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NATIONAL MOCK BOARD EXAMINATION 2017
TAXATION
1. A non-VAT person decided to optionally register his VAT-subject transactions under the VAT system. He
became VAT-registered during the year. He was also engaged in the sale of agricultural and marine food
products in their original state. He wanted to, likewise, register, under the VAT system, his VAT–exempt
sales. He approached you to seek advice as to what business tax will he be liable to. What will be your
answer?
a. He is liable to VAT on his VAT-subject transactions including the sale of agricultural and marine
food products in their original state.
b. He is liable to VAT on his VAT-subject transactions but exempt from VAT on the sale of agricultural
and marine food products in their original state.
c. He is not liable to VAT on his VAT-subject transactions and the sale of agricultural and marine food
products in their original state.
d. He is not liable to any business tax because he is not qualified to optionally register under the VAT
system.
2. An individual who is a pure compensation income earner is allowed to deduct the following from his gross
compensation income except:
a. Basic personal exemption.
b. Additional exemption.
c. Premium payment on health and/or hospitalization insurance.
d. Personal expenses.
3. An individual who avails of optional standard deduction cannot deduct the following except:
a. cost of sales.
b. business expenses.
c. premium on health and/or hospitalization insurance.
d. basic personal exemptions and additional exemption.
4. The personal exemption allowed to estate and trust is:
a. P20,000 c. P50,000
b. P25,000 d. none. Not allowed personal exemption.
Use the following items for the next 4 items
A VAT-registered practitioner, single and resident citizen, has five (5) dependents living with and dependent
upon him for chief support. Two (2) of the dependents are minors who are legally adopted. One is a child out
of wedlock, person with disability, 25 years old. The other two (2) are his brothers, who are both minors.
During the first quarter of the current, he earns and spends the following (net of applicable taxes):
Gross receipts from practice of profession, net of 10% withholding tax
P1,710,000
Cost of services(40% VAT-subject)
500,000
Salary from part-time teaching job, net of 5% withholding tax
123,500
Expenses in connection with the practice of profession (80% VAT– subject)
100,000
VAT payments for January and February
100,000
5. How much is the personal exemptions for the quarter?
a. P150,000 c. P75,000
b. P125,000 d. None of the choices
6. How much is the taxable net income using itemized deductions?
a. P1,300,000 c. P1,140,000
b. P1,175,000 d. None of the choices
7. How much is the taxable net income using OSD?
a. P1,300,000 c. P1,140,000
b. P1,175,000 d. None of choices
8. One of the following is not an important factor when computing the taxable net gifts and the gift tax
payable.
a. Residence of the donor
b. Citizenship of the donor
c. Blood relationship between the donor and the donee
d. The economic status of the donee
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9. John transfers his car to his brother Samuel for P400,000. The sold car costs P500,000. At the time of the
transfer, the car has a fair market value of P300,000. John inquires from you whether or not he is required to
file donor’s tax return and pay donor’s tax. What will you tell him?
a. He has to file a donor’s tax return because the transfer will be considered a transfer for insufficient
consideration because the selling price is less than the cost.
b. He does not have to file a return because it is a transfer for sufficient consideration, hence, no donor’s
tax is due.
c. He has to file a donor’s tax return and pay donor’s tax because transfers to relatives are generally subject
to donor’ tax.
d. He does not have to file a return because the BIR will not be in a position to know the transfer as it is done
between brothers.
10. A stockholder of a closely held corporation owns 100,000 shares before the IPO. The par value of the share
is P1,000,000. During the IPO, the shares are selling at P12 per share. His broker-friend advises him not to sell
his shares during the IPO but instead wait until after the IPO. After the IPO, the outstanding shares of the
closely held corporation are 1,000,000 shares and are now selling at P14 per share at the local stock
exchange.
The stockholder of the closely held corporation approaches you to seek your advice because he is also
planning to sell the shares directly to his friend and, therefore, not traded through the local stock exchange
at P15 per share.
How much is the capital gains tax if he sells the shares directly to his friend?
a. P50,750 c. P15,000
b. P45,000 d. None of the choices
11. Ching Ah Chung, accomplished singer from Hongkong, is included in one of the local films produced by
Bebecu Productions. Ching Ah Chung stays in the Philippines for five (5) months and makes the Philippines
his temporary home as required in the contract. How will you classify Ching Ah Chung for Philippine income
tax purposes?
a. Resident citizen
b. Resident alien
c. Non-resident alien engaged in trade or business
d. Non-resident alien not engaged in trade or business
12. Nash Singha, non-resident Indian national doing business in the Philippines, seeks your advice whether or
not he is allowed to claim personal exemptions for Philippine income tax purposes. What will your answer
be?
a. He is not allowed to claim personal exemptions for Philippine income tax purposes because he is not
a resident.
b. He is allowed to claim personal exemptions for Philippine income tax purposes because being a non–
resident alien doing business in the Philippines entitles him to such exemptions at all times.
c. He is allowed to claim personal exemptions for Philippine income tax purposes if the country where
he is a citizen or resident allows personal exemptions to citizens of the Philippines not residing
therein.
d. He is not allowed to claim personal exemptions for Philippine income tax purposes because there is no
showing that he intends to reside in the Philippines permanently.
13. Mrs. N.A. Iwanan is an employee of a Philippine corporation. Her husband is working as an OFW for years
and has no income from Philippine sources. During the filing of her Philippine income tax return, she asks
you whether she can claim the additional exemptions or not. What will your answer be?
a. She cannot claim the additional exemption because the husband shall be the proper claimant of the
additional exemption for qualified dependent children unless he explicitly waives his right in favor of
his wife.
b. She can claim the additional exemption provided her husband explicitly waives his right in her favor.
c. She can claim the additional exemption even without a waiver of her husband’s right because where
the spouse of the employee is unemployed or is a non-resident citizen deriving income from foreign
sources, the employed spouse within the Philippines shall be automatically entitled to claim the
additional exemption for children.
d. She can claim the additional exemption if the BIR rules in her favor.
14. A single individual taxpayer, resident citizen, has the following dependents during the year:
Andres, senior citizen, not a relative
Ben, person with disability, child, 22 years old
Carmen, 21 years old, resides abroad because of sickness
David, child with his live-in partner, 18 years old
How much total additional exemptions can this taxpayer claim?
a. P100,000 c. P50,000
b. P 75,000 d. P25,000
15. A taxpayer is supporting three (3) persons with disability. The first one is a nephew who is 19 years old; the
second one is a child out of wedlock, 18 years old and the third one is a child who is 25 years old. He asked
you how much additional exemption he can claim. What will your answer be?
a. P75,000 c. P25,000
b. P50,000 d. None
16. Nicolas placed a property under trust in favor of his son, Nicolas II. He designated Julian as a trustee. Under
the term of the trust, Julian has full discretion on what to do with the income of the property under the trust.
Who is the taxpayer for income tax purposes?
a. Nicolas c. Julian
b. Nicolas II d. Trust
17. Mr. Jose Vicente is a sole proprietor engaged in trading business. He consults you as to what income tax
returns he will file. What will your answer be?
a. He is required to file quarterly income tax returns only because he is engaged in business.
b. He is not required to file quarterly income tax returns because individuals are required to file annual
returns only.
c. He is required to file quarterly returns and annual returns because he is engaged in business.
d. He is not required to file any income tax return because he is a sole proprietor, hence, exempted from
filing returns.
18. Mr. Faustino Santos, testator, appointed Mr. Generoso Cruz as the executor of the estate. Mr. Santos was a
citizen of Argentina and a resident ofQuezon City. He was in California, USA visiting his son when he died.
He owned a Mercedes sports car and had several bank deposits in the USA. The executor asked you whether
or not the car and the bank deposits in the USA will still have to be declared as part of the Philippine gross
estate of Faustino Santos. Argentina does not impose transfer taxes of any kind. What answer will you give
him?
a. The car and the bank deposits in the USA have to be declared as part of the Philippine gross estate
because the decedent was a resident at the time of his death and, as such, properties wherever
situated are included in the gross estate.
b. The car and the bank deposits in the USA need not be declared as part of the Philippine gross estate
because when Mr. Santos died he was in California, USA making him a non-resident alien.
c. The car and the bank deposits in the USA have to be declared as part of the Philippine gross estate only
when the decedent specified in his will and testament that such properties must form part of his gross
estate.
d. The car and the bank deposits in the USA need not be declared as part of the Philippine gross estate
