Exams Flashcards by Tina A

P 120,000

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During the year 2018, Nicanor, Jr. who resides in R. Papa Street, Sampaloc Manila and
with Tin 135-567 890-006. Made the following gifts:
June 1, 2018:
Donee: Junior, his son, on account of his marriage celebrated June 1, 2018 Amount of
donation: P 150,000 cash
July 10, 2018:
Donee: His friend Aprot Amount of donation: P 400,000 a secondhand motor vehicle
September 30, 2018: Donee: His daughter Julia
Amount of donation: P 450,000 cash dowry, on account of her scheduled marriage on
October 25, 2018
November 23,2018:
Donee: His father, Nicanor, Sr. Amount of donation: A parcel of land worth P 180,000,
subject to the condition that his father would assume the mortgage indebtedness of
Jose in the amount of P 40,000;
Using Donor’s Tax Return (BIR Form No. 1800), how much will be reflected on line 14
(total net gifts) for the return to be filed on November 23, 2018?
P 140,000
P 1,140,000
None of the choices
P 890,000

P 890,000

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A property acquired at a cost of P 1,000,000 was transferred in contemplation of death
for a consideration of P 1,200,000. Fair market value at the time of transfer, P
1,500,000, while at the time of death, P 1,200,000. How much shall be included in the
gross estate?
Select the correct response:
P1,500,000
P 1,000,000
P 1,100,000
PO

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S1: Estate tax an ad valorem tax.
S2: Estate tax is an excise tax.
Select the correct response:
Only S1 is correct.
Both are incorrect.
Only S2 is correct.
Both are correct.

Both are correct.

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Ryan Bangz, a Korean actor residing in Korea, died in 2022. Below are the information
pertaining to his estate:
Net taxable estate, Philippines P 6,000,000 Net taxable estate, Korea 3,000,000 Estate
tax paid China 100,000 How much is the estate tax payable?
Net taxable estate, China 1,000,000 Estate tax paid, Korea 50,000
Select the correct response:
P 490,000
P 450,000
P 600,000

P 490,000

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A parcel of land inherited from the father was acquired by the decedent’s father then for
a cost of P 250,000. Upon inheritance, the fair market value was P 200,000 as shown in
the schedule of values from the Assessor’s office and P 230,000 as determined by the
office of the BIR Commissioner. How much shall be included in the gross estate?
Select the correct response:
P 250,000
P 200,000
P 230,000
PO

P 230,000

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Due to COVID-19, the Commissioner of Internal Revenue allowed the filing of 2019
Annual Income Tax Returns (AITR) and payment of tax due at any Revenue District
Office (RDO) or any Authorized Agent Bank where taxpayer is currently held up. This
means that even if the taxpayer is registered in Makati, he/it can file the return
anywhere in the Philippines. This act is more in keeping with:
Select the correct response:
Fiscal Adequacy
Theoretical Justice
Administrative Feasibility
Ability to Pay Principle

Administrative Feasibility

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S1: In claiming vanishing deduction, there should always be two deaths within five years
from the receipt of property.
S2: In claiming vanishing deduction, there should always be two transfers of properties
within five years. One is onerous and the other is onerous.
Select the correct response:
Only S1 is correct.
Both are incorrect.
Both are correct.
Only S2 is correct.

Both are incorrect.

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NICKYNOR, a franchisee, had the following data on revenue and receivables (Net of
VAT)
Quarter ending 3/31/2018 Covered by the franchise Revenue: P 4,000,000
Receivables, Beginning: P 600,000 Receivables, Ending: P 800,000
Not covered by franchise
Revenue: P 1,000,000 Receivables, Beginning: PO Receivables, Ending: P 160,000
Assume that the taxpayer is generating and selling electricity, how much value added
tax due will NICKYNOR remit to the BIR, if any?
Select the correct response:
PO
P 600,000
P556, 800
Some other answer

P556, 800

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S1: Taxation is the process by which the Bureau of Internal Revenue levies and collects
taxes for use to defray public expenditures.
S2: Facts: During the Covid-19 pandemic period, Nicanor a rich man, refused to pay his
income tax on the ground that he did not receive any “ayuda” from the government
since the said “ayuda” was given only for the poor to middle class people. Nicanor may
refuse to pay his income tax.
Select the correct response:
Both are correct
Both are incorrect
Only S2 is correct
Only S1 is correc

Both are incorrect

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Nicanor, single, died in 2022 leaving the following properties:
Real properties located in Manila: P 8,200,000 Real Property located in Batangas
(Inherited from his father 3½ years before his death): P 1,800,000 Fortuner Toyota Car:
P 2,000,000 Mitsubishi Mirage Car (donated by his mother 6 years ago): P 800,000
Additional information:
Property acquired by gratuitous transfer: a) Real Property located in Batangas: Unpaid
Mortgage: P 100,000; FMV upon receipt: P 1,250,000 b) Mitsubishi Car: Unpaid
Mortgage: P 50,000; FMV upon receipt: P 1,000,000
During his lifetime, Nicanor was able to pay P 50,000 of the unpaid mortgage on the
real property inherited.
Exclusive deductions:
Unpaid taxes before death: P 100,000
Loss of Mirage Car during settlement period (Out of P 800,000, P 600,000 if which is
compensated by insurance company): P 200,000
In his will, Nicanor donated some of the real properties located in Manila to the City Hall
of Manila: P 300,000
Death Benefits from his employer under RA 4917: P 200,000
Family Home (included in his estate): P 2,000,000
From the foregoing facts, how much is the vanishing deduction?
Select the correct response:
P 457,500
Some other answer
P 450,750
P 661,719

P 457,500

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Zac is a senior citizen. He bought a Kiddie meal at
Jollibee. The sale is:
Select the correct response:
VATable
Subject to percentage tax or reciprocity
Zero-rated sale
VAT exempt

VATable

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Mari owns a real property. He was given an equivalent ownership in ABC Corporation in
exchange for the property. The tax-free exchange is:
Select the correct response:
VATable
Subject to percentage tax or reciprocity
Zero-rated sale
VAT exempt

VAT exempt

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Which of the following is not considered as direct tax:
Select the correct response
Donor's tax
Professional tax
Cedula
Value-added tax

Value-added tax

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S1: The heirs of Nicanor paid foreign tax in the United States of America (USA) with
respect to Nicanor’s properties therein which was subjected to estate tax by the USA’s
taxing authorities. For Philippine estate tax purposes, such foreign tax paid is deductible
in full against the computed estate tax due.
S2: Inday, an OFW, cannot claim credit on the foreign estate tax payment.
Select the correct response:
Only S2 is correct.
Both are incorrect.
Only S1 is correct
Both are correct.

Both are incorrect.

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S1: No person will be imprisoned for non-payment of
tax. 
S2: Taxes are imposed only for purposes of raising revenues.
Select the correct response:
Both are correct
Both are incorrect
Only S2 is correct
Only S1 is correct

Both are incorrect

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S1: Inday, a flower vendor made a gross sale of P 3,200,000 from the sale of her
flowers in original state. The sale although exceeds the vat threshold is exempt from
VAT.
S2: Handy Help, a non-stock, non-profit private organization which sell exclusively to its
members in the regular conduct or pursuit of commercial or economic activity are
exempt from value added tax.
Select the correct response
Only S1 is true
Both are true
Only S2 is true
Both are false

Both are false

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ABC Condominium Homeowners Association (ACHA) collects monthly association dues
and other charges for security, waste management and maintenance of common use
service areas (CUSA) from homeowners in ABC Condominium Tower amounting to P
5,000,000.
How much VAT will ACHA pay?
Select the correct response:
Some other answer
P 535,714
P 600,000
PO

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Sale of gold is:
Select the correct response:
Zero-rated sale
Subject to 12% VAT
Exempt from VAT
Subject to 3% Percentage Ta

Subject to 12% VAT

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P 180,000

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The least source of our tax laws is
Select the correct response:
Supreme Court decisions
Constitution
BIR Rulings
Statues

BIR Rulings

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The principles of a sound tax system exclude
Select the correct response:
Economic efficiency
Theoretical Justice
Fiscal Adequacy
Administrative Feasibility

Economic efficiency

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S1: Donor's tax is an indirect tax.
S2: Donor's tax is an excise tax
Select the correct response:
Only S1 is true
Both are true
Both are false
Only S2 is true

Only S2 is true

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S1: Vague Taxation laws are interpreted liberally in favor of the government. 
S2: Exemptions shall be interpreted strictly against the taxpayer and liberally in favor of 
the taxing authority.
Select the correct response:
Both are true
Only S2 is true
Only S1 is true
Both are false

Only S2 is true

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Which of the following is deductible from the gross estate? Select the correct response: Unpaid property taxes accrued in the year of death. Unpaid Estate tax after the death of the decedent. Estate tax paid to foreign country Income tax paid by the heirs of the decedent with respect to income earned by the estate.

Unpaid property taxes accrued in the year of death.

P 18,000,000

For a tax bill to become a law, it has to go thorough how many readings in the House of Representatives and the Senate (acting separately) Select the correct response: One Two Four Three

Three

``` The general rule under the Tax Code, as amended, the person statutorily liable to pay the VAT is the: Select the correct response: Buyer Either the seller or the buyer Seller Neither the seller of the buyer ```

Seller

During the year 2018, Nicanor, Jr. who resides in R. Papa Street, Sampaloc Manila and with Tin 135-567 890-006. Made the following gifts: June 1, 2018: Donee: Junior, his son, on account of his marriage celebrated June 1, 2018 Amount of donation: P 150,000 cash July 10, 2018: Donee: His friend Aprot Amount of donation: P 400,000 a secondhand motor vehicle September 30, 2018: Donee: His daughter Julia Amount of donation: P 450,000 cash dowry, on account of her scheduled marriage on October 25, 2018 November 23,2018: Donee: His father, Nicanor, Sr. Amount of donation: A parcel of land worth P 180,000, subject to the condition that his father would assume the mortgage indebtedness of Jose in the amount of P 40,000; Using the Donor's Tax Return (BIR Form No. 1800), how much will be reflected on line 18 (tax payable) on November 23, 2018? 890,000

890,000

Nicanor, married to Inday, died on August 15, 2022, leaving the following properties: Conjugal properties: Vacation house acquired by the spouses located in Makati: P 5,000,000 Family home built on the land inherited by Nicanor before his marriage by the spouses during their marriage: P 6,000,000 Exclusive properties: Parcel of land inherited by Nicanor from his father before his marriage: P 10,400,000 Parcel of land bought by Nicanor before his marriage: P 1,200,000 Conjugal deductions: Unpaid mortgage: P 1,200,000 Unpaid taxes before death: P 400,000 Unpaid taxes after death: P 200,000 How much is the Nicanor, married to Inday, died on August 15, 2022, leaving the following properties: Conjugal properties: Vacation house acquired by the spouses located in Makati: P 5,000,000 Family home built on the land inherited by Nicanorbefore his marriage by the spouses during theirmarriage: P 6,000,000 Exclusive properties: Parcel of land inherited by Nicanor from his father before his marriage: P 10,400,000 Parcel of land bought by Nicanor before his marriage: P 1,200,000 Conjugal deductions: Unpaid mortgage: P 1,200,000 Unpaid taxes before death: P 400,000 Unpaid taxes after death: P 200,000 How much is the estate tax due? Select the correct response: P 60,000 Some other answer P 72,000 P 78,000

P 78,000

``` Ching Chong, Chinese, died in 2019. If Ching Chong was a resident of old China town in Manila (Binondo), how much is the deductible standard deduction? Select the correct response: P 500,000 Zero or NIL 21 P 5,000,000 P 1,000,000 ```

P 5,000,000

Which is TRUE? A restaurant with videoke is: Select the correct response: Subject to 8% optional tax Subject to VAT if exceeded the threshold Subject to 3% percentage tax if below the VAT threshold Subject to amusement tax of 18%

Subject to amusement tax of 18%

S1: In case of conflict between the recognition of revenue by a revenue regulation and PFRS (GAAP) 15, PFRS 15 should be used because we follow the standards of accounting in recognition of revenue. S2: In case of conflict between a provision of tax code and a provision of PFRS, provision of tax code should prevail over the provision of PFRS Select the correct response: Only S1 is correct. Both statements are incorrect. Only S2 is correct. Both are correct.

Both are correct.

An official document that empowers a revenue officer to examine and scrutinize a Taxpayer's book of accounts and other accounting records, in order to determine the taxpayer's correct internal revenue tax liabilities. Select the correct response: Notice of Informal conference Letter of authority Preliminary assessment Notice Formal Assessment Notice

Letter of authority

``` Nicanor is paying his Professional Tax Receipt every year in the city hall of Manila. The reason for paying it, is that basically tax is imposed upon the enjoyment of a privilege or the engaging in an occupation. Select the correct response: Personal, poll or capitation tax Excise or privilege tax Property tax Ad valorem tax ```

Excise or privilege tax

S1: De Lasalle College, a non-stock, non-profit educational institution, has a canteen, bookstore, and dormitory inside its campus which are commercial in nature. The income from the sale of goods and/or services by the canteen, bookstore, and dormitory inside the campus are actually, directly, and exclusively used for educational purposes. Such income is exempt from income tax. S2: De Lasalle College, a non-stock, non-profit educational institution, has a building which has a canteen, bookstore, and dormitory inside its campus. For real property tax purposes, such building is exempt from real property tax for it is owned and used by De Lasalle College for educational purposes. Select the correct response: Only S1 is true Both are false Both are true Only S2 is true

Only S1 is true

S1: Generally, tax laws operate only within Philippine jurisdiction. S2: Visa fees collected by the United States are not taxed by the Philippine government. Select the correct response: Both are constitutional limitations S1 is a constitutional limitation while S2 is an Inherent limitation Both are Inherent limitations S1 is an Inherent limitation while S2 is a constitutional limitation

Both are Inherent limitations

Nicanor died on February 14, 2022. Below are the decedent's properties which were loss: P#1. Diamond ring, which was robbed on February 9, 2022: P 1,000,000 P#2. Improvement located in Cavite, which was destroyed by fire on March 15, 2022, not compensated by insurance: P 5,000,000 P#3. Household furniture located in Bulacan, which was destroyed by fire on February 15, 2023: P 200,000 P#4. Improvement located in Batangas, which was destroyed by fire on June 16, 2022, compensated by insurance: P 2,000,000 Select the correct response: Loss from P3 is deductible. Loss from P#3 and P#4 are deductible from gross estate. Loss from P#1 and P#2 are deductible from gross estate. Loss from P#2 is deductible. Loss from P#1 is deductible from gross estate.

Loss from P#2 is deductible.

Sana, a singer, and an actress in the Philippines, is paying her community tax every year. The said tax is a fixed amount imposed on individuals residing within a specified territory without regard to their property or the occupation in which they be engaged in. What is the classification of the community tax? Select the correct response: Personal, poll or capitation tax Ad valorem tax Property tax Excise or privilege tax

Personal, poll or capitation tax

S1 In a claim against the insolvent person, the insolvency of the debtor must be proven and not merely alleged. S2 In order that unpaid mortgage may be deducted from the gross estate, the fair market value of the mortgage property must from part of the net estate infull. S3 As a rule, deduction from the gross estate are presumed to be conjugal, unless specifically identified as exclusive. Select the correct response: Only S1 is false Only S2 is false Only S3 is false All is true

Only S2 is false

Due to COVID-19, the Government needed funds to cover budgetary deficits, hence the enactment of the CREATIVE law which broadened the tax base and institutionalized the tax incentives given to a group of non-individual taxpayers. This act is more in keeping with: Select the correct response: Fiscal Adequacy Ability to Pay Principle Administrative Feasibility Theoretical Justice

Fiscal Adequacy

S1: For estate tax purposes, the real estate, in general, shall be valued at cost at the time of death of the decedent. S2: In his will, Nicanor donated his real property to Samahan ng Magsasaka Foundation, a non-stock, non-profit organization but reserved his right to use the same until such time he needs it. Upon death of Nicanor, the donation is still part of the estate. Select the correct response: Only S2 is correct. Both are incorrect. Both are correct. Only S1 is correct.

Only S2 is correc

A property acquired for P 1,000,000 was transferred in contemplation of death for a consideration of P 100,000. Fair market value at the time of transfer, P 1,500,000, while at the time of death P 1,200,000 How much shall be included in the gross estate? Select the correct response: P1,500,000 P 1,100,000 PO P 1,000,000

P 1,100,00

The Commissioner of Internal Revenue is not empowered to Select the correct response: Make or amend a tax return for and behalf of the taxpayer Obtain information and to summon, examine, and take testimony of persons to effect tax collections Grant amnesty for erring taxpayers Compromise tax liabilities of taxpayers

Make or amend a tax return for and behalf of the taxpayer

``` Real property taxes should not disregard increases in the value of real property occurring over a long period of time. To do otherwise would violate the canon of a sound tax system referred to as Select the correct response: symbiotic relationship. administrative feasibility. theoretical justice. fiscal adequacy ```

fiscal adequacy

``` Zac is riding the Canadian Airlines going to Canada. His ticket is: Select the correct response: Subject to percentage tax or reciprocity VAT exempt Zero-rated sale VATable ```

VAT exemp

During the Covid-19 pandemic, some of the massage parlors/Spa along Valenzuela are being used as fronts for prostitution, the Sangguniang Panglungsod ng Valenzuela passed a tax ordinance subjecting massage parlors/Spa within its jurisdiction to such onerous taxes that leave them no other alternative but to stop operating. The passage of the ordinance is a valid exercise of? Select the correct response: Power to taxation as the Sanggunian collected taxes to punish the wrong doings Police power to exercise power of the government to destroy such wrong doings Police power to exercise power of the government to collect taxes to generate revenue for the government Power to taxation as the Sanggunian collected taxes to generate revenues for the government

Police power to exercise power of the government to destroy such wrong doings

S1: If the consideration received is less than adequate and full consideration, the value to be included in the gross estate shall be the excess of the fair value of the property at the time of the decedent's death and the fair market value at the time of sale. S2: If the transfer is not shown to have been made in contemplation of death or to take effect upon the decedent's demise, the transfer is subject to donor's tax. Select the correct response: Only S2 is correct. Only S1 is correct. Both are incorrect. Both are correct.

Both are incorrect.

``` Tax as to rates excludes Select the correct response: Specific Tax Progressive Tax Mixed Proportional Tax ```

Specific Tax

P 1,300,000

Nicanor was born in Pampanga. He resides in Quezon City. He works in Manila. His only property is in Pasay. He executed a deed of donation of the said property to Inday, a resident of Mandaluyong City. The deed of donation was notarized Taguig City. Where is the venue of the filing of the donor's tax return? Select the correct response: Quezon City Taguig Pampanga Manila

Quezon City

Which of the following statement is NOT correct? Select the correct response: A memorandum circular promulgated by the CIR that imposes penalty for violations of certain rules need not be published in a newspaper of general circulation or official gazette because it has the force and effect of law. The reversal of a ruling shall not generally be given retroactive application, if said reversal will be prejudicial to the taxpayer In case of doubt, statutes levying taxes are constructed strictly the government The construction of a statute made by his predecessors is not binding upon the successor, if thereafter he becomes satisfied that a different construction should be given

A memorandum circular promulgated by the CIR that imposes penalty for violations of certain rules need not be published in a newspaper of general circulation or official gazette because it has the force and effect of law.

On May 14, 2021, Nicanor, single and a resident citizen died. The following day, you were engaged by the heirs of Nicanor to assist them in filing the estate tax return. Below are the properties left by Nicanor: House and lot located in Makati (family home): P Montero Sports car: P 2,000,000 Bank deposits - Banko De Pelpens: P 6,000,000 Assuming the heirs told you that they do not have sufficient money to pay for the estate tax due, so, you advised to withdraw money from the Bank deposits of Nicanor. The following day, the heir's fill-up BIR Form 1904 and have it verified in the BIR. The said form together with a copy of Nicanor's death certificate was submitted to the Banko De Pelepens. The bank allows the heirs to withdraw P 1,000,000 from Nicanor's bank deposits. What is the tax consequence, if any? Select the correct response: Subject to estate tax Subject to final withholding tax of 6% No tax consequences Subject to creditable withholding tax of 6%

Subject to final withholding tax of 6%

Which of the following is subject to rule of reciprocity Select the correct response: Investment in bonds in EFG Corp, a corporation established under the laws of Philippines owned by Park Solomon, a Korean. Investment in bonds in HIJ Corp, a corporation established under the laws of Korea owned by Park Solomon, a Korean. Investment in stocks in ABC Corp, a corporation established under the laws of Korea owned by Nicanor Reyes, a Canadian. Investment in stocks in XYZ Corp, a corporation established under the laws of Philippines owned by Inday Reyes, a resident citizen of the Philippine

Investment in bonds in EFG Corp, a corporation established under the laws of Philippines owned by Park Solomon, a Korean.

Mr. Barrera, a decedent was married at the time of his death and under the system of conjugal partnership of gains. Among the properties in the gross estate were: Land, inherited before the marriage, fair market value: P 5,000,000 Family home built by the spouses on the inherited land: P 8,000,000 Based on the foregoing facts, how much is the allowable family home deduction? Select the correct response: P 9,000,000 Some other answer P 6,500,000 P 10,000,000

P 9,000,000

Banko De Pelepens deposit money with Banko De Uru which earns interest that is subjected to the 20% final withholding tax. At the same time, Banko De Pelepens is subjected to the 5% Gross Receipts Tax (GRT) on its interest income on loan transactions to customers. Which statement below INCORRECTLY describes the transaction? Select the correct response: There is no double taxation because the first tax is income tax, while the second tax is business tax There is double taxation because two taxes - income tax and gross receipts tax are imposed on the interest incomes described above and double taxation is prohibited under the 1987 Constitution There is no double taxation because the income tax is on the interest income of Banko De Pelepens on its deposits with Banko De Uru (passive income), while the gross receipts tax is on the interest income received by Banko De Pelepens from loans to its debtor-customers (active income)

There is double taxation because two taxes - income tax and gross receipts tax are imposed on the interest incomes described above and double taxation is prohibited under the 1987 Constitution

CREATIVE Law was enacted by the congress. One of its provisions provides that the proprietary educational institution is now taxed as a domestic corporation. When it was enacted, confusion arises among the practitioners because the law is vague. Since there is doubt about the law, the BIR will be most likely to issue. Select the correct response: Revenue Memorandum Order Revenue Regulations Revenue Rulings Revenue Memorandum Circular

Revenue Rulings

S1. The heirs or beneficiaries have the primary obligation to pay estate tax and the surviving spouse has the subsidiary liability for the payment of estate tax. S2. The executor or administrator has the primary obligation to pay estate tax and the heirs or beneficiaries have the subsidiary liability for the payment of estate tax. S3. The surviving spouse has the primary obligation to pay estate tax and the executor or administrator has the subsidiary liability for the payment of estate tax. Select the correct response: Only S1 is correct Only S3 is correct Only S2 is correct All is correct

Only S2 is correct

A quasi-public corporation like the National Grid Corporation of the Philippines (NGCP) may exercise one of the inherent powers of the state. Which is it? Select the correct response: Police power Taxation power Power of eminent domain

Power of eminent domain

Nicanor died in 2019. The deed of extra-judicial settlement of the estate of Nicanor was signed by the heirs in 2020. In 2021, the corresponding estate tax was paid. In 2022, the heirs partitioned the property in accordance with their respective shares. The properties are transferred to the heirs: Select the correct response: 2020 2022 2019 2021

2019

``` A fundamental rule of taxation is that the property of one country may not be taxed by another country is called as? Select the correct response: international inhibition international comity reciprocity international law ```

international comity

The Commissioner of Internal Revenue can delegate the power to Select the correct response: recommends rules and regulations to the Secretary of Finance assign and re-assign revenue officer to establishments of excisable articles refund or credit internal revenue tax compromise or abate tax liabilit

recommends rules and regulations to the Secretary of Finance

``` Philippine tax laws are, by nature Select the correct response: Civil Political and Civil Political Penal and Civil ```

Civil

S1: Only VAT-registered taxpayers are required to pay Value-Added Tax. S2: In all cases, taxpayers whose gross annual sales or receipts exceed the VAT threshold amount are required to pay Value-Added Tax. Select the correct response: Both are true Only S2 is true Both are false Only S1 is true

Both are false

Nicanor was married under the property regime of absolute community of properties. He died on June 08, 2022, leaving the following properties: Vacant land, which was inherited before marriage: FMV @ the time of death: P 1,500,000; FMV @ the time of acquisition: P 1,000,000 Family home built the spouses on the inherited land: FMV @ the time of death: P 4,000,000; FMV @ the time of acquisition: P 5,000,000 From the foregoing facts, how much is the deductible family home? Select the correct response: P 5,500,000 P 3,500,000 P 3,000,000 P 2,750,000

P 2,750,000

S1: Donation is perfected from the time of the acceptance by the donee. S2: Donation between husband and wife are always void. Select the correct response: Both are true Only S1 is true Only S2 is true Both are false

Both are false

NICKYNOR, a franchisee, had the following data on revenue and receivables (Net of VAT) Covered by the franchise Not covered by franchise Quarter ending 3/31/2018 Revenue: P 4,000,000 Receivables, Beginning: P 600,000 Receivables, Ending: P 800,000 Revenue: P 1,000,000 Receivables, Beginning: PO Receivables, Ending: P 160,000 Assume that the taxpayer is generating and selling gas and water, how much value added tax due will NICKYNOR remit to the BIR, if any? Select the correct response: P 176,800 P 556,800 P 100,800

P 100,800

S1: Nicanor, a VAT-registered person exported his product abroad. The sale is exemp of VAT S2: Agri-rice corp., an agricultural cooperative, imported machines that will be used for its operation. Such importation is not exempt from VAT as importation, whether for personal or business purpose is subject to 12% VAT. Select the correct response: Only S2 is true Both are true Both are false Only S1 is true

Both are false

S1: Nicanor paid a facilitation fee to the BOC. The facilitation fee shall be included in the determinati of applicable input vat on importation. S2: Under the current rules, sale of gold to the BDO is exempt from VAT. Select the correct response: Only S2 is true Only S1 is true Both are false Both are true

Both are false

S1: A BIR Ruling issued by a Commissioner of Inte Revenue which grants tax exemption would create perpetual exemption in favor of the taxpayer. S2: A tax exemption may be withdrawn anytime at the pleasure of the taxing authority. Select the correct response: Only S2 is correct. Both are correct. Only S1 is correct. Both statements are incorrect

Only S2 is correct.

1st statement – The police power can only be exercised by the State 2nd statement – The power to tax can only be exercised by the State. 3rd statement – The power of eminent domain can only be exercised by the State. Which is FALSE

3rd statement

Generally, power of taxation can be exercised by

Senate and the House of Representatives

In light of the recent news about the “Community Pantry” which under the government, violates the social distancing policy, it passed a law imposing 60% donor’s tax based on gross gifts, on those taxpayers who donate goods to the organizations forming such “Community Pantry” This power exercised is in accordance with the concept of:

Police Power

It is a fixed amount of tax imposed upon persons residing in a community without regard to their property or occupation:

Capitation tax / poll tax

The 8% optional tax is an example of the following, except

Progressive

Imported vehicles are taxed according to value. This is an example of:

Ad valorem tax

The following are similarities among Fundamental Powers of the State, except:

They can be abolished by the Constitution.

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.

Both statements are incorrec

An annual tax of P 1,000 was imposed upon all residents of the Philippines, who are above 21 years of age, with a gross income of P 250,000, 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:

For public purpose

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

Valid because it was congress which passed the law and it did not improperly delegate the power to tax

S1: Taxes may be imposed to raise revenues or to provide disincentives to certain activities within the state. S2: The state can have the power of taxation even if the Constitution does not expressly give it the power to tax. S3: For the exercise of the power of taxation, the state can tax anything at any time. S4: The provisions of taxation in the Philippine Constitution are grants of power and not limitations on taxing power.

Only S4 is false

A tax reform at any given time underscores the fact that: Choose the best statement.

Taxation is a power that is very broad

S1: The National government, including its political subdivisions, has the power to tax inherently. S2: The provisions of the Philippine Constitution on Taxation are grants of power.

Both false

Question 14 S1: The father of Nicanor, in his will, transferred his Bulacan property in trust for Nicanor giving powers to designate anybody he pleases to succeed to the property. The value of the property is Php 1,000,000.00. Upon Death of the father, the property is part of his gross estate. S2: The father of Nicanor, in his will, transferred his Bulacan property in trust for Nicanor giving powers to designate anybody he pleases to succeed to the property. The value of the property is Php 1,000,000.00. Upon Death of Nicanor, the property is part of his gross estate.

Both are true

S1: For estate tax purposes, the valuation for the Montero Sports left by Nicanor is the Fair Market Value at the time his death. S2: For estate tax purposes, the valuation of the real property left by Nicanor is the highest among the Selling Price, Fair Market Value, and Zonal Value at the time of his death.

Only S1 is true

Statement 1: John, a Filipino citizen who is residing in Manila, Philippines, died on February 14, 2021. He left a Ferarri SF90 Stradale car worth P 30,000,000 in Saudi Arabia. For estate tax purposes, the Ferrari car is included in the computation of John’s gross estate. Statement 2: John, a Canadian citizen, died on February 14, 2021. He left a Toyota Supra worth P 5,200,000 in Canada. For estate tax purposes, the Ferrari car is included in the computation of John’s gross estate

Only S1 is correct

A transfer subject to tax other than estate tax

Bona fide sale or transfer

If a Chinese is a resident of the Philippines, are the properties outside the Philippines be included in his gross estate?

Yes, regardless of the location of properties will be included in the gross estate because he was a resident.

The reciprocity clause in the donor’s tax law applies to:

Kate Williams, an American citizen, residing in Seattle

In relation to no. 19, the reciprocity clause applies to:

Trademark registered with intellectual property office in Makati

Statement 1: Persons subject to VAT are likewise subject to percentage tax. Statement 2: Persons exempted from VAT are likewise always exempted from other percentage tax.

Both of the statements are false.

Statement 1: In general, a non-VAT registered taxpayer has the option to register under the VAT system which shall not be revoked for a period of three (3) years. Statement 2: Percentage tax is imposed together with the excise tax.

Only S1 is true

S1 - The estate of any decedent is entitled to a standard deduction in the maximum amount of Php 5 Million. S2 – The estate of any decedent with family home can claim up to Php 10 Million deduction against gross estate.

Both are false

Which of the following is subject to the 3% common carrier’s tax?

Jeepney owned by Mang June for the transport of passengers

In 2022, Kimmy rents her 15 residential units for P 14,500 per month and 20 residential units for P 15,500 per month. During the taxable year, her accumulated gross receipts from rentals amounted to P 5,400,000. 20 residential units x P 14,500 per month x 12 months: P 3,480,000 20 residential units x P 15,500 per month x 12 months: P 3,720,000

None of the choices

Period for the BIR to refund VAT applications by taxpayers under TRAIN law

Ninety (90) days from submission of complete document

What is the proper sequence of the BIR assessment process? 1. Actual/table audit 2. Issuance of electronic Letter of Authority (e-LoA) 3. Issuance of Final Decision on Disputed Assessment (FDDA) 4. Issuance of Formal Letter of Demand/Final Assessment Notice (FLD/FAN) 5. Issuance of Notice of Discrepancy (NOD) 6. Issuance of Preliminary Assessment Notice (PAN

2, 1, 5, 6, 4, 3

St. Clementine Academy (SCA) is a private education institution. To be exempt from VAT, SCA must obtain accreditation from the following, except

Bureau of Internal Revenue (BIR)

Export-oriented enterprise are subject to zero-rated sale based on 70% of:

Total annual production

Under the TRAIN law, if monthly rental does not exceed Php 15,000.00 and the total gross receipts exceeds Php 3 Million, the taxpayer is:

Exempt from VAT and Percentage Tax

In the filing of income tax returns for individual taxpayers, which is TRUE in terms of deadline? Q1 ITR; Q2 ITR; Q3 ITR; Annual ITR

May 15; Aug 15; Nov 15; Apr 15

In the filing of income tax returns for non-individual taxpayers (assuming the taxpayer employs calendar year), which is TRUE in terms of deadline? 1st statement: April 30; August 29; November 29; Apr 15 2nd statement: 60 days after qtr; 60 days after qtr; 60 days after qtr; Apr 15

Only the 2nd statement is true

Statement 1: Real property initially acquired by a taxpayer engaged in the real estate business will result in its conversion into a capital asset even if the same is subsequently abandoned or becomes idle. Statement 2: Real properties classified as ordinary assets for being used in business by a taxpayer other than real estate business are automatically converted into capital assets without need of proof that the same have not been used in business for more than two (2) years prior to the consummation of the taxable transaction involving said properties.

Both false

Statement 1: Capital losses are deductible only up to the extent of ordinary gains. Statement 2: Ordinary losses are deductible only up to the extent of ordinary gains.

Both statements are false

Mr. V has a Lot in Taguig worth P 10,000,000. Since he is residing in Quezon City, he decided to rent the said lot to Mr. C for P 30,000/month for a period of 2 years. After the lapse of 2 years, Mr. V sold the same lot to Mr. C. For taxation purposes what is the classification of the lot being rented when subsequently sold?

ordinary asset

1st statement – Goyo, a person engaged in trading of laptop, sold one unit for Php 10,000.00. The fair market value of the laptop is Php 50,000.00. The transfer for insufficient consideration is subject to donor’s tax. 2nd statement – Goyo, a person NOT engaged in trading sold his personal cellphone for Php 10,000.00. The fair market value of the cellphone is Php 50,000.00. The transfer for insufficient consideration is subject to donor’s tax.

Only the 2nd statement is true

Nicanor died in 2020 and left several properties. During the period of administration or settlement of his estate, one of his real properties located in Manila has earned P 500,000 as rent income from its tenants. For tax purposes, what is the proper treatment for the P 500,000 rent income?

Ang iinclude na income lang ay yung kinita bago mamatay na hindi pa narereceived

Statement 1: If a taxpayer is engaged in real estate business, all real properties are ordinary assets. Statement 2: If a taxpayer is engaged in retail industry, all real properties are ordinary assets if used in business.

Both statements are correct.

S1 – Lisa, a non-resident alien, modeled for a local company and appeared in commercials. She was paid Php 1 Million. Her professional fee is subject to VAT. S2 - All discounts are deductible against gross selling price or the gross receipts.

S1 is true

S1 - The sale to senior citizens, PWDs and national athletes where 20% discounts were granted are considered VAT-exempt transactions. S2 - The allowable discounts given to senior citizens and persons with disabilities have no limit in terms of purchase.

Both false

On October 28, 2021, SMB Corporation, a corporation that manufactures beer in the Philippines, celebrates its “OKtUber FIEZTA” On the said occasion, the company held a concert party, and all of its employees were given “Filzen beer” one of its finest beers as their drink. The company incurred P 4,000,000 expenses for the said event. P 2,000,000 of which was boiled down to miscellaneous expense which represents the beers that were given to each employee. S1: The P 2,000,000 miscellaneous expense will not be subject to VAT since it is an expense account. S2: The P 2,000,000 miscellaneous expense is considered as deemed sale. S3: SMB Corporation will have to pay P 240,000 VAT because of the consumed beers.

S1 is false but S2 and S3 are true

S1: Inday cutiee, the surviving spouse of Nicanor cutiee (who died last October 21, 2021), renounced her share in the conjugal partnership after the dissolution of the marriage in favor Nico, the only child of Nicanor and Inday. The renunciation made by Inday cutiee is subject to donor’s tax. S2: Inday cutiee, the surviving spouse of Nicanor cutiee (who died last October 21, 2021), renounced her share in the distributive share after the dissolution of the marriage in favor Nico, the only child of Nicanor and Inday. The renunciation made by Inday cutiee is subject to donor’s tax.

Only S1 is true

S1: Donor’s tax is an indirect tax. S2: Donor’s tax is considered a property tax. S3: Donor’s tax is an excise tax.

Only S3 is true

S1: Only VAT-registered taxpayers are required to pay Value-Added Tax. S2: Taxpayers whose gross annual sales or receipts exceed the VAT threshold amount are required to pay Value-Added Tax in all cases.

Both are false.

Juan Dela 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:

Included in the gross estate of Juan Dela Cruz because when the executor of the estate is beneficiary, the proceeds are included in the gross estate regardless of the designation.

Nicanor signified his intention to be taxed at “8% income tax in lieu of the graduated income tax rates and percentage tax under Section 116” in his 1st Quarter Income Tax for the year 2019. However, his gross sales/receipts during the taxable year have exceeded the VAT threshold as follows: January: P 250,000.00 February: P 250,000.00 March: P 250,000.00 April: P 250,000.00 May: P 250,000.00 June: P 250,000.00 July: P 250,000.00 August: P 250,000.00 September: P 250,000.00 October: P 1,000,000.00 November: P 1,000,000.00 December: P 1,000,000.00 Total gross Sales/Receipts: Php 5,250,000.00 How much is the percentage tax due for the year 2019 (before CREATE), if any?

P 0

270,000

Nicanor signified his intention to be taxed at “8% income tax in lieu of the graduated income tax rates and percentage tax under Section 116” in his 1st Quarter Income Tax for the year 2019. However, his gross sales/receipts during the taxable year have exceeded the VAT threshold as follows: January: P 250,000.00 February: P 250,000.00 March: P 250,000.00 April: P 250,000.00 May: P 250,000.00 June: P 250,000.00 July: P 250,000.00 August: P 250,000.00 September: P 250,000.00 October: P 1,000,000.00 November: P 1,000,000.00 December: P 1,000,000.00 Total gross Sales/Receipts: Php 5,250,000.00 UNTIL When should Nicanor register under the VAT system WITHOUT INCURRING PENALTIES?

November 30, 2019

In 2022, a non- stock, non- profit organization made an importation of agricultural food product in its original state from an American farmer amounting to P 3,000,000 (VAT exclusive amount). Based on the facts given, how much business tax will the importer pay?

P 0

Question 50 In 2022, XYZ Corp. sold goods to the Department of Finance (DOF) in the amount of Php 100,000.00 after winning the bid. XYZ Corp. purchased the goods it sold from GHI Corp., a VAT-registered taxpayer at a cost of Php 50,000 .00. How much is the VAT payable/(overpayment)?

P 1,000

In 2022, XYZ Corp. sold goods to the Department of Finance (DOF) in the amount of Php 100,000.00 after winning the bid. XYZ Corp. purchased the goods it sold from GHI Corp., a VAT-registered taxpayer at a cost of Php 50,000 .00. Assume the same facts except that XYZ Corp. is non-VAT taxpayer how much other percentage tax will be withheld by DOF, if any?

P 0

The following information were given to you by Ms. Reyes, a prominent independent contractor who offers architectural and engineering services for the taxable year 2019: Total gross receipts from architectural designs (net of P150,000 withholding tax): P 1,350,000 Total gross receipts from engineering services: P 3,000,000 Total cost of services: P 2,150,000 Total operating expenses: P 1,000,000 Based on the foregoing information, how much is Ms. Reyes’ taxable income?

1,500,000 (1,350,000 + 150,000)

190,000 (130,000 + 210,000 = 340,000 - 150,000)

The following information were given to you by Ms. Reyes, a prominent independent contractor who offers architectural and engineering services for the taxable year 2019: Total gross receipts from architectural designs (net of P150,000 withholding tax): P 1,350,000 Total gross receipts from engineering services: P 3,000,000 Total cost of services: P 2,150,000 Total operating expenses: P 1,000,000 Assume the same facts except that Ms. Reyes opted to be taxed at 8% income tax regime, how much is her taxable income?

P 4,250,000

The following information were given to you by Ms. Reyes, a prominent independent contractor who offers architectural and engineering services for the taxable year 2019: Total gross receipts from architectural designs (net of P150,000 withholding tax): P 1,350,000 Total gross receipts from engineering services: P 3,000,000 Total cost of services: P 2,150,000 Total operating expenses: P 1,000,000 What is the proper BIR Form that Ms. Reyes will file with the BIR on or April 15, 2021?

BIR form 1701

``` Nicanor made the following donations to Inday and Nick: Car to Inday: P 2.5 Million House and lot: P 2.5 Million Total donations in 2019: P 5.0 Million The donor’s tax due is: ```

Php 285,000

``` Nicanor made the following donations to Inday and Nick: Car to Inday: P 2.5 Million House and lot: P 2.5 Million Total donations in 2019: P 5.0 Million The donor’s tax due is ```

Php 285,000

in the United States of America valued at P 2,000,000 and he bought a condominium in Manila valued at P 5,000,000. He died on March 12, 2020. For estate tax purposes, how much of the foregoing properties will form part of his gross estate?

P 5,000,000

in the United States of America valued at P 2,000,000 and he bought a condominium in Manila valued at P 5,000,000. He died on March 12, 2020. Assume the same facts except Ethan is a Filipino citizen, how much of the foregoing properties will form part of his gross estate?

P 7,000,000

Boat Ferrari is a common carrier by sea. During a particular quarter, its receipts consist of the following (exclusive of taxes): Transportation of passengers: P 2,000,000 Transportation of goods: P 3,000,000 Transportation of cargoes: P 1,500,000 The output VAT due is for the quarter is:

Php 780,000

Php 0

``` Assume that the family home is conjugal property, but lot on which it stands is exclusive property. Below are the data pertaining to Katrina’s estate. Conjugal Properties: Real and Personal Properties: P 14,000,000 Family Home: P 5,000,000 Exclusive Properties: Family Home (Lot): P 4,000,000 Conjugal Deductions: Funeral Expenses: P 200,000 Other Conjugal Deductions: P 2,000,000 Medical Expenses (exclusive): P500,000 The net taxable estate is ```

P 1,000,000

Katrina was born in Rizal . She resides in Manila. She works in Makati City. She suffered an accident in Pasay. She was brought to Makati Medical Center in Makati City where she was pronounced dead. Her only property is located in Caloocan City. Where is the venue of the filing of the estate tax return?

RDO in Manila

``` The following donations were made by Nicanor: Date of Donation: Amount January 20, 2021: Php 2 Million March 30, 2021: Php 1 Million September 18, 2021: Php 500,000 The donor’s tax on January 20 is: ```

Php 105,000.00 | 2,000,000 - 250,000 = 1750,000 x 6%

The following donations were made by Nicanor: Date of Donation: Amount January 20, 2021: Php 2 Million March 30, 2021: Php 1 Million September 18, 2021: Php 500,000 The donor’s tax payable on September 18 is:

Php 30,000.00

976,000 | 5,000,000 + 300,000 + 125,000 = 5,425,000 x 18%

Many is an operator of cockpit arena in Batangas. He also operates a restaurant and a convenience store inside the cockpit. Data for particular quarter follow: Gross receipts: Cockpit operations: P 5,000,000 Restaurant operations: P 300,000 Convenience store operations: P 125,000 Assume that the restaurant and convenience store are owned by another taxpayer, Jayvee, who is a non-VAT registered and whose annual gross receipt does not exceed the VAT threshold. The correct amusement tax due of Jayvee is

76,500 | 300,000 + 125,000 = 425,000 x 18%

In March 2022, The City Government of Caloocan, through the initiative of its Mayor, hired the services of Uy and Sobremonte., CPA’s, a local auditing firm in auditing for its general funds due to suspicion of massive corruption committed by the Chief of its assessment division. The agreed professional fee of both the City Government and the local auditing firm is Php 3 Million. Assuming the actual input tax related to the service rendered is P 240,000. How much is the input tax DEDUCTIBLE AGAINST THE OUTPUT TAX of the Uy and Sobremonte, CPA’s?

P 240,000

In March 2022, The City Government of Caloocan, through the initiative of its Mayor, hired the services of Uy and Sobremonte., CPA’s, a local auditing firm in auditing for its general funds due to suspicion of massive corruption committed by the Chief of its assessment division. The agreed professional fee of both the City Government and the local auditing firm is Php 3 Million. Assuming the actual input tax related to the service rendered is P 240,000. Assume the same facts except that, the hired firm, Uy and Sobremonte., CPA’s is an auditing firm from China, how much is the amount of value-added tax to be withheld by the City Government of Caloocan?

60,000

Ching Chong Bank has the following data for the first month of the current year: Interest, commissions, and discounts from lending activities (remaining maturity of 5 years): P 5,000,000 Income from finance leasing (remaining maturity is more than 5 years): P 3,000,000 Dividends and equity shares in net income of subsidiaries: P 1,000,000 Rentals of properties: P 500,000 Net trading gains within the taxable year on foreign currency: P 300,000 How much is the gross receipt tax?

P 336,000

Taxation is NOT:

A contribution for the support of a government required of persons, groups, or businesses within the domain of that government

ABC Corp. disclosed the following information: Sales: • VATable (12%) sales – Php 4,000,000 • VAT-exempt sales – Php 1,000,000 SOURCES OF INPUT TAXES • Carry-over from previous period – Php 1,000,000 • Purchase of capital goods worth Php 1,000,000 • Domestic purchase of goods worth Php 1,000,000 • Domestic purchase of services worth Php 1,000,000 • Imported goods worth Php 1,000,000 In the same period, the company has made the following: • Filed application for tax credit certificate amounting to Php 100,000 • Filed application for tax refund amounting to Php 1,000,000 • Paid total of Php 100,000 for the two-month period How much is the VAT Payable/Over-payment?

Php 96,000

Below are the data provided to you by Nicanor, a top withholding agent for the month of May 2021: Purchases of goods from XYZ Corporation, a regular supplier: P 800,000 Purchases of services from GHI Corporation, a regular supplier: P 200,000 Purchase of services from Jabiiee corporation (meals for employees of the company; transacted 4 times): P 25,000 Purchases of goods from NBS corporation (purchase of office supplies; transacted 8 times): P 8,000 Rent expense: P 50,000 Professional fees (Individual w/sworn declaration): P 30,000 Professional fees (Individual w/o sworn declaration): P 40,000 Security fees (20% of which is the agency fee): P 100,000 Janitorial services fees: P 10,000 Based on the foregoing data, how much is the total expanded withholding tax required to be withheld?

21,900 / 20,680

``` A taxpayer made available the following financial information: Gross sales: Php 10,000,000 Cost of sales: Php 6,000,000 Expenses: Salaries and wages: Php 1,000,000 Transportation and travel: Php 20,000 Rental: Php 240,000 Representation expense: Php 200,000 Depreciation expense: Php 200,000 Office supplies: Php 20,000 Miscellaneous expenses: Php 10,000 Other information: • Asset: Php 5,000,000 • Liability: Php 3,000,000 • SHE: Php 2,000,000 How much is the income tax due under CREATE Law if the taxpayer is an ordinary partnership and opted for OSD? ```

Php 480,000

Donation completed:

When the done accepts the donation and the acceptance is made known to the donor.

Nicanor, a resident citizen earned the following incomes: Interest income on deposits in foreign bank: P 50,000.00 Dividends from a domestic corporation: P 150,000.00 Gain on sale of a condominium unit in Makati City, Philippines: P 500,000.00 Gain on sale of a limousine in Los Angeles, California, USA: P 200,000.00 Gain on sale of domestic shares of stocks: P 200,000.00 Gain on sale of stocks issued by non-resident foreign corp.: P 100,000.00 Gain on sale of personal properties located in Quezon City: P 250,000.00 Business income in the Philippines: P 300,000.00 Other information: Business expenses - Philippines: P 200,000.00 Acquisition cost of domestic shares of stocks: P 100,000.00 Selling price of condominium unit in Makati City: P 600,000.00 Fair market value of condominium unit in Makati City (zonal): P 1,000,000.00 The taxable income derived from sources within the Philippines is:

Php 1,200,000.00

Nicanor, a resident citizen residing in Sampaloc, Manila, deposited $2,000 in BPI, Morayta Branch, a local bank authorized by the Banko Sentral ng Pilipinas (BSP) to engage in foreign-currency denominated transactions, given by his mother, Helen, an OFW, residing in Saudi Arabia. S1: If the deposited money earns $20 interest income, the interest income is subject to 15% final tax. S2: If the deposited money earns P1,000 interest income, the interest income is subject to 20% final tax

Only S1 is tru

Upon death of Nicanor and after payment of the estate tax, it was determined that the net distributable estate amounted to Php 3,000,000.00 while the conjugal share of Inday as surviving spouse amounted to Php 5,000,000.00. Under the Rules on Succession, the following are the sharing in net distributive estate: • Inday – 1/3 • Jose – 1/3 • Boni – 1/3 Assuming Inday waived her conjugal share in favor of his two children, the donor’s tax is?

285,000

1st statement - The power to interpret tax laws of the CIR is subject to review by the Secretary of the Department of Justice 2nd statement – The power to decide tax cases of the CIR are subject to appeal to the Court of Appeals

Both of the statements are false

Under the following cases, a Mission Order is appropriately issued, except

Surveillance

ABC Corp., a listed company, wanted to acquire 10% of the shares of GHI Landholdings, a listed company. It availed the services of XYZ Capital Securities, an accredited broker of the Philippine Stock Exchange. XYZ Capital successfully closed the transaction on behalf of ABC Corp. at the price of Php 100 Million. The stock transaction tax is?

P 600,000

Sale of car by ABC Corporation to the Korean Embassy is:

0% / zero-rated vat

Nicanor, a Filipino residing in Manila, borrowed P 50,000 from Inday, an OFW living in Saudi Arabia. As a result, Inday earned P 2,000 interest income. S1: Interest income earned by Inday is an income derived from sources within the Philippines. S2: The Interest income earned by Inday is taxable.

Both are true

S1: Nicanor, a resident citizen, dies leaving properties in the Philippines. All his properties situated within and without the Philippines are included in the computation of his gross estate. S2: Ryan Bangus, a resident alien, dies leaving properties in the Philippines. All his properties situated within and without the Philippines are included in the computation of his gross estate. S3: Justine Beybe, a non-resident alien, dies leaving properties in the Philippines. In general, all his properties situated within the Philippines are included in the computation of his gross estate. S4: The rule of reciprocity applies to all properties situated in the Philippines owned by a non-resident alien decedent.

Only S4 is false

Which is NOT a proper exercise of administrative feasibility?

Requirement to all taxpayers to file tax returns

Abatement or cancellation of tax liabilities is available under the following, except:

Except ay kahit ano wag lang excessive assessment and cost of collection is bigger than tax to be collected Possibly tama and doubtful validity since sa compromise sya. Pero kung ,ayroon sa choices na financial incorp ay iyun

``` The heirs of Nicanor provided the following data to you so you can help them file the return and pay the corresponding estate tax, if any: PROPERTIES Conjugal Family home: o Zonal value of land - Php 5,000,000 o Assessed value of land – Php 3,000,000 o Assessed value of house – Php 5,000,000 o Appraiser’s value – Php 20,000,000 Shares in ABC Corp. a listed company: o Opening price – Php 900,000 o Closing price – Php 1,200,000 o Lowest Quote – Php 800,000 o Highest Quote – Php 1,500,000 o Average Value - Php 1,000,000 2,500 Shares in XYZ Corp. an unlisted company: Audited Financial Statements of XYZ Corp. disclosed the following: o Assets – Php 10,000,000 o Liabilities – Php 2,000,000 o Outstanding shares of stocks – 10,000 o Par value Php 100.00 per share Jewelry of Inday (wife) o Value at time of purchase - Php 1,000,000 o Value at time of death of Nicanor – Php 2,000,000 Bank deposits: o Bank of Pabebe – Php 2,000,000 o BTS Bank – Php 3,000,000 Other information: Expenses o Funeral expense – Php 500,000 o Accountant’s fees – Php 50,000 o Lawyer’s fees – Php 500,000 o Medical expenses – Php 1,000,000 Losses – Php 2,000,000 Unpaid mortgage on the family home – Php 1,000,000 All sources of properties came from common fund of the spouses. How much is the estate tax due? ```

Php 450,000

Upon death of Nicanor and after payment of the estate tax, it was determined that the net distributable estate amounted to Php 3,000,000.00 while the conjugal share of Inday as surviving spouse amounted to Php 5,000,000.00. Under the Rules on Succession, the following are the sharing in net distributive estate: • Inday – 1/3 • Jose – 1/3 • Boni – 1/3 Assuming Inday waived her conjugal share and her right to the net distributive property in favor of Boni only, the donor’s tax is?

P 0

The following were sold by Nicanor: Old Warehouse (Located in Lipa, Batangas) Selling Price (Net of VAT amt): Php 6,000,000 Book Value: Php 8,000,000 Old factory (Located in Taguig): Selling Price (Net of VAT amt): Php 12,000,000 Book Value: Php 10,000,000 Old residential house: Selling Price (Net of VAT amt): Php 16,000,000 The output VAT is

2,160,000 6M x 12% = 720,000 12M x 12% = 1,440,000 2,160,000

Facts: Zilldjan is engaged in livestock selling (agricultural contract growing). He sells the chicken in wholesale to TEM Corp. (Handoks Chicken) and GEN Corp. (Biliwag Chicken). TEM Corp. sells the roasted chickens to the public. GEN Corp., on the other hand, sells the roasted chickens in its facility where the roasted chickens are offered as a menu to customers who would dine-in. S1: The sale by Zildjan to TEM Corp is exempt from VAT. S2: The sale by Handoks to consumers is exempt from VAT. S3: The sale by Baliwag Chicken is exempt from VAT

Only S3 is false

Park, a Korean actor, inherited parcel of land located in Clark Pampanga from his mother Inday, a Filipino residing in Clark Pampanga. Park sold the parcel of land to Nicanor, a Filipino residing in Manila evidenced by a deed of sale. S1: The sale of land by Park is subject to 6% capital gains tax. S2: The sale of land by Park is subject to regular income tax. S3. The sale is subject to documentary stamp tax.

Only S2 is false

``` ABC Corp., a DC, registered in 2010 made available the following financial information for TY2021: Balance Sheet: Asset: Php 500,000 Liability: Php 100,000 Stockholders' Equity: Php 400,000 Income Statement: Gross sales: Php 100,000,000 Cost of sales: Php 60,000,000 Operating Expenses: Php 30,000,000 How much is the excess MCIT which can be carried forward in 2022? Consider CREATE Law ```

Which is FALSE?

Tax laws can be applied retrospectively even if there is no express provision

As a CPA, you were contracted to submit a Tax Plan regarding tax shields which can be employed by the Company. Historical projections showed that the gross sales of ABC Corp. will most likely amount to Php 6,000,000.00, with cost of sales amounting to Php 4,000,000.00 and operating expenses Php 1,000,000.00. In comparing the effects of methods of deduction, which of the following is true? Use the 20% Regular Corporate Income Tax rate under CREATE Law:

Client will save Php 40,000 if will opt itemized deduction

1st statement – Holding period does NOT apply to non-individual taxpayers. 2nd statement – Holding period does NOT apply to real properties. 3rd statement – Holding period does NOT apply to shares of stocks not listed in Philippine Stock Exchange. 4th statement – Holding period does NOT apply to ordinary assets.

All are true

Nicanor, a Non-Resident Alien residing in Canada, bought 20,000 (@par value of Php 100) shares of stocks of ABC Corp., Non-Resident Foreign Corporation(NRFC) in the amount Php 2 Million in 2009. On January 05, 2022, Nicanor sold the shares of stocks to Inday, a Resident Citizen for Php 4 Million. How much is the capital gains tax due, if any?

P 0

S1: Proceeds of life insurance taken by the decedent upon his own life are included in the gross estate if the designation of a third person as a beneficiary is irrevocable. S2: Proceeds of life insurance taken by the decedent upon his own life are included in the gross estate if the designation of a third person as a beneficiary is revocable. S3: When the beneficiary of the proceeds of life insurance taken by the decedent upon his own life is estate, executor of the estate, or administrator of the estate, such proceeds shall be always in the decedent’s gross estate. S4: Benefits received from SSS and GSIS shall be excluded from the gross estate of the decedent whether the designation of a beneficiary is revocable or irrevocable.

Only S1 is false

Upon death of Nicanor and after payment of the estate tax, it was determined that the net distributable estate amounted to Php 3,000,000.00 while the conjugal share of Inday as surviving spouse amounted to Php 5,000,000.00. Under the Rules on Succession, the following are the sharing in net distributive estate: • Inday – 1/3 • Jose – 1/3 • Boni – 1/3 Assuming Inday waived her right to the net distributive property in favor of his two children, the donor’s tax is?

P 0

Php 90,000.00

When a property is transferred during lifetime to relieve the transferor from the burden of the management of such property, and the transfer is subject to tax, the basis of the tax is

The FMV at the time of donation

The following are the reserved powers of Congress in exercising taxation, except:

Discretion on who to tax

The Wolt Disny Company, commonly known as Disny, is an American diversified multinational mass media and entertainment conglomerate headquartered at the Malt Disny Studios in Burbank, California. The cartoon movie “Mowana” was shown in the Philippines and it earned Php 100 Million. The tax to be paid by Disny is?

Php 30 Million

110,000 | 50,000 + 40,000 + 10,000 + 10,000

Which of the following is not considered as transaction deemed sale?

Retirement from or cessation of business, with respect to capital goods existing as of such retirement or cessation

The inaction of the Commissioner of Internal Revenue within the _____________________-period shall be deemed a denial for purposes of allowing the taxpayer to appeal his case to the CTA and does not necessarily constitute a formal decision of the Commissioner of Internal Revenue on the tax case.

180

``` A taxpayer registered in 2020 made available the following financial information for TY2021: Balance Sheet: Asset: Php 500,000 Liability: Php 100,000 Stockholders' Equity: Php 400,000 Income Statement: Gross sales: Php 10,000,000 Cost of sales: Php 3,000,000 Operating Expenses: Php 1,000,000 How much is the income tax due under CREATE Law if the taxpayer is a domestic corporation? ```

Php 1,500,000

On February 14, 2020, A orally donated to B a residential land with fair market value of Php 2M. On February 14, 2024, A dies. At the time of A’s death, the residential land has a fair market value of Php 3M. As a result, the estate of A

Will include the residential land at Php 2M as part of A’s gross estate

The CPALE was able to push through after several postponements due to COVID-19. Inday, who really studied hard, who prayed a lot and who never wavered in her belief of becoming a CPA, finally became one. Nicanor, Inday’s father, recognized all her efforts and sacrifices and rewarded her with a brand-new car amounting to Php 2 Million. Naturally, Inday accepted the car. How much is the donor’s tax payable?

Php 105,000

S1: The excess of allowable deductions over gross sales is net operating loss. S2: Net operating loss is a deduction from gross income even if the taxpayer chose optional standard deduction. S3: If net operating loss is incurred in 2021, the taxpayer can carry over the loss in the immediately succeeding three (3) years Which is TRUE?

S1 only

350,000 (Interest income on deposits in foreign bank: P 50,000.00 Gain on sale of a limousine in Los Angeles, California, USA: P 200,000.00 Gain on sale of stocks issued by non-resident foreign corp.: P 100,000.00

In the issuance of assessment based on best evidence obtainable, which is NOT a requirement?

The assessment must be based on facts

Nicanor, a Resident Citizen residing in Manila, bought 20,000 (@par value of Php 100) shares of stocks of ABC Corp., Non-Resident Foreign Corporation(NRFC) in the amount Php 2 Million in 2009. On January 05, 2022, Nicanor sold the shares of stocks to Inday, a Resident Citizen for Php 4 Million. How much is the capital gains tax due, if any?

P 0

On August 1, 2017, Goyo received a notice from the Commissioner denying his request for reconsideration. On August 16, 2017, he filed a motion for reconsideration. The Commissioner has denied his motion on September 1, 2017. On September 2, 2018, he filed a petition for review with the CTA. Which is TRUE?

The petition for review before the CTA has been timely filed

Nicanor is an operator of a beerhouse club. His gross receipts which amounted to Php 4 Million is subject to:

P 720,000 (18% amusement tax)

Only three of the statements are true

As a CPA, you were contracted to prepare a Tax Plan regarding the registration of a business of a client. You projected that the gross sales will most likely amount to Php 6,000,000.00, with cost of sales amounting to Php 4,000,000.00 and operating expenses Php 1,000,000.00. Which is true if the client will consider registering the business as a One Person Corporation (OPC) instead of a sole proprietorship? Use itemized deduction and the 20% Regular Corporate Income Tax rate under CREATE Law:

Client will save Php 10,000 if will register as sole proprietor

Ms. Tricia sold her rest house in Bicol for P 8,000,000. The Fair market value of the rest house at the time of sale is P 10,000,000. If Ms. Tricia utilized P 6,000,000 of the proceeds of the sale in acquiring a new principal residence, the capital gains tax due is?

P 600,000

Nicanor, an Australian residing is United Stated of America (USA), inherited a condominium located in USA, from his mother Helen, a Filipino residing in Clark Pampanga. Nicanor sold the condominium to Manny, a Filipino residing in Taguig, evidenced by a deed of sale. S1: The sale of condominium by Nicanor is subject to 6% capital gains tax. S2: The sale of condominium by Nicanor is subject to regular income tax.

Only S1 is true

Php 15,000.00

In an administrative appeal, which is FALSE?

Without the commissioner

The following are mandated to use only itemized deductions, except:

Lanister Corporation, a resident foreign corporation

``` A taxpayer registered in 2010 made available the following financial information for TY2021: Balance Sheet: Asset: Php 50,000,000 Liability: Php 30,000,000 Stockholders' Equity: Php 20,000,000 Income Statement: Gross sales: Php 10,000,000 Cost of sales: Php 6,000,000 Operating Expenses: Php 2,000,000 How much is the income tax due under CREATE Law if the taxpayer is a domestic corporation and uses itemized deduction as method of deduction? ```

Php 500,000

Stark Brothers Corporation is in the brink of bankruptcy. The company thus offered early retirement package to its employees. The plan was approved by the BIR. Goyo, one of the employees, started working for the company when he was twenty (20) years old. He is now seventy years old. Which of the following scenario/facts will make the retirement pay of Goyo taxable?

Goyo's retirement pay of 50M

Php 20,000

The following appeared in the BIR Form 2316 of Nicanor, a purely compensation income earner (assume there is no CBA Agreement): Basic salary: P 600,000.00 13th month pay: P 50,000.00 Productivity incentives bonus: P 40,000.00 SSS employee contribution: P 10,000.00 PhilHealth contribution: P 10,000.00 Commission (from the same company): P 400,000.00 Tax table: P0 - P250,000: 0% P250,000 - P400,000: 20% of the excess over P250,000 P400,000 - P800,000: P30,000 + 25% of the excess over P400,000 P800,000 - P2,000,000: P130,000 + 30% of the excess over P800,000 P2,000,000 - P8,000,000: P490,000 + 32% of the excess over P2,000,000 P8,000,000 and above: P2,410,000 + 35% of the excess over P8,000,000 In relation to the above, the tax due is?

190,000

In 2021, ABC Corp. borrowed money from the bank in the amount of Php 1 Million with an interest rate of 10%. ABC Corp. has interest income from bank deposits in the amount of Php 50,000.00 from which final tax was withheld. Assume ABC Corp.’s tax rate is 25%. How much is the allowable interest expense?

90,000 | 100,000 - 10,000 = 90,000 50,000 x 20% = 10,000

Php 1,000,000.00

Nicanor is employed by Lovelife Insurance Corp. as a certified public accountant. His taxable compensation amounted to Php 1 Million. During the same year, he was able to earn Php 1 Million as a commission from Lovelife Insurance Corp. from his referrals. Nicanor’s proper tax to pay is? Tax table: P0 - P250,000: 0% P250,000 - P400,000: 20% of the excess over P250,000 P400,000 - P800,000: P30,000 + 25% of the excess over P400,000 P800,000 - P2,000,000: P130,000 + 30% of the excess over P800,000 P2,000,000 - P8,000,000: P490,000 + 32% of the excess over P2,000,000 P8,000,000 and above: P2,410,000 + 35% of the excess over P8,000,000

Php 490,000.00

``` A taxpayer registered in 2010 made available the following financial information for TY2021: Balance Sheet: Asset: Php 500,000 Liability: Php 100,000 Stockholders' Equity: Php 400,000 Income Statement: Gross sales: Php 100,000,000 Cost of sales: Php 60,000,000 Operating Expenses: Php 30,000,000 How much is the income tax payable under CREATE Law if the taxpayer is a domestic corporation? ```

Php 2,500,000

S1: The NIRC requires that the 10-year requirement for tax-exempt retirement benefits should be uninterrupted. S2: The tax-exempt retirement benefits shall be availed of by official or employee only once

Both are true

``` A taxpayer registered in 2020 made available the following financial information for TY2021: Balance Sheet: Asset: Php 500,000 Liability: Php 100,000 Stockholders' Equity: Php 400,000 Income Statement: Gross sales: Php 10,000,000 Cost of sales: Php 8,000,000 Operating Expenses: Php 5,000,000 How much is the income tax due under CREATE Law if the taxpayer is a domestic corporation? ```

Php 0

1st statement – The police power can only be exercised by the State. 2nd statement – The power to tax can only be exercised by the State. 3rd statement – The power of eminent domain can only be exercised by the State. Which is FALSE?

S3 only

The following principles are inter-related, except:

Benefit - received theory

The following principles are inter-related, except

Progressive tax system

Nicanor, resident citizen, sold his shares of stock from ABC Corporation, a foreign corporation based on United Kingdom, to Inday, resident citizen, for P 200,000 with a cost of P 100,000. S1: For income tax purposes, the sale of shares of stock by Nicanor is taxable. S2: The sale of the shares of stock is subject to 15% capital gains tax based on net capital gain of P 100,000.

S1 only

Which is FALSE?

Justine Beybe, a Non-Resident Alien residing in Canada, bought 20,000 (@par value of Php 100) shares of stocks of ABC Corp., a Domestic Corporation (DC) in the amount Php 2 Million in 2009. On January 05, 2022, Justine Beybe sold the shares of stocks to Bash, a Resident Citizen for Php 4 Million. How much is the capital gains tax due, if any?

300,000 cost 2,000,000 sell price 4,000,000 gain 2,000,000 x 0.15 = 300,000

S1 – Becky, a non-resident alien, modeled for a local company and appeared in commercials. He was paid Php 1 Million. His professional fee is subject to VAT. S2 - All discounts are deductible against gross selling price or the gross receipts.

Both are false

The following are the data given to you by an employer. You were contracted to handle the payroll: Employees Name: Status; Compensation; Frequency of payroll Rey: Contractor (Pakyawan/Arawan); P 537; Daily Ram: Probationary; P 900; Daily Nicanor: Regular; P 20,000; Weekly Rian: Regular; P 45,000; Semi-monthly Bryan: Regular; P 150,000; Monthly Additional information: • The company operates 26 working days in the month of September • Assume there are four (4) weeks in September • The statutory minimum wage rate is P 537 per day as per regional tripartite wage and productivity board How much is the total withholding tax on compensation will the employer need to withhold for the month of September?

7,032,234

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