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1. Which is incorrect with respect to business taxes?

a. VAT is a top-up tax on sales


b. Percentage tax is an expensed tax
c. VAT is due quarterly but is paid monthly
d. Percentage tax is an explicit consumption tax

2. Which of the following transactions has no consumption tax?


a. Importation
b. Domestic consumption from VAT suppliers
c. Domestic consumption from non-VAT suppliers
d. Exportation

3. Which of these importations is subject to VAT?


a. Lumber
b. Flour
c. Canned tuna
d. Wine

4. The sale of which of the following is exempt from business tax?


a. Urea fertilizer
b. Hybrid corn seeds
c. Herbicides
d. Chicken dung

5. Which of the following ingredients is exempt from the VAT on


importation?
a. Ingredients in the manufacture of Improvised Explosive Devices
b. Ingredient used in the manufacture of human foods
c. Ingredients used in the manufacture of pet feeds
d. Ingredients used in the manufacture of poultry or livestock feeds

6. Which of the following agricultural products is not exempt from


business tax on sales?
a. Ginseng
b. Coffee beans
c. Tobacco leaf
d. Tea leaf

7. Mabiga Cooperative is an agricultural cooperative which processes


the coffee production of its members for sale to NesFe Corporation,
a coffee processing company selling bottled instant cofee. Mabiga
imported a coffee drier from Colombia Coffee Machineries
Corporation. After 3 years of active use, Mabiga disposed the drier
to Pedro Mabanag, a member.

Which of the following is subject to VAT?


a. Importation of coffee drier from Colombia
b. Sale of coffee drier to Mr. Mabanag
c. Sale of coffee to NesFe Corporation
d. Sale of coffee by members to Mabiga Cooperative
8. Ammacian Corporation imported goods from abroad for domestic sale.
The details of the importation is given below:

Peso value of suppliers invoice P 2,000,000


Other cost incurred to bring the goods to Philippine 70,000
port
Other inland costs prior to release of goods from 85,000
Customs
Customs duties 10%
Freight cost to bring merchandise to Ammacians
warehouse

Compute the Customs duties on the dutiable value.


a. P 207,000 c. P 215,500
b. P 200,000 d. P 208,500

9. Compute the VAT on importation on the landed cost.


a. P 258,600 c. P 282,600
b. P 283,440 d. P 284,460

10. Which is subject to business tax?


a. Business for subsistence
b. Privilege stores
c. Non-resident sellers
d. All of these

11. Which is considered pure consumption tax?


a. VAT on importation
b. Percentage tax
c. Value Added Tax on sales
d. Excise tax

12. Who is statutory liable to pay the VAT on importation?


a. The non-resident seller
b. The resident buyer
c. Both seller and buyer
d. The Bureau of Customs

13. A business taxpayer had the following summarized transactions


during the quarter:

Cash sales P 400,000


Sales on credit (account sales) 600,000
Installment sales (P30,000 collected) 100,000
Sales returns and allowances 20,000
Quota discounts 10,000
Advances for goods not yet delivered 20,000
Purchase of goods, including of P72,000 VAT
passed on by sellers 672,000

Compute the gross selling price.


a. P1,100,000 c. P1,030,000
b. P1,080,000 d. P1,010,000

14. A lending investor had the following data during a month:

Cash collection for loan principal P 400,000


Cash collection for interest 50,000
Cash collection for penalties 6,000
Uncollected loan principal 300,000
Billed but uncollected interest 2,000
Billed but uncollected penalties 1,000

What is the gross receipt?


a. P 456,000 c. P 59,000
b. P 450,000 d. P 56,000

15. Geneva Corporation, a VAT lessor which leases commercial spaces


to various businesses, received P1,284,000 rentals from various
clients, net of 5% withholding tax. What is the gross receipt?
a. P 1,200,000 c. P 1,284,000
b. P 1,351,579 d. P

16. A VAT registered seller made the following sales of goods during
a month:

Selling price Fair value


To customer A P 150,000 P 180,000
To customer B 200,000 190,000
To customer C 102,000 150,000
Total sales P 452,000

Compute the output VAT.


a. P 60,000 c. P 62,400
b. P 54,240 d. P 63,600

17. A VAT-registered seller made the following sales to the following


entities:

Selling price Fair value


City of San Fernando P 134,000 P 200,000
ABC Trading Company 100,500 150,000

What is the output VAT?


a. P 34,080 c. P 42,000
b. P 28,080 d. P 40,500

18. The following pertain to a VAT-registered taxpayer in July 2016:

Fees from senior citizens, before 20% discount P 225,000


Fees from PWD, before 20% discount 75,000
Fees received from regular customers 340,000
Total fees P 640,000

Compute the output VAT assuming the given figures are exclusive of
VAT.
a. P 48,000 c. P
b. P 40,800 d. P 69,312

19. DEF Realty Corporation, a VAT-registered realty dealer, sold the


following residential properties during the month:

Zonal Assessed Selling


Value Value Price
Residential lot P 1,500,000 P 1,200,000 P 1,700,000
Residential dwelling 3,500,000 1,500,000 3,200,000

Compute the output VAT.


a. P 0 c. P 624,000
b. P 580,000 d. P 420,000

20. Sarangani, a VAT-taxpayer made a sale of real property with a


fair value of P3,000,000 at a selling price of P2,000,000. The sale
qualified for installment reporting of output VAT. Sarangani is due
to receive the following amounts (net of VAT) in the coming month:

Installment P 200,000
Interest 12,000
Penalty 4,000
Total P 216,000

What is the reportable output VAT on the scheduled collection?


a. P 37,920 c. P 25,920
b. P 36,000 d. P 24,420

21. A VAT-registered taxpayer has its own sales operations but also
sells goods through consignees. It also sells goods on consignment
for a commission. The following were the results of operations for
the month ended April 30, 2016:

Sales of own inventories P 500,000


Sales made through consignees 150,000
Sales made for consignors 100,000
Commission income from consignors 20,000
Commissions paid to consignees 30,000

Compute the output VAT.


a. P 96,000 c. P 80,400
b. P 92,400 d. P 62,400
22. Mr. Misamis, a VAT-registered taxpayer, ceases business operation
in May 2015. His business properties upon termination of business
operation include the following:

Cash P 50,000
Accounts receivables 120,000
Investments 180,000
Inventories 200,000
Property, plant and equipment 800,000
Total assets P 1,350,000

Compute the Output VAT on deemed sales.


a. P 162,000 c. P 24,000
b. P 120,000 d. P 0

23. Mr. Kudos, a VAT-registered lawyer, had a residence with a zonal


value of P2,000,000 and assessed value of P1,500,000. The same was
foreclosed by a bank for his failure to pay his bank loan.

What would be the output VAT on the foreclosure of the property?


a. None, because the same is a capital asset
b. None, because the same is below the threshold on residential
dwellings
c. P 240,000, because the deemed sales is based on fair value
d. P 180,000, because deemed sales on foreclosure sales is based on
the lower of cost or fair value

24. Mr. Digong sold a commercial land with a selling price of


P2,100,000 but with a zonal value of P2,240,000 and assessed value
of P 1,500,000.

What is the output VAT?


a. P 268,800 c. P 240,000
b. P 252,000 d. P 225,000

25. Assuming the same data in the previous problem except that the
commercial land was sold for P2,464,000, what would be the output
VAT.
a. P 295,680 c. P 264,000
b. P 268,800 d. P 240,000

26. Guimaras Company made the following export and domestic sales
during the month:

Export destination Terms Payment


Export for Hong Kong FOB destination $ 100,000
Export for Thailand FOB destination P 450,000
Export to Japan FOB shipping point 800,000

Domestic sales
Sales to an PEZA FOB destination P2,000,000
Sales to a non-VAT customer 500,000
Sales to a VAT customer 1,000,000

The exchange rates were as follows: $1 = P45; 1 = P0.50.

Compute the output VAT for the month.


a. P 474,000 c. P 180,000
b. P 420,000 d. P 120,000

27. Which is not a deemed sale transaction?


a. Exchange of inventory for stocks
b. Exchange of property, plants and equipment for stocks
c. Exchange of inventory for property
d. Exchange of stocks for property

28. A non-VAT retail business exceeded the VAT threshold on October


31, 2016. On that date, it had the following lists of goods on hand
which it acquired from VAT suppliers:

Snacks foods and grocery items P 76,500


Frozen meat and eggs 30,200
Fruits and vegetables 20,360
Shampoos, soaps and detergents 12,100
Baked bread 6,040

Compute the transitional input VAT.


a. P 0 c. P 9,493
b. P 2,904 d. P 10,140

29. A VAT taxpayer had the following data regarding its sales and
input VAT during a particular quarter:

Sales Amount Traceable input VAT


Regular sales P 800,000 P 40,000
Export sales 400,000 18,000
Sales to government 200,000 15,000
Exempt sales 100,000 8,000
Total P 1,500,000 P 81,000

Non-traceable input VAT totaled P 24,000. Input VAT applied for tax
refund totaled P 6,000.

Compute the total Output VAT.


a. P 180,000 c. P 120,000
b. P 168,000 d. P 96,000

30. Compute the total creditable input VAT.


a. P 99,000 c. P 91,200
b. P 95,400 d. P 85,200

31. Compute the VAT still due.


a. P 81,000 c. P 34,800
b. P 76,800 d. P 24,800

32. A non-VAT taxpayer secured the services of a foreign consultant


to solve one of its recurring business problems. It contracted to
pay P1,000,000 for the consultancy services. Compute the final
withholding VAT and the creditable input VAT.
a. P 0; P 0 c. P 120,000; P 120,000
b. P 0; P 120,000 d. P 120,000; P 0

33. The sale of a VAT registered taxpayer for the last 12 months
failed to exceed the VAT threshold. It made the following sales
during the month:

Sales of rice P 80,000


Sale of flour 20,000
Sale of fertilizers and seeds 40,000
Total P 140,000

Compute the output VAT.


a. P 0 c. P 7,200
b. P 2,400 d. P 16,800

34. A non-VAT professional service provider which exceeded the VAT


threshold had the following revenue and collections during the
quarter:

Total collections, inclusive of P13,440 advances P 268,800


Total revenue 392,000

Compute the total output VAT.


a. P 0 c. P 28,800
b. P 27,360 d. P 42,000

35. An international carrier generated the following receipts:

Incoming Outgoing
Passengers P 1,000,000 P 2,000,000
Cargoes, mails; excess baggage 500,000 400,000

Compute the percentage tax.


a. P 72,000 c. P 12,000
b. P 60,000 d. P 0

36. Mr. and Mrs. Smith have the following children:


Damulag, the familys cook, 23 years old deaf-mute
MJ, 21 years old and working as part-time office assistant
Pretty Boy, 16 years old young artist of ABS-CBN
Minnie, 14 year old BS. Biology student at Harvard University
Doraymund, 12 year old Math genius studying at the elite
University of Kalinga
Mr. and Mrs. Smith has salaries from employment of P150,000 and
P100,000, respectively. Mrs. Smith paid P3,000 health insurance for
the family.

Compute the taxable income of Mr. and Mrs. Smith, respectively.


a. P75,000; P50,000 c. P50,000; P47,600
b. P50,000; P47,600 d. P25,000; P50,000

37. Intrepid, Inc. showed the following computation of its taxable


income in 2016.

Gross income P 4,000,000


Less: Other deductions from gross income 2,000,000
Net operating loss carry over 1,000,000
Taxable income P 1,000,000

This was the first time Intrepid, Inc. reports taxable income since
its inception in 2010. Intrepid, Inc. paid P200,000 MCIT in the last
two years. During the current year, taxes withheld by clients
evidenced by BIR Form 2307 totaled P25,000.

Compute the 2016 income tax payable of Intrepid, Inc.


a. P300,000 c. P100,000
b. P275,000 d. P75,000

38. Atlas, Inc. reported the following in 2016:

Taxable income P 400,000


NOLCO claimed 600,000
Estimated 2010 income tax paid 100,000
Capital gains, net of tax 50,000
Passive income, net of tax 180,000
Exclusions from gross income 120,000
Exempt income 200,000
Dividends declared 400,000
Appropriation for plant expansion 300,000

Paid up capital and retained earnings grew by P 500,000 and P700,000


in 2016. Atlas, Inc. was assessed for improperly accumulating
profit. Compute the improperly accumulated earnings tax.
a. P 90,000 c. P 73,000
b. P 70,000 d. P 40,000

39. All of these are exempt from transfer tax, except?


a. General renunciation of share in the conjugal property by the
surviving spouse
b. Transfer of the usufruct in the owner of the naked title
c. Proceeds of group insurance received by heirs of the decedent
d. Transfer under special power of appointment

40. Non-resident decedent can claim deduction for


a. Medical expenses
b. Family home
c. Standard deduction
d. Transfer for public purpose

41. On November 1, 2010, Gwen died leaving the following properties:

Agricultural land, inherited February 2, 2008 P 1,200,000


House and lot 2,000,000
Cash 2,800,000
Car 500,000
Other personal properties 1,000,000
Total properties P 7,500,000
Mortgage on the agricultural land P 500,000
Other indebtedness 1,200,000
Deductible expenses and losses 400,000
Total ordinary deductions P 2,100,000

Gwen paid P300,000 in mortgage before his death. The prior estate
paid the estate tax on the agricultural which was then valued at
P1,000,000.

Compute the vanishing deduction.


a. P403,200 c. P330,400
b. P388,800 d. P302,400

42. Mr. and Mrs. Coyiuto got married on February 14, 2001. The
spouses stipulated the conjugal partnership of gains for their
property relation. Mr. Coyiuto died leaving the following
properties:

Mr. Coyiuto died leaving the following properties:


P800,000 cash inclusive of Mr. Coyiutos P200,000 SSS benefits
P200,000 claim from insolvent persons, from the salary of Mr.
Coyiuto accruing after marriage
P400,000 second hand car, inherited by Mrs. Coyiuto in 2000
P2,000,000 house and lot, purchased out of Mr. Coyiutos salary
savings
P300,000 pieces of jewelry, inherited by Mr. Coyiuto from his
father
P500,000 agricultural land purchased by Mrs. Coyiuto out of her
PCSO winnings during the marriage

Compute Mr. Coyiutos gross estate.


a. P4,200,000 c. P3,800,000
b. P4,000,000 d. P3,600,000

43. Zeus is fast getting ultra-rich. He is now deeply concerned about


managing his wealth to minimize his future estate tax. Which of the
following estate planning alternative is the least possible strategy
you can suggest him?
a. Zeus shall invest P100,000 annually to a Personal Equity
Retirement Fund (PERA).
b. Zeus and his wife shall invest in life insurance and designate
the same as irrevocable to their children.
c. Set-up an irrevocable trust fund for his children and contributes
therein P100,000 yearly until his death.
d. Transfer his properties to his children while he is still living
so that the same is subject to a 6% capital gains tax instead of
the transfer tax.

44. Which of the following donation is exempt?


a. Donation to the government for public purpose
b. Donation to the Philippine Inventors Commission
c. Donation to accredited non-profit institutions
d. Donation to the Board of Accountancy

45. The following are deductible by a non-resident alien donor,


except
a. Donation to the government for public purpose
b. Indebtedness assumed by done
c. Dowry exemption
d. Donation to accredited non-profit institutions

46. Which of the following is subject to value added tax?


a. Importation of grapes and apples
b. Sale of seaweeds
c. Sale of fire wood and charcoal
d. Sale of husked rice, corn grits and molasses

47. All of the following entities are VAT-exempt, except?


a. Notre Dame, a proprietary hospital
b. Philippine Airlines, a domestic air carrier
c. Bank of the Philippine Islands, a commercial bank
d. Tagbilaran University, a proprietary educational institution

48. Which is subject to VAT?


a. Life insurance companies
b. Operators of hotels, motels and inns
c. International air or sea carrier
d. Agricultural, credit or multi-purpose cooperative

49. Which is not subject to output VAT?


a.Sale of residential lot for P1,500,000
b.Direct export sales of goods
c.Cessation of status as VAT taxpayer with respect to all goods or
properties on hand
d. Sale of residential dwelling for P2,800,000

50. Which is not a transaction deemed sales?


a. Withdrawal of goods by the proprietor for personal use
b. Corporate merger or consolidation
c. Retirement from or cessation of business
d. Declaring business properties as property dividends

51. Which is not a zero-rated sale of goods or service?


a. Transmission of messages message originating from the Philippines
to abroad other than news services, embassies and diplomatic
calls.
b. Sale of gold to the Bangko Sentral ng Pilipinas
c. Sale of electricity from hydropower and solar power plants
d. Transport of passengers by air or sea from Philippines to abroad

52. Which is correct statement?


a. If the monthly aggregate acquisition cost of capital goods
exceeds P1,000,000, the input VAT shall be allocated over a
period of 60 months starting from the month of purchase.
b. The export sales of non-VAT taxpayers are exempt from VAT.
c. The excess of input VAT over standard input VAT on government
sales is a taxable gain subject to income tax.
d. Monthly VAT is due 25 days from the end of each month with the
quarterly VAT payable 20 days from the end of each quarter.

53. Wendy shows the following input VAT during a quarter:

Deferred input VAT P 150,000


Allocation of current input VAT:
- To Regular sales P 200,000
- To Zero-rated sales 300,000
- To Sales to the government* 100,000
- To Exempt sales 50,000

*equivalent to 8% of sales to government

Compute the creditable input VAT.


a. P800,000 c. P587,500
b. P650,000 d. P350,000

54. Wholesale traders of which of the following is allowed


presumptive input VAT?
A. Raw sugar C. Mackerel
B. Packed noodles D. Processed milk

a. All, except A c. All of these


b. All, except B d. None of these

55. Rural Bank of Gumaca, Inc. (RBG) shows the following receipts
during a quarter:

Interest income from more than 5 year loans P 1,000,000


Interest income from less than 5 year loans 6,000,000
Gain on sale of ROPA 400,000
Rental income from ROPA 200,000
Service fees 800,000
Dividend income 100,000
Assuming RBG is not a cooperative bank, compute the gross receipt
tax.
a. P408,000 c. P385,000
b. P415,000 d. P208,000

56. Phil Co. raised its total outstanding shares by 40% to


70,000,000. This was made by conducting an initial public offering
through the Philippine Stock Exchange. The IPO shares were offered
and sold for P20 per share. The stock transaction tax is
a. P16,000,000 c. P7,000,000
b. P8,000,000 d. P4,000,000

57. Which is a correct statement?


a. Distraint and levy should not be implemented simultaneously so as
not to violate the proprietary interest of the taxpayer.
b. Assessment must be made by the BIR within 5 years from the date
the return is filed. Collection shall be enforced within 3 years
from the date of such assessment.
c. VAT taxpayers shall issue receipts regardless of the amount of
the sale.
d. Distrait and levy can be effected even in the absence of a prior
assessment.

58. Remy was unjustly assessed by the BIR. The following relates to
Remys protest:

Date of receipt of final assessment November 12, 2009


Date protest was filed to the BIR December 8, 2009
Date supporting documents were submitted January 26, 2010
Date of denial was received June 5, 2010

Which of the following statement regarding deadlines is false?


a. The last day to file protest is December 12, 2009.
b. The last day to submit supporting documents is February 6, 2010.
c. The last day to appeal to the CTA is on July 22, 2010.
d. If the BIR should not act on the protest until the lapse of 180
days from the submission of the supporting documents, the
taxpayer should appeal to the CTA within 30 days from the lapse
of the 180 day period.

59. The following relates to a taxpayers claim for refund:

Date of erroneous payment of tax April 15, 2009


Date of claim for refund was filed with the BIR December 16, 2010
Date of receipt of BIR denial April 9, 2011

The last day to appeal to the Court of Tax Appeals is


a. January 16, 2011 c. April 15, 2011
b. April 9, 2011 d. May 9, 2011
60. Mr. Marcos is a resident of Magsaysay, Baguio City. He disclosed
the following properties and income during 2010:

House and lot P 3,000,000


Salary 400,000
Professional fees 800,000

How much shall Mr. Marcos pay in community tax for 2011?
a. P5,005 c. P4,205
b. P1,685 d. P 0

61. All of these are incorrect statement, except?


a. Tax condonation operates retrospectively.
b. Tax amnesty is a general pardon involving total and unconditional
relinquishment of government right to enforce tax collection.
c. Tax as to incidence can be specific or ad valorem.
d. Professional tax is a local tax.

62. A resident decedent, head of family, left the following:


Personal properties P 1,000,000
Real properties (including family P1.5M family home) 2,000,000
Deductions claimed (including funeral expenses of
P200,000, and P 600,000 medical expenses) 900,000
Compute the taxable net estate?
a. P 2,100,000 c. P 250,000
b. P 1,100,000 d. P 100,000

63. For donors tax purposes, this is not a stranger


A. Daughter of godson
B. Grandson of the sister of the donors mother
C. Son-in-law
D. Granddaughter of the donors sister

64. Mr. and Mrs. J. Cruz donated a conjugal parcel of land to their
son who was getting married within six (6) months after the date of
donation. The fair market value of the property at the time of
donation was 500,000. Its fair market value at the time of marriage
was 550,000. The donated property was subject to 100,000 mortgage.
This was assumed by the donee.

How much is the taxable net gift of Mr. J. Cruz?


A. 440,000 C. 215,000
B. 240,000 D. 190,000

65. Monkey is a first cousin of both Zeus and Mark. Zeus and Mark are
loving friends. Zeus wants to donate P100,000 cash to Mark. What
is the best tax strategy to minimize from donors tax?
a. Zeus shall donate the property in his will and testament to avoid
donors tax.
b. Zeus may directly donate the P100,000 to Mark since donation up
to the first P100,000 is tax-exempt.
c. Zeus shall first donate the property to Monkey under condition
that Monkey shall donate the same to Mark.
d. Zeus shall split the donation over several years to minimize the
annual donors tax.

66. A dealer in securities has the following data for the quarter:
Sales, shares held as inventory 5,000,000
Sales, shares held as investment 1,500,000
Cost, shares held as inventory 2,000,000
Cost, shares held as investment 500,000
Supplies expense, net of VAT 100,000
Rent expense, net of VAT 200,000
How much is the VAT payable?
A. 470,000 C. 270,000
B. 324,000 D. Not subject to VAT

67. Mr. Juan Cruz, VAT-exempt, issued VAT invoice to Mr. S. Santos,
VAT-registered trader. As a consequence, Mr. Juan Cruz would:
a. be liable to VAT without the benefit of input tax credit
b. not be liable to VAT because he is VAT-exempt
c. be liable to percentage tax, VAT, and a surcharge of 50%
d. not be liable to any business tax but may be liable to income tax

68. Beneco is a holder of franchise to distribute and sell


electricity. In a particular quarter, its gross receipts amounted to
P2,000,000 from distribution and sale of electricity. It has also
receipts from the lease of its auditorium amounting to P600,000.

The value-added tax or percentage tax due for the quarter is:
a. P40,000 percentage tax c. P52,000 percentage tax
b. P72,000 value-added tax d. P312,000 value-added tax

69. Chavit, a Filipino citizen, promoted a Philippine boxing


championship in Manila featuring Mark, the champion and Zeus, his
challenger. Gate receipts amounted to P3,000,000 and additional
receipts from television coverage was P2,000,000. The amusement tax
due is:
A. Exempt C. P300,000
B. P500,000 D. P600,000

70. Gloria, a security dealer, purchased P500,000 shares of Tabako


Corp. The corporations shares are listed and are traded in the
local stock exchange. Gloria sold the shares for P350,000 through
the local stock exchange. The percentage tax on the sale is:
A. P 0 C. P1,750
B. P3,500 D. P2,500

71. Victory Bus Lines had the following receipts during the quarter:

Gross receipts, without tax:


Transport of passengers P 1,000,000
Transport of goods 1,500,000
Transport of cargoes 500,000

The output VAT and OPT due for the quarter are:

Output VAT OPT due Output VAT OPT due


A. P240,000 P 30,000 C. P 0 P 90,000
B. 360,000 0 D. 360,000 30,000

64. The lease of property, real or personal, is subject to:

I. 7% gross receipts tax if the lessor is a bank.


II. 12% VAT if the lessor is not a bank.

A. Yes to I and II C. Yes to I only


B. No to I and II D. Yes to II only

72. Tarlac Company voluntarily registered to VAT. It has the


following inventory at the start of the year:

Processed foods from VAT sellers P 11,200


Processed foods from non-VAT sellers 90,000
Agricultural food products 200,000

Compute the transitional input VAT.


A. P 0 C. P2,000
B. P1,200 D. P6,000

73. Moses, Inc., a VAT registered trader, compiled the following


payments on purchases during the year:

Payments for merchandise from VAT suppliers P 134,400


Payments merchandise from non-VAT suppliers 82,400
Landed cost of merchandise withdrawn from the BOC 224,000

What is the creditable input VAT?


A. P 0 C. P38,400
B. P41,280 D. P50,108

74. A VAT-registered customer ordered the following from a non-VAT-


registered supplier:

Eggs P 100,000
Dried fish 150,000
Marinated fish 200,000

Under current revenue regulations, what is the output VAT?


A. P 0 C. P24,000
B. P12,000 D. P36,000
75. A manufacturer of perfume oils which newly registered as VAT
taxpayers during the quarter shall not be allowed which of the
following?
A. Transitional input VAT
B. Presumptive input VAT
C. Regular input VAT
D. None of these
TAXATION TEST BANK

1. Hayden Co, a resident citizen, earned the following interest income


gross of applicable taxes:

Interest income from PNB, a domestic bank P 40,000


Interest income from SVB, a domestic bank* 30,000
Interest income from THE, a non-resident foreign bank* 20,000
Interest income from XHE, a resident foreign bank* 10,000

*in Philippine Peso equivalent

Compute the amount of final tax.


a. P 11,000 c. P 8,000
b. P 10,250 d. P 0

2. If Hayden is an OFW, what compute the amount subject to regular tax.


a. P 40,000 c. P 20,000
b. P 30,000 d. P 0

3. If Hayden is a resident citizen, compute the amount subject to


regular tax.
a. P 50,000 c. P 30,000
b. P 40,000 d. P 20,000

4. Miss Darrelle Joe is a self-published author. She established a


printing press and a marketing distribution business for her books
which sells wildly hot like chili-flavored pizza. She does not know
anything about taxation so she consulted you about what type of
income tax she will pay.

What advice would you give her?


a. You are subject to regular tax not to final tax so file three
quarterly income tax returns every 60 days following the end of
the first three quarters and file an annual consolidated income
tax return on or before April 15 of the following year.
b. You are subject to final tax on your book royalties. There is no
need to file regular tax returns.
c. You should pay regular income tax on your net income and 10%
final tax on your royalties from your books to avoid hassle with
the tax authorities.
d. You are subject to regular tax. You shall file three quarterly
income tax returns on or before before April 15, August 15, and
November 15 respectively and file a consolidated annual income
tax return on or before April 15 of the following year.

5. Which is subject to creditable withholding tax?


a. Winnings
b. Dividends
c. Professional fees
d. Royalties

6. Who is not required to file the quarterly income tax return?


a. Individuals who are purely engaged in business
b. Individuals who are purely engaged in profession
c. Partnerships and corporations
d. Individuals who are purely employed

7. Withholding taxes are the primary liability of the


a. Earner or payee of income
b. Payor of income
c. Payee and payor of income
d. Collecting agency of the government

8. NFC, Inc. is due to pay the following expenses:


TAXATION TEST BANK

Interest expense bank loans P 21,000


Royalty expense from franchisor 40,000
Rent expense for lease of office building 10,000
Salaries expense for employees 100,000
Dividends to shareholders 40,000

Which of the following is subject to final withholding tax?


a. None c. Salaries
b. Interest d. Royalties

9. Compute the final tax to be withheld by SPV.


a. P 0 c. P12,000
b. P 4,000 d. P16,200

10. Which is subject to creditable withholding tax?


a. Royalty c. Salaries
b. Dividend d. None of these

11. Mr. Escala is a seaman employed abroad in an international vessel


that operates exclusively in international transport operations.
Wako invested all his earnings abroad in the time deposits of the
Bank of the Philippine Islands. A summary of his investments
follows:

P5,000,000 6-year non-preterminable deposit 10% p.a.


P3,000,000, 3 year deposit 7.5% p.a.
$100,000, 5 year preterminable deposit 10% p.a.
$50,000, 2 year deposit 8% p.a.

The applicable conversion rate is P47:$1.

Compute Wakos annual final tax.


a. P 94,350 c. P 45,000
b. P 59,100 d. P 16,875

12. Juan Company invested in the stocks of You See Corp. It purchased
10,000 shares of You See on April 2016 for P90 per share. The shares
had a par value of P50/share. You See declared a 20% stock dividend
in July 2016 followed by a P14/share cash dividend in October 10,
2016. In need of working capital, Juan Company sold 5,000 shares for
P100.00 per share on November 12, 2016.

Compute the final tax on Juans dividends.


a. P 28,000 c. P 14,000
b. P 16,800 d. P 0

13. Who shall remit any dividend tax to the government? What is the
deadline for such remittance?
a. Juan Company; November 5, 2016
b. You See Corp; November 15, 2016
c. Juan Company; November 10, 2016
d. The BIR; November 10, 2016

14. Compute the capital gains tax due of Juan Company.


a. P7,500 c. P 2,500
b. P 7,406 d. P 2,453

15. What is the deadline on Juan Companys capital gains tax return?
a. December 5, 2016 c. December 12, 2017
b. December 15, 2017 d. April 15, 2017

16. Compute the documentary stamp tax on the sale of stocks.


TAXATION TEST BANK

a. P 825.25 c. P 937.50
b. P942.50 d. P 925.00

17. What is the deadline for the documentary stamp tax?


a. December 5, 2016 c. December 12, 2017
b. December 15, 2016 d. April 15, 2017

18. Mr. Digong earned the following prizes from two different
competitions:

Date Event Gross Prize


January 4, 2011 Singing competition P 12,000
February 14, 2011 Painting competition 10,000

Compute the total final tax that should have been withheld from the
above prizes.
a. P5,500 c. P3,000
b. P4,400 d. P2,400

19. Mr. Quito won a gold medal and P50,000 cash prize for chess
competition in the Palarong Pambansa. How much final tax should be
withheld from the prize?
a. P 20,000 c. P5,000
b. P 10,000 d. P 0

20. Tiong Department Store conducted a sales promotion where


customers purchases exceeding P1,000 in one transaction shall be
entitled to a ticket for a chance to win P500,000. Mr. Shing won the
prize.

How much shall Tiong withhold from the grand prize winning?
a. P200,000 c. P 50,000
b. P100,000 d. P 0

21. Mr. Koronadal made the trade sales transactions during the year
in the common stocks of Ipus-ti-Baka Corporation, a domestic listed
company:

Date Transaction Gain(Loss)


5/8/2015 Sale P120,000
8/5/2015 Sale ( 20,000)
9/8/2015 Sale 240,000

Compute the final capital gains tax on April 15, 2016.


a. P29,000 c. P3,000
b. P22,000 d. P 0

22. Mrs. Joson sold a residential lot on July 1, 2014 for P2,000,000.
The property had a zonal value of P2,500,000 and an assessed value
of P1,000,000.

On August 1, 2015, Mrs. Joson was compelled to pay the capital gains
upon the request of the buyer. The compromise penalty was determined
to be P20,000.

Late payment to the capital gains tax is subject to a 25% surcharge


plus interest of 20% p.a. based on the basic tax and compromise
penalties.

Compute the total tax due.


a. P 150,000 c. P 217,500
b. P 180,000 d. P 237,500
TAXATION TEST BANK

23. Basic Company paid P9,000 documentary stamp tax on the sale of a
real property capital asset. Compute the capital gains tax on the
sale.
a. P 9,000 c. P 36,000
b. P 16,000 d. P 42,000

24. Bentong is employed by Sisiw, Lang, Bebe & Co, CPAs (SLB) as a
senior audit executive. Bentong is assigned a laptop for his office
use. To impress SLBs clients, Bentong also purchased an iPhone 8
for his office use.

Which is correct?
a. The iphone 8 and the laptop is an ordinary asset of Bentong.
b. The iPhone 8 and the laptop is an ordinary asset of SLB.
c. The iPhone 8 is an ordinary asset to Bentong while the laptop is
an ordinary asset of SLB.
d. The iPhone 8 is a capital asset to Bentong but the laptop is an
ordinary asset of SLB.

25. Mr. Bassit Unay sold a residential land for P4,000,000. The land
had a zonal value of P7,500,000 and an assessed value of P4,000,000.
What is the total income tax and documentary stamp tax due?
a. P 0; P 60,000 c. P400,000; P 112,500
b. P 450,000; P15,000 d. P450,000; P112,500

26. On August 15, 2011, Ms. Mones sold a 500-square meter residential
house and lot for P3,000,000. The house was acquired in 2005 at
P2,000,000. The assessed fair market values of the house and lot,
respectively, were P1,500,000 and P1,000,000. The zonal value of the
lot was P5,000 per square meter.

What is the capital gains tax?


a. P240,000 c. P180,000
b. P210,000 d. P120,000

27. Malena has the following items of income:

Philippines Abroad
Business income P 200,000 P 100,000
Professional fees 100,000 50,000
Compensation income 400,000 -
Rent income 300,000 200,000
Interest income-bank 20,000 30,000
Royalty 30,000 10,000

Assuming Malena is a resident citizen, compute the total income


subject to Philippine income tax.
a. P1,420,000 c. P1,030,000
b. P1,180,000 d. P1,390,000

28. Assuming Malena is a resident alien, compute the total income


subject to Philippine income tax.
a. P1,420,000 c. P1,000,000
b. P1,180,000 d. P1,390,000

29. Assuming Malena is a resident corporation, compute the total


income subject to Philippine income tax.
a. P1,420,000 c. P1,000,000
b. P1,180,000 d. P1,390,000

30. Assuming Malena is a domestic corporation, compute the total


income subject to Philippine income tax.
a. P1,420,000 c. P1,030,000
TAXATION TEST BANK

b. P1,180,000 d. P1,390,000

31. A Japanese who is staying in the Philippines for 183 days is a


a. Resident alien
b. Non-resident alien
c. Non-resident alien engaged in trade or business
d. Non-resident alien not engaged in trade or business

32. A Canadian who is staying in the Philippines for more than one
year is a
a. Resident alien
b. Non-resident alien
c. Non-resident alien engaged in trade or business
d. Non-resident alien not engaged in trade or business

33. Which is a large taxpayer?


a. A taxpayer with quarterly VAT of P900,000
b. A taxpayer with annual income tax of P900,000
c. A taxpayer with annual excise tax due of P900,000
d. A taxpayer with annual withholding tax remittances of P900,000

34. Which is an incorrect statement regarding situs of income?


a. Interest income is earned in the residence of the debtor.
b. Royalty is earned where the intangible is employed.
c. Service income is earned in the domicile of the taxpayer.
d. Rent is earned in the location of the property.

35. Excellent Company insured the life of its president for


P2,000,000. A total of P500,000 in premiums was paid before the
president died. The company collected the total proceeds.

Compute the return on capital.


a. P2,000,000 c. P500,000
b. P1,500,000 d. P 0

36. A tax that is imposed upon the performance of an act, the


enjoyment of a privilege or the engagement in a profession is known
as
a. income tax. c. excise tax.
b. license. d. transfer tax.

37. Which of the following distinguishes license from tax?


a. Unlimited in imposition
b. Imposed for revenue
c. Does not necessarily renders business illegal in case of non-
payment
d. Pre-activity in application

38. Tax classifications as to object do not include


a. Poll tax c. Regulatory tax
b. Property tax d. Excise tax

39. Mr. A has a tax obligation to the government amounting to


P80,000. Since he is leaving the country, he entered into a contract
with Mr. B, a tax practitioner, wherein Mr. B shall pay the P80,000
tax in his behalf. On due date, Mr. B failed to pay the tax. The BIR
sent a letter of demand to Mr. A which he refused to pay.

Which of the following statements is correct?


a. The government cannot enforce collection charges against Mr. A
since he has validly transferred his obligations to B under the
contract.
TAXATION TEST BANK

b. The government can no longer run after Mr. A because he is


already outside the Philippine territory.
c. The government should wait until Mr. B becomes solvent again.
d. The government should force Mr. A to pay because taxes are non-
assignable.

40. Which of the following is limited in application?


a. Tax laws c. Tax treaties
b. Revenue Regulations d. BIR Ruling

41. The principles of a sound tax system exclude


a. Economic efficiency c. Theoretical justice
b. Fiscal adequacy d. Administrative feasibility

42. The Bureau of Internal Revenue is authorized to do the following,


except?
a. Assess and collect taxes
b. Issue receipts and clearances
c. Enforce all forfeitures, penalties and fines
d. Mete out sentence of imprisonment for violation of Tariff and
Customs Code

43. The Commissioner of Internal Revenue is not authorized to


a. interpret the provisions of the National Internal Revenue Code
b. promulgate Revenue Regulations.
c. terminate an accounting period.
d. prescribe presumptive gross receipts.

44. The provisions in the Constitution regarding taxation are


a. Grants of the power to tax
b. Limitations to the power to tax
c. Grants and limitations to the power to tax
d. Limitations against double taxation

45. Which of the following violates Constitutional provisions?


a. Payment of salaries to priests or religious ministers employed by
the Armed Forces of the Philippines
b. Imposing tax on properties of religious institutions which are
not directly and exclusively used for religious purposes
c. Imposition of license for the sale of religious literature
d. Authorizing the President of the Philippines to fix the rates of
tariffs or imposts

46. With the country under incessant shortage of sugar, the


Philippine Congress enacted a law providing tax exemptions and
incentives to cane farmers without at the same time granting tax
exemptions to rice farmers who produce the staple food of the
Philippines. Is the new law valid?
a. Yes, since there is a valid classification of the taxpayers who
would be exempted from tax.
b. Yes, since sugar is more important than rice.
c. No, since the grant of exemption is construed in favor of
taxpayers.
d. No, because there is no uniformity in the grant of tax exemption.

47. Which of the following normally pays real property tax?


a. Bantay Bata, a non-profit charitable institution
b. Jesus Crusade movement, a religious institution
c. University of Pangasinan, a private proprietary educational
institution
d. UVS Corporation, a registered trading company
TAXATION TEST BANK

48. The Korean government invested P100,000,000 in a Philippine local


bank and earned P10,000,000 interest. Which is correct?
a. The income is exempt on grounds of territoriality.
b. The income is exempt due to international comity.
c. The income is subject to tax on the basis of sovereignty.
d. The income is subject to tax because the income is earned within
the Philippines.

49. Which is principally limited by the requirement of due process?


a. Eminent domain c. Taxation
b. Police power d. All of these

50. Which of the following is not an inherent limitation of the power


to tax?
a. Tax should be levied for public purpose.
b. Taxation is limited to its territorial jurisdiction.
c. Tax laws shall be uniform and equitable.
d. Government agencies and instrumentalities are exempt from tax.

51. Which of the following is not within the scope of tax


legislation?
a. Fixing the imposable tax rate;
b. Assessment of the tax;
c. Determining the subject to be taxed;
d. Determining the purpose of the tax.

52. Which of the following is not an inherent limitation of the power


of taxation?
a. International Comity; c. Territoriality;
b. Veto power of the President; d. Public purpose test.

53. Which is not subject to income tax?


a. Harvested fruits
b. Sold crops
c. Offset of indebtedness for services rendered
d. Damages recovered in a patent infringement suit

54. Which is not a tax obligation of an individual taxpayer engaged


in business?
a. File and pay monthly business tax
b. File and pay monthly income tax
c. File and pay annual income tax
d. Withhold and remit any withholding tax on income payments

55. The taxpayer realized P60,000 and P80,000 capital gains


separately on the sale of domestic stocks directly to buyer. A lone
capital loss of P10,000 was sustained during the year. What is the
annual capital gains tax due to be filed through BIR Form 1707A?
a. P 0 c. P 8,000
b. P 1,000 d. P 9,000

56. A dealer in securities made a disposition of real properties for


P6,000,000. The property has a zonal value of P5,000,0000 and
assessed value of P3,000,000. The same property was acquire for
P7,000,000 and has a present appraisal value of P6,500,000 at the
date of sale. What is the capital gains tax to be filed through BIR
Form 1706?
a. P 0 c. P 360,000
b. P 300,000 d. P 390,000

57. The residence of Mang Pedro is being expropriated by the


government to be used in road widening. The property has a zonal
value of P5,000,000. The citys assessed value on property
TAXATION TEST BANK

improvement was P2,000,000. Mang Pedro bought the lot for P2,000,000
and incurred P1,500,000 in building his residence. What is the best
alternative for Mang Pedro to save from taxes?
a. He should opt to be taxed at regular tax and claim tax exemption.
b. He should opt to be taxed at capital gains tax and claim tax
exemption.
c. He should enter a contract of lease with the government.
d. He should question the validity of the expropriation law.

58. The Japanese government invested in the stocks of San Miguel


Corporation by purchasing P1,000,000 worth of stocks from the stock
market. Japan later sold the same directly to the Yuchengco group
for P3,000,000 when the stocks were selling at P4,000,000.

Which is correct?
a. The P1,000,000 gain is subject to capital gains tax.
b. The transaction is subject to capital gains tax to the excess of
the higher of fair value and selling price and the cost.
c. This transaction is not subject to tax.
d. This transaction is subject to stock transaction tax.

59. A dealer in securities executed various trades through the


Philippine Stock Exchange and realized thereon a total gain of
P200,000. This transactions is
a. subject to capital gains tax.
b. subject to regular income tax
c. not subject to income tax
d. subject to final tax.

60. Mr. Tinio, not a dealer in properties, made the following


dispositions during the year.

Property Holding period Gain (loss)


Land 5 years P 200,000
Car 1year and 8 months 30,000
Laptop 8 months (8,000)

Compute the net gain to be included in gross income subject to


regular tax.
a. P222,000 as net capital gain
b. P207,000 as net capital gain
c. P200,000 as ordinary gain and P7,000 as ordinary gain
d. P7,000 as net capital gain

61. Ms. Charots, a realty dealer, had the following dealings in


properties in 2015:

Date of Date of
Properties acquisition sale Gain (Loss)
House and lot 2/25/2010 2/27/2015 P 400,000-
Commercial lot 8/12/2011 3/14/2015 ( 100,000)
Personal car 7/18/2014 5/12/2015 80,000-
Personal i-Phone 1/14/2014 7/3/2015 ( 40,000)

Compute the ordinary gain and the net capital gain subject to
regular income tax.
a. P480,000; P0 c. P400,000; P60,000
b. P400,000; P80,000 d. P300,000; P60,000

62. What is the amount of ordinary loss?


a. P 0 c. P 100,000
b. P 40,000 d. P 140,000
TAXATION TEST BANK

63. Mr. Andonicus, a dealer of household appliances, made the


following dispositions of properties during 2015:

Date of Date of
Properties acquisition sale Gain (Loss)
Leasehold right 12/2/2012 2/27/2015 P 50,000
Taxi franchise 7/10/2010 3/14/2015 100,000
Electric oven 6/15/2015 7/15/2015 80,000
Residence 1/14/2014 7/3/2015 800,000

Compute the net capital gains subject to regular tax.


a. P955,000 c. P 155,000
b. P875,000 d. P 75,000

64. The following relate to the compensation income of a private rank


and file employee during the year:

Annual compensation income P 540,000


13th month pay 45,000
14th month pay 45,000
Total of monthly rice allowances during the year 20,000
Commission from employer 12,000
Christmas gift 8,000

Compute the total non-taxable compensation income including exempt


de minimis benefits.
a. P 0 c. P55,000
b. P23,000 d. P105,000

65. Compute the total supplemental compensation.


a. P28,000 c. P19,000
b. P25,000 d. P13,000

66. Compute the exempt de minimis benefits.


a. P18,000 c. P26,000
b. P23,000 d. P50,000

67. Compute the gross taxable compensation income.


a. P570,000 c. P553,000
b. P565,000 d. P540,000

68. Mr. Cute is a top executive at The Real Company. After years of
dedicated and passionate service, he met the vesting condition of
his employers stock option plan (ESOP) where he is entitled to buy
10,000 of his employers share at a strike price of P100. Mr. Cute
exercised the option when the share of his employer was selling
P150/share. He eventually sold this to another employee of the
company for P180 per share.

Compute the compensation income.


a. P 0 c. P 500,000
b. P 300,000 d. P 800,000

69. In the immediately preceding problem, compute Cutes capital


gains tax.
a. P 0 c. P 45,000
b. P 25,000 d. P75,000

70. Markus Ngineus, single, is a managerial employee of Microna &


Softpa Company. He received the following employee benefits in 2014:

Salaries P 4,000,000
Stock bonus 800,000
TAXATION TEST BANK

Fixed allowances 200,000


Car designated for the use of Markus 2,500,000
House and lot, transferred in the name of Markus 5,000,000

Compute the taxable income of Markus.


a. P12,450,000 c. P 4,950,000
b. P7,450,000 d. P4,750,000

71. In the immediately preceding problem, compute the fringe benefit


tax for the year.
a. P1,176,471 c. P2,470,588
b. P2,352,941 d. P3,529,412

72. The following relate to the net income of the audit firm of Mr.
Trinidad, a single taxpayer with two dependent children:

Professional fees P 500,000


Long-term capital gain 80,000
Short-term capital gain 45,000
Ordinary gain 20,000
Long-term capital loss ( 90,000)
Short-term capital loss ( 30,000)
Ordinary loss ( 40,000)
Other business expenses ( 200,000)
Net income P 285,000

Compute his taxable income.


a. P 290,000 c. P 210,000
b. P 190,000 d. P 235,000

73. Shown below is the summarized result of operations of Mr. Ohas


business:

Sales P 700,000
Cost of sales 300,000
Gross profit P 400,000
Capital gain on the sale of land 100,000
Total gross income P 500,000
Other deductible expenses 100,000
Contributions expenses:
- Government priority project 50,000
- Non-accredited non-profit institution 45,000
- Foreign foundation 25,000
Net income P 280,000

Compute his taxable income.


a. P 230,000 c. P 170,000
b. P 255,000 d. P 270,000

74. Exempt corporations are nevertheless subject to 30% tax on income


from
a. related activities.
b. unrelated activities.
c. both related and unrelated activities.
d. neither related and unrelated activities.

75. Which is not taxable on unrelated activities?


a. Government agencies
b. Non-profit corporations
c. Government-owned and controlled corporations
d. Non-profit schools
TAXATION TEST BANK

76. The income from properties of exempt corporations is considered


income from
a. related sources.
b. unrelated sources.
c. either related or unrelated activities at the discretion of the
examiner.
d. either related or unrelated activities depending on the nature of
the properties concerned.

77. The classification rule is not relevant to a


a. cooperative.
b. farmers association.
c. government school.
d. profit-oriented agricultural organization.

78. An allocation of common expenses between related and unrelated


activities is made to properly reflect taxable income. This
procedure is required only of
a. domestic corporations.
b. resident foreign corporations.
c. exempt corporations.
d. non-profit hospitals.

79. The following relates to a taxpayer:

Sales P 1,000,000
Less: Cost of sales 450,000
Gross income from operations P 550,000
Add: Non-operating income
Dividend income domestic 50,000
Interest income bank 20,000
Gain on sale of domestic stocks 30,000
Gain on sale of office equipment 20,000
Total gross income P 670,000
Less: Expenses
Interest expense P 40,000
Salaries expense 150,000
Depreciation expense 50,000
Contribution expense 80,000
Pension contribution 50,000
Provision for bad debts 15,000
Entertainment expense 10,000
Office supplies 12,000
Loss on sale of patent 40,000
Total P 447,000
Net income P 223,000

Half of the contribution to pension is funding of prior service


cost. There was a write-off receivables totaling P12,000 during the
year. The contribution was made to an accredited civic organization.

What is the total regular allowable itemized deduction?


a. P 354,600 c. P 369,900
b. P 317,910 d. P371,100

80. Compute the taxable income assuming the taxpayer uses OSD.
a. P 620,000 c. P 520,000
b. P 550,000 d. P 570,000

81. Compute the total deductions assuming the taxpayer is a


corporation using OSD.
a. P 220,000 c. P 240,000
b. P 228,000 d. P 268,000
TAXATION TEST BANK

82. An individual taxpayer with two dependents reported the following


income:

Gross taxable compensation income P 200,000


Gross income from operations 300,000
Ordinary gain 130,000
Interest income from investment in bonds 50,000
Royalty 20,000
Total income P 700,000

Ordinary loss P 60,000


Capital loss 20,000
Contribution to a non-profit organization 70,000
Donation to governments priority activity 40,000
Rent expense 17,000
Interest expense 10,000
Other deductions 200,000
Total expenses P 417,000
Net income P 283,000

Assuming that the rent expense pertains to the rental of the


residence of the taxpayer, compute the allowable deductions against
gross income?
a. P 327,000 c. P 351,000
b. P 331,000 d. P353,000

83. Assuming that the rent expense pertains to the rental of the
residence of a managerial employee, compute the total deductions.
a. P 312,000 c. P 353,500
b. P 324,500 d. P 306,300

84. Mr. Roger is a managerial employee at Curad International. He is


paid the following benefits during the year:

Salaries, net of P8,000 PhilHealth, P12,000 SSS


and P4,000 HDMF and P10,000 withholding tax P 970,000
Fixed allowances 40,000
13th month pay and other benefits 98,000
Fringe benefits (residential rentals) 102,000

Mr. Roger has a senior citizen mother and a disabled brother who are
dependent upon him for chief support.

Compute the taxable compensation income.


a. P 1,036,000 c. P 961,000
b. P 936,000 d. P 986,000

85. Compute the fringe benefit tax.


a. P 0 c. P 48,000
b. P 72,000 d. P 24,000

86. Assuming Curad International is a regional operating headquarter


of a multinational corporation, compute Mr. Rogers income tax on
compensation.
a. P 155,400 c. P 117,000
b. P 259,000 d. Indeterminable

87. Using the same facts in the immediately preceding problem,


compute the fringe benefits tax.
a. P 34,000 c. P 17,000
b. P 18,000 d. P 9,000
TAXATION TEST BANK

88. Which is not subject to final tax to a corporation?


a. Interest income Foreign currency deposit
b. Royalty
c. Prizes
d. None of these

89. The following data relates to a corporate taxpayer:

Philippines Abroad Global


Gross receipts P 4,000,000 P 3,000,000 P 7,000,000
Direct cost of services 2,000,000 1,500,000 3,500,000
Expenses 1,200,000 1,000,000 2,200,000
Net income P 800,000 P 500,000 P 1,300,000
Income tax paid P 165,000

Compute the income tax still due if the taxpayer is a domestic


airliner.
a. P 390,000 c. P 240,000
b. P 175,000 d. P 0

90. Compute the income tax due if the taxpayer is an international


carrier whose country taxes international carriers 1.5%.
a. P 105,000 c. P 60,000
b. P 100,000 d. P 20,000

91. A non-profit hospital which started operations in 1990 has the


following results of operations in 2016:

Hospital Non-hospital Total


related related
Gross receipts and sales P 300,000,000 P 200,000,000 P 500,000,000
Cost of services and 280,000,000 _140,000,000 420,000,000
sales
Gross income P 20,000,000 P 60,000,000 P 80,000,000
Less: Expenses 40,000,000 20,000,000 60,000,000
Deduction 12,000,000 6,000,000 18,000,000
incentives
Net income (P32,000,000) P 34,000,000 P 2,000,000

Compute the income tax due.


a. P 1,600,000 c. P 1,200,000
b. P 600,000 d. P 10,200,000

92. Assuming the above hospital is a government hospital, compute the


income tax due.
a. P 0 c. P 1,600,000
b. P 600,000 d. P 10,200,000

93. A corporate taxpayer had the following income on its fifth year
of operations:

Within the Without the


Phils. Phils. Total
Gross receipts and sales P 300,000,000 P 200,000,000 P 500,000,000
Cost of services and sales _ 180,000,000 100,000,000 280,000,000
Gross income P 120,000,000 P 90,000,000 P 210,000,000
Less: Expenses 114,000,000 40,000,000 154,000,000
Net income P 6,000,000 P 50,000,000 P 56,000,000

Total of BIR Form 2307s P 400,000 400,000


Income tax paid *1,500,000 12,000,000 13,500,000

*Paid through BIR Form 1702Q


TAXATION TEST BANK

Assuming the corporation is a domestic corporation, compute the tax


still due per BIR Form 1702-RT.
a. P 0 c. P 4,400,000
b. P 2,900,000 d. P 14,900,000

94. Assuming the corporation is a resident foreign corporation,


compute the income tax still due (refundable).
a. P 0 c. P 500,000
b. (P 100,000) d. P 300,000

95. The Calintaan Corporation had the following historical MCIT and
RCIT data:

2013 2014 2015 2016


MCIT P 120,000 P 200,000 P 190,000 P 170,000
RCIT P 110,000 P 220,000 P 0 180,000

Basing solely on the information provided, what is the tax due and
payable respectively in 2013 and 2014?
a. P120,000; P220,000 c. P120,000; P210,000
b. P120,000; P100,000 d. P110,000; P220,000

96. In the immediately preceding problem, what is the tax due and
payable respectively in 2015 and 2016?
a. P190,000; P 0 c. P 0; P 0
b. P190,000; P180,000 d. P170,000; P 0

97. The following relates to Gandabebe Co., a domestic corporation:

Minimum corporate income tax P 164,000


Allowable deductions 7,600,000
Creditable withholding tax 52,000
Estimated income tax payments 87,000

What is the income tax still due to be filed through BIR Form 1702-
RT?
a. P 0 c. P 41,000
b. P 25,000 d. P112,000

98. A corporate taxpayer had the following data on its fifth year of
operation:

Philippines Abroad Total


Sales P 2,000,000 P 3,000,000 P 5,000,000
Less: Cost of services 1,200,000 1,800,000 3,000,000
Gross income from operation P 800,000 P 1,200,000 P 2,000,000
Interest on deposits 50,000 250,000 300,000
Total Income P 850,000 P 1,450,000 P 2,300,000
Less: Business expenses 800,000 1,300,000 2,100,000
Net income P 50,000 P 150,000 P 200,000

What is the tax due assuming the taxpayer is a domestic corporation?


a. P 60,000 c. P45,000
b. P 46,000 d. P40,000

99. In the immediately preceding problem, what is the tax due if the
corporation is a resident foreign corporation?
a. P 0 c. P16,000
b. P15,000 d. P17,000
TAXATION TEST BANK

100. Hehe Inc., a domestic corporation, was assessed by the BIR for
improperly accumulated earnings tax. Relevant to the determination
of the IAET are the following data:

Gross income P 4,000,000


Allowable deductible expenses 3,200,000
Interest income, net of tax 40,000
Gain on sale of domestic stocks, net of tax 60,000
Dividends declared 400,000
Common stocks, excluding P200,000 share premium 300,000
Retained earnings, end 500,000

What is the improperly accumulated earnings tax?


a. P 36,000 c. P 16,000
b. P 26,000 d. P 20,000

101. La-View Trading Corporation reported the following on its fifth


year of operation:

Sales, net of 1% withholding tax P 4,950,000


Cost of sales 2,000,000
Interest from deposit, net of tax 75,000
Gain on sale of domestic stocks directly to buyer 150,000
Casual rent income, net of 5% creditable withholding tax 95,000
Interest income from advances to employees 50,000
Business expenses 3,100,000
Estimated quarterly tax payments 10,000

Compute the income tax still due or (refundable).


a. P53,000 c. (P2,000)
b. (P50,000) d. P15,000

102. Aleppo Corporation is on its fifth year of business operation


when it was assessed by the BIR for improperly accumulating profits.

Gross income P 2,000,000


Business expense 1,400,000
NOLCO prior years 500,000
Dividend income - domestic 30,000
Gross interest income - bank 50,000
Gain on sale of domestic stocks directly to buyer 200,000
Gain on sale of land classified as capital asset
(Selling price = P2,000,000; fair value = P2,500,000) 500,000
Dividends declared 100,000
Appropriation for treasury stocks 50,000
Appropriation for plant expansion 150,000

Aleppo has P2,000,000 in common stocks, exclusive of P500,000 share


premium, and beginning retained earnings of P1,900,000.

Compute the improperly accumulated earnings tax.


a. P 86,500 c. P 60,000
b. P76,500 d. P 74,500

103. A resident foreign corporation earning purely active income


reported the following since it started operation in 2015:

2015 2016
Profit after tax P 200,000 P 150,000
Remittance 80,000 300,000

Compute the branch profit remittance tax in 2016.


TAXATION TEST BANK

a. P 12,000 c. P 45,000
b. P 38,000 d. P 40,500

104. Reek Review Center Inc. provides preparatory review services for
professional examinees. Reek had the following expenses:

Salaries of reviewers P 800,000


Administrative staff salaries 80,000
Marketing salaries and other expenses 150,000
Rent expense on review rooms 300,000
Rent on administrative offices 100,000
Printing costs of reviewee handouts 100,000
Classroom & library electricity expense 30,000
Office utilities 40,000
Classroom supplies expense 5,000
Loss on sale of old chairs 15,000
Interest expense 50,000

Compute the amount of direct cost of services to be presented in the


income tax return.
a. P1,230,000 c. P1,235,000
b. P1,325,000 d. P1,285,000

105. Xhelsy Drugstore Inc. recorded a P1,200,000 total deductible


expense and the following sales:

Customers
Regular Senior citizens
Gross sales P 5,000,000 P 1,200,000
Cost of sales 3,000,000 800,000

Xhelsy adopts a policy of giving senior citizens a 25% discount.


Consequently, it granted P300,000 total senior citizens discounts
during the period.

Compute the taxable income.


a. P1,200,000 c. P 960,000
b. P1,100,000 d. P 900,000

106. In 2016, Baguio Realty Corporation participated in the Adopt-a-


School Program by contributing its services to a public school in
La Trinidad, Benguet. The agreed value fixed in the memorandum of
agreement for the construction of the public school building was
P1,000,000. However, Baguio Realty was able to complete the same at
a total cost of P800,000. The Adopt-a-School Program is a priority
program in 2016.

Compute the total allowable deduction from the above contribution.


a. P1,200,000 c. P 1,000,000
b. P 800,000 d. P 900,000

107. An individual taxpayer compiled the following income, expense and


personal exemptions.

2013 2014 2015


Compensation income P 20,000 P 220,000 P 80,000
Business gross income 470,000 400,000 500,000
Deductions 500,000 420,000 420,000
Personal exemptions 50,000 50,000 100,000
TAXATION TEST BANK

Compute the taxable income in 2014.


a. P170,000 c. P 160,000
b. P150,000 d. P 140,000

108. Compute the taxable income in 2015.


a. P10,000 c. P 70,000
b. P20,000 d. P 60,000

109. A taxpayer had the following interest expense and interest income
in 2016:

Interest expense on bank loan P 100,000


Interest income from time deposit, gross 10,000
Interest income from promissory notes 40,000

Compute the allowable deduction for interest expense.


a. P 96,700 c. P50,000
b. P 83,500 d. P 100,000

110. The Crosby Manufacturing Corporation usually bills its foreign


branch at cost; however, it entered into an advanced pricing
agreement (APA) with the BIR which fixed its cross-border pricing to
its foreign branch at 150% of cost.

Crosby compiled the following costs and sales during the year:

Sales through the foreign branch:


Philippines Branch
Sales P 7,000,000 P 12,000,000
Less: cost of sales 7,000,000 7,000,000
Gross income P 0 P 5,000,000

Sales to unassociated domestic enterprises:


Philippines Branch
Sales P 3,000,000
Less: cost of sales 1,200,000
Gross income P 1,800,000
Total gross income P 5,300,000

Using the advanced pricing agreement, compute the total gross


income subject to Philippine taxation?
a. P 11,300,000 c. P 8,800,000
b. P 7,800,000 d. P 6,800,000