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Ms.

X is an employee of Isla Lipana, the local counterpart of


PricewaterhouseCoopers (PWC) in the Philippines. She just celebrated
her 61st birthday last November 2016. Ms. X has been working in the
firm for almost eight (8) years and is now thinking of retiring from
service. She comes to you now to ask opinion whether her total
retirement package would be subject to tax diminution.
1. Provided Ms. X will earn a total of 2 million pesos under the
company pension plan, what will be your advice?
a. Benefit is taxable because the service rendered fell short of the
ten-year requirement.
b. Benefit is tax free because she is past 60 years old and has
rendered more than 5 years of service.
c. Benefit is taxable because there is no approved pension plan.
d. Benefit is taxable because she is under 65 years old.
2. Provided Ms. X has worked for 10 years and will earn a total of 2
million pesos under the company pension plan which requires at
least 11 years of service, among others, what will be your advice?
a. Benefit is tax free because the service rendered met the tenyear requirement.
b. Benefit is tax free because she is past 60 years old and has
rendered more than 5 years of service.
c. Benefit is taxable because service fell short of the eleven-year
requirement.
d. Benefit is taxable because she is under 65 years old.
3. Provided Ms. X will earn a total of 2.5 million pesos under the
statutory retirement computation, what will be your advice?
a. Benefit is taxable because the service rendered fell short of the
ten-year requirement.
b. Benefit is tax free because she is past 60 years old and has
rendered more than 5 years of service.
c. Benefit is taxable because there is no approved pension plan.
d. Benefit is taxable because she is under 65 years old.
4. Consider problems 1 and 3, what will be your advice?
a. Benefit is taxable because the service rendered fell short of the
ten-year requirement.
b. Benefit is tax free because she is past 60 years old and has
rendered more than 5 years of service.
c. Benefit is taxable because there is no approved pension plan.
d. Benefit is taxable because she is under 65 years old.
5. Mel received from his first employer, P20,000 as retirement benefit
and was subsequently employed by another employer. After
rendering 10 years, Mel retired from his second employer and
received P50,000. Payment was made under a BIR approved
retirement plan. Is the said amount taxable or not?
a. Yes, it is taxable because the benefit of exemption can only be
availed of once.
b. Yes, it is taxable because Mel is probably under 50 years old.
c. No, it is not taxable because he is qualified under provisions of
RA 4917.
d. No, it is not taxable because he rendered at least 10 years of
service.
6. If the second employer is a Government entity (assuming Mel was
employed by the DPWH,) would the same be taxable?
a. No, according to RA 7641 (Retirement Pay Law) all benefits
falling under the minimum 60 years old and 5-year service

requirement is exempt regardless of the number of times


earned by an employee.
b. Yes, according to RA 4917 (Private Benefit Plan) the retiring
employee must be of at least 50 years old.
c. No, according to RA 8291 (The GSIS Act of 1997) all benefits he
received are tax exempt, including retirement gratuity.
d. Yes, the exemption can only be availed of once, without
qualifications.
7. Which of the following statements is /are incorrect?
i. Taxation is a process.
ii.
Enactment of tax laws is part of the taxation process.
iii.
The Constitution expressly conferred the power of Taxation
to the President of the Philippines.
iv.
Taxation requires voluntary contribution from inhabitants
to support the government.
Choices:
a. i, ii, iii and iv.
b. i, ii and iii only.
c. i and ii only
d. i only
8. Which of the following is/ are natural qualities of Taxation Power?
v. An inherent power
vi.
Essentially an executive function
vii.
An absolute power
viii.
Territorial in operation
Choices:
a. I and iv only
b. Ii and ii only
c. I and ii only
d. I only
9. Taxation co-exist with the four elements of the state which includes
all, except
a. Government
b. Property
c. Sovereignty
d. Territory
10. Which of the following statements is not correct?
a. Only the national government exercises the inherent power of
taxation.
b. The power to tax by the local government units is a delegated
power granted by the Constitution and other special laws.
c. National legislation is exercised by Congress.
d. Interpretation of Tax Laws is done by the Legislative
branch of the government.
11. The BIR is under the supervision of the
a. Department of Budget
b. Bureau of Customs
c. Department of Finance
d. Department of Trade and Industry
12. Which of the following is not the activity involving tax
administration
a. Execution of judgment decided by the court in favor by the BIR
b. Passage of tax laws and ordinances through the
legislature
c. Computation of tax due and payable

d. Taxpayers compliance to pay tax obligation


13. Which of the following statements is correct?
a. Levying and collection of taxes are legislative functions.
b. Assessment and collection are administrative function.
c. Enacting of tax laws and its interpretations are legislative
functions.
d. Levying and imposition of judicial functions.
14. Which of the following is correct?
Legislative
a. Fixing of tax rates
Yes
b. Valuation of object of tax
Yes
c. Collection of taxes
Yes
d. Assessment of tax liability No

Administration
Yes
No
Yes
Yes

15. It has the executive supervision and control over tax administration
a. Bureau of Internal Revenue
b. Bureau of Customs
c. Department of Finance
d. Court of Justice
16. Which of the following is classified as income?
a. Damage recovery due to physical injuries
b. Return of capital
c. Excess of selling price over cost of assets sold
d. Gift received
17. Which of the following is not a characteristic of income?
a. Increase in taxpayers wealth
b. Return of taxpayers wealth
c. Realization or receipt of gain
d. Earnings constructively received
18. Which of the following is taxable with income tax at its gross
amount when earned within the Philippines?
a. Professional Fee
c. Business Income
b. Compensation Income
d. Royalty Income
19. Which of the following income is/are earned through employee and
employer relationship?
I.
Professional Fee
II.
Wages
III.
Pension Pay
IV.
Capital Gain
a. I, II, III only
c. II and III only
b. I and II only
d. II only
20. Statement1: Remuneration for casual labor not in the course of an
employers trade or business is not considered as taxable
compensation income/
Statement 2: Additional benefits received by the employee for the
convenience of the employer are not taxable income of the employee.
a. Only statement 1 is correct.
c. Both statements are
correct.
b. Only statement 2 is correct.
d. Both statements are incorrect.
21. Which of the following is a taxable compensation income?
a. Separations pay due to resignation.
b. Retirement pay under BIR approved retirement plan.
c. Separations pay due to disability.

d. Terminal pay by fact of death.


22. Which of the following is a taxable compensation income?
a. Professional fee net of creditable withholding tax.
b. Separations pay due to closure of the employers business.
c. Terminal pay inclusive of 15,000.00 13th month pay.
d. Separations pay due to early retirement.
23. The monetary value of fringe benefit if given in money is
a. Fair market value (BIR) or zonal value whichever is higher.
b. Amount granted.
c. Depreciated value.
d. Acquisition cost plus other incidental costs.
24. Which value should be used as tax base to compute the fringe
benefit on the property assigned for the use of employees?
a. Fair market value of the property.
b. Cost of the property.
c. Equivalent rental value of the property.
d. Fringe benefit value.
25. For property assigned for use of employee, the excess of fair
market value over cost of the property assigned should be
a. Amortized over the original life of the property.
b. Depreciated over the original life of the property.
c. Amortized over the remaining useful life of the property.
d. Depreciated over the remaining useful life of the property.
26. The following are nontaxable housing fringe benefit, except
a. Housing for military official of the armed forces of the Philippines.
b. Housing within 50 meters of business premises.
c. Temporary housing within three months or more.
d. Free housing privilege to a corporate officer.
27. Which is true regarding taxation of ordinary gain?
a. It is subject to the regular tax regardless of the taxpayer
b. Individual taxpayers are always subject to regular tax
c. It is subject to capital gains tax
d. It is taxable to either regular or capital gains tax
28. Which capital asset is subject to the rules of capital gains tax?
a. Exchange of residential lot used in business
b. Sale of office building
c. Sale of domestic common shares directly to buyer
d. Sale of office equipment
29. Which is correct regarding gains from capital assets?
a. Always subject to regular tax
b. Always subject to capital gains tax
c. Subject to both regular and capital gains tax
d. Subject to either regular and capital gains tax
30. Which of the following can treat capital expenditure as outright
deduction?
a. Private educational institution
b. Public schools or universities
c. Non-profit schools or universities
d. All of these
31. Research and development cost that are not chargeable to capital
account can be claimed as
a. Deductible expense

b. Deferred expense subject to amortization


c. Both a and B
d. Either A or B
32. Fringe benefit tax can be claimed as
Deduction
Tax credit
a. Yes
Yes
b. No
Yes
c. Yes
No
d. No
No
33. Under the PEZA Law, entities within ecozones can avail of the
following, except:
a. Income Tax Holiday
b. 5% Income Tax i n lieu of all national and local taxes, except
Real Property Tax
c. Exclusive list of items for cost of sales
d. Non-exclusive list of items for cost of sales
34. The following are the proper treatments for unused input vat,
except:
a. Carryover
b. Refund or Credit
c. Deduction from gross income if already prescribed
d. Deduction form gross income if disallowed for refund
Mercury Drug Store recorded the following sales:
Customers
Regular
Senior citizens
Gross sales
P5,000,000 P1,200,000
Cost of sales
3,000,000
800,000
MDS adopts a policy of giving SCs 25% discount. Consequently, it
granted P300,000 total senior citizens discounts during the year.
Assuming the taxpayer employs senior citizens and paid the following
compensation during the period:
Regular employees
P200,000
Senior citizens above poverty level
50,000
Senior citizens below poverty level
40,000
35. What is the total deductible compensation expense of MDS?
a. 290,000
b. 303,500
c. 240,000
d. 296,000
36. What is the taxable net income of MDS?
a. 1,856,500
b. 2,104,000
c. 2,096,500
d. 1,864,000
37. When different type of income are subjected to common tax rate,
the tax system is described as
a. global tax system.
b. gross income tax system.
c. schedular tax system.
d. Final tax system.
38. Schedular tax system of income taxation means

a. all types of income are added together to arrive at gross


income.
b. separate graduated rates are imposed on different types
of income.
c. Capital gains are excluded in determining gross income.
d. Compensation income and business professional income shall
be added together in arriving at gross income.
39. Which of the following taxpayers are taxed for income earned
within and outside the Philippines?
i. Resident citizen
ii. Resident alien
iii. Domestic corporation
iv. Resident foreign corporation
Choices:
a. i, ii, iii and iv
b. i, ii and iv only
c. i and iv only
d. i and iii only
40. An individual taxpayer, whose personal exemption is allowed is the
lower amount provided between Philippine Tax Code and his
Countrys Tax code.
Citizenship
a. Filipino
b. Filipino
c. Alien
d. Alien

Residency
Within
Outside
Within
Outside

Business Income
No
Yes
No
Yes

41. Statement 1: If both husband and wife are earning income, only on
them could claim for the additional personal exemption.
Statement 2: the husband is the rightful claimant of addition personal
exemption, unless he waives his rights in favour of his wife.
a. Only statement 1 is correct
b. Both statements are correct
c. Only statement 2 is correct
d. Both statements are incorrect
42. Statement 1: A tax credit will reduce the taxable income.
Statement 2: A tax credit will be available when there is foreign
income tax paid by resident Filipino for income earned without.
a. Only statement 1 is correct
b. Both statements are correct
c. Only statement 2 is correct
d. Both statements are incorrect
43. One of the following is not creditable against the total computed
per ITR.
a. Final withholding tax
b. Foreign income tax paid by resident citizen
c. Creditable withholding tax on compensation
d. Income tax paid for the first three quarters for the business
income earned.
44. Statement 1: An alien who shall reside in the Philippines with no
definite intention as to his stay is a resident of the Philippines.
Statement 2: A foreigner who has acquired residency in the Philippines
shall only become a non-resident alien when he actually departs with
the intention of abandoning his residency in the Philippines.
a. Only statement 1 is correct

b. Only statement 2 is correct


c. Both statement are correct
d. Both statements are incorrect
45. All of the following taxes are classified as income taxes, except
a. 20% royalty tax
b. 10% dividend tax
c. of 1% tax on the selling price of shares of stock tradedin the local stock exchange
d. 6% capital gains tax on sale of land
46. Which of the following amount of winnings/ prizes is subject to final
tax of 20%?
a. P10,000 winnings outside the Philippines
b. P10,000 winnings earned within the Philippines
c. P1,000 Philippines Sweepstakes winnings
d. P9,000 first prize singing contest
47.
Which of the following is not correct income tax rate?
a. 20% on P50,000 compensation income earned by senior
citizen
b. 20% on dividend income earned within by non-resident alien
doing business within
c. 25% on gross income earned within by non-resident alien not
doing business in the Philippines
d. 7.5% on interest income earned within by a resident Filipino
citizen under the expanded foreign currency deposit system.
48. The minimum corporate income is applicable in determining the
tax liability of a corporation except when the corporation
a. Is in its third year
b. Is in its fourth year
c. Incurred net loss or zero taxable income
d. Has normal income tax which is lesser than minimum income tax
49. Nonresident foreign corporations are subject to normal tax rate
based on
a. Net taxable income within
b. Gross income within
c. Net taxable income from all sources
d. Net taxable income from all sources
50. The tax imposed on inter-corporate dividends received by a
resident foreign corporation from a domestic corporation is a
a. Tax-exempt
b. Subject to 10% final tax
c. Subject to 15% final tax
d. Subject to 30% corporate tax
51. Royalty income derived within the Philippines by a nonresident
foreign corporation shall be subject to
a. 20% final tax
b. 7.5% final tax
c. 30% normal corporate tax
d. 2% minimum corporate tax
52. The following corporate income are subject to income tax, except
a. Cash dividends received from a domestic corporation by
another domestic corporation
b. Royalty income received from a domestic corporation
c. Interest income on foreign loans

d. Inter-corporate dividends received by a nonresident foreign


corporation from a domestic corporation
53. The net taxable income of regional operating headquarters
established in the Philippines by multinational companies engaged
in administrative services is
a. Tax-exempt
b. Subject to 10% final tax
c. Subject to 15% final tax
d. Subject to 30% corporate tax
54. For taxation purposes, the following are taxable corporation,
except
a. National Power Corporation
b. EGV & Company Auditing Firm
c. ABC Trading Partnership
d. PAGCOR
55. Which of the following is an incorrect determination of income tax?
a. 25% on gross income within of a nonresident cinematographic
film
b. 30% income tax on the net taxable income of a
nonresident foreign corporation
c. 10% income tax on proprietary education institution
d. 30% income tax on net business income of government owned
and controlled corporation
56. The following are correct income tax rate, except
a. 7.5% on gross income within earned by nonresident
foreign cinematographic film owner
b. 2.5% on gross receipts within received by foreign international
carrier.
c. 4.5% on gross income within earned by nonresident lessor of
vessel chartered by Philippine nationals
d. 7.5% on gross income within earned by nonresident foreign
lessor of aircraft
57. The tax imposed on inter-corporate dividends received by a
nonresident foreign corporation from a domestic corporation is
a. Tax-exempt
b. Subject to 10% final tax
c. Subject to 15% final tax
d. Subject to 30% corporate tax
58. Which of the following corporation is subject to IAET?
a. Publicly-held corporations
b. Family-closed corporation
c. Banks and other nonbank financial intermediaries
d. Insurance companies
The following Income and Expenses are shown by X Corporation:
Within
Outside
Gross Income
P 8,000,000
4,000,000
Business expenses
5,000,000
3,000,000
Sale of land and warehouse (cost P2M)
3,000,000
59. If X is a domestic corporation, how much is the taxable income and
income tax due in the Philippines per annual ITR?
Taxable Income
Income Tax Due
a. P3,000,000
P 900,000
b. P4,000,000
P1,200,000

c. P5,000,000
d. P7,000,000

P1,500,000
P2,100,000

60. If X is a resident foreign corporation, how much is the taxable


income and income due in the Philippines per annual ITR?
Taxable Income
Income Tax Due
a. P3,000,000
P 900,000
b. P4,000,000
P1,200,000
c. P5,000,000
P1,500,000
d. P7,000,000
P2,100,000
The ABC Corporation has the following gross receipts and expanses for
the calendar year 201A.
Sources of Income:
Gross Receipts
Expenses
Philippines
P2,800,000
1,300,000
U.S.A
1,100,000
600,000
Saudi Arabia
400,000
500,000
61. If ABC Corporation is a non-resident foreign corporation, the
Philippine income tax due for 201A is
a. 175,000
b. 450,000
c. 700,000
d. 840,000
Unicor is a resident foreign corporation. For the fiscal year ending
March 31, 201B, reported the following:
Gross income derived from:
Philippines
P15,000,000
U.S.A
60,000,000
Mixed operating expenses
30,000,000
62. The Philippines income tax payable of Unicor for the fiscal year
April 1, 201a to March 31, 201B is
a. P2,700,000
b. P2,250,000
c. P1,750,000
d. P1,500,000
The Tacurong Company has the following business income and
expenses in year 201A:
From Philippines sources:
Gross Income
Expenses
From Business
450,000
290,000
Dividends from domestic corporation
80,000
From other countries:
Saudi Arabia
180,000
80,000
Australia
75,000
25,000
Japan
190,000
100,000
Total foreign income tax paid is P60,000 and Philippine quarterly
income tax paid is P42,000.
63. The income tax still due and payable if Tacurong is a resident
foreign corporation is:
a. P120,000
b. P 72,000
c. P 30,000
d. P 18,000

64. The income tax still due and payable if Tacurong is a resident
foreign corporation
a. P120,000
b. P 72,000
c. P 30,000
d. P 18,000
65. Which of the following is a party in a joint venture?
a. Partners
b. Co-owners
c. Co-venturers
d. Shareholders
66. The share of a partner in the income of a commercial partnership is
a. Subject to final tax of 10%.
b. Subject to creditable tax of 10% if the amount is P720, 000and
below and 15%if the amount is more than P720, 000.
c. Subject to normal tax of individual taxpayer
d. Tax-exempt
J, a partner of a general professional partnership, showed the following
income and losses:
Net income from trading business as sole proprietor
Share from net loss of the partnership

P500,000
200,000

67. How much is the net taxable income of J?


a. P700,000
c. P300,000
b. P450000
d. P250,000
M, a partner of a commercial partnership, showed the following income
and losses:
Net income from trading business as a sole proprietor
Share from net loss of the partnership

P500,000
200,000

68. How much is the net taxable income of M?


a. P700,000
c. P300,000
b. P450,000
d. P250,000
69. The portion of income from irrevocable trust that would be
distributed during the year is taxable against the
a. Grantor
b. Trustee
c. Beneficiary
d. Trust
70. The absolute exemption applicable to the income of estate ot
trusts amounts to
a. P75,000
b. P50,000
c. P30,000
d. P20,000

Amount of Net Taxable


Rate
Income
Over
P10,000
P30,000
P70,000
P140,000
P250,000
P500,000

But Not Over


P10,000

5%

P30,000
P70,000
P140,000
P250,000
P500,000

P500 + 10% of the Excess over P10,000


P2,500 + 15% of the Excess over P30,000
P8,500 + 20% of the Excess over P70,000
P22,500 + 25% of the Excess over P140,000
P50,000 + 30% of the Excess over P250,000
P125,000 + 32% of the Excess over
P500,000 in 2000 and onward