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General Principles of Taxation Exam
General Principles of Taxation Exam
5. The power to enforce proportional contribution from the people for the
support of the government is
A. Taxation C. Eminent Domain
B. Police Power D. Public Properties
7. The courts cannot issue injunction against the government’s effort to collect
taxes is justified by
A. Lifeblood doctrine C. Ability to pay theory
B. Imprescriptibility of taxes D. Doctrine of estoppel
8. This theory underscores that taxes are indispensable to the existence of the
state.
A. Doctrine of equitable recoupment C. Lifeblood Doctrine
B. Benefit-received theory D. Holmes Doctrine
14. Statement 1: In the selection of the objects of taxation, the courts have no
power to inquire into the wisdom, objectivity, motive, expediency or necessity
of a tax law.
Statement 2: An imposition can be both a tax and a regulation. Taxes may be
levied to provide means for rehabilitation and stabilization of threatened
industry.
A. Only Statement 1 is true C. Both Statements are true
B. Only Statement 2 is true D. Both Statements are false
16. This refers to the privilege or immunity from a tax burden which others are
subject to:
A. Exclusion C. Tax holiday
B. Deduction D. Reciprocity
17. The process by which the sovereign raises income to defray the expenses of
the government is called
A. Subsidy C. Taxation
B. Tariff D. Tribute
19. One of the characteristics of internal revenue laws is that they are:
A. Criminal in nature
B. Penal in nature
C. Political in nature
D. Generally prospective in application
20. One of the characteristics of our internal revenue laws is that they are:
A. Political in nature
B. Penal in nature
C. Generally prospective in operation although the tax statute may nevertheless
operate retrospectively provided it is clearly the legislative intent
D. Criminal in nature.
21. In case of conflict between tax laws and generally accepted accounting
principles (GAAP)
A. Both tax laws and GAAP shall be enforced.
B. GAAP shall prevail over tax laws
C. Tax laws shall prevail over GAAP
D. The issue shall be resolved by the courts.
22. The following are similarities of the inherent power of taxation, eminent
domain, and police power, except.
A. Are necessary attributes of sovereignty
B. Interfere with private rights and property
C. Affect all persons or the public
D. Are legislative in implementation
25. The distinction of a tax from permit or license fee is that a tax is
A. Imposed for regulation
B. One which involves an exercise of police power
C. One in which there is generally no limit on the amount that may be imposed
D. Imposed before engagement in those activities
27. Which of the following similarities of the three powers of the state, except.
A. They are all ways in which the State interferes with private rights and
properties
B. They all exist independently with Constitution and are exercisable by the
government even without Constitution grant. However, the Constitution may
impose conditions or limits for their power.
C. The exercise of these powers by the local government units have no limits
D. They all presuppose an equivalent form of compensation received by the
persons affected by the exercise of the power.
29. Which of the following statements is not part of the Inherent limitations?
A. Non-delegation of the taxing power C. Territoriality of taxation
B. International comity D. Free worship rule
33. Which of the following statements is not correct about strict construction of
tax laws?
A. Vague tax laws are construed against the government and in favor of the
taxpayers.
B. The claim for exemption is construed strictly against the taxpayer in
accordance with the lifeblood doctrine.
C. A well-founded doubt is fatal to the claim; it is only when the terms of the
concession are too explicit to admit fairly of any other construction that the
proposition can be supported.
D. A taxpayer claiming a tax exemption must not necessary to point a specific
provision of law conferring on the taxpayer, in clear and plain terms, exemption
from a common burden.
34. A feasibility study needs or needs to look into the taxes of different political
subdivisions of government which may be alternative sites of the business
because
A. Provinces, cities, and municipalities must have uniform taxes between and
among themselves.
B. The local taxes of a political subdivision need not be uniform with the local
taxes of another political subdivision
C. Businesses that are subject to national taxes are exempted from local
business taxes
D. Local business taxes may be credited against national business taxes.
36. Which of the following statements is not included about the importance of
taxation?
A. Taxation is very importance to regulate inflation, achieve economic and
social stability and for social control.
B. It is the primary source of government revenue that is used to effectively and
permanently perform government functions.
C. To raise revenue for the very existence of the government to serve the people
for whose benefits taxes are collected
D. To support other inherent powers of the State.
37. Which of the following statements is incorrect?
A. Direct duplicate taxation is a valid defense against a tax measure if it violates
the equal protection clause.
B. There is no constitutional prohibition on double taxation
C. A 20% final withholding tax on interest income on bank deposits and a 5%
gross receipts tax on banks is a direct duplicate taxation
D. The absence of any of the elements of direct double taxation makes it
indirect duplicate taxation.
39. Which of the following is not a scheme of shifting the incidence of the tax
burden?
A. Changing the terms of the sale like FOB shipping point in the Philippines to
FOB destination abroad, so that the title passes abroad instead of in the
Philippines.
B. The manufacturer transfers the tax to the consumer by adding the tax to the
selling price of the goods sold
C. The purchaser asks for a discount or refuses to buy at regular price unless it
is reduced by an amount equal to the tax he will pay
D. The manufacturer transfers the sales tax to the distributor, to the wholesaler,
to the retailer and finally to the consumer.
46. Which of the following cases will the law not allow the person to do
compromise on behalf of the government?
A. Only the BIR Commissioner is expressly authorized by the Tax Code to enter
into compromise for both civil and criminal liabilities subject to certain
conditions.
B. The Local Government Code has no provision regarding compromise;
however, the tax liability is not prohibited from being compromised.
C. The BIR is given the power to compromise with respect to customs duties
limited to cases where legitimate authority is specifically granted, such as in the
remission of duties
D. The Customs Commissioner, subject to approval by the Secretary for
Finance, has the power to compromise cases involving the imposition of fines,
surcharges, and forfeitures.
47. Which of the following factors is not included in determining the situs of
taxation?
A. Amount of income
B. Sources of income being taxed
C. Place of the excise, privilege, business or occupation being taxed
D. Subject matter of the tax (either person, property, rights or activity)
48. Statement 1: Tax laws are given retroactive effect because the rule of “ex-
post facto law” is applicable for tax purposes.
Statement 2: Tax rulings of the Secretary of Finance are binding to the Courts
because the Department of Finance is the highest agency regarding tax
administration.
A. Only Statement 1 is true C. Both Statements are true
B. Only Statement 2 is true D. Both Statements are false
57. Which of the following statements is not exempted from regular income
tax?
A. Social security benefits, retirement gratuitous and other similar benefits from
foreign government agencies and other institutions, private or public received
by resident or non-resident citizens or aliens who come to settle permanently in
the Philippines
B. Income derived from investments in the Philippines in loans, stocks, bonds,
or other domestic securities, or from interest on deposits in banks in the
Philippines who is enjoying refinancing from a foreign government.
C. Income derived by the government and its political subdivision from the
exercise of essential government function.
D. Income derived by the government-owned and controlled corporation
(GOCCs) engaged in income-producing activities which are proprietary or
commercial in nature.
58. Which of the following retirement benefits, pensions, gratuitous is subject to
regular income tax under Sec. 32 (6) of the NIRC?
A. Retirement benefits received under Republic Act. No. 7641 and those
received by officials and employees of private firms, whether individual or
corporate, in accordance with a reasonable private benefits plan maintained by
the employer.
B. Any amount received by an official or employee or by his heirs from the
employer as a consequence of the separation of such official employee from the
service of the employer because of death sickness or other physical disability or
for any cause within the control of the said official or employee.
C. The provisions of any existing law to the contrary notwithstanding, social
security benefits, retirement gratuities pensions and other similar benefits
received by a resident or nonresident citizens of the Philippines or aliens who
come to reside permanently in the Philippines from foreign government
agencies and other institutions, private or public.
D. Payment of benefits due to become due to any person residing in the
Philippine under the laws of the United states administered by the United States
Veterans Administration.
E. Benefits received from enjoyed under the SSS in accordance with the
provisions of Republic Act No. 8282 and benefits received under Republic Act.
No. 8291, including retirement gratuity received by government officials and
employees.
59. Which of the following is incorrect regarding the Revenue Regulation No.
3-2015?
A. This revenue regulation is promulgated to implement the provisions Republic
Act (RA) No. 10653.
B. Accordingly, the amount of 82, 000 shall ONLY apply to the 13th-month pay
and other benefits prescribed under the provisions of Section 2.78.1 (B) of RR
No. 2-98, as amended and shall apply ALSO to the Minimum Wage Earner.
C. It must be emphasized that this exclusion from gross income is not applicable
to self-employed individuals and income generated from the business.
D. The effective implementation of these Regulations all taxpayer-employers
shall ensure the correct computation and application of the said increase on the
13th month and other benefits of the employees in the year-end adjustments and
the same shall be clearly indicated among others.
E. The said BIR form shall be issued by the employer to the employee on or
before January 31 of the succeeding calendar year of if the employment is
terminated before the close of such calendar year, on the day on which the last
payment of compensation is made.
F. In case the employee whose employment is terminated and subsequently
employed transferee shall immediately furnish the new employer the
accomplished BIR form issued by the previous employer for the appropriate
withholding tax computation of the employee’s regular compensation and
subsequent year-end adjustment if any.
60. Which of the following items is not subject to regular income taxation?
A. Compensation income for services in whatever forms paid
B. Gross income from the conduct of trade, business or exercise of a profession
C. Gains derived from dealings in properties
D. Dealings in capital assets of domestic stocks and real properties
61. Which of the following interest incomes is not subject to regular income
tax?
A. Income from lending activities to individuals and corporation by banks,
finance companies, and other lenders.
B. From bonds and promissory notes
C. Interest income earned by the landowners in disposing their lands to their
tenants.
D. Interest income from banks deposits abroad
66. Which of the following other sources of gross income is/are subject to
regular income tax?
I. Income distribution from taxable estates or trusts
II. Share from the net income of other pass-through entities
III. Farming income
IV. Recovery of past deduction
V. Reimbursement of expenses
VI. Cancelation of indebtedness for a consideration
A. I, IV and VI C. I, III, IV and VI
B. I, II, III, IV and VI D. I, II, III, IV, V and VI
68. The following items are the taxable recovery of past deductions, except.
I. Recovery of previously claimed bad debt expense
II. Refund of local tax expense
III. Stock transaction tax in disposing of stocks through the Philippine stock
exchange
IV. Refund of foreign tax previously claimed as deduction
V. Income tax paid or incurred to a foreign country, if the taxpayer claimed a
credit for such tax in the year it was paid or incurred.
VI. Re-commissioning of abandoned petroleum service contracts or mining
properties
VII. Release of reserve funds of insurance companies
VIII. Special assessment
A. III, IV, V-VII and VIII C. II, III, V and VIII
B. II, IV, VI and VIII D. III, V and VIII
72. Which of the following de minimis benefits is/ are non-taxable from regular
income tax under RR8-2012?
I. Actual medical assistance not exceeding 10, 000 per annum
II. Employee achievement award in the form of tangible property other than
cash or gift certificates with an annual monetary value not exceeding 10, 000
received by the employee under an established written plan which does not
discriminate in favor of highly paid employees.
III. Gifts are given during Christmas and major anniversary celebration not
exceeding 10, 000 per annum
IV. Daily meal allowances for overtime work and night or graveyard shift not
exceeding 25% of the basic minimum wage on a per region basis.
V. Monetized unused vacation leave credits of private employees not exceeding
not exceeding 10 days during the year.
VI. Monetized unused terminal leave pay or the commutation of unused leave
credits due to involuntary separation from employment of the employee not
exceeding 10 days leave credit limit.
VII. Benefits receive by an employee by virtue of a collective bargaining
agreement (CBA) and productivity incentive schemes provided that the total
annual monetary value receives from both CBA and productivity incentive
schemes combined do not exceed 10, 000 per employee per taxable year.
A. I, II, III, IV, V and VII C. I, II, III, IV, V, VI and VII
B. I, II, IV, V and VII D. I, II, IV, V, VI and VII
75. Which of the following statements does not qualify to as necessity of the
employer rule?
A. Necessary traveling, transportation, representation or entertainment expenses
that are subject to an accounting or liquidation in accordance with specific
requirements of substantiation of expense.
B. Representation and Transportation Allowance (RATA) of public officers and
employees under the General Appropriation Act.
C. Personnel Economic Relief Allowance (PERA)
D. Cost of Living Allowances (COLA)
76. Benefits or allowances which are intended for the furtherance of the interest
of the employer’s business or to ensure its smooth operations are exempt from
income tax, except.
A. Scholarship grant to an employee under contract to remain in service for a
specified period upon completion of the study.
B. Grant of housing privilege to employees working at distant or remote
facilities even if the dwelling is distanced from the facility in compliance with
labor safety standards.
C. Cellphone allowance is given to all employees by the employer
D. Car incentives to medical doctor’s on-call who are required to report on duty
anytime.
77. Which of the following statements below is incorrect regarding the fixed
allowance is given by the employer to the employees?
A. The cost of living allowance and other benefits paid to the employee every
payroll period are tax exempt.
B. Ordinary and necessary traveling, representation or entertainment expense of
the employee in the pursuit of his trade, business or profession is exempted from
regular tax under the necessity of the employer rule.
C. Expenses subjected to accounting or liquidation are tax exempt.
D. Any excess of the advances return to the employer are non-taxable
78. Which of the following statements is false regarding paid vacation and sick
leave allowances?
A. The paid absences of an employee applied for his vacation or sick leave
credits which are normally received as part of the regular salary is part of the
regular compensation.
B. Retainer fees of consultants, talents, and directors who have no management
function in the business are professional income not a compensation income of
the recipient.
C. Commissions to non-employees such as independent sales agent is part of his
compensation income.
D. Tips and gratuities paid directly to an employee by customers of the
employer which are not accounted for by the employee to the employer are not
considered as compensation income but are to be reported as other income on
the income tax return of the employee.
83. Which of the following interest income is/are not subject to final tax?
i. Deposits substitute
ii. Government securities
iii. Cooperative’s income
iv. Money market placements
v. Trusts funds
vi. Financial companies or lending institutions
vii. Other investments evidenced by certificates prescribed by the Bangko
Sentral ng Pilipinas.
A. i, ii, iv, and vii C. i, ii, iii, iv , vi and vii
B. i, ii, iv, vi, and vii D. i, ii, iv, v, and vii
84. Which of the following amount of winnings/ prizes is subject to a final tax
of 20%?
A. P10,000 winnings outside the Philippines
B. P10,000 winnings earned within the Philippines
C. P1,000 Philippines Sweepstakes winnings
D. P9,000 first prize singing contest
88. Which of the following passive income from Philippine source is exempt
from Philippine income tax when received by non-resident Aliens and non-
resident citizens?
A. Royalties, in general
B. Yield or any other monetary benefit from deposit substitute
C. Interest income received from a depository bank under expanded foreign
currency deposit system
D. Other winnings
90. Which of the following statements is correct regarding the stock dividend?
A. If the stockholder has a preference to take cash or property dividends instead
of stock dividends it is subject to final tax.
B. Some stockholder exercised the option to take cash or property dividends is
not tax-exempt
C. Any different kind of stock received by stockholder will be subject to final
tax of 10%
D. It is subject to tax if the exercise of option resulted in a change of the
stockholder’s proportionate share of the outstanding shares of the corporation.
95. On April 15, 2015, the following incomes of Mr. Jerome Chavez are:
Compensation income from his employer net of
withholding tax of 5, 750 19, 250
Interest income from his investment in UCPB 20, 000
Dividend income from ADFC 50, 000
Prize in a debate competition 15, 000
Royalties outside the Philippines 75, 000
Winnings from raffle sponsored by GMA 100, 000
Gain on sale of bonds with maturity date of less than 317, 650
Share from BDC a cooperative certified by CDA 6, 000
Interest income under EFCDS 20, 000
Interest income from Metrobank with a maturity date
of 6 years but pre-terminated within three years 80, 000
How much is the income subject to regular tax and final taxes from the passive
income?
96. Mr. Jude Capalar, a government rank, and file employee have the following
summary of his compensation and benefits in 2015.
Gross compensation income 324, 000
Less: Employee payroll deductions
Contribution to GSIS, PHIC and HDMF 32, 000
Deduction for Withholding tax 34, 000 66, 0000
Net Regular payroll 258, 000
Representation and Transportation Allowance 18, 000
Personnel Economic Relief Allowance 24, 000
Christmas bonus 37, 000
Uniform Allowance 10, 000
Honoraria 15, 000
Christmas Gift 5, 000
Additional compensation allowance 36, 000
Monetized value of vacation leave and sick leave (15 days) 7, 500
How much is the gross taxable compensation income of Mr. Jude Capalar for
2015?
A. 369, 500 C. 325, 000
B. 352, 500 D. 308, 000
97. Mr. Jerome Chavez, a private rank and file employee derived the following
remuneration and benefits in 2015.
Basic compensation income 300, 000
Less: Employee’s contribution to SSS, PHIC and HDMF 24, 000
Withholding tax 30, 000
Net compensation income 246, 000
Overtime Pay 21, 000
Productivity incentive 25, 000
Vacation expense paid by the employer 20, 000
Cost of living allowance (COLA) 24, 000
Pre-computed daily transportation allw. 18, 000
Rice Allowance 27, 600
13th month pay 25, 000
Monetized unused leave credit (16 days) 16, 000
Uniform allowance 15, 000
How much is the gross taxable compensation income of Mr. Chavez for 2015?
A. 249, 600 C. 364, 600
B. 312, 600 D. 394, 600
98. Mr. Montecina is preparing his income tax return from his employment and
business income are:
Basic compensation income 240, 000
Less: Contribution to SSS, PHIC and HDMF 20, 000
Withholding tax 40, 750
Net Payroll 186, 100
Add: Cost of Living Allowance 24, 000
Overtime Pay 6, 000
Night Shift Differential 8, 000
Holiday Pay 5, 000
Cash Gifts 5, 000
13th month pay 25, 000
Christmas bonus 15, 000
Other fringe benefits 20, 000
Laundry allowance 3, 000
Productivity Incentives 18, 000
Rice allowance 24, 000
Other reportable income:
Gross sales 240, 000
Less: cost of sales 100, 000
Gross income from business 140, 000
Less: Deductions * 100, 000
Taxable income from business 40, 000
Additional information:
a. On December 31, 2015, the taxpayer filed for the additional exemption of one
(1) qualified dependent child.
b. On June 20, 2015, the taxpayer donated a 10, 000 cash to Marasbaras,
National High School- a public school and 5, 000 to the non-accredited non-
government organization.
c. Mr. Montecina received 10, 000 interest income, net of final tax from Bank of
the Philippines.
d. All expenses are connected with the taxpayer’s trade or business.
How much is the tax due and payable or refund of Mr. Montecina during 2015?
A. 1, 000 C. (1, 000)
B. 500 D. (500)
99. Atty. Jose Aguinalde, 64 years, married with two qualified dependent
children with the following income below:
Gross professional income, net of 10% FWT 625, 500
Professional Expenses 200, 000
Retirement benefits 200, 000
Prize in a sports tournament 50, 000
Gain from sale of bonds with maturity period of 4 years 20, 000
Interest income from bank deposit, Philippines 10, 000
Interest income under EFCDS 60, 000
Royalties income from outside the Philippines 10, 000
Philippine Lotto Winnings 60, 000
Share in a commercial partnership 40, 000
Interest income from bonds with maturity period of 5 years 20, 000
Share in a general professional partnership 60, 000
Additional information:
a. Retirement benefits received from his previous employer that maintained a
reasonable private pension plan after his 12 years of services.
b. Prize in a sports tournament is sponsored by a group of businessmen
promoting health products.
c. The commercial partnership is subject to corporate income tax of 30% based
on the taxable income.
d. Inclusive to the amount received by the taxpayer from the general
professional partnership is the share in interest income which was subjected to a
final tax of 20% of 5, 000.
How much is the taxable net income subject to regular income tax of Atty.
Aguinalde during 2015?
A. 720, 000 C. 485, 000
B. 680, 000 D. 480, 000
100. How much is the total final withholding taxes on passive income?
A. 20, 500 C. 30, 500
B. 26, 500 D. 32, 500
102. Mr. Gerald Result, a resident citizen and supporting his two younger sisters
has the following data for the year 2015:
Gross sales 1, 000, 000
Sales returns and allowances 50, 000
Cost of sales 300, 000
Interest income from Metrobank 10, 000
Share in the net income of commercial partnership
net of 10% final withholding tax 90, 000
Salaries of employee, net of 30, 000 CWT 270, 000
Valued Added Tax (VAT) 100, 000
Business permit and licenses 5, 000
Community tax 10, 000
Contribution to pension trust 50, 000
Entertainment expense 10, 000
Interest expense 50, 000
Research and development cost (deferred)
benefits realized during July 1, 2015, 60, 000
Purchase of equipment with estimated life of 5
acquired on October 1, 2015 50, 000
Additional information:
a. Result bought a residential dwelling for 100, 000 and transferred ownership to
his supervisor. The property has 90, 000 zonal value.
b. 20, 000 of the contributions to pension trust covers past year’s cost.
c. Withholding taxes from the salaries of the employees are properly remitted to
the BIR.
104. How much is the taxable income of Mr. Resula if he chooses optional
standard deduction?
A. 175, 000 C. 368, 050
B. 255, 000 D. 495, 000
105. How much is the total expense to be claimed as part of the itemized
deductions from the fringe benefits given to his employees?
A. 15, 000 C. 68, 000
B. 32, 000 D. 100, 000
106. On January 2, 2014, Mr. Keneth Sajorda, a resident citizen who sold land
as a capital asset for 1, 800, 000 which had a cost to him of 600, 000. The
property was subject to a mortgage of 700, 000, which was assumed by the
buyer. Of the remaining 1, 100, 000 of the consideration, 200, 000 was payable
on the date of sale, 600, 000 on January 2, 2015, and 300, 000 on January 2,
2016.
107. Using problem #106, how much is the installment payment for January 2,
2015?
A. 27, 000 C. 54, 000
B. 34, 000 D. 108, 000
119. The following are the requisites for a non-resident alien individual doing
business in the Philippines may be granted personal exemptions, except.
A. The country of which the non-resident alien is a subject or a citizen has an
income tax law.
B. Such income tax law of the foreign country does not allow personal
exemptions to a Filipino citizen deriving income therefrom but not residing
therein.
C. Such ITR is true and accurate, covering all income received from sources
within the Philippines
D. The non-resident alien files an income tax return in the Philippines in due
time.
126. Which of the following statements is not correct regarding the RR2-98?
A. A non-resident alien engaged in trade or business or in the exercise of a
profession in the Philippines shall be applied to personal exemption in the
amount equal to the exemptions allowed in the income tax law in the country of
which he is subject-or citizen, to citizens of the Philippines not residing in such
country, not to exceed the amount fixed under Sec. 35 of NIRC.
B. Under Sec. 35 of NIRC can only claim a basic personal exemption-in which
it does not involve the additional exemptions.
C. If the reciprocity tax treaty stipulates to allow the only basic personal
exemption, the Philippines will only allow basic personal exemption subject to
limit.
D. If the tax treaty stipulates that both basic personal and additional exemptions
be allowed as exemptions, based on reciprocity principle the Philippine will also
grant both basic and additional exemptions.
127. Which of the following statements is incorrect about the PHHI (Premium
on Health and or Hospitalization Insurance)
A. The premiums on health and or hospitalization insurance (PHHI) paid by the
taxpayer for himself, including h family, not exceeding P200 a month or P2, 400
a year.
B. PHHI is claimed as a deduction against gross income provided that the
family income of such taxpayer shall not exceed P250, 000 for the taxable year.
C. To claim this deduction, the employee shall present the policy contract
together with the original receipt of the premium payment for the current year to
the employer.
D. Total family income does not include primary and other income from sources
received by all members of the nuclear family.
128. Which of the following incorrect regarding the BIR Ruling 003-2005 about
trusts?
A. Tax treatment of UITFs should not be any different from CTFs since they are
considered similar products.
B. An irrevocable trust is treated as a separate and distinct taxable entity from
the person/s or parties that established the trust.
C. An irrevocable trust is subject to any applicable taxes on its investment
income as well as its investors, if and when the trust income is subsequently
distributed to them.
D. The nature of UITF is that they are considered as irrevocable trusts since the
beneficial ownership in a UITF is maintained with the trustor-beneficiary, and
considering that in the case of death of the trustor, The UITF participation forms
part of the trustor’s estate subject to estate tax.
129. Which of the following is correct regarding the BIR Ruling 003-2005?
A. Income accumulated in trust for the benefit of an unborn or unascertained
person or persons with contingent interest, and income accumulated or held for
future distribution under the terms of the will or trust is exempted from tax.
B. Any income which is to be distributed currently by the fiduciary to the
beneficiaries but not including income collected by a guardian of an infant
which is to be held or distributed as the court may direct.
C. Income received by estates of deceased persons after the period of
administration or settlement of the estate is subject to tax.
D. Income which, in the discretion of the fiduciary, may be either distributed to
the beneficiaries or accumulated.
134. Which of the following statements is true regarding the excess quarterly
estimated tax?
A. The excess quarterly estimated tax payments over the quarterly tax due may,
at the option of the taxpayer, be carried forward to quarters of the succeeding
taxable year or claimed through a tax refund.
B. The option must be indicated in the annual adjustment return.
C. Even the taxpayer decided to carry still it is revocable for that period.
D. The option to refund may be in the form of cash or tax credit certificate. If
the option to refund is selected, the excess refundable amount should not be
carried over as a tax credit to the succeeding quarters of the following year.
135. Which of the following statements is incorrect?
A. Married individuals shall file a return for the taxable year to include the
income of both spouses, computing separately their individual income tax based
on their respective total taxable income.
B. When the filing of one return is not practical, each spouse may file a separate
return of income.
C. If any income cannot be definitely attributed to or identified as income
exclusively earned or realized by either of the spouses, the same shall be divided
equally between the spouses for the purpose of determining their respective
taxable income.
D. The income of unmarried minors derived from property received from a
living parent is excluded in the return of the parent.
138. Which of the following statements is not correct regarding the filing of
income tax return?
A. The return shall be e-file and the tax e-paid on or before the 15th day of April
of each year covering the income for the preceding year using the eFPS
facilities through the BIR website.
B. For non-electronic filing and payment system (not-eFPS) taxpayers shall be
filed and the tax paid on or before the 15th day of April of each year covering
the income for the preceding year.
C. In the case of no payment returns, the same shall be filed with the RDo where
the taxpayer is registered/has his legal residence or place of business in the
Philippine or with the concerned RCO under the same RDO.
D. In case the taxpayer has no legal residence or place of business in the
Philippines, the return shall be filed by any authorized agent banks located
within the jurisdiction of the Revenue District Officer (RDO).
139. Which of the following individual taxpayers are required to file income tax
return that should be filed in triplicate, except?
A. Individual receiving purely compensation income from a single employer,
although the income of which has been correctly withheld, but whose spouse is
not entitled to substitute filing.
B. Individuals receiving income subjected to final tax
C. A trustee or a trust, guardian of a minor, executor/administrator of an estate,
or any person acting in any fiduciary capacity for any person, where such trust,
estate, minor, or person is engaged in trade or business.
D. An individual engaged in trade or business or in the exercise of their
profession and receiving compensation income as well.
140. The following taxpayers are not required to file income tax return, except.
A. An individual whose gross income does not exceed his total personal and
additional exemptions.
B. An individual whose compensation income derived from one employer does
not exceed 60, 000 and the income tax on which has been correctly withheld.
C. An individual who is not engaged in business or practice of profession whose
gross income does not exceed his personal and additional exemptions for
dependents.
D. Every non-resident alien on his income derived within the Philippines.
142. Which of the following is not required to file an income tax return?
A. Resident citizen with respect to his business earned outside the Philippines
B. An employee with only one employer and whose compensation income is
fully collected with creditable withholding tax
C. Nonresident citizen with respect to his compensation income earned within
the Philippines
D. Nonresident alien with respect to his business income earned within the
Philippines.
143. Which of the following corporations are exempt to the regular corporate
tax, except.
A. Labor, agricultural or horticultural organization established principally for
profit.
B. Mutual savings bank is not having a capital stock represented by shares, and
cooperatives bank without capital stock organized and operated for mutual
purposes and without profit.
C. Cemetery Company owned and operated exclusively for the benefit of its
members.
D. Civic league or organization not organized for profit but operated exclusively
for the promotion of social welfare.
146. Which of the following statements is not true regarding the capital gains
tax of a corporation derived within the Philippines?
A. Capital gains on the sale of shares of stock not traded in the local stock
exchange are subject to 5% and 10% based on net capital gains.
B. Net capital gains on sales or exchange or disposition of lands and or
buildings located outside the Philippine by the Resident Foreign Corporation is
subject to 30%.
C. Capital gains on sale or exchange or disposition of lands and or buildings
located in the Philippines by a domestic corporation are subject to 6% of selling
price or fair market value, whichever is higher.
D. Percentage tax on the sale of shares of the stock traded on the local stock
exchange is subject to ½ of 1% based selling price.
149. Minimum corporate income tax is imposed whenever the corporation has
zero or negative taxable income or whenever the MCIT is greater than the
Normal Income tax (NIT) due from such corporation. Which of the following
statements regarding the latter is incorrect?
A. The effectivity shall commence on the 4th taxable year immediately
following the year in which such corporation commenced its business operation
B. The tax rate to be imposed is 2% of taxable income
C. The computation and the payment shall apply at the time of filing the
quarterly corporation income tax
D. This tax applies only to domestic and resident foreign corporations
150. Statement 1: A final withholding tax of 15% of any profit remitted by the
Philippine branch of a foreign corporation to its head office based on the total
profits applied or earmarked for remittance without any deduction for the tax
component thereof.
Statement 2: A final withholding tax of 15% based on the gross amount thereof
shall be imposed on income derived from offshore banking units authorized by
local commercial banks and branches of foreign banks that may be authorized
by the Bangko Sentral ng Pilipinas to transact business with UBOs including
interest income derived from foreign currency loans granted to residents.
A. Both statements are correct C. Only the first statement is correct
B. Both statements are incorrect D. Only the 2nd statement is correct
151. This tax is imposed for each taxable year to every corporation formed or
availed for the purpose of avoiding the income tax with respect to its
shareholders or the shareholders or any other corporation.
A. Minimum Corporate Income Tax
B. Normal Corporate Income Tax
C. Improperly Accumulated Earnings Tax
D. Income Dividend Tax
153. The following statements below describes the Minimum Corporate Income
Tax (MCIT), except
A. The computation and the payment of MCIT shall likewise apply at the time
of filing the quarterly corporate income tax
B. In the computation of the tax due for the taxable quarter, if the computed
quarterly MCIT is higher than the quarterly normal income tax (NCIT), the tax
due to be paid for such taxable quarter at time of filing the quarterly corporate
income tax return shall be the MCIT which is two percent (2%) of the gross
income as of the end of the taxable quarter.
C. In the payment of quarterly MCIT, excess over MCIT from the previous
taxable year(s) shall not be allowed to be credited
D. Expanded withholding tax, quarterly corporate income tax payments under
the normal income tax, payments under the normal income tax, and the MCIT
paid in the previous taxable quarter(s) are not allowed to be applied against the
quarterly MICT due.
157. On December 31, 2015, the following data of Hagupit Corporation are:
Gross sales 4, 000, 000
Cost of Sales 1, 200, 000
Sale of office Building with Acc dep’n 450, 000 600, 000
Dividend Income from a domestic corporation 1, 200, 000
Prizes 40, 000
Royalties 20, 000
Interest Income in EFCDS 50, 000
Net capital gain on sale of stocks (not traded) 180, 000
Gain on sale of capital asset in Japan 800, 000
Rental Income from office computer 25, 000
Refund of business expenses overpaid in 2014 20, 000
Interest Income, net of final tax 6, 400
Gambling Income 20, 000
The following items are the identified deductions from the gross income are:
Requirement: Compute the taxable income and tax due and payable.
158. A taxpayer gives the following reasons for refusing to pay a tax. Which of
his reasons is not acceptable for legally refusing to pay the tax?
A. That he has been deprived of due process of law.
B. That there is a lack of territorial jurisdiction.
C. That he derives no benefit from the tax.
D. That the prescriptive period for the tax has elapsed.
159. Which statement refers to police power as distinguished from taxation?
A. It is restricted by the Constitutional provision.
B. It is superior to the non-impairment clause of the constitution.
C. It involves the taking of property by the government.
D. The amount imposed has no limit.
167. Which of the following is not required to file an income tax return?
A. Resident citizen with respect to his business income earned outside the
Philippines
B. An employee with only one employer and whose compensation income is
fully collected with creditable withholding tax
C. A non-resident citizen with respect to his compensation income earned
within the Philippines.
D. Non-resident alien with respect to his business income earned within the
Philippines
168. Which of the following amount of winnings/ prizes is subject to a final tax
of 20%?
A. P10,000 winnings outside the Philippines
B. P10,000 winnings earned within the Philippines
C. P1,000 Philippines Sweepstakes winnings
D. P9,000 first prize singing contest
175. In a loan agreement between the Bangko Sentral ng Pilipinas (as borrower)
and private international banks (as lenders), it is stipulated that all payments of
interest by the Central Bank to the lenders shall be made free and clear from all
Philippine taxes which may be imposed thereon. Is the stipulation valid?
A. Yes, based on international comity.
B. Yes, based on the doctrine of non-taxability of the government.
C. No, violative of the inherent limitations.
D. No, violative of the constitutional limitations.
176. Montecina Inc., a Philippine Corporation, sold through the local stock
exchange 10,000 PLDT shares that it bought 2 years ago. Montecina sold the
shares for P2,000,000 and realized a net gain of P200,000. How much shall it
pay tax on the transaction?
A. It shall declare a P2,000,000 gross income in its income tax return, deducting
the cost of acquisition as an expense.
B. It shall report the P200,000 in its corporate income tax return adjusted by the
holding period.
C. It shall pay 5% tax on the first P100,000 of the P200,000 and 10% tax on the
remaining P100,000.
D. It shall pay a tax of one-half of 1% if the P2,000,000 gross sales.
178. Transfer of the tax burden by one whom the tax is assessed to another.
A. Shifting C. Transformation
B. Capitalization D. Tax exemption
179. The method by which the manufacturer or producer upon whom the tax is
imposed pays the tax and strives to recover such expense through lower
production cost without sacrificing the quality of his product.
A. Shifting C. Transformation
B. Capitalization D. Tax exemption
184. Which of the following passive income from Philippine source is exempt
from Philippine income tax when received by non-resident Aliens and non-
resident citizens?
A. Royalties, in general
B. Yield or any other monetary benefit from deposit substitute
C. Interest income received from a depository bank under expanded foreign
currency deposit system
D. Other winnings
185. How will the local government units be able to exercise their taxing
powers?
A. By Local Legislation
B. By authority conferred by Congress
C. By the issuance of the Department of Finance
D. By the help of the Bureau of Internal Revenue
188. The following statements shall be sufficient causes for the disinheritance of
children and descendants, legitimate as well as illegitimate, except.
A. Has been convicted of adultery of concubinage with the spouse of the testator
B. Guilty of an attempt against the life of the testator, his or her spouse,
descendants, or ascendants.
C. There is a maltreatment of the testator by word or deed, by the child or
descendant
D. Guilty of criminal offense
190. The following are the motives of a taxpayer that preclude the transfer in
contemplation of death, except one, is to
A. relieve the taxpayer of the burden of management
B. save income and property taxes
C. avoid payment of estate tax
D. make dependents financially independent
191. The following are transactions and acquisitions exempt from transfer tax,
except.
A. Transmission from the first heir or done in favor of another beneficiary in
accordance with the desire of the predecessor
B. Transfer or delivery of the inheritance or legacy by the fiduciary heir or
legatee to the fideicommissary
C. The merger of usufruct in the owner of the naked title.
D. All bequests, devises, legacies or transfers to social welfare, cultural and
charitable institutions.
192. When a person dies and during the marriage the property relationship
between the husband and wife was that of conjugal partnership of gains, the
gross estate of the decedent would include
A. exclusive property only
B. All properties of husband and wife
C. exclusive properties and one-half of the conjugal properties
D. exclusive properties and all conjugal properties
193. Which of the following donations is not included as part of the gross estate
of the decedent?
A. revocable transfers
B. transfers in a contemplation of death
C. transfers with reservation of certain rights
D. transmission under a special power of appointment
194. Which among the following distinguishes an estate tax from other kinds of
taxes that are presently imposed under the provisions of the NIRC of 1997?
A. Tax imposed on the privilege to transfer property ownership
B. Tax that is imposed upon gratuitous transfers
C. It is a tax that is imposed on the net value of the properties that are
transferred
D. It is imposed only upon the death of a person.
195. Mr. A died leaving several parcels of land. Before the properties are
distributed to his heirs, the tax to be paid is known as
A. Donor’s tax C. Inheritance tax
B. Estate tax D. Transfer tax
196. The estate tax is to be computed starting from the death of the decedent
because
A. The provisions of the NIRC of 1997 require it
B. The privilege to transfer properties takes place upon death
C. It is only upon the decedent’s death that his heirs are known
D. At the time of death, that estate taxes are due
199. Which of the following unpaid taxes is not deductible from the gross
estate?
A. Property taxes accrued prior to decedent’s date
B. Income taxes on income earned and received from the estate after decedent’s
death
C. Gift taxes on life time gifts which remain unpaid at date of death
D. Capital gain tax on transfers before death and paid after date of death
200. Which of the following is deductible from the exclusive portion of the
gross estate?
A. Vanishing deduction pertaining to property inherited by the decedent prior to
marriage under conjugal property ownership
B. Transfer for public use pertaining to joint donation of husband and wife to
the government
C. Bad debts for uncollectible claims against insolvent person
D. Family home pertaining to house and lot acquired during marriage under
absolute community
201. Which of the following is allowed as a deduction from the gross estate of a
nonresident citizen?
A. Family home with respect to residential house located in the country
B. Standard deduction of P1,000,000
C. Prorated amount of medical expenses incurred 18 months prior to date of
death
D. Vanishing deduction with respect to property located in the Philippines
which was acquired through gratuitous title 4 years prior to death of present
decedent
203. Which of the following should be included as part of the gross estate of a
decedent resident alien?
A. The transmission from the first heir, legatee or done in favor or another
beneficiary, in accordance with the desire of the predecessor.
B. Reversion of the right of usufruct to the owner of the naked title
C. Property transferred under a general power of appointment
D. Property transferred for the use of the Government of the Republic of the
Philippines.
204. Which of the following items does not require that the value of the said
deductible amount should be included as part of decedent’s interest reflected in
the gross estate?
A. Claims against the insolvent person
B. Receivable under RA 4917
C. Claims against the estate
D. Accommodation loan
205. The following requisites are needed for the deductibility of claims against
the estate, except
A. All person obligations existing at the time of the decedent’s death, including
medical expenses prior to death.
B. The liability was contacted in good faith and for adequate and full
consideration in money or money’s worth
C. The creditor’s claim must be enforceable in court
D. The indebtedness was not have been condoned or prescribed
207. Which of the following item is considered situated outside the Philippines
A. Franchise in the name of the decedent which is exercised in the Philippines
B. Share of stock holdings of decedent in a foreign corporation whose business
is 90% done in the Philippines
C. Bond certificate issued by a domestic corporation owned by a nonresident
decedent
D. Foreign currency deposited in bank outside the Philippines
208. Problem: Read and analyze the problem below. Compute the total taxable
estate and the estate tax due and payable. Show your solution in a good form.
Mr. Tan Cruz died intestate on September 04, 1990. He was survived by his
wife and his two legitimate children. He and his wife were under the conjugal
partnership of gains.
On December 20, 2013, the administrator of Mr. Tan Cruz gathered the estates
of the decedents which include the cash in bank:
Savings Deposits 53, 750
Time Deposits (excluding the interest of 5, 756) 120, 000
Bank deposits, Security Savings representing
the amount received by heirs under RA 4917 500, 000
The identified personal and real properties of the decedents are as follows:
o Real properties inherited before the marriage from his father who died before
the present decedent’s death of 500, 000
o Received 1, 500, 000 real property given as a gift by his business partner
during the marriage 41/2 years before the present decedent’s death.
o Family car, cost of 1, 000, 000 (the fair market value at the date of death is 1,
125, 000)
o Household furniture and fixtures acquired during the marriage, the fair market
value, 580, 000.
o Land inherited during the marriage from his mother-in-law who died 6 years
before the present decedent’s death, 1,290, 890
o House and Lot at Tacloban, City, Philippines were his families live and
resides worth 2, 150, 000.
209. The spouses June and Elvira Sandoval purchases a parcel of land for P5,
000, 000 and included their two minor children as co-purchasers in the Deed of
Absolute Sale. The Commissioner of Internal Revenue (CIR) ruled that there
was an implied donation and assessed donor’s taxes against the spouses. Which
of the following statement is correct?
A. CIR is wrong because donation must be express
B. CIR is correct because the amount involved is huge and ultimately ends up
with the children
C. CIR is wrong because financial capacity is not a requirement for a valid sale.
D. CIR is correct because there was animus don and since the children had no
financial capacity to be co-purchasers
210. May-ann Makabenta, sold to Jan Vincent Vocal, her residential lot with a
market value of 1, 000, 000 for 600, 000. Makabenta’s cost in the lot is 100,
000. Mr. Vacal is financially capable of buying the lot. What tax should be
imposed and collected from Ms. Makabenta as a result of the transaction?
A. Presumed capital gains tax C. Donor’s tax
B. Real Property tax D. Tax on the transfer of property
213. In 2014, Mr. Encarnacion, a retiree, bought 10, 000 CDA shares that are
unlisted in the local stock exchange for 10 per share. In 2015, the said shares
had a book value per share of 60. In view of a car accident in 2016, Mr.
Encarnacion had to sell his CDA shares but he could sell the same only for 50
per share. The sale is subject to tax as follows:
A. 5% and 10% capital gains tax on the capital gain from the sale of 40 per
share which is the difference between 50 per share and 10 cost per share.
B. 5% and 10% capital gains tax on the capital gain from the sale of 50 per
share which is the difference between 60 per share and 10 cost per share.
C. 5% and 10% capital gains tax on the capital gain from the sale of 40 per
share which is the difference between 50 per share and 10 cost per share plus
donor’s tax on the excess of the fair market value of the shares over the
consideration.
D. Graduated income tax rates of 5% to 32% on the net taxable income from the
sale of the shares.
COMPREHENSIVE PROBLEMS:
PROBLEM 1: The following data are shown in the books of account of
Dimalugi Service Enterprises:
Collections Current Previous
Revenues
Accounts receivable
Advances
Bad debts recovery (previously written-off)
Claims from insurance
Proceeds of life insurance P 500,000
300,000
200,000
10,000
20,000
1,000,000 P300,000
100,000
20,000
5,000
The accounts receivable collected during the current period represents the
revenue of the previous period.
Required: Compute the total business taxes for the current and the previous
period assuming that Dimalugi is engaged in:
1. Common carrier of passengers
2. Race track
3. Boxing exhibitions
4. Water utilities
5. Life insurance
6. Life insurance as agent of foreign insurance companies
7. Overseas communication dispatches from the Philippines
PROBLEM 3: Mr. X and Mrs. XY, Filipino citizen, made conjugal donations
during the taxable year as follows:
August 20, 2013, To their son on account of marriage of 300, 000
September 20, 2013, To their daughter-in-law on account of marriage, 100, 000
March 2, 2014, Liberal Party (Exclusive property of Mr. X), 500, 000
April 28, 2014, To Philippine Government and Chinese Government of 1, 200,
000
June 23, 2014, To their nephew on account of graduation of 50, 000
To their grandson on account of marriage of 100, 000
To their church of 200, 000
July 8, 2014, To their daughter, real property subject to suspensive
The condition of passing the CPA exam. The donee intends to take the exam on
2015 of 1, 000, 000
To their son, house and lot on account of marriage Last year August 25, 2013,
subject to mortgage of 400, 000 assumed by their son of 2, 000, 000
December 30, 2014, To Ramon Magsaysay Foundation of 500, 000
To their son of 500, 000
To their daughter-in-law of 100, 000
To their daughter of 500, 000
Requirement: Compute the amount of donor’s tax due of both spouses in each
date.
229. Statement 1: the leasing of residential units is exempt from VAT if the
annual rental does not exceed 12, 800 per unit.
Statement 2: The sale of adjacent dwelling to different buyer shall be aggregated
as one
A. Only statement 1 is correct C. Both statements are correct
B. Only statement 2 is correct D. Both statements are incorrect
230. Statement 1: The sale fruits and vegetables is exempt from business tax
Statement 2: The sale of bread is exempt from business tax.
A. Only statement 1 is correct C. Both statements are correct
B. Only statement 2 is correct D. Both statements are incorrect
235. Statement 1: The VAT applies to receipts or sales other than those
exempted and those specifically subject to percentage tax.
Statement 2: A person with vatable sales or receipts not exceeding the VAT
threshold may register as non-VAT taxpayers.
A. Only statement 1 is correct C. Both statements are correct
B. Only statement 2 is correct D. Both statements are incorrect
236. Statement 1: a non-VAT registered person who invoiced VAT on his sale
shall be subject to 12% VAT without the benefit of an input VAT, 3%
percentage tax, and 25% surcharge.
Statement 2: A VAT-registered person shall be subject to a final withholding
VAT of 12% on sales to the government.
A. Only statement 1 is correct C. Both statements are correct
B. Only statement 2 is correct D. Both statements are incorrect
240. Statement 1: No appeal from a decision of the BIR on a claim for refund
may be made until other a decision on the claim has been received from the
BIR.
Statement 2: The decision of the BIR on a claim for refund may be appealed to
any court
A. Only statement 1 is correct C. Both statements are correct
B. Only statement 2 is correct D. Both statements are incorrect
242. Statement 1: After the receiving the Notice of Informal conference, the
taxpayer has 15 days to respond on the latter.
Statement 2: Once the BIR found out that the assessment to the taxpayer is
sufficient, issuance of Pre-Assessment letter is to be followed wherein the
taxpayer has 30 days to respond to this letter.
A. Only statement 1 is correct C. Both statements are correct
B. Only statement 2 is correct D. Both statements are incorrect
243. Statement 1: If the protest of the taxpayer is denied, the taxpayer has a 30
days to appeal his protest to Court of Tax Appeals.
Statement 2: If the protest of the taxpayer is still denied in the Court of Tax
Appeals, the taxpayer can elevate his protest to Supreme Court within 15 days.
A. Only statement 1 is correct C. Both statements are correct
B. Only statement 2 is correct D. Both statements are incorrect
245. In the case of importation of taxable goods, who shall be liable to VAT?
A. Importer, whether an individual or corporation and whether or not made in
the course of his trade or business
B. Importer if made in the course of trade or business only
C. Importer if corporation and only when made in the course of trade or
business
D. None of the choices
246. One of the followings is not a major business internal revenue tax in the
Tax Code.
A. VAT C. Income tax
B. Excise tax D. Percentage tax
248. Georgia Baby is an operator of parking lots. What business tax is due on
his income from the business?
A. Broker’s tax C. Common carrier’s tax
B. Caterer’s tax D. Value-added tax
249. Who shall be statutorily liable to pay for the tax on the sale of goods or
properties and sale of services and lease of properties?
A. Buyer C. Consumer
B. Seller D. None of the choices
250. Which of the following shall not be included in the term “goods or
properties”?
A. Real properties not held primarily for sale to customers or not held for lease
in the ordinary course of trade or business.
B. The right or privilege to use patent, copyright, design or model, plan, secret
formula or process, goodwill, trademark, trade brand or other like property or
right.
C. The right or the privilege to use any industrial, commercial or scientific
equipment
D. The right or the privilege to use motion picture film, films, tapes, and discs
252. Mr. Lee Pong is a manufacturer of fermented liquors. In making sales, all
taxes on the products and transactions are passed on to the buyers. For purposes
of the value-added tax, which of the three taxes mentioned here that he pays
forms part of the gross selling price?
A. Excise tax C. Percentage tax
B. VAT D. None of the above
253. Mr. B is a dealer of liquors. On his sales in the Philippines, his tax is:
A. Excise tax C. Percentage tax
B. VAT D. None of the above
254. Sale of real property, the initial payments of which exceed twenty-five
percent (25%) of the gross selling price in the year of sale.
A. Sale of real property by a real estate dealer on a deferred payment basis, not
on installment
B. Sale of real property on installment plan
C. Initial payment
D. None of the choices
256. In which of the following cases shall the selling price be deemed inclusive
of VAT?
I. If the gross selling price is based on the zonal value or market value of the
property
II. If the VAT is not billed separately
A. I only C. Both I and II
B. II only D. Neither I nor II
258. Which of the following is not a sale and, therefore, is not subject to the
VAT?
A. Transfer, use or consumption not in the ordinary course of business of goods
or properties ordinarily intended for sale or use in the course of business.
B. Distribution or transfer to shareholders or investors of shares in the profits of
a VAT registered person
C. Distribution or transfer to creditors in payment of debt;
D. Consignment sales
259. Under the VAT law, which of the following sales may not be zero-rated?
A. Export sales
B. Foreign currency denominated sales
C. Sale of goods to the Asian Development Bank
D. Sale of goods to an export-oriented enterprise
263. Which one is not included in the tax base of VAT on importation?
A. value used by BOC in determining tariff and customs duties
B. customs duties
C. excise tax
D. other charges after the release of imported goods from BOC
264. Ms. Consuelo Dimagulo receives a package of goods from her sister who
lives in California, USA. Ms. Consuelo will use the goods for personal
purposes. She is not VAT-registered. Which of the following statements is
correct in connection with the receipt of a package?
A. Ms. Consuelo shall be subject to VAT on importation
B. Ms. Consuelo shall not be subject to VAT on importation because she is not
VAT-registered
C. Ms. Consuelo shall not be subject to VAT on importation but shall be subject
to VAT on sales
D. None of the choices
265. Bigay Gabay, Inc. enjoys tax exemption for its importations. During a
particular month, it imported goods from Japan. After the release from customs
custody, Bigay Gabay, Inc. transferred the imported goods to Todo Bigay
Trading, a VAT registered entity. For VAT purposes, the VAT on importation
shall be paid by:
A. both Bigay Gabay, Inc. and Todo Bigay Trading
B. neither Bigay Gabay, Inc, nor Todo Bigay Trading
C. Bigay Gabay only
D. Todo Bigay only
267. One of the following statements is wrong. Identify. For a taxpayer who
becomes liable for the first time to the VAT:
A. There can be an input tax on purchases he made when not yet a VAT
taxpayer
B. He must use a VAT invoice on the sale of the goods purchased when not yet
a VAT taxpayer
C. He must still use the Non-VAT invoice in use when he was not yet a VAT
taxpayer on the sale of goods on hand on the transition date
D. There will be an adjustment in the inventory valuation on the transition date
268. Which is correct? The inventory balance in the financial statements at any
given date of a VAT-registered person is:
A. Balance, net of input taxes
B. Balance, inclusive of input taxes
C. Balance on which the transitional input tax is computed annually
D. Balance where the value-added tax thereon may be calculated by multiplying
it by 12%
270. Gaby, a Japanese residing in the Philippines, bought garments from ABC
Corp, a domestic corporation, and exported the same to Japan. The total value of
exports is P100,000. VAT (output tax) due on the transactions is:
A. P10,000 C. None, because 0% applies
B. P5,000 D. None, because the sale is exempt from VAT
273. Which of the following milling jobs shall not be exempt from VAT?
A. play into rice
B. corn into corn grits
C. wheat into flour
D. sugar cane into raw sugar
275. A VAT subject real estate dealer sold a residential lot on January 15, 2007.
The following information was made available on the terms of the sale:
Gross selling price P3,000,000
Initial payments on January 15, 2007 (consisting of down
payment and installment in the year of sale) 900,000
Balance to be paid in equal installment, installments starting
February 15, 2007 2,100,000
277. Using the same data in the preceding number, how much was the output
VAT on the exchange of real properties held for sale for shares of stock using
12% VAT rate?
A. P120,000 c. P80,000
B. P100,000 d. None
278. The following information is taken from the books of a VAT registered
enterprise was provided to you:
Domestic sales of goods P3,000,000
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 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
279. using the same data in the preceding number, how much was the output tax
using 12% VAT rate?
A. P360,000 C. P456,000
B. P396,000 D. P696,000
281. Mr. C is a VAT registered person, with the following data for a taxable
month, VAT is not included: Sales, domestic, to consumers – P600,000; Sales,
direct exports – P300,000; Purchases, total invoice cost, from VAT registered
persons: Of goods of P550,000 and of services of P330,000.The services subject
to the value added tax is:
A. P600,000 C. P300,000
B. P400,000 D. P900,000
282. Mr. Abnoy, a VAT taxpayer, on August 1, 2011, made the following
purchases from VAT sellers, for use in his business. The amounts stated not
including VAT:
Machine 1, with a useful life of 19 years P3,000,000
Machine 2, with a useful life of 3 years 1,800,000
Patent, with usefulness of 2 years 600,000
The input tax on the purchases, available to Mr. Abnoy, for the month of August
2011:
A. P84,000 C. P51,000
B. P15,000 D. P62,000
283. Puss, VAT registered, made the following purchases during the month of
January 2007:
Goods for sale, inclusive of VAT P246,400
How much was the total allowable input taxes of Puss for the month using 12%
VAT rate?
A. P38,688 C. P34,800
B. P35,337.60 D. P34,542.86