MoinT FC. Vilaroman Bide. #73 P. Campa St cor Espana, 227 aan yitaroman dg: #73 Ps err nanin cor Diego Siang, Baguio ity # (074442 Branch: Budel BION Vor add: ere_ace@yanon May 2014 BATCH BUSINESS LAW & TAXATION ) FIRST PRE-BOARD EXAMINATION skET BEB JAN. 30, 2074; 10:30AM -12:30PM INSTRUCTIONS: Select the comect answer for each of the following ques! Ieentby Shading the corresponding letter of your choice on the answer sh ALLOWED. Use Ponicl No. 2 only. 1, Thru some mistake on the part ofthe bank personnel, Bonnie was given Php This situation will be governed by the provisions of the law on: ‘A. Contracts ‘C. Obligations B. Quasi-delicts D. Quasi-contracts 2. Bong obliged himself to give Biboy a specific car on Jan. 14, 2014, stipulating that Bong is liable even if the thing 1s lost due to fortuttous event and without the need of a demand. On due date, the car got lost due to fortuitous event. Which is correct? ~* ‘A. The obligation is extinguished due fortuitous event B, Biboy can compel Bong to deliver another car CC. Biboy can require another person to deliver a car with expenses chargeable to Bong 1D. Obligation is not extinguished but converted into monetary. consideration 3, 1* STATEMENT ~ Ifthe obligation consists of delivering determinate things, the creditor fas 3 real right ver its accessions and accessories even though they may not have been mentioned in the agreement. 3” STATEMENT ~ bevessories are anything produced spontaneously or through human labor A. 1 statement is true, 2 statement false C. Both statements are false B, 1% statement false, 2” statement true D. Both statements are true 4. The condition that some event happen at @ determinate time shail the obligation as soon as the time expires or if it has become indubitable that the event will not take place. A. Extinguish B, Suspend °C, Give rise to . Toll 5, 1% Statement ~ The obligation to finish a case study Is an example of a real obligation 2° Statement ~ The stipulation in the contract to the effect that the debtor should remain as a servant in tthe house and in the service of her creditor so long as she had not pald her debt, is valid A. False, faise 5 C. True, true : B, True, false D: False, true 6. This is an obligation with a resolutory condition: Til give you P10,000 if you pass the October 2014 CPA board examination Til give you my car now, but should you fall in any of your subjects, your ownership will cease and it will be mine again 1 give you P10,000 on Christmas day of 2014 Tli give you P10,000 if A dies of heart attack 7. Atoy granted a loan of 100,000 to Bitoy guaranteed by a mortgage executed over the car of Bitoy. The obligation is due for payment on December 31, 2013. On June 26, 2013 the car was totally destroyed by typhoon Toners”, i on m ly 6 2ois Atoy will demand payment of the loan: edema id. The obligation Is one with i oa domanc ol te bev. Th 9 one with a definite date for payment and until that date B. The cemang wil not be valid. The obigation was lost through a fortuitous event and the obligation was © The demand The deme ed valid. The obligation became due at once because the guaranty was lost through @ D, The demand is valid. The obligation became due at once because from the tenor benefit, the credit given the right to demand performance even before the due date stipulated. . ners 8, Which of the following illustrates resol ‘A. A will support B until end of 2010 eee patio? 'R Awil support B if C will marry B tions. Mark only one answer for each ‘ect provided. STRICTLY NO ERASURES 10,000 instead of Php9,000. po =>a u + Fust Pre-board Exandaotion may 2014 Batch BUSINESS LAW § TAXATION r 480" peys an obligation that has prescribed: z mat towing It has Prescribed, Ason can recover on the ground of solutio inde! ‘mowing it has prescribed but still voluntarily paid, Ason cannot recover for this would be a case of mature! obfigation A Bom Lard 2are true C. Only 2 Is tue 5. Oniy dis tue D. Both 1 and 2 are false A, 5 and C are jomntly indebted to X in the amount of P30,000,00. Before due date, A becomes insolvent. ‘on due date, X can collect: 25,000.09 from B, and P15,000.00 from C. 2,003.99 from B, and P10,000.00 from C. [000.00 from B, or P20,000.00 from C. ,090.09 from B, or P30,000.00 from C. pom Eorgheng promised to give his laptop to Bing. Before actual delivery but after Bing demanded for the ‘seme, the mobile phone was lost through a fortuitous event. Which of the following is correct? AL The opligation is extinguished without any liability at all, &. Sings not allowed to recover from Bongbong. Song sho.td gWve Bingbing another of object which is of the same kind ©. Songs obliged to give an equivalent value of the phone plus damages. Aovie promised to sell her house and fot in Cebu to Bubbles if the latter decides to live in Cebu. This coligation s wth AL Mixed condition. . Casual condition. & Potessuive condition, D. Resolutory condition, herseff to give to Berta her car on January 1, 2014 to be delivered on July 1, 2014. There very until July 10, 2014 when the car was totally destroyed by an accidental fire. In this The obligation is extinguished by the fortuitous event ksr.c Should give Berta another car. D. The opiigation will be converted to a monetary one plus damges Aroe promised her dog to Baby on Jan 1, 2014 to be delivered on June 30, 2014. The dog gave birth to D.a3eS white in possession of Angel. In this case: L Ange! is extitied to the puppies as they were born while the dog is in her possession 2 2 He puppies were born on June 30, 2014 or after, Baby is entitled to them 3. I the puppies were bon before June 30, 2014, Angel is entitled to them A Only 1 and 2 are correct C. Only 1 and 3 are correct 8. Oniy 2 and 3 are correct D. Only 3 is correct Using te seme facts as given above, supposing the dog was sold by Angel to Baby? ‘L Argd is entitied to the puppies as they were bom while the dog is in her possession Z B25y is entitied to the puppies as the buyer is entitled to the fruits from perfection of the contract of se A oth Land 2 are true C. Only 2 is tue B. Only Lis tue D. Both 1 and 2 are false re Gy rot to recover what has voluntary been paid although payment was no longer required: A Géi obigation . natural obligation B. moral obligation D. solutio indebiti Bex 's obliged to deliver to Bert a specific Apple Mac Pro laptop. The parties stipulated that Alex could ceiver 2 specific Acer Transformer laptop as a substitute, Before due date and white Alex has not commuriceted to Bert whether he would deliver the Apple Laptop or the Acer Laptop, the Acer ‘Transformer laptop was lost due to Alex’s fault. In this case: A. Kiex's obliged to pay damages to Bert without any obligation to dellver the Apple laptop. 2. Kiex is stil obliged to deliver the Apple Laptop with damages. C. Alexis still obliged to deliver the Apple Laptop but without obligation to pay damages.4 CRO-ACE: Fist Pre-board Examination -May 2024 Batch BUSINESS LAW § TAXATION 2a. 29. 30, 3. 32. 33, 34, 35, 36, 37. 0. Alex Is obliged to pay damages to Bert or to deliver the Acer laptop at his option. 1* STATEMENT ~ A contract is the result of the conformity of wills of the parties 2™ STATEMENT — A quasi-contract is an implied contract A. 1 statement is true, 2 statement false C. Both statements are faise B, 1* statement false, 2% statement true D, Both statements are tue Delay on the part of the creditor to accept the performance of an existing obligation ‘A. compensatio morae C. dolo incidente B. mora silvend! D. mora accipiendi 1* Statement - Mora causante entities the person against whom it was employed the right to seek The annulment of the contract as fraud is one of the vices of consent. 2° Statement - Responsibility arising from fraud is demandable in all obfigations. Any waiver of an accio7 for fraud is void. A. Both statements are false. C. First false, second true. B. Both statements are true. D. First true, second false. When Berting voluntarily takes charge of the neglected business of Buboy without the latter's authorty Where reimbursement must be made for necessary and useful expenses, there is a: A. Quasi-delict C. Negotiorum Gestio B. Quasi-contract D. Solutio indebiti D Is obliged to give C a house and lot if C will not marry X within one year. Which of the following statements is Incorrect? A. D's obligation becomes demandable if the one-year period expires without C having married X. B, D's obligation becomes demandable if X dies before the one-year period expires without C having martied X. D's obligation Is extinguished if C marries X within the one-year period. D. _ D's obligation is demandable if C marries X within the one-year period, Whilch of the following combinations of conditions will render an obligation void? ‘A. Suspensive — potestative (creditor) 8. Suspensive — potestative (debtor) C. Relsolutory — potestative (creditor) 1D. Resolutory ~ potestative (debtor) ‘The juridical necessity to give, to do or not to do refers to: ‘A. Social obligation 8, Civil obligation. C. Moral obligation. ©. Natural obligation. ‘Anday bound herself to deliver to Barbie the party gown she is supposed to wear on the celebration of her 18" birthday on Jan 1, 2014. Anday failed to deliver hence:_ ‘A. she has already incurred in delay B. she will be excused by the happening of a fortuitous event C. there was no delay because there was no demand D. she must be sued by Jenny to claim damages "I will begin supporting you from the time Gloria dies of heart attack" is an example of an obligation with a A. suspensive period . _resolutory period B, _suspensive condition D. _resolutory condition Tort is: A. Quasi-contract C. Negotiorum gestio B. Quasi-delict D. Solutio indebiti38. 39. al 42, 43. 44, 45. 46. a, DRO ACE: Flrck Pre hnard Gramination May 2574 Baton BuSNESS LY TAXATION Culpa contractual ig different from culpa acuillana in >= . vcnmnnely A. Invculpa aquilana there is a preexisting obligation, while culos contractal ers DOE B. Mh lps contractual the source of eis ‘we peas: f conve, in ofze aquliane source of obligation Is the negligence of te defercart 2 cI culpa contractual the negigerce i stsarcie and romcmrert Of 8 cotres oa amniiana, the negigence is incicartal to tie performace f 2° GONTAT 1D. There tg @ negligent act or omission in culg2 contractual ard cane in culpa aquilers Negligence Is distinguished from fraud: A. Responsibility arising therafrom is demandable B. Waiver of an action to enforce liability may De waived C. Liability may be reduced by the courts D. There is deliberate intention to cause damage or prejudice May the sult fled by @ passenger who was hurt against the operator of a public utility vehice SiH prosper even Ifthe diver was acquitted by the court? A. Yes, provided he can prove the negligence of the drver. B. No, this will constitute double jeopardy which s vidatve of the Constaution No, the acquittal means thet the guilt of the accused was not proven Dy proof beyond reasonable doubt . | D. Yes, Itis sufficient for him to prove the existence of the contract of carriage and the injuries suffered. Which of the following obligations will not be extinguished by toss or destruction of a thing due? A, When the thing is lost before the debtor has incurred in de'ay 8, When the obligation is to deliver a car with plate number ABC 123 C. When the thing Is last without the Fauit of the debtor 1D. When the obligation is to deliver a brand new biack apple iphone 4gs_ Whan the delivery of a specific thing is subject to a suspensive condition and it is improved at the expense of the debtor: A, The debtor shall acquire the right over the thing. B, The creditor shall have the right to enjoy the thing as well as its fruits. 2 C. The crecitor shall enjoy the improversent only after the payment of just compensation. 1D. The debtor shall have no other right than that granted to the usufructuary When the fulfilment of the condition depends upon the sole will of the: ‘A. debtor but It Is resolutory, the obligation is void 8, debtor but it Is suspensive, the obligation is valid ©. creditor even If it is suspensive, the obligation is valid. D. debtor, it is always void ‘The receipt of the principal by the creditor, without reservation with respect to the interest, shail give rise tar ‘A. conclusive presumption that said interest has been paid 8. disputable presumption that the creditor is paid as to the principal amount C. conclusive presumption that the creditor is not paid as to the principal amount 1D. disputable presumption that said interest has been paid ‘An action for the rescission of contracts entered into by debtors to defraud creditors. A. accion publiciana . accion pauliana B, accion quanti minoris D. accion redhibitoria, ‘Andoy owes Bltoy P500,000.00 payable on December 31, 2014, Which of the following is correct? A. If Anday dies before December 31,2014, the obligation is extinguished 8. _ If Andoy dies before December 31,2014, Bitoy can collect from the heirs of Andoy. . IF Bitoy dies, his heirs can recover from Andoy. D. If both Andioy and Bitoy die, the heirs of Bitoy can collect from the heirs of Andoy. Ifa borrower lends the object to a third person, or saves yperty Instead borrowed, ‘shall be llable even In case of fortuitous event, because em pcpatyf ee ies ‘A. The nature of the obligation requires the assumption of risk. B, The parties have expressly stipulated such liability, szr mB Page $ of 12CRE-ACE: First Pre-board Exanination -May 2014 Baten BUSINESS LAW § TAXATION C. The law expressly so provides. D. He is automatically guilty of legal delay the debtor shall lose such benefit in the 48, If the period was established for the benefit of the debtor, a re unless he gives a guaranty or security for the debt. 8: He cos no rh era ae mpaed rough fis own fu D. He attempts to abscond in an obigation to give subject toa period or condition, the obigation to deliver arises arrives or the concition Papper oo do it, a specific performance case against 49, _ 1% statement ~ to do something fails from the moment the term 2" statement - If a person obligated him will prosper. A Both statements are false. C. First false, second true, B. Both statements are true. D. First true, second false. gainst a thief, the car he stole was lost through an accidental During the pendency of the criminal case a: fire, this will result to: "A extinguishment of the obligation because an accidental fre is always a fortultous event. B. extinguishment of the obligation because all persons can avail of the remedies provided by law C extinguishment of the civil obligation because the value of the car will be converted into the number of days the thief will serve in prison. 1 D. lability of the accused to pay the price of the car as the obligation will not be extinguished because the obligation proceeds from a criminal offense. 51. Chief Justice Marshall sald that the power to tax involves the power to destroy while Chief Justice Holmes aintains that the power to tax is not the power to destroy. Which among the following statements does not reconcile the two seemingly inconsistent opinions? "A-The imposition of @ valid tax could not be judicially restrained merely because it would prejudice taxpayer's property. B. The power to tax could not be the subject of compensation and set-off. C.An illegal tax could be judicially deciared invalid and should not work to prejudice a taxpayer's property. D. Chief Justice Marshall's view refers to a valid tax while the Chief Justice Holmes’ view refers to an invalid tax. 52. That there should be no improper delegation of the legislative authority to tax is: A. A principle of sound tax system. B. A constitutional limitation on the power of taxation. . An inherent limitation on the power of taxation. D. Both a constitutional and Inherent limitations on the power of taxation. 53. Inheritance tax is imposed on the privilege to: A. Transfer property inter vivos. 8B, Transfer property mortis causa, 54. Which among the following distinguishes an estate tax from other Kinds of taxes that are presently Imposed under the provisions of the NIRC of 1997? A. It Is a tax imposed on the privilege to transfer property ownership. 8. Itisa tax that is imposed upon gratuitous transfers. C. Itis a tax that is imposed upon the net value of the properties that are transferred. D. Itis a tax that Is Imposed only upon the death of a person. | ‘55. Donor’s tax Is img i " A. Tranter property teres. B. Transfer property mortis causa, C. Receive property inter vivos. D. Receive property mortis causa. C. Receive property inter vivos. D. Receive property mortis causa.Ti ve ORC-ACE: First Pre-board Examination ~May 2014 Batch BUSINESS LAW § TAXATION 56, Statement 1. Symbiotic relations Is the reason why the government could impose taxes on the incomes of Tesident citizens derived from sources outside the Philippines, ‘Statement 2, Jurisdiction Is the reason why citizens must provide support to the State so that latter could continue to give protection. A. Both statements are true. B. Both statements are false. €. Only statement 1 is correct but not statement 2. D, Only statement 2 is correct but not statement 1. 57. Noynoy died leaving several parcels of land, Before the properties are distributed to his heirs, the tax to be paid is known as: A. Donor’s tax. B. Inheritance tax. C. Estate tax. D. Transfer tax. 58. Your two co-reviewees are engaged In a discussion as to what are included in the inherent limitations on the power of taxation. They decided to make you their referee In order to enlighten them on which of the following Is generally not included among the inherent limitations. What should you choose from among the following? ‘A. Double taxation B. Recognition of comity €. No improper delegation of the legislative authority to tax. ©. The taxing power should only be exercised within the territorial boundaries of the taxing authority. 59. A tax does not meet the public purpose limitation if it: A. Is for the welfare of the nation or greater portion of the population. B. Affects the areas as a community rather than as individuals. GIs for the benefit principally of limited subjects or objects. D. Is designed to support the services of government for some of its recognized objects. 60. Among the nature of taxation Is that It Is an inherent power being an attribute of sovereignty. Which ‘among the following Is not among its manifestation as such inherent power? ‘A. Courts not Issue an injunction to enjoin the collection of taxes. 8, There should be no improper delegation of the power to tax. , Taxes may be imposed even without a constitutional grant. D. The State has the right to select the subjects and objects of taxation, 61. Consider the following statements: I. The power of taxation involves the promulgation of rules. Il. The State has the power to impose taxes even without a constitutional ant. nt Tees are based’ upon the lifeblood theory. JV, There should be no improper delegation of the power ta tax. Choose the correct answer from among the following choices: A. Statements I and II are both manifestations of taxation being legislative in nature. B, Statements II and IV are both manifestations of taxation being legislative in nature. C. Statements I and IV are both manifestations of taxation being inherent in nature. ©. Statements If and III are both manifestations of the inherent nature of taxation. 62. The NIRC of 1997 imposes different kinds of taxes on dispositions of property. These are VAT, OPT, excise taxes, estate taxes, donor's taxes, etc, Which among the following transactions would be subject to a transfer tax? A. Sales of articles that are exempt from the VAT. 8. Sale of cigars and cigarettes by a wholesaler. C. Sale of an automobile for less than an. adequate and full consideration. D. Sale of shares of stock that are listed and traded at the local stock exchange.+ CRO-ACE: First Pre-boavdl Examination -May 2014 Batch BUSINESS LAW § TAXATION 63, A person may be imprisoned for: ‘A. Non-payment of a poll tax. B. Fallure to pay a debt. C. Non-payment of his income tax. D. Failure to pay his community tax. 64. Transfer tax is a tax imposed on the privilege to transfer property ownership: A. Through a will. B. Mortis causa. . Inter vivos. D. Gratuitously. ial lot with a BIR determined zonal valuation of P1 million. In 2013 he sold the same to Y ¢ for Pl millon subject to the condition that while X Is still alive he shall be allowed to use part of the Property as a garage for whatever personal car he would own but limited only to one car. The proper taxes attendant to the sale were paid, X died In 2014, What should be the treatment of the value of the Sah jot in the preparation of the estate tax return, i incuce ne * retained the right to enjoy a portion of the property which right ends with his death, 8. Include because there is no showing in the problem that the title to the property was already transferred to Y. C. Exclude because there was a bona fide sale of the residential lot for sufficient and adequate consideration. ©. Exclude because the execution of the deed of sale and the payment of the taxes effectively deprived X of ownership over the property. 586. Which among the following transfers of property, by trust or otherwise, during the lifetime of the transferor is not included as part of a deceased transferor’s gross estate? ‘A. When the deceased transferor has reserved to himself the power to alter, amend, revoke or terminate the transfer and such power is relinquished in contemplation of the transferor's death, 5. Where the deceased transferor has reserved for himself the power to determine who could alter, amend, revoke or terminate the transfer and such power is relinquished In contemplation of the transferor’s death. C. Where the deceased transferor had made the transfer through a bona fide sale and for adequate consideration but he has made a reservation of the power to alter, amend, revoke or terminate the transfer prior to his death. D. Where the deceased transferor had made the transfer but he has reserved for himself the enjoyment thereof subject to his death to any change by himself or in connection with any other person could alter, amend, revoke or terminate the transfer and such power is relinquished In contemplation of the transferor’s death. 57-A Filipino citizen died abroad leaving the following properties: house and lot in Texas, USA; shares of stock Benen figuel Corporation and PHILEX, both local companies; bank deposits in New York CIty and in the Fark of te Philippine Islands in Makati; a Toyota Camry sedan registered in the name of his con aged 21 Years. He was buried in Manila and expenses were incurred to bring the remains home and for his funeral, ‘Which among the above properties should be excluded from his estate tax return? ‘A. The house and lot in Texas, USA. 8. The shares of stock in San Miguel Corporation, C. The bank deposits in New York City, D. The Toyota Camry sedan. 58, Who amang the following donees is considered a stranger for e purposes of donor's taxation, A. A first cousin of the donor, C. The donor’s great grandchild, 'B. The brother of the donor's father. D. The mother of the donor's spouse. 69. Who among the following is not a stranger for of donor's taxati ‘A. The donor's father-in-law, pegcbarbeetairs tyne C. The donoi’s great grandfather. 8. The donor's step mother. D. The husband of the donor's sister.ees a 1 CRC-ACE: First Pre-voard Examination -May 201+ Batch Business LAW, area a 70. An American citizen was @ permanent resident of the Philippines. He died in Mlaml, Florida. He ie a shares of Meralco; 2 condominium unitat the Twin Towers Buang ot Pasi Het Mantel USA; a lease contract over , USA, > SE ee eng ni ts shall be excluded In the Estate Tax Retum to be filed with the BIR’ ‘A. The value of the Florida, USA condominium, B. The value of the Pasig, Metro Manila condominium. C. The value of the house and lot located in California, USA. D, The value of the 10,000 Meralco shares. TILA Chinese citizen met an accident and died while visiting the Philippines. Which among the following properties are to be included as part of his gross estate for Philippine tax purposes? A. His house and lot in China, . B. Acondominium unit In California, U.S.A. C. Shares of stock in Philippine Long Distance Telephone Company (PLDT). D. Accident insurance issued by a Philippine insurance company payable to his wife. jes: in ‘An American domiciled in South Aftica, died in 2014. He left the following properties: a. 2 rest house 72 a yida, USA; b. a vila In Switzerland; c. shares of stock in (1) Hong Kong Corporation; (2) San igual Brewery, a Philippine corporation; (3) An American Corporation operating in and with office at Makati, & “Time deposits with PNB; e. Philippine Treasury bills; f. Lease contract over his Manhattan apartment least to the Philippine consulate. Which of the following properties forms part of his gross estate in the Philippines? A. The lease contract. B. The shares of stock in the American corporation. C. The rest house in Florida, USA. : D. The villa in Switzerland, 73. Jose Ortiz owns 100 hectares of agricultural land planted with coconut trees. He died on May 30, 2014, Prior to his death, the government, by operation of law, acquired under the Comprehensive Agrarian Reform Law all his agricultural lands except five (5) hectares. Upon the death of Ortiz, his widow asked you how she will consider the 100 hectares of agricultural land In the preparation of the estate tax return. What advice will you give her? A, Exclude the 100 hectares because Jose Ortiz did not have any interest in the said property at the time of his death, B. Include the 100 hectares in the estate tax return but deduct the same property as deemed taken for public use, - . Include only the five (5) hectares which were retained because this is the extent of the interest that Jose Ortiz had in the said property at the time of his death. D. Exclude the 100 hectares because these are properties that were taken for public use by operation of law. 74.\Villar, a real estate dealer, sold a piece of land for a selling price of P800,000 on installment basis. The and was acquired by Villar a year ago for P500,000, exclusive of VAT. The terms of the sale are: Downpayment ~ April 2014 100,000 Installment due — Oct. 2014 100,000 Installment due ~ April 2015 200,000 Installment due - Oct. 2015 > 200,000 Installment due - April 2016 200,000 ‘The VAT output tax for 2014 amounts to: ‘A. P96,000 B, P 24,000 C. P12,000 _D. None of these 75. Assume the same facts in No. 74, except that the down payment amounted to P300,000. The VAT output tax for 2014 amounts tor ne NStaiment payment In 2014 ‘A. 96,000 B. P 36,000 C. P304,000 —-D. None of these 76. During the current calendar year, Jekell has the followin zi 1 1g transactions: jon 2 Donated @ P150,000 diamond ring to his adopted son who Is getting married on March 15 of the Mar. 15 Sold his motorbike valued at P500,000 for P200,000 to his uncle.1 CRC-ACE: First Pre-board Exaratnation ~ may 2044 Batch BUSINESS LAW § TAXATION ‘Apr. 15 Sold his residential house to Fatman, his best friend, for P1,500,000. The falr market value of the residential house at the time of sale was P2,000,000. Jun. 15 Donated P100,000 to Makati City for public purpose and P50,000 to his sister who graduated from Ateneo, : “The aggregate taxable net gifts for the current calendar year to: Relatives Stangers Relatives Stangers A. P490,000 P600,000 C. P500,000 500,000 8. P490,000 © ©. P500,000 ° 77. The gross sales/receipts of Philex for the year are as follows: From grocery store = : P1,500,000 From sale of gold to BSP : 419,500 ot 500,000 From'passenger jeepneys —- i Which of the following statements is correct? A, Philex is required to register for VAT because the basis for registration Is the total gross sales/rec« ‘of 2,419,500, |B. Philex may elect to register for VAT because his annual gross sales/receipts as the basis for registration ~amount to only P1,919,500. . Philex may elect to register for VAT because his annual gross sales/receipts as the basis for registration amount to only P1,500,000. D. None of the above. 78."X" Corporation took a Keyman insurance on the life of Its President, Mr. Rodel Cruz, designating Mr. Cruz’ wife as its revocable beneficiary. In the event of death of Mr. Cruz, will the insurance proceeds form part of the gross estate of Mr. Cruz? A. Yes because Mrs. Cruz was designated as a revocable beneficiary. B. No because the premium was not paid by Mr. Cruz. . Yes because the insurance proceeds form part of the benefits of Mr. Cruz enjoyed by him as an ‘employee of "X” Corporation. No because Mr, Cruz had no interest in the proceeds at the time of his death hence this Is not property that he transferred at the time of his death. 79. When Procopio died, he left an estate valued at P10 million. His Heirs spent P700,000 for all the funeral services rendered by St. Peter Memorial Chapel, Including the expenses attendant to the wake, the coffin, cremation: services and the um where his ashes were placed, 'P300,000 out of the P700,000 funeral expenses were shouldered by friends and relatives. Which among the following amounts may be deducted from his gross estate for funeral expenses? A. P500;000 B. P700,000 c.P400,000 .P200,000 80. An American citizen who is a permanent resident of the Philippines died while on a vacation in his place of birth in the United States. Which one of the following is a valid deduction from his gross estate? ‘A, Estate taxes paid in the Philippines. : B. Income tax paid on income earned and received after his death. CC. Unpaid income taxes on salaries received by him before his death. . Real property taxes on his Quezon City condominium due after his death. 81. Vanishing deduction is availed of by taxpayers to: A. Correct his accounting records to reflect the actual deductions made. B, Reduce his gross income. . Reduce his output value-added tax liability. D. Reduce his gross estate. 82, Gary died in April, 2012 leaving all his properties to his only son Martin. Gary left no creditors. Martin promptly executed an affidavit of self-adjudication, paid the proper estate taxes and had the properties titled in his name. In August, 2014 Martin died leaving as his only heirs, his two surviving children. If vanishing deduction finds application what percentage of the value of the properties Martin Inherited from Gary should be allowed as a deduction? A. 20% B. 40% C. 60% D.80%' u ERC-ACE: First Pre-board Examination -May 2014 Bateh BUSINESS LAW § TAXATION 83. In which among the following Instances Is the filling of an estate tax return a requirement? t of the estate tax. ‘A. The gross value of the estate is P100,000 and Is exempt from the payment a B. The gross value of the estate exceeds P100,000 but is below P200,000 and is exempt from the Payment of the estate tax. . The gross value of the estate does not exceed 200,000 and is exempt from the payment of the estate tax, D. The gross value of the estate exceeds P200,000 but is exempt from the payment of the estate tax. 84. A died in June 2014 in LA, California, her last residence and domicile. She left properties consisting of i f the ff stocks in BMC, Inc., a company organized and existing under the laws of Phipgtnes wh penlpel office at Makati, MM, The estate tax due on said shares were correspondingly id to the state of California. "For Phlipine estate tax purposes what should be the tax treatment of the estate tax paid to the state of California? A. The California estate taxes are allowed to be deducted from A's gross estate. B, Since there is no showing of reciprocity then the California estate taxes should not be considere determining the Philippine estate tax, . The amount of the California estate taxes are allowed to be deducted from the Philippines estate tax that Is due from A’s estate, D. Since the California estate taxes have already been pald there Is no need anymore to pay Philippine estate taxes. 85. The commissioner of Internal Revenue may grant an extension of time for the payment of the estate tax or any part thereof, in case the estate is settled through the courts for a period not exceeding ‘A. Two (2) years from grant of the extension. B. Two (2) years from the settlement of the estate, C. Five (5) years from the settlement of the estate. D. Five (5) years from the grant of the extension, 86. A, an individual, sold to B, his brother-in-law, his residential lot with a market value of P1,000,000 for 600,000. A’s cost in the lot is P100,000. B is financially capable of buying the lot. What tax should be imposed and collected from A as a result of the transaction: ‘A. Final capital gains tax. . Real Property tax. B. Donor's tax. D. Tax on the transfer of real property. 87. Which among the following is subject to the payment of the donor's tax? AA general renunciation of a surviving spouse in his/her share in the inheritance of the deceased spouse. 8. A general renunciation by the surviving spouse of his/her share in the conjugal partnership of gains upon its liquidation as a result of the death of the other spouse. €. Aremuneratory donation where there is a legally demandable obligation. ©. Donation made outside the Philippines by a non-resident alien of property located outside of the Philippines, ‘Questions €8 to 92 are based on the following: AVAT-registered trader has the following transactions: Sales of goods to private entities, net of 12% VAT P 2, 500,000 Purchases of goods sold to private entities, gross of 12% VAT 896,000 Sales to a government owned corporation (GOCC), het of 12% VAT 1, 000,000 Purchases of goods sold to GOCC, net 12% VAT 700,000 88. How much is the withholding VAT? A. P 120,000 B. P 96,000 c. P50,000 D. None of the choices ‘89. How much Is the standard Input tax? A. P 120,000 —B. P-96,000 C._ P50,000 D. None of the choices 90. What is the treatment of the excess actual input VAT attributable to sales to GOCC ‘A. Input tax credit —_B. Expense or cost C._Income D. None of the choices 91. How much Is the creditable input tax on sale to private entities? A. P 176,000 B. P 96,000 Cc. P70,000 D None of the choices 92. How much is the VAT payable? ‘A. P 244,000 B. P 204,000 C. P 120,000 D. NoneBUSINESS LAW § TAXATION t to be sold or disposed of fora to B upon the expiry of that the fair market value of and the BIR zonal LCROLACE: First Pre-board Exavatnation -May 2044 Batch 93. died in 2004 leaving a will which directed all real estate owned by him Oo! period of 10 years after his death and ordered that the property be given. Period, Zn 2004, the estate left by A had a BIR zonal value ‘of P500,000. In 2014, pelt estate increased to P2,500,000. It was declared for taxation tn 2014 for P1,500,000 valuation was P3,000,000. 2 What value should be used for the purpose of estate taxation ‘A. P3,000,000 B. 1,500,000 C. 2,500,000 ©. P 500,000 04.0n 30 June 2012, X took out a life Insurance policy on his own life in the amount of P2,000,000. The cratums were paid from his separate property. He designated his wife, Y 95 irrevocable beneficiary to Pr 000,000 and his son 2, to the balance of P1,000,000 but, in the latter designation, reserving his right to Foo ener another, On 01 September 2014, X dled and his wife and son went to the Insurer to seat the proceeds of Xs fe Insurance palicy. Are the proceeds of the insurance to form part of the gross estate of X? estat oe proceeds would not form part of X's gross estate. The insurance company is obligated tO Pay to the named beneficiaries, thus no part of the proceeds should appertain the X's estate, B. All of the proceeds would form part of x's gross estate. The premiums were paid from the separate property of X hence the insurance proceeds are also part of his separate property subject to estate tax. ‘The proceeds though would not be taken from the named beneficiaries. : . Only the proceeds that were pald to the son would form part of X's gross estate. X retained an “incdent of ownership” In the insurance when he retained the right to revoke the designation of his son as beneficiary. . Only 2 portion of the insurance proceeds that appertain to his wife should form part of X's gross esta\e. ‘The insurance proceeds pald to the wife forms part of the conjugal partnership property hence X's share should appertain to his estate. Questions 95 to 100 are based on the following information: ‘On February 14, 2014, Kabisa died leaving the following: Exclusive properties P 2, 000,000 Conjugal real properties 2, 500,000 Funeral expenses (40% unpaid) 122,000 Judicial expenses (20% unpaid 2/27/15) 60,000 Unpaid mortgage on inherited property 30,000 Notes payable (1/2 notarized) 80,000 Claims against insolvent person (50% collectible) 400,000 "2 Proceeds of life insurance (Beneficiary ~ estate, irrevocable) 100,000 » Medical expenses (1/2 paid) 300,000 : ‘Additional information: : The exclusive property had a FMV of P500,000 when inherited 2 ¥% years ago with P80,000 unpaid ge. 95. Based on the above data, the total conjugal property Is: A, P 2,500,000 8, P 2,600,000 C. P3,000,000 D. P.2,900,000 96. The total exclusive property is: A. P-2,000,000 B. P 2,400,000 €. P3,000,000 D. 97. The total ordinary conjugal deduction is: ate A, P.662,000 B, 410,000 C. P310,000 _D, P 350,000 8. The total ordinary exclusive deduction (excluding vanishing deduction) is: A. P80,000 B. P 30,000 C. P50,000 D. P-60,000 99. The amount of vanishing deduction is * " A. P-450,000 B._P 410,000 C. P246,240 =D. P 430,500 100, The total amount of special deduction is: A. P 1,300,000 B. P 1,150,000 ¢. 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