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2005

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Income Taxation
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Multiple Choice Questions
1. On October 1, 2007, Pastrana Co. leased a new residential house for the use of its general manager. The
rent agreed upon was P136,000 per month. The amount of the fringe benefit tax monthly is:
a. P68,000
b. P100,000
c. P136,000
d. P32,000
2. Taxpayer sold capital assets as follows:
Selling Price
Cost
Net Gain (loss)
Terms of sale:
Down payment
1.15.2006
Paid on
6.15.2006
Paid on
9.15.2006
Installment due
1.15.2007
Installment due
5.15.2007
Mortgage assumed by the buyer

Lot 11
P6,000,000
2,500,000
P3,500,000

Lot 22
P10,000,000
1,000,000
P9,000,000

P500,000
500,000
500,000
2,000,000
2,500,000

P500,000
1,000,000
1,000,000
3,000,000
3,000,000
1,500,000

The final tax payable under the installment method for 2006 for lot 11 is:
a. P36,000
b. P90,000
c. P22,500
d. None of the above
3. In Problem No. 2, the final tax payable under the installment method for 2006 lot 22 is:
a. P135,000
b. P150,000
c. P600,000
d. None of the above
4. Jose Pidal, widower, supporting a son, 33 years old, who is invalid, has the following transactions in
2006:
Sales
P1,200,000
Cost of sales
550,000
Deductions:
1. Operating expenses
367,000
2. Loss of Goods thru theft
50,000
3. Contributions:
To Quezon Province government for priority
Activity in sports development
10,000
To St. Mark Cathedral
35,000
Other income
1. Rent of Apartment
30,000
2. Capital gain from sale of family painting held for 2 years 80,000
Jose Pidal will report a net income before personal exemptions of:
a. P226,700
b. P262,700
c. P266,700
d. P302,700
5. Assuming Jose Pidal claimed the optional standard deduction, he shall report a net income before
personal exemptions of:
a. P585,000
b. P648,000
c. P760,000
d. P1,143,000
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6. Roy, Caludio & Co. is a general professional partnership. Their income and expenses in 2006 are shown
below:
Roy, Claudio & Co.
Gross income
P1,000,000
Operating expenses (deductible)
600,000
Contributions:
1. To Mandaluyong City for priority projects in education
40,000
2. To Divine Mercy Church
20,000
Note: There was no contributions of profits during the year but partner Claudio withdrew P50,000
chargeable against his share.
Partner Roy, widower with 70% interest, uses cash method
Gross income, rent
P300,000
Rental expenses (deductible)
120,000
Royalty (on books)
40,000
Donation to Quiapo Church
40,000
Partner Claudio, married with 30% interest, on accrual basis
Gross income from business
P420,000
Business expenses (deductible)
290,000
Dividend from domestic company
50,000
Partner Roy will report taxable net income of:
a. P232,000
b. P368,800
c. P372,000

d. P388,000

7. Partner Claudio, will report a taxable net income of:


a. P238,000
b. P206,000
c. P200,000
8. Nikki Corporation has the following transactions during the year:
Gross income, Philippines business
Gross income, Hongkong business
Business expense, Philippines
Business expense, Hongkong
Interest connected with Philippine business
Interest connected with Hongkong business
Interest connected with business in the Phil. and Hongkong
Business expense which cannot be allocated

d. P124,000
P1,600,000
400,000
900,000
100,000
60,000
40,000
100,000
120,000

If taxpayer is a resident foreign corporation, its net income subject to tax in the Philippines is:
a. P464,000
b. P530,000
c. P640,000
d. P940,000
9. The books of Renato Co. show the following information for the year 2007:
1st Qtr.
2nd
Qtr.
3rd
Qtr.
4th
Qtr.

Sales
P1,200,000

Cost of sales
P680,000

1,400,000

840,000

1,500,000

900,000

1,700,000

1,000,000

P5,800,000

P3,420,000

Other income
P190,000, Rent Net of
5% withholding tax
P96,000, Royalty, Net of
20% withholding tax
P500,000, dividend from
domestic corporation
P95,000, Rent Net 5%
withholding tax

Deductions
P320,000
P360,000
P380,000
P450,000 including fringe
benefit tax of P50,000
P1,510,000

Renato Co. is entitled to a tax credit in the amount of P20,500, representing excess quarterly income
taxes paid in 2006, which it opted to carry over to 2007.
The income tax due from Renato Co. for the 1st quarter of 2007 is:
a. P66,000
b. P109,500
c. P122,000

d. P132,000

10. The tax records of Botai Co. for 2007 show:


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Sales
P2,000,000
Cost of sales
1,300,000
Expenses which includes bad debt written off
In the amount of P65,000
360,000
The bad debt of P65,000 written off in 2006, was recovered in the year 2007.
Botai Co. shall report in 20076, income arising from the bad debt recovery, in the amount of:
a. P65,000
b. P22,100
c.P22,750
d. None
11. Jose Miguel Arroyo, single, has the following transactions in 2007:
Business gross income
P200,000
Business expense
60,000
Loss from gambling
10,000
Other transactions:
1. Selling price, partnership interest
100,000
Investment in partnership 2005
20,000
2. Gain on sale of capital asset held for 4 years
10,000
1. Loss on sale of capital asset held for 8 months
12,000
2. Loss on account of failure to exercise 2-month option to buy Property
2,000
3. Liquidating dividend from Z Co.
150,000
Cost of investment in Z Co. in 2005
60,000
Note: in 2006, Jose Miguel Arroyo had a net income of P65,000 and a net capital loss of
P92,000.
Taxpayers net income before personal exemptions is:
a. P196,000
b. P141,000
c. P140,000
d. P151,000
12. Hubert and Winnie, spouses, have five (5) minor dependent children. They are both physicians. In 2007,
their records show the following income and expenses:
Professional fees from common clinic
P 140,000
Salary of Hubert as professor
120,000
Royalty of Hubert as book author
60,000
Salary of Winnie as professor
84,000
Prize won by Winnie
8,000
Interest on Notes Receivable of spouses
12,000
Allowable operating expenses of common clinic
30,000
Premium on health insurance of family
10,000
Hubert will report a taxable net income, after personal and additional exemptions, of:
a. P177,000
b. P147,000
c. P124,600
d. P117,000
13. Winnie will report a taxable net income, after personal exemptions, of:
a. P111,000
b. P121,000
c. P139,000
d. P145,000
14. Miriam Santiago, a business woman, incurred the following losses in 2006:
1. Wagering losses at Casino Filipino
Note: Wagering winnings amounted to P14,000
2. Loss on sale of company car to Red Co.
Note: Miriam Santiago owns 60% of the stocks of Red Co.
3. Loss on sale of office computers to Miriam Sto. Domingo,
cousin of Miriam Santiago
The deductible loss of Mirriam Santiago is:
a. P190,000
b. P104,000
c. P54,000

P86,000
54,000
40,000

d. None

15. Bogok, Manager of Tongek Co., receives a monthly salary of P120,000. On January 15, 2007, Bogok
received a bonus for services rendered in 2006 in the form of 200 shares of stock of Tongek Co. Said
shares have a par value of P120 per share and a fair market value of P240 per share at the time of receipt
on January 15, 2007. Its fair market value in 2004 was P210 per share.
Bogok shall report income from bonus in the amount of:
a. P48,000
b. P42,000
c. P24,000
d. None of the above
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16. Angelei Corporation organized in 2000, has the following records in 2007:
Sales
P2,100,000
Cost of sales
430,000
Operating expenses
1,585,000
For the year 2007, Angelei Corporation shall pay corporate income tax in the amount of:
a. RCIT of P27,200
b. MCIT of P33,400
c. MCIT of P29,750
d. RCIT of P28,050
Donors Tax
1. The tax imposed on the transfer of property without consideration between two or more
persons who are living at the time the transfer is made.
a.
Estate tax
c.
Gift Tax
b.
Business Tax
d.
Personal Tax
2. When the donee or beneficiary is a stranger, the tax payable by the donor shall be:
a.
30% of the gross gifts.
b.
30% of the net gifts.
c.
Based on the graduated rates with the first P100,000 net gift exempt.
d.
Based on the graduated rates with the first P100,000 net gift exempt or 30% of the net
gifts whichever is higher.
3. For donors tax purposes, one of the following is a stranger.
a.
Brother or sister
c.
Uncle
b.
Spouse
d.
Son-in-law
4. Three of the following are exempt or excluded from donors tax, which of the following is the
exception?
a.
P200,000 cash given by a nonresident alien donor to his legitimate son who is getting
married in the Philippines to a Filipina.
b.
P10,000 cash given by a resident alien o his legitimate son who is getting married in
the Philippines.
c.
Donation of a condominium in Japan to a Filipina by a Malaysian national not residing
in the Philippines.
d.
P150,000 donation to a nonprofit school.
5. All of the following except one are exempt from gift tax.
a.
Donation to Integrated Bar of the Philippines.
b.
Donation to Development Academy of the Philippines.
c.
Donation to Philippine Institute of Certified Public Accountants.
d.
Donation to International Rice Research Institute
6. Peter sold his car to James. Peters car cost P500,000 and has a fair value of P400,000 at
the time of sale. The car was sold for P200,000. For donors purposes, which of the
following statements is correct?
a.
There is a taxable gift of P300,000.
b.
There is a taxable gift of P200,000.
c.
The transfer is for insufficient consideration, hence, not subject to gift tax.
d.
The transfer involves a personal property, hence not subject to gift tax.
7. The donors tax return shall be filed within:
a.
30 days after each donation.
b.
30 days after end of the month following the donation.
c.
6 months after each donation
d.
30 days after end of the year donations were made.
8. The common characteristics of transfer taxes is:
a.
The transfer of property is onerous.
b.
The transfer of property takes effect during the lifetime of the transferor.
c.
The transfer of the property takes effect upon the death of the transferor.
d.
The transfer of property is gratuitous.
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9. Estate tax as distinguished from donors tax is:


a.
Exemption is P200,000.
b.
There is no optional valuation date.
c.
Payment is made as the return is filed.
d.
Notice is not needed.
10. The following are requisites of a donation for purposes of the donors tax, except one:
a.
Capacity of the donor.
b.
Capacity of the donee.
c.
Delivery of the subject matter.
d.
Donative intent.
11. It is an act of liberality where a person disposes gratuitously of a thing or right in favor of
another who accepts it.
a.
Succession
c.
Donation
b.
Remission
d.
Taxation
12. One of the following donations must be in public instrument.
a.
Donation of real (immovable) property.
b.
Donation of tangible personal (movable) property.
c.
Donation of intangible personal (movable property.
d.
Donation inter vivos.
13. Gifts may or may not be covered by taxes. One of these statements is false:
a.
The donors tax for each calendar year is computed on the basis of the total net gifts
made during the calendar year.
b.
Gifts on property shall be valued at fair market value of te property at the date of
donation.
c.
A gift to the Development Academy of the Philippines is exempt from tax.
d.
A gift out of conjugal property is always deemed as made by both spouses.
14. One of the following is not exempt from donors tax.
a.
Donation inter vivos to religious organizations.
b.
Donation inter vivos to International Rice Research Institute.
c.
Contribution in cash or in kind for election campaign purposes, duly reported to the
Commission on Elections.
d.
Remission of debt where the debtor did not render service in favor of the creditor.
15. Gift tax is considered as:
a.
Property tax
b.
Personal tax

c.
d.

Business tax
Excise tax

16. First statement:

The donors tax shall apply whether the transfer is in trust or


otherwise, whether the gift is direct or indirect, and whether the
property is real or personal, tangible or intangible.
Second statement:
Any contribution in ash or in king to any candidate, political party or
coalition of parties for campaign purposes shall exempt from donors
tax.
a.
Both statements are correct.
b.
Both statements are incorrect.
c.
Only the first statement is correct.
d.
Only second statement is correct.

17. Donors tax distinguished from estate tax:


First distinction:
The rates for donors tax are lower than those for the estate tax.
Second distinction: In donors tax, the exemption is P100,000 while in estate tax it is
P200,000.
a.
Both distinctions are correct.
b.
Both distinctions are wrong.
c.
First distinction is correct, the second is wrong.
d.
First distinction is wrong, the second is correct.
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18. First statement:

Gifts in favor of an educational and/or religious organization are


exempt from donors tax.
Second statement:
Transfers to educational and/or religious organization are exempt
from estate tax.
a.
Both statements are correct.
b.
Both statements are incorrect.
c.
Only the first statement is correct.
d.
Only second statement is correct.

19. First statement:

The commissioner shall have authority to grant in meritorious cases,


a reasonable extension of not more than 30 days for filing the
donors tax return.
Second statement:
In case of gifts made by nonresidents, the return may be filed with
Philippine Embassy or Consulate in the country where he is
domiciled at the time of the transfer, or directly with the Office of the
Commissioner.
a.
Both statements are correct.
b.
Both statements are incorrect.
c.
Only the first statement is correct.
d.
Only second statement is correct.

20. First statement:

In donation mortis causa, it is the donors death that determines the


acquisition of, or the right to the property; and that it is revocable at
the will of the donor.
Second statement:
In donation inter vivos, its effect is produced while the donor is still
alive.
a.
Both statements are correct.
b.
Both statements are incorrect.
c.
Only the first statement is correct.
d.
Only second statement is correct.

21. First question:

Second question:

a.
b.
c.
d.

Is donative intent always essential to constitute a gift? No. Where the


property, other than real property classified as capital assets, is
transferred for less than an adequate and full consideration in money
or moneys worth, the difference between the fair market value at the
time of transfer and consideration received is subject to donors tax.
How is the gift of conjugal partnership property made by the spouses
treated for donors tax purposes? The gift is taxable to the husband
being the head of the family as long as the wife gives consent to the
donation.

Both statements are correct.


Both statements are incorrect.
Only the first statement is correct.
Only second statement is correct.

22. Two of the following are the purpose of donors (gift) tax:
1. To supplement and prevent circumvention of the estate tax.
2. To prevent avoidance of income taxes through the devise of splitting income
amount numerous donees to escape the effect of the progressive rates of income
taxation.
3. To make the act of receiving a gift taxable.
4. To subject all properties wherever situated to gift tax.
a.
1 and 2 only
b.
1 and 3 only
c.
2 and 3 only
d.
3 and 4 only
23. First statement:

With the exception of moderate donations for charity or on


occasions of family rejoicing or distress, neither spouse may donate
any community or conjugal property without the consent of the
other.
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Second statement:
a.
b.
c.
d.

Transfer of any right or interest in property, but less than title to take
effect during the lifetime of the transferor and transferee is subject to
donors tax.
Both statements are correct.
Both statements are incorrect.
Only the first statement is correct.
Only second statement is correct.

24. First statement:

The law in force at the time of perfection or completion of the


donation shall govern the imposition of donors tax.
Second statement:
The transfer of property by gift is perfected from the moment the
donor knows of the acceptance by the donee; and completed by
the delivery to the donee either actually or constructively of the
donated property.
a.
Both statements are correct.
b.
Both statements are incorrect.
c.
Only the first statement is correct.
d.
Only second statement is correct.

25. First case:

Bong transfer to Kate P50,000 in trust for May. The transfer is not
subject to tax because the transfer is in trust.
Second case:
In consideration of his love Mary donated a parcel of land to her brother
Ernesto and Francisco, the naked title to Ernesto and usufruct to
Francisco for two year. The transfer of the land, naked title to Ernesto
and usufruct to Francisco, being a gift, is subject to donors tax.
a.
Answer to both cases are correct
b.
Answer to both cases are wrong
c.
Only answer to first case is correct
d.
Only answer to second case is correct

26.

In computing the donors tax, the dowry or gift on account of marriage is allowed as an
exemption (deduction) to:
a. A resident donor
c. Both resident donor and nonresident donor
b. A nonresident donor
d. Answer not given.

27.

28.

29.
30.

Husband and wife gave the following gift of conjugal property:


January 20, 2006 Land valued at P180,000. Donee is a brother of wife and gift is on
account of marriage of brother held on January 10, 2004.
The donors tax due on the gift is:
a. P1,600
b. P27,000
c. P54,000
d. P3,600

Noli de Castro made the following gifts in 2006


May 1 - Land valued at P500,000. Donee is first son and the gift is on account of
marriage held on April 10, 2006.
- Farm valued at P600,000. Donee is second daughter, farm has an unpaid
mortgage of P100,000 which Donee assumed.
Dec 1 - Shares of stock of F4 Corporation valued at P400,000. Donee is first
daughter and the gift is also on account of his marriage on April 10.
- Land in Makati valued at P1,000,000. Donee is the City of Makati and land will be
used for a school site.
The donors tax due on May 1 donations is
a. P43,400
b. P51,200
c. P52,000
d. None of the above
In Problem No. 28, the donors tax due on the gifts on December 1 is
a. P76,000
b. P10,000
c. P75,200
d. P31,800
A donor gave a piece of land to his legitimate daughter on account of his forthcoming
marriage. The land is valued at P1,500,000 with P500,000 unpaid mortgage.
The taxable net gift assuming the donor is a resident citizen and the unpaid mortgage was
assumed by the donee.
a. P1,500,000
b. P1,190,000
c. P990,000
d. none of the choices
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31.

The taxable net gift assuming the donor is a nonresident alien and the unpaid mortgage
was not assumed by the donee.
a. P1,500,000
b. P1,190,000
c. P990,000
d. none of the choices

32.

The taxable net gift assuming the donor is a resident alien and only P300,000 of the unpaid
mortgage was assumed by the donee.
a. P1,190,000
b. P990,000
c. P490,000
d. none of the choices

33.

The taxable net gift assuming the donor is a resident citizen and the piece of the land is a
conjugal. The unpaid mortgage was assumed in full by the donee.
a. P1,190,000
b. P990,000
c. P490,000
d. none of the choices

34.

Donor gave the following donations to his legitimate child residing in the Philippines
Real property located in Singapore
P700,000
Foreign shares
250,000
Domestic shares
150,000
Franchise used in the Philippines
500,000
P1,600,000
If donor is a Filipino residing in Singapore, taxable gross gift in the Philippines is
a. P1,600,000
b. P650,000
c. P950,000
d. None of the above

35.

If donor is an Singaporean residing in Kuala Lumpur and Singapore law exempts from
transfer tax the transmission of intangibles of Filipinos not residing in Singapore, the gross gift
taxable in the Philippines is
a. P650,000
b. P500,000
c. None
d. None of the above

36.

If the donor is a Japanese residing in Japan and Japan law imposes a transfer tax on the
transmission of intangibles of Filipinos not residing in Japan, the gross gift taxable in the
Philippines is
a. P650,000
b. P500,000
c. None
d. None of the above

37.

A donor gave P500,000 each to a stranger with the specific instruction to give part of it
amounting to P100,000 to the Philippine National Red Cross. For Philippine donors tax
purposes, he shall:
a. Pay donors tax of P150,000
c. Pay donors tax of P14,000
b. Pay donors tax of P120,000
d. Not pay donors tax

38.

Which of the following transfers are exempted or deductible from both total gross estate
and gross gifts?
a. Transfer to religious organization
b. Transfer to an educational institution
c. Transfer to a social institution
d. Transfer to a trust and Philanthropic organization

Other Percentage Taxes (OPT)


1. Which of the following statements is incorrect?
a. A taxpayer whose annual gross receipts/sales exceed P1,500,000 shall pay VAT even if he
is not VAT-registered.
b. A taxpayer whose annual gross receipts/sales do not exceed P1,500,000 but who is VATregistered shall pay VAT.
c. Percentage tax may be imposed together with VAT.
d. Percentage tax may be imposed together with excise tax.
2. Just like value-added tax, percentage taxes are paid on a quarterly non-cumulative basis.
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Generally, every person liable to pay the percentage taxes shall file a quarterly return within 25
days after the end of each taxable quarter.
a. True, True
c. False, True
b. False, False
d. True, False
3. Which of the following statements is correct?
a. Cooperatives shall be exempt from the 3% gross receipts tax.
b. A VAT-exempt taxpayer who issues VAT invoice shall not be liable to VAT.
c. Every person liable to the percentage tax shall always file a separate return for each branch
or place of business.
d. Motorized tricycles are not subject to percentage tax.
4. One of the following is subject to common carriers tax.
a. Owners of bancas
b. Owners of animal-drawn two-wheeled vehicles
c. Common carriers by land, air or water for transport of goods or cargoes.
d. Common carriers by land for transport of passengers.
5. A person whose business is to keep automobiles for hire or keep them stored ready for use or
order.
a. Keepers of garage
c. Taxicab operators
b. Common carrier
d. Tourist bus operator
6. The franchise tax of grantees of radio and television broadcasting whose annual gross receipts
of the preceding year do not exceed P10,000,000 shall be:
a. 2% of the gross receipts.
c. 4% of the gross receipts.
b. 3% of the gross receipts.
d. 5% of the gross receipts.
7 and 8 are based on the following:

In the third quarter of 2007, a taxpayer engaged in the sale of services whose annual gross
receipts do not exceed P1,500,000 has the following data:
Accounts receivable, beginning of quarter
Sales during the month
Accounts receivable, end of monh
Purchases of supplies, total invoice amount
7. The percentage tax due for the month is:
a. P2,250
b. P3,000
c. P7,500

P 50,000
100,000
75,000
11,200
d. P6,500

8. Assuming the taxpayer is VAT-registered, the VAT payable is:


a. P2,250
b. P6,500
c. P9,000
d. P7,800
9. One of the following is not subject to the 3% percentage tax.
a. International air carrier doing business in the Phils.
b. International shipping carrier doing business in the Phils.
c. Domestic carriers and keepers of garage.
d. Franchise grantee of city gas and water supplies.
10. Franchise grantees of city gas and water utilities is subject to a franchise tax of:
a. 2%
b. 3%
c. 4%
d. 5%
11. Amounts received for overseas dispatch, message, or conversation originating from the
Philippines are subject to:
a. 3% Franchise tax.
c. 2% franchise tax.
b. 10% overseas communications tax.
d. 10% value0added tax.
12. A tax on the right or privilege to enter places of amusement.
a. Value-added tax
c. Amusement tax
b. Franchise tax
d. Income tax
13. One of the following is not subject to amusement tax on gross receipts.
a. Disco houses
c. Professional basketball
b. Cockpits
d. Bowling alleys
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14. All of the following except one are liable to of 1% stock transaction tax. Which one is not?
a. Individual taxpayers, whether citizens or alien
b. Corporate taxpayers, whether domestic or foreign
c. Estate and trust
d. Dealers in securities
15. One of the following statements is incorrect.
a. The of 1% tax shall be collected by the broker who made the sale and shall be remitted
within 5 banking days from the date of collection.
b. The tax paid on sale of shares through local stock exchange and initial public offering (IPO)
and secondary offering shall not be allowable deduction for income tax purposes.
c. The of 1% tax on stock transaction is a final withholding tax on income.
d. The of 1% tax on stock transaction is collected whether there is an income or a loss and
is a percentage tax.
16. J. Reyes operates Ayawmagsakay Taxi with three units in Metro Manila. During the quarter,
Taxi No. 1 recorded gross receipts of P3,200, Taxi No.2 (net of P500 gasoline expense),
P3,500 and Taxi No.3, P4,500. The common carriers tax due is:
a. P363
b. P351
c. P336
d. None
17. Grandlate is a common carrier by sea. During a particular quarter, its receipts consist of the
following:
Gross receipts:
Transport of passengers
P1,000,000
Transport of goods
1,500,000
Transport of cargoes
500,000
The common carriers tax payable is:
a. P30,000
b. P90,000
c. P100,000
d. P200,000
18. Using the data in no. 17, the output VAT is:
a. None
b. P200,000
c. P360,000

d. P240,000

19. Mr. J. Cruz is the owner of a small variety store. His gross sales in any one year do not exceed
P1,550,000. He is not VAT-registered. The following data are taken from the books of the
variety store for the quarter ending March 31, 2007:
Merchandise inventory, December 31, 2006
Gross sales
Purchases from VAT-registered suppliers
The percentage tax due is:
a. P10,000
b. P13,500

P 100,000
450,000
350,000

c. P16,500

d. None

20. Nasaan Ang Kuryente Po (NAKUPO) is a holder of franchise to sell electricity. In a particular
quarter, its gross receipts amount to P2,000,000 from sale of electricity. It has also receipts
from the lease of its auditorium and theater amounting to P600,000.
The percentage tax due for the quarter is:
a. NIL
b. P40,000

c. P52,000

d. P78,000

21. Chiko operates a cockpit. Inside the cockpit, he also operates a restaurant. Data for the
particular quarter follow:
Gross receipts:
Cockpit operation
Restaurant operation
Sale of food
Sale of liquor
The amusement tax due from Chiko is:
a. P90,000
b. P135,000

P500,000
100,000
150,000
c. P120,000

d. P75,000
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22. Using the data in no. 21 except that the restaurant is not owned by Chiko but is owned by
another person, Chikabebs, not VAT-registered and whose annual gross sales never exceeded
P550,000. The amusement tax due from Chiko is:
a. P90,000
b. P135,000
c. P225,000
d. P7,500
23. Continuing no. 22, the percentage due from Chikabebs is:
a. P90,000
b. P135,000
c. P225,000

d. P7,500

24. J. Santos, promoted a world boxing championship in Manila featuring Manny Hakot, a Filipino
champion. Gate receipts amounted to P3,000,000 and additional receipts from television
coverage was P2,000,000. The amusement tax due is:
a. None
b. P500,000
c. P300,000
d. P900,000
25. Assuming the above is not a world championship but a Philippine national boxing
championship, how much is the amusement tax?
a. None
b. P500,000
c. P300,000
d. P900,000
26. ABS-GMA is a radio-tv broadcasting franchise grantee. During the preceding year, its gross
receipts did not exceed P10,000,000. During the first quarter of the current year, it has the
following data:
Gross receipts, sale of airtime
Gross receipts, use of radio stations
communication facilities
Business expenses
The franchise tax due for the quarter is:
a. P60,000
b. P40,000

P 2,000,000
500,000
700,000
c. P75,000

d. P39,000

27. A horseracing oficianado has the following winnings during particular race day:
Total winnings
Cost of winning tickets
The tax on winnings is:
a. P1,000
b. P400

P10,000
500
c. P950

d. zero

28. Aileen invested P500,000 in the shares of stock of Manila Trading Corp. The corporations
shares are listed and are traded in the local stock exchange. Aileen sold the shares for
P350,000 through the local stock exchange. The percentage tax on the sale is:
a. None
b. P2,500
c. P1,750
d. P50,000
29. Using the same data in no. 28 and assuming that Aileen sold the shares to Daisy, a direct
buyer, the percentage tax on the sale is:
a. None
b. P2,500
c. P1,750
d. P50,000
30. Jean, a dealer in securities, sold P1,500,000 worth of shares she held as investment. The
shares sold were acquired for P1,000,000 and were listed and traded in the local stock
exchange. The percentage tax due on the sale is:
a. Nil
b. P7,500
c. P2,500
d. P5,000
Questions 31 and 32 are based on the following information:
31. Makikiraan Po Transportation Company is a holder of a franchise to operate twelve (12) units of
buses in the Ilocos Region. It also owns a gas station, which is used exclusively to load its own
buses although in very rare instances it is accepting repair jobs from outsiders. During the
month of December 2007, it had the following gross receipts.
From the buses
P280,000
From the gas station
300,000
From the garage
12,000
How much is the common carriers tax payable?
a. P17, 760
b. P 8,400
c. P8,760

d. P17,400
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32. Using data above, the common carriers tax is payable by Makikiraan Po Transportation without
any penalty on or before a. January 10, 2008
c. January 20, 2008
b. January 15, 2008
d. January 25, 2008
33. Helow Po Co. is a franchise to operate a private telephone company. During the period, it had
the following gross receipts:
Domestic long distance calls
P137,500
Local regular bills from customers
220,000
Overseas calls from the Philippines to other countries
340,000
Purchases, VAT inclusive
209,000
The overseas communications tax is
a. P34,000
b. P36,500
c. P78,500

d. Zero

34. The value added tax payable by the company is


a. P20,507
b. P22,393
c. P42,900

d. None

35. Manny Pakwan owns shares of stock of domestic corporations which are actively traded in the
Philippine Stock Exchange. Due to the unstable prices in the stock exchange, he decided to
sell the shares. The data of which are as follows:
Selling Price
Cost
Gain/Loss
A-GAY-mat Corporation
P230,000
P220,000
P10,000
Back Lita Corporation
360,000
395,000
(35,000)
The stock transaction tax is
a. P2,950
b. P1,150

c. P50

d. Zero

36. Fani Lyn operates the Plastic Maam Nightclub in Quezon City. Her gross receipts on February,
2007 amounted to P126,700. The foods and drinks being served inside the nightclub are being
delivered by Malakas, a non-VAT taxapayer to Fani Lyn. During the month, Malakas sold
P32,400 worth of foods and drinks to Fani Lyn
The amusement tax payable is
a. P19,005
b. P22,806
c. P28,638
d. P5,832
Estate Tax
Select the letter that correspond the BEST answer.
A. If the first statement is correct
C. If the both statements are correct
B. If the second statement is correct
D. If the both statements are incorrect
1.

Gratuitous transfer of property may not involve financial consideration. F


Onerous transfer of property is not subject to tax. F
2.

The estate of the decedent may include his liabilities. F


A sale is a form of transfer transaction that requires payment of transfer tax. F

3.

A gift out of love to a former girlfriend is an onerous transfer. F

Cancellation of exiting debt as payment for services rendered by the debtor to the creditor is
a gratuitous transfer. F
4.

The right to succession is effected at the time of transfer of the decedents property or rights
to the heir. F
In case of doubt, testamentary succession is preferred to legal or intestate succession. T

5.

The share of the surviving spouse is an exclusive property of the wife and shall be part of
the decedents distributable estate. F
Intestate succession is a legal succession because it takes effect through the validity of the
decedents last will and testament. F

6.

Notes or claims held by the decedent should not be included in the gross estate if cancelled
by the decedents will. F
Interest collected in advance before the decedents death, which occurred after the
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decedents death shall be included in the gross estate. F


7.

Donated properties subject to condition upon the wishes of the decedent donor shall not be
included as part of the gross estate. F
There is transfer in contemplation of death when the sale involves an adequate and full
consideration. F

8.

There is a revocable transfer when a transferor of a corporate stock in trust for his children
reserves the right to vote the shares during his lifetime to aid his children to gradually
assume financial responsibilities. F
When the designation of the beneficiary is not stated or is not clear, the Insurance Code
assumes irrevocable designation. F

9.

Under the absolute community of property regime, property acquired through exclusive
property of the husband or wife is an exclusive property even acquired during the marriage.
T
Exclusive property does not become community property just because it is used as family
home. T

10.

The property acquired through donation during marriage shall remain exclusive property of
the decedent or surviving spouse. F
Property for personal and exclusive used of either spouse including jewelry shall form part
of the community property. F

11.

Obligations contacted by a person during his lifetime terminate upon his death.
Where a decedent owns less than all of the property covered by a mortgage, only a
proportionate amount is deductible. F

12.

Estate tax is deductible from the gross estate.


In computing vanishing deduction, the value to be taken is the lesser amount of the value of
the property at the date of transfer or the value of the property at the date of death of the
decedent. T

13.

The amount of estate taxes paid to foreign country could be claimed as credit against
estate tax in the Philippines, if such taxes paid to foreign countries pertain to properties
which are included in the gross estate fir Philippine estate tax purpose. T
Where the decedent is nonresident alien, unidentifiable deductions shall be allocated
proportionately with the gross estate located within the Philippines and the gross estate
located outside the Philippines. F

14.

Failure of the BIR Commissioner to serve a copy of the estate tax claim to the executor or
administrator is a valid ground to deny the claim. T
The Register of Deeds shall not register any deed or instrument covering the decedents
estate or any portion thereof until the taxes are shown to have been paid. T

15.

Estate tax is imposed upon the


a. Decedent
b. Property or rights transferred

c. Right to transfer properties


d. Privilege to receive inheritance

16.

Which of the following is regarded as an intestate succession?


a. The will is designating the State as beneficiary of the free portion.
b. The will was subsequently rendered void by circumstances.
c. The will designate a part of free portion to a stranger.
d. The will disposed the legitime to its rightful heir.

17.

Which of the following is subject to transfer tax?


a. Sale of personal property for a price lower than cost.
b. Exchange of a piece of jewelry for a set of furniture.
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c. Transfer of personal goods for free.


d. Transfer of real property for services rendered.
18.

Which of the following item is considered situated outside the Philippines?


a. Franchise in the name of the decedent which is exercised in the Philippines
b. Share of stock holdings of decedent in a foreign corporation whose business is 90 %
done in the Philippines
c. Bond certificate issued by a domestic corporation owned by a non-resident decedent
d. Foreign currency deposited in bank outside the Philippines

19.

Which of the following is not to be included in the gross estate of citizen decedent?
a. Dividend income declared, but not yet actually received at date of death
b. Share in partnerships profit earned immediately after date of death
c. Rent income accrued before death but collected after death
d. None of the above

20.

Which of the following is considered as transfer under general power of appointment?


a. Power to use property though a will exercisable in favor of the estate
b. Power to appropriate property expressly not exercisable by decedents creditors
c. Power to use property for the comport of person/s other than the decedent of his estate
d. Power designating the estates creditor as beneficiary

21.

Which of the following proceeds of life insurance of the decedent is not to be included in the
gross estate?
a. The estate as beneficiary
b. The executor as beneficiary
c. The estate as the irrevocable beneficiary
d. The spouse as the irrevocable beneficiary

22.

Which of the following proceeds of life insurance of the decedent is to be included in the
gross estate?
a. The estate as irrevocable beneficiary
b. The spouse as the irrevocable beneficiary
c. The parent as the irrevocable beneficiary
d. Irrevocable beneficiary other than the estate or executor

23.

Mr. Papa Tayin makes a transfer of property in trust, income payable to himself for 10
years, thereafter to Miss Nama Tayan or his estate. Mr. Papa Tayin dies after 2 years.
a. Both transfers are to be included in the gross estate
b. Both transfer are not to be included in the gross estate
c. Only transfer No.1 is to be included in the gross estate
d. Only transfer No.2 is to be included in the gross estate

24.

Statement No.1: For estate tax computation, real estate shall be valued at fair market
value at the date of death of the decedent.
Statement No.2: If zonal value is available at date of death, and this is higher than the fair
market value per assessors listings of values, then the amount to be reported in the gross
estate is the zonal value.
a. Only statement number 1 is correct.
b. Both statements are correct.

c. Both statements are incorrect.


d. Only statement number 2 is correct.

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25.

26.

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Naty Ghok died in 1993 leaving a will which directed all real estates owned by him not to
be disposed or sold for a period of 12 years after his death, and ordered that the property
be given to Nau Lila after 12 years. In 1993, the estate left by Naty Ghok had fair market
value of P500,000. In 2005 the fair market value of the said estate increased to P4,500,00
and the BIR Commissioner assessed value thereon is P4,000,000 in 2005. What would be
the correct amount of the gross estate?
a. P 500,000
b. P 4,000,000
c. P 4,500,000
d. P 5,000,000
Identified estate of the decedent:
Real property located in the Philippines acquired 2 years ago at cost of P1,000,000.
This has a zonal value of P1,500,000 and an assessed value of P800,000 at the date of
death.
Personal property located abroad. This has realizable value of P1,000,000 at the date
of death.
Claimed as deductions:
Funeral expenses, P150,000
Total medical expenses of P550,000 of which 80% were incurred within one year prior
to death and 20% were incurred more than one year prior to death.
Assume that the decedent died a resident alien in the Philippines, the gross estate taxable
in the Philippines is
a. P 2,500,000

27.

b. P 2,000,000

c. P 1,800,000

d. P 1,500,000

Based on the data above, assume that the decedent was a non-resident alien at date of
death, the gross taxable estate under Philippine Tax Code is
a. P 800,000
b. P 1,000,000
c. P 1,500,000
d. P 2,500,000

Questions 28 through 33 are based on the following information regarding the inheritance due to
death of a married individual, Filipino and a resident of Lucena City, Philippines:

Residential house and lot in Lucena, acquired at P1,000,000 with zonal value of
P3,000,000 at the date of death.
Jewelry found on the body of the decedent at the date of death, with fair market value of
P500,000. This asset is determined as exclusive property of the decedent.
Real property in Mindanao, Philippines, bought 10 years ago, assessed at that time for
P1,000,000. An interested buyer would like to buy his property a week before his death
at P5,000,000.
Investment in bonds, local and foreign, P600,000.
Shares of stock of various domestic corporations, listed in the local stock exchange at
date of death at aggregate of value of P400,000.
Real property located in Ilocos, inherited from his father 3 years ago. This was taxed a
P2,500,000 when transferred from his father to his name. At that time, he assumed the
unpaid mortgage of P500,000. This has 20% assessment level at declared fair market
value of P2,600,000. The BIR zonal valuation stated a fair market value of P2,800,000
at date of death.
Income from farm earned before the date of death, P800,000 ( net of related income
tax.)
Commercial lot inherited by wife during marriage. This was valued at P6,000,000 when
inherited by wife and it has a fair market value of P10,000,000 at date of death. Rent
income from the commercial lot earned before the date of death, P3,000,000 ( net of
related income tax).
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Property brought to marriage by his wife, P6,000,000.

Deduction claimed by the executor:


Actual funeral expenses

P 180,000

Judicial expenses

900,000

Medical expenses

1,500,000

Unpaid mortgage on property in Ilocos


Various claims of creditors

200,000
8,000,000

Claims against insolvent person

800,000

Using the above problem above, under the regime of conjugal partnership of gains.

28.

The gross exclusive estate


a. P3,300,000b. P2,800,000c. P4,100,000d. P3,600,000

29.

The gross conjugal estate


a. P12,800,000
b. P13,600,000

c. P14,100,000

d. P13,300,000

The total gross estate


a. P16,100,000
b. P26,900,000

c. P16,900,000

d. P16,700,000

30.

Using the above problem above, under the regime of absolute community of property, compute for
the following:
31.

The gross exclusive estate


a. P3,300,000b. P2,800,000c. P4,100,000d. P3,600,000

32.

The gross conjugal estate


a. P10,600,000
b. P13,600,000

c. P15,800,000

d. P16,600,000

The total gross estate


a. P16,100,000
b. P26,900,000

c. P19,900,000

d. P16,700,000

33.
34.

Which of the following is deductible from the exclusive portion of the gross estate?
a. Vanishing deduction pertaining to property inherited by the decedent prior to marriage
under conjugal property ownership.
b. Transfer for public use pertaining to joint donation of husband and wife to the
government.
c. Bad debts for uncollectible claims against insolvent person.
d. Family home pertaining to house and lot acquired during marriage.

35.

Which of the following is deduction from the conjugal portion of the gross estate?
a. Paid mortgage pertaining to property acquired as inheritance before marriage under
absolute community property ownership.
b. Losses incurred during administration of the estate on property included in the gross
estate.
c. Claims against the exclusive portion of the estate.
d. Transfer for public use.

36.

Which of the following unpaid taxes is not deductible from the gross estate?
a. Property taxes accrued prior to decedents date.
b. Income taxes on income earned and received after decedents death.
c. Gift taxes on life time gifts which remain unpaid at date of death.
d. Capital gain tax on transfers before death and paid after date of death.

37.

Which is deductible from the gross estate of resident decedent?


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a.
b.
c.
d.
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Loss of portion of the estate incurred during settlement, arising from theft.
Loss of portion of the estate incurred 200 days before the date of death of the decedent.
Loss of portion of the estate incurred a month before the date of death of decedent.
Losses on the portion of exclusive capital of surviving spouse incurred during settlement
of the estate.

What is the correct amount of allowable medical expenses for the following:
Date Incurred

Hospital Bills

October 2005 to December 2005

P 100,000

March 2005 to May 2005

450,000

November 2004 to December 2004

150,000

Date of Death, September 30, 2006


a. P 500,000
39.

b. P 450,000

c. P 100,000

d. P 700,000

Mr. Nakalimot Hoo Minga, Filipino, resident of Rea Quezon died on December 2005. He is
survived by his wife and three (3) children. An inventory of his estate as of December 31,
2005, shows the following:
Real Estate:
Commercial land, 400 sq. meters w/ fair market value of

P 400,000

Residential land, 500 sq. meters w/ fair market value of

250,000

Residential house, with fair market value of

300,000

Farm land, 2 hectares with fair market value of

80,000

Personal Property:
Appliances, w/ fair market value of

160,000

Time Deposit with the Metro bank

90,000

Other Personal Properties

30,000

The commercial land is the exclusive property of the decedent and is pledge as collateral to a
mortgage loan form the Metro bank obtained on April, 2005 with the total amount of P200,000 at
18% interest per annum. The loan and accrued interest are not paid at the date of death of the
decedent. The rest of the estate is conjugal. The residential land and residential house are
mortgaged at the Equitable PCI Bank for P300,000. The unpaid balance of the mortgage loan on
December 31, 2005 per certificate of the bank is P220,000. The actual funeral expense is P55,000
and the judicial expenses is P15,000.
Compute the total ordinary deductions from the entire gross estate.
a. P517,000

b. PP1,517,000

c. P490,000

d. P500,500

Questions 40 through 41 are based on the following are the inventory of the estate of Mr.
Pumayapa who died on September 11, 2005.
Properties:
Jewelries

P 1,600,000

Old Vehicle

800,000

Shares of stock, domestic corporation

250,000

Real estate inherited August 9, 2000. This was previously


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taxed at P250,000. It was inherited from his uncle and


the decedent assumed unpaid mortgaged of P70,000,
of w/c P50,000 was paid by the present decedent before
his death.

300,000

Collectibles, excluding P50,000 claims against insolvent


person and P100,000 cancelled in a written will

350,000

Peso bank deposit

150,000

Investment in bonds

100,000

Amount received by heir under R.A 4917

300,000

Expenses:

40.

Funeral Expenses

190,000

Judicial Expenses

120,000

Loans payable, duly notarized

50,000

Stolen Jewelry, part of the gross estate

10,000

Medical Expenses

250,000

Legacy to the City of Manila

100,000

The following Vanishing deduction


a. P34,700
b. P34,600

c. P34,390

d. P35,000

41.

Using the above data, the total deductions from the gross estate
a. P2,124,600b. P1,124,000c. P2,124,700d. P2,125,000

42.

Which of the following may reduce the taxable estate but not the inheritance?
a. Funeral Expenses
c. Judicial Expenses
b. Losses
d. Family Home

43.

Which of the following is a decrease in inheritance?


a. Vanishing deduction
c. Family home
b. Claims against insolvent person d. Standard deduction

44.

Which of the following is allowed with tax credit for estate tax paid to foreign
country?
a. Resident Alien, whose gross estate reported as taxable in the Philippines,
included only those located in the Philippines.
b. Gross estate of an alien who was resident of his country at date of death.
c. Gross estate of an American residing in the Philippines at the date of death whose
properties are located within and without.
d. All of the Above

Questions 45 through 47 are based on the following information:


Mr. Juan Todas, Filipino, married and resident of Pasay City died intestate on February 24,
2005. He was survived by his wife, Rosa and three (3) children. His estate consist of the
following:
Fair Market Value
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January 15, 2000

February 24, 2005

P 500,000

P 1,000,000

800,000

1,200,000

Exclusive real property inherited


from his father who died on
January 15, 2000:
Land, residential, 800 sq.meters
Land, agricultural, 10 hectares
Conjugal Real Property:
Land, residential, 1,500 sq.mtrs.

1,800,000

Building, residential, 300 sq. mtrs.

900,000

Land, fishponds, 4 hectares

600,000

Conjugal Personal Property:


Motor Vehicles

650,000

Miscellaneous

250,000

The exclusive real property, residential land, 800 sq. m. was mortgaged at the Bank of
Philippine Islands. On February 23, 1998 to guaranty an eighteen percent (18%) per annum
mortgage loan of P100,000. At the date of death, the loan and interest are not paid. The
conjugal real property, residential land and residential building are also mortgaged at the Metro
bank, and the unpaid balance of the loan on February 24, 2005 was P80,000. The actual
funeral expenses amounted to P320,500 and judicial expenses were P24,000.
The net taxable estate
a. P3,422,000

b. P2,922,000c. P3,172,000d. P2,172,000

46. Using the above problem, the estate tax


a. P291,420
b. P236,420

c. P326,240

d. P192,240

47. Using the above problem, the net distributable share


a. P3,422,000b. P2,922,000c. P3,861,750d. P2,172,000
48.

Mrs. Kina Pos Sahangin, a Filipino, died November 1, 2005 survived by her husband. At the
date of death, she has P2,000,000 cash in bank and 100,000 shares holding of Pure Joke
Corporation with a sales value of P100 per share at the date of death. On January 15, she
made a gift of P3,000,000 (real property) to her husband. She is insured for P1,000,000
designating her estate as beneficiary. The premium was paid from her exclusive property.
The last will and testament of Mrs. Kina Pos Sahangin reveals that her shares of stock in
Pure Joke Corporation shall be contributed to the local government of Tagaytay City for the
maintenance of public park, and the balance shall be given to her husband.
Mrs.Kina Pos Sahangins executor field and paid the follow tax returns:
Donors tax for gift to her husband
Estate Tax

P 204,000
34,840

The transfer tax still due for the estate tax of Mrs. Kina Pos Sahangin.
a. P116,160

b. P160,160

c. P356,160

d. P560,160

*****************************************************************************************************************
Value Added Tax
*****************************************************************************************************************
1. One of the following is not a major business internal revenue tax in the Tax Code.
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c. Income tax
d. Other Percentage tax

2. The value added tax due on the sale of the taxable goods, property and services by any person
whether or not he has taken the necessary steps to be registered.
a. Input tax
c. Excise tax
b. Output tax
d. Sales tax
3. First statement: Nonstock and nonprofit private organizations which sell exclusively to their
members in the regular conduct or pursuit of commercial or economic activity are exempt
from value-added tax.
Second statement: Government entities engaged in commercial or economic activity are
generally exempt from value-added tax.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only the first statement is correct.
d. Only the second statement is correct.
4. Gross selling price includes all of the following except one. Which one?
a. Total amount which the purchase pays to the seller.
b. Total amount which the purchase is obligated to pay to the seller.
c. Excise tax.
d. Value-added tax.
5. First statement: If the tax is not billed separately in the inventory, the VAT shall
be determined by multiplying the gross selling price including the amount
intended to cover the tax by the factor 12/112.
Second statement: If the tax is billed erroneously, the VAT shall be determined by multiplying
the gross selling price including the tax billed separately by the factor 12/112.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only the first statement is correct.
d. Only the second statement is correct.
6. The tax base value added tax on the installment sale of real property is:
a. The higher between the selling price stated in the sales document or zonal value or market
value.
b. Selling price stated in the sales document.
c. Installment received plus interest and other charges.
d. Gross receipts.
7. The following are zero-rated if paid for in acceptable foreign currency or its equivalent and
accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas
except one.
a. Sale and actual shipment of goods from the Philippines to a foreign country.
b. Sale of raw materials or packaging materials to a nonresident buyer for delivery to a
resident local export-oriented enterprise.
c. Sale to a non resident of goods assembled or manufactured in the Philippines for delivery
to a resident in the Philippines.
d. Sale of real property to a nonresident person for delivery to a resident in the Philippines.
8. One of the following is not an export sale.
a. Sale to bonded manufacturing warehouses of export-oriented manufacturers and to export
processing zones.
b. Sale to foreign military bases, diplomatic missions or agencies and/or instrumentalities
granted tax immunities, of locally manufactured, assembled or repacked products whether
paid for in foreign currency or not.
c. Sale of gold to Bangko Sentral ng Pilipinas.
d. Exportations of goods on consignment.
9. One of the following is not a transaction deemed sale:
a. Transfer, use or consumption not in the course of business of goods or properties originally
intended for sale or for use in the course of business.
b. Distribution or transfer to shareholders or investors of goods or properties as share in the
profits of a VAT-registered person or creditors in payment of debt.

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c. Retirement from or cessation from business, with respect to all goods on hand as of the
date of such retirement or cessation.
d. Consignment of goods if actual sale is made within 60 days following the date such goods
were consigned.
10. Tax credit for input taxes shall be allowed if:
a. Both the seller and the purchaser are VAT-registered.
b. Either one of the seller or the purchaser is VAT-registered.
c. Neither one of the seller or the purchaser is VAT-registered as long as VAT invoice is
issued.
d. The seller is VAT-registered regardless of whether the purchaser is VAT-registered or not.
11. The allowable transitional input tax is:
a. The lower between 2% of the value of beginning inventory or actual VAT paid on such
inventory.
b. The higher between 2% of the value of beginning inventory or actual VAT paid on such
inventory.
c. The actual VAT paid on the beginning inventory.
d. 2% of the value of beginning inventory.
12. Which of the following input taxes can be refunded, converted into tax credit certificates or
carried over to the next quarter at the option of the VAT-registered taxpayer?
a. Input tax on purchase of raw materials.
b. Input tax on importation of supplies.
c. Input tax on zero-rated sales of goods or services.
d. Input tax on purchase of services.
13. First statement: Unused input tax of persons whose registration had been
cancelled may be converted into tax credit certificate which may be used in
payment of other NIRC taxes.
Second statement: Refund or tax credit certificate shall be granted within 25 days from the
date of submission of complete documents.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only the first statement is correct.
d. Only the second statement is correct.
14. Monthly VAT declaration is filed on or before the:
a. 15th day from the end of each month.
b. 20th day from the end of each month.
c. 25th day from the end of each month.
d. 30th days from the end of each month.
15. First statement: VAT taxpayers except corporations use calendar quarters for
VAT purposes.
Second statement: Withholding of VAT is done when the buyer is the Government or any of its
political subdivisions.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only the first statement is correct.
d. Only the second statement is correct.
16. Withholding of VAT is not applicable when payment is:
a. P1,000 and above.
c. P8,000 and above.
b. P1,000 and below.
d. P15,000 and above.
17. Value added tax is a/an:
a. Indirect tax
b. Direct tax.

c. Local tax
d. Personal tax

18. The Silvilocks Pastry sells cakes and pastry items to well-known hotels around the Metro
Manila area. The hotels are allowed credit based on the track record of the hotels. The total
amounts received or receivable from sales by Silvilocks in April 2007 were P224,000, including
the value-added tax. 75% of the sales are normally on account.
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How much is the output tax for the month of April 2007?
a. P22,000
b. P24,000
c. P16,500
d. P15,000
19. J. Cruz, a trader, made the following sales of goods during the month of July 2007, exclusive of
VAT:
Cash sales
P 200,000
Open account sales
100,000
Installment sales
100,000
Note: Receipt from installment sales is P 40,000
Consignment sales
Apr. 15, 2007
100,000
Feb. 15, 2007
100,000
Output tax is:
a. P48,000
b. P55,200
c. P72,000
d. P60,000
20. J. Santos, VAT-registered, made the following purchases during the month of January, 2007:
Goods for sale, inclusive of VAT
P 246,400
Supplies, exclusive of VAT
20,000
Office airconditioners, total invoice amount
56,000
Home appliances for residence, gross of VAT
17,920
Repair of store, contractor not VAT-registered, total invoice amount 33,600
Repainting of store, total invoice amount evidenced by
ordinary receipt of contractor
4,480
Mr. Santos intends to refund the VAT on office airconditioners. Creditable input taxes are:
a. P34,800
b. P28,800
c. P35,280
d. P34,670
21. A taxpayer registered under the VAT system on January 1, 2007. His records during the month
show:
Value of inventory as of December 31, 2006
Purchased from VAT-registered persons
P 50,000
VAT paid on inventory as of December 31, 2006
6,000
Value of inventory as of December 31, 2006 purchased from
non-VAT persons
60,000
Sales, net of VAT
140,000
Sales, gross of VAT
44,800
Purchases, net of VAT
70,000
VAT payable is:
a. P13,200
b. P7,200
c. P11,000
d. P15,600
22. The following are the data of City Appliances Marketing Co. for the last quarter of 2007:
Sales up to December 15, total invoice value
P 319,200
Purchases up to December 15, net of input taxes
215,000
Additional information:
On December 16, 2007, the City Appliances Marketing Co. retired from its business and the
inventory valued at P190,000 was taken and transferred to New City Appliances Co. There
is a deferred input tax from the third quarter of P3,500.
How much is the total value-added taxes due and payable by City Appliances Marketing Co. in
its operations in the last quarter and its retirement from business?
a. P27,700
b. P4,900
c. P31,200
d. P8,400
23. Continuing no. 22, assuming that the New City Appliances Co. has the following data for the
first quarter of 2008.
Sales, total invoice value
Purchases, total invoice value

P 336,000
22,400

How much is the VAT payable of the New City Appliances Co. for the first quarter of 2008?
a. P33,600
b. P10,800
c. P13,200
d. P36,000
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24. Violet Corp. is a VAT-registered dealer of appliances. The following data are for the last quarter
of 2007:
Sales, total invoice value
P 6,920,000
Purchases, net of input taxes
5,500,000
Sales return
200,000
Purchases return
300,000
Deferred input taxes (carried over from the
third quarter of 2007)
9,500
The value added tax payable for the last quarter of 2007 by Violet Corp. is:
a. P107,929
b. P86,500
c. P96,000
d. P81,429
25. During a quarter, Popocute Corp. made sales of goods amounting to P1,000,000 plus output
tax of P120,000 for a total of P1,120,000. It also made sales of services amounting to
P200,000 plus output tax of P24,000 for a total of P224,000.
During the same quarter, it made domestic purchases of P1,000,000 for goods for sale plus
input tax of P120,000. It also hired the services of an independent contractor to repair the
building used for both lines of activities for which it paid the amount of P150,000 plus P18,000
input VAT. Its input tax carried over from the previous quarter is P215,000, for which P200,000
is a carry over input tax for a previous purchase of capital goods.
Popocute received a credit memorandum for purchases returned during the quarter covering
purchases made in the previous quarter amounting to P336,000, P36,000 of which is the
adjustment to input tax. It also filed a claim for refund of P200,000 input tax on capital goods.
How much is Popocutes net creditable input tax?
a. P317,000
b. P117,000
c. P153,000

d. (P83,000)

26. In question no. 25, how much is the VAT payable or excess tax credit?
a. P173,000
b. P3,000
c. P27,000
d. (P117,000)
27. Assuming the same facts in question no. 25, except that the company has not filed a claim for
refund during the period for input tax on previous purchases of capital goods, how much is
Popocutes net creditable input tax?
a. P173,000
b. P100,800
c. P43,200
d. P317,000
28. Continuing no. 27, how much is the VAT payable or excess tax credit as the case may be?
a. P43,200
b. P17,300
c. P27,000
d. P1,170
29. Jolas Realty Corp. in the course of the trade sells real property. During the month of January
2007 had the following data per sales document (VAT included):
Cash sales
P 560,000
Sale on deferred payment basis (initial payments
exceed 25% of the selling price)
336000
The real property sold for cash had a zonal value of P600,000 (excluding VAT) and the
property sold under deferred payment basis had a fair market value of P200,000 (excluding
VAT)
How much is the output VAT on the sale of real property?
a. P9600
b. P84000
c. P108,000

d. P50,000

30. Jawo Realty Corp. sells real property in the course of its business. During the month of April
2007, it had sold a lot under the following terms (including VAT):
Total contract price
P 1,120,000
Downpayment, 4-10-07
112,000
First installment, 6-30-07
112,000
Second installment, 1-01-08
56,000
The output VAT in April 2008 is:
a. P12,000
b. P24,000

c. P30,000

d.

None
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31. A VAT-registered person is engaged in the sale of VAT taxable goods and at the same time is
also engaged in non-VAT business, in the same business establishment. During the quarter
made sales of goods in the amount of P300,000 plus a value-added tax of P36,000. The sales
of the non-VAT business amounted to P200,000 with a separate percentage tax of P6,000 for a
total of P206,000. During the same quarter, repairs on the building amounted to P50,000 plus
value-added tax of P6,000. Supplies purchased for common use amounted to P10,000 plus
P1,200 value-added tax.
The creditable input tax is:
a. P28,800
b. P4,463
32. Using the data in no. 31, the VAT payable is:
a. P28,800
b. P31,537

c.

P7,200

d.

P4,320

c.

P30,000

d.

P31,680

33. Sweetie Pie Refining Company manufactures refined sugar. It had the following data during the
first quarter of 2007:
Sale of refined sugar, net of VAT
P 2,000,000
Purchase of sugar cane from farmers used
in the manufacture of refined sugar
500,000
Purchase of packaging materials, gross of VAT
784,000
Purchase of labels, gross of VAT
112,000
The VAT payable is:
a. P144,000
b. P124,000
c. P84,000 d. P136,500
34. A VAT-registered supplier sold goods amounting to P500,000 to a government-controlled
corporation during a particular quarter. Which of the following statements is incorrect in relation
to the sale of goods?
a. The sale is subject to creditable withholding VAT.
b. The government-controlled corporation will withhold P15,000 withholding VAT
c. The government-controlled corporation shall remit the withholding VAT to the BIR within 10
days following the end of the month the withholding was made.
d. The VAT-registered supplier may refuse the withholding of VAT as long as it is willing to pay
the full 12% VAT.
35. On January 5, 2007, Laylu Co., VAT-registered, sold on account goods for P112,000 to Vinmar
Corp. The term was: 2/10, n/30. Payment made on January 10, 2007. The total amount due is:
a. P112,000
b. P109,760
c. P111,760
d. P100,000
36. A VAT-registered person has the following data:
Export sales, total invoice amount
P 3,000,000
Domestic sales, total invoice amount
6,720,000
Purchase of raw materials, used to manufacture
goods for export and domestic sales, VAT inclusive
560,000
Supplies used for both export and domestic sales,
VAT inclusive
448,000
Purchase of equipment used in the manufacture
of goods for export and domestic sales, VAT exclusive
300,000
The amount of input tax which can be refunded or converted into tax credit certificates at
the option of the VAT-registered person is:
a. P144,000
b. P60,000
c. P36,000
d. P48,000
37. Agua Pataranta is a manufacturer of beer. During a particular quarter, it had the following
transactions (net of VAT):
January 4, 2007 : Consigned beer to a retailer in Quezon City amounting to P200,000.
February 14, 2007 : Exported P1,000,000 worth of beer to Japan.
February 27, 2007 : President of Agua Pataranta celebrated his birthday, consuming
P50,000 worth of beer given to him by the company as a birthday gift.
March 20, 2007
: Declared property dividend of one case of beer for every 10 shares,
amounting to P150,000.
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Additional information: From January to March, domestic sales to wholesalers amounted to


P600,00. No beer was returned by the consignee until the end of the quarter.
The output tax for the quarter is:
a. P24,000
b. P96,000

c. P240,000

d. P120,000

38. First statement: A taxpayer whose gross sales or receipts exceeded the threshold amount of
P1,500,000 shall pay VAT even if he is not VAT-registered. He is entitled to input taxes.
Second statement: Importers of goods for personal use is subject to value-added tax even if he
is not VAT-registered.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only the first statement is correct.
d. Only the second statement is correct.
39. One of the following statements is incorrect.
a. Imported goods which are subject to excise tax are no longer subject to value-added tax.
b. VAT on importation is paid to the Bureau of Customs before the imported goods are
released from its custody.
c. Expenses incurred after the goods are released from Customs custody are disregarded in
computing VAT on importation.
d. When a person who enjoys tax-exemption on his importation subsequently sells in the
Philippines such imported articles to non-exempt person, the purchaser-non-exempt
person shall pay the VAT on such importation.

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