Taxation Examination
1. Which of the following donors is taxable only on gifts
of property within the Philippines? [A] Resident
citizen donor. [B] Non-resident citizen donor. [C]
Resident alien donor. [D] Non-resident alien donor.
2. The reciprocity rule in donor's tax is applicable only
to non-resident alien donors who donate [A]
Tangible personal property within the Philippines.
[B] Intangible personal property within the
Philippines. [C] Tangible real property within the
Philippines. [D] All of the foregoing.
3. Celia donated P110,000.00 to her friend Victoria who
was getting married. Celia gave no other gift during
the calendar year. What is the donor's tax
implication on Celia's donation? [A] The P100,000.00
portion of the donation is exempt since given in
consideration of marriage. [B] A P10,000.00 portion
of the donation is exempt being a donation in
consideration of marriage. [C] Celia shall pay a 30%
donor's tax on the P110,000.00 donation. [D] The
P100,000.00 portion of the donation is exempt
under the rate schedule for donor's tax.
4. In May 2010, Mr. And Mrs. Melencio Antonio
donated a conjugal house and lot with a fair market
value of P10 Million to their son, Roberto, and
daughter-in-law, Josefina, who were just married
during the year. Which statement below is not
correct? [A] There are four (4) donations made - two
(2) donations are made by Mr. Melencio Antonio to
Roberto and Josefina, and two (2) donations are
made by Mrs. Antonio. [B] The four (4) donations are
made by the Spouses Antonio to members of the
family, hence, subject to the graduated donor's tax
rates (2%-15%). [C] Two (2) donations are made by
the spouses to members of the family, while two (2)
other donations are made to strangers. [D] Two (2)
donations made by the spouses to Roberto are
entitled to deduction from the gross gift as donation
proper nuptias.
5. Which of the following transactions is deemed a
taxable gift? [A] Condonation or remission of a debt.
[B] Sale of residential house and lot for less than an
adequate and full consideration in money or
money's worth. [C] Both A and B. [D] Neither A nor
B.
6. Determine which of the following gifts given by a
parent to his child is entitled to the P10,000
exemption? [A] Gift given on account of the child's
18th birthday. [B] Gift given on account of the child's
college graduation. [C] Gift given on account of the
child's successful recovery from cancer. [D] None of
the foregoing.
7. One of the following gifts given on account of
marriage is not entitled to the P10,000 exemption
[A] Gift given before the celebration of the marriage.
[B] Gift given exactly one year after the celebration
of the marriage. [C] Gift given to a spurious child. [D]
Gift given to a legally adopted child.
8. Who among the following donors is not entitled to
claim the P10,000 exemption on account of marriage
[A] Resident alien donor. [B] Non-resident alien
donor. [C] Both A and B. [D] Neither A nor B.
9. Determine which of the following exempt gifts shall
be included as part of the gross gifts in the donor's
tax return [A] Gift given on account of a child's
marriage. [B] Gift given to the government. [C] Gift
given to educational, religious, cultural or social
welfare institutions. [D] All of the foregoing.
10. Which of the following items may be deducted from
the gross gifts? [A] amount of mortgage assumed by
the done. [B] gifts declared as exempt by law. [C]
Both A and B. [D] Neither A nor B.
11. Which of the following statements relative to
donor's tax is false? [A] The spouses shall file
separate donor's tax returns where the thing
donated is common property. [B] Each parent shall
be entitled to the P10,000 exemption on account of
marriage of a child. [C] Exemptions and deductions
cannot be claimed where the 30% tax rate on
stranger is applicable. [D] None of the foregoing.
12. Which of the following statements in relation to
donor's tax is correct? [A] Spouses who donate their
common property shall file only one donor's tax
return for the said donation. [B] The unpaid
mortgage on the property donated that is to be
assumed by the donee is deductible from the fair
market value of the gift at the time of the donation.
[C] In the sale of real property classified as a capital
asset for less than an adequate and full
consideration, the deficiency shall be deemed a gift
subject to donor's tax. [D] A wedding gift that is given
to a "stranger" can avail of the P10,000 exemption of
gifts given on account of marriage.
13. Which of the following transfers is subject to donor's
tax? [A] Residential lot with market value of
P1,000,000 was sold for only P600,000. [B] Listed
shares of stock with market value of P500,000 were
sold for only P250,000. [C] Company vehicle with
book value of P700,000 was sold by way of bona fide
sale for only P600,000. [D] None of the foregoing.
14. X donated a motorbike valued at P100,000 to Y, son
of X's first cousin. What is the tax consequence of
the foregoing donation? [A] X is liable to pay donor's
tax in the amount of P30,000. [B] X is liable to pay
donor's tax in the amount of P2,000 per the
graduated donor's tax rates. [C] X is liable to pay
capital gains tax in the amount of P6,000. [D] X is not
liable to pay any tax on the transfer.
15. S sold his residential house and lot to his best friend
for P4,000,000. At the time of the sale, the property
had a fair market value of P5,000,000. What is the
tax consequence of this foregoing sale for
insufficient consideration? [A] S shall be liable to pay
donor's tax in the amount of P300,000. [B] S shall be
liable to pay donor's tax in the amount of
P1,500,000. [C] S shall be liable to pay capital gains
tax in the amount of P240,000. [D] S shall be liable to
pay capital gains tax in the amount of P300,000.
16. Gifts are to be computed on a cumulative basis
provided the said gifts are given during the same [A]
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Taxation Examination
calendar year. [B] fiscal year. [C] calendar quarter.
[D] calendar month.
17. In applying the graduated donor's tax rates, no
donor's tax liability shall arise where the taxable net
gifts amount to [A] P100,000. [B] P200,000. [C] Both
A and B. [D] Neither A nor B.
18. X (unmarried) made the following donations to his
spurious son on account of the latter's marriage on
December 1, 2012:
(1) on July 20, 2012 P 50,000
(2) on December 1, 2012 50,000
(3) on January 2, 200B 50,000
Which of the following statements is correct? [A] No
gift tax is payable on the 3 gifts. [B] Gift taxes are
payable on the 3 gifts. [C] Gift taxes are payable on
the 2nd and 3rd gifts. [D] Gift tax is payable on the
3rd gift.
19. X (unmarried) made the following donations to his
legally adopted son on account of the latter's
marriage on June 1, 2012:
(1) on January 10, 2012 P 50,000
(2) on June 1, 2012 60,000
(3) on December 1, 2012 50,000
Which gifts or gifts shall be liable to pay donor's tax?
[A] All the 3 gifts. [B] 2nd gift. [C] 3rd gift. [D] None
of the gifts.
20. A gift that is given to one of the following donees
shall be subject to the 30% gift tax rate on strangers
[A] Grandchild. [B] Aunt. [C] Sister-in-law. [D]
Brother.
21. A gift that is given to one of the following donees
shall be subject to the graduated donor's tax rates?
[A] Naturally adopted child. [B] Child with a mistress.
[C] Sister-in-law. [D] Child of "first cousin".
22. Husband (H) and wife (W) gave a used car as birthday
gift to X, a legitimate child of W from her former
marriage to Z who is now deceased. This vehicle,
valued at P100,000, was inherited by W from her
parents during her marriage to Z. Who shall be liable
to pay donor's tax on the foregoing gift? [A] Husband
and Wife. [B] Husband. [C] Wife. [D] Neither H nor
W.
23. Husband (H) and wife (W) are recently separated by
judicial decree. Custody of their 15-year old child, X,
was awarded by the court to W. When X turned 18
years of age, she married Y. H and W gave the newly-
wed couple a diamond ring as wedding present. This
ring was purchased by H a week before the
celebration of the marriage of X and Y. What is the
legal consequence of the donation for purposes of
donor's tax? [A] H and W shall each report one-half
(1/2) of the value of the ring as gross gift, and claim
P10,000 exemption each on account of marriage. [B]
H shall report the entire value of the ring as gross gift,
and claim P10,000 exemption on account of
marriage. [C] W shall report the entire value of the
ring as gross gift, and claim P10,000 exemption on
account of marriage. [D] None of the foregoing.
24. Assume the same facts above, except that the
diamond ring was donated to H by a wealthy relative
at a time when H and W were not yet married. What
is the legal consequence of the donation for
purposes of donor's tax? [A] H and W shall each
report one-half (1/2) of the value of the ring as gross
gift, and claim P10,000 exemption each on account
of marriage. [B] H shall report the entire value of the
ring as gross gift, and claim P10,000 exemption on
account of marriage. [C] W shall report the entire
value of the ring as gross gift, and claim P10,000
exemption on account of marriage. [D] None of the
foregoing.
25. Husband (H) and wife (W) gave a lot as wedding gift
to X (widowed mother of H). This lot was donated to
W when she bore her first child with H a year after
their marriage. The current market value of the lot
when it was donated to X was P500,000. Which of
the following statements is correct? [A] W shall be
liable for gift tax based on the 30% tax rate on
stranger on her net gift of P500,000. [B] W shall be
liable for gift tax based on the graduated donor's tax
rates on her net gift of P500,000. [C] H shall be liable
for gift tax based on the graduated donor's tax rates
on his net gift of P500,000. [D] H shall be liable for
gift tax based on the graduated donor's tax rates on
his net gift of P250,000, and W shall be liable for gift
tax based on the 30% tax rate on stranger on her net
gift of P250,000.
26. The donor's tax return, as well as the donor's tax due
thereon, shall be filed and paid not later than [A] 1
month from the date of the gift. [B] 30 days from the
date of the gift. [C] 3 months from the date of the
gift. [D] 90 days from the date of the gift.
27. X is a Chinese national who is residing in China. He
donated his Philippine shares of stock to his Chinese
friend, Y, who is residing in the Philippines. Assume
Chinese tax law imposes gift tax on all real and
personal properties donated by Chinese citizens,
whether located in China or elsewhere, but does not
allow any tax credit for gift taxes paid in foreign
countries. X paid gift taxes to both the Chinese and
Philippine governments. Which of the following
statements is correct? [A] X may claim a tax credit for
the China gift tax because he also paid Philippine
donor's tax. [B] X may claim a tax credit for the China
gift tax because of the burdensome effect of
"international double taxation" on the same
property. [C] X cannot claim a tax credit for the China
gift tax because of the absence of reciprocity. [D] X
cannot claim a tax credit for the China gift tax
because a non-resident alien is not allowed to claim
a tax credit for foreign gift taxes under Philippine tax
law.
28. The following properties were valued at the time of
H's death: A Common properties of H and W
(husband and wife, respectively) - P700,000; B
Exclusive properties of H - P300,000; and C Exclusive
properties of W - P200,000. The gross estate of H
amounts to [A] P1,200,000. [B] P1,000,000. [C]
P700,000. [D] P0.
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Taxation Examination
29. Assume the same facts as above. Assume further
that no tangible and verifiable records or receipts
could support any deductions that may be claimed
from the gross estate. The taxable net estate of H
that will be subject to the graduated estate tax rates
amounts to [A] P1,200,000. [B] P1,000,000. [C]
P700,000. [D] P0.
30. X, unmarried, left behind the following properties
upon his demise:
House and lot (purchased
from lump-sum pension) P 700,000
Used van (bequeathed to parish
church per last will and testament) 200,000
Cash (bequeathed to Cagayan de Oro
City per last will and testament) 100,000
The gross estate of X amounts to [A] P1,000,000. [B]
P700,000. [C] P300,000. [D] P0.
31. Which of the following properties is exempt from
estate tax because of the presence of reciprocity? [A]
Patent of a non-resident alien decedent exercised in
the Philippines. [B] Foreign shares of stock of a non-
resident alien decedent (60% of business in the
Philippines). [C] Bank deposit of a non-resident alien
decedent in a Taiwan bank. [D] Vehicle of a non-
resident alien decedent located in the Philippines.
32. Which of the following intangible personal property
of a non-resident German decedent is exempt from
estate tax because of the presence of reciprocity? [A]
Time deposit at a German bank. [B] Domestic shares
of stock (certificates of stock kept in Germany). [D]
Franchise exercised in Europe. [D] None of the
foregoing.
33. X is an American citizen residing in the United States.
Upon his demise, he left behind, among others an
automobile registered in his name in the Philippines.
Assume U.S. law grants an exemption from estate tax
to non-resident Filipino decedents owning vehicles
in the United States. Fr purposes of Philippine estate
tax, the automobile is [A] Exempt because the
decedent-owner is a non-resident alien. [B] Exempt
because of the presence of reciprocity. [C] Taxable
because the reciprocity rule does not apply to
tangible personal property within the Philippines. [D]
Taxable because all real and personal properties of a
non-resident alien decedent are taxable.
34. Which of the following properties shall be excluded
from the gross estate of a decedent? [A] Proceeds of
life insurance policy on the life of the decedent
payable to his youngest daughter. [B] The
transmission of the inheritance from the decedent to
the fiduciary heir. [C] Both A and B. [D] Neither A nor
B.
35. Who among the following transferors is not liable for
estate tax on the property transferred during his
lifetime? [A] The testator who bequeaths property to
his heirs in a last will and testament executed and
probated during his lifetime. [B] The donor who
reserves his right to amend or revoke the donation
of property in favor of the done. [C] The donee of an
appointed property who is required under a power
of appointment to transfer such property upon
death to his eldest child. [D] The transferor of
personal property who sold it for insufficient
consideration.
36. X executed a power of appointment transferring his
piece of land (appointed property) to Y (donee), the
latter being empowered to designate in his last will
and testament any person of his choice to inherit the
said property upon his death. Thereafter, Y died.
Which of the following statements is correct? [A] The
land shall form part of Y's gross estate because he is
the owner of the appointed property. [B] The land
shall not form part of Y's gross estate because Y is
merely a trustee over the land. [C] The land shall not
form part of Y's gross estate because the land
belongs to the beneficiary after Y's demise. [D] The
land shall not form part of Y's gross estate because
such transfer is not valid.
37. Assume the same facts above, except that Y is
empowered to choose from any part of his male
children as the beneficiary of the appointed
property. Which of the following statements is
correct? [A] The land shall form part of Y's gross
estate because he is the owner of the appointed
property. [B] The land shall not form part of Y's gross
estate because Y is merely a trustee over the land.
[C] The land shall not form part of Y's gross estate
because the land belongs to the beneficiary after Y's
demise. [D] The land shall not form part of Y's gross
estate because such transfer is not valid.
38. X sold his condominium unit to Y for P3,000,000. X
died a year later. The fair market value of the unit at
the time of the sale was P4,000,000 but rose to
P5,000,000 at the time of X's death. The value of the
condominium unit to be included in X's gross estate
for estate tax purposes shall be [A] P0. [B]
P1,000,000. [C] P2,000,000. [D] P5,000,000.
39. X took a life insurance policy on his own life for
P1,000,000, naming B as the irrevocable beneficiary.
B predeceased X. What is the treatment of the
insurance proceeds for estate tax purposes? [A] The
P1M forms part of B's gross estate because his
vested right over the policy continues to be effective
until X's death. [B] The P1M forms part of X's gross
estate because X's estate became the beneficiary
after B's death. [C] The P1M does not form part of B's
gross estate because he is an irrevocable beneficiary
who is not the executor or administrator of X's
estate. [D] The P1M does not form part of X's gross
estate because the beneficiary is irrevocable and is
not the estate, its executor or administrator.
40. X executed a last will and testament leaving behind
the naked title of a coconut plantation to his younger
son A, and its usufruct to his elder son B for the
duration of the latter's lifetime. B died ten years
after X's death. How shall the property be treated
for estate tax purposes? [A] The property shall form
part of the gross estates of both X and B upon their
respective deaths. [B] The property shall form part of
X's gross estate upon his death, but it shall be exempt
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Taxation Examination
from estate tax upon B's death. [C] The property shall
be exempt from estate tax upon X's death, but it shall
form part of B's gross estate upon his death. [D] The
property shall not form part of the gross estates of
both X and B.
41. Determine which of the following exempt transfers
shall nevertheless be included as part of the gross
estate [A] The merger of the usufruct in the owner of
the naked title. [B] The transmission of the
inheritance by the fiduciary heir to the
fideicommissary. [C] The transmission from the first
heir in favor of another beneficiary in accordance
with the desire of the predecessor. [D] Bequests,
devises, legacies or transfers to social welfare,
cultural and charitable institutions.
42. Which of the following properties constitutes the
common property of the spouses H and W under a
regime of Conjugal Partnership of Gains? [A] Land
inherited by H during marriage. [B] Fruits of land in
A. [C] Jewelry inherited by W during marriage. [D]
Building donated to W before marriage.
43. Which of the following properties constitutes the
common property of the spouses H and W under a
regime of Absolute Community of Property? [A]
Taxicabs inherited in H during marriage. [B] Income
of taxicabs in A. [C] Law books of W for her law
practice bought before marriage. [D] None of the
foregoing.
44. Under the Absolute Community of Property regime
in property relations, which of the following
properties is classified as the common or community
property of the spouses? [A] Fruits or income from a
fishpond donated to the wife during marriage by her
aunt. [B] Dental equipment of the dentist-husband
purchased during marriage. [C] Appliances
purchased by the husband during his previous
marriage where he had no legitimate descendant by
such former marriage. [D] None of the foregoing.
45. Husband recently died and is survived by the
following:
W - wife of H
A - child of H and W; and
B - legitimate child of W from her former
marriage to Z (deceased)
Which of the following properties shall form part of
the gross estate of H under the Conjugal Partnership
of Gains regime? [A] Vehicle donated to W by her
grandfather when she was already married to H. [B]
Agricultural land inherited by W from Z. [C] Fruits or
income from the agricultural land in B. [D] None of
the foregoing.
46. Assume the same facts as above, except that the
property relations of the spouses is governed by the
Absolute Community of Property regime. Which of
the following properties shall form part of the gross
estate of H? [A] Vehicle donated to W by her
grandfather when she was already married to H. [B]
[B] Agricultural land inherited by W from Z. [C] Fruits
or income from the agricultural land. [D] None of the
foregoing.
47. W was formerly married to X. The couple was
childless during their union which was one of the
reasons that led to the annulment of their marriage.
Thereafter, W married H. H died five years later.
Which of the following properties shall be included
in H's gross estate? [A] Cash benefit received by H's
heirs from his employer as a consequence of his
death. [B] Benefits received from the SSS. [C]
Retirement benefits received by employees of
private firms from a private pension plan duly
approved by the Bureau of Internal Revenue. [D]
None of the foregoing.
48. H received his lump-sum pension when he retired
from employment. He utilized the entire amount to
purchase four taxicabs. A year later, H married W.
He died of a heart failure and was survived by W and
their only child X. Thereafter, W re-married. She
passed away a few years later. Under the regime of
Conjugal Partnership of Gains, what is the estate tax
treatment of the four taxicabs upon W's demise? [A]
Four taxicabs shall form part of W's gross estate. [B]
Three taxicabs shall form part of W's gross estate. [C]
Two taxicabs shall form part of W's gross estate. [D]
One taxicab shall form part of W's gross estate.
49. Assume the same facts above. Under the regime of
absolute community of property, what is the estate
tax treatment of the four taxicabs upon W's demise?
[A] Four taxicabs shall form part of W's gross estate.
[B] Three taxicabs shall form part of W's gross estate.
[C] Two taxicabs shall form part of W's gross estate.
[D] One taxicab shall form part of W's gross estate.
50. W received an expensive necklace as a birthday
present when she turned 18 years of age. She
married H at the age of 21. Unfortunately, the young
couple simultaneously died as a result of a plane
crash. For estate tax purposes, what is the treatment
of the necklace under the regime of Conjugal
Partnership of Gains? [A] The one-half value of the
necklace shall form part of W's gross estate, and the
other half shall form part of H's gross estate. [B] The
entire value of the necklace shall form part of W's
gross estate. [C] The entire value of the necklace
shall form part of H's gross estate. [D] The entire
value of the necklace shall not form part of the gross
estates of both W and H.
51. Assume the same facts as above. For estate tax
purposes, what is the treatment of the necklace
under the regime of Absolute Community of
Property? [A] The one-half value of the necklace shall
form part of W's gross estate, and the other half shall
form part of H's gross estate. [B] The entire value of
the necklace shall form part of W's gross estate. [C]
The entire value of the necklace shall form part of H's
gross estate. [D] The entire value of the necklace
shall not form part of the gross estates of both W and
H.
52. It is a proceeding whereby the State claims the
properties of a decedent without a will and without
a successor. [A] Escheat. [B] Probate. [C] Reprobate.
[D] Intestate.
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Taxation Examination
53. Which of the following items is not considered as a
"special deduction" in computing the taxable net
estate of the decedent? [A] Vanishing deduction. [B]
Medical expenses. [C] Standard deduction. [D]
Family home deduction.
54. Which of the following shall be deducted from the
gross estate as part of funeral expenses? [A]
Mourning clothing of surviving spouse. [B]
Refreshments paid for by relatives and friends. [C]
Expenses on prayer for the soul after the burial. [D]
Cash advances of the surviving spouse and heirs.
55. Actual funeral expenses amounted to P300,000.
Gross estate amounted to P10,000,000. The
deductible funeral expenses shall be [A] P1,000,000.
[B] P500,000. [C] P300,000. [D] P200,000.
56. Which of the following claims by the decedent may
be deducted from his gross estate? [A] Claim against
a debtor upon a promissory note executed twelve
years ago. [B] Claim against a corporation
undergoing judicial rehabilitation proceedings. [C]
Both A and B. [D] Neither A nor B.
57. Selected data of an estate appear below:
Collectibles from debtors (inclusive of bad
debts from insolvent, P100,000) P 500,000
Mortgage land (amount of unpaid
mortgage, P1,000,000) valued at P 2,000,000
How much of the above items shall form part of the
gross estate? [A] P2,500,000. [B] P2,400,000. [C]
P1,500,000. [D] P1,400,000.
58. Which of the following losses may be deducted from
the gross estate of a decedent? [A] Loss from theft of
vehicle which was stolen a day before the death of
the decedent. [B] Loss from fire of building which
occurred seven months after decedent's death. [C]
Both A and B. [D] Neither A nor B.
59. X died on February 28, 200A. His real property tax
for the whole year of 200A was computed at
P12,000. X's estate may deduct taxes from his gross
estate in the amount of [A] P12,000. [B] P10,000. [C]
P2,000. [D] P0.
60. Y sold his residential family home for P5,000,000.
The house and lot was previously purchased for
P3,300,000 inclusive input VAT from a real estate
broker. How much is the amount of business tax
payable on the sale? [A] P600,000. [B] P200,000. [D]
P150,000. [D] P0.
61. On January 10, 2012, Maria Reyes, single-mother,
donated cash in the amount of P50,000.00 to her
daughter Cristina, and on December 20, 2012, she
donated another P50,000.00 to Cristina. Which
statement is correct? [A] Maria Reyes is subject to
donor's tax in 2012 because gross gift is P100,000.00.
[B] Maria Reyes is exempt from donor's tax in 2012
because gross gift is P100,000.00. [C] Maria Reyes is
exempt from donor's tax in 2012 only to the extent
of P50,000.00. [D] Maria Reyes is exempt from
donor's tax in 2012 because the donee is minor.
62. Which of the following statements regarding
vanishing deduction is not correct? [A] It may be
claimed on a property that was inherited by a prior
decedent and later on sold to the present decedent
during the latter's lifetime. [B] It may be claimed on
a property that was donated by a donor to the prior
decedent on April 1, 200A and later on inherited by
the present decedent from the prior decedent on
March 15, 200F. The present decedent died on
September 30, 200H. [C] Both A and B. [D] Neither A
nor B.
63. The vanishing deduction rate of 60% shall be applied
where the interval of time is [A] Date of donation -
March 1, 2011; date of present decedent's death -
March 1, 2013. [B] Date of prior decedent's death -
May 15, 2011; date of present decedent's death -
June 1, 2016. [C] Date of donation - August 1, 2011;
date of present decedent's death - September 10,
2013. [D] Date of purchase by present decedent -
February 1, 2011; date of present decedent's death -
June 30, 2013.
64. H, unmarried, passed away on April 1, 2013. Which
of the following properties may be claimed as
vanishing deduction? [A] Land donated to H by his
parents on April 14, 2010. [B] Vehicle inherited by H
from his uncle who died on December 25, 2013. It
was donated to the said uncle by his father on
December 25, 2008. [C] Shares of stock purchased by
H on April 1, 2011. [D] None of the foregoing.
65. H, married to W for a decade, passed away on April
1, 2013. Which of the following properties may be
claimed as vanishing deduction? [A] Land donated to
H by his parents on March 15, 2008. [B] Vehicle
inherited by H from his aunt who died on January 10,
2011. It was purchased by the said aunt from her
mother on December 25, 2008. [C] Shares of stock
purchased by W on February 20, 2013. [D] House
purchased by H on April 1, 2008.
66. Which of the following independent cases shall
justify the claim for vanishing deduction by X's
estate? [A] X purchased a piece of land from Y. X and
Y died on July 1, 2013 and on July 1, 2008,
respectively. [B] X inherited a house from Y. Y also
inherited this house from Z. X, Y, and Z died on April
1, 2017, on September 15, 2013, and on September
30, 2008, respectively. [C] X received a gold watch as
a gift from Y on December 25, 2012. This watch as
inherited by Y from Z. X and Z died on August 28,
2013 and November 1, 2008, respectively. Y is still
alive at the time of X's death. [D] X received a car as
a gift from Y on February 14, 2008. X died on April 1,
2014. Y is still alive at the time of X's death.
67. W died and is survived by H and one legitimate child.
Their principal residence consists of a lot that was
inherited by H before marriage, and a house that was
donated to W by her parents after giving birth to her
first child with H. At the time of W's demise, the lot
and the house had market values of P400,000 and
P600,000, respectively. The family home deduction
of W's estate under the regime of Absolute
Community of Property amounts to [A] P1,000,000.
[B] P800,000. [C] P600,000. [D] P0.
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Taxation Examination
68. H died and is survived by W and two legitimate
children. Their principal residence consists of a lot
that was inherited by H during his marriage to W, and
a house that was built from the retirement benefit
received by H from his employer. At the time of H's
demise, the lot and the house had market values of
P1,500,000 and P800,000, respectively. The family
home deduction of H's estate under the regime of
Conjugal Partnership of Gains amounts to
P1,500,000. [B] P1,000,000. [C] P750,000. [D] P0.
69. H won the jackpot prize in a lotto draw at the time
he was already a widower. He spent the whole
amount to construct a duplex apartment. He
occupied one door for himself and rented the other
door to a paying tenant. The two doors of the
apartment equally occupied a 200 square-meter lot.
This lot was donated to H's deceased wife at the time
that they were married without any offspring. H died
of a very rare disease. Under the regime of Conjugal
Partnership of Gains, what may be claimed as family
home deduction by H's estate? [A] The 2-door
apartment and the 200 square-meter lot. [B] The 1-
door apartment and the 200 square-meter lot. [C]
The 1-door apartment and the 100 square-meter lot.
[D] The 100 square-meter lot.
70. Assume the same facts above, except that H utilized
his retirement benefit to construct the duplex
apartment at the time when he was already a
widower. Under the regime of Absolute Community
of Property, what may be claimed as family home
deduction by H's estate? [A] The 2-door apartment
and the 200 square-meter lot. [B] The 1-door
apartment and the 200 square-meter lot. [C] The 1-
door apartment and the 100 square-meter lot. [D]
The 100 square-meter lot.
71. Husband inherited a house and lot from his deceased
parents at a time when he was already married to W.
This property served as the residence of the family.
After many years of marital union, W died and was
survived by H and their only legitimate child, X. The
property was valued at P4,000,000 at the time of W's
death. Under the regime of Conjugal Partnership of
Gains, the family home deduction of W's estate
amounts to [A] P4,000,000. [B] P2,000,000. [C]
P1,000,000. [D] P0.
72. Assume the same facts above, except that the house
and lot were inherited by H when he was still
unmarried. Under the regime of Absolute
Community of Property, the family home deduction
of W's estate amounts to [A] P4,000,000. [B]
P2,000,000. [C] P1,000,000. [D] P0.
73. Husband (H) and wife (W) are supporting X (child of
H from his former marriage to Z, deceased).
Thereafter, W died. Under the regime of Conjugal
Partnership of Gains, which of the following
properties shall be classified as the separate or
exclusive property of H, the surviving spouse? [A]
Vehicle purchased during their marriage out of the
salary of H. [B] Land inherited by W during their
marriage. [C] Shares of stock donated to H during his
marriage to W. [D] Jewelry purchased by H during his
marriage to W.
74. Assume the same facts as above. Under the regime
of Absolutely Community of Property, which of the
following properties shall be classified as the
separate or exclusive property of W, the decedent?
[A] Vehicle purchased during their marriage out of
the salary of H. [B] Land inherited by W during their
marriage. [C] Shares of stock donated to H during his
marriage to W. [D] Jewelry purchased by H during his
marriage to W.
75. In relation to the valuation of properties at the time
of the decedent's death for purposes of estate
taxation, determine which of the following
valuations is erroneous [A] Real property shall be
valued in accordance with the fair market value as
determined by the Commissioner of Internal
Revenue or the fair market value as determined in
the schedule of values fixed by the Provincial or City
Assessors, whichever is higher. [B] Listed and traded
shares of stock shall be valued at their arithmetic
mean between the highest and lowest quotation of
the shares at the date of filing the estate tax return.
[C] Unlisted and untraded common shares shall be
valued at their book value. [D] Unlisted and untraded
preferred shares shall be valued at their par value.
76. The estate of the decedent is not liable to pay any
estate tax where the taxable net estate, after
considering all exemptions and deductions allowed
by law, does not exceed [A] P500,000. [B] P200,000.
[C] P100,000. [D] None of the foregoing.
77. An estate tax return is required by law to be filed
where [A] The gross value of the estate exceeds
P200,000, even though exempt from estate tax. [B]
The estate consists of registered or registrable
property. [C] Both A and B. [D] Neither A nor B.
78. When the payment of estate tax will cause undue
hardship upon the heirs or the estate which is
undergoing judicial settlement before the court, the
Commissioner of Internal Revenue may grant an
extension for a period not exceeding [A] 5 years. [B]
3 years. [C] 2 years. [D] 1 year.
79. The Commissioner of Internal Revenue may examine
the bank accounts of the taxpayer without need of
securing beforehand a court order in one of the
following cases [A] To examine the bank accounts of
the taxpayer for the purpose of determining whether
or not the tax evasion is committed. [B] To examine
the bank accounts of the decedent for the purpose
of determining his gross estate. [C] To examine the
bank accounts of the taxpayer for the purpose of
determining whether or not a fraudulent return has
been filed. [D] To examine the bank accounts of the
taxpayer for the purpose of determining his gross
income.
80. Which of the following statements relative to tax
credit on estate taxation is true? [A] The estate of a
non-resident alien decedent may claim a tax credit
for taxes paid in his country from his Philippine
estate tax. [B] The amount to be claimed as tax credit
6
Taxation Examination
from the Philippine estate tax is always the actual
amount of estate tax paid to the foreign country. [C]
The estate tax paid to the foreign country may be
claimed as a tax credit in the estate tax return and at
the same time as a deductible expense in the income
tax return. [D] Tax credit may only be claimed with
respect to taxable properties located abroad owned
by citizens and residents of the Philippines.
81. Which of the following taxpayers is not subject to the
3% Percentage Tax on VAT-exempt persons? [A]
Cooperatives. [B] Business partnership with annual
gross receipts of P1,900,000. [C] Exporter who is not
VAT-registered. [D] Retailer expecting his gross sales
to reach P1,600,000 for the next 12-month period.
82. Which of the following transportation providers is
not subject to the 3% percentage tax on domestic
carriers? [A] School bus operators. [B] Cargo truck
operators. [C] Passenger jeepney operators. [D] Car
rental business.
83. Which of the following persons is subject to the 3%
percentage tax on Domestic carriers? [A] owners of
bancas. [B] owners of animal-drawn two-wheeled
vehicles. [C] keepers of garage. [D] none of the
foregoing.
84. Determine the carrier that is not subject to the 3%
Percentage Tax on International Carriers [A] Resident
foreign corporation operating as an international
shipping carrier. [B] Non-resident foreign
corporation operating as an international air carrier.
[C] Both A and B. [D] Neither A nor B.
85. Which of the following franchises is not subject to
the 3% Percentage Tax on franchises? [A] Franchise
of gas and water utilities. [B] Radio and television
broadcasting companies with annual gross sales of
more than P10,000,000. [C] Both A and B. [D] Neither
A nor B.
86. The 3% Percentage Tax on Overseas
Communications covers [A] Telephone, telegraph,
wireless and other communication equipment
services from the Philippines to a foreign country. [B]
Telephone, telegraph, wireless and other
communication equipment services from a foreign
country to the Philippines. [C] Both A and B. [D]
Neither A nor B.
87. Which of the following entities is subject to the 3%
Percentage Tax on Overseas Communications? [A]
Government and diplomatic services. [B]
International organizations. [C] News services. [D]
None of the foregoing.
88. The Percentage Tax on Banks and Non-bank financial
intermediaries with different tax rates is imposed on
the gross receipts derived from [A] interest from
lending. [B] rentals of property. [C] dividend and
equity shares. [D] all of the foregoing.
89. The Percentage Tax on Amusements imposed under
the National Internal Revenue Code covers the gross
receipts of the amusement places derived from [A]
Gross receipts of a canteen within the amusement
place where the owners or operators of the canteen
and the amusement place are one and the same
person. [B] Gross receipts of a canteen within the
amusement place where the owners or operators of
the canteen and the amusement place are different
persons. [C] Both A and B. [D] Neither A nor B.
90. The amusement tax which is imposable by the Local
Government Units (LGUs) under the Local
Government Code covers the gross receipts of the
amusement places derived from [A] admission fees.
[B] rentals of property. [C] television and motion
picture rights. [D] all of the foregoing.
91. Which of the following amusement places is not
subject to VAT nor any amusement tax by the
national government? [A] cinema houses. [B]
racetracks. [C] cockpits. [D] cabarets.
92. A boxing exhibition, in order to be exempt from the
percentage tax on amusements must be [A] a titled
or non-titled bout involving at least one Filipino
boxer. [B] Promoted by a Filipino citizen or a
corporation where at least 60% of the capital stock is
owned by a Filipino citizen or citizens. [C] Both A and
B. [D] Neither A nor B.
93. The Percentage Tax on Winnings is imposed on the
winnings of bettors in [A] cockfighting. [B] horse
race. [C] jai-alai. [D] boxing.
94. Determine which of the following taxes is a final
percentage tax [A] Tax on the sale or exchange of
listed or traded shares of stock. [B] Tax on the sale or
exchange of unlisted or untraded shares of stock. [C]
Both A and B. [D] Neither A nor B.
95. The Percentage Tax Return shall be filed not later
than [A] 30th day following the close of the taxable
year. [B] 25th day following the close of the taxable
quarter. [C] 20th day following the close of the
taxable quarter. [D] 20th day following the close of
the taxable month.
96. Which of the following taxes is not a transfer tax? [A]
Excise tax. [B] Estate tax. [C] Donor's tax. [D] All of
the above.
97. Which of the following is not considered a business
activity? [A] Selling of goods. [B] Production of goods
for a consideration. [C] Employment. [D] Rendering
services for a fee
98. A pawnshop shall now be treated, for business tax
purposes [A] As a lending investor liable to the 12%
VAT on its gross receipts from interest income and
from gross selling price from sale of unclaimed
properties. [B] Not as a lending investor, but liable to
the 5% gross receipts tax imposed on a non-bank
financial intermediary under Title VI (Other
Percentage Taxes). [C] As exempt from 12% VAT and
5% gross receipts tax. [D] As liable to the 12% VAT
and 5% gross receipts tax.
99. Which statement is not correct under the VAT law?
[A] A VAT-registered person will be subject to VAT for
his taxable transactions, regardless of his gross sales
or receipts. [B] A person engaged in trade or business
selling taxable goods or services must register as a
VAT person, when his gross sales or receipts for the
year 2013 exceed P1,919,500. [C] A person who
issued a VAT-registered invoice or receipt for a VAT-
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Taxation Examination

exempt transaction is liable to the 12% VAT as a
penalty for the wrong issuance thereof. [D] Once a
doctor of medicine exercises his profession during
the year, he needs to register as a VAT person and to
issue VAT receipts for professional fees received.
100. The public market vendor below, who is not a
VAT-registered person is liable to VAT in 2010, if [A]
She sells raw chicken and meats and her gross sales
during the year amount to P3 Million. [B] She sells
vegetables and fruits in her stall and her gross sales
during the year amount to P4 Million. [C] She sells
flowers and plants in her stall and her gross sales
during the year amount to P2.2 Million. [D] She sells
live fish, shrimps, and crabs and her gross sales
during the year amount to P5 Million.
101. ABS Corporation is a PEZA-registered export
enterprise which manufactures cameras and sells all
its finished products abroad. Which statement is
NOT correct? [A] ABS Corporation is subject to the
5% final tax on gross income earned, in lieu of all
national and local taxes. [B] ABS Corporation is
exempt from the 30% corporate income tax on net
income, provided it pays 12% output VAT. [C] ABS
Corporation is subject to the 0% output VAT. [D] ABS
Corporation is exempt from all national and local
taxes, except real property tax.
102. Under the VAT system, there is no cascading
because the tax itself is not again being taxed.
However, in determining the tax base on sale of
taxable goods under the VAT system [A] The
professional tax paid by the professional is included
in gross receipts. [B] The other percentage tax (e.g.,
gross receipts tax) paid by the taxpayer is included in
gross selling price. [C] The excise tax paid by the
taxpayer before withdrawal of the goods from the
place of production or from customs custody is
included in the VAT taxable base. [D] The
documentary stamp tax paid by the taxpayer is
included in the gross selling price or gross receipts.
103. Except for one transaction, the rest are exempt
from value added tax. Which one is VAT taxable? [A]
Sales of chicken by a farmer and whose gross annual
sales amount to P5 Million. [B] Sales of copra by a
copra dealer whose gross annual sales is P5 Million.
[C] Gross receipts of a non-VAT registered CPA during
the year amounted to P2.5 Million. [D] Gross receipts
of an agricultural contract grower amounting to P3.0
Millon.
104. A lessor or real property is exempt from value-
added tax in one of the transactions below. Which
one is it? [A] Lessor leases commercial stalls located
in the Greenhills Commercial Center to VAT-
registered sellers of cell phones; lessor's gross rental
during the year amounted to P12 Million. [B] Lessor
leases residential apartment units to individual
tenants for P10,000.00 per month per unit; his gross
rental income during the year amounted to P6
Million. [C] Lessor leases commercial stalls at
P10,000.00 per stall per month and residential units
at P15,000.00 per unit per month; his gross rental
income during the year amounted to P3 Million. [D]
Lessor leases two (2) residential houses and lots at
P50,000.00 per month per unit, but he registered as
a VAT person.
105. Which of the following input VAT of a VAT-
registered taxpayer is not allowed to be converted
into tax credit certificate? [A] Input VAT of zero-rated
sales. [B] Input VAT of effectively zero-rated sales. [C]
Input VAT of imported or local purchases of capital
goods. [D] Input VAT of those VAT-registered
taxpayers who would be cancelling their VAT-
registration.
106. The input VAT allowed to deduct from the
output VAT of sales to government is called [A]
Actual input VAT. [B] Standard input VAT. [C]
Transitional input VAT. [D] Presumptive input VAT.
107. Which of the following businesses is not subject
to VAT? [A] Pawnshops. [B] Dealers in securities. [C]
Lending investors. [D] Freight forwarders.
108. The following products are exempt from
business tax, except [A] Rice. [B] Bagoong. [C] Water.
[D] Balut.
109. Which of the following is subject to 3% OPT? [A]
Compensation income of an employee amounting to
P200,000 per month. [B] Non-VAT franchise grantees
of radio or television broadcasting with P10,000,000
annual gross receipts. [C] International flight of
Philippine Airlines with gross receipts of P50,000,000
per year. [D] Transport of cargoes by sea of Sulficio
Shipping Company with P1,900,000 annual gross
receipts.
110. What is the correct treatment for the excess of
standard input VAT over the actual input VAT on
sales to the government? [A] Other income. [B] Cost
of sales. [C] Operating expense. [D] Final withholding
VAT.
8