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Answer Midterm - Docx 1

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Republic of the Philippines

CAGAYAN STATE UNIVERSITY


College of Business ,Entrepreneurship and Accountancy
Andrews Campus , Caritan Tuguegarao City, Cagayan

TAX 56- Business and Transfer Taxes


2nd Semester, S.Y. 2018-2019
Midterm Examination-April 23-24, 2019
Direction: The questions composes of

Name: _______________________________ Course / Year/Section____________ Score_______

1. To be subject to the general percentage tax, a taxable person must not be


a. VAT-registered c. Operating below the VAT threshold
b. Non-VAT-registered d. All of these
2. From which of the following sources does the 3% common carriers tax specifically apply?
a. Transport of passengers c. Both A and B
b. Transport of goods d. Neither A nor B
3. Which domestic common carrier is specifically subject to percentage tax?
a. Common carrier by land

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b. Common carrier by air

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c. Common carrier by sea eH w
d. All of these

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4. The gross receipt of an international carrier from which of the following sources is subject to percentage
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taxes?
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a. Outgoing transport of passengers


b. Outgoing transport of cargoes
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c. Incoming transport of passengers and cargoes


d. None of these
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5. On transport of excess baggage, cargoes or emails, an international carrier shall pay


a. Percentage tax if it is below the VAT threshold
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b. Percentage tax even if it is above the VAT threshold


c. VAT regardless of whether it is below or above the VAT threshold
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d. No business tax
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6. Which is a VAT-exempt receipt to a bus operator?


a. Receipts from passengers
b. Receipt from cargoes
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c. Receipt from baggage


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d. None of these
7. Which is subject to 3% percentage tax?
a. Bus c. Car for hire without chauffeur
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b. Taxi d. Pedicab
8. Which is not exempt from the overseas communication tax?
a. PEZA Locators c. Diplomatic Services
b. Government d. News Services
9. Which is subject to 3% percentage tax?
a. Bus c. Car for hire without chauffeur
b. Taxi d. Pedicab
10. Which is not exempt from the overseas communication tax?
c. PEZA Locators c. Diplomatic Services
d. Government d. News Services
11. The gross receipt tax does not apply to
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a. Bangko Sentral ng Pilipinas
b. Rural banks
c. Urban banks
d. Industrial banks
12. Statement 1: Reinsurance premium is exempt from the percentage tax.
Statement 2: Reinsurance premium is exempt from VAT.
Which is statement is correct?
a. Statement 1 c. Both statements
b. Statement 2 d. Neither statement

13. The sale of water by water utility franchise grantees is subject to VAT. F
14. The percentage tax of banks is called “premiums tax”. F (pertains to insurance companies)
15. If the block sale of primary shares exceeds 1/3 of the outstanding shares after the IPO, the IPO tax is?
1%
16. The property is transferred for less than full consideration when it is sold
a. Above the fair value of the property
b. Below the fair value of the property

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c. At the fair value of the property

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d. At any price which is deemed unacceptable to the seller

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17. The gratuitous component of transfer for inadequate consideration is
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a. Subject to income tax

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b. Exempt from income tax
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c. Exempt from transfer tax
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d. A and B
18. Transfer tax is imposed to partially recover future reduction in income tax which will arise from the split
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of income producing to few or several taxpayers. This statement describes what theory?
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a. Tax evasion theory c. Benefit received theory


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b. Tax recoupment theory d. Wealth distribution theory


19. Which is not a characteristic of transfer tax?
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a. Privilege tax c. Local Tax


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b. National Tax d. Direct Tax


20. Statement 1: All Philippine transfers are subject to transfer taxes.
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Statement 2: All foreign transfers are subject to transfer taxes.


Which statement is generally correct?
a. Statement 1 c. Both statements
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b. Statement 2 d. Neither statement


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21. The reciprocity exemption covers which properties?


a. Intangible personal property located abroad
b. Intangible personal property located in the Philippines
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c. Tangible and intangible properties located abroad


d. Tangible and intangible properties located in the Philippines
22. Which of these is taxable on global transfer of properties?
A. An American residing in the Philippines
B. A Filipino residing in Malaysia
C. A Sudanese residing in Bahrain
D. A Chinese residing in the Philippines

a. A and B c. C only
b. B and D d. A,B and D

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23. Because of flying cockroaches ,Mr. Kromi Kuto decedent died in shocked leaving the following
properties:

Philippines Abroad
Investment in stocks 500,000 -
House and lot - 4,000,000
Residential lot 3,000,000 -

Assuming Mr. Koto is a non-resident citizen or a resident alien, what is the amount of donation mortis
causa?

a. P 0 c. P 3,500,000
b. P 3,000,000 d. P 7,500,000

24. Assuming Mr. Koto is a non-resident alien, what is the amount of donation mortis causa?

a. P 0 c. P 3,500,000
b. P 3,000,000 d. P 7,500,000
25. Assuming Mr. Koto is a non-resident alien and the reciprocity rule applies, what is the amount of
donation mortis causa?

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a. P 0 c. P 3,500,000

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b. P 3,000,000 d. P 7,500,000

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26. The donor in a donation mortis causa is

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a. Dead c. either living or dead
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b. Living d. under a coma
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27. A done of a real property in a last will and testament


a. Heir c. Legatee
b. Devisee d. Legatees
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28. Which is not a form of taxation?


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a. Testamentary c. Intestate
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b. Compulsory d. Mixed
29. There are several estate tax laws in the history of estate taxation in the Philippines. Which applies to a
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particular decedent?
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a. The estate tax law in effect of the properties when the properties of the decedent are being
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accumulated.
b. The estate tax law in effect at the date of the decedent’s death.
c. The estate tax law in effect at the date the last will and testament is prepared.
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d. The estate tax law in effect upon determination of the legal heirs.
30. Statement 1: A resident citizen is taxable on his estate wherever situated.
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Statement 2: A non-resident citizen is taxable only on his estate situated in the Philippines.
Which is correct?
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a. Statement 1 c. Both statements


b. Statement 2 d. Neither statement

31. Which is not deducted from the inventory list of properties in arriving at the gross estate?
a. Properties held as trustee
b. Properties held as fiduciary
c. Properties held under a general power of appointment
d. Properties held under a special power o appointment
32. Which is not added to the inventory list of properties in computing gross estate?
a. Transfer in contemplation of death
b. Revocable transfers
c. Transfers under general power of appointment
d. Merger of the usufruct in the owner of naked title
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33. Which is correct statement?
a. The merger of the usufruct in the owner of naked title is a transmission subject to estate tax.
b. The transfer from the first heir to the second heir in accordance with the wishes of a predecessor is a
taxable transfer subject to estate tax.
c. The proceeds of life insurance taken by the decedent for his own life is always included in the
gross estate if the beneficiary is the estate, executor or administrator.
d. The trustor need not include a property transferred in a revocable trust in his gross estate.
34. Which of these transfers is subject to estate tax?
a. Transfer of properties for a full consideration
b. Transfer of inheritance from the fiduciary heir to the fideicommissary.
c. Transfer of the property held in trust by a trustee to the beneficiary.
d. Transfer mortis causa for less than full and adequate consideration.
35. The proceeds of life insurance designated by the decedent to his estate is included in the gross estate
a. If the designation is revocable
b. If the designation is irrevocable
c. Without regard to the designation as revocable or irrevocable
d. In all circumstances
36. Which is not included in gross estate?
a. Revocable transfers
b. Transfers in contemplation of death

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c. Transfer under special power of appointment

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d. All of these

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37. Nyogi appointed Pogi as fiduciary heir over an agricultural land which Pogi shall shall turn over to Ganda

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Ka upon Pogi’s death.
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Which is incorrect?
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a. The land must be included in Nyogi’s gross estate upon his death.
b. The land must be excluded in Pogi’s gross estate upon his death.
c. The land must be excluded in Ganda Ka’s gross estate upon her death.
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d. None of these
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38. What is best way to minimize tax exposure?


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a. Invest your money in a corporation


b. Donate the properties to relatives before death
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c. Understate your gross estate and do not pay estate tax


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d. Invest property in life insurance and make the designation of the beneficiary as irrevocable.
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39. Which of the following properties is present at the point of death but is excluded from gross estate?
a. Revocable transfer
b. Conditional Transfer
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c. Transfer by bona fide sale


d. Proceeds of group insurance
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40. The decedent owns an agricultural land with the following values:
Zonal Value 2,000,000
Assessed Value 1,500,000
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Independent Appraised
Value 3,200,000
Offer Price of a willing
The agricultural land shall be included in the gross
buyer 4,000,000
estate at
a. P 1,500,000 c. P3,200,000
b. P 2,000.000 d. P4,000,000

41. A non-resident alien decedent died because of too much watching Korean Dramas. The following are his
properties upon his death:
A building in Korea 8,000,000
A car in Hongkong 2,000,000
Shares of stocks in Malaysia 4,000,000
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Cash in Philippine Banks 800,000
Investment in bonds of domestic
corporations 400,000

Compute the gross estate.


a. P 0 c. P1,200,000
b. P800,000 d. P11,200,000
42. A non-resident alien decedent had the following interests at the point of death:
Interest in a business partnership organized abroad 300,000
Shares in a foreign corporation 75% of the business of which is
situated in the Philippines 400,000
Shares of a foreign corporation traded in the Philippine Stock
Exchange 800,000
Claims from resident debtors 1,200,000

Compute the amount of properties considered situated in the Philippines.


a. P800,000 c. P2,000,000
b. P1,200,000 d. P2,400,000

43. Confidently Beautiful died bankrupt. She had the following properties and obligations at the date of

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death:

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Cash
Agricultural Land
200,000 eH w
3,000,000

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Family home 2,000,000
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Debts and Obligations 8,000,000
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Compute the gross estate.


a. (P2,800,000) c. P5,000,000
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b. P 0 d. P5,200,000
44. The heirs of a decedent received the following insurance proceeds upon the decedent’s death:
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Source Amount
Insurance A-designated to wife as revocable beneficiary 400,000
Insurance B-designated to son as irrevocable beneficiary 500,000
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Insurance C-group insurance proceeds 200,000


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Insurance D-designated to executor as irrevocable


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beneficiary 400,000

Compute the insurance proceeds to be included in the gross estate.


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a. P200,000 c. P800,000
b. P400,000 d. P900,000
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45. Oo Maganda Ako devised in her will an agricultural land with life usufruct to Aangal Ka Ba and naked
title to Ako Pogi. All parties eventually died because of their self-confidence. The land had a value of
P1,500,000 on Oo Maganda Ako’s death, P1,000,000 on Aangal Ka Ba’s death and P 2,000,000 on Ako
sh

Pogi’s death.

Which is correct?
a. The land shall be valued at P1,000,000 in the gross estate of Oo Manganda Ako.
b. The land shall be valued at P1,500,000 in the gross estate of of Aangal Ka Ba.
c. The land shall be valued at P2,000,000 in the gross estate of Ako Pogi.
d. None of these.
46. Statement 1: Under absolute community of property, properties are presumed community unless
proven otherwise.
Statement 2: Under conjugal partnership of gains, properties are assumed conjugal unless proven
otherwise.
Which is correct?
a. Statement 1 c. Both statements
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b. Statement 2 d. Neither statement
47. In determining the property regime of the spouses, which is given primacy?
a. Agreement
b. Conjugal partnership of gains
c. Absolute community of property
d. Absolute separation of property
48. Which is a conjugal property?
a. Property inherited during marriage
b. Property inherited before marriage
c. Property received from exercise of profession during the marriage
d. Property received from donation during the marriage
49. Which of these donations or inheritance is a common property?
a. Donations designated by the donor for the wife
b. A devise to the husband
c. A donation designated by the donor for the husband and the wife.
d. An inheritance from the mother of the wife.
50. Which is incorrect regarding fruits of separate properties during the marriage?
a. Exclusive under conjugal partnership of gains
b. Exclusive under absolute community of property
c. Exclusive under absolute separation of property

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d. None of these

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51. Which is excluded in the gross estate of a deceased wife under the conjugal partnership of gains?

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a. Business income of husband eH w
b. Professional income of the wife

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c. Property received by way of inheritance by the wife
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d. Property brought into the marriage by husband.
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52. Which is excluded in the gross estate of the husband under the conjugal partnership of gains?

a. Properties inherited by the wife


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b. Properties brought into the marriage by the husband


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c. Income from properties inherited by the wife


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d. Properties acquired from the wife from her own labor.


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The following problems applies for Numbers 53 through 60.


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Before their marriage, Mr. and Mrs. Boneti had P2,000,000 and P1,500,000 salary savings, respectively. Mr. and
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Mrs. Boneti earned P200,000 and P180,000 income from these savings during the marriage. Mr. and Mrs.
Boneti earned P400,000 and P500,000 from their separate industry.
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Under the absolute community of property, compute the following:


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53. Separate property of Mr. Boneti


a. P0 c. P 2,000,000
b. P400,000 d. P 2,400,000
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54. Separate property of Mrs. Boneti


a. P0 c. P1,500,000
b. P 500,000 d. P2,000,000
55. Common property of the spouses
a. P900,000 c.P 3,500,000
b. P1,280,000 d. P 4,780,000
56. The gross estate of Mr. Boneti
a. P 1,680,000 c. P4,780,000
b. P3,500,000 d. P 5,500,000
Under the conjugal partnership of gains, compute the following:
57. Separate property of Mr. Boneti
a. P0 c. P2,000,000
b. P400,000 d. P2,400,000
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58. Separate property of Mrs. Boneti
a. P0 c. P1,500,000
b. 500,000 d. P2,000,000
59. Common property of the spouses
a. P900,000 c. P3,500,000
b. P1,280,000 d. P 4,780,000
60. The gross estate of Mr. Boneti
a. P3,280,000 c. P4,000,000
b. P3,500,000 d. P4,780,000

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Prepared by:
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SHANNEN D. CALIMAG,CPA
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Subject Professor
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Reviewed and Approved by: Noted by:


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ANTHONY CEASAR F. ZAMABLE,CPA ANTONIA JOSEFA A. TAGUINOD,


MBM
Department Chair – BSAc College Dean

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