TAXATION

Numbers 1, 2, 3, 4 and 5 (Income Tax)

Mr. Andes, LAW practioner, single, has the following dependents: illegitimate child 21 years of age,
his mother 65 years of age, 1st cousin who is blind, and a foster child. Mr. Andes is also employed
with a manufacturing company and received the following for the year:

Salary 150,000
Overtime 30,000
13th month 15,000
Deposit of client 20,000
Retainer fee of P5,000 per month from clients 60,000
Out of pocket expenses charged to client 80,000
Capital gains, car 25,000

1. How much is Mr. Andes’ gross compensation income?

A. 180,000
B. 240,000
C. 265,000
D. 215,000

2. How much is Mr. Andes’ vatable transaction?

A. 160,000
B. 185,000
C. 60,000
D. 140,000

3. How much is subject to withholding tax?

A. 340,000
B. 320,000
C. 240,000
D. 160,000

4. How much is Mr. Andes’ personal exemption?

A. 50,000
B. 75,000
C. 100,000
D. 125,000

5. Mr. Andes asks your professional expertise whether the following items of income need be
reported in his Income Tax Return:
I. Passive income
II. Fringe Benefits received
III. Capital gains from sale of real property and shares of stock
IV. Exempt or exclusion from gross income e.g. Proceeds of Life Insurance
A. All of the above must be supplemented in the ITR
B. None of the above must be supplemented in the ITR
C. Only items I and II must be supplemented in the ITR
D. Only items I , II and III must be supplemented in the ITR
 Page 2

Numbers 6, 7, 8 and 9 (Income Tax)

X Company, a restaurant business, used accrual basis of accounting in its financial statements. Its
operation for the year ended showed the following:

Gross revenue on account to customers 3,500,000

Gross receipts from senior citizens, net of 20% discount 400,000
Purchases, directly attributable to customers other than senior 300,000
citizens, net of VAT
Purchases, cannot be attributed, net of VAT 200,000
Direct cost 2,000,000
Purchase of equipment, used for all services rendered 600,000
Increase in accounts receivable (VAT inclusive) 224,000
Operating expenses 1,000,000

6. What is the Output VAT?

A. 420,000
B. 468,000
C. 396,000
D. 372,000

7. What is the creditable input VAT?

A. 132,000
B. 129,000
C. 123,000
D. 120,000

8. What is the amount of Gross Income?

A. 900,000
B. 2,000,000
C. 3,500,000
D. 4,000,000

9. What is the amount of allowable deduction?

A. 1,000,000
B. 1,112,000
C. 1,500,000
D. 1,600,000
 Page 3
Numbers 10, 11 and 12 (Income Tax)

X Company, a hardware business, used accrual basis of accounting in its financial statements. The
operations for the current year showed the following information:
Gross revenue 3,500,000
Sales returns 200,000
Increase in accounts receivable, VAT inclusive 224,000
Increase in inventory, net of VAT 150,000
Purchases 1,000,000
Supplies (40% from VAT registered) VAT exclusive 600,000
Services (60% from VAT registered) VAT exclusive 500,000
Other operating expenses 200,000

10. What is the Output VAT?

A. 420,000
B. 396,000
C. 372,000
D. 360,000

11. What is the creditable input VAT?

A. 120,000
B. 184,800
C. 166,800
D. 108,000

12. What is the Taxable Income?

A. 1,000,000
B. 1,082,800
C. 1,350,000
D. 1,500,000

Numbers 13, 14 and 15 (Donor’s tax)

Mr. Jose made the following donations for the year:

January - to his Son amounting to P250,000

February - to an Officemate P30,000
March - to his daughter who got married in the same month P60,000
March - to his daughter in law P40,000

13. How much is the donor’s tax for the month of January?
A. 4,000
B. 3,000
C. 2,000
D. 1,000

14. How much is the donor’s tax for the month of February?
A. 9,000
B. 5,200
C. 1,000
D. Exempt

15. How much is the donor’s tax for the month of March?
A. 14,000
B. 8,000
C. 4,000
D. Exempt
 Page 4
Numbers 16, 17, 18, 19 and 20 (Donor’s tax)

Mrs. Mapagbigay made the following donations for taxable year?

February : to a legitimate daughter who got married on Valentine’s day amounting to
P290,000.
July : to legitimate son’s birthday celebration amounting to P150,000.
: to an adopted child who got married P9,500

16. What is the donor’s tax due for month of February?

A. 6,000
B. 5,600
C. 5,200
D. 900

17. What is donor’s tax due for month of July?

A. 6,000
B. 5,600
C. 5,200
D. 11,200

18. What is donor’s tax due for month of July if the gift given to the son was split into P75,000 in
July and P75,000 in August next year?
A. 3,000
B. 2,800
C. 2,600
D. 5,100

19. What is donor’s tax due for month of August?

A. 3,000
B. 2,800
C. 2,600
D. Exempt

20. A nontaxable entity that dissolves and transfers all its property in favor of another entity will
remain nontaxable if it meets the requirements of the law, except
A. The transferee is another nonstock nonprofit organization.
B. Not more than 30 % of the donation is used for administrative purpose.
C. The transferee is a educational, charitable, religious, cultural or social welfare, philanthropic
organization.
D. The transferee is a nongovernment organization.

DONOR TAX RATES

Net Gift Over But not Over Tax Due Plus Of the Excess Over

100,000.00 exempt
100,000.00 200,000.00 0 2% 100,000.00
200,000.00 500,000.00 2,000.00 4% 200,000.00
500,000.00 1,000,000.00 14,000.00 6% 500,000.00
1,000,000.00 3,000,000.00 44,000.00 8% 1,000,000.00
3,000,000.00 5,000,000.00 204,000.00 10% 3,000,000.00
5,000,000.00 10,000,000.00 404,000.00 12% 5,000,000.00
10,000,000.00 and over 1,004,000.00 15% 10,000,000.00
Donation made to a stranger is subject to 30% of the net gift.
 Page 5

Numbers 21, 22 and 23 (Estate tax)

X, a widow, died intestate on January 1, 2019. Her son Y was designated by court as the administrator.
On April 30, 2019, Y filed a “No Payment” return. On June 30, 2016, BIR issued a Letter of Authority
and conducted an investigation which resulted to the following valuation on June 30, 2019:

Real properties (Family Home) 2,500,000

Personal properties 300,000
Cash in bank 1,000,000
100,000 Shares of Stock, based on the mean of highest and lowest rate on June 30, 2019 2,500,000

a. Property

Real property Personal property

Assessed value 2,500,000 2,400,000
Zonal value 2,500,000 2,600,000

b. The only transaction with the bank between January 1, 2019 to June 30, 2019 was a deposit of
P180,000 and interest amounting to P20,000.

c. Investment in shares with the following quoted price on January 1, 2019:

Closing 4.5
Opening 4.3
High 4.6
Low 4.4

d. Deductions claimed:

Funeral expense 600,000

Mortgage 1,300,000
Medical expense 800,000
40th day celebration 500,000

21. What is the amount of Gross Estate?

A. 6,300,000
B. 6,350,000
C. 8,400,000
D. 9,000,000

22. What is the allowable deduction?

A. 3,700,000
B. 3,900,000
C. 4,000,000
D. 4,500,000

23. What is he total amount due if the BIR assessed a tax deficiency which is paid only on
September 30, 2019?
A. 173,500
B. 216,875
C. 225,550
D. 234,225
 Page 6

ESTATE TAX RATES

Over But not Over Tax Due Plus Of the Excess Over
P 200,000.00 Exempt
P 200,000.00 500,000.00 0 5% P 200,000.00
500,000.00 2,000,000.00 P 15,000.00 8% 500,000.00
2,000,000.00 5,000,000.00 135,000.00 11 % 2,000,000.00
5,000,000.00 10,000,000.00 465,000.00 15 % 5,000,000.00
10,000,000.00 1,215,000.00 20 % 10,000,000.00

Number 24 (Corporate income tax)

A domestic corporation provided the following data:

2016 2017 2018 2019

Gross sales 2,040,000 2,800,000 3,000,000 4,000,000
Sales returns 40,000 100,000
Cost of goods sold 1,000,000 700,000 1,500,000 1,500,000
Business expenses 950,000 2,100,000 1,200,000 1,200,000

What is the income tax due after tax credit, if any, for taxable year 2018?
A. 15,000
B. 40,000
C. 60,000
D. 90,000

Number 25 (Deductible expense)

Amos Corp. had P600,000 in compensation expense for book purposes in 2019. Included in this
amount was a P50,000 accrual for 2019 nonshareholder bonuses. Amos paid the actual 2019 bonus
for P60,000 on March 1, 2020. In its 2019 tax return, what amount should Amos deduct as
compensation expense?
A. 600,000
B. 610,000
C. 550,000
D. 540,000

Number 26 (Minimum corporate income)

Aragorn, Inc. had the following items of income and expenses:

Gross receipts 500,000

Cost of services, salary of personnel directly engaged in business 250,000
Dividends received 25,000

The dividends were received from a domestic corporation. The general and administrative expenses
included cost of utilized facilities and cost of supplies of P25,000 and P15,000, respectively. What
amount should be reported as gross income for minimum corporate income tax purpose?
A. 210,000
B. 235,000
C. 250,000
D. 275,000
 Page 7

Number 27 (Charitable contributions)

In 2019 Cable Corp., a calendar-year corporation, contributed P80,000 to a qualified charitable

organization. Cable’s 2019 net income was P820,000. In 2019, what amount can Cable deduct as
charitable contribution?
A. 80,000
B. 45,000
C. 41,000
D. 51,000

Number 28 (Taxable income)

For the year ended December 31, 2019, Kelly Corp. had net income per book of P300,000 before
taxes. Included in the net income were the following items:

Dividend income from an unaffiliated domestic taxable corporation 50,000

Bad debt expense representing increase in the allowance for doubtful accounts 80,000

What was Kelly’s taxable income for the year ended December 31, 2019?
A. 170,000
B. 330,000
C. 345,000
D. 380,000

Numbers 29 and 30 (Income tax due)

A DOMESTIC Co. provided the following data

2018 2019
Gross income 2,000,000 1,500,000
Net income 100,000 250,000

29. What is the income tax due for the taxable year 2018?
A. 80,000
B. 72,000
C. 32,000
D. 40,000

30. What is the income tax due for the taxable year 2019?
A. 75,000
B. 65,000
C. 30,000
D. 40,000
 Page 8

Numbers 31, 32, 33 and 34 (Community tax))

The following information pertains to business operations for 2019:

Gross receipts from business 900,000.00

Rental income 650,000.00
Operational expenses 400,000.00
Real properties 17, 000,000.00

31.What is the amount of Individual Community tax?

A. 1,555
B. 1,155
C. 5,200
D. 5,005

32. What is the amount Corporate Community Tax?

A. 7,920.00
B. 7,560.00
C. 1,120.00
D. 10,500.00

33. Which has the authority to collect Community Tax?

A. Bureau of Internal Revenue
B. Local Government Unit
C. Bureau of Customs
D. National Treasury

34. What is the characteristic of Community Tax?

A. Tax
B. Fee
C. Identification Card
D. License

35. Elorde, a famous boxer, intends to convert his boxing gymnasium into a cockpit arena. Elorde
summons you to give him advise to go over his tax exposures. As Certified Public Accountant,
which reference or document will you recommend to Mr. Elorde?
A. National Internal Revenue Code
B. Revenue Regulations of the NIRC
C. Local Government Code
D. Tariff and Customs Code

36. Your client, Mr. Aegis, an importer, inquired what laws will have most relevance in his daily
transactions. Having several laws to take into consideration, which laws do you recommend for
Mr. Aegis to read?
A. National Internal Revenue Code
B. Implementing Rules and Regulation of NIRC
C. Tariff and Customs Code
D. Local Government Code

37. The RATE program of the Bureau of Internal Revenue is to eradicate

A. Underground economy.
B. Smugglers.
C. Evaders
D. Unregistered taxpayers.
 Page 9

38. A documentary stamp tax is necessary in

A. Sale of real property.
B. Inheritance of real property.
C. Estate tax payment
D. Donation of real property.

39. JB Bookstore is using cash method of accounting in recognizing its taxable income and
deductions. For the current year, JB decided to adopt the accrual method of recognizing income
and expenses. The application for permission to change the method of accounting employed and
the basis upon which return is made shall be filed the BIR within
A. 90 days
B. 60 days
C. 30 days
D. 15 days

40. As Certified Public Accountant, what would you tell if a domestic corporation asked you where
to file first its financial statements and income tax returns?
A. Securities and Exchange Commission
B. Local Municipal City Treasurer where the corporation has a principal address
C. Bureau of Internal Revenue
D. Authorized Accredited Agent Banks

41. How may financial statement and tax return copies are filed with the Bureau of internal Revenue?
A. Duplicate
B. Triplicate
C. Quadruplicate
D. As many as required by the revenue officer.

42. When may the Bureau of Internal Revenue not terminate taxing period?
A. When the taxpayer is retiring from business subject to tax.
B. When the taxpayer went abroad.
C. When the taxpayer removes his property from Philippines.
D. When the taxpayer hides or conceals his property.

43. The Board of Directors of RAPC Corporation received a subpoena from the Department of Justice
involving tax fraud. The Chairman of the Board summons you to attend the regular Board of
Directors meeting to address whose signature must appear on the withholding tax returns and
consequently be held imprisoned in case of fraud?
A. President and Treasurer
B. Treasurer and Corporate Secretary
C. Corporate Secretary and Internal Auditor
D. Internal Auditor and Comptroller

44. The Bureau of Internal Revenue may use “Oplan Kandado” against all of the following taxpayers,
except
A. VAT registered person who fails to issue receipts.
B. VAT registered person who fails to file VAT returns.
C. VAT registered person who understates its taxable sales by 30%.
D. VAT registered person who understates its purchase by 30%.

45. In order to avail the benefits of taxes paid abroad, what must be presented to the regulatory body?
A. Memorandum of agreement between the taxpayer and host country
B. Tax treaty law of the host country
C. Tax treaty relief application
D. Other relevant document as may be required by regulatory body.
 Page 10

46. AZEP Corporation secured an income tax holiday for 4 years as a pioneer industry. On the third
year of the tax holiday, AZEP Corporation declared and paid cash dividends to its shareholders,
all of whom are individuals. Are the dividends taxable?
A. The dividends are taxable because the tax exemption of AZEP does not extend to its
shareholders.
B. The dividends are tax exempt because of AZEP Corporation income tax holiday.
C. The dividends are taxable if they exceeded 50 % of AZEP Corporation retained earnings.
D. The dividends are exempt if paid before the end of AZEP Corporation fiscal year.

47. Mr. Compton sells shoes in Makati through a retail store. He pays the VAT on his gross sales to
the BIR and the municipal license tax based on the same gross sales to the City of Makati. He
comes to you for advice because he thinks he is being subjected to double taxation. What advice
will you give him?
A. Yes, there is double taxation and it is progressive.
B. The City of Makati has no taxing power.
C. Yes, there is double taxation and this is illegal in the Philippines.
D. Double taxation is allowed where one tax is imposed by the national government and the
other by local government.

48. The Municipality of Icawat passed an ordinance imposing a tax on installation managers. At that
time, there was only one installation manager in the municipality. Thus, only the installation
manager would be liable for the tax. Is the law constitutional?
A. It is unconstitutional because it clearly discriminates against this person.
B. It is unconstitutional for lack of legal basis
C. It is constitutional as it applies to all persons in that class
D. It is constitutional because the power to tax is the power to destroy.

49. Philtele is a power generation and distribution company operating mainly in City of Makati. It
owns electric poles which it also rents out to other companies that use poles such as telephone
and cable companies. The City of Makati passed an ordinance imposing a fee equivalent to 1%
of the annual rental for these poles. Philtele questioned the legality of the ordinance on the ground
that it imposes an income tax which local government units are prohibited from imposing. What
is the validity of the ordinance?
A. The ordinance is void because the fee is based on rental income and therefore a tax on income.
B. The ordinance is valid as a legitimate exercise of police power to regulate electric poles
C. The ordinance is void because 1% of annual rental is excessive and oppressive
D. The ordinance is valid because a LGU may impose income tax.

50. You were preparing your income tax return and had some doubt on whether a commission you
earned should be declared for the current year or the succeeding year. You sought the opinion of
a lawyer who advised you to report the commission in the succeeding year. You heeded lawyer’s
advice and reported the commission in the succeeding year. The lawyer’s advice turned out to be
wrong. In your petition against the BIR assessment, the court ruled against you. Are you guilty
of fraud?
A. Not guilty of fraud because you simply followed lawyer’s advice.
B. Guilty of fraud because it was deliberate
C. Not guilty it is the lawyer’s fault.
D. Guilty for failure to consult an accountant.

51. All of the following are tax incentives given to micro business enterprises, except
A. Income tax exemption from all income arising from the operations of the enterprise
B. Exemption from the coverage of the Minimum Wage Law but employees will still receive
the same social security and health care benefits as other employees
C. Priority to a special credit window set up specifically for the financing requirements of
MBEs
D. Technology transfer, production and management training and marketing assistance
programs for MBE beneficiaries.
 Page 11

52. Which is a function of the Bureau of Customs?

A. Assessment and collection of revenues from imported articles and all other impositions
under the Tariff and Customs Code.
B. Control smuggling and related frauds
C. Supervision and control over the entrance and clearance of vessels and aircrafts
D. To investigate the operation of tariff and customs laws, including their relation to the
national revenues, their effects upon industries and labor of the country

53. Who has the authority to cause all importation to be entered in the customs warehouse?
A. Port Authority
B. Bureau of Customs
C. Collector of Customs
D. Tariff Commission

54. Julia, an importer, protested an assessment and classification by the Collector of Customs.
However, the Collector of Customs denied Julia’s protest. Hence, Julia went to appeal the adverse
decision by the Collector of Customs with the Commissioner of Custom. Which of the following
statements is correct in case the Commissioner decides to favor or deny Julia?
I. Adverse decision against Julia appealable to Court of Tax Appeal.
II. Adverse decision against the government appeal to Court of Tax Appeal.
III. Adverse decision against Julia appealable to Secretary of Finance.
IV. Adverse decision against the government appealable to the Secretary of Finance.
A. I and II
B. III and IV
C. I and IV
D. I, II, III and IV

55. The authority and function of Collector of Customs include all of the following, except
A. Cause all importer articles to be entered in customs warehouse.
B. Classify and assess imported articles
C. Collect customs duties and tariff.
D. Forfeit and destroy contraband goods.

56. The different classifications of imported goods include all of the following, except
A. Contraband
B. Duty Free
C. Conditionally Free goods
D. Smuggled goods

57. Which of the following is a regular duty?

A. Marking Duty
B. Discriminatory Duty
C. Alternative Duty
D. Countervailing Duty

58. Which of the following is a special duty?

A. Ad Valorem
B. Specific
C. Compounding Duty
D. Dumping Duty
 Page 12

59. Tariff and customs are applied when?

A. When vessel or aircraft enters Philippine territory with intention to unload goods.
B. Upon payment of duties and release from customs warehouse.
C. When vessel or aircraft enters Philippine territory with the intention to unload goods
and upon payment of duties and release from customs warehouse
D. None of these

60. Mendoza is an importer and his merchandise was seized and forfeited by the Bureau of
Customs. What is the extent of Mendoza’s liability?
A. Mendoza’s civil liability is limited to the value of imported.
B. Mendoza is still liable to pay customs duties and tariff on the imported merchandise even
though it was confiscated and forfeited in favor of the Government.
C. Mendoza is exonerated from civil and criminal liabilities because the seized merchandize is
considered the price for his offense.
D. Mendoza’s civil liability is subsumed by the confiscation of merchandize but may still
be liable criminally.

61. What is the device or scheme resorted to enable merchandise affected by taxes to be exported
and later sold in foreign countries under the same terms as if it is not taxed at all?
A. Import Entry
B. Manifest
C. Drawings
D. Drawback

62. Llmado’s Cessna plane was being used without his knowledge to smuggle goods into the
Philippines. The Bureau of Customs confiscated Llmado’s airplane. Is the confiscation legal or
illegal?
A. The forfeiture of the smuggled goods is legal but the confiscation of the plane is illegal
B. The forfeiture of the smuggled goods is illegal and the confiscation of the plane is legal.
C. The forfeiture of the smuggled goods and the confiscation of the plane are legal
D. The forfeiture of the smuggled goods and the confiscation of the plane are illegal.

63. Which statement is true about customs protest?

I. The customs protest is required to be filed only in cases the liability of importer over duties
and tariffs has been determined and such importer disputes said duties and tariff.
II. The customs protest is not required if there is no dispute over the duties and tariffs but mere
claim of refund due to destruction of imported merchandise.
A. I only
B. II only
C. Both I and II
D. Neither I nor II

64. Pirate vessel engaged in smuggling was detected by Customs Police in Panatag shoal but
apprehended already in China territory. May such pirate be prosecuted in the Philippines?
A. Yes, under the doctrine of inflagrante delicto.
B. Yes, under doctrine of hot pursuit
C. No, the arrest and seizure are warrantless
D. No, because of lack of territorial jurisdiction.
 Page 13
65. Which statement is true about the Bureau of Customs?
I. No regular court may intervene in customs cases because it is the primary jurisdiction of the
Bureau of Customs.
II. No attachment issued by court will lie against imported goods within the custody of Bureau
of Customs.
A. I only
B. II only
C. Both I and II
D. Neither I nor II

66. Mr. Lim bought a piece of land in Manila 2017 whereby he discovered that it has unpaid real
property tax for year 2016. Which statement is correct?
A. Mr. Lim is liable for real property tax because he is the new owner.
B. Mr. Lim is liable for real property tax because he assumed responsibility carried from
previous owner.
C. Mr. Lim is not liable because realty tax attaches to the property and is chargeable
against the person who had actual or beneficial use and possession of the property
regardless of whether or not he is the owner.
D. Mr. Lim is not liable because realty tax attaches to the property and it is the property itself
that is liable.

67. Idle lands are exempt from real property tax under all of the following circumstances, except
A. Civil disturbance
B. Natural calamity
C. Any cause which physically or legally prevented the owner to utilized his land
D. Declared by the President of the Philippines

68. Which statement is true about real property taxes?

I. No regular court may intervene in assessment of real property taxes because this is the
primary jurisdiction of the Board of Assessors.
II. No injunction by court will lie against real property tax collection by the Local Government.
A. I only
B. II only
C. Both I and II
D. Neither I nor II

69. Which is statement is true about tax relief?

I. Local tax relief or exemption is granted to cases of natural calamity, civil disturbance, general
failure of crops, or adverse economic conditions, such as substantially decrease in prices.
II. Local tax incentives are granted only to new investments in the locality.
A. I only
B. II only
C. Both I and II
D. Neither I nor II

70. Which statement is true about tax cases?

I. Local tax cases may be brought to the attention of the Secretary of Finance.
II. Customs tax cases may be brought to the attention of the Secretary of Justice.
A. I only
B. II only
C. Both I and II
D. Neither I nor II
END
 Page 14
TAXATION
(Solution)
1. Salary 150,000
Overtime 30,000
Total compensation income 180,000 A

2. Deposit 20,000
Retainer 60,000
Out of pocket 80,000
Total vatable sales 160,000 A

3. Total compensation 180,000

Total vatable transaction 160,000
Total subject to w/holding 340,000 A

4. Basic personal exemption 50,000

Additional personal exemption 75,000
Total 125,000 D

6. Gross revenue 3,500,000

Increase in accounts receivable ( 200,000)
Net receipts 3,300,000
Multiply VAT rate ____12%
Output 396,000 C

7. Purchases directly attributable to customers 300,000 x 12% 36,000

Purchases that cannot be attributed 200,000 x 12% x 3.5/4M 21,000
Purchase of equipment 600,000 x 12% x 3.5/4M 63,000
Input 120,000 D

8. Gross revenue 3,500,000

Gross receipts (400,000 /80%) 500,000
Less : Purchases directly attributable 300,000
Purchases not directly attributable 200,000
Direct cost 2,000,000
Purchases 600,000
Gross income 900,000 A

9. Operating expenses 1,000,000

Señior citizen discount 100,000
Allocated input VAT to expense:
Purchases 200,000 x 12% x 5/4M 3,000
Equipment 600,000 x 12% x 5/4M ___9,000
Allowable deductions 1,112,000 B
 Page 15

10. Gross revenue 3,500,000

Sales return ( 200,000)
Net revenue 3,300,000
VAT rate ___12%
Output 396,000 B

11. Purchases 1,000,000

Supplies 600,000 x 40% 240,000
Services 500,000 x 60% _300,000
Total 1,540,000
VAT rate ___12%
Input VAT 184,800

12. Gross revenue 3,500,000

Sales return ( 200,000)
Cost of goods sold:
Purchases 1,000,000
Increase in inventory (150,000) ( 850,000)
Supplies ( 600,000)
Services ( 500,000)
Operating expenses ( 200,000)
Allocated input VAT to expenses:
600,000 x 12% x 60% ( 43,200)
500,000 x 12% x 40% ( 24,000)
Taxable income 1,082,800

13. Gross gift 250,000

Donor’s tax First, 200,000 2,000
Excess 200,000 50,000 x 4% 2,000
4,000 A

14. Gross gift to stranger 30,000

Apply rate 30%
Donor’s tax 9,000 A

15. Gross gift - January 250,000

Gross gift - March 60,000
Total gifts 310,000

Allowable deduction
Dowry ( 10,000)
Net gifts 300,000

Donor’s tax First, 200,000 2,000

Excess 200,000 100,000 x 4% __4,000
Total 6,000
Less: prior gift paid January ( 4,000)
Tax still due 2,000
Tax due to stranger (40,000 x 30%) 12,000
Total 14,000 A
 Page 16

16. Gross gift, February 290,000

Allowable deduction ( 10,000)
Net gift 280,000

Donor’s tax First, 200,000 2,000

Excess 80,000 x 4% 3,200
Tax due 5,200 C

17. Gross gift, July 150,000

Adopted child 9,500
Less: dowry (10,000) 0
Prior gift, February 280,000
Net gifts 430,000

Donor’s tax First, 200,000 2,000

Excess 230,000 x 4% 9,200
12,200
Less: Prior tax paid (5,200)
Still due 6,000 A

18. Gross gift 75,000

Adopted child 9,500
Less: dowry (10,000) 0
Prior gift 280,000
Total gift 355,000

Donor’s tax First, 200,000 2,000

Excess 155,000 x 4% 6,200
Total tax due 8,200
Less: Prior tax paid (5,200)
Tax still due 3,000 A

19. First 75,000 Exempt

21. Gross estate

Real property 2,500,000
Personal property: 2,600,000
Cash 1,000,000
Less: Deposit ( 180,000)
Interest ( 20,000) 800,000
Stock (4.6.+4.4/2 x 100,000 shares) 450,000

Total 6,350,000 B

22. Funeral expense (maximum) 200,000

Mortgage 1,300,000
Medical expenses (maximum) 500,000
Family home 1,000,000
Standard deductions 1,000,000
Allowable deductions 4,000,000 C
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23. Gross estate 6,350,000

Allowable deduction (4,000,000)
Net estate 2,350,000

Estate tax due 173,500

Surcharge 25% 43,375
Interest (20% x 3mos/12) __8,675
Tax due 225,550 C

24. 2016 2017 2018

Gross income 1,000,000 2,000,000 1,500,000
Allowable deduction (950,000) (2,100,000) (1,200,000)
Taxable income 50,000 (100,000) 300,000
Net income tax 15,000 -0- (100,000)
200,000
Minimum corporate (net income tax) 60,000

Income tax 2% x gross income 20,000 40,000 30,000

Net income tax 60,000

Excess MCIT prior years [5,000 + 40,000] (45,000)
Tax still due 15,000 B

25. Compensation 600,000

Less: Accrual nonshareholder bonus ( 50,000)
Add: Paid actual bonus 60,000
610,000 B

26. Gross receipts 500,000

Cost of services (250,000)
Cost of utilized facilities ( 25,000)
Cost of supplier ( 15,000)
Gross income for MCIT 210,000 A

27. Net income 820,000

Add: Charitable contribution _80,000
Total income before contribution 90,000
Ceiling set by law ___5%
Deductible donation 45,000 B

28. Net income 300,000

Less: dividends from domestic corp ( 50,000)
Add: Bad debts expense 80,000
Taxable income 330,000 B
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29.
Gross income - 2015 2,000,000
Net income 100,000
Net income tax (30% x 100,000) 30,000
MCIT 2% x 2,000,000) 40,000 D

Excess MCIT (40,000 - 30,000) 10,000

30. Gross income 2016 1,500,000

Net income 250,000
Net income tax (30% x 250,000) 75,000
MCIT (2% x 1,500,000) 30,000

Net income tax 75,000

Excess MCIT 2015 (10,000)
Income tax due 2016 65,000 B

31. Basic community tax P5

Additional P1 for every P1,000 earnings
Gross receipts 900,000
Rent 650,000
Total 1,550,000
÷ 1,000 1,550
P1,555 A

32. Basic community tax P500

Additional P2 per 5,000 income & property
Gross receipts 900,000
Rent 650,000
Properties 17,000,000
18,550,000
÷ 5,000
3,710
x P2 7,420
Total P7,920 A

END