PART 1

1. ABC, a non-resident Japanese, donated domestic stocks valued at P500,000 to his half-sister who is
getting married abroad. Shanon designated the donation to the new spouses. He also donated her
used car in Japan worth P 1,000,000 to the spouses. Japan allows reciprocity clause. What is the net
gift subject to tax?
1,500,000
250,000
1,250,000
zero

2. The BIR discovered that no estate tax was paid on the estate of a certain decedent who died
November 2, 2010. The estate tax return should have been filed May 2, 2011. To avoid prescription,
the BIR should send an assessment letter not later than. (mm/dd/year)

Your answer

3. The seized property of delinquent taxpayer becomes the property of the government. This refers to
Distraint
Forfeiture
Levy
Compromise

4.

54,000
36,000
39,000
46,000

Please see image

5.

90,400
106,400
96,650
126,400

6. Which of the following items is not considered as a “special deduction” in computing the taxable net
estate of the decedent?
Standard deduction
Family home deduction
Medical expenses
Vanishing deduction

7. ABC donated a lot to the Philippine government. The lot had a zonal value of P 4,000,000 and was
encumbered by a P 1,000,000 mortgage. What is the donor’s tax?

Your answer

8. S1: The surcharge of 25% is imposed if a tax return was not filed within the time prescribed by law
and if a tax return was not paid within the prescribed by law. S2: In “ seizure to enforce tax lien”, the
residue of such proceeds over and above what is required to pay the tax sought to be realized,
including expenses, is returned to the owner of the property. S3: The remedy by distraint of personal
property and levy on realty may be repeated if necessary until the full amount due, including all
expenses is collected.
All of the statements are incorrect.
Only one statement is correct.
Only one statement is incorrect.
All of the statements are correct.
 9. S1: Donees and benefactor of donees have the primary obligation to pay the donor’s tax. S2: Valid
donations are subject to tax. S3: The donee's acceptance is required for the completion of the
donation.
All of the statements are incorrect.
Only one statement is incorrect.
All of the statements are correct.
Only one statement is correct.

10. The Constitution provides, “charitable institutions, churches, parsonages or convents appurtenant
thereto, mosques, and non-profit cemeteries and all lands, buildings, and improvements actually,
directly and exclusively used for religious, charitable or educational purposes shall be exempt from
taxation.” This
From all kinds of taxes
From income tax only
From real property tax
From value added tax

11. Which of the following requirements is not necessary in order that a tax return could be amended?
A tax return should have been first submitted to the BIR and such should not be withdrawn
The tax return should have been withdrawn first by the taxpayer before amendment shall be made.
No notice for audit or investigation of such return has been served to the taxpayer
The amendment should be made within three years from the date of filing the return

12. Which of the following donated properties of a non-resident alien donor may be exempt from donor’s
tax?
Franchise
Cars
Condominium Unit
Cash in Bank

13. S1: Taxation could be described as a power, as a process or as a means. As a power, taxation is a
way of apportioning the cost of government to the people. S2: The State can enforce contributions
upon its citizens in the form of taxes even without a constitutional provision authorizing it but with the
approval of the people. S3: The benefits from taxation may or may not be experienced by the
taxpayer. The justification to collect tax is base on lifeblood theory.
Only one statement is incorrect.
All of the statements are correct.
Only one statement is correct.
All of the statements are incorrect

.
 14.

0
2,400
17,400
20,400

15. Mr. ABC donated a brewery with a value of P24M to Mr. XYZ. Mr. XYZ assumed the mortgage on the
property valuing P18M. Compute donors tax.

Your answer

16. Which of the following donation to is not exempt from donor's tax?
Donation to the International Rice Research Institute
Donation to the Philippine Inventors Commission
Donation to a government-owned and controlled corporation
Donation to the Integrated Bar of the Philippines

17. S1: Police power and taxation is exercised only by the government but eminent domain may be
exercised by private entities. S2: Any tax laws which violate the principles of a sound tax system
renders itself unconstitutional. S3: The property taken under eminent domain and taxation are
preserved but that of police power is destroyed
Only one statement is incorrect.
Only one statement is correct.
All of the statements are incorrect.
All of the statements are correct.

18. Mr. and Mrs. ABC made a donation of P800,000 to their daughter, XX, on July 1, 2020. On August 1,
2020, they made another donation of P700,000 to XXX. Compute the net gift of the each spouses
subject to tax as of August 1, 2020.
750,000
550,000
500,000
1,250,000

19. For donations made on or after January 1, 2018, the donor's tax return shall be within
thirty (30) days after the date the gift is made
two (2) months after the date the gift is made
One year after the date the gift is made
six (6) months after the date the gift is made
 20. The local Government Code took effect on January 1, 1992. ABC’s legislative franchise was granted
sometime before 1992. Its franchise provides that ABC will only pay 3% franchise tax in lieu of all
taxes. The legislative franchises of UUU and XXX Telecoms were granted in 1998. Their legislative
franchise state that they will pay only 5% franchise tax in lieu of all taxes. The Province of Baguio City
passed an ordinance in 1997 that imposes a local franchise tax on all telecommunication companies
operating within province. The tax is 50% of 1% of the gross annual receipts of the preceding
calendar year based on the income receipts, or receipts realize, within its territorial jurisdiction. Is the
ordinance valid?
Yes, the local government units are empowered by the Constitution to raise its own revenues
No, the Local Government Code prevails over ordinances.
Yes, autonomy of Baguio City
No, ordinance in effect resulted into double taxation

21. S1: Corporate donors are entitled to the P250,000 annual gift exemption. S2: Encumbrance on the
property donated, if assumed by the donor, is deductible for donor’s tax purposes. S3: A donation
can be made to conceived or unborn children.
Only one statement is correct.
All of the statements are correct.
All of the statements are incorrect.
Only one statement is incorrect.

22.

120,000
288,000
408,000
336,000

23. X took a life insurance policy on his own life for P1,000,000, naming B as the irrevocable beneficiary.
B predeceased X. What is the treatment of the insurance proceeds for estate tax purposes?
The P1M does not form part of B’s gross estate because he is an irrevocable beneficiary who is not the executor or
administrator of X’s estate.
The P1M forms part of B’s gross estate because his vested right over the policy continues to be effective until X’s death
The P1M does not form part of X’s gross estate because the beneficiary is irrevocable and is not the estate, its executor or
administrator.
The P1M forms part of X’s gross estate because X’s estate became the beneficiary after B’s death

24.
4,000
45,000
0
4,500

25.

29,286
74,000
225,000
30,625

26. Mr. ABC wanted to help her brother who is financially challenged. She donated an agricultural land
worth P 1,500,000 and designated her brother and sister-in-law as donees. How much shall be
reflected in net gifts subject to tax?
1,250,000
750,000
1,000,000
500,000

27. S1: Taxes may be imposed to provide disincentives to certain activities within the state. S2: For the
exercise of the power of taxation, the state can tax anything at any time. S3: There is no limit on the
amount of tax that may be imposed.
All of the statements are incorrect.
Only one statement is incorrect.
All of the statements are correct.
Only one statement is correct.
 28. In relation to the valuation of properties at the time of the decedent’s death for purposes of estate
taxation, determine which of the following valuations is erroneous:
Unlisted and untraded preferred shares shall be valued at their par value
Unlisted and untraded common shares shall be valued at their book value
Real property shall be valued in accordance with the fair market value as determined by the Commissioner of Internal
Revenue or the fair market value as determined in the schedule of values fixed by the Provincial or City Assessors,
whichever is higher.
Listed and traded shares of stock shall be valued at their arithmetic mean between the highest and lowest quotation of the
shares at the date of filing the estate tax return.

29. What is the required form in the donation of real property?

Written and oral agreement
Written agreement
Oral agreement
Public instrument

30. ABC Company donated a commercial lot worth P 1,000,000 to XYZ Company. The lot was
encumbered by a P400,000 mortgage which was assumed by XYZ. The property had P100,000
accrued property tax which XYZ assumed. The net gift shall be
1,000,000
900,000
500,000
600,000

31. S1: The donation of real property must be in a public instrument. S2: The donation of intangible
personal property must be made in writing if the value does not exceed P5,000. S3: Non-resident
aliens are subject to donor's tax only on donations of tangible properties located in the Philippines if
there is reciprocity clause.
Only one statement is correct.
All of the statements are correct.
Only one statement is incorrect.
All of the statements are incorrect.

32. S1: When a donor’s tax return was filed and it was found out by the BIR to have errors which gave
rise to a deficiency donor’s tax, the donor might be required to pay the deficiency although he did not
possess or own the property anymore. S2: The Government is not bound by any agreement between
the donor and the donee that the latter shall pay the donor’s tax instead of the former. S3: Donor's
tax is a proportional tax.
Only one statement is correct.
All of the statements are incorrect.
Only one statement is incorrect.
All of the statements are correct.

33. Who is the one directly liable to the payment of donor's tax?
Donor
Donor or donee
The person in possession of the property upon discovery of the donation
Donee
 34. The donor’s tax shall apply whether: I- the transfer is in trust or otherwise. II- the gift is direct or
indirect. III- The property is real or personal, tangible or intangible
I, II and III are true.
Only I is true.
Only II is true.
Both I and II is true.

35. Which is taxable only on Philippine donations?

An Italian citizen, residing in the United Arab Emirates
A Filipino citizen, residing in Canada
Filipino residing in Jolo, Sulu, Philippines
An Australian citizen, residing in the Philippines

36. Motivated by love, Mr. ABC donated a car to his brothers, Mr. X and Mr. Y, the naked title to Mr. X
and usufruct to Mr. Y for one year. Is the transfer of the car, naked title to Mr. X and usufruct to Mr. Y
a valid donation?
Yes the donation is valid provided that Mr. X agrees to the donation of the usufruct to Mr. Y.
No the donation is not valid because a right (usufruct) cannot be donated.
No the donation is not valid because it is specifically provided in the Civil Code that such donation is not allowed.
Yes the transfer of the naked title to X and usufruct to Y is a valid donation provided all the donees are living at the time of
donation.

37. Mr. ABC received a deficiency assessment (dated June 6, 2014) on his 2013 income tax on June 8,
2014. If he did not settle the tax, he should expect the BIR to enforce collection by distraint or levy
and/judicial action not later than (mm/dd/year)

Your answer

38. No law granting any tax exemption shall be passed without the concurrence of a majority of all the
______________.
members of the Congress
members of the majority party of the Congress
members of the Ways and means committee of the congress
members of Congress present during the deliberation of the tax exemption bill

39. S1: A donation can be both a part of the gross gift of the donor and a taxable income to the donee.
S2: If on any one date, there is a donation by one donor to his relative and another one to a stranger
there will be two separate donor’s tax return to be filed. S3: If the donation involves
conjugal/community property, each spouses shall file separate return corresponding to his/he
respective share in the conjugal/community property.
All of the statements are incorrect.
Only one statement is incorrect.
All of the statements are correct.
Only one statement is correct.
 40. ABC disposed an agricultural land to his granddaughters, XX and ZZ for a consideration of P200,000.
The property was worth P 1,000,000 at the date of disposal. Compute the donor’s tax.

Your answer

41. ABC, a resident of Dagupan City donated to XYZ a property in Laoag City. The donor’s tax is
P40,000. The deed of donation was signed in the residence of XYZ in Baguio City. The donor’s tax
return must be filed in
Quezon City
Baguio City
Dagupan City
Laoag City

42. The common characteristic of transfer taxes is the transfer of property:

Is onerous
Takes effect during the lifetime of the transfer
Takes effect upon the death of the transferor
Is gratuitous

43. A car dealer could not pay his taxes on sales. The dealer delivered several units of the car to the
Bureau of Internal Revenue in payment of the taxes. Which of the following is correct?
There is a valid payment of tax
There is valid forfeiture of property
There is in effect a collection of the tax by distraint
This is not a valid procedure for collection of the tax

44. Congress passed a sin tax law that increased the tax rates on cigarettes by 1,000%. The law was
thought to be sufficient to drive many cigarette companies out of business out of business, and was
questioned in court by a cigarette company that would go out of business because it would not be
able to pay the increased tax. The cigarette company is.
Wrong because taxes are the lifeblood of the government
Wrong because the law recognized that the power to tax is the power to destroy
Correct because the Congress, in this case, exceeded its power to tax
Correct because no government can deprive a person of his livelihood

45. Which of the following is violative of the uniformity rule in taxation?

A road users’ tax imposed on all motor vehicles registered and operating in the City of Baguio but does not subject vehicles
not registered therein but also operating temporarily in said city.
Wholesale dealers in oil are subject to occupation tax while wholesale dealers in other articles such as sugar, bacon, coal,
iron and other things are not so subject.
Different tax rates on boarding stables for racehorses and boarding horses that are not for racing.
A tax of P5 per square meter or fraction thereof is imposed on every billboard or sign anywhere in the country
 46. Mr. ABC, a non-resident Korean donor, donated a car in the Philippines worth P500,000 to his
resident Filipino best friend. Mr. ABC paid P12,000 donor's tax in Korea on the donation. Korea do
not impose a donor's tax on Filipino non-residents. What is the donor's tax still due in the Philippines?
3,000
18,000
15,000
0

47.

Your answer
PLEASE SEE IMAGE FOR REQUIREMENT
48.What is the total net gifts subject to tax on the donation made on September 21, 2018?
1,185,000
575,000
325,000
1,260,000

49.What is the donor' tax payable for the donations made on September 21, 2018?

Your answer

50.Assuming Mr. ABC only paid its donor'tax on September 7, 2018 (referring to donation made
on February 7) What is total amount payable, excluding compromise tax

Your answer

51.What is the donor's tax due on Februay 7, 2018?

15,600
7,000
600
0
PLEASE SEE IMAGE FOR REQUIREMENT
52.How much is the total allowable deduction?

Your answer

53.How much is the standard deduction

Your answer

54.How much is the estate tax due?

108,000
120,000
30,000
19,500

55.Compute the total taxable Gross estate.

11,650,000
500,000
1,800,000
3,250,000