Taxation MCQ (1-10) 1. Which of the following violations cannot be subject to compromise penalties? a. Failure to keep/preserve books of accounts and accounting records. b. Failure to keep books of accounts or records in native language or English. c. Failure to have books of accounts audited and have financial statements attached to income tax return certified by independent CPA. d. Keeping two sets of books of accounts or records. ANSWER: D
2. One of the following is not a major business internal revenue tax in the Tax Code. a. Value-Added Tax b. Excise Tax c. Income Tax d. Percentage Tax ANSWER: C
3. In cases of deductions and exemptions on income tax returns, doubts shall be resolved: a. Strictly against the taxpayer; b. Strictly against the government; c. Liberally in favor of the taxpayer; d. Liberally in favor of the employer. ANSWER: A
4. The following, except one, may claim personal exemptions: a. Non-resident alien not engaged in trade or business in the Philippines; b. Non-resident alien engaged in trade or business in the Philippines; c. Resident alien; d. Citizen. ANSWER: A
5. Value-added tax is an example of: a. Graduated tax; b. Progressive tax; c. Regressive tax; d. Proportional tax. ANSWER: D
6. Lots being rented when subsequently sold are classified as: a. Capital assets; b. Liquid assets; c. Ordinary assets; d. Fixed assets. ANSWER: C
7. Proceeds of life insurance includible in the taxable gross estate. a. Insurance proceeds from SSS or GSIS; b. Amount receivable by any beneficiary irrevocable, designated in the policy by the insured; c. Amount receivable by any beneficiary designated in the insurance policy; d. Proceeds of group insurance taken out by a company for employees. ANSWER: C
8. The following are requisites for vanishing deductions to be allowable, except one: a. The estate tax of the prior succession must have been finally determined; b. The present decedent died within five (5) years from the date of the death of the decedent; c. The property with respect to which deduction is sought can be identified; d. The property must have formed part of the gross estate situated in the Philippines of the prior decedent. ANSWER: D
9. The following are the requisites of a donation for purposes of the donor's tax, except one: a. Capacity of the donor; b. Capacity of the donee; c. Delivery of the subject matter of gift; d. Donative intent. ANSWER: B
10. The following are the requisites in order that claims against the decedent's estate may be deductible, except: a. They must be existing against the estate; b. They must be reasonably certain as to amounts; c. They must have been prescribed; d. They must be enforced by the claimants. ANSWER: C
Taxation MCQ (11-20) 11. The Commissioner or his authorized representative is empowered to suspend the business operations and temporarily close the business establishment of any person for: a. Failure to issue receipts or invoices of a VAT-registered entity. b. Failure to file a VAT-return for VAT-registered person as required by the Tax Code c. Understatement of taxable sales or receipts by thirty percent (30%) or more of his correct taxable sales or receipts for the taxable quarter d. All of the above ANSWER: D
12. The VAT on goods a. Is a selling expense of the trader b. Is imposed on goods for domestic consumption c. It is not based on net sales d. Maybe due even if there is no actual sale of the goods ANSWER: D
13. A tax on the right or privilege to enter places of amusement a. VAT b. Franchise tax c. Amusement tax d. Income tax ANSWER: C
14. One of the following is not subject to amusement tax on gross receipts a. Disco houses b. Cockpits c. Professional basketball d. Bowling alleys ANSWER: D
15. Cash dividend received by a non-resident corporation from a domestic corporation is a. Exempt from income tax b. Subject to final tax c. Part of taxable income d. Partly exempt, partly taxable ANSWER: B
16. One of the following does not form part of gross income a. Interest b. Royalties c. Annuities d. Gift, bequest and devices ANSWER: D
17. Which of the following taxes may be deducted from gross income a. Special assessment b. Transfer tax c. Documentary stamp tax d. Income tax ANSWER: C
18. Shares, obligations, bonds issued by a foreign corporation shall be considered as intangible personal property situated in the Philippines if, how many percent of its business is located in the Philippines? a. 33% b. 50% c. 75% d. 85% ANSWER: D
19. The following are examples of non-taxable compensation for injuries, except a. Actual damages for injuries suffered b. Compensatory damages for unrealized profits c. Moral damages for grief, anxiety and physical sufferings d. Exemplary damages ANSWER: B
20. Which of the following fringe benefits is taxable? a. Those benefits which are given to rank and file employees b. Contributions of the employer for the benefit of the employee to retirement, insurance and hospitalization benefit plans c. Benefits given to supervisory employees under a collective bargaining agreement d. De minimis benefits ANSWER: C Taxation MCQ (21-30) 21. The municipal council passed an ordinance imposing an occupation tax or profession or occupation of a "plant accountant." A is the only person with such an occupation in the municipality. Which of the following is correct? a. A can successfully challenge the validity of the ordinance as being discriminatory since he is the only adversely affected. b. The ordinance violates the constitutional rule of equality in taxation. c. The ordinance is a "class legislation" since it does not subject to occupation tax the other accountants. d. The ordinance is a valid exercise of the council's power to enact laws to raise revenue under the Local Government Code. ANSWER: D
22. A non-resident alien donor cannot claim one of the following deductions from gross gift: a. Encumbrance on a property donated which is assumed by donee b. Dowry c. Gift to the national government for public purpose d. A requirement by the donor to the donee, which would result in diminution of file property donated ANSWER: B
23. Not a deduction from gross estate for purposes of determining net distributable estate a. Vanishing deductions b. Actual medical expenses c. Losses d. One-half share of the surviving spouse on the net conjugal property ANSWER: A
24. For purposes of computing minimum corporate income tax of a corporation engaged in the sale of services, cost of services means: a. Salaries and employees' benefits of personnel directly rendering the service b. Cost of facilities directly utilized in providing the services c. Cost of supplies d. All of the above ANSWER: D
25. The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the Tax Code or other laws or positions thereof administered by the BIR is vested in the: a. Regional Trial Court b. Court of Tax Appeals c. Secretary of Finance d. Commissioner of Internal Revenue ANSWER: D
26. The Secretary of Finance, upon accommodation by the Commissioner of Internal Revenue, issued a Revenue Regulation using gross income as the tax base for corporations doing business in the Philippines. Is the Revenue Regulation valid? a. Yes, the Secretary of Finance has the power to issue Revenue Rules and Regulations b. Yes, gross income taxation over corporation is valid c. No, the Secretary of Finance has no power to amend the NIRC d. No, only the Commissioner of BIR has the authority to make revenue rules and regulations ANSWER: C
27. Which of the following cases falls within the jurisdiction of the Court of Tax Appeals? Except: a. Criminal action for violation of the NIRC b. Question of whether or not to impose a deficiency tax assessment upon a taxpayer c. Appeal from undisputed tax assessment d. Action for refund of real property tax ANSWER: B
28. Which of the following losses is deductible? a. Loss on wash sale b. Loss on merger c. Loss in transfer of property to a corporation solely for stock resulting in control d. Loss on transfer of property to a controlled corporation solely for stock ANSWER: D
29. Interest income received by a foreign government of financial institutions organized by a foreign government from its Philippine bank deposits shall be a. Subject to the 20% final tax on passive income b. Subject to 32% final tax starting year 2000 c. Exempt from Philippine income tax d. Subject to 5% tax on gross income allowed to PEZA-registered enterprises ANSWER: C
30. One of the following inhabitants is not required to pay basic community tax a. Engaged in business or occupation b. Owns real property with aggregate assessment value of one thousand pesos (P1,000) or more c. Required by law to file an income tax return d. Diplomatic and consular representatives
ANSWER: D
