Professional Documents
Culture Documents
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 1. Every corporation no matter how created or organized, whether domestic or resident foreign, engaged in or
doing business in the Philippines shall pay an annual additional tax in accordance with the following
schedule:
I For every Five thousand pesos (P5,000.00) worth of real property in the Philippines
owned by it during the preceding year based on the valuation used for the payment of
the real property tax under existing laws, found in the assessment rolls of the city or
municipality where the real property is situated - Two pesos (P2.00)
II For every Five thousand pesos (P5,000.00) of gross receipts or earnings derived by it
from its business in the Philippines during the preceding year. - Two pesos (P2.00). The
dividends received by a corporation from another corporation however shall, for the
purpose of the additional tax, be considered as part of the gross receipts or earnings of
said corporation.
I The owner desiring to contest the validity of the forfeiture may, at any time before
sale or destruction of the property, bring an action against the person seizing the
property or having possession thereof to recover the same, and upon giving proper
bond, may enjoin the sale.
II The owner desiring to contest the validity of the forfeiture may, after the sale and
within six (6) months, bring an action to recover the net proceeds realized at the same
at the realized at the sale.
a. II only
b. Neither I nor II
c. I only
d. Both I and II
____ 6. A communication issued by the Regional Assessment Division, or any other concerned BIR Office, informing
a Taxpayer who has been audited of the findings of the Revenue Officer, following the review of these
findings.
a. Preliminary Assessment Notice
b. Formal Assessment Notice
c. Notice of Informal Conference
d. Letter of Authority
____ 7. Jude Company operates 10 units of buses. During the month, it has the following data in its books
Other than his retirement benefits, he also received his endowment insurance policy in the amount of
P400,000 which he was paying for 20 years at an annual premium of P5,000.
Excess
Normal Taxes Excess MCIT witholding
Quarter income tax MCIT withheld prior year tax prior year
1st 100,000 80,000 20,000 30,000 10,000
2nd 120,000 250,000 30,000
3rd 250,000 100,000 40,000
4th 200,000 100,000 35,000
The amount which Paul could exclude from his gross income is
a. 50,000
b. 19,600
c. 30,400
d. 0
____ 12. Jeopardy assessment is a valid ground to compromise a tax liability.
a. Because of doubt as to the validity of the assessment
b. Only when there is an approval of the National Evaluation Board
c. If the compromise amount does not exceed 10% of the basic tax
d. Involving deficiency income taxes only, but not for other taxes
____ 13. Which of the following statements is correct regarding standard input tax?
a. The standard input tax is in lieu of the actual input VAT directly attributable or ratably
apportioned to sales of goods or services to government or any of its political
subdivisions, instrumentalities on agencies including GOCCs
b. Should actual input VAT attributable to sale to government exceeds seven percent (7%) of
gross payments, the excess must be closed to expense or cost
c. The government or any of its political subdivisions, instrumentalities or agencies as well
as purchasers in the course of trade or business shall deduct and withhold a final VAT due
at the rate of five percent (5%) of the gross payment
d. Input tax that can be directly attributable to VAT taxable sales of goods and services to the
Government shall be credited against output taxes arising from sales to non-Government
entities
____ 14. What may the BIR do in case of payment of internal revenue tax appears to be unjustly or excessively
assessed, or that the administrative and collection costs involved do not justify the collection thereof?
a. Abate
b. Compromise
c. Credit
d. Refund
____ 15. Assuming the taxpayer filed a claim for refund on September 10, 2017 and submitted relevant documents on
September 15, 2017. When is the last day for the BIR to decide on the filed claim for refund?
a. May 10, 2018
b. November 15, 2017
c. April 10, 2018
d. March 13, 2018
____ 16. Proprietary educational institutions and hospitals which are nonprofit shall pay a taxable income at what
percent?
a. 30%
b. 10%
c. 15%
d. 25%
____ 17. Which of the following is included in the income of the estate of a decedent?
a. Appreciation in the value of property passed to the executor or administrator upon death
of decedent
b. Income received by the estate of a deceased person during the period of administration or
settlement of the estate
c. Excess of selling price over the appraised value placed upon the property at the time of
death, where the property was sold after the settlement of the estate
d. Delivery of property in kind to legatee or distribute
____ 18. Tax morality ___.
a. is the excess of deductible expenses over gross income
b. are those taxes imposed by host governments on dividend and interest payments to
foreign investors and debt holders
c. is a tax that would not affect the location of the investment or the nationality of the
investor
d. are those taxes assessed on imported goods
e. is the conflict between profits and ethics
____ 19. Which of the following is included in gross income?
a. Life insurance proceeds
b. Compensation for injuries or sickness
c. Share in the net income of a general professional partnership
d. Amounts received by insured as return of premium
____ 20. Josh B. Cruz died interstate on September 30, 2017. He was survived by his wife and two children. He and his
wife were under conjugal partnership of gains. He left the following properties situated in the Philippines:
a Land (900 sq. m.) inherited from the decedents father who died on June 15, 2011;
FMV per tax declaration, P1,900,000; zonal value, P3,000 per sq. m
b Car inherited from the decedents father, FMV, P500,000; Cost, P700,000
c House and lot acquired during the marriage (family home), Zonal value, P4,100,000;
assessed value, P3,300,000
d Household furniture and appliances acquired during the marriage, FMV, P500,000
e Other tangible personal properties (mode of acquisition unknown), FMV, P1,800,000.
He and his wife also owned a real property in USA valued at P1,500,000. It had an unpaid mortgage of
P300,000 at the time of his death. The estate of Mr. Cruz paid P120,000 estate tax to the US Government.
The following were considered as deductions from the gross estate in the Philippines:
The estate of the decedents father paid the estate on the land at fair market value of P2,500,000 and on the
car, P700,000. During the marriage, Mr. Cruz mortgaged the inherited land for P700,000 for the benefit of the
family. He paid P350,000 before he died.
Philippines Abroad
(in pesos) (in dollars)
Gross income 4,000,000 40,000
Deductions 2,500,000 15,000
Income tax paid 3,000
If Francis is a non resident lessor of aircrafts, machineries and equipments, its income tax is
a. 100,000
b. 180,000
c. 300,000
d. 128,000
____ 22. The following are related to the tax assessment of a taxpayer:
a. Yes to I and II
b. Yes to I only
c. No to I and II
d. Yes to II only
____ 28.
I In a case where a return is filed beyond the period prescribed by law, the three (3)-year
period shall be counted from the day the return was filed.
II A return filed before the last day prescribed by law for the filing thereof shall be
considered as filed on such last day.
Krisha, another official of the same company, was separated for occupying a redundant position. He was
given P1,000,000 as separation pay.
Joel was separated due to his failing eyesight. He was given P500,000 as separation pay.
All the 3 were not qualified to retire under the BIR approved pension plan of the corporation. The following
statements are derived from the above set of facts:
a. True; False
b. True; True
c. False; True
d. False; False
____ 39.
I Monetized unused vacation leave credits not exceeding 10 days is an exempt de
minimis benefit
II Daily meal allowance for overtime work not exceeding twenty five (25%) percent
of the basic minimum wage is exempt fringe benefit
a. True, true
b. False, true
c. True, false
d. False, false
____ 40. A worked for a manufacturing firm but due to business reverses, the firm offered a voluntary redundancy
program in order to reduce overhead expenses. Under the program, an employee who offered to resign would
be given separation pay equivalent to his 3 months basic salary for ever year of service. A accepted the offer
and received P800,000 as separation pay under the program. After all the employees who accepted the offer
were paid, the firm found its overhead still excessive. Hence, it adopted another program where various
unprofitable departments were closed. As a result, B was separated from the service, B also received
P800,000 as separation pay. At the time of separation both A and B was only 45 years old. As a result,
a. Both amounts are subject to income tax
b. Only Mr. A is subject to income tax
c. Both amounts are exempt from income tax
d. Only Mr. B is subject to income tax
____ 41. The following are the powers of the Bureau of Internal Revenue (BIR), except:
a. The enforcement of all forfeitures, penalties and fines connected with national internal
revenue taxes
b. The assessment and collection of all national internal revenue taxes
c. The execution of all judgments in all cases decided in its favor by the CTA and the
ordinary courts
d. The assessment and collection of customs duties and tariffs
____ 42. The different types of income taxes does not include a
a. unitary tax
b. composite tax
c. presumptive tax
d. regressive tax
____ 43. Mr. Mujer, Filipino, married, died leaving the following estate
a. Both I and II
b. Neither I nor II
c. I only
d. II only
____ 47. Goods in a foreign trade zone have not entered the country so far as the following factors are concerned
a. all of the above
b. import documentation
c. other import restrictions
d. collection of custom duties
e. the allocation of quotas
____ 48. The following are examples of non-taxable compensation from injuries, except
a. Moral damages for grief, anxiety and physical sufferings
b. Exemplary damages
c. Actual damages for injuries suffered
d. Compensatory damages for unrealized profits
____ 49. Which of the following statements is not true?
a. A tax assessment is necessary to a criminal prosecution for willful attempt to defeat and
evade payment of taxes
b. Criminal proceedings under the Tax Code is now a mode of collection of internal revenue
taxes, fees or charges.
c. A conviction for tax evasion is not a bar for collection of unpaid taxes
d. 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.
____ 50. The prescriptive period for the issuance of a formal notice of assessment may not ordinarily be stayed because
of the lifeblood theory. However, there are certain instances where the running of the prescriptive period may
be suspended. One of the following is not among the recognized instances which suspend the running of the
prescriptive period within which to assess.
a. if the Commissioner of the BIR is out of the country
b. where the taxpayer requests for and is granted a reinvestigation by the Commissioner
c. if the taxpayer changes his address stated in the return without informing the BIR
Commissioner
d. answer not given
Taxation
Answer Section
MULTIPLE CHOICE
1. ANS: D DIF: 3
2. ANS: A DIF: 2
3. ANS: D DIF: 2
4. ANS: B DIF: 2
5. ANS: B DIF: 2
6. ANS: A DIF: 2
7. ANS: D DIF: 3
8. ANS: C
SOL:
Proceeds from insurance policy 400,000
Less: Premiums paid 100,000
Amount subject to tax 300,000
The retirement benefit is not taxable because all the requisites for exemption are complied, such as existence
of a private pension plan, retirement age of at least 50 years old, and service to the same employer for at least
10 years.
DIF: 2
9. ANS: D DIF: 2
10. ANS: D DIF: 3
11. ANS: B
SOL:
The amount of P30,400 is excluded from gross income, hence not subject to tax because it is the amount
received by Paul, as a return of the premiums paid by him under a life insurance contract at the maturity of the
term mentioned in the contract. The premiums returned are not income but return of capital. They represent
earnings which were previously taxed.
On the other hand, the amount of P750,000 is subject to tax because it represents income being interest or
earnings of the premium and not return of capital.
DIF: 3
12. ANS: A DIF: 2
13. ANS: A DIF: 3
14. ANS: A DIF: 3
15. ANS: D
SOL:
Summary of Period of Assessment and Collection
a. Return filed was not 1. Collection with prior assessment
false or fraudulent a. Assessment shall be made within 3 years from the date of
firing of return or from the last day required by law for filing,
if the return was filed before such last day.
b. Collection shall be made within 5 years from the date of
assessment, either by: (1) Summary proceedings, or (2)
Judicial proceedings.
2. Collection without prior assessment
a. No proceeding in court without assessment for the collection
shall be begun after the expiration of the 3 year period.
b. Return filed was 1. Collection with prior assessment
false or fraudulent a. Assessment shall be made at any time within 10 years after
with intent to evade discovery of the falsity, fraud or omission.
tax or no return was b. Collection shall be made within 5 years from the date of
filed assessment, either by: (1) Summary proceedings, or (2)
Judicial proceedings.
2. Collection without prior assessment
a. A proceeding in court for the collection of tax may be filed
without assessment at any time within 10 years after the
discovery of the falsity, fraud or omission.
c. Extension of 1. If before the expiration of the 3-year period, both the
assessment Commissioner and the taxpayer have agreed in writing to its
assessment after such time, assessment maybe made within the
period agreed.
2. The period so agreed upon may be extended by the subsequent
written agreement before the expiration of the 5-year period
following the assessment by: (a) Summary proceedings, or (b)
Judicial proceedings.
Due process in the issuance of a deficiency tax assessment (Remedy Against an Assessment).
a. Notice for Informal To be responded within fifteen (15) days after receipt of this
Conference. notice.
b.Preliminary Assessment To be responded within fifteen (15) days after receipt of this
Notice (PAN). notice.
c. Formal letter of To be responded within thirty (30) days.
demand
assessment notice.
d. Protest the assessment. The taxpayer shall file a request for reconsideration or
reinvestigation with the BIR within thirty (30) days from receipt
of the assessment notice.
Notices: 1) Before going to CTA, the taxpayer may elevate his
protest to the Commissioner within thirty (30) days
from date of receipt of the final decision of the
Commissioners duly authorized representative.
2) The decision of the Commissioners duly authorized
representative shall not be considered final,
executory and demandable, in which case the
protest shall be decided by the Commissioner.
e. Submit all relevant Within 60 days from filing of protest, all relevant supporting
supporting documents documents shall have been submitted, otherwise the assessment
to shall become final.
the BIR. Note: There is now a 180-day requirement for the BIR to decide
on an administrative appeal.
f. Appeal to Court of Tax If the protest is denied, in whole or in part, by the
Appeals. Commissioner, the taxpayer may appeal to the CTA within 30
days:
1) from the receipt of the adverse (unfavorable decision; or
2) from the lapse of the 180-day period.
Note: Failure to appeal to Court of Tax Appeals shall make the
BIRs decision final, executory and demandable.
DIF: 2
16. ANS: B DIF: 2
17. ANS: B DIF: 2
18. ANS: E DIF: 3
19. ANS: C DIF: 2
20. ANS: A
SOL:
Total Exclusive Deduction =P518,283
DIF: 3
21. ANS: C DIF: 2
22. ANS: D
SOL:
From March 22, 2017 to March 30, 2017, eight (8) days have already passed. When the taxpayer files a
second request for reconsideration the running of the 30-day period is suspended. Upon receipt of the decision
of denial of the second request for reconsideration, the taxpayer has twenty-two (22) more days to appeal to
the Court of Tax Appeals. It has to be noted that no revised assessment is issued by the BIR.
DIF: 2
23. ANS: B DIF: 3
24. ANS: A DIF: 3
25. ANS: C DIF: 3
26. ANS: B DIF: 2
27. ANS: B DIF: 2
28. ANS: A
SOL:
Section 203: Period of Limitation Upon Assessment and Collection.
Except as provided in Section 222, internal revenue taxes shall be assessed within three (3) years after the last
day prescribed by law for the filing of the return, and no proceeding in court without assessment for the
collection of such taxes shall be begun after the expiration of such period: Provided, that in a case where a
return is filed beyond the period prescribed by law, the three (3)-year period shall be counted from the day the
return was filed. For purposes of this Section, a return before the last day prescribed by law for the filing
thereof shall be considered as filed on such last day.
DIF: 2
29. ANS: A DIF: 3
30. ANS: A DIF: 3
31. ANS: A DIF: 2
32. ANS: B DIF: 2
33. ANS: A DIF: 2
34. ANS: B
SOL:
I is a correct statement. The voluntary action on the part of Gaddy is not considered as a cause beyond his
control hence, the separation is not excluded from gross income. It is included for tax purposes. He does not
quality for tax-free retirement because there is no showing that he is 50 years or over, that he has not
previously availed of the tax-free retirement.
III is a correct statement. The separation pay received by Joel was due to his failing eyesight, a physical
disability, which is for a cause beyond his control.
II is not a correct statement because Krisha was separated due to redundancy which is beyond his control.
DIF: 3
35. ANS: D DIF: 2
36. ANS: B
SOL:
Global and schedular may have features of choices of the other choices but they are not the accepted
nomenclatures for the systems if income taxation.
DIF: 3
37. ANS: D DIF: 3
38. ANS: A DIF: 2
39. ANS: A DIF: 2
40. ANS: B DIF: 3
41. ANS: D DIF: 2
42. ANS: D
SOL:
Choices a, b and c are all types of income taxes while a regressive tax is a tax rate system.
DIF: 2
43. ANS: A DIF: 3
44. ANS: C DIF: 2
45. ANS: D DIF: 3
46. ANS: A DIF: 2
47. ANS: A DIF: 3
48. ANS: D DIF: 2
49. ANS: A DIF: 2
50. ANS: A DIF: 2