BALIUAG UNIVERSITY JPIA

IN PARTNERSHIP WITH P&A GRANT THORNTON

TAXATION
1. A car dealer could not pay his taxes on sales. The dealer delivered several units of the car to
the BIR in payment of the taxes. Which of the following statements is correct?
a. This is a valid payment of the tax.
b. This is in effect a collection of the tax by distraint.
c. This is valid forfeiture of property.
d. This is not a valid procedure for collection of the tax.

2. It refers to a plea of re-evaluation of an assessment on the basis of newly discovered or

additional evidence that a taxpayer intends to present. It may also involve a question of fact
or of law or both.
a. Request for reconsideration.
b. Request for reinvestigation.
c. Request for informal conference.
d. Request for compassion.

3. Alden, a resident citizen, sold the following real property:

Location Acquisition Cost FMV Selling Price
Family home Phils. Php 2M Php 6M Php5M
Apartment houses
leased to tenants Phils. 4M 8M 10M
Residential Land USA 6M 10M 12M
Residential Land Phils. 3M 5M 7M

The capital gains tax due is:

a. P780,000
b. P1,380,000
c. P2,200,000
d. P420,000
4. Oliver University, a non-stock, non-profit educational institution organized in 2000 had the
following in 2016:

ACTIVITIES
School Related Non-school related Totals
Gross income P8,000,000 P4,000,000 P12,000,000
Allowable deductions 4,000,000 3,000,000 7,000,000
Net income P4,000,000 P1,000,000 P 5,000,000

How much is the income tax due?

a. P500,000
b. P300,000
c. P0
d. P1,500,000

5. Queen Hospital, a non-profit hospital organized in 2000 had the following in 2016:

ACTIVITIES
Hospital related Non hospital related Totals
Gross income P18,000,000 P12,000,000 P30,000,000
Allowable deduction 17,800,000 11,200,000 29,000,000
Net income P 200,000 P 800,000 P 1,000,000

How much is the income tax due?

a. P300,000
b. P100,000
c. P240,000
d. P0

6. Queen Consolidated organized in 2000 had the following:

In 2015
Gross income P20,000,000
Allowable deductions:
Itemized allowed by the NIRC 17,000,000
Special allowed by the NIRC 4,000,000
Incentives allowed by special laws 2,000,000
Net operating loss (P3,000,000)

In 2016
Gross income P33,000,000
Allowable deductions:
Itemized allowed by the NIRC 18,000,000
Special allowed by the NIRC 4,000,000
Incentives allowed by special laws 3,000,000
Net income P 8,000,000
 How much is the income tax still due in 2016?
a. P1,100,000
b. P2,000,000
c. P1,700,000
d. P1,400,000

7. Felicity Smoak reported the following for the year 2016:

Gross income P5,000,000

Cost of sales 3,000,000
Salaries of employees, net of 100,000 withholding tax
and P50,000 SSS, Medicare and Pag-ibig premiums
contributions 800,000
Fringe benefits given to rank and file employees 300,000
Fringe benefits given to managerial employees 136,000
Representation and entertainment expenses (all
business connected) 100,000
Rent expense 120,000
Donation to religious and charitable institutions 500,000

The amount that Felicity will report as net income before exemptions is
a. P2,894,000
b. P2,997,000
c. P3,054,600
d. P3,051,000

8. Radio and television broadcasting companies who have an option to be registered as a value
added taxpayer and the option is exercised, which of the following is correct?
a. It can be revoked within 3 years
b. It can be revoked within 5 years
c. It can be revoked within 2 years
d. It cannot be revoked

9. Arrow Co., a domestic corporation, 60% Filipino owned, had the following gross receipts
from world championship events it conducted in the Philippines:

Billiard (between Bata Reyes and Mei Goon Young) P1M

Tennis (between M. Sharapova and S. Mariposa) 2M
Basketball (between Philippines and USA) 3M
Volleyball (between Philippines and Argentina) 4M
Boxing (between Manny Pacquiao and Floyd Mayweather) 10M

The percentage tax due is

a. P 1M
b. P 2M
c. P450,000
d. P0
10. The records of John Diggle, a lessor of real property show the following:
Rent per unit Annual rent
Apartment house P20,000 P1,800,000
Residential houses 12,000 1,200,000
Boarding houses 10,000 2,000,000

Which of the following is correct?

a. John Diggle is not required to register as VAT taxpayer.
b. John Diggle is required to register because his annual rent exceeded P1,919,500.
c. John Diggle will pay output tax on receipts from lease of boarding houses.
d. John Diggle will pay output tax on receipts from lease of apartment houses.

11. Which of the following is taxable only on estate from within the Philippines?
a. Oliver Queen, a Filipino overseas contract worker residing in Canada.
b. Tommy Merlin, a Mexican, married to a Filipina and living in Puerto Rico since
2005.
c. Laurel Lance, an American, now a naturalized Filipino citizen and living in Japan
since 2002.
d. Yao Fei, a Chinese professional boxer residing in Chinatown, Binondo, Manila.

12. Which of the following is a stranger to the donor? If the done is the
a. Grandfather of the donors great grandfather
b. Granddaughter of the sister of the donors mother
c. Grandson of the donors half-sister
d. Brother of the donors grandfather

13. If the required documentary stamp is not affixed on a document, one of the following is
correct. The document
a. Will be notarized because the document is still valid.
b. Will not be admitted as evidence in court because the document is void.
c. Will not be registered in the proper registry even if the document is valid.
d. Is still valid and if already notarized should be registered and admitted as
evidence in court.

14. A taxpayer received an assessment notice on February 14, 2015. He filed a motion for
reinvestigation with the BIR on February 22, 2015. The last day of submission of necessary
documents to support his motion for reinvestigation is
a. March 14, 2015
b. April 23, 2015
c. April 15, 2015
d. March 22, 2015
15. The records of Starling Travel Hotel showed the following, net of VAT

No. of rooms Ave. monthly rent per room Annual rent per room
10 P12,000 P1,440,000
10 15,000 1,800,000
20 20,000 4,800,000

The output tax for the year is

a. P964,800
b. P792,000
c. P576,000
d. P388,800

16. On February 14, 2014, Moira donated to Thea a residential land with a fair market value of
P2M. On February 14, 2018, Moira dies. At the time of Moiras death, the residential land
has a fair market value of P3M. As a result, the estate of Moira
a. Will include the residential land at P2M as part of Moiras gross estate.
b. Will claim a vanishing deduction rate of 40%
c. Will claim a vanishing deduction rate of 20%
d. Cannot claim deduction for property previously taxed.

17. The following data were provided by the estate of Lord Stark, head of family, a resident of
Bulacan. Mr. Stark died intestate on September 30, 2005.

Land and house (famiy home) P3,000,000

Agricultural alnd inherited from his father who died 2 years
before his death 800,000
Other real properties 1,000,000
Other tangible personal properties 200,000
Bank deposit, PNB-Manila representing amount received by
Heirs under R.A. No. 4917 500,000

Obligations of and charges against certain properties follow:

Medical expenses of last illness (unpaid as of the time of death, supported by bills and
statements form hospitals) P 600,000
Actual funeral expenses (30% paid for from the estate,
70% paid for by relatives) 500,000
Judicial expenses incurred within six (6) months after death 100,000
Claims against the estate other than unpaid mortgage 250,000
Unpaid mortgage on inherited agricultural land 30,000
Claims against insolvent persons 100,000
Unpaid real estate taxes for 2005 20,000

The agricultural land was inherited by the present decedent. Its value at the time of
inheritance was 500,000. It has unpaid mortgage of 80,000.
 How much was the taxable net estate?
a. P1,684,822
b. P1,711,339
c. P1,790,893
d. None of the choices

18. 18 and 19 are based on the following: In 2014, George James, single supports the
following: Earl, his significant other, Elirie, a legally adopted child who became 21 years old
during the year; Vanessa, an 18 year old niece and Gorgonio, a senior citizen who is not
related to him. He earned P2,500,000.00 from his beauty parlor and received P250,000.00 as
Christmas gift from his spinster aunt. He had no other receipts for the year. The cost of
services of the parlor was P500,000.00 and the expenses for the operation of his beauty
parlor amounted to P250,000.00
The taxable net income for 2014 if he uses itemized deductions is:
A. P1,750,000.00 C. P1,425,000.00
B. P1,675,000.00 D. None of the choices

19. The taxable net income for 2014 if he avails of the optional standard deduction is:
A. P1,675,000.00 C. P1,425,000.00
B. P1,500,000.00 D. None of the choices

20. ABC Restaurant Corporation provides 20% discount to senior citizens. It recorded the
following during the year:
CUSTOMERS
Regular Senior Citizen Totals
Receipts (net) P 8,000,000.00 P 1,000,000.00 P 9,000,000.00
Cost of Services P 5,000,000.00
Other deductible P 2,000,000.00
expenses

The regular and special itemized deductions deductible from gross income is:
A. P 2,000,000.00 C. P 7,000,000.00
B. P 2,250,000.00 D. P 5,250,000.00
21. ABC Corporation installed a lactation station for its nursing employees. ABC Corporation
secured a Working Mother-Baby Friendly Certificate from the Department of Health. It
Incurred the following costs:
Remodelling of a space for the lactation station P 100,000.00
Tables and comfortable chairs P 60,000.00
Manual and electric breast pumps P 12,000.00
Supplies (sterile milk containers, soaps and others) P 10,000.00
Refrigerator P 20,000.00
ABC Corporation may claim as part of deduction
A. P 202,000 C. P 404,000
B. P 102,000 D. P 303,000

22. Which of the following statements is correct?

A. The power of taxation must first be expressly granted, either by law or by the
constitution for the State to validly exercise it
B. The power of taxation and police power may be exercised simultaneously
C. The Philippine government may subject the land where embassies of foreign
government are located to real estate taxes
D. Government owned and controlled corporations are exempted from taxes because it
would be impractical for the government to be taxing itself

23. Which of the following is not a power vested in the Bureau of Internal Revenue?
A. The assessment and collection of all national internal revenue taxes, fees, and charges
B. The enforcement of all forfeitures, penalties, and fines
C. The granting of tax exemptions and other tax incentives to taxpayer
D. The execution of judgements in al cases decided in its favor by the Court of Tax Appeals
and the ordinary courts

24. The importation of the following is exempt from VAT, except

A. Grapes, apples and oranges
B. Poultry and livestock
C. Race horse, fighting cocks and zoo animals
D. Rice, corn and coffee beans

25. Which of the following are exempt from VAT, except?

A. Services subject to percentage tax
B. Lease of residential units with a monthly rental not exceeding P12,800
C. Export Sales
D. Services of banks and other non-banks financial intermediaries
26. Which of the following is not considered as transaction deemed sale?
A. Transfer, use or consumption not in the ordinary course of business of goods or
properties originally intended for sale or for use in the course of business
B. Distribution or transfer to shareholders or investors as share in the profits of the vat-
registered person or to creditors in payment of debt
C. Consignment of goods if actual sale is not made within 60 days following the date such
goods were consigned
D. Retirement from or cessation of business, with respect to capital goods existing as of
such retirement or cessation

27. Tax credit for foreign tax paid is allowed on

A. Income tax paid by a non-resident citizen alien
B. Estate tax paid by a resident alien
C. Income tax paid by a non-resident
D. Donors tax paid by a non-resident

28. A resident citizen died on September 3, 2015. An administrator was appointed on September
15, 2015. The inventory taking of the decedents properties was completed on October 10,
2015. When should the estate tax return be filed?

A. March 3, 2016 C. April 10, 2016

B. March 15, 2016 D. None of the choices

29. One of the following is not an important factor when computing the taxable net gifts and
the gift tax payable.

A. Residence of the donor

B. Citizenship of the donor
C. Blood relationship between the donor and the done
D. The economic status of the donee

30. One of the following is a donation made to a relative

A. Donation given by a corporation to its stockholder

B. Donation given by a parent to his illegitimate child
C. Donation given by a partner to a partnership
D. Donation given by father-in-law to his son-in-law
31. One of the following taxes had been replaced by VAT except:

A. Advance sales tax

B. Subsequent sales tax
C. Common carriers tax on transport of passengers by land
D. Common carriers tax on transport of goods and cargo by land

32. The value-added tax due from the sale or lease of taxable goods or properties or services by
any person registered or required to register under the VAT system is:

A. Output tax C. Sales tax

B. Input tax D. Excise tax

33. An international air carrier doing business in the Philippines is subject to the 3% tax:

A. On transport of passenger, cargo and/or mail originating from the Philippines

B. On transport of cargo and /or mail originating from within and outside the Philippines
C. On transport of cargo and/or mail originating from the Philippines
D. On transport of cargo and/or mail originating from the Philippines in a continuous and
uninterrupted flight

34. A domestic common carrier by air has the following data for the month:
Gross receipts from transport of passengers
from Manila to Cebu P 2,000,000.00
Gross receipts from transport of passengers from
Manila to Hongkong P 2,500,000.00
Gross receipts from transport of goods and cargo
from Manila to Hongkong P 1,500,000.00
How much is the common carriers tax for the month?
A. P 600,000 C. P 150,000
B. P 300,000 D. None

35. A single taxpayer provides chief support for the following persons:

Abe, his sister who is unmarried, 22 years old;

Bell, a street child abandoned by her parents, 12 years old;
Claire, niece, 18 years old
 For Philippine income tax purposes, how much is the total personal exemptions?

A. P 125,000 C. P 75,000
B. P100,000 D. P 50,000

36. An individual who is a pure compensation income earner is allowed to deduct the following
form his gross compensation income except:
A. Basic personal exemption
B. Additional exemption
C. Premium payment on health and/or hospitalization insurance
D. Personal expenses

37. An individual who avails of optional standard deduction cannot deduct the following except:

A. Cost of sales C. premium on health and/or hospitalization insurance

B. Business expenses D. basic personal and additional exemption

38. The personal exemption allowed to estate and trust is:

A. P20,000 C. P50,000
B. P25,000 D. None

39. The following data are presented to you for the month of January, 2014:
Gross receipts P 1,000,000
Cost of services P 200,000
Expenses P 100,000
Compute the percentage tax assuming the above involves a taxpayer who operates a
common carrier by land (30% of the gross receipts is for the transport of passengers)?

A. P 30,000 C. P 20,000
B. P 24,000 D. P 9,000

40. A VAT registered company is importing (new machinery, a new machine, new machineries).

A. New Machinery C. New machineries

B. A new machineries D. None of the choices

END