1.

An educational institution operated by a religious organization was being

required by the LGU to pay real property tax, is this assessment valid.
Yes, with respect to properties not actually devoted to education.

2. Congress pass a law subjecting GOCC’s to income tax. Is the law valid?
Yes, because GOCCs are essentially commercial in nature

3. This refers to the privilege or immunity from a tax burden which others are
subject to.
Tax Holiday or exemption

4. Non-payment of additional community tax is an act of tax evasion punishable

by imprisonment.
True

5. No one shall be imprisoned for non-payment of debt even for debt obtained in
bad faith.
False

6. The constitutional guarantee of on non-imprisonment for non-payment of debt

does not extend to non-payment of tax, except poll tax.
True

7. Taxation is an inherent power of the state to enforce proportional contribution

from its subject for public purpose. The may or may not pay the tax at their
discretion.
False
8. Situs rules serve as reference in gauging whether tax object is in or out of the
taxing authority jurisdiction.
True

9. Enactment of the tax law is also called as the incidence of taxation.

False

10. Implementation of the tax is the impact of taxation.

False

11. Businesses are subject to tax in the place where business is conducted.

True

12. Under holme's doctrine the power tax involves the power to destroy.

False

13. Vague tax laws are construed against the taxpayers.

False

14. Nothing in our law expressly prohibits double taxation.

True

15. The essence of due process of law is that taxpayers under dissimilar
circumstances should not be tax the same.

F
16. Capitalization pertains to the elimination of wastes or losses by the taxpayer
to form savings to compensate for the tax imposition or increase and taxes.

False

17. Tax evasion is also called tax minimization.

False

18. The government's necessity for funding is the basis of taxation.

False

19. Amnesty covers only civil liabilities while condonation covers both civil and
criminal liabilities of the taxpayer.

False

20. The mutuality of support between the people and the government is the
theory of taxation.

False

21. A system of government is indispensable to every society. Without it, the

people will not relish the benefits of a civilized and orderly society.

True

22. Under procedural due process, tax must be imposed only for public purpose,
collected only under authority of a valid law and only by a taxpayer having
jurisdiction.

F
23. It is only with the power of eminent domain where there is interference by the
state of private rights and properties.

24. Persons affected by police power is the community or class of individuals.

True

25. Only the government is exercising authority of the power of eminent domain.

False

26. Tax exemption bills are approved by

Majority of all members of the congress

27. The lifeblood doctrine states that taxes are essential and indispensable to the
continued subsistence of the government.

True

28. Taxation is a state power legislative process in the mode of government cost
distribution.

True

29. Theory of taxation

Necessity

30. Under the ability to pay theory, those who have more should be taxed less if
they only benefit less from the government.
False
31. Vertical equity proposes that the extent of one's ability to pay is directly
proportional to the level of his tax base.
True

32. Taxpayers should be required to contribute based on their relative capacity to

sacrifice for the support of the government.
True

33. The Japanese government invested P100M in Philippine local bank & earned
P10M interest. Which is correct
The income is exempt due international comity

34. When a legislative body taxes persons at the property, rights and privileges
under the same taxable category at the same rate that is referred to as
compliance with the constitutional limitation of:
Uniformity

35. The inherent powers of the state are similar in the following, except:
All are not exercised by private entities.

36. Licensing of business or profession is an exercise of

police power

37. Which of the following entities will least likely exercise the power of eminent
domain
Transportation operators
38. Which is mandatorily observed in implementing police power
Public interest

39. Which of the following normally pay real property tax answer AM holdings.
A registered property development company

40. Under the liability to pay theory, those who have less shall contribute more if
they receive more benefits from the government.
False

41. Inherent powers of the state are natural, inseparable and inherent to every
government.
True

42. The government sustains itself by the police power, secures itself and the
well-being of its people by the power of taxation and secures its own
properties to carry out its public services by the power of eminent domain.
False

43. The point at which tax is levied is also called

Impact of taxation

44. Which of the following normally pays real property tax?

AM Holdings, a registered property development company
45. Which is not a legislative act?
Assessment of the tax
46. This underscores that taxes are indispensable to the existence of the state
Lifeblood doctrine
CHAPTER 3

1. Which is not subject to income tax?

DONATION
2. Dividend income from Domestic Corporation is presumed earned outside the
Philippines
FALSE

3. Danilo paid P40,000 annual premium for a P2,000,000 life insurance policy.
After 7 years, Dan surrendered the policy & was paid by the insurance company
P400,000 which represents the cash surrender value of the policy. Return on
capital is how much?
120000

3. An alien received P300,000 compensation income in the Philippines &

P200,000 income from abroad. How much will be subject to Philippine income
tax?
300000

4. Which is taxable on world income?

RESIDENT CITIZEN

5. Unilateral transfers are also referred to as transfers for less than full and
adequate consideration.
FALSE
6. Sales of home office to its branches are taxable.
FALSE

7. Ms. Love insured her strawberry crop with P300,000 crop insurance coverage
against calamities. The crop was eventually destroyed by unusual frost &
received the P300,000 proceeds. The amount is taxable
TRUE

9. Estates under extrajudicial settlement are treated as individual taxpayers.

FALSE
10. Which is not a requisite of gross income?
EXEMPTED BY THE LAW
11.Manufacturing income is earned where the goods are manufactured and sold.
TRUE

12.Proceeds of crop or livestock insurance, guarantee payments & indemnity

received from patent infringement are not taxable.
FALSE
13.The value of life is not measurable by money.
TRUE

14.All of the following are taxable only on income earned from sources within the
Philippines, except
DOMESTIC CORPORATION

15.Trust that is designated as revocable is treated as an individual taxpayers.

FALSE

16.The total consideration received from sale of goods at a loss represents

RETURN OF CAPITAL

17.Non-residents aliens engaged in business are aliens who stayed in the

Philippines for an aggregate period of less than 90 days during the year.
FALSE

18.Mr. Paul purchased a franchise with P200,000 annual income guaranteed by

franchisor. In the first year, Mr. Paul earned only P120,000. The franchisor paid
Mr. Paul the P80,000 difference. The amount is not taxable.
FALSE

19.Situs is not important to taxpayers taxable only on income within.

FALSE

20.Which of the following is not an income taxpayer classification?

GENERAL PROFESSIONAL PARTNERSHIP
21.Rent income is taxable at the owner’s residence.
FALSE

22.Resident citizens & domestic corporations are taxable for income within and
outside the Philippines.
TRUE
23.A foreign corporation that operates a branch in the Philippines is
RESIDENT CORPORATION

24.Jordan, Inc. experienced unusual decline in its income after a competitor

copied its patented invention. Jordan sued the competitor for patent infringement
& was awarded P5M. The amount is an item of gross income subject to tax.
TRUE
25.Service income is taxable in the place where the service is rendered.
TRUE
26.Which is an incorrect statement regarding situs of income?
SERVICE INCOME IS EARNED IN THE DOMICILE OF THE TAXPAYER

27.Any excess amount received over premiums paid by the insured surrender or
maturity of the policy is not taxable.
FALSE

28.Proceeds of a life insurance contract collected by an employer as a

beneficiary from the life insurance of the officer is not taxable.
TRUE
29.Which is required to pay income tax?
BUSINESS PARTNERSHIP

30.A non-resident citizen is an international financier who earned P400,000

interest income from resident debtors & P500,000 from foreign debtors. How
much is subject to Philippine income tax?
400000
31. Non-residents aliens not engaged in business are aliens who come to the
Philippines & stay for an aggregate period of not more than 180 days during the
year.
TRUE

32. A co-ownership limited to property preservation or income collection is a

taxable entity.
FALSE
33.Receipt of loan proceeds is taxable.
FALSE

34.In complex transactions, the excess of fair value over selling price is a gratuity
while excess of selling price over cost is an item of gross income.
TRUE
35.GPP is taxable as a corporation
FALSE
36.Income between businesses of a sole proprietor should not be taxed.
TRUE

37.Filipinos working in Philippine embassies are considered non-resident

citizens.
FALSE

38. John was one of the passengers of a van that fell off a ravine. John sued the
bus company & was awarded an indemnity of P800,000 for the following:
P500,000 for the impairment of his health resulting from amputation of his leg;
P200,000 for his loss of salaries during hospitalization; P100,000 for his
attorney’s fee. How much is return on capital?
200000

39. Any compensation received in consideration for the loss of health such as
compensation for personal injuries or tortuous acts is deemed return on capital.
FALSE

40. The increase in wealth of the taxpayer in the form of appreciation or increase
in the value of his properties or decrease in the value of his obligations in the
absence of a sale or barter transaction is taxable. FALSE
41. Which of the following taxpayers is taxable only on income earned from the
Philippines?
RESIDENT CORPORATION

42.Proceeds of embezzlement or swindling are considered income because of

the increase in the net worth of the swindler.
TRUE

43.A corporation that incorporates in the Philippines is a domestic corporation

under the incorporation test even if the same is controlled by foreigners.
TRUE
44.Jen is engaged….income subject to income tax is
250000

45.Proceeds of life insurance policies paid to the heirs or beneficiaries upon

death of insured are exempt from income tax
TRUE
CHAPTER 2

1. Business tax is generally a direct tax

FALSE

2. As the subject matter taxes, do not include

REGULATORY TAX

3. A tax that is imposed upon the performance of an act, the enjoyment of a

privilege or the engagement in a proficient is known as answer
EXCISE TAX

4. BIR has one commissioner and deputy commissioners

FALSE

5. When tax is collected upon someone who is effectively reimbursed by

another, the tax is regarded as
INDIRECT

6. Tax rulings are issued by

COMMISSIONER OF INTERNAL REVENUE

7. Philippine tax laws are civil and not political in nature

TRUE

8. Toll is demand sovereignty while tax is a demand of ownership

FALSE

9. E-filing and e-payment of taxes as an application of theoretical justice

FALSE

10. Tax is a pre-activity imposition while license is post-activity imposition

FALSE

11. Local ordinances can never be a source of taxation law

False

12. Both the government and private entities can impose toll but private
entities cannot impose taxes
TRUE
13. The country adopts withholding system, voluntary compliance system
and assessment or enforcement system for taxation purposes
TRUE

14. Which of the following do not relate to tax

Intended to cover cost of regulations

15. As to purpose, tax is imposed for general purpose. This is the sumptuary
tax
FALSE

16. GAAP refers to the conventions of financial reporting

TRUE

17. Taxation power can be used to destroy answer

AS AN IMPLEMENT OF POLICE POWER

18. Exercise or privilege tax is imposed upon the performance of an act,

enjoyment of a privilege or engagement and occupation
TRUE

19. Which is not a source of tax

OPINION OF TAX EXPERTS

20. “Tax treaties and conventions with foreign countries” is one of the
sources of taxation law
TRUE

21. Specific tax is a fixed amount of tax imposed on a per unit basis such as
per kilo, liter or meter, etc. TRUE

22. Tax as to purpose is classified as

FISCAL OR REGULATORY

23. License fee emanates from the taxation power of the government
FALSE

24. When both the impact and incidence of taxation rest upon the same
taxpayer, the tax is said to be direct TRUE
25. In the preparation and filing of tax returns, taxpayers are mandated to
follow GAAP with tax laws
FALSE
26. Which is not a characteristics of tax
IT IS SUBJECT TO ASSIGNMENT
27. Economic taxpayer is the person named by the law to pay the tax
FALSE
28. Rulings are merely advisory……. Reversed by the BIR at any time.
TRUE
29. Tax is an enforced proportional contribution levied by….. public purpose
TRUE
30. Internal revenues….. penal in mature…..in these laws
FALSE
31. Philippine tax laws are civil and not political in nature
TRUE
32. Revenue regulations has the force…. Application of the law
FALSE

33. Tax administration of the national tax system in the phil…. Supervision of
the bir.
FALSE
34. Tax is payable in kind
False
35. Revenue regulations specify, prescribe or define rules and regulations for
the effective enforcement of the provisions of NIRC and related statutes.
True
36. The amount imposed by the government is called tax and the tax
collected is revenue to the government.
True
37. Tax as to incidence is classified as
Direct and indirect
38. Which one of the following is BIR not empowered to do?
Assess and collect local taxes
39. An example of ad valorem tax is excise tax on cigarettes
False
40. The Philippine corporate tax rate is an example of progressive tax
False
41. Which of the following statements is correct?
An ex post facto law violates the constitution
42. Administrative feasibility requires that the sources of government funds
must be sufficient to cover government costs
False
43. The commissioner of internal revenue is not empowered to
Grant amnesty for erring taxpayers
44. What distinguishes tax from license
Tax is a post- activity imposition
45.
Chapter 4

1. Information returns are essential to the government in its tax mapping efforts
and in its evaluation of tax compliance.
TRUE FALSE
2.The outright method as mandated by the regulation will best apply in cases
where lessees pay the lessor rentals in the form of leasehold improvements or
when leasehold improvements by lessees are treated as reduction to cash
rentals TRUE FALSE
3.If an item is sold under the deferred payment method for a term of two years,
gross profit from sale is to be spread out over such period for tax purposes TRUE
FALSE
4.Downpayment is broader than initial payment
TRUE FALSE
5.The sale of properties of which the seller is not a dealer id referred to as casual
sale.
TRUE FALSE
6. E-BIR forms ensures completeness of data on the tax returns with offline and
online versions.
TRUE FALSE
7.The general rule in paying income taxes is “pay as you file”
TRUE FALSE
8.Long-term one-time crops are accounted for using crop year basis.
TRUE FALSE
9.Most of those incomes subject to the final income taxation scheme are active in
nature. TRUE FALSE
10.Manual filing system is no longer allowed by BIR to taxpayers at this time.
TRUE FALSE
11. All taxpayers are mandated to use the electronic filing and payment system
(EFPS) of the BIR. TRUE FALSE
12. Penalties for non-filing or late filing of information return is P10,000 for each
failure. TRUE FALSE
13.The three income taxation schemes are mutually exclusive. TRUE FALSE
14.Excess of indebtedness assumed by buyer over tax basis or cost is added as
part of contract price and is also part of the initial payment
TRUE FALSE
15.Compromise penalty is said by taxpayer in lieu of criminal prosecution over a
tax violation.
TRUE FALSE
16.Long term perennial crops are accounted for using either cash basis or
accrual basis. TRUE FALSE
17. In case of unavailability of the EFPS during maintenance or instances of
technical errors, enrolled taxpayers may file manually.
TRUE FALSE
18. If the taxpayer did not file his tax return and has already received a notice
from the BIR about it, the applicable surcharge will be 50%
TRUE FALSE
19.Initial payment ratio is computed by dividing total initial payment by the
contract price at all times. TRUE FALSE
20. Dissolving corporations shall file their return within 30 days from cessation of
activities. TRUE FALSE
21.When the indebtedness assumed by the buyer exceeds the tax basis or cost
of the property sold, the excess is an indirect receipt realized by the buyer. TRUE
FALSE
22.Contract price and selling price are equal when there is mortgage assumed by
the buyer on the item sold to him. TRUE FALSE
23.Dealers in real properties can use installment method in reporting income for
tax purposes regardless of the initial payment ratio. TRUE FALSE
24.In accrual basis accounting, income is recognized when earned even if not yet
received and this is acceptable for taxation purposes. TRUE FALSE
25. Individual and corporate taxpayers can change their accounting period from
calendar to fiscal and vice versa. TRUE FALSE
26.Under the spread-out method, the depreciated value of the property at the
termination od the lease is the value of years of usage of the lessee. FALSE
27. Under the crop year basis, farming income is recognized as the difference
between the proceeds of harvest and expenses of the particular crop harvested.
TRUE FALSE
28. For the taxpayer having many businesses using different accounting
methods, there is a need for him to restate all the income from his different
businesses to a common accounting method. TRUE FALSE
29.Simple neglect of the taxpayer resulting to delayed payment of tax subject to
25% surcharge. TRUE FALSE
30.Effective August 2021, Cebu Incorporated changed its fiscal year accounting
period ending every June 30 to the calendar year. Cebu Incorporated should file
an adjustment return covering July 1 to December 31, 2021 on or before April 15,
2022. TRUE FALSE
31.The request for approval of the change in accounting period shall be filed at
any time not less than 60 days prior to the beginning of the new accounting
period.
TRUE
32.Sale of goods with extended payment terms should be reported under the
installment method for tax purposes at all times. TRUE FALSE
33.The change in accounting period by the taxpayer does not require prior BIR
notice. TRUE FALSE
34. Interest on delayed payment of income tax due is based on the total of basic
tax and the surcharge. TRUE FALSE
35.Contract price and selling price are equal when there is mortgage assumed by
the buyer on the item sold to him. TRUE FALSE
36.Prepaid expenses are fully deductible against gross receipts for income tax
purposes under cash basis during the year of payment. TRUE FALSE
37.Under the percentage of completion method, the estimated gross income from
construction is reported based on the percentage of completion of the
construction project. TRUE FALSE
38.When the indebtedness assumed by the buyer exceeds the tax basis or cost
of the property sold, the excess is an indirect receipt realized by the buyer. TRUE
FALSE
39.A taxpayer with basic tax due of P100,000 on April 15, 2021 made his
payment only on June 15, 2020. Interest shall be computed: P100,000 or
P2,005.48. FALSE
40. Under the installment method, gross income is recognized and reported in
proportion to the collection from the installment sales. TRUE FALSE