PHIL.

CPA LICENSURE EXAMINATION TAXATION

1. Mr. Bone filed 2014 income tax return on June 30, 2015. The Bureau of Internal Revenue 6. How much discount is granted to a senior citizen on his purchase of basic and prime
discovered a deficiency income tax on August 15, 2016. When the deficiency tax assessment be served? commodities, subject to limitation?
A. On April 15, 2018 C. On or before June 30, 2018 A. 5% C. 15%
B. On or before April 15, 2018 D. On or before August 15, 2019 B. 10% D. 20%
2. On March 5, 2015, the Bureau of Internal Revenue discovered a deficiency value added tax for the 7. What is the basis of the documentary stamp tax to be imposed when one of the contracting parties
quarter ended September 2008. The deficiency did not arise from error or fraud. Which of the on the sale of property is the government?
following statement is CORRECT? A. Actual consideration
A. The BIR has no more remedies since the tax prescribed. B. Consideration contracted to be paid for such realty
B. The BIR must send the assessment notice before March 5, 2018. C. Consideration contracted to be paid for such realty or on its fair market value, whichever is lower
C. The BIR must send the assessment notice before March 5, 2025 D. Consideration contracted to be paid for such realty or on its fair market value, whichever is
D. The BIR must send the assessment notice before September 30, 2018. higher
3. Which of the following statement/s is/are correct? 8. Which of the following statement/s is/are correct
Statement A. Non-resident citizens are taxable on all income derived from sources within the Statement A. DORA filed ger 2014 ITR (not fraudulent nor false) on March 20, 2015. The last day for
Philippines the BIR to collect the tax by judicial action if no assessment was made is April 15, 2018
Statement B. Resident citizens and domestic corporation are taxable on all income derived from Statement B. DADA’s 2014 ITR was filed and paid on May 8, 2015. The last day for the BIR
sources within or without the Philippines. to send an assessment is April 15, 2018.
Statement C. Foreign corporations, whether engaged or not in trade or business in the Statement C. On July 20, 2015, DIDI filed an amended return which is substantially different from
Philippines are taxable from sources within or without the Philippines. the 2014 ITR which she filed on April 13, 2015. The last day to send an assessment is April 15,
Statement D. Aliens, whether residents or not of the Philippines, are taxable only from sources 2018.
within the Philippines. A. Only Statement A is correct C. Statement A and C are correct
A. Statement A and D are correct C. Statements A, B and D are correct B. Statement A and B are correct D. Statement B and C are correct
B. Statements C and D are correct D. Statements B, C and D are correct
9. Which of the following statements is TRUE?
4. Which of the following are basic principles of a sound tax system? A. Real property taxes are payable in the local treasurer’s offices
A. Fiscal Deficit, Administrative Feasibility and Ability to Pay B. A local government unit is empowered to collect documentary stamp taxes
B. Progressive Taxation, Ability to Pay, Symbiotic Relationship C. For the computation of real property tax, the FMV is equal to the Assessed Value Divide by the
C. Fiscal Adequacy, Economic Feasibility and Theoretical Justice Assessment Level.
D. Fiscal Adequacy, Administrative Feasibility and Theoretical Justice D. When the land is located in a commercial area but the building is residential, the
classification of land to determine the fair market value is residential and the assessment level is
5. Mr. SMALL TIME’s piece of land measuring 500 sq. meters in Makati City was assessed as commercial.
commercial with a fair market value P20,000 per sq. m. How much is highest possible amount
of annual basic real property tax can be collected from him?
A. P20,000 C. P50,000
B. P40,000 D. P100,000

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10. If a taxpayer believes in good faith that the assessment against him is doubtful but the same has 16. The President of the Philippines and the Prime Minister of Japan entered into an executive
become final and unappealable, what is the best available remedy for him? agreement on a loan facility to the Philippines from Japan whereby it was stipulated that interest on
A. Protest the assessment loans granted by private Japanese financial institutions in the Philippines shall not be subject to
B. File an injunction with the CTA Philippine income tax laws. What basic characteristics of taxation has been violated by this
C. Ask for the interest to be waived agreement?
D. Apply for a compromise of his tax liability A. Constitutional limitation C. Legislative in character
B. Inherent limitation D. Theoretical justice
11. The concept of “situs of taxation” is based on which limitation of taxation?
A. Exemption of the government C. Public purpose 17. The refusal of the taxpayer to submit books of accounts and records relating to the pending tax
B. International comity D. Territoriality investigation by the offices of the Bureau of Internal Revenue shall allow the BIR to
A. Issue a final assessment based only of the financial statements submitted by the taxpayer
12. Which of the following statement is/are CORRECT? B. Allow the BIR to enter the premises of the taxpayer to obtain any available records relating
I. The power to license includes the power to tax to the tax investigation
II. The power to tax may not include the power to destroy. C. File an action with the Court of Tax Appeals or the regular courts to compel the taxpayer to
III. The power to tax includes the power to exempt present the necessary documentation
A. I only C. I and II D. Authorize the issuance of a subpoena duces tecum against the taxpayer to submit the pertinent
B. III only D. II and III records to the office of the BIR
13. The following, EXCEPT ONE, are establishments which grant sales discount to senior citizens 18. Which of the following is a FALSE statement?
on their sale of goods and/or services. A. Every person legally authorized to practice his profession shall pay professional tax anywhere
Which is the EXCEPTION? in the Philippines, regardless of where he practices his profession or his principal office
A. Cinema houses C. Optical clinics location
B. Funeral parlors D. Residential unit lessor B. The province may levy an annual professional tax on each person engaged in the exercise
or practice of his profession requiring government examination at such amount and reasonable
14. PETRON INC. installed underground tanks in its depot for the storage of its oil and petroleum products. classification
The City of Cebu assessed Petron for real property tax on land and on the storage tanks. C. Every person legally authorized to practice his profession shall pay the professional tax to the
A. Petron is not taxable province where he practices his profession or where he maintains his principal office if he
B. Petron is taxable on the land only practices in several places
C. Petron is taxable on the storage tanks D. Every person legally authorized to practice his profession shall be entitled to practice his profession
D. Petron is taxable both to the land and storage tanks in any art of the Philippines without being subjected to any other national or local tax for the
practice of such profession.
15. Which of the following tax cases may NOT be compromised?
A. Collection cases filed in courts
B. Civil tax cases being disputed before courts
C. Delinquent accounts with duly approved schedule of installment payments
D. Criminal violations, other than those already filed in court or those involving criminal tax fraud

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SITUATIONAL Assume further that the market values of the real property of XYZ Corporation as follow: Book
Value MV per TD* Zonal Value Appraised Value
Situation 1 – (TRAIN LAW) Land A P2,000,000 P2,500,000 P5,000,000 P6,000,000
Mr. and Mrs. JBL had the following conjugal transfers during the year 2018: Land B 2,000,000 2,200,000 4,000,000 3,500,000
 January 26 Donated a parcel of land to their son, on account of their marriage. Their son’s wedding Building A 1,000,000 2,400,000 3,000,000
is on July 31, 2018. The fair market value of the land at the time of donation was P500,000. The Building B 500,000 2,000,000 1,950,000
fair market value of the land at the time of marriage was P550,000. The donated property subject *MV per TD – Market value per tax declaration
to P100,000 mortgage which was assumed by their son.
 October 29 Donated P300,000 to the sister of Mr. JBL who was diagnosed with cancer. They 23. How much is the capital gains tax due on the sale of Mr. X’s shares of stock?
donated the amount for the medication of Mr. JBL’s sister. A. P495,000 C. P1,046,250
 December 20 Sold 300,000 shares of stocks from ABC Corporation to their daughter for B. P750,000 D. P1,087,500
P300,000. The book value per shares as per latest audited financial statement of ABC
Corporation is P1.50 per share. The shares of stocks were acquired two years ago for P200,000 24. How much is the documentary stamp tax due on the sale of Mr. X’s Shares of Stock?
A. P18,750 C. P75,000
19. How much is the donor’s tax still due of Mr. JBL on the January 26 transfer? B. P37,500 D. P91,875
A. P11,400 C. P16,500
B. P12,000 D. P24,000 25. How much is the donor’s tax due if any?
A. P90,000 C. P120,000
20. How much is the donor’s tax due of Mrs. JBL on the October 29 transfer B. P103,500 D. None
A. P9,000 C. P45,000
B. P21,000 D. P57,000 26. Assuming that Mr. X donated the 5,000 shares of stocks of XYZ Corporation, instead of being
sold, how much is the donor’s tax due on the said donation?
21. How much is the capital gains tax due of Mr. JBL on the December 20 transfer? A. P435,000 C. P703,000
A. P7,500 C. P22,500 B. P585,000 D. P720,000
B. P15,000 D. P41,250
Situation 3 – (TRAIN LAW)
22. How much is the donor’s tax still due of Mr. JBL on the December 20 transfer? Mr. SMB single and non-resident alien, died of a heart attack in 2018, leaving the following
A. P4,500 C. P25,500 properties in favor of his heirs:
B. P9,000 D. None Gross estate within the Philippines P30,000,000
Gross estate outside the Philippines 20,000,000
Situation 2 – (TRAIN LAW) Funeral expense 500,000
Mr. X sold on April 30, 2018, 5,000 shares of stock of XYZ Corporation for P10,000,000. Said shares of Judicial and administrative expense 2,000,000
stock were acquired 3 years ago at par value. XYZ Corporation has 10,000 outstanding shares with par value Claims against the estate 5,000,000
of P1,000 per share. The total assets and liabilities of XYZ Corporation in its latest audited financial statements His gross estate includes family home valued at P8,000,000
are P20,000,000 and P5,000,000, respectively. Assuming that the book value of all its assets and liabilities
is also the market value with the exception of its real property. 27. How much is the gross taxable estate of Mr. SMB’s estate?
A. P30,000,000 C. P45,000,000
B. P35,000,000 D. P50,000,000
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28. How much is the deductible ordinary deductions of Mr. SMB’s estate? Less: Interest from bank P 24,000
A. P3,000,000 C. P4, 320,000 Gain on sale of land 500,000 (524,000)
B. P4,200,000 D. P5,000,000 Net taxable income P1,500,000
Multiply by: Corporate income Tax rate 30%
29. How much is the deductible special deduction of Mr. SMB’s estate? Income tax expense P450,000
A. P500,000 C. P5,500,000
B. P1,000,000 D. P8,500,000 After a detailed examination of the Corporation’s book, you have noted the following:
* Balance sheet as of December 31, 2016 showed an outstanding balances of deferred rent income
30. How much is the estate tax due of Mr. SMB’s estate amounting to P200,000
A. P1,110,000 C. P1,518,000 * Interest from bank is net of 20% final withholding tax
B. P1,510,000 D. P1,590,000 * Gain on sale of land, represent gain on sale of residential lot with selling price, amounting to
P2,000,000
Situation 4 * Taxes and licenses in the notes to financial statements showed the following breakdown:
Minalas Corporation, a real estate dealer and lessor, on its first year of operation, has been issued a letter of Withholding tax on sale of land P120,000
Authority by the BIR. As a revenue officer, you were assigned to audit the Corporation’s income tax for Documentary stamp tax on sale of land 30,000
taxable year 2016. The audited financial statements show the corporation’s income statement as follows: Surcharge and penalties on late payment of tax 10,000
Permit and licenses 20,000
Revenues: * Interest expense includes interest on late payment of tax amounting to P5,000
Rental income P2,800,000
Interest from Bank 24,000 31. How much should reflected as net sales and revenues in the annual income tax return of the
Gain on sale of land 500,000 Corporation?
Total P3,324,000 A. P3,300,000 C. P4,800,000
B. P3,500,000 D. P5,000,000
Expenses:
Depreciation P800,000 32. How much should be the deductible taxes and licenses?
Salaries and wages 200,000 A. P20,000 C. P50,000
Taxes and licenses 180,000 B. P30,000 D. P180,000
Entertainment and representation 40,000
Interest expense 60,000 33. How much is the deductible entertainment and representation expense?
Office supplies 20,000 A. P33,333 C. P38,000
Total P1,300,000 B. P34,000 D. P40,000
Net income before income tax P2,024,000
34. How much is the basic deficiency income tax due?
Income tax expense Net (450,000) P1,574,000 A. P103,800 C. P135,300
income B. P133,800 D. P253,800

Income tax due for the year is computed as follow: Net

income before income tax P2,024,000
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Situation – 5 Situation – 6 (TRAIN LAW)

Mr. The Pokna, Filipino and married, died in 2017, leaving his estate in favor of his surviving Kiko Macha, a non-VAT registered lessor of residential and commercial units, had the following data for
spouse. The following information were made available: the 1st and 2nd Quarters of 2018
 Real property in Manila, acquired during marriage. Said property is supported by a barangay 1st Quarter 2nd Quarter
certification that the spouses resided in this property at the time of Mr. Pokna’s death. The fair market Gross receipts
value of this property as per latest tax declaration is P1,200,000, while the zonal valuation as of With monthly rental of P13,000 per unit P2,500,000 P2,300,000
the time of death is P1,500,000. Said real property was held as a mortgage in a loan applied by the spouses. With monthly rental of P18,000 per unit 1,000,000 1,200,000
As of the time of death, the outstanding balance of the mortgage payable amounted to P500,000 Gross receipts from lease of commercial units 2,300,000 2,400,000
 Real property in Laguna, inherited by Mr. Pokna during marriage, two and half years ago, from his late Input tax paid from VAT suppliers 150,000 120,000
father. The fair market value as per latest tax declaration as of the time of his death is P1,000,000
while the zonal valuation is P800,000. Said property was previously taxed at a value of P900,000 39. How much is the business tax due for the 1st Quarter 2018 of Mr. Macha?
when Mr. Pokna inherited the property from his father A. P99,000 C. P246,000
 Real property in Cavite, donated to Mrs. Pokna, 10 years ago (before marriage) by his parents- B. P174,000 D. P396,000
in-law. The fair market value as per latest tax declaration as of the time of Mr. Pokna’s death is P300,000
while the zonal valuation is P400,000. 40. How much is the business tax due for the 2nd Quarter 2018 of Mr. Macha?
 Cash supported by a bank certification. Balance as of the time of death: savings account in the name of A. P108,000 C. P432,000
Mr. Pokna - P200,000; and saving account in the name of Mr. and Mrs. Pokna - P300,000 B. P312,000 D. P708,000
 Funeral expenses incurred by the estate during the wake and burial of Mr. Pokna amounted P150,000
41. How much is the business tax due for the 2nd quarter 2018 of Mr. Macha. Assuming he registered
as VAT taxpayer at the start of the 2nd quarter 2018?
35. Compute item 21C of BIR Form No. 1801 A. P312,000 D. P588,000
A. P2,850,000 C. P3,250,000 B. P432,000 C. P708,000
B. P3,000,000 D. P3,400,000
42. Assuming Mr. Macha is VAT registered taxpayer instead of non-VAT registered taxpayer, how
36. Compute item 22C of BIR Form No. 1801 much is the business tax due of Mr. Macha for the 1st Quarter of 2018?
A. P670,000 C. P1,103,588 A. P246,000 C. P546,000
B. P1,055,442 D. P1,151,765 B. P396,000 D. P696,000

37. Compute item 24 of BIR Form No. 1801 Situation – 7 (TRAIN LAW)
A. P750,000 C. P1,500,000 HUMILITY Corporation, is a domestic corporation engaged in the business of manufacturing textiles.
B. P1,000,000 D. None For the fiscal year end June 30, 2019, its profit and loss statement reported the following:
Sales: P100,000,000
38. Compute item 29 of BIR Form No. 1801 Cost of goods manufactured and sold (60,000,000)
A. P675,000 C. P865,000 Gross income from operations P 40,000,000
B. P793,750 D. P1,200,000 Other income 5,000,000
Total gross income P 45,000,000
Operating expenses (15,000,000)
Finance cost (5,000,000)
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Net income before income tax P 25,000,000 Situation 8

Income tax expense (4,500,000) BASTA LANG CORPORATION, is a registered enterprise with the board of investment and was granted
Net income after income tax P 20,500,000 an Income Tax Holiday (ITH) Incentives for the first 4 years of operation as a non-pioneer firm. The
Corporation has not applied for an extension of its ITH incentives on its 5 th year. On its 5th year of operations,
Additional information were made available for tax reconciliation purposes: it reported the following:
 Withholding tax credit from sale of textile (supported by BIR Form No. 2307) - P600,000 Sales P120,000,000
 Other income broken down as follow: Cost of goods manufacture and sold 70,000,000
- Interest income for savings deposit (net of final withholding tax) - 200,000 Operating expense 20,000,000
- Gain from sale of investment property (the property was not used in the primary activity of the
corporation but held for lease) - P4,000,000 (gross of withholding tax amounting to P900,000) Additional information were made available as follows:
- Rental income from investment property – P800,000 (gross of withholding tax)  All sales during the year are export sales
 Operating expenses includes allowance for bad debts expense amounting to P500,000  Cost of goods manufactured and sold include, imported raw materials with dutiable value of
 During the year, the Corporation has written-off bad debts which are certainly uncollectible P1,400,000. Pre-computed customs duties and other charges as follow:
amounting P300,000 (a) Customs duties P200,000
 Finance cost is broken down as follows: (b) Insurance 10,000
- Interest expense on loan from various financial institution – P3,000,000. (c) Arrastre charges 5,000
- Interest expense on loans from a majority stockholder – P2,000,000 (d) Wharfage dues 7,000
 Income tax expense, represent quarterly income tax paid  Included under operating expenses are expenses incurred on the importation of the said equipment
as follow:
43. Compute page 4, Schedule V, Item 4 of BIR Form No. 1702-RT (net income per books should refer to (a) Facilitation fee - P100,000
net income before income tax) (b) Delivery expense to warehouse after release from customs – P11,200 (VAT
A. P500,000 C. P2,500,000 inclusive)
B. P582,400 D. P2,582,400  Cost of goods manufactured and sold included direct labor for skilled and unskilled workers
amounting to P10,000,000 and P20,000,000, respectively. The project meets the prescribed ration of
44. Compute page 4, Schedule V, Item 9 of BIR Form No. 1702-RT. capital equipment to number of workers set by the BOI
A. P200,000 C. P500,000  The Company incurred an accumulated net operating loss on its first 4 years of operation as follow:
B. P300,000 D. P4,500,000 (a) 1st year - P2,000,000;
(b)2nd year – P1,600,000;
45. Compute page 2, Item 55 of BIR Form No, 1702-RT (c)3rd year – P800,000;
A. P600,000 C. P5,140,000 (d)4th year – P400,000
B. P5,100,000 D. P6,040,000
47. How much is the VAT due on the importation of raw materials?
46. How much withholding tax should HUMILITY Corporation remit on its loan interest payment A. P168,000 C. P207,840
assuming the Corporation is including in the BIR list of top withholding agents? B. P194,640 D. None
A. P100,000 C. P460,000 48. How much is the deductible direct labor cost?
B. P360,000 D. P750,000 A. P30,000,000 C. P40,000,000
B. P35,000,000 D. P45,000,000

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49 How much is the deductible net operating loss carry over? Situation – 10
A. P400,000 C. P4,800,000 X Corporation, a VAT registered Company engaged in the lease of residential properties. During the first
B. P2,800,000 D. None quarter of 2017, the following information were made available (all amounts are exclusive of VAT):
 Rental income with monthly rental of P15,000 per unit – P800,000
50. How much is the income tax due of the Company for the year
 Rental income with monthly rental of P13,000 per unit – P600,000
A. P1,750,000 C. P4,500,000
 Rental income with monthly rental of P10,000 per unit – P400,000
B. P1,869,000 D. P4,530,000
 Receivable from tenants as of December 31, 2016, (60% is VAT Exempt) – P200,000
Situation – 9 (TRAIN LAW)  Receivables from tenants as of March 31, 2017, (40% is VAT Exempt) – P300,000
IWASH Corporation, a VAT-registered Company is engaged in the laundry business. During the first  Deferred rent income as of December 31, 2016, (60% is VAT Exempt) – P200,000
quarter of 2018, the following information were made available:  Deferred rent income as of March 31, 2017, (40% is VAT Exempt) – P250,000
Net revenue, 1st quarter 2018 P1,000,000  Input tax credit on purchases of goods and services for the 1st quarter of 2017 – P80,000
Receivables from customer, January 1, 2018 224,000
Receivables from customer, March 31, 2018 336,000 55. How much is the output tax due for the 1st quarter of 2017?
Creditable VAT withheld, 1 quarter 2018
st 5,000 A. P92,400 C. P171,600
VAT purchases, other than capital goods, 1st quarter 2018 300,000 B. P164,400 D. None
VAT purchases, capital goods, 1st quarter 2018 (all in January 2018) 1,200,000
56. How much is the creditable input tax credit for the 1st quarter of 2017?
Receivable balances are all income related and are inclusive of Value-added tax. Revenue and purchases A. P35,200 D. P62,629
are VAT exclusive. Capital goods are estimated to have a useful life of 10 years. B. P61,838 C. P80,000

51. Compute item 19B of BIR Form No. 2650Q. 57. Assuming that on April 5, 2017, X Corporation sold a residential house and lot for P3,000,000 (VAT
A. P106,500 C. P120,000 exclusive). How much is the output tax due on its sale of real property, Assuming the zonal value
B. P108,000 D. P132,000 of the property sold is P3,248,000?
A. P348,000 C. P389,760
52. Compute item 22 of BIR Form No. 2550Q. B. P360,000 D. None
A. P36,000 C. P180,000
B. P43,200 D. P185,000 58. When is the deadline for filing of first month of the quarter VAT return?
A. On the 20th day after the close of the taxable month
53. Compute the deferred input tax as of March 31, 2018: B. On the 25th day after the close of the taxable month
A. P136,800 C. P141,600 C. On the 20th day after the close of the taxable quarter
B. P140,400 D. None D. On the 25th day after the close of the taxable quarter

54. Compute item 23C of BIR Form No. 2550Q.

A. P2,200 closed to income C. P11,000 closed to expense
B. P2,680 closed to income D. P13,000 closed to expense

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Situation – 11 (TRAIN LAW) Situation – 12 (TRAIN LAW)

Jose and Maria inherited a commercial lot and building from their parents 2 years ago. In 2018 (current IT’S EASY CORPORATION is engaged in the business of PHARMACY. The following data were
year), the inherited property realized rental income of P300,000 per month, in which both shared the made available for the first quarter 2019
revenue equally. The co-ownership remained unregistered with the securities and exchange commission. Revenues P10,000,000
In addition, Jose and Maria reported their following personal income and expenses: Cost of service 6,000,000
 Jose, gross compensation income (inclusive of 13th month and other benefits amounting to Operating expenses 1,500,000
P100,000) – P1,300,000 Receivables, beginning 200,000
 Maria, net income from her laundry service business (net of cost and expenses of P600,000) – Receivables, ending 150,000
P200,000 Additional information were as follows:
 All sales for the quarter were cash and credit card sales.
59. How much final withholding income tax should the co-ownership remit representing the  Receivables at the beginning and ending of quarter are outstanding receivables from credit card
revenue distribution to the co-owners? companies. Amounts are VAT inclusive
A. P180,000 C. P540,000  All sales form senior citizens are cash sales
B. P360,000 D. None
 Sales is net of senior citizens discount amounting to P200,000
 Sale is inclusive of sales of medicines prescribed for diabetes, high cholesterol and
60. How much is the income tax due of Jose in his annual income tax return, assuming optional
hypertension to non-senior citizens amounting to P300,000
standard deduction is used in determining his expenses?
A. P253,000 C. P582,800  Input tax credit from purchase of goods and services for the quarter amounts to P300,000
B. P431,800 D. P611,600  Included in the operating expense is entertainment, amusement and recreation expense
amounting to P150,000
61. How much is the income tax due of Jose in his annual income tax return, assuming optional standard
deduction is used in determining his expense? 63. How much is the output tax due for the first quarter of 2019?
A. P22,000 C. P322,000 A. P1,044,000 C. P1,080,000
B. P250,000 D. None B. P1,068,000 D. P1,104,000

62. When is the deadline for filing of the annual income tax return of the co-ownership for the taxable 64. How much is the deductible creditable input tax for the 1st quarter of 2019?
year 2018? A. P255,172 C. P266,667
A. April 15, 2018 C. May 15, 2019 B. P256,180 D. P300,000
B. April 15, 2019 D. Not applicable
65. How much is the income tax due for the 1st quarter of 2019, assuming itemized deduction was
used?
A. P750,000 C. P779,700
B. P765,000 D. P780,000

66. How much is the income tax due for the 1st quarter of 2019, assuming the optional standard
deduction was used?
A. P618,000 C. P1,770,000
B. P656,400 D. P1,808,400

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Situation – 13 (TRAIN LAW) D. He should register under the non-VAT system, because professional practice as a lawyer is a non-
Lucky Go, is a practicing lawyer, who is engaged in providing legal services to his clients. He is also a VAT transaction, and that his revenue from his real estate business does not exceed the VAT
licensed real estate broker. Both businesses were registered with the BIR and had the following data threshold.
made available for year 2018 (amounts are gross of withholding tax):
 Revenue from his profession as a lawyer amounting to P3,000,000;
 Commission received as a real estate broker amounted to P600,000;
 Cost of services and business related expenses amounted to P700,000 and P400,000,
respectively;
 Gain on sale of real property held for investment amounts to P500,000 (Selling price is
P2,000,000);
 Wagering gain amounting to P50,000 (net of wagering losses of P100,000);
 Royalties from books published and sold amounting to P150,000;
 Interest income from banks amounting to P30,000.

67. Compute 22A, Page 1 of BIR Form No. 1701, assuming Mr. Go opted to use itemized deduction
in computing his income tax.
A. P666,000 C. P810,000
B. P698,000 D. P826,000

68. Compute 17A, Page 2 of BIR Form No. 1710, assuming Mr. Go opted to use optional
standard deduction in computing his income tax.
A. P1,440,000 C. P2,240,000
B. P1,500,000 D. P2,300,000

69. How much is the final withholding income tax of Mr. Go, assuming 2/3 of interest income from banks
were realized from time deposit with maturity of 5 years
A. P17,000 C. P47,000
B. P21,000 D. P137,000

70. Under what system should Mr. Go registered his businesses?

A. He should register his professional practice as a lawyer under VAT-system and his real estate
business under the non-VAT system
B. He would register his business under VAT system, since his aggregate revenues / sales form all his
business exceed the VAT threshold.
C. He should register his business under the non-VAT system, since revenue / sales from each
business does not exceed the VAT threshold.

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