Final Examination - Income Taxation

5/18/2020 FINAL EXAMINATION: INCOME TAXATION
FINAL EXAMINATION
Due May 18 at 11:59pm Points 100 Questions 51
Available May 14 at 12am - May 20 at 11:59pm 7 days Time Limit None
Attempt History
Attempt Time Score
LATEST Attempt 1 1,138 minutes 95 out of 100
Score for this quiz: 95 out of 100

Submitted May 18 at 8:18pm
This attempt took 1,138 minutes.
Question 1 1 / 1 pts
The power to decide disputed assessments refunds of internal revenue

taxes, fees or other charges or other matters administered by the BIR is
vested in the Commissioner of Internal Revenue, subject to the exclusive
appellate jurisdiction of the:
d. Municipal Courts
c. Court of Appeals
a. Secretary of Finance
Correct!
b. Court of Tax Appeals
Which of the following statements is incorrect?
https://feu.instructure.com/courses/44738/quizzes/140595 1/28
d. Any return, statement or declaration filed in any office authorized to

receive the same shall not be withdrawn.
a. After a return has been filed as required under the provisions of the Tax
Code, the Commissioner or his duly authorized representative may
authorize the examination of any taxpayer and the assessment of the
correct amount of tax.
c. The tax or any deficiency tax so assessed shall be paid upon notice and
demand from the Commissioner or from his duly authorized representative.
Correct!
b. Failure to file a return shall prevent the Commissioner from authorizing
the examination of any taxpayer.
Which of the following is not within the Commissioner’s authority to

terminate taxable period?
b. When taxpayer is intending to leave the Philippines or remove his

property therefrom
a. When the taxpayer is retiring from business subject to tax
c. When the taxpayer is performing any act tending to obstruct the

proceeding for collection of the tax for the past or current year or quarter
Correct!
d. When the taxpayer’s business is suffering looses
Which of the following statement is incorrect?
c. Failure of the Secretary of Finance to rule on the Appeal within the

prescribed period shall be deemed approval of the application for
accreditation of the appellant
Correct!
d. Only Certified Public Accountants who practice accountancy singly or in
partnership with other CPAs shall be accredited and registered to file tax
returns, statements, reports, protests, and the other papers with or who
appear before, the Bureau for taxpayers.
b. Individuals and general professional partnerships and their

representatives who are denied accreditation by the Commissioner and/or
the national and regional accreditation boards may appeal within sixty (60)
days from receipt of such appeal
a. The Commissioner shall accredit and register, based on their

professional /competence, integrity and moral fitness
First statement: The Commissioner may prescribe the manner of

compliance with any documentary or procedural requirement in
connection with the submission or preparation of financial statements
accompanying the tax returns.
Second statement: The Commissioner may delegate the power to

recommend the promulgation of rules and regulations by the Secretary of
Finance.
a. Both statement are correct
ou Answered d. Only the second statement is correct
orrect Answer c. Only the first statement is correct
b. Both statement are incorrect
(Phil. CPA) Which of the following is not under the special power of the
Commissioner to make assessments and prescribe additional
requirements for tax administration and enforcement?
d. To prescribe fair market value of real property
a. To make assessment
Correct!
c. To obtain information, examine, summon and take testimony
b. To require prior accreditation and registration of persons who may

represent taxpayer with the BIR
In ascertaining the correctness of any return, or in making a return when

none has been made, or in determining the liability of any person for any
internal revenue tax, or in collecting any such liability, or in evaluating tax
compliance, the Commissioner is authorized to do the following, except:
a. To examine any book, paper, record, or other data which may be

relevant or material to such inquiry
b. To summon the person liable for tax or required to file a return, or any
officer or employee of such person, or any person having possession,
custody, or care of the books of accounts and other accounting records
containing entries relating to the business of the person liable for tax, or
any other person, to appear before the Commissioner or his duly
authorized representative at a time and place specified in the summons
and to produce such books, papers, records, or other data, and to give
testimony.
Correct!
c. To inquire into bank deposits of taxpayers under investigation for
violations of the Tax Code.
d. None of the choices.
Current Commissioner of Internal Revenue
d. Rey Leonardo Guerrero
Correct!
a. Caesar Dulay
c. Carlos Dominguez II
b. Carlos Dominguez III
Philippine Economic Zone Authority (PEZA) is a government agency in

the Philippines attached to the
c. Department of Budget and Management
a. Department of Finance
Correct!
b. Department of Trade and Industry
d. Department of Public Works and Highways
Ligaya Educational Foundation, Inc., a stock educational institution

organized for profit, decided to lease for commercial use a 1,500 square
meter portion of its school. The school actually, directly and exclusively
used the rents for the maintenance of its school buildings, including
payment of janitorial services. Is the leased portion subject to real
property tax?
c. No, but it may be subject to income taxation on the rents it received
d. Yes, since the leased portion is not actually, directly, and exclusively
used for educational purposes.
b. No, since the school actually, directly, and exclusively used the rents for
educational purposes
Correct! a. Yes, since Ligaya is a stock and for profit educational institution
Which of the following has no power of taxation?
c. Municipalities
b. Cities
Correct!
d. Barrios
a. Provinces
One is not a direct tax
c. Income tax
orrect Answer d. Business tax
ou Answered a. Immigration tax
b. Transfer tax
The following are kinds of taxes as to graduation except
Correct!
b. Uniform
a. Digressive
c. Regressive
d. Progressive
Which of the following statements is wrong:
b. In case of conflict between a tax law and a revenue regulation, the latter
shall prevail
Correct!
a. Non-payment of additional community tax is a ground for imprisonment
c. A revenue regulation can expand the provision of law by imposing a

penalty even it the law that it implements does not impose a penalty
d. Revenue bills shall originate exclusively from the Senate
Income tax on compensation income may accrue
a. In the country of residence of the income earner
b. In the country where the service has been rendered
c. Neither in the residence of the income earner nor in the country where
the service has been rendered
Correct!
d. Both in the country where the income earner is a resident and in the
country where the service has been earned
One of the characteristics of internal revenue taxes is that they are
c. Political in nature
a. Criminal in nature
Correct!
d. Generally prospective in application
b. Penal in nature
Which of the following activities is not a public purpose?
d. Scholarship to poor but deserving students
Correct!
c. Opening of a road on a tract of land owned by a private individual
b. Payment of Christmas bonuses of government officials and employees
a. Construction of bridges
The following are the criteria to qualify and avail of the 8% income tax rate
pursuant to the Tax Reform for Acceleration and Inclusion (TRAIN) Law,
except:
a. Individuals (Single Proprietor or Professional or Mixed Income Earner)

earning from self-employment and/or practice of profession
d. Taxpayers who have signified their intention to elect the 8% income tax
rate
c. Taxpayers exempt from VAT or other percentage taxes
Correct!
b. VAT-registered taxpayer whose gross sales/receipts and other non-
operating income did not exceed the PhP 3,000,000 VAT threshold during
the taxable year
A resident citizen taxpayer sold shares of stock of a domestic corporation

through Philippine Stocks Exchange:
Selling Price: P850,000
Cost of the shares sold: P600,000
Compute the capital gains tax:
b) P37,500.00
c) P51,000.00
Correct!
a) P0.00
d) P15,000.00
Which of the following is an income subject to the basic tax
Correct!
a) Prizes from USA lotto
d) Interest income from BPI
c) Share in the net income of ordinary partnership
b) Dividends received from domestic corporation
Individual taxpayers not subject to tax under Section 24(A)
d) Non-resident aliens engaged in trade or business on their net income

within the Philippines
b) Resident citizens on their net income within and without the Philippines
orrect Answer
a) Non-resident aliens not engaged in trade or business on their gross
income within the Philippines
ou Answered
c) Resident citizens and resident aliens on their net income within the
Philippinesc) Resident citizens and resident aliens on their net income
within the Philippines
Which of the following income is required to be filed in a quarterly income

tax return)
Correct! a) Business income
b) Compensation income
c) Passive income
d) Capital gains
A fringe benefit is any goods, service, or other benefits furnished or

granted by an employer in cash or in kind, including basic salaries to
individual employees.
orrect Answer a) False
ou Answered b) True
Supervisor’s expense account not subject to liquidation amounting to

P120,000
b) P120,000 is subject to normal income tax
Correct! a) P120,000 is subject to fringe benefits tax
c) P120,000 is exempt from income tax
d) P120,000 is subject to final withholding tax
Rank and file personnel’s expense account not subject to liquidation

amounting to P120,000
b) P120,000 is subject to fringe benefits tax
Correct! a) P120,000 is subject to normal income tax
d) P120,000 is subject to final withholding tax
c) P120,000 is exempt from income tax
P10,000 annual uniform allowance granted to an executive
b) P6,000 is subject to fringe benefits tax
c) P10,000 is subject to normal income tax
d) P10,000 is exempt from income tax
Correct! a) P6,000 is exempt from income tax
(Phil. CPA) Which of the following may not raise money for the
government?
Correct! c. Power of eminent domain
b. Police power
a. Power of taxation
d. Privatization of government’s capital assets
In this power of state, the person who is parting with his money or
property is presumed to receive a benefit.
Correct! a. taxation
b. police power
c. eminent domain
d. forfeiture power
First statement: There is hereby created a Court of Tax Appeals (CTA)

which shall be the same level as the Court of Appeals, possessing all the
inherent powers of a Court of Justice.
Second statement: The CTA shall consist of a Presiding Justice and nine
(9) Associate Justices.
a. Both statements are correct
Correct! c. Only the first statement is correct
d. Only the second statement
b. Both statements are incorrect
Which of the following is not under the exclusive appellate jurisdiction of

the CTA to review by appeal?
A. Decisions of the commissioner of the customs in cases involving liability

for customs duties, fees, of the other money charges, seizure , detention or
release of property affected , fines, forfeitures, or other penalties, in
relation thereto, or other matters arising under the customs
B. Decisions of the Central Board of Assessment Appeals in the exercise

of its, appellate jurisdiction over cases involving the assessment and
taxation of real property originally decided by the provincial or city board of
assessment appeals
Correct!
D. None of the choices
C. Decisions of the secretary of finance on customs cases elevated to him

automatically for review from decisions of the commissioner of customs
which are adverse to the government under Sec. 2315 of the tariff and
customs code
(Phil. CPA modified ) which of the following cases does not fall within the
jurisdiction of the Court of Tax Appeals?
orrect Answer c. Appeal from an undisputed tax assessment
b. Question of whether or not to impose a deficiency tax assessment upon

taxpayer
ou Answered d. Action for refund of real property tax
a. Criminal action for violation of the National Internal Revenue Code
Under this system, the amount of income tax withheld by the withholding
agent is constituted as a full and final payment of the income tax due from
the payee on the said income.
D. schedular tax system
C. global tax system
A. creditable withholding tax
Correct! B. final withholding tax
Which of the following statements is correct?
Correct!
B. In case of the withholding agent's failure to withhold the final tax or in
case of under withholding, the deficiency tax shall be collected from the
payor/withholding agent.
D. All of the choices
C. The payee is required to file an income tax return for income subject to
final withholding tax.
A. The liability for the payment of the final tax rests primarily on the payee
as a withholding agent.
Under this system, taxes withheld on certain income payments are

intended to equal or at least approximate the tax due of the payee on said
income.
C. global tax system
B. final withholding tax
D. schedular tax system
Correct! A. creditable withholding tax
The following persons are constituted as withholding agents for purposes

of the creditable tax required to be withheld on income payments, except:
A. any juridical person, whether or not engaged in trade or business
Correct! D. none of the choices
C. all government offices including government-owned or controlled

corporations, as well as provincial, city and municipal governments and
barangays
B. an individual with respect to payments made in connection with his

trade or business
A sworn statement in which the taxpayer discloses the nature and extent
of his tax liability by formally making a report of his income and allowable
deductions for the taxable year in the prescribed form.
b. Tax assessment
c. Letter of authority
d. Letter of intent
Correct! a. Income tax return
An accounting period 12 months ending on the last day of December.
B. Fiscal Year
D. Sum-of-the-year
Correct! A. Calendar year
C. Leap Year
An accounting period of 12 months ending on the last day of any month

other than December.
A. Calendar year
Correct! B. Fiscal year
D. Sum-of-the-year
C. Leap year
ERA Corporation is engaged in the sale of goods and services with net
sales/net revenue of P200,000 and P100,000 respectively. The total
entertainment, amusement and recreation expense for the taxable quarter
is P3,000.
How much is the amount of the deductible entertainment, amusement and

recreation expenses?
A. P3,000
Correct! B. P2,000
C. P1,500
D. P1,000
AJD Corporation used the accrual basis of accounting from the year it
was organized. On March 1, 2011 it purchased an equipment for
P1,120,000, VAT inclusive. The equipment was estimated to have a life of
5 years. The equipment was financed through a one-year loan with Banco
de Plata with interest at the rate of 18% per annum beginning January 16,
2011, which was discounted in full. During the same year, the corporation
also paid interest on business-related taxes amounting to P50,000.
In 2011, AJD had interest income from its bank deposit in the amount of
P100,000. AJD decided to expense outright the interest incurred to
acquire the equipment.
How much was the deductible interest?
Correct! B. P210,200
D. P160,200
A. P243,200
C. P193,200
In 2011, CPL Corporation, domestic, had net income P200,000 from

within the Philippines and P300,000 from the USA. The income tax paid
on income from USA was P110,000.
How much was the allowable tax credit on income tax paid to the US
Government using 30% tax rate?
A. P150,000
Correct! C. P90,000
B. P110,000
D. P60,000
On July 1, 2010, a Certified Public Accountant purchased for P500,000 an

automobile, which will be used exclusively for his practice. He deducted
annual depreciation on the basis of an estimated useful life of five (5)
years. On July 1, 2012, the automobile was partially damaged in an
accidental collision with another automobile. The fair market value of the
vehicle was P200,000 immediately before the collision and P100,000
immediately after the collision. The taxpayer received insurance proceeds
of P70,000 to cover the loss. How much is the deductible loss?
C. P130,000
B. P100,000
Correct!
D. P30,000
A. P200,000
Jey Manufacturing Company bought a piece of land as well as the old

building erected on it. In the Deed of Sale, the land has an allocated price
of P2,000,000 and the building, P500,000. The building was immediately
demolished to give way to the construction of a factory. The cost of the
removal was P25,000 and the proceeds from sale of scrap amounted to
P10,000. How much was the deductible loss?
B. P500,000
Correct! D. None
C. P490,000
A. P515,000
One of the following is deductible from the gross income:
Correct!
d. Premiums paid on any life insurance policy covering the life of any
person financially interested in any trade or business carried on by the
taxpayer, individual or corporate, when the family of the insured is directly
or indirectly a beneficiary.
c. Losses from sales or exchanges of property directly or indirectly

between members of the family
a. Personal, living and family expenses.
b. Amount paid cut for new buildings or for permanent improvements of

betterments, made to increase the value of any property or estate.
Which of the following may be allowed to claims OSD in lieu of the

itemized deductions?
b. Non-resident Citizen
c. Resident alien
Correct!
d. All of the choices
a. Resident Citizen
In lieu of the itemized deductions, as individual subject to tax under

Sec.24, other than a nonresident alien, may elect a standard deduction in
an amount not exceeding:
a. 10% of his Gross income
c. 40% of his gross income
Correct!
d. 40% of his gross sales or gross receipts
b. 20% of his gross sales or gross receipts
A taxpayer, married without qualified dependent child, had the following

data for taxable year 2018:
Gross income, Philippines P 1,000,000
Gross income, USA 900,000
Expenses, Philippines 400,000
Expenses, USA 200,000
If the taxpayer is a resident alien, married, his taxable income is

____________.
d. P 1,000,000
a. P 1,300,000
c. P 700,000
Correct!
b. P 600,000
If the taxpayer is a resident citizen, married, his taxable income is

_____________.
b. P 600,000
Correct! a. P 1,300,000
d. P 1,000,000
c. P 700,000
If the taxpayer is a non-resident alien not engaged in trade or business in

the Philippines, married and his country grants P 40,000 as a personal
exemption for married individuals, his taxable income is
________________.
c. P 700,000
Correct! d. P 1,000,000
b. P 600,000
a. P 1,300,000
With the efforts I made this semester, I believe, I will pass this subject.
b. False
Correct! a. True
Gusto ko meron kang palaging rason para ngumiti. Harapin ang umaga
na may pagmamalasakit, pagmamahal, kabutihan at talino. Pahalagahan
ang mga maliliit na tuwa sa inyong buhay. Hanapin ang kagandahan ng
samahan na inyong binou sa kapwa tao at pagyamanin ito na parang
parte ng inyong buhay. Pag di man mahanap ang kaligayahan- gumawa
ka ng bago at ibahagi sa iyong kapwa.
Ipakita mo kung sino ka. wag mong ipilit na maging tulad ng iba at tahakin
ang landas na hindi naman para sa iyo. Hiling ko sana, gumawa ka ng
sarili mong landas, mangarap ka ng sarili mong pangarap, ilatag mo ang
alam mong tagumpay at tangapin mo kung sino ka ng sagayon walang
gumamit nito laban sa iyo.
Sa puntong ito, Itapon mo na ang lahat ng pagsisi sa iyong buhay, walang

saysay ang pagsayangan ang bagay na hindi mo na mababago. Tandaan
na hindi ka pwedeng magkaroon ng bagong simula, pero pwede kang
gumawa ng bagong katapusan. Balikan mo nalang ang nakaraan sa
buhay mo at ipagmalaki ang lahat ng ito-mapa pagkabigo o tagumpay
dahil kung wala ang isa dun, hindi ka magiging tulad kung nasaan ka man
ngayon. Maniwala ka, nariyan ka kung nasaan ka man dapat ngayon.
Magpatuloy ka sa pagsulong sa buhay. Hindi magiging patas ang buhay

at parati siyang magiging ganyan. Kaya kung nararamdaman mong
parang bibigay ka na, Bumigay ka kahit isang araw, umiyak, damahin ang
sakit pero dapat buuin mo muli ang yung nabasag na sarili. tumayo sa
pagkadapa at harapin ang mundo at muling sumulong ng mas maayos na
ikaw.
Mayroon kang habang buhay para matupad ang pagsubok na ito, minsan
sa iyong buhay, balikan mo muli ang pagsubok na to at gamitin sa iyong
paglalakbay. Ang pagsasamahan natin ay hindi magtatapos dito dahil

gusto kung magtagumpay ka at matupad ang iyong pangarap sa buhay,
Hintayin ko ang ang araw na iyon, dahil alam kung kaya mo.
Correct!
A. Yes, Makakaya ko ang lahat ng pagsubok na dadaan sa aking buhay
Quiz Score: 95 out of 100

Final Examination - Income Taxation

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5/18/2020 FINAL EXAMINATION: INCOME TAXATION

Score for this quiz: 95 out of 100

The power to decide disputed assessments refunds of internal revenue

Which of the following statements is incorrect?

d. Any return, statement or declaration filed in any office authorized to

Which of the following is not within the Commissioner’s authority to

b. When taxpayer is intending to leave the Philippines or remove his

a. When the taxpayer is retiring from business subject to tax

c. When the taxpayer is performing any act tending to obstruct the

Which of the following statement is incorrect?

c. Failure of the Secretary of Finance to rule on the Appeal within the

b. Individuals and general professional partnerships and their

a. The Commissioner shall accredit and register, based on their

First statement: The Commissioner may prescribe the manner of

Second statement: The Commissioner may delegate the power to

a. Both statement are correct

ou Answered d. Only the second statement is correct

orrect Answer c. Only the first statement is correct

b. Both statement are incorrect

d. To prescribe fair market value of real property

b. To require prior accreditation and registration of persons who may

In ascertaining the correctness of any return, or in making a return when

a. To examine any book, paper, record, or other data which may be

d. None of the choices.

Current Commissioner of Internal Revenue

d. Rey Leonardo Guerrero

b. Carlos Dominguez III

Philippine Economic Zone Authority (PEZA) is a government agency in

c. Department of Budget and Management

d. Department of Public Works and Highways

Ligaya Educational Foundation, Inc., a stock educational institution

c. No, but it may be subject to income taxation on the rents it received

Which of the following has no power of taxation?

One is not a direct tax

orrect Answer d. Business tax

ou Answered a. Immigration tax

The following are kinds of taxes as to graduation except

Which of the following statements is wrong:

a. Non-payment of additional community tax is a ground for imprisonment

c. A revenue regulation can expand the provision of law by imposing a

d. Revenue bills shall originate exclusively from the Senate

Income tax on compensation income may accrue

a. In the country of residence of the income earner

b. In the country where the service has been rendered

One of the characteristics of internal revenue taxes is that they are

Which of the following activities is not a public purpose?

d. Scholarship to poor but deserving students

b. Payment of Christmas bonuses of government officials and employees

a. Individuals (Single Proprietor or Professional or Mixed Income Earner)

c. Taxpayers exempt from VAT or other percentage taxes

A resident citizen taxpayer sold shares of stock of a domestic corporation

Selling Price: P850,000

Cost of the shares sold: P600,000

Compute the capital gains tax:

Which of the following is an income subject to the basic tax

d) Interest income from BPI

c) Share in the net income of ordinary partnership

b) Dividends received from domestic corporation

Individual taxpayers not subject to tax under Section 24(A)

d) Non-resident aliens engaged in trade or business on their net income

Which of the following income is required to be filed in a quarterly income

Correct! a) Business income