Which of the following taxpayers is taxable on income derived from sources within

and outside the Philippines?

A) Resident citizen
B) Resident alien
C) Resident alien and resident alien
D) Resident alien and non-resident citizen
ANSWER: A
Statement 1: As a general rule, for income tax purposes, a partnership is a
corporation.Statement 2: A general professional partnership is subject to income
tax at 30%.
A) Only Statement 1 is true.
B) Only Statement 2 is true.
C) Both statements are true.
D) Both statements are false.
ANSWER: A
Statement 1: An individual taxpayer whose only income is interest from bank
deposits need not file his income tax return.Statement 2: A minimum wage earner
who has derived no other income aside from his minimum wage employment need not
file his income tax return.
A) Only Statement 1 is true.
B) Only Statement 2 is true.
C) Both statements are true.
D) Both statements are not true.
ANSWER: C
SITUTATIONAL PROBLEM NO. 1: For items 10 to 12, refer to the following
information:YNTCD Partnership is a domestic partnership duly registered with the
Securities and Exchange Commission. Its total liabilities amounted
to ₱2,000,000.00 and its total partners' equity amounted to ₱3,300,000.00. Its
primary purpose, as stated in its Articles of Co-Partnership, is the selling of cat
food. The partners, Katy and Taylor, share equally in the profits. For the year
ended December 31, 2021, the income statement of YNTCD Partnership showed the
following: Sales 1,480,000.00 Less: Cost of sales
(650,000.00) Gross income 830,000.00
Operating expenses (360,000.00) Earnings before taxes
470,000.00Compute for the income tax due of YNTCD Partnership
A) 0
B) 94,000
C) 117,500
D) 141,000
ANSWER: B
All of the following can be deducted from a purely compensation income earner’s
income, except:
A) Union dues
B) Mandatory PAGIBIG contributions
C) Private health insurance contributions
D) Mandatory SSS contributions
ANSWER: C
Net of any applicable withholding taxes, how much will Katy receive assuming she is
a resident alien?
A) 131,600
B) 148,050
C) 188,000
D) 169,200
ANSWER: D
If a mixed income earner avails of the 8% income tax option, then:
A) He is entitled to deduct ₱250,000 as exempt compensation.
B) He is entitled to deduct ₱250,000 from his compensation as exempt compensation,
and another ₱250,000 as exempt income from trade or business.
C) He is entitled to deduct ₱250,000 from his compensation as exempt compensation,
and another ₱250,000 as exempt income from trade or business, at his option.
D) He is no longer entitled to any exemption.
ANSWER: A
Net of any applicable withholding taxes, how much will Taylor receive assuming she
is a non-resident alien engaged in trade or business?
A) 131,600
B) 148,050
C) 188,000
D) 150,400
ANSWER: D
Statement 1: A non-VAT registered taxpayer whose annual gross receipt is
₱4,500,000 cannot avail of the 8% income tax option.Statement 2: A VAT-registered
taxpayer whose annual gross receipt is ₱2,500,000 cannot avail of the 8% income tax
option.
A) Only Statement 1 is true.
B) Only Statement 2 is true
C) Both statements are true.
D) Both statements are not true
ANSWER: C
Broadly defined, this informs the taxpayer that he or she has tax liabilities.
A) Assessment
B) Investigation
C) Letter of authority
D) Litigation
ANSWER: A
Which of the following should be included as part of gross income subject to
regular income tax of a resident citizen taxpayer?
A) Royalties from literary compositions earned in the Philippines
B) Royalties from films showed in France
C) Prizes amounting to ₱40,000
D) PCSO winnings amounting to ₱6,000
ANSWER: B
Statement 1: An assessment can be orally made.Statement 2: An assessment should
contain the law and the facts on which the assessment is based.
A) Only Statement 1 is true.
B) Only Statement 2 is true.
C) Both statements are true.
D) Both statements are not true.
ANSWER: B
Which of the following is exempt from income tax for a resident citizen taxpayer?
A) a Royalties from literary compositions earned in the Philippines
B) Royalties from films showed in France
C) Prizes amounting to ₱40,000
D) PCSO winnings amounting to ₱6,000
ANSWER: D
Statement 1: Assessments are presumed to be correct.Statement 2: Assessments are
discretionary on the part of the Commissioner.
A) Only Statement 1 is true.
B) Only Statement 2 is true.
C) Both statements are true.
D) Both statements are not true.
ANSWER: C
Which of the following is an inclusion to gross income?
A) Proceeds of life insurance
B) Interest in the proceeds of life insurance
C) Property insurance recovery, proceeds equal to book value of property perished
D) Health insurance proceeds
ANSWER: B
This occurs when self-assessed tax per return filed by the taxpayer on the
prescribed date was not paid at all or only partially paid.
A) Deficiency tax
B) Delinquency tax
C) Deficit tax
D) Delayed tax
ANSWER: B
Generally, which of the following types of income is subject to final withholding
tax?
A) Compensation income
B) Business income
C) Passive income
D) Construction income
ANSWER: C
Which of the following can be the subject of a collection suit immediately without
the need of a prior assessment?
A) Delinquency tax
B) Deficiency tax
C) Both a and b
D) Neither a nor b
ANSWER: A
Which of the following types of income is no longer required to be reported in the
income tax return?
A) Income already subjected to final withholding tax
B) Income already subjected to creditable withholding tax
C) Illegal income
D) Income outside Philippine territory
ANSWER: A
It is defined as a delinquency tax assessment made without the benefit of a
complete or partial investigation by an authorized revenue officer.
A) Hasty assessment
B) Jeopardy assessment
C) Delinquency assessment
D) Impartial assessment
ANSWER: B
Which fringe benefit may be subjected to fringe benefit tax?
A) _De minimis_ fringe benefits given to rank and file employees
B) _De minimis _fringe benefits given to supervisory or management employees
C) Fringe benefits in excess of _de minimis _fringe benefits given to rank and file
employees
D) Fringe benefits in excess of _de minimis _fringe benefits given to supervisory
or managerial employees
ANSWER: D
It is an official document that empowers a Revenue Officer (RO) to examine and
scrutinize a taxpayer's books of accounts and other accounting records, in order to
determine the taxpayer's correct internal revenue tax liabilities.
A) Preliminary Assessment Notice (PAN)
B) Warrant of Inspection (WOI)
C) Letter of Authority (LA)
D) Arrest Warrant (AW)
ANSWER: C
A non-resident alien engaged in trade or business is one whose stay in the
Philippines is:
A) At least 180 days
B) More than 180 days
C) At least 183 days
D) More than 183 days
ANSWER: B
Which of the following is true regarding the taxation of distribution of profits to
partners?
A) A resident citizen partner in a general professional partnership is subject to
the final tax on dividends at the rate of 10% on his share in the profits.
B) A non-resident alien engaged in trade or business who is a partner in a
commercial partnership is subject to the final tax on dividends at the rate of 20%
on his share in the profits.
C) A resident alien partner in a general professional partnership is exempt from
income tax on his share in the profits.
D) A non-resident citizen who is a partner in a commercial partnership is subject
to the regular income tax at the graduated rates of 20% to 35% on his share in the
profits.
ANSWER: B
What is the income tax rate on presumed capital gain on sale of real property
classified as capital assets which are located within Philippine territory?
A) 15% on gain on sale
B) 6% on gain on sale
C) 15% on selling price or fair market value or zonal valuation, whichever is the
highest
D) 6% on selling price or fair market value or zonal valuation, whichever is the
highest.
ANSWER: D
Statement 1: A Preliminary Assessment Notice (PAN) need not be in
writing.Statement 2: If voluntary payments are made prior to the issuance of PAN,
then a PAN need not be issued.
A) Only Statement 1 is true.
B) Only Statement 2 is true.
C) Both statements are true.
D) Both statements are not true.
ANSWER: B
Based on the schedular rate of individual income taxation, how much annual income
is exempted from income tax?
A) ₱250,000
B) ₱500,000
C) ₱1,000,000
D) ₱1,500,000
ANSWER: A
In which of the following cases will a PAN not be required?
A) There is deficiency income tax due.
B) There is a mathematical error in the computation of taxes.
C) In cases involving documentary stamp tax
D) When there is discrepancy between tax payable and tax due.
ANSWER: B
In which of the following cases will a PAN not be required?
A) There is deficiency income tax due.
B) There is a mathematical error in the computation of taxes.
C) In cases involving documentary stamp tax
D) When there is discrepancy between tax payable and tax due
ANSWER: B
What is the final withholding tax rate for the royalty income of resident citizen
coming from his books, literary works, and musical compositions?
A) 10%
B) 15%
C) 20%
D) 25%
ANSWER: A
Within how many days should a taxpayer reply to the PAN?
A) Ten (10) days.
B) Fifteen (15) days.
C) Twenty (20) days.
D) Thirty (30) days.
ANSWER: B
What is the final withholding tax rate for the gross income of a non-resident alien
not engaged in trade or business?
A) 10%
B) 15%
C) 20%
D) 25%
ANSWER: D
A Final Assessment Notice (FAN) shall be issued within ___________ after the
expiration of the period to file the reply to the PAN or after receipt of reply to
the PAN.
A) Ten (10) days.
B) Fifteen (15) days.
C) Twenty (20) days.
D) Thirty (30) days.
ANSWER: B
Which income of a minimum wage earner is subject to income tax?
A) Holiday pay
B) Overtime pay
C) Night shift differential pay
D) None of the above
ANSWER: D
Mommy Divine Company received a Preliminary Assessment Notice on August 1, 2020.
As Mommy Divine was preparing her reply, Mommy Divine already received a Final
Assessment Notice on August 11, 2020. Rule on the validity of the Final Assessment
Notice.
A) The FAN is void. BIR should have waited for the reply to the PAN
B) The FAN is void. The right to due process of Mommy Divine has been violated.
C) The FAN is valid. Mommy Divine's period to file her reply expired on August 6,
2020.
D) The FAN is valid. Reply to the PAN is not mandatory in nature.
ANSWER: D
Which of the following taxpayers may avail of the 8% optional gross income
taxation?
A) Pure compensation income earner
B) Individual business income earner
C) Corporation
D) Partnership
ANSWER: B
Within how many days should a taxpayer protest to the FAN?
A) Ten (10) days.
B) Fifteen (15) days.
C) Twenty (20) days.
D) Thirty (30) days.
ANSWER: D
What is the maximum reward that may be given to informer of tax evasion?
A) 10% of the revenues, surcharges or fees recovered and/or fine or penalty imposed
and collected or one million pesos (₱1,000,000.00) per case whichever is lower.
B) 20% of the revenues, surcharges or fees recovered and/or fine or penalty imposed
and collected or one million pesos (₱2,000,000.00) per case whichever is lower.
C) 30% of the revenues, surcharges or fees recovered and/or fine or penalty imposed
and collected or one million pesos (₱3,000,000.00) per case. whichever is lower.
D) 40% of the revenues, surcharges or fees recovered and/or fine or penalty imposed
and collected or one million pesos (₱4,000,000.00) per case whichever is lower.
ANSWER: A
Which kind of protest requires the submission of additional supporting documents?
A) Request for reconsideration
B) Request for reinvestigation
C) Request for reconveyance
D) Request for recognition
ANSWER: B
What is the quantitative threshold for the taxpayer to avail of the 8% optional
gross income taxation?
A) Gross sales or receipts not exceeding ₱1,000,000
B) Gross sales or receipts not exceeding ₱2,000,000
C) Gross sales or receipts not exceeding ₱3,000,000
D) Gross sales or receipts not exceeding ₱4,000,000
ANSWER: C
Within how many days must additional supporting documents be submitted?
A) Fifteen (15) days from filing of a request for reinvestigation.
B) Thirty (30) days from filing of a request for reinvestigation.
C) Sixty (60) days from filing of a request for reinvestigation.
D) Ninety (90) days from filing of a request for reinvestigation.
ANSWER: C
Which of the following individuals is subject to gross income tax?
A) Resident citizen
B) Nonresident citizen
C) Resident alien
D) Nonresident alien not engaged in trade or business
ANSWER: D
Upon receipt of the protest in a request for reconsideration, within how many days
must the duly authorized representative or the Commissioner of Internal Revenue
decide?
A) 90 days.
B) 120 days.
C) 150 days.
D) 180 days.
ANSWER: D
The compensation income of which of the following is exempted from income tax?
A) Minimum wage income earner
B) Senior citizen
C) Either A or B
D) Neither A nor B
ANSWER: A
It is the decision of the Commissioner of Internal Revenue on the protest of the
taxpayer against an assessment.
A) Final Decision on Disputed Assessment (FDDA)
B) Final Decision on Contested Assessment (FDCA)
C) Final Decision on Protested Assessment (FDPA)
D) Final Decision on Questioned Assessment (FDQA)
ANSWER: A
Statement 1: A non-resident alien not engaged in trade or business subject to
income tax rate at a rate of 0% to 35% depending on his/her taxable
income.Statement 2: All resident citizens are required to file a quarterly income
tax return aside from their annual income tax returns.
A) Only Statement 1 is true.
B) Only Statement 2 is true.
C) Both statements are true.
D) Both statements are false.
ANSWER: D
Statement 1: Partnerships may be liable to pay improperly accumulated earnings tax
if they have improperly accumulated taxable income.Statement 2: Partnerships which
are organized as non-profit religious partnerships are exempt from income tax on
their income received by them as such.
A) Only Statement 1 is true.
B) Only Statement 2 is true.
C) Both statements are true.
D) Both statements are false.
ANSWER: B
In which income of an individual mixed income earner is he allowed to avail of 8%
gross income taxation?
A) Compensation income
B) Business income
C) Either A or B
D) Neither A nor B
ANSWER: B
It is defined as the contract between the government and the taxpayer to settle the
liability at a lower amount.
A) Abatement
B) Compromise
C) Settlement
D) Remission
ANSWER: B
Situational Problem No. 1: For items 31 to 33, refer to the following
information:Kathlyn, of Norwegian parentage, went to the Philippines for a short
lecture series about how to avoid bullying. The lecture series lasted for four
weeks. The following details pertain to Kathlyn’s lecture series in the
Philippines:Professional fees for lecture (₱80,000 a week)₱320,000Income from
onsite bookselling140,000Travel expenses incurred, with receipts120,000Food and
accommodation expenses incurred, with receipts100,000Kathlyn is a:
A) Resident citizen
B) Resident alien
C) Non-resident alien engaged in trade or business
D) Non-resident alien not engaged in trade or business
ANSWER: D
Which of the following is a ground for compromise?
A) Tax return of the taxpayer has been lost.
B) The prescriptive period to assess taxes has already expired.
C) A reasonable doubt as to the validity of the claim against the taxpayer exists.
D) The taxpayer is out of the country and cannot be served with summons by the
government.
ANSWER: C
Situational Problem No. 1: For items 31 to 33, refer to the following
information:Kathlyn, of Norwegian parentage, went to the Philippines for a short
lecture series about how to avoid bullying. The lecture series lasted for four
weeks. The following details pertain to Kathlyn’s lecture series in the
Philippines:Professional fees for lecture (₱80,000 a week)₱320,000Income from
onsite bookselling140,000Travel expenses incurred, with receipts120,000Food and
accommodation expenses incurred, with receipts100,000How much is Kathlyn's
Philippine income tax due?
A) ₱25,000
B) ₱55,000
C) ₱110,000
D) ₱115,000
ANSWER: D
What is the minimum compromise rate if the ground for compromise is financial
incapacity?
A) 10% of the basic assessed tax.
B) 20% of the basic assessed tax.
C) 30% of the basic assessed tax.
D) 40% of the basic assessed tax.
ANSWER: A
Situational Problem No. 1: For items 31 to 33, refer to the following
information:Kathlyn, of Norwegian parentage, went to the Philippines for a short
lecture series about how to avoid bullying. The lecture series lasted for four
weeks. The following details pertain to Kathlyn’s lecture series in the
Philippines:Professional fees for lecture (₱80,000 a week)₱320,000Income from
onsite bookselling140,000Travel expenses incurred, with receipts120,000Food and
accommodation expenses incurred, with receipts100,000Statement 1: The food and
accommodation expenses can be claimed by Kathlyn as a deductible expense for
purposes of computing Philippine income tax.Statement 2: The travel expenses can
be claimed by Kathlyn as a deductible expense for purposes of computing Philippine
income tax.
A) Only Statement 1 is true.
B) Only Statement 2 is true.
C) Both statements are true.
D) Both statements are not true.
ANSWER: D
In criminal tax cases, compromise should be made:
A) Before institution of criminal action
B) Before arraignment
C) Before conviction of a violation of tax laws
D) Before imprisonment
ANSWER: A
Which of the following is a resident foreign corporation?
A) Blossom Corporation, a foreign corporation with five out of seven directors in
the Philippines.
B) Bubbles Corporation, a foreign corporation with an isolated transaction in the
Philippines.
C) Buttercup Corporation, a foreign corporation with a branch in the Philippines.
D) Booba Corporation, a subsidiary foreign corporation whose parent corporation is
a domestic corporation.
ANSWER: C
Statement 1: Civil cases already filed before the courts may no longer be the
subject of compromise.Statement 2: Criminal tax fraud cases cannot be the subject
of compromise.
A) Only Statement 1 is true.
B) Only Statement 2 is true.
C) Both statements are true.
D) Both statements are not true.
ANSWER: B
Which of the following prize is subject to regular income tax?
A) Prizes received by a domestic corporation, ₱100,000
B) Prizes received by a resident citizen, ₱20,000
C) Prizes received by a non-resident foreign corporation, ₱5,000
D) Prizes received by a non-resident citizen athlete who completed in an Asian
swimming championship as sanctioned by the national sports association.
ANSWER: A
When the administration and collection costs involved do not justify the collection
of the amount due, the tax due may be:
A) Compromised
B) Abated
C) Surcharged
D) Cancelled
ANSWER: B
Which is true regarding the taxation of non-resident foreign corporations?
A) They are subject to the final tax of 30% based on gross income.
B) They are subject to the final tax of 30% based on taxable income.
C) They are subject to the final tax of 25% based on gross income.
D) They are subject to the final tax of 25% based on taxable income.
ANSWER: C
What is the prescriptive period for assessing taxes?
A) Three (3) years from due date
B) Three (3) years from actual filing
C) Three (3) years from due date or actual filing, whichever is earlier
D) Three (3) years from due date or actual filing, whichever is later.
ANSWER: D
Which of the following corporations are exempt from income tax under Section 30 of
the Tax Code?I. Non-stock corporation organized and operated exclusively for
religious purposes.II. Non-stock corporation organized and operated exclusively
for charitable purposes.III. Non-stock corporation organized and operated
exclusively for athletic purposes.IV. Non-stock corporation organized and operated
exclusively for cultural purposes.
A) I and II only.
B) I, II, and III only.
C) I, II, and IV only.
D) I, II, III, and IV.
ANSWER: D
What is the prescriptive period in cases of fraudulent filing?
A) Ten (10) days from due date or actual filing, whichever is earlier.
B) Ten (10) years from due date or actual filing, whichever is later.
C) Ten (10) years from discovery of fraud.
D) Ten (10) years from commission of fraud.
ANSWER: C
Which of the following is not an exempt government owned and controlled corporation
for income tax purposes?
A) Home Development Mutual Fund
B) Social Security System
C) Philippine Health Insurance Corporation
D) Philippine Amusement and Gaming Corporation.
ANSWER: D
Mimiyuuuh Company filed its annual income tax return for the calendar year 2020 on
April 12, 2021. The BIR assessed Mimiyuuuh of deficiency taxes on April 24, 2024,
without alleging fraud. Mimiyuuuh, in its protest, contended that the period for
BIR to assess has already prescribed. Is Mimiyuuuh correct?
A) Yes, the right of BIR to assess has prescribed on April 12, 2023.
B) Yes, the right of BIR to assess has prescribed on April 12, 2024.
C) No, the right of BIR to assess will only prescribe on April 15, 2024.
D) No, the right of BIR to assess will only prescribe on April 15, 2025.
ANSWER: C
Under the CREATE Act, which of the following taxes is no longer imposed?I.
Minimum Corporate Income Tax (MCIT)II. Optional Corporate Income Tax (OCT) of
15%III. Improperly Accumulated Earnings Tax (IAET)
A) I and II only.
B) I and III only.
C) II and III only.
D) I, II, and III.
ANSWER: C
Harry Potter Company filed its donor's tax return for a donation made on March 1,
2020, on March 20, 2020. On April 13, 2020, Harry Potter Company filed an amended
donor's tax return declaring a gross gift which is 40% greater than the previously
declared gross gift. When is the last day for BIR to assess Harry Potter Company
for deficiency donor's tax assuming there is no fraud?
A) March 1, 2023.
B) March 20, 2023.
C) March 31, 2023.
D) April 13, 2023.
ANSWER: D
Namjoon is a non-resident alien. He stayed in the Philippines for a period of 70
days from March to May, went abroad, and return to the Philippines for a period of
120 days from August to December. For tax purposes, is Namjoon considered as a
non-resident alien engaged in trade or business?
A) Yes, considering that his longest stay in the Philippines was for a continuous
period of 120 days.
B) Yes, considering that he stayed in the Philippines for an aggregate period of
190 days.
C) No, considering that his longest stay in the Philippines was only for a
continuous period of 120 days.
D) No, considering that he stayed in the Philippines only for an aggregated period
of 190 days.
ANSWER: B
Which of the following partnerships is a taxable corporation in so far as the
income tax is concern?
A) General professional partnership
B) Commercial or business partnership
C) Both A and B
D) Neither A nor B
ANSWER: B
Chromatica Corporation was incorporated in 2020. SEC issued its Certificate of
Incorporation on June 30, 2020. Chromatica Corporation follows the calendar year.
When will the imposition of the minimum corporate income tax commence?
A) First quarter of 2023.
B) Third quarter of 2023.
C) First quarter of 2024.
D) Third quarter of 2024.
ANSWER: C
When is an amendment of a return considered substantial?
A) When there is underdeclaration exceeding 20%
B) When there is underdelcaration exceeding 25%
C) When there is underdeclaration exceeding 30%
D) When there is underdeclaration exceeding 40%
ANSWER: C
Minimum corporate income tax may be carried forward:
A) for the three (3) immediately succeeding taxable years.
B) for the four (3) immediately succeeding taxable years.
C) for the five (5) immediately succeeding taxable years.
D) for the one hundred seventy-eight (178) immediately succeeding taxable years.
ANSWER: A
Statement 1: If the taxpayer cannot be located in the address given to him in his
return, the period of prescription is tolled.Statement 2: If the taxpayer is out
of the Philippines, the period of prescription is tolled.
A) Only Statement 1 is true.
B) Only Statement 2 is true.
C) Both statements are true.
D) Both statements are not true.
ANSWER: C
Which of the following is not a ground for the suspension of imposition of the
minimum corporate income tax?
A) Sustained substantial losses
B) Prolonged labor dispute
C) Force majeure
D) Non-operation of the business
ANSWER: D
A final decision on disputed assessment (FDDA) may be the subject of a Petition for
Review within:
A) 30 days from the issuance of decision
B) 30 days from receipt of the taxpayer of the FDDA
C) 60 days from the issuance of decision
D) 60 days from receipt of the taxpayer of the FDDA
ANSWER: B
Who is given the authority to suspend the imposition of the minimum corporate
income tax?
A) The President, upon recommendation of the Secretary of Finance
B) The Secretary of Finance, upon recommendation of the Commissioner of Internal
Revenue
C) The Commissioner of Internal Revenue
D) The Commissioner of Internal Revenue, upon concurrence of all the Deputy
Commissioners.
ANSWER: B
Statement 1: A void assessment renders the FDDA void.Statement 2: A void FDDA
renders the assessment void.
A) Only Statement 1 is true.
B) Only Statement 2 is true.
C) Both statements are true.
D) Both statements are not true.
ANSWER: A
Statement 1: All proprietary educational institutions are not subject to minimum
corporate income tax.Statement 2: Domestic corporations engaged in the business as
depositary banks under the expanded foreign currency deposit system on their income
from foreign currency transactions with local commercial banks are not subject to
minimum corporate income tax.
A) Only Statement 1 is true.
B) Only Statement 2 is true.
C) Both statements are true.
D) Both statements are not true.
ANSWER: B
A Petition for Review against a FDDA shall be filed with:
A) A Division of the Court of Appeals
B) Court of Appeals _en banc_
C) A Division of the Court of Tax Appeals
D) Court of Tax Appeals _en banc_
ANSWER: C
Statement 1: A one-person corporation is taxed in a similar way as a sole
proprietorship.Statement 2: Due to their relatively small size, a one-person
corporation is always subject to 20% regular corporate income tax.
A) Only Statement 1 is true.
B) Only Statement 2 is true.
C) Both statements are true.
D) Both statements are not true.
ANSWER: D
The Court of Tax Appeals is composed of a Presiding Justice and ______ associate
Justices.
A) Seven
B) Eight
C) Nine
D) Ten
ANSWER: B
The reduced rate of 20% corporate income tax may apply to:
A) Domestic corporations
B) Resident foreign corporations
C) Domestic corporations and resident foreign corporations
D) Domestic corporations, resident foreign corporations, and non-resident foreign
corporations.
ANSWER: A
The Court of Tax Appeals is composed of a Presiding Justice and _____ associate
Justices.
A) Seven
B) Eight
C) Nine
D) Ten
ANSWER: B
Upon notice of an adverse decision by the Court of Tax Appeals Division, the
taxpayer must file:
A) A Petition for Review within 15 days to the Court of Tax Appeals _en banc._
B) A Petition for Review within 30 days to the Court of Tax Appeals _en banc._
C) A Motion for Reconsideration or Motion for New Trial within 15 days to the Court
of Tax Appeals Division.
D) A Motion for Reconsideration or Motion for New Trial within 30 days to the Court
of Tax Appeals Division.
ANSWER: C
In order for the reduce rate of 20% corporate income tax to apply, a domestic
corporation must have a taxable income:
A) Not exceeding ₱5,000,000
B) Less than ₱5,000,000
C) Not exceeding ₱100,000,000
D) Less than ₱100,000,000
ANSWER: A
If the decision of the Court of Tax Appeals _en banc_ is adverse to the taxpayer,
the taxpayer may lodge an appeal with:
A) Court of Appeals
B) Supreme Court
C) International Criminal Court
D) Court of Heaven
ANSWER: B
Which of the following is true regarding the capital gains tax liability of
corporations?I. A resident foreign corporation is subject to 15% capital gains tax
on its capital gain on sales of shares of its own shares directly to buyerII. A
domestic corporation is subject to 6% capital gains tax on gains of sale of any of
its capital assets situated in the PhilippinesIII. A domestic corporation is not
subject to 15% capital gains tax on its capital gain on sale of shares if the sale
was made through the local stock exchange
A) I only.
B) III only.
C) I and III only.
D) I, II, and III.
ANSWER: B
Fearless Corporation received an assessment notice from the Bureau of Internal
Revenue on 9 April 2021, assessing the corporation of deficiency income taxes for
taxable year 2017. Fearless Corporation follows the calendar year, and Fearless
Corporation has filed its annual income tax return for year 2017 on 7 April 2018.
The Bureau of Internal Revenue has sent the assessment notice on 5 April 2021 but
was only received by the taxpayer 9 April 2021. Has the assessment prescribed?
A) Yes. The assessment has prescribed on 7 April 2021, and the taxpayer was only
able to receive the assessment notice on 9 April 2021.
B) No. The assessment is set to prescribe on 7 April 2021, and the BIR was able to
send the assessment notice on 5 April 2021.
C) No. The assessment is set to prescribe on 15 April 2021, and the taxpayer was
able to receive the assessment notice on 9 April 2021.
D) No. The assessment is set to prescribe on 15 April 2021, and the BIR was able
to send the assessment notice on 5 April 2021.
ANSWER: D
Which taxable corporations is disqualified from claiming deductions from its gross
income?
A) Domestic corporation
B) Resident foreign corporation
C) Nonresident foreign corporation
D) None of the above
ANSWER: C
The rate of interest for late payment of taxes is set by the law at:
A) The legal interest rate.
B) Twelve (12) percent.
C) Six (6) percent.
D) Twenty (20) percent.
ANSWER: B
Which is true regarding the taxation of non-resident aliens not engaged in trade or
business?
A) They are subject to the final tax of 30% based on gross income.
B) They are subject to the final tax of 30% based on taxable income.
C) They are subject to the final tax of 25% based on gross income.
D) They are subject to the final tax of 25% based on taxable income.
ANSWER: C
Which of the following partnerships is required to file annual return to BIR
concerning its income?
A) General professional partnership
B) Commercial or business partnership
C) Both A and B
D) Neither A nor B
ANSWER: C
A lawyer, a civil engineer and a CPA established a partnership for the rendition of
consultancy services. How shall the income of the partnership be taxed?
A) It will be taxed like a taxable corporation.
B) It will be taxed like a self-employed individual.
C) It will be taxed like a pure-compensation income earner.
D) It will be exempted from payment of income tax.
ANSWER: A
What are the two kinds of interest under the Tax Code?
A) Deficiency and deficit interest
B) Deficiency and delinquency interest
C) Delinquency and demerit interest
D) Delinquency and deficit interest
ANSWER: B
Which corporation is taxable for its income from within and without sources in the
Philippines?
A) Domestic corporation
B) Resident foreign corporation
C) Nonresident foreign corporation
D) None of the above
ANSWER: A
The computation of deficiency interest is reckoned from:
A) Deadline for the payment of the tax due
B) Receipt of assessment notice
C) Finality of the assessment
D) Receipt of the FDDA
ANSWER: A
Which of the following GOCC is subject to corporate income tax?
A) Social Security System (SSS)
B) Government Service Insurance System (GSIS)
C) Philippine Health Insurance Corporation (PHIC)
D) Landbank of the Philippines (LBP)
ANSWER: D
All of the following would necessitate the imposition of the 50% surcharge, except:
A) Willful neglect to file the return within the period prescribed.
B) False return is willfully made.
C) Fraudulent return is willfully made.
D) Failure to file with the proper internal revenue officer.
ANSWER: D
Which of the following is subject to final withholding tax for its ordinary income?
A) Domestic corporation
B) Resident foreign corporation
C) Nonresident foreign corporation
D) None of the above
ANSWER: C
When will tax surcharge amounting to 50% of tax due be imposed?
A) In case of false fraudulent return is willfully made.
B) In case of failure to pay the full or part of the amount tax shown on any return
required to be filed, or before the date prescribed for payment.
C) Filing a return with an internal revenue officer other than those to whom the
return is required to be filed.
D) Failure to file any return and pay the tax due thereon.
ANSWER: A
Which of the following is a taxable corporation?
A) Government educational institutions
B) Civil league or organization not organized for profit but operate exclusively
for the promotion of social welfare
C) Profit cemetery company
D) Nonstock nonprofit educational institutions
ANSWER: C
What is the prescriptive period of assessment of tax in case of false or fraudulent
return?
A) Within 3 years from the last date of filing required by law or actual filing of
return whichever is later.
B) Within 5 years from the discovery of falsity or fraud.
C) Within 3 years from the discovery of falsity or fraud.
D) Within 10 years from the discovery of falsity or fraud.
ANSWER: D
Which corporation is subject to the minimum corporate income tax?
A) Proprietary educational institution
B) Nonprofit hospital
C) Nonresident Foreign Corporation
D) Resident Foreign Corporation
ANSWER: A
What is the jurisdictional amount for filing civil action for collection of taxes
to Court of Tax Appeals?
A) If the principal amount of taxes is ₱300,000.00 or less exclusive of charges and
penalties.
B) If the principal amount of taxes is ₱400,000.00 or less exclusive of charges and
penalties.
C) If the principal amount of taxes is at least ₱1,000,000.00 exclusive of charges
and penalties.
D) If the principal amount of taxes is at least ₱500,000.00 exclusive of charges
and penalties.
ANSWER: C
Situational Problem 2: For items 56 to 57, refer to the following
information:Dalagang Pilipina Company was incorporated on June 12, 1898. It uses
the fiscal year which begins from May 1 and ends on April 30 of the next year. For
the years ending April 30, 2022, and April 30, 2023, the following are the results
of operations: 20222023Sales14,000,00016,000,000Less: Cost of Sales(8,000,000)
(9,000,000)Gross Profit6,000,0006,000,000Less: Expenses(5,930,000)(3,500,000)Net
income70,0003,500,000Dalagang Pilipina Company assets amounting to ₱240,000,000,
which includes a parcel of land amounting to ₱5,000,000.How much is income tax
payable in 2022?
A) 17,500
B) 21,000
C) 60,000
D) 120,000
ANSWER: C
Which of the following is not an administrative remedy of BIR Commissioner to
collect tax?
A) Distraint of personal property
B) Civil case to collect a sum of money
C) Garnishment of bank deposit
D) Levy of real property
ANSWER: B
Situational Problem 2: For items 56 to 57, refer to the following
information:Dalagang Pilipina Company was incorporated on June 12, 1898. It uses
the fiscal year which begins from May 1 and ends on April 30 of the next year. For
the years ending April 30, 2022, and April 30, 2023, the following are the results
of operations: 20222023Sales14,000,00016,000,000Less: Cost of Sales(8,000,000)
(9,000,000)Gross Profit6,000,0006,000,000Less: Expenses(5,930,000)(3,500,000)Net
income70,0003,500,000Dalagang Pilipina Company assets amounting to ₱240,000,000,
which includes a parcel of land amounting to ₱5,000,000.How much is income tax
payable in 2023?
A) 832,500
B) 875,000
C) 951,000
D) 1,041,000
ANSWER: A
It refers to the pleading filed by the taxpayer in response to the Preliminary
Assessment Notice issued by BIR Commissioner.
A) Request for reconsideration
B) Request for reinvestigation
C) Formal protest
D) Reply
ANSWER: D
In computing for the optional standard deduction of individuals, the computation is
based on:
A) Gross sales or receipts
B) Gross income
C) Net income
D) Taxable income
ANSWER: A
Which of the following tax cases may be the subject matter of compromise agreement?
A) Estate tax case on ground of financial incapacity
B) Withholding tax case
C) Criminal tax case involving fraud
D) Criminal tax case not yet filed in court
ANSWER: C
Statement 1: If a taxpayer fails to choose whether he opts to claim itemized
deduction or optional standard deduction, the default mode of claiming deduction is
itemized deduction.Statement 2: If a taxpayer chooses optional standard deduction,
such taxpayer is barred from switching to itemized deduction for the next three
taxable years.
A) Only Statement 1 is true.
B) Only Statement 2 is true.
C) Both statements are true.
D) Both statements are not true.
ANSWER: A
In which scenario is previous issuance of preliminary assessment notice mandatory
for the validity of the issued final assessment notice with formal letter of
demand?
A) When the tax deficiency is due to mathematical error
B) When the amount of tax withheld is higher than the amount of tax remitted to BIR
C) When the tax deficiency pertains to value added tax
D) When the amount of tax refunded is still claimed as tax credit
ANSWER: C
Who among the following is most likely to be classified as a mixed income earner?
A) Sakura, who is part-time service crew at a fastfood store and a part-time
saleslady at two different department stores.
B) Tomoyo, who earns income from her freelance photography stints and is engaged on
a per-contract basis by different companies.
C) Yukito, who is a full-time Vice President for Human Resources at a multinational
company and a lessor of a five-floor apartment.
D) Toya, who is still a college student and has income from his gigs with his rock
band.
ANSWER: C
The payments by their clients to which type of partnership are exempted from
creditable withholding tax?
A) General professional partnership
B) Commercial or business partnership
C) Both A and B
D) Neither A nor B
ANSWER: A
Which of the following is an example of income tax credit?
A) Net operating loss carry over
B) Advertising expense
C) Excess MCIT carry over
D) Depreciation
ANSWER: C
Which of the following documents issued by BIR Commissioner must be duly protested
by the taxpayer to prevent the finality of assessment?
A) Final assessment notice with formal letter of demand
B) Preliminary assessment notice
C) Both A and B.
D) Neither A nor B.
ANSWER: A
Failure to withhold and remit taxes when the law requires that a taxpayer becomes a
withholding agent will result to:I. Non-deductibility of expensesII. Interest
and penaltiesIII. Annulment of the transaction
A) I only.
B) II only.
C) I and II only.
D) I, II, and III.
ANSWER: C
Which type of formal protest filed by a taxpayer before BIR Commissioner requires
the taxpayer to submit documentary evidence to BIR Commissioner?
A) Request for reconsideration
B) Request for reinvestigation
C) Both A and B
D) Neither A nor B
ANSWER: B
As distinguished from deductions, tax credit is:
A) A deduction on tax due
B) A deduction from gross income
C) A deduction from gross sales/receipts
D) A deduction from other income
ANSWER: A
What is the prescriptive period for filing claim for tax refund of national
internal revenue taxes?
A) Within 5 years from the date of payment of tax
B) Within 3 years from the date of payment of tax
C) Within 10 years from the date of payment of tax
D) Within 2 years from the date of payment of tax
ANSWER: D
Which of the following deductions is subject to a limit expressed as a percentage
of net sales or receipts?
A) Interest expense
B) Entertainment, amusement, and recreational expense
C) Rent expense
D) Charitable contributions
ANSWER: B
Which of the following is a ground for abatement of tax?
A) Financial incapacity of taxpayer
B) Reasonable doubt as to validity of claim against the taxpayer
C) The tax appears to be unjustly or excessively assessed
D) None of the above
ANSWER: C
The ceiling for entertainment, amusement, and recreational expense of 1% of net
revenues applies to
A) Taxpayers engaged in the sale of goods
B) Taxpayers engaged in the sale of services
C) Taxpayers engaged in exportation
D) Taxpayers engaged in domestic sales
ANSWER: B
What is the prescriptive period for collection of national internal revenue taxes?
A) Within 5 years from the finality of assessment of tax
B) Within 10 years from the finality of assessment of tax
C) Within 2 years from the finality of assessment of tax
D) Within 3 years from the finality of assessment of tax
ANSWER: A
Bad debts, as an allowable deduction
A) Requires proof of worthlessness and uncollectibility
B) Is an estimate of worthless and uncollectible accounts
C) Is determined by the lapse of time at which accounts remain uncollected
D) Is determined by materiality of the amount on uncollected accounts
ANSWER: A
Which court may enjoin the collection of national internal revenue taxes?
A) Court of Tax Appeals
B) Supreme Court
C) Either A or B
D) Neither A nor B
ANSWER: C
Statement 1: For a resident alien, foreign taxes paid may be claimed only as a
Philippine income tax credit but never as a deduction from gross income for
Philippine income tax purposes.Statement 2: For a resident citizen, foreign taxes
paid may be claimed either as a Philippine income tax credit or as a deduction from
gross income for Philippine income tax purposes.
A) Only Statement 1 is true.
B) Only Statement 2 is true.
C) Both statements are true.
D) Both statements are not true.
ANSWER: B
Which case may be filed by the government even the tax assessment case is still
pending?
A) Civil action to collect the tax
B) Criminal action for tax evasion
C) Both A and B
D) Neither A nor B
ANSWER: B
Net operating loss carry over
A) Can be deducted against income tax due to arrive at taxable income.
B) Can be deducted against gross income to arrive at income tax payable.
C) Can be deducted against gross income to arrive at income tax payable.
D) Can be deducted against gross income to arrive at taxable income.
ANSWER: D
What is the remedy available to the taxpayer if the 180-day period given by law to
BIR Commissioner to decide on the formal protest filed by taxpayer has already
lapsed without any action on the part of BIR Commissioner?
A) Wait for the decision of BIR Commissioner
B) Appeal before the CTA Division within 30 days from the lapse of the 180-day
period
C) Either A or B
D) Neither A nor B
ANSWER: C
Which of the following statements is/are true regarding the optional standard
deduction (OSD)?I. A taxpayer availing of OSD cannot simultaneously avail of
itemized deductions.II. A taxpayer availing of OSD cannot simultaneously avail of
net operating loss carryover.
A) I only.
B) II only.
C) Both I and II.
D) Neither I nor II
ANSWER: C
Under National Internal Revenue Code, which of the following government officer has
the power to cancel a tax liability?
A) BIR Commissioner
B) Revenue District Officer
C) BIR Deputy Commissioner
D) Revenue Regional Director
ANSWER: A
Which type of income taxpayer may still claim cost of sales as allowable deduction
aside from the 40% Optional Standard Deduction?
A) Individual income taxpayer
B) Corporate income taxpayer
C) Both a and b
D) Neither a nor b
ANSWER: B
Where the basic tax involved exceeds ₱1,000,000.00, who has the authority to
approve the tax compromise?
A) BIR Commissioner
B) Revenue District Officer
C) Revenue Regional Director
D) National Evaluation Board consisting of BIR Commissioner and 4 Deputy
Commissioners
ANSWER: D
Statement 1: A purely compensation income earner is required to file his second
quarter income tax return on August 15.Statement 2: A mixed income earner is
required to file his third quarter income tax return on December 15.
A) Only Statement 1 is true.
B) Only Statement 2 is true.
C) Both statements are true.
D) Both statements are not true.
ANSWER: D
Who shall pay the income tax on the taxable income of general professional
partnership?
A) General professional partnership
B) Clients of general professional partnership
C) Partners of general professional partnership in their separate income tax
returns
D) None of the above
ANSWER: C
What rule or principle is applied to determine the income taxability of tax refund
or recovery of previously written off bad debts?
A) Tax benefit rule
B) Tax credit rule
C) Tax avoidance rule
D) Tax dodging rule
ANSWER: A
Which of the following tax cases may be subject to tax compromised?
A) Estate tax civil case on the ground of financial incapacity
B) Tax civil cases finally decided by Supreme Court on the ground of reasonable
doubts as to the assessment
C) Withholding tax cases
D) Criminal tax cases without fraud and not yet filed in court
ANSWER: D
When shall bad debts expense be claimed as allowable deduction from gross income?
A) On the taxable year the bad debt expense is recognized
B) On the taxable year the account receivable is recorded
C) On the taxable year the bad debt is actually written off
D) On the taxable year the bad debt is estimated to be uncollectible
ANSWER: A
Which of the following may be subject to writ of garnishment by the BIR
Commissioner?
A) Land
B) Condominium unit
C) Bank deposit
D) Car
ANSWER: C
Up to what extent may wagering losses be claimed as deductions?
A) Up to 100% of wagering gains
B) Up to 25% of wagering gains
C) Up to 50% of wagering gains
D) Up to 75% of wagering gains
ANSWER: A
In which of the following tax assessment cases is prior preliminary assessment
notice necessary for the validity of final assessment notice?
A) When a discrepancy has been determined between the tax withheld and the amount
actually remitted by the withholding agent
B) When a taxpayer who opted to claim a refund or tax credit of excess creditable
withholding tax for a taxable period was determined to have carried over and
automatically applied the same amount claimed against the estimated tax liabilities
for the taxable quarter or quarters of the succeeding taxable year
C) When the article locally purchased or imported by an exempt person, such as, but
not limited to, vehicles, capital equipment, machineries and spare parts, has been
sold, traded or transferred to non-exempt persons
D) When a non-VAT registered person issues a VAT-Official Receipt or Sales invoice
in a VAT-Exempt transaction
ANSWER: D
Which of the following may be claimed as allowable deductions by a businessman?
A) Bribed money and illegal kickbacks
B) Immoral expenses
C) Personal and living expenses
D) None of the above
ANSWER: D
What is the minimum compromise rate equivalent if the ground for tax compromise is
based on reasonable doubt as to validity of assessment?
A) At least 10% of basic assessed tax
B) At least 20% of basic assessed tax
C) At least 30% of basic assessed tax
D) At least 40% of basic assessed tax
ANSWER: D
Situational Problem No. 3: For items 74 to 75, refer to the following
information:Paggie Ong has an entrepreneurial mind, but perhaps an evil one. In
order to maximize his wealth, Paggie Ong engaged in the illegal trading of drugs
and other contrabands, all of which were smuggled from overseas or produced in
clandestine laboratories in unsuspecting areas of the country.Paggie Ong is
registered with the Bureau of Internal Revenue as a VAT-registered sole proprietor,
but he is not declaring amounts in relation to his illegal operations.Three years
after he started his illegal operations, Paggie Ong was sacked by the Philippine
Drug Enforcement Agency. The PDEA was able to obtain a record of Paggie Ong’s
transactions throughout the year, and it was forwarded to the Bureau of Internal
Revenue for possible assessment of taxes.Which of the following statements is true
regarding Paggie Ong’s income?
A) Only Paggie Ong’s income from legal operations is subject to income tax.
B) Only Paggie Ong’s income from illegal operations is subject to income tax.
C) Both Paggie Ong’s income from legal and illegal operations are subject to income
tax.
D) No amount of Paggie Ong’s income is subject to income tax.
ANSWER: C
Which of the following is a valid ground for tax abatement or cancellation by BIR
Commissioner?
A) Reasonable doubt as to validity of the claim against the taxpayer
B) The financial position of the taxpayer demonstrates a clear inability to pay the
assessed tax
C) The administration and collection costs involved do not justify the collection
of the amount due
D) The tax or any portion thereof appears to be justly assessed
ANSWER: C
Situational Problem No. 3: For items 74 to 75, refer to the following
information:Paggie Ong has an entrepreneurial mind, but perhaps an evil one. In
order to maximize his wealth, Paggie Ong engaged in the illegal trading of drugs
and other contrabands, all of which were smuggled from overseas or produced in
clandestine laboratories in unsuspecting areas of the country.Paggie Ong is
registered with the Bureau of Internal Revenue as a VAT-registered sole proprietor,
but he is not declaring amounts in relation to his illegal operations.Three years
after he started his illegal operations, Paggie Ong was sacked by the Philippine
Drug Enforcement Agency. The PDEA was able to obtain a record of Paggie Ong’s
transactions throughout the year, and it was forwarded to the Bureau of Internal
Revenue for possible assessment of taxes.Which of the following statements is true
regarding Paggie Ong’s expenses?
A) The expenses from Paggie Ong’s illegal operations are deductions from gross
income.
B) The expenses from Paggie Ong’s illegal operations are not subject to withholding
requirements.
C) The expenses from Paggie Ong’s illegal operations are not allowable deductions.
D) The expenses from Paggie Ong’s illegal operations are subject to a limit of
deductibility of 10% of gross income.
ANSWER: C
Who has the original jurisdiction to entertain claim for tax refund of National
Internal Revenue Taxes?
A) Municipal Trial Court
B) Regional Trial Court
C) Court of Tax Appeals Division
D) BIR Commissioner
ANSWER: C
Situational Problem No. 4. For items 76 to 80, refer to the following
information:San Miggy Corporation, a corporation engaged in the selling of beer and
other alcoholic drinks, obtained information that you are studying Taxation. Upon
knowing such, the Chief Executive Officer of San Miggy Corporation contacted you
and sought your help for the computation of their income tax due. She presented to
you their income statement for the fiscal year ending February 28,
2022:Sales 25,000,000Cost of sales (15,000,000)Gross income 10,000,000Interest
income 200,000Rental income 1,800,000Total 12,000,000Expenses: Advertising
expense400,000 Entertainment expense500,000 Interest expense170,000 Salaries
expense600,000 Charitable contributions800,000 Training expense330,000 Utilities
expense550,000 Repairs expense850,000(4,200,000)Net income 7,800,000 The
charitable contributions were made to athletes. The training expenses were spent
for chemists who enrolled in public universities under an apprenticeship agreement
in accordance with the Labor Code. The interest income is gross of the 20% final
withholding tax, which have been duly withheld and remitted by the bank. The
rental income is gross of the 5% creditable withholding tax, which have been duly
withheld and remitted by the lessees. Prior quarter’s income tax payments amount
to ₱440,000. How much is deductible entertainment, amusement, and recreational
expense?
A) 125,000
B) 143,000
C) 259,000
D) 500,000
ANSWER: B
What is the prescriptive period for ordinary assessment by BIR Commissioner of
National Internal Revenue Taxes?
A) Within 2 years from the last date of filing of tax return acquired by law or
actual date of filing of tax return, whichever is later
B) Within 3 years from the last date of filing of tax return required by law or
actual date of filing of tax return, whichever is later
C) Within 4 years from the last date of filing of tax return required by law or
actual date of filing of tax return, whichever is later
D) Within 10 years from the last date of filing of tax return required by law or
actual date of filing of tax return, whichever is later
ANSWER: B
Situational Problem No. 4. For items 76 to 80, refer to the following
information:San Miggy Corporation, a corporation engaged in the selling of beer and
other alcoholic drinks, obtained information that you are studying Taxation. Upon
knowing such, the Chief Executive Officer of San Miggy Corporation contacted you
and sought your help for the computation of their income tax due. She presented to
you their income statement for the fiscal year ending February 28,
2022:Sales 25,000,000Cost of sales (15,000,000)Gross income 10,000,000Interest
income 200,000Rental income 1,800,000Total 12,000,000Expenses: Advertising
expense400,000 Entertainment expense500,000 Interest expense170,000 Salaries
expense600,000 Charitable contributions800,000 Training expense330,000 Utilities
expense550,000 Repairs expense850,000(4,200,000)Net income 7,800,000 The
charitable contributions were made to athletes. The training expenses were spent
for chemists who enrolled in public universities under an apprenticeship agreement
in accordance with the Labor Code. The interest income is gross of the 20% final
withholding tax, which have been duly withheld and remitted by the bank. The
rental income is gross of the 5% creditable withholding tax, which have been duly
withheld and remitted by the lessees. Prior quarter’s income tax payments amount
to ₱440,000. How much is deductible interest expense?
A) 104,000
B) 130,000
C) 138,000
D) 170,000
ANSWER: B
Which court has the authority to issue injunction to enjoin collection of national
tax?
A) Municipal Trial Court
B) Regional Trial Court
C) Court of Tax Appeals
D) Court of Appeals
ANSWER: C
Situational Problem No. 4. For items 76 to 80, refer to the following
information:San Miggy Corporation, a corporation engaged in the selling of beer and
other alcoholic drinks, obtained information that you are studying Taxation. Upon
knowing such, the Chief Executive Officer of San Miggy Corporation contacted you
and sought your help for the computation of their income tax due. She presented to
you their income statement for the fiscal year ending February 28,
2022:Sales 25,000,000Cost of sales (15,000,000)Gross income 10,000,000Interest
income 200,000Rental income 1,800,000Total 12,000,000Expenses: Advertising
expense400,000 Entertainment expense500,000 Interest expense170,000 Salaries
expense600,000 Charitable contributions800,000 Training expense330,000 Utilities
expense550,000 Repairs expense850,000(4,200,000)Net income 7,800,000 The
charitable contributions were made to athletes. The training expenses were spent
for chemists who enrolled in public universities under an apprenticeship agreement
in accordance with the Labor Code. The interest income is gross of the 20% final
withholding tax, which have been duly withheld and remitted by the bank. The
rental income is gross of the 5% creditable withholding tax, which have been duly
withheld and remitted by the lessees. Prior quarter’s income tax payments amount
to ₱440,000. How much is deductible charitable contributions?
A) 431,600
B) 432,900
C) 439,850
D) 800,000
ANSWER: A
Anthonkia filed her 2020 Income Tax Return and paid the tax due thereon on April 1,
2021. In case of deficiency, the last day for the Bureau of Internal Revenue to
send a Final Assessment Notice (FAN) is
A) April 1, 2024
B) April 15, 2025
C) April 15, 2024
D) April 15, 2031
ANSWER: C
Situational Problem No. 4. For items 76 to 80, refer to the following
information:San Miggy Corporation, a corporation engaged in the selling of beer and
other alcoholic drinks, obtained information that you are studying Taxation. Upon
knowing such, the Chief Executive Officer of San Miggy Corporation contacted you
and sought your help for the computation of their income tax due. She presented to
you their income statement for the fiscal year ending February 28,
2022:Sales 25,000,000Cost of sales (15,000,000)Gross income 10,000,000Interest
income 200,000Rental income 1,800,000Total 12,000,000Expenses: Advertising
expense400,000 Entertainment expense500,000 Interest expense170,000 Salaries
expense600,000 Charitable contributions800,000 Training expense330,000 Utilities
expense550,000 Repairs expense850,000(4,200,000)Net income 7,800,000 The
charitable contributions were made to athletes. The training expenses were spent
for chemists who enrolled in public universities under an apprenticeship agreement
in accordance with the Labor Code. The interest income is gross of the 20% final
withholding tax, which have been duly withheld and remitted by the bank. The
rental income is gross of the 5% creditable withholding tax, which have been duly
withheld and remitted by the lessees. Prior quarter’s income tax payments amount
to ₱440,000. How much is income tax due?
A) 1,643,680
B) 1,962,500
C) 2,054,600
D) 2,093,788
ANSWER: C
Mr. Lacson filed an income tax return for the calendar year 2022 on March 10,
2023. The BIR assessed a deficiency income tax on April 10, 2025. When is the
last day for the BIR to make a Formal Letter of Demand (FLD)?
A) April 15, 2026
B) April 10, 2025
C) April 15, 2025
D) March 10, 2026
ANSWER: A
Who among the individual taxpayers is qualified under substituted filing, assuming
they are all resident citizens?
A) Lisa, who is employed as an accounting teacher in two universities in Cavite.
B) Jennie, who sells cupcakes in her free time.
C) Rose, who is employed as a chef in a five-star restaurant, but at the same time,
won the lottery in the current taxable year amounting to ₱200,000,000.
D) Jisoo, who receives professional fees as a singer.
ANSWER: C
The share of a partner in the income of a commercial partnership amounting
to ₱3,000,000.00 shall be subjected to what type of tax to the commercial
partnership?
A) Final tax of 15% to be withheld by the commercial partnership
B) Creditable withholding tax of 15% to be withheld by the commercial partnership
C) Final tax of 10% to be withheld by the commercial partnership
D) Creditable withholding tax of 10% to be withheld by the commercial partnership
ANSWER: C
Situational Problem No. 4. For items 76 to 80, refer to the following
information:San Miggy Corporation, a corporation engaged in the selling of beer and
other alcoholic drinks, obtained information that you are studying Taxation. Upon
knowing such, the Chief Executive Officer of San Miggy Corporation contacted you
and sought your help for the computation of their income tax due. She presented to
you their income statement for the fiscal year ending February 28,
2022:Sales 25,000,000Cost of sales (15,000,000)Gross income 10,000,000Interest
income 200,000Rental income 1,800,000Total 12,000,000Expenses: Advertising
expense400,000 Entertainment expense500,000 Interest expense170,000 Salaries
expense600,000 Charitable contributions800,000 Training expense330,000 Utilities
expense550,000 Repairs expense850,000(4,200,000)Net income 7,800,000 The
charitable contributions were made to athletes. The training expenses were spent
for chemists who enrolled in public universities under an apprenticeship agreement
in accordance with the Labor Code. The interest income is gross of the 20% final
withholding tax, which have been duly withheld and remitted by the bank. The
rental income is gross of the 5% creditable withholding tax, which have been duly
withheld and remitted by the lessees. Prior quarter’s income tax payments amount
to ₱440,000. How much is income tax payable?
A) 1,113,680
B) 1,432,500
C) 1,484,600
D) 1,524,600
ANSWER: D
Carlos filed his Income Tax Return (ITR) for taxable year 2022 on May 2, 2023.
After an investigation, it was discovered that the tax paid was deficient. The
last day for the BIR to send an assessment is -
A) April 15, 2026
B) May 2, 2026
C) May 2, 2030
D) April 15, 2026.
ANSWER: B
Married taxpayers are:
A) Required to file separate tax returns.
B) Required to file a joint tax return and aggregate their income in the process of
computing the income tax due.
C) May file a joint tax return but are required to aggregate their income in the
process of computing their income tax due.
D) May file a joint tax return but are required to compute their income tax due
separately.
ANSWER: D
Which distributable income of a general professional partnership to its partners is
subject to final tax?
A) The share in net income actually distributed to the partners.
B) The share in net income credited to the capital account of the partners.
C) Both A and B.
D) Neither A nor B.
ANSWER: C