NOTRE DAME EDUCATIONAL ASSOCIATION

Purok San Jose, Brgy. New Isabela, Tacurong City

MOCK BOARD EXAMINATION

TAXATION
S.Y. 2016-2017

INSTRUCTIONS: This examination is good for three (3) hours. Select the best answer for each
item. Mark only ONE answer for each item by shading the letter of your choice on the ANSWER
SHEET. STRICTLY NO ERASURES. Use Mongol Pencil No. 2 Only.

1. Which tax exemption is irrevocable?

A. Tax exemption based on contract C. Tax exemption based on law
B. Tax exemption based on the Constitution D. Both A and B

2. The following statements are correct, EXCEPT

A. The provisions of taxation in the Philippine Constitution are powers granted to the taxing
authorities and not limitations in the exercise of taxation.
B. The State can tax anything at any time within its jurisdiction in the exercise of taxation.
C. Taxes are generally imposed to raise revenue or to provide certain disincentives to certain
activities within the State’s juridical limit.
D. The State can exercise the power of taxation even if the Constitution does not expressly
provide such power.

3. NDEA Colleges is a non-stock, non-profit educational institution run by the Archdiocese of

Cotabato. It is occupying the following buildings
A. Bldg. 1 being used by the students for classroom purposes.
B. Bldg. 2 being used as dormitory of its students but open to non-students who want
to stay therein; and
C. Bldg. 3 owned by Mr. Lease being rented to NDEA Colleges and serving as
administration building which houses the offices of the school president, treasurer
and registrar.

Which of the above buildings is exempted from real estate tax?

A. Building A only C. Buildings A and C
B. Buildings A and B D. All of them

4. Question 1: Does the power of the Commissioner of Internal Revenue to inquire into the bank
deposits of a taxpayer conflict with the provisions of R.A. 1405 (Bank Secrecy Law)?
Question 2: May the Commissioner of Internal Revenue authorizes an examiner to inquire into
the bank deposits of a taxpayer who is suspected to have committed fraud in declaring his
income?

Which of the above questions is answerable by “Yes”?

A. Question 1 only C. Questions 1 and 2
B. Question 2 only D. Neither Question 1 nor 2

5. Taxation power can be used to destroy

A. a revenue measure C. even if the tax is invalid
B. an implement of police power D. when the State is in dire need of funds

6. Statement 1: Tax differs from customs duties because tax is imposed on person, properties, or
rights while customs duties are imposed only on persons and rights.
Statement 2: Tax differs from debt because tax is based on enacted laws while debt is based on
contract. Which statement/s is/are CORRECT?
A. Statement 1 only C. Statement 2 only
B. Statements 1 and 2 D. Neither statement 1 nor 2

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 7. What inherent power of the State is being applied when a law is passed providing for
compulsory vaccination and subjects a person to imprisonment for refusing to submit to
vaccination, except when the person is not fit for vaccination because of his physical
condition?
A. Eminent domain C. Taxation
B. Police power D. All of these

8. The distinction between constructive distraint and actual distraint is that

A. constructive distraint is applied on the property of a delinquent taxpayer, while actual
distraint is applied on the property of a taxpayer whether delinquent or not.
B. in constructive distraint, the taxpayer is prohibited from disposing the property, while in
actual distraint, there is the taking of possession.
C. actual distraint is effected by requiring the taxpayer to sign a receipt of the property, or by
the revenue officer preparing and leaving a list of the distrained property, or by service of a
warrant of distraint or garnishment
D. constructive distraint is considered summary proceedings available to the government,
while actual distraint is a judicial remedy to enforce collection of taxes.

9. Where any national internal revenue tax is alleged to have been erroneously or illegally
collected, the taxpayer should first file
A. a claim for refund or credit with the BIR
B. an action for refund with the Regional Trial Court
C. an action for refund with the Court of Tax Appeals
D. an action for refund with the Supreme Court

10. The following cases fall within the jurisdiction of the Court of Tax Appeals, EXCEPT
A. criminal action for violation of the Tax Code
B. appeal from disputed assessment
C. appeal from undisputed tax assessment
D. question on whether or not to impose a deficiency tax assessment upon a taxpayer

11. On April 15, 2013, Mr. Jed Tacs paid excessive tax. On December 20, 2014, he filed a written
claim for refund with the BIR. His claim was denied by the BIR, and he received the denial on
March10, 2015. He filed a motion for reconsideration with the BIR on March 31, 2015. He
received the final denial of the BIR on April 20, 2015. What will be the taxpayer’s remedy?
A. Within 15 days after receipt of the final denial, file an appeal with the Court of Tax Appeals.
B. Within 30 days after receipt of the final denial, file an appeal with the Court of Tax Appeals.
C. Within 30 days after receipt of the final denial, file another motion of reconsideration with
the BIR.
D. Mr. Tacs has no more remedy against the final denial.

12. Carla received an assessment on October 7, 2014. When is the last day for filing the protest?
A. October 22, 2014 C. December 6, 2014
B. November 6, 2014 D. January 4, 2015

13. Mr. Apol has a tax obligation to the government amounting to P100,000. Since he is leaving
the country, he entered into a contract with Mr. Cee wherein Mr. Cee shall pay the P100,000
tax in his behalf. On due date, Mr. Cee failed to pay the tax. The BIR sent a letter of demand to
Mr. Apol which he refused to pay. Which of the following statements is CORRECT?
A. The government cannot enforce collection against Mr. Apol since he has validly transferred
his obligation to Mr. Cee under the contract.
B. The government can no longer run after Mr. Apol because he is in other country.
C. The government should wait until Mr. Cee becomes solvent again.
D. The government should force Mr. Apol to pay because taxes are non-assignable.

14. Which of the following statements is a distinction between distraint and levy?
1. Distraint is the seizure of personal property, while levy is the seizure of real property.
2. In distrait, the government may purchase the property if no sufficient bid is received,
while in levy the government shall forfeit the property.
3. Distraint and levy shall not be availed of where the amount of tax involved is not more

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 than One Hundred Pesos P100.00).
A. 1 and 2 only C. 2 and 3 only
B. 1 and 3 only D. 1, 2 and 3

15. Banks are authorized by the government to collect taxes. This practice highlights the principle
of
A. Administrative feasibility C. Administrative feasibility
B. Privity of relationship D. Theoretical justice

16. The power to decide disputed assessments, refunds of taxes, fees and other charges, penalties,
and other matters arising under the NIRC is vested with the Commissioner of Internal
Revenue, subject to the exclusive appellate jurisdiction of
A. Regional Trial Court C. Secretary of Finance
B. Court of Appeals D. Court of Tax Appeals

17. Which is a CORRECT statement regarding income taxes?

A. An item of income subjected to final tax can still be subject to regular tax.
B. An item of income exempted from tax is likewise exempted from capital gains tax and
regular tax.
C. An item of income exempted from final tax is nevertheless taxable to regular tax.
D. An item of income subjected to capital gains tax may be subject to regular income tax.

18. The following statements are false, EXCEPT

A. The excess of MCIT over the normal income tax of the current year always reduces the
normal income tax.
B. The annual corporate income tax is always equal or higher than the MCIT.
C. MCIT is always lower than the normal income tax at regular rate.
D. The excess of MCIT over the normal income tax is allowed to be carried forward for the
next 4 successive years.

19. In year 2016, Mr. Gringo, married with 7 minor children, is engaged in architectural design
services. The following are pertinent data
Gross receipts P 5,000,000
Sales returns and allowances 200,000
Sales discounts 250,000
Cost of services 2,250,000
Business expenses 1,000,000
The gross income of Mr. Gringo is
A. P2,750,000 C. P2,300,000
B. P2,450,000 D. P2,236,000

20. Effective May 15, 2016, Diana Corp. changed its fiscal year every April 30 to the calendar year.
An adjustment return shall be filed covering the period
A. January 15 to December 31, 2016 C. May 1 to December 31, 2016.
B. January 1 to April 30, 2016 D. April 30 to December 31, 2016.

21. Real Construction Company has a contract starting Sept. 2016 to construct a P40,000,000
department store that is expected to be completed on December 2018. The following are the
data pertaining to the construction
2016 2017 2018
Costs incurred to date P 10,950,000 P 29,200,000 P 36,500,000
Percentage of completion 30% 80% 100%
Under the percentage of completion, the annual realized revenue to be reported in 2016 is
A. P 2,800,000 C. P 1,500,000
B. P 1,750,000 D. P 1,050,000

22. The manager of Twilight Company receives a monthly salary of P45,000. On January 5, 2016,
he received the following items as bonus for 2015 services:
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 • 500 shares of shares, par value, P100 per share and a fair market value at the time of receipt
of P150. In 2015, the fair market value of the shares was P130.
• Non-interest bearing note of P200,000, payable in two years. The prevailing market rate of
a similar note is 12%.

What is gross compensation income of the manager in 2015?

A. P 790,000 C. P 774,400
B. P 781,000 D. P 766,000

23. Statement 1: Mr. Greg received dividend income from a domestic corporation where he has an
investment. The dividend income is excluded in the computation of his gross taxable income.
Statement 2: Mr. Eric, director and employee of Oil Company, received P500,000 director’s fee
during the current taxable year. The director’s fee is subject to 10% creditable withholding
tax. Which statement/s is/are CORRECT?
A. Statement 1 only C. Both statements 1 and 2
B. Statement 2 only D. Neither statement 1 nor 2

24. A resident citizen received the following prizes and winnings during the current taxable year:
Car won from KCC during Christmas raffle bonanza P 800,000
Winnings from PCSO 300,000
Winnings from American charity 600,000
Winnings from local lottery 9,000
Prizes received because of literary contributions without
competition given by CHED 15,000

The amount of prizes and winnings subject to final tax is

A. P 315,000 C. P 800,000
B. P 615,000 D. P 815,000

25. A farmer uses the crop-year method in reporting his income from long-term crops. The
following data are relevant to his farming operations in 2016:
Sales of crops harvested, P900,000
Expenses on harvested crops, P350,000
Expenses on maturing crops, P250,000
Expenses on newly planted crops, P150,000
Sales of tree branches for firewood, P50,000

How much income from farming should be subjected to tax?

A. ₱ 150,000 C. ₱ 550,000
B. ₱ 300,000 D. ₱ 600,000

Use this information to answer items 26-27: Gardo leased a land to Coco for a period of 10 years
starting January 1, 2016 at a monthly rental of P2,000. Observing the provisions of the contract, Coco
constructed a building which shall become the property of Gardo at the expiration of the lease. The
construction was completed on December 31, 2016 at a cost of P1,000,000 with an estimated life of
20 years.
26. How much income is to be reported by Gardo in 2017 under the spread-out method?
A. P 1,024,000 C. P 99,000
B. P 1,000,000 D. P 85,111

27. Suppose on January 1, 2018 the building was destroyed by fire, how much loss should Gardo
report in 2018 under the spread-out method?
A. P 1,000,000 C. P 61,111
B. P 112,500 D. P 75,000

28. Mr. Istol, who regularly sells on instalment basis, presented the following data on the sale of
ordinary asset, other than inventory, in 2016
Selling price of the property 4,500,000

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 Cost to the seller 2,100,000
Payment from the buyer:
On the date of sale 600,000
Additional payment in 2016 500,000
In year 2017 1,650,000
In year 2018 1,650,000
The income to be reported in 2016 is
A. P 1,100,000 C. P 275,000
B. P 586,666 D. P 268,840

29. Statement 1: Share dividend is not taxable, because the company simply capitalized part of its
retained earnings.
Statement 2: Share dividend that brought changes to the proportionate interest of the
stockholders is taxable.
Which statement/s is/are CORRECT?
A. Statement 1 only C. Both statements 1 and 2
B. Statement 2 only D. Neither statement 1 nor 2

30. Included in the compensation package of an executive was the free use of the company’s
residential condominium unit in Forbes Park, Makati City, Philippines. Data on the
condominium unit follows:
FMV in the Real Property Tax Declaration P1,000,000
Zonal value 2,000,000
FMV 2,500,000
The basis for the computation of monetary value of the fringe benefit is
A. P 1,000,000 C. P 2,500,000
B. P 2,000,000 D. P 5,500,000

31. Donor’s tax distinguished from estate tax.

1st distinction: The rates of donor’s tax are lower than those for the estate tax.
2nd distinction: The donor’s tax exemption per tax table is only P100,000 while the estate
tax is P200,000.
Which of the following statements is CORRECT?
A. Both distinctions are correct
B. 1st distinction is correct, while 2nd distinction is wrong
C. Both distinction are wrong
D. 1st distinction is wrong, while 2nd distinction is correct

32. The conjugal property is distinguished from the community property by the
A. income derived by each spouse during marriage
B. fruits of exclusive property
C. properties acquired through occupation during marriage
D. property inherited during marriage

33. Mr. Rendo, a non-resident Filipino, died during the taxable year with the following information
House and lot in the Philippines as family home P2,000,000
Car in Switzerland 800,000
Pieces of jewelry in the Philippines 500,000
Receivables in Singapore where 15% is proven to
be uncollectible due to insolvency of the debtor 900,000
Funeral expenses 150,000
Judicial expenses 60,000
If the decedent is single, the amount of net estate subject to tax is
A. P1,720,000 C. P1,855,000
B. P1,805,000 D. P1,940,000
34. A resident alien conveyed the following properties at the following terms
Consideration Fair value
Car P0 P 500,000
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 Motorcycle 300,000 300,000
Computer set 20,000 80,000
The total amount subject to transfer tax is
A. P 880,000 C. P 500,000
B. P 560,000 D. P 60,000

35. If a resident citizen died on November 1, 2016, the last day of filing of notice of death as
required by the Tax Code is
A. Nov. 30, 2016 C. Dec. 31, 2016
B. Apr. 15, 2017 D. Apr. 30, 2017

36. Caridad made a donation to her children in 2015. In which of the following successive
donations will Caridad pay the donor’s tax?
A. January 15 - To Savannah on account of marriage, P60,000
B. March 15 - To Maria on account of graduation, P50,000
C. May 15 - To Teresa on account of her 18th birthday,P50,000
D. In all of the above donations

37. Donor’s tax return shall be filed within

A. 30 days after the gift is made C. 6 months after the gift is made
B. 25 days after the gift is made D. 30 days after the end of every year

38. Mrs. Santos, a resident of the Philippines, gave the following donations on March 22, 2016:
To Beauty, a legitimate son, on account of
marriage cash of P125,000
To the City of Bacolod for public purpose,
land with a market value of 200,000
To Destiny, illegitimate son, on account of marriage
last December 31, 2015 125,000
To Kitty, daughter, on account of graduation 150,000

What is the donor’s tax on the March 22, 2016 donations?

A. P 20,000 C. P 5,800
B. P 10,000 D. P 5,000

39. Gifts may or may not be covered by taxes. Which of the following statements is FALSE?
A. The donor’s tax for each calendar year is computed on the basis of the total net gifts made
during the calendar year.
B. A gift out of conjugal property is always deemed as made by both spouses.
C. Gifts in property shall be valued at the fair market value of the property at the date of
donation.
D. A gift to the Development Academy of the Philippines is exempt from tax.

40. Crispin wrote a letter to Basilio on December 25, 2015 donating his car worth P2,400,000.
The letter was received by Basilio on January 7, 2016 who accepted the donation. The letter of
acceptance was received only by Crispin on January 15, 2016. The donor’s tax was not paid
until February 28, 2016. For donor’s tax purposes, the gross gift should be based on the value
of the property on
A. Dec. 25, 2015 C. Jan. 15, 2016
B. Jan. 7, 2016 D. Feb. 28, 2016

41. Which is an INCORRECT statement regarding consumption taxes?

A. They are always indirect in nature.
B. They effectively tax everyone in the state.
C. Apply only when the goods or services are destined for consumption within the
Philippines.
D. Consumption taxes may encourage savings formation.
42. A person who imports properties will more likely to pay
A. a 3% percentage tax on the importation C. either 3% or 12% on the importation
B. a 12% VAT on the importation D. no consumption tax
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 43. A taxpayer had the following sales or receipt in the past twelve months:
Exempt sales P1,500,000
Services subject to percentage tax 400,000
Other sales 800,000
Total P2,700,000
Which statement is CORRECT?
A. The taxpayer is subject to VAT on all sales.
B. The taxpayer is subject to VAT on taxable sales other than exempt sales.
C. The taxpayer is subject to percentage tax on taxable sales other than exempt sales.
D. The taxpayer is subject to percentage tax on all sales.

44. A restaurant sold to a senior citizen who is accompanied by two adult persons. The total price
of their order totaled P3,360. What is the amount to be billed?
A. P 3,240 C. P 3,040
B. P 3,136 D. P 3,000

45. A farm supply dealer made the following sales in a month:

Fertilizer P 45,000
Hybrid corn and rice seeds 65,000
Pesticides 120,000
Water pumps and hand tractors 240,000
Total P 470,000
What is the amount of sales subject to business tax?
A. P 110,000 C. P 230,000
B. P 120,000 D. P 360,000

46. ACCTY is the operator of BSA Hotel and Restaurant. The restaurant is open to the public
including the hotel guests. It has the following data for the first quarter of the current year
Gross receipts – room rentals P 500,000
Gross receipts – foods/drinks served to hotel guests 50,000
Gross receipts – foods and soft drinks from customers 150,000
The percentage tax payable on the gross receipts of the first quarter of the current year shall be
A. P 21,000 C. P 19,500
B. P 16,500 D. P 84,000

47. Mr. Celso had the following transaction in September 2015

Sale of VAT-exempt goods P 200,000
Sale of vatable goods 400,000
Purchases of VAT-exempt goods 120,000
Purchase of vatable goods 250,000
All amounts are exclusive of VAT. The amount of VAT payable is
A. P 84,000 C. P 36,000
B. P 72,000 D. P 24,000

48. Bukaspalad Corp. is a VAT-registered dealer of appliances. The following data are for the last
quarter of the year:
Sales, total invoice value P6,800,000
Purchases, net of input taxes 5,500,000
Sales return 200,000
Purchases return 300,000
Deferred input taxes (carried over from the 3rd quarter) 9,500
The VAT payable for the last quarter by Bukaspalad Corporation is
A. P 120,500 C. P 71,071
B. P 70,500 D. P 73,643
49. The following are instances where a VAT-registered person may apply for cancellation of

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 registration, EXCEPT
A. A change of ownership, in the case of a single proprietorship.
B. A person who has registered prior to planned business operation, fails to actually start his
business.
C. A person who has retired from business
D. A person who voluntarily registered under the VAT system can only revert to exempt
status after the lapse of 12 months from the date of registration.
50. Subido Transport is engaged in transportation business. It is registered as a domestic
common carrier by land. The receipts in October of the current taxable year are as follows:
Transport of passengers P 5,000,000
Transport of goods 3,500,000
Transport of cargoes 2,000,000
How much is the common carrier tax due and payable?
A. P 150,000 C. P 350,000
B. P 315,000 D. P 900,000

51. A VAT-taxpayer had the following data on its VAT obligation at the quarter of the year:
Output VAT on regular sales P150,000
Input VAT on regular purchases 120,000
Advanced input VAT 70,000
Advanced input VAT claimed as tax credit 40,000
VAT paid in the prior months 40,000
What is the input VAT carry-over for the following quarter?
A. P 0 C. P 50,000
B. P 40,000 D. P 80,000

52. The DST of the original issue of shares of stock shall be

A. P1 for every P100 C. P2 for every P200
B. ½ of 1% of the authorized capital stock D. 1% of the authorized capital stock
53. An advisory or information communication service to various taxpayers is called
A. BIR Memorandum Circular C. Statutes
B. BIR Rulings D. Revenue Regulations
54. Are you aware that the selling of tickets _______started?
A. has C. was
B. have D. were
55. The people, including the religious, ____ divided in their opinion about the death penalty.
A. is C. has
B. are D. have
56. The total log ban _______ saved the trees from indiscriminate logging.
A. had C. would have
B. have D. should have
57. Decide whether the following statements are correct or incorrect.
Statement 1- A person is subject to excise tax is also subject to value-added tax.
Statement 2- A person subject to percentage tax is also a subject to value added tax.
A. Both statements are correct.
B. Both statements are incorrect.
C. The first statement is correct but the second statement is wrong.
D. The first statement is wrong but the second statement is correct.
58. The actual residential home of the descendant and his family at the time of his death, as
certified by the barangay captain of the locality where the family home is situated, has a fair
market value of P3,000,000. The family home is part of the common property of the spouses.
How much is the family home deduction?
A. P 1,500,000 C. P 750,000
B. P 1,000,000 D. P 500,000

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 59. All of the following refer to special deductions from the gross estate, EXCEPT
A. Judicial expenses in testate or intestate proceedings
B. Standard deduction
C. Family home deduction up to P1,000,000
D. Medical Expenses within one year from the death of the descendant not exceeding
P500,000

60. Under this system there is a merger of all the properties of the husband and wife owned by
them at the time of the celebration of the marriage or those acquired thereafter. What is this
CALLED?
A. Conjugal partnership of gains C. Complete separation of properties
B. Absolute community of properties D. None of the above

61. Which of the following statement is INCORRECT?

A. A separate shall be filed by each donor for each gift or donation made on different dates
during the year reflecting therein any previous net gift made in the same calendar year.
B. Only one return shall be filed for several gift or donations by a donor to the different
donees on the same date.
C. When a donor’s tax return was filed and it was found out by the BIR to have errors which
gave rise to a deficiency donor’s tax, the donor cannot be required to pay the deficiency.
D. The government is not legally bound by the agreement between the donor and the donee
that the later shall pay the donors tax instead of the former.

62. Which of the following is a stranger for donor’s tax purpose?

A. A child is born out of wedlock of parents who are legally impeded to marry each other at
the time the child is being conceived
B. The son of the donor’s first cousin
C. The donor’s grand mother
D. The donor’s spouse

63. Which of the following donees will NOT entitle the donor-parent to a P10,000 dowry
exemption?
A. Legitimate child C. Adopted Child
B. Recognize Natural Child D. Stepchild

64. When the donee is a stranger the tax payable is

A. 30% of the gross gift
B. 30% of the net gifts
C. Based on the graduate tax rates
D. Based on the graduated tax rates or 30% of gross gifts whichever is higher

65. 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 are engaged in trade/business in the Philippines are allowed personal
exemptions based on reciprocity
D. All of the above

66. Which of the following individuals shall NOT be a subject to the income tax under Section 24
(A)?
A. Individual citizen of the Philippines residing therein.
B. Individual citizen of the Philippines who residing outside the Philippines including
overseas contract worker.
C. Individual alien who is a resident of the Philippines.
D. Individual alien who is not a resident of the Philippines.

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 67. The deadline for filing a payment of Annual Income Tax return for individual taxpayer is on or
before
A. December 31 C. March 15
B. January 31 D. April 15

68. What refers to a summary administrative remedy, seizure of real property to enforce payment
of tax due?
A. Levy C. Forfeiture
B. Distraint D. Tax alien

69. Penalties and/or interest imposed on the tax payer may be abated or cancelled on the ground
that the imposition thereof is unjust and excessive, EXCEPT when
A. the taxpayer is declared insolvent or bankrupt.
B. the filing of the return or payment of the tax is made at the wrong venue.
C. the taxpayer’s mistake in payment of his tax is due to erroneous written official advice of a
revenue officer.
D. the assessment is brought about or a result of the taxpayer’s non-compliance with the law
due to a difficult interpretation of the said law.

70. A taxpayer paid excessive tax on April 15, 2000. On December 20, 2001, a written claim for
refund was filed. Her claim was denied by the BIR and she received the denial on March 15,
2002. She filed a motion for reconsideration with the BIR on March 31, 2002. On April 10,
2002, she received the final denial of the BIR. What will be the taxpayer’s remedy?
A. File another motion for reconsideration with the BIR within 30 Days after the receipt of the
final denial.
B. File an appeal with the Court of Tax Appeals on or before May 10, 2002
C. File an appeal with the Court of Tax Appeals on or before April 15, 2002
D. The taxpayer has no more remedy against the final denial

END OF EXAMINATION 

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