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Problems 1 - 2

Petitioner The Philippine American Life and General Insurance Company


(Philamlife) used to own 498,590 Class A shares in Philam Care Health
Systems, Inc. (PhilamCare), representing 49.89% of the latter's
outstanding capital stock. In 2009, petitioner, in a bid to divest itself
of its interests in the health maintenance organization industry, offered
to sell its shareholdings in PhilamCare through competitive bidding. Thus,
on September 24, 2009, petitioner's Class A shares were sold for
USD2,190,000, or P104,259,330 based on the prevailing exchange rate at the
time of the sale, to STI Investments, Inc., who emerged as the highest
bidder.

After the sale was completed and the necessary documentary stamp and
capital gains taxes were paid.

Months later, petitioner was informed that it needed to secure a BIR


ruling in connection with its application due to potential donor’s tax
liability.

In compliance, petitioner, on January 4, 2012, requested a ruling to


confirm that the sale was not subject to donor’s tax, pointing out, in its
request, the following: that the transaction cannot attract donor’s tax
liability since there was no donative intent and, ergo, no taxable
donation, citing BIR Ruling [DA-(DT-065) 715-09] dated November 27, 2009;
that the shares were sold at their actual fair market value and at arm’s
length; that as long as the transaction conducted is at arm’s length––such
that a bona fide business arrangement of the dealings is done in the
ordinary course of business––a sale for less than an adequate
consideration is not subject to donor’s tax; and that donor’s tax does not
apply to sale of shares sold in an open bidding process.

Commissioner on Internal Revenue (Commissioner) denied Philamlife’s


request through BIR Ruling No. 015-12. As determined by the Commissioner,
the selling price of the shares thus sold was lower than their book value
based on the financial statements of PhilamCare as of the end of 2008. As
such, the Commisioner held, donor’s tax became imposable on the price
difference pursuant to Sec. 100 of the National Internal Revenue Code
(NIRC).

In view of the foregoing, the Commissioner ruled that the difference


between the book value and the selling price in the sales transaction is
taxable donation subject to donor’s tax under Section 99(B) of the NIRC.

Not contented with the adverse results, petitioner elevated the case to
the Court of Appeals (CA).

On May 23, 2013, the CA issued the assailed Resolution dismissing the CA
Petition for lack of jurisdiction.

1. Where does one seek immediate recourse from the adverse ruling of the
Secretary of Finance in its exercise of its power of review?
a. The ruling of the Commissioner is subject to review by the Secretary of
Finance and that of the Secretary to the Court of Appeals.
b. The ruling of the Commissioner is subject to review by the Secretary
and that of the Secretary to the Office of the President before
appealing to the Court of Appeals.
c. The ruling of the Commissioner is subject to review by the Supreme
Court.
d. The ruling of the Commissioner is subject to review by the Court of Tax
Appeals.

2. Does the price difference in the adverted sale of shares in PhilamCare


attract donor’s tax?
a. No. The sale of the shares is a bona fide business transaction without
any donative intent and is therefore beyond the ambit of Section 100 of
the Tax Code.
b. Yes. Donor’s tax applies as regards insufficiencies.
c. No. The sale of shares was made with sufficient consideration.
d. Yes. Donor’s tax applies as the insufficiency does not arise from a
capital transaction subject to

Problems 3 - 4
Prince Kit, a Filipino citizen, died on February 14, 2019. He got married
eight years before his death. He left the aforesaid estate to his wife,
Princess KT, and to JC, their only son.

The following accounts were presented by the executrix to the BIR:

Real properties:
Residential house and lot P25,000,000
Building apartment brought into marriage 10,000,000
Agricultural land received by the Prince as donee, 6 years ago 2,000,000
Agricultural land 1,100,000
Real estate, Hongkong 5,000,000
Real estate, Philippines 7,000,000
Cash on hand and in banks:
Expanded foreign currency deposit – Equitable Bank 4,000,000
Philippine peso deposit – Metrobank 500,000
From gift before marriage – BPI (current account) 40,000
From unidentified sources 300,000
From a sale at a loss of exclusive property 1,500,000
Equity investments:
Shares of stock of a domestic corporation 200,000
Shares of stock of a Japanese corporation 300,000
Shares of stock of a Canadian corporation, doing business in
100,000
the Philippines only
Other properties:
Family car 1,500,000
Jewelry of wife, received during marriage 500,000
Clothes acquired during the marriage , with income during the
marriage:
For use of the decedent 60,000
For use of the wife 70,000
Owned before the marriage 90,000
Acquired during the marriage 20,000
Receivable under a life insurance with an insurance company 2,250,000
doing business in Hong-Kong
Receivable from employment pension plan 4,000,000
Other personal properties 2,500,000
Deductions Claimed:
Funeral expenses 500,000
Judicial expenses 4,000,000
Claims against insolvent person 1,500,000
Transfer for public use (part of the inherited agricultural
500,000
land)
Transfer for public use (part of Real Estate, Philippines) 2,500,000
Unpaid mortgage – Agricultural land 1,000,000
Unpaid mortgage – Real Estate, Philippines 800,000
Medical expenses – Incurred and paid six months ago 5,200,000

Per examination of the revenue officer the following transaction and accounts
were discovered:

Exclusive personal property of the surviving spouse and the decedent acquired
prior to marriage worth P2,500,000 and P3,000,000, respectively.

Other exclusive apparels of the decedent were valued at P500,000.

Income of P3,000,000 was specifically identified from the apartment building.

The surviving spouse declared several pieces of jewelry from her jewelry
collections that she acquired before their marriage. The collection set were
assessed to value P7,000,000.

The following creditors filed their judicial claim against the estate of the
decedent:
a. Creditor X filed in MTC Palo a claim for P200,000 evidenced by a
promissory note.
b. Creditor Y filed in RTC Tacloban a claim for P1,500,000 evidenced by a
notarized promissory note.
c. Creditor Z filed in RTC Tacloban a claim against the estate of the
decedent worth P2,000,000. The creditor’s counsel presented the creditor
before the RTC to testify for the validity of the same claim.

Several other claims against decedent’s estate totaling P2,500,000,


P1,500,000 of which is without proper documentation, are being liquidated by
the heirs to maintain the reputation of the Prince.

During the wake of the decedent, creditor Y, a long-time friend of the


decedent, talked to the heirs and told them his intention to condone half of
his receivables from their father.

The Princess KT presented to the BIR examiner pieces of documents evidencing


condonation of debt worth P500,000 by creditor X prior to Prince Kit’s death.

The Real Estate in the Philippines was acquired through gift 4-1/2 years ago.
The property has a FMV of P5,000,000 and a mortgage of P1,200,000.

The Real Estate in abroad was transferred to the decedent as inheritance from
deceased father. The property has a FMV of P3,500,000 and a mortgage of
P1,200,000.

The residential house and lot was inherited from the decedent’s father who
died 11/2 years ago. The fair market value at that time was P15,000,000.

The car was purchased with cash received as gift from the mother during the
year.

The cash was identified to be an inheritance from the decedent’s father.

The BIR examiner also took notice of the following transactions during the
lifetime and immediately prior to the death of decedent:
a. A brand new Porsche worth P7,000,000 was sold to JC for P4,000,000.
b. A residential property valued P5,000,000 was sold to Princess KT for
P4,700,000.
c. The agricultural farm of the decedent in Ilocos Norte was sold to JC with
insufficiency value of P2,500,000.
d. Moved by the imminence of his death, months before the decedent dies, he
donated to his relatives and former students several properties worth
P6,000,000 and P5,500,000, respectively.

3. How much claims against the estate is allowable as deduction?


a. P2,700,000 c. P3,950,000
b. P4,700,000 d. P1,950,000

4. As part of estate planning, to avail of the most benefits from potential


deductible amounts, determine how much should the executrix claim as
special deduction for family home?
a. P10,000,000 c. P1,000,000
b. P25,000,000 d. P0

5. A lessor rents his 5 commercial and 10 residential units for monthly rent
of P60,000 and P15,500 per unit, respectively. During the taxable year,
his gross receipts amounted to P3,600,000 from commercial units and
P1,860,000 from residential units. Compute the business tax.
a. P487,800 c. P432,000
b. P655,200 d. some other amounts

Problems 6 - 8
A PEZA-registered entity reported the following accounts, exclusive of
applicable business taxes:
Freeport Zone Custom Territory
Details Registered Unregistered Registered Unregistered
Activities Activities Activities Activities
Gross sales P 150,000,000 P 50,000,000 P40,000,000 P30,000,000
Cost of sales 100,000,000 40,000,000 25,000,000 20,000,000
Gross income P 50,000,000 P 10,000,000 P15,000,000 P10,000,000
Other income - 500,000 - 1,000,000
Total gross P 50,000,000 P 10,500,000 P15,000,000 P11,000,000
income
Operating
expense (90%
allocated to
registered
activities P10,000,000 P15,000,000
and the rest
to
unregistered
activities)

6. Determine the regular corporate income tax payable to the BIR.


a. P18,450,000 b. P7,650,000 c. P5,100,000 d. P0

7. Determine the tax paid to the provincial government where the PEZA entity
is located.
a. P1,500,000 b. P1,000,000 c. P1,300,000 d. P0

8. Determine the value added tax payable?


a. P32,400,000 b. P8,520,000 c. P8,400,000 d. P0

9. Examine the following items:

Statement 1: Double taxation does not violate the uniformity rule nor
does it infringe the equal protection guarantee just because one tax is
imposed by the national government and the other tax is levied by a
local government unit.
Statement 2: Regional or area headquarters (RAHQ) are subject to 10%
income tax.
Statement 3: The doctrine of irrevocability applies only to tax credit.

Determine which is legally tenable.


a. All statements are correct.
b. Statement 1 is incorrect; statement 2 is correct.
c. All are correct, except statement 1.
d. Statement 2 is incorrect; statement 3 is correct.

10. Which is a proper statutory construction for remedial measures in


taxation?
a. Tax remedial laws are construed strictly against taxpayers.
b. Tax remedial laws are construed liberally in favor of the taxing
authority if taxpayers committed fraud, error or omissions.
c. Tax remedial laws are construed strictly against the government.
d. Tax remedial laws are special constitutional grant of powers and must
be exercised carefully to avoid harmful impact to taxpayers.

11. Taxpayer Andy received on January 3, 2018 a preliminary assessment notice


(PAN) from the BIR, stating that he had fifteen (15) days from its receipt
to comment or to file a protest. Eight (8) days later (or on January 11,
2018), before he could comment or file a protest, Andy received the final
assessment notice (FAN). Decide on the validity of the FAN.
a. The FAN is invalid; Andy was not given the chance to respond to the
PAN, in violation of his due process rights.
b. The FAN is invalid for being premature.
c. The FAN is valid since it was issued before the right to assess
prescribed.
d. The FAN is valid. There is no legal requirement that the FAN should
await the protest to the PAN because protest to the PAN is not
mandatory.

12. Examine the following statements:


Statement 1: Protest against PAN is allowed through a motion for
reconsideration only.
Statement 2: Protest against FAN is allowed either through a motion for
reconsideration or reinvestigation.
Statement 3: Protest against Final Decision on Disputed Assessment (FDDA)
is either through a motion for reconsideration or reinvestigation.

Which is legally incorrect?


a. Statement 1 is correct.
b. Statement 2 is correct.
c. Statement 3 is correct.
d. Not all statements are correct.

13. The Dark Princess & Co. received a final assessment notice last June 15,
2018 for deficiency income taxes for covered period 2015, 2016, and 2017.
After 20 days from such receipt, the CFO filed a motion to the CIR. As of
the present day, the latter is yet to issue a decision on the protest.
Considering the lapse of time since the date of protest, the CFO now asks
for your advice whether he can still file protest before the CTA.
a. Yes, protest is still allowed since the BIR has not yet acted on the
protest.
b. Protest to the CTA is no longer allowed. As a rule, protest must be
made only within the jurisdictional 180-day period to file an appeal to
the CTA.
c. Yes. Protest is a matter of right to the taxpayer. He has the option to
exercise the right anytime he deems it proper.
d. Protest is not allowed. More than 180 days have lapsed since filing of
protest. The inaction of the CIR is a “deemed denial” which should have
been the proper subject of appeal.

14. In what doctrine does the proscription to seek immediate judicial recourse
as regards tax disputes finds legal basis?
a. Doctrine of poisonous tree
b. Doctrine of exhaustion of administrative remedies
c. Doctrine of res ipsa loquitor
d. Doctrine of strictissimi juris

15. Which is legally correct?


a. Vat is not a cascading tax.
b. Excise tax on excisable goods is a tax on privilege.
c. Banks and other financial institutions pay VAT on their gross receipts
if the annual receipts exceed P3,00,000.
d. Local government units mat collect OPTs from business establishments.

16. A an agricultural cooperative imported P10,000,000 worth of equipment for


use in its operation. After 5 years of using such properties, it decided
to sell the same to the Dark Princess, a non-member client.

Who should pay the VAT on importation?


a. The cooperative should pay the VAT as importations, as a rule, are
subject to VAT.
b. The cooperative is an agricultural cooperative, hence exempt from VAT.
c. The buyer should pay the VAT.
d. Neither the cooperative nor the buyer should pay VAT since the
importation was made by a VAT exempt entity.

17. BPI loaned P1,000,000 at 10% interest. Compute the GRT payable to the BIR
from the annual collection of interest.
a. P5,000 c. P1,070
b. P5,350 d. some other amounts

18. In 2019, Atara Dama Drugstore imported P10,000,000 worth of hypertensive


medicines from GSK, UK. As of March, the store was able to sell half of
the medicines for P8,000,000. Determine which is accurate.
a. VAT is inapplicable since sale of qualified hypertensive medicines are
now VAT exempt.
b. VAT payable will be computed from the total of importation and domestic
sale.
c. There is VAT payable to the BIR from the importation since only
domestic sale of such medicine is VAT-exempt.
d. All the aforesaid choices are incorrect.
19. Mang Kanor, a Canadian citizen, donated to his Filipina girlfriend,
through a will, a P10-million worth shares of stocks of SM Corporation, a
domestic company, and another P15-million worth of cash deposited in Bank
of America. While they were living together, as residents, in Madagascar,
Africa, Mang Kanor suffered heart attack and died. Canada and Madagascar
grant non-resident Filipino citizens exemptions on intangible personal
properties from transfer taxes. The BIR asks your opinion if how much of
the properties of the decedent will be subject to Philippines estate tax.
a. P10,000,000 c. P25,000,000
b. P15,000,000 d. P0

20. Queen Be bequeathed to Queen Bi the ceremonial family Crown Jewel that her
grandmother, Queen Bei, acquired many years ago from an unknown seller for
P10,000,000. At the time of donation, the property was assessed by the BIR
at P15,000,000. Queen Bi donated the Crown to her only heiress, the Dark
Princess. At that time, its value was assessed at P20,000,000. The Dark
Princess subsequently, after the death of the Queen, sold the Crown Jewel
to Prince Kit for P30,000,000. Determine the amount of gain subject to
capital gains tax.
a. P10,000,000 c. P15,000,000
b. P20,000,000 d. P0

21. Lalala bought shares of stock in 2017 at a cost of P100,000. He donated


these shares to Lololo on January 1, 2018, during which time, the said
shares have a fair market value of P1,000,000 and on the basis of such
fair market value, Lalala paid the corresponding donor’s tax. Lololo sold
the shares on January 1, 2019 for a consideration of P2,000,000. Compute
the capital gains tax.
a. P150,000 d. P240,000
b. P285,000 c. P300,000

22. Princess KT has been assessed deficiency income tax P1,000,000, exclusive
of interest and surcharges, for the taxable year 2018. The tax liability
has remained unpaid despite the lapse of June 30, 2020 (442 days), the
deadline for payment stated in the notice and demand issued by the
Commissioner. Payment was made by the taxpayer on February 10, 2021; 225
days past due date. Compute the total tax due.
a. P1,498,530 c. P1,799,448
b. P1,395,315 d. P1,492,192

23. Princess KT has been assessed deficiency income tax of P1,000,000,


exclusive of interest and surcharge, for taxable year2015. The tax
liability has remained unpaid despite the lapse of June 30, 2017, the
deadline for payment stated in the notice and demand issued by the
Commissioner, Payment was made by the taxpayer only on February 10, 2018.
Compute the amount due on February 10, 2018.
a. P1,491,644 c. P1,662,141
b. P1,762,963 d. some other amount

24. Prince JC, a resident of the Province of Samar, sold vast track of lands
in the deep northern hemisphere of the Philippine Islands. The lands, as
assessed in the local office and per CIR’s record, value at around
P50,000,000 and P60,000,000, respectively. The same property was sold for
P100,000,000. Compute the tax liability of Prince JC.
a. P6,000,000 c. P6,500,000
b. P7,500,000 d. P8,000,000

25. These are administrative rulings, more specific and less general
interpretations of tax laws issued from time to time by CIR.
a. BIR Ruling c. Revenue regulation
b. Revenue Orders d. Revenue Memorandum Circulars

26. The BIR examiner took notice of the following transactions during the
lifetime and immediately prior to the death of a decedent:
i. A brand new car worth P7,000,000 was sold to a son for P4,000,000.
ii. A residential property valued P5,000,000 was sold to a relative for
P4,700,000.
iii. An agricultural farm was sold to a son with insufficiency value of
P2,500,000.
iv. Moved by the imminence of his death, months before the decedent dies,
he donated to his former students several properties worth P6,000,000.

Determine the amount subject to estate tax.


a. P3,000,000 c. P6,000,000
b. P9,000,000 d. some other amounts

27. Lady Osang, an 80-year old spinster made the following transactions during
the month:
Payment for water and utility bill P10,000
Grocery purchases 40,000
Online purchase of airline ticket 20,000
Other purchases of goods and services 30,000

Assume all amounts are exclusive of applicable business taxes and


discounts.

Compute the amount of discount she availed from her senior citizen’s
privilege.
a. P12,500 c. P20,000
b. P18,500 d. P14,000

28. Examine the following statements:


Statement 1: VAT deficiencies are subject to 12% delinquency interest
rate.
Statement 2: Delinquency interest and deficiency interest cannot be
applied simultaneously.
Statement 3: Delinquency interest applies to the total of basic tax,
surcharges and deficiency interest.

Which statement is legally incorrect?


a. Statement 1 is correct
b. Statement 2 is correct.
c. Statement 3 is correct.
d. Not all statements are correct.

29. As a rule, double taxation warranted, however in certain cases, it becomes


prohibited as it violates
a. Due process c. Administrative feasibility
b. Equal protection d. Theoretical justice

30. What is the business tax applicable to revenue generated by the National
Grid Corporation of the Philippines (NGCP)?
a. Value-added tax c. Other percentage tax
b. 3% percentage tax d. Franchise tax

31. Tutty reported cumulative sales of P5,000,000. 30% came from vatable
operating income, 30% was sourced from VAT-exempt transactions, 30% from
0%-VAT items and 10% from non-operating items subject to various OPT’s.
Tutty earned P2,000,000 from employment during the same year. How much of
the total earnings should be used in relation to the VAT threshold to
determine whether the taxpayer is qualified to use the 8% income tax
option?
a. P1,500,000 c. P7,000,000
b. P5,000,000 d. P3,000,000

32. Condonation of debt of a managerial employee is subject to


a. Donor’s tax c. Fringe benefit tax
b. Regular income tax d. Final income tax

33. XYZ Corporation owns a condominium unit. During the year 2018, the said
corporation furnished and granted the said property for the residential
use of its Assistant Vice-President. The fair market value of the said
property as determined by the Commissioner pursuant to Section 6(E) of the
Code amounts P10,000,000 while its fair market value as shown in its
current Real Property Tax Declaration amounts to P8,000,000. The
condominium unit has a carrying amount of P7,000,000, with remaining
useful life of 15 years. Compute the Fringe Benefit expense.
a. P11,218 c. P27,885
b. P16,667 d. P20,192

34. Cabidog, Abanila, Romanca, Tegio Law and Accounting (CARTeL), Inc. was
incorporated as a PEZA-registered entity in 2015. Due to some unexpected
events, the firm decided to cease its business even prior to its
commercial operation. The Board decided to sell its remaining machinery
and equipment worth P20,000,000 to another competitor firm for
P21,000,000. Since the business failed to commence its operation, they
properly classified all these real properties as capital assets.

On June 2017, the firm filed their income tax return and paid the capital
gain tax on the sale of their machinery and equipment. Compute the proper
capital tax payable to the BIR.
a. P1,260,000 c. P60,000
b. P1,200,000 d. some other amounts

35. Which mode of protest arrests the running of prescriptive period for
collection?
a. Motion for reconsideration c. Either A or B
b. Motion for reinvestigation d. Both A and B

36. Examine the following statements:


Statement 1: As regards inaction of a representative, the appeal should be
made directly to the CTA and not to the CIR.
Statement 2: As regards denial of a representative, the appeal should be
made to the CTA or to the CIR.
Statement 3: Only VAT zero-rated transactions are allowed tax credit,
refund, and carry-over options.

Which is correct?
a. Only statements 2 and 3 are correct.
b. Only statements 1 and 2 are correct.
c. Statement 1 is correct; statement 3 is incorrect.
d. All statements are correct.

Problems 37 - 38
A corporation has been operating since January 1, 2012. Data for 2014 to
2016 are as follows:
Gross sales P3,080,000 P4,100,000 P5,200,000
Sales returns 80,000 100,000 200,000
Cost of sales 1,500,000 2,000,000 2,500,000
Operating expenses 1,450,000 1,900,000 2,333,333

37. Compute the tax liability in 2015.


a. P30,000 c. P25,000
b. P40,000 d. some other amounts

38. Compute the tax liability in 2016.


a. P50,000 c. P25,000
b. P40,000 d. some other amounts

39. Princess KT, Inc. was issued SEC and BIR certificates in 2014 and 2015,
respectively. It started its business operation in 2016. For the year
2018, the company reported these accounts:

Gross sales P10,000,000


Sales returns 500,000
Sales discounts 500,000
Purchases 3,000,000
Inventory as of December 2017 2,000,000
Inventory as of December 2018 1,500,000
Freight-in 500,000
Freight-out 1,300,000
Operating expenses 1,900,000
Administrative expenses 1,500,000

Compute the corporate tax liability for 2018.


a. P90,000 c. P200,000
b. P100,000 d. Some other amounts
40. Mr. Ben bought residential lot from Camella Homes, a realty developer, for
P1,500,000. During the 12-month period, Mr. Ben bought an adjoining lot of
Mr. C for 1,500,000. For purposes of VAT, how much should the BIR assess
Mr. Ben? Assume amounts are exclusive of VAT.
a. P180,000 c. P250,000
b. P360,000 d. P0

Problems 41 - 42
KT, Inc., a manufacturer sweet pineapple, established head office in
Ayala, Makati. Its factory is located in the City of Malabon while its
pineapple plantation is in the City of Candon, Ilocos Sur. Total sales of
P20 million for calendar year 2018 were generated as follows:

Ayala Center 60%; Tacloban branch 25%; Baguio branch 15%

41. How much of the total sales should be taxable in Malabon?


a. P8,400,000 c. P3,360,000
b. P5,040,000 d. P0

42. How much of the total sales should be taxable in Candon?


a. P4,800,000 c. P3,360,000
b. P5,040,000 d. P0

Problems 43 - 48
An WARAY TINGOG Corporation reported the following items for the year
2018:

On January 2012, Princess KT and his eight other friends formed An WARAY
TINGOG Corporation to operate real estate business. Each of the friend-
incorporator owned 10% equity while Princess KT had 15%, the remaining
stock ownership was offered through the local stock market. On November
2018, Princess KT sold through the PSE 20% of his stocks valued at
P10,000,000 for P12,500,000.

JC Company invested in the stocks of An WARAY TINGOG. It purchased 10,000


shares on April 2018 for P90/share. The shares had a par value of
P50/share. The company declared a 20% stock dividend in July 2018 followed
by a P14/share cash dividend in October 10, 2018. In need of working
capital, JC Company sold 5,000 shares for P100/share on 11/12/18.

The Corporation owns a condominium unit. During the year 2018, the said
corporation furnished and granted the said property for the residential
use of its president, Mr. Godibac. Its zonal value is at P10,000,000 while
its assessed value amounts to P8,000,000. The cost of the aforesaid
condominium unit is P7,000,000 with remaining useful life of 15 years.

Prince Kit is an employee of the company, he earns P3,500,000 yearly. He


owns a convenience store with gross sales of P2,500,000. During the year,
he reported sales returns of P500,000, cost of sales of P1,000,000 and
operating expenses of P600,000. His non-operating income is P700,000.

On August 15, 2018, An WARAY TINGOG sold a 500-square meter capital


residential house and lot for P3,000,000. The house was acquired in 2005
at P2,000,000. The assessed fair market values of the house and lot,
respectively, were P1,500,000 and P1,000,000. The zonal value of the lot
was P5,000 per square meter.

The company reported other passive income:


Winnings from charity horse race sweepstakes from P10,000
PCSO 60,000
Gain from sale of a 5-year bond 50,000
Interest income from a 5-year bank deposit 40,000
Interest income from a 10-year bond investment 30,000
Gains from redemption of shares in mutual fund

Determine the following accounts:

43. Final tax liability on the sale of shares of stocks.


a. P75,000 c. P375,000
b. P60,000 d. P1,875,000

44. Final tax on JC’s dividends.


a. P 28,000 c. P 14,000
b. P 16,800 d. P 0

45. Capital gains tax.


a. P240,000 c. P180,000
b. P210,000 d. P120,000

46. Monthly constructive income of the company.


a. P11,218 c. P27,885
b. P16,667 d. P20,192

47. Assume Prince Kit opted to be taxed at 8%, determine the tax due from his
business activity.
a. P200,000 c. P216,000
b. P256,000 d. 8% is not allowed

48. Final tax from other passive income


a. P38,000 c. P30,000
b. P10,000 d. P0

49. In 2017, X44, Inc. applied its 2016 excess income tax payments worth
P2,000,000 against its current income tax liability of P1,200,000. In
2018, X44 reported P500,000 income tax due before tax credit. In 2018, the
company filed before the BIR a claim for refund for its excess tax
payments. How much can X44 claim as refund in 2018?
a. P1,500,000 c. P300,000
b. P800,000 d. P0

50. The RATE program of the BIR stands for?


a. Run After Tax Evaders c. Remedy Against Tax Exemptions
b. Run Against Tax Evaders d. Right Against Tax Exemptions

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Income Tax Table (R.A. 10963)


RANGE OF TAXABLE
TAX DUE = a + (b x c)
INCOME
OVER NOT OVER BASIC ADDITIONAL EXCESS
- 250,000 - - -
250,000 400,000 - 20% 250,000
400,000 800,000 30,000 25% 400,000
800,000 2,000,000 130,000 30% 800,000
2,000,000 8,000,000 490,000 32% 2,000,000
8,000,000 - 2,410,000 35% 8,000,000