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1. Which of the following distinguishes license from tax?
a. It is imposed under taxation power.

b. It is a charge for other’s property.
c. Non-compliance to it will render businesses illegal.
d. It is generally payable in money.
2. The amount imposed is based on the value of the property

a. Eminent domain c. Toll
b. License d. Special assessment
3. Which is intended to regulate conduct?

a. Penalty c. Police power
b. License d. Toll
4. The principles of a sound tax system exclude

a. Economic efficiency c. Theoretical justice
b. Fiscal adequacy d. Administrative feasibility
5. A domestic corporation was registered with the BIR on January 1, 2006. What year
would the first MCIT be imposed on such corporation?
A. 2006 C. 2008
B. 2009 D. 2010
6. A taxpayer who is governed by gross income taxation:

A. Filipino residing in China C. Filipino residing in the Philippines
B. Chinese residing in USA D. Korean residing in the Philippines
7. Which of the following statements is correct?

A. Fringe benefits cannot be deducted without withholding tax.
B. Fringe benefits can be deducted even without withholding tax.
C. Fringe benefits are salary of employees and always deductible by the
employer.
D. Fringe benefits are exempt from tax and can be deducted even
without withholding tax.
8. Advance rental received by the lessor under a claim or right and without restriction as
to use is:
A. Taxable income of the lessor in the year received if he is using the cash basis
of accounting.
B. Taxable income of the lessor in the year received if he is using the accrual
basis of accounting.
C. Taxable income of the lessor in the year received whether he is using
the cash or the accrual basis of accounting.
D. Taxable income of the lessor up to the amount earned in the year the rental
is received.
9. Which of the following does not denote exemption from fringe benefit tax?
A. Necessity to the business or trade C. De minimis benefits
B. Welfare and benefits of the employee D. Convenience of the employer
10. Statement 1: A deduction is an amount of expenses and losses that reduces the
gross income to net income.
Statement 2: A personal exemption is an arbitrary amount representing personal,
living and family expenses that reduces the net income of an individual
taxpayer to taxable income beginning January 1, 2018.
A. Only the first statement is correct C. Both statements are correct
B. Only the second statement is correct D. Both statements are incorrect
1. Betty paid Php20,000 annual premium on a life insurance contract which would pay
her Php1,000,000 in case of her death. After paying for 4 years, Betty assigned the
policy to Carlos for Php120,000. Compute the return on capital.
a. Php120,000 c. Php40,000
b. Php80,000 d. Php0
[20 x 4 = 80] 120 – 80 = 40
2. Boy, a resident citizen, received the following interest income:

• Php80,000 from short-term Peso time deposit
• Php16,000 from a five-year bonds issued by a commercial bank
• Php24,000 from 5/6 lending to market vendors
How much final tax must have been withheld from Boy’s interest income?
a. Php0 c. Php20,000
b. Php16,000 d. Php24,000
[80,000 / .80 x 20% = 20,000]
3. JESSICA, a self-employed resident citizen provided the following data for 2018:
Sales 2,800,000
Cost of Sales 1,125,000
Business Expenses 650,000
Interest income from peso bank deposit 80,000
Interest income from bank deposit under FCDS 120,000
Gain on direct sale to buyer of shares of stock
of a domestic corporation held as capital asset 150,000
Gain on sale of land in the Philippines held as capital
asset
with cost of 1,500,000 when the zonal value is
1,200,000 500,000
How much is the total income tax expense of Jessica for the year assuming she opted
to be taxed using the graduated rates?
a. 321,500
b. 380,500
c. 351,500
d. 374,000
4. JESSICA, a self-employed resident citizen provided the following data for 2018:
Sales 2,800,000
Cost of Sales 1,125,000
Business Expenses 650,000
Interest income from peso bank deposit 80,000
Interest income from bank deposit under FCDS 120,000
Gain on direct sale to buyer of shares of stock
of a domestic corporation held as capital asset 150,000
Gain on sale of land in the Philippines held as capital
asset
with cost of 1,500,000 when the zonal value is
1,200,000 500,000
How much is the total income tax expense of Jessica assuming she opted to be taxed at
8%?
a. 321,500
b. 380,500
c. 351,500
d. 374,000
5. The records of ABC Corporation, organized in 2004 showed the following data for
2018:
Gross Income 2,000,000

Less: Allowable business expenses
(other than bad debts) 1,850,000
Bad debts written off 100,000 1,950,000
Taxable net income 50,000
In 2019, 80% of the bad debts written off in 2018 was collected.
The income tax due in 2018 is

a. 40,000
b. 45,000
c. 15,000
d. 25,000
MCIT 2,000,000 x 2% = 40,000

RCIT 50,000x 30% = 15,000
6. GG and SS are partners who provided the following data about their partnership and
their own data in their separate businesses for 2018:
Partnership GG SS
(Ratio is
50:50)
Gross 2,000,000 1,000,000 500,000
Income
Expenses 500,000 300,000 100,000
Drawings 200,000 100,000 100,000
Other 0 200,000 300,000
Income
Status Single Married
How much is GG’s taxable income if the partnership is a General Professional Partnership?
A. P1,200,000 C. P1,380,000
B. P1,450,000 D. P1,480,000
(partnership: 2000-500-200 = 1300/2 = 650)

(GG: 650 + 1000 – 300 – 100 + 200 = 1450)
7. Mr. Caesar, single and a Filipino, has the following transactions for 2018:
Salaries received P250,000
Loss from wash sales 100,000
Transportation expense 50,000
Health insurance premium 3,000
How much can the taxpayer deduct from his income?

A. P153,000 C. PNIL
B. P50,000 D. P53,000
(No more personal expenses anymore)
8. A domestic corporation has the following information during the year:

Taxable income, before income tax –
Philippines P3,000,000
Australia 2,000,000
Quarterly income tax paid, Philippines 950,000
Income tax paid, Australia 800,000
How much is the income tax still due after credit for foreign income tax?
A. P1,500,000 C. P550,000
B. P600,000 D. None of the above
[3000 + 2000] x 30% = 1500

2/5 x 1500 = 600 LIMIT
1500 – 950 – 600 = (50)
9. Mr. Kuma, a resident citizen who is married and has two qualified dependent children,
has the following data for 2018:
Gross sales, Philippines P5,000,000

Sales returns and allowances, Philippines 500,000
Cost of sales, Philippines 1,500,000
Gross sales, Japan 3,000,000
Sales returns and allowances, Japan 200,000
Cost of sales, Japan 800,000
Business expenses, Philippines (itemized) 500,000
Business expenses, Japan (itemized) 300,000
Interest income, peso bank deposit, Landbank-Makati 20,000
Interest income, dollar deposit, Landbank-Makati 50,000
Gain from sale of residential house and lot
(SP = P3,000,000; FMV, time of sale = P5,000,000) 500,000
Gain from sale of shares of stock listed and traded in the
local stock exchange (SP = P100,000) 30,000
Gain from sale of shares of stock not
traded in the local stock exchange 150,000
How much is the total final tax on passive income?

A. P4,000 C. P14,000
20000 x 20% = 4000
50000 x 15% = 7500
= 11500
10. Mr. Kuma, a resident citizen who is married and has two qualified dependent children,
has the following data for 2018:
Gross sales, Philippines P5,000,000

Sales returns and allowances, Philippines 500,000
Cost of sales, Philippines 1,500,000
Gross sales, Japan 3,000,000
Sales returns and allowances, Japan 200,000
Cost of sales, Japan 800,000
Business expenses, Philippines (itemized) 500,000
Business expenses, Japan (itemized) 300,000
Interest income, peso bank deposit, Landbank-Makati 20,000
Interest income, dollar deposit, Landbank-Makati 50,000
Gain from sale of residential house and lot
(SP = P3,000,000; FMV, time of sale = P5,000,000) 500,000
Gain from sale of shares of stock listed and traded in the
local stock exchange (SP = P100,000) 30,000
Gain from sale of shares of stock not
traded in the local stock exchange 150,000
How much is the total capital gains tax?

A. P180,000 C. P322,500
5M x 6% = 300
150 x 15% = 22.5
322.50

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1. Which of the following distinguishes license from tax?

a. It is imposed under taxation power.

2. The amount imposed is based on the value of the property

3. Which is intended to regulate conduct?

4. The principles of a sound tax system exclude

6. A taxpayer who is governed by gross income taxation:

7. Which of the following statements is correct?

[20 x 4 = 80] 120 – 80 = 40

2. Boy, a resident citizen, received the following interest income:

[80,000 / .80 x 20% = 20,000]

Gross Income 2,000,000

The income tax due in 2018 is

MCIT 2,000,000 x 2% = 40,000

(partnership: 2000-500-200 = 1300/2 = 650)

How much can the taxpayer deduct from his income?

(No more personal expenses anymore)

8. A domestic corporation has the following information during the year:

[3000 + 2000] x 30% = 1500

Gross sales, Philippines P5,000,000

How much is the total final tax on passive income?

Gross sales, Philippines P5,000,000

How much is the total capital gains tax?

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