1.

Statement 1: The primordial consideration is, every time, the legislative intent, but where doubts exist in
determining that intent, the doubt must be resolved strictly against the tax payer and liberally against the taxing
authority.
Statement 2: It bears stressing that tax burdens are not to be imposed, nor presumed to be imposed beyond
what the statute expressly and clearly imports, tax statutes being construed stritissimi juris against the tax payer.
A.
B.
C.
D.

True, true
True, false
False, true
False, false

2. Statement 1: No person shall be deprived of life, liberty or penalty without due process of law (Art III, Sec 1a).
The implication is that one may be deprived of property as long as the requirement of due process - notice or
hearing - has been complied with.
Statement 2: Due process requires that the property subject to tax or the amount to be raised should be
determined by judicial inquiry and notice and hearing as to the amount of the tax and the manner in which it shall
be apportioned are generally necessary to due process of law.
A.
B.
C.
D.

True, true
True, false
False, true
False, false

3. Statement 1: The grant of tax amnesty must be construed against the taxpayer and liberally in favor the taxing
authority.
Statement 2: A BIR ruling issued by a Commissioner of Internal Revenue which grants tax exemption would
create a perpetual exemption in favor of the tax payer.
A.
B.
C.
D.

True, true
True, false
False, true
False, false

4. Statement 1: An ordinance imposing a tax on the manufacture of soft drinks and another tax on the sale of the
soft drinks constitute double taxation.
Statement 2: A criminal case for a tax evasion maybe filed against a taxpayer even without prior assessment
issued by the commissioner of internal revenue.
A.
B.
C.
D.

True, true
True, false
False, true
False, false

5. Statement 1: A revenue regulation can expand the provision of law by imposing a penalty even if the law that it
implements does not impose penalty.
Statement 2: In case of conflict between a tax law and a revenue regulation, the later shall prevail.
A.
B.
C.
D.

True, true
True, false
False, true
False, false

6. Statement1: Generally, business expenses incurred within and w/out the Phil. by a non-resident citizen are
deductible from Gross income if they satisfy the condition prescribed by the Tax Code.
Statement 2: For a person benefit to be non- taxable, the retiring employee must be in service of the same
employer for at least 10 uninterrupted years.
a. Statement 1 is False, Statement 2 is true.
b. Both statements are False
c. Statement 1 is true, Statement 2 is False
d. Both statements are true
7. Statement 1: Zag resigned from his employment and received 30,000 separation pay. The separation pay
received is taxable.
Statement 2: Kelly received 50,000 as her terminal pay due to retrenchment. The amount received is not taxable.
Statement 3: Karlo received 35,000 termination pay when he was dismissed due to gross negligence. The
35,000 is taxable.
a. Only statement 2 is correct
b. All statements are true
c. All statements are false
d. Statement 1 and 2 are correct
8. Statement 1: If the advance payment is a prepaid rental, such payment is a taxable income of the lessor and a
deductible expense of the lessee in the year the lessor received the payment regardless of the method used in
reporting income and expense.
Statement 2: An employer-employee relationship exists when the person for whom services are rendered has
the right to direct but not to control the individual who performs the services.

a. Both statements are incorrect

b. Only statement 2 is correct
c. Only statement 2 is incorrect
d. Both statements are correct

9. Mr. Goody, a supervisor, was accidentally bumped by a YKL bus. The court decided that YKL would pay Mr.
goody the ff. damages:
Actual damages for injuries suffered
Moral damages
Exemplary damages
Damages for loss of earnings capacity
Actual liquidated damages
Compensation for unrealized earnings

30,000
70,000
40,000
100,000
50,000
25,000

Statement 1: The non- taxable damages amount to 290,000

Statement 2: The taxable damages is 25,000
a. Only statement 1 is true
b. Only statement 2 is true
c. Both statements are false
d. Both statements are true
10. JKR is real property lessor. For the current year, total rent collection are the ff:
Last year's rent:
Nov.- Dec.
Current year's rent:
Jan.- Nov.

30,000
165,000

The rent income for December of current year is proven noncollectible. How much is the deductible expense of
JKR?
a.15,000
b.30,000
c.10,000
d.0
11. Statement 1: Income tax returns should be filed in duplicate setting forth specifically the gross amount of income
from all sources. For corporations, a true and accurate quarterly income tax return on a cumulative basis and a
final return are required to be filed.
Statement 2: If there is a conflict between the sales figure reflected in the books of accounts and the amount
reflected in the income tax return, the sales figure in the books of accounts shall prevail.
a.
b.
c.
d.
12.

only statement 1 is true

only statement 2 is true
both statements are true
neither of the statements is true
Statement 1: A nonresident alien engaged in trade or business in the Philippines deriving purely compensation
income or compensation income and other non-business, non-profession related income is not required to file
an income tax return.
Statement 2: The monthly percentage tax return must be filed within 20th day after months end.

a.
b.
c.
d.
13.

only statement 1 is true

only statement 2 is true
both statements are true
neither of the statements is true

Statement 1: The withholding tax return, whether creditable or final shall be filed and paid within ten days after
end of month except for taxes withheld in December which shall be filed on or before January 25 of the
following year. For large taxpayers the filing and payment shall be made within 25 days after the end of each
month.
Statement 2: A business establishment with VAT paid or payable of at least one hundred thousand pesos
(100,000) for any quarter of the preceding taxable year is already considered as a large taxpayer.
a. only statement 1 is false
b. only statement 2 is false
c. both statements are false
d. neither of the statements is false

14.

The quarterly income tax return of a corporation for any of the first, second or third quarters should be filed
a. On or before the fifteenth day of the fourth month following the close of the taxable year.
b. On or before the 25th day of the month following the month in which withholding was made.
c. On or before April 15 for the first quarter, on or before August 15 for the second quarter and on or before
November 15 for the third quarter
d. Within 60 days after the close of the quarter for the first three quarters

15.

Returns for each sale or exchange on stock not listed or traded through a local exchange should be filed and
paid
a. within 15 days after each sale
b. within 30 days after each sale
c. within 60 days after each sale
d. within 90 days after each sale

16. Statement 1: The power to interpret provisions of the National Internal Revenue Code and other tax laws shall
be under the exclusive and original jurisdiction of the Commissioner of Internal Revenue, subject to review by
the Secretary of Finance.
Statement 2: The power to decide disputed assessment and refunds of internal revenue taxes is vested in the
Commissioner of Internal Revenue, subject to the exclusive appellate jurisdiction of the Secretary of Finance.

Statement 1
Statement 2

A.
True
True

B.
True
False

C.
False
True

D.
False
False

17. Statement 1. A refund check or warrant which shall remain unclaimed or uncashed within 10 years from the date
the said warrant or check was mailed or delivered shall be forfeited in favor of the Government.

Statement 2. A tax credit certificate, which shall remain unutilized after five years from the date of issue shall,
unless revalidated, be considered invalid, and shall not be allowed as payment of any internal revenue tax
liabilities of the taxpayer.

Statement 1
Statement 2

A.
True
True

B.
True
False

C.
False
True

D.
False
False

18. An internal revenue officer, having been reliably informed from unimpeachable source that articles subject to
excise taxes were kept in the house of Y, entered said house to look for and to seize the aforementioned articles
over the objection of Y. Since said officer was not armed with a search warrant, Y invoked the sanctity of his
home. Is the internal revenue officer's actuation described above, sanctioned by law or not?
A.
B.
C.
D.

Yes, because of primary jurisdiction of the BIR over excisable goods pursuant to the lifeblood doctrine.
Yes, the IRO is exempted from obtaining a search and seizure warrant
No, violative of search and seizure clause of the Constitution.
No, violative of the right to privacy and abode.

19. The President of the Philippines and the Prime Minister of Japan entered into executive agreement in respect of
a loan facility to the Philippines from Japan whereby it was stipulated that interest on loans granted by private
Japanese financial institutions to private financial institutions in the Philippines should not be subject to
Philippine income taxes. Is the tax exemption valid?
A.
B.
C.
D.

Yes, non-taxability of the government

Yes, based on international comity
Yes, based on international treaties and agreement
No, violation of the essential characteristics of taxation

20. Statement 1: The filing of quarterly income tax returns and payment of quarterly income tax by corporations are
mere installments and therefore, not the basis in computing the two-year prescriptive period for refund.
Statement 2: If the taxpayer believes that the assessment is erroneous or it has no legal basis, he should file a
written protest within thirty (30) working days from the receipt thereof.
A. True, False
B. False, True

C. False, False
D. True, True

21. Statement no. 1: The term initial payments in capital gains tax means down payment in the year of purchase.
Statement no. 2: A taxpayer abandoning his property for an ordinary loss and sells it to his friend at less than its
cost results to a capital loss.
A. True, True
B. False, True

C. True, False
D. False, False

22. Statement No. 1: Holding period is not applicable to capital gains tax transactions involving final taxes.

Statement no. 2: Peter and Heidi Company entered into a call option to buy copra at a price of 12 per kilo. They
paid 30,000 for the option to be used in the last day of April. On April 30, the current price of copra in the market
is 10 per kilo opting Peter and Heidi to disregard the option. The loss on option shall be considered as capital
loss.
A. False, False
B. True, False

C. False, True
D. True, True

23. Dupee And Pulgas, a wholesaler of corn sold its wharehouse with a cost of 800,000 for 1,000,000. During the
year, Sales and cost of Sales amounted to 7,500,000 and 5,000,000 respectively. Its operating expenses
amounted 850,000. The wharehouse was sold to National Food Authority to be used as a storage facility for rice
bags. The difference in income tax due and payable between the option to pay Final capital gains tax and the
option of using normal tax will be:
A. 60,000
B. 55,000

C. 29,700
D. 33,300

24. Banco De Blank, a bank, acquired a land foreclosed from Mr. Pogi due to his inability to pay. The fair market
value at the time of foreclosure is 750,000. Banco De Blank subsequently sold the said land for 1,000,000 when
the market value is 1,200,000 and the Zonal Valuation is 1,300,000. What is the capital gains tax to be
recognized by Banco de Blank?
A. 45,000
B. 60,000

C. 78,000
D. 72,000

25. Mr. Basa exchanged his car with a cost of 250,000 and a book value of 150,000 to a lot with a fair market value
of 190,000 and a zonal value of 150,000.
The gain (loss) from the exchange of property is
A. (60,000)
B. 40,000

C. 50,000
D. 90,000

26. Mr. Ranchoddas Shamaldas Chanchad, Indian national, stays in the Philippines with no definite intention. He
received P600,000 compensation income as researcher of Blue Good Ocean, a domestic corporation. In
addition, he invested in the Philippines, some of his savings earning dividend income and interest income of
P120,000 and $10,000, respectively.
If the interest income is a dollar deposit under the expanded foreign currency deposit system, how much is the
total income tax due of Mr. Chanchad in the Philippines? (1$ = P50)
a. P 37,500

c. P146,760

b. P190,500

d. P196,260

27. Statement 1. A dependent child who marries within the year or who becomes gainfully employed during the year
is still a dependent with additional exemption of the year.

Statement 2. If the taxpayer dies during the taxable year, his estate may claim the personal exemption as if he
died at the close of such year.

a. True, true
b. True, false
c. False, true
d. False, false
28. Champ, an employee of Hale Finance Corporation, borrowed money from the company amounting to P88,400.
The companys policy is to charge 3% per annum to its employees instead of its regular interest rate of 1.5% per
month.
Statement 1: If Champ is a rank-and-file employee, the fringe benefit tax on the interest benefits is P3,744.
Statement 2: If Champ is a managerial employee, the fringe benefit tax on the interest benefits is P0.

a. True, true
b. True, false
c. False, true
d. False, false

29. Statement 1: Fringe benefit tax includes additional help granted by the employer to the employees in
addition to the basic salary.
Statement 2: Fringe benefit tax shall be treated as a final income tax on the employee that shall be
withheld and paid by the employer on a quarterly basis.
a. True, true
b. True, false
c. False, true
d. False, false
30. After passing the scholarship examination, Hayley received P92,500 as educational assistance from
Paramore Foundation wherein her father works as the VP for Operations. How much is the fringe
benefit tax?
a. P -0-

b. P30,464

c. P15,360

d. P95,200