!

/ 1. Statement 1: Only those who can and do pay taxes can

enjoy the privilege and protection given to a citizen by & 7. Statement 1. Goodwi11 results to taxable income only
the governmenti . when the business to which the goodwill is attached in
Statement 2. A tax is a compulsory payment to the sold.T
government in return for which the payor gave no O
Statement 2. Sale of foreign shares with 55% operations
definite, specific commodity or service. t in the Philippines is determined to be partly within and
a. False, False b. True, True without.
Oc. False, True d. True, False a. False, False b. True, True
c. False, True ° d. True, False
/ 2. Statement T I: Constitutional provisions relating to the
power of taxation do not operate to the grants of power
/ 8. Statement 1. The receipt of the dividend where the
to the government, they merely constitute limitations
upon a power. which would otherwise be practically
O r
stockholder becomes richer after the declaration of the
dividend constitutes taxable income.
without limit. + Statement 2. Income shall not be taxable unless
Statement 2. Taxes may be decreased in periods of separated or removed from the capital or labor that bore
prosperity to curb spending power. ypg
it.
a. False, False b. True, True
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c. False, True d. True, False
i 9. Statement. I. A foreign corporation which operates
3. Statement 1: Taxes cannot be subject to legal and conducts business in the Philippines through a
compensation or- set-off unless both claims of the permanent establishment is a foreign corporation
government and the taxpayer against each other have engaged in trade or business. "
already become due, demandable, and liquidated Statement 2. Citizens staying abroad for a period of at

A
Statement 2: A debt is generally based on a contract, least 180 days are considered non-residents. F
express or implied, while a tax is based on law.
a. False, False
c. False, True
0b. True, True
d. True, False
&
10. Statement 1. Aliens who are staying in the
Philippines for not more than one year but more than
180 days are deemed non-resident aliens engaged in

/4. Statement 1. Poll tax may properly be levied upon

persons who are inhabitants or residents of the State,
business. t
Statement 2. The distribution of stock dividends by a
whether citizens or not.i corporation to its shareholders shall not be subject to tax.

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Statement 2. With respect to property taxes, real estate is

subject to taxation in the State in which it is located 11. A tax is laid by some rule of apportionment
whether the owner is a resident or non-resident, and is according to which the persons share public burden
taxable only there.+ a. Generally payable in money
a. False, False O b. True, True b. Levied on persons or property
c. False, True d. True, False c. Proportionate in character

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d. Enforced contribution

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5. Statement 1. Government has burden to show clearly
that assessment is illegal or improper.F 12. Tax which is demanded or exacted from the very
Statement 2. The taxpayer's tax liability cannot be person who also shoulders the burden of the tax. (choose
determined based on records of other taxpayers engaged the incorrect one)
in the same line of business.E a. Custom duties
Oa. False, False b. True, True b. Income Tax
c. False, True d. True, False c. Estate Tax

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d. None of these
6. Statement 1. A transaction whereby nothing of
exchangeable value comes to or is received by, the
taxpayer does not give rise to or create taxable income.t
Statement 2. Where theG condonation did not make the
debtor's assets greater than they were before, the debtor
realized no taxable income because of the condonation 13, which of the following is incorrect?
and is, as such, not subject to Income taxation.t
a. False, False
c. False, True
Ob. True, True
d. True, False
b. Income tax in graduated
c. Real estate tax as localft
a. Real estate tax is proportional
! !
d. None of these
✓ o
19. Which is not a function of the BIR?
A. Identification of taxable objects
14. The following does not constitute double taxation, R. Collection of tax
except C. Levy of real property when the taxpayer is delinquent
a. A tax on a mortgage as personal property when the D. None of these
mortgaged property is also taxed at its full value as real
estate. 20. . The Municipality of Oslob in the Province of Cebu
b. A tax upon a corporation for its property and upon its conducts Butanding Watching Activity operations for
-

shareholders for their shares visiting tourists. It also provides guides to assist the
c. A tax upon a corporation for its capital stock as a tourists. For such services, the municipality charges and
whole and upon the shareholder for their shares collects fees from the tourists. Are these fees taxable?
d. All of the above A. No. The municipality is a political subdivision of the
National Government and thus exempt from taxes
15. The Commission of Internal Revenue may delegate o D. Yes. The income derived by the municipality is not in

✓
the powers rested in him under the pertinent provisions the exercise of its essential government functions, but
of the Tax Code to any of such subordinate officials pursuant to its proprietary function.
except: C. It depends whether the fees received shall be used for
a. the power the recommend the promulgation of rules the benefit of the residents of the municipality
and regulations by the Secretary of Finance D. None of the above
b. the power to enforce all forfeitures, penalties and fines
connected therewith 21. The following does not constitute income, except

I -
c. the power to give effect to and administer the A. A mere increase in the value of the property
supervisory and police power H. Excess of depreciated replacement cost over the cost
d. none of these or book value of on asset
C. Mama pig gave birth to baby pig
16. The manufacturer or producer upon where the tax D. None of those
has been imposed, fearing the loss of his market if he

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should add the tax to the price, pays the tax. He then 22. A German residing in the United States receives a
endeavors to recoup the tax paid by making his divided from a Philippine corporation, the following

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production more efficient and lowering his cost of statement is correct, except
production. A. Dividend received may be taxed in Germany
a. Capitalization B. Dividend received may be taxed in the United States
b. Shifting C. Dividend received may be taxed in the Philippines

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c. Transformation D. None of these
d. Avoidance
23. In the first year, a domestic corporation did not
17. A taxpayer does not want to pay his taxes. Which of derive any income or gain as it had not yet started
the following cannot be accepted as a reason for such commercial operations in said year. However, it was
refusal to pay taxes? assessed as a deficiency tax by the BIR. The BIR found
a. His right to due process was violated that the corporation overstated its pre-operating
b. The right of the state to assess taxes has prescribed expenses, some of which were unsubstantiated. Should
c. He cannot see any benefit as the government is corrupt such disallowed expenses give rise to income tax?
d. The tax agency does not have jurisdiction to collect A. No income tax shall be imposed in the absence of
the tax profit realized or received actually or constructively.
B. The disallowance of the pre-operating expenses, if
18. . Taxation is a very broad power of a state because proper, will result to income tax.
A. it is an inherent power of a state C. The BIR, in all instances, is correct in translating and
B. A state's legislature can impose a tax at any amount subjecting such disallowed expenses to income tax.
on whatever property or activity it may choose D. None of these

←
C. The stages of taxation encompass the imposition,
assessment and collection of taxes 24. The following individuals shall be subject to tax
. only
D. The tax revenues which form part of the general fund on sources within, except
of the government can be used for whatever purpose as A. Filipino citizen, who resides in California, USA,
long as it is for a public purpose doing business in the US
 B. Chinese citizen, resident of Hong Kong, with
business in Hong Kong
* II. Niño is born to both Filipino parents and has never
left the country since birth. He is working online for a
①
C. Filipino citizen, resident of Quezon City, doing
business in Hong Kong
company located in the US. R c
III. Steph is born to a Filipino mother and an American
D. None of these father. She worked on an international cruise ship in the
US. NRC
* 25. J. Kimura, a Japanese citizen, lives in Tokyo, Japan,
with his family. In February of the year 2022, he was
IV. Sha is born to both Chinese parents residing in Japan.
She owns resident Foreign stocks which she sold in the
designated the resident auditor of a Japanese firm doing Philippines.N R A
business in the Philippines. He transferred his residence A. Only Steph will have no income taxable in the
to Manila and has since then lived in the Philippines. In
March 2023, Kimura went to Hong Kong to experience
Disneyland. The following statement is not incorrect,
Philippines×
=
D. Niño, Steph, and Sha will have no income taxable in
the Philippines.i
Fong
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except m C. Ace, Niño, Steph and She have taxable income in the
A. Kimura is a resident alien in 2022 since his intention Philippines
to come to the Philippines is to work in the country. D. None of the choices
B. Kimura is a resident alien in 2023 residing in the
country for more than one year after arrival. 30. Patatew, is a resident alien. The following income
C. Both A and B will be subject to tax in the Philippines, except
g
D. Neither A nor B O
A. Business income of his laundry store in France

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B. Rent income on his properties in Italy
26. Which of the following exhibits-vertical equity? C. Stock dividends from a domestic corporation
a. Baby Shark has a P200,000 income while Mama D. None of the choices
Shark has P400,000. In taxing income, the government
should tax Baby Shark more than Mama Shark.
b. Baby Shark has a P200,000 income while Mama Part II. Problem Solving: Supply your answer to the
Shark has P400,000. In taxing income, the government following problems. Show your solution in proper
should tax Mama Shark more than Baby Shark.
C. Baby Shark and Mama Shark have an income of
form and encircle your final answer.
P200,000. Baby Shark is single without a child while
Mama Shark is married with four children. In taxing 31. Baby M. Korap received the following income
Income, the government should tax Baby Shark more in 2023:
than Mama Shark. Rent, Philippines- 10K
D. Baby Shark and Mama Shark have income P200,000.
Baby Shark in single without a child while Mama Shark
Ront, Hong Kong- 20K
is married with four children. In taxing income, the
government should tax Mama Shark more than Baby
Shark. Interest, peso deposit, BDO- 10K

÷
27. All are ad valorem taxes, except Interest, U9D deposit, BDO ($1,000 x P40). - 40k
A. Poll tax
B. Estate tax
Interest, deposit in HK (HK$1, 000 x P5)- 5k
C. Real property tax
D. Capital gains tax on real property capital asset
28. Tax as to purpose is classified as an Prize (cash) won In a local contest- 8k
A. Fiscal or regulatory Prize (TV) won In a local lottery valued at- 15k
B. Direct or indirect tax Prize won in contest in US- 30k
C. National or local tax Lotto winning in US- 10k
D. Specific or ad valorem tax
Dividend, domestic company- 60k
29. Which of the following is correct?
1. Ace is born to both Filipino parents and is working as
a nurse in the Philippines. A N Determine income taxable if the taxpayer is:
a. a resident citizen
b. a non-resident citizen
 2020: Cost 2.4M; Payment Received 2M;
32. Senbato Y. Gamit has the following income: Percentage of Completion 30%
Groom income from business, Philippines-
P220,000 2021: Cost 2.7M; Payment Received 3M;
Percentage of Completion 65%
Rent from building, located in the Philippines-
95,000 2022: Cost 2M; Payment Received 2.5M;
Percentage of Completion 90%
Rent from commercial building Located in Japan-
70,000 2023: Cost 800k; Payment Received 2.5M;
Percentage of Completion 100%
Dividend from Confidential Funds, a foreign
company- 60,000 Determine the income to be reported per year under
the percentage of completion
Royalties received from Confidential funds for use
of its patent in Japan- 30,000 54. Angela Eunice, leased a lot to Ebmary, lessee
for 15 years beginning January 1, 2021 subject to
Sale of Nakaw Inc, a foreign company (cost: the following terms and conditions:
P20,000). -100,000
-Lessee will pay rental of P20,000 per month
Gain on sale in the Philippines of land located in -Lesee will construct a building on the lot to be
Japan- 300,000 owned by the lessor when the lease expires.
Cost of building completed on Juiy 1, 2023
Gain on sale /n the Philippines of toys purchased in 22,800,000
Japan- 40,000 life of building- 20 years
Compute the taxable income of Angela Eunice for
2023 under the spread-out method?
Additional Information:
5. A truck driven by Leo crashed into the farmhouse
of Carms, causing fire which destroyed Carms’
crops ready for harvesting. Carms also suffered
second degree burns and was hospitalized for 10
days. Carms recovered from damages caused by
Leo as follows:

Determine the income taxable if the taxpayer is a: Cost of the farm- 100k
a. resident citizen Cost of the 2 carabaos which died in the fire- 20k
b, non-resident citizen Market value of the crops- 40k
Loss of income which Carms could have earned- 5k
13. Sars La-ambag, a building contractor, undertook Exemplary damages- 10k
the construction of an office building for Deeped Cost of hospitalization- 8k
Corporation at a total contract price of P10,000,000. Moral damages- 50k
The work started in July, 2020, and was completed Determine the amount to be included as taxable
In June 2023, or after 3 years. The following income.
information appears in the books of Sara La-
ambag :
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