CPAR CPA Review School of the Philippines FIRST PRE-BOARD EXAMINATION Saturday, July 27.2019 Taxation 8:00 AM to 10:00 AM Iraracto: Choose the BEST znswer foreach ofthe following items Mark only one answer for each item on the Special Answer Sheet provided Stistly no eresute allowed 1 A.test applied in the realization of income and expenses by an accrual bass taxpayer a Alleventstest b. Immediacy test ¢. Rational basis test. Pre-dominance test 2. A test applied to determine whether the accumutatin of after tax profits by & domestic or resident foreign ‘corporation is really forthe reasonable need ofthe business \Allevertstest b, Immodiacy test ¢ Rational asi test Predominance test 3. test applied to gauge the consitutionality of an asailed law in the face of an equal protection challenge wAlleventstest b.Immediacy test c Rafional busts test d_ Predominance test 4, Which ofthe following items are not taxable? ‘Income from jueteng « Incorve taxes paid and subsequently refunded ‘Gain arising ftom expropriation of property d. Gains on the sale ofa car used for personal purposes 5. Which ofthe following ate deductible from gross income for inonme tax purposes? ‘Interest on loans used to acquive capital pp nent or machinery th Reserves for bad debts «¢ Worthless securities which are ordinary assets <4 Worthless securities which are capita esets 6. An offline iteration air carer having a branch office oa sales agent i the Philippines which sells ‘asage documents for compensation ar amnion teaver efFlne Aphis ofits principal or bead office or Bor other arines covering figh's originating Hon the Philippines poms or of-line Might is 2 Subject t0 2 4% incon ty on is gs98s Philippe Biss ' Subject to 3% soni carver" tax on prose Philippine bile eNot subject to 2% ross Peiiyine billugs waa aos 19 the comnson caries ta vine bi the Ye enramon carins tx Subject both the 2 4 grass Pi ings ard 7. tn computing net income, deduction in any cave be ali: wad i cesp2ct of Loses from sles or exchanges of propety dirty) indivectly. except wr Becween the fasiar eta rus sad the fdulary of another trust i he same person is the beneficiary ‘with respect to each trust b, Between the fiduciary cf w rust and the grantor Between the fiduciary of a caw end the Eenetisary of suck trust 44 Between members ofa family ofan individial lich shal incu the brothers and sisters, whether by ‘the whole or half blood, spouse, ancestors and lines descendants 48, The following are characteristics of spscial assessment. except «Its levied on lands oaly b.Itisbased on the improvements iaroduced by the government € Ikis based onthe benef derived by the snes cf the lard It isa personal lability of the persons assessed% ‘AS 10 scope ofegsature power to ta, which ofthe following scores? 1 The power ot pre, ery, compres wou ey Hn ee the exience of the goverment is a necessity 'b The discretion of Congyess in imposing axes extends to the mode, method and kind of tax, even ifthe consitaton provides oherwise Congress has the right o levy a tx of any kind at any amount at it set it, even inthe of any connitational provision . i 4. The sole arbiter of the purpose for which taxes shall be levied is Congress, provided the purpose is public and the cours may not review te levy ofthe tx to determine whether or not the Purpose public 10. domestic proprietary educational institution improve its brary facilites by ang anew wing tits 18 library building, The capital outlay on library improvement, for income tax purposes, may be ‘8 Deducted in fll atthe time of completion ofthe improvement '. Capitalized or expensed outright at the option ofthe school owner Capitalized and deprecated over the estimated life ofthe improvement 4. Capitalized or expensed outright at the option of the government 11. Which ofthe following items isan income of aron- resident citizen subject othe basic tax (scheduler)? 1. Dividend received from a domestic corporation Prizes ffom USA lotto «Interest income from PNB 4. Share in the net income of genera professional partnership 12, Consider the following statements TA special esessment is an enforced proportional conritution fiom the owmers of ral property ‘especially or peculiarly benefited by public instruments IL The power of eminent domain maybe exercised even by private individuals while the power of taxation and police power maybe exercised only by the government ML Unlike tax, a debt draws interest, if stipulated IV. Thepoice power, power of texation and povterof eminent domain being fundamental powers of the state maybe exercised by the goverment even without any constitutional grant ‘a Land Il ae cortect b. Only IT isnot correct ¢. and IV are comect d. All are correct 13, Tips or gates pad rectly to an employee by. customer ofthe employer which are not accounted for by the employee to the employer are ‘Statement 1- Considered as passive income ‘Statement 2- Subject to creditable withholding tax ‘a. Both statements are true °c. Only Statement 1 is rue . Both statements ate false. Only Statement 2s true 14. The following, except one are the basic principles ofa sound tax system. The exception is ‘It should be capable of being effectively enforced B Itshould consider the taxpayers’ abilty to pay tis levied by the lanmaking body ofthe state The sources of revenue must be sufficient to meet government expenditures and other public needs 15. A, presented the following data regarding the items of income be eared during taxable year 2015: 1 Reta incomve (gross) ‘a. Froman apartment unit in USA. 240,000 ', Frome parcel of land in Makati 180,000 1. Royalties from book: ‘a. Published inthe Philippines 30,000 Published in USA : 20,000 TL Imerest income eared on notes receivable ‘8 From a debtor who resides in USA. 15,000 'b. From 2 debtor who resides in Marila 25,000 IV. Net profit fom sales, merchandising business: ‘4, From Philippine outlet 300,000 . From USA outlet 200000'V_ Dividend income fiom two domestic corporations. The gross income fom the Philippines forthe past 3 years = 260% ofits world income 0.000 b 88% of ts world income mane VI Dividend income From two resident foreign corporations. The ggoss income from the the Philippines forthe past 3 years wat equivalent to 40% oft ord income pevea ofits world income 20,000 VIL. Prizes received from Supermarket raf. ‘A From the Philippines. 1 ABC Supermarket 000 2 DEF Superstore aot B. From USA 1 UVW Supermarket oon 2. XYZ Supersivers ison VIL, Prizes and winnings from oto 1 Philippine lotto breed 2 USA lotto Jones “The ttl income from sources within the Pilippiaes is 2 P903,000 P703,000 "© PRSS,000 «4 907,000, 16, Using the above data, the total income from sources ontide the Philippines is a P63S,000 b.PS35,000 ©. POH3,000 4 P629.000 17. Using data in number 15, assume instead that A isa resident citizen, single, his net taxable income subject 10 sraduated rates is ‘2 P1,118,000 Pi,018,000 ¢.P992,000 P938,000 18, Using data in number 1S, assume instead that Aisa non-resident citizen, singe, hs net taxable income subject to graduated rates is ‘1 495,000—«~b.PA75,000, «470.000. PA87,000 19, The power to tx isnot without imitations. Such fimitatons may be constitutional (expressly found in te onstuson or mpfied in its provisions) or inherent (estic the power although they are not embodied in the constitution) Which of the following isan inherent Limitation? ‘No imprisonment for non-peyinent of poll ta. b, Equal protection ofthe laws ¢. Exemption from taxation of government entities. 4G. Enewtion of religous, charable, and eduestonl estes, nonprofit cemeteries, and churches from propery taxation 20. Which ofthe following shall be sYlowed 2s deducticas from gross sales? et es cerurs and ellowances for which proper creat ox refund was made during the month or quarter tothe buyer for sales presiously recorded es vaxabie sales tb. Discounts determined and gated a te tine of sae, which are previously indicated inthe invoice, the amount thereot forming part of the gross sales dult rezorded in the books of accounts ce Sales discounts indicated i tbe invoice at the tine of sale, the rant of which is dependent upon the happening ofa future event abanéc baandb cand d.a,bandc 21. Ma. A operates a convenience store and als ers bookkeeping services tober cients In 2018, he ge a read to Php 1 20,000 an her receipts rom bookkeeping serves amounted to Php 400,000, he Se ett als a0 operating expenses stovrsing o Phy 700,000 and Php 300,000, respectively Het inca oe nabity fr the yea, she signified hes intention 0 be ted at BY income tx rat in Be rerum is A Php 108,000 b Php 128,000. Php 48,000. Phy) 28,000her income tax 72 Using te preceding umber, tut Ms. fied wig Her inteton ob ued liability for the year is 4° Php 80,000. b Php 70,000. «Pp 370,000, 4 Php 280,000 1000 Her cost of sales and operating Ms. A owns a day and nightclub with ipts of Php 2,800, 4 with gross salestecel i expenses are Pip 1 200000 and Php 700,000, respectively and with nono Her tax due forthe yea is 8. Php 250,000 "b Php 190,000. Php 228,000 Php 248,000, 24, Using the preceding umber, which of he following statements is incorrect? ‘Ms A has no option to aval of the 8% income tax rate on her income from business b. Ms Ais subject to other percentage tax under Sec. 125 ofthe Tax Code, as amended ‘© Aside fom income ax, Ms. A is subject to VAT 44. Aside ffom income tax, Ms. Ais lable to pay the prescribed business tax 25. Ms A, the cost accountnt of ABC Corporation, earned annual compensation income of Php 1,500,000, inclusive of 13° month pay and other benefits in the amount of Php 120,000, but net of mandatory ‘ontsbutions to S88, Philheath and Pag.ibig of Php 25,000. Aside ffom employment income, she owns & Convenience store, with goss sales of Php 2,400,000. Her cos of sles and operating expenses ae PRP 410,000 and Pip 500,000, respectively and with aon-operating income of Php 100,000. I. Ms, A opted #9 be taxed at 8% income tax rate of his grss sales fr his income from business, her tax due is ‘2 Php 292,800 b Php $13,000 c Php 495,000 d 312,800 26. Using the preceding number, if she di not opt forthe 86 income tax based om gross sales! receipt, her Ux dues ‘2 Php 562200 b. Php S13,000 « Php 164,800 4. Php 184,800 27. Which ofthe following is core? Self-employed individuals shall ave the option o aval ofan 8% taxon gross sles or receipts in Hew ofthe graduated income tax rates b. Professionals shall have the option to aval of an 8% tax on gross sales or receipts and other non= ‘operating income in lieu ofthe graduated rates «6, Holiday pay received from employer ~ employee relationship i exempt from income tax 4. For martied individuals, the husband and wife shall compute separately their individual income tx ‘based on their respective total taxable income, ing dividends were declared and pai to the stockholders. Whet 28, ABC Corporation was dissolved and liqui tax consequence follows? ‘2. ABC Corporation should deduct final tax of 10% fom the dividends by. The stockholders should declare thei gain fom their investment and pay income tax at ordinary rates The dividends are exempt from 11x ABC Corporation should withhold a 10% creditable tx 29, MGC Corporation secured an income tax holiday fr S years as a pioneer industry, On the fourth year ofthe tax holiday, MGC Corporation declared and paid cash dividends 10 its stockholders, all of whom are individvals. Are the dividends taxable? "a The divideads ar taxable, the tax exertion of MGC Corporation does not extend to its stockholders 1}. Theedividends are tax exempt because of MGC Corporation's income tax hoiday ‘¢. The dividends are taxable if they exceeded 50% of MGC Conporaton's retained earnings The dividends are exempt if paid before the end of MGC Corporation fiscal year 130, Mr Alas sells shoes in Makati through areal store. He pays the VAT on his gross sales tothe BIR and the ‘municipal license tax based on the same gross sales tothe City of Makati. He comes to you for advice because he thinks he is being subjected o double texation. What advice will you give him? ‘2 Yes, there is double taxation and itis oppressive 1. The City of Makati does not have this power Yes, there is double taxation and this is illegal inthe Philippines 42. Double taxation is allowed where one taxis imposed by the national government and the other by the local government31 Congress passed a sin tax law that increase the tax rates on cigaretes by 1,000% The law was thought to be sufficient to drive many cigarene companies out of business, and was questioned in coun by a cigarette company that would go out of business because it would not beable to pay the increased tax The cigarette company is 4 Wrong because toxes are the lfeblood ofthe government '. Wrong because the law recogpizs tha the power ota is the power to destroy & Corret because no government can deprive a person of his livelihood 4. Correct because Congress, inthis cas, exceeded its power to ax 32. XYZ Corporation manufactures glass panels and is almost atthe point of insolvency It has no more cash and allithas are unsold plass panels It received an assessment from the BIR for deficiency income taxes It wants to pay but due to lack of cas, it seeks permission to pay in kind with glass panels Should the BIR grant the requested permission? It should urant permission to make payment convenient to taxpayers Itshould not grant permission because a tax is generally a pecuniary burden © It should grant permission, otherwise, XYZ Corporation would not beable to pay 4 shoud no gant pein een the goverment oes ot ve he tog i or ha 433, PRT Corporation purchased a residential house and lot with a swimming pool in an upscale subdivision and required the company president o stay there without paying ret, it reasoned out tha the company president must maintain a certain image and be able to enteriin guest atthe house io promote the company’s business ‘The company president declared that because they ae childless, he and his wife would very well live in & smaller house Was there a taxable fringe benefit? ‘There was no taxable fringe benefit since it was for the convenience ofthe employer and was necessary forts business b. There was a taxable finge benefit since the stay at the house was for fee €. There was a taxable fringe benefit because the house was very lunrious 4 There was no taxable fringe benefit because the company president was only required to stay there and id not demand free housing 34. Pheleco is a power generation and distribution company operating mainly from the City of Taguig. It owns electric poles which it also rents out tother companies that use poles such as telephone and cable companies. ‘Taguig passed an ordinance imposing a fee equivalent to 1% of the annual rental for these poles. Pheleco {questioned the legality of the ordinance on the ground that i imposes an income tzx wiih local government ‘nits are prohibited ffom imposing. Rule on the validity ofthe ordinance ‘4 The ordinance is void: the fee is based on rental income and is therefore a tax on income The ordinance is valid asa legitimate exercise of police power to regulate electric poles ©. The ordinance is void, 1% of annual rental is excessive and oppressive 4. The ordinance is valid; an LGU may impose tax on income 35, Aleta sued Boboy for breach of promise to marry. Boboy los the case and duly paid the court's award thet {included among others, Php 100,000 as moral damages forthe mental anguish Aleta suffered. Did Aleta eam ‘taxable income? ‘She had a taxable income of Php 100,000 since income is income from whatever source ', She had no taxable income because it was a donation i © She had taxable income since she made a profit 4. She had no taxable income since moral damages are compensttory. 36, Which ofthe following statements is nol correct? 1 ‘a Incase of doubt, statutes levying taxes are construed strictly agains the government i , The construction of statute made by his predecessor isnot binding upon the successor, if, thereafter he becomes satisfied tha 2 different construction should be given & The reversal of a ruling shall not generally be given retroactive application, if ssid reversal will be prejudicial tothe tacpayer 4. A memorandum circular promulgated by the CIR that imposes penalty for violations of certain rules ‘need not be published in & newspaper of general circulation or offical gazette because it has the force and effect of law.37. Which statement below expresses the lifeblood theory? ‘The assessed taxes must be enforced by the goversment The underlying bss of exaions government necessity for without taxation, a government ean nether exist nor endure ‘Taxation san arbitrary method of exaction by those who are in the seat of power © 4. The power of taxation fan inherent power ofthe sovereign to impote burdens upon subjess and object “within its jurisdiction forthe purpose of raising revenues” 38, Which statement is wrong? The power of taxation may be exercised by the government, its political subdivision and public utilities Generally, there sno limit on the amount of tax thet may be imposed The money contributed as tax becomes part othe public funds 4. The power of tax is subject to certain constiniona imitations 39, The Philippines adopted the semiglobal tax system, which means that ‘a All taxable incomes, regardless of the nature of income, are added together to arrive at gross income, ‘and al ellowable deductions are deducted from the gross income to arive atthe taxable income b. All income subject to final withholding taxes are liable to income tax under the schedular tax system, while all ordinary income as well as income not subject to final withholding taxes ae lable to income tax under the global tax system ‘e. All texable incomes are subject to final withholding texes under the scheduler tax system 4. All taxable incomes from sources within and without the Philipines are liable 1 income tax who isa 140, For incom tax purposes, the source ofthe service income is important forthe taxpayer, ‘a. Filipino citizen residing in Makati City, Philippines Non-resident Filipino citizen working and residing in London, United Kingdom ‘¢. Filipino citizen who is married toa Jepanese citizen and residing in their family home located in Fort ‘Bonifacio, Taguig City Philippines 4. Domestic corporation 441, 12017 aningividual, who is realestate dealer, sold a residential lt in Quezon City at again of Php 100,000. The sale is subject to income tax a follows: 6% capital gains tax onthe gaia selling price or fair market valu, whichever is higher . 6% capital gains tax onthe gross Ordinary income tax atthe graduated rates of $9% to 32%6 of net taxable income 4, 30% income tax on net taxable income 42. The interest expense of« domestic corporation on a bank lan in connestion with the purchase of a production, equipment ’2_ [snot deductible from gross income of the borrower ~ corporation {Ts deduerible from the gross income ofthe borrower ~ corporation during the year orit may be capitalized part of cos of the equipment . Is deductible only fora period of five years from date of purchase 44 Is deductible only ifthe taxpayer uses the eash method of accounting 10 use only the calendar year for tax purposes. 48, Which among the following tuxpayers is rogined 1 ture projects considered as practice of 14 Partnership exclusively for the design of government infrastruc civil engineering '. Joint-stock company formed forthe purpose of undertaking construction projects ‘¢. Business partnership engaged in energy operations under a service contract with the government 44. Joint account engaged in trading of mineral ores.‘44. The municipal council passed an ordinance imposing an occupation ex on profession or occupation oF 2plaat accountant” A is the only person with such an occupation in the municipality. Which of the fllownng is correct” aA can successflly challenge the validity ofthe ordinance ss being discriminatory since be isthe only adversely affected b, The ordinance violates the constitutional rule of equality in taxation 1c. The ordinance is “class legislation” since it does not subject to occupation tax he other accountants 44. The ordinance isa valid exercise ofthe councils power to enact laws to rag revenue under the Local Government Code since the ordinance conforms tothe uniformity clause 45. The government is sad 10 be exempt from taxation, Which ofthe following ean exertion to this rule? 2A contract entered ito bythe AFP and SM where SM fornshes the AFP wth cmbas boots A goverment employee buying 30 printers for office use 2 AENacur brtle poccnnen claming exemption om coamcor'stax | | 4. DSWD claiming tax exemption on goods donated by the LGU of Albay | 46. The power to taxis not without finitations Such limitations may be constitutional (egpessy found in the ‘constitution or implied in its provisions) or inherent (restrict the power although they are not embodied in the constitution), Which ofthe following is an inherent limitation? a No imprisonment for non-payment of a poll tax. Equal protection of the laws «¢, _Exemption from taxation of government entities, Exempuion of eligious, charitable, and educational entities, non-profit cemeteries, and churches From propery taxation (47. During the audit conducted by the BIR oficial it was found thatthe rena income claimed by the corporation ‘was nat subjected to expanded withholding tax. Accordingly, the claimed rental expense va Is deductible fiom the gross income of the corporation, despite non-withholding of income tax by the corporation b. Ts deductible from the gross income of the corporation, provided thatthe 5% expanded withholding ‘axis paid by the corporation during the audit ce. Is not deductible from the gross income of the corporation due to non-withholding of tax ededuetible, iit can be shown thatthe lessor has correctly reported the rental income in is tax return 48. Which statement is correct? A non-stock, non-profit charitable association that sells is ile agricultural property is Nor required to file an income tax etur, nor pay income taxon the transaction tothe BIR, provided the sales proceeds are invested in another real estate during the year Required to pay the 6% capital ain tox on the gross sling price or fir market value, whichever is higher ce Mandated to pay the 30% regular corporate income tax on the gui from sale 4. Required to-withholé the applicable expanded withholding tax ete onthe transaction and remit the same tothe BIR 149. Abas 4,0 shares of investment inthe common shares of Delightful Corporation, coxting PS00.000, Dating the cunant taxable year, he received from Delightful Corporation, 200 shares of Cheerful Corporation with a fa vale of P00 per shares dvidends. the date of vided dolaraton, the hi mrt vale of Chee Ersgoraton vas P120 per share and by the time he received the dividend, the fair market value was P180/share. The dividend is we Subject to inal tax. b. Exempt from income tax ¢ Pat oftaxableincome dA stock dividend 50. Which ofthe long saemeat is rong? ao ar nay exerted bythe goverment it political vbdvisins and pubis The tnmeycontiuted as tax becomes pao the public nds , The pow of the Sate to tax subject to onsiutionlimiteons Geacally. there's eo lint onthe amount tax that maybe imposed poop | 1 | | 751. A isthe cost accountant ofa domestic corporation Tn 2017, he was promoted to chief accountant. Later, he bought new ear worth Php SM and he traded his old car with e fair market value of Php 700,000 and paid the difference of Php 800,000 to the seller His old car was donated by his father who bought the car 2 years ‘ago at & price of Php 600,000. His father paid the corresponding donor's tax Which of the following i incorrect? 2 The cost basis ofthe old arto A is Php 600,000 The old car isa capital asset The capital gan subject to income tax is Php 100,000 d_ The father of A isnot required (o report the capital gain as part of his texable income 52, A bought a parcel of land in Manila in 1980 at a price of Php 2M. In 2017, the land which remained ide had 4 fair market value of Php 12M B offered to buy the land for Php 12M. The Assessor of Manila had re- ‘assessed the property at Pip 10M in 2017 If A sold the land o B subject othe condition as stated in the Deed of Sale thatthe buyer shall assume the capital gains tax thereon, which ofthe following statements i correct? ‘8. The capital gain ax due on the wunsaction is computed at 6% ofthe selling price of Php 12M The capital gains tax return should be filed within 30 days ftom the date ef the sale and shall pay the wx due ashe files the return . The capital ysns tax due on the transaction is computed at 6% ofthe re-assessed value of Php 10M. 4_ Ais liable to pay real property taxon the land based on the re-assessed value in 2017, 53, Which ofthe following is not correct? ‘8. Any excess ofthe minimum corporate income tax over the normal income tax shall be caried forward and credited against the normal income tax forthe three (3) immediately succeeding texable year. The Secretary of Finance is authorized to suspend the imposition of the minimum corporate income tax ‘on corporations which suffers losses on account of prolonged labor dispute or because of force majeure, ‘or because of legitimate business iosses ‘eA minimum corporate income tax of 2% of the gross income is imposed on taxable corporations beginning on the 4 taxable year immediately following the year in which such corporation was amcorporsted 4. The Sccretary of Finance is authorized to promulgete, upon recommendation ofthe CIR the necessary rules and regulations that shall define the terms and conditions under which he may suspend the ‘imposition of the minimum corporate iacouve tax in a menrorious case ‘54, 112016, a final withholding tax atthe rate of 15% is imposed on the amount of cash andor property dividends received by noa-resident Foreign corporation from # doraesic corporation provided that the country in which the non-esident foreign comporation i domiciled, shat allow a credit agaist the tax due from the non-resident foreign corporation taxes deemad to have been paid in the Philippines equivalent to 2. 15% b.20% 1% d 18 155. There shall bea prima facie evidence of a purpose to avoid the tax upon ity members or stockholders ifthe corporations is/are ‘Publicly held corporations «¢ Insurance companies 1. Holding or nvestment companies Banks end other non-bank financial intermediaries ‘56. The following organizations shall not be taxed in respect to income received by them as such, except ‘8. Not-stock and non-profit educational inituio '. Government edvcstionalinsitation © Non-profit hospitals d. Cemetery company owned and operated exclusively tr the benefit ofits members ‘57. Statement 1 ~ All prizes and awards granted to athletes ic local and international sports competitions and tournaments whether held in the Pilippines or abroad and sanctioned by ther nations! sports associations are exclusions from gross income. ‘Statement 2 ~ Income derived by the government from the exercise of any essential governmental function ‘aceruing 0 the Government of the Philippines orto any political subd'visions thereof are exclusion ftom gross income. ‘a Both sutements are correct © Only Stitement 1 is correct ‘Both statements are not correct 4. Only Statement 2is correct‘58 Which of the following items is an income ofa resident alien subject to the basic tan (schedlar)? Dividend received from ¢ domestic corporation ¢. Interest income from Philippine lotto winnings } Prizes from USA lotto 4 Share in the net income of ordinary partnership 59 Bani A deposited money with an B which ex nee thi 95 al wtioding ax Ath same ine Bark Ae sbjeed othe om exp tenon eet ena oan wane Which statement eo ineorety dears eases 4 Theres double aan basse wo aca" ico tx and gos rece tx ae inpsed on the 4, MEE nome deserted above, and oe ation probed ener 1587 Comtnton double tation becaae the its come x le he sean snes lak Thee sno double ation because the come tax one inet income of Ban Ao it depests ith Ban B (gaa income) whie the ros recep on here incon eeved Ban & from lars ets dor casomer (ace noone) Income tx on interes nome of eponts of Bank sa det ax wile GRT on inte income on Ioan tanacton an dec oe 60. Which of the following statement isnot correct? | case of ou, sats levying aes are conte rity agi thegoverent construction ofa statute made by his predecessor isnot Binding upon the successor, i thereafter he becomes satisfied that different construction should be given © The reversal of a ruling shall not generally be given retroactive application, if said reversal ill be Prejudicial tothe taxpayer 44. A memorandum eireaiar promolgsted by the CIR that imposes penalty for violations of certsin roles need not be published in & newspaper of general circulation or oficial gaze because it has the force and effect of law. 61. A dealer in securities sold unlisted shares of stocks of domestic corporation in 2017 and derived a gain of Php IM therefrom. The gain is ‘4 Taxable at 30% regular corporate income tax based on net taxable income b. Taxable at 5% / 10% capital gains tax based on net capita gain ©. Taxable at %of 1% stock transaction tax based on the gross selling price or far market value, whichever is higher 4. Exempt from income tax 62. Which ofthe following are elements of impact of taxation? LLevy I Imposition UL. Assessment IV. Collection a land. b., Mand I ¢ Mand IV 4.00, Mandy 1 63, Which ofthe aspects of taxation is (are) administrative in nature?” L Levy TL Assessment ML Collection a Tonly . Land IT Wand 4. only ‘4, Which ofthe following statements is correet? ‘8 The power of taxation must fist be expresely granted, either by law or by the ednsitution for the State to validly exercise it », The power of taxation and police power may be exercised simultaneously © The Philippine goverament may subject the land where embassies of foreign governments are located toreal estate taxes 4. Government owned and controlled corporations are exempted from taxes’ because it would be impractical forthe government be taxing itself (66. Income payments to persons residing inthe Philipines as professional and talent fees for services rendered shal be subject to creditable withholding tax of. | ‘Statement 1 ~ If gross income for the year did not exceed Php 3M | - St ‘Statement? ~ If gross income for the year is fnore than Php 3M or VAT registered = 10%, ‘Statement 3 ~ Ifgross income for the year did not exceed Php 720,000 : 1% Statement 4 ~ If gross income forthe year is more than Php 720,000 ‘4 Allstatements are correct Statement U and 2 are correct b All statements are not correct Statement 3 and 4 are correct 1 9barter, exchange or other disposic® dealer in securities, @ 12 at 3 ‘There shall be levied, esessed and collected on every sale, ‘of stock listed and raded through the local stock exchange by & 0f4:10 oF 1% ofthe gross selling pric or g70ss value in money ofthe shares of tock sold, bartered, exe oF otherwise disposed States The percentage taxon the sae, barter of exchange of shares of stock listed nd traded tnrough ‘the focal lock exchange has teen incensed by 1/10 of (4 of he ose selling price or gross value in money (ofthe shares of stock sold. bartered, exchanged or otherwise disposed ‘Both statements are correct Only Statement 1 is correct +b Both statements are not correct Only Statement 2is correct 7, The following shall be considered as de minimis benefits not subject to income tax as wel as withholding ‘on compensation incone of both managerial and rank and file employees, except * Moneizal nised vacation an kl es of pate emplyees rox exceeding 10 ds dor the year > Moretized value of vacation and lave cteits pid to government officials and employees € Medical cash allowance to dependents of employees, not exceeding Php 1,500 per employee per semester of Php 250 per month 4 Rice subsidy of Php 2,000 or { sack of 50g rice per month amounting to not more than Php 2,000 68. In 2018, A. « minimum wage earner received from her employer a total amount of Php 195,000 inclusive of the 13% month pay of Php 15,000 She also received evertime pay of Php 48,000 and night shift differential ‘of Php 22,000. She also received commission income from her employer amounting to Php 25.000, thus the {otal income received from her employer amounted to Php 290,000, The taxable income of Ai a PhpO— &. Php 28,000 € Php 290000 ‘4. Php 275,000 (69. B received the foliowing compensation forthe yee 2019: Basic salary, per month = Php $0,000.00, Overtime pay for November 10,000 00, 13° month pay 50,000 00 Other benefits 10,000 00 ‘Withholding tax (Jamaary to Novernber) 733345 The taxable compensation income of B is ‘ePhp $80,000 b Php.600,000 «Php 610,000 d. PhpO 70. Using the above data. the tx still due (refund) is ‘@Php 9,165.75 b Php 1,165.75 ©. Php 6,168.75, ‘Tax Rate 4 op 73.34.25) ‘On citizens, resident aliens, non-resident alicos engaged ia business io the Phils 1) On Compensaticn, business end other Inearne Over ‘Buf.not over of Excess Over P 10,000 5% - P 10,000 30,000 10% P 10,000 30000 70,000 + 15% 30,000 7o00c 140,000 + 20% 70,000 140.000 250,000 + 35% 140,000 250,000 $00,000 = 50,000 + 30% 250,000 500,000 125,000 + 34% 500,000 1999) The top marginal rate to be reduced to: 33% - effective Jan 32% - effective Jan. 2000 and thereafter ‘Tax Rates (TRAIN) ‘Tas Rate en [Phy 250,000 and below ‘Php 250,000 1o Php 460,000 Php 240,000 Php 400,000 10 Php 800,00 ‘of excess ever Pap 400,000 ‘€, Php 800,000 0 Php ‘of excess over Php 800,000 Php 2 000,000 10 Php 8,00 32% of excess over Php 7,000,000 ‘Above Pip 8,000,000 10