ReSA B45 TAX Final PB Exam Questions, Answers & Solutions

ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY
CPA Review Batch 45  May 2023 CPALE  23 April 2023  8:00 - 11:00 AM
TAXATION FINAL PRE-BOARD EXAMINATION
INSTRUCTIONS: Select the correct answer for each of the questions. Mark only one
answer for each item by shading the box corresponding to the letter of your choice on
the answer sheet provided. STRICTLY NO ERASURES ALLOWED. Use pencil no. 2 only.
1. 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. The basic principle of taxation, where, “Taxes must be based on the taxpayer’s
ability to pay” is called:
a. equality in taxation. c. theoretical justice.
b. ability to pay theory. d. equity in taxation.
3. 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. 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.
5. The principle of separation of powers ordains that each of the three branches of
the government has exclusive cognizance of and is supreme in matters falling within
its own constitutionally allocated sphere.
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.
6. Which of the following is not an element of double taxation?
a. Two taxes c. Same year
b. Same subject matter d. Same amount
7. Which is not an essential characteristic of tax?
a. Unlimited as to amount c. Proportionate in character
b. Payable in money d. Regular payment
8. Statement 1: The value-added tax is a property tax.
Statement 2: The estate tax is a direct tax.
a. The two statements are correct.
b. The two statements are wrong.
c. Statement 1 is correct while statement 2 is wrong.
d. Statement 1 is wrong while statement 2 is correct.
9. Mr. Bill Morgan, a Canadian citizen and a resident of Scarborough, Ontario, sends a gift
check of $20,000 to his future daughter-in-law who is to be married to his only son in the
Philippines. Is the donation subject to Philippine donor’s taxes?
a. Yes, but only up to extent that exceeds the allowable P250,000.00 exemption for
donations.
b. Yes. There is no showing in the problem that the marriage actually took place within
one (1) year from the date of the donation
c. No. The donor is a non-resident alien hence he is not subject to the Philippine donor’s
tax law.
d. No. The donation took place outside the Philippines hence not subject to the Philippine
donor’s tax law.
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TAXATION
ReSA Batch 45 – May 2023 CPALE Batch
23 April 2023  8:00 AM to 11:00 AM TAX Final Pre-Board Exam
10. Transfer tax is a tax imposed on the privilege to transfer property ownership
a. through a will.
b. mortis causa.
c. inter vivos.
d. gratuitously.
11. The NIRC of 1997 imposes different kinds of taxes on dispositions of property. There are
VAT, excise taxes, estate taxes, donor’s taxes, etc. Which among the following transactions
would be subject to a transfer tax?
a. Sales of articles that are exempt from the VAT.
b. Sale of cigars and cigarettes by a wholesaler.
c. Sale of an automobile for less than an adequate and full consideration.
d. Sale of shares of stock that are not listed and traded at the stock exchange.
12. Mr. Nat Tigok, Filipino citizen, died abroad leaving the following properties: house and lot
in Texas, USA; shares of stock in San Miguel Corporation and PHILEX, both local companies;
bank deposits in New York City and in the Bank of the Philippine Islands in Makati; a Toyota
Camry sedan registered in the name of his son aged 21 years. He was buried in Manila and
expenses were incurred to bring the remains home and for his funeral. Which among the above
properties should be excluded from his estate tax return?
a. The house and lot in Texas, USA
b. The shares of stock in San Miguel Corporation
c. The bank deposits in New York City
d. The Toyota Camry sedan
SITUATIONAL
The following donations are made to relatives and strangers:
January 30, 2021 P2,000,000
March 30, 2021 1,000,000
August 15, 2021 500,000
September 20, 2022 600,000
13. How much is the donor’s tax payable on the gift made on January 30, 2021?
a. P 204,000 c. P 80,000
b. P 105,000 d. P 50,000
14. How much is the donor’s tax payable on the gift made on March 30, 2021?
a. P 204,000 c. P 60,000
b. P 124,000 d. P 50,000
15. How much is the donor’s tax payable on the gift made on August 15, 2021?
a. P 204,000 c. P 80,000
b. P 124,000 d. P 30,000
16. How much is the donor’s tax payable on the gift made on September 20, 2022?
a. P36,000 c. P21,000
b. P30,000 d. P20,000
SITUATONAL
The decedent is a resident alien, married, with the following data:
Conjugal properties
Real and personal properties, outside the Philippines P14,000,000
Family home, Philippines 30,000,000
Exclusive properties, Philippines 5,000,000
Conjugal deductions 2,000,000
17. The total gross estate is:
a. P49,000,000 c. P35,000,000
b. P34,000,000 d. P20,000,000
18. The special deductions are:
a. P40,000,000 c. P15,000,000
b. P30,000,000 d. P10,000,000
19. The taxable net estate is:
a. P 47,000,000 c. P32,000,000
b. P37,000,000 d. P11,000,000
20. The estate tax due is:
a. P2,820,000 c. P1,920,000
b. P2,220,000 d. P 660,000

TAXATION
21. Who among the following individual taxpayers is not required to file and income
tax return?
a. A partner who received his share in the profits of a taxable partnership.
b. A proprietor of a business who suffered a net loss during the taxable year.
c. A teacher who is employed in two (2) different schools.
d. An author who receives royalty form his books published in Japan.
22. The surcharge of 50% on the amount due shall be imposed where there is:
a. failure to file any return and pay the tax due thereon.
b. filing of return with an internal revenue officer other than those with
whom the return is required to be filed.
c. failure to pay the deficiency tax on time as indicated in the notice of
assessment.
d. failure to file a return on time due to willful neglect.
23. Who files the income tax return, and pays the tax thereon, on income derived by an
estate that is under judicial administration?
a. Executor or administrator
b. Any of the heirs
c. Either a or b
d. Neither a not b
24. Ken and Ian inherited a piece of agricultural land from their parents. The last
will and testament of the decedent provided that the said property shall not be
partitioned and should remain jointly owned by the siblings for a period of 20
years. What organization is deemed to exist for income tax purposes?
a. Corporation c. Co-ownership
b. Unregistered partnership d. Trust
25. Nippon Corporation a non-resident corporation organized under and by virtue of the
laws of Japan, deposited US$4,000,000 at Bank of Philippines Islands, Makati City.
The interest income from the said deposit shall be subject to:
a. 25% final withholding tax
b. 20% final withholding tax
c. 15% final withholding tax
d. 0% final withholding tax
26. The “tax sparing principle” which entitles the taxpayer of a preferential tax rate
of only 15% on the dividends received from a domestic corporation may be applied
to:
a. domestic corporation
b. resident foreign corporation
c. non-resident foreign corporation
d. non-corporate taxpayers
SITUATIONAL
An employee of a private corporation received the following de minimis benefits during
the taxable year 2022:
Monetized unused vacation leaves (10 days x P500) P5,000
Uniform allowance for the year 8,000
Laundry allowance (12 x P300) 3,600
Rice subsidy (12 x 2,500) 30,000
Actual medical benefits 12,000
Benefits received by an employee by virtue of a
collective bargaining (CBA) and productivity
incentive schemes 15,000
Payroll record also revealed the following:
Basic salary (P40,000 x 12) 480,000
13th month pay 40,000
Christmas bonus 30,000
27. How much is the taxable 13th month and other benefits?
a. P95,000 c. P5,000
b. P90,000 d. None of the choices
28. How much is the tax payable (overpayment)?
a. P73,750 c. P50,000
b. P51,250 d. None of the choices

TAXATION
29. The records revealed the following taxes and fees incurred by a practicing CPA
during the taxable year 2022:
Professional tax receipt (PTR) for accounting practice P 600
Car registration (60% used in practice) 3,000
Depreciation of car 75,000
Gasoline and oil of car 30,000
Income tax 12,000
Interest – late payment of income tax 1,500
Surcharge – late of payment of income tax 2,000
Donor’s tax 5,000
Special assessment 7,500
Real property tax on residential house 4,000
The total deductible amount for the taxable year was:
a. P110,100 c. P66,900
b. P 68,000 d. P65,400
30. Which of the following revenue constitutes the “Gross Philippine Billings” of a
resident foreign corporation operating as an international air carrier?
a. Revenue on flight from the United States to the Philippines, tickets sold in
the Philippines
b. Revenue on flight from the Philippines to Japan, tickets sold in Japan
c. Revenue on flight from Hongkong to South Korea (flight originated from the
Philippines with transshipment at Hongkong), tickets sold in the Philippines
d. Revenue on a return flight from Singapore to the Philippines, round-trip
ticket sold in the Philippines
31. A private non-profit hospital, has gross receipts of P15,000,000 with a cost of
P6,000,000 and allowable deductions of P3,250,000 from related activities, while
for its unrelated activities, it incurred P5,000,000 and P2,000,000 as cost of
sales and allowable deductions, respectively with a gross sales of P18,000,000 for
CY 2021.
How much is the tax due?
a. P4,187,500 c. P1,675,000
b. P3,350,000 d. P 167,500
SITUATIONAL
AST Corporation is registered as a Regional Operating Headquarters (ROHQ) since 2015.
For taxable years 2020 to 2023, its operations showed the following results:
2020 2021 2022 2023
Gross receipts P75,000,000.00 P120,000,000.00 P130,000,000.00 P75,000,000.00
Cost of services 41,250,000.00 66,000,000.00 71,500,000.00 41,250,000.00
Gross income 33,750,000.00 54,000,000.00 58,500,000.00 33,750,000.00
Less: Allowable
deductions 33,625,000.00 41,200,000.00 42,550,000.00 35,125,000.00
Net taxable
income P 125,000.00 P12,800,000.00 P15,950,000.00 (P1,375,000.00)
32. How much is the minimum corporate income tax (MCIT) in 2020
a. P1,500,000 c. None, not applicable
b. P 675,000 d. None of the choices
33. How much is the minimum corporate income tax (MCIT) in 2022?
a. P2,600,000 c. P585,000
b. P1,170,000 d. None, not applicable
34. How much is the tax due in 2023?
a. P1,500,000 c. P506,250
b. P 675,000 d. P337,500
35. 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
36. First statement: The law on prescription, being a remedial measure, should be
liberally construed in order to afford protection against harassment.
Second statement: The exceptions to the law on prescription should be strictly
construed.
a. Both statements are correct. c. Only the first statement is correct.
b. Both statements are incorrect. d. Only the second statement is correct.

TAXATION
37. 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
38. The Commissioner of Internal Revenue has the authority to do all of the following
except:
a. compromise the payment of any internal revenue tax.
b. cancel or abate tax liability.
c. credit or refund tax.
d. review the decisions of the Court of Tax Appeals.
39. The offer to compromise based on financial incapacity may be accepted upon showing
the following, except when:
a. the corporation ceases operation or is already dissolved.
b. the taxpayer is suffering from surplus or earnings deficit resulting to
impairment in the original capital by 50%.
c. the taxpayer is a compensation income earner with no other source of income
and the family’s gross monthly compensation income does not exceed P10,500,
if single, or P21,000, if married.
d. the taxpayer does not waive in writing his privilege of the secrecy of bank
deposits.
40. Any residue over and above what is required to pay the entire claim, including
expenses, shall be:
a. returned to the owner of the property sold.
b. remitted to the Revenue District Officer.
c. remitted to the Regional District Officer.
d. reverted to the general fund.
41. An Internal Revenue Officer is allowed only how many days from the date of receipt
of an letter of authority 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
42. A taxpayer filed her income tax return for 2000 on April 15, 2001 and paid the tax
of P12,000. Upon audit of the BIR, an assessment notice was issued on May 2, 2003
requiring the taxpayer to pay a deficiency tax of P50,000 not later than July 15,
2003. The taxpayer may:
a. go to the Supreme Court if the issue involved is purely a question of the law.
b. ignore the assessment as the date of collection is beyond three (3) years as
the taxable year covers 2000.
c. request for an extension of time to pay the deficiency income tax.
d. go to the Court of Tax Appeals to appeal the assessment made by the BIR
43. K imported, not VAT-registered imported articles whose customs duties were based
on their volume. Total landed cost was determined to be P5,000,000 and excise taxes
on the said importation amounted to P1,000,000. He sold these articles to
Registered Business Enterprise (RBE). How much is the VAT payable on the
importation?
a. P960,000 c. P800,000
b. P720,000 d. None, importer is not VAT-registered
44. Using the same data in the preceding number, how much is the VAT on sale to an
RBE?
a. P960,000 c. P800.000
b. P720,000 d. Zero, sale to RBE is zero-rated
45. Where the input tax exceeds the output tax at the end of any quarter, the excess
may be claimed as a:
a. tax refund in the succeeding quarter or quarters.
b. tax credit in the succeeding quarter or quarter.
c. either a or b.
d. neither a nor b.

TAXATION
46. IAN Corporation is a retail business that had been generating sales not exceeding
the VAT threshold for exempt persons. It decided, however, to be registered under
the VAT system for the first time in order to benefit from input tax credits. What
benefit, if any, my IAN Corporation be entitled to once it registered under the
VAT system?
a. Tax refund c. Transitional input tax
b. Presumptive input tax d. No benefit at all
47. Which of the following statements based on latest regulations relative to the
filing of the VAT return and payment of VAT is correct?
a. The return is filed quarterly and the tax is also paid quarterly.
b. The return is filed monthly and the tax is also paid monthly.
c. The return is filed quarterly and the tax is paid monthly.
d. The return is filed monthly and the tax is paid quarterly.
48. The sales/receipts GCC for the year are as follows:
From grocery store P2,000,000
From sale of goods to Asian Development Bank 1,500,000
From passenger jeepney 500,000
From agricultural food products (original state) 600,000
Which of the statements is correct?
a. The basis for VAT registration is P4,600,000.
b. The basis for VAT registration is P3,500,000.
c. The basis for VAT registration is P3,100,000.
d. The basis for VAT registration is P3,000,000.
SITUATIONAL
The following information was gathered pertaining to the business of a VAT-registered
person for a taxable period.
VAT-subject sales P6,000,000
VAT-zero-rated sales 1,500,000
VAT-exempt sales 2,500,000
Input tax – VAT-subject sales 400,000
Input tax that cannot be allocated 300,000
49. How much shall be declared as total sales/receipts under line 19 (BIR Form 2550Q)?
a. P10,000,000 c. P7,500,000
b. P 8,500,000 d. P6,000,000
50. How much shall be the total VAT-subject sales?
a. P10,000,000 c. P7,500,000
b. P 8,500,000 d. P6,00,000
51. How much is the total available input taxes under line 22 (BIR Form 2550Q)?
a. P700,000 c. P600,000
b. P650,000 d. P400,000
52. How much is the total allowable input taxes under line 24 assuming input tax on
zero rated sales will be claimed as tax refund (BIR Form 2550Q)?
a. P1,000,000 c. P600,000
b. P 580,000 d. P400,000
53. How much is the net VAT payable under line 25 BIR Form 2550Q)?
a. P420,000 c. P140,000
b. P320,000 d. P 20,000
54. Which of the following transportation providers is not subject to the 3% percentage
tax on domestic carriers?
a. School bus operators c. Passenger jeepney operators
b. Cargo truck operators d. Car rental business
55. Excise taxes on alcoholic products manufactured or produced in the Philippines
for domestic sales or consumption in the Philippine is:
a. a local tax. c. a specific tax.
b. a proportional tax. d. an ad valorem tax.

TAXATION
56. With respect to the excise tax on locally produced or extracted metallic mineral
or mineral products, the person liable shall file a return and pay the tax within
how many days after the end of the calendar quarter when such products were removed
subject to such conditions as may be prescribed by rules and regulations to be
promulgated by the Secretary of Finance, upon recommendation of the Commissioner.
a. Thirty (30) days c. Ten (10) days
b. Fifteen (15) days d. Five (5) days
57. 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.
58. The Documentary Stamp Tax Return shall be filed within how many days after the
close of the month when the taxable document was made, signed, accepted or
transferred and the tax thereon shall be paid at the same time the aforesaid return
is filed.
a. Thirty (30) days c. Ten (10) days
b. Fifteen (15) days d. Five (5) days
59. Which of the following statements is incorrect
a. Taxation shall be uniform in each local government unit.
b. The collection of local taxes, fees, charges and other impositions shall in
no case be left to any private person;
c. The revenue collected pursuant to the provisions of the Local Government Code
shall inure solely to the benefit of, and be subject to disposition by, the
local government unit levying the tax, fee, charge or other imposition unless
otherwise specifically provided herein; and,
d. All local government units shall, as far as practicable, evolve a uniform
system of taxation.
60. In cases where a person conducts or operates two (2) or more businesses mentioned
in Section 143 of the Local Government Code which are subject to different rates
of tax, the gross sales or receipts of each business:
a. shall be separately reported for the purpose of computing the tax due from
each business.
b. shall be computed on the combined total gross sales or receipts of the said
two (2) or more related businesses.
c. shall be reported or computed using either choices a or b.
d. shall be reported or computed using neither choices a nor b.
61. The power to impose a tax, fee, or charge or to generate revenue under the Local
Government Code shall be exercised by:
a. the Sanggunian of the local government unit concerned through an appropriate
ordinance.
b. Office of the Mayor of the local government unit concerned through appropriate
executive orders.
c. Office of Assessor of the local government unit concerned through appropriate
assessments.
d. Office of the Municipal Administrator of the local government unit concerned
through appropriate administrative policies.
62. Unless otherwise provided in the Local Government Code, all local taxes, fees,
and charges shall be paid when?
a. within the first thirty (30) days of January or of each subsequent quarter,
as the case may be.
b. within the first twenty (20) days of January or of each subsequent quarter,
as the case may be.
c. within the first ten (10) days of January or of each subsequent quarter, as
the case may be.
d. within the first five (5) days of January or of each subsequent quarter, as
the case may be.

TAXATION
63. In the purchase of goods and services which have promotional discount, the senior
citizen or PWD can avail:
a. of the promotional discount or the senior citizen/PWD discount whichever is
higher.
b. of the promotional discount or the senior citizen/PWD discount whichever is
lower.
c. of both the promotional discount or the senior citizen/PWD discount.
d. of neither the promotional discount nor the senior citizen/PWD discount.
64. The monthly utilization of water and electricity by the Senior Citizen supplied by
public utilities will be subject to a 5% discount.
I - The individual meters for the foregoing utilities are registered in the name
of the senior citizen or his care giver residing therein:
II -The monthly consumption does not exceed one hundred kilowatt hours (100 kWh)
of electricity and thirty cubic meters (30 m3) of water:
III - The privilege is granted per household regardless of the number of senior
citizens residing therein.
a. I, II and III are correct

b. Only I and II are correct
c. Only II and III correct
d. I, II and III are incorrect
65. Senior citizens and PWDs are not exempted from which of the following taxes?
I - 20% final withholding tax on certain passive income
II - 15% final withholding tax on interest from a depository bank under EFCDS
III - VAT or other Percentage Taxes, if he is self-employed or engaged in business
or practice of profession
IV - 6% capital gains tax on presumed capital gain on sale of real property classified as
capital asset
a. I, II, III and IV

b. I, II and IV only
c. II and IV only
d. I and II only
66. Who of the following is not eligible to register as a Barangay Micro Business
Enterprise?
a. Enterprise engaged in the production, processing or manufacturing of products
or commodities, including agro-processing whose total assets including those
arising from loans but exclusive of the land on which the particular business
entity's office, plant and equipment are situated, shall not be more than Three
Million Pesos (P3,000,000.00).
b. Enterprise engaged in trading, whose total assets including those arising from
loans but exclusive of the land on which the particular business entity's
office, plant and equipment are situated, shall not be more than Three Million
Pesos (P3,000,000.00).
c. Certified Public Accountant engaged in public practice whose total assets
including those arising from loans but exclusive of the land on which the
particular business entity's office, plant and equipment are situated, shall
not be more than Three Million Pesos (P3,000,000.00).
d. Enterprise engaged in auto repair services, whose total assets including those
arising from loans but exclusive of the land on which the particular business
entity's office, plant and equipment are situated, shall not be more than Three
Million Pesos (P3,000,000.00).
67. Which of the following is not an incentive given to a Barangay Micro Business
Enterprise?
a. Exemption from income tax for income arising from the operations of the
enterprise
b. Exemption from the coverage of the Minimum Wage Law
c. Exemption from SSS and Philhealth contributions
d. Availment of credit services from government financing institutions

TAXATION
68. A person applying to be registered as a BMBE shall meet which of the following
qualifications?
I - With an asset of not more than Three Million Pesos (P3,000,000.00)
excluding land;
II - Engaged in the production, processing or manufacturing of products or
commodities, including agro-processing, trading and services;
III - Registered with the Department of Trade and Industry (DTI) for sole
proprietorships, for juridical persons; with Securities and Exchange
Commission (SEC) for corporations.
a. I, II and III
b. I and II only
c. I and III only
d. I only
69. The nature and purpose of DOUBLE TAXATION AGREEMENTS (DTAs)

I - Avoidance of double taxation
II - Prevention of fiscal evasion with respect to taxes on income
a. Both I and II
b. Neither I nor II
c. I only
d. II only
70. In case of conflict between tax treaty and domestic laws:

a. the provisions of the tax treaty generally prevail over the provisions of
the domestic law.
b. the provisions of the domestic law generally prevail over the provisions of
the tax treaty.
c. the domestic law of the richer country generally prevail in most cases
d. the countries entering into the treaty shall apply their domestic laws.
- END OF EXAMINATION –
ANSWERS & SOLUTIONS/CLARIFICATIONS

1 C 26 C 51 A
2 C 27 C 52 B
3 D 28 B 53 C
4 A 29 C 54 B
5 B 30 B 55 D
6 D 31 A 56 B
7 D 32 C 57 D
8 D 33 C 58 D
9 D 34 C 59 D
10 D 35 C 60 A
11 C 36 A 61 A
12 D 37 A 62 B
13 B 38 D 63 A
14 C 39 D 64 C
15 D 40 A 65 A
16 C 41 C 66 C
17 A 42 C 67 C
18 C 43 B 68 A
19 D 44 D 69 A
20 D 45 B 70 A
21 A 46 C
22 D 47 A
23 A 48 B
24 C 49 A
25 D 50 C

TAXATION
6.
Direct double taxation means taxing twice, by the same taxing authority, within the
same jurisdiction or taxing district, for the same purpose, in the same year (or taxing
period) some of the property in the territory.
13 to 16
January 30, 2021
27 Total gifts in this return P2,000,000
33 Total deductions allowed -
34 Total net gifts in this return 2,000,000
35 Add total prior net gifts during the calendar year
37 Less: Exempt gift 250,000
38/14 Total net gifts subject to tax 1,750,000
15 Applicable donor’s tax rate 6%
16 Total donor’s tax due 105,000
17A Less Payments for prior gifts during the calendar year -
18 Tax payable (overpayment) P105,000
March 30, 2021

27 Total gifts in this return P1,000,000
35 Add total prior net gifts during the calendar year 2,000,000
17A Less Payments for prior gifts during the calendar year 105,000
18 Tax payable (overpayment) P 60,000
August 30, 2021

27 Total gifts in this return P 500,000
34 Total net gifts in this return 500,000
35 Add total prior net gifts during the calendar year 3,000,000
17A Less Payments for prior gifts during the calendar year 165,000
18 Tax payable (overpayment) P 30,000
September 20, 2022

27 Total gifts in this return P600,000
35 Add total prior net gifts during the calendar year
38/14 Total net gifts subject to tax 350,000
17A Less Payments for prior gifts during the calendar year -
18 Tax payable (overpayment) P21,000

TAXATION
17 to 20
Exclusive Common Total
34 Gross estate P5,000,000 P44,000,000 P49,000,000
35 Less: Ordinary deductions - (2,000,000) (2,000,000)
36 Estate after ordinary deductions 5,000,000 42,000,000* 47,000,000
37 Less: Special deductions
37A Standard deduction (5,000,000)
37B Family home (1/2 x 30,000,000) 15,000,000
Maximum 10,000,000 (10,000,000)
38 Net estate 32,000,000
39 Less: Share of surviving spouse
(1/2 x 42,000,000) (21,000,000)
40/16 Net taxable estate 11,000,000
17 Applicable tax rate 6%
18 Estate tax due P 660,000
27.
13th month pay P40,000
Christmas bonus 30,000
Benefits received by an employee by virtue of a collective bargaining
(CBA) and productivity incentive schemes 15,000
Uniform allowance (8,000 – 6,000) 2,000
Rice subsidy (12 x 500) 6,000
Actual medical benefits (12,000 – 10,000) 2,000
Total 95,000
Less: Exempt amount 90,000
Taxable amount P5,000
28.
4 Gross compensation income (480,000 + 95,000) P575,00
5 Less: Non-taxable/exempt compensation 90,000
6 Taxable compensation income P485,00
7 Tax due – compensation income Sec. 24 (A)
400,000 30,000
85,000 x 25% 21,250
485,000 P51,250
If the taxable income is:

Over But not over The tax shall be Plus Of excess over
P 250,000 0%
P 250,000 400,000 20% P 250,000
400,000 800,000 P 30,000 25% 400,000
800,000 2,000,000 130,000 30% 800,000
2,000,000 8,000,000 490,000 32% 2,000,000
8,000,000 2,410,000 35% 8,000,000
29.
Professional tax receipt P 600
Car registration (3,000 x 60%) 1,800
Depreciation of car (75,000 x 60%) 45,000
Gasoline and oil of car 30,000 x 60%) 18,000
Interest on late payment of income tax 1,500
Total deductible amount P66,900
31.
Related Unrelated Total
activities activities
Gross receipts P15,000,000.00 P18,000,000.00 P33,000,000.00
Less: Cost of services 6,000,000.00 5,000,000.00 11,000,000.00
Gross income 9,000,000.00 13,000,000.00 22,000,000.00
Less: Allowable deductions 3,250,000.00 2,000,000.00 5,250,000.00
Net taxable income P 5,750,000.00 P11,000,000.00 16,750,000.00
Tax rate* 25%
Income tax due P4,187,500.00

TAXATION
* Tax rate is 25% because income from unrelated activities exceeds 50%
(13,000,000/22,000,000 = 59%) and taxable net income exceeds P5,000,000.00.
32 to 34
2020 2021 2022 2023
Gross receipts P75,000,000.00 P120,000,000.00 P130,000,000.00 P75,000,000.00
Cost of services 41,250,000.00 66,000,000.00 71,500,000.00 41,250,000.00
Gross income 33,750,000.00 54,000,000.00 58,500,000.00 33,750,000.00
Less: Allowable
deductions 33,625,000.00 41,200,000.00 42,550,000.00 35,125,000.00
Net taxable
income P 125,000.00 P12,800,000.00 P15,950,000.00 (P1,375,000.00)
Tax rate 10% 10% 25% 25%
Income tax due P12,500,00.00 P 1,280,000.00 P 3,987,000.00 0
Minimum corporate
income tax (MCIT) Not applicable Not applicable P 585,000.00 P 506,250.00
Tax due (higher) P 3,987,000.00 P 506,250.00
Computation of MCIT
2022 2023
2022 (1% x 58,500,000) P 585,000.00
2023 January 1 to June 30, 2023 (1% x 33,750,000 x 6/12) P168,750.00
July 1 to December 31, 2023 (2% x 33,750,000 x 6/12) 337,500.00
P506,250.00
35.
If the return is amended substantially different from the original return, the three
(3) year prescriptive period shall be counted from the filing of the amended return.
There is substantial amendment when a new return is filed declaring more losses,
which can only be done either:
1) In reducing gross income, or
2) In increasing the items of deductions claimed.
If the amendment is minimal, the counting of the prescriptive period is still the
original period. (CIR vs. Phoenix Assurance, Inc.’ G.R. L-19727, May 20, 1965, 14
SCRA 52
36.
Negligence or oversight on the part of the BIR cannot prejudice taxpayers,
considering that the prescriptive period was precisely intended to give them peace
of mind. (CIR vs. Goodrich Phils., Inc. G.R. 104171, February 24, 1999
The normal three (3)- year prescriptive period expires on the 1095th day,
notwithstanding the fact that within the period, there is a leap year which is 366
days. (Revenue Memorandum Circular (RMC) 48-90)
37.
The following cases fall under exceptional prescriptive period of assessment and
collection:
a. The taxpayer failed to file a return;
b. The taxpayer filed a false return with intent to evade tax;
c. The taxpayer filed a fraudulent return with intent to evade tax; or
d. The taxpayer and the Commissioner agreed in writing to waive the prescriptive
period of assessment of tax.
38. Reference: Section 204, NIRC as amended
39. Reference: Section 3. 2, Revenue Regulations No. 30-2002

The offer to compromise based on financial incapacity may be accepted upon showing
that:
1) The corporation ceased operation or is already dissolved;
2) The taxpayer is suffering from surplus or earnings deficit resulting to impairment
in the original capital by at least 50%;

TAXATION
3) The taxpayer is suffering from net worth deficit, and in case of an individual
taxpayer he has no leviable/distrainable assets other than family home;
4) The taxpayer is a compensation income earner with no other source of income and
whose monthly salary is P10,500 or less, if single, or P21,000 or less, if married,
and has no leviable/distrainable assets other than family home;
5) The taxpayer has been declared by any competent tribunal or authority or body or
government agency as bankrupt or insolvent.
40. Reference: Section 209, NIRC, as amended

Any residue over and above what is required to pay the entire claim, including expenses,
shall be returned to the owner of the property sold.
The expenses chargeable upon each seizure and sale shall embrace only the actual
expenses of seizure and preservation of the property pending; the sale, and no charge
shall be imposed for the services.
41. Reference: Revenue Memorandum Order No. 36-99

If the Revenue Officer is unable to submit his final report of investigation within
120-day period, he must then submit a Progress Report to his Head of Office, and
surrender the LA for revalidation.
43.
Total landed cost P5,000,000
Add: Excise tax 1,000,000
Tax base 6,000,000
Rate 12%
VAT on importation P 720,000
48.
From grocery store P2,000,000
From sale of goods to Asian Development Bank 1,500,000
Total P3,500,000
49.
VAT-exempt sales 2,500,000
Total sales/receipts P10,000,000
50.
Total P7,500,000
51.
Input tax – VAT-subject sales P 400,000
Unallocated input tax 300,000
Total available input taxes P700,000
52.
Input tax – VAT-subject sales P 400,000
Unallocated input tax 300,000
Total available input taxes 700,000
Less: Allocable input tax on VAT-exempt sales
(2,500,000/10,000,000 x 300,000) (75,000)
Allocable input tax on VAT-zero rated sales claimed as tax refund
(1,500,000/10,000,000 x 300,000) (45,000)
Total allowable input taxes P 580,000
53.
19B Output tax (6,000,000 x 12%) P720,000
24 Total allowable input taxes (580,000)
25 Net VAT payable P140,000

ReSA B45 TAX Final PB Exam Questions, Answers &amp; Solutions

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ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY

TAXATION FINAL PRE-BOARD EXAMINATION

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a. I, II and III are correct

a. I, II, III and IV

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69. The nature and purpose of DOUBLE TAXATION AGREEMENTS (DTAs)

70. In case of conflict between tax treaty and domestic laws:

ANSWERS & SOLUTIONS/CLARIFICATIONS

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March 30, 2021

August 30, 2021

September 20, 2022

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If the taxable income is:

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38. Reference: Section 204, NIRC as amended

39. Reference: Section 3. 2, Revenue Regulations No. 30-2002

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40. Reference: Section 209, NIRC, as amended

41. Reference: Revenue Memorandum Order No. 36-99

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ReSA B45 TAX Final PB Exam Questions, Answers & Solutions

ReSA B45 TAX Final PB Exam Questions, Answers & Solutions