TAX Preweek Lecture (B42) - December 2021 CPALE

ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY
CPA Review Batch 42  Dec 2021 CPA Licensure Exam  Preweek Lecture
TAXATION A. Tamayo  G. Caiga  C. Lim  K. Manuel  E. Buen
TAX PREWEEK LECTURE – December 2021 CPALE

TAX REMEDIES
1. Mr. Santos filed his 2014 income tax return on June 30, 2015. The Bureau of Internal Revenue
discovered a deficiency income tax on August 15, 2016. When should the deficiency tax
assessment be served?
a. On or before August 15, 2019
b. On or before June 30, 2018
c. On April 15, 2018
d. On or before April 15, 2018
2. Which of the following tax cases may NOT be compromised?

a. Criminal violations, other than those already filed in court or those involving
criminal tax fraud
b. Collection cases filed in courts
c. Delinquent accounts with duly approved schedule of installment payments
d. Civil tax cases being disputed before the courts
3. The final income tax return for the taxable year 2018 which was due on April 15, 2019 was
filed earlier on March 15, 2019. A substantial amended return was filed on May 31, 2019.
When is the last day to make a valid assessment?
a. March 15, 2022 c. May 31, 2022
b. April 15, 2022 d. May 31, 2025
4. First statement: In civil tax cases involving collection of internal revenue taxes,
prescription is construed strictly against the government and liberally in favor of the
taxpayer.
Second statement: In criminal tax cases involving tax offenses punishable under the Tax
Code, prescription is construed strictly against the taxpayer.
a. Both statements are correct
b. Bothe statements are incorrect
c. Only the first statement is correct
d. Only the second statement is correct
5. A taxpayer is complaining of harassment because the BIR levies on real property and at
the same time distraints personal property to collect the deficiency or delinquency
revenue. Is his complaint valid?
a. Yes. Because the BIR can only levy real property after distraint of personal property.
b. Yes. Because the BIR can only distraint personal property after levy of real property
is resorted to.
c. No. Because real property may be levied upon, before, simultaneously with or after the
distraint of personal property belonging to the delinquent taxpayer.
d. No. Because the BIR is presumed to have acted in good faith when it pursues both levy
of real property and distraint of personal property.
INCOME TAX
6. Which of the following statement/s is/are correct?

Statement A. Non-resident citizens are taxable on all income derived from sources within
the Philippines.
Statement B. Resident citizens and domestic corporations are taxable on all income derived
from sources within or without the Philippines.
Statement C. Foreign corporations, whether engaged or not in trade or business in the
Philippines are taxable from sources within or without the Philippines.
Statement D. Aliens, whether residents or not of the Philippines, are taxable only from
sources within the Philippines.
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ReSA – THE REVIEW SCHOOL OF ACCOUNTANCY TAX Preweek
ReSA Batch 42 – December 2021 CPA Licensure Examination
a. Statements C and D are correct.
b. Statements A, B, and D are correct.
c. Statements B, C and D are correct.
d. Statements A and D are correct.
7. Starting July 1, 2020, domestic corporations the taxable income and total assets of which
do not exceed P5,000,0000 and P100,000,000 respectively shall be taxed at:
a. 30% c. 20%
b. 25% d. 10%
Problem in Reconciliation
Leni Corporation, is a domestic corporation engaged in the business of manufacturing textiles. For
the fiscal year end June 30, 2019, its profit and loss statement reported the following:
Sales P 100,000,000
Cost of goods manufactured and sold 60,000,000
Gross income from operations 40,000,000
Other income 5,000,000
Total gross income 45,000,000
Operating expenses 15,000,000
Finance costs 5,000,000
Net income before income tax 25,000,000
Income tax expense 4,500,000
Net income after income tax P 20,500,000
Additional information were made available for tax reconciliation purposes:
a. Withholding tax credit from sale of textiles (supported by BIR Form No. 2307) – P 600,000
b. Other income is broken down as follows:
- Interest income from savings deposits (net of final withholding tax) – P 200,000
- Gain from sale of investment property (the property was not used in the primary activity
of the corporation but held for lease) – P 4,000,000 (gross of withholding tax amounting
to P 900,000)
- Rental income from investment property – P 800,000 (gross of withholding tax)
c. Operating expense include allowance for bad debts expense amounting to P 500,000.
d. During the year, Corporation has written-off bad debts which are certainly uncollectible
amounting to P 300,000.
e. Finance cost is broken down as follows:
- Interest expense on loan from various financial institutions – P 3,000,000. Interest
expense on loans from a majority stockholder – P 2,000,000.
f. Income tax expense, represents quarterly income tax paid.
8. (PROBLEM) Compute Page 4, Schedule V, Item 4 of BIR Form No. 1702-RT (net income per books
should refer to net income before income tax).
a. P 500,000
b. P 1,582,400
c. P 582,400
d. P 2,500,000
Net income per books P25,000,000

Add: Non-deductible expenses/taxable other income
Allowance for bad debts 500,000
Interest expense on loans from majority
stockholder 2,000,000 2,500,000
Total 27,500,000
Less: Non-taxable income and income subject to
final tax
Interest income from savings deposit 200,000
Gain from sale of investment property 4,000,000
Accounts written off 300,000 4,500,000
Net taxable income P27,450,000

9. (PROBLEM) Compute Page 4, Schedule V, Item 9 of BIR Form No. 1702-RT.
a. P 200,000 c. P 300,000
b. P 4,500,000 d. P 500,000
10. (PROBLEM) Compute Page 2, Item 55 of BIR Form No. 1702-RT.

a. P 600,000 c. P 5,100,000
b. P 5, 140,000 d. P 6,040,000
11. (PROBLEM) How much withholding tax should Leni Corporation remit on its loan interest
payments assuming the Corporation is including in the BIR list of top withholding agents?
a. P 460,000
b. P 750,000
c. P 100,000
d. P 360,000
Loan payments (5,000,000 x 2%) P100,000
12. How much discount is granted to a senior citizen on his purchase of basic and prime
commodities, subject to limitations?
a. 20% b. 15% c. 10% d. 5%
13. A non-profit hospital has the following data for the current calendar year:
Gross receipts, related activities P 15,000,000.00
Cost of services, related activities 6,000,000.00
Allowable deductions from related activities 3,250,000.00
Gross receipts, unrelated activities 18,000,000.00
Cost of services, unrelated activities 5,000,000.00
Allowable deductions from unrelated activities 2,000,000.00
Payments, first three (3) quarters 2,000,000.00
How much is the tax payable?
a. P2,187,500 c. (P325,000)
b. P1,350,000 d. None, exempt from tax.
Related Unrelated Total

activities activities
Gross receipts P15,000,000.00 P18,000,000.00 P33,000,000.00
Less: Cost of services 6,000,000.00 5,000,000.00 11,000,000.00
Gross income 9,000,000.00 13,000,000.00 22,000,000.00
Less: Allowable deductions
3,250,000.00 2,000,000.00 5,250,000.00
Net taxable income P 5,750,000.00 P11,000,000.00 16,750,000.00
Tax rate* 25%
Income tax due 4,187,500.00
Less: Payments, first 3
quarters 2,000,000.00
Income tax payable P2,187,500.00
* Tax rate is 25% because income from unrelated activities exceeds 50%
(13,000,000/22,000,000 = 59%) and taxable net income exceeds P5,000,000.00.
DOCUMENTARY STAMP TAX

14. Documentary stamp tax is:
a. an excise tax. c. a local tax.
b. an Ad valorem tax d. a percentage tax.
15. Except as provided by rules and regulations promulgated by the Secretary of Finance,
upon recommendation of the Commissioner, the tax return prescribed in this Section shall
be filed wit hin how many days after the close of the month when the taxable document
was made, signed, issued, accepted, or transferred, and the tax thereon shall be paid at
the same time the aforesaid return is filed?
a. 30 days c. 15 days
b. 20 days d. 10 days

16. AST Corporation originally issued shares of stock with par value of P5,000,000. How
much is the documentary stamp tax, if any?
a. P75,000 c. P37,500
b. P50,000 d. None of the choices
Documentary stamp tax (P5,000,000/200 x P2) = P50,000

17. A stockholder in JMI Corporation sold his shares of stock for P500,000. How much is
the documentary stamp tax, if any?
a. P7,500 c. P3,750
Documentary stamp tax (500,000/200 x P1.50) = P3,750
18. What is the basis of the documentary stamp tax to be imposed when one of the contracting
parties on the sale of property is the Government?
a. Consideration contracted to be paid for such realty
b. Consideration contracted to be paid for such realty or on its fair market value,
whichever is higher
c. Actual consideration
d. Consideration contracted to be paid for such realty or on its fair
market value, whichever is lower
19. A real property was sold for P3,495,700. How much is the documentary stamp tax, if
any?
a. P52,440.00 c. P52,420.50
b. P52,425.00 d. None of the choices
On P1,000 P 15
3,494,700/1,000 = 3,494.70 or 3,495 x 15 52,425
Total P52,440
PREFERENTIAL TAXATION
20. The following, EXCEPT ONE, are establishments which grant sales discounts to senior
citizens on their sale of goods and/or services. Which is the EXCEPTION?
a. Cinema houses
b. Residential unit lessor
c. Optical clinics
d. Funeral parlors
21. (PEZA-Registered Enterprises) A PEZA-registered enterprise has the following data for the
current year:
Gross revenue P100,000,000
Cost of services 50,000,000
Operating expenses 10,000,000
How much is the tax due assuming it enjoys income tax holiday?
a. P13,500,000 c. Zero
b. P 2,750,000 d. None of the choices

Less: Cost of services 50,000,000
Gross profits 50,000,000
Less: Operating expenses 10,000,000
Net income from operations 40,000,000
Total gross profits P 45,000,000
Tax rate 0%
Tax due 0

22. (PEZA-Registered Enterprises)Using the same data in the preceding number, how much is
the tax due assuming it is subject to 5% preferential rate?
a. P13,500,000 c. Zero
b. P 2,750,000 d. None of the choices
Tax rate 5%
Tax due P 2,750,000
The share of the local government is 2/5 x P2,750,000 P 1,100,000
The share of the national government is 3/5 x P2,750,000 P 1,650,000
23. (PEZA-Registered Enterprises) Using the same data in the preceding number, how much is
the tax due assuming it is subject to the 25% regular corporate income tax rate?
a. P11,250,000 c. Zero
b. P 2,750,000 d. None of the choice

Less: Operating expenses 10,000,000
Net income from operations 40,000,000
Tax rate 25%
Tax due P 11,250,000
EXCISE TAXES
24. These are taxes on goods manufactured or produced in the Philippines for domestic
sales or consumption or for any other disposition and to things imported as well as
services performed in the Philippine, which tax shall be in addition to the VAT.
a. Excise tax c. Documentary stamp tax
b. Percentage tax d. Local taxes
TAXATION UNDER THE LOCAL GOVERNMENT CODE

25. Which of the following is a FALSE statement?
a. Every person legally authorized to practice his profession shall be entitled to practice
his profession in any art of the Philippines without being subjected to any other national
or local tax for the practice of such profession.
b. Every person legally authorized to practice his profession shall pay the professional tax
anywhere in the Philippines, regardless of where he practices his profession or his
principal office location.
c. 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 classification.
d. Every person legally authorized to practice his profession shall pay the professional tax
to the province where he practices his profession or where he maintains his principal
office if he practices in several places.
26. (Real Property Tax) A residential land is located in Metro Manila. Its fair market value
is P5,000,000. How much is the basic real property tax, if any?
a. P30,000 c. P10,000
Fair market value P5,000,000

Multiplied by assessment level 20%
Assessed Value 1,000,000
Tax rate 2%
Basic real property tax P 20,000

27. (Real Property Tax) An agricultural land is located in the province. Its fair market value
is P2,000,000.
How much is the basic real property tax, if any?

a. P16,000 c. P4,000
b. P 8,000 d. None of the choices

Assessed Value 800,000
Tax rate 1%
The assessment level of agricultural land is 40%. The basic RPT in the province
is not exceeding 1%. SEF is 1%.
28. (Real Property Tax) A commercial land located is located in one of the cities in Metro Manila.
Its fair market value is P10,000,000.
How much is the basic real property tax, if any?

c. P150,000 c. P50,000
d. P100,000 d. None of the choices

Tax rate 2%
29. (Real Property Tax) A residential building located in one of the cities in Metro Manila has
a fair market value of P10,000,000. The city ordinance fixed the actual assessment level at
60%. How much is the basic real property tax, excluding the Special Educational Fund (SEF)?
a. P120,000 c. P60,000

Tax rate 2%
Assessment Levels of Building

Class Fair Market Value Rate*
Residential P175,000 to P10,000,000 plus 0% to 60%
Agricultural P300,000 to P2,000,000 plus 25% to 50%
Commercial or industrial 300,000 to P10,000,000 plus 30% to 80%
Timberland P300,000 to P2,000,000 plus 45% to 70%
*Actual assessment level fixed by ordinance
30. (Real Property Tax) An agricultural machinery located in the province has fair market value
of P3,000,000. How much is the basic real property tax, excluding Special Educational Fund
(SEF)?
a. P12,000 c. P4,000
b. P 8,000 d. None of the choices

Tax rate 1%

Assessment Levels of Machinery

Class Maximum Assessment Level
Residential 50%
Agricultural 40%
Commercial 80%
Industrial 80%
DONOR’S TAX
Problem in Donor’s Tax
Mr. Cruz sold on April 30, 2018, 5,000 shares of stock of XYZ Corporation for P10,000,000. Said
shares of stocks were acquired 3 years ago at par value. XYZ Corporation has 10,000 outstanding
shares with par value of P1,000 per share. The total assets and liabilities of XYZ Corporation
in its latest audited financial statements 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. Assume further that the market values of the real property
of XYZ Corporation are as follows:
Book Value MV per TD* Zonal Value Appraised Value
Land A P 2,000,000 P 2,500,000 P 5,000,000 P 6,000,000
Land B 2,000,000 2,200,000 4,000,000 3,500,000
Building A 1,000,000 2,400,000 3,000,000
Building B 500,000 2,000,000 1,950,000
*MV per TD – market value per tax declaration
31. How much is the capital gains tax due on the sale of Mr. Cruz’s shares of stocks?
a. P1,087,500 c. P750,000
b. P1,046,250 d. P495,000
Selling price P10,000,000

Less: Cost (5,000 x 1,000) 5,000,000
Capital gain 5,000,000
Tax rate 15%
Capital gains tax P 750,000
32. How much is the documentary stamp tax due on the sale of Mr. Cruz’s shares of stock?
a. P91,875 c. P37,500
d. P18,750
b. P75,000
Par value (5,000 x 1,000) P5,000,000
Divided by 200
Tax base 25,000
Tax 1.50
Documentary stamp tax P 37,500
33. How much is the donor’s tax due if any?

a. P120,000
b. P103,500
c. P 90,000
d. None
34. Assuming that Mr. Cruz 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?
a. P720,000
b. P703,500
c. P585,000
d. P435,000

27 Total gifts in this return (20,000,000 – 5,000,000 = 15,000,000 divided by

10,000 = 1,500 x 5,000) P7,500,000
33 Total deductions allowed -
34 Total net gifts in this return 7,500,000
35 Add: Total prior net gifts during the calendar year -
36 Total net gifts 7,500,000
37 Less: Exempt gift 250,000
38/14 Total net gifts subject to tax 7,250,000
15 Applicable donor’s tax rate 6%
16 Donor tax due P435,000
Problems in Donor’s Tax
Mr. and Mrs. Santos had the following conjugal transfers during the year 2018:
January 26 Donated a parcel of land to their son, on account of their marriage. Their son’s
wedding is on July 31, 2018. The fair market value of the land at the time of donation was
P500,000. The fair market value of the land at the time of marriage was P500,00. The donated
property was subject to P100,000 mortgage which was assumed by their son.
October 29 Donated P300,000 to the sister of Mr. Santos who was diagnosed with cancer. They
donated the amount for the medication of Mr. Santos’s sister.
December 20 Sold 300,000 shares of stocks from ABC Corporation to their daughter for P300,000.
The book value per share as per latest audited financial statements of ABC Corporation is
P1.50 per share. The shares of stocks were acquired two years ago for P200,000.
35. (PROBLEM) How much is the donor’s tax still due of Mr. Santos on the January 26 transfer?
a. P 24,000 c. P 11,400
b. P 16,500 d. none
January 26, 2018

27 Total gifts in this return (1/2 x 500,000) P250,000
33 Total deductions (Mortgage assumed by the donee 1/2 x 100,000) 50,000
34 Total net gifts in this return 200,000
35 Add: Total prior net gifts during the calendar year -
36 Total net gifts 200,000
37 Less: Exempt gift 250,000
38/14 Total net gifts subject to tax (50,000)
16 Total donor’s tax due -
36. (PROBLEM) How much is the donor’s tax due of Mrs. Santos on the October 29 transfer?
a. P 57,000 c. P9,000
b. P15,000 d. P6,000
October 29
27 Total gifts in this return (1/2 x 300,000) P150,000
35 Add: Total prior net gifts during the calendar year January 26 (250,000
– 50,000) 200,000
37 Less: Exempt gift (250,000)
38/14 Total net gifts subject to tax 100,000
16 Total donor’s tax due P6,000
17A Less: Payments for prior gifts during the calendar year -
18 Tax payable P6,000
37. (PROBLEM) How much is the capital gains tax due of Mr. Santos on the December 20 transfer?
a. P41,250 c. P 15,000
b. P22,500 d. P 7,500
Selling price (1/2 x 300,000) P150,000

Less: Value in the hands of the donor (1/2 x 200,000) 100,000
Capital gain 50,000
Tax rate 15%
Capital gains tax P 7,500
38. (PROBLEM) How much is the donor’s tax still due of Mr. Santos on the December 20 transfer?
a. P 25,500 c. P4,500
b. P9,000 d. None
December 20
27 Total gift in this return (225,000 – 150,000) P75,000
35 Add: Total prior net gifts during the calendar year
January 26 (500,000 x ½ = 250,000 – 50,000) 200,000
October 29 (300,000 x ½) 150,000 350,000
37 Less: Exempt gift (250,000)
38/14 Total net gifts subject to tax 175,000
16 Total donor’s tax due 10,500
17A Less: Payments for prior gifts during the calendar year
(350,000 – 250,000 x 6%) 6,000
18 Tax payable P4,500
ESTATE TAX
Problem in Estate Tax
Mr. Pat Thayna, a single and a non-resident alien, died of a heart attack in 2018, leaving
the following properties in favor of his heirs:
Gross estate within the Philippines P 30,000,000

Gross estate outside of the Philippines P 20,000,000
Funeral expense P 500,000
Judicial and administrative expenses P 2,000,000
Claims against the estate P 5,000,000
Transfer for public purpose
(part of properties within the Philippines) P 300,000
His gross estate includes family home valued at P 8,000,000.
39. (PROBLEM) How much is the gross taxable estate of Mr. Pat Thaynas estate?
a. P 50,000,000 d. P 30,000,000
b. P 45,000,000
c. P 35,000,000
Gross estate within the Philippines (including family home) P30,000,000
40. (PROBLEM) How much is the deductible ordinary deductions of Mr. Pat Thayna’s estate?
a. P5,000,000 c. P 4,200,000
b. P4,320,000 d. P 3,300,000
Claims against the estate (30,000,000/50,000,000 x 5,000,000) P3,000,000
Transfer for public use 300,000
Total P3,300,000
41. (PROBLEM) How much is the deductible special deductions of Mr. Pat Thayna’s estate?
a. P 8,500,000 c. P 1,000,000
b. P 1,510,800 d. P 500,000
Standard deduction P500,000
42. (PROBLEM) How much is the estate tax due of Mr. Pat Thayna’s estate?
a. P 1,590,000 c. P 1,572,000
b. P 1,579,000 d. P 1,518,000
34 Gross estate P30,000,000

35 Less: Ordinary deductions (3,000,000 + 300,000) 3,300,000
36 Estate after ordinary deductions 26,700,000
37A Less: Special deductions (Standard deduction) 500,000
40/16 Net taxable estate 26,200,000
17 Applicable tax rate 6%
18 Estate tax due P1,572,000
43. Assuming Mr. Pat Thayna is a resident alien, how much is the estate tax due?
a. P1,834,920 c. P702,000
b. P1,782,000 d. P582,000
34 Gross estate (30,000,000 + 20,000,000) P50,000,000

35 Less: Ordinary deductions (5,000,000 + 300,000) 5,300,000
36 Estate after ordinary deductions 44,700,000
37 Less: Special deductions
37A Standard deduction (5,000,000)
37B Family home (10,000,000)
40/16 Net taxable estate 29,700,000
18 Estate tax due P 1,782,000
Problems in Estate Tax
Mr. P.A. Langit, Filipino and married on August 3, 1988, died in 2020, leaving his estate in
favor of his surviving spouse. The following information were made available:
Real property in Masbate, acquired during marriage. Said property is supported by a barangay
certification that the spouses resided in this property at the time of Mr. Langit’s death. The
fair market value of this property as per latest tax declaration is P9,200,000, while the zonal
valuation as of the time of death is P11,500,000. Said real property was held as a mortgage in
a loan applied by the spouses. As of the time of death, the outstanding balance of the mortgage
payable amounted to P500,000.
Real property in Quezon City, inherited by Mr. Langit during marriage, two and half years ago,
from his late father. The fair market value as per latest tax declaration as of the time of his
death is P5,000,000 while the zonal valuation is P8,000,000. Said property was previously taxed
at a value of P6,500,000 when Mr. Langit inherited the property from his father. It was also
subject to P800,000 unpaid mortgage at the time it was inherited. Mr. Langit paid P500,000 of
the P800,000 unpaid mortgage before he died.
Real property in Batangas, donated to Mrs. Langit, 10 years ago (before marriage) by his parents-
in-law. The fair market value as per latest tax declaration as of the time of Mr. Langit’s death
is P3,000,000 while the zonal valuation is P4,000,000.

Cash supported by a bank certification. Balance as of the time of death: savings account in the
name of Mr. Langit – P200,000; and savings account in the name of Mr. and Mrs. Langit – P300,000.
Funeral expenses incurred by the estate during the wake and burial of Mr. Langit amounted to
200,000.
Medical expenses within one year before Mr. Langit died amounted to P300,000.
44. Compute Item 34 page 2 (Gross estate) using BIR Form No. 1801
a. P24,000,000 c. P19,700,000
b. P20,000,000 d. P19,500,000
45. Compute Item 35 page 2 (Ordinary deductions) using BIR Form No. 1801
a. P4,280,000 c. P3,780,000
b. P3,980,000 d. P 800,000
46. Compute Item 37D page 2 (Total special deductions) using BIR Form No. 1801
a. P15,000,000 c. P10,750,000
b. P11,000,000 d. P10,500,000
47. Compute Item 40 page 2 (Net taxable estate) using BIR Form No. 1801
a. P1,970,000 c. P1,220,000
b. P1,470,000 d. P 970,000
48. Compute Item 18 page 1 (Estate tax due) using BIR Form No. 1801
a. P118,200 c. P73,200
b. P 88,200 d. P58,200
Exclusive Common Total

34 Gross estate P8,000,000 P16,000,000 P24,000,000
35 Less: Ordinary deductions 3,780,000 500,000 4,280,000
36 Estate after ordinary deductions 4,220,000 15,500,000* 19,720,000
37 Less:Special deductions
37A Standard deduction 5,000,000
37B Family house
(1/2 x 11,500,000) 5,750,000
37C Others (specify) -
37D Total special deduction 10,750,000
38 Net estate 8,970,000
39 Less: Share of surviving spouse (1/2 x
15,500,000*) 7,750,000
40 Net taxable estate 1,220,000
18 Estate tax due P 73,200
Gross estate:
Exclusive Community
Real property in Masbate P11,500,000
Real property in Quezon City P8,000,000
Real property in Batangas - 4,000,000
Cash supported by a bank certification - 500,000
Total P8,000,000 P16,000,000
Ordinary deductions
Exclusive Community
Unpaid mortgage (Real property in Masbate) P P500,000
Unpaid mortgage (Real property in Quezon City) 300,000 -
Property previously taxed (vanishing deduction) 3,480,000 -
Total P3,780,000 P500,000

Value to take P6,500,000

Less: Mortgage paid 500,000
Initial basis 6,000,000
Less: Proportional deduction (6,000,000/24,000,000 x 800,000) 200,000
Final basis 5,800,000
Rate 60%
Vanishing deduction P3,480,000
BUSINESS TAXES (VALUE-ADDED TAX AND OTHER PERCENTAGE TAXES)
49. Beginning January 1, 2021, which of the following shall no longer be exempt from VAT?
a. Sale of real properties not primarily held for sale to customers or held for lease in
the ordinary course of trade or business
b. Sale of real property utilized for socialized housing as defined by Republic Act No.
7279
c. Sale of house and lot, and other residential dwellings with selling price of not more
than Two Million Pesos (P2,000,000.00)
d. Sale of residential lot valued at One Million Five Hundred Thousand Pesos
(P1,500,000.00) and below
50. A lessor rents his 15 residential units for P14,500 per month. During the taxable year,
his accumulated gross receipts amounted to P2,610,000. To what business taxes will he be
liable?
I – Value-Added Tax
II – 3% Percentage under Section 116 of the Tax Code
a. Both I and II c. I only
b. Neither I nor II d. II only
Reference: Section 4.109-1 (B) (q), Revenue Regulations No. 13-2018

51. A lessor rents his 15 residential units for P15,500 per month. During the taxable year,
his accumulated gross receipts amounted to P2,790,000 To what business taxes will he be
liable?
52. Using the information in the preceding number, assuming he is VAT-registered, To what business
taxes will he be liable?
Problem in VAT
AliLaba Corporation, a VAT-registered company is engaged in the laundry business. During the
first quarter of 2018, the following information were made available:
Net revenues, 1st quarter 2018 P 1,000,000

Receivables from customers, January 1, 2018 224,000
Receivables from customers, March 31,2018 336,000
Creditable VAT withheld, 1st quarter 2018 5,000
VAT purchases, other than capital goods, 1st quarter 2018 300,000
VAT purchases, capital goods, 1st quarter 2018 (all in January 2018) 1,200,000
Receivable balances are all income related and are inclusive of value-added tax. Revenues and
purchases are VAT exclusive. Capital goods are estimated to have a useful life of 10 years.
53. (PROBLEM) Compute item 19B (Output Tax) of BIR Form No. 2550Q.
a. P 106,560 c. P 132,000
b. P 108,000 d. P 120,000

Receivables, January 1, 2018 (224,000 divided by 1.12) P 200,000

Add: Revenue, first quarter 2018 1,000,000
Total 1,200,000
Less: Receivables, March 31, 2018 (336,000 divided by 1.12) 300,000
Gross receipts 900,000
Tax rate 12%
Output tax (Item 19B) P108,000
54. (PROBLEM) Compute item 22 (Total Available Input Tax) of BIR Form No. 2550Q.
a. P 180,000 c. P 36,000
b. P 43,200 d. P 185,000
Input tax on VAT purchases other than capital goods, first quarter 2018 P36,000
(300,000 x 12%)
Input tax on VAT purchases, capital goods, first quarter 2018
(all in January 2018)
(1,200,000 x 12% = 144,000) 144,000
Total available input taxes (Line 22) P180,000
22 Total available input taxes P180,000

Less: 23 A Input tax on purchases of capital goods exceed P1M deferred to
succeeding period (1,200,000 x 12% x 56/60) 136,800
24 Total allowable input taxes P43,200
55. (PROBLEM) Compute the deferred input tax as of March 31, 2018:
a. P 141,600 C. P 36,000
b. P 136,800 D. P 185,000
1,200,000 x 12% x 57/60 P136,800

56. z(PROBLEM) When shal BIR Form No. 2550Q be filed?
a. April 20, 2018
b. April 25, 2018
c. April 30, 2018
d. Return not required to be filed
Problem in VAT
57. The following information taken from the books of a VAT-registered enterprise was provided
to you:
Domestic sales of goods P 3,000,000
Sales of packaging materials to an export-
oriented enterprise whose export sales
exceed 70% of the total annual production 2,000,000
Local sales of goods to Asian Development
Bank (ADB) 500,000
Consignment of goods (not returned within
60 days following the date of consignment) 200,000
Goods transferred for the personal use of the owner 100,000
How much was the total taxable sales?
a. P 3,000,000 c. P 3,800,000
b. P 3,300,000 d. P 5,800,000
58. Using the same data in the preceding number, how much was the output tax using 12% VAT
rate?
a. P 360,000 c. P 456,000
b. P 396,000 d. P 696,000
Taxable sales Rate Output tax

Domestic sale of goods P3,000,000 12% P360,000
Sales of packaging materials
to export-oriented enterprise 2,000,000 0%
Local sales of goods to ADB 500,000 0%

Consignment of goods (deemed sold) 200,000 12% 24,000

Goods transferred for the personal
use of the owner (deemed sold) 100,000 12,000
Total P5,800,000 P396,000
Problem in VAT
A VAT-registered real estate dealer sold the following during the month of January 2021:
One (1) condominium unit (inclusive of parking space
valued at P500,000) P1,500,000
Two (2) adjacent condominium units covered
by separate titles sold to one buyer, each
unit is valued at P2,500,000 (exclusive of two
(2) parking spaces valued at P500,000 each) 5,000,000
He also had the following acquisitions during the month:

Domestic purchase of supplies, net of VAT 300,000
Domestic purchase of five (5) units of office
computers valued at P50,000 each, net of VAT
(4 years estimated life) 250,000
Importation of one vehicle for land transport
used in business (5 years estimated life) 1,400,000
Office rental, net of VAT 100,000
59. Compute item 16A (Sales/Receipts for the month exclusive of VAT) of BIR Form No. 2550M
a. P7,500,000 c. P6,000,000
b. P6,500,000 d. P5,000,000
Sellng price of one condo unit P1,000,000

Selling price, parking spaces (500,000 x 3) 1,500,000
Selling price, 2 adjacent condo units (2,500,000 x 2) 5,000,000
Total P7,500,000
Beginning January 1, 2021, the VAT exemption shall only apply to sale of real properties
not primarily held for sale to customers or held for lease in the ordinary course of
trade or business, sale of real property utilized for socialized housing as defined
by Republic Act No. 7279, sale of house and lot, and other residential dwellings with
selling price of not more than Two million pesos (P2,000,000)(Sec. 4-109-1 B
(p) (4) RR 4-2021)
60. Compute item 16B (Output Tax) of BIR Form No. 2550M
a. P900,000 c. P720,000
b. P780,000 d. P600,000
Total selling price P7,500,000

Tax rate 12%
Output tax P 900,000
61. Compute item 21 (Allowable Input Tax) of BIR Form No. 2550M
a. P246,000 c. P51,425
b. P 80,800 d. P38,800
On supplies (300,000 x 12%) P36,000

On computer (capital goods) (250,000 x 12% = 30,000/48 months )* 625
On imported SUV (capital good) (1,400,000 x 12% = 168,000/60 months)*
2,800
On office rental (100,000 x 12%) 12,000
Total P51,425

*Aggregate acquisition cost of capital goods during the month:

Five (5) units of computers P 250,000
One vehicle for land transport 1,400,000
Aggregate acquisition cost P 1,650,000
62. Compute item 22 (Net VAT Payable) of BIR Form No. 2550M
a. P848,575 c. P688,575
b. P699,200 d. P561,200
16B Output Tax P900,000

21 Total Allowable Input Tax 51,425
22 Net VAT Payable P848,575
VAT-registered persons shall pay the value-added tax on a monthly basis. Monthly VAT
declarations shall remain until December 31, 2022.
Beginning January 1, 2023, the filing and payment required shall be done within twenty-
five (25) days following the close of the taxable quarter.
Problem in VAT and Percentage Taxes
Ms. N is a caterer and a videoke bar operator. In a taxable period, she had the following
data, tax not included:
Sales:
From operations of the Truluv Catering Service:
Cash sales
Accounts receivable (catering) P400,000
Credit card sales 250,000
243,000
From operations of the Dude Videoke Bar:
Cash sales 1,360,000
Payments for catering service, based on gross receipts (80% of which are to
VAT taxpayers) 60%
63. How much is the amusement tax payable?

a. P357,156 c. P198,420
b. P297,630 d. None, not subject to amusement tax
Cash sales P1,360,000

Gross receipts P1,984,200
Tax rate 18%
Amusement tax P 357,156
64. How much is the value added tax payable?

a. P77,160 c. P30,864
Cash sales P400,000

Taxable sales 643,000
Tax rate 12%
Output tax 77,160
Less: Input tax VAT payments on expenses (12% of P308,640*) 37,037
Value-added tax payable P40,123
* Operating expenses (60% x 643,000) P385,800

VAT –paid expenses (80% x P385,800) P308,640

BASIC PRINCIPLES
65. Which of the following are basic principles of a sound tax system?
a. Fiscal Adequacy, Economic Feasibility and Theoretical Justice
b. Fiscal Adequacy, Administrative Feasibility and Theoretical Justice
c. Progressive Taxation, Ability to Pay, Symbiotic Relationship
d. Fiscal Deficit, Administrative Feasibility and Ability to Pay
66. (Adapted) Among the nature of taxation is that it is an inherent power being an attribute
of sovereignty. Which among the following is not among its manifestation as such inherent
power?
a. Courts cannot issue an injunction to enjoin the collection of taxes.
b. There should be no improper delegation of the power to tax.
c. Taxes may be imposed even without a constitutional grant.
d. The State has the right to select the subjects and objects of taxation.
67. The Philippine Constitution has expressly adopted the generally accepted principles of
international law as part of the land. Which inherent limitation of taxation is being
adhered to?
a. Territorial jurisdiction
b. International comity
c. Public purpose
d. Non-delegation of power of taxation
68. One of the following is not a national tax.
a. Income tax c. Documentary stamp tax
b. Value-added tax d. Community tax
COMPLIANCE REQUIREMENTS
69. Statement A: All persons subject to an internal revenue tax shall, for each sale or transfer
of merchandise or for services rendered valued at One hundred pesos (P100.00) or more, issue
duly registered receipts or sales or commercial invoices, prepared at least in duplicate,
showing the date of transaction, quantity, unit cost and description of merchandise or nature
of service.
Statement B: Where the receipt is issued to cover payment made as rentals, commissions,
compensations or fees, receipts or invoices shall be issued which shall show the name,
business style, if any, and address of the purchaser, customer or client.
Statement C: Where the purchaser is a VAT-registered person, in addition to the information

herein required, the invoice or receipt shall further show the Taxpayer Identification Number
(TIN) of the purchaser.
a. Only statements A and C are correct. c. Only statement C is correct.

b. All statements are correct. d. Only Statement A is correct.
70. All taxpayers are required to preserve their books of accounts, including subsidiary books
and other accounting records, for a period of how many years reckoned from the day
following the deadline in filing a return, or if filed after the deadline, from the date of
the filing of the return, for the taxable year when the last entry was made in the books of
accounts.
a. 20 years c. 10 years
b. 15 years d. 5 years
THOT: “When seeking God’s best for us becomes our focus – contentment, joy and peace replace
anxiety.” -Tamthewise
PRAYER: Lord we offer all our labor for Your greater glory alone. May You grant special favor
to the hard work our CPA Licensure examinees put into their review. Help them remember the
things we taught them. Please keep them composed during the examinations. WE pray for our very
fair examinations. Amen

TAX Preweek Lecture (B42) - December 2021 CPALE

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TAX Preweek Lecture (B42) - December 2021 CPALE

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ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY

TAXATION A. Tamayo  G. Caiga  C. Lim  K. Manuel  E. Buen

TAX PREWEEK LECTURE – December 2021 CPALE

2. Which of the following tax cases may NOT be compromised?

6. Which of the following statement/s is/are correct?

Page 1 of 16 0915-2303213  www.resacpareview.com

Net income per books P25,000,000

Page 2 of 16 0915-2303213  www.resacpareview.com

10. (PROBLEM) Compute Page 2, Item 55 of BIR Form No. 1702-RT.

Loan payments (5,000,000 x 2%) P100,000

Related Unrelated Total

DOCUMENTARY STAMP TAX

Page 3 of 16 0915-2303213  www.resacpareview.com

Documentary stamp tax (P5,000,000/200 x P2) = P50,000

Documentary stamp tax (500,000/200 x P1.50) = P3,750

Gross revenue P100,000,000

Page 4 of 16 0915-2303213  www.resacpareview.com

Gross revenue P100,000,000

TAXATION UNDER THE LOCAL GOVERNMENT CODE

Fair market value P5,000,000

Page 5 of 16 0915-2303213  www.resacpareview.com

How much is the basic real property tax, if any?

Fair market value P2,000,000

How much is the basic real property tax, if any?

Fair market value P10,000,000

Fair market value P10,000,000

Assessment Levels of Building

*Actual assessment level fixed by ordinance

Fair market value P3,000,000

Page 6 of 16 0915-2303213  www.resacpareview.com

Assessment Levels of Machinery

Problem in Donor’s Tax

Selling price P10,000,000

33. How much is the donor’s tax due if any?

Page 7 of 16 0915-2303213  www.resacpareview.com

27 Total gifts in this return (20,000,000 – 5,000,000 = 15,000,000 divided by

Problems in Donor’s Tax

January 26, 2018

Selling price (1/2 x 300,000) P150,000

Problem in Estate Tax

Gross estate within the Philippines P 30,000,000

His gross estate includes family home valued at P 8,000,000.

Standard deduction P500,000

34 Gross estate P30,000,000

34 Gross estate (30,000,000 + 20,000,000) P50,000,000

Problems in Estate Tax

Page 10 of 16 0915-2303213  www.resacpareview.com

Exclusive Common Total

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Value to take P6,500,000

BUSINESS TAXES (VALUE-ADDED TAX AND OTHER PERCENTAGE TAXES)

Reference: Section 4.109-1 (B) (q), Revenue Regulations No. 13-2018

Net revenues, 1st quarter 2018 P 1,000,000

Page 12 of 16 0915-2303213  www.resacpareview.com

Receivables, January 1, 2018 (224,000 divided by 1.12) P 200,000

22 Total available input taxes P180,000

1,200,000 x 12% x 57/60 P136,800

Taxable sales Rate Output tax

Page 13 of 16 0915-2303213  www.resacpareview.com

Consignment of goods (deemed sold) 200,000 12% 24,000

He also had the following acquisitions during the month:

Sellng price of one condo unit P1,000,000

Total selling price P7,500,000

On supplies (300,000 x 12%) P36,000