1.

This refers to the privilege or immunity from a tax burden which others are subject to:
a. Exclusion c. Tax holiday
b. Deduction d. Reciprocity

2. The Constitutional exemption of religious or charitable institutions refers only to

a. Real property tax c. Property tax and income tax
b. Income tax d. Business tax

3. The Japanese government invested P100,000,000 in a Philippine local bank and earned P10,000,000 interest. Which is
correct?
a. The income is exempt on grounds of territoriality.
b. The income is exempt due to international comity.
c. The income is subject to tax on the basis of sovereignty.
d. The income is subject to tax because the income is earned within the Philippines.

4. As to subject matter, taxes do not include

a. Property tax c. Poll tax
b. Regulatory tax d. Excise tax

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5. Which is not an excise tax?
a. Income tax c. Estate tax

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b. Community tax d. Occupation tax

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Mr. dela Cruz has a tax obligation to the government amounting to P80,000. Since he is leaving the country, he entered into
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a contract with Mr. Garcia wherein Mr. B shall pay the P80,000 tax in his behalf. On due date, Mr. Garcia failed to pay the tax.
The BIR sent a letter of demand to Mr. dela Cruz which he refused to pay.
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Which of the following statements is correct?

a. The government cannot enforce collection charges against Mr. dela Cruz since he has validly transferred his obligations
to Mr. Garcia under the contract.
b. The government can no longer run after Mr. dela Cruz because he is already outside the Philippine territory.
C

c. The government should wait until Mr. B becomes solvent again.

d. The government should force Mr. A to pay because taxes are non-assignable.
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7. Which of the following do not relate to tax?

a. Does not render business illegal when not paid
b. Arises from law rather than from contracts
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c. Intended to cover cost of regulations

d. Intended for public purpose

8. As to tax payments measures, which of the following threshold for the qualification as large taxpayer is incorrect?
a. Annual income tax payments of P1M
b. Annual value added tax payments of P1M
c. Quarterly percentage tax payments of P200,000
d. Annual documentary stamp tax of P1M

9. Which is not an item of gross income because of the absence of an undertaking from the taxpayer?
a. Proceeds of a life insurance policy
b. Forgiveness of indebtedness as an act of gratuity
c. Revaluation surplus on properties
d. Service fees
10. Who is not a resident alien?
a. An alien who stayed in the Philippines for more than two years.
b. An alien who married and stayed in the Philippines for one year.
c. An alien who stayed in the Philippines for more than one year.
d. An alien who established his intention before the CIR to stay in the Philippines for an extended period of time.

11. A Filipino who has been abroad for more than 183 days is classified as a
a. Resident alien
b. Non-resident alien
c. Non-resident citizen
d. Non-resident citizen not engaged in trade or business

12. An American who showed proof to the satisfaction of the Commissioner of Internal Revenue of his intention to stay in the
Philippines as an immigrant is classified as a
a. Resident citizen c. NRA - ETB
b. Resident alien d. NRA - NETB

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13. A partnership organized in the Philippines but dominantly operates business abroad is a
a. Domestic corporation c. Non-resident corporation
b. Resident corporation d. De jure corporation

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a. wherever sold. c. without the Philippines only. ev
14. Gains on the sale of goods manufactured and sold by the taxpayer within the Philippines is subject to tax
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b. if sold abroad only. d. within the Philippines only.

15. Henson Johnson was one of the passengers of a van that fell off a ravine. Henson sued the bus company and was awarded
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an indemnity of P800,000 for the following:

• P500,000 for the impairment of his health resulting to the amputation of his legs
• P200,000 for his loss of salaries during his hospitalization
C

• P100,000 for his Attorney’s fees

Compute JohnsonHenson’s return on capital.
a. P800,000 c. P200,000
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b. P300,000 d. P0

16. Pines Corporation has a branch in Manila and a 70%-owned subsidiary, Choco Hills, Inc. in Davao. The following data shows
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Pines Corporation’s sales transactions during the year:

• Pines Corporation billed the Manila branch P1,500,000 for merchandise shipped to the latter at a mark-up of 50% above
acquisition cost. The branch stored the merchandise and did not operate during the year.
• Sold merchandise to unrelated parties at a gain of P800,000
• Sold merchandise to Darrel Asuncion, Pines Corporation’s controlling stockholder, at a gain of P100,000
• Sold various merchandise to Choco Hills, Inc. at a gain of P200,000

Compute the total income of Pines Corporation subject to income tax.

a. P1,700,000 c. P1,100,000
b. P1,200,000 d. P900,000

17. Jen is engaged in business. The following pertains to her transactions during 202114:
• Sold his personal car which was purchased at P200,000 to a friend who paid only half of the car’s P500,000 current fair
value.
• Sales of merchandise was P800,000 and the cost of goods sold was P600,000.
• Jen acquired several stocks from the Philippine Stock Exchange for speculation. These stocks have an aggregate purchase
price of P400,000 but with P700,000 fair value by December 31, 202114.
• Jen’s house and lot which he acquired for P1,500,000 in 2010 now have a current fair value of P2,500,000.

Compute Jen’s total income subject to income tax.

a. P1,800,000 c. P200,000
b. P1,550,000 d. P250,000

18. A non-resident citizen is an international financier who earned P400,000 interest income from resident debtors and
P300,000 from foreign debtors. How much is subject to Philippine income tax?
a. None c. P400,000
b. P300,000 d. P700,000

19. TNCTC Company manufactures wooden furniture for the local and export market. It has a distribution outlet abroad which
handles foreign sales. It bills all customers, including the foreign outlet, 70% above manufacturing costs. The foreign outlet
bills its customers 100% above TNC Company’s billing price. TNC Company reports P3,400,000 in total sales, exclusive of
sales to the foreign outlet. The foreign outlet reports P2,720,000 total sales to customers.
Compute the manufacturing income respectively earned within and earned without the Philippines.

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a. P1,960,000; P1,360,000 c. P840,000; P1,920,000
b. P1,400,000; P1,360,000 d. P840,000; P1,360,000

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20. Capital asset means
a. real properties used in business.
b. personal properties used in business.
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c. real properties not used in business.
d. any property, real or personal, not used in business.
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21. Which statement is correct?

a. Dealers of real properties can use the installment method without limitation.
b. Dealers of personal properties can use the installment method without limitation.
C

c. Non-dealers of properties can use the installment method if initial payment exceeds 25% of the selling price.
d. Dealers of properties can use the installment method only if initial payment does not exceed 25% of the selling price.
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22. Which is an incorrect statement regarding the use of accounting period?

a. Individuals can either choose the calendar year or fiscal year accounting period.
b. The regular accounting period for any taxpayer is 12 months.
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c. Individual taxpayers are not allowed to report income using fiscal accounting period.
d. Corporations may opt to use either calendar or fiscal accounting period.

23. Anderson died on March 31, 2021. Which is a correct statement?

a. Anderson’s 2021 income tax return shall cover January 1, 2020 to December 31, 2021.
b. Anderson’s 2021 income tax return shall cover January 1, 2021 to December 31, 2021.
c. Anderson’s 2021 income tax return shall cover January 1, 2021 to March 31, 2021.
d. Anderson’s 2021 income tax return shall cover April 1, 2021 to December 31, 2021.

24. Metersbonwe Corporation started business on April 5, 2021 and opted to report income tax on a fiscal year ending every
October 31. Metersbonwe’s first income tax return shall cover
a. April 6, 2021 to October 31, 2021
b. April 5, 2021 to October 31, 2021
c. April 5, 2021 to December 31, 2021
d. April 5, 2021 to April 5, 2022
25. Dapitan, Inc. has the following receipts during 2021:
From service billings to clients P 400,000
Advances from clients 100,000
Total cash collection P 500,000

The P100,000 advances refer to services which will be rendered next year. Total uncollected billing increased from
P100,000 on December 31, 2020 to P150,000 on December 31, 2021.

Compute the gross income using cash basis.

a. P400,000 c. P500,000
b. P450,000 d. P550,000

26. Dapitan, Inc. has the following receipts during 2021:

From service billings to clients P 400,000

Advances from clients 100,000
Total cash collection P 500,000

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The P100,000 advances refer to services which will be rendered next year. Total uncollected billing increased from
P100,000 on December 31, 2020 to P150,000 on December 31, 2021.

Compute the gross income using accrual basis.

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a. P400,000 c. P500,000
b. P450,000 d. P550,000 R
27. A taxpayer received a notice from the BIR to file his 2020 income tax return not later than January 15, 2022. The tax due per
his return is P100,000. What is the total surcharge penalty?
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a. P0 c. P25,000
b. P20,000 d. P50,000

28. A taxpayer received a notice from the BIR to file his 2020 income tax return not later than January 15, 2022. The tax due per
his return is P100,000. What is his total interest penalty?
C

a. P6,500 c. P9,041
b. P7,900 d. P15,068
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29. The interest income from long-term peso deposits made with foreign banks is
a. subject to 20% final tax. c. subject to regular tax.
b. exempt from any tax. d. None of these.
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30. Which of the following recipients is exempt from final tax on dividends?
a. Resident citizen c. Resident corporation
b. Non-resident alien d. Resident alien

31. Which is covered by final tax?

a. Interest income from foreign banks
b. Share in the net income of a joint venture
c. P10,000 taxable prizes from the Philippines
d. Share in the net income of a general professional partnership

32. Which of the following is taxable?

a. Prize on sports competitions sanctioned by the national sports organization
b. Prize from dance competition abroad
c. Nobel prize
 d. Any prize received without effort

33. Which is not subject to final tax?

a. Compensation to non-resident aliens not-engaged in trade or business
b. Fringe benefits of supervisory and managerial employees
c. Income of non-resident foreign corporations
d. Fringe benefits of rank and file employees

34. Renz received P42,000 interest from short-term deposits. Compute the final tax withheld on the interest.
a. P10,500 c. P5,000
b. P9,000 d. P4,500

35. On January 1, 2021, Mr. Albuera invested P2,000,000 in the six-year time deposit of Sulu Unibank which pays 10% annual
interest. Assume Mr. Albuera pre-terminated the time deposit on July 1, 2025; compute the final tax to be withheld on pre-
termination.
a. P5,000 c. P45,000
b. P12,000 d. P108,000

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36. On January 2, 2021, Quezon, Inc. placed P1,000,000 in the 5-year time deposit of Bank of Laguna. The placement earns 10%
annual interest. Quezon, Inc. pre-terminated the deposit on June 30, 2024. Compute the final tax to be withheld on pre-

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termination.
a. P0 c. P17,500
b. P10,000 d. P42,000
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37. Gabriel is a non-resident citizen working abroad. He invested his $1,000,000 personal savings in a FCDU bank under a joint
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account with his resident wife. The bank pays 8% annual interest. Compute the final tax to be withheld in one year.
a. $0 c. $12,000
b. $6,000 d. $16,000
C

38. Ms. Suzuki owns 40% of the capital and profits of Cebu Ventures, a business partnership engaged in the trade of tourist
souvenirs. Cebu Ventures reported P200,000 net income in 2021. Compute the total final tax to be withheld by the
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partnership on Gina’s profit sharing.

a. P0 c. P10,000
b. P8,000 d. P20,000
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39. A concerned government employee furnished the BIR a statement detailing the improper tax practices of a corporate
taxpayer. The information was instrumental to the collection of P500,000 tax. How much informer’s tax reward after tax
shall be released to the informant?
a. P0 c. P45,000
b. P40,000 d. P50,000

40. A taxpayer wants to manually file his Monthly Remittance Return of Final Income Tax Withheld for the month of February
2021. What is the deadline for the return?
a. February 14, 2021 c. March 10, 2021
b. February 28, 2021 d. April 15, 2021