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Income Taxation - Cpar test bank
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TAXATION 1 – Income Taxation
General Principles of Taxation
1. Taxation as distinguished from police power and power of eminent domain.
A. Property is taken to promote the general welfare.
B. Maybe exercised only by the government.
C. Operates upon the whole citizenry.
D. There is generally no limit as to the amount that may be imposed.
2. The following are constitutional limitations, except
A. No imprisonment for non-payment of poll tax.
B. Non-impairment of the obligation of contracts.
C. Rule of uniformity and equity in taxation.
D. Exemption from income tax of charitable institutions, cemeteries, churches,
personage or convents appurtenant thereto, as well as all lands, buildings and
improvements actually, directly and exclusively used for religious, charitable and
educational purposes.
3. Which of the following statements is correct?
A. The President is authorized to increase or decrease national internal revenue tax rates.
B. One of the nature of taxation is the reciprocal duties of protection and support between
the state and subjects thereof.
C. Every sovereign government has the inherent power to tax.
D. Income tax in an indirect tax.
4. A tax must be imposed for public purpose. Which of the following is not a public purpose?
A. National defense
B. Public education
C. Improvement of the sugar and coconut industries.
D. Improvement of a subdivision road.
5. Which is not an essential characteristic of a tax?
A. It is unlimited as to amount.
B. It is payable in money.
C. It is proportionate in character.
D. It is an enforced contribution.
6. Special assessment is an enforced proportional contribution from owners of land especially
benefited by public improvement. Which one of the following is not considered as one of its
characteristics?
A. It is levied on land.
B. It is based on the government’s need of money to support its legitimate objectives.
C. It is not a personal liability of the persons assessed.
D. It is based solely on the benefit derived by the owners of the land.
7.
It is the privilege of not being imposed a financial obligation to which others are subject.
A. Tax incentive
B. Tax exemption
C. Tax amnesty
D. Tax credit
8. As to scope of the legislative power to tax, which is not correct?
A. Where there are no constitutional restrictions, and provided the subjects are within the
territorial jurisdiction of the state, Congress has unlimited discretion as to the persons,
property or occupations to be taxed.
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B. In the absence of any constitutional prohibition, Congress has the right to levy a tax of
any amount it sees fit.
C. The discretion of Congress in imposing taxes extends to the mode, method or kind of tax,
unless restricted by the constitution.
D. The sole arbiter of the purpose or which taxes shall be levied is Congress, provided
the purpose is public and the courts may not review the levy of the tax to determine
whether or not the purpose is public.
9. Which of the following is a nature of taxation?
A. The power is granted by legislative action.
B. It is essentially an administrative function.
C. It is generally payable in money.
D. Without it the state can continue to exist.
10. Which of the following is not a determinant of the place of taxation?
A. Source of the income
B. Citizenship of the taxpayer
C. Residence of the taxpayer
D. Amount of tax to be imposed
11. Which of the following statements is not correct?
A. An inherent limitation of taxation may be disregarded by the application of a
constitutional limitation.
B. The property of an educational institution operated by a religious order is exempt from
property tax, but its income is subject to income tax.
C. The prohibition of delegation by the state of the power of taxation will still allow the
BIR to modify the rules in time for filing of returns and payment of taxes.
D. The power of taxation is shared by the legislative and executive departments of the
government.
12. Statement 1 – The point on which tax is originally imposed is impact of taxation.
Statement 2 – Eminent domain is inferior to non-impairment clause of the constitution.
Statement 3 – As a rule, taxes are subject to set-off or compensation.
Statement 4 – As a rule, provisions on the validity of tax exemptions are resolved liberally
in favor of the taxpayer.
A.
B.
C.
D.
Statement 1Statement 2Statement 3Statement 4
True
False
False
True
False
True
True
False
True
True
False
False
False
False
True
True
13. A tax system where the revenues are supplied mostly by indirect taxes.
A. Schedular
C. Progressive
B. Proportional
D. Regressive
14. A tax system where the greater bulk of the tax revenues is derived by direct taxes.
A. Schedular
C. Progressive
B. Proportional
D. Regressive
15. This is an inherent limitation on the power of taxation.
A. Rule on uniformity and equity in taxation.
B. Due process of law and equal protection of the laws.
C. Non-impairment of the jurisdiction of the Supreme Court in tax cases.
D. Tax must be for the public purpose.
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16. This is a constitutional limitation on the power of taxation.
A. Tax laws must be applied within the territorial jurisdiction of the state.
B. Exemption of government agencies and instrumentalities from taxation.
C. No appropriation of public money for religious purposes.
D. Power to tax cannot be delegated to private persons or entities.
17. They exist independent of the constitution being fundamental powers of the state, except
A. Power of taxation
C. Power of imminent domain
B. Police power
D. Power of recall
18. The power to acquire private property upon payment of just compensation for public purpose
A. Power of taxation
C. Power of imminent domain
B. Police power
D. Power of recall
19. The power to regulate liberty and property to promote the general welfare.
A. Power of taxation
C. Power of imminent domain
B. Police power
D. Power of recall
20. The power to demand proportionate contributions from persons and property to defray the
expenses of the government.
A. Power of taxation
C. Power of imminent domain
B. Police power
D. Power of recall
21. Basic Principles of a sound tax system, except
A. Fiscal adequacy
C. Administrative feasibility
B. Equality or theoretical justice D. Intellectual sensitivity
22. The tax imposed should be proportionate to the taxpayer’s ability to pay.
A. Fiscal adequacy
C. Administrative feasibility
B. Equality or theoretical justice D. Intellectual sensitivity
23. The sources of revenue as a whole, should be sufficient to meet the demands of public
expenditures.
A. Fiscal adequacy
C. Administrative feasibility
B. Equality or theoretical justice D. Intellectual sensitivity
24. The tax laws must be capable of convenient, just and effective administration.
A. Fiscal adequacy
C. Administrative feasibility
B. Equality or theoretical justice D. Intellectual sensitivity
25. Persons or things belonging to the same class shall be taxed at the same rate.
A Simplicity in taxation
C. Equality in taxation
B. Reciprocity in taxation
D. Uniformity in taxation
26. The tax should be proportional to the relative value of the property to be taxed.
A Simplicity in taxation
C. Equality in taxation
B. Reciprocity in taxation
D. Uniformity in taxation
27.The following are the nature of taxation, except
A. Inherent in sovereignty
B. Essentially legislative in character
C. Subject to inherent and constitutional limitation
D. Subject to approval by the people.
28. It literally means “place of taxation”; the country that has the power and jurisdiction to levy
and collect the tax.
A. Basis of taxation
C. Scope of taxation
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B. Situs of taxation
D. Theory of taxation
29. The existence of the government is a necessity and that the state has the right to compel all
individuals and property within its limits to contribute
A. Basis of taxation
C. Scope of taxation
B. Situs of taxation
D. Theory of taxation
30. The reciprocal duties of support and protection between the people and the government.
A. Basis of taxation
C. Scope of taxation
B. Situs of taxation
D. Theory of taxation
31. Subject to inherent and constitutional limitations, the power of taxation is regarded as
supreme, plenary, unlimited and comprehensive.
A. Basis of taxation
C. Scope of taxation
B. Situs of taxation
D. Theory of taxation
32. Our National Internal Revenue Laws are
A. Political in nature
C. Criminal in nature
B. Penal in nature
D. Civil in nature
33. The levying or imposition of tax and the collection of the tax are processes which constitute
the taxation system.
A. Basis of taxation
C. Nature of taxation
B. Aspects of taxation
D. Theory of taxation
34. The process or means by which the sovereign, through its law-making body raises income to
defray the expenses of the government.
A. Toll
C. Taxation
B. License fee
D. Assessment
35. Enforced proportional contributions from persons and property levied by the state by virtue
of its sovereignty for the support of the government and for all public needs.
A. Toll
C. Taxes
B. License fee
D. Assessment
36. An escape from taxation where the tax burden is transferred by the one on whom the tax is
imposed or assessed to another.
A. Shifting
C. Transformation
B.
Exemption
D. Capitalization
37. An escape from taxation where the producer or manufacturer pays the tax and endeavors to
recoup himself by improving his process of production thereby turning out his units of
products at a lower cost.
A. Shifting
C. Transformation
B.
Exemption
D. Capitalization
38. An escape from taxation where there is a reduction in the price of the taxed object equal to
the capitalized value of future taxes which the taxpayer expects to be called upon to pay.
A. Shifting
C. Transformation
B.
Exemption
D. Capitalization
39. The use of illegal or fraudulent means to avoid or defeat the payment of tax.
A. Exemption
C. Avoidance
B. Shifting
D. Evasion
40. The use of legal or permissible means to minimize or avoid taxes.
A. Exemption
C. Avoidance
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B. Shifting
D. Evasion
41. Synonymous to tax evasion.
A. Tax dodging
C. Tax exemption
B. Tax minimization
D. Tax evasion
42. Synonymous to tax avoidance.
A. Tax dodging
C. Tax exemption
B. Tax minimization
D. Tax evasion
43. In every case of doubt, tax statutes are construed
A. Strictly against the government and the taxpayer.
B. Liberally in favor of the government and the taxpayer.
C. Strictly against the government and liberally in favor of the taxpayer.
D. Liberally in favor of the government and strictly against the taxpayer.
44. In every case of doubt, tax exemptions are construed
A. Strictly against the government and the taxpayer.
B. Liberally in favor of the government and the taxpayer.
C. Strictly against the government and liberally in favor of the taxpayer.
D. Liberally in favor of the government and strictly against the taxpayer.
45. In case of conflict between the Tax Code and the Philippine Accounting Standards (PAS).
A. PAS shall prevail over the Tax Code.
B. Tax Code shall prevail over PAS.
C. PAS and Tax Code shall be both disregarded.
D. The taxpayer may choose between the PAS or the Tax Code.
.
46. Tax of a fixed amount imposed upon all persons residing within a specified territory without
regard to their property or occupation they may be engaged.
A. Personal, poll or capitation
C. Excise
B. Property
D. Regressive
47. Tax imposed on personal or real property in proportion to its value or on some other
reasonable method of apportionment.
A. Personal, poll or capitation C. Excise
B. Property
D. Regressive
48. Tax imposed upon performance of an act, the enjoyment of privilege or the engaging in an
occupation.
A. Personal, poll or capitation C. Excise
B. Property
D. Regressive
49. Tax which is demanded from the person whom the law intends or desires to pay it.
A. Direct
C. Excise
B. Indirect
D. Percentage
50. Tax which is demanded from one person in the expectation and intention that he shall
indemnify himself at the expense of another.
A. Direct
C. Excise
B. Indirect
D. Percentage
51. Tax which imposes a specific sum by the head or number or by some standard of weight or
measurement and which requires no assessment other than a listing or classification of the
objects to be taxed.
A. Specific
C. Excise
B. Ad-valorem
D. Income
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52. Tax of a fixed proportion of the amount or value of the property with respect to which the tax
is assessed.
A. Specific
C. Excise
B. Ad-valorem
D. Percentage
53. Tax based on a fixed percentage of the amount of property, income or other basis to be taxed.
A. Proportional
C. Regressive
B. Progressive
D. Indirect
54. Tax where the rate decreases as the tax base increases.
A. Proportional
C. Regressive
B. Progressive
D. Indirect
55. Tax where the rate increases as the tax base increases.
A. Proportional
C. Regressive
B. Progressive
D. Indirect
56. Which of the following statements is not correct?
A. Tax burdens shall neither be imposed nor presumed to be imposed beyond what the
statute expressly and clearly states because tax statutes should be construed strictly
against the government.
B. Tax exemptions, tax amnesty tax condonations and their equivalent provisions are not
presumed and, when granted are strictly construed against the taxpayer because such
provisions are highly disfavored by the government.
C. Exemptions from taxation are highly disfavored in law and he who claims tax exemption
must be able to justify his claim or right.
D. The House of Representatives has the duty and the exclusive power of constructing
and interpreting tax laws.
57. The strongest of all inherent powers of the state because without it, the government can
neither survive nor dispense any of its other powers and functions effectively.
A. Police Power
C. Power of Taxation
B. Power of Eminent Domain D. Power of Recall
58. This power is superior to the non-impairment clause and is broader in application because it
is a power to make and implement laws.
A. Power of Taxation
C. Power of Eminent Domain
B. Power of Recall
D. Police Power
59. Which of the following statements is not correct?
A. An inherent limitation of taxation may be disregarded by the application of a
constitutional limitation.
B. Income tax liabilities shall be paid by the inhabitants even if foreign invaders occupy our
country.
C. Taxes may be imposed retroactively by law, but unless so expressed by such law, these
taxes must only be imposed prospectively.
D.
Tax laws are either political or penal in nature.
60. Which of the following is not a constitutional limitation on the Power of Taxation?
A. No person shall be deprived of life , liberty or property without due process of law.
B. No person shall be denied the equal protection of the law.
C. No person shall be imprisoned for debt or non-payment of tax.
D.
No law granting any tax exemption shall be passed without the concurrence of a
majority of all the members of Congress.
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61. The distinction of a tax from permit or license fee is that a tax is:
A. Imposed for regulation.
B. One which involves an exercise of police power.
C. One in which there is generally no limit on the amount that maybe imposed.
D. Limited to the cost of regulation.
62. Police power as distinguished from the power of eminent domain:
A. Just compensation is received by the owner of the property.
B. Maybe exercised by private individuals.
C. May regulate both liberty and property.
D. Property is taken by the government for public purpose.
63. A tax wherein both the incidence of or the liability for the payment of the tax as well as the
burden of the tax falls on the same person.
A. Direct tax
C. Indirect tax
B. Value added tax
D. Percentage tax
64. Which one of the following is not a characteristic or element of a tax?
A. It is an enforced contribution.
B. It is legislative in character.
C. It is based on the ability to pay.
D. It is payable in money or in kind.
65. Tax as distinguished from license fees:
A. Limited to cover cost of regulation.
B. A regulatory measure.
C. Non-payment does not necessarily render the business illegal.
D. Imposed in the exercise of police power.
66. The power of taxation is exercised by
A. The President
C. Bureau of Internal Revenue
B. The Supreme Court
D. Congress
67. One of the characteristics of internal revenue laws is that they are:
A. Criminal in nature
C. Political in nature
B. Penal in nature
D. Generally prospective in application.
68. Which of the following is not an example of excise tax:
A. Transfer tax
C. Real property tax
B. Sales tax
D. Income tax
69. The following are similarities of the inherent power of taxation, eminent domain, and police
power, except one:
A. Are necessary attributes of sovereignty
B. Superior to the non-impairment clause of the constitution.
C. Compensation is received.
D. Are legislative in character.
70. Which of the following is not a scheme of shifting the incidence of taxation?
A. The manufacturer transfers the tax to the consumer by adding the tax to the selling price
of the goods sold;
B. The purchaser asks for a discount or refuse to buy at regular prices unless it is reduced
by the amount equal to the tax he will pay;
C. Changing the terms of the sale like FOB shipping point in the Philippines to FOB
destination abroad, so that the title passes abroad instead of in the Philippines;
D. The manufacturer transfers the sales tax to the distributor, then in turn to the wholesaler,
in turn to the retailer and finally to the consumer.
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71. Which of the following statements is not correct?
A. Taxes may be imposed to raise revenues or to provide disincentives to certain activities
within the state;
B. The state can have the power of taxation even if the Constitution does not expressly give
it the power to tax.
C. For the exercise of the power of taxation, the state can tax anything at any time.
D. The provisions of taxation in the Philippine Constitution are grants of power and
not limitations on taxing powers.
72. License fee as distinguished from tax:
A. Non-payment does not necessary render the business illegal.
B. A revenue raising measure
C. Imposed in the exercise of taxing power.
D. Limited to cover cost of regulation.
73. Value-added tax is an example of:
A. Graduated tax
C. Regressive tax
B. Progressive tax
D. Proportional tax
74. Which tax principle is described in the statement “ the more income earned by the taxpayer,
the more tax he has to pay.”
A. Fiscal Adequacy
C. Administrative feasibility
B. Theoretical justice
D. Inherent in sovereignty
75. The most superior and least limitable among the fundamental powers of the state:
A. Power of recall
C. Power of taxation
B. Police power
D. Power of eminent domain
76. One of the characteristics of a tax is that:
A. It is generally based on contact.
B. It is generally payable in money.
C. It is generally assignable.
D. It is generally subject to compensation.
77. The following are the characteristics of our internal revenue laws except:
A. Political in nature.
B. Civil in nature.
C. Generally prospective in application.
D. May operate retrospectively if congress so provides.
78. Which of the following has no power of taxation?
A. Provinces
C. Barangays
B. Cities
D. Barrios
79. Which of the following statements is wrong? A revenue bill:
A. Must originate from the House of Representatives and on which same bill the Senate may
propose amendments.
B. May originate from the Senate and on which same bill the House of Representatives
may propose amendments.
C. may have a House version and a Senate version approved separately, and then
consolidated, with both houses approving the consolidation version.
D. May be recommended by the President to Congress.
80. Tax as distinguished from special assessment:
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A. not as a personal liability of the person assessed.
B. based wholly on benefits
C. exceptional as to time and place
D. based on necessity and is to raise revenues
81. Under this basic principle of a sound tax system, the Government should not incur a deficit:
A. Theoretical justice
C. Fiscal Adequacy
B. Administrative feasibility
D. Uniformity in taxation
82. Which of the following may not raise money for the government?
A. Power of taxation
C. Eminent Domain
B. Police power
D. License fee
83. No person shall be imprisoned for non-payment of this:
A. Excise tax
C. Income tax
B. Value added tax
D. Poll tax
84. This is a demand of ownership:
A. License fee
C. Toll
B. Tax
D. Customs duties
85. Income tax is generally regarded as
A. an excise tax
C. a property tax
B. a tax on persons
D. tax on profits
86. Which of the following is not acceptable for legally refusing to pay the tax?
A. That the right of the state to collect the tax has prescribed.
B. That there is no jurisdiction to collect the tax.
C. That the tax law was declared as unconstitutional.
D. That there is no benefit derived from the tax.
87. It is important to know the source of income for income tax purposes, i.e. from within or
without the Philippines because
A. The Philippines imposes income tax on income from sources within and without of a
non-resident citizen.
B. Some individual taxpayers are citizens while others are aliens.
C. Separate graduated rates are imposed on different types of income.
D. Some taxpayers are taxed on their worldwide income while others are taxable only
upon income from sources within the Phils.
88 .A law granting tax exemption requires the concurrence of
A. Majority vote of members of congress
B. 2/3 vote of members of Congress.
C. 3/4 vote of members of Congress.
D. Unanimous vote of members of Congress.
89. No person shall be imprisoned for debt or non-payment of poll tax. This is a(an)
A. Inherent limitation
C. International limitation
B. Constitutional limitation D. Territorial limitation
90. The Department of Finance thru its officers entered into a contract with foreign investors
granting them exemption from all forms of taxes to encourage investments in the Phils. The
contract is
A. Void, unless the President ratifies
B. Void, because the power to grant tax exemption is vested in Congress.
C. Valid, if the President has authorized the officers to enter into such contract.
D. Valid, because the purpose is to promote public welfare.
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91. Tax as distinguished from debt
A. no imprisonment for non-payment C. based on contract
B. may be paid in kind
D. based on law
92. Congress can impose a tax at any amount and at anytime shows that
A. Taxation is an inherent power of the state.
B. Taxation is essentially a legislative power.
C. Taxation is a very broad power of the state.
D. Taxation is based on taxpayers’ ability to pay.
93. The amount required is dictated by the needs of the government in:
A. License fee
C. Toll
B. Tax
D. Debts
94. A charge imposed on land for special benefits derived resulting from public improvements.
A. Tax
C. License
B. Toll
D. Special assessment
95. Which of the following are National Internal Revenue Taxes?
I.
Income tax
III. Donor’s tax
V. Other percentage tax
II. Estate tax
IV. Value Added tax VI. Excise Tax
VII.
Documentary stamp tax
A. I, II, III, IV
B. I, II, III, IV, V
C. I, II, III, IV, V, VI
D. I, II, III, IV, V, VI, VII
96. The Bureau of Internal Revenue shall have a chief and four (4) assistant chiefs to be known
as
A. Secretary and Assistant Secretaries
B. Secretary and Undersecretaries
C. Commissioner and Assistant Commissioners
D. Commissioners and Deputy Commissioners
97. The three fundamental powers of the state are
I. Inherent in the state and may be exercised by the state without need of any
constitutional grant.
II. Not only necessary but indispensable.
A. True; True
B. True; false
C. False; true
D. False; false
98. The three fundamental powers of the state are
I. Methods by which the state interfere with private rights.
II Exercised primarily by the legislature.
A. True; True
B. True; false
C. False; true
D. False; false
99. I. Police power regulates both liberty and property while the power of eminent domain and
the power of taxation affect only property rights.
II Police power and the power of taxation may be exercised only by the government while
the power of eminent domain may be exercised by some private entities.
A. True; True
C. False; true
B. True; false
D. False; false
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100. I. The property taken in police power is destroyed while the property taken under the power
of eminent domain and power of taxation are not destroyed.
II. In power of taxation, the compensation received is the protection afforded to the
citizens; in police power the compensation received is the altruistic feeling that somehow
you contributed to the promotion of the general welfare; in power of eminent domain, the
compensation received is the just compensation paid for the property taken.
A. True; True
B. True; false
C. False; true
D. False; false
101. I. The point on which a tax is originally imposed is impact of taxation.
II. The point on which a tax burden finally rests or settles down is incidence of taxation.
A. True; True
B. True; false
C. False; true
D. False; false
102. I. Police power is superior to the non-impairment clause of the constitution.
II. Power of taxation is superior to the non-impairment clause of the constitution.
A. True; True
B. True; false
C. False; true
D. False; false
103. I. No person shall be imprisoned for debt or non-payment of tax.
II. Tax laws are civil and penal in nature because there are penalties provided in case of
violation.
A. True; True
B. True; false
C. False; true
D. False; false
104. I. Tax may be collected in an unlimited amount.
II. License fee may be collected in an unlimited amount.
A. True; True
B. True; false
C. False; true
D. False; false
105. I. Tax is imposed to raise revenue.
II. License fee is imposed to raise revenue.
A. True; True
C. False; true
B. True; false
D. False; false
106.
I. Tax is a demand of sovereignty.
II. Toll is a demand of sovereignty.
A. True; True
B. True; false
C. False; true
D. False; false
107. I Tax is imposed on persons, property, and property rights.
II. Special assessment is imposed on persons, property, and property rights.
A. True; True
B. True; false
C. False; true
D. False; false
108. I. Collection of tax is a legislative act.
II. Imposition of tax is an administrative act.
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A. True; True
B. True; false
C. False; true
D. False; false
109. I. A state has the power to tax even if not granted by the constitution.
II. A state cannot exercise police power if not granted by the constitution.
A. True; True
C. False; true
B. True; false
D. False; false
110. I. There can only be a tax even if there is a law imposing the tax.
II. The power to tax may include the power to destroy.
A. True; True
B. True; false
C. False; true
D. False; false
111. I. Due process of law in taxation under the constitution is a grant of power.
II. Provisions in the Philippine constitution on taxation are grants of power.
A. True; True
B. True; false
C. False; true
D. False; false
112. I. In the Philippines, there may be double taxation.
II. Taxation may be used to implement the police power of the state.
A. True; True
B. True; false
C. False; true
D. False; false
113. I. License fee is a charge imposed under police power.
II. Special assessment is levied on lands only.
A. True; True
B. True; false
C. False; true
D. False; false
114. I. Tax is imposed regardless of public improvement.
II. Special assessment is imposed regardless of public improvements.
A. True; True
B. True; false
C. False; true
D. False; false
115. I. Tax avoidance is the use by the taxpayer of legal or fraudulent means to avoid or defeat
taxes.
II. Tax evasion is the use by the taxpayer of illegal or fraudulent means to avoid or defeat
taxes.
A. True; True
B. True; false
C. False; true
D. False; false
116. I. One of the essential characteristics of a tax is it is unlimited in amount.
II. A tax is generally unlimited because it is based on the needs of the state.
A. True; True
B. True; false
C. False; true
D. False; false
117. I. The power of taxation is inherent in sovereignty being essential to the existence of every
government. Hence, even if not mentioned in the constitution the state can still exercise
the power and is essentially a legislative function.
II. Even in the absence of any constitutional provision, taxation power falls to Congress as
part of the general power of law-making.
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A. True; True
B. True; false
C. False; true
D. False; false
118. I. The President has the power to veto a revenue bill even if such bill was already
approved by Congress.
II. The President is superior to Congress as he/she can veto any bill even if already
approved by Congress.
A. True; True
B. True; false
C. False; true
D. False; false
INDIVIDUAL TAXPAYERS
1. The National Internal Revenue Code of 1988 is
A. RA 9337
B. CA 466
C. RA 9504
D. RA 8424
2. Which of the following statements is not correct?
A. An individual citizens of the Philippines who is working and deriving income from
abroad as an overseas contract worker is taxable on income from sources within and
without the Philippines.
B. A seaman who is a citizen of the Philippines and who receives compensation for
services rendered abroad as a member of the complement of vessel engaged exclusively
in international trade shall be treated as a resident citizen.
C. A non- resident citizen who is not engaged in business in the Philippines is treated as
non-resident alien who is not engaged in business in the Philippines
D. An alien individual, whether a resident or not of the Philippines, is taxable only on
income derived from sources in the Philippines
3. Which of the following statements is not correct?
A. In the case of married individuals, where only one of the spouses is deriving gross
income, only such spouse shall be allowed the personal exemption.
B
In the case of married individuals, the additional exemptions maybe claimed by only
one of the spouses
C. As a rule, the husband shall be the head of the family and proper claimant of the
additional exemption
D. In the case of legally separated spouses, additional exemption maybe claimed by
the spouses who has custody of the children but shall not exceed four(4) for each
spouse
4. A resident citizen is taxable on all income derived from sources
A. Within the Philippines only
B. Without the Philippines only
C. Partly within and partly without
D. Within and without the Philippines
5. A non-resident citizen is taxable on all income derived from sources
A. Within the Philippines only
B. Without the Philippines only
C. Partly within and partly without
D. Within and without the Philippines
6. A resident alien is taxable on all income derived from sources
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A.
B.
C.
D.
Within the Philippines only
Without the Philippines only
Partly within and partly without
Within and without the Philippines
7. A non-resident alien is taxable on all income derived from sources
A. Within the Philippines only
B. Without the Philippines only
C. Partly within and partly without
D. Within and without the Philippines
8. The following taxpayers are allowed to claim additional exemptions, except
A. Resident citizens
B. non- resident citizens
C. Resident aliens
D. Non-resident aliens
9. Which of the following statements is not correct?
A. If only one spouse is deriving taxable income, only said spouse may claim the
additional exemption
B. If both spouses earn taxable income only one of the spouses can claim additional
exemption
C. If legally separated from the spouse, the husband can claim the additional
exemption
unless he waives the right in favor of his wife
D. An unmarried individual with a child out of wedlock can claim a personal exemption as a
head of the family plus exemption
10. A citizen of the Phils. who works and derives income from abroad is a resident if he
stayed outside the Phils.
A. For less than 180 days
B. For more than 180 days
C. For 183 days or more
D. For less 183 days
11. A citizen of the Phils. Who works abroad and whose employment requires him to be
physically present abroad most of the time during taxable years
A. Taxable on income within and without the Phils.
B. Taxable on income from without the Phils.
C. Exempt from income tax
D. Taxable income from within the Phils.
12. A citizen of a foreign country is considered a non-resident alien engaged in business in the
Phils. If he stayed inside the Phils.
A. For 183 days or more
B. For less than 183 days
C. For more than 180 days
D. For less than 180 days
13. Which of the following dependents is not qualified to entitle a taxpayer additional persona
exemption?
A. Recognized natural son who celebrated his 21st birthday during the taxable year.
B.
Legitimate natural son, 21 years old who got married on December 31, of the year.
C. Legally adopted son, 21 years old son who became employed December 30, of the
taxable year.
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D.
Widowed mother, who celebrated her 59th birthday during the taxable year.
14. For income tax purposes, which of the following is considered head of the Family?
A. Married individual who has dependent minor child.
B. Married but legally separated individual with a dependent mother who is 59 years
old
C. Single individual with a common law life
D. Married individual even if he has no children
15. Which of the following dependents will qualify a single taxpayer as head of the family?
A. Taxpayer’s brother, 22 years old, unemployed, unmarried, living with him and
dependent upon him for support
B. Taxpayer’s sister, 18 years old, unemployed, unmarried living with parents, but
dependent upon him for chief support
C. Taxpayer’s illegitimate son, 12 years old, unemployed, single, living with him and
dependent upon him for support
D. Taxpayer’s godchild, 10 years old, dependent upon him for chief support
16. Mr. A with a dependent minor legitimate child became a widower in January of 2009. In
February of the following year, he got married to Ms. B and subsequently in November of
the same year, the latter gave birth to three (3) boys. For calendar year 2010, Mr. A’s basic
and additional personal exemption is:
A. P 75,000
B. P100, 000
C. P125, 000
D. P150, 000
17. A German citizen residing in Germany, married is doing business in the Phils. His country
allow non- resident Filipino with income from Germany a basic personal exemption of
P30,000 as head of the family, P40, 000 as married and P15, 000 as single. The allowe
personal exemption he can claim is?
A. P50. 000
B. P30, 000
C. P32, 000
D. P40, 000
18. Which of the enumerated taxpayers below can claim personal exemption only if there exist a
reciprocity clause/law between the Philippines and his country/
A.
Non-resident
B. Resident alien
C. Non-resident alien not engaged in business in the Philippines
D. Non-resident alien engaged in business in the Philippines
19. A legally married couple had the following data in year 20010?
A. Two qualified legitimate dependent children
B. Two dependent nephews
C. One illegitimate child of husband
D. One of legitimate child died in December 2010
E.
Both spouses are gainfully employed.
The claimable personal and additional exemptions of the couple:
A.
H-P 50, 000, W-P 125, 000
B.
H-P 100,000, W-P 50, 000
C.
H-P 100, 000, W-P 75, 000
D.
H-P 150, 000, W-P 50, 000
20. A, who became a widower in February of taxable year 2010 had the following dependents:
A.
B.
C.
D.
Two legitimate children
Recognized natural child with current common law wife
B, his common law wife
Illegitimate child with another woman
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The total basic personal and additional exemption in 2009 is:
A. 150, 000
B. P100, 000
C. P125, 000
D. P75, 000
21. A married, earned P225, 000 (net of P40, 000 w/tax) compensation income from employment
from July to December 2010. He has a legally adopted child as qualified dependent and paid
P3,000 as health and hospitalization insurance premiums. For 2010, he can deduct premiums
for health and hospitalization insurance of:
A. P3, 000
B. P2, 400
C. P1, 200
D. P0
22. Using the preceding number, his personal and additional exemption is
A. P40, 000
B. P75, 000
C. P77,400
D. P78,000
23. Which of the following individual taxpayers cannot avail of the allowed deductions for
health and hospitalization insurance premiums?
A. Non-Resident citizen
B. Resident alien
C. Non-resident alien engaged in business in the Phil.
D. Non-resident alien not engaged in business in the Phil.
24. Taxable on income from all sources within and without the Phil.
A. Resident citizen B. Non-resident citizen
C. Resident alien
D. Non-resident alien
25. Taxable only on income from sources within the Phil. except
A. Resident citizen B. Non-resident citizen
C. Resident alien
D. Non-resident alien
26. May not claim personal exemption
A. Non-resident citizen
B. Non-resident alien engaged in trade or business in the Phil. Under certain conditions
C. Resident alien
D. Non-resident alien who stayed in the Phil. For 175 days
27. Exemption which is determined according to the status of the taxpayer
A. Personal exemption
B. Additional Exemption
C. Optional standard deduction
D. Special additional personal exemption
28. Exemptions allowed based on presence of qualified dependent children
A. Personal exemption
B. Additional Exemption
C. Optional standard deduction
D. Special additional personal exemption
29. Will not qualify as dependent
A. Legitimate child
B. Brother
C. Mother
D. Nephew
30. Personal exemption, if single
A. P20, 000
B. P25, 000
C. P32, 000
D. P50, 000
31. Personal exemption, if married but judicially declared as legally separated with no
dependent.
A. P20, 000
B. P25, 000
C. P32, 000
D. P50, 000
32. Personal exemption, if married but living separately without judicial decree of separation
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A. P20, 000
B. P25, 000
C. P32, 000
D. P50, 000
33. Personal exemption, if married but judicially declared as legally separated with dependent
A. P20, 000
B. P25, 000
C. P32, 000
D. P50, 000
34. Personal exemption, if head of the family
A. P20, 000
B. P25, 000
C. P32, 000
D. P50, 000
35. Amount of additional exemption each qualified dependent child is
A. P8, 000
B. P100, 000
C. P50, 000
D. P25, 000
36. The number of dependent children who will qualify for additional exemption purposes shall
not exceed.
A. 3 children
B. 4 children
C. 5 children
D. 6 children
37. An unmarried or legally separated man or woman with one or both parents, or with one more
brothers and sisters, or with one or more legitimate, illegitimate, or legally adopted children
living with and dependent upon him or her for their chief support, where such brothers, or
sisters, or children, regardless of age are incapable of self-support because of mental physical
defect.
A. Good father of a family
B. Married
C. Single
D. Head of the family
38. A non-resident alien is deemed doing business in the Phil. If he
A. Is an individual whose residence is within the Phil.
B. Is an individual whose father or mother is an alien who is engaged in business in the Phil.
C. Is an individual who is naturalized in accordance with law
D. Shall come to the Phil. And stay therein for an aggregate period of more than 180
days
during a calendar year.
39. One is not correct
A. If the taxpayer marries during the taxable year, he may claim the personal exemption in
full as a married person for such year.
B. If the taxpayer dies during the taxable year, his estate may still claim the personal and
additional exemption for himself and his dependents as if he died at the close of such year.
C. If the spouse of the taxpayer or any of the dependents dies during the taxable year, the
taxpayer may still claim the same exemptions as if death occurred at the close of such year.
D. If the taxpayer should have additional dependent children during the taxable year, he
can
always claim the additional exemptions for such year.
40. One is correct
A. Where both husband and wife receive compensation income, the additional exemption
shall be claimed by wife unless she explicitly waives her right in favor of her husband in
the withholding exemption certificate.
B. Husband and wife shall be treated as separate taxable units and each shall be allowed
to
claim personal exemption
C. If the gross income does not exceed P20, 000, a special additional personal exemption of
P4, 000 may be claimed by the taxpayer.
D. Husband and wife shall be treated as separate taxable units and shall be allowed to claim
only one personal exemption either for the husband or wife at their option.
41. A. The term “chief support” means more than one-half of the requirements for support
B. If two children contribute equal amounts for the support of dependent, neither one of them
may be qualify as head of the family
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A. True, true
B. True, false
C. False, true
D. False, false
42. A. If any of the qualified dependents becomes 21 years old during the taxable year, the
taxpayer may claim the same exemptions as if such dependent became 21 years old at the
close of such year.
B. Parents living with and dependent upon the taxpayer for their support regardless of their
age will qualify as dependents
A True, true
B. True, false
C. False, true
D. False, false
43. A. If the dependent child marries during the taxable year, the taxpayer may still claim the
same exemption as if the marriage occurred at the close of such year.
B. In the case of married individuals, the additional exemptions shall be claimed by only one
of the spouses
A True, true
B. True, false
C. False, true
D. False, false
44. Who is non-resident alien not engaged in business in the Phil.?
A. An alien who comes in the Phil. For a definite purpose which in its nature may be
promptly accomplished..
B. An alien who comes to the Phil. For definite purpose which in its nature would require
an extended stay of more than 180 days.
C. An alien who has required residence in the Phil.
D. An alien who lives in the Phil. With no definite intention as to his stay
45. The personal exemption of the non-resident alien engaged in trade or business in the Phil. is
equal to that allowed by.
A. The income tax law of his country to a citizen of the Phil. not residing there
B. The income tax law of his country to a citizen of the Phil. not residing there or the
amount provided by the NIRC to a citizen or resident whichever lower.
C. The NIRC to a citizen or resident
D. The income tax law of his country to a citizen of the Phil. not residing there or the
amount provided by the NIRC to a citizen or resident whichever is higher.
46. A. If a taxpayer marries during the year, he may claim the personal exemption for married
individuals in full for such year.
B. A dependent child who marries within the year may still qualify as dependent for the year.
A. True, true
B. True, false
C. False, true
D. False, false
47. Z, married, had the following data for the taxable year:
Gross income, Philippines
Gross income, China
Expenses, Philippines
Expenses, China
P400,000
300,000
200,000
150,000
If the taxpayer is a resident citizen, married, his taxable income is
A. P309, 000
B. P318, 000
C. 350, 000
D. P300,000
48. If the taxpayer is a non-resident citizen, married, his taxable income is
A. P 300, 000
B. P159, 000
C. P150, 000
D. P200, 000
49. If the taxpayer is a resident alien, married his taxable income is
A. P 300, 000
B. P159, 000
C. P150, 000
D. P200, 000
50. If the taxpayer is a non-resident alien engaged in business in the Phil. married and his
country allows a reciprocity P30, 000 as personal exemption for married individuals, his
taxable income is?
A. P370, 000
B. P170, 000
C. P200, 000
D. P150, 000
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51. If the taxpayer is non-resident alien not engaged in business in the Phil. married and his
country grants P35, 000 as personal exemption for married individuals, his taxable income
is?
A. P370, 000
B. P170, 000
C. P200, 000
D. P400, 000
52. With regard to deduction for premiums on hospitalization and health insurance, which of the
following statements is wrong?
A. Allowed as deduction even if income is from compensation only
B. Allowed as deduction even if income is from business or practice of Profession
C. Allowed as deduction even if mixed income
D. Allowed as deduction only if the taxpayer is taking itemized deductions from gross
income.
53. Which of the following statements is wrong? The premiums on hospitalization and health
insurance may be deducted
A. Not exceed P2, 400 a year per family
B. Not exceed P200 per month
C. If the family income doesn’t exceed P250, 000
D. By either spouse in the case of married individuals
54. A resident, single with qualified dependent illegitimate children had the following during the
calendar year.
Gross compensation income
P250, 000
Expenses related to his employment
120, 000
SSS premium contributions
3, 600
Philhealth contribution
2, 400
Pag-ibig contributions
2, 000
Union dues
1, 000
Premiums on health insurance
4, 000
The taxable income before personal and additional exemption is
A. P237, 000
B. P241, 000
C. P238, 600(?)
D. P117, 000
55. In which of the following should additional exemption not be allowed to the taxpayer?
A. An alien, whose dependent child is living with him in the Phil.
B. A resident citizen, who has 25 years old mentally retarded son
C. A resident citizen, who has a 50 years old mother as his dependent
D. a resident alien with an illegitimate child, 7 years old
.
CORPORATION
1. For income taxation purposes, the term “corporation ” excludes one of the following :
A. Ordinary partnership
B. An incorporated business organization
C. General professional partnership
D. Business partnership
2. Which of the following is subject to the corporate income tax?
A. a non- stock and non profit educational institution
B. Public educational institution
C. Private cemeteries
D. Civic league or organization not organized for profit and operated exclusively for the
promotion of social welfare
3. A corporation organized and created under the laws of a foreign country and is authorized to
do business/ trade in the Phil. is:
A. Domestic corporation
C. Non-resident foreign corporation
B. Resident foreign corporation
D. General co-partnership
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4. One of the general principles of income taxation:
A. A foreign corporation engaged in business in the Phil. is taxable on all income
derived from sources within and without the Phil.
B. A foreign corporation engaged in business in the Phil. is taxable on all income
derived from sources within the Phil. only.
C. A domestic corporation is taxable on income derived from sources within the Phil. only.
D. A domestic corporation is taxable on income derived from sources without the Phil. only.
5. One of the following doesn’t fall under the definition of a “corporation” for income tax
purpose:
A. General partnership
B. Joint stock company
C. Insurance company
D. Sole partnership
6. Which of the following is classified as Special Corporation subject to preferential corporate
income tax rate?
A. Social security System
C. Phil. Charity Sweepstakes Office
B. Proprietary Educational Institution
D. Government Service Insurance System
7. A corporation which may be classified as either a resident corporation or non-resident
Corporation is
A. Domestic corporation
C. Government owned and controlled corporation
B. Foreign corporation
D. Non-profit hospital
8. The Phil. Health Insurance Corporation, a government owned corporation is:
A. Exempt from the corporate income tax
B. Subject to the preferential corporate income tax for special corporations.
C. Subject to the basic corporate income tax.
D. Subject to final tax.
9. Public educational institutions, like the University of the Philippines is deemed by law:
A. subject to preferential corporate income tax for special corporations.
B. Subject to the basic corporate income tax
C. Subject to both the preferential income tax and the basic corporate income tax.
D. Exempt from the corporate income tax.
10. Which is not correct? The following are exempt from the corporate income tax:
A. Philippine Charity Sweepstakes Office C. Gov’t. owned or controlled corp.
B. Bureau of Internal Revenue
D. Social Security System
11. Which of the following maybe subject to the corporate income tax?
A. A non-profit educational institution
C. A private educational Institution
B. A public educational Institution
D. Government Service Insurance System
12. A domestic corporation may employ, as a basis for filing its annual corporate return the:
A. Calendar year only
C. Either calendar or fiscal year
B. Fiscal year only
D. Neither calendar nor fiscal year
13. A corporation files a quarterly return within
A. 30 days after the end of each of the 3 quarters
B. 60 days after the end of each of the first 3 quarters
C. 30 days after the end of each of the first 4 quarters
D. 60 days after the end of each of the first quarters
14. A final or annual return is filed on or before the 15th day of the?
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A. Month following the close of the taxable year
B. 2nd month following the close of the taxable year.
C. 3rd month following the close of the taxable year.
D. 4th month following the close of the taxable year
15. A corporation on a fiscal year ending March 31, should file its annual return
A. On or before April 15 of the same year
C. On or before July 15 same year
B. On or before April 15 of the following year D. on or before July 15 of the ff. year
16. The improperly accumulated earnings tax shall apply to
A. Publicly held corporation
C. Insurance companies
B. Banks and other non-bank financial
D. Private corporations
17. Which of the following statements is not correct?
A. MCIT is not applicable to non-resident foreign corporations
B. The corporate quarterly return shall be filed within 60 days following the close of each of
the first three quarters of the taxable year.
C. Resident foreign corporations would be taxed on net income from within the Phil only
D Non-resident foreign corporations are taxed on gross income from within and without
the Phils..
18. The following income are subject to final tax, except?
A. Royalty income received by a domestic corporation from a domestic corporation
B. Cash dividends received by a non-resident foreign corporation from a domestic corp.
C. Cash dividends received by a domestic corporation from a domestic corporation.
D. Interest income received by resident foreign corporation from a Phil. bank.
19. The MCIT shall not apply to the following resident foreign corporations, except
A. RFC engaged in business as int’l carrier subject to 2 ½ 0/0 of their Gross Phil billings
B. RFC engaged in business as offensive Banking Units on their income from foreign
currency transactions with local commercial banks.
C. RFC engaged in business as regional operating headquarters
D. RFC engaged in hotel, motel and resort operations
20. Which of the following is not correct? The gross income tax
A. Is optional to qualified corporation
B. Is available if the ratio of costs of sales to gross sales or receipts from all sources does
not exceed 55%
C. Shall be irrevocable for three consecutive taxable years that the corporation is qualified
under the scheme
D. Is compared with the normal income tax and minimum corporate income tax
(?)21. A Corporation’s records show:
Normal
Taxes
Quarter
Income Tax MCIT
Withheld
First
P100, 000
P80, 000 P20, 000
Second
120, 000
250,000
30, 000
Third
250, 000
100, 000
40, 000
Fourth
200, 000
100, 000
35, 000
Excess MCIT
Prior Year
P30 000
The income tax due for the second quarter is
A. P100, 000
B. P80, 000
C. P50, 000
22. The income tax due for the second quarter is
A. P120, 000
B. P250, 000
C. P150, 000
Express withholding
Tax Prior Year
P10, 000
D. P40, 000
D. P230, 000
23. The income tax due for the third quarter is
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A. P250, 000
B. P100, 000
24. The income tax due for the year is
A. P200, 000
B. P100, 000
C. P140, 000
D. P70, 000
C. P135, 000
D. 165, 000
25. Using the preceding problem except that the normal income tax for the fourth quarter is
P50, 000 (instead of P200, 000), the income tax due for the year is
A. P120, 000
B.P55, 000
C. P45, 000
D.P75, 000
26. One of the following is not acceptable as basis of relief from the MCIT
A. Prolonged labor dispute
C. Legitimate business reverse
B. Force majeure
D. Law suits filed by the company
27. Which is not one of the characteristics of corporate income tax
A. Progressive tax
C. Direct tax
B. General tax
D. National tax
28. CPA University, a private educational institution organized in 2000, had the following data
For 2007.
Tuition fees
P 850, 000
Rental income
150, 000
School related expenses
820, 000
The income tax due for 2007 is
A. P 57, 000
B. P 9, 600
D. P 20, 000
C. P 18, 000
29. CPA college, a private educational institution organized in 2000, had the following data for
2007.
Tuition fees
P 480 000
Rental income
520, 000
School related expenses
450, 000
The income tax due for 2007 is
A. P 17, 600
B. P 5, 500
C. P 100, 000
D. P 165, 000
30. CPA Airlines, a resident foreign international carrier has the following records of income for
the period. (The income represents gross Phil. billings)
A. Continuous flight from Manila to Tokyo=1, 000 tickets at P 2, 000 per ticket
B. Flight form Manila to Singapore ; transfer flight from Singapore to Tokyo=2, 000
Tickets at P 2, 000 per ticket
C. Continuous flight from Manila to Singapore= 3, 000 tickets at P1,000 per ticket
The income tax due is
A. P225, 000
B. P125, 000
C. P100, 000
D. P 175, 000
31-46 The A corporation provided the following data for calendar year ending December 31,
2009 ($ 1= P50).
Philippines
Abroad
Gross income
P4, 000, 000
$ 40, 000
Deductions
2, 500, 000
$ 15, 000
Income Tax Paid
$ 3, 000
31. If it is a domestic corporation, its income tax after tax credit is
A. P675,000
B. P832, 000
C. P962, 500
32. If it is a resident corporation, its income tax is
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A. P730, 000
B. P1, 280, 000
C. P480, 000
33. If it is a non-resident corporation, its income tax is
A. P370, 000
B. P1,280,000
C.P880,000
D. P450, 000
D.P1,200,000
34. Under No. 31, but it opts to claim the tax paid abroad as deduction from gross income, its
income tax is
A. P780,000
B.P832, 000
C.P275,000
D.P150,000
35. If it is private educational institution, its income tax due after tax credit
A. P730, 000
B.P832, 000
C.P275,000
D.P150,000
36. If it is a non-profit hospital, its income tax credit is
A. P730, 000
B.P832,000
C.P275,000
37. If it is a resident international carrier, its income tax is
A.P100,000
B.P10,000
C.37,000
D.P150,000
D.P125,000
38. If it is a non-resident cinematographic film owner/lessor, its income tax is
A.P1,000,000
B.P100,000
C.P300,000
D.P128,000
39. If it is a non-resident lessor of vessels,its income tax is
A.P100,000
B.P180,000
C.P300,000
D.P128,000
40. If it is a non-resident lessor of aircrafts, machineries and equipments, its income tax is
A. P100,000
B.P180,000
C.P300,000
D.P128,000
41. If it is a resident corporation but its expenses within and outside the Philippines is P3M,
Unallocated (disregard original data on expenses), its income tax is
A.P640,000
B.P700,000
C.P480,000
D.P128,000
42. If it is a resident corporation and remitted 60% of its net profit to its head office abroad, its
total tax liability is (Original data).
A. P480,000
B.P571,800
C. P196,000
D.P612,750
43. If it is a private educational institution but P3.5M of its total gross income is from lease and
restaurant business, its income tax is
A.P730,000
B.P275,000
C.P150,000
D.P812,500
44. If it is a domestic corporation, but its total expenses is P5,800,000 (disregard original data on
expenses), its income tax is
A.P730,000
B.P64,000
C.P120,000
D.P85,000
45. Under No.44, but the domestic corporation is non-profit hospital (disregard tax paid abroad ),
Its income tax is
A.P20,000
B.P64,000
C.P10,909
D.P120,000
46. If the corporation is a non-stock educational; institution, which uses all its revenues or
income for educational and charitable purposes , its income is
A. P0
B.P730,000
C.P120,000
D.P64,000
(?)47. A domestic corporation organized in 1998 provided the following information:
2003
2004
2005
2006
2007
Net Sales
P4,000,000 P5,000,000 P6,000,000
P7,000,000 P8,000,000
Cost of sales
2,000,000
2,500,000
2,800,000
4,000,000
5,200,000
Business Expenses 1,900,000
2,350,000
2,900,000
3,100,000
2,300,000
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The tax due after tax credit, if any for 2005
A.P86, 000
B. P95, 000
C.P87,500
D.P97,500
48. Using the above data, the tax due after tax credit, if any for 2007
A. P115,000
B.P140,000
C.P175,000
D.P80,000
49. A corporation , a resident corporation, provided the following data for taxable year 2006
Philippines
USA
Gross income
P40M
P20M
Dividends from:
Domestic corporation
5M
Foreign corporation
4M
Business expenses
12M
8M
The corporation remitted to its head office the P5M dividend income and 40% of its net profit
to its head office in USA. The corporation’s total tax liability including the tax on the profit
remitted is
A.P10,240,000
B.P11,545,600
C.P15,960,000
D.P12,448,000
50. In the foregoing problem, if it is registered with PEZA, its total tax liability is
A.P10,240,000
B. P0
C.P11,200,000
D.P15,960,000
51. A corporation has the following data for the year 2007:
Gross Income, Philippines
P1,000,000
Gross income, USA
500,000
Gross income, Japan
500,000
Expenses, Philippines
300,000
Expenses, USA
200,000
Expenses, Japan
100,000
Other Income:
Dividend from San Miguel Corp
70,000
Dividend from Ford Motors, USA
120,000
Gain, sale of San Miguel shares directly to buyer 150,000
Royalties, Philippines
50,000
Royalties, USA
100,000
Interest (other than from banks)
60,000
Rent, land USA
250,000
Other rent income
100,000
Prize, contest in Manila
200,000
Land sold in the Philippines (selling prize)
2,000,000
The cost of the land which is not used in business is P1M, while FMV is P3M, Its total tax
liability as a domestic corporation is:
A. P780,500
B. P913,600
C. P963,600
D. P980,500
52. Based on the above problem, its total tax liability if it is a resident corporation is
A. P721,000
B. P679,200
C. P659,200
D.P741,000
53. And if it is a non-resident corporation, its total tax liability is
A. P843,500
B.791,700
C. P791,200
54. A domestic corporation had the following data:
Gross income
1998
P1,000,000
1999
2,000,000
2000
3,000,000
2001
1,000,000
Deductions
P1,200,000
1,900,000
2,950,000
1,100,000
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2002
980,000
The taxable income in 2002 is:
A. P380,000
B. P330,000
500,000
C. P100,000
D. P50,000
Partnership
1. If a partner on his own transactions, is on the cash method of accounting while the general
professional partnership is on the accrual method of accounting, in the partner’s determination
of his taxable income for the year, he
A. Must convert his income from the partnership into cash method
B. Must convert his own income into accrual method
C. Does not report his income from the partnership because the partnership is exempt from
income tax
D. Can consolidate his share in the net income of the partnership under accrual method with
his own income under cash method
2. The net share received by a partner in a general professional partnership is
A. Part of his taxable income
B. Exempt from income tax
C. Subject to corporate tax
D. Subject to final tax
3. The net shares received by a partner in a general co-partnership is
A. Part of his taxable income
B. Exempt from income tax
C. Subject to corporate tax
D. Subject to final tax
4. Which of the following statements is not correct?
A. When the co-owners invest the income of the property co-owned in a business or any
income producing properties or activities constituting themselves into a business
partnership, such partnership is consequently subject to tax as a corporation.
B. As a rule, a co ownership is mot subject to income tax because the activities of the coowners are limited to the preservation and enjoyment of the property and the collection of
the income there from.
C. A co-owner is subject to income tax on his share in the net income of the co-ownership
actually or constructively received.
D. All partnerships, no matter how created or organized are considered corporations
subject to corporate income tax.
5. The following statements regarding taxable partnerships are correct, except
A. They file quarterly and year-end income tax returns.
B. They are subject to the rules on corporation for capital gain tax, final tax on passive
income, normal income tax, minimum corporate income tax and gross income tax.
C. The partners’ share in the distributable net income is subject to final tax.
D. They are subject to the improperly accumulated earnings tax.
6. Which of the following statements is correct?
A. Partners of a taxable partnership are considered as stockholders and profits
distributed to them by the partnership are considered as dividends.
B. The share of each partner in net income of a taxable partnership shall be based on their
capital contribution .
C. The share of an individual partner in the net income of taxable partnership shall be equal to
the share of a capitalist partner with the least capital contribution.
D. The industrial partner shall contribute money and or property but not services.
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7. Statement 1- A CPA and a Dentist may form a GPP or an ordinary partnership
Statement 2- Partnership and Corporations have separate juridical personalities distinct from
the owners, as such partners and stockholders are not liable to creditors of
business
A. True, true
C. False, true
B. False, false
D. True, false
8. Statement-1 The share of the partner in the net income of an OP is added on his own gross
income.
Statement-2 The share of the partner in the net income in GPP is also considered as passive
Income.
A. True, true
C. False, true
B. False, false
D. True, false
9. As regards a general professional partnership, which of the following statements is correct?
A. Treated like a corporation, hence it is subject to the corporate income tax
B. It is exempt from income tax, hence it need not file an ITR
C. Partners’ share are subject to final tax
D. Partners’ share will be included in their respective ITRs whether distributed or not
10. As regards an ordinary partnership, which of the following statements is correct?
A. Partners’ share are subject to final tax, hence it not file an ITR
B. Subject to improperly accumulated earnings tax
C. Treated like corporations, hence partners have limited liability
D. Partner’s share even if distributed will not be included in their ITR
11. AB partnership with A and B as partners had a net professional income amounting to
P500,000. Its other income included bank interest income of P8,000, net of final
withholding tax and it received dividend income from a domestic corporation of P10, 000. A
is single and has compensation income of P200, 000. The net taxable income of A who
shares profit and loss equally with B is
A.P364, 000
C. P400,000
B.P440, 000
D. P 444, 000
12. Using the preceding number, but it is a business partnership, the taxable income of the
partnership is
A. P518, 000
C. P510, 000
B. P500, 000
D. P508, 000
(?)13. Using the preceding number, the net distributable share of A is
A. P162, 500
C. P171, 500
B. P146, 250
D. P154, 350
14. A and B are partners in a Partnership which realized a gross income of P800, 000 with a
Corresponding P350, 000 expenses in the year 2007. A is married with 2 qualified dependent
children , he earned P400,000 in his own business, incurring P230,000 allowable expenses
while B, single had P450,000 and P250,000 gross income and expenses respectively. They
share profits and losses at 4:6. If the partnership is a GPP, the taxable income of A subject to
5-32% is
A. P276, 000
C. P250,000
B. P180, 000
D. P320, 000
15. And the taxable income of B subject to 5- 32% is
A. P435, 000
C. P420,000
B. P270, 000
D. P 470, 000
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(?)16. If the partnership is an OP, its tax due is
A. P144, 000 /135,000
C. P153, 000
B. P148, 000
D. P108, 000
17. And the total tax liability of A is
A. P12, 240
B. P18, 900
18. The total tax liability of B is
A. P32, 500
B. P8, 360
C. P31, 140(?)/48,600
D. P32, 500
D. P31, 140
C. P50, 860(?)
19. A, B, and C are partners sharing profits and losses 30%, 30% and 40%, respectively. The
following data pertain to the partnership and the individual account of the members in their
own business for the taxable year 2004:
A
B
C
Partnership
Gross income
P400, 000
P300, 000
P350, 000
P900, 000
Deductions
100, 000
70, 000
160, 000
420, 000
Drawing Account
5, 000
3, 000
2, 000
10, 000
Civil Status
Single
Married
Head of the family
If the partnership is a GPP, the taxable income of C is
A. P424, 000
B. P342, 000
C. P357, 000
D. P382, 000
20. The taxable income of B is (GPP)
A. P424, 000
B. P342, 000
C. P357, 000
D. P382, 000
21. The taxable income of A is (OP)
A. P280, 000
B. P198, 000
C. P165, 000
D. P424, 000
22. The taxable income of B is (OP)
A. P180, 000
B. P198, 000
C. P165, 000
D. P424, 000
23.The taxable income of C is (OP)
A. P180, 000
B. P198, 000
C. P165, 000
D. P424, 000
24. The income tax due of the partnership if OP
A. P 153, 600
B. P57, 000
C. P37, 000
D. P28, 750
25. If B opts to claim the 10% OSD (OP), his taxable income is
A. P367, 600
B. P238, 000
C. P280, 000
D. P399, 600
26. A and B are co-owners by virtue of a property given to them by their father. The coownership had a gross rental income of P500,000 (gross of 5% tax) and expenses related to
rental activity of P200,000 but 10% is not deductible for the year 2007. A and B share in the
profits at 75% and 25%, respectively. A withdrew P50,000 from the co-ownership net income
for the year, B did not withdraw any amount. A and B are both single. The income tax
liability of the co-ownership
A. P102,400
B. P76,800
C. P80,000
D. P0
27. The taxable income of A before exemption
A. P320,000
B. P240,000
C. P80,000
D. P0
28. Suppose A and B did not divide but instead invested the entire profit in another business
venture where they earned a net income after deductions of P450,000, the tax due of the coownership is
A. P102,400
B. P144,000
C. P157,500
D. P0
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Estates and Trusts
1. Which of the following statements is correct?
A. Estates and trusts are allowed a personal exemption of P32,000 if the executor or trustee is
married.
B. The income tax rates for corporate taxpayers apply to taxable estates and trusts.
C. The taxable year of estates and trusts maybe calendar or fiscal year
D. For a trust to be taxable, it must be irrevocable, both as to corpus (principal) and
income
2. The property, rights and obligations of a person which are not extinguished by his death and
those which accrued thereto since the opening of succession.
A. Assets
B. Capital
C. Estate
D. Income
3. The term applied to the person whose property is transmitted through succession, whether or
not he left a will
A. Decedent
B. Transferor
C. Transferee
D. Grantor
4. The term applied to the answer in No. 3 if he left a will
A. Transferor
B. Grantor
C. Donor
D. Testator
5. The person called to the succession either by the provision of a will or by operation of law
A. Heir
B. Devisee
C. Legatee
D. Trustor
6. The person to whom a gift of real property is given by virtue of a will
A. Heir
B. Devisee
C. Legatee
D. Trustor
7. The person to whom the gift of personal property is given by virtue of a will
A. Heir
B. Devisee
C. Legatee
D. Trustor
8. The person who establishes a trust
A. Heir
B. Devisee
C. Legatee
D. Trustor
9. The person in whom confidence is reposed as regards property for the benefit of another
person
A. Devisee
B. Trustee
C. Legatee
D. Heir
10. The person for whose benefit the trust has been created
A. Legatee
B. Heir
C. Beneficiary
D. Trustee
12. For income tax purposes, any person or corporation that holds in trust an estate of another
person or persons
A. Beneficiary
B. Fiduciary
C. Legatee
D. Devisee
GROSS INCOME
1. All of the following statements are correct, except one. Which is the exception?
A. The source of interest income is the country where the debtor resides
B. The source of dividend income is the country where the corporation was
incorporated
C. Rents are considered derived from the country where the property is located
D. Income from personal services is considered derived from the country where the
services were rendered.
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2. – A gain from sale of shares of a domestic corporation shall be considered derived from the
Philippines regardless of where the shares were sold.
- A gain from sale of shares of a foreign corporation shall be considered derived from the
country where the corporation was created or organized.
A.
B.
True; True
True; False
C.
D.
False; True
False; False
3. Which is not a creditable withholding income tax?
A. Expanded withholding income tax
B. Withholding income tax on passive income
C. Withholding income tax at source
D. Withholding income tax on compensation income
4. As a rule, this is not part of taxable income
A. Profit sharing
B. Hazard pay
C.
D.
Overtime pay
13th month pay
5. This is taxable income
A. Retrenchment pay
B. SSS/GSIS benefits
C.
D.
Separation pay due to resignation
Refund of Philippine Income tax
6. Which of the following is taxable income?
A. Prizes and awards as an awardee of Ramon Magsaysay Award Foundation
B. Damages awarded as a consequence of a libel and slander suits
C. Interest on Philippine lotto winnings
D. Amounts received as returns of premiums
7. One of the following is taxable income
A. Gifts, bequests and devices
B. Amounts received as rewards for giving information instrumental in the discovery
of violation of the Tax Code and seizure of smuggled goods
C. Proceeds from life insurance
D. Separation pay received by an employee due to a cause beyond his control
8. As a rule, the following are taxable income, except
A. Cash dividend
C. Scrip dividend
B. Property dividend
D. Stock dividend
9. The following items are exclusions from gross income, except
A. Labor union dues
C. IOU’s
B. SSS/GSIS premiums contributions
D. Pag-ibig premiums contributions
10. Which of the following is part of gross income?
A. PCSO & Phil Lotto winnings
B. Bank interest on long-term deposit
C. Proceeds of life insurance
D. Raffle prize not exceeding P10,000
11. If refunded, this is taxable
A. Estate tax
B. Donor’s tax
C.
D.
Special assessment
Fringe benefit tax
12. Income tax payments to a foreign country, in the case of a resident citizen may be claimed as
A. Tax credit and deduction from gross income
B. Tax credit only
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C.
D.
Tax credit or deduction from gross income
Deduction from gross income only
13. Dividends paid by a domestic corporation maybe taxable but subject to final tax, except
A. if received by a resident citizen
B. if received by a resident alien
C. if received by a non-resident corporation
D. if received by another domestic corporation
14. Which of the following statements regarding dividends is wrong?
A. Exempt from income tax if received by a domestic corporation from another domestic
corporation
B. Exempt from income tax if received by a resident corporation from a domestic
corporation
C. Taxable subject to year-end tax if received by a resident citizen from a non-resident
corporation
D. Taxable subject to final tax if received by a non-resident citizen from a nonresident corporation
15. X works as a secretary in an advertising firm in Manila. During the year, she received
P10,000 a month as salary or a total of P120,000. In addition she also received 13th month
pay, Christmas bonus, productivity bonus, mid year bonus and 14th month pay amounting to
P40,000. The total deductions for her SSS premiums, Medicare, Pag-ibig, and Union dues
contributions amounted to P5,000. X’s taxable income, if single is
A. P 90,000
C.
P 75,000
B. P105,000
D. P100,000
16. Which of the following statements is correct?
A. The power of taxation reaches even the citizens abroad and his income earned from
sources outside the Philippines
B. Priests and religious institutions are exempt from income and property taxes.
C. Separation benefits received by terminated employees resulting from a deadlock in
their collective bargaining agreement are exempt from income tax.
D. The value of a property received as a gift, or under a will or testament or through legal
succession is exempt from taxation.
17. Which of the following statements is not correct?
A. Proceeds of life insurance policies paid to beneficiaries upon the death of the insured
are excluded from gross income regardless of whether the proceeds are received as a
single sum or in installments.
B. In case of transfer for a valuable consideration by assignment or otherwise of a life
insurance, endowment or annuity contract or any interest therein, only the actual value
of such consideration and the amount of the premium and the sums subsequently paid
by the transferee are exempt from income tax.
C.
Marriage fees, baptismal offerings, sums paid for saying masses for the dead and other
contributions received by a clergyman, evangelist or religious worker for services
rendered is taxable income.
D.
Monetization of leave credits of employees who were unable to go on leave due to
exigencies of the service constitute taxable income.
18. – PCSO and Phil lotto winnings are excluded from gross income because they are subject to
final tax.
- Prizes, awards and winnings are excluded from gross income because they are subject to
final tax.
A. Both are true
C. True; False
B. Both are False
D. False; True
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19. Which statements is correct?
A. Incomes from illegal activities are taxable.
B. Tax refunds constitute taxable income to the taxpayer.
C. Recovery of bad debts previously written off is part of taxable income
D. As a rule, contest awards and prizes are subject to 20% final tax if they amount to
P10,00 or more, otherwise they will be exempt from income tax.
20. One of the following is taxable income
A. Compensation for damages
B. The share of a partner in the undistributed net income of a general professional
partnership
C. Living quarters and meals furnished and given to an employee for the convenience of
the employer
D. Facilities or privilege of relatively small value offered by the employer as a means of
promoting the health, goodwill, contentment, or efficiency of the employee.
21.Which of the following is taxable?
A. P100,000 interest on long-term deposit or investment
B. P200,000 gain on sale of 10-year bonds
C. P12,000 prize in a supermarket raffle
D. P1 M winnings from Phil. lotto
22. Gain realized from the sale or exchange or retirement of bonds, debentures or other
certificate of indebtedness is excluded from gross income if with a maturity of
A. 5 years or more
C. More than 8 years
B. More than 7 years
D. More than 10 years
23. Gross benefits received by officials and employees of public and private entities as 13th
month pay and other benefits such as productivity bonus, service incentive pay and
Christmas bonus shall be excluded from taxable income up to
A. P20,000
C. P40,000
B. P30,000
D. P50,000
24. Exclusions from gross income, except:
A. Interest on the price of the land covered by the Presidential Decree on land reform.
B. Interest payments on proceeds of life insurance held by the insurer
C. GSIS/SSS, Philhealth and Pag-ibig contributions and Union dues of individuals
D. Gains realized by an investor upon redemption of shares of stock in a mutual fund
company.
25. Advance rental in the nature of prepaid rental, received by the lessor under a claim or right
and without restriction as to use is
A. Taxable income of the lessor in the year received if he is on the cash method of
accounting
B. Taxable income of the lessor in the year received whether he is on the cash or accrual
method of accounting
C. Taxable income of the lessor in the year received whether he is on the cash or
accrual method of accounting
D. Taxable income of the lessor up to the amount earned in the year the rental is received
26. Which payments made by the lessee under such terms of the lease contract should be
considered as additional rent income of the lessor?
1.
If a lessee paid directly to the government a real tax on the property of the lessor
2.
If the amount received by the lessor is in the nature of a security deposit for the faithful
compliance by the lessee of the terms of the contracts
3.
If the amount received by the lessor is in the nature of a loan extended by the lessee to
the lessor.
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A.
B.
Only 1
Only 1 and 3
C.
D.
Only 2 and3
1, 2 and3
27. One of the following represents taxable income:
A. Refund of overpaid rental expense in prior year
B. Refund of donor’s tax paid in prior year
C. Refund of income tax in prior year
D. Refund of special assessment paid in prior year
28. If an individual performs services for a creditor who in consideration thereof cancels the
debt, the cancellation of indebtedness may amount to
A. A gift
C. A capital contribution
B. A donation inter-vivos
D. A payment of income
29. This is not part of gross compensation income
A. Salary of P 20,000 a month
B. Fringe benefits of P10,000 of an employee
C. Salary of P10,000 a month of a partner in a general professional partnership
D. Honorarium and allowances of P10,000 of a member of the board of directors of a
Corporation
30. Mr Z, a farmer, had the following data for the year:
Sales of livestock and farm products raised
Sales of livestock and farm products purchased
Cost of raising livestock and farm products
P270,000
160,000
190,000
Cost of livestock and farm products purchased and sold```
Rental income of farm equipment
Inventory of livestock and farm products, January 1
Inventory of livestock and farm products, December 31
140,000
105,000
110,000
113,000
Using the cash method of accounting, the income is:
A. P205,000
C. P395,000
B. P208,000
D. P202,000
31. Using the same information above, but the accrual method of accounting is used, the income
is
A. P205,000
C. P395,000
B. P208,000
D. P202,000
FRINGE BENEFITS TAX
1. In 2010, X Corporation allows its Sales Manager to incur expenses subject to
reimbursement, as follows:
Electricity- 70% in the name of X Corporation
Water – 70% in the name of X Corporation
Grocery (PONES)
Gasoline of company car
Representation and Transportation – business trip
The amount subject to fringe benefit tax is
A. P48,000
B. P25,400
C.
D.
P20,000
2,000
10,000
12,000
4,000
P15,400
P16,600
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2. Which of the following is subject to fringe benefit tax?
A. compensation income of the rank and file employees
B. fringe benefit of the rank and file employees
C. compensation income of the managerial employees
D. fringe benefit of the managerial employees
3. The following concepts denote exemption from the fringe benefits tax, except
A. convenience of the employer
B. necessity to the business or trade
C. welfare and benefits of the employee
D. de minimis benefits
4. As a rule, fringe benefit furnished or granted in cash or in kind by an employer to an
individual employee maybe subject to the fringe benefit tax, if given to
1.
Rank and file employees
2.
Managerial employees
3.
Those holding supervisory positions
A.
B.
1 and 2 only
1 and 3 only
C.
D.
2 and 3 only
1, 2 and 3
C.
D.
2 and 3 only
1, 2 and 3
5. The fringe benefit tax is
1.
Imposed on the employer
2.
Withheld at source
3.
Deductible by the employer
A.
B.
1 and 2 only
1 and 3 only
6. With regard to the amount on which the fringe benefit tax rate is applied, which statement
is wrong? The tax benefit rate is applied on
A. The monetary value of the fringe benefit
B. The gross-up monetary value of the fringe benefit
C. The amount deductible by the employer from gross income
D. Both accounts of the fringe benefit and the fringe benefit tax
7. The following fringe benefits are not subject to fringe benefit tax, except
A. if required by the nature of or necessary to the trade, business or profession of the
employer
B. contributions of the employer for the benefit of the employee to retirement, insurance
and hospitalization benefit plans
C. benefits given to the rank and file employees
D. if given for the convenience or advantage of the employee
8. Basic rules on fringe benefits tax, except
A. Fringe benefit given to rank and file employees is not subject to fringe benefits tax
B. Fringe benefit given to a supervisory or managerial employee is subject to fringe
benefits tax
C. De minimis benefit whether given to rank and file employee or to supervisory or
managerial employee is not subject to fringe benefit tax
D. The fringe benefit tax is a tax paid by the managerial or supervisory employee.
9. Facilities or privileges or offered or furnished or offered by an employer to his employees
that are of relatively small value and are offered or furnished by the employer merely as a
means of promoting the health, goodwill, contentment, or efficiency of his employees.
A. Fringe benefit
C. De minimis benefit
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B.
Fringe benefit tax
D.
Grossed-up monetary
10. Which statement is wrong? The fringe benefit tax is
A. imposed on the employer
B. imposed on the managerial or supervisory employee
C. withheld at source
D. deductible by the employer
11. As a means of promoting the health, goodwill, and efficiency of his employees, employer
A gave rank and file employee X the following fringe benefits in 2009:
1. Monetized unused vacation leave of 15 days
P 9,000
2. Rice subsidy
24,000
3. Uniform and clothing allowance
8,000
4. Achievement award for length of service in the form
of tangible personal property
15,000
5. Gifts given during Christmas and major anniversary celebrations
10,000
th
6. 13 Month pay
18,000
The amount of taxable fringe benefits is
A. P30,000
B. P25,000
C.
D.
P23,000
P11,000
12. The employer’s deductions for the benefits given
A. P23,000
C. P66,000
B. P18,000
D. P84,000
13. The grossed-up monetary value of fringe benefit subject to fringe benefit tax received by a
non-resident alien individual not engaged in trade or business in the Philippines is
computed by dividing the monetary value of the fringe benefit by
A.
75%
C. 85%
B.
25%
D. 15%
14. The following fringe benefits are not subject to fringe benefits tax, except:
A. Fringe benefits given to the rank and file employees, whether granted under a
collective bargaining agreement or not
B.
Contributions of the employer for the benefit of the employees to retirement,
insurance and hospitalization benefits plans
C.
De minimis benefits, as defined in the rules and regulations to be promulgated by the
Secretary of Finance, upon recommendations of the Commissioner.
D. Fringe benefits furnished or granted by the employer to its managerial and
supervisory employees.
DEDUCTIONS AND EXEMPTIONS
1. Which of the following statements is true?
A. Payments which constitutes bribes, kickbacks, and others of similar nature which are
necessary to realize the profit are allowed as deduction from gross income
B. The taxes which are deductible from gross income include the taxes, interest and
penalties incident to tax delinquency
C. Deductions are amounts allowed by the Tax Code to be deducted from gross income
to arrive at the income tax liability of a taxpayer.
D. Losses from wagering transactions shall be allowed only up to the extent of the
gains from such transactions.
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2. X Corp. had a net sales of P1M. The actual entertainment, amusement and recreation
expense amounted to P20,000. The deductible “EAR” expense is
A. P20,000
C. P10,000
B. P 6,000
D. P 5,000
3. Y Corp. had a net revenue of P1M. The actual entertainment, amusement and recreation
expense amounted to P20,000. The deductible “EAR” expense is
A. P20,000
C. P 5,000
B. P 6,000
D. P 10,000
4.
Z Corp. is engaged in the sale of goods and services with net sales and net revenue of
P2M and P1M respectively. The actual entertainment, amusement and recreation expense
amounted to P18,000. The deductible “EAR” expense is
A. P18,000
C. P12,000
B. P16,000
D. P 6,000
5. This is not deductible from gross income
A. Transportation expenses from the main office to the branch
B. Transportation expenses from home to the office and from the office back to
home
C. Travel expenses on business trips
D. Travel expenses while away from home in the pursuit of trade, business or profession
6. A revenue expenditure is
A. Usually incurred in the acquisition, betterment or permanent improvement of the
asset
B. Capitalized and the cost is recovered through annual depreciation
C. Ordinarily to benefit more than one accounting period
D. To benefit one accounting period and is a deduction from gross income in the
year paid or incurred.
7. The optional standard deduction for corporations is
A. 10% of the gross income
C. 40% of the gross income
B. 10% of the gross sales/ receipts
D. 40% of the gross sales/receipts
8. No deductions shall be allowed where the transaction is between “related taxpayers” for
1. Losses from sales or exchanges of property
2. Interest expense
3. Bad debts
A.
B.
1 and 2 only
2 and 3 only
C.
D.
1 and 3 only
1, 2 and 3
9. The phrase “related taxpayers” will apply to the following, except:
A. Between members of a family
B. Between the grantor and a fiduciary of any trust
C. Between a fiduciary of a trust and a beneficiary of such trust
D. Between an individual and a corporation more than 50% in value of the
outstanding stock of which is owned, directly or indirectly for such individual,
in case of distributions in liquidation.
10. For individuals, premiums paid during the taxable year for health and/or hospitalization
insurance taken out by him on himself, including his family shall be allowed as deductions
from gross income, provided that the family has a gross income of
A. More than P250,000
C. Not more than P250,000
B. More than P500,000
D. Not more than P2,400
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11. The deduction for premium payments on health and / or hospitalization insurance is not
available to:
A. An individual with gross compensation income only
B. An individual with gross income from business or practice profession, whether he is
availing of the optional standard deduction or itemized deduction
C. An individual with mixed income
D. Both husband and wife
12. - In case of married taxpayer, only the spouse claiming the additional exemptions for
dependents shall be entitled to the deduction on premium payments on health and / or
hospitalization insurance.
- The deduction for premium payments on health and / or hospitalization insurance shall
not exceed P2,400 for the family or P200 a month
A.
B.
C.
D.
True; True
True; False
False; True
False; False
14. In 2009, Z, a resident citizen, engaged in business borrowed money from ABC Bank from
which he had an interest expense of P20,000. His deposit in XYZ bank yielded an interest
income of P25,000. His deduction for interest expense is
A. P20,000
C. P 9,750
B. P 5,000
D. P10,250
15. Interest expense incurred to acquire property used in trade or business or exercise of a
profession is
A. Not allowed as a deduction against gross income
B. Required to be treated as a capital expenditure to form part of the cost of the asset
C. Allowed as a deduction or treated as a capital expenditure at the option of the
taxpayer
D.Allowed as a deduction or treated as a capital expenditure at the option of the
government
?15. If an individual is on the cash basis of accounting, will interest paid in advance be
allowed as a deduction?
First answer - No, it is a deduction in the year that the indebtedness was paid and not in the year
that the interest was paid.
Second answer – Yes, if the indebtedness is payable in periodic amortizations, the amount of the
interest which corresponds to the amount of the principal amortized or paid during the year shall
be allowed as a deduction in such taxable year.
A. True; True
C. False; False
B. True; False
D. False; True
16.
17.
May be deducted from gross income
A. Philippine income tax
B. Foreign income tax
C.
D.
Estate or donor’s tax
Special assessment
A taxpayer engaged in business incurred a partial loss of property as follows:
Asset 1
Book value of the asset at the time of loss
P200,000
Cost to restore the property back to its normal operating condition 120,000
Insurance recovery
50,000
Salvage
None
The deductible loss for asset 1 is
A. P120,000
B. P 70,000
C.
D.
P30,000
P80,000
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Asset 2
P200,000
300,000
None
40,000
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18.
The deductible loss for asset 2 is
A. P300,000
B. P200,000
C.
D.
P160,000
P240,000
19. The operating loss, which had not been previously offset as deduction from gross income
shall be carried over as deduction from gross income for the next
A. 2 consecutive taxable years immediately following such loss.
B. 3 consecutive taxable years immediately following such loss.
C. 4 consecutive taxable years immediately following such loss.
D. taxable year immediately following such loss.
20. A taxpayer had the following:
Year 1
Gross income
P450,000
Allowable Deductions 530,000
21.
Year2
P450,000
430,000
Year 3
Year 4
Year 5
P440,000 P420,000 P490,000
410,000
410,000
410,000
The income to be reported in year 2 is
A. P20,000
B. P60,000
C.
D.
P450,000
P 0
The income to be reported in year 5 is
A. P60,000
B. P20,000
C.
D.
P80,000
P 0
22.
One of the following losses can not be deducted from gross income
A. To construct a bigger warehouse, a corporation demolished an old warehouse which had
a construction cost of P2M and a book value of P300,000.
B. Demolition of a building existing on a land purchased where the corporation has
no use for the building at the time of purchase and it was its intention to remove
the building in order to build its factory.
C. A corporation retired its machinery from the business because of the increase in the
cost of production and the failure of the machinery to meet the desired number of units
of production.
D. A corporation ascertained that its B Corp. stocks are worthless because of the total
insolvency of B Corp.
23.
Examples of taxes that are deductible except
A. Occupation tax
C.
B. Privilege tax
D.
Documentary stamp tax
Philippine income tax
Non-deductible taxes, except
A. Special assessment
B. Donor’s tax
Estate tax
Business tax
24.
C.
D.
25.
X acquired a machine at a cost of P250,000. Scrap value is P20,000 and the estimated
useful life was 25 years. After depreciating the asset for 20 years using the straight-line
method, it was determined that the remaining life is not five years. The annual depreciation
from the 21st year assuming a remaining life of 10 years without scrap is
A. P10,000
C. P9,200
B.
P11,500
D. P6,600
26.
- An expense which is necessary but not ordinary, or ordinary but not necessary is
Deductible from gross income.
- The taxpayer must signify his intention to elect the itemized deduction, otherwise, he is
deemed to have chosen the optional standard deduction.
A. True; True
C. False; True
B. True; False
D. False; False
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?27.
A.
B.
- Interest paid on preferred stock is deductible from gross income of the paying
corporation.
- A capital expenditure usually benefits more than one accounting period and is
deductible from gross income in the year it is paid or incurred.
True; True
True; False
C.
D.
False; True
False; False
?28 . - The cost of leasehold improvements shall be deductible from gross income of the paying
corporation.
- Contributions by the employer to a pension trust for past service cost is deductible in full
in the year that the employer made the contributions.
A. True; True
C. False; True
B. True; False
D. False; False
29.
For individuals with gross compensation income, the following maybe deducted, except:
A. Personal exemptions
B. Additional Exemptions
C. Optional standard deduction
D. Premium payments on health and/or hospitalization insurance
30.
For individuals with gross income from business or practice of profession, the following
may be deducted
1. Optional standard deduction
2. Itemized deduction
3.`Personal exemptions
4. Additional exemptions
5. Premium payments on health and / a hospitalization insurance
A.
B.
1, 2, 3 and 4
2, 3 and 4
C.
D.
3, 4 and 5 and either 1 or 2
1, 2, 3, 4 and 5
31.
Any amount subsequently received on account of a bad debt previously charged off and
allowed as a deduction from gross income in prior years must be included in gross income
in the taxable year in which received. This is
A. Severance test
C. Destination of income test
B. Life-blood theory
D. Equitable doctrine of tax benefit
32.
X took out a life insurance policy of P1,000,000 naming his wife as beneficiary. The policy
provides that the insurance company will pay X the amount of P1,000,000 after the 25th
year of the policy and his beneficiary, should he die before this date. The premiums paid on
the policy is P700,000. If X outlived the policy and received the proceeds of P1,000,000,
such proceeds will be:
A. Taxable in full
C. Exempt from income tax
B. Partly taxable, partly exempt
D. Subject to final tax
33.
Using the preceding no., if X dies and his beneficiary received the proceeds of P1,000,000,
such proceeds will be
A. Taxable in full
C. Exempt from income tax
B. Partly taxable, partly exempt
D. Subject to final tax
34.
Z, a dedicated and honest employee of RST Corp. for the past 20 years was advised that
he is to be retrenched as the company was losing heavily but that he would be given the
separation pay provided by law. To avoid implication of inefficiency Z was advised to file
a letter of resignation instead of being retrenched. If Z files a letter of resignation and
receives the separation pay, such amount is
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A. Taxable in full
B. Partly taxable , partly exempt
35.
C.
D.
Private educational institutions
Resident alien
C.
D.
Non-resident citizen
Non-resident alien
One of the following is not correct for deductibility of losses from gross income
A.
B.
C.
D.
39.
Exempt from income tax
Subject to final tax
May claim tax credit for income taxes paid to foreign country.
A. Resident citizen
B. Resident alien
38.
C.
D.
May consider capital expenditures as revenue expenditures
A. Resident citizen
B. Domestic corporation
37.
D.
Exempt from income tax
Subject to final tax
Using the preceding no., If Z is retrenched and receives the separation pay, such amount is
A. Taxable in full
B. Partly taxable , partly exempt
36.
C.
Must arise from fire, storm or other casualty, robbery, theft or embezzlement
Must not be compensated by insurance or other form of indemnity
A declaration of loss by casualty should be filed with the Bureau of Internal Revenue
Must have been claimed as deduction in the estate return of the taxpayer
Which of the following statements is not correct?
A.
The optional standard deduction is an amount equal to forty percent (40%) of
the
Gross income from business or practice of profession of the taxpayer.
B.
The optional standard deduction is not available against compensation income
arising
Out of an employer-employee relationship
C.
The election of Optional Standard Deduction is irrevocable for the taxable year for
Which the choice is made.
D.
Unless the taxpayer signifies in his return his intention he shall be considered as
having
availed of the itemized deduction.
40.
The following may be allowed to claim optional standard deduction, except
A.
B.
41.
Resident alien
Non-resident alien
Taxable estates and trusts
Domestic corporation
C.
D.
General professional partnership
Foreign corporation
The optional standard deduction for individuals is
A.
B.
43.
C.
D.
The following may elect optional standard deduction or itemized deduction, except
A.
B.
42 .
Resident citizen
Non-resident citizen
10% of the gross income
10% of the gross sales/receipts
C.
D.
40% of the gross income
40% of the gross sales/receipts
May consider capital expenditures as revenue expenditures
A. Resident citizen
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B. Domestic corporations
C. Private educational institutions
D. Resident alien
44.
A building was partially destroyed by fire in 2010. The building had a book value of
P10M. The insurance company was willing to pay P5 M, which was refused by the owner.
Finally, the claim was settled in 2011 for P9M. The proceeds will be
A.
B.
C.
D.
45.
Z took a life insurance policy of P2M naming his wife as beneficiary. The policy provides
that the insurance company will pay Z the amount of P2 M after the 25th year of the policy
and his beneficiary, should he die before this date. The premiums paid on the policy is
P1.5M. If Z outlived the policy and received the proceeds of P2M, such proceeds will be:
A.
B.
C.
D.
46.
Exempt from income tax
Part of taxable income
Subject to final tax
Partly exempt, partly taxable
Taxable in full
Exempt from income tax
Partly taxable, partly exempt
Subject to final tax.
B, a retailer of goods uses the accrual method in reporting his income and expenses. His
2010 transactions show:
Jan. 1 - June 30
Gross Sales
P1,000,000
Cost of Sales
600,000
Business expenses
100,000
Jul 1 - Sept. 30
P700,000
200,000
50,000
Oct.1 - Dec 31
P900,000
300,000
70,000
For the period January 1 to June 30, 2010, he used the itemized deduction but decided to
use the optional standard deduction beginning July 1. B’s annual income tax return using
the optional standard deduction will show a net income before exemptions of
A. P1,560,000
B. P 900,000
47.
C. P1,020,000
D. P1,320,000
RLG Corporation, a retailer of goods uses the accrual method of accounting in reporting its
income and expenses under the calendar year basis. From January 1 to June 30, 2010, it
used the itemized deduction but decided to use the optional standard deduction method
when it filed its annual income tax return. Its 2010 transactions show:
Gross Sales
Cost of Sales
Business expenses
Jan. 1 - June 30
P1,000,000
600,000
100,000
The net income of RDG is
A. P1,560,000
B. P 660,000
48.
Jul 1 - Sept. 30
P700,000
300,000
50,000
Oct.1 - Dec 31
P900,000
600,000
150,000
C. P800,000
D. P720,000
MDG Corporation is engaged in trading business. The reported income and expenses for
taxable year 2010 show:
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Sales
P10,000,000
Cost of sales
6,000,000
General business expenses
1,000,000
Interest on time deposit (gross)
100,000
Interest expense on loans payable
180,000
The net taxable income is
A. P2,858,000
B. P2,820,000
C. P3,000,000
D. P2,862,000
CAPITAL ASSETS
1. Where the taxpayer is a corporation, which of the following statements is true?
A. The holding period does not apply to corporation, hence, capital gains and losses are
recognized at 50%.
B. The net capital loss can be carried over in the next succeeding year
C. Capital loss is deductible only up to the extent of ordinary gains
D. Ordinary loss is deductible from capital gains
2. - Capital losses are deductible from ordinary gains but net capital loss is not deductible
from ordinary gains.
- Ordinary losses are deductible only to the extent of the capital gains but the net capital
loss is not deductible from ordinary gain.
A. True; True
C. False; True
B. True; False
D. False; False
3. An individual taxpayer owns a ten (10)- door apartment with a monthly rental of P10,000
each residential unit. He sold this property to another individual taxpayer. Which is not
correct?
A. The seller is not liable to pay the capital gains tax.
B. The property sold is a capital asset.
C. The taxpayer is engaged in business
D. The rental income is subject to income tax using the graduated rates.
5. Holding period is the duration for which the taxpayer held the capital asset. A capital
asset
held by the taxpayer for not more than 12 months is said to be
A. short-term
C. long-term
B. medium-term
D. no-term
6. The following rules as to recognition of capital gains or losses from the disposition of
personal property classified as capital asset apply where the taxpayer is an individual.
Which is the exception?
A. Depending on the holding period, the percentages of gain or loss is 100% if the capital
asset has been held for 12 months or less; and 50% if the capital asset has been held for
more than 12 months.
B. Capital losses are deductible only to the extent of the capital gains; hence, the net
capital loss is not deductible.
C. Ordinary losses are deductible from capital gains but net capital loss cannot be deducted
from ordinary gain.
D. Net capital loss carry over in a taxable year should not exceed the capital gain in
the year the loss was incurred.
6. Where the taxpayer is a corporation, the following rules as to recognition of capital gains or
losses from the disposition of property classified as capital asset shall apply. Which is the
exception?
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A.
B.
C.
D.
The holding period does not apply to corporations, hence, capital gains and losses are
recognized at 100%.
Capital losses are deductible only to the extent of capital gains.
Ordinary losses are deductible from capital gains but net capital loss cannot be deducted
from ordinary gain.
Net capital loss carry-over should not exceed the net income in the year the loss was
incurred.
7. The term “capital assets” include
A. Stock in trade or other property included in the taxpayer’s inventory.
B. Real property not used in the trade or business of taxpayer.
C. Property primarily for sale to customers in the ordinary course of his trade or business.
D. Property used in the trade or business of the taxpayer and subject to depreciation.
8. 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. The
capital gains tax is
A. P360,000
C. P240,000
B. P300,000
D. P 0
9. How much is the basis (cost) of the new principal residence?
A. P7M
C. P5M
B. P6M
D. P4M
10. If only P4M out of P5 M was utilized in acquiring his new principal residence, the capital
gain tax is
A. P60,000
C. P300,000
B. P72,000
D. P360,000
11. Using the preceding number, the basis (cost) of the new principal residence?
A. P3.2M
C. P2.4M
B. P4M
D. P3M
INSTALLMENT METHOD
Which of the following statements is not correct? Those who make a casual sale or
disposition of personal property on the installment plan may elect the installment basis of
reporting income if
A. The personal property sold is not of a kind which would be included in the inventory.
B. The selling price exceeds P1,000
C. The sale is in installment
D. The initial payments do not exceed 25% of the contract price.
2. In 2009, Z sold a piece of land which had a cost of P1M for a selling price of P4M. The sale
called for an assumption by the buyer of a mortgage on the land of P1.5M, cash of P500,000
on the date of sale and installment payments of P500,000 every year thereafter. The land is an
ordinary asset. The income to be reported in 2009 under the installment method of reporting
income is
A. P500,000
C. P375,000
B. P750,000
D. P1,000,000
FILING, PENALTIES AND REMEDIES
1.The Income tax return for the calendar year 2010 was due for filing on April 15, 2011, but
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the taxpayer voluntarily filed his tax return without notice from the BIR, only on July 15,
2011. The tax due per return amounts to P100,000. The total amount due on July 15, 2011
(excluding compromise penalty) is
A. P145,000
B. P111,250
C. P117,500
D. P130,000
2. Using the preceding number, but the income tax return is filed on time but through an internal
revenue officer other than with whom the return is required to be filed. The total amount due
is
A. P100,000
C. P150,000
B. P130,000
D. P125,000
3. The taxpayer did not file his income tax return for the calendar year 2008. He was notified by
the BIR of his failure to file the tax return, for which reason he filed his tax return and paid
the tax only after said notice on October 15, 2010. The tax due per return is P100,000. The
total amount due on October 15, 2010 (excluding compromise penalty) is
A. P150,000
B. P155,000
C. P180,000
D. P205,000
4. Taxpayer filed on time his income tax return for the calendar year 2008 and paid on April 15,
2009. Upon pre-audit of his return, it was disclosed that he erroneously computed the tax due.
The correct amount of tax due is P120,000. The taxpayer is assessed for deficiency income
tax in a letter of demand and assessment notice is issued on June 15, 2010 calling for
payment on or before July 15, 2010. The amount still due on July 15, 2010 is:
A. P30,000
B. P31,250
C. P35,000
D. P25,000
5. A corporation filed its ITR and paid tax for calendar year 2008 with a net taxable income of
P500,000. However, upon investigation, it was disclosed that its ITR was false or fraudulent
because it did not report a taxable income amounting to another P500,000. Failing to protest
on time against the preliminary assessment notice, a final letter of demand and assessment
notice issued on June 15, 2010 calling for payment on before July 15, 2010. The amount still
due on July 15, 2010 is
A. P328,125
B. P297,500
C. P262,500
D. P306,250
6. Using the preceding number, assuming that the assessment has become final and collectible,
but the corporation pays the tax assessment only on August 15, 2010, the total amount due
(excluding compromise penalty) is
A. P415,625
B. P376,833
C. P387,917
D. P329,500
7. Individual self-employed taxpayers are required to file their Income Tax Returns:
A.
B.
C.
D.
On a yearly basis,, once a year.
On a quarterly basis, non-cumulative system
On a quarterly basis, cumulative system
On a quarterly basis, cumulative system and on a yearly basis, once a year.
8. The individual income tax return of a fixed earner (employee) is filed on or before
A. April 15 of the current taxable year
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B. April 15 of the following taxable year.
C. May 15 of the current taxable year
D. May 15 of the following taxable year.
9. A resident citizen taxpayer is allowed to pay his income tax due on installment basis if:
A.
B.
C.
D.
Basic income tax is P2,000 or below
Basic income tax is over P2,000
Basic income tax is over P5,000
Basic income tax is over P1,000.
10. B was employed by A Corporation on the first working day of January 2008 on a part-time
basis with a salary of P10,000 a month. He then received his 13th month pay. In September
2008 he accepted another part-time job from B Corporation from which he received a total
compensation of P408,000 for the year 2008. The correct total taxes were withheld from both
earnings. With regard to the filing of income tax return (ITR) for the year 2008 which of the
following is true?
A. B is exempt from filing his ITR because the correct total taxes have been withheld.
B. B is not exempt from filing his ITR because his total compensation income for 2008
came from more than one employer.
C. B is exempt from filing his ITR because his total income for 2008 came from employeremployee relationship.
D. B is not exempt from filing his ITR because his income came from employer-employee
relationship.
11. Generally, the following individuals are required to file an income tax return. Who is the
exception?
A. Every Filipino citizen residing in the Philippines.
B. Every Filipino citizen residing outside the Philippines, on his income from sources
outside the Philippines.
C. Every alien residing in the Philippines on income derived from sources within the
Philippines.
D. Every non-resident alien engaged in trade or business in the Philippines.
12. Where compromise penalties is not allowed
A. Failure to preserve or keep books of accounts and accounting records.
B. Failure to keep records of accounts or records in a native language or in English.
C. Failure to have books of accounts audited and have financial statements attached to
income tax return certified by an independent CPA.
D. Keeping two (2) sets of books of accounts or records.
1. All criminal violations may be compromised:
A) Except those already filed in court.
B) Except those involving fraud.
A. True; True
B. True; False
C. False; True
D. False; False
2. For filing a false and fraudulent return, a surcharge is imposed at:
A. 25% as criminal penalty
B. 25% as administrative penalty
C. 50% as criminal penalty
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D. 50% as administrative penalty
3. This is not an administrative remedy available to a taxpayer in connection with collection
of taxes.
A.
B.
C.
D.
Filing a petition for reconsideration or reinvestigation
Filing a claim for tax refund or credit
Entering into a compromise
Filing a criminal complaint against erring BIR officials or employees.
4. A compromise for a tax liability on the ground of financial incapacity to pay shall still
involve a payment of tax from the taxpayer at a minimum compromise rate of
A.
B.
C.
D.
10% of the basic assessed tax
20% of the basic assessed tax
30% of the basic assessed tax
40% of the basic assessed tax
5. Using the preceding number, with regard to compromises other than on the ground of
financial incapacity to pay, the compromise shall involve a minimum compromise rate of
A.
B.
C.
D.
10% of the basic assessed tax
20% of the basic assessed tax
30% of the basic assessed tax
40% of the basic assessed tax
20. An assessment shall become final if not protested administratively, if such protest is not filed
with the BIR, from receipt of the assessment within
A. 30 days
B. 60 days
C. 90 days
D. 180 days
21. Using the preceding number, relevant supporting documents must also be presented to the
BIR, from filing the protest on the assessment within
A. 30 days
B. 60 days
C. 90 days
D. 180 days
22. An appeal on an assessment may be made to the CTA if the BIR does not act on the protest
within, how many days from the taxpayer’s submission of documents supporting his protest?
A. 30 days
B. 60 days
C. 90 days
D. 180 days
23. I - The taxpayer shall respond to a pre assessment notice, and if he fails to respond, an
assessment shall be issued.
II - An assessment issued may be questioned administratively with the BIR.
A. True; True
B. True; False
C. False; True
D. False; False
24. Where a return was filed, as a general rule, the prescriptive period for assessment after the
date the return was due or was filed, whichever is later, is within
A. 3 years
B. 5 years
C. 7 years
D. 10 years
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25. Where any national internal revenue tax is alleged to have been erroneously or illegally
collected. As a remedy, the taxpayer should first file an action for refund with the
A. Regional Trial Court
B. Court of Tax Appeals
C. BIR
D. Court of Appeals
26. In case of an assessment of a tax
A. The assessment should be made within 3 years from date of filing of the return.
B. The assessment should be made within 3 years from date of the return is due.
C. A protest should be made on time, otherwise the assessment becomes final and
executory.
D. A protest may be filed anytime before the BIR collects the tax.
27. Date of payment of tax erroneously paid
Date of claim for refund was filed
Date decision of denial by the BIR was received
Last day to appeal to the CTA is
A. April 15, 2011
B. January 15, 2011
April 15, 2009
January 15, 2010
September 15, 2010
C. November 15, 2010
D. October 15, 2010
28. Using the preceding number, if date of decision of denial by the BIR was received on March
31, 2011, the last day to appeal to the CTA is
A. April 30, 2011
C. March 31, 2012
B. April 15, 2011
D. May 30, 2011
29. Date assessment was received
Date petition for reconsideration was filed with the BIR
Date of filing of documents to support the petition
Date of decision of denial of the petition was received
The last day to appeal to the CTA is
A. April 15, 2011
B. November 8, 2010
March 8, 2010
March 18, 2010
May 8, 2010
September 28, 2010
C. December 8, 2010
D. October 28, 2010
30. Date assessment was received
Date petition for reconsideration was filed with the BIR
Date of filing of documents to support the petition
No decision on the protest is received as of
The last day to appeal to the CTA is
March 8, 2010
March 28, 2010
May 8, 2010
October 30, 2010
A. April 15, 2011
C. December 4, 2010
B. November 8, 2010
D. November 30, 2010
31. Which of the following statements is correct?
A.
B.
C.
D.
Individuals deriving compensation income are exempt from filing ITR.
General professional partnership are exempt from filing ITR.
Domestic corporations can avail the optional standard deduction beginning 2008.
Resident aliens engaged in business in the Philippines are required to file quarterly
and annual ITR.
32. Which of the following statement is correct?
A. A protest should be filed by a taxpayer, otherwise the assessment becomes final and
can no longer be questioned in court.
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B. A protest may be filed by the taxpayer anytime before the BIR collects the tax.
C. The assessment should be made by the BIR within five years from the filing of the return.
D. The assessment shall include only tax proper.
33. Which of the following statements is incorrect?
A. A pre-assessment notice shall be required before an assessment maybe made.
B. The taxpayer shall be informed of the law and the facts on which the assessment is made,
otherwise the assessment shall be void.
C. The Commissioner may refund a tax even without a claim refund from the taxpayer
where on the face of the return upon which the payment was made, such a payment
clearly appears to have been erroneously made.
D. A suit may be brought even after the lapse of two years from the date of payment, if any
supervening cause arises after payment.
34. The following are the grounds to cancel a tax liability by the Commissioner, except
A. The tax is unjustly or excessively assessed.
B. The administration and collection costs involved do not justify the collection of the
amount.
C. A reasonable doubt as to the validity of the claim against the taxpayer.
D. Illegal collection of tax.
35. Which of the following is not a requisite to toll the collection of taxes to be made by the BIR,
upon proof of the following to the Court of Tax Appeals
A.
B.
C.
D.
It will jeopardize the interest of the taxpayer.
It will jeopardize the interest of the government.
Filing of a bond for at least double the amount of the tax assessed.
The case is not dilatory.
36. Which of the following will not interrupt the running of the prescriptive period for
assessment and collection of taxes?
A. When the Commissioner is prohibited from making the assessment or beginning distrait
and levy or a proceeding in court and for thirty (30) days after.
B. The taxpayer requests for the reinvestigation which is granted by the Commissioner.
C. When the taxpayer is out of the Philippines.
D. When the taxpayer cannot be located in the address given by him in the return.
37. The power to decide disputed assessments, refunds of internal revenue taxes, fees or other
charges, penalties imposed in relation thereto, or other matters arising under the Tax Code or
other laws administered by the BIR is vested with
A.
B.
C.
D.
The Commissioner of the BIR
The Secretary of Finance
The Court of Tax Appeals
The Regular Courts
38. It is the official action of an administrative officer in determining the amount of tax due from
a taxpayer, or it may be a notice to the effect that the amount stated therein is due from the
taxpayer with a demand for payment of the tax or deficiency stated therein
A. Tax investigation
B. Tax audit
C. Tax assessments
D. Tax mapping
39. Which of the following is not the remedies of the government in tax collection?
A. Tax lien
C. Forfeiture
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B. Compromise
D. Protest
40. Commissioner of BIR may compromise any internal revenue tax when, except one
A. A reasonable doubt as to the validity of the claim against the taxpayer exists.
B. The financial position of the taxpayer demonstrates a clear inability to pay the assessed
tax.
C. The tax or any portion thereof appears to be unjustly or excessively assessed.
D. The taxpayer has been granted by the SEC or by any competent tribunal a moratorium or
suspension of payments to creditors, or otherwise declared bankrupt or insolvent.
51. The power of the Commissioner of Internal Revenue include the following, except
A. Abate a tax liability of a taxpayer.
B. Compromise the payment of any internal revenue tax.
C. Credit or refund a tax that has been erroneously paid by the taxpayer.
D. Inquire into bank deposits of a taxpayer.
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