1.

If the absence of a marriage settlement, or when the regime agreed upon is void,
the property relations of the spouses who married before August 3, 1988 shall be
governed by:
a. Absolute community of properties.
b. Conjugal partnership of gains.
c. Absolute separation of properties.
d. No property relations.

2. The ranch of the decedent was mortgaged to accommodate the request of his
brother for a loan. The value of the loan to the brother was not included as
receivable in the gross estate of the decedent. What would be the treatment of
the unpaid mortgage or the ranch?
a. Deductive from the gross estate.
b. Not deductive from the gross estate.
c. Deductive from the gross income of the estate.
d. Deductive either from the gross estate or the gross income of the estate.

3. Mr. John Samuelson, resident alien, donated apiece of jewelry to his son who got
married on January 15, 2009. The piece of jewelry was mailed to his son on
January 10, 2009, and was received and accepted on January 20, 2009. when is
the last day to file the donor’s tax return?
a. February 9, 2009
b. February 14, 2009
c. February 19, 2009
d. March 20, 2009

4. For Value-Added Tax, which is not a requisite for the taxability of the sale of
goods or property?
a. The sale must be an actual of goods or properties for a valuable
consideration.
b. The transaction is undertaken in then course of trade or business.
c. The goods are for use or consumption in the Philippines.
d. The transaction must not be exempt under the Tax Code, special law or
international agreement.

5. Dreamboat Corporation registered under the VAT system on January 15, 2009.
When would the last day to manually file its first monthly VAT declaration?
a. February 20, 2009
b. March 20, 2009
c. April 25, 2009
d. None of the choices

6. An international air carrier doing business in the Philippines shall be subject to:
a. 3 % percentage tax on gross receipts in the Philippines only.
b. 2 ½% income tax on Gross Philippine billings only.
c. Both the 2 ½% income tax on Gross Philippine billings and 3% percentage tax
on gross receipts in the Philippines.
d. Neither 2 ½% income tax on Gross Philippine billings nor the 3% percentage
on gross receipts in the Philippines.

7. One of the following is not a large taxpayer.

a. Taxpayer who pays value-added tax of P100,000 per quarter.
b. Taxpayer whose gross sales or receipts per year is P1,000,000,000.
 c. Taxpayer who pays income tax of P100,000 per quarter
d. Taxpayer whose net worth is P300,000,000 at the close of each calendar of
fiscal year.

8. The following information are presented to you in connection with the

determination of the fringe benefits tax of the General Manager of Jasmin
Merchandising:
a. Laptop computer for manager’s office use, P80,000
b. Air-condition unit for manager’s office use, P30,000
c. Groceries for manager’s family consumption, P10,000
d. Plumbing materials for use in the repair of manager’s residential house,
P5,000

Paid by the manager with official receipts in the name of the company:
a. Purchase of clothes and shoes for the manager’s wife, P15,000
b. Samples of merchandise sold in the competitor’s store for marketing study,
P12,000

How much is the fringe benefits tax due?

a. P14,118
b. P48,640
c. P58,824
d. P71,529

9. One of the following is deductible from the gross income even if not business
rotated.
a. Rent expense
b. Travel expenses
c. Bad debts
d. Charitable and other

10. An operator of an illegal hors betting business, single, has the following data:
Receipts from illegal bets, P500,000
Rent of space were bets are received, gross of 5% withholding tax, P20,000
Salaries of assistants, gross of creditable withholding tax P100,000
Bribe money to obtain protection from arrest and prosecution, P50,000

How much is the taxable income?

a. P380,000
b. P360,000
c. P330,000
d. P280,000

11. Noynoy Roxas paid Liberal Realty P600,000 for the right to lease a store space in
Makati for 5 years starting October 1, 2008. He would also pay a monthly rental
of P50,000 starting October 1, 2008, and would shoulder the annual real estae
tax of P20,000 starting 2009. How much would the total deductions of Noynoy
Roxas in 2008/
a. P670,000
b. P200,000
c. P180,000
d. P150,000
12. The taxable income before income tax of Elaine Corporation for the current year
was P500,000. During the year, the corporation received the following refund of
taxes paid in previous years and recoveries of accounts written off, all of which
were credited to miscellaneous income:
Refund of percentage tax P20,000
Refund of income tax P50,000
Bad debt recovered (allowed as deduction) P30,000
Bad debt recovered (disallowed as deduction) P15,000

How much would be the income tax payable of the corporation for the current
year?
a. P150,000
b. P130,500
c. P115,500
d. None of the choices

13. A fire occurred in the city of Dumaguete and by reason of which stock of plywood
of a lumber company was looted. The lumber company failed to record such loss
in its books of accounts. Was the loss deductible?
a. Yes. The loss was deductible because it was caused by fire.
b. Yes. The loss was deductible because it would be correct to assume that the
lumber company recorded it within 45 days after it was sustained.
c. No. the loss was not deductible because the conduct of the tax payer is not
charging off in its books of accounts its loss proved that the alleged loss had
not been suffered.
d. No. the loss was caused by carelessness.

14. One of the following individuals is not subject to income tax in the Philippines.
a. An American engineer who makes the Philippines his residence because of the
nature of his work.
b. A Japanese visiting professor who occasionally teaches at one of the leading
universities in the Philippines, and stays here for an aggregate of 185 days.
c. A Taiwanese singer who performs in one of the hotels in the Philippines for
one (1) week, and then leaves after he is through with his performances.
d. A Filipino residing and working in America who comes to visit his relatives

15. Which of the following is taxable as a corporation?

a. General professional partnership
b. Co-ownership
c. General co-partnership
d. None of the choice

16. A resident citizen owns a real property classified as capital asset situated in USA.
During the current year, he sells the property for P5,000,000 realizing a gaion of
P2,000,000. What is the Philippine tax consequence of the sale?
a. Subject to 6% capital gain tax
b. Subject to section 24 (A)
c. Subject to either 6% capital gains tax or Section 24 (A)
d. Not subject to Philippine tax

17. The following must report their income under the cash basis except:
a. Those who keep records under the cash receipts and disbursement method.
b. Those who do not keep books and records.
 c. Those whose books and records are inadequate to reflect the taxable income
d. Partners of a general professional partnership.

18. Mr. Tony Dayag, VAT-registered real estate dealer, sold a real estate for
P2,000,000 on November 29, 2008. The cost of property was P1,500,000. The
terms of the sale were as follows:

Down payment, November 29, 2008, P400,000

Balance payable in monthly installments of P100,000 beginning on December 29,
2008 until fully paid, P1,600,000

How much was the income to be reported in 2008?

a. P500,000
b. P200,000
c. P125,000
d. P100,000

19. Using the same data in the preceding number, how much was the output VAT in
November 29, 2008?
a. P60,000
b. P50,000
c. P48,000
d. P15,000

20. An individual taxpayer is qualified to substituted filing is income tax return if he

meets the following requisites, except:
a. pure compensation income earner
b. one employer in the Philippines
c. withholding tax is correct
d. minimum wage earner

21. A taxpayer receives an assessment notice on January 5, 2009. He files a motion

for reconsideration with the BIR on January 15, 2009. When is the last day for
the submission of complete documents to support his motion for reconsideration?
a. February 4, 2009
b. March 16, 2009
c. January 15, 2011
d. None of the choices

22. By Bonafe resides in Bacoor, Cavite while his place of work is in Sampaloc,
Manila. He files his income tax return for 2007 income on September 10, 2008 in
Quezon City because the Revenue District Officer in the place is his college friend.
The amount of tax due is P100,000. How much will be the surcharge?
a. P50,000
b. P25,000
c. P20,000
d. None

23. Using the same data in the preceding number, how much is the interest on
delinquency?
a. P8,111.00
b. P8,333.00
c. P8,091.33
 d. P7,500.00

24. Which of the following national taxes is found in the Tax Code?
a. Sugar adjustment taxes
b. Taxes on narcotic drugs
c. Documentary stamp tax
d. Private motor vehicle tax

25. When the property is donated in contemplation of death, the bais of the tax shall
be:
a. fair market value at the time of donation
b. fair market value in the hands of the donor before the time of donation
c. fair market value at the time of death of the donor
d. cost when the property was acquired

26. If a corporation to which the stockholder is indebted forgives the debt, the4
transaction has the effect of a payment of what kind of dividend?
a. Stock dividend
b. Cash dividend
c. Liquidating dividend
d. Indirect dividend

27. C. Uberita has three wives under his tribal customs and practice. He has a total of
six (6) qualified dependent children from his three wives. He is entitled to total
personal exemptions of:
a. P200,000
b. P150,000
c. P50,000
d. Zero

28. Which of the following taxes had been replaced by VAT?

a. Common carrier’s tax on Land Transport of passengers
b. Franchise tax on water and gas
c. Gross receipts tax on banks and non-bank financial intermediaries
d. Caterer’s tax on operators of eating places

29. One of the following is not entitled to an optional standard deduction?

a. Resident citizen who is a pure compensation income earner
b. Resident alien who is pure business income earner
c. Domestic corporation
d. Resident foreign corporation

30. LCB is engaged in sale of goods with net sale of P200,000. The actual
entertainment, amusement and recreation expenses for the taxable quarter total
P2,000. For income tax purposes, how much is the deductible entertainment,
amusement and recreation expenses?
a. P2,000
b. P1,000
c. P500
d. None

31. Which of the following shall make the assessment final and executory?
 a. Failure to respond to notice of informal conference within 15 days after
receipt of such notice.
b. Failure to respond to pre-assessment notice within 15 days after receipt of
such notice.
c. Failure to file letter of protest with BIR within 30 days after receipt of
assessment notice
d. Failure to claim refund within 2 years after the date of payment

32. The minimum percentage of compromise on the basic assessed tax when
financial incapacity is used is basis because the company has not been in
operation for 5 years is:
a. 40%
b. 30%
c. 20%
d. 10%

33. The ReSA Services, VAT-registered taxpayer, has the following data for the last
quarter of 2008:

Cash sales, net of input tax P3,000,000

Installment sales, net of input tax (collections) 1,200,000
Deferred input tax, third quarter 2008 22,000
Purchases, total invoice value 3,920,000
Monthly VAT payments (October and November, 2008) 20,000

The tax payable on or before January 25, 2009 is:

a. P13,000
b. P28,000
c. P42,000
d. Not given

34. George Refund is keeper of garage with annual gross receipts of more than
P1,500,000. What business tax is due on his receipts as keeper of garage?
a. Broker’s tax
b. Value-added tax
c. Common carrier’s tax
d. Garage sales tax

35. Which of the following may not raise money for the government?
a. Power of taxation
b. Police power
c. Power of eminent domain
d. Privatization of government’s capital assets

36. Which of the following statements is correct?

a. The monetized value of unutilized vacation leave credits of ten (10) days or
less which were paid to the employee during the year are not subject to
income tax and to withholding tax
b. The salary of an employee on vacation or on sick leave, which are paid
notwithstanding his absence from work, constitutes compensation income,
except if not more than 10 days
c. Any amount which is required by law to be deducted by the employer from
the compensation of an employee excluding with withheld tax is considered as
 part of the employee’s compensation and is deemed to be paid to the
employee as compensation at the time the deduction is made
d. If living quarters or meals are furnished to an employee for the convenience
of the employer, the value thereof should be included as part of compensation
income.

37. On January 1, 2008, A leased his vacant lot for a period of 12 years at P240,000
per year. It was agreed that the lessee will pay the following:
a. Rent of P480,000 (for 2008 and 2009)
b. Security deposit of P240,000
c. Real property tax at P20,000/year

The lease contract provides among others that the lessee will construct a 3-
storey building for parking purposes at a cost of P3,600,000 which shall belong to
the lessor upon expiration or termination of the lease. The building was
completed on July 1, 2008, with an estimated useful life of 15 years. A shall
report for the year 2008, using the spread-out method, a total income from lease
of
a. P296,543
b. P573,087
c. P536,521
d. P333,087

38. Using the above data, the lessee in 2008 can deduct total expenses amounting to
a. P656,521
b. P553,043
c. P416,521
d. P573,043

39. ABC had the following during the taxable year 2009:
a. Provision for bad debts P30,000
b. Contributions during the year:
1. To the government for priority activity in education 50,000
2. to the catholic church for charitable purposes 10,000
3. for public use 20,000
c. Allowance for bad debts:
1. Beginning 75,000
2. Ending 85,000
d. Accumulated depreciation on the machine
1. Beginning 80,000
2. Ending 100,000
e. During the year, ABC sold a machine acquired two years earlier. The machine
had an accumulated depreciation of P30,000.

The net income before considering a to e inclusive, amounts to P200,000. If ABC

is a sole proprietorship, owned by A, single, her net taxable income is
a. P60,000
b. P47,000
c. P40,000
d. P17,000

40. Recovery of bad debt written off by a taxpayer:

 No.1: P20,000 from accounts written off in a year which had a net income of
P200,000 before write-off. (Write-off of the year was P20,000)
No.2: P5,000 from accounts written off in a year which had a net loss before
write-off of P36,000. (Write-off for the year was P5,000)
No.3: P10,000 from accounts written off in a year which had a net income of
P8,000 before write-off. (Write-off for the year was P12,000)

The income from the bad debt recovery is:

a. P35,000
b. P20,000
c. P26,000
d. P30,000

41. What would be the allowable deduction for P10,000 contribution made by a
resident citizen to a religious organization from his P80,000 net income after
contribution?
a. P10,000
b. P9,000
c. P8,000
d. P5,000

42. A insured his life for P10M. in case A dies, the proceeds of the life insurance shall
be:
a. Excluded from gross estate if the beneficiary is the state, executor or
administrator whether revocable or irrevocable
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

43. What would be the amount to be deducted in the gross estate of a decedent
whose collectible sum from a debtor is P100,000 and the same debtor was
subsequently declared by the court as insolvent for having a total liabilities of
P400,000 and total properties of P80,000?
a. P100,000
b. P64,000
c. P60,000
d. P80,000

44. Which of the following properties of A who died April 19, 2008 is subject to
Vanishing Deduction?
Property 1 – Car purchased 3 years ago from his father
Property 2 – Land inherited from his mother in 2005 the estate tax thereon is
not yet paid
Property 3 – Donation from his best friend in 2004
Property 4 – Community property inherited before marriage from his
grandfather who died April 18, 2002
Property 1 Property 2 Property 3 Property 4
No Yes Yes No
No No Yes No
Yes No No Yes
Yes Yes No No
45. A died on April 19, 2008. Some of the properties he left are the following:
Mode of Date of Market Value
Assets Acquisition Acquisition Date Acquired Death of A
Land Donation 7-3-03 P500,000 P350,000
Car Purchase 10-2-07 800,000 980,000
Other information:
 The gross estate of the decedent amounts to P3,000,000.
 The land was mortgaged for P50,000, which was deducted in prior estate and
A paid the same before he died
 The allowable deductions total P125,000, which includes medical expenses of
P30,000. It excludes bequest to a charitable institution in the amount of
P50,000
The vanishing deduction is-----
a. P58,100
b. P57,500
c. P67,783
d. P67,083

46. On March 31, 2009, A received 100 shares of stocks with a fair value of P120 per
share as of March 31, 2009. The shares of stock were intended to pay the
services rendered by A on November 20, 2008 at which time, the fair market
value was P100 per share. The pair value per share is P50. The income of A is
a. P12,000
b. P10,000
c. P5,000
d. P2,500

47. Optional standard deduction

a. Is equal to 40% of the gross income from business or practice of profession
b. Cannot be used as deduction from compensation income
c. Maybe availed by all individual taxpayers
d. May be availed of by the taxpayer whether or not he signifies his desire to
elect optional standard deduction

48. XYZ, a domestic corporation was determined to be improperly accumulating its

earnings for the taxable year 2009 based on its records as follows:
a. Net income from business P1,000,000
b. Dividends actually or constructively paid 150,000
c. Income tax paid for the year 270,000
d. Income subjected to 20% final tax 60,000
e. Income exempt from tax 50,000
f. Income excluded from gross income 10,000
g. Net operating loss (2008) 100,000

The tax on improperly accumulated earnings is

a. P81,500
b. P71,500
c. P80,000
d. P70,000

49. In 2009, A made the following gifts;

a. On July 1, 2009, P150,000 to B, his son, on account of his marriage
celebrated on May 1, 2008
 b. On July 10, 2009, a parcel of land worth P180,000 to his father,
subject to the condition that the father would assume the mortgage
indebtedness in the amount of P40,000
c. On September 30, 2009, P150,000 dowry to his daughter C, on
account of her scheduled marriage on October 25, 2009, and another
wedding gift P20,000 on November 23, 2009

How much is the total net gifts?

a. P500,000
b. P450,000
c. P430,000
d. P460,000

50. Real property with a cost of P300,000 and a fair market value at the time of
death of P1,000,000, but subject to a mortgage of P200,000
a. Shall be in the taxable net estate at P800,000
b. Shall be in the gross estate at the decedent equity of P800,000
c. Shall be in the gross estate at P300,000
d. Shall be in the gross estate at the owner’s equity of P100,000

51. An individual taxpayer, single, has the following data for the current year:
Ordinary income P150,000
Long term capital gain 40,000
Short term capital loss 10,000

How much is the net taxable income?

a. P180,000
b. P160,000
c. P140,000
d. P110,000

52. A acquired his residential land in 2000 at a cost of PP1,000,000. He sold the
property on January 1, 2009 with a fair market value of P5,000,000 for a
consideration of P4,000,000. Within 18 months, he purchased his new principal
residence at a cost of P7,000,000. How much is the capital gain tax?
a. P300,000
b. P240,000
c. P75,000
d. P0

53. Using the data, except that A acquired his new principal residence at a cost of
P3,000,000, how much is the capital gains tax?
a. P300,000
b. P240,000
c. P75,000
d. P0

54. One of the following is not correct

a. The estate must be valued at the time of death of the decedent
b. Real estate situated in foreign countries will be included in the gross estate of
a resident alien decedent
c. The commissioner shall have the authority to grant, in meritorious cases, a
reasonable extension not exceeding 6 months for filing the estate tax return
 d. Vanishing deduction is subject to limitation

55. A, a caregiver, under a three year employment contract with a hospital in USA.
His wife, B and a minor child live in the Philippines. He earns P70,000 (converted)
a month. For the annual income of P840,000, A shall pay income tax
a. For the entire amount it being taxable in the Philippines
b. Of nothing because as OFW, he is considered a nonresident citizen
c. For half the full amount because the other half pertains to his wife
d. For the ½ share of his wife because the wife is a resident citizen

56. Using the above data, if A puts 30% of his earnings in a dollar deposit account
with a local back, interest income therein
a. Is taxable for the full amount at 7.5% final withholding tax
b. Of P126,000 shall be taxed at 7.5% final withholding tax
c. Maybe exempt from income tax provided he presents proof of nonresidency to
the bank
d. Of P840,000 shall be taxed at 7.5% final withholding

57. If the dollar deposit account above is joint (with B) with the same percentage of
earnings invested, interest income in that account
a. Is taxable for the full amount at 7.5% final withholding tax
b. Of P126,000 shall be taxed at 7.5% final withholding tax
c. Maybe exempt from income tax provided he presents proof of nonresidency to
the bank
d. Of P840,000 shall be taxed at 7.5% final withholding tax

58. M married to K, left the Philippines in the middle of the year on July 1, 2009 to go
to USA and work there as a contract worker for two years, the following income
were provided as of December 31, 2009:
Philippines USA
a. January 1 to June 30 P300,000 $10,000
b. July 1 to December 31 P100,000 $20,000

His net income is (1$ = P56)

a. P910,000
b. P350,000
c. P810,000
d. P250,000

59. Mabuhay Corporation organized in 2002 has the following data:

2008 2009
Sales P1,700,000 P2,300,000
Cost of sales 1,050,000 1,425,000
Operating expenses 615,000 480,000

The income tax payable in 2008 is

a. P13,000
b. P5,250
c. P10,500
d. P12,250

60. Using the above data, the income tax payable by Mabuhay Corporation in 2009 is
a. P118,500
 b. P110,750
c. P117,750
d. P108,000

61. A filed his income tax return for the calendar year 2007 on March 20, 2008.
When is the last day for the BIR to collect assuming A is did not pay the tax due
upon filing?
a. March 20, 2011
b. April 15, 2011
c. April 15, 2013
d. March 20, 2013

62. Using the above data, assuming A filed his income tax return on April 20, 2008
and the return is not fraudulent, when is the last day for the BIR to make
assessment?
a. April 20, 2011
b. April 15, 2011
c. April 20, 2013
d. April 15, 2013

63. Using the above data, if the BIR issued a deficiency income tax assessment on
March 10, 2010, when is the last day for BIR to collect?
a. March 10, 2013
b. April 15, 2013
c. March 10, 2015
d. April 15, 2015

64. One of the following is not within the powers of the Commission of Internal
Revenue
a. Compromise the payment of internal revenue tax on the ground of taxpayer’s
financial incapacity
b. Compromise the payment of internal revenue tax on the ground that there is
reasonable doubt as to the validity of the assessment
c. Compromise criminal violation if already filed in court and those involving
fraud
d. Abate or cancel a tax liability on the ground that the cost of collection is
greater than that of the tax to be collected

65. One of the following is not the effect of failure to affix documentary stamps; the
document, instrument or paper
a. Shall not be recorded in the proper registry
b. Shall not be valid
c. Shall not be admitted or used as evidence in court
d. Shall not be acknowledged by a notary public or other officer authorized to
administer oaths

66. Which of the following activities is not considered as engaging in trade or

business?
a. Sale of more than P100,000 for 10 months
b. Sale of P8,000 per month for 12 months
c. Sale of P200,000 for 12 months
d. Sale of P10,000 per month for 12 months
67. Importation of which of the following if belonging to persons coming to settle in
the Philippines for their own use and not for sale, barter or exchange is subject to
Vat
a. Wearing apparel
b. Domestic animals
c. Professional instrument and implements
d. Vehicles

68. A, resident taxpayer received of the following during the taxable year:
I. P12,000 cash received as refund of excess insurance premiums paid to an
insurance company
II. P40,000 worth of goods as prize in “Beer-Gin” talent search
III. A computer unit with a fair market value of P48,000 which was awarded to
him in recognition of his outstanding achievement in scientific research
IV. P25,000 salary per month as an accounting supervisor

Which of the above items is (are) part of taxable income subject to graduated
rates?
a. II only
b. II and IV
c. IV only
d. II,III and IV

69. The export sale of a vat registered enterprise is

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

70. A filed his ITR for 2008 on April 15, 2009 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 2nd installment only on October 15, 2009, the
amount to be paid (excluding compromise penalty) is
a. P26,000
b. P35,000
c. P55,000
d. P37,5000

71. Using the above data, the amount due on April 15, 2009 is
a. P20,000
b. P40,000
c. P0
d. Refund of P10,000