TAX Flashcards
1
Q
Statement 1: Under VAT 0-rating, the effects of the VAT system on the particular 0-rated transaction are totally nullified.
Statement 2: A VAT-exempt taxpayer ends up paying and shouldering more VAT than one engaged in 0-rated sale
a) Only Statement 1 is true.
b) Only Statement 2 is true.
c) Both statements are true.
d) Both statements are false.
A
Both statements are true.
2
Q
When is the deadline for filling of the annual income tax return of the co-ownership for taxable year 2023?
a. April 15, 2024
b. May 15, 2025
c. Not applicable
d. April 15, 2023
A
Not applicable
3
Q
1st Statement - The fact that an individual’s name is signed to a filed return shall be prima facie evidence for all purposes that the return was actually signed by him.
2nd Statement - If a taxpayer is unable to make his return, the return may be made by his guardian or representative, the latter assuming the responsibilities of making the return and incurring penalties if the same was erroneous.
a. True; False
b. True; True
c. False; True
d. False; False
A
True; True
4
Q
Acquired through gratuitous title
Before marriage
A
CPG - Exclusive
ACP - Common
5
Q
Acquired through gratuitous title
After marriage
A
CPG - Exclusive
ACP - Exclusive
6
Q
Cash owned by the decedent before the marriage
A
CPG - Exclusive
ACP - Common
7
Q
Real property inherited by the decedent during the marriage
A
CPG - Exclusive
ACP - Exclusive
8
Q
Personal property received by the wife as gift before the marriage
A
ACP - Common
9
Q
Property acquired by decedent with cash owned before the marriage
A
CPG - Exclusive
ACP - Common
10
Q
Personal effects of the decedent purchased with the exclusive money of the wife
A
ACP - Exclusive
11
Q
Property owned
Before Marriage
A
CPG - Exclusive
ACP - Common
12
Q
Acquired through labor/industry
Before Marriage
A
CPG - Exclusive
ACP - Common
13
Q
Acquired through labor/industry
After Marriage
A
CPG - Common
ACP - Common
14
Q
Jewelry purchased with cash of the surviving spouse earned before marriage
A
ACP - Common
15
Q
Property unidentified when and by whom acquired
A
CPG - Common
ACP - Common
16
Q
Cash representing income received during the marriage from exclusive property
A
CPG - Common
ACP - Exclusive
17
Q
Property acquired before marriage by the decedent who has legitimate descendants by a former marriage
A
CPG - Exclusive
ACP - Exclusive
18
Q
These are part and parcel of the power of taxation and originate from the very nature of
taxation.
a. Inherent limitations
b. Constitutional limitations
c. Canons of taxation
d. None of the choices
A
Inherent limitations
19
Q
Where does the taxing power of the provinces, municipalities and cities precede from?
a. Constitutional grant
b. Legislative enactment
c. Presidential decree or Executive act
d. Local legislation
A
Constitutional grant
20
Q
The following individual taxpayers are subject to the graduated income tax rates, except:
a. Filipino citizens
b. Resident aliens
c. Non-resident alien engaged in trade or business in the Philippines
d. Non-resident alien not engaged in trade or business in the Philippines
A
Non-resident alien not engaged in trade or business in the Philippines
21
Q
Which of the following income will be taxed in the same manner regardless of the classification
of the taxpayer?
a. Capital gain on sale of land and/or building
b. Capital gain on sale of shares of stock of a domestic corporation
c. Ordinary gain on sale of land and/or building
d. Ordinary gain on sale of shares of stock of a domestic corporation
A
Capital gain on sale of shares of stock of a domestic corporation
22
Q
First Statement- Pension contributions are entirely deductible on the year the contributions
were made.
Second Statement - The straight line method of depreciation is an allowed mode of depreciation under the tax code.
a. True, True
b. True, False
c. False, False
d. False, True
A
False, True
23
Q
The tax arbitrage rate for interest expense in the year 2024 for domestic corporations
qualified to the RCIT of 20% is 0%.
Taxpayers may opt to credit from the Philippine income tax or deduct from the gross income the foreign income taxes that he, she or it has paid.
A
True, False
24
Q
All income taxes are not allowed as a deduction from Gross income.
Interest expense may be treated as a revenue or capital expenditure, at the option of the taxpayer.
a. True, True
b. True, False
c. False, False
d. False, True
A
False, True
25
Salipapaw Airlines, a resident international carrier, shall have its tax base as
a) Gross Philippine billings
b) Gross Philippine billings less expenses which are directly related to flights originating
from the Philippines.
c) Gross income derived from sources within the Philippines.
d) Taxable income arising from sources within the Philippines.
Gross Philippine billings
26
Dividend from a domestic corporation or share in the distributable income after tax of a
taxable partnership received by a citizen shall be subjected to the final tax rate of:
a) 10%
b) 15%
c) 20%
d) 25%
10%
27
Refund of the following taxes are included in the gross income, except:
a) 6% capital gains tax on sale of real property.
b) Tax erroneously paid on inter vivos donations to the Government.
c) Special assessment on property specially benefitted by infrastructure project of the
Government.
d) Fringe benefits tax paid by the employer
Fringe benefits tax paid by the employer
28
The following fringe benefits are subject to the fringe benefits tax, except:
a) Benefits received by a managerial employee;
b) Benefits received by a rank-and-file employee;
c) Educational assistance given to the Company’s Finance Manager;
d) Membership dues for golf club membership for the Company’s Vice Presidents.
Benefits received by a rank-and-file employee;
29
The following may claim optional standard deductions, except:
a) General professional Partnership of Philippine lawyers;
b) Joint venture in the Philippines
c) Resident citizen individual
d) Non-resident alien individual
Non-resident alien individual
30
The following are the requisites of a validly imposed tax, except:
a.That the subject matter thereof be within the jurisdiction of the state;
b. That the assessment and collection thereof be subject to the due process guarantee of the constitution:
c. That the tax must not impinge on the inherent and constitutional limitations on the exercise
of taxation power;
d. it should be generally payable in money.
it should be generally payable in money.
31
The following are exempt from the Overseas communications tax, except:
a. Diplomatic community
b. News Organization
c. Government owned corporation
d. International Community
Government owned corporation
32
The following sale of services are not exempt from the VAT, except:
a. Services of banks, non-bank financial intermediaries performing quasi-banking functions,
and other non-bank financial intermediaries.
b. Services rendered by doctors of medicine duly registered with the professional Regulatory
Commission.
c. Services rendered by lawyers duly registered with the Integrated Bar of the Philippines.
d. Foreign artist performing in a one night concert in the Philippines.
Services of banks, non-bank financial intermediaries performing quasi-banking functions,
and other non-bank financial intermediaries.
33
First statement – The BIR Commissioner upon the recommendation of the Secretary of
Finance, shall promulgate all needful rules and regulations for the effective enforcement of the provisions of NIRC.
Second statement – The rules and regulations of the BIR shall contain the conditions to be observed by revenue officer respecting the institution and conduct of legal actions and
proceedings.
a. True; False
c. False; True
b. True; True
d. False; False
False; True
34
Remedies of the government for the collection of delinquent taxes shall be by:
a. Levy or/and distraint
b. Civil or criminal action
c. Either of these remedies or both simultaneously.
d. None of the above
Either of these remedies or both simultaneously.
35
Statement 1: The Constitution prohibits that taxes must be paid in any other form than money.
Statement 2: The Bureau of Internal Revenue may accept real property as a way of
voluntary compliance of one’s tax obligations.
A. Only statement I is true
B. Only statement II is true
C. Both statements are true
D. Both statements are false
Both statements are false
36
A certain House Bill was transmitted to the Senate and was passed accordingly. The
Bill was submitted to the President for his signature on August 1, 2023. On September
5, 2023, the President stated on a media interview that he does not intend to sign
the bill into law that is why he is not yet acting on the bill. What is the status
of House Bill?
A. The bill is automatically vetoed upon the lapse of 15 days.
B. The bill has automatically lapsed into law after 30 days.
C. The bill's effectivity is suspended until the President of the signature.
D. The bill has become effective until the President vetoes it.
The bill has automatically lapsed into law after 30 days.
37
What is the nature of the taxation power of local government units such as province,
city, municipality and barangay?
A. It is inherent in nature
B. It is a power delegated by the legislative department
C. It is a Constitutionally delegated power
D. All of the above
It is a Constitutionally delegated power
38
Installment basis of reporting of income shall apply to casual sale of personal
property upon compliance with all of the following requisites, except _.
A. The price exceeds P1,000.
B. The property would not be included in the inventory of the taxpayer if on hand at
the end of the taxable year.
C. The price will be paid in at least three (3) installments.
D. Initial payments do not exceed 25% of the selling price.
The price will be paid in at least three (3) installments.
39
Which of the following gains is subject to capital gains tax?
A. Gain on sale of shares of stocks of domestic corporation by dealer of securities
B. Gain on sale of unquoted shares of stocks of domestic corporation by a non-dealer of securities
C. Gain on sale of quoted shares of stocks of domestic corporation thru the facilities
of Philippine Stock Exchange
D. Gain on sale of quoted shares of stocks of foreign corporation directly to buyer
Gain on sale of unquoted shares of stocks of domestic corporation by a non-dealer of securities
40
Under the CREATE Act, interest income from depository banks under the Foreign Currency
Deposit System earned by a resident foreign corporation is _.
A. Subject to capital gains tax of 15%
B. Subject to final withholding tax of 15%
C. Subject to final withholding tax of 7.5%
Subject to final withholding tax of 15%
41
Which of the following is a taxable income?
A. Income from qualified pension plan
B. Compensation for personal injuries
C. Moral damages
D. Interest on moral damages
Interest on moral damages
42
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 gross sales/receipts from business and/or professional income.
D. 40% of business and/or professional excluding compensation income.
40% of gross sales/receipts from business and/or professional income.
43
Which of the following is a deductible expense for income tax purposes?
A. Salaries of domestic servants
B. Ordinary repair of the personal car
C. Provision for doubtful accounts
D. None of the above
None of the above
44
All of the following can be deducted from a purely compensation income earner’s
income, except _.
A. union dues
B. mandatory PAGIBIG contributions
C. Premium payments on health and hospitalization insurance
D. mandatory SSS contributions
Premium payments on health and hospitalization insurance
45
The situs of service income is _.
a. Where the payment for services is made
b. Where the service contract was perfected
c. Where the services are performed
d. Where the party availing of the services is located
Where the services are performed
46
Which of the following received by an individual taxpayer is not
subject to final tax but subject to tax under Section 24 A of the
Tax Code?
a. Cash dividend from domestic corporation
b. Property dividend from regional operating headquarters of
multinational companies
c. Share in the distributive net income after tax of a taxable
partnership in the Philippines
d. Cash dividend from a foreign corporation with Philippine branch
Cash dividend from a foreign corporation with Philippine branch
47
Statement 1: Passive incomes are subject to separate and final tax
rates.
Statement 2: Passive incomes are included in the computation of
taxable income from compensation or business/professional income.
a. Both statements are true
b.
Both statements are false
c. True, False
d. False, True
True, False
48
Cash and/or property dividends shall be subject to 10% final withholding if actually or constructively received from:
I.
Domestic companies or from joint stock companies
II.
Insurance or mutual companies
III.
Regional operating headquarters of multinationals
IV. Philippine branch of a foreign corporation
a. I only
b.
I and II only
c. I, II, III only
d. IV only
I, II, III only
49
The share of a partner in the profits of a general professional partnership is regarded as received by him and thus taxable although not yet distributed. This principle is known as _.
a. advance reporting of income.
b.
actual receipt of income
c. accrual method of accounting
d. constructive receipt of income
constructive receipt of income
50
The capital gains tax on the sale or disposition of domestic stocks
does not cover
a. Issuance of stocks by a corporation
b.
Redemption of shares in a mutual fund
c. Gratuitous transfer of stocks
d. All of the above
All of the above
51
What is the rate of stock transaction tax on sale of domestic
stocks classified as capital assets through the Philippine Stock
Exchange?
a. 50% of 1% of selling price
b.
60% of 1% of selling price
c.
50% of 1% of selling price or fair value, whichever is higher
d. 60% of 1% of selling price or fair value, whichever is higher
60% of 1% of selling price
52
The following income, unless excluded by law, are taxable with
regular income tax, except:
a. Gain on exercise of profession
b.
Gain on conduct of business
c. Gain on royalties
d. Gain on rentals of properties
Gain on royalties
53
It is a kind of withholding tax which is prescribed on certain
income payments and is creditable against the income tax due of the
payee for the taxable quarter/year in which the particular income
was earned.
a. Withholding tax on income
b.
Creditable withholding tax
c. Final withholding tax
d. All of the above
Creditable withholding tax
54
What method of accounting should the taxpayer use?
a. Cash basis
b.
Accrual basis
c. Method regularly employed by the taxpayer
d. All of the above
Method regularly employed by the taxpayer
55
The taxable income of a taxpayer shall be computed upon the basis
of such taxpayer’s
a. Monthly accounting period
b.
Quarterly accounting period
c.
Annual accounting period
d. All of the above
Annual accounting period
56
Which of the following dividends is an item of gross income?
a. Dividends received by a domestic corporation from another
domestic corporation
b. Dividends received by a resident foreign corporation from a
domestic corporation
c. Dividends received by a resident citizen from a non-resident
foreign corporation.
d. Dividends received by a non-resident from a non-resident
foreign corporation.
Dividends received by a resident citizen from a non-resident
foreign corporation.
57
Which of the following may not be allowed as deduction in computing the 5% gross income tax of a
manufacturer?
a. Financing charges associated with fixed assets used in production.
b. Supplies and fuels used in production.
c. Commissions paid to agents.
d. Production supervision salaries.
Commissions paid to agents
58
Which of the following will not be allowed to be claimed as deduction in calculating capital gain or capital
loss from sale of shares of stock?
a. Acquisition cost of the shares.
b. Capital gains tax from sale of said shares.
c. Agent’s commission incurred at the time of disposition of shares.
d. Documentary stamp tax paid on acquisition of shares.
Capital gains tax from sale of said shares.
59
Which of the following assets may be considered capital assets for income tax purposes?
a. Condominium units held for sale by real estate dealer.
b. Equipment used in the manufacture of consumer products.
c. Accounts receivables from customers.
d. Jewelry held as inventory
Condominium units held for sale by real estate dealer.
60
An example of a tax where the concept of progressivity finds
application is the
A. Income tax on individuals
B. Excise tax on petroleum products.
C. Value-added tax on certain articles.
D. Amusement tax on boxing exhibitions.
Income tax on individuals
61
Which of the following are types of excise tax?
A. Specific tax
B. Ad valorem tax
C. Both are types of excise tax
D. Neither are types of excise tax
Both are types of excise tax
62
For Value Added Tax computation purposes, the consumption of
gross selling price for sale of goods or properties generally
requires the use of what method of accounting in recognizing
sales?
a. Accrual method
b. Cash method
c. Either accrual or cash method at the taxpayer’s option
d. Accrual or cash method whichever comes first (hybrid method)
Accrual method
63
One of the following franchise grantees is not subject to VAT.
Which is it?
a. Franchise grantees of gas and water utilities whose annual
gross receipts of the preceding year exceed P10,000,000
b. Franchise grantees of telephone and telegraph businesses
c. Franchise grantees on toll road operations
d. VAT-registered franchise grantees of radio and television
broadcasting businesses whose annual gross receipts of the
preceding year do not exceed P10,000,000
Franchise grantees of gas and water utilities whose annual
gross receipts of the preceding year exceed P10,000,000
64
Who are allowed to withhold vat from its vat suppliers?
a. Entities, organization, business or corporation duly registered
with Philippine Economic Zone Authority (PEZA).
b. Nonresident individual and corporations
c. Government or any of its instrumentalities including government
owned and controlled corporation
d. Resident foreign corporation doing business in the Philippines
Government or any of its instrumentalities including government
65
All are similarities of taxation, police power, and power of eminent domain, EXCEPT
a. All are necessary attributes of the Constitution
b. All exist independently of the Constitution
c. All contemplate an equivalent benefit
d. All are superior to the non-impairment clause of the Constitution
All are superior to the non-impairment clause of the Constitution
66
The following powers of the Commissioner may not be delegated, except:
a. The power to recommend the promulgation of rules and regulations by the secretary of
finance.
b. The power to issue ruling of first impression or to reverse, revoke or modify any
existing ruling of the bureau.
c. The power to compromise or abate internal revenue taxes save for a few.
d. The power of the commissioner to make assessments.
The power of the commissioner to make assessments.
67
The following are agents and deputies for collection of National Internal Revenue taxes,
except:
a. The commissioner of Customs and his subordinates with respect to the collection of national
Internal Revenue Taxes on imported goods.
b. The head of the appropriate government office and his subordinates with respect to the
collection of energy tax.
c. Banks duly accredited by the commissioner with respect to receipts of payments of internal
revenue taxes authorized to be made thru banks.
d. City treasurer with regard to collection of real estate tax.
City treasurer with regard to collection of real estate tax.
68
1
st Statement – The BIR Commissioner upon the recommendation of the Secretary of
Finance, shall promulgate all needful rules and regulations for the effective enforcement of
the provisions of NIRC.
2
nd Statement – The rules and regulations of the BIR shall contain the conditions to be
observed by revenue officers respecting the institution and conduct of legal actions and
proceedings.
a. True; False c. False; True
b. True; True d. False; False
False; True
69
San Miguel Corporation a domestic corporation declared dividends in favor of a nonresident foreign corporation, Mc Donald’s USA in the amount of 200M. How much is the
tax payable in the Philippines?
a. 30M
b. 50M
c. 60M
d. Exempt
30M
70
Which of the following businesses is allowed a presumptive input value-added-tax?
a. Manufacturer of canned goods.
b. Manufacturer of packed juices.
c. Manufacturer of packed noodles
d. Manufacturer of dried fish
Manufacturer of packed noodles
other: sugar cooking oil, sardines?? check notes
71
When a BIR decision affirming an assessment is appealed to the CTA, the BIR’s power to
garnish the taxpayer’s bank deposits.
a. Is suspended to await the finality of such decision.
b. Is suspended given that the CTA can reverse BIR decisions when prejudicial to the
taxpayer.
c. Is not suspended because only final decisions of the BIR are subject to appeal.
d. Is not suspended since the continued existence of government depends on tax revenues.
Is not suspended since the continued existence of government depends on tax revenues.
72
There is prima facie evidence of a false or fraudulent return where the
a. Tax return was amended after a notice of assessment was issued.
b. Tax return was filed beyond the 11eglementary period.
c. Taxpayer changed his address without notifying the BIR.
d. Deductions claimed exceed by 30% the actual deduction
Deductions claimed exceed by 30% the actual deduction
73
What is the prescriptive period for an assessment fraud?
a. 5 years from discovery;
b. 10 years from discovery;
c. 5 years from date of the return or deadline prescribe by law whichever is later;
d. 10 years from date of the return or deadline prescribe by law whichever is later;
10 years from discovery;
74
The prescriptive period for tax warrant or check for refund or tax credit shall be within:
a. 4 years from date of issue;
b. 5 years from date of issue;
c. 10 years from date of issue;
d. 12 years from date of issue;
5 years from date of issue;
75
There are several special levies on real property. Which of the following
is not one of them?
A. Special education fund tax
B. Special assessment
C. Ad valorem tax on idle land
D. Transfer tax on transfer of real property ownership
Transfer tax on transfer of real property ownership
76
Which of the following losses is claimable as deduction against gross estate?
A.
Losses claimed in the income tax return of the estate
B.
Losses occurring before the death of the decedent
C.
Losses occurring 6 months after the death of the decedent
D.
Losses of separate properties of the decedent before he died
Losses occurring 6 months after the death of the decedent
77
Which is a conjugal property?
A.
Property inherited during marriage
B.
Property inherited before marriage
C.
Property received from exercise of profession during marriage
D.
Property received from a donation during marriage
Property received from exercise of profession during marriage
78
Which is excluded in the gross estate of a deceased husband under the absolute
community of property?
A.
Fruits of properties inherited by the wife during the marriage
B.
Fruits of common properties during the marriage
C.
Fruits of properties of the spouses before their marriage
D.
Properties inherited by the husband
Fruits of properties inherited by the wife during the marriage
79
For purposes of income taxation, which of the following is not considered as a
corporation?
A.
General professional partnership
B.
Business partnership
C.
Unregistered partnership
D.
Joint stock companies
General professional partnership
80
The income tax returns must be filed in _.
A.
Duplicate
B.
Triplicate
C.
Quadruplicate
D.
Quintuplicate
Duplicate
81
Which of the following types of income is no longer required to be reported in the
income tax return of a resident citizen?
A.
Capital gain subject to capital gains tax
B.
Income already subjected to creditable withholding tax
C.
Illegal income
D.
Income earned outside Philippine territory
Capital gain subject to capital gains tax
82
Which type of income taxpayer may still claim cost of sales as allowable deduction aside from the 40% Optional Standard Deductions?
A.
Individual income taxpayer
B.
Corporate income taxpayer
C.
Both A and B
D.
Neither A nor B
Corporate income taxpayer
