .
of time to pay the defic1en� v inco�e tax.

1 59 Date the �mtional internal rev·�nue

·
tax was paid - Apr. I I o, 20 1 O. Claim for refund was filed with il] e
March l O, 201 1 . Date aeci sion of denial of refund was received - March 2 1 ,
Bureau ot lntemal Revenue -
20 1 2 . L�st day to appeal to the Court
of Tal". Appeals.
a. April 20, 201:� b. April 1 0, 201:2 c . April 21, 2012 d . Apri l 1 5, :w 1 2

\ 60. The powers and duties o f the BIR in cl ude

the fol l owing . ':xcept
·

Tl) effect and administer the police and super.v1 sory po1 vers co nferred by the Tax Code and other' related
.

a
laws
) The exec uti on of judgment in all c ases de\.·idea in its ;& :or b y the Cpurt of Appeals and ordinary courts
'� · To enforce all forfeitures.. per.alties and fines in c onn ec- ion with the collection of national intema.J
.
re :1.:nue taxes . . .
d. The a.%essment and collectio11 of all nati onal and l'ocal
. \
revt:nue taxes

1 6 l . Whidi of the following statemerns is not correct2

a. lf with prior assessment. col lection of the tax can be lly summa1y proceedings
b. ! r with prior assessment, col lection of the tax can � b y J udj c ia1 proceedings
'
I

i
i\ c. I f without prior assessment, ;:;ollcction of the tax can t e by judicial proceedings

\
d. I f without prior ass0ssment, collection of the tax C<\ll be by summary proceedings

0
l 62. The following are the requisites !Or the exercise of the remedy of di strai nt and levy, except
.
:.1. The taxpayer must be delinq uent in the payment ofta1
b. The tax due sho ul d be at lea::t P 1 ,000
-
1;. The ta.xpayer failed to pay the tax at the time requ ired
d. The period to collect the tax has not yet prescribed

• 1 63. The :·evenue distriG t office c an carry out proceedings o!° a distraint of personal property when the tax
liability is not more: than
a. P ' 00 b. P LOOI) c. P 00,000 d. P l ,000,000
\ 64. Which of the following sratemern � is not correct )'
"·
· ;'b.: (.:TA, in the imcrest of the g overnment and/or tne. taxpayer may 'susJ51S1'd the collection of a tax
and 1:equire the taxpayer eirher to deposit tbe amount claimed or to file a surety bond f�r not more
than the amount due with the coun
b. As a rule, no court shall have the authority to gran t au injuncrion to restrain the collection of any
narional i ntemai revenue tax. fee or charg� imposed by �he NIRC
·

c. T!1e prescrip tion of a refw1d •.:heck or warrant ;;hall be ·'·irhin 5 years from the date th.e said warram of
check was mailed or delivered
d. The prescription of a tax c1 edit certifi cate shall be - .vithin 5 years from the date of issue. ·unless
revalidated

I
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165. P, a Fi lipino citizen residing i n Makati qty, owns a va :;at io n house and lot in San Francisco, 8_alifomia,
USA, which he acquired in 2000 for P l 5lvl On Januan· 10. 20 1 2 , he sold said real property to J , another
Filipi110 citizen residing in Quezon City for P20M. O ; Februarv 9, 20 12, P filed the capital gains ta.'<
return and paid P l .2M represmti ng 6% capital ga ins c�•. Si nce p did not derive any orainary bcome, no
income tax return was filed by him ill 2 0 1 2 . After tlte tax audit conducted in 2 01 3 , the BIR officer

I\I i asse ssed P for d efici e nc y income tax computed as foll ows: P5M ( P20M l ess P l'5M) x 30% P l .SM,
witho ut the capital gairu; ta,x paid being allowed as tax credit. p consulted a real estate broker who said
that the l' l .2M capital gains lax should be credited frc m the P I . SM deficiency i ncome tax. Is the BIR
=

officer's tax asse�;sment correc 1·1

'
i ri. Yes, assessment i ssued by the BIR is presumed correct

I
b. Yes, because the vacation house 1s located in USA
I, c. No, the ca pita l gains tax paid should have been ded\lcted from the Pl .SM defi ci em:y incom� tax
d. No, because the 30% tax rate applies to c.orporations

I
I 166. Which of the following propositions may now be untenabie?

\ a. The court should construe a law granung tax exemr ti on strictly"against the taxpayer.
b . Th� Court o�· Tax Appeal!: has .iur1sdicuon over decisions of the BIR Co mmi�i oner in cases

1
· ' ·

mvolving national internal'revenue taxes.

c. Tf1e Supreml! Court hasju risdic�ion to rev ie w dcc1swns of the Court of Tax Appeals.
d The court should construe a law granting a. municipal .
corporation
.
the p ower to tax mast strictly.
!
l ' 167. Due to an wic erta in ty whether or not a new tax law is :ipplicable to printing compan ies, ABC �inters
l' submitted a l egal query to the BIR on that issue. The Bm iss ued a ruling that printing compani(:S are not
covered by the new law. Relying on this rulinµ, A.BC :>rinters did not pay the said tax. Sub�:equen!I�
however, the BIR reversed the ruling and issued a ne\V 011e stati ng that the ta.x co vers printing companie.s.
'

Could the BIR assess ABC Primers for back taxe.s corresponding to the years before the new ruling?
a. Yes, because taxation is th e rule and exemption is th e exception
b. Yes, b ecause taxes are the lifeblood of the goverrumnt
c. No, the BlR is not aHowed ro reverse its ruling
d. No, revernal of a ruling shall not be given a r�troactive application if it will be prejudicial to the
I raxpayer

\. 1 68. From the date of the last e ntry m each book. book of accounts and other accounting records should be
prese rved by the ta x payer for a i:eriod of at least
i a. 2 years b. :; years c. 4 years d. 5 years
I

'\' i 69. The o fficial action c f an otliccr a .1thorized b y law m asccruining

.
I.he amouat ot�tiljl{ due under the law from
.

a taxpayer i� .
a. Assessment b. Delinquen:.:y c. Defic iencv d. Distraint

°
1• 1 70. The failure of the taxpayer to pa)' tax due on !lle date fixed by law or indicated in the assessment r.utice or
letter of demand
a. J\Sset;smem b. Deficiency c. Delinquen:;y d. Distraint

1 7 1 . The amount still due and co ll ectil: le from a taxpayer upon a 1dit or investigation
a. Asse�sment b. Delinque rn:y c. Defic i en c 1 d. Distraint

1 72. The seizure by the government OJ · personal propeny to enforce the payment of taxes to be followed by i ts
pub l ic sale if the taxe� a re not voluntarily paid •

a. Assessment b. Delinquency c. Levy d. Distraint

l 73. The seizure by the government of real property to enforce tt.e paymenr of taxes to be foUo�ed by it!: public
sale if the taxes are not voluntarily paid
•

a. Assessment I>. Delinquency c. Levy d. Distraint

1 74. As regard!; taxable y�·ar, one or the: followmg Statem

�
. .
ents is not correct
a. ht taxable year 1s the accountmg ptriod .
•

b. 1 he ta:\able year maybe less th:ln 1 2 months. ·,

.

\;. The taxable year of a sole prop:1etorship business maybe fi scal or calenda year
'
r
11. The taxable year of a domestic corporation maybe fiscal '.)r calendar'year.

PW-TAX-0-1 1 18
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Power to imerpret the ptov isions of th .
e T ax Cude·and other tax laws shall be under the e>:c l us1y� ano.
.
- l jurisdiction of the .
0
;.a. Regional Trial Court · •
c. Court ofT .:J� Appeals ·
•l.
Q. � retary
·�ec
.
of Fmance
d. Commissioner of Internal Revenue

1161 U'� ing N o. 175,

. ,
the power re c .
it.rred to above 1s s.ubJect tc revie w by
· ·

\
Cou rt of Tax Appeals
c:ommissioner of Internal Reve
�
c. Regi nd Trial Court
nue d. Seci-eta1 y of Finance

The powe to decide disputed

: assessments refunds of internal revenue truces ' fees or oth�-r charge!i.
.;
Pe-nalti es impos '
ed Ill thereto, or other mane rs aris ine. under tbe Tax Code or other laws c·1
"..
· ·
· · relatto�1
. . ·
prov 1s1ons thereof admiruste ..
�

ri:!d by the BIR 15 vested ii:. tbe

a. Secr.etary �f. F inance
c. Coun oi'Tax Appea ls
b. Regional 1 nal Court
d. Commi! .sioner of Internal Revenue

1 7!', . Tl 1e power referred to above i !: subj ec

t to the exclusive E ppelJate jurisdiction of the
a. Comm issioner of internal Revenue c. Secretar v of Finance
h. Regio nal Trial Coun d. Court 01 Tax Appeals
••
' 11:�

1 7 9 . The C ommissioner of Internal Revenue may com prv �1se0 the payment of any internal revenue 'tax WQen
I. A reasonable doubt as tc1 the validity of the claim . 1gain st the taxpayer ex ists
II. The tax or any portion thereof appears to be unjus Jy o r excessively assessed.
.
Ill. The financial position 01 the taxpayerdemon�tratq a clear inability to pay the assessed tax.'
a. I a nd 11 b. I :ind I ll c. II and IL d. I, II and HI

l 80 . The Commissioner of Interna l Revenue may abate or ca11ccl the tax liability when
I . The administration and c ol l ection costs invobed o o not j usufy th e collection of the amount due I
I L A reason ab le doubt as tc the validity of the claim against the taxpayer exists
1 ll. The tax or any portio n thereof appears to be unjustly or excessively assessed.
l V . The financial position of the taxpayer demonstrate ,; a cle-.lf inability to pay the assessed ta>:. -
•
a. Only I b. l and II c. I and IIl d. I and IV

l 8 l . The following reasons maybe given by a taxpaye r 11-. refusing to pay his tax l iabili ty. Which is not .
acceptable for legally refusing to pay the tax? .
a. That he has been depri ved o f due process of law
b. That there is no rerritorial jurisdiction
c. That the prescript on period for the collection of tax h is lapsed
. .
d. That he will derive no benern fr�m the tax ·
. '

1 82. Stateo�eot l - The CTA is considereo as havmg tn<> same level as the CA, and shall be com posed Qf J
UO\v

presiding j ustice and 8 associate justices. .

·.
·

Statement 2 - The CTA may sit in en bane or in 3 divisi )ns composed of three justices for each division . .
a. True, true b. True, false c. Faise, false d. False, true

1 83 . One of the following is require.J to issue receipt� or sales invoice

a. St::ller of merchandise whose sales amounted to p·25 or more .
b. Market vendors exclusively selling dome!?tic mear vi!gecables, fruits, poultry, fish and other food
pr(Jducts.
c. Se ll er who is exempted by !he commission of lnterm.I Revenue in meritorious cases
d. Seller of-merchandise who:>e sales amounted to less than P 25.

l 84. An individual taY_payer , other than a corporat!on ma y elect to pay the income tax due in �o equal
installments if the tax due is
a. More than Pl 00 b. More t han Pl ,000 c. Mon: than P 2,000 d. More than P 5,000

1 85. The per iod oflimitation for assessment of taxes is not suspended
a.
,
Tne return filed conta ined inaccuracies due to ornissi. ms and mistakes

'
b. 'i'hcre is faiJwc to iile tl1e require d return ·· 11: •
c. The taxpayer and the CIR agreed on the extensi<lri of the period .
.
d. The return filed is fraudulent and made with the inte:: t to avoid the ta'<. ,.;

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1 86. The Tax' Refonn Act of 1 997 i:,

a. RA 9337 b. RA 8424 C. RA 9504 cl. CA 466

187. Using the preceding number, it too.k efiect on

n. January 1 , 1 997 b. o.�cember 1 1 , 1997 c. January 1 , 1998 d. July 6, 2008

188. The Tax Refonn Act of 1997 was partly amended by (lattst)
a. RA 9337 b. RA 8424 c. RA 9504 d. RA 7506

1 89. Using the preceding number, it took effect on .

a. January 1 , 2008 b. July 6, 2008 c. Jul y 1, : 008 d. January I, 2009

190. Using the preceding nwnber, bur the optional Standard deducti on took effect
a. January 1 , 200 8 b. July 6 , 2008 c. July 1 , 1008 d. J anu ary 1 , 2009 . .!

1 9 l. Congr��s passed a law imposmg taxes on i ncome i.:amcct (1 lt or· a panicular. �c1iY! lY th&t was not pr\:_viously
,
t.ixed. 1- he law, however, taxed incomes already earned within the fiscal year wI 1en the Jaw took etlect. ls
'
the law valid?

a. No, because laws are intended to be prospective, not retrcactive.

b. No, the law is arbitrary in that i ! taxes income that has alnady been spent.
c. Yes, since tax laws are the lifeblood of the nation.
d. Yes. tax l aws are an exception; they can be given retroact :ve effect.

1 92.- Keyrand, Inc., a Ph i l ippine corporation, sold through the It •cal stock exchange l 0,000 PLDT share:� that it.
bougnt 2 years ago. Keyrand sol d the shares for P2 mi l lion and realized a net gain of P200,000.00. How
shall it pay tax on the transactior--?
a. It shall declare a P:! m ill i on gross i ncome in jts income ta> return, ded uc ti ng its cost of acquisition ·as an
1!xpense.
b. J t shall report the P200,000.00 it1 its corporate income tax .return adjusted by the holding period.
c. lt shall pay 5% tax on the fi rst P 1 00,000.00 of the P200,000.00 and 10% tax on the remaming
Pl00,000.00.
d. It shall pay a tax of o ne-hal f of l % of the P2 million gros� sales.

1 93. T he spouses Helena and .Federico wanted to donate a parce of !and to rheir s9u Donqon who 1s gell ing . ·

marm:o in December, 20 I 1 . The 4:}rcel of land has a zonal v�luation of P420,000.00. What is the most
eilicient mode of don ating the property?
· ·

:1. The siJOuses should first d onate 1:·1 20 1 1 a portion of the pn'.1perty valued at P20,000.00 then spread �he
P400,000.00 equally for 20 12, 20 13, 2014 and 20 1 5 .
b . Spread the· donation over a period o f 5 years b y the spouse� donating P I 00,000.00 each year from 20 1 1 to
. . •
.

20 1 5 .
c. The spouses s hould each donate a. P 1 1 0,000.00 poni oo of tlte val ue of the property in 201 1 then each

should donate P I 00,000.00 in 20 i2.

d. The spouses should each donate n Pl 00,000.00 portion pf tl1e yalue of the property in 2 0 1 1 , and another
P l.00,00� .00 each in 2 0 1 2. Then, in 2013, Helena should donate the rema ining P20,000.00.

Mra, a compensation i ncome earner, filed her income tax return for the taxable year 2007 on March 30,
2008. On May 20. 201 1 , Mia received an assessment notice .md letter of demand covering the taxabte year
2007 but the postmark on the envelope shows April 10, ·2 0 l J . Her return is not a false and fraudulem
ret:.un. Can tv.t:ia raise the defense c.f prescri ption?
a. No. The 3 year prescriptive period started to run on April l :i . 2008, hence, it has not yet expired on April
I C1_ 20 I J .
b. Ye�. The 3 year prescripti ve period started to run on April l . i, 2008, hence, it had already expired by May
2U, 20 1 l .
. No. Th.� prescriptive period startec io nm on March 30, ::00} . henc�, the 3ye�: �� �d expired on Apr1l P: .

.!{ 1 , 20 ;
.
. •

by Ma'.t 20;
es. Since the 3-year prescriptive ncriod started to run on March -30, 2008, it already expired
11.

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 , ;1mong the following ted
•

•
uces the gross estate . ·
of l
. .
of a citizen
·

• 'es of estate
( n Jt the the Phi 1 ppmes for
taxation..7
net estate)
a, T ransfers for public
use
•

c. Standa d d duct:Jo�
.
b. � ; iuperty previously taxed . of P l M
d Cap1.t ar
l o f teh� survwmg spouse
:t
·

Tj:e BIR could not avail

1· t seIt of' the remedy
of levy and distraint to implement, through collect1on, an
B. . · ·

as:�ssmen� that has become final,

·
. •

4 .
a. �1 he subj ect of the asse
executory, and dernandable where
ssme�1t is an mc ome tax.
..

b. . -�he
amount of the tax i nvol ved does not
exceed P lOO 00.
..

c . .'. he corporate_m�yer has no

other uncpllected tax i i itJility.
d.
;.
' he
taxpayer is an individual compensation income e;;mer.

2\i.:l . Alain Descartes.. a French citizen permanently residing 'in the Philippines, received several iterr_s duri ng �
the taxabl e year. Which amon� the following i.s NOT subj ect to Philippine income taxation?
·

a. Consultancy fees received for designing a comp uter �rogra.m and installing the same in the Shanghai
facility of a Chinese firm
·

b. i nterests from his deposits in a l ocal bank of foreign currency ea.med abroad c�nverted to Philjppinc
pesos.
t:. Dividends received from M Ame1ican corporation " hich derived 60% of its annual gro ss receipts
• . .
.

from Philippine sources for the past 7 years.

d. Gains derived from the sak of his condominium uru1 iocated in :rhe Fort, Taguig City to ano ther
resident alien.

205 . On March 30, 2005 Miguel foods, lnc. received a notic• ! of assessment and a letter of demand rn its
Apnl 15, 2002 fi na l adjustment return from the �IR. Miguel Foods then filed a request for reinvestigatio11
together with the requisite supporti ng documents on �pri ! 2�. 2005. On June 2, 2005, the BIR issued a
•

finat as �essment reducing the amount of the tax aemanded. Si nce Miguel Foods was satisfied with the
reduction, it did not do anything anymore. On April 1 5, 2 ) I 0 the BIR garnished the corporation's bank
'
deposits to answer for the tax liability. Was the BIR actio n proper?
a. Yes. The"BIR has 5 year s from the fili ng of the prote::t within which to collect.
b. Yes. The BIR has 5 years from the issuance of the fir al assessment within which to collect.
c. \lo The taxpa�1er did not apply for a comprom ise
d. �o. Without the taxpayer' s prior autbonty, the BIR a ; ri on violated the Bank Deposit S ecrecy Law.

206. p
Which among the following ta>.. ayers is required to use only the calendar year for tax purposes?
a. Parmership exclusively for the design of government infrastructure projects considered as practice of
civil engineering.
n. , omt-stock company formeu for the purpose of wi.denaking eonstructfcin -�f� ects.
c. Business partnership engaged in energy o peratiol'l.s under a service contract with the governm!nt .
.

•
d. J oint account ( cuentas en participacion) engaged in tie tra di ng of mineral ores.

In March 2009, Tonette, who i!: fond ofjewdries, bough1 .a diamond ring for P750,000.00, a brac:e Iet for
.
207.
P250.000.00, a necklace for P50n,OOO.OO, and a broo ch fo PS00.000.00. Tonette derives income from'the
exercise of her protessi on as a li censed CPA. In October 2 )09, Tonette sold her diamond ring, bracelet,
·
·

and neck.lace for only P l .25 mill i on incurring a l oss· of P2'. ·0,000. 00. She used the P 1.25 million to'buy a
solo diamond ring in November l009 which she sold for P 1 . 5 million in September 2010. Tonette bad no
other 1ransaction in jewelry in 2C 1 0. Which among the following describes the tax i mpl icatio ns arising
from the above transactions?
a. Tonette may d educt his 200S loss only from her 2009 '>rofessional income.
b. 1 nette may carry over and deduct her 21J09 loss only from her 2010 gain,
o
c. Tonette may carry o ver and deduct her 2009 loss from her 2010 professional income as well a:; fro�
ner gain .
d. Tonette may not deduct her :'.009 loss from both her 2(1 1 0- professional income and her gain.

• I

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195 The payor of pa:;sive income subject to final tax is required to withhold the tax from the payme nt due-the
recipient. The withholding of-.:he tax bas tf1�.effcct of ·

a. A fir..a l settlement of the tax l iability on the income.

b. A credit from the recipient's : ncome taX liability_
1:. Consummating the transaction resulting in an income_

LI. A deduction in the recipient's income tax return.

196. Guidant Resources Corporation, a corporation registered in Nonvay, has a 50MW electric powt:r plant i n
San �ose, Batangas . Aside from Guidant's income from its power plant, which among the following is
considered as part of its income from soun::es within the P.'.lilippines?
a. Gains from the sale to an Ilocos Norte power plant of grnerators tiought from the United States.
l1. Interests earned on its dollar c.eposits in a Philippine baitk: under the Expanded Foreigl!. Currenc Y Deposit
System.
c. Dividends from a two-year old Norwegian subsidiary w Jh operations in Zambia but derives 60% of its
gross income from the Philippines.
c. Royalties from the use in Bra.L.il of generator sets designed in the Philippines by itc; engineem.
. .

I 97. Anktryd, Inc., bought a parce l ·of lcl.nd in 2009 for P7 mi-!.l.i9n·as part of its inventory of real properties. In
1·
1·
20 1 0 . ii° sold the l and for P l 2 million which was its zonal, valuation. In the same year, it incurred a loss of
P6 million for sellmg another parcel of land in its invento ry. These were the only transactions it had i11 • •
its real estate business. Which of the following ts the applicable tax tteatment?
a. Anktryd shall be subject to a !ax of 6% of P 12 million.
b. Anktryd could deduct its P6 million loss from its P5 m i llion gain.
c. Ank1ryd's gain of PS mi l li on :;hall be subject to the holciing period.
d.. Ank1ryd's P6 million !oss could not be deducted from i1s P5 million gain.

l 98. Aple ! s Corporation is registered under the laws of the Virgin Islands. It has extensive operations in
Southeast Asia. In the Philippines, Its products are import !d and sold at a mark-up by its exclusiv1!
Jistnbutor, Kim's Trading, lnc. The BIR compiled a recod of all the imports of Kim from Aplets and
1.mposed a tax on .Aplets net income derived from its e xpo rts to Kim. Is the BIR correct?
1t. Y cs. Aplets is n non-resident roreign corporation engagi!d in trade or business in the Philippine!:.

b. No. The tax should have been computed on the basis of gross revenues and not net income.
l:. No. Aplcts is a non-r\!sident foreign corporation not engaged in trade or business in the Philippines.

d. Y�s. Aplet s is doing business in the Philippines througl' its exclusive distributor Kim's Trading. lnc.

1 99 P:1ssive income includes income derived from an activ ty in which the earner does not have an v
:;ub�.,:.m tial participation.
. . - of income is
This t·:pe
. . . . ,, . .
a. U sual ly subject to a final tax c. Taxable bnly if earned by a c1hzen
b. Exempt from income taxatio::i. d. lncludetl in the income tax return

200. Federico, a Filipino citizen, migrated to the �nited State:: some six years ago and got a permanent.
resident status or green card. He should pay his Philippine income taxes on
a. The gains derived from the sale in California, U.S.A, o :jewelry he purchased in the Philippines.
b. The proceeds be received from a Philippine insurance company as the sole beneficiary of life i:1surance
t�k.en by his father who died recenily.
c. The gains derived from the sHle in the New York Stock Exchange of shares of stock in PLDT, a
Philippine corporation.
d.' Dividends received from a two year old foreign corporation whose gross income was derived solely
trom Philippine sources.

20 1 . What i:> the rule o n the taxabili1 y of income that a govern.ment educational institution derives from its _
·

school operations? Such income is

a. Subject to I 0% tax on its m:t taxable income as if it i� a proprietary educational institution.
b. .Cxempt from 1 11come taxati l)n if it is actually. direct!)., 8:nd exclus1v�ly used for educ�t1onal purp?ses.
c. '.)ubject to the ordinary income tax rates with respect ..o mcomes c;ienved from educanona! actrv1t1es.
d. ixcmpt from income taxati on in the same manner as government-owned and c�ntrolled corp<)J:ation�.
• I

. .

PW-TAX-0-1 1 • 21 ----
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· ite Minerals ' Inc

b' . , a cor""
•
.
t-'�ration registered and hok 1 mg otlice i n Australia, not operating in the
. •

.ppm
.
�s may e su �ect to P hili pp
b
•
ine income taxation ' on .
.
a Gams it denved from sale in Austra
.

· of an ore cru5J ier it b ought from the Philippines with rhe.

·
·
1ia
proceeds convened to pes
os.
. . . .
a1 -ia of shar es ot st )Ck of Philex Mining Corporatlon a pi..
b. Gains it derived from sale 1· n Austr
. '
u.utppme
, ·

corporation. ·
�
· .

c. Di�i��nds earned from investment in a foreign corpo-:ation that derived 40% of its gross income fro�
Pmhppme sources . ·

d. ! nteres derived from its dl)llar dep

� osits in a Philippi ne bank under the Expanded Forei gn Cur,rency
Depc>Slt System .

209 · Pierre de Savigny, a Frenchman, arrived in the Philippin :s on January I , 201 O and continued to live and
engage Ill business in the Pbilipnines. He went on a tour o f Southeast Asia from August J to Novt:m ber 5,
iO l U. he returned to the Philipi;mes on Novembc�r 6, 20 1 1 ; and stayed until April 1 5 20 1 1 when he
,
returned to France He earned during his stay in the Philippines ;. gross income of P3 mi l l ion from his
mvestments in the country. For · he year 2 0 1 0, Pierre's taxable status is that of
a .(\. non-residenr. aJien not en ! ! aged in trade or busmes:; .:i the Phi l ippines .
.

h. �on··rcsiden·. a l i e n engage d ;n 1raue or busm1:ss tn �1.: Philippines. · · , ii:•

"·

c. A res.i dent alien not engaged in trade or business .in th !0Philippines.

d. A resi dent alien en ga ge d in trade or business in the Ph:lippines.

2 1 0. Money col l ected from taxation ,;hall nOl be p;ii d to any rc. igious dignitary EXCEPT when
a. The religi ous aignitary i s as:ngned to the Philippme A ·111y.
b. I t is paid by a l o caJ government unit.
c. ��he payment i:; passed in audit by the COA.

d ll is part of a lawmaker's pork barre l.

2 1 1 . J oanne married Jam es. a person with no known relatives . T nrough James' hard work, he and his wi fe
Joanne prospered. When James died, his estate alone amo:m .cd to P !OO mill ion . If, in his will, J ame:;
de:;ignates Joanne as his only heir, what will be the fret: pon: on of his estate?
·
a. Joanne.: gets all; estate has no fre:: ponion left.
b. .Joanne gets l/2; the other half i� free portion.
c. .ioanne gets 1/3� the remaining 2/3 is free ponion.
•
d. .Joanne gets 1/4; the remaining 3/4 is free portio"n.

:� I � .. There ;s no mxah1e income umil :.uch income is recognized Taxable inco me is recoI, liz d when th·!
'le
a. Tax-caver fai ls to iu:l ude the inc :nne in h i s income tax ren.ru.
b. lnc�m·e has been actually receiv1.: d in·money or its equi va l mt; •
c. Jnco me has been receiv �d, eithe1 actually or constructive! \ .
d. 'f'ransaction that i s the source of the income is consummat ;d.

213. Whicn rheorv in tax ation states that witho ut taxes, a goverr mem wouid be paralyzed for lack of power
·
to .
activate: and o ?e rate it:. re s ulti n g in its destruc t i o n?
a. Power to destroy theory c. Sumptunry theor: ·
b. Li febl ood theory d. Symbiotic theory

2 1 4. Douhie 1axatioo in its general sense means taxiog"the same· subject nvic.e d.uring the same taxing period.
in this�ense, double taxation
a. Violales subst:;mtivc due process c. V i 0l ates the right to equal protection
b. Does not violate suostantive du e process . d. Dues not violate the right to equal protection

2 l5. Tong Siok, a billionair; and a Canadian resideL t, died and left assets in China valued at P80
Chinese
..
bil lion and in the at P20 billion. F )r Philippine estate tax purposes the all owab le
Pb i 1 i ppines assets valued
deductions for expenses, losses, inctebtedness, and taxes , pro )erry prev10usly taxed, transfers for pub l ic use,
an<l the �hare of h i s survi ving spo:ise in their conjugal pnrt:1ership runo w1ted to P15 billion. Tong's gross
estate for Philippine e:;tate tax purpllses i s
P20 hliion !:.. P5 hill 1on c. P J O{J bitlli>n J. P85 billion
;. .
. •
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2 16. The actual efforrexerted by the government tp effect t1� exaction of what is due from the taxpayer is '

1.
known as·
a. Assessment b. Le\ y c. Payment d. Collection

217. Although the power oftaxation is basically legislative i11 character, it is NOT the function of.Congress 't<l
a. Fix·with certainty the amount of taxes c. Ide�tify who should collect the taX
b. Collect the tax levied under the law d. Determine' who should be subject to the tax

21 8 . ln 20 1 0, Juliet Ulbod �ed f-'500,000.00 as income from her beauty parlor and recei �ed P250,000.00 as
Christmas gift .from her spinster aunt. She had no other rec1:ipts for the year. She spent P 1 50,000. 00 for the
operation of her beauty parlor. For tax purpos es her gross �ncome for 2010 ,is
,

a. P750,000 b. P500,000 c. P350,0C O d. P600,000

219. Exempted from donor' s taxati(ln are gifts made

a. For the use of the barangay c. To a scr.ool which is a stock corporation
b. In consideration of marriage d. To a for -profit government corporation

:�20. A11 ::x<! mple of a tax where the concept of progressiviiy tiD.ds application is thY: •
a. Income tax on individuals c. Value-added tax on certain articles
I b. Excise tax on petroleum products d. AmuseIL-ent tax on boxing exhibitions
I
. J\\ 22 1 . A corporation may change its tuxable year to ca!endar or qscal year in filing its annual income tax return,
provided ·

a. h seeks prior BIR approval •)f i ts proposed change in accounting period.

l b. Jt si multa11eously seeks BJR approval of its new accounting period.
c. It should change its accountrng period two years prior to changing its taxable year.
d. Its constitution and by-laws authorizes the change.

:222. .<a Ped.ring Matibag, a sole proprietor, buys and sells ''kur not at r
: nlambo" both of which are subj�ct to
value-added tax. Since he is using the calenda'r year as his taxable year, his taxable quarters end on the last
day of March, Jw1e. September, a:1d December. When shou :d Ka Pedring file the VAT quarterly return t�r
hi..s grnss sales or receipts for the period of J une 1 to Septerrber 30?
a. Within 25 days from Seplember 30 c. W ithin 1 5 days from September 30
b. Within 45 days from September 30 ci. W ithin 30 days. from September 30

223. Dou Fortunato. a widower, died m May, 201 1 . In his will, he left his estate of P lOO mi l li on to"his four
Ghildrrn. He mu�ed his compadr�., Don Epitacio, to be the Hdmmistrator of the estate: When the Bm. "sent �
demand le tter to Don Epitacio for the payment of the estate 't<lx he refused to pay claiming that he did
not bcr.c1h from the estate, he not being an ,
heir. Forthwitli.'lie resigned as administrator. As a resuh: oft.he ·
rcsign:1iion, who may be held liable for the paym�nt of the ::state tax? .
a. Don Epitacio since the tax became due prior to his resignation.
b. The eldest child who would t e reimbursed by the other ;,
·�. All the four children, the tax 10 be divided equally among them.
J. The person designated by the wil! as the one li�bl e . •

224. On July 3 1 , 20 1 1 , Esperanza received a preliminary assessment notice from the BIR demanding that she
pays P l 80,000.00 deficiency income tax:es on her 2009 income. How many days from July 3 1 , 20 1 1
should Esperanza respond to the notice?
a. 1 80 days b. 30 days c. 60 days d. 15 days

lncom� is considered realized for [ax purposes when

a. it is recogn izea as ;eve n ue unde: accounting standards e�1t:n if
the la� does not do so.
o�c frc·m e BIR .
b. rhe taxpayer ret i re� frClm the bu� mess �1th oval th
appr .
cash the taxable rncome.
c. lhe Ut:'. pJyer has been paid and has received m
or near cash

d . th� eaming process is complete • Jr virtually complete and an

exchange has taken place .

. . .....
..

ch among tne following . .

1.:ircwnstanc
.. . pnma
· sment?
es negates tbe. fac i e presumption of correcmess of a Bffi
�- The BIR assessment ·
was -;easona bl" .
) prote!>ted w1.J1 · .,.. .
· :·, ..>O aays from receipt.
b No
•

0 pfre i·immary assessment notice

was i ssued pnor .o the asst:
.·

'·· .i roo that the assessme ssment notice . .

erlY WJ·thout tioundm. on. arbitrary,
nt is utt.
d. The BIR did not .nclud and capricious.
; . .
e '' formal lener of deman d 1 0 pay the alleged deficiency.

G•!r� do died on July 3 1 ,

� 201 1 . His estate tax return sht uld be filed within
"- · s,1.x months from ti.lin
g of the noti
ce of dearh.
b. Sixty days from the appointm
ent of an administratw.
c . S1x months from the time
be died on J ..ilv J l . 201 : .
c.. S ixty days ti om the time he
died on July 3 l . 20 1 1 . •

.
223. A nwn.
. I nc. re ceiveda notice of assessment �iW a lcn�r from ihe BIR demandi ng the payment of P3
.
tlll �hon pesos in deficiency mc ome taxes for the raxabk vear 2008. The financial statements of th.e
company show that it has bee r, suffering financial rever� �-� from the ·year 2009 up to tbe present. Its asset
po�;1t10n shows that it could pay oaiy l-'50(i,00u.O(; wn1Ci n offered as a compro�e to the BIR Which·
among the fo llowing may the J3m require to enable it to enter' into a compromise with Anion, In ::. ?
" Amon must show 1t has h,ithlUHy pgiu ta.xe:; be1cm:.-:·!009.
b. Amon must promise to pa? itS deficiency yi1hen r1nai 1ci:.lly able,
c Anil>n must waive its right to the secrecy of its bank deposi ts.
d. /\.nion must immediately C:eposit the PS 00 ,000 .00 w th the BlR.

229. Donuon and Hell!na were legally sepmated. Tb,�y 11<:.� :; x mmur cJlildren, all qualified to be �!aimed as •

for income tax purposes. 1 ·h� cuult awarded custody of two of the childre;1 to
addi tional exemptions
Dondon and three to Helena, \\ith Dondon directed to pr.)Vicie full financial support for them as well. The
cou rt awarded the 6th child to Dondon's father wit h Don.ion also providing ful l financial support.
Assu1,11ing that only Dondon is gainfully employed while Helena is not, for how many children could
. Dondon claim additional ex em pt i ons when he files his ii: come tax return?
a. Six children c. Three children
b. Five children d. Two chih.iren

no Poliucal campaign contributior�s are NOT deducribie frolll gross i ncome

a. If 1l1ey are nor. reported to the Commi ssion en Electi<•ns.

b. !fthe candidate suppo rted wins th e dection because of possible corruption.

c. ;)i 11ce t hey do not help ean� the mcome from wh 1c�1 1 ! 1ev are to be deducted.
d. Smee such muourns urc noc consi<l\!rt:d as woom� 01 lfle oanaidate to w�given.

- 1 23 l . When a BJR dec i.:;ion affirming an assessment ?'.-> appeakd rn the CTA, the BrR's power to garnish th�
1
tax.paver's bank deposits
a.· J� suspended to await the finalitv or such decision. .
b. ls suspended given that the CTA can reverse P.lR Jf!i.isions when prejudicial to the taxpayer.
c. l s not suspended because 01tly final decision� of tbe I H.R
are subject to appeal.
d. Js not suspended since the continued existence of go1 ·ermnent depends on tax revenues.

132. The power to tax is the power w destroy . Is l'his alwavs -' ) :
a. No. The Executive Branch ::nay decide not ro enfor.:: e a mx iaw which it believes to be confiscatory.
b. Yes. The ta.x c:ollectors should enforce a tax law eve� ! f it results to the destruction of the property
nghts of a taxpayer.
•

c. Ye�. Tax laws s hould alway�• be en forced because wr hout taxes the very existence of the Staie is
�r1dangered. .
d. No. The Supreme Court may nullify a tnx l?v., be,1c.t. property rights are not affected.

Jeopardy assessment is a valid . �round w compro:nise r1 1;1:� liability

a. cllVOJving defi.:: icncy incom:: tax:�S only, but nor for \1l her taxes.
b. 3ecause of doubt as to tht 1 ·a lid.ity Gi thi:. ass,.ssmcm.
c. if the compromise amount does not exceed 10%.or'th! liastc tax.
d Onl\1 when there is an approval of the National fa•atur.uun Board.

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234. As a general rule, within what period must a taxpayer e!cvate to the Court of Tax Appeals a denial o his �
application for refund of inco1m: tax. overpay ment?
a. Within 30 days from receipt of the Cor!nnissioner' s uenial of his app l i cation for refund.
b. W it hin 30 days from receipt of the denial which must. not e xce ed 2 years from payment of income tax.
c. Within 2 years from paymtmt of the income taxes sought to be refunded.
d. Within 30 days from receipt of the denial or within r.vo years from payment.

235. Celia donated Pl 1 0,000.00 to ner friend Victoria who w.1s getting married. Celia gave no other ��ft
during the calendar year. What is the donor's tax impiica1 ion on Celia's donation?
a. The Pl 00,000.00 portion of the donation is exempt s '.Ilce given in consideration of marriage.
b. A P l 0,000.00 portion of the donation is exempt being a donation in consideration of marriage.
c. Celia shall pay a 30% donCJr's tax on the Pl 1 0,000 .0(1 donation.
d. The Pl00,000.00 portion o f the donation is exempt i;nder the rate schedule for do no r's tax.

236. Levox Corporation wanted to donate PS million as prize money for the wo rld professional· biihard
championship to be heid i n the Philippines. Since the Bill iard Spons Con federation of the Phi l i ppi nes does
not re co gnize the event, it was hel d under r.he auspices of the in tern ati onal Professional Bii liards
Association, Inc . l:; Levox subj e ct to the donor's tax on its dw.ation') ·
. .
I • a. No, so long as the donated mon�y goes direclly to th ·� winpers and not through the association:
I
b. Yt!s, since the national sports association for billiard:; d.oes not sao.ction the event.
c. No, because it is donated as prize for an internatioru1°. com petiti on under the billiards associacion. .
'
d. Ycs, but only that part that exceeds the first P 100.Q(l).00 of total Levox donations for the cale ndai .
year.

237. What i s the effect on the tax Ii'-bility of a taxpayer who does not protest an assessment for deficiency
taxes?. •

a. The taxpayer may appeal tis liability to the CTA' sin�e the assessment is a final decision of the
·
Gommissioner on the matter. ·

b . The BIR could already enforce the coll ecti on of the t ax.payer' s iiability if it coul d secure authority
from the CTA.
p
c. TI1e tax ayer's liability bec omes fixed and subject to coliecti on as the assessment becomes final and
colieclible.
d. The taxpayer's liability remains sus�n ded for l 80 d.1ys from the expiration of the period to protest .

23 8 . A non-stock, non-profit schoc.l aiways had cash t1cw pr:>b l ems, resulting in fa ilu re to recruit wt:ll-trained
admimstrarive personnel to effocrively managt: the schoci. ln 2010, Don Leon donated PlOO mi l l.ion pesos .
to the :;chool, provi ded the money shaU be used solely fo: paying the salaries. wages, and benefits of
admimstrative persom:el. The < ionatioE represen!s ie�s th :i.n 1 0% of Don Leon's taxable income for the
ye ar . is he subject to donor's taxes? · · ' ••:•
a. No;since the donation i s actually, directly, anci exclusively used for educational purposes.
b Yes, because the donation is to be wholly used for ad.ministration purposes.
c. Yes, since he did not obtain the requisi.:e NGO certification before be made the donation.
d. No, because the donation does not exceed 1 0% of hi>. taxabl e income for 20 l 0.

:239. There is prima facie evidence of a false or frauduienr r e t urn where the
a. Tax return was amended a ft:er a notice of assessmern was issued
b. Tax return was filed beyond the reglementary perioc.
c. Taxpayer changed h is address without notifying the 31.�.
d. Deductions claimed exceed by 30% the actual deduc nous.

'
insurance endowment contract ,is NOT consi dered part of gross
240. The rroceeds received under f life
income .
anc� endowment poll";)'.·
a. If it is so stated in Lhe life i nsur
b. If the price for the endowm
ent policy was.notfu.1�7 f·a�d.
made · result of the death or
th:! msured.
c. Wh ere paymen1fiis
a< a
; the endowment contract.
a not the one who wok om
d W here the be ne tctary w
. � '
.

taxable year is know n as

· � �ver gross income o f the bus ine ss in a
The excess of a ll owa ble ded uct,1on. d. NOLCO
c N�t dedubible loss
a. Not operatin g loss b. Ord
inary oss ·

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<:=y�-:<:-·:;:-.}��
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- .-. :
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. .
1
_ct1on shall be taken by tbe ·

, .iency taxes
BIR on th.e taxpaye1_, s lllspute
•

'.
. .
d issues
•

unul the taxpayer bas paid the

-� Wh�n the as:>essment was i ssued
·

.
.
t. ff there was a failure to
agamst a Ialse and fraudulent rerum.
. the de ficie
P'-Y ncy !ax \\'1thu 60 days from BIR demand.
c . U the Regional T ·
a1 C�urt issue
_

� s a �1t _ of preh
d. Attributabl e to th !Ilirn 1ry)njunction to enjoin the BIR.
· undi sputed issues m the.
assessm ent notice.

Ka Tato owns a parce l of . �·

- fl
la01 l m ..:ian Jose, Batangas a1:: clared for real property taxation, as agricttltural.
In i 990 , he used the Iand.
or a poultry feed processmg p.. ant but continued to declare
agricultural 1 n M arch .
the property as
. ·
201 1 , the local tax assessor cUscm ered Ka Tato' s change of use of his land and
mfn:med the local tre asur
er wJ \O <lemanded payment of < 1 dic 1. ency real property taxes from 1 99G to 201 I .
·

.
Ha:; the action pn!scribed?
a. No, f�e defi�t ncy
� ta xes may be collected within fiv1: years from when they fel l due.
b No . 1 he d ettc 1 ency taxes llJr the perio<l 1990
up to :�:;1 l may still be co ll ected within 1 0 yea rs front
March 20 1 1 .
(. '( t�S More th:m { c years h:,d lapsed ror tht :-1tnd l ( clQ up to woo,
.•
:. hence the right to col lec1 the
dd.1c1ency taxes oas presl;ribed. . . · · � II: •·

d. Y cs, More than 5 years had lapsed for the col!e�'t1on c-f the deficiency taxes for the period 1 990 up to ·
200 ) .
.

244. Lualhati E ducati onal Foundat.on, Inc . , a s tock t:duL.atio1111l institution organized for profit, decid ea to
lease for commerci al use a 1 ,5C•O sq. m. poruon of it:; �cJuol. The scho ol actually, directly. and exclus�vely
used the rents for the maintena nc e of its school tmildi11g� ii1Cluding paymen t of janitorial services. Is the
leased portion subject to reai property tax?
a. Y cs, si nce Lualhatl is a stoi ; k and for profit educatior al institution.
b. No, sinc e the school actual: y, di rectly , and t:xclusiw. y used the rents for educational purposes.
c. No, but .it may be subj ect tc• income taxation on the rents it receives.
d. Yes. since the leased po1tion is not actqall y , d.irectly. and ex c lu sivel y used for educational purposes.

245. What should the lHR <lo when t he prescriptive perioc for 1he assessment of a tax de fic iency is about to
prescribe but the taxpayer bas ni:.t yet compli ed With the B·R rnquirements for the produotion of books of
'
accounts and other records to substantiate tht: claimed deductions, exemptions or credits?
I
,I
a. C:al I the ta'<pa�1er to a conference to expiain the delay
I b. Immediately conduct an invesiigation or the taxpayeT s activ ities .
c. issue a j eopardy assessment coupled with a letter of demand.
. m e.n t interest.
d. Issue a non ce of consrrucm · e. dis.tra int tCt protect go ve rn
' ·
.

24 6. The taxpayer sem:onabiy filed . us protest togerner with <r l the supporting documents. It is al read:1 J uly. .
.ll, 20 1 1 , or J 80 d ays from sub::nission of the protest but)1e nm. Co!Illniss ioner has not yet decided his.
protest. Desirous of an early res1 1lution of his protesrcu .l;,,: .c.>sment, the taxpayer should file his· appeal ro
rhe Court of Tax A ppeal s not later than
a. August 3 1 , 20·1 l .. :. August 1 5 . 20 l i

\ 247.
b. Aul,'1.ISt 30, 20 1 1 ' !. August 1, 20 i I,

Which of the following are NOT usually imposed when ti1ere i s a �x amnesty?
a. Civil, criminaL and administrative penalties
b. Civil and crimrnal pen al ties
c. C ivil and administrative penalties

J C riminal and administrative penalties

'248. Which among the following: concepts of taxation is tbe ba ;is for the situs of income taxation?
a. Lifeblood doctr ine of taxaticin ;; . Compensatory purpose of taxation
b. Symbiotic relation in taxatic n d. SumptmL y p urp ose of taxation

249. in ··operation Kandadc." the B. R temporarily ciosed bu!..ness establishments, including New Dynasty
Corporation that failed to comp!�, with VAT regulauon.s. /\. ew Dynasty contends that it should not be
temporarily c losed :;ince it has a ·.1alid and ex1stm!" VA r r.:l!1srranon, l l faithfull y issued VAT recei pts. and
L ied .nc prope1· VAT r cnuns. Th.: contenuon may be ri:!jcci�d if the BIR in�estigtition reveals that
The t.1xpaye r has not beeo regularly fi lin g its income wx returns for the past 4 years.
·

a. .

b. The taxpayer deliberately fikd a false and fraudule nt r!tum with deliberate intention to evade taxes . .
c. The taxpaye r u8ed falsified cocuments IQ support its application for refund o f taxes.
d. 1 here was an undersratemem of taxabi e sales or receipts by 30% or more for the taxable quarter:

PW-TAX-0-1 1 • '?. 7
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250. Th�'. head priest m:'the religious sect Tres Personas S o lo riios, as th e corporation sole, rented out a 5,ooo·
sq. m. lot registered in its name for use a'> sch.�l site of a, school org &nized for profit. The sect used the •

rentais for the support and upkeep of its priests. ·1he rente j Jot is
a. Not exempt from real property taxes because the user is organized for profit.
b. Exempt from real property taxes since it is actually, directly, and exclusively used for religious
purposes. • •

c. Not exempt from real property taxes since it is the rents, not the land, that is used for religiom.
. .

·purposes.
d. Exempt from real property taxes since it is actually, directly, and exclusively used for educational
.
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The End£
Good Luck!

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MAV. 2014

6. D 11. D :t6. A 21. B 26. c 31. A

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2. B 27. D 52. D 77. A 102. c 127. D . 152. C 177. D 202. D 227. C ·

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20. D 45. A 70. D 95. B 120. A 145. 0 170. C 195. A 220. A 245. C
21. A 46. 0 71. c 96. c 121. A 146. D 171. C 196. A 221. A 246. B
22. B 47. D 72. D 97. D 122. C 147. D 172. D 197. B 222. A 2t. 7. A
23. · D · 48. D 73. D 98. D 123. B 148. A 173. c 198. 223. C 2L'.S. B
24. B 49. C 74. D 99. D 124. B 149. B 174. C 199. A 224. D 2L9. D
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