TAX FINALS

INSTRUCTION: IN YOUR ANSWER SHEET, SHADE THE LETTER THAT

CORRESPONDS TO THE BEST ANSWER. ANSWER WITH ERASURE
WILL BE INVALIDATED. (TOTAL POINTS = 100 POINTS)
8. Gerardo died on July 31, 2011. His estate tax return should be
filed within
I. THEORY (1 point each = 40 points) a. six months from filing of the notice of death.
b. sixty days from the appointment of an administrator.
1. Which of the following Philippine tax situs is true? c. six months from the time he died on July 31, 2011.
Within Without d. sixty days from the time he died on July 31, 2011.
a. Income of nonresident alien
for income tax Nontaxable Nontaxable 9. This refers to a gift made during the life-time of the donor
b. Sales of resident Filipino which is conditional upon and takes effect upon death.
citizen for business tax Taxable Taxable a. donatio inter-vivos
c. Properties of resident alien b. donatio mortis-causa
for estate tax Taxable Taxable c. donatio ab initio
d. Properties of nonresident d. donatio de-facto
Filipino citizen for donor’s tax Taxable Nontaxable
10. The following items are included as part of the gross estate,
2. The basic community tax for a partnership business is except:
a. None a. irrevocable trust.
b. P 5.00 b. Claims against insolvent persons.
c. P 500.00 c. Proceeds of life insurance with revocable beneficiary.
d. P2,000.00 d. Exclusive property of the decedent.

3. To avoid penalty, the payment of community tax for those 11. Which of the following last Will and Testament is not valid?
who already paid the same tax in the previous should be a. Holographic will written in the very hand-writing of the
made on or before testator
a. January 1 of the current year. b. Notarial will signed by the testator in every page,
b. The last day of February of the current year. notarized by a lawyer in the presence of at least three
c. March 31 of the current year. witnesses
d. Twenty days from the date the taxpayer becomes liable. c. Oral will in the presence of credible witnesses
d. Codicil to explain the original will
4. What is the amount of maximum additional community tax
for an individual taxpayer? 12. If the investments in common shares of stock made by the
a. P 500 decedent are not traded-in the stock market, the value to be
b. P 2,000 reported in the estate tax return should be
c. P 5,000 a. the actual sales price at the time of liquidation.
d. P10,000 b. Stockholders’ equity at the time of death divided by the
outstanding common shares.
5. One of the following establishments is classified as large c. Par value of the common shares.
taxpayer. d. Liquidating value of the common shares.
a. With VAT payable of at least P100,000 in any quarter of
the previous year 13. The following proceeds of life insurance is exempt from
b. With withholding tax remittance of at least P100,000 in estate tax, except:
any quarter of the previous year a. With irrevocable third person beneficiary.
c. With income tax payable of P100,000 of the previous b. With benefits from SSS and GSIS.
taxable year c. With proceeds from group insurance.
d. With excise tax payment of at P100,000 per quarter in d. With administrator as beneficiary.
the previous taxable year
14. Which of the following is not classified as ordinary deduction?
6. Which of the following taxes is not a transfer tax? a. Vanishing deduction
a. Excise tax b. Transfer for public use
b. Estate tax c. Medical expense
c. Donor’s tax d. Unpaid mortgage of property inherited by the decedent
d. All of the above prior to his death

7. Which of the following due dates is not true? 15. This property valuation is generally used in determining the
Particular Due date value of the distributable estate.
a. Annual filing ITR April 15 of the following year a. Selling price
b. Estate tax return Within six months from the b. Fair market value.
time of death c. Zonal value.
c. Donor’s tax Within 30 days from the d. Realizable value.
time of donation
d. Monthly VAT 25 days after the month of
return sale

16. This substantiated expense is allowed to reduce the gross

estate even if already paid prior to the decedent’s death,
except
a. Medical expense
b. Funeral expense
c. Income tax expense
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d. All of the above
17. Funeral expenses that can be claimed as deduction from the
gross estate should be:
a. Actual amount incurred.
b. Not exceeding P200,000.
c. 5% of the gross estate.
d. The lowest of “a”, “b”, or “c.”
18. The following charges shall reduce the community property
of the decedent.
a. Liability incurred by either spouse by reason of a crime.
b. Gambling losses sustained by either of the spouse.
c. Unpaid mortgage loan of an inherited property received
by the decedent during marriage time.
d. Unpaid mortgage loan incurred by the spouses during
marriage time using the exclusive property of the
surviving spouse as collateral.
19. The following deductions are allowed to reduce the gross
estate of a nonresident alien decedent without properties
outside the Philippines.
a. Standard deduction
b. Donation to the Philippine Government
c. Funeral expense
d. Medical expense
20. The following deduction is deductible from the gross estate
whether paid or unpaid, except:
a. Funeral expense.
b. Medical expense.
c. Accommodation loan.
d. All of the above.
21. Which of the following deductions from gross estate is not
subject to limit?
a. Funeral expense
b. Medical expense
c. Claims against the estate
d. Family home
22. The standard deduction of P1,000,000 from gross estate is:
a. optional.
b. in addition to ordinary deduction.
c. not available to nonresident Filipino decedents.
d. in lieu of all ordinary deductions.
23. How much is the share of the decedent’s legitimate parents
when his surviving relatives are his adopted son, surviving
spouse and a sister. The decedent died without a will.
a. None
b. 50% of the net distributable estate
c. 25% of the net distributable estate
d. 20% of the net distributable estate
24. Celia donated P110,000.00 to her friend Victoria who was
getting married. Celia gave no other gift during the calendar
year. What is the donor's tax implication on Celia’s donation?
a. The P100,000.00 portion of the donation is exempt since
given in consideration of marriage.
b. A P10,000.00 portion of the donation is exempt being a
donation in consideration of marriage.
c. Celia shall pay a 30% donor's tax on the P110,000.00
donation.
d. The P100,000.00 portion of the donation is exempt
under the rate schedule for donor's tax.
25. In May 2010, Mr. And Mrs. Melencio Antonio donated a
conjugal house and lot with a fair market value of P10 Million
to their son, Roberto, and daughter-in-law, Josefina, who
were just married during the year. Which statement below is
INCORRECT?
2
a. There are four (4) donations made – two (2) donations
are made by Mr. Melencio Antonio to Roberto and
Josefina, and two (2) donations are made by Mrs.
Antonio;
b. The four (4) donations are made by the Spouses Antonio
to members of the family, hence, subject to the
graduated donor’s tax rates (2%-15%);
c. Two (2) donations are made by the spouses to members
of the family, while two (2) other donations are made to
strangers;
d. Two (2) donations made by the spouses to Roberto are
entitled to deduction from the gross gift as
donation proper nuptias.
26. Levox Corporation wanted to donate P5 million as prize
money for the world professional billiard championship to be
held in the Philippines. Since the Billiard Sports Confederation
of the Philippines does not recognize the event, it was held
under the auspices of the International Professional Billiards
Association, Inc. Is Levox subject to the donor's tax on its
donation?
a. No, so long as the donated money goes directly to the
winners and not through the association.
b. Yes, since the national sports association for billiards
does not sanction the event.
c. No, because it is donated as prize for an international
competition under the billiards association.
d. Yes, but only that part that exceeds the first P100,000.00
of total Levox donations for the calendar year.
27. Which of the following tax is not paid on casual sale of real
property?
a. Local transfer tax
b. Capital gains tax
c. Income tax
d. Documentary stamp tax
28. This tax is imposed on sale, barter or exchange of goods and
services, transactions deemed sale and importation of goods
and services.
a. Value-added tax
b. Other percentage tax
c. Excise tax
d. Transfer tax
29. Once a person registered his business under VAT system,
such VAT registration shall be irrevocable for
a. 5 years from the quarter the VAT registration was made.
b. 4 years from the quarter the VAT registration as made.
c. 3 years from the quarter the VAT registration as made.
d. 2 years from the quarter the VAT registration as made.
30. Which of the following statement is incorrect?
a. A VAT-registered person that pays Input VAT to a non-
VAT registered supplier collecting VAT cannot deduct the
said Input VAT from his Output VAT.
b. A non-VAT person that collects VAT is subject to a 50%
surcharge based on his VAT collection.
c. A non-VAT person that collects VAT is required to pay
the 3% OPT and 12% VAT.
d. A non-VAT person that collects VAT is allowed to deduct
Input VAT because he is required to pay Output VAT.
31. The public market vendor below, who is not a VAT-registered
person is liable to VAT in 2010, if:
a. She sells raw chicken and meats and her gross sales
during the year amount to P3 Million;
b. She sells vegetables and fruits in her stall and her gross
sales during the year amount to P4 Million;
c. She sells flowers and plants in her stall and her gross
sales during the year amount to P2.2 Million;
d. She sells live fish, shrimps, and crabs and her gross sales
during the year amount to P5 Million.
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b. Transitional Input VAT.
32. Which statement is FALSE under the VAT law? c. Presumptive Input VAT.
a. A VAT-registered person will be subject to VAT for his d. Standard Input VAT.
taxable transactions, regardless of his gross sales or
receipts. 39. Which of the following Input VAT is allowed to be deducted
b. A person engaged in trade or business selling taxable from Output VAT on sales to the government units?
goods or services must register as a VAT person, when a. Actual Input VAT
his gross sales or receipts for the year 2013 exceed b. Standard Input VAT
P1,919,500. c. Final Input VAT
c. A person who issued a VAT-registered invoice or receipt d. Regular Input VAT
for a VAT-exempt transaction is liable to the 12% VAT as
a penalty for the wrong issuance thereof. 40. What is the tax treatment of the excess of Standard Input
d. Once a doctor of medicine exercises his profession VAT over Actual Input VAT?
during the year, he needs to register as a VAT person a. Deductible operating expense from gross income.
and to issue VAT receipts for professional fees received. b. Additional cost of sale.
c. Taxable other income.
33. Sale of residential house by a realty corporation for a d. Not considered in determining net taxable income.
consideration of P3.0 Million in 2012 is:
a. Exempt from VAT because the gross sales do not exceed II. COMPUTATION (2 points each = 40 points)
P3,199,200 Million.
b. Exempt from VAT because the property sold is a capital 41. Rose Bud received a total compensation income in 2012
asset, regardless of the gross selling price. amounting to P360,000 plus 13th month pay of P30,000 and
c. Subject to 12% VAT because the consideration exceeds other productive bonuses of P10,000. How much is the
P1,919,500. amount of her community tax for year 2013?
d. Taxable at 12% VAT output tax on the gross selling price a. P405.00
of P3.0 Million. b. P395.00
c. P365.00
34. A lessor of real property is exempt from value-added tax in d. None, because Rose has not yet earned compensation
one of the transactions below. Which one is it? income in 2013.
a. Lessor leases commercial stalls located in the Greenhills
Commercial Center to VAT-registered sellers of cell 42. Texas Instrument is a PEZA-registered multi-national
phones; lessor’s gross rental during the year amounted corporation subject to a final tax of 5% tax. Its total sales
to P12 Million; during the year amounting to P50,000,000 and its operating
b. Lessor leases residential apartment units to individual expenses amounted to P10,000,000. How much is the
tenants for P12,800.00 per month per unit; his gross community tax of Texas Instrument?
rental income during the year amounted to P6 Million; a. P10,500
c. Lessor leases commercial stalls at P10,000.00 per stall b. P10,000
per month and residential units at P15,000.00 per unit c. P 8,500
per month; his gross rental income during the year d. P - 0 -
amounted to P3 Million;
d. Lessor leases two (2) residential houses and lots at 43. The administrator of X, a decedent resident Filipino citizen,
P50,000.00 per month per unit, but he registered as a shows the following gross estate including unpaid expenses
VAT person. and obligations:
Gross estate P3,000,000
35. Which transaction below is subject to VAT? Funeral expenses 200,000
a. Sale of vegetables by a farmer in Baguio City to a Medical expenses (within one year) 650,000
vegetable dealer; Claims against the estate 300,000
b. Sale of vegetables by a vegetable dealer in Baguio City to
another vegetable dealer in Quezon City; How much is the amount that shall no longer be allowed as
c. Sale of vegetables by the QC vegetable dealer to a deduction from the gross estate and cannot be classified as
restaurant in Manila; claims against the estate?
d. Sale of vegetables by the restaurant operator to its a. P150,000
customers. b. P200,000
c. P300,000
36. Which of the following is other percentage tax (OPT) rate is d. P500,000
applicable to franchise grantees of gas and water utilities?
a. 2%
b. 3%
c. 10% 44. The following are the assets left by Mr. Pumanao who died on
d. 12% November 1, 2012:
37. One of the following business transactions is VAT-exempt and 5-year time deposit with 6% interest/year
OPT-exempt. (deposited on January 1, 2011) P5,000,000
a. Sale of mineral water
b. Sale of agricultural nonfood products 10,000 equity share investments in SMC
c. Transport of passengers and cargo by air or sea vessel stocks acquired at par value (5% cash
from the Philippines to foreign country dividend was declared on November 5, 2012
d. Printing or publishing of books when the FMV per share was P120) 1,000,000

38. One of the following tax credit is not allowed to be applied Uncollected rent income on Nov. 1, 2012 750,000
for tax credit certificate (TCC), except:
a. Actual Input VAT on zero-rated or effectively zero-rated How much is the reportable gross estate on May 1, 2013?
sales. a. P7,060,000
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b. P7,050,000 How much is the net estate subject to estate tax in the
c. P7,000,000 Philippines?
d. P6,750,000 a. P5,000,000
b. P4,700,000
45. The only item included in the gross estate is a real property c. P4,000,000
inherited by the present decedent more than 2 years prior to d. P3,000,000
his death. The real property was taxed in the previous
transfer at value of P1,000,000. The present value of the 50. The net taxable estate is P10,000,000 subject to estate tax of
same property at date of death of the present decedent is P1,215,000. The decedent is a resident Filipino with conjugal
P3,000,000. The total actual and ordinary deductions from family home of P2,000,000, actual medical expense unpaid of
the gross estate is P150,000. How much could be allowed as P400,000 and unpaid funeral expense of P100,000. How
the amount of vanishing deduction? much is the net distributable estate?
a. P 570,000 a. P10,785,000
b. P 720,000 b. P11,185,000
c. P 950,000 c. P11,285,000
d. P1,710,000 d. P12,185,000

46. While he was traveling with friends, Mr. Jose Francisco, 51. Monie Weather, a resident alien died leaving conjugal
resident Filipino citizen, died on January 20, 2012 in a properties within and outside the Philippines to his wife,
California Hospital, USA, leaving personal and real properties Junkie as follows:
with market values as follows: House and Lot in Quezon City – Within Without
P10 Million; Cash in bank in California – US$10,000.00; Family home P5,000,000 P10,000,000
Citibank in New York – US$5,000.00; Cash in BPI Makati – P4 Car 4,000,000 6,000,000
Million; Car in Quezon City – P1 Million; Shares of stocks of Cash 3,000,000 4,000,000
Apple Corporation, US corporation listed in NY Stock Funeral expense 300,000 700,000
Exchange US$5,000.00. Exchange rate is US$1 = Php50. If the Judicial expense 500,000 1,000,000
US Government grants tax-exempt reciprocity to Filipino Medical expense – paid 40,000 260,000
citizens, Mr. Francisco’s gross estate for the Philippine estate Claims against insolvent person 2,000,000 1,000,000
tax purposes shall be: Estate tax paid 1,115,000
a. P13,000,000.
b. P14,000,000. How much is the estate tax still due and payable in the
c. P15,000,000. Philippines if the estate tax of the first P10,000,000 net
d. P16,000,000. taxable estate is P1,215,000 and the excess is subject to 20%?
a. P637,500
47. The parents of a student (minor) who died in a tourist bus b. P670,000
and truck collision in Tuba, Benguet received a total amount c. P700,000
of P2,500,000 of which P500,000 comes from the tourist bus d. P800,000
company and P2,000,000 from the proceeds of a revocable
life insurance. The P2,000,000 was received 30 days after 52. The following donations were made by Don Lopot during the
death. The P500,000 was received after an out-of-court taxable year:
settlement negotiation was made by the tourist bus Donation to TESDA – priority project P900,000
company. How much is the amount to be declared in the Revocable donation of car to his son 800,000
estate tax return? Inadequate consideration of real property sold
a. P2,500,000 to his friend 700,000
b. P2,000,000 Donation to his wife 300,000
c. Zero, because the amounts were received after death. Donation to his unborn grandchild 200,000
d. Zero, because the decedent person is a minor.
How much is the amount of donation subject to donor’s tax?
48. Jose Ramos, single, died of a heart attack on October 10, a. P2,000,000
2012, leaving a residential house and lot (family home) with a b. P1,800,000
market value of P2.2 Million and cash of P100,000.00. c. P 900,000
Memorial plan already paid prior to death amounted to d. P 200,000
P200,000.00.
a. His estate will be exempt from estate tax because the
net estate is zero. 53. How much is the amount of gift subject to donor’s tax if X, a
b. His estate will be exempt from estate tax because the Filipino citizen, made a general renunciation of his P2,000,000
net estate is P185,000. inheritance in favor of his siblings and the inheritance was
c. His estate will be subject to estate tax because the net taken from the conjugal property of their parents?
estate is P300,000. a. P - 0 -
d. His estate will be subject to estate tax because the net b. P 500,000
estate is P375,000. c. P1,000,000
d. P2,000,000
49. Nor Korea, a nonresident Korean national, died in the
Philippines. His administrator showed to the Philippine 54. On January 10, 2012, Maria Reyes, single-mother, donated
Government the following assets and expenses: cash in the amount of P50,000.00 to her daughter Cristina,
Within Without and on December 20, 2012, she donated another P50,000.00
Properties P5,000,000 to Cristina. Which statement is correct?
Funeral expenses 300,000 a. Maria Reyes is subject to donor’s tax in 2012 because
Mortgage loan P200,000 the gross gift is P100,000.00;
Claims against estate 500,000 b. Maria Reyes is exempt from donor’s tax in 2012 because
the gross gift is P100,000.00;

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c. Maria Reyes is exempt from donor’s tax in 2012 only to
the extent of P50,000.00; How much is the net VAT payable?
d. Maria Reyes is exempt from donor’s tax in 2012 because a. P72,000
the donee is minor. b. P48,000
c. P24,000
55. Conjugal donations by Mr. and Mrs. Bigay were made as d. P - 0 -
follows:
 February 14, 2013 – house and lot with acquisition cost 61. Tuso Enterprises, a non-VAT business, shows a particular non-
of P1,000,000 (FMV of P1,400,000) to their only son, VAT sales invoice as follows:
Anak, on account of marriage. The property was subject
Sales P1,000,000
to a mortgage of P400,000 which is not assumed by the
Plus: 12% Value added tax 120,000
donee.
Total invoice amount P1,120,000
 June 14, 2013 – cash P200,000 to their only son, Anak,
and jewelry P100,000 to their daughter-in-law, on If the BIR uncovered the collection of VAT, how much is the
account of marriage.
amount of surcharge to be imposed?
How much is the amount of net gifts subject to graduated a. P210,000
donor’s tax on June 14, 2013? b. P150,000
Mr. Bigay Mrs. Bigay c. P120,000
a. P790,000 P790,000 d. P 60,000
b. P630,000 P630,000
c. P140,000 P140,000 62. For the VAT purchase invoice of P112,000 on purchases made
d. P100,000 P100,000 from a VAT-registered business, the required journal entries
to be recorded in the books of the non-VAT registered buyer
56. Mario donated his old car with P100,000 fair market value to would be
his second cousin, Maria. How much is the amount of donor’s
tax? a. Purchases 112,000
a. None, because the first P100,000 donation to a relative Cash 112,000
is donor’s tax-exempt.
b. P 2,000. b. Purchases 100,000
c. P 5,000. Input VAT 12,000
d. P30,000. Cash 112,000

57. How much would be the amount of net gift subject to donor’s c. Purchases 112,000
tax for a wedding gift of P110,000 to a son given by the Input VAT 13,440
resident alien? Cash 125,440
a. P120,000
b. P110,000 d. No journal entry needed
c. P100,000
d. P – 0 - 63. A nonVAT person reported the following during the year:
Domestic sales P1,000,000
58. During a taxable year, Jollibee Corporation donated the Export sales 600,000
P10,000,000 to Bahay Kalinga, an accredited NGO. The deed Importation of goods 500,000
of donation states that 1/3 of the donated amount shall be Transaction deemed sales 100,000
used for administration purposes of Bahay Kalinga. The
donor’s tax would be Its total amount subject to 12% VAT would be
a. P3,000,000. a. P1,600,000.
b. P1,004,000. b. P1,100,000.
c. P1,000,000. c. P500,000.
d. P - 0 - d. P - 0 -

59. San Miguel Corporation donated the following properties to 64. Japan Air Lines, an international foreign registry company,
its sister-company, Ginebra San Miguel: reported the following results of operation during the taxable
year:
Land P5,000,000
Within Without
Investments in stocks 2,000,000
Gross receipts P10,000,000 P40,000,000
Cash 1,000,000
Operating expenses 6,000,000 16,000,000
Net income P 4,000,000 P24,000,000
How much is the donor’s tax?
a. P - 0 –
How much is the Philippine business tax due?
b. P404,000
a. P1,200,000
c. P764,000
b. P1,000,000
d. P2,400,000.
c. P500,000
d. P300,000
60. Sung Kee, a Filipino-Chinese, is a VAT-registered person. The
records of his business transactions during the year were as
65. Mario reported the following transactions during the year:
follows:
Sale of his family home P1,000,000
Purchases from VAT-registered supplier P 800,000
Sale of his car 200,000
Purchases from non-VAT supplier 200,000
Sale of equity shares investment through
Sales 1,000,000
the local stock exchange (Cost, P120,000) 100,000
Cost of sales 600,000
Long distance call to USA 10,000
Ending inventory 400,000
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c. P35,000
How much is the total amount of business tax on the above d. P36,000
transactions?
a. P - 0 –
b. P1,000
c. P1,500 END OF EXAMINATION
d. P7,500

66. A VAT domestic common carrier reported the following gross

receipts during the year.
From the transport of:
Passengers by land P1,500,000
Passengers by sea 1,500,000
Cargoes by land 500,000
Cargoes by sea 500,000

Its total VAT taxable transactions would be:

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

67. A Non-VAT registered person reported the following during

the year:
Export sales P10,000,000
Sales of agricultural food products – original state 6,000,000
Gross receipts derived from millings of palay 2,000,000
Domestic sales 2,000,000

The amount of VAT-exempt transactions would be:

a. P20,000,000.
b. P18,000,000.
c. P16,000,000.
d. P14,000,000.

68. Baguio Water District obtained water franchise from the

Philippine Government to supply water to Baguio City. Its
total gross receipts during the amounted to P11,200,000
inclusive of VAT. How much is the total amount of business
taxes including surcharges to be imposed to Baguio Water
District?
a. P 300,000
b. P1,200,000
c. P2,000,000
d. P2,100,000

69. Philippine Airlines (PAL) transports passengers within and

outside the Philippines. PAL reported the following gross
receipts during the taxable year:
Gross receipts from
transport of Within Without
Passengers P20,000,000 P15,000,000
Cargoes 10,000,000 5,000,000

If PAL has a total input VAT of P2,400,000 for its entire

operation within and outside the Philippines, how much is
the net VAT payable?
a. P3,600,000
b. P2,640,000
c. P2,260,000
d. P1,200,000

70. X Trading, a VAT-registered business, sold office supplies to

Baguio City government with the following data:

Purchases inclusive of VAT P224,000

Sales inclusive of VAT 560,000

The net VAT payable of X Trading on this particular sale would

be:
a. P - 0 -
b. P25,000
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