Icare Taxxxx

1.
First Statement – Taxation power is considered inherent in a sovereign State

because it is a necessary attribute of sovereignty. Without this power no
sovereign State can exist or endure
Second Statement - The power to tax proceeds upon the theory that the
existence of a government is a necessity and this power is an essential and
inherent attribute of sovereignty, belonging as a matter of right to every
independent state or government.
a. True, False
b. True, True
c. False, True
d. False, False
2. The following are stages/aspects of taxation, except

a. Levying and imposition
b. Administration and collection
c. Payment
d. Appeal to the Court of Tax Appeals
3. By its nature taxation is a legislative power, i.e., such power being exclusively
vested in the legislature, except
a. In case of local governments, to raise their own revenue, within their own
territorial jurisdiction, subject to limitations as may be provided by
Congress.
b.
The Congress may, by law, authorize the President to fix within specified
limits, and subject to such limitations and restrictions as it may impose,
tariff rates, import and export quotas, tonnage and wharfage dues, and
other duties or imposts within the framework of the national development
program of the Government.
c. Both A and B
d. Neither A nor B
4. The equal protection clause guarantees that persons and things similarly situated
are treated under the law similarly. However, constitutional guarantee allows
reasonable classification, provided the conditions are met, except
a. rest on substantial distinctions
b. be germane to the purpose of the law
c. not be limited to existing conditions only
d. apply equally to some members of the same class.
5. An Executive Order (EO) was issued pursuant to law, granting tax and duty
incentives only to businesses and residents within the "secured area" of the
Subic Economic Special Zone, and denying said incentives to those who live
within the Zone but outside such "secured area". Is the constitutional right to
equal protection of the law violated.
a. Yes, the EO gave preferential rights to those located within the SEZA as
against other business located within the Philippines.
b. Yes, the EO being an issuance made by the executive branch of the
Government encroached on the power of the Legislature to exercise the
power of taxation.
c. No. Equal protection of the law clause allows reasonable classification. There
are substantial differences between big investors being enticed to the
"secured area" and the business operators outside that are in accord with the
equal protection clause that does not require territorial uniformity of laws.
d. No. Equal protection is not the issue on this matter rather the territoriality
limitation has been breached.
6. The following are the usual methods of avoiding the occurrence of double
taxation, except
a. Allowing reciprocal exemption either by law or by treaty;
b. Allowance of tax credit for foreign taxes paid;
c. Allowance of deduction for foreign taxes paid; and
d. Granting of reduced taxation rates by the Department of Finance
7. Our national internal revenue laws are

a. Political in nature
b. Penal and nature
c. Criminal in nature
d. Civil in nature
8. Generally, tax laws are prospective in character. It will be given retroactive effect
under the following circumstances, except:
a. It is necessarily implied from the language used
b. It involves income tax
c. It is expressly provided or the retroactive application is clearly the intent of
Congress
d. It imposes a criminal liability
9. Which of the following statements is not correct?

a. Taxes maybe imposed to raise revenue or to provide disincentives to certain
activities within the State.
b. The State can have the power of taxation even if the Constitution does not
expressly give it the power to tax.
c. In the exercise of the power of taxation, the State can tax anything at any time.
d. The power of taxation in the Philippine Constitution are grants of power and
not limitations on taxing power.
10. All of the following, except one, are basic principles of a sound taxation system:
a. Fiscal adequacy
b. Administrative feasibility
c. Social equality
d. Theoretical justice
9. Under this basic principle of a sound taxation system, the government should not
incur a deficit:
a. Theoretical justice
b. Administrative feasibility
c. Fiscal adequacy
d. None of the above
10. The basic principle of a sound taxation system, where, “Taxes must be based on the
taxpayer’s ability to pay” is called:
a. Equality in taxation
b. Ability to pay theory
c. Theoretical justice
d. Equity in taxation
11. The tax law must be capable of convenient, just and effective administration
a. Equality or theoretical justice
b. Fiscal adequacy
c. Administrative feasibility
d. Rule of apportionment
12. A taxpayer gives the following reasons for refusing to pay a tax. Which of his
reasons is not acceptable for legally refusing to pay the tax?
a. That he has been deprived of due process of law.
b. That there is lack of territorial jurisdiction.
c. That the prescriptive period for the tax has lapsed.
d. That he will derive no benefit from the tax.
13. No law granting any tax exemption shall be passed without the concurrence of –
a. Majority of all members of Congress
b. 2/3 vote of all members of Congress
c. ¾ vote of all members of Congress
d. Unanimous vote of all members of Congress
14. Compliance with procedural requirements must be followed strictly to avoid collision
between the State’s power to tax and the individual’s recognized rights.
a. Due process of law
b. Equality in taxation
c. Non-infringement of religious freedom
d. Non-impairment of obligations and contracts
15. No person shall be imprisoned for non-payment of this.

a. Property tax
b. Excise tax
c. Poll tax
d. Income tax
16. Where does the taxing power of the provinces, municipalities and cities precede from?
a. Constitutional grant
b. Legislative enactment
c. Presidential decree or Executive act
d. Local legislation
17. Which of the

following has no power of taxation?
a. Province of Bulacan
b. Quezon City
c. Barangay Holy Spirit
d. Cordillera Administrative Region
18. Levying of local government taxes may be exercised by:

a. The local executive only
b. The legislative branch of the local government only
c. The local executive and the legislative branch of the local government unit
d. Neither the local executive nor the legislative branch of the local government
can exercise the power.
19. First Statement - Tax evasion is a scheme used outside of those lawful means to
escape tax liability and, when availed of, it usually subjects the taxpayer to further or
additional civil or criminal liabilities.
Second Statement - Tax avoidance, is a tax saving device within the means
sanctioned by law, hence legal.
a. True, true
b. True, false
c. False, false
d. False, true
20. First Statement - Tax Pyramiding is the imposition of a tax upon another tax. It is
allowed under this jurisdiction.
Second statement - A tax is deemed to have satisfied the uniformity rule when it
operates with the same force and effect in every place where the subject maybe
found.
a. True, true
b. True, False
c. False, False
d. False, True
21. One of the following is NOT an inherent limitation:

a. Taxes must be for public purposes
b. Uniformity of taxation
c. Territoriality rule
d. Government exemption
22. The power to tax is the power to destroy. Is this always so?
a. No. The Executive Branch may decide not to enforce a tax law which it believes to
be confiscatory.
b. Yes. The tax collectors should enforce a tax law even if it results to the destruction
of the property rights of a taxpayer.
c. Yes. Tax laws should always be enforced because without taxes the very
existence of the State is endangered.
d. No. The Supreme Court may nullify a tax law, hence, property rights are not affected.
23. Although the power of taxation is basically legislative in character, it is NOT

the function of Congress to
a. Fix with certainty the amount of taxes.

b. collect the tax levied under the law.
c. identify who should collect the tax.
d. determine who should be subject to the tax.
24. Which among the following concepts of taxation is the basis for the situs of income
taxation?
a. Lifeblood doctrine of taxation
b. Symbiotic relation in taxation
c. Compensatory purpose of taxation
d. Sumptuary purpose of taxation
25. Taxes are assessed for the purpose of generating revenue to be used for public
needs. Taxation itself is the power by which the state raises revenue to defray the
expenses of government. A jurist said that a tax is what we pay for civilization. In
our jurisdiction, which of the following statements may be erroneous?
a. Taxes are pecuniary in nature.

b. Taxes are enforced charges and contributions.
c. Taxes are imposed on persons and property within the territorial jurisdiction of
the State.
d. Taxes are levied by the executive branch of the government.
26. Which theory in taxation states that without taxes, a government would be
paralyzed for lack of power to activate and operate it, resulting in its destruction?
a. Power to destroy theory
b. Lifeblood theory
c. Sumptuary theory
d. Symbiotic doctrine
27. First Statement - In civil cases involving the collection of internal revenue taxes,
prescription is construed strictly against the government and liberally in favor of the
taxpayer.
Second Statement - In criminal cases involving tax offenses punishable under the
National Internal Revenue Code (NIRC), prescription is construed strictly against
the government
a. True, True
b. True, False
c. False, False
d. False, True .
28. The following are sources of tax laws, except:
a. Constitution
b. Statue
c. Decisions of the Supreme Court
d. Opinion of law luminaries
29. Money collected from taxation shall not be paid to any religious dignitary EXCEPT
when
a. The religious dignitary is assigned to the Philippine Army.
b. It is paid by a local government unit.
c. he payment is passed in audit by the COA.
d. It is part of a lawmaker’s pork barrel.
30. The actual effort exerted by the government to effect the exaction of what is
due from the taxpayer is known as
a. assessment.
b. levy.
c. payment.
d. collection.
31. Transfer of the tax burden by one whom the tax is assessed to another
a. Shifting
b. Capitalization
c. Tax exemption
d. Transformation
32. The method by which the manufacturer or producer upon whom the tax is imposed
pays the tax and strives to recover such expense through lower production cost
without sacrificing the quality of his product
a. Shifting
b. Capitalization
c. Tax exemption
d. Transformation
33. The reduction in the selling price of income producing property by an amount equal
to the capitalized value of future taxes that may be paid by the purchaser
a. Shifting
b. Capitalization
c. Tax exemption
d. Transformation
34. Tax as distinguished from license fee:
a. Non-payment does not necessarily render the business illegal;
b. A regulatory measure;
c. Imposed in the exercise of police power;
d. Limited to cover cost of regulation.
35. Value-added tax is an example of:

a. Graduated tax;
b. Progressive tax;
c. Regressive tax;
d. Proportional tax.
36. First Statement – There will only be a tax if there is a law imposing the tax.
Second Statement – The power to tax is inherent and no constitutional grant of said
power is required before the state can exercise such power.
a. True, True
b. True, False
c. False, True
d. False, False
37. For purposes of determining income tax liability: In case of conflict between the
tax code and generally accepted accounting principles (GAAP):
a. Both tax codes and GAAP shall be enforced;
b. GAAP shall prevail over tax code;
c. Tax code shall prevail over GAAP;
d. The issue shall be resolved by the courts.
38. First Statement – Tax and debt can be subject to off-set.

Second Statement – Taxes are generally payable only in money.
a. True, True
b. True, False
c. False, True
d. False, False
39. Which of the following statements is not correct?

a. Taxes may be imposed to raise revenues or to regulate certain
activities within the state;
b. The state can have the power of taxation even if the Constitution
does not expressly give it the power to tax;
c. For
the exercise of the power of taxation, the state can tax anything at any time;
d. The provisions of taxation in the Philippine Constitution are grants of
power and not limitations on taxing powers.
40. First Statement – The income from bank deposit of a non-stock non-profit
educational institution is exempt.
Second Statement – income of a non-stock non-profit educational institution is exempt
a. False; True
b. True; True
c. False; False
d. False, True
1. Income is anything derived from, except

a. Labor
b. Capital
c. Both labor and capital
d. Neither labor nor capital
2. The following are the characteristics of income tax, except

a. National
b. General
c. indirect
d. ad valorem
3. The adapted system of income taxation in the Philippines is

a. Global System
b. Schedular system
c. Mixed System
d. Modular system
4. First Statement - A global system of taxation is one where the taxpayer is required to
lump up all items of income earned during taxable period and pay under a single set
of income tax rules on these different items of income.
Second Statement - A schedular system of taxation provides for a different tax
treatment of different types of income so that a separate tax return is required to be
filed for each type of income and the tax is computed on a per return or per
schedule.
a. True, True
b. True, False
c. False, False
d. False, True
5. The following are the classification of income taxpayers for whom a particular
chapter of the Tax Code was provided, except
a. Corporation
b. Estate and Trust
c. Individual
d. Partnership
6. The following are taxable on income derived from sources within the Philippines
only, except
a. A resident and citizen of Australia who went for a 9 month holiday in Boracay,
Aklan
b. A Citizen of the Philippines who has permanently migrated into the United States
of America
c. A Filipino who is a resident of Batanes Island
d. A British Racecar driver, residing in Switzerland and on a weeklong beach
holiday in Amanpulo Island.
7. One of the following income is considered derived from sources within the Philippines
a. Gain on sale of shares of stocks of Microsoft Incorporated, created under the
laws of the USA.
b. Royalty income from use in Taiwan of software developed by Itlog Technologies,
a corporation engaged in trade or business in the Philippines.
c. Dividend income from a foreign corporation whose 60% of gross income from the
past 3 years were attributed from its business in Malaysia.
d. Interest income from a debtor who is residing in Davao City.
8. Dr. Pepe, an expert American Virologist was hired by a Philippine Pharmaceutical
company to assist the development of a vaccine, for which he had to stay in the
Philippines for an indefinite period. His coming to the Philippines was for a definite
purpose which in its nature would require an extended stay and to that end makes
his home temporarily in the Philippines. The American virologist intends to leave the
Philippines as soon as his Philippine assignment is completed.
For income tax purposes, the American virologist shall be classified as:
a. Resident alien
b. Nonresident alien engaged in trade or business
c. Nonresident alien not engaged in trade or business
d. Resident citizen.
9. Epinem, an American Rapper, was engaged to perform for 2 nights at the Philippine
Arena, after which he returned to the USA. For income tax purposes, he shall be
classified as:
a. Resident alien.
b. Nonresident alien engaged in trade or business.
c. Nonresident alien not engaged in trade or business.
d. Resident citizen.
10. First Statement – An Overseas Filipino Worker is taxable on income derived from
sources within the Philippines only.
Second Statement – Seafarers, who are Filipino Citizens, who receive compensation as
a complement for services rendered abroad as a member and complement of a
vessel engaged exclusively in international trade, shall be exempt from Philippine
income tax from the aforesaid compensation income. Provided has a valid overseas
employment certificate (OEC), valid Seafarers Identification Record Book (SIRB) or
Seaman’s Book duly issued by the Maritime Industry Authority (MARINA)
a. True, True
b. True, False
c. False, False
d. False, True
11. The following are income, derived from souces within the Philippines are subject to
creditable withholding tax, except:
a. Income derived from employer-employee relationship
b. Sale of real property held as ordinary asset
c. Passive royalty income from literary works
d. Rental income
12. Which of the following interest income derived within the Philippines is subject to
basic income tax?
a. Interest income from bank deposits
b. Interest income from loans
c. Interest income from deposit substitutes
d. Interest income from trust funds
13. Which of the following interest income by a resident is subject to 15% final tax?
a. Interest income from peso bank deposits
b. Interest income from deposit substitutes
c. Interest income trust funds
d. Interest income from dollar deposits
14. The following royalties earned from sources within the Philippines is subject to 10%
final withholding tax, except.
a. Royalties from computer software
b. Royalties from books
c. Royalties from literary works
d. Royalties from musical compositions
15. Ben Marino, a seaman, opened a joint bank account, under the expanded foreign
currency deposit system, with his wife. A month after, the bank deposit earned
interest in the amount of USD1,000 (foreign exchange rate is P50 for every USD1).
The final tax due on the interest income is.
a. P7,500
b. P3,750
c. P1,875
d. P10,000
16. Lucky Comcepto, a Filipino citizen, won from the Philippine Charity Sweepstakes
Swertres draw a prize amounting to P4,500. How much is the final tax on the said
winning.
a. P0
b. P900
c. P450
d. P1,440
17. Fernando Amorsolo, retired from

the Ninja Turtles, had the following income or the taxable year ended December 31,
2021.
Donatelo Pizza Company Limited, an P500,000

ordinary partnership in the Philippines,
share in the distributable income after
tax of the partnership
Da Vinci, Angelo, Amorsolo and P2,500,000
Associates, a general professional
partnership, share in the distributable
income.
Shredder Incorporated, a P250,000
domestic corporation, cash
dividend
The final tax liability of Fernando is:
a. P325,000
b. P75,000
c. P0
d. P250,000
18. The following sale are not subject to the capital gains tax on real property, except.
a. 10 door apartment building
b. Condominium unit owned by a real estate dealer
c. Recreational Vehicle used as a residence by a Doctor for the Barrios
d. Farm lot inherited by Doctor Abogado from his grandfather
19. The following are the requisites in order for the sale of real property, located in the
Philippines and held as capital assets to be exempt from the capital gains tax,
except
a. The property sold is the principal residence of the seller
b. The proceeds of the sale is utilized to acquire another principal residence
c. The new principal residence is acquired or constructed within 18 months from the
time of sale
d. The exemption from capital gains tax can be availed twice every ten years.
20. Edwin Nola sold his principal residence for P16,000,000 when the cost to him of the
same was P5,000,000. At the time of the sale the zonal and assessed value are
Php20,000,000 and P15,000,000, respectively.
The capital gains tax on the sale is. a.
P300,000
b. P1,200,000
c. P900,000
d. P0
Php20,000,000 and P15,000,000, respectively. Ten months after the sale, Edwin
acquired another principal residence for P25,000,000.
The cost basis of the new principal residence is. a.

P25,000,000
b. P20,000,000
c. P14,000,000
d. P16,000,000
The capital gains tax on the sale is a.

P300,000
b. P1,200,000
c. P900,000
d. P0
The cost basis of the new principal residence is a.
P12,000,000
b. P5,000,000
c. P3,750,000
d. 1,250,000
24. Broget, is employed and paid a monthly salary equivalent to the statutory minimum
wage. The following are his employment income during the year:
Statutory minimum wage P150,000
13th month pay 15,000
Overtime pay earned during the year 25,000
Night shift differential pay 20,000
Hazard pay 75,000
Holiday pay 15,000
Total P300,000
The taxable income of Broget during the year is
a. P300,000
b. P35,000
c. P0
d. P90,000
25. Amante is an MWE receiving salary equal to the statutory minimum wage
(SMW). He got promoted and beginning July 1, 2020 his salary exceeds the
SMW. Choose the correct statement from the following:
a. His income for the entire year ended 2020 is subject to compensation
withholding tax.
b. Considering that income tax period is one calendar year, Amante will be
subjected to compensation withholding beginning January 1, 2021.
c. Only his earnings beginning July 1, 2020 is subjected to compensation
withholding tax.
d. Holiday, overtime, nightshift and hazard pay is exempt from withholding tax.
Numbers 26 and 27 are based on the following set of facts
Mrs and Mr Beltran, CPA and Lawyer, respectively, had the following data for taxable
year ended December 31, 2021:
Salaries, Mrs P600,000

Bonus (13th month pay), Mrs 60,000
Professional Fees, (net of 10% withholding tax) 7,200,000
Mr
Expenses – Practice of profession 3,200,000
Rental income (net of 5% withholding tax) 712,500
Rental expenses 280,000
Other income, husband 840,000
26. The taxable income of Mr. Beltran is:

a. P5,875,000
b.
P3,235,000
c. P835,000
d. P235,000
27. The taxable income of Mrs. Beltran is:

a. P5,875,000
b. P3,235,000
c. P835,000
d. P235,000
Numbers 28 to 30 are based on the following
Christine Napa, the Chief Financial Officer of Driedpiece Inc., earned annual
compensation income in 2021 of P2,500,000, inclusive of 13 th month and other benefits
in the amount of P220,000 but net of mandatory contributions to SSS and Philhealth.
Aside from employment income, she owns a convenience store, with gross sales of
P800,000. Her Cost of Sales and operating expenses are P500,000 and P150,000,
respectively, and with non-operating income of P100,000.
28.How much is the total income tax of Christine?
a. P52000
b. P701,200
c. P621,200
d. P693,200
29.If Christine opted for the 8% income tax rate, her income tax expense is:
a. P52,000
b. P701,200
c. P621,200
d. P693,200
30. Based on the same set of fact facts in number 28, except that Christine is not
employed and opted to avail of the 8% income tax. Her income tax expense for
the year is.
a. P52,000
b. P701,200
c. P621,200
d. P693,200
31. An employer is required to register with the BIR within days from employment and
obtain a tax identification number (TIN) for his/her/its employee.
a. 5
b. 10
c. 25
d. 30
32. The following are the requisites of substituted filing, except:
a. The individual earned purely compensation income during the taxable year
b. The individual earned compensation income from a sole employer
c. The amount of tax withheld by the employer is correct and complete
d. If married, should have paid income tax also
33. First Statement - Income tax returns of individual are required to filed not later than
April 15 of the following year.
Second Statement – An individual deriving income from business is required to submit 4
quarterly income tax returns.
a. True, True
b. True, False
c. False, False
d. False, True
34. An individual income taxpayer is allowed to pay his income tax due in 2
installment if his income tax due is in excess of
a. Php1,000
b. Php2,000
c. Php3,000
d. Php4,000
35. An individual income taxpayer who availed the installment method of paying his
income tax is required to file and pay the second installment of his annual
income tax due, not later than
a. July 15
b. August 15
c. September15
d. October 15
36. The annual income tax return shall consist of a maximum of pages.
a. One (1)
b. Two (2)
c. Three (3)
d. Four (4)
1. First Statement - A “fringe benefit” is defined as being any good, service or other
benefit furnished or granted in cash or in kind by an employer to an individual
employee.
Second Statement – It is the employer who is required to pay the income tax on the
fringe benefit.
a. True, True
b. True, False
c. False, False
d. False, True
2. Share based payments, e.g., stock options, restricted stock units and alike, given by
the employer to his/her/its employees, are:
a. Subject to the fringe benefits tax in all cases
b. Exempt income of the employee
c. Reportable as compensation income of the employee in all cases
d. Subject to the Fringe Benefits tax in case of an employee holding a managerial
position
3. The fringe benefits tax is generally based on

a. Compensation income
b. Monetary value
c. Grossed-up monetary value
d. Value of the benefit
4. The following are not subject to the Fringe Benefits tax, except:
a. Fringe benefit received by a rank-and-file employee
b. Fringe benefit received by a managerial and supervisory employee
c. Salary and wages of managerial employee
d. Salary and wages of rank-and-file employee
5. Identify the erroneous statement from the following: The Fringe Benefit Tax is
a. The liability of the employer.
b. An income tax of the employee subjected to the final withholding tax system
whereby the burden thereof rest upon the employer
c. Deductible expense of the employer
d. Liability of the employee if the employee is a rank-and-file employee
6. Which among the following is a taxable “de minimis” benefit

a. Medical cash allowance to cover medical and healthcare need, annual
medical/executive check-up, maternity assistance and routine consultations not
exceeding Php10,000/year.
b. Gifts given during Christmas and major anniversary celebrations not exceeding
Php5,000 per year
c. Employees achievement award for length of service or safety achievement in the
form of cash or gift certificate in an amount not exceeding Php10,000.
d. Rice allowance not exceeding Php2,000 per month.
7. The following are exempt de minimis benefits except:

a. Uniform given to employees by the employer not exceeding Php6,000 per annum
b. Laundry allowance not exceeding Php300 per month
c. Productivity incentive pay not exceeding Php10,000 pursuant to a collective
bargaining agreement
d. Monetized unused vacation leave not exceeding 15 days
8. Sean Umali is a rank-and-file employee. During the year, he received the following
from his employer:
Basic Salary- net of statutory exclusions Php 420,000
13th month pay Php35,000
Productivity Incentive pay w/ CBA Php15,000
Christmas Bonus Php35,000
Uniform Allowance Php10,000
Monetized unused vacation leave (15 Php26,250
days_)
Rice Subsidy Php30,000
Determine Sean Umali’s Taxable Income for the year.
a. Php420,000
b. Php433,750
c. Php445,000
d. Php170,000
Items 9 to 11 are based on the following:
Galante Inc. provided residential accommodation to its Branch Manager. Rental expense per
quarter, paid directly by the employer to the lessor is P130,000.
9. The value of the benefit during the quarter is:
a. Php200,000
b. Php130,000
c. Php65,000
d. Php35,000
10. The monetary value during the quarter is:

a. Php200,000
b. Php130,000
c. Php65,000
d. Php35,000
11. The Fringe Benefits Tax due for the quarter is:
a. Php200,000
b. Php130,000
c. Php65,000
d. Php35,000
12. The journal entry to record the fringe benefit is
a. Fringe Benefit Expense Php130,000

Fringe Benefit Tax Expense Php 35,000
Cash Php165,000
b. Fringe Benefit Expense Php130,000

Cash Php200,000
c. Fringe Benefit Expense Php 65,000

Cash Php100,000
d. Fringe Benefit Expense Php200,000

Cash Php235,000
Items 13 and 14 are based on the following:
Trey Lorenz, a Senior Manager, was sent by his Firm to Bangkok Thailand to participate
in the Leadership Development Program of their Global professional Firm. The training
lasted for three (3) days. The following are the expenses incurred for his trip abroad.
Air Fare – First Class Ticket USD2,000

Air Fare – Economy Ticket USD700
Hotel Accommodation USD2,250
Per diem allowance( for inland travel USD1,500
expenses)
Assume that the foreign exchange is USD1.00 = Php50,00

13. Assuming that there was proper documentary evidence showing that the
employee’s foreign trip was related to his employer’s business, the Fringe
Benefits Tax due is:
a. Php322,500
b. Php100,000
c. Php52,500
d. Php173,654
14. Assuming that there was no proper documentary evidence showing that the
employee’s foreign trip was related to his employer’s business, the Fringe
Benefits Tax due is:
a. Php322,500
b. Php100,000
c. Php52,500
d. Php173,654
Numbers 15 and 16 are based on the following:
15. Source of Life, a non-stock non profit religious organization, owns a condominium
unit at the Serendra in the Bonifacio Global City. It was bought by the Company at a
price then of Php10,000,000. On the other hand, the fair value of the said
condominium unit is Php15,000,000 as zonal value and Php8,000,000 in the City
Assessors Office. This condominium unit is being used by the Company’s head
Pastor for his residential accommodation. How much is the fringe benefits tax due
on the first quarter of the year.
a. Php144,231
b. Php750,000
c. Php93750
d. Php50,481
16. Assuming the Company gave the condominium unit to the Head Pastor. The fringe
benefits tax will be:
a. Php5,384,615
b. Php8,076,924
c. Php15,000,000
d. Php7,500,000
Numbers 17 to 18 are based on the following:
Coco Roco is a sole proprietor of a business engaged in manufacture and design of

furniture. Her Chief Designer, holding a managerial position, was provided a motor
vehicle bought at a price of Php2,100,000.
17. The fringe benefits tax on the motor vehicle provided to the Chief Designer is:
a. Php1,130,769
b. Php56,538
c. Php861,538
d. Php161,538
18. The quarterly fringe benefits tax on the motor vehicle, provided the same was bought in
installment resulting to an interest of Php125,000 and registered under the name of the
Chief Designer:
a. Php1,130,769
b. Php56,538
c. Php861,538
d. Php161,538
19. The fringe benefits tax on the motor vehicle provided the Chief Designer shouldered the
first Php500,000 of the price of the car:
a. Php1,130,769
b. Php56,538
c. Php861,538
d. Php161,538
20. Benz Peredo is a managerial employee of Pranser and Never Inc. (PNI), as part of his
compensation package, he was given stock options on the common shares of PNI
(traded in the New York Stock Exchange). The following are the pertinent details of his
stock options benefit:
Number of Stock options Awarded 2,500
Exercise Price Php75
Fair market value at exercise Php100
Assuming he exercised all of the stock options awarded to him, the fringe benefits tax on his
stock options exercise is:
a. Php33,654
b. Php96,154
c. Php134,615
d. Php100,962
21. The Quarterly Remittance Return of final income taxes withheld on fringe benefits paid to
employees other than rank-and-file (BIR Form 1603Q) is due:
a. Not later than the last day of the month following the close of the quarter during
which withholding was made.
b. Not later than the 20th day of the month following the close of the quarter during
which the withholding was made.
c. Not later than the 5th day of the month following the close of the quarter during
d. Not later than the 25th day of the month following the close of the querter during
22. The following are exempt fringe benefits except

a. Contributions of the employer for the benfit of the employee to retirement,
insurance and hospitalization benefit plans.
b. Housing accommodation within 100 meters from the perimeter of the
employer’s business
c. Temporary housing for a stay in the housing unit for a period not exceeding
three (3) months.
d. Fringe benefit given for the advantage of the employer.
1. For purposes of income taxation, the following are considered “Corporation”, except:
a. One person corporation

b. Ordinary Partnership
c. General Professional Partnership
d. Joint Venture
e. Joint stock companies
f. Joint accounts (cuentas en participacion)
g. Associations
h. Insurance companies
2. The following
are not “Corporation” under the National Internal Revenue Code, except:
a. General Professional Partnership

b. Joint venture or consortium formed for the purpose of undertaking construction
projects
c. Joint venture or consortium formed for the purpose of engaging in petroleum,
coal, geothermal and other energy operations pursuant to an operating or
consortium agreement under a service contract with the Government
d. Joint venture formed between two transport corporations granted their respective
franchise to operate public utility of transportation
3. Technotronics Energy Corporation, a corporation registered in Belgium, has a 50 MW

electric power plant in Ibaan, Bataan. Aside from Technotronic’s income from its
power plant, which among the following is considered as part of its taxable income
from sources within the Philippines?
a. Gains from the sale to an Ilocos Norte power plant of generator delivered in the
United States
b. Interests earned on its dollar deposits in a Philippine bank under the Expanded
Foreign Currency Deposit system
c. Dividends from a three-year old Norwegian subsidiary with operations in the
Philippines and derives 60% of its gross income from the Philippines
d. Royalties from the use in Brazil of generator sets designed in the Philippines by its
engineers
4. Villasis, Inc. bought a parcel of land in 2020 for P7 million as part of its inventory of
real properties. In 2021, it sold the land for P12 million which was its zonal valuation.
In the same year, it incurred a loss of P6 million for selling another parcel of land in its
inventory. These were the only transactions it had in its real estate business. Which of
the following is the applicable tax treatment?
a. Villasis shall be subject to a tax of 6% CGT of P12 million

b. Villasis could deduct its P6 million loss from its P5 million gain
c. Villasis’ gain of P5 million shall be subject to the holding period being held for less than
a
year
d. Villasis’ P6 million loss could not be deducted from its P5 million gain
5. Samsang Tech Corporation is registered under the laws of the British Virgin Islands. It
has extensive operations in Asia. In the Philippines, its products are imported and
sold at a mark-up by its exclusive distributor, Somewell, Inc. The BIR complied a
record of all the imports of Somewell from Samsang and imposed a tax on
Samsang’s net income derived from its exports to Somewell. Is the BIR correct?
a. Yes. Samsang is a resident foreign corporation engaged in trade or business
in the Philippines.
b. No. The tax should have been computed on the basis of gross income and not net
income.
c. No. Samsang is a non-resident foreign corporation not engaged in trade or
business in the Philippines.
d. Yes. Samsang is doing business in the Philippines through its exclusive distributor
Somewell.
6. The following government owned and controlled corporations are exempt from
income tax, except:
a. Social Security System

b. Philippine Health Insurance Corporation (Philhealth)
c. Government Service Insurance System
d. Local Water Districts
e. Philippine
Amusement and Gaming Corporation
7. The following are classified as non-resident foreign corporation, except:
a. Non-resident owner of vessel chartered by Philippine nationals

b. Non-resident owner of aircraft leased and used in the Philippines
c. Non-resident owner of cinematographic Films
d. Non-resident airline, with no landing right in the Philippines, whereby tickets of
its flight originating abroad are regularly sold by Philippine travel agents in the
Philippines
8. All of the following are taxable on income derived from sources within the Philippines only,
except:
a. Non-resident foreign corporation

b. Resident foreign corporation
c. Domestic Corporation
d. Foreign corporation
9. First Statement - Non-Resident Foreign Corporations are not required to file any
income tax return.
Second Statement - Tax exempt corporations are also required to file an ITR for
administrative purposes only.
a. True, True
b. False, True
c. False, False
d. True, False
10. The following passive income, from sources within the Philippines, received by a
domestic corporation shall be subject to 20% final withholding tax, except:
a. Interest income from peso bank deposit

b. Yield from deposit substitutes
c. Interest income from foreign currency denominated deposit under the Foreign
Currency Deposit System
d. Royalties
11. A depository bank under Foreign Currency Deposit System has the following income
from foreign currency transactions (Exchange Rate $1=P50):
Other income From $50,000

Nonresidents
Interest income from residents 30,000
Other income- BPI (FCDU) 2,000
How much is the final withholding tax applicable on the above
income? a. P225,500
b. P95,000
c. P150,000
d. P545,000
12. Interest income of a domestic commercial bank derived from a peso loan to a
domestic corporation in 2021 is:
a. S
ubject to the 25% income tax based on its net taxable income
b. Subject to the 20% final withholding tax.
c. Subject to the 15% final withholding tax.
d. Subject to 10% final withholding tax.
Numbers 13 to 15 are based on the following set of facts:
On April 15, 2021, Aishin Corporation sold shares of stocks of Abu Co., a domestic
corporation. It was sold at its fair market value of P5,000,000 when its cost to the seller
was P2,000,000
13. Assuming Aishin Corporation is a domestic corporation, the capital gains tax on
the transaction is:
a. P450,000
b. P295,000
c. P750,000
d. P345,000
14. Assuming Aishin Corporation is a foreign corporation, the capital gains tax on the
transaction is: a. P450,000

b. P295,000
c. P750,000
d. P345,000
15. Assuming Aishin Corporation is a domestic corporation and the shares were sold at a
price of P4,000,000, when its fairmarket value at the time was P5,000,000. The cost of
the shares remain at P2,000,000. The total tax liability of the seller is:
a. P450,000
b. P295,000
c. P750,000
d. P345,000
Corporate income
tax under CREATE
The higher between the “Regular” or

Type of Corporation “MinimumCorporate Income Tax (MCIT)”
rates
Regular MCI
T
Rate Effectivity Rate Effectivity
Domestic Corporation:
Domestic corporations, in general 25% July 1, 2020 1% July 1, 2020 to
June 30, 2023
2% July 1, 2023
For corporations with net taxable 20% July 1, 2020 1% July 1, 2020 to
income not exceeding Five June 30, 2023
Million Pesos (P5,000,000) AND
total assetsnot exceeding One
Hundred Million (P 2% July 1, 2023
100,000,000), excluding the land
on which the particular business
entity’s office, plant and
equipment are situated
Proprietary Educational 1% July 1, 2020 Not Applicable

Institutions
and Hospitals to June 30, 2023
10% July 1, 2023
Foreign Corporation [on taxable income(e.g., net or
gross income, as applicable) derived from all sources
within the Philippines]:
1% July 1, 2020 to
Resident Foreign Corporation 25% July 1, 2020 June 30, 2023
2% July 1, 2023
The higher between the “Regular” or
Type of Corporation “MinimumCorporate
Income Tax (MCIT)” rates
Regular MCI
T
Rate Effectivity Rate Effectivity
Offshore Banking Unit (OBUs) 25% Upon the 1% Upon the
(Note: OBUs shall now be taxed effectivityof the effectivity of
asresident foreign corporation CREATE the
uponeffectivity of the CREATE) CREATE
until June
30,
2023
2% July 1, 2023
Regional Operating Headquarters 25% January 1, 2022 1% January 1,

2022
(ROHQ) to June
30,
2023
2% July 1, 2023
Non-Resident Foreign 25% Januar 1, 2021 Not applicable

Corporation y
16. A Domestic Corporation was registered with the Bureau of Internal Revenue. Its
Certificate of Registration (BIR Form 2313) indicates it was registered on December
27, 2020. It had a soft opening and made its first sale on January 7, 2021. It can be
liable to the Minimum Corporate Income Tax on the year:
a. 2022
b. 2023
c. 2024
d. 2025
17. The following corporations are exempt from the MCIT, except
a. Non-resident owner of cinematographic Films

b. Off shore banking unit
c. Resident International Carrier
d. Ordinary partnership in the Philippines
18. One of the following is not a ground for exemption from MCIT:
a. Prolonged labor dispute

b. Force majeure problems
c. Legitimate business reverse
d. Law suits filed by the company
Corporation A, a retailer, has a gross sales of P1,400,000,000 with a cost of sales

of P560,000,000 and allowable deductions of 150,000,000 for the calendar year
2021. Its total assets of P180,000,000 as of December 31, 2021 per Audited
Financial Statements includes the land costing P50,000,000 and the building of
P25,000,000 in which the business entity is situated, with an aggregate amount of
P75,000,000 as Fixed Assets. Assuming CY 2021 is the 5th year of operation of
Corporation A,
19. Corporation A’s regular corporate income tax for CY
2021 is: a. P172,500,000

b. P8,400,000
c. P138,000,000
d. P0
20. Corporation A’s minimum corporate income tax for the CY
2021 is: a. P172,500,000

b. P8,400,000
c. P138,000,000
d. P0
21. The amount of tax Corporation A is liable for the CY
2021 is: a. P172,500,000

b. P8,400,000
c. P138,000,000
d. P0
22. Took Mall Corporation, a domestic corporation and in its 7th year of operation in 2018,
provided you with the following data:
2018 2019 2020

Gross sales P2,040,00 P2,800,000 P3,000,00
0 0
Sales returns 40,000 100,000 -
Cost of sales 1,000,000 700,000 1,500,000
Business expenses 950,000 2,100,000 1,200,000
Assuming that for the year ended 2020, Took Mall’s total asset is amounting to
P250,000. The income tax due after tax credit, if any for taxable year 2020 is:
a. P10,000
b. P60,000
c.
P30,000
d. P90,000
5,000
Jiff
Free Corporation has the following information for the taxable year ended December 31,
2020:
Quarter RCIT MCIT Creditable

Withholding Tax
First 200,000 160,000 40,000
Second 240,000 500,000 60,000
Third 500,000 150,000 80,000
Fourth 300,000 200,000 70,000
Additio
nal Information:
a) Excess MCIT for 2019, P60,000;
b) Excess tax credits from 2019 amounts to P20,000.
23. How much was the income tax payable for the first quarter?
a. P200,000
b. P120,000
c. P160,000
d. P80,000
24. How much was the income tax payable for the second quarter?
a. P660,000
b. P200,000
c. P460,00
d. P60,000
25. How much was the income tax payable for the third
quarter? a. P860,000
b. P600,000
c. P120,000
d. P140,000
26. How much was the annual income tax
payable? a. P1,260,000
b. P230,000
c. P390,000
d. P930,000
27. If the gross income from unrelated activity exceeds 50% of the total gross income
derived by any private educational institution, the rate shall be 30% based on the
entire taxable income. This principle is known as:
a. Constructive receipt
b. Tax benefit rule
c. End result doctrine
d. Predominance test
Chong A Arts
High School, a proprietary educational institution organized in 1972, had the following
data for 2020.
Tuition Fees P850,000

Rental Income (net of 5% cwt) 142,500
School related expenses 820,000
28. The income tax still due for 2020 is:
a. P2,400
b. (P5,700)
c. P10,500
d. P46,500
29. Assuming the year is 2021, the income tax due
is: a. P2,400
b. (P5,700)
c. P10,500
d. P46,500
is: a. P2,400
b. (P5,700)
c. P10,500
d. P46,500
is: a. P2,400
b. (P5,700)
c. P10,500
d. P46,500
32. Xavier School for Gifted Youngsters, a proprietary educational institution organized in
2004, had the following data for 2020.
Tuition Fees P480,000

Rental Income (net of 5% cwt) 494,000
School related expenses 945,000
The income tax still due for 2020, assuming XSGY’s total assets is P500,000,000 is:
a. P16,500
b. (P9,500)
c. (P10,875)
d. P20,000
The Legacy Corporation provided the following data for the calendar year ending December
31, 2021 ($1=P50).
Philippines US
A
Gross Income P4,000,000 $40,000
Deductions 2,500,00 15,000
Income Tax Paid 3,000
33. If it is a domestic corporation, its income tax after tax
credit is: a. P812,500

b. P537,500
c. P962,500
d. P400,000
34. If it is a domestic corporation and its total assets amount to P95,000,000, its income
tax after tax credit is:
a. P812,500
b. P537,500
c. P962,500
d. P400,000
35. If it is a resident foreign corporation and its total assets amount to P95,000,000, its
income tax is:
a. P40,000
b. P450,000
c. P375,000
d. P525,000
36. If it is a non-resident foreign corporation, its income
tax is: a. P730,000

b. P1,280,000
c. P1,000,000
d. P1,400,000
37. If it is a domestic corporation, but it opts to claim the tax paid abroad as deduction
from gross income, its income tax is:
a. P910,000
b. P832,000
c. P237,000
d. P650,000
38. If it is a resident international carrier, assuming the gross income from the
Philippines is the gross Philippine billing, its income tax is:
a. P100,000
b. P 10,000
c. P 37,000
d. P125,000
39. If it is a non-resident cinematographic film
owner/lessor, its income tax is: a. P1,000,000 ans
40.
If it is a non-resident lessor of vessels, its
income tax is: a. P100,000

b. P180,000
c. P300,000
d. P128,000
41. If it is a non-resident lessor of aircrafts, machineries, and equipment, its

income tax is: a. P100,000
b. P180,000
c. P300,000
d. P128,000
42. If it is a resident foreign corporation but its expenses within and outside the
Philippines is P3M, unallocated (disregard original data on expense) its income tax is:
a. P640,000
b. P700,000
c. P480,000
d. P500,000
43. If it is a resident foreign corporation and it remitted 60% of its net profit to its head
office abroad, its total tax liability is (Original data)
a. P480,000
b. P571,800
c. 476.250
d. P612,750
44. Banco De Adamantium, a domestic corporation had the following data for the taxable
year ended December 31, 2020:
Regular Banking Unit:

Interest Income from loans P10,000,000
Interest Income from peso deposit with Bank of Gapan, a 1,000,000
domestic corp.
Dividend Income from various domestic corporations 1,500,000
Foreign Currency Deposit Unit:

Interest Income from loans to residents 2,000,000
Interest Income from loans to nonresidents 500,000
Additional
Information: Banco De Adamantium had total operating expenses of P12,000,000.
How much was the normal income tax for the year?
a. P600,000
b. P550,000
c. P400,000
d. P0
45. Generally, dividend income received by a domestic corporation from a foreign

corporation is includible as gross income of the recipient domestic corporation and
subject to corporate income tax. However, said foreign corporation dividend is exempt
from income tax provided the following requisites are met, except:
a. The dividends actually received or remitted into the Philippines are reinvested
in the business operations of the domestic corporation within the next taxable
year from the time the foreign-source dividends were received or remitted.
b. The dividends received shall only be used to fund the working capital
requirements,capital expenditures, dividend payments, investment in domestic
subsidiaries, and infrastructure project.
c. The domestic corporation holds directly or indirectly at least twenty percent (20%)
in value of the outstanding shares of the foreign corporation.
d. The domestic corporation has held the shareholdings uninterruptedly for a minimum
of two
(2) years at the time of the dividends distribution. In case the foreign corporation
has been in existence for less than two(2) years at the time of dividends
distribution, then the domestic corporation must have continuously held directly
at least twenty percent (20%) in value of the foreign corporation's outstanding
shares during the entire existence of the corporation.
46. The following are exempt from the Improperly Accumulated Earnings Tax, except?
a. Banks and other non-bank financial intermediaries

b. Publicly-held corporations
c. Insurance companies
d. Closely-held corporation
47. It is a test used in determining the reasonable needs of a business to justify the
accumulation of earnings which will exempt the corporation from paying Improperly
Accumulated Earnings Tax:
a. Urgency test
b. Immediacy test
c. Reasonable needs test
d. Control test
48. JCU Corporation, a domestic corporation had the following data for taxable year 2020:
Sales P5,000,000
Cost of goods sold 2,000,000
General selling and administrative expenses 500,000
Interest income from Philippine bank deposit 100,000
Rental income (net of 5% withholding tax) 190,000
Dividend Income:
From domestic corporation 60,000
From foreign corporation 50,000
Capital gains from sale of domestic shares of stocks sold Directly 75,000
to buyer
Dividend declared and paid during the year 500,000
Retained earnings, 12/31/2019 1,000,000
Par Value of outstanding shares 500,000
The income
tax payable was:
a.
P825,000
b. P899,200
c. P815,000
d. P819,200
756,250
49. Based on the foregoing problem, the Improperly accumulated earnings tax was:
a.
P208,125
b. P213,625
c. P108,125
d. P105,125
212,875
50. MNC Corporation, a domestic corporation, has unappropriated retained earnings in excess of
its paid-up capital stock amounting to P20,000,000 and P50,000,000 as of thefiscal years
ending June 30, 2020 and June 30, 2021, respectively. MNC Corporation shall be subject to
the 10% improperly accumulated earnings tax on the following fiscal years ending, except:
a. June 30, 2018

b. June 30, 2019
c. June 30, 2020
d. June 30, 2021
Asian Spirit, an international air carrier showed the following gross receipts for 2019:
Point of Destination Gross

Origin receipts
Philippines United States of 8,000,000
America
Korea Malaysia 4,000,000
Thailand Philippines 3,750,000
Philippines Philippines 2,100,000
Additional information:
 Thirty Five percent (35%) of the shipments from the Philippines to the United
States were later shipped to the Soviet Union.
 25% of all its revenues were from transport of cargoes and goods.
51. The income tax payable for 2019 is:
a. P127,500
b. P200,000
c. P170,000
d. P150,000
52. How much is the income tax payable for 2019 assuming the Philippines and U.S.
entered into a tax treaty subjecting international carriers to 1% income tax rate?
a. P68,000
b. P60,000
c. P80,000
d. P150,000
53. How much is the

income tax payable for 2019 assuming that Philippine carriers are exempt from
payment of income tax in the United States?
a. P125,000
b. P60,000
c. P0
d. P80,000
A corporation has the following data for 2016:
Gross income, Phil. P1,000,000

Gross income, USA 500,000
Gross income, Japan 500,000
Expenses, Phil. 300,000
Expenses, USA 200,000
Expenses, Japan 100,000
Other income:
Dividend from San Miguel Corp. 70,000
Dividend from Ford Motors, USA 120,000
Gain on sale of San Miguel shares
directly to buyers 150,000
Royalties, Phils. 50,000
Royalties, USA 100,000
Interest from receivables in the 60,000
Philippines
Rent Income, land in USA 250,000
Rent income, Building in the 100,000
Philippines
The Company also sold a land classified as capital asset for

P2,000,000. The cost of the land is P1,000,000 while its Zonal Value is P3,000,000.
54. Its income tax on all income as a domestic
corporation is: a. P578,000

b. P963,600
c. P683,500
d. P821,500
55. Based on the above problem, its income tax on all income if it is a resident foreign
corporation, ignoring sale of land:
a. P278,000
b. P663,600
c. P383,500
d. P509,000
56. And if it is a non-resident foreign corporation and there is tax sparing, its income
tax on all income is (ignore sale of land):
a. P378,000
b. P663,600
c. P383,500
d. P509,000
57. A
domestic corporation may employ, as a basis for filing its annual corporate
income tax return the:
a. Calendar year only

c. Either calendar or fiscal year .
b. Fiscal year only
d. Neither calendar nor fiscal year
58. A corporation files a, quarterly return within:
a. 30 days following the close of each of the first 3 quarters

b. 60 days after the end of each of the first 3 quarters
c. 30 days, after the end of each of the first 4 quarters
d. 60 days following the end of each of the first 4 quarters.
59. Which of the following is subject to the income tax?

a. A non-stock and non-profit educational institution
b. Public educational institution
c. Civic league or organization not organized for profit and operated exclusively
for the promotion of social welfare
d. Mutual savings bank and cooperative bank having a capital stock
represented by shares organized and operated for mutual purposes and profit
1. First Statement- Partnerships, no matter how created, are subject to income
taxation like a corporation.
Second Statement – A partnership, like a corporation, are allowed to claim itemized
deductions or optional standard deduction to determine taxable income or net
distributable income.
a. True, true
b. True, False
c. False, False
d. False, True
2. A taxable partnership may be subject to the following taxes:

1. Minimum corporate income tax
2. Regular corporate income tax
3. Improperly accumulated earnings tax.
a. 1, 2 and 3
b. 1 and 2 only
c. 1 only
d. None of the given choices
3. A partnership formed by persons for the sole purpose of exercising their common
profession, no part of the income of which is derived from engaging in any trade
or business.
a. General business partnership
b. General professional partnership
c. Co-ownership with capital contribution of the co-owners
d. Corporation by estoppel
4. A general professional partnership is exempt from income tax, but is required to

file an income tax return
a. For statistical purposes.
b. Because the net income of the partnership is reported as gross income of
the individual partners
c. Because all income earners are required to file income tax returns.
d. None of the above.
5. Which of the following statements is wrong?

a. A general partnership in trade is not taxable as a corporation.
b. A joint venture for undertaking construction projects is not taxable as a
corporation.
c. A consortium for energy operations pursuant to an operating consortium
agreement under a service contract with the government is not taxable as a
corporation.
d. A co-ownership where the activities of the co-owners are limited to the
preservation of property and collection of income from the property is not
taxable as a corporation.
6. First Statement - When the co-owners invest the income of the property co-owned in
a business or in any income producing properties or activities constituting
themselves into a business partnership, such partnership is consequently subject to
tax as a corporation.
Second Statement -As a rule, a co-ownership is not subject to income tax because
the activities of the co-owners are limited to the preservation and enjoyment of the
property and the collection of the income therefrom.
a. True, True
b. True, False
c. False, False
d. False, True
7. The partner’s share in the profits of a partnership is regarded as received by the

partners although not yet distributed. This concept of income reporting under the Tax
Code is known as:
a. Installment basis of reporting income
b. Accrual basis of reporting income
c. Constructive receipt basis of reporting income
d. Hybrid method of reporting income
8.
T
he share in the net income, received by a partner of a general professional
partnership is
a. Part of his gross income in his income tax return
b. Exempt from income tax
c. Subject to fringe benefit tax
d. Subject to final withholding tax
9. The share in the distributable income after tax, received by a partner of a general co-
partnership is
a. Part of his gross income in his income tax return
b. Exempt from income tax
c. Subject to fringe benefit tax
d. Subject to final withholding tax
Numbers 10 to 14 are based on the following:

10. TR & Co was established as early as 2010. Partners Troy and Ruby are sharing
profits 75:25. The following are the data on income and expenses for the year
ended December 31, 2020.
TR & Co Troy Ruby

Gross Income 750,000 1,250,000 750,000
Expenses 200,000 400,000 300,000
Dividend from a 20,000 2,000 1,500
Domestic
Corporation
Interest from 100,000
currency deposit
(gross)
Total Assets 11,000,000
The corporate income tax due of the partnership as reported in its income tax return is
a. Php137,500
b. Php15,000
c. Php850,000
d. Php40,000
11. The taxable income of Troy in his income tax return

is a. Php165,000
b. Php15,000
c. Php850,000
d. Php40,000
12. Assuming Ruby opted to pay the 8% preferential income tax during the year 2020,
income tax liability of Ruby is:
a. Php165,000
b. Php15,000
c. Php850,000
d. Php40,000
13. Amount of final taxes to be withheld on the respective shares of Troy and Ruby
a. P21,175.00 P17,325.00
b. 38,437.50 12,812.50
c. 25,025.00 20,475.00
d. 25,116.50 20,587.50
14. Assuming the partnership is a general professional partnership, the taxable

income of Ruby is
a. Php650,000
b. Php612,500
c. Php485,000
d. Php162,500
15. It arises when two or more heirs or beneficiaries inherit an undivided property from a
decedent, or when a donor makes a gift of an undivided property in favor of two or
more donees:
a. Joint account
b. Partnership
c. Estate
d. Co-ownership
Number 16 to 18 are based on the following:
Toto, Rick and Jane and Tarzan, brothers and sisters, are the heirs of Don Facundo.
The latter died, without leaving behind a last will and testament, and left a sole property,
i.e., a building with an annual rent income of Php15,000,000. During the year 2020, the
expenses of the property is Php1,500,000. During the same year, Toto had gross
income of Php3,000,000 and expenses of Php500,000.
16. The income tax liability of the co-ownership is:

a.Php4,050,000
b Php0
c. Php300,000
d. Php2,000,000
17. The taxable income of Toto during the year ended December 31,
2020: a. Php5,875,000
b. Php2,500,000
c. Php2,000,000
d. Php4,050,000
18. Assuming the year is 2021 and the heirs decided to invest their own money,
property and industry into the building that they co-own. The income tax liability of the
co- ownership assuming a taxable income of Php13,500,000:
a.Php3,375,000
b Php0
c. Php300,000
d. Php2,000,000
19. Jeje Construction Inc and Monmon Construction, Inc formed a joint venture to
create a 55 storey residential building along EDSA and agreed to share profits equally
Both parties including the JV are duly registered with the Philippine Construction
Accreditation Board. During the year ended December 31, 2020, the parties presented
the following:
Joint Venture Jeje Monmon

Gross Income 50,000,000 30,000,000 20,000,000
Business Expenses 35,000,000 20,000,000 15,000,000
19. The income tax of the JV is:

a.Php4,500,000 b.
Php1,500,000
c.Php0
d.Php5,250,0
00
20. The income tax of Jeje is:

a. Php4,500,000
b. Php1,500,000
c. Php0
d. Php4,812,500
21. Assuming Jeje was not able to obtain a PCAB Accreditation Certificate. The
total income tax of MonMon,, who did not qualify as an MSME, is
a. Php4,500,000
b. PHp1,375,000
c. Php0
d. Php5,250,000
22. First Statement-Where the estate is under judicial administration, the income of the
estate shall be taxable to the fiduciary or trustee.
Second Statement-Where the estate is not under judicial administration, the income of
the estate shall be taxable to the heirs and beneficiaries
a. True, True
b. True, False
c. False, False
d. False, True
23. First Statement-When an estate, under administration, has income-producing

properties, the annual income of the estate becomes part of the taxable gross
estate. Second Statement-When an estate, under administration, has income-
producing properties and its income during the year is distributed to the heirs, the
income so distributed is taxable to the heirs as part of their gross income for the
year.
a. True, True
b. True, False
c. False, False
d. False, True
Numbers 24 to 2a6 are based on the following
On December 31, 2019 Steve Armstrong died. Leaving behind an estate valued at
Php150,000,000. Steve’s heirs are John, Bert and Jamie. On February 2020, his
brother John was designated in a judicial proceeding as the administrator of Steve’s
estate. For the year ended December 31, 2020, the estate earned gross income of
Php2,500,000
and business expenses of Php1,750,000. John distributed to the heirs Php200,000 each,
as their share in the income of the estate. Bert had gross income of Php1,000,000
and Php800,000 expense during the year ended December 31, 2020.
24. Income tax of the estate is:

a. Php30,000
b. Php0
c. Php20,000
d. Php40,000
25. Income tax of Bert is:

a. Php30,000
b. Php0
c. Php20,000
d. Php40,000
26. Assuming that there is no executor nor administrator of Steve’s estate, Bert’s
income tax is:
a. Php30,000
b. Php0
c. Php20,000
d. Php42,500
27. Which of the following is correct

a. Income of the revocable trust is taxable to the trustee
b. Income of an irrevocable trust not taxable to the trustee
c. determination of income tax of an irrevocable trust is the same to that of a corporation
d. an irrevocable trust is subject to income tax like an
individual
Number 28 to 30 are based on the following
Mr. Bones created a trust naming his minor son Nerf as the beneficiary of the same. Ms.
Tee is designated as the trustee of the Trust amounting to Php50,000,000. During the
year ended December 31, 2020, the trust earned net income of Php3,500,000
whereby Ms. Tee distributed Php750,000 to Nerf as his share in the income of the
trust.
28. How much is the income tax of the trust assuming Mr. Bones can revoke the trust:
a. Php0
b. Php730,000
c.Php250,0
00
d.Php345,6
00
29. How much is the income tax of the trust assuming the Trust is irrevocable
a. Php0
b. Php730,000
c.Php250,0
00
d.Php345,6
00
30. How much is the income tax of Nerf for the year ended December 31, 2020:
a. Php0
b. Php730,000
c.Php117,5
00
d.Php345,6
00
31. The following are subject to income tax like that of an individual, except:
a. Income accumulated in trust for the benefit of unborn or unascertained person or
persons with contingent interests, and income accumulated or held for future
distribution under the terms of the will or trust;
b. Income which is to be distributed currently by the fiduciary to the beneficiaries, and
income collected by a guardian of an infant which is to be held or distributed as the
court may direct;
c. Income received by estates of deceased persons during the period of administration or
settlement of the estate; and
d. Income which, in the discretion of the fiduciary, may be either distributed to the trustor
or accumulated
32. The following are allowable deductions from the gross income of a trust
administered in a foreign country, except:
a. itemized deductions
b. optional standard deduction
c. income of the trust during the year distributed to the beneficiary
d. depreciation expense of the property held in trust
1. Investment Promotion Agencies (IPAs)- refer to government entities created by

law, executive order, decree or other issuance, in charge of promoting
investments, granting and administering tax and non-tax incentives, and
overseeing the operations of the different economic zones and freeports in
accordance with their respective special laws. These include the following,
except:
a. Board of Investments (BOI)

b. Regional Board of Investments Autonomous Region in Muslim Mindanao (RBOI-
ARMM)
c. Philippine Economic Zone Authority (PEZA)
d. Bases Conversion and Development Authority (BCDA)
e. Subic Bay Metropolitan Authority (SBMA)
f. Clark Development Corporation (CDC)
g. John Hay Management Corporation (JHMC)
h. Poro Point Management Corporation (PPMC)
i. Cagayan Economic Zone Authority (CEZA)
j. Zamboanga City Special Economic Zone Authority (ZCSEZA)
k. PHIVIDEC Industrial Authority (PIA)
l. Aurora Pacific Economic Zone and Freeport Authority (APECO)
m. Authority of the Freeport Area of Bataan (AFAB)
n. Tourism Infrastructure and Enterprise Zone Authority (TIEZA)
o. All other similar existing authorities or that may be created by law unless
otherwise specifically exempted from the coverage of this Code
p.Financial incentives review board (FIRB)
Numbers 2 and 3 are based on the following set of
facts:
Clemency Incorporated, a tier II domestic enterprise, set-up shop in Taguig City. It

produces parts for export and was issued it commenced its commercial operation
started on January 1, 2022, as evidenced by a Notice of Approval of Start of
Commercial Operation duly issued by PEZA.
2. Its income tax holiday shall end on:
a. December 31, 2023

b. December 31, 2024
c. December 31, 2025
d. December 31, 2026
3. Assuming Clemency does not reapply its Fiscal Incentives with the pertinent IPA,
it will be subjected to RCIT beginning the taxable year:
a. January 1, 2030
b. January 1, 2031
c. January 1, 2032
d. January 1, 2036
4. Santo Sebastian College is a non-stock, non-profit educational institution run by

the Archdiocese of Maynila. It collected and received the following exempt
income, except:
a. Tuition fees
b. Dormitory fees
c. Rentals from canteen concessionaires
d. Interest from money-market placements of the tuition fees and maintained as
fund for the use of the Archdiocese travel fund
5. Santo Tomas Hospital Incorporated is organized exclusively for charitable and
social welfare services when it offered medical services on its charitable ward.
At the same time, it opened a pay ward to cater to patients who have the
capacity to pay. The following are the tax implications on Santo Tomas Hospital,
except:
a. Exempt from income tax on income it derived from social welfare activity
b. Exempt from income tax on income it derived from charitable activity
c. Subject to 10% income tax on profit oriented activity provided exceeding
50% of its income is derived from related activity
d. Subject to 25% income tax provided at least 50% of its profit oriented activity
if related to hospital operation.
6. The following statements are true for exempt corporations enumerated under
Section 30 of the Tax Code, except:
a. Income tax exemption covers only the income derived by the corporation in
furtherance of the purposes for which it was organized under Section 30 of the NIRC
of 1997.
b. Section 30 corporations are still subject to the corresponding internal revenue taxes
imposed under the NIRC of 1997 on income derived from any of their properties,
real or personal, or any activity conducted for profit regardless of the disposition
thereof (i.e., interest income from bank deposits, gains from investments, rental
income from real or personal properties), which income should be reported for
taxation purposes.
c. The interest income from currency bank deposits and yield or any other
monetary benefit from deposit substitute instruments and from trust funds and
similar arrangement, and royalties derived from sources within the Philippines
of organizations under Section 30 are subject to the 20% final withholding
tax. Moreover, the interest income derived by them from a depository bank
under the expanded foreign currency deposit system shall be subject to 15%
2 final withholding tax pursuant to Section 27 (D) (1) in relation to Section 57
(A), both of the NIRC of 1997, as amended.
d. Are required to obtain a Certificate of Tax Exemption (CTE) which shall be
effective for 5 years from the date of issue unless sooner revoked or
cancelled.
7. Statement 1 – Exempt corporations under section 30 of the Tax Code must be

non-profit. "Non-profit" means that "no net income or asset accrues to or
benefits any member or specific person, with all the net income or asset devoted
to the institution's purposes and all its activities conducted not for profit
Statement 2 - To qualify as a non-profit corporation exempt from income tax, it
must demonstrate that its earnings or assets inure to the benefit of any of its
trustees, organizers, officers, members or any specific person. It must not be
organized or operated for the benefit of private interests such as specific
individuals, incorporators or his family, shareholders of the organization, or
persons controlled directly or indirectly by such private interests.
a. True, True
b. True, False
c. False, False
d. False True
1. First Statement – Income coming from illegal sources should not be subjected to
tax. Otherwise the State shall be accused of benefitting from the nefarious and
criminal acts of persons.
Second Statement – Generally, income means all wealth that flows into the taxpayer,
other than return of capital.
a. True, True
b. True, False
c. False, False
d. False, True
2. The following are the requisites of income to be taxable, except:
a. There must be gain, derived from labor, capital or both labor and capital
b. The gain must be realized or actually received
c. The gain must not be explicitly excluded/exempted by law
d. The gain must have been actually received
3. The following are taxable compensation income, except:
a. Basic salary
b. Basic salary not exceeding or less than the statutory minimum wage
c. 13th month pay and other benefits exceeding P90,000
d. Commission received by a minimum wage earner
4. The following are statutory exclusions from the taxable compensation income of
employees, except:
a. GSIS or SSS Contributions

b. Labor Union Dues
c. Home Development Mutual Fund (Pag-ibig Fund) contribution
5. The following are taxable compensation income, except:
a. Monetized unused vacation leave not exceeding 10 days

b. Christmas cash gift exceeding P5,000 per year
c. Separation pay of an employee who tendered her resignation
d. Loyalty award in the form of gift certificate valued at P10,000
6. Nar Cisa receives a P20,000 monthly allowance from her sister who works as a
nurse in the United Kingdom. For the month of December, when she was checking
for the credit on her bank account the usual allowance from her sister, she
discovered that she was credited with an amount of P2,000,000. She immediately
withdrew the entire P2,000,000 and spent the rest on luxury goods. Later on, the
bank is demanding that she return P1,980,000. On account of error on encoding
on the part of the bank personnel and she was meant to receive only P20,000.
She refuses to return the demanded amount stating that she has already spent the
rest of it. One of the following is correct:
a. Nar Cisa has the right to retain the P1,980,000 grounded on the principle of
finders keepers, losers weepers.
b. The bank has no cause of action against Nar Cisa, considering it was the
fault of their employee which resulted to damage to them. They should have
been more prudent in hiring their employees.
c. Nar Cisa received a donation from the bank and donor’s tax should have
been paid on
the P1,980,000.
d. Nar Cisa is required to report as gross income the amount of P1,980,000
and pay income tax thereon, considering there was in inflow of wealth which
is not exempt by law.
7. On February 14, 2021, Bronson sold shares of San Miguel Corporation through
the local stock exchange, He was able to sell it at a price of P75,000 when the
cost to him of said shares is P25,000. One of the following conclusions is correct:
a. He will be liable to pay final capital gains tax of 7,500 on the said sale.
b. He will be liable to pay final tax on capital gains of P2,500.
c. The sale is subject to the stock transactions tax of P375.
d. The gain of P50,000 is exempt from the final tax on capital gains and also
exempt from regular income tax on individual.
8. The following are ordinary assets except:
a. 10 door apartment, earning rental income, owned by a retired widower

b. Partnership interest in a business partnership engaged in the business of
offering residential houses for rent
c. Dental chair owned by a dentist
d. Grocery items included in the inventory of a business operating a mini
grocery
9. The following are the special rules applicable to capital gains and losses, except:
a. A corporation’s capital gain or loss to be taken into account, in case of

property held
by it for more than 12 months, is only 50%
b. Capital losses are allowed only against capital gains earned during the
same year.
c. An individual income taxpayer sustains during the taxable year a net capital
loss, such capital loss shall be treated in the subsequent year as a short
term capital loss in an amount not exceeding the net income of the year it
originated.
d. An individual’s capital gain or loss to be taken into account, in case of
property held by it for 12 months or less is 100%
The taxpayer provided you with the following:
2020 2021
Net Income P P
2,000,000 3,500,000
Capital Gain 7,500,000 10,000,000
Capital Loss 10.000,000 5,000,000
10. Assuming the taxpayer is an individual, his taxable income for the
year 2020 is: a. P2,000,000

b. P0
c. (P500,000)
d. P 500,000
11. Assuming the taxpayer is an individual, his taxable income for the year 2021 is:
a. P8,500,000
b. P6,500,000
c. P8,000,000
d. P0
12. Assuming the taxpayer is a corporation and the property sold with capital gains
were held for 13 months. Its taxable income for 2020 is:
a. P2,000,000
b. P0
c. (P500,000)
d. P 500,000
13. Assuming the taxpayer is a corporation, the taxable income
in 2021 is: a. P8,500,000

b. P6,500,000
c. P8,000,000
d. P0
14. Tikboy Alangaling, a member of the Philippine boxing team received the following
during the taxable year:
Prize for winning gold in the South East Asian P500,00

games 0
Athlete of the year award 100,000
Winnings from PCSO lotto 5,000
Prize – Mc Donald raffle promo 10,000
From the foregoing, the amount that should be exempted from
income tax: a. P100,000

b. P500,000
c. P605,000
d. P615,000
15. Prizes and awards received shall be exempt from income tax when the following
conditions are met, except:
a. It is given in recognition of religious, charitable, scientific, educational,

artistic, literary or civic achievement.
b. The recipient of the award or prize is not required to render substantial
future services as a condition in receiving the prize or award.
c. The recipient of the award was selected without any action on his part to
enter the contest or proceeding.
d. The recipient shall recognize the awarded prize as income on the year it
was actually received.
16. Proceeds of insurance taken by a corporation on the life of an executive to
indemnify the latter’s
beneficiaries against loss in case of the employee’s death is:
a. Exempt from income tax

b. Part of taxable income
c. Subject to final tax
d. Partly exempt, partly taxable
17. The premiums paid by the corporation in the preceding number is a:
a. Taxable income of the executive

b. Deductible expense of the corporation
c. Both a and b
d. Neither a nor b
18. Bro Co, a domestic corporation, is paying P2,500,000 to Stateside Inc, a non-
resident foreign corporation. Stateside is a resident of the United States of
America without permanent establishment in the Philippines. The following
statements are correct, except:
a. As provided by Section 32 (B)(5) said payment is exempt from income tax

in the Philippines, applying the Philippines – United States of America
double tax treaty.
b. Generally, without invoking the Treaty, payment to Stateside Inc. is subject
to 25% final withholding tax.
c. A tax treaty relief application should be lodged with the Bureau of Internal
Revenue – International Tax Affairs Division (BIR – ITAD) before the
happening of the taxable event. Otherwise the treaty exemption will be
forfeited.
d. The parties may already avail of the treaty exemption provided a request
for confirmation of treaty relief is lodged with the BIR – ITAD not later than
the last day of the 4th month following the close of the taxable year.
19. One of the following is a taxable income:
a. Car received as gift on account of wedding

b. Diamond ring inherited from the mother
c. PCSO lotto winning amounting to P7,500
d. Interest income from a loan to a sibling
20. The following dividends are taxable except:
a. Cash dividend
b. Stock dividend
c. Property dividend
d. Liquidating dividend
On July 1, 2014, Mr. Valentine leased his vacant lot for a period of 12 years to Mr.
Juliet at an annual rate of P2,400,000. It was also agreed that Mr. Juliet will pay the
following:
 P4,800,000 representing rental payment for two (2) years. Subsequent

rental payments will be made every July 1 of the applicable year.
 Security deposit of P2,400,000
 Annual real property tax of P30,000
The lease contract provides, among others that the lessee will construct a 5-storey building
for parking purposes at a cost of P36,000,000. Ownership of the building shall belong to
the lessor upon the expiration or termination of the lease contract.
The building was completed on July 1, 2016 with an estimated useful life of 15 years.
21. Mr. Valentine shall report total income from the lease for
2014 at: a. P2,430,000

b. P2,400,000
c. P4,830,000
d. P2,640,000
22. Assuming Mr. Valentine will use outright method in recognizing income from
leasehold improvements, how much is the total income from lease for year 2016?
a. P 3,030,000
b. P 3,630,000
c. P38,430,000
d. P 2,400,000
23. Assuming Mr. Valentine will use spread-out method in recognizing income from
leasehold improvements, how much is the total income from lease for year 2016?
a. P 3,030,000
b. P 3,630,000
c. P14,430,000
d. P 2,400,000
24. Assuming that due to the fault of the lessee, the lease contract was terminated on
January 1, 2018, how much income is to be reported by the lessor in 2018?
a. P32,400,000
b. P30,600,000
c. P34,830,000
d. P33,030,000
25. If an individual performs services for a creditor who in consideration thereof

cancels the debt, the cancellation of indebtedness may amount:
a. To a gift
b. To a capital contribution
c. To a donation inter vivos
d. To a payment of income
26. Gain realized from the sale, exchange or retirement of bonds, debentures or other
certificate of indebtedness is excluded from gross income if it has a maturity of:
a. 5 years or more
b. Less than 5 years
c. More than 5 years
d. 10 years or more
27. First statement – Rene Rekets turned 60 on February 14, 2020. During the same
year, he retired from his employer of 30 years and received retirement pay of
P5,000,000. The retirement pay received by Rene is exempt from income tax and
the consequent compensation withholding tax.
Second Statement – Star Lu is an employee of Goto Mi Hopia Factory for the past 15
years. She turned 54 on valentine’s day of 2021 and decided to retire from work.
Her employer gave her a retirement pay amounting to P5,000,000 out of the
latter’s working fund. The retirement pay is exempt from income tax and
consequent withholding tax.
a. True, True
b. True, False
c. False, False
d. False, True
28. Refund of the following taxes are not recognized as income, except:
a. Income tax
b. Donor’s tax
c. Estate tax
d. Fringe benefits tax
29. First Statement – Thirteenth (13 th) month pay and other benefits received by
officials and employees of public and private entities are exempt from income tax
and creditable withholding tax on compensation, provided that the total exclusion
shall not exceed P90,000.
Second Statement – The excess of de minimis benefits over the ceiling would form
part of an individual's gross income only if the total excess benefits including
bonuses exceeds P90,000 and would be subject to income tax and applicable final
withholding taxes.
a. True, True
b. True, False
c. False, False
d. False, True
30. The following data were provided to you by Intelligent Corporation for the current
year:
Amount PriorYear Income Amount

written-off (Loss) Recovered
in Prior Year before write off in Current year
P50,000 P350,000 P20,000
10,000 (50,000) 10,000
30,000 20,000 30,000
The income from bad debt recovery during current year is:
a. P0
b. P40,000
c. P50,000
d. P60,000
31. Brando, married with 4 children, received the following during the taxable year:
House and lot, inherited from his mother, FMV P35,000,000

Car, received as a gift from his best friend, 1,250,000
cost
Proceed of life insurance of his mother 10,000,000
Cash, awarded in a court case, for lost profit 15,000,000
Cash, awarded in a court case, for moral 500,000
damages
The amount added in his gross
income is: a. P61,750,000

b. P15,500,000
c. P15,000,000
d. P46,250,000
Bob Eden, a nonresident Malaysian stockholder, received dividend income of P300,000 in

2020 from Ramen Incorporated, a foreign corporation doing business in the
Philippines. The gross income of the foreign corporation from within and without the
Philippines for the past three years preceding 2020 were as follows:
Source 2017 2018 2019

Philippines P16,000,00 P12,000,00 P14,000,00
0 0 0
Abroad 8,000,000 14,000,000 16,000,000
32. The amount of income subject to tax should be:
a. P0
b. P 90,000
c. P157,500
d. P300,000
33. Assuming the percentage of gross income over worldwide gross income of
Ramen Inc. for the past three years is 40%, the income to be reported by Bob is:
a. P0
b. P 90,000
c. P157,500
d. P300,000
34. Assuming Ramen Inc is a domestic corporation, the amount of income subject to
tax of Bob should be:
a. P0
b. P 90,000
c. P157,500
d. P300,000
35. Gains realized by the investor upon redemption of shares of stock in a mutual fund company is:
a. Exempt
b. Subject to final withholding tax
c. Subject to basic tax
Numbers 36 and 37 are based on the following set of facts:
Drago purchased a life insurance, which he will pay P100,000 for the next 10 years. If he die
anytime, his beneficiary will receive P1,500,000. On the other hand, if he outlive the 10 years, he will
receive the P1,500,000 on the 15th year.
36. How much should he recognize as income on the 15th year? a. P
100,000
b. P1,500,000
c. P1,000,000
d. P 500,000
e. P0
37. Assuming Drago died on the 2nd year, how much should the beneficiary recognize as income on
account of receipt of the P1,500,000?
a. P 100,000
b. P1,500,000
c. P1,000,000
d. P 500,000
e. P0
1. The following describes a deduction , except:
a. It is charged against a taxpayers gross income to arrive at taxable income
b. It is not a receipt
c. It has the effect of reducing the amount against which the income tax will be
based
d. It is the privilege from a charge or burden to which others are subjected
2. First Statement – Deductions from gross income are matters of legislative grace,
i.e., what is not expressly granted by Congress is withheld.
Second Statement – Only those enumerated in Section 34 of the Tax Code and
special laws may be claimed as deductions from Gross income to arrive at
Taxable Income.
a. True, true
b. True, False
c. False, False
d. False, True
3. The following are the requisites in order for an expense to be considered as an

allowable deduction from gross income, except:
a. It is ordinary to the taxpayers trade, business or profession
b. It is linked to the taxpayer’s trade, business or profession
c. Its amount must be reasonable
d. Its payment must be legitimate
4. The following are the conditions in order for any expense be allowed as a
deduction from gross income
a. It must be paid or incurred during the taxable year
b. Its amount must be reasonable
c. It must be properly substantiated with evidence
a. If the payment or accrual is subject to withholding, the corresponding withholding tax
must have been withheld and paid to the BIR.
5. The following are the characteristics of Capital expenditure, except:
a. Incurred in the acquisition, betterment or permanent improvement of an asset
b. Akin to the acquisition of capital assets which normally should be spread over
a reasonable period of time
c. Expected to benefit more than one accounting period
d. Benefits one accounting period and is a deduction from gross income in the
year paid or incurred
6. The following taxpayers are allowed to claim optional standard deductions

(OSD), except:
a. Resident Citizen
b. Non-resident Citizen
c. Resident Alien
d. Non-resident alien
7. The basis of determining OSD for an individual is:

a. Gross income
b. Gross sales or gross receipts
c. Net income
d. Taxable income
8. The following corporate taxpayers are allowed to claim OSD, except:
a. Proprietary educational institutions
b. Domestic corporation
c. Resident foreign corporation
d. Non-resident foreign corporation
9. The basis of determining OSD for a corporate taxpayer is:

a. Gross income
b. Gross sales or gross receipts
c. Net income
d. Taxable income
10. Statement 1- Exclusions are items or amounts allowed to be subtracted from

gross income to arrive at the taxable income.
Statement 2- Deductions from gross income are not presumed.
a. True, true
b. True, false
c. False, false
d. False, true
11. The following itemized deductions are not deductible, if between related parties
as described by section 36(b) of the Tax code, except
a. Loss on dealings with property
b. Interest
c. Bad debt write-off
d. Casualty loss
12. The following are related parties enumerated on section 36(b) of the Tax Code
whereby interest expense is not deductible.
a. Between members of a family, which shall include only his brothers and
sisters, spouse, ancestors and lineal descendants.
b. Except in the case of distribution in liquidation, between an individual and
corporation more than 50% in value of the outstanding stock of which is
owned, directly or indirectly, by or for such individual
c. Between the grantor and a fiduciary of any trust
d. Between the fiduciary of a trust and the fiduciary of another trust if another
person is a grantor with respect to each trust
13. Interest expense incurred to acquire an asset used in the course of trade or
business and such asset could be subject to an allowance for depreciation is
a. Cannot be allowed as a deduction from gross income
b. Can only be allowed as a deduction from gross income
c. May either be capitalized, added to the cost of the asset, or claimed as an
outright interest expense at the prerogative of the taxpayer
d. May either be capitalized, added to the cost of the asset, or claimed as an
outright interest expense at the prerogative of the Commissioner of Internal
Revenue (CIR)
14. Avenger Incorporated is engaged in manufacturing clothes. It reported the

following during the year ended December 31, 2021:
Sales Php100,000,000
Cost of sales 60,000,000
General and Administrative expenses 10,000,000
Interest income on PH Bank deposit(gross) 1,000,000
Interest expense 2,000,000
The allowable interest expense is:
a. Php1,000,000
b. Php2,000,000
c. Php1,800,000
d. Php660,000
15. The taxable income of the Corporation for the year ended December 31,
2020 is:
a. Php28,200,000
b. Php29,000,000
c. Php28,000,000
d. Php40,000,000
16. The following interest expenses are not deductible except:

a. In case of an individual taxpayer reporting income on cash basis incurs an
indebtedness on which interest is paid in advance through discount and no
corresponding payment of principal was made.
b. Interest expense between a father and his son
c. Interest expense incurred to finance petroleum exploration
d. Interest expense on income tax deficiency
17. The following taxes are non-deductible from gross income, except:
a. Income tax
b. Income taxes paid to foreign country in case of a taxpayer who does not
signify in his/its income tax return to claim credit of the same against its
Philippine income tax
c. Estate tax
d. Donor’s tax
18. The following are the requisites for claiming casualty loss as a deduction from
gross income, except:
a. Actually incurred during the taxable year and not compensated by insurance
b. Casualty loss occurred by reason of fire, storm, shipwreck and other similar
casualty and robbery, theft and embezzlement
c. In case of an estate subject to income tax, the loss is claimed as a deduction
in the estate tax return
d. Reported with the Bureau of Internal Revenue within 45 days from the
occurrence of the loss
19. Net operating loss is the excess over gross income, as defined in section 32 of
the Tax Code, less one of the following
a. The itemized deductions
b. The optional standard deductions
c. Both itemized and optional standard deductions
d. Neither itemized and optional standard deductions
20. Net operating loss is allowed as carry-over, as indicated on the following,

except:
a. For the immediately succeeding three (3) years following the year of such
loss
b. For the immediately succeeding three years following the year of such loss
whereby the taxpayer is enjoying income tax holiday.
c. For mines other than oil and gas wells, who does not enjoy any incentive from
the Board of Investments, net operating loss for the first ten (10) years of
operation, can be carried over for the next five (5) years following the year of
such loss
d. NOLCO for Taxable Year 2020 and 2021, and Fiscal Year ending on or
before June 30,2021, and June 30, 2022 maybe carried over for the next five
(5) consecutive taxable years immediately following the year of such loss
21. Which of the following losses is not deductible?
a. Abandonment losses in petroleum operation.
b. Excess of expenses over gross income from sale of ordinary assets.
c. Losses on wash sales of stocks by a person other than a stock dealer
d. Losses on sale of investments.
22. Mr. Edward Nigma, a CPA-Lawyer, engaged in the exercise of his dual
profession, had the following transaction during the year on ACME Chemicals,
Inc.
October 10, 2020 Purchased 10,000 shares at Php50 per share Php500,000
October 20, 2020 Purchased 4,000 shares at Php50 per share Php200,000
November 10, 2020 Purchased 3,000 shares at Php48 per share Php144,000
November 14, 2020 Sold the 10,000 shares purchased in October Php450,000
10 at Php45 per share
How much is Mr. Nigma’s deductible loss on the sale a.
Php50,000
b. Php35,000
c. Php15,000
d. Php300,000
23. MisterE Corporation sells goods and services in the ordinary course of its trade
and business. It had net sales and net revenue of P3,000,000 and P2,000,000
respectively. The actual entertainment, amusement and recreational (EAR)
expense for the taxable year totalled P30,000.
How much is the deductible EAR expense? a.
Php30,000
b. Php25,000
c. Php27,000
d. Php0
Wayne Arms, Incorporated has been operating since 1954. It presented you with the
following results of its operation
2017 2018 2019 2020
Sales 5,000,000 6,000,000 7,000,000 9,000,000
Cost of Sales 3,500,000 4,200,000 5,000,000 5,200,000
Itemized Deductions 1,550,000 1,820,000 2,100,000 2,300,000
24. The taxable income for the year 2020 is:
a. Php1,330,000
b. Php1,500,000
c. Php3,800,000
d. Php1,500,000
25. Assuming the total assets of Wayne Arms is Php200,000,000; the income tax still
due for the year ended December 31, 2020 is:
a. Php399,000
b. Php30,000
c. Php259,750
d. Php40,000
26. The following depreciation method are allowed without the need of seeking
permission for its use from the Commissioner of Internal Revenue, except:
a. Straight line method
b. Declining balance method
c. Sum-of-the-years-digit method
d. Units of production depreciation
27. Marvel Universe Incorporated contributed P4,000,000 to its pension plan during
the year ended 2020. As indicated in its Actuarial Valuation report, the current
period contribution should only be P3,000,000. How much can Marvel Universe.
claim as pension contribution deduction?
a. Php4,000,000
b. Php3,100,000
c. Php3,000,000
d. Php0
28. Which of the following charitable contributions is not deductible in full?

a. Donation to the Government of the Philippines to finance priority projects
identified by NEDA
b. Donation to the Municipality of Milagros in the Province of Masbate for the
repair of Municipal Hall
c. Donation to International Organizations
d. Donation to accredited Non-government Organizations
29. The following are the conditions in order for donations of personal computers,
laptops, tablets, or similar equipment (i.e. mobile phone, printer) for use in
teaching and learning in public schools, starting from the effectivity of the
Bayanihan to Recover as One Act on September 15,2020 up to December 19,
2020.
a. that the Deed of Donation shall indicate in detail the items donated, its
quantity/number and the amount/value of the donation;
b. That the deduction shall be availed of in the taxable year in which the
expenses have been paid or incurred;
c. That the taxpayer can substantiate the deduction with sufficient evidence,
such as sales invoice/s, delivery receipt and other adequate records: i. the
amount of expenses being claimed as deduction; and ii. Proof or
acknowledgement of receipt of the contributed/donated property by the
recipient public school.
d. That the book value of the equipment donated be deductible in full from the
donor’s gross income
30.
Deadpool Recreation Inc. has been operating for seven (7) years. During the
year ended December 31, 2020, it presented the following personnel expenses:
The deductible expense of Deadpool Recreation Inc is: a.
Php6,450,000
b. Php5,575,000
c. Php5,700,000
d. Php4,000,000
Mr. Bruce Wayan presented you with the following data during the year:
Gross income P1,000,000

from
business
other income 40,000
Long-term Capital gain 50,000
Short-term Capital loss 20,000
Operating expenses 400,000
Donation to an 30,000
accredited NGO
Donation to church 40,000
31. How much is the taxable

income? a. Php505,000
b. Php525,000
c. Php575,000
d. Php555,000
32. Based on the above problem, but the taxpayer is a corporation, how much is the
taxable income?
a. Php570,000
b. Php606,500
c. Php545,000
d. Php600,000
33.
The taxpayer is a domestic corporation:

Gross sales P9,350,000
Sales returns and allowances 250,000
Sales discounts 100,000
Other income 200,000
Cost of sales 3,000,000
Operating expenses with vouchers and 4,000,000
receipts
Operating expenses without vouchers and
receipts
500,000
Interest income from savings deposit 80,000
Interest income from deposit under FCDS 125,000
Royalty income-passive 100,000
35. Vicki Vale operates a convenience store while at the same time offers
bookkeeping services to her clients. In the year 2020, her gross sales amounted to
Php1,800,000, in addition to her gross receipts from bookkeeping services of
Php400,000. During the same year, her cost of goods sold and operating expenses
were Php1,325,000 and Php320,000, respectively. How much is her taxable income
assuming she availed of the optional standard deduction:
a. Php1,320,000
b. Php720,000
c. Php160,000
d. Php525,000
36. RMP Corporation, a domestic manufacturing corporation, had gross
sales of P 100,000,000.00 for Fiscal Year ending June 30, 2021 and
incurred cost of sales of P60,000,000.00 and operating expenses of
P17,500,000.00, with the following details:
Cost of Sales
Direct Materials Php 30,000,000.00
Direct Labor 20,000,000.00
Manufacturing Overhead 10,000,000.00
Total Php 60,000,000.00
Operating Expenses
Salaries and Wages Php 7,000,000.00
Taxes 300,000.00
Depreciation 3,500,000.00
Professional Fees 200,000.00
Advertising Expenses 3,000,000.00
Training Expenses 3,000,000.00
Office Supplies 500,000.00
Total Php 17,500,000.00
Assuming the corporation has complied with the withholding tax requirement
on all cost and expenses incurred subject to withholding tax, compute for
the corporation’s net taxable income:
a. Php22,500,000
b. Php23,000,000
c. Php21,000,000
d. Php19,500.000
1. The following are the characteristics of estate tax, except:

a. National
b. General
c. Ad valorem
d. Excise
e. indirect
2. First Statement: Estate tax is a tax imposed on a person’s exercise of his right to
gratuitously dispose his property upon his death.
Second Statement: Donor’s tax is a tax imposed on a person’s exercise of his right to
gratuitously
dispose his property during his lifetime without regard to the donee.
a. True, True
b. True, False
c. False, False
d. False, True
3. First Statement: Succession is the mode of acquisition whereby the property rights
and obligation of a person is deemed transmitted to his heirs, successors or
beneficiaries, upon his death, either by his will or by operation of law.
Second Statement: Succession takes effect upon acceptance by the heirs of the properties
left behind by the decedent.
a. True, True
b. True, False
c. False, False
d. False, True
4. First Statement: Estate Tax is governed by the law prevailing at the time of
death of the decedent.
Second Statement: Estate tax is governed by the law prevailing at the time of distribution of
the properties to the heirs.
a. True, True
b. True, False
c. False, False
d. False, True
5. The following are the elements of succession, except:

a. Decedent
b. Heir
c. Estate
d. Executor
6. Keno Lecta, single, died on December 15, 2017. The administrator of his estate
provided you with the following information:
Family Home - Php25,000,000 Funeral Expenses Php300,000
Philippines
Personal Property Php15,000,000 Medical Expenses Php 600,000
-
Philippines
Claim againstthe Php7,000,000
estate
The Net taxable estate of the decedent shall be:

a. Php30,300,000
b. Php18,000,000
c. Php40,000,000
d. Php22,000,000
7. Keno Lecta, single, died on January 5, 2018. The administrator of his estate provided
you with the following information:
Family Home - Php25,000,000 Funeral Expenses Php300,000
Philippines
Personal Property Php15,000,000 Medical Expenses Php 600,000
-
Philippines
Claim againstthe Php7,000,000
estate
The Net taxable estate of the decedent shall be:
a. Php30,300,000
b. Php18,000,000
c. Php40,000,000
d. Php22,000,000
8. The estate tax is determined by multiplying 6% of:

a. Gross estate within and outside of the Philippines of a decedent who was
Chinese and resident of the Philippines.
b. Net taxable estate within the Philippines of a decedent who was resident and
citizen of China.
c. Gross estate within the Philippines of a decedent who was resident and citizen of China.
d. Net taxable estate within and outside of the Philippines of a decedent who was a
resident and citizen of China.
9. Intangible properties located in the Philippines is included in the gross estate of the
following except:
a. Resident and citizen of the Philippines
b. Resident of the Philippines and citizen of Japan
c. Resident and citizen of the United States of America, with reciprocity
d. Resident of Japan and citizen of the United states of America, with reciprocity
10. The following are intangible properties in the Philippines, except:

a. Franchise which must be exercised in the Philippines
b. Shares, obligations or bonds issued by any corporation or sociedad anonima
organized or constituted in the Philippines in accordance with its laws
c. Shares, obligations or bonds issued by any foreign corporation sixty-five percent
(65%) of the business of which is located in the Philippines
d. Shares, obligations or bonds issued by any foreign corporation if such shares,
obligations or bonds have acquired business situs in the Philippines
e. Shares or rights in any partnership, business or industry established in the Philippines
11. The following are inclusions in the gross estate of the decedent, except
a. Donation mortis causa
b. Donation inter vivos
c. Transfer in contemplation of death
d. Transferred to the decedent under general power of appointment
12. Mr. Sulaiman, a certified public accountant, is in advanced age and terminally ill. With
the thought of his impending death he, sold his properties to his son. Two months after
the sale, Mr. Sulaiman died:
Selling Fair Market Value at Fair Market Value at
Price(considerati Sale death
on received)
House & Lot, Marikina Php 50,000 Php5,000,000 Php5,000,050
Shares of stock of Php 75,000 Php70,000 Php76,000
a
domestic corporation
Rolex Watch Ph50,000 Php75,000 Php45,000
How much should be added in Mr. Sulaiman’s gross estate.
a. Php4,950,000
b. Php25,000
c. Php5,145,000
d. d.Php5,975,000
13. Mr. Sulaiman, a certified public accountant, is in the prime of his life, he was so happy
and would like to share the joy with his son. In that frame of mind he sold his
properties to his son. Two months after the sale, Mr. Sulaiman died:
Selling Fair Market Value at Fair Market Value at
Price(considerati Sale death
on received)
House & Lot, Marikina Php 50,000 Php5,000,000 Php5,000,050
Shares of stock of Php 75,000 Php70,000 Php76,000
a
domestic corporation
Rolex Watch Ph50,000 Php75,000 Php45,000
How much should be added in Mr. Sulaiman’s gross estate.
a. Php4,950,000
b. Php25,000
c. None
d. Php5,975,000
14. How much is the gross gift if

any: a. Php4,950,000
b. Php25,000
c. None
d. Php5,975,000
15. Xavier died intestate on March 15, 2021, leaving the following properties:
Common stocks of DelaMonte Corporation (1,000 shares) - listed in the Philippine Stock
Exchange(PSE) (highest - P40; lowest - P39).
Common stocks of Tantamount Corporation (500 shares) - not listed in PSE. Cost - P5 per
share; book value – P50 per share.
Preferred stocks of Trinitron Inc. (4,000 shares) – not listed in the PSE. Cost – P95 per
share; book value – P65 per share; par value – P10 per share
Real properties (zonal value - P1,250,000; assessed value –
P870,000) The gross estate of Xavier is –
a. Php1,159,500
b. Php870,000
c. Php1,354,500
d. Php1,200,000
16. Wade Wilson died on February 14, 2021 leaving the following properties:
House and Lot in California, USA 1,000,000
Vacant Lot in Manila 2,000,000
Shares of stock in a domestic corp., 20% business 100,000
in
the Philippines
Shares of stock in a foreign corp., 90% of the 200,000
business
is located in the Philippines
Car in Manila 500,000
How much is the gross estate?

a. Php3,800,000
b.Php2,500,000
c. P2,600,000
d. Php2,800,000
17. Based on the preceding number, but assuming the decedent is a non-resident alien, the
gross estate is:
a.
Php3,800,000
b.
Php2,800,000
c.
Php2,500,000
d.
Php2,000,000
18. Continuing number 16 and the rule of reciprocity applies, the gross estate is:
a. P3,800,000
b. Php2,800,000
c. P2,500,000
d. Php2,000,000
19. 1st statement: Diego died giving Hector power to appoint a person who will inherit Diego’s
house and lot. Hector, however can only choose among Anton, Donita and Fidel. Hector
decided to transfer the property to Fidel. The transfer from Hector to Fidel is subject to
estate tax.
2nd statement: During Angela’s lifetime, he decided to give Brian as gift her
(Angela’s) car subject to the condition that if Brian does not become a CPA within 3
years, Angela shall revoke the transfer. In the second year however, Angela died.
The car should form part of Angela’s gross estate.
a. True, True
b. True, False
c. False, False
d. False, True
20. As one of the properties whereby the decedent exercises owner’s interest, proceeds of life
insurance,
on the life of the decedent is generally included in the gross estate, except
a. Beneficiary is the estate, executor or administrator and the designation of the beneficiary
on the life insurance policy is revocable;
b. Beneficiary is the estate, executor or administrator and the designation of the beneficiary
on the life insurance policy is irrevocable;
c. Beneficiary is any person other than the estate, executor or administrator and the
designation of the beneficiary is revocable;
d. Beneficiary is other than the estate, executor or administrator and the designation of
the beneficiary is irrevocable.
21. The list provided below is excluded from the gross estate, except:
a. Exclusive property of the surviving spouse;
b. Properties outside the Philippines of a non-resident alien decedent;
c. Intangible personal property outside of the Philippines of non-resident alien when the
rule of Reciprocity applies.
d. Share of the surviving spouse in the conjugal/community properties;
22. The following are transfers exempt from transfer tax, except
a. Transmission from the first heir or donee in favor of another beneficiary in accordance
with the desire of the predecessor
b. Transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee
to the fideicommissary
c. The merger of usufruct in the owner of the naked title
d. All bequests, devises, legacies or transfers to social welfare, cultural and charitable
institutions
23. The following losses are deductible from the gross estate, except:
a. Car donated mortis causa, struck by lightning 2 hours after the decedent’s death;
b. 2 carats diamond ring reported stolen by the decedent, a night before his death;
c. Php50,000 cash in bank of the decedent, reported stolen to the BIR 30 days after the
decedent’s death;
d. A diamond necklace fairly valued at the time of the decedent’s death at Php2,000,000. It
was reported stolen, 45 days after the decedent’s death. The diamond necklace was
insured whereby the insurance company paid Php1,500,000 to the estate, due to the
loss of the diamond necklace.
24. The following are rules for deductibility of claims against the estate, except
a. The debt instrument must be duly notarized at the time the indebtedness was
incurred such promissory notes or contract of loans.
b. The debt instruments on debt granted by financial institution, where notarization is not
part of the business practice of the financial institution-lender, need not be not be
notarized.
c. Duly notarized certification from the creditor as to the unpaid balance of the debt,
including interest as of the time of death.
d. A statement under oath, executed by the administrator or executor of the estate
reflecting the disposition of the proceeds of the loan if said loan was contracted within
five (5) years prior to the death of the decedent
25. The following are taxes deductible from the gross estate of a decedent, except
a. Estate tax
b. Real property tax accrued in the year of death, paid before death
c. Income tax on income earned before death and remaining unpaid
d. Unpaid
donor’s tax on property donated before death
26. The following are the conditions for deductibility of the family home, except
a. The family home must be the actual residence of the decedent and his family at the time
of his death certified as such by the Barangay Captain of the locality where the family
home is located.
b. The decedent must be a resident or citizen of the Philippines.
c. The total value of the family home must be included as part of the gross estate of the
decedent.
d. Allowable deduction must be in an amount equivalent to the current fair market value
of the family home as declared or included in the gross estate, or to the extent of the
decedent’s interest (whether conjugal/community or exclusive) but not exceeding
Php1,000,000.
27. The following are the requisites for deductibility of retirement pay received by the decedent as
a
consequence of the latter’s death, pursuant to Republic Act 4917.
a. The retirement benefit received is in accordance with a reasonable private benefit plan
maintained by the employer.
b. The retiring employee has been with the same employer for a period of at least ten (10)
years.
c. The retiring employee is at least sixty – five (65) years of age.
d. The retirement benefit is to be received by the employee only once.
28. The following are characteristics of estate taxation of a non-resident alien, except:
a. The gross estate shall comprise of properties located within the Philippines only.
b. Not allowed to claim family home deductions.
c. Not allowed to claim vanishing deductions.
d. Allowed deduction for expenses, losses, indebtedness, taxes, etc.
29. The following are the deductions allowed to the estate of a non-resident alien decedent, except
a. Property previously taxed A.K.A Vanishing deductions
b. Transfers for public use
c. Net share of the surviving spouse in the net conjugal/community property
d. Standard deduction of Php500,000
e. Full ELITE
30. Joe Bush was a citizen and resident of the United States of America. He died on January 5,
2020 leaving behind the following properties with their respective fair market values:
Condominium Unit in BGC, Taguig 20,000,000

Cash in bank, Metrobank (MB), Taguig 500,000
Shares of stocks of SM Prime, Domestic Co. 750,000
Ferrari car, presently located in California, 11,250,000
USA
House & Lot, California, USA 150,000,00
0
Funeral Expenses 200,000
Receivable from an insolvent person 300,000
Legacy in favor of City of Taguig,MB cash in 500,000
bank
The Condominium unit was received by Joe, as a gift from a very generous
benefactor, 15 months before his death. Its fair market then was 15,000,000. At the
time it was given to him it was subject to a mortgage of P700,000 out of which
P200,000 remain unpaid at the time of his death.
How much is the net taxable estate of
Joe Bush a. Php9,191,925.99 .
b.Php8,765,300
c. Php161,250,000
d.Php11,299,12
9.8
31. How much is the estate

tax due a.
Php191,191,925.99
b. Php558,944.2
c. Php551,515.56
d. Php8,765,300
32 to 34 are based on the following:

Queena Leecho, married (celebrated 1 year before her death), died on January 2, 2018.
She left behind 2 children, both from a previous marriage, and the following properties
and obligations:
a. House and lot in Marikina, inherited Php4,000,000
4
years and 2 months before her death
b. Farm lot in Nueva Ecija, received as a 2,000,000
gift,
3 years and 4 months before death
c. Shares of of San Miguel 750,000
Corporation, inherited from Father 3
months before
her death
d. Car 500,000
e. Commercial Building 12,000,000
f. Receivable from an insolvent person 200,000
g. Diamond Ring 1,000,000
h. Cash in Bank 2,000,000
Funeral Expenses Php200,000, while

Judicial Expenses amount to Php350,000. The House and lot in Marikina was the place
where the decedent and her family resides.
The fair market value of the house and lot in Marikina, at the time of inheritance from
the previous owner, was Php3,000,000 and subject to a mortgage of Php500,000 at the
time. By the time of her death, the remaining unpaid mortgage amount to Php100,000.
32. Assuming the regime of Absolute Community of property, the net taxable estate
amounts to: a. Php2,042,338.53
b. Php3,357,661.47
c. Php22,450,000
d. Php6,750,000
33. The final tax on the estate, assuming the heirs decided to withdraw the cash in bank
prior to the payment of the estate tax.
a. Php120,000
b.Php180,0
00
c.Php300,00
0
d.Php250,00
00
34. Assuming the regime of absolute community of property and assuming further that final tax
on the cash in bank was paid, the amount of cash in bank to be included in the
determination of the net taxable estate.
a. Php2,000,000
b.Php1,880,0
00
c.Php1,940,0
00
d. Php0
35. Decedent who is married with a surviving spouse and one legitimate child and two
illegitimate children, left the following properties.
Real properties P3,000,000

Family home 1,000,000
Other real property (exclusive) 2,000,000
Family lot (exclusive) 400,000
Funeral expenses 300,000
Taxes and losses 1,300,000
Medical expenses 1,000,000
Assuming the decedent died on January 5, 2018, what is the total net
taxable estate: a. P1,250,000
b. ( P2,150,000)
c. c.P1,150,000
d. d. P2,450,000
36. Don Fortunato, a widower, died in May, 2011. In his will, he left his estate of P100 million to
his four children. He named his compadre, Don Epitacio, to be the administrator of the
estate. When the BIR sent a demand letter to Don Epitacio for the payment of the estate tax,
he refused to pay claiming that he did not benefit from the estate, he not being an heir.
Forthwith, he resigned as administrator. As a result of the resignation, who may be held
liable for the payment of the estate tax?
a. Don Epitacio since the tax became due prior to his resignation.
b. The eldest child who would be reimbursed by the others.
c. All the four children, the tax to be divided equally among them.
d. The person designated by the will as the one liable.
37. The estate of the following deceased persons may claim credit for estate taxes paid to a
foreign country except for a:
a. Filipino citizen residing in California
b. Filipino national residing in Marikina
c. Korean national residing in Hong Kong
d. Chinese national residing in Baguio
38. George Robinson, an American residing in the Philippines died and left behind substantial
properties in and outside of the Philippines. The administrator of his estate provided you with
the following information.
Net Taxable Estate, Philippines Estate Tax paid in Japan Php100,000
Php10,000,000
Net Taxable Estate, Germany 5,000,000 Estate Tax paid in Germany 500,000
Net Taxable Estate, USA 3,000,000
Net Taxable Estate, Japan 2,000,000
The foregoing Net Taxable Estate values are already net of allowable
deductions. Considering the foregoing, how much is the estate tax due,
after credit.
a. Php1,200,000
b. Php600,000
c. Php800,000
d. Php400,000
39. First Statement – Notice of death of the decedent shall be filed within 2 months from the
time of death.
Second Statement – Estate tax returns showing a gross estate exceeding a value of
Php5,000,000 shall be supported with a statement duly certified by a Certified Public
Account.
a. True, True
b. True, False
c. False, False
d. False, True
40. First Statement – The estate tax return shall be filed within one (1) year from the approval by
the Court of the project of partition of the estate.
Second Statement – the Commissioner of any Revenue Officer authorized by the
former, shall have the authority to grant in meritorious cases, a reasonable
extension, not exceeding thirty (30) days, for filing the return.
a. True, True
b. True, False
c. False, False
d. False, True
41. First Statement – The Commissioner, for any reason he may see fit, may extend the time for
payment of the estate tax not to exceed five (5) years in case the estate is being settled
through the courts, or two (2) years in case the estate is being settled out of court.
Second Statement – Where the request for extension is by reason of negligence,
intentional disregard of rules and regulations, or fraud on the part of the taxpayer,
the Commissioner may grant an extension subject to 50% surcharge of the amount
due.
a. True, True
b. True, False
c. False, False
d. False, True
42. First Statement – If an extension is granted, the Commissioner or his duly authorized
representative may require the executor, or administrator, or beneficiary, as the case may
be, to furnish a bond in such amount, not exceeding double the amount of the tax and with
such sureties as the Commissioner deems necessary, conditioned upon the payment of the
said tax in accordance with the terms of the extension.
Second Statement – Any amount paid after the statutory due date of the tax, but within
the extension period, shall be subject to interest but no surcharge.
a. True, True
b. True, False
c. False, False
d. False, True
43. First statement- In case of insufficiency of cash, the estate tax may be paid in installments within
two
(2) years from the date of filing of the estate tax return.
Second Statement – The frequency (i.e., montly, quarterly, semi-annually or annually),
deadline and amount of each installment shall be indicated in the estate tax return,
subject to prior approval by the BIR.
a. True, True
b. True, False
c. False, False
d. False, True
44. First Statement – The heirs are allowed to withdraw from the decedent’s bank account
without presenting proof of payment of the estate tax, i.e., eCAR issued by the CIR or his
duly authorized representative, provided the withdrawal will be subjected to a final
withholding tax of six percent (6%) of the amount to be withdrawn.
Second Statement - Cash in bank, withdrawn within 1 year from the death of the
decedent, and subjected to the 6% withholding tax, is no longer required to be added
in the gross estate in the course of filing the estate tax return.
a. True, True
b. True, False
c. False, False
d. False, True
45. First Statement – An estate tax amnesty rate of six percent (6%) shall be imposed
on each decedent’s total net taxable estate at the time of death without penalties,
provided that the minimum estate amnesty tax for the transfer of each decedent shall be
Five Thousand Pesos (Php5,000).
Second Statement – The estate tax amnesty shall cover the estate of those who
have died in 2017 earlier and can only be availed until June 14, 2023 or 2 years
from the effectivity date of RR 6-2019 and as extended `by RA 11569 .
a. True, True
b. True, False
c. False, False
d. False, True
46. Query: Is the BIR authorized to collect estate tax deficiencies by the summary
remedy of levy upon and sale of real properties of the decedent without first securing
the authority of the court sitting in probate over the supposedwill of the decedent?
Answer 1: Yes. The BIR is authorized to collect estate tax deficiency through the
summary remedy of levying upon and sale of real properties of a decedent,
without the cognition and authority of the court sitting in probate over the
supposedwill of the deceased, because the collection of estate tax is
executive in character. As such the estate tax is exempted from the
application of the statute of non- claims, and this is justified by the necessity
of government funding, immortalized in the maxim that taxes are the lifeblood
of the government.
Answer 2: Yes, if the tax assessment has already become final, executory and
enforceable. The approval of the court sitting in probate over the supposed
will of the deceased isnot a mandatory requirement for the collection of the
estate tax. The probate court is determining issues which are not against the
property of the decedent, or a claim against the estate as such, but is against
the interest or property right which the heir, legatee, devisee, etc. has in the
property formerly held by the decedent.
a. Both answers are correct
b. Only answer 1 is correct
c. Only answer 2 is correct
d. Both answers are incorrect

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1.

First Statement – Taxation power is considered inherent in a sovereign State

2. The following are stages/aspects of taxation, except

7. Our national internal revenue laws are

9. Which of the following statements is not correct?

15. No person shall be imprisoned for non-payment of this.

17. Which of the

18. Levying of local government taxes may be exercised by:

21. One of the following is NOT an inherent limitation:

23. Although the power of taxation is basically legislative in character, it is NOT

a. Fix with certainty the amount of taxes.

a. Taxes are pecuniary in nature.

35. Value-added tax is an example of:

38. First Statement – Tax and debt can be subject to off-set.

39. Which of the following statements is not correct?

1. Income is anything derived from, except

2. The following are the characteristics of income tax, except

3. The adapted system of income taxation in the Philippines is

17. Fernando Amorsolo, retired from

Donatelo Pizza Company Limited, an P500,000

The cost basis of the new principal residence is. a.

The capital gains tax on the sale is a.

Salaries, Mrs P600,000

26. The taxable income of Mr. Beltran is:

27. The taxable income of Mrs. Beltran is:

3. The fringe benefits tax is generally based on

6. Which among the following is a taxable “de minimis” benefit

7. The following are exempt de minimis benefits except:

10. The monetary value during the quarter is:

12. The journal entry to record the fringe benefit is

a. Fringe Benefit Expense Php130,000

b. Fringe Benefit Expense Php130,000

c. Fringe Benefit Expense Php 65,000

d. Fringe Benefit Expense Php200,000

Air Fare – First Class Ticket USD2,000

Assume that the foreign exchange is USD1.00 = Php50,00

Numbers 15 and 16 are based on the following:

Numbers 17 to 18 are based on the following:

Coco Roco is a sole proprietor of a business engaged in manufacture and design of

22. The following are exempt fringe benefits except

a. One person corporation

a. General Professional Partnership

3. Technotronics Energy Corporation, a corporation registered in Belgium, has a 50 MW

a. Villasis shall be subject to a tax of 6% CGT of P12 million

a. Social Security System

7. The following are classified as non-resident foreign corporation, except:

a. Non-resident owner of vessel chartered by Philippine nationals

a. Non-resident foreign corporation

a. Interest income from peso bank deposit

Other income From $50,000

How much is the final withholding tax applicable on the above

Numbers 13 to 15 are based on the following set of facts:

transaction is: a. P450,000

The higher between the “Regular” or

Proprietary Educational 1% July 1, 2020 Not Applicable

Regional Operating Headquarters 25% January 1, 2022 1% January 1,

Non-Resident Foreign 25% Januar 1, 2021 Not applicable

a. Non-resident owner of cinematographic Films

a. Prolonged labor dispute

Numbers 19 to 21 are based on the following set of facts:

Corporation A, a retailer, has a gross sales of P1,400,000,000 with a cost of sales

19. Corporation A’s regular corporate income tax for CY

2021 is: a. P172,500,000