Taxation Quiz 1

Name: Quiz 1
1. A. The power to tax includes the power to exempt.

B. The power to license includes the power to tax.
Which is true?
a. A only c. A and B
b. B only d. Neither A nor B
2. Which of the following inappropriately describes the nature of taxation?
a. Inherent in sovereignty
b. Essentially a legislative function
c. Subject to inherent and constitutional limitation
d. Generally for public purpose
3. Which does not properly describe the scope of taxation?
a. Comprehensive c. Discretionary
b. Supreme d. Unlimited
4. Which tax exemption is irrevocable?
a. Tax exemption based on contract
b. Tax exemption based on the Constitution
c. Tax exemption based on law
d. Both A and B
5. This refers to the privilege or immunity from a tax burden which others are subject to:
a. Exclusion c. Tax Holiday
b. Deduction d. Reciprocity
6. Which of the following powers is inherent or co-existent with the creation of the government?
a. Police power c. Taxation
b. Eminent Domain d. All of these
7. Which is not a nature of tax?
a. Enforced proportional contribution
b. Enforced within the territorial jurisdiction of the taxing authority
c. Levied by the lawmaking body
d. Generally payable in kind
8. A tax that is imposed upon the performance of an act, the enjoyment of a privilege or the
engagement in a profession as known as
a. Income tax c. excise tax
b. License d. transfer tax
9. Tax as to determination of amount is classified as
a. Fiscal or regulatory c. National or local tax
b. Direct or indirect tax d. Specific or ad valorem tax
10. Which is not an excise tax?
a. Income tax c. Estate tax
b. Community tax d. Occupation tax
11. Which is an indirect tax?
a. Value added tax c. Income tax
b. Donor’s tax d. Real property tax
12. A transfer tax is not a/an
a. Regressive tax c. National tax
b. Ad valorem tax d. Excise tax
13. The total consideration received from the sale of goods at a gain represents
a. Return on capital c. Either a or b
b. Return of capital d. Both a and b
14. Which taxpayer is not a natural person?
a. Resident citizen
b. Taxable estate
c. Non-resident alien engaged in trade or business
d. Non-resident alien not engaged in trade or business
15. A citizen who left the Philippines on March 1, 2013 would be classified as
a. Resident citizen for the year 2013.
b. Non-resident for the year 2014.
c. Non-resident for the year 2013.
d. Resident citizen for the year 2014.
16. An alien received P300,000 compensation income in the Philippines and P200,000 rental income
from abroad. How much will be subject to Philippine income tax?
a. None c. P300,000
b. P200,000 d. P500,000
17. Kendrick received the following items during the year:
 P200,000 donation from a girlfriend
 P150,000 service fee from professional services
 P300,000 inheritance from his deceased father
 P100,000 income from illegal gambling
 P50,000 gain on sale of his personal car
 P250,000 profits from his bar restaurant
Compute the total income subject to income tax.
a. P1,050,000 c. P550,000
b. 750,000 d. P450,000
18. Jen is engaged in business. The following pertains to her transactions during 2014:
 Sold his personal car which was purchased at P200,000 to a friend who paid only half of
the car’s P500,000 current fair value.
 Sales of merchandise was P800,000 and the cost of goods sold was P600,000.
 Jen acquired several stocks from the Philippine Stock Exchange for speculation. These
stocks have an aggregate purchase price of P400,000 but with P700,000 fair value by
December 31, 2014.
 Jen’s house and lot which he acquired for P1,500,000 in 2010 now have a current fair
value of P2,500,000.
Compute Jen’s total income subject to income tax.
a. P1,800,000 c. P250,000
b. 1,550,000 d. P200,000
19. A non-resident citizen is an international financier who earned P300,000 interest income from
resident debtors and P400,000 from foreign debtors. How much is subject to Philippine income
tax?
a. None c. P300,000
b. P300,000 d. P500,000
20. The place of taxation is
a. Situs rule c. Territoriality
b. Situs d. Gross income
“Count it all joy, my brothers, when you meet trials of various kinds, for you know
that the testing of your faith produces steadfastness and endurance.”
-James 1:23

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Name: Quiz 1

1. A. The power to tax includes the power to exempt.

Compute the total income subject to income tax.

Compute Jen’s total income subject to income tax.

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