lOMoAR cPSD| 11698516

ReSA
The Review School of Accountancy
Tel. No. 735-9807 & 734-3989

TAXATION February 16, 2021(Tuesday)

First Pre-Board Examination 06:00 PM to 09:00 P.M.

MULTIPLE CHOICE
INSTRUCTIONS: Select the correct answer for each of the following questions.
Mark only one answer for each item by shading the box corresponding to the
letter of your choice on the sheet provided. STRICTLY NO ERASURES ARE ALLOWED.
Use pencil no. 2 only.

1. (Estate Tax) Mr. Faustino Santos, testator, appointed Mr. Generoso Cruz as the
executor of the estate. Mr. Santos was a citizen of Argentina and a resident of
Buenos Aries, Argentina. He was in Manila visiting his son when he died. He
owned a Mercedes sports car and had several bank deposits in the USA. The
executor asked you whether or not the car and the bank deposits in the USA will
still have to be declared as part of the Philippine gross estate of Faustino
Santos. Argentina does not impose transfer taxes of any kind. What answer will
you give him?
a. The car and the bank deposits in the USA have to be declared as part of the
Philippine gross estate because the decedent was in Manila at the time of his
death and, as such, properties wherever situated are included in the gross
estate.
b. The car and the bank deposits in the USA need not be declared as part of the
Philippine gross estate because when Mr. Santos died he was a non-resident
alien.
c. The car and the bank deposits in the USA have to be declared as part of the
Philippine gross estate only when the decedent specified in his will and
testament that such properties must form part of his gross estate.
d. The car and the bank deposits in the USA need not be declared as part of the
Philippine gross estate because Argentina does not impose transfer tax of any
kind.
2. (Estate Tax) The amounts withdrawn from the deposit accounts of a decedent
subjected to the 6% final withholding tax imposed under Section 97 of the
NIRC, shall be:
a. excluded from the gross estate for purposes of computing the estate tax.
b. included from the gross estate for purposes of computing the estate tax.
c. claimed as tax credit against estate tax due.
d. claimed as deduction from the gross estate.

3. (Estate Tax) A property was transferred mortis causa. The following data were
gathered from the transaction:
Fair market value, time of transfer – P500,000
Fair market value, time of death – P300,000
Consideration received when transferred – P350,000

How much shall be included in the gross estate?

a. P500,000 c. P150,000
b. P300,000 d. None of the choices

4. (Estate Tax) The following data pertain to a decedent who is a married man with a
surviving spouse died on February 1, 2019:
Conjugal real personal properties P 10,000,000
Conjugal personal properties (including P800,000 bank
deposit which was withdrawn and subjected to 6% final
withholding tax) 4,800,000
Exclusive family home 30,000,000
Conjugal ordinary deductions claimed (including P200,000
funeral expenses and P300,000 judicial expenses) 2,500,000
The taxable net estate is:
a. P42,000,000. c. P27,000,000.
b. P32,000,000. d. P21,000,000.
 lOMoAR cPSD| 11698516

ReSA: The Review School of Accountancy Page 2 of 16

5. The decedent is a resident unmarried head of family with the following data:
Real and personal properties P14,000,000
Family home 30,000,000
Ordinary deductions
Unpaid real estate tax 2,000,000

The taxable net estate is:

a. P 42,000,000. c. P 27,000,000.
b. P 32,000,000. d. P 23,000,000.

6. The decedent is a married man with a surviving spouse with the following data:
Conjugal real properties P 6,000,000
Conjugal family house 1,000,000
Exclusive family lot 400,000
Other exclusive properties 4,500,000
Conjugal ordinary deductions 1,500,000
Exclusive ordinary deductions 500,000

The taxable net estate is:

a. P 9,900,000. c. P 3,500,000.
b. P 3,750,000. d. P 1,250,000.

7. Using the same data in the preceding number, how much is the estate tax payable?
a. P 594,000 c. P 210,000
b. P 225,000 d. P 75,000

8. (Estate Tax) Under the TRAIN, when is the time for filing of the estate tax
return?
a. Thirty (30) days from the decedent’s death
b. Two (2) months from the decedent’s death
c. Six (6) months from the decedent’s death
d. One (1) year from the decedent’s death

9. (Estate Tax) Which of the following statements is incorrect in connection with

cash installment payment of estate tax?
a. The cash installments shall be made within two (2) years from the date of
filing of the estate tax return.
b. The estate tax return shall be filed within one year from the date of
decedent’s death.
c. The frequency (i.e., monthly, quarterly, semi-annually or annually), deadline
and amount of each installment shall be indicated in the estate tax return,
subject to the prior approval by the BIR.
d. In case of lapse of two years without the payment of the entire tax due, the
remaining balance thereof shall be due and demandable without the applicable
penalties and interest.

10. (Estate Tax) Mr. Primitivo Primero died and was survived by his wife and two (2)
children, Faye and Faith. After getting her share in the conjugal property, the
surviving spouse renounced her share in the hereditary estate in favor of Faith
to the exclusion of Faye. Was the renunciation subject to donor’s tax?
a. Yes, because the renunciation was made categorically in favor of identified
heir to the exclusion or disadvantage of the other co-heirs.
b. No. because the renunciation was considered a general renunciation.
c. Yes, because , as a rule, renunciation of share in the hereditary estate is
always subject to donor’s tax.
d. No, because, as a rule, the surviving spouse cannot renounce her share in the
hereditary estate.

11 to 13 are based on the following: A resident decedent, single, died February 14,
2018. The estate’s decedent showed the following:
Real property in the Philippines P4,000,000.00
Personal property outside the Philippines 2,000,000.00
Proceeds of life insurance upon the life of
decedent, decedent’s estate designated as
irrevocable beneficiary 1,000,000.00
Proceeds of life insurance, decedent’s spouse
designated as irrevocable beneficiary 500,000.00

TAXATION – FIRST PRE-BOARD EXAMINATION (BATCH 41)

 lOMoAR cPSD| 11698516

ReSA: The Review School of Accountancy Page 3 of 16

Medical expenses one year prior to decedent’s
death (including unpaid amount of P400,000) 700,000.00
Funeral expenses (only P100,000 paid) 250,000.00
Claims against the estate 1,000,000.00

11. (Estate Tax) How much was the taxable net estate?
a. P4,300,000.00 c. P1,000,000.00
b. P4,100,000.00 d. None of the choices

12. (Estate Tax) How much was estate tax payable?

a. P443,000.00 c. P60,000.00
b. P388,000.00 d. None of the choices

13. (Estate Tax) How much were the total deductible items for estate tax
purposes?
a. P6,000,000.00 c. P1,700,000.00
b. P2,700,000.00 d. None of the choices

14. (Donor’s Tax) Under the TRAIN, the donor’s tax for each calendar year shall
be:
a. six percent (6%) computed on the basis of the total gifts made during
the calendar year.
b. six percent (6%) computed on the basis of the total gifts in excess of
Thee hundred thousand pesos (P300,000) exempt gift made during the
calendar year.
c. six percent (6%) computed on the basis of the total gifts including
those made in the previous calendar year in excess of Two hundred fifty
thousand pesos (P250,000) exempt gift made during the calendar year.
d. six percent (6%) computed on the basis of the total gifts in excess of
Two hundred fifty thousand pesos (P250,000) exempt gift made during the
calendar year.

15. (Donor’s Tax) First statement: The computation of the donor’s tax is on a
cumulative basis over a period of one calendar year.
Second statement: Husband and wife are considered as separate and distinct
taxpayers for purposes of the donor’s tax.
a. Both statements are correct
b. Both statements are incorrect
c. Only the first statement is correct
d. Only the second statement is correct

16. (Donor’s Tax) Patricia donated P110,000.00 to her friend Kimberly who was getting
married. Patricia gave no other gift during the calendar year. What is the
donor's tax implication on Patricia’s donation?
a. The P100,000.00 portion of the donation is exempt since given in consideration
of marriage.
b. A P10,000.00 portion of the donation is exempt being a donation in
consideration of marriage.
c. Patricia shall pay a 6% donor's tax on the P110,000.00 donation.
d. The P110,000.00 donation is exempt from donor's tax.

17. (Donor’s Tax) Mr. Gerardo Ireneo transfers inter vivos a personal property to his
son on March 15, 2018. His son who lives in another province let his father know
that he is accepting the gift on March 31, 2018. The personal property was
delivered and received on April 15, 2018. When shall be the last day to file the
donor’s tax return and pay the donor’s tax to avoid penalties?
a. April 14, 2018 c. May 15, 2018
b. April 30, 2018 d. None of the choices
18. to 20. are based on the following: The following donations during the
calendar year 2018 are made to relatives:
Date Amount
January 30, 2018 P 2,000,000
March 30, 2018 1,000,000
August 15, 2018 500,000
18. (Donor’s Tax) How much is the tax due on the gift made on January 30, 2018?
a. P 204,000 c. P 80,000
b. P 105,000 d. P 50,000

TAXATION – FIRST PRE-BOARD EXAMINATION (BATCH 41)

 lOMoAR cPSD| 11698516

ReSA: The Review School of Accountancy Page 4 of 16

19. (Donor’s Tax) How much is the tax due on the gift made on March 30, 2018?
a. P 204,000 c. P 60,000
b. P 124,000 d. P 50,000

20. (Donor’s Tax) How much is the tax due on the gift made on August 15, 2018?
a. P 204,000 c. P 80,000
b. P 124,000 d. P 30,000

21. to 22. are based on the following: Mr. Jose Mapagbigay donated P500,000 to the
City of Manila and P100,000 to his best friend who graduated summa cum laude.

21. (Donor’s Tax) For donor’s tax purposes, how much should be the gross gifts?
a. P 600,000 c. P 400,000
b. P 500,000 d. None of the choices

22. (Donor’s Tax) For donor’s tax purposes, how much should be the deductions?
a. P 500,000 c. P 100,000
b. P 400,000 d. None of the choices

23. (Donor’s Tax) On one date, Lara made donations of property in the Philippines to a
non-stranger, and of property outside the Philippines to a stranger. In taking a
credit for the foreign donor’s tax paid, the credit shall be against the
Philippine donor’s tax on the:
a. donation to the non-stranger plus that to the stranger.
b. donation to the non-stranger.
c. donation to the stranger.
d. none of the options given.

24. (Donor’s Tax) On June 10, 2018 Mr. Paolo Sao donated P50,000 cash to his favorite
grandson who is getting married on June 16, 2018. For donor’s tax purposes the
exempt dowry shall be:
a. P50,000. c. P5,000.
b. P10,000. d. none.

25. (VAT) Mr. Andres, VAT-registered real estate dealer, transferred a parcel of land
held for sale to his son as gift on account of his graduation. For VAT purposes,
the transfer is:
a. not subject to VAT because it is a gift.
b. subject to VAT because it is a deemed sale transaction.
c. not subject to VAT because it is subject to gift tax.
d. subject to VAT because it is considered an actual sale.

26. (VAT) Sale of orchids and other ornamental plants is:

a. subject to 12% VAT. c. exempt from VAT.
b. subject to 0% VAT. d. none of the choices

27. (VAT) A VAT-registered taxpayer has the following transactions during a

particular month:
a. Sale of two (2) adjacent condominium units, P2,500,000
b. Sale of one (1) residential lot, P1,500,000
c. Sale of one (1) parking lot in the condominium, P500,000
d. Sale of fresh fruits, vegetable and fish, P2,000,000

He approaches you to ask how much shall be subject to VAT. What will your answer
be?
a. P4,500,000 c. P500,000
b. P3,000,000 d. None of the choices

28. (VAT) A lessor leases his 15 residential units for P14,500 per month and the
other 15 residential units for P15,500 per month. During the taxable year, his
accumulated gross receipts amounted to P5,400,000. How much is the output VAT?
a. P648,000 c. P313,200
b. P334,800 d. None of the choices

TAXATION – FIRST PRE-BOARD EXAMINATION (BATCH 41)

 lOMoAR cPSD| 11698516

ReSA: The Review School of Accountancy Page 5 of 16

29 to 30 are based on the following: (VAT) The Anong Pizza Na, VAT-registered issued
the following official receipt to a customer who was with a senior citizen:

Ordered by a senior citizen

Parma pizza P880.00
Mango basil 180.00 P1,060.00
Ordered by the non-senior citizen
House salad 420.00
Beef rendang 590.00
Avocado smoothie 190.00 1,200.00
Total sales (VAT inclusive) P2,260.00

29. (VAT) How much is the VAT-exempt sale?

a. P2,017.85 c. P946.43
b. P1,060.00 d. None of the choices

30. (VAT) How much is the sales discount for senior citizen?
a. P403.57 c. P189.29
b. P212.00 d. None of the choices

31 to 34 are based on the following: A VAT subject real estate dealer sells a
residential lot on January 15, 2018. The following information are made available on
the terms of the sale:
Gross selling price P 3,000,000
Initial payments on January 15, 2018
(consisting of down payment and installments
in the year of sale) 900,000
Balance to be paid in equal installment,
installments starting February 15, 2018 2,100,000
The zonal value of the residential lot was P2,800,000.
31. (VAT) Does the sale qualify under installment plan?
a. Yes, because the sale has initial payments and, therefore, qualify under
installment plan.
b. No, because the initial payments exceed 25% of the selling price.
c. Yes, because the initial payments include installments in the year of sale.
d. No, because the initial payments exceed 25% of the zonal value.

32. (VAT) What is the tax base for VAT purposes?

a. P3,000,000 c. P2,100,000
b. P2,800,000 d. None of the choices

33. (VAT) How much was the output tax on January 15, 2018 using 12% VAT rate?
a. P 360,000 c. P 108,000
b. P 300,000 d. None

34. (VAT) How much was the output tax on February 15, 2018 using 12% VAT rate?
a. P 360,000 c. P 108,000
b. P 300,000 d. None

35. (VAT) If a VAT-registered person issues a VAT invoice or VAT official receipt for
a VAT-exempt transaction, but fails to display prominently on the invoice or
receipt the words “VAT-exempt sale”, the transaction shall:
a. still be exempt from value-added tax.
b. become taxable and the issuer shall be liable to pay VAT thereon.
c. be effectively subject to zero percent.
d. be considered erroneous transaction and must be disregarded.

36. (VAT) Suppose the accounting period adopted by the taxpayer is fiscal year ending
October 2018, when is the due date for the filing of his monthly VAT declarations
for the first and second month of the first fiscal quarter?
a. November 20, 2018 and December 20, 2018
b. August 20, 2018 and September 20, 2018
c. November 20, 2017 and December 20, 2017
d. December 20, 2017 and January 20, 2018

TAXATION – FIRST PRE-BOARD EXAMINATION (BATCH 41)

 lOMoAR cPSD| 11698516

ReSA: The Review School of Accountancy Page 6 of 16

37 to 39 are based on the following: (VAT) A taxpayer is engaged in VAT-subject
transactions but his annual gross sales do not exceed the VAT threshold. Hence, he
did not register under VAT system. However, during the current year, his quarterly
gross sales follow:

First quarter P1,000,000

Second quarter 1,000,000
Third quarter 1,000,000
Fourth quarter 1,000,000

37. (VAT) Which of the following statements is correct?

I – The taxpayer is required to update his registration from
non-VAT to VAT taxpayer in the fourth quarter.
II - The taxpayer is required to update his registration from non-
VAT to VAT taxpayer until taxpayer is liable to VAT.
III - VAT shall be imposed prospectively.
IV - Percentage tax due on the non-VAT portion of the
sales/receipts shall be collected without penalty, if
timely paid on the due date immediately following the
month/quarter when taxpayer ceases to be a non-VAT.

a. I, II, III and IV are correct

b. I, II and III are correct
c. Only I and II are correct
d. Only III and IV are correct

38. (OPT) How much is the percentage tax due?

a. P480,000 c. P90,000
b. P120,000 d. None of the choices

39. (VAT) How much is the VAT due?

a. P480,000 c. P90,000
b. P120,000 d. None of the choices

40. (OPT) Who of the following is not subject to tax on winnings under Section 126?
a. Person who wins in horse races
b. Winners from double, forecast/quinella and trifecta bets
c. Winners in cockfighting
d. Owners of winning race horses

41 to 44 are based on the following: (OPT) Vanderwoodsen, VAT-registered, is a radio-

TV broadcasting franchise grantee. The previous year, its gross receipts did not
exceed P 10,000,000. In the first month of the current year, it had the following
data:
Gross receipts, sale of airtime P2,000,000
Payments received from user of radio station’s
communications facilities for overseas communications 500,000
Rentals of office spaces 3,500,000
Business expenses 700,000
41. (OPT) How much was the franchise tax due?
a. P 75,000 c. P 50,000
b. P 60,000 d. None of the choices

42. (OPT) How much was the overseas communications tax?

a. P 250,000 c. P 75,000
b. P 200,000 d. P 50,000

43. (VAT) How much is output VAT, if any?

a. P720,000 c. P420,000
b. P660,000 d. None of the choices

44. (OPT) Can the franchise grantee register under the VAT system?
a. Yes. Franchise grantees of radio and/or television broadcasting whose annual
gross receipts of the preceding year do not exceed P10,000,000 derived from
the business covered by the law granting the franchise may opt for VAT
registration.
b. No. Franchise grantees of radio and/or television broadcasting whose annual
gross receipts of the preceding year do not exceed P10,000,000 derived from

TAXATION – FIRST PRE-BOARD EXAMINATION (BATCH 41)

 lOMoAR cPSD| 11698516

ReSA: The Review School of Accountancy Page 7 of 16

the business covered by the law granting the franchise cannot opt for VAT
registration.
c. Yes. As a rule, it is mandatory for franchise grantees of radio and/or
television broadcasting whose annual gross receipts of the preceding year do
not exceed P10,000,000 to register under the VAT system.
d. No. It is unwise to register because the taxpayer cannot claim input tax
credits.
45. (OPT) A proprietor of bowling alleys has the following gross receipts during the
month of July, 2018:
Gross receipts from bowling operation P2,000,000
Gross receipts from sale of food and drinks inside the
bowling alley 1,000,000
Gross receipts from rental of stalls inside the bowling alley 500,000
How much is the amusement tax?
a. P1,050,000 c. P525,000
b. P630,000 d. None of the choices

46. (OPT) Which of the following statements is incorrect?

a. The percentage taxes are basically on sale of services.
b. The percentage taxes are generally paid monthly.
c. The percentage taxes may be shifted to customers or clients.
d. An isolated transaction not in the course of trade or business will not result
in a liability for a percentage tax.

47. (IND) A nonresident alien individual who shall come to the Philippines and stay
therein for an aggregate period of more than 180 days during the calendar year
shall be deemed a “nonresident alien doing in the Philippines”:
a. regardless of whether or not he is actually engaged in business in the
Philippines.
b. only when he is actually engaged in business in the Philippines.
c. when his income does not come from the performance of personal services in the
Philippines.
d. when he comes to the Philippines for a definite purpose which in its nature
would require an extended stay and to that end makes his home temporarily in
the Philippines, although it may be his intention at all times to return to
his domicile abroad.

48. (IND) Under the TRAIN, the term ‘taxable income’ as applied to individuals means:
a. the pertinent items of gross income specified in the Tax Code, less
deductions if any, authorized for such types of income by the Tax Code or
other special laws.
b. the pertinent items of gross income specified in the Tax Code, less
deductions including personal exemptions, if any, authorized for such
types of income by the Tax Code or other special laws.
c. the pertinent items of gross income specified in the Tax Code.
d. the pertinent items of gross income specified in the Tax Code excluding
salaries received from employment.

49 and 50 are based on the following: (IND) Ms. Cyril is employed in MAFD Corporation
and is also a part-time real estate agent for a real estate broker. In addition to
the SMW of ₱180,000 she received from her employer, she likewise received ₱75,000 as
commissions from her real estate dealings for the year 2018.
49. (IND) How much is the exempt income?
a. P255,000 c. P75,000
b. P180,000 d. None of the choices
50. (IND) How much is the taxable income?
a. P255,000 c. P75,000
b. P180,000 d. None of the choices

51. (IND) To be considered physically present abroad most of the time during the
taxable year, a contract worker must have been outside the Philippines for not
less than:
a. 180 days c. 185 days
b. 183 days d. 190 days

TAXATION – FIRST PRE-BOARD EXAMINATION (BATCH 41)

 lOMoAR cPSD| 11698516

ReSA: The Review School of Accountancy Page 8 of 16

52. (IND) Denzell Wetta, an American management expert is hired by a Philippine
corporation to assist in its organization and operation for which he has to stay
in the Philippines for 5 months. He came to the Philippines for this definite
purpose but the nature of his job may require him to extend his stay and live
temporarily in the Philippines. The American management expert intends to leave
the Philippines as soon as his job is done.

For income tax purposes, the American management expert shall be classified as:
a. resident alien.
b. nonresident alien engaged in trade or business.
c. nonresident alien not engaged in trade or business.
d. resident citizen.

53. (IND) First statement: The husband and wife shall compute their individual
income tax separately based on their respective total taxable income.
Second statement: 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.
a. Both statements are correct
b. Both statements are incorrect
c. Only the first statement is correct
d. Only the second statement is correct

54. Ms. Allyza is employed in JBC Corporation, She the following for the
current year:
Statutory minimum wage,
inclusive of the 13th month pay P175,000
Overtime pay 40,000
Night-shift differential 25,000
Commission from the same employer 20,000
Total P260,000
(IND) How much is the exempt amount?
a. P260,000 c. P20,000
b. P240,000 d. None of the choices

55 and 56 are based on the following: A married resident citizen has five (5)
qualified dependent children. The following information pertains to his income and
expenses in the year 2018:
Salary, net of P20,000 withholding tax P 380,000
Interest income, bank deposit-BPI, Manila 50,000
Yield from money market placement,
State Investment House, Manila 30,000
Rent expense, apartment house 36,000
Health insurance premium paid 5,000

55. (IND) How much is the taxable compensation income?

a. P400,000 c. P250,000
b. P336,000 d. P230,000

56. (IND) How much is the tax due?

a. P80,000 c. None, exempt from tax
b. P30,000 d. None of the choices

57 and 58 are based on the following: A single resident citizen has two (2) qualified
dependent children. During a particular year, he earns and spends the following:
Gross income from practice of profession P 250,000
Expenses in connection with the practice
of profession 50,000
Hospitalization insurance premium paid 2,000
57. (IND) How much is the taxable net income?
a. P250,000 c. P100,000
b. P200,000 d. P 98,000

58. (IND) How much is the tax due?

a. P50,000 c. None, exempt from tax
b. P40,000 d. None of the choices

TAXATION – FIRST PRE-BOARD EXAMINATION (BATCH 41)

 lOMoAR cPSD| 11698516

ReSA: The Review School of Accountancy Page 9 of 16

59. (Excise Tax) Which of the following is an example of ad valorem excise tax?
a. Excise tax on Cigarettes Packed by Hand
b. Excise tax on Cigarettes Packed by Machine
c. Excise tax on petroleum products
d. Excise tax on alcoholic products

60 and 61 are based on the following: To improve her body shape Paz Seksi decided to
undergo procedure and sought the services of Body Beautiful, a clinic operated
outside the hospital and owned by Bello Medical Group, Inc. Body Beautiful charged
Ms. Pax Seksi the amount of P112,000 (inclusive of 12% VAT but exclusive of 5% excise
tax) for the service rendered.

60. (Excise Tax) How much is the excise tax?

a. P5,250.00 c. P4,761.90
b. P5,000.00 d. None of the choices

61. (Excise Tax) How much is the VAT?

a. P12,600.00 c. P10,714.29
b. P12,000.00 d. None of the choices

62. (Corp) Aliw Service Corporation, registered with BIR in 2010, has the following
data for the year 2018:
Gross receipts P 1,000,000
Discounts given 100,000
Returns and allowances 150,000
Salaries of personnel directly involved in the
supply of services 300,000
Fees of consultants directly involved in the
supply of services 50,000
Rental of equipment directly used in the
supply of services 70,000
Operating expenses 420,000

How much is the income tax due and payable?

a. P 27,000 c. Zero
b. P 6,600 d. None of the choices

63 and 44 are based on the following: XYZ Corporation is a foreign corporation

engaged in business in the Philippines. During the year 2018, its income and expenses
are shown below:
Gross income, Philippines P 20,000,000
Business expenses, Philippines 5,000,000
Gross income, South Korea 70,000,000
Business expenses, South Korea 3,000,000
Interest income on dollar deposit,
PNB-Manila, Philippines 500,000
Yield on money market placement in South Korea 1,000,000

63. (Corp) How much is the Philippine income tax due and payable using 30% income tax
rate?
a. P6,000,000 c. P4,500,000
b. P5,250,000 d. None of the choices

64. (Corp) Assuming the corporation is not engaged in business in the Philippines, how
much is the final withholding tax in the Philippines?
a. P6,000,000 c. P4,500,000
b. P5,250,000 d. None of the choices

65. (Sources of Income) It is important to know the source of income for tax purposes
(i.e., from within and without the Philippines) because:
a. some individuals and corporate taxpayers are taxed on their worldwide income
while others are taxable only upon income from sources within the Philippines.
b. the Philippines imposes income tax only on income from sources within.
c. some individual taxpayers are citizens while others are aliens.
d. export sales are not subject to income tax.

TAXATION – FIRST PRE-BOARD EXAMINATION (BATCH 41)

 lOMoAR cPSD| 11698516

ReSA: The Review School of Accountancy Page 10 of 16

66. (Sources of Income) Which of the following shall be treated as derived entirely
from sources without the Philippines?
a. Gains, profits and income derived from the purchase of personal property
within and its sale without the Philippines
b. Gains, profits and income derived from the purchase of personal property
without and its sale within the Philippines
c. Gain from the sale of shares of stock in a domestic corporation regardless of
where the said shares are sold
d. All of the choices

67. (Gross Income) Which of the following is not taxable?

a. Living quarters or meals furnished to an employee for the convenience of the
employer
b. Tips or gratuities paid directly to an employee by a customer of the employer
which are not accounted for by the employee to the employer
c. Pensions, retirement and separation pay, in general
d. Fixed or variable transportation, representation and other allowances which
are received by a public officer or employee or officer or employee of a
private entity, in addition to the regular compensation fixed for his position
or office, in general

68. (Gross Income) Which of the following statements is incorrect?

a. Gains, profits, and income are to be included in the gross income for the
taxable year in which they are received by the taxpayer, unless they are
included when they accrue to him in accordance with approved method of
accounting followed by him.
b. If a person sues in one year on a pecuniary claim or for property, and money
or property is recovered on a judgment therefore in a later year, income is
realized in that year, assuming the money or property would have been income
in the earlier year if then received.
c. Bad debts or accounts charged off because of the fact that they were
determined to be worthless, which are subsequently recovered, whether or not
by suit, constitute income for the year in which recovered, regardless of the
date when amounts were charged off.
d. None of the choices.

69. (Gross Income) A property was received as donation from Charlwin when its fair
market value was P300,000. Charlwin in turn received this property as donation
from Jose when its fair market value was P350,000. This property was purchased by
Marceliano for P200,000 and was donated to Jose. The property was sold for
P500,000.

How much gain (loss) shall be recognized from the sale?

a. P 300,000 c. P 150,000
b. P 200,000 d. None of the choices

70. (Fringe) Which of the following fringe benefits shall not be subject to the fringe
benefit tax?
a. Benefits given to the rank and file employees, whether granted under a
collective bargaining agreement or not
b. Fringe benefits required by the nature of, or necessary to the trade, business
or profession of the employer
c. Fringe benefit given for the convenience or advantage of the employer
d. All of the choices

END OF EXAMINATION

NOTE: Solutions to selected items are found on the next page (Page 11).

TAXATION – FIRST PRE-BOARD EXAMINATION (BATCH 41)

 lOMoAR cPSD| 11698516

ReSA: The Review School of Accountancy Page 11 of 16

1. B 11. C 21. A 31. B 41. D 51. B 61. A

2. A 12. C 22. A 32. A 42. D 52. A 62. B
3. D 13. A 23. A 33. A 43. B 53. A 63. C
4. D 14. D 24. D 34. D 44. A 54. B 64. A
5. C 15. A 25. B 35. B 45. D 55. A 65. A
6. D 16. D 26. A 36. D 46. D 56. B 66. A
7. D 17. C 27. C 37. A 47. A 57. B 67. A
8. D 18. B 28. D 38. C 48. A 58. C 68. D
9. D 19. C 29. C 39. B 49. B 59. D 69. A
10. A 20. D 30. C 40. C 50. C 60. B 70. D

SUPPORTING COMPUTATIONS
4. D
Exclusive Common Total
Gross estate P30,000,000 P14,000,000 P44,000,000
Less: Deductions (2,000,000)
- (2,000,000)
Net estate before special 30,000,000 12,000,000* 42,000,000
deductions
Less: Special ded
Family home 30,000,000
Maximum 10,000,000 10,000,000)
Standard deduction (5,000,000)
Net estate after special
deductions 27,000,000
Less: Share of surviving
spouse (1/2 x (6,000,000)
12,000,000*)
Net taxable estate P 21,000,000

5. C
Gross estate P44,000,000
Less: Deductions ( 2,000,000)
Estate after deductions 42,000,000
Less: Family home deduction (maximum) 10,000,000
Standard deduction 5,000,000 15,000,000
Taxable net estate P27,000,000

6. D

Exclusive Common Total

Gross estate P4,900,000 P7,000,000 P9,900,000
Less: Deductions 500,000
1,500,000) (2,000,000)
Net estate before
special deductions 4,400,000 5,500,000* 9,900,000
Less: Special ded

Family house(1/2) 500,000

Family lot (full)) 400,000
Total 900,000
Maximum 10,000,000 (900,000)
Standard deduction (5,000,000)

TAXATION – FIRST PRE-BOARD EXAMINATION (BATCH 41)

 lOMoAR cPSD| 11698516

ReSA: The Review School of Accountancy Page 12 of 16

Net estate after

special deductions 4,000,000
Less: Share of
surviving spouse
(1/2 x
5,500,000*) (2,750,000)
Net taxable estate P 1,250,000
7. D
Net taxable estate P 1,250,000
Tax rate 6%
Tax payable P 75,000
11. C
Real property in the Philippines P4,000,000.00
Personal property outside the
Philippines 2,000,000.00
Proceeds of life insurance upon the life
of decedent, decedent’s estate
designated as irrevocable beneficiary 1,000,000.00
Total taxable gross estate P7,000,000.00
Less: Deductions
Claims against the estate (1,000,000.00)
Net estate before special deductions 6,000,000.00
Less: Special deduction
Standard deduction (5,000,000.00)
Taxable net estate P1,000,000.00
12. C
Estate tax payable (1,000,000 x 6%) P60,000.00

13. A
Answer: A
Claims against the estate P 1,000,000.00
Standard deduction 5,000,000.00
Total P6,000,000.00
18. B
January 30, 2018
Total net gifts P2,000,000
Less: Exempt gift 250,000
Total net gifts subject to tax 1,750,000
Applicable Donor’s Tax Rate 6%
Total donor’s tax P105,000
19. C
March 30, 2018
Total net gifts in this return P1,000,000
Add: Total Prior net gifts during the calendar year 2,000,000
Total net gifts 3,000,000
Less: Exempt gift (250,000)
Total net gifts subject to tax 2,750,000
Applicable donor’s tax rate 6%
Total donor’s tax due 165,000
Less: Payments for prior gifts during the calendar 105,000
year
Tax payable P60,000

TAXATION – FIRST PRE-BOARD EXAMINATION (BATCH 41)

 lOMoAR cPSD| 11698516

ReSA: The Review School of Accountancy Page 13 of 16

34. D

August 15, 2018

Total net gifts in this return P500,000
Add: Total Prior net gifts during the calendar 3,000,000
year
Total net gifts 3,500,000
Less: Exempt gift (250,000)
Total net gifts subject to tax 3,250,000
Applicable donor’s tax rate 6%
Total donor’s tax due 195,000
Less: Payments for prior gifts during the calendar 165,000
year
Tax payable P30,000

29. C
Answer: C
Parma pizza P880.00
Mango basil 180.00
Total VAT-exempt sales 1,060.00
Less: VAT included in the VAT-exempt sale (1,060.00 x
12/112) 113.57
VAT-exempt sale P 946.43

30. C
Answer: C
VAT-exempt sale P 946.43
Sales discount rate 20%
Sales discount to senior citizen P189.29

31. B
Answer: B
Reference: Section 3, Revenue Regulations No. 4-2007
The initial payments over the selling price exceed 25%
(900,000/3,000,000 = 30%). This is a sale on a deferred payment basis
not on the installment plan.

32. A
Answer: A
Reference: Section 3, Revenue Regulations No. 4-2007
In case of sale of real property on a deferred-payment basis not on the
installment plan, the transaction shall be treated as cash sale which
makes the entire selling price taxable in the month of sale. Hence, the
tax base is selling price or fair market value whichever is higher.

33. A
Answer: A
Reference: Section 3, Revenue Regulations No. 4-2007

P3,000,000 x 12% = P360,000

TAXATION – FIRST PRE-BOARD EXAMINATION (BATCH 41)

 lOMoAR cPSD| 11698516

ReSA: The Review School of Accountancy Page 14 of 16

34. D
Answer: D
Reference: Section 3, Revenue Regulations No. 4-2007

The initial payments over the selling price exceed 25%. This is a sale on
a deferred payment basis not on the installment plan.

In case of sale of real property on a deferred-payment basis not on the

installment plan, the transaction shall be treated as cash sale which
makes the entire selling price taxable in the month of sale. Payments
subsequent to “initial payments” shall no longer be subject to output VAT,
in the case of sale on a deferred payment basis.

38. C
Answer: C
First quarter P1,000,000
Second quarter 1,000,000
Third quarter 1,000,000
Total gross sales 3,000,000
Tax rate 3%
Percentage tax P 90,000

39. B
Answer: B
Gross sales (fourth quarter) P1,000,000
Tax rate 12%
Value-Added Tax P 120,000

42. D
Gross payments received P500,000
Tax rate 10%
Overseas communications tax P50,000
43. B
Answer: B
Gross receipts, sale of airtime P 2,000,000
Rentals of office spaces 3,500,000
Total gross receipts 5,500,000
Tax rate 12%
Output tax P 660,000
45. D
Operators of bowling alleys are not subject to amusement tax.

49. B
The minimum wage of P180,000 is exempt from tax even if she has
received commission from her real estate business.

50. C
The P75,000 commission is taxable income.

TAXATION – FIRST PRE-BOARD EXAMINATION (BATCH 41)

 lOMoAR cPSD| 11698516

ReSA: The Review School of Accountancy Page 15 of 16

54. B
Answer: B
Reference: Section 6, Revenue Regulations No. 11-2018
Basic statutory minimum wage P175,000
Overtime pay 40,000
Night-shift differential 25,000
Total P240,000

55. A
Answer: A
Gross compensation income (P380,000 + P20,000) P400,000

56. B
Answer: B
Taxable compensation income P400,000
Tax due under Section 24 (A)
250,000 Exempt
150,000 x 20% P30,000

57. B
Answer: B
Gross professional income P250,000
Less: Expenses (50,000)
Taxable net income P250,000

58. C
Effective January 1, 2018, the first P250,000 taxable income is exempt
from tax.

60. B
Answer: B
Gross receipts, net of VAT (112,000/1.12) P100,000.00
Tax rate 5%
Excise tax P 5,000.00

61. A
Answer: A
Gross receipts, net of VAT P100,000.00
Add: Excise tax 5,000.00
Total 105,000.00
Tax rate 12%
VAT P12,600.00

62. B
Answer: B
Gross receipts P1,000,000
Less: Discounts 100,000
Returns and allowances 150,000 250,000
Net receipts 750,000
Less: Cost of services
Salaries of personnel 300,000
Fees of consultants 50,000
Rental of equipment 70,000 420,000

TAXATION – FIRST PRE-BOARD EXAMINATION (BATCH 41)

 lOMoAR cPSD| 11698516

ReSA: The Review School of Accountancy Page 16 of 16

Gross income 330,000

Less: Operating expenses 420,000
Net operating loss (P90,000)
Regular corporate income tax -
Minimum corporate income tax (330,000 x 2%) P6,600
Tax due and payable P6,600

63. C
Gross income, Philippines P20,000,000
Less: Business expenses, Philippines (5,000,000)
Taxable net income P15,000,000
Tax due (30% x 15,000,000) P4,500,000

64. A
Gross income, Philippines P20,000,000
Tax rate 30%
Final withholding tax P60,000,000

69. A
Answer: A
Selling price P500,000
Less: Basis (basis to the last owner who did not
acquire the property by donation) 200,000*
Gain from sale P300,000

*Less than the FMV of P300,000 at the time received as donation.

TAXATION – FIRST PRE-BOARD EXAMINATION (BATCH 41)