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******************************************************************************************************* Income Taxation ******************************************************************************************************* Multiple Choice Questions 1. On October 1, 2007, Pastrana Co. leased a new residential house for the use of its general manager. The rent agreed upon was P136,000 per month. The amount of the fringe benefit tax monthly is: a. P68,000 b. P100,000 c. P136,000 d. P32,000 2. Taxpayer sold capital assets as follows: Selling Price Cost Net Gain (loss) Terms of sale: Down payment 1.15.2006 Paid on 6.15.2006 Paid on 9.15.2006 Installment due 1.15.2007 Installment due 5.15.2007 Mortgage assumed by the buyer
Lot 11 P6,000,000 2,500,000 P3,500,000
Lot 22 P10,000,000 1,000,000 P9,000,000
P500,000 500,000 500,000 2,000,000 2,500,000
P500,000 1,000,000 1,000,000 3,000,000 3,000,000 1,500,000
The final tax payable under the installment method for 2006 for lot 11 is: a. P36,000 b. P90,000 c. P22,500 d. None of the above 3. In Problem No. 2, the final tax payable under the installment method for 2006 lot 22 is: a. P135,000 b. P150,000 c. P600,000 d. None of the above 4. Jose Pidal, widower, supporting a son, 33 years old, who is invalid, has the following transactions in 2006: Sales P1,200,000 Cost of sales 550,000 Deductions: 1. Operating expenses 367,000 2. Loss of Goods thru theft 50,000 3. Contributions: To Quezon Province government for priority Activity in sports development 10,000 To St. Mark Cathedral 35,000 Other income 1. Rent of Apartment 30,000 2. Capital gain from sale of family painting held for 2 years 80,000 Jose Pidal will report a net income before personal exemptions of: a. P226,700 b. P262,700 c. P266,700 d. P302,700 5. Assuming Jose Pidal claimed the optional standard deduction, he shall report a net income before personal exemptions of: a. P585,000 b. P648,000 c. P760,000 d. P1,143,000 Page 1 of 25
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6. Roy, Caludio & Co. is a general professional partnership. Their income and expenses in 2006 are shown below: Roy, Claudio & Co. Gross income P1,000,000 Operating expenses (deductible) 600,000 Contributions: 1. To Mandaluyong City for priority projects in education 40,000 2. To Divine Mercy Church 20,000 Note: There was no contributions of profits during the year but partner Claudio withdrew P50,000 chargeable against his share. Partner Roy, widower with 70% interest, uses cash method Gross income, rent P300,000 Rental expenses (deductible) 120,000 Royalty (on books) 40,000 Donation to Quiapo Church 40,000 Partner Claudio, married with 30% interest, on accrual basis Gross income from business P420,000 Business expenses (deductible) 290,000 Dividend from domestic company 50,000 Partner Roy will report taxable net income of: a. P232,000 b. P368,800 c. P372,000
d. P388,000
7. Partner Claudio, will report a taxable net income of: a. P238,000 b. P206,000 c. P200,000 8. Nikki Corporation has the following transactions during the year: Gross income, Philippines business Gross income, Hongkong business Business expense, Philippines Business expense, Hongkong Interest connected with Philippine business Interest connected with Hongkong business Interest connected with business in the Phil. and Hongkong Business expense which cannot be allocated
d. P124,000 P1,600,000 400,000 900,000 100,000 60,000 40,000 100,000 120,000
If taxpayer is a resident foreign corporation, its net income subject to tax in the Philippines is: a. P464,000 b. P530,000 c. P640,000 d. P940,000 9. The books of Renato Co. show the following information for the year 2007: 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
Sales P1,200,000
Cost of sales P680,000
1,400,000
840,000
1,500,000
900,000
1,700,000
1,000,000
P5,800,000
P3,420,000
Other income P190,000, Rent Net of 5% withholding tax P96,000, Royalty, Net of 20% withholding tax P500,000, dividend from domestic corporation P95,000, Rent Net 5% withholding tax
Deductions P320,000 P360,000 P380,000 P450,000 including fringe benefit tax of P50,000 P1,510,000
Renato Co. is entitled to a tax credit in the amount of P20,500, representing excess quarterly income taxes paid in 2006, which it opted to carry over to 2007. The income tax due from Renato Co. for the 1st quarter of 2007 is: a. P66,000 b. P109,500 c. P122,000
d. P132,000
10. The tax records of Botai Co. for 2007 show: Page 2 of 25
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Sales P2,000,000 Cost of sales 1,300,000 Expenses which includes bad debt written off In the amount of P65,000 360,000 The bad debt of P65,000 written off in 2006, was recovered in the year 2007. Botai Co. shall report in 20076, income arising from the bad debt recovery, in the amount of: a. P65,000 b. P22,100 c.P22,750 d. None 11. Jose Miguel Arroyo, single, has the following transactions in 2007: Business gross income P200,000 Business expense 60,000 Loss from gambling 10,000 Other transactions: 1. Selling price, partnership interest 100,000 Investment in partnership 2005 20,000 2. Gain on sale of capital asset held for 4 years 10,000 1. Loss on sale of capital asset held for 8 months 12,000 2. Loss on account of failure to exercise 2-month option to buy Property 2,000 3. Liquidating dividend from Z Co. 150,000 Cost of investment in Z Co. in 2005 60,000 Note: in 2006, Jose Miguel Arroyo had a net income of P65,000 and a net capital loss of P92,000. Taxpayer’s net income before personal exemptions is: a. P196,000 b. P141,000 c. P140,000 d. P151,000 12. Hubert and Winnie, spouses, have five (5) minor dependent children. They are both physicians. In 2007, their records show the following income and expenses: Professional fees from common clinic P 140,000 Salary of Hubert as professor 120,000 Royalty of Hubert as book author 60,000 Salary of Winnie as professor 84,000 Prize won by Winnie 8,000 Interest on Notes Receivable of spouses 12,000 Allowable operating expenses of common clinic 30,000 Premium on health insurance of family 10,000 Hubert will report a taxable net income, after personal and additional exemptions, of: a. P177,000 b. P147,000 c. P124,600 d. P117,000 13. Winnie will report a taxable net income, after personal exemptions, of: a. P111,000 b. P121,000 c. P139,000 d. P145,000 14. Miriam Santiago, a business woman, incurred the following losses in 2006: 1. Wagering losses at Casino Filipino Note: Wagering winnings amounted to P14,000 2. Loss on sale of company car to Red Co. Note: Miriam Santiago owns 60% of the stocks of Red Co. 3. Loss on sale of office computers to Miriam Sto. Domingo, cousin of Miriam Santiago The deductible loss of Mirriam Santiago is: a. P190,000 b. P104,000 c. P54,000
P86,000 54,000 40,000
d. None
15. Bogok, Manager of Tongek Co., receives a monthly salary of P120,000. On January 15, 2007, Bogok received a bonus for services rendered in 2006 in the form of 200 shares of stock of Tongek Co. Said shares have a par value of P120 per share and a fair market value of P240 per share at the time of receipt on January 15, 2007. Its fair market value in 2004 was P210 per share. Bogok shall report income from bonus in the amount of: a. P48,000 b. P42,000 c. P24,000 d. None of the above Page 3 of 25
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16. Angelei Corporation organized in 2000, has the following records in 2007: Sales P2,100,000 Cost of sales 430,000 Operating expenses 1,585,000 For the year 2007, Angelei Corporation shall pay corporate income tax in the amount of: a. RCIT of P27,200 b. MCIT of P33,400 c. MCIT of P29,750 d. RCIT of P28,050 Donor’s Tax 1. The tax imposed on the transfer of property without consideration between two or more persons who are living at the time the transfer is made. a. Estate tax c. Gift Tax b. Business Tax d. Personal Tax 2. When the donee or beneficiary is a stranger, the tax payable by the donor shall be: a. 30% of the gross gifts. b. 30% of the net gifts. c. Based on the graduated rates with the first P100,000 net gift exempt. d. Based on the graduated rates with the first P100,000 net gift exempt or 30% of the net gifts whichever is higher. 3. For donor’s tax purposes, one of the following is a stranger. a. Brother or sister c. Uncle b. Spouse d. Son-in-law 4. Three of the following are exempt or excluded from donor’s tax, which of the following is the exception? a. P200,000 cash given by a nonresident alien donor to his legitimate son who is getting married in the Philippines to a Filipina. b. P10,000 cash given by a resident alien o his legitimate son who is getting married in the Philippines. c. Donation of a condominium in Japan to a Filipina by a Malaysian national not residing in the Philippines. d. P150,000 donation to a nonprofit school. 5. All of the following except one are exempt from gift tax. a. Donation to Integrated Bar of the Philippines. b. Donation to Development Academy of the Philippines. c. Donation to Philippine Institute of Certified Public Accountants. d. Donation to International Rice Research Institute 6. Peter sold his car to James. Peter’s car cost P500,000 and has a fair value of P400,000 at the time of sale. The car was sold for P200,000. For donor’s purposes, which of the following statements is correct? a. There is a taxable gift of P300,000. b. There is a taxable gift of P200,000. c. The transfer is for insufficient consideration, hence, not subject to gift tax. d. The transfer involves a personal property, hence not subject to gift tax. 7. The donor’s tax return shall be filed within: a. 30 days after each donation. b. 30 days after end of the month following the donation. c. 6 months after each donation d. 30 days after end of the year donations were made. 8. The common characteristics of transfer taxes is: a. The transfer of property is onerous. b. The transfer of property takes effect during the lifetime of the transferor. c. The transfer of the property takes effect upon the death of the transferor. d. The transfer of property is gratuitous. Page 4 of 25
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9. Estate tax as distinguished from donor’s tax is: a. Exemption is P200,000. b. There is no optional valuation date. c. Payment is made as the return is filed. d. Notice is not needed. 10. The following are requisites of a donation for purposes of the donor’s tax, except one: a. Capacity of the donor. b. Capacity of the donee. c. Delivery of the subject matter. d. Donative intent. 11. It is an act of liberality where a person disposes gratuitously of a thing or right in favor of another who accepts it. a. Succession c. Donation b. Remission d. Taxation 12. One of the following donations must be in public instrument. a. Donation of real (immovable) property. b. Donation of tangible personal (movable) property. c. Donation of intangible personal (movable property. d. Donation inter vivos. 13. Gifts may or may not be covered by taxes. One of these statements is false: a. The donor’s tax for each calendar year is computed on the basis of the total net gifts made during the calendar year. b. Gifts on property shall be valued at fair market value of te property at the date of donation. c. A gift to the Development Academy of the Philippines is exempt from tax. d. A gift out of conjugal property is always deemed as made by both spouses. 14. One of the following is not exempt from donor’s tax. a. Donation inter vivos to religious organizations. b. Donation inter vivos to International Rice Research Institute. c. Contribution in cash or in kind for election campaign purposes, duly reported to the Commission on Elections. d. Remission of debt where the debtor did not render service in favor of the creditor. 15. Gift tax is considered as: a. Property tax b. Personal tax
c. d.
Business tax Excise tax
16. First statement:
The donor’s tax shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible. Second statement: Any contribution in ash or in king to any candidate, political party or coalition of parties for campaign purposes shall exempt from donor’s tax. a. Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only second statement is correct.
17. Donor’s tax distinguished from estate tax: First distinction: The rates for donor’s tax are lower than those for the estate tax. Second distinction: In donor’s tax, the exemption is P100,000 while in estate tax it is P200,000. a. Both distinctions are correct. b. Both distinctions are wrong. c. First distinction is correct, the second is wrong. d. First distinction is wrong, the second is correct. Page 5 of 25
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18. First statement:
Gifts in favor of an educational and/or religious organization are exempt from donor’s tax. Second statement: Transfers to educational and/or religious organization are exempt from estate tax. a. Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only second statement is correct.
19. First statement:
The commissioner shall have authority to grant in meritorious cases, a reasonable extension of not more than 30 days for filing the donor’s tax return. Second statement: In case of gifts made by nonresidents, the return may be filed with Philippine Embassy or Consulate in the country where he is domiciled at the time of the transfer, or directly with the Office of the Commissioner. a. Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only second statement is correct.
20. First statement:
In donation mortis causa, it is the donor’s death that determines the acquisition of, or the right to the property; and that it is revocable at the will of the donor. Second statement: In donation inter vivos, its effect is produced while the donor is still alive. a. Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only second statement is correct.
21. First question:
Second question:
a. b. c. d.
Is donative intent always essential to constitute a gift? No. Where the property, other than real property classified as capital assets, is transferred for less than an adequate and full consideration in money or money’s worth, the difference between the fair market value at the time of transfer and consideration received is subject to donor’s tax. How is the gift of conjugal partnership property made by the spouses treated for donor’s tax purposes? The gift is taxable to the husband being the head of the family as long as the wife gives consent to the donation.
Both statements are correct. Both statements are incorrect. Only the first statement is correct. Only second statement is correct.
22. Two of the following are the purpose of donor’s (gift) tax: 1. To supplement and prevent circumvention of the estate tax. 2. To prevent avoidance of income taxes through the devise of splitting income amount numerous donees to escape the effect of the progressive rates of income taxation. 3. To make the act of receiving a gift taxable. 4. To subject all properties wherever situated to gift tax. a. 1 and 2 only b. 1 and 3 only c. 2 and 3 only d. 3 and 4 only 23. First statement:
With the exception of moderate donations for charity or on occasions of family rejoicing or distress, neither spouse may donate any community or conjugal property without the consent of the other. Page 6 of 25
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Second statement: a. b. c. d.
Transfer of any right or interest in property, but less than title to take effect during the lifetime of the transferor and transferee is subject to donor’s tax. Both statements are correct. Both statements are incorrect. Only the first statement is correct. Only second statement is correct.
24. First statement:
The law in force at the time of perfection or completion of the donation shall govern the imposition of donor’s tax. Second statement: The transfer of property by gift is perfected from the moment the donor knows of the acceptance by the donee; and completed by the delivery to the donee either actually or constructively of the donated property. a. Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only second statement is correct.
25. First case:
Bong transfer to Kate P50,000 in trust for May. The transfer is not subject to tax because the transfer is in trust. Second case: In consideration of his love Mary donated a parcel of land to her brother Ernesto and Francisco, the naked title to Ernesto and usufruct to Francisco for two year. The transfer of the land, naked title to Ernesto and usufruct to Francisco, being a gift, is subject to donor’s tax. a. Answer to both cases are correct b. Answer to both cases are wrong c. Only answer to first case is correct d. Only answer to second case is correct
26.
In computing the donor’s tax, the dowry or gift on account of marriage is allowed as an exemption (deduction) to: a. A resident donor c. Both resident donor and nonresident donor b. A nonresident donor d. Answer not given.
27.
28.
29. 30.
Husband and wife gave the following gift of conjugal property: January 20, 2006 – Land valued at P180,000. Donee is a brother of wife and gift is on account of marriage of brother held on January 10, 2004. The donor’s tax due on the gift is: a. P1,600 b. P27,000 c. P54,000 d. P3,600
Noli de Castro made the following gifts in 2006 – May 1 - Land valued at P500,000. Donee is first son and the gift is on account of marriage held on April 10, 2006. - Farm valued at P600,000. Donee is second daughter, farm has an unpaid mortgage of P100,000 which Donee assumed. Dec 1 - Shares of stock of F4 Corporation valued at P400,000. Donee is first daughter and the gift is also on account of his marriage on April 10. - Land in Makati valued at P1,000,000. Donee is the City of Makati and land will be used for a school site. The donor’s tax due on May 1 donations is – a. P43,400 b. P51,200 c. P52,000 d. None of the above In Problem No. 28, the donor’s tax due on the gifts on December 1 is a. P76,000 b. P10,000 c. P75,200 d. P31,800 A donor gave a piece of land to his legitimate daughter on account of his forthcoming marriage. The land is valued at P1,500,000 with P500,000 unpaid mortgage. The taxable net gift assuming the donor is a resident citizen and the unpaid mortgage was assumed by the donee. a. P1,500,000 b. P1,190,000 c. P990,000 d. none of the choices Page 7 of 25
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31.
The taxable net gift assuming the donor is a nonresident alien and the unpaid mortgage was not assumed by the donee. a. P1,500,000 b. P1,190,000 c. P990,000 d. none of the choices
32.
The taxable net gift assuming the donor is a resident alien and only P300,000 of the unpaid mortgage was assumed by the donee. a. P1,190,000 b. P990,000 c. P490,000 d. none of the choices
33.
The taxable net gift assuming the donor is a resident citizen and the piece of the land is a conjugal. The unpaid mortgage was assumed in full by the donee. a. P1,190,000 b. P990,000 c. P490,000 d. none of the choices
34.
Donor gave the following donations to his legitimate child residing in the Philippines – Real property located in Singapore P700,000 Foreign shares 250,000 Domestic shares 150,000 Franchise used in the Philippines 500,000 P1,600,000 If donor is a Filipino residing in Singapore, taxable gross gift in the Philippines is – a. P1,600,000 b. P650,000 c. P950,000 d. None of the above
35.
If donor is an Singaporean residing in Kuala Lumpur and Singapore law exempts from transfer tax the transmission of intangibles of Filipinos not residing in Singapore, the gross gift taxable in the Philippines is – a. P650,000 b. P500,000 c. None d. None of the above
36.
If the donor is a Japanese residing in Japan and Japan law imposes a transfer tax on the transmission of intangibles of Filipinos not residing in Japan, the gross gift taxable in the Philippines is – a. P650,000 b. P500,000 c. None d. None of the above
37.
A donor gave P500,000 each to a stranger with the specific instruction to give part of it amounting to P100,000 to the Philippine National Red Cross. For Philippine donor’s tax purposes, he shall: a. Pay donor’s tax of P150,000 c. Pay donor’s tax of P14,000 b. Pay donor’s tax of P120,000 d. Not pay donor’s tax
38.
Which of the following transfers are exempted or deductible from both total gross estate and gross gifts? a. Transfer to religious organization b. Transfer to an educational institution c. Transfer to a social institution d. Transfer to a trust and Philanthropic organization
Other Percentage Taxes (OPT) 1. Which of the following statements is incorrect? a. A taxpayer whose annual gross receipts/sales exceed P1,500,000 shall pay VAT even if he is not VAT-registered. b. A taxpayer whose annual gross receipts/sales do not exceed P1,500,000 but who is VATregistered shall pay VAT. c. Percentage tax may be imposed together with VAT. d. Percentage tax may be imposed together with excise tax. 2. Just like value-added tax, percentage taxes are paid on a quarterly non-cumulative basis. Page 8 of 25
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Generally, every person liable to pay the percentage taxes shall file a quarterly return within 25 days after the end of each taxable quarter. a. True, True c. False, True b. False, False d. True, False 3. Which of the following statements is correct? a. Cooperatives shall be exempt from the 3% gross receipts tax. b. A VAT-exempt taxpayer who issues VAT invoice shall not be liable to VAT. c. Every person liable to the percentage tax shall always file a separate return for each branch or place of business. d. Motorized tricycles are not subject to percentage tax. 4. One of the following is subject to common carrier’s tax. a. Owners of bancas b. Owners of animal-drawn two-wheeled vehicles c. Common carriers by land, air or water for transport of goods or cargoes. d. Common carriers by land for transport of passengers. 5. A person whose business is to keep automobiles for hire or keep them stored ready for use or order. a. Keepers of garage c. Taxicab operators b. Common carrier d. Tourist bus operator 6. The franchise tax of grantees of radio and television broadcasting whose annual gross receipts of the preceding year do not exceed P10,000,000 shall be: a. 2% of the gross receipts. c. 4% of the gross receipts. b. 3% of the gross receipts. d. 5% of the gross receipts. 7 and 8 are based on the following:
In the third quarter of 2007, a taxpayer engaged in the sale of services whose annual gross receipts do not exceed P1,500,000 has the following data: Accounts receivable, beginning of quarter Sales during the month Accounts receivable, end of monh Purchases of supplies, total invoice amount 7. The percentage tax due for the month is: a. P2,250 b. P3,000 c. P7,500
P 50,000 100,000 75,000 11,200 d. P6,500
8. Assuming the taxpayer is VAT-registered, the VAT payable is: a. P2,250 b. P6,500 c. P9,000 d. P7,800 9. One of the following is not subject to the 3% percentage tax. a. International air carrier doing business in the Phils. b. International shipping carrier doing business in the Phils. c. Domestic carriers and keepers of garage. d. Franchise grantee of city gas and water supplies. 10. Franchise grantees of city gas and water utilities is subject to a franchise tax of: a. 2% b. 3% c. 4% d. 5% 11. Amounts received for overseas dispatch, message, or conversation originating from the Philippines are subject to: a. 3% Franchise tax. c. 2% franchise tax. b. 10% overseas communications tax. d. 10% value0added tax. 12. A tax on the right or privilege to enter places of amusement. a. Value-added tax c. Amusement tax b. Franchise tax d. Income tax 13. One of the following is not subject to amusement tax on gross receipts. a. Disco houses c. Professional basketball b. Cockpits d. Bowling alleys Page 9 of 25
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14. All of the following except one are liable to ½ of 1% stock transaction tax. Which one is not? a. Individual taxpayers, whether citizens or alien b. Corporate taxpayers, whether domestic or foreign c. Estate and trust d. Dealers in securities 15. One of the following statements is incorrect. a. The ½ of 1% tax shall be collected by the broker who made the sale and shall be remitted within 5 banking days from the date of collection. b. The tax paid on sale of shares through local stock exchange and initial public offering (IPO) and secondary offering shall not be allowable deduction for income tax purposes. c. The ½ of 1% tax on stock transaction is a final withholding tax on income. d. The ½ of 1% tax on stock transaction is collected whether there is an income or a loss and is a percentage tax. 16. J. Reyes operates Ayawmagsakay Taxi with three units in Metro Manila. During the quarter, Taxi No. 1 recorded gross receipts of P3,200, Taxi No.2 (net of P500 gasoline expense), P3,500 and Taxi No.3, P4,500. The common carrier’s tax due is: a. P363 b. P351 c. P336 d. None 17. Grandlate is a common carrier by sea. During a particular quarter, its receipts consist of the following: Gross receipts: Transport of passengers P1,000,000 Transport of goods 1,500,000 Transport of cargoes 500,000 The common carrier’s tax payable is: a. P30,000 b. P90,000 c. P100,000 d. P200,000 18. Using the data in no. 17, the output VAT is: a. None b. P200,000 c. P360,000
d. P240,000
19. Mr. J. Cruz is the owner of a small variety store. His gross sales in any one year do not exceed P1,550,000. He is not VAT-registered. The following data are taken from the books of the variety store for the quarter ending March 31, 2007: Merchandise inventory, December 31, 2006 Gross sales Purchases from VAT-registered suppliers The percentage tax due is: a. P10,000 b. P13,500
P 100,000 450,000 350,000
c. P16,500
d. None
20. Nasaan Ang Kuryente Po (NAKUPO) is a holder of franchise to sell electricity. In a particular quarter, its gross receipts amount to P2,000,000 from sale of electricity. It has also receipts from the lease of its auditorium and theater amounting to P600,000. The percentage tax due for the quarter is: a. NIL b. P40,000
c. P52,000
d. P78,000
21. Chiko operates a cockpit. Inside the cockpit, he also operates a restaurant. Data for the particular quarter follow: Gross receipts: Cockpit operation Restaurant operation Sale of food Sale of liquor The amusement tax due from Chiko is: a. P90,000 b. P135,000
P500,000 100,000 150,000 c. P120,000
d. P75,000 Page 10 of 25
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22. Using the data in no. 21 except that the restaurant is not owned by Chiko but is owned by another person, Chikabebs, not VAT-registered and whose annual gross sales never exceeded P550,000. The amusement tax due from Chiko is: a. P90,000 b. P135,000 c. P225,000 d. P7,500 23. Continuing no. 22, the percentage due from Chikabebs is: a. P90,000 b. P135,000 c. P225,000
d. P7,500
24. J. Santos, promoted a world boxing championship in Manila featuring Manny Hakot, a Filipino champion. Gate receipts amounted to P3,000,000 and additional receipts from television coverage was P2,000,000. The amusement tax due is: a. None b. P500,000 c. P300,000 d. P900,000 25. Assuming the above is not a world championship but a Philippine national boxing championship, how much is the amusement tax? a. None b. P500,000 c. P300,000 d. P900,000 26. ABS-GMA is a radio-tv broadcasting franchise grantee. During the preceding year, its gross receipts did not exceed P10,000,000. During the first quarter of the current year, it has the following data: Gross receipts, sale of airtime Gross receipts, use of radio station’s communication facilities Business expenses The franchise tax due for the quarter is: a. P60,000 b. P40,000
P 2,000,000 500,000 700,000 c. P75,000
d. P39,000
27. A horseracing oficianado has the following winnings during particular race day: Total winnings Cost of winning tickets The tax on winnings is: a. P1,000 b. P400
P10,000 500 c. P950
d. zero
28. Aileen invested P500,000 in the shares of stock of Manila Trading Corp. The corporation’s shares are listed and are traded in the local stock exchange. Aileen sold the shares for P350,000 through the local stock exchange. The percentage tax on the sale is: a. None b. P2,500 c. P1,750 d. P50,000 29. Using the same data in no. 28 and assuming that Aileen sold the shares to Daisy, a direct buyer, the percentage tax on the sale is: a. None b. P2,500 c. P1,750 d. P50,000 30. Jean, a dealer in securities, sold P1,500,000 worth of shares she held as investment. The shares sold were acquired for P1,000,000 and were listed and traded in the local stock exchange. The percentage tax due on the sale is: a. Nil b. P7,500 c. P2,500 d. P5,000 Questions 31 and 32 are based on the following information: 31. Makikiraan Po Transportation Company is a holder of a franchise to operate twelve (12) units of buses in the Ilocos Region. It also owns a gas station, which is used exclusively to load its own buses although in very rare instances it is accepting repair jobs from outsiders. During the month of December 2007, it had the following gross receipts. From the buses P280,000 From the gas station 300,000 From the garage 12,000 How much is the common carrier’s tax payable? a. P17, 760 b. P 8,400 c. P8,760
d. P17,400 Page 11 of 25
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32. Using data above, the common carrier’s tax is payable by Makikiraan Po Transportation without any penalty on or before a. January 10, 2008 c. January 20, 2008 b. January 15, 2008 d. January 25, 2008 33. Helow Po Co. is a franchise to operate a private telephone company. During the period, it had the following gross receipts: Domestic long distance calls P137,500 Local regular bills from customers 220,000 Overseas calls from the Philippines to other countries 340,000 Purchases, VAT inclusive 209,000 The overseas communications tax is – a. P34,000 b. P36,500 c. P78,500
d. Zero
34. The value added tax payable by the company is – a. P20,507 b. P22,393 c. P42,900
d. None
35. Manny Pakwan owns shares of stock of domestic corporations which are actively traded in the Philippine Stock Exchange. Due to the unstable prices in the stock exchange, he decided to sell the shares. The data of which are as follows: Selling Price Cost Gain/Loss A-GAY-mat Corporation P230,000 P220,000 P10,000 Back Lita Corporation 360,000 395,000 (35,000) The stock transaction tax is – a. P2,950 b. P1,150
c. P50
d. Zero
36. Fani Lyn operates the Plastic Ma’am Nightclub in Quezon City. Her gross receipts on February, 2007 amounted to P126,700. The foods and drinks being served inside the nightclub are being delivered by Malakas, a non-VAT taxapayer to Fani Lyn. During the month, Malakas sold P32,400 worth of foods and drinks to Fani Lyn The amusement tax payable is – a. P19,005 b. P22,806 c. P28,638 d. P5,832 Estate Tax Select the letter that correspond the BEST answer. A. If the first statement is correct C. If the both statements are correct B. If the second statement is correct D. If the both statements are incorrect 1.
Gratuitous transfer of property may not involve financial consideration. F Onerous transfer of property is not subject to tax. F 2.
The estate of the decedent may include his liabilities. F A sale is a form of transfer transaction that requires payment of transfer tax. F
3.
A gift out of love to a former girlfriend is an onerous transfer. F
Cancellation of exiting debt as payment for services rendered by the debtor to the creditor is a gratuitous transfer. F 4.
The right to succession is effected at the time of transfer of the decedent’s property or rights to the heir. F In case of doubt, testamentary succession is preferred to legal or intestate succession. T
5.
The share of the surviving spouse is an exclusive property of the wife and shall be part of the decedent’s distributable estate. F Intestate succession is a legal succession because it takes effect through the validity of the decedent’s last will and testament. F
6.
Notes or claims held by the decedent should not be included in the gross estate if cancelled by the decedent’s will. F Interest collected in advance before the decedent’s death, which occurred after the Page 12 of 25
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decedent’s death shall be included in the gross estate. F 7.
Donated properties subject to condition upon the wishes of the decedent donor shall not be included as part of the gross estate. F There is transfer in contemplation of death when the sale involves an adequate and full consideration. F
8.
There is a revocable transfer when a transferor of a corporate stock in trust for his children reserves the right to vote the shares during his lifetime to aid his children to gradually assume financial responsibilities. F When the designation of the beneficiary is not stated or is not clear, the Insurance Code assumes irrevocable designation. F
9.
Under the absolute community of property regime, property acquired through exclusive property of the husband or wife is an exclusive property even acquired during the marriage. T Exclusive property does not become community property just because it is used as family home. T
10.
The property acquired through donation during marriage shall remain exclusive property of the decedent or surviving spouse. F Property for personal and exclusive used of either spouse including jewelry shall form part of the community property. F
11.
Obligations contacted by a person during his lifetime terminate upon his death. Where a decedent owns less than all of the property covered by a mortgage, only a proportionate amount is deductible. F
12.
Estate tax is deductible from the gross estate. In computing vanishing deduction, the value to be taken is the lesser amount of the value of the property at the date of transfer or the value of the property at the date of death of the decedent. T
13.
The amount of estate taxes paid to foreign country could be claimed as credit against estate tax in the Philippines, if such taxes paid to foreign countries pertain to properties which are included in the gross estate fir Philippine estate tax purpose. T Where the decedent is nonresident alien, unidentifiable deductions shall be allocated proportionately with the gross estate located within the Philippines and the gross estate located outside the Philippines. F
14.
Failure of the BIR Commissioner to serve a copy of the estate tax claim to the executor or administrator is a valid ground to deny the claim. T The Register of Deeds shall not register any deed or instrument covering the decedent’s estate or any portion thereof until the taxes are shown to have been paid. T
15.
Estate tax is imposed upon the a. Decedent b. Property or rights transferred
c. Right to transfer properties d. Privilege to receive inheritance
16.
Which of the following is regarded as an intestate succession? a. The will is designating the State as beneficiary of the free portion. b. The will was subsequently rendered void by circumstances. c. The will designate a part of free portion to a stranger. d. The will disposed the legitime to its rightful heir.
17.
Which of the following is subject to transfer tax? a. Sale of personal property for a price lower than cost. b. Exchange of a piece of jewelry for a set of furniture. Page 13 of 25
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c. Transfer of personal goods for free. d. Transfer of real property for services rendered. 18.
Which of the following item is considered situated outside the Philippines? a. Franchise in the name of the decedent which is exercised in the Philippines b. Share of stock holdings of decedent in a foreign corporation whose business is 90 % done in the Philippines c. Bond certificate issued by a domestic corporation owned by a non-resident decedent d. Foreign currency deposited in bank outside the Philippines
19.
Which of the following is not to be included in the gross estate of citizen decedent? a. Dividend income declared, but not yet actually received at date of death b. Share in partnership’s profit earned immediately after date of death c. Rent income accrued before death but collected after death d. None of the above
20.
Which of the following is considered as transfer under general power of appointment? a. Power to use property though a will exercisable in favor of the estate b. Power to appropriate property expressly not exercisable by decedent’s creditors c. Power to use property for the comport of person/s other than the decedent of his estate d. Power designating the estate’s creditor as beneficiary
21.
Which of the following proceeds of life insurance of the decedent is not to be included in the gross estate? a. The estate as beneficiary b. The executor as beneficiary c. The estate as the irrevocable beneficiary d. The spouse as the irrevocable beneficiary
22.
Which of the following proceeds of life insurance of the decedent is to be included in the gross estate? a. The estate as irrevocable beneficiary b. The spouse as the irrevocable beneficiary c. The parent as the irrevocable beneficiary d. Irrevocable beneficiary other than the estate or executor
23.
Mr. Papa Tayin makes a transfer of property in trust, income payable to himself for 10 years, thereafter to Miss Nama Tayan or his estate. Mr. Papa Tayin dies after 2 years. a. Both transfers are to be included in the gross estate b. Both transfer are not to be included in the gross estate c. Only transfer No.1 is to be included in the gross estate d. Only transfer No.2 is to be included in the gross estate
24.
Statement No.1: For estate tax computation, real estate shall be valued at fair market value at the date of death of the decedent. Statement No.2: If zonal value is available at date of death, and this is higher than the fair market value per assessor’s listings of values, then the amount to be reported in the gross estate is the zonal value. a. Only statement number 1 is correct. b. Both statements are correct.
c. Both statements are incorrect. d. Only statement number 2 is correct.
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Naty Ghok died in 1993 leaving a will which directed all real estates owned by him not to be disposed or sold for a period of 12 years after his death, and ordered that the property be given to Nau Lila after 12 years. In 1993, the estate left by Naty Ghok had fair market value of P500,000. In 2005 the fair market value of the said estate increased to P4,500,00 and the BIR Commissioner assessed value thereon is P4,000,000 in 2005. What would be the correct amount of the gross estate? a. P 500,000 b. P 4,000,000 c. P 4,500,000 d. P 5,000,000 Identified estate of the decedent: Real property located in the Philippines acquired 2 years ago at cost of P1,000,000. This has a zonal value of P1,500,000 and an assessed value of P800,000 at the date of death. Personal property located abroad. This has realizable value of P1,000,000 at the date of death. Claimed as deductions: Funeral expenses, P150,000 Total medical expenses of P550,000 of which 80% were incurred within one year prior to death and 20% were incurred more than one year prior to death. Assume that the decedent died a resident alien in the Philippines, the gross estate taxable in the Philippines is a. P 2,500,000
27.
b. P 2,000,000
c. P 1,800,000
d. P 1,500,000
Based on the data above, assume that the decedent was a non-resident alien at date of death, the gross taxable estate under Philippine Tax Code is a. P 800,000 b. P 1,000,000 c. P 1,500,000 d. P 2,500,000
Questions 28 through 33 are based on the following information regarding the inheritance due to death of a married individual, Filipino and a resident of Lucena City, Philippines:
Residential house and lot in Lucena, acquired at P1,000,000 with zonal value of P3,000,000 at the date of death. Jewelry found on the body of the decedent at the date of death, with fair market value of P500,000. This asset is determined as exclusive property of the decedent. Real property in Mindanao, Philippines, bought 10 years ago, assessed at that time for P1,000,000. An interested buyer would like to buy his property a week before his death at P5,000,000. Investment in bonds, local and foreign, P600,000. Shares of stock of various domestic corporations, listed in the local stock exchange at date of death at aggregate of value of P400,000. Real property located in Ilocos, inherited from his father 3 years ago. This was taxed a P2,500,000 when transferred from his father to his name. At that time, he assumed the unpaid mortgage of P500,000. This has 20% assessment level at declared fair market value of P2,600,000. The BIR zonal valuation stated a fair market value of P2,800,000 at date of death. Income from farm earned before the date of death, P800,000 ( net of related income tax.) Commercial lot inherited by wife during marriage. This was valued at P6,000,000 when inherited by wife and it has a fair market value of P10,000,000 at date of death. Rent income from the commercial lot earned before the date of death, P3,000,000 ( net of related income tax). Page 15 of 25
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Property brought to marriage by his wife, P6,000,000.
Deduction claimed by the executor: Actual funeral expenses
P 180,000
Judicial expenses
900,000
Medical expenses
1,500,000
Unpaid mortgage on property in Ilocos Various claims of creditors
200,000 8,000,000
Claims against insolvent person
800,000
Using the above problem above, under the regime of conjugal partnership of gains.
28.
The gross exclusive estate a. P3,300,000b. P2,800,000c. P4,100,000d. P3,600,000
29.
The gross conjugal estate a. P12,800,000 b. P13,600,000
c. P14,100,000
d. P13,300,000
The total gross estate a. P16,100,000 b. P26,900,000
c. P16,900,000
d. P16,700,000
30.
Using the above problem above, under the regime of absolute community of property, compute for the following: 31.
The gross exclusive estate a. P3,300,000b. P2,800,000c. P4,100,000d. P3,600,000
32.
The gross conjugal estate a. P10,600,000 b. P13,600,000
c. P15,800,000
d. P16,600,000
The total gross estate a. P16,100,000 b. P26,900,000
c. P19,900,000
d. P16,700,000
33. 34.
Which of the following is deductible from the exclusive portion of the gross estate? a. Vanishing deduction pertaining to property inherited by the decedent prior to marriage under conjugal property ownership. b. Transfer for public use pertaining to joint donation of husband and wife to the government. c. Bad debts for uncollectible claims against insolvent person. d. Family home pertaining to house and lot acquired during marriage.
35.
Which of the following is deduction from the conjugal portion of the gross estate? a. Paid mortgage pertaining to property acquired as inheritance before marriage under absolute community property ownership. b. Losses incurred during administration of the estate on property included in the gross estate. c. Claims against the exclusive portion of the estate. d. Transfer for public use.
36.
Which of the following unpaid taxes is not deductible from the gross estate? a. Property taxes accrued prior to decedent’s date. b. Income taxes on income earned and received after decedent’s death. c. Gift taxes on life time gifts which remain unpaid at date of death. d. Capital gain tax on transfers before death and paid after date of death.
37.
Which is deductible from the gross estate of resident decedent? Page 16 of 25
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Loss of portion of the estate incurred during settlement, arising from theft. Loss of portion of the estate incurred 200 days before the date of death of the decedent. Loss of portion of the estate incurred a month before the date of death of decedent. Losses on the portion of exclusive capital of surviving spouse incurred during settlement of the estate.
What is the correct amount of allowable medical expenses for the following: Date Incurred
Hospital Bills
October 2005 to December 2005
P 100,000
March 2005 to May 2005
450,000
November 2004 to December 2004
150,000
Date of Death, September 30, 2006 a. P 500,000 39.
b. P 450,000
c. P 100,000
d. P 700,000
Mr. Nakalimot Hoo Minga, Filipino, resident of Rea Quezon died on December 2005. He is survived by his wife and three (3) children. An inventory of his estate as of December 31, 2005, shows the following: Real Estate: Commercial land, 400 sq. meters w/ fair market value of
P 400,000
Residential land, 500 sq. meters w/ fair market value of
250,000
Residential house, with fair market value of
300,000
Farm land, 2 hectares with fair market value of
80,000
Personal Property: Appliances, w/ fair market value of
160,000
Time Deposit with the Metro bank
90,000
Other Personal Properties
30,000
The commercial land is the exclusive property of the decedent and is pledge as collateral to a mortgage loan form the Metro bank obtained on April, 2005 with the total amount of P200,000 at 18% interest per annum. The loan and accrued interest are not paid at the date of death of the decedent. The rest of the estate is conjugal. The residential land and residential house are mortgaged at the Equitable PCI Bank for P300,000. The unpaid balance of the mortgage loan on December 31, 2005 per certificate of the bank is P220,000. The actual funeral expense is P55,000 and the judicial expenses is P15,000. Compute the total ordinary deductions from the entire gross estate. a. P517,000
b. PP1,517,000
c. P490,000
d. P500,500
Questions 40 through 41 are based on the following are the inventory of the estate of Mr. Pumayapa who died on September 11, 2005. Properties: Jewelries
P 1,600,000
Old Vehicle
800,000
Shares of stock, domestic corporation
250,000
Real estate inherited August 9, 2000. This was previously Page 17 of 25
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taxed at P250,000. It was inherited from his uncle and the decedent assumed unpaid mortgaged of P70,000, of w/c P50,000 was paid by the present decedent before his death.
300,000
Collectibles, excluding P50,000 claims against insolvent person and P100,000 cancelled in a written will
350,000
Peso bank deposit
150,000
Investment in bonds
100,000
Amount received by heir under R.A 4917
300,000
Expenses:
40.
Funeral Expenses
190,000
Judicial Expenses
120,000
Loans payable, duly notarized
50,000
Stolen Jewelry, part of the gross estate
10,000
Medical Expenses
250,000
Legacy to the City of Manila
100,000
The following Vanishing deduction a. P34,700 b. P34,600
c. P34,390
d. P35,000
41.
Using the above data, the total deductions from the gross estate a. P2,124,600b. P1,124,000c. P2,124,700d. P2,125,000
42.
Which of the following may reduce the taxable estate but not the inheritance? a. Funeral Expenses c. Judicial Expenses b. Losses d. Family Home
43.
Which of the following is a decrease in inheritance? a. Vanishing deduction c. Family home b. Claims against insolvent person d. Standard deduction
44.
Which of the following is allowed with tax credit for estate tax paid to foreign country? a. Resident Alien, whose gross estate reported as taxable in the Philippines, included only those located in the Philippines. b. Gross estate of an alien who was resident of his country at date of death. c. Gross estate of an American residing in the Philippines at the date of death whose properties are located within and without. d. All of the Above
Questions 45 through 47 are based on the following information: Mr. Juan Todas, Filipino, married and resident of Pasay City died intestate on February 24, 2005. He was survived by his wife, Rosa and three (3) children. His estate consist of the following: Fair Market Value Page 18 of 25
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January 15, 2000
February 24, 2005
P 500,000
P 1,000,000
800,000
1,200,000
Exclusive real property inherited from his father who died on January 15, 2000: Land, residential, 800 sq.meters Land, agricultural, 10 hectares Conjugal Real Property: Land, residential, 1,500 sq.mtrs.
1,800,000
Building, residential, 300 sq. mtrs.
900,000
Land, fishponds, 4 hectares
600,000
Conjugal Personal Property: Motor Vehicles
650,000
Miscellaneous
250,000
The exclusive real property, residential land, 800 sq. m. was mortgaged at the Bank of Philippine Islands. On February 23, 1998 to guaranty an eighteen percent (18%) per annum mortgage loan of P100,000. At the date of death, the loan and interest are not paid. The conjugal real property, residential land and residential building are also mortgaged at the Metro bank, and the unpaid balance of the loan on February 24, 2005 was P80,000. The actual funeral expenses amounted to P320,500 and judicial expenses were P24,000. The net taxable estate a. P3,422,000
b. P2,922,000c. P3,172,000d. P2,172,000
46. Using the above problem, the estate tax a. P291,420 b. P236,420
c. P326,240
d. P192,240
47. Using the above problem, the net distributable share a. P3,422,000b. P2,922,000c. P3,861,750d. P2,172,000 48.
Mrs. Kina Pos Sahangin, a Filipino, died November 1, 2005 survived by her husband. At the date of death, she has P2,000,000 cash in bank and 100,000 shares holding of Pure Joke Corporation with a sales value of P100 per share at the date of death. On January 15, she made a gift of P3,000,000 (real property) to her husband. She is insured for P1,000,000 designating her estate as beneficiary. The premium was paid from her exclusive property. The last will and testament of Mrs. Kina Pos Sahangin reveals that her shares of stock in Pure Joke Corporation shall be contributed to the local government of Tagaytay City for the maintenance of public park, and the balance shall be given to her husband. Mrs.Kina Pos Sahangin’s executor field and paid the follow tax returns: Donor’s tax for gift to her husband Estate Tax
P 204,000 34,840
The transfer tax still due for the estate tax of Mrs. Kina Pos Sahangin. a. P116,160
b. P160,160
c. P356,160
d. P560,160
***************************************************************************************************************** Value Added Tax ***************************************************************************************************************** 1. One of the following is not a major business internal revenue tax in the Tax Code. Page 19 of 25
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2. The value added tax due on the sale of the taxable goods, property and services by any person whether or not he has taken the necessary steps to be registered. a. Input tax c. Excise tax b. Output tax d. Sales tax 3. First statement: Nonstock and nonprofit private organizations which sell exclusively to their members in the regular conduct or pursuit of commercial or economic activity are exempt from value-added tax. Second statement: Government entities engaged in commercial or economic activity are generally exempt from value-added tax. a. Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only the second statement is correct. 4. Gross selling price includes all of the following except one. Which one? a. Total amount which the purchase pays to the seller. b. Total amount which the purchase is obligated to pay to the seller. c. Excise tax. d. Value-added tax. 5. First statement: If the tax is not billed separately in the inventory, the VAT shall be determined by multiplying the gross selling price including the amount intended to cover the tax by the factor 12/112. Second statement: If the tax is billed erroneously, the VAT shall be determined by multiplying the gross selling price including the tax billed separately by the factor 12/112. a. Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only the second statement is correct. 6. The tax base value added tax on the installment sale of real property is: a. The higher between the selling price stated in the sales document or zonal value or market value. b. Selling price stated in the sales document. c. Installment received plus interest and other charges. d. Gross receipts. 7. The following are zero-rated if paid for in acceptable foreign currency or its equivalent and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas except one. a. Sale and actual shipment of goods from the Philippines to a foreign country. b. Sale of raw materials or packaging materials to a nonresident buyer for delivery to a resident local export-oriented enterprise. c. Sale to a non resident of goods assembled or manufactured in the Philippines for delivery to a resident in the Philippines. d. Sale of real property to a nonresident person for delivery to a resident in the Philippines. 8. One of the following is not an export sale. a. Sale to bonded manufacturing warehouses of export-oriented manufacturers and to export processing zones. b. Sale to foreign military bases, diplomatic missions or agencies and/or instrumentalities granted tax immunities, of locally manufactured, assembled or repacked products whether paid for in foreign currency or not. c. Sale of gold to Bangko Sentral ng Pilipinas. d. Exportations of goods on consignment. 9. One of the following is not a transaction deemed sale: a. Transfer, use or consumption not in the course of business of goods or properties originally intended for sale or for use in the course of business. b. Distribution or transfer to shareholders or investors of goods or properties as share in the profits of a VAT-registered person or creditors in payment of debt.
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c. Retirement from or cessation from business, with respect to all goods on hand as of the date of such retirement or cessation. d. Consignment of goods if actual sale is made within 60 days following the date such goods were consigned. 10. Tax credit for input taxes shall be allowed if: a. Both the seller and the purchaser are VAT-registered. b. Either one of the seller or the purchaser is VAT-registered. c. Neither one of the seller or the purchaser is VAT-registered as long as VAT invoice is issued. d. The seller is VAT-registered regardless of whether the purchaser is VAT-registered or not. 11. The allowable transitional input tax is: a. The lower between 2% of the value of beginning inventory or actual VAT paid on such inventory. b. The higher between 2% of the value of beginning inventory or actual VAT paid on such inventory. c. The actual VAT paid on the beginning inventory. d. 2% of the value of beginning inventory. 12. Which of the following input taxes can be refunded, converted into tax credit certificates or carried over to the next quarter at the option of the VAT-registered taxpayer? a. Input tax on purchase of raw materials. b. Input tax on importation of supplies. c. Input tax on zero-rated sales of goods or services. d. Input tax on purchase of services. 13. First statement: Unused input tax of persons whose registration had been cancelled may be converted into tax credit certificate which may be used in payment of other NIRC taxes. Second statement: Refund or tax credit certificate shall be granted within 25 days from the date of submission of complete documents. a. Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only the second statement is correct. 14. Monthly VAT declaration is filed on or before the: a. 15th day from the end of each month. b. 20th day from the end of each month. c. 25th day from the end of each month. d. 30th days from the end of each month. 15. First statement: VAT taxpayers except corporations use calendar quarters for VAT purposes. Second statement: Withholding of VAT is done when the buyer is the Government or any of its political subdivisions. a. Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only the second statement is correct. 16. Withholding of VAT is not applicable when payment is: a. P1,000 and above. c. P8,000 and above. b. P1,000 and below. d. P15,000 and above. 17. Value added tax is a/an: a. Indirect tax b. Direct tax.
c. Local tax d. Personal tax
18. The Silvilocks Pastry sells cakes and pastry items to well-known hotels around the Metro Manila area. The hotels are allowed credit based on the track record of the hotels. The total amounts received or receivable from sales by Silvilocks in April 2007 were P224,000, including the value-added tax. 75% of the sales are normally on account. Page 21 of 25
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How much is the output tax for the month of April 2007? a. P22,000 b. P24,000 c. P16,500 d. P15,000 19. J. Cruz, a trader, made the following sales of goods during the month of July 2007, exclusive of VAT: Cash sales P 200,000 Open account sales 100,000 Installment sales 100,000 Note: Receipt from installment sales is P 40,000 Consignment sales Apr. 15, 2007 100,000 Feb. 15, 2007 100,000 Output tax is: a. P48,000 b. P55,200 c. P72,000 d. P60,000 20. J. Santos, VAT-registered, made the following purchases during the month of January, 2007: Goods for sale, inclusive of VAT P 246,400 Supplies, exclusive of VAT 20,000 Office airconditioners, total invoice amount 56,000 Home appliances for residence, gross of VAT 17,920 Repair of store, contractor not VAT-registered, total invoice amount 33,600 Repainting of store, total invoice amount evidenced by ordinary receipt of contractor 4,480 Mr. Santos intends to refund the VAT on office airconditioners. Creditable input taxes are: a. P34,800 b. P28,800 c. P35,280 d. P34,670 21. A taxpayer registered under the VAT system on January 1, 2007. His records during the month show: Value of inventory as of December 31, 2006 Purchased from VAT-registered persons P 50,000 VAT paid on inventory as of December 31, 2006 6,000 Value of inventory as of December 31, 2006 purchased from non-VAT persons 60,000 Sales, net of VAT 140,000 Sales, gross of VAT 44,800 Purchases, net of VAT 70,000 VAT payable is: a. P13,200 b. P7,200 c. P11,000 d. P15,600 22. The following are the data of City Appliances Marketing Co. for the last quarter of 2007: Sales up to December 15, total invoice value P 319,200 Purchases up to December 15, net of input taxes 215,000 Additional information: On December 16, 2007, the City Appliances Marketing Co. retired from its business and the inventory valued at P190,000 was taken and transferred to New City Appliances Co. There is a deferred input tax from the third quarter of P3,500. How much is the total value-added taxes due and payable by City Appliances Marketing Co. in its operations in the last quarter and its retirement from business? a. P27,700 b. P4,900 c. P31,200 d. P8,400 23. Continuing no. 22, assuming that the New City Appliances Co. has the following data for the first quarter of 2008. Sales, total invoice value Purchases, total invoice value
P 336,000 22,400
How much is the VAT payable of the New City Appliances Co. for the first quarter of 2008? a. P33,600 b. P10,800 c. P13,200 d. P36,000 Page 22 of 25
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24. Violet Corp. is a VAT-registered dealer of appliances. The following data are for the last quarter of 2007: Sales, total invoice value P 6,920,000 Purchases, net of input taxes 5,500,000 Sales return 200,000 Purchases return 300,000 Deferred input taxes (carried over from the third quarter of 2007) 9,500 The value added tax payable for the last quarter of 2007 by Violet Corp. is: a. P107,929 b. P86,500 c. P96,000 d. P81,429 25. During a quarter, Popocute Corp. made sales of goods amounting to P1,000,000 plus output tax of P120,000 for a total of P1,120,000. It also made sales of services amounting to P200,000 plus output tax of P24,000 for a total of P224,000. During the same quarter, it made domestic purchases of P1,000,000 for goods for sale plus input tax of P120,000. It also hired the services of an independent contractor to repair the building used for both lines of activities for which it paid the amount of P150,000 plus P18,000 input VAT. Its input tax carried over from the previous quarter is P215,000, for which P200,000 is a carry over input tax for a previous purchase of capital goods. Popocute received a credit memorandum for purchases returned during the quarter covering purchases made in the previous quarter amounting to P336,000, P36,000 of which is the adjustment to input tax. It also filed a claim for refund of P200,000 input tax on capital goods. How much is Popocute’s net creditable input tax? a. P317,000 b. P117,000 c. P153,000
d. (P83,000)
26. In question no. 25, how much is the VAT payable or excess tax credit? a. P173,000 b. P3,000 c. P27,000 d. (P117,000) 27. Assuming the same facts in question no. 25, except that the company has not filed a claim for refund during the period for input tax on previous purchases of capital goods, how much is Popocute’s net creditable input tax? a. P173,000 b. P100,800 c. P43,200 d. P317,000 28. Continuing no. 27, how much is the VAT payable or excess tax credit as the case may be? a. P43,200 b. P17,300 c. P27,000 d. P1,170 29. Jolas Realty Corp. in the course of the trade sells real property. During the month of January 2007 had the following data per sales document (VAT included): Cash sales P 560,000 Sale on deferred payment basis (initial payments exceed 25% of the selling price) 336000 The real property sold for cash had a zonal value of P600,000 (excluding VAT) and the property sold under deferred payment basis had a fair market value of P200,000 (excluding VAT) How much is the output VAT on the sale of real property? a. P9600 b. P84000 c. P108,000
d. P50,000
30. Jawo Realty Corp. sells real property in the course of its business. During the month of April 2007, it had sold a lot under the following terms (including VAT): Total contract price P 1,120,000 Downpayment, 4-10-07 112,000 First installment, 6-30-07 112,000 Second installment, 1-01-08 56,000 The output VAT in April 2008 is: a. P12,000 b. P24,000
c. P30,000
d.
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31. A VAT-registered person is engaged in the sale of VAT taxable goods and at the same time is also engaged in non-VAT business, in the same business establishment. During the quarter made sales of goods in the amount of P300,000 plus a value-added tax of P36,000. The sales of the non-VAT business amounted to P200,000 with a separate percentage tax of P6,000 for a total of P206,000. During the same quarter, repairs on the building amounted to P50,000 plus value-added tax of P6,000. Supplies purchased for common use amounted to P10,000 plus P1,200 value-added tax. The creditable input tax is: a. P28,800 b. P4,463 32. Using the data in no. 31, the VAT payable is: a. P28,800 b. P31,537
c.
P7,200
d.
P4,320
c.
P30,000
d.
P31,680
33. Sweetie Pie Refining Company manufactures refined sugar. It had the following data during the first quarter of 2007: Sale of refined sugar, net of VAT P 2,000,000 Purchase of sugar cane from farmers used in the manufacture of refined sugar 500,000 Purchase of packaging materials, gross of VAT 784,000 Purchase of labels, gross of VAT 112,000 The VAT payable is: a. P144,000 b. P124,000 c. P84,000 d. P136,500 34. A VAT-registered supplier sold goods amounting to P500,000 to a government-controlled corporation during a particular quarter. Which of the following statements is incorrect in relation to the sale of goods? a. The sale is subject to creditable withholding VAT. b. The government-controlled corporation will withhold P15,000 withholding VAT c. The government-controlled corporation shall remit the withholding VAT to the BIR within 10 days following the end of the month the withholding was made. d. The VAT-registered supplier may refuse the withholding of VAT as long as it is willing to pay the full 12% VAT. 35. On January 5, 2007, Laylu Co., VAT-registered, sold on account goods for P112,000 to Vinmar Corp. The term was: 2/10, n/30. Payment made on January 10, 2007. The total amount due is: a. P112,000 b. P109,760 c. P111,760 d. P100,000 36. A VAT-registered person has the following data: Export sales, total invoice amount P 3,000,000 Domestic sales, total invoice amount 6,720,000 Purchase of raw materials, used to manufacture goods for export and domestic sales, VAT inclusive 560,000 Supplies used for both export and domestic sales, VAT inclusive 448,000 Purchase of equipment used in the manufacture of goods for export and domestic sales, VAT exclusive 300,000 The amount of input tax which can be refunded or converted into tax credit certificates at the option of the VAT-registered person is: a. P144,000 b. P60,000 c. P36,000 d. P48,000 37. Agua Pataranta is a manufacturer of beer. During a particular quarter, it had the following transactions (net of VAT): January 4, 2007 : Consigned beer to a retailer in Quezon City amounting to P200,000. February 14, 2007 : Exported P1,000,000 worth of beer to Japan. February 27, 2007 : President of Agua Pataranta celebrated his birthday, consuming P50,000 worth of beer given to him by the company as a birthday gift. March 20, 2007 : Declared property dividend of one case of beer for every 10 shares, amounting to P150,000. Page 24 of 25
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Additional information: From January to March, domestic sales to wholesalers amounted to P600,00. No beer was returned by the consignee until the end of the quarter. The output tax for the quarter is: a. P24,000 b. P96,000
c. P240,000
d. P120,000
38. First statement: A taxpayer whose gross sales or receipts exceeded the threshold amount of P1,500,000 shall pay VAT even if he is not VAT-registered. He is entitled to input taxes. Second statement: Importers of goods for personal use is subject to value-added tax even if he is not VAT-registered. a. Both statements are correct. b. Both statements are incorrect. c. Only the first statement is correct. d. Only the second statement is correct. 39. One of the following statements is incorrect. a. Imported goods which are subject to excise tax are no longer subject to value-added tax. b. VAT on importation is paid to the Bureau of Customs before the imported goods are released from its custody. c. Expenses incurred after the goods are released from Customs custody are disregarded in computing VAT on importation. d. When a person who enjoys tax-exemption on his importation subsequently sells in the Philippines such imported articles to non-exempt person, the purchaser-non-exempt person shall pay the VAT on such importation.
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