INCOME TAXATION QUIZ #1

1. What is the basis of taxation?

a. Constitutionality
b. Public purpose
c. Reciprocal duties of support and protection
d. Necessity

2. What is the theory of taxation?

a. Constitutionality
b. Public purpose
c. Reciprocal duties of support and protection
d. Necessity

3. This theory underscores that taxes are indispensable to the existence of the state.

a. Doctrine of equitable recoupment

b. The lifeblood doctrine
c. The benefit received theory
d. The Holmes Doctrine

4. The primary purpose of taxation is:

a. To enforce contribution from its subject for private purpose

b. To raise revenue for the government
c. To achieve economic and social stability
d. To regulate the conduct of business or profession

5. When real property is sold at a gain, the situs of taxation is

a. The residence of the owner.

b. The residence of the buyer.
c. the place where the deed of sale is executed
d. the place where the property is located

6. THE Corporation declared dividends to its 100,000 outstanding P10-par ordinary share at P2 per share.
ABC bought its 10,000 ordinary share investment in THE Corporation for P15 per share. ABC have already
received cumulative dividends of P140,000. Which statement is correct?

a. Only P10,000 of the dividends will be subject to income tax since it represents excess over cost
(ie. return on capital)
b. The P20,000 dividends will be subject to tax since both return of or on capital is subject to tax
c. The P20,000 dividends will be subject to tax because it represents @ return on capital.
d. Only P10,000 of the dividends will be subject to income tax since it is the benefit actually
realized.

7. Which is subject to income tax?

a. Compensation for personal injuries

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 b. Investment income of foreign government in the Philippines
c. Income of resident aliens abroad
d. Business income from jueteng and sale of cocaine

8. Starting August, 2008, ABC Corporation changed its accounting period from a fiscal year ending every
June 30 to the calendar year. Which statement is correct?

a. ABC Corporation should file an adjustment return on April 15, 2009 covering the period of July 1,
2008 to December 31, 2008.
b. ABC Corporation should file an adjusted return on April 15, 2009 covering the period of August
1, 5 2008 to December 31, 2008.
c. ABC Corporation should file an adjustment return on October 15 covering the period of January
1, 2008 to June 30, 2008
d. ABC Corporation need not file an income tax return until April 15, 2009

9. One of the following does not fall under the definition of a corporation for income tax purpose

a. General partnership
b. Joint stock company
c. Insurance company
d. Sole proprietorship

10. A corporation organized and created under the laws of a foreign country and is authorized to do
business or trade in the Philippines is.

a. Domed corporation
b. Government-owned and controlled corporations.
c. Resident Foreign Corporation
d. Non-resident Foreign Corporation

11. A citizen of the Philippines who works abroad and whose employment requires him to be physically
present abroad most of the time during taxable year is

a. Taxable on income within and without the Philippines

b. Taxable on income within the Philippines
c. Taxable on income without the Philippines
d. Exempt from income tax

12. A citizen of a foreign country is considered non-resident alien engaged in business in the Philippines
if he stayed inside the country

a. For 183 days or more

b. For less than 183 days
c. For more than 180 days
d. For less than 180 days

13. A resident citizen is taxable on all income derived from sources

a. Within the Philippines only

b. Without the Philippines only

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 c. Partly within and partly without
d. Within and without the Philippines

14. Tax laws are

a. construed strictly against the taxpayer and liberally in favor of the government
b. construed strictly against the government and liberally in favor of the taxpayer
c. construed liberally against the government and strictly in favor of the taxpayer
d. construed liberally against the taxpayer and strictly in favor of the government

15. Tax exemption are

a. construed strictly against the taxpayer and liberally in favor of the government
b. construed strictly against the government and liberally in favor of the taxpayer
c. construed liberally against the government and strictly in favor of the taxpayer
d. construed liberally against the taxpayer and strictly in favor of the government

16. A taxpayer who had gross receipts derived from business in the preceding year did not declare it
when he paid the poll tax. He paid only the basic and tax and did not pay the additional community tax
based on gross receipts. Will he be imprisoned?

a. No. No person shall be imprisoned for non-payment of poll tax.

b. Yes. This is a case of tax evasion. Tax evasion is a criminal offense.
c. No. Paying the basic poll tax is enough. The additional poll tax is discretionary.
d. Yes. Non-payment of poll tax is punishable by imprisonment.

17. Tax as distinguished from toll

a. It is the demand of ownership.

b. It is the demand of sovereignty.
c. Non-payment of which renders the business illegal
d. It is subject to set-off.

18. Non-payment of this tax does not result in imprisonment, except

a. poll tax
b. personal tax
c. capitation
d. none of the above

19. As the tax base increases, the tax rate increases. This is referred to as

a. progressive tax
b. Regressive tax
c. proportional tax
d. income tax

20. The following statement correctly states the differences among the inherent powers of the state,
except?

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 a. the property taken under eminent domain and taxation are preserved but that of police power is
destroyed
b. eminent domain does not require constitutional grant but taxation being formidable does in
order to limit its exercise by the legislature
c. police power and taxation is exercised only by the government but eminent domain may be '
exercised by private entities
d. Police power regulates both property and liberty; eminent domain and taxation affects only
property rights

21. Select the incorrect statement.

a. the power of eminent domain may be exercised by private entities

b. by police power, the property taken is destroyed
c. by eminent domain, the property taken is destroyed
d. eminent domain and taxation affects only property rights

22. When the impact and incidence of taxation are merged into the statutory taxpayer, the tax is called?

a. personal tax
b. direct tax
c. indirect tax
d. national tax

23. Which of the following is an administrative act in taxation?

a. Collection of taxes
b. Fixing the rate of the tax
c. Determination of the subject of the tax
d. Determination of the purpose of the tax

24. The point in which tax is levied is called?

a. Impact of taxation
b. Situs of taxation
c. Incidence of taxation
d. Assessment

25. The tax imposed upon the performance of an act, the enjoyment of a privilege or engaging in a
profession is known as?

a. Income tax
b. License
c. Excise tax
d. Transfer tax

26. Which is subject to income tax?

a. Compensation for personal injuries

b. Investment income of foreign government in the Philippines
c. Income of resident aliens abroad

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 d. Business income from jueteng and sale of cocaine

27. Gross income means

a. The pertinent item of income that is subject to progressive rates.

b. The pertinent item of income that is subject to final tax rates.
c. Income that can be subject to income taxation.
d. Income that are actually realized in cash or property.

28. Which is a least principle of a sound tax system?

a. Consistency with economic objectives

b. Theoretical justice
c. Administrative feasibility
d. Fiscal adequacy

29. A tax system which is not directly practiced in the Philippines

a. Proportional tax
b. Mixed tax
c. Regressive tax
d. Progressive tax

30. Which is an indirect tax?

a. Community tax
b. Transfer tax
c. Income tax
d. Business tax

31. All funds derived by the government

a. Income
b. Revenue
c. Gains
d. Appropriations

32. There can be a classification of the subject matter being required to shoulder the burden. Which is
the exception?

a. Tax
b. License fee
c. Toll
d. Eminent domain

33. Equality in taxation denotes the use of

a. Proportional taxation
b. Progressive taxation
c. Mixed taxation
d. Digressive taxation

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 34. The progressive system of taxation is consistent with which principle of a sound tax system

a. Theoretical justice
b. Fiscal adequacy
c. Administrative feasibility
d. All of these

35. The principle of a sound tax system is violated when the government incurs a deficit

a. Theoretical justice
b. Fiscal adequacy
c. Administrative feasibility
d. All of these

36. Which of the following forms of escapes to taxation will more likely to result in direct loss of revenue
to the government?

a. Shifting
b. Capitalization
c. Transformation
d. Tax exemption

37. Distinguish between tax debt, which is assignable? Which cannot be set-off?

a. Tax; debt
b. Debt; tax
c. Tax, tax
d. Debt, debt

38. Which of the following is a local tax?

a. Value added tax

b. Documentary stamp tax
c. Other percentage taxes
d. Real property tax

39. When the determination of the amount of the tax requires an assessment of the value of the subject
of tax, this type of tax is known as?

a. Proportional tax
b. Specific tax
c. Ad valorem tax
d. Progressive tax

40. The tax imposed upon the non-essentials goods and commodities?

a. Sin tax
b. Excise tax
c. Both choices above
d. None of the above

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 41. Agreement among nation to lessen tax burden of their respective subject is called:

a. Reciprocity
b. International comity
c. Territoriality
d. Tax minimization

42. Which of the following is not a constitutional limitation of the power to tax?

a. Non-impairment of obligation or contracts

b. Due process and equal protection of the law
c. Non-appropriation for religious purposes
d. Non-delegation of the taxing power

43. Which of the following is not an inherent limitation of the power to tax?

a. Tax should be levied for public purposes

b. Taxation is limited to its territorial jurisdiction
c. Tax laws shall be uniform and equitable
d. Exemption of government agencies and instrumentalities

44. Public utility entities may in some circumstances exercise the power of eminent domain. Which of
the following is not a public utility?

a. Electric cooperatives
b. Water cooperatives
c. Telecommunication business
d. Manufacturing business

45. The following are inherent limitation on the power to tax. Which is the exception?

a. Territoriality of taxes
b. Legislative in character
c. Public purpose
d. Non-appropriation for religious purposes

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