1.

For income tax purposes, any person or corporation that holds in trust an estate of another person or persons
A. Beneficiary
B. Fiduciary
C. Legatee
D. Devisee

2. A citizen of the Philippines who works and derives income abroad is a resident citizen if he stayed
outside the Philippines
A. for less than 180 days
B. for more than 180 days
C. for 183 days or more
D. for less than 183 Days

3. A citizen of a foreign country is considered a non-resident alien engaged in business in the Philippines
if he stayed inside the Philippines
A. for 183 days or more
B. for less than 183 days
C. for more than 180 days
D. for less than 180 days

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

A. Is an individual whose residence is within the Philippines
B. Is an individual whose father or mother is an alien who is engage in business in the
Philippines
C. Is an individual who is naturalized in accordance with law
D. Shall come to the Phil. and stay therein for an aggregate period of more than 180 days during a
calendar year

5. Tax as distinguished from license fee:

A. Non-payment does not necessarily render the business illegal
B. A regulatory measure
C. Imposed in the exercise of police power
D. Limited to cover cost of regulation

6. Value-added tax Is an example of:

A. Graduated Tax
B. Progressive Tax
C. Regressive Tax
D. Proportional Tax

A domestic corp in it’s fourth year of operation had:

Gross profit from sales 3,000,000
Expenses of operations 1,000,000
Quarterly Income taxes paid 500,000
Dividend from domestic corporation 200,000
Interest on bank deposit, MBTC 100,000
Gain on sale of Capital Assets:
Land and building outside the PH on a selling
price of 10,000,000 and cost of 5,000,000 5,000,000
Shares of stock of a domestic corp, traded
directly to the buyer on a selling price of
350,000 and cost of 100,000 250,000

7. How much is the Final Tax due?

A. 20,000 B. 30,000 C. 40,000 D.0
8. How much is the total Capital Gains tax due?
A. 937,500 B. 37,500 C. 600,000 D. 637,500
9. How much is the income tax payable?
A. 100,000 B. 1,600,000 C. 2,100,000 D. 60,000
 Year 5 Year 6 Year 7 Year 8 Year 9
MCIT 400,000 100,000 300,000 200,000 100,000
RCIT 100,000 200,000 200,000 100,000 400,000

10. How much is the income tax due in Year 8?

A, 150,000 B. 100,000 C. 200,000 D. 0
11. How much is the income tax due in Year 9?
A, 150,000 B. 100,000 C. 200,000 D. 0

12. Under this system, the amount of income tax withheld by the withholding agent is constituted as full and
final payment of the income tax due from the payee
A. Creditable Withholding Tax
B. Final Withholding Tax
C. Global Tax System
D. Schedular Tax system

13, The term “public” means borrowing or having stockholders from how many individuals or corporate lenders
at any one time?
A. 25 or more
B. 20 or more
C. 20 or less
D. 10 or more

14. Which of the following passive income from Philippine sources is exempt when received by nonresident
aliens and non-resident citizens?
A. Royalties, in general
B. Yield or any other monetary benefit from deposit substitute
C. Interest income received from a depositary bank under expanded foreign currency deposit system
D. Other winnings

15. Cash and/or property dividends shall be subject to 10% final withholding tax if actually or constructively
received from any of the following except:
A. domestic corporation or from joint stock companies.
B. insurance or mutual fund companies
C. regional operating headquarters of multinationals
D. a nonresident foreign corporation.

16. Share of an individual in the distributable net income after tax shall be subject to 10% final tax if received
from any of the following, except:
A. business partnership
B. general professional partnership
C. association
D. joint account, joint ventures or consortium

17. Which of the following passive income is exempt from tax when received by resident or citizen and
nonresident aliens engaged in trade or business in the Philippines but subject to 25% final tax when received by
nonresident aliens not engaged in trade or business?
A. Prizes of more than PlO,OOO
B. Interest income from long-term deposit or instrument evidenced by certificates by BSP
C. Yield or any other monetary benefits from bank deposits or any similar arrangements
D. Other Winnings

18. Dividends from a domestic Corp and or share in the net income of a taxable partnership received by a
citizen during the year is subject to a final tax of?
A. Exempt
B. 30%
C. 20%
D. 10%
The Bicol School of Business and Arts is a private educational institution recognized by the government. The
following are the financial data for its fiscal year ending June 30, 2019

Tuition Fees 12,800,000

Miscellaneous fees 1,800,000
Interest on bank deposits 12,000
Rent Income of school facilities
to outsiders 350,000
Salary and bonuses, all personnel 7,500,000
Other OPEX 3,500,000
Repayment of Loan 400,000
Quarterly income tax paid 48,000

A building was constructed on April 2, 2019 at a cost 2,000,000 with a depreciable life of 50 years.

19. Assuming the school opted to expense the cost of the new building, the income tax payable of the the school
for the year ended June 30, 2019 is
A. 343,000
B. 147,000
C. 585,000
D. 537,000
20. Assuming the school opted to capitalize the cost of the new building, the income tax payable of the the
school for the year ended June 30, 2019 is
A. 346,000
B. 147,000
C. 1,128,000
D. 1,203,200

21. For excise or privilege tax, the situs of taxation is the place where the:
A. Act is performed
B. Occupation is acquired
C. Act might occur
D. Occupation might be acquired

22. Although the power of taxation is basically legislative in character, it is not the function of Congress to
A. Fix with certainty the amount of taxes
B. Collect the tax levied under the law
C. Identify who would collect the tax
D. Determine who should be subject to tax

23. Which statements does not properly refer to a general professional partnership? A GPP is one
A. Registered as such with SEC and the BIR
B. That is composed of individuals who exercise a common profession
C. That exclusively derives income from the practice of common profession
D. That derives professional and rental income from property owned by it.

24. The Department of Finance thru its officers entered into a contract with foreign investors granting them
exemptions in all forms of taxes to encourage investments in the Philippines. The contract is
A. Void, unless the President Ratifies
B. Void, because the power to grant tax exemption is vested in Congress
C. Valid, if the President has authorized the officers to enter into such contract
D. Valid, because the purpose is to promote public welfare.

25. Which of the following statements is correct?

A. Proprietary Educational Institutions and Hospitals shall pay a tax of 10% on their taxable income if
the gross income from unrelated trade, business or other activity is less than 50% of its total gross
income.
B. GOCC’s, agencies or instrumentalities shall pay a tax upon their taxable income as are imposed upon
corporations or associations engaged in a similar business, industry or activity
C. Dividends received by a domestic corp from another corporation shall not be subject
to tax.
 D. Any income of non-residents, whether individuals or corporations from transactions with depositary
banks under the expanded foreign currency deposit system shall he exempt from income tax.
Erika Company a domestic Corp had missing files, she ask of you to compute for her taxes, the following are
the available data:
Accounts Receivable, beg 1,234,055
Accounts Receivable, end 1,052,243
Accounts Payable, beg 286,924
Accounts Payable, end 737,824
Inventory, beg 815,386
Inventory, end 988,874
Freight In 40,000

Actual amount collected on accounts receivable 670,000

Actual amount paid to suppliers 540,000
Cash Sales 1,235,350
Other Operating Expenses 670,000

26. How much is the gross income?

A. 865,124 B. 850,000 C. 866,126 D. 867,125

27. How much is the taxable net income?

A. 195,124 B. 180,000 C. 196,126 D 197,125

28. How much is the Income tax payable?

A. 58,537.2 B. 54,000 C. 58,837.8 D. 59,137.5

29. When Dina Marthday died, she left real properties to her husband and three small children. The husband
administered the property, the rental income of which he accumulated and later used in buying a passenger bus.
Are the income of the inherited properties and the bus subject to tax?
Inherited Property Bus
A. Yes Yes
B. Yes No
C. No Yes
D. No No

Bimbam and Company a business partnership, had the following data of income and expenses:
Gross Income 750,000
Expenses 200,000
Dividend from a domestic Corp. 75,000
Interest on bank deposit(gross) 10,000

Partners Bim and Bam share profit and lossess in the ratio of 55% nad 45% respectively

30. The income tax payable by Bimbam and Company is

A. 218,750
B. 187,500
C. 165,000
D. 192,500

31. The final taxes on the respective share of Bim in the partnership income is
A. 25,740
B. 31,157,50
C. 24,227.5
D.0

32 The final taxes on the respective share of Bam the partnership income is
A. 25,492
B. 21,060
C. 0
D. 19,822.5
Panday and Pandak are partners in the following partnership:

Partnership Gross Income Expenses Withdrawal, Panday Withdrawal, Pandak

Professional Partnership A 400,000 250,000 60,000 40,000
Professional Partnership B 300,000 500,000 0 0
Business Partnership A 500,000 200,000 40,000 20,000
Business Partnership B 200,000 300,000 0 0

Panday holds 60% interest while 40% belongs to Pandak.

The partnership remitted to the BIR the corresponding withholding taxes on the the withdrawals of panday and
pandak.

The partner’s personal income and expenses are shown below:

Panday Pandak
Gross income from sole prop. 800,000 900,000
Business Expenses 250,000 370,000
Other Income:
Rent, net of 5% WT 57,000 0
Royaly 0 50,000
Dividend from Domestic co. 30,000 50,000

33. The Income tax payable of Panday is

A. 66,000
B. 65,000
C. 72,000
D. 70,000
34. The Income tax payable of Pandak is
A. 57,500
B. 53,500
C. 54,500
D. 56,000
35. The final taxes of Panday is
A. 3,000
B. 4,000
C. 7,000
D. 22,000
36. The final taxes of Pandak is
A. 17,000
B. 14,600
C. 22,200
D. 15,200

37. Double taxation in its general sense means taxing the same subject twice during the same taxing period. In
this sense, double taxation
A. Violates substantive due process
B. Does not violate substantive due process
C. Violates the right to equal protection
D. Does not violate the right to equal protection.

38. Tinong died on January 1, 2019. He left a gross estate with a cost of 4,000,000 but valued at 3,500,000
under an administrator. During the year, the gross income derived from the business of the estate was 900,000
while the related expenses amounted to 150,000. Beneficiaries Felipe and Khadafi were given 100,000 each.
How much is the taxable income of the estate?
A. 500,000
B. 550,000
C. 0
D. 600,000
39. The following statements about fringe benefits are false. Which is the exception
A. The amount of de minimis benefits given to rank and file employees are not subject to fringe benefits tax.
B. The amount of de minimis benefits given to managerial employees are subject to fringe benefits tax
C. The equivalent value of free meals and living quarters which are given to an employee for the convenience of
the employer are considered as fringe benefits subject to fringe benefits tax.
D. The fringe benefits tax is not deductible from gross income in computing the taxable income of the
employer.

40. One of the following is a 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 its is violative of the equal protection
clause.
C. Absence of any of the elements of direct double taxation makes it indirect duplicate taxation.
D. A 20% Final withholding tax on interest income on bank deposits and a 5% Gross receipt tax (a business tax)
on banks is a direct duplicate taxation

41. In May 2019, non-stock, non-profit university provided a 3-day vacation trip to Boracay Island to the
university Executive Vice-President. The total expenses incurred by the school was 20,000. The Fringe benefit
tax is
A.10,769
B. 9,412
C. 10.303
D. 5,500

42. XYX Corp. assigned Mr. Passo one of its employee in the head office in Manila to manage their branch
office in Dagupan. The company provided for the residential house of the manager paying a monthly rental of
34,000
The monthly fringe benefit tax thereon is
A. 9,124
B. 9,154
C. 8,000
D. 7,899

43. Xtra Corp. Furnished and granted the use of its condominium unit to its Executive Vice-Preisdent. The fair
market value of the property is 4,800,000 while the acquisition cost is 3,000,000.
The monthly fringe benefit tax due thereon is
A. 4,706
B, 56,472
C. 5,385
D. 64,615.38

44. The corporation gave a brand new car to its sales manager which he uses for the daily operation. The fringe
benefit given is
A. Subject to fringe benefit tax based on the provisions of the tax code
B. Subject to fringe benefit tax because it was given to a rank-file employee
C. Exempt from the fringe benefit tax because it is required by the nature of or necessary to the trade or
business of the employer
D. Exempt from fringe benefit tax because it was given for the convenience of the employee.

45. The following constitutes double taxation except one

A. Both taxes are imposed in the same amount
B. Both taxes are levied for the same purpose
C. Both taxes are imposed by the same taxing authority
D. Both taxes are imposed upon the same person

46. Transfer of the tax burden by one on whom the tax is assessed to another
A. Shifting
B. Capitalization
C. Transformation
D. Tax exemption
47. Which of the following facts/pertains to tax avoidance?
I. After studying his tax problems, Alicante decided to withdraw his bank deposit and to buy tax
exempt securities
II. B who wishes to avoid the payment of taxes on assessable on the transaction made it appear on the
deed of sale that the selling price was only 200,000 although it was actually 300,000
III. Refraining from engaging in activities subject to tax
IV. Clavillas Insurance Corp. sold its office building to Eva for P100 million who in turn sold the same
Property to Royal Match, Inc. for P200 million. These two transactions were evidenced by Deed of
absolute sale notarized on the same day by the same notary public.
A. I only
B. I and III
C. I and IV
D. I, III and IV

48. Mr. Arai Nakurot, a Japanese engineer residing in Tokyo, .Japan, was contracted by a domestic corp to
assemble in the Philippines an equipment It bought in Japan. He started the work in Japan and spent 10 days
there. The assembling job was completed in the Philippines for another 20 days. He was paid 300,000 for the
job. How much is the income considered within the Philippines?
A. 300,000
B. 200,000
C. 0
D. 100,000

49. TGT & Co. is a general partnership in trade and on its 5th year of operations. During the current taxable
year, it had a gross profit from sales and business expenses of 2,000,000 and 1,000,000 respectively. T, G and T
share equally in the profits and losses of the partnership. The income tax due of the partnership is
A. 40,000
B. 300,000
C. 640,000
D. 0

50. Using the data on no.49, the income tax payable of the partners as a consequence of being a partner in the
Partnership is:
A. 0
B. 68,000
C. 77,000
D. 70,000

51. TG partnership reported for a year net profit from trading amounting to 800,000. The other income included
interest income of 8,000 net of final tax and dividend income from domestic corp. of 20,000. Assuming T and G
share profits and loses equally, how much is the final withholding tax on the distributive share of T in the
earnings of that partnership.
A. 28,700
B. 28,600
C. 28,000
D. 29,400

In 2018, Louie and Floyd are partners in the following partnership:

Business Partnership GPP
Gross Income 800,000 500,000
Deductible expenses 420,000 375,000

Personal Income and Expenses Louie Floyd

Gross Income 325,000 380,000
Deductible Expenses 117,000 205,000
Dividend from domestic corp. 25,000 30,000
Dividend from foreign corp. 12,000 8,250
Prize, Supermarket raffle 15,000 7,500
Royalty, Books 10,000 18,000
Additional Information:
Partners agreed to share partnership income and losses as follows: Louie= 40% and Floyd 60%.

52. Determine the income tax payable of the:

Business Partnership GPP
A. 114,000 Exempt
B. 114,000 114,000
C. Exempt 114,000
D. 380,000 125,000
53. Determine the income tax payable of:
Louie Floyd
A. 1,500 5,650
B. 5,650 1,500
C. 4,000 3,150
D. 1,500 4,000

54. Which statement below expresses lifeblood theory?

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

55. Which statement is correct? A non-stock non-profit charitable association that sells its idle agricultural
property is
A. Not required to file an income tax return nor pay income taxes
B. Required to pay the 6% Capital gains tax
C. Mandated to pay 30% regular corporate income tax on the gain of sale
D. Required to withhold the applicable expanded withholding taxes.

56. Passive Income includes income derived from an activity in which the earner does not have any substantial
participation. This type of income is
A. Usually subject to final tax
B. Exempt from income taxation
C. Taxable only if earned by a citizen
D. Included in the income tax return

ABC Corp had the ff:

Gross Income 8,000,000
Cost of Sales 5,000,000
OPEX 2,000,000
Royalty Income 10,000
Bank Interest 100,000
Dividend fr. Domestic Co. 100,000

57. The final tax due is

A. 322,000
B. 300,000
C. 42,000
D. 22,000

58. How much is IAET?

A. 118,800
B. 88,800
C. 117,800
D. 87,800

59. Idol brands Inc. a domestic corp is in the business of owning, purchasing, licensing and acquiring
trademarks and other intellectual property rights. How should its royalty fees be taxed?
A. They should be treated as passive income subject to 20% final tax.
B. They should be included in the corporations ITR and subject to 30% RCIT vs MCIT.
C. Half should be subject to final tax and half to RCIT vs MCIT
D. None of the above.

60. In order to raise revenue for the repair and maintenance of the newly constructed City hall of Legazpi, The
City Mayor ordered the collection of PHP 1 called “escalator tax” every time a person rides any of the high tech
escalators in the City hall during the hours of 7:30AM to 9:30AM and 4:00PM to 6:00PM. What is the status of
the escalator tax?
A. Valid, this is a revenue raising power of the local government unit
B. Void, cities have no power to impose income tax.
C. Valid, this an exercise of police power through taxation
D. Void, the imposition of tax, fee or charge shall be exercised by the Sanggunian Bayan of the local
government unit through an appropriate ordinance.

61. Zygomite Minerals Inc., a corporation registered and holding office in Australia, not operating in the
Philippines may be subject to Philippine Income taxation on
A. Gains derived from sale in Australia of an ore crusher it bought from Philippines
B. Gains it derived from sale in Australia of shares of stock of Philex Mining Corp. a Philippine Corp.
C. Dividends earned from investment in a foreign corporation that derived 40% of its gross income from PH.
D. Interest derived from its dollar deposit in a Philippine Bank under the Expanded Foreign Currency Deposit
Sytem.

62. Double taxation in its general sense means taxing the same subject twice during the same taxing period. In
this sense, double taxation
A. Violates substantive due process
B. Does not violate substantive due process
C. Violates the right to equal protection
D. Does not violate the right to equal protection.

63. An annual tax of 1,000 was Imposed upon all residents of the Philippines, who are above 21 years of age,
wth a gross income of more than 250,000 whether or not they send their children to public school, for purpose
of raising funds in order to improve public school buildings. The tax is:
A. Violative of the equal protection clause
B. Confiscatory
C. For Public purpose
D. Contradicts the inherent limitation

64. Iligan Inc. became subject to MCIT in 2012, MCIT and RCIT data through the years were
(amount in thousands)
2012 2013 2014 2015 2016
MCIT 400 620 200 350 350
RCIT 0 500 300 200 400

How much is the income tax payable in 2016?

A. 350
B. 400
C. 130
D. 0

65. A corporation which became subject to MCIT in 2015 had the following statement of income:
2015 2016
Gross Income 300,000 500,000
Business Expenses 420,000 250,000

Compute for the income tax payable in 2016

A. 39,000
B. 10,000
C. 6,000
D. 33,000
Aleppo Corporation on its fifth year of business operation when it was assessed by the BIR had the ff:

Gross Income 2,000,000

Business Expenses 1,400,000
NOLCO prior years 500,000
Dividend Income-domestic 30,000
Interest Income from bank, gross 50,000
Gain on sale of domestic shares directly through buyer 200,000
Gain on sale of land classified as capital asset
(Selling Price= 2,000,000; Fair Value= 2,500,000) 500,000
Dividends Declared 100,000
Appropriation for plan expansion 200,000

66. How much is the net taxable income?

A. 600,000 B. 2,000,000 C. 100,000 D. 1,500,000

67. How much is the income tax due?

A. 30,000 B. 20,000 C. 0 D. 40,000

68. How much is final tax due?

A. 15,000 B. 5,000 C. 20,000 D. 10,000

69. How much is the total capital gains tax due?

A. 180,000 B. 170,000 C. 100,000 D. 0

70. How much is the Improperly Accumulated Earnings Tax?

A. 84,000 B. 85,000 C. 86,000 D. 86,500