CPA REVIEW SCHOOL OF THE PHILIPPINES TAXATION

Transfer Taxes A. not subject to VAT because it is a gift.

1. Transfer Tax is a tax imposed on the privilege to transfer property ownership: B. not subject to VAT because it is subject to gift tax.
A. gratuitously. C. mortis causa. C. subject to VAT because it is considered an actual sale.
B. inter vivos. D. through a will. D. subject to VAT because it is a deemed sale transaction.

Donor’s Tax 7. If two or more adjacent lots are sold or disposed in favor of one buyer, for the purpose of
2. A, an individual, sold to B, his brother-in-law, his residential lot with a market value of utilizing the lots as one residential lot, the sale shall be exempt from VAT only if the
P1,000,000 for P600,000.00. A’s cost in the lot is P100,000.00. B is financially capable of aggregate value of the lots does not exceed:
buying the lot. What tax should be imposed and collected from A as a result of the A. P1,919,500. C. P3,199,200.
transaction? B. P2,559,200 D. P3,838,900.
A. Donor's Tax. C. Real properly Tax.
B Presumed capital gains Tax. D. Tax on the transfer of real property. 8. The sale of parking lot by a VAT-registered real estate dealer shall be subject to VAT
A. regardless of the amount of selling price.
3. Who among the following donations is considered a stranger for purposes of donor's B. only when it is included as part of the sale of condominium unit.
taxation? C. only when it is sold separately from the sale of condominium unit.
A. A first cousin of the donor. C. The donor's great grandchild. D. provided the amount of selling price exceeds the threshold 
amount.
B. The brother of the donor's father. D. The mother of the donor's spouse.
9. Which of the following sales to senior citizens shall not be exempt from VAT?
Estate tax A. Sale of single serving seat meals with beverage for an individual senior citizen
4. Which of the following should be treated as real property? B. Bulk orders which are within the context of pre-contracted or pre-arranged group 
meals
A. A Porshe sports car or packages
B. An Amorsolo painting C. Sale of medicines from drug stores, hospital pharmacies, medical and optical clinics and
C. Shares of stock of San Miguel Corporation 
similar establishments including non-traditional outlets dispensing medicines
D. A contract for the construction of public road D. Sale of food, drinks, dessert and other consumable items served by the establishments,

including value-meals and promotional meals, offered for consumption of the general
5. A died in 1990 leaving all real estate owned by him with direction that such real property shall 
public
not be sold or disposed of for a period of 10 years after his death and ordered that the
property be given to B upon the expiry of that period. In 1999, the estate left by A had BIR 10. During a particular year, the following gross sales/receipts subject to VAT are recorded by a
zonal value of P500,000.00. In 2009, the fair market value of said estate increased to taxpayer who is not VAT-registered:
P2,500,000.00, it was declared for taxation in 2009 for P1,500,000.00 and the BIR zonal Gross receipts, transport of goods and cargoes P 1,000,000
valuation was P3,000,000.00. What value should be used for the purpose of estate taxation? Gross receipts, practice of profession 700,000
A. P 500,000.00 C. P2,500,000.00. Gross sales, grocery store 800,000
B. P1,500,000.00 D. P3,000,000.00 Gross sales, agricultural food products in their original state 300,000
Based on the above data, will he be subject to VAT?
Business Taxes A. No, he is not subject to VAT because- he is not VAT-registered.
Value-Added Tax B. No, he is not subject to VAT because his sales/receipts in each business do not exceed
6. Mr. Andres, VAT registered real estate dealer, transferred a parcel of land field for sale to his 
the VAT threshold amount.
son as gift, on account of his graduation. For VAT purposes, the transfer is: C. Yes, he is subject to VAT because aside from the practice of his profession, he also
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derives revenue from other lines of business which are subject to VAT and applying the a:
aggregation rule his combined gross sales /receipts subject to VAT exceed the threshold A. VAT credit certificate. C. VAT official receipt.
amount. B. VAT invoice. D. VAT refund.
D. Answer not given.
16. Which of the following statements is incorrect?
11. A VAT-registered company acquired one vehicle for land transport for the use of an official or A. The amount of VAT shall be shown as a separate item in the invoice or receipt.
employee valued at P2,400,000. Which of the following statements is correct? B. If the sale is exempt from VAT, the term "VAT-exempt sale" shall be written or printed
A. The input tax on the purchase of the vehicle for land transport as well as the input 
taxes 
prominently on the invoice or receipt.
on maintenance expenses incurred on the said vehicle shall be allowed as 
input tax C. If the sale is subject to zero percent (0%) VAT, the term "zero-rated sale" shall be written
credit. 
or printed prominently on the invoice or receipt.
B. The input tax on the purchase of the vehicle for land transport as well as the input taxes D. The VAT-subject seller does not have the option to issue separate invoices or 
receipts

on maintenance expenses incurred on the said vehicle shall not be allowed as input, tax for the taxable, exempt, and zero-rated components of the sale.
credit.
C. The input tax on the purchase of the vehicle for land transport shall be allowed as input 17. "A", at the time of retirement, had 1,000 pieces of merchandise which was deemed sold at a
tax credit while the input taxes on maintenance expenses incurred on the said vehicle value of P20,000.00 with an output tax of P2,400.00. After retirement, "A" sold to "B" 500
shall not be allowed as input tax credit. pieces of these for P12,000.00. In the contract of sale or invoice, "A" stated the sales
D. The input tax on the purchase of the vehicle for land transport shall not be allowed as invoice number wherein the output tax on "deemed sale" was imposed and the corresponding

input tax credit while the input taxes en maintenance expenses incurred on the said tax. paid on the 500 pieces. He prepared the following invoice:

vehicle shall be allowed as input tax credit. Gross selling price P 10,800
VAT previously paid on "deemed sale: 1,200
12. VAT withheld by a resident withholding agent on payments to non-residents shall be remitted Total P 12.000
within how many days following the end of the month the withholding was made? How much is the input tax of "B"?
A. 10 days C. 20 days A. P1,000 C. P2.400
B. 15 days D. 25 days B. P1,200 D. None of the choices

13. When shall the application for tax credit certificate or refund be filed?
A. Within fifteen (15) days after the close of the month
B. Within twenty (20) days after the close of the quarter
C. Within two (2) years after the close of the taxable month when such sales were made
D. Within two (2) years after the close of the taxable quarter when such sales were 
made
14 In proper cases, the Commissioner of Internal Revenue shall grant a tax credit certificate or

refund for creditable input taxes within how many days from the date of submission of

complete documents in support of the application filed?
A. One hundred (100) days C. One hundred twenty-live (125) days
B. One hundred twenty (120) days D. One hundred thirty (130) days
15. A VAT-registered person shall issue for every sale, barter or exchange of goods or properties
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18. The VAT-registered purchaser in a transaction where a seller who is not VAT-registered
issues 
an invoice or receipt showing his TIN, followed by the word "VAT":
A. shall be liable to the percentage taxes applicable to the transaction.
B. shall claim a refund for the erroneous VAT provided the requisite information required

under the Regulations is shown on the invoice or receipt.
C. shall recognize as an input tax credit the "passed on VAT" provided the requisite

information required under the Regulations is shown on the invoice or receipt.
D. none of the choices.
19. 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.
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B. be effectively subject to zero percent. D. None of the choices

C. be considered erroneous transaction and must be disregarded.
D. become taxable and the issuer shall be liable to pay VAT thereon. 25. Who of the following is not subject to tax on winnings under Section 126?
A. Winners in cockfighting
20. All persons liable to VAT such as manufacturers, wholesalers, service-providers, among B. Owners of winning race horses

others, shall be required to submit summary lists of purchases if their quarterly purchases: C. Person who wins in horse races
A. exceed P1,000,000. D. Winners from double, forecast/quinella and trifecta bets
B. amount to P1,000,000 or less.
C. regardless of the amount of quarterly purchases. 26. Which of the following statements is incorrect?
D. answer not given. A. The percentage taxes are generally paid monthly.
B. The percentage taxes are basically on sale of services.
Questions 21 thru 23 are based on the following information. C. The percentage taxes may be shifted to customers or clients.
LBH Corporation sold capital goods on installment on October 1, 2014. It is agreed that the selling D. An isolated transaction not in the course of trade or business will not result in a 
liability
price, including the VAT, shall be payable in five (5) equal monthly installments. The data pertinent for a percentage tax.
to the sold assets are as follows:
Selling price (exclusive of VAT) P5,000,000 27. Which of the following is incorrect? The percentage tax is:
Passed-on VAT 600,000 A. imposed on a sale of goods.
Original cost of the asset 3,000,00.0 B. a tax on a sale of sale of services.
Accumulated depreciation at the time of sale 1,000,000 C. imposed together with the excise tax.
Unutilized input tax on sold asset 100,000 D. imposed together with the value-added tax.

21. How much is the gain on sale of asset? [1] Tax Remedies
A. P2,000,000 C. P3,000,000 28. (Phil. CPA) In which of the following cases where civil penalties of 25% or 50% imposed by
B. P2,600,000 D. P3,600,000 the Tax Code is not applicable?
A. In case of false or fraudulent return
22. How much is the VAT payable? [2] B. Failure to file certain information required by the Tax Code
A. P200,000 C. P400.000 C. Failure or willful neglect to file the tax return within the period prescribed by law
B. P300,000 D. P500.000 D. Failure to pay the full amount of tax shown on any return required to be filed under the
law
23. How much is the creditable withholding tax of the buyer in this case? [3]
A. P 8,333.33 C. P100,000.00 29. The amount still due and collectible from a taxpayer upon audit or investigation.
B. P10,000.00 D. P500.000.00 A. Deficiency C. Interest
B. Delinquency D. Surcharge
Other Percentage Taxes
24. Who shall be liable to the amusement taxes under Section 125? 30. Except for the provision in Section 222, internal revenue taxes shall be assessed within how
A. Patrons of amusement places many years after the last day prescribed by law for the filing of the return?
B. Lessors of amusement places A. Two (2) years C. Four (4) years
C. Proprietor, lessees, or operator of amusement places B. Three (3) years D. Five (5) years
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I - Appeal to the CTA within thirty (30) days after the expiration of the one hundred eighty
31. (Phil. CPA) The Commissioner of Internal Revenue cannot: 
(180)-day period.
A. abate or cancel tax liability. II - Await the final decision of the Commissioner's duly authorized representative on the
B. compromise payment of internal revenue taxes. 
disputed assessment.
C. credit or refund taxes erroneously or illegally collected. A. I only C. Both I and II
D. compromise the criminal aspect of tax violation.already filed in court. B. II only D. Neither I nor II

32. (Phil. CPA) Ms. J. Cruz filed an income tax return for the calendar year 2002 on March 10, 37. The power to interpret the provision of the Tax Code and other tax laws shall be under the
2003. The BIR issued a deficiency assessment income tax on April 10, 2004, which has exclusive and original jurisdiction of the Commissioner of Internal Revenue subject to review
become final. When is the last, day for the BIR to collect? by:
A. March 10, 2006 C. April 15, 2008 A. Court of Appeals. C. Municipal Courts.
B. April 15, 2006 D. April 10, 2009 B. Court of Tax Appeals. D. Secretary of Finance.

33. It refers to a plea of re-evaluation of an assessment on the basis of existing records without Income Taxes
need of additional evidence. It may involve both a question of fact or of law or both. 38. A married individual deriving income within the Philippines whose spouse is unemployed or is
A. Request for compassion C. Request for reconsideration a nonresident citizen deriving income from foreign sources, shall be entitled to a personal
B. Request for informal conference D. Request for reinvestigation exemption of:
A. P40,000 only. C. P64,000 only.
34. It refers to a plea of re-evaluation of an assessment on the basis of newly discovered or B. P50,000 only. D. P100,000 only.
additional evidence that a taxpayer intends to present. It may also involve a question of fact
or of law or both. 39. Which of the following shall entitle the taxpayer to an additional exemption during the year?
A. Request for compassion C. Request for reconsideration A. A legitimate child, 24 years old, who got married during the year
B. Request for informal conference D. Request for reinvestigation B. A legally adopted child, 21 years old, who gained employment in the previous year
C. A legitimate child, 25 years did. who was insane at the beginning of the year but who
35. If the protest is not acted upon by the Commissioner's duly authorized representative within 
became well within the year
one hundred eighty (180) days counted from the date of filing of the protest in case of a D. A married minor daughter whose marriage was annulled during the year and now 
lives
request for reconsideration, the taxpayer may either: with and depends upon her parents for chief support
I - Appeal to the CTA within thirty (30) days after the expiration of the one hundred eighty
(180) -day period. 40. A benefactor has a qualified dependent senior citizen. For income tax purposes, which of the
II - Await the final decision of the Commissioner's duly authorized representative on the following statements is incorrect?
disputed assessment. A. The benefactor shall be entitled to both basic personal exemption and additional
A. I only C. Both I and II 
exemption.
B. II only D. Neither I nor II B. The benefactor shall be entitled only to the basic personal exemption allowed to head of

family.
36. If the protest is not acted upon by the Commissioner's duly authorized representative within C. If required to file an income tax return (ITR), the benefactor shall state therein the name,

one hundred eighty (ISC') days counted from date of submission by the taxpayer of the 
birthday and Office for Senior Citizen Affairs (OSCA) ID number of the dependent senior
required documents within sixty (60) days from the date of filing of the protest in case of a 
citizen,
request, for reinvestigation, the taxpayer may either: D. The benefactor shall register the senior citizen as his dependent and himself/herself as
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benefactor in the RDO having jurisdiction over the place where he/she and the senior

citizen resident. 47. A VAT-registered drugstore sells ten (10) pieces of prescription medicine to a Senior Citizen
at an undiscounted selling price of P5.00 per piece. It issues the following receipt:
41. What is the minimum corporate income tax (MCIT) rate imposed upon any domestic Selling price (VAT-exempt) of 10 pcs. @ P5.00 each P50..00
corporation on its gross income within and without the Philippines? Less: 20% discount 10,00
A. Two percent (2%) C. Ten percent (10%) Amount payable by the Senior Citizen P40.00
B. Five percent (5%) D. Fifteen percent (15%) How much is the deductible amount from the gross income of the drug store?
A P10.00 C. P50.00
42. A domestic corporation was registered with the BIR on January 1, 2014: What year would the B. P40.00 D. None
first MCIT be imposed on such corporation?
A. 2014 C. 2018 48. The taxpayer's otherwise allowable deduction for interest expense shall be reduced by how
B. 2017 D. 2020 
much starting January 1.2009?
A. Twenty-five percent (25%) of the interest income subjected to final tax
43. A tax imposed in the nature of a penalty to the corporation to deter tax avoidance of B. Thirty-three percent (33%) of the interest income subjected to final tax

shareholders who avoid paying the dividends tax on the earnings distributed to them by the C. Forty-two percent (42%) of the interest income subjected to final tax
corporation. D. Forty-five percent. (45%) of the interest income subjected to final tax
A Capital gains tax C. Minimum corporate income tax
B. Improperly accumulated earnings tax D. Optional corporate income tax 49. Which of the following shall be allowed as a deduction from the gross income?
A. Depreciation for vehicle for land transport used in the business the value of which
44. When shall a tax-exempt organization file its annual information return? 
exceeds P2,400,000
A. On or before April 15 of each year B. Depreciation for vehicle for land transport used for personal purposes the value of which
B. On or before June 15 of each of year 
does not exceed P2,400,000
C. On or after December 31 of each year C. Depreciation for airplanes and/or aircrafts the value of which exceeds P2,400,000 where
D. None of the choices 
the taxpayer's main line. of business is sale of goods and properties and the vehicles

purchased are used in said operations
45. (Phil. CPA) Lots being rented when subsequently sold are classified as: D. Depreciation for land vehicles the value of which exceeds P2,400,000 where the
A. capital assets. C. liquid assets. 
taxpayer's main line of business is transport operations or lease of transportation
B. fixed assets. D. ordinary assets. 
equipment and the vehicles purchased are used in said operations

46. Which of the following retirement benefits received from private firms is not taxable?
A. Received from an employer under its reasonable pension plan, employee is 51 years old

and has served the company for 9 years
B. Received from an employer under its reasonable pension plan, employee is 52 years

old and has served the company for 11 years
C. Received from an employer under its reasonable pension plan employee is 49 years old

and has served the company for 12 years
D. Received from an employer which has no reasonable pension plan, employee is 53
years 
old and has served the company for 12 years
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50. In lieu of the itemized deductions, an individual subject to tax under Section 24, other than a
nonresident alien, may elect a standard deduction in an amount not exceeding:
A. ten percent (10%) of his gross income.
B. forty percent (40%) of his gross income.
C. forty percent (40%) of his gross sales or gross receipts.
D. twenty percent (20%) of his gross sales or gross receipts.
51. This is designed to prevent the exclusion from taxable income of items, the actual receipt of
which could, at the option of a taxpayer on the cash basis, be deferred or indefinitely
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postponed. 57. ASEAN means:

A. Cross Border Principle C. Doctrine of Constructive Receipt A. Association of South East Asian Nations.
B. Destination Principle D. Separability Doctrine B. Accountants in the Service of All Nations.
C. Accountants in South East Asian Nations.
52. A minimum wage earner (MWE) was promoted during the latter part of the year (e.g. D. Association of South East Asian Accountants.
December) and was given a raise in salary which is beyond the minimum wage.
Is the entire salaries earned during the calendar year taxable? 58. The ASEAN MRA is an agreement of all ten. ASEAN countries to facilitate movement of
A. Yes, the entire salaries during the calendar year is taxable because they exceeded the accountants among ASEAN member states. MRA means:

statutory minimum wage. A. Membership of Recognized Accountants. C. Mutual Recognition Agreement.
B. No, the minimum wage earner shall be subject to income tax only in the following year B. Movement for Regional Accountants. D. Mutual Recognition Arrangement.

after he exceeded the statutory minimum wage.
C. Yes, as a rule, the moment the statutory minimum wage is exceeded the entire 
salaries 59. Any person required to file a tax return, statement or document shall be registered and
during the calendar year shall be subject to income tax. assigned a TIN. What does TIN mean?
D. No, the minimum wage earner shall still be exempted from income tax during 
the time A. Tax Identification Number C. Tax Informers Number
that his salary does not exceed the statutory minimum wage. B. Tax Information Number D. Temporary Identification Number

53. Under this system, the amount of income tax withheld by the withholding agent is constituted 60. If after review and evaluation by the Commissioner or his duly authorized representative, as
as a full and final payment of the income tax due from the payee on the said income. the case may be, it is determined that there exists sufficient basis to assess the taxpayer for
A. Creditable withholding tax C. Global tax system any deficiency tax or taxes, the said Office shall issue to the taxpayer a PAN. What is meant
B. Final withholding tax D. Schedular tax system by PAN?
A. Preliminary Assessment Notice C. Preliminary Assessment Number
54. Under this system, taxes withheld on certain income payments are intended to equal or at B. Post Assessment Notice D. Previous Assessment Number
least approximate the tax due of the payee on said income.
A. Creditable withholding tax C. Global tax system 61. If the taxpayer fails to respond within fifteen (15) days from the date of receipt of the PAN or if
B. Final withholding tax D. Schedular tax system the taxpayer, within fifteen (15) days from date of receipt of the PAN, responds that he/it
disagrees with the findings of deficiency tax or taxes FAN shall be issued. What, is meant by
55. These are issuances signed by the Secretary of Finance, upon recommendation of the FAN? [4]

Commissioner of Internal Revenue, that specify, prescribe or define rules and regulations for A. Fiscal Assessment Notice C. Final Assessment Number

the effective enforcement of the provisions of the National Internal Revenue Code (NIRC) B. Final Assessment Notice D. Formal Assessment Notice
and 
related statutes.
A. Revenue Memorandum Circulars C. Revenue Memorandum Rulings 62. Under the Tax Code, how much shall be taken into account in computing the net
income, if a
B. Revenue Memorandum Orders D. Revenue Regulations gain is realized by an individual taxpayer from the sale or exchange of capital 
assets (other
than real properties and shares of stock) held for more than twelve months? (M)
56. These are issuances that publish pertinent and applicable portions, as well as amplifications, A. 5% of the capital asset sold C. P5,000

 of laws, rules, regulations and precedents issued.by the BIR and other agencies/offices. B. 50% of the net capital gain D. P50,000
A. Revenue Memorandum Circulars C. Revenue Memorandum Rulings
B. Revenue Memorandum Orders D. Revenue Regulations 63. Which of the following statements is incorrect? (M)
A. Actual sale, barter or exchange of capital assets must always transpire before capital
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gains and losses are recognized. between the Bangko Sentral ng Pilipinas (BSP) and any authorized agent bank,
B. Gains and losses from short sales of property shall be considered as gains or losses certificates of assignment or participation and similar instruments with recourse
from 
sale or exchange of capital assets.
C. If securities become worthless during the taxable year and are capital assets, the loss 67. First statement: The tax on interest income from foreign currency deposit shall be imposed
shall 
be considered as a loss from the sale, barter or exchange of capital assets on the unless the depositor who is a nonresident citizen or nonresident alien can present
last day 
of each taxable year. documentary evidence that he is not a resident of the Philippines.
D. Amounts received by the holder upon the retirement of bonds, debentures or other Second statement: To be entitled to an exemption from the tax on interest income on foreign
evidence of indebtedness issued by any corporation including those issued by the currency deposit, the Foreign Currency Bank Account shall be in the name of the nonresident
Government with interest coupon or in registered from, shall be considered as amounts individual or nonresident corporation. (M)
in exchange thereof, and may result to capital gains or losses. A. B. C. D.
1st Statement Correct Correct Incorrect Incorrect
64. Rowena expects that within a week, the market price of Angeles Corporation shares, which is 2nd Statement Correct Incorrect Correct Incorrect
selling at P10 per share, will go down. She does not. have Angeles Corporation shares so
she calls up her stockbroker and asks him to sell for her 10,000 shares of Angeles 68. Which of the following valuation of fringe benefits is incorrect? (M)
Corporation shares. Rowena and the stockbroker agree that the sold shares are to be A. If the fringe benefit is granted in money, or is directly paid for by the employer, then the 

replaced within one week after the sale. The stockbroker sells for Rowena the 10,000 shares value is the amount granted or paid for.
at P10 per share. One week after, when the sold shares are about to be replaced, the selling B. If the fringe benefit is granted or furnished by the employer in property other than money
price of Angeles Corporation shares rises to P16 per share, contrary to Rowena's 
but ownership is not transferred to the employee, the value of the fringe benefit is equal
expectation. Nevertheless, she orders her stockbroker to buy for her 10,000 Angeles to 
the depreciation value of the property.
Corporation shares to cover the same number of shares she borrowed a week ago. C. If the fringe benefit is granted or furnished by the employer in property other than money
How much is the capital gain (loss) from the short sale? (M) [5] 
and ownership is transferred to the employee, then the value of the fringe benefit shall
A. P60,000 loss C. P 50,000 gain be 
equal to the fair market value of the property as determined in accordance with the
B. P30,000 loss D. P100,000 gain 
authority of the Commissioner to prescribe real property values.
D. None of the choices
65. The term shall mean an alternative form of obtaining funds from the public other than
deposits, through the issuance, endorsement, or acceptance of debt instruments for the 69. The grossed-up monetary value of the fringe benefit shall be determined by dividing the
borrowers own account, for the purpose of relending or purchasing of receivables and other actual monetary value of the fringe benefit by: (E)
obligations, or financing their own needs or the needs of their agent or dealer. (M) a. 66%. c. 68%.
A. Banking activities C. Deposit substitutes b. 67%. d. 70%.
B. Mutual funding D. Quasi-banking activities
70. The fringe benefit furnished to employees who are nonresident aliens not engaged in trade or
66. Which of the following is not included in the term "deposit substitutes'? business within the Philippines shall be taxed at: (E)
A. Promissory notes A. 15%. C. 32%.
B. Bankers' acceptances B. 25%. D. 33%.
C. Debt instruments issued for interbank call loans with maturity of not more than five (5)

days to cover deficiency in reserves against deposit liabilities, including those between 71. During the current year, a nonresident alien not engaged in trade or business, came to 
the
or 
among banks and quasi-banks Philippines to fulfill a contract commitment. He stayed at one of the five-star hotels in 
Makati
D. Repurchase agreements, including reverse repurchase agreements entered into by and City. His local contact paid him P500.000 for the services rendered and P90,000 for 
his
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hotel bills. How much is the fringe benefit tax, if any? [6] (E) D. none of the choices.
A. P 30,000 C. P196,667
B. P125,000 D. None 78. A VAT-registered trader sold goods to a person with disability. The amount of 
sales, net of
VAT, is P100. How much is the total amount to be paid by the person with 
disability? [11] (M)
72. An alien manager employed by an offshore banking unit in the Philippines received fringe A. P80.00 C. P112.00
benefits amounting to P680,000 during the first quarter of the current year. How much was B. P 89.60 D. None of the choices
the fringe benefit tax, if any? [7] (E)
A. P 120,000 C. P 226,667 79. One of the following is not deductible as bad debts (M)
B. P 217,600 D. None A. Difference between the amount received in distribution of assets of a bankrupt company

and the amount of claims against the said company.
Questions 73 thru 76 are based on the following information. B. Difference between the amount received by a creditor of a decedent in distribution of the
(Difficult) XYZ Corp. owns a condominium unit. During the year 2011, the said corporation 
assets of the decedent's estate and the amount of his claim.
furnished and granted the said property for the residential use of its Assistant Vice President. The C. Difference between the purchase price and the indebtedness, where under foreclosure
fair market, value of the property per BIR amounts to P10,000,000 while its fair market value as of a mortgage, the mortgagee buys the mortgaged property and credits the indebtedness

shown in its current Real Property Declaration amounts to P8.000,000 to the purchase price.
D. Worthless debts arising from unpaid wages, salaries, rents and similar items of taxable
73. How much is the value of the fringe benefit? [8] 
income, the income such items represent has been included in the returns of income for
A. P 400,000 C. P 8,000,000 
the year in which the deduction for bad debt is sought to be made, or in a previous year.
B. P 500,000 D. P 10,000,000
80. Which of the following statements is incorrect? (M)
74. How much is the monetary value of the fringe benefit? [9] A. The responsibility of establishing the existence of such facts and circumstances shall
A. P 200,000 C. P4,000,000 rest 
with the Government at all times.
B. P 250,000 D. P 8,000,000 B. Any change in the agreed rate and useful life of the depreciable property as specified in

the agreement shall not be effective for taxable years prior to the taxable year in which
75. How much is the monthly fringe benefit expense? 
notice in writing by certified mail or registered mail is served by the party initiating such
A. None C. P 20,833 
change to the other party to the agreement.
B. P 16,667 D. P 41,667 C. Where the taxpayer has adopted such useful life and depreciation rate for any
depreciable 
and claimed the depreciation expenses as deduction from his gross income,
76. How much is the monthly fringe benefit tax expense? [10] without any 
written objection on the part of the Commissioner or his duly authorized
A. P 7,843 C. P16,667 representatives, 
the aforesaid useful life and depreciation rate so adopted by the
B. P9,804 D. None taxpayer for the aforesaid 
depreciable asset shall be considered binding for purposes of
depreciation.
77. The cost of educational assistance extended by an employer to the dependents of 
an D. Where under rules and regulations prescribed by the Secretary of Finance upon
employee shall be treated as taxable fringe benefits of the employee unless the assistance recommendation of the Commissioner, the taxpayer and the Commissioner have entered

was (M) into an agreement in writing specifically dealing with the useful life and rate of
A. given through the employee-parent of the dependent. 
depreciation of any property, the rate so agreed upon shall be binding on both the
B. paid directly to the school where the dependents are studying. 
taxpayer and the National Government in the absence of facts and circumstances not
C. provided through a competitive, scheme under the scholarship program of the company. taken into consideration during the adoption of such agreement.
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81. Which of the following shall be deductible in full? (M)
A. Donations made for the use of the Government of the Philippines or any of its agencies
or 
any political subdivision exclusively for public purpose
B. Donations made to accredited domestic corporations or associations organized and
operated exclusively for religious, charitable, scientific, youth and sports development,
cultural or educational purposes or rehabilitation of veterans
C. Donations to foreign institutions or international organizations in pursuance of or in
compliance with agreements, treaties, or commitments entered into by the Government
of the Philippines and the foreign institutions or international organizations or in
pursuance of special laws
D. None of the choices
82. Research and development expenses treated as deferred expenses shall be allowed as

deduction ratably distributed over a period of not less than: (E)
A. 60 months beginning with the month ending the taxpayer's taxable year.
B. 6 months beginning with the month in. which the taxpayer first realizes benefits from
such expenditures.
C. 30 months beginning with the month in which the taxpayer first realizes benefits from
such expenditures.
D. 60 months beginning with the month in which the taxpayer first realizes benefits from
such expenditures.
83. Any amount, paid or payable which is otherwise deductible from, or taken into 
account in
computing gross income or for which depreciation or amortization may be 
permitted, shall be
allowed as a deduction only if it is shown that the tax required to be 
deducted and withheld
there from has been: (M)
A. claimed as deduction by the taxpayer from his gross income.
B. correctly computed in accordance with the provisions of the Tax Code.
C. paid to the Bureau of Internal Revenue in accordance with the provisions in the Tax

Code.
D. none of the choices.
84. In lieu of the itemized deductions, an individual subject to tax under Section 24, other 
than a
nonresident alien, may elect a standard deduction in an amount not exceeding: (E)
A. ten percent (10%) of his gross income.
B. forty percent (40%) of his gross income.
C. forty percent (40%) of his gross sales or gross receipts.
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TAXATION
D. twenty percent (20%) of his gross sales or gross receipts.
85. In the case of domestic corporation or a resident foreign corporation, it may elect a 
standard
deduction in an amount not exceeding (E)
A. ten percent (10%) of its gross income.
B. forty percent (40%) of its gross income.
C. forty percent (40%) of its gross sales or gross receipts.
D. twenty percent (20%) of its gross sales or gross receipts.
Questions 86 & 87 are based on the following information.
A retailer of goods, whose accounting method is under the accrual basis, has a gross sales of
P1,000,000 with a cost of sales amounting to P800,000 for year 2009. The taxpayer is qualified to
choose OSD as deductions.
86. How much is the net taxable income assuming the taxpayer is a single individual with no
dependents? [12] (M)
A. P120,000 C. P550,000
B. P200.000 D None of the choices
87. How much is the net taxable income c. arming the taxpayer is a corporation? [13]
A. P120,000 C. P550.000
B. P200,000 D. None of the choices
88. Case 1- A family corporation paid the premiums on the life insurance policy of its president
and named his wife as beneficiary.
Case II- A corporation paid the premiums on the insurance policy covering the lives of its two
executives naming each other the beneficiary.
Which of the above premiums paid shall be deductible? (M)
A. I only C. Both I and II
B. II only 
 D. Neither I nor II
89. Mr. Tony Dee created a trust in favor of his son, Tony II. He appointed Atty. Mars 
Bona as a
trustee. Mr. Conrad Oh also created a trust in favor of his mother, Connie. Mr. 
Oh
appointed Mr. Ging Aye as trustee. Atty. Mars Bona sold his business car to Mr. Ging Aye 
at
a loss. Can Atty. Bona deduct the loss from the sale of the car? (M)
A. No, because Atty. Bona does not have a capital gain.
B. Yes, because losses as a rule are always deductible.
C. No, because both Atty. Bona and Mr. Aye were both fiduciaries of trusts.
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D. Yes, because Atty. Bona and Mr. Aye are fiduciaries hot of the same grantor. Philippine Lotto winnings 100,000
Other non-taxable income 22,000
90. The request for approval of the change in accounting period should be filed at anytime 
not How much is the deficiency income tax per investigation? [15] (D)
less than how many days prior to the beginning of the proposed new accounting period? (E) A. P6,090 C. P 32,500
A. Fifteen (15) days C. Sixty (60) days B. P 12,000 D. None of the choices
B. Thirty (30) days D. Ninety (90) days.
94. A capital gains tax return for the sale or exchange of shares of stock not traded through a
91. The certification approving the adoption of a new accounting period must be released 
within local stock exchange as prescribed under Section 24(c) by an individual shall be filed within
how many working days from the date of receipt of the complete documentary 
requirements? (E)
(E) A. ten (10) days after each transaction. C. twenty (20) days after each transaction.
A. Fifteen (15) days C. Sixty (60) days B. fifteen (15) days after each transaction. D. thirty (30) days after each transaction.
B. Thirty (30) days D. Ninety (90) days.
Questions 95 & 96 are based on the following information.
92. Ms. Achie Dizon sold a personal property, a capital asset., for P600,000 on March A taxpayer, widower, and his five (5) children have the following data for the year 2009:
27, 2011 payable as follows: Gross business income (taxpayer) P 120,000
Down payment P 100,000 Business expenses 30,000
Installment due, 2012 200,000 Income of children:
Installment due, 2013 200,000 Abigail,16 years old, salary 70,000
The property was purchased on May 19. 2010 at a cost of P270.000. It was mortgaged Beth, 14 years old, income from property inherited from her uncle 50,000
with a balance of P100,000, which was to be assumed by the buyer. The commission Cathy, 12 years old, income from property received as gift from the taxpayer
on the sale was P30.000. (donor's tax has been paid) 60,000
How much was the returnable capital gain of Ms. Dizon in 2011? [14] (D) Desiree, 10 years old, income from property received as gift from the taxpayer
A. P 15,000 C. P 60,000 (exempt from donor's tax) 65,000
B. P 30,000 D. P 90,000 Emily, 8 years old, income from property received as gift from the taxpayer
(donor's tax not yet paid) 80,000
93. The Bureau of Internal Revenue is using the Net Worth Method of investigation on 
Mr. Art
Angeles, a married taxpayer with two (2) qualified dependents. The investigation 
covers the 95. How much is the total gross income of the taxpayer? [16] (M)
years 2007 to 2011. There are no discrepancies discovered for the years 2007 to 
2010. A. P120.000 C. P330,000
However, the BIR discovers discrepancies for 2011. Mr. Angeles paid P20,500 income 
tax B. P200,000 D. P375,000
on the income declared for 2011.
The assets, liabilities and net worth at the end of 2010 and 2011 follow: 96. How much is the total personal exemptions of the taxpayer? [17] (M)
12.31.10 12.31.11 A. P50.000 C. P150,000
Assets P 700,000 P 900,000 B. P 75,000 D. None of the choices
Liabilities 
 200,000 100,000
Net worth 
P 500,000 P 800,000 97. If the sum of the quarterly tax payments made during the said taxable year is notequal to the
The following data pertain to 2011: total tax due on the entire taxable income of that year, what shall the corporation do? (E)
Personal, family and living expenses 72,000 A. Carry-over the excess credit
Other non-deductible expenses 30,000 B. Pay the balance of tax still due
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C. Be credited or refunded with the excess amount paid 103. With respect to taxpayers, whether large or non-large, who availed of the electronic filing and
D. Any of the choices payments (EFPS), the deadline for electronically filing the applicable withholding tax returns
and paying the taxes due via the EP'PS shall be: (E)
98. This refers to the system developed and. maintained by the Bureau of Internal Revenue A. five (5) days later than the deadlines set for manual filing and payment.

(BIR) for electronically filing tax returns, including attachments, if any, and paying taxes B. ten (10) days later than the deadline set for manual filing and payment.

thereon, specifically through the internet. (E) C. fifteen (15) days later than the deadline set for manual filing and payment.
A. Manual Filing and Payment System D. twenty (20) days later than the deadline set for manual filing and payment.
B. Electronic Filing and Payment System
C. Up-to-date Filing and Payment System 104. For final withholding taxes, the statement should be given to the payee on or before: (E)
D. Advance Technological Filing and Payment System A. January 10 of the succeeding year.
B. January 15 of the succeeding year.
99. (Easy) Who of the following taxpayers shall file their return and pay their taxes through EFPS: C. January 31 of the succeeding year.

(E) D. March 15 of the succeeding year.
I - Large taxpayers.
II - The volunteering 200 or more Non-large Taxpayers previously identified by the BIR. 105. If in lieu of the automatic application of his excess credit, the taxpayer wants a cash 
refund
A. I only C. Both I and II or a tax credit certificate for use in payment of his other national internal revenue tax
B. II only D. Neither I nor II 
liabilities, he shall make a written request therefor, within: (E)
A. two (2) years after the payment of the tax.
100. Under this system, taxes withheld on certain income payments are intended to equal or at B. three (3) years after the payment of the tax.
least approximate the tax due of the payee on said income. (E) C. five (5) years after the payment of the tax
A. Creditable withholding tax C. Global tax system D. none of the choices.
B. Final withholding tax D. Schedular tax system
106. The penalty for non-issuance of receipts or invoices are as follows: (E)
101. For both large and non-large taxpayers, the withholding tax return, whether creditable 
or final A. Fine of not less than P1,000 but not more than P50,000
(including final withholding taxes on interest from any currency bank deposit and 
 yield or B. Imprisonment for not less than two (2) years but not more than four (4) years.
any other monetary benefit from deposit substitutes and from trust funds and similar A. A only C. Both A and B

arrangements) shall be filed and payments should be made, within how many days after the B. B only D. Neither A nor B

end of each month (except December)? (E)
A. five(5) days C. fifteen (15) days 107. Which of the following persons is required to issue a receipt? (E)
B. ten (10) days D. twenty (20) days A. Those whose value of merchandise sold or the service rendered is P100 or more
B. Those exempted b> the Commissioner of Internal Revenue under meritorious cases
102. For both large and non-large taxpayers, the withholding tax return, whether creditable 
or final C. Market vendors selling exclusively domestic meat, fruits, vegetables, game, poultry, fish
(including final withholding taxes on interest from any currency bank deposit and 
yield or any 
and other food products
other monetary benefit from deposit substitutes and from trust funds and similar D. Those whose value of merchandise sold or the service rendered is less than P25, and

arrangements) for the month of December of each year, shall be filed on or before: (E) 
whose gross sales or receipts in the preceding year do not exceed P30,000
A. January 10 of the following year. C. January 31 of the following year.
B. January 15 of the following year. D. March 15 of the following year. 108. These are issuances that provide directives or instructions; prescribe guidelines; and 
outline
processes, operations, activities, workflows, methods and procedures necessary in the
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implementation of stated policies, goals, objectives, plans and programs of the Bureau in all

areas of operations, except auditing. (E)
A. Revenue Memorandum Circulars C. Revenue Memorandum Rulings
B. Revenue Memorandum Orders D. Revenue Regulations
109. Which of the following transactions in the course of trade or business requires actual 
payment
of VAT before an input tax is allowed as tax credit from the output tax? (E)
A. Purchase of services
B. Transactions deemed sale
C. Domestic purchase of goods for use as raw materials supplied in the sale of services
D. Domestic purchase of goods for use in trade or business for which deduction for

depreciation or amortization is allowed under the Tax Code
110. 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? (M)
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 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.
D. The input tax on the purchase of the vehicle for land transport shall not be allowed as

input tax credit while the input taxes on maintenance expenses incurred on the said

vehicle shall be allowed as input tax credit.
111. A VAT-registered domestic carrier operating air, land and sea transport equipment 
acquired
vehicles for use in its operation to transport goods and cargoes. The domestic 
carrier: (E)
A. can claim input taxes on the said acquisitions.
B. cannot claim input taxes on the said acquisitions.
C. can claim input taxes only on the acquisition of land transport vehicles.
D. can claim input taxes only on the acquisitions of air and sea transport vehicles.
112. Which of the following is not included in the gross estate of a resident decedent who is under
conjugal partnership of gains? (M)
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TAXATION
A. Car revocably transferred by the decedent before he died to his son
B. Shares of stock inherited by the decedent's surviving spouse during 
the marriage
C. Land inherited during the marriage from the father who predeceased the decedent
D. Jewelry purchased during the marriage using the exclusive money of 
the decedent.
113. One of the following is an intangible personal property situated in the Philippines. (M)
A. Franchise which is exercised in a foreign country
B. Shares or rights in a partnership established in Malaysia by 
 Filipinos
C. Shares, obligations or bonds issued by a foreign corporation 80% of the business of
which is situated in the Philippines
D. Shares, obligations or bonds issued by a corporation organized and 
constituted in the
Philippines in accordance with its laws
114. Mr. Octavio Paz transferred his properties to his relatives to provide independent income for
them. This is an example of: 
(M)
A. Transfer for insufficient consideration
B. Transfer not in contemplation of death
C. Transfer with retention or reservation of certain rights
D. Transfer passing under general power of appointment
115. Mr. Julian Cruz procured a life insurance upon his own life. He designated his nephew as a
beneficiary. For estate tax purposes, the proceeds of life insurance is: (M)
A. Not included in the gross estate of Mr. Julian Cruz because the 
designation of the
beneficiary is not clear.
B. Not included in the gross estate; because, as a rule, proceeds of 
life insurance are
generally not subject to estate tax.
C. Included in the gross estate of Mr. Julian Cruz because when a 
relative is a beneficiary
the designation is always revocable.
D. Included in the gross estate of Mr. Julian Cruz because the 
designation of the
beneficiary is not clear, hence, it is revocable.
116. Mr. Nolasco de la Paz dies leaving a residential lot in an exclusive subdivision. The value per
tax declaration and the zonal value at the time of death are P3,000,000 and P4,000,000
respectively. An adjacent lot is sold by another lot owner for P5,000,000 on the date Mr. de la
Paz dies. For estate tax purposes, the value that shall be included in the gross of the
decedent is (E)
A. P3,000,000 C. P5,000,000
B. P4,000,000 D. Some other amount
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Questions 117 & 118 are based on the following: (Difficult) 120. Which of the following shall be allowed as deduction from the gross estate of a non-resident
Questions 6 & 6 are based on the following information. alien decedent? (E)
A decedent dies on January 15, 2013. The interment is on January 31, 2013. The gross estate of A. Family home deduction C. Standard deduction
the decedent is P4,000,000. The following expenses are presented to you: B. Medical expenses D. Transfer for public use
Expenses during the wake borne by relatives and friends P30, 000
Mourning clothing of the widow and unmarried minor children 20,000 121. The estate tax is paid (E)
Obituary notice in a newspaper 50, 000 A. as the return is filed.
Card of thanks published in a newspaper 30,000 B. after the tax due is properly determined.
Burial plot 80,000 C. six (6) months following the death of. the decedent.
Flowers placed on top of the burial lot when relatives visited on February 14, 2015 5,000 D. on the day an administrator is appointed by the court.
Expenses during a family's gathering to commemorate the 40th day
after death of the decedent on February 23, 2013 15,000 122. One of the following is not allowed as deduction from the gross gifts of a non-resident alien
Accountant's fee in gathering the assets of the decedent incurred on February 15, 2013 donor. (E)
50,000 A. Gifts made on account of marriage
Lawyer's fee in representing the estate in case filed on August 15, 2013 70,000 B. Gifts made in favor of a religious corporation.
Executor's fee: C. Gifts made to or for the use of the National Government
January 15, 2013 to July 15, 2013 P120,000 D. Encumbrance on the property donated assumed by the done
July 16, 2013 to December 31, 2013 120,000
240,000 123. Which of the following inter vivos transfers is not subject to donor's tax. (M)
117. The deductible funeral expenses are [18] A. Transfer for insufficient consideration of a personal car
A. P150,000. C. P200,000. B. Transfer for insufficient consideration of an apartment house
B. P180,000. D. none of the choices. C. Transfer for insufficient consideration of a residential house and 
lot
D. Transfer of real property by a real estate dealer to a son who is getting married
118. The deductible judicial expenses are [19]
A. P170,000. C. P360,000. 124. Donation is completed (E)
B. P240,000. D. none of the choices A. when the donor's tax is finally paid.
B. when it is determined that' the donor has the capacity to make 
donations.
119. The following taxes are claimed as deduction from the gross estate of a decedent who dies C. when the property donated is delivered actually or constructively to 
 the donee.
on July 1, 2013. D. when the donee accepts the donation and the acceptance is made known 
to the donor.
Income tax on income earned from January 1 to June 30, 2103 P100,000
Income tax on income earned from July 1, 2013 to December 31, 2013120,000 125. Which of the following statements is incorrect when a conjugal property is donated? (M)
Real estate tax paid, January 1 to June 30, 2013 50,000 A. The husband and wife shall be considered as separate and distinct 
taxpayers for
Unpaid real estate tax, July 1 to December 31, 2013 50,000 purposes of donor's tax.
Unpaid property tax, January 1 to June 30, 2013 60,000 B. Neither spouse may donate any community property or conjugal 
property without the
The correct amount of deductible taxes shall be (D) [20] consent of the other and this is without any 
exception.
A. P170.000. C. P380,000. C. The husband and wife may each claim the dowry deduction if the 
 donation of
B. P210,000. D. none of the choices. conjugal property is made on account of marriage of a 
 legitimate child.
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D. If what was donated is a conjugal property and only the husband 
signed the Deed of 131. A VAT-registered taxpayer is able to harness wind to produce power which he sells to the
Donation, there is only one donor for donor's tax 
purposes, without prejudice to the right community. This is an example of a: (E)
of the wise to question the 
validity of the donation without her consent pursuant to the 
 A. VAT-exempt transaction.
pertinent provisions of the Civil Code of the Philippines and the 
Family Code of B. Zero-rated VAT-subject transaction.
the Philippines. C. Transaction subject to percentage tax.
D. VAT-subject transaction subject to the 12% VAT.
126. Donor's return shall be filed within (E)
A. six (6) months after the date the gift is made. 132. A VAT-registered lessor of apartment houses has the following gross rentals for the first
B. thirty (30) days after the date the gift is made. quarter of the current year:
C. thirty (30) days after the donor pays the donor's tax. Gross rentals of 30 units at P10,000 per month per unit P3,600,.000
D. thirty (30) days after the donor executes a Deed of Donation. Gross rentals of 10 units at P15,000 per month per unit 1,800,000
Total P5,400,000
127. A restaurant owner v/ho sells food and drinks in his restaurant is (E) The VAT-registered lessor of apartment houses shall be: (M)
A. a seller of goods. C. not subject to value-added tax. A. exempt from VAT on his total gross rentals.
B. a seller of services. D. a seller of both goods and services. B. subject to VAT on his gross rentals of P1,800,000.
C. subject to VAT on his gross rentals of P3,600,000
128. A VAT-registered store owner who sells different VAT-subject goods decides to replace his D. subject to VAT on his gross rentals of P5,400,000.
old store furniture and equipment. He sells them as pre-owned store furniture and equipment.
The sale is: (M) 133. Which of the following is a creditable input tax? (E)
A. not subject to VAT because he is not a dealer of store furniture and 
equipment. A. VAT oh importation of goods for personal use
B. subject to VAT because he is considered a dealer of store furniture 
and equipment. B. VAT on purchase on account of goods evidenced by a VAT invoice
C. not subject- to VAT because the store furniture: and equipment may be 
fully C. VAT- on unpaid bill on services rendered by a VAT-registered service-provider
depreciated. D. VAT on purchase of furniture for use in the residential house of a 
VAT-registered person
D. subject to VAT because the sale of store furniture and equipment falls under the
definition of "in the course of trade or business 134. The following transactions during the month of January, 2013 are recorded in the Books of a
VAT-registered taxpayer:
129. In case where output tax is greater than the input tax, the difference will be recognized as a Purchase of three 3) office equipment at'P150,000 each
(E) Purchase of five (5) office furniture at P50,000 each
A. current asset. C. deductible expense. Importation of vehicle for transport used in business, P1,500,000
B. current liability. D. miscellaneous income. Based on the above data (D)
A. The total input taxes on the above transactions shall be amortized.
130. First statement: Only VAT-registered taxpayers are required to pay Value-Added Tax. B. The input tax on office equipment and office furniture shall be 
credited in full.
Second statement: Taxpayers whose gross annual sales or receipts exceed the VAT C Only the VAT on importation of vehicle for land transport shall be 
amortized,
threshold amount are required to pay Value-Added Tax in all cases. (M) D. The total input taxes on the above transactions may be amortized or 
credited in full
A. B. C. D. depending on the choice of the taxpayer.
1st Statement Correct Correct Incorrect Incorrect
2nd Statement Correct Incorrect Correct Incorrect 135. Which of the following is allowed presumptive input tax? (E)
A. Processor of canned fruits
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B. Manufacturer of raw sugar threshold amount.

C. Processor of sardines, mackerel and milk
D. Manufacturer of packed instant champorado 141. Which of the following is not subject to amusement tax? (E)
A. Lessee jai-alai and racetracks C. Operator of cockpits
136. The quarterly VAT return is filed (E) B. Lessee of bowling alleys D. Proprietor of videoke bars
A. When the VAT payable is finally determined.
B. Within sixty (60) days following the end of the quarter. 142. A non-resident alien individual who shall come to the Philippines and stay therein for an
C. Within twenty (20) days following the end of the quarter. aggregate period of more than 180 days during any calendar year shall be deemed a (E)
D. Within twenty-five (25) days following the end of the quarter. A. tourist.
B. resident alien.
137. One of the following is subject to the 3% percentage tax under Sec. 116 (M) C. non-resident alien doing business in the Philippines.
A. Seller of canned fish whose annual gross sales exceed the VAT 
threshold amount D. non-resident alien not doing business in the Philippines.
B. Seller of refined sugar whose annual gross sales do not exceed the 
VAT threshold
amount 143. An individual who is a pure compensation income earner is allowed to deduct the following
C. Seller of fresh mangoes whose annual gross sales do not exceed the 
VAT threshold from his gross compensation income except: (E)
amount A. Personal expenses.
D. Seller of office supplies who is VAT-registered but whose gross 
annual sale's do not B. Additional exemption.
exceed the VAT threshold amount C. Basic personal exemption.
D. Premium payment on health and/or hospitalization insurance.
138. Which of the following is subject to common carriers tax? (E)
A. Person who transports passengers by air 144. Who among the following is taxed on income from sources within and outside the
B. Person who transports goods and cargoes by sea Philippines? (E)
C. Domestic carrier by land relative their transport of passengers. A. Resident citizen
D. Transportation contractors by land on their transport of goods and cargoes B. Resident alien
C. Non-resident citizen
139. Which of the following is not subject to franchise tax? (E) D. Non-resident alien engaged in trade or business.
A. Franchise grantee of electric utilities
B. PAGCOR and its licensees and franchisees 145. One of the following cannot avail of the optional standard deduction. (E)
C. Franchise grantees of gas and water utilities A. Estate and trust C. Non-resident citizen
D. Franchise grantee of radio and/or television broadcasting whose 
gross annual receipts B. Non-resident alien D. Resident citizen
of the preceding year does not exceed 
P10,000,000
146. Who of the following is not considered a nuclear family? (E)
140. Rentals of property, real or personal, received by bank and non-bank financial intermediaries A. Single person living alone
performing quasi-banking functions are (E) B. Single parent with children
A. not subject- to any tax. C. Father, mother, unmarried children living together as one household
B. subject to Value-added Tax at 12%. D. None of the choices
C. subject to Gross Receipts Tax at 7%.
D. subject to Gross Receipts Tax if the annual gross rentals do not 
 exceed the VAT 147. Who of the following dependents will entitle the taxpayer/benefactor to additional exemption?
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(M)  Fatima, child, 12 years old

A. Senior citizen  George, child by natural adoption, 15 years old
B. A child who is naturally adopted The following information pertain to his income and expenses in the year 2014:
C. Person with disability who is not related to the benefactor Salary, net of P20,000 withholding tax P230,000
D. Person with disability who is legitimate, illegitimate or legally 
adopted child, whether Rent expense, apartment house 36,0.00
minor or of legal age. Health insurance premium paid (P500 per month starting July, 2014) 3,000
Gross receipts from practice of profession 2,00,000
148. Which of the following will change the status of the taxpayer? (M) Cost of services 500,000
A. Death during the year of the taxpayer's spouse Business expenses 300,000
B. Birth during the year of the taxpayer's fourth child. Gain from sale of shares of stock listed and traced
C. Marriage during the year of a qualified dependent child in the local stock exchange (gross selling price is P100,000) 50,000
D. Employment during the year of a qualified dependent child
152. The total additional exemptions for the year are (D) [21]
149. An- individual who avails of optional standard deduction cannot deduct the following except: A. P50,000. C. P100,000.
(M) B. P 75,0'00. D. None of the choices.
A. cost of sales.
B. business expenses. 153. The deductible health insurance premium is (D)
C. premium on health and/or hospitalization insurance. A. P1,200. C. P3,000.
D. basic personal exemptions and additional exemption. B. P2,400. D. None. Not qualified.

150. The personal exemption allowed to estate and trust is: (E) 154. The output tax assuming the taxpayer is not VAT-registered. [22] (D)
A. P20,000 C. P50,000 A. P144,000 C. P240,000
B. P25,000 D. none. Not allowed personal exemption. B. P180,000 D. None. Not VAT-registered.

151. The husband shall be the proper claimant of the additional exemption for qualified dependent
children except when: (M) 155. The stock transactions tax is [23] (D)
A. he is employed but his wife's salary is greater than his. A. P250 C. P2,500
B. he explicitly waives his additional exemption in favor of his wife. B. P 500 D. none. Not subject to percentage tax.
C. he is a non-resident citizen deriving income from foreign sources.
D. he and his wife agree to let the wife claim the additional exemption. 156. The deductible amount assuming the taxpayer opts to avail of the optional standard
deduction is [24] (D)
Questions 152 thru 157 are based on the following information. A. P600,000. C. P900,000.
A married resident citizen has the following dependents for the taxable year 2104: B. P800,000. D. none. Cannot avail of OSD.
 Aida, child, 25 years old, person with disability, dies previous year
 Benigna, child of his wife in a previous marriage, 18 years old 157. The total taxable net income is: [25] (D)
 Carlos, child, becomes 21 years old on January 1, 2014 A. P1,297,600. C. P1,350,000.
 Dennis, child, 21 years old, lives with the taxpayer's parents B. P1,300,000. D. none of the choices
 Edna, person with disability, 13 years, illegitimate child
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Questions 158 & 159 are based on the following: (Difficult)

Questions 47 thru 50 are based on the following information. 163. The student went, to see the Dean for (advice, an advice, advise, an advise)
A VAT-registered real estate dealer sold the following during the month of January 2014: A. Advice C. Advise
One (1) residential lot valued at P 2,000,000 b. An advice D. An advise
Two (2) adjacent condominium units covered by separate titles sold to one buyer,
each unit is valued at P1,500,000 (exclusive of two (2) parking spaces 164. Politics (is, are) the cause of too much mudslinging among dishonest politicians. [29]
valued at P300,000 each) 3,000,000 A. Is C. Either
He also had the following acquisitions during the month: B. Are D. Neither
Domestic purchase of supplies, net of VAT 100,000
Domestic purchase of three (3) units of office computers 165. Earl and (me, I) are having a lively discussion about the new BIR regulations.
valued at P50,000 each, net of VAT (4 years estimated life) 150,000 A. Me C. Either
Importation of one vehicle for land transport used B. I D. Nither
in business (5 years estimated life) 2,500,000
Maintenance expenses, vehicle for land transport, net of VAT 70,000
Office rental, net of VAT 100,000
1. Answer is (C)
158. How much is the output VAT? Selling price P5,000,000
A. P312,000 C. P672,000 Less: Book value (3,000,000 - 1,000,000) 2,000,000
B. P600,000 D. None of the choices Gain on sale of assets P3,000,000
159. How much is the creditable input tax on vehicle for land transport? 2. Answer is (C)
A. P5,000 C. P300,000 Output tax P500,000
B. P120,000 D. None Less: Unutilized input tax on sold asset 100,000
VAT payable P400,000
Grammar
160. The financial statements (that, which) are presented by the Chief Accountant are in office of
3. Answer is (B) Creditable input tax (600,000/ 60 months) = P10,000
the VP-Treasury. [26]
A. That C. Either
B. Which D. Neither 4. Note: Also known as FLD (Formal Letter of Demand)

161. The company is importing (new machinery, a new machinery, new machineries). [27] 5. Answer is (A)
A. New machinery C. New machineries Selling price (P10.000 X 10) P100,000
B. A new machinery D. None of the choices Less: Cost (P10,000 X 16) ( 160.000)
Loss on short sales (P 60.000)
162. The auditor has (much evidence, many evidence, much evidences, many evidences) to
warrant a full blown forensic audit. [28] 6. Answer is (A)
A. Much evidence C. Much evidences Grossed-up monetary value of the fringe benefit (P90,000/75%) P120,000
B. Many evidence D. Many evidences Tax rate 25%

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Fringe benefits tax P30,000 Basic personal exemption (50,000) .

Taxable net income P550,000 P120,000
7. Answer: A
Grossed-up monetary value of the fringe benefit (P680,000/85%) P 800,000 14. Answer is (C)
Tax rate 15% Selling price P 600,000
Fringe benefits tax P 120.000 Less: Cost P 270,000
Commission 30,000 ( 300,000)
8. Answer is (B). (5% X P10,000,000) = P500,000 Capital gain (short term) P 300,000
2011 - P300,000/P500,000 X P100.000 P60,000
9. Answer is (B) (50% X P500,000) = P250,000 a.) Selling price
Cash received P 100,000
10. Answer is (B) (P250.000 / 68% X 32% / 12 months) = P9,804 FMV, property received -
Installment obligations 400,000
11. Answer is (B) Mortgage assumed 100.000
Amount of sales P100.00 Selling price P 600.000
Less: 20% discount 20.00 b.) Contract price
VATable sale 80.00 Selling price P 600,000
Add: 12% VAT (12% x 80) 9.60 Less: Mortgage assumed ( 100.000)
Total amount to be paid P89.60 Balance 500,000
Persons with disability do not enjoy VAT exemption unlike Senior Citizens. Add: Excess of mortgage assumed over cost -
Contract price 500,000
12. Answer is (C). c.) Initial payments
Individual Corporation Downpayment P 100,000
Gross sales P 1,000.000 P 1,000,000 Add: Installments, year of sale -
Less: Cost of sales . ( 800.000) Excess of mortgage assumed over cost -
Gross sales / Gross income 1,000.000 200,000 Initial payments P 100,000
Less: OSD (400,000) 80,000) d.) Initial payments over selling price (P100,000/P600,000) = 16.67%
Basic personal exemption (50,000) .
Taxable net income P550,000 P120,000 15. Answer is (B)
Net worth, 12.31.11 800,000
13. Answer is (A). Net worth, 12.31.10 500.000
Individual Corporation Increase in net worth 300,000
Gross sales P 1,000.000 P 1,000,000 Add (Deduct):
Less: Cost of sales . ( 800.000) Personal, family and living expenses 72,000
Gross sales / Gross income 1,000.000 200,000 Other non-deductible expenses 30,000
Less: OSD (400,000) 80,000) Philippine Lotto winnings (100,000)

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Other non-taxable income-. ( 22,000) Unpaid property tax, January 1 to June 30, 2013 60,000
Net income per investigation P 280,000 Deductible taxes P210.000
Less: Basic personal exemption P 50.000
Additional exemption 50.000 100.000 21. Answer is (C)
Taxable net income per investigation P 180.0.00. Benigna, child of his wife in a previous marriage, 18 years old P 25,000
Tax due Sec. 24 (A) P32,500 Carlos, child, becomes 21 years old on January 1, 2014 25,000
Less: Income tax paid per return ( 20,500) Edna, person with -disability, 18 years, illegitimate child 25,000
Deficiency income tax P12,000 Fatima, child, 12 years old 25,000
Total P100,000
16. Answer is (B)
Gross business income (taxpayer) P 120,000 22. Answer is (C)
Add: Income from property received as gift from the taxpayer by Emily 80.000 Gross receipts from practice of profession P2,000,000
Total gross income P 200,000 Tax rate 12%
Output tax P 240,000
17. Answer is (B)
Basic personal exemption P50,000 23. Answer is (B)
Additional exemption (Emily only) 25,000 Gross selling price (shares listed and traded) P100,000
Total personal exemptions P75.000 Tax rate .05
Stock transactions tax 500
18. Answer is (A)
Mourning clothing of the widow and unmarried minor children P 20,000 24. Answer is (B)
Obituary notice in a newspaper 50,000 Gross receipts from practice of profession P2,00,000
Burial plot 80,000 Optional standard deduction rate 40%
Total actual funeral expenses P150,000 Output tax P 800,000
Limit (5% x P4,000,000) P200,000
Allowed funeral expenses (lower) P150,000 25. Answer is (B)
Gross compensation income P250,000
19. Answer is (A). Less: Basic personal exemption 50,000
Accountant's fee in gathering the assets of the decedent Additional exemption 100,000 150,000
incurred on February 15, 2013 P 50,000 Taxable compensation income 100,000
Executor's fee: January 15, 2013 to July 15, 2013 120,000 Gross receipts 2,000,000
Deductible judicial expenses P170,000 Less: Cost of services 500,000
Gross income 1,500,000
20. Answer is (B) Less: Expenses 300,000 1,200,000
Income tax on income earned from January 1 to June 30, 2103 P10C000 Total taxable net income P1,300,000
Unpaid real estate tax, July 1 to December 31, 2013 50,000

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26. That is the defining, or restrictive, pronoun, which the non-defining, or nonrestrictive.

27. The following are examples of non-countable nouns also sometimes referred to as mass
nouns. These take singular form have no plural form.
(Equipment, furniture, jewelry, luggage, baggage, machinery, scenery, decor, houseware,
glassware, dinnerware, hardware, merchandise, garbage, traffic, school wear, men's wear,
children's wear, evidence, legislation and applause.)

28. We do not use many or few to describe or modify mass or non-countable nouns. Instead, we
use much or little.

29. Some nouns look plural, but are actually singular. Here are a few examples. (Ethics,
politics, physics. Phonetics, statistics, economics, aeronautics, rabies, mumps, rickets,
measles, meningitis, AIDs, news, billiards, checkers, a shambles)

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