Taxation Prelims

TAXATION
Test 1
1. Congress passed a sin tax law that increased the tax rates on cigarettes by
1,000%. The law was thought to be sufficient to drive many cigarette companies
out of business,and was questioned in court by a cigarette company that would
go out of business because it would not be able to pay the increased tax. The
cigarette company is __________
A. wrong because the law recognizes that the power to tax is the power to destroy
B. wrong because taxes are the lifeblood of the government
C. correct because no government can deprive a person of his livelihood
D. correct because Congress, in this case, exceeded its power to tax
2. XYZ Corporation manufactures glass panels and is almost at the point of

insolvency. It has no more cash and all it has are unsold glass panels. It received
an assessment from the BIR for deficiency income taxes. It wants to pay but due
to lack of cash, it seeks permission to pay in kind with glass panels. Should the
BIR grant the requested permission?
A. It should grant permission to make payment convenient to taxpayers.
B. It should grant permission; otherwise, XYZ Corporation would not be able to pay.
C. It should not grant permission because a tax is generally a pecuniary burden.
D. It should not grant permission because the government does not have the
storage facilities for glass panels.
3. Money collected from taxation shall not be paid to any religious dignitary
EXCEPT when:
A. the religious dignitary is assigned to the Philippine Army
B. it is paid by a local government unit
C. the payment is passed in audit by the COA
D. None of the choices
4. Anne Lapada, a student activist, wants to impugn the validity of a tax on text
messages. Aside from claiming that the law adversely affects her since she sends
messages by text, what may she allege that would strengthen her claim to the
right to file a taxpayer’s suit?
A. That tax money is being extracted and spent in violation of the constitutionally
guaranteed right to freedom of communication.
B. That she is entitled to the return of the taxes collected from her in case the court
nullifies the tax measure.
C. That she is filing the case in behalf of a substantial number of taxpayers.
D. That text messages are an important part of the lives of the people she
represents.
5. Real property taxes should not disregard increases in the value of real property
occurring over a long period of time. To do otherwise would violate the canon of a
sound tax system referred to as:
A. fiscal adequacy.
B. theoretical justice.
C. administrative feasibility.
D. symbiotic relationship.
6. Which statement below expresses the lifeblood theory?

A. The assessed taxes must be enforced by the government.
B. Taxation is an arbitrary method of exaction by those who are in the seat of power;
C. The power of taxation is an inherent power of the sovereign to impose burdens
upon subjects and objects within its jurisdiction for the purpose of raising
revenues.
D. The underlying basis of taxation is government necessity, for without taxation, a
government can neither exist nor endure;
7. Which theory in taxation states that without taxes, a government would be

paralyzed for lack of power to activate and operate it, resulting in its destruction?
A. Lifeblood theory
B. Power to destroy theory
C. Sumptuary theory
D. Symbiotic doctrine
8. The power to tax is the power to destroy. Is this always so?

A. No. The Supreme Court may nullify a tax law, hence, property rights are not
affected.
B. No. The Executive Branch may decide not to enforce a tax law which it believes
to be confiscatory
C. Yes. The tax collectors should enforce a tax law even if it results to the
destruction of the property rights of a taxpayer.
D. Yes. Tax laws should always be enforced because without taxes the very
existence of the State is endangered.
9. Choose the correct answer. Double Taxation

A. exists when a corporation is assessed with local business tax as a manufacturer,
and at the same time, value-added tax as a person selling goods in the course of
trade or business.
B. means taxing the same property twice when it should be taxed only once; it is
tantamount to taxing the same person twice by the same jurisdiction for the same
thing.
C. is one of direct duplicate taxations wherein two (2) taxes must be imposed on the
same subject matter, by the same taxing authority, within the same jurisdiction,
during the same period, with the same kind or character of tax, even if the
purposes of imposing the same are different.
D. is forbidden by law; and therefore, it is a valid defense against the validity of a tax
measure.
10. Bank A deposit money with Bank B which earns interest that is subjected to
the 20% final withholding tax. At the same time, Bank A is subjected to the 5%
gross receipts tax on its interest income on loan transactions to customers.
Which statement below INCORRECTLY describes the transaction?
A. There is double taxation because two taxes – income tax and gross receipts tax
are imposed on the interest incomes described above and double taxation is
prohibited under the 1987 Constitution
B. There is no double taxation because the first tax is income tax, while the second
tax is business tax;
C. There is no double taxation because the income tax is on the interest income of
Bank A on its deposits with Bank B (passive income), while the gross receipts tax
is on the interest income received by Bank A from loans to its debtor-customers
(active income);
D. Income tax on interest income of deposits of Bank A is a direct tax, while GRT on
interest income on loan transaction is and tax.
11. Double taxation in its general sense means taxing the same subject twice
during the same taxing period. In this sense, double taxation:
A. violates the right to equal protection.
B. violates substantive due process.
C. does not violate the right to equal protection.
D. does not violate substantive due process.
12. Mr. Alas sells shoes in Makati through a retail store. He pays the VAT on his
gross sales to the BIR and the municipal license tax based on the same gross
sales to the City of Makati. He comes to you for advice because he thinks he is
being subjected to double taxation. What advice will you give him?
A. Yes, there is double taxation and it is oppressive.
B. The City of Makati does not have this power.
C. Yes, there is double taxation and this is illegal in the Philippines.
D. Double taxation is allowed where one tax is imposed by the national government
and the other by the local government.
13. Choose the correct answer. Tax Avoidance –

A. is a tax saving device within the means sanctioned by law.
B. is a scheme used outside of those lawful means and, when availed of, it usually
subjects the taxpayer to further or additional civil or criminal liabilities.
C. is employed by a corporation, the organization of which is prompted more on the
mitigation of tax liabilities than for legitimate business purpose.
D. is any form of tax deduction scheme, regardless if the same is legal or not.
14. Which of the following statement is NOT correct?

A. A memorandum circular promulgated by the CIR that imposes penalty for
violations of certain rules need not be published in a newspaper of general
circulation or official gazette because it has the force and effect of law.
B. In case of doubt, statutes levying taxes are constructed strictly the government;
C. The construction of a statute made by his predecessors is not binding upon the
successor, if thereafter he becomes satisfied that a different construction should
be given;
D. The reversal of a ruling shall not generally be given retroactive application, if said
reversal will be prejudicial to the taxpayer;
15. The BIR, through the Commissioner, instituted a system requiring taxpayers
to submit to the BIR a summary list of their sales and purchases during the year,
indicating the name of the seller or the buyer and the amount. Based on these
lists, the BIR discovered that in 2020 ABC Corp. purchased from XYZ Corp. goods
worthP5,000,000. XYZ Corp. did not declare these for income tax purposes as its
reported gross sales for 2020 was only Pl,000,000. Which of the following
defenses may XYZ Corp. interpose in an assessment against it by the BIR?
A. None of the above.
B. The BIR has no authority to obtain third party information to assess taxpayers.
C. The third party information is inadmissible as hearsay evidence.
D. The system of requiring taxpayers to submit third party information is illegal for
violating the right to privacy.
16. Which statement is WRONG?

A. The power of taxation may be exercised by the government, its political
subdivisions, and public utilities;
B. Generally, there is no limit on the amount of tax that may be imposed;
C. The money contributed as tax becomes part of the public funds;
D. The power of tax is subject to certain constitutional limitations.
17. Which among the following concepts of taxation is the basis for the situs of
income taxation?
A. Symbiotic relation in taxation
B. Lifeblood doctrine of taxation
C. Compensatory purpose of taxation
D. Sumptuary purpose of taxation
18. Guidant Resources Corporation, a corporation registered in Norway, has a 50

MW electric power plant in San Jose, Batangas. Aside from Guidant's income
from its power plant, which among the following is considered as part of its
income from sources within the Philippines?
A. Gains from the sale to an Ilocos Norte power plant of generators bought from the
United States.
B. Interests earned on its dollar deposits in a Philippine bank under the Expanded
Foreign Currency Deposit System.
C. Dividends from a two-year old Norwegian subsidiary with operations in Zambia
but derives 60% of its gross income from the Philippines.
D. Royalties from the use in Brazil of generator sets designed in the Philippines by
its engineers.
19. The municipality of San Isidro passed an ordinance imposing a tax on

installation managers. At that time, there was only one installation manager in the
municipality; thus, only he would be liable for the tax. Is the law constitutional?
A. It is constitutional as it applies to all persons in that class.
B. It is unconstitutional because it clearly discriminates against this person.
C. It is unconstitutional for lack of legal basis.
D. It is constitutional because the power to tax is the power to destroy.
20. Choose the correct answer. Tax laws –

A. adhere to uniformity and equality when all taxable articles or kinds of property of
the same class are taxable at the same rate
B. may be enacted for the promotion of private enterprise or business for as long as
it gives incidental advantage to the public or the State
C. are inherently legislative; therefore, may not be delegated
D. are territorial in nature; hence, they do not recognize the generally-accepted
tenets of international law
21. The actual effort exerted by the government to effect the exaction of what is
due from the taxpayer is known as:
A. collection.
B. assessment
C. levy.
D. payment.
22. Although the power of taxation is basically legislative in character, it is NOT

the function of Congress to:
A. collect the tax levied under the law.
B. fix with certainty the amount of taxes.
C. identify who should collect the tax.
D. determine who should be subject to the tax.
23. Imposition of taxes is a legislative act. Collection of taxes is an administrative

act
A. Both statement are true
B. Both statements are false
C. Only the first statement is true
D. Only the second statement is true
24. A state has the power to tax even if not granted by the Constitution. A state
cannot exercise police power if not granted by the Constitution
A. Only the first statement is true
B. Both statement are true
C. Both statements are false
25. There can only be a tax if there is a law imposing the tax. The power to tax is
inherent.
A. Both statement are true
B. Both statements are false
C. Only the first statement is true
TEST 2
1. They exist independent of the constitution being fundamental powers of the

state, except.
A. People power
B. Power of taxation
C. Police power
D. Power of eminent domain
2. The power to acquire private property upon payment of just compensation for
public purpose.
A. Power of eminent domain
B. People power
C. Power of taxation
D. Police power
3. The power to regulate liberty and property to promote the general welfare
A. Police power
B. Power of eminent domain
C. People power
D. Power of taxation
4. The power to demand proportionate contributions from persons and propertv

to defray the expenses of the government
A. Power of taxation
B. Police power
C. Power of eminent domain
D. People power
5. Basic principles of a sound tax system, except.

A. Intellectual sensitivity
B. Fiscal adequacy
C. Equality or theoretical justice
D. Administrative feasibility
6. The tax imposed should be proportionate to the taxpayer's ability to pay.

A. Equality or theoretical justice
B. Intellectual sensitivity
C. Fiscal adequacy
7. The sources of revenue as a whole should be sufficent to meet the demands of
public expenditures
A. Fiscal adequacy
B. Equality or theoretical justice
C. Intellectual sensitivity
8. The tax laws must be capable of convenient, just and effective administration
A. Administrative feasibility
B. Fiscal adequacy
C. Equality or theoretical justice
D. Intellectual sensitivity
9. The principal purpose of taxation

A. To raise revenues for governmental needs
B. To implement the police power of the state.
C. The reduce excessive inequalities of wealth.
D. To encourage the growth of home industries through the proper use of tax
exemptions and tax incentives
10. The aspects of taxation are

A. shared by the legislative and executive departments
B. Legislative in character
C. Executive in character
D. Judicial in character
11. Taxation as distinguish from police power and power of eminent domain.
A. There is generally no limit as to the amount that may be imposed.
B. Property is taken to promote the general welfare.
C. Maybe exercised only by the government
D. Operates upon the whole citizenry.
12. This is an inherent limitation on the power of taxation

A. Tax must be for public purpose
B. Rule on uniformity and equity in taxation
C. Due process of law and equal protection of laws
D. Non impairment of the jurisdiction of the Supreme Court in tax cases
13. This is a constitutional limitation on the power of taxation

A. No appropriation of money for religious purposes
B. Tax laws must be applied within territorial jurisdiction of the state
C. Exemption of government agencies and instrumentalities from taxation
D. Power of tax cannot be delegated to private persons or entities
14. Which of the following statements is correct?

A. Every sovereign government has the inherent power on tax
B. The president is authorized to increase or decrease national internal revenue tax
rates.
C. One of the nature of taxation is the reciprocal duties of protection and support
between the state and subjects thereof.
D. Income tax is an indirect tax
15. Persons or things belonging to the same class shall be taxed at the same rate.
A. Uniformity in taxation
B. Equality in taxation
C. Simplicity in taxation
D. Reciprocity in taxation
16. The tax should proportional to the relative value of the property to be taxed
A. Equality in taxation
B. Uniformity in taxation
C. Simplicity in taxation
D. Reciprocity in taxation
17. The following are the nature of taxation, except.

A. Subject to approval by people
B. Inherent in sovereignty
C. Essentially legislative in character
D. subject to inherent and constitutional Limitations
18. It literally means "place of taxation"; the country that has the power and
jurisdiction to levy and collect the tax.
A. Situs of taxation
B. Basis of taxation
C. Scope of taxation
D. Theory of taxation
19. The existence of the government is a necessity and that the state has the right
to compel all individuals and property within its limits to contribute.
A. Theory of taxation
B. Situs of taxation
C. Basis of taxation
D. Scope of taxation
20. The reciprocal duties of support and protection between people and
government
A. Basis of taxation
B. Theory of taxation
C. Situs of taxation
D. Scope of taxation
21. A tax must be imposed for public purposes. Which of the following is not a
public purpose?
A. improvement of a subdivision road
B. National defense
C. Public education
D. improvement of the sugar and industries
22. Which is not an essential characteristic of a tax?

A. It is unlimited as to amount
B. It is payable in money
C. It is proportionate in character
D. It is an enforced contribution
23. Special assessment is an enforced proportional contribution from owners of

land especially benefited by public improvement.Which of the following is not
considered as one of its characteristics?
A. It is not a personal liability of the persons assessed
B. It is levied on land
C. It is based on the government's need of money to support its legitimate
objectives
D. It is based solely on the benefit derived by the owners of land
24. It is the privilege of not being imposed a financial obligation to which others
are subject
A. Tax exemption
B. Tax incentive
C. Tax amnesty
D. Tax credit
25. As to the scope of the legislative power to tax, which is not correct?
A. The sole arbiter of the purpose for which taxes shall be levied is CIR, provided
the purpose is public but the courts may review the levy of the tax to determine
whether or not the purpose is public
B. Where there are no constitutional restrictions, and provided the subjects are
within the territorial jurisdiction of the state, Congress has unlimited discretion as
to the persons, property or occupation to be tax
C. In the absence of any constitutional prohibition, the House of Representatives
has the right to levy a tax of any amount it sees fit.
D. The discretion of Congress in imposing taxes extends to the mode, method or
kind of tax, if not restricted by the constitution
26. Which of the following is a nature of taxation?

A. The power is exercised by legislative action
B. It is essentially an administrative function
C. It is generally in money
D. Without it the state can continue to exist
27. Which of the following is not a determinant of the place of taxation?

A. Amount of tax to be imposed
B. Source of the income
C. Citizenship of the taxpayer
D. Residence of the taxpayer
28. Police power is superior to the non impairment clause of the constitution. As
a rulem provision on the validity of tax exemptions are resolved liberally in favor
of the taxpayer
A. Only the first statement is true
B. Only the second statement is true
C. Both are true
D. Both are false
29. Subject to inherent and constitutional limitations, the power of taxation is

regarded as supreme, plenary, unlimited and comprehensive
A. Scope of Taxation
B. Theory of taxation
C. Situs of taxation
D. Basis of taxation
30. Our International Revenue Law are
A. Civil in nature
B. Political in nature
C. Penal in nature
D. Criminal in nature
31. The levying or imposition of tax and the collection of the tax are processes
which constitute the taxation system
A. Aspect of Taxation
B. Scope of Taxation
C. Theory of taxation
D. Basis of taxation
32. The process or means by which the sovereign, through its law-making body
raises income to defray the expenses of the government
A. Taxation
B. Toll
C. License Fee
D. Assessment
33. Enforced proportional contributions from persons and property levied by the
state by virtue of its sovereignty for the support of the government and for all
public needs
A. Tax
B. Toll
C. License Fee
D. Community Tax
34. An escape from taxation where the tax burden is transferred by the one on
whom the tax is imposed or assessed to 'another .
A. Shifting
B. Exemption
C. Transformation
D. Capitalization
35. An escape from taxation from the producer or manufacturer pays the tax and
endeavors to recoup himself by improving his process of production hereby
turning out his units of production thereby turning out his units of products at a
lower cost
A. Transformation
B. Shifting
C. Exemption
D. Capitalization
36. An escape from taxation where there is a reduction in the price of the taxed
object equal to the capitalized value of future taxes which the taxpayer expects to
be called upon to pay
A. Capitalization
B. Transformation
C. Shifting
D. Exemption
37. The use of illegal or fraudulent means to avoid or defeat the payment of tax
A. Evasion
B. Shifting
C. Exemption
D. Avoidance
38. The use of legal or permissible means to minimize or avoid taxes

A. Avoidance
B. Evasion
C. Shifting
D. Exemption
39. Synonymous to tax evasion

A. Tax dodging
B. Tax minimization
C. Tax amnesty
D. Tax Exemption
40. Synonymous to tax exemption

A. Tax Exemption
B. Tax dodging
C. Tax minimization
D. Tax amnesty
41. In every case of doubt, tax statutes are construed

A. Strictly against the government and liberally in favor of the taxpayer
B. Strictly against the government and the taxpayer
C. Liberally in favor of the government and the taxpayer
D. Liberally in favor of the government and strictly against the taxpayer
42. In every case of doubt, tax exemption are construed

A. Liberally in favor of the government and strictly against the taxpayer
B. Strictly against the government and liberally in favor of the taxpayer
C. Strictly against the government and the taxpayer
D. Liberally in favor of the government and the taxpayer
43. In case of conflict between the Tax Code and the Philippine Accounting
Standards
A. Tax code shall prevail over PAS
B. PAS shall prevail over the tax code
C. PAS and Tax code shall be both disregarded
D. The taxpayer must choose between the PAS or tax code
44. Tax of a fixed amount imposed upon all persons residing within a specified
territory without regard to their property or occupation they may be engaged
A. Personal, poll or capitation
B. Property
C. Excise
D. Regressive
45. Tax imposed on personal or real property in proportion to its value or on some
other reasonable method of apportionment
A. Property
B. Personal, poll or capitation
C. Excise
D. Regressive
46. Tax imposed upon the performance of an act, the enjoyment of privilege or the
engaging in an occupation.
A. Excise
B. Property
C. Personal, poll or capitation
D. Regressive
47. Tax which is demanded from the person whom the law intends or desires to
pay it
A. Direct
B. Indirect
C. Excise
D. Percentage
48. Tax which is demanded from one person in the expectation and intention that
he shall indemnify himself at the expense of another
A. Indirect
B. Direct
C. Excise
D. Percentage
49. Tax which imposes a specific sum b the head or number or b some standard
of weight or measurement and which requires no. assessment other than a listing
or classification of the objects to be taxed
A. Specific
B. Ad Valorem
C. Excise
D. Income
50. Tax of a fixed proportion of the amount of the amount or the value of the
property with respect to which the tax is assessed
A. Ad Valorem
B. Specific
C. Excise
D. Income
TEST 3
1. Annakin, a French citizen permanently residing in the Philippines, received

several items during the taxable year. Which among the following is NOT subject
to Philippine income taxation?
A. Consultancy fees received for designing a computer program and installing the
same in the Shanghai facility of a Chinese firm.
B. Interest from his deposits in a local bank of foreign currency earned abroad
converted to Philippine pesos.
C. 60% of the dividends received from an American corporation which derived 60%
of its annual gross receipts from the Philippine sources for the past 3 years.
D. Gains derived from the sale of his condominium unit located in The Fort, Taguig
City to another resident alien.
2. Noah Reed, a Canadian, arrived in the Philippines on January 1, 2018 and

continued to live and engage in business in the Philippines. He went on a tour of
India and Pakistan from April 1 to November 5, 2018. He returned to the
Philippines on November 6, 2018 and stayed until April 15, 2019 when he returned
to Quebec, Canada. From his investments in the Philippines, he earned a gross
income of P2.5 million. For the year 2018, Noah's taxable status is that of
A. A non-resident alien engaged in trade or business in the Philippines.
B. A resident alien not engaged in trade or business in the Philippines.
C. A non-resident alien not engaged in trade or business in the Philippines.
D. A resident alien engaged in trade or business in the Philippines.
3. Which of the following is not correct? A non-resident citizen means, a citizen of

the Philippines
A. Who establishes to the satisfaction of the Commissioner the fact of his physical
presence abroad with a definite intention to reside therein
B. Who leaves the Philippines during the taxable year to reside abroad, either as an
immigrant or for employment on a permanent basis.
C. Who works and derives income from abroad and whose employment thereat
requires him to be physically present abroad most of the time during the taxable
year.
D. Who has been previously considered a non-resident citizen and who arrives in
the Philippines at any time during the taxable year to reside permanently in the
Philippines and who is treated as a non-resident citizen with respect to his
income derived from sources abroad for the entire taxable year.
4. Which of the following statements is not correct?

A. An individual citizen of the Philippines who is working and deriving income from
abroad as an overseas contract worker is taxable only on income from sources
within the Philippines.
B. A non-resident citizen who is not engaged in business in the Philippines is
treated as a non- resident alien who is not engaged in business in the Philippines
C. A seaman who is a citizen of the Philippines and who receives compensation for
services rendered abroad as a member of the complement of a vessel engaged
exclusively in international trade shall be treated as a non-resident citizen.
D. An alien individual, whether a resident or not of the Philippines, is taxable only on
income derived from sources within the Philippines.
5. A citizen of the Philippines who works and derives income from abroad is a
resident citizen if he stayed outside the Philippines
A. For less than 183 days
B. For 183 days or more
C. For less than 180 days
D. For more than 180 days
6. A citizen of a foreign country is considered a non-resident alien engaged in

business in the Philippines if he stayed inside the Philippines
A. For more than 180 days
B. For less than 183 days
C. For 183 days or more
D. For less than 180 days
7. A resident citizen is taxable on all income derived from sources

A. Within and without the Philippines
B. Within the Philippines only
C. Without the Philippines only
D. Partly within and partly without
8. A non-resident citizen is taxable on all income derived from sources

A. Within the Philippines only
B. Within and without the Philippines
9. A resident alien is taxable on all income derived from sources

A. Within the Philippines only
B. Within and without the Philippines
10. A non-resident alien is taxable on all income derived from sources

A. Within and without the Philippines
B. Without the Philippines only
C. Partly within and partly without
D. Within the Philippines only
11. A citizen of the Philippines who works abroad and whose employment
requires him to be physically present abroad most of the time during the taxable
year is
A. Taxable on income from within the Philippines
B. Taxable on income within and without the Philippines
C. Taxable income from without the Philippines
D. Exempt from the income tax
12. A non-resident alien is deemed doing business in the Philippines if he

A. Shall come to the Philippines and stay therein for an aggregate period of more
than 180 days during a calendar year.
B. Is an individual whose residence is within the Philippines.
C. Is an individual whose father or mother is an alien who is engaged in business in
the Philippines.
D. Is an individual who is naturalized in accordance with law.
13. Virginia Pecson is a MWE working in Quezon City, As such, her employer did
not withhold any tax from her compensation. In addition to her Statutory
Minimum 'age, she also earned commission from her employer in September of
taxable year 2018. In what months of the taxable year shall her employer withhold
income tax from her SMW?
A. None. Her employer may not withhold income taxes from the SMW she received
in all the 12 months of 2018. Her employer shall withhold the CWT only from the
commission she received in September 2018.
B. When she received the commission in September, she ceased to be a MWE. Her
employer shall withhold income taxes from her compensation (which includes the
SMW) received in the months of September thru December 2018.
C. In all the months of 2018.
D. None of the above.
14. Mario is a minimum wage earner ("MWE") employed in a fast food restaurant
in Metro Manila. Aside from this, he also earns income from the operation of a
small "barbeque stand" in front of his house. What should be included in his
taxable income for the year?
A. His taxable income shall include only his income from the barbeque stand. As far
as his minimum wage is concerned, Mario is still an MWE who is entitled to
exemption as such.
B. His taxable income shall include his entire salary earned from the fast food
restaurant, and the income from his barbeque stand.
C. Both his minimum wages and his income from his business shall be exempt from
tax.
15. Angelo Bato is an MWE employed with the Philippine National Police. He was
assigned in the National Capital Region from January 1,2018 to April. 30, 2018,
earning the SMW of P492 per day. Beginning May 1, 2018, he was transferred to
PNP-Region V, receiving the same rate of P492 per day. The SMW in Region V for
the period May 2018 to December 2018 was just P450 per day. Should PNP-Region
V withhold tax from the salary of Angelo?
A. Yes. His daily wage rate is above the prevailing SMW in Region V which makes it
taxable and subject to withholding.
B. I don't know.
C. No. He is considered an MWE for the entire year
16. Mr. Gigolo (resident citizen) appoints the Trust Department of Tyra Bank to
manage his money pursuant to a trust agreement. The Trust Department
proceeds to invest the money in a 5-year corporate bond. If Mr. Gigolo withdraws
his money from the trust account after 8 years, the interest income from the
corporate bond is:
A. Subject to the 20 final tax
B. Exempt from income tax
C. All of the above
D. None of the above
17. Mr. Gigolo (resident citizen) appoints the Trust Department of Tyra Bank to
manage his money pursuant to a trust agreement. The Trust Department
proceeds to invest the money in a 5-year corporate bond. If instead, the bank in
the immediately preceding number, in the ame of Mr. Gigolo, invests the money in
a 20-year long-term investment certificate issued by Bank of Ruptcy, will the
interest income therefrom be exempt from income tax?
A. Yes, provided the holding period of Mr. Gigolo and the holding period of the trust
in the L T investment certificate are both at least 5 years.
B. Yes, regardless of the holding periods of Mr. Gigolo and the trust.
C. All of the above
18. Kaino sold his residential house and lot located in Manila on January 5, 2018
for P8,000,000. The property was purchased in 2005 for P3,000,000. The current
market value of the property at the time of sale was: BIR Commissioner's zonal
valuation - P9,000,000 City Assessor's schedule of values - 6,000,000 What is the
capital gains tax on the sale?
A. P540,000
B. P480,000
C. P300,000
D. P360,000
valuation - P9,000,000 City Assessor's schedule of values - 6,000,000 If Kaino,
within 6 months after the sale, purchases another.residence for P8,000,000, what
will be the capital gains tax on the sale and what would be the cost (basis) of the
new residence for income tax purposes?
A. P0; P3,000,000
B. P540,000; P8,000,000
C. P540,000; P9,000,000
D. P0; P6,000,000
within the I8-month reglementary period, instead purchases a new principal
residence at a cost of P10,000,000. What will be the capital gains tax on the sale
and what would be the cost (adjusted basis) of the new residence for income tax
purposes?
A. P0; P3,000,000
B. P0; P10,000,000
C. P0; P9,000,000
D. P0; P5,000,000
residence at a cost of P5,000,000. What will be the capital gains tax on the sale ?
A. P202,500
B. P480,000
C. P300,000
D. P337,500
residence at a cost of P5,000,000. What would be the cost (adjusted basis) of the
new residence for income tax purposes?
A. P3,000,000
B. P1,875,000
C. P0
D. P5,000,000
23. The following are taxed at a final rate of 20% except:

A. Interest and other payments upon. tax - free covenant bonds, mortgages, deeds
of trust, or other obligations under Section 57(C) of the Tax Code.
B. Cash or property dividend payment by a domestic corporation to a NRAETB.
C. Share of a NRAETB in the distributable after-tax net income of a business
partnership where he is a partner, or share in the after-tax net income of an
association or joint venture taxable as a corporation of which he is a member.
D. Royalty payments (except royalties on books, literary works and musical
compositions) to citizens, RAs, and NRAETB, and prizes exceeding P10,000.
paid to the same persons
24. A Corporation declared and distributed to its stockholder shares of B

Corporation. One of its stockholders, W, received 10.0 shares of B Corporation
shares as dividends. At the date of dividend declaration, the fair market value ofB
Corporation shares was Pl20 per. share and by the time W received the dividend,
the fair market value per share was P180. Which of the following is correct? The
dividend is
A. A property dividend, hence subject to final tax based on its fair market value of
Pl20 per share at the time of declaration.
B. A stock dividend, hence exempt from tax
C. A property dividend, hence part of taxable income of W
D. A property dividend, hence subject to final tax based on its fair market value of
P180 per share
25. All of the following statements are correct, except one. Which is the
exception?
A. The source of dividend income is the country where the corporation was
incorporated.
B. The source of interest income is the country where the debtor resides.
C. Rents are considered derived from the country where the property is located.
D. Income from personal services is considered derived from the country where the
services were rendered.
26. Statement 1- A gain from sale of shares of a domestic corporation shall be

considered derived from the Philippines regardless of where the shares were
sold. Statement 2 - A gain from sale of shares of a foreign corporation shall be
considered derived from the country where the corporation was created or
organized.
A. True, True
B. False, True
C. True, False
D. False, False
27. Allan Reyes, married, VAT-registered, had the following data for the taxable
year: Gross sales, Phils. P2,000,000 Cost of sales, Phils, 1,600,000 Gross sales,
USA 1,500,000 Cost of sales, USA 1,200,000 Operating expenses, Phils. 10,000
Operating expenses, USA 35,000 If the taxpayer is a resident citizen, his tax due
is:
A. P93,750
B. P158,600
C. P81,250
Operating expenses, USA 35,000 If the taxpayer isa resident citizen, not
VAT-registered, can he avail of the 8% income tax rate on gross sales plus
non-operating income?
A. No, because his income is more than 3m VAT threshold
B. Yes, because his income is less than 3m VAT threshold
C. Yes. If he choose the 8% income tax at the start of filing of income tax
D. No. Because he has income within and without the Philippines
Operating expenses, USA 35,000 If the taxpayer is a non-resident citizen,
VAT-registered, his tax due is:
A. P28,000
B. P15,000
C. P77,000
Operating expenses, USA 35,000 If the taxpayer is a resident alien,
VAT-registered, his tax due is:
A. P28,000
B. P15,000
C. P77,000
Operating expenses, USA 35,000 If the taxpayer is a non-resident alien engaged
in business in the Philippines, married, VAT- registered and his country allow
reciprocity of P30000 as personal exemption for married individuals, his tax due
is:
A. P28,000
B. P15,000
C. P77,000
Operating expenses, USA 35,000 If the taxpayer is a non-resident alien engaged
in business in the Philippines, married, not VAT-registered, can he avail of the 8%
income tax rate on gross sales plus non-operating income?
A. Yes, because his income is less than 3m VAT threshold
B. No, because his income is more than 3m VAT threshold
C. Yes. If he choose the 8% income tax at the start of filing of income tax
D. No. Because he has income within and without the Philippines
Operating expenses, USA 35,000 If the taxpayer is a non-resident alien not
engaged in business in the Philippines, married, married and his country grants
P35,000 as personal exemption for married individuals, his tax due is?
A. P100,000
B. P93,750
C. P400,000
34. Sally Rafa, an MWE, works for McDonny's, Inc. She has no other source of
income. For the taxable year, her total regular compensation income, inclusive of
the 13th montH pay, amounted to P180,000. During the year, she. received a 13
month pay equivalent to PI0,000, and contributed to SSS, Philhealth, and Pag-ibig
a total amount of P3,000. ' . 1 In addition to the abovementioned amounts, she
received the following amounts: P90,000 for overtime pay, P10,000 for night shift
differential pay, P25,000 for hazard pay, and P35,000 for holiday pay. The tax due
from her compensation income is:
A. None.
B. P10,000
C. P13,200
D. P14,200
35. Elena Putito, a part-time exercise trainer, also operates a shoe store while
offering her services to clients living in Metro Manila. In 2018, the gross sales of
her shoe store amounted to P1,100,000 while her receipts from her training
services amounted to P400,000. Her total cost of sales and operating expenses
amounted to P150,000 and P35,000, respectively. She signified in her 1st
Quarterly ITR her intention to be taxed at the 8% income tax rate. Compute her
income tax due for 2018
A. P100,000
B. P120,000
C. P68,000
36. Elena Putito, a part-time exercise trainer, also operates a shoe store while
offering her services to clients living in Metro Manila. In 2018, the gross sales of
her shoe store amounted to P1,100,000 while her receipts from her training
services amounted to P400,000. Her total cost of sales and operating expenses
amounted to P150,000 and P35,000, respectively. If Elena Putito, failed to signify
her intention to be taxed at the 8% income tax rate, what will be her income tax
due in 2018?
A. P284,500
B. P369,800
C. P566,879
37. Mr. Rolly Gomez operates a small nightclub in which he employs dancers to
dance with the patrons of his night club. In 2018, his gross receipts, cost of
services, and operating expenses amounted to P2,800,000, P100,000, and
P35,000, respectively. The night club also earned other non-operating income of
P150,000 in 2018. Can he avail of the 8% income tax rate option? What is his
income tax due for 2018?
A. No, because his business is subject to the 18% OPT under Section 125 and not
to the 3% OPT under Section 116. Tax due is P750,800 under the graduated
rates.
B. Yes, because his gross receipts plus non-operating income do not exceed
P3,000,000; Tax due is P216,000 under the 8% tax regime.
C. Yes and No. He can avail of the 8 income tax rate option if he chooses this option
in his 1st Quarterly ITR. Otherwise, he will be taxed under the graduated rates.
38. Amyjo Perez owns a pet store specializing in reptiles which is her only source
of income. She signified her intention to be taxed at 8 of gross sales in her 1st
Quarterly ITR of the taxable year. Her sales, cost of sales, and operating expenses
for the 4 quarters are as follows: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Sales 400,000 600,000 2,000,000 3,500,000 Cost of sales (100,000) (200,000)
(600,000) (800,000) Gross income 300,000 400,000 1,400,000 2,700,000 Operating
expenses (170,000) (190,000) (500,000) (820,000) Net income 130,000 210,000
900,000 1,880,000 Compute her income tax payable in her 1st Quarterly ITRs?
A. P12,000
B. P48,000
C. P78,000
D. P160,000
900,000 1,880,000 Compute her income tax payable in her 2nd Quarterly ITRs?
A. P48,000
B. P12,000
C. P78,000
D. P160,000
40. In 2018, Maginoo M. Henyo, the CEO of the Philippine Nuclear Fusion
Corporation, earned a compensation income of P4,000,500. This amount is
inclusive of his 13th month pay and other benefits of P250,000,but net of the
mandatory contributions to SSS and Philhealth. Aside from his employment, he
also owns a cafeteria. In 2018, the cafeteria had gross sales of Pl,500,000, cost of
sales ofP500,000, and operating expenses ofP300,000. It also had a non-operating
income of P700,000. Compute his income tax due for 2018 if he avails of the 8%
income tax rate option on his gross sales plus non-operating income arising from
his cafeteria business.
A. P1.277.360
B. P1.257.360
C. P1.549.360
900,000 1,880,000 Compute her income tax payable in her 3rd Quarterly ITRs?
A. P160,000
B. P48,000
C. P12,000
D. P78,000
42. In 2018, Maginoo M. Henyo, the CEO of the Philippine Nuclear Fusion
Corporation, earned compensation income of P4,000,500. This amount is
inclusive of his 13th month pay and other benefits of P250,000,but net of the
mandatory contributions to SSS and Philhealth. Aside from his employment, he
also owns a cafeteria. In 2018, the cafeteria had gross sales of Pl,500,000, cost of
sales ofP500,000, and operating expenses ofP300,000. It also had non-operating
income of P700,000. What would be Maginoo's total income tax due if he did not
avail of the 8% income tax rate on gross sales plus non-operating income arising
from his business?
A. P1.549.360
B. P1.277.360
C. P1.257.360
900,000 1,880,000 Compute her income tax payable in her Annual ITR?
A. P628,400
B. P638,400
C. P638,560
D. P638,580
44. Sally Rafa, an MWE, works for McDonny's, Inc. She has no other source of
income. For the taxable year, her total regular compensation income, inclusive of
the 13th montH pay, amounted to P180,000. During the year, she. received a 13
month pay equivalent to PI0,000, and contributed to SSS, Philhealth, and Pag-ibig
a total amount of P3,000. ' In addition to the abovementioned amounts, she
received the following amounts: P90,000 for overtime pay, P10,000 for night shift
differential pay, P25,000 for hazard pay, and P35,000 for holiday pay.She also has
a small business with the following data: sales of P500,000, cost of goods sold of
PI 00,000, operating expenses of P60,000, and non-operating income of Pl0,000.
What would be the income tax due under the graduated rates, and under the 8%
income tax rate option?
A. P20,000. P40,800
B. P23,600. P54,564
C. P18,000. P42,350
45. First Statement: All income payments which are required to be subjected to
withholding tax shall be subject to the corresponding withholding tax rate to be
withheld by the person having control over the payment and who, at the same
time claims the expenses.
Second Statement: The obligation to withhold is imposed upon the buyer-payer
of income although the burden of tax is really upon the seller-income earner.
Hence, unjustifiable refusal of the latter to be subjected to withholding shall be a
ground for the mandatory audit of all internal revenue tax liabilities, as well as the
imposition of penalties under the Tax Code, upon verified complaint of the
buyer-payor.
A. True, True
B. False, True
C. True, False
D. False, False
46. Statement 1: If the tax has actually been withheld at source, a credit or a
refund shall be made to the recipient of the income (e.g., the employee) even
though such withheld tax has not been paid to the government by the employer.
Statement 2: Any income subject to income tax may be subject to withholding
tax. However, income exempt from income tax is consequently exempt from
withholding tax. Further, income not subject to withholding tax does not
necessarily mean that it is not subject to income tax. '
A. True, True
B. False, True
C. True, False
D. False, False
47. Mr. Al Dabog elected the 8% income tax rate option on February 2 2018 by
updating his Registration Information using BIR Form No. 1905. Later, a month
before the date for filing either the 1st Quarter Income Tax Return or 1st Quarter
Percentage Tax Return, he decided that it would be better for him to be taxed at
the graduated rates. Can he signify his decision to be taxed under the graduated
rates in either his 1st Quarter Income Tax Return or 1st Quarter Percentage Tax
Return, or by filing another BIR Form No. 1905?
A. Yes, that is his right under the Tax Code.
B. It depends if the first Form No. 1905 has already been processed by the BIR.
C. None of the above.
48. In his first year of business, Manny Durugas did not derive any income nor
any gain as he had not yet started operations of his on-line store. However, he
was assessed a deficiency tax by the BIR. The BIR found that he overstated its
pre-operating expenses, some of which were unsubstantiated. Should such
disallowed expenses give rise to income tax?
A. No. In order for income tax to be imposed, 3 elements should be present: (1)
there must be gain or profit; (2) the gain or profit is realized or received, actually
or constructively; and (3) such gain or profit is not exempted by law or treaty from
income tax. In this case, no income tax shall be imposed in the absence of the
first 2 elements above.
B. Yes, he should not have overstated his expenses in the first place increasing his
deductions in the process.
C. All of the above.
49. Alma sold her principal residence to Bobby as evidenced by a notarized Deed
of Absolute Sale executed on September 10, 2013. Alma also acquired a new
principal residence from Carlo which was evidenced by another notarized Deed of
Sale executed on September 9, 2013. Is the sale of Alma's principal residence
exempt from the 6% capital gains tax.
A. No. The sale of the old principal residence must precede the acquisition of the
new principal residence.
B. Yes. Alma bought a new principal residence even before selling her old principal
residence.
C. Yes. . Alma utilized the proceeds from the sale of her old principal residence in
buying a new principal residence within 18 months from the sale of her old
residence.
50. All income payments received by minimum wage earners are exempt from
withholding.
An individual payee shall not be subjected to withholding if the total of the
income payments he receives is not more than P250,000
A. False, False
B. False, True
C. True, False
D. True, True
TEST 4
1. The optional standard deduction for individuals is

A. 40% of the gross sales/receipts
B. 10% of the gross income
C. 10% of the gross sales receipts
D. 40% of the gross income
2. Interest expense incurred to acquire property used in trade or business or

exercise or a profession IS
A. Allowed as a deduction or treated as a capital expenditure at the option of the
taxpayer
B. Not allowed as a deduction against gross income
C. Required to be treated as a capital expenditure to form part of the cost of the
asset
D. Allowed as a deduction or treated as a capital expenditure at the option of the
government
3. If an individual is on the cash basis. of accounting, will interest paid in advance

as a deduction? First answer- No, it is a deduction in the year that the
indebtedness is paid and no the interest is paid. Second answer= Yes, if the
indebtedness is payable in periodic amortizations, the amount of the interest
which corresponds to the amount of the principal amortized or paid during the
year shall be allowed as a deduction in such taxable year.
A. True, true
B. True, false
C. False, true
D. False, False
4. I. An expense which is necessary but ordinary, or ordinary but not necessary is

deductible from gross income. II. The taxpayer must signify his intention to elect
the itemized deduction, otherwise, he is deemed to have chosen the optional
standard deduction.
A. False, False
B. True, true
C. True, false
D. False, true
5. Examples of taxes that are deductible except

A. Income Tax
B. Occupational Tax
C. Privilege Tax
D. Documentary Stamp Tax
6. Nondeductible taxes, except

A. Business tax
B. Special assessment
C. Donor's tax
D. Estate tax
7. A) The cost of leasehold improvements shall be deductible by the lessee by

spreading the cost of the improvements over the life of the improvements or the
remaining term of the lease whichever period is shorter. B) Contributions by the
employer to a pension trust for past service cost is deductible in full in the year
that the employer made the contributions.
A. True, false
B. True, true
C. False, true
D. False, False
8. Beginning 1/11/2018, for individuals with purely gross compensation income,

the following may not be deducted:
A. All of the above.
B. Personal exemptions
C. Additional exemptions
D. Premium payments on health and/or hospitalization insurance
9. Beginning 1/1/2018, for individuals with gross income from business or

practice of profession, which of the following may be deducted? A. Optional
standard deduction B. Itemized Deduction C. Personal basic exemptions D.
Additional exemptions E. Premium payments on health and/or hospitalization
insurance
A. Either A or B
B. C, D and E and Either A or B
C. A,B,C and D
D. B,C and D
10. Any amount subsequently received on account of a bad debt previously

charged off and allowed as a deduction from gross income in prior years must be
included in gross income in the taxable year in which received. This is
A. Equitable doctrine of tax benefit
B. Severance test
C. Life-blood theory
D. Destination of income test
11. A took out a life insurance policy of Pl,OOO,OOO naming his wife as
beneficiary. The policy provides that the insurance company will-pay A and his
beneficiary the amount of Pl,OOO,OOO after the 25th year of the policy, should he
die before this date. The premiums paid on the policy is P700,OOO. If A outlived
the policy and received the proceeds of Pl,OOO,OOO, such proceeds will be:
A. Partly taxable, partly exempt
B. Taxable in full
C. Exempt from income tax
D. Subject to final tax
12. A took out a life insurance policy of Pl,OOO,OOO naming his wife as
beneficiary. The policy provides that the insurance company will-pay A and his
beneficiary the amount of Pl,OOO,OOO after the 25th year of the policy, should he
die before this date. The premiums paid on the policy is P700,OOO. A die'S and
his beneficiary received the proceeds of Pl,OOO,OOO, such proceeds will be
A. Exempt from income tax
B. Partly taxable, partly exempt
C. Taxable in full
13. A building was partially destroyed by fire in 2017. The building had a book
value of P5M. The insurance company was willing to pay P4M, which was refused
by the owner. Finally, the claim was settled in 2018 for P4.6M. The proceeds will
be
C. Taxable in full
14. One of the following is not correct for deductibility of losses from gross
income
A. Must have been claimed as deduction in the estate return of the taxpayer.
B. Must arise from fire, storm or other casualty, robbery, theft or embezzlement.
C. Must not be compensated by insurance or other form of indemnity.
D. A declaration of loss by casualty should be filed with the Bureau of Internal
Revenue.

A. The Optional Standard Deduction is an amount equal to forty (40%) of the gross
income from business or practice of profession of the taxpayer.
B. The Optional Standard Deduction is not available against compensation income
arising out of an employer-employee relationship.
C. The election of Optional Standard Deduction is irrevocable for the taxable year
for which the choice is made.
D. Unless the taxpayer signifies in his return his intention he shall be considered as
having availed of the itemized deduction.
16. The net operating loss, which had not been previously offset as deduction
from gross income shall be carried over as deduction from gross income for the
next
A. 3 consecutive taxable years immediately following such loss.
B. 2 consecutive taxable years immediately following such loss.
C. 4 consecutive taxable years immediately following such loss.
D. Taxable year immediately following such loss.
17. A taxpayer engaged in business incurred a partial less of property as follows:

Asset 1 Asset 2 Book value of the asset at the asset at the time of loss P200,000
200,000 Cost to restore the property back to its normal operating condition
120,000 300,000 Insurance recovery 50,000 none Salvage None 40,000 The
deductible loss for asset 1 is
A. P 70,000
B. P 120,000
C. P 30,000
D. P 30,000
18. A taxpayer engaged in business incurred a partial less of property as follows:
Asset 1 Asset 2 Book value of the asset at the asset at the time of loss P200,000
200,000 Cost to restore the property back to its normal operating condition
120,000 300,000 Insurance recovery 50,000 none Salvage None 40,000 The
deductible loss for asset 2 is
A. P 160,000
B. P 240,000
C. P 300,000
D. P 120,000
19. Mr. Santos, a retailer of goods, uses the accrual method in reporting his
income and expenses. His transactions show: Jan. 1 to June 30 July 1 to Sept 30
Oct. 1 to Dec. 31 Gross Sales P 1,000,000 P 700,000 P 900,000 Cost of Sales
600,000 200,000 300,000 Business Expense 100,000 50,000 70,000 Non-operating
income In the ITR 50,000 40,000 10,000 If the calendar year is 2018, and he avails
of the OSD, his taxable net income under the graduated rates is:
A. P 1,660,000
B. P 1,040,000
C. P 900,000
20. Mr. Santos, a retailer of goods, uses the accrual method in reporting his
income and expenses. His transactions show: Jan. 1 to June 30 July 1 to Sept 30
Oct. 1 to Dec. 31 Gross Sales P 1,000,000 P 700,000 P 900,000 Cost of Sales
600,000 200,000 300,000 Business Expense 100,000 50,000 70,000 Non-operating
income In the ITR 50,000 40,000 10,000 If the calendar year is 2018, and he avails
of the ID, his taxable net income under the graduated rates is:
A. P 1,380,000
B. P 1,660,000
C. P 1,040,000
21. The records of Manila Bus Corp. show salaries and wages paid for ' its rank
and file employees: To non-senior citizens P 1,800,000 To senior citizen 200,000
The deductible salaries and wages expense is
A. P 2,030,000
B. P 2,000,000
C. P 1,960,000
D. P 2,400,000
22. The term "net operating loss" shall mean
A. The excess of allowable deductions over grOSS income of the business in a
taxable year
B. The excess of allowable deductions over grOSS income of the business in a
taxable year
C. The excess of optional standard deduction over gross income of the business in
a taxable year
D. Loss incurred which shall be can-led over as a deduction from gross income to
be spread for the next three years
23. Atty. A rendered the following services during the year: Gross receipts from
legal fees P 3,000,000 Value of 50 hours assistance to indigent client 200,000
Value of other pro-bono services 150,000 Direct cost of services 1,200,000 Other
deductible expenses 900,000 The taxable net income of Atty.A is
A. P550,000
B. P720,000
C. P750,000
D. P900,000
24. Atty. A rendered the following services during the year: Gross receipts from
legal fees P 3,000,000 Value of 50 hours assistance to indigent client 200,000
Value of other pro-bono services 150,000 Direct cost of services 1,200,000 Other
deductible expenses 900,000 The tax due of Atty.A is
A. 67500
B. 110000
C. 160000
D. 117500
25. Mr. Allan Bautista is engaged in the business of buying and selling of used
cars: In the taxable year, he sold a used car to his first cousin thereby incurring a
loss of P50,000. Allan’s acquisition cost of the car was P1OO,OOO. Can Allan
deduct the losS in his ITR in computing his income tax payable?
A. No. The loss is personal, and not connected with his business.
B. Yes. The loss is connected with his business, and is not between related parties.
C. No. The loss is connected with his business, but the loss is between related
parties under Section 36 (B) of the Tax Code.
D. Yes The loss is a capital loss which car be offset against capital gains that are
includible in the ITR
26. Lorna de Jesus borrowed P100,000 from Chris de Disbro. As collateral, she
mortgaged her house in favor of Chris. She was not able to rX!Y, and Chris
immediately foreclosed the property in 2015. In the public auction held in 2015,
Chris was the highest bidder with a bid of P40,COO. In 2017, Chris eventually sold
the house for Pl75,000. Chris is not in the real estate business nor did he
previously use the house for business. How much loss can Chris deduct in 2015
and in 2017
A. None in both years
B. P60,000 in 2015, P25,000 in 2017
C. P60,000 in 2015, P40,000 in 2017
D. P60,000 in 2015, none in 2017
27. For individuals before, 2018, premiums paid during taxable year for health
and/or hospitalization insurance taken out by him on himself, including his family
shall be allowed as deductions from gross income, provided that the family has a
gross income of
A. Not more than 250,000
B. Not more than 2,400
C. more than 250,000
D. more than 500,000
28. First statement - Before 2018, in case of a married taxpayer, only the spouse
claiming the additional exemptions for dependents shall be entitled to the
deduction on premium payments on health and/or hospitalization insurance.
Second Statement- Before 2018, the deduction for premium payments on health
and or hospitalization insurance shall not exceed P2,400 per year for the family or
P200 per month.
A. True, true
B. True, false
C. False, true
D. False, False
29. Exclusions from gross income, except:

A. Interest on the price of land covered by the Presidential Decree on land reform
B. GSIS, SSS, Philhealth and Pag-ibig contributions and union dues of Individuals
C. Interest payments on proceeds of life insurance held by the insurer.
D. Gains realized by an Investor upon redemption of shares of stock in a mutual
fund company.
30. Which of the following statements is correct?

A. The power of taxation reaches even the citizens abroad and their income earned
from sources outside the Philippines.
B. Priests and religious institutions are exempt from income and property taxes.
C. The value of received as gift, or under a will or testament or through legal
succession is exempt from taxation.
D. Separation benefits received by terminated employees resulting from a deadlock
in their collective bargaining agreement are exempt from income tax.

A. Proceeds of life insurance policies paid to beneficiaries upon the death of the
insured are excluded from gross income regardless of whether the proceeds are
received as a single sum or in installments.
B. Monetization of leave credits of employees who were unable to go on leave due
to exigencies of the service constitutes taxable income.
C. In case of transfer for a valuable consideration by assignment or otherwise of a
life insurance, endowment or annuity contract or any interest therein, only the
actual value of such consideration and the amount of the premium and the sums
subsequently paid by the transferee are exempt from income tax.
D. Marriage fees, baptismal offerings, sums paid for saying masses for the dead
and other contributions received by a clergyman, evangelist or religious worker
for services rendered is taxable income.
32. As a rule, this is not part of taxable income

A. Profit sharing
B. Hazard pay
C. 13 th month pay
D. Overtime pay
33. This is taxable income

A. Retrenchment pay
B. SSS/GSIS benefits
C. Refund of Philippine income tax
D. Separation pay due to resignation
34. Which of the following is taxable income?

A. Interest on Philippine lotto winnings
B. Prizes and awards as an awardee of Ramon Magsaysay Award Foundation
C. Damages awarded as a consequence of libel and slander suits
D. Amount received as returns of premiums
35. The following items are exclusions from gross income, except
A. IOUs
B. Labor union dues
C. SSS/GSIS premiums contribution
D. Pag-ibig premium contribution
36. A) PCSO and Philippine lotto winnings (of more than P10,000) of citizens and
resident aliens are excluded from gross income in the ITR because they are
exempt from tax. . B) All prizes, awards, winnings are excluded from gross
income in the ITR because they are subject to final tax
A. False, False
B. True, true
C. True, false
D. False, true
37. Which of the following is taxable?

A. P 100,000 interest on long- term deposit or investment
B. P 12,000 prize in supermarket raffle
C. P 200,000 gain on sale of 10-year bonds
D. P 10,000 winnings in Philippine Lotto
38. Gross benefits received by officials and employees of public and private
entities as 13th month pay and other benefits such as productivity bonus,
services incentive pay and Christmas bonus shall be excluded from taxable
income up to
A. P90,000
B. P30,000
C. P40,000
D. P50,000
39. After 10 years of romantic relationship, A decided to end his relationship with
B which made B very angry. B with anger in her eyes boxed, kicked and berated
A. A tried to pacify B, but B slipped, lost control and fell to the ground requiring
hospitalization. To buy peace, A decided to shoulder the medical expenses for the
injuries suffered by B. The amount is
B. Taxable income B
C. Deductible expense of A
40. In 2018, A inherited pieces of jewelry from her father with a FMV of P500,000.
Her father acquired the property in 1985 for P200,000. If A sells these pieces of
jewelry in 2019 for P550,000, A's gross profit is
A. P350,000
B. P50,000
C. P550,000
D. P300,000
41. In 2018, A acquired the jewelry as a birthday gift from her father, with a FMV of
P500,000. Her father acquired the property in 1985 for P200,000. If A sells these
pieces of jewelry in 2019 for P550,000, A's gross profit is
A. P50,000
B. P350,000
C. P550,000
D. P300,000
42. Mike Reyes has been an employee of Matatag Steelworks Inc. for the last 25
years. His employer set up a BlR-approved private benefit plan primarily for
retirement payments to its retiring employees. His employer also set up a trust
fund for the exclusive benefit of its employees, and to which the employees can
make contributions. So far, Mike has contributed a total ofP40,000 to this trust
fund. When he retired at age 55, he received the following amounts from his
employer: (1) P125,000representing his retirement benefits and which was paid
out of the BIR-approved benefit plan; and (2) a dividend ofP140,000 frorn the trust
fund. Which statement IS correct?
A. Only Mike's retirement benefits are tax-exempt.
B. Both the retirement benefits and the dividend from the trust fund are tax- exempt.
C. The excess of the dividend over his contribution to the trust fund shall be taxable,
and includible in gross income in his income tax return.
43. A is engaged in the marketing of cars. When A's son got married to the
daughter of a senator, he gave the newly-wedded couple a brand new car worth
P800,OOO as a wedding gift.
A. Not taxable income to the newly-wedded couple
B. Taxable income to the newly-wedded couple
C. Deductible expense of A
D. Taxable income to the couple and deductible expense of A
44. RA 9505, otherwise known as PERA Act of 2008, is

A. Personal equity and retirement account
B. Personal exemption and reciprocity action
C. Personal exemption and retirement account
D. Personal equity and reciprocity action
45. At the testimonial dinner for new CPAs, Christian, a reviewer was requested to
sing the theme song of the movie "Ghost" Pauline.ra new CPA, was so delighted
that she felt she was falling in love with Christian so she decided to cancel
Christian's indebtedness to her. As a result,
A. Christian received a gift from Pauline and therefore is not part of his taxable
income
B. Christian realized a taxable income as compensation for services
C. Christian accepts the cancellation, he will pay donor's tax
D. The amount of indebtedness canceled is partly taxable, partly exempt
46. Which of the following statements is true?

A. Losses from wagering transactions shall be allowed only up the extent 9f the
gains from such transactions.
B. Payments which constitute bribes, kickbacks and others of similar nature which
are necessary to realize profits are allowed as deductions from gross income
C. The taxes which are deductible from gross income include the taxes, interest and
penalties incident to tax delinquency.
D. Deductions are amounts allowed by the Tax Code to be deducted from gross
income to arrive at the income tax liability of a taxpayer.
47. This is not deductible from gross income

A. Transportation expenses from home to the office and from the office back to
home.
B. Transportation expenses from the main office to the branch.
C. Travel expenses on business trips.
D. Travel expenses while away from home in the pursuit of trade, business or
profession.
48. A revenue expenditure is

A. To benefit one accounting period and is a deduction from gross income in the
year paid or incurred.
B. Usually incurred in the acquisition, betterment or permanent improvement of the
asset
C. Capitalized and the cost is recovered through annual depreciation
D. Ordinarily to benefit more than one accounting period
49. No deductions shall be allowed where the transaction is between "related
taxpayers" under Sec. 36(B) of the Tax Code for A) Losses from sales or
exchanges of property B) Interest expense C) Bad debts
A. A, B and C
B. A and B
C. B and C
D. A and C
50. The phrase "related taxpayers" under Sec. 36(B) of the Tax Code will apply to
the following, except:
A. Between an individual and a corporation more than 50 % value of the
outstanding stock of which is owned, directly or indirectly by or for such
individual, in case of distributions in liquidation
B. Between members of a family
C. Between the grantor and a fiduciary of any trust
D. Between a fiduciary of a trust and a beneficiary of such trust
Test 5
1. One of the following is taxable income:

A. Gifts, bequests and devices
B. Amounts received as rewards from giving information instrumental in the
discovery of violations of the Tax Code and seizure of smuggled goods.
C. Proceeds from life insurance
D. Separation pay received by an employee due to a cause beyond his control.
2. One of the following is part of taxable income subject to schedular

(graduated/progressive) rates: :
A. The share of a partner in the undistributed net income of a general
co-partnership
B. Compensation for damages
C. Living quarters and meals furnished and given to a rank and file employee for the
convenience of the employee
D. Facilities or privileges of relatively small value offered by the employer as a
means of promoting the health, goodwill, contentment, or efficiency of the
employee.
3. As a rule, this is not part of taxable income

A. Profit sharing
B. Hazard pay
C. Overtime pay
D. 13 th month pay
4. This is taxable income

A. Retrenchment pay
B. SSS/GSIS benefits
C. Separation pay due to resignation
D. Refund of Philippine income tax
5. Which of the following is taxable income?

A. Interest on Philippine lotto winnings
B. Prizes and awards as an awardee of Ramon Magsaysay Award Foundation
C. Damages awarded as a consequence of libel and slander suits
D. Amount received as returns of premiums
6. Which of the following statements regarding dividends is correct?

A. Exempt from tax if received by a resident citizen from a domestic corporation
B. Exempt from tax if received by a resident alien from a domestic corporation
C. Taxable subject to year-end tax if received by a resident citizen from a
non-resident foreign corporation
D. Taxable subject to final tax if received by a non-resident citizen from a
non-resident foreign corporation
7. Which of the following is part of gross income in the ITR?

A. PCSO and philippine lotto winnings
B. Bank interest on long term deposit
C. Proceeds of life insurance upon the death of the insured
D. Raffle prize not exceeding P10,000
8. Which of the following is taxable?

A. P 100,000 interest on long-term deposit or investment
B. P 200,000 gain on sale of 10-year bonds
C. P 12,000 prize in supermarket raffle
D. P 10,000 winnings in Philippine Lotto
9. Advance rental in the nature of prepaid rental, received by the lessor under a
claim or right, and without restriction as to use is
A. Taxable income of the lessor in the year received if he is on the cash method of
accounting.
B. Taxable income of the lessor in the year received if he is on the accrual method
of accounting.
C. Taxable income of the lessor in the year received whether he is on the cash or
accrual method of accounting.
D. Taxable income of the lessor up to the amount earned in the year the rental is
received.
10. Which payments made by the lessee under such terms of the.lease contract
should be considered as additional rent income of the lessor? A. If a lessee paid
directly to the government the real estate tax on the property of the lessor B. If
the amount received by the lessor is in the nature of a security deposit for the
faithful compliance by the lessee of the terms of the contract C. If the amount
received by the lessor is in nature of a loan extended by the lessee to the lessor
A. Only A
B. Only A and C
C. Only B and C
D. A, B and C
11. Should the lessee make permanent improvements on the property leased
under an agreement that upon the expiration of the lease contract the
improvements shall belong to the lessor, the lessor may recognize income from
the leasehold improvements . A. At the time when such improvements are
completed, the fair market value of such improvements. A. By spreading over the
remaining term of the lease the estimated depreciated value of such
improvements at the termination of the lease and report as income for each year
of the lease an aliquot part thereof.
A. A but not B is allowed
B. B but not A is allowed
C. Either A or B is allowed
D. Neither A nor B is allowed
12. After 10 years of romantic relationship, A decided to end his relationship with
B which made B very angry. B with anger in her eyes boxed, kicked and berated
A. A tried to pacify B, but B slipped, lost control and fell to the ground requiring
hospitalization. To buy peace, A decided to shoulder the medical expenses for the
injuries suffered by B. The amount is
A. Taxable income B
B. Deductible expense of A
C. Subject to final tax
D. Exempt from income tax
13. One of the following represents taxable income:

A. Refund of overpaid rental expense in prior year
B. Refund of donors' tax paid in prior year
C. Refund of income tax in prior year
D. Refund of special assessment paid in prior year
14. Cash allowance of P250 per month given to Central Bank employee to cover
the medical expenses of their dependents shall be
A. Included from gross compensation income
B. Excluded from gross compensation income
C. Partly included, partly excluded from gross compensation income
15. A purchased a life annuity for P1,000,000 which will pay him P100,000 a year.
The life expectancy of A is 12 years. Which of the following wilJ A be able to
exclude from his income?:
A. P 1,000,000
B. P 1,200,000
C. P 200,000
D. P 100,000
16. If an individual performs services for a creditor who in consideration thereof

cancels the debt, the cancellation of indebtedness may amount to
A. A gift
B. A donation inter-vivos
C. A capital contribution
D. A payment of income
17. This is not part of gross compensation income

A. Salary of P10,000 a month of an employee
B. Fringe benefits of P10,000 a month
C. Salary of PI 0,000 a month of a partner in a general professional partnership
D. Honorarium and allowances of P10,000 of a member of the board of directors of
a corporation who is also an employee of the corporation.
18. Mr. A, a farmer, had the following data for the year: Sales of livestock and farm
products raised P270,000 Sales of livestock and farm products purchased
P160,000 Cost of raising livestock and farm products P190,000 Cost of livestock
and farm products purchased and sold P140,000 Rental income of farm
equipment P105,000 Inventory of livestock and farm products, January 1 P110,000
Inventory of livestock and farm products, December 31 P113,000 A. Using cash
method of accounting, the income is:
A. P205,000
B. P208,000
C. P395,000
D. P202,000
19. Mr. A, a farmer, had the following data for the year: Sales of livestock and farm
products raised P270,000 Sales of livestock and farm products purchased
P160,000 Cost of raising livestock and farm products P190,000 Cost of livestock
and farm products purchased and sold P140,000 Rental income of farm
equipment P105,000 Inventory of livestock and farm products, January 1 P110,000
Inventory of livestock and farm products, December 31 P113,000 A. Using accrual
method of accounting, the income is:
A. P205,000
B. P208,000
C. P395,000
D. P202,000
20. How much is the tax refund or tax due?A, a resident alien, single had the
following during the year: 1. Salaries (net of payroll deduction), P200,000 2:
Allowances. P25,000 3. 13th month pay, P26,000 4. Christmas cash gift P10,000 5.
14th month pay, P26,000 6. Payroll Deductions a. Withholding tax on salary,
P16,500 b. Contributions for SSS, PHIC, PAG-IBIG, and labor union dues, P16,000
c. Advances/Loans, P30,000 7. Premium on health and hospitalization insurance,
P2,750 8. Bank interest income, net of 20 %, P1,400
A. -12200
B. -20000
C. -30000
D. -15000
21. How much is the tax refund or tax due?. A, resident citizen, single had the
following during the year 2018: Gross compensation income P480,000
Deductions from compensation income: SSS contributions P3,600 Pag-ibig
Contributions 1,200 Philhealth Contributions 1,800 Union dues 2,400 Premium
payments on health insurance (P250/month) 3,000 Other income: Prizes and
awards received as best athlete in the Palarong Pambansa 10,000 Prizes and
awards received for the silver medal in the South East Asian 25,000 games Prize
won in a Supermarket raffle 10,000 Prize won as a Lucky Home Viewer 20,000 13th
month pay 45,000 Christmas cash gift 10,000 Mid-year bonus 45,000 Interest on
bank deposit (net of 20% WT) 16,000 Interest on foreign currency deposit (net of
15% WT) 10,000
A. 51500
B. 50000
C. 52500
D. 60000
22. How much is the tax refund or tax due? D, a resident citizen, married, with 2
qualified dependent children, had the following: Professional fees P400,000
Gross Income from rental of conjugal properties 600,000 Expenses connected
with profession 180,000 Expenses connected with rental properties 200,000 Tax
withheld on professional fees 40,000 Tax withheld on rental of properties 30,000
A. -20000
B. -12200
C. -30000
D. -15000
23. The following income received by officials and employees in the public sector
are not subject to income tax and withholding tax on compensation, except .
A. The excess of the 13th month pay and other benefits paid or accrued during the
year over P90,000
B. Representation and transportation allowance (RATA) granted under the General
Appropriations Act
C. Personnel Economic Relief Allowance (PERA) granted to government personnel
D. Monetized value of leave credits paid to government officials and employees
24. How much is the tax refund or tax due? D, married with 4 qualified dependent
children, had the following: Salary (net ofP19,000 SSS, Philhealth and Pag-ibig
contributions & Php 80,000 CWT) P400,000 13 th month pay 42,000 Productivity
bonus 42,000 Premium payments on health insurance 2,400 Personal, family and
living expenses 200,000
A. -30000
B. -20000
C. -12200
D. -15000
25. Mr. Right" Realty, a domestic corporation, leased its building to Mr. Cruz for a
term of 5 years, beginning 2018. Under the terms of the lease contract, Mr. Cruz,
instead of paying rentals to the corporation, agreed to pay yearly to the 6
stockholders of "Mr. Right" Realty an amount equivalent to 10% of their
stockholdings. In 2018, the following payments were received by the
stockholders of "Mr. Right" Realty from Mr. Cruz: . Shareholders: Mr. Billionaire
P10,000 Mr. Handsome P10,000 Mr. Macho P30,000 Mr. Gentleman P20,000 Mr.
Kind P20,000 Mr. Intelligent P10,000 TOTAL P100,000 Which of the following
statements is true?
A. "Mr. Right" Realty shall not recognize any rental income in 2015.
B. The shareholders shall recognize dividend income which shall be included in
their respective ITR
C. "Mr. Right" Realty shall recognize rental income which shall be included in its
ITR, while the amounts received by the shareholders from Mr. Cruz shall be
subject to final tax.
26. The records of ABC Corporation, organized in 2007 showed the following data
for 2017. Gross Income P2,000,000 Less: Allowable business expenses
P1,850,000 (other than bad debts) Bad debts written off 100,000 Taxable net
income P 50,000 In 2018, 80% of the the bad debts were collected The income tax
due is
A. 40000
B. 15000
C. 25000
D. 45000
27. The records of ABC Corporation, organized in 2007 showed the following data
for 2017. Gross Income P2,000,000 Less: Allowable business expenses
P1,850,000 (other than bad debts) Bad debts written off 100,000 Taxable net
income P 50,000 In 2018, 80% of the the bad debts were collected In 2018, which
of the following is correct?
A. There is a deficiency income tax of P24,000 for 2017
B. The taxable net income should be corrected to P130,000
C. There is a taxable recovery amounting to P80,000 in 2018
D. The bad debts expense in 2017 should be reduced to P20,000
28. A, dedicated and honest employee of ABC Corp. for the past 20 years was
advised that he is to be retrenched as the company was losing heavily but that he
would be given the separation pay provided by law. To avoid implication of
inefficiency, A was advised to file a letter of resignation instead of being
retrenched. If A files a letter of resignation and receives the separation pay, such
amount is
A. Taxable in full
29. A, dedicated and honest employee of ABC Corp. for the past 20 years was
advised that he is to be retrenched as the company was losing heavily but that he
would be given the separation pay provided by law. If A is retrench and receives
the separation pay, such amount is
A. Taxable in full
30. Mike Reyes has been an employee of Matatag Steelworks Inc. for the last 25
years. His employer set up a BlR-approved private benefit plan primarily for
retirement payments to its retiring employees. His employer also set up a trust
fund for the exclusive benefit of its employees, and to which the employees can
make contributions. So far, Mike has contributed a total ofP40,000 to this trust
fund. When he retired at age 55, he received the following amounts from his
employer: (1) P125,000 representing his retirement benefits and which was paid
out of the Blk-approved benefit plan; and (2) a dividend ofP140,000 frorn the trust
fund. Which statement is correct?
A. Only Mike's retirement benefits are tax-exempt.
B. Both the retirement benefits and the dividend from the trust fund are tax- exempt.
C. The excess of the dividend over his contribution to the trust fund shall be taxable,
and includible in gross income in his income tax return.
31. CREATE Law was published on two newspapers of general circulation on:
A. March 27, 2021
B. March 26, 2021
C. April 11, 2021
D. February 03, 2021
32. The effectivity of CREATE Law shall be on:

A. March 26, 2021
B. March 27, 2021
C. February 03, 2021
D. April 11, 2021
33. CREATE Law was passed by the Congress on:

A. March 26, 2021
B. March 27, 2021
C. February 03, 2021
D. April 11, 2021
34. CREATE Law was signed by the President on:

A. March 26, 2021
B. February 03, 2021
C. March 27, 2021
D. April 11, 2021
35. Income tax (20% to 25%) on corporation shall be effective on:

A. January 01, 2021
B. July 01, 2020
C. April 15, 2021
D. April 11, 2021
36. TRAIN Law was approved by the President on:

A. December 19, 2017
B. December 13, 2017
C. December 27, 2017
D. January 01, 2018
37. TRAIN Law was passed by the Congress on:

D. January 01, 2018
38. The effectivity of TRAIN Law shall be on:
D. January 01, 2018
39. TRAIN Law was published on two newspapers of general circulation on:
B. January 01, 2018
D. December 19, 2017
40. The term corporation shall include the following, except

A. general professional partnership
B. one person corporation
C. association
D. insurance companies
41. MVAA Corporation, a domestic retailer, has gross sales of P1,400,000,000.00

with cost of sales of P560,000,000.00 and allowable deductions of
P150,000,000.00 for calendar year 2020, its 4th year of business operations. Its
total assets of P180,000,000.00 includes the land and building in which the
business is situated, amounting to P50,000,000.00 and P25,000,000.00,
respectively. The corporate income tax due for taxable year 2020 shall be?
A. P189,750,000
B. P207,000,000
C. P172,500,000
D. P10,350,000
42. JKL Corporation secured in 2018 a bank loan for its business expansion, and
incurred interest expense of P2,000,000 in CY 2020 on the said bank loan. In the
same year, it likewise earned interest income of P300,000 subjected to final tax of
20%. For CY 2020, its gross income amounted to P20,000,000. Its gross assets,
excluding the value of the land where its building and plant are situated, is
P100,000,000. Its operating expenses amounted to P10,000,000, inclusive of the
interest expense of P2,000,000. What is the amount of interest deductible from the
interest expense claimed?
A. P49,500
B. P30,000
C. P79,500
D. P49,995
43. Tax rate on capital gains from shares of stock not traded in stock exchange of
a non resident foreign corporation shall be:
A. 0.15
B. 0.1
C. 0.25
D. 0.2
44. Tax rate on intercorporate dividend of a non resident foreign corporation shall
be:
A. 0.25
B. 0.15
C. 0.1
D. 0.2
45. Tax rate on intercorporate dividend from a domestic corporation to a domestic

corporation shall be:
A. Exempt
B. 0.25
C. 0.2
D. 0.1
46. Tax rate for corporations with net taxable income not exceeding Five Million
Pesos (P5,000,000) and total assets not exceeding One Hundred Million (P
100,000,000), excluding the land on which the particular business entity’s office,
plant and equipment are situated shall be?
A. 0.01
B. 0.1
C. 0.2
D. 0.25
47. Tax rate for Proprietary Educational Institutions and Hospitals shall be?
A. 0.2
B. 0.25
C. 0.01
D. 0.1
48. Tax rate for Offshore Banking Unit shall be:

A. 0.25
B. Exempt
C. 0.2
D. 0.1
49. Tax rate for Regional Operating Headquarters shall be:

A. 0.25
B. Exempt
C. 0.2
D. 0.1
50. Which is correct with regards to MCIT

A. Domestic corporation will revert the MCIT rate from 1% to 2% on January 1,
2023
B. It is not applicable under CREATE and old law in proprietary educational
institution
C. MCIT rate will be use if the regular tax due is higher than the minimum corporate
income tax
D. MCIT is no longer be imposed on corporations

Taxation Prelims

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Taxation Prelims

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TAXATION

2. XYZ Corporation manufactures glass panels and is almost at the point of

6. Which statement below expresses the lifeblood theory?

7. Which theory in taxation states that without taxes, a government would be

8. The power to tax is the power to destroy. Is this always so?

9. Choose the correct answer. Double Taxation

13. Choose the correct answer. Tax Avoidance –

14. Which of the following statement is NOT correct?

16. Which statement is WRONG?

18. Guidant Resources Corporation, a corporation registered in Norway, has a 50

19. The municipality of San Isidro passed an ordinance imposing a tax on

20. Choose the correct answer. Tax laws –

22. Although the power of taxation is basically legislative in character, it is NOT

23. Imposition of taxes is a legislative act. Collection of taxes is an administrative

1. They exist independent of the constitution being fundamental powers of the

4. The power to demand proportionate contributions from persons and propertv

5. Basic principles of a sound tax system, except.

6. The tax imposed should be proportionate to the taxpayer's ability to pay.

9. The principal purpose of taxation

10. The aspects of taxation are

12. This is an inherent limitation on the power of taxation

13. This is a constitutional limitation on the power of taxation

14. Which of the following statements is correct?

17. The following are the nature of taxation, except.

22. Which is not an essential characteristic of a tax?

23. Special assessment is an enforced proportional contribution from owners of

26. Which of the following is a nature of taxation?

27. Which of the following is not a determinant of the place of taxation?

29. Subject to inherent and constitutional limitations, the power of taxation is

38. The use of legal or permissible means to minimize or avoid taxes

39. Synonymous to tax evasion

40. Synonymous to tax exemption

41. In every case of doubt, tax statutes are construed

42. In every case of doubt, tax exemption are construed

1. Annakin, a French citizen permanently residing in the Philippines, received

2. Noah Reed, a Canadian, arrived in the Philippines on January 1, 2018 and

3. Which of the following is not correct? A non-resident citizen means, a citizen of

4. Which of the following statements is not correct?

6. A citizen of a foreign country is considered a non-resident alien engaged in

7. A resident citizen is taxable on all income derived from sources

8. A non-resident citizen is taxable on all income derived from sources

9. A resident alien is taxable on all income derived from sources

10. A non-resident alien is taxable on all income derived from sources

12. A non-resident alien is deemed doing business in the Philippines if he

23. The following are taxed at a final rate of 20% except:

24. A Corporation declared and distributed to its stockholder shares of B

26. Statement 1- A gain from sale of shares of a domestic corporation shall be

1. The optional standard deduction for individuals is

2. Interest expense incurred to acquire property used in trade or business or

3. If an individual is on the cash basis. of accounting, will interest paid in advance

4. I. An expense which is necessary but ordinary, or ordinary but not necessary is

5. Examples of taxes that are deductible except

6. Nondeductible taxes, except

7. A) The cost of leasehold improvements shall be deductible by the lessee by

8. Beginning 1/11/2018, for individuals with purely gross compensation income,

9. Beginning 1/1/2018, for individuals with gross income from business or

10. Any amount subsequently received on account of a bad debt previously

15. Which of the following statements is not correct?

17. A taxpayer engaged in business incurred a partial less of property as follows:

29. Exclusions from gross income, except:

30. Which of the following statements is correct?

31. Which of the following statements is not correct?

32. As a rule, this is not part of taxable income

33. This is taxable income