Taxation Reviewer

Business Law and Taxation Review Class Name:_____________________________________ Course:_____________________ Date:_____________________ INSTRUCTION: Write the letter of your answer in the box provided. The letter must be written in CAPITAL LETTER. D1. Which of the following statement 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 to tax c. For the exercise of the power of taxation, the state can tax anything at any time d.The provisions of taxation in the Philippine Constitution are grants of power and not limitations on taxing powers D2. 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 application C3. One of the characteristics of our internal revenue laws is that they are: a. Political in na ture b. Penal in nature c. Generally prospective in operation although the tax statute may nevertheless operate retrospectively provided it is clearly the legislative intent d. Answer not given C4.In case of conflict between tax laws and generally accepted accounting principles (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 C5. The following are similarities of the inherent power of taxation, eminent domain and police power, except one a. Are necessary attributes of sovereignty b. Interfere with private rights and property c. Affects all persons or the public d. Are legislative in implementation A6. Tax as distinguished from license fee: a. Non payment does not necessarily render the business illegal b.A regulatory measure c. Imposed in the exercise of police power d. Limited to cover cost of regulation B7. Which statement refers to police power as distinguished from taxation? a. It can only be imposed on specific property or properties b. The amount imposed depends on whether the activity is useful or not c. It involves the taking of property by the government d. The amount imposed has no limit C8. The distinction of a tax from permit or license fee is that a tax is: a. Imposed for regulation b. One which involves an exercise of police power c. One in which there is generally no limit on the amount that may be imposed d.Answer not given C9. Which of the following is not an example of excise tax: a. Transfer tax b. Sales tax c. Real property tax d. Income tax D10. Value added tax is an example of: a. Graduated tax b. Progressive tax c. Regressive tax d. Proportional tax C11. S1: The power of taxation is inherent in sovereignty being essential to the existence of every government. Hence, even if not mentioned in the Constitution the state can still exercise the power. S2: It is essentially a legislative function. Even in the absence of any c onstitutional provision, taxation power falls to Congress as part of the general power of law-making a.False, False b. False, True c. True, True d. True, False C12. Which of the following is not a scheme of shifting the incidence of taxation? a. The manufacturer transfers the tax to the customer by adding the tax to the selling price of the goods sold b. 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 c. Changing the terms of the sale like FOB Shipping Point in the Philippines to FOB Destination abroad, so that the title passes abroad instead of in the Philippines d.The manufacturer transfers the sales tax to the distributor, then in turn to the wholesaler, in turn to the retailer and finally to the consumer A13. 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 refer red to as: a. Taxes b. Special assessment c. License fee d. Answer not given B14. One of the characteristics of a tax is that: a. It is generally based on contract b. It is generally payable in money c. It is generally assignable d. Answer not given B15.Tax of a 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 tax taxpayer can be determined is known as: a. Specific b. Ad valorem c. Special or regulatory d. Answer not given C16. 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 ubject to income tax c. The prohibition of delegation by the state of the power of taxation will still allow the Burea u of Internal Revenue to modify the rules on time for filing of returns and payment of taxes d. The power of taxation is shared by the legislative and executive departments of government D17. Which of the following has no power of taxation? a. Provinces b. Cities c. Barangays d. Barrios D18. A tax must be imposed for a public purpose. Which of the following is not a public purpose? a. National defense b. Public education c. Improvement of the sugar industry d.None of the above B19. The basic community tax of Php 5. 00 of an individual is: a. A personal tax b. A direct tax c. A national tax d. An ad valorem tax B20. In 2005, a person was given by a special law the privilege to operate a public utility (franchise), in consideration of which, he was required by that law to pay a franchise tax. This franchise can be amended by: a. An amendment of that special law only b. An amendment of that special law or a law of general application c. An amendment of a revenue regulation d. None of t he above B21. Which statement is wrong? A revenue bill: a.Must originate from the House of Representatives and on which same bill the Senate may propose amendments b. May originate from the Senate and on which same bill the House of Representatives may propose amendments c. Must have a House version and a Senate version approved separately, and then consolidated, with both houses approving the consolidated version d. May be recommended by the President to Congress B22. The state has complete discretion on the amount to be imposed, after distinguishing between a useful and a non useful activity a. Tax b. License fee c. Toll d. Customs duty B23.A tax on business is: a. Direct tax b. Indirect tax c. Property tax d. None of the above C24. Which is the correct and best statement? A tax reform at any given time underscores the fact that: a. Taxation is an inherent power of the state b. Taxation is essentially a legislative power c. Taxation is a power that is very broad d. The state can a nd should adopt progressive taxation B25. Which of the statement gives the correct answer? That a feasibility study needs or need not look into the taxes of different political subdivisions of government which may be alternative sites of the business is because: a.Provinces, cities and municipalities must have uniform taxes between and among themselves b. The local taxes of one political subdivision need not be uniform with the local taxes of another political subdivision c. Businesses that are subject to national business taxes are exempt from local business taxes d. Local business taxes may be credited against national business taxes C26. Which statement is wrong? a. A tax is a demand of sovereignty b. A toll is a demand of ownership c. A special assessment is a tax d. Customs duty is a tax B27. A fundamental rule in taxation is that the property of one country may not be taxed by another country.This is known as: a. International law b. International comity c. Reciprocity d. Inte rnational inhibition A28. In this power of the state, the person who is parting with his money/property is presumed to receive a benefit: a. Taxation b. Police power c. Eminent domain d. None of the above D29. In all, except one, 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 C30. There can be no tax unless there is a law imposing the tax is consistent with the doctrine or principle of: a. Uniformity in taxation . Due process of law c. Non-delegation of the power to tax d. The power of taxation is very broad and the only limitation is the sense of responsibility of the members of the legislature to their constituents D31. Which of the following is not an element of direct double taxation? a. Two taxes b. Same subject matter c. Same year d. Same amount D32. S1: The value added tax is a property tax S2: The estate tax is a direct tax a. True, True b. False, False c. True , False d. False, True B33. S1: Because the power of taxation is inherent in state, the inherent limitations on the power of taxation always appliesS2: Inherent limitations on the power of taxation must give way to constitutional limitations a. True, False b. False, True c. True, True d. False, False C34. Which statement is wrong? â€Å"The tax should be based on the tax payer’s ability to pay† a. As a basic principle of taxation, this is called â€Å"theoretical justice† b. As a theory of taxation, this is called â€Å"ability-to-pay-theory† c. No person shall be imprisoned for non-payment of a tax d. A graduated tax table is in consonance with this rule C35. S1: The power to tax can be delegated to units of local government, but with limitations as may be imposed by lawS2: The power to tax cannot be delegated to the executive department of the National Government a. True, False b. False, True c. True, True d. False, False C36. Which statement is false? a. A tax is a demand of sovereignty while a toll is a demand of property ownership b. Non-payment of a tax does not make the activity taxed unlawful c. A grant of police power to a unit of local government carries with it a grant of the power to tax d. Customs duty is a tax D37. Some franchise holders who are paying the franchise tax are being required by an amendatory law to pay the value-added tax, while others remain subject to the franchise tax.Which of the following constructional provisions makes the law unconstitutional? a. No law shall be passed impairing the obligation of contracts b. The rule on taxation shall be uniform c. No person shall be deprived of property without due process of law d. None of the above C38. Under this basic principle of a sound tax system, the Government should not incur a deficit: a. Theoretical justice b. Administrative feasibility c. Fiscal adequacy d. None of the above B39. That the legislative body can impose a tax at any amount underscores th e legal truism that: a. Taxation is an inherent power of the state b.Taxation is a very broad power of the state c. Taxation is essentially a legislative power d. None of the above D40. The City of Manila, claiming that it can impose taxes under the Local Government Code, imposed a tax on banks (in addition to the percentage tax on banks imposed in the National Internal Revenue Code). The banks within the City of Manila objected for the various reasons given below. Which would justify the objection of the banks? a. The power of taxation cannot be delegated b. The rule on double taxation c. Uniformity of taxation d. None of the above B41. The amount required is dictated by the needs of the government in: a.License fee b. Tax c. Toll d. None of the above C42. This is a demand of owners: a. License fee b. Tax c. Toll d. None of the above C43. No person shall be imprisoned for non-payment of this: a. Property tax b. Excise tax c. Poll tax d. None of the above C44. As a basic principle o f taxation, that â€Å"taxes must be based on the taxpayer’s ability to pay† is called: a. Equality in taxation b. Ability-to-pay theory c. Theoretical justice d. Equity in taxation C45. Which of the following may not raise money for the government? a. Power of taxation b. Police power c. Eminent domain d. None of the above D46.Which is not an essential characteristic of tax? a. It is unlimited as to amount b. It is payable in money c. It is proportionate in character d. It is a regular payment C47. S1: Direct double taxation involves two taxes by the same taxing authority (e. g. National Government) S2: Indirect double taxation involves two taxes by two different taxing authorities (e. g. National Government and a unit of local government) a. True, False b. False, True c. True, True d. False, False B48. S1: Direct double taxation is prohibited by the Philippine Constitution S2: Indirect double taxation is allowed by the Philippine Constitution a.True, False b. False, True c. True, True d. False, False A49. S1: Tax evasion, which is the use of means to escape a tax that is already a liability, is prohibited by law, and is punishable S2: Tax avoidance, which is the use of means to prevent an accrual of a tax, or to minimize a tax that may accrue is likewise prohibited by law and is punishable a. True, False b. False, True c. True, True d. False, False B50. Which statement is true? The prohibition in the Philippine Constitution on taxation of religious corporations is: a. A prohibition on imposition of excise taxes on the corporation b.A prohibition on imposition of property taxes on the corporation c. A prohibition on imposition of any and all local taxes on the corporation d. A prohibition on imposition of any and all national taxes on the corporation B51. S1: A tax amnesty that forgives tax delinquency of prior years is a legislative act of the Government S2: A tax compromise that lowers the delinquent tax due from a taxpayer is an executive act pursuant to a legislative grant of power to the Executive Department of the Government a. True, False b. False, True c. True, True d. False, FalseC52. S1: A revenue regulation must not be contrary to the provision of the law that is implements S2: A revenue regulation cannot expand the provision of the law that implements by imposing a penalty when the law that authorizes the revenue regulation does not impose a penalty a. True, False b. False, True c. True, True d. False, False D53. Which statement is false? a. A law that imposes a tax on sugar mills and centrals where the revenue collected will be used to improve the sugar industry is a tax for a public purpose, and the law is constitutional b.A law that imposes a tax on movie goers in a city, where the revenues will be used to improve flood control infrastructures in the low areas in the city is constitutional c. A law that gives tax privileges to manufacturers in defined industrial areas, which are not enjoyed by other manufact urers elsewhere is not discriminatory and is constitutional d. None of the above D54. If the taxpayer is a resident citizen of the Philippines, which of the following is not subject to income tax? a. Capital gain on sale of real property in the Philippines b.Interest on bank deposit in the Philippines c. Rent income from property outside the Philippines d. Capital gain on shares of stocks of a domestic corporation sold thru the Philippine Stock Exchange B55. On capital gain tax on real property, which of the following statements is not true? a. The tax should be paid, if in one lump sum, within 30 days from the date of sale b. The term â€Å"initial payment† is synonymous to â€Å"down payment† c. The installment payment of the tax should be made within 30 days from receipt of each installment payment on the selling price d.The tax may be paid in installment if the initial payments do not exceed 25% of the selling price A56. S1: Interest earned on Bangko Sentral treasu ry notes is subject to a final tax at 20% S2: Interest earned on customers trade notes is not subject to final tax a. True, True b. False, False c. True, False d. False, True D57. Which statement is wrong? a. A resident citizen and a resident alien has a final tax of seven and one-half percent (7. 5%) on interest on foreign currency deposit under the expanded foreign currency deposit system b.A non-resident citizen is exempt from income tax on interest on foreign currency deposit under the expanded foreign currency deposit system c. A non-resident alien engaged in business in the Philippines is subject to a final tax of twenty-five percent (25%) on gross income from within the Philippines from cinematographic films d. A non-resident alien engaged in business in the Philippines has a final tax of twenty percent (20%) on interest only if the interest is on bank deposits C58. A non-resident alien not engaged in business in the Philippines, but with income from the Philippines:S1: Is ta xed at twenty-five percent (25%) of gross income from within the Philippines S2: Is entitled to personal exemptions on the basis of reciprocity a. True, True b. False, False c. True, False d. False, True A59. The following, except one, may claim personal exemptions: a. Non-resident alien not engaged in trade or business in the Philippines b. Non-resident alien engaged in trade or business in the Philippines c. Resident alien d. Citizen D60. S1: If a taxpayer marries or has dependents during the year, or dies during the year, or his spouse dies during the year, he/his estate may claim personal exemption in full for such yearS2: If a dependent child dies within the year, or becomes twenty-one years old within the year, the taxpayer may still claim additional exemption a. True, False b. False, True c. False, False d. True, True A61. 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 accomp lished 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 D62.All the following statements, except one, are correct. Which is wrong? a. April 15, August 15, November 15 of the current year, and April 15 of the succeeding year, are dates (last day) for filing the quarterly income tax returns of the individual who is self-employed b. April 15 is the last day for filing the annual income tax return of an individual who is self-employed c. April 15 is the last day for filing of the income tax return for individuals who have gross compensation income only, but whose income tax returns show income tax due or refundable d.The dates will be other than the dates mentioned in (a) to (c) if the individual has a fiscal year accounting period D63. One of the following statements is not correct. Which is it? a. For domestic corporations, the capital gain tax on sale of shares of stock are the same as the capital gain tax on such assets of resident citizens of the Philippines b. The final tax on interest on foreign currency deposit under the expanded foreign currency deposit system for domestic corporations is the same as that of resident citizens of the Philippines at seven and one-half percent (7. %) c. Dividends received by a domestic corporation from a domestic corporation subject to tax is exempt from the income tax of the corporation receiving the dividend d. Prizes exceeding Php 10,000. 00 received by a domestic corporation is subject to a final tax of twenty percent (20%) A64. S1: The minimum corporate income tax of a trading or manufacturing concern is based on net sales less cost of sales S2: The minimum corporate income tax of a service concern is based on net revenues or receipts less direct cost of services a. True, True . False, False c. True, False d. False, True D65. All the following are true, except one. Which is the exception: a. A domestic corporation is subject to the minimum corporate income tax on MCIT gross income from within and outside the Philippines b. A resident corporation is subject to the minimum corporate income tax on MCIT gross income from within the Philippines c. A non-resident corporation is not subject to the minimum corporate income tax d. The optional gross income tax (GIT) applies to domestic and resident corporations