QUIZ BEE QUESTIONS

A. EASY

1. Which is not false? A non-resident citizen is a Filipino:

a. who establishes the fact of his physical presence abroad with a definite intention to be a citizen therein
b. who leaves the Philippines to reside abroad, either as an immigrant or for employment on a temporary
basis
c. who works and derives income from abroad and whose employment thereat requires him/her to be
physically present abroad most of the time
d. All the statements are false.

Answer: B

2. A non-resident alien can be the following except one:

a. A Chinese who engages in trade or business

b. A Japanese national who stays in the Philippines for 180 days
c. A Filipino who speaks Korean and goes out of the Philippines for more than 183 days
d. An American businessman who goes to the Philippine for a business trip

Answer: C

3. Who among the following is considered a qualified dependent?

a. 19-year old son, currently employed as a Manager at San Miguel Corporation

b. Daughter who just turned 21 this year and got married in the previous year
c. 16-year old son, making money by doing assignments of her classmates
d. Self-employed but dependent with parents for her lavish lifestyle

Answer: C

4. All the following individuals are taxable based only on their Philippine-source income, except one:

a. Resident citizen engaged in business

b. Non-resident citizen
c. Non-resident alien
d. Resident alien

Answer: A

5. Which of the following is not an exclusion or deduction in the computation of the net taxable compensation
income of an employee?

a. Basic personal exemption

b. Ordinary and necessary business expenses
c. SSS/PhilHealth/HDMF contributions
d. Bonus not exceeding Php30,000

Answer: B

6. Which is not a de minimis benefit?

a. Rice subsidy of Php1,500 or 1 sack of 50-kg. rice per month amounting to not more than Php1,500
b. Monetized unused sick leave credits of private employees not exceeding 10 days during the year
c. Uniform and clothing allowance not exceeding P5,000 per annum
 d. Laundry allowance not exceeding P300 per month

Answer: B

7. Which of these statements are true?

Statement 1
The deadline for filing the individual income tax return is 15 th day of April of each year covering the
preceding taxable year.

Statement 2
An individual may opt to file his tax return on two (2) equal installments if his tax due is more than
Php2,000.

Statement 3
Filipinos employed foreign embassies and other international organizations such as Asian Development
Bank (ADB) are exempt from tax.

a. Only statements 1 and 2.

b. Only statements 2 and 3.
c. Only statements 1 and 3.
d. Statements 1, 2 and 3.

Answer: D

8. The preferential tax rate applicable to employees occupying managerial or technical positions in a Regional
headquarters (RHQ) or Regional Operating Headquarters (ROHQ) of a foreign entity in the Philippines is:

a. 15% on net taxable income

b. 25% on gross taxable income
c. 15% on gross taxable income
d. 5%-32% on net taxable income

Answer: C

9. Which statement(s) is/are correct?

Statement 1
In the case of two or more trusts created by different grantors but with the same beneficiary, the taxable
income of all trusts shall be consolidated, and the tax shall be computed based on the consolidated income.

Statement 2
General Professional Partnerships are subject to improperly accumulated earnings tax.

a. Statement 1 is correct
b. Statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer: D

10. Which of the following may reduce the taxable estate but not the inheritance?
a. Claims against the estate
b. Judicial expense
c. Family home
d. Unpaid mortgage

Answer: C
11. Estate tax accrues from the time of:
a. Death of the decedent
b. Filing of the estate tax return
c. Filing of the notice of death
d. Confirmation of death by the relatives of the decedent

Answer: A

12. In 2012, a rich philanthropist decided to donate P5 million to a non-stock, non-profit school provided the
money shall be used for paying the salaries and benefits of the administrative personnel. The donation only
accounts for less than 10% of the philanthropist’s taxable income for the year. Is he subject to donor’s tax?
a. No, because the donation does not exceed 10% of his taxable income for 2010.
b. No, since the donation is actually, directly, and exclusively used for educational purposes.
c. Yes, because he did not obtain the requisite NGO certification before he made the donation.
d. Yes, since the donation is to be wholly used for administration purposes.

Answer: D

13. This may be subject to donor’s tax. Donation to:

a. Social welfare, cultural and charitable institution
b. Ramon Magsaysay Foundation
c. Integrated Bar of the Philippines
d. National Social Action Council

Answer: A

14. A corporation includes:

a. A joint venture or consortium for engaging in petroleum, coal, geothermal and other energy operations
pursuant to an operating consortium agreement under a service contract with the government
b. A general professional partnership formed by persons for the sole purpose of exercising their common
profession
c. A joint venture formed for the purpose of undertaking construction projects
d. A joint account company in which one interests himself in the business of another by contributing
capital thereto, and sharing the profits or losses in the proportion agreed upon

Answer: D

15. Which of the following is exempt from tax?

a. Dividends received by a resident foreign corporation from a domestic corporation
b. Dividends received by a domestic corporation from a resident foreign corporation
c. Share of an individual in the distributable net income after tax of a partnership of which he is a partner
d. Inter-corporate dividends received by a non-resident foreign corporation from a domestic corporation

Answer: A

16. Lots being rented but subsequently sold shall now be classified as:
a. Capital assets
b. Ordinary assets
c. Fixed assets
d. Liquid assets

Answer: B

17. All prizes and awards granted to athletes in local and international sports competitions and tournaments
sanctioned by their national sports associations shall be:
a. Subject to Section 24(A)
b. Subject to final withholding tax
c. Exempt from income tax
d. Exempt from final withholding tax
Answer: C

18. Which is a requisite for the deductibility of business expenses?

a. The expenses are ordinary and unnecessary.
b. The expenses are paid or incurred during the past year.
c. The expenses are directly attributable to the development, management, operation and/or conduct
of trade or business.
d. As long as business related, the expenses do not necessarily have to be substantiated with sufficient
evidence, such as official receipts.
Answer: C

19. Which of the following statements is false?

a. A tax law is still valid even if it violates the principle of fiscal adequacy.
b. A tax law is invalid if it violates the principle of theoretical justice.
c. Equitable taxation is not mandated by the constitution; however, taxes must still be considered just,
reasonable and fair.
d. There is no law that requires compliance with the principle of administrative feasibility.

Answer: C

20. Which of the following statements is true about the inherent powers of the state?
a. Taxation is not subject to constitutional prohibition against the impairment of the obligations of contract.
b. The power of eminent domain is superior to the impairment prohibition.
c. There is no direct and immediate benefit derived from the state’s police power but only such as may arise
from the maintenance of a healthy economic standard of society.
d. The power of eminent domain is not legislative in nature and character.

Answer: C

21. Josie, single, owns an idle land that has not been used for her business since two years ago. Consequently,
she decided to sell the land to one of her close friends at a price of P528,000. If the zonal value is
P880,000, how much is the donor’s tax due on the transfer?
a. 105,600
b. 8,080
c. None
d. 158,400

Answer: C

22. The following are allowed to claim foreign tax credit for income tax payments, except:
a. Partnerships
b. Estates
c. Resident foreign corporation
d. Domestic corporations

Answer: C

23. What is the applicable Percentage Tax rate under Section 116 (Tax on Persons Exempt from Value-added
Tax) of the 1997 Tax Code as amended?
a. 1%
b. 3%
c. 5%
d. 12%

Answer: b)

24. Persons liable to pay Percentage Tax shall manually file a quarterly return (BIR form 2551Q) on the amount
of his gross sales, receipts or earnings and pay the tax due thereon within:
a. Five (5) days after the end of each taxable quarter.
b. Twenty (20) days after the end of each taxable quarter.
c. Ten (10) days after the end of each taxable quarter.
 d. Twenty five (25) days after the end of each taxable quarter.

Answer: b)

25. All persons subject to an internal revenue tax shall, for each sale and transfer of merchandise or for services
rendered, valued at ___________ or more, shall issue duly registered receipts or sales commercial
invoices, prepared at least in duplicate showing the date of transaction, quantity, unit cost and description
of merchandise or nature of services.
a. P100
b. P50
c. P25
d. P10

Answer: c)

26. How much is the annual registration fee for every separate or distinct establishment or place of business,
including facility types where sales transactions occur shall be paid by a taxpayer upon registration and
every year thereafter on or before the last day of January?:
a. P1,000
b. P300
c. P500
d. P200

Answer: c)

27. Which of the following taxes is not allowed as deductible expense for income tax purposes:
a. Percentage Tax
b. Local Business Tax
c. Community Tax
d. Withholding Tax

Answer: D

28. How much is the maximum compromise penalty for failure to keep or preserve records required by law or
tax regulations?
a. P25,000
b. P50,000
c. P100,000
d. P5,000

Answer: B

29. What is the applicable percentage in computing the interest on deficiency taxes?
a. 20%
b. 25%
c. 50%
d. 100%

Answer: A

30. Taxpayer B is a taxi operator in Metro Manila. The total gross receipts of his two taxis for the first quarter
of 2013, is P 110,000. How much is the applicable percentage tax?
a. P5,500
b. P11,000
c. P3,300
d. P8,250

Answer: c)

31. Annual inventory listing must be submitted to the BIR, how many days after the end of the taxable year?
a. 30 days
 b. 60 days
c. 90 days
d. 120 days

Answer: a)
B. AVERAGE

1. The following individuals are required to file an income tax return, except:

a. Non-resident alien engaged in trade or business

b. Non-resident alien not engaged in trade or business
c. Resident citizen
d. Non-resident citizen

Answer: B

2. A person who earns both compensation and business income:

a. Is allowed to deduct business-related expenses on his business income

b. Can no longer claim personal and additional exemption
c. Is allowed to use the optional standard deduction with respect to his business and compensation
income
d. Is taxable only on the compensation income

Answer: A

3. Which of these two (2) statement(s) is/are correct?

Statement 1
A cash prize of Php10,000 received by a resident alien shall be subject to graduated tax rates of 5-32%.

Statement 2
Prizes amounting to P20,000 received by a non-resident alien engaged in trade or business shall be subject
to 25% final tax.

a. Statement 1 is correct
b. Statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer: A

4. Which of these two (2) statement(s) is/are correct?

Statement 1
Any contributions made by an employee to Social Security Systems shall be excluded from its gross
compensation income.

Statement 2
All individuals earning purely compensation income shall be allowed to claim Php30,000 bonus exemption.

a. Statement 1 is correct.
b. Statement 2 is correct.
c. Both statements are correct.
d. Both statements are incorrect.

Answer: D

5. Junnel, a resident citizen of the Philippines has the following income information for taxable year 2013:

Gross sales Php50 million

Cost of sales 30 million
Business expenses 10 million
 If Junnel elected optional standard deduction, his net taxable income for 2013 would be:

a. Php 7,950,000
b. Php 29,950,000
c. Php 11,950,000
d. Php 12 million

Answer: B

6. Which is correct?

a. A resident citizen is taxed at graduated rates of 5-32% based on the net taxable income.
b. A non-resident alien engaged in trade or business is taxed at a flat rate of 25% based on gross taxable
income.
c. A resident alien is taxed based on his worldwide income.
d. All is correct

Answer: A

7. Fringe benefits granted to rank and file employees are generally subject to:

a. Fringe benefits tax

b. Donor’s tax
c. Compensation tax
d. None of the above

Answer: C

8. JR’s residence was totally destroyed by fire. The property had an adjusted basis and a fair market value of
Php130,000 before the fire. During 2013, he received insurance reimbursement of Php120,000 for the
destruction of his home. His 2013 adjusted gross income was Php70,000 and had no casualty gains. What
amount of the fire loss was he entitled to claim as an itemized deduction on his income tax return?

a. Php 10,000
b. Php 130,000
c. Php 0
d. Php 50,000

Answer: C

9. Compute for the annual withholding tax due of a married individual earning purely compensation income
with two (2) dependents. Income details are as follows:

Basic salary: Php450,000

Overtime: 17,000
Bonus: 25,000
Rice subsidy: 18,000
SSS/HDMF/PhilHealth contributions: 11,700

a. Php 94,490
b. Php 81,590
c. Php 80,090
d. Php 96,590

Answer: B

10. Rodolfo had the following transactions in ABC Corporation’s ordinary shares classified as capital asset:
 January 10, 2013 Purchased 9,000 shares at P50 per share
January 20, 2013 Purchased 5,000 shares at P50 per share
February 10, 2013 Purchased 5,000 shares at P45 per share
February 14, 2013 Sold 8,000 shares at P40 per share (FIFO)

Compute for the nondeductible capital loss for the month of February.

a. Php 80,000
b. Php 64,000
c. Php 16,000
d. Php 0

Answer: B

11. Katherine, married and has a two (2)-year old child, has the following income information for the current
year:

Salaries (no bonus) Php 200,000

Sales 1,440,000
Cost of Goods Sold 660,000
Deductions:
Operating expenses 440,000
Contributions:
- To the Philippine government
priority project in education 12,000
- To accredited non-stock, non-profit organization
established for charitable purposes 42,000
Other income:
Gross rental 84,000

Compute the income tax payable of Katherine.

a. Php 133,960
b. Php 131,400
c. Php 123,500
d. Php 129,760

Answer: D

12. In a transfer in contemplation of death, revocable transfer and transfer under a general power of
appointment, certain rules are observed in determining the amount to be included in the gross estate.
Which of these is not one of the said rules?
a. If the transfer was in the nature of a bona fide sale for an adequate and full consideration in money or
money’s worth, no value shall be included in the gross estate.
b. If there was no consideration received on the transfer as in donation mortis causa, the value to include
in the gross estate shall be the fair market value of the property at the time of the decedent’s death
c. If the consideration received on the transfer was less than adequate and full, the value to include in the
gross estate shall be the excess of the fair market value of the property at the time of decedent’s death
over the consideration received.
d. If there was no consideration received on the transfer as in donation inter-vivos, the value to include in
the gross estate shall be the fair market value of the property at the time of transfer.

Answer: D

13. A resident citizen died testate on September 25, 2014. Included in his gross estate are properties inherited
from his deceased father who died on January 6, 2012. What percentage of deduction will be used in
computing the amount of vanishing deduction?
a. 80% of the value taken as basis for vanishing deduction
b. 60% of the value taken as basis for vanishing deduction
c. 40% of the value taken as basis for vanishing deduction
 d. 20% of the value taken as basis for vanishing deduction

Answer: B

14. Rey owns a commercial land which he acquired several years ago for P2 million. On December 29, 2012, he
donated the land to his son, Jacob. At that time, the land was worth P11.5 million but the zonal value was
only P6 million. Later on, Jacob sold the land to a buyer for P12 million. How much is the gain on the sale?
a. 10 million
b. 6 million
c. 0.5 million
d. 9.5 million

Answer: A

15. Which of the following is not considered a “deemed sale”?

a. Merchandise inventory left upon cessation of business
b. Distribution of inventory to shareholders as share in the profits
c. Consignment of goods if not sold within 60 days
d. Installment sale of real property

Answer: D

16. Which one is not included in the tax base of VAT on importation?
a. Customs duties
b. Excise tax
c. Other charges before the release of imported goods from the Bureau of Customs
d. Freight charges from the BOC to the importer’s warehouse

Answer: D

17. Which of the following taxpayers is not allowed to claim Optional Standard Deduction or OSD under RA
9504 in lieu of the itemized deductions?
a. resident and non-resident citizen
b. resident alien
c. taxable estate and trust
d. non-resident alien engaged in trade or business

Answer: D

18. A non-resident foreign corporation has the following income and expenses for the year 2012.
Philippines Singapore
Gross income P800,000 P665,000
Expenses 525,000 480,000
Interest on bank deposit 32,000
How much is the income tax due?
a. 92,100
b. 82,500
c. 249,600
d. 147,600

Answer: C

19. Promissory notes or other evidence of indebtedness received in payment for services, and not merely as
security for such payment, constitute income in the amount of their:
a. Maturity value
b. Face value
c. Fair market value
d. Future value

Answer: C
20. The principle of theoretical justice as one of the characteristics of a sound tax system was originally laid
down by an economist in 1776. This principle states that the subjects of every state ought to contribute
towards the support of the government in proportion to their respective abilities, that is, in proportion to
the revenue which they enjoy under the protection of the state. Who is the economist who developed the
original canons of taxation?
a. John Maynard Keynes
b. Adam Smith
c. David Ricardo
d. Alfred Marshall

Answer: B

21. Alex filed his income tax return and at the same time paid the tax due on his compensation for the taxable
year 2009 on March 30, 2010. On April 15, 2013, Alex received an assessment notice and demand letter
dated March 29, 2013. If the return is not considered false and fraudulent, can the taxpayer raise the
defense of prescription?
a. No. The three-year prescriptive period started to run on April 15, 2010; hence, it has not yet expired on
April 15, 2013.
b. Yes. The three-year prescriptive period started to run on April 15, 2010; hence, it had already expired
by April 15, 2013.
c. No. The three-year prescriptive period started to run on March 30, 2010; hence, the period had not yet
expired on March 29, 2013.
d. Yes. The three-year prescriptive period started to run on March 30, 2010; hence, the period had expired
by April 15, 2013.

Answer: A

22. If a taxpayer received an adverse decision from the Commissioner of Internal Revenue regarding its claim
for refund of unutilized input VAT, within what period may the taxpayer seek relief from the Court of Tax
Appeals by filing a Petition for Review?
a. Within 30 days from receipt of the denial of his application
b. Within 30 days from receipt of the denial of his application which must not exceed two (2) years from
payment of income tax
c. Within 2 years from payment of the income taxes sought to be refunded
d. Within 30 days from the lapse of the 120-day period given to the Commissioner to act on the claim

Answer: A

23. Manual filers of BIR form 2550M are required to file the tax return not later than, how many days at the
end of each month?
a. 10 days
b. 20 days
c. 25 days
d. 30 days

Answer: b)

24. All books of accounts, including the subsidiary books and other accounting records of corporations,
partnerships, or persons, shall be preserved by them for a period beginning from the last entry in each book
until the last day prescribed under Section 203 of the Tax Code –
a. One (1) year
b. Three (3) years
c. Five (5) years
d. Ten (10) years

Answer: b)

25. Which of the following is NOT subject to Percentage Tax:

a. Domestic carriers and keepers of garages.
b. Franchisees.
c. Banks and non-bank financial intermediaries performing quisi-banking functions.
 d. Lease of motion picture films, films, tapes and discs.

Answer: d)

26. Corporations, companies, partnerships or persons whose gross quarterly sales earnings, receipts or output
exceeded:
a. P250,000
b. P500,000
c. P1,000,000
d. 150,000

shall have its books of accounts audited and examined yearly by Independent Certified Public Accountant
(CPA).

Answer: d)

27. The Bureau of Internal Revenue (BIR) collects the following taxes except:
a. Final withholding Tax
b. Branch Profit Remittance Tax
c. Community Tax
d. Excise Tax

Answer: c)

28. If the deficiency expanded withholding tax is P125,000, how much would be the applicable compromise
penalty ?
a. P12,000
b. P16,000
c. P20,000
d. P25,000

Answer: b)

29. What is the percentage of the required surcharge for deficiency taxes?
a. 20%
b. 25%
c. 50%
d. 100%

Answer: b)

30. Taxpayer A is a transportation operator of a public utility jeepney plying the route, Quiapo to Kamuning.
How much would be the total percentage tax to be paid by Taxpayer A with details of his receipts for the
first two quarters of 2013:
First quarter – P60,000
Second quarter – P70,000
a. P 3,900
b. P2,100
c. P6,500
d. P1,950

Answer: b) First quarter receipt of P60,000 is below the minimum quarterly gross receipt limit of P65, 700.

31. Which of the following is NOT required to be attached with the annual corporate income tax return (BIR
form 1702) once manually filed with the BIR –
a. Statement of management responsibility for Annual Income Tax Return.
b. Certificate of creditable tax withheld at source (BIR form 2307).
c. Supplemental form (schedule 4) for taxpayers with multiple activities per tax regime.
d. Minimum corporate income tax certificate.

Answer: d)
32. In case of wilful neglect to file the tax return within the period prescribed by the Tax Code, a taxpayer shall
be subject to a surcharge on the deficiency tax of –
a. 25%
b. 5%
c. 50%
d. 100%

Answer: c)

33. In case a Group B taxpayer has been registered with the BIR thru the electronic Filing and Payment System
(e-FPS), when would be its due date when e-filing its monthly VAT return?
a. Twenty Five (25) days following the end of the month.
b. Twenty Four (24) days following the end of the month.
c. Twenty Three (23) days following the end of the month.
d. Twenty Two (22) days following the end of the month.

Answer: b)
C. DIFFICULT

1. Kristine, a Filipino citizen is a broker of houses and lots. During the year, he was able to sell an office
building for a total consideration of Php5 million. Which of the following statements are correct?

a. The sale is subject to 6% capital gains tax based on the selling price or fair market value of the property,
whichever is higher.
b. The sale is subject to a creditable withholding tax of 6% based on the total consideration.
c. The sale is subject to income tax.
d. The sale is subject to 20% final tax.

Answer: B/C

2. Which of the two (2) cases below is/are correct?

Case 1
Rodolfo, engaged in rental business, sold his five (5)-door apartment for Php10 million. The monthly rental
per unit is P20,000. This sale is subject to capital gains tax.

Case 2
Jose bought a lot for Php6 million, in which he intended to construct his dream house. After 10 years, he
abandoned his plan and subdivided the lot to three parts (Lots A, B and C). He sold Lot A for Php3 million.
Lots B and C are held in inventory. The sale is subject to capital gains tax.

a. Statement 1 is correct
b. Statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer: D

3. Geraldine, a Filipino, single and with no relatives, has the following data for the year:

Compensation income (inclusive of Php 20,000 bonus) Php250,000

Loss from stocks becoming worthless 100,000
Transportation expense 50,000
Health insurance premium 3,000

The total deductible amount from her gross income for ITR purposes would be:

a. Php72,400
b. Php80,000
c. Php52,400
d. Php53,000

Answer: A

4. Spouses Ann and Leo, with 6 dependent children, have the following data in 2012:

Ann Leo
Gross compensation income (Assume no bonus) Php125,000 Php60,000
Rent income 76,000
Royalties on books 70,000
Withholding tax on compensation 10,000 4,000

During the year, they earned a revenue of Php120,000 and incurred expenses of P65,000, which cannot be
identified as solely earned and incurred either of the spouses. Assuming all withholding taxes are correctly
withheld and remitted to the Bureau of Internal Revenue, compute for the respective net taxable income of
Ann and Leo.
 Ann Leo
a. Php 82,500 107,500
b. Php 78,500 37,500
c. Php 82,500 37,500
d. Php 78,500 107,500

Answer: B

5. A general professional partnership (GPP) has a net distributable income of Php 5 million. Chel, one of the
partners has a share of 55% on the GPP’s income. Apart from this, she also earned compensation income
(inclusive of Php 200,000 bonus) of Php 2,000,000 as an employee in another company.

Chel also incurred expenses in relation to the conduct of her profession, which were not claimed as expense
by the GPP amounting to Php20,000. Assume that the GPP elected OSD, compute for the tax due of Chel.

a. P 1,459,400
b. P 1,107,400
c. P 1,453,000
d. P 1,101,000

Answer: A

6. Which of the following statements is/are correct?

Statement 1
A non-resident alien engaged in trade or business is covered by the substituted filing regulation of the BIR.

Statement 2
Compensation income earned by Minimum Wage Earners (MWE) exempt from tax includes, among others,
overtime pay, holiday pay, night shift differential pay, and hazard pay.

a. Statement 1 is correct.
b. Statement 2 is correct.
c. Both statements are correct.
d. Both statements are incorrect.

Answer: B

7. Kristine is the accountant of PxC Company. During the year, she prepared the below journal entry:

DR. Fringe benefit expense Php750,000

CR. Cash Php574,000
CR. FBT Payable 176,000

Note that all fringe benefits are lumped under the fringe benefit expense account. Analyze the above entry
and determine how much of the monetary value was given to rank and file.

a. Php 374,000
b. Php 176,000
c. Php 200,000
d. Php 574,000

Answer: C

8. Reese sold her principal residential house costing Php 6 million for Php 10 million. She has informed the
BIR Commissioner within 30 days of her intention to avail of the tax exemption. She utilized only Php 8
million of the total proceeds. What is the basis of the new principal residence?
 a. Php 6 million
b. Php 4.8 million
c. Php 8 million
d. Php 10 million

Answer: B

9. Melissa, a non-resident alien not engaged in trade or business leased an aircraft to Cebu Pacific for 3 years.
Melissa’s gross receipts for 2012 for this lease agreement is Php5 million. Calculate her tax due.

a. Php 750,000
b. Php 450,000
c. Php 2.5 million
d. Php 1.25 million

Answer: C

10. Loren, an Indian national, was on a short-term assignment in the Philippines from October 1-December 31,
2012. He was granted foreign shares on April 1, 2013 on account of his assignment. His equity income
details are as follows:

Number of shares: 1,000

FMV per share: US$15
US$1 = Php42

Calculate his 2013 Philippine tax due:

a. Php 0
b. Php 157,500
c. Php 166,600
d. Php 141,000

Answer: B

11. A non-resident alien died, leaving behind properties in the Philippines and the US amounting to P600,000
and P400,000, respectively. Actual funeral expenses incurred in the Philippines totaled P20,000, while
that in the US amounted to P10,000. How much is the deductible funeral expense?
a. 18,000
b. 30,000
c. 20,000
d. 50,000

Answer: A

12. XYZ Enterprises has the following sales during the month of April:
Sales to ABC Corporation, a private entity P112,000
Sale to an export-oriented enterprise P100,000
Sale of exempt goods P50,000
The following input taxes were passed on by its VAT-registered suppliers during the same month:
Input tax on taxable goods P3,000
Input tax on zero-rated sales P1,000
Input tax on sale of exempt goods P2,000
Input tax on depreciable capital good not
attributable to any specific activity P10,000

What is the VAT payable for the month?

a. 8,000
b. 4,000
c. 0
 d. 2,000

Answer: B

13. Which of the following is exempt from VAT?

a. Sale of professional instruments and implements, wearing apparel, domestic animals and personal
household effect
b. Sale of non-food marine and forest products in their original state
c. Sale of passenger or cargo vessels and aircraft, including engine, equipment and spare parts thereof for
domestic or international transport operations
d. Importation by persons who are not VAT-registered

Answer: C

14. MNO Corporation sold a parcel of land to XYZ Company on September 3, 2012 for P1,000,000, plus output
VAT, with a monthly installment payment of P10,000.00, plus output VAT. The zonal value of the subject
property at the time of sale amounted to P1,500,000. What is the output tax due on the installment
payment?
a. P1,800
b. P800
c. P1,200
d. 0

Answer: A

15. Which is an incorrect statement about the minimum corporate income tax (MCIT)?
a. Revenue regulations No. 12-2007 provides that the gross income to be used in computing the MCIT
shall include all income earned or realized during the taxable year.
b. Corporations under special economic zones including areas administered by the Bases Conversion
Development Authority are subject to MCIT.
c. The Secretary of Finance is authorized to suspend the imposition of MCIT on any corporation due to
losses from prolonged labor disputes.
d. Excess MCIT from previous taxable years shall not be allowed as credit against the current year’s
quarterly MCIT due.

Answer: B

16. A private educational institution owns a building used for its normal operations. During the year, its income
and operating expenses amounted to P3,400,000 and P1,250,000, respectively. Also, the school incurred
costs of P1,800,000 in constructing a new facility with an estimated useful life of 6 years. If the new facility
is to be capitalized and depreciated, how much is the income tax due for the year?
a. 185,000
b. 35,000
c. 555,000
d. 105,000

Answer: A

17. All of these taxpayers are required to file and pay under the electronic filing and payment system, except:
a. A taxpayer whose percentage tax payments amounts to more than P100,000 per quarter
b. A corporation with paid-up capital of P1,000,000 and above
c. A corporation registered with the Board of Investments
d. A corporation with gross receipts totaling P1 billion per year

Answer: B

18. XYZ Corporation, a publicly-listed entity has 1,000,000 issued and outstanding shares as of January 1,
2013. Of these shares, only 90,000 shares is currently held by the public which is less than the 10%
minimum public ownership required by the Philippine Stock Exchange. The subsequent sale by XYZ Corp.
of 50,000 of its unissued shares shall be subject to:
 a. stock transaction tax of ½ of 1% of the gross selling price or gross value in money of the shares of
stock
b. 5% or 10% final tax on the net capital gains
c. stock transaction tax of ½ of 1% of the par value of the shares of stock
d. 5% or 10% final tax on the gross selling price

Answer: B

19. When one of the contracting parties to a sale of realty is the Government, the documentary stamp tax
imposed shall be based on the:
a. Consideration contracted to be paid for such realty
b. Consideration contracted to be paid for such realty or on its fair market value, whichever is higher
c. Actual consideration
d. Fair market value

Answer: C

20. First Statement: The levying, imposition and collection of tax are legislative in character.
Second Statement: A tax law is valid even if it directly benefited private individuals, provided, such benefit
is merely incidental.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only the first statement is correct.
d. Only the second statement is correct.

Answer: D

21. First statement: The Supreme Court consistently held that the taxpayer must comply with the 120-day
waiting period allowed to the Commissioner of Internal Revenue to decide on a claim for refund before
elevating the case to the CTA.

Second statement: The mandatory and jurisdictional nature of the 120+30 day rule admits of one exception
in BIR Ruling No. DA-489-03 which ruled that the taxpayer need not wait for the lapse of the 120-day
period before it could seek judicial relief with the CTA by way of Petition.
a. True, True
b. True, False
c. False, True
d. False, False

Answer: A

22. Which of the following is NOT a VAT Exempt transaction?

a. Medical, dental, hospital and veterinary services including those rendered by professionals.
b. Services rendered by regional or area headquarters established in the Philippines by multinational
corporations which act as supervisory, communications and coordinating centers for their affiliates,
subsidiaries or branches in the Asia-Pacific Region and do not earn or derive income from the
Philippines.
c. Importation of personal and household effects belonging to the residents of the Philippines returning
from abroad and non-resident citizen coming to settle in the Philippines: Provided, That such goods are
exempt from customs duties under the Tariff and Customs Code of the Philippines.
d. Services rendered by individuals pursuant to an employer –employee relationship.

Answer: a) should be excluding ...

23. Which of the following statement is not TRUE?

For Other Percentage Taxes Rates –
a. International air carriers doing business in the Philippines shall pay a tax of three percent (3%) of the
quarterly gross receipts.
 b. There shall be collected a tax on gross receipts derived from sources within the Philippines by all banks
and non-bank financial intermediaries: On dividends and equity shares and net income to subsidiaries
– 3%.
c. There shall be collected a tax on gross receipts derived from sources within the Philippines by all banks
and non-bank financial intermediaries: On net trading gains within the taxable year on foreign
currency, debt securities, derivatives, and other similar financial instruments. – 7%.
d. There shall be collected from the proprietor, lessee of operator of cockpits a tax equivalent of eighteen
percent (18%) of its quarterly gross receipts.

Answer: d)

24. Which of the following statement is not TRUE?

a. A taxpayer can secure one or more Tax Identification Number (TIN) depending on the nature of his
transactions.
b. A taxpayer may apply for the cancellation of his BIR registration when he has ceased to carry on his
trade or business, and does not expect to re-commence any trade or business within the next twelve
(12) months.
c. Every person subject to any internal revenue tax shall register with the BIR on or before the
commencement of his business.
d. Every person who is required to register with the BIR shall register each type of internal revenue tax for
which he is obligated.

Answer: a) A taxpayer must secure one TIN only.

25. If a corporate taxpayer has an income tax deficiency of P100,000 from the amount he paid when he filed its
annual corporate income tax return last April 15, 2013, how much would be his total tax due if the company
would be settling the deficiency income tax on August 15, 2013?
a. P39,667
b. P35,667
c. P34,667
d. P33,667

Answer: c) Surcharge – P25,000; Interest – 6,667; and compromise fee – 3,000

26. How much is the maximum compromise penalty of failure to file any tax return or supply correct information at
the time required by Section 255 of the Tax Code?
a. P25,000
b. P50,000
c. P100,000
d. P 5,000

Answer: a)

27. If the gross annual sales, earnings or receipts of a company who failed to keep or preserve its accounting
records is P40,500.500, how much would be the compromise penalty?
a. P15,000
b. P20,000
c. P30,000
d. P50,000

Answer: c)

28. Which of the following statement is TRUE? BIR rulings and regulations shall be given retroactive application if
:
a. A taxpayer acted in bad faith.
b. A taxpayer deliberately misstates or omits material facts.
c. The revocation, modification or reversal will be prejudicial to the taxpayer.
d. The facts subsequently gathered by the BIR are materially different from the facts on which the ruling is
based.

Answer: c)
29. In case a Group A taxpayer has been registered with the BIR thru the electronic Filing and Payment System (e-
FPS), when would be its due date when e-filing its monthly VAT return?
a. Twenty Five (25) days following the end of the month.
b. Twenty Four (24) days following the end of the month.
c. Twenty Three (23) days following the end of the month.
d. Twenty Two (22) days following the end of the month.

Answer: a)

30. In case a Group C taxpayer has been registered with the BIR thru the electronic Filing and Payment System (e-
FPS), when would be its due date when e-filing its monthly VAT return?
a. Twenty Five (25) days following the end of the month.
b. Twenty Four (24) days following the end of the month.
c. Twenty Three (23) days following the end of the month.
d. Twenty Two (22) days following the end of the month.

Answer: c)

31. In case a Group D taxpayer has been registered with the BIR thru the electronic Filing and Payment System (e-
FPS), when would be its due date when e-filing its monthly VAT return?
a. Twenty Five (25) days following the end of the month.
b. Twenty Four (24) days following the end of the month.
c. Twenty Three (23) days following the end of the month.
d. Twenty Two (22) days following the end of the month.

Answer: d)

32. Which of the following is NOT a documentary requirement when filing BIR Form 2552 or the Percentage Tax
Return on transactions involving shares of stocks listed and traded through the local stock exchange.
a. Duly issued Certificate of Creditable Tax Withheld at source.
b. Proof of exemption for transaction not subject to tax, if applicable.
c. Duly approved Tax Debit Memo.
d. Previously filed return and proof of payment, for tentatively filed tax return.

Answer: d)