Page 1 of 13

COMPILED BY: PATRICK

AUTHOR OF LAZY NOTE
MAKER OF CENTURY EGG
WITH THE SUPPORT OF BELOVED FRIENDS FROM WORLD WAR ACCOUNTANT’S

THIS CENTURY EGG IS DEDICATED TO MY BESTFRIEND TO CARL VINCENT N. TALAROK WHO

FOUGHT FOR THIS BATTLE FOR THE 8TH TIME BUT NEVER GIVEN THE CHANCE TO PROVED
HIS WORTH.REST IN PEACE CARL, YOUR WISH IS GRANTED.
I HOPE YOU ARE HAPPY NOW. I LOVE YOU LOKO KA DI BIRO ANG WISH MO PERO NAKAYA
KO AT TINAPOS KO HANGGANG SA HULI, THIS TIME HINDI AKO NAG-IISA.

ACTUAL TAXATION QUESTIONNAIRES OCTOBER 2021 TO DECEMBER 2021:

1. Which of the following are basic principles of a sound tax system?

A. Fiscal Deficit, Administrative Feasibility and Ability to Pay.
B. Progressive Taxation, Ability to Pay, Symbiotic Relationship
C. Fiscal Adequacy, Economic Feasibility and Theoretical Justice
D. Fiscal Adequacy, Administrative Feasibility and Theoretical Justice

2. The concept of “situs of taxation” is based on which limitation of taxation?

A. Exemption of the government C. Public purpose
B. International comity D. Territoriality

3. Which of the following statement/s is/are correct

Statement A. DORA filed ger 2014 ITR (not fraudulent nor false) on March 20,
2015. The last day for the BIR to collect the tax by judicial action if no
assessment was made is April 15, 2018

Statement B. DADA’s 2014 ITR was filed and paid on May 8, 2015. The last day
for the BIR to send an assessment is April 15, 2018.

Statement C. On July 20, 2015, DIDI filed an amended return which is

substantially different from the 2014 ITR which she filed on April 13, 2015.
The last day to send an assessment is April 15, 2018.
A. Only Statement A is correct C. Statement A and C are correct
B. Statement A and B are correct D. Statement B and C are correct

4. Which of the following statement/s is/are correct?

Statement A. Non-resident citizens are taxable on all income derived from
sources within the Philippines
Statement B. Resident citizens and domestic corporation are taxable on all
income derived from sources within or without the Philippines.
Statement C. Foreign corporations, whether engaged or not in trade or business
in the Philippines are taxable from sources within or without the Philippines.
Statement D. Aliens, whether residents or not of the Philippines, are taxable
only from sources within the Philippines.

A. Statement A and D are correct C. Statements A, B and D are correct

B. Statements C and D are correct D. Statements B, C and D are correct

5. If the taxpayer fails to respond within fifteen (15) days. from the date of
receipt of the PAN,he shall be considered in default, in which case, what shall
be issued calling for payment of the taxpayer's deficiency tax liability,
inclusive of the applicable penalties?

FORMAL LETTER IF DEMAND ANF ASSESSMENT NOTICE

SECTION 3. Due Process Requirement in the Issuance of a Deficiency Tax

Assessment. —
Page 2 of 13

3.1 Mode of procedures in the issuance of a deficiency tax assessment:

3.1.1 Notice for informal conference. — The Revenue Officer who audited the
taxpayer's records shall, among others, state in his report whether or not the
taxpayer agrees with his findings that the taxpayer is liable for deficiency
tax or taxes. If the taxpayer is not amenable, based on the said Officer's
submitted report of investigation, the tax payer shall be informed, in writing,
by the Revenue District Office or by the Special Investigation Division, as the
case may be (in the case Revenue Regional Offices) or by the Chief of Division
concerned (in the case of the BIR National Office) of the discrepancy or
discrepancies in the taxpayer's payment of his internal revenue taxes, for the
purpose of "Informal Conference," in order to afford the taxpayer with an
opportunity to present his side of the case. If the taxpayer fails to respond
within fifteen (15) days from date of receipt of the notice for informal
conference, he shall be considered in default, in which case, the Revenue
District Officer or the Chief of the Special Investigation Division of the
Revenue Regional Office, or the Chief of Division in the National Office, as
the case may be, shall endorse the case with the least possible delay to the
Assessment Division of the Revenue Regional Office or to the Commissioner or
his duly authorized representative, as the case may be, for appropriate review
and issuance of a deficiency tax assessment, if warranted.

3.1.2 Preliminary Assessment Notice (PAN). — If after review and evaluation by

the Assessment Division or by the Commissioner or his duly authorized
representative, as the case may be, it is determined that there exists
sufficient basis to assess the taxpayer for any deficiency tax or taxes, the
said Office shall issue to the taxpayer, at least by registered mail, a
Preliminary Assessment Notice (PAN) for the proposed assessment, showing in
detail, the facts and the law, rules and regulations, or jurisprudence on which
the proposed assessment is based x x x. If the taxpayer fails to respond within
fifteen (15) days from date of receipt of the PAN, he shall be considered in
default, in which case, a formal letter of demand and assessment notice shall
be caused to be issued by the said Office, calling for payment of the
taxpayer's deficiency tax liability, inclusive of the applicable penalties.

x x x x

3.1.4 Formal Letter of Demand and Assessment Notice. — The formal letter of
demand and assessment notice shall be issued by the Commissioner or his duly
authorized representative. The letter of demand calling for payment of the
taxpayer's deficiency tax or taxes shall state the facts, the law, rules and
regulations, or jurisprudence on which the assessment is based, otherwise, the
formal letter of demand and assessment notice shall be void x x x. The same
shall be sent to the taxpayer only by registered mail or by personal delivery.
If sent by personal delivery, the taxpayer or his duly authorized
representative shall acknowledge receipt thereof in the duplicate copy of the
letter of demand, showing the following: (a) His name; (b) signature; (c)
designation and authority to act for and in behalf of the taxpayer, if
acknowledged received by a person other than the taxpayer himself; and (d) date
of receipt thereof.

x x x x

PLEASE READ ATTACHED SEPARATE FILE : (CIR VS. T SHUTTLE SERVCES, INC.)

6. Which of the following statement/s is/are correct?

Page 3 of 13

Statement A.Non-resident citizens are taxable on all income derived from

sources within the Philippines
Statement B. Resident citizens and domestic corporation are taxable on all
income derived from sources within or without the Philippines.
Statement C.Foreign corporations, whether engaged or not in trade or business
in the Philippines are taxable from sources within or without the Philippines.
Statement D. Aliens, whether residents or not of the Philippines, are taxable
only from sources within the Philippines.
A. Statement A and D are correct C. Statements A, B and D are correct
B. Statements C and D are correct D. Statements B, C and D are
Correct

7. One of the following is not a ground for exemption from MCIT:

a.Prolonged labor dispute
b. Force majeure problems
c.Legitimate business reverse
d.Law suits filed by the company

8. If the gross income from unrelated activity exceals 50% of the total gross
income derived by any private edueational institution,the rate shall be 30%
based on the entire taxable income.This principle is known as
a. Constnictive receipt
b. Tax benefit rule
c.End result doctrine
d.Predominance test

9.Which of the following corporations shall pay a tax equal to thirty

percent(30%)of the gross income received during each taxable year from all
sources within the Philippines?
a. Domestic corporation
b. Resident foreign corporation
c. Nonresident foreign corporation
d. None of the choices

SITUATION 1 - RMC 97 - 2021

TAXABLE INCOME(resident/non-resident) AND FOREIGN TAX CREDIT

In 2020,SOCIAL INFLUENZA, a Filipino social media influencer residing in the

Philippines, received USD200,000 or P10 million from Google LLC, an enterprise
resident of the US, as her share from advertising revenues. Undez the US tax
law, payments from YouTube through the YouTube Partner Program are considered
royalties which are generally subject to tax at 244. SOCIAL INFLUENZA did not
receive any other income during the year. When she f1led her tax return,she
claimed P1 millon as deductions and opted to avail of tax credit for taxes paid
in the US.

. What is the tax payable 1f SOCIAL INFLUENZA does not inform the income pAXOx
that she is a resident of the Philippines?
A.P3,110,000
B.P2,760,000
C.3,000,000
D.2,800,000

. What 1s the taxable income 1f SOCIAL INFLUENZA submits her tax information to
Google LLC and proves that she is a resident of the Philippines?
A.P9,000,000
Page 4 of 13

B.P10,000,000
C. P7,600,000
D.P8,500,000

Refer to the preceeding question, how much is the tax payable?

A. P1,200,000
B.P1,160,000
C.P1,260,000
D.P1,100,000

SITUATION 2 -GPP (with other business income aside from share in GPP)
Q-Taxable income of partners in their own ITR (ID/OSD) with unliquidated
expenses.

A, B, and C are partners in a GPP which realized a sales of P5,000,000 with

corresponding cost of services of P2,000,000 and operating expenses of
P1,750,000. They share profits and losses at 3:4:3

They have the following personal income and expenses:

A B C
Gross income P150,000, P130,000 P143,500
OPERATING EXPENSES
(30% unliquidated) 75,500 55,000 65,750
Prize, supermarket raffle 15,000
Royalty,books 12,000

The taxable income in A's ITR 1f he avails of the OSD (1f applicable)
A.P474,000
B.P315,000
C.P324,000
D.P465,000
Page 5 of 13

Situation – 7 (TRAIN LAW)

HUMILITY Corporation, is a domestic corporation engaged in the business of
manufacturing textiles. For the fiscal year end June 30, 2019, its profit and
loss statement reported the following:
Sales: P100,000,000
Cost of goods manufactured and sold (60,000,000)
Gross income from operations P 40,000,000
Other income 5,000,000
Total gross income P 45,000,000
Operating expenses (15,000,000)
Finance cost (5,000,000)
Net income before income tax P 25,000,000
Income tax expense (4,500,000)
Net income after income tax P 20,500,000
Additional information were made available for tax reconciliation purposes:
• Withholding tax credit from sale of textile (supported by BIR Form No. 2307)
- P600,000
• Other income broken down as follow:
- Interest income for savings deposit (net of final withholding tax) -
200,000
- Gain from sale of investment property (the property was not used in the
primary activity of the corporation but held for lease) - P4,000,000 (gross of
withholding tax amounting to P900,000)
- Rental income from investment property – P800,000 (gross of withholding
tax)
• Operating expenses includes allowance for bad debts expense amounting to
P500,000
• During the year, the Corporation has written-off bad debts which are
certainly uncollectible amounting P300,000
• Finance cost is broken down as follows:
- Interest expense on loan from various financial institution –
P3,000,000.
- Interest expense on loans from a majority stockholder – P2,000,000
• Income tax expense, represent quarterly income tax paid

6. Compute page 4, Schedule V, Item 4 of BIR Form No. 1702-RT (net income per
books should refer to net income before income tax)
A. P500,000 C. P2,500,000
B. P582,400 D. P2,582,400
7. Compute page 4, Schedule V, Item 9 of BIR Form No. 1702-RT.
A. P200,000 C. P500,000
B. P300,000 D. P4,500,000
8. Compute page 2, Item 55 of BIR Form No, 1702-RT
A. P600,000 C. P5,140,000
B. P5,100,000 D. P6,040,000
9. How much withholding tax should HUMILITY Corporation remit on its loan
interest payment assuming the Corporation is including in the BIR list of top
withholding agents?
A. P100,000 C. P460,000
B. P360,000 D. P750,000

TAKE NOTE : NEEDED TO EDIT THIS PART FOR RMC 84-2012 AND RR 14-2012
PLEASE CHECK SEPARATE DOCUMENT ATTACHED.
Page 6 of 13

CPAR PW 9041) Domestic Inc., VAT-registered, had the following data (net
of business taxes) for the last quarter of 2020 in Philippine peso:

October November December Quarterly

Total
SALES:
VATable sales to private 500,000 200,000 300,000 1,000,000
entities
Exempt sales 400,000 200,000 600,000
Sales to the government 300,000 100,000 400,000
Export sales 200,000 50,000 250,000
Total P1,400,000 400,000 450,000 2,250,000

October November December Quarterly

Total
Purchase of good fr. VAT
Supplier
VATable sales to private 40,000 50,000 90,000
entities
Exempt sales 30,000 50,000 80,000
Sales to the government 0
Export sales 30,000 30,000
Total 70,000 30,000 100,000 200,000

October November December Quarterly

Total
Purchase of Services fr. VAT Supplier
VATable sales to private 20,000 20,000
entities
Exempt sales 30,000 30,000
Sales to the government 200,000 100,000 300,000
Export sales 20,000 20,000
Total 220,000 50,000 100,000 370,000

October November December Quarterly

Total
Purchase of depreciable
capital goods from VAT 3,000,000 2,000,000 5,000,000
supplier
Life in years 3 6
The corporation had excess input tax credit from the previous quarter in the
amount of ₱3,900.

In November 2020, it chose to file an application for VAT refund/TCC in the

amount of ₱2,000.

The purchase of the depreciable capital goods is for the benefit of all its
businesses.

10. What is the VAT payable for October 2020?

(A) ₱43,900
(B) ₱69,000
(C) ₱43,000
(D) None of the above
Page 7 of 13

11. What is the VAT payable for November 2020?

(A) ₱43,900
(B) ₱13,000
(C) ₱23,000
(D) None of the above
12. What is the VAT payable for the 4th Quarter of 2020?
(A) ₱19,564
(B) ₱20,889
(C) ₱13,567
(D) None of the above
13. Assume that the information in number 41 is for the 4th quarter of 2021,
compute the VAT payable for October 2021.
(A) ₱16,747
(B) ₱17,757
(C) ₱13,676
(D) None of the above
14. Assume that the information in number 41 is for the 4th quarter of 2021,
compute the VAT payable for November 2021.
(A) ₱13,000
(B) ₱17,757
(C) ₱13,676
(D) None of the above
15. Assume that the information in number 41 is for the 4th quarter of 2021,
compute the VAT payable for 4 th quarter of 2021.
(A) ₱13,000
(B) ₱17,757
(C) ₱ 4,276
(D) None of the above

ASK SOLMAN FROM SUMMIT TO LAZY TO PUT IT HERE!

CPA REVIEWER TAXATION by TABAG Chap 12 No. 67 ONLY

#16.
Page 8 of 13

5. Mr. SMALL TIME’s piece of land measuring 500 sq. meters in Makati City was
assessed as commercial with a fair market value P20,000 per sq. m. How much is
highest possible amount of annual basic real property tax can be collected from
him?
A. P20,000 C. P50,000
B. P40,000 D. P100,000

14. PETRON INC. installed underground tanks in its depot for the storage of its
oil and petroleum products. The City of Cebu assessed Petron for real property
tax on land and on the storage tanks.
A. Petron is not taxable
B. Petron is taxable on the land only
C. Petron is taxable on the storage tanks
D. Petron is taxable both to the land and storage tanks
Page 9 of 13

Situation – 12 (TRAIN LAW)

IT’S EASY CORPORATION is engaged in the business of PHARMACY. The following
data were made available for the first quarter 2019
Revenues P10,000,000
Cost of service 6,000,000
Operating expenses 1,500,000
Receivables, beginning 200,000
Receivables, ending 150,000

Additional information were as follows:

• All sales for the quarter were cash and credit card sales.
• Receivables at the beginning and ending of quarter are outstanding
receivables from credit card companies. Amounts are VAT inclusive
• All sales form senior citizens are cash sales
• Sales is net of senior citizens discount amounting to P200,000
• Sale is inclusive of sales of medicines prescribed for diabetes, high
cholesterol and hypertension to non-senior citizens amounting to P300,000
(omitted in Exam) NOT IN THE COMPUTATION
• Input tax credit from purchase of goods and services for the quarter amounts
to P300,000
• Included in the operating expense is entertainment, amusement and recreation
expense amounting to P150,000

63. How much is the output tax due for the first quarter of 2019?
A. P1,044,000 C. P1,080,000
B. P1,068,000 D. P1,110,000

64. How much is the deductible creditable input tax for the 1st quarter of
2019?
A. P255,172 C. P266,667
B. P256,180 D. P270,588

65. How much is the income tax due for the 1st quarter of 2019, assuming
itemized deduction was used?
A. P750,000 C. P779,700
B. P765,000 D. 764,400

66. How much is the income tax due for the 1st quarter of 2019, assuming the
optional standard deduction was used?
A. 756,000 C. P1,770,000
B. P656,400 D. P1,808,400

(63)(64)

Revenue P 10,000,000
Less: Sales to Senior Citizen (1,000,000)
(P400,000/20%) (Workedback Discount)
Less: Sales of medicines prescribed for
diabetes, high cholesterol, and (300,000 )
hypertension P 17,400,000
Vatable Sales X 12%
x Rate P 1,044,000
Output Tax

(65)
Page 10 of 13

Revenues P 10,000,000
Cost of services (6,000,000)
Gross Income P4,000,000
Less: Itemized Deuctions:
- Operating expenses (1,500,000)
- Add: Remove entertainment, amusement, and
recreational expenses amounting to Php 150,000
150,000.
- Less: Threshold for entertainment, (50,000)
amusement, and recreational expenses P 2,600,000
(P10,000,000 X .005) X 30%
Taxable Income P 780,000
X Rate
Income Tax Due

(66)

Revenues P 10,000,000
Cost of services (6,000,000)
Gross Income P4,000,000
Less: OSD
(P4,000,000 X 40%) (1,600,000)
Taxable Income P 2,400,000
X Rate X 30%
Income Tax Due P 720,000
 Page 11 of 13

DECEMBER 2021:
Consider the tollowing in answering a set of questions:
Assuming Decedent A left the following properties to three legal heirs, namely,
Heir X ,Heir Y and Heir Z and at the time of the execution of the Extrajudicial
Settlement of the Estate, the properties' Fair Market Value (FMV) per Tax
Declaration and Zonal Value (ZV) are as follows:

Market Value (FMV) PER

Classification of Property Zonal Value (ZV)
Tax Declaration
Residential Land 1M 3M
Commercial Land 1500T 2400T
Agricultural Land 500T 2100T

Heir X waived his share from the commercial and agricultural land. Heir Y
waived his share from the residential and agricultural land, while Heir Z
waived his share from the residential and commercial land.
D1.How much is the supposed share of X?
a.Php 2,500,000
b.Php 3,000,000
c.Php 2,100,000
d.Php 2,400,000

D2.How much is the total VALUE received by Y?

a.Php 2,500,000

b.Php 3,000,000
c.Php 2,100,000
d.Php 2,400,000

D3.How much is the donor's tax required to be paid by Z?

a.Php 9,000
b.Php 150,000
c.Php 24,000
d.Php 0

EXPLAINATION/SOLMAN:
D1. 2500T
D2. 2400T
D3, 9000

ESTATE TAX
Page 12 of 13

The heirs of Nicanor provided the following data to you so you can help then
file the return and pay the corresponding estate tax, if any:

PROPERTIES
• Conjugal Family home:
Zonal value of land - Php 5,000,000
Assessed value of land - Php 3,000,000
Assessed value of house - Php 5,000,000
Appraiser'ș value - Php 20,000,000
• Shares in ABC Corp. a listed company:
Opening price-Php 900,000
Closing price - Php 1,200,000 1977
Lowest Quote-Php 800,000
Highest Quote - Php 1,500,000
Average Value -Php 1,000,000
• 2,500 Shares in XYZ Corp. an unlisted company: Audited Financial
Statements of XYZ Corp. disclosed the following:
Assets-Php 10,000,000
Liabilities - Php 2,000,000
Outstanding shares of stocks - 10,000
Par value Php 100.00 per share

• Jewelry of Inday (wife)

。 -Value at time of purchase - Php 1,000,000
-Value at time of death of Nicanor - Php 2,000,000
• Bank deposits;
-Bank of Pabebe -Php 2,000,000
-BTS Bank-Php 3,000,000
Other information:
• Expenses
Funeral expense-Php 500,000
Accountant's fees-Php 50,000
Lawyer's fees - Php 500,000
Medical expenses-Php 1,000,000
• Losses - Php 2,000,000
• Unpaid mortgage on the family home - Php 1,000,000
•
D4. All sources of properties came from common fund of the spouses.
How much is the estate tax due?
a.Php 0
b. Php 450,000
C. Php 600,000
d. Php 5,000

CREATE
Page 13 of 13