NATIONAL MOCKBOARD EXAMINATION | TAXATION

1. Which of the following is subject to VAT?

A. Sale of non-food agricultural products in their original state by farmers.
B. Services of non-VAT person subject to percentage tax.
C. Sale or importation of agricultural and marine food products in their original state.
D. None of the above

2. Which of the following is deductible expense to arrive at the taxable income?

A. Personal, living or family expenses.
B. Any amount paid for new buildings or for permanent improvements, or betterment
made of increase the value of any property or state.
C. Any amount expended in restoring property or in making good the exhaustion thereof
which an allowance is or has been made.
D. Premiums paid or in life insurance policy covering the life of any officer or
employee, when the immediate family member of the insured officer or employee is
directly the beneficiary.

3. Phoenix Resources Corp., a corporation registered in Norway, has a 50MW electric

power plant in San Jose, Batangas. Aside from Phoenix’s income from its power plant,
which among the following is considered as part of its income from sources within the
Philippines?
A. Gains from the sale to an Ilocos Norte power plant of generators bought from the
United States.
B. Interests earned on its dollar deposits in a Philippine bank under the Expanded
Foreign Currency Deposit System.
C. Dividends from a two-year old Norwegian subsidiary with operations in Zambia but
derives 60% of its gross income from the Philippines.
D. Royalties from the use in Brazil of generator sets designed in the Philippines by its
engineers.

4. Statement 1: Itemized deductions from income should be duly supported by vouchers or

receipts.
Statement2: Only business expenses may be deducted from the income of taxpayers.
A. First statement is true while second statement is false.
B. Both statements are true.
C. First statement is false while second statement is true.
D. Both statements are false.

5. In filing the state tax return, a CPA Certificate is required when the gross state:
A. Exceeds P2,000,000
B. Reaches P200,000
C. Exceeds P200,000
D. Reaches P2,000,000
6. Properties owned before marriage and brought into the marriage are generally classified
as:
I. Exclusive properties under conjugal partnership of gains.
II. Common properties under absolute community of properties.

A. Only I is correct
B. Only II is correct
C. Both I and II are correct
D. Both I and II are incorrect

7. Money collected from taxation shall not be paid to any religious dignitary EXCEPT
when:
A. The religious dignitary is assigned to the Philippine Army.
B. It is paid by a local government unit.
C. The payment is passed in audit by the COA
D. It is part of a lawmaker’s pork barrel.

8. Crisostomo died on July 31, 2014. His estate tax return should be filed within:
A. Six months from filing of the notice of the death.
B. Sixty days from the appointment of an administrator.
C. Six months from the time he died on July 31,2014
D. Six days from the time he died on July 31,2014

9. The following are the similarities of the inherent power of taxation, eminent domain and
police power except:
A. They are necessary attributes of sovereignty.
B. They affect all persons of the public.
C. They interfere with private rights and properties.
D. They are legislative in administration.

10. No person shall be imprisoned for non-payment of:

A. Property Tax
B. Excise Tax
C. Poll Tax
D. All kinds of taxes

11. On July 31, 2014, Esperanza received a preliminary assessment notice from the BIR
demanding that she pays P 180,000 deficiency income taxes on her 2012 income. How
many days from July 31, 2014 should Esperanza respond to the notice?
A. 180 days
B. 30 days
C. 60 days
D. 15 days

12. The distinction of a tax from permit or license is that a tax is:
 A. Imposed for regulation.
B. One which involves an exercise of police power.
C. One in which there is generally no limit on the amount that may be imposed.
D. Imposed through the provisions of the Constitution.

13. Which of the following is not an element of double taxation?

A. Two taxes
B. Same subject matter
C. Same amount
D. Same year

14. A nonresident alien individual who shall come to Philippines shall be deemed a
nonresident alien along doing business in the Philippines if he stays therein for an
aggregate period of how many days during any calendar year?
A. More than one hundred eighty-three (183) days.
B. One hundred eighty (180) days or less.
C. More than one hundred eighty (180) days.
D. More than one hundred ninety (190) days.

15. There shall be levied, collected and paid for each taxable year upon the gross income
received by every alien individual employed by regional or area headquarters and
regional operating headquarters established in the Philippines by multinational companies
from such regional or area headquarters and regional operating headquarters, a tax equal
to:
A. Twenty-five percent (25%) of such gross income.
B. Twenty percent (20%) of such gross income.
C. Fifteen percent of such gross income.
D. Ten percent (10%) of such gross income.

16. A married resident citizen has five (5) qualified dependent children. The following
information pertains to his income and expenses in the year 2014:
Salary, net of P20,000 withholding tax P 380,000
Interest income, bank deposit-BPI, Manila 50,000
Yield from money market placement, State investment House, Manila 30,000
Rent Expense, apartment house 36,000
Health insurance premium paid 5,000

How much is the taxable compensation income?

A. P 400,000
B. P 336,000
C. P 250,000
D. P 230,000

17. The following information are available relating to the computation of estate tax of a
resident decedent who died on August 29, 2015:
 Australia – Net estate P 100,000 and estate tax paid of P 3,500
New Zealand – Net estate of P 200,000 and estate tax paid of P 5,000
Philippines – Net Estate of P 200,000

Compute for the estate tax still due after foreign tax credit.
A. P6,000
B. P6,500
C. P7,000
D. P8,000

18. The following data were provided by Air Asia, international carrier doing business in the
Philippines:

Gross receipts, sales of tickets in the Philippines ( Manila to Taipei flight ) P 8,000,000
Gross receipts, sales of tickets in Japan ( Manila to Tokyo flight ) 5,000,000
Gross receipts, sales of tickets in Japan ( Tokyo to Manila flight ) 3,000,000
Gross receipts, sales of tickets in the Philippines ( Manila to Hongkong flight ), 1,000,000
passenger were endorsed to another international airline which airlifted them from Manila
Gross receipts, sales of tickets in the Philippines ( Manila to Los Angeles flight ), 4,500,000
passengers were transshipped in Tokyo to Los Angeles by another airline ( flight from Manila
to Tokyo – 5 hours; flight from Tokyo to Los Angeles – 10 hours )
Expenses 4,000,000

How much was the Philippine income tax due and payable?
A. P5,250,000
B. P537,500
C. P387,500
D. P287,500

19. Which of the following is not expressly provided for by the Philippine Constitution?
A. Due process of law.
B. Equal protection of laws.
C. Progressive system of taxation.
D. Prohibition against double taxation

20. A local government unit (LGU) imposed taxes on the steam boilers of an electric
company. The Department of labor and Employment also imposed fees on the said steam
boilers. There is no conflict between the two impositions on the same subject matter
because:
A. The former is exercising the power of taxation while the latter is exercising the police
power.
B. The purpose of the former is to raise revenue while the purpose of the latter is for
regulation.
C. There is no direct duplicate taxation since there are two different taxing authorities:
the local government and the national government.
D. All of the above are correct.
21. 1st statement: To require business to register first with the government regulatory agency
is an exercise of the taxing power of the State.
2nd statement: Non-compliance to business registration renders the business illegal.
A. 1st statement is true while 2nd statement is false.
B. 1st statement is false while 2nd statement is true.
C. Both statements are true.
D. Both statements are false.

22. On January 15, 2015, a VAT-registered domestic corporation, engaged in the real estate
business, sold land and building for P10 million. Is the sale subject to Value-added tax
(VAT)?
A. No, because the property sold does not form part of its goods available for sale.
B. No, because the sale of the property was only a one-time transaction.
C. Yes, because the sale of the property was made in the ordinary course of trade or
business of the corporation, being engaged in the real estate business.
D. Yes, because all sale of property whether used in business or not are subject t value
added tax (VAT).

23. The records of resident citizen revealed the following income ( all amounts at gross )
from Philippine sources for the taxable year 2014:
Interest on bank deposit P 30,000
Royalty from patented invention 50,000
Royalty from copyrighted books 40,000
Prize won in the Singing Bee contest 7,500
Share from professional partnership 25,000
Dividend from San Miguel Corporation 10,000
Lotto winnings 20,000

The total final income taxes withheld amount to:

A. P21,000
B. P21,750
C. P22,500
D. P24,250

24. In which of the following debts is legal compensation proper? When one of the debts
A. Arises from the obligation of a depository
B. Arises from voidable contract
C. Arises from a claim for support by gratuitous title
D. Consists in civil liability arising from penal offense

25. Under absolute community of property, which of the following is a community property?
A. Property inherited by the surviving spouse during the marriage
B. Property bought during the marriage using the salary of the decedent earned before
marriage
 C. Personal belongings (e.g. clothes, shoes, etc.)bought during the marriage for
exclusive use of the decedent
D. Jewelry inherited by the decedent during the marriage

26. If transfer in contemplation of death, revocable transfer or property passing under general
power of appointment is made created, exercised or relinquished for consideration in
money or money’s worth, but there is no bona fide sale for an adequate and full
consideration in money or money’s worth, the gross estate will include:
A. Fair market of such property at the time of transfer.
B. Historical cost of such property at the time acquired.
C. Excess of the fair market value of the property at the time of death over the value
of the consideration received therefore.
D. Fair market value or the assessed value of such property, at the time of death,
whichever is higher.

27. The following selected data were taken from the estate of Ed Sados:
Claim against an insolvent person (fully uncollectible) P 500,000
Claim against a person who absconded (fully uncollectible) 300,000
Claim against an insolvent person (20% collectible) 100,000
How much should be deducted from the gross estate?
A. P 80,000 B. P 100,000 C. P 580,000 D. P 880,000

28. A married couple donated a conjugal property to their son who is getting married. Which
of the following statements is incorrect in connection with the donation?
A. The husband is the proper claimant of the dowry, being head of the family.
B. The husband wife shall file two separate donor’s tax returns.
C. The husband and the wife can claim P 10,000 dowry each.
D. The gross gift of the husband shall be one-half of the value of the donated conjugal
property.

29. A dealer in securities has the following data for the year 2014:
Sales, shares held as inventory P 4,000,000
Sales, shares held as investment 1,500,000
Cost, shares held as inventory 2,000,000
Cost, shares held as investment 500,000
Supplies expense, net of VAT 100,000
Rent expense, net of VAT 200,000
How much is the taxable net income assuming the dealer is single?
A. P 1,680,000 B. 1,750,000 C. P 2,750,000 D. 1,730,000

30. Timothy died leaving a house and lot Rudolf on March 31, 2014 which was questioned
by Sander. It is under litigation but the parties have started an extra-judicial settlement.
The last day for the payment of estate tax if extended shall be:
A. March 21, 2016 B. September 30, 2016 C. September 30, 2019 D. April 30, 2016
 31. Tax of a fixed proportion of the value of the property with respect to which tax is
assessed and requires the intervention of assessors or appraisers to estimate the value of
such property before the amount due from each taxpayer can be determine is known as:
A. Specific B. Ad valorem C. Special or Regulatory D. Fiscal

32. The following are the powers of BIR except:

A. The assessment and collection of all national revenue taxes.
B. The execution of all judgements in all cases decided in its favor by the CTA and the
ordinary courts.
C. The enforcement of all forfeitures, penalties and fines connected with national
internal revenue taxes.
D. The assessment and collection of custom duties.

33. Statement 1: Symbiotic relation is the reason why the government would impose donor’s
tax on property donated by a resident citizen located outside the Philippines.
Statement 2: Jurisdiction is the reason why citizens must provide support to the state so
the latter could continue to give protection.
A. Both statements are true C. Only statement 1 is correct
B. Both statements are false D. Only statement 2 is correct

34. Which among the following is not a tax-free donation?

A. Donation for prizes to be given to athletes in local sports competitions held in the
Philippines sanctioned by a national sports association.
B. Net gifts made by an individual to a non-stranger in the amount of P100, 000 during
the calendar year.
C. A cash donation amounting to P 1 million made to a candidate last election that is
aspiring for the position of the Senator which donation was reported to the
COMELEC.
D. Renunciation by a surviving spouse of his share in the absolute community in favor of
his common children with the decedent.

35. A married non-resident alien donates shares of stock valued at P300, 000 to his son who
is getting married to a Filipina in the Philippines. Assuming there is reciprocity, how
much is the gross gift and the exempt dowry?
Gross Gift Dowry Gross Gift Dowry
A. P 300, 000 P 10, 000 C. P 150,000 Zero
B. P 300, 000 Zero D. Zero Zero

36. First statement: Transfer inter vivos to the National Government for public use is a
deduction from the gross gifts.
Second statement: Transfer mortis causa to the National Government for public purpose
is a deduction form the gross estate.
A. True, true B. False, false C. True, false D. False, true
37. Panda Co. has the following data for a particular month:
Gross receipts, domestic calls P 5,000,000
Gross receipts, overseas calls (originating from the Phils.) 3,000,000
Purchases of supplies used in connection with domestic calls, net of VAT 300,000
Purchases of equipment used in connection with both domestic calls and overseas
calls, net of VAT 2,000,000
Business expenses 1,000,000

How much is the VAT payable assuming the corporation is VAT-registered and has
registered its tax-exempt transactions under the VAT system?

A. P 920, 000 B.P 912,000 C. P 684,000 D. P 567,500

38. The following, except one, are exceptions to the rule that tax exemptions must be strictly
construed:
A. Where the statute granting the exemption provide for the liberal interpretation thereof.
B. The taxpayer does not fall within the purview of exception by clear legislative intent.
C. Case of special taxes relating to special cases and affecting only special classes of
persons.
D. Exemptions refer to public property.

39. The ranch of the decedent was mortgaged to accommodate the request of his brother for a
loan. The value of the loan to the brother was not included as receivable in the gross
estate of the decedent. What would be the treatment of the unpaid mortgage on the ranch?
A. Deductible from the gross estate
B. Not deductible from the gross estate
C. Deductible from the gross income of the estate
D. Deductible either from the gross estate or the gross income of the estate

40. The taxable income before income tax of Elaine Corporation for the current year was P
500,000. During the year, the corporation received the following refund of taxes paid in
previous years and recoveries of accounts written off , all of which were credited to
miscellaneous income:
Refund of percentage tax, P20, 000
Refund of income tax, P50, 000
Bad debt recovered (allowed as deduction), P30, 000
Bad debt recovered (disallowed as deduction) P15, 000

How much would be the income tax payable of the corporation for the current year?
A. P150, 000 C. P115, 500
B. P130, 500 D. None of the choices
41. Which of the following statements is not correct?
A. The sharing of heirs in testamentary succession must satisfy must satisfy the rules on
legitime.
B. When a compulsory heir is given by will less than his legitime, the provisions of the
will should be modified in such a way that he will receive his legitime.
C. The CIR may examine the bank deposit of a decedent for the purpose of determining
his gross estate even if the estate did not request for a compromise on the ground of
financial incapacity.
D. The P500, 000 standard deduction for medical expenses for estate tax purposes is a
legal mechanism to further exempt the less privileged estate and heirs from tax burden.

42. For proceeds of life insurance not to constitute part of the gross estate
A. Must have been taken out by the decedent upon his life.
B. Must have designated the estate of the decedent as irrevocable beneficiary.

C. Must have designated a third person as, the decedent’s executor or administrator as the
irrevocable beneficiary.
D. Must have designated a third person other than the estate, the decedent’s executor or
administrator as irrevocable beneficiary.

43. Statement I: If the estate is settled extra-judicially, the estate tax return should be filed
within 2 years from date of death of decedent.
Statement II: If the estate is settled judicially, the estate tax return should be filed within
5 years from death of decedent.
Statement III: The value added tax return should be filed within 25 days from the close of
the taxable month.
Statement IV: The donor’s tax return is not required if the net gift does not exceed P
100,000.
A. All statements are true.
B. All statements are false.
C. Only one statement is true.
D. Only two statements are true.

44. The gross receipts of A, a lessor from his residential units for the year, show (net of
VAT):
Monthly Rent/Unit No. of Units Total
P 10,000 20 P 2,400,000
12,000 10 1,440,000
14,000 6 840,000
16,000 10 1,920,000

The output VAT is

A. P230, 400 B. P331, 200 C. P504, 000 D. P792, 000
45. Which of the following is not a basic principle of a sound taxation system?
A. It should be capable of being effectively enforced.
B. It must be a progressive tax.
C. It must be sufficient to meet government expenditures and other public needs.
D. It should be exercised to promote public welfare.

46. A dealer in securities has the following data for the year 2012
Sales, shares held as inventory P 4,000,000
Sales, shares held as investment 1,500,000
Cost, shares held as inventory 2,000,000
Cost, shares held as investment 500,000
Supplies expense net of VAT 100,000
Rent expense net of VAT 200,000

How much is the taxable net income assuming the dealer is married with a qualified
dependent niece, 18 years old person with disability?
A. P 1,625,000
B. P 1,650,000
C. P 2,650,000
D. not subject to income tax

47. A nonresident alien donor gifted his son and his daughter in law on account of their
forthcoming marriage in the Philippines. The maximum exempt dowry was:
Gift to Donee-Son Gift to Donee-Daughter-in-law
A. P 10,000 P 10,000
B. P 10,000 Zero
C. Zero Zero
D. Zero P 10,000

48. Joseph sold his apartment house to Evelyn, his best friend, for P 1,000,000. The fair
market value of the land at that time of sale was P 1,500,000. For donor’s tax purposes,
which of the following statements was correct?
A. Joseph would be subject to donor’s tax at 30% based on P 500,000.
B. Joseph was not subject to donor’s tax at 30% based on P 1,500,000.
C. Joseph was not subject to donor’s tax but to 6% capital gains tax based on the selling
price.
D. Joseph would be subject to donor’s tax or capital gains tax depending on his choice.

49. Sunset Insurance Company, a domestic corporation, had the

Health and accidence insurance P 2,340,000
Motor vehicle insurance 1,250,000
Life and disability insurance 1,850,000
Property insurance 2,840,000
 The percentage tax is:
A. P 83,800 B. P 92,500 C. P 272,000 D. P 414,000

50. In taxation, the following is included in the term corporation, except

A. Partnership
B. Joint stock companies
C. Joint venture
D. Joint accounts