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SUCCEED REVIEW CENTER

TAXATION
Final Pre board Examination
1.

Joe an official of ABS Corporation asked for an earlier retirement because he was emigrating to Canada, he was paid
P3M separation pay in recognition of his valuable services to the corporation plus P100,000 13th month pay and P20,000
xmas bonus, Gani another official was separated due to retrenchment. He was given P1M separation pay plus P150,000
unpaid salaries. Raul was separated for violating company rules but was given P500,000 separation pay. Anson opted to
retire at 55 years old after working for 10 years in the same company. He received P1M. All of the foregoing are not
covered by BIR approved Retirement Plan except for Anson. The total income subject to withholding tax on the above
payment is:
a.
P 2,540,000
c. P 3,400,000
b.
P 3,540,000
d. P 3,735,000
A building contractor provided the following data (all figures are net of VAT)
Amount received from Building 1
P 1,800,000
Advances received from Building 2
400,000
Amount received from Building 3 (net of P400T retention cost)
800,000
Receivable from Building 4
1,000,000
Disbursements:
Services of contractors
500,000
Materials for construction
700,000
Imported material, landed cost
200,000
Other general and operating expenses
100,000
Note: The imported material was also subjected to P20,000 excise taxes.
2. The VAT due is:
a.
P58,000
c. P117,600
b.
P120,000
d. P237,600
Batman Trans, is a common carrier by land. During a particular quarter its receipts consist of the following: (Figures are net of
any business taxes)
Transport of passengers
P 5,000,000
Transport of goods
5,000,000
Transport of cargoes
6,000,000
3. The total business taxes payable is:
a.
P1, 500,000
c. P1,800,000
b.
P1,920,000
d. P1,470,000
Roberto, Filipino, single, has the following transactions in 2012:
Business gross income
P200,000
Business expenses
60,000
Wagering gains
10,000
Wagering losses
5,000
Selling price, partnership interest
100,000
Investment in partnership in 2000
20,000
Gain on sale of capital asset held for 4 years
10,000
Loss on sale of capital asset held for 8 months
12,000
Loss on account of failure to exercise 2 month option to buy property
2,000
Liquidating dividend from Z Co.
150,000
Cost of investment in Z Co. in 2000
60,000
Note: In 2011, Roberto had a net income of P65,000 and a net capital loss of P92,000.
4.

The taxpayer's taxable net income is:


a.
P196,000
c. P106,000
b.
P141,000
d. P 151.000
Mr. Corpus, married with 2 minor children, had the following transactions in 2012:
Compensation Income
P 200,000
Sales
1,440,000
Cost of goods sold
660,000
Deductions:
Operating Expenses
440,000
Loss due to theft (properly reported)
60,000
Contributions:
To a government priority project in
education
12,000
To St. Jude church
42,000
Other income:
Rent
36,000
Capital gain from sale of personal
car held for 2 years
96,000
5. The taxpayer will report a taxable net income of:
a.
P472,000
c. P420,400
b.
P480,400
d. P500,400
Questions 6-7 are based on the following information:
Corporation A has the following transactions during the year 2012:

Gross Income, Philippine business


Gross Income, Japan business
Business expenses, Philippines
Business expenses, Japan
Other expenses connected with the Philippine business

P2,400,000
600,000
1,350,000
150,000
90,000

Other expenses connected with the Japan business


60,000
Other expenses connected with the business in the Phil and Japan
150,000
Other business expenses which cannot be allocated
180,000
Intercorporate dividends from PLDT
100,000
6. If the taxpayer is a domestic corporation, its income tax due is:
a.
P403,200
c. P326,400
b.
P357,000
d. P306,000
7. If the taxpayer is a resident foreign corporation, and it remitted 40% of its profit to USA (Head Office) the total tax liability
is:
a. P222,720
c. P238,032
b. P244,188
d. P251,117
Taxpayer, individual, married with 3 minor children, one is gainfully employed, had the following transactions in 2012:
Sales
P2,000,000
Cost of sales
1,150,000
Operating expenses
560,000
Other transactions:
a. Sale of office equipment held for 2 years:
Selling price
100,000
Cost
120,000
Accumulated depreciation
80,000
b. Sale of family van held for 4 years:
Selling price
300,000
Cost
210,000
c. Sale of family car held for 12 months:
Selling price
480,000
Cost
500,000
8. Taxpayer will report a taxable income of:
a.
P335,000
c. P375,000
b.
P295,000
d. P285,000
RA-A-A Corporation, a domestic corporation now on its 5th year of operation provided the following data:
Gross sales
P1,100,000
Sales returns and allowances
200,000
Cost of goods sold
300,000
Gain on sale of capital assets held
for 11 months
10,000
Loss on sale of capital assets held
for 20 months
5,000
Royalty income
50,000
Rent income
10,000
Allowable business expenses
580,000
9.

10.

Income tax due is:


a.
P12,200
c. P12,000
b.
P10,500
d. 7,500
On October 1, 2012, Dragon Girl Co. leased a residential house for the use of one of its executives, Mr. Kurukuru, a special alien
employee. The rent agreed upon was P170,000 per month. The FBT for the quarter is:
a.
P54,400
c. P45,000
b.
P120,000
d. P15,000
Taxpayer sold capital assets as follows:
Lot 1
Lot 2
Selling Price
P6,000,000
P10,000,000
Cost
2,500,000
1,000,000
Gain (loss)
P3,500,000
P 9,000,000
Terms of Sale:
Down payment 1/15/2011
P500,000 P 1,500,000
Paid on 6/15/2011
500,000
1,000,000
Paid on 9/15/2011
500,000
1,000,000
Installment due 1/15/2012
2,000,000
2,000,000
Installment due 5/15/2012
2,500,000
3,000,000
Mortgage assumed by the buyer
1,500,000
11. The final tax payable under the installment method for 2011 for lot 1 is:
a.
P360,000
c. P22,500
b.
P90,000
d. P32,500
Questions 12 and 13 are based on the following information:
Emong gave the following donations:
5/10/2012
To legitimate son on account of marriage on 8/15/2012 with P100,000
mortgage assumed by the donee.
P 300,000

8/15/2012

To his legitimate daughter on account of marriage on 8/15/2012

10/20/2012

Lot donated to the National Government to be used for public


purpose. Value
To his brother on account of marriage on 11/15/2012

8,000
11/1 5/2012

100,000
5,000
P413.000

12. The total exemption or deductions from the total gross gift is:
a.
P120,000
c. P218,000
b.
P118,000
d. P300,000
13. The gift tax payable on 11/15/2012 donation is:
a.
P1,900
c. P1,800
b.
P800
d. P100
Questions 14 and 15 are based on the following information:
Donor made the following donations:
Jan. 24 - Land located in the Philippines valued at P2,000,000 to her uncle subject tothe condition that uncle will pay the
donors tax due and mortgage to which her uncle agreed and pay the mortgage amounting to P500,000.
Nov. 30- Building in USA valued at P4,500,000 to her sister. Donors tax paid in USA was P400,000.
14. The donors tax due on the gift on Jan. 24 is:
a.
P84,000
c. P450,000
b.
P92,000
d. P480,000
15. The donors tax due on November 30 donation is:
a.
P131,000
c. P47,000
b.
P524,000
d. P124,000
Sam and Piolo are partners who provided the following data about their partnership and their own data in their separate
businesses.
Partnership
Sam
Piolo
Gross income
P2,000,000
P1,000,000
P500,000
Deductions
500,000
300,000
100,000
P&L ratio
4:6
Status
Single
Married
Drawing account
P200,000
P 100,000
P100,000
Other income (salaries)
0
200,000
300,000
16. The taxable income of Sam if the partnership is a General Professional Partnership and he opted to claim OSD is:
a.
P1,400,000
c. P1,350,000
b.
P1,380,000
d. P1,450,000
17. 1st Case: Mr. Ong sold his 5 - door apartment for P10,000,000. The monthly rental per unit is P20,000. This sale is
subject to capital gains tax.
2nd Case: Mr. Ocampo bought a lot for P2,000,000 which he intended to be used as family home. After 5 years, he
abandoned his plan and sold it for P3,000,000. This sale is subject to capital gains tax.

28.

a. Only the first statement is correct.


c. Both statements are correct.
b. Only the second statement is correct.
d. Both statements are incorrect.
18. Which of the following income from Philippine source of a resident individual is not subject to the rates in Sect. 24 A of the
Tax Code?
a. Gain from sale of his personal motor vehicle.
b. Gain from sale of family home.
c. Salary received by a managing partner of a partnership.
d. Passive income from prizes won in a raffle amounting to P8,000.
19. Janet Poles, single, with an illegitimate child, provided the following data for 2012:
20.
Compensation income
P250,000
21.
Loss from stocks becoming worthless 100,000
22.
Transportation expense 50,000
23.
Health Insurance Premiums (6 months
24.
@ P500/mo.) 3,000
25. The amount she can deduct from her income for ITR purpose is?
26. a. P50,000
c. P52,400
27. b. P76,200
d. P77,400
The widow of your best friend has just been paid P1,000.000 on account of the life insurance policy of the deceased husband.
She asks you whether she should declare the amount for income tax purposes or for estate tax purposes.
29.
1st advice: The proceeds of life insurance paid to the beneficiary upon the death of the insured are exempt
from income tax and need not be declared for income tax purposes.
30.
2nd advice: The proceeds of life insurance would have to be declared for estate tax purposes if the designation
of the beneficiary was irrevocable, otherwise it need not be declared.
a. Both advices are correct.
c. Both advices are wrong.
b. 1st advice correct; 2nd advice wrong;
d. 1st advice wrong, 2nd advice correct
31. All of the following are exempt from MCIT (Minimum Corporate Income Tax) ,except:
a. Private Educational Institutions
c. Publicly held corporations
b. International Carriers
d. Offshore banking units
32. The accounting period of Corporation A is .fiscal year ending on October 31. For the year 2010, Corporation A filed its
annual tax return on March 15, 2011. The last day for BIR to assess is on:
a. February 16, 2014
c. March 15, 2014
b. March 14, 2014
d. April 16, 2014
33. Miramar's income tax for 2010 was P75,000 as shown in her income tax return (ITR). She filed her return only on July 15,
2012 and paid the total amount upon filing the return. The total amount payable if assuming she filed with the wrong RDO
is:

e.
f.

a.
b.

P113,750
P131,250

c. P108,750
d. P97,500

g.
h.

a.
b.
a.
b.

On January 1, 2008, lessor leased a lot with a building thereon for a period of 10 years. It was agreed that the
lessee will pay the following:
a) Rent of P120,000 per year
b) Fire Insurance premium in the building of P16,000 per year
c) Real property tax as of P10,000/yr
i.
Lessee will also construct a warehouse on the lad at a cost P3,600,000 with a useful life of 10 years completed
on June 30, 2010, which shall belong to the lessor at the end of the lease.
j.
34. The lessor shall report for year 2010, as income from lease the total amount of:
k.
a.
P336,000
c. P326,000
l.
b.
P206,000
d. P1,296,000
35. Mr. X filed his ITR on April 15, 2010. He received an assessment from BIR on June 30, 2012, which was duly protested
within the period allowed. If the protest above was denied by the BIR Commissioner and he received the said decision on
August 31, 2012, his remedy is:
a. Appeal to the Court of Tax Appeals on or before September 30, 2012.
b. Appeal to the Court of Tax Appeals on or before September 15, 2013.
c. Appeal to the Office of the President on or before September 30, 2012.
d. Appeal to the Finance Secretary on or before September 30, 2012.
m. A tax payer provided the following data
n.
Sales
P 24M
o.
Sales returns & discounts
P 4M
p.
COGS
P 8M
q.
Operating expenses
P 4M
r.
Other income: rent
P 1M
s.
Royalty income
P 1M
t.
36. Using Optional Standard Deduction, the taxable net income if the taxpayer is a corporation is _______________.
P 7,200,000.00
c. P 7,800,000.00
P 11,700,000.00
d. P 8,200,000.00
37. Based on the same data above, using OSD, the taxable net income if the taxpayer is individual, married w/5 minor
children is ____________________.
P 11,800.00
c. P 7,200.00
P 10,100.00
d. P 11,250.00
u. Mr. Juan provided the following data:
v.
Salaries
w.
P9
x.

Fringe benefits as Vice Pres.

y.
30

z.

Other De minimis benefits in the form of Christmas bonus

aa.
ab.
30

ac.

13th month pay

ad.
10

ae.

Representation and travel allowance (RATA)

af.
20

ag.
ah.
The salaries are net of P100,000 withholding tax but gross of P40,000 SSS, union dues & Pag-ibig
contributions. Mr. Juan is married with 5 minor children.
ai.
38. The Taxable Net Income is:
a. P360,000
c. P720,000
b. P660,000
d. P905,000
aj. H and W married on June 6, 1980 without a marriage settlement. H died on August 20, 2010. The estate
reported the following assets and deductions of H and W.
al.
ak. Conjugal Properties of H and W:
am.
Fishpond, Dagupan
an. P
1,
5
0
0,
0
0
0
ao.
Apartment houses, Makati
ap. 1,
5
0
0,
0
0

aq.

Cash in bank

as.

Family house

au.
aw. Exclusive Properties of H:
ay.
Land, inherited from father who died on August 20, 2006. Value of
land when inherited was P210,000. The land has a mortgage of P30,000 when
inherited of which P10,000 was paid by H before he died

be.
Land, donated on February 14, 2007 by his mother who died on
November 2, 2008. Value of land when donated was P500,000

bm.

bo.

bu.

bi.
bk. Exclusive Properties of W:
Farm in Davao acquired before marriage

Family lot

bq.
bs. Deductions claimed:
Funeral expenses

bw.

Fire loss of apartment (occurred 4 months after death)

bz.

Bad debt (represents unpaid receivable from Bert, an insolvent)

cc.

Mortgage on inherited land

ce.

Vanishing deduction on inherited land

0
ar. 1
0
0,
0
0
0
at. 6
5
0,
0
0
0
av.
ax.
az.
ba.
bb.
bc.
bd. 4
0
0,
0
0
0
bf.
bg.
bh. 6
0
0,
0
0
0
bj.
bl.
bn. 2,
0
0
0,
0
0
0
bp. 3
5
0,
0
0
0
br.
bt.
bv. 2
5
0,
0
0
0
bx.
by. 8
0,
0
0
0
ca.
cb. 1
0
0,
0
0
0
cd. 3
0,
0
0
0
cf. 1
4
0,
0

cg.

Vanishing deduction on donated land

ci.

Standard deduction

ck.

Death benefits (R.A 4917)

cm.

Medical expenses (documented incurred 1 yr. before death)

0
0
ch. 1
2
0,
0
0
0
cj. 2,
0
0
0,
0
0
0
cl. 1
5
0,
0
0
0
cn. 6
0
0,
0
0
0

co.
39. The gross estate of H is:
a. P4,900,000
c. P6,900,000
b. P4,500,000
d. P5,000,000
40. The total deduction, chargeable against the conjugal properties is:
cp.
a.
P564,000
c. P380,000
cq.
b.
P430,000
d. P530,000
41. The total deduction including the vanishing deduction, chargeable against the exclusive properties of H is:
cr.
a.
P73,600
c. P277,600

42.

44.

cs.
b.
P93,600
The taxable net estate is:
ct.
a.
P1,307,400

d. P80,000
c. P2,067,400

cu.
b.
P982,400
d. P1,067,400
43. Which is not a constitutional limitation?
a. Non-infringement of religious freedom in taxation
b. Non imprisonment for non payment of tax
c. Uniformity of taxation
d. Due process of law in taxation
Which is correct?
a. Collection of taxes is an incidence of taxation
b. There can be no tax if there is no law providing for the said tax
c. Taxes are strictly constructed against the taxpayer
d. A tax imposed outside the situs of taxation is voidable
45. All are essential characteristics of a tax except:
a.
Payment of the tax is mandatory
b.
It is generally payable in money
c.
Imposed on persons and properties as a rule
d.
It is proportionate in character
46. All are similarities of taxation, police power, and power of eminent domain, EXCEPT:
a. All are necessary attributes of the Constitution
b. All exist independently of the Constitution
c. All contemplate an equivalent benefit
d. All are superior to the non-impairment clause of the Constitution
47. 1st Statement Non life insurance companies are subject to OPT on the premiums collected.
cv.
2nd Statement Marginal income earners are exempted from paying VAT and OPT as well.
a. True, True
c. True, False
b. False, False
d. False, True
48. Which is incorrect?
a. Sugar dealers cannot claim presumptive input tax
b. A VAT registrable person can also claim input tax
c. A VAT registered person is liable to VAT regardless of his sales or receipts
d. Any importation as a rule is subject to VAT even if for personal use only
cw. 39. Aishah University, a domestic corporation, had the following data for taxable year 2012:
cx.
Sales
P5,000,000
cy.
Cost of Goods Sold
2,000,000
cz.
General, Selling and Adiministrative Expenses
500,000
da.
Interest Income from Phil. Bank Deposit
100,000
db.
Rental Income (net of 5% withholding tax)
190,000

dc.
dd.
de.
df.
dg.
dh.
di.
dj.
dk.
dl.
dm.
dn.
do.
dp. 40.
dq.

Dividend Income: From domestic corporation


From foreign corporation
Winnings from charity sweepstakes
Capital gains from sale of domestic share of stocks
Sold directly to buyer
Dividend declared and paid during the year
Retained earnings, beg. of the year (subjected to
IAE tax last year)

60,000
50,000
1,000,000
75,000
500,000
1,000,000

Note: The board of directors approved a resolution reserving P1,500,000 of its net profit for the year for plant expansion.

The income tax due after credit if any is:


a.
P880,000 b.
P870,000
c.
Based on the foregoing problem, the IAE tax if any is:
a.
P208,125 b.
P93,875 c.
P207,125
dr. DONORS TAX RATES
ds.
In general
dt.
If the net gift is:
du.
dv. Bu
dw. The
O
t
tax
no
shall
t
be
ov
er

dz.

P825,000
d.

dx.
Pl

ea. P
10
0,
00
0
ef.
20
0,
00
0

eb. Exem
pt

ec.

eg. 0

eh.
2

ej.
2

ek.

el.

eo.
5

ep. 1,
00
0,
00
0

eq. 14,0
00

er.
6

et.
1,

eu. 3,
00
0,
00
0

ev. 44,0
00

ew.
8

ey.
3,

ez. 5,
00
0,
00
0

fa. 204,0
00

fb.
10

fd.

fe. 10

ff.

fg.

ee.
P1

50
0,
00
0

2,0
00

404,0

em.
4

d.

P815,000

P113,625

dy. O
f
e
x
c
e
s
s
o
v
e
r
ed.

ei. P
1
0
0
,
0
0
0
en.
2
0
0
,
0
0
0
es.
5
0
0
,
0
0
0
ex. 1
,
0
0
0
,
0
0
0
fc. 3
,
0
0
0
,
0
0
0
fh. 5

5,

,0
00
,0
00

00

12

fi.

fj. - end of examination -

,
0
0
0
,
0
0
0

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