Mid-Term Exam_TAXN 2200_MRJacinto2021

True/False
Indicate whether the statement is true or false.

____ 1. Excise taxes apply to goods manufactured or produced in the Philippines for domestic sales or
consumption or for any other disposition and to things imported as well as services performed in
the Philippines. The excise tax imposed herein shall be in addition to the value-added tax

____ 2. Should domestic exciseable products be removed from the place of production without the
payment of the excise tax, the owner or person having possession thereof shall be liable for the
tax due thereon.

____ 3. Every person liable to pay excise tax shall file a separate return for each place of production
setting forth, among others the description and quantity or volume of products to be removed, the
applicable tax base and the amount of tax due thereon.

____ 4. In the case of indigenous petroleum, natural gas or liquefied natural gas, the excise tax shall be
paid by the first buyer, purchaser or transferee for local sale, barter or transfer, while the excise
tax on exported products shall be paid by the owner, lessee, concessionaire or operator of the
mining claim.

____ 5. There shall be levied, assessed and collected on cigarettes packed by hand and packed by
machine an excise tax effective on January 1, 2020 until December 31, 2021, Thirty five pesos
(P35.00) per pack.

____ 6. For the years 2018, 2019 and 2020, diesel fuel oil, and on similar fuel oils having more or less
the same generating power, per liter of volume capacity; liquified petroleum gas, per kilogram;
bunker fuel oil, and on similar oils having more or less the same generating power, per liter of
volume capacity; petroleum coke, per metric ton; excise tax of Two pesos and fifty centavos
(P2.50); Four pesos and fifty centavos (P4.50), Six pesos (P6.00), respectively.

____ 7. There shall be levied, assessed and collected an ad valorem tax on automobiles based on the
manufacturer's or importer's selling price, net of excise and value-added tax, in accordance with
the following schedule: Effective January 1, 2018 - Up to Six hundred thousand pesos (600,000)
- Four percent (4%); Over Six hundred thousand pesos (600,000) to One million
pesos(P1,000,000) - Ten percent (10%); Over One million pesos (P1,000,000) to Four million
pesos (P4,000,000) - Twenty percent (20%); Over Four million pesos (P4,000,000) - Fifty
percent (50%).

____ 8. Purely electric vehicles and pick-ups shall be exempt from excise tax on automobiles.
____ 9. There shall be levied, assessed, and collected a tax equivalent to five percent (5%) based on the
gross receipts derived from the performance of the services, net of excise tax and value-added
tax, on invasive cosmetic procedures, surgeries, and body enhancements directed solely towards
improving, altering, or enhancing the patient's appearance and do not meaningfully promote the
proper function of the body or prevent or treat illness or disease: Provided, That this tax shall not
apply to procedures necessary to ameliorate a deformity arising from, or directly related to, a
congenital or developmental defect or abnormality, a personal injury resulting from an accident
or trauma, or disfiguring disease, tumor, virus or infection: Provided, further, That cases or
treatments covered by the National Health Insurance Program shall not be subject to this tax.

____ 10. Ground coffee, instant soluble coffee, and pre-packaged powdered coffee products are exempt
from excise tax

Multiple Choice
Identify the choice that best completes the statement or answers the question.

____ 11. Which of the following is correct?

a. A transfer is gratuitous or without consideration and accordingly qualifies as a
donation, if no economic benefit measurable in money or money’s worth flowed to
the transferor from the transferee.
b. A gratuitous transfer is always subject to donor’s tax.
c. A donation on which the donor’s tax was not paid is not a valid donation.
d. Title to the donated real property can be transferred to the donee in the Register of
Deeds even if the donor’s tax on the donation had not been paid.

____ 12. Donor’s tax is a(n)

I. Excise tax
II. Direct Tax
III. Personal Tax
IV. Property Tax

a. I and II only
b. I, II and III only
c. I, II and IV only
d. I, II, III and IV

____ 13. Statement I. A gift occurs when the donor surrenders control over the property.
Statement II. If the donor retains an unlimited power to revoke the gift, it is clear that gift has
occurred.
a. Only Statement I is correct.
b. Only Statement II is correct.
c. Both statements are correct.
d. Both statements are incorrect.
____ 14. Statement I. Donor’s tax shall not apply unless and until there is a completed gift.
Statement II. The transfer of property by gift is perfected from the moment the donor knows the
acceptance of the donee. It is completed by delivery, either actually or constructively, of the
donated property to the donee.
a. Only Statement I is correct.
b. Only Statement II is correct.
c. Both statements are correct.
d. Both statements are incorrect.

____ 15. A gift that is incomplete because of reserved powers, becomes complete when either:
I. the donor renounces the power, or
II. his right to exercise reserved power ceases because of the happening of some event or
contingency or the fulfillment of some condition, other than because of the donor’s
death

a. Only I is correct.
b. Only II is correct.
c. Both I and II are correct.
d. Both I and II are incorrect.

____ 16. One of the following is not a distinction between donation inter vivos and donation mortis causa
a. Donation inter vivos takes effect during the lifetime of the grantor while donation
mortis causa takes effect after the death of the grantor.
b. Donation inter vivos is subject to donor’s tax while donation mortis causa is
subject to estate tax.
c. Donation inter vivos requires a public document while donation mortis causa may
not require a public document.
d. Donation inter vivos is valued at fair market value at the time the property is given
while donation mortis causa is valued at the fair market value at the time of death
of the grantor,

____ 17. Which of the following statements regarding donation of an immovable property is correct?
a. The donation may be made in a public document specifying therein the property
donated.
b. The acceptance may be made in the same Deed of Donation or in a separate public
instrument, but it shall not take effect unless it is done during the lifetime of the
donor.
c. If the acceptance is made in a separate instrument, the donor shall be notified
thereof in an authentic form, and this step shall be noted in both instruments.
d. All of the above.
____ 18. Statement I. Regardless of the relationship to the donee, donations may be made by the donor are
subject to the schedular rates of 2% to 15%, if such donation was made prior to the effectivity of
the TRAIN Law.
Statement II. A relative by consanguinity in the collateral line within the fourth degree of
relationship is a stranger.

a. Only Statement I is correct.

b. Only Statement II is correct.
c. Both Statements are correct.
d. Both Statements are incorrect.

____ 19. Statement I. Regardless of the relationship to the donee, donations may be made by the donor
beginning January 1, 2018 shall be subject to 6% donor’s tax rate in excess of P250,000 exempt
gifts.
Statement II. Donations made by or in favor of juridical persons beginning January 1, 2018 shall
be subject to 6% donor’s tax rate in excess of P250,000 exempt gifts.

a. Only Statement I is correct.

b. Only Statement II is correct.
c. Both Statements are correct.
d. Both Statements are incorrect.

____ 20. Which of the following is subject to donor’s tax?

I. Condonation of debt due to rendition of service.
II. Condonation of debt made by a corporation in favor of the shareholders.
III. Contribution in cash or in kind to any candidate, political party or coalition of parties for
campaign purposes.

a. I only
b. II only
c. II and III only
d. None of the above

____ 21. Which of the following transactions is deemed a taxable gift?

a. Condonation or remission of debt

b. Sale of residential house and lot for less than adequate and full consideration in
money or money’s worth.
c. Both a and b
d. Neither a nor b
____ 22. Which of the following statements is incorrect regarding sale of property for insufficient
consideration?

a. In the case of sale of movable or personal property, when the donor’s tax had been
paid, it shall be included in the gross estate of the decedent.
b. In the case of real property which had been subjected to 6% capital gains tax, the
excess of FMV at the time of death over the consideration received at the time of
transfer shall still be included in the gross estate of the decedent.
c. In the case of capital asset located abroad, the excess of FMV over the
consideration received shall be subject to donor’s tax
d. In the case of sale of movable or personal property, when the donor’s tax had been
paid, it shall no longer be included in the gross estate of the decedent.

____ 23. On January 15, 2018, Jose donated a vacant lot held as capital asset to his brother-in-law. The
assessed value and zonal value of the land were P750,000 and P1,000,000, respectively. The
land had an unpaid mortgage of P200,000 and an unpaid realty tax of P10,000 which was
assumed by the donee. The donation is subject to
a. donor’s tax only of P44,400.
b. capital gains tax only of P60,000
c. donor’s tax of P44,400 and CGT of P60,000.
d. donor’s tax of P32,400

____ 24. Which of the following is subject to donor’s tax?

a. Those made between persons who were guilty of adultery or concubinage at the
time of the donation.
b. Those made to conceived and unborn children.
c. Those made to a public officer by reason of his office.
d. Those made between husband and wife during their marriage.

____ 25. Statement I. In all cases, void donations are not subject to donor’s tax.
Statement II. Every donation between the spouses during the marriage shall be void.

a. Only I is correct.
b. Only II is correct.
c. Both I and II are correct.
d. Both I and II are incorrect.

____ 26. Which of the following is taxable only with respect to properties donated within the Philippines?
a. Resident citizen
b. Non-resident citizen
c. Resident alien
d. Non-resident alien
____ 27. Which of the following is incorrect?
a. Every compulsory heir, who succeeds with other compulsory heirs, must bring into
the mass of the estate any property or right which he may have received from the
decedent, during the lifetime of the latter, by way of donation, or any other
gratuitous title, in order that it may be computed in the determination of the
legitime of each heir, and in the account of the partition.
b. Payment made by a third person who does not intend to be reimbursed by the
debtor is deemed to be a donation, which requires the debtor’s consent.
c. Persons who are prohibited from giving each other any donation or advantage may
enter into universal partnership.
d. Any person who is forbidden from receiving any donation under article 739 cannot
be named beneficiary of a life insurance policy by the person who cannot make
any donation to him,

____ 28. In 2018, Cristina donated P500,000 to her friend Liza who was getting married. Cristina gave
no other gift during the calendar year. What is the donor’s tax implication on Cristina donation?
a. The P10,000 portion of the donation is exempt as dowry since it was given in
consideration of marriage.
b. Cristina donated to a stranger, hence, she shall pay a 30% donor’s tax on her
donation.
c. Cristina shall pay only 6% donor’ tax on her donation in excess of P250,000.
d. The donation is exempt under the TRAIN Law.

____ 29. Donor’s tax credit is not allowed to a donor’s tax who is a
a. resident citizen
b. non-resident citizen
c. resident alien
d. non-resident alien

____ 30. Statement I. When a donor’s tax return was filed and it was found out by the BIR to have errors
which gave rise to a deficiency donor’s tax, the donor might be required to pay the deficiency
although he did not possess or own the property anymore.
Statement II. The government is not bound by any agreement between the donor and the donee
that the latter shall pay the donor’s tax instead of the former.
a. Statement 1 and 2 are false.
b. Statement 1 is true but Statement 2 is false.
c. Statement 1 is false but Statement 2 is true.
d. Statement 1 and 2 are true.

____ 31. Which of the following is not subject to business tax?

 a. Sale of goods, services and lease of property, in the ordinary course of trade or
business
b. Importation of goods into the Philippines, whether for personal or business use
c. Gratuitous transfer
d. All of the above

____ 32. Which statement is wrong? Transactions considered “in the course of trade or business” and
therefore subject to business taxes include:
a. Regular conduct or pursuit of a commercial or an economic activity by a stock
private corporation.
b. Regular conduct or pursuit of a commercial or an economic activity by a non-
stock, non-profit private corporation.
c. Isolated services in the Philippines by non-resident foreign corporation.
d. Isolated sale of goods or services.

____ 33. Statement 1: Non-stock and non-profit private organizations which sell exclusively to their
members in the regular conduct or pursuit of commercial or economic activity are generally
exempt from VAT.
Statement 2: Government entities engaged in commercial or economic activity are generally
exempt from the VAT.

a. Both statements are correct.

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

____ 34. Value added tax

a. is an indirect national tax levied on the value added in the production of a good or
service as it moves through the various stages of production.
b. is an ad valorem tax
c. is preferred in place of a personal income tax by many economists because income
taxes are a disincentive to work, whereas VAT discourages unnecessary
consumption.
d. All of the above

____ 35. Who is the one statutorily liable for the payment of the VAT?
a. consumer
b. buyer
c. seller
d. buyer or seller
____ 36. Which of the following is incorrect?
a. An article exempt from VAT may also be exempt from percentage tax.
b. An article subjected to excise tax may be subjected to VAT.
c. A taxpayer may be subjected both to VAT and percentage tax.
d. None of the above

____ 37. Which of the following is incorrect?

a. A VAT taxable article may be exempt from VAT
b. A VAT taxable article may be subject to VAT
c. A taxpayer may have two businesses where one is subject to VAT and the other is
subject to percentage tax.
d. Manufacturers and importers of goods are subject to excise tax

____ 38. Which is correct?

a. An excise tax which imposes a tax based on weight or volume capacity or any
other physical unit of measurement is called specific tax.
b. An excise tax which imposes a tax based on selling price or other specified value
of the article is called an ad valorem tax.
c. A percentage tax is which is imposed whether the transaction resulted in a gain or
loss is called transaction tax.
d. All of the above

____ 39. Registration of taxpayers under the VAT system may be classified as, except
a. Mandatory VAT registration
b. Optional VAT registration
c. Mixed VAT registration
d. None of the above

____ 40. The following data were provided by Spouses Edgardo and Angela. In 2020, Edgardo’s gross
receipts from his practice of profession was P2,850,000 while his wife, Angela, has gross sales of
P2,200,000 derived from her trading business. Assuming they are not VAT registered, will they
be subject to VAT?
a. Yes, because their aggregate gross receipts/sales exceeded the VAT threshold of
P3,000,000.
b. No, because for purposes of VAT threshold, husband and wife shall be considered
as separate taxpayers.
c. Yes, because their gross receipts/sales are not specifically exempt from VAT as
provided in the Tax Code
d. None if the above.

____ 41. The following are exempt from VAT, except

 a. sale of 1 sack of rice
b. sale of lechon manok
c. sale of pet food
d. sale of newspaper

____ 42. Which of the following has an option to register under the VAT system in 2020?
I. Common carrier by air transporting passengers, the gross receipts of which do not
exceed P3,000,0000.
II. Radio and/or television broadcasting companies whose annual gross receipts of the
preceding year exceeded P10,000,000.
III. Operator of cockpit, the receipts of which do not exceed P3,000,000 during the year.
IV. Seller of VAT subject services the gross receipts of which do not exceed P3,000,000.

a. IV only
b. I and III only
c. I and IV only
d. All of the above

____ 43. Where even if there is a business, there is no VAT imposable when
I. A business is pursued by an individual where the aggregate gross sales and/or receipts do
not exceed P100,000 during any twelve-month period
II. Sale of real properties for low-cost housing (exceeding threshold in “V” below) beginning
January 1, 2021.
III. Sale of real properties for socialized housing.
IV. Sale of residential lot at P1,500,00,000 per unit and below beginning January 1, 2021.
V. Sale of house and lot and other residential dwellings valued at P2,599,300 and below
beginning January 1, 2021.

a. II and IV only
b. I, II and III
c. I, III and V only
d. All of the above

____ 44. Where even if there is no business, VAT is imposable on

I. Importation of goods for personal use
II. Services rendered in the Philippines by non-resident foreign persons, even isolated, shall
be considered as being rendered in the course of trade or business.

a. I only
b. II only
c. I and II
d. None of the above
____ 45. Juan Dela Cruz, non-VAT registered lessor of residential and commercial units, had the
following data for the 1st and 2nd quarter of 2020
Gross Receipts
1st qtr 2nd qtr
Lease of residential units
Monthly rental of P13,000/unit P2,500,000 P2,300,000
Monthly rental of P18,000/unit 1,000,000 1,200,000
Lease of commercial units 2,300,000 2,400,000
Input VAT from VAT suppliers 150,000 120,000

How much is the business tax due for the first quarter 2020?
a. P99,000
b. P174,000
c. P396,000
d. P246,000

____ 46. How much is the business tax due for the 2nd quarter 2020?
a. P432,000
b. P312,000
c. P708,000
d. P108,000

____ 47. How much is the business tax due for the 2nd quarter 2020, assuming he registered as a VAT
taxpayer at the start of 2nd quarter of 2020?
a. P432,000
b. P312,000
c. P708,000
d. P108,000

____ 48. Assuming that Mr. Dela Cruz is a VAT registered taxpayer instead of non-VAT registered, how
much is the business tax due for the first quarter of 2020?
a. P246,000
b. P546,000
c. P696,000
d. P396,000

____ 49. Bakella Realty Corporation sold the following real properties during the taxable year 2021
2 units of residential house and lot at P3,000,000 P6,000,000
each
4 residential lots at P2,000,000 each 8,000,000
1 commercial lot at P3,000,000 3,000,000
 How much is the total transactions subject to VAT?

a. P17,000,000
b. P11,000,000
c. P6,000,000
d. P8,000,000

____ 50. Lotus Distribution, Inc., a VAT taxpayer had the following data in a month
Cash sales P200,000
Open account sales 500,000
Consignment
0 to 30 days old (on which there were
remittances from consignees of 600,000
P200,000)
31 to 60 days old 700,000
61 days old and above 900,000

How much is the output tax?

a. P348,000
b. P216,000
c. P264,000
d. P108,000

Yes/No

Answer Yes if the item is subject to VAT and No if not subject to VAT.

____ 51. Sale by agricultural cooperatives of their produce to members and non-members

____ 52. Receipts from lending activities by credit multi-purpose cooperatives duly registered and in good
standing with Cooperative Development Authority (CDA)

____ 53. Importation by non-agricultural, non-electric, non-credit cooperatives of machinery and

equipment to be used by them.

____ 54. Sale, importation, printing or publication of books, and any newspaper, magazine, journal, review
bulletin, or any such educational reading material covered by the United Nations Educational,
Scientific and Cultural Organization (UNESCO) Agreement on the importation of educational,
scientific and cultural materials, including the digital or electronic format thereof; not devoted
principally to the publication of paid advertisements and are compliant with the requirements set
forth by the National Book Development Board pursuant to R.A. No. 8047.
____ 55. Sale of real property utilized for low-cost housing

____ 56. Sale of residential house and lot with selling price not exceeding P2,599,300.

____ 57. Sale of residential lot with selling price not exceeding P2,599,300.

____ 58. Sale or importation of prescription drugs and medicines for Diabetes, high cholesterol, and
hypertension beginning January 1, 2021

____ 59. Sale or importation of prescription drugs and medicines for cancer, mental illness, tuberculosis,
and kidney diseases beginning January 1, 2020.

____ 60. Sale or importation of the following beginning January 1, 2021 to December 31, 2023: Capital
equipment, its spare parts and raw materials, necessary for the production of personal protective
equipment (PPE) components such as coveralls, gown, surgical cap, surgical mask, n-95 mask,
scrub suits, goggles and face shield, double or surgical gloves, dedicated shoes, and shoe covers,
for COVID-19 prevention; All drugs, vaccines and medical devices specifically prescribed and
directly used for the treatment of COVID-19; and Drugs for the treatment of COVID-19 approved
by the Food and Drug Administration (FDA) for use in clinical trials, including raw materials
directly necessary for the production of such drugs.