Income Taxation

Co, ownership which exists in 10 years for more than 10 years, is subjected to tax if less than 720,000php per year.

• True
• False

An individual taxpayer is exempted from filing income tax return if his sole income has been subjected to final withholding tax.

• True
• False

Where are the sources of Income come from?

• Within the Philippines
• Partly without the Philippines
• Partly within the Philippines
• Outside Philippines
• Business

All of the following are administrative functions of taxation except

• collection of taxes
• equalization of assessment
• selection of object of tax
• valuation of property for taxation

It is defined as a contract whereby two or more persons bind themselves to contribute money, property, or industry to a common fund to engage in profitable activities with the intention of dividing the profits among themselves.

• PARTNERSHIPS

A trust is a right of property, real or personal, held by one party for the benefit of another.

• True
• False

Which of the following is not within the scope of authority of the BIR Commissioner?

• To decide cases involving National Internal Revenue taxes
• To assess and collect BIR taxes
• To interpret tax laws
• To exercise the levying function of taxation

The requisites of wash sale must be the sale of stock or securities is at a gain.

• True
• False

Income earned outside the Philippines by domestic helpers is tax-exempt because they are corresponded nonresident citizen.

• True
• False

These refer to the last day for filing return and payment of tax.

• due dates

The allowances for personal exemptions of a single mother with a dependent child out of wedlock are 50,000php and 25,000php, respectively.

• True
• False

All of the following are inherent restrictions on the exercise of taxation power, except

• rule of uniformity
• international comity
• territorial jurisdiction
• for public purposes

It is an inter-corporate dividend received by a nonresident foreign corporation from a domestic corporation is subject to 15% final withholding tax provided that foreign law allows taxpayer clause

• TAX SPARING RULE

All of the following are not taxes except

• special assessment
• custom duties
• surcharges
• license fee

Tax Administration is a system involving enforcement of taxes through the use of

• Tax Legislation and Assessment
• Tax Imposition and Collection
• Tax Legislation
• Tax Assessment and Collection

The distributive share of a partner in a commercial partnership is subjected to final tax of 10%.

• True
• False

De minimisWhich of the following fringe benefit received by a managerial employee is taxable with final income tax?

• Educational scholarship related to trade
• Free housing
• Foreign travel on account of business convention
• De minimis

The income of irrevocable trust is taxable in the same manner as the income of the estate.

• True
• False

It is a legal claim granted to the government to secure the proper payment of the tax, surcharges, interest and costs on all property subject to levy or distraint.

• tax lien

Cash method of reporting income can deduct prepaid expenses in the year of payment.

• True
• False

It is absorption of a corporation by another corporation, the latter retaining its own name and identity and acquiring the assets, liabilities, franchises, and powers of the former, and the absorbed corporation ceasing to exist as a separate juridical person.

• MERGER

The absolute exemption allowed to estates and trusts is

• 20,000PHP

They are usually called “period cost” because they are related to a particular period of time of business operation.

• REVENUE EXPENDITURES

It is used frequently to transfer property from one generation to another.

• TRUST DEVICE

The computation of the net taxable income of the estate is the same manner as individual taxpayer, except that the personal exemption is limited to 20,000php.

• True
• False

~Hasnewline~In corporation, the capital loss is no holding period and deductible from capital gain only.

• True
• False

It is a civil penalty imposed by law in addition to the main tax required to be paid dud to delinquency or misrepresentation of taxes.

• Question 16
• Correct
• Mark 1.00 out of 1.00
• Not flaggedNot flaggedFlag question

The share of the beneficiary of the income of estates during the taxable year Is subject to a

• Creditable withholding tax of 15%.
• Final withholding tax of 15%.
• Final withholding tax of 10%.
• Creditable withholding tax of 10%.

It is an activity intended to make profit

• BUSINESS

Statement 1: The income of the undistributed estate is subject to income tax.

• Both statements are correct.
• Only statement 2 is correct.
• Both statements are not correct.
• Only statement 1 is correct.

Which of the following business travel expenses is not subjected to fringe benefit tax?

• Inland travel expense
• All of the above
• Cost of economy airplane ticket
• Hotel accommodation for $300 per day

The properties left by the decedent transferable to the successors are called

• Wills
• Investments
• Estates
• Trusts

Which of the following companies would report release reserved funds as part of gross income in the year of release?

• Insurance companies.
• Cinematographic companies.
• Franchising companies.
• Liquidating companies.

This tax assessment is being asked to be cancelled because there is a question as to its validity or legality.

• Illegal Assessment
• Jeopardy Assessment
• Disputed Assessment
• Deficiency Assessment

It is a sale or disposition of stock or securities where substantially identical securities are acquired or purchased within a 61-day period, beginning 30 days before the sale and ending 30 days after the sale.

• WASH SALES

Which of the following co-ownership is not subjected to tax as a corporation?

• Co-ownership with investments of co-owners.
• Agreed co-ownership
• Undivided property of co-ownership for more than 10 years with an attempt to divide the property of co-ownership among the co-heirs.
• Undivided property of co-ownership for more than 10 years without an attempt to divide the property of co-ownership among the co-heirs.

It is a scheme of reducing payment of taxes through legally permissible means.

• Tax Evasion
• Tax Avoidance
• Tax Remission
• Tax Amnesty

All housing benefits provided by employer to managerial employee are subject to fringe benefit tax.

• True
• False

The business income of a domestic corporation may be subject to any of the following except

• Optional gross income tax.
• Final withholding tax.
• Minimum corporate tax.
• Normal corporate tax.

In tax capitalization, the buyer absorbs the payment if tax and includes the same as part of the cost of the acquired property.

• True
• False

Which of the following nature of laws describes tax laws?

• remedial
• criminal
• political
• civil

Capital Gain refers to the excess of the determined cost over the value received from the sale or exchange of a capital asset.

• True
• False

The share of partners from the 700,000 net income of a general professional partnership is subjected to

• Creditable withholding tax of 10%
• Creditable withholding tax of 15%
• Tax-exempt
• Final tax of 10%

An allowance paid to a widow or heir out of the corpus of the estate trust is not deductible from gross income.

• True
• False

If the only source of income of the partner is his share in a general commercial partnership, he is no longer required to file the annual income tax return.

• True
• False

Which of the following is a party in a joint venture?

• Shareholders
• Co-ventures
• Co-owners
• Partners

Which of the following is subjected to tax?

• Capital gains on sale of partner’s capital
• Income of a general professional partnership
• Share of co-ventures in the income of a taxable joint venture
• Dividend income of a commercial partnership from a domestic corporation

A tax evader sidesteps the law, while the tax avoider breaks it.

• True
• False

Which of the following tax rates behaves in the same direction with the taxable value?

• proportionate
• regressive
• digressive
• progressive

Statement 1: Both revocable and irrevocable trust are taxable for their income earned.

• Both statements are not correct.
• Only statement 2 is correct.
• Both statements are correct.
• Only statement 1 is correct.

It is a foreign-born person who is not qualified to acquire Philippine citizenship by birth or after birth.

• ALIEN

It refers to the use of regular domestic income tax rates on corporate taxable income which 30%

• NORMAL CORPORATE INCOME TAX

The taxable of the estates or trusts is to be computed in the same manner as

• Corporation.
• Joint venture.
• Individual taxpayer.
• Taxable partnership.

Protection is the basic consideration that justifies tax situs.

• True
• False

Individual taxpayers are allowed to elect installment payment of their income taxes when the tax due is 2,000php.

• True
• False

Income that is not realized is taxable.

• True
• False

Taxation is the government's legitimate means of interfering with private properties of its subjects.

• True
• False

They provide current and future benefits in business operations.

• CAPITAL EXPENDITURES

The royalty income in pursuit of business received by franchising companies like Jollibee Corporation is subject to

• 15% final tax.
• 20% final tax.
• 30% regular tax.
• 10% creditable withholding tax.

Trust device is usually used to transfer property from one generation to another.

• True
• False

Taxation could be described as a power, as a process, or as a means. As a power, taxation is a way of apportioning the cost of government among those who are privileged to enjoy its benefits.

• True
• False

Dividend income earned by general commercial partnership is no longer taxable against the partner upon its distribution as share of the partner.

• True
• False

Merchandise inventory is a capital asset.

• True
• False

The monetary value of availed vacation and sick leaves is compensation income.

• True
• False

The beneficiary of the income of estate has the status of

• Taxpayer with dependents
• Receivership
• Single taxpayer
• Self-employed taxpayer

The general professional partnerships and joint ventures are not classified as a corporation.

• True
• False

All BIR approved retirement pays are exempted from income tax.

• True
• False

It is the government agency primarily in charge to assess and collect all taxes and charges imposed.

• Bureau of Internal Revenue

Which of the following co-ownership is subject to income tax?

• Income of co-owned property acquired as inheritance
• Income of co-owned property acquired as donation
• Income of voluntarily established co-ownership
• Income of general professional partnership

Amount of wealth plus savings and earnings.

• Income

Sovereign equality dictates that a nation cannot impose taxes on the property of another country.

• True
• False

Which statement is wrong? A revenue bill

• may be recommended by the President to Congress.
• may have a House version and a Senate version approved separately and then consolidated, with both houses approving the consolidation version.
• may originate from the Senate and on which same bill the House of Representatives may propose amendments.
• must originate from the House of Representative and on which same bill the Senate may propose amendments.

No person shall be imprisoned for nonpayment of income taxes.

• True
• False

Partner's contributions to the partnership are subjected to a final tax of 10%.

• True
• False

These are procedures or actions available both to the government to collect taxes and to the taxpayer to avoid abuses in the payment of taxes.

• Tax remedies

In case of two or more trusts created by the same person for the same beneficiary, the taxable income of all trusts shall be consolidated and the tax shall be computed based on the consolidated income.

• True
• False

He shall be responsible for the withholding and remittance of the right amount of tax needed by deducting and withholding from his employees’ compensation. He is required to collect, account and remit any tax.

• EMPLOYER

If the taxpayer is an individual, his taxable income shall be computed on the basis of calendar year.

• True
• False

One of the following is not creditable against the total computed tax per ITR

• Income tax paid for the first three quarters for the business per ITR
• Final withholding tax
• Creditable withholding tax on compensation
• Foreign income tax paid by the resident citizen

All partnerships are taxed in the same manner as corporation.

• True
• False

It is a system of collecting taxes in accordance with the country’s tax policies.

• tax administration

The amount of income tax withheld by the withholding agent is constituted as a full and final payment of the income tax due from the payee on the said income.

• FINAL WITHHOLDING TAX

Which of the following is entitled to claim NOLCO?

• Foreign international carrier
• Employees with respect to his compensation income
• OBU
• Self-employed individual

This refers to the process of taxation to determine the amount of tax based on existing tax law.

• Imposition
• Collection
• Levying
• Assessment

Dependent senior citizen is not entitled for additional exemption of 25,000php.

• True
• False

As a rule, business expenses are deductible only if they are incurred in relation to the business income taxable in the Philippines. If a business expense could not be traced whether incurred within or not, such expense shall be allocated based on the gross income within and without.

• SITUS OF EXPENSES

Which of the following is a subject to a creditable withholding tax at source?

• Gain on sale of shares of stock
• Sale of family home
• Holiday pay
• Royalties

A citizen who works abroad most of the time during the taxable year is a nonresident citizen.

• True
• False

The capital gains on sale of partner's interest is subjected to a final tax of 5% if the amount is 100,000php and 10% in excess of the first 100,000php.

• True
• False

For self-employed taxpayers, their quarterly income tax returns are to be reduced with corresponding personal exemption.

• True
• False

Taxes withheld in certain payments are intended to equal or at least approximate the tax due of the payee on said income.

• CREDITABLE WITHHOLDING TAX

All government entities regardless of their functions are exempted from taxes because it would be impractical for the government to be taxing itself.

• True
• False

It is the exhaustion of the natural resources like mines, oil and gas wells due to production.

• DEPLATION EXPENSE

This income tax system is a combination of gross compensation income and/or net income from business, trade or profession to arrive at the total income subject to tabular tax rates.

• GLOBAL INCOME TAX SYSTEM

The tax-exempt joint venture is not required to file an ITR.

• True
• False

It is a partnership wherein part of all of its income is derived from the conduct of trade or business.

• GENERAL CO-PARTNERSHIP

The share of a partner in the general professional partnership is subjected to final withholding tax of 10% if the amount is below 720,000php.

• True
• False

These represent reductions of resources due to unintended destruction or deprivation of things.

• LOSSES

All amounts received from a life insurance annuity are taxable.

• True
• False

No taxable income is realized from the passage of property to the executor or administrator on the death of the descendant.

• True
• False

Capital assets are not subjected to normal tax.

• True
• False

Domestic and foreign corporations shall be taxed with 2% based on gross income and not on their net taxable income

• MINIMUM CORPORATE INCOME TAX

As an option of a resident taxpayer, income taxes paid in foreign countries can be claimed as deduction from gross income or tax credit subject to limit.

• True
• False

Fringe benefits include only salaries and services or similar benefits given by employer to a managerial employee.

• True
• False

Which of the following is deductible from related gross income?

• Loss on exchange of capital assets
• Worthless and written-off trade receivables
• Loss of business property due to theft
• Net operating loss carry-over

The fringe benefit tax rate shall be the same with the normal corporate tax rate for income taxes.

• True
• False

A joint venture is taxed like a corporation.

• True
• False

A Filipino citizen who stayed outside the Philippines and worked abroad for 183 days during the taxable year is classified as

• Nonresident citizen
• Resident citizen
• Overseas contract worker
• Special taxpayer

Each beneficiary must include in his return his distributive share of the net income of the trust.

• True
• False

All damage recoveries are not taxable.

• True
• False

By hour, day, week.

• Wage

The share of co-ventures in a taxable joint venture is subjected to a final tax of 10%.

• True
• False

The benefits from taxation have to be experienced to justify the legitimacy of collection of taxes from the people.

• True
• False

Most taxpayers elect to report income in a fiscal year basis.

• True
• False

Interest income from foreign currency deposit of a nonresident Filipino is subjected to final withholding tax of 7.5%.

• True
• False

These resident foreign corporations are subjected to a 10% final tax on interest income derived from foreign currency loans granted to residents.

• OFFSHORE BANKING UNITS

Fringe Benefits are forms of incentives to managerial employees.

• True
• False

Gain from redemption of shares in mutual fund is exempted from income tax.

• True
• False

Tax exemption is transferable and assignable.

• True
• False

A senior citizen's income is exempted from all income taxes.

• True
• False

Which of the following taxes are not allowed as deductions from reportable gross income, except

• VAT
• Stock transaction tax
• Capital gains tax
• Documentary stamp tax

Which of the following is required to be filed with quarterly income tax return?

• Business income
• Passive income
• Compensation income
• Capital gain

By month.

• Salary

It is twenty five percent (25%) surcharge.

• SIMPLE NEGLECT

The additional fringe benefits received by the rank-and-file employees are not subject to final fringe benefit tax rate, but are to be reported in the annual income t ax return.

• True
• False

Nonresident aliens engaged in Philippines are allowed with personal exemptions and additional exemptions is subjected to reciprocity.

• True
• False

Which of the following is not an activity involving tax administration?

• Taxpayer's compliance to pay tax obligation
• Passage of tax laws and ordinance through the legislature
• Computation of tax due and payable
• Execution of judgment decided by the court in favor of the BIR

The gross receipts of a professional entertainer is subjected to a 10% creditable withholding tax his/her income during the year.

• None of the above
• Is 720,000 and below
• Exceeds 720,000
• Is 1,000,000 and above

A general professional partnership engaged in the practice of profession and trading of goods is subject to

• Tax-exempt
• 30% tax based on net taxable income
• 10% tax based on gross income
• 25% tax based on net taxable income

The gains or losses on short sales are capital asset transactions.

• SHORT SALES

Which of the following statements is not correct?

• An irrevocable trust is subject to income tax.
• The taxable trust is taxed at 30% of net taxable income.
• The taxable trust is taxed in the same manner as individual taxpayer.
• The taxable trust is allowed to claim P20,000 exemption.

A trustee is the person who establishes a trust.

• True
• False

The 13th month pay and other benefits amounting to P82,000 and below are not taxable.

• True
• False

Tax affects the area or nation as a community rather than as individuals. This is a specific explanation of

• Reciprocity
• Supreme Power
• Public Purpose
• International Comity

It must be imposed directly upon the taxpayer.

• TAX

The liability of the employer is to withhold the corresponding income tax from the fringe benefit earned by the employee.

• True
• False

The absolute exemption applicable to the income of estate or trusts amounts to

• P30,000.
• P20,000.
• P75,000.
• P50,000.

The tabular rates of tax prescribed for individuals shall be used in computing the income tax of trusts or estates.

• True
• False

Which of the following remedies against double taxation requires tax treaty?

• Reciprocity
• Tax Credit
• Deduction Allowance
• Tax Exemption

Tips are taxable.

• True
• False

It terminates or condenses the taxpayer's period.

• Jeopardy Assessment

The income of the trust which is accumulated for future distribution is taxed against the beneficiaries.

• True
• False

The income of general commercial partnership is also subjected to MCIT or Normal Corporate Tax whichever is applicable.

• True
• False

Which of the following is classified as deductible loss?

• All of the above
• Depreciation
• Allowance for bad debts
• Embezzlement

The tax doctrine of Marshall Dictum explains that tax is a power to destroy.

• True
• False

The taxpayer’s income tax is fixed or computed based on the gross income. The usual allowable deductions are completely disregarded in computing this income tax.

• GROSS INCOME TAX SYSTEM

Leasehold improvement is recognized.

• Outright Method

Revenues derived from taxes cannot be used for the exclusive use of private persons.

• True
• False

A CPA certificate is required if the quarterly gross sales, gross receipts or earnings of an individual taxpayer

• Exceeds 100,000
• Exceeds 150,000
• Less than 200,000
• Less than 500,000

“Any good, service, or other benefit furnished or granted by an employer, in cash or in kind, in addition to basic salaries, to an individual.

• FRINGE BENEFIT

The following incomes are not allowed to deduct business expenses except

• Compensation income
• Professional income
• Passive income
• Capital gains

The share of a partner in the income of a commercial partnership is

• Subject to normal tax of individual taxpayer
• Subject to creditable tax of 10% if the amount is 720,000 and below and 15% if the amount is more than 720,000
• Subject to a final tax of 10%
• Tax-exempt

Which of the following characteristics describes our internal revenue laws?

• Political in nature
• Retroactive in character
• Penal in nature
• Generally, prospective in operation although the tax statute may nevertheless operate retrospectively provided it is clearly the legislative intent.

The fringe benefit tax is the final tax of the employer.

• True
• False

Income accumulated in trust for the benefit of unborn person is not reported income.

• True
• False

The tax rate on special aliens is 15% of their gross compensation income derived within the Philippines from special employment by multinational corporation.

• True
• False

It refers to the disposal through sale or exchange of ordinary assets or capital assets.

• DEALINGS IN PROPERTY

Dividends received by a cooperative from a domestic corporation are tax exempt.

• True
• False

An alien residing and doing business in the Philippines is allowed to have a tax credit for income taxes paid other country.

• True
• False

Gross income includes other income from other sources.

• True
• False

An increase in the value of property is income.

• True
• False

Which of the following will be an appropriate deductible expense for the exhaustion of intangible asset of wasting asset corporation?

• Depletion expense
• Amortization expense
• Depreciation expense
• Exploration expense

A net taxable income of a nonresident alien sole proprietor of a cinematographic film is subjected to a

• Normal tax of individuals
• 25% final tax
• 32% normal corporate income tax
• 10% special tax

If a taxpayer dies during the taxable year, his estate may claim the personal exemption as if he died at the close of such year.

• True
• False

In installment method, the excess of mortgage assumed over cost of property sold is considered as part of the initial payment.

• True
• False

Those who are citizens of the Philippines at the time of the adoption of the 1987 Philippine Constitution.

• FILIPINO CITIZEN

If the amount to be distributed to a partner of a general professional partnership is more than 720,000php, it is to be withheld with 15% creditable tax.

• True
• False

Reward for an event.

• Winning

It represents basic interest of ownership in a corporation. Stockholders holding common shares are called common stockholders.

• COMMON STOCK

Estates and trusts are treated as separate taxable entities.

• True
• False

The Philippine tax laws are not political and penal in nature.

• True
• False

In general, bills need not to be signed by the President to become a law.

• True
• False

Which of the following income is allowed to be reduced with itemized deductions?

• Capital gain
• Passive income
• Business income
• Compensation income

Passive income is subjected to normal tax only if not subjected to final tax.

• True
• False

The income of several irrevocable trusts shall be included in the consolidated income of the grantor to avail of one personal exemptions.

• True
• False

The exemption allowed to estate or trust is 50,000php.

• True
• False

Reward for a contest.

• Prize

The grossed-up monetary value is the benefit expense of the employer.

• True
• False

As a rule, excess amount of liquidating dividends over cost of shares surrendered is taxable.

• True
• False

Co-ownership income is not taxable.

• True
• False

Taxation is the primary source of government revenue. Hence, all government funds come from taxes.

• True
• False

The deferred payment method adopts the present value of reporting income.

• True
• False

A Filipino citizen classified as special taxpayer is required to be taxed based on his gross compensation income subject to a final tax of 15%.

• True
• False

All of the following taxes are classified as income taxes, except

• 6% capital gains tax on sale of land
• 10% dividend tax
• ½ of 1% tax on the selling price of shares of stock traded in the local stock exchange
• 20% royalty tax

Which of the following is not true?

• Fringe benefit tax rate is 32%
• Fringe benefit tax of a managerial employee is subjected to final income tax
• Fringe benefit tax is a creditable withholding tax
• Fringe benefit tax is an income tax

Who is the BIR Commissioner?

• Chief Officials

Distinctions of Income

• Receipts
• Sales
• Revenue
• Capital

Which of the following taxes included in the conduct of business is allowed as deduction from business income?

• Community tax
• Withholding on wages of employees
• VAT
• Income tax

It paid or payable of 1,000,000php for the preceding taxable year.

• EXCISE TAX

The net worth method is commonly used in determining the taxable income of taxpayers with complete accounting records.

• True
• False

The fringe benefit tax is the income on income earned by the employee.

• True
• False

A lotto or sweepstakes winnings derived by a resident Filipino citizen within and outside the Philippines are exempted from Philippine income tax.

• True
• False

Illegal source of income

• Embezzlement

The following are business taxes except

• other percentage tax
• value-added tax
• custom duties
• excise tax

The income of co-ownership that is distributed to the beneficiary is subjected to 10% withholding tax if less than 720,000php per year.

• True
• False

If the professional or talent fee of an entertainer exceeds 720,000php per year, the creditable withholding tax should be 20%.

• True
• False

Statement 1: The grantor is liable for the income of revocable trust,

• Only statement 1 is correct.
• Both statements are not correct.
• Both statements are correct.
• Only statement 2 is correct.

It is a systematic way of collecting taxes at source, an indispensable method of collecting taxes to ensure adequate revenue for the government.

• WILDHOLDING OF TAXES

In general, which of the following incomes is not allowed to be reduced with personal exemption

• Professional income
• Compensation income
• Passive income
• Business income

It is composed of all properties, rights and obligations including those properties, or obligations that have accrued thereto since the opening of the succession the estate is to be transferred from the decent to his successors.

• ESTATE

All of the following taxes are classified as income taxes, except 20% royalty tax

• 20% royalty tax
• ½ of 1% tax on the selling price of shares of stock
• 10% dividend tax

Which of the following is the correct amount of additional personal exemption?

• 20,000 for each dependent sibling
• 25,000 for each qualified dependent child
• 25,000 for senior citizen
• 8,000 for each qualified dependent child

Installment of payments.

• Annuities

Real and personal properties not used in trade or business like residential house and lot, car, jewelries, etc are example of capital assets.

• True
• False

Local tax ordinances must be uniformly and equally applied throughout the country.

• True
• False

The existence of a Constitution is necessary for the exercise of the inherent powers of the Sovereign State.

• True
• False

The special deduction from trust is allowed to reduce the income of trust if such trust is administered in foreign country.

• True
• False

In ordinary assets, 30% of the net taxable income for individual taxpayers.

• True
• False

Interest on loans granted by the employer to employee are taxable fringe benefit when the interest rate is

• Lower than 12%
• 18% and above
• 12%
• Above 12%

In taxation, it is one's civil liability to pay taxes which gives rise to criminal liability.

• True
• False

The trustor (grantor) reserves the power to change at any time any part of the terms of the trust.

• REVOCABLE TRUSTS

Dealings in property refers to the disposal through sale or exchange of ordinary assets or capital assets.

• True
• False

Which of the following corporate tax is not yet implemented in the Philippines?

• Optional gross income tax.
• Capital gains tax.
• Final withholding tax.
• Passive income tax .

It exists when more than one person acquired the right to own a piece of property or mass of properties. The ownership acquisition by more than one person over a property or properties may be due to succession of an estate or donation.

• CO-OWNERSHIP

The power to tax includes the power to destroy because the taxpayer has no option but to pay the tax imposed to him.

• Marshall Dictum
• Strictissimi Juris
• Pari Materia Principle
• Holmes Doctrine

A corporation cannot enter into a partnership contract, but it can engage in a joint venture.

• True
• False

Below are the legal sources of income. Select three sources of income.

• Salary
• Bonus
• Rebates
• Gambling
• You have correctly selected 3.

It is an obligation imposed or a right to administer over a property given to a person for the benefit of another.

• TRUST

Taxation co-exist with the four elements of the state which includes all, except

• Sovereignty
• Government
• Territory
• Property

It is a class of the stock refer to the shares of stock to be issued by the charter or by-laws with respect to dividends and/or assets in case of liquidation over the remainder of the stocks of the corporation which are called common stock.

• PREFERRED STOCK

Additional remuneration for overtime and separation pay does not include fringe benefits.

• True
• False

It is a business activity that is organized or established only for temporary or short-period of time.

• JOINT VENTURE

A taxpayer that allowed with both personal exemption and additional exemption is a/an

• Partnership
• Corporation
• Estate and trusts
• Individual taxpayer

Which of the following amount of winnings/prizes is subjected to final tax of 20%?

• 9,000 first prize singing contest
• 10,000 winnings outside the Philippines
• 1,000,000 Philippines Sweepstakes winnings
• 10,000 winnings earned within the Philippines

All of the following are National taxes as to collecting authority except

• real property tax
• value-added tax
• estate tax
• income tax

A government officer considered as tax enforcer by having the power to ascertain the validity of tax laws subject to the review of the Courts of Justice

• Secretary of Justice
• Secretary of Finance
• BIR Commissioner
• Chief Justice

Which value should be used as tax base to compute the fringe benefit on the property assigned for the use of employers?

• Cost of the property
• Fair market value of the property
• Equivalent rental value of the property
• Fringe benefit value

Which of the following is not included as entertainment, amusement and recreation expenses of a business?

• Amusement and recreation expenses
• Expenses incurred in accommodating company agents
• Fixed representation allowances of key officers subjected to WTH
• Depreciation or rental facilities

A beneficiary of an estate engaged in business has the status of self-employed individual player.

• True
• False

Allowance on his retirement.

• Pension

The co-venture in a tax-exempt joint venture are also exempt from income tax.

• True
• False

If the casual loss on business property is partial, the deductible loss is the

• Book value of the damaged property
• Actual cost of damaged on business property
• Lower amount between a and c
• Replacement cost of the damaged property

The creation of trusts may be either expressed or implied.

• True
• False

The gain from the sale or other disposition of property shall be the excess of the amount realized therefrom over the basis or adjusted basis.

• True
• False

A general professional partnership is not required to file its annual income tax return.

• True
• False

The income of a trust for the taxable year which is to be distributed to the beneficiaries is returnable and will be taxed to the respective beneficiaries.

• True
• False

Which of the following is a taxable fringe benefit?

• Life insurance premium on the life of employee borne by the employer.
• 13th month pay and similar benefits in excess of 30,000php
• All of the above
• Employer’s tax payment on behalf of the employee

Which of the following taxes incurred in the conduct of business is not allowed as deduction from business income?

• Import duties
• Local business taxes
• Foreign income tax claimed as tax credit
• Documentary stamp tax

The following individual taxpayers are granted basic and additional personal exemption except

• Partnership fully owned by resident Filipino citizen
• Nonresident alien engaged in trade or business in the Philippines with tax treaty reciprocity
• Resident citizen
• Nonresident citizen

The net income received by a partner of a general co-partnership is subjected to

• A capital gains tax
• A final tax on dividends
• An individual normal tax
• A corporate tax

It paid or payable of 100,000php for any quarter.

• BUSINESS TAX

The portion of income from irrevocable trust that would be distributed during the year is taxable against the

• Grantor
• Beneficiary
• Trustee
• Trust

Which of the following interest expense is deductible in full?

• Interest paid in advance
• Interest on tax delinquency
• Interest on personal loan
• Interest expense which is 20% of the interest income for the same year

One of the following is not creditable against the total computed tax per ITR.

• Final withholding tax
• Income tax paid for the first three quarters for the business income earned
• Foreign income tax paid by resident citizen
• Creditable withholding tax on compensation

Which of the following income is subjected to a monthly creditable withholding tax?

• Income from trading
• 13th month pay
• Salaries
• Winnings

It is a corporation’s own stock that has been issued and then reacquired but not cancelled.

• TREASURY STOCK

An income of a professional entertainer can be reduced by OSD.

• True
• False

The State can still exercise its taxing powers over its citizen, even if he resides outside the taxing State's territory.

• True
• False

There is no need to file a tax return if the income of estates or irrevocable trusts is 20,000php and below.

• True
• False

As a rule, the original issue by a corporation of its shares of stock at more or less than the par value or stated value shall have no recognition of gain or loss. Hence, it is not subject to capital gains tax.

• True
• False

The personal exemption of a nonresident alien not engaged in business in the Philippines is subjected to reciprocity agreement.

• True
• False

The share of partners in the general professional partnership is taxable in the conventional manner of computing the normal income tax of individual.

• True
• False

Normal taxes are usually subject to creditable withholding tax.

• True
• False

Total earnings from whatever source.

• Gross Income

It is one formed by two or several persons for the sole purpose of exercising their common profession of which no part of income derived from engaging in any trade or business.

• GENERAL PROFESSIONAL PARTNERSHIP

Taxes collected by the BIR are local taxes.

• True
• False

The monetary value of fringe benefit if given in money is:

• Depreciated value
• Fair market value or zonal value whichever is higher
• Acquisition cost plus other incidental costs
• Amount granted

It is a contract whereby the parties, by reciprocal concessions, avoid litigation or put an end to one already commenced.

• compromise

Professional or talent fees for services rendered by an individual shall be subjected to a creditable withholding value-added tax.

• True
• False