Exam (elaborations) TEST BANK STUDENT COPY TEST BANK INCOME TAXATION GRADE A+ QUESTION BANK 2021

Exam (elaborations) TEST BANK STUDENT COPY TEST BANK INCOME TAXATION GRADE A+ QUESTION BANK 2021 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 STUDENT COPY TEST BANK INCOME TAXATION GRADE A+ QUESTION BANK 2021 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 A) FISCAL ADEQUACY 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? 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 D) CONSTITUTIONAL LIMITATIONS 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 D) NON-DELEGATION OF LEGISLATIVE POWER 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 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. 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? 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? 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 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