1. Which of the following is not a taxable corporation?

a. Ana, Lorna and Fe agreed to contribute their money into a common fund to engage in the
business of buying and selling consumer goods. Their total investment amounted to P300.000
and they did not bother to register their business with the DTI and the SEC.
b. Pedro, Juan and Luna, all certified public accountants, agreed to contribute their money,
property and industry to a common fund with the sole intention of jointly exercising their
common profession. They have registered with the SEC.
c. Victorious Bus Company and California Bus Company owns separate franchises to operate a
public utility covering the area of Northern Luzon. To achieve maximum efficiency of utilizing
their assets and to avoid the negative effects of competition, the two companies agreed to pool
their resources together and operate as a single company.
d. Rody and Allan, lawyer and certified public accountants, respectively, agreed to contribute
their money, property and industry to a common fund to render service of business process
outsourcing.

❖ Answer: B
0 The partnership organized in “b* is a GPP. hence, non-taxable.

2. Which is not a characteristic of corporate income tax:

> a. Progressive tax c. General tax
a. Direct tax d. National tax

❖ Answer: A
() Corporate tex is NOT a progressive tax, but a proportional tax. A
progressive tax is a tax where the rate increases as the tax base
increases. Examples of a progressive tax under the NIRC are; income
tax on individuals, donor’s tax (prior to TRAIN Law), estate tax (prior to
TRAIN Law). On the other hand, proportional tax is tax in proportion to
the amount subject to taxation. The tax rate is fixed, regardless of
whether the tax base increases or decreases. Examples are; income tax
on corporations, value added tax, percentage taxes, donor’s tax and
estate tax (upon effectivity of the TRAIN Law).

0 Direct tax is a type of tax where the incidence and impact of taxation fall on
the same person. The burden of paying the tax cant be shifted by the
taxpayer to someone else.

0 General tax refers to a general levy by a government that offers no special

 benefit to the taxpayer, but only a support to governmental programs
that benefit all. It is a source of public revenue.

() National tax is a tax imposed by the National government.

3. Which of the following is subject to income tax?

a. SSS and GSIS
b. Philippine Health Insurance Corporation (PHIC)
c. Local Water Districts
d. Philippine Amusement and Gaming Corporation (PAGCOR)

❖ Answer: D
Q PCSO is already taxable upon the effectivity of the TRAIN Law.

4. One of the following is exempt from income tax

* a. Proprietary educational institutions
b. Private cemeteries
c Government educational institutions
a. Mutual savings bank

❖ Answer: C (Section 30 of the Tax Code, as amended)

5. Statement 1; Corporations exempt from income tax are not subject to income tax on incomes
received which are incidental or necessarily connected with the purposes for which they were
organized and operating.
Statement 2: Corporations exempt from income tax are subject to income tax on income of
whatever kind and character from any of their properties (real or personal) or from any other
activity conducted for profit, regardless of the disposition of such income,
Only statement 1 is correct