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TAX 2021 - Theories and Independent Problems
TAX 2021 - Theories and Independent Problems
DISCLAIMER: Not of all these questions are the exact questions itself on the said
CPALE but the concept behind those questions, exists HERE. The importance of the
concept/rationale is important. Padayon, future CPA’s!
P.S. Wag maniniwala sa chismis (BOA yern). Always believe in your preparation and
your efforts will never betray you. ^^
5. Mr. SMALL TIME’s piece of land measuring 500 sq. meters in Makati City was
assessed as commercial with a fair market value of P20,000 per sq. m. How much is
the highest possible amount of annual basic real property tax can be collected
from him?
A. P20,000
B. P40,000
C. P50,000
D. P100,000
6. PETRON INC. Installed underground tanks in its depot for the storage of its
oil and petroleum products. The City of Cebu assessed Petron for real property
tax on land and on the storage tanks. (Caltex Phil. Inc. VS. CBAA 114 SCRA 296)
A. Petron is not taxable.
B. Petron is taxable on the land only.
C. Petron is taxable on the storage tanks.
D. Petron is taxable both to the land and storage tanks.
7. The President of the Philippines and the Prime Minister of Japan entered into
an executive agreement on a loan facility to the Philippines from Japan whereby
it was stipulated that interest on loans granted by private Japanese financial
institutions in the Philippines shall not be subject to Philippine income tax
laws. What basic characteristic of taxation has been violated by this agreement?
a. Theoretical justice
b. Inherent limitation
c. Legislative in character
d. Constitutional limitation
8. Joseph provided the following data on sale of his personal property sold in
2021 held by him for 15 months:
Cost P225,000
Mortgage assumed by the buyer 270,000
Installment collection schedule:
2021 67,500
2022 67,500
2023 45,000
13. Zion Shoe’s head office is located in Ortigas, Pasig City. However, its
manufacturing plant is in Taytay, Rizal. As the company accountant you were asked
by Zion where to pay the 2% local business tax. Zion’s gross receipts is P10
million.
30% and 70%
A. Pay P200,000 at Taytay, Rizal
B. Pay P200,000 at Ortigas, Pasig City
C. Pay P60,000 at Ortigas, Pasig City and P140,000 at Taytay, Rizal
D. Pay P140,000 at Ortigas, Pasig City and P60,000 at Taytay, Rizal
14. If the taxpayer fails to respond within fifteen (15) days from the date of
receipt of the PAN, he shall be considered in default, in which case, what shall
be issued calling for payment of the taxpayer’s deficiency tax liability, inclusive
of the applicable penalties?
A. Final Assesment Notice
B. Notice of Informal Conference
C. Subpoena Duces Tecum
D. Formal letter of demand and assessment notice
16. If a sale of real property is made on February 28, the DST is required to be
paid on ______ shall be filed 5 days after the close of the month
A. February 28
B. March 5
C. March 26
D. March 28
20. S1: Domestic air carriers may be subject to common carrier’s tax on certain
transactions.
S2: Domestic air carriers may be subject to franchise tax on certain transactions.
A. Only S1 is true
B. Only S2 is true
C. Both statements are true
D. Both statements are not true
22. Tyra Banks, a banking institution, had the following transactions for the
taxable month:
26. 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.
31. What is the basis of the documentary stamp tax to be imposed when one of the
contracting parties on the sale of property is the Government?
a. Consideration contracted to be paid for such realty.
b. Actual consideration
c. Consideration contracted or its FMV, whichever is higher
d. Consideration contracted or its FMV, whichever is lower.
32. On April 15, 2017, Yummerz Corporation paid cash dividends to its
stockholders, as follows:
Cash dividends paid
1) Resident Citizens 10% P1,800,000
2) Resident Aliens 10% 600,000
3) Non-resident Citizens 10% 300,000
4) Non-resident aliens
a. Engaged in business in the Philippines 20% 320,000
b. Not engaged in business in the Philippines 25% 120,000
5) Domestic Corporations exempt 1,400,000
6) Foreign Corporations
a. Resident exempt 600,000
b. Non-resident 15% 85,000
How much should Delicious remit to the BIR as final withholding tax on the
dividends paid to its stockholders?
a. P376,750
b. P389,500
c. P435,000
d. P509,000
SOLUTION:
33. A taxpayer gives the following reasons for refusing to pay a tax. Which of
his reasons is not acceptable for legally refusing to pay the tax?
a. That he has been deprived of due process of law.
b. That there is lack of territorial jurisdiction.
c. That the prescriptive period for the tax has elapsed.
d. That he will derive no benefit from the tax.
35. One of the following deductions physically diminishes the gross estate of the
decedent.
A. Standard deduction
B. Family home deduction
C. Vanishing deduction
D. Claims against the estate
37. On April 15, 2017, the BIR discovered a deficiency VAT equivalent to ¼ of the
VAT due for the quarter ended September 2010. If the BIR will send an assessment
notice, which of the following is correct?
a. The taxpayer should protest to the CIR within 30 days from receipt, otherwise
the assessment becomes final and executor.
b. The BIR must send the assessment notice on or before April 15, 2020.
c. The BIR must send the assessment notice on or before April 15, 2027
d. The tax payer can just ignore the assessment and may donate the amount involved
to the BIR.
41. Which of the following statements is incorrect in connection with excise tax?
A. Should domestic products be removed from the place of production without the
payment of the tax, the owner or person having possession thereof shall be liable
for the tax due thereon.
B. Unless otherwise specifically allowed, the return shall be filed and the excise
tax paid by the manufacturer or producer before removal of domestic products from
place of production.
C. Except as the Commissioner otherwise permits, the return shall be filed with and
the tax paid to any authorised agent bank or Revenue Collection Officer, or duly
authorised City or Municipal Treasurer in the Philippines.
D. Unless otherwise provided, the price, including the value-added tax, at which
the goods are sold at wholesale in the place of production or through their sales
agents to the public shall constitute the gross selling price.
42. X Company has been assessed deficiency income tax of P1,000,000, exclusive of
interest and surcharge, for taxable year 2015. The tax liability has remained unpaid
despite the lapse of June 30, 2017, the deadline for payment stated in the notice
and demand issued by the Commissioner. Payment was made by the taxpayer only on
February 10, 2018. How much is the total amount due on February 10, 2018?
a. P1,762,962.67
b. P1,491,643.83
c. P1,662,140.76
d. None of the choices
The double imposition of both deficiency and delinquency interest under Section
249 of the Tax Code prior to its amendment will still apply in so far as the
period between the date prescribed for payment until December 31, 2017.
43. The following are tax incentives afforded to micro business enterprises, except
a. Priority to a special credit window set up specifically for the financing
requirements of MBEs.
b. Exemption from the coverage of the minimum wage law, however its employees are
still entitled to the same social security and health care benefits as other
employees.
c. Exemption from income tax of all income arising from the operations of the
enterprises.
d. Technology transfer, production and management training, and marketing assistance
programs for MBE beneficiaries.
I – An applicant for a CPA Licensure Examination who is a resident of Cebu City may
validly secure community tax certificate in Davao City.
II – The community tax certificate for 2021 can still be validly used in filing the
income tax return on March 10, 2020.
III – An unemployed Filipino with seven children whose only source of livelihood
is to work in his own rice field measuring 1,000 square meters may be required to
pay community tax.
Statement I is incorrect.
45. Ms. Pina Asa bought a piece of land in Caloocan City in 2019. Thereafter she
discovered that it has unpaid real property tax for the year 2018. Is Ms. K. Wawa
liable to pay the unpaid real property tax for 2018?
a. Yes, because as the new owner, it will not be registered in her name.
b. Yes, because the buyer assumes the responsibility carried from the previous
owner.
c. No, because the real property tax attaches to the property. Therefore, it is the
property itself which is liable.
d. No, because the real property tax attaches to the property and is chargeable
against the person with actual or beneficial use and possession of the property
regardless of whether or not he is the owner.
46. Notwithstanding any contrary provision of R.A. No. 1405 and other general or
special laws, the Commissioner of Internal Revenue is authorized to inquire into
bank deposit:
47. . If at any time prior to the consummation of the sale all proper charges
are paid to the officer conducting the sale, the goods or effects
distrained:
a. shall be restored to the owner.
b. shall no longer be restored to the owner.
c. shall be brought to the Revenue District Officer.
d. shall be brought to the Regional District Officer.
48. Under the TRAIN, how much of the net estate is exempt from estate tax?
A. P100,000 and below
B. P250,000 and below
C. P500,000 and below
D. None
49. For taxable year 2021, ECB Corp. incurred interest expense of P500,000 on its
bank loan. For the year, its gross assets amounted to P50,000,000, exclusive of the
land of P7,100,000. It registered a gross income of P10,000,000 and incurred
operating expenses of P6,000,000, inclusive of interest expense. It had interest
income earned for the same year amounting to P15,000. How much is the allowable
interest expense?
a. P500,000
b. P470,000
c. P150,000
d. None of the choices
Since the corporation’s taxable income did not exceed P5,000,000 and its total
assets did not exceed P100,000,000, exclusive of the land, the corporate income tax
(CIT) is 20%, and the final tax on interest income is also at 20%. There is no
interest arbitrage.
50. A certificate issued granting the authority to the registered BMBE to operate
and be entitled to the benefits and privileges accorded thereto
a. Certificate of Authority
b. BIR Certification of Registration
c. Certificate of Incorporation
d. DTI Certificate of Registration
51. Research and development expenses treated as a deferred expense shall be allowed
as deduction ratably distributed over a period of
a. Not more than 60 months beginning with the month in which the taxpayer first
realizes benefits from such expenditure
b. Not less than 60 months beginning with the month in which the taxpayer first
realizes benefits from such expenditure
c. Not less than 30 months beginning with the month in which the taxpayer first
realizes benefits from such expenditure
d. Not less than 6 months beginning with the month in which the taxpayer first
realizes benefits from such expenditure
a. Both I and II
b. Neither I nor II
c. I only
d. II only
54. 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
55. The Estate of Mang Tomas has the following condensed data:
58. For requests for reconsideration, the taxpayer shall submit all relevant
supporting documents in support of his protest within how many days from the date
of filing of his letter of protest, otherwise, the assessment shall become final?
a. 60 days request for reinvestigation
b. 30 days
c. 20 days
d. None of the above
59. EMZ Corporation, a domestic corporation, owns 20% of the outstanding shares of
CHZ Corporation, a non-resident foreign corporation (NRFC), since August 1, 2015.
On June 30, 2021, it received dividends amounting to P1,000,000 from the said NRFC.
EMZ Corporation utilized P800,000 for its dividend payments. On January 1, 2023,
it utilized the remaining P200,000 for its working capital. How much is tax-exempt
dividend?
a. P1,000,000
b. P800,000
c. P200,000
d. None of the choices
61. Which of the following shall not be exempt from donor’s tax?
a. Donation to the Integrated Bar of the Philippines (IBP)
b. Donation of parcel of land to the Government made by a Philippine Corporation
to be used as relocation site for the less fortunate
c. Donation to parish church where not more than 30% of the said gifts shall be
used by the parish church for administration purposes
d. Donation to a political party which failed to file a return of contributions
with the COMELEC
62. During an unusually strong typhoon in 2019, a warehouse was destroyed. The
owner filed a claim of P1,000,000, the book value of the warehouse, against the
insurance company. The insurance company was willing to pay P600,000. Finally,
the claim was settled in 2021 for P750,000, the insurance company paying that
amount in the same year. When would the loss of P250,000 be deductible?
a. 2019
b. 2020
c. 2021
d. 2022
64. Mang Andoks sa Baliwag sells roasted chicken to customers who eat inside its
restaurant and to those who take out the roasted chicken.
Statement I – The sale of roasted chicken to customers who eat in its restaurant
is subject to VAT.
Statement II – The sale of roasted chicken to customers who take them out is
exempt from VAT.
65. Is the transfer of LUGI’s properties to the liquidator subject to income tax,
VAT, and donor’s tax?
a. No, No, No
b. Yes, Yes, Yes
c. No, Yes, No
d. Yes, Yes, No
Income Tax – no; transfer of assets from corporation to the liquidator does not
give rise to any income.
VAT – no; not in the ordinary course of business, not a transaction deemed sale
Donor’s Tax – no; no donative intent on the part of the corporation, done
pursuant to court order
66. Is the transfer of LUGI’s properties to its shareholders as liquidating
dividend subject to the ordinary income tax and to VAT?
a. No, No
b. Yes, Yes
c. No, Yes
d. Yes, No
67. For the donation to be considered valid, acceptance of the donation must be
made:
A. during the lifetime of the donor only.
B. during the lifetime of the donee only.
C. during the lifetime of the donor and the donee.
D. none of the above
68. Imposition of fixed license fee for the sale of Bible and other religious
items is a violation of
a. exemption of non-profit organization from taxation
b. non-infringement of religious freedom
c. exemption of religious organization from property taxation
d. no appropriation for religious freedom
69. 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 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.
71. Receipt or invoice is issued, at least in duplicate, at the time the transaction
is effected for each sale or transfer of merchandise or for services rendered valued
at
a. P50 or more
b. P100 or more
c. P200 or more
d. P250 or more
72. Which statements is/are correct?
I – Equal protection of the law is the right of every taxpayer to be heard
II – Equality is the same as progressive taxation Equitability
Equitability
a. True, true
b. True, false
c. False, true
d. False, false
73. Which of the following is not included in the term “gross selling price”?
A. Total amount of money or its equivalent paid by the purchaser
B. Delivery, freight and insurance paid by the purchaser
C. Value-added tax passed on by the seller to the buyer
D. Excise tax
74. In what cases may the minimum compromise rate of 10% be imposed?
I – The taxpayer is suffering from a net worth deficit taken from the latest
audited financial statements
II – The taxpayer’s compensation with no other source of income and the family’s
gross monthly compensation does not exceed P10,500 per month if single; P21,000
per month if married.
III – The taxpayer is suffering from surplus/earnings deficit resulting to
impairment in the original capital by at least 50%.
76. The MCIT shall apply to which of the following resident foreign corporations?
I. International carrier
II. Offshore banking units (OBUs)
III. Regional operating headquarters
77. A VAT-registered domestic carrier operating air, land and sea transport
equipment acquired vehicles for use in its operation to transport goods and cargoes.
The domestic carrier:
a. can claim input taxes on the said acquisitions.
b. cannot claim input taxes on the said acquisitions.
c. can claim input taxes only on the acquisitions of air and sea transport vehicles.
d. can claim input taxes only on the acquisition of land transport vehicles.
82. The books of account are required to be audited and examined yearly by an
independent CPA if the gross quarterly sales, earnings, receipts or output
exceed:
a. P5,000,000
b. P3,000,000
c. P2,500,000
d. P1,500,000
83. 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.
84. Which of the following statements is wrong on corporations?
a. Domestic corporations, in general, are subject to a tax rate of twenty-five
percent (25%) effective July 1, 2020, on income derived from all sources within and
outside the Philippines
b. Proprietary educational institutions and hospitals which are nonprofit shall pay
a tax of one percent (1%) on their taxable income from all sources within and
outside the Philippines beginning July 1, 2020, until June 30, 2023, provided that
gross income from ‘unrelated activities’ exceeds fifty percent (50%) of the total
gross income derived from all sources
c. Resident foreign corporations are subject to a tax rate of twenty-five percent
(25%) effective July 1, 2020, on income derived from sources within the Philippines
d. Domestic corporations with net taxable income not exceeding Five Million Pesos
(P5,000,000) and total assets not exceeding One Hundred Million (P100,000,000),
excluding the land on which the particular business entity’s office, plant and
equipment are situated, are subject to a tax rate of twenty percent (20%) effective
July 1, 2020
85. Which of the following transactions in the course of trade or business requires
actual payment of VAT before an input tax is allowed as tax credit from the output
tax?
a. Purchase of services
b. Transactions deemed sale
c. Domestic purchase of goods for use as raw materials supplied in the sale of
services
d. Domestic purchase of goods for use in trade or business for which deduction
for depreciation or amortization is allowed under the Tax Code
86. Hidilyn Marcial won the gold in the boxing lightweight division in the recently
concluded Olympic Games. By virtue of this single honor, she brought to the country,
he was given P1M by a car dealer course thru the National Sports Commission.
a. True, true
b. True, false
c. False, true
d. False, false
a. II and III
b. I and II
c. III only
d. I only
88. The Withholding Tax System was devised for the following reasons, except:
a. To provide the taxpayer a convenient manner to meet his probable income tax
liability.
b. To ensure the collection of the income tax.
c. To improve the government’s cash flow.
d. To do away with the filing of income tax returns.
For numbers 89 and 90:
The decedent is a married man with a surviving spouse with the following data:
Conjugal real properties P6,000,000
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
91. Which of the following sales to senior citizens shall not be exempt from VAT?
A. Sale of food, drinks, dessert and other consumable items served by the
establishments, including value-meals and promotional meals, offered for
consumption of the general public.
B. Sale of single serving seat meals with beverage for an individual senior citizen.
C. Bulk orders which are within the context of pre-contracted or pre-arranged group
meals or packages.
D. Sale of medicines from drug stores, hospital pharmacies, medical and optical
clinics and similar establishments including non-traditional outlets dispensing
medicines.
92. The following are the requisites for vanishing deduction to be allowable,
except
a. The estate tax of the prior succession must have been finally determined and
paid.
b. The present decedent died within five years from date of death of the prior
decedent.
c. The property with respect to which deduction is sought can be identified as
having been received by the present decedent from the prior decedent.
d. The property must have formed part of the gross estate situated outside the
Philippines of the prior decedent.
95. Mr. Kalan Say, a cemetery lot dealer sold real properties to different buyers
as follows:
Selling Price Cost
House & Lot P2,000,000 P1,250,000
Farm Lot P800,000 P300,000
Cemetery Lot P 45,000 P20,000
The house and lot was Mr. Kalan Say’s principal residence that was sold to
reacquire a new principal residence noting that the entire proceeds thereof was
utilized. What is Mr. Kalan Say’s capital gains tax?
a. P 48,000
b. P 50,700
c. P170,700
d. P168,000
96. Which is incorrect with respect to DST on original issue of shares of stock?
a. Par value stocks: P2.00 on every P200 or fractional part of the par value
b. No par value stocks: P2.00 on every P200 of the actual consideration
c. Stock dividends: Not subject to DST
d. None of the above
97. During the taxable year 2022, a domestic corporation may be held liable to
pay the following corporate income tax
I. Regular Corporate income tax of 25% or 20%
II. Capital gains tax on sale of shares of stocks of a domestic corporation at
15% of capital gains
III. Minimum Corporate Income Tax of 1%
IV. Improperly accumulated earnings tax of 10%
a. I or III, II and IV
b. I and III, II and IV
c. I, II and IV
d. I or III and II
98. This refers to any person who is required to register under the provisions of
the Tax Code but failed to register.
a. VAT – registered person
b. VAT – registrable person
c. Vat – exempt person
d. None of the above
99. When an indebtedness is cancelled without any service rendered by the debtor
in favor of the creditor, the forgiveness of debt will result to
a. taxable income
b. distribution of dividend
c. taxable indirect donation
d. taxable estate
100. Which of the following statements is incorrect?
a. Domestic corporations are subject to income tax based on net income from all
sources
b. Resident foreign corporations are subject to income tax based on net income from
sources within the Philippines
c. Non-resident foreign corporations are subject to income tax based on gross income
from sources within the Philippines
d. Proprietary educational institutions and hospitals for non-profit are subject
to income tax based on gross income from sources within the Philippines at a tax
rate of 10% beginning July 1, 2020 until June 30, 2023 (1%)
101. 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
B. P334,800
C. P313,200
D. None of the choices (OPT, total gross receipts subject to VAT does not exceed 3M)
102. In case the available cash of the estate is insufficient to pay the total
estate tax due, payment by installment shall be allowed:
a. Within two years from the statutory date for its payment without civil penalty
and interest.
b. Within two years from the statutory date for its payment with civil penalty and
interest.
c. Within one year from the statutory date for its payment without civil penalty
and interest.
d. Within six months from the statutory date for its payment without civil penalty
and interest.
103. Misty’s income from leasing his property reaches the maximum rate of tax under
the law. She donated one-half of his said property to a non-stock, non-profit
educational institution whose income and assets are actually, directly and
exclusively used for educational purposes, and therefore qualified for tax exemption
under Article XIV, Section 4 (3) of the Constitution and Section 30 (h) of the Tax
Code. Having thus transferred a portion of his said asset, Misty succeeded in paying
a lesser tax on the rental income derived from his property. Is there tax avoidance
or tax evasion?
a. There is tax avoidance. Misty has exploited a fully permissible alternative
method to reduce his income tax by transferring part of her rental income to a tax-
exempt entity through a donation of one-half of the income producing property.
b. There is tax evasion. Misty has exploited a non-permissible alternative method
to reduce her income tax by transferring part of his rental income to a tax exempt
entity through a donation of one-half of the income producing property.
c. There is tax dodging
d. None of the choices
104. Which of the following is not one of the benefits of a barangay micro business
enterprise (BMBE) under BMBE Act of 2002?
a. Exemption from the coverage of the Minimum Wage Law
b. Priority to special credit window set up specifically for the financing of BMBEs
c. Exemption from national and local internal revenue taxes
d. Technology transfer, production and management training, and marketing assistance
programs for BMBE beneficiaries
105. Which of the following is not one of the changes under the CREATE Law and
Bayanihan Act II?
a. Nondeductible interest expense was reduced from 33% to 20% of interest income
b. NOLCO incurred during taxable years 2020 and 2021 can be carried over for 5
years
c. Additional deduction can be claimed amounting to ½ of the value of labor training
expenses
d. Stock transactions tax of 6/10 of 1% has been repealed under the Bayanihan Act
II effective September 15, 2020
106. Which is not subject to local amusement tax under the Local Government Code?
a. Operators of theaters
b. Lessees of cinemas
c. Proprietors of boxing stadia
d. Operators of resorts
a. I and II
b. I and III
c. II and III
d. II and IV
108. Which stage of taxation will the legislative department be involved with?
a. Levy
b. Assessment
c. Collection
d. Imprisonment
110. Which of the following is not one of the activities eligible for PEZA
registration?
a. Export manufacturing
b. Logistics and warehousing services
c. Facilities providers
d. Public infrastructures
112. DITO Communication, a telecommunication company, has its only office in Baguio
City, Benguet. Which is correct?
a. DITO Communication shall pay franchise tax in Baguio City and in the Province
of Benguet
b. DITO Communication shall pay franchise tax only in Baguio City
c. DITO Communication shall pay franchise tax only in the Province of Benguet
d. DITO Communication shall pay franchise tax in Baguio City and in the Province
of Benguet
115. To record application of excess MCIT vs. NORMAL income tax, what account is
credited:
a. Income tax payable
b. Cash in bank
c. Retained earnings
d. Deferred charges MCIT
117. What are the means employed in the assessment of taxes, EXCEPT?
a. Examination of tax returns
b. Inventory taking surveillance and use of presumptions gross sales or receipts
c. Prescription of real property values
d. Examination of bank deposits
118. Consider the following statements:
A. A special assessment is an enforced proportional contribution from the owners
of real
property especially or peculiarly benefited by public instruments
B. The power of eminent domain maybe exercised even by the private entities while
the power of taxation and police power maybe exercised only by the government
C. Unlike tax, a debt draws interest, if stipulated
D. The police power, power of taxation and power of eminent domain being fundamental
powers of the state maybe exercised by the government even without any
constitutional grant
120. A resident citizen had a family home in the Philippines. He worked abroad and
was temporarily absent from his family home when he died. The executor of the estate
inquired from you whether or not to claim family home deduction from the gross
estate for Philippine estate tax purposes. What would you tell him?
a. The estate would not be allowed family home deduction because he was abroad when
he died.
b. The estate would not be allowed family home deduction because he was a non-
resident citizen when he died.
c. The estate would be allowed family home deduction because actual occupancy of
the family home was not interrupted or abandoned because of his temporary absence.
d. The estate would be allowed family home deduction because all decedents were
allowed family home deduction.
121. 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, 2019
b. August 20, 2018 and September 20, 2018
c. November 20, 2017 and December 20, 2017
d. December 20, 2017 and January 20, 2018
122. Mr. Jose San Jose owns a restaurant. His gross receipts for the for the first
month of the current year is P1,000,000. He asks you if he is required to register
under the VAT system. What will your advice be?
a. Mr. San Jose is not required to register under the VAT system because owners of
restaurant are generally exempted from VAT.
b. Mr. San Jose has to register under the VAT system because there is a reasonable
ground to believe that his gross receipts will exceed the VAT threshold amount
during the 12-month period.
c. Mr. San Jose may or may not register under the VAT system because it is not
clear that his gross receipts will exceed the VAT threshold amount during the year.
d. Mr. San Jose is not required to register under the VAT system because his gross
receipts will not exceed the VAT threshold amount during the year.
123. Consider the following
124. The Board of Directors of Dieya Corporation received a subpoena from the DOJ
involving fraudulent tax return. Because of the gravity of the offense, your legal
advice was sought as to whose signature must appear on the withholding tax returns
and face the possibility of being criminally liable in case of fraud?
a. President and Treasurer
b. President and Corporate Secretary
c. Treasurer and Corporate Secretary
d. Chairman and Chief Accountant
125. A non-profit hospital has the following data for the current calendar year:
* Tax rate is 25% because income from unrelated activities exceeds 50%
(13,000,000/22,000,000 = 59%) and taxable net income exceeds P5,000,000.00.
Abo Gado, a VAT-registered CPA received the following in 2019 (amounts are net of
VAT, if applicable).
Salary P360,000
Overtime pay 40,000
Holiday pay 20,000
13th month pay 30,000
Cash payment made by clients 880,000
Retainer fee of Php 10,000 per month from clients 2,000,000
Out of pocket expenses to be reimbursed by clients 50,000
Capital gains from sale of jewelry 10,000
128. A VAT-registered hotel owner contends that the sale of fresh fruits and
other agricultural food products to the hotel guests is not subject to VAT. Is his
contention correct?
a. Yes. His contention is correct because, as a rule, the sale agricultural products
is exempt from VAT.
b. No. His contention is incorrect because the sale of the agricultural products
is incidental to the sale of services of the hotel.
c. Yes. His contention is correct because his gross receipts may not exceed the VAT
threshold amount.
d. No. His contention is not correct but requires a clear BIR ruling.
129. Mr. Julian Reyes, transfers his car to his nephew on a condition that he passes
the CPA Licensure Examination. The nephew tops the CPA Licensure Examination. The
transfer is subject to:
a. Estate tax.
b. Donor’s tax.
c. Either donor’s tax or estate tax.
d. Neither donor’s tax nor estate tax.
Compute the corporation’s income tax due for the taxable year?
a. P866,667
b. P1,200,000
c. P800,000
d. None of the above
RCIT:
2/12 200,000 + 10/12 666,667 = 866,667
MCIT:
2/12 21,667 + 10/12 54,167 = 75,833
132. Manneh Paksiw is a Filipino world boxing champion. He will defend his crown
in Manila against the Thai challenger, Sawah Dikha. The boxing exhibition is
promoted by Unipak Promotions wholly owned by Filipinos. You are asked by the
promoters whether or not the boxing exhibition shall be subject to amusement tax
in the Philippines. What will your answer be?
a. The boxing exhibition is subject to Philippine amusement tax because only one
of the contenders is a Filipino.
b. The boxing exhibition is subject to Philippine VAT because boxing involves
professional boxers rendering service using physical faculty.
c. The boxing exhibition is not subject to Philippine amusement tax because one of
the contenders is a Filipino, involves world championship and is promoted by a
corporation wholly owned by Filipinos.
d. The boxing exhibition is not subject to Philippine amusement tax if a special
law is passed exempting such exhibition from the tax.
133. Under the TRAIN, the donor’s tax for gifts given to stranger 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.
Gross Income:
From business P2,200,000
Rent 1,500,000
Cost of Sales 1,000,000
Operating Expenses 700,000
Real properties 18,000,000
134. How much is the additional community tax, if individual?
a. Php 3,700
b. Php 5,600
c. Php 4,700
d. Php 21,700
134 – (2,200,000 + 1,500,000 + 1,000,000)/1,000 x 1 = P4,700 Php1 for every 1,000 of receipts
135 – (4,700,000 + 18,000,000)/5,000 x 2 = P9,080 Php2 for every 5,000 of receipts inc. properties
136. As a rule, Corporate Income Tax rate for year 2020 is?
a. 20%
b. 25%
c. 27.5%
d. 30%
137. . A corporation may change its taxable year to calendar or fiscal year in
filing its annual income tax return, provided
a. It seeks prior BIR approval of its proposed change in the accounting period.
b. It simultaneously seeks BIR approval of its new account period immediately after
the close of the taxable year.
c. It should change its accounting period two years prior to changing its taxable
year.
d. Its constitution and by-laws authorizes the change.
138. An unmarried decedent died leaving properties he inherited 4.5 years ago which
had fair market value of P800,000 at the time of his death (P650,000 at the time
of inheritance, and unpaid mortgage of P50,000, P20,000 of which paid by the present
decedent before he died). Other properties in his gross estate had fair market
value of P1,000,000. The total expenses, losses, indebtedness, taxes and transfer
for public purpose amounted to P300,000. How much was the vanishing deduction?
a. P225,000
b. P108,333
c. P102,900
d. P100,000
139. If the taxpayer is adversely affected by the resolution of the CTA in Division
on his Motion for Reconsideration, he may file a petition for review with the CTA
en banc within how many days?
a. 60 days
b. 30 days
c. 20 days
d. 15 days
140. All taxpayers are required to preserve their books of accounts, including
subsidiary books and other accounting records, for a period of how many years
reckoned from the day following the deadline in filing a return, or if filed after
the deadline, from the date of the filing of the return, for the taxable year when
the last entry was made in the books of accounts.
a. 20 years
b. 15 years
c. 10 years
d. 5 years
“Come unto me, all you who are weary and burdened, and I will give you rest.”
Matthew 11:28