ATARA DAMA INC.

is a corporation incorporated and existing under and by virtue

of laws of the Republic of the Philippines, with business address at 1122
General Luna Street, Paco. Manila. Respondent on the other hand, is the duly
appointed Commissioner of Internal Revenue, with power, among others, 10 act
upon claims for refund or tax credit of overpaid internal revenue taxes, with
office address at the Fifth Floor, BIR National Office Building, BIR Road,
Diliman , Quezon City.

On April 16, 2017, petitioner filed its Annual Income Tax Return (ITR) for the
year ended December 31, 2016 with the Revenue District No. 34 of the Revenue
Region No. 6 of the Bureau of Internal Revenue (BIR), reflecting an income tax
overpayment of P5,159,341 computed as follows:

Sales/Revenues/Receipts/Fees P 28,808,960

Less: Cost of Sales/Services 23,834,605

Gross Income from Operation P 4,974,355

Add: Non-Operating & Other Income 5,375

Total Gross Income P 4,979,730

Less: Deductions P 4,979,730

Taxable Income -

   

Tax Rate (except MCIT Rate) 35%

Income Tax -

Minimum Corporate Income Tax (MCIT) P 99,595

   

   

Aggregate Income Tax Due P 99,595

Less: Tax Credits/Payments  

Prior Year's Excess Credits P 2,331,102

Creditable Tax Withheld for the First  

Three Quarters

Creditable Tax Withheld for the Fourth  

Three Quarters 2,927,834

Total Tax Credits/Payments P 5,258,936)

Tax Payable/(Overpayment) P (5,159,341)

Subsequently, on November 14, 2017, petitioner filed an Annual ITR for the
short period fiscal year ended March 31, 2017, reflecting the income tax
overpayment of P5,159,341 from the previous period as "Prior Year’s Excess
Credit", as follows:

Sales/Revenues/Receipts/Fees 7,489,259

Less: Cost of Sales/Services 6,461,650

Gross Income from Operation 1,027,609

Add: Non-Operating & Other Income 479

Total Gross Income 1,028,088

Less: Deductions 1,206,543

Taxable Income (178,455)

   

Tax Rate (except MCIT Rate) 35%

Income Tax -

Minimum Corporate Income Tax (MCIT) 20,562

   

Aggregate Income Tax Due 20,562

Less: Tax Credits/Payments  

Prior Year's Excess Credits 5,159,341

Creditable Tax Withheld for the First

1,107,228
Three Quarters

Creditable Tax Withheld for the Fourth  

Quarter 6,266,569

Total Tax Credits/Payments 6,266,569

Tax Payable/(Overpayment) (6,246,007)

On the same date, petitioner filed an amended Annual ITR for the short period
fiscal year ended March 31, 2017, reflecting the removal of the amount of the
instant claim in the “Prior Year's Excess Credit”. Thus, the amount thereof
was changed from P5, 159,341 to P2,231,507.

On October 10, 2018, petitioner filed with the respondent's office, a claim
for refund and/or issuance of a Tax Credit Certificate (TCC) in the amount of
P2,927,834, representing the alleged excess and unutilized creditable
withholding taxes for 2016.

In view of the fact that respondent has not acted upon the foregoing claim for
refund/tax credit, petitioner filed with a Petition for Review on April l4,
2019 before the Court in Division.
As per CTA observation, ATARA DAMA INC. had, as of 31 December 2015, an
outstanding amount of P2,331,102 in excess and unutilized creditable
withholding taxes.

For the subsequent taxable year ending 31 December 2016, the total sum of
creditable taxes withheld on the management fees of ATARA DAMA INC. was
P2,927,834. Per its 2016 Annual Income Tax Return (ITR), ATARA DAMA INC.'s
income tax due amounted to P99,105. ATARA DAMA INC. applied its "Prior Year's
Excess Credits" of P2,331, 102 as tax credit against such 2016 Income Tax due,
leaving a balance of P2,231,507 of still unutilized excess creditable tax.

Meanwhile, the creditable taxes withheld for the year 2016 (P2,927,834)
remained intact and unutilized. In said 2016 Annual ITR, ATARA DAMA INC. chose
the option "To be issued a tax credit certificate" with respect to the amount
P2,927,834, representing unutilized excess creditable taxes for the taxable
year ending 31 December 2016. The figures are summarized in the table below:

Taxable Excess Income Tax Less Tax Balance of

Year Creditable Due Tax Credit Payable Excess CWT
Withholding
Tax (CWT)

2015 P 2,331, 102 - - - - - - - - - P 2,231,507

2016 P 2,927,834 P 99, 105 P 99,105 (A P 0 P 2,927,834

(MCIT) portion of the
excess credit of
Php2,33l,102 in
2015)
In the following year, ATARA DAMA INC. changed its taxable period from
calendar year to fiscal year ending on the last day of March. Thus, it filed
on 14 November 2017 an Annual ITR covering the short period from January 1 to
March 31 of 2017. In the original 2017 Annual ITR, ATARA DAMA INC. opted to
carry over as "Prior Year's Excess Credits" the total amount of P5,159,341
which included the 2016 unutilized creditable withholding tax of P2,927,834.
ATARA DAMA INC. amended the return by excluding the sum of P2,927,834 under
the line "Prior Year's Excess Credits" which amount is the subject of the
refund claim.

1. How much refund can the company claim from of its 2016 excess tax credits
when it filed its income tax return indicating the option of carry-over?
a. P2,927,834 c. P2,331,102
b. P5,159,341 d. P0

2. How much can the company carry-over from of its 2016 excess tax credits
when it filed its income tax return March 31, 2017?
a. P2,927,834 c. P2,231,507
b. P5,159,341 d. P2,331,102

3. The “irrevocability rule” in taxpayer’s remedy for overpaid income tax

applies to
a. Carry-over option c. Both A and B
b. Refund option d. Neither A nor B

4. Examine the truth or falsity of the following remedies for excess VAT
payments:

I. Unused input VAT from regular VAT transaction may be refunded.

II. Unused input VAT from VAT-exempt transactions are allowed as tax
credit against output VAT from regular sales.
III. Excess input VAT from zero-rated transactions may be refunded or
carried-over.
IV. VAT refund claims should be made within 2 years from month of sale.
V. The taxpayer may file VAT refund with the CIR or the CTA.
VI. The CIR has 90 days to decide VAT claims.
VII. A taxpayer should file before CTA deemed inaction of the CIR within
30 days after the lapse of the 90-day period, otherwise the VAT claim
will be denied.

Which is incorrect?
a. I is incorrect; II, III VI are correct
b. II, VI and VII are correct; IV is incorrect
c. III, VI, and VII are correct
d. IV, V, VI are incorrect; III is correct

5. Absence of Letter of Authority makes a tax assessment

a. Rescissible c. Unenforceable
b. Voidable d. Void

6. These are administrative rulings, more specific and less general

interpretations of tax laws issued from time to time by CIR.
a. BIR Ruling c. Revenue regulation
b. Revenue Orders d. Revenue Memorandum Circulars

7. The national government elects to tax a particular area, impliedly

withholding from the local government the delegated power to tax the same
field.
a. Doctrine of processual presumption
b. Doctrine of regularity
c. Strictissimi juris
d. Doctrine of preemption

Assume these facts for loss of property used in business:

Acquisition cost P100,000
Accumulated depreciation 90,000
Estimated remaining life 5 years
Replacement cost of damaged 5,000
 portion

8. How much is the deductible loss for tax purposes?

a. P5,000 c. P90,000
b. P10,000 d. P100,000

9. What is the new cost basis of the property?

a. P10,000 c. P15,000
b. P5,000 d. P0

10. Lalala bought shares of stock in 2017 at a cost of P100,000. He donated

these shares to Lololo on January 1, 2018, during which time, the said
shares have a fair market value of P1,000,000 and on the basis of such fair
market value, Lalala paid the corresponding donor’s tax. Lololo sold the
shares on January 1, 2019 for a consideration of P2,000,000.

Compute the capital gains tax.

a. P150,000 d. P240,000
b. P285,000 c. P300,000

11. Mr. X, a resident of the Province of Leyte, sold vast track of lands in
Ilocos Province. The lands, as assessed in the local office and per CIR’s
record, value at around P50,000,000 and P60,000,000, respectively. The same
property was sold for P100,000,000.

Compute the tax liability of Mr. X.

a. P6,000,000 c. P6,500,000
b. P7,500,000 d. P8,000,000

12. Alcatraz reported the following items for the taxable year:

Income from deposit substitute P 10,000

Interest income from bonds of a domestic corporation 23,000
Property dividend declared by a foreign corporation 40,000
Stock dividend declared by a domestic corporation 50,000
Compensation income, net of P10,000 withholding tax 80,000
Prize on beauty contest 15,000
Royalties from books 24,000
Interest income on personal loans granted to a friend 8,000
Salaries from a general professional partnership 30,000
Salaries from a business partnership 20,000

Compute the total amount of income subject to final tax.

a. P89,000 c. P49,000
b. P99,000 d. P69,000

Princess KT has been assessed deficiency income tax P1,000,000, exclusive

of interest and surcharges, for the taxable year 2018. The tax liability
has remained unpaid despite the lapse of June 30, 2020 (442 days), the
deadline for payment stated in the notice and demand issued by the
Commissioner. Payment was made by the taxpayer on February 10, 2021; 225
days past due date.

Note: Always use 365 days for interest computation.

13. Total tax due is:

a. P1,498,530 c. P1,799,448
b. P1,395,315 d. P1,492,192

14. Following old tax Law, total tax due is:

a. P1,498,530 c. P1,799,448
b. P1,395,315 d. P1,492,192

15. Princess KT has been assessed deficiency income tax of P1,000,000,

exclusive of interest and surcharge, for taxable year2015. The tax
liability has remained unpaid despite the lapse of June 30, 2017, the
deadline for payment stated in the notice and demand issued by the
Commissioner, Payment was made by the taxpayer only on February 10, 2018.
 Total amount due on February 10, 2018 is:
a. P1,762,963 c. P1,662,141
b. P1,491,644 d. P1,498,530

Servienrey signified his intention to be taxed at “8% income tax in lieu

of the graduated income tax rates and percentage tax under Section 116”
in his 1st Quarter Income Tax. However, his gross sales/receipts during
the taxable year have exceeded the VAT threshold as follows:
Amount
January P 250,000

February 250,000

March 250,000

April 250,000

May 250,000

June 250,000

July 250,000

August 250,000

September 250,000

October P 1,000,000

November 1,000,000

December 1,000,000 3,000,000

Total gross P 5,250,000

Sales/Receipts

16. How much is the VAT payable?

a. P120,000
b. P240,000
c. P630,000
d. P360,000

17. How much is the percentage tax liability?

Mr. SIOPAO signified his intention to be taxed at 8% income tax rate on

gross sales in his 1st Quarter Income Tax Return. He has no other source of
income, His total sales for the first three (3) quarters amounted to
P3,000,000 with 4th quarter sales of P3,500,000.

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

8% Rate 8% Rate 8% Rate
Total
P 500,000 P 500,000 P 2,000,000 P3,500,000
sales
Less: COS 300,000 300,000 1,200,000 1,200,000
Gross
P 200,000 P 200,000 P 800,000 P 2,300,000
income
Less:
Operating 120,000 120,000 480,000 720,000
expenses
Taxable
P 80,000 P 80,000 P 320,000 P 1,580,000
income
18. What is the total tax liability for the first three quarters?
a. P220,000 c. P810,000
b. P240,000 d. none of the choices

19. What is the tax liability for the whole year?

a. P520,000 c. P509,200
b. P500,000 d. P289,200

20. Popoy Corporation condoned the debt of Basha, a manager. What is the tax
consequence?
a. Compensation income tax c. Final income tax
b. Fringe benefit tax d. Donor’s tax

21. RLG Corporation, a retailer of goods uses the accrual method of accounting
in reporting its income and expenses under the calendar year basis. From
January 1 to June 30, 2018, it used the itemized deduction but decided to
use the optional standard deduction method when it filed its annual income
tax return. Its 2018 transactions show:

Jan 1 - June 30 Jul 1 - Sept 30 Oct 1 - Dec 31

Gross Sales P1,000,000 P700,000 P900,000
Cost of Sales 600,000 300,000 600,000
Business expenses 100,000 50,000 150,000

The net income of RDG is

a. P1,560,000 c. P800,000
b. P660,000 d. P720,000

MDG Corporation is engaged in trading business. The reported income and

expenses for taxable year 2018 show:

Sales P10,000,000
Cost of sales 6,000,000
General business expenses 1,000,000
Interest on time deposit (gross) 100,000
Interest expense on loans payable 180,000

22. The net taxable income is

a. P2,858,000 c. P3,000,000
b. P2,820,000 d. P2,862,000

23. A taxpayer had the following:

Year 1 Year2 Year 3 Year 4 Year 5
Gross income P450,000 P450,000 P440,000 P420,000 P490,000
Allowable Deductions 530,000 430,000 410,000 410,000 410,000

24. The income to be reported in year 2 is

a. P20,000 c. P450,000
b. P60,000 d. P0

25. The income to be reported in year 5 is

a. P60,000 c. P80,000
b. P20,000 d. P0

Gigi Na, a farmer, had the following data for the year:

Sales of livestock and farm products raised P270,000

Sales of livestock and farm products purchased 160,000
Cost of raising livestock and farm products 190,000

Cost of livestock and farm products purchased and sold 140,000

Rental income of farm equipment 105,000
Inventory of livestock and farm products, January 1 110,000
Inventory of livestock and farm products, December 31 113,000

26. Using the cash method of accounting, the income is:

a. P205,000 c. P395,000
b. P208,000 d. P202,000
27. Using the same information above, but the accrual method of accounting is
used, the income is
a. P205,000 c. P395,000
b. P208,000 d. P202,000

WATDAPAK is a PEZA-registered corporation authorized "to engage in the

business of manufacturing microprocessor unit package."

After its registration on June 29, 1998, WATDAPAK constructed buildings and
purchased machineries and equipment. As of December 31, 2009, the total
cost of the properties amounted to P3,150,925,917.

WATDAPAK "failed to commence operations." Its factory was temporarily

closed, effective October 15, 2009. On August 1, 2010, it sold its
buildings and some of its installed machineries and equipment to Ibigen
Philippines, Inc., another PEZA-registered enterprise, for ¥2,100,000,000
(P893,550,000).

WATDAPAK was dissolved on November 30, 2010.

In its quarterly income tax return for year 2010, WATDAPAK subjected the
entire gross sales of its properties to 5% final tax on PEZA registered
corporations. WATDAPAK paid taxes amounting to P44,677,500. On February 2,
2011, after requesting the cancellation of its PEZA registration and
amending its articles of incorporation to shorten its corporate term,
WATDAPAK filed an administrative claim for the refund of P44,677,500 with
the Bureauof Internal Revenue (BIR). WATDAPAK alleged that the amount was
erroneously paid. It also indicated the refundable amount in its final
income tax return filed on March 1, 2011. It also alleged that it incurred
a net loss of P2,233,464,538.

The BIR did not act on WATDAPAK’ claim, which prompted the latter to file a
petition for review before the Court of Tax Appeals on September 9, 2012.

The Court of Tax Appeals Second Division denied WATDAPAK’ claim for refund
in the decision dated December 29, 2014. The Court of Tax Appeals Second
Division found that WATDAPAK’ administrative claim for refund and the
petition for review with the Court of Tax Appeals were filed within the
two-year prescriptive period. However, fiscal incentives given to PEZA-
registered enterprises may be availed only by PEZA-registered enterprises
that had already commenced operations. Since WATDAPAK had not commenced
operations, it was not entitled to the incentives of either the income tax
holiday or the 5% preferential tax rate. Payment of the 5% preferential tax
amounting to P44,677,500 was erroneous.

After finding that WATDAPAK sold properties that were capital assets under
Section 39(A)(1) of the National Internal Revenue Code of 1997, the Court
of Tax Appeals Second Division subjected the sale of WATDAPAK’s assets to
6% capital gains tax under Section 27(D)(5) of the same Code and Section 2
of Revenue Regulations No. 8-98. It was found liable for capital gains tax
amounting to P53,613,000. Therefore, WATDAPAK must still pay the balance of
P8,935,500 as deficiency tax, "which respondent should perhaps look into." 

On July 17, 2015, WATDAPAK filed a petition for review before the Court of
Tax Appeals En Banc. 

It argued that the Court of Tax Appeals Second Division erroneously

assessed the 6% capital gains tax on the sale of WATDAPAK’ equipment,
machineries, and buildings. It also argued that the Court of Tax Appeals
Second Division cannot make an assessment at the first instance. Even if
the Court of Tax Appeals Second Division has such power, the period to make
an assessment had already prescribed.

In the decision promulgated on November 3, 2016, the Court of Tax Appeals

En Banc dismissed WATDAPAK’s petition and affirmed the Court of Tax Appeals
Second Division’s decision and resolution.

28. Which is incorrect as regards WATDAPAK’s entitlement to benefits given to

PEZA-registered enterprises?
 a. WATDAPAK is entitled to benefits given to PEZA-registered enterprises,
including the 5% preferential tax rate.
b. Three percent (3%) of the 5% preferential tax is paid to the national
government.
c. The fiscal incentives and the 5% preferential tax rate are available
only to businesses operating within the Ecozone.
d. WATDAPAK is subject to ordinary tax rates under the National Internal
Revenue Code of 1997.

29. Which is incorrect as regards the capital assets of WATDAPAK?

a. Individuals are taxed on capital gains from sale of all real properties
located in the Philippines and classified as capital assets. 
b. Domestic corporations are imposed a 6% capital gains tax only on the
presumed gain realized from the sale of lands and/or buildings. 
c. The income from the sale of petitioner’s machineries and equipment is
not subject to the provisions on normal corporate income tax.
d. For domestic corporations, the National Internal Revenue Code of 1997
does not impose the 6% capital gains tax on the gains realized from the
sale of machineries and equipment.

A Corporation has the following data for the year 20l8:

Gross income, Philippines P1,000,000

Gross income, USA 500,000
Gross income, Japan 500,000
Expenes, Philippines 300,000
Expenses, USA 200,000
Expenses, Japan 100,000
Other income:

Dividend from San Miguel Corp 70,000

Dividend from Ford Motors, USA 120,000
Gain, sale of San Miguel shares directly to buyer 150,000
Royalties, Philippines 50,000
Royalties, USA 100,000
Interest (other than from banks) 60,000
Rent, land in USA 250,000
Other rent income 100,000
Prize, contest in Manila 200,000

30. The total liability as a domestic corporation is:

a. P689,000 b. P669,000 c. P679,750 d. P699,500

31. Based on e above problem, its total tax liability if it is a resident

corporation is
a. P318,000 b. P338,000 c. P328,750 d. P348,520

32. And if it i a non-resident corporation, its total tax liability is

a. P433,500 b. P443,500 c. P338,500 d. P353,500

A Corporation's records show:

Normal Excess
Taxes Excess MCIT
Quarter income Withholding Tax
Withheld Prior Year
tax MCIT Prior Year
First P100,000 P80,000 P20,000 P30,000 P10,000
Second 120,000 250,000 30,000
Third 250,000 100,000 40,000
Fourth 200,000 100,000 35,000

33. The income tax due for the first quarter is

a. Pl00,000 b. P80,000 c. P50,000 d. P40,000

34. The income tax due for the second quarter is

a. Pl20,000 b. P250,000 c.Pl50,000 d. P230,000

35. The income tax due for the third quarter is

 a. P250,000 b. Pl00,000 c. P140,000 d. P70,000

36. The income tax due for the year is

a. P200,000 b. Pl00,000 c. Pl35,000 d. P165,000

37. Using the preceding problem except that the normal income tax for the
fourth quarter is P50,000 (instead of P200,000),the income tax due for the
year is
a. Pl20,000 b. P55,000 c.P45,000 d. P75,000

38. CPA University, a private educational institution organized in 2000, had

the following data for 2018.
Tuition fees P850,000
Rental income (net of 5% cwt) 142,500
School related expenses 820,000

The income tax still due for 2018 is

a. P 54,000 b. P 10,500 c. P 18,000 d. P 46,500

39. CPA College, a private educational institution organized in 2000, hadthe

following data for 2018.

Tuition fees P480,000

Rental income (net of 5% cwt) 494,000
School related expenses 945,000

The income tax still due for 2018 is

a. P 16,500 b. (P 9,500) c. (P 6,000) d P 20,000

A corporation , a resident corporation, provided the following data for

taxable year 2006
Philippines USA
Gross income P40M P20M
Dividends from:
Domestic corporation 5M
Foreign corporation 4M
Business expenses 12M 8M

40. The corporation remitted to its head office the P5M dividend income and
40% of its net profit to its head office in USA. The corporation’s total
tax liability including the tax on the profit remitted is

a. P10,240,000 b. P11,545,600 c. P15,960,000 d. P12,448,000

41. In the foregoing problem, if it is registered with PEZA, its total tax
liability is
a. P10,240,000 b. P0 c. P11,200,000 d. P15,960,000

A corporation has the following data for the year 2017:

Gross Income, Philippines P1,000,000

Gross income, USA 500,000
Gross income, Japan 500,000
Expenses, Philippines 300,000
Expenses, USA 200,000
Expenses, Japan 100,000
Other Income:
Dividend from San Miguel Corp 70,000
Dividend from Ford Motors, USA 120,000
Gain, sale of San Miguel shares directly to buyer 150,000
Royalties, Philippines 50,000
Royalties, USA 100,000
Interest (other than from banks) 60,000
Rent, land USA 250,000
Other rent income 100,000
Prize, contest in Manila 200,000
Land sold in the Philippines (selling prize) 2,000,000
42. The cost of the land which is not used in business is P1M, while FMV is
P3M, Its total tax liability as a domestic corporation is:
a. P780,500 b. P913,600 c. P963,600 d. P980,500

43. Based on the above problem, its total tax liability if it is a resident
corporation is
a. P721,000 b. P679,200 c. P659,200 d.P741,000

44. And if it is a non-resident corporation, its total tax liability is

a. P843,500 b.791,700 c. P791,200 d.P846,000

WPM is a rice dealer. His total annual gross sales and/or receipts do not
exceed Three Million (P3,000,000), allowing him to avail the following:

Statement 1: WPM is a VAT-exempt taxpayer. He may elect to avail of the

optional registration for VAT of exempt person under Section 236 (H) of the
1997 Tax Code, as amended. Upon election of such option, he shall not be
entitled to cancel his VAT registration for the next three (3) years;

Statement 2: WPM may elect to pay the 8% commuted tax rate on gross sales
or receipts and other non-operating income in lieu of the graduated income
tax rates and the percentage tax under Section 24(A)(2)(b) of the 1997 Tax
Code, as amended, since his gross sales or receipts did not exceed Three
Million Pesos (P3,000,000) during the taxable year.

Statement 3: If he elects to pay the 8% commuted tax, he shall not be

allowed to avail of the optional registration for VAT of exempt person
provided by Section 236(H) of the 1997 Tax Code, as amended.

45. Which is correct?

a. Statements 1 and 2 are correct; 3 is incorrect
b. Only statement 2 and 3 are correct
c. Only statements 1 and 3
d. All are correct

Examine the following transactions:

I. Sale of gold to the Bangko Sentral ng Pilipinas.

II. Sale of drugs and medicines prescribed for diabetes, high
cholesterol, and hypertension to beginning January 1, 2019 as
determined by the Department of Health.
III. Sale or lease of goods or properties or the performance of
services other than the transactions mentioned in the preceding
paragraphs, the gross annual sales and/or receipts do not exceed the
amount of Three Million Pesos (P3,000,000).
IV. Importation of fuel, goods and supplies by persons engaged in
international shipping or air transport operations: Provided, That the
fuel, goods and supplies shall be used for international shipping or
air transport operations.
V. Services of banks, non-bank financial intermediaries performing
quasi-banking functions, and other non-bank financial intermediaries
such as money changers and pawnshops, subject to other percentage tax.
VI. Lease of residential units with a monthly rental per unit not
exceeding Fifteen Thousand Pesos (P15,000).
VII. Sale of residential lot valued at One Million Five Hundred
Thousand Pesos (P1,500,000.00) and below, or house & lot and other
residential dwellings valued at Two Million Five Hundred Thousand
Pesos (P2,500,000.00) and below.

46. Which is incorrect?

a. I, II, III are VAT-exempt.
b. III, IV, VI, and VII are VAT-exempt.
c. I, VI, and VII are VAT-exempt.
d. All are VAT-exempt, except V.

47. WBV Company (a domestic employer/company) granted Ms. Leni (a Filipino

branch manager employee), in addition to her basic salaries, P5,000 cash
 per quarter for her personal membership fees at Country Golf Club. The
Fringe Benefits Tax (FBT) shall be?
a. P5,000 c. P2,692.31
b. P7,692.31 d. P0

48. Same facts but the employee is a non-resident alien individual not engaged
in trade or business within the Philippines:
a. P6,666.67 c. P2,692.31
b. P7,692.31 d. P1,666.67

49. Ms. Grace received the following compensation for the year:

a. Monthly Basic Salary P 50,000.00

b. Overtime pay for November 10,000.00
c. Thirteenth Month Pay 50,000.00
d. Other Benefits 10,000.00
e. Withholding Tax (Jan-Nov) 73,334.25

Compute the compensation tax to be withheld in December 2018.

a. P73,334.25 c. P9,165.75
b. P82,500 d. Some other amount

50. Mr. Gerry, hired on July 1, 2018, received the following compensation for
the year:

a. Monthly Basic Salary P25,000.00

b. Thirteenth Month Pay 25,000.00
c. Other Benefits 5,000.00
d. Salary from previous employer (Jan-May 2018) 125,000.00
e. Withholding tax from previous employer 4,167.00
f. Withholding tax (Jul-Nov) 4,167.00

a. P8,334 c. P3,334
b. P5,000 d. Some other amount

51. A non-VAT retail business exceeded the VAT threshold on October 31, 2016.
On that date, it had the following lists of goods on hand which it acquired
from VAT suppliers:

Snacks foods and grocery items P 76,500

Frozen meat and eggs 30,200
Fruits and vegetables 20,360
Shampoos, soaps and detergents 12,100
Baked bread 6,040

Compute the transitional input VAT.

a. P 0 c. P 9,493
b. P 2,904 d. P 10,140

52. A VAT taxpayer had the following data regarding its sales and input VAT
during a particular quarter:

Sales Amount Traceable input VAT

Regular sales P 800,000 P 40,000
Export sales 400,000 18,000
Sales to government 200,000 15,000
Exempt sales 100,000 8,000
Total P 1,500,000 P 81,000

Non-traceable input VAT totaled P 24,000. Input VAT applied for tax refund
totaled P 6,000.

Compute the total Output VAT.

a. P 180,000 c. P 120,000
b. P 168,000 d. P 96,000

53. Compute the total creditable input VAT.

 a. P 99,000 c. P 91,200
b. P 95,400 d. P 85,200

54. Compute the VAT still due.

a. P 81,000 c. P 34,800
b. P 76,800 d. P 24,800

55. A non-VAT taxpayer secured the services of a foreign consultant to solve

one of its recurring business problems. It contracted to pay P1,000,000 for
the consultancy services. Compute the final withholding VAT and the
creditable input VAT.
a. P 0; P 0 c. P 120,000; P 120,000
b. P 0; P 120,000 d. P 120,000; P 0

56. The sale of a VAT registered taxpayer for the last 12 months failed to
exceed the VAT threshold. It made the following sales during the month:

Sales of rice P 80,000

Sale of flour 20,000
Sale of fertilizers and seeds 40,000
Total P 140,000

Compute the output VAT.

a. P 0 c. P 7,200
b. P 2,400 d. P 16,800

57. A non-VAT professional service provider which exceeded the VAT threshold
had the following revenue and collections during the quarter:

Total collections, inclusive of P13,440 advances P 268,800

Total revenue 392,000

Compute the total output VAT.

a. P 0 c. P 28,800
b. P 27,360 d. P 42,000

58. An international carrier generated the following receipts:

Incoming Outgoing
Passengers P 1,000,000 P 2,000,000
Cargoes, mails; excess baggage 500,000 400,000

Compute the percentage tax.

a. P 72,000 c. P 12,000
b. P 60,000 d. P 0

59. Mr. and Mrs. Smith have the following children:

 Damulag, the family’s cook, 23 years old deaf-mute
 MJ, 21 years old and working as part-time office assistant
 Pretty Boy, 16 years old young artist of ABS-CBN
 Minnie, 14 year old BS. Biology student at Harvard University
 Doraymund, 12 year old Math genius studying at the elite University of
Kalinga

Mr. and Mrs. Smith has salaries from employment of P150,000 and P100,000,
respectively. Mrs. Smith paid P3,000 health insurance for the family.

Compute the taxable income of Mr. and Mrs. Smith, respectively.

a. P75,000; P50,000 c. P50,000; P47,600
b. P50,000; P47,600 d. P25,000; P50,000

60. Intrepid, Inc. showed the following computation of its taxable income in
2016.

Gross income P 4,000,000

Less: Other deductions from gross income 2,000,000
Net operating loss carry over 1,000,000
Taxable income P 1,000,000
 This was the first time Intrepid, Inc. reports taxable income since its
inception in 2010. Intrepid, Inc. paid P200,000 MCIT in the last two years.
During the current year, taxes withheld by clients evidenced by BIR Form
2307 totaled P25,000.

Compute the 2016 income tax payable of Intrepid, Inc.

a. P300,000 c. P100,000
b. P275,000 d. P75,000

--- END OF FIRST PRE-BOARD ---

Income Tax Table (R.A. 10963)

RANGE OF TAXABLE
TAX DUE = a + (b x c)
INCOME
OVER NOT OVER BASIC ADDITIONAL EXCESS
- 250,000 - - -
250,000 400,000 - 20% 250,000
400,000 800,000 30,000 25% 400,000
800,000 2,000,000 130,000 30% 800,000
2,000,000 8,000,000 490,000 32% 2,000,000
8,000,000 - 2,410,000 35% 8,000,000