Department of Accountancy and Taxation

COLLEGE OF ARTS AND SCIENCES

San Beda University

TXINCOME – Income Taxation

2ns Semester AY 2022 - 2023

Instruction: Write in CAPITAL LETTERS your best answer on a separate paper.

1. This is a prerogative of escaping or diminishing a tax liability, availment of ways

allowable by law or not contrary to law to mitigate tax liability.
a. Tax exemption
b. Tax avoidance
c. Tax assessment
d. Tax evasion
2. A tax wherein both the incidence of or the liability for the payment of the tax as well
as the burden of the tax falls on the same person.
a. Direct tax
b. Indirect tax
c. Personal tax
d. Property tax
3. Define as a charge imposed under the police power for purposes of regulation.
a. tax b. toll c. revenue d. permit
4. Tax rate increases as the tax base increases.
a. proportional b. regressive c. progressive d. not included
5. A tax that is demanded from the person who also shoulders the burden of the tax.
a. specific b. ad valorem c.excise d. direct
6. It is also known as tax dodging.
a. tax evasion b. tax avoidance c. tax amnesty d. tax exemption
7. It is immunity from all criminal and civil obligations arising from nonpayment of tax.
a. tax avoidance b. tax amnesty tax exemptiond. tax evasion
8. Which of the following could exercise the levying aspect of taxation?
a. Barangay Council
b. City Mayor
c. Judiciary
d. The President of the Philippines
9. The power to demand proportionate contributions from persons and property to
defray the expenses of government.
a. Power of taxation
b. Police power
c. Power of eminent domain
d. National power
10. Tax where the rate decreases as the tax base increases.
a. Proportional
b. Progressive
c. Regressive
d. Indirect
11. Not one of the purposes or objectives of taxation?
A. reduction of social inequality
B. protectionism
C. promotion of general welfare
 D. expropriation
12. The process or means by which the sovereign, through its law-making body raises
income to defray the expenses of the government.
a) Toll
b) License fee
c) Taxation
d) Assessment
13. The use of illegal or fraudulent means to avoid or defeat the payment of tax.
a) Exemption
b) Shifting
c) Avoidance
d) Evasion
14. Tax of a fixed amount imposed upon all persons residing within a specified territory
without regard to their property or occupation they may be engaged.
a) Personal or poll
b) Property
c) Excise
d) Percentage
15. It literally means “place of taxation”; the country that has the power and jurisdiction
to levy and collect the tax.
a) Basis of taxation
b) Situs of taxation
c) Scope of taxation
d) Theory of taxation
16. Statement 1: A person may refuse to pay on the ground that he receives no personal
benefit from it.
Statement 2: A taxpayer has a right to question illegal expenditures of public funds.
a. Only the first statement is correct
b. Only the second statement is correct
c. Both statements are correct
d. Both statements are incorrect
17. Statement 1: A State has the power to tax even if not granted by the constitution
Statement 2: A state cannot exercise police power if not granted by the constitution
a. Only the first statement is correct
b. Only the second statement is correct
c. Both statements are correct
d. Both statements are incorrect
18. Statement 1: Non-payment of tax makes the business illegal
Statement 2: The non-payment of license fee makes the business illegal
a. Only the first statement is correct
b. Only the second statement is correct
c. Both statements are correct
d. Both statements are incorrect
19. All are characteristics of the power of taxation, EXCEPT:
a. It is an inherent power
b. It is legislative in character
c. It is civil in character
d. It is subject to inherent and constitutional limitations
20. Taxation is an inherent power because:
a. It is the life blood of the government
b. Protection and benefit theory
 c. It co-exist with the existence of the state
d. It is exercised for the general welfare of the people
21. All are similarities of taxation, police power, and power of eminent domain, EXCEPT
a. All are necessary attributes of the constitution
b. All exist independently of the constitution
c. All contemplate as equivalent benefit
d. All are superior to the non-impairment clause of the constitution
22. The theory which most justifies the necessity of taxation
a. Protection and benefits theory
b. Revenue purposes theory
c. Lifeblood theory
d. Ability to pay theory
23. Statement 1: 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.
Statement 2: It is essentially a legislative function. Even in the absence of any
constitutional provision, taxing power falls to congress as part of the general power
of law-making.
a. False; True
b. False; False
c. True; True
d. True; False
24. The purpose of taxation is to:
a. Raise revenue
b. Promote public welfare
c. Facilitate the taking of private property for public use
d. Impose unnecessary burden
25. Every person who is able must contribute his share in the burden of running the
government. The government for its part is expected to respond in the form of
tangible and intangible benefits intended to improve the lives of the people and
enhance their material and moral values. This theory of taxation is known as:
a. Necessity theory
b. Benefits received/ reciprocity theory
c. Ability to pay theory
d. Administrative feasibility
26. The following are the characteristics of a sound tax system except:
a. Fiscal Adequacy
b. Administrative feasibility
c. Theoretical justice
d. Necessity theory
27. The power to tax does not include the power to destroy while the court sits. This
statement is:
a. True as to an invalid tax
b. True as to a valid tax
c. False as to a tax bill yet to be passed
d. False as to repealed tax laws
28. The following are the requisites of a valid tax except:
a. That either the person or property taxed be within the Jurisdiction of the
taxing authority.
 b. That the assessment and collection of certain kinds of taxes guarantee against
injustice to individuals, especially by providing notice and opportunity for
hearing.
c. The tax must not impinge on the inherent and constitutional limitations on
the power of taxation.
d. It is paid on regular periods or intervals.
29. The Latin maxim that helps in determining the Situs of real property is:
a. Mobilia sequuntur personam
b. Rebus sic stantibus
c. Lex rei sitae
d. Emptio rei speratae
30. The Latin maxim that helps in determining the Situs of intangible movable property
is:
a. Lex rei Sitae
b. EmptioSpei
c. Dura LexsedLex
d. Mobilia sequuntur personam
31. The following determines the Situs of income tax except:
a. Nationality or citizenship of the taxpayer.
b. Residence or domicile of the taxpayer.
c. Amount of income
d. Source of the income.
32. One of the tests to determine the public purpose of tax is:
a. Promotion of general welfare test
b. Place of incorporation test
c. Accion reinvidicatoria
d. Nationality test
33. The following are the inherent limitations of taxation except:
a. International Comity
b. Non-delegability of the taxing power
c. Exemption of the Government
d. Due process
34. Situs refers to:
a. Territoriality
b. Exemption of the government
c. International Comity
d. Procedural due process
35. International comity refers to:
a. The respect accorded by nations to each other because they are sovereign
equals.
b. The committee tasked with enforcing international law
c. The express contract between nations embodied in a treaty that determine
which country will tax a particular subject
d. The legally binding agreement between nations that focuses on the amount to
be taxed between which country
36. The reasons for international comity are the following except:
a. In par parem non habet imperium- as between equals there is no sovereign
b. A foreign government may not be sued without its consent
c. A foreign government must respect the tax laws of an economically superior
country
 d. When a foreign sovereign enters the territorial jurisdiction of another, it does
not subject itself to the jurisdiction of the other.
37. A delegated power cannot be further delegated. Since the power of taxation is a power
that is exercised by congress as delegates of the people then as a general rule, Congress
could not re-delegate this delegated power. This is known as:
a. AccionPauliana
b. Delegata potestas non potest delegari
c. Res perit domino
d. Certiorari
38. A law was passed by the legislature imposing a license tax upon alcohol and liquor
products, increasing the amount of its selling price. What is exercised in this case?
a. Power of Eminent Domain
b. Police Power
c. Taxation
d. Taxation used as an implement of Police Power
39. The Congress passed a law authorizing the City of Manila to purchase the lots and
buildings along Avenida and Recto to widen the road for the better flow of the traffic
for which the said local government unit would pay just compensation to the owners.
What is exercised in this case?
a. Power of Eminent Domain
b. Police Power
c. Taxation
d. Taxation used as an implement of Police Power
40. Manda Raya’s Income Tax Return(ITR) shows a low income by understating her Gross
Income and overstating her expenses. What does this imply?
a. Tax Avoidance
b. Tax Restriction
c. Tax Evasion
d. Tax Arbitration
41. License as distinguished from tax
a. unlimited in imposition
b. imposed for revenue
c. does not necessarily renders business illegal in case of non-payment
d. a pre-activity in operation
42. Which is correct?
a. Taxes may be subject to compensation
b. Toll, being a demand of ownership, is exercised only by private entities
c. dacion and cession are applicable to taxation
d. Special assessment applies only when public improvement is made
43. Philippine tax law are, by nature
a. political c. political and civil
b. civil d. penal and civil
44. Mr. A has tax obligation to the government amounting to P80,000. Since he is leaving
the country, he entered into a contract with Mr. B, wherein the latter shall pay the
P80,000 tax in his behalf. On due date, Mr. B failed to pay the tax. The BIR send a letter
of demand to Mr. A which he refused to pay.
Which of the following statement is correct?
a. The government cannot enforce collection charges against Mr. A since he has
validly transferred his obligations to B under the contract
b. The government can no longer run after Mr. A because he is already outside
the Philippine territory.
 c. The government should wait until Mr. B becomes solvent again
d. The government should force Mr. A to pay because taxes are non-assignable
45. Which of the following does not relate to tax?
a. Does not render business illegal when not paid
b. Arises from law rather than from contracts
c. intended for cover cost of regulations
d. intended for public purpose
46. Debt as compared to tax
a. a demand of ownership
b. not assignable
c. will not cause imprisonment when not paid
d. generally payable in money
47. Select the incorrect statement
a. Tax may be unlimited in amount
b. License make the business illegal when not paid
c. Special assessment are not a liability of the person owning the property
d. Special assessment can be imposed on building and other real right attaching
or pertaining to land.
48. Violation of this principle will make a tax law invalid
a. Fiscal adequacy c. Administrative feasibility
b. Theoretical justice d. Economic consistency

49. Taxes that cannot be shifted by the statutory taxpayer are referred to as
a. Direct taxes c. business taxes
b. Indirect taxes d. personal taxes

50. Which is an indirect tax?

a. Value added tax c. Estate tax
b. Donor’s tax d. Real Property tax
51. Agreement among nation to lessen tax burden of their respective subject is called
a. Reciprocity c. territoriality
b. international comity d. tax minimization

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