TAXATION PREWEEK

1. The VAT refund period under the enhanced VAT refund system shall be
a. 30 days c. 90 days
b. 60 days d. 120 days

2. The zero-rating of some VAT exempt transactions will be removed. They will be subjected to 12% VAT
a. Automatically effective January 1, 2018.
b. Conditions upon the implementation of an enhanced VAT refund system.
c. Automatically effective January 1, 2019.
d. Effective January 1, 2021.

w
3. Which of the following zero-rated treatment will remain zero-rated even after the implementation of the
TRAIN law?
a. Zero-rated sales under EO 226 and special laws

ie
b. Sales of raw materials or packaging materials to a non-resident buyer for delivery to a local export-
oriented enterprise
c. Sale of raw materials or packaging materials to export-oriented enterprise whose export sales exceed

ev
70% of total annual production
d. Sale of goods or supplies to an international shipping or international air transport operators

4. Which is still subject to zero-rating even after full implementation of the TRAIN law?

laws
b. The sales of goods to ecozones
R
a. Effectively zero-rated sales of services to ecozones and other persons with exemption under special

c. Processing, manufacturing or repacking of goods for a non-resident person doing business outside the
PA
Philippines which goods are subsequently exported
d. Subcontract services rendered to export-oriented enterprises

5. Which of the following leases is not subject to DST?

a. Lease of equipment
b. Lease of vessels
C

c. Lease of real estate

d. None of these

6. Which is subject to documentary stamp tax?

EO

a. Accounts payable for services rendered

b. Credit card receivables
c. Accounts receivables on sales of goods
d. Promissory note for intercompany advances
R

7. Miss Becky Power, a VAT-registered cosmetic surgeon, had the following financial statements in the first
quarter of 2020:

Balance sheet 12/31/2019 3/31/2020

Cash P 212,000 P 393,000
Accounts receivables 128,000 120,000
Allowance for bad debts P 6,400 P 6,000
Supplies 285,000 450,000
Investment in stocks 125,000 -
Leasehold improvements 200,000 200,000

1
 Less: Accum. Depreciation LHI 20,000 22,000
Equipment 150,000 1,200,000
Less: Accum. Depreciation Eq. 25,000 15,000
Payables 148,600 120,000
Advances from clients - 50,000
Bank loans - 500,000
Becky Power, capital - 900,000 - 1,650,000
TOTAL P 1,100,000 P 1,100,000 P 2,363,000 P 2,363,000

Income Statement 1st Quarter 2020

Professional fees, net of P60,000 withheld tax P 1,790,000

w
Dividend income received 12,000
Interest income from bank, net 18,000
Gain on sale of equipment 20,000

ie
Gain on sale of stocks 40,000
Total P 1,880,000

ev
Less: Operating expenses
- Administrative salaries 130,000
- Professional fees for other VAT-registered surgeons 500,000
- Supplies expense 280,000
- Depreciation expense 15,000
- Bad debt expense
- Consultancy services
- Interest expense
R 37,000
100,000
12,000
PA
- Local business taxes 24,000
- Miscellaneous, including DSTs on loans and stocks 32,000
Total Expenses 1,130,000
Net Profit P 750,000
C

Additional information:
1. Miss Becky uses the accrual basis in filing her income tax return.
2. The stocks consisting of 12,000 shares at par value of P10/share were disposed in March.
3. Becky invested in new equipment for various cosmetic applications in February.
EO

4. Becky disposed an old equipment at the start of the year as additional funding for the new equipment.
She borrowed from the bank to pay for the balance.
5. The professional services were paid to a VAT-registered consultant.
6. Becky made an estimated VAT payment of P42,000 during the quarter.

Requirements:
R

Determine the following for the quarter:

1. Excise tax due
2. Final income tax due
3. Capital gains tax
4. Total documentary stamp tax
5. Creditable withholding tax
6. Output VAT
7. VAT still due
8. Deductions from gross income
9. Taxable income

2
 10. Income tax still due
11. When to file the BIR Form 1701A?
12. When to file the BIR Form 2550Q?
13. When to file the BIR Form 8000-OT for the sales of stocks?
14. When to file the BIR Form 1607 for the sales of stocks?
15. When to file the BIR Form 1601-EQ for the expanded withholding tax?

8. Which is a national tax?

a. Contractor’s tax c. Tax on banks and insurance
b. Customs duties d. Professional tax

w
9. Audit certification of financial statements is required if
a. Net asset is at least P3M
b. Gross annual sales, earnings or receipts is at least P3M

ie
c. Gross sales, earnings or receipt in any quarter exceeds P150,000
d. Net asset is at least P10M

ev
10. The accounting records shall be kept for a period of
a. 10 years c. 3 years from the date of the last entry in the books
b. 20 years d. 5 years from the date of the last entry in the books

b. once every 5 years.

R
11. Registration with the BIR Revenue District Office is
a. made annually. c. once in a lifetime.
d. done quarterly.
PA
12. Which of the following improperly depicts the timing of registration for taxpayers subject to any
internal revenue tax?
a. Those who are getting employed – within 10 days from date of employment
b. Those who are commencing business – on or before commencement of business
c. Those subject to any tax due – before payment of any tax due
C

d. Those required to file return, statement or declarations – 10 days after such filing

13. The annual registration fee shall be

EO

a. P300 for every taxpayer

b. P500 for every taxpayer
c. P500 for every distinct establishment or place of business where sales transaction occurs
d. P300 for every distinct establishment or place of business where sales transaction occurs
including warehouses
R

14. Which is subject to the annual registration fee?

a. Cooperatives c. Pure compensation income earners
b. Overseas workers d. Mixed income earner

15. Which of the following does not require update of registration?

a. Change from VAT to non-VAT status
b. Change in business address
c. Change in the type of tax the taxpayer is subject to
d. Change in business activity which is subject to the same type of tax

3
16. Statement 1: Registration with the BIR is once but taxpayers pay annual registration fee.
Statement 2: Each taxpayer shall be given at least one Taxpayer’s Identification Number.
a. True; True c. False; True
b. True; False d. False; False

17. Mr. Elitsgo has a principal office in Baguio City and a branch in La Trinidad City. Which is correct with
respect to his annual registration fee?
a. He shall pay P1,000 in the BIR RDO of Baguio City
b. He shall pay P600 in the BIR RDO of Baguio City
c. He shall pay P500 each in the RDOs of Baguio City and La Trinidad City

w
d. He shall pay P300 each in the RDOs of Baguio City and La Trinidad City

ie
18. Who are required to update their registration information with the BIR?
a. Those who are subject to new taxes they are not previously liable to
b. Those who are no longer subject to the type of tax they are previously subject to

ev
c. Those who are transferring their place of business, head office or branches
d. All of these

19. Issuance of receipts is required for every sale transaction with an amount of at least
a. P25
b. P50
c. P100
d. P250 R
20. An expanding enterprise is registered with the BOI. It has a base figure of P20M with actual sales of
PA
P50M for the year out of which it reported a net income of P18M. What is the rate of exemption?
a. 0% c. 60%
b. 40% d. 100%

21. In the preceding problem, what is the income tax holiday?

C

a. P 0 c. P 3,240,000
b. P 2,160,000 d. P 7,200,000

22. A BOI-registered biofuel manufacturing corporation had the following for the third quarter of 2018:
EO

Registered Activities Unregistered Activities

Sales P 20,000,000 P 5,000,000

Beginning inventory 2,000,000 -

Purchases 14,000,000 3,000,000
R

Ending inventory 6,000,000 -

Less: Cost of services P 10,000,000 P 3,000,000
Gross profit P 10,000,000 P 2,000,000
Less: Expenses (no VAT) 6,000,000 1,000,000
Net income P 4,000,000 P 1,000,000

*70% of sales from registered activities constitutes export sales while all of the purchases of the
registered activities were from farmers

4
 Compute the corporate income tax.
a. P 0 c. P 450,000
b. P 300,000 d. P 1,500,000

23. In filing its annual tax return, the taxpayer shall use BIR Form
a. 1701 c. 1702-EX
b. 1702-RT d. 1702-MX

24. Compute the VAT due.

a. P 0 c. P 600,000
b. P 240,000 d. P 960,000

w
25. The 8% optional income tax is not allowed to

ie
a. Partner solely deriving income from a general professional partnership
b. Self-employed individuals selling goods
c. Mixed income earner

ev
d. Self-employed individuals selling services

26. Which need not be required to be specifically identified in the official receipt or invoice?
a. The fact that the sale is a VAT-exempt sale
b. The fact that the sale is a Zero-rated sale
R
c. The fact that the sale is Regular vatable sales
d. None of these
PA
27. The TIN of the buyer is required to be indicated in the invoice or receipt if
a. He is a VAT-taxpayer, regardless of amount of purchase
b. He is a VAT-taxpayer and the amount exceeds P1,000
c. The amount exceeds P1,000 regardless of whether or not he is VAT or non-VAT taxpayer
d. The taxpayer is a large taxpayer, regardless of amount of purchase
C

28. A VAT official receipt may not be issued for the

a. Sale, barter or exchange of services
b. Lease of goods or properties
EO

c. Sale, barter or exchange of goods

d. None of these

29. Statement 1: VAT taxpayers with quarterly total sales/receipt exceeding P2.5M are required to
submit Summary List of Sales
Statement 2: VAT taxpayers with quarterly total sales/receipt exceeding P1.0M are required to
R

submit Summary List of Purchases

a. True; True c. False; True
b. True; False d. False; False

30. Temporary closure of business establishment shall be enforced against

a. VAT-registered persons who fail to issue receipts or invoices or file VAT return
b. Understatement of taxable sales or receipts by more than 30% of the correct amount
c. Persons who fail to register with the BIR
d. All of these

5
31. A VAT taxpayer had the following details in the preceding quarter:

Sales to private entities P 400,000

Export sales 200,000
Sales to the government 300,000
Exempt sales 100,000
Total P 1,000,000

Input VAT P 72,000

w
Compute the output VAT.
a. P 48,000 c. P 84,000

ie
b. P 64,000 d. P 108,000

32. Compute the creditable input VAT.

ev
a. P 43,200 c. P 64,800
b. P 64,200 d. P 72,000

33. Compute the VAT still due.

a. P 4,800
b. P 12,200 R
c. P 19,200
d. P 19,800

34. Amount of gain or loss through regular income tax

PA
a. P 0 c. P 600 loss
b. P 600 gain d. P1,600 loss

35. In 2019, Mr. Bistro, a resident of Baguio City, Benguet, donated an agricultural land in Roxas, Isabela
with a zonal value and fair value per assessor’s office of P5,000,000 and P4,000,000, respectively.
C

Compute the donor’s tax.

a. P 300,000 c. P 285,000
b. P 240,000 d. P 225,000
EO

36. Compute the documentary stamp tax.

a. P 75,000 c. P 71,250
b. P 60,000 d. P 56,250

37. Where is the proper venue to file the donor’s tax return?
R

a. RDO Baguio City c. RDO Isabela

b. RDO Benguet d. Any of these

38. Compute the local transfer tax.

a. P 20,000 c. P 25,000
b. P 30,000 d. P 37,500

39. Where is the proper venue of the local transfer tax?

a. Provincial treasurer of Isabela c. Provincial treasurer of Benguet

6
 b. Municipal treasurer of Roxas d. City treasurer of Baguio City

40. Compute the total annual tax on the land.

a. P 40,000 c. P 20,000
b. P 32,000 d. P 10,000

Rhad Vic, a resident of Baguio City, started his siopao business by establishing a factory in Aringay, La
Union and a sales outlet in Baguio City as head office. He also opened other sales outlets in San Fernando
City, Municipality of La Trinidad and Dagupan City. Rhad’s consolidated sipao sales and income for 2018
is shown below:

w
San Other
Baguio City Fernando La Trinidad Dagupan places Total

ie
Sales P 8,000,000 P 5,000,000 P 4,000,000 P6,000,000 P2,000,000 P25,000,000
COGS 4,800,000 3,000,000 2,400,000 3,600,000 1,200,000 15,000,000
Interest income – bank deposit 40,000

ev
Expenses 3,500,000
Net Income P 6,540,000

Rhad Vic made vatable purchases totaling P12,000,000, inclusive of an equipment costing P2,000,000

R
acquired in June 2018. All sales were for cash. Rhad’s factory in Aringay has a total fair value of
P4,000,000, inclusive of P2,500,000 land. The balance pertains to a building and equipment with
overall assessment level of 50%.
PA
Required: Determine the following:
41. Total VAT due for 2018
a. P 1,800,000 c. P 1,560,000
b. P 1,772,000 d. P 1,540,000
C

42. Income tax due 2018

a. P 490,000 c. P 1,930,000
b. P 1,440,000 d. P 2,040,000
EO

43. Where to file the annual income and VAT returns

a. RDO Baguio City c. RDO Benguet
b. RDO La Union d. In each of the cities and municipalities with branches

44. Total gross sales or receipt subject to local business tax in Baguio City
a. P 10,000,000 c. P 3,000,000
R

b. P 8,000,000 d. P 2,400,000

45. Rhad’s real property tax and the venue of payment.

a. P 20,000, Treasurer of the Province of La Union
b. P 8,000, Treasurer of the Province of La Union
c. P 20,000, Baguio City
d. P 8,000, prorate in municipalities where the branches are situated

46. Rhad’s annual community tax and the venue of payment.

7
 a. P 6,505; Baguio City c. P 5,005; Province of Benguet
b. P 5,005; Baguio City d. P 6,005, pro-rata to all municipality

47. Speedy Company, a non-resident foreign corporation, was contracted to design the website of
Wesleyan University for P2,000,000.

Compute the final tax if the website development is done

a. outside the Philippines?
b. within the Philippines?

48. BPI is a universal bank with both a regular business unit and an expanded foreign currency deposit

w
unit. The following pertains to the income and expense of the bank:

ie
RBU EFCDU
Interest income on loans
- From residents P 18,000,000 $ 4,000,000

ev
- From foreign clients 10,000,000 3,000,000
- From fellow banks 2,000,000 1,000,000
Interest expense on short-term deposits 15,000,000 2,000,000
Interest expense on long-term deposits – individuals 4,000,000 1,000,000
R
Interest expense on long-term deposits – corporate

Long-term deposits are at least 5 years in maturities.

2,000,000 500,000
PA
Required:
a. Compute the final tax required to be withheld from Peso deposits.
b. Compute the final tax required to be withheld from FCDU deposits.
c. Compute the final tax to be withheld from BPI.
C

49. Benson is a 40% owner in a business which reported the following income and profit distribution
policy:
Pre-tax income P 15,000,000
EO

Profit distribution policy 50%

Required:
a. Compute the final tax to be withheld from Benson if the business is a corporation.
b. Compute the final tax to be withheld from Benson if the business is a partnership or joint
venture.
R

c. Compute the creditable withholding tax to be withheld from Benson if the business is a
general professional partnership or exempt joint venture.

50. The manual filing of the final withholding tax return for the first two months of the quarter by
withholding agent shall be made not later than
a. 10 days from the close of the month of withholding.
b. 20 days from the close of the month of withholding.
c. 25 days from the close of each calendar quarter.
d. the last day of the month following the close of the taxable quarter of withholding.

8
 Query: How about the quarterly final withholding tax return?

51. ZTX Company had the following dealings in the stocks of Suzi Company, a domestic corporation:

Date Transaction Shares Net price

11/15/2017 Buy 10,000 P 30
9/30/2018 Sell 8,000 27
10/3/2018 Buy 6,000 26
12/7/2018 Sell 5,000 34

w
Assuming ZTX Company uses FIFO method, compute the capital gains tax in 2018.
a. P 850 c. P 2,550

ie
b. P 1,150 d. P 3,450

52. Mr. Wong surrendered 1,000,000 shares of MVC which he acquired for P10.50/share for the

ev
500,000 shares of SMB plus P800,000 cash, in pursuant to MVC’s merger with SMB. The MVC and
SMB shares were selling P12/share and P20/share, respectively, at the time of exchange.

Compute the capital gains tax.

a. P 0
b. P 45,000 R
c. P 120,000
d. P 150,000

53. What is the basis of the SMB shares acquired?

PA
a. P 10,000,000 c. P 11,200,000
b. P 10,500,000 d. P 12,000,000

54. Due to lack of interested buyer, Enso was forced to sell his farm lot for P1,750,000 at a discount of
30% on its prevailing fair value. Due to this, Enso realized a loss of P250,000 from the sale. Compute
C

the capital gains tax.

a. P 0 c. P 120,000
b. P 105,000 d. P 150,000
EO

55. Mr. Bantaw, retired from his job in Silicon Valley, USA, at the age of 45. He returned to reside
permanently in the Philippines. He is receiving a monthly pension of $20,000, equivalent to
P112,000. Compute his reportable gross income.
a. P 0 c. P 1,344,000
b. P 112,000 d. P 1,456,000
R

56. You were assigned to compute Misucorp’s taxable income from its GAAP net income:

Rental income P 2,000,000

Gain on life insurance policies of the company CEO 800,000
Gain on increase in value of investment property 400,000
Gain from trading stocks 500,000
Gain on sale of 10-year term bonds 100,000
Dividend income 40,000
Interest income

9
 - from deposits P 20,000
- from bonds 32,000 52,000
Total income P 3,892,000
Less: Expenses 2,000,000
Net income P 1,892,000

Additional information:
1. A certain lessee made an improvement costing P450,000 with an economic life of 5 years
more than its 10-year lease term. Misucorp prefers to spread income from lease
improvements over their lease term.
2. Misucorp received P400,000 rental advances and P100,000 rental deposits during the year

w
which remained unearned at the year-end.

ie
What is Misucorp’s taxable income?
a. P 2,132,000 c. P 547,000
b. P 647,000 d. P 447,000

ev
57. The following pertains to various tax assessment paid by the taxpayer:
Local Tax Income tax Total
Tax due P 20,000 P 100,000 P 120,000
Surcharge
Interest
Total
5,000
4,000
P 29,000
R 25,000
21,000
P 146,000
30,000
25,000
P 175,000
PA
Compute the total deductible expense.
a. P 0 c. P 24,000
b. P20,000 d. P 45,000

58. Pinoy Exporters, Inc., a pioneer BOI-registered entity with an ITH which expired at the end of 2016,
C

incurred net losses P15,000,000 and P12,000,000 in 2016 and 2017, respectively. If Pinoy Exporter,
Inc. has a net income of P20,000,000 in 2018. How much NOLCO can be claimed?
a. P 37,000,000 b. P20,000,000 c. P 12,000,000 d. P 0
EO

59. The following relates to the income and deductions of Malufet, Inc., a corporation organized in
2016.

2020 2021 2022

Sales P 20,000,000 P 24,000,000 P 30,000,000
R

Cost of sales 12,000,000 13,000,000 16,000,000

Regular deductions 10,000,000 8,200,000 7,000,000
Special incentive deductions 2,000,000 1,000,000 2,000,000

Required: Compute the taxable income in 2020, 2021 and 2022.

60. Mr. X, a bachelor, died on August 30, 2017. His estate underwent judicial settlement. Mr. X’s
executor summarized the following information for purposes of computing his income tax and
estate tax:

10
 Properties, net of obligations, at point of death P 3,800,000
Rent income of properties(earned evenly during 2017) 300,000
Net income of X’ business (40% earned after death) 500,000
Teaching income of Mr. X 150,000
Judicial expenses of Mr. X’s estate 200,000
Funeral expenses (30% after interment) 250,000
Fire loss of business properties classified as ordinary assets (25% before death) 100,000
Medical expenses of Mr. X just prior to death 120,000
The executor decided to claim the loss as deduction for income tax purposes. (USE CREATE)

w
1. Compute Mr. X’s taxable income.
2. Compute the taxable income of X’s estate.
3. Compute Mr. X’s taxable estate.

ie
61. The decedent had P 20,000,000 cash in his bank account in his latest SALN. P2,000,000 of this were
spent for his hospitalization prior to his death. His family withdrew P1,500,000 of this for his funeral.

ev
The same were subjected to 6% final tax by the bank. How much cash shall be reflected in the gross
estate of the decedent?
a. P 20,000,000 c. P 18,000,000
b. P 18,500,000 d. P 16,500,000
R
62. On October 31, 2016, the decedent borrowed a P2,000,000 from a lender which charges 10%
interest due annually every October 31. The decedent died on January 31, 2018. Compute the total
deductible indebtedness against gross estate.
PA
a. P 2,250,000 c. P 2,050,000
b. P 2,200,000 d. P 2,000,000

63. The following obligations remained unpaid before estate tax returns were about to be filed:
Unpaid funeral expenses P 250,000
C

Unpaid judicial expenses 400,000

Unpaid medical expense 200,000
Real property tax (3/4 unpaid before death) 80,000
EO

Unpaid bank loan:

- Balance at date of death 150,000
- Balance before filing of return 120,000

Compute the deductible indebtedness.

a. P 1,080,000 c. P 410,000
R

b. P 810,000 d. P 210,000

64. Decedent X received a P2,000,000 donations from his father on July 1, 2016. He used the money to
purchase 100,000 shares of listed company, Sam Miguel Company. The shares of Sam Miguel
Company traded as follows: Open – P20, High – P 24, Low – P18 and Close – P23 at the time of X’s
death on July 4, 2018. X have other assets of P12,900,000. X had P3,600,000 total obligations upon
his death. Compute the vanishing deduction?
a. P 0 c. P 912,000
b. P 608,000 d. P 2,000,000

11
65. On January 2, 2015, Andrew inherited a commercial building which was valued at P30,000,000 in the
estate tax return of his predecessor. This is the only property that remained when Andrew died on
July 7, 2018. The property was encumbered by a P12,000,000 mortgage. Andrew was able to pay
P6,500,000 of this before his death. The property has a zonal of P40,000,000 and appraisal value of
P50,000,000 upon his death.

Required:
a. Compute the vanishing deduction.
b. Compute the estate tax.

w
66. On July 2018, Mr. and Mrs. Ocampo made a donation of property worth P1,000,000 to their
daughter, Inday, and her fiancé, June, on account of Inday’s marriage to June which was scheduled

ie
on March 14, 2019.

Required: Compute the donor’s tax due under the TRAIN law.

ev
67. Who is not qualified to a 20% discount on the sale of furniture?
a. Mark, a handsome PWD
b. Rhad, a senior citizen but recognized international playboy
c. Zeus, a rich but PWD-looking senior citizen
d. All of the above R
68. A senior citizen who is also a professional practitioner shall be
PA
a. Exempt from VAT on his receipts
b. Exempt from income tax on his receipts
c. Exempt from VAT and income tax on his receipts
d. Subject to VAT and income tax on his receipts.
C

69. A partial income tax holiday is given by law to

a. PEZA-registered entities
b. Newly-registered enterprises to the BOI
c. Expanding enterprises registered to the BOI
EO

d. Any of these

70. Which of the following PEZA-registered enterprises enjoys initial income tax holiday?
a. Facility providers
b. Export manufacturing enterprises
c. Developers of Ecozones
R

d. Utilities providers

71. DOH, a government agency, entered into a contract to purchase its supplies from XDL Manufacturing,
a VAT-registered taxpayer. During the month, it received a bill for P420,000 from XDL for supplies
purchased. How much shall DOH withhold?
a. P 0 c. P 21,000
b. P 18,750 d. P 50,400

12
72. In the immediately preceding problem, assuming XDL is a non-VAT supplier, how much shall DOH
withhold?
a. P 0 c. P 18,750
b. P 12,600 d. P 21,000

73. A private school is subject to

a. Income tax c. Real property tax
b. Business tax d. All of these

74. A private hospital is exempt from

a. Income tax c. Real property tax

w
b. Business tax d. None of these

ie
75. Which is false?
a. A private school is subject to income tax but not to business tax.
b. A BMBE is exempt from both income tax and business tax.

ev
c. A local water utility is exempt from income tax but subject to business tax.
d. A general professional partnership is exempt from income tax but subject to business tax.

76. Which is vatable under the TRAIN law?

a. Association dues
b. Sales of gold to the BSP R
c. Sales of medicine prescribed for diabetes and hypertension
d. Exchange of property for stocks where no control is obtained
PA
77. Which is not a PEZA incentive?
a. Exemption from duties and taxes on importation
b. 0% income tax
c. Exemption from VAT and percentage tax
C

d. Exemption from local business tax and real property tax, except those on land

78. A certain taxpayer on the calendar year basis filed his third quarterly VAT return on December 30,
2018 and paid the VAT due of P40,000 thereon. He filed an amendment return on February 5, 2019
EO

and paid the additional tax of P30,000.

In case of deficiency taxes, the BIR shall issue a notice of assessment not later than
a. October 25, 2021 c. February 5, 2022
b. December 30, 2021 d. February 5, 2021
R

79. In case of overpayment, the taxpayer shall file a claim for tax refund not later than
a. October 25, 2020 c. February 5, 2021
b. December 30, 2020 d. February 5, 2022

80. The taxpayer received a deficiency assessment from the BIR. The same stemmed out of the BIR’s
another interpretation on the provision of the law. The taxpayer must
a. File a petition for review before the CTA within 30 days
b. File a motion for reinvestigation with the BIR within 30 days
c. File a motion for reconsideration with the BIR within 30 days

13
 d. Seek the opinion of the Secretary of Finance within 60 days

81. The employer paid for the following:

Bonuses of managerial employees P 208,000

Vacation expenses of managerial or supervisory employees 260,000
Rent for the residence of company president 162,500
Cars given to sales personnel as performance bonus 1,300,000

The vacation expenses were incurred during mandatory company outing sponsored by the company
for top-management get-together and strategic planning of the company

w
Compute the fringe benefits tax.

ie
a. P 0 c. P 87,500
b. P 43,750 d. P 227,500

ev
82. Tess, married, died on November 1, 2018 leaving the following properties and obligations:

Cash P 5,000,000
Warehouse building 8,000,000
Land
Investment stocks
Family home
Bank loan
R 10,000,000
1,000,000
12,000,000
2,500,000
PA
Unpaid taxes 300,000

The investment in stocks consists of 1,000,000 shares with P1 par value, P2.50/share book value. The
stocks were traded P2.20 at the open, peaked at P2.32 and bottomed at 2.10 and closed at P2.30 at
the date of Tess’ death. All of the properties were common except for the warehouse building which
C

was inherited by Munda’s spouse just before her death. After due notice were made to the bank about
her death, P1,000,000 of the cash were withdrawn from the account for her funeral expenses.

Compute the total gross estate.

EO

a. P 37,210,000 c. P 28,210,000
b. P 29,210,000 d. P 28,000,000

83. Compute the estate tax due.

a. P 672,300 c. P 132,300
R

b. P 402,300 d. P 102,300

84. The VAT return for the third quarter of 2018 was paid by the taxpayer on October 15, 2018. What is
the last day for the BIR to send any deficiency tax assessment?
a. April 15, 2021 c. October 25, 2021
b. October 15, 2021 d. September 30, 2021

85. Mr. CSO, a minimum wage earner, derived the following benefits during the year:
Basic minimum wage P 124,000

14
 13th month pay 11,000
Overtime pay 80,000
Night shift differential pay 30,000
Hazard pay 15,000
Holiday pay 15,000
Total P 275,000
Less: SSS, PhilHealth, HDMF contributions 5,000
Net total P 270,000

Required: Compute the taxable compensation income.

w
86. Mary, a minimum wage employee, was able to close a sales deal for her employer during the year.
She received the following compensation during the year:

ie
Basic minimum wage, net of
P8,000 mandatory deductions P 160,800

ev
13 month pay
th
14,000
Holiday pay 4,000
Overtime pay 70,000
Night shift differential pay 15,000
Hazard pay
Profit sharing bonus
Commission income
Total
R P
10,000
12,000
370,000
655,800
PA
Required: Compute the taxable compensation income and tax due.

87. Jun, a minimum wage employee, do part-time business after work. He received total minimum
wage of P290,000 inclusive of P11,000 13th month pay but net of P5,000 mandatory deductions. He
C

also received a performance bonus of P20,000 and netted P300,000 from his P700,000 revenue on
his side-line business.

Required: Compute the tax due under the:

EO

a. Regular tax option

b. 8% income tax option

Withholding taxes
88. The University of the Cordilleras took Zeus Millan, a practicing accountant and professor, as the
resource speaker in a social symposium “Accounting for Real Estate” He is contracted to be paid
R

P89,600 professional fees for the event.

Required:
a. What is the withholding tax if Mr. Zeus Millan is a professor of the College of Accountancy of the
University of the Cordillera?
b. What is the withholding tax if Mr. Zeus is a professor of the College of Accountancy in the
University of Baguio? What if Millan submitted an affidavit of his gross receipts? What if Millan
is a VAT-registered taxpayer?

15
8% Income Tax, General Professional Partnership & Optional Standard Deductions
89. A self-employed taxpayer expects to have the following income for the upcoming the year:

Sales P 1,200,000
Cost of sales 500,000
Gross income P 700,000
Compensation income 180,000
Dividend income 20,000
Gain on sale of machinery 50,000
Total income P 950,000
Less: Expenses 230,000

w
Net income P 720,000
Required:

ie
1. Compute the tax due under the regular income tax, using
a. Itemized deduction
b. Optional standard deduction

ev
2. Compute the 8% income tax
3. Which is preferable to the taxpayer?

90. Mr. Iyo is a partner in Tan, Melco & Associates, a general professional partnership, where he owns

year:
GPP
R
20% of the equity. The following shows the income of the GPP and Mr. Iyo for the recently concluded

Mr. Iyo
PA
Gross receipts P 4,000,000 P 1,200,000
Cost of services 1,200,000 600,000
Gross income P 2,800,000 P 600,000
Interest income from deposits 12,000 8,000
Less: Expenses 1,000,000 200,000
C

Net income P 1,812,000 P 408,000

Compensation income 170,000
Total income P 578,000
EO

The partnership is registered as a VAT taxpayer while Mr. Iyo is registered as a non-VAT taxpayer. Mr.
Iyo also documented a P15,000 expense he incurred in line with his duties in the GPP which were not
reimbursed by the GPP.

Required: Compute the distributable income of the general professional partnership and taxable
R

income of Mr. Iyo under:

1. 8% income tax
2. Regular income tax, assuming the use of:
a. Itemized deduction
b. Optional standard deductions

91. A taxpayer who opted to the 8% income tax had the following details of receipts and expenses:

16
 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total
Sales P 1,200,000 P 2,000,000 P 1,000,000 P 1,500,000 P 5,700,000
Cost of sales 600,000 1,000,000 500,000 700,000 2,800,000
Gross profit P 600,000 P 1,000,000 P 500,000 P 800,000 P 2,900,000
Gain on sale of stocks 20,000 30,000 50,000
Gain on sale of - 40,000 - 20,000 60,000
equipment
Total income P 620,000 P 1,040,000 P 530,000 P 820,000 P 3,010,000
Less: Expenses 320,000 450,000 300,000 400,000 1,470,000
Net income P 300,000 P 590,000 P 230,000 P 420,000 P 1,540,000

w
All purchases were made from VAT-taxpayers. Last year’s inventory was reported at P107,600.
Equipment were sold for P 80,000 and P200,000 in the second and fourth quarter respectively.

ie
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Purchases P 672,000 P 1,120,000 P 400,000 P 600,000
Purchase of equipment in August 1,500,000

ev
Total input VAT on goods and equipment 228,000 72,000

Required: Determine the following:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Annual ITR
Income tax
Percentage tax
Value added tax
R
PA
Deadline of filing

92. Juan Cruz, a non-VAT registered senior citizen and owner of St. Peter Drugstore, had the following
sales during the first quarter of 2019:
Sales of medicines for diabetes and hypertension P 30,000
C

Sales of other medicines 500,000

Cost of sales 140,000
Gross income P 390,000
EO

Interest income from deposit 2,000

Salaries of senior citizen employee 20,000
Salaries of PWD employees 20,000
Other expenses 50,000
Net income P 332,000
R

Compute the percentage tax.

a. P 0 c. P 15,000
b. P 60 d. P 15,060
93. Compute the income subject to regular income tax.
a. P 0 c. P 292,000
b. P 277,000 d. P 302,000

17
94. The incremental ITH for newly registered BOI enterprise
a. 2 c. 4
b. 3 d. 6

95. An enterprise earned P40M, inclusive of P5M income from unregistered activity, in 2018.

Registered activities Unregistered activities Total

Revenue (75% export) P 100M P 20M P 120M
Less: Cost of sales 45M 10M 55M
Expenses 20M 5M 25M
Net income P 35M P 5M P 40M

w
Required: Compute the income tax still due and output VAT assuming the enterprise is a:
a. BOI-registered enterprise

ie
- The enterprise is a newly registered enterprise.
- The enterprise is an expanding enterprise with an exemption ratio of 40%.
b. PEZA-registered enterprise

ev
a. During ITH period
b. During GIT period

96. A British national, residing in Nigeria, earned dividend income from a DZ, a domestic corporation,

a. 10%
b. 12%
c. 15%
d. 25%
R
amounting to P500,000. The RP-UK tax treaty provides for a 12% tax rate. While the Nigeria-
Philippine tax treaty calls for a 15% tax treaty. What is the applicable withholding rate?
PA

97. Which is required for the claim of tax treaty relief on business profits?
a. Certificate of Residency for Tax Treaty Relief
b. Tax Treaty Relief Application
c. Certificate of non-residency in UK
C

d. All of these

98. A Company was assessed for P1M income tax, before increments, for taxable year 2020. The
assessment calls for payment not later than June 30, 2021.
EO

Required: Compute the tax payment if the taxpayer settled

a. On June 30, 2021.
b. On February 10, 2022
R

99. On June 4, 2019, the BIR assessed Mr. Pedro for deficiency income tax of P400,000 for the year
2014 due to an alleged improper computation of deduction. Mr. Pedro shall
a. ignore the assessment.
b. file a motion for reinvestigation with the BIR within 30 days
c. file a motion for reconsideration with the BIR within 30 days
d. file a petition for review with the Court of Tax Appeals.

18
100. A PEZA-registered enterprise with no unregistered activity shall file
a. 1702-RT c. 1702-MX
b. 1702-EX d. None of these

101. A newly registered BOI-enterprise with no unregistered activity shall file

a. 1702-RT c. 1702-MX
b. 1702-EX d. None of these

102. An expanding BOI-enterprise with no unregistered activity shall file

a. 1702-RT c. 1702-MX
b. 1702-EX d. None of these

w
103. X-Trade rendered services to the government. It billed the latter P 224,000. Compute the amount

ie
to be withheld by the government assuming X-Trade is a:
a. VAT taxpayer
b. Non-VAT taxpayer

ev
Query: What if the services were provided by a non-resident person?

104. Which is least likely to be filed under the eFPS?

a. Form 2551Q
b. Form 1701-A R
c. Form 1706
d. Form 2550Q

105. Which is likely to be filed under ONETT?

PA
a. Form 1702Q c. Form 2000
b. Form 2200 d. Form 1800

106. Dr. Bantayan Muto made a cosmetic procedure on Zeus Schuding for P50,000. Determine the
amount to bill for excise tax and VAT if:
C

a. The amount is agreed to be inclusive of VAT but exclusive of excise tax.

b. The amount is inclusive of VAT and excise tax

107. Assume instead that the procedure on Zeus Schuding was done by Bantayan Hospital incurring
EO

thereon P20,000 for supplies plus P50,000 for professional fees which is agreed to be inclusive of
VAT and excise tax, determine the excise tax and output VAT.

To God be all the honor and the glory, forever!

God bless you all!
R

---- End of Pre-week ----

19