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TAXATION

ENHANCEMENT EXERCISES

ATTY. MACMOD, CPA

BASIC PRINCIPLES OF TAXATION


1. Which is not a characteristic of power of Taxation?
a. Power co-exists with the existence of the state
b. It is absolutely legislative in character
c. It is subject to inherent limitations
d. It is subject to limitations found in the 1987
Constitution
2.

3.

Which of the following statements is correct?


a. Tax law is still valid when its theory purposes and
basis are disregarded
b. There can be tax exemption solely on the ground
of equity
c. Levying or imposition of taxes is known as tax
administration
d. The power to tax generally includes the power to
destroy
One is not among the canons of taxation:
a. Fiscal adequacy
b. Progressive taxation system
c. Administrative feasibility
d. Equality in taxation

4.

As to subject matter, community tax is:


a. Personal tax
c. Advalorem tax
b. Direct tax
d. Local tax

5.

One of the following is not a valid constitutional


limitations on the power of taxation:
a. Non appropriation for religious purposes
b. Non impairment of jurisdiction of Court of Tax
Appeals in Tax cases
c. Non imprisonment for nonpayment of poll tax
d. Due process of law and equal protection of law

6.

One of the following violates the inherent limitation on


the power of taxation:
a. Supplier of schools supplies for Department of
Education shifted the VAT making the government
an indirect taxpayer of VAT
b. A revenue regulation was issued by Department of
Finance to amend mistake in a tax law
c. Income of US government in the Philippines is not
subjected to income taxation
d. Non-resident citizen abroad are taxable from within
only.

7.

A. Courts can review or inquire in to the wisdom or


advisability of a tax under Power of Judicial Review in
Taxation.
B. Our constitution does not contain any provision
granting tax exemption to the government.
a. True: True
c. False; True
b. False; False
d. True; False

8. 1st Statement
To be exempt from taxation under the
Constitution land & buildings must be exclusively and
actually used for religious, educational or charitable
purpose, even if not directly.
2nd Statement
Exemptions of non-profit schools are
only limited to revenue and assets derived from strictly
school operations.
a. True, True
c. False, True
b. False, False
d. True, False

9.

Our tax laws are both:


a.
Progressive and prospective

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b.
c.
d.

Civil and prospective


Penal and regulatory
Personal and regulatory

10. 1st Statement Tax imposed outside the situs of


Taxation is void.
2nd Statement International Comity is an exception
to the territoriality doctrine.
a. True; False
b. False; True
c. True; True
d. False; False
11. Which is not a characteristic of states power of tax?
a. It is based on the taxpayers ability to pay &
benefits received
b. It is legislative in character
c.
It is an inherent power
d.
It is limited by constitutional and inherent
limitations
12. In case of conflict between the tax code and generally
accepted accounting principles (GAAP):
a.Both tax codes and GAAP shall be enforced;
b.GAAP shall prevail over tax code;
c. Tax code shall prevail over GAAP;
d.The issue shall be resolved by the courts.
13. Which of the following statements is not correct?
a. Taxes may be imposed to raise revenues or to
regulate certain activities within the state;
b. The state can have the power of taxation even if
the Constitution does not expressly give it the
power to tax;
c.
For the exercise of the power of taxation, the
state can tax anything at any time;
d. The provisions of taxation in the Philippines
Constitution are grants of power and not
limitations on taxing powers.
14. 1st Statement Tax exemptions are strictly construed
against the government.
2 nd Statement When the tax law is not clear and
there is doubt whether he is taxable or not, the doubt
shall be settled against the government.
a. Only the first statement is correct.
b. Only the second statement is correct.
c. Both statements are correct.
d. Both statements are incorrect.
15. One of them is not an essential characteristic of tax:
a. Generally payable in money
b. Mandatory in character
c. Proportionate burden
d. Imposed on persons or properties
16. The present Philippine Budget deficit is a violation of
what principle:
a. Administrative feasibility and compliance
b. Theoretical justice or equality
c. Fiscal adequacy
d. Consistency with economic goods

INCOME TAXATION
17. Which is not a correct principle of individual income
taxation?

P1.502A

a.
b.
c.
d.

Resident Filipino citizens are taxable on all income


from sources within & without
Non-resident citizens are taxable only on income
from sources within
Overseas contract workers are taxable only on
income from sources without the Philippines
An alien individual whether resident or not of the
Philippines is taxable only on income from within

18. Which is not a correct principle of corporate income


taxation
a. Domestic Corporations are taxable on all income
from within & without
b. Resident
Corporations
and
non-resident
corporations are taxable on all their income from
Philippine
c. Foreign Corp. are subject to 15% on their
remittance to their head office abroad
d. Non- resident Corp. are not covered by the rule on
MCIT
19. On November 8, 2012, Mr. & Mrs. Tolentino sold their
principal residence in Makati for P10, 000,000. The
following must be met in order that the capital gains
presumed to have been realized from such sale may
not be subject to capital gains tax, except:
a. They must use the proceeds of the said sale to
acquire or construct a new principal residence
within 2 years from date of sale.
b. They must inform the BIR of that intention within
30 days from the date of sale
c. They can only avail of the said privilege once every
ten (10) years.
d. The historical cost or adjusted basis of the real
property sold shall be carried to the new principal
residence built or acquired
20. Which is an incorrect principle about withholding
taxes?
a. Returnable income are income usually subject to
creditable withholding tax
b. Passive income are subject to final non creditable
withholding tax
c. Special income like income subject to CGT are also
subject to final non creditable withholding tax
d. Fringe benefits are subject to final non creditable
withholding tax
21. The following expenses are not allowed as deductions
from gross income except:
a. Personal, living or family expenses
b. Amounts paid out for new buildings or for
permanent improvements or betterments made to
increase the value of the property
c. Amounts expanded in restoring a property
d. Premiums paid by a corporation or any life
insurance policy covering the life of any of its
officers or employees
22. 1 Statement- Mr. Yu, Chinese, is a resident manager
of China International Bank, a Chinese Bank with an
offshore banking unit in the Philippines. His salary in
the Philippines from the said unit is subject to 15%
final tax. If Filipino is employed as a manager for the
aforementioned position, he will be taxed based on the
5-32% schedular tax rates automatically.
st

2nd Statement- A foreign corporation with a branch


office in the Philippines employed Mr. X, a British as its
executive to supervise the companys operation. He
stayed in the Philippines for 4 months in the year
2008. Then left abroad. His salary in the Philippines
from the said corporation will be taxed at 25%. If a
Filipino occupies the said position, he will be taxed
based on the 5-32%, schedular tax rates:
a. True; True
c. True; False
b. False; False
d. False; True

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23. RENO had the following transactions:


2011- Taxable income from her business
Dividends received:
From resident corp.
From non-resident corp.
Interest from bank deposits
Interest from trade receivables
Capital gains on assets held for 8
mos.
Capital loss on assets held for 12
mos.
2012- Taxable income from business
Capital gains on capital assets
held for 13 mos.
Capital loss on assets held for 7
mos.
Amount received as liquidating
dividends
(Cost = 100, 000) held for 19
mos.

P 20,000
3,000
1,000
10.000
4,000
34,000
70,000
140,000
30,000
6,000
150,000

The taxable Income before personal exemption in 2012


is:
a. P62, 000
c. P72, 000
b. P71, 000
d. P146, 000
24. If the taxpayer is a corporation, the taxable income in
2010 is:
a. P 78, 000
c. P 86, 000
b. P 214,000
d. P 49, 000
25. The following information are from the record of
Central Mindanao University Inc., a proprietary
educational institution, for fiscal year ended March 31,
2012:
Income:
Tuition fees
P5,000,000
Miscellaneous fees
2,500,000
Income from rental
150,000
Net Income, canteen
350,000
Intercorporate dividends
750,000
Interest on time deposit
100,000
Expenses: General & Administrative
1, 500,000
expenses
Interest expenses, bank
50,000
loan
Depreciation, for the year of new bldg.
costing 1M
Completed of 6 mos. ago (est. useful life
of 20 yrs.)
50,000
The income tax due of the corporation for the fiscal
year is if it opts to claim depreciation expense from the
new building is:
a. P646, 600
c. P721, 400
b. P646, 700
d. P645,800
26. The following fringe benefits are not taxable except:
a. Those which are authorized and exempted under
special laws
b. Contributions of the employer for the benefit of the
employee to retirement, insurance, hospitalization,
benefit plans, holiday and vacation expenses
c. Those benefits given to rank and file employees
d. De minimis benefits
27. All of the following fringe benefits are not taxable
except:
a. De minimis benefits
b. Benefits given to clerk of the company
c. Those authorized and exempted under contractual
agreements
d. Contributions of the employer for the benefit of the
employee
to
retirement,
insurance
and
hospitalization

P1.502A

28. Tarzan Corporation made the following payments for


the 1st quarter of 2012. In behalf of Vice President
To Ever Supermarket, groceries consumed by the
officers familyP100,000
To Ateneo de Davao, tuition of EVPS youngest son
(one of Companys scholars chosen after passing the
Companys qualifying examination)P50,000
Brand new car leased from rent-a-car for use of the
officer (quarterly rental)P45,000
The fringe benefit tax for the quarter is:
a. P60, 336
c. P86, 194
b. P57, 647
d. P75, 112
29. Mr. Masaya,married, supporting his minor son has the
following data for the year 2012:
Gross professional income, net of 10%
w/tax
Brokers Commission, net of 5%
withholding tax
Other Income, net of 10% withholding
tax
Deductions claimed:
Salaries of staff, net P5, 000
withholding tax
Advertising expenses
Bad debt (P2, 500 actually written off)
Cost of office equipment purchased on
April 1, 2012 (useful life, 5years)
Fire insurance premium on office
equipment for One year paid on
August 1, 2012
Rent of office space for 2 yrs. at
P10,000 per month Paid on February
1, 2012
Traveling expense (business trip 50%
only)
Charitable contribution to religious
corp.

P630,000
P 95,000
90,000
250,000
3,000
4,000
120,000

1,500
240,000
100,000
100,000

Using itemized deduction, the taxable income is:


a. P460, 875
c. P339,787
b. P414, 787
d. P777, 000
30. Using optional standard deduction, the taxable income
is:
a. P P460, 875
c. P465,000
b. P414, 787
d. P777, 000
31. All
a.
b.
c.
d.

are exempted from IAE tax except:


Banks and non-banking financial institutions
Life insurance companies
Private educational Institutions
Taxable partnership

32. All are exempt from MCIT except:


a. Hospitals
c. offshore banking units
b. International Carriers d. resident foreign corps.
33. STARK Corp. provided the following data for taxable
year 2012:
Philippines
Abroad
Gross Income
P1M
P2M
Allowance deductions
P200,000
P300, 000
Intercorporate dividends P100,000
Sale of real property in the Philippines held as capital
asset in the Philippines was P1, 200,000 costs P800,
000 but with a zonal value P1, 300,000.
If the Corp. is a domestic corporation, its total tax
liability is
a. P878, 000
c. P800, 000
b. P928, 000
d. P828,000

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34. If the corporation is a resident corporation and it


remitted 50% of its net profit to its head office abroad,
total taxes liability is:
a. P384, 000
c. P296, 800
b. P256, 000
d. P423,000
35. If however it is non- resident corporation, its total tax
liability is:
a. P384, 000
c. P463, 000
b. P256, 000
d. P435,000
36. It is a contract for sale of shares of stocks, which the
seller does not own yet and subject to delivery only in
the future. It is prohibited sales unless made by
dealers in securities:
a. Wash sale
c. Stock sale
b. Short sale
d. Short term sale
37. A situation wherein equivalent stock is purchased
within 30 days before or thirty days after the date of
sale known as 60 day period. Losses are not
deductible but gains are taxable
a. Wash sale
c. Stock sale
b. Short sale
d. Short term sale
38. All are considered large taxpayers except one:
a. Business establishment with VAT paid or payable of
at least P100, 000 for the preceding taxable
quarter.
b. Corporate income tax paid or payable of at least
P1M for the preceding taxable year
c. Excise tax paid or payable of at least P1M for the
preceding taxable year
d. Withholding tax payment or remittance was less
than P1M for the preceding taxable year.
39. Case 1: Mr. Ramos inherited from his parents large
parcels of undeveloped land acquired by them years
ago with total cost of P500,000. Mr. Ramos now sells
all of these parcels for P2M. How much gain should Mr.
Ramos report for income tax purposes?
Case 2 : Suppose that when Mr. Ramos inherited these
parcels of land, they were already developed real
estate subdivisions with small lots being sold on
installment bases. He now sells all these parcels for
P4M. How much gain should be reported by Mr. Ramos
for income tax purposes?
Answer to Case 1: None because the properties are
capital assets and the transaction is subject to capital
gains tax and not basic income tax.
Answer to Case 2: Mr. Ramos should report gains from
the sale amounting to P3.5M because the properties
sold are ordinary assets. The transaction is subject to
income tax.
a. Both answers are correct
b. Both answers are wrong
c. Answer to Case 1 wrong, answer to Case 2 correct
d. Answer to Case 1 correct, answer to Case 2 wrong
40. RICO, an official of ABC Corporation asked for an
earlier retirement because he was emigrating to
Canada, he was paid P2M separation pay in recognition
of his valuable services to the corporation plus P200,
000 13th month pay. Jekky, another official was
separated for his failing eyesight. He was given P1M
separation pay. Juan was separated for occupying a
redundant position. He was given P500, 000 separation
pay. Benjie opted to retire at 55 years old. After
working for 10 years in the same company. He
received P1M. All of them except Benjie were not
qualified to retire under the BIR approved pension
plan.
The total income subject to withholding tax on the
above payment is:
a. P2, 200,000
c. P3, 000,000
b. P2, 170,000
d. P4, 000,000

P1.502A

41. On January 1, 2010, lessor leased a lot with a building


thereon for a period of 10 years. It was agreed that
the lessee will pay the following:
a. Rent of P240,000 per year
b. Fire insurance premium in the building of
P16,000/year
c. Real property tax of P10,000/year
Lessee will also construct a warehouse on the land
at a cost of P3,600,000 with a useful life of 10
years completed on June 30, 2012, which shall
belong to the lessor at the end of the lease.
The lessor shall report for year 2012 as income
from lease the total amount of:
a. P336,000
c. P326,000
b. P366,000
d. P1,296,000
42. Based on the above problem the lessee can deduct the
total rental expenses of:
a. P516,000
c. P636,000
b. P506,000
d. P576,000
43. ABS Company, a subcontractor, sold one of its
machines in installment, the details of which are:
Date of sale
March 2011 Cost
P960,000
Accumulated Depreciation
576,000
Terms of Sale:
Downpayment
P180,000
Due on:
May 2011
180,000
August 2012
300,000
December 2012
300,000
During the year, under the installment method, the
company will report income from the sale in the
amount of:
a. P144,000
c. P576,000
b. P216,000
d. P180,000
44. But assuming that the company is a dealer of the said
personal property, it will report in year 2011 income
from the sale in the amount of:
a. P180,000
c. P216,000
b. P144,000
d. P576,000
45. Mr. Abuda, non-resident alien stockholder received
dividend income of P600,000 in 2008 from a resident
foreign corporation. The resident corporations gross
income from within and without the Philippines for
three years preceding 2008 are as follows:
Gross Income
2005
2006
2007
Philippines
P32M
P24M
P28M
Abroad
P36M
P28M
P32M
Mr. Abudas dividend income taxable in the Philippines
is:
a. P300,000
c. P600,000
b. P0
d. P540,000
46. Pio, married, with five minor children and Pia, single,
with 2 legally adopted children are partners, sharing
profits and losses into 4:6. The following data pertain
to the partnership account and the accounts of the
individual partners in their own business.

Partnership
Pio
Pia
Gross Income
P570,000 P280,000 P190,000
Allowable Deductions
250,000 150,000 70,000
Drawing Accounts
30,000 20,000
10,000
Other Income
20,000
10,000
Charitable partnership contribution: (not included
above)
To:
UP
P20,000
To:
Malate Church
50,000

If the partnership is a GPP, the taxable income of Pio


is:
a. P194,000
c. P211,000

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b.

P187,000

d.

P100,000

47. If the partnership is an ordinary partnership, the


taxable income of the partnership is:
a. P284,000
c. P250,000
b. P320,000
d. P280,000
48. A taxpayer sold his stock investments in 2012 as
follows:
1. Selling price ( A Co. shares, not traded in the stock
exchange)
P300,000
Cost
120,000
Net Gain
P180,000
2.

Selling price (B Co. shares, not traded in the stock


exchange)
P400,000
Cost
340,000
Net gain
P 60,000

3.

Selling price (C Co. shares, traded in the stock


exchange)
P150,000
Cost
230,000
Net loss
P 80,000

The total final withholding tax due on the sales is:


a. P21,000
c. P16,000
b. P21,375
d. P16,750
49. A taxpayer, married, with five minor children, three of
them are gainfully employed, provided the following
data:
Compensation Income
P150,000
(gross of 10% SSS, Union
dues, Pag-IBIG & Philhealth,
net of P45t 13th mo. Pay
and gross of P10t xmas bonus)
150,000
Gross sales
500,000
Cost of Sales
320,000
Other income, 80% represents
income from bank deposits, Phils.
20,000
Expenses (15% represents personal
expenses and health insurance
of P2,000 included in the 15%)
50,000
50,000
Income treasury bills
40,000
Additional information:
of business income and deductible business
expenses is from outside the Philippines.
If the taxpayer is a resident citizen, the taxable income
is:
a. P228,500
c. P239,000
b. P236,500
d. P186,500
50. Mr. Juan dela Cruz transferred his commercial land
with a cost of P500,000 but with a fair market value of
P750,000 to JDC Corp. in exchange of the stocks of the
corporation with par value of P1,000,000. As a result
of the transfer he became the majority stockholder of
the corporation. As a result of the transfer:
a. The recognized gain is the difference between the
fair market value of the shares of stocks and the
cost of the land.
b. The recognized gain is the difference between the
par value of the stocks and the fair market value of
the land.
c. No recognized gain because the land was in
exchange of purely stocks and Mr. dela Cruz
became the majority stockholder.
d. No recognized gain because the land was in
exchange of stocks of the corporation.
51. Mr. Paul Herce is an Australian citizen employed as an
auditor in a Canadian-based professional services firm
contracted by the Philippine Government to find out

P1.502A

the extent of corruption in a suspected government


agency. He received compensation income of P365,000
for his services from that Canadian firm for 365 days,
250 days of which was spent in the Philippines and the
rest in Indonesia. Based on these information what
amount of Mr. Herces compensation should be
considered as earned within the Philippines?
a. P365,000
c. P500,000
b. P250,000
d. P182,000
52. Which of the following is a method of accounting for
income determination in farming?
a. Cash basis
c. Crop basis
b. Accrual basis
d. All of the above
53. In computing gain or loss from sale or other disposition
of property acquired by gift or donation, the basis or
cost of the donee is:
a. Fair market value, time of donation
b. Purchase price plus expenses of acquisition
including VAT
c. Fair market value, when purchased
d. The basis as if it is in the hands of the donor
54. 1st statement- Overtime and holiday pay are included
in computing the Minimum wage.
2nd statement- Dealers of real property need not be
observe the 25% rule to qualify under installment
method.
a. True: True
c. True; False
b. False; False
d. False; True
55. 1 statement- Net operating loss in the preceding year
shall be added in the net income in the succeeding
year for purposes of computing the IAET.
2nd statement- In computing the net operating loss,
capital asset transactions (CAT), if any is included.
a. True: True
c. False; True
b. False; False
d. True; False
st

56. The following individuals are not required to file their


ITR except:
a. Minimum wage earner who has business and other
income
b. One whose only income is subject to final tax.
c. One whose gross compensation income in one year
does not exceed P60, 000
d. One whose income is exempt under a treaty or
special law.
57. A tax payer provided the following data
Sales (net of P1M discounts and returns) P 10M
COGS
P 4M
Operating expenses
P 2M
Royalty income
P 1M
Using OSD, the taxable net income the taxpayer is a
corporation is
a. P 3,600,000
c. P 5,900,000
b. P 4,200,000
d. P 6,450,000
58. Using OSD, the taxable net income the taxpayer is an
individual, married w/ 5 minor children is
a. P 5,900,000
c. P 3,600,000
b. P 5,850,000
d. P 5,450,000
ESTATE AND DONORS TAX
59. H and W married without a marriage settlement. H
died on August 20, 2012. The estate reported the
following assets and deductions of H and W:
Conjugal Properties of H and W:
Fishpond, Bulacan
P1,500,000
Apartment houses, Makati
1,500,000
Cash in bank
650,000
Others
100,000
Exclusive Properties of H:
Land, inherited from father who

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died on August 20, 2008.


Value of land when inherited was
P210,000. The land had
a mortgage of P30,000 when inherited of
which P10,000
was paid by H before he died.
P400,000
Land, donated on February 14,2009 by his
mother who died
on November 2,2010. Value of land when
donated was P500,000.
600,000
Exclusive Properties of W:
Farm in Laguna, acquired
before marriage

2,000,000

Deductions claimed:
Funeral expenses
250,000
Fire loss of apartment
(occurred 4 months after death) 80,000
Bad debt (represents unpaid receivable
from Bert, an insolvent)
100,000
Mortgage on inherited land
30,000
Vanishing deduction on
inherited land
40,000
Vanishing deduction on
donated land
20,000
Standard deduction
2,000,000
Death benefits (R.A 4917)
150,000
The gross estate of H is:
a. P4,900,000
b. P5,000,000

c. P6,900,000
d. P4,500,000

60. The total conjugal and special deduction is:


a. P1,564,000
c. P1,380,000
b. P1,530,000
d. P430,000
61. The total deduction exclusive deduction is:
a. P277,600
c. P73,600
b. P93,600
d. P80,000
62. A resident decedent married and under absolute
community of properties, died on January 15, 2012. He
left the following properties, expenses and obligations:
Community properties, Philippines (including family
Home valued at P3, 000, 000)
P5,000,000
Community properties, Japan
2,500,000
Exclusive properties, Philippines
2,000,000
Actual funeral expenses
300,000
Judicial expenses
200,000
Medical expenses (documented w/in
1yr. before death)
600,000
Transfer for public purpose (National Govt)
50,000
Legacy to (Local Govt)
70,000
Death benefits receive from employer
(included above)
500,000
The taxable net estate is:
a. P2,680,000
c. P1, 430, 000
b. P3,680,000
d. P4, 380, 000
63. Which of the following is incorrect:
a. The allowable deduction for funeral expenses can
never be more than the actual funeral expenses
paid.
b. Vanishing
deduction
diminishes
the
estate
physically
c. Taxes in order to be deductible must accrue before
the decedents death
d. Claims against the estate even for equitable
reasons is not allowed as deduction if not
notarized.
64. All of the following are incorrect except:
a. Revocable transfer are only includible if the gross
estate if the revocation was actually exercised.

P1.502A

b.
c.
d.

A transfer mortis cause of a real property in the


Philippines held as capital asset is not subject to
estate tax
Proceeds of life insurance policy where the
beneficiary is the executor are includible in the
estate in all cases
Only married decedent can claim the deduction for
family home

65. Mr. ANACONDA died leaving the following properties:


Exclusive real property, FMV-P500,000 when
inherited 3 yrs. ago and subject to a mortgage
of P65,000 at that time. FMV at the time of death
is P700,000.
Other data are:
Conjugal properties
P 1,700,000
Unpaid mortgage on the
inherited property
15,000
Judicial expenses
85,500
Funeral expenses (P 15,000
paid by friends)
75,000
Other obligations
19,500
The net estate subject to tax is:
a. P 699,500
c. P 850,000
b. P 286,000
d. P 875,000
66. The following are motives of taxpayer that preclude
transfer in contemplation of death, except one:
a. To relieve the taxpayer of the burden of
management
b. To save income and property taxes
c. To avoid payment of estate tax.
d. To make dependents financially dependent
67. 1st Statement- Life Insurance proceeds if the
beneficiary is the executor is includible in the gross
income regardless of the designation.
2nd Statement- Life Insurance proceeds if the
beneficiary is a third person is includible in the gross
estate if it is revocable.
a. True; True
c. False; True
b. False; False
d. True; False
68. 1st statement: Dowries made by non-resident alien
parents to their children before marriage are exempt
from gift tax up to P 10,000.
2nd statement: Donors can always claim a tax credit for
donors taxes paid to a foreign country.
a. True, True
c. False, True
b. False, False
d. True, False
69 to 72 are based on the following data:
On February 25, 2012, Mr. and Mrs. Bayabas donated their
conjugal land worth P500, 000 to their three sons, but on
account of marriage to one of them who got married 5
months ago. On June 9, 2012, they also donated to the
child of Mrs. Bayabas by first marriage, jewelry worth P75,
000 on account of marriage more than a month after the
donation. Finally on December 25, 2012, they donated to
the nephew of Mr. Bayabas a building worth P750, 000,
40% of which was co-owned by their Kumpare who agreed
to the donation and executed the necessary documents
donating his share
69. The donors taxes due on the February 25, 2012
donation should be:
a. P14, 000 for Mr. & Mrs.
b. P3, 600 each for Mr. & Mrs.
c. P4, 000 each for Mr. & Mrs.
d. P5, 750 each for Mr. & Mrs.
70. The donors tax due on the June 9, 2012 donation is:
a. Mr. 0; Mrs. P1, 875
b. Mr. 11, 250; Mrs. P4, 700
c. Mr. 11, 250; Mrs. P1, 100
d. Mr. 11, 250; Mrs. P1, 875

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71. The donors tax due on the December 25, 2012 for Mr.
& Mrs. are:
a. Mr. 9, 875; Mrs. P13, 500
b. Mr. 67, 500; Mrs. P67, 500
c. Mr. 9, 000; Mrs. P13, 500
d. Mr. 9, 000; Mrs. P67, 500
72. The donors tax due on the December 25, 2012 for
their Kumpare is:
a. P90, 000
c. P0
b. P6, 000
d. P30, 000
73. Matubo Corp. donated P100,000 for the purpose of
cementing a Barangay road where its factory is
located.
1st statement: The donation is exempt from donors
tax.
2nd statement: The corporation may claim a full
deduction for income tax purposes.
a. Both statements are incorrect
b. Only 1st statement is correct
c. Both statements are correct
d. Only 2nd statement is correct
74. A donor gave the following donations in year 2012
Jan. 24- Land located in the Philippines valued at
P2,000,000 to her uncle subject to the
condition that uncle will pay the donors
tax due and mortgage to which she
agreed to pay the mortgage amounting
to P500,000.
Nov.30-Building in US valued at P4,500,000 to her
sister. Donors tax paid in US was
P400,000.
The donors tax on the gift on Jan. 24 is:
a. P84,000
c. P450,000
b. P92,000
d. P480,000
75. The donors tax due on the Nov. 30 donation is:
a. P131,000
c. P47,000
b. P524,000
d. P124,000
VAT AND OPT
76. MY BABY Sales Corporation provided the following data
for the first quarter of 2012 first year as VAT registered
person:
Cash sales, total value
P336, 000
Open account sales
112,000
Consignment made
(Exclusive of VAT)
Jan. 1- P200, 000
Feb. 15- 150, 000
Purchased of capital goods,
VAT excluded
50,000
Purchased of materials, net of VAT
40,000
Value of inventory as of Jan .1 of the year
Purchased from VAT Registered Person
P240,000
Purchased from non-Vat Registered
Person
50,000
Purchased of VAT Exempt goods
10,000
VAT paid on the (above inventory)
4,000
Equipment purchased, March 2012
(useful life 10 yrs.)
P2M
The VAT due is:
a. P37, 000
c. P51, 400
b. P38, 000
d. P55,200
77. One of the following activities is not subject to VAT:
a. Movie house operators
b. Pawnshop
c. Drugstores
d. Parking lot operators
78. A building contractor provided the following data (all
figures are net of VAT)

P1.502A

Amount
received
from
building
Advances received from
building
Amount
received
from
building (net of P200t
retention cost)
Receivable from building
Disbursement:
Services of Subcontractors
Materials for construction
Imported materials, landed
cost
Other general & operating
expenses

-1

P800, 000

-2

400, 000

-3

800, 000

-4

1,000,000
500,000
700,000
200,000
100,000

Note: The imported material was also subjected to


P20, 000 excise taxes:
The VAT due is:
a. P58, 000
b. P20, 000

c. P93, 600
d. P69, 600

79. 1st statement: The input tax on purchases of capital


goods is spread out when the acquisition cost
exceeded P1.5M.
2nd statement: The presumptive input tax is also called
VAT actually paid
a. True, True
c. True, False
b. False, False
d. False, True
80. 1st Statement- a person whose annual gross sales or
receipts do not exceed P100, 000 is not considered
engaged in trade or business.
2nd Statement- A VAT registered person is subject to
VAT regardless of his annual gross sales or receipts
provided he does not pay the 3% OPT.
a. True; True
c. False; True
b. False; False
d. True; False
81. CROCODILE TRANS is a common carrier by land.
During a particular quarter its receipts consists of the
following: (Figures are net of any business taxes)
Transport of passengers
Transport of goods
Transport of cargoes

P4, 000,000
5, 000,000
6, 000,000

The total business taxes payable is:


a. P1,500,000
c. P1,800,000
b. P540,000
d. P1,440,000
82. Which is incorrect
a. A taxpayer whose annual gross receipts/sales
exceed P 1,919,500 shall pay VAT even if not VAT
registered
b. A taxpayer whose annual receipts/sales do not
exceed P 1,919,500 but who is VAT registered shall
pay Vat.
c. The same transaction may be subjected to both
income tax and VAT
d. Marginal income earners are both exempt from
VAT and income tax.
83. IMIC Corp. imported an article from USA. The invoice
value of the imported articles was $7,000 ($1-P50).
The following are incurred in connection with the
importation:
Insurance
Freight
Postage
Wharfage
Arrastre charges
Brokerage fee
Facilitation fee

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The imported article was subjected to P150,000 customs


duty and P30,000 excise tax.
IMIC Corp. spent P50,000 (ordinary receipt) for trucking
from the customs warehouse to not on its warehouse in
Quezon City. The imported article was later sold for
P900,000, w/out VAT
The VAT due is:
a. P48,360
b. P48,000

c. P30,000
d. P36,000

84. KATRINA invested P500, 000 in the shares of stock of


Manila Trading Corp. Later she sold the said shares for
only P350, 000. The corporations shares are listed and
are traded in the local stock exchange. The percentage
tax on the sale is:
a. None
c. P1, 750
b. P2, 500
d. P50, 000
85. Sweetie Pie Refining Company manufactures refined
sugar. It had the following data during the first quarter
of 2009:
Sale of refined sugar, net of VAT
P2,000,000
Purchases of sugar cane from farmers
used in the manufacture of refined
sugar
500,000
Purchase of packaging materials,
gross of VAT
784,000
Purchase of labels, gross of VAT
112,000
The VAT payable is:
a. P124,000
b. P112,500

c. P144,000
d. P 62,000

86. J. Shaggy VAT-registered, made the following


purchases during the month of January, 200A:
Goods for sale, inclusive of VAT
P 246,400
Supplies, exclusive of VAT
20,000
Office air conditioners, total invoice
amount
56,000
Home appliances for residence,
gross of VAT
17,920
Office machine, 8 years useful life,
net of VAT

2,000,000

Repair of store amounted to P20,000 evidenced by


ordinary receipt of contractor
Creditable Input taxes are:
a. P38,800
c. P37,440
b. P34,800
d. P35,520
87. A taxpayer registered under the VAT system on
January 1, 200B. His records during the month show:
Value of inventory as of December 31,
200A purchase from VAT-registered
P100,000
persons
VAT paid on inventory as of December 31,
200A
5,000
Value of inventory as of December 31,
200A purchased, from non-VAT persons
200,000
Sales, net of VAT
140,000
Sales, gross of VAT
45,920
Purchases, net of VAT
70,000
Purchases of VAT exempt goods
50,000
VAT payable is:
a. P8,320
b. P13,320

c. P 7,320
d. P13,400

REMEDIES

Which of the following statements is not true?


a. A tax assessment is necessary to a criminal
prosecution for willful attempt to defeat and evade
payment of taxes.

P1.502A

b.
c.
d.

A conviction for tax evasion is not a bar for


collection of unpaid taxes.
Criminal proceedings under the Tax Code is now a
mode of collection of internal revenue taxes, fees
and charges.
If the taxpayer is acquitted in a criminal violation
of the Tax Code, this acquittal does not exonerate
him from his civil liability to pay the taxes.

89. The running of the prescriptive period for assessment


and collection of taxes is suspended under the
following circumstances, except one:
a. When taxpayer is out of the country
b. When the BIR Commissioner is prohibited from
assessing or collecting the tax
c. When the taxpayer requests for a reinvestigation
d. When the warrant of distraint and levy is duly
served
90. 1st statement- The BIR Commissioner may abate or
cancel the payment of interest revenue tax when:
a. A reasonable doubt as to validity of the claim
against taxpayer exists, or
b. The financial position of the taxpayer demonstrates
a clear inability to pay the tax assessed.
2nd
statementThe
BIR
Commissioner
may
compromise the payment of tax when:
a. The tax or any portion thereof appears to be
unjustly or excessively assessed
b. The administration and collection costs involved do
not justify the collection of the amount due.
a.
True; True
c.
True;
False
b.
False; False
d.
False;
True
91. Which of the following is not under the power of BIR
Commissioner as provided in the Tax Code?
a. Authority to terminate taxable year and make
assessment.
b. Authority to inquire into the taxpayers bank
deposits if there is a reasonable ground to
investigate due to tax evasion.
c. Authority to obtain information, examines,
summon and take testimony.
d. Authority to prescribe FMV of real property
92. Which of the following statements about assessment is
incorrect?
a. It is an official action of an officer authorized by
law in ascertaining the amount of tax due from a
taxpayer.
b. If not contested by the taxpayer within 30 days
from receipt, it becomes final and executory.
c. It is an action for collection of taxes.
d. It fixes and determines the tax liability of the
taxpayer.
93. Where a return is filed, as a general rule, the
prescriptive period for assessment after the date
return filed or due whichever is later, within:
a. two years
c. three years
b. five years
d. ten years
94. The seizure by the government of personal property to
enforce the payment of taxes to be followed by its
public sale if the taxes are not voluntary paid:
a. Forfeiture
c. Levy
b. Distraint
d. Garnishment
95. X filed his ITR and paid the tax shown thereon in full
on April 15, 2011. On April 15, 2012, X received an
assessment notice and demand from BIR to pay a
deficiency tax of P20, 000 excluding surcharge and
interest on or before April 30, 2012. How much is the

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total amount of tax payable as shown


assessment notice if BIR found out fraud?
a. P29, 000
c. P34, 000
b. P25, 000
d. P20, 000

in

the

96. Barby filed her 2010 ITR and paid the tax shown
thereon on April 10, 2011. Upon investigation the BIR
found out a deficiency income tax of P20, 000. The tax
payer agreed with the said findings and on July 15 ,
2011, assessment notice was sent to her giving her up
to July 30, 2011, to pay the amount shown thereon
plus penalty and interest. Barby however failed to pay
the tax as well as the penalty and interest on the due
date. She was only able to pay on December 15, 2011.
The total correct amount of tax to be paid is:
a. P35,208
c. P28,438
b. P34,671
d. P34,667
97. Which statement is wrong? A revenue bill
a. Must originate from the House of Representatives
and on which same bill the Senate may propose
amendments.
b. May originate from the Senate and on which same
bill the House of Representatives may propose
amendments.
c. May have a house version and a senate version
approved separately and then consolidated with
both houses approving the consolidation version.
d. May be recommended by the President to
Congress.
98. Statement 1: The power of Commissioner of Internal
Revenue to recommend the promulgation of rules and
regulations by the Secretary of Finance may not be
delegated.
Statement 2: The power of Commissioner of Internal
Revenue to issue ruling of first impression or to
reverse, revoke, or modify any existing rules of the
Bureau of Internal Revenue may not be delegated.
a. Both are True
b. Both are False
c. First statement is True, second statement is False
d. First statement is False, second statement is True
99. Statement 1: The Commissioner of Internal Revenue
has authority to terminate the tax period of a taxpayer
who is retiring from a business subject to tax, or is
intending to leave the Philippines or to remove his
property or to hide or conceal his property, or to
perform an act tending to obstruct the collection of
taxes.
Statement 2: When a tax period is terminated, any
unpaid tax is due immediately.
a. First statement is True, second statement is False
b. First statement is False, second statement is True
c. Both are True
d. Both are False
100. Which of the following violations cannot be subjected
to compromise penalties?
a.
b.
c.
d.

Failure to keep/preserve books of accounts and


accounting records.
Failure to keep books of accounts or records in
native language or English.
Failure to have books of accounts audited and have
a financial statements attached to income tax
return certified by independent CPA.
Keeping two sets of books of accounts or records.

101. The accounting period of Corporation A is fiscal year


ending on October 31. For the year 2012, Corporation
A filed its annual income tax return on March 15,
2013. The last day of BIR assess is on:
a. February 16, 2016
c. March 15, 2016
b. March 14, 2016
d. April 16, 2016

P1.502A

102. If in the above problem, the tax payer is an individual


taxpayer, the last day of BIR assess is on:
a. March 15, 2016
c. March 15, 2017
b. April 15, 2016
d. April 14, 2018
103. It is a failure to pay the correct amount of tax.
a. Delinquency
c. Default
b. Deficiency
d. Delay
104. Mr. X filed his ITR on April 15, 2011. He received an
assessment from the BIR on June 30, 20012. His last
day to file a protest is on:
a. July 30, 2012
c. April 15, 2013
b. June 30, 2015
d. April 15, 2015
105. If his protest above was denied by the BIR
Commissioner and he received the said decision on
August 31, 2012, his remedy is:
a. Appeal to the Court of Tax Appeals on or before
September 30, 2012.
b. Appeal to the Court of Appeals on or before
September 15, 2012.
c. Appeal to the Office of the President on or before
September 30, 2012.
d. Appeal to the Finance Secretary on or before
September 30, 2012.
106. Miramars income tax for 2010 was P75, 000, as
shown in her income tax return (ITR). She filed her
return only on July 15, 2012 and paid the total
amount upon filing the return. The total amount
payable assuming there was fraud should be:
a. P131, 250
c. P98, 750
b. P112, 500
d. P97, 500
107. Taxpayer was assessed deficiency income tax of
P200, 000 payable on or before June 15, 2012.
Within the period however, he was only able to pay
P100, 000 and the balance only on August 30, 2012.
The total tax due that he is liable should be:
a. P129, 155
c. P258, 333.33
b. P125, 000
d. P 250, 000
MISCELLANEOUS
108.
Floyd an official of ABS Corporation asked
for an earlier retirement because he was
emigrating to Canada, he was paid P2M separation
pay in recognition of his valuable services to the
corporation plus P100,000 13th month pay, Nelson
another official was separated for his failing
eyesight. He was given P1M separation pay plus
P150,000 unpaid salaries. Rico was separated for
violating company rules but was given P300,000
separation pay. Ben opted to retire at 55 years old
after working for 10 years in the same company.
He received P1M. All of the foregoing are not
covered by BIR approved Retirement Plan except
for Ben. The total income subject to withholding
tax on the above payment is:
a. P 2,520,000
c. P 3,400,000
b. P 2,370,000
d. P 3,450,000
109.
A
building
contractor
provided the
following data (all figures are net of VAT)
Amount received from Building 1
P 800,000
Advances received from Building 2
400,000
Amount received from Building 3
(net of P400T retention cost)
800,000
Receivable from Building 4
1,000,000
Disbursements:
Services of contractors
500,000
Materials for construction
700,000
Imported material, landed cost
200,000
Other general and operating expenses
100,000

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Note: The imported material was also subjected to


P20,000 excise taxes.
The VAT due is:
a.
P58,000
c. P69,600
b.
P20,000
d. P117,600
110.
Dugong Trans, is a common carrier by sea.
During a particular quarter its receipts consist of
the following: (Figures are net of any business
taxes)
Transport of passengers
P 4,000,000
Transport of goods
5,000,000
Transport of cargoes
6,000,000
The total business taxes payable is:
a. P1, 500,000
c. P1,800,000
b. P450,000
d. P1,440,000
111.
TONY, Filipino, single, has the following
transactions in 2012:
Business gross income
P200,000
Business expenses
60,000
Wagering gains
10,000
Wagering losses
5,000
Selling price, partnership interest
100,000
Investment in partnership in 2001
20,000
Gain in sale of capital asset held for
10,000
4 years
Loss on sale of capital asset held
for 8 months
12,000
Loss on account of failure to
exercise
2 month option to buy property
2,000
Liquidating dividend from Z Co.
150,000
Cost of investment in Z Co. in 2001
60,000
Note: In 2011, Tony had a net income of P65,000
and a net capital loss of P92,000.
The taxpayer's taxable net income is:
a. P196,000
c. P106,000
b. P141,000
d. P 151,000
112.
Mr. Corpus, married with
2 minor
children, has the following transactions in 2012:
Compensation Income
P 200,000
Sales
1,440,000
Cost of goods sold
660,000
Deductions:
Operating Expenses
440,000
Loss due to theft (properly reported) 60,000
Contributions:
To a government priority
project in education
12,000
To St. Jude church
42,000
Other income:
Rent
36,000
Capital gain from sale of personal
car held for 2 years
96,000
The taxpayer will report a taxable net income of:
a. P472,000
c. P420,400
b. P480,400
d. P500,400
Questions 113-114 are based on the following
information:
Corporation A has the following transactions during the
year 2011:
Gross Income, Philippine business
P2,400,000
Gross Income, Japan business
600,000
Business expenses, Philippines
1,350,000
Business expenses, Japan
150,000
Other expenses connected with the
Philippine business
90,000
Other expenses connected with the
Japan business
60,000
Other expenses connected with the
business in the Phil and Japan
150,000

P1.502A

Other business expenses which


cannot be allocated
Intercorporate dividends from PLDT

180,000
100,000

113.
If the taxpayer is a domestic corporation,
its income tax due is:
a. P306,000
c. P326,400
b. P357,000
d. P403,200
114.
If the taxpayer is a resident foreign
corporation, and it remitted 40% of its profit to
USA (Head Office) the total tax liability is:
a. P222,720
c. P238,032
b. P244,188
d. P251,117
115.
Taxpayer, individual, married with 3 minor
children, one is gainfully employed, has the
following transactions in 2012:
Sales
P2,000,000
Cost of sales
1,150,000
Operating expenses
560,000
Other transactions:
c.
Sale of office equipment held for 2 years:
Selling price
100,000
Cost
120,000
Accumulated depreciation
80,000
b. Sale of family van held for 4 years:
Selling price
300,000
Cost
210,000
c. Sale of family car held for 15 months:
Selling price
480,000
Cost
500,000
Taxpayer will report a taxable income of:
a. P335,000
c. P360,000
b. P325,000
d. P285,000
116.
RA-A-A
Corporation,
a
domestic
corporation now on its 5th year of operation
provided the following data:
Gross sales
P1,100,000
Sales returns and allowances
200,000
Cost of goods sold
300,000
Gain on sale of capital assets held
for 11 months
10,000
Loss on sale of capital assets held
for 20 months
5,000
Royalty income
50,000
Allowable business expenses
580,000
Income tax due is:
a. P8,800
b. P10,500

c. P12,000
d. 7,500

117.
On October 1, 2012, Dragon Girl Co.
leased a residential house for the use of one of its
executives, Mr. Kurukuru, a special alien
employee. The rent agreed upon was P170,000
per month. The FBT for the quarter is:
a. P54,400
c. P45,000
b. P524,000
d. P15,000
118.

Taxpayer sold capital assets as follows:


Lot 1
Lot 2
Selling Price
P6,000,000
P10,000,000
Cost
2,500,000
1,000,000
Gain (loss)
P3,500,000
P9,000,000
Terms of Sale:
Down
payment
1/15/2008
P500,000
P1,500,000
Paid on 6/15/2008
500,000
1,000,000
Paid on 9/15/2008
500,000
1,000,000
Installment
due
1/15/2009
2,000,000
2,000,000
Installment
due
5/15/2009
2,500,000
3,000,000
Mortgage
assumed

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by the buyer

1,500,000

The final tax payable under the installment method for


2008 for lot 1 is:
a. P360,000
c. P22,500
b. P90,000
d. P32,500

Questions 119 and 120 are based on the following


information:
Emong gave the following donations:
5/10/2012
To legitimate son on account of m
8/15/2012 with P100,000
assumed by the donee.

8/15/2012

To his legitimate daughter on a


marriage on 8/15/2012

10/20/2012

Lot donated to the National Gove


be used for public purpose. Val

11/1 5/2012

To his brother on account of m


11/15/2012

119. The total exemption or deductions from the total


gross gift is:
a. P120,000
c. P118,000
b. P218,000
d. P120,000
120. The gift tax payable on 11/15/2010 donation is:
a. P1,900
c. P1,800
b. P100
d. P800
Questions 121 and 122 are based on the following
information:
Land located in the Philippines valued at P2,000,000 to her
uncle subject to
Jan. 24 - the condition that uncle will pay the donors tax
due and mortgage to which her uncle agreed
and pay the mortgage amounting to P500,000.
Nov. 30 - Building in USA valued at P4,500,000 to her
sister. Donors tax paid in USA was P400,000.
121. The donors tax due on the gift on Jan. 24 is:
a. P84,000
c. P450,000
b. P92,000
d. P480,000
122. The donors tax due on November 30 donation is:
a. P131,000
c. P47,000
b. P524,000
d. P124,000
123. Which of the following is correct about estate tax?
a. The payment of estate tax is a personal
obligation of the heirs.
b. Estate is a taxpayer created by the death of a
person.
c. A resident alien decedent's situs of taxation is
within the Philippines only just like in income tax.
d. Courts may allow the distribution of the estate to
the heirs in the interest of justice and equity
before estate tax is paid.
124. Which is false about estate tax?
a. The allowable funeral expense can never be
more than the actual expenses paid.
b. Death benefit as a deduction must be included in
the gross estate first.
c. Vanishing deduction does not diminish the estate
physically

P1.502A

d.

Family home may be granted to a married nonresident alien.

125. Which shall not form part of the gross estate of a


decedent:
a. Intangible personal property of non-resident
alien decedent without reciprocity law
b. Revocable transfer
c. Transfer passing special power of appointment.
d. Life insurance where the executor is the
beneficiary and it is irrevocable
126. Which of the following statements is correct?
a. Actual damages paid to the victim are not
taxable including payment for lost salary or
income.
b. Moral and exemplary damages paid to the victim
out of a vehicular accident are not taxable.
c. Moral and exemplary damages paid due to
breach of contract in bad faith are also not
taxable.
d. Amount received as return of insurance
premiums is not taxable regardless of the
amount paid by the insurance.
127. 1 Case:
Mr. X sold his 5 - door apartment
for P10,000,000. The monthly rental per unit is
P20,000. This sale is subject to capital gains tax.
2nd Case: Mr. Nadal bought a lot for P2,000,000
which he intended to be used as family home. After
5 years, he abandoned his plan and sold it for
P3,000,000. This sale is subject to capital gains tax.
a. Only the first statement is correct.
b. Only the second statement is correct.
c. Both statements are correct.
d. Both statements are incorrect.
st

128. Which of the following income from Philippine


source of a resident individual is not subject to the
rates in Sect. 24 A of the Tax Code?
a. Gain from sale of his personal motor vehicle.
b. Gain from sale of residential house and lot.
c. Salary received by a managing partner of a
partnership.
d. Passive income from prizes won in a raffle
amounting to P8,000.
129. In January 2012, Dino and Jiji were separated by
court order. Dino was awarded the custody of their 9
year old daughter Dina and Jiji was awarded the
custody of their 5 year old son Jojo. To preserve the
ties among them the court ordered Dino to shoulder
70% of the financial support for Jojo and Jiji to
shoulder 70% of the financial support for Dina. They
complied with the above order.
The amount of personal exemptions (basic and
additional) Dino and Jiji could claim each in their
respective income tax returns is:
a. P50,000
c. P100,000
b. P75,000
d. P0
130. AUSTIN, single, Filipino, provided the following
data for 2012:
Compensation income
P250,000
Loss from stocks becoming worthless
100,000
Transportation expense
50,000
Health Insurance Premiums (6 months
@ P500/mo.)
3,000
The amount he can deduct from his income for ITR
purpose is?
a.
P50,000
c. P51,200
b.
P52,400
d. P173,500
131. The following are not allowed as deductions from
gross income except:
a. Personal, family & living expenses supported by
document & notarized.

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b.
c.
d.

Expenses incurred to increase useful life of an


asset.
Charitable donation to a priest.
School Building erected by a University.

132. The widow of your best friend has just been paid
P1,000.000 on account of the life insurance policy of
the deceased husband. She asks you whether she
should declare the amount for income tax purposes
or for estate tax purposes.
1st advice: The proceeds of life insurance paid to the
beneficiary upon the death of the insured are exempt
from income tax and need not be declared for
income tax purposes.
2nd advice: The proceeds of life insurance would
have to be declared for estate tax purposes if the
designation of the beneficiary was irrevocable,
otherwise it need not be declared.
a. Both advices are correct.
b. 1st advice correct; 2nd advice wrong;
c. Both advices are wrong.
d. 1st advice wrong, 2nd advice correct
133. Laila took out a life insurance policy for P500,000
naming her niece, Samantha, as beneficiary. Under
the terms of the policy, the insurer, Paramount
Insurance Corp., will pay Laila the amount of
P500,000 after the 25th year of the policy, and her
beneficiary, should she die before that date. Laila
outlived the policy and received the proceeds of
P500,000. The premiums paid on the policy were
P400,000. The proceeds from the life insurance
policy of Laila is:
a. exempt from income tax
b. taxable to the extent of P100,000
c. the entire proceeds is taxable
d. taxable to the extent of PI 00,000 less current
rate of interest
134.
Which of the following income of an
individual taxpayer is subject to final tax?
a. P10,000 prize in Manila won by a resident citizen.
b. Dividend received by a resident citizen from a
resident corporation.
c. Shares in the net income of a general professional
partnership received by a resident alien.
d. Dividend received by a non-resident alien from a
domestic corporation.
135.
1st Statement: If an estate is not the object
of judicial or intestate proceeding, an estate is not
the income taxpayer but the direct beneficiaries.
2nd Statement: If an estate is the object of judicial
or intestate proceeding, an estate emerges as
taxable person. The personal representative must file
an annual return for the estate up to final
settlement.
a. True, True
c. False, True
b. False, False
d. True, False
136.
One of the following is exempt from both
MCIT (Minimum Corporate Income Tax) and IAET
(Improperly Accumulated Earnings Tax)
a. Private Educational Institutions
b. International Carriers
c. Publicly held corporations
d. Corporations registered with EPZA or PEZA
137.
The accounting period of Corporation A is
.fiscal year ending on October 31. For the year 2010,
Corporation A filed its annual tax return on March 15,
2011. The last day for BIR to assess is on:
a. February 16, 2014
c. March 15, 2014
b. March 14, 2014
d. April 16, 2014
138.
Miramar's income tax for 2010 was
P75,000 as shown in her income tax return (ITR).

P1.502A

She filed her return only on July 15, 2012 and paid
the total amount upon filing the return. The total
amount payable if assuming she filed with the wrong
RDO is:
a.
P113,750
c. P108,750
b.
P131,250
d. P 97,500

Car acquired before marriage by Mr. Jose


Car acquired before marriage by Mrs. Jose
House and lot acquired during marriage
Jewelries of Mrs. Jose
Personal properties inherited by:
Mr. Jose during marriage
Benefits from SSS
Retirement benefits from a private firm
Proceeds of group insurance taken by his
employer
Land inherited by the wife during marriage
Income earned from the land inherited by
wife
(25% of which was earned after death)

P 300,000
450,000
1,500,000
100,000

145.
The community tax for individual is basic tax of
P5.00 plus:
a.
P1.00 for every P1,000 gross sales
b.
P1.00 for every P1,000 gross receipts
c.
P1.00 for every P1,000 net income
d.
P1.00 for every P1,000 gross income

250,000
50,000
150,000
75,000
1,000,000

The maximum community tax for individual shall be:


P500
c.
P1,000
P5,000
d. P10,000

200,000 a.
b.
The gross estate under conjugal partnership of gain is:
a. P2,600,000
b. P3,600,000
c. P1,950,000
d. P2,200,000

147.
The following entities or association are liable to
pay community tax, except:
a.
All domestic corporations
b. All foreign corporations engaged in business in
the Philippines.
c. All partnerships for profit.
d. All joint ventures engaged in energy operations
with the Philippine Government.

140.
Under the same problem, the gross estate
under absolute community of property is:
a. P2,600,000
b. P3,600,000
c. P1,950,000
d. P2,500,000
141-143

The community tax for corporations is P500 plus:


a. P2.00 for every P5,000 worth of real and
personal property.
b. P2.00 for every P5,000 gross receipts or
earnings in Phils.
c. P2.00 for every P5,000 gross sales in Phils.
d. P2.00 for every P5,000 net income in Phils.

Mr. Tantor married under the regime of absolute


community of property. Survived by his wife, left behind
the following properties and charges upon his estate:
Real property acquired during the marriage P 3,000,000
Family Home, built using community fund
1,000,000
Real property received as a gift during the
Marriage
2,000,000
Lot where family home was built, inherited
During the marriage
400,000
Funeral expenses
300,000
Taxes and Losses
1,300,000
Medical Expenses, with receipt, incurred
within 1 year period
1,000,000

a.
b.

c. P 1,500,000
d. P 4,000,000

144.
The following individuals are liable to pay
community tax, except:
a. Every inhabitant of the Philippines who is at least
18 years old.
b. Anybody who has worked in the Phils. for at least
30 consecutive days.
c. Anybody who is engaged in business or practice
of profession.
d. Owners of real property with assessed value of
P10,000 or more.

139.
Mr. Jose, Filipino, married died leaving the
following estate:

41.

42.
a.
b.

The net taxable estate is:


a. P 1,250,000
b. P 2,500,000

The maximum community tax for corporation is:


a.P500
c.
P1,000
b.P5,000
d.
P10,000
Community tax is due
a.Before the last day of January
b.Before the last day of February
c. Before the last day of March
d.Before the last day of April

The allowed family home deduction is:


P1,000,000
c. P900,000
P1,400,000
d. P700,000

The deduction for share of the surviving spouse is:


P 2,500,000 c. P 4,000,000
P 1,250,000 d. P 1,500,000

In every challenge or undertaking, the important thing is you do your best, its up to God to do the rest.
- VICTOR
- end of preweek -

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P1.502A