OUR LADY OF FATIMA UNIVERSITY C. Enforce all forfeitures, penalties, and fines.

Dela Paz Norte, City of San Fernando (P) D. Mete out sentence of imprisonment for violation of
COLLEGE OF BUSINESS AND ACCOUNTANCY
Final Examination in APP III Tariff and Customs Code.
Accounting Proficiency Program III 11. The Commissioner of Internal Revenue is not authorized
to:
A. Interpret the provisions of the National Internal
GENERAL INSTRUCTIONS: Shade the letter that corresponds to Revenue Code.
your answer. STRICTLY NO CHEATING. B. Promulgate Revenue Regulations.
C. Terminate a taxable period.
D. Prescribe presumptive gross receipts.
12. The provisions in the Constitution regarding taxation are:
THEORIES:
A. Grants of the power to tax.
1. Which is subject to creditable withholding tax? B. Limitations to the power to tax.
A. Winnings C. Grants and limitations to the power to tax.
B. Dividends D. Limitations against double taxation.
C. Professional fees 13. Which of the following violates Constitutional
D. Royalties provisions?
2. Withholding taxes are the primary liability of the: A. Payment of salaries to priests or religious ministers
A. Earner or payee of income.
employed by the Armed Forces of Philippines.
B. Payor of income.
B. Imposing tax on properties of religious institutions
C. Payee and payor of income.
which are not directly and exclusively used for
D. Collecting agency of the government.
3. A Canadian who is staying in the Philippines for more religious purposes.
than one year is a: C. Imposition of license for the sale of religious
A. Resident alien. literature.
B. Non-resident citizen. D. Authorizing the President of the Philippines to fix
C. Non-resident alien engaged in trade or business. the rates of tariffs or imposts.
D. Non-resident alien not engaged in trade or business. 14. Which of the following normally pays real property tax?
4. Which is an incorrect statement regarding situs of A. Bantay Bata, a non-profit educational institution.
income? B. Jesus Crusade Movement, a religious institution.
A. Interest income is earned in the residence of the C. University of Pangasinan, a private proprietary
debtor. educational institution.
B. Royalty is earned where the intangible is employed. D. UVS Corporation, a registered trading company.
C. Service income is earned in the domicile of the 15. Which is principally limited by the requirement of due
taxpayer. process?
D. Rent is earned in the location of the property. A. Eminent domain
5. A tax that is imposed upon the performance of an act, B. Police power
the enjoyment of privilege, or the engagement in a C. Taxation
profession is known as: D. All of these
A. Income tax. 16. Which of the following is not an inherent limitation of
B. License. the power to tax?
C. Excise tax. A. Tax should be levied for public purpose.
D. Transfer tax. B. Taxation is limited to its territorial jurisdiction.
6. Which of the following distinguishes license from tax? C. Tax laws shall be uniform and equitable.
A. Unlimited in imposition D. Government agencies and instrumentalities are
B. Imposed for revenue exempt from tax.
C. Does not necessarily renders the business illegal in 17. Which of the following is not within the scope of tax
case of non-payment legislation?
D. Pre-activity in application A. Fixing the imposable tax rate
7. Tax classifications as to object do not include: B. Assessment of the tax
A. Poll tax. C. Determining the subject to be taxed
B. Property tax. D. Determining the purpose of the tax
C. Regulatory tax. 18. Which is not subject to income tax?
D. Excise tax. A. Harvested fruits
8. Which of the following is limited in application? B. Sold crops
A. Tax Laws C. Offset of indebtedness for services rendered
B. Revenue Regulations D. Damages recovered in a patent infringement suit
C. Tax Treaties 19. Which is not subject to final tax to a corporation?
D. BIR Ruling A. Interest income from foreign currency deposits.
9. The principles of a sound tax system exclude: B. Royalty
A. Economic efficiency. C. Prizes
B. Fiscal adequacy. D. None of these
C. Theoretical justice. 20. Royalties on musical composition is subject to:
D. Administrative feasibility. A. 20% final tax
10. The Bureau of Internal Revenue is authorized to do the B. 10% final tax
following, except: C. 0% final tax
A. Assess and collect national taxes. D. Regular tax
B. Issue receipts and clearances. 21. Which is subject to final tax?
 A. Share of the distributive net income of a general
professional partnership.
B. Active royalties.
C. Prizes not exceeding P10,000.
D. Interest income from foreign bank deposits.
22. The term “capital assets” includes:
A. Stock in trade or other property included in the
taxpayer’s inventory.
B. Real property not used in the trade or business of
the taxpayer.
C. Real property primarily use for the sale to customers
in the ordinary course of trade or business.
D. Property used in the trade or business of the
taxpayer and subject to depreciation.
23. Which is not taxable?
A. Interest income in government securities.
B. Interest income in long-term deposits but pre-
terminated by the taxpayer prior to 5 years.
C. Informer’s reward for the discovery of violations to
the provisions of the NIRC.
D. Gains on redemption of shares in a mutual fund.
24. Facilities or privileges furnished or offered by an
employer to his employees that are of relatively small
value and are offered or furnished by the employer
merely as a means of promoting the health, goodwill,
contentment, or efficiency of his employees.
A. Fringe benefit
B. Fringe benefit tax
C. De minimis benefit
D. Grossed-up monetary value
25. The following fringe benefits are not subject to fringe
benefit tax, except:
A. Fringe benefits given to the rank and file employees,
whether granted under a collective bargaining
agreement or not.
B. De minimis benefits, as defined in the rules and
regulations to be promulgated by the Secretary of
Finance, upon the recommendation of the
Commissioner of Internal Revenue.
C. Contribution of the employer for the benefit of the
employees to retirement, insurance, and
hospitalization benefit plans.
D. Fringe benefits furnished or granted by the
employer to its managerial and supervisory
employees.
26. The following fringe benefits are not subject to fringe
benefit tax, except:
A. If given for the convenience or advantage of the
employee.
B. Benefits given to rank and file employees.
C. Contribution of the employer for the benefit of the
employees to retirement, insurance, and
hospitalization benefit plans.
D. If required by the nature of or necessary to the
trade, business, or profession of the employer.
27. Which of the following taxpayers whose personal
exemption is subject to the law of reciprocity?
A. Non-resident citizen with respect to his income
derived outside the Philippines.
B. Non-resident alien who shall come to the Philippines
and stay therein for an aggregate period of more
than 180 days.
C. Resident alien deriving income from a foreign entity.
D. Non-resident alien not engaged in trade or business
in the Philippines whose country allows personal
exemption to Filipinos who are not residing but are
deriving income from the said country.
28. Tax imposed on inter-corporate dividends received by a
domestic corporation from a resident foreign
corporation is:
A. Tax exempt.
B. Subject to 10% income tax.
C. Subject to 15% final tax.
D. Subject to 30% corporate tax.
29. Which of the following statements is correct as regards a
resident citizen?
A. Income from illegal activities is subject to final tax.
B. Income tax refunds constitute taxable income to the
taxpayer.
C. Recovery of bad debts previously written off is part
of taxable income.
D. As a rule, contest awards and prizes are subject to
20% final tax if they amount to more than P10,000 ,
otherwise they will be part of taxable income.
30. Which of the following statements is not correct?
A. Minimum wage earners shall be exempt from the
payment of income tax.
B. Holiday pay, overtime pay, night shift differential
and hazard pay shall be exempt from income tax.
C. Prizes and awards granted to athletes in local and
international sports competitions and tournaments
whether held in the Philippines or abroad, and
sanctioned by their national sports associations are
exclusions from gross income.
D. Benefits received from or enjoyed under the social
security system are exclusions from gross income.
31. Income tax payments to a foreign country, in the case of
a resident citizen may be claimed as
A. Tax credit and deduction from gross income.
B. Tax credit.
C. Tax credit or deduction from gross income.
D. Deduction from gross income.
32. Which of the following is taxable?
A. P 100,000 interest on long-term deposit or
investment
B. P 200,000 gain on sale of 10-year bonds
C. P 12,000 prize in supermarket raffle
D. P 1M winning in Philippine Lotto
33. Which of the following statements is true?
A. Payments which constitute bribes, kickbacks and
others of similar nature which are necessary to
realize profits are allowed as deductions from gross
income.
B. The taxes which are deductible from gross income
include the taxes, interest and penalties incident to
tax delinquency.
C. Deductions are amounts allowed by the Tax Code to
be deducted from gross income to arrive at the
income tax liability of a taxpayer.
D. Losses from wagering transactions shall be allowed
only up the extent of the gains from such
transactions.
34. This is not deductible from gross income
A. Transportation expenses from the main office to the
branch.
B. Transportation expenses from home to the office
and from the office back to home.
C. Travel expenses on business trips.
D. Travel expenses while away from home in the
pursuit of trade, business or profession.
35. The phrase “related taxpayers” will apply to the
following, except:
A. Between members of a family.
B. Between the grantor and a fiduciary.
C. Between a fiduciary of a trust and a beneficiary of
such trust.
 D. Between an individual and a corporation more than
50% in value of the outstanding stock of which is
owned, directly or indirectly by or for such
individual, in case of distributions in liquidation.
36. The optional standard deduction for corporation is
A. 10% of the gross income
B. 10% of the gross sales/receipts
C. 40% of the gross income
D. 40% of the gross sales/receipts
37. The optional standard deduction for individuals is
A. 10% of the gross income
B. 10% of the gross sales receipts
C. 40% of the gross income
D. 40% of the gross sales/receipts
38. Interest expense incurred to acquire property used in
trade or business or exercise of a profession is:
A. Not allowed as a deduction against gross income.
B. Required to be treated as a capital expenditure to
form part of the cost of the asset.
C. Allowed as a deduction or treated as a capital
expenditure as the option of the taxpayer.
D. Allowed as a deduction or treated as a capital
expenditure at the option of the government.
39. For individuals with gross compensation income, the
following maybe deducted, except:
A. Personal exemptions.
B. Additional exemptions.
C. Optional standard deduction.
D. Premium payments on health and/or hospitalization
insurance.
40. For mines other than oil and gas wells, a net operating
loss without the benefit of incentives under Executive
Order 226, as amended, otherwise known as Omnibus
Investment Code of 1987, maybe carried over as a
deduction from taxable income, if incurred in any of the:
A. First 10 years of operation.
B. First 4 years of operation.
C. First 3 years of operation.
D. First 5 years of operation.
41. Using the preceding number, such net operating loss can
be carried as a deduction from taxable income, within
how many years immediately following the year of such
loss?
A. 5 years
B. 3 years
C. 10 years
D. 4 years
42. Which of the following statements is not correct?
A. In the case of married individuals, where only one of
the spouses is deriving income, only such spouse
shall be allowed the personal exemption.
B. In the case of married individuals, the addition
exemptions may be claimed by only one of the
spouses.
C. As a rule, the husband shall be deemed to be the
head of the family and proper claimant of the
additional exemption.
D. In the case of legally separated spouses, additional
exemption may be claimed by the spouses who has
custody of the children but shall not exceed four for
each spouse.
43. Which of the following statements is not correct?
A. If only one spouse is deriving taxable income, only
said spouse may claim the additional exemption.
B. If both spouses earn taxable income only one of the
spouses can claim additional exemption.
C. If legally separated from the spouse, the husband
can claim the additional exemption unless he waives
the right in favor of his wife.
D. An unmarried individual with a child out of the
wedlock can claim a personal exemption as a head
of the family plus additional exemption.
44. With regard to deduction for premiums on
hospitalization and health insurance, which of the
following statements is wrong?
A. Allowed as deduction even if income is from
compensation only.
B. Allowed as deduction even if income is from
business or practice of profession.
C. Allowed as deduction even if mixed income.
D. Allowed as deduction only if the taxpayer is taking
itemized deductions from gross income.
45. Which of the following dependents will qualify a single
taxpayer as head of the family?
A. Taxpayer’s brother, 22 years old, unemployed,
unmarried, living with him and dependent upon him
for support.
B. Taxpayer’s sister, 18 years of age, unemployed,
unmarried, living with their parents, but dependent
upon him for chief support.
C. Taxpayer’s illegitimate son, 12 years old,
unemployed, single, living with him and dependent
upon him for support.
D. Taxpayer’s godchild, 10 years old and dependent
upon him for chief support.
46. For income taxation purposes, the term “corporation”
excludes one of the following:
A. Ordinary partnership
B. An incorporated business organization
C. General professional partnership
D. Business partnership
47. The taxpayer is allowed to claim additional exemptions
for the following, except:
A. Legitimate daughter who got married on December
31 of the taxable year, one day before she turned
22.
B. Illegitimate son, minor who died December 31 of
the previous year.
C. Legally adopted daughter, 25 year old but incapable
of self-support due to mental defect.
D. Recognized natural son who celebrated his 21st
birthday on January 1 of the taxable year.
48. Which of the following is not a condition imposed by the
Constitution for the exercise of the power of eminent
domain?
A. The consent of the owner of the private property to
sell the same to the government.
B. The payment of just compensation.
C. The observance of due process in taking of the
private property.
D. The existence of public use for the taking of a
private property.
49. Which statement is wrong?
A. The power of taxation maybe exercised by the
government, its political subdivisions, and public
utilities.
B. Generally, there is no limit on the amount of tax
that may be imposed.
C. The money contributed as tax becomes part of the
public fund.
D. The power to tax is subject to certain constitutional
limitations.
50. Income from dealings in property (real, personal, and
mixed) is the gain or loss derived:
A. Only from the cash sales of property.
B. From cash and gratuitous receipts of property.
 C. From sale and lease of property.
D. Only from the sale of property.
TRUE OR FALSE:
For items 51 through 60:
Shade A if statement 1 is true and statement 2 is false.
Shade B if statement 1 is false and statement 2 is true.
Shade C if both statements are true.
Shade D if both statements are false.
51. I. an expense which is necessary but not ordinary, or
ordinary but not necessary is deductible from gross
income. F
II. The taxpayer must signify his intention to elect the
itemized deduction, otherwise he is deemed to have
chosen the optional standard deduction. F
52. I. The cost of leasehold improvements shall be
deductible by the lessee by spreading the cost of the
improvements over the life of the improvements or the
remaining lease term of the lease whichever period is
shorter. T
II. Contributions by the employer to a pension trust for
past service cost is deductible in full in the year that the
employer made the contributions. F
53. I. The term “chief support” means more than one-half of
the requirements for support. T
II. If two single individuals contribute equal amounts for
the support of a dependent, neither one of them may
qualify as head of the family. T
54. I. In case of married individuals, the basic and additional
exemptions shall be claimed by only one of the spouses.
F the amount of P1,000,000 after the 25th year of the
II. If the dependent child marries during the taxable year,
the taxpayer may still claim the same exemption as if the
marriage occurred at the close of such year. T
55. I. A gain from sale of shares of a domestic corporation
shall be considered derived from the Philippines
regardless of where the shares were sold. T
II. A gain from sale of shares of a foreign corporation
shall be considered derived from the country where the
corporation was created or organized. F
56. I. Interest paid on preferred stock is deductible from the
gross income of the paying corporation. F
II. A capital expenditure usually benefits more than one
accounting period and is deductible from the gross
income in the year it is paid or incurred. F
57. I. In case of a married taxpayer, only the spouse claiming
the additional exemptions for dependents shall be
entitled to the deduction on premium payments on
health and/or hospitalization insurance. T
II. The deduction for premium payments on health
and/or hospitalization insurance shall not exceed P2,400
per year for the family or P200 per month. T
58. I. If the taxpayer should have additional dependent
children during the taxable year, he can always claim the
additional exemptions for such year. F
II. A non-resident alien is taxable on all income derived
from sources within the Philippines. T
59. I. Housing privileges of the Armed Forces of the
Philippines are taxable fringe benefits. F
II. Cost of premiums borne by the employer for the
group insurance of his employees is a taxable fringe
benefit. F
60. I. Fringe benefits may be given to managerial,
supervisory and rank and file employees. T
II. Cost of economy and business class airplane ticket for
foreign travel is a taxable fringe benefit. F
SITUATIONAL ANALYSIS:
61. After 10 years of romantic relationship, Gardo decided to
end his relationship with Tecla which made the latter
very angry. Tecla with anger in her eyes, boxed, kicked
and berated Gardo. Gardo tried to pacify Tecla, but Tecla
slipped, lost control and fell to the ground requiring
hospitalization. To buy peace, Gardo decided to shoulder
medical expenses for the injuries suffered by Tecla. The
amount is:
A. Taxable income of Tecla.
B. Deductible expense of Gardo.
C. Subject to final tax.
D. Exempt from income tax.
62. At the testimonial dinner for new CPA’s, Ador, a
reviewer was requested to sing the theme song of the
movie “Ghost”. Bruno, a new CPA, was so delighted that
he felt he was falling in love with Ador so he decided to
cancel Ador’s indebtedness to him. As a result:
A. Ador realized a taxable income as compensation for
services.
B. If Ador accepts the cancellation, he will pay donor’s
tax.
C. Ador received a gift from Bruno and therefore is not
part of his taxable income.
D. The amount of indebtedness cancelled is partly
taxable, partly exempt.
63. Zoe took out a life insurance policy of P1,000,000
naming his wife as beneficiary. The policy provides that
the insurance company will pay Zoe and his beneficiary
policy, should he die before this date. The premiums
paid on the policy are P700,000. If Zoe outlived the
policy and received the proceeds of P1,000,000, such
proceeds will be:
A. Taxable in full.
B. Partly taxable, partly exempt.
C. Subject to final tax.
D. Exempt from income tax.
64. Using the preceding number, if Zoe dies and his
beneficiary received the proceeds of P1,000,000, such
proceeds will be:
A. Taxable in full.
B. Partly taxable, partly exempt.
C. Subject to final tax.
D. Exempt from income tax.
65. Zara, a dedicated and honest employee of Majubis Corp.
for the past 20 years was advised that she is to be
retrenched as the company was losing heavily but that
she would be given the separation pay provided by law.
To avoid implication of inefficiency, Zara was advised to
file a letter of resignation instead of being retrenched. If
Zara files a letter of resignation and receives the
separation pay, such amount is:
A. Taxable in full.
B. Partly taxable, partly exempt.
C. Exempt from income tax.
D. Subject to final tax.
66. Using the preceding number, if Zara is retrenched and
receives the separation pay, such amount is:
A. Taxable in full.
B. Partly taxable, partly exempt.
C. Exempt from income tax.
D. Subject to final tax.
67. A building was partially destroyed by fire in 2009. The
building had a book value of P5,000,000. The insurance
company was willing to pay P4,000,000, which was
 refused by the owner. Finally, the claim was settled in
2011 for P4,600,000. The proceeds will be:
A. Exempt from income tax.
B. Part of taxable income.
C. Subject to final tax.
D. Partly exempt, partly taxable.
68. Eme Corporation secured an income tax holiday for 5
years as a pioneer industry. On the fourth year of the tax
holiday, Eme Corporation declared and paid cash
dividends to its stockholders, all of whom are individuals.
Are the dividends taxable?
A. The dividends are taxable: the tax exemption of Eme
Corporation does not extend to its stockholders.
B. The dividends are tax-exempt because of Eme
Corporation’s income tax holiday.
C. The dividends are taxable if they exceed 50% of Eme
Corporation’s retained earnings.
D. The dividends are exempt if paid before the end of
Eme Corporation’s fiscal year.
69. Witchikels Corporation purchased a residential house
and lot with a swimming pool in an upscale subdivision
and required the company president to stay there
without paying rent; it reasoned out that the company
president must maintain a certain image and be able to
entertain guests at the house to promote the company’s
business. The company president declared that because
they are childless, he and his wife could very well live in
a smaller house. Was there a taxable fringe benefit?
A. There is no taxable fringe benefit because the
company president was only required to stay there
and did not demand free housing.
B. There was no taxable fringe benefit since it was for
the convenience of the employer and was necessary
for its business.
C. There was a taxable fringe benefit because the
house was very luxurious.
D. There was a taxable fringe benefit since the stay at
the house was for free.
70. Bank A deposited money to Bank B which earns interest
that is subjected to the 20% final withholding tax. At the
same time, Bank A is subjected to the 5% gross receipts
tax on its interest income on loan transactions. Which
statement below incorrectly describes the transactions?
A. There is no double taxation because the first is
income tax while the second is business tax.
B. There is double taxation because two taxes –
income tax and gross receipts tax are imposed on
the interest incomes described above, and double
taxation is prohibited under the 1987 Constitution.
C. Income tax on interest income of deposits of Bank A
is a direct tax while GRT on interest income on loan
transaction is an indirect tax.
D. There is no double taxation because the income tax
is on the interest income on Bank A on its deposits
with Bank B (passive income) while the gross
receipts tax is on the interest income received by
Bank A from loans to its debtor – customers (active
income).
71. An individual, who is a real estate dealer, sold a
residential lot in Quezon City at a gain of P100,000
(selling price of P900,000 and cost of P800,000). The sale
is subject to income tax as follows:
A. 6% capital gains tax on the gain.
B. 6% capital gains tax on the gross selling price or fair
market value, whichever is higher.
C. Ordinary income tax at the graduated rates or 5% to
32% of net taxable income.
D. 30% income tax on net taxable income.
72. The Cancer Hospital of the Philippines is a charitable
institution. Mr. Walang-awa visited the hospital on his
60th birthday. He donated P500,000 to the hospital and
P10,000 to a cancer victim who is only ten (10) years old.
He also brought with him a chain restaurant mascot that
played with the children patients while eating the
popular product of the restaurant. It had cost him
P15,000.
Which of the above contributions is qualified as
deductions from the gross compensation income of
Walang-awa if he is a newly retired government official
who is not engaged in business?
A. Only the P500,000
B. The P500,000 and the P10,000
C. The P500,000, P10,000, and the P15,000
D. None of them
73. Using the same data above, which of the following
contributions is/are qualified as deduction to Walang-
awa if he is engaged in business?
A. Only the P500,000
B. The P500,000 and the P10,000
C. The P500,000, P10,000, and the P15,000
D. None of them
74. The President of the Philippines and the Prime Minister
of Japan entered into an executive agreement in respect
of a loan facility to the Philippines from Japan whereby it
was stipulated that interest on loans granted by private
Japanese financial institutions in the Philippines shall not
be subject to Philippines income taxes. What basic
characteristic of taxation has been violated by this
agreement?
A. Inherent limitation
B. Theoretical justice
C. Legislative in character
D. Administrative feasibility
75. After having been informed that some massage parlors
are being used as fronts for prostitution, the
Sangguniang Panlungsod of Manila passed a tax
ordinance subjecting massage parlors within its
jurisdiction to such onerous taxes that leave them no
other alternative but to stop operating. The passage of
the ordinance is a valid exercise of:
A. Taxation.
B. Eminent Domain.
C. Police Power.
D. Police Power and Power of Taxation.
PROBLEM SOLVING:
76-78. The following data belong to Zion Corp. for the year 2015:
Educational assistance to supervisors and their P100,000
children
Employer’s contribution for the benefit of the 80,000
employees to retirement, insurance, and
hospitalization benefit plan
Year’s rental for an apartment paid by the 120,000
corporation for the use of its comptroller
The fringe benefits tax due is:
A. P75,294 B. P103,529
C. P141,176 D. P112,941
79-81. Zady Corp., a regional operating headquarters of a
multinational company in the Philippines provided its employees
with cash and non-cash fringe benefits in 2015 as follows:
Total amount of fringe benefits P1,000,000
60% of said amount was given to rank and file employees
40% of said amount was given to corporate officers as follows:
 To resident citizens (taxed at regular 45%
rates)
 To non-resident aliens not engaged in 35%
trade or business in the Philippines
 To special alien and Filipino employees 20%
The fringe benefits tax due is:
A. P60,704 B. P145,491
C. P84,706 D. P188,235
 Interest expense 40,000
For items 82 through 87: Salaries expense 150,000
Depreciation expense 50,000
The following relate to the compensation income of a private Contribution expense 80,000
rank and file employee during 2016: Pension contribution 50,000
Annual compensation income P540,000 Provision for bad debts 15,000
13th month pay 45,000 Entertainment expense 10,000
th
14 month pay 45,000 Office supplies 12,000
Total of monthly rice allowances during the 20,000 Loss on sale of patent 40,000
year Total P 447,000
Commission from the employer 12,000 Net income P 223,000
Christmas gift 8,000
Half of the contribution to pension is funding of prior service cost.
82-84. Compute the total non-taxable compensation income There was a write-off of receivables totaling P12,000 during the
including exempt de minimis benefits. year. The contribution was made to an accredited civic
A. P0 B. P23,000 organization.
C. P53,000 D. P105,000
94-96. What is the total regular allowable itemized deductions?
85-87. Compute the gross taxable compensation income. A. P369,900 B. P371,100
A. P670,000 B. P565,000 C. P317,910 D. P354,600
C. P617,000 D. P647,000
97-99. Compute the taxable income before OSD assuming the
88-90. The following relate to the net income of the audit firm of taxpayer is a corporation using OSD.
Mr. Zeus, a single taxpayer with two dependent children: A. P620,000 B. P520,000
Professional Fees P500,000 C. P550,000 D. P570,000
Long-term capital gain 80,000
Short-term capital gain 45,000 100-102. Compute the total deductions assuming the taxpayer is
Ordinary gain 20,000 a corporation using OSD.
Long-term capital loss ( 90,000) A. P220,000 B. P228,000
Short-term capital loss ( 30,000) C. P248,000 D. P208,000
Ordinary loss ( 40,000)
Other business expenses ( 200,000) For items 103 through 114:
Net income P285,000
Mr. Pedro is a managerial employee at Lafang International. He is
Compute his taxable income. paid the following benefits during the year:
A. P290,000 B. P210,000 Salaries, net of P8,000 PhilHealth, P12,000 SSS, P970,000
C. P190,000 D. P235,000 and P4,000 HDMF and P10,000 withholding tax
Fixed allowance 40,000
91-93. Shown below is the summarized result of operations of 13th month pay and other benefits 98,000
Ms. Zia’s business: Fringe benefits (residential rentals) 102,000
Sales P700,000
Cost of Sales 300,000 Mr. Pedro has a senior citizen mother and a disable godson who
Gross profit P400,000 are dependent upon him for chief support.
Capital gain on the sale of land 100,000
Total gross income P500,000 103-105. Compute the taxable compensation income.
Other deductible expenses 100,000 A. P1,036,000 B. P936,000
Contributions expenses: C. P961,000 D. P986,000
 Government priority project 50,000
 Non-accredited, non-profit 45,000 106-108. Compute the fringe benefit tax.
institution A. P0 B. P72,000
 Foreign foundation 25,000 C. P48,000 D. P24,000
Net income P280,000
109-111. Assuming Lafang International is a regional operating
Compute his taxable income. headquarters of a multinational corporation; compute Mr.
Pedro’s income tax on compensation.
A. P230,000 B. P270,000
A. P155,400 B. P259,000
C. P255,000 D. P170,000
C. P117,000 D. Indeterminable
For items 94 through 102:
112-114. Using the same facts in the immediately preceding
The following relates to a taxpayer: numbers, compute the fringe benefits tax.
Sales P1,000,000 A. P17,000 B. P9,000
Less: Cost of Sales 450,000 C. P34,000 D. P18,000
Gross income from operations P 550,000
For items 115 through 120:
Add: Non-operating income
Dividend income – domestic 50,000
The Finale Corporation had the following historical MCIT and RCIT
Interest income – bank 20,000
data:
Gain on sale of domestic stocks 30,000
Year MCIT RCIT
Gain on sale of office equipment 20,000
2013 P120,000 P110,000
Total gross income P 670,000
2014 200,000 220,000
Less: Expenses
2015 190,000 0
2016 170,000 180,000

115-117. Basing solely on the information provided, what is the

tax due and payable in 2013 and 2014, respectively?
A. P120,000; P220,000 B. P120,000; P100,000
C. P120,000; P210,000 D. P110,000; P220,000

118-120. In the immediately preceding problem, what is the tax

due and payable in 2015 and 2016, respectively?
A. P190,000; P0 B. P190,000; P180,000
C. P0; P0 D. P170,000; P0

END OF EXAMINATION

“EVERY WEAKNESS YOU HAVE IS AN OPPORTUNITY FOR GOD TO

SHOW TO SHOW HIS STRENGTH IN YOUR LIFE.”

Prepared by:

FRANCESCO RAFIEL A. MALLARI, CPA

FACULTY, Department of Accountancy
OLFU – Pampanga

Reviewed and Checked by:

ALEND KERSEY Q. SAMPANG, CPA

OIC – Department of Accountancy
OLFU – Pampanga

Approved by:

Dr. IGNACIO C. CORDOVA, Jr.

Dean – College of Business and Accountancy
OLFU