TAX Preweek B48

ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY
CPA Review Batch 48  October 2024 CPALE  Pre-Week Summary Lecture
TAXATION A. TAMAYO  E. GARCIA  G. CAIGA  C. LIM  K. MANUEL  J. TAGLE
TAX PREWEEK LECTURE

PRINCIPLES OF TAXATON
1. (Basic Principles) The following are common to the inherent power of taxation, power
of eminent domain and police power, except for which of the following?
a. They are necessary attributes of sovereignty.
b. They interfere with private rights and property.
c. They affect all persons or the public.
d. They are legislative in implementation.
2. (Basic Principles) Which statement is wrong? A revenue bill:

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

tax:
a. It is levied by the legislature.
b. It is payable in money or in kind.
c. It is proportionate in character.
d. It is an enforced contribution.
4. (Basic Principles) There is no taxable income until such income is recognized.

Taxable income is recognized when the:
a. taxpayer fails to include the income in his income tax return.
b. income has been actually received in money or its equivalent.
c. income has been received, either actually or constructively.
d. transaction that is the source of the income is consummated.
5. Which of the following may not raise money for the government?
a. Power of taxation
b. Police power
c. Power of eminent domain
d. Privatization of government’s capital assets
6. The basic principle of taxation, where, “Taxes must be based on the taxpayer’s
ability to pay” is called:
a. equality in taxation. c. theoretical justice.
b. lifeblood theory. d. equity in taxation.
7. Which of the following statements is not correct?
a. Taxes may be imposed to raise revenue or to provide incentives or
disincentives for certain activities within the State.
b. The State can have the power of taxation even if the Constitution does not
expressly give it the power to tax.
c. For the exercise of the power of taxation, the state can tax anything at any
time.
d. The provisions of taxation in the Philippine Constitution are grants
of power and not limitations on the taxing power.
8. Is it possible for the tax to be used partly for public and partly private without
violating the limitation that a tax must be for public purpose?
a. Yes. The purpose to be accomplished by taxation need not be exclusively
public. Although private individuals are directly benefited (e.g. giving aid
to flood victims), the tax will still be valid provided such benefit is only
incidental.
b. No. The purpose to be accomplished by taxation need to be exclusively public.
To benefit private individuals will be tantamount to deprivation of property
of those who paid the tax without due process.
c. Yes. The purpose is not important as long as the use of the tax can be
property accounted for.
d. No. The purpose shall either be public or private. It cannot be both.
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ReSA – THE REVIEW SCHOOL OF ACCOUNTANCY TAX-Preweek
BATCH 48 – October 2024 CPA Licensure Examination
9. The principle of separation of powers ordains that each of the three branches of the
government has exclusive cognizance of and is supreme in matters falling within its
own constitutionally allocated sphere, Hence:
a. The tax imposed should be for public purpose.
b. There should be no improper delegation of the taxing power.
c. The power to tax is limited to the territorial jurisdiction of the taxing
government.
d. Exemption of government entities from taxation.
10. Which of the following is not an element of double taxation?

a. Two taxes c. Same year
b. Same subject matter d. Same amount
11. Statement 1: The value-added tax is a property tax.

Statement 2: The estate tax is a direct tax.
a. The two statements are correct.
b. The two statements are wrong.
c. Statement 1 is correct while statement 2 is wrong.
d. Statement 1 is wrong while statement 2 is correct.
12. Tax laws have been held to be:

a. Political in nature c. Both a and b
b. Penal in nature d. Neither a nor b
13. An increase in land value is not recognized as income until the property is sold
or exchanged. This is an application of the:
a. Severance test c. Economic benefit theory
b. Claim of right doctrine d. Accrual concept
14. The hornbook doctrine in the interpretation of tax laws states that:
a. A statute is not construed as imposing a tax unless it does so clearly and
unambiguously.
b. A tax cannot be imposed without clear and express words for that purpose.
c. Both a and b
d. Neither a nor b
15. Which of the following is not expressly provided for in the Constitution?
a. Prohibition against direct double taxation
b. Uniformity of taxation
c. Regressive system of taxation
d. Non-imprisonment for non-payment of poll tax
16. What is the system of taxation where all the items of income earned during the
taxable period are lumped together and subjected to a single set of income tax
rates?
a. Global tax system
b. Schedular tax system
c. Semi-global ad semi-schedular tax system
d. Proportionate tax system
TAX REMEDIES
17. (Tax Remedies) The Commissioner may compromise the payment of any internal revenue
tax, when:
I - there is a reasonable doubt as to the validity of the claim against the taxpayer
II - the tax or any portion thereof appears to be unjustly or excessively assessed.
a. Both I and II are correct c. Only I is correct
b. Both I and II are incorrect d. Only II is correct
18. The final income tax return for the taxable year 2018 which was due on April 15,
2019 was filed earlier on March 15, 2019. A substantial amended return was filed
on May 31, 2019. When is the last day to make a valid assessment?
a. March 15, 2022 c. May 31, 2022
b. April 15, 2022 d. May 31, 2025
19. First statement: The law on prescription, being a remedial measure, should be
liberally construed in order to afford protection against harassment.

Second statement: The exceptions to the law on prescription should be strictly
construed.
a. Both statements are correct. c. Only the first statement is correct.
b. Both statements are incorrect. d. Only the second statement is correct.
20. Which of the following prescriptive period of assessment and collection falls under
normal or regular prescriptive period?
a. Taxpayer filed a return and the return filed is not false of fraudulent
b. Taxpayer failed to file a return
c. Taxpayer filed a false return with intent to evade tax
d. Taxpayer filed a fraudulent return with intent to evade tax
21. The Commissioner of Internal Revenue has the authority to do all of the following
except:
a. compromise the payment of any internal revenue tax.
b. cancel or abate tax liability.
c. credit or refund tax.
d. review the decisions of the Court of Tax Appeals.
22. The offer to compromise based on financial incapacity may be accepted upon showing
the following, except when:
a. the corporation ceases operation or is already dissolved.
b. the taxpayer is suffering from surplus or earnings deficit resulting to
impairment in the original capital by 50%.
c. the taxpayer is a compensation income earner with no other source of income
and the family’s gross monthly compensation income does not exceed P10,500,
if single, or P21,000, if married.
d. the taxpayer does not waive in writing his privilege of the secrecy of bank
deposits.
23. In the implementation of warrants of distraint and levy, any residue over and above
what is required to pay the entire claim, including expenses, shall be:
a. returned to the owner of the property sold.
b. remitted to the Revenue District Officer.
c. remitted to the Regional District Officer.
d. reverted to the general fund.
24. An Internal Revenue Officer is allowed only how many days from the date of receipt
of a letter of authority by the taxpayer to conduct the audit and submit the
required report of investigation?
a. 30 days c. 120 days
b. 60 days d. 180 days
25. A taxpayer filed her income tax return for 2000 on April 15, 2001 and paid the tax
of P12,000. Upon audit of the BIR, an assessment notice was issued on May 2, 2003
requiring the taxpayer to pay a deficiency tax of P50,000 not later than July 15,
2003. The taxpayer may:
a. go to the Supreme Court if the issue involved is purely a question of the
law.
b. ignore the assessment as the date of collection is beyond three (3) years
as the taxable year covers 2000.
c. request for an extension of time to pay the deficiency income tax.
d. go to the Court of Tax Appeals to appeal the assessment made by the BIR
INCOME TAXATION
26. A nonresident citizen arrives in the Philippines on July 31, 2022 to reside here
permanently after many years of living abroad. The following data for the year
2018 on his income are made available:
Gross income, foreign sources (in Philippine pesos)

January 1 to July 31 P500,000
Gross income, Philippine sources, August 1
to December 31 300,000
Gross income, foreign sources, (in Philippine pesos)
August 1 to December 31 400,000
For Philippine income tax purposes, how much is his taxable gross income in 2022?
a. P800,000 c. P400,000
b. P700,000 d. P300,000
SITUATIONAL
In 2022, Mr. Kris Manuel owns a nightclub and videoke bar, with gross
sales/receipts of P2,500,000.00. His cost of sales and operating
expenses are P1.000,000.00 and P600,000.00, respectively.
27. Can the taxpayer avail of the 8% income tax rate?

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

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

a. P750,000 c. P375,000
b. P450,000 d. P250,000
30. Foreign nationals or non-Filipino citizens, regardless of their residency, term and
class of working or employment permit or visa, who are employed and assigned in the
Philippines by an Offshore Gaming Licensee (OGL) or its Accredited Service Provider
shall have Taxpayer Identification Number (TIN) and shall be subject to a:
a. final withholding tax of 25% on their gross income.
b. creditable withholding tax of 25% on their gross income.
c. final withholding tax of 20% on their gross income.
d. creditable withholding tax of 10% on their gross income.
31. One of the following can avail of the 8% income tax rate option:
a. VAT-registered seller of goods
b. Taxpayer subject to franchise tax under Section 119
c. Partners of general professional partnerships
d. Taxpayer subject to Percentage Tax on VAT-exempt persons (Sec. 116)
32. With respect to optional Standard Deductions (OSD) allowed to individual taxpayers,
which of the following statements is incorrect?
a. In lieu of the deductions allowed (itemized), an individual subject to tax
under Section 24, other than a nonresident alien, may elect a standard
deduction in an amount not exceeding forty percent (40%) of his gross sales
or gross receipts, as the case may be.
b. Unless the taxpayer signifies in his return his intention to elect the
optional standard deduction, he shall be considered as having availed
himself of the itemized deductions allowed.
c. An individual who is entitled to and claimed for the optional standard
deduction shall still be required to submit with his tax return such
financial statements required under the Tax Code.
d. The said individual shall keep such records pertaining to his gross sales
or gross receipts.
33. Who among the following individual taxpayers is not required to file and income
tax return?
a. A partner who received his share in the profits of a taxable partnership.
b. A proprietor of a business who suffered a net loss during the taxable year.
c. A teacher who is employed in two (2) different schools.
d. An author who receives royalty form his books published in Japan.
34. The surcharge of 50% on the amount due shall be imposed where there is:
a. failure to file any return and pay the tax due thereon.
b. filing of return with an internal revenue officer other than those with whom
the return is required to be filed.
c. failure to pay the deficiency tax on time as indicated in the notice of
assessment.
d. failure to file a return on time due to willful neglect.
35. Who files the income tax return, and pays the tax thereon, on income derived by an
estate that is under judicial administration?
a. Executor or administrator c. Either a or b
b. Any of the heirs d. Neither a not b
36. Ken and Ian inherited a piece of agricultural land from their parents. The last
will and testament of the decedent provided that the said property shall not be
partitioned and should remain jointly owned by the siblings for a period of 20
years. What organization is deemed to exist for income tax purposes?
a. Corporation c. Co-ownership
b. Unregistered partnership d. Trust
37. Nippon Corporation a non-resident corporation organized under and by virtue of the
laws of Japan, deposited US$4,000,000 at Bank of Philippines Islands, Makati City.
The interest income from the said deposit shall be subject to:
a. 25% final withholding tax c. 15% final withholding tax
b. 20% final withholding tax d. 0% final withholding tax
38. The “tax sparing principle” which entitles the taxpayer of a preferential tax rate
of only 15% on the dividends received from a domestic corporation may be applied
to:
a. domestic corporation c. non-resident foreign corporation
b. resident foreign corporation d. non-corporate taxpayers
SITUATIONAL
An employee of a private corporation received the following de minimis benefits during
the taxable year 2022:
Monetized unused vacation leaves (10 days x P500) P5,000
Uniform allowance for the year 8,000
Laundry allowance (12 x P300) 3,600
Rice subsidy (12 x 2,500) 30,000
Actual medical benefits 12,000
Benefits received by an employee by virtue of a
collective bargaining (CBA) and productivity
incentive schemes 15,000
Payroll record also revealed the following:
Basic salary (P40,000 x 12) 480,000
13th month pay 40,000
Christmas bonus 30,000
39. How much is the taxable 13th month and other benefits?
a. P95,000 c. P5,000
b. P90,000 d. None of the choices
40. How much is the tax payable (overpayment)?

a. P73,750 c. P50,000
If the taxable income is:

Over But not over The tax shall be Plus Of excess over
P 250,000 0%
P 250,000 400,000 20% P 250,000
400,000 800,000 P 30,000 25% 400,000
800,000 2,000,000 130,000 30% 800,000
2,000,000 8,000,000 490,000 32% 2,000,000
8,000,000 2,410,000 35% 8,000,000
41. The records revealed the following taxes and fees incurred by a practicing CPA
during the taxable year 2022:
Professional tax receipt (PTR) for accounting practice P 600
Car registration (60% used in practice) 3,000
Depreciation of car 75,000
Gasoline and oil of car 30,000
Income tax 12,000
Interest – late payment of income tax 1,500
Surcharge – late of payment of income tax 2,000
Donor’s tax 5,000
Special assessment 7,500
Real property tax on residential house 4,000
The total deductible amount for the taxable year was:

a. P110,100 c. P66,900
b. P 68,000 d. P65,400

42. Which of the following revenue constitutes the “Gross Philippine Billings” of a
resident foreign corporation operating as an international air carrier?
a. Revenue on flight from the United States to the Philippines, tickets sold
in the Philippines
b. Revenue on flight from the Philippines to Japan, tickets sold in Japan
c. Revenue on flight from Hongkong to South Korea (flight originated from the
Philippines with transshipment at Hongkong), tickets sold in the Philippines
d. Revenue on a return flight from Singapore to the Philippines, round-trip
ticket sold in the Philippines
43. A private non-profit hospital, has gross receipts of P15,000,000 with a cost of
P6,000,000 and allowable deductions of P3,250,000 from related activities, while
for its unrelated activities, it incurred P5,000,000 and P2,000,000 as cost of
sales and allowable deductions, respectively with a gross sales of P18,000,000 for
CY 2021.
How much is the tax due?
a. P4,187,500 c. P1,675,000
b. P3,350,000 d. P 167,500
SITUATIONAL
AST Corporation is registered as a Regional Operating Headquarters (ROHQ) since 2015.
For taxable years 2020 to 2023, its operations showed the following results:
2020 2021 2022 2023
Gross receipts P75,000,000.00 P120,000,000.00 P130,000,000.00 P75,000,000.00
Cost of services 41,250,000.00 66,000,000.00 71,500,000.00 41,250,000.00
Gross income 33,750,000.00 54,000,000.00 58,500,000.00 33,750,000.00
Less: Allowable
deductions 33,625,000.00 41,200,000.00 42,550,000.00 35,125,000.00
Net taxable
income P 125,000.00 P12,800,000.00 P15,950,000.00 (P1,375,000.00)
44. How much is the minimum corporate income tax (MCIT) in 2020
a. P1,500,000 c. None, not applicable
b. P 675,000 d. None of the choices
45. How much is the minimum corporate income tax (MCIT) in 2022?
a. P2,600,000 c. P585,000
b. P1,170,000 d. None, not applicable
46. How much is the tax due in 2023?

a. P1,500,000 c. P506,250
b. P 675,000 d. P337,500
SITUATIONAL (Reconciliation of Income)

The following were taken from the Statement of Income and Expenses of ABC
Corporation for the taxable year 2021:
Gross profits from sales P800,000
Less: Business expenses 440,000
Provision for bad debts 80,000
Write-off of inventories lost due to spoilage 20,000 540,000
Net income from operation 260,000
Add: Other income
Dividend income from a domestic corporation 50,000
Interest on Philippine bank peso deposit 30,000 80,000
Net income P340,000
Additional information:
1) Accounts written off during the year and charged to allowance for bad
debts, P50,000;
2) Recoveries on accounts receivable previously written off in 2020 and
credited to allowance for bad debts:
Allowed as deduction by BIR, P30,000;
Disallowed as deduction by BIR,P20,000.
47. How much is the total non-deductible expenses/taxable other income?

a. P410,000 c. P110,000
b. P130,000 d. P100,000

48. How much is the non-taxable income and income subject to final tax?
a. P130,000 c. P80,000
b. P100,000 d. P30,000
49. How much was the taxable net income using Reconciliation Net Income Per Books
Against Taxable Income?
a. P340,000 c. P390,000
b. P370,000 d. P440,000
SITUATIONAL (Additions to Tax)

X Company has been assessed deficiency income tax of P1,000,000, exclusive of interest
and surcharge, for taxable year 2015. The tax liability has remained unpaid despite
the lapse of June 30, 2017, the deadline for payment stated in the notice and demand
issued by the Commissioner. Payment was made by the taxpayer only on February 10, 2018.
50. How much is the interest on deficiency from April 16, 2016 to June 30, 2017 (441
days)?
a. P302,054.79 c. P181,232.87
b. P241,643.83 d. P144,986.30
51. How much is the additional interest on deficiency from July 1, 2017 to December 31,
2017 (184 days)?
a. P126,027.39 c. P75,616.43
b. P100,821.91 d. P60,493.50
52. How much is the interest on delinquency from July 1, 2017 to December 31, 2017
(184 days)?
a. P151,232.87 c. P90,234.23
b. P150,390.39 d. P75,616.43
53. How much is the interest on delinquency from January 1, 2018 to February 10, 2018
(41 days)?
a. P33,698.63 c. P22,465.75
b. P33,510.90 d. P20,106.54
54. How much is the total amount due on February 10,2018?

a. P2,012,962.67 c. P1,512,962.67
b. P1,762,962,67 d. P1,262,962.67
55. (Income Taxation) CPL Corporation secured in 2018 a bank loan for its business
expansion, and incurred interest expense of P2,000,000.00 in calendar year 2020 on
the said bank loan. In the same year, it likewise earned interest income of
P300,000.00 subjected to final tax of 20% and royalties of P100,000 subjected to
20% final tax. For calendar year 2020, its gross income amounted to P20,000,000.00.
Its gross assets, including the P20,000,000 value of the land where its building
and plant are situated, is P120,000,000.00. Its operating expenses amounted to
P15,000,000.00, inclusive of the interest expense of P2,000,000.00. How much is
the allowable interest expense?
a. P1,894,000 c. P1,920,500
b. P1,934,000 d. P1,950,500
56. (Income Taxation) GCC Corporation, a domestic corporation, owns 20% of the
outstanding shares of BTS Corporation, a non-resident foreign corporation (NRFC),
since August 1, 2015. On May 1, 2021, it received dividends amounting to P1,000,000
from the said NRFC. On September 1, 2022, GCC Corporation utilized P800,000 for its
dividend payments. On January 1, 2023, it utilized the remaining P200,000 for its
working capital.
How much is tax-exempt dividend?

a. P1,000,000 c. P200,000
57. (Income Taxation) Jose Cruz sold a painting (capital asset) which he purchased in
2018 at a cost of P30,000. He sold the painting to Pedro Santos, on the following
terms:
June 1, 2021 down payment P10,000
August 1, 2021 installment due 10,000
October 1, 2021 installment due 20,000
For the year 2021, Jose Cruz will report a gross income of:
a. P90,000 c. P30,000
b. P45,000 d. P15,000
58. Using the same data in the preceding number, assuming Jose Cruz is a dealer in
paintings, how much will he report as gross income for 2021?
a. P15,000 c. P45,000
b. P30,000 d. P90,000
59. (Income Taxation) A domestic corporation has the following data for three (3) years:
Normal income tax MCIT
2019 P 50,000 P 75,000
2020 P 60,000 P100,000
2021 P100,000 P 60,000
How much is the tax payable in 2021?

a. P100,000 c. P35,000
b. P 60,000 d. Zero
60. (Income Taxation) With the following data, how much is the deductible
pension/retirement plan contribution for 2022?
Pension/retirement plan contribution (2020) P500,000
The breakdown of the P500,000 per actuarial valuation:

Normal cost P400,000
Past service cost 100,000
Total P500,000
a. P500,000 c. P420,000
b. P430,000 d. P400,000
61. (Income Taxation) As a general rule, proceeds of insurance are not taxable because
they only constitute a return of what was lost (return of capital). Which of the
following are taxable proceeds?
a. Proceeds of life insurance c. Proceeds of property insurance
b. Proceeds of accident or health insurance d. Proceeds of crop insurance.
62. Which of the following shall be considered other benefits “includible in 13th month
and other benefits” in full?
a. Medical benefits exceeding P10,000
b. Tangible personal property given as Achievement Award exceeding P10,000
c. Benefits received by an employee by virtue of a collective bargaining (CBA)
and productivity incentive schemes exceeding P10,000
d. Uniform and clothing allowance exceeding P10,000
63. Under Republic Act No. 11976 (Ease of Paying Tax Act), the repeal of Section 34 (K)
which is an additional requirement for deductibility of certain payments applies
to:
a. micro and small taxpayers only.
b. medium and large taxpayers only.
c. large taxpayers only.
d. all taxpayer regardless of the classification.
64. Under EOPT Act, filing of returns in a wrong venue no longer subjects such violation
to 25% surcharge if it involves:
a. micro and small taxpayers only.
b. medium and large taxpayers only.
c. large taxpayers only.
d. all taxpayer regardless of the classification.
65. Under EOPT Act, the 10% reduced surcharge for micro and small taxpayers does not
apply when there is:
a. failure to file any return and pay the tax due thereon as required under the
provisions of the Tax Code or rules and regulations on the date prescribed.
b. failure to pay the deficiency tax within the time prescribed for its payment
in the notice of assessment.

c. failure to pay the full or part of the amount of tax shown on any return
required to be filed under the provisions of the Tax Code or rules and
regulations, or the full amount of tax due for which no return is required
to be filed, on or before the date prescribed for its payment.
d. willful neglect to file the return within the period prescribed by the Code.
66. (Income Taxation) On August 11, 2018, an individual taxpayer not engaged in real
estate business acquired a parcel of land which would be used as a site for office
building for P3,000,000. Unfortunately, the planned office building was not built
due to financial problem that hounded the taxpayer. The land was idle up to August
11, 2022. The taxpayer presented a proof to the BIR that the land had not been used
in business since its acquisition. Subsequently, the land was sold by the taxpayer
for P5,000,000 on September 5, 2022.
What was the tax consequence of the sale?

a. There was taxable gain of P2,000,000 which would be subject to Section 24 (A).
b. The sale would be subject to 6% capital gains tax based on the selling price.
c. The sale would be exempt from tax because the property was not used for
business.
d. The gain of P2,000,000 will be subject to 6% capital gains tax.
TRANSFER TAXES
67. The gross estate of a decedent consists of registered and registrable properties
valued at P5,000,000. Which of the following statements is/are correct?
I - The estate of the decedent is required to submit notice of death.
II - The estate of the decedent is required to file an estate tax return.
III - The estate of the decedent is required to submit a statement certified
by a CPA.
a. Statements I, II and III c. Statement II
b. Statements II and III d. None of the statements
SITUATIONAL
The decedent is a married man with a surviving spouse (under conjugal partnership of
gains) with the following data died on February 1, 2021:
Real properties received by decedent as inheritance during the
marriage (including land valued at P200,000 transferred
inter vivos by decedent to a son) P10,000,000
Personal properties acquired during the marriage using common
fund (including car valued at P1,800,000 acquired for the
exclusive use of the surviving spouse) 6,000,000
Personal properties received as gift by the surviving spouse
during the marriage 5,000,000
Exclusive family home 5,200,000
Conjugal deductions claimed (including funeral expenses
amounting to P200,000; judicial expenses amounting to
P300,000 and medical expenses amounting to P100,000) 2,600,000
Exclusive deductions claimed (including unpaid mortgage of
P500,000 on the personal properties received as gift by the
surviving spouse during the marriage) 2,500,000
68. Using BIR From No. 1801 what amount shall be reflected in Line 34 page 2 (Gross
estate)
a. P26,200,000. c. P21,000,000.
b. P21,200,000. d. P16,000,000.
69. Using BIR From No. 1801 what amount shall be reflected in Line 35 page 2 (Ordinary
deductions)
a. P5,100,000 c. P4,600,000
b. P5,000,000 d. P4,000,000
70. Using BIR From No. 1801 what amount shall be reflected in Line 37D page 2 (Total
special deductions)
a. P10,200,000 c. P7,600,000
b. P10,000,000 d. P5,200,000
71. Using BIR From No. 1801 what amount shall be reflected in Line 40 page 2 (Net
taxable estate)
a. P10,900,000 c. P6,800,000
b. P 8,800,000 d. P4,800,000

72. Using BIR From No. 1801 what amount shall be reflected in Line 18 page 1 (Estate
tax due)
a. P654,000 c. P408,000
b. P528,000 d. P288,000
SITUATIONAL
On January 15, 2022, Daisy gave a piece of land to her brother-in-law who is getting
married on February 14, 2022. The assessed value and zonal value of the land were
P750,000 and P1,000,000 respectively. It was acquired by Daisy at a cost P1,500,000
in 2018. An adjacent lot to the donated property was valued at P2,000,000. The land
given as a gift had an unpaid mortgage of P200,000, which was assumed by the donee and
an unpaid realty tax of P10,000 which was also assumed by the donee. The donor and the
donee agreed that the latter will assume the donor’s tax amounting to P33,000.
Daisy donated other properties to her sister and brother on March 15, 2022. Gift to
sister had a zonal value of P500,000 and an assessed value P300,000. Gift to brother
was cash P300,000 of which she specially provided that 10% of the gift should be given
to the church where Daisy was a member.
73. Using BIR From No. 1801 to be filed for the donations dated March 15, 2022, what
amount shall be shown in Line 27 page 2 (Total gifts in this return)
a. P1,800,000 c. P800,000
b. P1,560,000 d. P600,000
74. Using BIR From No. 1801 what amount shall be shown in Line 33 page 2 (Total
deductions allowed)
a. P243,000 c. P30,000
b. P240,000 d. None
75. Using BIR From No. 1801 what amount shall be shown in Line 35 page 2(Total prior
net gifts during the calendar year)
a. P800,000 c. P540,000
b. P790,000 d. None
76. Using BIR From No. 1801 what amount shall be shown in Line 38 page 2 (Total net
gift subject to tax)
a. P1,590,000 c. P1,310,000
b. P1,560,000 d. None
77. Using BIR From No. 1801 what amount shall be shown in Line 18 page 1 (Tax payable)
a. P95,400 c. P78,600
b. P93,600 d. P46,200
78. The gross estate of the following decedents shall include all properties wherever
situated, except which one?
a. Resident citizen
b. Resident alien
c. Non-resident citizen
d. Non-resident alien
79. Mr. Julian Cruz procured a life insurance upon his own life. He designated his
estate’s executor as an irrevocable beneficiary. For estate tax purposes, the
proceeds of life insurance is:
a. included in the gross estate of Mr. Julian Cruz because when the executor of
the estate is a beneficiary the proceeds are included in the gross estate
regardless of the designation.
b. not included in the gross estate of Mr. Julian Cruz because the designation of
the beneficiary is irrevocable.
c. included in the gross estate of Mr. Julian Cruz because proceeds of life
insurance are always subject to estate tax.
d. not included in the gross estate because, as a rule, proceeds of life insurance
are generally not subject to estate tax.
80. (Phil. CPA) The following are the requisites in order for claims against the
decedent’s estate to be deductible, except which one?
a. They must be existing against the estate.
b. They must be reasonably certain as to amount.
c. They must have been prescribed.
d. They must be enforced by the claimant.

81. Which of the following statements is incorrect? A claim against an insolvent

person, which is not collectible in full:
a. is included in the gross estate.
b. is not included in the taxable net estate.
c. must be notarized if arising out of a debt instrument of the insolvent.
d. needs no preliminary filing of a case against the insolvent.
82. Kenneth sold a residential lot for P1,500,000. The fair market value of the
residential lot at the time of sale was P2,000,000. The sale of property was
made in the ordinary course of business which was a bona fide transaction, at
arm’s length, and was free from any donative intent. How much was the donor’s
tax due?
a. P120,000.00 c. P30,000.00
b. P 90,000.00 d. None, not subject to donor’ s tax.
83. (Phil. CPA) The common characteristic of transfer taxes is the transfer of property:
a. is onerous.
b. takes effect during the lifetime of the transferor.
c. takes effect upon the death of the transferor.
d. is gratuitous.
84. Mr. Bill Morgan, a Canadian citizen and a resident of Scarborough, Ontario, sends
a gift check of $20,000 to his future daughter-in-law who is to be married to his
only son in the Philippines. Is the donation subject to Philippine donor’s taxes?
a. Yes, but only up to extent that exceeds the allowable P250,000.00 exemption
for donations.
b. Yes. There is no showing in the problem that the marriage actually took place
within one (1) year from the date of the donation
c. No. The donor is a non-resident alien hence he is not subject to the Philippine
donor’s tax law.
d. No. The donation took place outside the Philippines hence not subject to the
Philippine donor’s tax law.
85. Transfer tax is a tax imposed on the privilege to transfer property ownership
a. through a will. c. inter vivos.
b. mortis causa. d. gratuitously.
86. The NIRC of 1997 imposes different kinds of taxes on dispositions of property.
There are VAT, excise taxes, estate taxes, donor’s taxes, etc. Which among the
following transactions would be subject to a transfer tax?
a. Sales of articles that are exempt from the VAT.
b. Sale of cigars and cigarettes by a wholesaler.
c. Sale of an automobile for less than an adequate and full consideration.
d. Sale of shares of stock that are not listed and traded at the stock exchange.
87. Mr. Nat Tigok, Filipino citizen, died abroad leaving the following properties:
house and lot in Texas, USA; shares of stock in San Miguel Corporation and PHILEX,
both local companies; bank deposits in New York City and in the Bank of the
Philippine Islands in Makati; a Toyota Camry sedan registered in the name of his
son aged 21 years. He was buried in Manila and expenses were incurred to bring the
remains home and for his funeral. Which among the above properties should be
excluded from his estate tax return?
a. The house and lot in Texas, USA
b. The shares of stock in San Miguel Corporation
c. The bank deposits in New York City
d. The Toyota Camry sedan
SITUATIONAL
The following donations are made to relatives and strangers:
January 30, 2021 P2,000,000
March 30, 2021 1,000,000
August 15, 2021 500,000
September 20, 2022 600,000
88. How much is the donor’s tax payable on the gift made on January 30, 2021?
a. P 204,000 c. P 80,000
b. P 105,000 d. P 50,000

89. How much is the donor’s tax payable on the gift made on March 30, 2021?
a. P 204,000 c. P 60,000
b. P 124,000 d. P 50,000
90. How much is the donor’s tax payable on the gift made on August 15, 2021?
a. P 204,000 c. P 80,000
b. P 124,000 d. P 30,000
91. How much is the donor’s tax payable on the gift made on September 20, 2022?
a. P36,000 c. P21,000
b. P30,000 d. P20,000
SITUATONAL
The decedent is a resident alien, married, with the following data:
Conjugal properties
Real and personal properties, outside the Philippines P14,000,000
Family home, Philippines 30,000,000
Exclusive properties, Philippines 5,000,000
Conjugal deductions 2,000,000
92. The total gross estate is:
a. P49,000,000 c. P35,000,000
b. P34,000,000 d. P20,000,000
93. The special deductions are:
a. P40,000,000 c. P15,000,000
b. P30,000,000 d. P10,000,000
94. The taxable net estate is:
a. P47,000,000 c. P32,000,000
b. P37,000,000 d. P11,000,000
95. The estate tax due is:
a. P2,820,000 c. P1,920,000
b. P2,220,000 d. P 660,000
BUSINESS TAXES
96. Under EOPT, in the case of sales in the amount of ₱1,000 or more where the sale or
transfer is made to a VAT-registered person, which information pertaining to
purchaser, customer or client is no longer required to be shown?
a. the name,
b. business style
c. address and
d. Taxpayer Identification Number
97. Under EOPT, a VAT-registered person shall issue for every sale, barter, exchange,
or lease of goods or properties, and for every sale, barter or exchange of services.
a. VAT invoice
b. VAT official receipt
c. either a or b
d. neither a nor b
SITUATIONAL
A VAT-registered exporter, who is also engaged in VAT-exempt sales, has the following
VAT-exclusive data for the first calendar quarter of the current year:
Export sales P4,000,000
VAT-exempt domestic sales 6,000,000
Purchases attributed to export sales 2,000,000
Purchases attributed to all sales 1,000,000
98. How much is going to be reflected in Line 19 of BIR Form 2550Q (Total
sales/receipts)?
a. P10,000,000 c. P4,000,000
b. P 6,000,000 d. Zero
99. How much is the total VAT-subject sales?

a. P10,000,000 c. P4,000,000
b. P 6,000,000 d. Zero

100. What amount of input tax is chargeable to cost or expenses?

a. P216,000 c. P120,000
b. P144,000 d. P 72,000
101. What amount of input tax can be claimed as tax credit or refund?
a. P360,000 c. P240,000
b. P288,000 d. None
102. A VAT-registered taxpayer service provider has the following data taken from the
books of account for the month of January 2021:
Accounts receivable, January 1, 2021 P 560,000
Sales on account for the month of January, VAT-inclusive 1,120,000
Services paid in cash for the month of January, VAT-inclusive 336,000
Accounts receivable, January 31, 2021 784,000
Cash purchases for the month of January 2021 448,000
How much is the output tax for the month of January, 2021 using 12% rate?
a. P201,600 c. P132,000
b. P147,840 d. P96,000
103. A lessor, not VAT-registered, rents his 5 commercial and 20 residential units for
monthly rent of P50,000 and P15,000 per unit, respectively. His accumulated gross
receipts during the taxable year amounted to:
Rent from 5 commercial units (P50,000 per unit x 12) P3,000,000
Rent from 20 residential units (P15,000 per unit x 12) 3,600,000
Aggregate gross receipts P6,500,000
What will be the business taxes consequences?

a. Both will be subject to VAT because the aggregate gross receipts exceed the
VAT threshold.
b. Both will be exempt from VAT because rent from commercial units did not exceed
the VAT threshold and rent from residential units shall be exempt regardless
of the gross annual receipts.
c. Only the rent from commercial units shall be subject to VAT
d. Only the rent from residential units shall be subject to VAT because it exceeded
the VAT threshold.
SITUATIONAL
A taxpayer is engaged in VAT-subject transactions but his annual gross sales do not
exceed the VAT threshold. Hence, he did not register under VAT system. However,
during 2022, his quarterly gross sales follow:
First quarter P1,000,000
Second quarter 1,000,000
Third quarter 1,000,000
Fourth quarter 1,000,000
104. How much is the total percentage tax due for the first three (3) quarters?
a. P480,000 c. P90,000
b. P120,000 d. P30,000
105. How much is the VAT due?
a. P480,000 c. P90,000
SITUATIONAL
A VAT-registered taxpayer is also engaged in VAT-exempt transactions. The following
VAT exclusive data are made available:
Domestic VAT-subject cash sales P1,000,000
VAT-exempt sales on account 500,000
Export cash sales 300,000
Cash purchases of supplies from VAT supplier used for all
transactions) 150,000
Purchase on account of merchandise from VAT-registered trader (for
VAT sales only) 200,000
106. How much is the amount reflected in line 22 BIR Form 2550Q (total available input
tax)?
a. P42,000 c. P34,000
b. P37,000 d. P24,000

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

a. P1,800,000 c. P1,300,000
b. P1,500,000 d. P1,000,000
110. How much is the amount reflected in line 25 BIR Form 2550Q (Net VAT payable)
assuming the taxpayer decided to refund the input tax attributed to zero-rated
sales?
a. P96,000 c. P83,000
b. P86,000 d. P78,000
SITUATIONAL
An operator of domestic common carrier by land, not VAT-registered, presented the

following data for the first calendar quarter of the year 2022. His VAT-subject gross
receipts do not exceed the VAT threshold in any given year.
Gross receipts transport of passengers by land P 3,500,000
Gross receipts transport of goods 500,000
Gross receipts transport of cargoes 200,000
Cost of services, transport of passenger 800,000
Cost of services, transport of goods and cargoes 300,000
Operating expense, transport of passenger 100,000
Operating expenses, transport of goods and cargoes 50,000
111. How much is the common carrier’s tax?

a. P105,000 c. P35,000
b. P70,000 d. None
112. How much is the output VAT?

a. P180,000 c. P60,000
b. P120,000 d. Exempt from VAT
113. How much is the percentage under Sec. 116?

a. P21,000 c. P7,000
b. P14,000 d. None
114. Can the taxpayer avail of the 8% income tax rate?

a. Yes. Because his total gross receipts do not exceed the VAT threshold as long
as he signifies his intention when he files his first quarter return.
b. No. Because he is VAT-registered and therefore not qualified to avail of the
8% income tax rate.
c. Yes. Because taxpayers with various business is qualified as long as he
signifies his intention when he files his first quarter return.
d. No. Taxpayers who are subject to Other Percentage Taxes, except those under
Section 116 are not qualified to avail of the 8% income tax option.
115. If the taxpayer avails of the 8% tax on his gross receipts how much is the
percentage under Sec. 116 due and payable for the quarter
a. P21,000 c. P7,000
b. P14,000 d. None
Over But not over The tax shall be Plus Of excess over
P 250,000 0%
P 250,000 400,000 20% P 250,000
400,000 800,000 P30,000 25% 400,000
800,000 2,000,000 130,000 30% 800,000
2,000,000 8,000,000 490,000 32% 2,000,000
8,000,000 2,410,000 35% 8,000,000

116. When shall the Percentage Tax Return be filed?

a. April 25, 2022 c. April 21, 2022
b. April 24, 2022 d. April 20, 2022
SITUATIONAL
ABS-GMA, VAT-registered, is a radio-TV broadcasting franchise grantee. The previous
year, its gross receipts did not exceed P 10,000,000. In the first quarter of the
year 2022, it had the following data:
Gross receipts, sale of airtime P 2,000,000

Payments received from user of radio station’s
communications facilities for overseas communications 500,000
Rentals of office spaces 3,500,000
Business expenses 700,000
117. How much was the franchise tax?

a. P60,000 c. P40,000
b. P50,000 d. None, not subject to franchise tax
118. How much was the overseas communications tax?

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

a. P720,000 c. P420,000
b. P660,000 d. None
120. When shall the Quarterly VAT Return (2550Q) be filed?

a. April 25, 2022 c. April 15, 2022
b. April 20, 2022 d. Not applicable
121. When shall the overseas communications tax be paid?

a. April 25, 2022 c. April 15, 2022
b. April 20, 2022 d. Not applicable
122. A proprietor of bowling alleys has the following gross receipts during the month
of July, 2022:
Gross receipts from bowling operation P2,000,000

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

a. P1,050,000 c. P525,000
b. P630,000 d. None
123. A non-VAT registered taxpayer who initially opted to avail of the 8% option but
has exceeded the VAT threshold during the taxable year, shall be subject to:
I – 3% percentage tax on the first P3,000,000 under Section 116
II – Without imposition of any penalty if payment is timely made on the following
month when the threshold is breached.
a. I and II and correct c. Only II is correct
b. Only I is correct d. Both and I and II are incorrect
124. A VAT-registered owner of a shoe store wants to replace the old display cabinets
in the store. He decides to sell them. He asks whether or not the sale of display
cabinets used in his store is subject to VAT. What answer will you give him?
a. No, the sale of display cabinets used in the shoe store is not subject to VAT
because it is not considered his regular conduct or pursuit of commercial or
economic activity.
b. Yes, the sale of display cabinets used in the shoe store is subject to VAT
because it is considered an incidental transaction to his regular conduct or
pursuit of commercial or economic activity.
c. No, the sale of display cabinets used in the shoe store is not subject to VAT
because he is not a dealer of display cabinets.
d. Yes, the sale of display cabinets used in the shoe store is subject to VAT
because, as a rule, such sale is always subject to VAT.

125. Which of the following statements is incorrect?
a. A zero-rated sale of goods or properties (by a VAT-registered person) is a
taxable transaction for VAT purposes, but shall not result in any output tax.
b. The input tax on purchases of goods, properties or services, related to zero-
rated sales, shall be available as tax credit only in accordance with the
Regulations.
c. The input tax on purchases of goods, properties or services, related to such
zero-rated sale, shall be available as tax credit or refund in accordance with
the Regulations.
d. Any enterprise whose export sales exceed 70% of the total annual production of
the preceding taxable year shall be considered an export-oriented enterprise.
126. Which of the following is subject to Value-Added Tax?
a. Medical, dental, hospital and veterinary services
b. Laboratory services
c. Sale of drugs and medicine in the hospital’s pharmacy or drug store
d. Medicines administered to a patient confined in the hospital
127. Which one of the following is VAT-exempt?
a. Export sale by a non-VAT person
b. Foreign currency denominated sale
c. Sale of services to entities duly registered with PEZA
d. Sale of services to Ramon Magsaysay Awards Foundation
128. Mr. Juan Cruz, VAT-exempt, issued VAT invoice to Mr. S. Santos, VAT-registered
trader. As a consequence:
A. Mr. Juan Cruz would be liable to percentage tax, VAT, and a surcharge of 50%.
B. Mr. S. Santos can claim input tax on his purchase provided the requisite
information required under the Regulations is shown on the invoice or receipt.
a. Both A and B are correct c. Only A is correct
b. Both A and B are incorrect d. Only B is correct
SITUATIONAL
A manufacturer purchased capital goods on different occasions as follows:
12% No. of
Month of Purchase Input Useful Monthly
Amount Tax Life Amortization
January 2018 P8,500,000 P1,020,000 6 years 60
February 2018 8,500,000 1,020,000 4 years 48
December 2021 10,000,000 1,020,000 5 years 60
January 2022 10,000,000 1,020,000 5 years -
129. When is the last month of amortization of the capital good purchased on January
2018?
a. December 2022 c. November 2026
b. January 2022 d. None of the choices
130. When is the last month of amortization of the capital good purchased on February
2018?
131. When is the last month of amortization of the capital good purchased on December
2021?
132. When is the last month of amortization of the capital good purchased on January
2022?
133. International carriers doing business in the Philippines is subject to the:
a. 3% percentage tax on gross receipts derived from the transport of cargo and/or
mail from the Philippines to another country.
b. 3% percentage tax on gross receipts derived from the transport of cargo, mail
and passenger from the Philippines to another country.
c. 12% value-added tax on their gross receipts derived from the transport of cargo
from the Philippines to another country.
d. 0% percent value-added tax on their gross receipts derived from the transport
of cargo and passenger from the Philippines to another country

134. A VAT-registered telephone company provides services for domestic and overseas
calls. What business taxes are due from the services offered?
I - Value-added tax for domestic calls of which the taxpayer is the person
using the communications facilities
II - Overseas communications tax for overseas calls originating from the
Philippines of which the taxpayer is the owner of the communications
facilities
a. Yes to I and II c. Yes to I only
b. No to I and II d. Yes to II only
135. The lease of property, real or personal, by a bank is subject to:

a. 5% gross receipts tax. c. 12% VAT.
b. 7% gross receipts tax. d. none of the choices.
136. Which of the following items is subject to VAT or percentage tax under Sec. 116
when received by a person engaged in life insurance business?
a. Investment income realized from the investment of funds obtained from others
allowed and approved by the Insurance Commission
b. Premium on Health and Accident Insurance
c. Re-issuance fees, reinstatement fees, renewal fees as well as penalties paid
to the life insurance company which are incidental to or in connection with
the insurance policy contracts issued
d. Other income earned which can be pursued independently of the insurance
business activities
137. A boxing exhibition featuring two (2) Filipino boxers in a Philippine championship
is held in a stadium in Pasig. It is promoted by a domestic corporation at least
60% of the stock of which is owned by Filipinos. The following data are presented
to you:
Gross receipts P 5,000,000
Cost of services 3,000,000
Gross income 2,000,000
Less: Expense (2,500,000)
Net loss (P500,000)
How much is the amusement tax?

a. None, because the boxing exhibition resulted in a loss.
b. None, because the boxing exhibition is exempt from the tax.
c. P500,000
d. P200,000
138. Using the same data in the preceding number and assuming it is a world
championship, how much is the amusement tax?
a. None, because the boxing exhibition resulted in a loss.
b. None, because the boxing exhibition is exempt from the tax.
c. P500,000
d. P200,000
139. Tax on winnings shall be withheld by the operator, manager or person in charge of
the horse races before paying the dividends or prizes and shall be remitted to
the BIR within how many days from the date the tax was deducted and withheld?
a. 30 days c. 20 days
b. 25 days d. 15 days
140. IAN Importers, not VAT-registered, imported articles whose customs duties were
based on their volume. Total landed cost was determined to be P5,000,000 and excise
taxes on the said importation amounted to P1,000,000. It eventually sold these
articles to Registered Business Enterprise (RBE), and the RBE used it directly and
exlusively in its registered activity. How much is the VAT payable on the
importation?
a. P960,000 c. P800,000
b. P720,000 d. None, importer is not VAT-registered
141. Using the same data in the preceding number, how much is the VAT on sale to an
RBE?
a. P960,000 c. P800.000
b. P720,000 d. Zero, sale to RBE is zero-rated

142. Where the input tax exceeds the output tax at the end of any quarter, the excess
may be claimed as a:
a. tax refund in the succeeding quarter or quarters.
b. tax credit in the succeeding quarter or quarter.
c. either a or b.
d. neither a nor b.
143. AST Corporation is a retail business that had been generating sales not exceeding
the VAT threshold for exempt persons. It decided, however, to be registered under
the VAT system for the first time in order to benefit from input tax credits. What
benefit, if any, may AST Corporation be entitled to once it registered under the
VAT system?
a. Tax refund c. Transitional input tax
b. Presumptive input tax d. No benefit at all
144. Which of the following statements based on latest regulations relative to the
filing of the VAT return and payment of VAT is correct?
a. The return is required to be filed quarterly and the tax is also paid quarterly.
b. The return is required to be filed monthly and the tax is also paid monthly.
c. The return is required to be filed quarterly and the tax is paid monthly.
d. The return is required to be filed monthly and the tax is paid quarterly.
145. The sales/receipts GCC for the year are as follows:

From grocery store P2,000,000
From sale of goods to Asian Development Bank 1,500,000
From passenger riding in a jeepney 500,000
From agricultural food products (original state) 600,000
Which of the statements is correct?

a. The basis for VAT registration is P4,600,000.
b. The basis for VAT registration is P3,500,000.
c. The basis for VAT registration is P3,100,000.
d. The basis for VAT registration is P3,000,000.
SITUATIONAL
The following information was gathered pertaining to the business of a VAT-registered
person for a taxable period.
Regular VAT-subject sales P6,000,000
VAT-zero-rated sales 1,500,000
VAT-exempt sales 2,500,000
Input tax – regular VAT-subject sales 400,000
Input tax that cannot be allocated 300,000
146. How much shall be declared as total sales/receipts under line 19 (BIR Form 2550Q)?
a. P10,000,000 c. P7,500,000
b. P 8,500,000 d. P6,000,000
147. How much shall be the total VAT-subject sales?
a. P10,000,000 c. P7,500,000
b. P 8,500,000 d. P6,00,000
148. How much is the total available input taxes under line 22 (BIR Form 2550Q)?
a. P700,000 c. P600,000
b. P650,000 d. P400,000
149. How much is the total allowable input taxes under line 24 assuming input tax on
zero rated sales will be claimed as tax refund (BIR Form 2550Q)?
a. P1,000,000 c. P600,000
b. P 580,000 d. P400,000
150. How much is the net VAT payable under line 25 BIR Form 2550Q)?
a. P420,000 c. P140,000
b. P320,000 d. P 20,000
151. Which of the following transportation providers is not subject to the 3% percentage
tax on domestic carriers?
a. School bus operators c. Passenger jeepney operators
b. Cargo truck operators d. Car rental business

EXCISE TAXES
152. Excise taxes are:
I - considered taxes on production
II - directly levied upon the manufacturer or importer
III - actually passed on to the end consumer
a. I, II and III are correct c. Only I and II are correct
b. I, II and III are incorrect d. Only II and III are correct
153. Who shall be statutorily liable to pay excise tax on locally manufactured or
imported goods?
a. Buyer c. Consumer
b. Seller d. None of the choices
154. First statement: Every fractional part of a proof liter equal to or greater than
a half liter in a cask or package containing more than one liter shall be taxed
as a liter, and any smaller fractional part shall be exempt.
Second statement: Any package of spirits, the total content of which are less than
a proof liter, shall be taxed as one liter.
a. Both statements are correct
b. Both statements are incorrect
c. Only the first is correct
d. Only the second statement is correct
155. Which of the following statements is incorrect?

a. Excise tax on nonmetallic mineral or mineral products, or quarry resources
shall be due and payable upon removal of such products from the locality
where mined or extracted.
b. With respect to the excise tax on locally produced or extracted metallic
mineral or mineral products, the person liable shall file a return and pay the
tax within fifteen (15) days after the end of the calendar quarter
c. The taxpayer shall file a bond in an amount which approximates the amount of
excise tax due on the removals for the said quarter.
d. For imported mineral or mineral products, whether metallic or nonmetallic, the
excise tax due thereon shall be paid after their removal from customs custody.
156. How much excise tax shall be levied, assessed and collected on sweetened beverages
using purely caloric sweeteners, and purely non-caloric sweeteners, or a mix of
caloric and non-caloric sweeteners?
a. P12 per liter of volume capacity
b. P10 per liter of volume capacity
c. P6 per liter of volume capacity
d. P5 per liter of volume capacity
157. An excise tax of twenty percent (20%) of the net retail price (excluding the
excise tax and the value-added tax) per proof on distilled spirits manufactured
or produced in the Philippines for domestic sales or consumption in the
Philippine is:
a. a local tax. c. a specific tax.
b. a proportional tax. d. an ad valorem tax.
158. With respect to the excise tax on locally produced or extracted metallic mineral
or mineral products, the person liable shall file a return and pay the tax within
how many days after the end of the calendar quarter when such products were removed
subject to such conditions as may be prescribed by rules and regulations to be
promulgated by the Secretary of Finance, upon recommendation of the Commissioner.
a. Thirty (30) days c. Ten (10) days
b. Fifteen (15) days d. Five (5) days
159. One of the following fermented liquor is not subject to excise tax.
a. Beer c. Porter
b. Ale d. Basi
160. Champagne is classified as:

a. Sparkling wine c. Carbonated wine
b. Still wine d. Fermented liquor

161. Brandy is classified as:

a. Distilled spirit c. Sparkling wine
b. Fermented liquor d. Carbonated wine
162. A manufacturer of sweetened beverage using purely high fructose corn syrup
or in combination with any caloric or non-caloric sweetener presented the
following data: Each package contains 3.5 liters; Selling price – P150
per package
How much is the excise tax using P12 tax per liter?
a. P48 c. P12
b. P36 d. Not subject to excise tax
DOCUMENTARY STAMP TAXES

163. Which of the following is not an effect of failure to affix the required DST?
a. An instrument, document or paper which is required by law to be stamped and
which has been signed, issued, accepted or transferred without being duly
stamped, shall not be recorded.
b. An instrument, document or paper or any copy thereof or any record of transfer
of the same which is required by law to be stamped shall not be admitted or
used in evidence in any court until the requisite stamp or stamps are affixed
thereto and cancelled.
c. No notary public or other officer authorized to administer oaths shall add his
jurat or acknowledgment to any document subject to documentary stamp tax unless
the proper documentary stamps are affixed thereto and cancelled.
d. An instrument, document or paper which is required by law to be stamped and
which has been signed, issued, accepted or transferred without being duly
stamped, shall make the transaction void.
164. The Documentary Stamp Tax Return shall be filed within how many days after the
close of the month when the taxable document was made, signed, accepted or
transferred and the tax thereon shall be paid at the same time the aforesaid
return is filed.
a. Thirty (30) days c. Ten (10) days
b. Fifteen (15) days d. Five (5) days
165. DST is levied on the exercise by person of certain privileges conferred by law
for the creation, revision, or termination of specific legal relationship through
the execution of specific instruments. It is classified as:
a. a business tax. c. an excise tax.
b. a transfer tax. d. a property tax.
166. First statement: DSTs are levied independently of the legal status of the
transactions giving rise thereto.
Second statement: DSTs must be paid upon the issuance of the instruments, without
regard to whether the contracts which gave rise to them are rescissible, void,
voidable, or unenforceable.
a. Both statements are correct
b. Both statements are incorrect
c. Only the first statement is correct
d. Only the second statement is correct.
TAXATION UNDER LOCAL GOVERNMENT
167. Which of the following statements is incorrect
a. Taxation shall be uniform in each local government unit.
b. The collection of local taxes, fees, charges and other impositions shall in no
case be left to any private person;
c. The revenue collected pursuant to the provisions of the Local Government Code
shall inure solely to the benefit of, and be subject to disposition by, the
local government unit levying the tax, fee, charge or other imposition unless
otherwise specifically provided herein; and,
d. All local government units shall, as far as practicable, evolve a uniform
system of taxation.
168. In cases where a person conducts or operates two (2) or more businesses mentioned
in Section 143 of the Local Government Code which are subject to different rates
of tax, the gross sales or receipts of each business:
a. shall be separately reported for the purpose of computing the tax due from
each business.
b. shall be computed on the combined total gross sales or receipts of the said
two (2) or more related businesses.
c. shall be reported or computed using either choices a or b.
d. shall be reported or computed using neither choices a nor b.
169. The power to impose a tax, fee, or charge or to generate revenue under the Local
Government Code shall be exercised by:
a. the Sanggunian of the local government unit concerned through an appropriate
ordinance.
b. Office of the Mayor of the local government unit concerned through appropriate
executive orders.
c. Office of Assessor of the local government unit concerned through appropriate
assessments.
d. Office of the Municipal Administrator of the local government unit concerned
through appropriate administrative policies.
170. Unless otherwise provided in the Local Government Code, all local taxes, fees,
and charges shall be paid when?
a. within the first thirty (30) days of January or of each subsequent quarter, as
the case may be.
b. within the first twenty (20) days of January or of each subsequent quarter, as
the case may be.
c. within the first ten (10) days of January or of each subsequent quarter, as
the case may be.
d. within the first five (5) days of January or of each subsequent quarter, as
the case may be.
171. A residential land is located in Metro Manila. Its fair market value is P5,000,000.
How much is the basic real property tax, if any?
a. P30,000 c. P10,000
172. How much is the Special Educational Fund (SEF), if any?

a. P30,000 c. P10,000
173. An agricultural land is located in the province. Its fair market value is
P2,000,000. How much is the basic real property tax, if any?
a. P16,000 c. P4,000
PREFERENTIAL TAXATION
174. In the purchase of goods and services which have promotional discount, the senior
citizen or PWD can avail:
a. of the promotional discount or the senior citizen/PWD discount whichever is
higher.
b. of the promotional discount or the senior citizen/PWD discount whichever is
lower.
c. of both the promotional discount or the senior citizen/PWD discount.
d. of neither the promotional discount nor the senior citizen/PWD discount.
175. The monthly utilization of water and electricity by the Senior Citizen supplied
by public utilities will be subject to a 5% discount.
I - The individual meters for the foregoing utilities are registered in the name
of the senior citizen or his care giver residing therein:
II -The monthly consumption does not exceed one hundred kilowatt hours (100 kWh)
of electricity and thirty cubic meters (30 m3) of water:
III -The privilege is granted per household regardless of the number of senior
citizens residing therein.
a. I, II and III are correct c. Only II and III correct

b. Only I and II are correct d. I, II and III are incorrect
176. Senior citizens and PWDs are not exempted from which of the following taxes?
I - 20% final withholding tax on certain passive income
II - 15% final withholding tax on interest from a depository bank under EFCDS
III - VAT or other Percentage Taxes, if he is self-employed or engaged in business
or practice of profession

IV - 6% capital gains tax on presumed capital gain on sale of real property
classified as capital asset
a. I, II, III and IV c. II and IV only

b. I, II and IV only d. I and II only
177. Who of the following is not eligible to register as a Barangay Micro Business
Enterprise?
a. Enterprise engaged in the production, processing or manufacturing of products
or commodities, including agro-processing whose total assets including those
arising from loans but exclusive of the land on which the particular business
entity's office, plant and equipment are situated, shall not be more than Three
Million Pesos (P3,000,000.00).
b. Enterprise engaged in trading, whose total assets including those arising from
loans but exclusive of the land on which the particular business entity's
office, plant and equipment are situated, shall not be more than Three Million
Pesos (P3,000,000.00).
c. Certified Public Accountant engaged in public practice whose total assets
including those arising from loans but exclusive of the land on which the
particular business entity's office, plant and equipment are situated, shall
not be more than Three Million Pesos (P3,000,000.00).
d. Enterprise engaged in auto repair services, whose total assets including those
arising from loans but exclusive of the land on which the particular business
entity's office, plant and equipment are situated, shall not be more than Three
Million Pesos (P3,000,000.00).
178. Which of the following is not an incentive given to a Barangay Micro Business
Enterprise?
a. Exemption from income tax for income arising from the operations of the
enterprise
b. Exemption from the coverage of the Minimum Wage Law
c. Exemption from SSS and Philhealth contributions
d. Availment of credit services from government financing institutions
179. A person applying to be registered as a BMBE shall meet which of the following
qualifications?
I - With an asset of not more than Three Million Pesos (P3,000,000.00)
excluding land;
II - Engaged in the production, processing or manufacturing of products or
commodities, including agro-processing, trading and services;
III - Registered with the Department of Trade and Industry (DTI) for sole
proprietorships, for juridical persons; with Securities and Exchange
Commission (SEC) for corporations.
a. I, II and III c. I and III only

b. I and II only d. I only
180. (Preferential Taxation) An individual is operating a trading business enterprise.

He is asking you to assist him to register his business under the Barangay Micro
Business Enterprise (BMBE) so he can avail of the incentives granted under it. His
total assets including the cash of P300,000 he loaned from a bank amounted to
P3,500,000. The total assets also include P500,000 value of the land on which the
particular business entity's office, plant and equipment are situated. Is the
individual qualified?
a. No. Because he is engaged in a trading business which is specifically excluded
from those who can register under BMBE.
b. Yes. Because his total assets excluding the land on which the particular
business entity's office, plant and equipment are situated do not exceed
P3,000,000.
c. No. Because only juridical persons are qualified to register under BMBE.
d. Yes. Because trading business is automatically qualified regardless of the
total assets.
181. In order to avail of the privileges under BMBE Act, the concerned taxpayer shall
file application with:
a. Barangay Treasurer
b. Municipal Treasurer
c. Sangguniang Bayan
d. Negosyo Centers established by DTI

182. The nature and purpose of DOUBLE TAXATION AGREEMENTS (DTAs)

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

a. the provisions of the tax treaty generally prevail over the provisions of the
domestic law.
b. the provisions of the domestic law generally prevail over the provisions of
the tax treaty.
c. the domestic law of the richer country generally prevail in most cases
d. the countries entering into the treaty shall apply their domestic laws.
184. (Preferential Taxation) If the goods or services are used in both the registered
project or activity and administration purposes and the proper allocation could
not be determined, the purchase of such goods and services shall be:
a. subject to 12% VAT. c. exempt from VAT.
b. subject to 0% VAT. d. disregarded.
185. (Preferential Taxation) First statement: Registered Business Enterprises (RBEs)

which are categorized as Domestic Market Enterprises (DME) are not entitled to
VAT zero-rating on local purchases.
Second statement: Sale of goods or services to a registered domestic market

enterprise shall be exempt VAT.
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
186. (Preferential Taxation) How much discount is granted to senior citizens on his
purchase of basic and prime commodities, subject to limitations?
a. 20% c. 10%
b. 15% d. 5%
187. Effective July 1, 2020, Special Corporate Income Tax (SCIT) is:
a. 5% based on gross income earned, in lieu of all national and local taxes.
b. 10% based on gross income earned, in lieu of all national and local taxes.
c. 15% based on gross income earned, in lieu of all national and local taxes.
d. 20% based on gross income earned, in lieu of all national and local taxes.
188. Preferential Taxation) This model generally favors retention of greater so called
“source country” taxing rights under a tax treaty—the taxation rights of the host
country of investment—as compared to those of the “residence country” of the
investor.
a. OECD Model Tax Convention
b. UN Model Double Taxation Convention
c. United States Model Income Tax Convention
d. None of the choices
189. (Preferential Taxation) If the goods or services are used in both the registered
project or activity and administration purposes and the proper allocation could
not be determined, the purchase of such goods and services shall be:
a. subject to 12% VAT. c. exempt from VAT.
b. subject to 0% VAT. d. disregarded.
190. (Preferential Taxation) First statement: Registered Business Enterprises (RBEs)

which are categorized as Domestic Market Enterprises (DME) are not entitled to
VAT zero-rating on local purchases.
Second statement: Sale of goods or services to a registered domestic market

enterprise shall be exempt VAT.
a. Both statements are correct c. Only the first statement is correct
b. Both statements are incorrect d. Only the second statement is correct
END OF PREWEEK LECTURE

TAXATION TABLE OF SPECIFICATIONS

Weight in Number of
TOPICS Percentage items
1.0 Principles of Taxation 11.43% 8
2.0 Tax Remedies 11.43% 8
3.0 Income Taxation 20.00% 14
4.0 Transfer Taxes 17.14% 12
5.0 Business Taxes 17.14% 12
6.0 Excise Tax 2.85% 2
7.0 Documentary Stamp Tax 2.85% 2
8.0 Taxation Under Local Government Code 5.73% 4
9.0 Preferential Taxation 11.43% 8
Total 100.00% 70

TAX Preweek B48

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ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY

CPA Review Batch 48  October 2024 CPALE  Pre-Week Summary Lecture

TAXATION A. TAMAYO  E. GARCIA  G. CAIGA  C. LIM  K. MANUEL  J. TAGLE

TAX PREWEEK LECTURE

2. (Basic Principles) Which statement is wrong? A revenue bill:

3. (Basic Principles) One of the following is not a characteristic or an element of

4. (Basic Principles) There is no taxable income until such income is recognized.

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10. Which of the following is not an element of double taxation?

11. Statement 1: The value-added tax is a property tax.

12. Tax laws have been held to be:

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Gross income, foreign sources (in Philippine pesos)

27. Can the taxpayer avail of the 8% income tax rate?

28. How much is the income tax due?

29. How much is the percentage tax due?

40. How much is the tax payable (overpayment)?

If the taxable income is:

The total deductible amount for the taxable year was:

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46. How much is the tax due in 2023?

SITUATIONAL (Reconciliation of Income)

47. How much is the total non-deductible expenses/taxable other income?

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SITUATIONAL (Additions to Tax)

54. How much is the total amount due on February 10,2018?

How much is tax-exempt dividend?

How much is the tax payable in 2021?

The breakdown of the P500,000 per actuarial valuation:

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What was the tax consequence of the sale?

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81. Which of the following statements is incorrect? A claim against an insolvent

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99. How much is the total VAT-subject sales?

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100. What amount of input tax is chargeable to cost or expenses?

What will be the business taxes consequences?

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109. How much is the VAT-subject sales?

An operator of domestic common carrier by land, not VAT-registered, presented the

111. How much is the common carrier’s tax?

112. How much is the output VAT?

113. How much is the percentage under Sec. 116?

114. Can the taxpayer avail of the 8% income tax rate?

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116. When shall the Percentage Tax Return be filed?

Gross receipts, sale of airtime P 2,000,000

117. How much was the franchise tax?

118. How much was the overseas communications tax?

119. How much is output VAT, if any?

120. When shall the Quarterly VAT Return (2550Q) be filed?

121. When shall the overseas communications tax be paid?

Gross receipts from bowling operation P2,000,000

How much is the amusement tax?

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135. The lease of property, real or personal, by a bank is subject to: