Taxation Preweek and Additional Materials

TAXATION PRE-WEEK
INCOME TAX
1. The taxpayer earned the following income:
Dividends P 40,000
Prizes in Badminton tournament 20,000
Royalty from novels 200,000
Compute the final tax.

a. P 24,000 c. P 28,000
b. P 26,000 d. P 48,000
2. A corporate taxpayer which earned interest income from dollar deposits is

a. not exempt from final tax if it is a resident corporation.
b. subject to 20% final tax if non-resident corporation.
c. subject to regular income tax on said interest if a resident corporation.
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d. subject to regular tax if it is a domestic corporation.
3. An inter-corporate dividend from a resident corporation is

a. totally subject to regular tax if the recipient is a resident corporation.
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b. totally exempt from tax
c. totally subject to regular tax if the recipient is a domestic corporation.
d. partially subject to final tax if the recipient is a domestic corporation.
Compensation income
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4. A managerial employee had the following compensation income from a regional area
headquarter of a multinational company in 2022:
P 1,020,000
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Fringe benefits 204,000
Compute the total final tax if the employee is a resident citizen.

a. P 0 c. P 109,846
b. P 96,000 d. P 249,000
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5. Romelda, an individual taxpayer, sold a real property classified as capital for P1, 500,000.
The cost of the real property was P2, 000,000. She was being required to pay the 6%
capital gains tax. She refused on the ground the she did not realize any capital gain. As a
matter of fact, she suffered a loss of P500, 000. Was her refusal justified?
a. Yes, because capital gains tax should be based on the capital gain only.
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b. No, because capital gain should be presumed when real property classified as capital
is sold.
c. Yes, because there was no capital gain from which she could deduct the capital loss.
d. No, because sale of real property whether or not classified as capital should be subject
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to capital gains tax.
6. The option to be taxed at 8% is available to?

a. A VAT-registered taxpayer
b. A self-employed operating a gay bar
c. A partner of a general professional partnership
d. None of these.
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7. In 2022, Gerry sold his stocks through a broker at a gain of P400,000 before stock
transaction tax and ½ of 1% commission on the P800,000 selling price.
Compute the capital gains tax.

a. P 0 c. P 34,200
b. P 4,000 d. P 35,000
*Compute the stock transaction tax.
8. On July 21, 2022, Mang Assar sold for P4,800,000 a commercial building which he
acquired for P2,400,000 on June 22, 2016.
Compute the gain to be subjected to regular tax.

a. P 0 c. P2,400,000
b. P 1,200,000 d. P4,800,000
9. Which is not an inherent limitation of the power to tax?
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a. Territoriality
b. Exemption of government-owned and controlled corporations
c. Public purpose
d. Non-delegation of the power to tax
10. Which can opt to use OSD?

a. Non-resident alien engaged in business
b. A bank
c. A domestic private school
d. An exempt corporation with taxable operations
11. Luck Corporation paid the following benefits to employees during the month:
Benefits type Purpose Grantee employees Amount

Compensation Service rewards Managers/supervisors P1,200,000
Compensation Service rewards Rank and file 3,000,000
Fringe benefits Legal requirement Managers/supervisors 272,000
Fringe benefits Legal requirement Rank and file 217,600
Fringe benefits Business necessity Managers/supervisors 238,000
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Fringe benefits Business convenience Rank and file 374,000
Fringe benefits Employee convenience Managers/supervisors 258,400
Fringe benefits Employee convenience Rank and file 170,000
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Compute the final withholding tax to be withheld.
a. P 361,600 c. P 121,600
b. P 233,600 d. P 0
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12. In 2015, Taprolani Corporation purchased a residential house and lot for P2, 500,000.
The property was sold to the President of the corporation for P2, 000,000. The fair
market values per BIR and per Assessors Office were P4, 000,000 and P3, 000,000
respectively. How much is the fringe benefits tax?
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a. P1, 882,352.94 c. P941, 176.47
b. P1, 411,764.71 d. None of the choices
13. Using the same data in the preceding number except that the real property was
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transferred to the President without any payment made, how much is the fringe benefits
tax?
a. P1,882,352.94 c. P941,176.47
b. P1,411,764.71 d. None of the choices
14. Desiring to expand business outside his accounting profession, Mr. Zeus Millan is
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planning to set-up a hair parlor business to be named “Hairdo Does It All” or simply
“HDIA” to meet the hair styling demands of highly effective individuals like him.
Which of the following is least likely to be required by the BIR in the registration of his
business?
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a. DTI certification
b. Contract of lease or land title
c. Mayor’s permit
d. Certificate of incorporation
15. If Mr. Millan starts his business as a non-VAT business, which of the following books will
least likely to be required by the BIR?
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a. Journals and ledgers

b. Subsidiary sales journal
c. Cash receipts journal
d. Cash disbursement journals
16. Which is least likely to be required for a start-up business?

a. Evidence of updated payment for real property tax
b. Application form for taxpayer’s identification number
c. Payment of P500 registration fee
d. Payment of documentary stamp tax on lease contracts
17. Which is not a required attachment in the annual ITR?

a. Statement of management responsibility
b. Audited financial statements when gross sales exceed P150,000 in any quarter
c. Certificate of year-end bank balances
d. Summary alpha list of withholding taxes paid
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18. Alamin Moto is an eFPS-registered taxpayer. Which of the following is required to be
filed in the EFPS system?
a. Donor’s tax return
b. Estate tax return
c. Capital gains tax return
d. Income tax return
19. Which is least likely to be filed under the eFPS?

a. BIR Form 2550M and 2550Q for VAT taxpayers
b. BIR Form 1702Q and 1702RT
c. BIR Form 1707 on capital gains
d. Payment form for annual registration (BIR Form 1605)
20. Who is not required to file under eFPS?

a. Non-large taxpayers
b. Top 20,000 corporations
c. Top 5,000 individuals
d. Government agencies
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21. Tax classified as to object do not include
a. Personal tax
b. Property tax
c. Estate tax
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d. Privilege tax
22. Which is a local tax?

a. Capital gains tax
b. Professional tax
c. Percentage tax
d. Donor’s tax ev
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23. Mr. Midas is an accountant by profession. He rents an office for his practice and employs
two accounting staffs. Mr. Midas has regular clients which pay his firm P300,000
monthly retainer.
As for his own tax obligations, which of the following is not required of Mr. Midas to
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file?
a. BIR Form 1701Q
b. BIR Form 1701
c. BIR Form 2551M
d. BIR Form 2550Q
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24. As for his withholding tax obligations, which of the following is correct?
a. Mr. Midas shall deduct withholding tax on compensation from his staff’s salaries
b. Mr. Midas shall deduct 2% withholding tax on his rental payments
c. Mr. Midas shall claim as tax credit against his own income tax the tax withheld on
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rent
d. Mr. Midas shall claim as expense his remittance of withholding tax on compensation
25. The following pertains to the building of the taxpayer with 10 years initial estimated
useful life:
Building acquisition cost P 1,000,000

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Accumulated depreciation 200,000

Impaired current fair value 600,000
What is the deductible depreciation expense?

a. P 0 c. P 75,000
b. P 60,000 d. P 100,000
26. A Certified Public Accountant used cash basis in computing his taxable income. In 2021,
he performs a professional service for a client who is unable to pay him. The unpaid
professional fee of the client becomes worthless in 2022. When can the taxpayer
deduct the worthless professional fee as bad debt?
a. 2021
b. 2022
c. 2021 or 2022 depending on his choice
d. Cannot be deducted in any year
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27. In 2019, the corporation paid P50,000 MCIT last year despite a P400,000 reported
operating loss. This current year’s MCIT amounted to P80,000 with total deductions of
P3,000,000. Withholding taxes withheld by income payors totaled P45,000.
What is the tax still due?

a. P 0 c. P 205,000
b. P 85,000 d. P 255,000
28. A private school which started operations in 2014 reported the following income and
expense in 2020:
Tuition and miscellaneous fees P 4,500,000

Hotel operations 5,000,000
Interest income – bank 500,000
Expenses of school operations (40% direct costs) 4,200,000
Expenses of hotel operations (50% direct costs) 4,800,000
Estimated tax payments 130,000
Creditable withholding taxes 40,000
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Compute the tax still due or refundable.
a. P88,700 refundable
b. P 32,500 refundable
c. P 20,000 refundable
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d. P 110,000 payable
29. Which one of the following is not a source of income tax laws?
a. Income tax regulations
b. Administrative rulings and opinions
c. Judicial decisions
d. Opinions of tax experts and authors ev
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30. A domestic corporation has the following data for three (3) years:
Normal income tax MCIT

2020 P 50, 000 P60, 000
2021 P 60, 000 P55, 000
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2022 P 100, 000 P60, 000
How much is the tax payable in 2022?

a. P100, 000 c. P35, 000
b. P 95, 000 d. Zero
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31. An operator of an Illegal horse-betting business, a senior citizen who is supporting a

person with disability (PWD), has the following data:
Receipts from illegal bets P500, 000

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Rent of space where bets are received, gross of 5% withholding tax 20, 000
Salaries of assistants, gross of creditable withholding tax 100, 000
Bribe money to obtain protection from arrest and prosecution 50, 000
How much is the taxable net income?

a. P500, 000 c. P330, 000
b. P350, 000 d. P305, 000
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32. Brando is a cash basis self-employed air-conditioning repairman with 2022 gross
business receipts of P200,000. Brando’s cash disbursements were as follows:
Air-conditioning parts P 25,000

Yellow pages listing 20,000
Estimated national income taxes on self-employment income 10,000
Business long-distance telephone calls 4,000
Charitable contributions 20,000
What amount should Brando report as self-employment income?

a. P151, 200 c. P135, 900
b. P149, 000 d. None of the choices
33. The taxpayer is a single individual service provider. He has the following data during the
year 2022:
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Gross receipts from services P 400, 000
Discounts and allowances 30, 000
Direct cost and expenses 120, 000
Operating expenses 20, 000
Premium paid on health insurance premium 3, 000
How much is the taxable income if he chooses to avail of the Optional Standard
Deduction?
a. P172, 000 c. P110, 000
34. Using the same data in the preceding number, how much is the taxable income if he fails
to signify in his return his choice of Optional Standard Deduction?
a. P180, 000 c. P149, 600
35. Under the global system of income taxation:

a. there is no need for classification as all taxpayers are subject to a single rate.
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b. there are different categories of taxable income.
c. there are different tax rates.
d. individuals are subject to tax treatment.
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36. Mr. Marky opted for an early retirement from Remona Company, a private company, after
ten (10) years of service. Pursuant to the company’s qualified and approved private
retirement benefit plan, he was paid his retirement benefit.
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a. Remona compay should withhold income taxes from Marky’s retirement pay.
b. Marky’s retirement pay is excluded from gross income.
c. Remona Company should pay the tax on Marky’s retirement pay.
d. Since Marky voluntarily retired, the retirement pay he received was not retirement in
the true sense but was part of his compensation income subject to tax.
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37. In 2022, Carissa is an independent accounting practitioner. Her net revenue for the year
is P5,000,000. She incurred the following expenses:
Entertainment, amusement and recreation P 60,000

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Travel 450,000
Seminar fees 50,000
How much of these expenses could she deduct on her 2015 income tax return?
a. P560, 000 c. P500, 000
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*What if Carissa is an executive?
38. Kathlyn, a dealer of paintings, sold one masterpiece which she purchased in 2017 at a
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cost P30,000. She sold the painting, on the following terms:
June 1, 2020 down payment P 10, 000

August 1,2020 installment due 10,000
October 1, 2020 installment due 20,000
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How much would she report as gross income for 2020?

a. P15, 000 c. P45, 000
b. P30, 000 d. P90, 000
Note: What if what was sold is an antique collection? What if an office equipment?
39. The results of operation of Gummy Beards, a non VAT-registered mixed income earner,
for the first three (3) quarters of 2016 are as follows:
Compensation Gross Receipts Deductions Net Income

First quarter P 300,000 P150,000
P300,000 P150,000
Second P 300,000 350,000 200,000 150,000
quarter
Third quarter P 300,000 250,000 150,000
100,000
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How much is the reportable taxable income as of the third quarter?
a. P400, 000 c. P250, 000
b. P336, 000 d. P100, 000
40. Using the information in the preceding number, when is the due date of the third quarter
return?
a. November 15, 2016 c. November 30, 2016
b. November 29, 2016 d. None of the choices
41. On August 11, 2017, an individual taxpayer not engaged in real estate business acquired
a parcel of land which would be used as a site for office building for P3, 000, 000.
Unfortunately, the planned office building was not built due to financial problem that
hounded the taxpayer. The land was idle up to August 11, 2021. The taxpayers presented
a proof to the BIR that the land had not been used in business since its acquisition.
Subsequently, the land was sold by the taxpayer for P5, 000, 000 on September 5, 2021.
What was the tax consequence of the sale?

a. There was taxable gain of P2, 000, 000 which would be subject to Section 24 (A).
b. The sale would be subject to 6% capital gains tax based on the selling price
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c. The sale would be exempt from tax because the property was not used for business
d. The gain of P2, 000, 000 will be subject to 6% capital gains tax
42. The taxable income before income tax of Sarah Corporation for the current year was
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P500, 000. During the year, the corporation received the following refund of taxes paid
in previous years and recoveries of accounts written off, all of which were credited to
miscellaneous income:
Refund of percentage tax

Refund of income tax
Refund of Value-Added Tax
Bad debt recovered (allowed as deduction)
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50, 000
40, 000
30, 000
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Bad debt recovered (disallowed as seduction) 20, 000
How much would be the income tax payable of the corporation for the current year?
a. P160, 000 c. P117, 000
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Rachel Service Corporation, registered with BIR in 2019, has the following data for the year
2021:
Gross receipts P 1, 000, 000

Discounts given 100, 000
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Returns and allowances 150, 000

Salaries of personnel directly involved in the supply of services 300, 000
Salaries of office personnel 250, 000
Acquisition cost of office equipment (estimated life is 5 years) 250, 000
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Acquisition cost of equipment used in the supply of services

(estimated life is 5 years) 300, 000
Fees of consultants directly involved in the
supply of services 50, 000
Rental of equipment directly used in the supply of services 70, 000
Other operating expenses 120, 000
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43. How much is the total cost of services?

a. P670, 000 c. P480, 000
44. How much is the income tax due and payable using itemized deduction?
a. P6, 600 c. Zero
45. How much is the income tax due and payable using optional standard deduction?
a. P63, 000 c. P48, 600
46. How much is the VAT-subject amount assuming the taxpayer is VAT-registered?
a. P1, 000, 000 c. P750, 000
b. P 900, 000 d. None of the choices
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TRANSFER TAX
47. Mr. Ongbak, a Thai citizen, met an accident and died while visiting the Philippines.
Which among the following properties are to be included as part of his gross estate for
Philippine tax purposes?
a. His house and lot in Thailand
b. A condominium unit in California, USA
c. Shares of stock in Philippine Long Distance Telephone Company (PLDT)
d. Accident insurance issued by a Philippine Insurance company payable to his wife.
48. Janice is the administrator of the estate of his father, Carlu. In the estate proceeding
pending before the MM Regional Trial Court. Last year, she received from the
commissioner of Internal Revenue a deficiency assessment for the estate in the amount
of P1, 000,000.00, but she ignored the notice. Last month, the BIR affected a levy on
the real properties of the estate to pay the delinquent tax. Considering the above facts
which of the following statements are correct?
a. Janice should file a motion with the probate court to stop the enforcement and
collection of the tax because the properties from the tax to be enforced are in
custodial legis.
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b. Janice should within thirty (30) days from receipt of the levy file a petition for
review with an application for the suspension of the tax before the Court of Tax
Appeals.
c. Janice should advise the BIR Commissioner that it could not enforce the levy
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because of the pendency of the estate proceeding before the Regional Trial Court.
d. Janice should raise P1 million and pay the deficiency assessment so that the real
properties would not be the subject levy.
49.
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The Commissioner of Internal Revenue may grant an extension of time for the payment
of the estate tax or any part thereof, in case the estate is settled through the courts for
a period not exceeding.
a. two (2) years from grant of the extension.
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b. two (2) years from the settlement of the estate.
c. five (5) years from the settlement of the estate.
d. five (5) years from the grant of the extension.
50. Ms. Audrey Morgan, a Canadian citizen and a resident of Scarborough, Ontario sends a
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gift check of $20,000 to her future daughter-in-law who is to be married to her 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 P10,000.00 exemption for
donations by reason of marriage.
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.
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c. No. The donor is a non-resident alien hence she 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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N.A. Mathay, a resident decedent head of family, died on November 1, 2015. He left the
following:
Personal properties P1, 000, 000

Real properties (including family home valued at P1, 500, 000) 2, 000, 000
Deductions claimed (including actual funeral expenses of P200, 000,
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and medical expenses of P600, 000) 900, 000
How much was the deductible funeral expenses?

a. P200, 000 c. P100, 000
51. Using the same data in the preceding number, how much is the total of the special
deductions?
a. P2, 500, 000 c. P1, 500, 000
b. P1, 600, 000 d. None of the choices
52. Using the same data in the preceding number, how much was the taxable net estate?
a. P2, 100, 000 c. P250, 000
b. P1, 100, 000 d. P100, 000
53. Using the same data in the preceding number, when is the last day to file an estate tax
return?
a. May 1, 2016 c. November 1, 2016
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b. January 1, 2016 d. None of the choices
54. Mr. X got hospitalized on June 1, 2015 and was declared dead on July 8, 2015. His estate
experienced undue difficulties in filing his estate tax return. What is the extended
deadline for filing his estate tax return?
a. December 1, 2015
b. January 1, 2016
c. January 8, 2016
d. February 8, 2016
*What are the requirements for estate tax compliance under the TRAIN law?
55. Which is not included in gross estate?

a. Rental income earned before death
b. Compensation income earned before death
c. Dividend income accruing before death
d. SSS benefit payable upon death
56. An unmarried decedent had the following expenses and obligations which may be
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considered for deductions against his estate in 2017:
Remaining unpaid balance of medical bills

originally totaling P600,000 P 200,000
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Unpaid income and business taxes 300,000
Bank loans 500,000
Unpaid interest on bank loans 15,000
Claim against insolvent persons

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Funeral expenses (P90,000 contributed by friends)
Fire loss on property occurring shortly after death
250,000
50,000
30,000
The decedent has a residence where his dependent mother and siblings are currently
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living. His residential lot has a zonal value and assessed value of P500,000 and
P300,000, respectively. The house has assessed value of P400,000.
Compute the total ordinary deductions against gross estate.

a. P 955,000 c. P 1,055,000
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b. P 985,000 d. P 1,185,000
57. Compute the total special deductions against gross estate.

a. P 1,400,000 c. P2,400,000
b. P 1,500,000 d. P2,200,000
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58. Which does not qualify as deduction against gross gift?

a. Donation to the government for public use
b. Obligations on the property donated assumed by the donor
c. Donation to accredited non-profit corporation
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d. Dowry exemption
59. On January 1, 2016, Mr. Pinot inherited a commercial property worth P 20,000,000. The
commercial property is leased to several tenants who pay P2,400,000 annual rentals
which were all deposited intact in the bank account of Mr. Pinot. On April 1, 2016, Mr.
Pinot married Miss Cunot. On August 1, 2016, Mr. Pinot was accidentally shot dead by
Major Panot.
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Which of the following properly presents Mr. Pinot’s gross estate?
Separate property Common Property Gross estate

a. P0 P 22,400,000 P 22,400,000
b. P 20,600,000 P 800,000 P 21,400,000
c. P 600,000 P 20,000,000 P 20,600,000
d. P0 P 21,400,000 P 21,400,000
60. Which of the following property presents Mr. Pinot’s gross estate assuming the spouses
stipulated the conjugal partnership of gains?
Separate property Common Property Gross estate

a. P0 P 22,400,000 P 22,400,000
b. P 20,600,000 P 800,000 P 21,400,000
c. P 600,000 P 20,000,000 P 20,600,000
d. P0 P 21,400,000 P 21,400,000
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BUSINESS TAX
61. Which is subject to VAT?

a. Leasing of property
b. Sale of residential property
c. Sale of personal motorcycle
d. Sale of books
62. A manufacturer of cooking oil purchased had the following data for January:
Sales of cooking oil P 7,000,000

Purchase of copra 3,000,000
Purchase of supplies, VAT inclusive 1,120,000
Salaries of workers 800,000
Depreciation expense 300,000
Other miscellaneous expense with P12,000 VAT 432,000
Compute the VAT due.
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a. P 840,000 c. P 708,000
b. P 720,000 d. P 588,000
63. At the time AXP Corporation registered to the VAT system, it had 10 units of
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motorcycles for sale currently valued at P6,000 apiece. The original invoice of the
goods show 200 units purchased under a P1,008,000 VAT invoice.
64.
Compute the transitional input VAT.
a. P 7,200
b. P 6,048
c. P 6,000
d. P 5,400
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Assuming the goods above were evidenced by a non-VAT invoice, what would be the
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transitional input VAT?
a. P 0 c. P 1,200
b. P 1,008 d. P 1,500
65. If a realty dealer sold a residential lot which has a zonal value of P1,919,500 for
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P2,300,000, what is the output VAT?

a. P 0 c. P 230,340
b. P 246,429 d. P 276,000
66. When DXP Corporation retired from business, it has a building with a book value of
P3,000,000 but with current fair value of P5,000,000. What is the output VAT on
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retirement?
a. P 0 c. P 360,000
b. P 321,429 d. P 600,000
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67. Which of this pay VAT?

a. Pawnshops
b. Educational institutions
c. Life insurance companies
d. Pre-need companies
68. On August 1, 2022, a realty dealers sold a commercial building for P1,792,000 in 20
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monthly installment starting August. The building have a fair value of P1,500,000.
Compute the reportable output VAT for the quarter September 30, 2022.
a. P 0 c. P 18,000
b. P 9,600 d. P 19,200
69. In the immediately preceding problem, compute the claimable input VAT of the buyer
for the same quarter ending September 30, 2022.
a. P 0 c. P 6,400
b. P 6,000 d. P 7,168
70. Which cannot claim presumptive input VAT?

a. Manufacturers of cooking oil
b. Processors of sardines
c. Wholesalers of milk
d. Processors of packed noodles
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Zeus, a senior citizen, is engaged in a trading business. He is VAT-registered. He is also
supporting a Person with Disability (PWD) who is the husband of his deceased sister. During
the first quarter of the calendar year 2016, the following data taken from his books of
accounts are given:
Gross sales P 800,000

Beginning inventory 100,000
Purchases 400,000
Ending inventory 300,000
Deductible expenses (40% VAT- subject) 100,000
Interest income from Peso bank deposit 10,000
Selling price of shares of stocks made directly to a buyer (cost is
P100,000) 150,000
Share from the net income of a business partnership 40,000
VAT paid first two months of the quarter 30,000
71. How much is the VAT payable?

a. P48, 000.00 c. P13,200
b. P31, 200.00 d. None. Exempt from VAT
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72. When shall the first quarter return be filed?
a. April 15, 2016 c. April 25, 2016
b. April 20, 2016 d. None. Exempt from VAT
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73. How much is the final tax on certain passive income?
a. P10, 000.00 c. P5, 000.00
b. P6, 000. 00
a. P10, 000.00
b. P5, 000.00
c. P2, 500.00 ev
d. None. Exempt from tax
74. How much is the capital gains tax?
d. None. Exempt tax

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75. How much is the taxable net income?
a. P500, 000.00 c. P425, 000.00
b. P450, 000.00 d. None. Exempt from tax
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76. Which is not subject to common carriers tax?

a. Bus operator c. Keepers of garage
b. Grab taxi d. International carriers
77. The VAT taxpayer paid the following billings from PLDT:
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Internet service charge P 1,792

Domestic calls 1,568
International calls 1,320
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Compute the total claimable VAT.

a. P 168 c. P 360
b. P 192 d. P 501
78. In the immediately preceding problem, compute the percentage tax expense.
a. P 0 c. P 93
b. P 39 d. P 120
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79. Which of the following taxpayer do not pay monthly percentage tax under the NIRC?
a. Cockpit operators c. Life insurance
b. Common carriers d. International carriers
80. Which is not a taxable deemed sales transaction for a VAT taxpayer?
a. Issuance of stocks for goods
b. Exchange of goods for capital goods
c. Exchange of capital goods for goods
d. Repayment of debts with goods
81. A VAT-registered professional filed his third quarterly VAT return and income tax
return on October 30, 2016. Which is correct?
a. He shall pay penalties for late payment of quarterly VAT and income tax.
b. He shall not be subjected to surcharges.
c. He shall be subject to surcharges on VAT but not on income tax.
d. He shall be subject to surcharges to income tax but not to VAT.
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82. The input VAT on zero-rated sales shall not be claimed as
a. expense. c. tax refund.
b. input VAT credit. d. tax credit.
83. A VAT taxpayer had the following data during a quarter:
Regular sales P4,000,000

Export sales 2,000,000
Sales to Government and GOCCs 3,000,000
Exempt sales inclusive of sales to SC and PWE 1,000,000
Total input VAT 400,000
Compute respectively the total creditable input VAT.

a. P 240,000 c. P 400,000
b. P 360,000 d. P 450,000
84. In case a person who is not VAT-registered an issues or receipts showing his TIN,
followed by word “VAT”, the surcharge shall be:
a. 20% c. 50%
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b. 25% d. none
85. During a particular year, the following gross sales/receipts subject are recorded by a
taxpayer who is not VAT-registered:
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Gross receipts, transport of goods and cargoes P 500,000
Gross receipts, practice of profession 300,000
Gross sales, grocery store
Gross sales, fruit and vegetable stalls
Total
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Based on the above data, will he be subject to VAT?
600,000
900,000
P2,300,000
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a. No, he is not subject to VAT because his aggregate VATable sales/receipts do not
exceed the VAT threshold amount but he is subject to the 3% percentage tax on VAT-
exempt person.
b. Yes, he is subject to VAT because his aggregate sales/receipts exceed the VAT
threshold amount.
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c. No, he is not subject to VAT nor percentage tax because he is not VAT registered.
d. Answer not given.
86. Effective January 1, 2018, what is the deadline of the quarterly percentage tax?
a. 10 days from the end of quarter
b. 20 days from the end of quarter
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c. 25 days from the end of quarter

d. 30 days from the end of quarter
REMEDIES AND OTHERS

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87. An official document that empowers a Revenue Officer to examine and scrutinize a
Taxpayer’s books of accounts and other accounting records, in order to determine the
Taxpayer’s correct internal revenue tax liabilities.
a. Notice of Informal Conference
b. Preliminary Assessment Notice
c. Letter of Authority
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d. Formal Assessment Notice
88. The compromise offer shall be paid by the taxpayer upon filing of the application for
compromise settlement. In case of disapproval of the application for compromise
settlement, the amount paid upon filing of such application shall be:
a. deducted from the total outstanding tax liabilities.
b. forfeited in favour of the government.
c. returned to the taxpayer with interest.
d. Subject to court litigation.
89. After receiving the Formal Letter of Demand/Final Assessment Notice, a taxpayer files a
request for reconsideration on June 15, 2021. When shall the protest be acted upon by
the Commissioner of Internal Revenue?
a. On or before August 14, 2021
b. On or before October 13, 2021
c. On or before December 12, 2021
d. Cannot be determined because the date required documents are submitted is not
given.
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90. After receiving the Formal Letter of Demand/ Final Assessment Notice, a taxpayer files
a request for reinvestigation on June 15, 2021. When shall the taxpayer submit the
required documents?
a. On or before August 14, 2021
b. On or before October 13, 2021
c. On or before December 12, 2021
d. Choice not given
91. The CIR may not abate taxes in which of the following conditions?
a. The tax or any portion of which appears to be excessively assessed.
b. The taxpayer offered for a compromise settlement
c. The taxpayer is dead with no property left.
d. The tax case already prescribed.
92. The following data relate to the disputed assessment of a taxpayer:
Date FLD/FAN was received : August 5, 2020

Filing date of a motion for reconsideration : August 29, 2020
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CIR’s denial of the request : December 4, 2020
What is the taxpayer’s next procedure?

a. Petition for review before the CTA on or before January 3, 2021.
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b. Petition for review before the CTA on or before January 31, 2021.
c. Petition for review on certiorari before the Supreme Court on or before January 3,
2021.
93.
2021.
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d. Petition for review on certiorari before the Supreme Court on or before January 31,
The following data relates to the disputed assessment of a taxpayer:

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Date of denial of protest : March 5, 2019
Date petition for review was filed with CTA : March 29, 2019
Date of release of an adverse CTA en banc decision : Dec. 4, 2022
What is the taxpayer’s next procedure?

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a. File a motion for reconsideration with the BIR on or before January 3, 2023
b. Petition for review on certiorari with the Supreme Court on or before January 3, 2023
c. Petition for review on certiorari with the Supreme Court on or before December 19,
2022
d. No more. The taxpayer has slept on his right.
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94. The following are related to the tax assessment of a taxpayer:
Assessment received January 5, 2020

Petition for reinvestigation filed with BIR February 1, 2020
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Documents supporting the petition filed with BIR February 7, 2020

Decision of BIR denying the petition received by the taxpayer March 22, 2020
Second request for reconsideration filed with BIR March 30, 2020
Final decision of denial of second request for reconsideration was received April
12,2020
When is the last day to appeal to the Court of Tax Appeals?

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a. May 12, 2020 c. May 4, 2020

b. July 4, 2020 d. June 4, 2020
95. Decision of the Commissioner of Internal Revenue (CIR) or inaction by the CIR in cases
involving disputed assessments, refunds of internal revenues, fees or other charges,
penalties in relation thereto, or other matters arising under NIRC or other laws
administered by the BIR may appealed to:
a. Office of President c. Secretary of Finance
b. Supreme Court d. Court of Tax Appeals
96. A taxpayer defaulted for failing to seasonably interpose a valid protest on an

assessment issued January 5, 2016. On December 31, 2022, the BIR sent a preliminary
collection letter.
What is the best defense of the taxpayer?

a. Raise the issue of prescription.
b. Apply for a compromise settlement.
c. Apply for an extended payment term.
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d. Raise the issue of failure of jurisdiction.
97. A taxpayer received a formal letter of demand and a final assessment notice on August
31, 2022. He must
a. file a protest on or before September 30, 2022.
b. make a written reply on or before September 15, 2022.
c. await for a subpoena duces tecum on or before September 30, 2022.
d. file a petition for review with the Court of Tax Appeals before September 15, 2022.
98. A taxpayer submitted a motion for reconsideration in response to the BIR’s formal letter
of demand and final assessment notice. He must
a. Wait for a period of 180 days for BIR action.
b. Submit documents within the 180-day period.
c. Submit documents within 60 days.
d. Wait for the BIR to issue a subpoena duces tecum.
99. A taxpayer submitted a motion for re-investigation in response to the BIR’s formal
letter of demand and final assessment notice. He must
a. Wait for a period of 180 days for BIR action.
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b. Submit documents within the 180-day period.
c. Submit documents within 60 days.
d. Wait for the BIR to issue a subpoena duces tecum.
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100. Mr. Kumon received a deficiency assessment (dated June 6, 2017) on his 2016 income
tax on June 8, 2017. If he did not settle the tax, he should expect the BIR to enforce
collection by distraint levy and/or judicial action
a. by June 8, 2022.
b. on or before June 8, 2022.
c. by June 6, 2022.
d. on or before June 6, 2022. ev
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101. The BIR discovered that no estate tax was paid on the estate of a certain decedent who
died October 1, 2010. To avoid prescription, the BIR should send an assessment letter
not later than
a. November 2, 2020.
b. April 1, 2021.
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c. November 2, 2013.
d. April 1, 2014.
102. On March 5, 2015, the BIR discovered a deficiency value added tax for the quarter ended
September 2008. The deficiency did not arise from error or fraud.
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Which is correct?
a. The BIR must send the assessment notice before March 5, 2018.
b. The BIR must send the assessment notice before September 30, 2018.
c. The BIR must send the assessment notice before March 5, 2025.
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d. The BIR has no more remedies since the tax prescribed.
103. If a taxpayers has filed a claim for refund and the Bureau of Internal Revenue has yet to
render a decision on this claim, can the taxpayer elevate his claim to the CTA?
a. No, he cannot, the taxpayer has to wait under the Bureau decides on his claim for
refund.
b. Yes, he can, if the two (2) year period stated above is about to end, and the
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Commissioner has yet to render a decision on the claim.

c. No, he cannot, as a rule, the taxpayer can only elevate his claim to the CTA when the
Bureau issues unfavourable decision.
104. Boy resides in Kawit, Cavite while his place of work is in Sampaloc, Manila. He files his
income tax return for 2016 income on September 10, 2017 in Quezon City because the
Revenue District Officer in the place is his college friend. The return filed was fraudulent.
The amount of tax due is P100,000.
How much will be the surcharge?

a. P50, 000 c. P100,000
105. Using the same data in the preceding number, how much is the interest on
delinquency?
a. P8, 111.10 c. P6,666.67
b. P8, 091.33 d. None of the choices
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106. Using the same date in original problem, how much is the total amount due on
September 10, 2017?
a. P156, 666. 67 c. P183, 091.33
b. P158, 091.33 d. None of the choices
107. The prescriptive period for the issuance of a formal notice of assessment may not
ordinarily be stayed because of the lifeblood theory. However, there are certain instances
where the running of the prescriptive period may be suspended. One of the following is
not among the recognized instances which suspend the running of the prescriptive
period within which to assess.
a. Where the taxpayer requests for and is granted a reinvestigation by the
Commissioner.
b. If the Commissioner of the BIR is out of the country.
c. If the taxpayer changes his address stated in the return without informing the
Commissioner of BIR.
108. The final tax on interest received by resident citizen and resident alien from a
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domestic depository bank under Expand Foreign Currency Deposit System (EFCDS) is
7.5%. Under a tax treaty entered into by the Philippine Government and the Government
of the resident alien, the final tax on the same interest income is 10%. Which tax rate shall
be imposed on the such interest income for Philippine income tax purposes?
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a. 7.5% c. Either 7.5% or 10%
b. 10% d. None of the choices
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109. When a taxpayer erroneously paid a tax in instalment, the prescriptive period for a
claim for refund should be counted:
a. from the date of payment of the first installment.
b. from the date of payment of the last installment.
c. from the last day required by law for the payment of the tax in one lump sum.
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d. none of the choices.
110. The books of account may be kept in the following languages except:
a. Native languages c. English
b. Spanish d. Chinese or Japanese
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111. A senior citizen bought goods classified as basic necessities from a person who is VAT-
exempt but subject to the 3% percentage tax on VAT-exempt persons. The seller
prepared the following sales invoice:
Selling price P 1, 000, 000

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Less: 20% discount 200, 000

Net selling price 800, 000
Add: 3% percentage tax (800 x 3%) 24, 000
Total amount due P 824, 000
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Is the above invoice correctly prepared?

a. No. Senior citizens are exempted from percentage tax.
b. Yes. Senior citizens are not exempted from the 3% percentage tax.
c. No. Senior citizens are not allowed discount when buying goods from VAT-exempt
persons.
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112. When shall the Application for Registration for Individuals Earning Purely Compensation
Income, and Non-Resident Citizens or Resident Alien Employee be filed?
a. Within ten (10) days from the date of employment, or before the payment of any tax
due or before filing of a return, or declaration is required with the RDO having
jurisdiction over the taxpayer’s residence or place of employment.
b. Within fifteen (15) days from the date of employment, or before the payment of any
tax due or before filing of a return, or declaration is required with the RDO having
c. Within twenty (20) days from the date of employment, or before the payment of any
tax due or before filing of a return, or declaration is required with the RDO having
d. On or before commencement of business or before payment of any tax due or before
filing a return RDO having jurisdiction over the principal office of business or
branch/regional Office
113. In which situation will the financial statements require that they be certified by a CPA?
a. When the gross receipts/sales in any quarter does not exceed P3,000,000
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b. When the gross receipts/sales in any quarter exceed P50,000 but does not exceed
P150,000
c. When the gross receipts/sales in any quarter exceed P150,000
d. When the gross receipts/sales in the year exceeds P3,000,000
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ie
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TAXATION PREWEEK
(SUPPLEMENTAL EXERCISE PROBLEMS)
1. The VAT refund period under the enhanced VAT refund system shall be
a. 30 days c. 90 days
b. 60 days d. 120 days
2. Which of the following leases is not subject to DST?

a. Lease of equipment
b. Lease of vessels
c. Lease of real estate
d. None of these
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3. Which is subject to documentary stamp tax?
a. Accounts payable for services rendered
b. Credit card receivables
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c. Accounts receivables on sales of goods
d. Promissory note for intercompany advances
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4. Miss Becky Power, a VAT-registered cosmetic surgeon, had the following financial statements in the
first quarter of 2020:
Balance sheet 12/31/2019 3/31/2020

Cash
Accounts receivables
Allowance for bad debts
Supplies
Investment in stocks
P 212,000
128,000
285,000
125,000
R P 6,400
P 393,000
120,000
450,000
-
P 6,000
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Leasehold improvements 200,000 200,000
Less: Accum. Depreciation 20,000 22,000
LHI
Equipment 150,000 1,200,000
Less: Accum. Depreciation 25,000 15,000
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Eq.
Payables 148,600 120,000
Advances from clients - 50,000
Bank loans - 500,000
Becky Power, capital - 900,000 - 1,650,000
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TOTAL P 1,100,000 P 1,100,000 P 2,363,000 P 2,363,000
Income Statement 1st Quarter 2020

Professional fees, net of P60,000 withheld tax P 1,790,000
Dividend income received 12,000
Interest income from bank, net 18,000
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Gain on sale of equipment 20,000

Gain on sale of stocks 40,000
Total P 1,880,000
Less: Operating expenses
- Administrative salaries 130,000
- Professional fees for other VAT-registered surgeons 500,000
- Supplies expense 280,000
- Depreciation expense 15,000
- Bad debt expense 37,000
- Consultancy services 100,000
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- Interest expense 12,000
- Local business taxes 24,000
- Miscellaneous, including DSTs on loans and stocks 32,000
Total Expenses 1,130,000
Net Profit P 750,000
Additional information:
1. Miss Becky uses the accrual basis in filing her income tax return.
2. The stocks consisting of 12,000 shares at par value of P10/share were disposed in March.
3. Becky invested in new equipment for various cosmetic applications in February.
4. Becky disposed an old equipment at the start of the year as additional funding for the new equipment.
She borrowed from the bank to pay for the balance.
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5. The professional services were paid to a VAT-registered consultant.
6. Becky made an estimated VAT payment of P42,000 during the quarter.
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Requirements:
Determine the following for the quarter:
1. Excise tax due
2. Final income tax due
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3. Capital gains tax
4. Total documentary stamp tax
5. Creditable withholding tax
6. Output VAT
7. VAT still due
8. Deductions from gross income
9. Taxable income
10. Income tax still due
11. When to file the BIR Form 1701A?
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12. When to file the BIR Form 2550Q?
13. When to file the BIR Form 8000-OT for the sales of stocks?
14. When to file the BIR Form 1607 for the sales of stocks?
15. When to file the BIR Form 1601-EQ for the expanded withholding tax?
5. Which is a national tax?

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a. Contractor’s tax c. Tax on banks and insurance

b. Customs duties d. Professional tax
6. Audit certification of financial statements is required if

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a. Net asset is at least P3M

b. Gross annual sales, earnings or receipts is at least P3M
c. Gross sales, earnings or receipt in any quarter exceeds P150,000
d. Net asset is at least P10M
7. The accounting records shall be kept for a period of

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a. 10 years c. 3 years from the date of the last entry in the books
b. 20 years d. 5 years from the date of the last entry in the books
8. Registration with the BIR Revenue District Office is

a. made annually. c. once in a lifetime.
b. once every 5 years. d. done quarterly.
9. Which of the following improperly depicts the timing of registration for taxpayers subject to any
internal revenue tax?
a. Those who are getting employed – within 10 days from date of employment
b. Those who are commencing business – on or before commencement of business
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c. Those subject to any tax due – before payment of any tax due
d. Those required to file return, statement or declarations – 10 days after such filing
10. The annual registration fee shall be

a. P300 for every taxpayer
b. P500 for every taxpayer
c. P500 for every distinct establishment or place of business where sales transaction occurs
d. P300 for every distinct establishment or place of business where sales transaction occurs
including warehouses
11. Which is subject to the annual registration fee?

a. Cooperatives c. Pure compensation income earners
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b. Overseas workers d. Mixed income earner
12. Which of the following does not require update of registration?

a. Change from VAT to non-VAT status
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b. Change in business address
c. Change in the type of tax the taxpayer is subject to
d. Change in business activity which is subject to the same type of tax
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13. Statement 1: Registration with the BIR is once but taxpayers pay annual registration fee.
Statement 2: Each taxpayer shall be given at least one Taxpayer’s Identification Number.
a. True; True c. False; True
b. True; False d. False; False
respect to his annual registration fee?

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14. Mr. Elitsgo has a principal office in Baguio City and a branch in La Trinidad City. Which is correct with
a. He shall pay P1,000 in the BIR RDO of Baguio City

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b. He shall pay P600 in the BIR RDO of Baguio City
c. He shall pay P500 each in the RDOs of Baguio City and La Trinidad City
d. He shall pay P300 each in the RDOs of Baguio City and La Trinidad City
15. Who are required to update their registration information with the BIR?
a. Those who are subject to new taxes they are not previously liable to
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b. Those who are no longer subject to the type of tax they are previously subject to
c. Those who are transferring their place of business, head office or branches
d. All of these
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16. Issuance of receipts is required for every sale transaction with an amount of at least
a. P25 c. P100
b. P50 d. P250
17. An expanding enterprise is registered with the BOI. It has a base figure of P20M with actual sales of
P50M for the year out of which it reported a net income of P18M. What is the rate of exemption?
a. 0% c. 60%
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b. 40% d. 100%
18. In the preceding problem, what is the income tax holiday?

a. P 0 c. P 3,240,000
b. P 2,160,000 d. P 7,200,000
19. A BOI-registered biofuel manufacturing corporation had the following for the third quarter of 2018:
Registered Activities Unregistered Activities

Sales P 20,000,000 P 5,000,000
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Beginning inventory 2,000,000 -
Purchases 14,000,000 3,000,000
Ending inventory 6,000,000 -
Less: Cost of services P 10,000,000 P 3,000,000
Gross profit P 10,000,000 P 2,000,000
Less: Expenses (no VAT) 6,000,000 1,000,000
Net income P 4,000,000 P 1,000,000
*70% of sales from registered activities constitutes export sales while all of the purchases of the
registered activities were from farmers
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Compute the corporate income tax.
a. P 0 c. P 450,000
b. P 300,000 d. P 1,500,000
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20. In filing its annual tax return, the taxpayer shall use BIR Form
a. 1701 c. 1702-EX
b. 1702-RT d. 1702-MX
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21. Compute the VAT due.
a. P 0 c. P 600,000
b. P 240,000 d. P 960,000
22. The 8% optional income tax is not allowed to

a.
b.
c.
Self-employed individuals selling goods
Mixed income earner
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Partner solely deriving income from a general professional partnership
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d. Self-employed individuals selling services
23. Which need not be required to be specifically identified in the official receipt or invoice?
a. The fact that the sale is a VAT-exempt sale
b. The fact that the sale is a Zero-rated sale
c. The fact that the sale is Regular vatable sales
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d. None of these
24. The TIN of the buyer is required to be indicated in the invoice or receipt if
a. He is a VAT-taxpayer, regardless of amount of purchase
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b. He is a VAT-taxpayer and the amount exceeds P1,000

c. The amount exceeds P1,000 regardless of whether or not he is VAT or non-VAT taxpayer
d. The taxpayer is a large taxpayer, regardless of amount of purchase
25. A VAT official receipt may not be issued for the

a. Sale, barter or exchange of services
b. Lease of goods or properties
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c. Sale, barter or exchange of goods

d. None of these
26. Statement 1: VAT taxpayers with quarterly total sales/receipt exceeding P2.5M are required to submit
Summary List of Sales
Statement 2: VAT taxpayers with quarterly total sales/receipt exceeding P1.0M are required to submit
Summary List of Purchases
a. True; True c. False; True
b. True; False d. False; False
27. Temporary closure of business establishment shall be enforced against
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a. VAT-registered persons who fail to issue receipts or invoices or file VAT return
b. Understatement of taxable sales or receipts by more than 30% of the correct amount
c. Persons who fail to register with the BIR
d. All of these
28. A VAT taxpayer had the following details in the preceding quarter:
Sales to private entities P 400,000

Export sales 200,000
Sales to the government 300,000
Exempt sales 100,000
Total P 1,000,000
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Input VAT P 72,000
Compute the output VAT.
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a. P 48,000 c. P 84,000
b. P 64,000 d. P 108,000
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29. Compute the creditable input VAT.
a. P 43,200 c. P 64,800
b. P 64,200 d. P 72,000
30. Compute the VAT still due.

a. P 4,800
b. P 19,200
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c. P 19,800
d. P 28,200
31. Amount of gain or loss through regular income tax

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a. None c. P 600 loss
b. P 600 gain d. P1,600 loss
32. In 2019, Mr. Bistro, a resident of Baguio City, Benguet, donated an agricultural land in Roxas, Isabela
with a zonal value and fair value per assessor’s office of P5,000,000 and P4,000,000, respectively.
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Compute the donor’s tax.

a. P 300,000 c. P 285,000
b. P 240,000 d. P 225,000
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33. Compute the documentary stamp tax.

a. P 75,000 c. P 71,250
b. P 60,000 d. P 56,250
34. Where is the proper venue to file the donor’s tax return?
a. RDO Baguio City c. RDO Isabela
b. RDO Benguet d. Any of these
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35. Compute the local transfer tax.

a. P 20,000 c. P 25,000
b. P 30,000 d. P 37,500
36. Where is the proper venue of the local transfer tax?

a. Provincial treasurer of Isabela c. Provincial treasurer of Benguet
b. Municipal treasurer of Roxas d. City treasurer of Baguio City
37. Compute the total annual tax on the land.
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a. P 40,000 c. P 20,000
b. P 32,000 d. P 10,000
38. Speedy Company, a non-resident foreign corporation, was contracted to design the website of
Wesleyan University for P2,000,000.
Compute the final tax if the website development is done

a. outside the Philippines?
b. within the Philippines?
39. The manual filing of the final withholding tax return for the first two months of the quarter by
withholding agent shall be made not later than
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a. 10 days from the close of the month of withholding.
b. 20 days from the close of the month of withholding.
c. 25 days from the close of each calendar quarter.
d. the last day of the month following the close of the taxable quarter of withholding.
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Query: How about the quarterly final withholding tax return?
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40. ZTX Company had the following dealings in the stocks of Suzi Company, a domestic corporation:
Date Transaction Shares Net price

11/15/2017 Buy 10,000 P 30
9/30/2018 Sell 8,000 27
10/3/2018
12/7/2018
Buy
Sell
6,000
5,000
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Assuming ZTX Company uses FIFO method, compute the capital gains tax in 2018.
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a. P 850 c. P 2,550
b. P 1,150 d. P 3,450
41. Due to lack of interested buyer, Enso was forced to sell his farm lot for P1,750,000 at a discount of
30% on its prevailing fair value. Due to this, Enso realized a loss of P250,000 from the sale. Compute
the capital gains tax.
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a. P 0 c. P 120,000
b. P 105,000 d. P 150,000
42. Mr. Bantaw, retired from his job in Silicon Valley, USA, at the age of 45. He returned to reside
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permanently in the Philippines. He is receiving a monthly pension of $20,000, equivalent to P112,000.

Compute his reportable gross income.
a. P 0 c. P 1,344,000
b. P 112,000 d. P 1,456,000
43. The following pertains to various tax assessment paid by the taxpayer:
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Local Tax Income tax Total

Tax due P 20,000 P 100,000 P 120,000
Surcharge 5,000 25,000 30,000
Interest 4,000 21,000 25,000
Total P 29,000 P 146,000 P 175,000
Compute the total deductible expense.

a. P 0 c. P 24,000
b. P20,000 d. P 45,000
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44. Pinoy Exporters, Inc., a pioneer BOI-registered entity with an ITH which expired at the end of 2016,
incurred net losses P15,000,000 and P12,000,000 in 2016 and 2017, respectively. If Pinoy Exporter,
Inc. has a net income of P20,000,000 in 2018. How much NOLCO can be claimed?
a. P 37,000,000 b. P20,000,000 c. P 12,000,000 d. P 0
45. The decedent had P 20,000,000 cash in his bank account in his latest SALN. P2,000,000 of this were
spent for his hospitalization prior to his death. His family withdrew P1,500,000 of this for his funeral.
The same were subjected to 6% final tax by the bank. How much cash shall be reflected in the gross
estate of the decedent?
a. P 20,000,000 c. P 18,000,000
b. P 18,500,000 d. P 16,500,000
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46. On October 31, 2016, the decedent borrowed a P2,000,000 from a lender which charges 10%
interest due annually every October 31. The decedent died on January 31, 2018. Compute the total
deductible indebtedness against gross estate.
a. P 2,250,000 c. P 2,050,000
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b. P 2,200,000 d. P 2,000,000
47. Decedent X received a P2,000,000 donations from his father on July 1, 2016. He used the money to
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purchase 100,000 shares of listed company, Sam Miguel Company. The shares of Sam Miguel
Company traded as follows: Open – P20, High – P 24, Low – P18 and Close – P23 at the time of X’s
death on July 4, 2018. X have other assets of P12,900,000. X had P3,600,000 total obligations upon
his death. Compute the vanishing deduction?
a. P 0 c. P 912,000
b. P 608,000 R
d. P 2,000,000
48. A senior citizen who is also a professional practitioner shall be

a. Exempt from VAT on his receipts
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b. Exempt from income tax on his receipts
c. Exempt from VAT and income tax on his receipts
d. Subject to VAT and income tax on his receipts.
49. A partial income tax holiday is given by law to

a. PEZA-registered entities
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b. Newly-registered enterprises to the BOI

c. Expanding enterprises registered to the BOI
d. Any of these
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50. Which of the following PEZA-registered enterprises enjoys initial income tax holiday?
a. Facility providers
b. Export manufacturing enterprises
c. Developers of Ecozones
d. Utilities providers
51. A private school is subject to

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a. Income tax c. Real property tax

b. Business tax d. All of these
52. A private hospital is exempt from

a. Income tax c. Real property tax
b. Business tax d. None of these
53. Which is false?

a. A private school is subject to income tax but not to business tax.
b. A BMBE is exempt from both income tax and business tax.
7
c. A local water utility is exempt from income tax but subject to business tax.
d. A general professional partnership is exempt from income tax but subject to business tax.
54. Which is vatable under the TRAIN law?

a. Association dues
b. Sales of gold to the BSP
c. Sales of medicine prescribed for diabetes and hypertension
d. Exchange of property for stocks where no control is obtained
55. Which is not a PEZA incentive?

a. Exemption from duties and taxes on importation
b. 0% income tax
w
c. Exemption from VAT and percentage tax
d. Exemption from local business tax and real property tax, except those on land
56. A certain taxpayer on the calendar year basis filed his third quarterly VAT return on December 30, 2018
ie
and paid the VAT due of P40,000 thereon. He filed an amendment return on February 5, 2019 and paid
the additional tax of P30,000.
ev
In case of deficiency taxes, the BIR shall issue a notice of assessment not later than
a. October 25, 2021 c. February 5, 2022
b. December 30, 2021 d. February 5, 2021
57. In case of overpayment, the taxpayer shall file a claim for tax refund not later than
a. October 25, 2020
b. December 30, 2020
R
c. February 5, 2021
d. February 5, 2022
58. The taxpayer received a deficiency assessment from the BIR. The same stemmed out of the BIR’s
PA
another interpretation on the provision of the law. The taxpayer must
a. File a petition for review before the CTA within 30 days
b. File a motion for reinvestigation with the BIR within 30 days
c. File a motion for reconsideration with the BIR within 30 days
d. Seek the opinion of the Secretary of Finance within 60 days
C
59. The employer paid for the following:
Bonuses of managerial employees P 208,000

Vacation expenses of managerial or supervisory employees 260,000
EO
Rent for the residence of company president 162,500

Cars given to sales personnel as performance bonus 1,300,000
The vacation expenses were incurred during mandatory company outing sponsored by the company
for top-management get-together and strategic planning of the company
Compute the fringe benefits tax.

R
a. P 0 c. P 87,500
b. P 43,750 d. P 227,500
60. Tess, married, died on November 1, 2018 leaving the following properties and obligations:
Cash P 5,000,000
Warehouse building 8,000,000
Land 10,000,000
Investment stocks 1,000,000
Family home 12,000,000
8
Bank loan 2,500,000
Unpaid taxes 300,000
The investment in stocks consists of 1,000,000 shares with P1 par value, P2.50/share book value. The
stocks were traded P2.20 at the open, peaked at P2.32 and bottomed at 2.10 and closed at P2.30 at
the date of Tess’ death. All of the properties were common except for the warehouse building which
was inherited by Munda’s spouse just before her death. After due notice were made to the bank about
her death, P1,000,000 of the cash were withdrawn from the account for her funeral expenses.
Compute the total gross estate.

a. P 37,210,000 c. P 28,210,000
b. P 29,210,000 d. P 28,000,000
w
61. Compute the estate tax due.
a. P 672,300 c. P 132,300
ie
b. P 402,300 d. P 102,300
62. The VAT return for the third quarter of 2018 was paid by the taxpayer on October 15, 2018. What is
the last day for the BIR to send any deficiency tax assessment?
ev
a. April 15, 2021 c. October 25, 2021
b. October 15, 2021 d. September 30, 2021
Withholding taxes
63. The University of the Cordilleras took Zeus Millan, a practicing accountant and professor, as the
P89,600 professional fees for the event.
Required:
R
resource speaker in a social symposium “Accounting for Real Estate” He is contracted to be paid
PA
a. What is the withholding tax if Mr. Zeus Millan is a professor of the College of Accountancy of the
University of the Cordillera?
b. What is the withholding tax if Mr. Zeus is a professor of the College of Accountancy in the
University of Baguio? What if Millan submitted an affidavit of his gross receipts? What if Millan is
a VAT-registered taxpayer?
C
8% Income Tax, General Professional Partnership & Optional Standard Deductions

64. A self-employed taxpayer expects to have the following income for the upcoming the year:
Sales P 1,200,000
EO
Cost of sales 500,000

Gross income P 700,000
Compensation income 180,000
Dividend income 20,000
Gain on sale of machinery 50,000
Total income P 950,000
Less: Expenses 230,000
R
Net income P 720,000
Required:
1. Compute the tax due under the regular income tax, using
a. Itemized deduction
b. Optional standard deduction
2. Compute the 8% income tax
3. Which is preferable to the taxpayer?
9
65. Juan Cruz, a non-VAT registered senior citizen and owner of St. Peter Drugstore, had the
following sales during the first quarter of 2019:
Sales of medicines for diabetes and hypertension P 30,000

Sales of other medicines 500,000
Cost of sales 140,000
Gross income P 390,000
Interest income from deposit 2,000
Salaries of senior citizen employee 20,000
Salaries of PWD employees 20,000
Other expenses 50,000
Net income P 332,000
w
Compute the percentage tax.
a. P 0 c. P 15,000
ie
b. P 60 d. P 15,060
66. Compute the income subject to regular income tax.

a. P 0 c. P 292,000
ev
b. P 277,000 d. P 302,000
67. The incremental ITH for newly registered BOI enterprise

a. 2
b. 3
c. 4
d. 6 R
68. An enterprise earned P40M, inclusive of P5M income from unregistered activity, in 2018.
PA
Registered activities Unregistered activities Total
Revenue (75% export) P 100M P 20M P 120M
Less: Cost of sales 45M 10M 55M
Expenses 20M 5M 25M
Net income P 35M P 5M P 40M
C
Required: Compute the income tax still due and output VAT assuming the enterprise is a:
a. BOI-registered enterprise
- The enterprise is a newly registered enterprise.
- The enterprise is an expanding enterprise with an exemption ratio of 40%.
EO
b. PEZA-registered enterprise
a. During ITH period
b. During GIT period
69. A British national, residing in Nigeria, earned dividend income from a DZ, a domestic corporation,
amounting to P500,000. The RP-UK tax treaty provides for a 12% tax rate. While the Nigeria-
R
Philippine tax treaty calls for a 15% tax treaty. What is the applicable withholding rate?
a. 10% c. 15%
b. 12% d. 25%
70. Which is required for the claim of tax treaty relief on business profits?
a. Certificate of Residency for Tax Treaty Relief
b. Tax Treaty Relief Application
c. Certificate of non-residency in UK
d. All of these
10
71. A Company was assessed for P1M income tax, before increments, for taxable year 2020. The
assessment calls for payment not later than June 30, 2021.
Required: Compute the tax payment if the taxpayer settled

a. On June 30, 2021.
b. On February 10, 2022
72. On June 4, 2019, the BIR assessed Mr. Pedro for deficiency income tax of P400,000 for the year
2014 due to an alleged improper computation of deduction. Mr. Pedro shall
a. ignore the assessment.
b. file a motion for reinvestigation with the BIR within 30 days
c. file a motion for reconsideration with the BIR within 30 days
w
d. file a petition for review with the Court of Tax Appeals.
73. A PEZA-registered enterprise with no unregistered activity shall file

a. 1702-RT c. 1702-MX
ie
b. 1702-EX d. None of these
74. A newly registered BOI-enterprise with no unregistered activity shall file
ev
a. 1702-RT c. 1702-MX
b. 1702-EX d. None of these
75. An expanding BOI-enterprise with no unregistered activity shall file

a. 1702-RT c. 1702-MX
b. 1702-EX R
d. None of these
76. X-Trade rendered services to the government. It billed the latter P 224,000. Compute the amount to
be withheld by the government assuming X-Trade is a:
PA
a. VAT taxpayer
b. Non-VAT taxpayer
Query: What if the services were provided by a non-resident person?
77. Which is least likely to be filed under the eFPS?

C
a. Form 2551Q c. Form 1706

b. Form 1701-A d. Form 2550Q
78. Which is likely to be filed under ONETT?

EO
a. Form 1702Q c. Form 2000

b. Form 2200 d. Form 1800
79. Dr. Bantayan Muto made a cosmetic procedure on Zeus Schuding for P50,000. Determine the
amount to bill for excise tax and VAT if:
a. The amount is agreed to be inclusive of VAT but exclusive of excise tax.
b. The amount is inclusive of VAT and excise tax
R
80. Assume instead that the procedure on Zeus Schuding was done by Bantayan Hospital incurring
thereon P20,000 for supplies plus P50,000 for professional fees which is agreed to be inclusive of
VAT and excise tax, determine the excise tax and output VAT.
To God be all the honor and the glory, forever!

God bless you all!
---- End of Pre-week ----
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TAXATION PRE-WEEK

1. The taxpayer earned the following income:

Compute the final tax.

2. A corporate taxpayer which earned interest income from dollar deposits is

3. An inter-corporate dividend from a resident corporation is

Compute the total final tax if the employee is a resident citizen.

to capital gains tax.

6. The option to be taxed at 8% is available to?

Compute the capital gains tax.

*Compute the stock transaction tax.

Compute the gain to be subjected to regular tax.

9. Which is not an inherent limitation of the power to tax?

10. Which can opt to use OSD?

Benefits type Purpose Grantee employees Amount

a. Journals and ledgers

16. Which is least likely to be required for a start-up business?

17. Which is not a required attachment in the annual ITR?

19. Which is least likely to be filed under the eFPS?

20. Who is not required to file under eFPS?

22. Which is a local tax?

Building acquisition cost P 1,000,000

Accumulated depreciation 200,000

What is the deductible depreciation expense?

What is the tax still due?

Tuition and miscellaneous fees P 4,500,000

Normal income tax MCIT

2022 P 100, 000 P60, 000

How much is the tax payable in 2022?

31. An operator of an Illegal horse-betting business, a senior citizen who is supporting a

Receipts from illegal bets P500, 000

How much is the taxable net income?

Air-conditioning parts P 25,000

What amount should Brando report as self-employment income?

35. Under the global system of income taxation:

Entertainment, amusement and recreation P 60,000

*What if Carissa is an executive?

cost P30,000. She sold the painting, on the following terms:

June 1, 2020 down payment P 10, 000

How much would she report as gross income for 2020?

Compensation Gross Receipts Deductions Net Income

What was the tax consequence of the sale?

Refund of percentage tax

Gross receipts P 1, 000, 000

Returns and allowances 150, 000

Acquisition cost of equipment used in the supply of services

43. How much is the total cost of services?

Personal properties P1, 000, 000

and medical expenses of P600, 000) 900, 000

How much was the deductible funeral expenses?

55. Which is not included in gross estate?

Remaining unpaid balance of medical bills

Claim against insolvent persons

Compute the total ordinary deductions against gross estate.

57. Compute the total special deductions against gross estate.

58. Which does not qualify as deduction against gross gift?

Which of the following properly presents Mr. Pinot’s gross estate?

Separate property Common Property Gross estate

Separate property Common Property Gross estate

61. Which is subject to VAT?

Sales of cooking oil P 7,000,000

Compute the VAT due.

P2,300,000, what is the output VAT?

67. Which of this pay VAT?

70. Which cannot claim presumptive input VAT?