Name:__________________________________Course/Year:____________Date:__________

BUSINESS TAXATION (MIDTERM EXAM)

Multiple Choice:
Identify the choice that best completes the statement or answers the question.

______1. The property, rights and obligations of a person which are not extinguished by
his death
and those which occurred thereto since the opening of succession.
a. Assets b. Capital c. Estate d. Income

______2. The term applied to the person whose property is transmitted through
succession,
whether or not he left a will
a. Decedent b. Transferor c. Transferee d. Grantor

______3. The person called to the succession either by the provision of a will or by
operation of law
a. Heir b. Devisee c. Legatee d. Trustor

______4. For income tax purposes, any person or corporation that holds in trust an estate
of another person or
persons
a. Beneficiary b. Fiduciary c. Legatee d. Devisee

______5. Which of the following statements is correct?

a. Estates and trusts are allowed a personal exemption of 50,000 if the
executor or trustee is married.
b. The income tax rates for corporate taxpayers apply to taxable estates and
trusts
c. The taxable year of estates and trusts maybe calendar or fiscal year
d. For a trust to be taxable, it must be irrevocable, both as to corpus (principal)
and income

______ 6. Taxable estate as distinguished from a taxable trust

a. The exemption is 50,000.
b. The income tax rates for individuals apply
c. The income tax return should be filed if the gross income is 20,000 or more
d. May claim the same exemption allowed for individuals

______ 7. When an individual dies, future income on his property will be taxed to
a. Those who inherit the property after they receive the property.
b. The estate itself after the heirs have received the property.
c. The individual himself.
d. None of the choices.
______ 8. 1st Statement: Where the estate is under judicial administration, the income of
the estate shall be
taxable to the fiduciary or trustee.
2 Statement: Where the estate is not under judicial administration, the income
nd

of the estate shall be

taxable to the heirs and beneficiaries.
a. True, true c. False, true
b. True, false d. False, false

______ 9. A domestic carrier by air is engaged in the transport of passengers. It is not

VAT-registered and its
annual gross receipts do not exceed the VAT threshold amount. To what
business tax is it liable?
a. 12% value-added tax c. 3% tax on VAT-exempt persons
b. 3% common carriers tax d. not subject to business tax

______ 10. Which of the following percentage taxes is paid on a monthly basis?
a. overseas communication tax c. franchise tax
b. tax on winnings d. stock transactions tax

______ 11. Which of the following items shall be subject to the 2% premium tax?
a. Insurance and insurance commissions, whether life or non-life
b. Premium on Health and Accident Insurance, whether received by a life or non-
life insurance
c. Income earned which can be pursued independently of the insurance business
activities
d. None of the choices.

______ 12. One of the following is not subject to amusement tax on gross receipts.
a. proprietor of a KTV bars c. owners of music lounge
b. owners of cockpits d. lessees of bowling alleys

______ 13. A domestic carrier by land is engaged in the transport of passengers. It is not
VAT-registered and its
annual gross receipts do not exceed the VAT threshold amount. To what
business tax is it liable?
a. 12% value-added tax c. 3% tax on VAT –exempt persons
b. 3% common carrier’s tax d. not subject to business tax

______ 14. Which of the following percentage taxes is paid on a quarterly basis?
a. amusement tax c. franchise tax
b. tax on winnings d. stock transactions tax

______15. Which of the following is not true? The percentage tax

a. is a tax on a sale of services.
b. may be imposed on a sale of goods.
c. may be imposed together with the value-added tax.
d. may be imposed together with the excise tax.

______ 16. Banco de Makati, Inc. has the following data for the first month of the current
year:
 Interest, commissions and discounts from lending activities 5,000,000
(remaining maturity is 5 yrs.)
Income from financial leasing 3,000,000
(remaining maturity is more than 5 yrs.)
Dividends and equity shares in net income of subsidiaries 1,000,000
Rentals of properties 500,000
Net trading gains within the taxable year on foreign currency 300,000

How much is the gross receipts tax?

a. 490,000 c. 336,000
b. 400,000 d. 290,000

_____17. Banks and non-bank financial intermediaries performing quasi-banking functions

are subject to:
a. Value-added tax c. franchise tax
b. Gross receipts tax d. amusement tax

_____18. One of the following is a correct amusement tax rate:

a. 30% on jai-alai and racetracks
b. 18% on boxing exhibitions
c. 15% on cockpits, cabarets, night and day clubs
d. 10% on professional basketball games

_____ 19. One of the following is an incorrect amusement tax rate:

a. Jai-alai and race tracks – 30%
b. Cockpits, cabarets, night and day clubs – 18%
c. Professional basketball games – 15%
d. Boxing exhibitions – 12%

_____ 20. Gross receipts for amusement tax shall include all of the following except:
a. Income from television, radio and motion picture rights.
b. Income from sale of tickets
c. Income from sale of food and refreshments within the amusement place.
d. Income from sale of food and refreshment outside the amusement place.

_____ 21. One of the following is not subject to the 3% percentage tax.
a. International air carrier doing business in the Phils.
b. International shipping carrier doing business in the Phils.
c. Domestic carriers by land and keepers of garage.
d. Franchise grantee of city gas and water utilities.

_____ 22. The 3% tax on franchise upon radio and /or television broadcasting companies
whose annual gross
receipts of the preceding year do not exceed 10,000,000 is based on:
a. Gross receipts c. Gross selling price
b. Gross income d. actual or minimum gross receipts

_____ 23. Which statement is wrong?

a. The percentage taxes are basically on sales of services.
b. The percentage taxes are paid monthly.
 c. The percentage taxes are not allowed by law to be shifted to the
customers or clients.
d. An isolated transaction not in the course of business shall not result in a
liability for a percentage tax.

______24. One of the following is wrong. Operators of transport facilities are

a. Subject to value-added tax on gross receipts from transporting
passengers
b. Subject to value-added tax on gross receipts from transporting goods or
cargoes
c. Subject to percentage tax on gross receipts from transporting passengers
d. Subject to value-added tax on gross receipts from renting out its
transportation facilities.
______25. One of the following inhabitants is not required to pay the basic community
tax:
a. Engaged in business or occupation
b. Owns real property with an aggregate assessment value of one thousand
pesos (1,000) or more.
c. Required by law to file an income tax return.
d. Diplomatic and consular representatives.

______26. Q Co. never exceeded sales of 1,919,500 in any year. Purchases were from VAT-
registered taxpayers.
In January, 2016, any tax not included:
Sales, exports 300,000
Sales, domestic 220,000
Purchases, for exports 132,000
Purchases, for domestic sales 99,000
Percentage tax if its line of items handled are general merchandise items and
it did not choose to be
VAT registed for 2016?
a. 15,600 b. 9,000 c. 6,600 d. Some other amount.

_____ 27. D Co. is a common carrier with passenger buses and cargo trucks. For the
month of June 2016, it had
the data on revenues and receipts, taxes not included:

For transporting passengers, gross revenues and receipts of 330,000

For transporting cargoes, gross revenues of 220,000, of which, 200,000 was
received;
For renting out to the MMDA its towing trucks, gross receipts of 50,000,
representing 10,000 from
gross revenues of the quarter ending March 31 and 40,000 for the month of
June.

How much is the Percentage tax?

a. 17,400 b. 9,900 c. 16,500 d. 15,900

______ 28. Atin Transport Co. is a common carrier by land and sea within the Philippines.
It had the following
data in a month:
 On land carriers:
Gross receipts from cargoes 500,000
Gross receipts from passengers 700,000
On sea carriers:
Gross receipts from cargoes 900,000
Gross receipts from passengers 1,000,000
The percentage tax?
a. 21,000 b. 36,000 c. 15,000 d. Some other amount.

_____ 29. Following the given data in number 28, how much is the output value-added
tax?
a. 240,000 b. 120,000 c. 288,000 d. Some other amount

_____ 30. Z Co. was given a franchise to sell electricity in the Calabarzon area in the
island of Luzon. In a month,
data on operations, any tax not included, were:
Gross receipts 2,000,000
Payments for goods and services purchased from VAT
Suppliers 900,000
Business tax payable?
a. 600,000 b. 132,000 c. 240,000 d. None of the above.

______ 31. Y Co. was given a franchise to operate a radio and television station. 2016 was
its second year of
operations. In 2015, its gross receipts from operations was 9,000,000. For
January 2016, it had:

Gross receipts, any tax not included 3,000,000

Payments to VAT-registered supplier of goods, supplies
and services 1,800,000

Business tax payable?

a. 90,000 b. 36,000 c. 144,000 d. Some other amount

_____ 32. Revenues of the current period: 600,000

Collections during the period:
Of revenues of prior periods 80,000
Of revenues of the current period 400,000
Of revenues of the succeeding period (advances) 20,000

Business tax if a night club?

a. 12,000 b. 22,800 c. 90,000 d. 21,000

_____ 33. Statement 1: The percentage taxes should be paid within twenty (20 days)
after the close of the month.
Statement 2: There can be a withholding tax on a payment which shall be
subject to a percentage tax
on the recipient.
 a. True, true b. False, false c. True, false d.
False, true

_____ 34. Which of the following may be the subject of succession?

a. Properties b. Rights c. Obligations d. All of the
above.

_____ 35. Statement 1: The estate tax is imposed on the privilege of a person to transmit
his properties upon his
death.
Statement 2: The inheritance tax is imposed on the privilege of a person to
receive the properties of
the person who died.
a. True, true b. False, false c. True, false d.
False, true

_____ 36. Statement 1: The estate tax is a tax on property (a property tax).
Statement 2: The estate tax is a tax on a privilege (an excise tax).
a. True, true b. False, false c. True, false d.
False, true

_____ 37. Statement 1: The estate tax is an excise tax on a person for transmitting his
properties upon his death.
Statement 2: The donor’s tax is an excise tax on a person for transmitting his
properties effective while
still alive.
a. True, true b. False, false c. True, false d.
False, true

_____38. Statement 1: The estate tax accrues upon the death of the decedent-owner of
the properties
transmitted by succession.
Statement 2: The estate tax should be paid by the executor or administrator, or
the heir, before title to
any registerable property may be registered in the name of the heir to whom it
is given by succession.
a. True, true b. False, false c. True, false d.
False, true

_____ 39. The property, rights and obligations of a person which are not extinguished by
his death and those
which have been accrued thereto since the opening of succession:
a Assets b. Capital c. Estate d. Income

_____ 40. Which of the following is not subject to estate tax?

a. A succession to the property of a decedent who left no last will and
testament;
b. A donation mortis causa;
c. A donation inter vivos;
d. A transfer during the lifetime for less than full and adequate
consideration.
_____ 41. Which of the following statements is wrong?
a. The gross estate of a non-resident citizen would include all properties
regardless of location;
b. The gross estate of a non-resident, not citizen of the Philippines would
include intangible properties in the Philippines.
c. The gross estate of a resident, not citizen of the Philippines would include
all properties regardless of location.
d. The gross estate of a non-resident citizen of the Philippines would include
only properties in the Philippines.

_____ 42. The personal properties of a non-resident, not citizen of the Philippines would
not be included in the
gross estate if:
a. The intangible personal property is in the Philippines;
b. The intangible personal property is in the Philippines and the reciprocity
clause of the estate tax law applies.
c. The tangible personal property is in the Philippines;
d. The personal property is shares of stock of a domestic corporation 90% of
whose business is in the Philippines.

_____ 43. Which statement is wrong? The gross estate shall be valued:
a. At its fair market value at the time of death;
b. At its fair market value at the time the return is due;
c. If real property, the zonal value, which may be higher than the fair market
value.
d. In the case of shares of stock, at book value.

_____ 44. Statement 1: A donation inter vivos is subject to estate tax.

Statement 2: A donation mortis causa is subject to estate tax.

a. True, true b. False, false c. True, false d.

False, true

_____ 45. Which of the following is not included in the gross estate?
a. Revocable transfer where the consideration is not sufficient.
b. Revocable transfer where the power of revocation was not excercised;
c. Transfer under a general power of appointment where the consideration
was not sufficient;
d. Transfer under a limited power of appointment.