ReSa Pre Board

ReSA
The Review School of Accountancy

Tel. No. 735-9807 & 734-3989
TAXATION September 26, 2021 (Sunday)

Final Pre-Board Examination 08:00 A.M. to 11:00 A.M.
MULTIPLE CHOICE
INSTRUCTIONS: Select the correct answer for each of the following
questions. Mark only one answer for each item by shading the box
corresponding to the letter of your choice on the sheet provided. STRICTLY
NO ERASURES ARE ALLOWED. Use pencil no. 2 only.
1. Excise tax on certain articles is an example of:

a. an indirect tax. c. a local tax.
A b. a direct tax. d. a transfer tax.
2. Which of the following is/are correct?

Statement A: Non-resident citizens are taxable on all income derived from
sources within the Philippines.
Statement B: Resident citizens and domestic corporations are taxable on
all income derived from sources within or without the
Philippines.
Statement C: Foreign corporations, whether engaged or not in trade or
business in the Philippines are taxable from sources within
or without the Philippines.
Statement D: Aliens, whether residents or not of the Philippines, are
taxable only from sources within the Philippines.
a. Statements C and D are correct
B
b. Statement A, B and D are correct
c. Statement B, C and D are correct
d. Statement A and D are correct
3. (Adapted) First statement: Symbiotic relation is the reason why the

government could impose taxes on the income of the resident citizens
derived from sources outside the Philippines.
Second statement: Jurisdiction is the reason why citizens must provide

support to the State so the latter could continue to give protection.
B a. Both statements are correct

b. Both statements are incorrect
c. Only the first statement is correct
d. Only the second statement is correct
The first statement refers to jurisdiction while the second statement

refers to symbiotic relationship (reciprocal duties).
4. An annual tax of P1,000 was imposed upon all residents of the Philippines,
who are above 21 years of age, with a gross income of P250,000, whether
or not they send their children to public schools, for the purpose of
raising funds in order to improve public school buildings. The tax is:
C a.violative of the equal protection clause of the Constitution.
b.confiscatory.
c.for public purpose.
d.contradicts the inherent limitations.
5. A law was passed by Congress which granted tax amnesty to those who have
not paid income taxes for a certain year without at the same time providing
for the refund of taxes to those who have already paid them. The law is:
A a. valid because there is a proper classification.
TAXATION – FINAL PRE-BOARD EXAMINATION (BATCH 42)

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b. not valid because those who did not pay their taxes are favored over
those who have paid their taxes.
c. valid because it was Congress which passed the law and it did not
improperly delegate the power to tax.
d. not valid because only the President with the approval of Congress
may grant amnesty.
6. Which of the following are basic principles of a sound tax system?

B a. Fiscal Adequacy, Economic Feasibility and Theoretical Justice
b. Fiscal Adequacy, Administrative Feasibility and Theoretical Justice
c. Progressive Taxation, Ability to Pay and Symbiotic Relationship
d. Fiscal Deficit, Administrative Feasibility and Ability to Pay
7. “Schedular system of income taxation” means:

B a. all types of income are added together to arrive at gross income.
b. separate graduated rates are imposed on different types of income.
c. capital gains are excluded in determining gross income.
d. compensation income and business/professional income are added
together in arriving at gross income.
The opposite of “scheduler system of income taxation” is called “global

system of income taxation” which is described in choice letter d. above.
8. Mr. Yu So’s piece of land measuring 500 sq. m. in Quezon City was assessed
as commercial with a fair market value of P20,000 per sq. m. How much is
the highest possible amount of annual basic real property tax can be
collected from him?
D a. P20,000 c. P 40,000
b. P50,000 d. P100,000
Solution:
Fair market value (500 x 20,000) P10,000,000
X Assessment level 50%
Assessed value 5,000,000
Rate 2%
Real property tax P100,000
9. The fair market value of real properties located in each zone or area,
shall be subject to automatic adjustment once every how many years through
rules and regulations issued by the Secretary of Finance based on the
current Philippine valuation standards?
A a. 3 years c. 7 years
b. 5 years d. 10 years
10. Mr. D filed his 2014 income tax return on June 30, 2015. The Bureau of
Internal Revenue discovered a deficiency income tax on August 15, 2016.
When should the deficiency tax assessment be served?
B a. On or before August 15, 2019
b. On or before June 30, 2018
c. On or before April 15, 2018
d. On or before April 2018
11. Notwithstanding any contrary provision of R.A. No. 1405 and other general
or special laws, the Commissioner of Internal Revenue is authorized to
inquire into bank deposit:
Case 1 – of a decedent to determine his gross estate.
Case 2 – of any taxpayer who has filed an application for compromise
of his tax liability by reason of financial incapacity
provided there is waiver of his privilege under R.A. No. 1405
or under other general or special laws.
A a. True in both cases
b. False in both cases
c. True only in the first case
d. True only in the second case

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12. The concept of “situs of taxation” is based on which limitations of

taxation?
A a. Territorial jurisdiction
b. International comity
c. Exemption of the government
d. Public purpose
13. The following are instances when penalties and/or interest imposed on
the taxpayer may be abated or cancelled on the ground that the imposition
thereof is unjust and excessive, except when the:
D a. filing of the return or payment of the tax is made at the wrong
venue.
b. taxpayer’s mistake in payment of his tax is due to erroneous written
official advice of a revenue officer.
c. assessment is brought about or a result of the taxpayer’s non-
compliance with the law due to a difficult interpretation of the
said law.
d. taxpayer is declared insolvent or bankrupt.
14. First statement: In civil tax cases involving collection of internal

revenue taxes, prescription is construed strictly against the government
and liberally in favor of the taxpayer.
Second statement: In criminal tax cases involving tax offenses punishable

under the Tax Code, prescription is construed strictly against the
government.
C a. Both statements are correct
In criminal tax cases involving tax offenses punishable under the Tax
Code, prescription is construed strictly against the taxpayer.
15. Which of the following statements is not correct?

C a. A tax refund is in the nature of a tax exemption which must be
construed strictissimi juris against the taxpayer.
(Bonus b. Tax refund refers to the actual reimbursement of the erroneously or
item illegally collected taxes.
in c. Tax refund may be utilized in the payment of internal revenue taxes,
Final including (corrected from “excluding”) withholding taxes, for which
Pre- the taxpayer is directly liable.
Board) d. Illegally assessed or collected taxes arose when payments are made
under duress or assessment thereof having been rendered by a person
who has no power to assess the tax at all.
16. First statement: The President shall have the power to veto any
particular item or items in an appropriation, revenue, or tariff bill,
but the veto shall not affect the item or items to which he does not
object.
Second statement: The President shall have the power to veto any
particular item or items in a bill that penalizes crimes, but the veto
shall not affect the item or items to which he does not object.
A a. 1st statement is correct, 2nd statement is wrong

b. 1st statement is wrong, 2nd statement is correct
c. Both statements are wrong
d. Both statements are correct
The President shall have the power to veto any particular item or items
in an appropriation, revenue, or tariff bill, but the veto shall not
affect the item or items to which he does not object [Art. VI, Sec. 27
(2)].

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17. Warrant of levy as distinguished from warrant of distraint.

A a. It is on real property owned by and in possession of the taxpayer.
b. It is on personal property owned by and in possession of the taxpayer.
c. It is on property owned by the taxpayer but in the possession of a
third party,
d. It does not required advertisement.
18. If at any time prior to the consummation of the sale all proper charges
are paid to the officer conducting the sale, the goods or effects
distrained:
A a. shall be restored to the owner.
b. shall no longer be restored to the owner.
c. shall be brought to the Revenue District Officer.
d. shall be brought to the Regional District Officer.
SEC. 210. Release of Distrained Property Upon Payment Prior to Sale. -

If at any time prior to the consummation of the sale all proper charges
are paid to the officer conducting the sale, the goods or effects
distrained shall be restored to the owner.
19. A written notice informing a Taxpayer that the findings of the audit
conducted on his books of accounts and accounting records indicate that
additional taxes or deficiency assessments have to be paid.
A a. Notice of Informal Conference
b. Preliminary Assessment Notice
c. Letter of Authority
d. Formal Assessment Notice
20. For requests for reconsideration, the taxpayer shall submit all relevant
supporting documents in support of his protest within how many days from
date of filing of his letter of protest, other-wise, the assessment shall
become final?
D a. Sixty (60) days c. Twenty (20) days
b. Thirty (30) days d. None of the choices
The sixty (60)-day period for the submission of all relevant supporting
documents shall not apply to requests for reconsideration. It applies
to request for reinvestigation.
21. If the taxpayer is adversely affected by the resolution of the CTA in

Division on his Motion for Reconsideration, he may file a petition for
review with the CTA en banc within how many days?
D a. Sixty (60) days c. Twenty (20) days
b. Thirty (30) days d. Fifteen (15) days
22 to 25 are based on the following: In 2018, Ms. Glai Espenilla

Bangug, a financial comptroller of EB Company, earns annual
compensation of P1,500,000, inclusive of 13th month and other benefits
in the amount of P80,000 and mandatory SSS contribution of P3,500
and Philhealth contribution of P2,000. Aside from her employment
income, she owns a convenience store, VAT-registered, with gross
sales of P3,000,000. Sales discount amounts to P300,000; sales
returns and allowances amount to P150,000. Her cost of sales and
operating expenses are P1,000,000 and P600,000 respectively and with
non-operating income of P100,000. Payments for the first three (3)
quarters amount to P300,000.
22. Can she avail of the 8% income tax rate?

a. Yes, because her gross sales do not exceed the VAT threshold.
B b. No, because she is VAT-registered.
c. Yes, because she is a mixed income earner.
d. No, because her total income including compensation income exceed
the VAT threshold.

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23. How much is her total taxable income?

D a. P2,913,500 c. P2,463,500
b. P2,550,000 d. None of the choices
Solution:
Total compensation income P1,500,000
Less: Non-taxable 13th month and other
benefits 80,000
Mandatory SSS contribution 3,500
Mandatory Philhealth contribution 2,000 85,500
Taxable compensation income 1,414,500
Gross sales 3,000,000
Less: Sales discount ( 300,000)
Sales returns and allowances ( 150,000)
Net sales 2,550,000
Less: Cost of sales (1,000,000)
Gross income 1,550,000
Less: Operating expenses 600,000
Net income from operation 950,000
Add: Non-operating income 100,000 1,050,000
Total taxable income P2,464,500
24. How much is her tax due when she files her final tax return?
D a. P338,320 c. P482,320
b. P366,000 d. None of the choices
Total taxable income P2,464,500
Tax due Sec. 24 (A) 2,000,000 490,000
464,500 x 32% 148,640 P 638,640
Less: Payments, firs 3 quarters 300,000
Tax payable P 338,640
25. How much is the output VAT, if any?

A a. P306,000 c. P360,000
Solution:
Gross sales P3,000,000
Less: Sales discount ( 300,000)
Sales returns and allowances ( 150,000)
Net sales 2,550,000
Tax rate 12%
Output VAT P 306,000
26 to 29 are based on the following: Mr. and Mrs. CTE had the following
conjugal transfers during the year 2018:
January 26: Donated a parcel of land to their son, on account of
marriage. Their son’s wedding is on July 31, 2018. The fair
market value of the land at the time of donation was
P500,000. The fair market value of the land at the time
of marriage was P550,000. The donated property was subject
to P100,000 mortgage which was assumed by their son.
October 29: Donated P300,000 to the sister of Mr. CTE who was diagnosed
with cancer. They donated the amount for the medication
of Mr. CTE’s sister.
December 30: Sold 300,000 shares of stock from ABC Corporation to their
daughter for P300,000. The book value per share as per
latest audited financial statements of ABC Corporation is
P1.50 per share. The shares of stock were acquired two
years ago for P200,000.

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26. How much is the donor’s tax still of Mr. CTE on the January 26
transfer?
D a. P24,000 c. P12,000
Solution:
January 26, 2018
Gross gift (1/2 x 500,000) P250,000
Less: Mortgage assumed by the donee (1/2 x 100,000) 50,000
Net gift 200,000
Less: Exempt gift 250,000
Taxable net gift (50,000)
Donor’s tax rate 6%
Donor’s tax due -
27. How much is the donor’s tax due of Mrs. CTE on the October 29
transfer?
D a. P57,000 c. P21,000
Solution:
Gross gift (1/2 x 300,000) P150,000
Less: Deduction -
Net gift 150,000
Add: Prior net gift January 26 (250,000 – 50,000) 200,000
Total net gifts 350,000
Less: Exempt gift (250,000)
Total taxable net gifts 100,000
Tax due P6,000
Less: Donor’s tax on prior net gifts -
Donor’s tax payable P6,000
28. How much is the capital gains tax due of Mr. CTE on the December 30,
transfer?
C a. P22,500 c. P7,500
Solution:
Selling price (1/2 x 300,000) P150,000
Less: Value in the hands of the donor (1/2 x 200,000) 100,000
Capital gain 50,000
Tax rate 15%
Capital gains tax P 7,500
29. How much is the donor’s tax still of Mr. CTE on the December 30
transfer?
C a. P25,500 c. P4,500
b. P 9,000 d. None
Solution:
December 30
Gross gift (225,000 – 150,000) P75,000
Less: Deduction -
Net gift 75,000
Add: Prior net gifts (200,000
January 26 200,000
October 29 150,000 350,000
Less: Exempt gift (250,000)
Taxable net gifts 175,000
Tax due 10,500
Less: Donor’s tax on prior net gifts 6,000

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30 to 33 are based on the following: ECB, non-VAT registered lessor of

residential and commercial units had the following data for the first
and second quarters of 2018:
First Second
quarter quarter
Gross receipts from lease of residential units
With monthly rental of P13,000 per unit P2,500,000 P2,300,000
With monthly rental of P18,000 per unit 1,000,000 1,200,000
Gross receipts from lease of commercial units 2,300,000 2,400,000
Input tax paid from VAT suppliers 150,000 120,000
30. How much is the business tax of ECB for the first quarter?
A a. P396,000 c. P174,000
b. P246,000 d. P 99,000
Solution:
Gross receipts from lease of residential unit with
18,000 monthly rental 1,000,000
Gross receipts from lease of commercial units 2,300,000
Total (exceeds VAT threshold of 3,000,000) 3,300,000
Tax rate 12%
Output VAT 396,000
31. How much is the business tax of ECB for the second quarter?
B a. P708,000 c. P312,000
b. P432,000 d. P108,000
Solution:
Total 3,600,000
Tax rate 12%
Output VAT 432,000
32. How much is the business tax of ECB for the second quarter of 2018
assuming he registered as a VAT taxpayer at the start of the second
quarter 2018?
D a. P708,000 c. P432,000
b. P588,000 d. P312,000
Solution:
Total 3,600,000
Tax rate 12%
Output VAT 432,000
Less: Input tax 120,000
VAT due 312,000
33. Assuming ECB is VAT-registered taxpayer instead of Non-VAT

registered taxpayer, how much is the business tax due for the first
quarter of 2018?
D a. P696,000 c. P396,000
b. P546,000 d. P246,000
Solution:
Gross receipts from lease of residential unit with 18,000
monthly rental 1,000,000
Total 3,300,000
Tax rate 12%
Output VAT 396,000
Less: Input tax 150,000
VAT due 246,000

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34. An alien employee of an offshore banking unit has the following

income for the year 2018:
Salary received from offshore banking unit (OBU) P10,000,000

Honoraria and allowances received from the OBU 5,000,000
Interest income from a domestic bank on his peso
deposits 50,000
Capital gain from sale of shares in a domestic
corporation 100,000
How much is the tax from his gross income in the Philippines?
A a. P4,869,000 c. P1,500,000
Solution:
Taxable compensation income (10,000,000 + P15,000,000
5,000,000)
Tax due Section 24 (A) 8,000,000 P2,419,000
7,000,000 x 35% 2,450,000 P 4,869,000
Notes:
1) Starting January 1, 2018, all employees of RHQs/ROHQs/OBUs, and
Petroleum Service Contractors and Subcontractors shall be subject
to regular income tax rate under Section 24 (A)(2)(a) of the Tax
Code, as amended, without prejudice to the application of
preferential tax rates under existing international tax treaties,
if warranted.
2) The interest income on peso deposits and the capital gain from sale of
shares of stock in a domestic corporation shall be subject to different
rates of tax [See Section 24 (B) (1) and Section 24 (C).]
Section 24 (A) Effective January 1, 2018 up to December 31, 2022

If the taxable income is:
Over But not over The tax shall be Plus Of excess over
P 250,000 0%
P 250,000 400,000 20% P 250,000
400,000 800,000 P 30,000 25% 400,000
800,000 2,000,000 130,000 30% 800,000
2,000,000 8,000,000 490,000 32% 2,000,000
8,000,000 2,419,000 35% 8,000,000
(In the CPALE, follow given info despite different amount)
35. Under the TRAIN, the books of accounts shall be audited and examined
yearly by independent Certified Public Accountants and their income
tax returns accompanied with a duly accomplished Account Information
Form (AIF) which shall contain, among others, information lifted
from certified balance sheets, profit and loss statements, schedules
listing income-producing properties and the corresponding income
therefrom and other relevant statements if the:
A a. gross annual sales, earnings, receipts or output exceed Three
million pesos (P3,000,000).
b. gross quarterly sales, earnings, receipts or output exceed Three
c. gross annual sales, earnings, receipts or output amount to Three
million pesos (P3,000,000) or more.
d. gross quarterly sales, earnings, receipts or output exceed One
Hundred Fifty Thousand (P150,000).
36 and 37 are based on the following: Assume that “Mr. Era”, resident
citizen, bought shares of stock in 2017 at a cost of P100,000. He
donated these shares to “Mr. Aio”, a close resident alien friend, on
January 1, 2017, during which time, the said shares has a fair market
value of P 1,000,000 and on the basis of such fair market value, “Mr.

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Era” paid the corresponding donor’s tax. “Mr. Aio”, the donee, sold the
shares on February 1, 2018 for a consideration of P2,000,000.
36. How much is the capital gain (loss) from sale of shares of stock?
A a. P1,900,000 c. P950,000
b. P1,000,000 d. P500,000
Solution:
Selling price P2,000,000
Less: Value in the hands of the donor 100,000
Capital gain P1,900,000
37. How much was the capital gains tax, if any?

A a. P285,000 c. P185,000
Solution:
Capital gain P1,900,000
Tax rate 15%
38 to 41 are based on the following: Mr. Mark Tang is a partner of Tang

Dayag Caiga Company, a business partnership. He owns 25% interest. The
gross sales of Tang Dayag Caiga Company amounted to P10,000,000.00 for
taxable year 2021. The recorded cost of sales and operating expenses
of the partnership were P2,750,000.00 and P1,500,000.00, respectively.
It had also incurred an interest expense of P200,000 in connection with
asset acquisition and earned interest income from bank deposit amounting
to P100,000.
38. How much is the taxable income of the partnership?

B a. P5,750,000 c. P5,550,000
Solution:
Less: Cost of sales 2,750,000
Less: Interest expense 200,000
Reduction (20% x 100,000) (20,000) (180,000)
Other operating expense (1,500,000)
Taxable income P5,570,000
39. How much is the income tax liability of the partnership?

C a. P1,725,000 c. P1,392,500
Solution:
Tax rate 25%
Tax due P1,392,500
40. How much is the share in the partnership income of partner mark
Tang?
D a. P1,084,375 c. P978,775
Solution:
Taxable income of the partnership P5,570,000
Less: Income tax 1,392,500
Net income after tax 4,177,500
Add: Interest income, net of final tax (100,000 –
(100,000 x 20%) 80,000
Distributable net income 4,257,500
Mark Tang’s interest in the partnership 25%
Partner’s interest in the partnership’s
distributable income P 1,064,375

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41. Assuming the partnership avails of the Optional Standard deduction,

how much is the tax liability of the partnership?
C a. P1,725,000 c. P1,087,500
Solution:
Less: Optional standard deduction (40% x 7,250,000) 2,900,000
Taxable income 4,350,000
Tax rate 25%
Tax due and payable P1,087,500
42. Your client dies on July 14, 2018. You are appointed as
administrator. You withdraw from his bank deposit P100,000
because the estate needs cash to settle some obligations. What
is the consequence of your withdrawal from the decedent’s bank
deposit?
A a. subject to final withholding tax of 6%
b. subject to creditable withholding tax of 6%
c. Not subject to withholding tax
d. Subject to penalty and interest because such withdrawal is not
allowed.
43. Julian Cruz procured a life insurance upon his own life. He designated
his estate’s executor as an irrevocable beneficiary. For estate tax
purposes, the proceeds of life insurance is:
A a. included in the gross estate of Mr. Julian Cruz because when the
executor of the estate is a beneficiary the proceeds are included in
the gross estate regardless of the designation.
b. not included in the gross estate of Mr. Julian Cruz because the
designation of the beneficiary is irrevocable.
c. included in the gross estate of Mr. Julian Cruz because proceeds of
life insurance are always subject to estate tax.
d. not included in the gross estate because, as a rule, proceeds of life
insurance are generally not subject to estate tax.
44 to 47 are based on the following: Mr. Nah Mah The, single and
non-resident alien, died in 2018, leaving the following properties
in favor of his heirs:
Gross estate within the Philippines P30,000,000
Gross estate outside the Philippines 20,000,000
Funeral expenses 500,000
Judicial and administrative expenses 2,000,000
Claims against the estate 5,000,000
His gross estate includes family home valued at P8,000,000.
44. How much is the gross taxable estate of Mr. Nah Mah Teh’s estate?
C a. P50,000,000 c. P30,000,000
b. P45,000,000 d. P35,000,000
Solution:
Gross estate within the Philippines (including family home) P30,000,000
45. How much is the deductible ordinary deductions of Mr. Nah Mah Teh’s
estate?
D a. P5,000,000 c. P4,200,000
b. P4,320,000 d. P3,000,000
Solution:
Claims against the estate (5M x 30M/50M) P3,000,000

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46. How much is the deductible special deductions of Mr. Nah Mah Teh’s
estate?
D a. P8,500,000 c. P1,000,000
b. P5,500,000 d. P500,000
Solution:
Standard deduction P500,000
47. How much is the estate tax due of Mr. Nah Mah Teh’s estate?
A a. P1,590,000 c. P1,470,000
b. P1,518,000 d. P1,110,000
Solution:
Gross estate P30,000,000
Less: Ordinary deductions 3,000,000
Net estate before special deductions 27,000,000
Less: Standard deduction 500,000
Net taxable estate 26,500,000
Tax rate 6%
Estate tax due P1,590,000
48 and 49 are based on the following: During the current year, Jose Tugas
who resides in 158 R. Papa Street, Sampaloc Manila and with TIN 135-567-
890-006 made the following gifts:
Date Donee Amount of donation
June 1, 2018 Anton, his son, on
account of his P150,000 cash
marriage celebrated
June 1, 2018
July 10, 2018 His friend Carlos P400,000 a second-hand motor
vehicle
September 30, 2018 His daughter Dana P450,000 cash dowry, on
account of her scheduled
marriage on October 25, 2018
November 23, 2018 His father A parcel of land worth
P180,000, subject to the
condition that his father
would assume the mortgage
indebtedness of Jose in the
amount of P40,000;
48. Using Donor’s Tax Return (BIR Form No. 1800), how much will be reflected
on page 1 line 14 (Total Net Gifts Subject to Tax) for the return to be
filed on November 23, 2018?
B a. P1,140,000 c. P140,000
Solution:
25 Personal property (From Part V Schedule A) P -
26 Real property (From Part V Schedule B) 180,000
27 Total gifts in this return 180,000
Less: Deductions allowed (Sum of items 28 to 32)
28 Mortgage assumed by the donee 40,000
34 Total net gifts in this return (Item 27 less Item 28) 140,000
35 Add: Total net gifts during the calendar year (Item 36
of return previously filed with the year)
June 1, 2018 150,000
July 10, 2018 400,000
September 30, 2018 450,000 1,000,000
36 Total net gifts (Sum of Items 34 and 35) 1,140,000
37 Less: Exempt gift 250,000
38 Total net gifts subject to tax (Item 36 less Item 37) P 890,000

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49. Using the Donor’s Tax Return (BIR Form No. 1800), how much will be
reflected on line 18 (Tax Payable)?
B a. P53,400 c. (P6,600)
b. P 8,400 d. None of the choices
Solution:
14 Total net gifts subject to tax (From Part IV Item 38) P890,000
15 Applicable donor’s tax rate 6%
16 Total donor’s tax due (Item 14 x Item 15) 53,400
17 Less: Tax credit/payments
17A Payments for prior gifts during the taxable year
(1,000,000 – 250,000 x 6%) 45,000
18 Tax payable/Overpayment ((Item 16 less Item 17A) P 8,400
50 to 53 are based on the following: Your client, Antonio Manuel, is

engaged in various transactions that are subject to percentage taxes.
His address is 143 S. Loyola Street, Sampaloc, Manila. The TIN is 143-
678-910-005. He is under RDO 032. Email ad is Antoman@gamil.com.
The following data for the first quarter of the current year are
presented for your perusal. Answer the questions by filling up the line
in the actual Quarterly Percentage Tax Return (2551Q).
Gross receipts, sale of gas and water P1,500,000
Expenses, sale of gas and water 200,000
Gross receipts, rentals of office spaces, net
of 3% withholding tax (Follow rate as given; 727,500
while the latest rate is 1% effective July 1,
2020 – June 30, 2023, the examiner in the
problem still uses the 3% old rate)
Expenses, rental of office spaces 150,000
Gross receipts, life insurance premiums 800,000
Expenses, life insurance business 100,000
50. Using line 14 (Total tax due) of BIR Form 2551 Q, how much is total tax
due?
A a. P68,500 c. P30,000
Solution:
Alpha numeric
tax code Taxable amount Rate Tax due
(ATC)
PT 060 P1,500,000 2% P30,000
PT 010 750,000 3% 22,500
PT 120 800,000 2% 16,000
Total tax due P68,500
51. Assuming your client filed the return and paid the tax on July 25 and
it was found out that it was due to willful neglect, using line 20
(Surcharge), how much is the surcharge?
B a. P36,305 c. P17,125
Solution:
Surcharge rate 50%
Surcharge for willful neglect P34,250
52. Using the same information in the preceding number, using line 21
(Interest), how much is the interest?
C a. P8,220 c. P2,055
Solution:
Interest on delinquency (April 25 to July 25)
(68,500 x 12% x 3/12) P2,055
P a g e | 13
53. Using line 24 (Total amount payable), how much is the total amount
payable excluding compromise penalty?
C a. P104,805 c. P82,305
Solution:
14 Total tax due (From schedule 1 item 7) P68,500
Less: Tax credit/payment (attach proof)
15 Creditable percentage tax per BIR Form No. 2307 22,500
Tax still payable 46,000
Add: Penalties
20 Surcharge 34,250
21 Interest 2,055
Total amount payable P82,305
54 to 57 are based on the following: Inlabada, VAT-registered company is

engaged in the laundry business. During the first quarter of 2018, the
following information were made available:
Net revenue, first quarter 2018 P1,000,000
Receivables from customers, January 1, 2018 224,000
Receivables from customers, March 31, 2018 336,000
Creditable withholding VAT, first quarter 2018 5,000
VAT purchases other than capital goods, first quarter 2018 300,000
VAT purchases, capital goods, first quarter 2018
(all in January 2018) 1,200,000
Receivable balances are all income related and are exclusive of VAT.
Revenue and purchases are VAT exclusive. Capital goods are estimated
to have a useful life of 10 years.
54. Compute item 19B (Output tax) of BIR Form No. 2550Q
D a. P132,000 c. P108,000
b. P120,000 d. P106,560
Solution:
Receivables, January 1, 2018 P 224,000
Add: Revenue, first quarter 2018 1,000,000
Total 1,224,000
Less: Receivables, March 31, 2018 336,000
Gross receipts 888,000
Tax rate 12%
Output tax (Item 19B) P106,560
55. Compute item 22 (Total available input tax) of BIR Form No. 2550Q
B a. P185,000 c. P43,200
b. P180,000 d. P36,000
Input tax on VAT purchases other than capital goods,

first quarter 2018 (300,000 x 12%) P 36,000
Input tax on VAT purchases, capital goods, first quarter
2018 (all in January 2018)
(1,200,000 x 12% = 144,000) 144,000
Total available input taxes (Line 22) P 180,000
56. Compute the deferred input tax as of March 31, 2018?

C a. P141,600 c. P136,800
Solution:
1,200,000 X 12% X 57/60 = P136,800

P a g e | 14
57. Compute item 23C (Input tax allocated to exempt sales) of BIR Form No.
2550Q
D a. P13,000 closed to expense
b. P2,200 closed to income
c. P11,000 closed to expense
d. None of the choices
58 and 59 are based on the following: The gross sales of GEAL Corporation
for 2022 amounted to P6,000,000.00, with cost of sales amounting to
P4,000,000.00. It incurred. Operating expenses amounting to
P1,000,000.00. Its total assets excluding the land on which the particular
business entity’s office, plant and equipment are situated does not exceed
P100,000,000.00. On the filing of its First Quarter Income Tax Return,
its signified its intention to avail of the OSD.
58. Compute the income tax due

C a. P360,000 c. P240,000
Solution:
Gross sales P6,000,000.00
Less: Cost of sales 4,000,000.00
Gross income 2,000,000.00
Less: Optional Standard Deduction (2,000,000.00 x 40%)* 800,000.00
Taxable income P1,200,000.00
Tax rate** 20%
Tax due P 240,000.00
* OSD for corporation is based on gross income.

** Tax rate is 20%, taxable income does not exceed P5,000,000.00 and
total assets do not exceed P100,000,000.00
59. How much is the Output VAT, if any.

A a. P720,000 c. P120,000
Solution:
Tax rate 12%
Output VAT P720,000.00
60. Mr. Florence Binaluyo donates a piece of land to the City of Masbate.
The fair market value per BIR of the piece of land is P2,000,000 and its
value per Tax Declaration is P1,800,000. How much is the documentary
stamp tax, if any?
C a. P30,000 c. None, exempt from DST
Transfers exempt from donor’s tax under Section 101(a) and (b) of
the Tax Code shall be exempt from the tax imposed under this Section.
61. On every original issue, whether on organization, reorganization or for

any lawful purpose, of shares of stock by any association, company or
corporation, the documentary stamp tax is:
B a. One peso and fifty centavos (P1.50) on each Two hundred pesos
(P200), or fractional part thereof, of the par value of such stock.
b. Two pesos (P2.00) on each Two hundred pesos (P200), or fractional
part thereof, of the par value, of such shares of stock
c. Three pesos (P3.00) on each Two hundred pesos (P200), or fractional
d. Fifteen pesos (P15.00) on each Two hundred pesos (P200), or
fractional part thereof, of the par value, of such shares of stock

P a g e | 15
62. EF Pharmaceutical Corporation sold drugs for cancer which were part of
the corporation’s previous and current purchases. Total sales for the
period is P500,000,000.00, fifty percent (50%) of which is VAT-exempt.
The corporation also incurred P20,000,000.00 of input tax for the period
from purchases of medicines including those prescribed for cancer. There
was an unutilized input tax of P10,000,000.00 coming from the previous
period but cannot be attributed to the inventory of drugs for cancer.
Using BIR Form No. 2550Q what amount shall be reflected in line 23C?
B a. P30,000,000 c. P10,000,000
Solution:
Output tax (250,000,000.00 x 12%) P30,000,000.00
Less: Input taxes for the period
Carried over from previous 10,000,000.00
period
From current purchases 20,000,000.00
Total 30,000,000.00
Less: Input tax ratable to (15,000,000.00)
exempt sales (50% of
total sales)(line 23C) (15,000,000.00)*
VAT payable P11,000,000.00
*Note: The P15,000,000.00 directly identifiable to exempt sales shall

be charged to cost.
63. Which of the following articles shall be subject to specific excise

tax?
D a. Excise tax on alcoholic products
b. Excise tax on automobiles
c. Excise tax on non-essential services
d. Excise tax on sweetened beverages
64. A non-profit hospital has the following data for the current calendar
year:
Gross receipts, related activities P 15,000,000.00
Cost of services, related activities 6,000,000.00
Allowable deductions from related activities 3,250,000.00
Gross receipts, unrelated activities 18,000,000.00
Cost of services, unrelated activities 5,000,000.00
Allowable deductions from unrelated
activities 2,000,000.00
Payments, first three (3) quarters 2,000,000.00
How much is the tax payable (Overpayment)?

B a. P4,187,500 c. (P1,832,500)
Solution:
Related Unrelated
activities activities Total
Gross receipts P15,000,000.00 P18,000,000.00 P33,000,000.00
Less: Cost of 6,000,000.00 5,000,000.00 11,000,000.00
services
Gross income 9,000,000.00 13,000,000.00 22,000,000.00
Less: Allowable
deductions 3,250,000.00 2,000,000.00 5,250,000.00
Net taxable income P 5,750,000.00 P11,000,000.00 16,750,000.00
Tax rate* 25%
Income tax due 4,187,500.00
Less: Payments, 2,000,000.00
first 3 quarters
Income tax payable P2,187,500.00

P a g e | 16
65. Case 1: The City of Masbate passed an ordinance granting senior

citizens free movie viewing on certain days.
Case 2: The City of Masbate passed an ordinance limiting the discount

given to senior citizens at 15% instead of 20%.
A a. Only Case 1 is valid.

b. Both cases are valid.
c. Only Case 2 is valid.
d. Both cases are not valid.
66. For income tax purposes, the term “corporation” shall include all the
following except:
D a. One person corporation
b. Partnerships no matter how created or organized
c. Joint-stock companies
d. General professional partnerships
67 and 68 are based on the following: A PEZA-registered entity engaged

as an export enterprise provided you with the following information for
the current taxable year:
Export sales P45,500,000
Direct costs 27,000,000
Administrative expenses 5,650,000
Marketing expenses 2,720,000
Other operating expenses 1,330,000
Incidental losses 320,000
Additional information:
a. Domestic sales at P24,500,000 with direct cost at P14,700,000
b. Other expenses related to the domestic sale incurred amounted to
P3,206,400
c. PEZA Letter of Authority No. 18-ERD-LS-FP/EE-0001 provides domestic
sales limitation at 30%
67. What is the entity’s total income tax for the year?
D a. P 925,000 c. P 2,903,080
b. P 1,978,080 d. None of the choices
Solution:
Gross sales (export) P45,500,000
Less: Direct costs 27,000,000
Tax rate 5%
Tax due P 925,000
Share of the National Government (3% x 18,500,000) P 555,000
Share of the local government (2% x 18,500,000) P 370,000
Gross sales (domestic) P24,500,000

Less: Direct costs (domestic sales) 14,700,000
Gross income (domestic sales) 9,800,000
Less: Deductible expenses 3,206,400
Taxable income P 6,593,600
Normal corporate income tax (6,593,600 x 25%) P 1,648,400
Minimum corporate income tax (9,800,000 x 1%) P 98,000
Tax due (higher) P 1,648,400
Income tax on export sales P 925,000

Income tax on domestic sales 1,648,400
Total P 2,573,400

P a g e | 17
68. What is the entity’s income tax if the PEZA Letter of Authority No. 18-
ERD-LS-FP/EE-0001 provides domestic sales limitation at 30% as a
condition for fiscal incentives?
D a. P4,522,080 c. P1,978,080
Solution:
Gross sales (45,500,000 + 24,500,000) P70,000,000
Less: Direct costs (27,000,000 + 14,700,000) 41,700,000
Less: Deductible expenses
Administrative expenses 5,650,000
Marketing expenses 2,720,000
Other operating expenses 1,330,000
Incidental losses 320,000
Other expenses related to the domestic sale 3,206,400 13,226,400
Normal corporate income tax (15,073,600 x 25%) P 3,768,400
Minimum corporate income tax (28,300,000 x 1%) P 283,000
Tax due (higher) P 3,768,400
Domestic sales over total sales is 35% (24,500,000/70,000,000).
Since the PEZA-registered entity is an export enterprise subject to 5% special

tax regime but did not comply with the condition for fiscal incentive, all
the entity’s income shall be subject to the normal corporate income tax of
25% under the CREATE Act.
69. LA Corporation is a VAT-registered entity and a holder of License to

Operate issued by FDA to manufacture medical-grade PPE components such
as coveralls, gowns, surgical caps, surgical masks, n-95 masks, scrub
suits, goggles and face shields, double or surgical gloves, dedicated
shoes and shoe covers for COVID-19 prevention.
During the period of April to June 2021, the company had the following
transactions:
Importation of raw materials (not locally available) P2,000,000.00
Importation of capital equipment 25,000,000.00
Importation of raw materials (locally available) 1,000,000.00
Sale or transfer of raw materials to an affiliated
company which is also a holder of License to Operate
by the FDA 500,000.00
How much of the above transactions shall be exempt from VAT?

B a. P28,500,000 c. P27,000,000
Solution:
Importation of raw materials (not locally available) P 2,000,000.00

Importation of capital equipment 25,000,000.00
Sale or transfer of raw materials to an affiliated
company also a holder of License to Operate by the FDA 500,000.00
Total P27,500,000.00
70. Starting July 1, 2020, resident foreign corporations the taxable income
and total assets of which do not exceed P5,000,0000 and P100,000,000
respectively shall be taxed at:
B a. 30% c. 20%
b. 25% d. 10%
END OF EXAMINATION

ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY
CPA Review Batch 43  May 2022 CPALE  23 April 2022  8:00 – 11:00 AM
TAXATION FINAL PRE-BOARD EXAMINATION
INSTRUCTIONS: Select the correct answer for each of the questions. Mark only one
answer for each item by shading the box corresponding to the letter of your choice on
the answer sheet provided. STRICTLY NO ERASURES ALLOWED. Use pencil no. 2 only.
1. A citizen who has been previously considered as nonresident citizen and who arrives
in the Philippines at any time during the taxable year to reside permanently in the
Philippines shall likewise be treated as a nonresident citizen for the taxable year
in which he arrives in the Philippines with respect to his:
a. income derived from sources abroad until the date of his arrival in
the Philippines.
b. income derived from sources within the Philippines.
c. income derived from sources abroad until the last day of the calendar
year.
d. income derived from sources within and outside the Philippines.
2. First statement: The husband and wife shall compute their individual income tax
separately based on their respective total taxable income.
Second statement: If any income cannot be definitely attributed to or identified
as income exclusively earned or realized by either of the spouses, the same shall
be divided equally between the spouses for the purpose of determining their
respective taxable income.
a. Both statements are correct
3. There shall be levied, collected and paid for each taxable year upon the income
received by every alien individual employed by regional or area headquarters and
regional operating headquarters established in the Philippines by multinational
companies from such regional or area headquarters and regional operating
headquarters, a tax equal to:
a. Twenty-five percent (25%) of such gross income.
b. Twenty percent (20%) of such gross income.
c. Fifteen percent (15%) of such gross income.
d. Regular income tax rate under Section 24 (A) (2) (a) of the Tax Code.
4. Ms. Cora Fiel, an alien employed in PetrolEx Corporation that is a Petroleum Service
Contractor, received compensation income of P 5,000,000.00 for 2018. She is
married and has four (4) minor children. How much is the tax due?
a. P 1,450,000
b. P 1,402,000
c. P 750,000
5. The MCIT shall be imposed upon a domestic corporation or a resident foreign

corporation:
I - whenever such corporation has a zero or negative taxable income;
II - when the amount of minimum corporate income tax is greater than the normal
income tax due from such corporation.
a. Both I and II are correct
b. Neither I nor II is correct
c. Only I is correct
d. Only II is correct
6. Aliw Service Corporation, registered with BIR in 2018, has the following data for
the year 2021:
Gross receipts P1,000,000
Discounts given 100,000
Returns and allowances 150,000
Salaries of personnel directly involved in
the supply of services 300,000
Fees of consultants directly involved in
the supply of services 50,000
Rental of equipment directly used in the
supply of services 70,000
Operating expenses 420,000
Page 1 of 17 0915-2303213  resacpareview@gmail.com

TAXATION
ReSA Batch 43 - May 2022 CPALE Batch
23 April 2022  8:00 AM to 11:00 AM TAX Final Pre-Board Exam
How much is the income tax due and payable?

a. P 27,000
b. P 6,600
c. Zero
7. The recovery of the account previously written off would constitute taxable income
only if in the year of recognition of being worthless, the write-off resulted in a
reduction of a taxable income.
a. Reciprocity rule
b. Equity of the incumbent rule
c. Tax benefit rule
d. Materiality rule
8. One of the following is considered an income for income taxation.

a. Advance in the value of the person or a corporation
b. Increase in book value of real property and other fixed assets of a
corporation as a result of their re-appraisal
c. Net increase in the value of livestock or increase of its inventory
d. Items of gross income which have been credited or set apart for the
taxpayer without restriction
9. Excise tax on certain articles is an example of:

a. An indirect tax.
b. A direct tax.
c. A local tax.
d. A transfer tax.
10. An annual tax of P1,000 was imposed upon all residents of the Philippines, who are
above 21 years of age, with a gross income of P250,000, whether or not they send
their children to public schools, for the purpose of raising funds in order to
improve public school buildings. The tax is:
a. violative of the equal protection clause of the Constitution.
b. confiscatory.
c. for public purpose.
d. contradicts the inherent limitations.
11. A law was passed by Congress which granted tax amnesty to those who have not paid
income taxes for a certain year without at the same time providing for the refund
of taxes to those who have already paid them. The law is:
a. valid because there is a valid classification.
b. not valid because those who did not pay their taxes are favored over
those who have paid their taxes.
c. valid because it was Congress which passed the law and it did not
improperly delegate the power to tax.
d. not valid because only the President with the approval of Congress
may grant amnesty.
12. In case of conflict between tax laws and generally accepted accounting principles
(GAAP):
a. both tax laws and GAAP shall be enforced.
b. GAAP shall prevail over tax laws.
c. tax laws shall prevail over GAAP.
d. the issue shall be resolved by the court.
13. The fair market value of real properties located in each zone or area, shall be subject
to automatic adjustment once every how many years through rules and regulations
issued by the Secretary of Finance based on the current Philippine valuation
standards?
a. 3 years
b. 5 years
c. 7 years
d. 10 years

TAXATION
14. Which of the following cases may not be compromised?

a. Delinquent accounts
b. Cases under administrative protest after issuance of the Final
Notice of Assessment to the taxpayer still pending in the BIR
c. Civil tax cases being disputed before the courts
d. Criminal violations involving criminal tax fraud.
15. The following are instances when penalties and/or interest imposed on the taxpayer
may be abated or cancelled on the ground that the imposition thereof is unjust and
excessive, except when the:
a. Filing of the return or payment of the tax is made at the wrong
venue.
b. Taxpayer’s mistake in payment of his tax is due to erroneous
written official advice of a revenue officer.
c. Assessment is brought about or a result of the taxpayer’s non-
compliance with the law due to a difficult interpretation of the
said law.
d. Taxpayer is declared insolvent or bankrupt.
16. First statement: In civil tax cases involving collection of internal revenue taxes,
prescription is construed strictly against the government and liberally in favor
of the taxpayer.
Second statement: In criminal tax cases involving tax offenses punishable under
the Tax Code, prescription is construed strictly against the government.
a. Both statements are correct
17. If at any time prior to the consummation of the sale all proper charges are paid
to the officer conducting the sale, the goods or effects distrained:
a. shall be restored to the owner.
b. shall no longer be restored to the owner.
c. shall be brought to the Revenue District Officer.
d. shall be brought to the Regional District Officer.
18. If after review and evaluation by the Commissioner or his duly authorized
representative, it is determined that there exists sufficient basis to assess the
taxpayer for any deficiency tax or taxes, the said Office shall issue to the
taxpayer the:
a. Notice of informal conference
b. Notice of discrepancies
c. Preliminary Assessment Notice
d. Formal Assessment Notice
19. For requests for reinvestigation, the taxpayer shall submit all relevant supporting
documents in support of his protest within how many days from date of filing of
his letter of protest, other-wise, the assessment shall become final?
a. Sixty (60) days
b. Thirty (30) days
c. Twenty (20) days
20. In 2018, Ms. Glai Espenilla Bangug, a financial comptroller of EB Company,

earns annual compensation of P1,500,000, inclusive of 13th month and other
benefits in the amount of P80,000 and mandatory SSS contribution of P3,500 and
Philhealth contribution of P2,000. Aside from her employment income, she owns
a convenience store, VAT-registered, with gross sales of P3,000,000. Sales
discount amounts to P300,000; sales returns and allowances amount to P150,000.
Her cost of sales and operating expenses are P1,000,000 and P600,000
respectively and with non-operating income of P100,000. Payments for the first
three (3) quarters amount to P300,000.

TAXATION
Can she avail of the 8% income tax rate?
a. Yes, because her gross sales do not exceed the VAT threshold.
b. No, because she is VAT- registered.
c. Yes, because she is a mixed income earner.
d. No, because her total income including compensation income exceed the
VAT threshold.
21. Under the TRAIN, the books of accounts shall be audited and examined yearly by
independent Certified Public Accountants and their income tax returns
accompanied with a duly accomplished Account Information Form (AIF) which shall
contain, among others, information lifted from certified balance sheets, profit
and loss statements, schedules listing income-producing properties and the
corresponding income therefrom and other relevant statements if the:
a. gross annual sales, earnings, receipts or output exceed Three
b. gross quarterly sales, earnings, receipts or output exceed Three
c. gross annual sales, earnings, receipts or output amount to Three
million pesos (P3,000,000)or more.
d. gross quarterly sales, earnings, receipts or output exceed One
Hundred Fifty Thousand (P150,000).
22. Your client dies on July 14, 2018. You are appointed as administrator. You
withdraw from his bank deposit P100,000 because the estate needs cash to
settle some obligations. What is the consequence of your withdrawal from
the decedent’s bank deposit?
a. subject to final withholding tax of 6%
b. subject to creditable withholding tax of 6%
c. Not subject to withholding tax
d. Subject to penalty and interest because such withdrawal is not
allowed.
23 and 24 are based on the following: A resident decedent left the following
properties:
Real properties P 10,000,000
Personal properties excluding bank deposit 15,000,000
Bank deposit (P 940,000 net of final tax, was withdrawn
from the account of the decedent after the decedent 3,000,000
died)
23. The gross estate of the decedent was:

a. P 28,000,000
b. P 27,000,000
c. P 26,000,000
d. P 25,000,000
24. The final withholding tax on amount withdrawn was:

a. P 200,000
b. P 100,000
c. P 60,000
An unmarried decedent died leaving properties he inherited 4 ½ years ago which

had fair market value of P800,000 at the time of his death (P650,000 at the time
of inheritance). The present decedent mortgaged the property for P50,000 and
paid P20,000 before he died). Other properties in his gross estate had fair
market value of P1,000,000. The total expenses, losses, indebtedness, taxes and
transfer for public purpose amounted to P300,000.
25. How much was the vanishing deduction?

a. P 225,000
b. P 108,333
c. P 102,900
d. P 100,000

TAXATION
26 and 27 are based on the following: Transfer Taxes The decedent is a resident
unmarried head of family who died on March 1, 2019. He left the following properties,
obligations and expenses:
Real and personal properties P14,000,000

Family home 30,000,000
Ordinary deductions
Unpaid real estate tax 2,000,000
Medical expenses 600,000
26. The taxable net estate is:

a. P42,000,000.
b. P32,000,000.
c. P27,000,000.
d. P23,000,000.
27. Continuing the preceding number, the estate tax return shall be filed and the
estate tax paid on or before to avoid penalties:
a. March 1, 2020
b. March 1, 2021
c. September 1, 2018
28 and 29 are based on the following: During the current year, Jose Tugas who resides
in 158 R. Papa Street, Sampaloc Manila and with TIN 135-567-890-006 made the following
gifts:
Date Donee Amount of donation
June 1, 2018 Anton, his son, on P150,000 cash
account of his
marriage celebrated
June 1, 2018
July 10, 2018 His friend Carlos P400,000 a second hand motor
vehicle
September 30, 2018 His daughter Dana P450,000 cash dowry, on account
of her scheduled marriage on
October 25, 2018
November 23, 2018 His father A parcel of land worth P180,000,
subject to the condition that
his father would assume the
mortgage indebtedness of Jose
in the amount of P40,000;
28. Using Donor’s Tax Return (BIR Form No. 1800), how much will be reflected on line
38 (Total net gifts subject to tax) for the return to be filed on November 23,
2018?
a. P1,140,000
b. P 890,000
c. P 140,000
29. Using the Donor’s Tax Return (BIR Form No. 1800), how much will be reflected on
line 18?
a. P53,400
b. P 8,400
c. (P6,600)
30 to 33 are based on the following: Your client, Antonio Manuel, is engaged in various
transactions that are subject to percentage taxes. His address is 143 S. Loyola
Street, Sampaloc, Manila. The TIN is 143-678-910-005. He is under RDO 032. Email ad
is Antoman@gamil.com.
The following data for the first quarter of the current year are presented for your
perusal. Answer the questions by filling up the line in the actual Quarterly
Percentage Tax Return (2551Q).

TAXATION
Gross receipts, sale of gas and water P1,500,000
Expenses, sale of gas and water 200,000
Gross receipts, rentals of office spaces, net of 1% 742,500
withholding tax
Expenses, rental of office spaces 150,000
Gross receipts, life insurance premiums 800,000
Expenses, life insurance business 100,000
30. Using line 14 of BIR Form 2551 Q, how much is total tax due?
a. P91,500
b. P68,500
c. P53,500
d. P30,000
31. Assuming your client filed the return and paid the tax on July 25 and it was found
out that it was due to willful neglect, using line 20, how much is the surcharge?
a. P36,305
b. P34,250
c. P26,750
d. P17,125
32. Using the same information in the preceding number, using line 21, how much is the
interest?
a. P8,220
b. P3,425
c. P1,605
d. P1,600
33. Using line 24, how much is the total amount payable excluding compromise penalty?
a. P104,805
b. P 85,730
c. P 74,355
d. P 74,350
34 and 35 are based on the following: In the year 2021, Mr. Nicko Macariola has the
following transactions:
Gross receipts, trucking business P1,500,000

Gross receipts, lease of residential units
(monthly rental is P20,000 per unit) 2,500,000
Gross receipts, practice of accountancy 1,000,000
Sale of four (4) residential lots at P1,500,000 each to
four (4) individual buyers for socialized housing 6,000,000
Sale of three (3) parking spaces at P500,000 each 1,500,000
34. How much is the VAT-exempt gross receipts, assuming the taxpayer is VAT-registered?
a. P8,500,000
b. P6,000,000
c. P3,500,000
35. How much is total VAT-subject amount, assuming the taxpayer is not VAT-registered?
a. P8,500,000
b. P7,500,000
c. P6,500,000
36. In 2018 a stockholder of a closely held corporation owns 100,000 shares before the
IPO. The cost of the share is P1,000,000. During the IPO, the shares are selling
at P12 per share. After the IPO, the outstanding shares of the closely held
corporation are 1,000,000 shares and are now selling at P14 per share at the local
stock exchange.
Your friend asks for your advice whether to sell his shares during the IPO through
the local stock exchange or sell after the IPO not through the local stock exchange.

TAXATION
What advice will you give him to minimize income tax?
a. Sell during the IPO because he will pay lesser tax.
b. Sell after the IPO but directly to a buyer so that he will pay lesser
tax.
c. Sell any time because there is no advantage as far as taxes due are
concerned.
d. Sell it below cost after the IPO directly to a buyer so he will not
be subject to tax on capital gain.
37 and 38 are based on the following: ABC Corporation, VAT-registered real estate
dealer, sold a residential lot on July 2, 2021 for P1,500,000. The down payment was
P200,000. The first installment of P100,000 was made on the year of sale. The zonal
value of the subject property at the time of sale amounted to P2,000,000.
37. Would the sale qualify under installment plan?

a. Yes, because the initial payment did not exceed 25% of the selling
price.
b. No, because the amount of the initial payments were not known.
c. Yes, because the sale had initial payments and, therefore, qualified
under installment plan.
d. No, because, as a rule, sale of real property would always be
considered sale under cash basis.
38. How much was the output tax on the installment payment?
a. P48,000
b. P36,000
c. P32,000
d. Exempt from VAT
39. Mr. Florence Binaluyo donates a piece of land to the City of Masbate. The fair
market value per BIR of the piece of land is P2,000,000 and its value per Tax
Declaration is P1,800,000. How much is the documentary stamp tax, if any?
a. P30,000
b. P30,000
c. None, exempt from DST
40. On every original issue, whether on organization, reorganization or for any lawful
purpose, of shares of stock by any association, company or corporation, the
documentary stamp tax is:
a. One peso and fifty centavos (P1.50) on each Two hundred pesos
(P200), or fractional part thereof, of the par value of such stock.
b. Two pesos (P2.00) on each Two hundred pesos (P200), or fractional
c. Three pesos (P3.00) on each Two hundred pesos (P200), or fractional
d. Fifteen pesos (P15.00)on each Two hundred pesos (P200), or fractional
41. These are taxes on goods manufactured or produced in the Philippines for
domestic sales or consumption or for any other disposition and to things imported
as well as services performed in the Philippine, which tax shall be in addition
to the value-added tax.
a. Percentage Taxes
b. Income Tax
c. Documentary Stamp Taxes
d. Excise Taxes
42. Which of the following articles shall be subject to specific excise tax?
a. Excise tax on alcoholic products
b. Excise tax on automobiles
c. Excise tax on non-essential services
d. Excise tax on sweetened beverages

TAXATION
43. A residential building located in one of the cities in Metro Manila has a fair
market value of P10,000,000. The city ordinance fixed the actual assessment level
at 60%. How much is the basic real property tax, excluding the Special Educational
Fund (SEF)?
a. P120,000
b. P 60,000
c. P30,000
44. Unless otherwise provided in the Local Government Code, the tax period of all
local taxes, fees and charges shall be:
a. calendar year.
b. fiscal year.
c. either calendar year or fiscal year at the option of the taxpayer.
d. neither calendar year nor fiscal year at the option of the LGU.
45. Who of the following shall not qualify as senior citizen?

a. Resident Filipino citizen, 60 years old
b. Filipino citizen with dual citizenship, 60 years old, 6 months
residency in the Philippines
c. Resident alien, 65 years old
46. A Company that hires a PWD shall be allowed subject to certain conditions:
a. Ten percent (10%) of the total amount paid as salaries and wages to
senior citizens as additional deduction.
b. Fifteen percent (15%) of the total amount paid as salaries and wages
to senior citizens as additional deduction.
c. Twenty-five percent (25%) of the total amount paid as salaries and
wages to senior citizens as additional deduction.
d. Thirty percent (30%) of the total amount paid as salaries and wages
to senior citizens as additional deduction.
47. One of the following is not qualified to register as Barangay Micro Business
Enterprise (BMBE).
a. Bakery with total assets not exceeding P3,000,000
b. Motor shop with total assets not exceeding P3,000,000
c. A CPA practitioner with total assets not exceeding P3,000,000
d. Farm producing agricultural products with total assets not exceeding
P3,000,000
48. Which of the following is not a relief from double taxation?

a. Tax credit
b. Allowance of deduction for foreign taxes
c. Tax treaties
d. Not reporting income or transactions in foreign countries
49. LAB Corporation originally issued stock dividends valued at P2,000,000. How much
is the documentary stamp tax, if any?
a. P30,000
b. P20,000
c. P15,000
50. The final income tax return for the taxable year 2018 which was due on April 15,
2019 was filed earlier on March 15, 2019. A substantially amended return was
filed on May 31, 2019. When is the last day to make a valid assessment?
a. March 15, 2022
b. April 15, 2022
c. May 31, 2022
d. May 31, 2025

TAXATION
SITUATIONAL
During the year 2018, ABC Corporation paid for the monthly rental of a residential
house of its branch manager, Mr. J. de la Cruz, amounting to P 68,000.
51. How much is the value of the fringe benefit?

a. P68,000
b. P34,000
c. P16,000
d. P11,333
52. How much is the monetary value of the fringe benefit?

a. P68,000
b. P34,000
c. P16,000
d. P11,333
53. How much is the fringe benefit tax?

a. P18,308
b. P16,000
c. P 6,000
SITUATIONAL
An individual taxpayer holds shares of stock as investment which he bought from a

publicly-listed company for P500,000 (P500,000 par value). The shares are listed
and traded in the local stock exchange. He sells them for P750,000. How much is the
capital gains tax on the sale, if any?
54. How much is the capital gains tax, if any?

a. P112,500
b. P 37,500
c. P 4,500
d. None, not subject to capital gains tax
55. How much is the capital gains tax on the sale assuming the corporation from which
the shares are bought is not compliant with the mandatory minimum public ownership?
a. P112,500
b. P 37,500
c. P 4,500
d. None, not subject to capital gains tax
SITUATIONAL
A resident citizen, 50 years old, married, with three (3) qualified dependent
children asks you to assist him in computing his taxable net income for the year
2018:
Gross professional income, net of 15% withholding tax P680,000

Professional expenses 300,000
Retirement benefits received from his previous
employer that maintained a reasonable private
pension plan (he served the company for 12 years) 250,000
Lump sum benefits received from SSS 200,000
Prize in a sports tournament sponsored by a group
of businessmen promoting health products 50,000
Gain from sale of bonds (maturity period is 4 years) 10,000
Interest income from bonds with a maturity period
of 7 years 20,000
Interest on long term deposits with maturity period
of 5 years 30,000
Philippine Lotto winnings 500,000
Share in the net income of a business partnership 100,000

TAXATION
56. How much is the total amount of excluded or exempted income?
a. P1,150,000
b. P1,000,000
c. P 500,000
d. P 480,000
57. How much is the final withholding tax on certain income?

a. P130,000
b. P120,000
c. P110,000
d. P 20,000
58. How much is the taxable net income?

a. P651,176
b. P510,000
c. P385,000
d. P375,000
59. How much is the tax due and payable?

a. 81,544
b. 61,544
c. 57,500
d. (62,500)
60. How much is the total income tax expenses for the year?
a. P177,500
b. P167,500
c. P 77,500
d. P 57,500
SITUATIONAL
The decedent was a resident unmarried head of family died on January 6, 2022. The
following data were provided from his estate:
Real and personal properties (excluding a piece of land valued

at P2,000,000 transferred mortis causa to his son, and car
valued at P500,000 which was revocably transferred to a nephew,
decedent waived his right to revoke before he died)
P14,000,000
The following items were claimed as deductions from the gross estate:
Funeral expenses P 100,000
Judicial expenses 200,000
Unpaid real estate tax 2,000,000
Loss of a personal property due to theft (500,000 recovered
from Insurance) 1,000,000
Transfer for public use 500,000
Medical expenses 300,000
61. How much is to be reflected in line 34 of BIR Form No. 1801 (gross estate)?
a. P46,500,000
b. P46,000,000
c. P42,500,000
d. P42,000,000
62. How much is to be reflected in line 35 of BIR Form 1801 (the total ordinary
deductions)?
a. P3,800,000
b. P3,500,000
c. P3,200,000
d. P3,000,000
63. How much is to be reflected in line 37D of BIR Form 1801 (the total special
deductions)?
B a. P15,000,000
b. P11,000,000
c. P 2,000,000
d. P 1,500,000

TAXATION
64. How much is to be reflected in line 40 of BIR Form 1801 (net taxable estate)?
a. P42,000,000.
b. P32,000,000.
c. P28,000,000.
d. P23,500,000.
65. How much is to be reflected in line 16 of BIR Form No. 1800 (the donor’s tax), if
any, on certain transfer mentioned in the information given above?
a. P30,000
b. P15,000
c. P10,000
d. None, not subject to donor’s tax
SITUATIONAL
A VAT-registered corporation has the following data taken from the books of accounts
for the first calendar quarter of 2018:
Sales returns and allowances 10,000,000
Sales discount (given at the time of sale including P500,000
discount given to senior citizens) 4,500,000
Cost of sales 90,500,000
Office equipment purchased January 1, 2018 1,100,000
Vehicle for land transport imported January 1, 2018 2,500,000
Pre-owned helicopter acquired January 1, 2018 10,000,000
Maintenance expenses, vehicle for land transport and helicopter 150,000
Purchase of goods for sale, (included in the cost of sales above) 30,000,000
Operating expenses (40% with passed-on VAT) 5,000,000
Office supplies purchased (wholly used) 900,000
VAT payments for January 5,000,000
February 2,000,000
66. How much is the output tax?
a. P18,000,000
b. P16,800,000
c. P16,320,000
d. P16,260,000
67. Can the taxpayer claim creditable input tax on importation of vehicle for land
transport?
a. Yes, because the vehicle for land transport is used for the VAT-
subject business.
b. No, because the value of the vehicle exceeded P2,400,000.
c. Yes, because the vehicle is a depreciable asset for income tax
purposes.
d. No, because input tax is not allowed on importation.
68. Can the taxpayer claim input tax on acquisition of helicopter?
a. Yes, because the helicopter is used for the VAT-subject business.
b. No, because the helicopter is a non-depreciable asset, hence, no
input tax shall be allowed.
c. Yes, because the helicopter is a depreciable asset for income tax
purposes, hence, input tax shall be allowed.
d. No, because input tax is not allowed on helicopters without any
exception.
69. How much is the creditable input tax?
a. P4,080,000
b. P3,954,600
c. P3,950,200
d. P3,948,000
70. How much is the VAT payable upon filing of the quarterly return on or before April
25, 2018?
a. P6,920,000
b. P5,845,400
c. P5,370,000
d. P5,305,400
- END –

TAXATION
ANSWERS & SOLUTIONS/CLARIFICATIONS

1 A 26 C 51 A
2 A 27 A 52 B
3 D 28 B 53 A
4 A 29 B 54 D
5 A 30 C 55 B
6 C 31 C 56 C
7 C 32 D 57 B
8 D 33 D 58 B
9 A 34 B 59 D
10 C 35 C 60 A
11 A 36 D 61 B
12 C 37 A 62 D
13 A 38 A 63 A
14 D 39 C 64 C
15 D 40 B 65 B
16 C 41 D 66 D
17 A 42 D 67 B
18 A 43 A 68 B
19 A 44 A 69 B
20 B 45 C 70 D
21 A 46 C
22 A 47 C
23 B 48 D
24 C 49 B
25 B 50 C
1. Reference: Section 22 (E) (4), NIRC, as amended
2. Reference: Section 24 (A) (1) (a), (b) and (c), NIRC, as amended
3. Reference: Section 25 (C), NIRC, as amended
Section 4 (C), Revenue Regulations No. 8-2018

The preferential income tax rate under subsection (C) (D) and (E) of Section 25 of the
Tax Code, as amended, shall no longer be applicable without prejudice to the application
of preferential tax rates under existing international tax treaties, if warranted. Thus. all
concerned employees of the regional or area headquarters and regional operating
headquarters of multinational companies, offshore banking units and petroleum service
contractor and subcontractor ‘s shall be subject to the regular income tax rate under
Sec. 24(A)(2) ta) of the Tax Code. as amended.
4. Compensation income P5,000,000

Tax due under Section 24 (A)
2,000,000 P490,000
3,000,000 x 32% 960,000 P1,450,000
5. References: Section 2.27 (E) (1), Revenue Regulations No. 9-98, as amended by
Revenue Regulations No. 12-2007
Section 2.28 (A) (2), Revenue Regulations No. 9-98, as amended by
Revenue Regulations No. 12-2007

TAXATION
6. Gross receipts P1,000,000
Less: Discounts (P 100,000)
Returns and allowances ( 150,000) (250,000)
Net receipts 750,000
Less: Cost of services
Salaries of personnel (P 300,000)
Fees of consultants ( 50,000)
Rental of equipment ( 70,000 ) (420,000)
Gross income 330,000
Net operating loss (P 90,000)
RCIT P - ____
MCIT (not subject yet) P___-____
Tax due and payable Zero
8. Reference: Section 52, Revenue Regulations No. 2
13. Reference: Section 6 (E), NIRC, as amended under TRAIN
14. Reference: Section 2, Revenue Regulations No. 30-2002
16. References: CIR vs. Goodrich Phils., Inc. G.R. 104171, Feb. 24, 1999
Lim vs. CA, G.R. 48134-37, Oct. 18, 1990
In criminal tax cases involving tax offenses punishable under the Tax Code, prescription is
construed strictly against the taxpayer.
17. Reference: Section 210, NIRC, as amended
SEC. 210. Release of Distrained Property Upon Payment Prior to Sale. - If at any
time prior to the consummation of the sale all proper charges are paid to the officer
conducting the sale, the goods or effects distrained shall be restored to the owner.
18. An order the to expedite the processing of Letter Notice (LN) cases, the issuance of Notice
for Informal Conference may immediately commence, even without prior issuance of Letters
of Authority, as required in certain situations, as prescribed in the existing RMOs on the LN
system.
19. References: Section 228, NIRC, as amended

Section 3.1.5, Revenue Regulations No. 12-99
as amended under Revenue Regulations No. 18-2013
The term “relevant supporting documents” refer to those documents necessary to support
the legal and factual bases in disputing a tax assessment as determined by the taxpayer.
The sixty (60)-day period for the submission of all relevant supporting documents shall not
apply to requests for reconsideration.
Furthermore, the term “the assessment shall become final” shall mean the taxpayer is
barred from disputing the correctness of the issued assessment by introduction of newly
discovered or additional evidence, and the FDDA shall consequently be denied.
23. Real properties, Philippines P10,000,000

Personal properties excluding bank deposit 15,000,000
Bank deposit (P3,000,000 – P1,000,000) 2,000,000
24. Amount withdrawn P1,000,000

Rate 6%
Final withholding tax P 60,000

TAXATION
25. Value to take P 650,000

Less: Mortgage paid -
Initial basis 650,000
Less: Proportional deduction (650,000/1,800,000 x 300,000) 108,333
Final basis 541,667
Rate 20%
Vanishing deduction P 108,333
26. Reference: Section 2, Revenue Regulations No. 30-2002

Less: Deductions 2,000,000
Estate after deductions 42,000,000
Less: Family home (10,000,000)
Standard deduction ( 5,000,000)
Taxable net estate P27,000,000
28. 25 Personal property (From Part V Schedule A) P -

26 Real property (From Part V Schedule B) 180,000
27 Total gifts in this return 180,000
Less: Deductions allowed (Sum of items 28 to 32)
28 Mortgage assumed by the donee 40,000
34 Total net gifts in this return (Item 27 less Item 28) 140,000
35 Add: Total net gifts during the calendar year (Item 36 of return
previously filed with the year)
June 1, 2018 150,000
July 10, 2018 400,000
September 30, 2018 450,000 1,000,000
36 Total net gifts (Sum of Items 34 and 35) 1,140,000
38/14 Total net gifts subject to tax (Item 36 less Item 37) P 890,000
29. 14 Total net gifts subject to tax (From Part IV Item 38) P890,000
16 Total donor’s tax due (Item 14 x Item 15) 53,400
17 Less: Tax credit/payments
17A Payments for prior gifts during the taxable year
(1,000,000 – 250,000 x 6%) 45,000
18 Tax payable/Overpayment ((Item 16 less Item 17A) P 8,400
30. Alpha numeric

tax code (ATC) Taxable amount Rate Tax due
PT 060 P1,500,000 2% P30,000
PT 010 750,000 1% 7,500
PT 120 800,000 2% 16,000
31. Total tax due P53,500

Surcharge rate 50%
Surcharge for willful neglect P26,750
32. Interest on delinquency (April 25 to July 25)

(53,500 x 12% x 91/365) P1,600

TAXATION
33. 14 Total tax due (From schedule 1 item 7) P53,500

Less: Tax credit/payment (attach proof)
15 Creditable percentage tax per BIR Form No. 2307
7,500
Tax still payable 46,000
Add: Penalties
20 Surcharge 26,750
21 Interest 1,600
Total amount payable P74,350
34. Sale of four (4) residential lots at P1,500,000 each to four (4) individual
buyers for socialized housing P6,000,000
35. Gross receipts, trucking business P1,500,000

Gross receipts, lease of residential units 2,500,000
Gross receipts, practice of accountancy 1,000,000
Sale of three (3) parking spaces at P500,000 each 1,500,000
Vatable gross amount P6,500,000
36. Sell directly to

Sell during IPO buyer after IPO
Gross selling price P1,200,000 P1,400,000
Less: Cost - 1,000,000
Gross selling price/net capital gain P1,200,000 P 400,000
Rate 4% 15%
Tax due P 48,000 P 60,000
Ratio = 100,000 shares/1,000,000 shares 10%
37. Initial payment/selling price (300,000/1,500,000 = 20%) does not exceed 25%.
38. 300,000/1,500,000 x 2,000,000 = 400,000 x 12% = 48,000
39. Transfers exempt from donor’s tax under Section 101(a) and (b) of the Tax Code shall be
exempt from the tax imposed under this Section.
43. Fair market value P10,000,000

Multiplied by assessment level 60%
Assessed Value 6,000,000
Tax rate 2%
Basic real property tax P 120,000
46. Conditions:
a. That such entities present proof as certified by the Department of Labor and
Employment that disabled persons are under their employ:
b. The disabled employee is accredited with the Department of Labor and Employment
and the Department of Health as to his disability, skills and qualifications.
47. BMBE refers to any business entity or enterprise engaged in the production, processing or
manufacturing of products or commodities, including agro-processing, trading and services,
whose total assets including those arising from loans but exclusive of the land on which the
particular business entity's office, plant and equipment are situated, shall not be more than
Three Million Pesos (P3,000,000.00).
“Services" shall exclude those rendered by any one, who is duly licensed by the government
after having passed a government licensure examination, in connection with the exercise of
one's profession.

TAXATION
49. Documentary stamp tax (P2,000,000/200 x P2) = P20,000
50. If the return is amended substantially different from the original return, the three (3) year
prescriptive period shall be counted from the filing of the amended return.
There is substantial amendment when a new return is filed declaring more losses, which
can only be done either:
1) In reducing gross income, or
2) In increasing the items of deductions claimed.
If the amendment is minimal, the counting of the prescriptive period is still the original
period. (CIR vs. Phoenix Assurance, Inc.’ G.R. L-19727, May 20, 1965, 14 SCRA 52
52. P68,000 x 50% P34,000
53. P34,000 divided by 65% x 35 P18,308
55. Selling price P750,000

Less: Cost 500,000
Capital gain P250,000
Capital gains tax 250,000 x 15% P 37,500
56. Retirement benefits received from his previous employer that maintained
a reasonable private pension plan (he served the company for 12 years)
P250,000
Lump sum benefits received from SSS 200,000
Interest income from bonds with a maturity period of 7 years 20,000
Interest on long term deposits with maturity period of 5 years 30,000
Total P500,000
57. Prize in a sports tournament sponsored by a group of businessmen

promoting health products (P50,000 X 20%) P 10,000
Share in the net income of a business partnership (P100,000 X 10%) 10,000
Philippine Lotto winnings (500,000 x 20%) 100,000
Total P120,000
58. Gross professional income, net of 15% withholding tax (P680,000/85%) P800,000
Less: Professional expenses 300,000
Add: Non-operating income
Gain from sale of bonds (maturity period is 4 years) 10,000
Taxable income P510,000
60. Regular income tax P 57,500

Final tax on passive income 120,000
Total P177,500
Note: The income tax expenses include the regular income tax, final tax on passive income
and capital gains tax, if any.
61. Real and personal properties (14,000,000 + 2,000,000) P16,000,000

62. Unpaid real estate tax P2,000,000

Loss of a personal property due to theft 500,000
Transfer for public use 500,000
Total P3,000,000

TAXATION
63. Family home P 10,000,000

Standard deduction 5,000,000
Total P 15,000,000
64. 34 Gross estate P 46,000,000

35 Less: Ordinary deductions 3,000,000
36 Estate after ordinary deductions 43,000,000
37D Less: Total special deductions 15,000,000
40 Net taxable estate P 28,000,000
65. 36 Total net gifts P 500,000

38 Total net gifts subject to tax 250,000
16 Total donor’s tax due P 15,000
66. Gross sales P 150,000,000

Less: Sales returns and allowances 10,000,000
Sales discount 4,500,000 14,500,000
Net sales P 135,500,000
Tax rate 12%
Output tax P 16,260,000
67. Reference: Section 3 B, Revenue Regulations No. 12-2012

Only one vehicle for land transport is allowed for the use of an official or employee, the
value of which should not exceed P2,400,000.
68. Reference: Section 3 C, D and E, Revenue Regulations No. 12-2012
C. No depreciation shall be allowed for yachts, helicopters, airplanes and/or aircrafts, and
land vehicles which exceed the threshold amount, unless the taxpayer’s main line of
business is transport operations or lease of transportation equipment and the vehicles
purchased are used in said operations.
D. All maintenance expenses on account of non-depreciable vehicles for taxation
purposes are disallowed in its entirety.
E. The input taxes on the purchase of non-depreciable vehicles and all input taxes on
maintenance expenses are likewise disallowed for taxation purposes.
69. Office equipment (1,100,000 x 12% divided 60 x 3) P 6,600

Purchase of goods for sale (30,000,000 12%) 3,600,000
Operating expenses (5,000,000 x 40% x 12%) 240,000
Office supplies purchased (900,000 x 12%) 108,000
Total P3,954,600
70. Output tax P16,260,000

Less: Input taxes 3,954,600
VAT payable 12,305,400
Less: VAT payments for January and February 7,000,000
Tax payable P5,305,400

CPA Review Batch 44  Oct 2022 CPALE  31 July 2022  8:00 - 11:00 AM
TAXATION FIRST PRE-BOARD EXAMINATION
1. There shall be levied, assessed, collected and paid upon the transfer of the net estate of
every decedent, whether resident or nonresident of the Philippines, a tax:
a. at the rate of six percent (6%) based on the value of such net estate.
b. at the rate of six percent (6%) based on the value of such gross estate.
c. at the rate of five percent (5%) based on the value of such net estate.
d. at six percent (6%) computed on the basis of the total net estate in
excess of Two hundred fifty thousand pesos (P250,000) exempt amount.
2. Which of the following ordinary deductions for estate tax purposes is not prorated
with respect to deductions allowed to non-resident alien decedent?
a. Losses
b. Indebtedness (Claims against the estate)
c. Claims against insolvent debtor
d. Transfer for public use
3. The gross estate of a decedent is valued at P5,000,000. Which of the following

statements is/are correct?
I - The estate of the decedent is required to submit notice of death.
II - The estate of the decedent is required to file an estate tax return.
III - The estate of the decedent is required to submit a statement certified
by a CPA.
a. Statements I, II and III
b. Statements II and III
c. Statement II
d. None of the statements
4. The amounts withdrawn from the deposit accounts of a decedent:
a. shall be subjected to the 6% final withholding tax imposed under
Section 97 of the NIRC.
b. shall be subjected to the 6% creditable withholding tax imposed
under Section 97 of the NIRC.
c. shall be claimed as deduction from the gross estate.
d. shall not be allowed under any circumstance.
5. All the following information shall be shown in the estate tax return except:
a. the value of the gross estate of the decedent at the time of his
death, or in case of non-resident alien of that part of his gross
estate situated in the Philippines.
b. the deductions allowed from the gross estate’.
c. such part of such information as may at the time be ascertainable
and such supplemental data as may be necessary to establish the
correct taxes.
d. names of the heirs and beneficiaries.
6. Properties acquired by gratuitous title before the marriage shall be classified

for estate tax purposes:
I - Conjugal properties under conjugal partnership of gains
II - Exclusive properties under absolute community of properties.
a. Both I and II are correct
b. Both I and II are incorrect
c. Only I is correct
d. Only II is correct
7. Which among the following should be treated as a real property?
a. A Manansala painting
b. A BMW sports car
c. A contract for the construction of a public road
d. Shares of stock of Meralco
8. A property was transferred mortis causa. The following data were gathered from the
transaction:
Fair market value, time of transfer – P500,000
Fair market value, time of death – P700,000
Consideration received when transferred – P550,000

TAXATION
ReSA Batch 44 – October 2022 CPALE Batch
31 July 2022  8:00 AM to 11:00 AM TAX First Pre-Board Exam
How much shall be included in the gross estate?

a. P500,000 c. P150,000
9. One of the following deductions physically diminishes the gross estate of the
decedent.
a. Standard deduction c. Vanishing deduction
b. Family home deduction d. Claims against the estate
10. The fair market values of the family home which is partly exclusive (owned by
surviving spouse) and partly common are as follows:
Family lot (exclusive) P 5,000,000

Family house (common) 14,000,000
Total P19,000,000
What amount shall be included in the gross estate?

a. P19,000,000 c. P12,000,000
b. P14,000,000 d. P10,000,000
11. Using the same date in the preceding number, how much is the deductible family
home?
a. P12,000,000 c. P7,000,000
b. P10,000,000 d. None
SITUATIONAL
The decedent is a married man with a surviving spouse with the following data died on
February 1, 2021:
Conjugal real personal properties (excluding land
valued at P200,000 transferred inter vivos to a son) P10,000,000
Conjugal personal properties (including P800,000 bank
deposit which was withdrawn and subjected to 6% final
withholding tax) 4,800,000
Conjugal family home 30,000,000
Conjugal ordinary deductions claimed (including P500,000
funeral expenses but excluding P300,000 judicial expenses) 2,500,000
12. Using BIR From No. 1801 what amount shall be reflected in Line 34 page 2 (Gross
estate)
a. P45,000,000. c. P44,000,000.
b. P44,800,000. d. P21,000,000.
13. Using BIR From No. 1801 what amount shall be reflected in Line 35 page 2 (Ordinary
deductions)
a. P2,800,000 c. P2,000,000
b. P2,500,000 d. P1,700,000
14. Using BIR From No. 1801 what amount shall be reflected in Line 37D page 2 (Total
special deductions)
a. P30,000,000 c. P10,000,000
b. P15,000,000 d. P1,000,000
15. Using BIR From No. 1801 what amount shall be reflected in Line 40 page 2 (Net
taxable estate)
a. P31,500,000 c. P27,000,000
b. P27,500,000 d. P21,000,000
16. Using BIR From No. 1801 what amount shall be reflected in Line 18 page 1 (Estate
tax due)
a. P1,890,000 c. P1,620,000
b. P1,632,000 d. P1,260,000

TAXATION
17. Which of the following statements is incorrect in connection with cash installment
payment of estate tax?
a. The cash installments shall be made within two (2) years from the
date of filing of the estate tax return.
b. The estate tax return shall be filed within one year from the date of
decedent’s death.
c. The frequency (i.e., monthly, quarterly, semi-annually or annually),
deadline and amount of each installment shall be indicated in the
estate tax return, subject to the prior approval by the BIR.
d. In case of lapse of two years without the payment of the entire tax
due, the remaining balance thereof shall be due and demandable without
the applicable penalties and interest.
18. The donor’s tax for each year shall be

a. six percent (6%) computed on the basis of the total gifts in
excess of Two hundred fifty thousand pesos (P250,000) exempt gift
made during the calendar or fiscal year.
b. six percent (6%) computed on the basis of the total gifts in
excess of Two hundred fifty thousand pesos (P250,000) exempt gift
made during the calendar year.
c. six percent (6%) computed on the basis of the total gifts in
excess of Two hundred fifty thousand pesos (P250,000) exempt
gross gift made during the calendar year.
d. six percent (6%) computed on the basis of the total gifts made
during the calendar year.
19. Gross gifts of non-resident citizen donor shall be composed of:

a. real properties, personal properties and taxable transfers wherever
situated.
b. real properties and personal properties wherever situated.
c. real properties, personal properties and taxable transfers situated
in the Philippines.
d. real properties and personal properties wherever situated except
intangible personal properties when there is reciprocity.
20. A sale, exchange, or other transfer of property made in the ordinary course of
business (a transaction which is a bona fide, at arm’s length, and free from
any donative intent):
a. will be considered as made for an adequate and full consideration
in money or money’s worth and not subject to donor’s tax.
b. will not be considered as made for an adequate and full consideration
in money or money’s worth and subject to donor’s tax.
c. will be considered as made for an adequate and full consideration
in money or money’s worth but considered deemed gift subject to
donor’s tax.
d. will not be considered as made for an adequate and full consideration
in money or money’s worth and not subject to donors tax.
21. Mr. J. Santos donated P500,000 to AST Foundation, a philanthropic organization.

The organizations total administrative expenses amounted to P7,000,000 out of its
expenses of P20,000,000. How much was the exempt gift to the philanthropic
organization?
a. P6,000,000 c. P500,000
b. P5,000,000 d. None
22. A resident alien donor donated to a Philippine domestic corporation a property

located abroad valued at P500,000. The foreign donor’s tax on the donation was
P20,000. A donation earlier within the same calendar year, was donated to a
legitimate daughter, a property valued at P300,000.
How much was the total net gifts subject to tax?

a. P800,000 c. P500,000
23. Using the same data in the preceding number, how much is the donor’s tax payable?
a. P33,000 c. P10,000

TAXATION
24. Mr. Gerardo Ireneo transfers inter vivos a personal property to his son on March
15, 2018. His son who lives in another province let his father know that he is
accepting the gift on March 31, 2018. The personal property was delivered and
received on April 15, 2018. When shall be the last day to file the donor’s tax
return and pay the donor’s tax to avoid penalties?
a. April 14, 2018 c. May 15, 2018
b. April 30, 2018 d. None of the choices
25. In order that the donation of an immovable may be valid:
I - It must be made in a public document specifying therein the property donated.
II - The acceptance may be made in the same Deed of Donation or in a separate
public document, but it shall not take effect unless it is done during
the lifetime of the donor.
IIII - 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.
a. I, II and III are correct
b. I and II correct
c. I and III are correct
d. Only I is correct
SITUATIONAL
On January 15, 2022, Daisy gave a piece of land to her brother-in-law who is getting
married on February 14, 2022. The assessed value and zonal value of the land were
P750,000 and P1,000,000 respectively. It was acquired by Daisy at a cost P1,500,000
in 2018. An adjacent lot to the donated property was valued at P2,000,000. The land
had an unpaid mortgage of P200,000, which was assumed by the donee and an unpaid realty
tax of P10,000 which was not assumed by the donee. The donor and the donee agreed that
the latter will assume the donor’s tax amounting to P33,000.
Daisy donated other properties to her sister and brother in 2021. Gift to sister had
a zonal value of P500,000 and an assessed value P300,000. Gift to brother was cash
P300,000 of which she specially provided that 10% of the gift should be given to the
church where Daisy was a member,
26. Using BIR From No. 1801 what amount shall be shown in Line 27 page 2 (Total gifts
in this return)
a. P2,800,000 c. P1,800,000
b. P2,300,000 d. P1,000,000
27. Using BIR From No. 1801 what amount shall be shown in Line 33 page 2 (Total
deductions allowed)
a. P243,000 c. P210,000
b. P233,000 d. P200,000
28. Using BIR From No. 1801 what amount shall be shown in Line 35 page 2(Total prior
net gifts during the calendar year)
a. P800,000 c. P500,000
b. P600,000 d. None
29. Using BIR From No. 1801 what amount shall be shown in Line 38 page 2 (Total net
gift subject to tax)
a. P1,370,000 c. P800,000
b. P1,340,000 d. P550,000
30. Using BIR From No. 1801 what amount shall be shown in Line 18 page 1 (Tax payable)
a. P82,200 c. P48,000
b. P80,400 d. P33,000
31. No VAT shall be imposed to form part of the cost of goods sold destined for
consumption outside of the territorial border of the taxing authority.
a. Cross Border Doctrine
b. Rule of Reciprocity
c. Constructive Receipt Doctrine
d. International Comity

TAXATION
32. Which of the following is not subject to VAT?
a. Sale of goods or properties not in the course of trade or business
b. Sale of services and lease of properties in the course of trade or
business
c. Importation in the course of trade or business
d. Importation not in the course of trade or business.
33. Which of the following sale of services is subject to VAT?

a. Transport of passengers by land by a transportation contractor
b. Sale of gas and water by a franchise grantee
c. Sale of health and accident insurance by non-life insurance companies
d. Sale of services regardless of whether or not the performance thereof
calls for the exercise or use of the physical or mental faculties.
34.In computing the taxable base during the month or quarter, which of the
following shall be allowed as deductions from gross selling price?
I - Discounts determined and granted at the time of sale, which are expressly
indicated in the invoice, the amount thereof forming part of the gross sales
duly recorded in the books of accounts.
II - Sales discount indicated in the invoice at the time of sale, the grant of
which is dependent upon the happening of a future event,
IIII - Sales returns and allowances for which a proper credit or refund was made
during the month or quarter to the buyer for sales previously recorded as
taxable sales.
a. I, II and III
b. I and II only
c. I and III only
d. None of I, II and III
35. Sale of gold by a VAT-registered taxpayer to the Bangko Sentral ng Pilipinas is:
a. subject to 12% VAT.
b. subject to 0% VAT.
c. subject to 3% percentage tax.
d. Exempt from VAT
36. A VAT-registered taxpayer service provider has the following data taken from the
books of account for the month of January 2021:
Accounts receivable, January 1, 2021 P 560,000
Sales on account for the month of January 1,120,000
Services paid in cash for the month of January 336,000
Accounts receivable, January 31, 2021 784,000
Cash purchases for the month of January 2021 448,000
How much is the output tax for the month of January, 2021 using 12% rate?
a. P201,600 c. P132,000
b. P147,840 d. P96,000
37. Sale of bamboo shoots (labong) and saluyot (leafy vegetable) is:
a. subject to 12% VAT. c. exempt from VAT.
b. subject to 0% VAT. d. none of the choices
38. The sale of parking lot by a VAT-registered real estate dealer:

a. shall be subject to VAT regardless of the amount of selling price.
b. shall be subject to VAT provided the amount of selling price exceeds
the threshold amount.
c. shall be subject to VAT only when it is included as part of the sale
of condominium unit.
d. shall be subject to VAT only when it is sold separately from the sale
of condominium unit.
39. A VAT- registered lessor rents his 5 commercial and 20 residential units for monthly
rent of P50,000 and P15,000 per unit, respectively. His accumulated gross receipts
during the taxable year amounted to:
Rent from 5 commercial units (P50,000 per unit x 12) P3,000,000
Rent from 20 residential units (P15,000 per unit x 12) 3,600,000
Aggregate gross receipts P6,500,000

TAXATION
What will be the business taxes consequences?
a. Both will be subject to VAT because the aggregate gross receipts exceed
the VAT threshold.
b. Both will be exempt from VAT because rent from commercial units did not
exceed the VAT threshold and rent from residential units shall be exempt
regardless of the gross annual receipts.
c. Only the rent from commercial units shall be subject to VAT
d. Only the rent from residential units shall be subject to VAT because
it exceeded the VAT threshold.
40. Which of the following sales to senior citizens shall not be exempt from VAT?
a. Sale of food, drinks, dessert and other consumable items served by the
establishments, including value-meals and promotional meals, offered
for consumption of the general public
b. Sale of single serving seat meals with beverage for an individual senior
citizen
c. Bulk orders which are within the context of pre-contracted or pre-
arranged group meals or packages
d. Sale of medicines from drug stores, hospital pharmacies, medical and
optical clinics and similar establishments including non-traditional
outlets dispensing medicines
SITUATIONAL
A taxpayer is engaged in VAT-subject transactions but his annual gross sales do not
exceed the VAT threshold. Hence, he did not register under VAT system. However,
during the current year, his quarterly gross sales follow:
First quarter P1,000,000

Second quarter 1,000,000
Third quarter 1,000,000
Fourth quarter 1,000,000
41. How much is the total percentage tax due for the first three (3) quarters?
a. P480,000 c. P90,000
b. P120,000 d. P30,000
42. How much is the VAT due?

a. P480,000 c. P90,000
43. Who amoung the following shall not be allowed input tax credit?
a. importer upon payment of VAT prior to the release of goods from customs
custody.
b. purchaser of the domestic goods or properties upon consummation of the
sale
c. purchaser of services or the lessee or licensee upon payment of the
compensation, rental, royalty or fee.
d. seller of the domestic goods or properties upon consummation of the
sale
SITUATIONAL
A VAT-registered taxpayer is also engaged in VAT-exempt transactions. The following

VAT exclusive data are made available:
Domestic VAT-subject cash sales P1,000,000

VAT-exempt sales on account 500,000
Export cash sales 300,000
Cash purchases of supplies from VAT supplier
used for all transactions) 150,000
Purchase on account of merchandise from VAT-registered trader
(for VAT sales only) 200,000

TAXATION
44. How much is the amount reflected in line 22 BIR Form 2550Q (total available input
tax)?
a. P42,000 c. P34,000
b. P37,000 d. P24,000
45. How much is the amount reflected in line 24 BIR Form 2550Q (allowable input tax)
assuming the taxpayer decided to refund the input tax attributed to zero-rated
sales?
a. P42,000 c. P34,000
b. P37,000 d. P24,000
46. How much is the amount reflected in line 19A BIR Form 2550Q (total sales)?
a. P1,800,000 c. P1,300,000
b. P1,500,000 d. P1,000,000
47. How much is the VAT-subject sales?

a. P1,800,000 c. P1,300,000
b. P1,500,000 d. P1,000,000
48. How much is the amount reflected in line 25 BIR Form 2550Q (Net VAT payable?
a. P96,000 c. P83,000
b. P86,000 d. P78,000
49. A taxpayer imports motor vehicle for land transport on January 1, 2022. Its total
landed cost is P2,400,000. The estimated life of the vehicle is 5 years. Which of
the following statements is correct?
a. The taxpayer can amortize the input tax because the cost exceeds
P1,000,000 but not P2,400,000.
b. The taxpayer cannot amortize the input tax because the motor vehicle
is acquired on January 1, 2022.
c. The taxpayer can amortize the input tax because the cost exceeds
P1,000,000 but not P2,400,000 up to January 1, 2027.
d. The taxpayer cannot amortize the input tax because the motor vehicle
is acquired is for land transport.
50. SR Pharmaceutical Corporation is an exclusive disctirbutor of certan brand of
prescription drugs for cancer and serveral drugs in the Philippines. For the period
January to March 2021, the said company had the followng:
Inventory of cancer drugs as of December 31, 2020 P200,000,000.00
Sale of cancer medicine (goods from previous inventory) 200,000,000.00
Total sales for the period 500,000,000.00
Percentage of sale of cancer medicines to total sales for
the period 40%
All input taxes from the existng inventory of cancer drugs have been utilized as
of December 31, 2020.
SR Pharmaceutical Corporation incurred P20,000,000.00 of input tax for the period

from purchases of medicine other than those prescribed for cancer and no additonal
purchases of prescription drugs for cancer was purchased during the period.
How much is the VAT payable?

a. P64,000,000 c. P28,800,000
b. P40,000,000 d. P16,000,000
51. Which of the following is incorrect? The percentage tax is:

a. a tax on a sale of sale or services.
b. imposed on a sale of goods.
c. imposed together with the value-added tax.
d. imposed together with the excise tax.
SITUATIONAL
A VAT-registered operator of domestic common carrier by land presented the following

data for the first calendar quarter of the year 2022.

TAXATION
Gross receipts transport of passengers by land P 1,500,000
Gross receipts transport of goods 1,000,000
Gross receipts transport of cargoes 500,000
Cost of services, transport of passenger 800,000
Cost of services, transport of goods and cargoes 300,000
Operating expense, transport of passenger 200,000
Operating expenses, transport of goods and cargoes
Cost of services and operating expenses are 60% with VAT
52. How much is the common carrier’s tax?

a. P75,000 c. P30,000
b. P45.000 d. P15,000
53. How much is the output VAT?

a. P180,000 c. P60,000
b. P120,000 d. Exempt from VAT
54. Can the taxpayer avail of the 8% income tax rate?

a. Yes. Because his total gross receipts do not exceed the VAT as
long as he signifies his intention when he files his first quarter
return.
b. No. Because he is VAT-registered and therefore not qualified to
avail of the 8% income tax rate.
c. Yes. Because taxpayers with various business is qualified as long
as he signifies his intention when he files his first quarter
return.
d. No. Because as a rule taxpayers with various business is not
qualified even if he signifies his intention when he files his
first quarter return.
55. When shall the Percentage Tax Return be filed?

a. April 25, 2022 c. April 21, 2022
b. April 24, 2022 d. April 20, 2022
56. When shall the Monthly VAT Declaration be filed for the second month of the first
calendar quarter?
a. April 25, 2022 c. April 21, 2022
b. April 24, 2022 d. April 20, 2022
57. Can the VAT-registered taxpayer register his carriage of passengers under the VAT
system?
a. Yes. Any person who is VAT-registered but enters into transactions
which are exempt from VAT (mixed transactions) may opt that the VAT
apply to his transactions which would have been exempt from VAT.
b. No. Any person who is VAT-registered but enters into transactions which
are exempt from VAT (mixed transactions) cannot optionally register his
transactions which would have been exempt from VAT.
c. Yes. As a rule, it is mandatory for VAT-registered taxpayers to register
all transactions under the VAT system.
d. No. It is the other way, the taxpayer may opt that the VAT-subject
transactions be exempted from VAT.
SITUATIONAL
Vanderwoodsen, not VAT-registered, is a radio-TV broadcasting franchise grantee. The

previous year, its gross receipts did not exceed P 10,000,000. In the first month of
the current year, it had the following data:
Gross receipts, sale of airtime P 2,000,000
Payments received from user of radio station’s
communications facilities for overseas communications 500,000
Rentals of office spaces 3,500,000
Business expenses 700,000
58. How much was the franchise tax due?

a. P75,000 c. P50,000
b. P60,000 d. P20,000

TAXATION
59. How much was the overseas communications tax?

a. P250,000 c. P75,000
b. P200,000 d. P50,000
60. How much is output VAT, if any?

a. P720,000 c. P420,000
b. P660,000 d. None
61. A proprietor of bowling alleys has the following gross receipts during the month
of July, 2022:
Gross receipts from bowling operation P2,000,000

Gross receipts from sale of food and drinks inside the
bowling alley 1,000,000
Gross receipts from rental of stalls inside the bowling alley 500,000
How much is the amusement tax?

a. P1,050,000 c. P525,000
b. P630,000 d. None
62. Under the TRAIN, the term ‘taxable income’ as applied to individuals means:
a. the pertinent items of gross income specified in the Tax Code, less
deductions if any, authorized for such types of income by the Tax
Code or other special laws.
b. the pertinent items of gross income specified in the Tax Code, less
deductions including personal exemptions, if any, authorized for
such types of income by the Tax Code or other special laws.
c. the pertinent items of gross income specified in the Tax Code.
d. the pertinent items of gross income specified in the Tax Code
excluding salaries received from employment.
63. A nonresident citizen arrives in the Philippines on July 31, 2018 to reside here
permanently after many years of living abroad. The following data for the year
2018 on his income are made available:
Gross income, foreign sources (in Philippine pesos)
January 1 to July 31 P500,000
Gross income, Philippine sources, August 1
to December 31 300,000
Gross income, foreign sources, (in Philippine pesos)
August 1 to December 31 400,000
For Philippine income tax purposes, how much is his taxable gross income?
a. P800,000 c. P400,000
b. P700,000 d. P300,000
64. Mr. Elie Cruz, minimum wage earner, earned, aside from his basic
wage of P135,000, additional pay of P140,000.00 which consists of the
overtime pay-P80,000.00, night shift differential- P30,000.00,
hazard pay-P15,000.00, and holiday pay- P15,000.00. He contributed
to the SSS, Philhealth, and HDMF amounting to P5,000.00 and has
received 13th month pay of P11,000.00 which are both excluded from
taxable income.
How much is the income tax due?

a. P1,800 c. P324
b. P 720 d. None
SITUATIONAL
In 2022, Mr. Geri Manuel owns a nightclub and videoke bar, with gross
sales/receipts of P2,500,000.00. His cost of sales and operating
expenses are P1.000,000.00 and P600,000.00, respectively, and with non-
operating income of P100,000.00.

TAXATION
65. Can the taxpayer avail of the 8% income tax rate?
a. Yes. Because his gross receipts do not exceed the VAT threshold.
b. No. Because he is subject to percentage tax under Sec. 125.
c. Yes. Because night club and videoke bar owners are always allowed
to avail of the 8% income tax rate.
d. No. Because he did not express his intention to be taxed at 8%.
66. How much is the income tax due?

a. P200,000 c. P190,000
b. P198,000 d. P160,000
67. How much is the percentage tax due?

a. P750,000 c. P375,000
b. P450,000 d. P250,000
68. In the case of locally produced of extracted minerals and mineral products or
quarry resources where the mine site or place of extraction is not the same as
the place of processing or production, the return shall be filed with and the
tax paid to the:
a. Revenue District Office having jurisdiction over the locality where
the same are processed.
b. Revenue District Office having jurisdiction over the locality where
the same are mined, extracted or quarried.
c. Revenue District Office having jurisdiction over the locality where
the same are mined, extracted or quarried or processed at the
taxpayer’s discretion.
d. Revenue District Office having jurisdiction over the taxpayer’s
principal place of business.
69. First statement: Unless otherwise provided, the price, including the value-
added tax, at which the goods are sold at wholesale in the place of production
or through their sales agents to the public shall constitute the gross selling
price.
Second statement: If the manufacturer also sells or allows such goods to be sold
at wholesale in another establishment of which he is the owner or in the profits
of which he has an interest, the wholesale price in such establishment shall
constitute the gross selling price.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only the first statement is correct.
d. Only the second statement is correct.
70. A manufacturer of sweetened beverage using purely high fructose corn syrup or
in combination with any caloric or non-caloric sweetener presented the
following data: Each package contains 3.5 liters; Selling price – P150
per package
How much is the excise tax using P12 tax per liter?
a. P42 c. P12
b. P36 d. Not subject to excise tax
-END OF EXAMINATION-

TAXATION

1 A 26 D 51 C
2 D 27 D 52 B
3 D 28 D 53 A
4 A 29 D 54 B
5 D 30 D 55 A
6 B 31 A 56 Bonus
7 C 32 A 57 A
8 D 33 D 58 B
9 D 34 C 59 D
10 B 35 D 60 D
11 C 36 C 61 D
12 C 37 C 62 A
13 C 38 A 63 B
14 B 39 C 64 D
15 D 40 C 65 B
16 D 41 D 66 C
17 D 42 B 67 B
18 B 43 D 68 B
19 B 44 A 69 D
20 A 45 C 70 B
21 D 46 A
22 B 47 C
23 C 48 B
24 C 49 B
25 A 50 D
12. C (44,000,000)
13. C (P2,000,000)
14. B (P15,000,000)
15. D (P21,000,000)
16. D (P1,260,000)
Exclusive Common Total

Gross estate P30,000,000 P14,000,000 P44,000,000
Less: Deductions
- (2,000,000) (2,000,000)
Net estate before special 30,000,000 12,000,000*
deductions 42,000,000
Less: Special deductions
Maximum 10,000,000 (10,000,000)
Standard deduction (5,000,000)
Net estate after special
deductions 27,000,000
Less: Share of surviving
spouse
(1/2 x 12,000,000*) (6,000,000)
Net taxable estate P 21,000,000
Tax rate 6%
Estate tax due P1,260,000
21. D
The gift was not exempted because the administrative expenses of the
donee-institution exceed 30% of the total expenses
(P7,000,000/P20,000,000 = 35%).

TAXATION
22. B
Net gift in this return P500,000
Add: Total prior net gifts during the calendar year 300,000
Less: Exempt gift 250,000
Total net gifts subject to tax P550,000
23.C
Total net gifts subject to tax P550,000
Tax rate 6%
Total donor’s tax due 33,000
Less: Payments for prior gifts
(300,000 -250,000 x 6%) 3,000
Foreign donor’s tax credit
Actual foreign donor’s tax 20,000
Limit (500,000/800,000 x 33,000) 20,625 20,000 23,000
26. D (P1,000,000)
27. D (P200,000)
28. D (None)
29. D (P550,000)
30. D (P33,000)
27 Total gifts in this return P1,000,000
33 Total deductions 200,000
34 Total net gifts in this return 800,000
35 Add: Total prior net gifts during the calendar year -
36 Total net gifts 800,000
38 Total net gift subject to tax 550,000
16 Total donor’s tax due 33,000
17 Less: Tax payments/ credits -
18 Tax payable P33,000
36. C
Services paid in cash for the month (336,000/1.12 P300,000
Account receivable beginning (560,000/1.12) 500,000
Add: Sales on account (1,120,000/1,12) 1,000,000
Total 1,500,000
Less: Accounts receivable, ending (784,000/1.12) 700,000
Collections 800,000
Total 1,100,000
Tax rate 12%
Output tax P132,000
41. D
First quarter P1,000,000
Second quarter 1,000,000
Third quarter 1,000,000
Total gross sales 3,000,000
Tax rate 1%
Percentage tax P 30,000
42. B
Gross sales (fourth quarter) P1,000,000
Tax rate 12%
Value-Added Tax P 120,000

TAXATION
44. A
Cash purchases of supplies from VAT supplier (used for all
transactions) (150,000 x 12%) P18,000
Purchase on account of merchandise from VAT-registered
trader (for VAT sales only) (200,000 x 12%) 24,000
Total available input tax P42,000
45. C
Total available input tax P42,000
Less: Input tax attributed to exempt sale
(500,000/1,800,000 x 18,000) (5,000)
Input tax to be refunded (300,000/1,800,000 x 18,000) (3,000)
Allowable input tax P34,000
46. A
VAT-exempt sales on account 500,000
Total P1,800,000
47. C
Total P1,300,000
48. B
Output tax (1,000,000 x 12%) P120,000
Less: Allowable input tax 34,000
VAT payable P 86,000
50. D
Output tax (300,000,000.00 x 12%) P36,000,000.00
Less: Input tax 20,000,000.00
VAT payable P16,000,000.00
52. B
Gross receipts transport of passengers by land P1,500,000
Rate 3%
Common carrier’s tax P 45,000
53. A
Output tax on transport of goods (1,000,000 x 12%) P120,000
Output tax on transport of cargoes (500,000 x 12%) 60,000
Total P180,000
56. BONUS
ERRONEOUS CHOICES
When shall the Monthly VAT Declaration be filed for the second month
of the first calendar quarter?
a. April 25, 2022 c. April 21, 2022
b. April 24, 2022 d. April 20, 2022
CORRECT CHOICES SHOULD HAVE BEEN:

a. March 25, 2022 c. March 21, 2022
b. March 24, 2022 d. March 20, 2022
58. B
Gross receipts, sale of airtime P 2,000,000
Tax rate 3%
Franchise tax P 60,000
59. D
Payment received for the use of facilities P 500,000
Tax rate 10%
Overseas communications tax P 50,000

TAXATION
61. D
Operators of bowling alleys are not subject to amusement tax.
63. B
Gross income, Philippine sources, August 1 to December 31 P300,000
Gross income, foreign sources, (in Philippine pesos) August
1 to December 31 400,000
Taxable gross income P700,000
64. D
Total Compensation Income P135,000.00
Add: Overtime, night shift differential,
hazard, and holiday pay 140,000.00
Total Income 275,000.00
Less: Mandatory contributions P5,000.00
Non-taxable benefits 11,000.00 16,000.00
Taxable compensation income P 259,000
Income tax due Exempt
66. C
Gross Sales P2,500,000
Add: Non-operating income 100,000
Tax due Sec. 24 (A) 800,000 130,000
200,000 x 30% 60,000 P190,000
67. B
Gross Sales P2,500,000
Tax rate 18%
Amusement tax P 450,000
70. B
Every fractional part of a proof liter equal to or greater than a half liter
in a cask or package containing more than one liter shall be taxed as a
liter, and any smaller fractional part shall be exempt but any package of
spirits, the total content of which are less than a proof liter, shall be
taxed as one liter.
3 liters x 12 = P36

CPA Review Batch 44  Oct 2022 CPALE  25 September 2022  8:00 - 11:00 AM
1. The gross estate of a decedent is valued at P3,000,000 composed of registered and

registrable properties. Total deductions are P4,000,000. Which of the following
statements is/are correct?
I - The estate of the decedent is required to submit notice of death.
II - The estate of the decedent is required to file an estate tax return.
III - The estate of the decedent is required to submit a statement certified
by a CPA.
a. Statements I, II and III
b. Statements II and III
c. Statement II
d. None of the statements
2. Gross gifts of non-resident alien donor shall be composed of:
a. real properties, personal properties and taxable transfers wherever
situated.
b. real properties and personal properties wherever situated.
c. real properties, personal properties and taxable transfers situated
in the Philippines.
d. real properties and personal properties situated in the Philippines
except intangible personal properties when there is reciprocity.
3. A VAT-registered taxpayer service provider has the following data taken from the
books of account for the month of January 2021:
Accounts receivable, January 1, 2021 P 560,000
Sales on account for the month of January 1,120,000
Services paid in cash for the month of January 336,000
Accounts receivable, January 31, 2021 784,000
Cash purchases for the month of January 2021 448,000
How much is the output tax for the month of January, 2021 using 12% rate?
a. P201,600 c. P132,000
b. P147,840 d. P96,000
4. Who of the following individual taxpayer shall not be required to file an income
tax return?
a. Individuals deriving compensation from two or more employers concurrently or
successively at any time during the taxable year;
b. Individual taxpayer receiving purely compensation income, regardless of
amount, from only one employer in the Philippines for the calendar year, the
income tax of which has been withheld correctly by the said employer.
c. Employees deriving compensation income, regardless of the amount, whether from
a single or several employers during the calendar year, the income tax of
which has not been withheld correctly (i.e., tax due is not equal to the tax
withheld) resulting to collectible or refundable return.
d. Individuals receiving purely compensation income from a single employer,
although the income tax of which has been correctly withheld, but whose
spouse is required to file income tax return
5. The books of account may be kept in:

a. Native language. c. Chinese language.
b. Korean language. d. Japanese language.
6. The filing of the withholding tax returns (BIR Form No. 1601EQ) for creditable
withholding tax and Form Nos. 1602 for final tax on interest on bank deposits, 1603Q
for final tax withheld on fringe benefits, and 1601FQ for all other final withholding
taxes and payment of the taxes withheld at source shall be made:
a. not later than the last day of the month following the close of the quarter
during which the withholding was made.
b. not later than the 20th day of the month following the close of the quarter
c. not later than the 25th day of the month following the close of the quarter
d. not later than the first day of the month following the close of the quarter
TAXATION
25 September 2022  8:00 AM to 11:00 AM TAX Final Pre-Board Exam
7. Which of the following is not an effect of failure to affix the required DST?
a. An instrument, document or paper which is required by law to be stamped and
which has been signed, issued, accepted or transferred without being duly
stamped, shall not be recorded.
b. An instrument, document or paper or any copy thereof or any record of transfer
of the same which is required by law to be stamped shall not be admitted or
used in evidence in any court until the requisite stamp or stamps are affixed
thereto and cancelled.
c. No notary public or other officer authorized to administer oaths shall add
his jurat or acknowledgment to any document subject to documentary stamp tax
unless the proper documentary stamps are affixed thereto and cancelled.
d. An instrument, document or paper which is required by law to be stamped and
stamped, shall make the transaction void.
8. The Commissioner may compromise the payment of any internal revenue tax, when:
I - there is a reasonable doubt as to the validity of the claim against the
taxpayer
II - the tax or any portion thereof appears to be unjustly or excessively
assessed.
a. Both I and II are correct c. Only I is correct
b. Both I and II are incorrect d. Only II is correct
9. Who has the power to lift the order of distraint?

a. Secretary of Finance
b. Commissioner of Internal Revenue exclusively
c. Commissioner of Internal Revenue or his duly authorized representative
d. Revenue District Officer
10. A taxpayer paid excessive tax on April 15, 2000. On December 20, 2001, she filed a
written claim for refund. Her claim was denied by the BIR and she received the
denial on March 16, 2002. She filed a motion for reconsideration with the BIR on
March 31, 2002. On April 18, 2002, she received the final denial of the BIR. What
will be the taxpayer’s remedy?
a. File another motion for reconsideration with the BIR within 30 days after the
receipt of the final denial
b. File an appeal with the Court of Tax Appeals within 30 days after the receipt
of the final denial
c. File an appeal with the Court of Tax Appeals within 15 days after the receipt
of the final denial
d. The taxpayer has no more remedy against the final denial
11. The following are common to the inherent power of taxation, power of eminent domain
and police power, except for which of the following?
a. They are necessary attributes of sovereignty.
b. They interfere with private rights and property.
c. They affect all persons or the public.
d. They are legislative in implementation.
12. Which statement is wrong? A revenue bill:

a. must originate from the House of Representative and on the same bill the
Senate may propose amendments.
b. may originate from the Senate and on which same bill the House of
Representative may propose amendments.
c. may have a House version and a Senate version approved separately.
d. may be recommended by the President to Congress.
13. One of the following is not a characteristic or an element of tax:

a. It is levied by the legislature.
b. It is payable in money or in kind.
c. It is proportionate in character.
d. It is an enforced contribution.
14. The power to interpret the provision of the Tax Code and other tax laws shall be
under the exclusive and original jurisdiction of the Commissioner of Internal
Revenue subject to review by:
a. Secretary of Finance. c. Court of Appeals.
b. Court of Tax Appeals. d. Municipal Courts.

TAXATION
15. Unless otherwise provided in Local Government Code, all local taxes, fees, and
charges shall be paid:
a. within the first twenty (20) days of January or of each subsequent quarter,
as the case may be.
b. within the first fifteen (15) days of January or of each subsequent quarter,
as the case may be.
c. within the first ten (10) days of January or of each subsequent quarter, as
the case may be.
d. within the first five (5) days of January or of each subsequent quarter, as
the case may be.
16. A senior citizen is engaged in the sale of VATable goods. His gross annual sales,
however, do not exceed the VAT threshold and he is not VAT-registered. During the
first quarter of the current year, his gross sales amounted to P250,000. How much
is the business tax due, if any?
a. P7,500
b. P5,000
c. P2,500
d. None, senior citizens are exempt from business taxes
17. An individual is operating a trading business enterprise. He is asking you to assist

him to register his business under the Barangay Micro Business Enterprise (BMBE) so
he can avail of the incentives granted under it. His total assets including the cash
of P300,000 he loaned from a bank amounted to P3,500,000. The total assets also
include P500,000 value of the land on which the particular business entity's office,
plant and equipment are situated. Is the individual qualified?
a. No. Because he is engaged in a trading business which is specifically excluded
from those who can register under BMBE.
b. Yes. Because his total assets excluding the land on which the particular
business entity's office, plant and equipment are situated do not exceed
P3,000,000.
c. No. Because only juridical persons are qualified to register under BMBE.
d. Yes. Because trading business is automatically qualified regardless of the
total assets.
18. This model generally favors retention of greater so called “source country” taxing
rights under a tax treaty—the taxation rights of the host country of investment—as
compared to those of the “residence country” of the investor.
a. OECD Model Tax Convention
b. UN Model Double Taxation Convention
c. United States Model Income Tax Convention
19. If the goods or services are used in both the registered project or activity and
administration purposes and the proper allocation could not be determined, the
purchase of such goods and services shall be:
a. subject to 12% VAT. c. exempt from VAT.
b. subject to 0% VAT. d. disregarded.
20. First statement: Registered Business Enterprises (RBEs) which are categorized as
Domestic Market Enterprises (DME) are not entitled to VAT zero-rating on local
purchases.
Second statement: Sale of goods or services to a registered domestic market
enterprise shall be exempt VAT.
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
SITUATIONAL
X Company has been assessed deficiency income tax of P1,000,000, exclusive of interest
and surcharge, for taxable year 2015. The tax liability has remained unpaid despite
the lapse of June 30, 2017, the deadline for payment stated in the notice and demand
issued by the Commissioner. Payment was made by the taxpayer only on February 10, 2018.
How much is the total amount due on February 10, 2018?
21. How much is the interest on deficiency from April 16, 2016 to June 30, 2017 (441
days)?
a. P302,054.79 c. P181,232.87
b. P241,643.83 d. P144,986.30
TAXATION
22. How much is the additional interest on deficiency from July 1, 2017 to December
31, 2017 (184 days)?
a. P126,027.39 c. P75,616.43
b. P100,821.91 d. P60,493.50
23. How much is the interest on delinquency from July 1, 2017 to December 31, 2017
(184 days)?
a. P151,232.87 c. P90,234.23
b. P150,390.39 d. P75,616.43
24. How much is the interest on delinquency from January 1, 2018 to February 10, 2018
(41 days)?
a. P33,698.63 c. P22,465.75
b. P33,510.90 d. P20,106.54
25. How much is the total amount due on February 10,2018?

a. P2,012,962.67 c. P1,512,962.67
b. P1,762,962,67 d. P1,262,962.67
SITUATIONAL
On July 1, 2021, Ms. Cris Cruz sold shares of stock for P200,000. The shares, acquired
on June 1, 2018 at a par value of P150,000, were held as investment, and were sold
directly to a buyer under the following terms:
Down payment, July 1, 2021 P 30,000
Installment due, October 10, 2021 30,000
26. How much was the capital tax due in July 1, 2021?
a. P7,500 c. P1,125
b. P1,875 d. None
27. When should the capital gains tax return be filed?

a. August 1, 2021 c. July 16, 2021
b. July 31, 2021 d. July 30, 2021
28. How much was the documentary stamp tax due?

a. P1,500 c. P563
b. P1,125 d. None
SITUATIONAL
The following were taken from the Statement of Income and Expenses of ABC Corporation
for the taxable year 2021:
Gross profits from sales P800,000
Less: Business expenses 440,000
Provision for bad debts 80,000
Write-off of inventories lost due to spoilage 20,000 540,000
Add: Other income
Dividend income from a domestic corporation 50,000
Interest on Philippine bank peso deposit 30,000 80,000
Net income P340,000
Additional information:
1) Accounts written off during the year and charged to allowance for bad debts,
P50,000;
2) Recoveries on accounts receivable previously written off in 2020 and
credited to allowance for bad debts:
Allowed as deduction by BIR, P30,000;
Disallowed as deduction by BIR, P20,000.
29. How much is the total non-deductible expenses/taxable other income?
a. P410,000 c. P110,000
b. P130,000 d. P100,000
30. How much is the non-taxable income and income subject to final tax?
a. P130,000 c. P80,000
b. P100,000 d. P30,000

TAXATION
31. How much was the taxable net income using Reconciliation Net Income Per Books
Against Taxable Income?
a. P340,000 c. P390,000
b. P370,000 d. P440,000
32. LAB Corporation, a domestic manufacturing corporation, had a gross sales of
P100,000,000.00 for fiscal year ending June 30, 2021. It incurred cost of sales
of P60,000,000.00 which includes Direct Labor Wage of P20,000,000.00 and operating
expenses of P17,500,000.00 which include training expenses amounting to
P3,000,000.00. The corporation complied with all the prescribed requirements (e.g.
Apprenticeship Agreement, Certification from DepED or TESDA or CHED, whichever is
applicable). How much is the corporation’s net taxable income for the taxable year?
a. P22,500,000 c. P20,500,000
33. CPL Corporation secured in 2018 a bank loan for its business expansion, and incurred
interest expense of P2,000,000.00 in calendar year 2020 on the said bank loan. In
the same year, it likewise earned interest income of P300,000.00 subjected to final
tax of 20% and royalties of P100,000 subjected to 20% final tax. For calendar year
2020, its gross income amounted to P20,000,000.00. Its gross assets, including the
P20,000,000 value of the land where its building and plant are situated, is
P120,000,000.00. Its operating expenses amounted to P15,000,000.00, inclusive of
the interest expense of P2,000,000.00. How much is the allowable interest expense?
a. P1,894,000 c. P1,920,500
b. P1,934,000 d. P1,950,500
34. GCC Corporation, a domestic corporation, owns 20% of the outstanding shares of BTS
Corporation, a non-resident foreign corporation (NRFC), since August 1, 2015. On
May 1, 2021, it received dividends amounting to P1,000,000 from the said NRFC. On
September 1, 2022, GCC Corporation utilized P800,000 for its dividend payments. On
January 1, 2023, it utilized the remaining P200,000 for its working capital.
How much is tax-exempt dividend, if any?
a. P1,000,000 c. P200,000
35. In 2021, Taprolani Corporation purchased a residential house and lot for P2,300,000.
The property was sold to the President of the corporation for P2,500,000. The fair
market value per BIR and per Assessor's Office were P3,500,000 and P3,000,000
respectively.
How much was fringe benefits tax, if any?
a. P1,884,615 c. P538,462
b. P1,615,385 d. None
36. KLM Corporation, a manufacturer, has gross sales of P190,000,000 for CY 2021, its
fourth year of operation. Its total assets amounted to P150,000,000, net of the
value of the land of P6,000,0000 where its manufacturing plant and business
operations are situated. Its cost of sales and allowable operating expenses amounted
to P100,000,000 and P89,000,000, respectively.
a. P1,800,000 c. P200,000
37. Using the same data in preceding number and it is the corporation’s fifth year of
operation. How much is the income tax due?
a. P1,800,000 c. P250,000
b. P 900,000 d. P200,000
38. Mr. Julian Cruz procured a life insurance upon his own life. He designated his
estate’s executor as an irrevocable beneficiary. For estate tax purposes, the
proceeds of life insurance are:
a. included in the gross estate of Mr. Julian Cruz because when the executor of
the estate is a beneficiary the proceeds are included in the gross estate
regardless of the designation.
b. not included in the gross estate of Mr. Julian Cruz because the designation of
the beneficiary is irrevocable.
c. included in the gross estate of Mr. Julian Cruz because proceeds of life
insurance are always subject to estate tax.
d. not included in the gross estate because, as a rule, proceeds of life insurance
are generally not subject to estate tax.
TAXATION
39. Mr. Rigoberto Collado, a citizen and resident of Puerto Rico, dies during the year.
Puerto Rico does not impose transfer taxes on properties of decedent not residing
therein. He left the following properties among others:
Shares of stock, San Miguel Corporation, Manila
House and lot, Puerto Rico
Leasehold on a condominium unit, Philippines
Contract for public works, Philippines
The executor of his estate in Philippines asked you what properties are to be
included in his Philippine gross estate. What answer will you give him?
a. Include all the properties.
b. Include contract for public works only
c. Include all properties except shares of stock and house and lot
d. Include all properties except house and lot in Puerto Rico.
40. How much discount is granted to senior citizens on his purchase of basic and prime
commodities, subject to limitations?
a. 20% c. 10%
b. 15% d. 5%
SITUATIONAL
Mr. Pat Tayna, a single and a non-resident alien, died of a heart attack in 2018,
leaving the following properties in favor of his heirs:
Gross estate within the Philippines
(including P8,000,000 family home) P 30,000,000
Gross estate outside of the Philippines P 20,000,000
Funeral expense P 500,000
Judicial and administrative expenses P 2,000,000
Claims against the estate P 5,000,000
Unpaid taxes accrued before death P 300,000
Losses due to robbery P 200,000
Medical expenses P 500,000
41. How much is the taxable gross estate of the Estate of Pat Tayna?
a. P50,000,000 c. P35,000,000
b. P45,000,000 d. P30,000,000
42. How much is the deductible ordinary deductions of the Estate of Pat Tayna?
a. P8,000,000 c. P4,800,000
b. P5,500,000 d. P3,300,000
43. How much is the deductible special deductions of the Estate of Pat Tayna?
a. P8,500,000 c. P500,000
b. P5,000,000 d. None
44. How much is the estate tax due of the Estate of Pat Tayna?
a. P2,070,000 c. P1,782,000
b. P2,010,000 d. P1,572,000
SITUATIONAL
The following data are taken from the books of a dealer in securities:
Selling price, shares held as inventory P3,000,000
Selling price, shares held as investment 2,000,000
Acquisition cost, shares held as inventory 1,000,000
Acquisition cost, shares held as investment 1,500,000
Other income, shares held as inventory 200,000
45. How much is the output tax using 12% rate?

a. P360,000 c. P240,000
b. P264,000 d. P220,000
46. How much is the capital gains tax assuming that the shares held as investment are
sold not through the local stock exchange?
a. P300,000 c. P45,000
b. P 75,000 d. Not subject capital gains tax.

TAXATION
47. How much is the percentage tax on the shares held as investment assuming that the
shares are listed and traded in the local stock exchange?
a. P12,000 c. P3,060
b. P10,000 d. Not subject percentage tax.
48. How much is the percentage tax on the shares held as investment and are from a
closely held corporation and were sold in the secondary offering where the ratio
of the shares sold over the outstanding shares is 25%?
a. P80,000 c. P20,000
b. P40,000 d. Not subject to percentage tax
49. Which of the following has an option to register under the VAT system?
a. Common carriers by land transporting passengers the gross receipts of which
exceed P3,000,000 during the year
b. VAT-registered seller with mixed transactions as far as his VAT-exempt sales
are concerned
c. Operator of cockpit the receipts of which do not exceed P3,000,000 during the
year
d. Seller of VAT-subject services the gross receipts of which exceed P3,000,000
during the year
50. A keeper of garage whose gross receipts for the year exceed P3,000,000 is subject
to:
a. value-added tax. c. garage sales tax.
b. common carrier’s tax. d. franchise tax.
51. As a general rule, proceeds of insurance are not taxable because they only
constitute a return of what was lost (return of capital). Which of the following
are taxable proceeds?
a. Proceeds of life insurance c. Proceeds of property insurance
b. Proceeds of accident or health insurance d. Proceeds of crop insurance.
52. Which of the following statements in INCORRECT?
a. No uniform method of accounting can be prescribed for all taxpayers.
b. Each taxpayer is required by law to make a return on his true income.
c. The taxpayer has to adopt accrual method of accounting because it is in
accordance with generally accepted accounting principles.
d. Where purchase or sale of merchandise is an income-producing factor;
inventories on hand shall be taken at the beginning and at the end of year.
53. Papable Aljon Lee sold a painting (capital asset) which he purchased in 2018 at a
cost of P30,000. He sold the painting to Mamable Tonee Dee, on the following terms:
June 1, 2021 down payment P10,000
August 1, 2021 installment due 10,000
October 1, 2021 installment due 20,000
For the year 2021, Papable Aljon will report a gross income of:
a. P90,000 c. P30,000
b. P45,000 d. P15,000
54. Using the same data in the preceding number, assuming Papable Aljon is a dealer in
paintings, how much will he report as gross income for 2021?
a. P15,000 c. P45,000
b. P30,000 d. P90,000
55. The results of operation of Yummy Convenient Store, not VAT-registered sole
proprietorship, owned by Ms. Alicia, for the first three (3) quarters of 2021 are
as follows:
Gross income Deductions
First quarter P300,000 P150,000
Second quarter 350,000 200,000
Third quarter 250,000 150,000
How much is taxable income for the third quarter assuming Ms. Alicia is married and
has five (5) qualified dependent children?
a. P400,000 c. P250,000
b. P300,000 d. P100,000

TAXATION
56. One of the following individuals is not subject to income tax in the Philippines.
a. An American engineer who makes the Philippines his residence because of the
nature of his work
b. A Japanese visiting professor who occasionally teaches at one of the leading
universities in the Philippines, and stays here for an aggregate of 185 days
c. A Taiwanese singer who performs in one of the hotels in the Philippines for
one (1) week, and then leaves after he is through with his performances
d. A Filipino residing and working in America who comes to the Philippines to
visit his relatives
57. A domestic corporation has the following data for three (3) years:
Normal income tax MCIT
2019 P 50,000 P 75,000
2020 P 60,000 P100,000
2021 P100,000 P 60,000
How much is the tax payable in 2021?

a. P100,000 c. P35,000
b. P 60,000 d. Zero
58. A VAT-registered seller sold goods to Asian Development Bank. It did not get
permission from the BIR to zero-rate the sale. As a consequence of the failure to
get the permission, the sale:
a. should be exempt from VAT.
b. should be subject to 12% VAT.
c. should be subject to 0% VAT.
d. should not be subject to any business tax.
59. Which of the following is allowed to claim presumptive input tax?

a. Processor of canned fruits
b. Miller of refined sugar not for his account
c. Miller of refined sugar for his own account
d. Public works contractor
60. Tax laws, being imposition of burden, are construed:

a. strictly against the taxpayer.
b. strictly against the government.
c. by filing a case before a regular court.
d. by strict adherence to opinions of tax expert.
61. On August 11, 2018, an individual taxpayer not engaged in real estate business acquired
a parcel of land which would be used as a site for office building for P3,000,000.
Unfortunately, the planned office building was not built due to financial problem that
hounded the taxpayer. The land was idle up to August 11, 2022. The taxpayer presented
a proof to the BIR that the land had not been used in business since its acquisition.
Subsequently, the land was sold by the taxpayer for P5,000,000 on September 5, 2022.
What was the tax consequence of the sale?

a. There was taxable gain of P2,000,000 which would be subject to Section 24 (A).
b. The sale would be subject to 6% capital gains tax based on the selling price.
c. The sale would be exempt from tax because the property was not used for
business.
d. The gain of P2,000,000 will be subject to 6% capital gains tax.
62. One of the following is deductible from the gross income even if not business related.
a. Rent expense c. Bad debts
b. Travel expenses d. Charitable contributions
63. An operator of an illegal horse-betting business, single, has the following data:
Receipts from illegal bets P 500,000
Rent of space where bets are received, gross of 5% withholding tax 20,000
Salaries of assistants, gross of creditable withholding tax 100,000
Bribe money to obtain protection from arrest and prosecution 50,000

a. P66,000 c. P25,000
b. P26,000 d. Not subject income tax

TAXATION
64. Maris bought from Pretty Corporation ten (10) shares of stock. Sixty (60) days
thereafter, the corporation was adjudged bankrupt and its stock as worthless. The
loss of Maris to be reported for income tax purposes is classified as:
a. a wagering loss.
b. non-deductible loss for income tax purposes.
c. short-term capital loss.
d. casualty loss.
65. Fly Me to the Moon, a resident international carrier, has the following data for
the current year: Gross income of P700,000 and expenses of P200,000 from the
Philippines; Gross income of P500,000 and expenses of P100,000 from Hongkong. How
much is the Philippine income tax payable of the corporation?
a. P288,000 c. P30,000
b. P160,000 d. P17,500
66. The imposition of this tax will require payment of corporate income tax even if the result
of operation is a net loss.
a. Optional corporate income
b. Minimum corporate income tax
c. Regular corporate income tax
d. Improperly accumulated earnings tax
67. The following data are presented to you by the administrator of the Estate of Mr.
X:
Gross sales P500,000
Cost of sales 200,000
Business expenses 50,000
Distribution of year’s income to the heirs 30,000
How much is the taxable income using optional standard deduction?

a. P300,000 c. P180,000
b. P270,000 d. P150,000
68. There is no taxable income until such income is recognized. Taxable income is
recognized when the:
a. taxpayer fails to include the income in his income tax return.
b. income has been actually received in money or its equivalent.
c. income has been received, either actually or constructively.
d. transaction that is the source of the income is consummated.
69. With the following data, how much is the deductible pension/retirement plan
contribution for 2022?
Pension/retirement plan contribution (2020) P500,000
The breakdown of the P500,000 per actuarial valuation:

Normal cost P400,000
Past service cost 100,000
Total P500,000
a. P500,000 c. P420,000
b. P430,000 d. P400,000
70. A system of taxation that places emphasis on direct rather than indirect taxation,
with ability to pay as the principal criterion.
a. Regressive tax system c. Global tax system
b. Progressive tax system d. Schedular tax system
- END of EXAMINATION -

TAXATION

1 C 26 A 51 D
2 D 27 B 52 C
3 C 28 B 53 B
4 B 29 B 54 B
5 A 30 C 55 A
6 A 31 A 56 D
7 D 32 B 57 C
8 C 33 D 58 C
9 C 34 B 59 C
10 D 35 D 60 B
11 C 36 D 61 B
12 B 37 Bonus 62 D
13 B 38 A 63 B
14 A 39 B 64 C
15 A 40 D 65 D
16 C 41 D 66 B
17 B 42 D 67 A
18 B 43 C 68 C
19 A 44 D 69 B
20 C 45 B 70 B
21 B 46 B
22 B 47 A
23 B 48 D
24 D 49 B
25 B 50 B
3.
Services paid in cash for the month (336,000/1.12 P 300,000
Account receivable beginning (560,000/1.12) 500,000
Add: Sales on account (1,120,000/1,12) 1,000,000
Total 1,500,000
Less: Accounts receivable, ending (784,000/1.12) 700,000
Collections 800,000
Total 1,100,000
Tax rate 12%
Output tax P 132,000
9.
The Commissioner or his duly authorized representative shall, subject to rules and regulations
promulgated by the Secretary of Finance, upon recommendation of the Commissioner, have the
power to lift such order of distraint: Provided, further, That a consolidated report by the Revenue
Regional Director may be required by the Commissioner as often as necessary.
10.
The last day to appeal to the Court of Tax Appeals is April 15, 2002 which is within two (2) yeas
from the date of payment of tax.
Claims for refund must be elevated to the CTA before the expiration of the two-year period
because the prescriptive period will not be suspended regardless of any supervening event.
11.
Similarities among the three inherent powers:
1) They are inherent in the State;
2) They exist independently of the Constitution;
3) They constitute the three methods by which the State interferes with private rights and
property;
4) They are legislative in nature and character;
5) Each presupposes an equivalent compensation.
12.
All appropriation, revenue or tariff bills authorizing increase of the public debt, bills of application,
and private bills shall originate exclusively in the House of Representatives, but the Senate may
propose or concur with amendments (Art. VI, Sec. 24).

TAXATION
13.
Essential 1) It is an enforced contribution;
Characteristics of 2) It is levied pursuant to legislative authority;
Tax 3) It is proportionate in character;
4) It is payable in money;
5) It is levied on persons and property within the jurisdiction of the State;
6) It is levied and collected for the purpose of raising revenue to be used for public
purpose;
7) It is commonly required to be paid at regular intervals (not all taxes).
16.
Tax rate 1%
Percentage tax P 2,500
17.
BMBE refers to any business entity or enterprise engaged in the production, processing or manufacturing of
products or commodities, including agro-processing, trading and services, whose total assets including those
arising from loans but exclusive of the land on which the particular business entity's office, plant and
equipment are situated, shall not be more than Three Million Pesos (P3,000,000.00).
“Services" shall exclude those rendered by any one, who is duly licensed by the government after having
passed a government licensure examination, in connection with the exercise of one's profession.
20.
RBEs which are categorized as Domestic Market Enterprises (DME) are not entitled to VAT zero-rating on
local purchases.
Sale of goods or services to a registered domestic market enterprise shall be subject to VAT at 12%.
21.
Interest on deficiency from April 16, 2016 to June 30, 2017 (1,000,000 x 20% x 441/365 days)=
P241,643.83
22.
20% interest on deficiency from July 1, 2017 to December 31, 2017 (1,000,000 x 20% x 184/365 days) =
P100,821.91
23.
20% interest on delinquency from July 1, 2017 to December 31, 2017 (1,491,643.83 x 20% x 184/365
days) = P150,390.39
24.
12% interest on delinquency from January 1, 2018 to February 10, 2018 (1,491,643.83 x 12% x 41/365
days) = P20,106.54
25.
Basic tax due (income tax) P1,000,000.00
Add: 25% surcharge for late payment (25% x 1,000,000) 250,000.00
Interest on deficiency from April 16, 2016 to June 30, 2017
(1,000,000 x 20% x 441/365 days) 241,643.83 491,643.83
Total amount due, June 30, 2017 1,491,643.83
Add: 20% interest on deficiency from July 1, 2017 to December 31,
2017 (1,000,000 x 20% x 184/365 days) 100,821.91
20% interest on delinquency from July 1, 2017 to December 31,
2017 (1,491,643.83 x 20% x 184/365 days) 150,390.39
12% interest on delinquency from January 1, 2018 to February 10,
2018 (1,491,643.83 x 12% x 41/365 days) 20,106.54 271,318.84
Total amount due, February 10, 2018 P1,762,962.67
26.
Selling price P200,000

Less: Acquisition cost 150,000
Capital gain 50,000
Tax rate 15%
Initial payments are P60,000 (30,000 + 30,000). Initial payments over selling price 60,000/200,000 is
30%. Capital gains tax cannot be paid in installment because initial payments exceed 25% over the
selling price.

TAXATION
28.
150,000/200 x 1.50 = P1,125
29-30
Using Reconciliation of Net Income Per Books Against Taxable Income
Net income per books P340,000
Add: Non-Deductible Expenses/Taxable Other Income
Provision for bad debts 80,000
Write-off of inventories lost due to spoilage 20,000
Bad debts recovery 30,000
Total 470,000
Less: A) Non-Taxable Income and Income Subject to Final Tax
Dividend income 50,000
Interest income 30,000
B) Special/Other Allowable Deductions
Accounts written-off 50,000
Total 130,000
Net Taxable Income (Loss) P340,000
32.
Less: Operating expenses (before the
additional deduction) 17,500,000.00
Additional deduction from training
expenses
1/2 x 3,000,000.00) (lower) 1,500,000.00
10% x 20,000,000.00 2,000,000.00 1,500,000.00 19,000,000
Net taxable income P21,000,000.00
33.
Interest expense before interest arbitrage P2,000,000.00
Less: Interest arbitrage
January 1 to June 30, 2020
(300,000.00 x 33% x 6/12) 49,500.00
July 1, to December 31, 2020)
(300,000.00 x 0% x 6/12) 0.00 49,500.00
Allowable interest expense P1,950,500.00
34.
The P800,000.00 shall be treated as tax-exempt since it was properly utilized within 2022. On the other
hand, the P200,000.00 shall be declared as taxable income for the calendar year 2021, subject to surcharge,
interest and penalty, since the utilization in not within the following taxable year, which is in 2022.
36.
Less: Allowable deductions 89,000,000.00
Net taxable income P 1,000,000.00
Normal/regular corporate income tax (1,000,000 x 25%) P 250,000.00
Minimum corporate income tax (not yet subject) -
Tax due (higher) P 250,000.00
37. BONUS
Less: Allowable deductions 89,000,000.00
Net taxable income P 1,000,000.00
Normal/regular corporate income tax (1,000,000 x 25%) P 250,000.00
Minimum corporate income tax (90,000,000 x 1%) P 900,000.00
Tax due (higher) P 900,000.00
MCIT rate: 2% - Up to June 30, 2020; 1% - July 1, 2020 to June 30, 2023; 2% - July 1, 2023

TAXATION
42.
30,000,000/50,000,000 x 5,500,000 = 3,300,000
43.
Standard deduction – P500,000
44.
Less: Ordinary deductions 3,300,000
Net estate before special deductions 26,700,000
Less: Standard deduction 500,000
Net taxable estate 26,200,000
Tax rate 6%
Estate tax due P 1,572,000
45.
Selling price, shares held as inventory P3,000,000
Less: Acquisition cost, shares held as inventory 1,000,000
Add: Other income, shares held as inventory 200,000
Gross receipts 2,200,000
Tax rate 12%
Output tax P 264,000
46.
Selling price, held as investment P2,000,000
Less: Acquisition cost, shares held as investment 1,500,000
Capital gain 500,000
Tax rate 15%
47.
Selling price, held as investment P2,000,000
Tax rate .006
Stock transactions tax P 12,000
48.
Repealed under Sec. 6 RA No. 11494 (Bayanihan to Recover as One Act)
See Sec. 2 RR No. 23-2020
53.
Less: Cost 30,000
Capital gain (long-term) P 90,000
Income to be recognized (50%) P 45,000
Initial payments over selling price = 40,000/120,000 = 33%
54.
Less: Cost 30,000
Ordinary gain P 90,000
Income to be reported in 2021 (90,000/120,000 x 40,000 = 30,000)
55.
Gross income P250,000
Less: Deductions 150,000
Taxable income this quarter 100,000
Add: Taxable income, previous quarters
(150,000 + 150,000) 300,000
Taxable income to date P400,000
57.
Tax due (higher) P100,000
Less: Unexpired excess MCIT (25,000 + 40,000) 65,000

TAXATION
63.
Gross receipts P500,000
Less: Rent expense 20,000
Salaries expense 100,000 120,000
Taxable net income P380,000
Tax due under Section 24 (A)250,000 0
130,000 x 20% 26,000 P 26,000
65.
Gross Philippines Billings P700,000
Rate 2.5%
67.
Less: OSD (40% x 500,000) 200,000
Taxable net income P300,000
69.
Normal cost for 2022 P400,000
Add: 1/10 x 100,000 (2020) 10,000
1/10 x 100,000 (2021) 10,000
1/10 x 100,000 (2022) 10,000
Total P430,000

CPA Review Batch 45  May 2023 CPALE  23 April 2023  8:00 - 11:00 AM
1. Which of the following may not raise money for the government?
a. Power of taxation
b. Police power
c. Power of eminent domain
d. Privatization of government’s capital assets
2. The basic principle of taxation, where, “Taxes must be based on the taxpayer’s
ability to pay” is called:
a. equality in taxation. c. theoretical justice.
b. ability to pay theory. d. equity in taxation.
3. Which of the following statements is not correct?
a. Taxes may be imposed to raise revenue or to provide incentives or disincentives
for certain activities within the State.
b. The State can have the power of taxation even if the Constitution does not
expressly give it the power to tax.
c. For the exercise of the power of taxation, the state can tax anything at any
time.
d. The provisions of taxation in the Philippine Constitution are grants of power
and not limitations on the taxing power.
4. Is it possible for the tax to be used partly for public and partly private without
violating the limitation that a tax must be for public purpose?
a. Yes. The purpose to be accomplished by taxation need not be exclusively public.
Although private individuals are directly benefited (e.g. giving aid to flood
victims), the tax will still be valid provided such benefit is only incidental.
b. No. The purpose to be accomplished by taxation need to be exclusively public.
To benefit private individuals will be tantamount to deprivation of property
of those who paid the tax without due process.
c. Yes. The purpose is not important as long as the use of the tax can be property
accounted for.
d. No. The purpose shall either be public or private. It cannot be both.
5. The principle of separation of powers ordains that each of the three branches of
the government has exclusive cognizance of and is supreme in matters falling within
its own constitutionally allocated sphere.
a. The tax imposed should be for public purpose.
b. There should be no improper delegation of the taxing power.
c. The power to tax is limited to the territorial jurisdiction of the taxing
government.
d. Exemption of government entities from taxation.
6. Which of the following is not an element of double taxation?
a. Two taxes c. Same year
b. Same subject matter d. Same amount
7. Which is not an essential characteristic of tax?
a. Unlimited as to amount c. Proportionate in character
b. Payable in money d. Regular payment
8. Statement 1: The value-added tax is a property tax.
Statement 2: The estate tax is a direct tax.
a. The two statements are correct.
b. The two statements are wrong.
c. Statement 1 is correct while statement 2 is wrong.
d. Statement 1 is wrong while statement 2 is correct.
9. Mr. Bill Morgan, a Canadian citizen and a resident of Scarborough, Ontario, sends a gift
check of $20,000 to his future daughter-in-law who is to be married to his only son in the
Philippines. Is the donation subject to Philippine donor’s taxes?
a. Yes, but only up to extent that exceeds the allowable P250,000.00 exemption for
donations.
b. Yes. There is no showing in the problem that the marriage actually took place within
one (1) year from the date of the donation
c. No. The donor is a non-resident alien hence he is not subject to the Philippine donor’s
tax law.
d. No. The donation took place outside the Philippines hence not subject to the Philippine
donor’s tax law.

TAXATION
ReSA Batch 45 – May 2023 CPALE Batch
10. Transfer tax is a tax imposed on the privilege to transfer property ownership
a. through a will.
b. mortis causa.
c. inter vivos.
d. gratuitously.
11. The NIRC of 1997 imposes different kinds of taxes on dispositions of property. There are
VAT, excise taxes, estate taxes, donor’s taxes, etc. Which among the following transactions
would be subject to a transfer tax?
a. Sales of articles that are exempt from the VAT.
b. Sale of cigars and cigarettes by a wholesaler.
c. Sale of an automobile for less than an adequate and full consideration.
d. Sale of shares of stock that are not listed and traded at the stock exchange.
12. Mr. Nat Tigok, Filipino citizen, died abroad leaving the following properties: house and lot
in Texas, USA; shares of stock in San Miguel Corporation and PHILEX, both local companies;
bank deposits in New York City and in the Bank of the Philippine Islands in Makati; a Toyota
Camry sedan registered in the name of his son aged 21 years. He was buried in Manila and
expenses were incurred to bring the remains home and for his funeral. Which among the above
properties should be excluded from his estate tax return?
a. The house and lot in Texas, USA
b. The shares of stock in San Miguel Corporation
c. The bank deposits in New York City
d. The Toyota Camry sedan
SITUATIONAL
The following donations are made to relatives and strangers:
January 30, 2021 P2,000,000
March 30, 2021 1,000,000
August 15, 2021 500,000
September 20, 2022 600,000
13. How much is the donor’s tax payable on the gift made on January 30, 2021?
a. P 204,000 c. P 80,000
b. P 105,000 d. P 50,000
14. How much is the donor’s tax payable on the gift made on March 30, 2021?
a. P 204,000 c. P 60,000
b. P 124,000 d. P 50,000
15. How much is the donor’s tax payable on the gift made on August 15, 2021?
a. P 204,000 c. P 80,000
b. P 124,000 d. P 30,000
16. How much is the donor’s tax payable on the gift made on September 20, 2022?
a. P36,000 c. P21,000
b. P30,000 d. P20,000
SITUATONAL
The decedent is a resident alien, married, with the following data:
Conjugal properties
Real and personal properties, outside the Philippines P14,000,000
Family home, Philippines 30,000,000
Exclusive properties, Philippines 5,000,000
Conjugal deductions 2,000,000
17. The total gross estate is:
a. P49,000,000 c. P35,000,000
b. P34,000,000 d. P20,000,000
18. The special deductions are:
a. P40,000,000 c. P15,000,000
b. P30,000,000 d. P10,000,000
19. The taxable net estate is:
a. P 47,000,000 c. P32,000,000
b. P37,000,000 d. P11,000,000
20. The estate tax due is:
a. P2,820,000 c. P1,920,000
b. P2,220,000 d. P 660,000

TAXATION
21. Who among the following individual taxpayers is not required to file and income
tax return?
a. A partner who received his share in the profits of a taxable partnership.
b. A proprietor of a business who suffered a net loss during the taxable year.
c. A teacher who is employed in two (2) different schools.
d. An author who receives royalty form his books published in Japan.
22. The surcharge of 50% on the amount due shall be imposed where there is:
a. failure to file any return and pay the tax due thereon.
b. filing of return with an internal revenue officer other than those with
whom the return is required to be filed.
c. failure to pay the deficiency tax on time as indicated in the notice of
assessment.
d. failure to file a return on time due to willful neglect.
23. Who files the income tax return, and pays the tax thereon, on income derived by an
estate that is under judicial administration?
a. Executor or administrator
b. Any of the heirs
c. Either a or b
d. Neither a not b
24. Ken and Ian inherited a piece of agricultural land from their parents. The last
will and testament of the decedent provided that the said property shall not be
partitioned and should remain jointly owned by the siblings for a period of 20
years. What organization is deemed to exist for income tax purposes?
a. Corporation c. Co-ownership
b. Unregistered partnership d. Trust
25. Nippon Corporation a non-resident corporation organized under and by virtue of the
laws of Japan, deposited US$4,000,000 at Bank of Philippines Islands, Makati City.
The interest income from the said deposit shall be subject to:
a. 25% final withholding tax
b. 20% final withholding tax
c. 15% final withholding tax
d. 0% final withholding tax
26. The “tax sparing principle” which entitles the taxpayer of a preferential tax rate
of only 15% on the dividends received from a domestic corporation may be applied
to:
a. domestic corporation
b. resident foreign corporation
c. non-resident foreign corporation
d. non-corporate taxpayers
SITUATIONAL
An employee of a private corporation received the following de minimis benefits during
the taxable year 2022:
Monetized unused vacation leaves (10 days x P500) P5,000
Uniform allowance for the year 8,000
Laundry allowance (12 x P300) 3,600
Rice subsidy (12 x 2,500) 30,000
Actual medical benefits 12,000
Benefits received by an employee by virtue of a
collective bargaining (CBA) and productivity
incentive schemes 15,000
Payroll record also revealed the following:
Basic salary (P40,000 x 12) 480,000
13th month pay 40,000
Christmas bonus 30,000
27. How much is the taxable 13th month and other benefits?
a. P95,000 c. P5,000
28. How much is the tax payable (overpayment)?
a. P73,750 c. P50,000

TAXATION
29. The records revealed the following taxes and fees incurred by a practicing CPA
during the taxable year 2022:
Professional tax receipt (PTR) for accounting practice P 600
Car registration (60% used in practice) 3,000
Depreciation of car 75,000
Gasoline and oil of car 30,000
Income tax 12,000
Interest – late payment of income tax 1,500
Surcharge – late of payment of income tax 2,000
Donor’s tax 5,000
Special assessment 7,500
Real property tax on residential house 4,000
The total deductible amount for the taxable year was:
a. P110,100 c. P66,900
b. P 68,000 d. P65,400
30. Which of the following revenue constitutes the “Gross Philippine Billings” of a
resident foreign corporation operating as an international air carrier?
a. Revenue on flight from the United States to the Philippines, tickets sold in
the Philippines
b. Revenue on flight from the Philippines to Japan, tickets sold in Japan
c. Revenue on flight from Hongkong to South Korea (flight originated from the
Philippines with transshipment at Hongkong), tickets sold in the Philippines
d. Revenue on a return flight from Singapore to the Philippines, round-trip
ticket sold in the Philippines
31. A private non-profit hospital, has gross receipts of P15,000,000 with a cost of
P6,000,000 and allowable deductions of P3,250,000 from related activities, while
for its unrelated activities, it incurred P5,000,000 and P2,000,000 as cost of
sales and allowable deductions, respectively with a gross sales of P18,000,000 for
CY 2021.
How much is the tax due?
a. P4,187,500 c. P1,675,000
b. P3,350,000 d. P 167,500
SITUATIONAL
AST Corporation is registered as a Regional Operating Headquarters (ROHQ) since 2015.
For taxable years 2020 to 2023, its operations showed the following results:
2020 2021 2022 2023
Gross receipts P75,000,000.00 P120,000,000.00 P130,000,000.00 P75,000,000.00
Cost of services 41,250,000.00 66,000,000.00 71,500,000.00 41,250,000.00
Gross income 33,750,000.00 54,000,000.00 58,500,000.00 33,750,000.00
Less: Allowable
deductions 33,625,000.00 41,200,000.00 42,550,000.00 35,125,000.00
Net taxable
income P 125,000.00 P12,800,000.00 P15,950,000.00 (P1,375,000.00)
32. How much is the minimum corporate income tax (MCIT) in 2020
a. P1,500,000 c. None, not applicable
33. How much is the minimum corporate income tax (MCIT) in 2022?
a. P2,600,000 c. P585,000
b. P1,170,000 d. None, not applicable
34. How much is the tax due in 2023?
a. P1,500,000 c. P506,250
b. P 675,000 d. P337,500
35. The final income tax return for the taxable year 2018 which was due on April 15,
2019 was filed earlier on March 15, 2019. A substantial amended return was filed
on May 31, 2019. When is the last day to make a valid assessment?
a. March 15, 2022 c. May 31, 2022
b. April 15, 2022 d. May 31, 2025
36. First statement: The law on prescription, being a remedial measure, should be
liberally construed in order to afford protection against harassment.
Second statement: The exceptions to the law on prescription should be strictly
construed.
a. Both statements are correct. c. Only the first statement is correct.
b. Both statements are incorrect. d. Only the second statement is correct.

TAXATION
37. Which of the following prescriptive period of assessment and collection falls under
normal or regular prescriptive period?
a. Taxpayer filed a return and the return filed is not false of fraudulent
b. Taxpayer failed to file a return
c. Taxpayer filed a false return with intent to evade tax
d. Taxpayer filed a fraudulent return with intent to evade tax
38. The Commissioner of Internal Revenue has the authority to do all of the following
except:
a. compromise the payment of any internal revenue tax.
b. cancel or abate tax liability.
c. credit or refund tax.
d. review the decisions of the Court of Tax Appeals.
39. The offer to compromise based on financial incapacity may be accepted upon showing
the following, except when:
a. the corporation ceases operation or is already dissolved.
b. the taxpayer is suffering from surplus or earnings deficit resulting to
impairment in the original capital by 50%.
c. the taxpayer is a compensation income earner with no other source of income
and the family’s gross monthly compensation income does not exceed P10,500,
if single, or P21,000, if married.
d. the taxpayer does not waive in writing his privilege of the secrecy of bank
deposits.
40. Any residue over and above what is required to pay the entire claim, including
expenses, shall be:
a. returned to the owner of the property sold.
b. remitted to the Revenue District Officer.
c. remitted to the Regional District Officer.
d. reverted to the general fund.
41. An Internal Revenue Officer is allowed only how many days from the date of receipt
of an letter of authority by the taxpayer to conduct the audit and submit the
required report of investigation?
a. 30 days c. 120 days
b. 60 days d. 180 days
42. A taxpayer filed her income tax return for 2000 on April 15, 2001 and paid the tax
of P12,000. Upon audit of the BIR, an assessment notice was issued on May 2, 2003
requiring the taxpayer to pay a deficiency tax of P50,000 not later than July 15,
2003. The taxpayer may:
a. go to the Supreme Court if the issue involved is purely a question of the law.
b. ignore the assessment as the date of collection is beyond three (3) years as
the taxable year covers 2000.
c. request for an extension of time to pay the deficiency income tax.
d. go to the Court of Tax Appeals to appeal the assessment made by the BIR
43. K imported, not VAT-registered imported articles whose customs duties were based
on their volume. Total landed cost was determined to be P5,000,000 and excise taxes
on the said importation amounted to P1,000,000. He sold these articles to
Registered Business Enterprise (RBE). How much is the VAT payable on the
importation?
a. P960,000 c. P800,000
b. P720,000 d. None, importer is not VAT-registered
44. Using the same data in the preceding number, how much is the VAT on sale to an
RBE?
a. P960,000 c. P800.000
b. P720,000 d. Zero, sale to RBE is zero-rated
45. Where the input tax exceeds the output tax at the end of any quarter, the excess
may be claimed as a:
a. tax refund in the succeeding quarter or quarters.
b. tax credit in the succeeding quarter or quarter.
c. either a or b.
d. neither a nor b.

TAXATION
46. IAN Corporation is a retail business that had been generating sales not exceeding
the VAT threshold for exempt persons. It decided, however, to be registered under
the VAT system for the first time in order to benefit from input tax credits. What
benefit, if any, my IAN Corporation be entitled to once it registered under the
VAT system?
a. Tax refund c. Transitional input tax
b. Presumptive input tax d. No benefit at all
47. Which of the following statements based on latest regulations relative to the
filing of the VAT return and payment of VAT is correct?
a. The return is filed quarterly and the tax is also paid quarterly.
b. The return is filed monthly and the tax is also paid monthly.
c. The return is filed quarterly and the tax is paid monthly.
d. The return is filed monthly and the tax is paid quarterly.
48. The sales/receipts GCC for the year are as follows:
From grocery store P2,000,000
From sale of goods to Asian Development Bank 1,500,000
From passenger jeepney 500,000
From agricultural food products (original state) 600,000
Which of the statements is correct?
a. The basis for VAT registration is P4,600,000.
b. The basis for VAT registration is P3,500,000.
c. The basis for VAT registration is P3,100,000.
d. The basis for VAT registration is P3,000,000.
SITUATIONAL
The following information was gathered pertaining to the business of a VAT-registered
person for a taxable period.
VAT-subject sales P6,000,000
VAT-zero-rated sales 1,500,000
VAT-exempt sales 2,500,000
Input tax – VAT-subject sales 400,000
Input tax that cannot be allocated 300,000
49. How much shall be declared as total sales/receipts under line 19 (BIR Form 2550Q)?
a. P10,000,000 c. P7,500,000
b. P 8,500,000 d. P6,000,000
50. How much shall be the total VAT-subject sales?
a. P10,000,000 c. P7,500,000
b. P 8,500,000 d. P6,00,000
51. How much is the total available input taxes under line 22 (BIR Form 2550Q)?
a. P700,000 c. P600,000
b. P650,000 d. P400,000
52. How much is the total allowable input taxes under line 24 assuming input tax on
zero rated sales will be claimed as tax refund (BIR Form 2550Q)?
a. P1,000,000 c. P600,000
b. P 580,000 d. P400,000
53. How much is the net VAT payable under line 25 BIR Form 2550Q)?
a. P420,000 c. P140,000
b. P320,000 d. P 20,000
54. Which of the following transportation providers is not subject to the 3% percentage
tax on domestic carriers?
a. School bus operators c. Passenger jeepney operators
b. Cargo truck operators d. Car rental business
55. Excise taxes on alcoholic products manufactured or produced in the Philippines
for domestic sales or consumption in the Philippine is:
a. a local tax. c. a specific tax.
b. a proportional tax. d. an ad valorem tax.

TAXATION
56. With respect to the excise tax on locally produced or extracted metallic mineral
or mineral products, the person liable shall file a return and pay the tax within
how many days after the end of the calendar quarter when such products were removed
subject to such conditions as may be prescribed by rules and regulations to be
promulgated by the Secretary of Finance, upon recommendation of the Commissioner.
a. Thirty (30) days c. Ten (10) days
b. Fifteen (15) days d. Five (5) days
57. Which of the following is not an effect of failure to affix the required DST?
a. An instrument, document or paper which is required by law to be stamped and
stamped, shall not be recorded.
b. An instrument, document or paper or any copy thereof or any record of transfer
of the same which is required by law to be stamped shall not be admitted or
used in evidence in any court until the requisite stamp or stamps are affixed
thereto and cancelled.
c. No notary public or other officer authorized to administer oaths shall add his
jurat or acknowledgment to any document subject to documentary stamp tax unless
the proper documentary stamps are affixed thereto and cancelled.
d. An instrument, document or paper which is required by law to be stamped and
stamped, shall make the transaction void.
58. The Documentary Stamp Tax Return shall be filed within how many days after the
close of the month when the taxable document was made, signed, accepted or
transferred and the tax thereon shall be paid at the same time the aforesaid return
is filed.
a. Thirty (30) days c. Ten (10) days
b. Fifteen (15) days d. Five (5) days
59. Which of the following statements is incorrect
a. Taxation shall be uniform in each local government unit.
b. The collection of local taxes, fees, charges and other impositions shall in
no case be left to any private person;
c. The revenue collected pursuant to the provisions of the Local Government Code
shall inure solely to the benefit of, and be subject to disposition by, the
local government unit levying the tax, fee, charge or other imposition unless
otherwise specifically provided herein; and,
d. All local government units shall, as far as practicable, evolve a uniform
system of taxation.
60. In cases where a person conducts or operates two (2) or more businesses mentioned
in Section 143 of the Local Government Code which are subject to different rates
of tax, the gross sales or receipts of each business:
a. shall be separately reported for the purpose of computing the tax due from
each business.
b. shall be computed on the combined total gross sales or receipts of the said
two (2) or more related businesses.
c. shall be reported or computed using either choices a or b.
d. shall be reported or computed using neither choices a nor b.
61. The power to impose a tax, fee, or charge or to generate revenue under the Local
Government Code shall be exercised by:
a. the Sanggunian of the local government unit concerned through an appropriate
ordinance.
b. Office of the Mayor of the local government unit concerned through appropriate
executive orders.
c. Office of Assessor of the local government unit concerned through appropriate
assessments.
d. Office of the Municipal Administrator of the local government unit concerned
through appropriate administrative policies.
62. Unless otherwise provided in the Local Government Code, all local taxes, fees,
and charges shall be paid when?
a. within the first thirty (30) days of January or of each subsequent quarter,
as the case may be.
b. within the first twenty (20) days of January or of each subsequent quarter,
as the case may be.
c. within the first ten (10) days of January or of each subsequent quarter, as
the case may be.
d. within the first five (5) days of January or of each subsequent quarter, as
the case may be.

TAXATION
63. In the purchase of goods and services which have promotional discount, the senior
citizen or PWD can avail:
a. of the promotional discount or the senior citizen/PWD discount whichever is
higher.
b. of the promotional discount or the senior citizen/PWD discount whichever is
lower.
c. of both the promotional discount or the senior citizen/PWD discount.
d. of neither the promotional discount nor the senior citizen/PWD discount.
64. The monthly utilization of water and electricity by the Senior Citizen supplied by
public utilities will be subject to a 5% discount.
I - The individual meters for the foregoing utilities are registered in the name
of the senior citizen or his care giver residing therein:
II -The monthly consumption does not exceed one hundred kilowatt hours (100 kWh)
of electricity and thirty cubic meters (30 m3) of water:
III - The privilege is granted per household regardless of the number of senior
citizens residing therein.
a. I, II and III are correct

b. Only I and II are correct
c. Only II and III correct
d. I, II and III are incorrect
65. Senior citizens and PWDs are not exempted from which of the following taxes?
I - 20% final withholding tax on certain passive income
II - 15% final withholding tax on interest from a depository bank under EFCDS
III - VAT or other Percentage Taxes, if he is self-employed or engaged in business
or practice of profession
IV - 6% capital gains tax on presumed capital gain on sale of real property classified as
capital asset
a. I, II, III and IV

b. I, II and IV only
c. II and IV only
d. I and II only
66. Who of the following is not eligible to register as a Barangay Micro Business
Enterprise?
a. Enterprise engaged in the production, processing or manufacturing of products
or commodities, including agro-processing whose total assets including those
arising from loans but exclusive of the land on which the particular business
entity's office, plant and equipment are situated, shall not be more than Three
Million Pesos (P3,000,000.00).
b. Enterprise engaged in trading, whose total assets including those arising from
loans but exclusive of the land on which the particular business entity's
office, plant and equipment are situated, shall not be more than Three Million
Pesos (P3,000,000.00).
c. Certified Public Accountant engaged in public practice whose total assets
including those arising from loans but exclusive of the land on which the
particular business entity's office, plant and equipment are situated, shall
not be more than Three Million Pesos (P3,000,000.00).
d. Enterprise engaged in auto repair services, whose total assets including those
arising from loans but exclusive of the land on which the particular business
entity's office, plant and equipment are situated, shall not be more than Three
Million Pesos (P3,000,000.00).
67. Which of the following is not an incentive given to a Barangay Micro Business
Enterprise?
a. Exemption from income tax for income arising from the operations of the
enterprise
b. Exemption from the coverage of the Minimum Wage Law
c. Exemption from SSS and Philhealth contributions
d. Availment of credit services from government financing institutions

TAXATION
68. A person applying to be registered as a BMBE shall meet which of the following
qualifications?
I - With an asset of not more than Three Million Pesos (P3,000,000.00)
excluding land;
II - Engaged in the production, processing or manufacturing of products or
commodities, including agro-processing, trading and services;
III - Registered with the Department of Trade and Industry (DTI) for sole
proprietorships, for juridical persons; with Securities and Exchange
Commission (SEC) for corporations.
a. I, II and III
b. I and II only
c. I and III only
d. I only
69. The nature and purpose of DOUBLE TAXATION AGREEMENTS (DTAs)

I - Avoidance of double taxation
II - Prevention of fiscal evasion with respect to taxes on income
a. Both I and II
b. Neither I nor II
c. I only
d. II only
70. In case of conflict between tax treaty and domestic laws:

a. the provisions of the tax treaty generally prevail over the provisions of
the domestic law.
b. the provisions of the domestic law generally prevail over the provisions of
the tax treaty.
c. the domestic law of the richer country generally prevail in most cases
d. the countries entering into the treaty shall apply their domestic laws.
- END OF EXAMINATION –

1 C 26 C 51 A
2 C 27 C 52 B
3 D 28 B 53 C
4 A 29 C 54 B
5 B 30 B 55 D
6 D 31 A 56 B
7 D 32 C 57 D
8 D 33 C 58 D
9 D 34 C 59 D
10 D 35 C 60 A
11 C 36 A 61 A
12 D 37 A 62 B
13 B 38 D 63 A
14 C 39 D 64 C
15 D 40 A 65 A
16 C 41 C 66 C
17 A 42 C 67 C
18 C 43 B 68 A
19 D 44 D 69 A
20 D 45 B 70 A
21 A 46 C
22 D 47 A
23 A 48 B
24 C 49 A
25 D 50 C

TAXATION
6.
Direct double taxation means taxing twice, by the same taxing authority, within the
same jurisdiction or taxing district, for the same purpose, in the same year (or taxing
period) some of the property in the territory.
13 to 16
January 30, 2021
33 Total deductions allowed -
34 Total net gifts in this return 2,000,000
35 Add total prior net gifts during the calendar year
38/14 Total net gifts subject to tax 1,750,000
17A Less Payments for prior gifts during the calendar year -
18 Tax payable (overpayment) P105,000
March 30, 2021

35 Add total prior net gifts during the calendar year 2,000,000
17A Less Payments for prior gifts during the calendar year 105,000
18 Tax payable (overpayment) P 60,000
August 30, 2021

27 Total gifts in this return P 500,000
35 Add total prior net gifts during the calendar year 3,000,000
17A Less Payments for prior gifts during the calendar year 165,000
18 Tax payable (overpayment) P 30,000
September 20, 2022

27 Total gifts in this return P600,000
35 Add total prior net gifts during the calendar year
38/14 Total net gifts subject to tax 350,000
17A Less Payments for prior gifts during the calendar year -
18 Tax payable (overpayment) P21,000

TAXATION
17 to 20
Exclusive Common Total
34 Gross estate P5,000,000 P44,000,000 P49,000,000
35 Less: Ordinary deductions - (2,000,000) (2,000,000)
36 Estate after ordinary deductions 5,000,000 42,000,000* 47,000,000
37 Less: Special deductions
37A Standard deduction (5,000,000)
37B Family home (1/2 x 30,000,000) 15,000,000
Maximum 10,000,000 (10,000,000)
38 Net estate 32,000,000
39 Less: Share of surviving spouse
(1/2 x 42,000,000) (21,000,000)
40/16 Net taxable estate 11,000,000
17 Applicable tax rate 6%
18 Estate tax due P 660,000
27.
13th month pay P40,000
Christmas bonus 30,000
Benefits received by an employee by virtue of a collective bargaining
(CBA) and productivity incentive schemes 15,000
Uniform allowance (8,000 – 6,000) 2,000
Rice subsidy (12 x 500) 6,000
Actual medical benefits (12,000 – 10,000) 2,000
Total 95,000
Less: Exempt amount 90,000
Taxable amount P5,000
28.
4 Gross compensation income (480,000 + 95,000) P575,00
5 Less: Non-taxable/exempt compensation 90,000
6 Taxable compensation income P485,00
7 Tax due – compensation income Sec. 24 (A)
400,000 30,000
85,000 x 25% 21,250
485,000 P51,250
If the taxable income is:

Over But not over The tax shall be Plus Of excess over
P 250,000 0%
P 250,000 400,000 20% P 250,000
400,000 800,000 P 30,000 25% 400,000
800,000 2,000,000 130,000 30% 800,000
2,000,000 8,000,000 490,000 32% 2,000,000
8,000,000 2,410,000 35% 8,000,000
29.
Professional tax receipt P 600
Car registration (3,000 x 60%) 1,800
Depreciation of car (75,000 x 60%) 45,000
Gasoline and oil of car 30,000 x 60%) 18,000
Interest on late payment of income tax 1,500
Total deductible amount P66,900
31.
Related Unrelated Total
activities activities
Gross receipts P15,000,000.00 P18,000,000.00 P33,000,000.00
Less: Cost of services 6,000,000.00 5,000,000.00 11,000,000.00
Gross income 9,000,000.00 13,000,000.00 22,000,000.00
Less: Allowable deductions 3,250,000.00 2,000,000.00 5,250,000.00
Net taxable income P 5,750,000.00 P11,000,000.00 16,750,000.00
Tax rate* 25%
Income tax due P4,187,500.00

TAXATION
* Tax rate is 25% because income from unrelated activities exceeds 50%
(13,000,000/22,000,000 = 59%) and taxable net income exceeds P5,000,000.00.
32 to 34
2020 2021 2022 2023
Gross receipts P75,000,000.00 P120,000,000.00 P130,000,000.00 P75,000,000.00
Cost of services 41,250,000.00 66,000,000.00 71,500,000.00 41,250,000.00
Gross income 33,750,000.00 54,000,000.00 58,500,000.00 33,750,000.00
Less: Allowable
deductions 33,625,000.00 41,200,000.00 42,550,000.00 35,125,000.00
Net taxable
income P 125,000.00 P12,800,000.00 P15,950,000.00 (P1,375,000.00)
Tax rate 10% 10% 25% 25%
Income tax due P12,500,00.00 P 1,280,000.00 P 3,987,000.00 0
Minimum corporate
income tax (MCIT) Not applicable Not applicable P 585,000.00 P 506,250.00
Tax due (higher) P 3,987,000.00 P 506,250.00
Computation of MCIT
2022 2023
2022 (1% x 58,500,000) P 585,000.00
2023 January 1 to June 30, 2023 (1% x 33,750,000 x 6/12) P168,750.00
July 1 to December 31, 2023 (2% x 33,750,000 x 6/12) 337,500.00
P506,250.00
35.
If the return is amended substantially different from the original return, the three
(3) year prescriptive period shall be counted from the filing of the amended return.
There is substantial amendment when a new return is filed declaring more losses,
which can only be done either:
1) In reducing gross income, or
2) In increasing the items of deductions claimed.
If the amendment is minimal, the counting of the prescriptive period is still the
original period. (CIR vs. Phoenix Assurance, Inc.’ G.R. L-19727, May 20, 1965, 14
SCRA 52
36.
Negligence or oversight on the part of the BIR cannot prejudice taxpayers,
considering that the prescriptive period was precisely intended to give them peace
of mind. (CIR vs. Goodrich Phils., Inc. G.R. 104171, February 24, 1999
The normal three (3)- year prescriptive period expires on the 1095th day,
notwithstanding the fact that within the period, there is a leap year which is 366
days. (Revenue Memorandum Circular (RMC) 48-90)
37.
The following cases fall under exceptional prescriptive period of assessment and
collection:
a. The taxpayer failed to file a return;
b. The taxpayer filed a false return with intent to evade tax;
c. The taxpayer filed a fraudulent return with intent to evade tax; or
d. The taxpayer and the Commissioner agreed in writing to waive the prescriptive
period of assessment of tax.
38. Reference: Section 204, NIRC as amended
39. Reference: Section 3. 2, Revenue Regulations No. 30-2002

The offer to compromise based on financial incapacity may be accepted upon showing
that:
1) The corporation ceased operation or is already dissolved;
2) The taxpayer is suffering from surplus or earnings deficit resulting to impairment
in the original capital by at least 50%;

TAXATION
3) The taxpayer is suffering from net worth deficit, and in case of an individual
taxpayer he has no leviable/distrainable assets other than family home;
4) The taxpayer is a compensation income earner with no other source of income and
whose monthly salary is P10,500 or less, if single, or P21,000 or less, if married,
and has no leviable/distrainable assets other than family home;
5) The taxpayer has been declared by any competent tribunal or authority or body or
government agency as bankrupt or insolvent.
40. Reference: Section 209, NIRC, as amended

Any residue over and above what is required to pay the entire claim, including expenses,
shall be returned to the owner of the property sold.
The expenses chargeable upon each seizure and sale shall embrace only the actual
expenses of seizure and preservation of the property pending; the sale, and no charge
shall be imposed for the services.
41. Reference: Revenue Memorandum Order No. 36-99

If the Revenue Officer is unable to submit his final report of investigation within
120-day period, he must then submit a Progress Report to his Head of Office, and
surrender the LA for revalidation.
43.
Total landed cost P5,000,000
Add: Excise tax 1,000,000
Tax base 6,000,000
Rate 12%
VAT on importation P 720,000
48.
From grocery store P2,000,000
From sale of goods to Asian Development Bank 1,500,000
Total P3,500,000
49.
VAT-exempt sales 2,500,000
Total sales/receipts P10,000,000
50.
Total P7,500,000
51.
Input tax – VAT-subject sales P 400,000
Unallocated input tax 300,000
Total available input taxes P700,000
52.
Input tax – VAT-subject sales P 400,000
Unallocated input tax 300,000
Total available input taxes 700,000
Less: Allocable input tax on VAT-exempt sales
(2,500,000/10,000,000 x 300,000) (75,000)
Allocable input tax on VAT-zero rated sales claimed as tax refund
(1,500,000/10,000,000 x 300,000) (45,000)
Total allowable input taxes P 580,000
53.
19B Output tax (6,000,000 x 12%) P720,000
24 Total allowable input taxes (580,000)
25 Net VAT payable P140,000

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The Review School of Accountancy

TAXATION September 26, 2021 (Sunday)

1. Excise tax on certain articles is an example of:

2. Which of the following is/are correct?

3. (Adapted) First statement: Symbiotic relation is the reason why the

Second statement: Jurisdiction is the reason why citizens must provide

B a. Both statements are correct

The first statement refers to jurisdiction while the second statement

TAXATION – FINAL PRE-BOARD EXAMINATION (BATCH 42)

6. Which of the following are basic principles of a sound tax system?

7. “Schedular system of income taxation” means:

The opposite of “scheduler system of income taxation” is called “global

TAXATION – FINAL PRE-BOARD EXAMINATION (BATCH 42)

12. The concept of “situs of taxation” is based on which limitations of

14. First statement: In civil tax cases involving collection of internal

Second statement: In criminal tax cases involving tax offenses punishable

15. Which of the following statements is not correct?

A a. 1st statement is correct, 2nd statement is wrong

TAXATION – FINAL PRE-BOARD EXAMINATION (BATCH 42)

17. Warrant of levy as distinguished from warrant of distraint.

SEC. 210. Release of Distrained Property Upon Payment Prior to Sale. -

21. If the taxpayer is adversely affected by the resolution of the CTA in

22 to 25 are based on the following: In 2018, Ms. Glai Espenilla

22. Can she avail of the 8% income tax rate?

TAXATION – FINAL PRE-BOARD EXAMINATION (BATCH 42)

23. How much is her total taxable income?

25. How much is the output VAT, if any?

TAXATION – FINAL PRE-BOARD EXAMINATION (BATCH 42)

TAXATION – FINAL PRE-BOARD EXAMINATION (BATCH 42)

30 to 33 are based on the following: ECB, non-VAT registered lessor of

33. Assuming ECB is VAT-registered taxpayer instead of Non-VAT

TAXATION – FINAL PRE-BOARD EXAMINATION (BATCH 42)

34. An alien employee of an offshore banking unit has the following

Salary received from offshore banking unit (OBU) P10,000,000

Section 24 (A) Effective January 1, 2018 up to December 31, 2022

TAXATION – FINAL PRE-BOARD EXAMINATION (BATCH 42)

37. How much was the capital gains tax, if any?

38 to 41 are based on the following: Mr. Mark Tang is a partner of Tang

38. How much is the taxable income of the partnership?

39. How much is the income tax liability of the partnership?

TAXATION – FINAL PRE-BOARD EXAMINATION (BATCH 42)

41. Assuming the partnership avails of the Optional Standard deduction,

His gross estate includes family home valued at P8,000,000.

TAXATION – FINAL PRE-BOARD EXAMINATION (BATCH 42)

TAXATION – FINAL PRE-BOARD EXAMINATION (BATCH 42)

50 to 53 are based on the following: Your client, Antonio Manuel, is

54 to 57 are based on the following: Inlabada, VAT-registered company is

Input tax on VAT purchases other than capital goods,

56. Compute the deferred input tax as of March 31, 2018?

TAXATION – FINAL PRE-BOARD EXAMINATION (BATCH 42)

58. Compute the income tax due

* OSD for corporation is based on gross income.

59. How much is the Output VAT, if any.

61. On every original issue, whether on organization, reorganization or for

TAXATION – FINAL PRE-BOARD EXAMINATION (BATCH 42)

*Note: The P15,000,000.00 directly identifiable to exempt sales shall

63. Which of the following articles shall be subject to specific excise

How much is the tax payable (Overpayment)?