Test Bank - Income Taxation-cpar

TAXATION 1 – Income TaxationGeneral 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. 2 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. Statement 1Statement 2Statement 3Statement 4 A. True False False True B. False True True False C. True True False False D. 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. 3 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 4 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 Tax imposed on personal or real property in proportion to its value or on some other reasonable method of apportionment. A. B. Excise B. Strictly against the government and the taxpayer. A. 44. Regressive 48. tax exemptions are construed A. Percentage 51. 5 B. PAS and Tax Code shall be both disregarded. Strictly against the government and liberally in favor of the taxpayer. Tax dodging C. Tax minimization D. Property D. . B. Liberally in favor of the government and strictly against the taxpayer. In case of conflict between the Tax Code and the Philippine Accounting Standards (PAS). Tax which is demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another. A. Personal. Excise B. Strictly against the government and the taxpayer. Evasion 41. Income . Indirect D. PAS shall prevail over the Tax Code. Tax evasion 42. Tax minimization D. Percentage 50. Personal. Regressive 47. C. A. Direct C. A. the enjoyment of privilege or the engaging in an occupation. 46. Excise B. A. Specific C. Personal. 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. Liberally in favor of the government and the taxpayer. Tax imposed upon performance of an act. poll or capitation C. Ad-valorem D. 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. In every case of doubt. D. Tax exemption B. Direct C. Excise B. Shifting D. Regressive 49. Indirect D. C. Excise B. A. Tax evasion 43. Synonymous to tax avoidance. Synonymous to tax evasion. poll or capitation C. poll or capitation C. Tax Code shall prevail over PAS. B. C. Excise B. D. In every case of doubt. The taxpayer may choose between the PAS or the Tax Code. tax statutes are construed A. Tax exemption B. Property D. Liberally in favor of the government and the taxpayer. 45. Property D. Strictly against the government and liberally in favor of the taxpayer. A. D. Tax dodging C. Liberally in favor of the government and strictly against the taxpayer. Tax which is demanded from the person whom the law intends or desires to pay it. C. Power of Recall D. Exemptions from taxation are highly disfavored in law and he who claims tax exemption must be able to justify his claim or right. D. No person shall be deprived of life . liberty or property without due process of law. . income or other basis to be taxed. D. The strongest of all inherent powers of the state because without it. A. B. 57. A. Proportional C. No person shall be denied the equal protection of the law. A. Which of the following is not a constitutional limitation on the Power of Taxation? A. Tax of a fixed proportion of the amount or value of the property with respect to which the tax is assessed. C. An inherent limitation of taxation may be disregarded by the application of a constitutional limitation. Indirect 55. Tax where the rate decreases as the tax base increases. The House of Representatives has the duty and the exclusive power of constructing and interpreting tax laws. Taxes may be imposed retroactively by law. No law granting any tax exemption shall be passed without the concurrence of a majority of all the members of Congress. Regressive B. A. Proportional C. Proportional C. these taxes must only be imposed prospectively. the government can neither survive nor dispense any of its other powers and functions effectively. Progressive D. 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. Progressive D. A. but unless so expressed by such law. Indirect 54. when granted are strictly construed against the taxpayer because such provisions are highly disfavored by the government. D. Percentage 53. Power of Recall 58. B. C. Tax based on a fixed percentage of the amount of property. Tax laws are either political or penal in nature. Power of Eminent Domain D. tax amnesty tax condonations and their equivalent provisions are not presumed and. Power of Taxation C. Which of the following statements is not correct? A. This power is superior to the non-impairment clause and is broader in application because it is a power to make and implement laws. Ad-valorem D. Regressive B. Police Power C. Which of the following statements is not correct? A. Excise B. 60. Tax where the rate increases as the tax base increases. Specific C. Progressive D. Indirect 56. Police Power 59. B. A. Power of Eminent Domain B. No person shall be imprisoned for debt or non-payment of tax. Tax exemptions. 6 52. Income tax liabilities shall be paid by the inhabitants even if foreign invaders occupy our country. Power of Taxation B. Regressive B. Are necessary attributes of sovereignty B. The manufacturer transfers the sales tax to the distributor. It is based on the ability to pay. B. Imposed in the exercise of police power. B. It is an enforced contribution. Police power as distinguished from the power of eminent domain: A. Criminal in nature C. 68. 7 61. The power of taxation is exercised by A. One of the characteristics of internal revenue laws is that they are: A. 62. D. Which one of the following is not a characteristic or element of a tax? A. Sales tax D. eminent domain. Congress 67. C. Bureau of Internal Revenue B. Changing the terms of the sale like FOB shipping point in the Philippines to FOB destination abroad. Limited to the cost of regulation. It is legislative in character. Direct tax C. Imposed for regulation. Real property tax B. C. A regulatory measure. Percentage tax 64. 63. then in turn to the wholesaler. C. so that the title passes abroad instead of in the Philippines. Superior to the non-impairment clause of the constitution. The manufacturer transfers the tax to the consumer by adding the tax to the selling price of the goods sold. 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. Which of the following is not a scheme of shifting the incidence of taxation? A. Non-payment does not necessarily render the business illegal. and police power. Value added tax D. D. D. It is payable in money or in kind. Penal in nature D. except one: A. May regulate both liberty and property. Are legislative in character. One in which there is generally no limit on the amount that maybe imposed. Limited to cover cost of regulation. Political in nature B. C. C. One which involves an exercise of police power. . Income tax 69. 65. B. in turn to the retailer and finally to the consumer. Indirect tax B. B. Which of the following is not an example of excise tax: A. The Supreme Court D. D. B. Transfer tax C. Just compensation is received by the owner of the property. D. 70. 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. Property is taken by the government for public purpose. C. Tax as distinguished from license fees: A. The distinction of a tax from permit or license fee is that a tax is: A. Maybe exercised by private individuals. D. Compensation is received. The President C. The following are similarities of the inherent power of taxation. Generally prospective in application. 66. Generally prospective in application. Provinces C. It is generally assignable. 8 71. May be recommended by the President to Congress. Progressive tax D. It is generally subject to compensation. A revenue raising measure C. and then consolidated. B. Fiscal Adequacy C. Power of taxation B. The most superior and least limitable among the fundamental powers of the state: A. 73. Theoretical justice D. D. Power of eminent domain 76. 72. 77. with both houses approving the consolidation version. Imposed in the exercise of taxing power. Civil in nature. Political in nature. Administrative feasibility B. Which of the following statements is not correct? A. the more tax he has to pay. 80. Which of the following statements is wrong? A revenue bill: A. May originate from the Senate and on which same bill the House of Representatives may propose amendments. For the exercise of the power of taxation. Inherent in sovereignty 75. Power of recall C. may have a House version and a Senate version approved separately. D. The provisions of taxation in the Philippine Constitution are grants of power and not limitations on taxing powers. Taxes may be imposed to raise revenues or to provide disincentives to certain activities within the state. Which tax principle is described in the statement “ the more income earned by the taxpayer. Proportional tax 74. C. C. B. C. B. Must originate from the House of Representatives and on which same bill the Senate may propose amendments. It is generally payable in money. Barrios 79. C. Cities D. Limited to cover cost of regulation. License fee as distinguished from tax: A. Regressive tax B. It is generally based on contact. D. Barangays B. D. the state can tax anything at any time. The following are the characteristics of our internal revenue laws except: A. Value-added tax is an example of: A. Which of the following has no power of taxation? A. 78. The state can have the power of taxation even if the Constitution does not expressly give it the power to tax. Police power D. D. May operate retrospectively if congress so provides. B.” A. Tax as distinguished from special assessment: . Graduated tax C. Non-payment does not necessary render the business illegal. B. One of the characteristics of a tax is that: A. 87. Under this basic principle of a sound tax system. not as a personal liability of the person assessed. That there is no jurisdiction to collect the tax. B. 2/3 vote of members of Congress. Void. License fee 83. i. Constitutional limitation D. C. Void. based wholly on benefits C. Excise tax C. Unanimous vote of members of Congress. B. Some individual taxpayers are citizens while others are aliens. Customs duties 85. International limitation B. The contract is A. Toll B. D. Uniformity in taxation 82. D. Poll tax 84. The Philippines imposes income tax on income from sources within and without of a non-resident citizen. Valid. 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. C. 88 . 89. if the President has authorized the officers to enter into such contract. Majority vote of members of congress B. This is a(an) A. Tax D. from within or without the Philippines because A. Territorial limitation 90. Which of the following is not acceptable for legally refusing to pay the tax? A. It is important to know the source of income for income tax purposes. C. exceptional as to time and place D. No person shall be imprisoned for debt or non-payment of poll tax. because the purpose is to promote public welfare. Eminent Domain B. No person shall be imprisoned for non-payment of this: A. because the power to grant tax exemption is vested in Congress. License fee C. Power of taxation C. Inherent limitation C. D. Separate graduated rates are imposed on different types of income. . 9 A. tax on profits 86.e. an excise tax C. That the right of the state to collect the tax has prescribed. Police power D. That the tax law was declared as unconstitutional. D. 3/4 vote of members of Congress.A law granting tax exemption requires the concurrence of A. based on necessity and is to raise revenues 81. That there is no benefit derived from the tax. Administrative feasibility D. unless the President ratifies B. Valid. This is a demand of ownership: A. the Government should not incur a deficit: A. C. Which of the following may not raise money for the government? A. Income tax is generally regarded as A. Fiscal Adequacy B. Some taxpayers are taxed on their worldwide income while others are taxable only upon income from sources within the Phils. Income tax B. a tax on persons D. a property tax B. B. Theoretical justice C. Value added tax D. V. True C. Commissioner and Assistant Commissioners D. True. VII 96. IV. Secretary and Assistant Secretaries B. V. Value Added tax VI. False. I. Special assessment 95. The Bureau of Internal Revenue shall have a chief and four (4) assistant chiefs to be known as A. False. True. Income tax III. False. III. IV. Estate tax IV. may be paid in kind D. II. false . False. The three fundamental powers of the state are I. Documentary stamp tax A. D. I. A. true B. III. Excise Tax VII. Toll B. false D. A. True. true B. True. License fee C. Inherent in the state and may be exercised by the state without need of any constitutional grant. Taxation is essentially a legislative power. II Exercised primarily by the legislature. License B. Commissioners and Deputy Commissioners 97. Tax as distinguished from debt A. V D. based on contract B. 10 91. Taxation is based on taxpayers’ ability to pay. B. False. A. II. Not only necessary but indispensable. VI. II. true B. III. based on law 92. True C. True C. 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. The three fundamental powers of the state are I. I. IV. no imprisonment for non-payment C. Police power regulates both liberty and property while the power of eminent domain and the power of taxation affect only property rights. false D. Donor’s tax V. Tax C. Secretary and Undersecretaries C. The amount required is dictated by the needs of the government in: A. IV C. Debts 94. I. false 98. Congress can impose a tax at any amount and at anytime shows that A. II. Tax D. Toll D. VI B. Taxation is a very broad power of the state. A. False. A charge imposed on land for special benefits derived resulting from public improvements. C. Taxation is an inherent power of the state. false 99. True. I. Methods by which the state interfere with private rights. III. Which of the following are National Internal Revenue Taxes? I. false D. 93. Other percentage tax II. II. True. true B. True. false 107. true B. False. True C. II. 11 100. II. No person shall be imprisoned for debt or non-payment of tax. True. The point on which a tax burden finally rests or settles down is incidence of taxation. False. A. false D. 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. True C. False. false D. true B. false D. True C. License fee may be collected in an unlimited amount. I. False. Tax may be collected in an unlimited amount. true B. True. True C. false D. II. Power of taxation is superior to the non-impairment clause of the constitution. True. License fee is imposed to raise revenue. in police power the compensation received is the altruistic feeling that somehow you contributed to the promotion of the general welfare. II. Police power is superior to the non-impairment clause of the constitution. True. A. A. True. the compensation received is the protection afforded to the citizens. false D. In power of taxation. Tax is imposed to raise revenue. True C. property. False. False. A. False. true B. True. True. I. False. True C. false 101. true B. True C. A. false 106. I. False. II. false 108. True. Tax is a demand of sovereignty. False. property. True. . True. I. Imposition of tax is an administrative act. False. I. The point on which a tax is originally imposed is impact of taxation. true B. I. and property rights. false 104. false 102. in power of eminent domain. II. False. A. False. Collection of tax is a legislative act. A. Toll is a demand of sovereignty. I. I. false 105. the compensation received is the just compensation paid for the property taken. True. II. false D. True C. and property rights. false D. I Tax is imposed on persons. II. False. true B. II. Tax laws are civil and penal in nature because there are penalties provided in case of violation. false 103. false D. False. A. True. True. True. True. False. Special assessment is imposed on persons. Special assessment is levied on lands only. A. True. false 109. True C. True. false D. True. false 110. True. I. True. True C. A. false 111. False. II. There can only be a tax even if there is a law imposing the tax. A. false D. II. False. A state cannot exercise police power if not granted by the constitution. A tax is generally unlimited because it is based on the needs of the state. even if not mentioned in the constitution the state can still exercise the power and is essentially a legislative function. true B. Tax is imposed regardless of public improvement. true B. true B. True. False. True C. Tax evasion is the use by the taxpayer of illegal or fraudulent means to avoid or defeat taxes. True. True. I. I. License fee is a charge imposed under police power. false D. II. I. false 114. true B. taxation power falls to Congress as part of the general power of law-making. II. 12 A. false 113. False. I. False. True C. there may be double taxation. False. False. false D. False. True. I. False. True. True C. A state has the power to tax even if not granted by the constitution. True. False. II. False. False. false D. A. False. True. True. false D. A. Due process of law in taxation under the constitution is a grant of power. A. false D. True. false 116. Taxation may be used to implement the police power of the state. false D. Tax avoidance is the use by the taxpayer of legal or fraudulent means to avoid or defeat taxes. True. In the Philippines. II. true B. true B. II. False. Special assessment is imposed regardless of public improvements. true B. false 117. II. II. True C. True. false D. One of the essential characteristics of a tax is it is unlimited in amount. True. A. false 115. Hence. True C. Provisions in the Philippine constitution on taxation are grants of power. true B. True C. The power to tax may include the power to destroy. The power of taxation is inherent in sovereignty being essential to the existence of every government. I. I. False. False. true B. I. Even in the absence of any constitutional provision. False. True. false 112. False. A. True C. . The National Internal Revenue Code of 1988 is A. Within and without the Philippines 6. 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. CA 466 C. In the case of legally separated spouses. Within the Philippines only B. True. B In the case of married individuals.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. the additional exemptions maybe claimed by only one of the spouses C. False. RA 8424 2. Within and without the Philippines 5. True C. true B. Which of the following statements is not correct? A. 13 A. Which of the following statements is not correct? A. Partly within and partly without D. I. whether a resident or not of the Philippines. RA 9337 B. II. False. A resident citizen is taxable on all income derived from sources A. Within the Philippines only B. true B. C. As a rule. An alien individual. False. In the case of married individuals. is taxable only on income derived from sources in the Philippines 3. Without the Philippines only C. Partly within and partly without D. A non. The President has the power to veto a revenue bill even if such bill was already approved by Congress. True. false D. A. True. Without the Philippines only C. false INDIVIDUAL TAXPAYERS 1. only such spouse shall be allowed the personal exemption. True. RA 9504 D. 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. where only one of the spouses is deriving gross income. false 118. The President is superior to Congress as he/she can veto any bill even if already approved by Congress. A non-resident citizen is taxable on all income derived from sources A. False. B. A resident alien is taxable on all income derived from sources . True C. additional exemption maybe claimed by the spouses who has custody of the children but shall not exceed four(4) for each spouse 4. false D. the husband shall be the head of the family and proper claimant of the additional exemption D. except A. Within the Philippines only B. non. Within and without the Philippines 7. 14 A. Resident aliens D. of the year. The following taxpayers are allowed to claim additional exemptions. Resident citizens B. For less 183 days 11. only said spouse may claim the additional exemption B. If legally separated from the spouse.resident citizens C. 21 years old son who became employed December 30. who works and derives income from abroad is a resident if he stayed outside the Phils. Recognized natural son who celebrated his 21st birthday during the taxable year. Which of the following dependents is not qualified to entitle a taxpayer additional persona exemption? A. A citizen of the Phils. 21 years old who got married on December 31. Which of the following statements is not correct? A. Taxable on income within and without the Phils. Who works abroad and whose employment requires him to be physically present abroad most of the time during taxable years A. the husband can claim the additional exemption unless he waives the right in favor of his wife D. Without the Philippines only C. Taxable on income from without the Phils. Partly within and partly without D. C. For more than 180 days C. Non-resident aliens 9. 12. Taxable income from within the Phils. C. A non-resident alien is taxable on all income derived from sources A. Legally adopted son. For less than 180 days 13. . A. B. Legitimate natural son. Within the Philippines only B. If only one spouse is deriving taxable income. If both spouses earn taxable income only one of the spouses can claim additional exemption C. For 183 days or more B. For more than 180 days D. For less than 183 days C. For 183 days or more D. Exempt from income tax D. If he stayed inside the Phils. An unmarried individual with a child out of wedlock can claim a personal exemption as a head of the family plus exemption 10. B. Within and without the Philippines 8. For less than 180 days B. A citizen of the Phils. A. Without the Philippines only C. Partly within and partly without D. A citizen of a foreign country is considered a non-resident alien engaged in business in the Phils. of the taxable year. 18 years old. One illegitimate child of husband D.000. For calendar year 2010. H-P 150. Married individual even if he has no children 15. dependent upon him for chief support 16. A’s basic and additional personal exemption is: A. Taxpayer’s brother.000 as head of the family. 000. Widowed mother. 000 D. W-P 75. who celebrated her 59th birthday during the taxable year. the latter gave birth to three (3) boys. 10 years old. Recognized natural child with current common law wife C. unmarried. unemployed. Two legitimate children B. 14. Taxpayer’s godchild. Non-resident alien not engaged in business in the Philippines D. Married individual who has dependent minor child. unmarried living with parents. P150. 000 C. married is doing business in the Phils. Resident alien C. P125. A German citizen residing in Germany. 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. In February of the following year. 000. unemployed. P30.000 B. he got married to Ms. 000. his common law wife D. Single individual with a common law life D. The allowe personal exemption he can claim is? A. 22 years old. W-P 125. Married but legally separated individual with a dependent mother who is 59 years old C. Non-resident alien engaged in business in the Philippines 19. P100. 000 as married and P15. P40. who became a widower in February of taxable year 2010 had the following dependents: A. Non-resident B. A legally married couple had the following data in year 20010? A. A. Two dependent nephews C. P32. 000 C. H-P 100. living with him and dependent upon him for support B. H-P 50. 15 D. For income tax purposes. W-P 50. B. The claimable personal and additional exemptions of the couple: A. Two qualified legitimate dependent children B.resident Filipino with income from Germany a basic personal exemption of P30. B. One of legitimate child died in December 2010 E. 000 D. but dependent upon him for chief support C. 000 as single. A with a dependent minor legitimate child became a widower in January of 2009. P40. living with him and dependent upon him for support D. Mr. P 75. B and subsequently in November of the same year. W-P 50. P50. Taxpayer’s sister. 000 B. Both spouses are gainfully employed. 000 17. 000 20. Mr. 000 18. which of the following is considered head of the Family? A. Which of the following dependents will qualify a single taxpayer as head of the family? A. unemployed. His country allow non. 000 B. H-P 100. 000 D. Taxpayer’s illegitimate son. Illegitimate child with another woman . 000 C. single. 12 years old. Special additional personal exemption 28. P25. He has a legally adopted child as qualified dependent and paid P3. 000 C. 000 C. Exemption which is determined according to the status of the taxpayer A. 16 The total basic personal and additional exemption in 2009 is: A. P32. Brother C. Additional Exemption C. Taxable only on income from sources within the Phil. earned P225. 000 D. Resident citizen B. 400 C. 150. Non-Resident citizen B. 200 D. Resident citizen B. For 2010. For 175 days 27. 000 (net of P40. Using the preceding number. Will not qualify as dependent A. P75. May not claim personal exemption A. Optional standard deduction D. Taxable on income from all sources within and without the Phil. 000 B. except A. Personal exemption B. D. P125. P20. A married. P75. his personal and additional exemption is A. P32. Legitimate child B. Nephew 30. P0 22. Personal exemption. P50. Non-resident alien engaged in business in the Phil. P2. Non-resident alien who stayed in the Phil. 000 B. P3. P100. P25. P40.000 as health and hospitalization insurance premiums. Under certain conditions C. he can deduct premiums for health and hospitalization insurance of: A. 000 w/tax) compensation income from employment from July to December 2010. 000 B. Personal exemption. Special additional personal exemption 29. A. 000 B. 24. 000 C. Exemptions allowed based on presence of qualified dependent children A. Non-resident citizen C. P77. Additional Exemption C. 000 32. Which of the following individual taxpayers cannot avail of the allowed deductions for health and hospitalization insurance premiums? A. 000 B. Non-resident citizen C. Personal exemption B. 000 21. Resident alien C. Non-resident alien not engaged in business in the Phil. 000 D. Non-resident alien 26.000 23. P50. Resident alien D. Mother D. P20. 000 31. P1. 000 D. Resident alien D. if married but judicially declared as legally separated with no dependent. if single A. 000 C. if married but living separately without judicial decree of separation . Resident alien D. P78. Non-resident citizen B. Non-resident alien 25. Optional standard deduction D.400 D. A. Non-resident alien engaged in trade or business in the Phil. Personal exemption. or legally adopted children living with and dependent upon him or her for their chief support. 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. Amount of additional exemption each qualified dependent child is A. Is an individual whose residence is within the Phil. A. P32. 40. Head of the family 38. P20. 000 36. 000 D. or with one more brothers and sisters. P25. P32. 000 C. If he A. P50. P20. or sisters. Is an individual whose father or mother is an alien who is engaged in business in the Phil. If two children contribute equal amounts for the support of dependent. A non-resident alien is deemed doing business in the Phil. A. he may claim the personal exemption in full as a married person for such year. if married but judicially declared as legally separated with dependent A. the taxpayer may still claim the same exemptions as if death occurred at the close of such year. An unmarried or legally separated man or woman with one or both parents. P100. If the taxpayer marries during the taxable year. 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. regardless of age are incapable of self-support because of mental physical defect. 39. 000 33. P25. he can always claim the additional exemptions for such year. Husband and wife shall be treated as separate taxable units and each shall be allowed to claim personal exemption C. A. Where both husband and wife receive compensation income. Good father of a family B. illegitimate. 17 A. P25. The number of dependent children who will qualify for additional exemption purposes shall not exceed. 000 D. B. or children. 5 children D. 000 C. or with one or more legitimate. P50. 000 35. if head of the family A. 000 C. 6 children 37. 000 34. D. If the taxpayer dies during the taxable year. where such brothers. C. P32. P20. If the gross income does not exceed P20. If the spouse of the taxpayer or any of the dependents dies during the taxable year. B. One is not correct A. 4 children C. a special additional personal exemption of P4. D. 000 D. Is an individual who is naturalized in accordance with law D. 000 B. 000 may be claimed by the taxpayer. the additional exemption shall be claimed by wife unless she explicitly waives her right in favor of her husband in the withholding exemption certificate. P8. B. 000. 000 D. The term “chief support” means more than one-half of the requirements for support B. P50. 000 C. Personal exemption. If the taxpayer should have additional dependent children during the taxable year. C. 000 B. Married C. Personal exemption. P50. And stay therein for an aggregate period of more than 180 days during a calendar year. 3 children B. Shall come to the Phil. 000 B. 000 B. 41. Single D. P25. neither one of them may be qualify as head of the family . One is correct A. 000 B. False. A. 000 D. Z. P159. not residing there or the amount provided by the NIRC to a citizen or resident whichever is higher. P309. his taxable income is A. 000 D. False. true D. had the following data for the taxable year: Gross income. True. 000 D. The income tax law of his country to a citizen of the Phil. Philippines 200. True. 000 B. If the taxpayer is a non-resident alien engaged in business in the Phil. true B. A. False. P370.. false C. false 42. False. If any of the qualified dependents becomes 21 years old during the taxable year. P300. false C. A. China 150. P150. A. married. false 44. False. For definite purpose which in its nature would require an extended stay of more than 180 days. The income tax law of his country to a citizen of the Phil. If a taxpayer marries during the year. is equal to that allowed by. The income tax law of his country to a citizen of the Phil. C. A dependent child who marries within the year may still qualify as dependent for the year. With no definite intention as to his stay 45. In the case of married individuals.000 48.000 If the taxpayer is a resident citizen. married his taxable income is A. China 300. True. P150. P200. 350. not residing there B. the additional exemptions shall be claimed by only one of the spouses A True. the taxpayer may claim the same exemptions as if such dependent became 21 years old at the close of such year. false C. An alien who comes in the Phil. P170. he may claim the personal exemption for married individuals in full for such year. his taxable income is A.? A. his taxable income is? A. B. P318. Philippines P400. true D. 000 as personal exemption for married individuals. False. 000 B. An alien who lives in the Phil. 000 49. not residing there or the amount provided by the NIRC to a citizen or resident whichever lower. The personal exemption of the non-resident alien engaged in trade or business in the Phil. False. For a definite purpose which in its nature may be promptly accomplished. 000 D.000 Expenses. Parents living with and dependent upon the taxpayer for their support regardless of their age will qualify as dependents A True. P200. If the taxpayer is a non-resident citizen. The NIRC to a citizen or resident D. A. false 43. 000 C. If the dependent child marries during the taxable year. False. P 300. B. the taxpayer may still claim the same exemption as if the marriage occurred at the close of such year. C. 000 C. B. P150.000 Gross income.000 Expenses. P200. 000 50. True. true B. false C. married. True. false 47. 000 . An alien who has required residence in the Phil. If the taxpayer is a resident alien. married and his country allows a reciprocity P30. 000 C. true D. true B. 000 B. An alien who comes to the Phil. D. Who is non-resident alien not engaged in business in the Phil. true B. married. 18 A. true D. 46. B. P159. 000 C. P 300. True. a resident alien with an illegitimate child. 000 C. 000 D. P237. which of the following statements is wrong? A. A resident citizen. married and his country grants P35. General co-partnership . P238. Domestic corporation C. Not exceed P2. Not exceed P200 per month C. is: A. single with qualified dependent illegitimate children had the following during the calendar year. 000 B. Private cemeteries D. 000 Premiums on health insurance 4. Allowed as deduction even if income is from business or practice of Profession C. 7 years old . Business partnership 2. 000 SSS premium contributions 3. 400 Pag-ibig contributions 2. the term “corporation ” excludes one of the following : A. 000 D. A resident. 000 Expenses related to his employment 120. P170. Civic league or organization not organized for profit and operated exclusively for the promotion of social welfare 3. 000 C. With regard to deduction for premiums on hospitalization and health insurance. For income taxation purposes. P400. 000 52. 19 51. An alien. 400 a year per family B. Resident foreign corporation D. P370. a non. who has a 50 years old mother as his dependent D. P241. P117. 000 B. General professional partnership D. 000 55. his taxable income is? A. A resident citizen. Non-resident foreign corporation B. P200. 000 Union dues 1. Ordinary partnership B. Allowed as deduction even if income is from compensation only B. Gross compensation income P250. Allowed as deduction even if mixed income D.stock and non profit educational institution B. Allowed as deduction only if the taxpayer is taking itemized deductions from gross income. Public educational institution C. 600 Philhealth contribution 2. 600(?) D. An incorporated business organization C. 000 as personal exemption for married individuals. CORPORATION 1. Which of the following is subject to the corporate income tax? A. whose dependent child is living with him in the Phil. If the taxpayer is non-resident alien not engaged in business in the Phil. If the family income doesn’t exceed P250. 53. who has 25 years old mentally retarded son C. Which of the following statements is wrong? The premiums on hospitalization and health insurance may be deducted A. A corporation organized and created under the laws of a foreign country and is authorized to do business/ trade in the Phil. 000 The taxable income before personal and additional exemption is A. B. In which of the following should additional exemption not be allowed to the taxpayer? A. By either spouse in the case of married individuals 54. One of the following doesn’t fall under the definition of a “corporation” for income tax purpose: A. A domestic corporation may employ. Government Service Insurance System 12. only. Domestic corporation C. 9. only. Phil. Health Insurance Corporation. D. owned or controlled corp. One of the general principles of income taxation: A. 30 days after the end of each of the first 4 quarters D. is taxable on all income derived from sources within the Phil. C. Government Service Insurance System 7. 5. Subject to the preferential corporate income tax for special corporations. only. Subject to the basic corporate income tax C. Either calendar or fiscal year B. D. B. Charity Sweepstakes Office B. C. D. B. Government owned and controlled corporation B. 60 days after the end of each of the first 3 quarters C. Philippine Charity Sweepstakes Office C. Social Security System 11. Social security System C. The Phil. a government owned corporation is: A. A non-profit educational institution C. Gov’t. Subject to the basic corporate income tax. 60 days after the end of each of the first quarters 14. Fiscal year only D. Which of the following maybe subject to the corporate income tax? A. Exempt from the corporate income tax B. 20 4. like the University of the Philippines is deemed by law: A. A domestic corporation is taxable on income derived from sources without the Phil. 10. Subject to both the preferential income tax and the basic corporate income tax. Non-profit hospital 8. A foreign corporation engaged in business in the Phil. is taxable on all income derived from sources within and without the Phil. Proprietary Educational Institution D. Bureau of Internal Revenue D. A corporation which may be classified as either a resident corporation or non-resident Corporation is A. A corporation files a quarterly return within A. Foreign corporation D. A domestic corporation is taxable on income derived from sources within the Phil. 30 days after the end of each of the 3 quarters B. A foreign corporation engaged in business in the Phil. A final or annual return is filed on or before the 15th day of the? . as a basis for filing its annual corporate return the: A. Neither calendar nor fiscal year 13. Joint stock company C. Sole partnership 6. Public educational institutions. subject to preferential corporate income tax for special corporations. B. Calendar year only C. Which of the following is classified as Special Corporation subject to preferential corporate income tax rate? A. Exempt from the corporate income tax. Which is not correct? The following are exempt from the corporate income tax: A. General partnership B. Subject to final tax. A public educational Institution D. Insurance company D. A private educational Institution B. On or before July 15 same year B. Is available if the ratio of costs of sales to gross sales or receipts from all sources does not exceed 55% C. RFC engaged in business as int’l carrier subject to 2 ½ 0/0 of their Gross Phil billings B. The income tax due for the second quarter is A. 000 Second 120. Shall be irrevocable for three consecutive taxable years that the corporation is qualified under the scheme D. 000 C. P100. Banks and other non-bank financial D. 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. 000 B. should file its annual return A. 000 23. Month following the close of the taxable year B. C. except A. 000 P80. P50. C. Cash dividends received by a domestic corporation from a domestic corporation. MCIT is not applicable to non-resident foreign corporations B. 000 100. 000 Third 250. except? A. 000 D.. Is optional to qualified corporation B. P80. 000 B. year 16. Royalty income received by a domestic corporation from a domestic corporation B. 000 P30 000 P10. P40. 000 250. C. RFC engaged in business as offensive Banking Units on their income from foreign currency transactions with local commercial banks. The MCIT shall not apply to the following resident foreign corporations. RFC engaged in business as regional operating headquarters D. Which of the following is not correct? The gross income tax A. P150. The following income are subject to final tax. A corporation on a fiscal year ending March 31. 000 D. 2nd month following the close of the taxable year. Interest income received by resident foreign corporation from a Phil. 000 100. A Corporation’s records show: Normal Taxes Excess MCIT Express withholding Quarter Income Tax MCIT Withheld Prior Year Tax Prior Year First P100. Is compared with the normal income tax and minimum corporate income tax (?)21. 000 The income tax due for the second quarter is A. motel and resort operations 20.000 30. D. bank. C. Cash dividends received by a non-resident foreign corporation from a domestic corp. 21 A. D. The corporate quarterly return shall be filed within 60 days following the close of each of the first three quarters of the taxable year. The improperly accumulated earnings tax shall apply to A. 000 22. 3rd month following the close of the taxable year. Which of the following statements is not correct? A. 000 Fourth 200. 000 P20. The income tax due for the third quarter is . P230. On or before April 15 of the same year C. on or before July 15 of the ff. Private corporations 17. 4th month following the close of the taxable year 15. 000 40. RFC engaged in hotel. On or before April 15 of the following year D. Publicly held corporation C. 18. Insurance companies B. 000 35. P120. 000 C. P250. 19. 000 per ticket C. 500 C. 000 Income Tax Paid $ 3. 000 26. 000 C. 000 The income tax due for 2007 is A. its income tax after tax credit is A. Direct tax B. P100. One of the following is not acceptable as basis of relief from the MCIT A. 000 31-46 The A corporation provided the following data for calendar year ending December 31. 000 C. If it is a resident corporation. 000 B. 000 29.P55.000 B.000 per ticket The income tax due is A. Progressive tax C. Philippines Abroad Gross income P4. (The income represents gross Phil. 000 32. Legitimate business reverse B. 600 B. P832. National tax 28. P200. CPA University. P 17. P225. 000 B. 000 B. 2009 ($ 1= P50). 000 24. CPA Airlines. 000 C. Law suits filed by the company 27. 000. 000 25. 000 School related expenses 820. Tuition fees P 480 000 Rental income 520. 000 C. Tuition fees P 850. Prolonged labor dispute C. the income tax due for the year is A. 000 tickets at P1. Flight form Manila to Singapore . P100. Continuous flight from Manila to Tokyo=1. a private educational institution organized in 2000. P 5. 000 D. P 175. P675. 000 Tickets at P 2. a resident foreign international carrier has the following records of income for the period. P125. a private educational institution organized in 2000. P135. 000 D. The income tax due for the year is A. 000 School related expenses 450. P120. 000 D. CPA college. P250. P100. P 165. General tax D. Which is not one of the characteristics of corporate income tax A. P70. transfer flight from Singapore to Tokyo=2. 000 The income tax due for 2007 is A. P 57. had the following data For 2007. 000 (instead of P200. 600 C. 22 A. 000).P75. 000 B. 000 C. Using the preceding problem except that the normal income tax for the fourth quarter is P50. P 9. P480. 000 $ 40. 500. P140. billings) A. 165. 000 Rental income 150. 000 $ 15. Force majeure D. 000 per ticket B. Continuous flight from Manila to Singapore= 3. 000 Deductions 2. P962. 000 D. 500 D. 000 B. its income tax is . 000 30. P 18. 000 tickets at P 2. P 100. P 20. P45. had the following data for 2007. 000 D. 000 D. 000 31. If it is a domestic corporation. 000 33.P10.000 36.000 37. 000 C. 000 B.P640.P832.000 C. 23 A.000 B.000 40.000 D.000 39.P832. If it is a resident international carrier.000 C.000 B.its income tax is A.000 P5.200.P150.37. 000 B.000 D.000 C.P150.000 D.000 D.000 D.P480. its income tax due after tax credit A.000 5.P150.000.000. 000 C.000 Business Expenses 1.000 C. A domestic corporation organized in 1998 provided the following information: 2003 2004 2005 2006 2007 Net Sales P4. 31.000 B. its income tax is A.P10. If it is a domestic corporation.000 D.000.000.000 C.100. If it is a resident corporation and remitted 60% of its net profit to its head office abroad.P275.000 46. its income is A.000 Cost of sales 2.750 43. P196.P300.000 4.P880.P125.P120.000 C.000 D.000 D. A.000 C.44.000. its income tax is A.500 44.P300.P64.800.P1. its income tax is A. its income tax credit is A.000 B.800.000. P730.900. P780.P700.300. but it opts to claim the tax paid abroad as deduction from gross income. Under No. 000 C.800 C.P730.000 D. P370. P450. If it is a non-resident corporation. its income tax is A.000 B.000 C.000 B.P180.000 2. If it is a non-resident lessor of vessels. P1. If it is a non-resident lessor of aircrafts. If it is a resident corporation but its expenses within and outside the Philippines is P3M.500.P571. Unallocated (disregard original data on expenses).909 D.000 D.900.P100. 000 B.000 C.5M of its total gross income is from lease and restaurant business.P128. P730.P180.000 2. 280.000 2. If it is a non-profit hospital.000 C.000 3. Under No. its income tax is A.000 D.000 2.P730. which uses all its revenues or income for educational and charitable purposes .000 (?)47.000 2. P0 B.P150.P20.P100.P812.000 38.000 C. If the corporation is a non-stock educational. P730.P730. P480. Its income tax is A.000 B.200.000 B.000 34.000 35. If it is a non-resident cinematographic film owner/lessor. 000 D.P64.000.P128. institution.000.000 41.P100.P128. but the domestic corporation is non-profit hospital (disregard tax paid abroad ).P85. its income tax is A. machineries and equipments.000 42.000 45.000 D.000 P7.000 P6. its income tax is A.P64. 000 B.000 B.P120. If it is a private educational institution but P3.P275.P832.P128. If it is private educational institution. but its total expenses is P5.P300.000 D.P275.000 P8.P1.P275. P480.000 B.350. its income tax is A.000 (disregard original data on expenses). its total tax liability is (Original data).000 . P1. P100.P612.280.P120. 000 B.P175.000 Interest (other than from banks) 60. P679.200 C. Philippines 50.000 Prize.000 D.200 D. the tax due after tax credit.000 Other Income: Dividend from San Miguel Corp 70. P659. P791.000 1.P86. In the foregoing problem.000 49.P12.600 D.P140. if any for 2007 A.000 B. 24 The tax due after tax credit.P741.000 Expenses.000 Royalties.240.200 D. while FMV is P3M.000 2001 1.000 Dividend from Ford Motors.100.000. 000 C.000 2000 3.P846.000 The cost of the land which is not used in business is P1M. P0 C.P80. if it is registered with PEZA.950. P780.000 B.791.000 Rent. its total tax liability is A. P980.P15.240.000.500 48. A corporation has the following data for the year 2007: Gross Income. A corporation .960. Japan 100.000 D.000 53.000 2.000 C. P963.000 Royalties.P11.600 C. its total tax liability is A.P11. sale of San Miguel shares directly to buyer 150. Japan 500.960.P87.448.200.000 Expenses.000 Gross income.500 B. A domestic corporation had the following data: Gross income Deductions 1998 P1.000 B. USA 200.000 Expenses.000 . if any for 2005 A.000 1.700 C.000 54.000. USA 120.900.000.545. P721. its total tax liability if it is a resident corporation is A.P10.500 D.000 51. P115. USA 500.200.P15. P95. USA 100.000 Other rent income 100.000 1999 2.000 Gross income. Using the above data. And if it is a non-resident corporation.000 D. Philippines P1.000 50.500 B.000 Land sold in the Philippines (selling prize) 2.000.500 52. Its total tax liability as a domestic corporation is: A. contest in Manila 200.000 Gain. land USA 250.600 C.000 B.000.P97. 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.P10. Philippines 300. P913. Based on the above problem.000 P1. a resident corporation. P843. The corporation’s total tax liability including the tax on the profit remitted is A. C. Part of his taxable income B. P380. Can consolidate his share in the net income of the partnership under accrual method with his own income under cash method 2. B. final tax on passive income. no matter how created or organized are considered corporations subject to corporate income tax. Must convert his own income into accrual method C. P100. he A. C. Does not report his income from the partnership because the partnership is exempt from income tax D.000 The taxable income in 2002 is: A. The partners’ share in the distributable net income is subject to final tax. They file quarterly and year-end income tax returns. A co-owner is subject to income tax on his share in the net income of the co-ownership actually or constructively received. minimum corporate income tax and gross income tax. is on the cash method of accounting while the general professional partnership is on the accrual method of accounting. Subject to corporate tax D. The following statements regarding taxable partnerships are correct. Part of his taxable income B. 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.000 B. except A. P50. All partnerships.000 Partnership 1. As a rule. a co ownership is mot subject to income tax because the activities of the co- owners are limited to the preservation and enjoyment of the property and the collection of the income there from. Which of the following statements is not correct? A. C. 25 2002 980. B. Partners of a taxable partnership are considered as stockholders and profits distributed to them by the partnership are considered as dividends. D. They are subject to the rules on corporation for capital gain tax. The industrial partner shall contribute money and or property but not services.000 500. Must convert his income from the partnership into cash method B. Subject to final tax 4. normal income tax. The net share received by a partner in a general professional partnership is A. in the partner’s determination of his taxable income for the year. Subject to corporate tax D.000 C. They are subject to the improperly accumulated earnings tax. Exempt from income tax C. D. 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. If a partner on his own transactions. 6. Exempt from income tax C.000 D. P330. 5. Which of the following statements is correct? A. B. The net shares received by a partner in a general co-partnership is A. Subject to final tax 3. . such partnership is consequently subject to tax as a corporation. The share of each partner in net income of a taxable partnership shall be based on their capital contribution . D. 250 D. As regards an ordinary partnership. Statement 1. Partners’ share are subject to final tax. P270. false D. 500 B. hence partners have limited liability D.P440. P 470. Statement-1 The share of the partner in the net income of an OP is added on his own gross income.000.000 B. P171. 000 C. Treated like a corporation. P400. true B. single had P450. 000 B. Statement-2 The share of the partner in the net income in GPP is also considered as passive Income. false 8. Treated like corporations. Partners’ share will be included in their respective ITRs whether distributed or not 10. true B. True. 000 C. True. Subject to improperly accumulated earnings tax C. 000 D. as such partners and stockholders are not liable to creditors of business A. P500. 000. A is married with 2 qualified dependent children . And the taxable income of B subject to 5. P518.000 B. incurring P230. 000 C. P180. 26 7. 000 C. hence it is subject to the corporate income tax B. A. hence it not file an ITR B. true C. P508. It is exempt from income tax. 000 with a Corresponding P350. Partners’ share are subject to final tax D. P435. which of the following statements is correct? A. true C. False. 000 (?)13. net of final withholding tax and it received dividend income from a domestic corporation of P10. They share profits and losses at 4:6. False.000 and P250. Using the preceding number.A CPA and a Dentist may form a GPP or an ordinary partnership Statement 2. P146. Partner’s share even if distributed will not be included in their ITR 11. As regards a general professional partnership. A and B are partners in a Partnership which realized a gross income of P800. P420. P 444. which of the following statements is correct? A. 000 15. P154. the net distributable share of A is A. 500 C. False. false 9. hence it need not file an ITR C.000 B.P364. False. P320. The net taxable income of A who shares profit and loss equally with B is A. 000 D. P162. AB partnership with A and B as partners had a net professional income amounting to P500. A is single and has compensation income of P200. Using the preceding number.Partnership and Corporations have separate juridical personalities distinct from the owners. P510. True. 350 14. false D. he earned P400.000 in his own business. the taxable income of A subject to 5-32% is A.000 gross income and expenses respectively.000 allowable expenses while B. 000 D.32% is A. P276. 000 . If the partnership is a GPP. 000 12. but it is a business partnership. 000 D. Its other income included bank interest income of P8. 000 expenses in the year 2007. P250.000. True. the taxable income of the partnership is A. 000. 400 B. 140 19. P76. 360 C.The taxable income of C is (OP) A. 30% and 40%. P12. The income tax due of the partnership if OP A. The taxable income of B is (OP) A. respectively. If the partnership is an OP. A and B share in the profits at 75% and 25%. 000 C. P198. 000 Deductions 100. 750 25. P157. 000 B. 000 160. If B opts to claim the 10% OSD (OP). the tax due of the co- ownership is A.800 C. P180. P357. P180. 000 P300. 900 D. P18. P320. 000 B. 000 D. A and B are both single. P198. 000 B. 000 24. P32. P165. P342. 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 D. 000 D. P 153. B did not withdraw any amount. P238. 000 70. 240 C. P424. P357. P382. P31.000. P198. P32. 000 C. 000 D. P31. P424. P148. 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. 140(?)/48.000 D.000 (gross of 5% tax) and expenses related to rental activity of P200. 000 C.000 D. 000 D. P144. P165. 000 21. 000 Drawing Account 5. P342. respectively. 860(?) D. 27 (?)16. The income tax liability of the co-ownership A. The taxable income of A before exemption A.000 B. A withdrew P50. 000 D. A and B are co-owners by virtue of a property given to them by their father. 000 20. 000 17. P0 28. The co- ownership had a gross rental income of P500. 000 2. P240. 000 23.000 C. P280. P80. P57. P367. 000 Civil Status Single Married Head of the family If the partnership is a GPP. And the total tax liability of A is A. P165. 000 C. P424. 000 420. B. P37. his taxable income is A. 600 B.000 but 10% is not deductible for the year 2007. P399. P424. 000 22. 000 /135.400 B. 000 D. P144. and C are partners sharing profits and losses 30%.600 B. P280. The taxable income of A is (OP) A. 000 B.000 C. 000 C. P0 . 600 B. 000 B. 600 26. 000 C. 500 B. P8. its tax due is A. 000 B.500 D. P382. 500 18. P424. The total tax liability of B is A. 000 D. 000 3. P50. the taxable income of C is A. 000 P900. 000 P350. P0 27. P80.000 from the co-ownership net income for the year. P102. P153. The taxable income of B is (GPP) A. P102. P28. A. P108. 000 C. 000 10.000 C. C. Capital C. A. Legatee D. 3 if he left a will A. Devisee C. Transferee D. Assets B. Heir C. any person or corporation that holds in trust an estate of another person or persons A. Trustor 7. Decedent B. both as to corpus (principal) and income 2. The person who establishes a trust A. The person in whom confidence is reposed as regards property for the benefit of another person A. Transferor B. Devisee GROSS INCOME 1. Devisee C.000 if the executor or trustee is married. The person to whom a gift of real property is given by virtue of a will A. Trustor 9. The term applied to the person whose property is transmitted through succession. Trustee C. The term applied to the answer in No. Heir B. Legatee D. Rents are considered derived from the country where the property is located D. Legatee D. rights and obligations of a person which are not extinguished by his death and those which accrued thereto since the opening of succession. Which of the following statements is correct? A. Estate D. Devisee C. The person to whom the gift of personal property is given by virtue of a will A. The taxable year of estates and trusts maybe calendar or fiscal year D. Legatee D. except one. Beneficiary B. The source of dividend income is the country where the corporation was incorporated C. The property. The person called to the succession either by the provision of a will or by operation of law A. The source of interest income is the country where the debtor resides B. Estates and trusts are allowed a personal exemption of P32. Devisee C. B. Heir 10. . All of the following statements are correct. Legatee D. Heir B. Which is the exception? A. Heir B. Income from personal services is considered derived from the country where the services were rendered. Fiduciary C. whether or not he left a will A. For a trust to be taxable. For income tax purposes. Donor D. Beneficiary D. 28 Estates and Trusts 1. Income 3. Heir B. Grantor C. Trustee 12. Devisee B. it must be irrevocable. The income tax rates for corporate taxpayers apply to taxable estates and trusts. Legatee B. The person for whose benefit the trust has been created A. Grantor 4. Trustor 6. Legatee D. Trustor 8. Testator 5. Transferor C. Damages awarded as a consequence of a libel and slander suits C. False. Which of the following is part of gross income? A. As a rule. Scrip dividend B. Retrenchment pay C. Expanded withholding income tax B. Overtime pay B. SSS/GSIS benefits D. False 3. Fringe benefit tax 12. Amounts received as rewards for giving information instrumental in the discovery of violation of the Tax Code and seizure of smuggled goods C. Prizes and awards as an awardee of Ramon Magsaysay Award Foundation B. Special assessment B. Pag-ibig premiums contributions 10. Tax credit only . True. Tax credit and deduction from gross income B. Gifts. Bank interest on long-term deposit C. Cash dividend C. in the case of a resident citizen may be claimed as A. Income tax payments to a foreign country. SSS/GSIS premiums contributions D. Estate tax C. – 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. this is not part of taxable income A. If refunded. bequests and devices B. the following are taxable income.A gain from sale of shares of a foreign corporation shall be considered derived from the country where the corporation was created or organized. Proceeds from life insurance D. IOU’s B. Labor union dues C. This is taxable income A. Amounts received as returns of premiums 7. True. One of the following is taxable income A. . False. The following items are exclusions from gross income. except A.000 11. Raffle prize not exceeding P10. Property dividend D. 13th month pay 5. Donor’s tax D. True C. Which is not a creditable withholding income tax? A. Hazard pay D. Profit sharing C. Withholding income tax on compensation income 4. Separation pay due to resignation B. Refund of Philippine Income tax 6. except A. As a rule. Withholding income tax at source D. Interest on Philippine lotto winnings D. Stock dividend 9. Separation pay received by an employee due to a cause beyond his control 8. True B. Withholding income tax on passive income C. Proceeds of life insurance D. False D. this is taxable A. PCSO & Phil Lotto winnings B. Which of the following is taxable income? A. 29 2. except A.000. A.Prizes. True .000. sums paid for saying masses for the dead and other contributions received by a clergyman. Marriage fees. Taxable subject to final tax if received by a non-resident citizen from a non- resident corporation 15. True. D. During the year.000 C. evangelist or religious worker for services rendered is taxable income. Taxable subject to year-end tax if received by a resident citizen from a non-resident corporation D. C. if received by another domestic corporation 14. awards and winnings are excluded from gross income because they are subject to final tax. Both are true C. P100. mid year bonus and 14th month pay amounting to P40. False B. Which of the following statements is not correct? A. if received by a resident alien C. P 90. Pag-ibig. X works as a secretary in an advertising firm in Manila. Exempt from income tax if received by a resident corporation from a domestic corporation C. The total deductions for her SSS premiums. Exempt from income tax if received by a domestic corporation from another domestic corporation B. Priests and religious institutions are exempt from income and property taxes. D. if received by a resident citizen B. if single is A. The value of a property received as a gift. Christmas bonus.000 a month as salary or a total of P120. Tax credit or deduction from gross income D. 18. 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. B. . Separation benefits received by terminated employees resulting from a deadlock in their collective bargaining agreement are exempt from income tax.000 D. In addition she also received 13th month pay. Which of the following statements is correct? A. Deduction from gross income only 13. productivity bonus. endowment or annuity contract or any interest therein.000 16. or under a will or testament or through legal succession is exempt from taxation. C. and Union dues contributions amounted to P5. P 75. In case of transfer for a valuable consideration by assignment or otherwise of a life insurance. baptismal offerings.000 B. X’s taxable income. Monetization of leave credits of employees who were unable to go on leave due to exigencies of the service constitute taxable income. if received by a non-resident corporation D. 17. P105. 30 C. False.000. Dividends paid by a domestic corporation maybe taxable but subject to final tax. – PCSO and Phil lotto winnings are excluded from gross income because they are subject to final tax. Medicare. she received P10. The power of taxation reaches even the citizens abroad and his income earned from sources outside the Philippines B. 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. Both are False D. Which of the following statements regarding dividends is wrong? A. 21. P12.Which of the following is taxable? A. Exclusions from gross income. Advance rental in the nature of prepaid rental. P40. except: A. Taxable income of the lessor in the year received if he is on the cash method of accounting B. Interest payments on proceeds of life insurance held by the insurer C. P200. or efficiency of the employee. lotto 22. otherwise they will be exempt from income tax.00 or more. Living quarters and meals furnished and given to an employee for the convenience of the employer D. contentment. P30. Taxable income of the lessor in the year received whether he is on the cash or accrual method of accounting C. 25. Taxable income of the lessor up to the amount earned in the year the rental is received 26. As a rule. Recovery of bad debts previously written off is part of taxable income D. 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. Which statements is correct? A. service incentive pay and Christmas bonus shall be excluded from taxable income up to A. P50.000 interest on long-term deposit or investment B. GSIS/SSS. Interest on the price of the land covered by the Presidential Decree on land reform. Incomes from illegal activities are taxable.000 D. Which payments made by the lessee under such terms of the lease contract should be considered as additional rent income of the lessor? 1. goodwill. Gain realized from the sale or exchange or retirement of bonds. Tax refunds constitute taxable income to the taxpayer. Philhealth and Pag-ibig contributions and Union dues of individuals D. received by the lessor under a claim or right and without restriction as to use is A. If a lessee paid directly to the government a real tax on the property of the lessor 2.000 B. 31 19. B. Compensation for damages B. . More than 7 years D.000 prize in a supermarket raffle D. One of the following is taxable income A. B. P1 M winnings from Phil. 5 years or more C. contest awards and prizes are subject to 20% final tax if they amount to P10. C. Gains realized by an investor upon redemption of shares of stock in a mutual fund company. Taxable income of the lessor in the year received whether he is on the cash or accrual method of accounting D. debentures or other certificate of indebtedness is excluded from gross income if with a maturity of A. More than 8 years B. P20. The share of a partner in the undistributed net income of a general professional partnership C.000 C. Facilities or privilege of relatively small value offered by the employer as a means of promoting the health. 20. Gross benefits received by officials and employees of public and private entities as 13th month pay and other benefits such as productivity bonus.000 gain on sale of 10-year bonds C. If the amount received by the lessor is in the nature of a loan extended by the lessee to the lessor. More than 10 years 23. P100.000 24. 400 D. but the accrual method of accounting is used. a farmer. P395. Using the same information above. Fringe benefits of P10.000 D.000 Inventory of livestock and farm products.000 FRINGE BENEFITS TAX 1. the income is: A. 32 A.400 B. Refund of income tax in prior year D. P15.000 The amount subject to fringe benefit tax is A. P395. P205.000 Cost of livestock and farm products purchased and sold``` 140.000 Cost of raising livestock and farm products 190. X Corporation allows its Sales Manager to incur expenses subject to reimbursement.000 Grocery (PONES) 10.000 Using the cash method of accounting. P202. In 2010.000 Sales of livestock and farm products purchased 160. Only 1 and 3 D. Refund of donor’s tax paid in prior year C. Only 1 C. P16. had the following data for the year: Sales of livestock and farm products raised P270. January 1 110. Honorarium and allowances of P10.000 a month B. P48.000 B. A capital contribution B. Refund of special assessment paid in prior year 28.000 C.000 D. P208. P202. P208. One of the following represents taxable income: A. P25.000 of an employee C. Mr Z. 2 and3 27.000 B.000 a month of a partner in a general professional partnership D. A gift C. Salary of P 20.000 C. This is not part of gross compensation income A. Refund of overpaid rental expense in prior year B.000 Inventory of livestock and farm products.000 Gasoline of company car 12.000 C. If an individual performs services for a creditor who in consideration thereof cancels the debt.000 of a member of the board of directors of a Corporation 30.000 Rental income of farm equipment 105.000 31. the cancellation of indebtedness may amount to A. A payment of income 29.000 Water – 70% in the name of X Corporation 2. P205.70% in the name of X Corporation P20.600 . Salary of P10. A donation inter-vivos D.000 Representation and Transportation – business trip 4. Only 2 and3 B. as follows: Electricity. the income is A. December 31 113. 1. The following concepts denote exemption from the fringe benefits tax. fringe benefit furnished or granted in cash or in kind by an employer to an individual employee maybe subject to the fringe benefit tax. or efficiency of his employees. necessity to the business or trade C. Withheld at source 3. The monetary value of the fringe benefit B. compensation income of the rank and file employees B. benefits given to the rank and file employees D. 9. Fringe benefit C. 2 and 3 5. The fringe benefit tax is 1. Imposed on the employer 2. except A. De minimis benefit . A. 1 and 2 only C. Those holding supervisory positions A. The following fringe benefits are not subject to fringe benefit tax. 33 2. if required by the nature of or necessary to the trade. Rank and file employees 2. 2 and 3 only B. 1. insurance and hospitalization benefit plans C. compensation income of the managerial employees D. except A. if given for the convenience or advantage of the employee 8. fringe benefit of the rank and file employees C. convenience of the employer B. if given to 1. Both accounts of the fringe benefit and the fringe benefit tax 7. The fringe benefit tax is a tax paid by the managerial or supervisory employee. goodwill. De minimis benefit whether given to rank and file employee or to supervisory or managerial employee is not subject to fringe benefit tax D. 2 and 3 6. Fringe benefit given to rank and file employees is not subject to fringe benefits tax B. contributions of the employer for the benefit of the employee to retirement. The amount deductible by the employer from gross income D. Deductible by the employer A. Managerial employees 3. 1 and 3 only D. welfare and benefits of the employee D. 1 and 3 only D. 2 and 3 only B. 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. 1 and 2 only C. de minimis benefits 4. Basic rules on fringe benefits tax. 1. The gross-up monetary value of the fringe benefit C. fringe benefit of the managerial employees 3. Fringe benefit given to a supervisory or managerial employee is subject to fringe benefits tax C. Which of the following is subject to fringe benefit tax? A. business or profession of the employer B. contentment. except A. As a rule. 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. and efficiency of his employees. 25% D. As a means of promoting the health. Uniform and clothing allowance 8. Losses from wagering transactions shall be allowed only up to the extent of the gains from such transactions. imposed on the employer B. P23.000 C.000 D.000 B. Which statement is wrong? The fringe benefit tax is A.000 C. P11.000 B. De minimis benefits.000 th 6. interest and penalties incident to tax delinquency C. .000 5.000 3. D. 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.000 4. P18.000 2. insurance and hospitalization benefits plans C. deductible by the employer 11. 15% 14. as defined in the rules and regulations to be promulgated by the Secretary of Finance. and others of similar nature which are necessary to realize the profit are allowed as deduction from gross income B.000 13. Monetized unused vacation leave of 15 days P 9. DEDUCTIONS AND EXEMPTIONS 1. P84. Which of the following statements is true? A. 75% C. The following fringe benefits are not subject to fringe benefits tax. Gifts given during Christmas and major anniversary celebrations 10. whether granted under a collective bargaining agreement or not B. withheld at source D. D. Grossed-up monetary 10.000 D.000 The amount of taxable fringe benefits is A. The employer’s deductions for the benefits given A. Payments which constitutes bribes. Fringe benefits given to the rank and file employees. P30. Contributions of the employer for the benefit of the employees to retirement. imposed on the managerial or supervisory employee C. except: A. Deductions are amounts allowed by the Tax Code to be deducted from gross income to arrive at the income tax liability of a taxpayer. P23. Fringe benefits furnished or granted by the employer to its managerial and supervisory employees. Fringe benefit tax D.000 12. 13 Month pay 18. kickbacks. employer A gave rank and file employee X the following fringe benefits in 2009: 1. upon recommendations of the Commissioner. goodwill. Rice subsidy 24. The taxes which are deductible from gross income include the taxes. 34 B. 85% B. Achievement award for length of service in the form of tangible personal property 15. P25. P66. P 6.000 D. 40% of the gross sales/receipts 8. No deductions shall be allowed where the transaction is between “related taxpayers” for 1. Bad debts A. 10% of the gross sales/ receipts D.400 . Y Corp. business or profession 6. had a net sales of P1M.000 5.000 D. is engaged in the sale of goods and services with net sales and net revenue of P2M and P1M respectively.000 B. Transportation expenses from the main office to the branch B. The actual entertainment. P 10. 7.000 D. The actual entertainment. amusement and recreation expense amounted to P18. amusement and recreation expense amounted to P20.000 4.000 B. Usually incurred in the acquisition. More than P250. P20. Between an individual and a corporation more than 50% in value of the outstanding stock of which is owned.000. 10. Interest expense 3.000 B.000 B. Between a fiduciary of a trust and a beneficiary of such trust D. except: A.000 C. 1 and 2 only C.000. Not more than P2. Not more than P250. provided that the family has a gross income of A. The phrase “related taxpayers” will apply to the following. premiums paid during the taxable year for health and/or hospitalization insurance taken out by him on himself. P 6. The optional standard deduction for corporations is A. P10. More than P500. The deductible “EAR” expense is A.000 3. P 5. had a net revenue of P1M. The actual entertainment.000 D. Travel expenses on business trips D. P 5. P18. 10% of the gross income C.000. P20. To benefit one accounting period and is a deduction from gross income in the year paid or incurred. directly or indirectly for such individual. The deductible “EAR” expense is A. in case of distributions in liquidation. Capitalized and the cost is recovered through annual depreciation C. amusement and recreation expense amounted to P20. Travel expenses while away from home in the pursuit of trade. 2 and 3 only D. betterment or permanent improvement of the asset B. P12. The deductible “EAR” expense is A. Transportation expenses from home to the office and from the office back to home C. X Corp. Between the grantor and a fiduciary of any trust C. P16.000 C. Z Corp. 35 2. 40% of the gross income B. P 6. 1. Ordinarily to benefit more than one accounting period D.000 C.000 C. For individuals. 1 and 3 only B. including his family shall be allowed as deductions from gross income. Between members of a family B. This is not deductible from gross income A. Losses from sales or exchanges of property 2. 2 and 3 9. A revenue expenditure is A. May be deducted from gross income A. An individual with gross compensation income only B. His deduction for interest expense is A. False 14.000 Insurance recovery 50. His deposit in XYZ bank yielded an interest income of P25. If an individual is on the cash basis of accounting.000. engaged in business borrowed money from ABC Bank from which he had an interest expense of P20. Philippine income tax C.000 B. will interest paid in advance be allowed as a deduction? First answer . An individual with mixed income D. A. True. True C.000 D. In 2009. True.In case of married taxpayer. The deduction for premium payments on health and / or hospitalization insurance is not available to: A. True. False. Special assessment 17. P 5.000 .000. P80. True.The deduction for premium payments on health and / or hospitalization insurance shall not exceed P2.000 C.000 C. True B. A taxpayer engaged in business incurred a partial loss of property as follows: Asset 1 Asset 2 Book value of the asset at the time of loss P200. P120. 36 11.750 B. if the indebtedness is payable in periodic amortizations. An individual with gross income from business or practice profession. False D. a resident citizen.Allowed as a deduction or treated as a capital expenditure at the option of the government ?15. P10.400 for the family or P200 a month A. Z. whether he is availing of the optional standard deduction or itemized deduction C. Not allowed as a deduction against gross income B. Allowed as a deduction or treated as a capital expenditure at the option of the taxpayer D. Estate or donor’s tax B. P 70.000 D. Required to be treated as a capital expenditure to form part of the cost of the asset C. Second answer – Yes.000 The deductible loss for asset 1 is A.000 Cost to restore the property back to its normal operating condition 120. Foreign income tax D.000 P200. P20.000 None Salvage None 40. False B.No. 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. False. True C.250 15. P 9. False. Interest expense incurred to acquire property used in trade or business or exercise of a profession is A. only the spouse claiming the additional exemptions for dependents shall be entitled to the deduction on premium payments on health and / or hospitalization insurance. . P30. True 16. False. Both husband and wife 12.000 300. it is a deduction in the year that the indebtedness was paid and not in the year that the interest was paid. False D. . 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. B. 2 consecutive taxable years immediately following such loss. Scrap value is P20. which had not been previously offset as deduction from gross income shall be carried over as deduction from gross income for the next A. True. P60. The income to be reported in year 5 is A.000 410. P6. P 0 22. Documentary stamp tax B.000 The income to be reported in year 2 is A. Estate tax B.000 C.000 and the estimated useful life was 25 years. Examples of taxes that are deductible except A. a corporation demolished an old warehouse which had a construction cost of P2M and a book value of P300.000 410.000 P420. P20.000 Allowable Deductions 530. Philippine income tax 24.500 D.000 B. One of the following losses can not be deducted from gross income A. 4 consecutive taxable years immediately following such loss.000 410. Privilege tax D. D. taxable year immediately following such loss. Special assessment C.000. True C. A.000 C.000 D. otherwise. Donor’s tax D. To construct a bigger warehouse. 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. P10.200 B. P240. A corporation ascertained that its B Corp. Non-deductible taxes. A taxpayer had the following: Year 1 Year2 Year 3 Year 4 Year 5 Gross income P450. P450. 3 consecutive taxable years immediately following such loss. False D. P80. False. P60. 20.000 D. . X acquired a machine at a cost of P250. Occupation tax C.000 P440. 37 18. . C.000 B. D. True B. P11. False. or ordinary but not necessary is Deductible from gross income.000 P450. P200. 23. P300. The operating loss. True.000 B. C. After depreciating the asset for 20 years using the straight-line method.The taxpayer must signify his intention to elect the itemized deduction.000 C. False .000 P490.600 26. The annual depreciation from the 21st year assuming a remaining life of 10 years without scrap is A. stocks are worthless because of the total insolvency of B Corp. B.An expense which is necessary but not ordinary.000 430.000 19.000.000 D. Business tax 25. P20. P 0 21. P9. P160. except A.000 C. The deductible loss for asset 2 is A. he is deemed to have chosen the optional standard deduction. it was determined that the remaining life is not five years. The premiums paid on the policy is P700. True C.000. the following may be deducted 1. the following maybe deducted. False D. Exempt from income tax B.000 after the 25th year of the policy and his beneficiary. 3.000. Partly taxable. Optional standard deduction D. 4 and 5 and either 1 or 2 B. False 29.000. Destination of income test B. False.Interest paid on preferred stock is deductible from gross income of the paying corporation. For individuals with gross compensation income. partly exempt D. If Z files a letter of resignation and receives the separation pay. False. X took out a life insurance policy of P1. False ?28 . 2. such amount is . True. Premium payments on health and / a hospitalization insurance A. Subject to final tax 33. Equitable doctrine of tax benefit 32. Taxable in full C. except: A. Exempt from income tax B. Itemized deduction 3. True. Optional standard deduction 2. Partly taxable. A. 2.000 naming his wife as beneficiary. if X dies and his beneficiary received the proceeds of P1. This is A.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. .. 3 and 4 C.000.000. partly exempt D.The cost of leasehold improvements shall be deductible from gross income of the paying corporation. Subject to final tax 34.A capital expenditure usually benefits more than one accounting period and is deductible from gross income in the year it is paid or incurred. 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. Additional exemptions 5. Premium payments on health and/or hospitalization insurance 30. For individuals with gross income from business or practice of profession. A. . 38 ?27. 1. such proceeds will be: A.000. False D. such proceeds will be A. should he die before this date. . . Taxable in full C.000. True. True B. 1. 4 and 5 31. 2. 3. To avoid implication of inefficiency Z was advised to file a letter of resignation instead of being retrenched.`Personal exemptions 4. Life-blood theory D. Personal exemptions B. Additional Exemptions C. If X outlived the policy and received the proceeds of P1. True. True C. The policy provides that the insurance company will pay X the amount of P1. False. Using the preceding no. 3 and 4 D. True B. 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. False. Severance test C. Z. One of the following is not correct for deductibility of losses from gross income A. May claim tax credit for income taxes paid to foreign country. General professional partnership B. Taxable estates and trusts C. 40. The optional standard deduction is not available against compensation income arising Out of an employer-employee relationship C. 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. Subject to final tax 36. May consider capital expenditures as revenue expenditures A. storm or other casualty. 40% of the gross income B. Non-resident alien 41. Exempt from income tax B. Non-resident alien 38. Must not be compensated by insurance or other form of indemnity C. Taxable in full C. Resident citizen C. If Z is retrenched and receives the separation pay. Taxable in full C. Partly taxable . Using the preceding no. except A. 10% of the gross sales/receipts D. Domestic corporation D. Non-resident citizen D. Resident alien D. The following may elect optional standard deduction or itemized deduction. Resident alien 37. A. theft or embezzlement B. The following may be allowed to claim optional standard deduction. Partly taxable . partly exempt D. 40% of the gross sales/receipts 43. such amount is A. Resident citizen C. Resident citizen C.. Resident alien B. except A. Must have been claimed as deduction in the estate return of the taxpayer 39. The optional standard deduction for individuals is A. 10% of the gross income C. The election of Optional Standard Deduction is irrevocable for the taxable year for Which the choice is made. Exempt from income tax B. Resident citizen . D. May consider capital expenditures as revenue expenditures A. Domestic corporation D. Must arise from fire. 39 A. Foreign corporation 42 . Unless the taxpayer signifies in his return his intention he shall be considered as having availed of the itemized deduction. partly exempt D. Subject to final tax 35. Private educational institutions B. Non-resident citizen B. Which of the following statements is not correct? A. robbery. A declaration of loss by casualty should be filed with the Bureau of Internal Revenue D. B. June 30 Jul 1 . P1. Finally. B. P1.000 The net income of RDG is A.000 P900. a retailer of goods uses the accrual method of accounting in reporting its income and expenses under the calendar year basis. Its 2010 transactions show: Jan. Subject to final tax. a retailer of goods uses the accrual method in reporting his income and expenses. such proceeds will be: A.000 B. Exempt from income tax C.020.000.560.000 Business expenses 100.000 B. 46.000 D. the claim was settled in 2011 for P9M.000 Business expenses 100.Dec 31 Gross Sales P1. P720.000 300.000 P700. 1 . The building had a book value of P10M.Dec 31 Gross Sales P1.000 For the period January 1 to June 30. RLG Corporation.1 .5M.000 P700. Private educational institutions D. Partly taxable. P1.000.000 300. His 2010 transactions show: Jan.000 C. 30 Oct. The premiums paid on the policy is P1. B’s annual income tax return using the optional standard deduction will show a net income before exemptions of A.000 P900.000 C.000 200. should he die before this date.560. he used the itemized deduction but decided to use the optional standard deduction beginning July 1. Exempt from income tax B. Z took a life insurance policy of P2M naming his wife as beneficiary. The reported income and expenses for taxable year 2010 show: .320.000 47. Domestic corporations C.000 48.000 50. 40 B.000 600. it used the itemized deduction but decided to use the optional standard deduction method when it filed its annual income tax return. 30 Oct. Part of taxable income C. MDG Corporation is engaged in trading business.000 150. 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. partly exempt D. P 900. Resident alien 44. Taxable in full B. A building was partially destroyed by fire in 2010. P800. partly taxable 45.1 .000 50. The proceeds will be A.Sept.000 Cost of Sales 600. P 660.Sept.000 D. 2010. Subject to final tax D. From January 1 to June 30. Partly exempt.000 Cost of Sales 600. which was refused by the owner.000 70. The insurance company was willing to pay P5 M. 2010.June 30 Jul 1 . If Z outlived the policy and received the proceeds of P2M. 1 . P1. 000 CAPITAL ASSETS 1. which of the following statements is true? A. Ordinary loss is deductible from capital gains 2.Ordinary losses are deductible only to the extent of the capital gains but the net capital loss is not deductible from ordinary gain. True C.858.000. 5. Where the taxpayer is a corporation. the net capital loss is not deductible.000 Interest on time deposit (gross) 100.000 each residential unit.000. The holding period does not apply to corporation. . 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. The net capital loss can be carried over in the next succeeding year C.000 Interest expense on loans payable 180. the percentages of gain or loss is 100% if the capital asset has been held for 12 months or less. short-term C.000 B. B.door apartment with a monthly rental of P10.Capital losses are deductible from ordinary gains but net capital loss is not deductible from ordinary gains. A capital asset held by the taxpayer for not more than 12 months is said to be A. Capital loss is deductible only up to the extent of ordinary gains D. The seller is not liable to pay the capital gains tax.000.000 The net taxable income is A. Which is the exception? A. B. 41 Sales P10. False. Depending on the holding period. capital gains and losses are recognized at 50%. and 50% if the capital asset has been held for more than 12 months. He sold this property to another individual taxpayer. A.000 Cost of sales 6.000 C. hence.000 D.820. P2. no-term 6. False D. The taxpayer is engaged in business D. medium-term D. D. False 3. . The rental income is subject to income tax using the graduated rates. Net capital loss carry over in a taxable year should not exceed the capital gain in the year the loss was incurred. P3. P2. C. B.862. long-term B. hence. True. Holding period is the duration for which the taxpayer held the capital asset. C. Where the taxpayer is a corporation. True B. P2. Capital losses are deductible only to the extent of the capital gains. Ordinary losses are deductible from capital gains but net capital loss cannot be deducted from ordinary gain.000. True. the following rules as to recognition of capital gains or losses from the disposition of property classified as capital asset shall apply. The property sold is a capital asset. Which is the exception? . 6. An individual taxpayer owns a ten (10).000 General business expenses 1. Which is not correct? A. False. 000 B. P300. Property primarily for sale to customers in the ordinary course of his trade or business. P240. 2011.000 B. C. P375. P2.000 C. P72. Ordinary losses are deductible from capital gains but net capital loss cannot be deducted from ordinary gain. P3. He purchased his new principal residence at a cost of P7M.000 on the date of sale and installment payments of P500. D.5M. The holding period does not apply to corporations. P5M B.000. PENALTIES AND REMEDIES 1. 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. In 2009. the basis (cost) of the new principal residence? A. P4M 10. the capital gain tax is A. P750. P 0 9. A sold his principal residence at a selling price of P5M but with a FMV of P6M. The selling price exceeds P1. C. P300. The sale is in installment D. 42 A.000 11.4M B. P1. B. Stock in trade or other property included in the taxpayer’s inventory. The term “capital assets” include A. P500. Capital losses are deductible only to the extent of capital gains. but .000 FILING.000 C. P6M D. How much is the basis (cost) of the new principal residence? A. cash of P500. B.000 every year thereafter. Property used in the trade or business of the taxpayer and subject to depreciation. P4M D. B. The sale called for an assumption by the buyer of a mortgage on the land of P1. capital gains and losses are recognized at 100%. Z sold a piece of land which had a cost of P1M for a selling price of P4M.000 C. Real property not used in the trade or business of taxpayer.000 D. 2.000 D. P7M C.The Income tax return for the calendar year 2010 was due for filing on April 15. hence. 7. 8.000 D. The land is an ordinary asset. Net capital loss carry-over should not exceed the net income in the year the loss was incurred.000 C. P360.2M C. D. P60. The initial payments do not exceed 25% of the contract price.000 B. The income to be reported in 2009 under the installment method of reporting income is A. The personal property sold is not of a kind which would be included in the inventory. Using the preceding number. The capital gains tax is A. The property sold was acquired for P3M. If only P4M out of P5 M was utilized in acquiring his new principal residence. P360. 000 4.000.917 B. April 15 of the current taxable year . However. it was disclosed that its ITR was false or fraudulent because it did not report a taxable income amounting to another P500. P100. 2010.000 2. assuming that the assessment has become final and collectible.833 D. P150.000 B. P145. for which reason he filed his tax return and paid the tax only after said notice on October 15. P205. 2011 (excluding compromise penalty) is A. The tax due per return is P100. The amount still due on July 15. 2010. only on July 15. but the corporation pays the tax assessment only on August 15.000 D. 2010. non-cumulative system C.000 C. The individual income tax return of a fixed earner (employee) is filed on or before A. it was disclosed that he erroneously computed the tax due. P297. On a yearly basis.500 D. once a year. B. P387.000 C. The total amount due on July 15. 2010 is: A.250 6. upon investigation. On a quarterly basis.. P180. 2011.000. P130. 8. P376.250 D. On a quarterly basis. The taxpayer did not file his income tax return for the calendar year 2008. 2010.625 C.500 B. The amount still due on July 15.500 B. The total amount due is A.500 7. P306. 2010 calling for payment on or before July 15. P31. P150. P262. P329. On a quarterly basis.000 D. 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 tax due per return amounts to P100.000 B. 2010 (excluding compromise penalty) is A. P25. A corporation filed its ITR and paid tax for calendar year 2008 with a net taxable income of P500. P125. Upon pre-audit of his return. Using the preceding number.000 B. P155. P30.000. The taxpayer is assessed for deficiency income tax in a letter of demand and assessment notice is issued on June 15.000 C. Using the preceding number. Individual self-employed taxpayers are required to file their Income Tax Returns: A. P328. P415. 2010 is A. P35. once a year. 43 the taxpayer voluntarily filed his tax return without notice from the BIR. He was notified by the BIR of his failure to file the tax return. Taxpayer filed on time his income tax return for the calendar year 2008 and paid on April 15.000. 2010 calling for payment on before July 15. cumulative system D. cumulative system and on a yearly basis.000 5. 2009. P111. P130. The total amount due on October 15. Failing to protest on time against the preliminary assessment notice.125 C. The correct amount of tax due is P120.000.250 D. a final letter of demand and assessment notice issued on June 15. the total amount due (excluding compromise penalty) is A. P117.000 3.000 C. Who is the exception? A. False D. Basic income tax is over P2. 9. Keeping two (2) sets of books of accounts or records. Where compromise penalties is not allowed A. Every alien residing in the Philippines on income derived from sources within the Philippines. Failure to keep records of accounts or records in a native language or in English.000 D. All criminal violations may be compromised: A) Except those already filed in court. B. B) Except those involving fraud. on his income from sources outside the Philippines. A resident citizen taxpayer is allowed to pay his income tax due on installment basis if: A. False. True. C. 12.000 or below B. 25% as administrative penalty C. Failure to have books of accounts audited and have financial statements attached to income tax return certified by an independent CPA. B.000 for the year 2008. Every Filipino citizen residing outside the Philippines. a surcharge is imposed at: A. The correct total taxes were withheld from both earnings. 25% as criminal penalty B. B. A. 44 B. Generally. B is exempt from filing his ITR because the correct total taxes have been withheld. D. 1. True. In September 2008 he accepted another part-time job from B Corporation from which he received a total compensation of P408. True C. He then received his 13th month pay. With regard to the filing of income tax return (ITR) for the year 2008 which of the following is true? A. False. 10.000 a month. May 15 of the current taxable year D. Basic income tax is P2. True B. D. B is not exempt from filing his ITR because his total compensation income for 2008 came from more than one employer. C. 11. Basic income tax is over P1. D. False 2. For filing a false and fraudulent return.000. C. B is exempt from filing his ITR because his total income for 2008 came from employer- employee relationship. the following individuals are required to file an income tax return. Failure to preserve or keep books of accounts and accounting records. 50% as criminal penalty . Every Filipino citizen residing in the Philippines. May 15 of the following taxable year. Basic income tax is over P5. Every non-resident alien engaged in trade or business in the Philippines. B was employed by A Corporation on the first working day of January 2008 on a part-time basis with a salary of P10. B is not exempt from filing his ITR because his income came from employer-employee relationship. April 15 of the following taxable year. C.000 C. 10% of the basic assessed tax B. with regard to compromises other than on the ground of financial incapacity to pay. 40% of the basic assessed tax 5. 4. False. 50% as administrative penalty 3. 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. the compromise shall involve a minimum compromise rate of A. from filing the protest on the assessment within A. relevant supporting documents must also be presented to the BIR. the prescriptive period for assessment after the date the return was due or was filed. 90 days B. 30% of the basic assessed tax D. from receipt of the assessment within A. 180 days 23. I . 10% of the basic assessed tax B. An assessment shall become final if not protested administratively. II . Filing a petition for reconsideration or reinvestigation B. True C. 30 days C. 5 years D. 60 days D. Filing a criminal complaint against erring BIR officials or employees. False D. 90 days B. True. 60 days D. how many days from the taxpayer’s submission of documents supporting his protest? A. whichever is later. 30 days C. 60 days D. 45 D. 20% of the basic assessed tax C. True. as a general rule. 7 years B. 90 days B. and if he fails to respond. This is not an administrative remedy available to a taxpayer in connection with collection of taxes. False 24. 30 days C. 10 years . Where a return was filed. Using the preceding number. if such protest is not filed with the BIR. False. 20% of the basic assessed tax C. 3 years C. Using the preceding number. 40% of the basic assessed tax 20. 180 days 21. Filing a claim for tax refund or credit C. An appeal on an assessment may be made to the CTA if the BIR does not act on the protest within.An assessment issued may be questioned administratively with the BIR. 180 days 22. 30% of the basic assessed tax D. is within A. True B. A. Entering into a compromise D.The taxpayer shall respond to a pre assessment notice. an assessment shall be issued. A. 2010 31. 2011 C. 2010 The last day to appeal to the CTA is A. October 28. B. November 8. November 30. A protest may be filed anytime before the BIR collects the tax. 2011 C. Resident aliens engaged in business in the Philippines are required to file quarterly and annual ITR. November 15. 2011. 2012 B. otherwise the assessment becomes final and can no longer be questioned in court. April 30. 2010 D. December 8. January 15. 2011 D. 2010 Last day to appeal to the CTA is A. Domestic corporations can avail the optional standard deduction beginning 2008. Which of the following statement is correct? A. Individuals deriving compensation income are exempt from filing ITR. In case of an assessment of a tax A. the last day to appeal to the CTA is A. April 15. Court of Appeals 26. November 8. 2010 Date of filing of documents to support the petition May 8. BIR B. 2010 D. 2011 D. March 31. 2009 Date of claim for refund was filed January 15. A protest should be made on time. 2010 28. D. . 2010 30. As a remedy. April 15. 2010 Date of decision of denial of the petition was received September 28. C. April 15. the taxpayer should first file an action for refund with the A. 2011 C. Which of the following statements is correct? A. Date assessment was received March 8. 2011 C. Court of Tax Appeals D. B. 2010 B. 2010 Date decision of denial by the BIR was received September 15. General professional partnership are exempt from filing ITR. The assessment should be made within 3 years from date of filing of the return. 46 25. C. Using the preceding number. 2010 Date of filing of documents to support the petition May 8. 2010 Date petition for reconsideration was filed with the BIR March 18. December 4. Where any national internal revenue tax is alleged to have been erroneously or illegally collected. otherwise the assessment becomes final and executory. 2010 B. Regional Trial Court C. 2010 B. D. 2011 29. October 15. A protest should be filed by a taxpayer. 2010 The last day to appeal to the CTA is A. 27. Date of payment of tax erroneously paid April 15. 2010 Date petition for reconsideration was filed with the BIR March 28. Date assessment was received March 8. 32. 2010 No decision on the protest is received as of October 30. if date of decision of denial by the BIR was received on March 31. May 30. The assessment should be made within 3 years from date of the return is due. April 15. fees or other charges. 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. Forfeiture . A pre-assessment notice shall be required before an assessment maybe made. D. Illegal collection of tax. When the taxpayer cannot be located in the address given by him in the return. Which of the following statements is incorrect? A. or other matters arising under the Tax Code or other laws administered by the BIR is vested with A. Which of the following is not the remedies of the government in tax collection? A. The assessment should be made by the BIR within five years from the filing of the return. The administration and collection costs involved do not justify the collection of the amount. 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. refunds of internal revenue taxes. 34. The Court of Tax Appeals D. B. It is the official action of an administrative officer in determining the amount of tax due from a taxpayer. except A. upon proof of the following to the Court of Tax Appeals A. D. B. A protest may be filed by the taxpayer anytime before the BIR collects the tax. It will jeopardize the interest of the government. D. B. When the taxpayer is out of the Philippines. It will jeopardize the interest of the taxpayer. 33. The assessment shall include only tax proper. The Regular Courts 38. C. 37. Tax mapping 39. Which of the following will not interrupt the running of the prescriptive period for assessment and collection of taxes? A. A reasonable doubt as to the validity of the claim against the taxpayer. Which of the following is not a requisite to toll the collection of taxes to be made by the BIR. The taxpayer requests for the reinvestigation which is granted by the Commissioner. Tax audit D. Tax investigation C. if any supervening cause arises after payment. 47 B. D. The following are the grounds to cancel a tax liability by the Commissioner. C. A suit may be brought even after the lapse of two years from the date of payment. C. 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. 35. The tax is unjustly or excessively assessed. 36. otherwise the assessment shall be void. The power to decide disputed assessments. The Commissioner of the BIR B. penalties imposed in relation thereto. Filing of a bond for at least double the amount of the tax assessed. The Secretary of Finance C. Tax lien C. The case is not dilatory. such a payment clearly appears to have been erroneously made. D. C. Tax assessments B. The taxpayer shall be informed of the law and the facts on which the assessment is made. The power of the Commissioner of Internal Revenue include the following. B. 48 B. C. Compromise D. except A. Credit or refund a tax that has been erroneously paid by the taxpayer. Compromise the payment of any internal revenue tax. D. B. 51. A reasonable doubt as to the validity of the claim against the taxpayer exists. The financial position of the taxpayer demonstrates a clear inability to pay the assessed tax. Inquire into bank deposits of a taxpayer. or otherwise declared bankrupt or insolvent. C. D. The tax or any portion thereof appears to be unjustly or excessively assessed. Abate a tax liability of a taxpayer. The taxpayer has been granted by the SEC or by any competent tribunal a moratorium or suspension of payments to creditors. . Commissioner of BIR may compromise any internal revenue tax when. Protest 40. except one A.