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TEST BANK-INCOME TAXATION

CHAPTER 1-GENERAL PRINCIPLES AND CONCEPTS OF

TAXATION

A.MULTIPLE CHOICE:

1. THE PROCESS BY WHICH THE SOVEREIGN RAISES INCOME TO DEFRAY THE EXPENSES OF THE GOVERNMENT IS CALLED- (RPCPA)

A. SUBSIDY B. TARIFF C. TAXATION D. TRIBUTE

2. ONE OF THE CHARACTERISTICS OF INTERNAL REVENUE TAX IS THAT THEY ARE-(RPCPA)

A) CRIMINAL IN NATURE B) PENAL IN NATURE C) POLITICAL IN NATURE

D) GENERALLY PROSPECTIVE IN APPLICATION

3. IN CASE OF CONFLICT BETWEEN THE TAX LAWS AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)-(RPCPA)

A) BOTH TAX LAWS AND GAAP SHALL BE ENFORCED B) GAAP SHALL PREVAIL OVER TAX LAWS

C) TAX LAWS SHALL PREVAIL OVER GAAP

D) THE ISSUE SHALL BE RESOLVED BY THE COURT

4. WHICH OF THE FOLLOWING HAS NO POWER OF TAXATION?(RPCPA)

A) PROVINCES B) CITIES

C) BARANGAYS D) BARRIOS

5. “SCHEDULAR SYSTEM OF INCOME TAXATION” MEANS(RPCPA)

A) ALL TYPES OF INCOME ARE ADDED TOGETHER TO ARRIVE AT GROSS INCOME

B) SEPARATE GRADUATED RATES ARE IMPOSED ON DIFFERENT TYPES OF INCOME

C) CAPITAL GAINS ARE EXCLUDED IN DETERMINING GROSS INCOME

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D) COMPENSATION INCOME AND BUSINESS/PROFESSIONAL INCOME ARE ADDED TOGETHER IN ARRIVING AT GROSS INCOME

6. ONE OF THE FOLLOWING IS A PRIMARY PURPOSE OF TAXATION

A)PROTECTION OF LOCAL INDUSTRIES AGAINST FOREIGN COMPETITION THROUGH IMPOSITION OF HIGH CUSTOMS DUTIES ON IMPORTED GOODS

B)REDUCTION OF INEQUALITIES IN WEALTH AND INCOME BY IMPOSING PROGRESSIVELY HIGHER TAX RATES

C) TO SECURE REVENUE FOR THE SUPPORT OF THE GOVERNMENT

D) STRENGTHENING OF ANEMIC ENTERPRISES BY GIVING TAX EXEMPTION

7. WHICH OF THE FOLLOWING IS NOT A SECONDARY PURPOSE OF TAXATION?

A) TO SERVE AS KEY INSTRUMENT OF SOCIAL CONTROL

B) TO EFFECT A MORE EQUITABLE DISTRIB UTION OF WEALTH AMONG PEOPLE

C) TO ACHIEVE SOCIAL AND ECONOMIC STABILITY

D) TO RAISE REVENUE TO DEFRAY THE NECESSARY EXPENSE OF THE GOVERNMENT

8. WHICH IS THE BEST ANSWER? A TAX REFORM AT ANY GIVEN TIME UNDERSCORES THE FACT THAT-(RPCPA)

A) TAXATION IS AN INHERENT POWER OF THE STATE B) TAXATION IS ESSENTIALLY A LEGISLATIVE POWER C) TAXATION IS A POWER THAT IS VERY BROAD

D) THE STATE CAN AND SHOULD ADOPT PROGRESSIVE TAXATION

9. THE LEGISLATIVE BODY CAN IMPOSE A TAX AT ANY AMOUNT UNDERSCORES THE LEGAL DICTUM THAT TAXATION IS – (RPCPA)

A) AN INHERENT POWER OF THE TAX B) A VERY BROAD POWER OF THE STATE C) ESSENTIALLY A LEGISLATIVE POWER D) FOR PUBLIC PURPOSE

10. ALL OF THE FOLLOWING, EXCEPT ONE, ARE BASIC PRINCIPLES OF THE SOUND TAX SYSTEM

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B) THEORETICAL JUSTICE

C) ADMINISTRATIVE FEASIBILITY D) INHERENT IN SOVEREIGNTY

11. UNDER THIS BASIC PRINCIPLE OF SOUND TAX SYSTEM, THE GOVERNMENT SHOULD NOT INCUR A DEFICIT-(RPCPA)

A) THEORETICAL JUSTICE

B) ADMINISTRATIVE FEASIBILITY C) FISCAL ADEQUACY

D) NONE OF THE ABOVE

12. THE FOLLOWING, EXCEPT ONE, ARE BASIC PRINCIPLES OF A SOUND TAX SYSTEM

A) IT SHOULD BE CAPABLE OF BEING EFFECTIVELY ENFORCED B) IT MUST BE PROGRESSIVE

C) SOURCES OF REVENUE MUST BE SUFFICIENT TO MEET GOVERNMENT EXPENDITURES AND OTHER PUBLIC NEEDS

D) IT SHOULD BE EXERCISED TO PROMOTE PUBLIC WELFARE

13. WHICH OF THE FOLLOWING IS NOT ONE OF THE CANONS OF A SOUND TAX SYSTEM?

A) QUANTIFIABILITY B) EQUALITY

C) CERTAINTY D) CONVENIENCE

14. THE POWER OF TAXATION CAN ONLY BE EXERCISED BY THE LAWMAKING BODY

A) SUBJECT TO CONSTITUTIONAL AND INHERENT LIMITATIONS B) EQUALITY OR THEORETICAL JUSTICE

C) LEGISLATIVE IN CHARACTER D) INHERENT IN SOVEREIGNTY

15. THE PRESIDENT OF THE PHILIPPINES AND THE PRIME MINISTER OF JAPAN ENTERED INTO AN EXECUTIVE AGREEMENTIN RESPECT OF A LOAN FACILITY TO THE PHILIPPINES FROM JAPAN WHEREBY IT WAS STIPULATED THAT INTEREST ON LOANS GRANTED BY PRIVATE JAPANESE FINANCIAL INSTITUTIONS IN THE PHILIPPINES SHALL NOT BE SUBJECT TO PHILIPPINE INCOME TAXES. WHAT BASIC CHARACTERISTIC OF TAXATION HAS BEEN VIOLATED BY THIS AGREEMENT?

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A) INHERENT LIMITATION B) THEORETICAL JUSTICE

C) LEGISLATIVE IN CHARACTER D) ADMINISTRATIVE FEASIBILITY

16. WHICH STATEMENT GIVES THE CORRECT ANSWER? THAT A FEASIBILITY STUDY NEEDS OR NEED TO LOOK INTO THE TAXES OF DIFFERENT POLITICAL SUBDIVISIONS OF GOVERNMENT WHICH MAY BE ALTERNATIVE SITES OF BUSINESS BECAUSE-(RPCPA)

A) PROVINCES, CITIES AND MUNICIPALITIES MUST HAVE UNIFORM TAXES BETWEEN AND AMONG THEMSELVES

B) THE LOCAL TAXES OF A POLITICAL SUBDIVISION NEED NOT BE UNIFORM WITH THE LOCAL TAXES OF ANOTHER POLITICAL SUBDIVISION

C) BUSINESSES THAT ARE SUBJECT TO NATIONAL TAXES ARE EXEMPTED FROM LOCAL BUSINESS TAXES

D) LOCAL BUSINESS TAXES MAY BE CREDITED AGAINST NATIONAL BUSINESS TAXES

17. STATE,MENT 1:THE POWER OF TAXATION IS INHERENT IN SOVEREIGNTY BEING ESSENTIAL TO THE EXISTENCE OF EVERY GOVERNMENT. HENCE, EVEN IF NOT MENTIONED IN THE CONSTITUTION, THE STATE CAN STILL EXERCISE THE POWER.

STATEMENT 2:IT IS ESSENTIALLY A LEGISLATIVE FUNCTION. EVEN IN THE ABSENCE OF ANY CONSTITUTIONAL PROVISION, TAXATION POWER FALLS TO CONGRESS AS PART OF THE GENERAL POWER OF LAWMAKING.-(RPCPA)

A) FALSE, FALSE B) FALSE, TRUE C) TRUE, TRUE D) TRUE, FALSE

18. THOSE RESTRICTIONS ON THE EXERCISE OF THE POWER OF TAXATION THAT AREW FOUND IN THE CONSTITUTION OR IMPLIED FROM ITS PROVISIONS

A) THEORETICAL JUSTICE

B) LEGISLATIVE IN CHARACTER C) INHERENT LIMITATIONS

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19. WHICH OF THE FOLLOWING STATEMENTS IS NOT CORRECT?-(RPCPA)

A) TAXES MAY BE IMPOSED TO RAISE REVENUE OR TO PROVIDE DISINCENTIVES TO CERTAIN ACTIVITIES WITHIN THE STATE

B) THE STATE CAN HAVE THE POWER OF TAXATION EVEN IF THE CONSTITUTION DOES NOT NECESSARILY GIVE IT THE POWER TO TAX

C) FOR THE EXERCISE OF THE POWER OF TAXATION, THE STATE CANJ TAX ANYTHING AT ANY TIME

D) THE POWER OF TAXATION IN THE PHILIPPINE CONSTITUTION ARE GRANTS OF POWER AND NOT LIMITATIONS ON TAXING POWERS

20. ONE OF THE FOLLOWING IS NOT AN INHERENT LIMITATION ON THE EXERCISE OF THE POWER OF TAXATION-

A) INTERNATIONAL COMITY B) DOUBLE TAXATION

C) NON-DELEGATION OF THE LEGISLATIVE POWER TO TAX D) TERRITORIALITY

21. THE CITY COUNCIL PASSED AN ORDINANCE IMPOSING AN OCCUPATION TAX ON AN AIRCONDITIONING TECHNICIAN. CONDE IS THE ONLY PERSON WITH SUCH OCCUPATION IN THE CITY. HE CHALLENGED THE VALIDITY OF THE ORDINANCE AS BEING DISCRIMINATORY SINCE HE IS THE ONLY ONE ADVERSELY AFFECTED.

A) THE CONTENTION OF CONDE IS TENABLE

B) THE ORDINANCE IS UNCONSTITUTIONAL BECAUSE CONDE IS DENIED OF HIS RIGHT TO EQUAL PROTECTION OF LAW

C) THE CONTENTION OF CONDE IS NOT JUSTIFIED BECAUSE THE RULE ON UNIFORMITY IS NOT VIOLATED CONSIDERING THAT THE ORDINANCE WOULD ALSO IMPOSE ON ALL AIRCONDITIONING TECHNICIAN WHO MAY COME WITHIN THE JURISDICTION OF THE CITY

D) THE ISSUE ON VALIDITY OR INVALIDITY OF THE ORDINANCE SHOULD BE SET ASIDE

22. TREATING PERSONS WHO ARE SIMILARLY SITUATED IN THE SAME MANNER-

A) UNIFORMITY OF TAXATION B) EQUALITY OF TAXATION C) DUE PROCESS OF LAW

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23. WHICH OF THE FOLLOWING IS VIOLATIVE OF THE UNIFORMITY RULE IN TAXATION?

A) DIFFERENT TAX RATES ON BOARDING STABLES FOR RACEHORSES AND BOARDING HORSES THAT ARE NOT FOR RACING

B) WHOLESALE DEALERS IN OIL ARE SUBJECT TO OCCUPATION TAX WHILE WHOLESALE DEALERS IN OTHER ARTICLES SCU AS SUGAR, BACON, COAL, IRON AND OTHER THINGS ARE NOT SO SUBJECT

C) A ROAD USERS’ TAX IMPOSED ON ALL MOTOR VEHICLES REGISTERED AND OPERATING IN THE CITY OF MANILA BUT DOES NOT SUBJECT VEHICLES NOT REGISTERED THEREIN BUT ALSO OPERATING TEMPORARILY IN SAID CITY

D) A TAX OF P2 PER SQM OR FRACTION THEREOF IS IMPSED ON EVERY BILLBOARD OR SIGN ANYWHERE IN THE COUNTRY

24. THE LUNG CENTER OF THE PHILIPPINES, A CHARITABLE INSTITUTION, IS ERECTED IN THE MIDDLE OF A 12-HECTARE LOT:

I. A BIG SPACE AT ITS GROUND FLOOR IS BEING LEASED TO PRIVATE PARTIES, FOR CANTEEN AND SMALL STORE SPACES, AND TO MEDICAL OR PROFESSIONAL PRACTITIONERS WHO USE THE SAME AS THEIR PRIVATE CLINICS FOR THEIR PATIENTS WHOM THEY CHARGE FOR THEIR PROFESSIONAL FEES.

II. THE REST OF THE PORTIONS OF THE BUILDING ARE USED FOR ITS PATIENTS, WHETHER PAYING OR NON-PAYING

III. ALMOST ½ OF THE ENTIRE AREA OF THE LOT ON THE LEFT SIDE OF THE BUILDING IS VACANT AND IDLE

IV. A BIG PORTION ON THE RIGHT SIDE IS BEING LEASED FOR COMMERCIAL PURPOSES TO A PRIVATE ENTERPRISE KNOWN AS THE ELLIPTICAL ORCHIDS & GARDEN CENTER

WHICH PORTION IS SUBJECT TO REAL PROPERTY TAX?

A) I ONLY B) I AND II C) III AND IV D) I, III AND IV

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25. STATEMENT 1:THE CONSTITUTIONAL EXEMPTION ON INCOME TAXES, PROPERTY TAXES AND CUSTOMS DUTIES IS ALLOWED ON NON-STOCK, NON-PROFIT EDUCATIONAL INSTITUTIONS ONLY.

STATEMENT 2: A BUILDING BEING LEASED BY ITS OWNER TO A PRIVATE EDUCATIONAL INSTITUTION FOR USE AS CLASSROOMS IS EXEMPT FROM PROPERTY YAX

STATEMENT 3: INCOME OF A NON-STOCK, NON-PROFIT EDUCATIONAL INSTITUTION RUN BY THE ARCHDIOCESE IS EXMEPT FROM TAX PROVIDED THAT INCOMES ARE ACTUALLY, DIRECTLY AND EXCLUSIVELY USED FOR EDUCATIONAL PURPOSES

WHICH OF THE STATEMENTS ARE CORRECT?

A) STATEMENT 1 ONLY B) STATEMENTS 1 AND 2 C) STATEMENT 2 ONLY D) ALL OF THEM

26. WHICH OF THE FOLLOWING STATEMENTS IS NOT CORRECT?-(RPCPA)

A) AN INHERENT LIMITATION OF TAXATION MAY BE DISREGARDED BY THE APPLICATION OF A CONSTITUTIONAL LIMITATION

B) THE PROPERTY OF AN EDUCATIONAL INSTITUTION OPERATED BY A RELIGIOUS ORDER IS EXEMPT FROM PROPERTY TAX, BUT ITS INCOME IS SUBJECT TO INCOME TAX

C) THE PROHIBITION OF DELEGATION BY THE STATE OF THE POWER OF TAXATION WILL STILL ALLOW THE BIR TO MODIFY THE RULES ON TIME FOR FILING OF RETURNS AND PAYMENT OF TAXES

D) THE POWER OF TAXATION IS SHARED BY THE LEGISLATIVE AND EXECUTIVE DEPARTMENTS OF GOVERNMENT

27. ST. BARNABAS COLLEGE (SBC) IS A NON-STOCK, NON-PROFIT EDUCATIONAL INSTITUTION. IT OWNS A 5-HECTARE LOT ½ OF WHICH IS BEING USED AS ITS SCHOOL CAMPUS WHILE THE OTHER HALF IS VACANT. TO COPE WITH THE INCREASING OPERATING COSTS AND TO UPGRADE ITS FACILITIES, SBC PLANS TO DO THE FOLLOWING EFFECTIVE JANUARY 1, 2006; 1). RENT OUT TO A MARKETING FIRM THE VACANT PORTION OF THE LAND; 2) INJCREASE TUITION FEES BY 10% IN ACCORDANCE WITH GOVERNMENT REGULATIONS;.3)IMPORT 20 SETS OF COMPUTERS FOR USE IN ITS COMPUTER COURSES.

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WHICH OF THE FOLLOWING QUESTIONS IS ANSWERABLE BY “YES.”? A) IS SBC SUBJECT TO REAL ESTATE TAX ON THE ½ PORTION TO

BE RENTED OUT TO A BUSINESS ESTABLISHMENT?

B) WILL IT BE EXEMPT FROM INCOME TAX ON ITS RENTAL TO THE MARKETING FIRM?

C) WILL THE INCREASE IN TUITION FEES BE SUBJECT TO INCOME TAX IF IT RESULTS TO NET INCOME FROM SCHOOL OPERATIONS?

D) WILL IT BE SUBJECT TO CUSTOMS DUTIES ON THE IMPORTATION OF THE COMPUTERS?

28. THE QUEZON SCHOOL OF BUSINESS AND ARTS, A PROPRIETARY EDUCATIONAL INSTITUTION WHICH IS OFFERING PRIMARY, SECONDARY AND TERTIARY EDUCATIONB, IS REGISTERED AND ACCREDITED BY DEPED AND CHED.

WHICH OF THE FOLLOWING IS EXEMPT FROM TAX? WHAT KIND OF TAX?

A) THE IMPORTATION OF LABORATORY EQUIPMENTS-FROM CUSTOMS DUTIES

B) THE SCHOOL BEING RENTED BY THE SCHOOL-FROM REAL PROPERTY TAX

C) A PORTION OF THE SCHOOL BUILDING BEING LEASED TO A FASTFOOD CHAIN-FROM REAL PROPERTY TAX

D) THE INCOME FROM OPERATION-FROM INCOME TAX

29. IN RELATION TO NO. 28 ABOVE, ASSUMING THAT THE SCHOOL IS A NON-STOCK, NON-PROFIT EDUCATIONAL INSTITUTION, WHICH OF THE FOLLOWING IS SUBJECT TO TAX ? WHAT KIND OF TAX?

A) THE SCHOOL BUILDING OWNED BY THE SCHOOL-FROM REAL ESTATE TAX

B) THE SCHOOL BUILDING BEING RENTED BY THE SCHOOL-FROM REAL ESTATE TAX

C) A PORTION OF THE SCHOOL BUILDING BEING LEASED TO A FASTFOOD CHAIN-FROM REAL PROPERTY TAX

D) THE INCOME FROM OPERATION-FROM INCOME TAX

30. THE MUNICIPALITY OF SAN FRANCISCO HAS A 10-HECTARE CEMETERY OF 4 DIFFRRENT CEMETERIES WHICH ARE OWNED BY DIFFERENT ENTITIES. WHICH OF THE FOLLOWING IS SUBJECT TO REAL ESTATE TAX?

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A) CEMENTERIO MUNICIPAL DEL SAN FRANCISCO-A GOV’T CEMETERY OWNED BY THE MUNICIPALITY WHICH WAS ESTABLISHED FOR THE PURPOSE OF USING IT AS BURIAL GROUND OF THE PAUPERS OF SAN FRANCISCO

B) SAN FRANCISCO CATHOLIC CEMETERY-OWNED BY THE CATHOLIC CHURCH; PAYMENTS ARE REMITTED TO THE CATHOLIC CHURCH AND FOR THE IMPROVEMENT OF THE CEMETERY

C) LAST TRIP MEMORIAL PARK-OWNED BY A CORPOR5ATION WHERE DIVIDENDS ARE DISTRIBUTED TO THE SHAREHOLDERS AT THE END OF THE YEAR

D) QUITA-QUITA MEMORIAL PARK-OWNED BY AN ASSOCIATION CONSISTING OF 100 DIFFERENT FAMILIES; EACH FAMILY OWNS SEVERAL SQUARE METERS OF LOT; NOT A SINGLE PORTION IS HELD FOR SALE TO EITHER MEMBER OR NON-MEMBERS OF THE ASSOCIATION

31.ALL APPROPRIATIONS, REVENUE OR TARIFF BILLS, BILLS AUTHORIZING INCREASE OF PUBLIC DEBT, BILLS OF LOCAL APPLICATION, AND BILLS SHALL ORIGINATE EXCLUSIVELY IN THE-(RPCPA)

A) OFFICE OF THE PRESIDENT B) HOUSE OF REPRESENTATIVES C) SENATE

D) SUPREME COURT

32 WHICH STATEMENT IS WRONG? TAX LAWS-(RPCPA)

A) MUST ORIGINATE FROM THE HOUSE OF REPRESENTATIVES AND ON WHICH SAME BILL THE SENATE MAY PROPOSE AMENDMENTS

B) MAY ORIGINATE FROM THE SENATE AND ON WHICH SAME BILL THE HOUSE OF REPRESENTATIVES MAY PROPOSE AMENDMENTS

C) MAY HAVE A HOUSE VERSION AND SENATE VERSION APPROVED SEPARATELY

D) MAY BE RECOMMENDED BY THE PRESIDENT TO CONGFRESS

33.CONGRESSMAN ERIN TANADA OF QUEZON AND SENATOR JUAN PONCE ENRILE SPONSORED A BILL IN THE HOUSE OF REPRESENTATIVES AND THE SENATE, RESPECTIVELY, INCREASING THE PERSONAL EXEMPTIONS OF INDIVIDUAL TAXPAYERS AS WELL AS GRANTING TAX EXEMPTION TO MINIMUM WAGE EARNERS. WHICH OF THE FOLLOWING IS CORRECT?

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A) THE SENATE BILL SHOULD BE DISCUSSED AHEAD OF THE HOUSE BILL

B) THE SENATE AND HOUSE BILLS MAY BE DISCUSSED AT THE SAME TIME IN BOTH HOUSES

C) THE HOUSE BILL SHOULD BE DISCUSSED AHEAD NOF THE SENATE BILL

D) NO PRIORITY; EACH BILL CAN BE DISCUSSED AHEAD OF THE OTHER

34.NO LAW GRANTING ANY TAX EXEMPTION SHALL BE PASSED WITHOUT THE CONCURRENCE OF-(RPCPA)

A) MAJORITY OF ALL MEMBERS OF THE CONGRESS B) 2/3 VOTE OF ALL MEMBERS OF THE CONGRESS C) ¾ VOTE OF ALL MEMBERS OF THE CONGRESS

D) UNANIMOUS VOTE OF ALL MEMBERS OF THE CONGRESS

35.WHICH OF THE FOLLOWING STATEMENTS IS INCORRECT?

A) NO PERSON SHALL BE IMPRISONED FOR NON-PAYMENT OF DEBT OR NON-PAYMENT OF TAXES

B) THE PASSAGE OF LAWS GRANTING TAX EXEMPTIONS REQUIRES THE CONCURRENCE BY A MAJORITY OF ALL THE MEMBERS OF CONGRESS

C) THE SUPREME COURT’S JURISDICTION OVER TAX CASES CAN NOT BE IMPAIRED

D) THE REVENUES AND ASSETS OF NON-STOCK, NON-PROFIT EDUCATIONAL INSTITUTIONS AND DONATIONS FFOR EDUCATIONAL PURPOSES ARE EXEMPTED FROM TAXES AND DUTIES

36.THEY RESTRICT THE EXERCISE OF THE POWER OF TAXATION ALTHOUGH THEY ARE NOT EMBODIED IN THE CONSTITUTION

A) THEORETICAL JUSTICE

B) LEGISLATIVE IN CHARACTER C) INHERENT LIMITATIONS D) CONSTUTIONAL LIMITATIONS

37. A TAX MUST BE IMPOSED FOR PUBLIC PURPOSE. WHICH OF THE FOLLOWING IS NOT A PUBLIC PURPOSE?-(RPCPA)

A) NATIONAL DEFENSE B) PUBLIC EDUCATION

C) IMPROVEMENT OF SUGAR INDUSTRY D) NONE OF THE ABOVE

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38. A FUNDAMENTAL RULE IN TAXATION IS THAT “THE PROPERTY OF ONE COUNTRY MAY NOT BE TAXED BY ANOTHER COUNTRY”. THIS IS KNOWN AS-(RPCPA)

A) INTERNATIONAL LAW B) INTERNATIONAL COMITY C) RECIPROCITY

D) INTERNATIONAL INHIBITION

39.QUESTION 1: CAN THE STATE TAX THE ARMED FORCES OF THE PHILIPPINES?

QUESTION 2: ARE GOVERNMENT-OWNED AND CONTROLLED CORPORATIONS SUBJECT TO TAX?

A)YES, NO B)YES, YES C)NO, YES D)NO, NO

40 DIPLOMATIC OFFICIALS SUCH AS HEADS OF STATES AND AMBASSADORS ARE EXEMPT FROM TAXES AND DUTIES BECAUSE OF

A) INTERNATIONAL COMITY B) RECIPROCITY PROVISIONS C) PRINCIPLE OF TERRITORIALITY D) EXEMPTION IN THE TAX CODE

41. DEALS WITH THE PROVISION OF THE LAW WHICH DETERMINES THE PERSON OR PROPERTY TO BE TAXED, THE SUM OR SUMS TO BE RAISED, THE RATE THEREOF, AND THE TIME AND MANNER OF LEVYINGM RECEIVING AND COLLECTING OF TAXES

A) COLLECTION B) PAYMENT

C) ENFORCED CONTRIBUTION D) LEVY

42. CONSTITUTED OF THE PROVISIONS OF LAW WHICH PRESCRIBE THE MANNER OF ENFORCING THE OBLIGATION ON THE PART OF THOSE TAXED TO PAY THE DEMAND THUS CREATED

A) COLLECTION

B) PROPORTIONATE IN CHARACTER C) ENFORCED CONTRIBUTION

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43.THE AMOUNT REQUIRED IS DICTATED BY THE NEEDS OF THE GOVERNMENT-(RPCPA) A) LICENSE FEE B) TAX C) TOLL D) TARIFF

44. ONE OF THE CHARACTERISTICS OF A TAX IS

A) A TAX IS A PECUNIARY BURDEN AND THE LAW MAY NOT ALLOW PAYMENT IN KIND

B) IT IS DEPENDENT UPON THE WILL OR CONTRACTUAL ASSENT, EXPRESS OR IMPLIED, OF THE PERSON TAXED

C) IT IS LEVIED BY THE STATE BY VIRTUE OF ITS SOVEREIGNTY D) IT IS COLLECTED FOR PUBLIC AND PRIV ATE PURPOSE

45. ONE OF THE CHARACTERISTICS OF A TAX IS THAT-(RPCPA)

A) IT IS GENERALLY BASED ON CONTRACT B) IT IS GENERALLY PAYABLE IN MONEY C) IT IS GENERALLY ASSIGNABLE

D) OPTIONAL

46. WHICH IS NOT AN ESSENTIAL CHARACTERISTIC OF TAX?-(RPCPA)

A) UNLIMITED AS TO AMOUNT B) PAYABLE IN MONEY

C) PROPORTIONATE IN CHARACTER D) REGULAR IN PAYMENT

47. NO PERSON SHALL BE IMPRISONED FOR NON-PAYMENT OF-(RPCPA)

A) PROPERTY TAX B) EXCISE TAX C) POLL TAX D) INCOME TAX

48. AN EXAMPLE OF A PROPERTY TAX IS

A) ADDITIONAL COMMUNITY TAX ON INCOME OF REAL PROPERTIES B) REAL ESTATE TAX ON REAL PROPERTIES

C) ESTATE TAX ON INHERITED PERSONAL AS WELL AS REAL PROPERTIES

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49. WHICH OF THE FOLLOWING IS NOT AN EXAMPLE OF EXCISE TAX?

A) TRANSFER TAX B) SALES TAX

C) REAL PROPERTY TAX D) INCOME TAX

50. SHARON, A CPA HAS JUST OBTAINED HER CPA LICENSE. BEFORE SHE CAN LAWFULLY PURSUE HER OCCUPATION, SHE SHOULD PAY-(RPCPA)

A) PRIVILEGE TAX(PTR) B) PERCENTAGE TAX C) CPA’S INCOME TAX D) VALUE-ADDED TAX

51. A TAX THAT IS IMPOSED UPON A PERSON WHO IS DIRECTLY BOUND TO PAY IT-

A) DIRECT TAX B) INDIRECT TAX C) EXCISE TAX D) POLL TAX

52. ONE IS NOT A DIRECT TAX-(RPCPA)

A) IMMIGRATION TAX B) TRANSFER TAX C) INCOME TAX

D) CONTRACTOR’S TAX

53.THE BASIC COMMUNITY TAX OF P5.00 OF AN INDIVIDUAL IS A(AN)- \

A) PROPERTY TAX B) DIRECT TAX C) NATIONAL TAX D) AD VALOREM TAX

54. STATEMENT 1: THE VALUE-ADDED TAX IS A PROPERTRY TAX

STATEMENT 2: THE ESTATE TAX IS A DIRECT TAX-(RPCPA)

A) THE 2 STATEMENTS ARE CORRECT B) THE 2 STATEMENTS ARE WRONG

C) STATEMENT 1 IS CORRECT; STATEMENT 2 IS WRONG D) STATEMENT 1 IS WRONG; STATEMENT 2 IS CORRECT

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55.FORMS PART OF THE PURCHASE PRICE OF THE COMMODITY OR SERVICE AND PASSED ON TO CUSTOMERS

A) DIRECT TAX B) INDIRECT TAX C) PROPERTY TAX D) NONE OF THE ABOVE

56. A TAX ON BUSINESS IS-(RPCPA)

A) DIRECT TAX B) INDIRECT TAX C) PROPERTY TAX D) NONE OF THE ABOVE

57. FELIX IS A MINING OPERATOR. HIS MINERAL LANDS ARE NOT COVERED BY ANY LEASE CONTRACT. THE TAX FELIX HAS TO PAY BASED ON THE ACTUAL VALUE OF THE GROSS OUTPUT OR MINERAL PRODUCTS EXTRACTED IS-(RPCPA)

A) MINING TAX B) ROYALTIES C) RENTAL

D) AD VALOREM TAX

58.TAX THAT IS IMPOSED SOLELY TO RAISE REVENUE FOR GOV’T EXPENDITURES

A) REVENUE TAX B) REGULATORY TAX C) SPECIFIC TAX D) AD VALOREM TAX

59.TAX LEVIED FOR PARTICULAR OR SPECIFIC PURPOSE IRRESPECTIVE OF WHETHER REVENUE IS ACTUALLY RAISED OR NOT

A) REVENUE TAX B) REGULATORY TAX C) SPECIFIC TAX D) AD VALOREM TAX

60..TAX IMPOSED BY THE NATIONAL GOVERNMENT AND IS EFFECTIVE WITHIN THE ENTIRE JURISDICTION THEREOF

A) NATIONAL TAX B) LOCAL TAX

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C) PROPORTIONAL TAX D) GENERAL TAX

61. TAXES IMPOSED BY A POLITICAL SUBDIVISION OF THE STATE AND IS EFFECTIVE ONLY WITHIN THE TERRITORIAL BOUNDARIES THEREOF

A) NATIONAL TAX B) LOCAL TAX

C) PROGRESSIVE TAX D) REGRESSIVE TAX

62.THE FOLLOWING ARE KINDS OF TAXES AS TO GRDUATION. WHICH ONE IS NOT?-(RPCPA)

A) DIGRESSIVE B) UNIFORM C) REGRESSIVE D) PROGRESSIVE

63.THE POWER OF THE STATE OR THOSE TO WHOM THE POWER HAS BEEN DELEGATED TO TAKE PRIVATE PROPERTY FOR PUBLIC USE UPON PAYING TO THE OWNER A JUST COMPENSATION

A) POWER OF EMINENT DOMAIN B) POLICE POWER

C) POWER OF TAXATION D) PEOPLE POWER

64.THERE CAN BE CLASSIFICATION OF THE SUBJECT MATTER BEING REQUIRED TO SHOULDER THE BURDEN. WHICH IS THE EXCEPTION?-(RPCPA)

A) TAX

B) LICENSE FEE C) TOLL

D) EMINENT DOMAIN

65.THE POWER OF THE STATE TO ENACT SUCH LAWS IN RELATION TO PERSONS AND PROPERTY AS MAY PROMOTE PUBLIC HEALTH, PUBLIC MORALS, PUBLIC SAFETY, AND THE GENERAL WELFARE OF THE PEOPLE\

A) POWER OF EMINENT DOMAIN B) POLICE POWER

C) POWER OF TAXATION D) PEOPLE POWER

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66. THE FOLLOWING ARE SIMILARITIES OF THE INHERENT POWER OF TAXATION, EMINENT DOMAIN AND POLICE POWER EXCEPT ONE-(RPCPA)

A) ARE NECESSARY ATTRIBUTES OF SOVEREIGNTY B) INTERFERES WITH PRIVATE RIGHTS AND PROPERTY C) AFFECTS ALL PERSONS OR THE PUBLIC

D) ARE LEGISLATIVE IN THEIR IMPLEMENTATION

67. WHICH STATEMENT REFERS TO POLICE POWER AS DISTINGUISHED FROM TAXATION?-(RPCPA)

A) IT CAN ONLY BE IMPOSED ON SPECIFIC PROPERTY OR PROPERTIES B) THE AMOUNT IMPOSED DEPENDS ON WHETHER THE ACTIVITY IS

USEFUL OR NOT

C) IT INVOLVES THE TAKING OF PROPERTY BY THE GOVERNMENT D) THE AMOUNT IMPOSED HAS NO LIMIT

68.POLICE POWER AS DISTINGUISHED FROM TAXATION

A) JUST COMPENSATION IS RECEIVED BY THE OWNER OF THE PROPERTY

B) MAYBE EXERCISED BY PRIVATE INDIVIDUALS

C) SUPERIOR TO THE NON-IMPAIRMENT CLAUSE OF THE CONSTITUTION

D) PROPERTY IS TAKEN BY THE GOV’T FOR PUBLIC PURPOSE

69 AFTER HAVING BEEN INFORMED THAT SOME MASSAGE PARLORS ARE BEING USED AS FRONTS FOR PROSTITUTION, THE SANGGUNIANG PANLUNGSOD OF MANILA PASSED A TAX ORDINANCE SUBJECTING MASSAGE PARLORS WITHIN ITS JURISDICTION TO SUCH ONEROUS TAXES THAT LEAVE THEM NO OTHER ALTERNATIVE BUT TO STOP OPERATING. THE PASSAGE OF THE ORDINANCE IS A VALID EXERCISE OF-

A) TAXATION

B) EMINENT DOMAIN C) POLICE POWER

D) POLICE POWER AND POWER OF TAXATION

70. STATEMENT 1: THE CONGRESS CAN ENACT TAX LAWS EVEN IN THE ABSENCE OF A CONSTITUTIONAL PROVISION GRANTING SAID BODY THE POWER TO TAX.

STATEMENT 2: A TAX MAY BE VALIDLY IMPOSED IN THE EXERCISE OF POLICE POWER AND NOT THE POWER TO TAX.

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A) FALSE, FALSE B) FALSE, TRUE C) TRUE, TRUE D) TRUE, FALSE

71. WHICH OF THE FOLLOWING MAY NOT RAISE MONEY FOR THE GOVERNMENT-(RPCPA)

A) POWER OF TAXATION B) POLICE POWER

C) POWER OF EMINENT DOMAIN

D) PRIVATIZATION OF GOVERNMENT’S CAPITAL ASSETS

72. IN THIS POWER OF THE STATE, THE PERSON WHO IS PARTING WITH HIS MONEY OR PROPERTY IS PRESUMED TO RECEIVE A BENEFIT-(RPCPA)

A) TAXATION B) POLICE POWER C) EMINENT DOMAIN D) FORFEITURE POWER

73. WHICH OF THE INHERENT POWERS OF THE GOVERNMENT IS INFERIOR TO THE NON-IMPAIRMENT CLAUSE OF THE CONSTITUTION?

A) TAXATION B) POLICE POWER C) EMINENT DOMAIN D) NONE

74. TAX IS DISTINGUISHED FROM LICENSE FEE-(RPCPA)

A) NON-PAYMENT DOES NOT NECESSARILY RENDER THE BUSINESS ILLEGAL

B) A REGULATORY MEASURE

C) IMPOSED IN THE EXERCISE OF POLICE POWER D) LIMITED TO COVER COST OF OBLIGATION

75. THE DISTINCTION OF A TAX FROM PERMIT OR LICENSE FEE IS THAT A TAX IS-(RPCPA)

A) IMPOSED FOR REGULATION

B) ONE WHICH INVOLVES EXERCISE OF POLICE POWER

C) ONE IN WHICH THERE IS GENERALLY NO LIMIT ON THE AMOUNT THAT MAY BE IMPOSED

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76. WHICH OF THE FOLLOWING TERMS DESCRIBES THIS STATEMENT “THAT THE STATE HAS COMPLETE DISCRETION ON THE AMOUNT TO BE IMPOSED AFTER DISTINGUISHING BETWEEN A USEFUL AND NON-USEFUL ACTIVITY?”-(RPCPA)

A) TAX

B) LICENSE FEE C) TOLL

D) CUSTOMS DUTY

77. WHICH OF THE FOLLOWING IS NOT A DISTINCTION OR SIMILARITY OF LICENSE FEE FROM TAX?-(RPCPA)

A) IMPOSED NFOR REGULATION

B) INVOLVES EXERCISE OF POLICE POWER

C) NON-PAYMENT MAKES THE BUSINESS ILLEGAL

D) LEGAL COMPENSATION OR REWARD OF AN OFFICER FOR SERVICES

78. ALL OF THE FOLLOWING, EXCEPT ONE, ARE CHARACTERISTICS OF A TOLL

A) DEMAND OF PROPRIETORSHIP

B) COMPENSATION FOR THE USE OF ANOTHER’S PROPERTY C) MAY BE IMPOSED BY PRIVATE INDIVIDUALS

D) LEVIED FOR THE SUPPORT OF THE GOVERNMENT

79. THIS IS A DEMAND OF OWNERSHIP-(RPCPA)

A) LICENSE FEE B) TAX

C) TOLL

D) FRANCHISE

80. ONE OF THE FOLLOWING IS NOT A CHARACTERISTIC OF A SPECIAL ASSESSMENT

A) IT HAS SPECIAL APPLICATION ONLY TO A PARTICULAR TIME AND PLACE

B) IT IS LEVIED ONLY ON LAND C) MAY BE LEVIED ON BUSINESS D) BASED WHOLLY ON BENEFITS

81. WHICH STATEMENT IS WRONG?-(RPCPA)

A) A TAX IS A DEMAND OF SOVEREIGNTY B) A TOLL IS A DEMAND OF OWNERSHIP

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C) A SPECIAL ASSESSMENT IS A TAX D) CUSTOMS DUTY IS A TAX

82.WHICH OF THE FOLLOWING IS NOT A CHARACTERISTIC OF DEBT?

A) GENERALLY ARISES FROM CONTRACT B) PAYABLE ONLY IN MONEY

C) ASSIGNABLE

D) IMPRISONMENT IS NOT A SANCTION FOR NON-PAYMENT

83. ALL FUNDS OR INCOME DERIVED BY THE GOVERNMENT FROM ANY OTHER SOURC E

A) TAX

B) CUSTOMS DUTY C) REVENUE

D) ORDINARY INCOME

84. IT COMPRISES ALL KINDS OF FUNDS INCLUDING TAXES-(RPCPA)

A) LICENSE FEE B) INCOME

C) CUSTOMS DUTY D) REVENUE

85.WHICH OF THE FOLLOWING CONSTITUTE OBJECTIONABLE DOUBLE TAXATION?-(RPCPA)

A) A LICENSE FEE AND A TAX IMPOSED ON THE SAME BUSINESS OR OCCUPATION FOR SELLING THE SAME ARTICLES

B) A TAX IMPOSED BOTH ON THE OCCUPATION OF FISHING AND ON FISHPOND OPERATION

C) PERSONS ENGAGED IN LEASING OR SELLING REAL PROPERTY ARE SUBJECT TO REAL ESTATE DEALERS TAX AND THEIR SALES ARE ALSO SUBJECT TO 12% VAT

D) A TAX OF 1% IS IMPOSED FOR BANK RESERVE DEFICIENCY WHILE A PENALTY OF 1/10 OF 1% IS ALSO IMPOSED AS A CONSEQUENCE OF SUCH RESERVE DEFICIENCY

86. WHICH OF THE FOLLOWING IS NOT AN ELEMENT OF DIRECT DUPLICATE TAXATION WHICH IS VIOLATIVE OF THE EQUAL PROTECTIONAND UNIFORMITY CLAUSES IN THE CONSTITUTION?

A) SAME PROPERTY IS TAXED TWICE B) SAME TAXING AUTHORITY

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D) SAME PURPOSE

87. THE FOLLOWING CONSTITUTE DOUBLE TAXATION EXCEPT ONE-(RPCPA)

A) BOTH TAXES ARE IMPOSED IN THE SAME AMOUNT B) BOTH TAXES ARE LEVIED FOR THE SAME PURPOSE

C) BOTH TAXES ARE IMPOSED BY THE SAME TAXING AUTHORITY D) BOTH TAXES ARE IMPOSED UPON THE SAME PERSON

88. STATEMENT 1: OUR CONSTITUTION DOES NOT PROHIBIT DOUBLE TAXATION

STATEMENT 2: IF DOUBLE TAXATION OCCURS, THE TAXPAYER MAY SEEK RELIEF UNDER THE UNIFORMITY CLAUSE OR THE EQUAL PROTECTION GUARANTEE-(RPCPA)

A) CORRECT, WRONG B) WRONG, CORRECT C) WRONG, WRONG D) CORRECT, CORRECT

89. YOUR CLIENT OWNS A ROW OF APARTMENTS. HE COMPLAINS TO YOU THAT HE IS BEING REQUIRED TO PAY FOUR (4) KINDS OF TAXES ON THIS LINE OF BUSINESS ALONE. FROM THE LIST GIVEN BY YOUR CLIENT, WHICH OF THE FOLLOWING TAXES HAS BEEN WRONGLY IMPOSED ON HIM?

A) REAL ESTATE TAX ON THE LAND AND BUILDING

B) VALUE-ADDED TAX ON THE GROSS RECEIPTS FROM RENT

C) COMMUNITY TAX BASED ON THE ASSESSED VALUE OF THE APARTMENT HOUSE

D) INCOME TAX ON INCOME FROM RENT

90. ONE OF THE FOLLOWING IS A FALSE STATEMENT ABOUT DOUBLE TAXATION. WHICH IS IT?

A) THERE IS NO CONSTITUTIONAL PROHIBITION ON DOUBLE TAXATION

B) DIRECT DUPLICATE TAXATION IS A VALID DEFENSE AGAINST A TAX MEASURE IF IT IS VIOLATIVE OF THE EQUAL PROTECTION CLAUSE C) ABSENCE OF ANY OF THE ELEMENTS OF DIRECT DOUBLE TAXATION

MAKES IT INDIRECT DUPLICATE TAXATION

D) A 20% FINAL WITHHOLDING TAX ON INTEREST INCOME ON BANK DEPOSITS AND A 5% GROSS RECEIPTS TAX ON BANKS IS A DIRECT DUPLICATE TAXATION

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91. TRANSFER OF THE TAX BURDEN BY ONE ON WHOM THE TAX IS ASSESSED TO ANOTHER A) SHIFTING B) CAPITALIZATION C) TRANSFORMATION D) TAX EXEMPTION

92. WHICH OF THE FOLLOWING IS NOT A SCHEME OF SHIFTING THE INCIDENCE OF TAX BURDEN?-(RPCPA)

A) THE MANUFACTURER TRANSFERS THE TAX TO THE CONSUMER BY ADDING THE TAX TO THE SELLING PRICE OF THE GOODS SOLD

B) THE PURCHASER ASKS FOR A DISCOUNT OR REFUSE TO BUY AT REGULAR PRICE UNLESS IT IS REDUCED BY AN AMOUNT EQUAL TO THE TAX HE WILL PAY

C) CHANGING THE TERMS OF THE SALE LIKE FOB SHIPPING POINT IN THE PHILIPPINES TO FOB DESTINATION ABROAD, SO THAT THE TITLE PASSES ABROAD INSTEAD OF IN THE PHILIPPINES

D) THE MANUFACTURER TRANSFERS THE SALES TAX TO THE DISTRIBUTOR, THEN IN TURN TO THE WHOLESALER, TO THE RETAILER AND FINALLY TO THE CONSUMER

93. THE REDUCTION IN THE SELLING PRICE OF INCOME-PRODUCING PROPERTY BY AN AMOUNT EQUAL TO THE CAPITALIZED VALUE OF FUTURE TAXES THAT MAY BE PAID BY THE PURCHASER

A) SHIFTING

B) CAPITALIZATION C) TRANSFORMATION D) TAX EXEMPTION

94. THE METHOD BY WHICH THE MANUFACTURER OR PRODUCER UPON WHOM THE TAX IS IMPOSED PAYS THE TAX AND STRIVES TO RECOVER SUCH EXPENSE THROUGH LOWER PRODUCTION COST WITHOUT SACRIFICING THE QUALITY OF HIS PRODUCT

A) SHIFTING

B) CAPITALIZATION C) TRANSFORMATION D) TAX EXEMPTION

95. THE GRANT OF IMMUNITY TO PARTICULAR PERSONS OR CORPORATION OR TO PERSONS OR CORPORATIONS OF A PARTICULAR CLASS FROM A TAX WHICH PERSONS AND CORPORATIONS GENERALLY WITHIN THE SAME TAXING DISTRICT ARE OBLIGED TO PAY

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A) TAX EXEMPTION B) TAX EVASION C) TAX AVOIDANCE D) TAX AMNESTY

96. STATEMENT 1: A BIR RULING ISSUED BY A COMMISSIONER OF INTERNAL REVENUE WHICH GRANTS TAX EXEMPTION WOULD CREATEA PERPETUAL EXEMPTION IN FAVOR OF THE TAXPAYER

STATEMENT 2: A TAX EXEMPTION MAY BE WITHDRAWN ANYTIME AT THE PLEASURE OF THE TAXING AUTHORITY

WHICH OF THE ABOVE STATEMENTS IS TRUE?

A) STATEMENT 1 ONLY B) STATEMENTS 1 AND 2 C) STATEMENT 2 ONLY D) NEITHER OF THEM

97. IT IS ALSO KNOWN AS TAX DODGING

A) TAX EXEMPTION B) TAX EVASION C) TAX AVOIDANCE D) TRANSFORMATION

98. IT IS ALSO KNOWN AS TAX MINIMIZATION

A) TAX EXEMPTION B) TAX EVASION C) TAX AVOIDANCE D) TRANSFORMATION

99. WHICH OF THE FOLLOWING STATEMENTS CONSTITUTE TAX AVOIDANCE?

A) DELIBERATE FAILURE OF A TAXPAYER TO PAY THE TAXES DUE TO THE GOVERNMENT

B) CONNOTES FRAUD THROUGH THE USE OF PRETENSES AND FORBIDDEN DEVICES TO LESSEN OR DEFEAT TAXES

C) PUNISHABLE BY LAW

D) MAYBE CONTRARY TO THE INTENT OF THE LEGISLATURE BUT NEVERTHELESS DO NOT VIOLATE THE LAW

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100. WHICH OF THE FOLLOWING FACTS PERTAIN/S TO TAX AVOIDANCE?

I.AFTER STUDYING HIS TAX PROBLEMS, MATALINO DECIDED TO WITHDRAW HIS BANK DEPOSITS AND TO BUY TAX-EXEMPT SECURITIES II.TUSO WHO WISHES TO AVOID THE PAYMENT OF TAXES ASSESSABLE ON THE TRANSACTION MADE IT APPEAR ON THE DEED OF SALE THAT THE SELLING PRICE WAS ONLY P200,000 ALTHOUGH IT WAS ACTUALLY P300,000

III.REFRAINING FROM ENGAGING IN ACTIVITES SUBJECT TO TAX

IV.ABUSADO INSURANCE CORPORATION SOLD ITS OFFICE BUILDING TO ADAN FOR P100 MILLION, WHO IN TURN, SOLD THE SAME PROPERTY TO DUGONG-BUGHAW, INC. FOR P200 MILLION. THESE 2 TRANSACTIONS WERE EVIDENCED BTY DEEDS OF ABSOLUTE SALE NOTARIZED ON THE SAME DAY BY THE SAME NOTARY PUBLIC.

A) I ONLY

B) I AND III ONLY C) I AND IV

D) I, III AND IV

101. IN CASE OF AMBIGUITY, TAX LAWS SHALL BE INTERPRETED

A) STRICTLY AGAINST THE TAXPAYER B) LIBERALLY AGAINST THE POWER

C) LIBERALLY IN FAVOR OF THE TAXPAYER D) LIBERALLY IN FAVOR OF THE GOVERNMENT

102. IN CASES OF DEDUCTIONS AND EXEMPTIONS ON INCOME TAX RETURNS, DOUBTS SHALL BE RESOLVED-(RPCPA)

A) STRICTLY AGAINST THE TAXPAYER B) STRICTLY AGAINST THE GOVERNMENT C) LIBERALLY IN FAVOR OF THE TAXPAYER D) LIBERALLY AGAINST THE GOVERNMENT

103. THE FOLLOWING, EXCEPT ONE, ARE EXCEPTIONS TO THE RULE THAT TAX EXEMPTIONS MUST BE STRICTLY CONSTRUED AGAINST THE TAXPAYER

A) WHERE THE STATUTE GRANTING THE EXEMPTION PROVIDES FOR LIBERAL INTERPRETATION THEREOF

B) IF THE TAXPAYER DOES NOT FALL WITHIN THE PURVIEW OF THE EXCEPTION BY CLEAR LEGISLATIVE INTENT

C) IN CASE OF SPECIAL TAXES RELATING TO SPECIAL CASES AND AFFECTING ONLY SPECIAL CLASSES OF PERSONS

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104. A FRANCHISE CAN BE AMENDED BY-(RPCPA)

A) AN AMENDMENT OF SPECIAL LAW, WHICH GRANTED THE FRANCHISE

B) AN AMENDMENT OF A LAW OF GENERAL APPLICATION C) AN AMENDMENT OF A REVENUE REGULATION

D) AN AMENDMENT OF TAX LAWS

105. SOME FRANCHISE HOLDERS WHO ARE PAYING THE FRANCHISE TAX ARE BEING REQUIRED BY AN AMENDATORY LAW TO PAY THE VALUE-ADDED TAX, WHILE OTHERS REMAIN SUBJECT TO FRANCHISE TAX. WHICH OF THE FOLLOWING CONSTITUTIONAL PROVISION MAKES THE LAW UNCONSTITUTIONAL?-(RPCPA)

A) NO LAW SHALL BE PASSED IMPAIRING THE OBLIGATION OF CONTRACT

B) THE RULE OF TAXATION SHALL BE UNIFORM

C) NO PERSON SHALL BE DEPRIVED OF PROPERTY WITHOUT DUE PROCESS OF LAW

D) NONE OF THE ABOVE

106. STATEMENT 1: THE POINT ON WHICH A TAX IS ORIGINALLY IMPOSED IS IMPACT OF TAXATION

STATEMENT 2: AS A RULE, TAXES ARE SUBJECT TO SET-OFF OR COMPENSATION

A) TRUE, TRUE B) FALSE, TRUE C) FALSE, FALSE D) TRUE, FALSE

107. WHICH OF THE FOLLOWING IS NOT CONSIDERED AS A STEP IN MAKING A REVENUE REGULATION EFFECTIVE?

A) RECOMMENDATION BY THE COMMISSIONER OF INTERNAL REVENUE TO THE SECRETARY OF FINANCE

B) APPROVAL BY THE SECRETARY OF FINANCE C) LEGISLATION BY CONGRESS

D) PUBLICATION IN A NEWSPAPER OF GENERAL CIRCULATION

108. STATEMENT 1: IN CASE OF CONFLICT BETWEEN A REVENUE REGULATION AND THE PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, THE LATTER SHALL PREVAIL

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STATEMENT 2: THE REVOCATION OF A REVENUE REGULATION CAN NOT BE MADE RETROACTIVE EVEN IF THE REASON FOR ITS REVOCATION IS THAT IT IS ERRONEOUS OR CONTRARY TO LAW

A) CORRECT, WRONG B) CORRECT, CORRECT C) WRONG, CORRECT D) WRONG, WRONG

109. ALL OF THE FOLLOWING, EXCEPT ONE, ARE SOURCES OF TAX LAWS-

A) LEGISLATIONS, TAX TREATIES AND TAX ORDINANCES B) JUDICIAL DECISIONS

C) OPINIONS OF AUTHORS

D) ADMINISTRATIVE RULES AND REGULATIONS

110. THE LEAST SOURCE OF TAX LAW IS-

A) STATUTES

B) COURT DECISIONS C) CONSTITUTION D) BIR RULINGS

111. WHEN THE REFUND OF A TAX SUPPOSEDLY DUE TO THE TAXPAYER HAS ALREADY BEEN BARRED BY PRESCRIPTION, AND THE SAID TAXPAYER IS ASSESSED WITH A TAX AT PRESENT, THE TWO CASES MAY BE SET-OFF WITH EACH OTHER. THIS DOCTRINE IS CALLED

A) SET-OFF DOCTRINE

B) DOCTRINE OF RECIPROCITY C) TAX SPARING DOCTRINE D) EQUITAB LE RECOUPMENT

112. STATEMENT 1: THE DOCTRINE OF EQUITABLE IS APPLICABLE IN THE PHILIPPINES

STATEMENT 2: WHERE TAXES AND THE CLAIM OF THE TAXPAYER ARE FULLY LIQUIDATED, DUE AND DEMANDABLE, SET-OFF OR LEGAL COMPENSATION MAY TAKE PLACE BY OPERATION OF LAW

A) CORRECT, WRONG B) CORRECT, CORRECT C) WRONG, CORRECT D) WRONG, WRONG

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113. THE PLACE OR AUTHORITY THAT HAS THE RIGHT TO IMPOSE AND COLLECT TAXES- A) TERRITORIALITY B) INTERNATIONAL COMITY C) SITUS OF TAXATION D) TRANSFORMATION

114. DOMICILE OR RESIDENCE OF THE OWNER IS NOT THE SITUS OF TAXATION IN

A) INCOME TAX B) COMMUNITY TAX C) ESTATE TAX D) BUSINESS TAX

115. WHICH OF THE FOLLOWING IS NOT CORRECT WITH RESPECT TO A TAXPAYER’S SUIT?

A) IT MUST PERTAIN TO ILLEGAL DISBURSEMENT OF PUBLIC FUNDS B) IT PERTAINS TO THE PASSAGE OF A SEEMINGLY

UNCONSTITUTIONAL MEASURE

C) THE FUNDS SOUGHT TO BE DISBURSED MUSTB HAVE BEEN RAISED THROUGH TAXATION

D) IT MUST NOT REFER TO AN ENACTMENT OF A TAX LAW

B. TRUE OR FALSE

1. NO PERSON SHALL BE IMPRISONED FOR DEBT OR NON-PAYMENT OF POLL TAX

2. CONGRESS MAY AUTHORIZE THE PRESIDENT TO FIX WITHIN SPECIFIED LIMITS TARIFF RATES, IMPORT AND EXPORT DUTIES, TONNAGE AND WHARFAGE DUES, AND OTHER DUTIES OR IMPOSTS WITHIN THE FRAMEWORK OF THE NATIONAL DEVELOPMENT PROGRAM OF THE GOVERNMENT.

3. A LAW GRANTING TAX EXEMPTION SHOULD BE CONCURRED IN BY A MAJORITY OF ALL MEMBERS OF THE CONGRESS PRESENT.

4. THE PRESIDENT CAN VETO ANY PARTICULAR ITEM IN A REVENUE OR TARIFF BILL, BUT THE VETO SHALL NOT AFFECT THE ITEMS OR ITEMS TO WHICH HE DOES NOT OBJECT

5. THE POWER TO TAX CAN BE DELEGATED TO LOCAL GOVERNMENT UNITS, SUBJECT TO LIMITATIONS THAT MAY BE SET BY LAW.

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6. THE POWER OF TAXATION CAN BE DELEGATED TO THE PRESIDENT OF THE PHILIPPINES.

7. THE PRESIDENT OF THE PHILIPPINES IS EMPOWERED TO GRANT TAX EXEMPTION ON CERTAIN CLASS OF TAXPAYERS.

8. NON-PAYMENT OF TAX AND DEBT IS GROUND FOR IMPRISONMENT.

9. THE POWER TO TAX MAY INCLUDE THE POWER TO DESTROY.

10. PROVISIONS IN THE PHILIPPINE CONSTITUTION ARE GRANTS OF POWER.

11. LANDS AND BUILDINGS BEING USED ACTUALLY, DIRECTLY AND EXCLUSIVELY FOR RELIGIOUS AND CHARITABLE PURPOSES BY CHURCHES AND CHARITABLE INSTITUTIONS ARE EXEMPT FROM INCOME AND PROPERTY TAXES.

12. A PORTION OF A SCHOOL BUILDING WHICH IS BEING LEASED TO A MARKETING FIRM FOR COMMERCIAL PURPOSES IS EXEMPT FROM PROPERTY TAX.

13. A NON-STOCK, NON-PROFIT EDUCATIONAL INSTITUTION IS EXEMPT FROM INCOME TAX ON ITS REVENUES AND FROM REAL PROPERTY TAX ON ASSETS USED ACTUALLY, DIRECTLY AND EXCLUSIVELY FOR EDUCATIONAL PURPOSES.

14. TAX LAWS CAN NEVER HAVE A RETROACTIVE EFFECT.

15. THE GOVERNMENT CAN NOT TAX ITS AGENCIES AND INSTRUMENTALITIES.

16. A TAXPAYER’S SUIT CAN BE FILED BY ANY TAXPAYER IN ANY INSTANCE AGAINST THE GOVERNMENT.

17. IN THE PHILIPPINES, THERE MAY BE DOUBLE TAXATION.

18. A TAX IS GENERALLY UNLIMITED BECAUSE IT IS BASED ON THE NEEDS OF THE STATE.

19. AS A RULE, TAXES ARE SUBJECT TO SET-OFF OR COMPENSATION.

20. RECIPROCITY RULE APPLIES TO CITIZENS OF THE PHILIPPINES AND RESIDENT ALIEN ONLY.

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21. THE INHERENT POWERS ARE EXERCISED PRIMARILY BY THE LEGISLATURE.

22. THE RULE OF TAXATION SHALL BE UNIFORM AND EQUITABLE.

23. TAXATION MAY BE USED TO IMPLEMENT THE POLICE POWER OF THE STATE.

24. POLICE POWER IS SUPERIOR TO THE NON-IMPAIRMENT CLAUSE OF THE CONSTITUTION.

25. THE THREE INHERENT POWERS ARE METHODS BY WHICH THE STATE INTERFERES WITH PRIVATE RIGHT.

26. THE SALARY OF THE PRESIDENT OF THE PHILIPPINES AND OF THE JUSTICES OF THE SUPREME COURT IS EXEMPT FROM INCOME TAX.

27. OPINIONS OF LEGAL LUMINARIES ARE SOURCES OF TAX LAWS.

28. THE CONSTITUTION GRANTS EXEMPTION FROM ALL KINDS OF TAXES TO RELIGIOUS AND CHARITABLE ORGANIZATIONS.

29. BECAUSE THE POWER TO TAX IS UNLIMITED, COMPREHENSIVE, PLENARY AND SUPREME, THE POWER TO TAX CAN REACH OVER INTO ANY JURISDICTION TO SEIZE UPON PERSON OR PROPERTY.

30. A PERSON CAN OBJECT OR RESIST THE PAYMENT OF TAXES SOLELY BECAUSE NO PERSONAL BENEFIT TO HIM CAN BE POINTED AS ARISING FROM THE TAX.

31. THE “BENEFIT-PROTECTION THEORY” IS THE SOURCE OF THE “DOCTRINE OF SYMBIOTIC RELATIONSHIP”.

32. A TAXPAYER COMMITS TAX AVOIDANCE WHEN HE DELIBERATELY OMITS TO DECLARE ALL HIS TAXABLE INCOME.

33. THE THEORY OF TAXATION IS BASED ON THE LIFEBLOOD DOCTRINE.

34. A DIRECT TAX CAN BE SHIFTED DIRECTLY TO THE CONSUMERS.

35. A TAX IS A VOLUNTARY PAYMENT OR DONATION TO THE GOVERNMENT.

36. TAXES ARE CONTRACTUAL DEBTS, HENCE A TAXPAYER CANNOT BE IMPRISONED FOR NON-PAYMENT THEREOF.

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37. AS A POWER, TAXATION REFERS TO THE INHERENT POWER OF THE STATE TO DEMAND ENFORCED CONTRIBUTION FOR PUBLIC PURPOSE OR PURPOSES.

38. THE GOVERNMENT CANNOT SURVIVE WITHOUT TAXATION.

39. INCOME TAX IS A PROGRESSIVE TAX.

40. TAX LAW CANNOT BE IMPOSED FOR A SPECIAL PURPOSE FOR IT SHOULD ALWAYS BE AIMED AT REVENUE COLLECTION.

41. THE POWER OF THE STATE TO TAX EXISTS BY VIRTUE OF AN EXPRESS PROVISION OF THE CONSTITUTION.

42. AN EXEMPTION FROM TAXATION IS TRANSFERABLE.

43. ADMINISTRATIVE FEASIBILITY MEANS ALSO THAT THE TAX MUST NOT BE DISCOURAGING TO BUSINESS ACTIVITY.

44. FISCAL ADEQUACY MEANS THAT REVENUE SHOULD ALWAYS MEET THE DEMANDS OF PUBLIC EXPENDITURE EVEN DURING ADVERSE ECONOMIC CONDITION.

45. STATUTORY TAX EXEMPTIONS MAY BE REVOKED BY THE CONGRESS.

46. TAX EVASION IN ONE YEAR CAN BE OFFSET BY PAYING MORE TAXES THE FOLLOWING YEAR.

47. NON-PAYMENT OF ADDITIONAL COMMUNITY TAX IS A GROUND FOR IMPRISONMENT.

48. IN CASE OF CONFLICT BETWEEN A TAX LAW AND A REVENUE REGULATION, THE LATTER SHALL PREVAIL.

49. A REVENUE REGULATION CAN EXPAND THE PROVISION OF LAW BY IMPOSING A PENALTY EVEN IF THE LAW THAT IT IMPLEMENTS DOES NOT IMPOSE A PENALTY.

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CHAPTER 11-INCOME TAX OF INDIVIDUALS

1.WHO AMONG THE FOLLOWING IS A NON-RESIDENT ALIEN?-(RPCPA)

A) AN ALIEN WHO COMES TO THE PHILIPPINES FOR A DEFINITE PURPOSE WHICH IN ITS NATURE MAY BE PROMPTLY ACCOMPLISHED

B) AN ALIEN WHO COMES TO THE PHILIPPINES FOR A DEFINITE PURPOSE WHICH IN ITS NATURE WOULD REQUIRE AN EXTENDED STAY

C) AN ALIEN WHO HAS ACQUIRED RESIDENCE IN THE PHILIPPINES D) AN ALIEN WHO LIVES IN THE PHILIPPINES WITH NO DEFINITE

INTENTION AS TO HIS STAY

2. ARCHIE, A STAFF AUDITOR OF SGV & CO., TOOK AND PASSED THE EXAMINATION FOR CERTIFIED INTERNAL AUDITOR (CIA). THE FOLLOWING YEAR, HE RESIGNED FROM HIS JOB AND LEFT THE PHILIPPINES ON APRIL 10, 2006 TO WORK AS AN INTERNAL AUDITOR IN A BIG ESTABLISHMENT IN MELBOURNE, AUSTRALIA. FOR INCOME TAX PURPOSES, WHICH OF THE FOLLOWING STATEMENTS IS CORRECT WITH RESPECT TO ARCHIE’S CLASSIFICATION?

A) HE SHALL BE CLASSIFIED AS NON-RESIDENT CITIZEN FOR THE WHOLE YEAR OF 2006

B) HIS CLASSIFICATION AS A NON-RESIDENT CITIZEN WILL START IN 2007

C) HE SHALL BE CLASSIFIED AS NON-RESIDENT CITIZEN FOR THE YEAR 2006 WITH RESPECT TO HIS INCOME DERIVED FROM SOURCES WITHOUT FROM APRIL 10, 2006

D) HE SHALL BE CLASSIFIED AS NON-RESIDENT CITIZEN FOR THE YEAR 2006 WITH RESPECT TO HIS INCOME DERIVED FROM SOURCES WITHOUT FROM APRIL 11,2006

3. WHO AMONG THE FOLLOWING INDIVIDUAL TAXPAYERS IS TAXABLE ON INCOME WITHIN AND WITHOUT THE PHILIPPINES?

A) ALEX, A NATIVE OF GENERAL SANTOS CITY, WORKING AS OVERSEAS CONTRACT WORKER IN IRAQ

B) PHILANDER RODOLFO, NATURALIZED FILIPINO CITIZEN AND MARRIED TO A FILIPINA. HE HAD BEEN LIVING IN OLONGAPO CITY SINCE 1970

C) ALDREDO DE LA HOYA, SPANISH CITIZEN, A RESIDENT OF MADRID, SPAIN, SPENT A ONE WEEK VACATION TRIP IN BORACAY

D) MING HONG, TAIWANESE SINGER, HELD A 3-DAY CONCERT IN MANILA

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4. WHICH OF THE FOLLOWING TAXPAYERS WHOSE PERSONAL EXEMPTION IS SUBJECT TO THE LAW ON RECIPROCITY UNDER THE TAX CODE?-(RPCPA)

A) NON-RESIDENT CITIZEN WITH RESPECT TO HIS INCOME DERIVED FROM OUTSIDE THE PHILIPPINES

B) NON-RESIDENT ALIEN WHO SHALL COME TO THE PHILIPPINES AND STAY HEREIN FOR AN AGGREGATE PERIOD OF MORE THAN 180 DAYS DURING ANY CALENDAR YEAR

C) RESIDENT ALIEN DERIVING INCOME FROM A FOREIGN COUNTRY D) NON-RESIDENT ALIEN NOT ENGAGED IN TRADE OR BUSINESS IN THE

PHILIPINES WHOSE COUNTRY ALLOWS PERSONAL EXEMPTION TO FILIPINOS WHO ARE NOT RESIDING BUT ARE DERIVING INCOME FROM SAID COUNTRY

5. THE PERSONAL EXEMPTION OF THE NON-RESIDENT ALIEN ENGAGED IN TRADE OR BUSINESS IN THE PHILIPPINES IS EQUAL TO THAT ALLOWED BY-(RPCPA)

A) THE INCOME TAX LAW OF HIS COUNTRY TO A RESIDENT CITIZEN OF THE PHILIPPINES NOT RESIDING THERE

B) THE INCOME TAX LAW OF HIS COUNTRY TO A CITIZEN OF THE PHILIPPINES NOT RESIDING THERE OR THE AMOUNT PROVIDED BY THE NIRC TO A CITIZEN OR RESIDENT, WHICHEVER IS LOWER

C) THE NATIONAL INTERNAL REVENUE CODE TO A CITIZEN OR RESIDENT

D) THE INCOME TAX LAW OF HIS COUNTRY ALLOWS TO A CITIZEN OF THE PHILIPPINES NOT RESIDING THERE OR THE AMOUNT PROVIDED BY THE NIRC TO A CITIZEN OR RESIDENT ALIEN, WHICHEVER IS HIGHER

6. THE TAXPAYER IS A MARRIED NON-RESIDENT ALIEN ENGAGED IN BUSINESS IN THE PHILIPPINES WITH TWO QUALIFIED DEPENDENT CHILDREN. HIS COUNTRY GIVES A NON-RESIDENT FILIPINO WITH INCOME FROM THEREFROM A BASIC PERSONAL EXEMPTION (IF MARRIED) OF P20,000 AND ADDITIONAL EXEMPTION OF P4,000. HE IS ENTITLED TO A PERSONAL EXEMPTION OF-(RPCPA)

A) P28,000 B) P26,000 C) P24,000 D) P20,000

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7. THE FOLLOWING, EXCEPT ONE, MAY CLAIM PERSONAL EXEMPTIONS-(RPCPA)

A) NONRESIDENT ALIENS NOT ENGAGED IN TRADE OR BUSINESS IN THE PHILIPPINES

B) NONRESIDENT ALIEN ENGAGED IN TRADE OR BUSINESS IN THE PHILIPPINES

C) RESIDENT ALIEN D) CITIZEN

8. AN EXEMPTION PROVIDED BY LAW TO TAKE CARE OF PERSONAL, LIVING AND FAMILY EXPENSES OF THE TAXPAYER AND THE AMOUNT OF WHICH IS DETERMINED ACCORDING TO THE STATUS OF THE TAXPAYERS ARE:-(RPCPA)

A) OPTIONAL STANDARD DEDUCTION B) PERSONAL EXEMPTION

C) ADDITIONAL EXEMPTION

D) SPECIAL ADDITIONAL EXEMPTION

9. AN EXEMPTION ALLOWED TO A TAXPAYER WHO HAS QUALIFIED LEGITIMATE, ILLEGITIMATE, OR LEGALLY ADOPTED CHILDFREN-(RPCPA)

A) ADDITIONAL EXEMPTION

B) SPECIAL ADDITIONAL PERSONAL EXEMPTION C) OPTIONAL STANDARD DEDUCTION

D) PERSONAL EXEMPTION

10.A MAN HAS THREE WIVES UNDER HIS TRIBAL CUSTOMS AND PRACTICE. HE IS ENTITLED TO PERSONAL EXEMPTION APPERTAINING TO-(RPCPA)

A) A SINGLE INDIVIDUAL B) A MARRIED INDIVIDUAL

C) A MARRIED INDIVIDUAL PLUS ADDITIONAL EXEMPTION FOR DEPENDENTS PERTAINING TO EACH OF THE 2 EXTRA WIVES

D) A HEAD OF THE FAMILY PLUS ADDITIONAL EXEMPTION FOR DEPENDENTS PERTAINING TO EACH OF HIS THREE WIVES

11. AS A RULE, WHO OF THE SPOUSES IS THE PROPER CLAIMANT OF THE ADDITIONAL EXEMPTION WITH RESPECT TO ANY OF THE DEPENDENT CHILDREN?

A) THE HUSBAND IF HIS INCOME IS HIGHER THAN THE INCOME OF THE WIFE

B) THE SPOUSE WHO HAS A HIGHER INCOME C) THE HUSBAND

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D) THE WIFE

12. THE WIFE CAN CLAIM ADDITIONAL EXEMPTION IF-(RPCPA)

A) THE HUSBAND’S INCOME IS LOWER THAN HER INCOME

B) THE HUSBAND IS A NONRESIDENT CITIZEN WITH INCOME FROM WITHIN AND WITHOUT THE PHILIPPINES

C) THE HUSBAND IS A PURE BUSINESS INCOME EARNER D) THE HUSBAND HAS NO INCOME OF HIS OWN

13. THE HUSBAND CAN WAIVE HIS RIGHT TO CLAIM THE ADDITIONAL EXEMPTION IN FAVOR OF HIS WIFE IF-

A) HE IS A NONRESIDENT CITIZEN WHOSE INCOME IS PURELY WITHOUT THE PHILIPPINES

B) HE HAS NO INCOME OF HIS OWN

C) HE IS A COMPENSATION INCOME EARNER IN THE PHILIPPINES D) HIS INCOME IS PURELY SUBJECT TO FINAL WITHHOLDING TAX

14. WHO AMONG THE FOLLOWING QUALIFIES AS A DEPENDENT FOR PURPOSES OF ADDITIONAL EXEMPTION?

A) SISTER-IN-LAW B) STEPMOTHER C) GRANDFATHER

D) ILLEGITIMATE DAUGHTER

15. NENA, AGED 70 YEARS OLD, WHO LIVES WITH HER UNMARRIED SON MARIO, RECEIVED P60,000 WHICH WAS USED FOR HER SUPPORT DURING THE YEAR. THE SOURCES OF HER SUPPORT WERE AS FOLLOWS:

SOCIAL SECURITY BENEFITS P24,000

MARIO 20,000

CAROLINE, UNRELATED FRIEND 4,000 DOUGLAS, SON OF NENA 5,000 LALAINE, NENA’S SISTER 7,000

TOTAL 60,000

WHO CAN CLAIM HEAD OF FAMILY STATUS BASED ON NENA’S DEPENDENCY EXEMPTION?

A) MARIO B) DOUGLAS C) LALAINE D) NONE

(34)

16. WHO OF THE FOLLOWING IS NOT A QUALIFIED DEPENDENT FOR PURPOSES OF CLAIMING ADDITIONAL EXEMPTION?

A) ILLEGITIMATE CHILD B) LEGALLY ADOPTED CHILD C) LEGITIMATE CHILD

D) CHILD BY NATURAL ADOPTION

17. MR. MAASIKASO, SINGLE, HAS THE FOLLOWING DEPENDENTS WHO ARE LIVING WITH AND ENTIRELY DEPENDENT UPON HIM FOR CHIEF SUPPORT:

ANDREA, CHILD WITH HIS EX-GIRLFRIEND

BARBARA, LEGITIMATE CHILD OF HIS SISTER, LEGALLY ADOPTED BY MR. MAASIKASO

CARIDAD, MOTHER, 85 YEARS OLD, WIDOW, BEDRIDDEN DONATA, GODMOTHER, 80 YEARS OLD

MR. MAASIKASO CAN CLAIM ADDITIONAL PERSONAL EXEMPTION ON-

A) ANDREA ONLY

B) ANDREA AND BARBARA

C) ANDREA, BARBARA AND CARIDAD

D) ANDREA, BARBARA, CARIDAD AND DONATA

18. A NATIVE OF LUCENA CITY, SUPPORTING HIS BROTHER, 18 YEARS OLD, UNMARRIED, NOT GAINFULLY EMPLOYED, STUDYING BS ACCOUNTANCY AT ASIA PACIFIC COLLEGE AT MAKATI CITY, IS ENTITLED TO BASIC PERSONAL EXEMPTION OF-

A) P20,000 B) 25,000 C) 50,000 D) 75,000

19. THE ADDITIONAL PERSONAL EXEMPTION ON EVERY QUALIFIED DEPENDENT CHILD IS-

A) P8,000 B) 32,000 C) 25,000 D) 50,000

(35)

20. REMY MARTIN, SINGLE, SUPPORTING THE FOLLOWING:

JOHNNY WALKER, ILLEGITIMATE SON, 16 YEARS OLD, STUDYING IN THE UNIVERSIDAD DE JEREZ, CADIZ, SPAIN, LIVING WITH REMY MARTIN’S DIPLOMATIC BROTHER IN ANDALUCIA, SPAIN.

TORRES, FATHER, LIVING WITH HIM. REMY MARTIN IS GIVING 60% OF THE ENTIRE SUPPORT NEEDED, THE OTHER 40% IS BEING FURNISHED BY HIS SISTER, CHEVAS REGAL.

REMY MARTIN CAN CLAIM A TOTAL EXEMPTION OF-

A) P20,000 B) 75,000 C) 33,000 D) 41,000

21. TAXPAYERS ARE HUSBAND AND WIFE. THE GROSS COMPENSATION OF THE WIFE IS P260,000 WHILE THE GROSS BUSINESS INCOME OF THE HUSBAND IS P200,000. THEY HAVE SIX QUALIFIED DEPENDENT CHILDREN BUT WITHIN THE YEAR ONE CHILD DIED. THEIR TOTAL EXEMPTIONS IS-(RPCPA)

A) P200,000 B) 96,000 C) 64,000 D) NONE

22. LIZA’S HUSBAND DIED IN APRIL 2009 HAVING SEVEN(7) UNMARRIED CHILDREN LIVING WITH AND WHOLLY DEPENDENT ON LIZA FOR SUPPORT. THE AGES OF THE CHILDREN ARE AS FOLLOWS:

CHILDREN AGES STATUS

A 24 JOBLESS

B 22 MENTALLY RETARDED C 19 STUDYING IN MANILA

D 10 STUDYING IN THEIR HOMETOWN E 8 STUDYING IN THEIR HOMETOWN F 6 STUDYING IN THEIR HOMETOWN G 3 TAKEN BY THE GRANDPARENTS

AFTER THE DEATH OF THE FATHER

FOR PURPOSES OF TAXABLE YEAR 2009, HOW MUCH EXEMPTION WOULD LIZA BE ENTITLED TO?-(RPCPA)

(36)

A) P150,000 B) 57,000 C) 64,000 D) 73,000

NUMBERS 23 AND 24 ARE BASED ON THE FOLLOWING INFORMATION:

23. IN 2009, PIDOL’S WIFE DIED OF A CAR ACCIDENT. HIS DEPENDENTS ARE AS FOLLOWS:

CHILDREN STATUS

A 22 Y/O, EMPLOYED ON JULY 12, 2009 B 21 Y/O ON JANUARY 2, 2009

C 18 Y/O, MARRIED ON JANUARY 31, 2009

D 17 Y/O, GAINFULLY EMPLOYED ON OCTOBER 1, 2009 E 15 Y/O, AFFLICTED WITH SORE EYES ON MAY 6, 2009 F 13 DIED OF AN ACCIDENT IN 2009

G BROTHER, 28 Y/O PARALYTIC

FOR TAXABLE YEAR 2009, PIDOL CAN CLAIM ADDITIONAL EXEMPTIONS OF-

A) P75,000 B) 125,000 C) 100,000 D) 32,000

24. FOR THE YEAR 2010, PIDOL CAN CLAIM ADDITIONAL EXEMPTIONS OF-

A) P8,000 B) 16,000 C) 25,000 D) 100,000

25. ANGIE, WIDOW, EARNING AN ANNUAL GROSS COMPENSATION INCOME OF P300,000 HAS THE FOLLOWING DEPENDENT CHILDREN IN 2009:

AUBREY- BABY, BORN ON JANUARY 31;

BARBARA- CELEBRATED HER 21ST BIRTHDAY LAST JUNE 12; CRISTETA- MARRIED ON JANUARY 1;

DIANA- GAINFULLY EMPLOYED EFFECTIVE JULY 1; ELIZA- DIED OF DENGUE FEVER ON SEPTEMBER 30;

ASSUMING ANGIE HAS TWO EMPLOYERS, HER TAXABLE INCOME IN 2009 IS-

(37)

A) P32,000 B) 63,000 C) 150,000 D) 100,000

26. THE TAXABLE INCOME OF ANGIE IN 2010 IS-

A) P120,000 B) 225,000 C) 95,000 D) 87,000

27. WHICH OF THE FOLLOWING INCOME DERIVED FROM WITHIN THE PHILIPPINES BY A RESIDENT ALIEN IS NOT SUBJECT TO THE RATES IN SECTION 24(A) OF THE NIRC?-(RPCPA)

A) SALARY RECEIVED BY A MANAGING PARTNER OF A GENERAL PROFESSIONAL PARTNERSHIP

B) A PASSIVE INCOME IN THE FORM OF A PRIZE WON IN A RAFFLE AMOUNTING TO P4,000

C) A GAIN FROM SALE OF A MOTOR VEHICLE AS ANOTHER INCOME OF A TAXPAYER WHO IS A COMPENSATION INCOME EARNER

D) A GAIN ON SALE OF A REAL PROPERTY FOR PRIVATE USE OF THE FAMILY OF THE TAXPAYER

28. WHICH OF THE FOLLOWING INCOME IS SUBJECT TO FINAL TAX IF RECEIVED BY AN INDIVIDUAL TAXPAYER?

I. SHARE OF A PARTNER IN THE NET INCOME OF A BUSINESS PARTNERSHIP

II. CASH DIVIDEND RECEIVED BY A STOCKBROKER FROM A DOMESTIC CORPORATION

III. WINNINGS IN LOTTO

IV. RAFFLE PRIZES AMOUNTING TO P6,000

A) I AND II B) III AND IV C) I, II AND IV D) I, II, III AND IV

29. WHICH OF THE FOLLOWING IS NOT A REQUISITE FOR DEDUCTIBILITY OF HEALTH INSURANCE?

(38)

A) THE TOTAL FAMILY INCOME IS NOT MORE THAN P250,000

B) THE MAXIMUM AMOUNT OF PREMIUM DEDUCTIBLE DURING THE YEAR IS P2,400 PER FAMILY OR P200 A MONTH

C) IN THE CASE OF MARRIED INDIVIDUAL, THE SPOUSE CLAIMING THE ADDITIONAL EXEMPTION SHALL BE ENTITLED TO CLAIM THE INSURANCE PREMIUMS PAID

D) THE TAXPAYER MUST BE A HEAD OF FAMILY

30.STATEMENT 1: HEALTH AND/OR HOSPITALIZATION INSURANCE PREMIUMS PAID BY AN INDIVIDUAL IS DEDUCTIBLE ONLY IF THE TAXPAYER IS A PURE COMPENSATION INCOME EARNER

STATEMENT 2: A TAXPAYER WHO HAS PAID A MONTHLY HEALTH INSURANCE OF P400 FOR SIX MONTHS IN A YEAR CAN CLAIM TOTAL DEDUCTIBLE AMOUNT OF P2,400

A) TRUE, FALSE B) TRUE, TRUE C) FALSE, TRUE D) FALSE, FALSE

31. MAX, SINGLE, SUPPORTING HIS 58-YEAR OLD MOTHER, IS A COMPENSATION INCOME EARNER. DURING THE YEAR, HIS NET INCOME WAS P150,000. HE ALSO PAID A TOTAL PREMIUM OF P3,000 TO AN INSURANCE COMPANY FOR HIS HEALTH INSURANCE. HOW MUCH IS HIS TAXABLE INCOME?

A) P97,600 B) 97,000 C) 122,000 D) 122,600

32. ALL OF THE FOLLOWING, EXCEPT ONE, ARE TAXABLE ON INCOME WITHIN ONLY:

A) RESIDENT ONLY

B) NON-RESIDENT CITIZEN C) RESIDENT CITIZEN D) NON-RESIDENT ALIEN

33. IN 2009, RUSTOM, FILIPINO, LEGALLY SEPARATED FROM HIS WIFE, MINA, LEFT FOR THE UNITED STATES WITH HIS DAUGHTER, ROBINA, TO PERMANENTLY RESIDE THEREIN. IN 2009, HE EARNED P2 MILLION AS INCOME FROM HIS BEAUTY APRLON IN THAT COUNTRY.

(39)

WHICH OF THE FOLLOWING STATEMENTS IS CORRECT?

A) FOR PHILIPPINE INCOME TAX PURPOSES, RUSTOM MAY DEDUCT FROM HIS GROSS INCOME HIS PERSONAL EXEMPTION OF P50,000 OR THE AMOUNT ALLOWED IN THAT COUNTRY, WHICHEVER IS LOWER

B) FOR PHILIPPINE INCOME TAX PURPOSES, RUSTOM’S GROSS INCOME IS SUBJECT TO A CREDITABLE WITHHOLDING TAX OF 10%

C) RUSTOM’S GROSS INCOME OF P2 MILLION IS NOT TAXABLE IN THE PHILIPPINES

D) FOR PHILIPPINE INCOME TAX PURPOSES, HE IS NO LONGER ENTITLED TO CLAIM ADDITIONAL EXEMPTION ON ROBINA BECAUSE HE IS ALREADY CLASSIFIED AS A NON-RESIDENT ALIEN ENGAGED IN BUSINESS IN FOREIGN COUNTRY

34. CASE 1: PEPE, A CPA, HAD SIGNED A LEGALLY ENFORCEABLE AGREEMENT WITH HIS WIFE, PILAR, THAT THE EARNINGS FROM THE EXERCISE OF HIS PROFESSION WOULD BE SHARED EQUALLY BETWEEN THEM FOR PURPOSES OF COMPUTING THE INCOME TO BE REPORTED IN THEIR RESPECTIVE INDIVIDUAL INCOME TAX RETURN. IS THE AGREEMENT VALID?

CASE 2: LORENZO ADVISED HIS DAUGHTER, LORENA THAT THE RENT INCOME ON THE DORMITORY OWNED BY LORENZO WILL ACCRUE TO THE LATTER. LORENA COLLECTED THE INCOME AND REPORTED IT ON HER OWN RETURN. WERE THE ACTIONS TAKEN BY LORENZO AND LORENA VALID?

A) YES, NO B) YES, YES C) NO, YES D) NO, NO

ITEMS 35 TO 37 ARE BASED ON THE FOLLOWING INFORMATION:

BUSINESS INCOME, PHILIPPINES P300,000 BUSINESS INCOME, UNITED STATES 250,000 EXPENSES, PHILIPPINES 200,000 EXPENSES, UNITED STATES 125,000 INTEREST ON DEPOSIT WITH METROBANK 3,000 INTEREST ON DEPOSIT IN U.S.($1=P40) $500 CASH PRIZE WON IN A LOCAL CONTEST P6,000 CASH PRIZE WON IN A CONTEST IN U.S. 10,000 WINNINGS IN LOTTO 20,000

(40)

WINNINGS IN LOTTO IN U.S. 50,000 DIVIDENDS FROM SMC, A DOMESTIC COMPANY 25,000

35. THE TAXABLE INCOME IF SHARON IS A RESIDENT CITIZEN, SINGLE IS-

A) P261,000 B) 334,000 C) 291,000 D) 306,000

36.THE TAXABLE INCOME IF SHARON IS A NON-RESIDENT ALIEN ETB, MARRIED WITH FIVE(5) DEPENDENT CHILDREN-

A) P243,000 B) 56,000 C) 74,000 D) NONE

37. THE INCOME TAX DUE ON SHARON ASSUMING SHE IS A NON-RESIDENT ALIEN NETB, SINGLE, IS-

A) P83,500 B) 63,500 C) 18,500 D) 334,000

NUMBERS 38 TO 40 ARE BASED ON THE FOLLOWING INFORMATION:

ELVIS AND MADONNA, HUSBAND AND WIFE, HAVE THE FOLLOWING DATA IN 2009: ELVIS MADONNA COMPENSATION INCOME P125,000 P60,000 RENT INCOME(NET OF 5% WHT) 76,000 ROYALTIES ON BOOKS 70,000 DEPENDENT CHILDREN 6 WHT ON COMPENSATION 10,000

DURING THE YEAR, THE SPOUSES HAD AN INCOME OF P120,000 AND EXPENSES OF P65,000, WHICH CANNOT BE IDENTIFIED AS SOLELY ESRNED BY THE WIFE OR THE HUSBAND.

(41)

A) P3,000 B) 10,200 C) (P5,500) D) 8,700

39. THE TAXABLE INCOME OF MADONNA IS- A) P27,500

B) 37,500 C) 11,600 D) NONE

40. THE FINAL TAX ON THE PASSIVE INCOME IS-

A) P14,000 B) 7,000 C) NONE

D) NO ANSWER

41. THE OPTIONAL STANDARD DEDUCTION ON INDIVIDUAL IS-

A) 40% OF TAXABLE INCOME

B) 40% OF BUSINESS AND/OR PROFESSIONAL INCLUDING COMPENSATION INCOME

C) 40% OF BUSINESS AND/OR PROFESSIONAL INCOME

D) 10% OF BUSINESS AND/OR PROFESSIONAL EXCLUDING COMPENSATION INCOME

42.OPTIONAL STANDARD DEDUCTION IS ALLOWED TO

A) RESIDENT ALIEN

B) NON-RESIDENT ALIEN ENGAGED IN TRADE OR BUSINESS C) NON-RESIDENT ALIEN NOT ENGAGED IN TRADE OR BUSINESS D) NON-RESIDENT FOREIGN CORPORATION

NUMBERS 43 AND 44 ARE BASED ON THE FOLLOWING INFORMATION:

ROD, MARRIED, WITH TWO DEPENDENT CHILDREN, HAD THE FOLLOWING INCOME AND EXPENSES IN 2009:

SALARY, NET OF WHT OF P5,000 P55,000 13TH MONTH PAY 5,000 GROSS RECEIPTS FROM PROFESSION, NET OF WHT OF P7,000 83,000 RENT INCOME, NET OF 5% WHT 57,000 GROSS RECEIPTS FROM BUSINESS 125,000

(42)

PROFESSIONAL AND BUSINESS EXPENSES 56,500 PREMIUMS ON HEALTH INSURANCE 6,000

43. THE INCOME TAX PAYABLE BY ROD IF HE AVAILED OF THE ITEMIZED DEDUCTIONS-

A) P28,125 B) 17,125 C) 44,500 D) 41,360

44. THE INCOME TAX PAYABLE BY ROD IF HE AVAILED OF THE OPTIONAL STANDARD DEDUCTIONS-

A) P4,500 B) 50,225 C) 51,050 D) 51,650

NUMBERS 45 TO 46 ARE BASED ON THE FOLLOWING INFORMATION:

SPOUSES CARLOS AND IRENE, GOVERNMENT EMPLOYEES, HAD THE FOLLOWING DATA IN 2009:

CARLOS IRENE 13TH MONTH PAY AND OTHER BENEFITS 18,949.00 8,605.00 SSS, PHIC AND PAG-IBIG 14,549.76 4,559.75 BASIC SALARY 210,438.24 68,465.25 REPRESENTATION AND TRAVEL ALLOWANCE 96,000.00 - PERSONNEL ECONOMIC RELIEF ALLOWANCE - 6,000.00 OVERTIME PAY 2,450.35 4,457.04

HOLIDAY PAY - 1,783.25

HAZARD PAY - 6,000.00

ADDITIONAL EXEMPTIONS 50,000.00 - TOTAL AMOUNT OF TAXES WITHHELD 17,046.40 -

45. THE INCOME TAX PAYABLE BY CARLOS IS-

A) P31.32 B) 18,277.72 C) 363.16 D) 8,687.85

46. THE INCOME TAX PAYABLE ON IRENE IS-

(43)

B) 1,431.45 C) (P983.19) D) NONE

47. MRS. EVAN OWNS A PARCEL OF LAND WORTH P500,000 WHICH SHE INHERITED FROM HER FATHER IN 2006 WHEN IT WAS WORTH P300,000. HER FATHER PURCHASED IT IN 1986 FOR P100,000. IF MRS. EVAN TRANSFERS THIS PARCEL OF LAND FOR HER WHOLLY OWNED CORPORATION IN EXCHANGE FOR SHARES OF STOCKS OF SAID CORPORATION WORTH P450,000. MRS. EVAN’S TAXABLE GAIN IS-(RPCPA)

A) ZERO B) P50,000 C) 150,000 D) 350,000

48. MR. JOHNNY DELA CRUZ TRANSFERRED HIS COMMERCIAL LAND WITH A COST OF P500,000 BUT WITH A FAIR MARKET VALUE OF P750,000 TO JDC CORPORATION IN EXCHANGE OF THE STOCKS OF THE CORPORATION WITH PAR VALUE OF P1,000,000. AS A RESULT OF THE TRANSFER, HE BECAME THE MAJOR STOCKHOLDER OF THE CORPORATION.-(RPCPA)

AS A RESULT OF THE TRANSFER:

A) THE RECOGNIZED GAIN IS THE DIFFERENCE BETWEEN THE FAIR MARKET VALUE OF THE SHARES OF STOCKS AND THE COST OF THE LAND

B) THE RECOGNIZED GAIN IS THE DIFFERENCE BETWEEN THE PAR VALUE OF THE STOCKS AND THE FAIR MARKET VALUE OF THE LAND

C) NO RECOGNIZED GAIN BECAUSE THE LAND WAS IN EXCHANGE OF PURELY STOCKS AND MR. JOHNNY DELA CRUZ BECAME THE MAJORITY STOCKHOLDER

D) NO RECOGNIZED GAIN BECAUSE THE LAND WAS IN EXCHANGE OF STOCKS OF THE CORPORATION.

49. MR. SANTOS PURCHASED A LIFE ANNUITY FOR P100,000 WHICH WILL PAY HIM P10,000 A YEAR. THE LIFE EXPECTANCY OF MR. SANTOS IS 12 YEARS. WHICH OF THE FOLLOWING WILL MR. SANTOS BE ABLE TO EXCLUDE FROM HIS GROSS INCOME?-(RPCPA)

A) P100,000 B) 10,000 C) 20,000 D) 120,000

(44)

50.IF AN INDIVIDUAL PERFORMS SERVICES FOR A CREDITOR WHO IN CONSIDERATION THEREOF CANCELS THE DEBT, THE CANCELLATION OF INDEBTEDNESS MAY AMOUNT-(RPCPA)

A) TO A GIFT

B) TO A CAPITAL CONTRIBUTION C) TO A DONATION INTER VIVOS D) TO A PAYMENT OF INCOME

51. MR. AGUILA, AN EMPLOYEE OF FUERTE CORPORATION IS RECEIVING A MONTHLY SALARY (NET OF 10% WHT) OF P18,000. DUE TO AN OUTSTANDING ACCOMPLISHMENT IN JULY 2008, THE CORPORATION GAVE HIM 200 SHARES OF STOCK OF THE CORPORATION WITH A PAR VALUE OF P100 PER SHARE AND A FAIR MARKET VALUE OF P150. THE FAIR VALUE AT THE TIME OF RECEIPT IS P152 PER SHARE.

HOW MUCH IS THE INCOME OF MR. AGUILA IN 2008?

A) P50,000 B) 270,400 C) 270,000 D) 240,000

52. CARANCHO IS INDEBTED TO DACUYCUY. DUE TO HIS INABILITY TO PAY THE DEBT, HE WAS ASKED TO CLEAN THE PIGGERY OF THE LATTER FOR THREE MONTHS. THEREAFTER, DACUYCUY GAVE HIM P5,000 AND CONDONED THE DEBT AMOUNTING TO P10,000.

HOW MUCH INCOME SHOULD BE DECLARED BY CARANCHO?

A) P5,000 B) 10,000 C) 15,000 D) NONE

53. REWARDS GIVEN TO PERSONS INSTRUMENTAL IN THE DISCOVERY OF VIOLATION OF THE NATIONAL INTERNAL REVENUE CODE ARE SUBJECT TO-

A) FINAL TAX OF 10% ON REWARDS COLLECTED B) FINAL TAX OF 10% OF P1,000,000

C) FINAL TAX OF 10% OF REWARDS COLLECTED OR P1,000,000, WHICHEVER IS HIGHER

D) FINAL TAX OF 10% OF REWARDS COLLECTED OR P1,000,000, WHICHEVER IS LOWER

(45)

54. IN 2008, ALMONTE RECEIVED FROM HIS EMPLOYER A PROMISSORY NOTE WITH A FACE VALUE OF P50,000 FOR SERVICES RENDERED. THE NOTE WILL MATURE IN 2009. HOWEVER, IT CAN BE SOLD TO A BANK AT A DISCOUNT OF 25%. THE EMPLOYER PAID THE PROMISSORY NOTE IN 2009. HOW MUCH TAXABLE INCOME IS TO BE DECLARED BY ALMONTE ON THE PROMISSORY NOTE IN 2008 AND 2009, RESPECTIVELY?

A) P50,000, 50,000 B) 12,500, 37,500 C) 37,500, 12,500 D) NONE, 50,000

55. USING THE SAME DATA IN NUMBER 54 ABOVE, EXCEPT THAT 50% OF THE FACE VALUE OF THE NOTE IS PAYABLE IN 2009 WHILE THE REMAINING 50% IS PAYABLE IN 2010?

HOW MUCH INCOME IS TAXABLE TO ALMONTE IN 2008, 2009 AND IN 2010, RESPECTIVELY? A) P50,000, NONE, NONE B) 37,500, 6,250, 6,250 C) 12,500, 18,750, 18,750 D) 0, 25,000, 25,000 56.

2008 CASE1 CASE2 CASE3 CASE4 NET INCOME BEFORE

WRITE-OFF OF

BAD DEBT 70,000 70,000 70,000 70,000 LESS: BAD DEBT

WRITTEN OFF 40,000 80,000 55,000 85,000 NET INCOME AFTER

BAD DEBT 40,000 (10,000) 15,000 (15,000)

2009

AMOUNT RECOVERED 40,000 30,000 40,000 85,000

THE TAXABLE AMOUNT ON THE RECOVERY OF BAD DEBT PREVIOUSLY DEDUCTED, RESPECTIVELY, IS –

A) 40,000, 30,000, 40,000, 85,000 B) 40,000, 20,000, 40,000, 70,000 C) 30,000, 30,000, 55,000, 85,000 D) 30,000, 60,000, 25,000, 70,000

(46)

57.WHICH OF THE FOLLOWING STATEMENTS IS CORRECT WITH RESPECT TO A LEASEHOLD CONTRACT?

STATEMENT I: SECURITY DEPOSITS ARE REPORTABLE AS INCOME OF THE LESSOR IN THE YEAR OF RECEIPT

STATEMENT II: THE DEPRECIATION ON THE IMPROVEMENT IS TO BE COMPUTED BY DIVIDING THE COST BY THE LIFE OF THE ASSET OR THE REMAINING TERM OF THE LEASE, WHICHEVER IS LONGER

STATEMENT III: PREPAYMENT OF RENTALS BY THE LESSEE ARE TO BE RECORDED BY THE LESSOR USING CASH METHOD EVEN IF IT IS ORDINARILY USING ACCRUAL METHOD OF ACCOUNTING

A) I ONLY B) I AND II C) II AND III D) III ONLY

NUMBERS 58 TO 62 ARE BASED ON THE FOLLOWING INFORMATION:

BRYAN LEASED A LAND TO JOSE FOR A PERIOD OF 11 YEARS STARTING JANUARY 1, 2006 AT AN ANNUAL RENTAL OF P12,000. OBSERVING THE PROVISIONS OF THE CONTRACT, JOSE CONSTRUCTED A BUILDING WHICH SHALL BECOME THE PROPERTY OF BRYAN AT THE EXPIRATION OF THE LEASE. THE CONSTRUCTION WAS COMPLETED ON JANUARY 1, 2009 AT A COST OF P1,000,000 WITH AN ESTIMATED USEFUL LIFE OF 20 YEARS.

IT IS ALSO STIPULATED IN THE CONTRACT THAT THE LESSEE WILL PAY THE P1,500 ANNUAL REAL PROPERTY TAX ON THE LAND.

58. ASSUMING THAT ON JANUARY 1, 2006, JOSE PAID P24,000 TO BRYAN COVERING THE LEASE CONTRACT FOR 2 YEARS, HOW MUCH INCOME IS TO BE REPORTED BY BRYAN IN 2006?

A) P12,000 B) 13,500 C) 24,000 D) 25,500

59. HOW MUCH INCOME IS TO BE REPORTED BY BRYAN IN 2009 UNDER THE OUTRIGHT METHOD?

(47)

B) 1,500 C) 1,013,500 D) 1,000,000

60. HOW MUCH INCOME IS TO BE REPORTED BY BRYAN IN 2009 UNDER THE SPREAD-OUT METHOD?

A) P13,500 B) 1,500 C) 1,013,500 D) 88,500

61. HOW MUCH IS THE DEDUCTIBLE EXPENSE OF THE LESSEE IN 2009?

A) P138,500 B) 63,500 C) 125,000 D) 13,500

62. ASSUMING THAT DUE TO THE FAULT OF THE LESSEE, THE LEASE CONTRACT WAS TERMINATED ON JANUARY 1, 2011, HOW MUCH INCOME IS TO BE REPORTED BY THE LESSOR IN 2011?

A) P763,500 B) 750,000 C) 88,500 D) 1,013,500

NUMBERS 63 TO 69 ARE BASED ON THE FOLLOWING INFORMATION:

ARTURO LEASED A 216-SQUARE METER OF IDLE LAND TO LEIZZIE COLLEGE OF BUSINESS (LCB), A PROPRIETARY EDUCATIONAL INSTITUTION, FOR A PERIOD OF 20 YEARS EFFECTIVE JANUARY 1, 2006. THE LEASE CONTRACT PROVIDES THAT LCB WILL ERECT A BUILDING THEREON TO BE USED AS A CLASSROOM , WHICH IT DID ON THE LOT OF ARTURO. THE AGREEMENT PROVIDES ALSO THAT THE BUILDING SHALL BECOME THE PROPERTY OF THE LESSOR AT THE END OF THE LEASE. THE BUILDING WAS COMPLETED ON JUNE 30, 2008 AT A COST OF P1,800,000. THE ESTIMATED LIFE OF THE LEASEHOLD IMPROVEMENT IS 30 YEARS.

IT WAS FURTHER AGREED THAT LCB WILL PAY THE REAL ESTATE TAX ON THE LAND ASSESSED AT P3,000 ANNUALLY. ON JANUARY 2, 2006, LCB PAID ARTURO P120,000 CONSISTING OF RENTAL COVERING THE 2 YEARS PERIOD(24 MONTHS) FROM 2006 TO 2007.

(48)

63. THE RENT INCOME TO BE REPORTED BY ARTURO IN 2006-

A) P60,000 B) 123,000 C) 120,000 D) 63,000

64. THE RENT INCOME TO BE REPORTED BY ARTURO IN 2008 UNDER OUTRIGHT METHOD-

A) P60,000 B) 63,000 C) 1,860,000 D) 1,863,000

65. THE INCOME TO BE REPORTED BY ARTURO UNDER SPREAD-OUT METHOD-

A) P84,429 B) 105,857 C) 81,429 D) 21,429

66. WHICH OF THE FOLLOWING STATEMENTS IS CORRECT?

A) EFFECTIVE JANUARY 1, 2006, THE LAND SHALL BE EXEMPT FROM REAL ESTATE TAX

B) EFFECTIVE JUNE 30, 2008, THE LAND SHALL BE EXEMPT FROM REAL ESTATE TAX

C) EFFECTIVE JANUARY 1, 2009, THE LAND AND THE BUILDING SHALL BE EXEMPT FROM REAL ESTATE TAX

D) EFFECTIVE JUNE 30, 2008 THE LAND AND THE BUILDING SHALL BE EXEMPT FROM REAL ESTATE TAX

67. THE DEDUCTIBLE EXPENSE OF LCB IN 2009-

A) P165,857 B) 162,857 C) 114, 429 D) 84,429

68. THE INCOME TO BE REPORTED BY ARTURO IN 2009 UNDER SPREAD-OUT METHOD IS-

A) P105,857 B) 102,857 C) 114,429

References

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