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TAXATION OCTOBER 2022 BATCH

PREWEEK QUIZZER PROF. ROEL E. HERMOSILLA

1. Which of the following statements is not correct?

a. Taxes may be imposed to raise revenue or to provide disincentives to certain activities
within the state.
b. The state can have the power of taxation even if the Constitution does not expressly give
it the power to tax.
c. For the exercise of the power of taxation, the state can tax anything at any time.
d. The provisions of taxation in the Philippine Constitution are grants of power and not
limitation on taxing powers.

2. The power to interpret the provisions of National Internal Revenue Code and other tax laws
shall be under the exclusive and original jurisdiction belongs to _________.
a. Commissioner of Internal Revenue, subject to the exclusive appellate jurisdiction of the
Court of Tax Appeals
b. Court of Tax Appeals, subject to the exclusive appellate jurisdiction of the Court of Appeals
c. Regular Courts, subject to the review by the Court of Tax Appeals
d. Commissioner of Internal Revenue, subject to the review by the Secretary of Finance

3. The power of taxation is basically legislative in character. Which of the following is a legislative
function?
A B C D
 Fix with certainty the amount of
Yes No Yes Yes
tax
 Identify who should collect the
Yes Yes No Yes
tax
 Determine who should be subject
Yes Yes Yes No
to tax

4. Which theory of taxation states that without taxes, a government would be paralyzed for lock
of power to activate and operate it, resulting in its destruction?
a. Power to destroy theory
b. Lifeblood theory
c. Sumptuary theory
d. Symbiotic doctrine

5. Which of the following statements regarding special assessment is incorrect?

a. It is based on the government’s need for money to support its legitimate objectives
b. It is levied only on land
c. It is based solely on the benefits derived by the owners of the land.
d. None of the above.

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6. An example of a tax where the concept of progressivity finds application is the
a. Income tax on individuals
b. Excise tax on petroleum products.
c. Value-added tax on certain articles.
d. Amusement tax on boxing exhibitions.

7. Statement 1 – The levying, imposition and collection of tax – are legislative in character.
Statement 2 – The aspects of taxation are shared by the legislative and executive branches of
the government.
a. True, true
b. True, false
c. False, true
d. False, false

8. The seizure by the government of personal property to enforce the payment of taxes to be
followed by its public sale if the taxes are not voluntarily paid is called
a. Forfeiture
b. Distraint
c. Levy
d. Garnishment

9. The property of a foreign state may not be taxed by another because of sovereign equality
among states. This is
a. International comity
b. Constitutional limitation
c. Territorial jurisdiction
d. Non-delegability of the power to tax

10. Luningning filed an income tax return for the calendar year 2020 on March 10, 2021. The BIR
issued a deficiency income tax assessment on April 10, 2023, which has become final. When
is the last day for the BIR to collect?
a. April 15, 2028
b. April 15, 2027
c. March 10, 2025
d. April 10, 2028

11. One of the following statements is false:

a. Taxation is the lifeblood of the government:
b. The power of taxation must first be expressly granted, either by law or the Constitution,
before the state may validly exercise it.
c. A government that imposes more direct taxes than indirect taxes is said to have
managed to evolve a progressive system of taxation.
d. Taxes are imposed primarily to raise revenue, while fees and charges are imposed
primarily for regulation purposes.

12. Which of the following statements is not correct?

a. For the exercise of the power of taxation, the state can tax at anytime
b. Taxes may be imposed to raise revenues or to provide disincentives to certain activities
within the state
c. The power of taxation is a grant of power under the Philippine Constitution

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 d. The state can exercise the power of taxation even if the constitution does not expressly
give it the power to tax

13. Which of the following tax cases may be the subject of compromise settlement?
I. Delinquent accounts
II. Criminal violations involving tax fraud cases
III. Cases under administrative protest after issuance of Final Assessment Notice to the
taxpayer still pending
a. I only
b. III only
c. I, II and III
d. I and III

14. Which of the following is not a scheme of shifting the incidence of tax burden
a. The manufacturer transfer the tax to the consumer by adding the tax to the selling
price of the goods sold
b. The purchaser asks for a discount or refuse to buy at regular price unless it is reduced
by an amount equal to one tax he will pay
c. Changing the terms of the sale like FOB shipping point in the Phil. to FOB destination
abroad, so that the title passes abroad instead of in the Phils.
d. The manufacturer transfers the tax to the distributor, than in turn to the wholesaler,
to the retailer and finally to the consumer

15. Which of the following statement/s is/are INCORRECT? Under the TRAIN Law,
I. Self-employed professionals whose gross receipts do not exceed P3M may opt to be
taxed at 8% based on gross sales and/or gross receipts and other non-operating
income in excess of PHP250,000 in lieu of graduated rates and percentage tax.
II. Mixed income earners are subject to graduated rates on their compensation income
if their gross receipts and other non-operating income do not exceed P3M.
III. Individuals earning purely compensation income from only one employer are not
require to file annual ITRs.
a. Statements I and III are INCORRECT.
b. Only Statement III is INCORRECT.
c. Statements II and III are INCORRECT.
d. Only Statement II IS INCORRECT.

16. As regards revenue bill, which of the following is not correct?

a. The President may recommend a revenue bill to Congress
b. The Senate may propose amendment if the bill originates from the House of
Representatives.
c. The House of Representatives may propose amendment if the bill originates from the
Senate.
d. Versions of a revenue bill approved separately by the House of Representatives and the
Senate shall be consolidated with both houses approving the consolidated version.

17. Which of the following are basic principles of a sound tax system?
a. Fiscal Adequacy, Economic Feasibility and Theoretical Justice
b. Fiscal Adequacy, Administrative Feasibility and Theoretical Justice
c. Progressive Taxation, Ability to Pay, Symbiotic Relationship
d. Fiscal Deficit, Administrative Feasibility and Ability to Pay

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18. The concept of “situs of taxation” is based on which limitation of taxation? (CPALE)
a. Territoriality
b. International comity
c. Exemption of the government
d. Public purpose

19. Which of the following statements is/are CORRECT? (CPALE)

I. The power to license includes the power to tax.
II. The power to tax may not include the power to destroy
III. The power to tax includes the power to exempt
a. II AND III
b. I AND II
c. III ONLY
d. I ONLY

20. Taxes are assessed for the purpose of generating revenue to be used for public needs.
Taxation itself is the power by which the state raises revenue to defray the expenses of
government. A jurist said that a tax is what we pay for civilization. In our jurisdiction, which of
the following statements may be erroneous?
a. Taxes are pecuniary in nature.
b. Taxes are enforced charges and contributions
c. Taxes are imposed on persons and property within the territorial jurisdiction of the State.
d. Taxes are levied by the executive branch of the government.

21. The BIR Commissioner may compromise payment of internal revenue taxes when:
First Ground: A reasonable doubt as to the validity of the claim against the taxpayer exists.
Second Ground: The financial position of the taxpayer demonstrates a clear inability to pay
the tax.
a. Both grounds are wrong
b. First ground is wrong, Second ground is correct
c. Both grounds are correct
d. First ground is correct, Second ground is wrong

22. Which statement is correct? In case of tax assessment:

a. A protest should be filed by the taxpayer, otherwise the assessment becomes final and
cannot be questioned anymore in court.
b. A protest may be filed by the taxpayer anytime before the Bureau of Internal Revenue
collects the tax.
c. The assessment should be made by the BIR within 5 years from date of filing of the
return.
d. The assessment shall include only the tax proper.

23. ALEGRA filed an income tax return for the calendar year 2019 on March 10, 2020. The BIR
assessed a deficiency income tax on April 10, 2022. When is the last day for the BIR to make
assessment?
a. April 15, 2023
b. April 15, 2022
c. April 10, 2022
d. April 10, 2023

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24. First Statement: If the correct tax return was filed, the assessment could be made within 3
years after the return is filed.
Second Statement: If no return is filed, the assessment could be made within 10 years from
discovery of the omission to file the return.
a. True, true
b. True, false
c. False, true
d. False, false

25. Which of the following government-owned, controlled corporation is subject to income tax
a. Securities and Exchange Commission (SSS)
b. Philippine Health Insurance Corporation (PHIC)
c. Philippine Amusement and Gaming Corporation (PAGCOR)
d. Local Water Districts (LWD)

26. Which are constituted when one interests himself in the business of another by contributing
capital thereto, and sharing in the profits or losses in the proportion agreed upon?
a. Joint ventures
b. Joint stock companies
c. Joint accounts
d. Associates

27. The following are remedies available to the government to collect taxes, except
a. Distraint and levy
b. Inquiring into bank deposit accounts of taxpayers
c. Entering into compromise of taxes cases
d. Enforcement of forfeiture of property

28. Which of the following is not correct?

a. The proceedings on the protest in the BIR is an administrative proceedings
b. Informers’ rewards shall be given to public officials who acquire information on violation
of internal revenue laws while in the performance of their duties during their incumbency
c. All taxes imposed and collected by the BIR are internal revenue taxes
d. A tax credit certificate validly issued by the BIR may be used as credit against internal
revenue tax except against withholding tax

29. Which of the following statements is not correct?

a. Criminal action may be pursued by the government for the collection of delinquent taxes
b. An assessment of a tax deficiency is not necessary to a cr9iminal prosecution for tax
evasion
c. The government loses the right to collect the tax in a civil action if the taxpayer is
acquitted in a criminal action
d. The payment of a tax is an obligation imposed by statute and does not arise from a
criminal act.

30. Ms. Mimi Yah, an employee received the following compensation from Mr. Iskeert, his
employer for the year 2022:
 Basic salary (net of government contributions) - Php600,000
 13th month pay, P50,000
 Mid-year bonus, P10,000

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  Year-end bonus, P20,000
 Uniform allowance, P10,000
 Rice subsidy, P36,000

How much should be reflected as the taxable income from the said employee?
a. P606,000
b. P696,000
c. P616,000

31. What should the BIR do when the prescriptive period for the assessment of a tax deficient is
about to prescribe but the taxpayer has not yet complied with the BIR requirements for the
production of books of accounts and other records to substantiate the claimed deductions,
exemptions or credits?
a. Call the taxpayer to a conference to explain the delay.
b. Immediately conduct an investigation of the taxpayer’s activities.
c. Issue a jeopardy assessment coupled with a letter of demand
d. Issue a notice of constructive distraint to protect government interest

32. Jeopardy assessment is a valid ground to compromise a tax liability

a. Involving deficiency income taxes only, but not for other taxes.
b. Because of doubt as to the validity of the assessment
c. If the compromise amount does not exceed 10% of the basic tax
d. Only when there is an approval of the National Evaluation Board

33. Which of the following is subject to minimum corporate income tax?

a. Firms that are taxed under a special income tax regime such as those in accordance with
R.A. 7916 and 7227 (the PEZA law and the Bases Conversion Development Act (BCDA),
respectively)
b. Regional operating headquarters
c. All non-resident foreign corporations
d. Taxable partnerships

34. A donation was made on March 14, 2017. The donor’s tax return was filed on March 31, 2017.
When is the last day to make a valid assessment?
a. March 14.2020
b. April 13, 2020
c. April 14, 2020
d. September 14, 2020

35. Income earned by a resident foreign corporation from rentals of machineries in the
Philippines is subject to what kind of income tax?
a. 4½% final income tax
b. 30% normal income tax
c. 7½% final income tax
d. Exempt from income tax

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SITUATIONAL (FOR ITEMS 36 AND 37)
36. Catherine inherited from her father, who died on June 10, 2014, several pieces of real
property in Metro Manila. The estate tax return was filed and the estate tax due for P0.5
million was paid on December 6, 2014. The Tax Fraud Division of the BIR investigated the case
based on confidential information given by Sandy on January 6, 2018, that the return filed by
Catherine was false or fraudulent and that she failed to declare all properties left by her father
with intent to evade payment of the correct tax. As a result, a deficiency estate tax assessment
for P1.5 million, inclusive of a surcharge for late payment, interest and compromise penalty,
was issued against her on January 10, 2021. Catherine protested the assessment on the
ground of prescription. Will Catherine’s protest prosper?
a. No, because the assessment notice that was issued by the BIR was well within the 10
years prescriptive period for false or fraudulent return, counted from the discovery of
the falsity or fraud.
b. No, because the assessment notice has become final, executory, demandable and
unappealable to the Court of Tax Appeals.
c. Yes, because the BIR itself recognized that the return filed was not false or fraudulent, as
it failed to impose a fraud surcharge. Thus, the appropriate prescriptive period to apply
is three years from the time the return was filed or should have been filed, whichever is
later. The right of the BIR to assess, therefore, had prescribed.
d. Yes, because Catherine protested the deficiency estate tax assessment seasonably.

37. Catherine inherited from her father, who died on June 10, 2014, several pieces of real
property in Metro Manila. The estate tax return was filed and the estate tax due for P0.5
million was paid on December 6, 2014. The Tax Fraud Division of the BIR investigated the case
based on confidential information given by Sandy on January 6, 2018, that the return filed by
Catherine was false or fraudulent and that she failed to declare all properties left by her father
with intent to evade payment of the correct tax. As a result, a deficiency estate tax assessment
for P1.5 million, inclusive of a surcharge for late payment, interest and compromise penalty,
was issued against her on January 10, 2021. Catherine protested the assessment on the
ground of prescription. If the deficiency estate tax assessment included a 50% surcharge for
fraud, will Catherine’s protest prosper?
a. No, because the assessment notice that was issued by the BIR was well within the 10
years prescriptive period for false or fraudulent return, counted from the discovery of
the falsity or fraud.
b. No, because the assessment notice has become final, executory, demandable and
unappealable to the Court of Tax Appeals.
c. Yes, because regardless of the penalty surcharge imposed by the BIR, the appropriate
prescriptive period to apply will still be three years from the time the return was filed or
should have been filed, whichever is later. Thus, the right of the BIR to assess had
prescribed.
d. Yes, because Catherine protested the deficiency estate tax assessment seasonably.

SITUATIONAL (ITEMS 38 & 39)

38. A resident Filipino citizen receives dividend income from the Milan, Italy on his capital
investments in that foreign country. The dividend being remitted to him is taxed in the Milan,
Italy and at the same time is being taxed in the Philippines. Is this what is called “double
taxation”?
a. No, because the taxes are imposed for different purposes and by different taxing
authorities.
b. Yes, because the same income is taxed twice even by different taxing authorities, albeit
an indirect duplicate taxation which is not prohibited by the Philippine Constitution.
Page 7 of 26
 c. Yes, because as a Filipino citizen, resident or not, his dividend income derived from
abroad is covered by the multiplicity of situs rule in taxation.
d. No, because presumably the tax imposed by the Canadian government was a percentage
tax on gross receipts while that imposed in the Philippines was a final dividend tax, hence
the two taxes are of different kinds or subject matters.

39. A resident Filipino citizen receives dividend income from the Milan, Italy on his capital
investments in that foreign country. The dividend being remitted to him is taxed in the Milan,
Italy and at the same time is being taxed in the Philippines. Has our National Internal Revenue
Code (NIRC) of 1997 (as amended) provided any remedy (on perceived double taxation) for
such taxpayer?
a. None, as there is no standing reciprocity agreement between the Canadian government
and Philippine government.
b. Yes, the taxpayer could use the foreign income taxes paid as deduction (tax credit) from
his Philippine income taxes due or the taxpayer may claim the foreign income taxes paid
as deduction from his taxable gross income.
c. Yes, Filipino citizens, whether resident or not, are now allowed to claim any foreign
income taxes paid either as tax credit against their Philippine income taxes due or as direct
deduction from their taxable gross income.
d. None, as the taxpayer has to absorb the impact of the tax, which is imposed twice on the
same income.

40. Maria Luz sold her principal residence for P2,000,000. The fair market value of the property
as per the latest tax declaration is P2,200,000, while its zonal value amounts to P1,800,000.
Five months after the sale, Maria Luz acquired a new principal residence for P2,500,000. How
much is the capital gains tax due on the sale?
a. P132,000
b. Exempt
c. P 33,000
d. P120,000

SITUATIONAL (ITEMS 41 & 42)

41. Assume that the 2015 income tax return of Joaquin was filed on March 1, 2016. In the absence
of fraud or intent to evade the tax, the BIR may assess the tax not later than:
a. March 1, 2019
b. April 15, 2021
c. April 15, 2019
d. March 1, 2021

42. Assume that the 2015 income tax return of Joaquin was filed on June 30, 2016. The
prescription period of assessment is until:
a. March 1, 2019
b. June 30, 2019
c. April 15, 2019
d. June 30, 2020

43. Spouses A and B sold their family home, a capital asset for P5,000,000. It was acquired in 1980
at P2,000,000. The fair market value as determined by the BIR is P6,000,000 but the fair
market value as shown in the schedule of values of the City Assessor is P5,500,000. Later, the
spouses utilized P4,000,000 for the acquisition of their new family home.

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 The capital gains tax due is
a. P 72,000
b. P 60,000
c. P 300,000
d. P 360,000

44. Mr. Lucero, AVP for Finance of Green Homes, Inc., earned annual gross compensation income
in 2020 of P1,500,000. The amount is inclusive of 13th month and other benefits of P120,000
but net of SSS, PHIC and HDMF contributions. Aside from his employment, he is also a
practicing Certified Public Accountant with gross receipts of P2,400,000. His cost of services
and operating expenses are P1,000,000 and P600,000, respectively. He also derived other
non-operating income of P100,000 during the year. How much is his income tax due for the
year assuming he availed of the 8% income tax rate option?
a. P493,000
b. P513,000
c. P589,200
d. P504,000

45. Min Ah, married to Woo Bin had the following during the taxable year:
Gross Income
From the practice of profession P 700,000
Rental income from their conjugal property 300,000
Allowable deductions
For the practice of profession 520,000
For the property rented to tenants 140,000

The taxable income of Min Ah is

a. P340,000
b. P180,000
c. P260,000
d. P170,000

46. Mang Berto took a life insurance policy for P5M where the annual premium is P20,000. The
proceeds will be paid to Mang Berto after 25 years or to Mang Berto’s estate should he dies
before completing 25 years of payment. But after paying the annual premium for 10 years,
he transferred the policy to Mang Tomas for P250,000 and Mang Tomas paid the annual
premiums as they mature. After 10 years, Mang Berto died. Which of the following is correct?
a. The amount received by Mang Berto from Mang Tomas is part of former’s taxable income
b. The proceeds received by Mang Tomas is part of his taxable income and partly exempt
c. The amount received by Mang Berto from Mang Tomas is partly taxable income and
partly exempt
d. The proceeds will be part of Mang Berto’s gross estate

47. Rentals of property, real or personal, received by bank and non-bank financial intermediaries
performing quasi-banking functions are:
a. Subject to 12% vat
b. Subject to gross receipts tax of 5%
c. Subject to gross receipts tax of 7%
d. Subject to 3% OPT if annual gross receipts do not exceed the vat threshold

Page 9 of 26
48. BBM who is a real estate dealer, sold a real estate for P2,000,000 on November 29, 2022. The
cost of the property was P1,500,000. The terms of the sale were as follows:
 Down payment - P400,000
 Balance, payable in monthly installments - P100,000 beginning December 29, 2022
until fully paid.
How much is the taxable income subject to normal tax in 2022?
a. P300,000
b. P125,000
c. P 75,000
d. None. Income is subject to 6% final tax.

49. For value-added tax purposes, which of the following transactions of VAT-registered taxpayer
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

50. Who are allowed to withhold vat from its vat suppliers?
a. Entities, organization, business or corporation duly registered with Philippine Economic
Zone Authority (PEZA).
b. Nonresident individual and corporations
c. Government or any of its instrumentalities including government owned and controlled
corporation
d. Resident foreign corporation doing business in the Philippines

51. Value added tax

a. Is an indirect national tax levied on the value added in the production of a good (or
service) as it moves through the various stages of production.
b. Is ad valorem tax.
c. Is preferred in place of a personal income tax by many economists because income
taxes are a disincentive to work, whereas a VAT discourages unnecessary
consumption.
d. All of the above.

52. Which of the following is incorrect?

a. An article exempt from vat may be exempt from percentage tax.
b. An article subjected to excise tax may be subjected to vat.
c. An article subjected to vat may be subjected to percentage tax.
d. None of the above.

53. The percentage tax rates on services specifically subject to percentage tax ranges from
_________.
a. 0.6% to 30%
b. 0.6% to 3%
c. 0.5% to 3%
d. 0.5% to 30%

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54. Statement 1: For a person to be subjected to any business tax, it is necessary that he is
regularly engaged in the conduct or pursuit of an economic activity.
Statement 2: A non-resident foreign person performing isolated transaction in the Philippines
shall be liable to VAT
a. Statement 1 is true, Statement 2 is false
b. Statement 1 is false, Statement 2 is true
c. Both statements are correct
d. Both statements are incorrect

55. In January 2020, the Philippine Charity Sweepstakes Office (PCSO), has the following payouts
for the month: (a) Payouts amounting to P10,000 or less – P20,000,000; (b) Payouts more
than P10,000 – P100,000,000. How much withholding tax on winnings should PCSO remit for
the month?
a. None
b. P24,000,000
c. P10,000,000
d. P20,000,000

56. Statement 1: Nonstock and nonprofit private organizations which sell exclusively to their
members in the regular conduct or pursuit of commercial or economic activity are exempt
from value-added tax.
Statement 2: Government entities engaged in commercial or economic activity are generally
exempt from value-added tax.
a. Statement 1 is true, Statement 2 is false
b. Statement 1 is false, Statement 2 is true
c. Both statements are correct
d. Both statements are incorrect

57. Who is the one statutorily liable for the payment of VAT?
a. Consumer
b. Buyer
c. Seller
d. Buyer or seller

58. Statement 1: Upon the effectivity of the TRAIN Law, payment of stock transaction tax of 6/10
of 1% is within five (5) banking days from the date withheld by the broker.
Statement 2: Payment of stock transaction tax of 4%, 2% and 1% on primary offering should
be within thirty (30) days from the date of listing in the local stock exchange.
a. Both statements are correct
b. Both statements are incorrect
c. Only the first statement is correct
d. Only the second statement is correct

59. On July 1, 2020, a Raul sold directly to a buyer shares of stock of a domestic corporation held
as capital asset, as follows:
Cost P500,000
Holding period 12 months
Selling price at prevailing market value of P900,000, paid as
follows:
Cash:
7/1/2020 Down payment 50,000
Page 11 of 26
 12/1/2020 Installment 75,000
7/1/2021 Installment 75,000
12/1/2021 Installment 100,000
Assumption by the buyer of an indebtedness of the shares 600,000
The total final gain tax paid on the payments received in 2020 was:
a. P19,687.50
b. P33,750.00
c. P30,625.00
d. P39,375.00

SITUATIONAL (ITEMS 60 & 61)

60. Tino, a resident taxpayer received the following during the taxable year.
I. P 12,000 cash received as refund of excess insurance premiums paid to an insurance
company.
II. P 40,000 worth of goods as prize in “The Voice Clash Season 2” talent search
III. A computer unit with a FMV of P 48,000, which was awarded to him in recognition of
his outstanding achievement in scientific research.
IV. P25,000 salary per month as an accounting supervisor
Which of the above items is (are) taxable?
A. II only
B. II & IV
C. IV only
D. II, III & IV

61. The following income taxpayers are allowed to claim Optional Standard Deduction (OSD)
under R.A. 9504 in lieu of the itemized deductions, except:
a. Domestic corporation
b. General professional partnership
c. Resident foreign corporation
d. Non-resident foreign corporation

62. A retailer of goods, whose accounting method is under the accrual basis, has for taxable year
2020 gross sales of P1,000,000 and cost of sales amounting to P800,000. How much is the
OSD if the taxpayer is an/a:
Individual Corporation Individual Corporation
a. P400,000 P400,000 c. P100,000 P80,000
b. P400,000 P 80,000 d. P 80,000 P80,000

63. FILI-MON, INC. is under BIR audit for taxable year 2018. As a result of the audit, the BIR found
out that the transportation equipment acquired on January 3, 2016 by the Company was
provided for the benefit and use of the officers of the Corporation. It was also noted that the
Company has not paid any fringe benefit tax for the year 2018. The book value as of
December 31, 2018 of the transportation equipment subject to fringe benefit tax amounted
to P3,000,000, with a total cost of P6,000,000 and accumulated depreciation of P3,000,000.
Depreciation expense charged on the said transportation equipment for the year 2018
amounted to P1,000,000. How much is the basic deficiency fringe benefit tax due for the year
2018?
a. P269,231
b. P887,783
c. P969,231
d. P323,077
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64. YURI sold her residential house under the following terms:
Cash received, January 10, 2019 P 300,000
Amount received, June 10, 2019 100,000
Instalment due, June 10, 2020 400,000
Additional information:
Cost of land 150,000
Mortgage assumed by the buyer 200,000
Mortgage on the land executed by buyer in favor of the seller to
guarantee payment 600,000

How much was the capital gains tax due in 2017?

A. P60,000
B. P42,353
C. P17,647
D. P10,588

65. An employee received the following compensation from his employer for the year 2020: (a)
Basic salary (net of government contributions), P600,000; (b) 13th month pay, P50,000; (c)
Mid-year bonus, P25,000; (d) Year-end bonus, P25,000; (e) Uniform allowance, P8,000; and
(f) Rice subsidy, P24,000. How much should be reflected as the income tax due of the said
employee?
a. P 105,500
b. P 82,500
c. P 105,000
d. P 83,000

SITUATIONAL (ITEMS 66 TO 68)

66. Situation1 (TRAINLAW)- Mr. PERFECTO, is a practicing lawyer, who is engaged in providing legal
services to his clients. He is also a licensed real estate broker. Both businesses were registered
with the BIR and had the following data made available for year 2018 (amounts are gross of
withholding tax):
 Revenues from his profession as a lawyer amounting to P3,000,000;
 Commission received as a real estate broker amounts to P600,000;
 Cost of services and business related expenses amounted to P700,000 and P400,000,
respectively;
 Gain on sale of real property held for investment amounts to P500,000 (selling price
is P2,000,000);
 Wage ring gain amounting to P50,000 (net of wage ring losses of P100,000);
 Royalties from books published and sold amounting to P150,000; and
 Interest income from banks amounting to P30,000.
Compute 22A, Page1 of BIR Form No.1701, assuming Mr. PERFECTO opted to use itemized
deduction in computing his income tax.
a. P810,000
b. P666,000
c. P698,000
d. P826,000

Page 13 of 26
67. Situation 2 (TRAINLAW)
Mr. PERFECTO, is a practicing lawyer, who is engaged in providing legal services to his clients.
He is also a licensed real estate broker. Both businesses were registered with the BIR and
had the following data made available for year 2018 (amounts are gross of withholding tax):
 Revenues from his profession as a lawyer amounting to P3,000,000;
 Commission received as a real estate broker amounts to P600,000;
 Cost of services and business related expenses amounted to P700,000 and P400,000,
respectively;
 Gain on sale of real property held for investment amounts to P500,000 (selling price is
P2,000,000);
 Wage ring gain amounting to P50,000 (net of wage ring losses of P100,000);
 Royalties from books published and sold amounting to P150,000; and
 Interest income from banks amounting to P30,000.
Compute 17A, Page2 of BIR Form No. 1701, assuming Mr. PERFECTO opted to use optional
standard deduction in computing his income tax.
a. P2,240,000
b. P1,500,000
c. P2,300,000
d. P1,440,000

68. Situation 3 (TRAINLAW)

Mr. PERFECTO, is a practicing lawyer, who is engaged in providing legal services to his clients.
He is also a licensed real estate broker. Both businesses were registered with the BIR and
had the following data made available for year 2018 (amounts are gross of withholding tax):
 Revenues from his profession as a lawyer amounting to P3,000,000;
 Commission received as a real estate broker amounts to P600,000;
 Cost of services and business related expenses amounted to P700,000 and
P400,000, respectively;
 Gain on sale of real property held for investment amounts to P500,000 (selling price
is P2,000,000);
 Wage ring gain amounting to P50,000 (net of wage ring losses of P100,000);
 Royalties from books published and sold amounting to P150,000; and
 Interest income from banks amounting to P30,000.
How much is the final withholding income tax of Mr. PERFECTO, assuming 2/3 of interest
income from banks were realized from time deposits with maturity of 5years?
a. P 47,000
b. P 21,000
c. P 17,000
d. P 137,000

69. ABO sold a delivery truck in installment on February 14, 2020 for P200,000. The delivery truck
was acquired 3 years ago at P300,000, with accumulated depreciation as of the date of sale
amounting to P200,000. The terms of payment are as follows: (a) Down payment, February 14,
2020 – P40,000; (b) 1st Installment, February 14, 2021 – P80,000; (c) 2nd Installment, February
14, 2022 – P80,000. How much is the taxable gain for 2020 assuming the Installment Method
of accounting is used, if qualified?
a. P100,000
b. P 20,000
c. P 10,000
d. Zero

Page 14 of 26
70. Effective _______, generally, the regular corporate income tax rate for domestic
corporations, other than MSME, was reduced from a)_____________ to ___________
a. 01July 2020 30% 20%
b. 01January2021 30% 20%
c. 01 July 2020 30% 25%
d. None of the above

71. The regular corporate income tax applicable to domestic corporations is lowered to
__________ when the domestic corporation has total assets of _____a n d net taxable
income of __________.
a. 25% P100 million below P5millionandbelow
b. 25% P150 million below P10millionandbelow
c. 20% P100 million below P5 million and below
d. 20% P150 million below P10 million and below

72. Situational 1 (TRAIN LAW)- Lucas, married to Maria, died leaving the following:
Car acquired before marriage by LUCAS P 3,000,000
Car acquired before marriage by MARIA 4,500,000
House and lot acquired during marriage 15,000,000
Jewelries of MARIA (received as gift during the marriage) 1,000,000
Personal properties inherited by LUCAS during marriage 2,500,000
Land inherited by MARIA during marriage 10,000,000
Rental income on land inherited by MARIA (25% of which was
earned after LUCAS’s death) 2,000,000
Benefits from SSS 3,500,000
Proceeds of group insurance taken by LUCAS’s employer 1,750,000
How much is the correct gross estate if the property relationship is conjugal partnership of
gains?
a. 19,500,000
b. 22,000,000
c. 26,000,000
d. 36,000,000

73. Situational 2 (TRAIN LAW) - Lucas, married to Maria, died leaving the following:
Car acquired before marriage by LUCAS P 3,000,000
Car acquired before marriage by MARIA 4,500,000
House and lot acquired during marriage 15,000,000
Jewelries of MARIA (received as gift during the marriage) 1,000,000
Personal properties inherited by LUCAS during marriage 2,500,000
Land inherited by MARIA during marriage 10,000,000
Rental income on land inherited by MARIA (25% of which was
earned after LUCAS’s death) 2,000,000
Benefits from SSS 3,500,000
Proceeds of group insurance taken by LUCAS’s employer 1,750,000
How much is the correct gross estate if the property relationship is absolute community of
property?
a. 19,500,000
b. 25,000,000
c. 26,500,000
d. 36,000,000

Page 15 of 26
74. Situational 3 (TRAIN LAW)- Lucas married to Maria, died leaving the following:
Car acquired before marriage by LUCAS P 3,000,000
Car acquired before marriage by MARIA 4,500,000
House and lot acquired during marriage 15,000,000
Jewelries of MARIA (received as gift during the marriage) 1,000,000
Personal properties inherited by LUCAS during marriage 2,500,000
Land inherited by MARIA during marriage 10,000,000
Rental income on land inherited by MARIA (25% of which was
earned after LUCAS’s death) 2,000,000
Benefits from SSS 3,500,000
Proceeds of group insurance taken by LUCAS’s employer 1,750,000

Allowable deduction from gross estate of a decedent who died on or after January1, 2018:
a. Losses arising from calamities after settlement of the estate
b. Medical expenses
c. Optional standard deductions
d. None of the above

75. Situational 1 (TRAIN LAW) - Decedent was married at the time of death and was survived by his wife
and their five legitimate children when he was still alive. He died on November1,2018, leaving
the following:
Real and personal properties in the Philippines P 11,000,000
Proceeds of life insurance:
Receivable by the estate as revocable beneficiary 5,000,000
Receivable by the spouse as irrevocable beneficiary 3,900,000
Medical expenses within one year prior to death:
Paid by the time of death 500,000
Unpaid as at the time of death 400,000
Funeral expenses:
Paid by the time of death 200,000
Unpaid at the time of death 300,000
Other obligations of the decedent 1,500,000
The estate tax due is:
a. P225,000
b. P135,000
c. P114,000
d. P75,000

76. Situational 2 (TRAIN LAW) - Decedent was married at the time of death and was survived by his wife
and their five legitimate children when he was still alive. He died on November1,2018, leaving
the following:
Real and personal properties in the Philippines P 11,000,000
Proceeds of life insurance:
Receivable by the estate as revocable beneficiary 5,000,000
Receivable by the spouse as irrevocable beneficiary 3,900,000
Medical expenses within one year prior to death:
Paid by the time of death 500,000
Unpaid as at the time of death 400,000
Funeral expenses:
Paid by the time of death 200,000
Page 16 of 26
 Unpaid at the time of death 300,000
Other obligations of the decedent 1,500,000
The net distributable estate to the compulsory heirs is:
a. P13,575,000
b. P13,665,000
c. P13,686,000
d. P13,725,000

77. Situational 3 (TRAIN LAW) - Decedent was married at the time of death and was survived by his wife
and their five legitimate children when he was still alive. He died on November1,2018, leaving
the following:
Real and personal properties in the Philippines P 11,000,000
Proceeds of life insurance:
Receivable by the estate as revocable beneficiary 5,000,000
Receivable by the spouse as irrevocable beneficiary 3,900,000
Medical expenses within one year prior to death:
Paid by the time of death 500,000
Unpaid as at the time of death 400,000
Funeral expenses:
Paid by the time of death 200,000
Unpaid at the time of death 300,000
Other obligations of the decedent 1,500,000

What if after the burial of the decedent, in 2019 the surviving spouse renounces her entire
share of inheritance in favor of their five legitimate children, evenly? Will she be liable to
pay donor’s tax?
A. No, because no one of the five legitimate children-donees is put on a disadvantaged
position.
B. Yes, because there is in truth and in fact a valid donation she made and regardless of
whether the donees are related to her by blood or not.
C. No, because after all the donees are their legitimate children and irrespective of whether
one receives more or less than the share of the others in the inheritance after their
mother’s renunciation of her own share.
D. Yes, but only on the excess of her donated interest over and above the P250,000 exempt
gift during the calendar year.

78. Situational 5 (TRAIN LAW) - Decedent was married at the time of death and was survived by his wife
and their five legitimate children when he was still alive. He died on November1,2018, leaving
the following:
Real and personal properties in the Philippines P11,000,000
Proceeds of life insurance:
Receivable by the estate as revocable beneficiary 5,000,000
Receivable by the spouse as irrevocable beneficiary 3,900,000
Medical expenses within one year prior to death:
Paid by the time of death 500,000
Unpaid as at the time of death 400,000
Funeral expenses:
Paid by the time of death 200,000
Unpaid at the time of death 300,000
Other obligations of the decedent 1,500,000
Page 17 of 26
 What will be the donor’s tax due (if any)in 2019, if the surviving spouse
renunciationofherentireshareinthenetdistributableestateinheritanceisdonated60%totheiry
oungestchildinstead andtheremaining40%totheotherthreechildren?
A. P 779,500 C. P806,160
B. P 804,900 D. None, still exempt

79. Ambrocia, single, residing in Quezon City died on March 31, 2020. The following data were
provided by the Estate of Ambrocia:
(A) Net estate, Philippines = P200,000
(B) Net estate, S. Korea = P100,000
(C) Net estate, N. Korea = (P50,000)
(D) Net estate, China = P250,000
(I) Estate tax paid, S. Korea – P2,500
(II) Estate tax paid, N. Korea – P0
(III) Estate tax paid, China – P20,000.
How much was the estate tax credit for foreign estate taxes?
a. P18,000
b. P22,500
c. P17,500
d. None

80. Mr. Isaac single, a Canadian citizen but resident of Candelaria, Zambales, donated in 2018 his
car in Ukraine to his future daughter-in-law who is to be married to his only son in Ukraine. His
son and future daughter-in-law are both citizens and residents of Ukraine.
What is the tax implication of the above donation?
a. The donation is not subject to donor’s tax since the donee is a non-resident alien and the
donated property is located in Ukraine.
b. The donation is taxable, however, dowry exemption may be claimed as deduction.
c. The donation is taxable at 6% in excess of P250,000 without any deduction for dowry.
d. The donation is subject to graduated rates.

SITUATIONAL (ITEMS 81)

81. Lee Dong Seok, head of the family, died intestate on August 20, 2019 leaving the following
properties:
Land and house (family home) P8,000,000
Agricultural land inherited from his father who died 2 ½ 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
Obligation of and charges against certain properties follow:
Medical expenses of last illness (unpaid as of the time of death,
supported by bills and statements from hospital) P600,000
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 270,000
Unpaid mortgage on inherited agricultural land 30,000
Claims against insolvent persons 100,000
Page 18 of 26
 The value of the agricultural land at the time of inheritance was P500,000. It had an unpaid
mortgage of P80,000.
How much was the vanishing deduction?
a. 265,178
b. 259,811
c. 159,107
d. 318,214

82. A non-resident alien decedent can claim the following deductions:

Medical Expenses Standard Deduction Family home
a. Yes Yes Yes
b. Yes No No
c. No Yes No
d. No Yes Yes

83. Which of the following is allowed as a deduction from the gross estate of a non-resident alien
decedent?
a. Vanishing deduction
b. Standard deduction
c. Medical expenses
d. Family home

84. Antonio died on November 20, 2019. Some of the properties he left are the following:
Market Value
Mode of Date of Date Death of
Assets Acquisition Acquisition Acquired Antonio
Land Donation 07/03/2011 P500,000 P350,000
Car Purchase 10/02/2014 800,000 980,000
Other information:
 The gross estate of the decedent amounts to P3,000,000.
 The land was mortgaged for P50,000 which was deducted in prior estate and Antonio
paid the same before he died.
 The allowable deductions total P125,000, which includes medical expenses of P30,000.
It excludes bequest to a charitable institution in the amount of P50,000.
The vanishing deduction is:
a. P58,100
b. P57,500
c. P67,783
d. P67,083

SITUATIONAL (ITEMS 85 & 86)

85. Olivia, a resident citizen, single, died leaving the following properties with their fair market
value, charges and deductions
Property inherited 5 ½ years ago with a fair market value of
P1,000,000 when inherited P 2,800,000
Property acquired thru own labor 7,200,000
Actual funeral expenses 240,000
Judicial expenses 200,000
Claims against the estate:

Page 19 of 26
 Evidenced by a notarial loan agreement 400,000
Evidenced by a promissory note (not notarized) 200,000
The net taxable estate is
a. P4,600,000
b. P 4,200,000
c. P3,540,000
d. P 3,560,000

86. Olivia, a resident citizen, single, died leaving the following properties with their fair market
value, charges and deductions
Property inherited 5 ½ years ago with a fair market value of
P1,000,000 when inherited P 2,800,000
Property acquired thru own labor 7,200,000
Actual funeral expenses 240,000
Judicial expenses 200,000
Claims against the estate:
Evidenced by a notarial loan agreement 400,000
Evidenced by a promissory note (not notarized) 200,000
In relation with above data, ignoring estate tax, the net distributable estate is:
a. P 8,000,000
b. P 10,000,000
c. P 9,000,000
d. P 8,960,000

SITUATIONAL (ITEMS 87 & 88)

87. Marcos is a sole proprietor engaged in the distribution of various beautifying products. During
the year, he sold a parcel of land valued at P2,500,000 to his long time buddy, John, for only
P1,500,000. The property was purchased by Marcos two years ago at a cost of P1,200,000.
Determine the correct Donor’s tax due.
a. P 750,000
b. P 450,000
c. P 360,000
d. P 0

88. Marcos is a sole proprietor engaged in the distribution of various beautifying products. During
the year, he sold a parcel of land valued at P2,500,000 to his long time buddy, John, for only
P1,500,000. The property was purchased by Marcos two years ago at a cost of P1,200,000.
Assuming Marcos is a real estate dealer and the parcel of land sold is held for sale in the
ordinary course, determine the correct Donor’s tax due.
a. P 45,000
b. P 450,000
c. P 360,000
d. P 0

SITUATIONAL (ITEM 89)

89. Wilfredo is an operator of ten (10) buses with routes from Manila to Baguio and is likewise a
transportation contractor with three (3) freight trucks. For the taxable year 2019, he reported
gross receipts from his bus operations of P36,000,000. His gross receipts, however, from his
freight of goods or cargoes amounted only to P800,000 for the year.

Page 20 of 26
 Assuming Wilfredo is non-vat registered, how much is his total business tax due?
a. P1,080,000
b. P1,104,000
c. P1,176,000
d. P4,416,000

90. FIL-EKS CO. is a fast growing vat registered business. Due to its expanding workforce, it needed
a bigger office. It hired the services of a building contractor to construct a 25 storey building
for a contract price of P10 Million. It was agreed that FIL-EKS Corp. will procure the necessary
materials for the construction. For the month of January 2019, the records of FIL-EKS Corp.
pertaining to the construction showed the following:
Billings Payments
Services 1,000,000 700,000
Materials 650,000 500,000

Assuming it is the building contractor who will provide the materials, how much is the
creditable input tax?
a. 198,000
b. 180,000
c. 162,000
d. 144,000

91. Herman is a trader of poultry feeds. Determine his applicable business tax
a. Subject to 12% vat
b. Vat exempt but subject to 3% OPT under Section 116
c. 12% vat or 3% OPT, at his option
d. Exempt from 12% vat and OPT

SITUATIONAL (ITEM 92)

92. Geronimo, a vat taxpayer made a P100,000 sales to the government invoiced at P112,000
inclusive of output vat. He purchased the same for P90,000, net of P10,800 input vat from
Leopold Corporation. The government effected payment, net of the 5% final tax. The actual
input vat that will be charged to cost or expense is
a. 2,000
b. 3,800
c. 5,000
d. 7,000

SITUATIONAL (ITEMS 93 & 94)

93. CONRAD HOTEL, VAT registered, offers different services to its guests. The following data
taken from the books of the taxpayer are for the first month of the first quarter of 2020:
Revenues Collections
Hotel rooms (local guests) P 800,000 P 700,000
Dining hall:
Sale of food and refreshments 1,000,000 850,000
Sale of wine, beer and liquor 700,000 600,000
Disco
Sale of food and refreshments 600,000 550,000
Sale of wine, beer and liquor 500,000 450,000
How much is the output tax using 12% VAT rate?
a. P 432,000
Page 21 of 26
 b. P 378,000
c. P 258,000
d. None of the these

94. CONRAD HOTEL, VAT registered, offers different services to its guests. The following data
taken from the books of the taxpayer are for the first month of the first quarter of 2020:
Revenues Collections
Hotel rooms (local guests) P 800,000 P 700,000
Dining hall:
Sale of food and refreshments 1,000,000 850,000
Sale of wine, beer and liquor 700,000 600,000
Disco
Sale of food and refreshments 600,000 550,000
Sale of wine, beer and liquor 500,000 450,000
How much is the total amusement tax?
a. P 300,000
b. P 180,000
c. P 150,000
d. None of the these

95. A corporation with fiscal year ending September 30, 2020 should file its annual income tax
return on or before _____________.
a. February 15, 2021
b. April 15, 2021
c. November 29, 2020
d. January 15, 2021

96. Cho-Cho, a businessman, died on June 30, 2020. When is the deadline for filing of its 2020
final and adjusted income tax return?
a. August 29, 2020
b. October 15, 2020
c. April 15, 2021
d. December 31, 2020

97. In February 2020, Genius Corporation has applied for a change in accounting period from
calendar year to fiscal year ending March 31. Genius Corporation should file a short period
income tax return on or before ________________.
a. April 15, 2020
b. May 30, 2020
c. April 15, 2021
d. July 15, 2020

98. The following information was gathered pertaining to the business of a VAT-registered person
for a taxable period:
Taxable sales P800,000
Zero-rated sales 400,000
Exempt sales 300,000
Input tax – taxable sales 45,000
Input tax – zero-rated sales 10,000
Input tax – exempt sales 15,000

Page 22 of 26
 Input tax that cannot be attributed to any 20,000
transaction

Assuming all applicable input taxes are to be claimed as credits against output taxes, the VAT
payable is:
a. P51,000
b. P35,000
c. P25,000
d. P6,000

99. LOWKEY Corp. is engaged in the sale of goods and services with net sales and net revenue of
P200,000 and P100,000 respectively. The total entertainment, amusement and recreation
expense for the taxable quarter is P3,000. How much is the amount of the deductible
entertainment, amusement and recreation expense?
a. P1,000
b. P3,000
c. P2,000
d. P1,500

100. SSK INC. has the following sales during the month:
Sale to private entities (VAT inclusive) 224,000.00
Sale to export-oriented enterprise 100,000.00
Sale of exempt goods 100,000.00

The following input taxes were passed on by its VAT suppliers during the month:
Input tax on taxable goods 5,000.00
Input tax on zero-rate sales 3,000.00
Input tax on sale of exempt goods 2,000.00
Input tax on depreciable capital good not attributable
to any specific activity 20,000.00
The output VAT for the month:
a. 48,000
b. 36,000
c. 26,880
d. 24,000

101. Date taken from a VAT registered entity, inclusive of vat:

Sales to government 112,000
Regular Sales 350,000
Zero rated Sales 200,000
Exempt Sales 75,000
Purchases 532,000

How much is creditable withholding vat?

a. 12,000
b. 7,000
c. 5,000
d. Zero

Page 23 of 26
102. Date taken from a VAT registered entity, inclusive of vat:
Sales to government 112,000
Regular Sales 350,000
Zero rated Sales 200,000
Exempt Sales 75,000
Purchases 532,000
How much vat is charge to expenses?
a. 7,508
b. 2,500
c. 12,500
d. ZERO

103. Which of the following statement is not correct?

a. The Optional Standard Deduction (OSD) is not available against compensation income
arising out of an employer-employee relationship.
b. The election of Optional Standard Deduction (OSD) is irrevocable only for the quarter for
which the choice is made.
c. The Optional Standard Deduction (OSD) is an amount equal to forty percent (40%) of gross
income for corporations.
d. Unless the taxpayer signifies in his return his intention he shall be considered as having
availed of the itemized deduction.

104. Under the TRAIN Law, which of the following statements about Allowable Deductions is/are
TRUE for purposes of computing income tax?
I. A General Professional Partnership (GPP) may avail of the Optional Standard Deduction
(OSD) only once, either by the GPP or the partners comprising the partnership.
II. No deductions shall be allowed to individuals who opted to be taxed at 8% income tax
rate in their income from business/practice of profession.
III. If a partner of a GPP also derives other income from trade or business apart and distinct
from the share in the net income of the GPP, the deduction that can be claimed from
the other income would either be the itemized deduction or OSD.
a. I, II and III
b. I and II
c. II and III
d. I and III

105. Roberto Sabado, single, resident citizen, is engaged in a merchandising business. During the
year, he donated P100,000 to the local government to be used for public purpose. Sabado
had a net business income before contribution amounting to P1,100,000.
How much is the deductible charitable contribution of Sabado?
a. P110,000
b. P100,000
c. P 55,000
d. Zero

Use the following information for the next three questions:

On February 14, 2022, Mr. and Mrs. Ilustre donated residential land to their daughter on account
of her wedding to be celebrated on June 12, 2022. The FMV of the land at the time of donation
was P1,200,000 with an unpaid mortgage pf P300,000 to be assumed by their daughter. The
FMV of the land at the time of marriage was P1,300,000
Page 24 of 26
 On July 30, 2023, Mrs. Ilustre donated P700,000 to the sister of Mr. Ilustre who was diagnosed
with COVID-19. The donated amount was used for the medication of Mr. Ilustre’s sister.

On August 31, 2023, Mr. and Mrs. Ilustre sold 400,000 shares of ABC Corporation to their only
son for P400,000. The book value per share per latest audited financial statement of ABC
Corporation is P2.00 per share. The shares of stocks were acquired three years ago for P100,000.

106. How much is the donor’s tax still due of Mr. Ilustre on the February 14, 2022 transfer?
a. P12,000
b. P24,000
c. P40,500
d. P81,000

107. How much is the donor’s tax still due of Mrs. Ilustre on the July 30, 2023 transfer?
a. P7,500
b. P15,000
c. P27,000
d. P42,000

108. How much is the donor’s tax still due of Mr. Ilustre on the August 31, 2023 transfer?
a. P15,000
b. P12,000
c. P24,000
d. P0

109. Ms. Carol, 62 years old, was treated by her grandchildren X, Y and X to Subway Restaurant
during grandparent’s day and their total bill is P3,920. How much is the discount of the Senior
Citizen and the amount due and payable on the bill?
a. P196; P3,920
b. P175; P3,640
c. P700; P3,619
d. P784; P3,627

110. Mali-Mali, a businessman and a resident citizen, reported a net taxable loss of P200,000 (net
of P500,000 bad debts written-off in the previous year). In the current year, he reported a net
operating income of P100,000 before recovery of bad debts previously written-off amounting
to P300,000.

How much is the net taxable income of Mali-Mali for the current year?
a. P200,000
b. P400,000
c. Zero
d. P150,000

Page 25 of 26
111. BULGAR INC., a domestic corporation, had the following data for year 2022:
 Gross sales – P5,000,000
 Cost of sales – P3,500,000
 Business expenses – P800,000
How much is the net taxable income of the Corporation assuming optional standard
deduction is used?
a. P 700,000
b. P 900,000
c. P3,000,000
d. P4,400,000

Page 26 of 26