Activities
1. It is a type of administrative issuances that provide directives or instructions; prescribe
guidelines; and outline processes, operations, activities, workflows, methods, and procedures
necessary in the implementation of stated policies, goals, objectives, plans, and programs of the
Bureau in all areas of operations except auditing.
Answer - Revenue Memorandum Orders
2. Is a type of administrative issuances that includes publish pertinent and applicable portions as
well as amplifications of laws, rules, regulations, and precedents issued by the BIR and other
agencies/offices.
Answer - Revenue Memorandum Circulars
3. Statement 1: In case of conflict between a revenue regulation and the provision of the National
Internal Revenue Code, the latter shall prevail.
Statement 2: The revocation of a revenue regulation cannot be made retroactive even if the
reason for its revocation is that it is erroneous or contrary to law.
Answer - Statement 1 is correct; Statement 2 is wrong
4. The correct regarding the purpose(s) of revenue regulations issued by the Department of
Finance through the Bureau of Internal Revenue was to carry into effect the law's general
provisions by providing details of administration and procedure
5. In case of ambiguity, tax laws imposing a tax shall be interpreted
Answer - Liberally in favor of the taxpayer
6. Statement 1: Cost of technical books used by a CPA in the practice of his profession is
allowable business expense
Statement 2: Tuition fees, board and lodging incurred by a medical doctor while attending a
continuing professional education seminar is allowable business expense.
Answer - Both statements are correct
7. Example of business expenses of a professional practitioner is not allowed to be deducted
from the gross income
Answer - Professional expenses incurred outside the Philippines by a nonresident alien engaged
in business in the Philippines
8. In cases of deductions and exemptions, doubts shall be resolved.
Answer - Strictly against the taxpayer
9. The following taxes is always proportional
Answer - Value-added tax
10. Allowable compensation expense of an employer can be salary of employee paid for a
limited period of time after his death to his widow is allowable deduction of the employer and
Manager's expense account subject to fringe benefit tax.
11. Statement 1: As a rule, the interest must be on an indebtedness of the taxpayer, otherwise it is
not deductible.
Statement 2: Interest paid by the taxpayer on a mortgage upon real estate of which he is the legal
or equitable owner, even though the taxpayer is not directly liable upon the bond or not secured
by such mortgage, may be deducted as interest on his indebtedness.
Answer - Both statements are correct
12. Correct about NOLCO: can be
a. NOLCO is allowed as deduction from business income for the next 5 succeeding years under
Create Law
b. Domestic and resident foreign corporation subject to normal income tax is allowed with
NOLCO
c. Private educational institution enjoying preferential tax rate is allowed with NOLCO
13. The following should be used as basis in computing the Optional Standard Deductions.
I. For individual taxpayers using the accrual basis of accounting, OSD is based on 40% of gross
sales.
II. For individual taxpayers using the cash basis of accounting, OSD is based on 40% of gross
receipts.
III. For individual taxpayers using the other basis of accounting such as percentage of
completion method, OSD is based on 40% of gross receipts or sales, as the case may be.
14. Under Create Law, Enhanced Net Operating Loss Carry-Over (Enhanced NOLCO) –
NOLCO incurred within the first three (3) years from the start of commercial operations shall be
carried over as deduction in the succeeding five (5) years immediately following the year of the
loss
15. Under Create Law, effective July 1, 2020, the Corporate Income Tax (CIT) rate for
corporations will be reduced as follows for those entities or transactions subject to CIT
(a) Reduced CIT rate of 20% shall be applicable to domestic corporations with net taxable
income not exceeding P5, 000,000 and with total assets not exceeding P100 Million (excluding
land on which the business entity's office, plant, and equipment are situated), and (b) Reduced
CIT rate of 25% shall be applicable to all other domestic corporations and resident foreign
corporations
16. Under Create Law, the improperly accumulated earnings tax (IAET) was repealed
17. The following are not treated as Corporations: can be but not limited to
a. General professional partnership
b. A joint venture or consortium formed for the purpose of undertaking construction projects
c. A joint consortium for engaging in petroleum, coal, geothermal and other energy operations
pursuant to an operating consortium agreement under a service contract with the government
18. Statement 1: Tax on certain passive income is a capital gains tax
Statement 2: Other income, for income taxation purposes, is excluded in the determination of
an individual taxpayer’s returnable income.
Answer: Both statement is incorrect
Reason:
Statement 1 Tax on certain passive income is subject to a final tax
Statement 2 Other income, for income taxation purposes, is included in the determination of
an individual taxpayer’s returnable income
19. A joint ownership of a property formed for the purpose of preserving the same and/or
dividing it's income.
Answer: Co-ownership
20. This is an interest income derived within the Philippines but subject to basic income tax?
Answer: Interest income from loans
