OPT, Excise, DST, Donor, Acctg Method

Question 1

1. A is the owner of a small variety store. His gross sales in any one year do not exceed P3,000,000. He is not VAT-registered. The following data are taken from the books of the variety store for the quarter ending September 30, 2023:
   Merchandise inventory, June 30, 2023 P100,000
   Gross sales 450,000
   Purchase from VAT-registered suppliers, gross of VAT 350,000

The percentage tax due is:
a. P10,000 b. P13,500 c. P16,500 d. None

2. Lilia’s Hobby Store, a non-VAT registered seller of model planes and cars, had the following sales for the calendar year 2023:
   1st Quarter ₱ 500,000
   2nd Quarter 250,000
   3rd Quarter 500,000
   4th Quarter 300,000
   Total ₱1,550,000

Compute the seller’s OPT liability for the 4 quarters:
(a) ₱5,000; ₱2,500; ₱5,000; ₱3,000
(b) ₱15,000; ₱7,500; ₱15,000; ₱9,000
(c) ₱5,000; ₱2,500; ₱15,000; ₱9,000
(d) None of the above.

3. In the third quarter of 2024, a taxpayer engaged in the sale of services whose annual gross sales do not exceed P3,000,000, had the following data:
   Accounts receivable, beginning of the quarter P 50,000
   Sales during the quarter 100,000
   Accounts receivable, end of the quarter 75,000
   Purchase of supplies, total invoice amount 11,200
   The percentage tax due for the quarter is:
   a. P2,250 b. P3,500 c. P3,000 d. P6,500
4. “A” operates a ferryboat. During a particular quarter, its sales consist of the following (without VAT):
   Transport of passengers P2,000,000
   Transport of goods 1,500,000
   Transport of cargoes 500,000

The common carrier’s tax payable is
a. P30,000 b. P90,000 c. P100,000 d. None

5. Using the data above, the output VAT is:
   a. P480,000 b. P90,000 c. P100,000 d. P240,000

Answer 1

1. B
2. C
3. C
4. D
5. A

Question 2

6. A person whose business is to keep automobiles for hire or keep them stored for use or order
   a. Keepers of garages
   c. Taxicab operators
   b. Common carrier
   d. Tourist bus operator
7. Which of the following statements is incorrect?
   a. A taxpayer whose annual gross sales exceed P3,000,000 shall pay VAT only if he is VAT- registered.
   b. A taxpayer whose annual gross sales do not exceed P3,000,000 but who is VAT-registered shall pay VAT.
   c. Excise tax may be imposed together with VAT.
   d. Percentage tax may be imposed together with excise tax.
8. One of the following is subject to common carrier’s tax
   a. Owners of banca
   b. Owners of animal-drawn two wheeled vehicles
   c. Common carriers by land for transport of goods or cargoes
   d. Common carriers by land for transport of passengers
9. The franchise tax of grantees of radio and television broadcasting whose annual gross sales of the preceding year do not exceed P10,000,000 shall be
   a. 3% of the gross receipts
   c. 4% of the gross receipts
   b. 3% of the gross sales
   d. 5% of the gross receipts
10. One of the following is not subject to the 3% percentage tax
    a. International air carrier doing business in the Philippines
    b. International shipping carrier doing business in the Philippines
    c. Domestic carriers and keepers of garage
    d. Franchise grantee of electric utilities

Answer 2

6. A
7. A
8. D
9. B
10. D

Question 3

16. ABC Insurance Corporation, a domestic corporation, VAT-registered, received the following premiums (net of any tax):
    . INSURANCE
    . Life Fire Marine
    Cash received P 400,000 P 300,000 P 300,000
    Promissory notes 100,000 ________ ________
    Totals P 500,000 P 300,000 P 300,000

a. The amount subject to percentage tax is
a. P400,000 b. P500,000 c. P900,000 d. P1,000,000

b. The percentage tax due is
a. P10,000 b. P8,000 c. P5,000 d. P20,000

c. The output VAT is
a. P36,000 b. P24,000 c. P72,000 d. P120,000

Answer 3

B
A
C

Question 4

11. Franchise grantees of city gas and water utilities are subject to franchise tax of
    a. 2%
    b. 3%
    c. 4%
    d. 5%
12. Amounts billed for overseas dispatch, message or conversations originating from the Philippines are subject to
    a. 3% franchise tax
    b. 10% overseas communication tax
    c. 2% franchise tax
    d. 10% VAT
13. A tax on the right or privilege to enter places of amusement
    a. VAT
    c. Amusement tax
    b. Franchise tax
    d. Income tax
14. One of the following is not subject to amusement tax on gross receipts
    a. Disco houses
    c. Professional basketball games
    b. Cockpits
    d. Bowling alleys
15. All of the following except one are liable to the 1/10 of 1% stock transaction tax. Which one is not?
    a. Individual taxpayers, whether citizens or alien
    b. Corporate taxpayers, whether domestic or foreign
    c. Estates and Trust
    d. Dealers in securities

Answer 4

11. A
12. B
13. C
14. D
15. D

Question 5

17. ABC Corporation, a VAT-registered domestic corporation, is a holder of a franchise to operate transportation units on land. The records for the month show (net of any tax):
    Cargo Passenger
    Gross sales from transporting P 2,000,000 P 3,000,000
    VAT Supplier Non-VAT Supplier
    Payments to P800,000 P300,000

The percentage tax due is
a. P150,000 b. P60,000 c. P90,000 d. P144,000

18. Using the preceding number, but the franchise is for air and sea transport, within the Philippines, the VAT payable is
    a. P144,000 b. P600,000 c. P468,000 d. P504,000
19. Using the preceding number, but the route is from the Philippines to foreign country, which of the following is correct?
    a. The corporation is exempt from VAT.
    b. The corporation is subject to percentage tax.
    c. The output vat is 0, hence the corporation cannot claim input tax.
    d. May claim a refund or credit the input taxes against other internal revenue taxes.
20. “A” is a holder of franchise to sell electricity. In a particular quarter, its gross sales amounted to P3,000,000 from the sale of electricity. It also leased its auditorium and theater amounting to P600,000. The percentage tax due for the quarter is
    a. P40,000 b. P60,000 c. P100,000 d. None

Answer 5

17. C
18. D
19. D
20. D

Question 6

21. “A” operates a cockpit. Inside the cockpit, he also operates a restaurant. Data for the particular quarter in 2024 follow:
    Receipts, cockpit operations P500,000
    Restaurant operations:
    Sale of food 100,000
    Sale of liquor 150,000
    The amusement tax due from A is
    a. P90,000 b. P135,000 c. P225,000 d. P75,000
22. Using the above data, except that the restaurant is not owned by A but is owned by another person, B, not VAT-registered and whose annual gross sales never exceeded P3,000,000. The amusement tax due from A is
    a. P90,000 b. P135,000 c. P225,000 d. P75,000
23. Continuing the preceding number, the percentage tax due from B is
    a. P90,000 b. P135,000 c. P225,000 d. P7,500
24. A, a resident citizen, promoted a world boxing championship in Manila featuring B, a Filipino champion. Gate receipts amounted to P3,000,000 and additional receipts from television coverage was P2,000,000. The amusement tax due is
    a. None b. P500,000 c. P300,000 d. P900,000
25. Assuming that the above data is not a world championship but a Philippine national boxing championship, how much is the amusement tax?
    a. None b. P500,000 c. P300,000 d. P900,000

Answer 6

21. B
22. A
23. D
24. A
25. B

Question 7

26. “A” is a radio-TV broadcasting franchise grantee. During the preceding year, its gross sales did not exceed P10,000,000. During the first quarter of the current year, it had the following data:
    Gross sales, sale of airtime P 2,000,000
    Gross sales, use of radio station’s communication facilities 500,000
    Business expenses 700,000
    The franchise tax due for the first quarter is
    a. P60,000 b. P40,000 c. P75,000 d. P39,000
27. A horseracing enthusiast has the following winnings during a particular racing day
    Total winnings P10,000
    Cost of winning tickets 500
    The OPT on winnings is
    a. P1,000 b. P400 c. P950 d. Zero
28. Using the data above, but the total winnings came from double bet, the percentage tax on winnings is
    a. P1,000 b. P400 c. P950 d. P380
29. MuniCity Bank has the following income/loss items for the months of March and April 2024:
    March 2024
    Interest income with maturity of less than 5 years ₱ 70,000
    Rental income 80,000
    Net trading loss (20,000)

April 2024
Interest income with maturity of less than 5 years ₱80,000
Rental income 90,000
Net trading gain 50,000

How much GRT is it liable for in March 2024 and in April 2024:
a) ₱3,500; ₱5,600 c) ₱9,100; ₱12,400
b) ₱9,100; ₱5,600 d) None of the above.

Answer 7

26. C
27. C
28. D
29. C

Question 8

36. Ms. Chona decided to undergo a noselift procedure. She availed of the services of Belat Clinic which is owned by Bole Medical Corporation, and located outside a hospital. Belat Clinic charged Ms. Chona ₱50,000, inclusive of VAT but exclusive of the 5% excise tax, for the service rendered. Compute the correct output VAT and the excise tax to be charged by Belat Clinic.
    (a) ₱5,625, ₱2,232
    (b) ₱5,600, ₱2,200
    (c) ₱5,620, ₱2,230
    (d) None of the above
37. In number 36, if a 15% CWT on professional income payments is withheld by Ms. Chona, how much will the Belat Clinic collect:
    (a) ₱45,804
    (b) ₱52,500
    (c) ₱46,906
    (d) None of the above
38. At an interest rate of 5%, a zero-coupon note with face value of ₱250,000 and a term of 2 years is issued at ₱226,757.37. The DST due is
    a) P1,700.68
    b) P2,000
    c) P1,875
    d) None of the above.
39. At an interest rate of 5%, a zero-coupon note with face value of ₱250,000 and a term of 120 days is issued at ₱245,998. The DST due is
    a) P606.57
    b) P500.88
    c) P389.29
    d) None of the above.
40. DST is necessary in:
    (a) Sale of real property
    (b) Inheritance of real property
    (c) Estate tax payment
    (d) Donation of real property exempt from the donor’s tax.

Answer 8

36. A
37. A
38. A
39. A
40. A

Question 9

30-32) ABC Corporation, a closely-held domestic corporation, has an authorized capital stock of 1,000,000 shares with a par value of P100/share. Of the 1,000,000 authorized shares, 250,000 thereof were subscribed and fully paid by the following stockholders:
A - 150,000
B - 50,000
C - 25,000
D - 12,500
E - 12,500
Total shares outstanding 250,000

30. ABC Corporation finally decided to conduct an IPO and initially offered 250,000 of its unissued shares to the investing public at P150/share. At the IPO, two of the existing stockholders, A and B, likewise decided to sell their entire 150,000 and 50,000 shares, respectively, to the public also at P150/share.
    What is the OPT and DST due on the original issuance of shares by ABC Corporation?
    a. ₱675,000; ₱0 b. ₱1,350,000; ₱0
    c. ₱0; ₱187,500 d. ₱0; ₱250,000

31) What is the OPT and DST due on the sale of shares by Stockholder A?
a. ₱675,000; ₱0 b. ₱125,000; ₱0
c. ₱22,500; ₱0 d. ₱135,000; ₱112,500

32. Stockholder A, in number 31, had previously bought the shares for a total of ₱12,500,000, and held the shares as capital assets. How much CGT would he be liable for in the sale of the shares thru the stock exchange?
    a. P1,500,000 b. P50,000 c. P100,000 d. P0
33. Sale, importation, printing, or publication of books and any newspaper, magazine, review, or bulletin which appears at regular intervals with fixed prices for subscription and sale, and which is not devoted principally to the publication of paid advertisements is:
    a) Subject to VAT and OPT
    b) Subject to VAT, exempt from OPT
    c) Exempt from VAT and OPT
    d) Exempt from VAT, subject to OPT
34. Allan Drinks Corporation, a manufacturer of carbonated drinks, will remove from its place of production 200 cases of its beverage containing high fructose corn syrup (“HFCS”) and a non-caloric sweetener. Each case contains 6 bottles of 1.5 liters each. The excise tax is P12/liter. Compute the excise tax to be paid before removal.
    a) P21,600
    b) P25,400
    c) P43,100
    d) None of the above.
35. Statement 1: The tax base for the excise tax excludes the VAT and the excise tax.
    Statement 2: The tax base for the VAT includes the excise tax.
    Statement 3: The tax base for the CWT excludes the VAT and the excise tax.
    (a) All are true.
    (b) All are false.
    (c) 2 are true.
    (d) 2 are false.

Answer 9

30. C
31. C
32. D
33. C
34. A
35. A

Question 10

41. The BIR assessed the taxpayer for deficiency DST on a loan extended to it by its affiliates, which is not covered by any document but disclosed in Note 18 of its Audited Financial Statements (AFS). The taxpayer argues that the Notes to AFS are neither documents nor debt instruments within the purview of Section 179 of the Tax Code. Thus, the advances extended to it by related parties as appearing in Note 18 of its 2019 AFS are not subject to DST.
    (a) The taxpayer is correct. The DST is literally a tax on the document that embodies the transaction.
    (b) The BIR is correct. The DST is imposed on the transaction rather than on the document.
42. The following transfers of shares of stock shall also be subject to DST under Section 175 of the Tax Code:
    (a) Transfer pursuant to a Deed of Donation;
    (b) Transfer pursuant to a will of a decedent as approved by a probate court in a judicial settlement of an estate;
    (c) When an heir, whether in a judicial or extra-judicial settlement of an estate, specifically waives or renounces his/her share in an inheritance in the form of shares of stock.
    (d) All of the above.
    (e) None of the above.
43. Sweet Foot Massage Parlor is not VAT-registered and its annual gross receipts do not exceed ₱2,500,000. Lolo Chris, a senior PWD, went to Sweet Foot Massage to augment his physical therapy. After the massage, he presented his PWD ID card to get the 20% discount. When he was shown the bill, he was surprised to see that while the establishment gave him a 20% discount, it was charging him the 3% other percentage tax (“OPT”).
    (A) Lolo Chris should present his Senior Citizen ID Card to be exempted from the 3% OPT.
    (B) Lolo Chris may refuse to pay as he is also entitled to exemption from payment of the OPT.
    (C) Lolo Chris is liable to pay the OPT as the exemption granted by the law from payment of indirect business taxes only covers VAT.
    (D) None of the above.

Answer 10

41. B
42. D
43. C

Question 11

1. S1: Documentary stamp tax is a tax on loan agreemetns and papers evidencing the acceptance, assignment, sale or transfer of an obligation, rights, or property incdient thereto, and in respect of the transaction so had or accomplished.
   S2: is levied on the exercise by persons of certain privileges conferred by law for the creation, revision or termination of specific legal relationships through the execution of specific instruments.
   a. Only statement 1 is correct
   b. Only statement 2 is correct
   c. Both statements are correct
   d. Both statements are incorrect
2. The amount of documentary stamp tax is
   a. Based on a fixed amount
   b. Based on par value
   c. Based on face value
   d. Any of the above
3. What is the nature of a documentary stamp tax?
   a. Personal tax
   b. Property tax
   c. Excise Taxa
   d. None of the above

Answer 11

TABAG

1. C
2. D
3. C

Question 12

4. Statement 1: DST is paid by the person making, signing, issuing, accepting or transferring the same wherever the document is made, signed, issued, accepted or transferred when the obligation or right arises from Philippine sources or the property is situated in the Philippines, and the same time such act is done or transaction had.
   Statement 2: Whenever one party to the taxable document enjoys exemption from the tax herein imposed the other party thereto who is not exempt shall be the one directly liable for the tax.
   a. Only statement 1 is correct
   b. Only statement 2 is correct
   c. Both statements are correct
   d. Both statements are incorrect
5. DST return should filed and the corresponding tax due shall be paid
   a. Within five (5) days after the close of the month when the taxable document was signed, issued, accepted or transferred.
   b. Within ten (10) days after the close of the month when the taxable document was signed, issued, accepted or transferred.
   c. Within fifteen (15) days after the close of the month when the taxable document was signed, issued, accepted or transferred.
   d. Within thirty (30) days after the close of the month when the taxable document was signed, issued, accepted or transferred.

Answer 12

4. C
5. A

Question 13

6. What is the effect of failure to stamp a taxable document?
   a. The taxable document is not invalidated
   b. The taxable document should not be recorded (i.e. in the Registry of Deeds)
   c. The taxable document should not be admitted or used as evidence in any court until the requisite stamp is affixed thereto and cancelled.
   d All of the above

Alpha corporation, a newly formed corporation organized under Philippines laws, issued on March 8, 2024 shares of stocks to one of its incorporators, Mr. dela Cruz for P250,000. the par value of the shares issued is P200,000.
7. How much is the documentary stamp tax due
a. 1k
b. 1,250
c. 2k
d. 2,500

8. How much is the documentary stamp tax due assuming the shares are without par value?
   a. 1k
   b. 1,250
   c. 2k
   d. 2,500
9. If the shares (with par value) were subsequently sold by Mr. Dela Cruz for P400k, how much is the documentary stamp tax due?
   a. 1,250
   b. 1,500
   c. 2k
   d. 2,500
10. If the shares (without par value) were subsequently sold by Mr. Dela Cruz for P400k, how much is the documentary stamp tax due?
    a. 1,250
    b. 1,500
    c. 2k
    d. 2,500

Answer 13

6. D
7. C
8. D
9. B
10. A

Question 14

11. Pedro sold one of his vacant lots in his hometown in Pampanga acquired by him five years ago for P6M. He sold the same to Juan for P15M, equivalent to the fair market value at the time of sale. How much is the documentary stamp tax due?
    a. 125K
    b. 225K
    c. 250K
    d. 275K
12. How much is the applicable DST due for all debt instruments?
    a. P1.50 per P200 or fraction thereof or 0.75% of the issue price
    b. P0.60 per P200 or fraction thereof or 0.30% Of the face value
    c: P3.00 per instrument
    d. Exempt

Answer 14

11. B
    Deed of Sale, Conveyances, Donations of Real Property (except grants, patents or original certificate of adjudication issued by the government)
    Php15 per P1,000 OR 1.5%
    Basis: Consideration or Fair Market Value, whichever is higher (if government is a party, basis shall be the consideration)
12. A

Question 15

1. S1: an excise tax is tax imposed on specific goods or services such as tobacco, fuel and alcohol
   S2. excise tax is a tax on the production, sale or consumption of a commodity in a country, including certain services
   a. Only s1 correct
   b. Only s2 correct
   c. both correct
   d. both incorrect
2. Excise tax is imposed on:
   a. Certain goods manufactured or produced in the Philippines for domestic sale or consumption on for any other disposition
   b. Certain goods imported
   c. Certain services performed in the Philippines
   d. All of the above
3. Excise tax shall be paid by
   A The manufacturer or producer of excisable product
   B The seller or distributor of excisable product
   C The buyer or consumer of excisable product
   D None of the above
4. Unless expressly provided by law or regulations, the payment of excise tax due shall be made
   A Fifteen (15) days after removal of domestic products from the place of production
   B Before removal of domestic products from the place of production
   C Thirty (30) days after removal of domestic products from the place of production
   D Ten (10) days after removal of domestic products from the place of production
5. It refers to the excise tax imposed which is based on weight or volume capacity or any other physical unit of measurement
   a. ad valorem
   b. specific tax
   c. value added tax
   d. none of the above

Answer 15

1. C
2. D
3. A
4. B
5. B

Question 16

6. It refers to the excise tax imposed which is based on selling price or other specified value of the goods/articles
   a. ad valorem
   b. specific tax
   c. value added tax
   d. none of the above
7. What is the formula for computing specific tax?
   A Specific Tax = No. of Units or other measurements x Specific Tax Rate
   B Specific Tax = No. of Units or other measurements x Selling Price of any specific value per unit x Specific Tax Rate
   C Specific Tax = Specific Tax No. of Units or other measurements x Ad Valorem Tax Rate
   D Specific Tax = Selling Price of any specific value per unit x Ad Valorem Tax Rate
8. What is the formula for computing ad valorem tax?
   A Ad Valorem Tax = Selling Price x Ad Valorem Tax Rate
   B Ad Valorem Tax = No. of Units or other measurements x Ad Valorem Tax Rate
   C Ad Valorem Tax = No. of Units or other measurements x Selling Price of any specific value per unit x Ad Valorem Tax Rate
   D Ad Valorem Tax = No. of Units or other measurements x Specific Tax Rate
9. Who is not liable for excise tax?
   A Importer or owner of imported articles
   B Owner or person having possession of articles removed from the place of production without the payment of the tax of domestic or local articles
   C Manufacturer or producer of domestic or local articles
   D None of the above
10. Which of the following persons is not liable for excise tax?
    A Person who is found in possession of article which are exempt from excise taxes on imported articles other than those legally entitled to exemption.
    B First buyer, purchaser, or transferee on local sale, barter, or transfer of indigenous petroleum, natural gas, or liquefied natural gas
    C Owner, lessee, concessionaire or operator of the mining claim on exportation of indigenous petroleum, natural gas or liquefied natural gas
    D None of the above

Answer 16

6. A
7. A
8. C
9. D
10. D

Question 17

11. The following information was provided on heated tobacco product. How much is correct floor price?
    Unit Pack
    Stick 20
    Production cost/landed cost, net excise and vat P95
    Excise tax P30
    Vat P15
    A P140.00
    B P150.00
    C P95.00
    D P125.00
12. Assume that in 2022, there was a removal of 50 cases of heated tobacco product from place of production in which 1 case contains 50 reams while 1 ream contains 10 packs. How much is the excise tax due assuming taxable year is 2022?
    A P750,000
    B P812,500
    C P853,125
    D P687,500
13. Assume that in 2022, there was a removal of 50 cases of heated tobacco product from place of production in which 1 case contains 50 reams while 1 ream contains 10 packs. How much is the inspection fee assuming taxable year is 2022?
    A P100.00
    B P25.00
    C P10.00
    D P50.00
14. How much is the correct excise tax of Nicotine salt or salt nicotine with volume content of 1.9ml, 500 packs of vapor products with 2 pods per pack?
    A 60K
    B 74K
    C 84K
    D 94K
15. How much is the correct inspection fee in the preceding number?
    A P21.00
    B P19.00
    C P20.00
    D P25.00

Answer 17

11. A
12. A
    no. of packs 25k
    * tax rate for 2022 P30
13. D
    total no. of sticks 500k
    divided by 1k sticks
    total no of thousand sticks 500
    * inspection fee 0.10
14. D
    total no of pods 1k
    P94
15. B
    total ml 1,900
    P0.01 inspection fee rate

Question 18

Filing and Payment of Excise Tax:

1. In General - ______ removal of domestic products from place of production
2. Nonmetallic mineral or mineral products or quarry sources - _________ removal of such products from the locality where it is mined or extracted
3. Locally produced or extracted metallic mineral or mineral products - Within _____ days after end of the calendar quarter when such products were removed
4. Imported mineral or mineral products (metallic or non-metallic) - ______ their removal from customs custody

Answer 18

1. Before
2. Upon
3. 15
4. Before

Question 19

1. Which of the following statements is correct?
   a. A transfer is gratuitous or without consideration and accordingly qualifies as a donation, if no economic benefit measurable in money or money’s worth flowed to the transferor from the transferee.
   b. A gratuitous transfer is always subject to donor’s tax.
   c. A donation on which the donor’s tax was not paid is not a valid donation.
   d. Title to the donated real property can be transferred to the donee in the Register of Deeds even if the donor’s tax on the donation had not been paid.
2. Donor’s tax is:
   a. A property tax
   b. A personal tax
   c. A business tax
   d. An excise tax
3. Donor’s tax is a(n)
   I. Excise tax
   II. Direct Tax
   III. Personal Tax
   IV. Property tax
   a. I and II only
   b. I, II and III only
   c. I, II and IV only
   d. I, II, III and IV
4. Statement 1: A gift occurs when the donor surrenders control over the property.
   Statement 2: If the donor retains an unlimited power to revoke the gift, it is clear that gift has occured.
   a. Only statement 1 is correct
   b. Only statement 2 is correct
   c. Both statements are correct
   d. Both statements are incorrect
5. Statement 1: Donor’s tax shall not apply unless and until there is completed gift.
   Statement 2: The transfer of property by gift is perfected from the moment the donor knows of the acceptance by the donee; it is completed by delivery, either actually or constructively, of the donated property to the donee.
   a. Only statement 1 is correct
   b. Only statement 2 is correct
   c. Both statements are correct
   d. Both statements are incorrect

Answer 19

1. A
2. D
3. A
4. A
5. C

Question 20

1. A gift that is incomplete because of reserved powers, becomes complete when either:
   I. the donor renounces the power; or
   II. his right to exercise the reserved power ceases because of the happening of some event or contingency or the fulfillment of some condition, other than because of the donor’s death.
   a. Only I is correct
   b. Only II is correct
   c. Both I and II are correct
   d. Both I and II are incorrect
2. The common characteristic of transfer taxes is that the transfer of property:
   a. Is onerous.
   b. Takes effect during the lifetime of the transferor.
   c. Takes effect upon the death of the transferor.
   d. Is gratuitous
3. One of the following is not a distinction between donation inter vivos and donation mortis causa.
   a. Donation inter vivos takes effect during the lifetime of the grantor while donation mortis causa takes effect after the death of the grantor.
   b. Donation inter vivos is subject to donor’s tax while donation mortis causa is subject to estate tax.
   c. Donation inter vivos requires a public document while donation mortis causa may not requires a public document.
   d. Donation inter vivos is valued at fair market value at the time the property is given while donation mortis causa is valued at the fair market value at the time of the death of the grantor.
4. Which of the following donations inter vivos may not require that it be in writing?
   a. Donation of personal (movable) property, the value of which exceeds P5,000.
   b. Donation of personal (movable) property, the value of which is P5,000.
   c. Donation of real (immovable) property, the value of which is less than P5,000.
   d. Donation of real (immovable) property, the value of which exceeds P5,000.
5. Which of the following statements regarding donation of an immovable property is correct?
   a. The donation must be made in public document specifying therein the property donated.
   b. The acceptance may be made in the same Deed of Donation or in a separate public instrument, but it shall not take effect unless it is done during the lifetime of the donor.
   c. If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments.
   d. All of the above

Answer 20

1. C
2. D
3. C
4. B
5. D

Question 21

1. Which of the following statements is correct?
   a. Donation of immovable property may be made orally or in writing.
   b. If the value of the real property donated exceeds P5,000, the donation and the acceptance shall be made in writing, otherwise, the donation shall be void.
   c. An oral donation requires the simultaneous delivery of the thing or of the document representing the right donated.
   d. All of the above
2. The following are the requisites of a donation for purposes of the donor’s tax, except one.
   a. Capacity of the donor
   b. Capacity of the donee
   c. Delivery of the subject matter or gift
   d. Donative intent
3. Statement 1: Donor’s tax shall be levied, assessed, collected and paid upon the transfer of property by any person, resident or non-resident, as a gift.
   Statement 2: The donor’s tax shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible.
   a. Only I is correct
   b. Only II is correct
   c. Both I and II are correct
   d. Both I and II are incorrect
4. Statement 1: “Consideration” means money or equal value or some goods or service capable of being evaluated in money.
   Statement 2: Donative intent is required only in indirect gift.
   a. Only I is correct
   b. Only II is correct
   c. Both I and II are correct
   d. Both I and II are incorrect
5. For the donation to be considered valid, acceptance of the donation must be made:
   a. During the lifetime of the donor only.
   b. During the lifetime of the donee only.
   c. During the lifetime of the donor and the donee.
   d. None of the choices.

Answer 21

1. C
2. B
3. C
4. A
5. C

Question 22

1. When is the donation perfected?
   a. The moment the donor knows of the acceptance by the donee
   b. The moment the thing donated is delivered, either actually or constructively, to the donee
   c. Upon payment of the donor’s tax
   d. Upon execution of the deed of donation
2. Which of the following statements is correct?
   a. Donation is perfected not from the time of acceptance but from the time of knowledge of the donor that the donee has accepted the donation.
   b. Acceptance must be made during the lifetime of the donor and of the donee.
   c. Donations made to conceived and unborn children may be accepted by those persons who would legally represent them if they were already born.
   d. All of the above
3. Which is not true?
   a. The donation is perfected only from the moment the donor knows of the acceptance by the donee.
   b. Vitiated consent renders the donation voidable.
   c. Acceptance may be made after the lifetime of the donor.
   d. The donee must accept the donation personally or through an authorized person; otherwise the donation shall be void.
4. Which of the following statements is correct?
   a. Donation is perfected not from the time of acceptance but from the time of knowledge of the donor that the donee has accepted the donation.
   b. Acceptance must be made during the lifetime of the donor and of the donee.
   c. Donations made to conceived and unborn children may be accepted by those persons who would legally represent them if there were already born.
   d. All of the above
5. Statement 1: Regardless of the relationship to the donee, donations made by the donor beginning January 1, 2018 shall be subject to 6% donor’s tax rate in excess of P250,000 exempt gifts.
   Statement 2: Donations made by or in favor of juridical persons beginning January 1, 2018 shall be subject to 6% donor’s tax rate in excess of P250,000 exempt gifts.
   a. Only the first statement is correct
   b. Only the second statement is correct.
   c. Both statements are correct.
   d. Both statements are incorrect.

Answer 22

1. A
2. D
3. C
4. D
5. C

Question 23

1. Which of the following constitutes “Gift” for donor’s tax purposes?
   a. Transfer of property without consideration.
   b. Sales, exchanges and other dispositions of property for a consideration to the extent that the value of the property transferred exceeds the value in money or money’s worth of the consideration received therefor.
   c. Both “a” and “b”
   d. Neither “a” nor “b”
2. Which of the following is subject to donor’s tax?
   I. Condonation of debt due to rendition of service.
   II. Condonation of debt made by a corporation in favor of its shareholders.
   III. Contribution in cash or in kind to any candidate, political party or coalition of parties for campaign purposes.
   a. I only
   b. II only
   c. II and III only
   d. None of the above
3. Which of the following transactions is deemed a taxable gift?
   a. Condonation or remission of a debt
   b. Sale of residential house and lot for less than adequate and full consideration in money or money’s worth
   c. Both (a) and (b)
   d. Neither (a) nor (b)
4. When an indebtedness is cancelled without any service rendered by the debtor in favor of the creditor, the forgiveness of debt will result to:
   a. taxable income
   b. distribution of dividend
   c. taxable donation
   d. taxable estate
5. If an individual performs services for a creditor who in consideration thereof cancels the debt, the cancellation of indebtedness may amount to a
   a. Gift
   b. Capital contribution
   c. Donation inter vivos
   d. Payment of income

Answer 23

1. C
2. D
3. A
4. C
5. D

Question 24

1. Which of the following renunciations shall be subject to donor’s tax
   I. Renunciation by the surviving spouse of his/her share in the conjugal partnership or absolute community after the dissolution of the marriage in favor of the heirs of the deceased spouse or any other person(s).
   II. General renunciation by an heir, including the surviving spouse, of his or her share in the hereditary estate left by the decedent.
   III. General renunciation by an heir, including the surviving spouse, of his or her share in the hereditary estate left by the decedent categorically in favor of identified heir(s) to the exclusion or disadvantage of other co-heir(s).
   a. I only
   b. I and II only
   c. I and III only
   d. I, II and III
2. Which of the following events is not subject to donor’s tax?
   a. A Filipino citizen donated a parcel of land located in the United States to B, non-resident alien.
   b. A resident alien made a gift of P200,000 to his daughter on account marriage.
   c. A non-resident citizen gives his girlfriend a diamond ring worth P100,00 as a birthday gift.
   d. A and B are the only heirs of C. A renounces his share of inheritance in favor of B.
3. A gift that is incomplete because of reserved powers, becomes complete when:
   I. The donor renounces the power
   II. The right of the donor to exercise the reserved power ceases because of the happening of some event or contingency or the fulfillment of some condition, other than because of the donor’s death
   a. I and II are correct
   b. I and II are not correct
   c. Only I is correct
   d. Only Il is correct
4. If the gift is made in properties, it shall be appraised at its:
   a. Fair market value as of the time the donor’s tax return is filed.
   b. Fair market value as of the time of donation.
   c. Historical cost at the time the donated property was acquired.
   d. Value in the hands of the donor
5. Every donation or grant of gratuitous advantage, direct and indirect, between the spouses during the marriage, shall be void, except:
   a. Moderate gifts which the spouses may give each other on the occasion of any family rejoicing.
   b. Donation mortis causa
   c. Donation propter nuptias which are given before the marriage.
   d. All the choices are correct exceptions.

Answer 24

1. C
2. D
3. A
4. B
5. D

Question 24

Mr. and Mrs. Pinagpala, made the following donations during 2021: * Jan. 25: To Oliver, their legitimate son, on account of marriage last January 20, 2016, car worth P400,000, with P200,000 unpaid mortgage, 1/2 was assumed by the donee. * May 31: To John, brother of Mr. Pinagpala, his capital property worth P200,000 on account of marriage 6 months ago with a condition that the donee will pay the donor's tax thereon. * July 15: To Felicity, daughter of Mrs. Pinagpala by former marriage, on account of her marriage 12 months ago, Mrs. Pinagpala's paraphernal property worth P100,000. * Aug. 20 Conjugal car of the couple worth P400,000, with P200,000 unpaid mortgage, 1/2 assumed by Felicity and P500,000 worth of land to their four sons on account of their graduation, 20% of which was owned by their closest friend Roy, who agreed to donate his share through a public document. 1. The gift tax payable of Mr. Pinagpala as of May 31 should be: a. P8,000 b. P7,000 c. P7,200 d. P6,000 2. The gift tax payable of Mrs. Pinagpala as of July 15 should be: a. P1,000 b. P2,600 c. P15,000 d. P0 3. The gift taxes payable of Mr. and Mrs. Pinagpala on August 20 should be: a. P27,000 & P21,000 b. P21,000 & P27,000 c. P21,000 & P21,000 d. P6,000 & P0 4. The gift tax payable of Roy on June 20 should be: a. P30,000 b. P6,000 c. P45,000 d. P0 5. Pedro gave gifts to the following persons on June 12, 2021, his 40th birthday: * A second hand car worth P350,000 to Kaskasero, his trusted driver. The donation was made orally. Since then, the driver had taken possession of the property. * To his Mayordoma, Ms. Mercy, a lot with a bungalow thereon, The value of the property is P1,200,000. The donation provides that it may be revoked anytime at the pleasure of Mikey. * His flower shop worth P700,000 to Hardinero, his gardener. The donation is provided in his will. * Cash of P100,000 each to his three long-time friends. How much is the donor's tax due a. P720,000 b. P45,000 c. P100,000 d. P3,000

Answer 24

1. D 2. D 3. C 4. D 5. D

Question 25

1. Statement 1: Where a property that has been subjected to the final capital gains tax is transferred for less than an adequate and full consideration in money or money's worth, the amount by which the fair market value of the property at the time of transfer exceeded the actual consideration shall be deemed gift and shall be included in the computation of gifts made during the calendar year. Statement 2: A donation inter-vivos by the husband and the wife jointly during the marriage is a donation of each spouse to the extent of one-half that will require separate computations for two donor's taxes, under whichever property relationship exists between the spouses. 2. Jose sold a vacant lot held as capital asset for P600,000 to his brother-in-law. The assessed value and zonal value of the land were P750,000 and P1,000,000 respectively. The sale is subject to: a. Subject to donor's tax only of P9,000. b. Subject to capital gains tax only of P60,000. c. Subject to donor's tax of P9,000 and capital gains tax of P60,000. d. Subject to donor's tax of P9,000 or capital gains tax of P60,000 at the option of Jose. 3. Jose sold a real property used in business for P600,000 to his brother-in-law. The assessed value and zonal value of the land were P750,000 and P1,000,000 respectively. The sale is subject to: a. Subject to donor's tax only of P9,000. b. Subject to capital gains tax only of P60,000. c. Subject to donor's tax of P9,000 and capital gains tax of P60,000. d. Subject to donor's tax of P9,000 or capital gains tax of P60,000 at the option of Jose. 4. Jose donated a vacant lot held as capital asset to his brother-in-law. The assessed value and zonal value of the land were P750,000 and P1,000,000 respectively. The land had an unpaid mortgage of P200,000, which was not assumed by the donee and an unpaid realty tax of P10,000 which was assumed by the donee. The donation is subject to: a. Subject to donor's tax only of P44,400. b. Subject to capital gains tax only of P60,000. c. Subject to donor's tax of P44,400 and capital gains tax of P60,000. d. Subject to donor's tax of P44,400 or capital gains tax of P60,000 at the option of Jose. 5. Which of the following is false? a. Donor's tax applies also to juridical persons b. For purposes of donor's tax, second cousins are strangers to each other c. Encumbrance on the property donated, if assumed by the donor is deductible for donor's tax purposes d. As a rule, donation between husband and wife during the marriage is void

Answer 25

1. C 2. B 3. A 4. A 5. C

Question 26

1. Which of the following is subject to donor's tax? a. Those made between persons who were guilty of adultery or concubinage at the time of the donation. b. Those made to conceived and unborn children. c. Those made to a public officer by reason of his office. d. Those made between husband and wife during their marriage. 2. Who is not subject to the donor's tax? a. An individual making a donation. b. A corporation making a donation. c. A partnership making a donation. d. An employer who pays premiums on the life insurance of its employee. 3. Statement 1: In all cases, void donations are not subject to donor's tax. Statement 2: Every donation between the spouses during the marriage shall be void. a. Only I is correct b. Only II is correct c. Both I and II are correct d. Both I and II are incorrect 4. A non-resident citizen donor is taxed on his donation of properties: a. Situated in the Philippines only. b. Wherever situated. c. Situated outside the Philippines only. d. Situated in the Philippines only subject to the rule of reciprocity. 5. Statement 1: Resident alien would be subject to donor's tax only on their donations of property located in the Philippines. Statement 2: A donation by a foreign corporation of its own shares of stock to resident employees is not subject to gift tax but may be subjected to income tax. a. Only the first statement is correct b. Only the second statement is correct. c. Both statements are correct. d. Both statements are incorrect.

Answer 26

1. B 2. D 3. A 4. B 5. B

Question 27

1. There is reciprocity, when the donor and the donated property is: a. Donor - Non-resident alien; Property - Intangible Personal Property b. Donor - Non-resident alien; Property - Immovable c. Donor - Non-resident alien; Property - Tangible Personal Property d. Donor - Resident alien; Property - Any kind of property 2. Which of the following is taxable only with respect to properties donated within the Philippines? a. Resident citizen b. Non-resident citizen c. Resident alien d. Non-resident alien 3. If a donor is a non-resident alien and the rule of reciprocity applies, which of the following properties will not form part of his gross gift? a. Real properties in the Philippines b. Tangible personal properties within the Philippines c. Intangible personal properties within the Philippines d. All of the choices 4. Juliet, a Filipina made the following donations. * To Nick, a land worth P450,000 in Manila. * To Rosalee, jewelry worth P100,000 in Japan. * To Adalind, PLDT shares amounting to P150,000. * To Renard, a building in Italy P1,600,000 mortgaged for P50,000 assumed by the donee. * To Drew, land in Davao worth P300,000. * P300,000 cash, PNB New York to Hank * P200,000 receivable, 50% condoned by Juliet She has also transferred the following properties: * Car, Makati (Selling Price - P200,000; FMV - P300,000) * Car, Malaysia (Selling Price - P300,000; FMV - P200,000) * Rest house, Tagaytay (Selling Price - P1,000,000; FMV - P2,000,000) * Rest house, Malaysia (Selling Price - P1,500,000; FMV - P2,500,000) How much is the gross gift? a. P5,200,000 b. P4,200,000 c. P4,100,000 d. P3,200,000 5. If she is a non-resident Alien, her gross gift is: a. P3,200,000 b. P1,200,000 c. P4,100,000 d. P3,200,000 6. If she is a non-resident alien, and there is reciprocity law, her gross gift is: a. P850,000 b. P950,000 c. P1,050,000 d. P700,000

Answer 27

1. A 2. D 3. C 4. C 5. C 6. A

Question 28

1. Which of the following is not a deduction from the gross gifts? a. Unpaid mortgage on the donated property assumed by the donee b. Unpaid real estate tax on the property donated assumed by the done c. Diminution on the donated property specifically provided by the donor d. Unpaid donor's tax on the donated property assumed by the donee 2. All of the following except one are exempt from gift tax under special laws a. Donation to Integrated Bar of the Philippines b. Donation to Development Academy of the Philippines c. Donation to Philippine Institute of Certified Public Accountants d. Donation to International Rice Research Institute 3. All of the following, except one, are exempt from donor's tax a. Donation to the Philippine National Red Cross b. Donation to the Development Academy of the Philippines c. Donation directly given to the victims of the typhoon Yolanda d. Donation to the City of Davao for public purpose 4. In 2018, Ronald gave a property with a fair market value of P2,000,000, with unpaid mortgage of P200,000 to be paid by him, to his son Daniel and Daniel's bride Emily, on account of their marriage 15 months ago. The allowable deduction is: a. P10,000 b. P20,000 c. P40,000 d. P0 5. The donor's tax payable should be: a. P300,000 b. P344,000 c. P105,000 d. P120,000

Answer 28

1. D 2. C 3. C 4. D 5. C

Question 28

1. A tax minimization scheme which is done by spreading the gift over numerous calendar years to avail of lower tax liability a. Spread-out method b. Donation of life insurance c. Splitting of gift d. Void donation 2. The spouses Ana and Pedro wanted to donate a parcel of land to their son Loma who is getting married in December, 2016. The parcel of land has a zonal valuation of P420,000.00. What is the most efficient mode of donating the property? a. The spouses should first donate in 2016 a portion of the property valued at P20,000, then spread the P400,000 equally for 2017, 2018, 2019 and 2020. b. Spread the donation over a period of 5 years by the spouses donating P100,000 each year from 2016 to 2020. c. The spouses should each donate a P110,000 portion of the value of the property in 2016 then each should donate P100,000 in 2017. d. The spouses should each donate a P100,000 portion of the value of the property in 2016, and another P100,000 each in 2017. Then, in 2018, Pedro should donate the remaining P20,000. 3. Jay sold his car to Jana for P200,000. Jay's car cost P500,000 and had a fair market value of P400,000, at the time of sale. What is the tax consequence of the sale? a. There is a taxable gift of P300,000 b. There is a taxable gift of P200,000 c. The transfer is for insufficient consideration, hence, not subject to donor's tax d. The transfer is involved a personal property, hence, not subject to donor's tax 4. Caroline donated P500,000 to her friend Vicky who was getting married. Caroline gave no other gift during the calendar year. What is the donor's tax implication on Caroline's donation? a. The P10,000 portion of the donation is exempt a dowry since it was given in consideration of marriage. b. Caroline donated to a stranger, hence, she shall pay a 30% donor's tax on her donation in excess of P250,000. c. Caroline shall pay a 6% donor's tax on her donation in excess of P250,000. d. The donation is exempt. 5. Mr.Putiis a Russian national residing in Ukraine. He donated some properties located in the Philippines and curious as to what can be deduct in arriving at his net gifts subject to donor's tax. Which of the following cannot be claimed as deduction? a. Gifts made to or for the use of the National Government b. Gifts in favor of an educational institution c. Both "a" and "b" d. Neither "a" nor "b"

Answer 28

1. C 2. C 3. B 4. C 5. D

Question 29

1. Pedro, single, donated the following properties on September 21, 2021: (Value; Property; Donee) * P100,000; Cash; Juan, brother, on account of marriage * P400,000; Jewelries; Kat, girlfriend residing in Korea * P1,500,000; House & lot; parents, silver wedding anniversary gift * P75,000; Land; Bgy. Mapayapa, for use of barangay hall * P300,000; Car; Fe, sister, donation is revocable * P50,000; Cash; International Rice Research Institute * P100,000; Cash; Guillermo, father of the father of his mother * P70,000; Motorcycle; Kay, niece, donation is embodied in the will The total donor's tax payable should be: a. P111,000 b. P126,000 c. P160,000 d. P220,000 2. Donor's tax credit is not allowed to a donor who is a: a. Resident citizen b. Non-resident citizen c. Resident alien d. Non-resident alien Patrick, resident alien, made the following donations for the year 2021: April 15: * To Hayley (legally adopted child): Car worth P700,000 in the Philippines. * To Rebekah (daughter): Car in Canada worth P300,000. The donor's tax paid in Canada was $200 ($1 = P45) July 20: * To Sophie (niece in Manila): P200,000 worth of personal property. * To Davina (legitimate daughter on account of marriage, July 18, 2017): Car in Manila, worth P400,000 but mortgaged for P200,000, 1/2 of which was assumed by the donee. 3. The gift tax payable on April 15 should be: a. P45,600 b. P30,000 c. P44,000 d. P36,000 4. The gift tax payable on July 20 should be: a. P40,000 b. P30,000 c. P84,000 d. P80,000

Answer 29

1. A 2. D 3. D 4. B

Question 30

1. Statement 1: Only one return shall be filed for several gifts (donations) by a donor to the different donees on the same date. Statement 2: If the donation involves conjugal/community property, each spouse shall file separate return corresponding to his/her respective share in the conjugal/community property. a. True, False b. False, True c. True, True d. False, False 2. Statement 1: If on any one date, there is a donation by one donor to his relative and another one to a stranger, there will be two (2) separate donor's tax return to be filled. Statement 2: In donor's tax, no extension of time for filling the donor's tax return is allowed. a. Statement 1 is correct, while Statement 2 is wrong b. Statement 1 is wrong, while Statement 1 is correct c. Both Statements are correct d. Both Statements are wrong 3. Statement 1: A donation can be both a part of the gross gift of the donor and a taxable income to the donee. Statement 2: A donation may be exempt from donor's tax but not necessarily a deduction from the donor's gross income. a. Only statement 1 is true b. Only statement 2 is true c. Both statements are true d. Both statements are false

Answer 30

1. C 2. B 3. B

Question 31

1. When the donor has no legal residence in the Philippines, the donor's tax return shall be filed with: a. Authorized Agent Bank. b. Revenue District Officer where the donor is domiciled. c. Revenue Collection Officer where the donee is domiciled. d. Office of the Commissioner. 2. Statement 1: Husband and wife are considered as separate and distinct taxpayers for purposes of the donor's tax. Statement 2: If what was donated is a conjugal or community property and only the husband signed the deed of donation, there is only one donor for donor's tax purposes, without prejudice to the right of the wife to question the validity of the donation without her consent pursuant to the pertinent provisions of the Civil Code of the Philippines and the Family Code of the Philippines. a. Statements 1 & 2 are false b. Statement 1 is true but statement 2 is false c. Statement 1 is false but statement 2 is true d. Statements 1 & 2 are true 3. Statement 1: When a donor's tax return was filed and it was found out by the BIR to have errors which gave rise to a deficiency donor's tax, the donor might be required to pay the deficiency although he did not possessed or own the property anymore. Statement 2: The Government is not bound by any agreement between the donor and the donee that the latter shall pay the donor's tax instead of the former. a. Statements 1 & 2 are false b. Statement 1 is true but statement 2 is false c. Statement 1 is false but statement 2 is true d. Statements 1 & 2 are true

Answer 31

1. D 2. D 3. D

Question 31

1. Julio made the following gifts to his relatives: Phils. * Gross gift: P750,000 * Deductions: P250,000 * Tax paid: P0 USA * Gross gift: P500,000 * Deductions: P200,000 * Tax paid: P25,000 UK * Gross gift: P250,000 * Deductions: P150,000 * Tax paid: P12,000 Italy * Gross gift: P500,000 * Deductions: P150,000 * Tax paid: P10,000 The donor's tax payable after tax credit is: a. P26,000 b. P30,800 c. P33,520 d. P60,000 2. Any person making a donation (whether direct or indirect), unless the donation is specifically exempt under the Tax Code or other special laws, is required, for every donation, to accomplish under oath a donor's tax return. The return shall set forth: I. Each gift made during the calendar year which is to be included in gifts II. The deductions claimed and allowable III. Any previous net gifts made during the calendar year IV. Name of the donee a. I and II only b. I, II and III only c. I, II and IV only d. All of the above 3. The donor's tax return shall be filed within: a. six (6) months after the date the gift is made or completed. b. two (2) months after the date the gift is made or completed c. thirty (30) days after the date the gift is made or completed. d. One year after the date the gift is made or completed 4. Unless the Commissioner otherwise permits, the donor's tax return shall be filed and the tax paid to the: I. Authorized agent bank (AAB) under the jurisdiction of the RDO where the donor is domiciled at the time of the transfer. II. Revenue District Officer or Revenue Collection of Officer having jurisdiction over the place where the donor is domiciled at the time of transfer. III. Office of the Commissioner if the donor has no legal residence in the Philippines IV. Philippine Embassy or Consulate in the country where the donor is domiciled at the time of the transfer or directly to the office of the Commissioner, in the case of gifts made by a nonresident. a. I and II only b. I, II and III only c. I, II and IV only d. All of the above 5. Manolo, a resident of Dagupan City donated to Arturo a property in Laoag City. The donor's tax is P40,000. The deed of donation was signed in the residence of Arturo in Baguio City. The donor's tax return must be filed in a. Dagupan City b. Laoag City c. Baguio City d. Quezon City

Answer 31

1. B 2. D 3. C 4. D 5. A

Question 32

1. Which one of the following cases may the taxable be computed not on the basis of the calendar year? I. Taxpayer has no accounting period II. Taxpayer does not keep books of accounts III. Taxpayer is an individual taxpayer IV. Taxpayer is a corpration V. Taxpayer is a general partnership a. IVonly b. IV and V only c. III, IV, & V only d. None of the above 2. Which of the following statements is correct? a. A change in the method of accounting requires a prior approval of the Commissioner of Internal Revenue. b. A change in accounting period does not require prior approval of the Commissioner of Internal Revenue as long as the necessary income tax returns for the different accounting periods are filed. c. Both "a" and "b" d. Neither "a" nor "b" 3. A method of accounting where income is reported in the year it is collected, actually constructively a. Cash basis c. Crop basis b. Accrual basis d. Installment method 4. Which of the following instances may give rise to short accounting period? a. When the corporation is newly organized using calendar year b. When a corporation is dissolved c. When a corporation changes accounting period d. All of the above 5. Which of the following instances may give rise to short accounting period? I. When the corporation is newly organized using fiscal year II. When a taxpayer dies III. When a corporation changes accounting method a. I only c. Ill only b. ll only d. I, II and III

Answer 32

1. B 2. A 3. A 4. D 5. B

Question 33

1. Which of the following statements in incorrect? a. No uniform method of accounting can be prescribed for all taxpayers. b. Each taxpayer is required by law to make a return on his true income. c. The taxpayer has to adopt accrual method of accounting because it isin accordance with generally accepted accounting principles d. Where purchase or sale of merchandise is an income-producing factor; inventories on hand shall be taken at the beginning and at the end of year. 2. Statement 1: If a taxpayer, other than an individual, with the approval of the Commissioner,changes the basis of computing net income from fiscal year to calendar year, separate finalor adjustment return shall be made for the period between the close of the last fiscal year forwhich return was made and the following December 31. Statement 2: If the change is from calendar year to fiscal year, a separate final or adjustmentreturn shall be made for the period between the close of the last calendar year for whichreturn was made and the date designated as the close of the fiscal year. a. Statements 1 & 2 are false b. Statement 1 is true but statement 2 is false c. Statement 1 is false but statement 2 is true d. Statements 1 and 2 are true 3. Statement 1: The method of accounting regularly employed by the taxpayer in keeping hisbooks, if such method clearly reflects his income, is to be followed with respect to the timeas of which items of gross income and deductions are to be accounted for. Statement 2: The computation shall be made in accordance with such method of accountingas in the opinion of the Commissioner clearly reflects the income if there is a method ofaccounting being employed by the taxpayer and such method of accounting clearly reflectthe income. a. Statements 1 & 2 are false b. Statement 1 is true but statement 2 is false c. Statement 1 is false but statement 2 is true d. Statements 1 and 2 are true 4. S1: The amount of all items of gross income shall be included in the gross income for the taxable year in which received by the taxpayer. S2: The deductions shall be taken for the taxable year in which "paid or accrued" or "paid or incurred", dependent upon the method of accounting the basis of which the net income is computed, unless in order to clearly reflect the income, the deductions should be taken as of a different period. a. Statements 1 & 2 are false b. Statement 1 is true but statement 2 is false c. Statement 1 is false but statement 2 is true d. Statements 1 and 2 are true 5. Which one of the following is an essential of an acceptable accounting method? a. There should be distinction between revenue and capital expenditures b. Expenses to restore property or prolong its useful life should not be added to the property account or charged against depreciation c. In all cases in which production, purchase or sale of merchandise is an income producing factor, inventories should be considered either at the beginning or at the end of the accounting period d. The accounting method should adhere to generally accepted accounting principles

Answer 33

1. C 2. D 3. B 4. D 5. A

Question 34

1. Statement 1: Income which is credited to the account of or set apart for a taxpayer and which may be withdrawn upon by him at any time is subject to tax for the year during which so credited or set apart, although not then actually reduced to possession. Statement 2: The doctrine of constructive receipt of income is designed to prevent the exclusion from taxable income of items, the actual receipt of which could, at the option of a tax payer on the cash basis, be deferred or indefinitely postponed. a. Statements 1 & 2 are false b. Statement 1 is true but statement 2 is false c. Statement 1 is false but statement 2 is true d. Statements 1 and 2 are true 2. The following statements pertain to registration requirements of every person required 3 toregister for tax purposes. Choose the incorrect statement. I. Every person subject to any internal revenue tax shall register once with theappropriate revenue district officer. II. A person maintaining a head office, branch or facility shall register with therevenue district officer having jurisdiction over the head office, branch of facility. III. In case a registered person decides to transfer his place of business or his headoffice or branches, it shall be his duty to update his registration status by filingan application for registration information update in a prescribed form. IV. The registration of any person who ceases to be liable to a tax type shall b ecancelled upon filing with the Revenue District Office where he is registered byfiling an application for registration information update in a prescribed form. a. III only c. All of the above b. IV only d. None of the above 3. Statement 1: Any person required under the authority of the Tax Code to make, render, orfile a return, statement or other documents shall be supplied with of assigned a singleTaxpayer Identification Number (TIN). Statement 2: The assigned TIN shall be indicated every time a return, statement ofdocument is filed with the BIR for the taxpayer's proper identification. a. Statements 1 & 2 are false b. Statement 1 is true but statement 2 is false c. Statement 1 is false but statement 2 is true d. Statements 1 and 2 are true 4. What is/are the penalty for non-issuance of receipts or invoices? a. Fine of not less than P1,000 but not more than P50,000; b. Imprisonment for not less than two (2) years but not more than four (4) years. c. Both "a" and "b" d. Neither "a" nor "b" 5. Prior to the effectivity of the TRAIN Law, what books of account shall be kept forthose whose quarterly sales/earnings/receipts or output do not exceed P50,000 prior to2018? I. Simplified set of bookkeeping records II. Journal and a ledger or their equivalents. III. Either simplified set or bookkeeping records or journal and a ledger ortheir equivalents IV. No books of account required. a. I only c. III only b. ll only d. IV only

Answer 34

1. D 2. D 3. D 4. D 5. A

Question 34

1. Prior to the effectivity of TRAIN Law, what books of account shall be kept for those whose quarterly sales, earnings, receipts or output exceed P50,000 I. Simplified set of bookkeeping records II. Journal and a ledger or their equivalents. lll. Either Simplified set or bookkeeping records or journal and a ledger ortheir equivalents IV. No books of account required. a. I only c. III only b. ll only d. I only 2. Prior to the effectivity of TRAIN Law, the books of account are required to be audited andexamined yearly by an independent CPA if the gross quarterly sales, earnings, receipts oroutput exceed a. P10,000 c. P50,000 b. P30,000 d. P150,000 3. The books of account may be kept in the following languages, except a. Native language b. Spanish c. English d. Chinese or Japanese 4. Statement 1: The books of account and other records shall be subject to examination andinspection only once in a taxable year by the BIR officers. Statement 2: The examination and inspection of books of account and other accountingrecords shall be done in the taxpayer's office or place of business or office of the BIR. a. Statements 1 & 2 are false b. Statement 1 is true but statement 2 is false c. Statement 1 is false but statement 2 is true d. Statements 1 and 2 are true 5. For income tax purposes, the examination and inspection of the books of account andrecords shall be made only once in a taxable year, except in the following cases. I. Fraud, irregularity or mistakes, as determined by the Commissioner; II. The taxpayer requests for reinvestigation; III. Verification of compliance with withholding tax laws and regulations; IV. Verification of capital gains tax liabilities; a. I and II only c. All of the above b. III and IV only d. None of the above

Answer 34

1. B 2. D 3. D 4. D 5. C

Question 35

1. Prior to the effectivity of RA 11976 or the EOPTA, all Books Of Accounts, including the subsidiary books and other accounting records Of corporations, partnerships, or persons, shall preserved by the taxpayer for a period of ______ years reckoned from the day following the deadline in filing a return, or if filed after the deadline, from the date of the filing of the return, for the taxable year when the last entry was made in the books of accounts. a. 2 years b. 3 years c. 5 years d. 10 years 2. Upon to the effectivity of RA 11976 or the EOPTA, all Books Of Accounts, including the subsidiary books and other accounting records Of corporations, partnerships, or persons, shall preserved by the taxpayer for a period of ______ years reckoned from the day following the deadline in filing a return, or if filed after the deadline, from the date of the filing of the return, for the taxable year when the last entw was made in the books of accounts. a. 2 years b. 3 years c. 5 years d. 10 years 3. Registration and updating of a taxpayers books of anunts shall be done: a. manually b, online/lelectronically c. either manually or online d. none of the above 4. Under RA11976 or the EOPTA, every person subject to any intemal revenue tax shall register with the Revenue District Office (RDO): a. manually b, online/lelectronically c. either manually or online d. none of the above 5. Prior to the effectivity of RA 11976 or the EOPTA, all persons sbject t0 an internal revenue tax shall, at the point of each sale and transfer of merchandise or for services, issue duly invoices for transactions valued at: a. P100 or more c. P500 or more b. P300 or more d. P1,000 or more

Answer 35

1. D 2. C 3. B 4. C 5. A