1.

The following are agents and deputies for the collection of National Internal
Revenue Taxes, except:
a. The Commissioner of Customs and his subordinates with respect to the
collection of national internal revenue taxes on imported goods
b. The head of appropriate government office and his subordinates with
respect to the collection of energy tax
c. Banks duly accredited by the CIR with respect to receipt of payments
of internal revenue taxes authorized to be made thru banks
d. The city and municipal treasurers with respect to collection of real
property tax.
2. A keeper of garage whose gross receipts for the year exceed P1,919,500
is subject to
a. VAT
b. common carriers tax
c. franchise tax
d. All of the above
3. The actual effort exerted by the government to effect the exaction of
what is due from the taxpayer is known as
a. assessment.
b. levy.
c. payment.
d. collection.
4. Sale of raw materials or packing materials to export-oriented enterprise is
considered export sales when export sales of such enterprise
a. Exceed 50% of total annual production
b. Exceed 60% of total annual production
c. Exceed 70% of total annual production
d. Exceed 80% of total annual production
5. Although the power of taxation is basically legislative in character, it is
NOT the function of Congress to
a. fix with certainty the amount of taxes.
b. collect the tax levied under the law.
c. identify who should collect the tax.
d. determine who should be subject to the tax.
5. Which of the following is taxable based on world income?
a. Resident alien
b. Nonresident citizen
c. Nonresident alien
d. Resident citizen
6. Which of the following expenses is not deductible from gross income?
a. Salaries and wages of employees.
b. Entertainment, amusement and recreation expenses.
c. Rental expenses.
d. Bribes, kickbacks and other similar payments.
7. Which theory in taxation states that without taxes, a government would
be paralyzed for lack of power to activate and operate it, resulting in its
destruction?
a. Power to destroy theory
b. Lifeblood theory
c. Sumptuary theory
d. Symbiotic doctrine
8. All of the following, EXCEPT one, are basic principles of a sound taxation
system:
a. Fiscal adequacy
b. Administrative feasibility
c. Theoretical justice
d. Inherent in sovereignty

9. A compromise for a tax liability on the ground of financial incapacity to

pay shall involve a payment of tax from the taxpayer at a minimum
compromise rate of
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
10. Which of the following is not an element of direct double taxation?
a. Two taxes;
b. Same subject matter;
c. Same year;
d. Same amount.
11. Double taxation in its general sense means taxing the same subject twice
during the same taxing period. In this sense, double taxation
a. violates substantive due process.
b. does not violate substantive due process.
c. violates the right to equal protection.
d. does not violate the right to equal protection.
12. The estate tax return should be accompanied by a certificate of an
independent Certified Public Accountant if the gross estate is:
a.
b.
c.
d.

P2,000,000
P2,000,000 or over
Over P2,000,000
P50,000 or over

13. The payor of passive income subject to final tax is required to withhold
the tax from the payment due the recipient. The withholding of the tax has
the effect of:
a. a final settlement of the tax liability on the income.
b. a credit from the recipient's income tax liability.
c. consummating the transaction resulting in an income.
d. a deduction in the recipient's income tax return.
14. Mr. Antonio B., a nonresident alien employed by a regional operating
headquarter of a multinational company, married, with 6 qualified dependent
children has the following data for the year 2013.
Gross compensation income
Premium payment on health
insurance
Compute for the tax due.
a.
b.
c.
d.

P
240,000
10,000

12, 020
36,000
72,000
none of the above

15. Passive income includes income derived from an activity in which the
earner does not have any substantial participation. This type of income is
a. usually subject to a final tax.
b. exempt from income taxation.
c. taxable only if earned by a citizen.
d. included in the income tax return.
16. John McDonald, a U.S. citizen residing in Makati City, bought shares or
stock of a domestic corporation whose shares are listed and traded in the
Philippine Stock Exchange at the price of P2,000,000. He sold the shares of
stock through his favorite Makati stockbroker at a gain of P200,000.
How much is his liability for income tax on the sale of shares?
a. 132,000
b. 11,000
2

c. 60,000
d. None
17. In 2010, Juliet Ulbod earned P500,000.00 as income from her beauty
parlor and received P250,000.00 as Christmas gift from her spinster aunt. She
had no other receipts for the year. She spent P150,000.00 for the operation of
her beauty parlor. For tax purposes, her gross income for 2010 is
a.
b.
c.
d.

P750,000.00.
P500,000.00.
P350,000.00.
P600,000.00.

18. ABC University, a proprietary educational institution has a gross income

for the taxable year of 15,000,000. Of the gross income 5,000,000 was
derived from unrelated trade or business. Total deductions amount to
3,000,000. What is the tax due?
a.
b.
c.
d.

1,200,000
3,600,000
4,500,000
None, the company is exempt from tax liability

19. Exempted from donors taxation are gifts made

a.
b.
c.
d.

for the use of the barangay.

in consideration of marriage.
to a school which is a stock corporation.
to a for-profit government corporation.

20. Consider the following statements:

I.
II.

No law granting any tax exemption shall be passed without the

concurrence of a majority of all the members of the Congress
Tax avoidance refers to the exploitation by the taxpayer of legally
permissible alternative tax rates or methods of assessing taxable
property or income in order to reduce or avoid tax liability.

Statement I
a. a. True
b. b. True
c. c. False
d. d. False

Statement II
True
False
True
False

21. Federico, a Filipino citizen, migrated to the United States some six years
ago and got a permanent resident status or green card. He should pay his
Philippine income taxes on
a. the gains derived from the sale in California, U.S.A. of jewelry he
purchased in the Philippines.
b. the proceeds he received from a Philippine insurance company as the
sole beneficiary of life insurance taken by his father who died recently.
c. the gains derived from the sale in the New York Stock Exchange of
shares of stock in PLDT, a Philippine corporation.
d. dividends received from a two year old foreign corporation whose gross
income was derived solely from Philippine sources.
22. An example of a tax where the concept of progressivity finds application
is the
a. income tax on individuals.
b. excise tax on petroleum products.
c. value-added tax on certain articles.
d. amusement tax on boxing exhibitions.
23. A corporation may change its taxable year to calendar or fiscal year in
filing
its annual income tax return, provided
a. it seeks prior BIR approval of its proposed change in accounting period.
b. it simultaneously seeks BIR approval of its new accounting period.
3

c. it should change its accounting period two years prior to changing its
taxable year.
d. its constitution and by-laws authorizes the change.
24. Political campaign contributions are NOT deductible from gross income
a. if they are not reported to the Commission on Elections.
b. if the candidate supported wins the election because of possible
corruption.
c. since they do not help earn the income from which they are to be
deducted.
d. since such amounts are not considered as income of the candidate to
whom given.
25. Which of the following is a deductible expense for income tax purposes?
a.
b.
c.
d.

Interest paid on delinquent business taxes

Provision for doubtful accounts
Ordinary repair for personal car
Salaries of domestic servants

26. The power to tax is the power to destroy. Is this always so?
a. No. The Executive Branch may decide not to enforce a tax law which it
believes to be confiscatory.
b. Yes. The tax collectors should enforce a tax law even if it results to the
destruction of the property rights of a taxpayer.
c. Yes. Tax laws should always be enforced because without taxes the
very existence of the State is endangered.
d. No. The Supreme Court may nullify a tax law, hence, property rights
are not affected.
27. Who among the following is a non-resident alien?
a. An alien who comes to the Philippines for a definite purpose which in
its nature may be promptly accomplished;
b. An alien who comes to the Philippines for definite purpose which in its
nature would require an extended stay;
c. An alien who has acquired residence in the Philippines;
d. An alien who lives in the Philippines with no definite intention as to his
stay.
28. Celia donated P 110,000.00 to her friend Victoria who was getting
married. Celia gave no other gift during the calendar year. What is the
donor's tax implication on Celias donation?
a. The P100,000.00 portion of the donation is exempt since given in
consideration of marriage.
b. A P10,000.00 portion of the donation is exempt being a donation in
consideration of marriage.
c. Celia shall pay a 30% donor's tax on the P110,000.00 donation.
d. The P100,000.00 portion of the donation is exempt under the rate
schedule for donor's tax.
29. All of the following statements, except one, are correct. Which is wrong?
a. April 15, August 15, November 15 of the current year, and April 15 of
the succeeding year, are dates (last day) for filing the quarterly income
tax returns of the individual who are self-employed;
b. April 15 is the last day for filing the annual income tax return of an
individual who are self-employed;
c. April 15 is the last day for filing of the income tax return for individuals
who have gross compensation income only, but whose income tax
returns show income tax due or refundable;
d. The dates will be other than the dates mentioned in (a) to (c) if the
individual has a fiscal year accounting period.
30. What is the effect on the tax liability of a taxpayer who does not protest
an assessment for deficiency taxes?

a. The taxpayer may appeal his liability to the CTA since the assessment
is a final decision of the Commissioner on the matter.
b. The BIR could already enforce the collection of the taxpayer's liability if
it could secure authority from the CTA.
c. The taxpayer's liability becomes fixed and subject to collection as the
assessment becomes final and collectible.
d. The taxpayer's liability remains suspended for 180 days from the
expiration of the period to protest.
31. The following, except one, give rise to the presumption that a corporation
is improperly accumulating profits. Identify the exception:
a. The corporation is a mere holding company.
b. The corporation is an investment company.
c. The corporation permits its profits to accumulate beyond the
reasonable needs of the business.
d. The corporation is a service enterprise.
32. No action shall be taken by the BIR on the taxpayers disputed issues until
the taxpayer has paid the deficiency taxes
a. when the assessment was issued against a false and fraudulent return.
b. if there was a failure to pay the deficiency tax within 60 days from BIR
demand.
c. if the Regional Trial Court issues a writ of preliminary injunction to
enjoin the BIR.
d. attributable to the undisputed issues in the assessment notice.
33. Which of the following statements is wrong?
a. A general partnership in trade shall no be treated as a corporation.
b. A co-ownership where the activities of the co-owners are limited to the
preservation of the property and collection of income from the property
shall not be treated as a corporation.
c. A co-ownership by investment of labor or capital shall be treated as a
corporation.
d. A regional operating headquarters of a multinational company shall be
considered a corporation.
34. Which among the following concepts of taxation is the basis for the situs
of income taxation?
a.
b.
c.
d.

Lifeblood doctrine of taxation

Symbiotic relation in taxation
Compensatory purpose of taxation
Sumptuary purpose of taxation

35. Statement 1: When an estate or a trust is taxable, the rules for

individuals shall apply.
Statement 2: Any distribution out of the current years income by a
taxable estate or trust is a deduction from the current years gross income
of the estate or trust, which in turn becomes an item of gross income for
the current year of the heir of the estate or the beneficiary of the trust.
a.
b.
c.
d.

Both statements are true.

Both statements are false.
The first statement is true, but the second statement is false.
The first statement is false, but the second statement is true.

36. In Operation Kandado, the BIR temporarily closed business

establishments, including New Dynasty Corporation that failed to comply with
VAT regulations. New Dynasty contends that it should not be temporarily
closed since it has a valid and existing VAT registration, it faithfully issued VAT
receipts, and filed the proper VAT returns. The contention may be rejected if
the BIR investigation reveals that:
a. the taxpayer has not been regularly filing its income tax returns for the
past 4 years.
5

b. the taxpayer deliberately filed a false and fraudulent return with

deliberate intention to evade taxes.
c. the taxpayer used falsified documents to support its application for
refund of taxes.
d. there was an understatement of taxable sales or receipts by 30% or
more for the taxable quarter.

For questions 37 to 40:

INCOME TAX INDIVIDUAL SEC 24A
Not Over P10,000
5%
Over P10,000 but Not Over P30,000
P500 + 10% in excess of P10,000
Over P30,000 but Not Over P70,000
P2,500 + 15% in excess of P30,000
Over P70,000 but Not Over P140,000 P8,500 + 20% in excess of P70,000
Over P140,000 but Not Over
P22,500 + 25% in excess of P140,000
P250,000
Over P250,000 but Not Over
P50,000 + 30% in excess of P250,000
P500,000
Over P500,000
P125,000 + 32% in excess of
P500,000
A certain taxpayer has the following income and expenses during the taxable
year.
Gross rental income (NWT) Phil
Rental expenses Phil
Business income Canada
Business expenses Canada
Salary Canada

P 285,000
150,000
400,000
100,000
200,000

37. If the taxpayer is a resident citizen the taxable income is

a.
b.
c.
d.

P 635,000
P 630,000
P 885,000
Answer is not given

38. The income tax payable in the Phil. in no. 2 above is

a. P 170,000
b. P 164,000
c. P 151,600
d. Answer is not given
a.

b. 39.
Supposing the taxpayer stayed in the Philippines from
March 1 to May 31, his taxable income is:
a P 300,000
b P 285,000
c P 135,000
d Answer is not given
c.
d. 40. The income tax payable by the taxpayer in no. 4 to the
Philippine government is
a P 21,500
b P 59,000
c P 75,000
d Answer is not given
e.

a.
b.
c.
d.

f. 41. Any internal revenue taxes which has been assessed within
the prescribed period may be collected by distraint or levy or by
proceedings in court:
Within 3 years following the assessment
Within 5 years following the assessment
Within 10 years
Answer not given
g.
h. 42. A building contractor had the following receipts during the
month:
i. Gross
receipts
on
principal
j. P
contracts completed
500,0
00
k. Gross receipts on sub-contracts
l. 400,0

completed
m. Receivables
on
principal
contracts completed
o. Receivables on sub-contracts
completed
q. The amount subject to business tax is:
a.
b.
c.
d.

P
P
P
P

500,000
900,000
580,000
950,000

00
n. 80,00
0
p. 50,00
0

a.
b.
c.
d.
a.
b.
c.
d.

a.
b.
c.
d.
a.
b.
c.
d.

ab.
a.
b.
c.
d.

a.
b.
c.
d.
ag.
a.
b.
c.
d.

r.
s. 43. The distinction of a tax from permit or license fee is that a tax is:
Imposed for regulation
One which involves an exercise of police power
One in which there is generally no limit on the amount that may be imposed
Limited to the cost of regulation
t.
u. 44. Which is not correct?
Taxes may be imposed to raise revenues or to provide disincentives to certain
activities within the state.
The state can have the power of taxation even if the Constitution does not
expressly give it the power to tax.
For the exercise of the power of taxation, the state can tax anything at any
time.
The provisions of taxation in the Philippine Constitution are grants of power
enabling the state to impose taxes.
v.
w. 45. The power of the Bureau of Internal Revenue to make assessments
will not include one of the following:
Examination of tax returns
To conduct inventory taking, surveillance, and to prescribe presumptive gross
sales and receipts
To inquire into bank deposit accounts of a taxpayer
To prescribe real property values
x.
y. 46. When a property is donated, the basis of the donors tax is
The cost of acquisition, if acquired by purchase or the fair market value at
acquisition date, whichever is higher.
The agreed upon value by the donor and the done
The fair market value at the time of donation
Any of the above
z.
aa.
47. PahTay, a Chinese billionaire and a Canadian resident, died
and left assets in China valued at P80 billion and in the Philippines
assets valued at P20 billion. For Philippine estate tax purposes the
allowable deduction for expenses, losses, indebtedness, and taxes,
property previously taxed, transfers for public use, and the share of
surviving spouse in their conjugal partnership amounted to P15 billion.
PahTays gross estate for Philippine estate tax purposes is
P 20 billion
P5 billion
P100 billion
P85 billion
ac.
ad.
48. Kristal, a pawnshop owner, is a non-VAT taxpayer. For the
month of April, she has gross receipts from Interests amounting to P
25,000. The pawnshop also conducted an auction sale that month. The
pawnshop has gain from it worth Php 13,850. How much is her
percentage tax for the month of April?
P 6,993.00
P 1,165.50
P 1,942.50
P 4,662.00
ae.
af. 49. Donors tax shall be filed within
30 days after the gift has been made
6 months after giving the gift
25 days after giving the gift
30 days after the end of every quarter

ah.
ai.

aj. 50. A Taxpayer, married, supports the following:

I.
Orland, legitimate child, 21 years old.
II.
Jaime, recognized natural child, 18 years old.
III.
Armi, stepchild, daughter of wife by a former marriage, 23 years old.
IV.
Widowed mother of her wife, 62 years old.
ak.
al. For income tax purposes, the taxpayer can claim:
am. Basic exemption
Additional exemption
a.
P50,000
P100,000
b.
P50,000
P75,000
c.
P50,000
P50,000
d.
P50,000
P0
an.
ao.
51. Which of the following is subject to fringe benefit tax?
ap.
a. Compensation of the rank and file employee.
b. Compensation of the supervisory or managerial employee.
c. Fringe benefit of the rank and file employee.
d. Fringe benefit of the supervisory or managerial employee.
aq.
ar. 52. Which is governed by gross income taxation.
as.
a. Domestic corporation
b. Resident foreign corporation
c. Non-resident foreign corporation
d. Educational institutions
at.
au.
53. Which of the following renunciations shall not be subject to
donors tax?
av.
a. 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
b. General renunciation by an heir, including the surviving spouse, of his/her
share in the hereditary estate left by the decedent
c. Renunciation by an heir, including the surviving spouse, of his/her share in
the hereditary estate left by the decedent categorically in favor of identified
heir/s to the exclusion or disadvantage of the other co-heirs
aw.
d. None of the choices
ax.
ay.54. Which of the following statements is WRONG:
az.
a.
Claims against insolvent person should be included in the gross estate
even if uncollectible.
b.
Transfer passing under special power of appointment is excluded from the
gross estate.
c.
Revocable transfers are includible whether or not the right to revoke is
exercised.
d.
Transfer in contemplation of death for adequate consideration is still
includible in the gross estate.
ba.
bb.
55. Which of the following is not correct about capital losses?
bc.
a. Losses from sales or exchanges of capital assets shall be allowed as
deduction only to the extent of capital gains.
b. Losses from sales or exchanges of capital assets shall be allowed as
deduction from ordinary income.
c. Losses from wagering transactions shall be allowed only to the extent of the
gains from such transactions.

d. If securities held as capital assets become worthless during the taxable year,
the loss resulting there from shall be considered as a loss from sale or
exchange of capital assets.
bd.
be.
56. Debt as distinguished from tax.
a. Based on law
b. May be paid in kind
c. Does not draw interest except when delinquent
d. Generally not subject to set-off or compensation
bf.
bg.
bh.
57. Who is the one statutorily liable for the payment of VAT?
bi.
a. Consumer
b. Buyer
c. Seller
d. Buyer or the Seller
bj.
bk.
58. The common characteristic of transfer taxes is the transfer
of property:
bl.
a. Is onerous.
b. Takes effect during the lifetime of the transferor.
c. Takes effect upon the death of the transferor.
d. Is gratuitous.
bm.
bn.
59. Which of the following statements is not correct?
bo.
a. Interest income from long term deposit is exempt from income tax.
b. Winnings from Philippine Charity Sweepstakes are exempt from income tax.
c. Royalties on books, literary works and musical compositions are subject to
10% non-creditable withholding tax.
d. A prize of P10,000 is subject to 20% final tax.
bp.
bq.
60. The additional exemption applies in all of the following
cases, except when:
br.
a. The father is absent on a business
b. A child or other dependent is away at school or on a visit
c. A parent, through force of circumstances, is obliged to maintain his
dependent children with relatives or in a boarding house while he lives
elsewhere
d. Without necessity the dependent continuously makes his home,
elsewhere
bs.
bt.
-end-