Bam 031 Cfe

BAM 031 Part 1 CFE SY 20-21, 2nd Sem
1. Which of the following is least likely true?

a. Interest from any currency bank deposit and yield or any other monetary benefit from
deposit substitutes and from trust funds and similar arrangements -20%
b. General royalties- 20%
c. Capital gains from the sale of shares of stock not traded in the stock exchange- 6%
d. Cash and property dividends- 10%
2. One of the following is false statement about double taxation. Which is it?
a. There is no constitutional prohibition on double taxation
b. Direct duplicate taxation is a valid defense against a tax measure if it violates the equal
protection clause
c. Absence of any of the elements of direct taxation makes it indirect duplicate taxation
d. 20% final withholding tax on interest income on bank deposits and a 5% gross receipts tax
on banks is a direct duplicate taxation
3. The withholding agent of creditable value added tax is required to remit the amount of value
added tax withheld within *
a. 25 days following the end of month the withholding was made
b. 20 days following the end of month the withholding was made
c. 15 days following the end of month the withholding was made
d. 10 days following the end of month the withholding was
4. Which statement is wrong? *
a. The and public power utilities of taxation may be exercised by the government, its
political subdivisions,
b. Generally, there is no limit on the amount of tax that may be imposed
c. The money contributed as tax becomes part of public funds
d. The power to tax is subject to inherent and constitutional limitation

5. Alpha sold the following shares of stock of domestic corporations which he bought for
investment purposes:
LISTED AND TRADED NON- LISTED AND TRADED
Sellin Price P250,000 P143,680
Sellin Expenses 12,000 3,680
Cost 118 ,000
80,000
Assume Alpha is a dealer in securities, the capital gains tax in 2018 is
a. P9,000
b. P3,000
c. P9,552
d. P0
6. Which of the following statements on construction of tax laws is false? *a.
a. A statute will not be construe as imposing a tax unless it does so clearly, expressly, and
unambiguously.
b. liberally in case of in doubt, favor of it the shall government.be construed most strongly
against the government, and
c. Tax laws are special laws and prevail over a general law.
d. Retroactive application of tax laws is not permitted
7. Which of the following statements is least likely correct? *
a. 8% income tax rate on gross sales/receipts and other non-operating income more
than P250,000 is available only to purely self-employed individuals and/or professionals.
b. The P250,000 is not applicable to mixed income earners since it is already
incorporated in the first tier of the graduated income tax rates applicable to
compensation income.
c. Tax due from compensation is computed using the 8% income tax rates.
d. Under the said graduated rates, the excess of the P250,000 over the actual taxable
compensation income is not deductible against the taxable income from
business/practice of profession under the 8% income tax rate option.
8. "Equality in taxation" means:
I. Progressive system of taxation shall be applied; II.The tax laws and their application must be
fair, just, reasonable and proportionate to one's ability to pay; III. The tax laws shall give
emphasis on direct rather than indirect taxes or on the ability-to-pay principle of taxation *
a. I only
b. II only
c. III only
d. l, Il and Ill
9. Statement 1: Where the estate is under judicial administration, the income of the estate shall
be taxable to the fiduciary or trustee. Statement 2: Where the estate is not under judicial
administration, the income of the estate shall be taxable to the heirs and beneficiaries. *
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true
10. Which of the following is not a determinant of the place of taxation?
a. Source of income
b. Citizenship of the taxpayers
c. Residence of the taxpayers
d. Amount of tax to be imposed

11. Alpha, a Mongolian national, arrived in the Philippines on January 1, 2018 to visit his Filipina
girlfriend. He planned to stay in the country until December 31, 2020, by which time he would
go back to his legal wife and family in Mongolia. Alpha derived income during his stay here in
the Philippines. For 2018 taxable year, Alpha shall be classified as a: *
a. Resident alien
b. Non-resident alien engaged in trade or business in the Philippines
c. Non-resident alien not engaged in trade or business in the Philippines
d. Special alien employee
12. Philippine Chooks-to-go 3x3 basketball team led by Alvin Pasaol competed well during the
recently concluded FIBA 3x3 World Championship held in Doha, Qatar on April 16-21, 2019.
They received $10,000 cash prize from International Basketball Federation (FIBA), the world
governing body of basketball, for reaching the quarterfinals of the tournament. By virtue of
the honor brought to the country, each team member also received P50,000 form Samahang
Basketbolista ng Pilipinas (SBP), the national sports association for basketball in the
Philippines. The team captain, Alvin Pasaol, likewise received P200,000 from "Chooks-to-go
Bounty Agro Ventures, Inc." for being one of its new endorsers.Statement 1: The $10,000
received from FIBA and P50,OOO from SBP are exempt from income tax.Statement 2: The
P200,OOO received from the Chooks-to-go is subject to 20% final withholding tax. *
a. Only Statement 1 is correct
b. Only Statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

13. Floramie, Ancot — owner of Flor Merchandise, non-vat registered business, earning
P2,000,0D0 for 2018, signified her intention on May 29, 2018 to avail the 8% income tax rate-
Christine Baco employee of Lebunan Corporation earning annually.
Arvin Bangalao — employee of Lomonsod Corporation eaming annually and owner of Antin
Bazaar, vat-registered, gaming P200,000 and signified his intention on the first quarter of
filing income tax return to avail the 8% income tax rate
Chenny Magsalay — owner of Chen Store. earning P333,333.33 monthly signified her
intention on the first quarter income tax retum to avail the 8% income tax rate. Who can
avail the 3% income tax rate?
a. Floramie
b. Floramie and Arvin
c. Floramie, Arvin and Chenny
d. None of them can avail
14. Statement 1: Tax avoidance is a scheme used outside of those lawful means to escape tax
liability. Statement 2: Tax avoidance is a tax saving device within the means sanctioned by law,
and, when availed of, it usually subjects the taxpayer to further or additional civil or criminal
liabilities *
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
15. The city council passed a tax ordinance imposing an occupation tax or profession or
occupation of an "industrial engineer". GJ is the only person with such an occupation in the
city. Which of the following is correct? *
a. GJ can successfully challenge the validity of the ordinance being discriminatory

since he is the only one adversely affected O The ordinance violates the
constitutional rule of equality in taxation
b. The ordinance violates the constitutional rule of equality in taxation

c. The ordinance is a "class legislation" since it does not subject to occupation tax
the other industrial engineers
d. The revenue ordinance under the is a Local valid exercise Government of the
Code. council's power to enact tax ordinance to raise
16. Alpha is a mining operator. The tax he must pay is based on the actual value of the gross
output or mineral products extracted is *
a. Mining tax
b. Royalties
c. Rental
d. Ad valorem tax
17. Which of the following instances may give rise to short accounting period?
a. When the corporation is newly organized using fiscal year.
b. When taxpayers dies
c. When a corporation changes accounting method
d. All of the above

18. The principal purpose of taxation is
a. To encourage the growth if home industries through the proper use of tax exemptions
and tax incentives
b. To implement the police power of the sale
c. The reduce excessive inequalities of wealth
d. To raise revenues for governmental needs
19. Alpha has the following quarterly income:
Q1- P1,000,000
Q2- P1.500.000
Q3- P2.000.000
Q4- P2.500,000
Alpha is qualified to avail 8% income tax rate option. Which of the following statements is
applicable to Alpha?
a. The financial statements are not required to be attached in filing the final income tax
returns.
b. Existing rules and regulations on bookkeeping and invoicing / receipting shall still apply.
c. His annual income tax shall be computed under the 8% Income tax rates.
d. Joan can claim a refund for the previous quarter/s income tax payment/s under the 8%
Income tax rate option.
20. The basic principle of a sound taxation system, where "Taxes must be based on the taxpayer's
ability to pay" is called:
a. Equality in taxation
b. Ability to pay theory
c. Theoretical justice
d. Equity in taxation
21. Levying of local government taxes may be exercised by: *
a. The local executive only
b. The legislative branch of the local government only
c. The local executive and the legislative branch of the local government only
d. Neither the local executive nor the legislative branch of the local government can
exercise the power
22. Which of the following statements is not true? *
a. Employee is an individual performing services under an employer-employee

relationship.
b. Employer is any person for whom an individual performs or performed any service, of
whatever nature, under an employer-employee relationship.
c. Employer and employee relationships exist when a person for whom services are
performed has the right to control and direct the individual who performs the services,
not only as to the result of the work to be accomplished but also as to the details,
method and means by which it is accomplished.
d. Gross receipts refer to the total sales transactions net of VAT, if applicable, reported
during the period, without any other deduction.
23. A religious order, a lessee of a piece of land constructed a seminary and church on a portion of
the land. On the portion of the land not used as seminary and church. It constructed a one-
story building that it sub-leased to private individuals selling religious materials, food
refreshments. The rent income is used to finance teaching at the seminary. Statement 1. The
rent income of the religious order is subject to income tax. Statement 2. The exemption from
taxation provided in the Philippine Constitution prohibits the imposition of any tax on the
religious order. *
a. True , true
b. False, false
c. True, false
d. False , true
24. Alpha is a resident citizen. Data on his 2018 income and expenses were provided as follows:
Gross business income P700,000
Business expenses 300,000
Royalty from books 40,000
Gain on direct sale to buyers of shares of
domestic corporation held as capital asset 70,000
Loss on sale of land in the Philippines
held as capital asset with a zonal value of (P1,200,000) 500,000
How much is the total income tax expense for the year?
a. P6,000
b. P142,500
c. P116,500
d. P159,500
25. Alpha sold the following shares of stock of dome year.
LISTED AND TRADED NON- LISTED AND TRADED
Sellin Price P250,000 P143,680
Sellin Expenses 12,000 3,680
Cost 119 ,000
80,000
Determine the capital gains tax assuming the sale was made in 2018 (upon effectively of TRAIN Law)
a. P9,000
b. P3,000
c. P3,184
d. P9,552
Solution: 143,680- 3,3680-80,000=60,000
60,000x 5%= P3,000 (2017)
60, 000 x 15%= 9,000 (2018)
26. Alpha earned interest income from a promissory note issued to him by Juan, a resident of
California, USA. Assuming that Pedro is a nonresident citizen. The interest income is
a. Subject to basic income tax
b. Subject to final tax
c. Not subject to income tax
d. Partly subject to schedular and partly subject to final tax
27. Alpha hat married, with 2 minor children, had the following data:
2016 2017
Business Income P106,70 P110,80
0 0
Interest on time deposit 2,00 3,000
with BPI 0
Short-term capital gain 10,00 90,500
0
Long -term capital gain 20,60 80,200
0
Short-term capital loss 90,00 20,90
0 0
Long-term capital loss 80,40
0
How much is the taxable income of Alpha assuminq the current taxable year is 2018?
a. P13,800
b. P110,800
c. P213,800
d. P260,600
28. Alpha Corporation shows the following data durinq taxable year
Sales P500,000
Interest Income, net of 20% FWT 24,000
Cost of Sales 300,000
Salary expense 120,000
Rent expense 24,000
Advertising expense 6,000
Machinery (salvage value — P15,000; useful life of 10 years) 65,000
What is the total of itemized deductions?

a. P205,100
b. P455,000
c. P155,000
d. OSD is implicty availed because the business is profitable
29. Which of the following statements is not true? *
a. If a taxpayer is acquitted in a criminal violation of the Tax Code, this acquittal

does not exonerate him from his civil liability to pay the taxes
b. A conviction for tax evasion is not a bar for collection of unpaid taxes
c. A tax assessment is necessary to a criminal prosecution for willful attempt to

defeat and evade payment of taxes
d. Criminal revenue taxes, proceedings fees, or under charges the Tax Code are
now a mode of collection of internal
30. Which of the following cases may the taxable income be computed not based on the calendar
year?
l. Taxpayer has no accounting period;
ll. Taxpayer does not keep books of accounts;
Ill. Taxpayer is an individual taxpayer;
IV. Taxpayer is a corporation;
V. Taxpayer is a general partnership
a. IV only
b. IV and V only
c. III, IV and V only
d. None of the above
31. Rule of "No estoppel against the government" means *
a. Rule of law that in the performance of its governmental functions, the state
cannot be estopped by the neglect of its agents and officers
b. The government is not estopped by the mistakes or errors of its agents;

erroneous application and enforcement of law by public officers do not
block the subsequent correct application of statues
c. Both statement of the other statements
d. None of the other statements

32. Which of the following statements is/are false?
I. The power to tax is exclusively exercised by the legislature.
II. The President has the authority to fix tariff rates, import and export quotas,
tonnage and wharfage duties, and other duties and imposts.
III. Local government units have the power to levy taxes.
IV. Tax legislation may be delegated to administrative agencies. *
a. Il and Ill only
b. Il and IV only
c. Il, Ill and IV only
d. IV only
33. Taxation as distinguished from police power and power of eminent domain
a. Property is taken to promote the general welfare
b. May be exercised only by the government
c. Operates upon the whole citizenry
d. There is generally no limit as to the amount that may be imposed
34. Alpha Hotel, Inc., using calendar year accounting period, overpaid its 2014 second quarter
income tax and it failed to correct the said overpayment on computation of its Annual Income
Tax. How shall the taxpayer recover the excess tax paid? *
a. File a claim for refund with the BIR within three years from August 29, 2014
b. File a claim for refund with the BIR within three years from April 15, 2015
c. File a claim for refund with the BIR within two years from August 29, 2014
d. File a claim for refund with the BIR within two years from April 15, 2015
35. Alpha, a real estate dealer sold a house and lot for P600,000 on November 20, 2017.
The cost of the property is P375,000.
Down payment : P100,000
Balance: Payable in monthly installments of P25,000 beginning Dec. 20, 2017
How much is the income subject to income tax in 2018?
a. P112, 500
b. P300,000
c. P56.250
d. Nil
GP % =225/600= 37.5 %
SOLUTION: 25,000 X 12 months x 37.5%= 112, 500
36. This is not a requisite for business expense to be deductible
a. It must be reasonable
b. It must be paid during the taxable year
c. The withholding tax otherwise required have been deducted and remitted to the BIR
d. It must be ordinary and necessary

37. The source from which income derived
A B C D
Labor True True True False
Gifts and True False False False
Inheritance
Use of Capital True True False False
a. A
b. B
c.
d. C
e. D
38. Which is not a creditable withholding income tax?
a. Expanded withholding income tax
b. Withholding income tax on passive income
c. Withholding income tax at source
39. What is/are the penalty for non-issuance of receipts or invoices?
a. Fine of not less than P1,000 but not more than P50,000
b. Imprisonment for not less than two years but not more than four years
c. Both statements are applicable
d. Either of the statements are applicable
40. Which of the following statements is true?
a. The exemption of statutory minimum wage rates does not cover holiday pay, overtime
pay, night shift differential pays, and hazard pay earned by an MWE.
b. Mixed income earner is an individual earning earning compensation income from
employment and income from business, but not practice of profession.
c. NRAETB refers to a non-resident alien who shall come to the Philippines and stay for an
aggregate period of more than spontaneous 180 days during any calendar year.
d. Rank and file employees refer to an employee holding neither managerial nor
supervisory position as defined under existing provisions of the Labor Code of the
Philippines.
BAM 031 Part 2 CFE SY 20-21, 2nd Sem
41. Alpha, Filipina residing at Cugman, Cagayan de Oro City, is working from 8am to 5pm Monday
to Friday at Teleperformance and attends to her business every vacant times and days. The
following data were provided for 2018 taxable year:
Compensation income P1,800,000
Sales 2,800,000
Cost of sales 1,125,000
Business Expenses 650,000
Interest Income from peso bank deposit 80,000
Interest income from Rupee at BPI 120,000
Gain on sale of land in the Philippines held
as capital asset with cost of P1,500,000
when the zonal value is P1,200,000 500,000
How much is the total final income tax on peso deposit?
a. P16,000
b. P18,000
c. P120,000
d. Answer is not given

42. Alpha, the most beautiful Miss Cagayan de Oro ever, earns P365 a day. She/He/lt is
not engaged in business nor has he had any other source of income other than his
employment. Alpha earned a total compensation income of P 160,000. The taxpayer
contributed to the SSS, PhilHealth, and HDMF amounting to P3,000and has received
a 13th-month pay of P9,000. How much is the tax due?
A. P172,000
B. P12,000
C. Exempt
D. Answer not given
43. Mr. Alpha is employed in CSO Corporation. He received the Statutory Minimum Wage for
2018 in the total amount of P 175,000, inclusive of the 13th month pay. In the same year,
he also received overtime pay of P40,000and night shift differential of P25,000. He also
received commission income from the same employer of P20,000, thus, total income
received amounted to P260,000. How much is the total exempt income? *
A. No exempt income become he is not MWE.
B. P260,000
C. P240,000
D. P20,000
E. Irrational because some important facts of the case are not stated
Solution: 175,000+ 40,000+ 25,000= 240,000

44. An individual had two sources of income from self-employment, but no compensation
income, as follows:
Gross sales, convenience store P1,800,000
Gross receipts, bookkeeping services 1,000,000
Cost of sale/Cost of Service 300,000
Operating Expenses 100,000
Non-operating Income 200,000
Taxes paid(1st-3rd Quarter) ¾ of Tax Due
The taxpayer failed to signify to be taxed at 8%
How much is the total income?
a. P2,800,000
b. P3,000,000
c. P2,600,000
d. P682,000
e. Answer not given

45. Alpha and Bravo are partners in a business partnership sharing profits and losses in the
ratio of 55:45. The following data expenses of the partnership for 2018 show:
Gross income P750,000
Expenses 200,000
Dividend received from a domestic corporation 20,000
Bank interest income, Metrobank (gross of withholding tax) 100,000
How much is the final tax withheld on the respective share of Bravo in 2018 partnership
income?
a. P38,500
b. P21,825
c. Cannot be calculated because data is lacking
d. Answer not given
46. Alpha, Filipina residing at Cugman, Cagayan de Oro City, is working from 8am to 5pm
Monday to Friday at Teleperformance and attends to her business everyvacant times and
days. The following data were provided for 2018 taxable year:
Sales 2,800,000
00
Interest income from peso bank deposit 80,00
0
Gain on sale of land in the 00
Philippines held as capital asset
with cost of
when the zonal value is P 1,200,000 500,0
00
How much is the capital gains tax?
A. P16,000
B. P15,000
C. P120,000
D. 9,000
E. Answer is not given
47. What is the threshold of the non-taxable 13th month pay and other benefits?
a. According to National Internal Revenue Code, Taxation is unlimited in nature
b. P80,000
c. P82,000
d. P90,000
e. According to TRAIN Law, any amount if positive income
48. Alpha, Inc., a corporation engaged in business in the Philippines and abroad has the
following data for the current year:
Gross income, Philippines P975,000
Expenses, Philippines 750,000
Gross income, Malaysia 770,000
Expenses, Malaysia 630,000
Interest on bank deposit 25,000
Determine the income tax due if the corporation is DC
a. P116,000
b. P109,500
c. 312,000
Solution: 365,000 x 30%= 109,500

49. Which of the following statement is incorrect?
a. No uniform method of accounting can be prescribed for all taxpayers
b. Each taxpayer is required by law to make a return on his true income.
c. The taxpayer must adopt accrual method of accounting because it is on accordance

with IFRS.
d. Where purchase or sale of merchandise is an income-producing factor; inventories on

hand shall be taken at the beginning and at the end of year.
50. The following are the instances when the co-ownership may be taxable, except: *
a. The co-owners used the common properties and/or income derived therefrom as a
common fund with intent to make profits.
b. When the property remained undivided for more than five years and no attempt was
ever made to divide the same among the co-heirs, nor was the property under
administration proceedings nor held in trust.
c. In all other circumstances when the co-ownership activities are already beyond mere
preservation of the co-owned property.
d. Co-owners appoint an administrator who manages the affairs of the co-ownership by

making investments therein from which profits are realized.
51. Alpha, single, is a minimum wage earner working at Gazini Corporation. In addition to his
basic minimum wage of P 180,000 for the year, he also received the following benefits for
the entire year: uniform allowance of P11,000; Christmas gift of P 10,000; meal allowance
for overtime work of P50,000; service achievement award in the form of ring with a
monetary value of P 15,000; and 13th month pay and other benefits of
P112,000. How much is the de minimis benefits - over the ceiling?
a. P90,000
b. P132,000
c. P20,000
d. P42,000
e. Answer not Given
Monday to Friday at Teleperformance and attends to her business every vacant times and
Sales 2,800,000
Gain on sale of land in the Philippines
held as capital asset with cost of when the zonal value is P1,200,000 500,000
How much is the basic Income tax if she opted at 8%?
a. P224,000
b. P430,000
c. P808,000
d. 654,000
e. Answer is not given
53. Rules on capital gains and losses of corporations, except:
a. Capital gains and losses are recognized to the extent of 100% regardless of the
holding period
b. The net capital loss carry over is not applicable

c. Capital losses are deductible only to the extent of capital gains
d. There is a final tax of 5% on real property sold
54. Alpha Inc., registered with BIR in 2012, has the following data for the year 2018:
Gross receipts P1,150,000
Discounts and allowances 250,000
Salaries of personnel directly involved in rendering service 300,000
Salaries of administrative personnel 100,000
Fees of consultants directly involved in rendering service 50,000

Rental of equipment used in rendering service 70,000
Rental of office space for use of administrative personnel 50,000
Other operating expenses 420,000
How much is the MCIT?
a. P23,000
b. P18,000
c. P9,600
Solution: 480,000 X 2%= 9,600
55. Which of the following is obliged to pay 15% FWT on interest earned under FCDS?
a. Resident Citizen
b. Non-resident Citizen
c. Non-resident Alien Engaged on Trade or Business
d. Non-resident Alien Not Engaged in Trade or Business
e. All answer are applicable except for NRANETB

56. Which of the following is a resident alien?
a. A Japanese computer expert was hired by a Philippine corporation to assist in its

computer system installation for which he had to stay in the Philippines for 6 months
b. A Korean actor was engaged to perform in the Philippines for 2 weeks after which
he returned to his country.
c. An alien whose share of stocks is in the Philippines
d. Answer is not given.
57. Alpha, Inc, a corporation engaged in business in the Philippines and abroad has the
Gross Income, Philippines P975,0
00
0
Gross Income, Malaysia 770,00
0
0
Determine the income tax due if
the corporation is RFC?
a. P72,000
b. P67,500
c. P515,850
Solution: 225,000 x 30%= 67,500

58. The MCIT shall apply to which of the following RFC? l. International carrier; ll. OBU on
their income from foreign currency transactions with local commercial banks; Ill.
Regional operating headquarters
a. I only
b. I and II only
c. All of the above
59. On January 1, 2018, Alpha established a trust fund for the benefit of his comrade, Bravo.
Alpha appointed Atty. Issa as the trustee. The property transferred to the trust is a piece of
land with a dormitory earning rental income. During the year, the trust earned
P40,000,000 revenues and incurred expenses of P 10,000,000.
Out of the trust's income, Atty. Issa gave Bravo P 10,000,000. In the same year, Bravo
earned compensation income of P3,000. The taxable income of the trust if it is
administered abroad is
a. P30,000,000
b. P20,000,000
c. P0
d. Data on reciprocity is not given, thus, taxable income cannot be calculated.
monetary value of P 15,000; and 13th month pay and other benefits of P 112,000. How
much is taxable income?
a. P132,000
b. P42,000
c. P312,000
d. P292,000
e. Answer not given
Salaries of personnel directly involved in rendering service 300,000
How much is the gross income?
a. P1,150,000
b. P900,000
c. P480,000
62. Alpha Inc., a resident foreign corporation has the following data for the taxable year2018:
Passengers’ airfare from China to Philippines P1,800,000
Passengers’ airfare from Philippines to China 1,500,000
Airfare for cargoes from China to Philippines 700,000
Airfare for cargoes from Philippines to China 1,300,000
How much is the income subject to income tax?
a. P1,500,000
b. P1,300,000
c. P2,800,000
00
Salaries of personnel directly involved in rendering service 300.000
How much is the income tax due?
a. P0
b. P9,600
c. P23,000
Solution: 480,000 x 2%= 9,600
00
How much is the taxable net income?
a. P0
b. P480,000
c. (P90,000)
65. Statement 1: Estate under judicial settlement is taxable as a separately entity.
Statement 2: Estate under extrajudicial settle, heirs and beneficiaries file the ITR of the
estate and pay the tax due thereon.
Statement 3: Irrevocable trust is taxable as a separate entity.
Statement 4: Trust in which income is for the benefit of the grantor, the income of the trust
is to be declared and taxed on the grantor.
Statement 5: In case of a trust administered in a foreign country, the income distributed to

beneficiaries is not deductible. How many statements are true?
a. 4
b. 2
c. 0
66. On January 1, 2018, Alpha established a trust fund for the benefit of his comrade, Bravo,
Alpha appointed Atty. Issa as the trustee. The property transferred to the trust is a piece of
land with a dormitory earning rental income. During the year, the trust earned
P40,000,000 revenues and incurred expenses of P10,000,000. Out of the trust’s income,
Atty. Issa gave Bravo P10,000,000. In the same year, Bravo earned compensation income
of P3,000. The taxable income of Bravo is
A. P13,000,000
B. P12,950,000
C. P10,000,000
D. Answer is not given
00
How much is the allowable deductions on gross income?
a. P420,000
b. P570,000
c. P940,000
68. On January 1, 2017, Alpha leased her land to Bravo. The terms of the contract of lease are
for fifteen years and the rental fee is P360,000 a year. The contract provides that Bravo
will construct a building and at the end of the term of the contract, the ownership of the
building will be transferred to Alpha. The building, with useful life of 30 years, was
completed on January 1, 2018 at a cost of P6,000,000. Assume Alpha will spread his
income over the term of the contract of lease. For income tax purposes, Alpha’s 2018
income is:
A. P360,000
B. P560,000
C. P760,000
D. 6,360,000
69. Under TRAIN Law, royalty income received by a corporation shall be subject to:
DC RFC NRFC
A. 20% 20% 20%
B. 20% 20% 30%
C. 20% 30% 30%
D. 20% 30% Exempt
70. Interest income on bank deposit or investment with maturity period of at least five years
received by a corporation is subject to:
DC RFC NFRC
A. 20% 20% 30%
B. Exempt Exempt Exempt
C. 20% 20% Exempt
D. 20% Exempt Exempt
71. Statement 1: Gain on sale of all kinds of capital assets are subject to the final tax on
capital gains
Statement 2: Gain from sale of real property classified as capital asset and located in
Miami, Florida is not subject to the of the final tax on capital gains
a. Both statements are correct
b. Both statements are not correct
c. Only the first statement is correct
d. Only the second statements is correct
72. An individual had two sources of income from self-employment, but no compensation
income, as follows:
Gross sales, convenience store P1,800,000
Gross receipts, bookkeeping service P1,000,000
Cost of Sales/Cost of service 300,000
Non-operating Income 200,000
Taxes paid (1st-3rd Quarter) ¾ of Tax Due
The taxpayer failed to signify to be taxed at 8%
How much is the income tax due?
a. P2,800,000
b. P3,000,000
c. P2,600,000
d. P682,000
e. Answer not given
73. Alpha Inc., a resident foreign corporation has the following data for the taxable year 2018;
Passengers’ airfare from China to Philippines P1,800,000
Passengers’ airfare from Philippines to China 1,500,000
Airfare for cargoes from China to Philippines 700,000
Airfare for cargoes from Philippines to China 1,300,000
How much is the income tax due and payable?
a. P37,500
b. P32,500
c. P70,000
74. Alpha, Bravo, Charlie and Co., CPAs (ABC and CO.) are partners of an accounting firm.
The 2018 financial records of the firm disclosed the following;
Service Revenue P4,490,000
Cost of services 1,610,000

Rental Income 500,000
Interest Income from Bank Deposit 200,000
Interest Income from FCDS Deposit 280,000
Bravo is also engaged in business with the following data for the year;
Sales P2,500,000
How much is the taxable income of Bravo in 2018?
a. P860,000
b. P1,510,000
c. P1560,000
d. P2,580,000
75. Under TRAIN law interest income received from depositary bank under expanding
foreign currency deposit system shall be subject to;
DC RFC NRFC
A.7.5% 7,5% 20%|
B.7.5% 7.5% Exempt

C.15% 15% Exempt
D.15% 7.5% Exempt
a. A
b. B
c. C
d. D
Monday to Friday at Teleperformance and attends to her business every vacant times and
Sales 2,800,000
Gain on sale of land in the Philippines
held as capital asset with cost of when the zonal value is P1,200,000 500,000
a. P16,000
b. P18,000
c. P120,000
d. P9,000
e. Answer is not given
77. Alpha, Inc, a corporation engaged in business in the Philippines and abroad has the
Gross Income, Philippines P975,0
00
0
Gross Income, Malaysia 770,00
0
0
Determine the income tax due if the corporation is NFRC
a. P320,000
b. P300,000
c. P116,800
Solution: P975,000+25,000= 1,000,000 x 30%= 300,000
basic minimum wage of P180,000 for the year, he also received the following benefits for
the entire year: uniform allowance of P11,000; Christmas gift of P10,000; meal allowance
monetary value of P15,000; and 13th month pay and other benefits of P112,000. Who is
primary liable in paying income tax?
a. Gazini Corporation
b. Alpha
c. Shared by Alpha and Gazini Corporation
d. Alpha and Wife
e. Alpha, wife, and Gazini Corporation
79. A taxpayer received during the taxable year following passive income derived from within
the Philippines:
Interest on bank deposit under FCDU (net) P231,250
Royalty on software application (gross) 95,000
Dividend income from resident foreign corporation (gross) 150,000
If taxpayer is a non-resident alien engaged in business, the final tax on the above
passive income would amount to
a. P52,750
b. P28,250
c. P19,000
d. P0
monetary value of P 15,000; and 13th month pay and other benefits of P 112,000. How
much is the income tax due?
A. Zero
B. Exempt
C. P8,400
D. P26,400
E. Answer not given

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BAM 031 Part 1 CFE SY 20-21, 2nd Sem

1. Which of the following is least likely true?

4. Which statement is wrong? *

b. Generally, there is no limit on the amount of tax that may be imposed

c. The money contributed as tax becomes part of public funds

d. The power to tax is subject to inherent and constitutional limitation

LISTED AND TRADED NON- LISTED AND TRADED

Sellin Price P250,000 P143,680

Sellin Expenses 12,000 3,680

Cost 118 ,000

d. Retroactive application of tax laws is not permitted

7. Which of the following statements is least likely correct? *

than P250,000 is available only to purely self-employed individuals and/or professionals.

b. The P250,000 is not applicable to mixed income earners since it is already

8. "Equality in taxation" means:

a. Statements 1 and 2 are false

b. Statement 1 is true but statement 2 is false

c. Statement 1 is false but statement 2 is true

d. Statements 1 and 2 are true

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

b. Citizenship of the taxpayers

c. Residence of the taxpayers

d. Amount of tax to be imposed

b. Non-resident alien engaged in trade or business in the Philippines

c. Non-resident alien not engaged in trade or business in the Philippines

d. Special alien employee

a. Only Statement 1 is correct

b. Only Statement 2 is correct

c. Both statements are correct

d. Both statements are incorrect

b. Floramie and Arvin

c. Floramie, Arvin and Chenny

d. None of them can avail

a. Only statement 1 is correct

b. Only statement 2 is correct

c. Both statements are correct

d. Both statements are incorrect

a. GJ can successfully challenge the validity of the ordinance being discriminatory

b. The ordinance violates the constitutional rule of equality in taxation

a. When the corporation is newly organized using fiscal year.

b. When taxpayers dies

c. When a corporation changes accounting method

d. All of the above

b. To implement the police power of the sale

c. The reduce excessive inequalities of wealth

d. To raise revenues for governmental needs

19. Alpha has the following quarterly income:

b. Ability to pay theory

a. The local executive only

b. The legislative branch of the local government only

22. Which of the following statements is not true? *

a. Employee is an individual performing services under an employer-employee

Gross business income P700,000

Business expenses 300,000

Royalty from books 40,000

Gain on direct sale to buyers of shares of

domestic corporation held as capital asset 70,000

Loss on sale of land in the Philippines

held as capital asset with a zonal value of (P1,200,000) 500,000

25. Alpha sold the following shares of stock of dome year.

LISTED AND TRADED NON- LISTED AND TRADED

Sellin Price P250,000 P143,680

Sellin Expenses 12,000 3,680