Saint Columban College

College of Business Education

2nd Semester, S.Y. 2021–2022

TAXATION

FIRST MOCKBOARD EXAMINATION

Instructions: Choose the correct answer among the choices and shade
the corresponding letter in the answer sheet provided.

Answer with your heart and mind, do not copy from others. You are
only cheating your self today and depriving your future self of a
chance you will never get back.

1. Statement 1: Imposition of taxes is a legislative act

Statement 2: Collection of taxes is an administrative act

A. Only Statement 1 is correct

B. Only Statement 2 is correct
C. Both Statements are correct
D. Both Statements are false

2. All are characteristics of the power of taxation, EXCEPT:

A. It is an inherent power
B. It is legislative in character
C. It is civil in character
D. It is subject to inherent and constitutional limitations

3. The following are similarities of the inherent power of

taxation, eminent domain and police power, except one:

A. Are necessary attributes of sovereignty

B. Interfere with private rights and property
C. Superior to the non-impairment clause
D. Are legislative in character.

4. Although the power of taxation is basically legislative in

character, it is NOT the function of the Congress to:

A. Fix with certainty the amount of taxes

B. Collect the tax levied under the law
C. Identify who should collect the tax
D. Determine who should be subject to the tax

5. What is the rule on taxability of income that a government

educational institution derives from its school operations?
Such income is

A. Subject to 10% tax on its net taxable income as if it is a

proprietary educational institution.
B. Exempt from income taxation if it is actually, directly and
exclusively used for educational purposes.
C. Subject to the ordinary income tax rates with respect to

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 incomes derived from educational activities.
D. Exempt from income taxation in the same manner as
government-owned and controlled operations.

6. On July 31, 2015, Esperanza received a preliminary assessment

notice from the BIR demanding that she pays P180,000.00
deficiency income taxes on her 2013 income. How many days from
July 31, 2015 should Esperanza respond to the notice?

A. 180 days
B. 30 days
C. 60 days
D. 15 days

7. Jane filed his annual income tax return on May 22, 2016 for
income earned during 2015. The BIR examiner assessed Jane for
tax delinquency on October 15, 2017. Jane filed a protest plus
all documentary evidence on November 8, 2017 with the CIR. The
commissioner rendered its unfavorable judgement on May 10,
2018. When is the last day to appeal the case to the Court of
Tax Appeals?

A. June 8, 2018
B. June 10, 2018
C. May 25, 2018
D. May 22, 2018

8. On March 30, 2010 Miguel Foods, Inc. received a notice of

assessment and a letter of demand on its April 15, 2007 final
adjustment return from the BIR. Miguel foods then field a
request for reinvestigation together with the requisite
supporting documents on April 25, 2010. On June 2, 2010 the BIR
issued a final assessment reducing the amount of the tax
demanded. Since Miguel foods satisfied with the reduction, it
did not do anything anymore. On April 15, 2015 the BIR
garnished the corporation’s banks deposit to answer the BIR
garnished the corporations bank deposit to answer for the tax
liability. Was the BIR action proper?

A. Yes. The BIR has 5 years from filing of the protest within
which to collect.
B. Yes. The BIR has 5 years from the issuance of the final
assessment within which to collect.
C. No. The taxpayer did not apply for a compromise
D. No. Without the taxpayer’s prior authority, the BIR action
violated the Secrecy of Bank Deposit Law.

9. There is prima facie evidence of a false or fraudulent return

where the

A. Tax return was amended after a notice of assessment was

issued.
B. Tax return was filed beyond the reglementary period
C. Taxpayer changed his address without notifying the BIR.
D. Deductions claimed exceed by 30% the actual deduction.

10. When is 25% surcharge imposable, except?

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 A. Failure to file the required tax return deliberately;
B. Failing a return with the wrong internal revenue office;
C. Failure to pay the deficiency tax within the time prescribed
D. Failure to pay the full amount of tax shown on the return
within time prescribed.

11. B, an Expert Physicist was hired by a Philippines Corporation

to assist in the Philippines Corporation to assist in its
organization and operation for which he had to stay in the
Philippines for an indefinite period. His coming to the
Philippines was for a definite purpose which in its nature
would require an extended stay and to that end makes his home
temporarily in the Philippines. The American management expert
intends to leave the Philippines as soon as his job is
finished.
For income tax purpose, the American management expert shall be
classified as:

A. Resident Alien
B. Nonresident Alien engaged in trade or business
C. Nonresident Alien not engaged in trade or business
D. Resident Citizen

12. In 2014, Caruso, a resident Filipino Citizen, received

dividend income from US -Based corporation which owns a chain
of Filipino restaurant in the West Coast, USA. The dividend
remitted to Caruso is subject to U.S. withholding tax with
respect to a non-resident alien like Caruso. The Dividend is
subject to:

A. Final income tax

B. Basic Income tax
C. Capital gain tax
D. Exempt from tax

13. Anktryd Inc. bought a parcel of land in 2015 for 7 million as

part of its inventory of real properties. In 2016, it sold the
land for 12 million which was its zonal valuation. In the same
year, it incurred a loss of 6 million for selling another
parcel of land in its inventory. These were the only
transactions it had in its real estate business. Which of the
following is the applicable tax treatment?

A. Anktryd shall be subject to a tax of 6% of 12 million

B. Anktryd could deduct its 6 million loss from its 5 million
gain
C. Anktryd gain of 5 million shall be subject to the holding
period
D. Anktryd 6 million loss could not be deducted from its 5
million gain.

14. Aplets Corporation is registered under the laws of the Virgin

Islands. It has extensive operations in Southeast Asia. In the
Philippines, its product are imported and sold at a mark-up by
its exclusive distributor, Kim’s Trading Inc. The BIR complied
a record of all the imports of Kim from Aplets and imposed a
tax on Aplet net income derived from its exports to Kim. Is the
BIR collect?

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 A. Yes. Aplets is a non-resident foreign corporation engaged in
trade or business in the Philippines.
B. No. The tax should have been computed on the basis of gross
revenue and not net income.
C. No Aplets is a non-resident foreign corporation not engaged
in trade or business in the Philippines.
D. Yes. Aplets is doing business in the Philippines through its
exclusive distributor Kim.

15. In 2016, Julied Ulbod earned 500,000 earned 500,000 as income

from her beauty parlor and received 250,000 as Christmas gift
from her sprinter aunt. She had no other receipts from the
year. Her gross income for 2016 is

A. 750,000
B. 500,000
C. 350,000
D. 600,000

16. K sold for 10M her Baguio rest house with a FMV of 12M to buy
a new principal residence. If K utilized 8M of the proceeds of
the sale in acquiring a new principal residence, the capital
gains tax payable is:

A. 720,000
B. 600,000
C. 144,000
D. 120,000

17. Which of the following statements if false?

A. An individual taxpayer is exempt on the first 250,000 of his
income.
B. A compensation earner may opt to avail of the 8% income tax
rate.
C. A professional income earner who avails of the 8% income tax
is exempt from the payment of 3% non-VAT.
D. An operator of cockpit cannot avail of the 8% income tax
option.

18. Santi retired from employment with the government on November

30, 2018. As a consequence of his retirement, he received the
following:

Monthly Salary (Jan-Nov) 30,000

Monthly personnel economic relief and allowance 2,000
13th month pay 30,000
Cash Gift 5,000
Retirement pay 750,000
Terminal leave pay 120,000
Longevity pay 30,000
Rice allowance for 1 month only 2,500
Clothing allowance 8,000

How much is the taxable income of Santi in 2018?

A. 452,500

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 B. 332,500
C. 330,000
D. 356,500

For the next two items

Ling owns a small sari-sari store and a beauty parlor. In 2018,

her gross sales in the store amounted to 680,000, in addition
to her receipts from the parlor of 500,000, while her total
cost of sales/services and operating expenses amounted to
300,000 and 200,000 respectively.

19. The income tax due if she signified her intention to be

taxed at the 8% income tax rate
A. 74,400
B. 94,400
C. 54,400
D. 34,400

20. The income tax due if she failed to signified her intention
to be taxed at the 8% income tax rate
A. 37,500
B. 54,400
C. 74,400
D. 100,000

For the next three items

Mr. A is an accountant who is engaged in public practice. His

total gross receipts in 2018 amounted to 2,250,000. His
recorded cost of service and operating expenses were 450,000
and 100,000, respectively.

21. How much is the income tax due if Mr. A avails of the
graduated rates in the tax table?
A. 570,000
B. 160,000
C. 400,000
D. Cannot be determined

22. How much is the income tax due if Mr. A avails of the 8%
income tax option?
A. 180,000
B. 160,000
C. 400,000
D. Cannot be determined

23. How much is the total tax benefit if Mr. A avails of tax
avoidance scheme by choosing the method will pay less tax to
the government?
A. 240,000
B. 307,500
C. 160,000
D. Cannot be determined

24. A minimum wage earner had the following data during the year:
Annual Salary 60,000
Other benefits 95,000

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 The amount subject to tax is
A. None
B. 3,000
C. 145,000
D. 60,000

For the next two items

The employees of AB Company received the following fringe benefits

from their employer in June 2018:

Chief Operating Officer 16,250

Two Supervisors, per person 3,900
15 Clerks and laborer, per person 3,000

25. The amount to be entered on Item 18 Part II of BIR Form 1603Q

is?
A. 23, 150
B. 20, 150
C. 10, 850
D. 12,950

26. The deductible fringe benefit expense is

A. 82,000
B. 40,000
C. 10,850
D. 34,000

27. 20,000 Cash dividend by a domestic corporation to a resident

citizen is subject to a final withholding tax of
A. 2,000
B. 4,000
C. 5,000
D. None

28. A 2018 Interest on foreign currency deposit under the

expanded currency deposit system is subject to final
withholding tax of
A. 20%
B. 10%
C. 15%
D. 7.5%

29. Dividends from a Domestic Co. and/or share in the net income
of a taxable partnership received by a nonresident alien NETB
is subject to a final tax of

A. 25%
B. 30%
C. 20%

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 D. 10%

30. The minimum corporate income tax is based on-

A. 2% of net income
B. 2% of gross income
C. 2% of taxable income
D. 2% of gross revenue

For the next 10 items

FOR THE YEAR: 2018

TAXPAYER’s NAME: LENI V. BONGBONG
METHOD OF DEDUCTION: OSD
REGISTERED ADDRESS: BALANGASAN, PAGADIAN CITY
CITIZENSHIP: FILIPINO

Data on income, costs and expenses

PROFESSION
Receipt from Profession 2,820,0000
Cost of Services 400,000
Expenses 880,000
Capital Gain(short-term) 40,000
Capital Loss(long-term) 5,000
Tax Payment (1st Q-3rd Q) 160,000

EMPLOYMENT (Jan 1 to Dec 31):

Name of Employer: Ajax Marketing
Address: San Jose, Pagadian City
Basic Salary: 260,000
COLA 24,000
13th Month pay 20,000
Cash Gift 50,000
Uniform Allowance 10,000
Rice allowance/ half-month 2,500
Overtime pay 15,000

Employee share in-

SSS 6,975
PhilHealth 5,720
Pag-Ibig 5,280
Tax Withheld 9,800

31. When is the Deadline of payment for her income taxes?

A. April 15, 2019
B. April 15, 2018
C. May 15, 2018
D. May 15, 2019

32. The amount to be entered on Item 36 Part IV-B of BIR Form

2316 is?
A. 82,975
B. 85,245

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 C. 135,825
D. 142,975

33. The amount to be entered on Item 46 Part IV-B of BIR Form

2316 is?
A. 15,000
B. 30,000
C. 45,000
D. 0

34. The amount to be entered on Item 50 Part IV-B of BIR Form

2316 is?
A. 260,000
B. 279,000
C. 299,000
D. 314,000

35. The amount to be entered on Item 24 Part IV-A of BIR Form

2316 is?
A. 6,505
B. 6,205
C. 8,755
D. 9,205

36. The amount to be entered on Item 19 Part V of BIR Form 1701

is?
A. 15,000
B. 35,000
C. 40,000
D. 37,500

37. The amount to be entered on Item 16 Part V of BIR Form 1701

is?
A. 400,000
B. 880,000
C. 1,280,000
D. None

38. The amount to be entered on Item 24 Part V of BIR Form 1701

is?
A. 1,988,025
B. 1,992,250
C. 2,025,525
D. 2,125,252

39. The amount to be entered on Item 10 Part VII of BIR Form 1701
is?
A. 160,000
B. 9,800
C. 169,800
D. None

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40. The amount to be entered on Item 32 Part II of BIR Form 1701
is?
A. 316,607.5
B. 321,525
C. 320,202
D. 328,368

For the next 10 items

Mega Construction Corp. a domestic Corp, has the following data

for 2021 Taxable year:

Gross Income, PH
100,000,000
Gross Income, USA 50,000,000
Gross Income, Japan 50,000,000
Expenses, PH 30,000,000
Expenses, USA 20,000,000
Expenses, Japan 10,000,000

Other Income
Dividend from San Miguel Corp. a domestic corp 7,000,000
Dividend from Ford Motors (RFC; income within) 12,000,000
Gain on sale of shares of a domestic corp sold
directly to buyers 15,000,000
Royalty Income, PH 5,000,000
Royalty Income, USA 10,000,000
Interest Income on peso bank deposit 8,000,000
Interest income on FCDS Deposit 3,000,000
Interest from receivables in the PH 6,000,000
Rent Income, land in USA 25,000,0000
Rent Income, Building in PH 10,000,000

The Company also sold a condominium classified as capital asset

for 200,000,000. The cost of the Condominium is 100,000,000
while its Zonal value is 300,000,000. The Company’s total
assets excluding the condominium sold and the land on which the
business office building is situated amounted to 680,000,000.

Determine the following:

41. The amount to be entered on Item 40 Part IV of BIR Form

1702-RT is?
A. 30%
B. 25%
C. 20%
D. 0

42. The amount to be entered on Item 27 Part IV of BIR Form

1702-RT is?
A. 100,000,000
B. 150,000,000
C. 200,000,000
D. 0

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43. The amount to be entered on Item 32 Part IV of BIR Form
1702-RT is?
A. 51,000,000
B. 50,000,000
C. 49,000,000
D. 0

44. The amount to be entered on Item 42 Part IV of BIR Form

1702-RT is?
A. 3,670,000
B. 5,020,000
C. 2,510,000
D. 0

45. The amount to be entered on Item 21 Part II of BIR Form

1702-RT is?
A. 52,250,000
B. 48,750,000
C. 47,750,000
D. 0

46. How much is the final withholding tax on passive income in

2021?
A. 1,000,000
B. 1,600,000
C. 2,550,000
D. 3,050,000

47. How much is the total capital gains tax in 2021?

A. 2,250,000
B. 18,250,000
C. 19,875,000
D. 20,250,000

For the next 5 items

Aleppo Corporation on its fifth year of business operation

in 2019, when it was assessed by the BIR had the ff:

Gross Income 2,000,000

Business Expenses 1,400,000
NOLCO prior years 500,000
Dividend Income-domestic 30,000
Interest Income from bank, gross 50,000
Gain on sale of domestic shares
directly through buyer 200,000
Gain on sale of land classified as capital asset
(Selling Price= 2,000,000; Fair Value= 2,500,000) 500,000
Dividends Declared 100,000
Appropriation for plan expansion 200,000

48. How much is the net taxable income?

A. 600,000 B. 2,000,000 C. 100,000 D. 1,500,000

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49. How much is the income tax due?
A. 30,000 B. 20,000 C. 0 D. 40,000

50. How much is final tax due?

A. 15,000 B. 5,000 C. 20,000 D. 10,000

51. How much is the total capital gains tax due?

A. 180,000 B. 170,000 C. 100,000 D. 0

52. How much is the Improperly Accumulated Earnings Tax?

A. 84,000 B. 85,000 C. 86,000 D. 86,500

For the next 2 items

Year 5 Year 6 Year 7 Year 8 Year 9

MCIT 400,000 100,000 300,000 200,000 100,000
RCIT 100,000 200,000 200,000 100,000 400,000

53. How much is the income tax due in Year 8?

A, 150,000 B. 100,000 C. 200,000 D. 0

54. How much is the income tax due in Year 9?

A, 150,000 B. 100,000 C. 200,000 D. 0

55. A citizen of the Philippines who works abroad and whose

employment requires him to be physically present abroad
most of the time during the taxable year is:
A. Taxable on income within and without the Philippines
B. Taxable income from without the Philippines
C. Exempt from income tax
D. Taxable in income from within the Philippines

56. Passive Income includes income derived from an activity

in which the earner does not have any substantial
participation. This type of income is
A. Usually subject to income tax
B. Exempt from income taxation
C. Taxable only if earned by a citizen
D. Included in the income tax return

57. In 2018 ABC Co. paid for the annual rental of a

residential house used by its general manager amounting to
136,000. The entry to record the benefit is

A. Fringe Benefit Expense 136,000

Fringe Benefit Tax Expense 73,230
Cash 209,230

B. Fringe Benefit Expense 136,000

Fringe Benefit Tax Expense 36,615

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 Cash 172.615

C. Fringe Benefit Expense 68,000

Fringe Benefit Tax Expense 36,615
Cash 104,615

D. Fringe Benefit Expense 68,000

Fringe Benefit Tax Expense 64,000
Cash 132,000

58. Although the power of taxation is basically legislative

in character, it is not the function of Congress to:
A. Fix the certainty the amount of taxes
B. Collect the tax levied under the law
C. Identify who should collect the tax
D. Determine who should be subject to tax

59. The following forms of escape from taxation result to

loss of revenue to the government, except
A. Exemption
B. Shifting
C. Avoidance
D. Evasion

60. The share in the profits of a partner in a general

professional partnership is regarded as received by him and
thus taxable although not yet distributed. The principle is
known as
A. Actual receipt of income
B. Advance reporting of income
C. Accrual method of accounting
D. Constructive receipt of income

For the next three items

A Co. and B Co, domestic corporations, both engaged in the
transportation business with operations in Northern and
Central Luzon formed a joint venture agreeing to distribute
the net income of the joint venture equally. In a taxable
year, the joint venture had a gross income of P5,000,000
and expense of 3,500,000.
Determine:

61. The income tax liability of the joint venture

A. 450,000
B. 5,000,000
C. 1,050,000
D. 0

62. The share of A Co. in the distributable net income of the

JV:
A. 525,000
B. 52,500

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 C. 472,500
D. 1,050,000

63. Final tax on the share of A Co. in the distributable net

income of the JV:
A. 52,500
B. 105,000
C. 78,750
D. 0

64. Arthur Perez owns a pet store specializing in reptiles

which is her source of income. She signified her intention
to be taxed at 8% of gross sales in her 1st quarterly ITR of
the taxable year. Her sales, cost of sales and operating
expenses for the 4 quarters are as follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Sales 400,000 600,000 2,000,000 3,500,000
Cost of Sales (100,000) (200,000) (600,000) (800,000)
Gross Income 300,000 400,000 1,400,000 2,700,000
OPEX (170,000) (190,000) (500,000) (820,000)
Net Income 130,000 210,000 900,000 1,880,000

Compute her income tax payable in her 1st, 2nd. 3rd Quarterly
ITRs and in her Annual ITR.
1st Quarter ITR 2nd Quarterly ITR 3rd Quarterly ITR 4th
Quarterly ITR
A.12,000 48,000 160,000 628,400
B.12,000 48,000 150,000 638,400
C.12,000 60,000 78,000 638,560
D. None

65. The share of a co-venturer corporation in the net income

after tax of a joint venture or consortium taxable as a
corporation is:
A. Subject to Final withholding tax of 20%
B. Subject to regular corporate income tax of 30%
c. Subject to capital gains tax
D. exempt from income tax

66. The share of a co-venturer individual the net income after

tax of a joint venture or consortium taxable as a corporation
is:
A. Subject to Final withholding tax of 20%
B. Subject to regular corporate income tax of 30%
c. Subject to capital gains tax
D. Subject to Final withholding tax of 10%

67. Shown below are the operating results of Bulalacao Corp since
its start of operations:
Gross Income Deductions
2011 4,000,000 5,000,000
2012 4,500,000 5,200,000
2013 5,500,000 5,000,000
2014 6,000,000 5,800,000
2015 6,500,000 6,100,000

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 2016 7,000,000 6,200,000

What is the income tax due for 2014 and 2015?

a. 120,000 : 0
b. 120,000 : 70,000
c. 120,000: 130,000
d. 0 : 130,000

68. No person shall be imprisoned for non-payment of this.

A. Property Tax C. Poll Tax
B. Excise Tax D. Business Tax

69. Jane filed his annual income tax return on May 22, 2016 for
income earned during 2015. The BIR examiner assessed Jane for
tax delinquency on October 15, 2017. Jane filed a protest plus
all documentary evidence on November 8, 2017 with the CIR. The
commissioner rendered its unfavorable judgement on May 10,
2018. When is the last day to appeal the case to the Court of
Tax Appeals?

A. June 8, 2018
B. June 10, 2018
C. May 25, 2018
D. May 22, 2018

NOTE: The Correct Answer should be June 9, 2018

This is Indirect Denial because the 180 day period Lapse on May
7, 2018.
But the taxpayer waited for the decision of the BIR, so 30 day
count starts from May 10, 2018.

70. Juan sold his principal residence and had the following data

Cost of House and Lot 1,500,000

Gain on Sale 500,000
FMV 1,900,000
ZV 1,800,000

How much is the Capital Gains Tax?

A. 120,000
B. 114,000
C. 108,000
D. 90,000

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