Midterm - Business Tax - Theories

NAME ______________________________ Section _____________ Date _________
Business Taxation
Midterm Examination
Theory
MULTIPLE CHOICE (1 point)

1. Which of the following rules shall apply when a man and a woman who are capacitated to marry each
other, live exclusively with each other as husband and wife without the benefit of marriage or under a
void marriage?
a. Wages and salaries shall be owned by them in equal shares.
b. Property acquired by both of them through their work or industry shall be governed by the rules on
co-ownership.
c. Neither party can encumber or dispose by act inter-vivos his or share in the property acquired
during cohabitation and owned in common, without the consent of the other, until after the
termination of their cohabitation.
d. d. All of the above
2. The following are required to be listed as part of the gross estate, but are exempted from estate tax,
except
a. Exclusive property of the decedent c. Transfer for public use
b. Amount received by heirs under RA 4917 d. Share of the surviving spouse
3. The following are exclusive property of each spouse. Which one is not?
a. That which is purchased with the exclusive money of either spouse.
b. That which is acquired by exchange with other property belonging to the spouses.
c. That which each acquires during the marriage by lucrative title.
d. That which is brought to the marriage as his or her own.
4. Statement 1: Under the system of conjugal partnership of gains upon dissolution of the marriage or of
the partnership, the net gains or benefits obtained by either or both spouses shall not be divided equally
between them.
Statement 2: Under the regime of absolute community of property, property acquired during the
marriage is presumed to belong to the community, unless it is proved that it is one of those excluded
therefrom.
a. Both statements are true c. Only Statement 1 is true
b. Both statements are false d. Only Statement 2 is true
5. Which of the following is not allowed with tax credit for payments of estate tax on foreign countries?
a. An American residing in the Philippines at the date of death
b. A Filipino citizen who migrated in the United States.
c. An alien who was a resident of his own country at the date of death
d. None of the above
6. Statement 1: Tax credit for foreign estate tax is allowed to minimize the effect of multiplicity of situs.
Statement 2: Only Resident decedents are allowed of tax credit for foreign estate tax.
7. The amount derived by the ratio of net estate in foreign country over net estate from all locations on the
Philippine estate tax.
a. Tax avoidance c. Estate tax credit limit
b. Estate tax credit d. Vanishing deductions
8. Which is not an element of donation?
a. Capacity of the donee to make a donation c. Acceptance
b. Delivery d. None of the above
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9. Statement 1: Donation of movable property must be made in writing, regardless of the value of the
property being donated.
Statement 2: Donor’s tax is a property tax based on the value of the donation
10. Which of the following is not a classification of donation as to motive or purpose?
a. Simple c. Modal
b. Renumeratory d. Modesty
11. Statement 1: If consideration received is greater than that fair market value of the property at the time
of donation, the excess is subject to donor’s tax.
Statement 2: Exemptions are not to be treated as exclusions from the gross gifts of the donor.
a. Both statements are false c. Only Statement 2 is true
b. Only Statement 1 is true d. Both statements are true
12. A type of succession that results from the designation of an heir, made in a will executed in the form
prescribed by law.
a. Testate succession c. Mixed succession
b. Legal succession d. Designatory succession
13. The following items are causes of intestacy, except
a. When the will does not institute an heir
b. If a person dies without a will
c. Non-fulfillment of resolutory condition
d. If a person dies with a void will
14. Those who have precedence over and exclude other compulsory heirs
a. Secondary c. Concurring
b. Testamentary d. Primary
15. Which of the following statements is false? Transfer tax is
a. Imposed upon gratuitous transfer of property c. Classified as national tax
b. Of two kinds: estate tax and donor’s tax d. None of the above
16. The object of estate tax is the:
a. Right to transmit c. Properties of the decedent
b. Decedent d. Beneficiaries
17. Mortis causa transfer of property is effected:
a. When the property is received by the heir.
b. When the court awarded the ownership of property to a particular heir.
c. Upon the death of the decedent.
d. Upon payment of estate tax.
18. When the property is donated in contemplation of death, the basis of the tax shall be
a. Fair market value at the time of donation
b. Fair market value in the hands of the donor before the time of the donation.
c. Fair market value at the time of death of the donor
d. Cost when the property was acquired
19. As a rule, the basis of valuation of property in the gross estate is the fair market value prevailing at the
time of decedent's death. In the case of domestic shares of stock not traded thru the stock exchange, the
fair market value is
a. The value appearing in the schedule of fixed values from the assessor's office
b. Net realizable value
c. Acquisition cost
d. Issuer's book value.
20. Which of the following value is not used when valuing gross estate?
a. Fair market value at the time of death
b. Fair market value at the time the estate return is filed

c. Zonal value when higher than the assessed value in case of real property
d. Book value in case of shares not traded in the stock exchange.

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NAME ________________________ Section _ Date ___

MULTIPLE CHOICE (1 point)

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