You correctly answered24out of50questions with an accuracy of48.0%.You gained240experience points!Answer More ChallengesQuestion 1A resident citizen, married with 2 qualified dependent children has the following income and expenses for the year 2014:Gross income, Philippines3,000,000

Gross income, USA2,000,000

Business expenses, Philippines500,000

Business expenses, USA300,000

Interest income, peso bank deposit BPI Manila20,000

Interest income, US dollar bank deposit BPI Manila50,000

Gain from sale of vacant lot used as parking space for rent (selling price, P3,000,000; FMV, time of sale, P5,000,000)500,000

Gain from sale of shares of stocks listed and traded in the stock exchange (selling price, P100,000)30,000

How much is the total final tax on passive income?4,00014,0007,750None of the choicesSOLUTION:Interest income, peso bank deposit BPI Manila (20,000x 20%)4,000

Interest income, US dollar deposit BPI Manila (50,000 x 7.5%)3,750

Total7,750

Tax - Income Tax on Capital Assets, Sales or Exchange of Properties (Uncategorized)Question 2Which of the following is not for the benefit of the taxpayer?substantiation ruleall events testoptional standard deductioncohan ruleTax - General Principles of Taxation (Uncategorized)Question 3An employee receiving less than P240,000 per annum and is classified as a minimum wage earner shallbe allowed to claim the additional deduction of P2,400 for medical insurance premiums paid on the premise that he availed of the samenot be subjected to the income tax on the salary receivedbe allowed to claim the personal exemption of his or her spouse amounting to P50,000 pesos even if the spouse is not workingnot be subjected to the withholding tax system on his salary receivedTax - Income Tax Individuals (Uncategorized)Question 4Ronald and Bev, husband and wife are both employed in Shell Corporation. After office hours, they jointly manage an internet shop at the ground of their house. The internet shop is registered in the name of both spouses.Which of the following is the correct way to prepare their income tax return?Ronald will declare his own compensation income and Bev will declare hers. The income from the internet shop shall be equally divided between them. Each spouse shall be taxed separately on their corresponding taxable income to be covered by one consolidated return for the spouses.Ronald will declare his compensation income and Bev will declare hers. The income from the internet shop shall be equally divided between them. Ronald will file one income tax return to cover all the income of both spouses, and the tax is computed on the aggregate taxable income of the spouses.Bev will declare the combined compensation income of the spouses, and Ronald will declare the income from the coffee shop.All the income will be declared by Ronald alone, because only one consolidated return is required to be filed by the spouses.Tax - Income Tax Individuals (Uncategorized)Question 5By specific provisions of law, which of the following need not appear in a public instrument?a contract of partnership having a capital of P3,000 or more, in money or property.a pledge, describing the thing pledged and the date of the pledge, in order to be effective against third persons.an assignment of credit, right or action involving real property in order to produce an effect against third persons.a contract of agency, for the sale of a piece of land or any interest therein, in order to consider the sale by the agent as valid.Tax - Negotiable Instruments (Uncategorized)Question 6Mike has inadvertently omitted P100,000 income in his 2014 Income Tax Return. Upon discovery in 2015, the BIR issued an assessment for deficiency income tax for P100,000 plus 50% fraud surcharge. Meanwhile, Mike included the omitted P100,000 income in his 2015 Income Tax Return. What advice will you give Mike?any of the answers is correctamend his 2014 Income Tax Return to reflect the correct amount of incomeprotest the assessmentpay the assessed tax plus surcharge, and thereafter, ask for refundTax - Assessment (Uncategorized)Question 7Katie is a thief who is under obligation now to return the car to the owner of Tom. The car was lost through an accidental fire. The obligation willnot be extinguished because the obligation proceeds from a criminal offense hence Katie will still have to pay the price of the car.be extinguished because not all persons can avail of the remedies provided by lawbe extinguished because an accidental fire is always a fortuitous event.be extinguished because the value of the car will be converted into the number of days Katie will serve in prison.Tax - Obligations (Uncategorized)Question 8Jane, a dealer of jewelry sold one jewelry which she purchased in 2011 at a cost of P30,000. She sold the car on the following terms:June 1, 2014 downpayment10,000

August 1, 2014 installment due10,000

October 1, 2014 installment due20,000

October 1, 2015 installment due40,000

October 1, 2016 installment due40,000

How much will she report as gross income for 2014?45,00030,00015,00090,000SOLUTION:Selling price120,000

Less: cost30,000

Ordinary gain90,000

Gain to be recognized (90,000/120,000 x 40,000)30,000

Income can be reported in installment because it involves a sale by a dealer of a personal property.Tax - Income Tax Individuals (Uncategorized)Question 9Jomel has been an employee of San Miguel Corporation for 19 years. On April 1, 2015, Jomel will celebrate his 49th birthday and, on the same day, retire from his company. Jomels retirement benefits willbe tax exemptbe subject to tax since he is only 49 years oldbe either exempt from or subject to income tax depending on whether the retirement plan is BIR registered.be subject to tax since he has only been employed for 19 yearsTax - Income Tax Individuals (Uncategorized)Question 10Cornell obliged himself to give Jeff his motorcycle on January 20, 2014. There was no delivery until January 30, 2014 when the garage of the motorcycle collapsed due to a strong typhoon and the motorcycle was totally destroyed. Is Cornell still liable?No, even if Cornell was already default, he could plead impossibility of performance.No, because there was no demand by Jeff to deliver the motorcycle and the specific object was lost due to fortuitous event. The obligation is extinguished.Yes, because the contract is perfected.Yes, the obligation to deliver the motorcycle is changed to pay the equivalent value because Cornell is in legal delay.Tax - Obligations (Uncategorized)Question 11SIMI, a corporation registered in Australia, has a 50 MW electric power plant in Mindoro. Aside from SIMIs income from its power plant, which among the following is considered as part of its income from sources within the Philippines?gains from the sale to an Quezon power plant of generators bought from the USinterests earned on it dollar deposits in a Philippine bank under the Expanded Foreign Currency Deposit Systemroyalties from the use in India of generator sets designed in the Philippines by its engineersdividends from a 2 year old Australian subsidiary with operations in Kenya but derives 60% of its gross income from the PhilippinesTax - Income Taxation Corporation (Uncategorized)Question 12N, R and J solidarily bound themselves to deliver to S a Honda motorcycle valued at P 60,000. The obligation was not fulfilled through the fault of J. Thereupon, S filed an action in court against N and the court awarded P 72,000 to S representing the value of the motorcycle plus damages. Which of the following situation is valid?N can refuse to pay the penalty because it should be charged against J, the guilty partyS has to collect P 24,000 each from N, R and J to satisfy the courts award of P 72,000If S succeeds in collecting the P 72,000 from N, N in turn can collect from R P 20,000 and from J P 32,000If N pays S the P 72,000, N can collect R and J P 24,000 eachTax - Obligations (Uncategorized)Question 13The signature of Mark was forged as drawer of a check. The check was deposited in the account of Paul and when deposited was accepted by PNB Bank, the drawee bank. Subsequently, PNB Bank found out that the signature of Mark was actually forged. Which statement is most accurate?The drawee bank can recover from Mark. because he is the drawer even though his signature was forged.The drawee bank is estopped from denying the genuineness of the signature of the Mark, the drawer of the check.The drawee bank can recover from Paul because as endorser he warrants the genuineness of the signature.The drawee bank can recover from Paul, because the check was deposited in his account.Tax - Negotiable Instruments (Uncategorized)Question 14Dianne issued a promissory notes which states, I promise to pay Y or order P100,000 or 1 unit of Kia Pride. Which statement is most accurate?The promissory note is non-negotiable because the option as to which form of payment is with the maker.The promissory note is negotiable because the forms of payment are clearly stated.The promissory note is an invalid instrument because there is more than one form of payment.The promissory note can be negotiated by way of delivery.Tax - Negotiable Instruments (Uncategorized)Question 15A dealer in securities has the following data for the year 2014:Sales, shares held as inventory4,000,000

Sales, shares held as investment1,500,000

Cost, shares held as inventory2,000,000

Cost, shares held as investment500,000

Supplies expense, net of VAT100,000

Rent expense, net of VAT200,000

How much is the VAT payable?444,000None of the choices240,000204,000SOLUTION:Sales, held as inventory4,000,000

Less: Cost of shares held as inventory(2,000,000)

Gross income2,000,000

VAT rate12%

Output tax240,000

Input taxes - supplies (100,000 x 12%)(12,000)

Input taxes - rent (200,000 x 12%)(24,000)

VAT payable204,000

Tax - VAT (Uncategorized)Question 16An individual engaged in business earned net income which is less than his personal and additional exemptions during the year. Is he required to file an income tax return?yes, because he is required to file a tax return notwithstanding such lossno, because individual taxpayers whose gross income is less than his personal exemptions need not file returns.no, because he is not liable for any taxyes, because he still incurs income tax liabilities notwithstanding the foregoing factsTax - Income Tax Individuals (Uncategorized)Question 17Which is not required to file an income tax return?Larry, who derived purely compensation income from 2 employers in 2014 for a total amount of P40,000Edge, a nonresident alien whose only income in 2014 was subjected to final witholding taxAdam, a businessman with total earnings of P50,000 for 2014 but who is married and has 4 children (thus, with personal and additional exemption of P64,000)Paul, who derived purely compensation income from just one employer for a total amount of P1,000,000Tax - Income Tax Individuals (Uncategorized)Question 18The Commissioner of Internal Revenue may abate or cancel the tax liability whenIThe administration and collection costs involved do not justify the collection of the amount due

IIA reasonable doubt as to the validity of the claim against the taxpayer exists

IIIThe tax or any portion thereof appears to be unjustly or excessively assessed

IVThe financial position of the taxpayer demonstrates a clear inability to pay the assessed tax

Only II and III and IIII and IVTax - BIR (Uncategorized)Question 19Absent any contrary provisions in the agreement, under which of the following circumstances will a limited partnership be dissolved?a personal creditor of a general partner obtains a judgment against the general partners interest in the limited partnership.a limited partner assigns his partnership interest to an outsider and the purchaser becomes a substituted limited partner.a general partner retires and all remaining general partners do not consent to continuea limited partner dies and his estate is insolventTax - Partnership Law (Uncategorized)Question 20The NIRC requires that ordinary and necessary deductions should be deducted in the income tax computation of taxpayers, whenthe deduction is both paid and accruedthe deduction is accruedthe taxpayer needs to record the expensethe deduction is paidTax - Income Tax Individuals (Uncategorized)Question 21Which of the following shall not be subject to income tax?I.Pedro Reyes, an official of Corporation X, asked for an early retirement because he was emigrating to Australia.He was paid P2,000,000 as a separation pay in recognition of his valuable services to the corporation.

II.Juan Cruz, another official of the same company was separated for occupying a redundant position. He was given P500,000 as separation pay.

III.John Bautista was separated due to his failing eyesight.He was given P500,000 as separation pay.

All the three (3) were not qualified to retire under the BIR-approved pension plan of the corporation.I, II and IIIII and III onlyI and III onlyTax - Income Tax Individuals (Uncategorized)Question 22A taxpayer received a certain sum of money erroneously through the crediting of his bank account. The taxpayer knew of this error and informed the bank which did nothing in relation to the said error. The taxpayer then prepared his income tax return and did not include the amount erroneously received as part of his income for the year. No mention was made on this matter in his financial statements or income tax return. The said constitutesbasis for the imposition of donors taxnot a basis for fraud because the money was not owned by the taxpayerwillful intent to evade taxes which can constitute fraudfailure to file a returnTax - Income Tax Individuals (Uncategorized)Question 23The taxable income before income tax of Julie Corporation for the current year was P500,000. During the year, the Corporation received the following refund of taxes paid in previous years and recoveries of accounts written off, of which were credited to miscellaneous income:Refund of percentage tax20,000

Refund of income tax50,000

Bad debt recovered (allowed as deduction)30,000

Bad debt recovered (disallowed as deduction)15,000

How much would be the income tax payable of the corporation for the current year?None of the above130,500168,000160,000SOLUTION:Taxable income before income tax500,000

Refund of income tax(50,000)

Bad debt recovered (disallowed as deduction)(15,000)

Adjusted taxable income435,000

Tax rate30%

Income tax payable130,500

Tax - Income Tax Corporation (Uncategorized)Question 24As payment for a debt, Arianna issued a promissory note in favor of Joe but the promissory note on its face was marked non-negotiable. Then Joe instead of indorsing the promissory note, assigned the same in favor of Henry to whom he owed some debt also. Which statement is most accurate?Henry can claim payment from Joe because under the Negotiable Instrument Law negotiation and assignment is one and the same.Henry can claim payment from Joe only because he was the endorser of the promissory note.Henry cannot claim payment from Arianna on the basis of the promissory note because it is marked non-negotiable.Henry can claim payment from Arianna even though it is marked non-negotiable.Tax - Negotiable Instruments (Uncategorized)Question 25Gil worked for a manufacturing firm. Due to business reverses, the firm offered a voluntary redundancy program in order to reduce overhead expenses. Under the program, an employee who offered to resign would be given separation pay equivalent to his 3 months basic salary for every year of service. Gil accepted the offer and received P400,000 as separation pay under the program.After all the employees who accepted the offer were paid, the firm found its overhead still excessive. Hence, its adopted another redundant program. Various unprofitable departments were closed. As a result, Gil was separated from the service. He also received P400,000 as separation pay. Which among the following statements is correct?Gils separation pay is not subject to income taxGils separation pay is excluded from gross incomeGils separation pay is subject to income taxGils separation pay is excluded from his gross incomeSOLUTION:Choice d. Gil was separated fro a reason beyond his control which is redundancy. The amount he received is excluded from gross income. As a result choice c is not correct. Choices a and b. Gil voluntarily resigned, hence the separation pay he received, not being for a cause beyond his control, is not excluded from gross income. Furthermore, the separation pay is not also considered as tax-free retirement because there is no showing that he is 50 years or over, that he has rendered at least 10 years service with his employer, and he has not previously availed of the tax-free retirement.Tax - Uncategorized (Uncategorized)Question 26Roger Company is exempt from VAT under Section 109 because its gross receipts never exceeded P1,500,000. It is subject to the 3% percentage tax under Section 116 of the Tax Code. It files a Notice of Availment of the Option to pay the tax through withholding process. It furnishes a copy of the notice to its withholding agents payors and its RDO as well as the RDOs of its withholding agents payors. The following selected data are made available by Roger Company.ISales to customers who bought the goods in the course of trade or business, net of 3% withholding tax, P10,000

IISales to customers who bought goods not in the course of business, P15,000.

How much is the percentage tax payable after deducting the withholding percentage tax?299.737414500SOLUTION:Amount

Gross receipts (10,000+15,000)25,000

Tax rate3%

Percentage tax due750

Less: Withholding percentage tax (10,000 x 3%)300

Stocks transactions tax450

Tax - Percentage Taxes (Uncategorized)Question 27Among the nature of taxation is that it is an inherent power being an attribute of sovereignty. Which among the following is not among its manifestation as such inherent power?the State has the right to select the subjects and objects of taxationtaxes may be imposed even without a constitutional grantcourts not issue an injunction to enjoin the collection of taxesthere should be no improper delegation of the power to taxSOLUTION:B is a manifestation of the nature of taxation being a legislative power.Tax - General Principles of Taxation (Uncategorized)Question 28The BIR is allowed only to conduct of examination for unpaid taxes for each type of taxes paid by the taxpayer except in which circumstances below:when the BIR fails to complete its investigation within the prescribed period of 5 yearswhen determined by the BIR as beneficial to the national governmentwhen the taxpayer failed to file a return or files a fraudulent return which is subsequently discovered by the BIRwhen the taxpayer files an amended tax returnTax - Assessment (Uncategorized)Question 29A promissory note which does not have the words or order or or bearer will render the promissory note non-negotiable, and thereforethe note can still be assigned and the maker made liablethe holder can become holder in due courseit will render the maker not liablethe promissory note can just be delivered and the maker will still be liable.Tax - Negotiable Instruments (Uncategorized)Question 30Properties passing through a power of appointment is not includible in the estate of the decedent:when the decedent-grantor retains possession of the property with transfer being effected only upon the death of the decedent-grantor.when the decedent-grantor delegates to a 3rd person the right to transfer or transmit the property, its possession and profits, at any point in time with a clause excluding the designation by the 3rd person of the decedent-grantor as a recipient of the property or it profits.when the decedent grantor delegates to a 3rd person the right to transfer or transmit the property, its possession and profits, at any point in time.when the decedent-grantor receives profits from the said properties which will continue as long as the grantor is aliveTax - Estate Tax (Uncategorized)Question 31Michelle Corporation, registered with BIR in 2006, has the following data for the year 2014:Gross receipts1,000,000

Discounts given100,000

Returns and allowances150,000

Salaries of personnel directly involved in the supply of services300,000

Salaries of office personnel250,000

Depreciation of office equipment50,000

Fees of consultants directly involved in the supply of services50,000

Rental of equipment directly used in the supply of services70,000

Other operating expenses120,000

How much is the income tax due and payable using the optional standard deduction?59,40063,00024,000none of the choicesSOLUTION:Gross receipts1,000,000

Discounts(100,000)

Returns and allowances(150,000)

Net receipts750,000

Cost of services

Salaries of personnel(300,000)

Consultant fees(50,000)

Rental equipment(70,000)

Gross income330,000

Less: Optional standard deduction (40% x 330,000)132,000

Net operating income198,000

RCIT (30% x 198,000)59,400

MCIT (330,000 x 2%)6,600

Tax due and payable (higher)59,400

Tax - Income Tax Corporation (Uncategorized)Question 32A is a single and gainfully employed, She is the only child of B who is already of an advanced age and depends solely on A for sustenance. A has a live-in partner in the person of X who had a child out of wedlock with another woman. The child is a minor and is physically incapacitated and since X was not employed, both depend on A for survival. X subsequently dies leaving Xs child an orphan but in the physical custody of A. How much is As personal exemption?P75,000 because B qualifies as dependent but not the childP75,000 because a dependant is defined as a child dependent upon and living with the taxpayer and is below 21 years of age hence the child of X who now lives with A is a dependent.P100,000 because both B and the child qualify as dependentsP50,000 because B and the child do not qualify as dependentsTax - Income Tax Individuals (Uncategorized)Question 33In instances wherein the tax or any portion thereof appears to be unjustly or excessively assessed or where the administration and collection costs involved do not justify the collection of the amount due, the commissioner may:compromise the payment of the internal revenue taxsubmit the matter to a committee composed of taxpayers and BIR officials to determine future action the particular matterabate or cancel the tax liabilitycause a further investigation to determine the true value of the assessmentTax - Assessment (Uncategorized)Question 34Philip, the President of Josh Corporation, was authorized by the Board of Directors of Josh Corporation to obtain a loan from Joey Bank and to sign documents in behalf of the corporation. Philip personally negotiated for the loan and got the loan at very low interest rates. Upon maturity of the loan, Josh Corporation was unable to pay. Which statement is most accurate?Philip, as President, cannot be personally held liable for the obligation of the corporation even though he signed all the loan documents, because the loan was authorized by the Board.Because Philip was personally acting in behalf of the Corporation, he can be held personally liable.If Josh Corporation cannot pay, Philip can be held subsidiarily liable.Joey Bank can choose as to who it wants to hold liable for the loan.Tax - Corporation Law (Uncategorized)Question 35The proposed amendments to the VAT has spawned a lot of controversy. However, the issue of validity of the imposition of VAT is not one of the first impression. Tolentino vs. Secretary of Finance, ruled that the VAT law was valid for various reasons. Which among the following statements is not among the reasons mentioned in the decision for upholding the validity of the VAT law?It is equitable because it is imposed only on the sale of goods and services by persons engaged in business with an annual gross sales exceeding P550,000Small sari-sari stores, as well as sales of farm and marine products, are exempt from the VAT so that the costs of basic food and other necessities are expected to be relatively lower and within the reach of the general public.There was no improper delegation of the legislative authority to tax when Congress imposed the VATThe imposition of VAT does not violate the uniformity principle because it is applied similarly on all goods and services and to the public which are not exempt, at the constant rate of 0% to 12%Tax - VAT (Uncategorized)Question 36The provisions of the family code require the transfer of the share of the guilty spouse of his/her share in the community property in favor of the innocent spouse, in effect causing a transfer of the property. The said transfer issubject to Philippine donors tax due to the donative intentsubject to Philippine donors tax because there was a transfer of property for inadequate considerationnot subject to the Philippine donors tax due to lack of donative intentnot subject to the Philippine donors tax due to a provision of the Family CodeTax - Donor'S Tax (Uncategorized)Question 37A Filipino citizen maintains a bank in the UK. She earns passive income of 3% per annum at the end of the taxable year, she declared an interest income amounting to 1,000 Euro that said account. What applicable tax should be imposed on the said income?final tax rate of 7.5%none, it is exempt from income tax since it is not derived from sources within the Philippinesfinal tax rate of 20%graduated rate of income tax (5-32%)Tax - Income Tax Individuals (Uncategorized)Question 38Minyong Corporation and Aris Corporation have agreed to be merged into one corporation. To facilitate the merger, both corporations agreed that the merger be made effective on May 31, 2014. SEC approved the Articles of Merger on June 30, 2014. Which statement is most accurate?The stockholders and the Board of Directors can set the effective date of the merger anytime after the approval of the SEC.The effective date of the merger is always the date of the approval of the Articles of Merger by the SEC.The effective date of the merger would be the date approved by the Board of Directors and the stockholders.The effective date of the merger is May 31, 2014 the date stipulated by the parties as the effective date.Tax - Corporation Law (Uncategorized)Question 39Jonas Joson, a manager in Splash Corporation, is given a free trip to the US with his wife and family. The Company paid for all of the expenses of the said trip. He would be compelled to report the trip in his personal income tax return asadditional compensation incomeprofessional feesboth the trip and the fringe benefits tax paid would be recorded in his ITRno item of the trip and the tax paid should be reported in his ITRTax - Income Tax Individuals (Uncategorized)Question 40Payment made to a third person is valid to extinguish the obligation of the debtor to the creditor in the following cases, exceptAfter payment to the creditor, the third person acquires the creditors rightWhen through the creditors conduct, the debtor was led to believe that the third person had authority to receive paymentWhen the third person is subrogated to the rights of the creditorWhen the creditor ratifies the payment to the third personTax - Obligations (Uncategorized)Question 41A gets a loan of P 1,000,000 from B which becomes due on October 1, 2008 and mortgaged his house as security for the debt. On June 30, 2008, the mortgaged house completely destroyed the fire through the fault of C. A week later, B demanded payment from A. Is Bs demand valid?Yes, the debt becomes demandable unless A can give another security equally satisfactoryNo, the obligation is one with a definite period which is deemed intended for the benefit of both the debtor and creditorNo, the destruction of the house was not thru the fault of A.Yes, the debt becomes demandable even if A can give another security equally satisfactoryTax - Obligations (Uncategorized)Question 42Jones acted as an accommodation party in signing as a maker of a promissory note. Which phrase best completes the sentence. This means that Jones is liable on the instrument to any holder for value.for as long as Jones did not receive any consideration for acting as accommodation party.for as long as the holder does not know that Jones is only an accommodation partyprovided Jones received consideration for acting as accommodation party.even though the holder knew all along that Jones is only an accommodation partyTax - Negotiable Instruments (Uncategorized)Question 43Which of the following renunciation is not subject to donors tax?IRenunciation by the surviving spouse of his/her share in the conjugal partnership or absolute community property after the dissolution of the marriage in favor of the heirs of the deceased spouse or any other persons.

IIGeneral renunciation by a heir, including the surviving spouse, of his/her share in the hereditary estate left by the decedent.

IIIRenunciation by an heir, including the surviving spouse, of his.her share in the hereditary estate left by the decedent categorically in favor of identified heir/s to the exclusion or disadvantage of the other co-heirs.

I and III onlyI, II and IIIII onlyI onlyTax - Donor'S Tax (Uncategorized)Question 44Joan, a Filipino citizen engaged in the real estate business, filed his 2011 income tax return on March 15, 2012. On December 2012, he left the Philippines as an immigrant to join his family in Canada. After investigation of said return, the BIR issued a notice of deficiency income tax assessment on April 15, 2014. Joan returned to the Philippines as a balikbayan on December 8, 2014. Finding his name as a delinquent taxpayer, he filed a protest against the assessment on the ground that he did not receive the notice of assessment and that the assessment had prescribed.Will the protest of Joan prosper?No.e right of the government to make a tax assessment -prescriptible, irrespective of whether the delinquent taxpayer is out of the country or not.No. The assessment has not prescribed because it was issued by the BIR on April 15, 2014, which is within the reglementary period of 3 years from the time the return should have been filed on April 15, 2012.Yes. The assessment had prescribed because it was issued by the BIR on April 15, 2014, which is already beyond the reglementary period of 3 years from the time the return was filed on March 20, 2012.Yes. In the instant case, the suspension of the running of the prescriptive period applies because the assessment notice was issued by the BIR beyond the 3 years prescriptive period.Tax - Tax Remedies (Uncategorized)Question 45The following are basic principles of a sound tax systemfiscal adequacy, economic feasibility and theoretical justicefiscal deficit, administrative feasibility, and ability to payfiscal adequacy, administrative feasibility and theoretical justicefiscal adequacy, ability to pay, symbiotic relationshipTax - General Principles of Taxation (Uncategorized)Question 46Statement 1Symbiotic relation is the reason why the government could impose taxes on the incomes of resident citizens derived from sources outside the Philippines

Statement 2Jurisdiction is the reason why citizens must provide support to the state so the latter could continue to give protection.

Both statements are trueBoth statements are falseOnly statement 1 is correct but not statement 2Only statement 2 is correct but not statement 1SOLUTION:Both of the statements are false. Statement 1 refers to jurisdiction while statement 2 refers to the symbiotic relation.Tax - General Principles of Taxation (Uncategorized)Question 47Henry, subscribed 15,000 shares in the capital stocks of Joel Corporation. He paid 50% of the 15,000 shares. Henry asked the Corporate Secretary to issue him the corresponding stock certificate representing the 50% of what he already paid. The Corporate Secretary of the corporation refused. Was the Corporate Secretary correct?The Corporate Secretary cannot refuse because it is his legal duty to issue a stock certificate corresponding to the number of shares actually subscribed regardless of the actual payment.The Corporate Secretary is correct because the Corporation Code provides that no certificate of stock shall be issued to a subscriber until the shares as subscribed have been fully paid.The Corporate Secretary cannot refuse because a stock certificate can be issued corresponding to the percentage of shares which were paid.The Corporate Secretary cannot refuse because a certificate of stock can be issued provided it is indicated in the certificate the actual percentage of what has been paid.Tax - Corporation Law (Uncategorized)Question 48The optional standard deduction is applicable under the National Internal Revenue Code which provides that taxpayers shall be allowed the following as an optional deduction in lieu of the itemized deduction.10% optional standard deduction based on gross income for both individual and corporations40% optional standard deduction for both individuals and corporations with individuals based on their gross sales or receipts while corporations would be based on gross income10% optional standard deduction based on gross receipts for individuals and 40% OSD for corporations based on gross income40% optional standard deduction based on gross receipts for both individual and corporationTax - Income Tax Individuals (Uncategorized)Question 49Jane, Erik and Matet are partners in buying and selling cars. Jane, by the partners agreement, was authorized to buy only in cash. One day, Jane bought on credit a car from Joanne, a client, who did not know of Janes lack of authority. Janes purchase was made in the name of the partnership. Is the partnership bound in the sale?It is bound because Joanne was in good faith and the act of Jane was apparently in the conduct of the business.It is not bound because the contract with Joanne is not in the ordinary course of business.It is bound if it ratifies the contract of sale by acceptance of benefits.The partnership is not bound because the contract is unenforceable, Jane exceeded his authority.Tax - Partnership Law (Uncategorized)Question 50DMCI, a Philippine corporation, has 2 divisions, manufacturing and construction. Due to the economic situation, it had to close its construction division and lay-off the employees in that division. DMCI has a retirement plan approved by the BIR, which requires a minimum of 50 years of age and 10 years of service in the same employer at the time of retirement.There are 2 groups of employees to be laid off:AEmployees who are at least 50 years of age and has 10 years of service at the time of termination of employment

BEmployees who do not meet either the age or length of service of DMCI plans to give the following:

For category A employees, the benefits under the BIR approved plan plus an ex gratia payment of 1 month for every year of service.For category B employees, one month for every year of service.The company asks you for advice. Which among the following shall you give?The payments received by all of the employees are excluded from gross income.The benefits received by category A employees from the BIR approved plans are excluded from gross income the ex gratia payment of 1 month for every year of service should be included in their gross income.Only the employees who are at least 50 years of age and has 10 years of service at the time of termination of employment could exclude whatever they receive from their gross incomeThe one month for every year service payment received by category B employees are not excluded from their gross incomeSOLUTION:The separation, due to the economic situation, is one which is beyond the employees control, hence excluded from gross income and not subject to income taxation. The age of the employee, and his years of service does not matter.Tax - Uncategorized (Uncategorized)