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The cost of the car given to Nico was P900,000. The fringe benefits tax that Nico is required to
pay is:
a. P423,529 c. P900,000
b. P288,000 d. P0
2. One of the following is not correct for deductibility of casualty losses from gross income:
a. It must arise from fire, storm, or other casualty, robbery, theft, or embezzlement.
b. It must not be compensated by insurance or any form of indemnity.
c. A declaration of loss by casualty should be filed with the BIR.
d. It is of property owned by the taxpayer, whether used in business or not.
3. Jim, a Filipino citizen, migrated to the United States some eight (8) years ago and got a
permanent resident status or green card. He should pay his Philippine income taxes on:
a. The gains derived from the sale in California, U.S.A. of jewelry he purchased in the
Philippines.
b. The proceeds he received from a Philippine insurance company as the sole beneficiary of life
insurance taken by his father who died recently.
c. The gains derived from the sale in New York Stock Exchange of shares of stock in PLDT, a
Philippine corporation.
d. Dividends received from a two year old foreign corporation whose gross income was
derived solely from Philippine sources.
4. The following data pertain to installment sales of personal property made by Dina Bale, who
regularly sells in installment, in his retail furniture store.
Equal Collection in
Year of Sale Installment Sale Profit
2016
2013 P50,000 15,000 10,000
2014 P100,000 40,000 20,000
2015 P150,000 75,000 40,000
These sales were regularly made in installment by Dina Bale to her customers. Under installment
method, Dina should report gross profit for 2016 of
a. P31,000 c. P86,000
b. P75,000 d. P130,000
5. Hermes received a final assessment notice (FAN) from the BIR on December 20, 2015. He
submitted his protest and the supporting documents within the time prescribed by the Law.
After 180 days, the subsequent step/s available to him shall be:
I. Elevate the case on appeal to the CTA, alleging inaction of the CIR, within 30 days from the
180th day since he submitted the supporting documents on his protest.
II. Wait for the decision of the Commissioner of Internal Revenue (CIR) and if adverse, appeal
the case before the CTA within thirty (30) days.
a. I only c. I and II
b. II only d. I or II
7. On October 1, 2018, Pastrana Co. leased a new residential house for the use of its general
manager. The rent agreed upon was P136,000 per month. The amount of the fringe benefit tax
monthly is:
a. P68,000 c. P36,615
b. b. P100,000 d. P32,000
8. Miriam Santiago, a business woman, incurred the following losses in 2006:
1. Wagering losses at Casino Filipino P86,000
Note: Wagering winnings amounted to P14,000
2. Loss on sale of company car to Red Co. 54,000
Note: Miriam Santiago owns 60% of the stocks of Red Co.
3. Loss on sale of office computers to Miriam Sto. Domingo, 40,000
cousin of Miriam Santiago
The deductible loss of Mirriam Santiago is:
a. P190,000 c. P54,000
b. b. P104,000 d. None
10. Mr. Quoriput signified his intention to be taxed at 8% income tax rate on gross sales in his 1"
Quarter Income Tax Retun. He has no other source of income. His total sales for the first three
(3) quarters amounted to P3,000,000.00 with 4th quarter sales of P3,500,000.00.
It is also stipulated in the contract that the lessee will pay to the government the P1,500 annual real property
tax on the land starting in 2015.
11. Assuming that on January 1, 2015, Jose paid P24.000 to Bryant covering the lease contract for
two years, how much income is to be reported by Bryant in 2012?
a. 12,000
b. 13,500
c. 24,000
d. 25,500
ANS: D
Gross receipts from rental P24,000
Real property taxes assumed by lessee 1,500
Income to be reported by lessor 25,500
Taxes and other obligations of the lessor which are assumed by the lessee are income to the lessor.
Rentals are taxable in the year they are received, if prepaid, irrespective of the accounting method being
used by the taxpayer. Thus, advance payments of rental are to be reported by the lessor in the year of receipt.
REF: Ampongan 2014
NAR: Bryant
12. How much income is to be reported by Bryant in 2018 under the outright method?
a. 13,500
b. 1,500
c. 1,013,500
d. 1,000,000
ANS: C
Fair market value of improvement 1,000,000
Annual rental 12,000
Taxes assumed by lessee 1,500
Income to be reported by lessor 1,013,500
Under the Outright Method of reporting income on leasehold improvement, the lessor shall report as income
the fair market value of the improvement in the year of completion.
REF: Ampongan 2014
NAR: Bryant
13. How much income is to be reported by Bryant in 2018 under the spread-out method?
a. 13,500
b. 1,500
c. 1,013,500
d. 88,500
ANS: D
Annual rental P12,000
Taxes assumed by lessee 1,500
Income on leasehold improvement:
Cost P1,000,000
Less: Accumulated depreciation
(1,000,000/20) x 8 years 400,000
Book value, end of lease 600,000
Income in 2015 on improvements (600,000/8) 75,000
Income to be reported in 20:5 88,500
REF: Ampongan 2014
NAR: Bryant
ANS: A
Taxes assumed by lessee 1,500
Depreciation of building (1,000,000/8) 125,000
Deductible expense 138,500
The leasehold improvement shall be depreciated over the remaining tern: of the lease or the life of the
improvement, whichever is shorter.
15. Ms. Ferrer , a Financial Comptroller of JAB Company, earned annual compensation in 2018 of
P1,500.000.00, inclusive of 13 month and other benefits in the amount of P120,000.00 but net of
mandatory contributions to SSS and Philhealth. Aside from employment income, he owns a
convenience store, with gross sales of P2,400,000. His cost of sales and operating expenses are
P1,000,000.00 and P600,000.00, respectively, and with non-operating income of 100,000.00
His tax due for 2018 shall be computed as follows if he opted to be taxed at eight percent (8%)
income tax rate on his gross sales for his income from a business.
a. P 513,000 c. P 540,000
b. P 589,200 d. P 520,000
16. His tax due for 2018 shall be computed as follows if he did not opt for the eight percent (8%)
income tax based on gross sales/receipts and other non-r operating income.
a. P 513,000 c. P 540,000
b. P 589,200 d. P 520,000
17. Donations were made on January 30, 2018 at P2,000,000; on March 30, 2018 at P1,000,000; and
August 15, 2018 at P500,000. How much is the donor’s tax due on August 15, 2018?
a. P 210,000 c. P 30,000
b. P 195,000 d. P 90,000
Total = 2,750,000
Total =3,250,000
19. Messrs, A and B inherited an income esming property. In 2018, without divi¬
ding the property, they had a net receipts (gross receipts less costs and
expenses) of P230.000 which they deposited in a Joint bank account. !n 2018, they
used the money in the bank to purchase another income-producing
property. From the net receipts of P500.000 in 2019 from the two properties,
Messrs. A and B each withdrew P100,000. Messrs. A end B are brothers.
Which of the following statements is wrong?
(a) in 2019, Mr. A and Mr. B each had a net receipts from the properties,
taxable to each as income of individual taxpayers;
(b) The income of P500.000 in 2019 is income of a partnership, taxable as
income of a corporation;
(c) in 2019, Mr, A and Mr. B each had an net receipts of P250.000, taxable as
income of an individual:
(d) In 2019, Mr. A and Mr. B each had a net receipts of P100.000, taxable as
income of an individual.
20. in 2018, Mr, X and Miss Y inherited income-producing properties from their
mother with a reported value of PI,000,000 to the court and the Bureau of
Internal Revenue, and on which the estate tax was paid. The properties
remained registered in the name of the mother, but the net receipts of P40.000
rfom the property was deposited in a joint account of Mr. X and Miss Y. in
2019, the property had a net receipts of P70.000, from which each withdrew Pi
5,000. in the same year, they sold the property for P3,000,000. Which of the
following statements is wrong?
(a)Mr. X and Miss Y in 2013 each had gross receipts (income) of P20.000
(1/2 of P40.000) from the property, as individual taxpayers;
(b) Mr. X and Miss Y became an entity taxable as a corporation beginning
2019;
(c) Mr. X and Miss Y in 2016 each had a net receipts of P35,000 from the
property, as individual taxpayers;
(d) Mr. X and Miss Y each had a capital gain tax of on a selling
price of F1,500,000.
23. The deferred payment method of reporting income on a deferred payment sale is available to a taxpayer if, there
being a requirement of the law on the ratio of initial payments to the selling price, the initial payments:
a. Exceed 25% of the selling price;
b. Do not exceed 25% of the selling price;
c. Regardless of the ratio of initial payments to the selling price;
d. Do not exceed 25% of the contract price.
24. Mr. CA is an art dealer and investor in share of stock of domestic corporations. He had the following transactions
in a year:
(a) Sale of a painting masterpiece with a cost of P500,000 for P2,500,000;
(b) Sale directly to a buyer of shares of stock held as investment with a cost of P150,000 for P320,000;
(c) Sale of a painting with a cost of P100,000 for P200,000 and donation of the proceeds of the sale to a child.
25. Mr. A is a dealer of household furniture regularly selling on installments. He made a sale of a bedroom set, with a
cost to him of P4,000, for P10,000, receiving as down payment P1,000 on the date of sale on December 2012,
and P1,500 the day after, and monthly thereafter at P2,500.
27. A Filipino citizen derived a dividend income on his shares of stock of an American corporation in the United
States. The United States federal government imposed an income tax on it. Which of the following statements
is correct?
a. There is double taxation;
b. The United States income tax payment cannot be claimed as a deduction from gross income;
c. The United States income tax payment can be claimed as tax credit without any limitation on the amount of
such tax credit;
d. The United States income tax payment can be claimed as tax credit, but subject to limitation on the amount
of such tax credit.
28. Double taxation in its general sense means taxing the same subject twice during the same taxing
period. In this sense, double taxation
a. Violates substantive due process.
b. Does not violate substantive due process.
c. Violates the right to equal protection.
d. Does not violate the right to equal protection.
30. In cases of deductions and exemptions on income tax returns, doubts shall be resolved:
a. Strictly against the taxpayer; c. Liberally in favor of the taxpayer;
b. Strictly against the government; d. Liberally in favor of the employer.
31. The following are the differences between the Power of Taxation and the Power of
Eminent Domain, except:
Power of Taxation Power of Eminent Domain
a. Enforced proportionate contribution Property to be taken is for public use
b. Government has no obligation to pay Gov't is a debtor of the property taken
c. It operates in a community It operates on an individual
d. Attribute of sovereignty Fundamental power
Answer: A
Answer: D
Use the following data for the next two (2) questions:
Ana, a resident citizen of the Philippines, provided the following data for year current taxable year:
Gross income from business P700,000
Business Expenses 300,000
Royalty from books 40,000
Gain on direct sale to buyer of shares of stock of a domestic corporation
held as capital asset 70,000
Loss on sale of land in the Philippines held as capital asset with cost of
P1,500,000 when the zonal value is P1,200,000 500,000
27. Assuming the taxable year is 2017, how much is the total income tax expense of Ana?
a. P116,500
b. P207,500
c. P159,500
d. P156,000
Answer: C
Solution:
Basic Income Tax P80.000***
Final Tax on Passive Income (40,000 x 10%) 4,000
CGT on shares of stock (P70.000 x 5%) 3,500
CGT on real properties (P1.2M x 6%) 72,000
SP = Cost - Loss = P1.5M - .5M = P1M
ZV-P1,200,000
TOTAL Income Tax Expense P159,500
INCOME TAX EXPENSE = basic income tax + FWT on passive income + CGTaxes
28. Assuming the taxable year is 2018, how much is the total income tax expense of Ana?
a. P116,500
b. P207,500
c. P159,500
d. P156,000
Answer: A
Solution:
Basic Income Tax P30,000"
Final Tax on Passive Income (40,000x10%) 4,000
CGT on shares of stock (P70,000x 15%) 10,500
CGT on real properties (P1,2M x 6%) 72,000
SP = Cost - Loss = P1.5M - .5M = P1M
ZV = P1,200,000
TOTAL Income Tax Expense P116,500
Answer/Sokition.
Gross income from business P15,000,000
Less:
Questions and Answers, Problems and Solutions in Taxation SO
Answer/Solutlon.
34. Rudolfo, a citizen of the Philippines and resident of Bacolod City, died testate on May 10, 2015. Among his
gross estate ars properties inherited from his de¬ ceased father who died on April 4, 2012. What percentage of
deduction will be used in computing the amount of vanishing deduction?
(a) 80% of the value taken as basis for vanishing deduction;
(b) 100% of the value taken as basis for vanishing deduction;
(c) 60% of the value taken as basis for vanishing deduction;
(d) 40% of the value taken as basis for vanishing deduction.
(CPA Examination question)
Answer/Solution: d
35. Gaby, a Japanese residing in the Philippines, bought garments from ABC Corp., a domestic
corporation, and exported the same to Japan. Total value of export is P100.000. VAT (output tax) due on the
transaction is:
(a) P10,000;
(b) P 5,000;
(c) None, because 0% applies;
(d) None, because the sale is exempt from VAT.
Answer/SoMon: d
Since Gaby is not a VAT-registered person (he is not in business) the
exportation is exempt from the value-added tax. Total value of export does hot mean the export selling price.
36, A VAT seller of services had the following data in a month;
37. Mrs, Evangelista owns a parcel of land worth P500,000 which was inherited
from her father in 2009 when it was worth P300.000. Her father purchased it in 2017
for P100,000. If Mrs. Evangelista transfers the parcel of land to her wholly
owned corporation in exchange for shares of stock of said corporation worth
P450.000, Mrs, Evangelista’s taxable gain is;
(a) Zero; (b) P50.000; (c) P150,000; (d) P350,000.
(CPA Examination question)
The author changed the year in the original problem.
Answer/Sotution. a
3. Rudolfo, a citizen of the Philippines and resident of Bacolod City, died testate on May 10, 1991. Among his
gross estate are properties inherited from his deceased father who died on April 4, 1988. What percentage
of deduction will be used in computing the amount of vanishing deduction?
a. 80% of the value taken as basis for vanishing deduction;
b. 100% of the value taken as basis for vanishing deduction;
c. 60% of the value taken as basis for vanishing deduction;
d. 40% of the value taken as basis for vanishing deduction.
4. Decedent was a citizen of the Philippines who was single at the time of death, with properties and charges
thereon:
Properties:
Inherited two and one-half years ago:
Property outside the Philippines P300,000
Property in the Philippines
Fair market value when inherited 650,000
Fair market value at death 700,000
Mortgage on the property when inherited 150,000
Mortgage on the property at death 100,000
Property acquired thru own labor 2,000,000
Charges:
Ordinary deductions from the gross estate 390,000
Vanishing deduction?
a. P522,000; c. P313,200;
b. P417,600; d. P208,800.
6. Mr. Ramon Asuncion, a citizen and resident of the Philippines, died leaving the following properties:
Real and personal properties P3,000,000
Land and building inherited from the father 1.5 years ago
(with a fair market value at that time of P1,500,000) 2,000,000
Car, purchased with cash received as gift from the mother
during the year 500,000
Cash (including P500,000 received by inheritance from the father) 1,500,000
Claims against the estate 600,000
Unpaid mortgage on the land and building inherited
(from an original of P600,000 when inherited) 100,000
7. The widow of Mrs. A received P500,000 under a life insurance of her husband. Should the proceeds of life
insurance be included in the gross estate? Which statement is wrong?
a. Yes, if the estate, executor or administrator of Mr. A was designated as revocable beneficiary;
b. Yes, if the estate was designated as irrevocable beneficiary;
c. Yes, if Mrs. A was designated as revocable beneficiary
d. Yes, if it was Mrs. A who insured Mr. A, and her designation as beneficiary was irrevocable.
8. In the last will and testament, a decedent provided that the properties he leaves should not be sold or
disposed of for ten years following his death. He had real estate in his gross estate as follows:
At the time of death - zonal value of P500,000
At the end of ten years after death:
Fair market value - P2,500,000;
Declared value in the estate tax return - P1,500,000;
Zonal value - P3,000,000.
11. Exclusive gross estate if the spouses were under the system of conjugal partnership of gains?
a. P11,600,000; c. P 6,600,000;
b. P10,600,000; d. P12,600,000.
12. Community gross estate if the spouses were under the system of absolute
community of property?
a. P10,200,000 c. P9,200,000:
b. P 8,200,000; d. P7,200,000.
Husband and wife, citizens and residents of the Philippines, made the following donations:
June 2, 2018: To a daughter and future son-in-law, on account of marriage to be celebrated on June 15, 2017,
cash of P1,000,000.
July 2, 2018: To an illegitimate child of the husband, cash of P100,000.
18. The account title to best reflect the value-added tax on a purchase:
a. Sales tax payable; c. Input tax;
b. Value-added tax payable; d. Output tax.
19. Charlie is an operator of parking lots. What business tax is due on his income from the business?
a. Broker's tax; c. Caterer's tax;
b. Common carrier's tax; d. Value-added tax.
Atin Transport Co. is a common carrier by land and sea within the Philippines. It had the following data in a month:
On land carriers:
Gross receipts from cargoes P 500.000
Gross receipts from passengers 700,000
On sea carriers:
Gross receipts from cargoes 900,000
Gross receipts from passengers 1,000,000
24. Sale of raw materials or packing materials to export-oriented enterprise is considered export sales when
export sales of such enterprise
a. Exceed 50%> of total annual production
b. Exceed 33 1/3% of total annual production
c. Exceed 66 2/3% of total annual production
d. Exceed 70% of total annual production
27. A domestic corporation had the following selected data for 2013, the accumulated earnings for which year
the Bureau of Internal Revenue considered to be improper:
Sales P6,000,000
Cost of sales 2,000,000
Quarterly income tax paid 710,000
Business expenses 1,000,000
Interest on Philippine currency bank deposit 50,000
Capital gain on sale directly to buyer of shares
of domestic corporation 120,000
Dividend income from domestic corporation 60,000
Dividend declared and paid during the year 500,000
Maturing bonds in 2014 100,000
Retained earnings, beginning of the year 1,500,000
Paid-in capital, end of the year 2,000,000
28. All, except one, of the following, are not subject to the improperly accumulated earnings tax. Which is the
exception?
a. Publicly-held corporations;
b. Banks and other non-bank financial intermediaries;
c. Insurance companies;
d. Service enterprises.
The income tax for Year 8 (before credit for any quarterly income tax payments) is:
a. P50,000; c. P20,000;
b. P30,000; d. P28,000.
The next four (4) questions are based on the following data:
Carlo, married, with two dependent children, received the following income:
Rent, Philippines P1,000,000
Rent, Hongkong 200,000
Interest, peso deposit, MBTC 100,000
Interest, US$ deposit, BDO ($10,000 x P42) 420,000
Interest, deposit in Hongkong (HK$10,000 x P5) 50,000
Prize (cash) won in a local contest 8,000
Prize (TV) won in a local lottery 50,000
PCSO/Lotto winnings 2,000,000
Prize won in contest in U.S. 300,000
Lotto winning in U.S. 100,000
Dividend, domestic company 600,000
23. Assuming the taxable year is 2017, determine the taxable net income assuming he is:
RC NRC RA NRA-ETB
a. P80,000 P180,000 P830.000 P180,000
b. 180,000 80,000 1,000,000 1,000,000
c. 1,558,000 908,000 908,000 908,000
d. 1,658,000 1,008,000 1,008,000 1,008,000
Answer: C
Solution:
RC NRC, RA, NRA-ET
Rent, Philippines 91,000,000 91,000,000
Rent, Hongkong 200,000
Interest, peso deposit, MBTC 20% FWT 20% FWT
Interest, US$ deposit, BDO 7.5% FWT 7.5% FWT for RA;
Exempt for NRC&NRAET
Interest, deposit in Hongkong 50,000
Prize (cash) won in a local contest 8,000 8,000
Prize (TV) won in a local lottery 20% FWT 20% FWT
PCSO/Lotto winnings Exempt Exempt
Prize won in contest in U.S. 300,000
Lotto winning in U.S. 100,000
Dividend, domestic company 10% FWT 10%FWTforRA&NRC
20%forNRAET
Basic exemption (50,000) (50,000)
Additional exemption (50,000) (50,000)
Taxable net income P1,558,000 P908,000
NOTE:
• Taxable income:
= generally pertaining to incomes subject to basic income tax and included in the income tax
return of the taxpayer
• Passive income subject to final withholding taxes and capital gains subject to CGTs are
nonreturnable income.
• Passive income subject to FWT shall refer only to those derived from Philippine sources.
Passive incomes derived from abroad received by RCs are subject to basic tax.
• The final tax on interest income earned under FCDS (7.5% prior to 2018; 15% beginning
Jan. 1, 2018) is applicable only to resident taxpayers.
• Prior to TRAIN Law, PCSO/Lotto winnings are exempt, except if received by NRANETB
• Prizes:
o Not more than P10,000 = basic tax
o More than P10.000 = 20%FWT; 25% FWT for NRANETB
• Winnings:
o PCSO/Philippine Lotto
Prior to TRAIN Law; Exempt, except if received by NRANETB Beginning 2018;
■ Not more than P10,000 = Exempt
■ More than P10,000 = 20% FWT (RC, NRC, RA);
■ Received by NRAETB = Exempt regardless of amount; not revised under
TRAIN Law; one of the obvious errors under the TRAIN Law
■ Received by NRANETB = 25% FWT regardless of amount. All income received from
sources within the Philippines by NRANETB is subject to
25% FWT except for interest income received under FCDS or FCDU
24. Assuming the taxable year is 2018, determine the taxable net income assuming he is:
RC NRC RA NRA-ETB
a. P80,000 P180.000 P830,000 P180,000
b. 180,000 80,000 1,000,000 1,000,000
c. 1,558,000 908,000 908,000 908,000
d. 1,658,000 1,008,000 1,008,000 1,008,000
Answer: D
RC NRC, RA, NRA-ET
Rent, Philippines P1,000,000 91,000,000
Rent, Hongkong 200,000
Interest, peso deposit, MBTC 20% FWT 20% FWT
Interest, US$ deposit, BDO 15% FWT 15% FWT for RA;
Exempt for NRC&NRAET
Interest, deposit in Hongkong 50,000
Prize (cash) won in a local contest 8,000 8,000
Prize (TV) won in a local lottery 20% FWT 20% FWT
PCSO/Lotto winnings Refer to NOTES above
Prize won in contest in U. S. 300,000
Lotto winning in U.S. 100,000
Dividend, domestic company 10% FWT 10%FWTforRA&NRC
20%forNRAET
Basic exemption NA NA
Additional exemption NA NA
Taxable net income P1,658,000 P1,008,000
Under RA No. 10963 (TRAIN Law), personal exemptions (basic and additional) as deductions from
gross income are no longer allowed beginning January 1,2018.
25. Assuming the taxable year is 2017, determine the total final tax assuming he is:
RC NRC NRAET NRA-ET
a. P553.000 P490,000 P550.000 P150,500
b. 121,500 90,000 150,000 687,500
c. 131,000 90,000 90,000 90,000
d. 142,000 90,000 150,000 150,000
Answer: B
Solution:
RC&RA NRC NRA-ET NRA-NET
Interest, peso deposit, MBTC @ 20%; 25% 920,000 P20.000 920,000 925,000
Interest, US$ deposit, BDO @ 7 <A% 31,500 exempt exempt exempt
Prize (TV) won in a local lottery @ 20%; 25% 10,000 10,000 10,000 12,500
PQSO/Lotto winnings exempt exempt exempt 500,000
Dividend, domestic company @ 10% 60,000 60,000
Dividend, domestic company @ 20% 120,000
Dividend, domestic company @ 25% 150,000
Total FWT P121,500 P90,000 P150,000 P687,500
26. Assuming the taxable year is 2018, determine the total final tax assuming he is:
RC NRC RA NRA-ET
a. P553,000 P490,000 P150,000 P687,500
b. 121,500 90,000 121,500 150,000
c. 131,000 90,000 90,000 90,000
d. P553,000 P490,000 P550,000 P687,500
Answer: A
Solution:
RC&RA NRC NRA-ET NRA-NET
Interest, peso deposit, MBTC® 20% 920,000 920,0009 20,000 925,000
Interest, US$ deposit, BDO@ 15% 63,000 exempt exempt exempt
Prize (TV) won in a local lottery @ 20%: 25% 10,000 10,000 10,000 12,500
PCSO/Lotto winnings® 20%; 25% 400,000 400,000 -*** 500,000
Dividend, domestic company @ 10% 60,000 60,000
Dividend, domestic company @ 20% - - 120,000
Dividend, domestic company @ 25% - - 150,000
Total FWT P553,000 P490,000 P150,000 P687,500
***The exemption of PCSO/Lotto winnings for NRA-ETB was not repealed under TRAIN Law
40. The following data were taken from Juan (single), holding managerial position for 2018 taxable
year:
Gross salaries @ P50.000 per month P600.000
SSS contributions 12,000
Philhealth contributions 7,200
Pag-ibig contributions 4,800
Union dues 3,000
Withholding tax on compensation income 73,250
Allowances, not subject to liquidation 100,000
Gasoline allowances, subject to liquidation 17,000
13th month pay 50,000
De minimis benefits 12,000
202. The total income tax expense of Juan is:
a. P127,096
b. P141,000
c. P170,760
d. P179,400
Answer: A
Answer: A
2017:
CGT = 5% on 1st P100,000 gain; 10% in excess of P100,000 gain
CGain = P143,680 - 3,680 - 80,000 = P60,000
CGT = P60,000 x 5% = P3,000
122. Bryan's total income tax expense for 2017 and 2018 is:
2017 2018
a. P3,000 P9,000
b. 4,250 30,552
c. 3,0552 9,000
d. 9,000 4,250
Answer: A
Income tax expense = Basic income tax + FWT on passive income + CGT.
The sale of listed shares is not subject to income tax, but to stock transaction tax of:
1½of 1 % of GSP prior to 2018
6/10 of 1% of GSP beginning Jan 1, 2018 (TRAIN Law)
123. Assume Bryan is a dealer in securities, the capital gains tax in 2017 and 2018 is
2017 2018
a. P3,000 P9,000
b. 9,000 3,000
c. 0 9,000
d. 0 0
Answer: D
30. An instrument with a maturity period of ten (10) years was held by Smith
(nonresident alien engage in trade or business) for three (3) years and
transferred it to Juan, a resident citizen. Juan held it for two (2)
years before subsequently transferring it to James (resident alien) who
pre-terminated it after four (4) years. The final withholding tax are
as follows:
A. B. C. D.
Smith-12% final tax True. True True True
Juan-20% final tax True True False False
James - exempt True False False True
30. Prior to 2018, Filipino counterparts of aliens employed by regional or area headquarters and regional
operating headquarters of multinational companies in the Philippines, which are engaged in
international trade with affiliates and subsidiary branch offices in the
Asia-Pacific region may taxed at 15% preferential tax rate subject to the following rules, except
I. The employee must occupy managerial or technical position and must be exercising such functions
pertaining to said position.
II. The employee must have received or is due to received under a contract of employment, a gross
taxable compensation income of at least P975.000 (whether or not this is actually received).
III. The employee must be exclusively working for the RHQ or ROHQ as a regular employee and not just a
consultant or contractual personnel.
a. I and II only c. I, II, and III
b. I and III only d. None of the above
1. Chiko operates a cockpit. Inside the cockpit, he also operates a restaurant. Data for the
particular quarter follow:
Gross receipts:
Restaurant operation
Sale of food 100,000
Questions 40 through 41 are based on the following are the inventory of the estate of Mr.
Pumayapa who died on September 11, 2005.
Properties:
Jewelries P 1,600,000
Old Vehicle 800,000
Shares of stock, domestic corporation 250,000
Real estate inherited August 9, 2000. This was previously
taxed at P250,000. It was inherited from his uncle and
the decedent assumed unpaid mortgaged of P70,000,
of w/c P50,000 was paid by the present decedent before
his death. 300,000
Collectibles, excluding P50,000 claims against insolvent
person and P100,000 cancelled in a written will 350,000
Peso bank deposit 150,000
Investment in bonds 100,000
Amount received by heir under R.A 4917 300,000
Expenses:
Funeral Expenses 190,000
Judicial Expenses 120,000
Loans payable, duly notarized 50,000
Stolen Jewelry, part of the gross estate 10,000
Medical Expenses 250,000
Legacy to the City of Manila 100,000
1. The following Vanishing deduction
a. P34,700 b. P34,600 c. P34,390 d. P35,000
2. Using the above data, the total deductions from the gross estate
a. P2,124,600 b. P1,124,000 c. P2,124,700 d. P2,125,000