UCP :TAXATION_FIRST PRE-BOARD EXAMINATION

Batch October 2019

UNIVERSAL COLLEGES OF PARAŇAQUE INC.

8273 Dr. A. Santos Ave., Parañaque City
Tel. Numbers: 02-820-2222/02-820-4276

TAXATION
FIRST PREBOARD EXAMINATION
February 14, 2019 (1:00 PM – 4:00 PM)
TAXATION

1. Assuming Senator Bobadilla filed in the Senate a substitute e-vat bill "in
anticipation" of its receipt of the bill from the House. The proposal is totally
different from the version of the lower house. Which of the following statements will
justify the filing of a substitute bill by Honorable Senator Bobadilla?
I. I.To insist that a revenue statute not only the bill which initiated the legislative
process culminating in the enactment of the law - must substantially be the same as
the House bill would be to deny the Senate's power not only to "concur with
amendments" but also to "propose amendment."
II. Il. It would be to violate the coequality of legislative power of the two houses of
Congress and in fact make the House superior to the Senate. Given the power of the
Senate to propose amendments, it can propose its own version even with respect to
bills which are required by the Constitution to originate in the House.
III. Filing in the Senate of a substitute bill in anticipation of its receipt of the bill
from the House is not prohibited under the Constitution, so long as the action by
the Senate as a body is withheld pending receipt of the House bill.
a. I only c. I, II and III
b. II only d. None of the above

2. Which of the following is not an example of excise tax:

a. Transfer tax;
b. Sales tax;
c. Real property tax;
d. Income tax.

3. Which statement gives the correct answer? That a feasibility study needs or need not
look into the taxes of different political subdivisions of government which may be
alternative sites of the business is because:
a. Provinces, cities and municipalities must have uniform taxes between and among
themselves;
b. The local taxes of one political subdivision need not be uniform with the local
taxes of another political subdivision;
c. Businesses that are subject to national business taxes are exempt from local
business taxes;
d. Local business taxes may be credited against national business taxes.

4. A fundamental rule in taxation is that the property of one country may not be taxed
by another country. This is known as:
a. International law;
b. International comity;
c. Reciprocity;
d. International inhibition.

5. Under this basic principle of a sound tax system, the Government should not incur a
deficit:
a. Theoretical justice;
b. Administrative feasibility;
c. Fiscal adequacy;
d. None of the above.
6. The power of taxation is inherent in sovereignty being essential to the existence of
every government. Hence, even if not mentioned in the Constitution the state can still
exercise the power.

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It is essentially a legislative function. Even in the absence of any constitutional
provision, taxation power falls to Congress as part of the general power of law-
making.
a. False; False
b. False; True
c. True; True
d. True; False

7. Which of the following is not a scheme of shifting the incidence of taxation?

a. The manufacturer transfer the tax to the consumer by adding the tax to the selling
price of the goods sold;
b. The tax forms part of the purchase price;
c. Changing the terms of the sale like FOB shipping point in the Philippines to FOB
destination abroad, so that the title passes abroad instead of in the Philippines.
d. The manufacturer transfer the sales tax to the distributor, then in turn to the
wholesaler, in turn to the retailer and finally to the consumer.

8. Where does taxing power of the provinces, municipalities and cities precede from?
a. Constitutional grant
b. Legislative enactment
c. Presidential or Executive act
d. Local legislation

9. The Local Government Code took effect on January 1, 1992. PLDT's legislative franchise
was granted sometime before 1992. Its franchise provides that PLDT will only pay 3%
franchise tax in lieu of all taxes. The legislative franchises of Smart and Globe
Telecoms were granted in 1998. Their legislative franchise state that they will pay
only 5% franchise tax in lieu of all taxes. The Province of Zamboanga del Norte passed
an ordinance in 1997 that imposes a local franchise tax on all telecommunication
companies operating within the province. The tax is 50% of 1% of the gross annual
receipts of the preceding calendar year based on the incoming receipts, or receipts
realized, within its territorial jurisdiction.
Is the ordinance valid?
a. No, the ordinance in effect resulted into double taxation.
b. No, the Local Government Code prevails over ordinances.
c. Yes, the local government units are empowered by the Constitution to raise its own
revenues.
d. Yes, autonomy of Zamboanga del Norte.

10. XYZ Corporation, an export oriented company, was able to secure a Bureau of Internal
Revenue (BIR) ruling in June 2005 that exempts from tax the importation of some of
its raw materials. The ruling is of first impression, which means the interpretations
made by the Commissioner of Internal Revenue is one without established precedents.
Subsequently, however, the BIR issued another ruling which in effect would subject to
tax such kind of importation.
XYZ Corporation is concerned that said ruling may have a retroactive effect which
means that all their importations done before the issuance of the second ruling could
be subject to tax. May the BIR rulings be given retroactive effect?
a. No, BIR rulings are prospective in nature.
b. No, BIR rulings are not retroactive if they are prejudicial to the taxpayer.
c. Yes, tax exemptions should be interpreted strictly against the taxpayer.
d. Yes, tax must favor the government's power to collect its revenues.

11. 1st Statement: In every case of doubt, tax statutes are construed strictly against
the Government and liberally in favor of the taxpayer.
2nd Statement: Where the intent to tax is clear and the taxpayer claims that he is
exempt from the tax obligation, the tax shall be construed against the taxpayer and
in favor of the Government because the power of taxation is necessary to the existence
of such Government
a. True; False
b. True; True
c. False, True
d. False, False

12. Which of the following statements is wrong? A revenue bill

a. Maybe recommended by the President to Congress
b. May have a House version and a Senate version approved separately and then
consolidated with both houses approving the consolidated version.

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c. May originate from the Senate and on which same bill the House of Representatives
may propose amendments.
d. Must originate from the House of Representatives and on which same bill the Senate
may propose amendments.

13. Which statement refers to police power as distinguished from taxation?

a. It is an inherent power of the state.
b. The benefit derived is the protection given by die state.
c. It involves the taking of property.
d. The amount collected is limited to die cost of regulation.

14. The following reasons maybe given by a taxpayer in refusing to pay his tax liability.
Which is not acceptable for legally refusing to pay the tax
a. That he has been deprived of due process of law
b. That there is lack territorial jurisdiction
c. That the prescription period for the collection of tax has lapsed
d. That he will derived no benefit from the tax.

15. “Schedular system of income taxation” means

a. All types of income are added together to arrive at gross income.
b. Separate graduated rates are imposed on different types of income.
c. Capita; gains are excluded in determining gross income.
d. Compensation income and business/professional income are added together in arriving
at gross income.

16. Rudolfo, a citizen of the Philippines and resident of Bacolod City, died testate on
May 10, 2015. Among his gross estate ars properties inherited from his deceased father
who died on April 4, 2012. What percentage of deduction will be used in computing the
amount of vanishing deduction?
a. 80% of the value taken as basis for vanishing deduction;
b. 100% of the value taken as basis for vanishing deduction;
c. 60% of the value taken as basis for vanishing deduction;
d. 40% of the value taken as basis for vanishing deduction.

17. The widow of Mrs. A received P500,000 under a life insurance of her husband. Should
the proceeds of life insurance be included in the gross estate? Which statement is
wrong?
a. Yes, if the estate, executor or administrator of Mr. A was designated as revocable
beneficiary;
b. Yes, if the estate was designated as irrevocable beneficiary;
c. Yes, if Mrs. A was designated as revocable beneficiary
d. Yes, if it was Mrs. A who insured Mr. A, and her designation as beneficiary was
irrevocable.

18. Statement 1. For a vanishing deduction, there should always be two deaths within five
years from receipt of property.
Statement 2. For two acquisitions by lucrative title at different dates, but both
within five years from present death, there may be one consolidated computation
only for the vanishing deduction.
a. True, true
b. False, false
c. True, false;
d. False, true
19. Date of death was March 5, 2013. Data at the time of death:
Real property in Manila inherited from the father two and one-
half (2 1/2) years ago and before the marriage, with a fair
market value at that time of P2,000,000 P1,500,000
Real property in Quezon City acquired during the marriage 4,000,000
Cash remaining of P500,000 proceeds from a sale of per-
sonal property ( Property was received within the year as
gift with a value of P200,000, with an unpaid purchase
price of P100,000 assumed by the decedent. The unpaid
price was paid out of the proceeds of the sale) 400,000
Cash from the earnings of the wife 600,000
Personal properties acquired thru own labor 400,000
Clothes of the surviving spouse, purchased with income
during marriage 600,000
Mortgage payable on the real property in Manila, from a

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mortgage on the property of P800.000 when inherited 500,000
Funeral expenses (paid of P160,000 and unpaid of P140,000) 300,000
Medical expenses on last illness two weeks before death:
(paid of P180,000 and unpaid of P300,000) 480,000
Medical expenses, unpaid, on illness on January 6, 2012 600,000
Other obligations 497,000
Claim against insolvent 100,000
Payments to the lawyer assisting in the settlement of the estate:
Acceptance fee, April 5, 2013 100,000
Appearance in court, June 16, 2013 3,000
Appearance in court, October 15, 2013 3,000
Appearance in court, December 2, 2013 3,000
If under the absolute community of property, the net taxable estate is:
a. P4,944,000;
b. P1,152,000;
c. P3,464,000;
d. P3,944,000.

20. The income of donated properties before marriage are

a. Exclusive properties under conjugal partnership
b. Exclusive under absolute community of property
c. Common properties under conjugal partnership of gains
d. Exclusive properties under conjugal partnership and common properties under
conjugal partnership of gains

21. Which is a capital property under the absolute community of property?

a. Properties before marriage of the wife with a descendant in a prior marriage
b. Fruits of separate property of the wife
c. Properties for exclusive personal use of the husband
d. Compensation income of the husband

22. Liwayway died leaving the following properties:

a.House and lot in the Philippines (mortgaged for P300,000) 1,250,000
b.Condominium unit in Hongkong 1,000,000
c.Car in Philippines 70,000
d.Car in Hongkong 60,000
e.Franchise exercised in the Philippines 300,000
f.Franchise exercised in New York, USA 25,000
g.Domestic shares, certificate kept in New York, USA 55,000
h.Foreign shares, 90% of business in the Philippines 60,000
i.Foreign shares, 30% of business in the Philippines,
with business situs in the Philippines. 15,000
j.Foreign shares, 60% of business in the Philippines 75,000

The gross estate if the decedent was a non-resident alien (no reciprocity)
a. 2,910,000
b. 1,750,000
c. 1,825,000
d. 1,320,000

Juan, married to Juana, died. The following properties were left upon his death:
a. Durian plantation in Davao, brought into marriage by H. - 3,000,000
b. Income of plantation in Davao earned during marriage - 250,000
c. Shares of stocks with Aga corp. earned by Juana during marriage - 420,000
d. Dividends from Aga Corp. earned during marriage - 52,000
e. Bus in Cebu, inherited by Juan during the marriage - 760,000
f. Income of passenger bus earned during the marriage - 23,000
g. Riceland in Legazpi, inherited by Juana before marriage - 460,000
h. Income of Riceland in Legazpi earned during the marriage - 50,000
i. Underwear(panties, brassiere) of Juana - 85,000
j. Cash, unidentified when and by whom acquired - 55,000
k. Jewelries inherited by Juana during marriage from her mother - 320,000

23. The exclusive properties of Juan under conjugal partnership of gains

a. 5,475,000
b. 3,815,000
c. 3,760,000
d. 4,610,000

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24. The gross estate of Juan if the spouse were under conjugal partnership of gains
a. 5,475,000
b. 4,610,000
c. 4,560,000
d. 3,975,000

25. The community property of the spouses under absolute community of property regime
a. 4,287,000
b. 5,475,000
c. 4,560,000
d. 3,975,000

26. The gross estate of Juan if the spouses were under the absolute community of property
regime
a. 5,070,000
b. 5,475,000
c. 4,287,000
d. 4,610,000

27. In determining the taxable net estate of a decedent, which of the following rules is
correct?
a. Real estate abroad is not included in the gross estate of a decedent who was a
resident alien.
b. Vanishing deduction must be subject to limitations.
c. Shares of stocks being intangible property shall be included in the decedent’s
gross estate wherever situated.
d. Funeral expenses are deductible to the extent of 5% of the total gross estate but
not exceeding P100,000.

28. 1st Statement - A died giving B power to appoint a person who will inherit A's House
and lot. B however can only choose among C, D, E and F. B decided to transfer the
property to C, in B's. The transfer from B to C is subject to Estate tax.
2nd Statement - During A's lifetime, he decided to give to B as gift his (A) car
subject to the condition that if B does not become a CPA within three years. A shall
revoke the transfer. In the second year however, A died. The car can no longer form
part of A's gross estate.
a. True, True
b. False, False
c. True, False
d. False, True

Questions 29 through 30 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
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 bond 100,000
Amount received by heir under R.A 4917 300,000
Expenses:
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
29. The following Vanishing deduction
a. P34,700 c. P34,390
b. P34,600 d. P35,000

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30. Using the above data, the total deductions from the gross estate
a. P2,124,600 c. P2,124,700
b. P1,124,000 d. P2,125,000

31. Which of the following statements is correct?

a. The gross estate of a resident citizen decedent would not include all properties,
whether real or personal and whether within or without.
b. The gross estate of an American decedent who was a resident of the Philippines
includes all properties in the Philippines only.
c. The gross estate of a Filipino decedent who was residing in Australia would include
all properties regardless of location.
d. The personal property of a non-resident alien is not included in the gross estate
in the Philippines if they are intangible.

32. In computing the gross estate of a decedent:

a. If he was a non-resident, but citizen of the Philippines, tangible and intangible
properties, regardless of location, shall be included
b. If he was a resident who was not a citizen of the Philippines, tangible and
intangible properties, regardless of location, shall be included
c. If he was a non-resident who was not a citizen of the Philippines, tangible and
intangible personal properties, located in the Philippines, shall be included.
d. All above statements are correct.

33. All of the following are considered intangible personal properties situated in the
Philippines, except:
a. Franchise which must be exercised in the Philippines;
b. Shares, obligations or bonds issued by any corporation or sociedad anonima
organized or constituted in the Philippines in accordance with it laws;
c. Shares, obligations or bonds issued by any foreign corporation doing business in
the Philippines;
d. Shares or rights in any partnership, business or industry established in the Phils.

34. Prior to the effectivity of TRAIN Law, which of the following deductions cannot be
claimed by a non-resident alien decedent?
a. Funeral expenses
b. Judicial expenses
c. Medical expenses
d. Vanishing deduction

35. The following deductions are also part of the gross estate, except:
a. Transfer for public use
b. Claims against the estate
c. Claims against insolvent persons
d. Death benefits under Republic Act. 4917

36. The decedent was a citizen of the Philippines, under the system of absolute community
of property during the marriage, with properties of P7,000,000 in the Philippines
and P4,000,000 in Foreign Country A, and all deductions, except the net share of the
surviving spouse in the community properties, from the gross estate of P2,000,000 in
the Philippines and P3,000,000 in Foreign Country A. There was a payment of P50,000
of the estate tax of foreign Country A.
Estate tax still due after tax credit?
a. P195,000.00;
b. P204,166.67;
c. P201,435.25;
d. Some other amount.

37. The decedent was a resident citizen, single at the time of death. He left the
following:
Properties inherited 2 1/2 years ago:
Value in the present estate P500,000
Fair market value when inherited 430,000
Mortgage on the property when inherited 60,000
Mortgage on the property paid by the present decedent 30,000
Properties received as gift within the year:
Value in the present estate 300,000
Value when received 320,000
Other properties 1,200,000

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Ordinary deductions, not including vanishing deduction 500,000
Net taxable estate?
a. P 95,000;
b. P500,000;
c. P320,000;
d. P275.000.

38. Mr. D owned one hundred hectares of agricultural land. The Government took nine
hundred ninety-five hectares under the Agrarian Reform Act, with payment for it not
yet received. Mr. D died. What value shall be included in his gross estate?
a. One hundred hectares of agricultural land;
b. Five hectares of agricultural and plus the amount receivable from the Government
on the appropriation of ninety-five hectares;
c. Five hectares of agricultural land;
d. None.

39. A single resident citizen died on December 2017 leaving the following estate and
deductions:
Philippines China Taiwan Total
Family home P1,800,000 P- P - P 1,800,000
Other properties 7,200,000 3,000,000 4,000,000 14,200,000
Total estate P9,000,000 P3,000,000 P4,000,000 P16,000,000
Funeral expense P250,000 P70,000 P- P320,000
Judicial expense 300,000 150,000 100,000 550,000
Obligations 2,250,000 800,000 1,200,000 4,250,000
Total P2,800,000 P1,020,000 P1,300,000 P5,120,000
Estate before
Standard deduction P6,200,000 P1,980,000 P2,700,000 P10,880,000
Philippines China Taiwan Total
Estate tax paid P- P220,000 P250,000 P470,000

Compute the net taxable estate in the Philippines, China and Taiwan, respectively.
a. P 4,731,250; P 1,818,750; P 2,450,000
b. P 4,650,000; P 1,830,000; P 2,520,000
c. P 4,850,000; P 1,870,500; P 2,279,500
d. P 4,750,250; P 1,825,750; P 2,424,000

40. Donations were made on January 30, 2018 at P2,000,000; on March 30, 2018 at P1,000,000;
and August 15, 2018 at P500,000. How much is the donor’s tax still due on August 15,
2018?
a. P 210,000 c. P 30,000
b. P 195,000 d. P 90,000

41. The reciprocity clause applies to:

a. Real property; c. Intangible personal property;
b. Tangible personal property; d. All of the above.

42. Which of the following statements is incorrect? (Prior to TRAIN Law)

a. When the donee or beneficiary is a stranger, the tax payable by the donor shall be
thirty percent (30%) of the gross gifts.
b. Donation between business organizations and those made between an individual and a
business organization shall be considered as donation made to a stranger.
c. A legally adopted child is entitled to all the rights and obligations provided by
law to legitimate children, and therefore, donation to him shall not be considered
as donation made to stranger.
d. All statements are correct.

43. Which of the following is subject to donor's tax?

a. Gift through creation of a trust.
b. General renunciation by an heir of his/her share in the hereditary estate left by
the decedent.
c. General renunciation by the surviving spouse of his/her share in the hereditary
estate left by the decedent.
d. Renunciation by the surviving spouse of his/her share in the conjugal partnership
or absolute community after the' dissolution of the marriage in favor of the heirs
of the deceased spouse.

44. One of the following statements is correct. The donor’s tax return:

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a. Must be filed within thirty days after the end of the calendar year.
b. Must be filed within thirty days from the date of donation.
c. Must be accompanied by a certificate of an independent Certified public Accountant
if the gross gift is P50,000 or more.
d. In the case of husband and wife making donations, one donor’s tax return shall be
filed and signed by either the husband or the wife.

45. One of the following statements is not true. Which is it? If on any one date there
is a donation by one donor to a donee who is not a stranger together with a donation
to a donee who is a stranger:
a. There will be two separate donor’s tax return because the donor’s tax on the
donation to a non-stranger is at graduated rates while the donor’s tax on the
donation to a stranger is at the flat rate of 30%.
b. There will be one donor’s tax return only, where the donor’s tax at graduated rates
on the donation to a non-stranger will be shown together with the donor’s tax at
the flat rate of 30% on the donation to a stranger, the total being the donor’s
tax to pay.
c. If there were previous donations to strangers during the year, the prior net gifts
to strangers need not be added anymore in the computation of aggregate net gifts,
donor’s tax on aggregate net gifts and donor’s tax due on the donations to
strangers.
d. A donation on account of marriage, before the marriage, by a parent to a son and
daughter-in-law shall be considered as donations to a non-stranger and stranger.

46. 1st statement: A sold his car ( cost, P300,000 ) to B for P500,000. The car has a
fair market value of P900,000 at the time of sale. The difference of P400,000 in
selling price and fair market value constitutes a gift subject to donor’s tax.
2nd statement: C purchased a lot and cottage in Alaminos City (home of 100 islands)
in 2009 for P1,000,000. It was used as summer vacation house by his family. In 2010,
C decided to sell the lot and cottage to D for P2,000,000 although its present market
value is P2,500,000. The P500,000 difference in selling price and market value is a
gift but not subject to donor’s tax.
a. both statements are true
b. both statements are false
c. The first statement is true and the second statement is false.
d. The first statement is false and the second statement is true.

47. When is the donation perfected?

a. The moment the donor knows of the acceptance by the donee
b. The moment the donated property is delivered, either actually or constructively,
to the donee
c. Upon payment of the donor’s tax
d. Upon execution of the deed of donation

48. Sonly renounced his inheritance in the estate

a. Renunciation is subject to donor’s tax
b. Renunciation is subject to estate tax
c. Renunciation is exempt from donor’s tax
d. Renunciation is void

49. Rom and Mea are not married but living together as husband and wife. On account of
Mea’s love to Rom, she gave him a house and lot with a fair value of P10,000,000.
The house, is subject to a mortgage loan of P2,000,000.
How much is the donor’s tax?
a. P-0- b. P404,000 c. P764,000 d. P1,004,000

50. During the calendar year 2017, Mr. Masagana paid a total donor’s tax amounting to P
38, 000 to his two legitimate children on account of marriage. On his first donation
during the year, he paid a donor’s tax amounting to P 13, 600. The amount of gross
gifts made on the first and second donation would be
First Donation Second Donation
a. P 600,000 P 500, 000
b. P 550,000 P 550, 000
c. P 500,000 P 450, 000
d. P 500,000 P 420, 000

51. The marriage was celebrated on June 5, 2013. Donations were made by a parent. Which
statement is wrong?

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a. A donation on account of marriage of P20,000 on June 1, 2013 has a deduction of
P10,000;
b. A donation on account of marriage of P20,000 on June 10, 2013 has a deduction of
P10,000;
c. A donation on account of marriage of P7,000 on June 1, 2013 and another donation
on account of marriage of P13,000 on June 10, 2013, has a deduction of P7,000 on
the donation of June 1, 2013, and a deduction of P3,000 on the donation of June
10, 2013;
d. A donation on account of marriage of P15,000 on June 1, 2013 and another donation
on account of marriage of P 15,000 on June 10, 2013, has a deduction of P10,000 on
the donation of June 1, 2013, and no deduction on the donation of June 10, 2013.
e. A donation on account of marriage of P20,000 to a legitimate son, and a donation
on account of marriage of P20,000 to a legitimate daughter, on the occasion of a
double wedding, has deduction of P 10,000 against the aggregate net gift of P40,000.

52. Assume the donation is prior to the effectivity of TRAIN Law

Statement 1. A donation to a corporation is a donation to a stranger.
Statement 2. A donation by one spouse to the legitimate child by a former marriage
of the other spouse is a donation to a stranger.
a. True, true
b. False, false
c. True, false;
d. False, true

The next four (4) questions are based on the following information:
Pedro, single, donated the following properties on September 21, 2017:

Value Property Donee

100,000 Cash Juan, brother, on account of marriage
400,000 Jewelries Kat, girlfriend residing in Korea
1,500,000 House & lot parents, silver wedding anniversary gift
75,000 Land Bgy. Mapayapa, for use of barangay hall
300,000 Car Fe, sister, donation is revocable
50,000 Cash International Rice Research Institute
100,000 Cash Guillermo, father of the father of his mother
70,000 Motorcycle Kay, niece, donation is embodied in the will

53. The donor's tax payable on the donation to strangers is -

a. P9,000
b. P24,000
c. P60,000
d. P120,000

54. The donor's tax payable on the donation to strangers assuming 2018 taxable year is
a. P9,000 c. P60,000
b. P24,000 d. P120,000

55. The total donor's tax payable in 2017 is -

a. P66,000
b. P100,000
c. P160,000
d. P220,000

56. The total donor's tax payable assuming 2018 taxable year is
a. P111,000 c. P160,000
b. P126,000 d. P220,000

57. When the donee or beneficiary is a stranger, what is the applicable tax rate assuming
the donor donated prior to the effectivity of train law?
a. 30% of the gross profits.
b. 30% of the net profits.
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.

58. Statement 1: Banks are subject to the value-added tax;

Statement 2: Banks are subject to the gross receipts tax, which is a percentage tax.
a. True, true c. True, false;

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b. False, false d. False, true

59. Sale of raw materials or packing materials to export-oriented enterprise is considered

export sales when export sales of such enterprise
a. Exceed 50% of total annual production
b. Exceed 33 1/3% of total annual production
c. Exceed 66 2/3% of total annual production
d. Exceed 70% of total annual production

60. Export sales of non-VAT registered person is

a. Exempt from VAT c. Subject to 0% VAT
b. Subject to percentage tax d. Subject to 12% VAT

61. Bogart is an operator of parking lots. What business tax is due on his income from
the business?
a. Broker’s tax c. Caterer’s tax
b. Common carrier’s tax d. Value-added tax

Felicisima had the following data during the month of February:

Case A Case B
Sales, net of VAT 1 900 000 2 800 000
Purchases of goods for sale, exclusive of VAT 1 260 000 1 600 000
Purchases of machines (VAT not included) 1 440 000 900 000
Machine life 6 years 3 years

62. The VAT payable in Case A:

a. P 76 800 c. P 74 400
b. P 78 920 d. P 154 080

63. The VAT payable in Case B:

a. P 36 000 c. P 142 200
b. P141 000 d. P 300 000

64. The VAT payable in Case A if the life of the machine is 4 years only:
a. P 73 920 c. P 73 200
b. P154 800 d. P 74 400

65. First statement: Sales of drugs and medicines of pharmacy run by the hospital to
outpatients are subject to VAT.
Second statement: Pharmacy items used in the performance of medical procedures in
hospital units such as in the operating and delivery rooms and by other departments
are considered part of medical services rendered by the hospital, hence, not subject
to VAT.
a. Both statements are correct
b. Both statements are incorrect
c. Only the first statement is correct
d. Only the second statement is correct

66. 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.

67. Which statement is wrong?

a. There is a transitional input tax on sales of goods or properties.
b. There is a transitional input tax on sales of services.
c. There is a presumptive input tax on sales of goods or properties.
d. There is a presumptive input tax on sales of services.

68. Ilarde, a VAT taxpayer, on January 1, 2013, made the following purchases from VAT \
sellers, for use in his business. The amounts stated below are not inclusive of value-
added taxes:
Machine 1, with a useful life of 20 years P 3 000 000
Machine 2, with a useful life of 3 years 1 800 000
Patent, with usefulness of 10 months 600 000

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The input taxes from the purchases, available to Ilarde, for the month of January,
2013:
a. P 19 200 c. P 79 500
b. P 70 000 d. P 84 000

69. A VAT-registered supplier sold goods amounting to P 500 000 gross selling price 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 withholding of final VAT.
b. The government-controlled corporation will withhold P 25 000 final VAT.
c. The government-controlled corporation shall remit 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.

70. Kitkat, a VAT taxpayer, had the following data for the first 3 months of taxable year
2013:
Data for the months of January February March
VAT not included:
Sales P 1 150 000 P 2 000 000 P 1 850 000
Purchases 600 000 1 600 000 900 000
There was a deferred input tax of P 20 000 at the end of the previous year. The value-
added tax payable at the end of March is:
a. P 94 000 c. P 95 000
b. P 180 000 d. P 114 000

DONOR’S TAX TABLE PRIOR to 2018:

Over But not over The tax shall be Plus Of excess over
- P 100,000 Exempt - -
P 100,000 200,000 0 2% P 100,00
200,000 500,000 2,000 4% 200,000
500,000 1,000,000 14,000 6% 500,000
1,000,000 3,000,000 44,000 8% 1,000,000
3,000,000 5,000,000 204,000 10% 3,000,000
5,000,000 10,000,000 404,000 12% 5,000,000
10,000,000 - 1,004,000 15% 10,000,000

ESTATE’ TAX TABLE

Over But not over The tax shall be Plus Of the excess over
0 200,000 Exempt
200,000 500,000 0 5% 200,000
500,000 2,000,000 15,000 8% 500,000
2,000,000 5,000,000 135,000 11% 2,000,000
5,000,000 10,000,000 465,000 15% 5,000,000
10,000,000 And Over 1,215,000 20% 10,000,000

Nothing worth having comes easy

--END OF PRE-BOARD EXAMINATION--

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ANSWER
1. A 36. D
2. D 37. A
3. C 38. A
4. A 39. D
5. D 40. A
6. C 41. C
7. C 42. A
8. C 43. A
9. B 44. D
10. A 45. D
11. D 46. B
12. C 47. D
13. D 48. A
14. A 49. C
15. A 50. A
16. B 51. B
17. C 52. A
18. A 53. D
19. C 54. B
20. B 55. D
21. C 56. A
22. C 57. A
23. A 58. C
24. D 59. D
25. A 60. D
26. D 61. A
27. D 62. D
28. C 63. C
29. C 64. D
30. B 65. B
31. D 66. C
32. D 67. C
33. C 68. A
34. D 69. A
35. D 70. D

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