tax Flashcards
Statement 1: A progressive system of taxation means a tax structure where the tax rate increases as the tax
base increases.
Statement 2: A person may refuse to pay a tax on the ground that he receives no personal benefit from it.
Statement 3 : A tax is generally unlimited because it is based on the needs of the state.
a. Only one (1) statement is correct
b. Only two (2) statements are correct
c. All statements are correct
d. All statements are incorrect
b. Only two (2) statements are correct
Statement 1 : Levying of taxes is a legislative act.
Statement 2: Assessment and collection of taxes is an executive act.
Statement 3 : A state has the power to tax even if not granted by the Constitution.
a. Only one (1) statement is correct
b. Only two (2) statements are correct
c. All statements are correct
d. All statements are incorrect
c. All statements are correct
Statement 1: A state cannot exercise police power if not granted by the Constitution.
Statement 2 : The provisions in the Constitution are grants of power of taxation.
Statement 3: The President may suggest proposalsfortax reforms addressed to both houses of Congress, but
the revenue bill of such reforms must originate from the House of Representatives.
a. Only one (1) statement is correct
b. Only two (2) statements are correct
c. All statements are correct
d. All statements are incorrect
a. Only one (1) statement is correct
Statement 1: Territoriality is one of the inherent limitations on the power of taxation.
Statement 2: International comity is a Constitutional limitation in taxation.
Statement 3: There can be a double taxation in the Philippines.
a. Only one (1) statement is correct
b. Only two (2) statements are correct
c. All statements are correct
d. All statements are incorrect
b. Only two (2) statements are correct
Statement 1: For MSMEs, interest expense in connection with the taxpayer’s business shall be reduced by
an amount equal to 20% of grossed-up interest income.
Statement 2: Interest incurred to acquire property used in businessshallbe allowed as a capital expenditure
or outright deduction, at the option of BIR.
Statement 3: The allowable deduction for pension payments to employees will only apply to those pension plan that is funded.
a. Only one (1) statement is correct
b. Only two (2) statements are correct
c. All statements are correct
d. All statements are incorrect
d. All statements are incorrect
Statement 1: An individual employee has no choice but to use graduated tax table in computing his
annual tax.
Statement 2: An individual engaged in trade or business may opt to use either graduated tax or 8% tax.
Statement 3: An individual purely engaged in practice of profession can only use 8% tax.
a. Only one (1) statement is correct
b. Only two (2) statements are correct
c. All statements are correct
d. All statements are incorrect
b. Only two (2) statements are correct
Statement 1: Generally, fringe benefits are subject to fringe benefits tax if given to managerial employees.
Statement 2: Fringe benefits when given to rank-and- file are exempted from fringe benefits tax.
Statement 3: The employee is the person statutorily liable to pay the fringe benefits tax.
Statement 4: The basis of the fringe benefits tax is the monetary value of the fringe benefits.
a. Only one (1) statement is correct
b. Only two (2) statements are correct
c. Only three (3) statements are correct
d. All statements are correct
b. Only two (2) statements are correct
Statement 1: A foreigner who shall stay in the Philippines without a definite intention is considered a nonresident alien.
Statement 2: A non-resident alien who shall stay in the Philippines for 180 days shall be considered engaged
in trade or business.
Statement 3: A nonresident citizen is a citizen of the Philippines who leaves the Philippines during the taxable
year to reside abroad, either an immigrant or for employment on a permanent basis.
a. Only one (1) statement is correct
b. Only two (2) statements are correct
c. All statements are correct
d. All statements are incorrect
a. Only one (1) statement is correct
The following are non-resident citizens, except
a. A citizen of the Philippines who establishes to the satisfaction of the Commissioner the fact of this
physical presence abroad with a definite intention reside therein
b. A citizen of the Philippines who went on a business trip abroad and stayed there most of the time during the year
c. A citizen of the Philippines who works and derives income from abroad and whose employment
thereat requires him to be physically present abroad most of the time during the taxable year
d. A citizen of the Philippines who leaves the Philippines during the taxable year to reside abroad, either
as an immigrant or for employment on permanent basis
b. A citizen of the Philippines who went on a business trip abroad and stayed there most of the time during the year
Mr. X arrived on September 1, 2024 to retire and reside permanently in the Philippines after working as
doctor in Australia for several years. Which of the following statements is correct with respect to Mr. X’s classification for income tax purposes?
a. He shall be classified as nonresident citizen for year 2024 with respect to his income derived from
sources abroad from September 1, 2024 to December 31, 2024
b. He shall be classified as nonresident citizen for the year 2024 with respect to his income derived from sources abroad from January 1, 2024 until September 1, 2024
c. He shall be classified as resident citizen for the year 2024 with respect to his income derived from
sources abroad from January 1, 2024 until September 1, 2024
d. He shall be classified as resident citizen for the entire calendar year 2024
b. He shall be classified as nonresident citizen for the year 2024 with respect to his income derived from sources abroad from January 1, 2024 until September 1, 2024
Ed Sheeran, an English singer, was engaged to sing for 3 days at the Mall of Asia Arena in Pasay City after
which he shall return to his hometown in England. For income tax purposes, he shall be classified as
a. Resident alien
b. Nonresident alien engaged in trade or business
c. Nonresident alien not engaged in trade or business
d. Resident citizen
c. Nonresident alien not engaged in trade or business
The following individual taxpayers may avail of the P250,000 tax exemption. Which is the exception?
a. Purely business income earners or exercise of profession
b. Purely compensation income earners
c. Mixed income earners
d. None. All of the above may avail of the P250,000 exemption
d. None. All of the above may avail of the P250,000 exemption
Which of the following individuals may avail of the 8% income tax rate option?
a. Self-employed with gross sales or receipts exceeding P3,000,000
b. Compensation income earner with gross compensation not exceeding P3,000,000
c. Mixed income earners with gross sales or receipts and other non-operating income not exceeding P3,000,000
d. None of the above
c. Mixed income earners with gross sales or receipts and other non-operating income not exceeding P3,000,000
Which of the following is excluded from gross income?
a. 13th month pay and other benefits amounting to P100,000
b. Separation pay within the control of the employee
c. Proceeds from life insurance wherein the corporation is the beneficiary
d. Stock dividends and liquidating dividends
d. Stock dividends and liquidating dividends
Y was injured in a vehicular accident with Z, a drunk driver. Y incurred and paid medical expenses of P100,000
and legalfees of P50,000 during the year, both reimbursed by Z. Y recovered P350,000 assettlement from the
insurance company which insured the car involved in the accident. Y likewise recovered P50,000 from Z to
compensate Y’s one-month absence from work. The amount taxable to Y is:
a. P0
b. P50,000
c. P200,000
d. P350,000
b. P50,000
Which of the following is included from gross income?
a. Life insurance proceeds
b. Amounts received by insured as return of premium
c. Share of a partner in the net income of a general professional partnership
d. Prizes received by athletes sanctioned by Philippine Government
c. Share of a partner in the net income of a general professional partnership
In computing net taxable income, no deduction shall in any case be allowed in respect to, except:
a. Any amount paid out for new buildings or for permanent improvements, or betterment made to increase the value of any property or estate
b. Premiums paid on any life insurance policy covering the life of any officer or employee, when the immediate family members of such employee are directly the beneficiary
c. Any amount expended in restoring property or in making good the exhaustion thereof which an
allowance is or has been made
d. Personal, living or family expenses
b. Premiums paid on any life insurance policy covering the life of any officer or employee, when the immediate family members of such employee are directly the beneficiary
Ms. Z retired from GHI Corporation and received P1,000,000 as retirement pay. The corporation went
bankrupt the following year. Which of the following cases would the P1,000,000 retirement pay received by
Ms. Z be subject to income tax?
Case 1: If the retirement pay was paid based ona reasonable pension where Ms. Z was 55 years old and has
served the corporation for more than 12 years.
Case 2: If Ms. Z was forced by the corporation to retire beyond her control.
a. Case 1 only
b. Case 2 only
c. In both cases
d. None of the above cases
d. None of the above cases
A non-resident alien engaged in trade or business (NRA-ETB) shall be exempt from tax on:
a. PCSO winnings of more than P10,000
b. Prizes of less than P10,000
c. Interest income under the foreign currency deposit system (FCDS)
d. Royalties from books, literary works and musical compositions
c. Interest income under the foreign currency deposit system (FCDS)
Which of the following is included from gross income?
a. Refund of donors’ tax paid in prior year
b. Refund of income tax in prior year
c. Refund of local taxes paid in a prior year
d. Refund of VAT paid in prior year
c. Refund of local taxes paid in a prior year
Which of the following is incorrect regarding the use of 8% income tax rate option?
a. AVAT-registered taxpayer is not qualified to avail of the 8% tax
b. The qualified taxpayer must signify his choice of the 8% tax rate in the first quarterly ITR before he can avail of the same
c. The qualified taxpayer who avails of the 8% tax option is exempt from paying the 3% other percentage tax under Section 116 of the Tax Code
d. The qualified taxpayer who avails of the 8% tax option is no longer entitled to the P250,000 tax exemption
d. The qualified taxpayer who avails of the 8% tax option is no longer entitled to the P250,000 tax exemption
Which of the following benefits received by an employee may be subject to the graduated income tax?
(1) Annual medical benefits of P20,000
(2) Payment of tuition fee of the daughter of a rank-and-file employee.
(3) Housing allowance provided to a rank-and-file employee.
(4) Uniform and clothing allowance of P6,000 per year.
a. All except (1)
b. All except (2)
c. All except (3)
d. All except (4)
d. All except (4)
The monetary value of the following housing privilege shall be 50% of the value of the benefit, except
a. If the employer leases a residential property for the use of his employee and the said property is the usual place of residence of the employee
b. If the employer owns a residential property and the same is assigned for the use of his employee as his usual place of residence
c. If the employer purchases a residential property on installment basis and allows his employee to use the same as his usual place of residence
d. If the employer acquires a residential property and transfers the ownership to his employee without consideration.
d. If the employer acquires a residential property and transfers the ownership to his employee without consideration.
The following are required to file an income tax return, except
a. Resident citizen
b. Nonresident alien not engaged in trade or business
c. Domestic corporation
d. Resident foreign corporation
b. Nonresident alien not engaged in trade or business