TAX 1 Exam

Bar Examination Questionnaire for TaxationSet A (Source:
www.chanroblesbar.Com)
1. A municipality may levy an annual ad valorem tax on realproperty such as

land, building, machinery, and otherimprovement only if
A. the real property is within the Metropolitan Manila Area.
B. the real property is located in the municipality.C. the DILG authorizes it to

do so.D. the power is delegated to it by the province.2. Anne Lapada, a
student activist, wants to impugn the validity of a tax on text messages.
Aside from claiming that the lawadversely affects her since she sends
messages by text, what mayshe allege that would strengthen her claim to the
right to file a
taxpayers suit?
A. That she is entitled to the return of the taxes collected fromher in case the
court nullifies the tax measure.
B. That tax money is being extracted and spent in violation of the

constitutionally guaranteed right to freedom of communication.
C. That she is filing the case in behalf of a substantial number of taxpayers.D.

That text messages are an important part of the lives of thepeople she
represents.3. There is no taxable income until such income is
recognized.Taxable income is recognized when theA. taxpayer fails to include
the income in his income tax return.B. income has been actually received in
money or its equivalent.
C. income has been received, either actually or constructively.
D. transaction that is the source of the income is consummated.4. Keyrand,

Inc., a Philippine corporation, sold through the localstock exchange 10,000
PLDT shares that it bought 2 years ago.Keyrand sold the shares for P2 million
and realized a net gain of P200,000.00. How shall it pay tax on the
transaction?A. It shall declare a P2 million gross income in its income
taxreturn, deducting its cost of acquisition as an expense.B. It shall report the
P200,000.00 in its corporate income taxreturn adjusted by the holding
period.C. It shall pay 5% tax on the first P100,000.00 of the P200,000.00and
10% tax on the remaining P100,000.00.
D. It shall pay a tax of one-half of 1% of the P2 million grosssales.
5. Amaretto, Inc., imported 100 cases of Marula wine from SouthAfrica. The
shipment was assessed duties and value-added taxesof P300,000 which
Amaretto, Inc. immediately paid. The Bureauof Customs did not, however,
issue the release papers of theshipment yet since the Food and Drug
Administration (FDA)needed to test the suitability of the wine for
humanconsumption. Is the Bureau of Customs at fault for refusing torelease
the shipment just as yet?A. Yes, because the importation was already
terminated as aresult of the payment of the taxes due.B. Yes, the Bureau of
Customs is estopped from holding therelease of the shipment after receiving
the payment.C. No, if the amount paid as duties and value-added taxes due
onthe importation was insufficient.
D. No, because the Bureau of Customs has not yet issued thelegal permit for
withdrawal pending the FDA's findings.
6. Which theory in taxation states that without taxes, agovernment would be

paralyzed for lack of power to activate andoperate it, resulting in its
destruction?A. Power to destroy theory
B. Lifeblood theory
C. Sumptuary theoryD. Symbiotic doctrine7. The spouses Helena and

Federico wanted to donate a parcel of land to their son Dondon who is getting
married in December,2011. The parcel of land has a zonal valuation of
P420,000.00.What is the most efficient mode of donating the property?A. The
spouses should first donate in 2011 a portion of theproperty valued at
P20,000.00 then spread the P400,000.00equally for 2012, 2013, 2014 and
2015.B. Spread the donation over a period of 5 years by the spousesdonating
P100,000.00 each year from 2011 to 2015.
C. The spouses should each donate a P110,000.00 portion of thevalue of the

property in 2011 then each should donateP100,000.00 in 2012.
D. The spouses should each donate a P100,000.00 portion of thevalue of the

property in 2011, and another P100,000.00 each in2012. Then, in 2013,
Helena should donate the remainingP20,000.00.8. Mia, a compensation
income earner, filed her income taxreturn for the taxable year 2007 on March
30, 2008. On May 20,2011, Mia received an assessment notice and letter of
demandcovering the taxable year 2007 but the postmark on the
envelopeshows April 10, 2011. Her return is not a false and fraudulentreturn.
Can Mia raise the defense of prescription?
A. No. The 3 year prescriptive period started to run on April 15,2008, hence, it
has not yet expired on April 10, 2011.
B. Yes. The 3 year prescriptive period started to run on April 15,2008, hence,
it had already expired by May 20, 2011.C. No. The prescriptive period started
to run on March 30, 2008,hence, the 3 year period expired on April 10,
2011.D. Yes. Since the 3-year prescriptive period started to run onMarch 30,
2008, it already expired by May 20, 2011.9. Double taxation in its general
sense means taxing the samesubject twice during the same taxing period. In
this sense, doubletaxationA. violates substantive due process.B. does not
violate substantive due process.
C. violates the right to equal protection.
D. does not violate the right to equal protection.10. The payor of passive
income subject to final tax is required towithhold the tax from the payment
due the recipient. Thewithholding of the tax has the effect of
A. a final settlement of the tax liability on the income.
B. a credit from the recipient's income tax liability.C. consummating the

transaction resulting in an income.D. a deduction in the recipient's income
tax return.11. Guidant Resources Corporation, a corporation registered
inNorway, has a 50 MW electric power plant in San Jose, Batangas.Aside from
Guidant's income from its power plant, which among

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Bar Examination Questionnaire for TaxationSet A (Source:

1. A municipality may levy an annual ad valorem tax on realproperty such as

A. the real property is within the Metropolitan Manila Area.

B. the real property is located in the municipality.C. the DILG authorizes it to

B. That tax money is being extracted and spent in violation of the

C. That she is filing the case in behalf of a substantial number of taxpayers.D.

C. income has been received, either actually or constructively.

D. transaction that is the source of the income is consummated.4. Keyrand,

D. It shall pay a tax of one-half of 1% of the P2 million grosssales.

6. Which theory in taxation states that without taxes, agovernment would be

C. Sumptuary theoryD. Symbiotic doctrine7. The spouses Helena and

C. The spouses should each donate a P110,000.00 portion of thevalue of the

D. The spouses should each donate a P100,000.00 portion of thevalue of the

C. violates the right to equal protection.

A. a final settlement of the tax liability on the income.

B. a credit from the recipient's income tax liability.C. consummating the

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