ReSA

The Review School of AccountancY

tTel. No. 735-9807 & 734-3989

TAXATION TAuAYO/ LrfilcArqA

TX fi}l ANS: PREWEEK LECTURE (THEORY)

on tax iseues, knowing the various tax oftces hat

i-Tlte6nd
and incentives.
they will be interaciing and basic tax planning to derive the benefts of the tax laws

The candidates must also be able to comnnrnicate effectively matters pertaining to the
ta,ration mft hat will be handled'

can address the fundamental

The knowledge of the candidates in fre competencies cited above is ffrat of an enl!rylevg!-eccwntanlwho
professionally in he future.
requirements of the various partbs trat frre Candidates dll be interac{ing

MULTIPLE CHOICE: Choose the best possible onswer.

lflnlpthf daxation, powE of eminent domain

1. (principles of Taxation) (phil. CpA) The following are common to the
and police power, G for which of the followinS?
a.' They are necessary attributes of 1afltlr
b. They interfere with frle rights and property'
c. Thev affect all persons or t{re public'
d. They ar*girHrhin implementation'
Similarities among the three inherent powers:
1) They are inherent in the State;
2) They exist independently of the Constitution;
property;
3) They constitute the three methods by which the State interferes with private rights and
4) They are legislative in nature dnd charaster;
5) Each presupposes an

2. (principlesofTaxation) (phil.CpA) ThePresidentofthePhilippinesandthePrimeMinisterofJapanenteredintoan

that interest on
executive agreement in respect of a loan facility to the Philippines from Japan whereby it was stipulated
to Philippine income tax laws'
llrn, gr"nt"d by private Japanese financial institutions in the Philippines shall not be subiect
What basic claractetistic gf taxation has been violated by this agreement? 121'Lt',1.'n, {:, ',ttiIlf,
'':- L- -;
.
a. lnherent limitation c leabhive in character I I "?'
justice d.Administrativefeasibility |' i ' i'i'-
b.Theoretical '
(principles of Taxation) The City of Masbate passed an ordinance imposing a license fee on all motor vehicles entering the
city between the hours of 9:00 a.m. and 5:00 p.m. Owners of motor vehicles assailed the validity of
the law. ls the law
valid?
a. Yes, because it was issued as a source of revenue.
b. Yes. because it is a lcdtimate exercise of police power.
c. No, because it discriminates against those who are not able to pay the license fee, particularly, the low-salaried
employees, and is, therefore, class legislation.
d. No, because it is not imposed by any other municipality,
4. (principle of Taxation) An annualtax of P1,000 was imposed upon all residents of the Philippines, who are above 21 years
purpose of
of age, with a gross income of P250,0(X), whether or not they send their children to public schools, for the
raising funds in order to improve public school bllldjngs. The tax is:
a. violative of the equal protection clause of the Constitution.
b. confiscatory.
c. for oublic ouroose,
d. contradicts the inherent limitations.

(principle of Taxation) (Phil. CPA) The basic community tax of P5.00 of an indirridual is:
a. a property tax. c. a national tax.
b. a directtax. .' valorem tax'
$#?.!,:d

6. (principle of Taxation) (Phil. CPA) ln case of ambiguity, tax laws shall be interpreted:
N
4 a. strictly against the taxpayer'
if'\ b. liberally against the Sovernment.
c. liberallv in favor of the taxpaver-
d. liberally in favor of the government.
 ReSA\: The Review Schoolof Accountancy page z of t7

7. (Principle of Taxation) (Phil. CPA) Christopher, a CPA, has just obtained her CPA license. Before he can lawfully pursue his
occupation, he should pay:
a. professional tax. c. percentage tax
b. income tax. d. Value-.,\dded Tax
Professional tax is a local tax imposed by local governments. of professional tax must be fixed+ by a
revenue ordinance, which shall not exceed three hundred

8. (Tax Remedies) All of the following falls underlpbl prescriptive period of assessment of collection except-one.
Which one is it?
a. rne taxpaye(fait"artlilq a return.'
b. The taxpayer filed a (ahehetu,rn with intent to evade tax.
c. The taxpayer filed aff[audulgnt futurn with intent tosyadgtax.
d. The taxpayer flleC.a-return that is not false or fraudulent.

The two {2} kinds of prescriptive periods for the assessment and collection of taxes are:
1) Normallregular prescriptive period of assessment and collection. - This prescriptive period of assessment
and collection of taxes is available to the Bovefnment if the taxpayer filed a return and the return filed is not
false or fraudulent.
2l pdriod of assessment and collection. - This prescriptive period of assessment and
-Hglgg?rprescriptive
collectib-of taxes is available to the government in the following cases:
a)
t't$i,i b)
cl
The
The
The
taxpayer
taxpayer
taxpayer
failed to file a return.
filed a false return with intent to evade tax.
filed a fraudulent return with intent to evade tax.
d) The taxpayer and the Commissioner agreed. in writing to waive the prescriptive period of assessment of
tax.

(Tax Remedies) lf the return is amended substantially, which means different from the original return, the three (3) year
period for assessment is counted from:
a. th€ last day for filing of the return.
b. the day the return was filed.
c. from filins of thelH;tt return.
d. any day depending on the convenience of the taxpayer.

There is substantial amendment when a new return is filed declarinB;rr# which can only be done either (1)
in reducing gross income, or (2) in increasing the items of deduction claimed. lf the amendment is minimal, the
counting of the prescriptive period is still the original period.

It should be noted that amendment, change or niodification of returns can only be done within three (3) years form
the date of filing of the return, provided that no notice of audit or investigation of such return has actually been
served upon the

10. (Tax Remedies) {Phil. CPA) The follo*,., ."6m;'"i:#tr,. of taxes by the BlR, except:
a. distraint and levy. "." "ott"ction
'
b- seizure of goods on which the Government has claim for unpaid taxes.
c. enforcement of tax lien..

'l:nstr$# - a' corn,romise' o

11.{TaxRemedies)lti,,notti.i"ldocumentthatempowersaRevenueoffic9r{q553|5ffiataxpaye'/sbooksof
accounts and other accounting records, in order to determine the taxpayer's correit internal revenue tax liabilities for a
particular period.
a. Preliminary Assessment Notice c. Letter of Authorltv
b. Final Assessment Notice d. Letter of lntent

An lnternal Revenue Officer is allowed only 120 days from the date of receipt of a Letter of Authority by the taxpayer
to conduct the audit and submit the required report of investigation. lf the Revenue Officer is unable to submit.his
final report of investigation within the 120-day period, he must ttren submit a Progress Report to his Head Office, and
surrender the Letter of Authority for revalidation.

A taxpayer's books of accounts and records shall be subjected to examination and inspection by the internal revenue
officers, provided that for income tax purposes, such examination and inspection shall be made only once in a
taxable year.

TAXATION - TX OO rF\/.
 R"SA: The Review School ofAccountancy page3 ot t7

12. (Tax Remedies) The Final Assessment Notice (FAN) becomesjlgl-grgq4gg$qrnd demandable in which of the fgllg;vins?
t- Taxpayer failed to fite a varid protest against tne rRrl]ffitri=n&6iho* receipt. tfl? rtL 7D
# /K
i; ,il . '1 il - Taxpayer failed to aopqal to CTA from the adverse decision of the Commissioner or his representative on the

( v:.i-, ,,,-riJifi:l;ilI,m.i?J;::il:iHHt"nu",theadversedecisionorthecrA*ithi,.gi;3w)
a. All of the choices c. Choices I and ll onlY
b. None of the choices d. Choices ll and lll onlY

@hiinactiononthedisputedassessmentbytheClRorhisrepre5entativewithin30days
final,ty of the FAN.
after the lapse of t'gO days from the submission of supporting document will not result in the

The taxpayer is given the option: (1) to appeal to the CTA within thirty (30) days from after the expiration
of the one
hundred eighty (1g0)-day period; or (2) await the final decision of the commissioner on the disputed assessment and
appeal such final decision to the CTA within thirty (30) days after the receipt of a copy of such decision.

lf the taxpayer is not satisfied with the decision of the CTA in Division, he may resoft to the following
remedy:
:file from receipt of the
(t) a motion for reconsideration before the same Division of the CTA within 15 days
decision of the CTA.
(2) .Then, again if he is adversely affected by a resolution of the Division of the CtA on the his Motion for
Reconsideration, he may appeal the petition with the CTA en banc'

ruling of
lf he is not satisfied with the decision of the CTA en banc, then the party adversely affected by the decision or
the crA en banc may file with the suprerne court within 15 days from the receipt of the adverse decision of the cTA en
banc.

13. (Tax Remedies) The taxpayer or his duly authorized reprisentative may protest administratively by filing a request
for
prescribed by implementing rules and regulations
reconsideration or reinvestigation in such form and manner as may be
ffieTate of receipof the fqtmal notiQe-gilglesunenj?
a. sixty (50) days ' c. Twenty (20) days
b. Thirtv(3ol davs d. Ten (10) daYs

(i.e.
(Tax Remedies) statement I - lf the taxpaye/s protest is filed with the commissioner's duly authorized representative
to the. Regional Director) and the protest is denied, the t.xpayer may elevate the protest to the Commissioner within 30
days from receipt of the decision, otherwis;e, the assessment shall become final, unless appeal to the CTA
is taken.

Statement lt -The decision of the Commissioner's authorized representative may be directly appealed to the CTA because
the Commissioner has the authority to delegate his assessment functions to subordinate officers and the assessment shall
frave tt e€me-folceina effed-as that issued by the Comrnissioner himself.if not elevated to the latter.
a. Onty StatementlEitue c. Eot.lr statelnents are true
b. Only Statement ll is true d. Both statements are not true

15. (Tax Remedies) The following are related to the tax assessment of a taxpayer:
Assessment received
Request for reinvestigation filed with BIR
January 5,2017
w
,p-dnllS.,nr,,i
Documents suppo-Iting the request submitted to BIR
Oecision-{ eln-{enyrnglhe request received by the taxpayer
il,trr,r#/;1 ffi'
>Aegg3lgdrhe decision of
the BIR lililt e,trau
1Z:,i7 s i
o
'sl,\Fab{j'' of request was received May 12, z\fi f*Llfi+,;
.-.lIg!-&niat =Ju
Last day to appeal to the Co_urt of TarAppeals is on:
VoCdt,;
a. May 12,2Ot7. c. Iune 3,2017.
b. )uneLL,2AL7. d. June 4,24fi.

.eight(8)dayshavealreadvpassqd.Whenthetaxpayerfilesa
request for reinvqgjgg!!9p, the running of the 30-day period is {89!999.Jupon receipt of the final denial
of the reqtle -rregsigleptq"the taxpayer has twenty-two{Zf-more days to appeal to the Court of Tax
6spar s. -r, (t" i"r"T* il llll*:*.$:{'TlL i i?",n9, gr*"', *

;:";;X*i**},#*1..,dffi;l;f
failureEiFfrIp-ayer
assessment may be disputed. The
:i-{i;;e3}davperiodwi,hinwhich,he
to submit the promised position paper with the 30-

?^varrn N Try rlrrr ANc. DDEtlrtFr I trTl lPg lTllFflRYl rr!r7 ,\ n { a LY('l
R"SA: The Review School ofAccountancy of 17
PaSe 4

16, (Tax Remedies) (phil. CpA) The following are related to the tax assessment of a taxpayer:
Date when assessment was received October L,,2015
Request for reconsideration was filed with BIR October 9,2OL5
BIR decision of denial was received .luly 2, 2016
Second request for reconsideration was filed with the BIR July 15, 2016
Datesyigd,bssessrnent was received '-.tul-y s, aOlz -
-\
+-wM__.)
The last day to appeal to the Court of Tax Appeals is on:
a. July 15,2017.
Tr*lJ
c. Aueust4.2O17.
b. August 6,2OL7. d. September 5,2017.

The 3tday period is counted from the date the revised assessment is received.

17. (Tax Remedies) Tax Credit Certificate issued under the peftinent provisions of the Tax Code may be used by the grantee in
payment of the following, sEgplwhich one?
a. lncome taxes c. Value-Added Tax
b. Estate tax and donor's taxes d. Withholdine tax

Tax Credit Certificate issued under the pertinent provisions of the Tax Code may be used by the grantee in
the payment of his direct internal revenue tax liability. Exceptions;
1) Payment or remittance for any kind of withholding tax;
2l Payment arising from the availment of tax amnesty declared under a legislative enactment;
3) Payment of deposits on withdrawal of excisable articles;
4l Payment of taxes not a/ministered or collected by BIR; and
mise

{Tax Remedies) {Phil' CPA) A taxpayer is assessed for taxes for filing false return and for failure to pay the taxes. She fites
an admihistrative protest with the BIR contesting said assessment. May the BIR during the pendency of the protest file a
action against the for filing a false return?
1_riminal :axpayer
Which of the following answers i13gg-q9ggg?.
a' Yes, for what is involved in this case is not the collection of taxes but atinifLnmr*bn for the violation of the
Tax Code.
b.Yes.Theprot€5tofthetaxpayeragainsttheassessmentffilforviolationoftheTaxCode'
c. Yes, because there is SlQfor the ,lliiFlUtHtrltDn and assessment of the tax before there can be
a criminal prosecution.
d. No. the filinr of the criminal a(tion is Dremature and precioitate since the protest has not vet b,een
resolved

(Tax Remedies) {Phil. cPA) A warrant ollgloqnay be issued against the taxpayer
owing delinguent taxes on his:
a.real oroperw
b.personal property.
c. bank deposits.
d.prooerty under custodia legis.

20. {lncome Taxation) A minimum wage earner {MwE)'who also receives holiday pay, overtime pay,
night shift differential and
hazard pay shall be:
a' exemfi from income tax and not required to file income tax return.
b. subject to income tax only on the pay in excess of the minimum wage.
c. exempt frorn income tax but required to file income tax return.
d. subject to income tax on the total income.

section I and 3 of RR No. 1G'20O8 are inconsistentr^rith RA 9504. The treatment of tonuses ana ottrer benefits
an employee receives from the employer in excess of P3O,OoO (now P82,OO0) ceiting remains the same anything
P3o,O00 (now P82,0Oo) is taxable. The treatment of this excess cannot serve to disenfranchise the MWE from
enjoying the exemption explicitly granted by R.A.9504. (G.R. No.'182t45o, La4so4,1B453g, 1gs234 promulgated
that
- in t
January 24,2OL7).

ln sum the proper interpretation of RA 9504 is that it imposes taxes only of the taxable income received in excess
of
the minimum wage, but the MWEs will not lose their exemption as such. Workers who received the statutory
minimum wage (SMW) as their basic pay remains MWEs: The receipt of any other income during the year does not
disqualify them as MWEs. They remain MWes, entitled to exemption as such,
f the taxable income they received
other than as MWEs may be ted to approprlglg lgl9s: h(
TAXATION TX
 R*SA: The Review School of Accountancy page 5 ol 17

2i. flncome Taxation) ln order that the capital gains presumed to have been realized from the sale of principal residence may
.lfsi,b" subject to capital gains tax, the following conditions must be complie{with, excegt which one?
a. The property being sold rnust be the princip-alf-eEiCeffg of a natural person,
...,1,.n.,(e,J/.,_ b. Theproceedsfrornthesale_ofthesaidprincipleresi-dence-rnustbefullyutllizedinacquiringorconstructinganew
w . i r' I ' 'e principal residence within68 qllerrdar months from the date qf sale or disposition,

4-c. \i'5( through a prescribed return of his intention to avai! gf the taieremfiion.
d' The tax exemption can only be availed of once every'd0{ears.
Wl:':" .,\;'rii
l.a\,;

The owner/seller must duly notify the Commissioner within 30 days from the date of sale or dispo$tion through a
prescribed return of his intention to avail of the tax

22. (lncome Taxation) A nonresident alien individual who shall come to the Philippines and stay therein for an aggregate
period of more than 180 days during the calendar year shall be deemed a "nonresident alien doing in the Philippines:
a. regardless of whether or not he is actuallv eneaged in business in the Philispines.
b. only when he is actually engaged in business in the Philippines.
c. when his income does not come from the performance of personal services in the Philippines.
d. when he comes to the Philippines for a definite purpose which in its nature would require an extended stay and
to that end makes his home temporarily in the Philippines, although it may be his intention at all times to return
to his domicile abroad.

The phrase "engaged in trade or business within the Philippines" includes the performance of personal services in the

23'(lncomeTaxation)Filipinosexercisingtheoptiontobetaxedatfifteenpercen.lffiroccupyingthe
.<:-=/ -
same managerial or technical position at that of an alien employed in Regional Operating Headquarters (ROHQ) or
Regional Headquarters {RHQ) must meet the following requirements except which of the following?

l'..,'i.,rioa
47,^ r,r B.
'\!, i'4"
\ ^,
The employee must occupy a managerial or technlcal position and must actually be exercising such managerial
and technical functions pertaining to said position.
aF'
5 t:fi _ b. The employee must have received or is duetoieceive under a{q1ga$. {eg'pLolmqn} a gross annual taxable
compensation income of at least P975,000.00 (whether or not this is actually received).
i I'-t'r:.r ftrl',.lr.u'; c. TheemployeemustbeexclusivelyworkingfortheROHQorRHQasaregularemployeeandnotiustaconsultant
,) I or contractual personnel.
d. The emplovee must be wortinEbr the same company for at least ten (1Ol vears.

i Filipinos exercising the option to be taxed at fifteen percent (15%) preferential rate for occupying the same
I managerial or technical positbn as that of an alien employed in an ROHQs or RHQs must meet all following
requirements:
1) Position and Functional Test - The employee must occupy managerial oosition or te(hnical position AND must
actually be exercising such managerial or technical functions pertaining to said positiory
2) Comp-ensation Threshold Test - ln order to be considered a managerial or technical employee for income tax
purposes, the employee must have received, or is due to receive under a contract of employment, a gross
annual taxable compensation of at least P975,fiX) (whether or not this is actually received.)
3) Exclusivity Test - The Filipino managerial or technical employee must be exclusirelv workine for the ROHQs or
RHQs as a regular employee and not just a consultant or contractual personnel. Exclusivity means having just
at a time. (Sec. 3, RR No. 11-2010)

(lncome Taxation) The impositionbf this tax is designed to forestall the prevailing practice of dornestic corporations and
resident foreign corporations of overclaiming {eductions in order to reduce their income tax payrnents.
,]dli'] a. MinimumCormratelncomeTax(MCIT)
' b. Normal Corporate lncome Tax {NCIT)
c. lmproperly Accumulated Earnings Tax (lAEfl
d. Optional Corporate lncome Tax (OCIT)

The MCIT shall be imposed whenever a domestic corporation or resident foreign corporation hamlffitaxable
income. MCIT prevents tax evasion and minimizes tax avoidance schemes achieved through sophisticated and artful
manifestation of d€ductions and other str

25. (lncome Taxation) This states that for income to exist, it is necessary that the capital blsefarate$hom
something of exchangeable value.
e. Seoerabllltv or aevereltcc test of lncome
b. Ability to pay theory
c. Benefits received theory
d. Situs of taxation
 R"SA: The Review School ofAccountancy
page 6 of 17

26. (tncome Taxation) (phil. CpA) The term ,,capital asset,, includes:
a. or other property included in the taxpayer,s inventory.
b.
c. primarily for sale to customers in the oroiorry
d. propert! used in the trade or business of the -r.se of his trade or business.
taxpayer and subject to depreciation.

section 39. Capital Gains and tosies*

ta) oen
r.n:ans qrop:rtv herd bv the taxpaver
flrt:::|1:::*; Iliji':-11t1':1":*:r {whether or not connected with his
;ffiil";il;;;;l;;'fiffiT"",l;
Bfoperlv be includerl in iha inrranta.r, ^rrL^ "^-.^-. --- ..
or property held by
or propertv used in the
provided in Fubsection (F) of
Section 34; or

) 27. (lncome Taxation) First statement:

;.
Yi its menrbers, trustees, or officers.,, ^ii:;i'iiTiffi;:i"'ft fi ifi i,$ii'jn:*:"isdistributab,easdividendsro
second';1..'fflJ;i:,'l':',::::l:
b. Both statements are correct
[tf,if.r"E#^"'*0.
28' (lncome Taxation) As a general rule,
campaign contributions to candidates or political parties
a. not inahrr{od ia }lro hval.l^ i--^-- are:
^. ^L -
b. included in the taxable incorne of the candidates,
c. subjectto donor,s tax.
d. either subject to income tax or dono/s tax.
As a general rule, campaig, c
beilg.thatsuch cont.ibui,o,, *u." given not for
:::::ii::.,:.:::3,1ffj:::,.:?lT 1"*o1 candidate,
or enrichment of the concerned thei personat
personar
r* r*,n" orrporu or utilizing such contributions for his or her
ffi;tT.t"t
However, unutilized or excess campaign furrds,
that rs, campdign contributions net of the
expenditures, shall be considered as subiect to candidate,s campaign
income tax.

F?nL u't:r 1t' I a candidate who fails to file with the coMELEC the appropriate
Y1t( soc6' I Election code, shall report as taxable income the entire amount
statement of Expenditures reguired under
the omnibus
r.ffIl!.:r't t t qf campaign contributions.
0ufi?.!6',1,4:i t

'.\i /
29' {tncomeTaxation) inwhichoithefollowint.ur"rshart
themonetaryvaruebetheentirevalueof thebenefit?
AS i-.: , 'I - lf the emptoyer purchases
Pu'L'rdses a residential
resloentral orooertv and i-ncra,.
property arrrr transfers ^r.,^^--L:^
ownership of-r -L
l1 ,',', , ., ,.,' ;;;;;;'"'Er the said property in the name of the
f lrl ' -'1 ll - lf the employer purchases a residential property
,.1-n i r_;'-\ ' anci transfers owneiship of the said propertyto
his employee for
i/ I ' t- . r n
the latter's residential use, at a price less than
the employer,s acquisition cost

r,r- rtf;
"h''$E '\' u. Bothtandn , c. Neithertnorlr
b. I only ' ''-' "
, Itonty
d. ,, ^^".-
\
(rncome Taxation) phirip and Kat
are huJband and wife with six (5) minor chirdren.
where the custodv of five (5) children we)e rh"v *"rg6g{!yrgggr"!id,n 2015,
awarded bvtfre .ili; ilil;
,.u1"" rii'.rllo=r[df *". supporrs her sister,
unemoolllaand living with her- uo*
*l;ilil1lfffi?#Iil"r'd -u,iy dependents ror additionar exemption purposes
a. Philip, 5; Kat, 2
b. Philip, 4; Kat, 1 -c-Ph!!!p-lila!,ll
d. Philip,2;Kat,2

The total amount of

I
I "ddition"l
allowed of four (4) quarified
dependents the custody olyr,q* wai awarded by court.
 RESA: The Review School of Accountancy pageT of 17

31. (lncorne Taxation) Tony, a CpA and Mary, an employee, are husband and wife with four (4) minor children. Mary supports
her 14-year old brother, Gerard, a pwD, living with them. Tony claims the additional exemptions for their four (4) children.

Car-r Mary claim additional exemption for her brother who is a PJA/??
a. No. The total amount of adCitienal eremptions that miv be clailned bv both spouses shall not exceed the
b. yes. pWDs, *ho ,r" *iffin"th€iou-rt1, degree of consangfinity or affinity to the taxpayer, regardless of age, who
dependent for additional
are not gainfully employed and chiefly dependent upon the taxpayer, shall be treated as
exemPtion.
c. No. Only the husband can claim additional exemptions without any exceptions.
d. yes. Sinie Tony claimed the four (4) qualified dependents for additional exemptions purposes it is but property
for Mary to also claim her brother as dependent for additional exemption purposes.
qualified dependent children
32. (lncome Taxation) Using the same data in the preceding number, except that the number of
is three (3) only and tony claims the additional exemptions for their
three (3) children, can Mary claim additional
exemption for herbrother who is a PWD? r_-^.^r-_ PwD'
qualifiedr dependent
t.r/
t\_i\,, +,- at No. onlv one soouse can claim Ure adCitionpl qxemption for
\'. . tt
,,
who
;. Gf\ /Dr, within the iourth degree of consanguinity or affinity to the taxpayer, regardless of age,
*fire
tr n:- t '; taxpayer, shall be treated as dependent for additional
are not gainfully employed and chiefly dependent upon the
K 'i' - '
,
exemPtion.
c. No. Only the husband can claim additional exemptions without any exceptions'
\ rii, .;/ ' t' d. yes. Since Tony claimed the three (3) qualified dependents for additional exemptions purposes it is but, groperJy ,f
for Mary to also claim her brother as dependent for additional exemption purposes'
-rr vr l ,tZ-lI __ _ --- : li', *i
\e(fl4-, '
it U*tt*r-in+a*, who is related within the6gg&lLtivil degree of
alfinity to the brother of his wife-

has a gross income of P250,00O during the year'

33. (lncome Taxation) A taxpayer with two (2) qualified dependent children
year:
He paid the following premiums on hospitalization and health insurance for the
On himself P 800
On his spouse 800
On child no. 1 500
On child no. 2 500
Total P2-600

The allowable deduction for premiums on hospitalization and heahh insurance is:

r ,,-
a.
P2,600 c. P800
d. none. Not qualified
-,'-.r - 1.*.- b.
P2,400

:o!v\ fi.,?,1,'.
talizationlnsuranceofanlndividualTaxpayer.-theamountofpremiums
not to exceed Two thousand four hundred pesos (glg) per family or Two hundred
pesos (P200) a month paid during
ik- l,fi^ the taxable year for health and/or hospitalization iniurance taken by the taxpayer for himself, including his farnily, shall
be allowed as a deduction from his gross income: Provided, That saidhaly huu Sffnili3dffifl*m
hundred fifty thousand pesos flifltllll for the taxable year: Provided, finally, That in the case of married taxpayers,
only the spouse g13im16g1hgdilthhilHFtrn foi dependents shall be entitled to this deduction.

34. {Transfer Taxes) These are taxes imposed ,pon tf,"fgi.iy1lgu\disposition of property, whether real or personal, tangible or
intangible.
a. Transfertaxes c. Business taxes
b. lncome tax d- Customs duties

35. (Transfer Taxes) One of the following is.not-,a characteristic of donationiDlffivcausa'

t \t'" i a. t conveys.rro-ritlE.or ownership to the transfereqilefoie the dg+ft th.e transferor.
'i iffi f/,tr< b. Thar before-IfrE-decedent'gdeath, the transfer should be{eriocabb ?fby the transferor ht vyrlf'
gr65yVfl

6io ] tr'" Einsreror shourc-su-ryiGne

t-transreree
$\X;*rL, i l::H:l"i:[il:,t"
36. (Transfer Taxes) properties transferr ed inter yNgiby a decedent to his children *itttin qg{@@@ before he died
due to his incurable sickness shall be subject to:
a. donor's tax, c. either-dono/s tax or estate tax'
b. estatetax. d. both donor's tax or estate tax.
 R"SA: The Review School of Accountancy PaSe 8 of U

37. (Transfer Taxes) The "copitol of the surviving spouse of o decedent refers to the exclusive property of the surviving spouse
and shall not, for estate tax purposes, be deemed part of his or her gross estate. Which of the following is not an exclr$jye
property ofthe surviving spouse under conjugal partnership ofgains:
a. That which is brought to the m;rrifta-as hEoiht;;n --
b. That which is acquired {yfllg1he marriage by lucrative title
c. The sums collected UXinstellUe[f) during marriage from credir belonging to the surviving spouse
payable in a cefiain number of years
d, The fruits, pensions andjnterests. due during the mariage.
The following are the exclusive-property of the surviving spouse:
1)Properties brought into the marriage as either of th e spouse's own;
2l Properties acquired by gratuitous (or lucrotive) tit e during the marriage;
3) Properties acquired by right of rcdemption or by exchange with other proryrty fulonging to only oae of the
spouses;
4) Properties acquired with exclusrve money of either spouse.
5) The sums collected by installments during the rnarriage from credit payable in a certain number of years are
considered property of the spouses to whom the credit belongs;
6) The right to an annuity, whether personal or'for life, and the right of usufruct, belonging to one of the spouses,
form pprt of his or her separate property, but the fruits, pensions and interests, due during the marriage belong
to the

38. (Transfer Taxes) Which of the following isggpdeductible as funeral expenses?

a. The mourning apparel of the surviving spbuse and unmarried minor children of the deceased bought and used on
the occasion of the butial ''i
b. Expenses forthe deceased wake, including food and drinks
c.
d. lnterment andlor cremation expense.

Funeral expenses include;

(a) The mourning apparel of the survivin8 spouse and unmarried minor children of the deceased bought and used on
the occasion of the burial;
(b) Expenses for the deceased's wake, including food and drinks;
(c) Publication charges for death notices;
(d) Telecommunication expenses incurred in informing retatives of the deceased;
(e) Cost of burial plot, tombstones, monument or mausoleum but not their upkeep. ln case the deceased owns a
family estate or several burial lots, only the value corresponding to the plot where he is buried is deductible;
(f) lnterment and/or cremation fees and charges; and
(g) All other expenses incurred for the performance of the rites and ceremonies incident to interment
Deductible funeral exPense$: Actual funeral expenses or 5% of gross estate whichever is lower, but in no case to
exceed P 200,0m

39. (Transfer Taxes) one of the following isLtgra requirement for the filing of a notice of death of the decedent.
a -. i a' Whenever there are properties l-eft by the decedent which are regisGi6d--oiiE-gBffile subject to estate tax
, ,t. t. i,t,
i'
.'
t b- lf the properties are exempt from estate tax,-tbe.grgss value of the estate exceeds p20,000
'?1,,ttt{,..,
! c.' The notice of death shall be filed withir.rtwo (2) months,after the decedent's death, or within a like period after
,ir,i -^' qualifying as such executor or administEtbr - --*
. 1 l,
f..c c( 1'n d. A notice of deat} is required to hgEled wilh Revenue District office (RDo) havinx iurisdiction oveT the place or
' ttGtt', ';" . residence of thd administrator or executor.'

AnoticeofdeathisrequiredtobefiledwithRevenueDiStrictoffice(RDo)hauingju'isffi
of th6 deceased,

40. {Transfer Taxes} One of the following is-n$9 requisite for the validity of donation of real property.
a. The donation is made in a publie instrument document specifliing the property donated.
b. The donation must be accepted during the lifetime of the donor, which acceptance may be made either in the
same Deed of Donation or in a separate public instrument.
c. lf the acceptance is made in a separate instrument, the donor must be notified in an authentic form, and the same
must be noted in both instruments.
d. The vatue of th€ donated real propertv must be at least pS,(XX).

-r"'-lif,47 (Transfer Taxes) One of the following i{rl@subjecr to donods tax.

a. Waiver or renunciationly_!!: ty1-iying spouse of his/her sfrarey{!.e conjugal partnership or absolute .
'
I comm_uniffieithe diiio-ttitiogirf the marriage tqleygr of th-gt
".1.t'
- -!o f w 1ai-*' b. tQoU11!oJ, made by the husband alone out of conjugat partnership property
'l nA-,*
C);'; t' .lJ'r-:'. c. Coq-dglgtgPor remission by the creditor of debtor's debt, debtor did not render service in favor of the creditor
l'.o- ' d, Cg?trib4iot! to a candidate for an elective post and to the political parw of the candidate
-r I
L
 ReSA The Review School ofAccountancy page 9 of t7

4)- (Transfer Taxes) A foreign corporation donated its own shares of stock in favor of resident employee in the Philippines.
The donation is:
a. subject to Philippine donor's tax.
b. not subiect to PhilipDine dono/s tax.
c. sub.iect to both donor's tax and income tax.

x1i,u :t
d. not valid because it involves donation of foreign shares.
:tt) _'t. ^ lt i /lr, )
l. S,|,i; However, { Wghf
}Yg.business
of the foreign corporation is located in the Philippines or the shares donated have
. .l r 1'
"tl'.,
t. .
[,.lf n,{i acquired busineslsitul in the Philippines, the donation may be taxed in the Philippines subject to the rule of

43. (Transfer Taxes) When does the reciprocity rule apply? The reciprocity rule applies if the foreign country of which the
';,');Y f ,/ 1
I
nonresident_ql[en decedent was a citizen and resident at the time of death of his death:
1,W' -, .V
..|
, | - di64inugse-a transfer tax of any character, in respect of iplangihle-personal property otl[glgglgdfg
-- {_;
;\'i
! . (esiilingin that foreig4 country
tl - aflowi a similar.ex'egfrfiodfrom transfer tax of every character or description in respect of intanehlgpersonal
' property owned by Filipino citizens not residing in that foreign country.

a. Either I or ll c. lonly
b. Neither I nor ll d. llonly

44. (Business Taxes) when shall the taxpayers register a( fai laxpayersl
a. Before the, start of the business and every vear thereafter on or before the 31n dav of Januarv
fn'la- , b. At the time of payment of the monthly VAT and every month thereafter on or before the 20'n day of the month.
iri fvl ,l ' , i;,".' c. At the time of payment of quarterly VAT and every quarter thereafter on or: before the 25ti day after the end of
the quarter
d. No need to register as long as monthly VAT and quarterly VAT.are paid on or before the due date

r'! rf , . 4,5. (Business Taxes) The following persons are allowed to registerp-Otionally,Under the VAT sVstemiggggwhich one?
' a. Any person who is VAT-exempt because his taxable grosiahn-ual sales or receipts do not exceed the VAT
r't
I t,ii
threshold
b. Any person who is VAT registered but enters into transactions which are exempt from VAT with respect to his '

VAT-exempt sales or receipts

1r
Ii" , :- ' c. Franchise'grantees of radio and/or television broadcasting whose annual gross receipts of the preceding year do
\ ./ ,,: ,
". not exceed P10,000,000 derived from business covered by the law granting the franchise
d. Any oercon nfiose er6s sales or receiots for th€ past 12 monfis. otrer than tho6e that are not subiect to VAT,
have erceeded the VAT ttreshold

Choice c: Franchise grantees of radio and/or television broadcasting whose annual gross receipts of the preceding
year do not exceed P10,000,00O derived from business covered by the law granting the franchise may opt for VAT
registration. This option, once exercised, shall be irrevocable

Choices a and b: They shall not be allowed to cancel the registration for the next three (3) years.

MandatoryVAT registration:
-
5I.-Rny person whose gross sales or receipt{ortbe+?st 12 months, other than those that are not subject to
VAT, have exceeded the VAT threshotdJflq€4gq,
b. There are reasoilable grounds to believe that the gross sales or receipts for the next twelve (12) months,
other than those that are not to VAT, will exceed the VAT threshold (P1,919,50O). i

46. (Business Taxes) The incidence of VAT is on the:

a. seller. c. BlR.
b. finalconsumer. d. Noneofthechoices

taxatian (on the seller), coresoonds to the imposition of the tax, shifting (VAT is passed on to the
refers to the transfer of tax an{iQcderlgd (on the final consumer} consists of the payment of the tax.
?i\,tr- INL'i'i'/l',!
47. (Business Taxes) lnigarryingiryglLu iri.".i'business oi'" iui"i,
.J#p.nv, which is the manufacturing of garments for
sale abroad, acouiraFnf,eventuallv sold aj{slggges
abroad. it acquirCde-ntlwentualtf$l a Mercedes 99!z Manaser- Prior to the sale.
Benz to its General Manager. sale, the motor vehir
vehicle
formed part of its capital assets, specifically under the account "Property, Plant and Equipment'. For VAT purposes, the
sale of the motor vehicle is:
a. subiect to VAT because it falls underEcidental transaction.
b. not subject to VAT because it is not the regular conduct of the manufacturing company.
c. not subject to VAT because the goods manufactured by the company are sold abroad and, iherefore, subject to
"o%.
d. subject to VAT because it involves sale of a iuxury vehicle.

TAYATTNN 7Y .IIII ANs. DeFu,FE( I ErTI IeF fTHFNDVI FFlr7 ,L-rI IYA
 R"SA: The Review School ofAccountancy page ro of 17

The sale of the motor vehicle is an incidental transaction because the said vehicle was purchased and used in
the
furtherance of the company's business.

"lncidentol" means something else as primary; something necessary appertaining to, or depending upon
another, which
termed the principal. Hence, an isolated transaction is not necessarily disqualified from being made incidentally in the
is
course of trade or business.

No distinction is made between capital and revenue items. Thus, a supply (sale) in the course of trade or business
includes:
1) the disposition of the assets and liabilities of a business;
z, the disposition of a business as going concern; and
3) An done in connection with the termination or intended termination of a business,

48. (Business Taxes) Which of the following itnogeubject to philippine VAT?

a'
Sale by a non-stock, non-profit organization or government entity engaged in the sale of goods or services
b.
Gross receipts of recreational clubs, including but not limited to membership fees, assessment dues, rental income
\ ','&s, i, , / and service fees
,t"r, . :. l{ c.
,' ir'
, SubsidY fiven to a companv eqsivalent to tte said compant's advertisins expense
1 'a. d' Sale of services by non-resident foreign corporation in the Philippines to one who is doin6 business in the
Philippines
it:'-l.i (li.r"r,:

The Tax Code explains when vAT may be imposed or exacted. Thul there must be sale or exchJnge or goods or
properties before any VAT may be levied. Certainly, there was no such sale, barter or exchange in the subsidy given by
515 to Sony. lt was but a dole out by SIS and not in payment for goods or properties sold, bartered or exchanged
by Sony.
Sony did not render any services to SIS at all. The services rendered by the advertising companies paid for
by Sony using
SIS dole-out, were for Sony and not sls. sls just gave assistance to Sony in the amount equivalent
to the latter,s
advertising expense but never received any goods, properties or services from sony. (clR vs. sony philippines, lnc., G>R.
178697, Nov, 17,20

49. (Business Taxes) Sale, transfer or disposal within a 12-month period of two or more adjacent house
and lots or other
residential dwellings in favor of one buyer form the same seller, for. the purpose of utilizing the house and lot
and other
residential dwellings as one residential area shall be subject to VAT if the aggregate value of the adjacent properties
is:
a.
P3,199,200 or more.
b.
in exeess of P3.19t1.2fi).
c.
P1,919,500 or more
d. ln excess of P1,919,500

The
'|
ur pgtllryEljs
rolE ot
r'|E sale
Eqtl!l16ly: r) not
trut coveied
fovereu by
Ey the
fne rules on thresnolcl amount not,b6ing a residentiallot house and lot and
other residential dwelling, thus, should be subject to VAT regardless of imount of r"f]ing
,.i.*
sale, transfer or disposal within a 12-month period of two or more adjacent residential
lots in favor of one buyer form
the.same seller, for the purpose of utilizing the lots as one residential area shall be subject
to vAT if the aggregate value
of the adjacent propertieiis in excess of W. .), ,]l
2t _'
{Business Taxes) Which of the following shall be subject to VAT a{}il?)
a. Sale of eold to Bansko sentral ns pilipinas (BSll v
b. sale of silver or other metallic mineral to Bangko sentral ng pilipinas
{BSp)
c- Sale of gold to manufacturers of jewelry
d. None of the choices

51. (Business Taxes) First statement: lmportation begins when the carrying vessels
or aircrafu enters the jurisdiction of the
Philippines with intention to unlade therein.

Second statement: lmportation is deemed terminated upon payment of duties, taxes and other
charges due upon the
articles or secured to be paid, at a port of entry and the legal permit for withdrawal shall have
been granted, or in case
said articles are free of duties, taxes and other charges, until they have legally left the jurisdiction.
a.. Only the first statement is correct
b. Only the second statement is correct
c. Both statements are correst
d. Both statements are notcorrect

TAXATfOil TX (Xrl AI{S: PREWEET(

 R"SA: The Review School ofAccountancy page tt of t7

I>2. (Business Taxes) Which of the following staternents js 1n.qoJlestJ

a. Transitional input tax credit may be claimed by a ryrylyivAT-registered person such as when business commences
a business operation. : -
{t
*1;,.tl b. The basis of transitional input tax is the'beginning inverrygi! of goods, materials and supplies including those that
\-'--::'-
are VAT-exempt under Sec. 109.
te

n0 n-
-11, U, \;, ffiil,
."f
C. The transitional input tax is 2% {used to be 8%} of the value of the besinning inventory on hand or actual VAT
paid on such goods, materials and supplies, whichever is lower.
d. The value allowed for income tax purposes on inventories shall be the basisfor the computation of transitional
input tax, including goods that are exempt from VAT under Sec. 109 of the Tax Code.

i'i
The transitional input taxis 2% (used to be 8%) of_the-value of the beginning inventory on hand or actual VAT paid on
such eoods, materials and supplies, whichever

53. (Business Taxes) A corporation requests refund of input tax for its zero-rated sales. The corporation fails to indicate in its
official receipts that the sales are "zero-rated ". The BIR denies the request for refund. ls the BIR correct in its denial of
the request for refund?
a. Yes. because the Suoreme Cou+ has ruled in several cases that the orinting of the word 'tero-rate.d' is required
to be placed,on the VAT invoices or receipts coverinF rero-rated sales in order to be entitled to claim for tax
credit or refund.
b. No, because the printing of "zero-rated" is inconsequential as long as VAT Official Receipts or invoices issued are
printed by BIR-accredited printers.
c. Yes, because the printing of "zero-rated" is required at all times without any exception.
d. No, because the BIR is mandated to grant requests for refund as long as its filed within two (2) years from the
payment of tax.

ln another case, failure of the taxpayer to indicate its zero-rated sales in its VAT retg'ns afr_d g its official receipts is
i\Jrli i ; not sufficient reason to deny its claim for tax credit or refund when there areQt]rldogyrngryfl from which the court
4.tr \\ ,' can determine the veracity of the taxpayer's claims. (Southern Philippine Power Corp. vs. ClR, G>R. 179632, Oct. 19,
f
2077

(Business Taxes) lnternational carriers doing business in the Philippines is subject to the:
a.
3% percentase tax on pross receipts deriued from the transoort of cario and/or mail from the Philippines to
another countn .
b. 3% percentage tax on gross receipts derived from the transport of cargo, mail and passenger from the
Philippines to another country.
c. 12% value.added tax on their gross receipts derived from the transport of cargo from the Philippines to
another country.
d. O% percent value.added tax on their gross rereipts derived from the transport of cargo and passenger from
the Philippines to another country

(Business Taxes) The Nativity lnsurance Co., a life insurance company, had the following data on premiums and expenses
for a month:
Cash received P520,000
Accounts receivable 36s,000
Post-dated cheqks 315,000

How much was the percentage tax payable?

a. P60,000 c. Zero
b. P24,@O d. None of the choices

/1 ' 'fj Cash received P 520,000

L. Y
Accounts receivable
Post-dated checks
365,OOO
31s-0Q0
Total premiums received P1.200.000
Tax on life insurance premium (1,200,0fi) x 2%) P 24.000

Five (5) years after the effectivity of this Code (AA) (issued February 23, 2010), no tax on life insurance premium shall.be
collected. (Sec. 4, R.A. No. 22-20101. This was vetoed.

( Lo c a rG overn m ent code ) At I (ael tGJe;;, f;i n rii"H.,% r J6'.Qr

r

"*J or
a. the pronincial, city. munkipal. or Barangay treasurer, or their dulv authorized deputies.
b. the Mayor of the local government unit or his duly authorized representatives.
c. the Sanggunian of'the local government unit.
d. the provincial, city, or municipal assessor or is duly authorized deputies.

,a\
 ReSA\: The Review Schoolof Accountancy paBe D of 17

57. (Local Government code) Unless otherwise provided in the Local Government Code, all local taxes, fees, and
charges shall be paid within the:
.l l a. firct twentv (2O) davs of Januarv or of each ssbseouent suarter, as the cas€ mav he,
L; b. lrst d?y ofJanuary or of each subsequentquarter, as the case may be.
c. first fifteen (15) days of January or of each subse,iluent quarter, as the case may be.
d' First twenty-five (25) days of January or of eadr subsequent quarter, as the case may be.

58. {Local Government Code} which of the following taxes shall be paid when a real property classified as capital asset iisold?,;
r -l | - 6% capital gains tax on presumed capital gain based on selling price or fair market value whichever is highe-.-'-
t l.-' ' 1-
(national tax)

:,
ll - 1.5% documentary stamp tax based on selling price or fair market value whichever is higher (national tax)
lll - 50olo 19o of the total consideration involved in the acquisiUon of the property or of the fair market value in
case the monetary consideration involved in the transfer is not substantial, whichever is higher (lcical tax)

a. L II and III c. I and III only

b. I and II only d. II and III only

The4r-oy11ygtnayimposeataxonthesale,donation,barter,or""anvotr.ermodeort'inire'ffi
real property at the rate of not more than fifty percent (50%) of one percent {1%l af the total consideration involved in
the acguisition of the property or of the.fair market value in case the monetary consideration involved in the transfer is
not substantial, whichever is higher.

The sale, transfer or other disposition of real property pursuant to R.A. No. 6657 (Comprehensive Agrarian Reform Law of
1988) shall be exempt from this tax.

For this purpose, the Register of Deeds of the province concerned shall, before registering any deed,
presentation of the evidence of payment of this tax. The provincial assessor shall likewise make the same
before canceling an old tax declaration and issuing a new one in place thereof.

Notaries public shall furnish the provincial treasures lvith a copy of any deed transferring ownership or title to any real
property within thirty {30) days frorn the date of notarization.

tt shall be the duty of th{sel.J-er,}onor, transferor, executor or administrator to pay the tax herein imposed
within sixty
60) days from the date gFthe execution of the deed or from the date of the decedent's death.

{Locat Government Code) Provinces are specifically authorized to levy the following taxes, bxcepqr
a. Tax on transfer of real propertyownership. c. professional tax.
b. Tax on business of printing and publication. d. Value-Added Tax. .

TheLocalGovernmentCodehasidentifiedandaiportionedthetaxes,fee'and.'@
avoid local double taxation. Provinces are specifically authorized to levy the following taxes:
1) Tax on transfer of real property ownership;
2l Tax on business of printing and publication;
3) Franchise tax;
4) Tax on extraction of sand, gravel an d other guarry resources;
5) Professional tax;
5) Amusement tax on theaters, cinemas, concert halls and circuses; and
7l Fixed tax on delivery trucks.
Municipalities may generally levy taxes, fees and charges not levied by provinces. ln particular,
they may levy:
1) Business tax;
2| Ucense fees and charges;
3) Fees for the sealing and licensing of weighrs anci measures;
4l Rental, fees or charges on the Bra4t of fishery privileges in the municipal waters; and
5) Community tax.
cities may levy and collect any of the taxes, fees and charges (and at higher rates) that the provinces or municipalities
may impose under the Local Government code. Specifically, cities may levy any of the following taxes,
fees and
charges:
1) Localtransfertaxes; , ,

2) Tax on business of printing and publication;

3) Franchise tax;
4) Tax on extraction of sand, gravel and other quarry resources;
5) Professional

TAXATION - TX 0O1ANS: PREWEEK LECTURE (THEORy) Reh

 7
R"SA: The Review School ofAccountancy page 13 of t7
/
6) Amusement tax;
7l Fixed tax on delivery truck or vans;
8) Business tax;
9) License fees and charges;
10) Fees for the sealing and licensing of weights and measures;
11) Rentals, fees or charges on the grant of fishery privileges in the city waters; and
12) Community tax.

Among the LGUs, barangays have the most limited taxing power. They may only levy:
U Taxes on stores or retailers which are not covered by the taxing power of cities and municipalities;
2l Taxes on commercial breeding of fighting cocks, cockfights and cockpits;
3) Taxes on places or recreation which charge admission fees (provided such taxes are not in the nature of
local amusement tax);
4t Taxes on billboards, signboards, neon sigh and outdoor advertisements; and
5) Limited fees for issuance of barangay clearance.
60
j:[ffi:i1;ffi:L',:,#a;::]::T:I;fl['msonswhomeettherequiredskillsorqualifications,either
additional deduction, from their gross income, equivalent to:
a. twentpfive oercent (25%l of the total amount pald ai salaries and wages to disabled persons.
b. fifteen percent (15%) of the total amount paid as salaries and wages to disabled persons.
c. five percent (5%) of the total amount paid as salaries and wages to disabled persons.
d. twenty-five percent 125%l or fifteen percent (15%) of the total amount paid as salaries'and wages to disabled
persons, whichever is lower.

Tax incentives for qualified establishments selling goods and services to PWDs:

Private entities that employ disabled persons who meet the required skills or qualifications, either as regular
employee, apprentice or learner, shall be entitled to an additional deduction, from their gross income, equivalent to
twenty-five percent (25%) of the total amount paid as salaries and wages to disabled persons.

Conditions:,
a. That such entities present proof as certified by the Department of Labor and Employment that disabled
persons are under their employ:
.
b. The disabled employee is accredited with the Department of Laborand Employment and the Department of
Health as to his disability, skills and qualifications.

Private entities that improve or modify their physical facilities in order to provide reasonable accomrnodation for
disabled persons shall also be entitled to an additional deduction from their net taxable income, equivalent to fifty
percent {50P,6) of the direct
costs of the improvements or modifications. This does not apply to improvements or modifications of facilities
required under Batas Pambansa Bilang 3214.

Establishments granting sales discount to PWD {promotional discount, the 20% discount} on their sales of goods
and/or service shall be entitled to deduct the said sales discounts from their gross income subject to certain
conditions.

61. (Preferential Taxation) Private entities employing senior citizens shall enjoy additional deduction of:
a. Fifteen percent {15%l rif the total amount paid as salaries and wages to senior citizens.
b. Twenty-five percent (25%) of the total amount paid as salaries and wages to senior citizens.
c. Fifty percent (50%) of the total amount paid as salaries and wages to senior citizens.
d. Fifteen percent (15%) or twenty-five percent (25%) of the total amount paid as salaries and wages to senior
citizens, whichever is lower.

Tax incentives for qualified establishments sellng goods and services to

Fifteen percent (15%) of the total amount paid as salaries and wages to senior citizens shall be allowed as additional
deduction.

Conditions for the allowdnce of deduction:

a. The employment shall have to continue for a period of at least six (6) months
b. The annual taxable income of the senior citizen does not exceed the poverty level
Establishments granting sales discount to Senior Citizens (promotional discount, lhe 2O% discount, the 5% discount
on water and electric consumption, or the 50% discount on electricity, water and telephone consumption by Senior
Citizen Center) on their sales of goods and/or'service shall be entitled to deduct the said sales discounts from their
ReSA The Review School of Accountancy pageq of t7
62. {Preferential Taxation) (Adapted} Zandro, a CPA and Yasmin, an enrployee, are husband and wife with four (a) minor
children. Yasmin supports her 14-year-old brother Joshua, a PWD, living with them. Zandro claims the exemption for their
four (4) children. ;

Can Yasmin claim for additional exemption for her brother who is a pWD?
a' Yes, because PWDs who are within the fourth degree of consanguinity or affinity to the taxpayer, regardless of
age, who arq not gainfully employed and chiefly dependent upon the taxpayer, shall be treated as dependent
under Section 35 {b} (additional exemption}.
b. No, because PWDs who are within the fourth degree of consanguinity or af inity to the taxpayer, regardless of
age, who are not gainfully employeci and chiefly dependent upon the taxpayer, shall not be treated as dependent
under Section 35 (b) (additionaiexemption).
c. Yes, because provides for a brorher who is a PWD.
d. No, because the total amount of additional exemptlon-that mav be claimed by both spouses shall not exceed
'the maximum allowed of four {4} qualified dbpendents.

63. (Preferential Taxation) tncome Tax Holiday (lTH) for new registered pioneer firm shall be:
a. six {61 vears from commercial operations.
b. four (4) years from commercial operations.
c. three (3) years from commercial operation of the expansion
d. None of the choices

1) lncome Tax Holiday

a. New Registered Pioneer Firms - Six (6) years from commercial operations.
b. New Registered Non-Pioneer Firms - four (4) years from commercial operations.
c. Expanding Firms - Three {3) years from commercial operation of the expansion.

2) Entidement for t{ew Expansion Projects

a' New ProJects - In excepUonal cases, ECOZONE Export or Free Trade Enterprises undertaking new activities
distinct from their registered operations may qualify as new projects subiect to the setting up of separate
books of accounG. In such cases, the incorne tax holiday shall apply only to sales of the new products.
b. Expansion Projects - The income tax holiday for expansion projects, shall apply only to the extent of the
actual increase in production.

mo&rnization ard retrabilitafion slrall not be entiued to inaome tax

64. (PreferentialTaxation) "Preferred areas of investments" shall mean the economic activities that the Board shall
have declared as such in accordance with Article 28 which shall be either non-pionqqr or pioneer.
"pioneer
enterprise' shall mean a registerd enterprise and strall include the following, er<cepqwhic*r one?
a' engaged in the manufacture, proce*sing or production- and not merelyh*e'assembly or packaging of
goods, products, commodities or raw materials th5[ have not,$rl_o,r are not being produced
in ihe'
Philippines on a commercial scale
b- which uses a design, formula, scheme, method, process or system of production or transformation
of
4.n-y qlgment, substance or raw materials into another raw material or finished goods which is new and
,
Jltl4jn the Philippines
c. E@aged in the pursuit of agricultural, forestry and mining activities and/or services including the
industrial aspects of food processing whenever apprgpriat€.{re-d_eterrnined by qe Bbard,
in"
consultation with the appropriate Department, to be.feasiblegnd-highly ssenliat to the attainment
of
the national goal, in relation to a declared specific nlEi;-na-r6a unilul.i*p iit p.ogr"m for
self-
sufficiency and other social benetrts of the project
d. l{one of the choices

''PreferredaleasofinveStments',shallmeantheeconomicactivitieittrattir
accordance with Article 28 which shall be either non-pioneer or pioneer.

"Pioneer enteiprise" shall mean a registered enterprise

(1) engaged in the manufacture, processing or production, and not merely in the assembly
or packaging of goods,
products, commodities or rau, materials that have not been or are not being produced in
the philippines on a
commercial scale or
(2) which uses a design, formula, scheme, method, process or system of production or transformation
of any
element, substance or raw materials into another raw material or finished goods which is new and untried in the
Philippines or
(3) engaged in the pursuit of agricultural, forestry and mining activities and/or services including
the industrial aspects
of food processing whenever appropriate, pre-determined by the Board, in consultation with the appropriate
Department, to be feasible and highly essential to the attainment of the national goal, in relation to a
declared
specific national food and agricultural program for self-sufficiency and other social benefits of the project
or

,-.f-:Tx
/-1, \a\
TAXATfON TX /' D (A --1
 R"SA: The Review School ofAccountancy page t5of t7

(4) which produces non-conventional fuels or manufactures equipment which utilize non-conventional sources of
(' energy or uses or converts to coal or other non-conventional fuels or sources of energy in its production,
manufacturing or processing operations. Provided, That the final product in any of the foregoing instances,
involves or will involve substantierl use and processing of domestic raw materials, whenever available; taking into
account the risks and magnitude of investmenl: Provided, further, That the foregoing definitions shall not in any
way limit the rights and incentives granted to less-developed-area enterprises provided under Title V, Book l,
hereof.

" shall include all ed producer en other than

i:5. (PreferentialTaxation) Barangay Micro Business Enterprise refers to any business entity or enterprise engaged in
the production, processing or manufacturing of products or commodjtiesT'indudingragqprocessing, trading and
';bwt- services, whose total assets including those arising fuom loans but exclusive of the lan{on which the particular
business enti!y's office, plant and equipment are situated, shall notEhorottranl---
r.\-f n
\ ll a. Three Million Pesos (P3.fiD,(lO.OO).
I r'' b. Five Million Pesos (P5,000,000.00).
c. Ten Million Pesos (P10,000,000.00)
d. Fifteen Million Pesos (P15,fr)0,000.00)

The definition of BMBE shall be subject to review and upward adjustment by the SMED Council, as mandated under
Republic Act No. 6977, as amended by Republic Act No.8289.

For the purpose of this Act, "seryices" shall exclude those rendered by any one, who is duly licensed by the
government after having passed a Bovernment licensure examination, in connection with the exercise of one's
profession.

66. (Preferential Taxation) Filing of Tax Treaty Relief Application (TTRA) are-no longe/ required for the following, gxlgp!one.
Which one?
a. Dividends c. lnterest
b. Royalties d. None ofthe choices

Nature and purpose of DTAs:

1) Avoidance of double taxation
2l Prevention of fiscal evasion with respect to taxes on income
Taxpayers who wish to avail themselves of tax- treaty relief should accomplish BIR Form 09O1-Application for Relief
I from Double Taxation-and file the same together with the supporting documents to the lnternational Tax Affairs
I Division (ITAD) at least 15 days before the transaction.
llH.tt
Under RMO No. 8-2017 date$28, 2017, filing of TTRA is no longer required for dividends, interest and royalties.
ion is still reouired for other of income.

67. (Tariff and Custom Code) Under the Customs Modernization and Tariff Act {CMTA) which became effective on June 16,
2016, which of the following functions of the Bureau of Customs were added?
I - Simplification and harmonization of customs procedures to facilitate movement of goods in international trade
ll * Facilitation and security of international trade and commerce through an informed compliance program
lll - Conduct a compensation study with the end view of developing and recommending to the President a
competitive compensation and iemuneration system to attract and retain highly qualfified personnel, while
ensuring that the Burgau remains financially sound and sustainable

a. I, ll and lll c. I and ll only

b. I and lltonly d. lonly

The general duties, powers and jurisdiction of the Bureau of Customs shall include:
a.
The assessment and collection of the lawful revenues from imported articles and all other dues, fees,
charges, fines and penalties accruing under the Tariff and Customs laws;
b. The prevention and suppression of smuggling and other frauds upon the customs;
c. The supervision and control over the entrance and clearance of vessels and aircraft engaged in foreign
commerce;
d.
' The enforcement of the tariff and customs laws and all other laws, rules and regulations relating to the tariff
and customs administration;
e. The supervision and control over the handling of foreign mails arriving in the Philippines, for the purpose of
the collection of the lawful duty on the dutiable articles thus imported and the prevention of smuggling
through the medium of such mails;
f ., Supervise and control all import and export cargoes, landed or stored in piers, airports, terminal facilities,
including container yards and freight stations, for the protection of government revenue
. Exercise exclusive original iurisdictions over seizure and forfeiture cases under the tariff and customs laws.

rdE-"\
TAYATT'TII TY fVt.I AIIC. DDEIA'ECA Er7 al l .l Y,^ A7e q^\z\
ReSA: The Review School of Accountancy page 16 of 17

68. (Tariff and Custom Code) The Tariff Cqmmission shallhavettre following functions among others, except which one?
a. Adiudicate cases on t[e.,ap-p!tq{ign of..tg{e :epg{ig9 against imports
b. Study the impact oflariff plioelild programs on national competitiveness and consumer welfare in line with
. economic objectives of the S9_ vernnl*
c. Administer the Philippinej6riff scheduGi /nd tarilt nomenclatures
d, Prevention and suppresslon ofsiiuecllaniand other fraud upon ttre customq

The Tariff Commission shall have the following functions among others, except which one?
a. Adjudicate cases on the application of trdde remedies against imports;
b. Study the impact of tariff policies and programs on national competitiveness and consumer welfare in line
with economic objectives of the government;
c. Administer the Philippine tariff schedules and tariff nomenclatures;
d. lssue advance ruling on tariff classification of imported goods and render rulings on disputes over tariff
classification of goods, except in cases involving goods on which the Commission has provided advance
ruling on tariff classification;
e. Provide the President and Congress with independent analysis, information and technical support on
matters related to tariff and non-tariff measures affecting Philippine industries and exports for policy
guidance;
f. Analyze the nature and compo-<ition, and the classification of goods according to tariff commodity
classification and heading number for customs and other related purposes, which information shall be
furnished to the NEDA, DTl, DA, DOF" DENR arrd BSP;
E. Reyiew the trade agreements for neBotiation and trade agreements entered into by the Philippines and
made recommendations, if necessary, on the consistency of the terms of the agreements with the national
policy objectives;
h. Conduct public consultations and public hearings pursuant to its functions; and
i. Deputize or delegate, to appropriate governrnent agency its function of rendering rulings on disputes over
tariff classification goods, until the plantilla positions necessary for undertaking such function have been
approved and filled up: Provided, That such delegation offunction shall not extend beyond three (3) years
from the ivitv of the Customs Modernization and Tariff Act {CMTA

69. lTarifl and Custom Code) lmportation begins when the carrying vessel or aircraft enters the Philippine territory with the
intention to unlade and is deemed terminated when:
I {he duties, taxes and other charges due upon the toods have been paid or secured to be paid at the port of.entry
unless the goods are free from duties, taxes and other charges and legal permit for withdrawal has been granted
ll - in case the goods are deemed free of duties, taxes and other charges, the goods have legally left the jurisdiction of
the Bureau.

a. Either I or ll c. lonly
b. Neither I nor ll d. ll only

74. (Effective Communication) Which of the follovring statements is correct?

a. gne of the hctorc influencins tgx gvaslql is lhe benefit of not payine taxes,
b. One of the factor influencing tax evasion is the benefit of not paying taxes.
c. One of the factors influencing tax evasion are the benefi ts of not paying taxes.
d. One of lhe factors influencing tax evasion are the benefi t of not paying taxes.

71 (Effective Communication) One of the following statements is correct.

a. ln addltlron to other, taxes irnposed bv this Titte. there is herebv imposed for each taxable vear on the
improPslrtv,acsgmulated Exable income d each corporiligo delcfibed in Subsqgtion B.heIeof. gn improperly
accumulated earnings tax equal to teT percent l1o%l of the improperly accumulated taxable income,
b. ln addition to other taxes imposed by this Title, there are hereby imposed for each taxable year on the improperty
accumulated taxable income of each corporation described in Subsection B hereof, an irnproperly accumulated
earnings tax egual to ten percent (10*) of the improperly accumulated taxable income.
c, ln addition to other taxes imposeU by this Title, there is hereby imposed for each taxable year on the improperly
accumulated taxable income of each corporation described in Subsection B hereof; an improperly accumulated
earnin6s tax equals to ten percent (10%) of the improperly accumulated taxable income.
d. ln addition to other taxes imposed by this Title, there is hereby imposed for each taxable year on the improper
accumulated taxable income of each corporation described in Subsection B hereof, an improperly accumulated
earnings tax equal to ten percent {10%) of the improperly accumulated taxable income

?AYA?tnI _ W mt ANC. OOEIIEEY I Cffil IDE

/ R"SA:The ReviewSchoolofAccountancy pageq ot'r7

;'2. (Effective Communication) One of following statements is correct.

a' The terms "lncludfao" and "incftr.des". when used in a definitioJ contained in this Title. shall not be deemed to
exclude other things otherwise within the meanins gf the term dgfined.
b. The term "including" and "includes", when used in a definition contained in this Title, shall not be deemed to
exclude other things oth€rwise within the meaning of the term defined.
c. The terms "including" and "includes", when use in a definition contained in this Title, shall not be deemed to
exclude other things otherwise within the meaning of the term defined.
d. The terms "including" and "includes", when used in a definition contained in this Title, shall not be deem to
exclude other things otherwise within the meaning of the term defined.

,t3. (Effective Communication) The auditor has (much evidence, many evidence, much evidences, many evidences) to warrant
a full blown forensic audit.
a. Much evidence c. Much evidences
b. Many evidence d. Many evidences

I We do not use mony orlew to describe or modify mass or non-countable nouns. lnstead, we use much or #ff!b. i

74. Politics (is, are) the cause of too much mudslinging among dishonest politicians.
a. ll' c. Either
b. Are d. Neither

Some nouns look plural, but are actually singular. Here are a few examples. (Ethics, politics, physics. Phonetics. statistics,
i
economics, aeronautics, rabies, !g!qts, measles, meningitis, AlDs, news, billiards, checkers, a shambles)
75. You pursue a subject (further, farther).
a. further c. Either
b. farther d. Neither

The two words above are commonly interchanged, but there is a distinction worth observiog: forther serves Uest ai i
distance word, further as a time or quantity word. (you chase a ball

€'*D OF P*EWEEI( TECTURE

 ReSA
The ReviewSchool of Accountancy
8Tel. No. z3S-98o2 &ZSq-ggBg

IAXATION TAI''AYOILTM/GARCI.A
TX 003 AI{9: PRE-WEEK IECTTURE (CASES ON LOCA], TAIIES}

Mu1tiple Choice: Choose the best possible answer.

i'ax on Transfer of Real Property Ownership
1- Which of the following 1" lo-! subject.to tax on transfer of reat $rop8rty
ownership?
a. Sale or donation of real properties
b. Transfer of rea.L properties through testate and intestate succession
c. Transfer of real property in compl-ete liquidatlon by a corporation of its
real properties to its stockholder
4. Transfer of ownershitr> of real property pursuant to the Couprehensive
Aqrarian R6fora Law (CARP Lax)
(}.
2. The !g;_&aag cf the loc.af tax on transfer of jgef-gelsrlg ownershlp 1s:
a. tctal1:,
consideration involved in the acqulsition of the property.
b. fair market value in case the monetary consideration inv- lved in the
:::ansfer is not substantial.
. --3-,a' consideration invofved in the acquisition of the property or
ia-r:--ar<et- value in case the r,onetary consideration involved ih the
:ransfer :s noi- subs:-ar.ilal, 'r,'-r:.chever , s l-ower.
/tfJ d. tota1 consideration involwed in the acquisition of the property or
fa-ir uarLet vaf.ue in c,ase the noneta::rr consideration involved in ttre
tranefer is not substantial, rhichever is higtter.
There is a view that farr rnarke-- va*ue s]:all refer t:c r-he FMV reflected or
i-nflicated in the prevailing Schedule of Market Value prepared by the
Assessor. apd Quly-eracted by the c3?cerned Sangguniap. The S.ypreme Court has
rrot', ye+- affrrmed 1-i:is,.,:ei,'.

l-\ registration of the ccrrespor:.JirrE Deed of Conveyance

within six 6) months aiter the transfer of rea.l property
(

d. the taxpayer signi-fies his desire to pay the local tax

EffectivedateofGreortit1eoverreaIproperty(e.g.
from ttre date of execution and !-=E|iE of ttre Deed of SaJ.e or from ttre
dateof W
Section 135 allows a period of 5O'days from the accrrral of the tax for
transferor to 1>ay the sade. The'transferor need not wait for the issuance
by the BIR of the Certificate Authorizing Registration (CAR) before he can
ttre 1ocaL transfer tax.
Who shall have authority to colLect the ffi?
a.
b. Residence of the Lransf.eror where the property is focated
c. Principal offlce of the transferor where the property is located
d. Residence of the transferee where the property is located
is sifent on the situs where the property is
Whl}e the Local Government Code
located of this tax, it- should be understood that the province where. the
real property is located (and not the residence or the pri-nclpal office or
the trandferor is located) shal.l have the author.ity to cofLect'
5. An individual taxpayer sofd his residentiaf house and lot for P5,000,000 (fair market
value was P4,000,000).
Questionl-Howmuch capital gains _Lax?
is the .---'-:--
a. P300,000 c. P75,000
b. P200,000 d. None of the cho.ces '
 R"Se: lhe Rewier Sctroo1 of Accountancy Page 2 of.5
Sellinq price (hl P5,000,000
Tax rate
Capital qains tax
,at ,,
Question 2 - How much j-s t he rl oc une n]-a+v--siasp--ta5? elqt"
a. P300,000 e.-P?5t900
b. P200,000 d. None of Lhe choices
higher ) P5,000,000
Tax Late
Capital gains tax

Question3-Howmuch
' a. P75,000
is the l,9saL-,rraasJe-L-laa- b\, :l: \
c. P25,000
b. P50, 000 d; N-one of the choices
Bellino pqrice (hiqher) P5,000,000
Tax rate (50% of l.?)
Capital gains tax P 25. O00

Tax r:n Bu.siness of Printinq and Publicatj-on

.-totaxonbuisinessofprintingrandpub1ication?
it. PrinLing and/or pubiica-"ion of bo<.rks
b. Printing andlor publicaLi-on of cards, posters, leaflets and handbil-1s
c. Printing and/or publicdti-on trf certif j.cates, recelpts,. pamphlets and others of
similar nature ,
d. Pri-ntinq: and/or,pub1i-cation of .beqlrs 4nd other reading magssia].a prescribed by

'i - The rate of the r-ax on business or printing and publication must be fixed by
,\h.f r7r11 11 )4 a rCVenuC oroinance ano:
'! r'!i I'w'w*-r r '-' a. shoul-d not be more than 50t of lt.
ir.
c. shoul-d be l/2O of 1?.
d. should not rnore than 5?.
i n tne
igrgm5.
ca-se or
In the strcceeding caieridar y<:ar,
rc
rt:gardless of when the business starLed
to operate, the tax sh:il] be based on the gross receipts for the preceding calendar
year,
Any advertisinq revenue is rrrerell' j.irciCental to the taxpayct 's maj,n business of
ublication, hence, it is not subject to a separate tax or fee.

B. statement r: The tax on business cf priniing arid publication *at*remle on the

@ of each year.
statement 11: The tax on business of prirrting anci pub]ication std6rh**S within
1-he@or:ofeurchsubsequent'quarterlastheCasemaybe.
Statement III: The Sanggunian c,or:<;ernecl may, for a justifiabfe reason or cause,
r;1$l the tj_me for paym.en.l- of 1.his 1.ax, wit.houL surcharges or penalties, but only
for a period
a. Only I and If are true
b. Only I1 and IlI are true
c. I,, . II,,pJ}d I1.I .arg, true
.t- I, fi and IIf are not true

9.Consider1ngthatthetaxonbr:sjnessof@isinthenatureof
a business tax, which of thre fot-lowirrg n-iles shall apply as far as the
tax 1s concerned? f*faia of the

Rule 1: if the taxpayer maintains opcjrates a brarch cf sal.es outlet where the sale or
transaction is raade and reccrci:<i, the tax on such sa]-e or transaction shoufd be paid
to the province where such branch ol safes outlet is located.
Rule 2: In case where there is no branch or sales outfeL in Lhe province where the
sale or transaction is made and recorcied, the tax on such sale or transaction should
5s:paid to the province where the principal office is focated.
a. Only Rule 1 applles
b. Only Rule 2 applies
c. Rufe 1 and Rule 2 appl-r,r
d. Rule 1 and P.ule 2 do nc*_ appl_!.
ReSA: Itre Revis Scbool of fccotmtanclt Page 3 of 5

priniipaf offlce refers to the, head or main offj-ce of the business appearing in the
pertinent documents submitted to the Securities and Exchange Commission (SEC), or the
Department of Trade and Industry (DTI), or other appropriate agTencies, as the case
may be.

10.The followi-ng data are taken from the.books of your client, single, in preceding
calendar year:
Gross receipts from printing of books prescribed
by the rcas school texts or references P 500,000
Gross receipts, printing of other books 200,000
Gross recei-pts, printi-ng of cards, posters, feaflets
and handbilfs 300, 000
Cost of services 250, 000
Deductible expenses 100,000

Question 1 - How much is the tax on busines" "{ Hfiffl**E&*i53lifl?

a . P5, 000 c. P2, 000
b. P2,5OO d. None of the choices
Gross receipts, printing of other books P200,000
Gross receipts, printing of cards, posters, feaflets and handbills 300, 000
Total 500,000
Tax rat.e (50* of 1? ) .005
Tax on business of printing and publication P 2,500
'Question 2 - How much raxab.e net incorne in the precedinq year?
was
a. 8699._99_q c. Exempt frorn income tax
b. P100,000 d. None of the choices
Grcss receipts from printi;:g of books prescribed
bi, :he lepartment of Eciuca-r:on as schcol texts or
i:e f erences P 500,000
Sioss receiocs r:nt:ng c: oiher books 200,000
G:css receipts, or:a::::g ci cards, po*ster.s, ieaflet,s
and hanCbilis 300,000
To-ual 1,000,000
Less: Cost of services 250,000
Gross income ? 50, 000
Less : Deductible _expenses 100. 000
Basic personal exemption s0.0+o 150,O00
Taxable net income P 600. 000

Franchige Tax
11. The rate of local franchise tax rrust be fixed by arevenue ordinance and:
a. should not be more than 50t of 1*. '
b. should be more than 50? of 1?.
c. should be 6% -
d- should be 10?.
of 13 of.the capital
1) In the }ocality where the principal office of the business is located - paid-
up capital stated in the Articl-es of Incorporation, in case of corporation, or
in any similar documents, in case of other types of business orqanizations or
2l Where there is branch or sales office commencing business operation within the
'same year - paid-up capital in no. 1) reduced by the amount of capital
investment made for the branch
3) Where the newly started business is a branch or sal,es office commencing
business operatlons - total funds invested in the branch or sales office
In'succeeding calendar year, Lhe tax shall be based the qross receipts
for the precedi
fa* on tte nr.tractj.o.
12. The fr#c to extract sand, gravel and other quarry resources may only be issued
pursuanL to the revenue ordinance of the Sangguniang Panlalawigan by the:
a.. Prowincial Gowernor.
b, Provincial Assessor.
c. Provir:cial Engineer.
d. Provi-nci-al Director of PNP.
13. Considering the nature of the quarrying activity, who may prescribe the tim.e,
manner. terms and conditions for theffiof tax?
a. Provincial Governor
b. Provincial Assessor
c. Provinciaf Engineer
d-, Sanggnrnianq Panlalawigan
!1g-A: II!E t(gvlgt -t(:Il,(rCrl (rl a.II',Lrtr.ar.sf Ee:re z v- s

14-The situs oi the tax on extrac:ioa oi:ia!:i, gravel and ot.her quarry resources is:
a. Province where the principaL pia(--e .;f <>ffice of the taxpayer is located.
b, Province where the resioence of the taxpayer'i.s focated'
c- Province where tha quaffiy resourcqs are extracted'
d. Any of the three pror,'iuces men;ioaed aboli€,
The tax on extractj-on of sand, grevei and other quarry resources sha.It be distribr:ted
as follows:
f ) Province - 30%
2) Component c ity or munlcipalitl' wnere thre sand, gravel and other quar:ry
resources are ext racted - 30?,
where the sanil, qra'tal ancl ottter resources are ext-racted " 40?
Hakotbato Company is engageri i n qira :r:y j.no bus.iness. f t extracts sand and graveJ. in
the Baranqay Nabanqig, Municipali:'7 ..'t Falan;.rs, Province of Masbate. Durinq a
particular quarter, it ex_t-.5-qc-ie-d, ". ) ', -, .-;--:ubic meters of sand from a public land the
fai-r market of which is,'?750, CCCi -r ,r,lso 200,000 cubic meters with fair market
value of P250,000 from a\.rar::Y-'r'- priv..'i,ely owns. How much tax on extraction wil l
it be lia}:,le?
a. P100, 000 c. P50, 000
b. P 75,000 ci. None of the choices

Fair market value of cubic metet:s e:,^f.::acted fronL ublic l.and

Tax
on extr:action of 1a !:r: y r:c..toLlrccs

The grant of the taxing power to p::o'.;inces and cj"ties is 1i-mited to those quarry
resources extracted but- not those extracted from private land,

L6 Continuing with the precedinq number, how shall the tax on extraction be distr:ibr.rted?
a, Nabangigr,P3O,O00; Palanas, F2?,50O; t{asba!g-P??-!!9
b. Nabangig, P25,000; Palanas, ?25,0C0; Masbate, P25,000
' c. Nabangrig,P40,0C0; Pal-anas,Pl7,500; MaLsbate,Pl?,500
d. Nabangig, P0; Palanas, P0; l"{asbaLe, p75,000
1t of tax Percentaqe Share
P75,000 408 P30,000
p'i 5.4)a)0 308 P22,540
)lasbate P /r,00U 308 P22,500

ProfeEEional Tax
17. Who amonq the following shall not be required to pay professi-onal tax?
a. Person engaged in the exercise or practice of liis profession
b. Persons whose practi.ce require gcvernnenl examjnatj-on prior to their exercj.se or
prac tice
c. P.of.""iorr.1"t'=*.1,r.i',r5il ..p.loy.d by tlrg gowerrunent
d. None of t.he ch5fcE-<*-
toca]- Arnuseoent Aax
18. Vihich among ihe iollcwing sha-:,l be s-blect botil Value-Added Tax and the local
Amusenent llax?
a. Theaters and cinemas
b. Cockpits
.c. Concert halls
d. Circuses
The followi-ng are subject to ffi
a. Theaters rrnd cinemas (aIso sub;ecl- t-o t-he 1 2 e" VAT')
b. Concert hal.l,s
c. Circuses
d. Boxing sladia,/boxing exhi.)rl.ticns (a-)-so sufiect to 10t funusement Tax i,rnpo.seci by

cgm*pnity rex
19. M;.- ancl tqrs. Jose Lee, residefit- r:.i',.izens, ]rad the :Eollowing data for the calendar
yea lr :

Mr. Jose Lee

Sal-a r ies and bonuses P 500,750
Assessed vafue of land rn Manila l, 0c0, 000
Mrs, Jose lee
Gros's receipts from busj.tress L) '1
25 ,100
Assessed value of apartment h,:us.:: 1, 500, 000
Income from apartment ilou-se 600,000
How much woulcl be the tot--al ac<1itio:ral conrnunity tax duei-n the succeedi.ng year asir1<.-'
from the P5 basic co::,m.rli-ry t-ax of each spouse?
a. P4,236 c. P1, 826
u F1 : _^ - 1 ',4';
u. r'1t -
 Page 5 of 5

Mr. Jose Lee - salaries and bonuses P 500,750

Mrs. Jose Lee
Gross receipts from business P725,100
lncome from apartment house 600,000 L ,325 ,'l oO
Total P 1,826,450
Divided bv 1, 000
Basis of {aaitional community Lax P T,826
Multip1y by 1

Additional community tax L___1,325

20. Kapatidz Corporation, l5]y,'f,, had the following selected data in the preceding
year.
Cas.h sales P 3,390,000
Cosc of sales 1,400,000
Operating expenses 900,000
Dividend received from a domestic corporation 50,000
Assessed value of land 500,000
Assessed value of buildinS 700,000
Assessed value of machinery 1,500,000
How much would be the toial baslc and additional community taxes in the current year?
a. P2,956 c. P!,316
b. P2,456 d. P1,080
Basrc community tax 500
Add:-tional community tax
Cash saies (3,390,000/5,000) P 1, 356
Diwrie::o (50,000,/5,000) X 2 20
Assessei value, lanci
r50C,C30r5,:0:) X 2 200
.issessec'.'a lue, :u* :d:.:.;
(140, l0c,/5,4c:; r 2 2Aa
Assessei value, :'.,aci.: :.e:i'
(1,50C,000,/5,00c) x 2 6a:" 2, 1a6
Total- corununity tax P2,956

EIID OF I.ECTURE

THOT: "When seeking God's best far us becomes our focus- contentment, joy and peace replace
anxieLy." -Tamthewise
PRAYER: Lotd re offer a77 our J,abo"r for Yottz gEeater glory alone- DIay You grant special
fawor to tlae hazd work our CPA licensure exarrairl€es Etat inXo tbeir review. HeJp
thn reloelober the things we taugbt thaa. Pjease teep theq cq>osed during the
exaz.inations. Amay:.