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1ST Tax Review Questionnaires With Answers PDF
1ST Tax Review Questionnaires With Answers PDF
EASY
2. Pioneer enterprises are exempt from certain taxes for a certain period of time, that are otherwise
applicable to other enterprises. Which of the following statements in wrong?
A. This violates the constitutional requirement of rule of uniformity in taxation
B. This is a sound tax incentive for development of the national economy
C. This will provide employment opportunities
D. This will not involve unconstitutional delegation of the power of taxation even as certain government
agencies, other than congress of the Philippines, will identify who qualify as pioneer enterprises.
4. If an individual performs for the creditor who, in consideration thereof, cancels the debt, the cancellation of
the debt may amount to:
A. A gift
B. A capital contribution
C. A donation inter vivos
D. To a payment of income
5. Mr P. was an insolvent debtor with an obligation of P500 000 to Q Co. Q Co. Agreed to a dacion en pago,
receiving a property with a fair value of P100 00 in payment, with the balance of P400 000 being condoned.
6. A Co. Is in the process of dissolution and liquidation. Mr. A is a stockholder with a cost to him of P100 000
on his shares of tax. He received a liquidating dividend of P50 000. What is the tax consequence of his
receipt of the dividend?
A. A dividend income of P50 000 and a loss of P100 000 on his shares of stock
B. A loss of P50 000 on his shares of stock
C. A dividend income of P50 000
D. No tax consequence
7. The amount of funeral expense that may be deducted from the gross estate is
A. 5% of the gross estate or P200 000, whichever is lower
B. Actual funeral expense or P200 000, whichever is lower
C. 5% of the gross estate or the actual funeral expenses whichever is lower
D. 5% of the gross estate or the actual funeral expense or P200 000 whichever is the lowest
-VOID QUESTION
8. Gaby, a Japanese residing in the Philippines, bought garments from ABC Corp., a domestic corporation,
and exported the same to Japan. Total value of export is P100 000. VAT (Output tax) due on the transaction
is:
A. 10 000
B. 5 000
C. None, because 0% applies
D. None, because the sale is exempt from VAT
Note: Gaby is not a VAT registered person (not in business) the exportation is exempt from the VAT.
10. Mr. D owned 100 hectares of agricultural land. The government took 95 hectares under Agrarian Reform
Act, with payment for it not yet received. MR. D died. What value shall be included in his gross estate.
A. One hundred hectares of agricultural land
B. Five hectares of agricultural land plus the amount receivable from the Government on the
appropriation of ninety-five hectares
C. Five he ctares of agricultural land
D. None
AVERAGE
1. Mr A own a parcel of land. He leased the land to Mr. B for ten years at a rental of P20 000 per year. The
condition was that Mr. B can make improvements on the land which will become the property of MR. A at the
end of the lease without compensation or reimbursement whatsoever for the value of the property. Mr. B
erected a building. Upon completion, the building had a fair value of P2 000 000. At the end of the lease the
building had a depreciated value of P1 000 000 only. The income of Mr. A is :
A. 0 B. 1 000 000 C. 2 000 000 D. Some other amount
2. An importer wishes to withdraw its importation from the Bureau of Customs . The imported goods were
subjected to 10% customs duty in the amount of P12 500 and to other charges in the amount of P9 500. The
value added tax due is :
A. 12 500 B. 13 750 C. 13 364 D. 17 640
3. Mr. A die with a receivable from MR. B. Mr B, has properties worth P220 00 and obligations of P320 000.
Included in the obligations of Mr. B are P20 000 owed to the government of the Republic of the Philippines
for unpaid taxes and to Mr. A of P60 000.
The estate of Mr. A has a deduction for claim against insolvent of:
A. 60 000 B. 41 250 C. 20 000 D. 0
5. In the last will and testament., a decedent provided that the properties he leaves must not be sold or
disposed for ten years following his death. He had real estate in his gross as follows.:
6. Y. Co. Issued preferred shares with the following features. Non-voting , entitled to dividend regardless of
income or loss for the year, to be paid ahead of common shares in the event of dissolution , and Y. Co had
the option to redeem the shares.
Statement 1. the payment of the dividend is interest payment by Y. Co deductible from its gross income.
Statement 2. the payment of dividend is income distribution and is not deductible from gross income.
A. True, true B. False, False C. False, True D. true , False
The allowable deduction for depreciation for the year of 2019 is:
A. 35 795.45 B. 43, 750 C. 49 431.82 D. 31 250.00
10. Mr Araki is a non resident alien stockholder , received a dividend income of P300 000 in 2019 from a
foreign corporation doing business in the Philippines. The gross income of the foreign corporation from
within and without the Philippines for three years preceding 2019 are as follows:
How much of the dividend income received by Mr. Araki is considered income from sources within the
Philippines?
A. Zero B. 150 000 C. 270 000 D. 300 000
1.
Difficult
1.
2.
3.
4.
5. Lenovo, Inc., a resident foreign corporation, has earned the following income during 2018:
DIVIDEND INCOME FROM:
Microsoft, a non-resident foreign corporation P500,000
Intel, a resident foreign corporation (ratio of Phlippine P400,000
Income over world income for the past 3 years is 40%)
Panday, a domestic corporation P300,000
INTEREST INCOME FROM:
Current Account, BDO P600,000
Savings deposit, ABN-AMRO bank, UK 700,000
FCDU deposits 800,000
ROYALTY INCOME from various domestic corporations 100,000
The total final tax on passive income for the taxable year is:
Answer : 260 000
6. I – The CIR may refund a tax even without a claim for refund from the taxpayer where on the face of the
return upon which the payment was made, such payment clearly appears to have been erroneously made.
II – When the two years are about to expire from the date of payment and no decision has yet been
received by the taxpayer on his claim for refund filed with the BIR, the taxpayer may appeal to the
CTA even without waiting for the decision of the BIR on his claim for refund.
a. True; True b, False; False
c. True; False d. False; True
7. World Power Corp. imported an article from Japan. The invoice value of the imported articles was $7,000
($1-P50), however, customs officials valued the imported article for P500,000. The following additional costs
were incurred in connection with the importation:
Insurance P15,000 Arrastre charges 8,000
Freight from Japan10,000 Brokerage fee 25,000
Postage 5,000 Facilitation fee 3,000
Wharfage 7,000
The imported article was imposed P50,000 customs duty and P30,000 excise tax.
The Company likewise spent P50,000 for trucking fee from the customs warehouse to its warehouse
in Quezon City. The carrier is a vat-registered entity. The VAT on importation is: ANS: P78,000
8. The following data were taken from Juan (single), holding managerial position for 2018 taxable year:
Gross salaries @ P50,000 per month P600,000
SSS Contributions 12,000
Philhealth contributions 7,200
Pag-ibig contributions 4,800
Union dues 3,000
Withholding tax on compensation income 73,250
Allowances, not subject to liquidation 100,000
Gasoline allowances, subject to liquidation 17,000
13 month pay
th
50,000
De minimis benefits 12,000
The taxable compensation income subject to graduated rate under Sec 24(A) of the tax code is:
ANS : 573 000
9. On February 2018, Gallaxy decided to conduct an initial public offering (IPO) and initially offers
5,000,000 of its unissued shares to the investing public for P7.50/share.
During the IPO period, one of its existing shareholders. Lorna, has likewise decided to sell her entire
1,000,000 shares to the public for P7.50/share.
How much is the percentage tax due on the primary offering?
ANS : 375 000
EASY
1.
Gain on sale of personal property purchased in
Philippines and sold in HongKong 400 000
Compensation received for personal services in the Philippines 200 000
Rent Income from real property in Malaysia 300 000
Gain from sale in the Philippines of shares of a foreign corporation 100 000
Deduction identified with:
Philippine income 80 000
Foreign income 120 000
Deductions unidentified with any particular income 30 000
Solution : PH FOREIGN
Gain on sale of personal property 400 000
Compensation for personal service 200 000
Rent Income from real property 300 000
Gain from sale of shares 100 000
Total 300 000 700 000
3.The following are similarities of the inherent power of taxation, eminent domain, and police power, except
one:
A. Are necessary attributes of sovereignty
B. Interfere with private rights and property
C. Affect all persons or the public
D. Are legislative in implementation
4. Mr Monte. Was injured in a vehicular accident in 2018. He incurred and paid medical expense of P20 000
and legal fees of P10 000 during the year. In 2019, he received P70 000 as settlement from the insurance
company which insured the car owned by the other party involved in the accident. From the above payments
and transactions, the amount of taxable income to Mr. Monte in 2019 is:
6. D
7. Statement 1: Monetized value of unused sick leave credits not exceeding 10 days to private employees is
a tax exempt benefit.
Statement 2: Monetized value of unused sick leave credits not exceeding 10 days to government employees
is a tax exempt benefit.
A. Only statement 1 is correct. c. Both statements are correct.
B. Only statement 2 is correct. d. Both statements are incorrect.
8. Moon Telecom Inc. has the following collections for the month of April 2018:
Overseas call originating abroad P1,120,000
Overseas call originating in the Philippines 880,000
Local calls 2,240,000
How much is the overseas communications tax to be remitted by Moon for the month?
A. P220,000 c. P200,000
B. P88,000 d. P80,000
10. The following taxpayers consider holding period in determining the taxable capital gain or deductible
capital loss and carry-over net capital loss the following year, except
a. Individual c. Corporation
C. Estates d. Trusts
AVERAGE
1. Mrs. Evangelista owns a parcel of land worth P500 000 which was inherited from her father in 2019when
it was worth P300 000. Her father purchased it in 2017 for P100 000. If Mrs. Evangelista transfers the parcel
of land to her wholly owned corporation in exchange for shares of stock of the said corporation worth P450
000, Mrs. Evangelista’s taxable gain is?
A. 0 B. 50 000 C. 150 000 D. 350 000
2. Which statement is wrong? Transactions considered “in the course of trade or business”, and therefore
subject to business taxes include:
A. Regular conduct or pursuit of commercial or an economic activity by a stock private corporation
B. Regular conduct or pursuit of commercial or an economic activity by a non-stock private corporation.
C. Isolated services in the Philippines by non-resident foreign persons
D. Isolated sale of goods or services for a gross selling price or receipts of P800 000
3. Sales, VAT business 600 000
Sales, non VAT business 300 000
Purchases of goods to be sold, VAT business 200 000
Purchases of goods to be sold, non VAT 100 000
Purchases of supplies for VAT and non VAT business 30 000
How much is VAT payable ?
A. 45 600 B. 50 000 C. 40 000 D. 55 000
4.
ANSWER C.
5. For death of a father in an airplane crash, the children received insurance proceeds of P350 000 by the
insurer and airline.
Statement 1. The P350 000 shall be included in the gross estate because it was a receivable at the time of
death
Statement 2. The P350 000 shall not be included in the gross estate because the life insurance was not
taken out by the decedent himself on his own life
6. Pacman imported brand new Jaguar, 2018 model from the USA for personal use of Jinkee. Total landed
costs is P15,000,000 exclusive of customs duties of P3,000,000, excise tax of P2,000,000 and facilitation
cost of P1,000,000. VAT payable is:
A. P240,000 b. P360,000 c. P1,800,000 d. P2,400,000
7. During 2018 taxable year, First Metro Pacific was able to persuade Francis to join the company as its Asst.
Vice President for Finance which included a car plan worth P3M on its compensation package. First Metro
purchased the vehicle and registered the same in favor of Francis. Assuming further that Francis is a
non-resident alien not engage in trade or business, how much is the fringe benefit tax?
A. P529,412 b. P1,411,765 c. P 1,615,385 d. P1,000,000
8. In 2018, Omega Corp. purchased a motor vehicle for the use of its executive. It was registered under the
name of the executive although it was agreed that it shall be used partly for the benefit of the company. The
cost of the vehicle was P1,400,000. The amount of fringe benefit tax is:
A. P658,824 b. P753,846 c. P329,411 d. nil
9. Mabuhay, Inc., a Philippine corporation, sold through the local stock exchange 10,000 PLDT shares that it
bought 2years ago. In 2018, Mabuhay sold the shares for P2 million and realized a net gain P200,000. How
shall it pay tax on the transaction?
A. It shall declare a P2 million gross income in its income tax return, deducting its cost of acquisition
as an expense.
B. It shall report the P200,000 in its corporate income tax return adjusted by the holding
period.
C. It shall pay a tax of ½ of 1% of the P2 million gross sales.
D. It shall pay a tax of 6/10 of 1% of the P2 million gross sales.
10. In case of conflict between tax laws and generally accepted accounting principles :
A. Both tax laws and GAAP shall be enforced
B. GAAP shall prevail over tax laws
C. Tax laws shall prevail over GAAP
D. The issue shall be resolved by the court
DIFFICULT
1. Pedro, vat-registered, made the following purchases during the month of January, 2018:
Goods for sale, inclusive of VAT P246,400
Supplies, exclusive of VAT 20,000
Packaging materials, total invoice amount 56,000
Home appliances for residence, gross of VAT 17,920
Office machines (5pcs), 8 years useful life, net of VAT 2,000,000
Creditable input taxes are:
Ans: P38,800
2. A sold a personal property held as capital asset he acquired 9 years ago with an acquisition cost
of P150,000 for P270,000. The payment shall be made in the following terms. Cash down payment
of P40,000 and additional P10,000 at the end of the year of sale. The property sold has been
mortgaged for P160,000 which is assumed by the buyer. The buyer issued a note payable for the
balance which is to be paid equally in two years following the year of sale. The taxable profit for the
year is:
a. P120,000 b. P60,000 c. P30,000 d. P15,000
3. X, Y and Co., a general partnership has the following data of income and expenses for 2018:
Gross income P2,400,000
Expenses 1,000,000
Dividend received from a domestic corporation 90,000
Interest on bank deposit (net) 10,000
Partners X and Y share profits and losses in the ratio of 80% and 20% respectively. The income tax payable
by the partnership is:
A. P420,000 b. P450,000 c. P447,000 d. P423,000
4. Pedro generated net income from trade amounting to P400,000. His capital asset transactions during
2018 are summarized as follows:
Holding Period Amount
Capital gain 6 months P50,000
Capital gain 2 years P45,000
Capital loss 12 months P23,000
Capital loss 10 years P28,000
How much is Pedro’s taxable income ?
a. P484,000 c. P435,500
b. P444,000 d. P385,500
5. An offshore banking unit, already in its 8th year in the Philippines, has the following data in its income
and expenses for the year 2018:
Foreign currency transaction with:
Non-residents 1,800,000
Local banks 1,200,000
Branches of foreign banks 1,000,000
Another OBU 500,000
Other residents 800,000
OTHER INCOME:
Rent income 1,000,000
Miscellaneous income 500,000
Operating expenses 2,380,000
How much is the total income tax for the year?
a. P0 c. P292,500
b. P80,000 d. P372,500
8. Le Bron Corporation has the following information for the taxable year 2018:
QUARTER RCIT MCIT CWT
First 200,000 160,000 40,000
Second 240,000 500,000 60,000
Third 500,000 150,000 80,000
Fourth 300,000 200,000 70,000
Additional Information:
MCIT carry-over from prior year amounts to P60,000;
Excess tax credits from prior year amounts to P20,000.
How much was the income tax payable for the first quarter?
a. P200,000 c. P120,000
b. P160,000 d. P80,000
9. Bahala Na College, a proprietary educational institution provided the following data for 2018:
Income from tuition fees P3,000,000
School miscellaneous fees 250,000
Income from canteen operations 750,000
Dividend income:
Domestic corporation 100,000
Foreign corporation 50,000
Rent income (net) 5,700,000
Operating expenses 4,125,000
Quarterly income tax payments 250,000
The income tax payable of the school is:
a. P37,500 c. P1,212,500
b. P337,500 d. P1,227,500
10. H Hospital is a 100-bed hospital organized mainly for non-paying patients. However, out of 100-bed
capacity, 40-beds are allotted for paying patients, while the rest are intended for charity patients. The
revenues generated from these paying patients, however, are being used to improve the facilities of the
hospital. Which of the following statement is correct?
I. H Hospital can claim exemption from real property tax. As a general principle, a charitable
institution does not lose its character as such and its exemption from taxes simply because it
derives income from paying patients, whether out-patient, or confined in the hospital, or receives
subsidies from the government, so long as the money received is devoted or used together to the
private benefit of the persons managing or operating the institution.
II. H Hospital is subject to 10% on its net income, subject to compliance with the “predominance
test”.
a. I only c. I and II
b. II only d. Neither I nor II