TAX Preweek (B44)

ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY
CPA Review Batch 44  October 2022 CPALE  Pre-Week Summary Lecture
TAXATION A. TAMAYO  C. LIM  K. MANUEL
TAX PREWEEK LECTURE

PRINCIPLES OF TAXATION
1. (Phil. CPA) Which of the following may not raise money for the government?
a. Power of taxation
b. Police power
c. Power of eminent domain
d. Privatization of government’s capital assets
2. Under this basic principle of a sound tax system, the government should not
incur a deficit.
a. Theoretical justice c. Fiscal adequacy
b. Administrative feasibility d. Debt restructuring
3. (Phil. CPA) Which of the following statements is not correct?

a. Taxes may be imposed to raise revenue or to provide incentives or
disincentives for certain activities within the State.
b. The State can have the power of taxation even if the Constitution
does not expressly give it the power to tax.
c. For the exercise of the power of taxation, the state can tax anything
at any time.
d. The provisions of taxation in the Philippine Constitution are grants
of power and not limitations on the taxing power.
4. (Adapted) First statement: Symbiotic relation is the reason why the government
could impose taxes on the income of the resident citizens derived from sources
outside the Philippines.
Second statement: Jurisdiction is the reason why citizens must provide support
to the State so the latter could continue to give protection.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only the first statement is correct.
d. Only the second statement is correct.
5. Is it possible for the tax to be used partly for public and partly private
without violating the limitation that a tax must be for public purpose?
a. Yes. The purpose to be accomplished by taxation need not be
exclusively public. Although private individuals are directly
benefited (e.g., giving aid to flood victims), the tax will still be
valid provided such benefit is only incidental.
b. No. The purpose to be accomplished by taxation need to be exclusively
public. To benefit private individuals will be tantamount to
deprivation of property of those who paid the tax without due process.
c. Yes. The purpose is not important as long as the use of the tax can
be property accounted for.
d. No. The purpose shall either be public or private. It cannot be both.
6. This stems from the principle that we pay taxes for the protection and services
provided by the taxing authority which could not be provided outside the
territorial boundaries of the taxing state.
a. The tax imposed should be for public purpose.
b. There should be no improper delegation of the taxing power.
c. The power to tax is limited to the territorial jurisdiction of the
taxing government.
d. Exemption of government entities from taxation.
7. First statement: A violation of inherent limitations can amount to taking of

property without due process of law.
Second statement: Any tax law contravening any of the inherent limitations of
taxation, in effect, will likewise be unconstitutional.
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ReSA – THE REVIEW SCHOOL OF ACCOUNTANCY
Batch 44 – October 2022 CPA Licensure Examination
TAX Preweek
8. (Phil. CPA) One of the characteristics of tax is that it is generally:
a. based on contract. c. assignable.
b. payable in money. d. optional.
9. (Phil. CPA) Which of the following is not an example of excise tax?

a. Transfer tax c. Real property tax
b. Value-Added tax) d. Income tax
10. (Phil. CPA) In case of conflict between tax laws and generally accepted
accounting principles (GAAP):
a. both tax laws and GAAP shall be enforced.
b. GAAP shall prevail over tax laws.
c. tax laws shall prevail over GAAP.
d. the issue shall be resolved by the court.
TAX REMEDIES
11. If a taxpayer is found to be liable for deficiency tax or taxes in the course
of investigation conducted by a Revenue Officer, the taxpayer shall be informed
through a:
a. Notice for Informal Conference (NIC)
b. Preliminary Assessment Notice (PAN)
c. Notice of Discrepancy (NOD)
d. Final Assessment Notice (FAN)
12. (Tax Remedies) Which of the following prescriptive period of assessment and
collection falls under normal or regular prescriptive period?
a. Taxpayer filed a return and the return filed is not false of
fraudulent
b. Taxpayer failed to file a return
c. Taxpayer filed a false return with intent to evade tax
d. Taxpayer filed a fraudulent return with intent to evade tax
13. (Tax Remedies) An Internal Revenue Officer is allowed only how many days from
the date of receipt of an LA by the taxpayer to conduct the audit and submit
the required report of investigation?
a. 30 days c. 120 days
b. 60 days d. 180 days
14. (Tax Remedies) If the protest is denied, in whole or in part, by the

Commissioner’s duly authorized representative, the taxpayer may:
I - Appeal to the Court of Tax Appeals (CTA) within thirty (30) days from
date of receipt of the said decision
II - Elevate his protest through request for reconsideration to the
Commissioner within thirty (30) days from date of receipt of the said
decision
a. Either I or II c. I only
b. Neither I nor II d. II only
15. (Tax Remedies) If the protest is not acted upon by the Commissioner’s duly
authorized representative within one hundred eighty (180) days counted from the
date of filing of the protest in case of a request for reconsideration; or from
date of submission by the taxpayer of the required documents within sixty (60)
days from the date of filing of the protest in case of a request for
reinvestigation, the taxpayer may:
I - Appeal to the CTA within thirty (30) days after the expiration of the one
hundred eighty (180) -day period
II - Await the final decision of the Commissioner’s duly authorized representative
on the disputed assessment
a. Either I or II c. I only
b. Neither I nor II d. II only
16. For requests for reconsideration, the taxpayer shall submit all relevant
supporting documents in support of his protest within how many days from date
of filing of his letter of protest, other-wise, the assessment shall become
final?
a. Sixty (60) days c. Twenty (20) days
b. Thirty (30) days d. None of the choices

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17. (Tax Remedies) First statement: Within three (3) years from the date of filing
of any return, statement or declaration, the same may be modified, changed, or
amended.
Second statement: The modification, change or amendment to any return,
statement of declaration filed is allowed if no notice for audit or investigation
of such return, statement or declaration has in the meantime been actually
served upon the taxpayer.
a. Both statements are correct
b. Only the first statement is correct
c. Both statements are incorrect
d. Only the second statement is correct
18. First statement: A Tax Credit Certificate issued, which shall remain unutilized
after 5 years from the date of issue, shall, unless revalidated, be considered
invalid, and shall not allowed as payment for internal revenue tax liabilities
of the taxpayer, and the amount covered by the certificate will revert to the
general fund.
Second statement: Any TCC which remains unutilized for more than one (1) year
at any given interval of time during its validity shall be converted into cash
with prior written notice by the BIR, subject to the availability of funds in
accordance with the procedural requirements that will be issued by the BIR for
this purpose.
b. Only the first statement is correct
c. Both statements are incorrect
19. First statement: In cases where a return is filed beyond the period prescribed
by law, the three (3)-year period shall be counted from the day the return was
filed.
Second statement: A return filed before the last day prescribed by law for the
filing thereof shall be considered as filed on such last day.
20. The final income tax return for the taxable year 2018 which was due on April
15, 2019 was filed earlier on March 15, 2019. A substantial amended return was
filed on May 31, 2019. When is the last day to make a valid assessment?
a. March 15, 2022 c. May 31, 2022
b. April 15, 2022 d. May 31, 2025
21. First statement: In civil tax cases involving collection of internal revenue
taxes, prescription is construed strictly against the government and liberally
in favor of the taxpayer.
Second statement: In criminal tax cases involving tax offenses punishable under
the Tax Code, prescription is construed strictly against the taxpayer.
b. Bothe statements are incorrect.
22. In case the warrant of levy on real property is not issued before or
simultaneously with the warrant of distraint on personal property, and the
personal property of the taxpayer is not sufficient to satisfy his tax
delinquency, the Commissioner or his duly authorized representative shall,
within how many days after execution of the distraint, proceed with the levy on
the taxpayer's real property?
a. Ten (10) days
b. Twenty (20) days
c. Thirty (30) days
d. Forty (40) days
23. If at any time prior to the consummation of the sale all proper charges are paid
to the officer conducting the sale, the goods or effects distrained:
a. shall be restored to the owner.
b. shall no longer be restored to the owner.
c. shall be brought to the Revenue District Officer.
d. shall be brought to the Regional District Officer.

TAX Preweek
INCOME TAX
SITUATIONAL
Mr. John Cruz is a partner of Cruz Dayag Caiga Company, a business partnership. He
owns 25% interest. The gross sales of Cruz Dayag Caiga Company amounted to
P10,000,000.00 for taxable year 2021. The recorded cost of sales and operating expenses
of the partnership were P2,750,000.00 and P1,500,000.00, respectively. It had also
incurred an interest expense of P200,000 in connection with asset acquisition and
interest income from bank deposit amounting to P100,000. The total assets of the
partnership is P110,000,000.
24. How much is the taxable income of the partnership?

a. P5,750,000 c. P5,550,000
b. P5,570,000 d. None of the choices
25. How much is the income tax liability of the partnership?

a. P1,725,000 c. P1,665,000
26. How much is the share in the partnership income of partner Mark Tang?
a. P1,068,750 c. P978,775
27. Assuming the partnership avails of the Optional Standard deduction, how much is
the tax liability of the partnership?
a. P1,725,000 c. Zero
28. Starting July 1, 2020, resident foreign corporations the taxable income and
total assets of which do not exceed P5,000,0000 and P100,000,000 respectively
shall be taxed at:
a. 30% c. 20%
b. 25% d. 10%
SITUATIONAL
29. KLM Corporation, a manufacturer, has gross sales of P190,000,000 for CY 2021,
its fourth year of operation. Its total assets amounted to P150,000,000, net
of the value of the land of P6,000,0000 where its manufacturing plant and
business operations are situated. Its cost of sales and allowable operating
expenses amounted to P100,000,000 and P89,000,000, respectively.
How much is the income tax due?
a. P1,800,000 c. P200,000
b. P 250,000 d. None of the choices
30. Using the same data in preceding number and it is the corporation’s fifth year
of operation. How much is the income tax due?
a. P1,800,000 c. P250,000
31. (Income Tax) An international carrier doing business in the Philippines shall
pay an income tax of:
a. three percent (3%) on its gross receipts.
b. two and one-half percent (2½%) on its ‘Gross Philippine Billings.’
c. two percent (2%) on its ‘Gross Philippine Billings.’
d. one and one-half percent (1½%) on its gross receipts.
32. (Income Tax) (Phil. CPA Adapted) Which of the following statements is incorrect?
a. Resident foreign corporations are subject to income tax based on net
income from sources within the Philippines.
b. Domestic corporations are subject to income tax based on net income
from all sources.
c. Nonresident foreign corporations are subject to income tax based on
gross income from sources within the Philippines.
d. Private educational corporations are subject to income tax based on
the net income from sources within the Philippines at the tax rate
of 1%.

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33. For income tax purposes, the term “corporation” shall include all the following
except:
a. One person corporation
b. Partnerships no matter how created or organized
c. Joint-stock companies
d. General professional partnerships
SITUATIONAL
In 2018, Mr. Kenneth Lim owns a nightclub and videoke bar, with gross
sales/receipts of P2,500,000.00. His cost of sales and operating
expenses are P1.000,000.00 and P600,000.00, respectively, and with non-
operating income of P100,000.00.
34. Can Mr. Lim have an option to avail of the 8% income tax rate?
a. Yes, because his gross sales/receipts do not exceed the VAT threshold.
b. No, because his business income is subject to Other Percentage
Tax under Section 125 of the Tax Code, as amended.
c. Yes, because individual taxpayers are always given the option
to be taxed at 8% income tax rate.
d. No, because he is not VAT-registered.
35. How much is the income tax due?

a. P200,000 c. P120,000
b. P190,000 d. None of the choices
36. How much is the percentage tax?

a. P450,000 c. P300,000
b. P375,000 d. P250,000
37. (Income Tax) A purely self-employed individual’s gross sales/receipts and other
non-operating income do not exceed the VAT threshold.
Case 1 – He signified his intention to avail of the 8% income tax rate on his
first quarter return, he will pay:
a. income tax on gross sales/receipts and other non-operating income in
excess of P250,000 and the percentage tax under Section 116
b. income tax on gross sales/receipts and other non-operating income in
excess of P250,000 in lieu of graduated tax rates and percentage
under Section 116
c. income tax on gross sales/receipts excluding non-operating income in
under Section 116
d. percentage tax under Section 116 only in lieu of income tax.
Case 2 – He failed to signify his intention to avail of the 8% income tax rate
on his first quarter return, he will pay:
a. income tax based on graduated income tax rates and percentage tax
under Section 116 if not VAT-registered
b. income tax on based on graduated income tax rates only.
c. income tax on gross sales/receipts excluding non-operating income in
under Section 116
d. Percentage tax under Section 116 only in lieu of income tax.
38. (Income Tax) Under the TRAIN, the income tax due from compensation income is:
a. based on graduated income tax rates under Section 24 (A)
b. 8% income tax rate on gross sales/receipts and other non-operating
income in excess of P250,000.
c. either graduated income tax rate or 8% income tax rate on gross
sales/receipts and other non-operating income in excess of P250,000.
d. Based on taxable income after deducting expenses and exemptions.
39. (Income Tax) Under the TRAIN, Philippine Charity Sweepstakes and Lotto winnings
received by residents or citizens shall be:

TAX Preweek
a. exempt from income tax.

b. subject to 20% final tax except Ten thousand pesos (P10,000) or
less from Philippine Charity Sweepstakes and Lotto which shall be
exempt.
c. subject to 20% final tax without exception.
d. subject to 20% final tax if less than Ten thousand pesos (P10,000).
40. (Income Tax) Under the TRAIN, the books of accounts shall be audited and
examined yearly by independent Certified Public Accountants and their income
tax returns accompanied with a duly accomplished Account Information Form
(AIF) which shall contain, among others, information lifted from certified
balance sheets, profit and loss statements, schedules listing income-
producing properties and the corresponding income therefrom and other relevant
statements if the:
a. gross annual sales, earnings, receipts or output exceed Three million
pesos (P3,000,000).
b. gross quarterly sales, earnings, receipts or output exceed Three
million pesos (P3,000,000).
c. gross annual sales, earnings, receipts or output amount to Three
million pesos (P3,000,000) or more.
d. gross quarterly sales, earnings, receipts or output exceed One
Hundred Fifty Thousand (P150,000).
41. (Income Tax) Which of the following statements is incorrect?
a. Considering that taxes withheld by the withholding agents are held in
trust for the government and its availability is an imperious necessity
to ensure sufficient cash inflow to the National Treasury, withholding
agents shall file BIR Monthly Remittance Form (BIR Form No. 0619E and/or
0619F) every tenth (10th) day of the following month when the withholding
is made, regardless of the amount withheld.
b. For withholding agents using EFPS facility, the due date is on the
fifteenth (15th) day of the following month.
c. Withholding agents with zero remittance are not required to use and file
the same Monthly Remittance Form.
d. None of the choices
42. (Income Tax) The books of account are required to be audited and examined yearly
by an independent CPA if the gross quarterly sales, earnings, receipts or output
exceed:
a. P5,000,000 c. P2,500,000
b. P3,000,000 d. P1,500,000
43. (Income Tax) For income tax purposes, the examination and inspection of the
books of account and records shall be made only once in a taxable year except
when:
a. Fraud, irregularity or mistakes, as determined by the Commissioner
b. The taxpayer requests reinvestigation
c. Verification of compliance with withholding tax laws and regulations
d. All of the choices
44. (Income Tax) Receipt or invoice is issued, at least in duplicate, at the time
the transaction is effected for each sale or transfer of merchandise or for
services rendered valued at:
a. P 50 or more. c. P200 or more.
b. P100 or more. d. P250 or more.
45. (Income Tax) Mr. Emilio Nario contributed campaign fund money to a political
party. The political party duly reported to the COMELEC the campaign
contributions and were fully utilized during the campaign.
First statement: The campaign contribution of the donor is not subject to donor’s
tax.
Second statement: The campaign contribution is not taxable to the political
party.
b. Both statements are incorrect
c. Only the first statement is correct

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46. Which of the following is not a requisite for an individual taxpayer to qualify
to substituted filing of income tax return?
a. Pure compensation income earner
b. One employer in the Philippines
c. Withholding tax is correct
d. Gross compensation income does not exceed P60,000
47. A proprietary educational institution with an issued permit to operate form
CHED. It is maintained and administered by a private domestic corporation
registered under the SEC. The proprietary educational institution uses fiscal
year accounting ending July 31st of each year. On July 31, 2021, it recorded
total gross receipts amounting to P18,000,000, of which P10,000,000 came from
education-related activities from other unrelated business activities. It also
recorded cost of services and operating expenses from related activities
amounting to P2,000,000 and P1,000,000, respectively, and from unrelated
business activities amounting to P3,000,000 and P2,000,000, respectively.
How much is the tax due?

a. P2,500,000.00 c. P200,000.00
b. P2,000,000.00 d. P100,000.00
SITUATIONAL
FCT Corporation, a domestic retailer, has gross sales of P1,400,000,000.00 with cost
sales of P560,000,000.00 and allowable deductions of P150,000,000.00 for calendar year
2020, its fourth quarter of operation after the year it registered with the BIR. 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.
48. How much is the regular corporate income tax?
a. P189,750,000 c. P138,000,000
49. How much is the minimum corporate income tax

a. P16,800,000 c. P8,400,000
50. How much is the income tax due?

a. P189,750,000 c. P138,000,000
51. Which of the following benefits will no longer be within the purview of a de
minimis benefit and therefor treated as other benefits in full when it exceeds
its limit?
a. Medical benefits given to employees
b. Employee achievement awards (e.g., for length of service or safety
achievement)
c. Benefits received by an employee by virtue of a collective bargaining
(CBA) and productivity incentive schemes
d. Uniforms and clothing allowance given to employees by the employer
TRANSFER TAXES
52. (Transfer Taxes) Mr. X died. He was survived by his wife and children. The
couple had exclusive and common properties. The gross estate of Mr. X would
include:
a. common and capital properties.
b. common and paraphernal properties.
c. common, capital and paraphernal properties.
d. common properties only.
53. (Transfer Taxes) In the absence of a marriage settlement, or when the regime
agreed upon is void, the property relations of the spouses who married before
August 3, 1988 shall be governed by:
a. conjugal partnership of gains.
b. absolute community of properties.
c. complete separation of properties.
d. none of the choices

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54. (Transfer Taxes) A resident citizen had a family home in the Philippines. He
worked abroad and was temporarily absent from his family home when he died in
2018. The executor of the estate inquired from you whether or not to claim
family home deduction from the gross estate for Philippine estate tax purposes.
What would you tell him?
a. The estate would not be allowed family home deduction because he was
abroad when he died.
b. The estate would not be allowed family home deduction because he was
a non-resident citizen when he died.
c. The estate would be allowed family home deduction of P10,000,000
because actual occupancy of the family home was not interrupted or
abandoned because of his temporary absence.
d. The estate would be allowed family home deduction of P1,000,000
because all decedents were allowed family home deduction.
55. (Transfer Taxes) Under the TRAIN, the estate tax rate is:
a. 6% based on net estate with P250,000 exemption.
b. 6% based on net estate with no exempt amount.
c. 8% based on gross estate.
d. graduated tax rates with P200,000 exemption.
56. (Transfer Taxes) The net fruits as well as the income received during the
marriage from the exclusive properties of the spouses are classified as:
I – conjugal properties under conjugal partnership of gains.
II – community properties under absolute community of properties.
a. Only I is correct c. Both I and II are correct
b. Only II is correct d. Both I and II are incorrect
57. (Transfer Taxes) An unmarried decedent died leaving properties he inherited 4

½ years ago which had fair market value of P800,000 at the time of his death
(P650,000 at the time of inheritance, and unpaid mortgage of P50,000, P20,000
of which paid by the present decedent before he died). Other properties in his
gross estate had fair market value of P1,000,000. The total expenses, losses,
indebtedness, taxes and transfer for public purpose amounted to P300,000.
How much was the vanishing deduction?
a. P 225,000 c. P 102,900
b. P 108,333 d. P 100,000
58. (Transfer Taxes) Under the TRAIN Law, the estate tax return shall be supported
with a statement duly certified to by a Certified Public Account is the it shows
a gross value:
a. of P5,000,000 or more. c. exceeding P2,000,000
b. exceeding P5,000,000. d. exceeding P200,000
59. (Transfer Taxes) In case the available cash of the estate is insufficient to
pay the total estate tax due, payment by installment shall be allowed:
a. within two (2) years from the statutory date for its payment without
civil penalty and interest.
b. within two (2) years from the statutory date for its payment with civil
penalty and interest.
c. within one (1) year from the statutory date for its payment without
d. within six (6) months from the statutory date for its payment without
60. (Transfer Taxes) Under the TRAIN Law, the donor’s tax rate is:
a. six percent (6%) computed on the basis of the total gifts in excess
of Two hundred fifty thousand pesos (P250,000) exempt gift made during
the calendar year whether the donee is a relative or a stranger.
b. six percent (6%) computed on the basis of the total gifts in excess
of Two hundred fifty thousand pesos (P250,000) exempt gift made during
the calendar year where the donee is a relative.
c. six percent (6%) computed on the basis of the total gifts without
exemption made during the calendar year when the donee is a stranger
d. six percent (6%) computed on the basis of the total gifts in excess
of One hundred thousand pesos (P100,000) exempt gift made during the
calendar year whether the donee is a relative or a stranger

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61. (Transfer Taxes) A sale, exchange, or other transfer of property made in the
ordinary course of business (a transaction which is a bona fide, at arm’s
length, and free from any donative intent), will be considered as made for an
adequate and full consideration in money or money’s worth and therefore:
a. subject to donor’s tax.
b. not subject to donor’s tax.
c. subject to estate tax.
d. Choice not given.
62. (Transfer Taxes) When an indebtedness is cancelled without any service rendered
by the debtor in favor of the creditor, the forgiveness of debt will
result to:
a. taxable income.
b. distribution of dividend.
c. taxable indirect donation.
d. taxable estate.
63. (Transfer Taxes) A client asked you whether or not to add the gifts made in the
previous year to the gifts made in the current year. What would your answer
be?
a. The gifts made in the previous year should not be added to the gifts
made in the current year because the computation of the taxable net
gifts is cumulative basis over a period of one calendar year.
b. The gifts made in the previous year should be added to the gifts made
in the current year because the computation of the taxable net gifts is
cumulative basis over several calendar years.
c. The gifts made in the previous year should not be added to the gifts
made in the current year because the BIR would have no way of knowing
them anyway.
d. The gifts made in the previous year should be added to the gifts made
in the current year so that the progressive effect of donor’s tax will
be felt.
64. (Transfer Taxes) Mr. Gerardo Ireneo transfers inter vivos a personal property
to his son on March 15, 2016. His son who lives in another province let his
father know that he is accepting the gift on March 31, 2016. The personal
property was delivered and received on April 15, 2016. When shall be the last
day to file the donor’s tax return and pay the donor’s tax?
a. April 14, 2016 c. May 15, 2016
b. April 30, 2016 d. None of the choices
65. (Transfer Taxes) A resident citizen has a property situated in Quezon City.
His legal residence is in Masbate City. While in Cebu City on a business trip,
he donated his property situated in Quezon City to a relative who is long-time
resident of Cebu City. Where will the donor file the donor’s tax return?
a. Quezon City c. Masbate City
b. Cebu City d. Any of the three cities
SITUATIONAL
The decedent is a married man with a surviving spouse with the following data dies on
January 1, 2018:
Conjugal real and personal properties (excluding the
P1,000,000 properties transferred in contemplation of death) P13,000,000
Conjugal family home 9,000,000
Exclusive properties (including the P2,000,000 exclusive
properties of the surviving spouse) 7,000,000
Conjugal ordinary deductions (excluding P300,000 funeral
expenses and P100,000 judicial expenses) 2,000,000
Medical expenses 500,000
66. The total gross estate is:
a. P29,000,000 c. P27,000,000
67. The total ordinary deductions are:

a. P2,400,000 c. P2,000,000
68. The total special deductions are:

a. P19,000,000 c. P9,500,000

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69. The taxable net estate is:
a. P26,000,000 c. P6,000,000
70. The estate tax due is:

a. P1,560,000 c. P360,000
71. (Transfer Taxes) (Phil. CPA Modified) Jose made the following gifts:
a. On June 1, 2017, P150,000 to Anton, his son, on account of his marriage
celebrated May 1, 2017;
b. On July 10, 2017, a parcel of land worth P180,000 to his father, subject
to the condition that his father would assume the mortgage indebtedness
of Jose in the amount of P40,000;
c. On September 30, 2018, P250,000 dowry to his daughter Dana, on account
of her scheduled marriage on October 25, 2018, and another wedding gift
worth P120,000 on November 23, 2018.
How much were the total net gifts subject to tax as of November 23, 2018?
a. P370,000 c. P120,000
72. Common shares of stock which are not traded in the local stock exchange shall
be valued at their prima facie fair market value based on:
a. Book value based on the latest available financial statements duly
certified by an independent public accountant prior to the date of sale,
but not earlier than the immediately preceding taxable year.
b. Liquidation value, which is equal to the redemption price of the shares
as of balance sheet date, including any premium and cumulative preferred
dividends in arrears.
c. Par value based on the latest available financial statements duly
certified by an independent public accountant prior to the date of sale,
but not earlier than the immediately preceding taxable year.
d. Book value or liquidation value based on the latest available financial
statements duly certified by an independent public accountant prior to
the date of sale, but not earlier than the immediately
BUSINESS TAXES
73. Beginning January 1, 2021, the VAT exemption shall apply to the following,
except which one?
a. sale of real properties not primarily held for sale to customers or
held for lease in the ordinary course of trade or business,
b. sale of real property utilized for socialized housing as defined by
Republic Act No. 7279,
c. sale of house and lot, and other residential dwellings with selling
price of not more than Two million pesos (P2,000,000) as adjusted
to P3,199,200 in 2011 using the 2010 Consumer Price Index
values.
d. sale of residential lot valued at One million five hundred thousand
pesos (P1,500,000) and below
74. (Business Taxes) This refers to any person who is required to register under
the provisions of the Tax Code but failed to register.
a. VAT-registered person c. VAT-exempt person
b. VAT-registrable person d. None of the choices
75. (Business Taxes) This refers to transactions in certain goods, properties, or

services which are not subject to value-added tax, even if such goods,
properties or services are sold by a VAT-registered person, and regardless of
the annual gross sales or receipts derived therefrom.
a. Transaction-specific exemption
b. Entity-specific exemption
c. Implied exemption
d. Exemption by tokenism
76. (Business Taxes) Ms. Consuelo Dimagulo receives a package of goods from her
sister who lives in California, United States of America. Ms. Consuelo will use
the goods for personal purposes. She is not VAT-registered. Which of the
following statements is correct in connection with the receipt of a package?
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a. Ms. Consuelo shall be subject to VAT on importation.
b. Ms. Consuelo shall not be subject to VAT on importation because she is
not VAT-registered.
c. Ms. Consuelo shall not be subject to VAT on importation but shall be
subject to VAT on sales.
d. None of the choices.
77. (Business Taxes) Any person who elects to optionally register under the VAT
system, other than franchise grantees of radio and/or television broadcasting,
shall not be allowed to cancel his registration for the next:
a. 5 years. c. 2 years.
b. 3 years. d. 1 year.
78. (Business Taxes) Which of the following transactions in the course of trade or
business requires actual payment of VAT before an input tax is allowed as tax
credit from the output tax?
a. Purchase of services
b. Transactions deemed sale
c. Domestic purchase of goods for use as raw materials supplied in the sale
of services
d. Domestic purchase of goods for use in trade or business for which
deduction for depreciation or amortization is allowed under the Tax Code
79. (Business Taxes) A VAT-registered domestic carrier operating air, land and sea
transport equipment acquired vehicles for use in its operation to transport
goods and cargoes. The domestic carrier:
a. can claim input taxes on the said acquisitions.
b. cannot claim input taxes on the said acquisitions.
c. can claim input taxes only on the acquisitions of air and sea transport
vehicles.
d. can claim input taxes only on the acquisition of land transport vehicles.
80. (Business Taxes) Starting January 1, 2018, in proper cases, the Commissioner of
Internal Revenue shall grant a tax credit certificate or refund for creditable
input taxes within how many days from the date of submission of complete
documents in support of the application filed?
81. (Business Taxes) An export sale of orchids and other ornamental plants of a
VAT-registered person is:
a. subject to 12% VAT. c. exempt from VAT.
b. subject to 0% VAT. d. none of the choices
SITUATIONAL
ECB, non-VAT registered lessor of residential and commercial units had the following
data for the first and second quarters of 2018:
First Second
quarter quarter
Gross receipts from lease of
residential units
With monthly rental of P13,000 per unit P2,500,000 P2,300,000
With monthly rental of P18,000 per unit 1,000,000 1,200,000
Gross receipts from lease of commercial 2,300,000 2,400,000
units
Input tax paid from VAT suppliers 150,000 120,000
82. How much is the business tax of ECB for the first quarter?
a. P396,000 c. P174,000
b. P246,000 d. P 99,000
83. How much is the business tax of ECB for the first quarter?
a. P708,000 c. P312,000
b. P432,000 d. P108,000
84. How much is the business tax of ECB for the second quarter of 2018 assuming
he registered as a VAT taxpayer at the start of the second quarter 2018?
a. P708,000 c. P432,000
b. P588,000 d. P312,000

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85. Assuming ECB is VAT-registered taxpayer instead of Non-VAT registered
taxpayer, how much is the business tax due for the first quarter of 2018?
a. P696,000 c. P396,000
b. P546,000 d. P246,000
SITUATIONAL
Inlabada, VAT-registered company is engaged n the laundry business. During the first
quarter of 2022, the following information were made available:
Net revenue, first quarter 2022 P1,000,000
Receivables from customers, January 1, 2022 224,000
Receivables from customers, March 31, 2022 336,000
Creditable withholding VAT, first quarter 2022 5,000
VAT purchases other than capital goods, first quarter 2022 300,000
VAT purchases, capital goods, first quarter 2022 all in January 2022) 1,200,000
Receivable balances are all income related and are inclusive of value-added tax.
Revenues and purchases are VAT exclusive. Capital goods are estimated to have a
useful life of 10 years.
86. Compute item 19B (Output tax) of BIR Form No. 2550Q
a. P132,000 c. P108,000
b. P120,000 d. P106,560
87. Compute item 22 (Total available input tax) of BIR Form No. 2550Q
a. P185,000 c. P43,200
b. P180,000 d. P36,000
88. Compute the deferred input tax as of March 31, 2022?

a. P141,600 c. P136,800
b. P140,400 d. None
89. Effective July 1, 2020 until June 30, 2023, the percentage tax rate on Persons
Exempt from VAT shall be:
a. 5% c. 2%
b. 3% d. 1%
90. (Business Taxes) Who of the following is not subject to tax on winnings under
Section 126?
a. Person who wins in horse races
b. Winners from double, forecast/quinella and trifecta bets
c. Winners in cockfighting
d. Owners of winning race horses
91. (Business Taxes) Stinging Bee Tony is a Filipino world boxing champion. He
will defend his crown in Manila against the Thai challenger, Fermin
Buntonghininga. The boxing exhibition is promoted by Nginateng Promotions wholly
owned by Filipinos. You are asked by the promoters whether or not the boxing
exhibition shall be subject to amusement tax in the Philippines. What will
your answer be?
a. The boxing exhibition is subject to Philippine amusement tax because
only one of the contenders is a Filipino.
b. The boxing exhibition is subject to Philippine VAT because boxing
involves professional boxers rendering service using physical faculty.
c. The boxing exhibition is not subject to Philippine amusement tax because
one of the contenders is a Filipino, involves world championship and is
promoted by a corporation wholly owned by Filipinos.
d. The boxing exhibition is not subject to Philippine amusement tax if a
special law is passed exempting such exhibition from the tax.
92. (Business Taxes) An individual taxpayer holds shares of stock as investment
which he bought from a publicly-listed company for P500,000. The shares are
listed and traded in the local stock exchange but the corporation is not
compliant with the mandatory minimum public ownership. He sold them for
P750,000. To what tax shall the gain be subject?
a. ½ of 1% percentage tax
b. Capital gains tax
c. Value-added tax
d. Not subject to any tax

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93. An individual taxpayer holds shares of stock as investment which he bought from
a closely-held corporation for P500,000. During the corporation’s initial
public offering in 2022, he sold them for P750,000 as secondary offering. To
what tax shall the transaction be subject?
a. 1/6 of 1% percentage tax
b. Capital gains tax
c. Value-added tax
d. Not subject to percentage tax
94. (Business Taxes) Which of the following is incorrect? The percentage tax is:
a. a tax on a sale of sale of services.
b. imposed on a sale of goods.
c. imposed together with the value-added tax.
d. imposed together with the excise tax.
95. (Business Taxes) It shall be the duty of every stock broker who effected the
sale subject to the tax imposed under Section 127 (A) to collect the tax and
remit the same within:
a. twenty (20) days after the end of the quarter.
b. ten (10) working days after the end of the month.
c. five (5) days from the date of collection.
d. five (5) banking days from the date of collection.
96. (Business Taxes) In 2018, Hope, a dealer in securities, sells P1,500,000 worth
of shares she holds as investment. The shares sold are acquired for P1,600,000
and are listed and traded in the local stock exchange. How much is the business
tax due on the sale?
a. P 12,000 c. P7,500
b. P 9,000 d. None
SITUATIONAL
A domestic common carrier with Certificate of Public Convenience (CPC) has the
following data for the year 2018:
Gross receipts P3,000,000
Cost of services 1,000,000
Operating expenses 500,000
97. Assuming the domestic common carrier is by land, how much is the common carrier’s
tax?
a. P90,000 c. P45,000
98. Assuming the domestic common carrier is by air, VAT-registered, how much is the
Value-Added Tax?
a. P360,000 c. Not subject to VAT
99. Assuming the entity is allowed to transport passenger but does not have a CPC,
how much is the percentage tax, if any?
a. P90,000 c. P45,000
100. (Additions to Tax) X Company has been assessed deficiency income tax of
P1,000,000, exclusive of interest and surcharge, for taxable year 2015. The
tax liability has remained unpaid despite the lapse of June 30, 2017, the
deadline for payment stated in the notice and demand issued by the Commissioner.
Payment was made by the taxpayer only on February 10, 2018. How much is the
total amount due on February 10, 2018?
a. P1,762,962.67 c. P1,491,643.83
b. P1,662,140.76 d. None of the choices
SITUATIONAL
Juan Cruz resides in Bacoor, Cavite while his place of work is in Sampaloc, Manila.
He files his income tax return for 2020 income on September 10, 2021 in Quezon City
because the Revenue District Officer in the place is his college friend. The amount
of tax due is P100,000.

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101. How much will be the surcharge?
a. P50,000 c. P20,000
b. P25,000 d. None
102. How much is the interest on delinquency (148 days)?

a. P8,109.58 c. P4,865.75
b. P8,091.33 d. None
103. How much is the total amount due on September 10, 2007?
a. P158,091.33 c. P133,111.10
b. P154,865.75 d. P125,000.00
104. (Reconciliation) The following data are taken from the Statement of Income and
Expenses of CPL Corporation, domestic corporation, for the current year:
Net income per books P800,000
Capital gains tax on shares of domestic corporation 22,500
Final tax on interest on bank deposit 20,000
Net capital loss 30,000
Dividend from domestic corporation 80,000
Interest on Philippine currency bank deposit 100,000
Capital gain on shares of stock of domestic 150,000
Allowance for bad debts 50,000
Based on the above information, how much is the taxable income?

a. P592,500 c. P420,000
105. (Reconciliation) From the following data, compute the income tax still due from
a domestic corporation engaged in merchandising business. For the calendar
year 2018, the net income per books (after tax) is P850,000, after considering
among others:
Interest income from bank deposit P 5,500

Inter-corporate dividends 5,000
Gain from sale of shares in a domestic corporation 7,000
Net capital loss 2,500
Bad debts written off 6,500
Write-off of inventories lost due to spoilage or expiry 12,000
Depreciation on appraised value of property 15,000
Surcharge and compromise paid in relation to the late filing of 80,000
ITR
Contribution to a government exclusively for public purpose 50,000
Contribution to Government’s priority program in education 10,500
Quarterly income tax payments 65,000
Provision for bad debts 8,000
The net income per books should be reconciled with the provisions of the Tax Code,
meaning, items which are not taxable must be excluded, and items which are not
deductible are to be added back.
How much is the net taxable net income?

a. P1,952,500 c. P1,014,500
b. P1,032,500 d. P1,008,500
DOCUMENTARY STAMP TAXES
106. A tax on documents, instruments, loan agreements, and papers evidencing the
acceptance, assignment, sale or transfer of an obligation, right or property
incident thereto.
a. Documentary stamp tax c. Local tax
b. Excise tax d. Some other taxes
107. Documentary stamp tax is:
a. An excise tax. c. A Local tax
b. An Ad valorem tax d. A percentage tax.

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108. Except as provided by rules and regulations promulgated by the Secretary of
Finance, upon recommendation of the Commissioner, the tax return prescribed in
this Section shall be filed within how many days after the close of the month
when the taxable document was made, signed, issued, accepted, or transferred,
and the tax thereon shall be paid at the same time the aforesaid return is
filed?
109. A real property was sold for P3,495,700. How much is the documentary stamp
tax, if any?
a. P52,440.00 c. P52,420.50
b. P52,425.00 d. None of the choices
110. A stockholder in JMI Corporation sold his shares of stock for P500,000. How
much is the documentary stamp tax, if any?
a. P7,500 c. P3,750
111. Which of the following is not an effect of failure to affix the required DST?
a. An instrument, document or paper which is required by law to be stamped
and which has been signed, issued, accepted or transferred without being
duly stamped, shall not be recorded.
b. An instrument, document or paper or any copy thereof or any record of
transfer of the same which is required by law to be stamped shall not
be admitted or used in evidence in any court until the requisite stamp
or stamps are affixed thereto and cancelled.
c. No notary public or other officer authorized to administer oaths shall
add his jurat or acknowledgment to any document subject to documentary
stamp tax unless the proper documentary stamps are affixed thereto and
cancelled.
d. An instrument, document or paper which is required by law to be stamped
and which has been signed, issued, accepted or transferred without being
duly stamped, shall make the transaction void.
EXCISE TAXES
112. These are taxes on goods manufactured or produced in the Philippines for
domestic sales or consumption or for any other disposition and to things
imported as well as services performed in the Philippine, which tax shall be
in addition to the value-added tax.
a. Excise tax c. Documentary stamp tax
b. Percentage tax d. Local taxes
113. Which of the following articles shall not be subject to specific excise tax?
a. Excise tax on cigarette packed by hand
b. Excise tax on processed gas
c. Excise tax on automobiles
d. Excise tax on domestic or imported coal and coke notwithstanding any
incentives granted in any law or special law
114. Which of the following articles shall not be subject to ad valorem excise tax?
a. Excise tax on cigarette packed by hand
b. Excise tax on non-essential services
c. Excise tax on automobiles
d. Excise tax on alcoholic products
115. To improve her body shape Paz Seksi decided to undergo procedure and sought
the services of Body Beautiful, a clinic operated outside the hospital and
owned by Bello Medical Group, Inc. Body Beautiful charged Ms. Pax Seksi the
amount of P50,000 (inclusive of 12% VAT but exclusive of 5% excise tax) for
the service rendered.
Question 1 – How much is the excise tax?

a. P4,464.42 c. P1,339.28
Question 2 – How much is the VAT?
a. P5,625.00 c. P4,687.50

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Question 3 - How much is the total amount to be collected from Ms. Paz Seksi?
a. P52,500.00 c. P46,877.99
REAL PROPERTY TAX

116. (Real Property Tax) A commercial land located is located in one of the cities
in Metro Manila. Its fair market value is P10,000,000.
Question 1 – How much is the basic real property tax, if any?
a. P150,000 c. P50,000
117. Real Property Tax) An agricultural land is located in the province. Its fair
market value is P2,000,000.
Question 1 – How much is the basic real property tax, if any?
a. P16,000 c. P4,000
SENIOR CITIZENS/PERSONS WITH DISABILITIES
118. (Senior Citizens) Who of the following shall not qualify as senior citizen?
a. Resident Filipino citizen, 60 years old
b. Filipino citizen with dual citizenship, 60 years old, 6 months residency
in the Philippines
c. Resident alien, 65 years old
119. (Senior Citizen/PWD) In the purchase of goods and services which have
promotional discount, the senior citizen or PWD can avail of:
a. the promotional discount or the senior citizen/PWD discount, whichever
is higher
b. the promotional discount or the senior citizen/PWD discount, whichever
is lower
c. the promotional discount only.
d. both the promotional discount and the senior citizen/PWD discount.
120. (Person With Disability) A Company that hires a PWD shall be allowed subject
to certain conditions:
a. Ten percent (10%) of the total amount paid as salaries and wages to
senior citizens as additional deduction.
b. Fifteen percent (15%) of the total amount paid as salaries and wages to
c. Twenty-five percent (25%) of the total amount paid as salaries and wages
to senior citizens as additional deduction.
d. Thirty percent (30%) of the total amount paid as salaries and wages to
121. (Senior Citizen) A Company that hires senior citizen shall be allowed subject
to certain conditions:
a. Ten percent (10%) of the total amount paid as salaries and wages to
b. Fifteen percent (15%) of the total amount paid as salaries and wages to
c. Twenty-five percent (25%) of the total amount paid as salaries and wages
to senior citizens as additional deduction.
d. Thirty percent (30%) of the total amount paid as salaries and wages to
122. How much discount is granted to senior citizens on his purchase of basic and
prime commodities, subject to limitations?
a. 20% c. 10%
b. 15% d. 5%

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BARANGAY MICRO BUSINESS ENTERPRISES (BMBEs)
123. (BMBE) One of the following is not qualified to register as Barangay Micro
Business Enterprise (BMBE).
a. Bakery with total assets not exceeding P3,000,000
b. Motor shop with total assets not exceeding P3,000,000
c. A CPA practitioner with total assets not exceeding P3,000,000
d. Farm producing agricultural products with total assets not exceeding
P3,000,000
124. (BMBE) BMBEs shall be exempt from:

a. Income tax.
b. SSS contribution.
c. Philhealth contribution.
d. None of the choices.
125. An individual is operating a trading business enterprise. He is asking you to
assist him to register his business under the Barangay Micro Business Enterprise
(BMBE) so he can avail of the incentives granted under it. His total assets
including the cash of P300,000 he loaned from a bank amounted to P3,500,000.
The total assets does not include the P500,000 value of the land on which the
particular business entity's office, plant and equipment are situated. Is the
individual qualified?
a. No. Because he is engaged in a trading business which is specifically
excluded from those who can register under BMBE.
b. Yes. Because his total assets excluding the land on which the particular
business entity's office, plant and equipment are situated do not exceed
P3,000,000.
c. No. Because his total assets exceed P3,000,000 excluding the land on which
the particular business entity's office, plant and equipment are situated.
d. Yes. Because trading business is automatically qualified regardless of
the total assets.
DOUBLE TAXATION AGREEMENTS DTAs)

126. Which of the following is not a relief from double taxation?
a. Tax credit
b. Allowance of deduction for foreign taxes
c. Tax treaties
d. Not reporting income or transactions in foreign countries
127. First statement: To avail of tax treaty benefits the taxpayer must secure a
ruling from the Bureau of Internal Revenue (BIR) through the International Tax
Affairs Division (ITAD) that he may avail himself of preferential rates under
existing tax treaties.
Second Statement: In case of conflict between the provisions of a tax treaty
and domestic law, the provisions of the tax treaty generally prevail over the
provisions of the domestic law.
128. This Model provides a means for settling on a uniform basis the most common
problems that arise in the field of international double taxation.
a. OECD Model Tax Convention
b. UN Model Double Taxation Convention
c. United States Model Income Tax Convention
REGISTERED BUSINESS ENTERPRISES
129. First statement: Registered Business Enterprises (RBEs) which are categorized
as Domestic Market Enterprises (DME) are entitled to VAT zero-rating on local
purchases.
Second statement: Sale of goods or services to a registered domestic market
enterprise shall be exempt VAT.
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct

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130. First statement: An ECOZONE may contain any or all of the following: industrial
estates (IEs), export processing zones (EPZ), free trade zones and tourist
/recreational centers.
Second statement: For purposes of the income tax holiday, it shall be the
date specified in the Registration Agreement or the date when the particular
ECOZONE export enterprise actually begins production of the registered
product for commercial purposes, whichever comes first, irrespective of
phases or modules or schedule of development.
131. A tax rate equivalent to 5% effective July 1, 2020 based on gross income, in
lieu of all national and local taxes can be availed by:
a. export enterprise.
b. domestic market enterprise with a minimum investment capital of
P500,000,000.00.
c. domestic market enterprise under the Strategic Investment Priority Plan
engaged in activities that are classified as critical.
d. none of the choices.
132. Export enterprise located in National Capital Region (NCR) belonging to Tier
I can avail of:
A. Income Tax Holiday of 4 years
B. Special corporate income rate or enhanced deduction for 10 years
a. A only c. Both A and B
b. B only d. Neither A nor B
133. Critical domestic market located in Metro areas (NCR adjacent) under Tier II
can avail of:
A – Income tax holiday for 6 years

B – E n h a n c e d d e d u c t i o n f o r 5 years
a. A only c. Both A and B
b. B only d. Neither A nor B
134. A PEZA-registered enterprise has the following data for the current year:
Gross revenue P100,000,000
Cost of services 50,000,000
Operating expenses 10,000,000
Other income 5,000,000
How much is the tax due to the BIR and to the local government assuming it
is subject to 5% SCIT?
a. BIR- P2,750,000; LGU – Zero

b. BIR – P1,650,000; LGU – P1,100,000
c. BIR – Zero; LGU – P2,750,000
d. BIR – P1,375,00; LGU – P1,375,000
135. First Statement: The VAT exemption of RBEs on importation and VAT zero-rating
on local purchases shall only apply to goods and services directly and
exclusively used in the registered project or activity of export enterprises,
during the period of registration of the said registered project or activity
with the concerned Investment Promotion Agency (IPA).
Second statement: That excess input taxes attributable to zero-rated sales by
VAT-registered RBEs, may at the RBEs option, be refunded or applied for a tax
credit, subject to the guidelines provided under Revenue Regulations No. 13-
2018, as amended.

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136. Statement I - The DME under the 5% Gross Income Tax (GIT) or Special Corporate
Income Tax (SCIT) regime, registered as a VAT exempt entity, shall treat its
revenues as VAT exempt.
Statement II - If the seller is VAT-registered while enjoying ITH, the sale of

goods and services to another registered export enterprise is subject to VAT
at zero-rate, provided, the goods and services are directly and exclusively
used in the latter's registered project or activity.
Statement III - If the seller is enjoying the 5% GIT incentive, the sale of
goods and services, such as manufactured, assembled or processed product or
IT/BPO services to another registered export enterprise that will form part
of the final export product or export service of the latter, of at least
seventy (70%) of its total production or output, shall be VAT-exempt.
a. All statements are correct
b. None of the statements is correct
c. Only I and II and correct
d. Only III is correct
END
THOT: “When seeking God’s best for us becomes our focus- contentment, joy and peace
replace anxiety.” - Tamthewise

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ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY

CPA Review Batch 44  October 2022 CPALE  Pre-Week Summary Lecture

TAXATION A. TAMAYO  C. LIM  K. MANUEL

TAX PREWEEK LECTURE

3. (Phil. CPA) Which of the following statements is not correct?

7. First statement: A violation of inherent limitations can amount to taking of

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9. (Phil. CPA) Which of the following is not an example of excise tax?

14. (Tax Remedies) If the protest is denied, in whole or in part, by the

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24. How much is the taxable income of the partnership?

25. How much is the income tax liability of the partnership?

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35. How much is the income tax due?

36. How much is the percentage tax?

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a. exempt from income tax.

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How much is the tax due?

49. How much is the minimum corporate income tax

50. How much is the income tax due?

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57. (Transfer Taxes) An unmarried decedent died leaving properties he inherited 4

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67. The total ordinary deductions are:

68. The total special deductions are:

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70. The estate tax due is:

75. (Business Taxes) This refers to transactions in certain goods, properties, or

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88. Compute the deferred input tax as of March 31, 2022?

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102. How much is the interest on delinquency (148 days)?

Based on the above information, how much is the taxable income?

Interest income from bank deposit P 5,500

How much is the net taxable net income?

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Question 1 – How much is the excise tax?

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REAL PROPERTY TAX

SENIOR CITIZENS/PERSONS WITH DISABILITIES

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124. (BMBE) BMBEs shall be exempt from:

DOUBLE TAXATION AGREEMENTS DTAs)

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A – Income tax holiday for 6 years

a. BIR- P2,750,000; LGU – Zero

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Statement II - If the seller is VAT-registered while enjoying ITH, the sale of

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