CPAR CPA Review School of the Philippines FINAL PRE-BOARD EXAMINATION Sunday, April 19, 2015 Business Law and Taxation 04:00PM to 06:00PM AnstructionsChoose the BEST answer for each of the following items. Mark only one answer for each item on the Special Answer Sheet provided. Strictly no erasure allowed. 1, Dividends on shares of stocks can only be declared out of unrestricted retained earnings of the corporation. Answer 1 — True, dividends whether cash or stock can be validly declared only out of unrestricted retained earnings. Answer 2 ~ False, during the receivership, the assets and properties of the corporation are being gathered for conversion into cash in preparation for distribution to creditors a, ) Both answers are correct ©. Only answer 1 is correct b. Both answers are not correct —_d. Only answer 2 is correct For Nos. 2~ 11. A, through insidious words and machinations made B to sign a promissory note which reads “I promise to pay A or order P10,000. Sgd. B. Then A negotiated the note to C by qualified indorsement and C to D by blank indorsement then D to E by delivery, then E to F also by delivery then F to G by special indorsement, then G to H by qualified indorsement, then H to I by facultative indorsement where Hi waived the notice of dishonor, then I to J by conditional indorsement, then J to k by restrictive indorsement. 2. Ifthe promissory note is in the hands of A, which of the following is correct? a. The promissory note is not valid, but A can collect from B because it is negotiable b. The promissory note is negotiable and valid hence A can collect from B c. The promissory note is negotiable but not valid hence A cannot collect from B d. The promissory note is valid and negotiable but A cannot collect from B 3. If the promissory note is in the hands of C, which of the following is correct? (a, C can collect from B, if C is a holder in due course 5 C can collect from B whether or not C is a holder in due course c. Can collect from A provided C is a holder in due course d. Can collect from B but not from A because A is a qualified indorser 4. Ifthe promissory note is in the hands of D, which is not correct? a. Dcancollect from B if C is a holder in due course even if D is a holder for value b. Dcan collect from either A or C if B will not pay c. Dan collect from C but not from A if B will not pay dD can collect from A even if D is a holder for value if B will not pay 5. If the promissory note is in the hands of E, which is correct? a. Ecan collect from A or C but not from D if B will not pay b. Eisa holder even if D did not indorse the note, hence E can collect from B ¢. Ecan collect from D but not from C if B will not pay d. Bis liable to E even if E is only a holder for value, if D is a holder in due course 6. Ifthe promissory note is in the hands of F, which is not correct? a. F can collect from C or E but not from A or D if B will not pay b. F may further negotiate the note either by indorsement or by mere delivery c. A,CandE but not D are liable to F if B will not pay d. Bis liable to F if F is a holder in due course even if E is only a holder for value 7. If the promissory note is in the hands of G, which of the following is correct? a. Gmay further negotiate the note only by indorsement and not by mere delivery b. Grmay sirike out the indorsement of A but all indorsers subsequent to A are also discharged ©. Gan collect from A or C or D or E or F if B will not pay d. Gean collect from C or F but not from,A or D or E if B will not pay a8. If the promissory note is in the hands of H, which of the following is not correct? a. Aand Gas qualified indorsers are not liable to H b. Dand E are not liable to H c. Cand F are liable to H even if H is only a holder for value d. Bis liable to H if His a holder in due course 9. If the promissory note is in the hands of I, which of the following is correct? a. .IfTis @ holder for value, but H is a holder in due course, B is liable to 1 b. All indorsers are liable to I except the qualified indorsers c. The qualified indorsers and the persons who negotiated by mere delivery are not liable to I d._ Ican strike out the indorsement of G because G is not liable to I 10. If the promissory note is in the hands of J, which of the following is correct? a. The instrument is no longer negotiable b. Bis liable to J if J fulfills the condition if J is a holder in duc course ¢. Ifthe condition is not yet fulfilled, B cannot pay J d. Bis not liable to J even if J fulfills the condition 11. If the promissory note is in the hands of K, which of the following is correct? a. The instrument is no longer negotiable b. ‘The subsequent indorsement and delivery of the instrument will be considered as assignment c. ) Gis not liable to K, even if K is a holder in due course dA, Dand E are not liable to K 12, A promissory note reads “I promise to pay B or order P100,000, Sgd. A. B negotiated the note to C, then C to D, D to E, E to F, F to G, G to H, then H to E all by special indorsements. Which of the following is correct? If A dishonors the instrument a, E should notify B, C, D, F, G and H to make them liable to him b. IFE notifies G and G notifies D, both D and G are liable to E ¢. F, Gand Hare discharged because they are intervening parties d. IfE notifies C and C notifies B and D, the notice given by C inures to the benefit of E making B and D liable to E 13. Using the preceding number, if E negotiates the note to I by special indorsement, which of the following is correct? a. F, G and Hare not liable to Tif I knows that the note was previously dishonored ., IfTis a holder in due course, all indorsers are liable to bim ¢. Tcan collect from E and E can collect from H d. If I presents the note for payment and A again dishonors, I should notify all the indorsers to make them liable to him 14, Using the preceding number, but I negotiates the note to G by special indorsement, which of the following is not correct? a. The negotiation to G is not allowed because G is an intervening party b. G can collect from E but not from H if A will not pay ¢. G can collect from F but not from Lif A will not pay . G can collect from A even if G is not a holder in due course 15. A promissory note reads “I promise to pay B or bearer P100,000. Sgd. A. B negotiated the note to C by special indorsement, then C to.D by blank indorsement, then D to E by delivery, then E to F by delivery, which of the following is corregt? a. IfF isa holder in due course, hd can collect fom either B, C, D or Eif A will not pay b. \F can collect only from E if A will not pay c. Fcan collect either from B, C or E but not from D if A will not pay d. F cannot strike out the indorsement of the payee B but can strike out the indorsement of C1, Using the preceding number, but the note is payable to B or order, which of the following is correct? a. IfF is a holder in due course, he can collect from either B, C, D or E if A will not pay b. F can only collect from E if A will not pay c. F can collect either from B, C or E but not from D if A will not pay d. F cannot strike out the indorsement of the payee B but can strike out the indorsement of C 17. Continuing the preceding number, and F makes a special indorsement to G and G makes a qualified indorsement to H and H makes a conditional indorsement to I, which of the following is correct? a, Before fulfillment of the condition, I may demand payment from A and if A pays, A’s obligation is extinguished ». Before fulfillment of the condition, 1 may demand payment from A and if A refuse to pay, the note is considered as having been dishonored ¢. Upon fulfillment of the condition, 1 can demand payment from any of the indorsers if A dishonors the instrument Upon fulfillment of the condition, I becomes a holder and I can demand payment from A if Lis a holder in due course 18. Which of the following instruments is negotiable? a. “Pay to the order of A or B the sum of P100,000.” Sed. C and D b. “promise to pay to the order of A or B the sum of P100,000. Sed. C and D ¢. “Pay to B or order the sum of 100,000 30 days after sight”. Sgd. A d. “We promise to pay A and B the sum of P100,000". Sgd Cand D 19. $ sold his car to B on installment and a chattel mortgage was constituted on the car. B defaulted in tivo installment payments. $ foreclosed the chattel mortgage and sold the car at a public auction. If there is deficiency, can § recover the deficiency? a. Yes, even without stipulation ¢. No, even if there is stipulation b. Yes, if there is stipulation No, unless there is stipulation 20. B borrowed P100,000 from S secured by a chattel mortgage on B’s car. The debt is payable in installment. When B defaulted in 2 installment payments, S foreclosed the chattel mortgage and sold the car at a public auction. If there is excess, who is entitled to the excess? a. S,even without stipulation —_¢, S, unless there is stipulation b. B, only if there is stipulation . d. B, even without stipulation 21. B pledged his ring to S. B failed to pay his obligation. $ sold the ring at a public auction. If there is deficiency, can $ recover the deficiency? a. Yes, if there is stipulation ©. Yes, even without stipulation b. No, even if there is stipulation 4. No, unless there is stipulation 22. Inadvertently, the SEC approved the Articles of Incorporation and issued a Certificate of Incorporation to Wholesome Corporation. Thereafter it was discovered that the incorporators have not completed the required period of residency in the Philippines. As a result, which of the following is not correct? a. The corporation shall be considered as a de-facto corporation b. The right to exercise corporate powers can be inquired into collaterally in any private suit to which the corporation maybe a party ©. The corporation has no legal personality and the incorporators maybe held personally liable for damages d. The Solicitor General has the right 10 question or contest the validity of its corporate existence through a quo-warranto proceedings 23. In case @ managing partner collects a demandable debt from his debtor who also owes the partnership a demandable debt, which of the following is not correct if payment is not enough to cover the two debts? a, The sum collected shall be applied to the partnership credit b, Itshall be applied to the two credits in proportion to their amounts ¢. The debtor has the right to have the payment applied to his debt to the partner if it should be onerous to him d_ The partner cannot apply the payment to his own credit24. May not require stockholders approval a. Declaration of cash dividend __c. increase of bonded indebtedness b. Management contract d. Removal of a director 25, Assume that the unpaid subscription of S for 10 shares with a par value of P100 each is P400 and the expenses, interest and cost of sales amount to P50. Who is the highest bidder if the bids are as follows? a. P400 for 5 shares c. P450 for 7 shares 'b.. P450 for 6 shares d. P400 for 4 shares 26. The following are the effects of unlawful partnership, except a, The contract is void ab initio and the partnership never existed in the eyes of the law b. The profits shall be confiscated in favor of the government c. The instruments, or tools and proceeds of the crime shail be forfeited in favor of the government 4. , The contributions of the partners shall be confiscated in favor of the government 27, A person cannot be admitted into the parmership without the consent of @. All the partners c. 2/3 of the partners 'b. Majority of the partners d. Partners representing the controlling interest 28, On April 1, 2014, A and B entered into a contract of partnership for the purpose of buying and selling textbooks, with the former as capitalist partner and the latter as industrial partner. It was agreed that A shall contribute P100,000 to the common fund on May 2, 2014. Upon the arrival of the designated date, A failed to deliver the contribution he promised. As a result a. B should make a demand upon A for the delivery of his contribution to render A in default b. The contract of partnership becomes void because A failed to give his contribution to the common fund ¢. B can compel A to deliver his contribution with interest and damages without the necessity of demand . The contract of partnership was never perfected because there was no delivery of contributions by the partners 29, A, Band C formed a limited partnership with A as general partner, B as limited partner and C as industrial partner. A and B contributed P50,000 each. The partnership failed and after disposing all its assets to pay partnership debts, there still remains a note payable in the sum of P15,000. Against whom can the creditor demand payment of the note of P15,000 a. Only A is liable to pay the P15,000 indebtedness b, Aand Bare liable to pay P7,500 each ©. A and C ate liable to pay P7,500 each d. A, Band C are liable to pay P5,000 each 30. Statement 1- A director is removed from office by a vote of the stockholders holding or representing at east 23 of outstanding capital stock, The vacancy occasioned by such removal can be filled by the vote of at least a majority of the remaining directors if still constituting a quorum Statement 2- Treasury shares sold for less than par or issued value are considered “watered stock” and as such are prohibited by law. a. True, true b, True, false. False, true | d. False, false we . One of the following is a ground for the suspension or revocation of the certificate of incorporation by the SEC a, If-the corporation has commenced iis business transactions and afterwards ceased operations continuously for a period of at least $ years b. If the corporation fails to commence and siart to operate and the failure to operate is due to causes beyond its contro] c. If the corporation does not formally commence its business operation or transactions within two years from date of issuance of certificate of incorporation 4. if the corporation has commenced its operations and subsequently become continuously inoperative for two years32, The following are ways of enforcing payment of unpaid subscription. Which is the exception? a. Sale at public auction of delinquent stock b. Denying delinquent stock cash dividend ©. Filing a court action to recover unpaid subscription | & Denying delinquent stock the right to vore and be voted upon 33. After ten years, five out of the nine incorporators who organized the corporation and signed the articles of incorporation died. The corporation is a, Dissolved as there will only be four left which is below the minimum of five incorporators required by law b, Dissolved as the Corporation Code requires that the incorporators be alive during the operation of the business ©. Not dissolved as it still has forty years left in its term 4. Not dissolved as it enjoys the right of succession 34. May a stock certificate be issued before full payment? ‘Statement 1 ~ No, in case of stock with per value Statement 2 ~ Yes, in case of stock without par value a True,true b. True, false‘ c. False, true. False, false 35. Which of the following corporate acts will not require the approval of the stockholders. or of the members of the private corporation? a. To amend the by-laws b. To increase the capital stock c. To invest corporate funds in another corporation or business d. To elect the officers of the corporation 36. Delectus personae is an element of a partnership which means a. Right to choose his partners ¢. Obligation to remain loyal to his partners b, Confidence and trust in his partners 4. Distribution of profits among the partners 37. When a real property is contributed to the parmership a, Areal contract is perfected b. A written instrument is required c. A public instrument complete with inventory is required d. A partner can make important alteration if beneficial to the partnership. 38. A, B, C and D are general partners contributing P20,000, P30,000, P50,000 and industry respectively. At the time of liquidation, the partnership is indebted to Y for P50,000, to partner A for P30,000 and to partner B for P20,000. If the assets of the partnership amount only to P20,000, which of the following is correct? a. Y can collect P20,000 from the partnership and from partners A, B and C at P10,000 each b. After exhausting the assets of the partnership amounting to P20,000, ¥ can collect from partners A, B, Cand D at P7,500 each . c. ¥ can collect P20,000 from the partnership and P30,000 from either partners A or B or C or D 4. IFY succeeds in collecting the P30,000 from the separate properties of the partners concerned, partners A, B and C will be required to make additional contribution 39. A is the listed owner of 10,000 shares with par value of P100/share in ABC Corporation. ABC sued A for the payment of A’s indebtedness of PIM. A contends that such debt must be compensated by his shares of stocks with the plaintiff corporation. The contention of A is a. Valid due to legal compensation ; vas id by virtue of judicial compensation fe since he is not a creditor of the corporation a ‘Autoonaticaly extinguished if the fair market value of the shares is PIM40. In the partnership of A, B, C and D, D was designated as the managing partner, D’s able management prevented the firm to suffer from the economic turbulence caused by the instability of the Philippine peso. Partners A, B and C became jealous of D’s good name. As a result, D was capriciously and whimsically removed as manager without a valid cause. Is the removal valid? a. Yes, D’s removal is valid even without his consent b. Yes, provided it is approved by all the other partners ©. No, D’s appointment is irrevocable without a just or lawful cause 4. No, D can only be removed for a valid cause with vote of the partners owning the controlling interest 41, The importation of the following is exempt from VAT, except a. grapes, apples and oranges ‘c. race horse, fighting cocks and zoo animals b. poultry and livestock d. tice, corn and coffee beans 42. The importation of the following is subject to VAT, except a. vegetables, cows and shrimps __. . shells, corals and tobacco b. logs, woods and abaca d. cotton, orchids and bamboos 43. ABC Transport Corporation has land, sea and air transport operations. To improve its services, which of the following importation is subject to vat? a. 20 units of airconditioned buses b. 12 units of life-saving, safety and rescue equipment for shipping transport operation ¢. 10 airplanes . 5 ships 44. A, a vat taxpayer made a Php 100,000 sales to the government invoiced at Php 112,000 inclusive of output vat. A purchased the same for Php 90,000, net of Php 10,800 input vat. The government effected payment, net of the 5% final vat. The entry to record the sale to the government is, a. Cash Php 107,000 Standard Input Tax 5,000 Sales Php 100,000 Output Tax 12,000 b. Cash Php 100,000 Standard Input Tax 5,000 Output Tax 7,000 Sales Php 100,000 Output Tax 12,000 ¢. Cash Php 100,000 Standard Input Tax 5,000 Sales Php 100,000 ‘Output Tax 5,000 d. Cash Php 106,400 Standard Input Tax 5,600 Sales Php 100,000 Output Tax 12,000 45. Using the above information, the actual input vat that will be charged to cost or expense is a. Php 3,800 b. Php 5,000 c. Php 7,000 . Php 2,000 46. On April 19, 2015, Mr. A donated 1,000 shares of stock of ABC Corporation. ABC Corporation shares are listed in the stock exchange. The following are the trading prices of each share on April 19, 2015: Opening price os Php 800 Highest trading price : 380 Lowest trading price 7 760 Average trading price : 820 Last trading price 2 840 The gross giftis eS47. The DOC Restaurant, a vat registered taxpayer sold to spouses H, a senior citizen and W a person with disability, as follows (based on menu prices): a Ww 2.pieces spicy chicken Php 150 Php 150 Siomai special 64 Sago - gulaman 64 Mushroom chicken soup 100 100 Tofu 64 Steamed kangkong 64 Buko pandan 70 A) Totals Php 448 Php $48 ‘The output tax due is . 3. Php 38.40. b. Php 48 c, Php 43.01 d. PO 48. Mrs. A died leaving 2,000 shares of stocks of ABC Corporation, a closely held corporation, as part of her estate. The balance sheet of ABC Corporation is shown below together with the fair values of its assets and liabilities: FA RV AL U_E Book Values ‘Assessed Values Zonal Values Independent Appraisal Cash Php 2,000,000 Php 2,000,000 Equipment , 1,000,000 1,200,000 Land A 4,000,000 5,000,000 Php 10,000,000 Php 12,000,000 Land B 4,000,000 4,400,000 8,000,000 7,000,000 Building A 2,000,000 4,800,000 6,000,000 Building B 1,000,000 4,000,000 3,900,000 Investment 3,000,000 2,600,000 Total Assets Php 17,000,000 Liabilities Php 7,000,000 Equity 10,000,000 Total Liabilities & Equity Php £7.000.000 Each share of stock of ABC Corporation has a par value of Php 1,000. Mrs. A purchased the shares at Php 1,200/share. ABC Corporation has 20,000 shares outstanding. The shares of stock shall be included in Mrs. A’s gross estate at a. Php 2,920,000 , b, Php 2,880,000 c. Php 2,000,000 d. Php 2,400,000 49. An inventory of Mr. A’s properties was taken two years after his death. He had the following properties during the inventory taking: Cash (20% from income of A’s properties after death) Php 4,000,000 Car (bought for Php 2M one day before A’s death) 1,200,000 House and Lot (EMV — Php 8M on A’s death) 10,000,000 Business interest (worth Php6M on As death) 7,000,000 The following expenses and losses were incurred by the estate: Funeral expenses Php 800,000 Judicial expenses 400,000 Loss of pieces of jewelry (8 months after A’s death) 1,000,000 Obligations of A paid using his estate 2,000,000 The gross estate of A is a, Php 23,200,000 _b. Php 23,400,000 —c. Php 22,200,000 _—_—_d. Php 20,400,000 50. Which of the following is not subject to VAT? ; a. Non-life insurance premiums c. Non-life insurance commissions b. Non-life reinsurance premiums d. Non-life reinsurance commissions$31. For the months of August and September 2014, ABC Bank has the following income / loss: Interest income with maturity August September - of less than 5 years 800,000 PIM - of more than 5 years 800,000 iM Rentais 400,000 300,000 Net trading gain (loss) (100,000) 200,000. The gross receipts tax of ABC Bank for August is a. P76,000 ‘b. P68,000 ¢, P69,000 d. P63,000 52. The gross receipts tax of ABC Bank for September is . a. P125,000 b. P130,000 ©. P116,000 4. P123,000 53. A filed his ITR for 2014 on April 15, 2015 and will pay his tax liability in installment. The return shows an income tax due of P100,000 and income tax withheld of P60,000. If A pays the 2” installment only on October 15, 2015, the amount to be paid (excluding compromise penalty) is a. P26,000 b.P35,000 . P55,000 4, P37,500 54, A, a VAT registered person had the following data for April 2015 (vat not included): a. Export sale of feeds for animals i.” For human consumption P 1,500,000 ii, For race horses and fighting cocks ‘500,000 b, Domestic sale of feeds for animals i. For human consumption 730,000 ii. For race horses and fighting cocks 250,000 ¢. Input tax which cannot be directly attributed to any of the above sales 100,000 The output tax for April is a. P30,000 b. P90,000 ©. 60,000 4. P120,000 55. Using the above data, the vat still due (excess input tax) is a, (P45,000) b. (P20,000) ©. (P70,000) . P5,000 56.A, a VAT registered taxpayer made the following acquisition of capital goods from VAT registered suppliers (net of vat) during the quarter; Date Cost Estimated Life July 2 P1,500,000 8 years 10 500,000 2 years August 5 400,000 3 years 20 00,000 4 years September 10 500,000 4 years 15 600,000 6 years The July 2 acquisition was retired in September. The input tax for July is a. P4275 . P5,500 ¢, P63,000 4. P240,000 57. Using the above data, the input tax for August is a, P2,583 ‘b, P8083 co. P108,000 d, P113,500 58. Using the data in number 57, the input tax for September is a P2,450 b. P132,000 ©. P178,950 d. P231,450 59. Which of the following is subject to vat? a. Sale of passenger or cargo vessels and aircraft for domestic or international transport operations b. Sale of agricultural and marine food products in their original state c. Sales by agricultural cooperatives duly registered with the Cooperative Development Authority d. Sale of fuel, goods and supplies by persons engaged in intemational shipping or air transport operations .60. The following are exempt from vat, except a. Services subject to percentage tax b, Lease of residential units with a monthly rental not exceeding P12,800 c. Export sales d. Services of banks and other non-banks financial intermediaries 61, .A’s income tax liability for 2014 was P75,000. She filed the return and paid the total amount due but not with the proper intemal revenue district office on July 15, 2015, The amount payable (ignoring compromise Penalty) is a. P97,500 b. P112,500 @. P116,250 d. P135,000 62. DODC Airlines, an international air carrier showed the following gross receipts: Point of Origin Destination Gross Receipts Philippines China P 2,000,000 Philippines Singapore 1,600,000 Singapore Japan 3,000,000 ‘Twenty-five percent of the shipment from the Philippines to Singapore were later shipped from Singapore to Japan. The percentage tax due is a. P198,000 b. P186,000 ©. P108,000 d. P96,000 63. DODC Broadcasting Company, a non-vat holder of a franchise to operate a radio and television network reported the following gross receipts (net of any tax): Year 2014 P_ 9,000,000 2015 12,000,000 The business tax liability 2014 2015 a.P 270,000 P 360,000 b. 1,080,000 1,440,000 c. 270,0000 1,440,000 d. 3,080,000 360,000 64, Tax credit for foreign tax paid is allowed on a. Income tax paid by a non-resident citizen _c. Income tax paid by a non-resident alien b, Estate tax paid by a resident alien 4. Donor’s tax paid by a non-resident alien Questions No. 65 to 67: 65. ABC Corporation did not file its annual income tax return for the calendar year 2014 on its due date, that is April 15, 2015. On May 15, 2015, the corporation advised the BIR that its income tax due for the said year amounts to P1,000,000 but, however, due to its adverse financial condition at the moment, it will be unable to pay the entire amount, inclusive of the delinquency penalties. Hence, on May 15, 2015, it made a partial payment of P400,000. The total amount due as of May 15, 2015 is (ignoring compromise penalty) a. PI,266,667 b. P1,160,000 ¢. P760,000 4. P1,516,667 66. Using the above statement, assuming thai the BIR demanded payment of the unpaid balance of its tax obligation payable by June 15, 2015, the amount due on June 15, 2015 is (ignoring compromise penalty) a. P88i,111 b. P1,027,778 ©. P772,667 dd. P926.667 67, Using the receding number, if the corporation fails to pay the tax due by June 15, 2015, how much will the corporation pay on July 15, 2015 a., P895,796 b. P1,044,908 c. P785,548 dd. PO78,711 68, Which of the following is subject to VAT? a, Sale of residential lot valued at P2,000,000 . Sale of residential house and lot valued at P2,500,000 c. Lease of residentiai units with a monthly rental per unit of P12,000 where the aggregate rentals received during the year was P2,500,000 4d. Lease of residential units with a monthly rental per unit of P15,000 where the aggregate rentals received during the year is P1,800,00069. Which of the following is not considered as transaction deemed sale? a. Transfer, use or consumption not in the ordinary course of business of goods or properties originally intended for sale or for use in the course of business b, Distribution or transfer to shareholders or investors as share in the profits of the vat-registered person or to creditors in payment of debt ¢. Consignment of goods if actual sale is not made within 60 days following the date such goods were consigned 4. Retirement from or cessation of business, with respect to capital goods existing as of such retirement or cessation 70. The gross receipts of A, a lessor, from his residential units for the year, show: Monthly rent/unit No. of units Total 12,800 10 P1,536,000 P10,000 10 1,200,000 P14,000 8 P1,344,000 P 16,000 8 P1,536,000 ‘The output vat is a, P673,920 b. P345,600 c. P529,920 d. PO 71. Which of the following is not a power vested in the Bureau of Interna} Revenue? a. The assessment and collection of all national internal revenue taxes, fees and charges . The enforcement of all forfeitures, penalties and fines c. The granting of tax exemptions and other tax incentives to taxpayer d. The execution of judgments in all cases decided in its favor by the Court of Tax Appeals and the ordinary courts 72.The seizure by the government of real property to enforce the payment of taxes to be followed by its public sale if the taxes are not voluntarily paid a. Delinquency —b. Deficiency _¢. Levy .Distraint 73, DEF Corporation, due to financial incapacity requested that it be allowed to pay its income tax liability per return for calendar year 2014, amounting to Pl million in four(4) equal monthly installments starting April}S, 2015. Its request has been duly approved. The tax due for the second installment on May 15, 2015 is a, P250,000 b, P254,167 —c.,P262,500 d. P300,000 74. A insured his life for PIOM. in case A dies, the proceeds of the life insurance shall be: a. Excluded from gross estate if the beneficiary is the estate, executor or administrator whether revocable or itrevocable b. Part of gross income if the beneficiary is a third person and the designation is revocable c. Part of the gross estate if the beneficiary is a third person and the designation is irrevocable d. , Excluded from gross income whether beneficiary is revocable or irrevocable 75. A sold his piano, a capital asset which he purchased in 2000 at a cost of P50,000. The terms of sale show: Downpayment - January 15, 2014 20,000 Installment payment - February 15, 2014 20,000 ~ February 15, 2015 40,000 ~ February 15, 2016 40,000 A will report a taxable gain on above sales in 2014 of a, P1167 b.P23,333 ¢. P35,000 d. P70,000 76. ABC Corporation engage in freight and trucking business received the following in 2014 Share in net income of the joint venture with XYZ Corp. 900,000 Dividend received from KLM Corp., a Domestic Corp. 18,000 Dividend received from NOP Corp., a Non-resident foreign Coep. | 10,000 Own net income 1,200,000 ‘The net taxable income of ABC Corp. is a. P1,210,000 b. P2,110,000 cc. P2,210,000 d. P1,200,90077. During 2014, the total net amount paid for the salaries and wages amounted to P9,000,000 after effecting the following deductions for employees: SSS premiums contributions P 420,000 Philhealth premiums contributions 160,000 Pag-ibig premiums contributions 180,000 Creditable withholding tax 300,000 In addition, the corporation provided its vice-president for operations P340,000 cash as fringe benefit. The allowable deduction for salaries and benefits is a. P9,340,000 _ b. P10,500,000 c, P10,340,000_. P 10,000,000 For Nos. 78 ~ 80, ABC, a domestic corporation usually bills its foreign branch at cost. ABC and the BIR entered into an advanced pricing agreement which fixed ABC’s cross border pricing to its foreign branch at 150% of cost. The following are provided for the year: Philippines Branch Sales through the branch: (intra-company sales) Selting Price Php 10,000,000 Php 18,000,000 Cost of Sales 10,000,000 40,000,000 Gross Income Php © Php 8,000,000 Sales to another domestic corporation: Selling Price Php 8,000,000 Cost of Sales 3,000,000 Gross Ineome Php 5,000,000 78. The gross income from the Philippines is a. Php 5,000,000 —_b. Php 10,000,000 ~—c. Php 13,000,000 d. Php 15,000,000 79. The total gross income of ABC is a. Php 13,000,000 b. Php 18,000,006 _c. Php 5,000,000 d. Php 10,000,000 * 80. If the foreign operation is not a branch but a foreign subsidiary incorporated abroad, ABC"s gross income is a. Php 5,000,000 —b. Php 10,000,000. Php 9,000,000. Php 13,000,000, The End!!