INCTAX-19/INCTAX-18 - Income Taxation
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INCTAX-19/INCTAX-18
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Quiz 1 - General Principles
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Thursday, 16 September 2021, 7:01 PM
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Thursday, 16 September 2021, 8:01 PM
1 hour
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Question 1
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The basis is the reciprocal duties of protection and support between the State and its
inhabitants.
a.
All of the above
b.
Necessity Theory
c.
Lifeblood Theory
d.
Benefits Received Theory
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The correct answer is:
Benefits Received Theory
Question 2
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Statement 1: Jurisdiction is the reason why the government would impose taxes on the
income of resident citizens derived from sources outside the Philippines.
Statement 2: Symbiotic relation is the reason why citizens must provide support to the state
so the latter could continue to give protection.
a.
Only Statement 2 is true
b.
Both statements are true
c.
Both statements are false
d.
Only Statement 1 is true
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The correct answer is:
Both statements are true
Question 3
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Which theory in taxation states that without taxes, a government would be paralyzed for
lack of power to activate and operate it, resulting in its destruction?
a.
Power to destroy theory
b.
Sumptuary theory
c.
Symbiotic Doctrine
d.
Lifeblood theory
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The correct answer is:
Lifeblood theory
Question 4
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Choose the correct answer. Tax avoidance a.
Is employed by a corporation, the organization of which is prompted more on the mitigation
of tax liabilities than for legitimate purpose
b.
Is any form of tax deduction scheme, regardless if the same is legal or not
c.
Is a tax saving device within the means sanctioned by law
d.
Is a scheme used outside of those lawful means and, when availed of, it usually subjects
the taxpayer to further or additional civil or criminal liabilities
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The correct answer is:
Is a tax saving device within the means sanctioned by law
Question 5
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Statement 1: Equality in taxation means the tax laws and their application must be fair, just,
reasonable and proportionate to one’s ability to pay.
Statement 2: Equal protection clause of the Constitution regarding the government’s power
tax happens is the protection of persons belonging to the same class against intentional and
arbitrary discrimination.
a.
Only Statement 1 is true
b.
Only Statement 2 is true
c.
Both statements are true
d.
Both statements are false
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The correct answer is:
Both statements are true
Question 6
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“Schedular system of income taxation” means:
a.
Compensation income and business professional income are added together in arriving at
gross income
b.
Separate graduated rates are imposed on different types of income
c.
All types of income are added together to arrive at gross income
d.
Capital gains are excluded in determining gross income
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The correct answer is:
Separate graduated rates are imposed on different types of income
Question 7
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Which of the following is not an example of excise tax?
a.
Sales tax
b.
Real property tax
c.
Transfer tax
d.
Income tax
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The correct answer is:
Real property tax
Question 8
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Which of the following elements of sound tax system provides that the sources of revenues
must be adequate to meet government expenditures and sustain the level of public services
demanded by citizens and policymakers?
a.
Administrative Feasibility
b.
Fiscal Adequacy
c.
Theoretical Justice
d.
None of the above
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The correct answer is:
Fiscal Adequacy
Question 9
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Which of the following is not an element of direct double taxation?
a.
Same subject matter
b.
Same amount
c.
Same year
d.
Two taxes
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Same amount
Question 10
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Which statement is wrong?
a.
A license fee is an exercise of police power
b.
A tax is a demand of sovereignty
c.
A toll is a demand of ownership
d.
A special assessment is a tax
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The correct answer is:
A special assessment is a tax
Question 11
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Which of the following statements is incorrect?
a.
For the exercise of the power of taxation, the state can tax anything at any time
b.
The state can have the power of taxation even if the Constitution does not expressly give it
the power to tax
c.
Taxes may be imposed to raise revenues or to provide disincentives to certain activities
within the state
d.
The provisions of taxation in the Philippine Constitution are grants of power and not
limitations on taxing powers
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The correct answer is:
The provisions of taxation in the Philippine Constitution are grants of power and not
limitations on taxing powers
Question 12
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Which of the following GOCCs has been granted an exemption under the CREATE law?
a.
Philippine Health Insurance Corporation (PHIC)
b.
Social Security System (SSS)
c.
Home Development Mutual Fund (HDMF)
d.
Government Service Insurance System (GSIS)
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The correct answer is:
Home Development Mutual Fund (HDMF)
Question 13
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Statement 1: Tax is generally unlimited because it is based on the needs of the taxpayers.
Statement 2: A person may refuse to pay on the ground that he will not receive benefit from
the government.
a.
Both statements are false
b.
Both statements are true
c.
Only Statement 1 is true
d.
Only Statement 2 is true
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The correct answer is:
Both statements are false
Question 14
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Tax base is a fixed percentage of the amount of property, income or other basis to be taxed
a.
Specific
b.
Answer not given
c.
Progressive
d.
Direct
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The correct answer is:
Answer not given
Question 15
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This is an inherent limitation on the power of taxation
a.
The rule of taxation shall be uniform and equitable
b.
Prohibition against delegation of the taxing power
c.
Prohibition against taxation of non-stock, non-profit educational institutions
d.
Prohibition against impairment of obligations and contracts
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The correct answer is:
Prohibition against delegation of the taxing power
Question 16
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Tax of fixed proportion of the value of the property with respect to which the tax is assessed
a.
Specific tax
b.
Property tax
c.
Ad valorem tax
d.
Excise tax
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The correct answer is:
Ad valorem tax
Question 17
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Which of the following does not relate to tax?
a.
Intended for public purpose
b.
Does not render business illegal when not paid
c.
Arises from law rather than from contracts
d.
Intended to cover cost of regulations
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Intended to cover cost of regulations
Question 18
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One of the characteristics of our internal revenue laws is that they are
a.
Penal in nature
b.
Political in nature
c.
Answer not given
d.
Generally retrospective in operation although the tax statute may nevertheless operate
prospectively provided it is clearly the legislative intent
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Answer not given
Question 19
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Real property taxes should not disregard increases in the value of real property occurring
over a long period of time. To do otherwise would violate the canon of a sound tax system
referred to as:
a.
Fiscal adequacy
b.
Theoretical justice
c.
Symbiotic relationship
d.
Administrative feasibility
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The correct answer is:
Fiscal adequacy
Question 20
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The following are the nature of taxation, except:
a.
Inherent and sovereignty
b.
Subject to the approval of the people
c.
Subject to inherent and constitutional limitation
d.
Essentially a legislative function
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Subject to the approval of the people
Question 21
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The principal purpose of taxation is
a.
To implement the police power of the State
b.
To raise revenue for governmental needs
c.
To reduce excessive inequalities of wealth
d.
To encourage the growth of home industries through the proper use of tax incentives
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The correct answer is:
To raise revenue for governmental needs
Question 22
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Which of the following is not a legislative act?
a.
Setting the amount of tax
b.
Determination of the subject of the tax
c.
Assessment of the tax
d.
Determining the purpose of the tax
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The correct answer is:
Assessment of the tax
Question 23
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Under the Constitution, no person shall be imprisoned for non-payment of tax. This
statement is
Select one:
True
False
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The correct answer is 'False'.
Question 24
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The actual effort exerted by the government to effect the execution of what is due from the
taxpayer is known as:
a.
Levy
b.
Collection
c.
Payment
d.
Assessment
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The correct answer is:
Collection
Question 25
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Statement 1: Tax amnesty is a privilege or freedom from the tax burden.
Statement 2: Tax exemption applies only to government entities that exercise proprietary
functions.
a.
Both statements are true
b.
Both statements are false
c.
Only Statement 2 is true
d.
Only Statement 1 is true
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The correct answer is:
Only Statement 2 is true
Question 26
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Statement 1: Government agencies performing governmental functions are exempt from tax
unless expressly taxed.
Statement 2: Government agencies performing proprietary functions are subject to tax
unless exempted.
a.
Only Statement 1 is true.
b.
Both statements are false
c.
Only Statement 2 is true.
d.
Both statements are true.
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The correct answer is:
Both statements are true.
Question 27
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Statement 1: In case of doubt, tax exemptions are construed liberally in favor of the
government.
Statement 2: In case of doubt, tax laws are construed liberally in favor of the taxpayer.
a.
Both statements are true
b.
Only Statement 1 is true
c.
Only Statement 2 is true
d.
Both statements are false
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The correct answer is:
Both statements are true
Question 28
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No law granting any tax exemption shall be passed without the concurrence of a ____ of all
the members of the _____.
a.
Majority; Congress
b.
2/3; State
c.
Majority; Board
d.
2/3; House of Representative
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The correct answer is:
Majority; Congress
Question 29
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When the impact and incidence of taxation are merged into the statutory taxpayer, the tax is
known as
a.
Personal tax
b.
Direct tax
c.
Property tax
d.
Excise tax
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The correct answer is:
Direct tax
Question 30
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Which of the following is an inherent limitation of taxation power?
a.
The tax laws cannot apply to the property of foreign governments
b.
The rule of taxation shall be uniform and equitable
c.
Veto power of the President on tax bills
d.
No law impairing the obligations of contracts shall be enacted
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The correct answer is:
The tax laws cannot apply to the property of foreign governments
Question 31
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The following are secondary purposes of taxation, except:
a.
Economic Growth
b.
Fiscal Purpose
c.
Promotion of General Welfare
d.
Reduction of Social Inequality
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The correct answer is:
Fiscal Purpose
Question 32
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Statement 1: Deliberate deduction of taxable income that has been received is an example
of tax evasion.
Statement 2: Opting to transfer property through sale rather than through donation where
tax liability would be higher is a form of tax evasion.
a.
Both statements are true
b.
Only Statement 2 is true.
c.
Both statements are false
d.
Only Statement 1 is true.
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The correct answer is:
Only Statement 1 is true.
Question 33
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Subject to inherent and constitutional limitations, the power of taxation is regarded as
supreme, plenary, unlimited, and comprehensive
a.
Situs of Taxation
b.
Theory of Taxation
c.
Scope of Taxation
d.
Basis of Taxation
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The correct answer is:
Scope of Taxation
Question 34
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Statement 1: Non-payment of taxes will necessarily render the business illegal.
Statement 2: Tax is imposed in the exercise of police power.
a.
Both statements are false
b.
Both statements are true
c.
Only Statement 2 is true
d.
Only Statement 1 is true
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The correct answer is:
Both statements are false
Question 35
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Statement 1: Police power may regulate even liberty.
Statement 2: The three fundamental powers of the State emanate from the Constitution.
a.
Both statements are true
b.
Only Statement 1 is true
c.
Only Statement 2 is true
d.
Both statements are false
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The correct answer is:
Only Statement 1 is true
Question 36
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The following are similarities of the inherent power of taxation, eminent domain, and police
power, except one:
a.
Affect all persons or the public
b.
Are legislative implementation
c.
Interfere with private rights and property
d.
Interfere with private rights and propertyAre necessary attributes of sovereignty
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Affect all persons or the public
Question 37
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Which of the following is not an essential element of a tax?
a.
It may be payable in kind
b.
It is proportionate in character
c.
It is levied by the law-making body of the State
d.
It is an enforced contribution
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The correct answer is:
It may be payable in kind
Question 38
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Although the power of taxation is basically legislative in character, it is NOT the function of
Congress to:
a.
collect the tax levied under the law
b.
fix with certainty the amount of taxes
c.
determine who should be subject to the tax
d.
identify who should collect the tax
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The correct answer is:
collect the tax levied under the law
Question 39
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Which of the inherent powers may be exercised by public utility companies?
a.
Eminent Domain
b.
Both taxation and eminent domain
c.
Taxation
d.
Police Power
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The correct answer is:
Eminent Domain
Question 40
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Which statement is WRONG?
a.
The power of taxation may be exercised by the government, its political subdivisions, and
public utilities
b.
The power of tax is subject to certain constitutional limitations
c.
Generally, there is no limit on the amount of tax that may be imposed
d.
The money contributed as tax becomes part of the public funds
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The correct answer is:
The power of taxation may be exercised by the government, its political subdivisions, and
public utilities
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