SCC

COLLEGE OF ACCOUNTANCY

ACCOUNTING ENHANCEMENT

MIDTERM LONG EXAMINATION TAXATION

1. Which of the following is not included in the gross estate of a resident decedent who is under conjugal partnership
of gains?
a. Land inherited during the marriage from the father who predeceased the decedent
b. Car revocably transferred by the decedent before he died to his son
c. Shares of stock inherited by the decedent’s surviving spouse during the marriage
d. Jewelry purchased during the marriage using the exclusive money of the decedent
2. One of the following is an intangible personal property situated in the Philippines
a. Franchise which is exercised in a foreign country
b. Shares, obligations or bonds issued by a corporation organized and constituted in the Philippines in
accordance with its laws
c. Shares, obligations or bonds issued by a foreign corporation 80% of the business of which is situated in the
Philippines
d. Shares or rights in a partnership established in Malaysia by Filipinos
3. Mr. Villegas transferred his properties to his relatives to provide independent income for them. This is an
example of
a. Transfer with retention of certain rights
b. Transfer passing under general power of appointment
c. Transfer for insufficient consideration
d. Transfer not in contemplation of death
4. Mr. Torres procured a life insurance upon his own life. He designated his nephew as a beneficiary. For estate
tax purposes, the proceeds of life insurance is
a. Included in the gross estate of Mr. Torres because when a relative is a beneficiary the designation is always
revocable
b. Not included in the gross estate of Mr. Torres because the designation of the beneficiary is not clear
c. Included in the gross estate of Mr. Torres because the designation of the beneficiary is not clear, hence, it
is revocable
d. Not included in the gross estate because, as a rule, proceeds of life insurance are generally not subject to
estate tax
5. Mr. Bangkay dies leaving a residential lot in an exclusive subdivision. The value per tax declaration and the
zonal value at the time of death are P3,000,000 and P4,000,000 respectively. An adjacent lot is sold by another
lot owner for P5,000,000 on the date Mr. Bangkay dies. For estate tax purposes, the value that shall be included
in the gross estate of the decedent is:
a. P3,000,000 b. P4,000,000 c. P5,000,000 d. none of the choices
6. A decedent dies on January 15, 2016. The interment is on January 31, 2016. The gross estate of the decedent
is P4,000,000. The following expenses are presented to you:
Expenses during the wake borne by relatives and friends P 30,000
Mourning clothing of the widow and unmarried minor children 20,000
Obituary notice in a newspaper 50,000
Card of thanks published in a newspaper 30,000
Burial plot 80,000
Flowers placed on the burial plot on February 14, 2016 5,000
Expenses on the 40th day after death on February 23, 2016 15,000
Accountant’s fee in gathering the assets of decedent on Feb 15, 2016 50,000
Lawyer’s fee in representing the estate in case filed on Aug. 15, 2016 70,000
Executor’s fee:
January 15, 2016 to July 15, 2016 120,000
July 16, 2016 to December 31, 2016 120,000 240,000

The deductible funeral expenses are:

a. P150,000 b. P180,000 c. P200,000 d. none of the choices
7. The deductible judicial expenses are:
a. P360,000 b. P240,000 c. P170,000 d. none of the choices
8. The following taxes are claimed as deduction from the gross estate of a decedent who dies on July 1, 2016.
Income tax on income earned from January 1, 2016 to June 30, 2016 100,000
Income tax on income earned from July 1, 2016 to December 31, 2016 120,000
Real estate tax paid, January 1 to June 30, 2016 50,000
Unpaid real estate tax, July 1 to December 31, 2016 50,000
Unpaid property tax, January 1 to June 30, 2016 60,000

The correct amount of deductible taxes shall be:

a. P380,000 b. P210,000 c. P170,000 d. none of the choices
9. Which of the following shall be allowed as deduction from the gross estate of a non-resident alien decedent?
a. Family home deduction c. standard deduction
b. Medical expenses d. transfer for public use
10. The estate tax is paid:
a. Six months following the death of the decedent
b. On the day an administrator is appointed by the court
c. As the return is filed
d. After the tax due is properly determined
11. The decedent, a married man with asurviving spouse under the conjugal partnership of gains, with the following
data died on March 1, 2016:
 Real Properties:
Family lot acquired by the decedent before marriage, FMV P 500,000
Family house built using the salary earned by the surviving spouse
During marriage, FMV 900,000
Coconut farm inherited by the surviving spouse during marriage, FMV 100,000
Banana plantation, FMV 800,000

Personal Properties:
Decedent’s Bank deposit representing salary earned before marriage 150,000
Gold necklace acquired during marriage using exclusive money of
Surviving spouse 120,000
Several pieces of jewelry acquired using the exclusive money of decedent 300,000

The following expenses/deductions are claimed:

Funeral expenses (40% shouldered by relatives) 100,000
Judicial expenses (including P50,000 lawyer’s fee incurred on
September 5, 2016-02-11 120,000
A piece of jewelry lost through theft on September 15, 2016 50,000
Gambling DEBTS of the decedent 70,000
Claims against insolvent debtor (25% can be collected) 80,000
Unpaid realty (coconut farm) tax for the 3 quarters of 2016 150,000
Medical expenses 600,000

How much is the conjugal properties?

a. P1,780,000 b. P1,700,000 c. P900,000 d. None of the choices
12. How much is the exclusive properties?
a. P950,000 b. P650,000 c. P450,000 d. None of the choices
13. How much is the family home deduction?
a. P1,000,000 b. P950,000 c. P700,000 d. None of the choices
14. How much is the total ordinary deductions?
a. P460,000 b. P360,000 c. P260,000 d. None of the choices
15. How much is the taxable net estate?
a. P225,000 b. P175,000 c. P125,000 d. P775,000
16. One of the following is not allowed as deduction from the gross gifts of a non-resident alien donor
a. Gifts made to or for the use of the National Government
b. Gifts made on account of marriage
c. Gifts made in favour of a religious corporation
d. Encumbrance on the property donated assumed by the done
17. Which of the following inter vivos transfers is not subject to donor’s tax?
a. Transfer for insufficient consideration of a personal car
b. Transfer for insufficient consideration of a residential house and lot
c. Transfer for insufficient consideration of an apartment house
d. Transfer of real property by a real estate dealer to a son who is getting married
18. Donation is completed:
a. When the done accepts the donation and the acceptance is made known to the donor
b. When the property donated is delivered actually or constructively to the donee
c. When the donor’s tax is finally paid
d. When it is determined that the donor has the capacity to make donations
19. Which of the following statements is incorrect when a conjugal property is donated?
a. The husband and wife shall be considered as separate and distinct taxpayers for purposes of donor’s tax
b. If what was donated is a conjugal property and only the husband signed the Deed of Donation, there is only
one donor for donor’s tax purposes, without prejudice to the right of the wife to question the validity of the
donation without her consent pursuant to the pertinent provisions of the Civil Code of the Philippines and
the Family Code of the Philippines
c. Neither spouse may donate any community property or conjugal property without the consent of the other
and this is without any exception
d. The husband and wife may each claim the dowry deduction if the donation of conjugal property is made on
account of marriage of a legitimate child
20. Donor’s return shall be filed within:
a. 30 days after the donor executes a Deed of donation
b. 30 days after the date the gift is made
c. 6 months after the date the gift is made
d. 30 days after the donor pays the donor’s tax
21. The spouses POGI and SEXY wanted to donate a parcel of land to their daughter Yona who is getting married in
December 2011. The parcel of land has a zonal valuation of P420,000. What is the most efficient mode of
donating the property?
a. The spouses should first donate in 2011 a portion of the property valued at P20,000 then spread the
P400,000 equally for 2012, 2013, 2014 and 2015
b. Spread the donation over a period of 5 years by the spouses donating P100,000 each year from 2011 to
2015
c. The spouses should each donate a P110,000 portion of the value of the property in 2011 then each donate
P100,000 in 2012
d. The spouses should each donate a P100,000 portion of the value of the property in 2011, and another
P100,000 each in 2012. Then, in 2013, SEXY should donate the remaining P20,000.
22. POGI donated P110,000 to his friend Umal who was getting married. POGI gave no other gift during the calendar
year. What is the donor’s tax implication on POGI’s donation?
a. The P100,000 portion of the donation is exempt since given in consideration of marriage
b. A P10,000 portion of the donation is exempt being donation in consideration of marriage
 c. POGI shall pay a 30% donor’s tax on the P110,000 donation
d. The P100,000 portion of the donation is exempt under the tabular rate for donor’s tax
23. A restaurant owner who sells food and drinks in his restaurant is
a. A seller of goods
b. A seller of services
c. A seller of both goods and services
d. Not subject to VAT
24. A VAT-registered store owner who sells different VAT-subject goods decide to replace is old store furniture and
equipment. He sells them as pre-owned store furniture and equipment. The sale is:
a. Not subject to VAT because he is not a dealer of store furniture and equipment
b. Subject to VAT because the sale of store furniture and equipment falls under the definition of “in the course
of trade or business”
c. Not subject to VAT because the store furniture and equipment may be fully depreciated
d. Subject to VAT because he is considered a dealer of store furniture and equipment
25. In case where output tax is greater than the input tax, the difference will be recognized as a:
a. Current liability
b. Current asset
c. Deductible expense
d. Miscellaneous income
26. First statement: Only Vat-registered taxpayers are required to pay VAT.
Second statement: Taxpayers whose annual gross sales or receipts exceed the VAT threshold amount are
required to pay VAT in all cases.
a. Both statements are correct
b. Both statements are incorrect
c. Only the first statement is correct
d. Only the second statement is correct
27. A VAT-registered taxpayer is able to harness wind to produce power which he sells to the community. This is an
example of a:
a. VAT-exempt transaction
b. Zero-rated VAT-subject transaction
c. VAT-subject transaction subject to the 12% VAT
d. Transaction subject to percentage tax
28. A VAT-registered lessor of apartment houses has the following gross rentals for the first quarter of the current
year:
Gross rentals of 30 units at P10,000 per month per unit P3,600,000
Gross rentals of 5 units at P12,900 per month per unit P774,000

The VAT-registered lessor of apartment houses shall be:

a. Subject to VAT on his gross rentals of P4,374,000
b. Subject to VAT on his gross rentals of P774,000
c. Subject to VAT on his gross rentals of P3,600,000
d. Exempt from VAT on his total gross rentals
29. Which of the following is a creditable input tax?
a. VAT on importation of goods for personal use
b. VAT on unpaid bill on services rendered by a VAT-registered service-provider
c. VAT on purchase on account of goods evidenced by a VAT invoice
d. VAT on purchase of furniture for use in the residential house of a VAT-registered person
30. The following transactions during the month of January 2016 are recorded in the books of a VAT-registered
taxpayer:
Purchase of 3 office equipments at P150,000 each
Purchase of 5 office furnitures at P50,000 each
Importation of vehicle for transport used in business, P1,500,000

Based on the above data:

a. The total input taxes on the above transactions shall be amortized
b. The input tax on office equipment and office furniture shall be credited in full
c. Only the VAT on importation of vehicle for land transport shall be amortized
d. The total input taxes on the above transactions may be amortized or credited in full depending on the choice
of the taxpayer
31. Which of the following is allowed presumptive input tax?
a. Manufacturer of raw sugar
b. Manufacturer of packed instant champorado
c. Processor of canned fruits
d. Processor of sardines, mackerel and milk
32. The quarterly VAT return is filed:
a. Within 20 days following the end of the quarter
b. Within 25 days following the end of the quarter
c. Within 60 days following the end of the quarter
d. When the VAT payable is finally determined
33. A VAT-registered real estate dealer sold the following during the month of January 2016:
One residential lot valued at P 2,000,000
Two adjacent condominium units covered by separate titles sold to
One buyer, each units is valued at P1,500,000 (exclusive of two
Parking lots valued at P300,000 each) 3,000,000
He also had the following acquisitions during the month:
Domestic purchase of supplies, net of VAT 100,000
Domestic purchase of three units of office computers valued at
P50,000 each, net of VAT (4 years estimated useful life) 150,000
 Importation of one vehicle for land transport used in business
(5 years estimated life) 2,500,000
Maintenance expenses, vehicle for land transport, net of VAT 70,000
Office rental, net of VAT 100,000

How much is the Output VAT?

a. P672,000 b. P600,000 c. P312,000 d. none of the choices
34. How much is the creditable input tax on vehicle for land transport?
a. P300,000 b. P120,000 c. P5,000 d. none
35. How much is the total creditable input taxes?
a. P330,000 b. P150,000 c. P30,000 d. P42,000
36. How much is the VAT payable?
a. P450,000 b. P282,000 c. P270,000 d. none of the choices