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TAXATION (TAX)
1. What basic principle of a sound tax system is met when Congress evolves a
progressive system of taxation as mandated in the Constitution?
a. Fiscal adequacy c. Administrative feasibility
b. Theoretical justice d. Balanced budget
5. A taxpayer owns a capital asset which he plans to sell. He asks you when is
the best time to sell the asset. You advise him to sell it after twelve (12)
months after the date he acquires it because the capital gain to be recognized
is 50% only. This is an example of:
a. Tax avoidance c. Tax exemption
b. Tax evasion d. None of the choices
6. The administrator has a friend who has a background in accounting. The friend
advised him not to include in the gross estate an antique jewelry inherited by
the decedent from his mother because the BIR will not know its existence
anyway. This an example of:
a. Tax avoidance c. Tax exemption
b. Tax evasion d. None of the choices
7. 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.
8. Some franchise holders who are paying the franchise tax are being required by
an amendatory law to pay the value-added tax, while others remain subjected to
franchise tax. Which of the following constitutional provisions makes the law
unconstitutional?
a. No law shall be passed impairing the obligation of contracts.
b. The rule on taxation shall be uniform.
c. No person shall be deprived of property without due process of law.
d. None of the above.
9. Which is the best answer? A tax reform at any given time underscores the fact
that:
a. taxation is an inherent power of the state.
b. taxation is essentially a legislative power.
c. the State can and should adopt progressive taxation.
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d. taxation is a power that is very broad.
10. Except for the provision in Section 222, internal revenue taxes shall be
assessed within how many years after the last day prescribed by law for the
filing of the return?
a. Five (5) years c. Three (3) years
b. Four (4) years d. Two (2) years
11. A decedent dies on January 1, 2009. The estate tax return is filed on
September 1, 2009. When is the last day to make a valid assessment?
a. April 15, 2010 c. July 1, 2012
b. July 1, 2009 d. September 1, 2012
12. The following remedies for the collection of the taxes are available to the
Government, except:
a. distraint and levy.
b. inquiring into bank deposit accounts of taxpayers.
c. entering into compromise of tax cases.
d. enforcement of forfeiture of property.
13. The compromise offer shall be paid by the taxpayer upon filing of the
application for compromise settlement. In case of disapproval of the
application for compromise settlement, the amount paid upon filing of such
application shall be:
a. deducted from the total outstanding tax liabilities.
b. forfeited in favor of the government.
c. returned to the taxpayer with interest.
d. Subject to court litigation.
14. No credit or refund of the taxes or penalties shall be allowed unless the
taxpayer files in writing with the Commissioner a claim for credit or refund
within what period after the payment of the tax or penalty?
a. two (2) years
b. three (3) years
c. five (5) years
d. ten (10) years
17. For requests for reconsideration, the taxpayer shall submit all relevant
supporting documents in support of his protest within how many days from date
of filing of his letter of protest, otherwise, the assessment shall become
final.
a. sixty (60) days
b. thirty (30) days
c. fifteen (15) days
d. none of the choices
18. It is the authority of a Court higher in rank to re-examine the final order or
judgment of a lower Court which tried the case now elevated for judicial
review.
a. Original jurisdiction
b. Appellate jurisdiction
c. Judicial review
d. None of the choices
19. The CTA shall exercise exclusive appellate jurisdiction to review by appeal:
24. How much shall be total personal exemptions she can deduct from his quarterly
income?
a.P150,000.00 c. P50,000.00
b. P100,000.00 d. None of the choices
26. Gross benefits received by officials and employees of public and private
entities shall be excluded from gross income provided that the total exemption
shall not exceed P82,000. The exclusion shall apply to:
a. 13th month pay and other benefits.
a. basic salary.
b. transportation allowance given monthly.
c. None of the choices
29. The imposition of this tax will force a closely-held corporation to declare
and pay dividends to its individual stockholders.
a. Optional corporate income
b. Minimum corporate income tax
c. Regular corporate income tax
d. Improperly accumulated earnings tax
30. Ayiesold one masterpiece which she purchased in 2013 at a cost P30,000. The
masterpiece was part of her personal collections. She sold the painting, under
the following terms:
June 1, 2016 down payment P10,000
August 1, 2016 installment due 10,000
October 1, 2016 installment due 20,000
October 1, 2017 installment due 40,000
October 1, 2018 installment due 40,000
33. How much is the income tax due and payable using optional standard deduction?
a. P63,000 c. P48,600
b. P59,400 d. None of the choices
35. Aaron, a senior citizen who is also a PWD bought goods classified as basic
necessities from a VAT-subject person. The goods are subject to a special
discount of 25%. The seller prepared the following sales invoice:
36 and 37 are based on the following: JinLi, a domestic corporation has the following
data for three (3) years:
Normal income tax MCIT
2014 P 50,000 P 60,000
2015 P 60,000 P 55,000
2016 P100,000 P 60,000
39. A property was transferred mortis causa. The following data were gathered
from the transaction:
Fair market value, time of transfer – P500,000
Fair market value, time of death – P450,000
Consideration received when transferred – P350,000
40. 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.
42. Antoine Vayage, aFrench citizen, was a permanent resident of the Philippines.
He died in Paris, France. He left 100,000 shares of Philippine Long Distance
Telephone Co. (PLDT); a condominium unit at the Essensa-Taguig; a house and
lot in Paris; a lease contract over a condominium unit located in Nice,
France.
Which among the following assets shall be excluded in the Estate Tax Return to
be filed with the BIR?
a. The value of the Nice, France condominium
b. The value of the Taguig condominium
c. The value of the house and lot in Paris
d. The value of the 100,000 PLDT shares
43. Mabuhay Corporation took a keyman insurance on the life of its President, Mr.
John Lloyd Delgado, designating Mr. Delgado’s wife as its revocable
beneficiary. In the event of death of Mr. Delgado, will the insurance proceeds
form part of the gross estate of Mr. Delgado?
a.Yes, because Mrs. Delgado was designated as a revocable beneficiary.
b. No, because the premium was not paid by Mr. Delgado.
c. Yes, because the insurance proceeds form part of the benefits of
Mr.Delgado enjoyed by him as an employee of Mabuhay Corporation.
d. No, because Mr. Delgado had no interest in the proceeds at the time of
his death, hence, this is not a property that he transferred at the time
of his death.
44. The estate tax is to be computed starting from the death of the decedent
because:
a. the provisions of the NIRC of 1997 requires it.
b. the privilege to transfer properties takes place upon death.
c. it is only upon the decedent’s death that his heirs are known.
d. it is at the time of death that estate taxes are due.
45. Mr. Segundo Primero died. He was survived by his wife and two (2), Pedro and
Juan. The wife renounced her share in common property in favor of their two
children. Was the renunciation subject donor’s tax?
a. Yes, because what was renounced is her share in the conjugal partnership
or absolute community after the dissolution of the marriage in favor of
the heirs of the deceased spouse or any other person/s.
b. No, because the renunciation by the surviving spouse of his/her share in
the conjugal partnership or absolute community after the dissolution of
the marriage was not done in favor of a specified heir to the exclusion
or disadvantage of the other co-heirs.
c. Yes, because the renunciation by the surviving spouse of his/her share in
the conjugal partnership or absolute community after the dissolution of
the marriage was done in favor of specified heirs.
d. No, because, as a rule, the surviving spouse cannot renounce her share in
the conjugal partnership or absolute community after the dissolution of
the marriage.
Question 1 – Was the donation by AST Corporation exempt from donor’s tax?
Question 2 – Was the awarding of parcels of land to the settlers exempt from
donor’s tax?
48 to 52 are based on the following: The decedent, resident alien, a married man
with a surviving spouse under conjugal partnership of gains, with the following
data died on March 1, 2014:
Real properties
Family lot acquired by the decedent before marriage, FMV P 500,000.00
Family house built using the salary earned by the
surviving spouse during the marriage, FMV 900,000.00
Coconut farm inherited by the surviving spouse
during the marriage, FMV 100,000.00
Mango orchard, FMV 800,000.00
Personal properties
Bank deposit under the name of the decedent
representing salary earned before marriage 2,150,000.00
Gold necklace inherited by the surviving spouse
during the marriage 120,000.00
Several pieces of jewelry acquired during the
marriage using the exclusive money of the
decedent 300,000.00
51. How much is the total ordinary deductions (excluding share of surviving spouse)?
a. P460,000.00 c. P260,000
b. P310,000.00 d. None of the choices
53. When may a VAT-registered person claim input taxes as an allowable deduction
from his income tax return?
a. Input tax from zero-rated sales c. Input tax from exempt sales
b. Input taxes from capital good d. Input taxes from export sales
54. No VAT shall be imposed to form part of the cost of goods sold destined for
consumption outside of the territorial border of the taxing authority.
a. Cross Border Doctrine c. Constructive Receipt Doctrine
b. Rule of Reciprocity d. International Comity
55. In which of the following cases shall the selling price be deemed inclusive of
VAT?
56. Marine food products which include fish and crustaceans are exempt from VAT.
Which of the following is not exempt from VAT?
a. Eels c. Prawns
b. Trout d. Aquarium fish
57. A VAT-registered company acquired one vehicle for land transport for the use
of an official or employee valued at P2,400,000. Which of the following
statements is correct?
a. The input tax on the purchase of the vehicle for land transport as well
as the input taxes on maintenance expenses incurred on the said vehicle
shall be allowed as input tax credit.
b. The input tax on the purchase of the vehicle for land transport as well
as the input taxes on maintenance expenses incurred on the said vehicle
shall not be allowed as input tax credit.
c. The input tax on the purchase of the vehicle for land transport shall not
be allowed as input tax credit while the input taxes on maintenance
expenses incurred on the said vehicle shall be allowed as input tax
credit.
d. The input tax on the purchase of the vehicle for land transport shall be
allowed as input tax credit while the input taxes on maintenance expenses
incurred on the said vehicle shall not be allowed as input tax credit.
58. A VAT-registered taxpayer files a claim for refund with the Large Taxpayers
Service having jurisdiction over the principal place of business. Which of the
following statements is correct?
a. The said taxpayer may also file a claim for refund with One Stop Center
of the Department of Finance.
b. The taxpayer may also file a claim for refund with the Revenue District
Office.
c. The taxpayer is precluded from filing the same claim for refund with
another office.
d. The taxpayer is entitled to refund from any Revenue District Office.
59. If a VAT-registered person issues a VAT invoice or VAT official receipt for a
VAT-exempt transaction, but fails to display prominently on the invoice or
receipt the words “VAT-exempt sale”, the transaction shall:
a. still be exempt from value-added tax.
b. become taxable and the issuer shall be liable to pay VAT thereon.
c. be effectively subject to zero percent.
d. be considered erroneous transaction and must be disregarded.
62 and 63 are based on the following: ABC Corporation, VAT-registered real estate
dealer, sold a residential lot on July 2, 2017 for P2,000,000, plus the output
VAT, with a monthly installment payment of P20,000, plus the output VAT. The
zonal value of the subject property at the time of sale amounted to P3,000,000.
63. How much was the output tax on the installment payment?
a. P3,600 c. P2,000
b. P2,400 d. P1,600
64 to 66 are based on the following: The following data are taken from the
records of Ms. Princess Ty, not VAT-registered, who owns various businesses
for the current year 2017:
66. Can Princess register her transactions under the VAT system?
a. Yes. Any person who is VAT-exempt under Section 109 (w) not required to
register for VAT may elect to be VAT-registered by registering optionally
under the VAT system.
b. No. Any person who is VAT-exempt cannot optionally register her
transactions which would have been exempt from VAT under the VAT system.
c. Yes. As a rule, it is mandatory for all taxpayers with several VAT-
subject transactions to register them under the VAT system.
d. No. It is unwise to register because the taxpayer cannot claim input tax
credits.
69. Please come and see me (every/any/each) day you like to discuss the financial
statements for the current year.
a. Every c. each
b. Any d. None of the choices