1. In 2020, Delta Corporation bought a condominium unit on installment for the use of 9.

9. In general, the applicable rate in computing fringe benefit tax beginning January 1,
its executive. The acquisition cost inclusive of 12% interest is P6,720,000. The fair 2018, if the employee is a non-resident alien not engaged in trade or business, the
market value of the property per Tax Declaration is P6,800,000 while the zonal applicable rate is: 25%
value is P6,500,000. Assume the ownership over the property will be transferred to 10. Which of the following statements regarding grossed-up monetary value is correct?
the executive, how much is the fringe benefit tax? P3,500,000 I. The grossed-up monetary value of the fringe benefit is simply a figure meant to
2. The actual value of a motor vehicle acquired on installment basis by the employer in represent the entire income earned by the employee.
the name of the employee is equal to The acquisition cost divided five years II. The grossed-up monetary value includes the net amount of money received, the
3. During the 2020 taxable year, First Metro Pacific was able to persuade Francis to net monetary value of any property received, and the amount of fringe benefit
join the company as its Assistant Vice-President for Finance which included a car tax received by the employee from the employer.
plan worth P3,000,000 in its compensation package. First Metro purchased the III. The grossed-up monetary value of the fringe benefit is determined by dividing
vehicle and registered the same in favor of Francis. Assuming First Metro is an the monetary value of the fringe benefit by the grossed-up monetary value
offshore banking unit, how much is the fringe benefit tax? P1,615,385 factor.
4. During the 2020 taxable year, First Metro Pacific was able to persuade Francis to IV. The grossed-up monetary value of the benefit is generally the total allowable
join the company as its Assistant Vice-President for Finance which included a car deduction of the employer from his gross income.
plan worth P3,000,000 in its compensation package. First Metro purchased the All the choices
vehicle and registered the same in favor of Francis. Assuming further that Francis is 11. An employer subject to fringe benefit tax may be a/an: An individual; General
a non-resident alien not engaged in trade or business, how much is the fringe professional partnership; Corporation.
benefit tax? P1,000,000 12. In 2020, Omega Corporation purchased a motor vehicle for the use of its executive.
5. Which of the following is subject to fringe benefit tax? fringe benefit of the It was registered under the name of the executive although it was agreed that it
managerial employees. shall be used partly for the benefit of the company. The cost of the vehicle was
6. Statement 1: Monetized value of unused sick leave credits not exceeding 10 days to P1,400,000. The amount of fringe benefit tax is P753,846.
private employees is a tax-exempt benefit. 13. Which of the following statements is correct?
Statement 2: Monetized value of unused sick leave credits not exceeding 10 days to  Fringe benefits given to employees is subject to fringe benefits tax
government employees is a tax-exempt benefit.  Fringe benefits given to employees is exempt from fringe benefits tax
Only statement 2 is correct.  Fringe benefits maybe given to managerial, supervisory and rank and file
7. Statement 1: In case the employer purchased a residential housing unit and employees.
transferred its ownership to the employee, the monetary value is equal to the  If the fringe benefits is taxable, the tax will be paid by the employer
purchase price of the property. 14.The amount of de minimis benefits conforming to the ceiling of de minimis benefits
Statement 2: For property acquired on installment basis, the acquisition cost shall be:
normally includes the down payment and installment payment including the I. Exempt from income tax, regardless of the rank of the employee
interest on installment. II. Not be considered in determining the P82,000 ceiling of other benefits excluded
Neither statement is correct. from the gross income under the Code, as amended.
8. The amount of P90,000 under "other benefits" which are excluded from gross Both I and II
income shall 15. Kape Puro Manufacturing Corporation operates a manufacturing plant in Davao
I. Not be applicable to self-employed individuals. Economic Zone (a PEZA registered economic zone). LJ was assigned to lead the
II. Not be applicable to income generated from the conduct of trade or business. conduct of audit and performance evaluation of the plant which is estimated to last
III. Shall be applicable to all types of income for a period of 2-3 months. He was provided a free housing benefit for the duration
I and II only of the audit in one of the prominent subdivisions in the city. The zonal value of the
 property is R32,000,000 while its fair market value as shown in its current Real 24. The monetary value of a fleet of motor vehicles owned by the employer and used
Property Tax Declaration amounts to P25.000.000. How much is the fringe benefit by employees for business and personal purposes is equal to 50% of the acquisition
expense? P-0- cost divided by 5 years.
16. Facilities or privileges furnished or offered by an employer to his employees that are 25. The cost of educational assistance extended by an employer to the dependents of
of relatively small value and are offered or furnished by the employer merely as a an employee shall be treated as taxable fringe benefits, unless: The assistance was
means of promoting the health, goodwill, contentment, or efficiency of his provided through a competitive scheme under the scholarship program of the
employees. de minimis benefit employer.
17. Daily meal allowance for overtime work is a de minimis benefit if not exceeding 26. Statement 1: Personal expenses of the employee paid by the employer are not
what percent of the basic minimum wage? 25% subject to fringe benefit tax if the expenses are duly receipted in the name of the
18. The monetary value of a motor vehicle purchased by the employer on cash basis in employer.
the name of the employee is equal to The acquisition price multiplied by 100% Statement 2: The monetary value of expenses paid by the employer in behalf of the
19. In 2020, Mapagpala Corporation paid for the monthly rental of the residential house employee is equal to the amount of expenses paid.
of its branch manager amounting to P204,000. How much is the fringe benefit tax Only second statement is correct.
for the month? P54,923 27. Statement 1: The grossing-up of fringe benefits was adopted in order to align the
20. Which of the following conditions is required in order that expenses incurred or tax treatment of fringe benefits with salaries and wages.
paid by an employee but which are paid or reimbursed by his employer will be Statement 2: The grossed-up monetary value of the fringe benefit includes the net
exempt from income tax? amount of money received or the net monetary value of any property received and
I. The expenditures are duly receipted for and in the name of the employer. the amount of fringe benefit tax.
II. The expenditures are not of a nature of a personal expense attributable to the Both statements are correct
employee. 28. Juan Dela Cruz, accounting manager of ABC Corporation, provided the following
Both I and II are required data for 2020 taxable year:
21. Fringe benefit tax is computed based on: Grossed-up monetary value.
22. Uste Company owns a condominium unit in “The One Residences" which is near the
factory and the plant's administrative building. To make it convenient to its
executive, it allowed the latter to use the said property as his residence. The zonal
value of the property is R32,000,000 while its fair market value as shown in its
current Real Property Tax Declaration amounts to P25,000,000. Assuming that the
acquisition cost of the residential property is P26,000,000 and the remaining useful
life is 12 years. How much is the fringe benefit expense? P500,000
23. During 2020, Alpha Corporation gave the following fringe benefits to its employees:
How much is the fringe benefit tax? P32,308
29. Statement 1: Aircraft and helicopters owned and maintained by the employer are
subject to fringe benefit tax if assigned to managerial employees.
Statement 2: A yacht purchased or leased by the employer to be used by the
employee is not subject to fringe benefit tax if it is used solely for business
How much is the total allowable deduction from business income of Alpha operation.
Corporation? P3,245,138 Neither statement is correct.
30. The following data were taken from Juan (single), holding managerial position for  For property acquired for less than an adequate consideration, cost is the
2020 taxable year: amount paid by the transferee.
 For property acquired as a gift, the basis of cost is the fair market value of the
property at the time of the sale or exchange.
 For property acquired by inheritance, cost is based on the fair market value of
the property on the date of acquisition.
6. I. Capital gain on preferred shares redeemed for cancellation or retirement is
subject to final tax.
II. Sale of shares held as treasury stock is not subject to tax.
How much is the taxable compensation income subject to graduated rate under False. False
Section 24(A) of the tax code? P573,000 7. I. As a general rule, net capital loss is deductible from ordinary gain.
1. I. The basis of property transferred on tax-free exchanges is the substituted basis. II. The principle of holding period applies both to ordinary and capital gains or
II. In the hands of the transferor of property, substituted basis is computed by losses.
adding the dividends and amount of gain recognized to the original cost and False. False
deducting therefrom the money payment and fair market value of property 8. A. Capital losses are deductible from ordinary gains but net capital loss is not
received. deductible from ordinary gains.
True, True B. Ordinary losses are deductible only to the extent of the capital gains but the net
2. Jay, a resident citizen, disposed the following shares of stock of a domestic capital loss is not deductible from ordinary gain
corporation whose shares are not listed and traded in the local stock exchange: False. False
9. Statement 1: The sale of a housing unit to the government may be subject to 6%
final tax on the basis of the selling price or zonal value, whichever is higher.
Statement 2: At the option of the taxpayer, proceeds from the sale of real property
How much is the capital gains tax on the Jan. 15, 2019 sale? P8,250 from a housing unit sold to the government may be subject to 6% withholding tax
3. During 2019, Mr. Nello sold a property as follows: to be credited against the normal basic tax.
Both statements are correct.
10. Jay, a resident citizen, disposed the following shares of stock of a domestic
corporation whose shares are not listed and traded in the local stock exchange:
How much is the gain on sale? P200,000
4. I. Generally, sale of real property located in the Philippines and classified as a
principal residence of the taxpayer is tax exempt.
II. Property used in trade or business, which is subject to depreciation, is classified How much is the capital gains tax on the March 30, 2019 sale? P15,600
as ordinary asset. 11. Below are the data of Mr. Calix, a self-employed individual, married with six
True, True qualified dependent children during the current taxable year:
5. In determining the gain or loss from the sale or exchange of assets, the cost is
deducted from the selling price. The term cost refers to the following, EXCEPT
 For property acquired by purchase, cost refers to the acquisition cost of the
property.
 How much is the capital gains tax on the Feb. 14, 2019 sale? P-0-
19. Adrian sold a residential house and lot held for P10,000,000 to his friend. Its FMV
when he inherited it from his father was P12,000,000 although its present FMV is
P15,000,000. Assuming the house and lot was Adrian's principal residence and he
What is the amount of net taxable income? P635,000 used 1/2 of the proceeds to buy a new principal residence within eighteen (18)
12. I. Losses on worthless shares held as capital assets are treated as capital loss. months after the above sale. Assume further that Adrian properly informed the BIR
II. The capital loss realized on worthless shares held as capital assets are deductible about the sale. It shall be: Subject to P450,000 capital gains tax
against capital gains on sale of shares of stock. 20. Mr. Gav sold a real property located in the Philippines for P6,000,000. The property
False. False cost him P4,000,000 plus additional acquisition cost of 200,000. The property had a
13. On July 1, 2019, Ms. Janellah sold an 800-square meter commercial lot for fair market value of P5,500,000 on the date of sale. How much is the capital gains
5,000,000, which she acquired for P1,800,000 in 2003. On the date of sale, the tax? P360,000
property had a fair market value of 4,800,000 and a zonal value of P6,500 per 21. This is a capital asset A residential land owned by a practicing CPA.
square meter. What is the amount of capital gains tax? P312,000] 22. I. The 15% capital gains tax rates cannot be applied unless there is an actual
14. Gain from sale of real property classified as capital asset located abroad by a disposition of the shares of stock held as capital assets.
resident citizen is subject to II. Capital loss realized on sale of shares of stock outside the local stock exchange is
6% capital gains tax; Section 24A of the tax code False.True deductible only to the extent of capital gain from the same type of transaction.
15. Which of the following transactions is subject to 6% capital gains tax: Sale of vacant True, True
lot by an employee 23. Statement 1: The determination of 6% capital gains tax on sale of real property is
16. Antz sold the following shares of stock of domestic corporations which he bought based on net capital gains realized by the seller of real property.
for investment purposes: Statement 2: Except for certain passive income, a nonresident alien not engaged in
trade or business shall be taxed at 25% of his gross income derived from sources
within the Philippines
Only statement 2 is correct
Assume Antz is a dealer in securities, how much the capital gains tax? P-0- 24. Below are the data of Mr. Calix, a self-employed individual, married with six
17. Net capital loss carry-over is allowable deduction subject to the following qualified dependent children during the current taxable year:
conditions, EXCEPT:
 The taxpayer is a corporation.
 The taxpayer is an individual.
 The holding period is not more than 12 months.
 The amount of capital loss applied is not more than the income before
exemption on the year the capital loss was incurred.
18. Jay, a resident citizen, disposed the following shares of stock of a domestic
corporation whose shares are not listed and traded in the local stock exchange:
What is the amount of gross taxable income? P1,435,000
25. Mr. Bamba sold shares of stock of a domestic corporation held as capital assets for True, True
P600,000. The cost of the shares of stock was P800,000. 36. The following data are in the records of Ms. Felise:
How much is the capital gains tax? P-0-
26. Where the taxpayer is a corporation, which of the following statements is true?
Ordinary loss is deductible from capital gains
27. The following statements apply to the preferential tax treatment of capital assets
over ordinary assets, EXCEPT Net capital losses are deductible from ordinary gain.
28. The term "capital assets" include Real property not used in the trade or business of What is the amount of taxable net income of Ms. Felise in 2019? P270,000
taxpayer. 37. Ms. Felise is married, and his wife gave birth to a male twin on December 31, 2018.
29. An ordinary asset may include the following, EXCEPT Personal property of the How much is the taxable net income of Ms. Felise for 2018? P400,000
taxpayer not used in the business. 38. I. The principle of holding period for individual taxpayers is applicable to shares
30. The data related to the exchange of property are: surrendered upon dissolution and liquidation.
II. Capital gain or loss on shares surrendered by the investor upon dissolution and
liquidation is subject to final tax.
True, False
How much is the gain or loss from the exchange? P220,000 39. Holding period is the duration for which the taxpayer held the capital asset. A
31. I. The cost of the property acquired by way of gift is the fair market value of the capital asset held by the taxpayer for not more than 12 months is said to be short-
property at the time of donation. term.
II. Ordinary assets have preferential tax treatment against capital assets. 40. Where the taxpayer is a corporation, the following rules as to recognition of capital
False. False gains or losses from the disposition of property classified as capital asset shall apply.
32. Ian, a resident citizen taxpayer owns a property converted into apartment units Which is the exception? Net capital loss carry-over should not exceed the net
with a monthly rental of P10,000 per unit. He subsequently sold the property to income in the year the loss was incurred.
Jeff, a resident alien taxpayer. The sale shall be subject to: Basic income tax 41. Mr. Gavin acquired a five-hectare land at a total purchase price of P900,000. In
33. Statement 1: Gain from sale of treasury stocks outside the local stock exchange is addition, he incurred the following: P20,000 for attorney's fee and P40,000 for taxes
subject to capital gains tax. and other charges. When he developed the property, he presented the following
Statement 2: Sale of real property classified as principal resident outside the data:
Philippines is subject to income taxation.
Both statements are correct.
34. Antz sold the following shares of stock of domestic corporations which he bought
After six years Mr. Gavin sold the property for P4,000,000. How much is the gain or
for investment purposes:
loss from sale? P2,960,000
42. A sold his principal residence at a selling price of P5M but with a FMV of P6M. The
property sold was acquired for P3M. He purchased his new principal residence at a
cost of P7M. If only P4M out of P5M was utilized in acquiring his new principal
How much is the capital gains tax? P9,000
residence, how much is the capital gain tax? P72,000
35. I. The rule on holding period on capital gain or loss on sale of shares of stock outside
43. I. Capital assets will include stocks in trade which form part of inventory at the end
the local stock exchange is not applicable if the transferor is an individual.
of the taxable year.
II. Capital loss realized on sale of shares of stock subject to capital gains tax 15%
II. In the case of exchange, the selling price of the shares of stock shall be the fair
cannot be carried over to the succeeding taxable year.
market value of the shares issued.
 False, False
44. I. The sale of real assets located in the Philippines and classified as not a principal
residence is subject to final tax based on its selling price or fair market value,
whichever is higher.
II. Net capital loss is deductible from gross taxable income.
True, False
45. I. Property acquired for inadequate consideration is based on the fair market value
of the property or payment made, whichever is higher.
II. The cost of shares acquired through purchase that can be identified shall be
computed using the first-in, first-out method.
False. False