INSTRUCTIONS: To all of my students under Income Taxation (Tax 1) subject, this
will be the set of final examination for your final grade. Please carefully
read the following multiple choices and be guided with the instruction I handed
to you last meeting. Please click any of your preferred e-mail servers before
answering:
GENERAL PRINCIPLES
(1)
Which of the following
statements is not correct?
a.
Taxes may be imposed to raise
revenues or to provide distinctive 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 tax in the Philippine Constitution are grants of power and not limitations
on taxing powers.
(2)
One of the characteristics of
internal revenue laws is that they are:
a.
Criminal in nature;
b.
Penal in nature;
c.
Political in nature;
d.
Generally prospective in
application.
(3)
One of the characteristics of
our internal revenue laws is that they are:
a.
Political in nature;
b.
Penal in nature;
c.
Generally prospective in
operation although the tax statute may nevertheless operate retrospectively
provided it is clearly the legislative intent;
d.
Answer not given.
(4)
In case of conflict between tax
laws and generally accepted accounting principles (GAAP):
a.
Both tax laws and GAAP shall be
enforced;
b.
GAAP shall prevail over tax
laws;
c.
Tax laws shall prevail over
GAAP;
d.
The issue shall be resolved by
the Supreme Court as it is the one in charged for interpreting and clarifying
provisions of laws.
(5)
The following are similarities
of the inherent power of taxation, eminent domain, and police power, except one:
a.
Are necessary attributes of
sovereignty;
b.
Interfere with private rights
and property;
c.
Affect all persons or the
public;
d.
Are legislative in
implementation.
(6)
Which of the following is not an example of excise tax?
a.
Transfer tax;
b.
Sales tax;
c.
Real property tax;
d.
Income tax.
INHERENT POWERS
(7)
Which of the following may not raise money for the government?
a.
Power of taxation;
b.
Power of eminent domain;
c.
Police power;
d.
Privatization of government’s
sugar industry.
(8)
In this power of the state, the
person who is parting with his money or property is presumed to receive a
benefit:
a.
Taxation;
b.
Police power;
c.
Eminent domain;
d.
Forfeiture power.
(9)
Police power as distinguished
from eminent domain:
a.
Just compensation is received
by the owner of the property;
b.
May be exercised by the private
individual;
c.
Superior to impairment clause
of the constitution;
d.
Property is taken by the
government for public purposes.
(10)Which
statement refers to police power as distinguished from taxation?
a.
It can only be imposed on
specific properties.
b.
The amount imposed depends on whether
the activity is useful or not.
c.
It involves the taking of
property by the government;
d.
The amount imposed has no
limit.
(11)The
following are the similarities of the inherent power of taxation, eminent
domain and police power, except one:
a.
They are necessary attributes
of sovereignty;
b.
They affect all persons or the
public;
c.
They interfere with private
rights and property;
d.
They are legislative in
implementation.
BASIC PRINCIPLES OF
TAXATION
(12)As a basic
principle of taxation, “taxes must be based on the taxpayer’s ability to pay”
is called:
a.
Equality in taxation;
b.
Ability to pay theory;
c.
Theoretical justice;
d.
Equity in taxation.
(13)Under this
basic principle of sound tax system, the government must be sufficient and
should not incur a deficit:
a.
Theoretical justice;
b.
Fiscal adequacy;
c.
Administrative feasibility;
d.
Debt restructuring.
(14)What basic
principle of a sound tax system is met when the Congress evolves a progressive
system of taxation as mandated in the constitution?
a.
Fiscal adequacy;
b.
Administrative feasibility;
c.
Theoretical justice;
d.
Balanced budget.
(15)Which of
the following is not a basic
principle of a sound tax system?
a.
It should be capable of being effectively enforced;
b.
It must be a progressive tax;
c.
It must be sufficient to meet government expenditures and other public needs;
d.
It should be exercised to
promote public welfare.
LIMITATIONS ON POWERS OF
TAXATIONS
(16)Which of
the following has no power of taxation?
a.
Provinces;
b.
Cities;
c.
Barangays;
d.
Barrios.
(17)A
fundamental rule in taxation is that the property of one country may not be
taxed by another country. This is known as:
a.
International law;
b.
International comity;
c.
Reciprocity;
d.
International inhibition.
(18)There can
be no tax unless there is a law imposing that tax is consistent with the
doctrine principle of:
a.
Uniformity in taxation;
b.
Due process of law;
c.
Non-delegation of power to tax;
d.
The power of taxation is very
broad and the only limitation is the sense of responsibility of the members of
the legislature to their constituents.
DOUBLE TAXATION
(19)Mrs.
Napoles is the owner of various real estate properties in Baguio. These
properties are for lease and yield rental income to Napoles. Every year, she
pays value-added tax to the BIR. The city government of Baguio enacts an
ordinance imposing tax on her a lessor tax in accordance with the schedule of
amounts related to her gross rental income from the same real properties.
First question: Does the local
ordinance, constitute, in effect, double taxation?
Answer: Yes, there is double taxation
because there are two kinds of taxes levied on the same person for the same
occupation or business.
Pork Barrel City enacts an
ordinance which imposes an occupation tax upon owners of piggery farms. The
validity of the ordinance is being challenged on the ground that it constitutes
double taxation because the piggery farm is already subject to land use tax.
Second question: Is the ordinance valid?
Answer: Yes, because there are two
different taxes involved, a tax on occupation and a tax on land. Hence, there
is no double taxation.
a.
Answer to 1st
question is wrong, answer to 2nd question is correct;
b.
Answer to both questions are
correct;
c.
Answers to both questions are
wrong;
d.
Answer to 2nd
question is wrong, answer to 1st question is correct
TAX AND OTHER CHARGES
(20)The
proportional contribution by persons and property levied by the lawmaking body
of the state by virtue of its sovereignty for the support of the government and
all public needs is referred to as:
a.
Taxes;
b.
Special assessment;
c.
License fees;
d.
Penalty.
(21)In case of
deductions and exemptions on income
tax returns, doubts shall be resolved:
a.
Liberally in favor of the tax
payer;
b.
Strictly against the
government;
c.
Liberally in favor of the
employer;
d.
Strictly against the taxpayer.
(22)Which of
the following terms describes the statement, “that the state has complete
discretion on the amount to be imposed, after distinguishing between a useful
or non-useful activity”?
a.
Tax b. License fee c. Toll d.
Customs duty
(23)Which
statement is wrong?
a.
A tax is a demand of
sovereignty;
b.
A toll is a demand of
ownership;
c.
A special assessment is a tax;
d.
Customs duty is a tax.
INCOME TAX PATTERNS
(24)Who is not a Philippine income tax payer?
a.
A resident citizen of the
Philippines with income from within and outside the Philippines;
b.
A resident citizen of the
Philippines with income from within the Philippines only;
c.
A non-resident citizen of
the Philippines with income from outside
the Philippines only;
d.
A non-citizen of the
Philippines with income from within the Philippines only.
(25)Statement
1: A minimum wage earner with a fringe benefits not exceeding P30,000 is not a
Philippine income tax payer.
Statement 2: A minimum wage earner
with fringe benefits exceeding P30,000 is a Philippine income tax payer on the
excess of the benefits over P30,000 as well as on his wages.
a.
Both statements are true;
b.
Both statements are false;
c.
The first statement is true,
but the second statement is false;
d.
The first statement is false,
but the second statement is true.
(26)If the tax
payer is a resident citizen of the Philippines, which of the following is not subject to income tax?
a.
Capital gain on sale of real
property in the Philippines;
b.
Interest on the bank deposit in
the Philippines;
c.
Rent income from property
outside of the Philippines;
d.
Capital gain on shares of stock
of a domestic corporation sold through the Philippine Stocks Exchange.
(27)The
following, except one, may claim
personal exemptions:
a.
Non-resident alien not engaged
in trade or business in the Philippines;
b.
Non-resident alien engaged in
trade or business in the Philippines;
c.
Resident alien;
d.
Citizen.
(28)Which of
the following BIR forms is used as a substitute filing for income tax returns
(ITR) of employees?
a.
1601C
b.
1604CF
c.
1701Q
d.
1701
e.
2316
(29)Which of
the following BIR forms is used to file monthly taxes withheld on compensation?
a.
1601C
b.
1604CF
c.
1701Q
d.
1701
e.
2316
(30)Which of
the following BIR forms is used to give to employees as a substitute form for
income tax returns (ITR)?
a.
1601C
b.
1604CF
c.
1701Q
d.
1701
e.
2316
(31)Which of
the following BIR forms is used for filing income tax returns for mixed income
(compensation, business, and professional income)?
a.
1601C
b.
1604CF
c.
1701Q
d.
1701
e.
2316
(32)May the
purpose of a tax partly public and partly private without violating the
limitation that a tax must be for public purpose?
a.
Yes. The purpose to be
accomplished by taxation need not be exclusively public. Although private
individuals are directly benefited (e.g. giving aids to victims of
flood/typhoon), the tax will still be valid provided such benefit is only
incidental.
b.
No. The purpose to be
accomplished by taxation need to be exclusively public. To benefit private
individuals will be tantamount to deprivation of property of those who paid the
tax without due process.
c.
Yes. The purpose is not
important as long as the use of the tax can be properly accounted for.
d.
No. The purpose shall either be
public of private. It cannot be both.
(33)One of the
following is not a public purpose:
a.
National defense
b.
Building churches common to all
religions
c.
Improving sugar industry
d.
Retirement benefits of public officials
CORPORATE
TAXATION
(34)Hungry
Shark corporation, in its third year of operations, had the following data:
Gross Income, Philippines P 2,000,000.00
Gross Income, foreign 1,000,000.00
Expenses, Philippines 1,000,000.00
Expenses, foreign 500,000.00
If the corporation is a domestic
corporation, the taxable income is:
(a)
P1,000,000
(b)
P2,000,000
(c)
P500,000
(d)
P1,500,000
(35)One of the
following statements is not correct. Which is it?
(a)
For domestic corporations, the
capital gain tax on sale of shares of stock are the same as the capital gain on
such assets of resident citizens of the Philippines.
(b)
The final tax on interest on
foreign currency deposit under the expanded foreign currency deposit system for
domestic corporations is the same as that of resident citizens of the
Philippines at seven and one-half percent (7 ½%)
(c)
Dividend received by a domestic
corporation from a domestic corporation subject to tax is exempt from income
tax of the corporation receiving the dividend.
(d)
Prizes exceeding P10,000
received by a domestic corporation is subject to a final tax of twenty percent
(20%)
(36)Statement
1: The minimum corporate income tax of a trading or manufacturing concern is
based on gross profit from sales.
Statement 2: The minimum corporate
income tax of a service concern is based on net revenues or receipts less
direct costs of services.
(a)
Both statements are true
(b)
Both statements are false
(c)
The first statement is true but
the second statement is false
(d)
The first statement is false
but the second statement is true
(37)The
following are true, except one. Which is exception:
(a)
A domestic corporation is
subject to MCIT on gross income from within and outside the Philippines.
(b)
A resident corporation is
subject to the MCIT on gross income from within the Philippines.
(c)
A non-resident corporation is
not subject to the MCIT
(d)
The optional gross income tax
(GIT) applies to domestic and resident corporations.
(38)Which of
the following statements is wrong?
(a)
The quarterly income tax of a
corporation for any of the first, second or third quarters is filed, and the
tax due is paid, within sixty (60) days after the close of the quarter.
(b)
The annual income tax return of
a corporation is filed, and the tax due is paid on or before the fifteenth day
of the fourth month following the close of the taxable year
(c)
There can be an income tax
refundable in a quarterly income tax return of a corporation
(d)
There can be an income tax
refundable in the final income tax return of a corporation
(39)One of the
following statements is wrong. Identify. The improperly accumulated earnings
tax imposed on corporations:
(a)
Is calculated to force
corporations to pay-out dividends
(b)
Is computed on the improperly
accumulated income over several years
(c)
Is based on the net income per
books after the income tax
(d)
Is based on a statutory formula
for improperly accumulated income
(40)All,
except one, of the following, are not subject to the improperly accumulated
earnings tax (IAET). Which is the exception?
(a)
Publicly-held corporations
(b)
Banks and other financial
intermediaries
(c)
Insurance Companies
(d)
Service Enterprises
(41)The
following except one, give rise to the presumption that a corporation is
improperly accumulating profits. Identify the exception:
(a)
The corporation is mere holding
company
(b)
The corporation is an
investment company
(c)
The corporation permits its
profit to accumulate beyond the reasonable needs of the business
(d)
The corporation is a service
enterprise
(42)A mother
corporation is abroad, with business in the Philippines through its branch in
the Philippines. Which of the following statements is wrong?
(a)
In a year, the branch in the
Philippines is subject to a profit remittance tax on its remittance of profits
to the mother company abroad, even if the profits from which the remittance was
made was a prior year’s profits.
(b)
The profit remittance tax is
fifteen (15%) percent of the total amount or profit for remittance, as applied
for with the bank.
(c)
The bank with which the
application for remittance was filed would be the withholding agent of the
Bureau of Internal Revenue
(d)
Even activities registered with
the Philippine Economic Zone Authority (PEZA), from the profits from which the
remittance is applied for, will be subject to the profit remittance tax.
(43)Statement
1: A private educational institution is a special corporation subject to income
tax on all its income at ten percent (10%)
Statement 2: A private educational
institution may be treated as an ordinary corporation subject to all the income
tax rules on corporation.
(a)
Both statements are true
(b)
Both statements are false
(c)
First statement is true but
second statement is false
(d)
First statement is false but
second statement is true
(44)Statement
1: Corporations, agencies or instrumentalities owned or controlled by the
government shall pay the income tax as their counterpart private corporations.
Statement 2: The Government
Service Insurance System and the Social Security System are subject to income
tax.
(a)
Both statements are true
(b)
Both statements are false
(c)
First statement is true but
second statement is false
(d)
First statement is false but
second statement is true
(45)Corporations
exempt from income tax are enumerated under Section 30 of the National Internal
Revenue Code.
Statement 1: They are not subject
to income tax on income received which are incidental or necessarily connected
with the purposes for which they were organized and are operating.
Statement 2: They are subject to
income tax on income of whatever kind and character from any of their properties,
real or personal, or from any activity conducted for profit, regardless of the
disposition of such income.
(a)
Both statements are true
(b)
Both statements are false
(c)
First statement is true but
second statement is false
(d)
First statement is false but
second statement is true
(46)Which of
the following is treated as a corporation?
(a)
General partnership in trade
(b)
General professional
partnership
(c)
Joint venture or consortium for
construction project
(d)
Joint venture or consortium for
engaging in energy operations under a service contract with the government.
(47)Reasonable
needs of the business is inconsistent with the concepts of IAET when:
(a)
The direct correlation of
anticipated needs to the accumulation of profits is proved.
(b)
It is not necessary for the
purpose of the business considering all the circumstances of the case
(c)
The “immediacy test” under the
American jurisprudence is adopted in Philippine jurisdiction
(d)
Construed as immediate needs of
the business including reasonable anticipated needs
(48)For
purposes of determining the Improperly Accumulated Taxable Income for a taxable
year, the following, except one, are added to that year’s taxable income. Which
one?
(a)
Income exempt from tax
(b)
Income excluded from gross
income
(c)
Income subject to final
withholding tax
(d)
The amount of net operating
loss carry-over (NOLCO)
(49)For
purposes of determining the Improperly Accumulated Taxable Income for a taxable
year, the following except one, are reduced from that year’s taxable income
after appropriately adding certain items. Which one?
(a)
10% improperly accumulated
earnings tax
(b)
Income tax paid/ payable for
the taxable year
(c)
Dividends actually or
constructively paid/ issued
(d)
Amount reserved for the
reasonable needs of the business
(50)Which of
the following is not true?
(a)
For purposes of the MCIT, the
taxable year in which business operations commenced shall be the year in which
the domestic corporation registered with the BIR.
(b)
Firms which were registered
with BIR in 1994 and earlier years shall be covered by the MCIT beginning
January 1, 1998.
(c)
Firms which were registered
with the BIR in any month in 1998 shall be covered by the MCIT in 2002 after
the lapse of three (3) calendar years from 1998.
(d)
None of the above
(51)The MCIT
applies to which of the following domestic corporations?
(a)
Proprietary Educational
Institutions
(b)
Non-profit Hospitals
(c)
Depository banks under the
Expanded Foreign Currency Deposit System (FCDS) on income from foreign currency
transactions with the local commercial banks.
(d)
Firms that are taxed under a
special income tax regime
(e)
All of the above
(f)
None of the above
(52)Which of
the following need not be deducted from gross sales to arrive at gross income
for purposes of computing MCIT of a merchandising/ manufacturing concern?
(a)
Sales returns and allowances
(b)
Sales discounts
(c)
Cost of sales
(d)
None of the above
(53)Which of
the following need not be deducted from gross sales to arrive at gross income
for purposes of computing MCIT of a service concern?
(a)
Sales returns and allowances
(b)
Sales discounts
(c)
Cost of sales
(d)
None of the above
(54)Which of
the following need not be deducted from gross sales to arrive at gross income
for purposes of computing OCIT or GIT of a merchandising/ manufacturing
concern?
(a)
Sales returns and allowances
(b)
Sales discounts
(c)
Cost of sales
(d)
None of the above
(55)Which of
the following need not be deducted from gross sales to arrive at gross income
for purposes of computing OCIT or GIT of a service concern?
(a)
Sales returns and allowances
(b)
Sales discounts
(c)
Cost of sales
(d)
None of the above
(56)A
PEZA-registered enterprise has a “registered” and an “unregistered” activity.
The MCIT shall apply to the:
(a)
Registered activity
(b)
Unregistered activity
(c)
Both activities
(d)
Neither registered nor
unregistered activity
(57)The
minimum corporate income tax of a domestic or resident corporation is:
(a)
15% of gross income
(b)
2% of gross sales
(c)
2% of gross income
(d)
2% of gross income for Domestic
Corporations while Resident Foreign Corporations are exempted from MCIT
computation.
(58)A tax
imposed whether a corporation has zero or negative taxable income or whenever
the minimum income tax is greater than the normal income tax due from such
corporation:
(a)
Improperly accumulated earnings
tax (IAET)
(b)
Optional Corporate Income Tax
(OCIT)
(c)
Capital Gains Tax (CGT)
(d)
Minimum Corporate Income Tax
(MCIT)
(59)A
corporation which was registered with the Bureau of Internal Revenue in May
2007 shall be covered by MCIT in:
(a)
2008 (b) 2009 (c) 2010 (d) 2011
(60)The BIR
form used by corporations to file quarterly income tax returns:
(a)
1702 (b) 1702Q (c) 2550 (d)
2550Q
Sir, wala pong answer key?
ReplyDeleteSir, wala po bang answer key?
ReplyDeleteGood day Sir,
ReplyDeletePwede bo bang makahingi with answers? email add ko po: rjarevado@gmail.com
Maraming pong salamat.
Thanks for sharing this at least it helps
ReplyDeletearmina lumina