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Taxation Examination

1. Which of the following donors is taxable only on gifts [A] Resident alien donor. [B] Non-resident alien
of property within the Philippines? [A] Resident donor. [C] Both A and B. [D] Neither A nor B.
citizen donor. [B] Non-resident citizen donor. [C] 9. Determine which of the following exempt gifts shall
Resident alien donor. [D] Non-resident alien donor. be included as part of the gross gifts in the donor's
2. The reciprocity rule in donor's tax is applicable only tax return [A] Gift given on account of a child's
to non-resident alien donors who donate [A] marriage. [B] Gift given to the government. [C] Gift
Tangible personal property within the Philippines. given to educational, religious, cultural or social
[B] Intangible personal property within the welfare institutions. [D] All of the foregoing.
Philippines. [C] Tangible real property within the 10. Which of the following items may be deducted from
Philippines. [D] All of the foregoing. the gross gifts? [A] amount of mortgage assumed by
3. Celia donated P110,000.00 to her friend Victoria who the done. [B] gifts declared as exempt by law. [C]
was getting married. Celia gave no other gift during Both A and B. [D] Neither A nor B.
the calendar year. What is the donor's tax 11. Which of the following statements relative to
implication on Celia's donation? [A] The P100,000.00 donor's tax is false? [A] The spouses shall file
portion of the donation is exempt since given in separate donor's tax returns where the thing
consideration of marriage. [B] A P10,000.00 portion donated is common property. [B] Each parent shall
of the donation is exempt being a donation in be entitled to the P10,000 exemption on account of
consideration of marriage. [C] Celia shall pay a 30% marriage of a child. [C] Exemptions and deductions
donor's tax on the P110,000.00 donation. [D] The cannot be claimed where the 30% tax rate on
P100,000.00 portion of the donation is exempt stranger is applicable. [D] None of the foregoing.
under the rate schedule for donor's tax. 12. Which of the following statements in relation to
4. In May 2010, Mr. And Mrs. Melencio Antonio donor's tax is correct? [A] Spouses who donate their
donated a conjugal house and lot with a fair market common property shall file only one donor's tax
value of P10 Million to their son, Roberto, and return for the said donation. [B] The unpaid
daughter-in-law, Josefina, who were just married mortgage on the property donated that is to be
during the year. Which statement below is not assumed by the donee is deductible from the fair
correct? [A] There are four (4) donations made - two market value of the gift at the time of the donation.
(2) donations are made by Mr. Melencio Antonio to [C] In the sale of real property classified as a capital
Roberto and Josefina, and two (2) donations are asset for less than an adequate and full
made by Mrs. Antonio. [B] The four (4) donations are consideration, the deficiency shall be deemed a gift
made by the Spouses Antonio to members of the subject to donor's tax. [D] A wedding gift that is given
family, hence, subject to the graduated donor's tax to a "stranger" can avail of the P10,000 exemption of
rates (2%-15%). [C] Two (2) donations are made by gifts given on account of marriage.
the spouses to members of the family, while two (2) 13. Which of the following transfers is subject to donor's
other donations are made to strangers. [D] Two (2) tax? [A] Residential lot with market value of
donations made by the spouses to Roberto are P1,000,000 was sold for only P600,000. [B] Listed
entitled to deduction from the gross gift as donation shares of stock with market value of P500,000 were
proper nuptias. sold for only P250,000. [C] Company vehicle with
5. Which of the following transactions is deemed a book value of P700,000 was sold by way of bona fide
taxable gift? [A] Condonation or remission of a debt. sale for only P600,000. [D] None of the foregoing.
[B] Sale of residential house and lot for less than an 14. X donated a motorbike valued at P100,000 to Y, son
adequate and full consideration in money or of X's first cousin. What is the tax consequence of
money's worth. [C] Both A and B. [D] Neither A nor the foregoing donation? [A] X is liable to pay donor's
B. tax in the amount of P30,000. [B] X is liable to pay
6. Determine which of the following gifts given by a donor's tax in the amount of P2,000 per the
parent to his child is entitled to the P10,000 graduated donor's tax rates. [C] X is liable to pay
exemption? [A] Gift given on account of the child's capital gains tax in the amount of P6,000. [D] X is not
18th birthday. [B] Gift given on account of the child's liable to pay any tax on the transfer.
college graduation. [C] Gift given on account of the 15. S sold his residential house and lot to his best friend
child's successful recovery from cancer. [D] None of for P4,000,000. At the time of the sale, the property
the foregoing. had a fair market value of P5,000,000. What is the
7. One of the following gifts given on account of tax consequence of this foregoing sale for
marriage is not entitled to the P10,000 exemption insufficient consideration? [A] S shall be liable to pay
[A] Gift given before the celebration of the marriage. donor's tax in the amount of P300,000. [B] S shall be
[B] Gift given exactly one year after the celebration liable to pay donor's tax in the amount of
of the marriage. [C] Gift given to a spurious child. [D] P1,500,000. [C] S shall be liable to pay capital gains
Gift given to a legally adopted child. tax in the amount of P240,000. [D] S shall be liable to
8. Who among the following donors is not entitled to pay capital gains tax in the amount of P300,000.
claim the P10,000 exemption on account of marriage 16. Gifts are to be computed on a cumulative basis
provided the said gifts are given during the same [A]
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Taxation Examination

calendar year. [B] fiscal year. [C] calendar quarter. at a time when H and W were not yet married. What
[D] calendar month. is the legal consequence of the donation for
17. In applying the graduated donor's tax rates, no purposes of donor's tax? [A] H and W shall each
donor's tax liability shall arise where the taxable net report one-half (1/2) of the value of the ring as gross
gifts amount to [A] P100,000. [B] P200,000. [C] Both gift, and claim P10,000 exemption each on account
A and B. [D] Neither A nor B. of marriage. [B] H shall report the entire value of the
18. X (unmarried) made the following donations to his ring as gross gift, and claim P10,000 exemption on
spurious son on account of the latter's marriage on account of marriage. [C] W shall report the entire
December 1, 2012: value of the ring as gross gift, and claim P10,000
(1) on July 20, 2012 P 50,000 exemption on account of marriage. [D] None of the
(2) on December 1, 2012 50,000 foregoing.
(3) on January 2, 200B 50,000 25. Husband (H) and wife (W) gave a lot as wedding gift
Which of the following statements is correct? [A] No to X (widowed mother of H). This lot was donated to
gift tax is payable on the 3 gifts. [B] Gift taxes are W when she bore her first child with H a year after
payable on the 3 gifts. [C] Gift taxes are payable on their marriage. The current market value of the lot
the 2nd and 3rd gifts. [D] Gift tax is payable on the when it was donated to X was P500,000. Which of
3rd gift. the following statements is correct? [A] W shall be
19. X (unmarried) made the following donations to his liable for gift tax based on the 30% tax rate on
legally adopted son on account of the latter's stranger on her net gift of P500,000. [B] W shall be
marriage on June 1, 2012: liable for gift tax based on the graduated donor's tax
(1) on January 10, 2012 P 50,000 rates on her net gift of P500,000. [C] H shall be liable
(2) on June 1, 2012 60,000 for gift tax based on the graduated donor's tax rates
(3) on December 1, 2012 50,000 on his net gift of P500,000. [D] H shall be liable for
Which gifts or gifts shall be liable to pay donor's tax? gift tax based on the graduated donor's tax rates on
[A] All the 3 gifts. [B] 2nd gift. [C] 3rd gift. [D] None his net gift of P250,000, and W shall be liable for gift
of the gifts. tax based on the 30% tax rate on stranger on her net
20. A gift that is given to one of the following donees gift of P250,000.
shall be subject to the 30% gift tax rate on strangers 26. The donor's tax return, as well as the donor's tax due
[A] Grandchild. [B] Aunt. [C] Sister-in-law. [D] thereon, shall be filed and paid not later than [A] 1
Brother. month from the date of the gift. [B] 30 days from the
21. A gift that is given to one of the following donees date of the gift. [C] 3 months from the date of the
shall be subject to the graduated donor's tax rates? gift. [D] 90 days from the date of the gift.
[A] Naturally adopted child. [B] Child with a mistress. 27. X is a Chinese national who is residing in China. He
[C] Sister-in-law. [D] Child of "first cousin". donated his Philippine shares of stock to his Chinese
22. Husband (H) and wife (W) gave a used car as birthday friend, Y, who is residing in the Philippines. Assume
gift to X, a legitimate child of W from her former Chinese tax law imposes gift tax on all real and
marriage to Z who is now deceased. This vehicle, personal properties donated by Chinese citizens,
valued at P100,000, was inherited by W from her whether located in China or elsewhere, but does not
parents during her marriage to Z. Who shall be liable allow any tax credit for gift taxes paid in foreign
to pay donor's tax on the foregoing gift? [A] Husband countries. X paid gift taxes to both the Chinese and
and Wife. [B] Husband. [C] Wife. [D] Neither H nor Philippine governments. Which of the following
W. statements is correct? [A] X may claim a tax credit for
23. Husband (H) and wife (W) are recently separated by the China gift tax because he also paid Philippine
judicial decree. Custody of their 15-year old child, X, donor's tax. [B] X may claim a tax credit for the China
was awarded by the court to W. When X turned 18 gift tax because of the burdensome effect of
years of age, she married Y. H and W gave the newly- "international double taxation" on the same
wed couple a diamond ring as wedding present. This property. [C] X cannot claim a tax credit for the China
ring was purchased by H a week before the gift tax because of the absence of reciprocity. [D] X
celebration of the marriage of X and Y. What is the cannot claim a tax credit for the China gift tax
legal consequence of the donation for purposes of because a non-resident alien is not allowed to claim
donor's tax? [A] H and W shall each report one-half a tax credit for foreign gift taxes under Philippine tax
(1/2) of the value of the ring as gross gift, and claim law.
P10,000 exemption each on account of marriage. [B] 28. The following properties were valued at the time of
H shall report the entire value of the ring as gross gift, H's death: A Common properties of H and W
and claim P10,000 exemption on account of (husband and wife, respectively) - P700,000; B
marriage. [C] W shall report the entire value of the Exclusive properties of H - P300,000; and C Exclusive
ring as gross gift, and claim P10,000 exemption on properties of W - P200,000. The gross estate of H
account of marriage. [D] None of the foregoing. amounts to [A] P1,200,000. [B] P1,000,000. [C]
24. Assume the same facts above, except that the P700,000. [D] P0.
diamond ring was donated to H by a wealthy relative
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Taxation Examination

29. Assume the same facts as above. Assume further of appointment to transfer such property upon
that no tangible and verifiable records or receipts death to his eldest child. [D] The transferor of
could support any deductions that may be claimed personal property who sold it for insufficient
from the gross estate. The taxable net estate of H consideration.
that will be subject to the graduated estate tax rates 36. X executed a power of appointment transferring his
amounts to [A] P1,200,000. [B] P1,000,000. [C] piece of land (appointed property) to Y (donee), the
P700,000. [D] P0. latter being empowered to designate in his last will
30. X, unmarried, left behind the following properties and testament any person of his choice to inherit the
upon his demise: said property upon his death. Thereafter, Y died.
House and lot (purchased Which of the following statements is correct? [A] The
from lump-sum pension) P 700,000 land shall form part of Y's gross estate because he is
Used van (bequeathed to parish the owner of the appointed property. [B] The land
church per last will and testament) 200,000 shall not form part of Y's gross estate because Y is
Cash (bequeathed to Cagayan de Oro merely a trustee over the land. [C] The land shall not
City per last will and testament) 100,000 form part of Y's gross estate because the land
The gross estate of X amounts to [A] P1,000,000. [B] belongs to the beneficiary after Y's demise. [D] The
P700,000. [C] P300,000. [D] P0. land shall not form part of Y's gross estate because
31. Which of the following properties is exempt from such transfer is not valid.
estate tax because of the presence of reciprocity? [A] 37. Assume the same facts above, except that Y is
Patent of a non-resident alien decedent exercised in empowered to choose from any part of his male
the Philippines. [B] Foreign shares of stock of a non- children as the beneficiary of the appointed
resident alien decedent (60% of business in the property. Which of the following statements is
Philippines). [C] Bank deposit of a non-resident alien correct? [A] The land shall form part of Y's gross
decedent in a Taiwan bank. [D] Vehicle of a non- estate because he is the owner of the appointed
resident alien decedent located in the Philippines. property. [B] The land shall not form part of Y's gross
32. Which of the following intangible personal property estate because Y is merely a trustee over the land.
of a non-resident German decedent is exempt from [C] The land shall not form part of Y's gross estate
estate tax because of the presence of reciprocity? [A] because the land belongs to the beneficiary after Y's
Time deposit at a German bank. [B] Domestic shares demise. [D] The land shall not form part of Y's gross
of stock (certificates of stock kept in Germany). [D] estate because such transfer is not valid.
Franchise exercised in Europe. [D] None of the 38. X sold his condominium unit to Y for P3,000,000. X
foregoing. died a year later. The fair market value of the unit at
33. X is an American citizen residing in the United States. the time of the sale was P4,000,000 but rose to
Upon his demise, he left behind, among others an P5,000,000 at the time of X's death. The value of the
automobile registered in his name in the Philippines. condominium unit to be included in X's gross estate
Assume U.S. law grants an exemption from estate tax for estate tax purposes shall be [A] P0. [B]
to non-resident Filipino decedents owning vehicles P1,000,000. [C] P2,000,000. [D] P5,000,000.
in the United States. Fr purposes of Philippine estate 39. X took a life insurance policy on his own life for
tax, the automobile is [A] Exempt because the P1,000,000, naming B as the irrevocable beneficiary.
decedent-owner is a non-resident alien. [B] Exempt B predeceased X. What is the treatment of the
because of the presence of reciprocity. [C] Taxable insurance proceeds for estate tax purposes? [A] The
because the reciprocity rule does not apply to P1M forms part of B's gross estate because his
tangible personal property within the Philippines. [D] vested right over the policy continues to be effective
Taxable because all real and personal properties of a until X's death. [B] The P1M forms part of X's gross
non-resident alien decedent are taxable. estate because X's estate became the beneficiary
34. Which of the following properties shall be excluded after B's death. [C] The P1M does not form part of B's
from the gross estate of a decedent? [A] Proceeds of gross estate because he is an irrevocable beneficiary
life insurance policy on the life of the decedent who is not the executor or administrator of X's
payable to his youngest daughter. [B] The estate. [D] The P1M does not form part of X's gross
transmission of the inheritance from the decedent to estate because the beneficiary is irrevocable and is
the fiduciary heir. [C] Both A and B. [D] Neither A nor not the estate, its executor or administrator.
B. 40. X executed a last will and testament leaving behind
35. Who among the following transferors is not liable for the naked title of a coconut plantation to his younger
estate tax on the property transferred during his son A, and its usufruct to his elder son B for the
lifetime? [A] The testator who bequeaths property to duration of the latter's lifetime. B died ten years
his heirs in a last will and testament executed and after X's death. How shall the property be treated
probated during his lifetime. [B] The donor who for estate tax purposes? [A] The property shall form
reserves his right to amend or revoke the donation part of the gross estates of both X and B upon their
of property in favor of the done. [C] The donee of an respective deaths. [B] The property shall form part of
appointed property who is required under a power X's gross estate upon his death, but it shall be exempt
3
Taxation Examination

from estate tax upon B's death. [C] The property shall 47. W was formerly married to X. The couple was
be exempt from estate tax upon X's death, but it shall childless during their union which was one of the
form part of B's gross estate upon his death. [D] The reasons that led to the annulment of their marriage.
property shall not form part of the gross estates of Thereafter, W married H. H died five years later.
both X and B. Which of the following properties shall be included
41. Determine which of the following exempt transfers in H's gross estate? [A] Cash benefit received by H's
shall nevertheless be included as part of the gross heirs from his employer as a consequence of his
estate [A] The merger of the usufruct in the owner of death. [B] Benefits received from the SSS. [C]
the naked title. [B] The transmission of the Retirement benefits received by employees of
inheritance by the fiduciary heir to the private firms from a private pension plan duly
fideicommissary. [C] The transmission from the first approved by the Bureau of Internal Revenue. [D]
heir in favor of another beneficiary in accordance None of the foregoing.
with the desire of the predecessor. [D] Bequests, 48. H received his lump-sum pension when he retired
devises, legacies or transfers to social welfare, from employment. He utilized the entire amount to
cultural and charitable institutions. purchase four taxicabs. A year later, H married W.
42. Which of the following properties constitutes the He died of a heart failure and was survived by W and
common property of the spouses H and W under a their only child X. Thereafter, W re-married. She
regime of Conjugal Partnership of Gains? [A] Land passed away a few years later. Under the regime of
inherited by H during marriage. [B] Fruits of land in Conjugal Partnership of Gains, what is the estate tax
A. [C] Jewelry inherited by W during marriage. [D] treatment of the four taxicabs upon W's demise? [A]
Building donated to W before marriage. Four taxicabs shall form part of W's gross estate. [B]
43. Which of the following properties constitutes the Three taxicabs shall form part of W's gross estate. [C]
common property of the spouses H and W under a Two taxicabs shall form part of W's gross estate. [D]
regime of Absolute Community of Property? [A] One taxicab shall form part of W's gross estate.
Taxicabs inherited in H during marriage. [B] Income 49. Assume the same facts above. Under the regime of
of taxicabs in A. [C] Law books of W for her law absolute community of property, what is the estate
practice bought before marriage. [D] None of the tax treatment of the four taxicabs upon W's demise?
foregoing. [A] Four taxicabs shall form part of W's gross estate.
44. Under the Absolute Community of Property regime [B] Three taxicabs shall form part of W's gross estate.
in property relations, which of the following [C] Two taxicabs shall form part of W's gross estate.
properties is classified as the common or community [D] One taxicab shall form part of W's gross estate.
property of the spouses? [A] Fruits or income from a 50. W received an expensive necklace as a birthday
fishpond donated to the wife during marriage by her present when she turned 18 years of age. She
aunt. [B] Dental equipment of the dentist-husband married H at the age of 21. Unfortunately, the young
purchased during marriage. [C] Appliances couple simultaneously died as a result of a plane
purchased by the husband during his previous crash. For estate tax purposes, what is the treatment
marriage where he had no legitimate descendant by of the necklace under the regime of Conjugal
such former marriage. [D] None of the foregoing. Partnership of Gains? [A] The one-half value of the
45. Husband recently died and is survived by the necklace shall form part of W's gross estate, and the
following: other half shall form part of H's gross estate. [B] The
W - wife of H entire value of the necklace shall form part of W's
A - child of H and W; and gross estate. [C] The entire value of the necklace
B - legitimate child of W from her former shall form part of H's gross estate. [D] The entire
marriage to Z (deceased) value of the necklace shall not form part of the gross
Which of the following properties shall form part of estates of both W and H.
the gross estate of H under the Conjugal Partnership 51. Assume the same facts as above. For estate tax
of Gains regime? [A] Vehicle donated to W by her purposes, what is the treatment of the necklace
grandfather when she was already married to H. [B] under the regime of Absolute Community of
Agricultural land inherited by W from Z. [C] Fruits or Property? [A] The one-half value of the necklace shall
income from the agricultural land in B. [D] None of form part of W's gross estate, and the other half shall
the foregoing. form part of H's gross estate. [B] The entire value of
46. Assume the same facts as above, except that the the necklace shall form part of W's gross estate. [C]
property relations of the spouses is governed by the The entire value of the necklace shall form part of H's
Absolute Community of Property regime. Which of gross estate. [D] The entire value of the necklace
the following properties shall form part of the gross shall not form part of the gross estates of both W and
estate of H? [A] Vehicle donated to W by her H.
grandfather when she was already married to H. [B] 52. It is a proceeding whereby the State claims the
[B] Agricultural land inherited by W from Z. [C] Fruits properties of a decedent without a will and without
or income from the agricultural land. [D] None of the a successor. [A] Escheat. [B] Probate. [C] Reprobate.
foregoing. [D] Intestate.
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Taxation Examination

53. Which of the following items is not considered as a decedent and later on sold to the present decedent
"special deduction" in computing the taxable net during the latter's lifetime. [B] It may be claimed on
estate of the decedent? [A] Vanishing deduction. [B] a property that was donated by a donor to the prior
Medical expenses. [C] Standard deduction. [D] decedent on April 1, 200A and later on inherited by
Family home deduction. the present decedent from the prior decedent on
54. Which of the following shall be deducted from the March 15, 200F. The present decedent died on
gross estate as part of funeral expenses? [A] September 30, 200H. [C] Both A and B. [D] Neither A
Mourning clothing of surviving spouse. [B] nor B.
Refreshments paid for by relatives and friends. [C] 63. The vanishing deduction rate of 60% shall be applied
Expenses on prayer for the soul after the burial. [D] where the interval of time is [A] Date of donation -
Cash advances of the surviving spouse and heirs. March 1, 2011; date of present decedent's death -
55. Actual funeral expenses amounted to P300,000. March 1, 2013. [B] Date of prior decedent's death -
Gross estate amounted to P10,000,000. The May 15, 2011; date of present decedent's death -
deductible funeral expenses shall be [A] P1,000,000. June 1, 2016. [C] Date of donation - August 1, 2011;
[B] P500,000. [C] P300,000. [D] P200,000. date of present decedent's death - September 10,
56. Which of the following claims by the decedent may 2013. [D] Date of purchase by present decedent -
be deducted from his gross estate? [A] Claim against February 1, 2011; date of present decedent's death -
a debtor upon a promissory note executed twelve June 30, 2013.
years ago. [B] Claim against a corporation 64. H, unmarried, passed away on April 1, 2013. Which
undergoing judicial rehabilitation proceedings. [C] of the following properties may be claimed as
Both A and B. [D] Neither A nor B. vanishing deduction? [A] Land donated to H by his
57. Selected data of an estate appear below: parents on April 14, 2010. [B] Vehicle inherited by H
Collectibles from debtors (inclusive of bad from his uncle who died on December 25, 2013. It
debts from insolvent, P100,000) P 500,000 was donated to the said uncle by his father on
Mortgage land (amount of unpaid December 25, 2008. [C] Shares of stock purchased by
mortgage, P1,000,000) valued at P 2,000,000 H on April 1, 2011. [D] None of the foregoing.
How much of the above items shall form part of the 65. H, married to W for a decade, passed away on April
gross estate? [A] P2,500,000. [B] P2,400,000. [C] 1, 2013. Which of the following properties may be
P1,500,000. [D] P1,400,000. claimed as vanishing deduction? [A] Land donated to
58. Which of the following losses may be deducted from H by his parents on March 15, 2008. [B] Vehicle
the gross estate of a decedent? [A] Loss from theft of inherited by H from his aunt who died on January 10,
vehicle which was stolen a day before the death of 2011. It was purchased by the said aunt from her
the decedent. [B] Loss from fire of building which mother on December 25, 2008. [C] Shares of stock
occurred seven months after decedent's death. [C] purchased by W on February 20, 2013. [D] House
Both A and B. [D] Neither A nor B. purchased by H on April 1, 2008.
59. X died on February 28, 200A. His real property tax 66. Which of the following independent cases shall
for the whole year of 200A was computed at justify the claim for vanishing deduction by X's
P12,000. X's estate may deduct taxes from his gross estate? [A] X purchased a piece of land from Y. X and
estate in the amount of [A] P12,000. [B] P10,000. [C] Y died on July 1, 2013 and on July 1, 2008,
P2,000. [D] P0. respectively. [B] X inherited a house from Y. Y also
60. Y sold his residential family home for P5,000,000. inherited this house from Z. X, Y, and Z died on April
The house and lot was previously purchased for 1, 2017, on September 15, 2013, and on September
P3,300,000 inclusive input VAT from a real estate 30, 2008, respectively. [C] X received a gold watch as
broker. How much is the amount of business tax a gift from Y on December 25, 2012. This watch as
payable on the sale? [A] P600,000. [B] P200,000. [D] inherited by Y from Z. X and Z died on August 28,
P150,000. [D] P0. 2013 and November 1, 2008, respectively. Y is still
61. On January 10, 2012, Maria Reyes, single-mother, alive at the time of X's death. [D] X received a car as
donated cash in the amount of P50,000.00 to her a gift from Y on February 14, 2008. X died on April 1,
daughter Cristina, and on December 20, 2012, she 2014. Y is still alive at the time of X's death.
donated another P50,000.00 to Cristina. Which 67. W died and is survived by H and one legitimate child.
statement is correct? [A] Maria Reyes is subject to Their principal residence consists of a lot that was
donor's tax in 2012 because gross gift is P100,000.00. inherited by H before marriage, and a house that was
[B] Maria Reyes is exempt from donor's tax in 2012 donated to W by her parents after giving birth to her
because gross gift is P100,000.00. [C] Maria Reyes is first child with H. At the time of W's demise, the lot
exempt from donor's tax in 2012 only to the extent and the house had market values of P400,000 and
of P50,000.00. [D] Maria Reyes is exempt from P600,000, respectively. The family home deduction
donor's tax in 2012 because the donee is minor. of W's estate under the regime of Absolute
62. Which of the following statements regarding Community of Property amounts to [A] P1,000,000.
vanishing deduction is not correct? [A] It may be [B] P800,000. [C] P600,000. [D] P0.
claimed on a property that was inherited by a prior
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Taxation Examination

68. H died and is survived by W and two legitimate marriage to W. [D] Jewelry purchased by H during his
children. Their principal residence consists of a lot marriage to W.
that was inherited by H during his marriage to W, and 74. Assume the same facts as above. Under the regime
a house that was built from the retirement benefit of Absolutely Community of Property, which of the
received by H from his employer. At the time of H's following properties shall be classified as the
demise, the lot and the house had market values of separate or exclusive property of W, the decedent?
P1,500,000 and P800,000, respectively. The family [A] Vehicle purchased during their marriage out of
home deduction of H's estate under the regime of the salary of H. [B] Land inherited by W during their
Conjugal Partnership of Gains amounts to marriage. [C] Shares of stock donated to H during his
P1,500,000. [B] P1,000,000. [C] P750,000. [D] P0. marriage to W. [D] Jewelry purchased by H during his
69. H won the jackpot prize in a lotto draw at the time marriage to W.
he was already a widower. He spent the whole 75. In relation to the valuation of properties at the time
amount to construct a duplex apartment. He of the decedent's death for purposes of estate
occupied one door for himself and rented the other taxation, determine which of the following
door to a paying tenant. The two doors of the valuations is erroneous [A] Real property shall be
apartment equally occupied a 200 square-meter lot. valued in accordance with the fair market value as
This lot was donated to H's deceased wife at the time determined by the Commissioner of Internal
that they were married without any offspring. H died Revenue or the fair market value as determined in
of a very rare disease. Under the regime of Conjugal the schedule of values fixed by the Provincial or City
Partnership of Gains, what may be claimed as family Assessors, whichever is higher. [B] Listed and traded
home deduction by H's estate? [A] The 2-door shares of stock shall be valued at their arithmetic
apartment and the 200 square-meter lot. [B] The 1- mean between the highest and lowest quotation of
door apartment and the 200 square-meter lot. [C] the shares at the date of filing the estate tax return.
The 1-door apartment and the 100 square-meter lot. [C] Unlisted and untraded common shares shall be
[D] The 100 square-meter lot. valued at their book value. [D] Unlisted and untraded
70. Assume the same facts above, except that H utilized preferred shares shall be valued at their par value.
his retirement benefit to construct the duplex 76. The estate of the decedent is not liable to pay any
apartment at the time when he was already a estate tax where the taxable net estate, after
widower. Under the regime of Absolute Community considering all exemptions and deductions allowed
of Property, what may be claimed as family home by law, does not exceed [A] P500,000. [B] P200,000.
deduction by H's estate? [A] The 2-door apartment [C] P100,000. [D] None of the foregoing.
and the 200 square-meter lot. [B] The 1-door 77. An estate tax return is required by law to be filed
apartment and the 200 square-meter lot. [C] The 1- where [A] The gross value of the estate exceeds
door apartment and the 100 square-meter lot. [D] P200,000, even though exempt from estate tax. [B]
The 100 square-meter lot. The estate consists of registered or registrable
71. Husband inherited a house and lot from his deceased property. [C] Both A and B. [D] Neither A nor B.
parents at a time when he was already married to W. 78. When the payment of estate tax will cause undue
This property served as the residence of the family. hardship upon the heirs or the estate which is
After many years of marital union, W died and was undergoing judicial settlement before the court, the
survived by H and their only legitimate child, X. The Commissioner of Internal Revenue may grant an
property was valued at P4,000,000 at the time of W's extension for a period not exceeding [A] 5 years. [B]
death. Under the regime of Conjugal Partnership of 3 years. [C] 2 years. [D] 1 year.
Gains, the family home deduction of W's estate 79. The Commissioner of Internal Revenue may examine
amounts to [A] P4,000,000. [B] P2,000,000. [C] the bank accounts of the taxpayer without need of
P1,000,000. [D] P0. securing beforehand a court order in one of the
72. Assume the same facts above, except that the house following cases [A] To examine the bank accounts of
and lot were inherited by H when he was still the taxpayer for the purpose of determining whether
unmarried. Under the regime of Absolute or not the tax evasion is committed. [B] To examine
Community of Property, the family home deduction the bank accounts of the decedent for the purpose
of W's estate amounts to [A] P4,000,000. [B] of determining his gross estate. [C] To examine the
P2,000,000. [C] P1,000,000. [D] P0. bank accounts of the taxpayer for the purpose of
73. Husband (H) and wife (W) are supporting X (child of determining whether or not a fraudulent return has
H from his former marriage to Z, deceased). been filed. [D] To examine the bank accounts of the
Thereafter, W died. Under the regime of Conjugal taxpayer for the purpose of determining his gross
Partnership of Gains, which of the following income.
properties shall be classified as the separate or 80. Which of the following statements relative to tax
exclusive property of H, the surviving spouse? [A] credit on estate taxation is true? [A] The estate of a
Vehicle purchased during their marriage out of the non-resident alien decedent may claim a tax credit
salary of H. [B] Land inherited by W during their for taxes paid in his country from his Philippine
marriage. [C] Shares of stock donated to H during his estate tax. [B] The amount to be claimed as tax credit
6
Taxation Examination

from the Philippine estate tax is always the actual person. [B] Gross receipts of a canteen within the
amount of estate tax paid to the foreign country. [C] amusement place where the owners or operators of
The estate tax paid to the foreign country may be the canteen and the amusement place are different
claimed as a tax credit in the estate tax return and at persons. [C] Both A and B. [D] Neither A nor B.
the same time as a deductible expense in the income 90. The amusement tax which is imposable by the Local
tax return. [D] Tax credit may only be claimed with Government Units (LGUs) under the Local
respect to taxable properties located abroad owned Government Code covers the gross receipts of the
by citizens and residents of the Philippines. amusement places derived from [A] admission fees.
81. Which of the following taxpayers is not subject to the [B] rentals of property. [C] television and motion
3% Percentage Tax on VAT-exempt persons? [A] picture rights. [D] all of the foregoing.
Cooperatives. [B] Business partnership with annual 91. Which of the following amusement places is not
gross receipts of P1,900,000. [C] Exporter who is not subject to VAT nor any amusement tax by the
VAT-registered. [D] Retailer expecting his gross sales national government? [A] cinema houses. [B]
to reach P1,600,000 for the next 12-month period. racetracks. [C] cockpits. [D] cabarets.
82. Which of the following transportation providers is 92. A boxing exhibition, in order to be exempt from the
not subject to the 3% percentage tax on domestic percentage tax on amusements must be [A] a titled
carriers? [A] School bus operators. [B] Cargo truck or non-titled bout involving at least one Filipino
operators. [C] Passenger jeepney operators. [D] Car boxer. [B] Promoted by a Filipino citizen or a
rental business. corporation where at least 60% of the capital stock is
83. Which of the following persons is subject to the 3% owned by a Filipino citizen or citizens. [C] Both A and
percentage tax on Domestic carriers? [A] owners of B. [D] Neither A nor B.
bancas. [B] owners of animal-drawn two-wheeled 93. The Percentage Tax on Winnings is imposed on the
vehicles. [C] keepers of garage. [D] none of the winnings of bettors in [A] cockfighting. [B] horse
foregoing. race. [C] jai-alai. [D] boxing.
84. Determine the carrier that is not subject to the 3% 94. Determine which of the following taxes is a final
Percentage Tax on International Carriers [A] Resident percentage tax [A] Tax on the sale or exchange of
foreign corporation operating as an international listed or traded shares of stock. [B] Tax on the sale or
shipping carrier. [B] Non-resident foreign exchange of unlisted or untraded shares of stock. [C]
corporation operating as an international air carrier. Both A and B. [D] Neither A nor B.
[C] Both A and B. [D] Neither A nor B. 95. The Percentage Tax Return shall be filed not later
85. Which of the following franchises is not subject to than [A] 30th day following the close of the taxable
the 3% Percentage Tax on franchises? [A] Franchise year. [B] 25th day following the close of the taxable
of gas and water utilities. [B] Radio and television quarter. [C] 20th day following the close of the
broadcasting companies with annual gross sales of taxable quarter. [D] 20th day following the close of
more than P10,000,000. [C] Both A and B. [D] Neither the taxable month.
A nor B. 96. Which of the following taxes is not a transfer tax? [A]
86. The 3% Percentage Tax on Overseas Excise tax. [B] Estate tax. [C] Donor's tax. [D] All of
Communications covers [A] Telephone, telegraph, the above.
wireless and other communication equipment 97. Which of the following is not considered a business
services from the Philippines to a foreign country. [B] activity? [A] Selling of goods. [B] Production of goods
Telephone, telegraph, wireless and other for a consideration. [C] Employment. [D] Rendering
communication equipment services from a foreign services for a fee
country to the Philippines. [C] Both A and B. [D] 98. A pawnshop shall now be treated, for business tax
Neither A nor B. purposes [A] As a lending investor liable to the 12%
87. Which of the following entities is subject to the 3% VAT on its gross receipts from interest income and
Percentage Tax on Overseas Communications? [A] from gross selling price from sale of unclaimed
Government and diplomatic services. [B] properties. [B] Not as a lending investor, but liable to
International organizations. [C] News services. [D] the 5% gross receipts tax imposed on a non-bank
None of the foregoing. financial intermediary under Title VI (Other
88. The Percentage Tax on Banks and Non-bank financial Percentage Taxes). [C] As exempt from 12% VAT and
intermediaries with different tax rates is imposed on 5% gross receipts tax. [D] As liable to the 12% VAT
the gross receipts derived from [A] interest from and 5% gross receipts tax.
lending. [B] rentals of property. [C] dividend and 99. Which statement is not correct under the VAT law?
equity shares. [D] all of the foregoing. [A] A VAT-registered person will be subject to VAT for
89. The Percentage Tax on Amusements imposed under his taxable transactions, regardless of his gross sales
the National Internal Revenue Code covers the gross or receipts. [B] A person engaged in trade or business
receipts of the amusement places derived from [A] selling taxable goods or services must register as a
Gross receipts of a canteen within the amusement VAT person, when his gross sales or receipts for the
place where the owners or operators of the canteen year 2013 exceed P1,919,500. [C] A person who
and the amusement place are one and the same issued a VAT-registered invoice or receipt for a VAT-
7
Taxation Examination

exempt transaction is liable to the 12% VAT as a income during the year amounted to P3 Million. [D]
penalty for the wrong issuance thereof. [D] Once a Lessor leases two (2) residential houses and lots at
doctor of medicine exercises his profession during P50,000.00 per month per unit, but he registered as
the year, he needs to register as a VAT person and to a VAT person.
issue VAT receipts for professional fees received. 105. Which of the following input VAT of a VAT-
100. The public market vendor below, who is not a registered taxpayer is not allowed to be converted
VAT-registered person is liable to VAT in 2010, if [A] into tax credit certificate? [A] Input VAT of zero-rated
She sells raw chicken and meats and her gross sales sales. [B] Input VAT of effectively zero-rated sales. [C]
during the year amount to P3 Million. [B] She sells Input VAT of imported or local purchases of capital
vegetables and fruits in her stall and her gross sales goods. [D] Input VAT of those VAT-registered
during the year amount to P4 Million. [C] She sells taxpayers who would be cancelling their VAT-
flowers and plants in her stall and her gross sales registration.
during the year amount to P2.2 Million. [D] She sells 106. The input VAT allowed to deduct from the
live fish, shrimps, and crabs and her gross sales output VAT of sales to government is called [A]
during the year amount to P5 Million. Actual input VAT. [B] Standard input VAT. [C]
101. ABS Corporation is a PEZA-registered export Transitional input VAT. [D] Presumptive input VAT.
enterprise which manufactures cameras and sells all 107. Which of the following businesses is not subject
its finished products abroad. Which statement is to VAT? [A] Pawnshops. [B] Dealers in securities. [C]
NOT correct? [A] ABS Corporation is subject to the Lending investors. [D] Freight forwarders.
5% final tax on gross income earned, in lieu of all 108. The following products are exempt from
national and local taxes. [B] ABS Corporation is business tax, except [A] Rice. [B] Bagoong. [C] Water.
exempt from the 30% corporate income tax on net [D] Balut.
income, provided it pays 12% output VAT. [C] ABS 109. Which of the following is subject to 3% OPT? [A]
Corporation is subject to the 0% output VAT. [D] ABS Compensation income of an employee amounting to
Corporation is exempt from all national and local P200,000 per month. [B] Non-VAT franchise grantees
taxes, except real property tax. of radio or television broadcasting with P10,000,000
102. Under the VAT system, there is no cascading annual gross receipts. [C] International flight of
because the tax itself is not again being taxed. Philippine Airlines with gross receipts of P50,000,000
However, in determining the tax base on sale of per year. [D] Transport of cargoes by sea of Sulficio
taxable goods under the VAT system [A] The Shipping Company with P1,900,000 annual gross
professional tax paid by the professional is included receipts.
in gross receipts. [B] The other percentage tax (e.g., 110. What is the correct treatment for the excess of
gross receipts tax) paid by the taxpayer is included in standard input VAT over the actual input VAT on
gross selling price. [C] The excise tax paid by the sales to the government? [A] Other income. [B] Cost
taxpayer before withdrawal of the goods from the of sales. [C] Operating expense. [D] Final withholding
place of production or from customs custody is VAT.
included in the VAT taxable base. [D] The
documentary stamp tax paid by the taxpayer is
included in the gross selling price or gross receipts.
103. Except for one transaction, the rest are exempt
from value added tax. Which one is VAT taxable? [A]
Sales of chicken by a farmer and whose gross annual
sales amount to P5 Million. [B] Sales of copra by a
copra dealer whose gross annual sales is P5 Million.
[C] Gross receipts of a non-VAT registered CPA during
the year amounted to P2.5 Million. [D] Gross receipts
of an agricultural contract grower amounting to P3.0
Millon.
104. A lessor or real property is exempt from value-
added tax in one of the transactions below. Which
one is it? [A] Lessor leases commercial stalls located
in the Greenhills Commercial Center to VAT-
registered sellers of cell phones; lessor's gross rental
during the year amounted to P12 Million. [B] Lessor
leases residential apartment units to individual
tenants for P10,000.00 per month per unit; his gross
rental income during the year amounted to P6
Million. [C] Lessor leases commercial stalls at
P10,000.00 per stall per month and residential units
at P15,000.00 per unit per month; his gross rental
8