DE LA SALLE UNIVERSITY (DLSU) Short Quiz 10

Taxation (INTAXTN) Second Term 2018-2019

Set A April 2, 2019

Name: ________________________________________________________________ Section: __________

Answers
1. 6. 11. 16.

2. 7. 12. 17.

3. 8. 13. 18.

4. 9. 14. 19.

5. 10. 15. 20.

I. Instruction: Choose the letter of the best answer from the given choices. University policies on
academic honesty as stated and inferred in the student handbook are strictly enforced.

1. The following entities are exempt from Local Business Tax (LBT), except:
a. BOI-registered entities enjoying income tax holiday incentive.
b. PEZA-registered entities subject to the 5% gross income tax (GIT).
c. PEZA-registered entities enjoying income tax holiday incentive.
d. Export-oriented enterprise selling essential commodities.

2. In general, donation of real properties is subject to:

a. Local transfer tax imposed by the province not exceeding 50% of 1% of the fair market value of the
property.
b. Local transfer tax imposed by the province not exceeding 75% of 1% of the fair market value of the
property.
c. Local transfer tax imposed by the municipalities not exceeding 50% of 1% of the fair market value of
the property.
d. The transaction is not subject to local transfer tax since there is no consideration.

3. Greenish Green Corporation had a manufacturing plant in Rosario, Cavite and head office in Pasig City. It
also maintains branches in Manila, Makati and Taguig. All its production are sold in its branches. Which of
the following statements is correct regarding its LBT?
a. Greenish Green should pay its LBT in Manila, Makati and Taguig based on the sales generated by
each branch.
b. Greenish Green should pay its LBT in Rosario, Manila, Makati and Taguig following the rules on situs
of taxation.
c. Greenish Green should pay its LBT in Rosario, Pasig City, Manila, Makati and Taguig following the
rules on situs of taxation.
d. Greenish Green should pay its LBT in Rosario and Pasig City following the rules on situs of taxation.

4. Brownies Chocolate, Inc. had deficiency LBT for the calendar year 2013. Said LBT was paid in 2017.
Which of the following statements is correct regarding surcharge and interest on deficiency LBT?
a. The deficiency LBT will be subject to 25% surcharge and 20% interest per annum.
b. The deficiency LBT will only be subject to the 20% interest per annum.
c. The deficiency LBT will be subject to 25% and 2% interest per month up to 60 months.
d. The deficiency LBT will be subject to 25% and 2% interest per month up to 36 months.

5. Which of the following taxes cannot be imposed by a city?

a. Local business tax on contractors.
b. Local business tax on exporters.
c. Local business tax on essential commodities.
d. Motor vehicle registration.

6. Under the LGC, the following local government units shall be primarily responsible for the proper, efficient
and effective administration of the RPT, except:
a. Provinces.
b. Cities.
c. Municipalities within Metro Manila.
d. Municipalities outside Metro Manila.
 7. The following are exempt from the payment of RPT, except:
a. Equipment owned by the government but used by a private entity.
b. School building owned by a non-stock, non-profit educational institution.
c. Machinery used by local water districts.
d. Building owned by cooperatives registered with the Cooperative Development Authority.

8. An individual donated a land to a non-stock, non-profit educational institution on July 1, 2018. Which of the
following statements is correct?
a. The individual is still liable to RPT which is due on June 30, 2018.
b. The land is exempt from RPT for the taxable year 2018.
c. The individual is still liable to RPT for the taxable year 2018.
d. The individual can avail RPT exemption for 2018 provided that Certificate of Tax Exemption is
secured.

9. Specter Corporation had undeclared real properties for RPT purposes. It was assessed RPT for these
properties on November 30, 2018. The deficiency RPT should be paid by:
a. November 30, 2018 so that no interest will be imposed.
b. December 31, 2018 so that no interest will be imposed.
c. December 31, 2018 but with deficiency interest starting November 30, 2018.
d. December 31, 2018 but with deficiency interest starting the subsequent year from acquisition up to 36
months.

II. Solve for the problems and provide the final answer. No solutions required. University policies on
academic honesty as stated and inferred in the student handbook are strictly enforced.

0 10. Rumpelstiltskin Company is a manufacturer of consumer products which started its business on March 1,
2018 with P100,000,000 capitalization. Its head office and plant are located in San Fernando, Pampanga.
It generated gross sales of P50,000,000 for the year 2018. How much is the LBT when it commenced its
business? The LBT rate for manufacture is 37.5% of 1%.

15,000 11. Rapunzel Corporation is a building contractor located in Pasay City which started its business 10 years
ago. It terminated its business on June 1, 2018. It generated gross receipts as follows:

2017 (January to December) P10,000,000

2018 (January to June) 7,000,000

Contractors are subject to LBT at the rate of 75% of 1% in Pasay City. Assume that Rapunzel paid its LBT
in 2017 on installment. How much is the final LBT payable upon retirement of its business.

16,125 12. Snowman Company, Inc. is a manufacturer of appliances. It paid its LBT in 2014 on time on a quarterly
basis using 2013 gross receipts of P5,000,000. However, the City Assessor assessed Snowman
deficiency LBT plus penalties because it was determined that its gross receipts for 2013 was P6,500,000.
The LBT rate is 50% of 1%. How much is the total deficiency LBT plus penalties if it is paid on December
20, 2018?

Use the following problem for the next three questions:

Mykonos Electric Company has a franchise to provide electricity in Metro Cebu. It has the following properties
which are located in various cities in Metro Cebu as of December 31, 2017:

Book value Fair market

value
Land P15,000,000 P18,000,000
Buildings 12,000,000 14,000,000
Sub-transmission and distribution
equipment 20,000,000 18,000,000
Communication equipment 10,000,000 8,000,000
Office furniture and fixtures 5,000,000 3,000,000
Transportation equipment 9,000,000 6,000,000

The following are the additional information:

· Land includes idle land with book value of P2,000,000 and fair market value of P3,000,000.
· Buildings are used both for administration and operations.
· Sub-transmission equipment includes substations (30% of total); underground and above ground
cables (20% of total); and transformers, wires, insulators and poles made of wood, concrete and steel
(25% of total). The remaining balance pertains to other specialized equipment.
 · Communication equipment comprise of specialized equipment (60% of total) and ordinary equipment
(40% of total) used in its business.
· Office furniture and fixtures include fixtures that are permanently attached to the building with book
value of P2,800,000 and fair market value of P3,000,000.

The following are the assessment levels for commercial and industrial properties for RPT purposes:

Land 50%
Buildings and other structures 60%
Machinery 80%

The various local government units where the properties are located impose maximum RPT rates under the
LGC and grant 20% discount if the RPT is paid by December 31, 2017. However, 15% discount is granted if
paid by January 31, 2018. No discount is granted if RPT is paid on or after February 1, 2018.

14,400,000 13. How much is the assessed value of sub-transmission and distribution equipment which are subject to
RPT?

345,000 14. How much is the total RPT (including other levies, if any) on the land, if it is paid on February 15, 2018?

92,160 15. How much is the total RPT (including other levies, if any) on communication equipment if it is paid on
December 15, 2017?

812,500 16. Cookie Corporation, a company engaged in trading, had the following financial information for year ended
December 31, 2017:

Gross profit P30,000,000

Operating expense 15,000,000
Scrap sales 10,000,000
Net income 25,000,000

The gross profit rate is fixed at 25%. The applicable LBT rate in the city having jurisdiction over Cookie
Corporation, is 62.50% of 1%. How much is the LBT payable to the City Treasurer on January 20, 2018?

525,000 17. Ross Manufacturing Company is engaged in the manufacture of computer products. It maintains a
manufacturing plant in Sta. Rosa, Laguna. All sales are made in its head office in Bonifacio Global City,
Taguig City. Ross generated sales amounting to P100,000,000 for the year ended December 31, 2017.
The applicable LBT rate in Sta. Rosa is 75% of 1% while 60% of 1% in Taguig City. How much is the LBT
payable to the City Treasurer of Sta. Rosa on January 20, 2018?

Use the following problem for the next three questions:

The LGU assessed Cat & Mouse basic deficiency RPT of P5,000,000 for the taxable year 2016 arising from
declared properties. Cat & Mouse paid its 2016 RPT on installment. The deficiency RPT plus penalties for
2016 was settled on October 31, 2019.

8,550,000 18. How much is the total deficiency RPT plus penalties, if any, that should be paid by Cat & Mouse?

5,000,000 19. Assuming the assessment pertains to undeclared properties and the assessment was issued on April 30,
2018. How much is the deficiency RPT plus penalties, if any, if Cat & Mouse made payment on June 30,
2018?

5,800,000 20. Assuming the assessment pertains to undeclared properties and the assessment was issued on April 30,
2018. How much is the deficiency RPT plus penalties, if any, if Cat & Mouse made payment on December
31, 2018?

GOOD LUCK AND GOD BLESS!!!