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Taxation Law MCQs_Set 1 1 UP PORTIA SORORITY 1. Interest income received by an individual taxpayer from a depository ban under t!

e expanded forei"n currency deposit system is sub#ect to a final income tax at t!e rate of $.%&. '. T!e statement is true and accurate. (. T!e statement is false because t!e interest income is sub#ect to a final income tax at t!e rate of )*&. C. T!e statement is inaccurate because interest income received by a non+resident individual is exempt from income tax. ,. T!e statement is inaccurate because interest income received by a non+resident individual is sub#ect to )*& tax rate.

). T!e maximum allowable basic personal taxpayer is'. )%. *** (. /%. *** C. 0*. *** ,. %*. ***

exemption for eac! individual

/. ' taxpayer is allowed for an additional exemption of )%. *** for eac! dependent. '. T!e statement is true and accurate. (. T!e statement is inaccurate because t!ou"! a taxpayer is allowed for an additional exemption of )%. *** for eac! dependent. t!e number of dependents must not exceed 0. C. T!e statement is false because t!e additional exemption t!at a taxpayer can avail of is /%. ***. ,. T!e law is silent as to t!e maximum amount t!at a taxpayer can avail of.

0. 1!ic! corporation. a"ency. or instrumentality owned or controlled by t!e 2overnment is exempt from income tax3

Taxation Law MCQs_Set 1 ) UP PORTIA SORORITY '. 2SIS (. SSS C. 4CS5 ,. 4'2C56

%. 7ose is an 581 stationed in 9S. 7ose sends !is dollar earnin"s to !is wife in t!e 4!ilippines. :e deposited !is dollar earnin"s to t!e 8C,9 of (anco de 5ro. a domestic corporation. 'ssumed t!at t!e deposit earns interest. Is t!e interest income of 7ose taxable3 '. ;es. 7ose. bein" a non+resident citi<en. all !is income derived from wit!in is taxable. (. ;es. !is interest income is sub#ect to t!e tax rate of )*&. C. =o. since t!e income is derived from a transaction wit! depository ban s under t!e expanded system. t!e interest income is exempt from income tax. ,. =o. !e is not re>uired to pay tax.

?. 1!ic! is =5T a c!aracteristic of final wit!!oldin" tax @81TA3 A. 81T wit!!eld by t!e payor of income @e.".. )*& 81T on interest income on ban depositsA represents 89LL payment of income tax due on suc! income of t!e recipient. B. Income payee @or recipient of incomeA does not report income sub#ected to 81T in !is income tax return. alt!ou"! income is reflected in !is audited financial statements for t!e year. :owever. !e is not allowed to claim any tax credit on income sub#ected to 81T. C. 1it!!oldin" a"ent @payor of incomeA files t!e wit!!oldin" tax return. w!ic! includes t!e 81T deducted from t!e income of payee. and pays t!e tax to t!e (I6. D. ' Certificate of Tax 1it!!eld @(I6 8orm )/*$A is issued to income payee. $. T!e 1B*+day rule is used to ascertain w!et!er an alien is en"a"ed in trade or business in t!e 4!ilippines.

Taxation Law MCQs_Set 1 / UP PORTIA SORORITY '. T!e statement is true and accurate. (. T!e statement is false because t!e 1B*+day rule is applied to determine w!et!er an alien is a resident or non+resident. C. T!e statement is false since t!e rule is used in ascertainin" w!et!er a citi<en is resident or non+resident. ,. T!e statement is inaccurate because t!e rule is applied to determine w!et!er a non+resident alien is en"a"ed in trade or business in t!e 4!ilippines.

B. 'll are considered non+resident citi<ens. except'. Immi"rant (. 4ermanent wor er C. 4ilots and stewardesses plyin" international routes w!o are !older of wor in" visas ,. 'n 581 w!o spends 1B) days abroad durin" any "iven taxable year

C. 1!ic! statement is incorrect3 '. 8or income tax purposes. a "eneral professional partners!ip @244A is not a taxable entity. (. ' 244 is a partners!ip formed by persons for t!e sole purpose of exercisin" t!eir professions. no part of t!e income of w!ic! is derived from en"a"in" in any trade or business. C. T!e partners t!emselves. not t!e partners!ip are liable for t!e payment of income tax in t!eir individual capacity computed on t!eir respective distributive s!ares of t!e partners!ip profit. ,. Since a 244 is exempt from income tax. t!e professional fees paid to it are t!us exempt from t!e expanded wit!!oldin" tax.

1*.D and ;. bot! lawyers. formed a 244 in 7anuary. )**). In accordance wit! t!eir a"reement. t!ey would e>ually divide t!e profits and losses. ,urin" t!e year. t!e partners!ip !ad a net profit of 4)Million and 41.%Million was distributed to t!e partners at t!e end of t!e year w!ile 4%**. *** was distributed at early part of )**/.

Taxation Law MCQs_Set 1 0 UP PORTIA SORORITY '. Eac! partner must report an income of 41Million because t!e income is taxable in t!e year earned and is deemed distributed in t!e same year. (. Eac! partner must report an income of 4$%*. ***. t!e amount t!at t!ey actually received durin" t!e taxable year w!ile t!e 4)%*. *** will form part of t!e )**/ income. C. D and ; !ave t!e option to report eit!er 41Million or 4$%*. ***. ,. Since 41.%M is part of t!e profit earned in )**) and it is t!e amount actually distributed to t!e partners. eac! partner "ains only 4$%*. ***. t!us. it follows t!at t!ey s!ould only report said amount as t!eir income for t!e taxable year of )**).

11.1!ic! is considered as taxable income3 '. Increase in net wort! due to correction of errors in boo entries (. Stoc dividend C. Security advances and deposits paid by a lessee to a lessor ,. 7ust compensation for expropriated property

1).1!ic! is not a feature of t!e 4!ilippine Income tax3 '. It is a direct tax. (. It is a pro"ressive tax. since t!e tax base increases as t!e tax rate increases. It is founded on t!e ability to pay of taxpayer. C. T!e 4!ilippines adopted t!e most compre!ensive system in imposin" income tax. ,. T!e 4!ilippines follows t!e "lobal income tax system.

1/.T!e Tax Code definition of FcorporationG includes t!e followin". except'. 7oint venture or consortium duly re"istered wit! t!e SEC and en"a"ed in ener"y+related pro#ects (. Limited partners!ip

C. 7oint venture or consortium formed for t!e purpose of underta in" construction pro#ects ,. Insurance companies

Taxation Law MCQs_Set 1 % UP PORTIA SORORITY

10.D. a lawyer. is employed as le"al adviser of Corporation H. a private corporation. In return. !e is bein" paid by Corporation H. 1!ic! statement is false3 '. 1!at D receives from Corporation H is classified as professional income. since D is a lawyer. w!o exercises !is profession as a le"al adviser and in return. is bein" paid. T!us. !e can validly claim suc! deductions. (. Since t!ere is compensation income. an employer+employee relations!ip. D earns

C. 8or income tax purposes. suc! compensation is sub#ect to "raduated income tax rates wit!out deductions. ,. 1!at D receives from Corporation H is sub#ect to creditable wit!!oldin" tax.

1%.T!e type or c!aracter of income is necessary for t!e followin" reasons. except-

'. To now t!e particular sc!eduler income tax system t!at will apply to t!e income (. To determine t!e period suc! income must be reported for income tax purposes C. To use t!e proper income tax return and file it wit!in t!e time specified by law or re"ulations ,. To determine w!o is liable to pay t!e income tax

1?.7uan died on 7uly 11. )*1*. 4rior to !is deat!. !eIs earnin" a salary of %*JKmont!. :e also earned rental income in t!e amount of 1**JKmont!. :e was survived by !is wife. Maria. and two c!ildren. D and ; w!o are bot! minors. Supposed t!e property re"ime adopted by 7uan and Maria is C42. 1!o are t!e taxpayers for t!e taxable year )*1*3 '. T!e estate of 7uan and Maria (. T!e estate of 7uan. 7uan Maria. D and ; C. T!e estate of 7uan. 7uan. and Maria ,. T!e estate of 7uan. Maria. D and ;

Taxation Law MCQs_Set 1 ? UP PORTIA SORORITY

1$.Can 7uan still avail personal and additional exemption @4'EA for purposes of computin" !is income tax due for t!e year )*1*3 '. =o. because !e is already dead at t!e time of filin" !is IT6. (. =o. since !e is already dead. !e is not re>uired to file an IT6. C. ;es. because !e is considered to !ave died at t!e close of suc! year. t!us. !e may still claim t!e 4'E. ,. ;es. because it is only but fair to allow !im to claim t!e 4'E since !e died in t!e middle of t!e year. 1B.1!ic! statement is incorrect3 '. It is t!e residence of t!e creditor w!ic! material w!et!er interest income is treated as income from wit!in. (. If t!e service is performed in t!e 4!ilippines. considered as income from wit!in. C. If t!e property or interest is located or used in t!e royaltiesKrentals are treated from sources wit!in. ,. If t!e real property is located in t!e 4!ilippines. derived from t!e sale is considered from wit!in. in ascertainin" t!e income is 4!ilippines. t!e t!e "ain bein"

1C.1!at is t!e 856M9L' in computin" t!e tax due of a corporation under t!e "lobal income tax system3 a. 2ross sales Less- Cost of sales 2ross income Less- ,eductions and 4ersonal and 'dditional Exemption @4'EA =et taxable income Multiplied by applicable rate @"raduated or flatA Income tax due Less- Creditable 1T (alance @Tax payableA 2ross sales Less- Cost of sales 2ross income Less- ,eductions Less- Creditable 1T =et taxable income Multiplied by applicable rate @"raduatedA Income tax due 2ross sales Less- Cost of sales 2ross income Less- ,eductions =et taxable income

b.

c.

Taxation Law MCQs_Set 1 $ UP PORTIA SORORITY Multiplied by applicable rate @flatA Income tax due Less- Creditable 1T (alance @Tax payableA d. 2ross sales Less- Cost of sales 2ross income Less- ,eductions Less- Creditable 1T =et taxable income Multiplied by applicable rate @flatA Income tax due

)*.1!ic! statement is incorrect3 '. ' taxpayer is allowed to avail a maximum of 1**. *** under Section /% @(A of t!e =I6C. (. ' minimum wa"e earner is exempt from income tax. C. ' corporation is sub#ect to a flat rate of /*&. ,. ' corporation can avail t!e 4'E. )1. 1!at is not an essential c!aracteristic of tax3 '. (. C. It is levied on persons or property It is proportionate in c!aracter It is a voluntary contribution

,. It is "enerally payable in money

)). 1!ic! statement is correct3 '. ' tax is based on a contract between t!e state and t!e individualKcorporation (. Imprisonment is not a sanction for non+payment of tax C. 8ailure to pay a tax ma es t!e business ille"al ,. ' tax. li e a debt. is a liability

)/. 1!at does Fincidence of taxationG mean3

Taxation Law MCQs_Set 1 B UP PORTIA SORORITY '. T!at point on w!ic! t!e tax burden finally rests or settles down (. T!at point on w!ic! a tax is ori"inally imposed C. T!at point w!en t!e burden of a tax is transferred by t!e ori"inal payer to anot!er ,. T!at point w!en t!e payer cannot pay

)0. 1!at is not a source of tax laws3 '. Tax treaties or a"reements entered into by t!e 4!ilippines wit! ot!er countries (. 5pinions of t!e Secretary of 7ustice C. 5pinions of SEC ,. Executive 5rders

)%. T!e followin" corporations are exempted from income tax except3 '. Mutual savin"s ban !avin" a capital stoc represented by s!ares (. Labor. a"ricultural or !orticultural or"ani<ation not or"ani<ed principally for profit C. Cemetery company owned and operated exclusively for t!e benefit of its members ,. 2overnment educational institution

)?. T!e followin" are exclusions from 2ross Income except3 '. 4roceeds of life insurance policies paid to t!e !eirs upon deat! of insured (. ,ividends C. 'mount received by insured @of a life insuranceA as return of premium ,. Compensation for in#uries or sic ness under 1or menIs Compensation 'cts

Taxation Law MCQs_Set 1 C UP PORTIA SORORITY )$. 1!ic! is false re"ardin" re"istration re>uirements for every person sub#ect to any internal revenue tax3 '. ' person must re"ister wit!in 1% days from date of employment (. ' person must re"ister on or before t!e commencement of business C. ' person must re"ister before any tax due ,. ' person must re"ister once wit! t!e appropriate 6evenue ,istrict 5fficer

)B. ' Flar"e taxpayerG means a taxpayer w!o satisfies any of t!e followin" criteria except3 , '. (usiness establis!ment wit! wit!!oldin" tax payment or remittance of at least 41.***.*** for t!e precedin" taxable year (. (usiness establis!ment wit! excise tax paid or payable of at least 41.***.*** for t!e precedin" taxable year C. (usiness establis!ment wit! annual income tax paid or payable of at least 41.***.*** for t!e precedin" taxable year ,. (usiness establis!ment wit! L'T paid or payable of at least 41.***.*** for any >uarter of t!e precedin" taxable year

)C. T!e cas! rewards of informers @instrumental in discovery and sei<ure of smu""led "oodsA s!all be sub#ect to income tax. collected as a final wit!!oldin" tax. at t!e rate of3 C '. 1)& (. 1%& C. 1*& ,. %&

/*. T!e followin" are deductions allowed to t!e estate of a citi<en or resident to determine t!e net estate except3 '. 7udicial expenses of t!e testamentary or intestate proceedin"s

Taxation Law MCQs_Set 1 1* UP PORTIA SORORITY (. Transfers for public use C. Medical expenses incurred by t!e decedent ) years before !is deat! ,. 8amily !ome @fair mar et value not exceedin" 41.***.***A as certified by t!e baran"ay captain of t!e locality

/1. T!e corporate >uarterly declaration s!all be filed w!en3 '. 1it!in %* days followin" t!e close of eac! of t!e first / >uarters of t!e taxable year (. 1it!in ?* days followin" t!e close of eac! of t!e first / >uarters of t!e taxable year C. 1it!in 1)* days followin" t!e close of eac! of t!e first / >uarters of t!e taxable year ,. 1it!in 1B* days followin" t!e close of eac! of t!e first / >uarters of t!e taxable year

/). 9nless ot!erwise provided. t!e exercise of t!e taxin" powers of provinces. cities. municipalities and baran"ays s!all not extend to t!e levy of t!e followin" except3 '. ,ocumentary stamp tax (. Taxes on premiums paid by way of reinsurance C. Taxes on business enterprises certified to by t!e (oard of Investments as pioneer for a period of ? years from t!e date of re"istration ,. 1!arfa"e on w!arves constructed and maintained by t!e L29 concerned

//. 1!ic! is not true about an amusement tax levied by t!e province3 '. Its rate is not more t!an /*& of t!e "ross receipts from admission fees (. T!e proceeds from t!e amusement tax will accrue only to t!e province C. T!e san""unian"panlalawi"an may prescribe t!e time. manner. terms and conditions for t!e payment of tax

Taxation Law MCQs_Set 1 11 UP PORTIA SORORITY ,. In t!e case of t!eaters or cinemas. t!e tax s!all first be deducted and wit!!eld by t!eir operators. lessees or proprietors and paid to t!e provincial treasurer before t!e "ross receipts are divided between t!em and t!e distributors of t!e film

/0. 1!o is not liable for community tax3 '. 8ilipino in!abitant w!o owns real property wit! an a""re"ate fair mar et value of 41.*** or more (. 8ilipino in!abitant 1B years or over C. 8ilipino in!abitant w!o is re"ularly employed on a wa"e basis for at least /* consecutive wor in" days durin" any calendar year ,. 8ilipino in!abitant w!o is re>uired by law to file an income tax return /%. 9nder t!e Tariff and Customs Code. a countervailin" action may be initiated by3 '. T!e Commissioner of Customs (. T!e Commissioner of t!e Tariff Commission C. T!e Secretary of '"riculture ,. (I6 Commissioner /?. ' petition for t!e imposition of a countervailin" duty s!all be considered to !ave been made by or on be!alf of t!e domestic industry if it is supported by t!ose domestic producers w!ose collective output constitutes ___________________ of t!e total production of t!e li e product produced by t!at portion of t!e domestic industry expressin" eit!er !er support for or opposition to t!e application. :owever. an investi"ation s!all be initiated only w!en domestic producers supportin" t!e application account for __________________ of t!e total production of t!e li e product produced by t!e domestic industry. In cases involvin" an exceptionally lar"e number of producers. de"ree of support or opposition may be determined by usin" statistically valid samplin" tec!ni>ues or by consultin" t!eir representative or"ani<ations. '. 't least %* percent. 't least )% percent (. More t!an %* percent. 't least )% percent C. 't least %* percent. More t!an )% percent ,. More t!an %* percent. More t!an %* percent /$. 8ormal Investi"ation- Tariff Commission -- 4reliminary determination_____________________. '. Secretary of Trade and Industry (. Secretary of '"riculture C. Secretary of 8inance

Taxation Law MCQs_Set 1 1) UP PORTIA SORORITY ,. Eit!er t!e Secretary of '"riculture or t!e Secretary of Trade and Industry dependin" on t!e type of product. /B. 8ormal Investi"ation- Tariff Commission -- Imposition of Countervailin" ,uty_______________. '. Secretary of Trade and Industry (. Secretary of '"riculture C. Secretary of 8inance ,. Eit!er t!e Secretary of '"riculture or t!e Secretary of Trade and Industry dependin" on t!e type of product. /C. 9nder t!e Tariff and Customs Code. T!e effective period of any safe"uard measure. includin" any extensions t!ereof under Section 1C may not. in t!e a""re"ate. exceed !ow many years3 '. % years (. 1* years C. 1% years ,. ) years 0*. ' treaty containin" tax exemptions must be ratified by ___'. )K/ ma#ority of t!e Senate (. ma#ority of all members of Con"ress C. bot! ,. none of t!e above