L-NU AA-23-02-01-18

LYCEUM-NORTHWESTERN UNIVERSITY
Tapuac District, Dagupan City

COLLEGE OF BUSINESS EDUCATION

MIDTERM EXAMINATION – ELEC 4 Taxation and Law Updates

Name:_____________________________________ Score:____________________

Student No.: _______________ Year/Section:___________ Date of Exam: ____________

1. The seizure by the government of personal property to enforce the payment of taxes to be
followed by its public sale if the taxes are not voluntarily paid is called
a. Forfeiture
b. Levy
c. Distraint
d. Garnishment
2. The running of the prescriptive period for assessment and collection of taxes is suspended under
the following circumstances, except one,
a. When the taxpayer is out of the country
b. When the BIR Commissioner is prohibited from assessing or collecting the tax
c. When the taxpayer request for reinvestigation
d. When the warrant of distraint and levy is duly served.
3. The BIR Commissioner may compromise payment of internal revenue taxes when:
1st Ground: A reasonable doubt as to the validity of the claim against the taxpayer exists.
2nd Ground: The financial position of the taxpayer demonstrates a clear inability to pay the tax.
a. Both grounds are wrong.
b. 1st ground is wrong, 2nd ground is correct
c. Both grounds are correct
d. 1st ground is correct, 2nd ground is wrong
4. Where any national Internal Revenue Tax is alleged to have been erroneously or illegally
collected, the taxpayer should first
a. File a claim for refund or credit
b. File an action for refund with the Regional Trial Court
c. File an action for refund with the Court of Tax Appeals
d. File a claim or refund or credit with the Secretary of Finances
5. Which statement is correct? In case of tax assessment:
a. A protest should be filed by the taxpayer; otherwise the assessment becomes final and
cannot be questioned anymore in court.
b. A protest may be filed by the taxpayer anytime before the Bureau of Internal Revenue
collects the tax.
c. The assessment should be made by the BIR within 5 years from the date of filing the return.
d. The assessment shall include only the tax proper.
6. Which of the following is not a power vested in the Bureau of Internal Revenue?
a. The assessment and collection of all national internal revenue taxes, fees and charges.
b. The enforcement of all forfeitures, penalties and fines
c. The granting of tax exemptions and other tax incentives to taxpayer
d. The execution of judgment in all cases decided in its favor by the Court of Tax Appeals and
the ordinary courts.
7. L, filed an income tax return for the calendar year 2013 on March 10, 2014. The BIR assessed a
deficiency income tax on April 10, 2016. When is the last day for the BIR to make assessment?
a. April 15, 2017
b. April 10, 2016

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 c. April 15, 2016
d. April 10, 2017
8. The Court of Tax Appeals has no jurisdiction to review:
a. Decisions of the Commissioner of Internal Revenue in undisputed assessments.
b. In instances where the Commissioner of Internal Revenue has failed to act on a disputed
assessment within 180 days from submission of complete documents to support a protest.
c. The inaction of the Commissioner of Internal Revenue in a claim for refund case and the
two-year prescriptive period is about to expire.
d. All of the above.
9. A BIR audit of the taxpayer’s books of accounts shows that it withheld P 1.5 million from its
suppliers but remitted to the BIR only the amount of P 0.5 million. The BIR should subject the
taxpayer to a:
a. Pre-assessment notice
b. Warrant of levy and distraint
c. Written notice calling the taxpayer to an informal conference
d. Formal assessment notice and a letter of demand for the payment of the deficiency tax.
10. Which is not a taxpayer’s remedy after paying a tax?
a. Claim for Tax credit
b. Claim for Tax refund
c. Motion for reinvestigation
d. Criminal action against corrupt revenue officer
11. Which is not a government remedy in tax collection?
a. Inquiry into taxpayer’s bank deposit
b. Compromise
c. Distraint and Levy
d. Forfeiture
12. Preliminary assessment notice is not required in the following cases, except:
a. Tax deficiency is due to mathematical error
b. Tax deficiency is due to unpaid VAT
c. Tax deficiency is due to unpaid excise taxes
d. Tax deficiency is due to withholding tax
13. Which is incorrect about assessment?
a. It fixes the tax liability of a taxpayer
b. It is an action to collect a tax
c. If not contested within 30 days from receipt it becomes final and executory
d. It is void if done beyond the prescriptive period
14. Nelson filed his ITR for 2009 on October 15, 2010. The last day for BIR to assess is on?
a. October 15, 2020
b. April 15, 2013
c. October 15, 2013
d. October 14, 2013
15. Donor’s tax return for a donation made on January 15, 2010 was filed on January 31, 2010. Last
day for BIR to assess is on?
a. February 28, 2013
b. February 14, 2013
c. January 31, 2013
d. January 15, 2013
16. Based on no. 15, but assume the return filed was fraudulent and was discovered on March 31,
2010. The last day for BIR to assess is on?
a. February 28, 2020
b. February 14, 2020
c. January 31, 2020
d. March 31, 2020
17. Piolo paid his income tax liability for 2009 on January 15, 2010. It was found out later on June
30, 2010 that he overpaid by more than P100,000. The last day to file a claim for tax refund is?
a. April 15, 2013
b. June 30, 2012
c. January 15, 2012

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 d. June 30, 2013
18. Assuming his claim for tax refund was denied and the denial was received on April 30, 2013. The
proper remedy available to the taxpayer is?
a. Appeal to Court of Tax Appeals on or before May 15, 2013
b. Appeal to Court of Tax Appeals on or before May 20, 2013
c. File a motion for reconsideration on or before May 30, 2013
d. No more remedy since the 2 year period already expired
19. BIR Commissioner can terminate the taxable year in the following cases except:
a. When the taxpayer is retiring from business subject to tax
b. When he intends to leave the Philippines
c. When he removes his property from the Philippines
d. When he suddenly transfers the principal office of the business
20. Taxpayer received assessment from BIR on February 22, 2010. He filed motion for
reconsideration on March 22, 2010 which was denied by BIR. Remedy of taxpayer is?
a. Appeal to Court of Tax Appeals on or before April 22, 2010
b. Appeal to Court of Tax Appeals on or before April 30, 2010
c. Appeal to Court of Tax Appeals on or before April 21, 2010
d. Appeal to Court of Appeals on or before April 7, 2010
21. Based on no. 20, But Court of Appeals decided in favor of the taxpayer, Remedy of BIR is:
(decision received on July 20, 2010)
a. Appeal to Supreme Court within 15 days from July 20, 2010
b. Appeal to Court of Tax Appeals-En Banc within 15 days from July 20, 2010
c. Appeal to Court of Tax Appeals-En Banc within 30 days from July 20, 2010
d. None since government cannot appeal if lost in Tax cases
22. Based on no. 20, Court of Tax Appeals-En Banc decided in favor of BIR. Remedy is: (decision
received by both parties on November 15, 2010)
a. BIR to appeal to Supreme Court within 15 days from November 15, 2010
b. Taxpayer to appeal to Supreme Court within 15 days from November 15, 2010
c. Taxpayer to appeal to Supreme Court within 30 days from November 15, 2010
d. Taxpayer to appeal to Court of Appeals within 30 days from November 15, 2010
23. Based on no. 21, but the assessment became final and executory. The last day for BIR to collect
is on:
a. March 22, 2015
b. March 22, 2020
c. February 22, 2015
d. April 22, 2015
24. Which statement is incorrect?
a. Taxes can be compromised due to financial incapacity of the taxpayer
b. Taxes can be compromised if doubt exists on the amount due
c. Taxes can be abated if they appear to be unjust or excessive
d. Taxes can be abated if doubt exists on the collectible amount
25. Miramar’s income tax for 1999 was P75, 000, as shown in her income tax return (ITR). She filed
her return only on July 15, 2001 and paid the total amount upon filing the return. The total
amount payable is:
a. P113, 750
b. P98, 750
c. P112, 500
d. P97, 500
26. Taxpayer was assessed deficiency income tax of P200, 000 payable on or before June 15, 2000.
Within the period however, he was only able to pay P100, 000 and the balance only on August
30, 2000. The total tax due that he is liable should be:
a. P129, 155
b. P258, 333.33
c. P125, 000
d. P 250, 000
27. Carmela inherited from his father, who died on June 10, 2009, several pieces of real property in
Metro Manila. The estate tax return was filed and the estate tax due in the amount of P0.5
million was paid on December 6, 2009. The Tax Fraud Division of the BIR investigatedthe case on

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 the basis of confidential information given by Peter on January 6, 2013, that the return filed by
Carmela was false or fraudulent and that he failed to declare all properties left by his father with
intent to evade payment of the correct tax. As a result, a deficiency estate tax assessment for P
1.5 million, inclusive of a surcharge for late payment, interest and compromise penalty, was
issued against her on January 10, 2016. Carmela protested the assessment on the ground of
prescription. Will Carmela’s protest prosper?
a. No, because the assessment notice that was issued by the BIR was well within the 10 years
prescriptive period for false or fraudulent return, counted from the discovery of the falsity
or fraud.
b. No, because the assessment notice has become final, executory, demandable and
unappealable to the Court of Tax Appeals.
c. Yes, because the BIR itself recognized that the return filed was not false or fraudulent, as
it failed to impose a fraud surcharge. Thus, the appropriate prescriptive period to apply is
three years from the time the return was filed or should have been filed, whichever is
later. The right of the BIR to assess, therefore, had prescribed.
d. Yes, because Carmela protested the deficiency estate tax assessment seasonably.
28. When if in the preceding number, the deficiency estate tax assessment included a 50%
surcharge for fraud, etc.? Will Carmela’s protest prosper?
a. No, because the assessment notice that was issued by the BIR was well within the 10
years prescriptive period for false or fraudulent return, counted from the discovery of the
falsity or fraud.
b. No, because the assessment notice has become final, executory, demandable and
unappealable to the Court of Tax Appeals.
c. Yes, because irregardless of the penalty surcharge imposed by the BIR, the appropriate
prescriptive period to apply will still be three years from the time the return was filed or
should have been filed, whichever is later. Thus, the right of the BIR to assess had
prescribed.
d. Yes, because Carmela protested the deficiency estate tax assessment seasonably.
29. The precriptive period for the issuance of a formal notice of assessment may not ordinarily be
stayed because of the lifeblood theory. However, there are certain instances where the running
of the prescriptive period may be suspended. Which of the following is not among the
recognized exceptions which suspend the prescriptive period within which to assess?
a. If the taxpayer is out of the country.
b. If the taxpayer changes his address informing the Commissioner of Internal Revenue of
such change.
c. Where the taxpayer requests for and is granted a reinvestigtaion by the Commissioner of
Internal Revenue.
d. When the Commissioner of Internal Revenue is prevented from making an assessment and
within 60 days thereafter.
30. Taxpayer Melchor paid an internal revenue deficiency tax of P 100,000 on November 14, 2009.
He submitted a claim for refund with the Commissioner of Internal Revenue on July 31, 2010.
The Commissioner, however, approved the refund only of P 50,000 on January 20, 2012. This
morning, September 27, 2016, he engaged your tax services on a contingent basis for the
purpose of recovering the remaining P 50,000. Will you accept this engagement?
a. Yes, because his claim for refund was duly filed administratively within 2 years from the date
of payment of the tax.
b. Yes, because the denial or refund for the remaining P 50,000 is still appealable to the Court
of Tax Appeals.
c. No, because as of today, September 27, 2016, the right of taxpayer Melchor to contest
beforw the Court of Tax Appeals the BIR Commissioner’s denial of the refund for the
remaining P50, 000 has already prescribed.
d. No, because taxpayer Melchor’s claim for refund has been administratively fully satisfied.
31. CDE Corporation filed its income tax return for the calendar year 2015 on April 10, 2016. The
return was not false or fraudulent, the last day for the BIR to collect if without prior assessment
is
a. April 10, 2019
b. April 15, 2019
c. April 10, 2021

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 d. April 15, 2021
32. The following are administrative remedies of the taxpayer, except
a. Protest the assessment within the reglamentary period.
b. Tax minimization scheme
c. Appeal the decision of the Revenue District Officer/Revenue Regional Director to the
Commissioner of Internal Revenue
d. Appeal the final decision of the CIR to the Court of Tax Appeals
33. Which of the following is not correct?
a. The proceedings on the protest in the BIR is an administrative proceedings
b. Informers’ rewards shall be given to public officials who acquire information on violation
of internal revenue laws while in the performance of their duties during their incumbancy.
c. All taxes imposed and collected by the BIR are internal revenue taxes
d. A tax credit certificate validly issued by the BIR maybe used as credit against internal
revenue tax except against withholding tax
34. Which of the taxpayers below is not required to file a final or adjustment income tax return at
the end of the taxable year?
a. A taxpayer with respect to his 2 or more sale transactions during a taxable year of shares of
stock not traded through a local stock exchange
b. A domestic corporation
c. A resident individual with respect to his business income
d. A taxpayer with respect to his 2 more sale transactions during a taxable year of real
property
35. The following are remedies available to the government to collect taxes, except
a. Distraint and levy
b. Inquiring into bank deposit accounts of taxpayers
c. Entering into compromise of taxes cases
d. Enforcement of forfeiture of property
36. A donated a parcel of land to B, his 15 year old son on account of B’s graduation. A did not pay
the gift tax on the property donated. Then, B took possession of the property and received the
rental derived from it. In 2017, an assessment on the income derived from the property was
issued against B, which is correct?
a. The assessment against B is correct
b. The assessment against B should be deferred
c. The income should be included in A’s income tax return
d. A validly effected a transfer of the property to B by virtue of delivery.
37. A newly BIR-registered corporation filed its quarterly income tax return for the first quarter of
2014 and paid an income tax of 500,000 on May 15, 2014. In the subsequent quarters, the
corporation suffered losses so that on April 15, 2015, it declared a net loss of P 1,000,000 in its
annual income tax return. After failing to get a refund, the Corporation filed on May 30, 2016 a
case with the Court of Tax Appeals (CTA) to recover the P 500,000 in taxes paid on May 15,
2014. Did the claim for refund prescribe?
a. Yes. The appeal to the CTA to recover the overpayment of its 2014 quarterly income tax was
filed beyond the reglementary period of two years from payment of the tax on May 15,
2014.
b. No. the CTA cases was filed well within the two years prescription period as the
corporation is deemed to have paid the P500,000 as of April 15, 2015 and not the actual
payment date of May 15, 2014. This is so because the quarterly tax payments are merely
considered as advances or portions of the annual income tax due that will be known only
upon filing of the Final Adjustment Return or the Annual Income Tax Return.
Consequently, therefore, the two-year prescription period should be computed from the
time of filing the Final Adjustment Return or Annual Income Tax Return and final payment
of income tax and not from the payment of quarterly income tax.
c. No. As the corporation is a calendar taxable year taxpayer, the reglementary period of two
years within which to file a petition for review for recovery with the CTA will expire on
December 31, 2016, hence the appeal filed on May 30, 2016 was seasonably done.
d. Yes. The claim for refund has prescribed on May 15, 2016.
38. Statement 1: The regular courts could issue an injunctive writ to restrain the Bureau of Customs
(BOC) from undertaking seizure and forfeiture proceedings.

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 Statement 2: The BOC has the exclusive original jurisdiction over seizure and forfeiture cases
under the tariff and customs laws.
a. Both statements are correct.
b. Both statements are incorrect.
c. The first statement is correct, but the second statement is not.
d. The second statement is correct, but the first statement is not.
39. Bucayu received from the BIR a preliminary assessment notice advising him to explain why he
should not be subject of a formal letter of demand and final assessment notice (FLD/FAN).
Bucayu should respond to the said preliminary assessment notice within a period of:
a. 15 days from issuance of the preliminary assessment notice
b. 15 days from the receipt of the preliminary assessment notice
c. 30 days from receipt of the preliminary assessment notice
d. 30 days from issuance of the preliminary assessment notice.
40. Tom, Dick and Harry are surviving legitimate children of Tanda who died leaving a taxable estate
worth P 12 million. Gigi, surviving spouse of Tanda and mother of Tom, Dick and Harry, was
appointed administratrix of the estate. A compromise agreement was made and the surviving
heirs agreed to an equal distribution of the estate among themselves. The estate tax, however,
was not pain and an assessment was issued against the surviving heirs, each in an amount equal
to 25% of the tax assessed. Tom, Dick and Harry protested the assessment alleging that the tax
should be paid by Gigi as administratrix. Is the protest of Tom, Dick and Harry valid?
a. Not valid. Each of the surviving heirs is liable for the payment of such portion of the estate
tax as his/her distributive share bears to the total estate, regardless of whether or not the
designated administratrix has already secured a written discharge from liability from the
CIR.
b. Valid. Because they can not be made subsidiarily liable for the payment of the estate tax,
whether or not the administratrix has already secured a written discharge from personal
liability from the CIR.
c. Valid. The appointed administratrix is the one primarily liable for the payment of the
estate tax before delivery is made to any beneficiary of his/her distributive share of the
estate, besides there is no showing that the administratrix has already secured a written
discharge from liability from the CIR.
d. No valid. Because as beneficiaries of the estate, they are subsidiarily liable for the payment
of the estate tax, whether or not the administratrix has secured a written discharge from
liability from the CIR.
41. The Court of Tax Appeals (CTA) has jurisdiction to review by appeal over the following matters
arising under the NIRC of 1997, except one. Which one?
a. In instances where the CIR has failed to act on disputed assessment within 180 days from
submission of the protest for reconsideration.
b. The inaction of the CIR on disputed assessment after the lapse of 180 days from submission
of all relevant documents supporting a protest for reinvestigation.
c. In instances where the CIR has not acted on a claim for refund case and the two-year
prescription period is about to expire.
d. Decisions of the CIR in undisputed assessments.
42. Which of the following propositions is wrong?
a. The Court should construe a law granting tax exemption strictly against the taxpayer.
b. The Court of Tax Appeals has jurisdiction over decisions of the Commissioner of Internal
Revenue in cases involving liability for internal revenue taxes.
c. The Court of Tax Appeals has jurisdiction to review decisions of the Court of Tax Appeals.
d. The Supreme Court has juridsiction to review decisions of the Court of Tax Appeals.
43. Assume that the 2014 income tax return of Baguio was filed on March 1, 2015. In the absence of
fraud or intent to evade the tax, the BIR may assess the tax not later than:
a. March 1, 2018
b. March 15, 2018
c. April 15, 2020
d. March 1, 2020
44. Assume the same fact in No. 43, except that the income tax return was filed on June 30, 2015.
The prescription period of assessment is until:
a. March 1, 2018

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 b. April 15, 2018
c. June 30, 2018
d. June 30, 2020
45. In proper classes, the Commissioner of Internal Revenue shall grant a tax cerdit certificate or
refund for creditable input taxes within how many days from the date of submission of
complete documents in support of the application filed?
a. One hundred thirty (130) days
b. One hundred twenty-five (125) days
c. One hundred twenty (120) days
d. One hundred (100) days
46. Mr. Jesus Arellano transfers inter vivos a personal property to his son on March 15, 2018. His
son who lives in another province let his father know that he is accepting the gift on March 31,
2018. The personal property was delivered and received on April 15, 2018.
When shall be the last day to file the donor’s tax return and pay the donor’s tax?
a. April 24, 2018
b. April 30, 2018
c. May 15, 2018
d. None of the choices
47. It refers to a plea of re-evaluation of an assessment on the basis of existing records without
need of additional evidence. It may involve both a question of fact or of law or both.
a. Request for reconsideration
b. Request for informal conference
c. Request for reinvestigation
d. Request for compassion
48. A donation was made on March 14, 2015. The donor’s tax return was filed on March 31, 2015.
When is the last day to make a valid assessment?
a. March 14, 2018
b. April 13, 2018
c. April 14, 2018
d. September 14, 2018
49. A protest was filed on May 10, 2018. When shall be the last day to submit the required
documents?
a. July 9, 2018
b. July 10, 2018
c. July 15, 2018
d. No need to submit the documents.
50. Who is not an agent of the BIR Commissioner in collecting taxes?
a. The commissioner of Customs and his subordinates for internal revenue taxed on imported
goods.
b. The head of the appropriate government office and his subordinate for collection of energy
tax.
c. Banks duly accredited by the BIR for receipt of internal revenue taxes.
d. Municipal/City mayors for collection of local taxes.

II. Enumeration:
I. Kinds of Special tarrifs: (4 pts)
II. Kinds of Regular tariffs: (3 pts)
III. Duties and function of the Tariff Commission (TC): (8)
IV. Source or basis of LGU’s power to tax: (2)
V. Nature of real property tax: (3)

III. Identification:

1. The percentage applied to the FMV to determine the taxable value of real property.
(Assessment level)
2. Who collect the tax on real property tax? (City or Municipal Treasurer)
3. Date of the tax accrual for real property tax? (January 1)

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 4. These are direct taxes imposed on the privilege to use real property such as land, building,
machinery and other improvements, unless specifically exempted. (Real Property taxes)
5. Tax rate for professional tax? (No to exceed P 300)
ajmiranda
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Goodluck and Godbless

Reviewed and Checked by:

Dr. Genoveva Y. Reyes, CPA, FRIAcc

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