TAXATION

1. What basic principle of a sound tax system is met when Congress evolves a progressive system
of taxation as mandated in the Constitution?
a. Fiscal adequacy
b. Theoretical justice
c. Administrative feasibility.
d. Balanced budget

2. Which of the following is not a basic principle of a sound taxation system?

a. It should be capable of being effectively enforced.
b. It must be a progressive tax.
c. It must be sufficient to meet government expenditures and other public needs.
d. It should be exercised to promote public welfare.

3. All of the following, except one, is an essential characteristic of a tax.

Which is the exception?
a. It is based on the ability to pay
b. It is an enforced contribution
c. It is generally payable in money
d. It is proportionate in character.

4. In case of deductions and exemption on income tax returns, doubts shall be resolved:
a. liberally in favor of the taxpayer.
b. liberally in favor of the employer.
c. strictly against the government.
d. strictly against the taxpayer.

5. A taxpayer owns a capital asset which he plans to sell. He asks you when is the best time to sell
the asset. You advise him to sell it after twelve (12) months after the date he acquires it because
the capital gain to be recognized is 50% only. This is an example of:
a. Tax avoidance
b. Tax evasion
c. Tax exemption
d. None of the choices

6. The administrator has a friend who has a background in accounting. The friend advised him not
to include in the gross estate an antique jewelry inherited by the decedent from his mother
because the BIR will not know its existence anyway. This an example of:
a. Tax avoidance
b. Tax evasion
c. Tax exemption
d. None of the choices
7. Is it possible for the tax to be used partly for public and partly private without violating the
limitation that a tax must be for public purpose?
a. Yes. The purpose to be accomplished by taxation need not be exclusively public. Although
private individuals are directly benefited (e.g. giving aid to flood victims), the tax will still be
valid provided such benefit is only incidental.
b. No. The purpose to be accomplished by taxation need to be exclusively public. To benefit
private individuals will be tantamount to deprivation of property of those who paid the tax
without due process.
c. Yes. The purpose is not important as long as the use of the tax can be property accounted
for.
d. No. The purpose shall either be public or private. It cannot be both.

8. Some franchise holders who are paying the franchise tax are being required by an amendatory
law to pay the value-added tax, while others remain subjected to franchise tax. Which of the
following constitutional provisions makes the law unconstitutional?
a. No law shall be passed impairing the obligation of contracts.
b. The rule on taxation shall be uniform.
c. No person shall be deprived of property without due process of law.
d. None of the above.

9. Which is the best answer? A tax reform at any given time underscores the fact that.
a. taxation is an inherent power of the state.
b. taxation is essentially a legislative power.
c. the State can and should adopt progressive taxation.
d. taxation is a power that is very broad.

10. Except for the provision in Section 222, internal revenue taxes shall be assessed within how
many years after the last day prescribed by law for the filing of the return?
a. Five (5) years
b. Four (4) years
c. Three (3) years
d. Two (2) years

11. A decedent dies on January 1, 2009. The estate return is filed on September 1, 2009. When is
the last day to make a solid assessment?
a. April 15, 2010
b. July 1, 2009
c. July 1, 2010
d. September 13, 2012

12. The following remedies for the collection of the taxes are available to the Government, except:
a. distraint and levy.
b. inquiring into bank deposit accounts of taxpayer
c. entering into compromise of tax cases.
d. Enforcement of forfeiture of property.
13. No credit or refund of the taxes or penalties shall be allowed unless the taxpayer files. in writing
with the Commissioner, a claim for credit or refund within what period after the payment of the
tax or penalty?
a. two (2) years
b. three, (3) years
c. five (5) years
d. ten (10) years.

14. After receiving the Formal Letter of Demand/Fina! Assessment Notice, a taxpayer files a request
for reconsideration on June 15, 2016. When shall be the last day for the protest to be acted
upon by the Commissioner of Internal Revenue?
a. On or before August 14, 2016
b. On or before October 13, 2016
c. On or before December 12, 2016
d. Cannot be determined because the date of the required document is submitted is not given.

15. It refers to a plea of re-evaluation of an assessment on the basis of newly discovered or

additional evidence that taxpayer intends to present. It may also involve a question of fact or of
law or both.
a. Request for reinvestigation
b. Request for reconsideration
c. Request for compassion
d. Request for re-evaluation

16. It refers to a plea of re-evaluation of an assessment on the basis of newly discovered or

additional evidence that a taxpayer intends to present. It may also involve a question of fact or
of law or both.
a. Request for reinvestigation
b. Request for reconsideration
c. Request for compassion
d. Request for re-evaluation

17. For requests for reconsideration, the taxpayer shall submit all relevant supporting documents in
support of his protest within how many days from date of filing of his letter of protest,
otherwise, the assessment shall become final.
a. sixty (60) days
b. thirty (30) days
c. fifteen (15) days
d. none of the choices

18. It is the authority of a Court higher in rank to re-examine the final order or judgment of a lower
Court which cried the case now elevated for judicial review.
a. Original jurisdiction
b. Appellate jurisdiction
c. Judicial review
d. None of the choices
 19. The CTA shall exercise exclusive appellate jurisdiction to review by appeal:
a. Decision of the CIR in cases involving disputed assessments, refunds of internal revenues,
fees or other charges, penalties in relation thereto, or other matters arising under NIRC or
other laws administered by the BIR.
b. Inaction by the CIR in cases involving disputed assessments, refunds of internal revenue
taxes, fees other charges, penalties. in relation thereto, or other matters arising under NIRC
or other laws administered by the BIR, where the NIRC provides a specific period for action,
in which case the inaction shall be deemed a denial.
c. Both & and b
d. Neither a nor b.

20. Certificate of Update of Exemption and Employer's and Employee's Information regarding
change of status snail be filed within now many days?
a. Within ton (10) days after such change or event
b. Within fifteen (15) days after such change or event
c. Within twenty-five (25) days after such change or event
d. Within thirty (30) days. after such change or event

21 to 25 are based on the following: Charie Yabut, senior citizen, is engaged in a trading business. She is
not VAT-registered. She is also supporting a Person with Disability (PWD) who is the husband of her
deceased sister and a legally adopted minor child. During the first quarter of the calendar year 2016, the
following data taken from her books of accounts are given:

Gross sales P2,000,000.00

Sales discounts given at the time of sale (including P100,000 discount to senior 500,000.00
citizens)
Beginning inventory 100,000.00
Purchases 400,000.00
Ending inventory 300,000.00
Deductible expenses (40% VAT-subject) 100,000.00
Interest income from Peso bank deposit 10,000.00
Selling price of shares of stock listed and traded through the local stock exchange 150,000.00
(cost is P100.000)
Capital loss from sale of 100 bonds (long term) 25,000.00
Gain from sale of his interest in a business partnership (short term) 40,000.00
VAT paid. first two months of the quarter 60,000.00

21. Is Ms. Charie Yabut subject to VAT?

a. Yes, because her gross sales exceed the VAT threshold amount.
b. No, because senior citizens are not subject to VAT.
c. Yes, because she is engaged on trading business.
d. No, because she is not VAT-registered
22. How much is the VAT payable?
a. P127,200.00
b. P67,200.00
c. P55,200.00
d. None. Exempt from the VAT

23. How much is the final tax on certain passive income?

a. P10,000.00
b. P6,000.00
c. P2,000.00
d. None. Exempt from tax

24. How much shall be total personal exemption she can deduct from his quarterly income?
a. P150,000.00
b. P100,000.00
c. P50,000.00
d. None of the choices

25. How much is the taxable net income?

a. P1,227,500.00
b. P1,200,000.00
c. P1,100,000.00
d. None of the choices

26. Gross benefits received by officials and employees of public and private entities shall be
excluded from gross income provided that the total exemption shall not exceed P82.000. The
exclusion shall apply to:
a. 13th month pay and other benefits.
b. a basic salary.
c. transportation allowance given monthly.
d. None of the choices

27. Romelda, a Certified Public Accountant, uses cash basis in computing her taxable income. In
2015, she performs a professional service for a client who is unable to pay her. The unpaid
professional fee of the client becomes worthless in 2016. When can she deduce the worthless
professional fee as bad debt?
a. 2015
b. 2016
c. 2015 or 2016 depending on his choice
d. Cannot be deducted in any year
28. Under the scheduler tax system of income taxation:
a. there is no need for classification as all taxpayers are subject to a single rate.
b. there are different categories of taxable income
c. there are different tax rates.
d. individuals are subject to tax treatment.

29. The imposition of this tax will force a closely-held corporation to declare and pay dividends to its
individual stockholders.
a. Optional corporate income
b. Minimum corporate income tax
c. Regular corporate income tax
d. Improperly accumulated earnings tax

30. A domestic corporation in a real estate business sold a building.

Statement 1. The sale is subject to the value-added tax because sale of goods and properties are
subject to the value-added tax and real estate it within the meaning of property.

Statement 2. The sale is not subject to the value added tax because it is not sale of goods or
services.

a. Both statements are true

b. Both statements are false.
c. Only statement 1 is true, but not statement 2.
d. Only statement 2 is true, but not statement 1

31. One is not entitled to tax credit for taxes paid to foreign country
a. Resident alien
b. Non-resident citizen
c. Resident alien
d. Non-resident alien

32. A PEZA registered enterprise operating in the Philippines for the year 2018 was given an Income
Tax holiday for 3 years, presented the following financial data:

Sales to outside customs territory P5,000,000

Sales within customs territory 1,000,000
Cost of sales outside customs territory 3,000,000
Cost of sales inside customs territory 800,000
Administrative Expenses 1,200,000

How much is due to BIR?

a. P120,000
b. P110,000
c. P300,000
d. P420,000
33. Congress passed a law subjecting government owned and controlled corporations (GOCCs) to
income tax. Is the law valid?
a. Yes, because all government agencies and instrumentalities are subject to tax.
b. Yes, because the GOCCs are essentially commercial by operation.
c. No, because government agencies are exempt. This would pose violation of the equality
clause in the constitution.
d. No, because GOCCs are constitutionally exempted from paying taxes.

34. Pedro sold his personal car, which he purchased in 2016at a cost of P300,000. He sold the
painting to Juan on the following terms:

June 1, 2018 down payment P100,000

August 1, 2018 installment due 100,000
October 1, 2018 installment due 200,000
October 1, 2019 installment due 400,000
October 1, 2019 installment due 400,000

For the year2018, Mike will report a gross income of:

a. P900,000
b. P450,000
c. P300,000
d. P150,000

35. Ayie sold one masterpiece which she purchased in 2013 at a cost P30,000. The masterpiece was
part of her personal collections. She sold the painting, under the following terms:'

June 1, 2016 down payment P10,000

August 1, 2016 installment due 10,000
October 1, 2016 installment due 20,000
October 1, 2017 installment due 40,000
October 1, 2018 installment due 40,000

How much would she report as gross income for 2016?

a. P15,000
b. P30,000
c. P45,000
d. P90, 000

36. What is the prescribed minimum percentage of compromise in case of doubtful validity of the
assessment?
a. 40% of basic assessed tax
b. 30% of the basic assessed tax
c. 30% of the basic assessed tax
d. 10% of the basic assessed tax

37. An internal Revenue Officer is allowed only how many days from the date of receipt of an LA by
the taxpayer to conduct the audit and submit the required report of investigation?
 a. 30 days
b. 60 days
c. 120 days
d. 180 days

38. Which tax cases need not be covered by an LA?

I- Cases involving civil or criminal tax fraud which fall under the jurisdiction of the National
Investigation Division (NID) under the Enforcement and Advocacy Service (EAS) of the BIP.
Il- Policy cases under audit by the special teams in the National Office.

a. Both I and II
b. Neither I nor II
c. I only
d. Il only

39. If the protest is denied, in whole or in part, by the Commissioner's duly authorized
representative, the taxpayer may:

I- Appeal to the Court of Tax Appeals (CTA) within thirty (30) days from date of receipt of the
said decision.
Il- Elevate his protest through request for reconsideration to the Commissioner's within thirty
(30) days from date of receipt of the said decision

a. Either I or Il
b. Neither I nor Il
c. I only
d. Il only

40. If the protest is not acted upon by the Commissioner's duly authorized representative within
one hundred eighty (180) days counted from the date of filing of the protest in case of a request
for reconsideration; or from date of submission by the taxpayer of the required documents
within sixty (60) days from the date of filing or the protest in case of a request for
reinvestigation, the taxpayer may:

I- Appeal to the CTA within thirty (30) days after the expiration of the one hundred eighty (180)
day period.

lI- Await the final decision of the Commissioner's duly authorized representative on the disputed
assessment.

a. Either I or Il
b. Neither I or Il
c. I only
d. Il only

41. A taxpayer paid excessive tax on April 15, 2000. On December20,2001, she filed 2 written claims
for refund. Her claim was denied by the BIR and she received the denial on March 2002. She
 filed a motion for reconsideration with the BIR on March 31, 2002. On April 18, 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 within 30 days after the receipt of the final
denial.
c. File an appeal with the Court of Tax Appeals within 15 days after the receipt of the final
denial.
d. The taxpayer has no more remedy against the final denial.

42. to 45 are based on the following: Sarah Angela Service Corporation, registered with BIR in 2012, has
the following data for the year 2016:

Gross receipts P1,000,000

Discounts given 100,000
Returns and allowances 150,000
Salaries of personnel directly involved in the
supply of services 300,000
Salaries of office personnel (including salaries
of P100,000 given to senior citizens) 250,000
Acquisition cost of office equipment (estimated life is
5 years) 2 50,000
Acquisition cost of equipment used in the supply of
services (estimated life is 5 years) 300,000
Fees of consultants directly involved in the
supply of services 50,000
Rental of equipment directly used in the
supply of services 70,000
Assistance given to a state university under the
Adopt-A-School- Program 100,000
Other operating expenses 120,000

42. How much is the total cost of services?

a. P670,000
b. P540,000
c. P480,000
d. None of the choices

43. How much are the total operating expenses?

a. P585,000.00
b. P535,000.00
c. P520,000.00
d. None of the choices

44. How much is the income tax due and payable using optional standard deduction?
a. P63,000
b. P59,400
 c. P46, 600
d. None of the choices

45. How much is the amount subject to VAT?

a. P1,000,000
b. P900,000
c. P750,000
d. None of the choices

46. Aaron, a senior citizen who is also a PWD bought goods classified as basic necessities from a
VAT-subject person. The goods are subject to special discount of 25%. The seller prepared the
following sales invoice:

Is the above invoice correctly prepared?

a. No. Senior citizens who are PWD are entitled to two (2) 20% discount.
b. Yes. Senior citizens have to choose between the special discount or the 20% discount
whichever is higher.
c. No. Senior citizens are entitled to 20% discount on top of the special discount.
d. Yes. But the senior citizens can request for additional 128 VAT-exemption.

47. A resident citizen had a family home in the Philippines. He worked abroad and was temporarily
absent from his family home when he died in 2018. The executor of the estate inquired from
you whether or not to claim finally home deduction from the gross estate for Philippines estate
tax purposes. What would you tell him?
a. The estate would not be allowed family home deduction because he was abroad when he
died.
b. The estate would not be allowed family home deduction because he was a nonresident
citizen when he died.
c. The estate would be allowed finally home deduction of P10,000,000 because actual
occupancy of the family home was not interrupted or abandoned because of his temporary
absence.
d. The estate would be allowed family home deduction of P1,000,000 because all decedents
were allowed family home deduction.

48. Under the TRAIN Law, the estate tax rate is:
a. 6% based on net estate with P250,000 exemption
b. 6% based on net estate with no exempt amount
c. 8% based on gross estate.
d. graduated tax rates with P200,000 exemption.

49. The net fruits as well as the income received during the marriage from the exclusive properties
of the spouses are classified as:

I - Conjugal properties under conjugal partnership of gains.

Il - Community properties under absolute community of properties.

a. Only I is correct
b. Only Il is correct
 c. Both I and II are correct
D. Both I and II are incorrect

50. The following date for 2017 are presented to enable you to compute the deductible funeral
expenses:

Gross estate P1,000,000

Actual funeral expenses 70,000
The deductible funeral expense is:
a. P200,000
b. P100,000
c. P70,000
d. P50,000

51. A decedent dies on January 15, 2013. The intermentisonJanuary31,2013. The gross estate of the
decedent is P2,500,000. The following expenses are presented to you:

Accountant's fee in gathering the assets of the decedent incurred on February 15, 2013 50,000
Lawyer's fee in representing the estate in case filed on August 15, 2013 70,000

Executor's fee:
January 15, 2013 to July 15, 2013 120,000
July 16, 2013 to December 31, 2013 120,000

The deductible judicial expenses are:

a. P360,000
b. P240,000
c. P170,000
d. none of the choices

52. Under the TRAIN Law, the estate tax return shall be supported with statement duly certified to
by a Certified Public Accountant is the it shows a gross value:
a. of P5,000,000 or more
b. exceeding P5,000,000
c. exceeding P2,000,000
d. exceeding P200,000

53 and 54 are based on the following: Jinli, a domestic corporation has the following data for three (3)
years:
Normal income tax MCIT
2014 P50,000 P60,000
2015 P60,000 P55,000
2016 P100,000 P60,000

53. How much is the tax payable in 2015?

a. P 60,000
b. P55,000
 c. 50,000
d. None of the choices

54. How much is the tax payable in 2016?

a. P100,000
b. P 95,000
c. P35,000
d. Zero

55. Chris, operator of an illegal horse-betting business, single, supporting a person with disability
(PWD), within the fourth degree of affinity, 25 years old and a foster child, has the following
data:

Receipts from illegal bets P500,000

Rent of space where bets are received, net of 5% withholding tax 19,000
Salaries of assistants, gross of creditable withholding tax 100,000
Bribe money to obtain protection from arrest and prosecution 50,000

How much is the taxable net income?

a. P500,000
b. P305,000
c. P281,000
d. P280,000

56. A property was transferred mortis causa. The following data were gathered from the
transaction:

Fair market value, time of transfer-P500,000

Fair market value, time of death - P450,000
Consideration received when transferred-P350,000,

How much shall be included in the gross estate?

a. P500,000
b. P300,000
c. P100,000
d. None of the choices

57. Mr. Julian Cruz procured a life insurance upon his own life. He designated his estate's executor
as an irrevocable beneficiary. For estate tax purposes, the proceeds of life insurance are:
a. included in the gross estate of Mr. Julian Cruz because when the executor of the estate is a
beneficiary the proceeds are included in the gross estate regardless of the designation.
b. not included in the gross estate of Mr. Julian Cruz because the designation of the beneficiary
is irrevocable.
c. included in the gross estate of Mr. Julian Cruz because proceeds of life insurance are always
subject to estate tax.
d. not included in the gross estate because. as a rule, proceeds of life insurance are generally
not subject to state tax.
58. Which of the following cancellation or forgiveness of debt shall be included in the gross estate of
the creditor?
a. Forgiveness or cancellation of debt where the debtor did not render service in favor of the
creditor to take effect while the creditor is alive
b. Forgiveness or cancellation of debt where, the debtor rendered service in favor of the
creditor
c. Forgiveness or cancellation of debt by a creditor-corporation in favor of a debtor-
stockholder
d. Forgiveness or cancellation of debt where the debtor did not render service in favor of the
creditor to take after the creditor dies

59. Antoine Vayage, a French citizen, was a permanent resident of the Philippines. He died in Paris,
France. He left 100, 000 shares of Philippine Long-Distance Telephone, Co. (PLDT): a
condominium unit at the Essensa-Taguig; a house and lot in Paris; a lease contract over France.
condominium unit located in Nice, France.

Which among the following assets shall be excluded in the Estate Tax Return to be filed with the
BIR?
a. The value of the Nice, France condominium
b. The value of the Taguig condominium
c. The value of the house and lot in Paris
d. The value of the 100,000 PLDT shares

60. Mabuhay Corporation took a keyman insurance on the life of its President, Mr. John Lloyd
Delgado, designating Mr. Delgado's wife as its revocable beneficiary. In the event of death of
Mr. Delgado, will the insurance proceeds form part of the gross estate of Mr. Delgado?
a. Yes, because Mrs. Delgado vas designated as a revocable beneficiary.
b. No, because the premium was not paid by Mr. Delgado.
c. Yes, because the insurance proceeds form part of the benefits of Mr. Delgado enjoyed by
him as an employee of Mabuhay Corporation.
d. No, because Mr. Delgado had no interest in the proceeds at the time of his death, hence,
this is not a property that he transferred at the time of his death.

61. The estate tax is to be computed starting from the death of the decedent because:
a. the provisions of the NIRC of 1997 requires it.
b. the privilege to transfer properties takes place upon death.
c. it is only upon the decedent's death that his heirs are known.
d. it is at the time of death that estate taxes are due.

62. Mr. Segundo Primero died. He was survived by his wife and two (2), Pedro and Juan. The wife
renounced her shore in common property in favor of their two children. Was the renunciation
subject donor's tax?
a. Yes, because what was renounced in her share in the conjugal partnership or absolute
community after the dissolution of the marriage in favor of the heirs of the deceased spouse
or any other person/s.
b. No, because the renunciation by the surviving spouse of his/her share in b. No, the conjugal
partnership or absolute community after the dissolution of the marriage was not done in
favor of a specified heir to the exclusion or advantage of the other co-heirs.
 c. Yes, because the renunciation by the surviving spouse of his/her share in the conjugal
partnership or absolute community after the dissolution of the marriage was done in favor
of specified heirs.
d. No, because, as a rule, the surviving spouse cannot renounce her share in the conjugal
partnership or absolute community after the dissolution of the marriage.

63. AST Corporation donated à piece of land to the Municipality of Palanas, Masbate Province for
the relocation site of informal settlers. The municipal government subdivided the property and
awarded parcels to the settlers. Houses were also built by the municipal government on the
property.

Question 1 - Was the donation by AST Corporation exempt from donor's tax?
Question 2 - Was the awarding of parcels of land to the settlers exempt from donor's tax?

a. Yes, to both questions

b. No to both questions
c. Yes to first question and No to second question
d. No to first question and Yes to second question

64. One of the following is an incorrect statement regarding dowry.

a. The donor must be natural or adopting parent of the child.
b. The donee must be a legitimate, recognized natural or legally adopted child of the donor
c. The dowry or gift on account of marriage must be given before the celebration of the
marriage or within two (2) years thereafter.
d. The exemption allowed is to the extent of the first P10,000

65 to 69 are based on the following: The decedent, resident alien, a married man with a surviving
spouse under conjugal partnership of gains, with the following data died on March 1, 2014:

Real properties
Family lot acquired by the decedent before marriage, FMV P 500,000.00
Family house built using the salary earned by the
surviving spouse during the marriage, FMV 900,000.00
Coconut farm inherited by the surviving spouse
during the marriage, FMV 100,000.00
Mango orchard, FMV 800,000.00
Personal properties
Bank deposit under the name of the decedent
representing salary earned before marriage 2,150,000.00
Gold necklace inherited by the surviving spouse
during the marriage 120,000.00
Several pieces of jewelry acquired during the
marriage using the exclusive money of the
decedent 300,000.00

The following expenses/deductions are claimed:

Funeral expenses (40% shouldered by relatives) 100,000.00
Judicial expenses (including P50,000.00 lawyer's fee incurred
 on September 5, 2014) 120,000.00
A piece Jewelry lost through theft on August 15. 2014 50,000.00
Gambling debts of the decedent 70,000.00
Unpaid realty tax (coconut farm) for the three (3) quarters
of 2014 150,000.00
Claims against an involvement debtor (25% can be collected) 80,000.00
Medical expenses 600,000.00

65. How much is the conjugal properties?

a. P1,780,000.00
b. P1,700,000.00
c. P900,000.00
d. None of the choices

66. How much is the exclusive properties?

a. P2,950,000.00
b. 650,000.00
c. 450,000.00
d. None of the choices

67. How much is the family home deduction?

a. P1,000,000.00
b. P950,000.00
c. P700,000.00
d. None of the choices

68. How much is the total ordinary deductions (excluding share of surviving spouse)?
a. P460,000.00
b. P310,000.00
c. P260,000.00
d. None of the choices

69. How much is the taxable net estate?

a. P1,225,000.00
b. P1,175,000.00
c. P1,125,000.00
d. None of the choice

70. When may a VAT-registered person claim input taxes as an allowable deduction from his income
tax return?
a. Input tax from zero-rated sales
b. Input taxes from capital good
c. Input tax from exempt sales
d. Input taxes from export sales
71. No VAT shall be imposed to form part of the cost of goods sold destined for consumption
outside of the territorial border of the taxing authority.
a. Cross Border Doctrine
b. Rule of Reciprocity
c. Constructive Receipt
d. Internal Comity

72. In which of the following cases shall the selling price be deemed inclusive of VAT?
I - if the gross selling price is based on the tonal value or market value of the property
II - if the VAT is not billed separately
a. I only
b. II only
c. Both I and II
d. Neither I and II

73. Marine food products which include fish and crustaceans are exempt from VAT. Which of the
following is not exempt from VAT?
a. Eels
b. Trout
c. Prawns
d. Aquarium fish

74. A VAT-registered company acquired one vehicle for land transport for the use of an official or
employee valued at P2, 400,000. Which of the following statements is correct?
a. The input tax on the purchase of the vehicle for land transport as well as the input taxes on
maintenance expenses incurred on the said vehicle shall be allowed as input tax credit.
b. The input tax on the purchase of the vehicle for land transport as well as the input taxes on
maintenance expenses incurred on the said vehicle shall not be allowed as input tax credit.
c. The input tax on the purchase of the vehicle for land transport shall not be allowed as input
tax credit while the input taxes or maintenance expenses incurred on the said vehicle shall
be allowed as input tax credit.
d. The input tax on the purchase of the vehicle for land transport shall be allowed as input tax
credit while the input taxes on maintenance expenses incurred on the said vehicle shall not
be allowed as input tax credit.

75. Statement 1. The property belongs to the heirs at the moment of death of the ancestor as
completely as if the latter had executed and delivered to the former a deed for the same before
he died.
Statement 2. The obligation to pay the estate tax arises as of the time of the decedent's

a. Both statements are correct

b. Both statements are incorrect
c. Statement 1 is correct but not statement 2
d. Statement 2 is correct but not statement 1

76. Which business is required quarterly submission of Percentage Tax Return?

a. International Carriage
b. Banks
 c. Overseas Communication
d. Amusement places

77. Which is not a zero-rated sale of goods or service?

a. Transmission of messages message originating from the Philippines to abroad other than
news services, embassies and diplomatic calls.
b. Sale of gold to the Bangko Sentral ng Pilipinas
c. Sale of electricity from hydropower and solar power plants
d. Transport of passengers by air or sea from Philippines to abroad

78. Which of the following does not characterize a capital asset?

a. It may be real or personal property.
b. It is not always subject to holding period.
c. It is normally subject to value added tax when sold.
d. It is always subject to a final tax.

79. A VAT-registered taxpayer files a claim for refund with the Large Taxpayers Service having
Jurisdiction over the principal place of business. Which of the following statements is correct?
a. The said taxpayer may also file claim for refund with One Stop Center of the Department of
Planes.
b. The taxpayer may also file a claim for refund with the Revenue District office.
c. The taxpayer is precluded from Filing the same claim for refund with another office.
d. The taxpayer is entitled to refund from any Revenue District Office.

80. If a VAT-registered person issues a VAT invoice or VAT official receipt for a VAT-exempt
transaction, but fails to display prominently on the invoice or receipt the words "VAT-exempt
sale", the transaction shall:
a. Still be exempt from value-added tax.
b. become taxable and the issuer shall be liable to pay VAT thereon.
c. be affectively subject to zero percent.
d. be considered erroneous transaction and must be disregarded.

81. Who of the following is net subject to tax on winnings under Section 126?
a. Person who wins in horse races
b. Winners from double, forecast/quinella and trifecta bets
c. Winners in, cockfighting
d. Owners of winning race horses.

82. International carriers doing business in the Philippines is subject to the:

a. 3% percentage tax on gross receipts derived from the transport of cargo and/or mail from
the Philippines to another country.
b. 3% percentage tax on gross receipts derived from the transport of cargo, mail and passenger
from the Philippines to another country.
c. 12 value-added tax on their gross receipts derived from the transport of cargo from the
Philippines to another country.
d. 0% percent value-added tax un their gross receipts derived from the transport of cargo and
passenger from the Philippines to another country.
83 and 84 are based on the following: ABC Corporation, VAT-registered real estate dealer, sold a
residential lot on July 2, 2017 for P2,000,000, plus the output VAT, with a monthly installment payment
of P20,000, plus the output VAT. The zonal value of the subject property at the time of sale amounted to
P3,000,000.

83. Would the sale qualify under installment plan?

a. Yes, because the initial payment did not exceed 25% of the selling price.
b. No, because the amount of the initial payments was not known.
c. Yes, because the sale had initial payments and, therefore. qualified under installment plan.
d. No, because, as a rule, sale of real property would always be considered sale under cash
basis.

84. How much was the output tax on the installment payment?
a. P3,600
b. P2,400
c. P2,000
d. P1,600

85 to 86 are based on the following: The following data are taken from the records of Ms. Princess Ty,
not VAT-registered, who owns various businesses for the current year 2017:

Gross sales from sale of shoes and clothes P300,000

Gross sales from her boutique 400,000
Gross receipts from her parlor 500,000

During the month of January, the following data are presented:

Gross sales from sale of shoes and clothes P30,000
Gross sales from her boutique 40,000
Gross receipts from her parlor 50,000

85. Is Princess subject to VAT?

a. Yes, because all his transactions are VAT-subject.
b. No, because she is not VAT-registered and her aggregate gross sales and receipts do not
c. exceed the VAT threshold amount.
d. Yes, because once a taxpayer has several businesses, she is automatically subject to VAT.
e. No, all her transactions are not VAT-subject.

86. To what percentage tax, if any, will she be subject?

a. Percentage tax on VAT-exempt persons
b. Percentage tax on domestic common carriers
c. Percentage tax on franchise grantees
d. None of the choices

87. Can Princess register her transactions under the VAT system?
a. Yes. Any person who is VAT-exempt under Section 109 (w) not required to register for VAT
may elect to be VAT-registered by registering optionally. under the VAT system.
b. No. Any person who is VAT-exempt cannot optionally register her transactions which would
have been exempt from VAT under the VAT system.
 c. Yes. As a rule, it is mandatory for all taxpayers with several VAT-subject transactions to
register them under the VAT system.
d. No. It is unwise to register because the taxpayer cannot claim input tax credits.

88. Neither of us (is/are) capable, of changing what is in the Revenue Regulations.

a. Is
b. Are
c. Either is or are
d. Neither is nor are

89. The newly released Revenue Regulations (affected/effected) small business.

a. Affected
b. Effected
c. Either affected or effected
d. Neither affected or effected

90. Please come and see me (every/any/each) day you like to discuss the financial statements for
the current year.
a. Every
b. Any
c. Each
d. None of the choices

91. Statement 1. The Commissioner of Internal Revenue has authority to terminate the tax period of
a taxpayer who is retiring from business subject to tax, or is intending to leave the Philippines or
to remove his property or to hide or to conceal his property, or to perform an act tending to
obstruct the collection of taxes

Statement 2. When a tax period is terminated, any unpaid tax is due immediately

a. True, true
b. False, false
c. True, false
d. False, true

92. (Who/Whom) should we invite to discuss the Tax Reform Act.

a. Who
b. Whom
c. Neither who nor whom
d. Either who or whom

93. One of the following statements is false. Which is it?

a. Foreign owned firms are not eligible to register their activity with the BOI.
b. Filipino enterprises are eligible to register their activity with the BOI if their project is listed
as a preferred project in the current Investment Priorities Plan OPP).
c. An activity which is not listed with the BOI may also be entitled to incentives if at least 50%
of the production is foe export (for 60% Filipino and 40% foreign owned enterprises).
 d. An activity of more than 40% foreign-owned enterprises which is not listed with the BOI may
also be entitled to incentives if at least 70% of its production is for export.

94. Statement 1 -every individual who is receiving self-employment income, whether it constitutes
the sole source of his/her income or in combination with compensation and other fixed or
determinable income shall make and file a declaration of his/her estimated income tax for the
current calendar taxable year on or before May 15 of the same current taxable year.

Statement 2 – the amount of estimated income tax for the current calendar taxable year shall
be paid in four (4) installments as follows:

First installment — on or before May 15

Second installment — on or before August 15
Third installment — on or before November 15; and
Fourth installment — on or before April 15 of the following calendar taxable year when the final
or adjustment annual income tax return covering the previous calendar taxable year would have
been filled.
a. Both statements are correct
b. Both statements are incorrect
c. Statement 1 is correct but statement 2 is incorrect
d. Statement 2 is correct but statement 1 is incorrect

95. Statement 1. When a property, other than real property in the Philippines classified as capital
asset. is sold, exchanged, transferred for less than full and adequate consideration in money or
money's worth, the amount by which the fair market value of the property exceeded the
consideration shall be deemed a gift and subject to donor's tax and subject to donor's tax as a
general rule.

Statement 2. A sale, exchange or other transfer of property made in the ordinary course of trade
or business shall be considered always as made for an adequate and full consideration in money
or money's worth and will not result in a gift for donor's tax purposes.

a. Both statements are true.

b. Both statements are false.
c. Only statement 1 is true, but not statement 2.
d. Only statement 2 is true, but not statement 1.

96. One of the following is not a remedy against double taxation

a. Estate tax credit
b. Vanishing deduction
c. Delivery of property from fiduciary heir to fideicommissary in a fideicommissary substitution
d. Transfer for public purpose
97. The following are administrative remedies available to a taxpayer in connection with collection
of taxes, except one:
a. Filing of claim for tax refund or credit
b. Filing a petition for reconsideration or reinvestigation
c. Filing of criminal complaint against erring BIR officials or employees
d. Entering into a compromise

98. Which of the following statements is not true?

a. If a taxpayer is acquitted in a criminal violation of the Tax Code, this acquittal does not
exonerate him from his civil liability to pay the taxes
b. A conviction for tax evasion is not a bar for collection of unpaid taxes
c. A tax assessment is necessary to a criminal prosecution for will full attempt to defeat and
evade payment of taxes
d. Criminal proceedings under the Tax Code is now a mode of collection of internal revenue
taxes, fees or charges

99. For filing a false and fraudulent return, a surcharge is imposed. Which of the following is
correct?
a. 50% as administrative penalty
b.50% as criminal penalty
c.25% plus 50%
d. 25% as criminal penalty

100. The following are administrative remedies available to a taxpayer in connection with
collection of taxes, except one:
a. Filing of claim for tax refund or credit
b. Filing a petition for reconsideration or reinvestigation
c. Filing of criminal complaint against erring BIR officials or employees
d. Entering into a compromise