Taxation Situational

TAXATION
DECEMBER 17, 2021

8:00AM – 11:00AM
Compiled By: 11 Supernova
DISCLAIMER: Not of all these questions are the exact questions itself on the said
CPALE but the concept behind those questions, exists HERE. The importance of the
concept/rationale is important. Padayon, future CPA’s!
P.S. Wag maniniwala sa chismis (BOA yern). Always believe in your preparation and
your efforts will never betray you. ^^
SITUATION 1: (PREFERENTIAL TAXATION): Gelato, PEZA registered enterprise, operating

in the Philippines for the year 2018 was given an income tax holiday for 4 years,
presented the following financial data:
Sales to registered activities P5,000,000

Sales to unregistered activities P1,000,000
Cost of sales outside customs territory P3,000,000
Administrative expenses P1,200,000
1. How much is due to National Government, after the income tax holiday period?
A. P75,000
B. P90,000
C. P165,000
D. P180,000
2. How much is due to Local Government, after the income tax holiday period?
A. P50,000
B. P60,000
C. P120,000
D. P42,000
SITUATION 2 (INCOME TAXATION): Kumadrona signified her intention to be taxed at 8%

income tax rate on gross sales in her first quarter return. However, her gross sales
during taxable year has exceeded the VAT threshhold.
First Quarter Second Quarter Third Quarter Fourth Quarter

Sales 500,000 1,000,000 1,500,000 4,000,000
Cost of Sales 300,000 500,000 700,000 1,500,000
Operating 100,000 200,000 250,000 500,000
Expenses
3. How much is the income tax payable for the final return?
A. P574,000
B. P560,000
C. P340,000
D. None of the above
4. How much is the percentage tax under Section 116 for the third quarter?
A. P210,000
B. P45,000
C. Not subject to Section 116
5. How much is the output VAT for the fourth quarter, if any?
A. P840,000
B. P480,000
C. P120,000
D. None of the choices
SITUATION 3 (INCOME TAXATION): Mr. Mark Tang is a partner of Tang Dayag Caiga Company,
a business partnership. He owns 25% interest. The gross sales of Tang Dayag Caiga
Company amounted to P10,000,000 for taxable year 2018. The recorded cost of sales and
operating expenses of the partnership were P2,150,000 and P1,500,000, respectively.
It had also incurred an interest expense of P200,000 in connection with asset
acquisition and interest income from bank deposit amounting to P100,000.
6. How much is the taxable income of the partnership? Php6,191,250
A. P5,750,000
B. P5,583,000
C. P5,550,000
7. How much is the income tax liability of the partnership? Php1,857,375

A. P1,725,000
B. P1,674,000
C. P1,665,000
8. How much is the share in the partnership income of partner Mark Tang? Php1,108,468.75
A. P1,068,750
B. P1,018,775
C. P978,775
D. P1,017,025
9. Assuming the partnership avails of the OSD, how much is the tax liability of the
partnership? Php1,413,000
A. P1,725,000
B. P1,305,000
C. P0
SITUATION 4 (INCOME TAXATION): The following data were provided by an international

air carrier:
Freight and cargo fees (cargo originating from the Philippines

in a continuous and uninterrupted flight to Japan, passage
documents sold in Japan) P5,000,000
Mail fees (mail originating from Japan in a continuous and
uninterrupted flight to the Philippines, passage documents sold
in the Philippines) 4,000,000
Advance payments for cargo originating from the Philippines in a
continuous and uninterrupted flight to Singapore (passage
documents sold in Singapore) 3,000,000
Receipts from sales of tickets to passengers originating from
the Philippines in a continuous and uninterrupted flight to
Hong kong (tickets sold in the Philippines) 2,000,000
Expenses, Philippines 1,500,000
10. How much is the income tax due from the international air carrier doing business
in the Philippines?
A. P250,000
B. P240,000
C. P200,000
11. How much is the common carriers tax due from the international air carrier?
A. P250,000
B. P240,000
C. P200,000
SITUATION 5 (INCOME TAXATION): In 2018, Mr. Kenneth Lim, owns a nightclub and videoke
bar, with gross sales/receipts of P2,500,000. His cost of sales and operating expenses
are P1,000,000 and P600,000, respectively, and with non-operating income of P100,000.
12. Can Mr. Lim have an option to avail of the 8% income tax rate?
A. Yes, because his gross sales/receipts do not exceed the VAT threshhold.
B. No, because his business income is subject to Other Percentage Tax under Section
125 of the Tax Code, as amended.
C. Yes, because individual taxpayers are always given the option to be taxed at 8%
income tax rate.
D. No, because he is not VAT – registered.
13. How much is the income tax due?
A. P200,000
B. P190,000
C. P120,000
14. How much is the Other Percentage tax?

A. P450,000 18% of gross receipts
B. P250,000
C. P75,000
SITUATION 6 (INCOME TAXATION): In 2018, Ms. Boa Hancock, a financial controller of

EB Company, earns annual compensation of P1,500,000, inclusive of 13th month and other
benefits in the amount of P80,000 and mandatory SSS contribution of P3,500 and
Philhealth contribution of P2,000. Aside from her employment income, she owns a
convenience store, VAT-Registered, with gross sales of P3,000,000. Sales discount
amounts to P300,000, sales returns and allowances amount to P150,000. Her cost of
sales and operating expenses are P1,000,000 and P600,000, respectively and with non-
operating income of P100,000. Payments for the first three quarters amount to
P300,000.
15. Can she avail of the 8% income tax rate?

A. Yes, because her gross sales do not exceed the VAT threshhold.
B. No, because she is VAT-registered.
C. Yes, because she is a mixed income earner.
D. No, because her total income including compensation income exceed the VAT
threshhold.
16. How much is her total taxable income?

A. P2,913,500
B. P2,550,000
C. P2,463,500
D. P2,464,500
17. How much is her tax due when she files her final tax return?
A. P338,320
B. P366,000
C. P482,320
D. P338,640
18. How much is the output VAT, if any

A. P306,000
B. P342,000
C. P360,000
SITUATION 7 (BUSINESS TAXATION): JJ Company, service provider, presented to you the

following income statement in line with the same Company’s audit of the financial
statements:
JJ COMPANY
INCOME STATEMENT
For the year ended December 31, 2021
Sales P10,350,000
Cost of Goods Sold 7,050,000
Gross Profit P 3,300,000
Operating expenses:
Selling P 675,000
Administrative 1,050,000 1,725,000
Net income P 1,575,000
Your audit disclosed the following information:

• Accounts receivable decreased P540,000 during the year.
• Prepaid expenses increased P255,000 during the year.
• Accounts payable to suppliers of merchandise decreased P412,500 during the year.
• Accrued expenses payable decreased P150,000 during the year.
• Administrative expenses include depreciation expense of P90,000.
• Inventories decreased by P450,000.
19. What is the total amount of cash received from customers during the year?
A. P10,980,000 10,890,000
B. P10,477,500
C. P10,350,000
20. How much is output VAT?

A. P1,306,800
B. P1,257,300
C. P1,242,000
D. P1,177,200
21. What is the total basis of input VAT on supplies and operating expenses
(purchase of services) during the year?
A. P9,052,500
B. P8,640,000
C. P7,012,500
22. What is the input tax during the year?

A. P1,086,300
B. P1,036,800
C. P841,500
23. Assuming the taxpayer is seller of goods, how much is the output tax for the
year?
A. P1,306,800
B. P1,257,300
C. P1,242,000
SITUATION 8 (BUSINESS TAXATION): A domestic common carrier with Certificate of

Public Convenience (CPC) has the following data for the year 2018:
Gross receipts P3,000,000

Cost of services 1,000,000
Operating expenses 500,000
24. Assuming the domestic common carrier is by land, how much is the common
carrier’s tax?
A. P90,000
B. P60,000
C. P45,000
25. Assuming the domestic common carrier is by air, VAT-registered, how much is the
VAT?
A. P360,000
B. P240,000
C. Not subject to VAT
26. Assuming the entity is allowed to transport passenger but does not have a CPC,
how much is the percentage tax, if any?
A. P90,000
B. P60,000
C. P45,000
SITUATION 9 (RECONCILIATION): The following data are taken from the Statement of
Income and Expenses of DXD Corporation, domestic corporation, for the current year:
Net income per books P800,000

Capital gains tax on shares of domestic corporation 22,500
Final tax on interest on bank deposit 20,000
Net capital loss 30,000
Dividend from domestic corporation 80,000
Interest on Philippine currency bank deposit 100,000
Capital gain on shares of stock of domestic corporation 150,000
Allowance for bad debts 50,000
27. Based on the above information, how much is the taxable income?
A. P470,000
B. P440,000
C. P420,000
D. P592,500
SITUATION 10 (RECONCILIATION): From the following data, compute the income tax still
due from a domestic corporation engaged in merchandising business. For the calendar
year 2018, the net income per books (after tax) is P850,000, after considering among
others:
Interest income from bank deposit P 5,500

Inter-corporate dividends 5,000
Gain from sale of shares in a domestic corporation 7,000
Bad debts written off 6,500
Write-off of inventories lost due to spoilage or expiry 12,000
Depreciation on appraised value of property 15,000
Surcharge and compromise paid in relation to the late filing of ITR 80,000
Contribution to a government exclusively for public purpose 50,000
Contribution to government’s priority program in education 10,500
Quarterly income tax payments 65,000
Provision for bad debts 8,000
The net income per books should be reconciled with the provisions of the tax code,
meaning items which are not taxable must be excluded and items which are not deductible
are to be added back.
28. How much is the net tax due and payable?

A. P231,700
B. P213,715
C. P213,550
D. P237,550
SITUATION 11 (DOCUMENTARY STAMP TAX): The following were independent cases.
A. AST Corporation originally issued shares of stock with par value of P5,000,000.
B. HXH Corporation originally issued stock dividends valued at P2,000,000.
C. A stockholder of YTJ Corporation sold his shares of stock for P500,000.
D. During the current year, a debt instrument with a face value of P500,000 was issued
with maturity of 100 days.
E. A real property was sold for P3,495,700.
F. Mr. Bon Clay donates a piece of land to the City of Masbate. The fair market value
per BIR of the piece of land is P2,000,000 and its value per Tax declaration is
P1,800,000.
29. How much is the DST of AST Corporation, if any?

A. P75,000
B. P50,000 for original issuance of shares, Php2 for every 200 and fractional part thereof
C. P37,500
30. How much is the DST of HXH Corporation, if any?

A. P30,000
B. P20,000 for original issuance stock dividends, Php2 for every 200 and fractional part thereof
C. P15,000
31. How much is the DST of the stockholder of YTJ Corporation, if any?
A. P7,500
B. P5,000
C. P3,750 for sale of shares, Php1.5 for every 200 and fractional part thereof
32. How much is the DST on the debt instrument, if any?

A. P3,750
B. P2,500
C. P1,027 Php1.5 for every 200 and fractional part thereof, if less tan a year prorated using 365 days
33. How much is the DST on the real property , if any?

A. P52,440
B. P52,425 Php15 for every 1,000 and fractional part thereof
C. P52,420.50
34. How much is the DST of Mr. Bon Clay, if any?

A. P30,000
B. P27,000
C. P0
SITUATION 12 (EXCISE TAX): To improve her body shape, Miya Califa decided to undergo
procedure and sought the services of Body Beautiful, a clinic operated outside the
hospital and owned by Bellat Medical Group, Inc. Body Beautiful charges Miya Califa
the amount of P50,000 (inclusive of 12% VAT but exclusive of 5% excise tax) for the
service rendered.
35. How much is the excise tax?

A. P4,464.42
B. P2,232.14
C. P1,339.28
36. How much is the VAT?

A. P5,625
B. P5,357.14
C. P4,687.50
37. How much is the total amount to be collected from Miya Califa?
A. P52,500
B. P50,267.85
C. P46,877.99
38. Assume that the amount of P50,000 is inclusive of 12% VAT and 5% excise tax. How
much is the excise tax, VAT, and the total amount to be collected from Miya Califa?
A. P2,500; P6,000; P47,874.15
B. P2,125.85; P5,357.14; P50,000
C. P2,232.10; P5,102.04; P44,642.86
39. Assume that Miya Califa had another invasive cosmetic procedure done by Dr.
Johnny, an individual practitioner operating a clinic inside of hospital whose gross
annual receipts exceed the VAT threshhold. The hospital bills of Miya Califa other
fees in the amount of P20,000, in addition to the fees charged by Dr. Johnny of
P50,000 (inclusive of 12% VAT, excluding the 5% excise tax) for the service performed.
How much is the VAT – exempt service, if any? The excise tax? The VAT? And the total
amount to be collected from Miya Califa?
A. P50,000; P2,232.14; P6,000: P67,875
B. P30,000; P1,000; P5,357.14; P71,267.86
C. P20,000; P3,232.14; P5,625; P73,500
SITUATION 13 (LOCAL TAXATION): The following are independent cases
A. The following data are taken from the books of VAT – registered manufacturer of
cigarettes:
Gross Sales P4,900,000

Sales returns 500,000
Sales discount, determinable at the time of sale 100,000
Excise tax 150,000
VAT 540,000
Local tax passed-on to customers 100,000
B. An individual taxpayer sold his residential house and lot for P5,000,000 (fair
market value was P4,000,000).
40. For local business tax purposes, the taxable amount is

A. P5,000,000
B. P4,500,000
C. P3,710,000
41. How much is the capital gains tax

A. P300,000
B. P200,000
C. P75,000
D. P0
42. How much is the DST?

A. P300,000
B. P200,000
C. P75,000
D. P0
43. How much is the local transfer tax?

A. P75,000
B. P50,000
C. P25,000
D. P0
SITUATION 14 (LOCAL TAXATION): A taxpayer has several real properties in the

Philippines:
• Residential land located in Metro Manila, its fair market value is P5,000,000.
• Agricultural land located in the province, fair market value, P2,000,000.
• Commercial land located in Las Piñas City, fair market value, P10,000,000.
• Residential building located in the one of the cities in Metro Manila has a fair
market value of P10,000,000. The city ordinance fixed the actual assessment level
at 60%.
• An agricultural machinery located in the province has fair market value of
P3,000,000.
44. How much is the total real property tax? 2% on assessed value-City
A. P300,000 1% on assessed value-Province
B. P304,000
C. P260,000
D. P128,000
45. How much is the total special educational fund (SEF)? 1% on assessed value
A. P140,000
B. P176,000
C. P142,000
D. P150,000
SITUATION 15 (PREFERENTIAL TAXATION): A PEZA – registered enterprise has the following
data for the current year:
Gross Revenue P100,000,000

Cost of Sales 50,000,000
Operating expenses 10,000,000
Other income 5,000,000
46. How much is the tax due assuming it enjoys income tax holiday?
A. P13,500,000
B. P2,750,000
C. P0
47. How much is the tax due assuming it is subject to 5% preferential rate?
A. P13,500,000
B. P2,750,000
C. P0
48. How much is the tax due assuming it is subject to the 30% RCIT?
A. P13,500,000
B. P2,750,000
C. P0
SITUATION 16 (PREFERENTIAL TAXATION): The Korosensei Company is a PEZA-registered

manufacturer entitled to Income Tax Holiday (ITH) incentive for CY 2018. It is the
fourth year of operations of the company.
The following information pertain to the CY 2018 activities of the company:
Registered Activities Unregistered Activities

Gross Sales P121,700,000 P10,425,000
Cost of Sales 103,400,000 7,297,500
Other income (net gain of
disposal of office PPE) 550,500
Operating expenses of P9,890,100 (use 90%-10% allocation between registered and

unregistered activities)
Creditable withholding taxes (CWTs) from the first three quarters amounted to P98,000
(including P10,000 CWTs dated 2019) while CWTs for the fourth quarter totaled P33,600
(excluding CWTs not in the name of Korosensei Company.
49. How much is the 2% MCIT?
A. P439,560
B. P73,560
C. P62,550
50. How much is the RCIT?

A. P1,103,400
B. P806,697
C. P0
51. How much is the income tax still due?

A. P685,097
B. P675,097
C. P0
52. Assuming the company is entitled to the 5% gross income tax (GIT), how much is
the tax due?
A. P915,000
B. P469,946
C. P0
53. Using the information in the preceding number, determine the income tax still due
to the BIR?
A. P1,721,697
B. P1,600,097
C. P1,234,097
SITUATION 17 (PREFERENTIAL TAXATION): A PEZA – registered entity engage as an export

enterprise provided you with the following information for the current taxable year:
Export sales P45,500,000

Direct costs 27,000,000
Administrative expenses 5,650,000
Marketing expenses 2,720,000
Other operating expenses 1,330,000
Incidental losses 320,000
Additional information: 24,500,000

a. Domestic sales at P4,500,000 with direct cost at P14,700,000.
b. Other expenses related to the domestic sale incurred amounted to P3,206,400.
c. PEZA Letter of Authority No. 18-ERD-LS-FP/EE-0001 provides domestic sales
limitation at 30%.
54. What is the entity’s total income tax for the year?
A. P925,000
B. P1,978,080
C. P2,903,080
55. What is the entity’s income tax if the PEZA Letter of Authority No. 18-ERD-LS-
FP/EE-0001 provides domestic sales limitation at 30% as a condition for fiscal
incentives?
A. P4,552,080
B. P2,903,000
C. P1,978,080
SITUATION 18 (LOCAL TAXATION): Tayrina Batumbakal is a resident of Brgy. Bactad East,

Urdaneta City, Pangasinan. Tayrina is engaged in general merchandise and is operating
a sari-sari store with annual income of P200,000. Tayrina owns a parcel of land, where
her residence and her sari-sari store stands. The parcel of land has a fair market
value of P2,500,000. Tayrina also owns shares in Minamina Corporation, a domestic
corporation with principal office in the same barangay. Details regarding Minamina
Corporation are as follows:
Assets P2,500,000
Gross receipts 1,500,000
Net income 350,000
56. How much is Tayrina’s community tax?

A. P200
B. P205 Php5 plus Php1 for every 1,000 of net income
C. P2,000
D. P2,005
57. Tayrina should pay the community tax on or before

A. January 20
B. February 28
C. March 15
D. April 15
58. How much is Minamina Corporation’s community tax?

A. P1,600
B. P1,640
C. P2,100 Php500 plus Php2 for every 5,000 of Receipts and Property
D. P2,240
59. Minamina Corporation’s community tax should be paid with which local government
unit?
A. Barangay Bactad East
B. Urdaneta City
C. Province of Pangasinan
D. Barangay Bactad East, Urdaneta City, or Province of Pangasinan, at the option of
Minamina Corporation.
SITUATION 19 (LOCAL TAXATION): Parokya Ni Edgar, a domestic corporation, sold a parcel

of land with the following details:
• The land has a Transfer Certificate of Title No. 109201.

• It is an agricultural land located in the municipality of Bamban in the province
of Tarlac.
• The area is 2,500 square meters.
• It was acquired in 2004 at a cost of P500,000.
• At the time of sale, it has a fair market value of P7,500,000. This is equivalent
to the prevailing market values enacted by the Sanggunian.
• The consideration for the sale is P6,700,000.
60. How much is the capital gains tax from the sale?
A. P372,000
B. P402,000
C. P420,000
D. P450,000
61. How much is the DST from the sale?

A. P50,250
B. P56,250
C. P100,500
D. P112,500
62. How much is the local transfer tax from the sale?
A. P33,500
B. P37,500
C. P67,000
D. P75,000
SITUATION 20 (DST): Sour Corporation, a domestic corporation primarily engaged in the

sale of strawberry ice cream, issued 12,000 shares to Olivia, a non-resident citizen.
The shares have a par value of P20 and were issued to Olivia by fully paying the
market value of P23 per share. At a time when the market value is P33, Olivia sold
the half of her shareholdings directly to Sabrina, a resident citizen.
63. Which of the following is true regarding Sour Corporation’s issuance of shares
to Olivia?
A. The excess of market value over the par value should be declared by Sour Corporation
as part of its gross income subject to income tax.
B. The P23 payment to Olivia is deductible for income tax purposes.
C. Olivia can claim the P3 excess of market value over par value as a deduction for
income tax purposes.
D. The transaction has no income tax implication.
64. How much is the DST due on the issuance of shares by Sour Corporation to Olivia?
A. P1,200
B. P1,380
C. P2,400
D. P2,760
65. How much is the CGT due on the sale of Olivia to Sabrina?
A. P0
B. P9,000 15% of Proceeds less Cost
C. P11,700
D. P18,000
66. How much is the DST due on the sale of Olivia to Sabrina?
A. P1,035
B. P1,380
C. P2,070
D. P2,760
67. Assuming the DST on the transaction has not been paid, which of the following
statements is true?
A. The transfer cannot be effected on the stock and transfer books of the
corporation.
B. The transfer is considered void ab initio if not paid within five days from the
close of the month when the transfer was made.
C. If the corporation does not inform the BIR of the failure to pay DST, the
corporation shall be liable to pay the basic tax due plus interests and penalties.
D. With the failure to pay DST, the shares will be considered as watered stocks.
SITUATION 21 (DST): Rose is on the ground, and she wants to acquire more parcels of
land for use on her upcoming resort project. Jisoo is planning to sell her idle land
to Rose. The land has a zonal value of P4,000,000, an assessed value of P4,200,000,
and an appraised value of P4,350,000. Jisoo was able to sell it to Rose for P4,070,000.
Rose paid for the parcel of land in full cash. They executed a Contract to Sell and
Deed of Absolute Sale to this effect.
68. How much is the CGT due on the transaction?

A. P240,000
B. P244,200
C. P252,000
D. P261,000
69. How much is the DST due on the transaction?

A. P31,500
B. P61,050
C. P63,000
D. P65,250
70. Suppose that was sold by Jisoo is her principal residence, and Jisoo was able to
use the entire proceeds to acquire a new principal residence in six months, how much
is the CGT and DST due on the transaction?
A. P0; P63,000
B. P0; P0
C. P252,000; P63,000
D. P252,000; P0
71. Suppose that instead of a sale, Jisoo instead donated the parcel of idle land to
Rose, which of the following statements is true?
A. The donation is subject to donors’ tax, but not to DST.
B. The donation is not subject to DST, but not to donors’ tax.
C. The donation is not subject to both donors’ tax and DST.
D. The donation is subject to both donors’ tax and DST.
72. Which of the following is the document that evidences the payment of taxes,
including DST, and will be presented to the Registry of Deeds by Rose in order to
effect the taxable transfer of title over the property from Jisoo’s name to hers?
A. Duly stamped DST returns
B. Certificate Authorizing Registration
C. VAT invoice covering the real property
D. Bank deposit slips
SITUATION 22 (INCOME TAXATION): Mike Hanopol, resident citizen with 2 dependent

children, has the following data for the current year:
Gross income from business, Philippines P4,350,000

Gross income from business, Singapore 3,200,000
Business expenses, Philippines 1,000,000
Business expenses, Singapore 750,000
Interest income from peso deposit in BPI (Manila) Final Tax-20% 15,000
Interest income from $ bank deposit in BPI (Manila) Final Tax-15% 25,000
Interest income from $ deposit in Bank America (New York) 55,000
Dividend income from Jollibee Foods Corporation Final Tax-10% 65,000
Dividend income from Microsoft Corporation 83,000
PCSO lotto winnings Final Tax 20% 1,500,000
Net winnings in New York Lottery 1,000,000
Prize won in ABS-CBN contest 4,500
Prize won in GMA 7 contest Final Tax- 20% 30,000
Prize won in raffle contest in Malaysia 12,000
Gain on sale of domestic shares not traded in the stock exchange 2,870,000
Price = P3,000,000 15% of Net Capital Gain
Cost = P130,000
Gain on sale of domestic shares traded in the stock exchange 180,000
Price = P230,000
Cost = P50,000
Capital gain on sale of idle land in the Philippines 6% 3,250,000
Price = P4,000,000
Zonal value = P5,000,000
Cost = P750,000
Capital gain on sale of condominium unit in India 119,000
Price = P325,000
Cost = P206,000
73. What is the net taxable income of Mike Hanopol in his ITR of the current taxable
year?
A. P7,073,500
B. P6,973,500
C. P5,800,000
74. If taxes in the amount of P250,000 were withheld from his gross income in the
Philippines, what would be his tax payable reflected in the ITR?
A. P1,863,520
B. P2,113,520
C. P2,071,520
75. What are his total final taxes paid in the current taxable year?
A. P1,049,255
B. P751,130
C. P1,051,130
D. P1,049,750
SITUATION 23 (FRINGE BENEFITS TAX): The following cases are independent to each other.
Case I: XXX Corporation, a domestic manufacturing company, is leasing a residential

house in an exclusive village for the use of its CEO. The rental paid by XXX is
P100,000 per month.
Case II: Nathan Chen, General manager of Pampam Hotel in Makati City, is required by
the owners of the hotel to live in one of the hotel suites that located nearby its
rooftop. This is to make sure that Nathan will be able to oversee the operations of
the hotel with more energy and efficiency, as he would be avoiding the early commute
to work due to heavy traffic.
Case III: In the beginning of the taxable year, Shuron Hakke Company, a domestic
corporation, purchased a SUV in the name of its CEO. The SUV was worth P2.0 million,
and the terms of the purchase were the following; No down payment; payable over 60
months; interest at 1% per month.
76. What is the annual fringe benefit tax to be paid by XXX?

A. P282,353
B. P323,077 50% of lease rental
C. P564,706
77. XXX decides, in the beginning of the next taxable year, to purchase the house
being used by its CEO for P25.0 million. The zonal value of the house is P30 million,
while the assessor’s value is P28 million. Compute the annual FBT to be paid by XXX.
A. P369,231
B. P403,846
C. P564,706
78. In the preceding number, if the purchase of the house is on the installment basis,
what is the annual FBT to be paid by XXX?
A. P564,706
B. P336,538
C. P352,941
79. In the preceding number, if the title of the house is transferred to the CEO, how
much FBT will be paid by XXX?
A. P11,764,706
B. P16,153,846
C. P14,117,647
80. In the preceding number, if XXX transfer the title of the house to its CEO for
P2,000,000, what FBT shall XXX be paying?
A. P4,705,882
B. P9,411,765
C. P5,384,615
81. If the hotel typically charges P16,500 per night for a hotel suite, how much is
the monthly FBT due from Pampam Hotel?
A. P133,269
B. P266, 538
C. P7,765
D. P0
82. Compute the FBT in the year of purchase under Case III.
A. P188,235
B. P941,176
C. P215,385
83. In the preceding number, if Shuron Hakke purchased the SUV in the name of its
CEO, and immediately paid the car dealer 100% of the purchase price, what would be
the FBT, if any, for the taxable year?
A. P1,076,923
B. P941,176
C. P1,054,118
SITUATION 24 (INCOME TAXATION): Wano Corporation, a domestic corporation, has the

following data for the current taxable year:
Gross income from business, Philippines P15,000,000

Other income:
Rental income, net of 5% CWT 2,375,000
Commission income 150,000
Interest income from peso deposit (BDO) 20% 75,000
Interest income earned from investments in corporate bonds20% 20,000
Interest income on $ deposit (BPI) 15% 40,000
Dividend income received from Jollibee Foods Corp. exempt 125,000
Dividend income received from Microsoft Corp. (U.S.) 45,000
Gain on sale of domestic shares not traded in the stock
exchange 15% 230,000
Gain on sale of idle land (Cebu) held as a capital asset.
It was bought 5 years ago for P6,000,000 6% 500,000
Gain on sale of real estate investment in Belgium. The
ordinary asset was bought 2 years ago for P35 million 1,000,000
Taxes withheld on the rental income 125,000

Income taxes paid in the first 3 quarterly returns 200,000
84. What is the income tax payable of the corporation in its annual income tax return?
A. P1,888,500
B. P1,563,500
C. P1,993,500
D. P0
85. What are the Corporation’s total final taxes on its passive income?
A. P430,000
B. P25,000
C. P105,000
D. P408,000
86. What are the Corporation’s total capital gains taxes?

A. P430,000
B. P25,000
C. P394,500
D. P424,500
87. Compute for the income tax payable(refund) of the corporation for the current
year
A. P0
B. P38,900
C. (P35,000)
D. P373,900
SITUATION 25 (INCOME TAXATION): Gullible Corporation’s computed RCIT and MCIT,

creditable income taxes withheld from the 1st to 4th quarters, and the excess MCIT
and excess withholding taxes prior years are as follows:
Quarter RCIT MCIT Taxes Withheld

First P100,000 P 80,000 P 20,000
Second 120,000 250,000 30,000
Third 250,000 100,000 40,000
Fourth 200,000 100,000 35,000
Excess MCIT (prior year) P30,000

Excess withholding tax (prior year) 10,000
88. How much is the income tax payable at the end of the first quarter?
A. P60,000
B. P40,000
C. P80,000
D. P100,000
89. How much is the income tax payable at the end of the second quarter?
A. P230,000
B. P250,000
C. P220,000
D. P80,000
90. How much is the income tax payable at the end of the third quarter?
A. P60,000
B. P100,000
C. P70,000
D. P210,000
91. How much is the income tax payable at the end of the fourth quarter?
A. P505,000
B. P160,000
C. P670,000
D. P165,000
92. What is the journal entry to record the application of excess MCIT against the
RCIT?
A. Deferred Charges - MCIT xxx
Income Tax Payable xxx
B. Income Tax Payable xxx
Deferred Charges – MCIT xxx
C. Income Tax Expense xxx
Deferred Charges – MCIT xxx
D. Deferred Charges - MCIT xxx
Cash xxx
SITUATION 26 (INCOME TAXATION): The records of a closely held corporation show the
following:
Retained Earnings, December 31, 2016 P4,000,000
Note: Retention of the profits did not serve any business purpose.
2017
Gross Income P3,000,000

Expenses (3,800,000)
Net income (loss) P (800,000)
2018
Gross income as a contractor, net of

1% WT P4,950,000
Business expense 3,000,000
Other income:
Rent, net of WT of 5% 475,000
Interest, money market placement, net of
WT of 20% 80,000
Inter-corporate dividend 500,000
Additional information:
In the year 2019, dividends were declared and paid as follows:
Out of 2016 retained earnings P2,000,000

Out of 2018 retained earnings 1,500,000
In the same year, the Commissioner concluded that the 2016 profits were
improperly accumulated, and that the taxpayer failed to show proof to the
contrary.
93. How much is the income tax payable for 2018?

A. P510,000
B. P435,000
C. P110,000
94. How much is the total final tax on dividends?

A. P200,000
B. P350,000
C. P150,000
95. How much is the improperly accumulated earnings tax?

A. P107,000
B. P310,000
C. P203,000
D. P140,000
SITUATION 27 (BUSINESS TAXATION): Hanks is a producer of cooking oil from coconut and
corn. Previously exempt from the VAT, he became subject to the VAT on January 1, 2018.
For January 2018, with sales, VAT not included, of P700,000, he had the following
other data for the month:
NRV Cost
Inventory, January 1, 2018:
Corn and coconut purchased from farmers P120,000 P100,000
Packaging materials purchased from VAT suppliers 24,640 22,400
Supplies purchased from VAT suppliers 11,200 13,440
Purchases during the month of coconut and corn from
farmers 330,000
Purchases during the month from VAT suppliers:
Packaging materials 56,000
Supplies 16,800
96. The transitional input tax is 2%)
A. P672
B. P762
C. P3,600
D. P4,080
97. The presumptive input tax is

A. P13,200
B. P33,000
C. P6,600
D. P39,600
98. The creditable input taxes are

A. P21,762
B. P24,600
C. P25,080
D. P21,672
99. The VAT payable for the month is

A. P62,328
B. P58,920
C. P59,400
D. P62,238
SITUATION 28 (BUSINESS TAXATION): After recognizing the VAT payable for the month of
December 2018, the books of accounts of Hue, a merchandising company, showed a debit
balance in the input taxes account of P12,000. Sales and purchases at total invoice
prices/costs for January 2019 were:
Sales P896,000
Sales returns and allowances 56,000
Sales discount 22,400
Purchases of:
Goods for sale, from VAT-registered persons 224,000
Goods for sale, from non-Vat registered persons 56,000
Services, from VAT-registered persons 21,280
Equipment (life of 10 years) from VAT-registered person 112,000
Importation of goods for sale:

Invoice cost, country of origin 20,000
Freight 500
Insurance 200
Customs duty 600
Excise tax 100
Other expenses prior to removal from customs custody 300
Other expenses after removal from customs custody 250
100. The VAT on Importation is

A. P2,170
B. P2,604
C. P2,634
D. P6,234
101. The VAT payable for January 2019 is

A. P34,716
B. P41,150
C. P40,716
D. P46,716
SITUATION 29 (BUSINESS TAXATION): Saucy is a VAT-Registered taxpayer. The following
data from the books of accounts were transactions for each of the months of January,
February and March (first quarter) of 2018:
January February March

Credits to sales account P440,000 P550,000 P770,000
Debits to purchases account on local
purchases of goods from:
VAT-registered persons 110,000 660,000 330,000
Non-VAT registered persons 20,000 30,000 15,000
Importation of goods, landed cost 50,000
102. The VAT payable at the end of January is

A. P33,000
B. P39,600
C. P30,000
D. P52,800
103. The VAT payable (refundable) at the end of February is

A. P(19,200)
B. P19,800
C. P0
D. P66,000
104. The output taxes on the return for the period ending March is
A. P160,000
B. P176,000
C. P211,200
D. P92,400
105. The VAT payable at the end of March is

A. P13,800
B. P33,600
C. P13,200
D. P39,600
SITUATION 30 (INCOME TAXATION): VSLG & Co., a general professional partnership

providing accounting services, is composed of the following partners with their
respective sharing in the partnership profits: V (50%), S (25%), L (12.5%), and G
(12.5%). For the current taxable year, the partnership and the partners have the
following financial data:
VSLG V S L G
Gross income 7,600,000 400,000 350,000 200,000 150,000
Deductible expenses 3,235,000 235,000 323,000 123,000 145,000
Interest on bank deposit
(net of FWT) 26,800 2,000 1,000 500 45
Dividend income
(from domestic corporation) 1,500 2,300 12,500
Gain on sale of residential house 2,000,000
106. What is the taxable net income of the partnership?

A. P4,365,000
B. P0
C. P4,391,800
107. What is the taxable income of S in his respective ITR?

A. P0
B. P1,118,250
C. P1,124,950
D. P1,745,345
108. If VSLG and Co. were actually a business partnership, what shall be the tax of
the partnership and of V in their respective ITRs?
A. P1,309,500; P0
B. P1,316,200; P18,000
C. P1,309,500; P490,680
SITUATION 31 (INCOME TAXATION):
For the taxable year 2018, Paul Lee earned a monthly rental income of P72,485 net of
the 5% CWT.
108. If he chooses to avail of the 40% OSD, what would be his taxable net income, and
tax payable in the first quarter?
A. P130,473; P9,722
B. P137,340; P10,523
C. P87,340; P523
D. P137,340; P0
109. What would be his taxable net income, and tax payable in the second quarter?
A. P274,680; P23,991
B. P260,946; P21,816
C. P224,680; P20.257
D. P274,680; P0
110. What would be his taxable net income, and tax payable in the third quarter?
A. P391,419; P28,269
B. P412,020; P29,757
C. P362,020; P28,491
D. P412,020; P0
111. What would be his taxable net income, and tax payable in the fourth quarter?
A. P471,892; P13,269
B. P499,360; P29,757
C. P471,892; P8,806
D. P549,360; P21,560
SITUATION 32 (INCOME TAXATION): Haligi Corporation had the following quarterly data
in 2018:
First Second Third Fourth

Sales 7,000,000 11,000,000 11,000,000 15,000,000
Cost of sales 3,000,000 5,000,000 4,800,000 6,500,000
Deductions 2,500,000 3,500,000 4,500,000 1,500,000
Tax withheld by clients 350,000 550,000 550,000 750,000
The corporation also had excess tax credits from the prior year in the amount of
P5,000.
113. If the corporation itemizes deduction in 2018, what is its income tax payable
in the first quarter of 2018?
A. P95,000
B. P80,000
C. P100,000
D. P0
in the second quarter of 2018?
A. P205,000
B. P200,000
C. P295,000
D. P0
in the third quarter of 2018?
A. P324,000
B. P200,000
C. P260,000
D. P(40,000)
in its Annual ITR for 2018?
A. P494,000
B. P630,000
C. P1,310,000
D. P0
SITUATION 33 (INCOME TAXATION): Harold D leased his lot to JJLM. The term of the lease
agreed upon is from January 1, 2015 to December 31, 2024. On July 1, 2015, lessee
JJLM finished erecting a building on the lot which will be owned by lessor Harold at
the end of the lease. Other information regarding the lease are as follows:
Annual rental P 150,000

Rentals received on January 1, 2015
equivalent to 3 years’ rent 450,000
Security deposit paid to lessor 300,000
Cost of building introduced by lessee 25,000,000
Estimate life (in years) 25
117. How much income will lessor Harold recognize in 2015 and 2016 under the spread
out method?
A. P1,265,789 and P1,631,579 Remaining Life of the
B. P965,789 and P1,781,579 Asset after Lease x Cost of the Asset/
C. P2,081,579 and P1,631,579 Term/Over Life of the Remaining Lease Term
D. None of the above Asset
118. If the lease is terminated thru the fault of the lessee at the beginning of the
ninth year of the lease, how much income shall be reported by lessor Harold in the
ninth year?
A. P4,563,158
B. P5,563,158
C. P5,263,158
119. If the leasehold improvement erected by lessee JJ was destroyed by fire on

January 1, 2020, what would be lessor Harold’s deductible loss on the improvements?
The building had a salvage value of P50,000 and was not covered by any insurance.
A. P7,292,105
B. P6,476,316
C. P5,710,526
SITUATION 34 (INCOME TAXATION): Reyes, Santos, and Associates is a GPP engaged in

accounting and tax practice. The income and expenses of the partnership and of the
partners during the year are shown below:
Reyes, Santos, and Associates:

Gross income from profession P1,560,000
Professional expenses (deductible) 460,000
Contributions to the National Government for priority
activity in education 50,000
Contribution to Catholic Church 50,000
Partner Reyes, single, with 70% interest:

Gross income from hardware business P 600,000
Business operating expenses (deductible) 240,000
Donation to Sto. Domingo Church 40,000
Partner Santos, married, with 30% interest:

Gross income, grocery store P 510,000
Royalties, domestic 80,000
Dividend from a domestic corporation 100,000
Grocery operating expenses (deductible) 280,000
Contributions to Mary Mother of God Church 20,000
Contributions to National Government for priority activity
in sports 10,000
119. How much is the net income of the partnership?

A. P1,000,000
B. P1,100,000
C. P1,050,000
D. P1,200,000
120. Determine the taxable net income of Partner Reyes

A. P1,059,000
B. P1,000,000
C. P1,100,000
D. P1,110,000
121. Determine the net income subject to tax of Partner Santos

A. P509,000
B. P512,000
C. P511,000
D. P510,000
SITUATION 35 (BUSINESS TAXATION): EX Corporation, a VAT registered company engaged

in the lease of residential properties. During the first quarter of 2020, the following
information were made available (all amounts are exclusive of VAT):
• Rental income with monthly rental of P18,000 per unit – P800,000

• Receivable from tenants as of December 31, 2019, (60% is VAT Exempt) – P200,000
• Receivable from tenants as of March 31, 2020 (40% is VAT Exempt) – P300,000
• Deferred rent income as of December 31, 2019 (60% is VAT Exempt) – P200,000
• Deferred rent income as of March 31, 2020 (40% is VAT Exempt) – P250,000
• Input tax credit on purchases of goods and services for the first quarter of 2020
– P80,000
122. How much is the output tax due for the first quarter of 2020?
A. P92,400
B. P164,400
C. P171,600
D. None
123. How much is the creditable input tax credit for the first quarter of 2020?
A. P35,200
B. P61,838
C. P62,629
D. P80,000
124. Assuming on April 5, 2020, EX Corporation sold a residential house and lot for
P3,000,000 (VAT Exclusive). How much is the output tax due on its sale of real
property, assuming the zonal value of the property is P3,248,000?
A. P348,000
B. P360,000
C. P389,760
D. None
125. When is the deadline for filing of first month of the quarter VAT return?
A. On the 20th day after the close of the taxable month
B. On the 25th day after the close of the taxable month
C. On the 20th day after the close of the taxable quarter
D. On the 25th day after the close of the taxable quarter
SITUATION 36 (BUSINESS TAXATION, Adapted): The Yumabong Banking Corporation, a

domestic bank, had the following income and expense items recognized under IFRS for
the quarter ended September 30, 2021 (tax exclusive, if applicable):
Income items:
Dividends 800,000
Equity income in subsidiary 1,000,000
Rentals of property acquired in mortgage foreclosures 4,000,000
Rentals of safety deposit boxes 300,000
Interest on loans with remaining maturities of:
Not more than five years 4,000,000
More than five years 6,400,000
Interest income on bank deposit (net of 20% FWT) 800,000
Interest income on bank deposit (net of 15% FWT) 425,000
Net trading gain (net of trading loss of P750,000) 1,350,000
Expense items:
Purchases of supplies and services from VAT-registered
suppliers 1,050,000
Purchases of supplies and services from non-VAT registered
suppliers 800,000
126. Compute the Gross Receipts Tax (GRT) for the quarter ended September 30, 2021.
A. P764,500
B. P580,500
C. P1,354,500
D. P818,500
127. Assume the GRT on interest on loans is passed-on to clients, determine the GRT
for the quarter ended September 30, 2021.
A. P550,980
B. P496,980
C. P668,980
D. P782,980
128. If the financial institution is not performing quasi-banking functions, compute

the GRT for the quarter ended September 30, 2021.
A. P854,500
B. P654,500
C. P711,500
D. P621,500
129. What is the deadline for filing the quarterly GRT return and payment of the
related tax if Yumabong is under the eFPS?
A. October 5, 2021
B. October 15, 2021
C. October 25, 2021
D. October 30, 2021
130. What is the tax return that will be used by Yumabong Banking Corporation in
filing such payment for GRT?
A. BIR Form 2000
B. BIR Form 2551Q
C. BIR Form 2550Q
D. BIR Form 2552
SITUATION 37 (INCOME TAXATION, Adapted): In 2020, Miggy, a Filipino social media

influencer residing in the Philippines, received $250,000 or P12.5 million from Google
LLC, an enterprise resident of the US, as his share from advertising revenues. Under
the US tax law, payments from YouTube through the YouTube partner program are
considered royalties which are generally subject to tax at 24%. Miggy did not receive
any other income during the year. When he filed his tax return, he claimed P1.5
million as deductions and opted to avail of tax credit for taxes paid in the US.
131. If Miggy does not inform the income payor that he is a resident of the
Philippines, compute the tax to be withheld on such income.
A. P3,750,000
B. P3,000,000
C. P1,875,000
D. P1,250,000
132. If Miggy submits his tax information to Google LLC and proves that he is a
resident of the Philippines, compute the tax to be remitted by Google LLC.
A. P3,750,000
B. P3,000,000
C. P1,875,000
D. P1,250,000
133 How much should be allowed as credit for taxes paid in the US?
A. P3,750,000
B. P3,000,000
C. P1,875,000
D. P1,250,000
134. How much would be the tax payable of Miggy in the Philippines?
A. P3,460,000
B. P2,210,000
C. P460,000
D. P1,585,000
135. Income of social media influences other than corporations and partnerships are
generally considered as
A. Compensation income
B. Business income
C. Passive income
D. Capital gains
SITUATION 38 (EXCISE TAX, Adapted): Gaganda Clinic is a dermatological clinic located

outside a hospital which is operated by Gaganda Medical Corporation. The following
relates to its gross receipts for the month of June 2021:
Diamond peel P 100,000

Abdominoplasty 1,300,000
Oxygen treatment 200,000
Breast augmentation 1,500,000
Liposuction 2,000,000
Botox treatment 500,000
The above gross receipts are inclusive of VAT and the applicable excise tax, if any.
136. Determine the excise tax on excisable services of Gaganda Clinic for the month
ended June 30, 2021.
A. P228,571
B. P204,082
C. P128,571
D. P124,827
137. Assume the gross receipts are exclusive of VAT and excise tax, if any, and the
clinic was operated by Dr. Gaganda. Dr. Gaganda charged professional fees of
P1,600,000, exclusive of VAT and excise tax, related to excisable services. Determine
the excise tax on excisable services of Dr. Gaganda for the month of June 30, 2021.
A. P400,000
B. P480,000
C. P384,000
D. P320,000
138. Assume the gross receipts are exclusive of VAT and excise tax, if any, and the
clinic was operated by Dr. Gaganda. Dr. Gaganda charged professional fees of
P1,600,000, inclusive of VAT but exclusive of excise tax, related to excisable
services. Determine the excise tax on excisable services of Dr. Gaganda for the month
of June 30, 2021.
A. P320,000
B. P285,714
C. P284,192
D. P357,142
139. Assume the gross receipts are inclusive of excise tax, if any, and the clinic
was operated by a hospital. In addition, Dr. Gaganda charged professional fees of
P1,600,000, exclusive of VAT and excise tax, related to excisable services. Determine
the excise tax on excisable services for the month of June 30, 2021.
A. P308,571
B. P320,000
C. P304,762
D. P192,000
140. What return shall be used by Dr. Gaganda in filing her excise tax to BIR?
A. BIR Form 2200-A
B. BIR Form 2200-AN
C. BIR Form 2200-C
D. BIR Form 2200-T
SITUATION 39 (BUSINESS TAXATION, Adapted): United Pharma Corporation is considered a
large taxpayer and uses the eFPS for filing its tax returns. It is a VAT registered
entity engaged in manufacturing of medicines. Here are the results of the Company’s
operations as of March 31, 2019:
Decrease in input VAT on goods (February to March) P550,000

Decrease in input VAT on services (February to March) 640,000
Decrease in deferred input VAT on capital goods (February to March) 70,000
Details of VAT payment for February 2019 are as follows:
Output VAT P30,000,000

Input VAT on goods 18,000,000
Input VAT on services 3,500,000
Input VAT on capital goods 70,000
• Mr. Nadoo Ling, the company’s accounts payable officer, recorded the purchase of
packaging materials at total invoice amount of P1,600,000 as purchase of services
instead of purchase of goods.
• The company has unrecorded input VAT on employee reimbursement for meals and hotel
accommodation for business use amounting to P52,000.
• The company has no purchase of capital goods for the month of March 2019.
• The company made income payments for services rendered by non-residents subjected
to withholding VAT amounting to P140,000.
• Amortization of input VAT on purchases of capital goods greater than P1,000,000 is
P70,000.
In addition, the company’s records of Importation for March 2019 are summarized as
follows:
Input VAT on Importations recorded per books P 17,000,000

Landed cost per Import Entry Document 142,000,000
Dutiable value per Import Entry Document 137,000,000
Furthermore, the company recorded the following adjustments to correct the input VAT
in February 2019 but only recorded in the books during March 2019:
Decrease in input VAT on Importation – February 2019 P 100

Unrecorded employee Reimbursements – February 2019 10,000
Withholding VAT on services of non-resident – February 2019 390,000
141. How much is the adjustment to correct the amount of Item 21H of BIR Form 2550Q
for March 2019?
A. P40,000 increase
B. P560,000 decrease
C. P31,440,000 increase
D. P400,100 decrease
142. How much is the correct amount of Item 21D of BIR Form 2550Q to be claimed for
March 2019?
A. P17,450,000.00
B. P17,621,428.57
C. P17,661,428.57
D. P17,661,528.57
143. How much is the correct combined amount of Item 21J and 21L of BIR Form 2550Q
to be claimed for March 2019?
A. P2,860,000.00
B. P2,688,571.43
C. P2,480,571.43
D. P2,318,071.43
144. How much is the correct amount of Item 21B of BIR Form 2550Q to be claimed for
March 2019?
A. P0
B. P70,000
C. P35,000
D. P140,000
145. How much is the total amount of Item 24 of BIR Form 2550Q that the company can
claim for March 2019?
A. P20,420,000
B. P20,212,000
C. P20,212,100
D. P20,211,000
SITUATION 40 (PREFERENTIAL TAXATION, Adapted): Balsa Company, Inc., a manufacturer

of motor vehicle, is an entity registered with the BOI. It had two registered
activites. One activity pertains to a new product line while the other activity
pertains to expansion of its old product line. These activities enjoyed ITH for the
year ended December 31, 2020. Balsa was registered with the BIR eight years ago.
The following information relates to these activities:
New Product Old Product

Sales P12,000,000 P20,000,000
Cost of Sales 4,000,000 3,000,000
Deductions 2,000,000 16,000,000
Balsa produced 1,200 units of its new products and 20,000 units of old products. Its
base figure for its expansion project was 15,000 units with sales value of P14,000,000.
The registered products were homogenous products.
146. Determine the taxable income subject to income tax for the year ended December
31, 2020.
A. P6,000,000
B. P6,250,000
C. P6,750,000
D. P7,000,000
147. Determine the income covered by ITH for the year ended December 31, 2020.
A. P6,000,000
B. P6,250,000
C. P6,750,000
D. P7,000,000
148. Determine the income tax liability for the year ended December 31, 2020.
A. P140,000
B. P225,000
C. P255,000
D. P480,000
149. Determine the income tax savings related to its ITH for the year ended December
31, 2020.
A. P1,845,000
B. P1,245,000
C. P1,620,000
D. P1,770,000
SITUATION 41 (LOCAL TAXATION, Adapted): Imprenta Corporation is engaged in the

business of printing and/or publication of books, cards, posters, leaflets, and other
printed materials. It reported the following information for the periods ended
September 30, 2020(three months), December 31, 2020 (six months), and December 31,
2021:
September 30, 2020 December 31, 2020 December 31, 2021

Revenues P150,000,000 P330,000,000 P440,000,000
Accounts Receivable 40,000,000 75,000,000 100,000,000
Unearned Revenues 10,000,000 15,000,000 280,000,000
Imprenta started its business on July 1, 2020 with capital investment of P500,000,000.
It initially employed 50 professionals on July 1, 2020. It hired additional
professionals during the same year. As of December 31, 2020, it had 150 professionals
and 500 professionals as of December 31, 2021.
150. Determine the local tax liabilities of Imprenta for the year 2020.
A. P5,000,000
B. P1,350,000
C. P2,500,000
D. P250,000
151. Determine the local tax liabilities of Imprenta for the year 2021.
A. P1,950,000
B. P2,200,000
C. P3,100,000
D. P1,350,000
152. Assume that Imprenta is engaged in the manufacturing business and it owns 100
delivery trucks in 2020 and 150 trucks in 2021, determine the local tax on delivery
trucks for the years 2020 and 2021.
A. P30,000 and P45,000
B. P50,000 and P75,000
C. P90,000 and P135,000
D. P0 and P75,000
153. Determine the professional tax liabilities for the years 2020 and 2021.
A. P45,000 and P150,000
B. P75,000 and P250,000
C. P15,000 and P50,000
D. P37,500 and P125,000
154. Which of the following statements is incorrect?

A. Imprenta Corporation should pay its local tax liabilities for the year 2020 on or
before October 20, 2021.
B. Imprenta Corporation should remit professional tax to local government on or before
January 31, 2021 covering the year 2020.
C. Imprenta Corporation is liable to pay tax on printing and publication in the amount
of 50% of 1% of the gross annual receipts for the preceding calendar year wherein the
corporation is located in a municipality
D. None of the foregoing.
SITUATION 42 (BUSINESS TAXATION): Kiko Macha, a non-VAT registered lessor of

residential and commercial units, had the following data for the first and second
quarters of 2018
1st Quarter 2nd Quarter

Gross receipts
With monthly rental of P13,000 per unit P2,500,000 P2,300,000
With monthly rental of P18,000 per unit 1,000,000 1,200,000
Gross receipts from lease of commercial units 2,300,000 2,400,000
Input tax paid from VAT suppliers 150,000 120,000
155. How much is the business tax due for the 1st quarter 2018 of Mr. Macha?
A. P99,000
B. P174,000
C. P246,000
D. P396,000
156. How much is the business tax due for the 2nd quarter 2018 of Mr. Macha?
A. P108,000
B. P312,000
C. P432,000
D. P708,000
157. How much is the business tax due for the 2nd quarter 2018 of Mr. Macha. Assuming
he registered as VAT taxpayer at the start of the 2nd quarter 2018?
A. P312,000
B. P432,000
C. P588,000
D. P708,000
158. Assuming Mr. Macha is VAT registered taxpayer instead of non-VAT registered
taxpayer, how much is the business tax due of Mr. Macha for the first quarter of 2018?
A. P246,000
B. P396,000
C. P546,000
D. P696,000
SITUATION 43 (BUSINESS TAXATION): IWASH Corporation, a VAT-Registered company, is
engaged in the laundry business. During the first quarter of 2018, the following
information were made available:
Net revenue, 1st quarter 2018 P1,000,000

Receivables from customer, January 1, 2018 224,000
Receivables from customer, March 31, 2018 336,000
Creditable VAT withheld, 1st quarter 2018 5,000
VAT purchases, other than capital goods, 1st quarter 2018 300,000
VAT purchases, capital goods, 1st quarter 2018 (all in January 2018) 1,200,000
Receivable balances are all income related and are inclusive of VAT. Revenue and
purchases are VAT exclusive. Capital goods are estimated to have a useful life of 10
years.
159. Compute item 19B of BIR Form 2550Q Total Output Tax Due
A. P106,500
B. P108,000
C. P120,000
D. P132,000
160. Compute item 22 of BIR Form 2550Q

A. P36,000 Total Available Input Tax
B. P43,200
C. P180,000
D. P185,000
161. Compute the deferred input tax as of March 31, 2018

A. P136,800
B. P140,400
C. P141,600
D. None
162. Compute item 23C of BIR Form 2550Q

A. P2,200 closed to income
B. P2,680 closed to income
C. P11,000 closed to expense
D. P13,000 closed to expense
SITUATION 44(CGT, DST, DONOR’S TAX): Five years ago, AJ Raval bought 5,000 shares of
ZENA Corporation (domestic, not listed) at par value. She sold her shares for
P10,000,000 today. The corporation has 10,000 outstanding shares with par value of
P1,000/share. Per its latest Financial Statements, the Corporation’s assets totalled
P30,000,000 and its liabilities totalled P5,000,000. With the exception of its real
property, the book value of ZENA’s assets and liabilities is equivalent to their
market values.
The book, market, zonal and appraised values of ZENA’s real properties are as follows:
BV per FS MV per TD* Zonal Value Appraised Value

Land A P2,000,000 P2,500,000 P5,000,000 P6,000,000
Land B 2,000,000 2,200,000 4,000,000 3,500,000
Building A 1,000,000 2,400,000 3,000,000
Building B 500,000 2,000,000 1,950,000
*TD – Tax Declaration
164. How much is the capital gains tax due on the sale of AJ’s shares of stock?
A. P1,046,250
B. P1,087,500
C. P375,000
D. P750,000
165. How much is the donor’s tax due, if any?

A. P103,500
B. P90,000
C. P135,000
D. None
166. How much is the DST due on the sale of AJ’s shares of stock?
A. P37,500
B. P91,875
C. P18,750
D. P75,000
167. Assume that AJ donated the 5,000 shares of stock of ZENA Corporation, instead
of selling them. How much is the donor’s tax due on the said donation?
A. P435,000
B. P585,000
C. P735,000
D. P703,500
SITUATION 45 (INCOME TAXATION): CRYSTAL corporation (domestic), which started

operations in 2010, has the following data for FY ending April 30, 2021:
Sales, net of sales discounts 20,000,000

Cost of sales 5,000,000
Salaries of employees, net of payroll deductions of ₱350,000 5,000,000
Fringe benefits given to:
Rank and file employees 1,040,000
Managerial employees 325,000
EAR expenses 550,000
Rent expenses 1,200,000
Depreciation expense 700,000
Bad debt expense (1/3 charged off during the year) 105,000
Interest expense on BPI loan 400,000
Interest expense on loan from majority shareholder 100,000
Other income:
Cash dividends received from:
Domestic corporations exempt 550,000
Foreign corporations 30,000
Interest income from Philippine bank deposits, net of FT 100,000
Royalty income (Phils.), gross of FT 125,000
Gain from sale of property:
Makati real property not used in business (SP = ₱10M) 2,000,000
Domestic shares (not listed) held as capital assets 100,000
Domestic shares (listed) held as capital assets 23,000,000
Liquidating dividend from ABC Corp 100,000
(cost of ABC shares = ₱96,000)
CWT withheld by customers 68,000

Tax paid in first 3 quarters 30,000
168. Compute final taxes on CRYSTAL’s passive income.

A. P50,000
B. P45,000
C. P40,000
169. Compute total CGT on CRYSTAL’s capital gains.

A. P753,000
B. P4,065,000
C. P615,000
170. How much is the corporation’s net taxable income?

A. P5,750,250
B. P5,736,713
C. P5,666,713
171. How much is the Corporation’s RCIT

A. P1,481,793
B. P1,721,714
C. P1,485,290
172. How much is the Corporation’s MCIT?
A. P175,898
B. P172,714
C. P150,340
173. How much is the tax payable?

A. P1,623,714
B. P1,387,290
C. P1,383,793
174. How much withholding tax should CRYSTAL withhold and remit on its loan interest
payments assuming the corporation is included in the BIR list of top withholding
agents?
A. P23,000
B. P10,000
C. P75,000
SITUATION 46 (BUSINESS TAXATION):
A VAT-registered company, had the following data (net of VAT) for the year 2020 in
Philippine peso.
Sales October November December Quarterly

Totals
VATable sales to private entities 500,000 200,000 300,000 1,000,000
Exempt sales 400,000 200,000 600,000
Sales to the government 300,000 100,000 400,000
Export sales 200,000 50,000 250,000
Total 1,400,000 400,000 450,000 2,250,000
Purchase of goods October November December Quarterly

Totals
VATable sales to private entities 40,000 50,000 90,000
Exempt sales 30,000 50,000 80,000
Sales to the government 0
Export sales 30,000 30,000
Total 70,000 30,000 100,000 200,000
Purchase of services October November December Quarterly

Totals
VATable sales to private entities 20,000 20,000
Exempt sales 30,000 30,000
Sales to the government 200,000 100,000 300,000
Export sales 20,000 20,000
220,000 50,000 100,000 370,000
October November December Quarterly

Totals
Purchase of depreciable capital 3,000,000 2,000,000 5,000,000
goods from supplier
Life in years 3 6
The corporation had excess input tax credit from the previous year in the amount of
P3,900.
April
In May 2020, it chose to file an application for VAT refund/TCC in the amount of
P2,000.
The purchase of the depreciable capital goods is for the benefit of all its
businesses.
175. What is the VAT payable for October 2020?
A. P43,900
B. P69,000
C. P43,000
176. What is the VAT payable for November 2020?

A. P43,900
B. P13,000
C. P23,000
177. What is the VAT payable for the 4th quarter of 2020?
A. P19,564
B. P20,889
C. P13,567
178. Assume that the information in Number 174 is for the 4th quarter of 2021,
compute the VAT payable for October 2021?
A. P16,747
B. P17,757
C. P13,676
compute the VAT payable for November 2021?
A. P13,000
B. P17,757
C. P13,676
compute the VAT payable for 4th quarter of 2021?
A. P13,000
B. P17,757
C. P4,276
SITUATION 47 (INCOME TAXATION):
A, B, and C are partners in a GPP which realized a sales of P5,000,000 with

corresponding cost of services of P2,000,000 and operating expenses of P1,750,000.
They share profits and losses at 3:4:3
They have the following personal income and expenses:
A B C
Gross income P150,000 P130,000 P143,500
Operating expenses
(30% unliquidated) 75,500 55,000 65,750
Prize, supermarket raffle 15,000
Royalty, books 12,000
181. The taxable income in A’s ITR if he avails of the OSD (if applicable)
A. P474,000
B. P315,000
C. P324,000
D. P465,000
182. The taxable income of C who itemizes deductions (if applicable) is

A. P498,775
B. P452,750
C. P472,475
D. P311,100
183. The taxable income of B if he avails (1)OSD and (2) itemized deductions (if
applicable)
A. P578,000; P591,500
B. P385,200; P575,000
C. P390,000; P603,500
D. P378,000; P587,000
SITUATION 48 (DONOR’S TAX, CAPITAL GAINS TAX)
Mr. And Mrs. MWP had the following conjugal transfers during the year 2018:
• January 26 Donated a parcel of land to their son, on account of their marriage.

Their son’s wedding is on July 31, 2018. The fair market value of the land at the
time of donation was P500,000. The fair market value of the land at the time of
marriage was P550,000. The donated property subject to P100,000 mortgage which was
assumed by their son.
• October 29 Donated P300,000 to the sister of Mr. MWP who was diagnosed with cancer.
They donated the amount for the medication of Mr. MWP’s sister.
• December 20 Sold 300,000 shares of stocks from ABC Corporation to their daughter
for P300,000. The book value per shares as per latest audited financial statement of
ABC Corporation is P1.50 per share. The shares of stocks were acquired two years ago
for P200,000
184. How much is the donor’s tax still due of Mr. MWP on the January 26 transfer?
A. P11,400
B. P12,000
C. P16,500
D. P0
185. How much is the donor’s tax due of Mrs. MWP on the October 29 transfer
A. P6,000
B. P21,000
C. P45,000
D. P57,000
186. How much is the capital gains tax due of Mr. MWP on the December 20 transfer?
A. P7,500
B. P15,000
C. P22,500
D. P41,250
187. How much is the donor’s tax still due of Mr. MWP on the December 20 transfer?
A. P4,500
B. P9,000
C. P25,500
D. None
SITUATION 49 (ESTATE TAXATION)
The estate of Juan, resident citizen decedent, married, who died on April 1, 2021
were as follows:
House and lot (Family Home) P14,000,000

The lot was acquired at a cost of P3M, five years ago, before
marriage, while the house was constructed on March 1, 2021, during
marriage, at a cost of P10M from partnership funds. The lot had
a FMV of P4M after construction of the house
Vacation house in Batanes inherited on February 14, 2020,
during marriage, then with a fair market value of P1,300,000 2,500,000
Other properties acquired during marriage 6,000,000
Property in Davao, received as gift during marriage from
a friend on January 12, 2020 (the applicable donor’s tax
was not paid by the donor) 2,300,000
Rental income on the property in Davao up to the time of death 1,200,000
Benefits received under RA 4917 300,000
Funeral expenses 420,000
Judicial expenses 800,000
Casualty losses incurred on Dec. 10, 2021 600,000
Claims against the estate 1,600,000
Medical expenses 4,000,000
188. Compute item 39 (share of surviving spouse) of BIR Form 1801.
A. P8,424,000
B. P9,200,000
C. P9,700,000
D. P8,900,000
189. Compute item 30 (family home) of BIR Form 1801.

A.P8,000,000
B.P7,000,000
C.P10,000,000
D.P9,000,000
190. Compute item 20 (estate tax payable) of BIR Form 1801.

A. P116,880
B. P134,880
C. P145,440
D. P26,880
SITUATION 50:
For the calendar year 2021, the net income per books after tax of CCM Corporation is
P850,000, after considering among others:
Interest income from bank deposit Final Tax P5,500

Dividends from domestic corporationExempt 5,000
Gain from sale of unlisted shares of a domestic corporation CGT 7,000
Loss sustained from a family membernot deductible 2,500
Bad debts written off 6,500
Contribution to government exclusively for public purpose 50,000
Contribution to government's priority program in education 10,500
The net income per books should be reconciled with the provisions of the Tax Code,
meaning, items which are not taxable must be excluded, and items which are not
deductible are to be added back.
Assuming the total assets of the entity amounted to P110,000,000, excluding land,
solve the following:
191. How much is the net income before charitable and other contributions?
A. P1,069,000
B. P1,008,500
C. P1,005,050
D. P1,004,000
192. How much is the taxable income?

A. P1,005,050
B. P1,008,500
C. P943,500
D. P940,050
193. How much is the corporate income tax still due?

A. P251,263
B. P186,263
C. P252,125
D. P187,125
194. How much is the total final tax on income not subject to regular income tax?
A. P1,100
B. P2,150
C. P3,150
D. P0
195. How much is the total tax expense?
A. P254,275
B. P188,413
C. P189,275
D. P187,363
SITUATION 51:
Abaca Corporation is a domestic corporation engaged in the business of manufacturing

clothing apparel. For the fiscal year ending March 31, 2020, its income and expenses
statement reported the following:
Sales 200,000,000
Cost of goods manufactured and sold (120,000,000)
Gross income from operations 80,000,000
Other income 10,000,000
Total Gross Income 90,000,000
Finance expenses 10,000,000 (40,000,000)
Net Income before income tax 50,000,000
Income tax expenses (9,000,000)
Net Income after income tax 41,000,000
The following additional information was made available for tax reconciliation
purposes:
1. The other income shows the following:
a. Interest income from bank savings deposit
(net of final withholding tax) P 400,000
b. Gain from sale of investment property (the property is held for
lease but was not used in the primary activity of the corporation,
gross of withholding tax amounting to Php 1,800,000) 8,000,000
c. Rental income from investment property (gross of withholding tax) 1,600,000
2. The withholding tax credit from sale of clothing materials

(supported by BIR form no. 2307) 1,200,000
3. Operating expenses include allowance for bad debts expense

amounting to 1,000,000
4. During the year the corporation has written off bad debts
which are certainly uncollectible amounting to 600,000
5. Finance expenses is broken down as follows:

a. Interest expense on loan from various financial institutions 6,000,000
b. Interest expense on loan from a majority stockholder 4,000,000
6. Income tax expense represents quarterly income tax paid.
REQUIRED: Compute for the following items:
196. Compute Page 4, Schedule V, Item 4 of BIR Form no. 1702 – RT (net income per
books should refer to
net income before income tax).
A. P46,000,000
B. P5,164,800
C. P1,164,800
D. P55,000,000
197. Compute Page 4, Schedule V, Item 9 of BIR Form no. 1702 – RT

A. P400,000
B. P9,000,000
C. P600,000
D. P1,000,000
198. Compute Page 4, Schedule V, Item 10 of BIR Form no. 1702 – RT

A. P45,000,000
B. P9,000,000
C. P600,000
D. P54,000,000
199. Compute Page 2, Item 55 of BIR Form no. 1702 – RT
A. P1,200,000
B. P10,280,000
C. P10,200,000
D. P12,080,000
SITUATION 52:
Luffy, together with Zoro, Usopp, Sanji, and Nami, started a corporation which they
named as Mugiwara, a firm which is engaged in manufacturing of cements. They were
able to register it with SEC and BIR last January 5, 2018, before the surge of the
COVID-19 pandemic. The entity started its operation immediately after the
registration.
During the taxable year of 2021, you are engaged by Mugiwara to prepare the income
tax return in compliance with the Tax Code. Big Bros has the following data which
were taken from its annual income statement for the year.
Gross sales of goods P150,000,000

Sales returns and allowances (2,800,000)
Net sales of goods 147,200,000
Cost of sales:
Beginning finished goods inventory P45,000,000
Cost of goods manufactured 98,650,000
Cost of goods available for sale 143,650,000
Ending finished goods inventory (78,950,000) (64,700,000)
Gross income 82,500,000
Operating expenses:
Salaries expense P5,500,000
Wages expense 7,400,000
Depreciation expense 10,500,000
Rental expenses 15,000,000
Entertainment expenses 750,000
Research and development expenses 3,500,000
Bad debt expense 1,500,000
Impairment loss on goodwill 500,000
Estimated warranty expense 2,500,000 (47,150,000)
Operating income 35,350,000
Non-operating income/other income:
Gain on sale of shares of stocks directly
to buyer 1,280,000
Gain on sale of debt securities classified
as FVTPL 1,550,000
Gain on sale of real property 4,050,000
Dividend income from a domestic
corporation 1,600,000
Dividend income from resident foreign
corporation 1,250,000
Interest income from local currency
bank deposits 1,920,000
Interest income from trades receivable 750,000 12,400,000
Non-operating expenses:
Interest expense 3,500,000
Charitable contribution 5,000,000 (8,500,000)
Net income before tax 39,250,000
Income tax expense (9,812,500)
Net income P29,437,500
Additional notes:
• The entity elected to use accrual method of accounting since the start of its
operation.
• The entity uses allowance for doubtful accounts as method in estimating bad debt
expense.
• The record shows that the real property with a book value of P6,000,000 was sold
for P10,050,000. However, upon careful examination, the fair market value determined
by the city assessor and the zonal value of the real property amounted to P12,000,000
and 9,000,000, respectively. The said real property is not used in business by the
entity.
• It was also determined that the requisites for exemption for foreign-sourced
dividends under Section 27D have been met.
• Upon inspection of the books, one record shows that entertainment and representation
expenses are duly supported by receipts and are business connected.
REQUIRED: Compute for the following:
200. Taxable income for the year

A. P34,900,000
B. P33,650,000
C. P37,095,600
D. P35,545,600
201. Corporate income tax due

A. P9,273,900
B. P9,812,500
C. P8,412,500
D. P8,886,400
202. Capital gains tax

A. P435,000
B. P795,000
C. P912,000
D. P1,144,500
203. Final withholding tax on passive income

A. P540,000
B. P384,000
C. P784,000
D. P854,000
204. Total income tax expense for the year

A. P9,708,500
B. P10,414,900
C. P10,569,900
D. P11,108,500
SITUATION 53:
In the course of your examination, as a revenue officer, of the audited financial

statements of ABC Corporation which sells and leases real estate, and by virtue of a
Letter of Authority duly issued by the BIR, the income statement of ABC Corporation
on its first year of operation shows:
Revenues:
Gain on sale of residential lots P 750,000

Bank interest income 40,000
Dividend from XYZ Corporation 65,000
Rental income 4,200,000
Total 5,055,000
Expenses:
Salaries and wages P 750,000

Depreciation 400,000
Entertainment and representation 45,000
Office supplies 110,000
Advertising expense 60,000
Interest expense 120,000
Taxes and licenses 250,000
Total 1,735,000
Net income before income tax 3,320,000

Less: Income tax expenses 616,250
Net income after income tax 2,703,750
The income tax due for the year as computed by ABC shows:
Net income before income tax 3,320,000
Less:
Bank interest income 40,000
Dividend from XYZ Corporation 65,000
Gain on sale of lots 750,000 855,000
Net taxable income 2,465,000
Corporate income tax rate 25%
Income tax expense 616,250
During examination, you observed the following:

1) The balance sheet for the taxable year showed deferred rent income of P600,000.
The payor has properly withheld the appropriate withholding tax on rentals.
2) The bank interest income is net of 20% final withholding tax.
3) XYZ Corporation is a domestic corporation
4) The gain on sale of residential lots represents gain on sale of two residential
lots with selling price of P1,600,000 each.
5) Interest expense includes interest on late payment of tax amounting to P10,000.
6) Entertainment and representation expenses are duly supported by receipts and are
business connected.
7) Taxes and licenses in the notes to Financial Statements showed the following:
a. Documentary stamp tax on sale of the residential lots – P60,000
b. Surcharge and penalties on late payment of tax – P40,000
c. Withholding tax on the sale of the lots - P120,000
d. Permits and licenses – P30,000
8) Total assets, excluding land, of the entity are valued at 110M.
205. How much should be reflected in Page 2, Part IV, Item 29 of BIR Form 1702-RT of
ABC Corporation’s
annual income tax return? Net Sales/Revenue
A. P 4,200,000
B. P 3,200,000
C. P 8,000,000
D. P 7,400,000
206. How much should be reflected in Page 3, Part VI, Item 15 of BIR Form 1702-RT of
ABC Corporation’s Taxes and Licenses
annual income tax return?
A. P 90,000
B. P 130,000
C. P 100,000
D. P 250,000
207. How much should be reflected in Page 3, Part VI, Item 6 of BIR Form 1702-RT of
ABC Corporation’s
annual income tax return? Entertainment, Amusement and Recreation
A. P 43,000
B. P 37,000
C. P 45,000
D. P 64,000
208. How much is the basic deficiency income tax still due?
A. P 145,000
B. P 380,500
C. P 143,000
D. P 140,500
SITUATION 54:
A(50%), B(30%), and C(20%), all certified public accountants, formed a partnership
called ABC CPA Firm so that they can practice their profession as public accountants.
For the year 2021, ABC CPA Firm received earnings and paid expenses, among which are
as follows:
Earnings:
Professional fees from various clients P50,000,000
Cash prize received from a religious society in recognition
of the exemplary service of ABC CPA Firm 5,500,000
Gains derived from sale of excess computers and laptops 4,000,000
Payments:
Salaries of office staff P10,000,000
Rentals for office space 7,500,000
Representation expenses incurred in meetings with clients 750,000
In addition, the partners’ personal income and expenses are as follows:

Partner A Partner B Partner C
Sales P6,000,000 P5,500,000 P10,000,000
Cost of sales 2,000,000 2,000,000 4,500,000
Gross income P4,000,000 P3,500,000 P5,500,000
Deductible expense 2,500,000 1,000,000 2,500,000
Dividend from domestic
corporation 30,000 150,000 50,000
Dividend from foreign
Corporation 70,000 10,000 20,000
Prize, supermarket raffle 150,000 300,000 250,000
Royalty, books 50,000 20,000 30,000
209. What are the items in the above mentioned earnings which should be included in
the computation of ABC CPA Firm’s gross income?
A. P50,000,000
B. P55,500,000
C. P54,000,000
D. P59,500,000
210. What are the items in the above-mentioned payments which may be considered as
deductions from the gross income of ABC CPA Firm?
A. P18,000,000
B. P17,500,000
C. P18,250,000
D. P10,000,000
211. If ABC CPA Firm earns net income in 2021, what is the net income of the entity
for the year assuming the entity elected to use (1)Itemized deduction;(2)Optional
standard deduction?
A. (1)P38,000,000 ; (2)P33,300,000
B. (1)P35,750,000 ; (2)P32,400,000
C. (1)P40,000,000 ; (2)P30,000,000
D. (1)P41,500,000 ; (2)P35,700,000
212. What, if any, is the tax consequence on the part of A as individual partner,
insofar as the payment of income tax is concerned assuming the partnership elected
OSD and partner A opt to use (1)Itemized deduction; (2)Optional standard deduction?
A. (1)P6,407,000 ; (2)P7,142,000
B. (1)P5,987,000 ; (2)P6,722,000
C. (1)P5,829,500 ; (2)P6,564,500
D. (1)P5,409,500 ; (2)P6,144,500
SITUATION 55:
In 2020, Cong TV, a Filipino social media influencer residing in the Philippines,
received the following income from the following sources:
Within Without
Income from YouTube Partner Program:
Advertising revenue $50,000 -
Channel membership 20,000 -
Super Chats and Super Stickers 10,000 -
YouTube Premium Revenue 5,000 -
Income from other sources:

Income from display advertising P100,000 $9,000
Income from sponsored social and blog posts 130,000 4,500
Income from promoting own products 500,000 5,000
Income from photo and video sales 350,000 6,500
Income from podcasts and webinars 300,000 5,000
Foreign tax credit payment $4,500

Relevant foreign exchange rate $1 = Php 50
Under the US tax law, payments from YouTube through the YouTube Partner Program are
considered royalties which are generally subject to tax at 24%. Jay-C did not receive
any income other than those listed above during the year. When he filed his tax
return, he opted to avail of tax credit for taxes paid in the US and claimed the
following deductions:
Subscription and software licensing fees P250,000

Internet and communication expenses 100,000
Home office expenses 150,000
Travel or transportation expenses related to YouTube business 300,000
Depreciation expense 250,000
Bank charges and shipping fees 75,000
All expenses were incurred evenly from within and without the Philippines.
213. How much would be the tax payable of Cong TV in the Philippines assuming he is
a resident citizen availing the Philippines-US treaty under Article 13(2)(a)?
A. P1,530,600
B. P1,486,585
C. P1,450,870
D. P1,755,600
214. How much should be reported in Page 1, Part II, Item 22 of BIR Form – 1701
assuming he is a nonresident citizen? Tax Due
A. P1,530,600
B. P1,463,600
C. P1,238,600
D. P1,430,600
215. How much should be reported in Page 1, Part II, Item 22 of BIR Form - 1701
assuming he is a resident alien?
A. P1,530,600
B. P1,463,600
C. P1,238,600
D. P1,430,600
216. How much would be the tax payable of Cong TV in the Philippines assuming he is
a non-resident alien not engaged in trade or business not availing the Philippines-
US treaty under Article 13(2)(a)?
A. P1,530,600
B. P1,407,500
C. P1,463,600
D. P1,238,600
SITUATION 56:
XYZ Pharmaceuticals is engaged in the business of providing services and selling of

drugs and medicines.
The following data were made available for the first quarter of 2019:
Revenues P20,000,000
Cost of goods sold 5,000,000
Cost of services 12,000,000
Receivables: December 31, 2018 448,000
Receivables: March 31, 2019 336,000
In addition, the following information was provided:

a. All sales for the first quarter were cash and credit card sales.
b. Sale of goods made to senior citizens are cash sales.
c. Sales are net of senior citizens discount amounting to P400,000.
d. Receivables at the beginning and ending of first quarter are outstanding
receivables from credit card companies.
e. The amounts of receivables are VAT inclusive.
f. Sales are inclusive of sales of medicines prescribed for diabetes, high
cholesterol, and hypertension to non-senior citizens amounting to P600,000.
g. Included in the operating expenses are entertainment, amusement, and
recreational expenses amounting to P300,000.
h. Input tax credit from purchase of goods and services for the first quarter
amounts to P600,000.
i. Other sales made to non-senior citizens were composed of services.
217. How much is the output tax due for the first quarter of 2019?
A. P2,088,000
B. P2,148,000
C. P2,136,000
D. P2,160,000
218. How much is the deductible creditable input tax for the first quarter of 2019?
A. P600,000
B. P522,000
C. P523,902
D. P533,333
219. How much is the income tax due for the first quarter of 2019, assuming itemized
deduction was used?
A. P7,171
B. P39,571
C. P630,000
D. P1,560,000
220. How much is the income tax due for the first quarter of 2019, assuming OSD was
used?
A. P39,571
B. P630,000
C. P1,560,000
D. P3,690,000
SITUATION 57:
Jokoy Corporation is an export-oriented enterprise registered with the Subic Bay

Metropolitan Authority. Based on its Certificate of Registration, its Start of
Commercial Operations is on 1 January 2022. Jokoy Corporation’s registered activity
involve production of a robotic spare part that is not locally produced in the
Philippines but is critical to the development of the Philippines‘ automation
industry. Jokoy Corporation successfully secured a Certificate of Registration and
Tax Exemption (CRTE) from PEZA.
During the year. Jokoy imported an assembly machine that will be directly used in the
production of Jokoy’s robotic spare parts. The assembly machine had a cost of Php
55,000,000, a useful life of ten years, no salvage value, and is depreciated using
the straight-line method of depreciation.
Jokoy had the following results of operations for the calendar year 2022 as reflected
in its audited income statement:
Sale of spare parts P124,000,000

Cost of sales (82,300,000)
Gross profit 41,700,000
Administrative expenses (12,000,000)
Selling expenses (6,800,000)
Interest expenses (970,000)
Earnings before taxes 21,930,000
The cost of sales included the depreciation of the imported assembly machine which
was purchased on January 1, 2022. On January 1, 2024, Jokoy Corporation sold the
assembly machine to James Corporation, a domestic corporation which is not registered
with any investment promotions agency.
221. How much should be reported in Page 1, Part II, Item 18 of BIR Form 1702 – EX
(tax due) for the year 2022?
A. P0
B. P1,096,500
C. P2,085,000
D. P5,482,500
222. Assuming the tax holiday has already expired and the taxpayer availed of the
Special Corporate Income Tax (SCIT), how much is the tax due?
A. P0
B. P1,096,500
C. P2,085,000
D. P5,482,500
223. How much is the output tax due in 2022?

A. P0
B. P14,880,000
C. P5,004,000
D. P6,200,000
SITUATION 58:
Raya Corporation, a domestic corporation organized in 2016, had the following:
2019 2020 2021 2022

Gross Income P4,000,000 P5,000,000 P6,000,000 P7,000,000
Allowable deductions 3,800,000 4,500,000 6,100,000 6,400,000
Net income (loss) 200,000 500,000 (100,000) 600,000
224. The income tax payable for 2020 is:

A. P150,000
B. P130,000
C. P100,000
D. P80,000
225. The income tax payable for 2022 is
A. P180,000
B. P150,000
C. P30,000
D. P60,000
SITUATION 59:
Munyanyo marketing incurred the following expenses in relation to its business during
the taxable year:
Provision for bad debts P 15,000

Research and development cost, treated as deferred expense 500,000
Contributions during the year:
The government for priority 50,000
The government for public purposes 10,000
To the Catholic church for charitable purposes 25,000
Additional Information:
A. Allowance for doubtful accounts per aging of accounts receivable revealed a
beginning and ending balances of P20,000 and P30,000, respectively.
B. Accumulated depreciation on machine at the beginning and end of the year amounted
to P100,000 and P110,000, respectively.
C. During the year, the firm sold a machine with a cost and accumulated depreciation
of P300,000 and P30,000, respectively.
D. The research and development cost was incurred in the preceding year but the
benefit was received during the taxable year
E. Taxable income before a to d and contributions amounted to P300,00
226. If Munyanyo marketing is a sole proprietorship, the allowable deductions for

contributions are:
A. P80,000
B. P85,000
C. P57,000
D. P65,500
227. Total allowable deductions:

A. P210,500
B. P220,500
C. P202,750
D. P225,000
228. Furthermore, the amount of taxable income

A. P220,000
B. P89,500
C. P97,250
D. P115,000
SITUATION 60:
ISTG CORPORATION, is a registered enterprise with the Board of Investments and was
granted an Income Tax Holiday (ITH) Incentives for the first 4 years of operations
as a nonpioneer firm. The Corporation has not applied for an extension of its ITH
incentives on its 5th year. On its 5th year of operations, it reported the following:
Export Sales P120,000,000

Cost of goods manufactured and sold 70,000,000
Additional information were made available as follows:

• Cost of goods manufactured and sold include, imported raw materials with dutiable
value of P1,400,000. Pre-computed customs duties and other charges are as follows:
(a) Customs duties – P200,000
(b) Insurance – P10,000
(c) Arrastre charges – P5,000
(d) Wharfage dues – P7,000.
• Included under operating expenses are expenses incurred on the importation of the
said equipment as follows:
(a) Facilitation fee – P100,000
(b) Delivery expense to warehouse after release from Customs P11,200.
• Cost of goods manufactured and sold include direct labor skilled and unskilled
workers amounting to P10,000,000 and P20,000,000, respectively. The project meets
the prescribed ration of capital equipment to number of workers set by the BOI.
229. How much is the VAT due on the Importation of raw materials?
A. None
B. P194,640
C. P291,960
D. P310,040
230. How much is the deductible direct labor cost?

A. P35,000,000
B. P45,000,000
C. P40,000,000
D. P30,000,000
231. How much is the deductible net operating loss carry over?
A. None
B. P2,800,000
C. P400,000
D. P4,800,000
232. How much is the income tax due of the Company for the year?
A. P4,500,000
B. P1,750,000
C. P4,530,000
D. P1,869,000
SITUATION 61:
John and Marcia inherited a commercial lot and building from their parents 2 years
ago. In 2018 (current year), the inherited property realized rental income of P300,000
per month, in which both shared the revenues equally. The co-ownership remained
unregistered with the Securities and Exchange Commission. In addition, Jose and Maria
reported their following personal income and expenses.
• John, gross compensation income (inclusive of 13th month and other benefits
amounting to P100,000), P1,300,000
• Marcia, net income from her laundry service business (net of cost and expenses of
P600,000), P200,000.
233. How much final withholding income tax should the co-ownership remit representing
the revenue distribution to the co-owners?
A. P360,000
B. P540,000
C. None
D. P180,000
234. How much is the income tax due of John in his annual income tax return, assuming
optional standard deduction is used in determining his expenses?
A. P582,500
B. P431,800
C. P253,000
D. P611,600
235. How much is the income tax due of Marcia in his annual income tax return, assuming
optional standard deduction is used in determining his expenses.
A. P22,000
B. P322,000
C. P358,000
D. P250,000
236. When is the deadline for filling of the annual income tax return of the co-
ownership for taxable year 2018?
A. April 15, 2018
B. May 15, 2019
C. Not applicable
D. April 15, 2019
SITUATION 62:
ATTY. CHUPAPI, is a practicing lawyer, is also a licensed real estate broker. Both
businesses were registered with the BIR and had the following data made available for
year 2018 (months are gross of withholding tax):
Revenues from his profession 3,000,000

Commission received 600,000
Cost of services 700,000
Business related expenses 400,000
Gain on sale of real property held for investment 500,000
Selling price of real property 2,000,000
Wagering gain 150,000
Wagering losses 100,000
Royalties from books published 150,000
Interest Income from banks 30,000
237. Compute Tax due, assuming ATTY. opted to use itemized deduction in computing his
income tax.
A. P810,000
B. P698,000
C. P666,000
D. P826,000
238. Compute OSD. Optional Standard Deductions

A. P2,240,000
B. P2,300,000
C. P1,460,000
D. P1,440,000
239. How much is the final withholding income tax of ATTY., assuming 2/3 of interest
income from banks were realized from time deposits with maturity of 5 years?
A. P47,000
B. P17,000
C. P32,000
D. P137,000
SITUATION 63:
consider the holding period
Garren, married, resident citizen had the following for 2021:
a.) Business Income

1.) Rental income from real property, net of 5% W/T P 285,000
Real property tax paid by the lessor 50,000
Note: The lessee reimbursed 50% of the tax, as per agreement in the lease
contract
Deductible expense 120,000
2.) Rental income from real property, net of 5% W/T P 142,500

Real property tax paid by the lessor 20,000
Note: The lessee reimbursed 100% of the tax, as per agreement in the lease
contract
Deductible expense 40,000
b.) Sale of capital assets:

1.) Shares of ABC (domestic) not traded:
Selling Price: P 300,000 Cost (2004): P180,000
2.) Shares of DEF (domestic), traded:
3.) Shares of XYZ (foreign)
4.) Vacant lot
5.) Toyota Car
c.) Other transactions:
1.) In 2000, he purchased shares of A Corporation for P50,000 which became
worthless and was written off in 2019.
2.) In 2019, he received liquidating dividend from B Corporation in the amount of
P450,000. The investment in 2000 was P300,000.
240. Determine the operational net income of Garren

A. 265,00
B. 290,000
C. 245,000
241. Determine the Net Capital Gains of Garren

A. 150,000
B. 125,000
C. 175,000
D. None of the above.
242. Determine the net taxable income of Garren in his Annual Income Tax Return for
2021.
A. 415,000
B. 689,000
C. 440,000
D. 690,000
243. Determine the stock transaction tax

A. P500
B. P1,800
C. P600
D. P1,500
244. Determine the capital gains tax

A. P12,000
B. P6,000
C. P18,000
D. P48,000 why capital gains tax on stock(not traded) is not included?
SITUATION 64:
Kikay Company, engaged in restaurant business, uses accrual basis of accounting in

its financial statements. Its operation for the year ended shows the following:
Gross Revenue on account to customers 3,500,000

Gross Receipts from senior citizens, net of 20% discount 400,000
Purchases, directly attributable to customers other than
senior citizens, net of VAT 300,000
Purchases, cannot be attributed, net of VAT 200,000
Direct Cost 2,000,000
Purchase of Equipment, used for all services rendered 600,000
Increase in Accounts Receivable (VAT inclusive) 224,000
Operating Expenses 1,000,000
245. Compute the Output VAT?

A. P420,000
B. P468,000
C. P396,000
D. P372,000
246. Compute the creditable input VAT?

A. P132,000
B. P129,000
C. P123,000
D. P120,000
247. Determine the amount of Gross Income?

A. P900,000
B. P2,000,000
C. P3,500,000
D. P4,000,000
248. Determine the amount of allowable deduction?
A. P1,000,000
B. P1,112,000
C. P1,500,000
D. P1,600,000
SITUATION 65:
Memeth Company is engaged in a hardware business. It uses accrual basis of accounting

in its financial statements.
Gross Revenue 3,500,000

Sales Returns 200,000
Increase in Accounts Receivable, VAT inclusive 224,000
Increase in Inventory, net of VAT 150,000
Purchases 1,000,000
Supplies (40% from VAT registered) VAT exclusive 600,000
Services (60% from VAT registered) VAT exclusive 500,000
Other Operating Expenses 200,000
249. Compute the Output VAT?

A. P420,000
B. P396,000
C. P372,000
D. P360,000
250. Determine the creditable input VAT?

A. P120,000
B. P184,800
C. P166,800
D. P108,000
251. Determine the Taxable Income?

A. P1,000,000
B. P1,082,800
C. P1,350,000
D. P1,500,000
SITUATION 66:
Mang Tetang, has an apartment building situated at Mabalacat, Pampanga.
Owner’s Declaration showed the following valuation:

Land - P 9,000,000
Building - P 4,000,000
Assessor’s Value per assessment rolls:

Land – P7,000,000
Building – P6,000,000
Land use Assessment Levels

Residential 20%
Agricultural 40%
Commercial, Industrial and Mineral 50%
Timberland 20%
Special classes: cultural, scientific 15%
Hospital, and water districts 10%
Commercial/Industrial Building
FMV Over But Not Over Assessment Level
300,000.00 30%
300,000.00 500,000.00 35%
500,000.00 750,000.00 40%
750,000.00 1,000,000.00 50%
1,000,000.00 2,000,000.00 60%
2,000,000.00 5,000,000.00 70%
5,000,000.00 10,000,000.00 75%
10,000,000.00 80%
252. How much is the assessed value?
A. P9,000,000
B. P8,000,000
C. P14,000,000
D. P16,000,000
253. How much is the Basic real property tax?

A. P180,000
B. P160,000
C. P90,000
D. P80,000
254. What is the maximum penalty for local taxes?

A. 12%
B. 24%
C. 36%
D. 72% 2% per month maximum of 36 months
255. Assessed value shall be classified based on:

A. actual use
B. owners declaration
C. assessor’s declaration
D. owners declaration or assessor’s value whichever is higher
SITUATION 67:
Bobby, lessor, leased a lot to Christina, lessee, for 15 years beginning January 1,
2016, subject to the following terms of and conditions:
Monthly rental P20,000

Advance rental for 2 years 480,000
Security deposit 240,000
Annual RPT to be paid by lessee 10,000
Cost of building constructed by
lessee (to be owned by lessor upon
termination of lease) 2,800,000
Building completed on July 1, 2018

Estimated life of building (in years) 20
256. Assuming the taxpayer uses the outright method. Determine the taxable income of
lessor Bobby for year 2016?
A. P480,000
B. P490,000
C. P3,280,000
D. P3,290,000
257. Determined the taxable income in year 2017?

A. P10,000
B. P240,000
C. P250,000
D. P1,410,000

A. P1,400,000
B. P2,800,000
C. P3,040,000
D. P3,050,000

A. P240,000
B. P250,000
C. P480,000
D. P500,000
260. Assuming the taxpayer uses the spread out method. Determine the taxable income
of lessor Bobby for year 2016?
A. P480,000
B. P490,000
C. P3,280,000
D. P3,290,000

A. P10,000
B. P240,000
C. P250,000
D. P1,410,000

A. P42,000
B. P84,000
C. P282,000
D. P292,000

A. P240,000
B. P250,000
C. P292,000
D. P334,000
264. In preceding number, determine the deductible expense of Cristina, lessee, for
2016?
A. P240,000
B. P250,000
C. P362,000
D. P474,000
265. Determined expense of Cristina for 2017?

A. P10,000
B. P240,000
C. P250,000
D. P474,000

A. P240,000
B. P250,000
C. P362,000
D. P474,000

A. P240,000
B. P250,000
C. P362,000
D. P474,000
268. One of the following represents taxable income:

A. Refund of overpaid rental expense in prior year
B. Refund of donors’ tax paid in prior year
C. Refund of income tax in prior year
D. Refund of special assessment paid in prior year
SITUATION 68:
The records of PARO PARO G, domestic corporation, on the calendar year basis,
organized in 2010, show financial data for the following years:
2018 2019 2020 2021

Net Sales 3,925,000 4,810,000 5,939,000 6,945,000
Cost of sales 1,950,000 2,710,000 3,465,000 4,180,000
Business expenses
including bad debts
written off 1,900,000 2,000,000 2,520,000 2,400,000
Other taxable income 25,000 100,000 26,000 35,000
Total assets 40,000,000 50,000,000 51,000,000 49,000,000
Recovery of bad debts written off:

In 2018 60,000
In 2019 10,000
269. The income tax payable for 2018?

A. P30,000
B P35,000
C. P40,000
270. The income tax payable 2019?

A. P78,000
B. P45,200
C. P68,000

A. P37,500
B. P27,500
C. P20,000

A. P100,000
b. P97,500
C. P78,000
d. P40,500
SITUATION 69:
FLY HIGH BUTTERFLY Corporation, a domestic corporation, had the following financial
information for CY 2021: gross sales of ₱50 Million; cost of sales of ₱35 Million;
and operating expenses of ₱12.6 Million, broken down as follows:
Cost of Sales
Direct materials ₱20,000,000
Direct labor 10,000,000
Manufacturing overhead 5,000,000
Total ₱35,000,000
Operating Expenses
Salaries and wages ₱5,000,000
Taxes 200,000
Professional fees 200,000
Advertising expenses 3,000,000
Training expenses 3,000,000
Total ₱12,600,000
The training expenses of ₱3,000,000 was incurred for its trainees enrolled in a
specific skills development program of TESDA. Moreover, the corporation earned
interest income, net of the 20% FT, in the amount of ₱100,000.
273. Assuming the corporation has complied with the withholding tax requirements on
all its costs
and expenses subject to withholding tax, compute its allowable deduction:
A. P12,600,000
B. P14,100,000
C. P13,580,000
D. P13,575,000
274. Compute net taxable income for taxable year 2021?

A. P2,400,000
B. P1,425,000
C. P1,420,000
D. P900,000
275. Compute tax due/payable for year 2021?

A. P600,000
B. P355,000
C. P356,250
SITUATION 70:
Christina, single, Filipino with 1 dependent child, received in taxable year 2020 the
following professional fees as an independent consultant:
Monthly Fees Less 5% CWT Net Monthly Fees

₱240,000 ₱12,000 ₱228,000
The monthly cost of her professional services amounted to ₱20,000, gross of the CWT.
The office rental expenses related to her consultancy business amounted to:
Monthly rental expense Less 5% CWT Monthly rental expense paid

₱30,000 ₱1,500 ₱28,500
She is not VAT-registered and instead pays 3% OPT on her gross receipts under Section
116 of the Tax Code.
Aside from her consultancy business, she is a faculty member of CPAR University from
which she received the following employment income for the same year:
Gross pay Less CWT Less SSS premiums Net Pay

and union dues
₱850,000 ₱60,000 ₱6,000 ₱784,000
The amount she received from CPAR University is inclusive of 13th Month Pay and other
benefits of ₱16,000. Her car fuel expenses amounted to ₱10,000 per month. She used
the car for her consultancy business 40% of the time.
She also wrote a book entitled “SINGLE LIFE IS HEAVEN” which became a bestseller in
the Philippines. In 2020, she earned royalties from the book in the amount of
₱2,500,000, net of the 10% final tax. Using this amount, she opened a time deposit
with BDO which earned interest income of ₱75,000, net of the 20% final tax. She has
excess tax credits from the prior year of ₱15,500.
276. Calculate her tax payable in 2020?

1st Quarterly ITR 2nd Quarterly ITR 3rd Quarterly ITR Annual ITR
A. P12,600 P111,740 P124,920 P309,112
B. (P10,500) P59,000 P28,000 P186,408
C. P10,500 P80,000 P7,500 P 63,817
D. P10,500 P12,600 P59,000 P186,408
277. Calculate her tax payable if she chooses OSD (Optional Standard Deduction)?
A. P12,600 P111,740 P124,920 P309,112
B. P10,434 P80,348 P7,534 P234,555
C. P0 P23,895 P24,343 P34,453
D. P0 P61,700 P93,600 P269,440
278. Calculate her tax payable if she avails of the 8% income tax option.
A. P0 P23,595 P24,343 P86,483
B. P6,100 P21,600 P21,600 P80,100
C. P0 P23,895 P24,343 P34,453
D. P10,434 P80,438 P7,534 P234,455
SITUATION 71:
Pok Puk and Company, general co-partnership has the following data of income and
expenses for 2018:
Gross income P2,400,000

Expenses 1,000,000
Dividend received from a domestic corporation 90,000
Interest on bank deposit (net) 10,000
Partners Jun share profits and losses in the ratio of 80% and 20%, respectively.
279. The income tax payable by the partnership is

A. P420,000
B. P450,000
C. P447, 000
D. P423,000
280. The taxes withheld on the respective share of Jun and Jon in the 2018 partnership
income are
A. Jun- P78,400 and Jon- P19,600
B. Jun- P117,600 and Jon- P19,600
C. Jun- P129,600 and Jon 21,600
D. Jun- P86,400 and Jon – P21,600
SITUATION 72:
On January 1, 2018, Angkol leased his vacant lot for a period of 12 years at P240,000
per year. It was agreed that the lessee will pay the following:
A. Rent of P480,000 (for 2018 and 2019)

B. Security deposit of P230,000
C. Real property tax at P20,000/year
The lease contract provides among others that the lessee will construct a 3-storey
building for parking purposes at a cost of P3,600,000 which shall belong to the lessor
upon expiration or termination of the lease. The building was completed on July 1,
2018, with an estimated useful of 15 years.
281. Angkol shall report for the year 2018, using the spread-out method, a total
income from lease of
A. P296,543
B. P573,087
C. P536,521
D. P333,087
282. Using the above data, the lessee in 2018 can deduct total expenses amounting to
A. P656,521
B. P553,043
C. P416,521
D. P573,043
SITUATION 73:
MG Corporation organized in 2016 has the following data:
2018 2019
Sales P1,700,000 P2,300,000
Cost of sales 1,050,000 1,425,000
Operating expenses 615,000 480,000
283. The income tax payable in 2018 is

A. P13,000
B. P5,250
C. P10,500
D. P12,250
284. Using the above data, the income tax payable by Mabuhay Corporation in 2019 is
A. P118,500
B. P110,750
C. P116,000
D. P105,500
SITUATION 74:
Azul corporation a domestic corporation duly registered under Philippines laws, made
the following donation for the year as follows:
• March 31, Shares of stock of Azure Corporation to its shareholders amounting to

P 25,000,000.
• June 30, Land to subsidiary Corporation amounting P77,000,000.
• September 30, Cash to corporate manager and officers total amount of P11,000,000.
• December 31, P100,000 donation to a private school for the construction of school
building.
285. What type of tax is imposed on March 31 donation?

A. Final Tax
B. Net Income Tax
C. Donor Tax
D. Exempt from tax
286. What type of tax is imposed on June 30 donation?

A. Final Tax
B. Net Income Tax
C. Donor Tax
D. Exempt from tax
287. What type of tax is imposed on September 30 donation?

A. Final Tax
B. Net Income Tax
C. Fringe Benefit Tax
D. Donor Tax
288. What type of tax is imposed on December 31 donation?

A. Final Tax
B. Net Income Tax
C. Donor Tax
D. Exempt from tax
SITUATION 75:
Blythe Brillantes, Certified Public Accountant, employed by CAM Corporation in its

Internal Audit Group, has inside information to believe she will profit from the
corporation if she invest in its stockholding’s so she decided to realize what she
knows and made the following:
• On April of 2021 Purchase 50,000 shares for Php50 of CAM Corporation.

• Again Purchase another 50,000 shares for Php60 of CAM Corporation on May 3, 2021
• May 8, 2021 CAM declared 10% stock dividend after annual stockholders meeting a
day after book value per share doubled its value.
• May 9, Blythe Sold 100,000 shares for Php100
289. What is the capital gains tax?

A. P750,000
B. P495,000
C. P675,000
D. P0
290. What is the documentary stamp tax?

A. P100,000
B. P75,000
C. P50,000
D. P25,000
SITUATION 76:
James Reed, purely engaged in business, on cash basis, had the following for the given
year:
Gross Revenue P800,000

Cost of Sales 200,000
Business expenses 150,000
Other (non-operating) business income:
Interest from bank deposit 20,000
Gain from sale of capital asset bought more than a year 50,000
291. How much is James Reed taxable income if he opted OSD?

A. P530,000
B. P505,000
C. P410,000
D. P385,000
292. Income tax due if he availed the 8% GRT?

A. P68,000
B. P69,600
C. P48,000
D. P46,000
SITUATION 77:
Bong & Billy are partners in a GPP which realized a Sales of P8,000,000 with
corresponding cost of sales P5,000,000 and Operating Expenses P2,000,000 in year 2018.
Bong, single, benefactor of senior citizen has his own income of P400,000 and cost
of sales and expenses P30,000 and P230,000, respectively. While, Billy, with one
qualified dependent generated P450,000 income and incurred cost of sales and expenses
P200,000 and P50,000, respectively. They share 70:30 in the profits. Bong and Billy
incurred unliquidated expenses of P100,000 & P50,000, respectively, for the
partnership.
293. Taxable income of Bong if he claims itemized deductions:

A. P850,000
B. P840,000
C. P740,000
D. P665,000
294. Taxable income of Billy if he opted for OSD:
A. P500,000
B. P570,000
C. P475,000
D. P495,000
SITUATION 78:
A Co. and B Co., domestic corporation, both in the construction business, formed a
joint venture to build houses, a government project duly licensed with PCAB, had the
ff:
Joint venture A Co. B Co.
Income P80,000,000 2,000,000 3,000,000
Expenses 60,000,000 1,200,000 2,000,000
295. What is the income tax of the Joint venture?

A. P6,000,000
B. P20,000,000
C. P1,800,000
D. P0
A. Co.
296. What is the taxable income of the joint venture?
A. P1,800,000
B. P20,800,000
C. P10,800,000
D. P3,240,000
297. If the joint venture is not approved by PCAB, what is the taxable income of the
venture?
A. P6,000,000
B. P3,000,000
C. P20,000,000
D. P0
SITUATION 79:
Mr. P.A. Langit, Filipino and married on August 3, 1988, died in 2020, leaving his
estate in favor of his surviving spouse. The following information were made
available:
• Real property in Masbate, acquired during marriage. Said property is supported by

a barangay certification that the spouses resided in this property at the time of
Mr. Langit’s death. The fair market value of this property as per latest tax
declaration is P9,200,000, while the zonal valuation as of the time of death is
P11,500,000. Said real property was held as a mortgage in a loan applied by the
spouses. As of the time of death, the outstanding balance of the mortgage payable
amounted to P500,000.
• Real property in Quezon City, inherited by Mr. Langit during marriage, two and
half years ago, from his late father. The fair market value as per latest tax
declaration as of the time of his death is P5,000,000 while the zonal valuation is
P8,000,000. Said property was previously taxed at a value of P6,500,000 when Mr.
Langit inherited the property from his father. It was also subject to P800,000
unpaid mortgage at the time it was inherited. Mr. Langit paid P500,000 of the
P800,000 unpaid mortgage before he died.
• Real property in Batangas, donated to Mrs. Langit, 10 years ago (before marriage)
by his parentsin-law. The fair market value as per latest tax declaration as of
the time of Mr. Langit’s death is P3,000,000 while the zonal valuation is
P4,000,000.
• Cash supported by a bank certification. Balance as of the time of death: savings

account in the name of Mr. Langit – P200,000; and savings account in the name of
Mr. and Mrs. Langit – P300,000.
• Funeral expenses incurred by the estate during the wake and burial of Mr. Langit
amounted to 200,000.
• Medical expenses within one year before Mr. Langit died amounted to P300,000.
298. Compute Item 34 page 2 (Gross estate) using BIR Form No. 1801
A. P24,000,000
B. P20,000,000
C. P19,700,000
D. P19,500,000
299. Compute Item 35 page 2 (Ordinary deductions) using BIR Form No. 1801
A. P4,280,000
B. P3,980,000
C. P3,780,000
D. P 800,000
300. Compute Item 37D page 2 (Total special deductions) using BIR Form No. 1801
A. P15,000,000
B. P11,000,000
C. P10,750,000
D. P10,500,000
301. Compute Item 40 page 2 (Net taxable estate) using BIR Form No. 1801
A. P1,970,000
B. P1,470,000
C. P1,220,000
D. P 970,000
302. Compute Item 18 page 1 (Estate tax due) using BIR Form No. 1801
A. P118,200
B. P 88,200
C. P73,200
D. P58,200
SITUATION 80:
A VAT-registered real estate dealer sold the following during the month of January
2021:
One (1) condominium unit (inclusive of parking space
valued at P500,000) P1,500,000
Two (2) adjacent condominium units covered
by separate titles sold to one buyer, each
unit is valued at P2,500,000 (exclusive of two
(2) parking spaces valued at P500,000 each) 5,000,000
He also had the following acquisitions during the month:

Domestic purchase of supplies, net of VAT 300,000
Domestic purchase of five (5) units of office
computers valued at P50,000 each, net of VAT
(4 years estimated life) 250,000
Importation of one vehicle for land transport
used in business (5 years estimated life) 1,400,000
Office rental, net of VAT 100,000
303. Compute item 16A (Sales/Receipts for the month exclusive of VAT) of BIR Form No.
2550M
A. P7,500,000
B. P6,500,000
C. P6,000,000
D. P5,000,000
304. Compute item 16B (Output Tax) of BIR Form No. 2550M
A. P900,000
B. P780,000
C. P720,000
D. P600,000
305. Compute item 21 (Allowable Input Tax) of BIR Form No. 2550M
A. P246,000
B. P 80,800
C. P51,425
D. P38,800
306. Compute item 22 (Net VAT Payable) of BIR Form No. 2550M
A. P848,575
B. P699,200
C. P688,575
D. P561,200
SITUATION 81:
MANG KURDI is a caterer and a videoke bar operator. In a taxable period, she had the
following data, tax not included:
Sales:
From operations of the Truluv Catering Service:
Cash sales P400,000
Accounts receivable (catering) 250,000
Credit card sales 243,000
From operations of the Dude Videoke Bar:

Cash sales 1,360,000
Payments for catering service, based on gross receipts

(80% of which are to VAT taxpayers) 60%
307. How much is the amusement tax payable?

A. P357,156
B. P297,630
C. P198,420
D. None, not subject to amusement tax
308. How much is the value added tax payable?

A. P77,160
B. P40,123
C. P30,864
SITUATION 82:
Your client, Antonio Manuel, is engaged in various transactions that are subject to
percentage taxes. His address is 143 S. Loyola Street, Sampaloc, Manila. The TIN is
143-678-910-005. He is under RDO 032. Email ad is Antoman@gamil.com. The following
data for the first quarter of the current year are presented for your perusal. Answer
the questions by filling up the line in the actual Quarterly Percentage Tax Return
(2551Q).
Gross receipts, sale of gas and water P1,500,000

Expenses, sale of gas and water 200,000
Gross receipts, rentals of office spaces, net of 3% withholding tax 727,500
Expenses, rental of office spaces 150,000
Gross receipts, life insurance premiums 800,000
Expenses, life insurance business 100,000
309. Using line 14 (Total tax due) of BIR Form 2551 Q, how much is total tax due?
A. P68,500
B. P46,000
C. P30,000
310. Assuming your client filed the return and paid the tax on July 25 and it was
found out that it was due to willful neglect, using line 20 (Surcharge), how much is
the surcharge?
A. P36,305
B. P34,250
C. P17,125
311. Using the same information in the preceding number, using line 21 (Interest),
how much is the interest?
A. P8,220
B. P3,425
C. P2,055
312. Using line 24 (Total amount payable), how much is the total amount payable
excluding compromise penalty?
A. P104,805
B. P85,730
C. P82,305
SITUATION 83:
LBT Cargo Company, VAT-registered with TIN 134-456-789-0000, has the following data,
net of VAT, for the month of January, 2019:
Gross receipts, sale to private entities P12,000,000

Gross receipts, services rendered to international shipping
transport operator 3,000,000
Purchase of materials 200,000
Purchase of supplies 500,000
Importation of warehouse equipment, estimated life 4 years 300,000
Purchase of truck, estimated life 5 years 500,000
Local purchase of office equipment, estimated life 3 years 200,000
Domestic purchase of services 600,000
Input tax carried over from previous period 50,000
a. Address of LBT Cargo Company: 146 Libertad Street, Sampaloc, Manila 1008
b. Telephone no: 02 734 39 89
c. RDO Code: 32
d. President of the company: Jose Cruz Santos, Sr. (TIN 456 789 100 0000)
e. Treasurer of the company: You are the Treasurer (Your TIN 165 224 991 0000)
f. All acquisitions are directly attributed to VAT-subject transactions except the
purchase of materials. Taxpayer will use as an input tax credit the input tax
attributed to zero rated sale.
Using BIR Form No. 2550M, answer the following:
313. Amount to be shown in item 16A (Total Sales/Receipts)

A. P16,000,000
B. P15,000,000
C. P13,000,000
314. Amount to be shown in item 16B (Output Tax Due)

A. P1,800,000
B. P1,440,000
C. P1,400,000
315. Amount to be shown in item 19 (Total Available Input Tax)

A. P326,000
B. P321,200
C. P276,000
316. Amount to be shown in item 21 (Total Allowable Input Tax)

A. P326,000
B. P321,200
C. P276,000
317. Amount to be shown in item 22 (Net VAT Payable)

A. P1,474,000
B. P1,164,000
C. P1,114,000
SITUATION 84 (Adapted):
Merlene, senior citizen, is engaged in a trading business. She is not VAT – registered.
She is also supporting a Person with Disability (PWD) who is the husband of her
deceased sister and a legally adopted minor child. During the first quarter of 2019,
the following data taken from her books of accounts are given:
Gross sales P2,000,000

Sales discounts given at the time of sale (including P100,000
discount to senior citizen) 500,000
Beginning inventory 100,000
Purchases 400,000
Ending inventory 300,000
Deductible expenses (40% VAT subject) 100,000
Interest income from peso bank deposit 10,000
Selling price of shares of stock listed and traded through the local
stock exchange (cost is P100,000) 150,000
Capital loss from sale of 10% Bonds (long term) 25,000
Gain from sale of her interest in a business partnership (short term) 40,000
VAT paid first two months of the quarter 60,000
318. Compute item 19B of BIR Form 2550Q

A. P240,000
B. P192,000
C. P180,000
D. P168,000

A. P52,800
B. P48,000
C. P12,000
D. P60,000

A. P127,200
B. P144,000
C. P120,000
D. P67,200
321. Compute item 45 of BIR Form 1701A (Assuming that Merlene is using the Itemized
deduction)
A. P1,427,500
B. P1,227,500
C. P1,400,000
D. P1,600,000
322. Compute item 45 of BIR Form 1701A (Assuming that Merlene is using the OSD)
A. P840,000
B. P867,500
C. P856,500
D. P720,000
SITUATION 85 (Adapted):
Sinagtala Foods Corporation is engaged in food business. It operates various
restaurants in Metro Manila. It was registered with the BIR and SEC five years ago.
The following information relates to its operations for the year ended December 31,
2019:
Sales/Revenues P10,000,000
Sales discounts 300,000
Interest income on foreign currency bank deposit, net of tax 15,300
Other income (not subject to final tax) 750,000
Cost of sales – food 1,200,000
Cost of sales – packaging 500,000
Salaries and bonuses – servers/waiters 1,500,000
Salaries and bonuses – store supervisors and managers 700,000
Rental expense – stores 850,000
Utilities expense – stores 325,000
Repairs and maintenance – stores and store facilities 300,000
Depreciation – stores and store facilities 600,000
Stores and store facilities impairment loss 525,000
Pension expense – servers/waiters 380,000
Pension expense – store supervisors and managers 250,000
Salaries and bonuses – sales and administration 560,000
Rental expense – administration 450,000
Utilities expense – administration 225,000
Repairs and maintenance – administration 150,000
Depreciation expense – administration 280,000
Building impairment loss – administration 475,000
Provision for various losses including tax expenses 550,000
Pension expense – administration 180,000
Other administration expenses 425,000
a. Sales discounts include senior citizen and PWD discount of P50,000.
b. Pension expense pertains to accrual of expenses under PAS 19. There were no
contributions to the pension fund.
c. Taxes and licenses include documentary stamp tax of P100,000, Donor’s tax of
P50,000 and local business tax of P280,000
d. Sinangtala opted to use the Itemized deductions
323. Compute page 2, item 34 of BIR Form No. 1702-RT

A. P9,750,000
B. P3,775,000
C. P4,525,000
D. P8,050,000

A. P195,000
B. P90,500
C. P161,000
D. P75,500

A. P475,782
B. P490,782
C. P747,282
D. P618,282
326. Assume that Sinagtala opted to use the OSD, compute page 2, item 46 of BIR Form
No. 1702-RT
A. P1,755,000
B. P679,500
C. P814,500
D. P1,449,000
SITUATION 86:
Data relative to ordinary gains/losses and capital gains are shown below for the
taxable year 2019:
Gross income P730,000

Gain on sale of business equipment, held for 15 months 100,000
Gain on sale of lot not used in business held for 3 years
(Gross selling price: P340,000; Cost: P300,000; FMV: P400,000) 40,000
Gain on sale of furniture not used in business, held for 6 months 50,000
Loss on sale of vehicle not used in business, held for 2 years 60,000
Loss on sale of shares of stock listed/trade at stock exchange
(Gross selling price: P70,000; Cost: P75,000) 5,000
Net capital gain from sale of shares of stock not listed/traded at
stock exchange (Capital gains: P300,000; Capital losses: P200,000) 100,000
327. Compute page 2, item 25 schedule 3A of BIR Form No. 1701

A. P125,000
B. P122,000
C. P67,500
D. P0
328. Assuming the taxpayer opted to apply the 8% fixed income tax rate in lieu of
graduate income tax rates, compute page 2 item 32 schedule 3B of BIR Form No. 1701
A. P68,000
B. P66,400
C. P60,000
D. P0
329. Assuming the facts in number 327, compute item 36 of BIR Form 1706 that may be
deducted in the next taxable year 2020 by the individual taxpayer
A. P60,000
B. P10,000
C. P0
330. Assuming the facts in number 327, compute item 36 of BIR Form 1706 that may be
deducted in the next taxable year 2020 by the corporate taxpayer
A. P60,000
B. P10,000
C. P0
331. Assuming the facts in number 327, the total final capital gains tax to be reported
in separate capital gains tax returns amounted to
A. P39,000
B. P30,400
C. P29,000
D. P0
SITUATION 87:
Rosas Company is engaged in merchandising business with the following information for
the year ended December 31, 2019:

Sales returns and allowances 300,000
Sales discounts 350,000
Purchases 2,000,000
Purchase returns and allowances 100,000
Purchase discounts 150,000
Freight in 200,000
Inventory, January 1 300,000
Inventory, December 31 250,000
Operating expenses, supported by invoices and receipts 1,000,000
Operating expenses, not supported by invoices and receipts 500,000
The sales discounts include P150,000 discounts granted to senior citizen and PWDs.
The following are additional independent situations:
Situation A:
Rosas filed its first quarter income tax return on May 30, 2019, and it used the OSD.
However, it used the Itemized deductions in its second and third quarter income tax
returns.
Situation B:
Rosas filed its first quarter income tax return on May 30, 2019 and it used the
itemized deduction. However, it amended its first quarter income tax return on June
30, 2019 and adopted the OSD. OSD was used in its second and third quarter income tax
returns.
332. Assume that Rosas is a corporation, using Situation A, compute page 2, item 39
of BIR Form 1702 – RT for the year 2019?
A. P1,400,000
B. P3,500,000
C. P2,200,000
D. P2,400,000
333. Assume that Rosas is a corporation, using Situation B, compute page 2, item 39
A. P1,400,000
B. P3,500,000
C. P2,200,000
D. P0
334. Assume that Rosas is a corporation, using Situation A, compute page 2, item 40
A. P3,600,000
B. P3,300,000
C. P5,250,000
D. P2,100,000
335. Assume that Rosas is a corporation, using Situation B, compute page 2, item 40
A. P3,600,000
B. P3,300,000
C. P2,350,000
D. P2,100,000
336. Assume that Rosas is a sole proprietorship, using Situation A, compute page 2,
part IV.A item 39 of BIR Form 1701-A, for the year 2019? (Observe Tax Minimization)
A. P2,200,000
B. P2,400,000
C. P2,340,000
D. P3,000,000
337. Assume that Rosas is a sole proprietorship, using Situation B, compute page 2,
A. P2,200,000
B. P2,400,000
C. P2,340,000
D. P0
338. Assume that Rosas is a sole proprietorship, using Situation A, compute page 2,
A. P3,100,000
B. P3,300,000
C. P2,100,000
D. P2,350,000
339. Assume that Rosas is a sole proprietorship, using Situation B, compute page 2,
A. P3,100,000
B. P3,300,000
C. P2,100,000
D. P2,350,000
SITUATION 88:
Handy Manny Manufacturing Company is engaged in the manufacturing of toys for export.
It was incorporated and registered with the BIR in December 2018. It registered with
the Board of Investments (BOI) and enjoyed Income Tax Holiday (ITH) incentive. Its
ITH incentive commenced on May 1, 2019, which is the start of its commercial
operations.
The following information relates to its operations for the year ended December 31,
2019:
January 1 to April 30 May 1 to December 31

Sales P100,000 P8,000,000
Interest income 20,000 100,000
Scrap sales 300,000
Gain on sale of fixed assets 1,250,000
Foreign exchange gain 60,000 420,000
Cost of sales 20,000 3,200,000

Interest expense 400,000 600,000
Salaries and bonuses 300,000 2,500,000
Depreciation 400,000 1,600,000
Pension expense 300,000 600,000
Other business expenses 30,000 65,000
Foreign exchange loss 50,000 330,000
• Interest income pertains to interest subjected to 20% FWT (recorded at gross).
• Scrap sales pertain to sale of scraps which have undergone production of P200,000
while the balance pertains to scrap raw materials sold.
• Gain on sale of fixed assets pertains to gain from sale of equipment.
• Foreign exchange gain pertains to realized and unrealized gains. Out of the total
amount, 30% of the gain from May to December 31, 2019 was not realized yet. The
balance was already realized during the year. These pertain to trade transactions.
• Interest expense pertains to interest on loans used in connection with Handy’s
trade or business.
• Pension expense pertains to accrual of pension obligation based on PAS 19.
• Foreign exchange loss pertains to realized and unrealized gains. Out of the total
amount, 20% of the loss from May to December 31, 2019 was not realized yet. The
balance was already realized during the year. These pertain to trade transactions.
340. Compute the taxable income subject to income tax for the year ended December 31,
2019.
A. P931,200
B. P614,600
C. P316,600
D. P215,600
341. Compute the taxable income covered by ITH for the year ended December 31, 2019.
A. P562,000
B. P298,000
C. P614,600
D. P931,200
342. Compute the income tax liability for the year ended December 31, 2019.
A. P118,980
B. P94,980
C. P24,000
D. P0
343. Compute the income tax savings related to its ITH for the year ended December
31, 2019.
A. P168,600
B. P94,980
C. P89,400
D. P279,360
SITUATION 89:
Mrs. Angat with one qualified dependent, is engaged in trading and manufacturing
businesses. The following information relates to her businesses for the year ended
December 31, 2019:
Trading Manufacturing
Sales on account P350,000 P370,000
Cash sales during the year 400,000 350,000
Collections of 2019 sales on account 180,000 150,000
Collections of 2018 sales on account 220,000 120,000
Purchases on account 100,000 120,000
Cash purchases 90,000 100,000
Payments for 2019 purchases on account 80,000 75,000
Payments for 2018 purchases on account 75,000 80,000
Expenses on account 280,000 220,000
Cash expenses 170,000 175,000
Payments for 2019 expenses on account 150,000 120,000
Payments for 2018 expenses on account 120,000 100,000
Mrs. Angat adopted the cash basis of accounting for her trading business and accrual
basis of accounting for her manufacturing business. In addition, she opted to use the
Itemized deductions. There were no beginning and ending inventories.
344. Compute part IV.A, page 2, item no. 45 of BIR Form 1701-A for the year ended
December 31, 2019.
A. P490,000
B. P340,000
C. P300,000
D. P220,000
345. Compute part IV.A, page 2, item no. 46 of BIR Form 1701-A for the year ended
December 31, 2019.
A. P0
B. P52,500
C. P18,000
D. P10,000
346. Assuming that Mrs. Angat adopted the OSD, compute part IV.A, page 2, item no,
45 of BIR Form 1701-A for the year ended December 31, 2019
A. P480,000
B. P432,000
C. P912,000
D. P726,000
‘
347. Assuming that Mrs. Angat adopted the OSD, compute part IV.A, page 2, item no,
46 of BIR Form 1701-A for the year ended December 31, 2019
A. P50,000
B. P38,000
C. P163,600
D. P111,500
SITUATION 90:
The following sales and their respective input taxes are reported by NFT Corporation,
a VAT-Registered business during the second quarter of 2019:
Domestic sales (VAT inclusive) P5,600,000

Export sales (subject to zero-rated VAT) 3,000,000
VAT-exempt sales 2,000,000
Input VAT attributable to:
Domestic sales 360,000
Zero-rated sales 200,000
VAT-exempt sales 60,000
Untraceable input VAT due to purchase of capital goods
amounting to P1,000,000 120,000
Itemized deductions allowed 2,000,000
In addition, NFT Corporation applied the input VAT attributable to zero-rated sales
for tax refund or issuance of Tax Credit Certificate (TCC) against the output VAT.
348. Compute Item 19B of the BIR Form 2550Q

A. P600,000
B. P561,429
C. P520,000
D. 385,714
349. Compute Item 23D of the BIR Form 2550Q?

A. P180,000
B. P84,000
C. P420,000
D. P236,000
350. Compute Item 23C of BIR Form 255Q?

A. P180,000
B. P84,000
C. P420,000
D. P236,000
351. Compute Item 29 of BIR Form 2550Q?

A. P180,000
B. P200,000
C. P236,000
D. P420,000
352. Compute Page 2, Part IV, Item 41 of BIR Form 1702-RT?

A. P0
B. P625,200
C. P600,000
D. P80,000
SITUATION 91:
On January 1, 2021, SLP Co. and AXIE Co., contractors, formed a joint venture, with
an agreed profit or loss ratio of 65:35. Data on the joint venture and parties to the
venture for the year are as follows:
Joint Venture SLP Co. AXIE Co.

Sales P75,000,000 P6,850,000 P7,500,000
Cost of Services 48,000,000 2,550,000 3,500,000
Gross Income P27,000,000 4,300,000 4,000,000
Operating Expenses:
Rent Expense 6,000,000 640,000 550,000
Depreciation Expense 500,000 122,500 600,000
Salaries Expense 5,500,000 700,000 1,100,000
Other Business Expenses 3,755,000 900,000 655,000
Quarterly income tax paid 1,650,000 600,000
353. If the joint venture was entered into solely to construct an expressway North
and south of Manila and collect toll from users, how much is the income tax still due
of joint venturer SLP Co.?
A.(P181,687.50)
B. P657,687.50
C. P661,687.50
D.(P392,312.50)
354. If the joint venture was entered into solely to engage in petroleum operations
pursuant to an operating or consortium agreement under a service contract with the
Government, how much is the income tax still due of joint venturer AXIE Co.?
A.(P181,687.50)
B. P657,687.50
C. P661,687.50
D.(P392,312.50)
355. If SLP Co. and AXIE Co. are transportation companies and they entered a joint
venture wherein SLP Co. will transport units south of Manila and AXIE Co. will
transport units north of Manila, how much is the income tax due of joint venturers
SLP Co. and AXIE Co.?
A. P484,375 and P273,750
B. P387,500 and P219,000
C. P581,250 and P328,500
D. P532,812.50 and P301,125
356. Using the scenario in the preceeding number, compute for the income tax due of
the joint venture.
A. P3,373,500
B. P2,811,250
C. P2,249,000
D. P3,092,375
SITUATION 92:
The following are the financial records of Yen Corporation, a VAT – registered
enterprise, for the fourth quarter of 2020 and first quarter of 2021:
4th Quarter – 2020 1st Quarter – 2021

Sales:
VATable sales P350,000 P400,000
Exempt sales 250,000 260,000
Sales to government 160,000 180,000
Zero-rated sales 140,000 120,000
Total P900,000 P960,000
Purchase of goods from VAT

Suppliers:
VATable sales P125,000 P110,000
Exempt sales 90,000 95,000
Sales to government 115,000 100,500
Zero-rated sales 60,000 75,000
Total P390,000 P380,500
Yen Corporation purchased depreciable capital goods on November 1, 2020 for P2,250,000
with an estimated useful life of four years and another one on February 1, 2021 for
P1,900,000 with an estimated useful life of six years. These capital goods are being
used for the benefit of the whole business. It likewise had excess input tax credit
from the third quarter of 2020 amounting to P5,000.
357. Using the BIR Form 2550Q,how much will be reflected on line 23B for the return
to be filed on December 2020?
A. P5,740
B. P4,600
C. P6,325
D. P5,725
358. Using the BIR Form 2550Q,how much will be reflected on line 25 for the return
to be filed on December 2020?
A. P9,815
B. P10,400
C. P8,675
D. P9,800
359. Using the BIR Form 2550Q,how much will be reflected on line 23C for the return
to be filed on January 2021?
A. P18,029
B. P15,989
C. P14,459
D. P21,598
360. Using the BIR Form 2550Q,how much will be reflected on line 25 for the return
to be filed on January 2021?
A. P8,311
B. P17,493
C.(P13,107)
D. P8,493
SITUATION 93:
Rogerrakker, non-VAT registered seller of goods, has the following records of its
gross receipts:
October 2020 P150,000

November 2020 255,000
December 2020 375,300
January 2021 675,000
February 2021 550,000
March 2021 635,500
April 2021 245,000
May 2021 350,000
June 2021 195,000
The applicable percentage tax for the fourth quarter of 2020 was paid on January 25
2021.
361. How much is the percentage tax payable for the fourth quarter of 2020?
A. P11,705
B. P15,606
C. P23,409
D. P7,803
362. Using the BIR Form 2550Q, how much will be reflected on line 17 for the return
to be filed on the first quarter of 2021?
A. P15,606
B. P37,210
C. P27,908
D. P55,815
363. How much is the percentage tax payable for the first quarter of 2021?
A. P4,804
B. P2,999
C. P7,803
364. Under the CREATE, when is the effectivity of the change in percentage tax rates
under Section 116?
A. June 1, 2021
B. July 1, 2021
C. June 1, 2020
D. July 1, 2020
SITUATION 94:
Ace, a resident of the Philippines but a citizen of Japan, died on November 20, 2018,
with the following data pertaining to his estate:
• A parcel of land was acquired for P1,200,000 from his father, Roger, for P1,100,000
at the time when the fair market value thereof was P1,500,000. At the time of Ace’s
death, the property had a fair market value of P2,000,000.
• The same land is where the family home was constructed for a total cost of
P1,500,000. At the time of death, the house had a fair market value of only P200,000.
• Ace transferred a car with a fair market value at the time of transfer of P300,000,
but was sold to his illegitimate son for P200,000, 2 years prior to his death. At the
time of death, the car had a fair market value of P180,000.
• Bank deposit in the Philippine Branch of a US Bank amounting to P300,000.
• House and lot located in Japan with a fair market value of P2,000,000. This was
inherited by Ace 2 years ago from his parents. At the time of inheritance, the house
and lot had a fair market value of P1,500,000. Estate tax in Japan amounting to
P50,000 was paid for said property.
• Also inherited from his parents was land located in the Philippines which had a
fair market value of P1,200,000 at the time of inheritance but was subjected to a
mortgage to secure a loan with an outstanding balance of P500,000. At the time of
Ace’s death, the remaining balance of the loan is P200,000; and an independent assessor
determined the fair market value of the land to be at P2,000,000, as per zonal
valuation of the BIR, it was valued at P1,500,000, and per local city assessor it was
valued at P1,300,000.
• At the time of Ace’s death, life insurance proceeds taken by him on his life amounted
to P1,000,000. Ace’s illegitimate daughter was the beneficiary thereof.
• Ace owned 1,000 shares in each of the following corporations:

▪ Blackbeard Corporation, a listed domestic corporation, had Retained Earnings of
P1,000,000 and Common Stocks amounting to P2,000,000; outstanding shares were 100,000
shares. At the time of death, the shares were trading at P40 per share.
▪ Garp Corporation, an unlisted domestic corporation with Total Assets amounting to
P5,000,000, part of which is real property with a book value of P3,000,000, but the
fair market value is P3,500,000; and Total Liabilities amounting to P3,000,000. The
total outstanding shares of the corporation was 100,000.
• A building and lot worth P5,000,000 was willed to be transferred to the local
government of Batangas where Ace was a resident before his death.
• Ace had unpaid income tax of P150,000 and real property tax of P20,000, all incurred
after his death.
• Funeral Expense amounting to P220,000 comprised of mourning clothing P15,000;

telecommunications expense P5,000 (P3,000 of which were incurred after interment to
thank those who attended the funeral; P2,000 to notify friends and family of Ace’s
death); Cost of burial plot P150,000; upkeep of the mausoleum where the deceased was
buried P10,000, interment fees and the coffin P40,000. 40% of the of the burial plot
remain unpaid.
• Judicial expenses to settle the estate P307,500, inclusive of attorney’s fees

P150,000; court filing fees P15,000; attorney’s fees of heirs fighting over some of
the properties P100,000; administrator’s fees P40,000; premium for the bond filed by
the administrator P2,500.
• Ace also had a receivable from Marco worth P400,000. Marco was declared insolvent
by the court and unsecured creditors can only recover 40%.
• Medical expenses incurred prior to the death of Ace amounted to P450,000, 50% of
which is still unpaid and not evidenced by any notarized deed or promissory note.
365. How much is the gross estate?

A. P7,060,000
B. P10,160,000
C. P12,460,000
D. P8,760,000
366. How much is the vanishing deduction?

A. P520,931
B. P694,575
C. P347,287
D. P173,644
367. How much is the estate tax payable?

A. P197,526
B. P116,056
C. P80,363
D. P6,781
SITUATION 95:
The CFO of Chupapi Munyanyo Corporation asked you to prepare their VAT return and
provided you with the following information pertaining to its 2nd quarter operation,
(the amounts are VAT exclusive, unless otherwise provided):
Sale of canned fruits, VAT inclusive P5,824,000

Sales Returns 100,000
Sales Discounts 200,000
Export sale of canned fruits 1,200,000
Sale of raw fruits 600,000
Sale of canned fruits to the government 200,000
Purchases of raw fruits 1,200,000
Packaging materials 300,000
Importation of capital equipment in the month of May 3,000,000
Sugar and other agricultural food products 400,000
Annual rental paid at the beginning of the year 1,200,000
Salaries of factory workers 900,000
• 50% of the sales discount pertains to discounts granted to customers who paid within
10 days following the 2/10, n/30 credit terms of the Company; the other 50% pertains
to trade discounts granted at the time of sale.
• All sales returns and discounts pertain to the sale of canned fruits (not including
sales to government)
• The equipment has a useful life of 6 years
368. How much is the VAT payable?

A. P545,500
B. P535,600
C. P520,600
D. P525,600
369. How much is deferred input VAT?

A. P432,000
B. P336,400
C. P355,200
D. P343,600
370. How much is the net amount of VAT closed to income/expense?

A.(P4,400)
B. P7,200
C.(P11,600)
D. P4,400
371. How much of the input VAT can be the subject of a claim for refund?
A. P16,800
B. P11,600
C. P14,400
D. P12,000
SITUATION 96:
The following data on income an expenses for 2020 of WEEKEND Corporation were
provided as follows:

Interest income on peso bank deposit, gross of 20% final tax 80,000
Interest income on bank deposit under FCDU, gross of 15% final tax 20,000
Dividend income from a domestic corporation 90,000
Dividend income from a resident foreign corporation 50,000
Capital gains (long-term) 40,000
Capital loss (short-term) 60,000
Salaries and wages 800,000
Rental payments 1,200,000
Loss on investment from FOOL Company due to changes in FMV at year-end 20,000
Interest expense , deductible in full 250,000
Utilities expense 88,000
Payment for pension cost 700,000
EAR expense 65,000
Contributions to charitable and religious organizations 320,000
Contributions to a LGU in relation to a priority project of the
government duly certified by NEDA 600,000
Other operating expenses 25,000
Total Assets 50,000,000
372. Assume the corporation is a domestic corporation, how much is the taxable income
for the year using Itemized deduction?
A. P3,370,000
B. P2,962,500
C. P2,190,150
373. Assume the corporation is a domestic corporation, how much is the taxable income
for the year using OSD?
A. P3,522,500
B. P3,502,500
C. P3,370,000
D. P3,630,000
374. Assume the taxpayer is a general professional partnership (JD, CPAs), owned by
Jason and Mac sharing equally in the partnership gains and losses. The distributable
income of the partnership using OSD should be
A. P3,820,000
B. P3,800,000
C. P3,802,500
D. P3,801,000
375. Assume the taxpayer is an ordinary partnership, the distributable income of

the partnership using OSD should be
A. P3,630,000
B. P2,623,500
C. P2,712,000
D. P2,713,500
SITUATION 97:
The records of C, citizen, married, with 2 dependent children show the following
for 2019:
Sales ₱1,000,000
COGS 580,000
Business expense 240,000
Rental income, net of 5% W/T 95,000
Dividend received from a foreign corporation 20,000
Winnings from Phil. Charity Sweepstakes office 400,000
Other transactions:
1. Sale of assets used in business:
a.) Delivery equipment – Selling price 200,000
Cost (2005) 300,000
Accumulated depreciation 60,000
b.) Land – Selling price 200,000
Cost (2002) 180,000
c.) Warehouse – Selling price 10,000,000
Cost (2003) 11,800,000
Accumulated depreciation 2,000,000
2. Sale of Capital assets:
a.) Jewelry – Selling price 250,000
Cost (2002) 180,000
b.) Land – Selling price CGT 800,000
Cost (2000) 900,000
c.) Furniture & Appliances – Selling price 10,000
Cost (2010) 40,000
3. Shares of stocks:
a.) Traded in the stock exchange: Selling price STT 220,000
Cost (2004) 300,000
b.) Non-traded in the stock exchange: Selling price CGT 300,000
Cost (2004) 180,000
376. What is the taxable income?

A. P500,000
B. P480,000
C. P470,000
D. P450,000
377. What is the capital gains tax?

A. P72,000
B. P48,000
C. P58,000
D. P66,000
378. What is the stock transaction tax?

A. P1,800
B. P1,320
C. P1,500
D. P1,100
SITUATION 98:
Mr. Eks died on December 1, 2021 leaving the following properties:
Farmland in Baguio, brought to marriage by wife 5,400,000

Income from farmland in Baguio 500,000
Apartment units in Quezon City, acquired during marriage 4,000,000
Rental income from apartment units in Quezon City 80,000
Rest house in Tagaytay, acquired before marriage 5,000,000
Income from rest house in Tagaytay 400,000
Car, inherited by wife during marriage 1,950,000
Jewelry, acquired during marriage for exclusive use
and using the exclusive money of the wife 300,000
House and lot inherited from his father on September 1, 2020
(fair market value when inherited, P3,000,000), used as family home 4,000,000
Unpaid mortgage on the inherited
house and lot (original mortgage, P1,200,000) 200,000
Car received as gift from his mother in 2021 750,000
Deductible losses, indebtedness, taxes 1,500,000
379. How much is the estate tax due under Conjugal Partnership of Gains (CPG)?
A. P367,771
B. P427,771
C. P232,171
D. P127,771
380. How much is the estate tax due under Absolute Community of Property (ACP)?
A. P145,110
B. P570,510
C. P385,110
D. P445,110
SITUATION 99:
Mr. Doncic reported the following items of income he earned during the taxable year
2021:
a. Rental income
From apartment in Japan P320,000
From condominium units in Philippines 240,000
b. Royalties from books

Published in Japan 80,000
Published in the Philippines 120,000
c. Interest income on notes receivable

The debtor resides in Japan 40,000
The debtor resides in the Philippines 48,000
d. Interest income from BPI

On peso currency bank deposit (gross) 40,000
On foreign currency bank deposit (gross) 50,000
e. Dividend income from two resident foreign corporations

where the gross income from the Philippines for the past
three years were equivalent to:
40% of its world income 30,000
60% of its world income Final Tax -10% 20,000
f. Prizes and awards received from:

Supermarket raffle
From the Philippines: A Market 8,000
B Hypermarket 10,000
C Mart 12,000
From Japan: Y Store 9,000
Z Mall 11,000
Ramon Magsaysay Award 100,000
g. Prizes and winnings from:

PCSO 500,000
Japan Lotto 200,000
h. Proceeds of life insurance of his

Mother where Mr. Doncic was designated as revocable
beneficiary 600,000
Father where Mr. Doncic was designated as irrevocable
beneficiary 400,000
i. Business income
From the Philippines 360,000
From Japan 240,000
j. Compensation for injuries and damages

Medical and hospital expenses 150,000
Moral and exemplary 80,000
Lost profits 40,000
k. Sale of shares of stock of a domestic corporation

Directly to the buyer:
Selling Price 150,000
Cost 60,000
Through the stock exchange:
Cost 110,000
l. Sale of pieces of jewelry held as capital assets

Acquired 5 years ago:
Cost 25K 150,000
Acquired this year:
Cost (20K) 160,000
381. If Mr. Doncic is a resident citizen, his taxable income subject to graduated
rates is
A. P1,661,000
B. P1,891,000
C. P2,661,000
D. P1,651,000
382. If Mr. Doncic is a non-resident citizen, his taxable income subject to graduated
rates is
A. P723,000
B. P731,000
C. P1,723,000
D. P703,000
SITUATION 100:
Berto Bank extended the following loans:

1. To Mr. Kepweng, P200,000, 90 days, 12% interest, evidenced by a promissory note,
for medical expenses
2. To Mr. Pol, P250,000, 180

90 days, 15% interest, evidenced by a promissory note for
purchase of raw materials for his business
3. To Kanor Corporation, P2,000,000, 3 years, 15%, evidenced by a promissory note,

and secured by a pledge of securities also indicated in the same note.
4. To Thirdy Corporation, P2,500,000, 3 years, 15% evidenced by a document containing

both a promissory note and secured by XYZ Corporation executing a separate mortgage
document.
383. How much is the DST on the promissory note to Mr. Kepweng?
A. P247
B. P370
C. P740
D. P0
384. How much is the DST on the promissory note to Mr. Pol?
A. P308
B. P822
C. P462
D. P450
385. How much is the DST on the promissory note to Kanor Corporation?
A. P15,000
B. P8,020
C. P10,000
D. P7,980
386. How much is the DST on the promissory note to Thirdy Corporation?
A. P22,480 for mortgage -First 5,000 = 40 plus 20 for every 5,000 in excess of 5K
B. P28,770
C. P28,430
D. P30,460
SITUATION 101:
SANA OL LAB Corporation has the following sales during the month of January 2019:
Sale to private entities subject to 12% P100,000

Sale to private entities subject to 0% 100,000
Sale of exempt goods 100,000
Sale to govt, subjected to 5% final Withholding VAT 100,000
Total sales for the month P400,000
The following input taxes were passed on by its VAT suppliers:
Input tax on taxable goods (12%) P 6,000

Input tax on zero-rated sales 3,600
Input tax on sale of exempt goods 2,400
Input tax on sale to government 4,800
Input tax on depreciable capital good not attributable to any
specific activity (monthly amortization for 60 months) 24,000
387. How much is the Creditable input tax for the month?
A. P12,000
B. P10,000
C. P9,600
D. P8,400
388. How much is the input tax attributable to Zero-rated sales for the month?
A. P12,000
B. P10,800
C. P9,600
D. P8,400
389. How much is the input tax attributable to sales to government for the month?
A. P12,000
B. P10,800
C. P9,600
D. P8,400
390. How much is the input tax attributable to VAT – exempt sales for the month?
A. P12,000
B. P10,800
C. P9,600
D. P8,400
391. How much is the VAT Payable?

A. P24,000
B. P12,000
C. P0
SITUATION 102:
The Anong Pizza Na, VAT-registered issued the following official receipt to a customer
who was with a senior citizen:
Ordered by a senior citizen

Parma Pizza P880.00
Mango basil 180.00 P1,060.00
Ordered by the non-senior citizen

House salad P420.00
Beef rendang 590.00
Avocado smoothie 190.00 1,200.00
Total sales (VAT inclusive) P2,260.00
392. How much is the VAT – exempt sale?

A. P2,017.85
B. P1,060.00
C. P946.43
393. How much is the sales discount for senior citizen?
A. P403.57
B. P212.00
C. P189.29
394. How much is the total amount to be paid to The Anong Pizza Na?
A. P2,070.71
B. P1,957.14
C. P2,146.43
D. P2,131.43
SITUATION 103:
The following data were taken from the accounting books of PHX Corporation for the
year 2021:
Gross Sales P 18,000,000

Cost of Sales (4,000,000)
Gross Income from sales 14,000,000
Other non-operating income:
Interest from receivables 400,000
Interest from peso deposits 200,000
Interest income on US dollar deposits
(400,000 from FCDU; 100,000 from BPI US Branch) 500,000
Gain on sale of land (cost P2,500,000; FMV 2,800,000) 500,000
Gain on sale of shares of stock (cost P2,300,000) 400,000
Dividend income (100,000 from domestic corporation;
200,000 from resident foreign corporation) 300,000
Rental Income (gross of 5% withholding tax) 700,000 3,000,000
Total Gross Income 17,000,000
Expenses
Operating Expenses
Depreciation Expense (2,216,000)
Loss on sale of building held as capital
asset (cost is P1,200,000; FMV 1,100,000) (200,000)
Provision for bad debts (net of P500,000 written-off) (3,000,000)
Taxes and Licenses (4,000,000)
Interest Expense (300,000)
Contributions to Retirement Fund (3,500,000)
Senior Citizen Discounts (250,000)
Impairment Loss (300,000)
Loss from fire (carrying amount of the machinery) (400,000)
Selling and Admin Expenses (6,100,000) (20,266,000)
Net Loss (3,266,000)
Note:
a. Taxes and Licenses consists of the following:
Mayor’s Permit and Registration Costs 100,000
Local Business Tax 1,200,000
Real Property Tax 1,000,000
Capital Gains Tax 280,000
Output Value-Added Tax 1,420,000
b. Per actuarial report, the current service cost for the pension fund of the employees
is P2,500,000.
c. Machinery lost in the fire had a carrying amount of P400,000 and was insured.
Amount recovered from the insurance company is P200,000.
d. The shares of stock sold were those of ABC Corporation which is an unlisted company
and sold to DEF Corporation, a company listed in the PSE.
e. The total assets of PHX Corporation is at P85,000,000.
395 .How much is the income tax due and payable of the Company?
A. P151,800
B. P154,000
C. P186,800
D. P233,500
396.How much is the total CGT due?

A. P291,000
B. P294,000
C. P288,000
D. P306,000
397.How much is the total FWT due?

A. P120,000
B. P90,000
C. P110,000
D. P100,000
SITUATION 104:
Steel Semi-Conductors Corporation (SSCC) is a 60% Filipino-owned corporation, where

5 out of its 7 Board of Directors are also Filipinos. It applied for BOI registration
and was granted a pioneer status for its system of production which is new and untried
in the Philippines and was granted an Income Tax Holiday up to taxable year 2017. It
had the following information regarding its operations:
Registered activities:
2014 2015 2016 2017 2018
Sales P20,000,000 P18,000,000 P15,000,000 P12,000,000 P50,000,000
Cost of Sales 10,000,000 9,500,000 8,000,000 10,000,000 30,000,000
Operating expenses 3,500,000 9,000,000 5,000,000 1,000,000 1,200,000
Unregistered activities:
2014 2015 2016 2017 2018
Sales P1,000,000 P1,200,000 P1,150,000 P1,300,000 P4,000,000
Cost of Sales 300,000 400,000 650,000 800,000 2,500,000
Operating expenses 500,000 1,000,000 300,000 200,000 300,000
During 2018, SSCC completed its expansion project for which a 3-year ITH
was granted.
398. How much is the income tax liability of SSCC for the years 2014, 2016, and 2018?
(disregard MCIT)
A. P0; P60,000; P2,030,400
B. P60,000; P0; P2,390,400
C. P0; P0; P2,390,400
D. P60,000; P60,000; P0
399. If in 2016, the labor expense relative to its registered activities, related to
skilled and unskilled workers in the labor force, amounted to P3,000,000 how much is
the additional deductible expense for income tax purposes?
A. P0
B. P6,000,000
C. P1,500,000
D. P4,500,000
400. If SSCC was instead PEZA-registered, how much would be its income tax liability
for 2014, 2016, and 2017?
A. P60,000; P0; P0; P90,000
B. P0; P0; P60,000; P90,000
C. P60,000; P0; P0; P90,000
D. P90,000; P0; P0; P0
401. If SSCC was PEZA-registered, and did not apply for ITH on its expansion project,
how much would be its income tax payable to BIR for 2018?
A. P360,000
B. P600,000
C. P960,000
D. P0
“Everything you want is on the other side of hard.”

ANSWERS AND SOME SOLUTIONS TO THE PROBLEMS:
Situation 1:
1 – C 2 – A
Sales to registered activities P 5,000,000

Allocated Cost of Sales
(5M/6M *3M) 2,500,000
2,500,000
Tax Rate for National Gov’t 3%
75,000
Sales to unregistered activities P 1,000,000

Allocated Cost of Sales
(1M/6M *3M) 500,000
Gross Income 500,000
Less: Allocated Expenses
(1M/6M *1.2M) 200,000
300,000
Corporate Income Tax Rate 30%
90,000
Share of National Government in GIT 5% P 75,000

Corporate Income Tax 90,000
Total tax due to the National Gov’t P 165,000
Allocation of Cost of Sales is based on 5M registered sales over 6M total Sales.

Allocation of Expenses is based on 1M unregistered sales over 6M total Sales.
Sales to registered activities P 5,000,000.00

Allocated Cost of Sales 2,500,000.00
P 2,500,000.00
Share of LGU from GIT 5% 2%
Due to Local Government P 50,000.00
Situation 2:
3 – A 4 – B 5 – B
Situation 3:
6 – B 7 – B 8 – D 9 – B
Situation 4:
10 – A 11 – B
Situation 5:
12 – B 13 – B 14 – A
Situation 6:
15 – B 16 – D 17 – D 18 – A
Situation 7:
19 – A 20 – A 21 – B 22 – B 23 – C
Sales, accrual basis P10,350,000.00

Add: Decrease in accounts receivable 540,000.00
Amount of cash received P10,890,000.00
Amount of cash received P10,890,000.00

Tax rate 12%
Output tax P 1,306,800.00
Cost of sales P7,050,000.00
Less: Decrease in inventory 450,000.00
Purchases of goods, accrual basis P6,600,000.00
Total operating expenses, accrual basis P1,725,000.00
Add (Deduct):
Increase in prepaid expenses 255,000.00
Decrease in accrued expense 150,000.00
Depreciation expense (non-cash expense) (90,000.00)
Cash payments for purchase of services 2,040,000.00
Total P8,640,000.00
Total P8,640,000.00
Tax rate 12%
Input taxes P1,036,800.00
Sales, accrual basis P10,350,000

Tax rate 12%
Output tax P 1,242,000
Situation 8:
24 – A 25 – A 26 – A
Situation 9:
27 – D
Add (Deduct):
Capital gains tax on shares of stock of domestic 22,500
Final tax on interest on bank deposit 20,000
Dividend from foreign corporation (80,000)
Interest on Philippine currency bank deposit (100,000)
Capital gain on shares of stock of domestic (150,000)
Allowance for bad debts 50,000
Taxable income P592,500
Situation 10:
28 – D
Net income per books P 850,000
Add (Deduct):
Interest income from bank deposit (5,500)
Inter-corporate dividends (5,000)
Gain from sale of shares in a domestic corporation (7,000)
Bad debts written off (6,500)
Quarterly income tax 65,000
Net income after charitable and other contributions 1,008,500
Add:
Charitable and other contributions 60,500
Net income before charitable and other contributions 1,069,000
Less:
Charitable and other contribution
Deductible in full 10,500
Deductible with limit
Actual 50,000
Limit (5% x 1,069,000) 53,450 50,000 60,500
Taxable net income 1,008,500
Tax rate 30%
Tax due (30%) 302,550
Less: Payments, first 3 quarters 65,000
Tax payable P 237,550
Situation 11:
29 – B 30 – B 31 – C 32 – C 33 – A 34 – C
Situation 12:
35 – B 36 – A 37 – A 38 – B 39 – C
Situation 13:
40 – C 41 – A 42 – C 43 – C
Situation 14:
44 – C 45 – A
Situation 15:
46 – C 47 – B 48 – A
Situation 16:
49 – D 50 – B 51 – A 52 – A 53 - C
Korosensei Company will be subject to MCIT starting 2019. It registered in 2014, count
4 years starting 2015 which is the year following its registration.
Gross Sales P10,425,000

Less: Cost of Sales 7,297,500
Gross Income P 3,127,500
Less: Operating expenses 989,010
Operating income P 2,138,490
Add: Other income 550,500
Taxable net income P 2,688,990
Rate 30%
RCIT P 806,697
RCIT P 806,697
Less: Creditable withholding taxes, first 3 quarters
(98,000 – 10,000) 88,000
Creditable withholding taxes, fourth quarter 33,600
Income tax still due P 685,097
Registered Unregistered
Gross Sales P121,700,000 P10,425,000
Less: Cost of sales 103,400,000 7,297,500
Gross income P18,300,000 P3,127,500
Less: Operating expenses - 989,010
Operating income
Add: Other income 550,500
Gross income/taxable net P18,300,000 P2,688,990
income
Rate 5% 30%
Tax due P915,000 P806,697
Total income tax due P1,721,697
Total income tax due P1,721,697

Less: Share of local government
(2/5 x 915,000) 366,000
Tax due to BIR P1,355,697
Less: Creditable withholding taxes, first 3 quarters 88,000
Creditable withholding taxes, fourth quarter 33,600
Income tax still due P1,234,097
Situation 17:
54 – C 55 – A
Gross sales (export) P45,500,000

Less: Direct costs 27,000,000
Tax rate 5%
Tax due P 925,000
Share of the National Government (3% x 18,500,000) P 555,000
Share of the local government (2% x 18,500,000) P 370,000
Gross sales (domestic) P24,500,000

Less: Direct costs (domestic sales) 14,700,000
Gross income (domestic sales) 9,800,000
Less: Deductible expenses 3,206,400
Taxable income P 6,593,600
Normal corporate income tax (6,593,600 x 30%) P 1,978,080

Minimum corporate income tax (9,800,000 x 2%) P 196,000
Tax due (higher) P 1,978,080
Income tax on export sales P 925,000

Income tax on domestic sales 1,978,080
Total P 2,903,080
Gross sales (45,500,000 + 24,500,000) P70,000,000

Less: Direct costs (27,000,000 + 14,700,000) 41,700,000
Less: Deductible expenses
Administrative expenses 5,650,000
Marketing expenses 2,720,000
Other operating expenses 1,330,000
Incidental losses 320,000
Other expenses related to the domestic sale 3,206,400 13,226,400
Taxable income P15,073,600
Normal corporate income tax (15,073,600 x 30%) P 4,522,080

Minimum corporate income tax (28,300,000 x 2%) P 566,000
Tax due (higher) P 4,522,080
Situation 18:
56 – B 57 – B 58 – C 59 – B
Basic community tax P 5

Additional community tax (200,000/1,000) 200
Total P205
Basic community tax P 500

Additional community tax
On property (2,500,000 x 2/5,000) 1,000
On gross receipts (1,500,000 x 2/5,000) 600 1,600
Total P2,100
Situation 19:
60 – D 61 – D 62 – A
Consideration P6,700,000
Fair market value 7,500,000
Higher P7,500,000
X CGT Rate 6%
CGT due P 450,000
Consideration P6,700,000
FMV 7,500,000
Higher P7,500,000
Divided by 1,000
Multiply by 15
DST due P 112,500
Local transfer tax (6,700,000 x 0.5%) P33,500
Situation 20:
63 – D 64 – C 65 – B 66 – C 67 – A
DST due (12,000 x 20 x 2/200) P2,400
Selling price (6,000 x 33) P198,000

Less: Acquisition cost (6,000 x 23) (138,000)
Capital gain P 60,000
CGT rate 15%
CGT due P 9,000
DST due (12,000 x 23 x 1.50/200) P2,070

Situation 21:
68 – C 69 – C 70 – A 71 – D 72 – B
CGT due (4M vs 4.2M vs 4.07M) 4.2M x 6% P252,000
DST due (4,200,000 x 15/1,000) P63,000
Situation 22:
73 – A 74 – A 75 – D
Situation 23:
76 – B 77 – B 78 – B 79 – B 80 – C 81 – D 82 – C 83 – A
Situation 24:
84 – B 85 – B 86 – D 87 – B
Situation 25:
88 – B 89 – A 90 – C 91 – D 92 – B
Situation 26:
93 – B 94 – B 95 – A
Situation 27:
96 – C 97 – A 98 – B 99 – C
Packaging materials
Actual input vat P2,400
2% x 22,400 448 P2,400
Supplies
Actual input vat P1,200
2% x 11,200 224 1,200
Transitional input tax P3,600
Presumptive input tax (330,000 x 4%) P13,200
Input VAT [(56,000 + 16,800)/1.12 x 12%] P7,800
Total creditable input taxes P24,600
Output VAT (700,000 x 12%) P84,000

Less: Input VAT 24,600
VAT Payable P59,400
Situation 28:
100 – B 101 – A
VAT on importation
[(20,000 + 500 + 200 + 600 + 100 + 300) x 12%] P2,604
Output VAT
[(896,000 – 56,000 – 22,400) x 12%] P87,600
Input VAT
Importation P 2,604
Goods (224,000 x 12/112) 24,000
Services (21,280 x 12/112) 2,280
Depreciable goods (112,000 x 12/112) 12,000
Excess input VAT – 2017 12,000 52,884
VAT Payable P34,716
Situation 29:
102 – B 103 – A 104 – C 105 – B
Situation 30:
106 – B 107 – B 108 – A
Situation 31:
109 – D 110 – D 111 – D 112 – D
Situation 32:
113 – A 114 – B 115 – D 116 – C
Situation 33:
117 – A 118 – B 119 – A
Situation 34:
120 – C 121 – A 122 – B
Situation 35:
123 – B 124 – C 125 – C 126 – A
VATable (800,000 + 600,000) P1,400,000

VAT Exempt 400,000
CASH BASIS P1,370,000

Deferred Income, Beginning (200,000 x 40%) 80,000
Accrued Income, Ending (300,000 x 60%) 120,000
Deferred Income, Ending (250,000 x 60%) (150,000)
Accrued Income, Beginning (200,000 x 40%) (80,000)
ACCRUAL BASIS P1,400,000
CASH BASIS P 380,000

Deferred Income, Beginning (200,000 x 60%) 120,000
Accrued Income, Ending (300,000 x 40%) 120,000
Deferred Income, Ending (250,000 x 40%) (100,000)
Accrued Income, Beginning (200,000 x 60%) (120,000)
ACCRUAL BASIS P 400,000
Output VAT (1,370,000 x 12%) P164,400
Input VAT (1370/1750 x 80,000) P62,629
ZV vs SP = SP 3,248,000 x 12% P389,760
Situation 36:
127 – A 128 – D 129 – C 130 – C 131 – B
Gross Receipt Tax Rate GRT

Dividends 800,000 0% -
Equity income in subsidiary 1,000,000 0% -
Rentals of property 4,000,000 7% 280,000
Rentals of safety deposit boxes 300,000 7% 21,000
Interest on Loans
not more than 5 years 4,000,000 5% 200,000
More than 5 years 6,400,000 1% 64,000
Interest income (net of 20% FWT) 1,000,000 7% 70,000
Interest income (net of 15% FWT) 500,000 7% 35,000
Net trading gain (net of trading 1,350,000 7% 94,500
loss of P750,000)
Gross Receipt Tax 764,500

Dividends 800,000 0% -
Equity income in subsidiary 1,000,000 0% -
Interest on Loans
Passed on clients 200,000 7% 14,000
More than 5 years 6,400,000 1% 64,000
Passed on clients 64,000 7% 4,480
loss of P750,000)
Dividends 800,000 5% 40,000
Equity income in subsidiary 1,000,000 5% 50,000
Interest on Loans
More than 5 years 6,400,000 1% 64,000
loss of P750,000)
Situation 37:
132 – B 133 – C 134 – C 135 – D 136 – B
Situation 38:
137 – B 138 – D 139 – C 140 – A 141 – C
Abdominoplasty Breast Liposuction Total

Augmentation
Gross Receipts 1,300,000 1,500,000 2,000,000 4,800,000
Divided by 112% 112% 112% 112%
Gross Receipts 1,160,714 1,339,286 1,785,714 4,285,714
(excluding VAT)
Divided by 105% 105% 105% 105%
Taxable base 1,105,442 1,275,510 1,700,680 4,081,633
Excise tax rate 5% 5% 5% 5%
Excise Tax 55,272 63,776 85,034 204,082
Taxable base Ad valorem rate Excise tax

Abdominoplasty 1,300,000 5% 65,000
Breast Augmentation 1,500,000 5% 75,000
Liposuction 2,000,000 5% 100,000
Professional fees 1,600,000 5% 80,000
Total Excise Tax 320,000
Abdominoplasty Breast Liposuction Professional Total

Augmentation Fee
Gross 1,300,000 1,500,000 2,000,000 1,600,000 6,400,000
Receipts
Divided by 112.6% 112.6% 112.6% 112.6% 112.6%
Gross 1,154,529 1,332,149 1,776,199 1,420,959 5,683,837
Receipts
(excluding
VAT)
Excise tax 5% 5% 5% 5% 5%
rate
Excise Tax 57,726 66,607 88,810 71,048 284,192
Rate Computation:
Gross Receipt before taxes 100%
Excise tax rate 5%
Gross Receipt (VAT Exclusive) 105%
Multiply by 112%
Gross Receipt (VAT inclusive) 117.6%
Less: Excise tax rate 5%
Gross Receipt rate excluding excise tax 112.6%
Abdominoplasty Breast Liposuction Professional Fee
Augmentation
Gross Receipts 1,300,000 1,500,000 2,000,000 1,600,000
Divided by 105% 105% 105%
Taxable base 1,238,095 1,428,571 1,904,762 1,600,000
Excise tax rate 5% 5% 5% 5%
Excise Tax 61,905 71,429 95,238 80,000
Total Excise Tax 308,571
Situation 39:
142 – A 143 – D 144 – C 145 – B 146 – C
Landed Cost per Import P142,000,000

Multiply by: 12%
VAT – Should be P 17,040,000
VAT – Recorded on books 17,000,000
Increase of P 40,000
Input VAT on goods P18,000,000.00

Decrease input VAT (Feb and Mar) (550,000.00)
VAT on services (1,600,000 x 3/28) 171,428.57
Adjustment to Input VAT 40,000.00
Decrease in Importation – February 2019 100.00
Correct input VAT – March 2019 P17,661,528.57
Input VAT on services P3,500,000.00

Error in recording (171,428.57)
Decrease input VAT – Services (640,000.00)
Unrecorded input VAT 52,000.00
Services rendered non-resident (21L BIR Form) 140,000.00
Withholding VAT on Services – Feb 2019 (390,000.00)
Unrecorded employee reimbursement (10,000.00)
Input VAT on services to be claimed – March 2019 P2,480,571.43
P70,000 – Amortization of capital goods purchased for more than 1M
Correct input VAT – March 2019 P17,661,528.57

Input VAT on services to be claimed – March 2019 2,480,571.43
Amortization of capital goods purchased for more than 1M 70,000.00
Total Input VAT P20,212,100.00
Situation 40:
147 – D 148 – B 149 – C 150 – A
Ratio for expansion (5,000/20,000) 25%
New Product Old Product TOTAL

ITH ITH – 25% Non- ITH – 75%
Sales 12,000,000 5,000,000 15,000,000 32,000,000
Cost of Sales (4,000,000) (750,000) (2,250,000) (7,000,000)
Deductions (2,000,000) (4,000,000) (12,000,000) (18,000,000)
Taxable Income 6,000,000 250,000 750,000 7,000,000
New Product P6,000,000

Old Product 250,000
Taxable income covered by ITH P6,250,000
RCIT (750,000 x 30%) P225,000

MCIT (12,570,000 x 2%) 255,000
Tax Payable P255,000
RCIT (7,000,000 x 30%) P2,100,000

MCIT (25,000,000 x 2%) 500,000
Tax Due P2,100,000
Tax Paid (255,000)
Tax Savings P1,845,000
Situation 41:
151 – D 152 – D 153 – B 154 – A 155 – C
(500,000,000 x 1/20 of 1%) P250,000
• Tax on capital investment shall be imposed on newly started business at the rate
of 1/20 of 1% of the capital investment (Sec. 136 and 137, 2nd paragraph of the
Local Government Code.)
Revenues, 2020 P330,000,000

Accounts receivable, 2020 (75,000,000)
Unearned revenues, 2020 15,000,000
Taxable base P270,000,000
Multiply by tax rate 50% of 1%
Local Tax Liability – 2021 P 1,350,000
• Tax on business of persons engaged in the printing and/or publication of books,

cards, posters, leaflets, handbills, certificates, receipts, pamphlets, and other
similar nature shall be 50% of 1% of the gross annual receipts for the preceding
calendar year. (Sec. 136 of the Local Government Code)
2020 2021
Number of trucks 100 150
Multiply by Tax per truck 500 500
Delivery Van Tax Due 50,000 75,000
2020 2021
Number of professional employees 150 500
Multiply by Tax per person 300 300
Professional Tax Due 45,000 150,000
Municipalities has no power/authority to imposed tax on business of printing and

publication.
Situation 42:
156 – D 157 – C 158 – A 159 – A
(1,000,000 + 2,300,000) * 12% = P396,000
(1,200,000 + 2,400,000) * 12% = P432,000
Output VAT P432,000

Input VAT (120,000)
P312,000
Output VAT P396,000
Input VAT (150,000)
P246,000
Situation 43:
160 – B 161 – C 162 – A 163 – B
Situation 44:
164 – D 165 – C 166 – A 167 – C
Selling Price P10,000,000

Cost (5,000 x P1,000) (5,000,000)
Net capital gain P 5,000,000
Multiply by rate x 15%
Capital gains tax due P 750,000
BV per share (30M - 5M)/10,000 shares = P2,500/share

Fair Value (5,000 x P2,500) P12,500,000
Selling Price (10,000,000)
Excess P 2,500,000
Less: Exemption (250,000)
Net Gift P 2,250,000
Donor’s tax rate P 135,000
DST due [(5,000,000/200)* P1.50] P 37,500
Gross Gift P12,500,000

Less: Exemption (250,000)
Net Gift P12,250,000
Donor’s tax rate P 735,000
Situation 45:
168 – A 169 – C 170 – B 171 – A 172 – A 173 – C 174 – A
Interest (100,000/80% x 20%) P25,000

Royalties (125,000 x 20%) 25,000
TOTAL P50,000
CGT on Real Property (10M x 6%) P600,000

CGT on Shares not listed in the stock exchange (100k x 15%) 15,000
TOTAL P615,000
Sales P20,000,000
Cost of sales (5,000,000)
Gross Profit P15,000,000
Dividend Income – Foreign Corporation 30,000
Capital Gain (100,000 – 96,000) 4,000
Total Income P15,034,000
Fringe Benefits (1,040,000 + 325,000) (1,365,000)
Fringe Benefits Tax (325,000/65% x 35%) (175,000)
Salaries (5,350,000)
EAR Expense (20M x 0.5%) 100,000 VS 550,000 (100,000)
Rent Expense (1,200,000)
Depreciation Expense (700,000)
Bad Debt Expense (105,000 x 1/3) (35,000)
Interest Expense (372,288)
Net Taxable Income P 5,736,713
RCIT P 1,481,793
MCIT P 175,898
Tax Due P 1,481,793
CWT (68,000)
Tax Paid (30,000)
Tax Payable P 1,383,783
Interest Expense P400,000

Interest Income (125,000 x 2/12 x 33%) (6,875)
(125,000 x 10/12 x 20%) (20,833)
Net Interest Expense P372,292
RCIT
(5,736,713 x 25.83%) P1,481,793
(30% x 2/12) + (25% x 10/12) 25.83%
MCIT
(15,034,000 x 1.17%) P175,898
(2% x 2/12) + (1% x 10/12) 1.17%
(100,000 x 15%) + (400,000 x 2%) P23,000

Situation 46:
175 – A 176 – B 177 – B 178 – B 179 – A 180 – C
October 2020:
Output VAT
VATable (500,000 x 12%) P60,000
Sales to government (300,000 x 12%) 36,000 P96,000
Less: Allowable Input VAT

Input tax carried over from previous period P 3,900
Purchase of capital goods exceeding 1M (3M x 12%) 360,000
Purchase of goods other than capital goods (70k x 12%) 8,400
Domestic purchase of services (220,000 x 12%) 26,400
Total Available input VAT P398,700
Less: Deductions from input VAT
Purchase of capital goods exceeding 1M (360k x 35/36) P350,000
Input Tax on Sale to govt closed to expense
Input tax – sale to govt P24,000
Add: ratable portion of input tax not
Directly attributable (300/1400 x 10k) 2,143
Total P26,143
Standard input VAT (300k x 7%) (21,000) 5,143
Input tax attributable to exempt sales
Input tax – exempt sales P3,600
Directly attributable (400/1400 x 10k) 2,857 6,457
Total P361,600 37,100
Net VAT Payable P58,900
Less: VAT withheld on sales to government (300k x 5%) 15,000
Total amount payable (overpayment) P43,900
November 2020:
Output VAT
VATable (200,000 x 12%) P24,000

Purchase of capital goods exceeding 1M (240k x 59/60) 236,000
VAT refund/TCC refund 2,000
Total P588,600 11,000
December 2020:
Output VAT
VATable (1,000,000 x 12%) P120,000

Purchase of goods other than capital goods(200k x 12%) 24,000
Purchase of capital goods exceeding 1M
(360k x 33/36) + (240k x 58/60) P562,000
Input Tax on Sale to govt closed to expense
Input tax – sale to govt P36,000
Directly attributable (400/2250 x 38k) 6,756
Total P42,756
Standard input VAT (400k x 7%) (28,000) 14,756
VAT Refund/TCC claimed 2,000
Total P602,089 70,211
Less: Monthly VAT payments (43,900 + 13,000) 56,900
VAT withheld on sales to government (400k x 5%) 15,000
October 2021:
Output VAT
VATable (500,000 x 12%) P60,000

Total P356,457 42,243
Less: VAT withheld on sales to government (300k x 12%) 36,000
November 2021:
Output VAT
VATable (200,000 x 12%) P24,000

Purchase of capital goods exceeding 1M (240k x 59/60) 236,000
VAT refund/TCC refund 2,000
Total P588,600 11,000
December 2021:
Output VAT
VATable (1,000,000 x 12%) P120,000

Purchase of goods other than capital goods(200k x 12%) 24,000
Purchase of capital goods exceeding 1M
(360k x 33/36) + (240k x 58/60) P562,000
VAT Refund/TCC claimed 2,000
Total P587,333 84,967
Less: Monthly VAT payments (17,757 + 13,000) 30,757
VAT withheld on sales to government (400k x 12%) 48,000
Total amount payable (overpayment) P 4,276
Situation 47:
181 – D 182 – C 183 – A
Situation 48:
184 – D 185 – A 186 – A 187 – A
January 26:
27 Total gifts in this return (1/2 x 500,000) P250,000

33 Total deductions (Mortgage assumed by the donee 1/2 x 100,000) 50,000
34 Total net gifts in this return 200,000
35 Add: Total prior net gifts during the calendar year -
36 Total net gifts 200,000
37 Less: Exempt gift 250,000
38/14 Total net gifts subject to tax (50,000)
15 Applicable donor’s tax rate 6%
16 Total donor’s tax due -
October 29
27 Total gifts in this return (1/2 x 300,000) P150,000

33 Total deductions allowed -
35 Add: Total prior net gifts during the calendar year January 26
(250,000 – 50,000) 200,000
37 Less: Exempt gift (250,000)
38/14 Total net gifts subject to tax 100,000
16 Total donor’s tax due P6,000
17A Less: Payments for prior gifts during the calendar year -
18 Tax payable P6,000
December 20:
Selling price (1/2 x 300,000) P150,000

Less: Value in the hands of the donor (1/2 x 200,000) 100,000
Capital gain 50,000
Tax rate 15%
Capital gains tax P 7,500
27 Total gift in this return (225,000 – 150,000) P75,000

33 Total deductions allowed -
35 Add: Total prior net gifts during the calendar year
January 26 (500,000 x ½ = 250,000 – 50,000) 200,000
October 29 (300,000 x ½) 150,000 350,000
37 Less: Exempt gift (250,000)
38/14 Total net gifts subject to tax 175,000
16 Total donor’s tax due 10,500
17A Less: Payments for prior gifts during the calendar year
(350,000 – 250,000 x 6%) 6,000
18 Tax payable P4,500
Situation 49:
188 – D 189 – B 190 – A
Situation 50:
191 – A 192 – B 193 – B 194 – B 195 – A

Interest income from bank deposit (P5,500)
Dividends from domestic corporation (5,000)
Gain from sale of unlisted shares of a domestic corporation (7,000)
Loss sustained from a family member 2,500
Bad debts written off (6,500)
Contribution to government exclusively for public purpose 50,000
Contribution to government's priority program in education 10,500
Net income before charitable and other contributions P1,069,000
Charitable contributions:
Full P10,500
With Limit:
Actual P50,000
(1,069,000 x 5%) 53,450 50,000 (60,500)
Taxable income P1,008,500
Tax rate 25%
Tax Due P 252,125
Less: Quarterly income tax payments 65,000
Tax still due P 187,125
Final tax:
Interest income (5,500 x 20%) P1,100
CGT (7,000 x 15%) 1,050 2,150
Total Tax Expense:

RCIT P252,125
FWT 1,100
CGT 1,050
P254,275
Situation 51:
196 – D 197 – D 198 – D 199 – C
Net income/loss per books P50,000,000

Add: Bad debts expense 1,000,000
Interest Expense – major stockholder 4,000,000
Item 4 P55,000,000
Less: Interest income 400,000
Write off 600,000 1,000,000
Item 10 P54,000,000
Quarterly payments P9,000,000

CWT 1,200,000
P10,200,000
Situation 52:
200 – C 201 – A 202 – C 203 – B 204 - C

Operating expenses:
Salary Expense (5,500,000)
Wages Expense (7,400,000)
Depreciation Expense (10,500,000)
Rental Expenses (15,000,000)
EAR Expense:
Actual P750,000
Limit (147.2M x 0.5%) 736,000 (736,000)
R&D Expense (3,500,000)
Operating income P39,864,000
Other income:
Gain on sale – debt securities at FVPL 1,550,000
Interest income from trades receivable 750,000
Interest expense P3,500,000
Interest income (1,920,000 x 20%) (384,000) (3,116,000)
Taxable income before contributions P39,048,000
Charitable contributions:
Actual P5,000,000
Limit (39,048,000 x 5%) 1,952,400 (1,952,400)
Taxable net income P37,095,600
Tax rate 25%
RCIT/Tax due 9,273,900
CGT:
On real property (12M x 6%) P720,000
On shares of stocks (1,280,000 x 15%) 192,000
Total P912,000
FWT (1,920,000 x 20%) P384,000
RCIT P9,273,900
CGT 912,000
FWT 384,000
Total income tax expense P10,569,900
Situation 53:
205 – C 206 – A 207 – A 208 – D
Revenues:
Rent (4,200,000 + 600,000) P4,800,000
Sale (1,600,000 x 2) 3,200,000 P8,000,000
Less: Expenses
Cost of Sales (3.2M - 750k) 2,450,000
Salaries and Wages 750,000
EAR Expense* 43,000
Advertising expense 60,000
Interest expense** 110,000
Taxes and licenses*** 90,000
Tax rate 25%
Tax payable P 996,750
Less: Tax paid 616,250
Tax still payable P 380,500
Less: Withholding tax on rent (4.8M x 5%) 240,000
Tax still due P 140,500
*Services 48,000 27,000 27,000

Goods 16,000 18,000 16,000
Total EAR expense 43,000
**Interest expense 120,000

Interest income (40k/80% x 20%) (10,000)
Adjusted interest expense 110,000
***DST 60,000
Permits and licenses 30,000
Situation 54:
209 – D 210 – A 211 – D 212 – A
Professional fees P50,000,000

Cash prize 5,500,000
Gains 4,000,000
Total Gross income P59,500,000
Salaries P10,000,000
Rentals 7,500,000
EAR Expense (750k VS 50M x 1% = 500k) 500,000
Total deductions P18,000,000
Itemized deductions:
Deductions (18,000,000)
OSD:
OSD (40% x 59,500,000) (23,800,000)
A:
Itemized deductions
Gross income – A 4,000,000
Deductible expense (2,500,000)
Dividend – FC 70,000
Share in GPP (35.7M x 50%) 17,850,000
Net income 19,420,000
8M P2,410,000
11,420,000 x 35% 3,997,000
Tax due P6,407,000
OSD

OSD (6M x 40%) (2,400,000)
Share in GPP (35.7M x 50%) 17,850,000
Dividend – FC 70,000
8M P2,410,000
13,520,000 x 35% 4,732,000
Tax due P7,142,000
Situation 55:
213 – A 214 – B 215 – B 216 – B
Resident Citizen
Gross income
Within [(85,000 x P50) + 1,380,000] P5,630,000
Without (30,000 x P50) 1,500,000 P7,130,000
Allowable deductions (1,175,000)
2M P 490,000
3,955,000 x 32% 1,265,600
Tax due 1,755,600
Tax credit (4,500 x P50) (225,000)
Tax payable 1,530,600
Non-resident Citizen
Taxable net income (5,630,000 – 587,500) P5,042,500
2M P 490,000
3,042,500 x 32% 973,600
Tax due 1,463,600
NRA-NETB
Tax payable (5,630,000 x 25%) P1,407,500
Situation 56:
217 – B 218 – C 219 – B 220 – B
Revenues P20,000,000
Sales to senior citizen (1,600,000)
Medicines ( 600,000)
Revenue – services P17,800,000
Receivables – 12/31/2018 400,000
Receivables – 3/31/2019 (300,000)
Cash collections P17,900,000
Rate 12%
Output VAT P 2,148,000
Sales: Goods (2,000,000 + 600,000) P 2,600,000

Services 17,900,000
Total P20,500,000
Deductible input VAT (600,000 x 17,900,000/20,500,000) P523,902
Sales P20,500,000
Cost of services and cost of goods sold (17,000,000)
Gross income P 3,500,000
OPEX (3,000,000 – 300,000) (2,700,000)
EAR Expense* (192,000)
Senior Citizen Discount (400,000)
Input VAT charged to expense (600,000 – 523,902) (76,098)
Taxable net income P 131,902
Tax rate 30%
Income tax due P 39,571
*EAR:
Goods 13,000 (2600/20500 x 300,000) 38,049 13,000
Services 179,000 (17900/20500 x 300,000) 261,951 179,000
192,000
If OSD:
OSD (40% x 3,500,000) (1,400,000)
Tax rate 30%
Tax due P 630,000
Situation 57:
221 – A 222 – C 223 - A
Zero; because Jokoy Company is on income tax holiday
SCIT (41,700,000 x 5%) P2,085,000
No output tax; separate customs territory, exporter – ZERO-RATED
Situation 58:
224 – A 225 – C
2019 2020 2021 2022

Net income 200,000 500,000 (100,000) 600,000
NOLCO - - - (100,000)
Income(Loss) 200,000 500,000 (100,000) 500,000
RCIT 60,000 150,000 - 150,000
MCIT - 100,000 120,000 140,000
Higher 60,000 150,000 120,000 150,000
Excess MCIT - - - (120,000)
Tax payable 60,000 150,000 120,000 30,000
Situation 59:
226 - D 227 - A 228 - B
Taxable income 300,000

Bad Debts (5,000)
R&D (100,000)
Depreciation (40,000)
Taxable income before contributions 155,000
Limit 10%
Allowed contribution 15,500
Contribution in full 50,000
TOTAL ALLOWABLE CONTRIBUTION 65,500
Charitable Contribution 65,500

Bad Debts 5,000
R&D 100,000
Depreciation 40,000
ALLOWABLE DEDUCTION 210,500
Taxable Income Before Deductions 300,000

Less: Allowable Deductions 210,500
TAXABLE INCOME 89,500
Situation 60:
229 - B 230 - B 231 - A 232 – C
VAT due [(1,400,000 + 200,000 + 10,000 + 5,000 + 7,000) x 12%] 194,640
Total compensation 30,000,000

Preferential 150% 45,000,000
Gross Income 50,000,000

Allowable Deductions (35,000,000–100,000) 34,900,000
Taxable income 15,100,000
TAX DUE 4,530,000
Situation 61:
233 - C 234 - A 235 - C 236 – C
Share in the partnership 1,800,000

Taxable portion 60% 1,080,000
ADD: Taxable Compensation 1,210,000
TOTAL TAXABLE INCOME 2,290,000
TAX DUE 582,800
Share in the partnership 1,800,000

ADD: taxable business income 800,000
TOTAL 2,600,000
Taxable income 60% 1,560,000
TAX DUE 358,000
Situation 62:
237 - C 238 - D 239 – D

Allowable Deductions (400,000)
TAX DUE 666,000
Gross Receipts 3,600,000

OSD 40% 1,440,000
Capital Gains Tax 6% 120,000

Final Tax on Royalty 10% 15,000
Final Tax on Interest 2,000
TOTAL FINAL TAX 137,000
Situation 63:
240 - A 241 - A 242 - A 243 - C 244 – D
Gross receipts
Rentals 450,000
RPT paid by lessee 45,000 495,000
Itemized deductions:
Expenses 160,000
RPT paid to LGU 70,000 (230,000)
NI from operations 265,000
Add: Non-operating income:
Capital gains
1) Foreign shares 200,000
2) Liquidating div. 75,000 275,000
Capital losses
1) Toyota car 100,000
2) Worthless shares 25,000 (125,000) 150,000
Taxable net income 415,000
Stock transaction tax (100,000 x 0.006) 600
CGT (800,000 x 6%) 48,000

Situation 64:
245 - C 246 - D 247 – B 248 – B
Revenue on account 3,500,000

Less: increase in AR 200,000
Total VATable receipts 3,300,000
VAT 12%
Output VAT 396,000
Purchases, directly attributable to VAT customers

(P300,000 x 12%) P 36,000
Purchases, cannot be attributed
(200,000 x 12% x 3.5/4) 21,000
Purchase of equipment
(600,000 x 12% x 3.5/4) 63,000
Creditable input VAT P 120,000
* Allocation is based on vatable sales 3,500,000 over total sales of 4,000,000

(including vat exempt sales of 500,000 to senior citizen).
Gross Revenue P 3,500,000

Gross Receipts from senior citizens 500,000
Less: Direct Cost 2,000,000
Operating Expense P 1,000,000

Senior citizen discount 100,000
Input VAT
(P200,000 x 12% x (.5/4)) 3,000
(P600,000 x 12% x (.5/4)) 9,000
Total Allowable Deduction 1,112,000
(allocation is based on vat exempt sales 500,000 over total sales 4,000,000)
Situation 65:
249 – B 250 – B 251 – B

Less: Sales Returns 200,000
Net Sales P 3,300,000
VAT Rate 12%
Output VAT P 396,000
Purchases (P1,000,000 x 12%) P 120,000

Supplies (600,000 x 12% x 40%) 28,800
Services (500,000 x 12% x 60%) 36,000
Creditable input VAT P 184,800

Less: Sales Returns 200,000
Net Sales P 3,300,000
Less: Cost of Sales (Purchases1M-150,000 increase inventory) 850,000
Less: Supplies P 600,000
Services 500,000
Operating Expense 200,000
Input VAT (600,000x12%x60%) 43,200
(500,000x12%x40%) 24,000 1,367,200
Taxable Income P 1,082,800
Situation 66:
252 - A 253 - A 254 – D 255 – A
Land P 9,000,000
Assessed level 50% P 4,500,000
Building P 6,000,000
Assessed level 75% 4,500,000
Total Assessed Value P 9,000,000
Assessed Value P 9,000,000

Tax Rate 2%
Basic Real Property Tax for Mabalacat City P 180,000
Situation 67:
256 - B 257 - A 258 - D 259 - B 260 - B 261 - A 262 - D 263 – D
264 - B 265 - B 266 - C 267 - D 268 – A
a) Outright Method
2016 2017 2018 2019
Rental - - 240,000 240,000
Advance rental (2 years) 480,000 - - -
Annual RPT paid by lessee 10,000 10,000 10,000 10,000
Income from leasehold improvement - - 2,800,000 -
Total income 490,000 10,000 3,050,000 250,000
(a) Spread-out Method

2016 2017 2018 2019
Rental - - 240,000 240,000
Advance rental (2 years) 480,000 - - -
Annual RPT paid by lessee 10,000 10,000 10,000 10,000
Income from leasehold improvement - - 42,000 84,000
Total income 490,000 10,000 292,000 334,000
Schedule:
Cost of leasehold improvement 2,800,000
Less estimated accumulated depreciation
at the end of the lease:
(₱2.8 M/20 years) x 12.5 years (1,750,000)
Est. Book value, at the end of lease 1,050,000
Income from LHI per year:

₱1.05 M/12.5 years 84,000 per year
2016 2017 2018 2019

Rental expense 240,000 240,000 240,000 240,000
RPT paid to lessor 10,000 10,000 10,000 10,000
Depreciation of LHI - - 112,000 224,000
Total deductible expense 250,000 250,000 362,000 474,000
Schedule:
Cost of LHI 2,800,000
Divided by shorter of:
(a) Useful life of LHI 20
(b) Remaining term of lease 12.5 12.5
Depreciation expense per year 224,000
SITUATION 68:
269 - C 270 - C 271 - A 272 – D
2018 2019 2020 2021

Net sales 3,925,000 4,810,000 5,939,000 6,945,000
Less: COGS (1,950,000) (2,710,000) (3,465,000) (4,180,000)
Gross income from Operations 1,975,000 2,100,000 2,474,000 2,765,000
Add: Other taxable income 25,000 160,000 26,000 45,000
Total gross income 2,000,000 2,260,000 2,500,000 2,810,000
Less: Itemized deductions (1,900,000) (2,000,000) (2,520,000) (2,420,000)
Net taxable income 100,000 260,000 (20,000) 390,000
RCIT (30% in 2018, 2019;
25% in 2020; 20% in 2021) 30,000 78,000 0 78,000
MCIT (2% in 2018, 2019;
1.5% in 2020; 1% in 2021) 40,000 45,200 37,500 28,100
Tax due (Higher of RCIT or MCIT) 40,000 78,000 37,500 78,000
Less: Tax credits - (10,000) - (37,500)
Tax still due 40,000 68,000 37,500 40,500
EMCIT: (2018-2021) 10,000

(2020-2023) 37,500
NOLCO: (2020-2025) 20,000
SITUATION 69:
273 - D 274 - B 275 – C
Gross sales 50,000,000

Less: Cost of sales (35,000,000)
Less: Allowable deductions:
Additional training expense deduction:
½ of training expense 1,500,000
Limit (10% of direct labor wages)1,000,000 1,000,000
Less: 20% of INTEREST income subject to FT (25,000) (13,575,000)
Net taxable income 1,425,000
SITUATION 70:
276 - A 277 - D 278 – B
TAX TABLE:
1st Quarter 2nd Quarter 3rd Quarter
Gross receipts 720,000 720,000 720,000
Less: Cost of services (60,000) (60,000) (60,000)
Gross income from operations 660,000 660,000 660,000
Less: Itemized deductions:
Rental expense (90,000) (90,000) (90,000)
OPT paid (21,600) (21,600) (21,600)
Transportation/fuel expense (12,000) (12,000) (12,000)
Net income from operations 536,400 536,400 536,400
Add: Taxable income/(loss)
from previous quarter - 536,400 1,072,800
Share in GPP net income - - -
Non-operating income - - -
Net taxable income 536,400 1,072,800 1,609,200
Tax (table) 64,100 211,840 372,760
Less Credits:
(1) Excess tax credits (15,500) (15,500) (15,500)
(2) Tax payments for previous
quarters - (12,600) (124,340)
(3) CWT for previous quarters
(Form 2307) - (36,000) (72,000)
(4) CWT for this quarter
(Form 2307) (36,000) (36,000) (36,000)
Tax Payable 12,600 111,740 124,920
Annual:
Gross compensation income 850,000
Less: Exempt compensation:
SSS premiums, Pag-ibig, and union dues (6,000)
13th month pay and other benefits (90,000)
Taxable Compensation income 754,000
Add: Income from business:
Less: Cost of services (240,000)
Less: Itemized deductions:
Rental expense (360,000)
OPT paid (86,400)
Transportation/fuel expense (48,000)
Net income from operations 2,145,600
Add: Non-operating income -
Share in GPP net income - 2,145,600
Total taxable income 2,899,600
Tax (table) 777,872
Less Credits:
(1) Excess tax credits (15,500)
(2) Tax payments for previous quarters (249,260)
(3) CWT for previous quarters (Form 2307) (108,000)
(4) CWT for this quarter: Form 2307 (36,000)
Form 2316 (60,000)
Tax Payable 309,112
OSD:
1st Quarter 2nd Quarter 3rd Quarter

Gross receipts 720,000 720,000 720,000
Less: Cost of services - 0 if OSD - - -
Gross income from operations 720,000 720,000 720,000
Less: OSD (40%) (288,000) (288,000) (288,000)
Net income from operations 432,000 432,000 432,000
Add: Taxable income/(loss) from
previous quarter - 432,000 864,000
Share in GPP net income - - -
Non-operating income - - -
Net taxable income 432,000 864,000 1,296,000
Tax (table) 38,000 149,200 278,800
Less Credits:
(2) Tax payments for previous quarters - 0 (61,700)
(3) CWT for previous quarters (Form 2307) - (36,000) (72,000)
(4) CWT for this quarter (Form 2307) (36,000) (36,000) (36,000)
Tax Payable 0 61,700 93,600
Annual:
Gross compensation income 850,000

Add: Income from business:
Less: Cost of services (0 if OSD) 0
Less: OSD (40%) (1,152,000)
Net income from operations 1,728,000
Share in GPP net income - 1,728,000
Total taxable income 2,482,000
Tax (table) 644,240
Less Credits:
Form 2316 (60,000)
Tax Payable 269,440
8% optional income tax rate
1st Q 2nd Q 3rd Q

Gross receipts in quarter 720,000 720,000 720,000
Add: Non-operating income - - -
Total income for the quarter 720,000 720,000 720,000
Add:
Total income from previous quarters - 720,000 1,440,000
Cumulative taxable income as of
this quarter 720,000 1,440,000 2,160,000
Less: Amount allowed as deduction - - -
Taxable Income 720,000 1,440,000 2,160,000
Tax rate (8%) 8% 8% 8%
Tax due 57,600 115,200 172,800
Less tax credits:
(2) CWT Withheld (36,000) (72,000) (108,000)
(3) Taxes paid in previous quarters - (6,100) (27,700)
Tax still due or tax payable 6,100 21,600 21,600
Annual Gross compensation income 850,000

Tax (table) 118,500
Add: Tax on business income
Total Income 2,880,000
Less: ₱250,000; 0 if mixed income earner 0
Taxable income (loss) 2,880,000
Tax (8%) 230,400
Total Tax Due 348,900
Less Credits:
Form 2316 (60,000)
Tax Payable 80,100
SITUATION 71:
279 - A 280 – D
Net income before tax 1,400,000

Income tax (30%) (420,000)
Net Income after tax 980,000
Jun 80% Jon 20%

Share 784,000 196,000
Dividends 72,000 18,000
Interest 8,000 2,000
TOTAL 864,000 216,000
CWT 10%. 86,400 21,600
SITUATION 72:
281 - B 282 – A
Rent expense 240,000

RPT 20,000
Semi-annual depreciation expense 156,521
TOTAL 416,521
Building 3,600,000
Divided by economical life 11.5 years 313,043
SITUATION 73:
283 - D 284 – A
2018 2019
Taxable Income 35,000 395,000
Tax Due 10,500 118,500
SITUATION 74:
285 - D 286 - D 287 - C 288 – C
SITUATION 75:
289 - A 290 – A
Selling Price (100,000 shares@P100) P10,000,000

Less: Average cost (100,000 shares@P50) 5,000,000
Gain 5,000,000
CGT Rate 15%
Capital Gains Tax P 750,000
Computation of Average Cost

(50,000 shares@P50) 2,500,000
(50,000 shares@P60) 3,000,000
5,500,000
÷ Total number of shares 110,000
Average cost P 50
Selling Price (100,000 shares@P100) P10,000,000

Divided by 200
Base 50,000
DST per document P 2
Total DST P 100,000
SITUATION 76:
291 - B 292 – D
Gross Revenue P 800,000

Less: Optional Standard Deduction 320,000
Taxable Income P 480,000
Add: Other Income
Gain from long-term Capital Asset 25,000
Gross Receipt/Revenue P 800,000
Add: Other Income 25,000
Less: Tax Exemption 250,000
Tax Base P 575,000
Tax Rate 8%
GRT due P 46,000
SITUATION 77:
293 – B 294 - B
General Professional Partnership

Income P1,000,000
Bong Billy
Share in Partnership P 700,000 P 300,000
Add: Own Income 400,000 450,000
Less: Cost of Sales 30,000 -
Expenses 230,000 -
OSD - 180,000
Total Taxable Income P 840,000 P 570,000
SITUATION 78:
295 - D 296 - C 297 – C
Income of A company P 2,000,000

Less: Expenses 1,200,000
Net Income of A P 800,000
Share in the Joint Venture 10,000,000
Taxable Income of Joint Venture, A. Co. P10,800,000
SITUATION 79:
298 - A 299 - C 300 - C 301 - C 302 – C
Exclusive Common Total

34 Gross estate P8,000,000 P16,000,000 P24,000,000
35 Less: Ordinary deductions 3,780,000 500,000 4,280,000
36 Estate after ordinary deductions 4,220,000 15,500,000* 19,720,000
37 Less:Special deductions
37A Standard deduction 5,000,000
37B Family house
(1/2 x 11,500,000) 5,750,000
37C Others (specify) -
37D Total special deduction 10,750,000
38 Net estate 8,970,000
39 Less: Share of surviving spouse (1/2 x 15,500,000*) 7,750,000
40 Net taxable estate 1,220,000
17 Applicable tax rate 6%
18 Estate tax due P 73,200
Gross estate: Exclusive Community

Real property in Masbate P11,500,000
Real property in Quezon City P8,000,000
Real property in Batangas - 4,000,000
Cash supported by a bank certification - 500,000
Total P8,000,000 P16,000,000
Ordinary deductions Exclusive Community

Unpaid mortgage (Real property in Masbate) P500,000
Unpaid mortgage (Real property in Quezon City) 300,000 -
Property previously taxed (vanishing deduction) 3,480,000 -
Total P3,780,000 P500,000
SITUATION 80:
303 - A 304 - A 305 - C 306 – A
Sellng price of one condo unit P1,000,000

Selling price, parking spaces (500,000 x 3) 1,500,000
Selling price, 2 adjacent condo units (2,500,000 x 2) 5,000,000
Total P7,500,000
Beginning January 1, 2021, the VAT exemption shall only apply to sale of real
properties not primarily held for sale to customers or held for lease in the ordinary
course of trade or business, sale of real property utilized for socialized housing
as defined by Republic Act No. 7279, sale of house and lot, and other residential
dwellings with selling price of not more than Two million pesos (P2,000,000)(Sec. 4-
109-1 B (p) (4) RR 4-2021)
Total selling price P7,500,000

Tax rate 12%
Output tax P 900,000
On supplies (300,000 x 12%) P36,000
On computer (capital goods) (250,000 x 12% = 30,000/48 months )* 625
On imported SUV (capital good) (1,400,000 x 12% = 168,000/60 months)* 2,800
On office rental (100,000 x 12%) 12,000
Total P51,425
Aggregate acquisition cost of capital goods during the month:

Five (5) units of computers P 250,000
One vehicle for land transport 1,400,000
Aggregate acquisition cost P 1,650,000
16B Output Tax P900,000

21 Total Allowable Input Tax 51,425
22 Net VAT Payable P848,575
VAT-registered persons shall pay the value-added tax on a monthly basis. Monthly VAT
declarations shall remain until December 31, 2022. Beginning January 1, 2023, the
filing and payment required shall be done within twentyfive (25) days following the
close of the taxable quarter.
SITUATION 81:
307 - A 308 – B
Cash sales P1,360,000

Gross receipts P1,984,200
Tax rate 18%
Amusement tax P 357,156
Cash sales P400,000

Taxable sales 643,000
Tax rate 12%
Output tax 77,160
Less: Input tax VAT payments on expenses
(12% of P308,640*) 37,037
Value-added tax payable P40,123
* Operating expenses (60% x 643,000) P385,800

VAT –paid expenses (80% x P385,800) P308,640
SITUATION 82:
309 - A 310 - B 311 - C 312 – C
Alpha numeric Taxable amount Rate Tax due

tax code (ATC)
PT 060 P1,500,000 2% P30,000
PT 010 750,000 3% 22,500
PT 120 800,000 2% 16,000
Total tax due P68,500
Total tax due P68,500

Surcharge rate 50%
Surcharge for willful neglect P34,250
Interest on delinquency (April 25 to July 25)

(68,500 x 12% x 3/12) P2,055
14 Total tax due (From schedule 1 item 7) P68,500
Less: Tax credit/payment (attach proof)
15 Creditable percentage tax per BIR Form No. 2307 22,500
Tax still payable 46,000
Add: Penalties
20 Surcharge 34,250
21 Interest 2,055
Total amount payable P82,305
SITUATION 83:
313 - B 314 - B 315 - A 316 - A 317 – C
Output tax on gross receipts, sale to private entities

(12,000,000 x 12%) P1,440,000
Output tax on gross receipts, services rendered to international
shipping transport operator 0
Total 1,440,000
Less: Input taxes
Carried over from previous period 50,000
On current transactions
Passed-on VAT on purchase of materials
(200,000 x 12%) 24,000
Passed-on VAT on purchase of supplies
(500,000 x 12%) 60,000
VAT on importation of warehouse equipment, estimated
life 4 years (300,000 x 12%) 36,000
Passed-on VAT on purchase of truck, estimated useful
life 5 years (500,000 x 12%) 60,000
Passed-on VAT on local purchase of office equipment,
estimated life 3 years (200,000 x 12%) 24,000
Passed-on VAT on domestic purchase of services
(600,000 x 12%) 72,000
Input taxes on current transactions 276,600
Total available input tax 326,000
Net VAT payable P1,114,000
SITUATION 84:
318 - C 319 - A 320 - D 321 - C 322 – B
SITUATION 85:
323 - C 324 - B 325 - A 326 – C
Sales/Revenues P10,000,000
Sales discounts P300,000
Less: SC and PWD Discount 50,000 250,000
Net Sales/Revenues P 9,750,000
Cost of services:
Cost of sales – food P1,200,000
Cost of sales – packaging 500,000
Salaries and bonuses – servers/waiters 1,500,000
Salaries and bonuses – store supervisors and managers 700,000
Rental expense – stores 850,000
Utilities expense – stores 325,000
Repairs and maintenance – stores and store facilities 300,000
Depreciation – stores and store facilities 600,000 5,975,000
Gross income before other income 3,775,000
Other income 750,000
MCIT Rate 2%
MCIT 90,500
Deductions:
Salaries and bonus – sales and administration P560,000
Rental expense – administration 450,000
Utilities expense – administration 225,000
Repairs and maintenance – administration 150,000
Depreciation expense – administration 280,000
Interest expense P375,000
Less:
Nondeductible interest
Interest subject to final tax P15,300
Factor (tax rate – 15%) 85%
Gross interest P18,000
Nondeductible rate 33% 5,940 369,060
Taxes and licenses P480,000
Less: Donor’s tax 50,000 430,000
Other administration expenses 425,000
SC and PWD discount 50,000 2,939,060
Tax rate 30%
RCIT 475,782

OSD (40%) 1,810,000
Tax rate 30%
RCIT 814,500
MCIT 90,500
Tax due 814,500
SITUATION 86:
327 – C 328 – A 329 – C 330 – C 331 – C 332 – A
SITUATION 87:
333 – A 334 – D 335 – D 336 – D 337 – C 338 – B 339 – D 340 – A
341 – D
SITUATION 88:
340 – C 341 – B 342 – A 343 – C
SITUATION 89:
344 – D 345 – A 346 – C 347 – C
SITUATION 90:
348 - 349 - 350 – B 351 – A 352 – C
SITUATION 91:
353 - C 354 - B 355 - A 356 – B
SLP Co.: 1,937,500

Share in JV (11,245,000 x 65%) 7,309,250
Total Net income 9,246,750
Tax rate 25%
Tax Due 2,311,687.50
Less: Tax paid – previous quarters 1,650,000
Tax still due 661,687.50
AXIE Co.: 1,095,000

Share in JV (11,245,000 x 35%) 3,935,75
Total Net income 5,030,750
Tax rate 25%
Tax Due 1,257,687.50
Less: Tax paid – previous quarters 600,000
Tax still due 657,687.50
SLP Co. (1,937,500 x 25%) 484,375
AXIE Co. (1,095,000 x 25%) 273,750
Joint Venture (11,245,000 x 25%) 2,811,250
SITUATION 92:
357 - B 358 - C 359 - A 360 – D
Fourth Quarter 2020:
Output VAT:
VATable (350,000 x 12%) P42,000
Sales to govt (160,000 x 12%) 19,200 P61,200
Input VAT:
VATable (125,000 x 12%) P15,000
Sales to govt (115,000 x 12%) 13,800
Zero rated (60,000 x 12%) 7,200
Capital goods
(2,250k x 12%)/48 x 2 = 11,250
11,250 x 650/900 8,125
Govt – closed to expense
Input VAT P13,800
Ratable portion (11,250 x 160/900) 2,000
Total P15,800
Standard input VAT (160k x 7%) (11,200) (4,600)
Excess input VAT 5,000 (44,525)
Withholding VAT (160,000 x 5%) ( 8,000)
VAT DUE P 8,675
OR
Output VAT (350,000 x 12%) P42,000

Less: Input VAT
(125k x 12%) P15,000
(60k x 12%) 7,200
(11,250 x 490/900) 6,125
5,000 33,325
VAT DUE P 8,675
First Quarter 2021:
Output VAT:
VATable (400,000 x 12%) P48,000
Govt (180,000 x 12%) 21,600 P69,600
Less: Input VAT
VATable (110,000 x 12%) P13,200
Govt (100,500 x 12%) 12,060
Zero-rated (75,000 x 12%) 9,000
Capital goods
(2,250k x 12%)/48 x 3 = 16,875
(1,900k x 12%)/60 x 2 = 7,600
[(16,875 + 7,600) x 700/960] 17,847 52,107
Less: Withholding VAT 9,000
VAT DUE P 8,943
SITUATION 93:
361 - C 362 - A 363 - B 364 – D
Percentage tax due, 4th quarter of 2020 (780,300 x 3%) P23,409
Percentage tax, 1st quarter of 2021

(1,860,500 x 1%) P18,605
Excess percentage tax paid for the fourth qtr of 2020
(780,300 x 2%) (15,606)
Percentage tax payable P 2,999
SITUATION 94:
365 – C 366 - B 367 – A
Land acquired from his father 2,000,000

FMV of the house 200,000
Transfer of car -
Bank deposit in US Branch 300,000
House and lot in Japan 2,000,000
Land inherited located in the Philippines 1,500,000
Life insurance proceeds 1,000,000
Shares in ABC Corp (at P40) 40,000
Shares in XYZ Corp (2,000,000/100,000) 20,000
Transfer for Public Use 5,000,000
Claims against insolvent persons 400,000
Gross Estate 12,460,000
Less:
LITE:
Uncollectible receivable from Marco
(60% non-collectible) P240,000
Remaining balance of the loan 200,000
Vanishing deduction:
Value to take P1,200,000
Less: Mortgage paid 300,000
Initial basis P 900,000
Less: Prop deduction
(900/12460 x 440k) 31,782
Final basis P 868,218
Percentage 80% 694,575 1,134,575
Special Deductions:
Standard Deduction P5,000,000
Family home 2,200,000 7,200,000
Net Taxable estate 4,125,425
Estate Tax Rate 6%
Estate Tax Due 247,526
Less: Estate Tax Credit 50,000*
Estate Tax Payable 197,526
*53,147 limit VS 50,000 actually paid
SITUATION 95:
368 - D 369 - D 370 - A 371 - C
Output VAT:
VATable sales - Sale of canned fruits
P5,824,000/1.12 = (P5,200,000 – 200,000)*12% P600,000
Zero-rated sales -
Exempt sales – sale of raw fruits -
Sale of canned fruits to government (200,000 x 12%) 24,000 P624,000
Input VAT:
Purchases of raw fruits 1,200,000 -
Packaging materials 300,000 36,000
Importation of capital equipment 3,000,000 360,000
Sugar and other agricultural
products 400,000 -
Rental - for the quarter 300,000 36,000
Salaries of factory workers 900,000 - -
Total Input VAT on Purchases 432,000
Less Deductions from Input VAT

Deferred input VAT 12,000 348,000
Input tax on sales to government
closed to expenses (11,600)
Input tax allocable to exempt sales 7,200 343,600 (88,400)
VAT Payable 535,600
VAT Withheld on sales to government (5% of sales to govt) (10,000)
Net VAT Payable 525,600
Input VAT on Sales to Government:
Sales to government 200,000
Standard Input VAT (7% of SALES) 14,000
Allocable input VAT (see below) 2,400 2,400
Additional input VAT (see below) 11,600*
Creditable VAT (Final VAT withheld of 5% of SALES)) 10,000
STANDARD INPUT VAT 14,000

Compared with Input VAT allocable
Ratio of sale to government over total sales 0.02857
Input VAT not directly attributable 84,000 2,400
[36000+36000+12,000] (from equipment)
Excess standard input VAT over input VAT allocable 11,600
If SIV < IV allocable = expense/cost
Input Tax Allocable to Exempt Sales

Exempt Sales 600,000
Total Sales 7,000,000
Ratio 0.085714
Available Input VAT 84,000
INPUT TAX ALLOCABLE TO EXEMPT SALES 7,200
(ratio of exempt sales/total sales * 84000)
Total Input VAT closed to Income/Expense:

Income - sales to government (11,600)
Expense - exempt sales 7,200
Net Income (4,400)
Input VAT that can be refunded relative to Zero-rated sales:

Export Sales 1,200,000
Total sales 7,000,000
Input VAT allocable (Not Directly Attributable) 84,000
(36,000+36,000+12,000)
Input VAT attributable to export sales 14,400
Situation 96:
372- C 373 - D 374 - D 375 – C
DC – Itemized deduction
Less: Cost of sales 4,000,000
Gross profit 6,000,000
Dividend income – RFC 50,000
Capital gain 20,000
Capital loss (60,000) -
Total Income 6,050,000
Less: Operating Expenses
Salaries and wages 800,000
Rental payments 1,200,000
Utilities expense 88,000
Payment for pension cost 700,000
EAR Expense:
Limit (10,000,000 x 0.5%) 50,000
Actual 65,000 50,000
Other operating expenses 25,000
Net income before charitable contributions 2,937,000
Less: Charitable contributions
Deductible in full P600,000
With limit:
Limit (2,937,000 x 5%) 146,850
Actual 320,000 146,850 746,850
RCIT
(2,190,150 x 6/12 x 30%) P328,523
(2,190,150 x 6/12 x 20%) 219,015 547,538
MCIT
(6,050,000 x 6/12 x 2%) P 60,500
(6,050,000 x 6/12 x 1%) 30,250 90,750
Tax due 547,538
DC – OSD
Total income 6,050,000
Less: OSD (40% x 6,050,000) 2,420,000
RCIT
(3,630,000 x 6/12 x 30%) P544,500
(3,630,000 x 6/12 x 20%) 363,000 907,500
MCIT
(6,050,000 x 6/12 x 2%) P 60,500
(6,050,000 x 6/12 x 1%) 30,250 90,750
Tax due 907,500
GPP – OSD
Interest income (80,000 x 80%) 64,000
Interest income – FCDU (20,000 x 85%) 17,000
Dividends – DC 90,000
Distributable income 3,801,000
Ordinary partnership – PSD

Net income after tax (3,630,000 xx 80%) 2,904,000
Interest income (80,000 x 80%) 64,000
Interest income – FCDU (20,000 x 85%) 17,000
Dividends – DC 90,000
Distributable income 2,712,000
Situation 97:
376 – A 377 – D 378 – B
Business income
(1,000,000 – 580,000 – 240,000) 180,000
Rent income (95,000/95%) 100,000
Dividend income 20,000
Ordinary Asset:
A. (200,000 – 240,000) (40,000)
B. (200,000 – 180,000) 20,000
C. (10,000,000 – 9,800,000) 200,000
Capital Asset:
A. [(250,000 – 180,000) * 50%] 35,000
C. [(10,000 – 40,000) * 50%] (15,000) 20,000
Taxable income 500,000
Capital gains tax:

(800,000 x 6%) 48,000
(120,000 x 15%) 18,000
66,000
STT (220,000 x 0.006) 1,320

Situation 98:
379 - D 380 – A
CPG: Exclusive Conjugal Total

Income from farmland 500,000 500,000
Apartment units – QC 4,000,000 4,000,000
Rental income - QC 80,000 80,000
Rest house – Tagaytay 5,000,000 5,000,000
Income – Tagaytay 400,000 400,000
Car 1,950,000 1,950,000
House and Lot 4,000,000 4,000,000
Car – gift 750,000 750,000
Gross Estate 11,700,000 4,980,000 16,680,000
Less: Allowable Deductions
Unpaid mortgage 200,000 200,000
Losses, indebtedness, taxes 1,500,000 1,500,000
Vanishing deduction* 1,436,930 1,436,930
Vanishing deduction** 673,561 673,561
Estate after deductions 9,389,509 3,480,000 12,869,509
Less: Special deductions
Family Home 4,000,000
Standard Deduction 5,000,000
Share of Surviving Spouse 1,740,000
Net Taxable Estate 2,129,509
Tax rate 6%
Estate Tax due 127,771
*Value to take 3,000,000

Less: Mortgage paid 1,000,000
Initial basis 2,000,000
Less: Prorated LITE (2,000,000/16,680,000 x 1,700,000) 203,837
Final basis 1,796,163
Rate 80%
Vanishing Deduction 1,436,930
**Value to take/Initial basis 750,000

Less: Prorated LITE (750,000/16,680,000 x 1,700,000) 76,439
Final basis 673,561
Rate 100%
Vanishing Deduction 673,561
ACP: Exclusive Community Total

Farmland 5,400,000 5,400,000
Income – farmland 500,000 500,000
Apartment – QC 4,000,000 4,000,000
Rental income 80,000 80,000
Rest house 5,000,000 5,000,000
Income – rest house 400,000 400,000
Car 1,950,000 1,950,000
Jewelry 300,000 300,000
House and Lot 4,000,000 4,000,000
Car – gift 750,000 750,000
Gross estate 6,700,000 15,680,000 22,380,000
Less: Allowable deductions
Unpaid mortgage 200,000 200,000
Losses, indebtedness, taxes 1,500,000 1,500,000
Vanishing deduction* 1,478,463 1,478,463
Vanishing deduction** 693,029 693,029
Estate after deductions 4,328,508 14,180,000 18,508,508
Less: Special deductions
Family Home 4,000,000
Standard Deduction 5,000,000
Share of Surviving Spouse 7,090,000
Net Taxable Estate 2,418,508
Tax rate 6%
Estate Tax Due 145,110
*Value to take 3,000,000
Less: Mortgage paid 1,000,000
Initial basis 2,000,000
Less: Prorated LITE (2,000,000/22,380,000 x 1,700,000) 151,921
Final basis 1,848,079
Rate 80%
Vanishing deduction 1,478,463
**Value to take/Initial basis 750,000

Less: Prorated LITE (750,000/22,380,000 x 1,700,000) 56,971
Final basis 693,029
Rate 100%
Vanishing deduction 693,029
SITUATION 99:
381 – A 382 – A
Resident Citizen Non-resident Citizen

A. 320,000
240,000 240,000
B. 80,000
C. 40,000
48,000 48,000
D.
E. 30,000
20,000 60% 12,000
F 8,000 8,000
10,000 10,000
9,000
11,000
G. 200,000
H.
I. 360,000 360,000
240,000
J. 40,000 40,000
K.
L. [(200-150)50%] 25,000 25,000
[(140-100)100%] (20,000) (20,000)
Taxable income 1,661,000 723,000
SITUATION 100:
383 - D 384 – C 385 – A 386 – B
To Mr. Kepweng – P0; not exceeding P250,000 for personal use
To Mr. Pol:
Amount of Loan P250,000
DST 1.50/200 1,875
Term 90 days
Over 365 days
DST Due P 462
To Kanor Corporation:
Debt instrument
Amount of Loan 2,000,000
DST Rate 1.50
On each 200
DST on Loan 15,000
Mortgage
5,000 40
1,995,000 7,980 8,020
Higher 15,000
To Thirdy Corporation:
Debt instrument
Amount of Loan 2,500,000
DST Rate 1.50
On each 200
DST on Loan 18,750
Mortgage
5,000 40
2,495,000 9,980 10,020
DST Due 28,770
Situation 101:
387 - A 388 - C 389 - B 390 - D 391 – C
Input tax on Taxable goods 6,000

Input tax on capital goods (100/400 x 24,000) 6,000
Creditable input tax for the month 12,000
Input tax on zero – rated sales 3,600

Input tax attributable to Zero-rated sales 9,600
Input tax on sales to government 4,800

Input tax attributable to sales to government 10,800
Input tax on VAT-exempt sale 2,400

Input tax attributable to VAT-exempt sales 8,400
Output VAT
Private entities (100,000 x 12%) 12,000
Sales to government (100,000 x 12%) 12,000 24,000
Less: Input VAT

Creditable input VAT 12,000
Less: Standard input VAT (100,000 x 7%) 7,000
Less: Withholding VAT (100,000 x 5%) 5,000
VAT Payable -
Situation 102:
392 - C 393 – C 394 - B
VAT Exempt Sale (1,060/1.12) 946.43
SC Discount (946.43 x 20%) 189.29
Total Sales 2,260.00

Less:
Senior Citizen Discount 189.29
VAT on SC Purchase (946.43 x 12%) 113.57
Total amount to be paid 1,957.14
Situation 103:
395 – A 396 – D 397 – D

Less: Cost of sales 4,000,000
Gross income from sales 15,000,000
Other Non-operating income:
Interest from receivables 400,000
Interest income - BPI US Branch 100,000
Dividend income – RFC 200,000
Rental income 700,000 1,400,000
Total Gross income 16,400,000
Less: Operating exepenses
Depreciation expense 2,216,000
Taxes and Licenses* 2,300,000
Interest expense** 267,000
Contributions to retirement fund*** 2,600,000
Senior Citizen discounts 250,000
Loss from fire 200,000
Selling and Admin expenses 6,100,000 14,433,000
RCIT:
(1,967,000 x 6/12 x 30%) P295,050
(1,967,000 x 6/12 x 20%) 196,700 P491,750
MCIT:
(16,400,000 x 6/12 x 2%) P164,000
(16,400,000 x 6/12 x 1%) 82,000 246,000
Higher P491,750
CWT – Rent ( 35,000)
TAX Payable P456,750
*Registration and Mayor’s permit 100,000

Local business tax 1,200,000
Real property tax 1,000,000
Deductible amount 2,300,000
** Interest expense 300,000

TAX arbitrarge
(200,000 x 6/12 x 33%) 33,000
Deductible interest 267,000
***Contributions to retirement 3,500,000

Current Service cost 2,500,000
Past service cost 1,000,000
Amortized over 10 years
Amortization for the year 100,000
Current Service cost 2,500,000
Total deductible amount 2,600,000
Land:
Selling Price 3,000,000
FMV 2,800,000
Higher 3,000,000
Tax rate 6% 180,000
Building:
Selling Price 1,000,000
FMV 1,100,000
Higher 1,100,000
Tax rate 6% 66,000
Shares of stocks:
Gain 400,000
Tax rate 15% 60,000
Total CGT Due 306,000

Interest on PESO Deposits (200,000 x 20%) 40,000
Interest on FCDU (400,000 x 15%) 60,000
Total FWT 100,000
Situation 104:
398 – B 399 – A 400 – A 401 – C
2014 2015 2016 2017

REGISTERED ACTIVITY
Sales 20,000,000 18,000,000 15,000,000 12,000,000
Cost of Sales (COS) 10,000,000 9,500,000 8,000,000 10,000,000
Operating Expenses 3,500,000 9,000,000 5,000,000 1,000,000
Net Income 6,500,000 (500,000) 2,000,000 1,000,000
ITH 0 0 0 0
UNREGISTERED ACTIVITY
2014 2015 2016 2017
Sales 1,000,000 1,200,000 1,150,000 1,300,000
COS 300,000 400,000 650,000 800,000
Operating Expenses 500,000 1,000,000 300,000 200,000
NOLCO from 2015 0 0 200,000 0
Net Income 200,000 (200,000) 0 300,000
Tax Rate 30% 30% 30% 30%
Income Tax Due 60,000 - - 90,000
2018:
REGISTERED ACTIVITY
Sales 50,000,000
Less: Cost of Sales 30,000,000
Operating Expenses 1,200,000
Tax rate 30%
Income Tax Due 5,640,000
Less: Covered by ITH* 3,609,600
Income Tax Payable 2,030,400
*Sales 50,000,000
Base sale(Highest sales volume, past 3 years) 18,000,000
Incremental sale 32,000,000
Increment % (32M/50M) 64%
Income Tax due 5,640,000
Covered by ITH (5,640,000 x 64%) 3,609,600
Sales from unregistered activities 4,000,000
Less:
COS from unregistered activities 2,500,000
Operating Expenses for unregistered activities 300,000
Net Income 1,200,000
Tax Rate 30%
Income Tax Due 360,000
Add: From registered activity 2,030,400
Total Income Tax Payable 2,390,400
P0 Additional labor expense cannot be claimed together with the ITH
Same for years 2014 to 2017

2018
REGISTERED ACTIVITY
Sales 50,000,000
Less: Cost of Sales (COS) 30,000,000
Tax Rate 5%
Tax Due 1,000,000
Share of BIR 0.6 3/5
5% GIT payable to BIR 600,000
Sales from unregistered activities 4,000,000
Less: COS from unregistered activities 2,500,000
Operating Expenses for unregistered
activities 300,000
Net Income 1,200,000
Tax Rate 30%
Income Tax Due 360,000
Total Tax Payable to the BIR 960,000

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TAXATION

DECEMBER 17, 2021

SITUATION 1: (PREFERENTIAL TAXATION): Gelato, PEZA registered enterprise, operating

Sales to registered activities P5,000,000

SITUATION 2 (INCOME TAXATION): Kumadrona signified her intention to be taxed at 8%

First Quarter Second Quarter Third Quarter Fourth Quarter

7. How much is the income tax liability of the partnership? Php1,857,375

SITUATION 4 (INCOME TAXATION): The following data were provided by an international

Freight and cargo fees (cargo originating from the Philippines

14. How much is the Other Percentage tax?

SITUATION 6 (INCOME TAXATION): In 2018, Ms. Boa Hancock, a financial controller of

15. Can she avail of the 8% income tax rate?

16. How much is her total taxable income?

18. How much is the output VAT, if any

SITUATION 7 (BUSINESS TAXATION): JJ Company, service provider, presented to you the

Your audit disclosed the following information:

20. How much is output VAT?

22. What is the input tax during the year?

SITUATION 8 (BUSINESS TAXATION): A domestic common carrier with Certificate of

Gross receipts P3,000,000

Net income per books P800,000

Interest income from bank deposit P 5,500

28. How much is the net tax due and payable?

SITUATION 11 (DOCUMENTARY STAMP TAX): The following were independent cases.

B. HXH Corporation originally issued stock dividends valued at P2,000,000.

C. A stockholder of YTJ Corporation sold his shares of stock for P500,000.

E. A real property was sold for P3,495,700.

29. How much is the DST of AST Corporation, if any?

30. How much is the DST of HXH Corporation, if any?

32. How much is the DST on the debt instrument, if any?

33. How much is the DST on the real property , if any?

34. How much is the DST of Mr. Bon Clay, if any?

35. How much is the excise tax?

36. How much is the VAT?

Gross Sales P4,900,000

40. For local business tax purposes, the taxable amount is

41. How much is the capital gains tax

42. How much is the DST?

43. How much is the local transfer tax?

SITUATION 14 (LOCAL TAXATION): A taxpayer has several real properties in the

Gross Revenue P100,000,000

SITUATION 16 (PREFERENTIAL TAXATION): The Korosensei Company is a PEZA-registered

The following information pertain to the CY 2018 activities of the company:

Registered Activities Unregistered Activities

Operating expenses of P9,890,100 (use 90%-10% allocation between registered and

50. How much is the RCIT?

51. How much is the income tax still due?

SITUATION 17 (PREFERENTIAL TAXATION): A PEZA – registered entity engage as an export

Export sales P45,500,000

Additional information: 24,500,000

SITUATION 18 (LOCAL TAXATION): Tayrina Batumbakal is a resident of Brgy. Bactad East,

56. How much is Tayrina’s community tax?

57. Tayrina should pay the community tax on or before

58. How much is Minamina Corporation’s community tax?

SITUATION 19 (LOCAL TAXATION): Parokya Ni Edgar, a domestic corporation, sold a parcel

• The land has a Transfer Certificate of Title No. 109201.

61. How much is the DST from the sale?

SITUATION 20 (DST): Sour Corporation, a domestic corporation primarily engaged in the

68. How much is the CGT due on the transaction?