TAX – Quiz 1

1. The list provided below is not included in the gross estate of a decedent, except
a. Exclusive property of the surviving spouse
b. Intangible personal property in the Philippines of a non-resident alien when the rule of
Reciprocity applies
c. Properties outside the Philippines of a non- resident alien decedent
d. Share in common properties of the surviving spouse

2. Which of the following is not an exclusion from the gross estate?

a. Transfer to the government
b. Shares owned by a nonresident alien decedent issued by a foreign corporation where 80%
of its operation is in the Philippines
c. Proceeds of the life insurance
d. Transfer passing under special power of appointment

3. In every case of doubt, tax statutes are construed

a. Strictly against the government and the taxpayer
b. Strictly against the government and liberally in favor of the taxpayer
c. Liberally in favor of the government and the taxpayer
d. Liberally in favor of the government and strictly against the taxpayer

4. The following information were from the estate of a married citizen decedent who died on June
2018.

The ½ share of the surviving spouse is

a. P500,000
b. P600,000
c. P575,000

5. Which of the following statements regarding donation of an immovable property is correct?

a. The acceptance may be made in the same Deed of Donation or in a separate public
instrument, but it shall not take effect unless it is done during the lifetime of the donor.
b. If the acceptance is made in a separate instrument, the donor shall be notified thereof in an
authentic form, and this step shall be noted in both instruments
c. The donation must be made in a public document specifying therein the property donated
 d. All of the choices

6. Statement 1: Uniformity in the imposition and/or collection of taxes means that all taxable
articles or kinds of property of the same class shall be taxed at the same rate. This requirement
is complied with when the tax operates with the same force and effect in every place where the
subject of it is found. 

Statement 2: uniformity rule is violate when different articles are taxed at different amounts
provided that the rate is uniform on the same class everywhere with all people at all times

a. Both statements are correct

b. Only statement 1 is correct
c. Both statements are incorrect
d. Only statement 2 is correct

7. Mr. Heart is in need of money to start a small business. However, he has no property to secure a
loan from a bank so he sought the help of his good friend Mr. Love. Mr. Love then obtained a
loan from Banco de Oro amounting to 1 million pesos secured by a real property worth 2 million
pesos to accommodate the request of Mr. Heart. If subsequent to securing the loan and
delivering to Mr. Heart the proceeds, Mr. Love died, how much gross estate should be reported?
A. P2,000,000
B. P3,000,000
C. P1,000,000
D. Nil

8. The State, having sovereignty can enforce contributions (tax) upon its citizens even without a
specific provision in the Constitution authorizing it.  Which of the following will justify the
foregoing statement?
I. It is so because the State has the supreme power to command and enforce obedience to
its will from the people within its jurisdiction.
II. Any provision in the Constitution regarding taxation creates right for the sovereignty to
have the power to tax.
III. Any provision in the Constitution regarding taxation merely constitutes limitations upon
the State in exercising its power to tax.
a. I and III only
b. I, II, and III
c. I only
d. I and II only

9. A suit questioning the validity of a tax statute is

a. Taxpayer’s suit
b. Class suit
c. Collective suit
 d. Derivative suit

10. Why is tax credit allowed to be availed by certain taxpayers?

a. To comply with commitments to international agreements or treaties
b. To induce the qualified taxpayers to report their income abroad
c. To provide relief from the burden of taxation
d. To avoid double taxation

11. In our jurisdiction, which of the following statements may be erroneous?

a. Taxes are levied by the executive branch of the government

12. This is an inherent limitation on the power of taxation

a. The tax laws cannot apply to the property of foreign governments

13. If the decedent is married under the conjugal partnership of gains vanishing deduction shall be
chargeable against?
a. Exclusive properties

14. Tax which is demanded from the persons whom the law intends or desires to pay it
a. Direct

15. Which of the following constitute tax avoidance

a. Maybe contrary to the intent of the legislature but nevertheless do not violate the law

16. Which of the following is correct?

a. Assessment of tax liability – no – yes

17. Who among the following transferors is not liable for estate tax on the property transferred
during his lifetime?
a. The donee of an appointed property who is required under a power of appointment to
transfer such property upon death to his eldest child

18. Which of the following is not a secondary purpose of taxation

a. To raise revenue to defray the necessary expenses of the government

19. Estate tax is a(n)

I. Excise tax
II. Direct tax
III. Personal tax
IV. Property tax
a. I and II only
20. 1st Statement: Taxes are important because they are the lifeblood of the government & so
should be calculated without unnecessary hindrance
2nd Statement: The legislature, in adopting measures to implement our tax laws, wants to be
assured that taxes are paid and collected without delay.
a. False, false
b. True, false
c. True, true
d. False, true

21. Which of the following is not a constitutional limitation

a. Exemption from taxes of the income and assets of educational institutions includes
grants, endowments or donations
b. That the money collected on a tax levied for a public purpose shall be paid out for such
purpose only
c. All of the choices
d. None of the choices

22. The inherent limitation on the power of taxation

a. Charitable institutions, churches, personages or convents appurtenants thereto, mosque
and non-profits cemeteries and all kinds of lands, buildings and improvements actually,
directly and exclusively used for religious or charitable purposes shall be exempt from
taxation
b. The tax laws cannot apply to the property of foreign governments
c. No law impairing the obligations of contracts shall be enacted
d. The rule on taxation shall be uniform and equitable

23. The following information were from the estate of a married citizen decedent who died on June
2018.
Under conjugal partnership of gains, gross conjugal property is
a. P1,300,000
b. P600,000
c. P1,600,000

24. Under TRAIN Law, all of the following, except one, are not deductible from the gross estate of a
non-resident alien:
a. Standard deduction
b. Family home allowance
c. Funeral and judicial expenses
d. Death benefits under ra 4917
25. Deductible claims against the estate or indebtedness in respect of property may arise out of,
except
a. Operations of law
b. Contracts
c. Tort
d. None of these

26. Which of the following properties of the spouses will be part of common properties under a
regime of Absolute Community of Property?
A. Jewelry inherited during the marriage

27. Why is tax credit allowed to be availed by certain taxpayers?

A. To provide relief from the burden of taxation

28. In every case of doubt, tax statutes are construed.

a. Strictly against the government and liberally in favor of the taxpayer

29. The following are the aspect of taxation

I – Levy or imposition of the tax on persons, property or excises
II – Collection of taxes already levied
III - Sufficiency of governments sources to satisfy its expenditure
a. I and II only

30. Which of the following constitute tax avoidance?

a. Maybe contrary to the intent of the legislature but nevertheless do not violate the law

31. Deductible claims against the estate or indebtedness in respect of property may arise out of,
except
a. none of these

32. Statement 1: Uniformity in the imposition and/or collection of taxes means that all taxable
articles or kinds of property of the same class shall be taxed at the same rate. This requirement
is complied with when the tax operates with the same force and effect in every place where the
subject of it is found.
Statement 2: uniformity rule is violate when different articles are taxed at different amounts
provided that the rate is uniform on the same class everywhere with all people at all times.
a. Only statement 1 is correct

33. This is an inherent limitation on the power of taxation.

a. The tax laws cannot apply to the property of foreign governments
34. Which is not an essential characteristic of tax?
Select one:
A. Proportionate in character
B. Limited as to amount
C. Regular payment
D. Payable in money

35. A tax is invalid in all of the following, except

Select one:
A. Basis of taxation is not recognized
B. Theory of taxation and its purpose are disregarded
C. It results to double taxation
D. Inherent and constitutional limitations are not observed

36. Mr. Vice, a bachelor and resident Filipino citizen, died on November 2, 2018. The following fees
were paid to the following in connection with the settlement of his estate 
How much deduction for judicial expenses may the estate claim?
Select one:
A. P230,000
B. P150,000
C. P270,000
D. P220,000

37. Which of the following is incorrect description of taxation?

Select one:
A. Legislative and inherent for the existence of the government
B. The strongest of all inherent powers of the State
C. Supreme and absolute power of the State
D. Necessary and for public purpose

38. Fe, married on June 5, 2014 died on April 29, 2016 with the following data: Gross estate -
conjugal, P3,000,000; exclusive, P2,000,000. Said amount includes a land which she received as
gift from her father two (2) months before the marriage, valued at P540,000. Her father
mortgaged the land for P20,000 which was paid by Fe. Fe mortgaged also the said land for
P50,000 but was able to pay only P20,000 until his death. ELIT claimed (excluding the unpaid
mortgage) amounted to P170,000.  The vanishing deduction is:
Select one:
A. P384,000
B. P399,360
C. P299,520
 D. P288,000

39. Taxes must be for public purpose means that

A. Taxes should be used for recognized public needs benefiting a community
B. Power of taxation should government be exercised by the legislature
C. Relationship of the government and the governed must be transparent and democratic
D. Taxes must be raised from the public

40. Which is not an essential characteristic of tax?

A. Proportionate in character
B. Regular payment
C. Payable in money
D. Limited as to amount

41. The following information were from the estate of a married citizen decedent who died on June
2018. The net taxable estate of the decedent is

A. P475,000
B. P575,000
C. P500,000

42. Mr. and Mrs. Valentino are happily married and the fruit of their love is a daughter born 2 years
after their hands were tied in marriage. They are residing in Quezon City. However, like in a song
which says “nothing seems so good that lasts eternally”, Mr. Valentino died in October 2017
which is exactly 1 month after celebrating their golden anniversary. The zonal value of the family
home at the time is P10,000,000. He has no other properties. The following expenses were
incurred for the burial:

Assuming Mr. Valentino died in 2018 (assume the medical expenses were incurred in 2017

How much is the allowable ELITe?

a. P1,000,000
b. P1,409,000
c. P1,309,000
d. P250,000
43. Mr. and Mrs. Valentino are happily married and the fruit of their love is a daughter born 2 years
after their hands were tied in marriage. They are residing in Quezon City. However, like in a song
which says “nothing seems so good that lasts eternally”, Mr. Valentino died in October 2017
which is exactly 1 month after celebrating their golden anniversary. The zonal value of the family
home at the time is P10,000,000. He has no other properties. The following expenses were
incurred for the burial:
Assuming Mr. Valentino died in 2018 (assume the medical expenses were incurred in 2017
How much is the net taxable estate?
a. P1,775,000
b. P0
c. 1,995,000
d. 1,795,500

44. Mr. and Mrs. Valentino are happily married and the fruit of their love is a daughter born 2 years
after their hands were tied in marriage. They are residing in Quezon City. However, like in a song
which says “nothing seems so good that lasts eternally”, Mr. Valentino died in October 2017
which is exactly 1 month after celebrating their golden anniversary. The zonal value of the family
home at the time is P10,000,000. He has no other properties. The following expenses were
incurred for the burial:
Assuming Mr. Valentino died in 2018 (assume the medical expenses were incurred in 2017
How much is the allowable deduction for medical expenses?
Select one:
A. P500,000
B. P300,000
C. P600,000
D. P0

45. Mr. and Mrs. Valentino are happily married and the fruit of their love is a daughter born 2 years
after their hands were tied in marriage. They are residing in Quezon City. However, like in a song
which says “nothing seems so good that lasts eternally”, Mr. Valentino died in October 2017
which is exactly 1 month after celebrating their golden anniversary. The zonal value of the family
home at the time is P10,000,000. He has no other properties. The following expenses were
incurred for the burial: How much is the allowable funeral expenses?
Assuming Mr. Valentino died in 2018 (assume the medical expenses were incurred in 2017
a. P200,000
b. P159,000
c. P128,000
d. P0
 46. Statement 1:  Estate tax credit for estate tax paid to a foreign country is allowed only if the
decedent is a citizen or resident of the Philippines.
Statement 2:  There can be an estate tax paid to a foreign country even if the citizen or resident
decedent had no property in the Philippines.
Select one:
a. Only first statement incorrect
b. Only first statement is correct
c. Both statements are correct
d. Both statements are incorrect
47. It explains why the government pursues tax evasion cases and hardly does tax avoidance cases
a. Tax avoidance is against the law or would result to violation of tax laws
b. Tax evasion is fraudulent
c. In tax avoidance, there is no amount of tax involved
d. In tax evasion, the amount involved is substantial

TAX - Quiz 2
1. Royalty income from books received by a corporation prior to 2018 shall be subject to:
DC        /    RFC     /    NRFC
a. 15% 15% Exempt
b. 20% 20% 30%
c. 10% 10% 30%
d. 15% 7 ½% Exempt

2. Because of dire necessity, Ana sold a parcel of land from Quezon province for P10,000,000 with
a cost of P6,000,000. At the time of sale, the fair market value of the land was P12,000,000.
P8,000,000 of the proceeds of the sale were used to purchase principal residence at Manila. As
such, within 30 days from the sale, he informed the Commissioner of Internal Revenue of his
intention to avail of the exemption and set-up an escrow deposit equivalent to the capital gains
tax. The sale of land resulted to a tax consequence of
A. P576,000 capital gains tax on sale of real property
B. P144,000 capital gains tax on sale of real property
C. P720,000 capital gains tax on sale of real property
D. Exempt

3. Which of the following are items included in the gross compensation income of the employee
a. Rice allowance of P2,000  a month given to managerial and supervisory employee
b. Representation expenses of P5,000 a month and not subject to liquidation
c. P9,000 representing nine days of monetized unused vacation leave
d. Traveling expenses of Php15,000 received by an employee who was sent on a business trip
to Cebu city
4. Mr. Mapalad realized the following income and expenses during 2018 taxable year:

The taxable net income of Mr. Mapalad should be

a. P2,250,000
b. P2,200,000
c. P2,260,000
d. P2,290,000

5. Ana realized the following income and expenses during 2018 taxable year:

Assume that Ana also earned P500,000 compensation income for being a part-time college
Professor for the 2018 taxable year. How much is her total income tax due assuming she
signified her intention to be taxed at 8% preferential tax rate?
a. P340,000
b. P259,000
c. P224,000
d. P279,000

6. Statement 1: The exemption of any fringe benefit from the fringe benefit tax shall not be
interpreted to mean exemption from any other income tax imposed under the Tax Code except
if the same is likewise expressly exempt from any other income tax imposed under the Tax Code
or under any other existing law. 
Statement 2: If the fringe benefit is exempted from the fringe benefit tax, the same may,
however still form part of the employee’s gross compensation income which is subject to
income tax, hence, likewise subject to withholding tax on compensation income payment.
a. Statement 1 is true but statement 2 is false
b. Statement 1 is true but statement 2 is true
c. Statements 1 and 2 are true
d. Statements 1 & 2 are false

7. Interest income received from a depository bank under expanded foreign currency deposit
system beginning January 1, 2018 or upon effectivity of the TRAIN Law shall be subject to: 
a. 15%, 7 ½ %, Exempt
8. Statement 1: An employee who is earning purely compensation income not exceeding P250,000
from a lone employer is still required to file an income tax return.
Statement 2: Self-employed and/or professionals who opted and are qualified to be taxed at 8%
income tax rate are required to attach the Financial Statements when filing the annual income
tax return
a. Both statements are incorrect

9. Which of the following statements on the 8% income tax rate is incorrect?

a. None of the choices

10. First Statement: An individual earning compensation income of P2,000,000 in 2018 shall have
the option of availing the optional 8% income tax.
Second Statement: Beginning 2018 taxable year, an individual who opted to pay the 8% income
tax is also exempt from the 3% other percentage tax under Section 116 of the Tax Code
a. False, true

11. What is the correct treatment of overtime pay, holiday pay, night shift differential, and hazard
pay received by those whose basic pay is more than the SMW?
a. Subject to income tax, and consequently, to the withholding tax on compensation income

12. Mr. Mapalad realized the following income and expenses during 2018 taxable year:

The final withholding tax on passive income should be

a. P10,000
13. Ana realized the following income and expenses during 2018 taxable year:

Assuming the same data in the immediately preceding number except that Ana is a vat-
registered taxpayer, how much is her total income tax for the year?
a. P224,000
b. P279,000
c. P259,000
d. P340,000
14. In 2018, Alpha Corporation provided a fringe benefit to one of its executives, Chris, amounting
to P78,000
Assume the fringe benefit is in the form of housing benefit (rental payment), how much is the
correct amount of fringe benefit tax?
a. P39,000
b. P21,000
c. P78,000
d. P60,000
15. Royalty income received by a corporation beginning January 1, 2018 or upon effectivity of the
TRAIN Law shall be subject to
a. 15% 15% Exempt
b. 20% 20% 30%
c. 10% 10% 30%
d. 15% 7 ½% Exempt

16. Which of the following statements is correct

I. The fringe benefit tax is a final withholding tax on the grossed-up monetary value of
the fringe benefit granted by the employer to an employee who holds a managerial
or supervisory position. 
II. Fringe benefit tax is effective regardless of whether the employer is an individual,
professional partnership or a corporation (regardless of whether the corporation is
taxable or not). 
III. The fringe benefit tax regulations cover only those fringe benefits given or furnished
to managerial or supervisory employees. The regulations do not cover those
benefits which are part of compensation income, because these are subject to
creditable withholding tax.
a. I and II only
b. I only
c. I, II, and III
d. None of the choices
17. The following individual taxpayers are not allowed to avail the 8% income tax rate, except:
a. None of the above
18. In 2018, Alpha Corporation provided a fringe benefit to one of its executives, Chris, amounting
to P78,000 How much is the correct amount of fringe benefit tax assuming Chris is an American
employed by ROHQ?
a. P42,000

19. Statement 1: Partners of GPPs are allowed to avail the 8% income tax rate.
Statement 2: Individuals enjoying income tax exemption such as those registered under BMBE
are not allowed to avail the 8% income tax rate
a. Only statement 2 is correct

20. First Statement: An individual earning compensation income of P2,000,000 in 2018 shall have
the option of availing the optional 8% income tax.
Second Statement: Beginning 2018 taxable year, an individual who opted to pay the 8% income
tax is also exempt from the 3% other percentage tax under Section 116 of the Tax Code
a. False, true

21. Who among the following individual taxpayers is taxable on income from within and without the
Philippines:
A. Amber, a native of Bacolod, working as overseas contract worker in Dubai
B. Tracy, a resident of Manila and citizen of Australia; who has been working in thePhilippines
for the past 10 years
C. Juan Cruz, a Filipino, who was sent by his employer to the United States for 5 months
D. Manuel Chavez, a resident and citizen of Puerto Rico, sent to the Philippines, as an employee
of a local brewery for 5 months

22. Interest income on bank deposit or investment with maturity period of at least five (5) years
received by a corporation is subject to:
Domestic Res.     /   Foreign Corp.         /Non-resident Foreign Corp.
A. Exempt Exempt Exempt
B. 20% 20% Exempt
C. 20% 20% 30%
D. 20% Exempt Exempt
23. In 2018, Alpha Corporation provided a fringe benefit to one of its executives, Chris, amounting
to P78,000 How much is the correct amount of fringe benefit tax?
A. P78,000
B. Nil
C. P120,000
D. P42,000

24. Dividend from a domestic corporation or share in the distributable income after tax of a taxable
partnership received by a citizen shall be subjected to the final tax rate of
A. 25%
B. 15%
 C. 10%
D. 20%
25. Which of the following statements regarding minimum wage earner (MWE) is correct?
A. The MWE is exempt from income tax on his basic statutory minimum wage (SMW).
B. The MWE is exempt from income tax on his overtime pay, holiday pay, night shift
differential, and hazard pay
C. All of the choices
D. The MWE is subject to income tax other than his basic statutory minimum wage and on his
overtime pay, holiday pay, night shift differential and hazard pay

26. Statement 1: The exemption of any fringe benefit from the fringe benefit tax shall not be
interpreted to mean exemption from any other income tax imposed under the Tax Code except
if the same is likewise expressly exempt from any other income tax imposed under the Tax Code
or under any other existing law. 
Statement 2: If the fringe benefit is exempted from the fringe benefit tax, the same may,
however still form part of the employee’s gross compensation income which is subject to
income tax, hence, likewise subject to withholding tax on compensation income payment.
a. Statements 1 and 2 are true
b. Statement 1 & 2 are false
c. Statement 1 is true but statement 2 is false
d. Statement 1 is true but statement 2 is true

27. Ronnie, worked in the United States as a Partner of a Big Four Accounting Firm and has been
residing therein for the past 25 years. He arrived in the Philippines on July 1, 2018 to reside here
permanently. Which of the following statements is correct with respect to Ronnie’s classification
for income tax purposes?
a. He will be classified as nonresident citizen from January 1, 2018 until the date of his
arrival in the Philippines
b. He will be classified as resident citizen for the whole year of 2018
c. He will be classified as neither resident nor nonresident citizen for the year 2018
d. He will be classified as nonresident citizen for the whole year of 2018

28. Mr. Mapalad realized the following income and expenses during 2018 taxable year:

Assume Mr. Mapagpala signified his intention to be taxed at 8%, his total income tax expense
during 2018 taxable year should be
a. P204,000
b. P596,800
c. P554,000
d. P595,000