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UCP :TAXATION_FIRST PRE-BOARD EXAMINATION

Batch October 2018

UNIVERSAL COLLEGES OF PARAŇAQUE INC.


8273 Dr. A. Santos Ave., Parañaque City

Tel. Numbers: 02-820-2222/02-820-4276

TAXATION
FIRST PREBOARD EXAMINATION
August 10, 2018 (1:00 PM – 4:00 PM)
TAXATION
1. Nico, Vice-President of JJ Super Fit Corporation was given a car by his employer,
Mr. JJ Trinidad. The cost of the car given to Nico was P900,000. The fringe
benefits tax that Nico is required to pay is:
a. P423,529 c. P900,000
b. P288,000 d. P0

2. One of the following is not correct for deductibility of casualty losses from gross
income:
a. It must arise from fire, storm, or other casualty, robbery, theft, or embezzlement.
b. It must not be compensated by insurance or any form of indemnity.
c. A declaration of loss by casualty should be filed with the BIR.
d. It is of property owned by the taxpayer, whether used in business or not.

3. Jim, a Filipino citizen, migrated to the United States some eight (8) years ago and
got a permanent resident status or green card. He should pay his Philippine income
taxes on:
a. The gains derived from the sale in California, U.S.A. of jewelry he purchased in
the Philippines.
b. The proceeds he received from a Philippine insurance company as the sole
beneficiary of life insurance taken by his father who died recently.
c. The gains derived from the sale in New York Stock Exchange of shares of stock in
PLDT, a Philippine corporation.
d. Dividends received from a two year old foreign corporation whose gross income was
derived solely from Philippine sources.

4. The following data pertain to installment sales of personal property made by Dina
Bale, who regularly sells in installment, in his retail furniture store.
Year of Sale Installment Sale Profit Equal Collection in 2016
2013 P50,000 15,000 10,000
2014 P100,000 40,000 20,000
2015 P150,000 75,000 40,000
These sales were regularly made in installment by Dina Bale to her customers. Under
installment method, Dina should report gross profit for
2016 of
a. P31,000 c. P86,000
b. P75,000 d. P130,000

5. Hermes received a final assessment notice (FAN) from the BIR on December 20, 2015.
He submitted his protest and the supporting documents within the time prescribed by
the Law. After 180 days, the subsequent step/s available to him shall be:
I. Elevate the case on appeal to the CTA, alleging inaction of the CIR, within 30 days
from the 180th day since he submitted the supporting documents on his protest.
II. Wait for the decision of the Commissioner of Internal Revenue (CIR) and if adverse,
appeal the case before the CTA within thirty (30) days.
a. I only c. I and II
b. II only d. I or II

6. In our jurisdiction, which of the following statements may be erroneous?


a. Taxes are pecuniary in nature.

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b. Taxes are assessed according to a reasonable rule of appointment.
c. Taxes are levied by the executive branch of the government.
d. Taxes are imposed on persons and property within the territorial jurisdiction of a
State.

7. On October 1, 2018, Pastrana Co. leased a new residential house for the use of its
general manager. The rent agreed upon was P136,000 per month. The amount of the
fringe benefit tax monthly is:
a. P68,000 c. P36,615
b. P100,000 d. P32,000

8. Miriam Santiago, a business woman, incurred the following losses in 2006:


1. Wagering losses at Casino Filipino P86,000
Note: Wagering winnings amounted to P14,000
2. Loss on sale of company car to Red Co. 54,000
Note: Miriam Santiago owns 60% of the stocks of Red Co.
3. Loss on sale of office computers to Miriam Sto. Domingo, 40,000
cousin of Miriam Santiago

The deductible loss of Mirriam Santiago is:


a. P190,000 c. P54,000
b. P104,000 d. None

9. Which is subject to final tax?


a. Share of the distribute net income of a general professional partnership
b. Winnings not exceeding P10,000
c. Prizes not exceeding P10,000
d. Interest income from foreign bank deposits

10. Mr. Quoriput signified his intention to be taxed at 8% income tax rate on gross
sales in his 1" Quarter Income Tax Retun. He has no other source of income. His
total sales for the first three (3) quarters amounted to P3,000,000.00 with 4th
quarter sales of P3,500,000.00.

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

(8% Rate) (8% Rate) (8% Rate)

Total Sales 500,000 500,000 2,000,000 3,500,000


Less: Cost of Sales 300,000 300,000 1,200,000 1,200,000
Gross Income 200,000 200,000 800,000 2,300,000
Less: Operating Expenses 120,000 120,000 480,000 720,000
Taxable Income 80,000 80,000 320,000 1,580,000

Compute for the Annual Income Tax Payable


a. P 289,200.00 c. P 509,200.00
b. P 40,000.00 d. P 260,000.00

THE NEXT ITEM(S) IS/ARE BASED ON THE FOLLOWING


Bryant leased a land to Jose for a period of 11 years starting January 1, 2015 at
an annual rental of P12.000. Observing the provisions of the contract, Jose
constructed a building which shall become the property of Bryant at the expiration
of the lease. The construction was completed on January 1, 2018 at a cost of
P1,000,000 with an estimated useful life of 20 years.

It is also stipulated in the contract that the lessee will pay to the government
the P1,500 annual real property tax on the land starting in 2015.

11. Assuming that on January 1, 2015, Jose paid P24.000 to Bryant covering the lease
contract for two years, how much income is to be reported by Bryant in 2012?
a. 12,000
b. 13,500
c. 24,000
d. 25,500

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12. How much income is to be reported by Bryant in 2018 under the outright method?
a. 13,500
b. 1,500
c. 1,013,500
d. 1,000,000

13. How much income is to be reported by Bryant in 2018 under the spread-out method?
a. 13,500
b. 1,500
c. 1,013,500
d. 88,500

14. How much is the deductible expense of the lessee in 2018


a. 138,500
b. 63,500
c. 125,000
d. 13,500

15. Ms. Ferrer , a Financial Comptroller of JAB Company, earned annual compensation in
2018 of P1,500.000.00, inclusive of 13 month and other benefits in the amount of
P120,000.00 but net of mandatory contributions to SSS and Philhealth. Aside from
employment income, he owns a convenience store, with gross sales of P2,400,000. His
cost of sales and operating expenses are P1,000,000.00 and P600,000.00,
respectively, and with non-operating income of 100,000.00

His tax due for 2018 shall be computed as follows if he opted to be taxed at eight
percent (8%) income tax rate on his gross sales for his income from a business.
a. P 513,000 c. P 540,000
b. P 589,200 d. P 520,000

16. His tax due for 2018 shall be computed as follows if he did not opt for the eight
percent (8%) income tax based on gross sales/receipts and other non-r operating
income.
a. P 513,000 c. P 540,000
b. P 589,200 d. P 520,000

17. Donations were made on January 30, 2018 at P2,000,000; on March 30, 2018 at
P1,000,000; and August 15, 2018 at P500,000. How much is the donor’s tax due on
August 15, 2018?
a. P 210,000 c. P 30,000
b. P 195,000 d. P 90,000

18. Statement 1. A general professional partnership is exempt from income tax, but a
partner will be taxable on his share in the partnership net income, that he will
consolidate with his own income from other sources.
Statement 2. A partnership that is not a general professional partnership is
taxable as a corporation, and a partner will report his spare in the partnership
net income, as dividend income, whether actually received or not.

a. Both statements are correct


b. Both statements are wrong
c. The first statement is correct but the second statement is wrong
d. The first statement is wrong but the first statement is correct.

19. Messrs, A and B inherited an income earning property. In 2018, without dividing
the property, they had a net receipts (gross receipts less costs and expenses) of
P230.000 which they deposited in a Joint bank account. In 2018, they used the money
in the bank to purchase another income-producing property. From the net receipts of
P500.000 in 2019 from the two properties, Messrs. A and B each withdrew P100,000.
Messrs. A end B are brothers.

Which of the following statements is wrong?


a. In 2019, Mr. A and Mr. B each had a net receipts from the properties, taxable to
each as income of individual taxpayers;

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b. The income of P500.000 in 2019 is income of a partnership, taxable as income of a
corporation;
c. In 2019, Mr, A and Mr. B each had an net receipts of P250.000, taxable as income of
an individual:
d. In 2019, Mr. A and Mr. B each had a net receipts of P100.000, taxable as income of
an individual.

20. In 2018, Mr, X and Miss Y inherited income-producing properties from their mother
with a reported value of PI,000,000 to the court and the Bureau of Internal
Revenue, and on which the estate tax was paid. The properties remained registered
in the name of the mother, but the net receipts of P40.000 from the property was
deposited in a joint account of Mr. X and Miss Y. in 2019, the property had a net
receipts of P70.000, from which each withdrew Pi 5,000. in the same year, they sold
the property for P3,000,000.

Which of the following statements is wrong?


a. Mr. X and Miss Y in 2013 each had gross receipts (income) of P20.000 (1/2 of
P40.000) from the property, as individual taxpayers;
b. Mr. X and Miss Y became an entity taxable as a corporation beginning 2019;
c. Mr. X and Miss Y in 2016 each had a net receipts of P35,000 from the property, as
individual taxpayers;
d. Mr. X and Miss Y each had a capital gain tax of on a selling price of F1,500,000.

21. A Go. is an owner of a large tract of land. B Co. is a construction company. A Co.
and B Co, entered into a consortium under which A Co. will contribute the land, and
B Co. will construct subdivision houses on it. A Co. 8 Co. will divide the property
(land and houses) between them. A Co. and B Co. will sell their respective shares
in the developed property. Which statement is wrong?
a. A Co. and B Co. do not constitute a taxable entity on the project;
b. A Co. and B Co. are not be taxable on their allocated shares (in land and property)
in the developed property;
c. A Co. and B Co. is one taxable entity on the sale of all land and houses covered by
the consortium agreement;
d. A Co, and B Co. are taxable on the sale of the land and houses allocated to them,
as separate taxpayers;

22. Assuming Senator Bobadilla filed in the Senate a substitute e-vat bill "in
anticipation" of its receipt of the bill from the House. The proposal is totally
different from the version of the lower house. Which of the following statements
will justify the filing of a substitute bill by Honorable Senator Bobadilla?
I. To insist that a revenue statute not only the bill which initiated the legislative
process culminating in the enactment of the law - must substantially be the same as
the House bill would be to deny the Senate's power not only to "concur with
amendments" but also to "propose amendment."
Il. It would be to violate the coequality of legislative power of the two houses of
Congress and in fact make the House superior to the Senate. Given the power of the
Senate to propose amendments, it can propose its own version even with respect to
bills which are required by the Constitution to originate in the House.
III. Filing in the Senate of a substitute bill in anticipation of its receipt of the
bill from the House is not prohibited under the Constitution, so long as the action
by the Senate as a body is withheld pending receipt of the House bill.
a. I only c. I, II and III
b. II only d. None of the above

23. The deferred payment method of reporting income on a deferred payment sale is
available to a taxpayer if, there being a requirement of the law on the ratio of
initial payments to the selling price, the initial payments:
a. Exceed 25% of the selling price;
b. Do not exceed 25% of the selling price;
c. Regardless of the ratio of initial payments to the selling price;
d. Do not exceed 25% of the contract price.

24. Mr. CA is an art dealer and investor in share of stock of domestic corporations.
He had the following transactions in a year:
a. Sale of a painting masterpiece with a cost of P500,000 for P2,500,000;

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b. Sale directly to a buyer of shares of stock held as investment with a cost of
P150,000 for P320,000;
c. Sale of a painting with a cost of P100,000 for P200,000 and donation of the
proceeds of the sale to a child.

Which of the following statements is wrong?


a. The sale of a painting masterpiece is a sale of an ordinary asset;
b. The sale of shares of stock is a sale of a capital asset;
c. The sale second painting is a sale of an ordinary asset;
d. All the gains shall be reported in the income tax return at the end of the year.

25. Mr. A is a dealer of household furniture regularly selling on installments. He


made a sale of a bedroom set, with a cost to him of P4,000, for P10,000, receiving
as down payment P1,000 on the date of sale on December 2012, and P1,500 the day
after, and monthly thereafter at P2,500.

The gross income to report on the installment method in 2013 is:


a. P4,500; c. P7,500;
b. P0; d. P1,500.

26. Which gain is exempt from income tax?


a. Gain to a stockholder or security holder when in a merger or consolidation he
received from the absorbing corporation shares only.
b. Gain to the absorbed corporation in a merger of consolidation when the absorbed
corporation received only stock of the absorbing corporation;
c. Gain to a transferor in a transfer of property to a corporation for stock only of
the corporation, and as a result of the transfer the transferor gained control of
the corporation;
d. In a sale of a principal residence by an individual when all or part of the
proceeds of the sale are invested by in acquiring a new principal residence

27. A Filipino citizen derived a dividend income on his shares of stock of an


American corporation in the United States. The United States federal government
imposed an income tax on it. Which of the following statements is correct?
a. There is double taxation;
b. The United States income tax payment cannot be claimed as a deduction from gross
income;
c. The United States income tax payment can be claimed as tax credit without any
limitation on the amount of such tax credit;
d. The United States income tax payment can be claimed as tax credit, but subject to
limitation on the amount of such tax credit.

28. Double taxation in its general sense means taxing the same subject twice during
the same taxing period. In this sense, double taxation
a. Violates substantive due process.
b. Does not violate substantive due process.
c. Violates the right to equal protection.
d. Does not violate the right to equal protection.

29. The least source of tax laws:


a. Statutes c. Revenue regulations
b. Presidential decrees d. Tax treaties or conventions

30. An instrument with a maturity period of ten (10) years was held by Smith
(nonresident alien engage in trade or business) for three (3) years and transferred
it to Juan, a resident citizen. Juan held it for two (2) years before subsequently
transferring it to James (resident alien) who pre-terminated it after four (4)
years. The final withholding tax are as follows:
A. B. C. D.
Smith-12% final tax True. True True True
Juan-20% final tax True True False False
James - exempt True False False True

31. The following are the differences between the Power of Taxation and the Power of
Eminent Domain, except:
Power of Taxation Power of Eminent Domain

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a. Enforced proportionate contribution Property to be taken is for public use
b. Government has no obligation to pay Gov't is a debtor of the property taken
c. It operates in a community It operates on an individual
d. Attribute of sovereignty Fundamental power

32. The Congress enacted a new law, known as Expanded Value Added Tax Law. An
association of taxpayers questions the constitutionality of this law on the ground
that it did not originate exclusively in the House of Representatives as required
by the Constitution, because it is in fact the result of the consolidation of two
distinct bills, one from the House of Representatives and the other from the
Senate. Is the vat law unconstitutional?
a. Yes, because all appropriation, revenue or tariff bills, bills authorizing increase
of public debt, bills of local application, and private bills, shall originate
exclusively in the House of Representatives.
b. Yes, because the Senate has no authority to propose or concur any amendments with
the revenue or tax bill proposed by House of Representatives.
c. No, because all appropriation, revenue or tariff bills, bills authorizing increase
of public debt, bills of local application, and private bills, shall be initiated
by the Senate.
d. No, because it is not the law but the revenue bill which is required by the
constitution to originate exclusively in the House of Representatives and insisting
otherwise would violate the coequality of legislative power of the two houses of
Congress and in fact would make the House superior to the Senate.

Use the following data for the next two (2) questions:
Ana, a resident citizen of the Philippines, provided the following data for year
current taxable year:
Gross income from business P700,000
Business Expenses 300,000
Royalty from books 40,000
Gain on direct sale to buyer of shares of stock of a
domestic corporation held as capital asset 70,000
Loss on sale of land in the Philippines held as capital
asset with cost of P1,500,000 when the
zonal value is P1,200,000 500,000

33. Assuming the taxable year is 2018, how much is the total income tax expense of
Ana?
a. P116,500
b. P207,500
c. P159,500
d. P156,000

34. Prior to 2018, Filipino counterparts of aliens employed by regional or area


headquarters and regional operating headquarters of multinational companies in the
Philippines, which are engaged in international trade with affiliates and
subsidiary branch offices in the Asia-Pacific region may taxed at 15% preferential
tax rate subject to the following rules, except
I. The employee must occupy managerial or technical position and must be exercising
such functions pertaining to said position.
II. The employee must have received or is due to received under a contract of
employment, a gross taxable compensation income of at least P975.000 (whether or
not this is actually received).
III. The employee must be exclusively working for the RHQ or ROHQ as a regular
employee and not just a consultant or contractual personnel.
a. I and II only c. I, II, and III
b. I and III only d. None of the above

35. Rudolfo, a citizen of the Philippines and resident of Bacolod City, died testate
on May 10, 2015. Among his gross estate ars properties inherited from his de¬
ceased father who died on April 4, 2012. What percentage of deduction will be used
in computing the amount of vanishing deduction?
a. 80% of the value taken as basis for vanishing deduction;
b. 100% of the value taken as basis for vanishing deduction;
c. 60% of the value taken as basis for vanishing deduction;
d. 40% of the value taken as basis for vanishing deduction.

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36. Gaby, a Japanese residing in the Philippines, bought garments from ABC Corp., a
domestic corporation, and exported the same to Japan. Total value of export is
P100.000. VAT (output tax) due on the transaction is:
a. P10,000;
b. P 5,000;
c. None, because 0% applies;
d. None, because the sale is exempt from VAT.

37. Mrs, Evangelista owns a parcel of land worth P500,000 which was inherited from her
father in 2009 when it was worth P300.000. Her father purchased it in 2017 for
P100,000. If Mrs. Evangelista transfers the parcel of land to her wholly owned
corporation in exchange for shares of stock of said corporation worth P450.000,
Mrs, Evangelista’s taxable gain is;
a. Zero; c. P150,000;
b. P50.000; d. P350,000.

38. In filing the estate tax return, a CPA Certified is required when:
a. Gross estate exceeds P2,000,000 c. Gross estate exceeds P200,000
b. Gross estate reaches P20,000 d. Gross estate reaches P2,000,000

39. Which of the following is deductible from the gross estate?


a. income tax paid on income received after death;
b. Property taxes not accrued prior to death;
c. Estate tax paid to a foreign country;
d. Donor's tax accrued prior to death.

40. The following data were taken from Juan (single), holding managerial position for
2018 taxable year:
Gross salaries @ P50.000 per month P600.000
SSS contributions 12,000
Philhealth contributions 7,200
Pag-ibig contributions 4,800
Union dues 3,000
Withholding tax on compensation income 73,250
Allowances, not subject to liquidation 100,000
Gasoline allowances, subject to liquidation 17,000
13th month pay 50,000
De minimis benefits 12,000

The total income tax expense of Juan is:


a. P127,096
b. P141,000
c. P170,760
d. P179,400

41. Decedent was a citizen of the Philippines who was single at the time of death, with
properties and charges thereon:
Properties:
Inherited two and one-half years ago:
Property outside the Philippines P300,000
Property in the Philippines
Fair market value when inherited 650,000
Fair market value at death 700,000
Mortgage on the property when inherited 150,000
Mortgage on the property at death 100,000
Property acquired thru own labor 2,000,000
Charges:
Ordinary deductions from the gross estate 390,000

Vanishing deduction?
a. P522,000; c. P313,200;
b. P417,600; d. P208,800.

42. Which statement is true?

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a. A single person who is not a head of family may not have a deduction for family
home;
b. There can be a deduction for two family homes if their aggregate value does not
exceed P10,000,000;
c. Deduction may be claimed for a family home of a non-resident citizen of the
Philippines located outside the Philippines;
d. A family home is always conjugal/community property.

43. Mr. Ramon Asuncion, a citizen and resident of the Philippines, died leaving the
following properties:
Real and personal properties P3,000,000
Land and building inherited from the father 1.5 years ago
(with a fair market value at that time of P1,500,000) 2,000,000
Car, purchased with cash received as gift from the mother
during the year 500,000
Cash (including P500,000 received by inheritance from the father) 1,500,000
Claims against the estate 600,000
Unpaid mortgage on the land and building inherited
(from an original of P600,000 when inherited) 100,000

The vanishing deduction is:


a. P1,530,000; c. P 450,000;
b. P1,080,000; d. P1,130,000.

44. The widow of Mrs. A received P500,000 under a life insurance of her husband. Should
the proceeds of life insurance be included in the gross estate? Which statement is
wrong?
a. Yes, if the estate, executor or administrator of Mr. A was designated as revocable
beneficiary;
b. Yes, if the estate was designated as irrevocable beneficiary;
c. Yes, if Mrs. A was designated as revocable beneficiary
d. Yes, if it was Mrs. A who insured Mr. A, and her designation as beneficiary was
irrevocable.

45. In the last will and testament, a decedent provided that the properties he leaves
should not be sold or disposed of for ten years following his death. He had real
estate in his gross estate as follows:
At the time of death - zonal value of P500,000
At the end of ten years after death:
Fair market value - P2,500,000
Declared value in the estate tax return - P1,500,000
Zonal value - P3,000,000

What value shall be used for purposes of estate tax?


a. P3,000,000; c. P2,500,000;
b. P1,500,000; d. P 500,000.

46. Fair market value Consideration


At transfer At death Received
Revocable transfers:
Land P4,000,000 P5,200,000 P3,000,000
Car 1,000,000 0 600,000
Shares of stock 500,000 300,000 400,000
Bonds 200,000 200,000 250,000
Transfer under power of appointment:
Land and building, general power 2,000,000 1,800,000 1,000,000
Farm land, limited power 1,500,000 500,000 1,200,000

The gross estate?


a. P 800,000 c. P2,200,000
b. P3,000,000 d. Some other amount.

The decedent was married at the time of death.


Cash owned by the decedent before the marriage P5,000,000
Real property inherited by the decedent during the marriage 6,000,000
Personal property received by the wife as gift before the

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marriage 400,000
Property acquired by the decedent with cash owned before
the marriage 600,000
Clothes of the decedent, purchased with the exclusive
money of the wife 500,000
Jewelry purchased with the exclusive cash of the decedent 1,000,000
Property unidentified when and by whom acquired 1,200,000
Cash - income during the marriage 2,000,000

47. Exclusive gross estate if the spouses were under the system of conjugal partnership
of gains?
a. P11,600,000; c. P 6,600,000;
b. P10,600,000; d. P12,600,000.

48. Community gross estate if the spouses were under the system of absolute
community of property?
a. P10,200,000 c. P9,200,000:
b. P 8,200,000; d. P7,200,000.

49. The reciprocity clause applies to:


a. Real property; c. Intangible personal property;
b. Tangible personal property; d. All of the above.

Husband and wife, citizens and residents of the Philippines, made the following
donations:

June 2, 2018: To a daughter and future son-in-law, on account of marriage to be


celebrated on June 15, 2017, cash of P1,000,000.
July 2, 2018: To an illegitimate child of the husband, cash of P100,000.

50. Donor/s tax of the wife on the donations of July 2, 2013?


a. P3,000 c. P18.,000;
b. P15,000; d. Some other amount.

Questions 51 through 52 are based on the following are the inventory of the estate of
Mr. Pumayapa who died on September 11, 2005.
Properties:
Jewelries P 1,600,000
Old Vehicle 800,000
Shares of stock, domestic corporation 250,000
Real estate inherited August 9, 2000. This was previously
taxed at P250,000. It was inherited from his uncle and
the decedent assumed unpaid mortgaged of P70,000,
of w/c P50,000 was paid by the present decedent before
his death. 300,000
Collectibles, excluding P50,000 claims against insolvent
person and P100,000 cancelled in a written will 350,000
Peso bank deposit 150,000
Investment in bonds 100,000
Amount received by heir under R.A 4917 300,000
Expenses:
Funeral Expenses 190,000
Judicial Expenses 120,000
Loans payable, duly notarized 50,000
Stolen Jewelry, part of the gross estate 10,000
Medical Expenses 250,000
Legacy to the City of Manila 100,000
51. The following Vanishing deduction
a. P34,700 c. P34,390
b. P34,600 d. P35,000

52. Using the above data, the total deductions from the gross estate
a. P2,124,600 c. P2,124,700
b. P1,124,000 d. P2,125,000

53. Gross receipts tax (GRT) is a business tax paid by a:

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a. Hotel operator; c. Franchise holder;
b. Insurance company; d. Bank.

54. Chiko operates a cockpit. Inside the cockpit, he also operates a restaurant. Data
for the particular quarter follow:

Gross receipts:
Cockpit operation P500,000
Restaurant operation
Sale of food 100,000
Sale of liquor 150,000

The amusement tax due from Chiko is:


a. P90,000 c. P120,000
b. P135,000 d. P75,000

55. Charlie is an operator of parking lots. What business tax is due on his income from
the business?
a. Broker's tax; c. Caterer's tax;
b. Common carrier's tax; d. Value-added tax.

56. Which of the following transactions is subject to zero-rated value-added-tax?


a. Services rendered to persons engaged in international shipping or air transport
operations.
b. Services rendered by banks, non-bank financial intermediaries.
c. Generation, transmission and distribution of electricity.
d. Services rendered by professionals such as CPAs, Physicians and Lawyers.

Atin Transport Co. is a common carrier by land and sea within the Philippines. It had
the following data in a month:
On land carriers:
Gross receipts from cargoes P 500,000
Gross receipts from passengers 700,000
On sea carriers:
Gross receipts from cargoes 900,000
Gross receipts from passengers 1,000,000

57. The percentage tax?


a. P21,000; c. P15,000;
b. P36,000; d. Some other amount.

58. The output value-added tax?


a. P240,000; c. P288,000;
b. P120,000; d. Some other amount.

59. Statement 1: Banks are subject to the value-added tax;


Statement 2: Banks are subject to the gross receipts tax, which is a percentage tax.
a. True, true c. True, false;
b. False, false d. False, true

60. Sale of raw materials or packing materials to export-oriented enterprise is


considered export sales when export sales of such enterprise
a. Exceed 50%> of total annual production
b. Exceed 33 1/3% of total annual production
c. Exceed 66 2/3% of total annual production
d. Exceed 70% of total annual production

61. Export sales of non-VAT registered person is


a. Exempt from VAT c. Subject to 0% VAT
b. Subject to percentage tax d. Subject to 12% VAT

62. The taxpayer is a domestic corporation (2018)


Gross income from business P5,000,000
Dividend from domestic corporation 10,000
Interest on bank deposit 15,000
Capital gain on direct sale to buyer of shares of

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domestic corporation 60,000
Business expenses 3,000,000
Dividend declared and paid 500,000
Retained earnings from prior years 2,000,000
Paid-in capital at the end of the year 1,000,000

If accumulation of earnings during the year is improper, the IAET?


a. P197,900; c. P103,560;
b. P208,500; d. P197,300

63. A domestic corporation had the following selected data for 2013, the accumulated
earnings for which year the Bureau of Internal Revenue considered to be improper:

Sales P6,000,000
Cost of sales 2,000,000
Quarterly income tax paid 710,000
Business expenses 1,000,000
Interest on Philippine currency bank deposit 50,000
Capital gain on sale directly to buyer of shares
of domestic corporation 120,000
Dividend income from domestic corporation 60,000
Dividend declared and paid during the year 500,000
Maturing bonds in 2014 100,000
Retained earnings, beginning of the year 1,500,000
Paid-in capital, end of the year 2,000,000

The improperly accumulated earnings tax (IAET) is:


a. P175,300; c. P121,300
b. P156,300; d. P323,000

64. All, except one, of the following, are not subject to the improperly accumulated
earnings tax. Which is the exception?
a. Publicly-held corporations;
b. Banks and other non-bank financial intermediaries;
c. Insurance companies;
d. Service enterprises.

65. A domestic corporation had the following data in five years:

Year 4: Normal income tax P32,000


Minimum corporate income tax 65,000
Year 5: Normal fax 8,000
Minimum corporate income tax 2,000
Year 6: Normal tax 10,000
Minimum corporate income tax 30,000
Year 7: Normal tax 22,000
Minimum corporate income tax 20,000
Year 8: Normal tax 50,000
Minimum corporate income tax 20,000

The income tax for Year 8 (before credit for any quarterly income tax payments) is:
a. P50,000; c. P20,000;
b. P30,000; d. P28,000.

66. One of the following statements is correct.


a. A joint venture for construction projects is taxable as a corporation;
b. A joint venture for engaging in petroleum, coal, geothermal and other energy
operations pursuant to an operating or consortium agreement under a service
contract with the Government is taxable as a corporation;
c. A general professional partnership is not taxable as a corporation;
d. A general professional partnership in trade is not taxable as a corporation.

The next four (4) questions are based on the following data:

Carlo, married, with two dependent children, received the following income:
Rent, Philippines P1,000,000

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Rent, Hongkong 200,000
Interest, peso deposit, MBTC 100,000
Interest, US$ deposit, BDO ($10,000 x P42) 420,000
Interest, deposit in Hongkong (HK$10,000 x P5) 50,000
Prize (cash) won in a local contest 8,000
Prize (TV) won in a local lottery 50,000
PCSO/Lotto winnings 2,000,000
Prize won in contest in U.S. 300,000
Lotto winning in U.S. 100,000
Dividend, domestic company 600,000

67. Assuming the taxable year is 2017, determine the taxable net income assuming he
is:

RC NRC RA NRA-ETB
a. P80,000 P180,000 P830.000 P180,000
b. 180,000 80,000 1,000,000 1,000,000
c. 1,558,000 908,000 908,000 908,000
d. 1,658,000 1,008,000 1,008,000 1,008,000

68. Assuming the taxable year is 2018, determine the total final tax assuming he is:
RC NRC RA NRA-ET
a. P553,000 P490,000 P150,000 P687,500
b. 121,500 90,000 121,500 150,000
c. 131,000 90,000 90,000 90,000
d. P553,000 P490,000 P550,000 P687,500

Use the following data for the next four (2) questions:
Bryan sold the following shares of stock of domestic corporations which he bought for
investment purposes':
Listed and Traded Not Listed and Traded
Selling price 250,000 143,680
Selling expense 12,000 3,680
Cost 118,000 80,000

69. Determine the capital gains tax assuming the sale was made in 2017 (before
effectivity of TRAIN Law) and 2018 (upon effectivity of TRAIN Law)
2017 2018
a. P3,000 P9,000
b. 3,184 9,552
c. 3,184 9,000
d. 3,000 9,552

70. Assume Bryan is a dealer in securities, the capital gains tax in 2017 and 2018 is
2017 2018
a. P3,000 P9,000
b. 9,000 3,000
c. 0 9,000
d. 0 0

Nothing worth having comes easy


--END OF PRE-BOARD EXAMINATION--

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ANSWER

1. D 36. D
2. D 37. A
3. C 38. A
4. A 39. D
5. D 40. A
6. C 41. C
7. C 42. A
8. C 43. A
9. B 44. D
10. A 45. D
11. D 46. B
12. C 47. D
13. D 48. A
14. A 49. C
15. A 50. A
16. B 51. B
17. C 52. A
18. A 53. D
19. C 54. B
20. B 55. D
21. C 56. A
22. C 57. A
23. A 58. C
24. D 59. D
25. A 60. D
26. D 61. A
27. D 62. D
28. C 63. C
29. C 64. D
30. B 65. B
31. D 66. C
32. D 67. C
33. C 68. A
34. D 69. A
35. D 70. D

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