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Income Taxation Practice Test

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Income Taxation Practice Test

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Lyka Idra
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Chapter 1 Introduction to Taxation CHAPTER 1: SELF-TEST EXERCISES piscussion Questions Define taxation, stings the theory andthe bas of taxation What are the theories of gover cost allocation? E: Dis the Lifeblood Doctrine. 5S Fumerate and explain the inherent powers of the State. nguish the three powers ofthe State and enumerate their similarities the scope of the power of taxation, hh substantive due process from procedural due process. h the concept of equality from the concept of uniformity in taxation. ‘yment of debt versus non-payment of tax in terms of piffer g._ Describe 9. Distinguis! 10, Distinguish pistinguish non-pa consequences. What i stitutions Which of the const ru, Explain the stages of the 15, Explain the concept of situs. Te pistinguish the Marshall Doctrine from the Holme’s Doctrine. 17, Discuss the doctrine of strict construction of tax laws. 1F Eaplain double taxation, its elements, and i's SYP 1e. What are the categories of escapes from taxation? Enumerat ier each category. means of escape und 20, Distinguish tax amnesty from tax condonation. in the Constitution? are exempt from real property tax i ied as inherent limitations? .titutional limitations are also classifi exercise of taxation power. te and explain each t relates to a Constitutional whether the statemen ) Ifit is not a limitation to the taxing power, Exercise Di In the space provid limitation (C) oF inher indicate (N). jed for, indicate nt limitation (1 “| Non-assignment of taxes__ “Territoriality of taxation __ ames must be for public use 4, | Exemption of the property o! incometax emption of the revenues and assets of stock educational institution Non-delegati he taxing power __ Non-appropriation for religious purpose The requirement of absolute majority in the pa tax exemption law. Non-imprisonment for non-pi cor f religious institutions ‘non-profit, now (Chapter 1- introduction to Taxation [To] Taxpayers under the same crcumstance should be] treated equal both in terms of privileges and obligations. co. TE | Exemption from property taxes of religious, educational, - and charitable enti TIE Government income and properties are not objects of |_| taxation. [TR Each local government shal have the power to create its | own sown of revere [HET npreserpebiy in taxation 15 Non impairment of obligation and contacts 6 Guarantee of proportional stem of taxation — 17. International courte 18. Non-impairment of the jurisdiction of the Supreme Court to review tax cases. TS___ The government is not subject to estoppel 20. Imprisonment for non-payment of poll tx. ‘True or False 1 There should be direct receipt of benefit before one could be compelled top tres 2. Eminent domain involves confiscation of prohibited commodities to protecs ‘well-being of the people. Forisontal equity requires consideration of the circumstance of the taxpayer anes are the lifebload ofthe government. ‘Taxation isa mode of apportionment of government costs to the people. ‘The enercise of taxation power requires Constitutional grant. ‘Taxation is inherent in sovereignty. Police power is the most superior power of the government. Its exercise ne to be sanctioned by the Constitution {All nherent powers presuppose an equivalent form of compensation. 0. The reciprocal duty of support between the government and the POP underscores the basis of taxation ‘True or False 2 1. The scope of taxation is regarded as comprehensive, plenary, unlimited, # supreme ‘The Constitutional exemption of religious, charitable, and non-profit cemet™ churches, and mosques refers to income tax and real property tx. ‘Taxpayers under the same circumstance should be taxed diflerently. ‘Taxation is subject to inherent and Constitutional limitations. International comity connotes courtesy between nations, Collection of taxes requirement for due process ‘No one shall be imprisoned for non-payment of tax 2 prey ge oicon Teton sted dcr ee te gener to vere ks egatons sn ney nent cere qed peste mpi a. Bi government should tax itself ‘ olce- Theory: Part 4 ss tenon ait te ovement cae te eed OY sheet 4 decrne. _cthe sey to pay theory. Fen ftate the doce a opel nt at which tax is levied is also called « Incidence of taxation Assessment 2 Repu Pere en » tne blog kapprepdcly decibes tbe tare of a? i ei Se con 2 a senna linizon 4. Generally for public purpose 44. Which is correct? 4 Taxcondonation is a general pardon granted by the government. 1h. TheBIR has five deputy commissioners. The government can stil collect tax in disregard of a constitutional limitation because taxes are the lifeblood ofthe government. 4 The President of the Philippines can change tariff or imposts without necessity of calling Congress to passa law for that purpose. 5. AThe power to tax includes the power to exempt. The power to license includes the power to tax. Which is erue? a Aoniy, cAandB & Bonly Neither A nor B loternational double taxation bby any of the following except nat du can be mitigated lowir Frowsion of reciprocity provisions in tax laws Protsions in tax wr" Westies to orm regional wade blockage gaint the rest fee Nhs tot an abet of txation? Business ‘Pc prony Public properties 23 o— - Chapter 1 - Introduction to Taxation {8 The power to enforce proportional contribution from the people forthe of the government is 5p a. Taxation © Eminent domain bb. Police power Exploitation 9. This theory underscores that taxes are indispensable tothe existence. 2. Doctrine ofequtable recoupment ofthe, The ifeblood Doctrine © Thebenefi received theory 4 Thetlolmes Doctrine 10. A Taxation isthe rule, exception isthe exemption. B. Vague taxation laws ae interpreted liberally in favor ofthe government. Which is false? a Aonly Both AandB b. Bonly Neither Anor B 1. Statement 1: The benefit received theory presupposes that some taxpayers with the territorial jurisdiction ofthe Philippines will be exempted from paying tas Jong 2s they do not receive benefits from the government. Statement 2: The ability to pay theory suggests that some taxpayers may} ‘exempted from tax provided they do not have the ability to pay the same, Which statements true? a Only statement 1 b. Only statement 2 12, Selectthe incorrect statement. ‘a. The power to tax includes the power to exempt. . Exemption is construed against the taxpayer and in favor ofthe government Tax statutes are construed against the government in case of doubt. 4. Taxes should be collected only for public improvements. «¢ Both statements 1 and 2 Neither statement 1 nor 2 13. Which is not public purpose? a. Public education Transportation National defense 4.None ofthese 14. Which does not properly describe the scope of taxation? a. Comprehensive ‘¢ Discretionary b, Supreme Unlimited 15. All ofthese are secondary purposes of taxation except ‘a. Toreduce social inequality b. To protect local industries ‘€.Toraise revenue for the support ofthe government ‘d._ To encourage growth of local industries 2 chapter 1- Introduction to Taxation 1 te and pce : eee eter ey caus b. Bonly Neither A nor B en provision of the Constitution is double taxation believed to violate? A equal protection guarantee i progressive scheme of taxation Uniformity rule fk Bither Aor C 19, Which limitation of taxation is a Territoriality 1 Publicpurpose 20, Which tax exemption is irrevocable? Tax exemption based on contract ‘ Taxexemption based on the Constitution © Taxexemption based on law 4 Both Aand B 1, Whi is the concept of “situs of taxation” based? ‘International comity 4. Exemption of the government 2, Which statement i incorrect? 44 very person must contribute his share in government costs. | The existence of a government is expected to improve the lives of the people. © To government provides protection and other benefits while the people rovide support @ duos who are able to pay tax can enjoy the privileges and protection of i cae eso incorrect statement regarding taxes? The suigassaty for the continued existence ofthe government. sista nace go Neen citizen of the government, 1 - ney for the support ofthe State. TEU There shoul be pen "sae py! Pv nove rom the government before one i xe should be clece not be “ollected without unneces it "etait with thou unnecessary delay, butts cllection should 25 _— Chapter 1 - Introduction to Taxation 23, Statement 1: In the selection ofthe objects of taxation, the courts have no Inquire into the wisdom, objectivity, motive expediency, or necessity of ow iy ofatayi Which is correct? Statement 1 only Statement 2 only ©-Both statements Neither statement 24, Which of the following acts in taxation is administrative by nature? Determination of the amount to be imposed b. Fixing the allocation of the amount to be collected government and the national government Peoreen the I Levy or distraint of taxpayers’ property for tax delinquency Determining the purpose of the tax to impose 25, This refers to the privilege or immunity from a tax burden which others subject to: a. Exclusion ¢ Taxholiday b. Deduction d. Reciprocity 26. Which is not a legislative act? ‘a. Determination ofthe subject ofthe tax 'b._ Setting the amount ofthe tax & Assessment ofthe tax 4. Determining the purpose of the tax 27. Which of the following statements does not support the principle that tax iss subject to compensation or set-off? a. The government and the taxpayer are not creditors and debtors of each ati b. Tax is not in the nature of contract but it grows out of a duty wher taxpayers are bound to obey even without the personal consent of t taxpayer. Taxes arise from law, not from contracts. d. Both tax and debt partake the nature of an obligation. 28, Statement 1: Taxation isthe rule; exemption isthe exception. ae ‘Statement 2: Taxation may be used to implement the police power of the st a Histrue land Mare true b. Mistrue and I are not true annoth 29. Which ofthe following powers ofthe Commissioner of internal Revenue delegated? ‘2. The examination oftax return and the determination of tax due thereo® b. Torefund or credit tax liabilities in certain eases 26 ater 1 Introduction to Taxation “The power to compromise or abate any tax liability involving basic deficiency tax of P500,000 and minor criminal violations ‘oversea ruling ofthe Bureau of internal Revenue 4. The powertor go. When exerpton bee lie tior ‘construed against the government. ation applies since exemptions are z Fanaa il applies sine thsi am instance of exemption by omisso Exon applies since exemptions are construed against the taxpayer, Tate piles since obligation arising fom law cannot be presumed an honee construed against the government. ‘om a tax imposition is sllent or not clearly stated, which is b ‘ 21, at se a suport and protection F constaonalty pte purpose Necessity sz wen he provisions of tax awe are silent 35 othe taxabiity ofan item, which s rae ation applies since taxation is the rule, exemption is the exception. £ Eetinton apples since vague tax laws are construed against the vernment. Tatton applies duet the Lifeblood doctrine. 4. Exemption aplies since obligation arising from law is presumed: ignorance ‘ofthe law isnot an excuse. 53. Which snot legally tenable refusing to pay tax? 4-Absence of benefit from the government 8 Lackofjurisdietion a the taxing authority Prescription ofthe tax authority's right to collect d Allofthese Ain 34. Whats the primary purpose of taxation? & Toenforce contribution from its sul F Teauts cnttbutn fom its subjects for public purpose © Toachieve economic and social stability 4 Toregulate the conduct of business or profession Uta aa ony: Pare 2 tbl ates orb ‘te underscores Properties of the same class shal be taxed atthe same & Baalty in taxation Eauiy oftartion Gye rmy in taxation. None of these 27 = (Chapter 1 - Introduction to Taxation 2. The Constitutional Seen aption of religious or charitable institutions refers, & Realproperty tax ¢ Property taxand income tax Income tax Business tax 3. An educational instiution operated by a religious organiza equired by alocal goverment op rel proper ts the aceson ‘@ Yes, with respect to all properties held by such educational institution 1 Yes withreapette properties nat actualy devoted to edational pa No, with respects any properes held bysuch educational isto No, with respect to properses nt acai devoted 0 educitional prj 4. Which is nota Constitutional limitation? No tax law shall be passed without the concurrence of a majority, members of Congress. 7 b._Non-appropriation for religious purpose & No law impairing government obligations on contracts shall be passed, 4. Non-impairment of religious freedom 5. Which ofthe following is not an inherent limitation ofthe power to tax? ‘a Tax should be levied for public purpose. 1b. Taxation is limited to its territorial jurisdiction. ¢ Taxlaws shall be uniform and equitable. Exemption of government agencies and instrumentaliies. 6 The following are inherent limitations to the power of taxation except one. Chis the exception ‘a. Territoriality of taxes, . Legislative in character & Forpublic purpose d._Non-appropriation for religious purpose 7. The following are limitations of taxation: ‘A. Territoriality of taxation B._ Exemption ofthe government Taxation is for public purpose. D._Non-impairment of contracts E._Non-delegation of the power to tax Which ofthese are classified as both constitutional Cand E d.DandE and inherent limitations? 8. The provisions in the Constitution regarding taxation are a. Grants ofthe power to tax 28 oper = vdcton 10 Taraon itatons to the power tt Land maton the power & Grrdons agains doubetaation a y vrongnations to essen ax burden of er respective suBIecsS se agreement 2 3 oe ¢.Territoriality cipro i a Rector comity Tox minimisation He verona exemption of nonstok, nn-pofi educaonl ino 10.The resto fel property tncome ste losing iltive ofthe pi 1, Wh of tha leslie enactment a Re ne President cof the amount ete commodities au mg i lect taxes: ncomain private corporation t0 suring era Py of nace and the BIR sue regulation oF lings eee OS beyond the cope of tax aw he flowing violates Constitutional provisions? 22 le oof slares to priest or religious ministers employed by Fores ofthe Philippines 4. Imposing taxon properties of rel husvely used for religious Purposes «. Imposition olicense for the sale of religious literature SL Aiiortng the President of the Philippines to fix the rates of tarifls or imposts 19. nord o phase-out huge deficit, the President of the Philippines passed a law offering al taxpayers with previous tax delinquency to pay a minimum tax ‘exchange for rele from tax assessment in the period of delinquency. Is this a valid ‘ere of tation power? 2 Yes because the measure adopted is grounded c pon necessity. 2 Yes because he President is merely exercising his presidential discretion. §, No beese the power of tation non delegated because only the Department of Finance can issue such ruling «Property taxand income tax Business tax inciple of non-delegation? ist exclusively pertain to Congress ff impost on imported and a the Armed. igious institutions which are not directly and 1. Concerned wit the Phllppine, nTeasi8g unemployment rates in the country, the President of ta pages yo ngouraged the Philippine Senate to passa law granting special The Senate record ey ess who wil establish businesses in the country. ‘ely drafted the bil and passed to Congress for approval. 29 (Chapter 1 - Introduction to Taxation I this valid exercise of taxation power? 4 Yes Is the daceton of the President to adopt any mess REE eat prorcondtonsim theca. es. Any means beneficial w the pubic sre ou rem ier oul beeen og © Yes. The President's proposal will have to be finall | a wl have to befall approved an 4g eletsatre Theraleonnon-deegton ef cin wouldve No. Tax bills shall originate from the House of Representatives, Mola nen te i pas Covers oan elt scat n Bato Cy hg transplant to 2% tax based on receipts. Ram objected claiming thay a iduaaceseictad & scpercan arate st but nde en egret tes Pel cane eal aeenls eal as practice in Baguio City. The uniformity rule would not be violated. be i | peck fers erhpetayee tele oledirsanior Socal eerie te opts ed oar creer a pertained as 17. Congress passed a law subjecting government-owned and controlled corporate (GOCCs) to income tax. Is the law valid? Yes, because all government agencies and instrumentalities are subject 10% b. Yes, because GOCCs are not government agencies and are essentsh ‘commercial in nature. j [No because government agencies are exempt. This would pose a violation the equality clause inthe constitution. No, because GOCCs are constitutionally exempted from paying taxes. mngress ae ine Congress enacted a law requiring foreign banks to withhold jer country and to remit the same © a 18. The Philippi ‘earned by Filipino residents in th Philippine government. 30 = introduction to Taxation tion power? ks are withl chapter? Z ve lleled wt ‘because foreign ban! 1 Tete aes on le co Seay ere ¢ Soe tera ne Telit i tS tin repr in the territorial jurisdiction ts to subjects of foreiR® soft fl 19, wm tay Bal 2 nates mon Ie ee panasnan 4 ¢ aopery tes es motion bisare approved BY 2c eres OF Congres 3 ay hares othe epi BS ers FONE rum & ahem presents consitaing Fring not a conatiatonal imitation ofthe power tax? 2 en of baton oF contracts Fer atequl protection ote aw ae no eis Purposes Remaeloton of pie power vested P100,000,000 in a Philippine local bank and 21, Which ofthe 122. The Japanese government tamed P10,000,000 interest. Which is correct? 2 The income i exempt on grounds of territoriality. The income is exempt due to international comity. © The income is subject to tax on the basis of sovereignty. 4 The income is subject to tax because the income is earned within the Prulippines Multiple Choice - Theory: Part 3 1 Select the correct statement. © bent received theory explains that the government is obliged to serve 8 Therreinte ts benefiting from the tax collection from ts subjects thestae, BPO" underscores that taxation is the most superior power of © The police power of ower ofthe «latin ' State is superior to the non-impairment clause of the The power of er of taxation is superi Const Superior to the non-impairment clause of the 31 -_ CChapter 1 - introduction to Taxation 2 When aleislative body taxes persons and property rights andy the same taxable category at the same rate, this is referred to ay rn eRe ‘the constitutional limitation of COmplia, a Equity © Due process b. Uniformity 4. Equal protection clase 3. Which isnot alegisative act? a. Assessment ofthe tax © Determination of th b._ Setting the amount ofthe tax 4. Determining the pu 4, Theinherent powers ofthe State are similar in the following re t Thay ae inherent othe existence ofthe State eTesPeet ape ey are exercisable without the need for an express Con ¢ Allare not exercised by private entities. eon —_ 4. Theyare exercised primarily by the legislature. re subjctof they, UTPOSC Of the ty 5. Which is mandatorily observed in implementing police power? a Public interest «Public use '. Just compensation All of these 6. Which is considered in the exercise of eminent domain? a Publicuse Both aandb b. Justcompensation Neither anor b ‘The general power to enact laws to protect the well-being ofthe peopleiscalé a. Police power Taxation b. Eminent domain d.Allof these 8, Which of the following entities will least likely exercise the power of emt domain? a. Electric cooperatives b. Water cooperatives ¢ Telecommunication business 4. Transportation operators 9. Inexercising taxation, the government need not consider a. Inherent limitations «¢ Due process of law 'b. Just compensation 4. Constitutional limitations 110. Licensing of business or profession isan exercise of a. Police power ‘¢ Eminent domain b. Taxation d.Allofthese ” . for privet 1 Sl errr to the power take pi propery Sher pying ust compensation = a err Rtigthe mst superior pamer of he Tmlecon tenor subiet™ 2 apter “4 Introduction to Taxation ‘an express taxation power shall be exercised by Congress even without an ©

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