You correctly answered 24 out of 50 questions with an accuracy of 48.0%.

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Answer More Challenges

Question 1
A resident citizen, married with 2 qualified dependent children has the following
income and expenses for the year 2014:
Gross income, Philippines
Gross income, USA
Business expenses, Philippines
Business expenses, USA
Interest income, peso bank deposit BPI Manila
Interest income, US dollar bank deposit BPI Manila
Gain from sale of vacant lot used as parking space for rent (selling
price, P3,000,000; FMV, time of sale, P5,000,000)
Gain from sale of shares of stocks listed and traded in the stock
exchange (selling price, P100,000)

3,000,000
2,000,000
500,000
300,000
20,000
50,000
500,000
30,000

How much is the total final tax on passive income?

4,000
14,000
7,750
None of the choices

SOLUTION:
Interest income, peso bank deposit BPI Manila (20,000 x
20%)
Interest income, US dollar deposit BPI Manila (50,000 x
7.5%)
Total

4,000
3,750
7,750

Tax - Income Tax on Capital Assets, Sales or Exchange of Properties

(Uncategorized)

Question 2
Which of the following is not for the benefit of the taxpayer?
substantiation rule

all events test

optional standard deduction
cohan rule
Tax - General Principles of Taxation (Uncategorized)

Question 3
An employee receiving less than P240,000 per annum and is classified as a
minimum wage earner shall
be allowed to claim the additional deduction of P2,400 for medical insurance
premiums paid on the premise that he availed of the same
not be subjected to the income tax on the salary received
be allowed to claim the personal exemption of his or her spouse amounting to
P50,000 pesos even if the spouse is not working
not be subjected to the withholding tax system on his salary received
Tax - Income Tax Individuals (Uncategorized)

Question 4
Ronald and Bev, husband and wife are both employed in Shell Corporation. After
office hours, they jointly manage an internet shop at the ground of their house.
The internet shop is registered in the name of both spouses.
Which of the following is the correct way to prepare their income tax return?
Ronald will declare his own compensation income and Bev will declare hers.
The income from the internet shop shall be equally divided between them. Each
spouse shall be taxed separately on their corresponding taxable income to be
covered by one consolidated return for the spouses.

Ronald will declare his compensation income and Bev will declare hers. The
income from the internet shop shall be equally divided between them. Ronald will
file one income tax return to cover all the income of both spouses, and the tax is
computed on the aggregate taxable income of the spouses.
Bev will declare the combined compensation income of the spouses, and
Ronald will declare the income from the coffee shop.
All the income will be declared by Ronald alone, because only one
consolidated return is required to be filed by the spouses.
Tax - Income Tax Individuals (Uncategorized)

Question 5
By specific provisions of law, which of the following need not appear in a public
instrument?
a contract of partnership having a capital of P3,000 or more, in money or
property.
a pledge, describing the thing pledged and the date of the pledge, in order to
be effective against third persons.
an assignment of credit, right or action involving real property in order to
produce an effect against third persons.
a contract of agency, for the sale of a piece of land or any interest therein, in
order to consider the sale by the agent as valid.
Tax - Negotiable Instruments (Uncategorized)

Question 6

Mike has inadvertently omitted P100,000 income in his 2014 Income Tax Return.
Upon discovery in 2015, the BIR issued an assessment for deficiency income tax
for P100,000 plus 50% fraud surcharge. Meanwhile, Mike included the omitted
P100,000 income in his 2015 Income Tax Return. What advice will you give
Mike?
any of the answers is correct
amend his 2014 Income Tax Return to reflect the correct amount of income
protest the assessment
pay the assessed tax plus surcharge, and thereafter, ask for refund
Tax - Assessment (Uncategorized)

Question 7
Katie is a thief who is under obligation now to return the car to the owner of Tom.
The car was lost through an accidental fire. The obligation will
not be extinguished because the obligation proceeds from a criminal offense
hence Katie will still have to pay the price of the car.
be extinguished because not all persons can avail of the remedies provided
by law
be extinguished because an accidental fire is always a fortuitous event.
be extinguished because the value of the car will be converted into the
number of days Katie will serve in prison.
Tax - Obligations (Uncategorized)

Question 8

Jane, a dealer of jewelry sold one jewelry which she purchased in 2011 at a cost
of P30,000. She sold the car on the following terms:
June 1, 2014 downpayment
August 1, 2014 installment due
October 1, 2014 installment
due
October 1, 2015 installment
due
October 1, 2016 installment
due

10,000
10,000
20,000
40,000
40,000

How much will she report as gross income for 2014?

45,000
30,000
15,000
90,000

SOLUTION:
Selling price
Less: cost
Ordinary gain
Gain to be recognized (90,000/120,000 x
40,000)

120,000
30,000
90,000
30,000

Income can be reported in installment because it involves a sale by a dealer of a

personal property.
Tax - Income Tax Individuals (Uncategorized)

Question 9
Jomel has been an employee of San Miguel Corporation for 19 years. On April 1,
2015, Jomel will celebrate his 49th birthday and, on the same day, retire from his
company. Jomels retirement benefits will
be tax exempt
be subject to tax since he is only 49 years old
be either exempt from or subject to income tax depending on whether the
retirement plan is BIR registered.

be subject to tax since he has only been employed for 19 years

Tax - Income Tax Individuals (Uncategorized)

Question 10
Cornell obliged himself to give Jeff his motorcycle on January 20, 2014. There
was no delivery until January 30, 2014 when the garage of the motorcycle
collapsed due to a strong typhoon and the motorcycle was totally destroyed. Is
Cornell still liable?
No, even if Cornell was already default, he could plead impossibility of
performance.
No, because there was no demand by Jeff to deliver the motorcycle and the
specific object was lost due to fortuitous event. The obligation is extinguished.
Yes, because the contract is perfected.
Yes, the obligation to deliver the motorcycle is changed to pay the equivalent
value because Cornell is in legal delay.
Tax - Obligations (Uncategorized)

Question 11
SIMI, a corporation registered in Australia, has a 50 MW electric power plant in
Mindoro. Aside from SIMIs income from its power plant, which among the
following is considered as part of its income from sources within the Philippines?
gains from the sale to an Quezon power plant of generators bought from the
US
interests earned on it dollar deposits in a Philippine bank under the Expanded
Foreign Currency Deposit System

royalties from the use in India of generator sets designed in the Philippines by
its engineers
dividends from a 2 year old Australian subsidiary with operations in Kenya but
derives 60% of its gross income from the Philippines
Tax - Income Taxation Corporation (Uncategorized)

Question 12
N, R and J solidarily bound themselves to deliver to S a Honda motorcycle valued
at P 60,000. The obligation was not fulfilled through the fault of J. Thereupon, S
filed an action in court against N and the court awarded P 72,000 to S
representing the value of the motorcycle plus damages. Which of the following
situation is valid?
N can refuse to pay the penalty because it should be charged against J, the
guilty party
S has to collect P 24,000 each from N, R and J to satisfy the courts award of
P 72,000
If S succeeds in collecting the P 72,000 from N, N in turn can collect from R P
20,000 and from J P 32,000
If N pays S the P 72,000, N can collect R and J P 24,000 each
Tax - Obligations (Uncategorized)

Question 13
The signature of Mark was forged as drawer of a check. The check was
deposited in the account of Paul and when deposited was accepted by PNB
Bank, the drawee bank. Subsequently, PNB Bank found out that the signature of
Mark was actually forged. Which statement is most accurate?

The drawee bank can recover from Mark. because he is the drawer even
though his signature was forged.
The drawee bank is estopped from denying the genuineness of the signature
of the Mark, the drawer of the check.
The drawee bank can recover from Paul because as endorser he warrants the
genuineness of the signature.
The drawee bank can recover from Paul, because the check was deposited in
his account.
Tax - Negotiable Instruments (Uncategorized)

Question 14
Dianne issued a promissory notes which states, I promise to pay Y or order
P100,000 or 1 unit of Kia Pride. Which statement is most accurate?
The promissory note is non-negotiable because the option as to which form of
payment is with the maker.
The promissory note is negotiable because the forms of payment are clearly
stated.
The promissory note is an invalid instrument because there is more than one
form of payment.
The promissory note can be negotiated by way of delivery.
Tax - Negotiable Instruments (Uncategorized)

Question 15
A dealer in securities has the following data for the year 2014:
Sales, shares held as inventory

4,000,000

Sales, shares held as investment

Cost, shares held as inventory
Cost, shares held as investment
Supplies expense, net of VAT
Rent expense, net of VAT

1,500,000
2,000,000
500,000
100,000
200,000

How much is the VAT payable?

444,000
None of the choices

240,000

204,000

SOLUTION:
Sales, held as inventory
Less: Cost of shares held as
inventory
Gross income
VAT rate
Output tax
Input taxes - supplies (100,000 x
12%)
Input taxes - rent (200,000 x 12%)
VAT payable

4,000,000
(2,000,000)
2,000,000
12%
240,000
(12,000)
(24,000)
204,000

Tax - VAT (Uncategorized)

Question 16
An individual engaged in business earned net income which is less than his
personal and additional exemptions during the year. Is he required to file an
income tax return?
yes, because he is required to file a tax return notwithstanding such loss
no, because individual taxpayers whose gross income is less than his
personal exemptions need not file returns.
no, because he is not liable for any tax
yes, because he still incurs income tax liabilities notwithstanding the foregoing
facts

Tax - Income Tax Individuals (Uncategorized)

Question 17
Which is not required to file an income tax return?
Larry, who derived purely compensation income from 2 employers in 2014 for
a total amount of P40,000
Edge, a nonresident alien whose only income in 2014 was subjected to final
witholding tax
Adam, a businessman with total earnings of P50,000 for 2014 but who is
married and has 4 children (thus, with personal and additional exemption of
P64,000)
Paul, who derived purely compensation income from just one employer for a
total amount of P1,000,000
Tax - Income Tax Individuals (Uncategorized)

Question 18
The Commissioner of Internal Revenue may abate or cancel the tax liability when
I
II
III
IV

The administration and collection costs involved do not justify the

collection of the amount due
A reasonable doubt as to the validity of the claim against the taxpayer
exists
The tax or any portion thereof appears to be unjustly or excessively
assessed
The financial position of the taxpayer demonstrates a clear inability to pay
the assessed tax

Only I

I and II

I and III

Tax - BIR (Uncategorized)

Question 19

I and IV

Absent any contrary provisions in the agreement, under which of the following
circumstances will a limited partnership be dissolved?
a personal creditor of a general partner obtains a judgment against the
general partners interest in the limited partnership.
a limited partner assigns his partnership interest to an outsider and the
purchaser becomes a substituted limited partner.
a general partner retires and all remaining general partners do not consent to
continue
a limited partner dies and his estate is insolvent
Tax - Partnership Law (Uncategorized)

Question 20
The NIRC requires that ordinary and necessary deductions should be deducted
in the income tax computation of taxpayers, when
the deduction is both paid and accrued
the deduction is accrued
the taxpayer needs to record the expense
the deduction is paid
Tax - Income Tax Individuals (Uncategorized)

Question 21
Which of the following shall not be subject to income tax?
I.
II.

Pedro Reyes, an official of Corporation X, asked for an early retirement

because he was emigrating to Australia. He was paid P2,000,000 as a
separation pay in recognition of his valuable services to the corporation.
Juan Cruz, another official of the same company was separated for

III
.

occupying a redundant position. He was given P500,000 as separation pay.

John Bautista was separated due to his failing eyesight. He was given
P500,000 as separation pay.

All the three (3) were not qualified to retire under the BIR-approved pension plan
of the corporation.
I, II and III
II and III only

I and II

I only

Tax - Income Tax Individuals (Uncategorized)

Question 22
A taxpayer received a certain sum of money erroneously through the crediting of
his bank account. The taxpayer knew of this error and informed the bank which
did nothing in relation to the said error. The taxpayer then prepared his income
tax return and did not include the amount erroneously received as part of his
income for the year. No mention was made on this matter in his financial
statements or income tax return. The said constitutes
basis for the imposition of donors tax
not a basis for fraud because the money was not owned by the taxpayer
willful intent to evade taxes which can constitute fraud
failure to file a return
Tax - Income Tax Individuals (Uncategorized)

Question 23
The taxable income before income tax of Julie Corporation for the current year
was P500,000. During the year, the Corporation received the following refund of
taxes paid in previous years and recoveries of accounts written off, of which were
credited to miscellaneous income:
Refund of percentage tax

20,000

Refund of income tax

Bad debt recovered (allowed as
deduction)
Bad debt recovered (disallowed as
deduction)

50,000
30,000
15,000

How much would be the income tax payable of the corporation for the current
year?
None of the above

130,500

168,000

160,000

SOLUTION:
Taxable income before income tax
Refund of income tax
Bad debt recovered (disallowed as
deduction)
Adjusted taxable income
Tax rate
Income tax payable

500,000
(50,000)
(15,000)
435,000
30%
130,500

Tax - Income Tax Corporation (Uncategorized)

Question 24
As payment for a debt, Arianna issued a promissory note in favor of Joe but the
promissory note on its face was marked non-negotiable. Then Joe instead of
indorsing the promissory note, assigned the same in favor of Henry to whom he
owed some debt also. Which statement is most accurate?
Henry can claim payment from Joe because under the Negotiable Instrument
Law negotiation and assignment is one and the same.
Henry can claim payment from Joe only because he was the endorser of the
promissory note.
Henry cannot claim payment from Arianna on the basis of the promissory
note because it is marked non-negotiable.

Henry can claim payment from Arianna even though it is marked nonnegotiable.
Tax - Negotiable Instruments (Uncategorized)

Question 25
Gil worked for a manufacturing firm. Due to business reverses, the firm offered a
voluntary redundancy program in order to reduce overhead expenses. Under the
program, an employee who offered to resign would be given separation pay
equivalent to his 3 months basic salary for every year of service. Gil accepted the
offer and received P400,000 as separation pay under the program.
After all the employees who accepted the offer were paid, the firm found its
overhead still excessive. Hence, its adopted another redundant program. Various
unprofitable departments were closed. As a result, Gil was separated from the
service. He also received P400,000 as separation pay. Which among the
following statements is correct?
Gils separation pay is not subject to income tax
Gils separation pay is excluded from gross income
Gils separation pay is subject to income tax
Gils separation pay is excluded from his gross income

SOLUTION:
Choice d. Gil was separated fro a reason beyond his control which is redundancy.
The amount he received is excluded from gross income. As a result choice c is
not correct. Choices a and b. Gil voluntarily resigned, hence the separation pay
he received, not being for a cause beyond his control, is not excluded from gross
income. Furthermore, the separation pay is not also considered as tax-free

retirement because there is no showing that he is 50 years or over, that he has

rendered at least 10 years service with his employer, and he has not previously
availed of the tax-free retirement.
Tax - Uncategorized (Uncategorized)

Question 26
Roger Company is exempt from VAT under Section 109 because its gross
receipts never exceeded P1,500,000. It is subject to the 3% percentage tax under
Section 116 of the Tax Code. It files a Notice of Availment of the Option to pay
the tax through withholding process. It furnishes a copy of the notice to its
withholding agents payors and its RDO as well as the RDOs of its withholding
agents payors. The following selected data are made available by Roger
Company.
I
II

Sales to customers who bought the goods in the course of trade or

business, net of 3% withholding tax, P10,000
Sales to customers who bought goods not in the course of business,
P15,000.

How much is the percentage tax payable after deducting the withholding
percentage tax?
299.73
741

450

SOLUTION:
Gross receipts (10,000+15,000)
Tax rate
Percentage tax due
Less: Withholding percentage tax (10,000 x
3%)
Stocks transactions tax

Tax - Percentage Taxes (Uncategorized)

Question 27

Amount
25,000
3%
750
300
450

Among the nature of taxation is that it is an inherent power being an attribute of

sovereignty. Which among the following is not among its manifestation as such
inherent power?
the State has the right to select the subjects and objects of taxation
taxes may be imposed even without a constitutional grant
courts not issue an injunction to enjoin the collection of taxes
there should be no improper delegation of the power to tax

SOLUTION:
B is a manifestation of the nature of taxation being a legislative power.
Tax - General Principles of Taxation (Uncategorized)

Question 28
The BIR is allowed only to conduct of examination for unpaid taxes for each type
of taxes paid by the taxpayer except in which circumstances below:
when the BIR fails to complete its investigation within the prescribed period of
5 years
when determined by the BIR as beneficial to the national government
when the taxpayer failed to file a return or files a fraudulent return which is
subsequently discovered by the BIR
when the taxpayer files an amended tax return
Tax - Assessment (Uncategorized)

Question 29

A promissory note which does not have the words or order or or bearer will
render the promissory note non-negotiable, and therefore
the note can still be assigned and the maker made liable
the holder can become holder in due course
it will render the maker not liable
the promissory note can just be delivered and the maker will still be liable.
Tax - Negotiable Instruments (Uncategorized)

Question 30
Properties passing through a power of appointment is not includible in the estate
of the decedent:
when the decedent-grantor retains possession of the property with transfer
being effected only upon the death of the decedent-grantor.
when the decedent-grantor delegates to a 3rd person the right to transfer or
transmit the property, its possession and profits, at any point in time with a clause
excluding the designation by the 3rd person of the decedent-grantor as a
recipient of the property or it profits.
when the decedent grantor delegates to a 3rd person the right to transfer or
transmit the property, its possession and profits, at any point in time.
when the decedent-grantor receives profits from the said properties which will
continue as long as the grantor is alive
Tax - Estate Tax (Uncategorized)

Question 31

Michelle Corporation, registered with BIR in 2006, has the following data for the
year 2014:
Gross receipts
Discounts given
Returns and allowances
Salaries of personnel directly involved in the supply of
services
Salaries of office personnel
Depreciation of office equipment
Fees of consultants directly involved in the supply of
services
Rental of equipment directly used in the supply of services
Other operating expenses

1,000,000
100,000
150,000
300,000
250,000
50,000
50,000
70,000
120,000

How much is the income tax due and payable using the optional standard
deduction?
59,400

63,000

24,000

none of the choices

SOLUTION:
Gross receipts
Discounts
Returns and allowances
Net receipts
Cost of services
Salaries of personnel
Consultant fees
Rental equipment
Gross income
Less: Optional standard deduction (40% x 330,000)
Net operating income
RCIT (30% x 198,000)
MCIT (330,000 x 2%)
Tax due and payable (higher)

Tax - Income Tax Corporation (Uncategorized)

Question 32

1,000,000
(100,000)
(150,000)
750,000
(300,000)
(50,000)
(70,000)
330,000
132,000
198,000
59,400
6,600
59,400

A is a single and gainfully employed, She is the only child of B who is already
of an advanced age and depends solely on A for sustenance. A has a live-in
partner in the person of X who had a child out of wedlock with another woman.
The child is a minor and is physically incapacitated and since X was not
employed, both depend on A for survival. X subsequently dies leaving Xs
child an orphan but in the physical custody of A. How much is As personal
exemption?
P75,000 because B qualifies as dependent but not the child
P75,000 because a dependant is defined as a child dependent upon and
living with the taxpayer and is below 21 years of age hence the child of X who
now lives with A is a dependent.
P100,000 because both B and the child qualify as dependents
P50,000 because B and the child do not qualify as dependents
Tax - Income Tax Individuals (Uncategorized)

Question 33
In instances wherein the tax or any portion thereof appears to be unjustly or
excessively assessed or where the administration and collection costs involved
do not justify the collection of the amount due, the commissioner may:
compromise the payment of the internal revenue tax
submit the matter to a committee composed of taxpayers and BIR officials to
determine future action the particular matter
abate or cancel the tax liability
cause a further investigation to determine the true value of the assessment
Tax - Assessment (Uncategorized)

Question 34
Philip, the President of Josh Corporation, was authorized by the Board of
Directors of Josh Corporation to obtain a loan from Joey Bank and to sign
documents in behalf of the corporation. Philip personally negotiated for the loan
and got the loan at very low interest rates. Upon maturity of the loan, Josh
Corporation was unable to pay. Which statement is most accurate?
Philip, as President, cannot be personally held liable for the obligation of the
corporation even though he signed all the loan documents, because the loan was
authorized by the Board.
Because Philip was personally acting in behalf of the Corporation, he can be
held personally liable.
If Josh Corporation cannot pay, Philip can be held subsidiarily liable.
Joey Bank can choose as to who it wants to hold liable for the loan.
Tax - Corporation Law (Uncategorized)

Question 35
The proposed amendments to the VAT has spawned a lot of controversy.
However, the issue of validity of the imposition of VAT is not one of the first
impression. Tolentino vs. Secretary of Finance, ruled that the VAT law was valid
for various reasons. Which among the following statements is not among the
reasons mentioned in the decision for upholding the validity of the VAT law?
It is equitable because it is imposed only on the sale of goods and services by
persons engaged in business with an annual gross sales exceeding P550,000

Small sari-sari stores, as well as sales of farm and marine products, are
exempt from the VAT so that the costs of basic food and other necessities are
expected to be relatively lower and within the reach of the general public.
There was no improper delegation of the legislative authority to tax when
Congress imposed the VAT
The imposition of VAT does not violate the uniformity principle because it is
applied similarly on all goods and services and to the public which are not
exempt, at the constant rate of 0% to 12%
Tax - VAT (Uncategorized)

Question 36
The provisions of the family code require the transfer of the share of the guilty
spouse of his/her share in the community property in favor of the innocent
spouse, in effect causing a transfer of the property. The said transfer is
subject to Philippine donors tax due to the donative intent
subject to Philippine donors tax because there was a transfer of property for
inadequate consideration
not subject to the Philippine donors tax due to lack of donative intent
not subject to the Philippine donors tax due to a provision of the Family Code
Tax - Donor'S Tax (Uncategorized)

Question 37
A Filipino citizen maintains a bank in the UK. She earns passive income of 3%
per annum at the end of the taxable year, she declared an interest income

amounting to 1,000 Euro that said account. What applicable tax should be
imposed on the said income?
final tax rate of 7.5%
none, it is exempt from income tax since it is not derived from sources within
the Philippines
final tax rate of 20%
graduated rate of income tax (5-32%)
Tax - Income Tax Individuals (Uncategorized)

Question 38
Minyong Corporation and Aris Corporation have agreed to be merged into one
corporation. To facilitate the merger, both corporations agreed that the merger be
made effective on May 31, 2014. SEC approved the Articles of Merger on June
30, 2014. Which statement is most accurate?
The stockholders and the Board of Directors can set the effective date of the
merger anytime after the approval of the SEC.
The effective date of the merger is always the date of the approval of the
Articles of Merger by the SEC.
The effective date of the merger would be the date approved by the Board of
Directors and the stockholders.
The effective date of the merger is May 31, 2014 the date stipulated by the
parties as the effective date.
Tax - Corporation Law (Uncategorized)

Question 39

Jonas Joson, a manager in Splash Corporation, is given a free trip to the US with
his wife and family. The Company paid for all of the expenses of the said trip. He
would be compelled to report the trip in his personal income tax return as
additional compensation income
professional fees
both the trip and the fringe benefits tax paid would be recorded in his ITR
no item of the trip and the tax paid should be reported in his ITR
Tax - Income Tax Individuals (Uncategorized)

Question 40
Payment made to a third person is valid to extinguish the obligation of the debtor
to the creditor in the following cases, except
After payment to the creditor, the third person acquires the creditors right
When through the creditors conduct, the debtor was led to believe that the
third person had authority to receive payment
When the third person is subrogated to the rights of the creditor
When the creditor ratifies the payment to the third person
Tax - Obligations (Uncategorized)

Question 41
A gets a loan of P 1,000,000 from B which becomes due on October 1, 2008 and
mortgaged his house as security for the debt. On June 30, 2008, the mortgaged
house completely destroyed the fire through the fault of C. A week later, B
demanded payment from A. Is Bs demand valid?

Yes, the debt becomes demandable unless A can give another security
equally satisfactory
No, the obligation is one with a definite period which is deemed intended for
the benefit of both the debtor and creditor
No, the destruction of the house was not thru the fault of A.
Yes, the debt becomes demandable even if A can give another security
equally satisfactory
Tax - Obligations (Uncategorized)

Question 42
Jones acted as an accommodation party in signing as a maker of a promissory
note. Which phrase best completes the sentence. This means that Jones is liable
on the instrument to any holder for value.
for as long as Jones did not receive any consideration for acting as
accommodation party.
for as long as the holder does not know that Jones is only an accommodation
party
provided Jones received consideration for acting as accommodation party.
even though the holder knew all along that Jones is only an accommodation
party
Tax - Negotiable Instruments (Uncategorized)

Question 43
Which of the following renunciation is not subject to donors tax?
I

Renunciation by the surviving spouse of his/her share in the conjugal

II
III

partnership or absolute community property after the dissolution of the

marriage in favor of the heirs of the deceased spouse or any other persons.
General renunciation by a heir, including the surviving spouse, of his/her
share in the hereditary estate left by the decedent.
Renunciation by an heir, including the surviving spouse, of his.her share in
the hereditary estate left by the decedent categorically in favor of
identified heir/s to the exclusion or disadvantage of the other co-heirs.

I and III only

I, II and III

II only

I only

Tax - Donor'S Tax (Uncategorized)

Question 44
Joan, a Filipino citizen engaged in the real estate business, filed his 2011 income
tax return on March 15, 2012. On December 2012, he left the Philippines as an
immigrant to join his family in Canada. After investigation of said return, the BIR
issued a notice of deficiency income tax assessment on April 15, 2014. Joan
returned to the Philippines as a balikbayan on December 8, 2014. Finding his
name as a delinquent taxpayer, he filed a protest against the assessment on the
ground that he did not receive the notice of assessment and that the assessment
had prescribed.
Will the protest of Joan prosper?
No.e right of the government to make a tax assessment -prescriptible,
irrespective of whether the delinquent taxpayer is out of the country or not.
No. The assessment has not prescribed because it was issued by the BIR on
April 15, 2014, which is within the reglementary period of 3 years from the time
the return should have been filed on April 15, 2012.
Yes. The assessment had prescribed because it was issued by the BIR on
April 15, 2014, which is already beyond the reglementary period of 3 years from
the time the return was filed on March 20, 2012.

Yes. In the instant case, the suspension of the running of the prescriptive
period applies because the assessment notice was issued by the BIR beyond the
3 years prescriptive period.
Tax - Tax Remedies (Uncategorized)

Question 45
The following are basic principles of a sound tax system
fiscal adequacy, economic feasibility and theoretical justice
fiscal deficit, administrative feasibility, and ability to pay
fiscal adequacy, administrative feasibility and theoretical justice
fiscal adequacy, ability to pay, symbiotic relationship
Tax - General Principles of Taxation (Uncategorized)

Question 46
Statement 1
Statement 2

Symbiotic relation is the reason why the government could impose

taxes on the incomes of resident citizens derived from sources outside
the Philippines
Jurisdiction is the reason why citizens must provide support to the
state so the latter could continue to give protection.

Both statements are true

Both statements are false
Only statement 1 is correct but not statement 2
Only statement 2 is correct but not statement 1

SOLUTION:

Both of the statements are false. Statement 1 refers to jurisdiction while

statement 2 refers to the symbiotic relation.
Tax - General Principles of Taxation (Uncategorized)

Question 47
Henry, subscribed 15,000 shares in the capital stocks of Joel Corporation. He
paid 50% of the 15,000 shares. Henry asked the Corporate Secretary to issue
him the corresponding stock certificate representing the 50% of what he already
paid. The Corporate Secretary of the corporation refused. Was the Corporate
Secretary correct?
The Corporate Secretary cannot refuse because it is his legal duty to issue a
stock certificate corresponding to the number of shares actually subscribed
regardless of the actual payment.
The Corporate Secretary is correct because the Corporation Code provides
that no certificate of stock shall be issued to a subscriber until the shares as
subscribed have been fully paid.
The Corporate Secretary cannot refuse because a stock certificate can be
issued corresponding to the percentage of shares which were paid.
The Corporate Secretary cannot refuse because a certificate of stock can be
issued provided it is indicated in the certificate the actual percentage of what has
been paid.
Tax - Corporation Law (Uncategorized)

Question 48
The optional standard deduction is applicable under the National Internal
Revenue Code which provides that taxpayers shall be allowed the following as an
optional deduction in lieu of the itemized deduction.

10% optional standard deduction based on gross income for both individual
and corporations
40% optional standard deduction for both individuals and corporations with
individuals based on their gross sales or receipts while corporations would be
based on gross income
10% optional standard deduction based on gross receipts for individuals and
40% OSD for corporations based on gross income
40% optional standard deduction based on gross receipts for both individual
and corporation
Tax - Income Tax Individuals (Uncategorized)

Question 49
Jane, Erik and Matet are partners in buying and selling cars. Jane, by the
partners agreement, was authorized to buy only in cash. One day, Jane bought
on credit a car from Joanne, a client, who did not know of Janes lack of authority.
Janes purchase was made in the name of the partnership. Is the partnership
bound in the sale?
It is bound because Joanne was in good faith and the act of Jane was
apparently in the conduct of the business.
It is not bound because the contract with Joanne is not in the ordinary course
of business.
It is bound if it ratifies the contract of sale by acceptance of benefits.
The partnership is not bound because the contract is unenforceable, Jane
exceeded his authority.
Tax - Partnership Law (Uncategorized)

Question 50
DMCI, a Philippine corporation, has 2 divisions, manufacturing and construction.
Due to the economic situation, it had to close its construction division and lay-off
the employees in that division. DMCI has a retirement plan approved by the BIR,
which requires a minimum of 50 years of age and 10 years of service in the same
employer at the time of retirement.
There are 2 groups of employees to be laid off:
A
B

Employees who are at least 50 years of age and has 10 years of

service at the time of termination of employment
Employees who do not meet either the age or length of service of
DMCI plans to give the following:

For category A employees, the benefits under the BIR approved plan plus an ex
gratia payment of 1 month for every year of service.
For category B employees, one month for every year of service.
The company asks you for advice. Which among the following shall you give?
The payments received by all of the employees are excluded from gross
income.
The benefits received by category A employees from the BIR approved plans
are excluded from gross income the ex gratia payment of 1 month for every year
of service should be included in their gross income.
Only the employees who are at least 50 years of age and has 10 years of
service at the time of termination of employment could exclude whatever they
receive from their gross income
The one month for every year service payment received by category B
employees are not excluded from their gross income

SOLUTION:

The separation, due to the economic situation, is one which is beyond the
employees control, hence excluded from gross income and not subject to income
taxation. The age of the employee, and his years of service does not matter.
Tax - Uncategorized (Uncategorized)