e) ReSA i The Review School of Accountancy ‘Tel. No. 735-9807 & 734-3989 TAXATION February 10, 2019(Sunday) First Pre-Board Examination 11:45 AM to 2:45 P.M. MULTIPLE CHOICE TNSTRUCTIONS: Select the correct anawer for each of the following questions. Mark only one answer for each item by shading the box corresponding to che Jotter of your choice on the sheet provided. STRICTLY NO ERASURES ARE ALLOWED. Use pencil no. 2 only. A nonresident citizen arrives in the Philippines on July 31, 2018 to reside here permanently after many yeurs of living abroad. The following data for the year 2018 on his income are nade availabl Gross income, foreign sources (in Philippine pesos) January 1 to duly 31 500, 000 Gross income, Philippine sources, August 1 ro December 31 300,000 Gross income, foreign sources, (in Philippine pesos) August 1 to December 31 400, 000 For Philippine income tx purposes, hhow much is his taxable gross incone? a. P800, 000 =. P400,.000 Be 700,000, 4. P300,000 2. nonresident alien individast, who shall cone to the Philippines and stay therein: or an_aggeegate. period of ore. than 480, daya-daring.the_oaiendas your shall ‘be aeened's "asebes deat alten doing {a the Bhiliopince™: ‘a. regardless of whether or not he is actually engaged in business in the Phitippines: b. only when he is actually engaged in business in the Philippines ! when his income does nat suas fron the performance of personal, services ithe Philippines 2 when he cones to the Phiiippines for a definite purpose which in ite ature would require sn exended stay and to that end makes his howe temporarily in the Philippines, although it may be his antention at aL Eines to return to-hle domicile abrond 3. Ms. Allyza is employed in JBC Corporation. She receives the following for the current year: Statutory minimum wage, inclusive of the 33" month pay 175,000 overtime pay 40,000 Night-shift differential 25,000 Commission from the sane employer 20, 000 Total How much is the exempt amount? a, 2260, 000 s+ 20,000 2F P240,000 4. None of the choices 1 4 to 6 are based “th the following: In 2018, Mr. Cris Yabut owns a nightclub and videoke bar, with gfoss sales/receipts of 22,500,000.00 for the period under consideration. His cost of sales and operating expenses are P1,000,000.00 and 600,000.00, respectively, and with non-operating income of P100,0C0.00. 4. How much is the business tax due from Mr. Yabut? ‘a. P750,000 fe. P375,000 Be 450,000, d. 250,000ReSA: The Review Schoo! of Accountancy Page 2 of 10 5. What BIR Form No. is he going ta file? ‘a. 2580 fe, asi mx b. 25509 a6 2551 Q. linen is the ast day for the filing of the BIR Form in the preceding number assuming it covers the first taxable period of the calendar’ yeer? 4, April 20, 2018 ©. September 30, 2018 {pri 25, 2028 “di None of the choices 7 to 9 are based on the following: Mr. Flong Aranas, International Cozp., earned in 2018 an annual compensation ct Pi, 200,000.00, exciusive of 13th month and other benefits in the amount ‘of P120,000.00 an officer of AMES 7, Can he avail of the 8 income tax rate option? si Yes, because net incowe trom operation does not exceed the VAT threshold. b. No, because his gross sales exceed the VAT threshold. ¢- Yes, because his sale of farm products is subject to 8% income tax: a. No, because mixed income earners are not allowed to avail of the 8% income tax rate option ©. How much is his taxable tion income for 20187 a. P3, 100,000 c. P21, 110, 000 Jb. P1;200, 000, d. None of the choices 9, What business tax is he Jiable to? + Value-Added Tax b. 38 Percentage Tax under sec. 119 ©, 3 Percentage Tax onder Sec. 116 Hone of the cheiczs Nabe IE NH a as i Senos 10: Individuals earning purvly compensation income shall be taxed based on’ the: 2. graduated income tax rates. b. 88 income tax rate if the total compensation income does not exceed the Var threshold. “27 88 income tax rate or graduated income tax rates at his discretion. 4d. graduated income taz cates provided his tote the VAP threshold. compensation income exceeds 11. Under the TRAIN, the term ‘taxable income’ as applied to individuals means: ~# the pertinent itens of grove incoue specified in the Ta Code, lese deductions if any, authorized for such types of income by the Tax Code or other special laws B. the pertinent items of gross income specified in the Tax Code, less deductions including personal exemptions, if any, authorized for such types of income by the Tax Code or other special laws 6. the pertinent items of gross income specified in the tw: Code, d. the pertinent items of gross income specified in the Te: salaries. received fiom employment Code excluding 12. Which of the following statenents is Geared a. The term *minimim wage easter” shall fefer to a worker in the private Sector paid the statutory. miniman wage of tot Mmfee te the private Public sector with compensation income of not more then the utara minimum wage in che non-agricultural sector where he/ahe Sr acsigrene b. Minimum wage earners shall be exempt fron the payment of incon eet". their taxable income. fay, overtine pay, night shift differential pay, and hazard Fone mettived by sue gum Wage. earners shall likewise be exempt pay received by such minimum wad: from income tax. du Mone of the choices TAXATION — FIRST PRE-BOARD EXAMINATION (BATCH 37) — .ReSA: The Review School of Accountancy Miia 13. sets be taxed ats ry 1 Sadwated incone tax eee on taxable income or ney ved indiviaua!s ana/or professionals shall have the options to TX an eight percent (82) tus on gross sales or gross receipts excludng Ron-operating .nconc In vxcess of Iwo hundred fifty thousand pesos {250,000} in 140 of tne graduated income tax rates and the Percentage tax under Section 126 of this Code. Er Both options ere correct a only the first statement is correct + Both options are incorrect. Only the second statement is correct 44. Which of the following statements is ifcarsect? 8+ Tf at any time during a given tazab!s year, a taxpeyer's gross sales of receipts exceeded the VAT Threshols (F3,U00, 067.6), ‘na/she shall automatically be subjected to the gradvated rates under ‘ection 2413) (7) (a) of the Tax Code, as amended. AT A non-VAt registered taxpryer ihe. init: ‘exceeded the VAT threshold di ty opted te ‘avail of the 6% option but has 1 the taxable year, shall be subject to 38 Percentage Tax on the first P3,000,000.00 of hisher gross sales/receipts under Section 116 of the Tax ode, as amended, with imposition of penalty om if payment is timely made on the fol2owing month wn the thresiold is breached. © {&+ The excess of the threshold sha] be subject to VAT prospectively, and the 88 income tax Previously paid shall be crodived to the Incone Tax Due under the graduated rates Provided in Section 241A) (21 (a) of the Tax Code, ag amended, 4. None of the choices 19. Under the TRAIN, individual taxpyers are allowed to claim: I~ Basic personal exemption uf P50, 000% TI ~ Additional exenption of £25,000 per qualified child not ex: a, 1 and 11 correct ©. Only I is correct 8: T and II are incorrect 4. only 11 is correct 16. Transfer taxes are taxes imposed upon the gratuitous disposition of property! AG whether real-or versons), tangible or intangible. bi which are real and tangible only. ©. which are personal only 4. Whether real or personal only. 17. Me, Paul Cruise, was an American citizen residing in the Philippines died in the USA.when he visited his son. for Philippine pestace Purposes, the Estate of Paul Cruise would include: #. All properties whoreve: situoted ’b. All properties situated in USA only. ©. ALL properties sithaced in the Philippines only. 4. None of the choices He 18. The administrator of the Setacc of Juan Santos claims as deduction from the Gross estate a receivable fros a person who absconded. is assection ts that the claim against that person can no longer be collected, he arco explains that for income tax purposes bad debts are deductible tron she gross incone so the receivable froma person who absconded shel! elec te Exeated in the same manner as in estate tax. Despite the administeacores contention the BIR diseliowed as deductign the claim ageinst a serene ono absconded. Ie the BIR correct? 2B Yes, to be allowed sv deduction from che gross estate the claisi must be against an Insolvent se! be a fact and not nerely alieged. b. Noy not to.allow it to be deducted from the gross estate will be a great injustice because of the fact that collection is sinoce impossible. e. Noy ail ivi Purposes are also allowed to be deducted from the gross setae, that are deductible from gross income for income tax and thet the incapacity of the person must 4. Yes, the regulations are not clear end it requires Sin rola ice auch claim to be allowed «3 Aeciucl ton (TION ~ FIRST PRE-BOARD EXAMINATION (BATCH 37) 810 ReSA: The Review School of Accountancy Page 4 of. cal amount of 19, The gross estate of the decedouit is P10,900,000. The total fi 2 jes incurred is 240,000, where P20,000 is still unpaid. The fineral. expens Eineral capenses incurred is in addition to the memorial plan of the decedent amounted to P50, 000. How mich is the deductible fureral expenses if the decedent dies on Decenber 5 21, 20172 ‘3. P500, 000 fe. 250,000 B! p2a0, 000 4G. None’ of the choices 20. Using the sane informatuen in tie peeceding number, suppose the decedent Gies on January 1, 2018, how much is the deductible funeral expenses? ‘3. P200,000 €; 150,000 B! pi80, 000 HF Mone’ of the choices 21. Under the TRADI (R.A. No. 10963), the estate of a non-resident alien decedent (anno) deduct waich of the following itens of deductions from Sts gross estate? if Family home deduction ¢, Claims against insolvent. debtor . Standard deducticn GL None of the choices 22, The decedent dies on May 51, 2019, the available cash of the estate is insufficient €0 pay che totel esate tax due. Which of the following 4s correct? ‘27 Payment by installment shail he allowed within two (2) years from statutory date for its payment without civil penalty and interest. b. Payment by installment shal! be allowed within two (2) years from statutory date for ito payment subject co civil penalty and interest. ©, Payment by installment shall be allowed within one (1) year from statutory date for its payment without civil penalty and interest. G. Payment by installment shall not be allowed under the TRAIN. 23. Your client dies on March 1S, 2018. The estate's gross estate is F10,000,000 which includes ear, land and sharey of stock. the total deductions amounts to. P1S,000,000.. which of the sel.cuiay is iow requiced to be filed? Notice of dah Statements certified to by 2 CPA ALL of the choices ance 24. Your client dies on July 14, 2018. You are appointed as administrator. You withdraw from his bank deposit P100,000 because the estate needs cash to settle some obligations. What is the consequence of your withdrewal from the decedent's bank deposit? ‘2. subject to fina) withholding tax of 6 Be subject to creditable withholding tax of 6 €. Not subject to withbolding cax d. Subject to penalty and interest because such withdrawal is not allowed, 25. If the decedent dies on June 1, 2018, the estate tax return shall be filed and the estate tax shall be paid to avoid penalties on or before: cas December 1, 2018 fc. June 1, 2020. b. guns 1, 2019. GL None of the choices 26. If the family home valued at ©2,500,000 is conjugal property and the resident decedent dies on Novenber 1, 2017, how much is the deductinle family home? ‘a. P2,500,000. (% P1,000, 000, b. P1,250, 000. @. None of the choices 27, TE the family home valued at 222,500,000 is conjugal property and the nom. resident alien decedent dies on Novenber 1, 2018, how much 1s the deductible family home’ wa. P22, 500,000. b. P11,250, 000. ££ P10,000,000. ‘d. None of the choices TAXATION ~ FIRST PRE-BOARD EXAMINATION (BATCH 37) 3ReSA: 'eSA: The Review Schoo! of Accountancy Page 5 of 10 28 to 30 are based on unnarrie, the following: The decedent is a non-resident citizen, Real aneat Of family, with the following data (dies May 14, 2017;2 eal and Bersonal propertics 0 Ieonaiating of plete ot ‘intd vslees 1,000,000, ‘car valved at. e400; etby plereer oe feces SOB,0EDs Loins ot B50" 000 aGarnet Uatetoece semeuty Yalued deposit valued ae Tape Cooe of which P100,000 was transferred mortis causa to the qovernno’ Funeral expenses 2,700,000 200, 000 Other deductions (includes c1ains against the estate anounting t 50,000 1, 400, 000, 28. The total dedyetibie amount trom gross estate excluding special deductions is rears 2. P2,240, 000 &- 21,140, 000 be. P1, 285, 000 4. None of the choices 29. The taxable net estate Ss a. Pi, 565,000 c. Pl, 140,000 b. Pi, 415,000 4. None of the choices 30. Bstate tax return to avoid penalties shall be filed on or before. a, November 14, 2017 e. May 14, 2009 Hitlay 14, 2018 4: tone of the choices 31. Which of the following statemencs regarding donor’s tax is {fcorreck? a. A donation inter vivos is deemed perfected form the monént the donor learned of the donee" acceptance of the donation, making the donee the absolute onner of the property donated.— Title to imnovevle proverty does not pass from the donor to the donee by virtue of Deed of boration watil and unless it has been accepted in a Public instrument ars: the acnor duly notified of such acceptancee Tf the acceptance of the tion is made ina separate instrument, the donor must be notified in an authentic form, and the same must be noted in both inotrusents.~~ 7 AC Bn acceptance clouse doesnot indicate that the donation ds inter vivos, since acceptance is not. a requirement for donation inter vivos, such requirement is for donation mortis cause. 32. On February 14, 2018, Ocho Uerecho Corp., VAT-registered real estate dealer, sold a’ residential lot toa elient for P1,000,000. The fair market value of the residential ior at the tine of sale was P1,500,000. Its cost was 500,000. The sale of property was made in the ordinary course of business which was a ona Fide trancaction, at arn’s length, and was free from any donative intent. What national taxes are due from this particular sale, if any? a. VAT, donor’ tax and incowe tax b. Var’ and donor's tax only xe: Income tax only 4. None 33. Under the TRAIN, the tax fox cach calendar year shall be: 4. six percent (61) computed on the basis of the total gifts made during the calendar ye. b. six percent (6t) computed on the basis of the total gifts in excess of Thee hundred thousand pesos (P300,000) exempt gift made during the calenaar year. six percent (6) computed on the basis of the total gifts including those made vn the previoua calendar year in excess of Two hundred £ifty thousand pesos (250,000) exempt gift made during the calendar year. | six percent (88) computed on the basis of the total gifts in excess of Two hundred fifty chousand pesos (b250, 000) exempt gi ft made during the ¢olender year ae TAXATION ~ FIRST PRE-BOARD EXAMINATION (BATCH 37)6 of 10 ReSA: The Review School of Accountancy Page t Examination. Mr. Reyos waives lis vower to revoke the transfer. The 95. On Novenber 30, 2017, Mr. Erin Macalintal cancelled the debt of Mr. Mar Rlejeno, son of his first cousin, without the latter rendering service in fovor of Mr. Macalintal. The cundonation is: L#, Subject ta the 308 donor's tax. ’b. Subject to the donor's tax based on the 2¢ to 15% rates. cc. Subject to 6% donor's ran. 4. Subject to final tax on cividends. 36, Under the TRAIN, which of the following is lad longer allowed to be deducted from the gross gifts. bY Dowries GF Gifts made on account of marriage and before its celebration or within one year theseafter by parents to each of their legitimate, recognized natural, or adopted children to the extent of the first P10, 000. b. Gifts made to or for the use of the National Government or any entity created by any of its igencies which is not conducted for profit, or to any political subdivision of the said Government €. Gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation, institution, accredited nongovernment organization, Urust or philanthropic organization or research institution or organization. 4. Encumbrance on the property donated if assumed by the donee 37. Which “ofthe fol Loling!-ghanihffied be ‘exempbiifron donor's tax? ‘3. Donation to the Integrated Bar of the Philippines (TBP) ~ b. Donation of parcel of land to the Government made by a Philippine Corporation to be used a4 relocation site for the less fortunate ©. Donation co parish churcn where more than 30% of the said gifts shall be used by the parish church for administration purposes -#C donation to a political party which filed a return of contributions with the COMELEC 38. On January 15, 2018, Mr. Pilo Gutoc donated a conjugal piece of land valued at P500,000 to a son who graduated summa cum aude and an exclusive piece of land’ valued at 600,000 to a daughter who is getting married Which of the following is hot correct in connection with the donations? ‘2. Only one return shall be filed by Mr. Pilo Gutoc for the two donations to the different doness made on the same date. 76 tie. Pile Gutoc will deciice one-half af the value of the conjugal piece of land and full valve of exclusive piece of land as his gross gifts. €. Mr. Pilo Gutoc will file IK Form No. 1800 on or before February 14, 2018 “ d. Mr. Pilo Gutoc shall give 2 notice of donation on these donations. 38 to 42 are based on the folloving: On March 1, 2017, Ms. Samira Aquino donated a piece of Land to her best friend, Mar Roxas. She algo donated to a non-profit religious, organization. The donation to her friend was a piece of land which had an’ aascased value of 1,000, 000.and zonal value of 600,000 at the tine of dooation. The donations to a non-profit religious organization were cash_anount ina te 200, 00D and an automobile with a purchase price of R/00,00). The pieco Of Tand was ehcunbered with an unpaid mortgage of P300,000 which was not assumed by the donee. In addition, the Gonee agreed to pay the applicable donor's tax of P219x800. 39, How much is the value of the gross gifts? mo hn -¥6 &. Pl, 300, 000 ©. 21,000, 000 aie ib. P21, 700,000 4. None of the choices ns TAXATION ~ FIRST PRE-BOARD EXAiINATION (BATCH 37)ReSA: The Review School of Acccuntancy Page 7 of 10 40. How much wae the Cotal deguct ions? a a. Pi, 410,000, Bt B 900,000 & b. P1,200, 000 4. None Of the choices 42, How much were the taxable net gifts? 3. Pl, 900, 000 e. P900, 000 2 P1,000; 000, a. None’ of the choices 42. How much was the donor's tax dus ‘3. P570, 000 e. P270,000 by P300, 000 4. None’ of the choices 43. Assuming the donations were given on March 1, 2018, how much is the donor's tax due? ‘a. P114,000 “ oe $ 3 a} = = 7 ¢ [se |e + 3 = a won st + [a | 98 Bonus ite sOppoRtING CouuTATIONS 3. FITS 00 = 0,000 [wighe-ohier aifterentiar —ss.008 Tost = ae FE 500,006 ise Laon ° son Tncswa F150. 000 month pay and other benefite 3z0,000 = : 30,000 insane See [Eza0. 000 | Sxpenses (230,000 ¥"50,000) apa Fe} aa 2705 0 = | esstone [e338 000 Glaiae apsinst tnsalvest pasion 50-000 Srsnafer’ to Nacional Governaent 300-000 7.000.000 7 [ 205.000" | a =|—F———________ _and personal property) _ ¥2, 700,000 seis jetions: $285,000) =e ee a eee | a weReSA: The Review School of Accountancy teanater to @ non-prORTe religious ryan) There in a need to declare it aa part of the gross gifte for wrification by the BIR that not more than 308 of the donation shall be used by the doanw for sdninistcative par) 200, 7 we ‘Gite to a non-profit religious organisation (200,000 a © Taxable net gift 750; 000 = 6 [Gross receipts, Tease of residential uni west: 000 por unt) [Sate of four (@) residenti ‘dour (4) individual buyers Wat-exeapt grose amount TAXATION ~ FIRST PRE-BOARD EXAMINATION (BATCH 37) g iReSA: The Review School of Accountancy Page 3 of 3 60. 8 ‘otal sales (VAT inclusive) 2,260.00 je; Sales discount : T6528 VAT iticluded on VAt-exempt sale 313.57 302.85 [Net sai ms 7,957.15] ‘Add: Service charge (10¢ x 1,628,57%) 162.65 (Zotal_amount due FE 140.00 [Botal sales (WAP inclusive) Pz, 260.00 [hoss: VA? (Z,260.09 = 12/132) 247.14 [Total sales before VAT 7017.86 189.29 7,828.57 oy [ seus2.c5 | a. 500,000] 38 62. 35,000, 000 ae |e se.200 | an Et “Franeport of passsngers, goods and Garyo_ 75,000,000 Tex sate i 3 [Percentage tax on VAT-exaape person (ection 116) Eat can [Grouse receipts (sale of water 5,500, 000 Tex Fate 2 Frenchie tax 7 Cn Ee (Gross cacaipta, fant sf office spaces 75,500,006 ak eee | eo. wale of ater ¥5, 500,000) Groas receipts, cont of office opace 3,500,000 Tosal gross receipts 7 = 7000, 000 Tox rate a7 [ear eee Eo a08 ee. p [Dperatere of bowling alleys ave not subject to amusement taxes. 1 69.8 - ‘Grows welling price (100,000 shares = Fiz) 200,000 a fe ook transactions tax [E8000 i 0. 2 ‘ices walling price (100,000 shares » FIG) i, 400, 000 Tax rate ~ 006 ‘Stock transections tar = E—a.00 |