TRANSFER AND BUSINESS TAXATION

Final Examination

TRUE OR FALSE
1. ​Value-added tax is a Privilege tax - True

2. The power of the Commissioner to extend the filing of estate

tax return has no limit-false (true sa book)

3. The gross gift of a Resident Citizen, a Non-Resident Citizen

or a Resident Alien donor shall include all his property
wherever situated - true

4. The government corporations are not exempt from Value-added tax

5. If the donor is a Non-Resident Alien, only his property located

in the Philippines shall form part of his gross gift - false

6. A person may be subject to business tax even if he is not

engaged in business - True

7. All persons who may contract and dispose of their property may
make a donation - true

8. Donor’s tax is a tax imposed on the gratuitous transfer of

property between two or more persons who are living at the
time of the transfer - true

9. The TRAIN law has repealed the notice of death requirement

under Section 89 of the NIRC - false

10. The change in corporation control over a corporation is

considered a deemed sale transaction - false

11. The sales of all ordinary assets are exempt from VAT. false

12. The exchange of investments in payment of debt is a deemed

sales transaction subject to VAT. false

13. The exchange of residence in payment of debt is subject to

VAT as a deemed sale transaction false
14. Consignment is deemed sold if not returned by the consignee
in 30 days. (60 days) - false

15. The consignee is subject to VAT on the commission income on

sales of consigned goods. true

16. The consignor is subject to VAT on the sales of consigned

goods by its consignees. true
 17. The vatable inventories and properties of a VAT taxpayer
upon retirement or cessation of business are subject to VAT
as deemed sales. true

18. The output VAT on deemed sales upon retirement or cessation

of business shall be based on the market price or cost of
goods whichever is lower. true

19. The commissioner shall determine the market value in cases

of transactions deemed sales and sales with unreasonably lower
gross selling prices. true

20. The change in corporate control over a corporation is

considered a deemed sale transaction. false

21. When a business changes its trade name, vatable items or

properties in its possession shall be deemed sold at the date
of change. false

22. The consolidation of a corporation with another corporation

is not considered a deemed sale transaction. true

23. The merger between two corporations shall result in a deemed

sale transaction.false

MULTIPLE CHOICE
1. What is the tax basis of the output VAT on sales of services?
a. Gross Selling Price
b. Gross Receipts
c. Fair Value
d. Fair Value or gross selling price whichever is higher

2. What is the tax basis of the output VAT on sales of goods?

a. Gross Selling Price
b. Gross Receipts
c. Fair Value
d. Fair Value or gross selling price whichever is higher

3. What is the tax basis of the output VAT on exchange of

properties?
a. Gross Selling Price
b. Gross Receipts
c. fair value of properties received
d. Fair Value or gross selling price whichever is higher
4. A return need to be filed by the executor, administrator or any
of the legal heirs on?
a. Transfer subject to estate tax
b. Transfer consisting of registered property
c. Transfer of registrable property
d. None of the above

5. Who among the following is not an appropriate person to be

notified (? HAHAHA) should they discover non-payment of
estate tax?
a. Commissioner of Internal Revenue
b. Revenue Collection Officer
c. Treasure of the city or municipality where their offices
are located
d. Mayor of the city or municipality where their offices are
located

6. The estate is imposed on the following:

a. Each of the property (? HAHAHA)
b. Privilege of transforming property upon death
c. Property left by the decedent
d. Property left to the surviving spouse

7. Which is not considered in the determination of tax base on the

VAT on sale of real properties?
a. Selling Price
b. Zonal Value
c. Assessed Value
d. Appraisal Value

8. Which of the following when sold will result in an output VAT?

a. Vegetables
b. Furniture
c. Fruits
d. Rice

9. A non-VAT taxpayer sold goods for P20,000, half of which

are paid by the buyer who gave a promissory note for the
balance. Hence, the output VAT is?
a. 0
b. 1,200
c. 2,200
d. 4,800

10. A VAT-registered car dealer sold the following goods to a

relative:

Selling Price: 300,000

FMV: 500,000
 What is the output VAT?
a. 0
b. 36,000
c. 42,000
d. 60,000

11. What is the tax basis of the output VAT on deemed sales?
a. Gross selling price
b. Gross receipts
c. Fair value
d. Fair value or gross selling price whichever is higher

12. What is the tax basis of the output VAT on sales of real
properties?
a. Selling price
b. Gross receipts
c. Fair value
d. Fair value or selling price whichever is higher

13. What is the tax basis of the output VAT on sales of goods
with unreasonably lower selling price?
a. Gross selling price
b. Gross receipts
c. Fair value
d. Fair value or gross selling price whichever is higher

14. What is the tax basis of the output VAT on installment sales?
a. Gross selling price
b. Installment received
c. Fair value of property sold
d. Fair value or gross selling price whichever is higher

15. Which of the following selling prices is considered

unreasonably lower?
Fair Value Selling Price Discount

A 200,000 240,000 -None-

B 250,000 172,500 77,500
C 400,000 300,000 100,000
D 500,000 380,000 120,000

16. Which of these is excluded in the gross selling price?

a. Excise tax
b. Output tax
c. Contract price
d. Delivery charges

17. Which of the following is excluded in gross receipts?

a. Cash collection
 b. Check collection
c. Promissory note given by the buyer
d. None of these

18. A real property is sold by a dealer for P1,900,000. The

property had a zonal value of P2,000,000, assessed value of
P1,800,000 and independent appraisal value of P2,400,000. What
is the “gross selling price” for VAT purposes?
a. P1,800,000
b. P1,900,000
c. P2,000,000
d. P2,400,000

19. Which of the following is not subject to output tax when sold
by a realty dealer?
a. Sale of properties held for sale
b. Sale of properties used in business
c. Sale of investment in stocks
d. Exchange of properties held for sale in settlement of debt

20. The output VAT on the installment sale of property may be

reported in installment if
a. The ration of initial payment exceeds 25% of the selling
price.
b. The ration of initial payment exceeds 25% of the fair
value.
c. The ration of initial payment does not exceed 25% of the
selling price.
d. The ration of initial payment does not exceed 25% of the
fair value.

21. Which is not a deemed sales transaction?

a. Distribution of property dividend
b. Dacion en pago
c. Consignment of goods when actual sale is made within 60
days
d. Cessation of status as VAT taxpayer

22. Which is a deemed sales transaction subject to VAT?

a. Retirement of business by a non-VAT taxpayer
b. Dacion en pago of properties by a person not engaged in
business
c. Distribution of property dividend by a VAT taxpayer
d. All of these

23. Which of the following dividend declaration is a deemed sale

subject to VAT?
a. Distribution of stock dividends
b. Distribution of investments as property dividends
c. Distribution of cash dividends
d. Distribution of properties held for sale as dividends
MATCHING TYPE
1. PEZA
2. Taxable Sale
3. Non-governmental Organization
4. Excise Tax
5. Commissioner of Internal Revenue
6. Donation
7. Encumbrance
8. Export Sale
9. Non-governmental Organization
Answer:
1. Philippine Economic Zone Authority - Their job is to attract
businesses to the Philippines by offering them special areas to
set up shop. These areas have lower taxes and other benefits to
make things easier for businesses.
2. means all transactions that are (or should be) taxed.
3. voluntary group of individuals or organizations, usually not
affiliated with any government, that is formed to provide
services or to advocate a public policy.
4. a tax levied on specific goods or services, like gasoline,
tobacco, and alcohol.
5. Romeo Lumagui, Jr.
6. the gratuitous transfer of property from one person to another.
7. a claim against a property by a party who is not the property
owner.
8. an export sale refers to selling goods to a foreign customer.
9. voluntary group of individuals or organizations, usually not
affiliated with any government, that is formed to provide
services or to advocate a public policy.

ESSAY (5pts each/4-5 items)

1. What are the 2 kinds of donations and explain its relevance in
taxation?
2. What are the zero-rated sale and its impact to taxation?
- Discuss the VAT and its significance

PROBLEM SOLVING
1. CHAPTER 15 / Prob 7-24
2. CHAPTER 17 / Prob 7-25