Interdepartment Tax and Accounting Quiz

FINAL ROUND prepared by: Jillian Kristin Deveza

FE1. Raquel Montero was retired by her employer – corporation in 2010 and paid P2,000,000 as a
retirement gratuity without any deduction of withholding tax. The corporation became bankrupt in
2011. Can the BIR subject the P2,000,000 retirement gratuity to income tax?
1st answer: No, if the retirement gratuity was paid based on reasonable pension plan where
Montero was 60 years old and has served the corporation for 9 years.
2nd answer: Yes, if Montero was forced by the corporation to resign due to retrenchment.
a. Both answers are wrong.
b. Both answers are correct.
c. First answer is correct, the second is wrong.
d. First answer is wrong, the second is correct.

FE2. On capital gains tax on real property, which of the following statements is not correct?
a. The tax should be paid, if in one lump sum, within 30 days from the date of the sale.
b. The term “initial payment” is synonymous to “downpayment.”
c. The instalment payment o the tax should be made within 30 days from receipt of each
instalment payment on the selling price.
d. The tax may be paid in instalment if the initial payments do not exceed 25% of the selling price.

FE3. All of the following, except one, are deductible from the gross estate of a decedent who died
September 30, 2010.
a. Income tax on income earned January 1 to September 20, 2010.
b. Gift taxes on donations given June 12, 2010.
c. Real property taxes payable during the last quarter of 2010.
d. Income tax on income earned during the last quarter of 2010.

FE4. Statement 1: There is a VAT in an importation by an importer-merchant even if he does not

intend to sell the imported article.
Statement 2: A person who s exempt from VAT may register under the VAT system.
a. Statement 1 is false; Statement 2 is false.
b. Statement 1 is false; Statement 2 is true.
c. Statement 1 is true; Statement 2 is false.
d. Statement 1 is true; Statement 2 is true.
FE5. Which of the following is not correct?
a. Transitional input tax is 2% of the value of the inventory or the actual VAT paid, whichever is
higher.
b. Amounts received from services performed by an individual pursuant to an employer-employee
relationship are exempt from VAT.
c. Export sales by VAT0registered persons are not subject to VAT.
d. Export sales by persons who are not VAT-registered are VAT exempt.

FA1. Which of the following violations cannot be subject to compromise penalties?

a. Failure to keep/preserve books of accounts and accounting records.
b. Failure to keep books of accounts or records in a native language.
c. Failure to have books of accounts audited and have financial statements attached to income tax
return certified by independent CPA
d. Keeping two sets of books of accounts or records

FA2. Date when assessment was received 10-01-07

Petition for reconsideration was filed with BIR 10-09-07
Decision of denial was received 7-02-08
2nd request for reconsideration was filed with BIR 7-15-08
Date of BIR revised final assessment was received 7-05-09

Last day to appeal to the Court of Tax Appeals is on –

a. July 15, 2009
b. August 4, 2009
c. August 5, 2009
d. September 5, 2009

FA3. Divine Word Company purchased shares of stock of Nueva Caceres Company for P60,000 and of
Ateneo Company for P30,000. At the end of the taxable year, it ascertained that its Nueva Caceres
Company stock was worthless because of the complete insolvency of the corporation, and its Ateneo
Company had declined in value of P28,000. Divine Word Company should recognize a loss on its
investment in Nueva Caceres and Ateneo Company shares of –
a. None
b. P62,000
c. 60,000
d. 90,000
FA4. All of the following, except one, results to a capital gain or loss
a. Gain on short sales
b. Option loss
c. Worthless securities
d. Ordinary gains

FA5. Janet sold her principal residence for P5,000,000 when its fair market value was P6,000,000. The
house was purchased 5 years ago for P3,000,000. Out of the proceeds of P5,000,000, Janet utilized the
P4,000,000 for the purchase of a new residential house.
The capital gains tax on the sale is
a. 72,000
b. 60,000
c. 360,000
d. 300,000

FD1. A transaction in which the speculator sells securities which he does not own (he merely borrows
the stock certificate through or from his stock broker) in anticipation of a decline in its price, and within
a reasonably short period of time buys or covers the stock to complete the transaction
a. wash sale
b. short sale
c. auction safe
d. rescissible sale

FD2. Villamayor, an employee of a cooperative was regularly receiving monthly salary and allowance
of P3,500 and P1,000, respectively. On June 1, 2010, he was retrenched by the cooperative paying him a
separation pay of P125,000. He decided to use this money in buying trimobile. For a six (6) month
period, he earned a net income of P24,000. How much income should Villamayor declare in 2010 for
income tax purposes?
a. 48,750
b. 46,500
c. 173,750
d. 171,000

FD3. In cases of deductions and exemptions on income tax returns, doubts shall be resolved
a. strictly against the taxpayer
b. strictly against the government
c. l iberally in favor of the taxpayer
d. liberally against the government
FD4. S1: The point on which a tax is originally imposed is impact of taxation.
S2: As a rule taxes are subject to set-off or compensation
Statement 1 Statement2
a. true true
b. false true
c. false false
d. true false

FD5. Boy Arana is the operator of Arana Coliseum. During the month, it had the following gross
receipts from various activities, to wit:
Concert by Rosa Mia P 85,000
Professional basketball 120,000
Amateur basketball 36,700
Billiard 45,000

The percentage tax payable by Boy Arana on the coliseum is

a. 18,000
b. 23,505
c. 43,005
d. 24,750