POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

COLLEGE OF ACCOUNTANCY AND FINANCE

Sta. Mesa, Manila

FINAL DEPARTMENTAL EXAMINATION

ACCO 3153 BUSINESS AND TRANSFER TAXES
1ST SEMESTER, S.Y. 2016-2017

28 SEPTEMBER 2016
8:00 AM 11:00 AM

IN THE PROVIDED SCANNABLE SHEET, SHADE THE BOX WHICH CORRESPONDS TO YOUR
CHOSEN ANSWER. WRITE YOUR COMPUTATIONS IN A SEPARATE WORKSHEET. KEEP YOUR
SCANNABLE SHEET CLEAN AND FREE FROM UNNECCESARY MARKINGS. YOU HAVE THREE (3)
HOURS FOR THIS EXAM. CHEATING IS A MAJOR OFFENSE. GOD BLESS!

PART I THEORIES (30 QUESTIONS, 1 POINT EACH)

1. As provided under the second paragraph of Section 105 of the National Internal Revenue Code, the value-
added tax (VAT) is an indirect tax and the amount of tax may be shifted or passed on to the buyer, transferee
or lessee of the goods, properties or services. Since the payment of the tax may be shifted by the seller to the
buyer, who shall file the VAT return?
a. The buyer, under the pay-as-you-file system.
b. The seller, because he is the one statutorily liable for the tax.
c. The buyer, because the burden of the payment of the tax is already passed on to him.
d. The seller, provided he agrees to the arrangement.

2. A property is considered transferred for insufficient consideration when

a. the consideration received is lower than the purchase price.
b. the consideration received is lower than the book value.
c. the consideration received is lower than the fair market value and the purchase price.
d. the consideration received is lower than the fair market value.

3. A donation of shares of stocks issued by a domestic corporation engaged in land and property development,
with a value of 3,500.00
a. may be made orally. c. should be in a public instrument.
b. should be in writing. d. is void.

4. For donors tax purposes, who among the following is not a relative?
a. illegitimate child. c. mother-in-law.
b. legally adopted child. d. granddaughter.

5. The part of the testator's estate which he cannot dispose of because the law has reserved it for certain heirs.
a. Legacy. c. Bequest.
b. Devise. d. Legitime.

6. The heirs acquire their successional rights over the decedent properties
a. at the exact moment of death.
b. when the properties are delivered to them, either actually or constructively.
c. when the heirs manifest their acceptance over the properties.
d. if they are indicated as heirs in the testators last will and testament.

7. Which of the following is not a business tax?

a. Value-Added Tax c. Income Tax
b. Percentage Tax d. Excise Tax

8. The monthly VAT declaration should be filed within

a. 10 days from the close of the taxable month.
b. 20 days from the close of the taxable month.
c. 25 days from the close of the taxable month.
d. 60 days from the close of the taxable month.
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9. If liable, when should the donors tax be paid?
a. Within 30 days from the donation.
b. Within 2 months from the donation.
c. Within 6 months from the donation.
d. Within 2 years from the donation.

10. The right to designate by will or deed the person or persons who are to receive certain properties from the
estate of a prior decedent.
a. Power of appointment. c. Deed of donation.
b. Right to revoke. d. Last will and testament.

11. Which of the following will not form part of landed cost for purposes of determining the VAT on importation?
a. Wharfage dues. c. Facilitation fees.
b. Arrastre charges. d. Brokerage fees.

12. It is the input tax to be credited against the output tax which is based on the value of the beginning inventory
or the actual VAT paid on such goods, materials and supplies, whichever is higher in case of taxpayers who
became VAT-registered upon exceeding the threshold gross sales or receipts or taxpayers who voluntarily
register under the VAT system even if they did not exceed such threshold.
a. 2% transitional input VAT. c. 2% presumptive input VAT.
b. 4% transitional input VAT. d. 4% presumptive input VAT.

13. A friend of yours has made various donations last year and this year. Your friend asks you on the proper
treatment as far as donors tax is concerned. What would you tell your friend?
a. The donations last year should not be added to the donations this year because the computation of
taxable net gifts is cumulative basis over a period of one calendar year.
b. The donations last year should be added to the donations this year because the computation of taxable
net gifts is cumulative, the donors tax paid last year serving as tax credit.
c. The donations last year should not be added to the donations this year, unless the donees are all relatives
or are all strangers.
d. The donations last year should be added to the donations this year because the computation of donors
tax is progressive in nature.

14. Which of the following is not an exclusion from gross estate?

a. The merger of usufruct in the owner of the naked title.
b. All bequests, devises, legacies or transfers to social welfare, cultural and charitable institutions where
not more than thirty percent (30%) of the said bequests, devises, legacies or transfers shall be used by
such institutions for administration purposes.
c. The interest of the surviving spouse in the net conjugal estate.
d. Retirement benefits received by employees of private firms from a private pension plan duly approved
by the BIR.

15. Persons or entities that are engaged in the lending, investing or placement of funds or evidence of indebtedness
or equity deposited with them, acquired by them or otherwise coursed through them, either for their own
account or for the account of others.
a. Banks. c. Brokers.
b. Dealers in securities. d. Non-bank financial intermediaries.

16. Mr. X is registered under the VAT system. He purchased fresh durian from a VAT-registered person from
Davao, converted them to durian candy and exported them to Taiwan. Which of the following is true?
a. There is no input VAT
b. There is a 12% input VAT
c. There is presumptive input VAT
d. There is transitional input VAT

17. Which of the following would not form part of the gross estate?
a. Exclusive property of the decedent.
b. Community/conjugal property of the decedent and the surviving spouse.
c. Share of the surviving spouse in the community/conjugal property.
d. Exclusive property of the surviving spouse.
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18. Which of the following is false? In value-added taxation, importations
a. are subject to VAT whether on not made in the ordinary course of trade or business.
b. subject to VAT is computed on the basis of total landed cost.
c. may adopt either inclusive or exclusive methods in the computation of the corresponding VAT.
d. makes tariff and customs duties as well as excise tax subject to VAT.

19. Which of the following is not subject to VAT?

a. Sale of gold to the BSP.
b. Sale of medical equipment to the World Health Organization.
c. Interest income earned by credit cooperatives.
d. Sale of shares of stocks by a dealer in securities.

20. Which of the following is not subject to VAT?

a. Sale of tapsilog.
b. Importation of bamboo poles.
c. Exportation of tomatoes.
d. Professional services by a CPA.

21. Lease of industrial units with monthly rentals of 10,000.00 per unit and annual gross receipts of 1,500,000.00
is
a. subject to VAT.
b. subject to percentage tax.
c. subject to VAT and percentage tax.
d. exempt from business tax.

22. Zack, a non-resident citizen, died. The only property that he owned at the time of his death are some shares
of stocks from a domestic corporation, which also operates outside the Philippines. At the time of his death,
the shares have a fair market value of 200,000.00. In this case, the heirs of Zack should file before the BIR
a. a notice of death.
b. an estate tax return.
c. a notice of death and an estate tax return.
d. nothing.

23. In estate taxation, there is a need to differentiate between ordinary deductions and special deductions because
a. only resident citizen decedents can claim special deductions.
b. only resident decedents can claim special deductions.
c. only citizen decedents can claim special deductions.
d. all decedents, except for non-resident aliens, can claim special deductions.

24. With respect to medical expenses as deduction from gross estate,

a. everything that are incurred within 1 year prior to the taxpayers death are deductible.
b. they are deductible up to the extent of 500,000.00, regardless of when they were incurred.
c. provided incurred within 1 year prior to the taxpayers death, but only up to 500,000.00.
d. provided incurred within 1 year prior to the taxpayers death, but only up to 200,000.00.

25. Mr. X inherited from his father a parcel of land while he was still single. If Mr. X gets married, under the
conjugal partnership of gains, this land will be classified as
a. exclusive, because it was acquired by Mr. X gratuitously.
b. conjugal, because properties brought into the marriage are classified as conjugal property.
c. exclusive, because properties brought into the marriage remain to be the exclusive property of the party.
d. conjugal, because properties acquired gratuitously forms part of conjugal property.

26. Mr. X inherited from his father a parcel of land while he was still single. If Mr. X gets married, under the
absolute community of property, this land will be classified as
a. exclusive, because it was acquired by Mr. X gratuitously.
b. community, because properties brought into the marriage are classified as community property.
c. exclusive, because properties brought into the marriage remain to be the exclusive property of the party.
d. community, because properties acquired gratuitously forms part of community property.

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27. Mr. X inherited from his father a house and lot when he was already married to Mrs. Y. Under the conjugal
partnership of gains, this property will be classified as
a. exclusive, because it was acquired by Mr. X gratuitously.
b. conjugal, because properties acquired during the marriage are classified as conjugal property.
c. exclusive, because properties acquired during the marriage are classified as exclusive property.
d. conjugal, because the property will be used by Mr. Xs family.

28. In computing for the claimable vanishing deduction, which of the following should not be considered?
a. Medical expenses.
b. Claims against insolvent persons.
c. Transfers for public use.
d. Casualty loss.

29. In determining the share of the surviving spouse,

a. medical expenses are considered as conjugal and hence deductible.
b. funeral expenses are considered as conjugal and hence deductible.
c. property transferred for public use are disregarded.
d. judicial expense for the estate of the deceased is considered as exclusive and hence disregarded.

30. Which word is not misspelled?

a. witholding
b. subsidised
c. eminent
d. compulsary

PART II PROBLEMS (35 QUESTIONS, 2 POINTS EACH)

A donor had the following data for the current taxable year:

Cash gift to a legitimate son and his bride, on account of their marriage 150,000.00
Jewelry, a birthday gift to his best friend, with an installment payable
of 50,000.00 to the be assumed by the donee 250,000.00
A 100 square meters lot in Manila, a donation to the government 300,000.00
A personal computer given to a daughter on account of her debut 80,000.00

31. How much is the total taxable net gift?

a. 420,000.00 c. 470,000.00
b. 430,000.00 d. 480,000.00

32. How much is the donors tax due to relatives?

a. 900.00 c. 1,400.00
b. 1,100.00 d. 2,400.00

In May 2016, Mr. Mapagbigay donated a real property to his legitimate son on account of the sons marriage.
Said property was acquired in 2008 at a cost of 560,000.00 with unpaid mortgage of 510,000.00 to be assumed
by the donee. At the time of donation, said property has a fair market value of 800,000.00. On the same date, he
donated educational books worth 35,000.00 to Burgos Elementary School, a government school.

In October 2016, Mr. Mapagbigay gave a gold bracelet worth 50,000.00 to his legally adopted daughter on
account of her marriage to be celebrated in November 2016 with a condition that said donee will donate 15,000.00
cash to their parish church to which the donee agreed. Mr. Mapagbigay likewise gave to his wife shoes and bags
worth 3,500.00 on account of his wifes birthday.

33. How much is the taxable gross gift in May 2016?

a. 560,000.00 c. 800,000.00
b. 650,000.00 d. 835,000.00

34. How much is the donors tax still due in October 2016?
a. 1,140.00 c. 1,540.00
b. 1,410.00 d. 1,740.00

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Tinda Corp. is a non-VAT registered taxpayer whose gross receipts never reached 1,919,500.00. It provided the
following data for July, 2015:

Sales on account 90,000.00

Sales for cash 100,000.00
Accounts receivable, beginning 50,000.00
Accounts receivable, ending 40,000.00
Cost of sales 90,000.00
Business expenses 40,000.00
Sales discounts 5,000.00

35. How much is the business tax due if Tinda is a seller of goods?
a. 6,000.00 c. 5,700.00
b. 5,850.00 d. 5,550.00

36. How much is the business tax due if Tinda is a seller of service?
a. 6,000.00 c. 5,700.00
b. 5,850.00 d. 5,550.00

37. How much is the business tax due if Tinda is an operator of cabaret?
a. 35,100.00 c. 58,500.00
b. 36,000.00 d. 60,000.00

38. How much is the business tax due if Tinda is an operator of racetrack?
a. 35,100.00 c. 58,500.00
b. 36,000.00 d. 60,000.00

Spouses Justin and Kerstin donated the following to their son Lester and their daughter-in-law Marjo, jointly:

House and lot in Makati, conjugal

with unpaid mortgage, 500,000.00 to be assumed by the donees 5,000,000.00
Cash in BDO, exclusive property of Kerstin 1,000,000.00
Shares of stocks from a domestic corporation, conjugal
with unpaid subscription, 400,000.00 to be assumed by the donees 1,000,000.00
Vacation house in Los Angeles, California, conjugal 4,000,000.00

39. As far as his donation to his son Lester is concerned, how much is the gross gift of Justin if he is a resident
citizen donor?
a. 2,500,000.00 c. 5,000,000.00
b. 3,000,000.00 d. 5,500,000.00

40. As far as her donation to her son Lester is concerned, how much is the taxable net gift of Kerstin if she is a
non-resident alien donor and there is no reciprocity?
a. 1,750,000.00 c. 2,250,000.00
b. 2,000,000.00 d. 3,000,000.00

41. As far as her donation to her daughter-in-law Marjo is concerned, how much is the gift tax due of Kerstin if
she is a non-resident alien donor and there is reciprocity?
a. 675,000.00 c. 525,000.00
b. 600,000.00 d. 337,500.00

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Mr. Pabenta made the following sales of goods during the month of October, exclusive of VAT:

Sales (40% is on account) 400,000.00

Installment sales, where 60,000.00 is collected 200,000.00
Consignment sales:
September 15 500,000.00
August 15 100,000.00
July 15 50,000.00
June 15 50,000.00

42. How much is the output VAT for the month of October?
a. 30,000.00 c. 67,200.00
b. 46,000.00 d. 84,000.00

Manix, a resident citizen, made the following donations for the year 2015:
On January 4to Nova, his friend, a car with a fair market value of 600,000.00, with unpaid mortgage of
100,000.00 to be assumed by Nova; to Oscar, his brother, cash for 80,0000.00.
On April 4to Pedro, the grandfather of his grandfather, a Rolex watch worth 50,000.00; to Sandra, his
niece, a set of encyclopedia with a value of 150,000.00.
On July 4to Tito, the spouse of the sister of his grandfather, a set of golf club worth 150,000.00; to
Ursula, a close friend, a pearl necklace worth 100,000.00.
On October 4to Victor, the son of his cousin, a grand piano worth 200,000.00; to the Barangay, a parcel
of land with a value of 120,000.00.

43. How much is the donors tax still due on January 4?

a. 204,000.00 c. 174,000.00
b. 180,000.00 d. 150,000.00

44. How much is the donors tax still due on April 4?

a. 2,000.00 c. 16,000.00
b. 5,200.00 d. 18,200.00

45. How much is the donors tax still due on July 4?

a. 31,000.00 c. 75,000.00
b. 34,000.00 d. 90,000.00

46. How much is the donors tax still due on October 4?

a. 13,200.00 c. 60,000.00
b. 15,800.00 d. 62,000.00

During the month, Lipad Corp., a transportation company, provided you with the following information:

Receipts:
From transport of passengers 1,500,000.00
From transport of goods 1,000,000.00
From transport of cargoes 500,000.00
Input tax on fuel for its common operations 12,000.00

47. How much is the total business taxes payable if Lipad Corp. is a domestic common carrier by land?
a. 213,000.00 c. 225,000.00
b. 219,000.00 d. 348,000.00

48. How much is the total business taxes payable if Lipad Corp. is a domestic common carrier by sea?
a. 213,000.00 c. 225,000.00
b. 219,000.00 d. 348,000.00

49. How much is the total business taxes payable if Lipad Corp. is an international common carrier by air?
a. 360,000.00 c. 90,000.00
b. 348,000.00 d. 78,000.00

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Mr. Ben Tah is a VAT-registered person. He purchased an equipment on the first month of the quarter for
1,500,000.00 before VAT and local goods at an invoice price of 336,000.00. Said local goods were sold with a
mark-up of 40% based on sales. The equipment has an estimated useful life of 3 years. There is an excess input
tax from the preceding quarter amounting to 5,000.00.

50. How much is the output VAT for the month?

a. 67,200.00 c. 56,448.00
b. 60,000.00 d. 50,400.00

51. How much is the input VAT for the month?

a. 36,000.00 c. 46,000.00
b. 41,000.00 d. 51,000.00

Mr. Diancie died on December 31, 2015. Relative to the computation of his gross estate is the following:

Land in Italy, with 1,000,000.00 unpaid mortgage 2,000,000.00

Land in Laguna 500,000.00
Franchise in USA 100,000.00
Receivables from a debtor in the Philippines 70,000.00
Receivables from a debtor in USA 100,000.00
Bank deposits in USA 80,000.00
Shares of stocks from Silph Co., a corporation
organized under the laws of Maldives, 80% of its
operation is in the Philippines 150,000.00

During his lifetime, Mr. Diancie made the following transfers in the Philippines:

Car to Mr. Volcanion, with Mr. Diancie reserving

the right to revoke 500,000.00
Car to Mr. Hoopa, which was transferred because
of a special power of appointment given to Mr.
Diancie by Mr. Cobalion, the previous owner 400,000.00

Finally, Mr. Diancies children received 500,000.00 from Unovalife Insurance Company. This is a life insurance
policy in the Philippines taken by Mr. Diancie over his own life where he designated his children as revocable
beneficiaries.

52. How much is the gross estate if Mr. Diancie is a resident alien?
a. 3,000,000.00 c. 4,000,000.00
b. 3,400,000.00 d. 4,400,000.00

53. How much is the gross estate if Mr. Diancie is a non-resident alien and there is no reciprocity?
a. 1,470,000.00 c. 1,970,000.00
b. 1,570,000.00 d. 2,120,000.00

54. How much is the gross estate if Mr. Diancie is a non-resident alien and there is reciprocity?
a. 1,570,000.00 c. 1,000,000.00
b. 1,500,000.00 d. 500,000.00

In a given month in 2016, total invoice prices and costs are as follows:

Purchases from VAT-registered persons

of goods exported 560,000.00
of goods sold domestically 224,000.00
Operating expenses 112,000.00
Domestic sales 672,000.00
Export sales 1,500,000.00

55. How much is the input taxes on the export sale?

a. 84,000.00 c. 36,000.00
b. 60,000.00 d. 24,000.00
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Mr. X, a VAT-registered taxpayer, provided you with the following information:

Domestic sales of goods 3,000,000.00

Sales of packaging materials to an export oriented enterprise whose export
sales exceed 70% of total productions 2,000,000.00
Local sales to Asian Development Bank, and international organization 500,000.00
Goods purchased for 120,000.00 and not sold for more than 60 days,
selling price is 200,000.00
Goods transferred for the personal use of the owner
(purchased for 100,000.00), market value is 120,000.00

56. How much is the output tax?

a. 360,000.00 c. 398,400.00
b. 374,400.00 d. 434,400.00

57. How much is the input tax?

a. None. c. 14,400.00
b. 12,000.00 d. 26,400.00

Mr. Y, a VAT-registered taxpayer, provided you with the following VAT-exclusive monthly information:

January February March

Export sales 1,000,000.00
Local sales 1,200,000.00 1,500,000.00 2,000,000.00
Consignment every 7th day of the month 500,000.00 600,000.00
Local purchases 700,000.00 1,100,000.00 500,000.00
Importation 800,000.00
Purchase of equipment with 6 years life 1,500,000.00 700,000.00

58. How much is the VAT payable (refundable) for January?

a. -120,000.00 c. 57,500.00
b. 117,000.00 d. 57,000.00

59. How much is the VAT payable (refundable) for February?

a. -39,000.00 c. 43,600.00
b. 18,000.00 d. 81,000.00

60. How much is the VAT payable (refundable) for March?

a. 198,000.00 c. 159,000.00
b. 186,000.00 d. 102,000.00

61. Assuming that there is an excess input VAT from the previous quarter amounting to 10,000.00, how much is
the VAT payable (refundable) for March?
a. 198,000.00 c. 159,000.00
b. 186,000.00 d. 102,000.00

Mr. Edgar is an investor in ABC Corporation, a domestic corporation. He purchased 10,000 shares for 200,000.00
on September 21, 2015. Two years later, or on September 21, 2017, he sold 7,000 shares for 175,000.00 when
the fair market value is 250,000.00.

62. How much is the percentage tax due if the shares are listed and traded in the local stocks exchange?
a. None. c. 875.00
b. 312.50 d. 1,250.00

63. How much is the percentage tax due if the shares are not listed and traded in the local stocks exchange?
a. None. c. 875.00
b. 312.50 d. 1,250.00

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Y Manufacturing Corporation had the following information for the current taxable month:

Sales
Processed fruits 500,000.00
Processed sardines 400,000.00

Purchases Processed Processed

Fruits Sardines
Fruits purchased from farmers 100,000.00
Fresh sardines purchased from fishermen 80,000.00
Refined sugar purchased from millers 30,000.00
Tomatoes purchased from farmers 30,000.00
Olive oil purchased from processors of olive oil 20,000.00
Bottles 5,000.00
Tin cans 10,000.00 10,000.00
Paper labels 5,000.00 5,000.00

64. How much is the total output VAT?

a. None. c. 60,000.00
b. 48,000.00 d. 108,000.00

65. How much is the total input VAT?

a. 14,600.00 c. 9,800.00
b. 11,400.00 d. 9,000.00

=END=

Donors Tax Table

From To Tax Due plus In excess of
- 100,000.00 - - -
100,000.00 200,000.00 0.00 2% 100,000.00
200,000.00 500,000.00 2,000.00 4% 200,000.00
500,000.00 1,000,000.00 14,000.00 6% 500,000.00
1,000,000.00 3,000,000.00 44,000.00 8% 1,000,000.00
3,000,000.00 5,000,000.00 204,000.00 10% 3,000,000.00
5,000,000.00 10,000,000.00 404,000.00 12% 5,000,000.00
10,000,000.00 - 1,004,000.00 15% 10,000,000.00

Estate Tax Table

From To Tax Due plus In excess of
- 200,000.00 - - -
200,000.00 500,000.00 0.00 5% 200,000.00
500,000.00 2,000,000.00 15,000.00 8% 500,000.00
2,000,000.00 5,000,000.00 135,000.00 11% 2,000,000.00
5,000,000.00 10,000,000.00 465,000.00 15% 5,000,000.00
10,000,000.00 - 1,215,000.00 20% 10,000,000.00

Live as if you were to die tomorrow;

Learn as if you were to live forever.
Gandhi

/CUL

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 FINAL DEPARTMENTAL EXAMINATION
ACCO 3153 BUSINESS AND TRANSFER TAXES
1ST SEMESTER, S.Y. 2016-2017

28 SEPTEMBER 2016
8:00 AM 11:00 AM
SUGGESTED ANSWERS
PART I THEORIES (1%) PART II PROBLEMS (2%)
1. B 21. B 31. A 51. C
2. D 22. C 32. A 52. C
3. A 23. D 33. D 53. B
4. C 24. C 34. A 54. C
5. D 25. C 35. D 55. B
6. A 26. B 36. B 56. B
7. C 27. A 37. A 57. D
8. B 28. A 38. C 58. D
9. A 29. B 39. A 59. A
10. A 30. C 40. Bonus 60. D
11. C 41. D 61. D
12. A 42. D 62. C
13. A 43. D 63. A
14. C 44. B 64. D
15. D 45. C 65. B
16. Bonus 46. C
17. D 47. B
18. C 48. D
19. C 49. C
20. C 50. B

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