University of Nueva Caceres

College of Business and Accountancy

BS Accountancy
Qualifying Examination
INCOME TAX
General Instructions: Choose the correct answer.
Theory (18 points)
1. Which of the following doctrine or theory is called the Doctrine of Symbiotic Relationship?
(Average)
a. Benefits-received theory
b. Necessity theory
c. Lifeblood doctrine
d. Holmes doctrine
2. Which of the following theories justifies taxes as being a preferred credit? (Average)
a. Necessity theory
b. Lifeblood doctrine
c. Marshall doctrine
d. Doctrine of equitable recoupment
3. When the law itself provides for non-payment of taxes, such tax escape is known as? (Easy)
a. Tax evasion
b. Tax holiday
c. Tax minimization
d. Tax avoidance
4. Which stage of taxation will the legislative department be involved with? (Easy)
a. Levy
b. Assessment
c. Collection
d. Imprisonment
5. Which of the following tax rates is used for taxation of corporations? (Easy)
a. 25% Final withholding tax
b. 8% option
c. 40% optional standard deduction
d. Exemption of annual income of P250,000 and below
6. Ruby invested in a bank organized in Canada through a Canadian agent. For 2023, she earned
P60,000, P40,000 receipts, and P120,000 estimated future income. What amount of income is
subject to the final withholding tax? (Easy)
a. P60,000
b. P40,000
c. P120,000
d. 0
7. Vicky is a partner of JJ general professional partnership. The said general professional
partnership earned P4,000,000 during the year. Vicky has a receipt of P1,300,000 during the
year based on the agreed schedule of drawings. What is the tax rate of the P1,300,000 receipt
of Vicky? (Average)
a. 15% final withholding tax
b. 15% creditable withholding tax
c. 10% final withholding tax
 d. 10% creditable withholding tax
8. In the same situation in number 7, what is the tax rate of P4,000,000 income? (Average)
a. 0%
b. Exempt
c. 25%
d. 2%
9. On July 1, 2020 to June 31, 2023, the tax rate of special domestic corporations is? (Easy)
a. 10%
b. 2%
c. 1%
d. 0%
10. Michaelani Bongalontani, a non-resident alien not engaged in trade and business, received a
fringe benefit from a domestic corporation. To compute for the fringe benefit tax of
Michaelani Bongalontani, the following is multiplied to the benefit: (Average)
a. 35%/65%
b. 25%/75%
c. 65%/35%
d. 75%/25%
11. Philip, a non-resident alien engaged in trade and business, earned an income from the
Philippines gross of deductions. Which of the following is an allowable deduction of Philip?
(Average)
a. Itemized deductions
b. Optional standard deduction
c. Both
d. None of the above
12. Carla and Cerila Singaporean Fly and Swim, a company located in Singapore offering both
international flights and shipments, has earned gross income from the Philippines. Which of
the following tax rates is applicable to the company? (Easy)
a. 2.5% final withholding tax
b. 25% final withholding tax
c. 7.5% final withholding tax
d. 4.5% final withholding tax
13. A qualified regional operating headquarters is liable to? (Average)
a. 2.5% final withholding tax
b. Regular corporate income tax
c. 25% final withholding tax
d. None of the above
14. Aileen sold a lot for P6,000,000. She used the said land as a resort. Which of the following
taxes is applicable to the transaction? (Average)
a. 5% final withholding tax
b. 6% final withholding tax
c. 6% creditable withholding tax
d. 5% creditable withholding tax
15. Punzalan was retrenched by his employer due to the budget cuts. Punzalan is under a
collective bargaining agreement with his employer. He received P230,000 separation pay. His
separation pay is liable to? (Average)
a. Income tax
b. Business tax
 c. Transfer tax
d. None of the above
16. Taxes paid can be claimed by the following as tax credit? (Average)
a. Nora, a Filipino citizen residing in Finland.
b. Nico, an Australian citizen engaged in business in Cebu.
c. Jessamine, a Filipino citizen engaged in business in J. Hernandez Ave, Naga City.
d. Justin, a Canadian citizen engaged in business in Peru.
17. Which of the following are deductible taxes? (Average)
a. Philippine income tax
b. Final withholding tax
c. Donor’s tax
d. Australian income tax
18. Blue Music Company is a promoter of Taylor Swift’s album in the Philippines. Per
agreement, Blue Music will receive 3% royalties in every sale. Which of the following final
withholding tax rate is applicable to Blue Music? (Average)
a. 10%
b. 20%
c. 3%
d. 15%
Practical (12 points)
Over But Not Over Tax Plus Of Excess Over

- 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

Over But Not Over Tax Plus Of Excess Over

- 250,000 - - -

250,000 400,000 - 15% 250,000

400,000 800,000 22,500 20% 400,000

800,000 2,000,000 102,500 25% 800,000

2,000,000 8,000,000 402,500 30% 2,000,000

8,000,000 - 2,202,500 35% 8,000,000

In items 19-20, the following is the summary of all income and expenses of Jorge during 2023:
Rent income (net of 5% CWT) P95,000
 Net receipt of scheduled salaries from general professional partnership 1,275,000

Depreciation of properties for rent 30,000

Share in the net income of general professional partnership 4,000,000

19. What is the taxable income of Jorge? (Difficult)
a. P5,340,000
b. P4,065,000
c. P2,790,000
d. P4,070,000
20. What is the income tax payable of Jorge? (Average)
a. P793,500
b. P639,500
c. P792,000
d. P1,404,500
In items 21-23: ABC partnership, a small/micro partnership established in 2015, has the following
income and expenses for the year 2023:
1st Quarter 2nd Quarter 3rd Quarter

Net Sales P1,400,000 P1,350,000 P1,650,000

Cost of goods sold 500,000 435,000 740,000

Capital gains 1,600,000 80,000

Itemized deductions 700,000 1,100,000 890,000

Excess MCIT over 13,000

RCIT in prior year

Tax credits 6,000 8,000 4,000

It is found out that the capital gains was erroneously declared in the summary above, the gain of each
transaction are as follows:
Land classified as capital assets was sold in January 31 P1,600,000

Printers and calculators were sold on August 10 which was held for 10 months. 80,000

Car used for transportation of the accountant was sold on August 19, which was 500,000
held for 6 years.

Guard dogs were sold on August 24, which were held for 2 years. (70,000)
21. What is the income tax payable during the first quarter? (Average)
a. P21,000
b. P40,000
c. P25,000
d. P24,000
22. What is the income tax payable during the second quarter? (Average)
a. P4,150
b. (P16,850)
c. (P24,000)
 d. P10,150
23. What is the income tax payable during the third quarter? (Average)
a. P57,000
b. P78,000
c. P34,850
d. P41,850
In items 24-26: The following is the summary of all income and expenses of Carlyn during the 2023:
Salary from her first employer during the first half of the year (CWT of P12,000) P258,000

Salary from her new employer during the year (CWT of P25,000) 275,000

Separation pay 88,000

Business gross sales from her small store (she paid income tax of P4,000 in the 450,000
first quarter)

Expenses of the business 300,000

Expenses of her house incurred mostly by her son 780,000

Additional information:
● Carlyn is a partner in a partnership that has for its undertaking a carriage of construction
materials. She owns 45% interest and 30% share in profit.
● It has a net sale of P6,000,000, cost of goods sold of P3,450,000, and deductible expenses of
P2,000,000. The partners decided to use the best tax scheme.
● The partnership has been in the industry for 15 years. It has P13,000,000 total assets for
which land has a value of P3,000,000.
24. What is the income tax due of Carlyn using the best tax scheme for the year 2023? (Difficult)
a. P86,500
b. P112,500
c. P56,500
d. P36,000
25. What is the income tax payable of Carlyn using OSD for the year 2023? (Average)
a. P112,500
b. P71,500
c. P56,500
d. P51,500
26. What is the final withholding tax in relation to the income of Carlyn during the year 2023?
(Average)
a. 0
b. P7,320
c. P13,200
d. None of the above
27. G Beltz Co. earned gross income of P1,000,000, P1,400,000, P1,200,000, P2,000,000 during
1st, 2nd, 3rd, and 4th quarter, respectively. It has identified expenses of P890,000, P900,000,
P1,000,000, 1,200,000 respectively throughout the quarters. What is the income tax payable
in the 3rd quarter if the year is 2023 and the company has been in the industry for 6 years?
(Average)
a. P72,000
b. P48,000
 c. P202,500
d. P50,000
28. What BIR form is used for the remittance of 2nd quarter tax payable and the due date of
payment? (Average)
a. 1702Q, 60 days after the close of quarter
b. 2550Q, 25 days after the close of quarter
c. 1702Q, 25 days after the close of quarter
d. 2550Q, 60 days after the close of quarter
29. What BIR form is used for the remittance of 4th quarter tax payable? (Average)
a. 1702-EX, 15th day of the 4th month following the close of the taxable year
b. 1702-RT, 15th day of the 4th month following the close of taxable year
c. 1702-RT, 15th day of April following the close of taxable year
d. 1702-EX, 15th day of April following the close of taxable year
30. Omar Ampongan has decided to lease a portion of Anelle Building in Tabuco, Naga City on
January 1, 2021. The term of the lease is 10 years and P140,000 annual payment (lessee has
made an advanced payment for 3 years on January 1, 2021). The lessee has constructed
windows on the vicinity of his rented portion of the building on December 31, 2022, the cost
of which is P390,000 and have an estimated useful life of 13 years. How much is the income
of the lessor in 2023? (Difficult)
a. P18,750.00
b. P11,538.46
c. P30,000.00
d. P48,750.00
Nothing follows~~

Prepared by: James B. Cantorne

The questions are based on the following authors and reviewers, these are modified by the preparer:
1. Nickolai Soriano
2. Kenneth Manuel
3. Reginald Laco
4. Omar Erasmo Ampongan
5. Cresencio Co Untian
6. Asser Tamayo
7. Rex Banggawan
8. Christopher Llamado
9. Jack De Vera
The questions are formed in parallel competency with the current preboard of the various review
centers and is answerable within 1 hour and 15 minutes. The following are coverage of this test:
1. General Principles of Taxation
2. Individual Tax
3. Fringe Benefit Tax
4. Tax Deductions
5. Corporate Tax
6. Final Withholding Taxes
7. Tax forms
The following is not covered by the same:
1. Tax remedies