TAXATION

QUESTIONS &
ANSWERS
1 pt. each
1. Which of the following statements is not
correct?

A. Taxes may be imposed to raise revenues or to

provide disincentives to certain activities within
the state
B. The state can have the power of taxation even if
the Constitution does not expressly give it the
power of tax
C. The provisions of taxation in the Philippine
Constitution are grants of power and not
limitations on taxing powers
D. For the exercise of the power of taxation, the
state can tax anything at any time
ANSWER

C
2. One of the characteristics of internal revenue
laws is that they are:

A. Criminal in nature
B. Penal in nature
C. Political in nature
D. Generally prospective in application
ANSWER

D
3. The following are the requisites of a donation
for purposes of donor’s tax, except:

A. capacity of the donee

B. capacity of the donor
C. delivery of the subject matter of gift
D. donative intent
ANSWER

A
4. Who among the following is a non-resident
alien?

A. An alien who comes to the Philippines for a

definite purpose which in its nature may be
promptly accomplished
B. An alien who comes to the Philippines for a
definite purpose which in its nature would require
an extended stay
C. An alien who has acquired residence in the
Philippines
D. An alien who lives in the Philippines with no
definite intention as to his stay
ANSWER

A
5. Statement 1: A general professional partnership is
exempt from income tax, but a partner will be taxable
on his share in the partnership net income, that he will
consolidate with his own income from other sources.

Statement 2: A partnership that is not a general

professional partnership is taxable as a corporation,
and a partner will report his share in the partnership net
income, as dividend income whether actually received
or not.

A. Both statements are correct

B. Both statements are wrong
C. Only the first statement is correct
D. Only the second statement is correct
ANSWER

A
6. One of the following is not a major business internal
revenue tax in the Tax Code

A. Value-added tax
B. Excise tax
C. Income tax
D. Percentage tax
ANSWER

C
7. The account title to best reflect the value-added tax
on purchase

A. Sales tax payable

B. Value-added tax payable
C. Input tax
D. Output tax
ANSWER

C
8. Mr. D, with stage three cancer, made a last will and
testament disposing of properties mentioned in the last
will and testament. On the same day, he made gifts inter
vivos to his children. A few days later he died. Are
donated properties to be included in the gross estate?

A. No, because they were not his properties anymore at

the time of death
B. Yes, because the donations were donations mortis
causa, and must be governed by the rules on estate tax
C. No, if the donor’s tax had been paid already on the
donations
D. No, because they were not transfer in contemplation of
death, since the donations were not simultaneous with
the execution of the last will and testament
ANSWER

B
9. Which of the following examples is not taxable in
2018?

A. A, Filipino citizen donated a parcel of land located in

the Philippines to B, a non-resident alien
B. On June 1, 2018, A made a gift of P20,000.00 to his
daughter on account of her marriage celebrated on May
1, 2018
C. Mr. Ramos gives his wife a diamond ring worth
P100,000.00 as a birthday gift
D. A and B are the only heirs of C. A renounces his share
of inheritance in favor of B
ANSWER

D
10. Where a return was filed, as a general rule, the
prescriptive period for assessment after the date the
return was due or was filed, whichever is later, is
within:

A. Three Years
B. Five Years
C. Ten Years
D. Answer not given
ANSWER

A
11. Tax of fixed proportion of the value of the property
with respect to which the tax is assessed and requires
the intervention of assessors or appraisers to estimate
the value of such property before the amount due from
each taxpayer can be determined is known as:

A. Specific
B. Ad valorem
C. Special or regulatory
D. Answer not given
ANSWER

B
12. The following are administrative remedies available
to a tax payer in connection with collection of taxes,
except

A. Filing of claim for tax refund or credit

B. Filing a petition for reconsideration or reinvestigation
C. Filing of criminal complaint against erring BIR officials
or employees
D. Entering into a compromise
ANSWER

C
13. One of the characteristics of a tax is that

A. It is generally payable in money

B. It is generally based on contract
C. It is generally assignable
D. Answer not given
ANSWER

A
14. The proportional contribution by persons and
property levied by the law-making body of the State by
virtue of its sovereignty for the support of the
government and all public needs is referred to as

A. License Fees
B. Special Assessment
C. Taxes
D. Answer not given
ANSWER

C
15. An individual is an operator of parking lots. What
business tax is due on his income from the business?

A. Broker’s tax
B. Common carrier’s tax
C. Caterer’s tax
D. Value-added tax
ANSWER

D
PROBLEMS AND
SOLUTIONS
2 pts. each
The taxpayer is a corporation.
Gross income from business P 15,000,000
All deductions (except contributions) 10,000,000
Contributions (deductible in full) 20,000

16. Compute the taxable income:

A. 4,980,000
B. 5,000,000
C. 15,000,000
D. Answer not given
The taxpayer is a corporation.
Gross income from business P 15,000,000+
All deductions (except contributions) 10,000,000-
Contributions (deductible in full) 20,000-

16. Compute the taxable income:

A. 4,980,000
B. 5,000,000
C. 15,000,000
D. Answer not given
An individual is married. In a year he had the following data:
Gross sales, Philippines P 400,000
Gross sales, Foreign 200,000
Cost and expenses on income, Philippines 300,000
Cost and expenses on income, Foreign 80,000
Compute the taxable income if the taxpayer is:
17. A resident alien
A. 220,000
B. 400,000
C. 100,000
D. Answer not given
18. A non-resident alien
A. 120,000
B. 300,000
C. 100,000
D. Answer not given
An individual is married. In a year he had the following data:
Gross sales, Philippines P 400,000+
Gross sales, Foreign 200,000
Cost and expenses on income, Philippines 300,000-
Cost and expenses on income, Foreign 80,000
Compute the taxable income if the taxpayer is:
17. A resident alien
A. 220,000
B. 400,000
C. 100,000
D. Answer not given
18. A non-resident alien
A. 120,000
B. 300,000
C. 100,000
D. Answer not given
19. Mr. Monte was injured in a vehicular accident in 2018. He
incurred and paid medical expenses of
P 20,000 and legal fees of P 10,000 during the year.

In 2019, he received P 70,000 as settlement from the insurance

company which insured the car owned by the other party
involved in the accident.

From the above payments and transactions, the amount of

taxable income to Mr. Monte in 2019:

A. 50,000
B. 70,000
C. 40,000
D. 0
19. Mr. Monte was injured in a vehicular accident in 2018. He
incurred and paid medical expenses of
P 20,000 and legal fees of P 10,000 during the year.

In 2019, he received P 70,000 as settlement from the insurance

company which insured the car owned by the other party
involved in the accident.

From the above payments and transactions, the amount of

taxable income to Mr. Monte in 2019:

A. 50,000
B. 70,000
C. 40,000
D. 0 All the amounts received were only
compensatory. There were no gains.
Land in the Philippines P 1,000,000
Land outside the Philippines 900,000
Car in the Philippines 300,000
Motorcycle outside the Philippines 100,000
Shares of stock of a domestic corporation 500,000
Shares of stock of a foreign corporation 200,000
20. Compute gross estate if the decedent was a resident or
citizen of the Philippines
A. 3,000,000
B. 1,800,000
C. 1,200,000
D. Answer not given
Land in the Philippines P 1,000,000
Land outside the Philippines 900,000
Car in the Philippines 300,000
Motorcycle outside the Philippines 100,000
Shares of stock of a domestic corporation 500,000
Shares of stock of a foreign corporation 200,000
20. Compute gross estate if the decedent was a resident or
citizen of the Philippines
A. 3,000,000
B. 1,800,000
C. 1,200,000
D. Answer not given
Gross receipt tax (GRT) is a business tax
paid by a

A. Hotel operator
B. Insurance Company
C. Franchise Holder
D. Bank
In case of conflict between tax laws and
generally accepted accounting principle (GAAP)

A. Both tax laws and GAAP shall be enforced

B. GAAP shall prevail over tax laws
C. Tax laws shall prevail over GAAP
D. The issue shall be resolved by the courts
11. For filling a false and fraudulent return, a surcharge
is imposed. Which of the following is correct?

A. 50% as administrative penalty

B. 50% as criminal penalty
C. 25% plus 50%
D. 25% as criminal penalty