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Statement 1: If an employee had two employers consecutively within the year, an income tax
return must be filed at the end of the year.
Statement 2: If an employee had three employers, on succession, for each of the past 3 years,
substituted filing of return is not allowed.

A. Statement 1 is true but Statement 2 is false

B. Statement 1 is false but Statement 2 is true
C. Statement 1 and 2 are false
D. Statement 1 and 2 are true

Which of the following statements is not correct?

A. Allocation of taxes for the benefit of greater portion of the population is

considered for public purposes.
B. If property is taken to satisfy tax liability, the property is sold through public
auction to satisfy the tax obligation.
C. All revenues and assets of non-stock, nonprofit educational institutions used
directly or indirectly for educational purposes shall be exempt from taxes and
duties.
D. Collections from taxes are public money.
E. Tax being a public money can be used to acquire private properties and will then
be converted into something beneficial to majority of individuals.
F. Appropriation of taxes greatly affecting several industries or group of individuals
and made for the common good of the people is valid.

Arnold received the following passive income in 2019:

Interest, peso deposit, MBTC - 100,000
Interest, dollar deposit, BDO ($10,000 x P42) - 420,000
Interest, deposit in HK (HK$10,000 x P5) - 50,000
Prize (TV) won in a local lottery - 50,000
PCSO winnings - 2,000,000
Prize won in contest in U.S - 300,000
Lotto winning in U.S - 100,000
Dividend, domestic company - 600,000

Determine the Total Final Tax in 2019 assuming he is:

1. Resident Citizen - 574,000

2. Nonresident Citizen - 574,000
3. Nonresident Alien Engaged in Trade or Business - 634,000
4. Nonresident Alien Not Engaged in Trade or Business - 792,500

No law granting any tax exemption shall be passed without the concurrence of -
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A. ¾ vote of all members of the Congress

B. Unanimous vote of all members of the Congress
C. Majority of all members of the Congress
D. ⅔ vote of all members of the Congress

Which of the following concepts of taxation is the basis for the situs of income taxation?

A. Symbiotic relation in taxation

B. Sumptuary purpose of taxation
C. Lifeblood doctrine of taxation
D. Compensatory purpose of taxation

On March 2021, Patria sold the following shares of stock of domestic corporations which she
bought for investment purposes

Listed and traded - Selling Price - P250,000, Cost - P118,000

Not listed and traded - Selling Price - P140,000, Cost - P80,000

How much is the capital gains tax?

A. P 9,000
B. P 6,000
C. P 3,000
D. P 12,000

The 30% corporate income tax is increased to 35% by the congress for the purpose if raising
revenue to be used for national road expansion project next to Bonifacio Global City, a private
corporation. Is the exercised of the taxing power unconstitutional?

A. Yes, because the increase in tax rate constitutes deprivation of right to property
of corporation without due process of law for being excessive and unreasonable.
B. No, because the Constitution does not expressly state that the power of taxation
must be used only for public purpose, thus, it may be used to benefit private
entity.
C. Yes, because taxing power must be exercised exclusively for public purpose
without any incidental benefit to any private entity.
D. No, because it is exercised directly for public purpose and the benefit to the
private entity is only incidental.

Patria, a resident citizen taxpayer owns a property converted in to apartment units with a
monthly rental of P10,000 per unit. She subsequently sold the property to Kent, a resident alien
taxpayer. The sale is subject to:

A. 6% CGT
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B. 6% CGT or basic income tax

C. Basic income tax
D. 6% CGT on net capital gain realized

It is important to know the source of income for income tax purpose because:
A. Export Sales are not subject to income tax.
B. The Philippines imposes income tax only on income from sources within.
C. Some individuals and corporate taxpayers are taxable based on their worldwide
income while others are taxable only on their income from sources within the
Philippines.
D. Some individuals taxpayers are citizens while the others are aliens.

Angelika received the following income during 2021 taxable year:

Philippines

Gross income, Philippines P3,850,000

Gross income, Canada 1,650,000

Business Expenses, Philippines 2,000,000

Business Expenses, Canada 725,000

Interest on bank deposit, Metrobank Taguig 50,000

Capital gain on sale of shares to closely held domestic corporation 180,000

1. How much is the taxable income of Angelika assuming she is a resident citizen?
= 2775000
2. How much is the taxable income of Angelika assuming she is a nonresident
citizen =1850000
3. How much is the income tax due of Angelika assuming she is resident citizen =
738000
4. How much is the income tax due of Angelika assuming she is a nonresident alien
engaged in trade or business? =445000
5. How much is the income tax due of Angelika assuming she is a nonresident alien
not engaged in trade or business? =962500
4 out of 5

Which of the following statements is correct?

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A. Revenue regulations have the force and effect of the law and a memorandum
order of the commissioner of the internal revenue, approved by the secretary of
finance, has the same force and effect as revenue regulations.
B. The revenue regulations in conflict with law are null and void
C. The interpretations of the former BIR Commissioner do not necessarily bind their
successor.
D. Both “a” and “b”
E. Both “b” and “c”
F. Both “a” and “c”
G. Statements “a”, “b”, and “c”

Statement 1: the distinction of a tax from permit or license fee is that a tax is imposed for
regulation.
Statement 2: Non-payment of tax does necessarily render a business illegal.
A. Both Statements are incorrect.
B. Only statement 1 is correct.
C. Only statement 2 is correct.
D. Both statements are correct

To spread the burden of taxation, the corresponding estimated tax is collected at once every
payroll period so that at the end of the taxable year, the amount of the tax withheld will be equal
or approximate to the actual tax for the year. Thes taxation system of collection at source based
on what principle ?
A. Theoretical justice
B. Fiscal adequacy
C. Administrative feasibility
D. Due process law

Kiether Sutherland, a Canadian Artist, arrived in the Philippines January 1 , 2019, to visit his
Filipina Girlfriend. He planned to stay in the country until December 31, 2020, by which time he
would go back to his family in Canada. Sutherland derived income during his stay in the
Philippines. For taxable year 2019, Sutherland shall be classified as:

A. Special Alien Employee

B. Nonresident alien not engaged in trade or business
C. Nonresident alien engaged in trade or business
D. Resident Alien

On march 2021, Patria, a dealer in securities, sold the following shares of stock of domestic
corporations:
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Listed and traded - Selling price - P250,000, Cost - P118,000

Not Listed and traded - Selling price - P140,000 Cost - P80,000

How much is the capital gains tax?

A. P3,000
B. P0
C. P6,0000
D. P12,000
Which of the following statements is not correct?
A. Only the national government exercises the inherent power of taxation.
B. The power to tax by the local government units is an entrusted power granted by
the constitution and other special laws.
C. National legislation is exercised by the congress.
D. Interpretation of tax is done by the congress and must be correct by them

Which of the following is/are taxable only for the income earned within the Philippines

I. Nonresident citizen
II.Nonresident Alien
III.Resident Citizen
IV.Resident Alien

A. I and ii only
B. Iii and iv only
C. I and iii only 3
D. I, ii and iv only
E. I, ii and iii only

Statement 1: The determination of 6% capital gains on sale of real property is based on net
capital gains realized by the seller of real property.
Statement 2: Except for certain passive income, a nonresident alien not engaged in trade or
business shall be taxed at 25% of his gross income derived from sources within the philippines.

A. Both statements are incorrect.

B. Only statement 1 is correct.
C. Only statement 2 is correct.
D. Both statements are correct

Which of the following tax escapes is permissible under the tax code?

A. Overstatement of expenses
B. Tax avoidance
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C. Tax dodging
D. Tax evasion

Under the Creditable withholding tax system, which of the following statements is incorrect?

A. Taxes withheld under this system are creditable in nature

B. The recipient of the income is no longer required to file an income tax return as
prescribed under the tax code
C. Taxes withheld on certain income payments are intended to equal or at least
approximate the tax due of the paree in said income.
D. The payee is required to report the income and pay the difference between the
tax withheld and the tax due thereon.

John doe, American, stayed in the Philippines from january 1 to july 1 2021, received during the
taxable year the following income derived in the Philippines.

Interest Income under FCDU (net) - P231,250

Royalty on Software application (Gross) - P 95,000
Dividend income RFC(gross) - P150,000

What is the final tax of John?

A. P52,750
B. P28,250
C. P37,750
D. P19,000

Statement 1: Government units performing governmental functions are exempt from tax unless
expressly taxable.
Statement 2: Government owned or controlled corporations exercising proprietary functions are
taxable unless expressly exempt

A. Only statement 2 is correct

B. Both statements are correct
C. Only statement 1 is correct
D. Both statements are incorrect

Park Na-kyung, a korean and resident of seoul, south korea, stayed in the Philippine from
November 28, 2020 to December 16, 2020 to watch the 2020 FIBA World Qualifying tournament
held in SM MOA, Pasay City. she then extended for another week to have a vacation. She was
fascinated by the people in the country as well as the tourist spots that she visited. She
considers acquiring Filipino citizenship and with this during her stay, she bought equity
investments from HBG Holding Corporation (domestic corporation). He likewise invested in
mutual fund of the national bank of the philippines, a local bank Ms.Park is a
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A. Nonresident alien engaged in trade or business

B. Nonresident alien not engaged in trade or business
C. Resident citizen
D. Resident Alien

Carl, a resident citizen, received the following income during 2021 taxable year:

Proceeds from copyright royalty, net of tax P31,500

Proceeds from mineral claim royalty, before tax 12,000

Share from trading partnership, net of withholding tax 495,000

How much is the total final withholding tax on Carl’s income?

A. P 61,500
B. P 60,900
C. P 55,050
D. P 5,550
How much is the income tax due and payable on Carl’s income?

A. P 55,050
B. P 60,900
C. P 61,500
D. P0

Which of the following statements is correct?

A. There is direct double taxation in taxing the income of the Corporation and again
subject the portion of that income declared as dividend to final tax.
B. Indirect double taxation is legal as long as there is no violation of equal protection
and uniformity clauses of the Constitution.
C. Direct double taxation is prohibited by the constitution.
D. Indirect double taxation violates the Constitutional provision of uniformity and eq
ual protection

All of the following are not taxes except -

A. Licence fee
B. Special Assessment
C. Customs duties
D. Surcharge
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Due to her expertise, Charlyn Moises, CPA ( a freelancer) was hired by a foreign airline
company in Australia to provide consulting services to help in safeguarding and restoring
financial and brand reputation. The service will be done for two (2) months from February to
March. She was hired again for the months of June-July and October-December of the same
taxable year Charlyn Moises, CPA is a

A. Nonresident Citizen
B. None of the above
C. Resident citizen
D. Special Filipino Employee

Case No. 1

Mr. and Mrs. San Andres, both CPAs and resident of the Philippines had the following
data for 2021 taxable year:

Salaries, wife P 1,200,000

13ᵀᴴ month pay and other bonuses, wife 140,000

Professional fees, net of 10% CWT 1,620,000

Expenses for practice of profession (15% non-deductible) 800,000

Rental income (net of 5% withholding tax) 190,000

Rental expenses 80,000

Other income, husband (20% non-taxable) 80,000

Requirements

The taxable income of Mr. San Andres is 764,000

The taxable income of Mrs. San Andres is 1,990,000

Case No, 2

Jen, married, left the Philippines in the middle of the year on July 1, 2021 to go abroad
and work there for 5 year. The following data were provided as of December 31, 2021:

Business Income
January 1 - June 30 - Philippines (P300,000) - Abroad (P200,000)
July 1 - December 31 - Philippines (P600,000) - Abroad (P400,000)
Business Expense
January 1 - June 30 - Philippines (P100,000) - Abroad (P50,000)
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July 1 - December 31 - Philippines (P150,000) - Abroad (P50,000)

Requirements

Jen taxable income should be 800,000

Assuming she arrived from abroad on July 1, 2021 to permanently resettle in the
Philippines, her taxable income should be 1,000,000

Statement 1: The intention regarding the length and nature of stay of an alien determines
whether he is a resident or nonresident.
Statement 2: A foreigner who has acquired residency in the Philippines shall inly become a
nonresident when he actually with the intention of abandoning his residency in the Philippines.
A. Only statement 2 is correct
B. Both statements are correct
C. Only statement 1 is correct
D. Both statements are incorrect
Reynne is a mixed income earner. She is a self-employed resident citizen with a store selling
general merchandise, lessor of 20 door apartment and currently the Finance Manager of
Euroasia corporation.
The following data were provided for 2021 taxable year:

Compensation Income P1,800,000

13th month pay and other benefits 150,000

sale 2,300,000

Cost of Sales 1,125,000

Business Expenses 650,000

RentalIncome, Net of 5% CWT 142,000

Interest income from debt securities from 20,000

SMC (Long term)

Interest Income From BPI, Net 64,000

Interest income from bank deposit under 120.000

FCDS, before FWT

PCSO winnings 15.000

Prize in a singing contest 2.000

Prize in a raffle draw 13.000

Gain on sale of land in cavite held as 500.000

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investment with cost P1.5M with a zonal

value P2,100,000

Ain in sale of 2-door apartment, cost P1.2M 300.000

with a onal Value of P2.3<

CWT on compensation 448,000

CWT on sale goods 28,000

1. Compute for the basic income tax expense assuming she opted to be taxed at 8% GIT.
=144000
2. Compute for the income tax due and payable assuming she opted to be taxes at 8% GIT
=0
3. Compute for the final taxes on her passive income. =39600
4. Compute for the total capital gains tax=264000
5. Assuming she is taxes using graduated tax rate, compute for her basic income
tax.=2475000
6. Assuming she is taxes using graduated tax rate, compute for her tax due and
payable.=153500
7. Assuming she nonresident citizen, compute for the total final withholding tax on
passive=39600
8. Assuming she nonresident alien engaged in trade or business, compute her final
withholding tax or passive income., = 18600
0 out 8

It is literally means “play of taxation” the country that has the power and jurisdiction to levy and
collect the tax -

A. Situs of taxation
B. Basis of taxation
C. Theory of taxation
D. Scope of taxation

Kensley Brian received a royalty fee from Philippine music Corporation, a domestic corporation
for his music composition. Brian is an American composer and was in the Philippines for ten
days. The royalty fee shall be subject to:

A. Graduated rate
B. 15% FWT
C. 25% FWT
D. 20% FWT
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Statement 1: The City of Baguio claims that it can impose additional taxes on banks under Local
Government Code (in addition to the percentage tax on bank imposed in the NIRC)
Statement 2: Such imposition is a direct double taxation

A. Both statements are correct

B. Only Statement 1 is correct
C. Only Statement 2 is correct
D. Both statements are incorrect

Camille, a self-employed resident citizen provided the following data for the taxable year:

Sales P2,800,000

Cost of sales 1,125,000

Business expenses 650,000

Gain on sale of shares of foreign corporation 50,000

Interest income from peso bank deposit 80,000

Interest income from bank deposit under FCDS 120,000

Gain on sale of shares of Domestic Corp. (non-listed) 150,000

Gain on sale of shares of Domestic Corp. (listed in the PSE) 200,000

Gain on sale of land in QC held as capital asset; Cost - P1.5M when 500,000
zonal value is P1.2M

Requirements

1. Compute for the total FWT 34,000

2. Compute for the total CGT 159,000
3. Assuming Camille opted to be taxed at 8%, compute for the basic tax 204,000
4. Using the same data except that her gross sales for the year was P3,800,000,
how much is her total income tax expense assuming she opted to be taxed at 8%
income tax rate 284,000
1 OUT OF 4

On January 1, 2018, Lloyd Invested P1,000,000 to MBRC’s 5-year tax-free deposit. The
long-term deposit pays 10% annual interest every January 1. In need of cash, Lloyd
pre-terminated his investment on July 1, 2021. How much is the final tax due in 2021?

A. P42,500
B. P17,500
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C. P12,000
D. P6,000
A taxpayer gives the following reasons in refusing to pay a tax. Which of his reasons is not
acceptable for legally refusing to pay the tax?

A. There is lack of territorial jurisdiction

B. That he derives no benefit from tax therefore denied of equal protection of law.
C. That the prescriptive period for the tax has elapsed.
D. That he has been deprived of due process of law

Kim, married, supporting his (3) minor children had the following data for the current taxable
year (Exchange rate $1 = P50)

Philippines Abroad
Business Income P 1,000,000 $20,000
Professional Income 400,000 10,000
Salaries 200,000
Business and Professional expenses 250,000 8,000
Income Tax Paid 4,000

If Kim is a non-resident citizen, his income tax payable should be?

A. 295,000
B. 358,000
C. 384,000
D. 357,000

In 2021, Lianne signified her intention to be taxed at 8% income tax rate on gross sales in her
1st quarter income tax return. Her gross sales during the year exceeded the VAT threshold of
3M as follows:
Q1 (8% tax) Q2 (8% tax) Q3 (8%) Q4 (Annual Graduated)

Sales 500,000 500,000 2,000,000 3,500,000

Cost of Sales (300,000) (300,000) (1,200,000) (1,200,000)
Gross Income 200,000 200,000 800,000 2,300,000
Operating Expenses (120,000) (120,000) 400,000 (720,000)

1. Compute for the total quarterly payments made under GIT

2. Compute for the annual income to the payable
3. Compute for the business tax - Other percentage tax due for this year
4. Compute for the business tax - VAT tax due for the year
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The statement that “he who received more should give more” is based on the basic tax
principle.

A. Fiscal adequacy
B. Administrative feasibility
C. Due process of Law
D. Theoretical Justice

As to scope of legislative power to tax, which of the following is correct?

A. The power to tax is supreme, plenary, comprehensive and without any limit because the
existence of the government is a necessity.
B. Congress has the right to levy tax of any kind at any amount as it seem fit, even in the
absence of any constitutional provision.
C. The sole arbiter of the purpose for which shall be levied in Congress provided the
purpose is public and the courts may not review the levy of the tax to determine whether
or the purpose is public
D. The discretion of the Congress in imposing taxes extends to the mode, method and kind
of tax, even if the Constitution provides otherwise.

Which of the following statements are incorrect?

A. Lotto winnings of a nonresident is exempted under CREATE Act

B. Lotto winnings of an OFW in United States are exempt from Income tax in Philippines
C. An income which is subject to final tax is excluded from the computation of income
subject to graduated tax rate.
D. To be subject to final tax, passive income must be from Philippine sources.

Where does taxing power of the provinces, municipalities and cities precede from?
A. Legislative enactment
B. Presidential Decree or Executive act
C. Local Registration
D. Constitutional grant

“The power to tax involves the power to destory” means

A. The power to tax is viewed as the to destroy in the sense that a lawful tax cannot be
defeated just because its exercise would be destructive or would bring about insolvency
to a taxpayer.
B. The principle iimplies that a imposition of lawful regulatory taxes would be destructive to
the taxpayers and business establishments because the government can compel
payment of tax and forfeiture of property through the exercise of police power.
 CORRECT WRONG FOR TRIAL

C. Both “A” and “B”

D. Neither “a” nor “b”

Which of the following is not true

A. Restricted by Just compensation - Taxation (No) - Police Power (No) - Eminent Domain
(Yes)
B. Inherent to the existence of the government - Taxation (Yes) - Police Power (Yes)
-Eminent Domain (Yes)
C. Superior to the non-impairment clause - Taxation (Yes) - Police Power (Yes) - Eminent
Domain (No)
D. Not legislative in nature - Taxation (No) - Police Power (No) - Eminent Domain (No)

Which of the following statements correctly described the tax exemption of the Government?

I. The State cannot be taxed without its consent, other, such is derogation to its sovereignty
II. Tax Exemption applies only tto government entities through whic the government immediately
and directly exercises its governmental functions like the Department of Justice, Department of
Foreign Affairs, Philippines National Police, and the like.
III. Government agencies performing governmental functions are exempt from tax unless
expressly taxed, while those performing proprietary functions are subject to tax unless expressly
tempted

A. iii only
B. ii and iii only
C. i only
D. I and ii only
E. I and iii only
F. I, ii, and iii
G. Ii only

A non-resident alien derived interest income only in his bank deposit here in the Philippines
under the FCDU system of a domestic bank. The interest amounted to USD 500. How much is
the income tax due? (USD1 = pHP 50)

A. 10,000
B. 3,000
C. 0
D. 8,000
Statement 1: All royalty income derived from sources within the Philippines are subjecti ti final
withholding tax.
Statement 2: All royalty income derived from sources outside the Philippines received by
resident alien are subject to basic income tax.
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A. Only statement 1 is correct

B. Both statements are incorrect
C. Both statements are correct
D. Only statement 2 is correct
Statement 1: Resident alien has transactions with depository banks under the foreigh currency
deposit system. The transaction is exempted from income tax.
Statement 2: Any income of nonresident individual taxpayers fro mtransactiosn with offshore
banking units shall be exempt from income tax

A. Only statement 1 is correct

B. Both statements are incorrect
C. Both statements are correct
D. Only statement 2 is correct