Quiz 5

1. Which of the following requisite for an income to be taxable?

a. All of the above
b. The gain must be realized or received
c. There must be gain
d. The gain must not exclude by law from taxation

2.

Compute for the taxable income of Raf in 2018.

180,000
3.

Compute for the taxpayer’s taxable income for 2018.

1,446,000

4. On January 1, 2018, HP Corporation leased out an office space for 15 years to PH

Corporation at an annual rental of P60,000. On the same date, HP received the following
amounts from PH:

 Rent for the month of January and February 2018

 Annual rental for 2019
 Security deposit amounting to P100,000

In addition, PH agreed that it will pay the insurance on the leased property during the first three
years of the lease contract amounting to P10,000 per year.
Records show that on January 1, 2023, PH introduced leasehold improvement which will be
transferred to HP upon the end of the lease term. The cost of construction totaled P4,000,000
with an estimated useful life of 20 years. However, due to a change in business strategy, both
parties agreed to terminate the lease agreement on June 30, 2028. The fair market value of the
leasehold improvement at the time of termination was P1,500,000.
Compute for the total amount of income to be reported by HP for the year 2023. (Assume HP
opted to use spread out method in relation to the leasehold improvement)
260,000

5. Political campaign contributions are not deductible from gross income

a. Since such amounts are not considered as income of the candidate to whom given
b. If they are not reported to the COMELEC
c. If the candidate supported wins the election because of possible corruption
d. Since they do not help earn the income from which they are to be deducted

6. Which is not an item of exclusion from gross income?

a. SSS benefits
b. Income of foreign governments
c. Income of government-owned and controlled operations
d. Income of the government and its political subdivisions

7. A, on her way to work, was hit by B’s car. The accident caused an injury to A which prohibited
her to work for three days. In addition, A’s personal properties were damaged due to the incident
costing P5,000.
B agreed to pay for the lost income of A (P1,500 per day) plus the cost of the damaged
property. How much should A report as taxable income, if any?
4,500

8. In cases of deductions and exemptions on income returns, doubts shall be resolved

a. Strictly against the taxpayer
b. Liberally in favor of the employer
c. Strictly against the government
d. Liberally in favor of the taxpayer

9. Which is subject to progressive tax to an individual taxpayer?

a. Amounts received by the insured in excess of premiums paid
b. Proceeds of life insurance policy
c. Compensation for personal injuries
d. Gift

10. Mr. Santiago purchased a life annuity for 100,000 which will pay him 10,000 a year. The life
expectancy of Mr. Santiago is 12 years. Which of the following will Mr. Santiago be able to
exclude from his gross income?
a. P10,000
b. P120,000
c. P20,000
d. P100,000

11. Which of the following is not an income for income tax purposes?
a. None of the above
b. Condonation of debt for services rendered
c. Excess of selling price over the cost of an asset sold
d. Collection of loans receivable

12. Which is not a valid definition of income?

a. Income is a fund at one distinct point of time
b. Income means all wealth which flows into the taxpayer other than a mere return of capital
c. Income means cash or cash equivalents unless otherwise specified
d. Income is the return from capital invested

13. Which is not part of compensation income subject to regular tax?

a. Bonuses of fixed allowances
b. Director’s fees
c. Portion of salary used to pay salary loans
d. Portion of salary contributed to SSS

14. Statement 1: The gain on sale of ordinary assets is subject to regular income tax.
Statement 2: The gain on sale of capital assets is subject to capital gains tax.
Which statement/s is/are correct?
a. Statement 1
b. Statement 2
c. Neither statement
d. Both statements

15. Which of the following is a deductible expense for income tax purposes?
a. Salaries of domestic servants
b. Provision for doubtful accounts
c. Ordinary repair of the personal car
d. None of the above

16. Nik Makino, a resident citizen, was engaged to render service for a multinational company
located abroad. A one year contract was entered in Japan amounting to P500,000. Nik
performed the services for eight months in the Philippines while the remaining period in Japan.
Compute for the taxable income.
500,000

17. Lester bought a piece of equipment under a two-year installment basis to be used in his
office in the practice of profession. Lester will pay 50,000 monthly for a period of 12 months. For
income tax purposes, the 50,000 monthly payment shall be
a. Treated as depreciation expense, hence deductible
b. Treated as ordinary business expenses
c. Treated as business expenses, hence deductible
d. Treated as capital expenditure, hence not deductible

18. Which is not an item of gross income subject to final tax?

a. Share in the net income of a general professional partnership
b. Prizes in excess of P10,000 by an individual
c. Winnings
d. Dividends from a domestic corporation
19. Which is not a requisite of exemption of a retirement benefit plan?
a. At least ten years of employment
b. First time availment of retirement exemption
c. The employer maintains a reasonable pension benefit plan
d. The retiree is more than 50 years of age

20. Which of the following is not a characteristic of a deduction?

a. An immunity or privilege, a freedom from a charge or burden to which others are
subjected
b. It is a reduction of wealth that heled earn the income subject to tax
c. It is a subtraction to arrive at income subject to tax
d. It is not a receipt

21. In 2018, Pedro sent his sister Ana P10,000 via a telegraphic transfer through BDO. Lorna,
the bank’s remittance clerk made a mistake and credited Ana with P100,000 which she promptly
withdrew. The bank demanded the return of the mistakenly credited excess, but Ana refused.
The BIR entered the picture and investigated Ana. Would the BIR be correct if it determines that
Ana earned taxable income under these facts?
a. No, it was not her fault the funds in excess of P10,000 were credited to her
b. No, she had no income because she had no right to the mistakenly credited funds
c. No, the funds in excess of P10,000 were in effect donated to her
d. Yes, income is income regardless of the source

22. Statement 1: Net loss in dealing ordinary assets is deductible from gross income.
Statement 2: Net loss in dealing capital assets is not deductible from gross income.

Which statement/s is/are correct?

a. Both statements
b. Statement 2
c. Statement 1
d. Neither statement
23.

Assume that the taxpayer is a DC, how much is taxable income in 2018.
380,000

24. Which is subject to regular tax to a resident foreign corporation?

a. Dividend from a domestic corporation
b. Service fees abroad
c. Gain from dealings in properties abroad
d. Gain from sale of real property capital assets in the Philippines

25. On January 1, 2018, HP Corporation leased out an office space for 15 years to PH
Corporation at an annual rental of P60,000. On the same date, HP received the following
amounts from PH:

 Rent for the month of January and February 2018

 Annual rental for 2019
 Security deposit amounting to P100,000

In addition, PH agreed that it will pay the insurance on the leased property during the first three
years of the lease contract amounting to P10,000 per year.
Records show that on January 1, 2023, PH introduced leasehold improvement which will be
transferred to HP upon the end of the lease term. The cost of construction totaled P4,000,000
with an estimated useful life of 20 years. However, due to a change in business strategy, both
parties agreed to terminate the lease agreement on June 30, 2028. The fair market value of the
leasehold improvement at the time of termination was P1,500,000.
How much should HP report as income for 2018?
130,000

26. The sources from which income is derived

a. Illegal activities
b. Labor
c. All of the above
d. Profits derived from sale or exchange of capital assets

27. A short term holding period means

a. 12 months or less
b. less than 12 months
c. 12 months or less
d. at least 12 months

28. Neneng Baltazar purchased a life insurance contract requiring her to pay an annual
insurance premium of P5,000 for 15 years. The contract provides that should Neneng die within
the 15-year period, her beneficiaries will receive P400,000. Otherwise, if she outlived her policy,
P300,000 will be given to her.
Assume that Ms. Baltazar outlived the policy in 2018, how much should be taxable on her part if
any?
225,000

29. Which is an item of gross income subject to regular tax?

a. Lottery winnings from abroad
b. Leasehold improvements with useful life not extending beyond the lease term
c. Imputed interest income
d. Advance rent representing security deposit for contingency which may or may not happen
30. On January 1, 2018, HP Corporation leased out an office space for 15 years to PH
Corporation at an annual rental of P60,000. On the same date, HP received the following
amounts from PH:

 Rent for the month of January and February 2018

 Annual rental for 2019
 Security deposit amounting to P100,000

In addition, PH agreed that it will pay the insurance on the leased property during the first three
years of the lease contract amounting to P10,000 per year.
Records show that on January 1, 2023, PH introduced leasehold improvement which will be
transferred to HP upon the end of the lease term. The cost of construction totaled P4,000,000
with an estimated useful life of 20 years. However, due to a change in business strategy, both
parties agreed to terminate the lease agreement on June 30, 2028. The fair market value of the
leasehold improvement at the time of termination was P1,500,000.
Compute for the income tax due of HP for the year 2019.
3,000
Quiz 6
1. Which of the following is not correct?
a. The situs when it comes to sale of shares is the place where the shares are sold
b. The location where the intangible is used would determine the situs of royalties
c. Dividend income from domestic corporation is always income from within the Philippines
d. The situs of income on interest is the residency of the debtor

2.

Compute for the total income exempt from income tax.

128,000

3. Capital gain on sale of real properties classified as capital assets in the Philippines to the
government, its agencies or GOCCs by an individual taxpayer either 6% capital gains tax or
basic tax at the option of the government.
True
False

4. Which of the following is not a basic feature of Philippine Income Taxation?

a. Mainly progressive in nature
b. Comprehensive tax situs
c. More schedular than global features
d. Uniformity of rates

5. If an individual taxpayer sustains in any taxable year a net capital loss, such loss shall be
treated in the succeeding year as a short term capital loss.
True
False

6. Neneng Baltazar purchased a life insurance contract requiring her to pay an annual insurance
premium of P5,000 for 15 years. The contract provides that should Neneng die within the 15-
year period, her beneficiaries will receive P400,000. Otherwise, if she outlived her policy,
P300,000 will be given to her. Assume she died within the 15-year period, how much should be
reported by her beneficiaries as taxable income from the insurance contract?
0

7. Income derived as informer’s reward to persons instrumental in the discovery of violations of

the NIRC and in the discovery and seizure of smuggled goods is subject to 10% final tax.
True
False

8. Remuneration for services performed outside the Philippines by a resident citizen for a
resident foreign corporation shall be treated as compensation which is subject to tax.
True
False

9. Statement 1: In the case of stock options, the amount of compensation shall be the FMV of
the stock options at the time of the exercise of such option.
Statement 2: Upon the exercise of the stock option, additional income shall be subject to regular
tax if exercised by a managerial employee.
Which statement/s is/are correct?
a. Both statements
b. Neither statement
c. Statement 2
d. Statement 1

10. On January 1, 2018, HP Corporation leased out an office space for 15 years to PH
Corporation at an annual rental of P60,000. On the same date, HP received the following
amounts from PH:

 Rent for the month of January and February 2018

 Annual rental for 2019
 Security deposit amounting to P100,000

In addition, PH agreed that it will pay the insurance on the leased property during the first three
years of the lease contract amounting to P10,000 per year.
Records show that on January 1, 2023, PH introduced leasehold improvement which will be
transferred to HP upon the end of the lease term. The cost of construction totaled P4,000,000
with an estimated useful life of 20 years. However, due to a change in business strategy, both
parties agreed to terminate the lease agreement on June 30, 2028. The fair market value of the
leasehold improvement at the time of termination was P1,500,000.
What amount should HP report as total income on the year of the lease termination?
530,000

11. Statement 1: Maternity benefits advanced by the employer to the employee are excluded
from gross income, and are therefore exempt from withholding tax.
Statement 2: Representation and transportation allowances (“RATA”) granted under Section 34
of the General Appropriation Act to certain officials and employees of the government are
subject to income tax, consequently, to the withholding tax.
Which statement/s is/are correct?
a. Neither statement
b. Statement 2
c. Statement 1
d. Both statements

12. On January 1, 2018, HP Corporation leased out an office space for 15 years to PH
Corporation at an annual rental of P60,000. On the same date, HP received the following
amounts from PH:
  Rent for the month of January and February 2018
 Annual rental for 2019
 Security deposit amounting to P100,000

In addition, PH agreed that it will pay the insurance on the leased property during the first three
years of the lease contract amounting to P10,000 per year.
Records show that on January 1, 2023, PH introduced leasehold improvement which will be
transferred to HP upon the end of the lease term. The cost of construction totaled P4,000,000
with an estimated useful life of 20 years. However, due to a change in business strategy, both
parties agreed to terminate the lease agreement on June 30, 2028. The fair market value of the
leasehold improvement at the time of termination was P1,500,000.
Compute for the total amount of income to be reported by HP for the year 2023. (Assume HP
opted to use lump-sum method in relation to the leasehold improvement).
4,060,000

13. Compensation from damages representing payment for loss of expected profits shall be
exempt from tax.
True
False
14.

Compute for the amount of passive income subject to final withholding tax.
991,000

15. The amount received by the insured as a return of premium shall form part of the gross
income.
True
False

16. The amount that can be deducted from the net capital gain of the succeeding year should
not be in excess of the net income at the time the capital loss was incurred.
True
False
17. Tax paid and subsequently refunded are generally taxable.
True
False

18. Which capital asset is not subject to regular tax

a. Foreign stocks
b. Domestic stock held by a security dealer
c. Real property held for sale by a dealer
d. Real property held as investment by a non-realty dealer

19. Tips paid directly to an employee by a customer are taxable income subject to basic tax.
True
False

20. Nik Makino, a nonresident citizen, was engaged to render service for a multinational
company located abroad. A one year contract was entered in Japan amounting to P500,000. Nik
performed the services for six months in the Philippines while the remaining period in Japan.
Compute for the taxable income.
250,000

21. The following are inclusions to gross income, except

a. Compensation from services rendered abroad
b. Prepaid rents
c. Dividends from foreign corporations
d. Annuities for premiums paid
22.

Compute for the taxable income of Raf in 2017.

100,000
23.

Assume that the taxpayer is a domestic corporation, how much is tax due in 2017
30,000

24. Condonation of debt for services rendered in an example of return of capital.

True
False

25. Which of the following is not an exempt prize?

a. CNN Hero of the Year
b. Nobel Prize award
c. Gawad ng Sining Award
d. Prize in Tawag ng Tanghalan

26. Neneng Baltazar purchased a life insurance contract requiring her to pay an annual
insurance premium of P5,000 for 15 years. The contract provides that should Neneng die within
the 15-year period, her beneficiaries will receive P400,000. Otherwise, if she outlived her policy,
P300,000 will be given to her. Assume she died in 2017 (within the 15-year period) and her
beneficiaries agreed to the insurance company to receive the amount on installment for 10
years plus 5,000 annual interest, how much income should be taxable to the beneficiaries if
any?
5,000

27. Statement 1: Under Schedular Tax System, income tax rules vary and made to depend on
the kind or category of taxable income of the taxpayer
Statement 2: Global Tax System imposes uniform tax rates.
Which statement/s is/are correct?
a. Statement 2
b. Statement 1
c. Neither statement
d. Both statements

28. Which of the following shall not be reported as compensation for services?
a. Tips paid directly to employee by the customer which is not accounted for by the employer
b. Payment made by an employer to an employee on account of dismissal
c. Authorized fees paid to sheriffs for services rendered in the performance of his official
duties
d. Sums paid to priest for saying masses for the dead

29. Which of the following refunds is not subject to income tax?

a. Foreign tax previously claimed as deduction

b. Special assessment
c. Previously claimed bad debt expense
d. Local tax expense

30. A taxpayer incurred a P90,000 bad debt expense in 2015 out of which P80,000 was
recovered in 2017. The following information relates to the taxpayer’s books:
2015 2016 2017
Net Income before bad debt P70,000 P100,000 P120,000
expense
Compute for the net income/(loss) for the year 2017?
200,000
Quiz 7
1. Exclusions from gross income refer to a flow wealth to the taxpayer that are not treated as
part of gross income.
True
False

2. Which of the following is not an ordinary and necessary expense?

a. Lease bonus paid to lessor
b. Taxes paid by the lessee on behalf of the lessor
c. Travel expenses incurred and paid without the country for business meeting
d. Employee’s share on SSS, PHIC, HDMF

3. In general, all taxpayers can avail of deductions from the gross income, except for taxpayers
earning purely compensation income arising from employer-employee relationship.
True
Falsse

4. One is not a deductible tax

a. Occupation tax
b. Privilege tax
c. Special assessment
d. Local business tax

5. On January 1, 2018, JOSH Corporation leased out an office space for 15 years to PH
Corporation at an monthly rental of P60,000. On the same date, JOSH received the following
amounts from PH:

 Annual rental for year 2018 and 2019

 Security deposit amounting to P100,000

In addition, PH agreed that it will pay the insurance on the leased property during the first three
years of the lease contract amounting to P100,000 per year.
Records show that on April 1, 2020, PH introduced leasehold improvement which will be
transferred to JOSH upon the end of the lease term. The cost of construction totalled
P6,375,000 with the estimated useful life of 20 years.
How much should PH report as deductible expense for 2018?
820,000

6. Premium payment on life insurance of employees taken-out by the corporation may be

allowed as deduction from the latter’s gross income regardless if the beneficiary is the employee
or the heirs of the employee.
True
False

7. In cases of deductions and exemptions on income tax returns, doubts shall be resolved
a. Liberally in favor of the employer
b. Strictly against the government
c. Liberally in favor of the taxpayer
d. Strictly against the taxpayer

8. The following are the records of Bidet Company which started operation in 2011:
2017 2018 2019
Gross Sales P3,300,000 P2,340,000 P825,000
Cost of Sales 2,400,000 1,070,000 380,000
Dividend – RFC 140,000 - 32,000
Interest income on notes 28,000 16,400 -
receivable
Capital Gain - 13,000 18,500
Capital Loss 20,000 - 22,000
Deductions 1,475,000 1,025,000 459,000
How much is income tax due for 2017?
21,360

9. On July 1, 2016, a taxpayer purchased for P300,000 an automobile which will be used
exclusively for his practice of profession. He deducted annual depreciation on the basis of an
estimated useful life of five years. On January 1, 2018, the automobile was partially damaged in
an accidental collision with another vehicle. The cost to restore the automobile totalled
P280,000. The taxpayer received insurance proceeds amounting to half of the cost to restore
the loss.
How much should be the deductible loss for the year 2018?
70,000

10. Wagering losses are non-deductible.

True
False

11. Ordinary losses can be deducted from any gross income.

True
False

12. Mrs. B is engaged in both sales of goods and sales of services. She incurred a total of
P9,000 entertainment, amusement, and recreation expenses in 2018. She reported P300,000 in
net sales and P700,000 in net revenues. Compute for the total deductible EAR.
7,800

13. Which of the following is not a characteristic of revenue expenditure?

a. Charged to operations
b. Non-recurring
c. Small amounts, individually
d. Helps current operations

14. Which of the following is not true regarding NOLCO?

a. It must be applied on a First-in, First-Out (FIFO) basis
b. It is allowed only if there has been no substantial change in the ownership of the business in
that at least 75% in the nominal value of the outstanding shares is held by or on behalf of the
same persons.
c. It is applicable against MCIT
d. It not applicable under Optional Standard Deduction (OSD)

15. An employer maintains pension trust for its employees. The following contributions are
made:
 2017 2018 2019
Current service costs P800,000 P800,000 P800,000
Past service costs 800,000 500,000 400,000

Determine the total deductible past service costs for 2019.

170,000

16. Which of the following is correct?

a. The deduction of an individual for contributions subject to limitation should not exceed 5% of
his taxable income from business, trade or profession after deduction for contribution.
b. Contributions of canned goods to student organizations during the Christmas season for
distribution to Muntinlupa inmates are deductible from gross income.
c. The deduction of a corporation for contributions subject to limitation should not exceed 10%
of its taxable income from business or trade before deduction for contribution.
d. Contributions to media in its media in its fund drive for the relief of calamity victims
are deductible from gross income.

17. Which statement is wrong? Research and development costs:

a. When related to the acquisition and/or improvement of land and building, must be capitalized.
b. Cannot be deducted in gross income.
c. If not related to land and building may be treated as outright deduction.
d. If not related to land and building may be treated as a deferred expense which may be
amortized.

18. Interests are not allowed as a deduction from the gross income if both the taxpayer and the
person to whom the payment has been made or is to be made are, except:
a. Interests are not allowed as a deduction from the gross income if both the taxpayer and the
person to whom the payment has been made or is to be made are, except:
b. Between spouses
c. Between half-blood sisters
d. Between an individual and a corporation at least 50% in value of the outstanding stock
of which is owned, directly or indirectly, by or for such individual
19. Loss on voluntary removal of building on land purchased with a view to erect another
building shall be allowed as deduction to gross income.
True
False

20. The following are the records of Bidet Company which started operation in 2011:
2017 2018 2019
Gross Sales P3,300,000 P2,340,000 P825,000
Cost of Sales 2,400,000 1,070,000 380,000
Dividend – RFC 140,000 - 32,000
Interest income on notes 28,000 16,400 -
receivable
Capital Gain - 13,000 18,500
Capital Loss 20,000 - 22,000
Deductions 1,475,000 1,025,000 459,000
How much in the net operating loss carry over in 2019?
0

21. Which of the following is not a requisite for the deductibility of interest expense?
a. The interest expense shall be reduced by 33% of interest income subject to final tax
b. The interest payment arrangement must not be between related taxpayers
c. The interest must be in writing and legally due
d. In case of interest incurred to acquire property used in business, the same was not treated as
capital expenditure

22. All of the following taxes are deductible from gross income, except
a. Stock transaction taxes
b. Excise taxes
c. Occupational taxes
d. Import duties
23. Deductions are the amounts which the law allows to be deducted from net income in order
to arrive at the taxable income.
True
False

24. Foreign corporations engaged in international shipping or air carriage in the Philippines may
deduct NOLCO from its gross income.
True
False

25. Deductions claimed against the gross income are strictly construed against the government.
True
False

26. Santy made a contribution of P15,000 to St. Jude Parish Church. He had a gross income
from business of P500,000 and deductions (excluding contribution) of P400,000. From this
contribution, how much will be allowed as deduction from his gross income
10,000

27. On July 1, 2016, a taxpayer purchased for P300,000 an automobile which will be used
exclusively for his practice of profession. He deducted annual depreciation on the basis of an
estimated useful life of five years. On January 1, 2018, the automobile was partially damaged in
an accidental collision with another vehicle. The cost to restore the automobile totalled
P280,000. The taxpayer received insurance proceeds amounting to half of the cost to restore
the loss. How much is the depreciation expense for 2019?
80,000

28. Exclusions pertain to the computation of gross income, while deductions pertain to the
computation of net income.
True
False
29. On January 1, 2018, JOSH Corporation leased out an office space for 15 years to PH
Corporation at an monthly rental of P60,000. On the same date, JOSH received the following
amounts from PH:

 Annual rental for year 2018 and 2019

 Security deposit amounting to P100,000

In addition, PH agreed that it will pay the insurance on the leased property during the first three
years of the lease contract amounting to P100,000 per year.
Records show that on April 1, 2020, PH introduced leasehold improvement which will be
transferred to JOSH upon the end of the lease term. The cost of construction totalled
P6,375,000 with the estimated useful life of 20 years.
How much should PH report as deductible expense for 2020?
1,195,000

30. A resident citizen taxpayer engaged in farming incurred the following losses:
Taxes and licenses 45,000
Special assessment 50,000
Stock transaction tax 20,000
Income tax due 2018 800,000
Interest income (net)
From trade notes receivable 61,200
From bank deposits - FCDU 76,500
From long-term deposit – Pre-terminated 79,200
after 3 years
Local taxes including interest of P5,000 20,000
Municipal tax 50,000
Interest expense on income tax assessment 25,000
Deficiency income tax 500,000
Interest expense on bank loan 250,000

How much is the total deductible taxes?

110,000
Quiz 8
1. The powers of the Commissioner of Internal Revenue include the following except:
a. Credit or refund a tax that has been erroneously paid by the taxpayer
b. Abate a tax liability of a taxpayer
c. Inquire into the bank deposits of a taxpayer
d. Compromise the payment of any internal revenue tax

2. An appeal on an assessment may be made to the CTA if the BIR does not act on the protest
within how many days from the taxpayer’s submission of documents supporting his protest?
a. 30 days
b. 180 days
c. 60 days
d. 90 days

3. Which of the following will not interrupt the running of the prescriptive period for assessment
and collection of taxes?
a. When the taxpayer requests for the reinvestigation which is granted by the Commissioner
b. When the taxpayer cannot be located in the address given by him in the return
c. When the Commissioner is prohibited from making the assessment or beginning
distraint and levy or a proceeding in court and for thirty (30) days after
d. When the taxpayer is out of the Philippines

4.

How much is the income tax payable of ABC assuming that foreign income taxes are claimed as
tax credit?
156,600

5. Date of filing of the Income Tax Return March 28, 2017

Date assessment was received June 20, 2019

Request for reconsideration was filed July 4, 2019

The last day for the taxpayer to submit relevant supporting documents is _______?
a. None of the above
b. September 2, 2019
c. July 20, 2019
d. September 4, 2019

6. Which of the following is not an extrajudicial remedy of the government against the taxpayer?
a. Garnishment of bank accounts
b. Distraint
c. Filing of civil case in court
d. Abatement

7. Partners comprising the GPP may choose between itemized deductions or OSD, regardless
of the method applied by the GPP.
True
False

8. A notice to the effect that the amount therein stated is due from a taxpayer as a tax with a
demand for payment of the same within a stated period of time –
a. Audit engagement letter
b. Protest letter
c. Demand letter
d. Assessment

9. Tabag filed his 2017 Income Tax Return and paid the tax due thereon on April 1, 2018. The
last day for the Bureau of Internal Revenue to send an assessment is –
a. April 1, 2021
b. None of the above
c. April 15, 2023
d. April 1, 2021

10.

How much is the capital gain tax for the year 2018?
83,700

11.

How much should Abby report as income in 2018?

150,000

12.
Determine the capital gains tax for 2018.
12,000

13. Which of the following statements is incorrect?

a. A suit to recover tax previously paid may be brought even after the lapse of two years from
the date of payment, if any supervening cause arises after payment
b. The taxpayer shall be informed of the law and the facts on which the assessment is made,
otherwise the assessment shall be void
c. The Commissioner may refund a tax even without a claim of refund from the taxpayer where
on the face of the return upon which the payment was made, such a payment clearly appears to
have been erroneously made
d. As a rule, a pre-assessment notice shall be required before a final assessment may be
made

14. If the taxpayer failed to signify in his tax return the intention to avail the OSD, he shall
automatically use Itemized Deduction.
True
False
15.

Compute for the taxable income using itemized deduction.

4,429,200

16. Tax credit can reduce the income tax due either as a deduction from gross income or from
the income tax due at the option of the taxpayer.
True
False

17. The excess of mortgage assumed by the buyer over the cost is relevant in computing the
Contract Price.
True
False

18. Which of the following violations cannot be subjected to compromise penalties?

a. Failure to keep books of accounts of records in a native language or in English
b. Failure to have books of accounts audited and have financial statements attached to income
tax return certified by independent CPA
c. Keeping two sets of books of accounts or records
d. Failure to keep/preserve books of accounts and accounting records

19. Mr. A, a real estate dealer, sold real estate for P2,000,000 on November 30, 2019. The cost
of the property was P1,300,000. The terms of the sale were as follows: (1) Down payment of
P400,000 and (2) P100,000 monthly installment beginning December 2019 until fully paid. How
much is the income to be reported in 2019?
175,000

20.

Assume the car is used for business purposes, how much should Abby report as income in
2018?
P300,000

21.
Determine the capital gains tax for 2019.
36,000

22. Statement 1: Initial payment refers to the total payments received in cash or property other
than evidence of indebtedness during the taxable year of the disposition of the property.
Statement 2: Instalment payment of CGT is applicable only to the sale of shares of stock not
traded in the local stock exchange.
Which statement/s is/are correct?
a. Neither statement
b. Statement 2
c. Statement 1
d. Both statements

23. It is the official action of an administrative officer in determining the amount of tax due from a
taxpayer, or it may be a notice to the effect that the amount stated therein is due from the
taxpayer with a demand for payment of the tax or deficiency stated therein.
a. Tax lien
b. Tax mapping
c. Tax assessment
d. Tax audit

24.

Compute for the income tax due if ABC opted to claim the foreign tax credit as a deduction.
207,900

25. Gina, a real estate dealer sold a house and lot for P600,000 on November 20, 2018. The
cost of the property is P450,000. Terms are (1) Down payment of P100,000 and (2) Balance:
Payable monthly P50,000 beginning January 20, 2019. How much is the income subject to
income tax in 2018?
25,000

26. Which of the following income is to be reduced by itemized deductions?

a. Capital gain
b. Compensation Income
c. Passive Income
d. Business Income

27. Gina, a real estate dealer sold a house and lot for P600,000 on November 20, 2018. The
cost of the property is P450,000. Terms are (1) Down payment of P100,000 and (2) Balance:
Payable monthly P50,000 beginning January 20, 2019. How much is the income subject to
income tax in 2019?
125,000

28. Gina, a real estate dealer sold a house and lot for P600,000 on November 20, 2018. The
cost of the property is P450,000. Terms are (1) Down payment of P100,000 and (2) Balance:
Payable monthly P50,000 beginning January 20, 2019. How much is the capital gains tax due?
0