tY r,r*J l-l

ReSA
The Review School of Accountancy
tTel. No. 735-9807 & 734-3989

TAXATION 22 ,fuly 2AL2 (SundaY)

Firet Pre-Board Exalulnation 10 : 30AlI to 12 :00 N -N -

MULTIPLE CHOICE
IIdSTRUCII]ONS I Sel-ect tne coriect answer for each of the t ol lowini,q guestions .

i4ark oniY ane answer for each item bY shading the box corresponding t-o the
ietter of .Your choice on the sheet Provided. SY&ICELY NO ENAS7T'XES AXA ALTONED.
tjss flanciT no. 2 onl

Which of the foltowing is,not included in the gross estate?

0 a. Revocable transier where the consideration is not sufficient
I- Revocable-transfer where the power of revocation wasthe not exercised
g. Transfer under a general power of appointment where consideration was
not sufficient
-l Transfer under a limited power of appointmenL
2 His heirs spent
wtren ?rocopio di-ed, he lef| an estaLe valued at P5,000,000' Memorial chapel'
p300,000 for all the funeral servj.ces rendered by Loyola
including the exPenses attendant to the wake, among the coffin, cremation services
and the urn where his ashes were placed. which the followi'ng amounts may
be deducted from his gross estate for funeral expenses;?
a. P300,000
b. P250,000
4 pzoa,ooo
d. P100,000

D 'l An example of intangible personal property without is:

a. domestic shares of stock.
b. foreign shares, 85t of the business of the corporation is in the
Philippines.
.4.foreignshareswithbusinesssitusj.nLhePhllippines.
d. foreign shares, certifi-cate of stock are kept in Makati.
4. Amounts received by the estate of the deceased. hi-s executor or life
admi-nistrator
as an insurance under policy taken by the decedent upon his own i-s:
a. excluded from the gross estate sj-nce the policy is taken by decedent upon
his own 1ife. designati-on is
.b. part of the gross estate whether the beneficiary's
revocable or irrevocable
c. part of the gross estate if the beneficiary's designation is revocabLe'
d. part of the gross estate if the beneficiary's designation is irrevocable.

5. In which among the foltowing instances is the flJ-ing of an estate tax return
not a requirement?
r/a-. The gross vafue of ttre estaLe is P100,000 and is exempt from the payment
of the estate tax-
b. The gross value of the estate does not exceed P200,000 consisting of
registered or regist':able properties'
c. The gross value of the .it"t" exceeds P200,000 but is exempt from the
palment of the estate tax.
d. None of the choices.

iaxerrox - FIRST PRE-BoARD ExAMINATIoN (BATcH 24)

 ReSA: The Revierv Sdrool of Accqrnancy Pry2of7
which of the following is deductible from the cornroon property of the decedent?
a. CLaims against the property inherited by the decedent during the marriage
mortgage on exclusive property mort-gaged by the decedent duri-ng
-_p. Unpaid
the marriage for the benefit of Lhe family
c. Loss during the marriage in a game of chance permitted by law
d. Support of ill.egitimate child of the decedent
The extension for the payment of estate tax where the estate is settled through
the i cciiirts )ris:
-ai nbf--exceeding f ive (5 ) year"s .
b. five (5) years or more.
c. not exceeding two l2l years.
d. none of the choices"
8 Which of Lhe following statements i.s cor"rect?
/. Family home deductlon shall be allowed on.ly if the the famj-ly home is
located j.n-the Phi-lippines.
b. Family home deduction shall" be at a naximum of P1,000,000 based on cost.
c. Family home deduction may be allowed for: two family homes, both j-n the
Philippj-hes, if certifi-ed by a Barangay Captain.
d. Family honie deducti.on shal1 be deducted at lesser than P1,000,000 if,
with vanishjng deduction and unpaid mortgage or i.ndebtedness, the value
of Lhe family home is already reduced to zero.
r\
,l
)
The following shall be paid or take place within a certain period in order to
be allowed as deduction from the gross estate. Which is the exception?
a. Deducti-on for property previousl.y t.axed
.&r Judicial expenses
c. Medi-cal expenses
d. Cl-aims agai-nsl the estale
10 The community properties shal] consist of all property owned by the spouses at
the tirne of the celebration of the marriage or acquired thereafter. One of the
following, however, is not a community property.
a. Properties inherited by the spouses before the marriage
b. Properties acquired by t-he spouses as donaticn b,efore the mar riage
c. Properti-es acquired using the salary earned by either spol_ise before the
marriage
*-.d-. Properties acquired before marriage by either spouse who had Iegitimate
descendants by a former marri-age

11. Which of the followi-ng is false?

-+< Donor's tax appiies also to juridical persons-
b. For purposesrcf.--donor's tax, second cousins are strangers t-o each other.
c. Encumbrance on the propert-y donated. if assumed by the donor 1s
deductible for dopg/-s- tax purposes.
d. As a rule, donaLi-on between husband an<1 wife during t.he marriage is void.
12. which of the followingr is nct a principal factor in the determination of
taxable gifts?
a. Identification of transfers inclucied in gross gift
b. Application of exempt transfers
c..Subtraction of allowed deductions
_d.'Multiprying the net gift by the appli,cable rates
13. In 20LA, John Lloyd gave a cash of P2000000 as a birthday gift to his daught.er,
Shaina. John Lloyd has not given any other gifts or donatj-on in 2010 but made a
donation to his daughter in t.he amount of P100,000 in 201-1 on account of his
daughter's forthcoming marriage. Based on the above information in 2011, John
Lloyd is:
a. liab1e to pay donor's tax based on P90,000 net gj.ft.
./' liable to pay donee's tax based on Pl00,000 net- gift.
b.-
E. exempted from paying donor's tax.
d. exempted from paylng donee's tax. ICC rt:i
!i.'i'i i .

, ,.: f il

TAX TTON _ FIRST PRE- BOARD EXAI\.IINATiON (BATCH 24)

7 ReSAr The Revler Sdrool of Accuntancy P+e3d7

14.The rule on transfer for lnadequate consideratlon doesi not apply to:
a':-' jewelr:y for per:.sona1 use,
h. delivery truck
c- vacant lot-
d. apartinent house .
15" rhe following are the requisi-tes of a donation for purposes of the donor's tax,
except one.
a-, Capacity of the donor
r.6. Capacity of the donee
c. Delivery of the subject matter of gift
C. Donative intent
16 . Wlren is the donation perfected? tt
'The moment the donor knows of the acceptance by the donee Wrf'(tf
--a'.
b. The moment t.he thing donated is delivered, eitherr actually or
const ructi veIy, to the donee -r ir fii'ir,i
c. Upon payment of the donor's tax
-t Upon execution of the deed of donation

hij Donor's tax is:

l// a. a property tax. c. a busi-ness tax
-b;' a personal tax. d " an excise tax.

18. One of the following is an incorrect statemenL regardi.ng dowry.

a. The donor must be the natural or adopting parent. of the child.
b. The donee musL be a legltimate, recognized natural or legally adopted
child of the donor.
.e..The dowry or gift on account of marriage must be, given before the
celebration of the marrj-age or within two (2) years thereafter.
d. The exemption allowed is to the extent of the fjrst P10,000.
e\/ 19. A resident cltj-zen has a property i-n Quezon City. His J.sg61 residence is in
Masi:ate City. While in Cebu City on a business trlp, he donated his property
in Quezon City to a relative who is long-ti-me resident of
Cebu City.
Where wil-l the donor file the donor's tax return?
;{ Quezon City c. Masbate City
b. Cebu City d. Any of the three c:ities
20.The cofllmon characteristic of transfer taxes is the transfer of property:
a. ]'s onerous.
b. takes effect during t.he lifet.ime of the transferox.
c. takes effect. upon the death of the transferor.
,{. is gratuitous.
21, t hich of the foJ-lowing shall- not result to value-added tax?
a. Sale of o1d computers used by a manufacturing corrpany
b. Transfer of office supplies for the personal use of the Office Manager
4$ S"t" of raw materials or packaglng material.s to export-orient.ed
z ertterprlse whose export sales exceed '703 of the total- annual production
d. Importation of goods for t.he personal use of the -importer
22. One of thb following transactions is VAT-exempt.
a, SaIe by an agricultural cooperative to non*members of agricultural
products the cooperative it.self did not produce
b. Sale of real property primarily held for sale to customers or held for
lease in the ordinary course of trade or business.
SaIe by an agriculLural cooperative to its members of processe<l
agricultural product it did not produce
d. Export sales by persons who are VAT*registered
t.'
/>
('123. The,r-creditabte input tax on construcLion in proqress can be cl-aj.med:
,{. after the construction 1s completed.
b. only after depreciation expense is deducted on the cons trucl:ion in
progress.
c. based on the payments made on progress billings.
d. none of the choices.
TAHTION - FIRST pRE- BOARD EXAMINATTON (BATCH 24)
 QSA: The Rflrteil Sdrool of Accanntancy P4e q6T
24 Which of the following statemeqts is incorrect?
a. Only VAT*reglstered taxpayers are required to pay the val_ue-added tax.
A b. A non*resident service provider who is noL VAT-registered is not subject
to the Phiiippine val-ue-added tax on servj-ces performed , in the
Philippines.
A lease of property in the course of trade or business is subject
to va-l-ue-added tax.
d. Goods imported into the phitippi-nes by vAT-exempt person which are
subsequently sold to a non*exerr4>t person are subject to value-added tax
on importation.
2s Mr. George Garei.a is engaged in the following:
A Trucking business, qross annua_I receipts P1,000,000
Lease of apartment house {monthly rental is p12, g00
per unit), gross annua] receipts 700,000
Practice of accounLancy, gross annual receipts 800,000
Mr. George Garcia is not VAT-regist.erecl. Which of the following slatements j-s
correct?
a. He is considered a VAI-registrable tazpayer.
b" He is mandator:ily required to regi-st.er under the vAT syst.em.
(:. He can optronalJ-y register: under t.he VAT system.
d. None of the choices
26. Vummy Fruitty, Inc. processes canned fruits. Prior to 2OL1, its gross sales
D never exceeds the VAT threshold amount. fn the year 2}li-, it decides to
register under the VAT system. For VAT purpose.s, Yummy Fruitty can avail as
input tax credit:
a. passed*on \rAT only.
b. passed-on VAT and presumptive tax only.
c' passed-on VAT. presumptive i-nput tax and transitional input. tax.
d, passed-on VAT and transitional lnput tax only"
2?. which of the following cannoL be convert.ecl into tax credit certificate?
a. lnput tax related to zero*r.lted sale
b. Unutilized VAT paid in advance aL the end of thre taxable year
c. Unused input tax on a VAT-subject person who retired
cl . None of the choi-ces

f 28. A taxpayer was registered under the vAT system in the secoird month of the
second calendar quarter. Hj-s Certificate of Registration shows the effecLive
date as of June 1. To comply with VAT .l:equirements/ what wi-l1 he file
initiaJ"ly ?
a. Monthly VAT declaration on or before May 20
h. Monthly VAT' declar:ation on or before June 20
c. Quarterly VAT return on o.r before July 25
d. None of the choi_ces.
29. A srirunary list of sales is requirecl to be sui:mitted when the:
a. quarterly sales, gross of VAT, exceeds p2,500,000.
b. quarLerly sa1es, net of VAT, exceeds p2r500,000-
c. quarterly sales, net of VAT, is p2,5C0,000 ancl above.
d. none of the choi_ces.
30. Presumptive input tax is equiva-Lent to:
a. ten percent (10*) cf the gross val-ue in money of the purchases of primary
agricultural prociucts used as j-npuLs to the production.
b. five percent (58) of the gro.ss value in money of the purci:ases of primary
agricultural products used as inputs to the production,
c. four percent (4t) of the gross varue in money of the purchases of primary
agricultural products used as inputs to the producti.orr.
d. two percent ,27) of the gross value in money of the purchases of primary
agricultural products used as inputs to the production.

TA)gryroil - FIRST pRE- BOARD EXAMTNATTON (BATCH 24)

7 R6SA: The Rgrdeuv Sdtool of Amrmancy PagB 5 of7
f\
I -jl.A,lomestic carrier by land is engaqed in the transport of passengers. It is not
U VAT-registered and its annual gross receipts do not exceed the VAT threshold
amounL. To what. business tax 1s it ]iable?
i1" i2? value-added tax c. 3? tax on VAT-exempt persons
i-)" 3?, common carrier's tax d. Not. subjer:t to business tax
A. 32. Wn:Lchof the following percentage taxes is pai<l on u qr.rterly basis?
'\ a, Amuserrent tax c. Franchise tax
b" Tax on winnings d. Stock transactions tax
h -i3- whlcir of the followi-ng items shall be subject to the 28 premium tax?
O
a. Insurance and reinsurance.commissions, whether: life or non-life
b. Prernj.um on HeaLth and Accldent Insurance, whether recei-ved by a Life or
nr:n-1ife insurance company
c, income earned which can be pursued' independently of the insurance
business acLivities
ii. None of Lhe choices
f-) 34. one of the following i-s not subject to amusement tax on gross receipts.
V a. Propri-etor of Karaoke KTV bars c. Owners of music lounge
b. Owners of Cockpits ci. Lessees of bowling alleys
n 35. one of the following is a }arge taxpayer.
f{ a. Taxpayer with gross purchases of at least P800,000,000 for the preceding
year
b. 'Iaxpayer with at leasL P200,000 income tax pal.ment per quarter
c. Taxpayer wi-th at least P100,000 VAT payment per quarter
d. Taxpayer with at least P200,000,000 net worth at the end of each taxable
year

36.An American tourist comes in and goes out of the Philippj-nes very often.
During the year 2010 he stayed in the Philippines for more than 180 days on the
D agqreqate. For Philippine income tax purposes, he sha1l be classified as:
a, res-idenl alien.
1,. nonresj-dent alien engaged in trade or business.
c. nonresj-dent alien not engaged j-n trade or business.
d. not subject to Philippine income tax.

C 37. An overseas contract worker is allowed an additional exemption:

a. when he has no income from Phili-ppines sources, and he has not wai-ved his
right over the additional exemption for h.is dependent children.
Lr. when he has dependent chj-1dren i-n the Philippines whom he provides chief
supporL on a regular basis from hj-s income wholly earned outside the
Philippines.
c. when he and his wife have income from common property situated in the
Philippines that provides chief support to his minor dependents.
d. only when his qualified minor dependent children actual-i.y 1lve with him
broad.
38. Who of the following shafl- not quallfy ttre taxpayer to an additional exemption?
O a. Illegitimat.e chi-ld, 22 years old, living with and dependent upon the
taxpayer for chief support and a person wj-th di_sability
b. Stepchild, 2L years, living wit,h and dependent upon the taxpayer for
chief support
c. tegitimate chiId, 20 years, married and living abr.oad because of his
studi-es, dependent upon the taxpayer for chief support
rl . None of the choices

n 39. The additional exemption applies in all of the followi-ng cases, except when:
U a. the father is absent on a business.
b. a child or other dependent is away at school cr on a vlsit..
c. a parent, t.hrough force of circumstances, is obliged to maintain his
dependent children with refatives or in a boardlng house while he lives
elsewhere.
d. without necessity the dependent continuously makes his home, elsewhere.

TAXATION * FIRST pRE- BOARD EXAMINATION (BATCH 24)

 RsSA: The Retriw Sdtool of Accountarrcy Page 6 of 7
n 40 Which of the followi.ng statement.s is incorr:ect?
a. There may be temporary separat.ion of par:ent and chilcl, but where there is
the intention to go back to the family hom.e. the requi.rement of "living
with" is stil1 sati.sfied.
b. Galnful emplol,.rnent- for the child means t_hat_ the child himself is an
income taxpayer.
c. A chi ld who i-s a person with disalrili-t,y wi.1} qualify as dependent for
add.itional exemption purposes only if he is not more than 21 years old,
cl . None of the choices.

4L to 42. are based on the following: A Y-tI_-ggSf _! te re-d t rade r has the following
ransact-ions:
Sales of gocd to pri.vate entities, net of 12it VAT p 2, 500, o0o
Purchases of goods sold to prj-vate enlities,
gross of 12.r VAT 896,000
Sales to a government owned corporation (GOCC),
net of 12:i VAT 1,000,00rJ
Purchases of goods sol-d to GOCC, net of i2't VAil 700,000
41 ,How much is the standard input tax?
a. P120, 000 c. P50, 000
ir. P 70,000 d. ttrone of the cholr:e s
4 r:. is the VA.T payable?
How much
0 a. P244,OAO c" P120,000
b. P204,000 cl . None

43 and 47 are based on the folJ-owing: Rowel and his wife, Vanie, have the
following data on receipts and expenses for the current year:
Gross receipts P350,000
Cost of services 100,000
Business expenses 50,000
Premj-um palrments on insurance for car not used in business 1,000
Premium palment on health insurance (procured in
the month of August of the current year) 3, ooo
The couple has one (1) qual-ified dependent chi1d. So

43. is Rowel,'s total- personal exe-rptions?

How much
b a. P100,000 (.i - P50,000
b. P 75,000 ci. None of the choices
44. How much is Rowel's deductible premium palmenL on health insurance?
a. P2,40A c. p1,001)
b. PL,200 cl . Norie of the choices

45. How much is Rowel's taxable net income rr:ing .i-temized deductions?
a. P30. 000 ::. " p24,0AA
b. P25,000 d. i.ione c,f the choices

L 46- How much is the Optional Standarcl Deduction shoulci Rowel opt for it?
a. P145,000 ., p70,000
b. P140,000 l. P2*\,U00
41" is Rowe]'s taxable net income using Optional Standar:d DeducLiorrl:
How much
A a. P30,000 c. P2-4,000
b. P25,000 d. None of the choices
(/ 48. A donation was made by Cris, a crtizen and resident of t-he philippines, to
James Company, a domest-ic corporation. The property donated was l-ocat,eci j rr ir
f or:ei qn r:curt.r y and had a fair market value of p3, 000, 000 . 1he f orei gn
donor's tax paid wa$ P70{1 ,000. There was a <J.onaLion earl.ier in the same
calendar year of Pl, 500, 000 cash to George, a legiti.rnate chitd in the
Philippines.
How much was the donor's tax on the donation to James Company after deducting
foreign donor's tax paid?
a. P984,000 c. P244,000
b. P328,000 . None of the choices
r'{

TAXATION * FrRST pRE- BOARD EXAMTNATTON (BATCt-t 24)

/.s',N
l"' r*se',:j
\l;;"-,i-:/
7 ReSA, The Rerylem, Sdtool dAccounterrcy PryB7 67
Donor's tax rates
Over But noL over The tax shal] be Plus 0f excess over
1,000,000 3,000,000 44,000 8't 1, ooo, oo0
3, ACO, OOA 5. 000, 000 244, OOO 108 3, 000, 000
49" and 50. are based on the following: A dealer i-n securities has the foJ-lowing
dat.a for t-he year 2A11 :
Sa1es, shares held as invent.o::y P4,000,000
.Sa1es, shares hel-d as j-nvestment 1,500,000
Cost, shares held as invent.ory 2, 000, ooo
fiost, shares held as investment 500,000
:{upplies expense, net of VAT (common Lo both sales) 100,000
F.ent expense, net of VAT (corunon to both sales) 200,000

f-v 49 - How n'tuch ls the taxable net income assurning the clealer j-s married with a
qualified dependent daughter, 25 .years old person with disability?
a. P2, 650,000 (:, P1,625,000
b. P1, 650, 000 ci. Not subject to income tax
'50. How much is the VAT payabfe?-baed on (ocq\nt.rn0
C a. P170, 000 c - ?219,429
b. P204,000 ri. Not sub3ect t.o VAT

E}T' Or' SEAMINATT'!(

TD(ATION - FIRST pRE- BOARD EXAMTNATTON (BATCH 24)

 The Revlew School of Accountancy
8Tcl. No. 735-98o7 & ZS4-3gBs

TAXATION TAMAYO/cARCrA

TX ANS: FIRST PRE-BQAIiD

1.D 11. C 21.. C 31. B 41,- B

2.C 12. D 22. C 32. A 42. B
3.D 13. C 23. C 33. B 43. B
4.B 14. C 24. A )a
u*. D 44. C
5.A 15. ts 25. C 35. A L5. C
6.8 L6. A 26D 36. D 4r. C
7. A 17 D 27. D 37. C 47. A
8.A 18. C 28. C 38. C 48. C
9.D 19. C 29. D 39. D 4.9. C
10. D 20. D .30. c 40. c 50B
So]-uL:-ons
2. Answer: C
Actual funeraJ. e:rpenses
Lic.it (58 x 5,000,000)
A1iowed (maximum)
*L. Answer :B
42. Answer :B
F;
&r#arr# l.o'-

Less: Standard t ta:: (1,000,000 :; 7t)

@cc
P120,000
( 70,000)
Privater
P300,000

_ Passed-on \IAf (896,000 x L2/LL2) ( 96,000)

\IAT payable 50
,000 2O4,OOO
Less: I[ithholding 'lAT (1,000,000 x 58 (50. u00)
Iax payable P2O4,uOO

45. Answer: C
Gross receipts (L/2 x 350,000) P175,000
tess: Ccst of services (L/2 x 100,000) 50,000
Gross'income 125,000
Lass: Business expenses (L/2 x 50,000) 25,00c
Basic personal exemption 50,000
Additional exeuption 25,000
Premium on healttr insurance (200 x 5) 1,000 101 ,000
Taxable net income P24,OOO

47. Answer: A
Gross receipts (L/2 x 350,000) P175,000
io" l4or- ; 17t o-ooi J0,"9-09-
BrJi- petsonaf exe*ptior, - 50,000
AddiLional exemption 25,000 145,000
Taxable net income P30, 000
 -7
I

RsSA: I'he Revlew School of Accountancy Paee 2 of 2

a
;8. Answer:
Stranger Relati- ve
Net gift P3,000,000
Artd: Prior net gift 1,5('0 r 000
Total taxable net gifts fr. sol:, ooo
Tax due P 84,000
Total tax due P 984,000
Less: Pafrments for pr1:t_91ts 84, C00
Estate tax credit 655. 000 740,000
Tax payable P 244.OOl

E:tate tax credit

Actual foreign estate tax 700 .000
Limit (3,000,00a/4,500,000 x 984,c00) 555.000
Allowed (lower) 656,000

49 - Answer': C
[-s"r"s shares he-r-d as inventory P4 - 000 000
fG;;t Cost, shares helci as inven 2,000 , o00
? 000 ,000
! Grcss
Busj.ness erq)enses 300 ,000
Basic personi*I exernption 50 ,000
Additional exenption 25,OOO 37s,000
Taxabre net income 000

50. Answer: B
gg!p!!_tgx- 12, 000 ,000 x L2*l ; Yzec, ooo I
T-
C:r suppl-ics (2,000,0OO/3,500,00C x 12,000) ( 6,957) I

l__J3.1lAL