CPA REVIEW SCHOOL OF THE PHILIPPINES

MANILA

FINAL PREBOARD EXAMINATION Saturday, April 18, 2020

TAXATION 8:00 AM – 10:00 AM

INSTRUCTIONS:
1. Select the correct answer for each of the following questions.
2. Mark only one answer for each item by shading the box corresponding to the letter of your choice on the
answer sheet provided.
3. Strictly no erasures allowed.
4. Pray earnestly.

QUESTIONS:
1. Mr. Yo filed his 2019 ITR on July 15, 2020. The BIR discovered a deficiency income tax on August 30,
2021. When should the deficiency tax assessment be served?
a. On or before August 30, 2024
b. On or before April 15, 2023
c. On or before August 30, 2031
d. On or before July 15, 2023

2. Ms. Wa filed her 2019 ITR on March 15, 2020. On September 15, 2023, the BIR discovered a fraudulent
intention to avoid the payment of income tax because the income was understated by more than 40% of
the correct amount. On April 15, 2024, the BIR issued a deficiency income tax assessment which was
received by Ms. Wa on April 30, 2024. Which of the following statements is correct?
a. The assessment should have been made not later than April 15, 2023.
b. Ms. Wa should protest the assessment because the right of the BIR to assess has prescribed.
c. The BIR has ten (10) years to assess counted from the due date or filing of the return whichever is
later.
d. Ms. Wa should protest with the CIR within 30 days from the receipt of the assessment otherwise,
the assessment becomes final and unappealable.

3. Which of the following statements is/are correct?

Statement A: Filipino citizens are taxable on all income derived from sources within the Philippines.
Statement B: Domestic corporations are taxable on all income derived from sources within and without
the Philippines.
Statement C: Foreign corporations are taxable only on all income derived from sources within the
Philippines
Statement D: Aliens are taxable only on all income derived from sources within the Philippines
a. Statements B, C, and D are correct are correct.
b. Statements A, B, and D are correct.
c. Statements A, B, C, and D are correct.
d. Statements A and B are correct.

4. Which of the following statements is/are correct?

Statement A: Jewelry purchased by the wife during marriage using the money inherited from her mother
during the marriage is exclusive property of the wife.
Statement B: Jewelry purchased by the husband during marriage using the money inherited from his
father during the marriage belongs to husband and wife
Statement C: Jewelry inherited by the wife before marriage from her father is exclusive property of the
wife.
Statement D: Jewelry inherited by the husband during marriage from his mother is exclusive property of
the husband.
a. Statements A, B, C, and D are correct.
b. Statements B, C, and D are correct.
c. Statements C and D are correct.
d. Statement D is correct.

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5. Which of the following are basic principles of a sound tax system?
a. Fiscal Adequacy, Equality or Theoretical Justice and Administrative Feasibility
b. Fiscal Adequacy, Economic Sufficiency and Administrative Feasibility
c. Administrative Justice, Theoretical Feasibility and Fiscal Sufficiency
d. Theoretical Justice, Fiscal Efficiency and Administrative Feasibility

6. Subject to limitation, on the purchase of basic and prime commodities, a senior citizen is granted a
discount of
a. 5% b. 10% c. 15% d. 20%

7. Which of the following statements is/are correct?

Statement A: Dado filed his 2019 ITR (not false nor fraudulent) on March 15, 2020. The last day for the
BIR to collect the tax by judicial action, if no assessment was made is on April 15, 2023.
Statement B: Dede’s 2019 ITR was filed and the tax due paid on May 15, 2020. The last day for the BIR
to send an assessment is on April 15, 2023.
Statement C: On July 15, 2020, Dodo filed an amended return which is substantially different from the
2019 ITR which he filed on April 10, 2020. The last day to send an assessment is April 15, 2023.
1) Statements A, B, and C are correct.
2) Statement A is correct.
3) Statements A and C are correct.
4) Statements B and C are correct.

8. If a taxpayer believes in good faith that the assessment against him is erroneous and doubtful but the same
has become final and unappealable, and he asks for advice, what is the best available remedy for him?
a. Apply and request for a compromise of his tax liability.
b. Ask for the interest to be waived.
c. Protest the assessment with the CIR
d. File an injunction or certiorari with the CTA.

9. The concept of “situs of taxation” is based on which inherent limitation of the power of taxation?
a. Non-delegability of the power to tax
b. International Comity
c. Territorial Jurisdiction
d. Exemption of the government from taxation

10. Which of the following statements is/are correct?

Statement A: The power to tax includes the power to exempt.
Statement B: The power to tax includes the power to destroy.
Statement C: The power to license includes the power to tax.
Statement D: The power to tax and police power are superior to the non-impairment clause of the
Constitution.
a. Statements A and C are correct.
b. Statements B and D are correct.
c. Statements A and B are correct.
d. Statements C and D are correct.

11. Which of the following establishments will not grant sales discounts to senior citizens on their sale of
goods and/or services:
a. Funeral parlors
b. Cinema houses
c. Residential Condominium unit lessors
d. Restaurants and canteens

12. When one of the contracting parties on the sale of a real property is the government, what is the basis of
the documentary stamp tax to be imposed?
a. Consideration agreed upon to be paid for such property or its FMV, whichever is higher
b. Consideration agreed upon to be paid or its FMV, at the option of the government.
c. Actual consideration received.
d. Exempt for documentary stamp tax under the destination of income theory.

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13. If the taxpayer refuses to submit books of accounts and records relating to the pending tax investigation
by the offices of the BIR, the BIR shall
a. Issue a final assessment based on the financial statements submitted by the taxpayer.
b. Give the BIR the authority to enter the premises of the taxpayer to obtain any available records
relating to the tax investigation.
c. Issue subpoena duces tecum against the taxpayer to submit the pertinent records to the office of
the BIR
d. File an action with the CTA or the regular courts to compel the taxpayer to present the necessary
documentation.

14. What basic characteristic of taxation is violated if the President of the Philippines and the President of the
USA entered into an executive agreement on a loan facility to the Philippines from USA whereby there
was a stipulation that interest on loans granted by private US financial institutions in the Philippines shall
not be subject to Philippine income tax laws.
a. Legislative in character
b. Equality or Theoretical Justice
c. Inherent limitation
d. Exception of the government from taxation

15. Three of the following statements are correct. Which is the wrong statement?
a. The province may levy an annual professional tax on each person engaged in the practice of his
profession requiring government examination at such amount and reasonable classification.
b. Every person legally authorized to practice his profession shall pay the professional tax to the
province where he practices his profession or where he maintains his principal office if he practices
in several places.
c. Every person legally authorized to practice his profession shall be entitled to practice his
profession in any part of the Philippines without being subjected to any other national or local tax
for the practice of such profession.
d. Every person legally authorized to practice his profession shall pay the professional tax anywhere
in the Philippines regardless of where he practives his profession or his principal office location.
For numbers 16 – 19: On February 14, 2020, Mr. and Mrs. Mar Egalo donated residential land to their
daughter on account of her wedding to be celebrated on June 12, 2020. The FMV of the land at the time of
donation was Php 1.2M with an unpaid mortgage of Php 300,000 to be assumed by their daughter. The FMV
of the land at the time of marriage was Php 1.3M.
On July 30, 2020, they donated Php 500,000 to the sister of Mr. Egalo who was diagnosed with COVID-
19. The donated amount was used for the medication of Mr. Egalo’s sister.
On August 31, 2020, they sold 400,000 shares of VGS Corporation to their only son for Php 400,000. The
book value per share as per latest audited financial statement of VGS Corporation is Php 2.00 per share.
The shares of stocks were acquired three years ago for Php 100,000.
16. How much is the donor’s tax still due of Mr. Egalo on the February 14, 2020 transfer?
a. Php 40,500 c. Php 12,00
b. Php 81,000 d. Php 24,000

17. How much is the donor’s tax due of Mrs. Egalo on the July 30, 2020 transfer?
a. Php 15,000 c. Php 7,500
b. Php 30,000 d. Php 27,000

18. How much is the capital gains tax due of Mr. Egalo on the August 31, 2020 transfer?
a. Php 45,000 c. Php 30,000
b. Php 22,500 d. Php 15,000

19. How much is the donor’s tax still due of Mr. Egalo on the August 31, 2020 transfer?
a. None c. Php 24,000
b. Php 12,000 d. Php 6,000

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For numbers 20 – 23: Ms. Pat Ayna, single and a non-resident alien died of COVID-19 in 2020, leaving the
following properties in favor of her parents:
Gross estate within and without the Philippines (including a family home valued Php 10M, where her parents
live), 60% of which is situated in the Philippines – Php 100M.
The estate claims the following as deductions:
Funeral expenses Php 1M
Judicial and administration expenses Php 2M
Claims against the estate Php 3M

20. How much is Pat Ayna’s gross taxable estate?

a. Php 60 M c. Php 59.5 M
b. Php 66 M d. Php 49.5 M

21. How much is the deductible ordinary deductions of Pat Ayna’s estate?
a. Php 3 M c. Php 3.5 M
b. Php 1.8 M d. Php 2.1 M

22. How much is the deductible special deductions of Pat Ayna’s estate?
a. Php 10.5 M c. Php 2.3 M
b. Php 6.3 M d. Php 500,000

23. How much is the estate tax due of Pat Ayna’s estate?
a. Php 3.462 M c. Php 3.798 M
b. Php 3.444 M d. Php 2.970 M

For numbers 24 – 27: In the course of your examination, as a revenue officer, of the audited financial statements
of Bagito Corporation which sells and leases real estate, and by virtue of a Letter of Authority duly issued by the
BIR, the income statement of Bagito Corporation on its first year of operation shows:
Revenues:
Gain on sale of residential lots Php 600,000
Bank interest income 32,000
Dividend from Delicious Corporation 8.000
Rental income 2,400,000
Total Php 3,040,000

Expenses:
Salaries and wages Php 500,000
Depreciation 300,000
Entertainment and representation 60,000
Office supplies 80,000
Advertising expense 30,000
Interest expense 100,000
Taxes and licenses 230,000
Total Php 1,300,000

Net income before income tax Php 1,740,000

Less: Income tax expenses 330,000
Net income after income tax Php 1,410,000

The income tax due for the year as computed by Bagito shows:
Net income before income tax Php 1,740,000
Less:
Bank interest income 32,000
Dividend from Delicious Corporation 8,000
Gain on sale of lots 600,000 640,000
Net taxable income Php 1,100,000
Corporate income tax rate 30%
Income tax expense Php 330,000

During examination, you observed the following:

1) The balance sheet for the taxable year showed deferred rent income of Php 600,000.
2) The bank interest income is net of 20% final withholding tax.
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 3) Delicious Corporation is a domestic corporation
4) The gain on sale of residential lots represents gain on sale of two residential lots with selling price
of Php 1,000,000 each.
5) Interest expense includes interest on late payment of tax amounting to Php 10,000.
6) Entertainment and representation expenses are duly supported by receipts and are business
connected.
7) Taxes and licenses in the notes to Financial Statements showed the following:
a. Documentary stamp tax on sale of the residential lots - Php 40,000
b. Surcharge and penalties on late payment of tax - 20,000
c. Withholding tax on the sale of the lots - 120,000
d. Permits and licenses - 40,000

24. How much should be reflected as net sales and revenue in the annual income tax return of Bagito
Corporation?
a. Php 3,040,000 c. Php 3,000,000
b. Php 5,000,000 d. Php 1,740,000

25. How much should be the deductible taxes and licenses?

a. Php 80,000 c. Php 100,000
b. Php 40,000 d. Php 60,000

26. How much is the deductible entertainment and representation expense?

a. Php 60,000 c. Php 40,000
b. Php 50,000 d. Php 30,000

27. How much is the basic deficiency income tax due?

a. Php 417,960 c. Php 405,000
b. Php 414,000 d. Php 414,960

For numbers 28 – 31: May Paupa, a non-VAT registered lessor of residential and commercial units has the
following data for the first and second quarters of 2019:
First Quarter Second Quarter
Gross receipts from lease of:
a. Residential units with monthly rental of:
1) Php 15,000 per unit Php 2,800,000 Php 2,400,000
2) Php 20,000 per unit 1,400,000 1,600,000
b. Commercial units with monthly rental of:
1) Php 15,000 per unit Php 1,800,000 Php 1,900,000
2) Php 20,000 per unit 700,000 800,000
Input Tax paid from VAT suppliers 160,000 140,000

28. How much is the business tax due for the first quarter of Ms. Paupa?
a. Php 468,000 c. Php 252,000
b. Php 300,000 d. Php 84,000

29. How much is the business tax due for the second quarter of Ms. Paupa?
a. Php 516,000 c. Php 288,000
b. Php 324,000 d. Php 96,000

30. Assuming she registered as a VAT taxpayer at the start of the second quarter, how much is the business
tax due for the 2nd quarter of Ms. Paupa?
a. Php 476,000 c. Php 148,000
b. Php 184,000 d. Php 264,000

31. Assuming she is a VAT-registered taxpayer instead of a non-VAT registered taxpayer, how much is the
business tax due of Ms. Paupa for the first quarter?
a. Php 128,000 c. Php 140,000
b. Php 92,000 d. Php 308,000

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For numbers 32 – 33: Holiday Corporation is a duly registered enterprise with the BOI, with an income tax
holiday incentives for the first four years of operations as non-pioneer. Holiday was not given an extension on its
fifth year of operations. Holiday reported the following:
Sales Php 180,000,000
Cost of Goods Manufactured and Sold 105,000,000
Operating expenses 30,000,000
Additional information are as follows:
1) All sales during the year are export sales.
2) Cost of goods manufactured and sold include imported raw materials with dutiable value of Php
2,100,000
3) Pre-computed customs duties and other charges are as follows:
a. Customs duties Php 300,000
b. Insurance 15,000
c. Arrastre charges 7,500
d. Wharfage dues 10,500
4) Cost of goods manufactured and sold includes direct labor for skilled and unskilled workers
amounting to Php 15,000,000 and Php 30,000,000 respectively.
5) Included under operating expenses are expenses incurred on the importation of equipment as
follows:
a. Delivery expense to warehouse after release from customs (VAT inclusive) – Php 16,800
b. Facilitation fee – Php 150,000
6) The project meets the prescribed ratio of capital equipment to number of workers set by the BOI.
7) Holiday incurred an accumulated net operating loss on its first four years of operations as follows:
a. First Year Php 3,000,000
b. Second Year Php 2,400,000
c. Third Year Php 1,200,000
d. Fourth Year Php 600,000

32. How much is the VAT due on the importation of raw materials?
a. None c. Php 291,960
b. Php 292,040 d. Php 310,040

33. How much is the deductible direct labor cost?

a. None c. Php 52,500,000
b. Php 45,000,000 d. Php 67,500,000

For numbers 34 – 37: Lila and Nau inherited a four-storey commercial lot and building from their parents in
2018. In 2019, the property realized rental income of Php 3,600,000, in which they shared the revenue equally.
They did not register the co-ownership with the SEC. In addition, Lila and Nau reported their personal income
and expenses as follows:
Nau – Gross compensation income (inclusive of 13th month
and other benefits amounting to Php 150,000) Php 1,950,000
Lila – Net income from her dry cleaning service business
(net of cost and expenses of Php 900,000) Php 300,000

34. How much final withholding income tax should the co-ownership remit representing the revenue
distribution to the co-owners?
a. Php 360,000 c. Php 180,000
b. Php 540,000 d. None

35. How much is the income tax due of Nau in his annual income tax return, assuming OSD is used in
determining his expenses?
a. Php 771,600 c. Php 584,600
b. Php 541,200 d. Php 308,000

36. How much is the income tax due of Lila in her annual income tax return assuming OSD is used in
determining her expenses?
a. Php 304,000 c. Php 430,000
b. Php 324,000 d. Php 554,000

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 37. When is the deadline for filing of the annual income tax return of the co-ownership for taxable year 2019?
a. April 15, 2020 c. October 15, 2020
b. May 15, 2020 d. Exempted from filing ITRs.

For numbers 38 – 41: Cure Pharmaceuticals is engaged in the business of selling drugs and medicines. The
following data were made available for the first quarter of 2019:
Revenues Php 20,000,000
Cost of services 12,000,000
Operating expenses 3,000,000
Receivables: December 31, 2018 400,000
Receivables: March 31, 2019 300,000

In addition, the following information was provided:

1) All sales for the first quarter were cash and credit card sales.
2) All sales made to senior citizens are cash sales.
3) Sales are net of senior citizens discount amounting to Php 400,000.
4) Receivables at the beginning and ending of first quarter are outstanding receivables from credit
card companies.
5) The amounts of receivables are VAT inclusive.
6) Sales are inclusive of sales of medicines prescribed for diabetes, high cholesterol, and hypertension
to non-senior citizens amounting to Php 600,000.
7) Included in the operating expenses are entertainment, amusement, and recreational expenses
amounting to Php 300,000.
8) Input tax credit from purchase of goods and services for the first quarter amounts to Php 600,000.

38. How much is the output tax due for the first quarter of 2019?
a. Php 2,088,000 c. Php 2,136,000
b. Php 2,076,000 d. Php 2,160,000

39. How much is the deductible creditable input tax for the first quarter of 2019?
a. Php 600,000 c. Php 517,920
b. Php 522,000 d. Php 533,333

40. How much is the income tax due for the first quarter of 2019, assuming itemized deduction was used?
a. Php 1,529,850 c. Php 1,500,000
b. Php 1,559,400 d. Php 1,560,000

41. How much is the income tax due for the first quarter of 2019, assuming OSD was used?
a. Php 3,600,000 c. Php 1,422,000
b. Php 1,522,000 d. Php 1,512,000

For numbers 42 – 44: Abaca Corporation is a domestic corporation engaged in the business of manufacturing
clothing apparel. For the fiscal year ending March 31, 2020, its income and expenses statement reported the
following:
Sales Php 200,000,000
Cost of goods manufactured and sold 120,000,000
Gross income from operations Php 80,000,000
Other income 10,000,000
Total Gross Income Php 90,000,000
Operating expenses Php 30,000,000
Finance expenses 10,000,000 40,000,000
Net Income before income tax Php 50,000,000
Income tax expenses 9,000,000
Net Income after income tax Php 41,000,000

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 The following additional information was made available for tax reconciliation purposes:
1) The other income shows the following:
a. Interest income from bank savings deposit (net of final withholding
tax) Php 400,000
b. Gain from sale of investment property (the property is held for lease
but was not used in the primary activity of the corporation, gross of
withholding tax amounting to Php 1,800,000) Php 8,000,000
c. Rental income from investment property (gross of withholding tax) Php 1,600,000
2) The withholding tax credit from sale of clothing materials (supported
by BIR form no. 2307) Php 1,200,000
3) Operating expenses include allowance for bad debts expense
amounting to Php 1,000,000
4) During the year the corporation has written off bad debts which are
certainly uncollectible amounting to Php 600,000
5) Finance expenses is broken down as follows:
a. Interest expense on loan from various financial institutions Php 6,000,000
b. Interest expense on loan from a majority stockholder Php 4,000,000
6) Income tax expense represents quarterly income tax paid.

42. Compute Page 4, Schedule V, Item 4 of BIR Form no. 1702 – RT (net income per books should refer to
net income before income tax).
a. Php 1,000,000 c. Php 1,164,800
b. Php 5,164,800 d. Php 5,000,000

43. Compute Page 4, Schedule V, Item 9 of BIR Form no. 1702 – RT

a. Php 400,000 c. Php 600,000
b. Php 9,000,000 d. Php 1,000,000

44. Compute Page 2, Item 55 of BIR Form no. 1702 – RT

a. Php 1,200,000 c. Php 10,200,000
b. Php 10,280,000 d. Php 12,080,000

For numbers 45 – 47: Lavander A Corporation, a VAT-registered corporation is engaged in the laundry business.
During the first quarter of 2020, the following information was made available:
Receivable from customers:
January 1, 2020 Php 448,000
March 31, 2020 672,000
Creditable VAT withheld, first quarter 2020 10,000
VAT Purchases:
Capital goods, first quarter 2020 2,400,000
Other than Capital goods, first quarter 2020 600,000
Net revenue, first quarter 2020 2,000,000

The receivable balances are all income related and are inclusive of VAT.
The revenues and purchases are VAT exclusive.
The capital goods are estimated to have a useful life of 10 years.

45. Compute item 19 B of BIR Form no. 2550 Q.

a. Php 213,120 c. Php 264,000
b. Php 216,000 d. Php 240,000

46. Compute item 22 of BIR Form no. 2550 Q.

a. Php 360,000 c. Php 72,000
b. Php 86,400 d. Php 370,000

47. Compute the deferred input tax as of March 31, 2020.

a. None c. Php 280,800
b. Php 283,200 d. Php 273,600

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For numbers 48 – 50: Paz Ado is a CPA, lawyer, who is engaged in providing legal services to her clients. She
is also a licensed real estate broker. She is registered with the BIR, and the following data are made available for
the year 2020. (All amounts are gross of withholding tax.)
1) Revenues from her profession as a CPA lawyer amounting to Php 6,000,000
2) Commissions received as a real estate broker amounting to 1,200,000
3) Cost of services amounted to 1,400,000
4) Business related expenses amounted to 800,000
5) Gain on sale of real property held for investment amounts to (selling
prices is Php 4,000,000) 1,000,000
6) Wagering gain amounting to (net of wagering loss of Php 200,000) 100,000
7) Royalties from books published and sold amounts to 300,000
8) Interest income from banks amounts to 60,000

48. Compute 22 A, Page 1 of BIR Form no. 1701, assuming Ms. Ado opted to use itemized deduction in
computing her income tax.
a. Php 1,482,000 c. Php 1,332,000
b. Php 1,620,000 d. Php 2,880,000

49. Compute 17 A, Page 2 of BIR Form no. 1701, assuming Ms. Ado opted to use OSD in computing her
income tax.
a. Php 1,450,000 c. Php 2,880,000
b. Php 2,160,000 d. Php 1,200,000

50. How much is the final withholding income tax of Ms. Ado assuming 2/3 of interest income from banks
was realized from time deposit with maturity of 5 years?
a. Php 114,000 c. Php 34,000
b. Php 94,000 d. Php 274,000

51. Kat Tok’s piece of land measuring 500 sq. meters in the City of Taguig was assessed as commercial with
an FMV of Php 20,000 per sq. meter. How much is the highest possible amount of annual basic real
property tax can be collected from her?
a. None c. Php 100,000
b. Php 50,000 d. Php 20,000

52. Which of the following statements is correct?

a. Real property taxes are payable in the local treasurer’s office.
b. Local government units are empowered to collect documentary stamp tax.
c. In determining the real property tax, the FMV is equal to the assessed value divided by the
assessment level.
d. When the land is located in a commercial area but the building is residential, the classification of
land to determine the FMV is residential and the assessment level is commercial.

53. On April 15, 2017, the BIR discovered a deficiency VAT equivalent to ¼ of the VAT due for the quarter
ended September 2010. If the BIR will send an assessment notice, which of the following is correct?
a. The taxpayer should protest to the CIR within 30 days from receipt, otherwise the assessment
becomes final and executor.
b. The BIR must send the assessment notice on or before April 15, 2020.
c. The BIR must send the assessment notice on or before April 15, 2027
d. The tax payer can just ignore the assessment and may donate the amount involved to the BIR.

54. Dely Kwente filed her ITR for 2019 and paid the corresponding tax due of Php 100,000 on May 15, 2020.
How much should Ms. Kwente pay on May 15, 2020?
a. Php 100,000 c. Php 137,000
b. Php 126,000 d. Php 129,000

55. What is the basis of the documentary stamp tax to be imposed when one of the contracting parties on the
sale of property is the Government?
a. Consideration contracted to be paid for such realty.
b. Actual consideration
c. Consideration contracted or its FMV, whichever is higher
d. Consideration contracted or its FMV, whichever is lower.

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For numbers 56 – 57: Abo Gado, a VAT-registered CPA received the following in 2019 (amounts are net of
VAT, if applicable).
Salary Php 360,000
Overtime pay 40,000
Holiday pay 20,000
13th month pay 30,000
Cash payment made by clients 880,000
Retainer fee of Php 10,000 per month from clients 2,000,000
Out of pocket expenses to be reimbursed by clients 50,000
Capital gains from sale of jewelry 10,000

56. How much is Mr. Gado’s gross compensation income?

a. Php 420,000 c. Php 430,000
b. Php 450,000 d. Php 460,000

57. How much is Mr. Gado’s vatable transactions?

a. None c. Php 2,880,000
b. Php 2,930,000 d. Php 2,940,000

58. The taxable period of a taxpayer may be terminated by the BIR in any of the following, except when the
taxpayer
a. Removes his property from the Philippines
b. Is retiring from business subject to tax
c. Hides or conceals his property
d. Goes to a foreign country

59. The Board of Directors of Dieya Corporation received a subpoena from the DOJ involving fraudulent tax
return. Because of the gravity of the offense, your legal advice was sought as to whose signature must
appear on the withholding tax returns and face the possibility of being criminally liable in case of fraud?
a. President and Treasurer
b. President and Corporate Secretary
c. Treasurer and Corporate Secretary
d. Chairman and Chief Accountant

60. “Oplan Kandado” may be used by the BIR against the following taxpayers, except VAT-registered persons
who:
a. Understates his taxable sales by more than 30%
b. Fails to issue receipts
c. Understates his purchases by more than 30%
d. Fails to file his VAT returns

61. Which of the following cannot impose real property tax?

a. Province of Albay
b. Municipality of Pateros
c. City of Taguig
d. Municipality of Taytay

62. How much is the basic real property tax and special educational fund if the following information was
provided?
FMV per assessor’s office:
Land Php 1,000,000
Improvements 2,000,000
Actual use of the property Residential
Location Valenzuela City
Assessment Level
Land 20%
Improvement 20%

a. Php 24,000 c. Php 12,000

b. Php 18,000 d. Php 9,000

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For numbers 63 – 64: Raya Corporation, a domestic corporation organized in 2016, had the following:
2019 2020 2021 2022
Gross Income Php 4,000,000 Php 5,000,000 Php 6,000,000 Php 7,000,000
Allowable deductions 3,800,000 4,500,000 6,100,000 6,400,000
Net income (loss) Php 200,000 Php 500,000 (Php 100,000) Php 600,000

63. The income tax payable for 2020 is:

a. Php 150,000 c. Php 100,000
b. Php 130,000 d. Php 80,000

64. The income tax payable for 2022 is

a. Php 180,000 c. Php 30,000
b. Php 150,000 d. Php 60,000

For numbers 65 – 66: The following information pertains to the business equations of a taxpayer in 2019:
Gross Income:
From business Php 2,200,000
Rent 1,500,000
Cost of Sales 1,000,000
Operating Expenses 700,000
Real properties 18,000,000

65. How much is the additional community tax, if individual?

a. Php 3,700 c. Php 5,600
b. Php 4,700 d. Php 21,700

66. How much is the additional community tax, if corporation?

a. Php 1,480 c. Php 8,680
b. Php 1,888 d. Php 9,080

67. On April 15, 2017, Delicious Corporation paid cash dividends to its stockholders, as follows:
Cash dividends paid
1) Resident Citizens Php 1,800,000
2) Resident Aliens 600,000
3) Non-resident Citizens 300,000
4) Non-resident aliens
a. Engaged in business in the Philippines 320,000
b. Not engaged in business in the Philippines 120,000
5) Domestic Corporations 1,400,000
6) Foreign Corporations
a. Resident 600,000
b. Non-resident 85,000

How much should Delicious remit to the BIR as final withholding tax on the dividends paid to its
stockholders?
a. Php 376,750 c. Php 389,500
b. Php 435,000 d. Php 509,000

68. The following are tax incentives afforded to micro business enterprises, except
a. Priority to a special credit window set up specifically for the financing requirements of MBEs.
b. Exemption from the coverage of the minimum wage law, however its employees are still entitled
to the same social security and health care benefits as other employees.
c. Exemption from income tax of all income arising from the operations of the enterprises.
d. Technology transfer, production and management training, and marketing assistance programs for
MBE beneficiaries.

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69. Which of the following statements is correct?
a. Local taxes may be brought to the attention of the Secretary of Finance.
b. The regular courts cannot intervene in the assessment of real property taxes because this is the
primary jurisdiction of the Board of Assessors.
c. Local tax incentives and relief are granted only to new investments in the locality.
d. No injunction by regular courts will lie against real property tax collection by the local government.

70. Ms. K. Wawa bought a piece of land in Caloocan City in 2019. Thereafter she discovered that it has unpaid
real property tax for the year 2018. Is Ms. K. Wawa liable to pay the unpaid real property tax for 2018?
a. Yes, because as the new owner, it will not be registered in her name.
b. Yes, because the buyer assumes the responsibility carried from the previous owner.
c. No, because the real property tax attaches to the property. Therefore, it is the property itself which
is liable.
d. No, because the real property tax attaches to the property and is chargeable against the person with
actual or beneficial use and possession of the property regardless of whether or not he is the owner.

END OF FINAL PRE-BOARD EXAMINATION

GOD BLESS!
U. I. O. G. D

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