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Interest income received by an individual taxpayer from a depository bank under the expanded foreign currency deposit system is subject to a final income tax at the rate of 7.5%. A. The statement is true and accurate. B. The statement is false because the interest income is subject to a final income tax at the rate of 20%. C. The statement is inaccurate because interest income received by a non-resident individual is exempt from income tax. D. The statement is inaccurate because interest income received by a non-resident individual is subject to 20% tax rate.
2. The maximum allowable basic personal taxpayer is: A. 25, 000 B. 35, 000 C. 40, 000 D. 50, 000
exemption for each individual
3. A taxpayer is allowed for an additional exemption of 25, 000 for each dependent. A. The statement is true and accurate. B. The statement is inaccurate because though a taxpayer is allowed for an additional exemption of 25, 000 for each dependent, the number of dependents must not exceed 4. C. The statement is false because the additional exemption that a taxpayer can avail of is 35, 000. D. The law is silent as to the maximum amount that a taxpayer can avail of.
4. Which corporation, agency, or instrumentality owned or controlled by the Government is exempt from income tax?
Taxation Law MCQs_Set 1 2 UP PORTIA SORORITY A. GSIS B. SSS C. PCSO D. PAGCOR
5. Jose is an OFW stationed in US. Jose sends his dollar earnings to his wife in the Philippines. He deposited his dollar earnings to the FCDU of Banco de Oro, a domestic corporation. Assumed that the deposit earns interest. Is the interest income of Jose taxable? A. Yes, Jose, being a non-resident citizen, all his income derived from within is taxable. B. Yes, his interest income is subject to the tax rate of 20%. C. No, since the income is derived from a transaction with depository banks under the expanded system, the interest income is exempt from income tax. D. No, he is not required to pay tax.
6. Which is NOT a characteristic of final withholding tax (FWT)? A. FWT withheld by the payor of income (e.g., 20% FWT on interest income on bank deposits) represents FULL payment of income tax due on such income of the recipient. B. Income payee (or recipient of income) does not report income subjected to FWT in his income tax return, although income is reflected in his audited financial statements for the year. However, he is not allowed to claim any tax credit on income subjected to FWT. C. Withholding agent (payor of income) files the withholding tax return, which includes the FWT deducted from the income of payee, and pays the tax to the BIR. D. A Certificate of Tax Withheld (BIR Form 2307) is issued to income payee. 7. The 180-day rule is used to ascertain whether an alien is engaged in trade or business in the Philippines.
Taxation Law MCQs_Set 1 3 UP PORTIA SORORITY A. The statement is true and accurate. B. The statement is false because the 180-day rule is applied to determine whether an alien is a resident or non-resident. C. The statement is false since the rule is used in ascertaining whether a citizen is resident or non-resident. D. The statement is inaccurate because the rule is applied to determine whether a non-resident alien is engaged in trade or business in the Philippines.
8. All are considered non-resident citizens, except: A. Immigrant B. Permanent worker C. Pilots and stewardesses plying international routes who are holder of working visas D. An OFW who spends 182 days abroad during any given taxable year
9. Which statement is incorrect? A. For income tax purposes, a general professional partnership (GPP) is not a taxable entity. B. A GPP is a partnership formed by persons for the sole purpose of exercising their professions, no part of the income of which is derived from engaging in any trade or business. C. The partners themselves, not the partnership are liable for the payment of income tax in their individual capacity computed on their respective distributive shares of the partnership profit. D. Since a GPP is exempt from income tax, the professional fees paid to it are thus exempt from the expanded withholding tax.
10.X and Y, both lawyers, formed a GPP in January, 2002. In accordance with their agreement, they would equally divide the profits and losses. During the year, the partnership had a net profit of P2Million and P1.5Million was distributed to the partners at the end of the year while P500, 000 was distributed at early part of 2003.
Taxation Law MCQs_Set 1 4 UP PORTIA SORORITY A. Each partner must report an income of P1Million because the income is taxable in the year earned and is deemed distributed in the same year. B. Each partner must report an income of P750, 000, the amount that they actually received during the taxable year while the P250, 000 will form part of the 2003 income. C. X and Y have the option to report either P1Million or P750, 000. D. Since P1.5M is part of the profit earned in 2002 and it is the amount actually distributed to the partners, each partner gains only P750, 000, thus, it follows that they should only report said amount as their income for the taxable year of 2002.
11.Which is considered as taxable income? A. Increase in net worth due to correction of errors in book entries B. Stock dividend C. Security advances and deposits paid by a lessee to a lessor D. Just compensation for expropriated property
12.Which is not a feature of the Philippine Income tax? A. It is a direct tax. B. It is a progressive tax, since the tax base increases as the tax rate increases. It is founded on the ability to pay of taxpayer. C. The Philippines adopted the most comprehensive system in imposing income tax. D. The Philippines follows the global income tax system.
13.The Tax Code definition of “corporation” includes the following, except: A. Joint venture or consortium duly registered with the SEC and engaged in energy-related projects B. Limited partnership
C. Joint venture or consortium formed for the purpose of undertaking construction projects D. Insurance companies
Taxation Law MCQs_Set 1 5 UP PORTIA SORORITY
14.X, a lawyer, is employed as legal adviser of Corporation Z, a private corporation. In return, he is being paid by Corporation Z. Which statement is false? A. What X receives from Corporation Z is classified as professional income, since X is a lawyer, who exercises his profession as a legal adviser and in return, is being paid. Thus, he can validly claim such deductions. B. Since there is compensation income. an employer-employee relationship, X earns
C. For income tax purposes, such compensation is subject to graduated income tax rates without deductions. D. What X receives from Corporation Z is subject to creditable withholding tax.
15.The type or character of income is necessary for the following reasons, except:
A. To know the particular scheduler income tax system that will apply to the income B. To determine the period such income must be reported for income tax purposes C. To use the proper income tax return and file it within the time specified by law or regulations D. To determine who is liable to pay the income tax
16.Juan died on July 11, 2010. Prior to his death, he’s earning a salary of 50K/month. He also earned rental income in the amount of 100K/month. He was survived by his wife, Maria, and two children, X and Y who are both minors. Supposed the property regime adopted by Juan and Maria is CPG. Who are the taxpayers for the taxable year 2010? A. The estate of Juan and Maria B. The estate of Juan, Juan Maria, X and Y C. The estate of Juan, Juan, and Maria D. The estate of Juan, Maria, X and Y
Taxation Law MCQs_Set 1 6 UP PORTIA SORORITY
17.Can Juan still avail personal and additional exemption (PAE) for purposes of computing his income tax due for the year 2010? A. No, because he is already dead at the time of filing his ITR. B. No, since he is already dead, he is not required to file an ITR. C. Yes, because he is considered to have died at the close of such year, thus, he may still claim the PAE. D. Yes, because it is only but fair to allow him to claim the PAE since he died in the middle of the year. 18.Which statement is incorrect? A. It is the residence of the creditor which material whether interest income is treated as income from within. B. If the service is performed in the Philippines, considered as income from within. C. If the property or interest is located or used in the royalties/rentals are treated from sources within. D. If the real property is located in the Philippines, derived from the sale is considered from within. in ascertaining the income is Philippines, the the gain being
19.What is the FORMULA in computing the tax due of a corporation under the global income tax system? a. Gross sales Less: Cost of sales Gross income Less: Deductions and Personal and Additional Exemption (PAE) Net taxable income Multiplied by applicable rate (graduated or flat) Income tax due Less: Creditable WT Balance (Tax payable) Gross sales Less: Cost of sales Gross income Less: Deductions Less: Creditable WT Net taxable income Multiplied by applicable rate (graduated) Income tax due Gross sales Less: Cost of sales Gross income Less: Deductions Net taxable income
Taxation Law MCQs_Set 1 7 UP PORTIA SORORITY Multiplied by applicable rate (flat) Income tax due Less: Creditable WT Balance (Tax payable) d. Gross sales Less: Cost of sales Gross income Less: Deductions Less: Creditable WT Net taxable income Multiplied by applicable rate (flat) Income tax due
20.Which statement is incorrect? A. A taxpayer is allowed to avail a maximum of 100, 000 under Section 35 (B) of the NIRC. B. A minimum wage earner is exempt from income tax. C. A corporation is subject to a flat rate of 30%. D. A corporation can avail the PAE. 21. What is not an essential characteristic of tax? A. B. C. It is levied on persons or property It is proportionate in character It is a voluntary contribution
D. It is generally payable in money
22. Which statement is correct? A. A tax is based on a contract between the state and the individual/corporation B. Imprisonment is not a sanction for non-payment of tax C. Failure to pay a tax makes the business illegal D. A tax, like a debt, is a liability
23. What does “incidence of taxation” mean?
Taxation Law MCQs_Set 1 8 UP PORTIA SORORITY A. That point on which the tax burden finally rests or settles down B. That point on which a tax is originally imposed C. That point when the burden of a tax is transferred by the original payer to another D. That point when the payer cannot pay
24. What is not a source of tax laws? A. Tax treaties or agreements entered into by the Philippines with other countries B. Opinions of the Secretary of Justice C. Opinions of SEC D. Executive Orders
25. The following corporations are exempted from income tax except? A. Mutual savings bank having a capital stock represented by shares B. Labor, agricultural or horticultural organization not organized principally for profit C. Cemetery company owned and operated exclusively for the benefit of its members D. Government educational institution
26. The following are exclusions from Gross Income except? A. Proceeds of life insurance policies paid to the heirs upon death of insured B. Dividends C. Amount received by insured (of a life insurance) as return of premium D. Compensation for injuries or sickness under Workmen’s Compensation Acts
Taxation Law MCQs_Set 1 9 UP PORTIA SORORITY 27. Which is false regarding registration requirements for every person subject to any internal revenue tax? A. A person must register within 15 days from date of employment B. A person must register on or before the commencement of business C. A person must register before any tax due D. A person must register once with the appropriate Revenue District Officer
28. A “large taxpayer” means a taxpayer who satisfies any of the following criteria except? D A. Business establishment with withholding tax payment or remittance of at least P1,000,000 for the preceding taxable year B. Business establishment with excise tax paid or payable of at least P1,000,000 for the preceding taxable year C. Business establishment with annual income tax paid or payable of at least P1,000,000 for the preceding taxable year D. Business establishment with VAT paid or payable of at least P1,000,000 for any quarter of the preceding taxable year
29. The cash rewards of informers (instrumental in discovery and seizure of smuggled goods) shall be subject to income tax, collected as a final withholding tax, at the rate of? C A. 12% B. 15% C. 10% D. 5%
30. The following are deductions allowed to the estate of a citizen or resident to determine the net estate except? A. Judicial expenses of the testamentary or intestate proceedings
Taxation Law MCQs_Set 1 10 UP PORTIA SORORITY B. Transfers for public use C. Medical expenses incurred by the decedent 2 years before his death D. Family home (fair market value not exceeding P1,000,000) as certified by the barangay captain of the locality
31. The corporate quarterly declaration shall be filed when? A. Within 50 days following the close of each of the first 3 quarters of the taxable year B. Within 60 days following the close of each of the first 3 quarters of the taxable year C. Within 120 days following the close of each of the first 3 quarters of the taxable year D. Within 180 days following the close of each of the first 3 quarters of the taxable year
32. Unless otherwise provided, the exercise of the taxing powers of provinces, cities, municipalities and barangays shall not extend to the levy of the following except? A. Documentary stamp tax B. Taxes on premiums paid by way of reinsurance C. Taxes on business enterprises certified to by the Board of Investments as pioneer for a period of 6 years from the date of registration D. Wharfage on wharves constructed and maintained by the LGU concerned
33. Which is not true about an amusement tax levied by the province? A. Its rate is not more than 30% of the gross receipts from admission fees B. The proceeds from the amusement tax will accrue only to the province C. The sangguniangpanlalawigan may prescribe the time, manner, terms and conditions for the payment of tax
Taxation Law MCQs_Set 1 11 UP PORTIA SORORITY D. In the case of theaters or cinemas, the tax shall first be deducted and withheld by their operators, lessees or proprietors and paid to the provincial treasurer before the gross receipts are divided between them and the distributors of the film
34. Who is not liable for community tax? A. Filipino inhabitant who owns real property with an aggregate fair market value of P1,000 or more B. Filipino inhabitant 18 years or over C. Filipino inhabitant who is regularly employed on a wage basis for at least 30 consecutive working days during any calendar year D. Filipino inhabitant who is required by law to file an income tax return 35. Under the Tariff and Customs Code, a countervailing action may be initiated by? A. The Commissioner of Customs B. The Commissioner of the Tariff Commission C. The Secretary of Agriculture D. BIR Commissioner 36. A petition for the imposition of a countervailing duty shall be considered to have been made by or on behalf of the domestic industry if it is supported by those domestic producers whose collective output constitutes ___________________ of the total production of the like product produced by that portion of the domestic industry expressing either her support for or opposition to the application. However, an investigation shall be initiated only when domestic producers supporting the application account for __________________ of the total production of the like product produced by the domestic industry. In cases involving an exceptionally large number of producers, degree of support or opposition may be determined by using statistically valid sampling techniques or by consulting their representative organizations. A. At least 50 percent, At least 25 percent B. More than 50 percent, At least 25 percent C. At least 50 percent, More than 25 percent D. More than 50 percent, More than 50 percent 37. Formal Investigation: Tariff Commission :: Preliminary determination: _____________________. A. Secretary of Trade and Industry B. Secretary of Agriculture C. Secretary of Finance
Taxation Law MCQs_Set 1 12 UP PORTIA SORORITY D. Either the Secretary of Agriculture or the Secretary of Trade and Industry depending on the type of product. 38. Formal Investigation: Tariff Commission :: Imposition of Countervailing Duty: _______________. A. Secretary of Trade and Industry B. Secretary of Agriculture C. Secretary of Finance D. Either the Secretary of Agriculture or the Secretary of Trade and Industry depending on the type of product. 39. Under the Tariff and Customs Code, The effective period of any safeguard measure, including any extensions thereof under Section 19 may not, in the aggregate, exceed how many years? A. 5 years B. 10 years C. 15 years D. 2 years 40. A treaty containing tax exemptions must be ratified by ___: A. 2/3 majority of the Senate B. majority of all members of Congress C. both D. none of the above
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