1.

The following conditions shall be observed when there is a net capital loss carry over:
a. The loss carried over is for a holding period not exceeding 12 months
b. The amount of the loss should not exceed the income before exemptions in the year when the
loss was sustained
c. The taxpayer should not be a corporation
d. All of the above

2.

Which of the following prizes/benefits is non-taxable:

a Prizes received in recognition of literary achievement
b Prizes granted to athletes in local competitions sanctioned by a national sports association
c
Social Security benefits received by resident aliens from foreign government agencies
d Any one of the above

3.

In the computation of the improperly accumulated earnings tax, which of the following is not deducted from
the taxable net income?
a Dividends declared and paid for the taxable year
b Net operating loss carry-over deducted
c
Income tax due and paid for the taxable year
d None of the above

4.

After filing a protest within the prescribed period, all relevant documents should be submitted to the BIR
within
a Within 30 days after filing the protest
b Within 40 days after filing the protest
c Within 60 days after filing the protest
d Answer not given

5.

Which of the following is subject to the corporate income tax?

a A non-stock and non-profit educational institution
b Public educational institution
c Private cemeteries
d Civic league or organization not organized for profit and operated exclusively for the promotion of
social welfare

6.

One of the general principles of income taxation:

a A foreign corporation engaged in business in the Philippines is taxable on all income derived from
sources within and without the Philippines
b A foreign corporation engaged in business in the Philippines is taxable on all income
derived from sources within the Philippines only
c
A domestic corporation is taxable on income derived from sources within the Philippines only
d A domestic corporation is taxable on income derived from sources without the Philippines only

7.

Which of the following statements is not correct?

a. MCIT is not applicable to non-resident foreign corporations
b. The annual corporate income tax return shall be filed within 60 days following the close of
the taxable year
c. Resident foreign corporations would be taxed on net income from within the Philippines only
d. Non-resident foreign corporations are taxed on gross income from within the Philippines only

8.

The following income are subject to final tax except:

a. Royalty income received by a domestic corporation from a domestic corporation
b. Cash dividends received by a non-resident foreign corporation from a domestic corporation
c. Cash dividends received by a domestic corporation from a domestic corporation
d. Interest income received by a resident foreign corporation from a Philippine bank

9.

Which of the following is not correct?

a. Income from illegal activities are taxable
b. Refund of income tax expense constitutes taxable income to the taxpayer
c. Recovery of bad debts previously written off is part of the taxable income
d. As a rule, contest awards and prizes of P10,000 or more are subject to final tax otherwise they will
be subject to basic income tax

10. One of the following is/are not taxable:

a. Compensation for damages
b. Livings quarters provided to rank and file employees for the convenience of the employer
c. Facilities or privileges of relatively small value offered by the employer as a means of promoting
the health, goodwill, contentment, or efficiency of the employee
d. All of the above
11. The de minimis benefit in excess of the ceiling is treated as:
a.
Income on the part of rank and file employee
b.
Subject to withholding tax on wages
c.
The fringe benefit is a deductible expense of the employer
a.
12.

Only a and b

b. Only a and c

c. Only b and c

In which of the following transaction/s is/are exempt from income tax:

d. a,b,and c

a.
b.
c.
d.
b.

When it involves a gain from sale of shares of stock held as capital assets and traded through the
local stock exchange
When it involves sale of shares of stock directly to the buyer held as capital asset
When the sale involves a real property considered as principal residence
When the sale involves a real property held as ordinary asset
Only a and b b. Only a and c

c. Only b and c

d. Only c

13. Which among the following dependents, age is not considered to qualify a taxpayer as head of the family:
a. Parents
b. Children
c. Siblings
d. Senior Citizen
14. Marvin is employed as a security guard of Lianas Supermarket, Inc. He lives in a room within the
compoundof Lianas but he us not charged any rent. The rental value of the room is P3,000 a month. The
rental on the part of the taxpayer is:
a.
b.

Subject to income tax

Subject to fringe benefits tax

c. Exempt Income
d. None of the above

15. Which of the following taxes is/are deductible

a. Customs Duties
b. Community Taxes
c. Local Taxes
d. Income Taxes
a.
16.

a,b and c only

b. a,b,c and d

c. a and b only

d. b and c only

Which of the following losses is deductible over the three-year period

a.
Net operating loss
c. Net ordinary loss
b.
Net capital loss
d. b and c only

17. Which of the following losses is deductible in the year of incurrence

a. Net operating loss
c. Net ordinary loss
b. Net capital loss
d. None of the above
18. For individuals with gross income of P500,000, the following may be deducted, except:
a.
Personal exemptions
c.Health/Hospitalization Insurance Premium
b.
Allowed business expenses
d. All of the above
19. Which of the following best exemplifies the tax benefit rule applicable to bad debts recovery?
a.
If in the year of deduction, a tax benefit resulted to the taxpayer, then the bad debts recovery is
taxable in the year recovered
b. If no such benefits resulted in favor of the taxpayer in the year of deduction, then the bad debts
recovery is not taxable
c. The bad debts recovery is taxable whether or not the deduction benefitted the taxpayer
d. Both a and b
20. The following withholding taxes are included in the tax credit except:
a. Withholding tax on compensation income
b. Creditable withholding taxes
c. Final withholding taxes
d. Withholding tax on practice of profession
21. Which is deductible in the measurement of net income from business or profession?
a. Salaries of personal security guard of a managerial employee
b. Personal exemption
c. Tuition fees of the taxpayers brother
d. Interest expense on borrowings from family members
22. A repair expense is deductible in the period paid or incurred unless it
a. Merely maintains the value of the property
b. Increases the value of the property
c. Constitutes a major repair
d. Constitutes a minor repair
23. Which of these concepts are not relevant to corporations
a.
Deductions
c. Exclusion
b.
Gross income
d. Personal exemption
24. An allocation of common expenses between related and unrelated activities is made to properly reflect
taxable income. This procedure is required only to
a.
domestic corporation
c. exempt corporation
b.
resident foreign corporation
d. non-profit hospital
25. International carriers are taxable on their gross income or receipt from
a. incoming shipment or flight
c. both incoming and outgoing flight
b. outgoing shipment or flight
d. any sources

26. Which is not a requisite of a deductible loss?

a. It must be sustained by the taxpayer in the current year
b. It must be reported to the BIR within 45 days from the occurrence of the loss
c. It must be compensated by insurance or indemnity contracts
d. It must pertain to a property connected to the trade, business, or profession of the taxpayer
27. Which of the following income is not from a related trade, business or activity of a domestic proprietary
educational institution
a. Income from rent of available office spaces in one of the school buildings
b. Income from hospital where medical graduates are trained for residency
c. Income from the canteen situated within the school campus
d. Income from bookstore situated within the school campus
28. If an individual performs services for a creditor who in consideration thereof cancels the debt, the
cancellation of indebtedness may amount to:
a. a gift
c. donation inter vivos
b. a capital transaction
d. payment of income
29. Which of the following is taxable?
a. Prize won in an essay writing contest
b. The Noble peace prize
c. Prize won as member of the PBA mythical team
d. Award for being a model employee
30. Which of the following is a taxable income?
a. Income from qualified pension plan
b. Compensation for personal injuries
c. Moral damages
d. Interest on moral damages
31. For an individual on the cash basis of accounting, prepaid interest pn business indebtedness is deductible:
a. In the year that the interest is prepaid
b. In the year that the principal is paid
c. For the portion expired corresponding to the current accounting period
d. As time goes by
32. Which of the following statements are true?
a. Resident Filipino citizens with income from foreign sources only are allowed personal and
additional exemptions
b. Non-resident aliens not engaged in trade/business in the Philippines are not allowed any personal
exemptions
c. Non-resident aliens engaged in trade/business in the Philippines are allowed personal exemptions
based on reciprocity
d. All of the above
33. Which of the following corporations is subject to the minimum corporate income tax?
a.
Proprietary educational institutions subject to tax at 10% of their taxable income
b.
Non-profit hospitals subject to tax at 10% of their taxable income
c.
Domestic airline companies operating within the Philippines
d.
Depository banks under the expanded foreign currency deposit system
34. The following cases may not be compromised:
a. Criminal tax fraud cases
b. Withholding tax cases
c. Delinquent accounts with duly approved schedule of payment
d. All of the above
35. Cash dividends received from a domestic corporation are subject to final tax of 10% if received by:
a. Another domestic corporation
b. Resident foreign corporation
c. Non-resident alien engaged
d. Resident Filipino citizen
36. The BIR Commissioner is empowered to:
a. Interpret tax laws and decide tax cases
b. Obtain information, summon and examine witnesses
c. Collect national internal revenue taxes
d. All of the above
37. Life insurance proceeds shall not be included in taxpayers gross income when:
a.
The amount does not qualify as income
b.
The recipient is always the beneficiary
c.
The life insurance policy always provides for exclusion
d.
The amount is paid upon the death of the insured
e.
None of the above

b.
c.
d.
e.

38. Which of the following are NOT exempt from income tax?
a.
Philippine Health Insurance Corporation
Philippine National Oil Company
University of the Philippines
PAGCOR
b and d
39. The following fringe benefits are not taxable, except:
a.
b.
c.
d.
e.

Fringe benefits which are authorized and exempted from tax under special laws.
Contributions of the employer for the benefit of the employee to retirement, insurance and
hospitalization benefits.
Membership fees, dues and other expenses borne by the employer in social or athletic clubs
or other similar organizations.
Benefits given to rank and file employees, whether granted under a collective bargaining
agreement or not.
De minimis benefits.

40. Which of the following statements is false?

a. Non-resident aliens engaged in trade or business are liable to pay 30% dividend tax
b. Non-resident aliens not engaged in trade or business are liable to pay 25% dividend tax
c. Resident citizens are liable to pay 10% dividend tax
d. Resident foreign corporations are exempt from the payament of dividend tax
41. Gross income means all income derived from whatever source, including the following items except:
a. Pensions
b. Prizes and winnings
c. Rents
d. Stock dividends
42. Exclusions from gross income under the Tax Code include the following except:
a. Veterans benefits
b. Compensation for injuries and sickness
c. Gifts, bequests, and devises
d. Gains from redemption of shares of stock
43. Fringe benefit tax shall be paid by the employer because:
a. The employee received the benefit net of tax
b. The Tax Code expressly so states
c. The employer relieves the employee of the burden to pay the tax
d. The employer is the agent of the employee for the payment thereof.
44. Allowable deductions are distinguished from personal exemptions in that:
a.
b.
c.
d.

The former may be availed of only by corporate taxpayers, whereas the latter may apply to
individual taxpayers.
The former applies to corporate and individual taxpayers engaged in business or are
practicing their profession, whereas the latter covers only natural persons.
The former may be found in Section 34, while the latter is granted under Section 35.
The former is a privilege while the latter is a matter of right.

45. Determine which of the following items are taxable:

a. Income from jueteng
b. Gain arising from expropriation of property
c. Taxes paid and subsequently refunded
d. Recovery of bad debts previously charged off
e. All of the above
46. Determine which of the following is (are) included in the preparation of annual income tax returns:
a. Proceeds of life insurance received by a child as irrevocable beneficiary
b. 13th month pay and de minimis benefits
c. Dividends received by a domestic corporation from another domestic corporation.
d. Interest on deposits with BPI Family Bank
e. None of the above
47. JR was a passenger of an airline that crashed. He survived the accident but sustained serious physical
injuries which required hospitalization for 3 months. Following negotiations with the airline and its insurer, an
agreement was reached under the terms of which JR was paid some amounts. Which of the following
amounts constitute taxable income?
a.
b.
c.
d.

P500,000 for his hospitalization

P250,000 as moral damages
P300,000 for loss of income during the period of his treatment and recuperation
JR received from his employer the amount of P200,000 representing the cash equivalent of his
earned vacation and sick leaves

48. XYZ Colleges is a non-stock, non-profit educational institution run by the Archdiocese of BP City. Which of
the following item(s) is included in its Income Tax Return?
a. Tuition fees
b. Laboratory fees
c. Rentals from canteen concessionaires
d. Interest from money-market placements of the tuition fees
e. Donation of a lot and building by school alumni
49. Which of the following are excluded from the gross estate?
a. proceeds of life insurance policy payable to an irrevocable beneficiary
b. revocable transfers
c. transfer in contemplation of death
d. claims against insolvent persons
50. Who among the following are NOT required to file an income tax return?
a.
b.
c.
d.

Filipino citizen with business income from the Philippines.

Resident alien on income derived within the Philippines.
Non-resident alien engaged in trade or business
An individual whose sole income has been subjected to final withholding tax.

51. Shirley was allowed to deduct P200,000 bad debts written off in 2003, where she had a net income before
bad debts of P180,000 and a net loss of P20,000. IN 2004, she was able to recover the bad debts written off
in full. The bad debts recovery is:
a. Taxable to the extent of P180,000
b. Taxable to the extent of P20,000
c. Taxable to the extent of P200,000
d. Not taxable
52. Dividends from a domestic corporation and/or share in the net income of a taxable partnership received by
a citizen during the year 2015 is subject to a final tax
a. Zero
c. 20%
b. 30%
d. 10%
53. A deductible interest expense
a. Interest on loan between members of a family
b. Interest on loan that was used to finance the construction of the taxpayers residence
c. Interest on tax delinquency
d. Interest on indebtedness to finance a petroleum operations
54. In 2015 Tuguegarao Educational Institute, a proprietary educational institution registered with the SEC and
CHED constructed a new school building at a total cost of P8,000,000. For income tax purposes, the
construction cost may be:
a.
b.
c.
d.
55.

Claimed entirely as deduction from its 2015 gross income

Classified as an asset or expensed outright at the option of the government
Classified as an asset or expensed outright at the option of the taxpayer
Classified as an asset and claim an annual depreciation over the life of the building

If the gross income from unrelated activities exceeds 50% of the total gross income derived by any
private educational institution, the tax rate shall be 30% based on the entire taxable income. This
principle is known as
a. Constructive receipt
c. end result doctrine
b. Tax benefit rule
d. predominance test

56. Which of the following statements is true? Dividends received by a

a. domestic corporation from a resident foreign corporation are subject to final withholding ta
b. resident foreign corporation from another resident foreign corporation are subject to scheduler
income tax in the Philippines
c. non-resident foreign corporation from a domestic corporation maybe subject to a tax
sparing credit
d. domestic corporation from another domestic corporation are subject to withholding tax
57. The minimum corporate income tax is imposed on
a.
b.
c.
d.

proprietary educational corporations taxable at 10% of gross income

depository banks under the expanded foreign currency deposit system
business partnerships
offshore banking units subject to final tax of 10%

58. Which of the following corporations is subject to improperly accumulated earnings tax?
a. Proprietary educational institutions
b. Non-taxable joint venture
c. Insurance companies
d. General professional partnerships

59. Which of the following is true? Proceeds of life insurance policy

a. is exempt from income tax upon the death of the insured if the beneficiary is not the estate,
executor or the administrator
b. is not subject to income tax if taken by a person other than the insured such as the employer
c. is not subject to income tax in its entirety if the insured outlives the policy regardless of the amount
of premiums paid by the insured
d. is exempt from income tax upon the death of the insured because the requirement of
irrevocability and appointment of beneficiary other than the estate, executor or
administrator are applicable only on estate tax and not to income tax

60. Which of the following statements is wrong about fringe benefits?

a. The fringe benefit tax does not apply to rank-and-file employees
b. The rule on de minimis benefit does not apply to rand-and-file employees
c. The monetary value received by an official or employee is presumed to be net of fringe benefit tax
d. If the recipient of a fringe benefit is a non-resident alien not engaged in trade or business, the
monetary value shall be divided by 75% in order to arrive at the grossed-up monetary value