1. Which of the following statement is false?

I. The power to tax is exclusively exercised by the legislative

II. The president has the authority to fix tariff rates, tonnage and wharfage dues, and other duties or
impost.
III. Local government units have the power to levy taxes
IV. Tax legislation may be delegated to administrative agencies
a. II and III only
b. II and IV only
c. II, III, and IV only
d. IV only

2. I. Renumeration for services performed outside the Philippines by a resident citizen for domestic or resident
foreign corporation or partnership, or for a nonresident corporation or partnership, or for a non-resident
individual not engaged in trade or business in trade in the Philippines shall be treated as compensation which is
subject to tax.
II. Renumeration for services as employee of a nonresident alien individual, foreign partnership or foreign
corporation constitute compensation only if such employer is engaged in the trade or business within the
Philippines.

a. True, false
b. True, true
c. False, false
d. False, true

3. Tax law, in general, is composed of three elements, except

a. The code
b. Decisions of various courts that hear tax cases
c. Regulations and ruling
d. Ordinances

4. Who among the following is not a Filipino Citizen?

a. Teddie, born on December 15, 1972. Her father is French, and her mother is Italian. She elected Philippine
citizenship up and reaching the age of majority
b. Gabbie, born on September 3,1968. Her father is Filipino, and her mother is Indonesian. She did not elect
Philippine citizenship upon reaching the age of majority
c. Alex, born on January 27, 1976. Her father is Brazilian, and her mother is Filipino. She did not elect Philippine
citizenship upon reaching the age of majority.
d. Bobbie, born on august 11, 1965. Her father is German, and her mother is Filipino. She elected Filipina
citizenship upon reaching the age of majority.

5. LJ’s income from leasing his property reaches the maximum rate of tax under the law. He donated one-half of
his said property to a non-stock, non-profit educational institution whose income and assets are actually,
directly and exclusively used for educational purposes, and therefore qualified for tax exemption under Article
XIV, Section 4 (3) of the Constitution and Section 30 (h) of the Tax Code. Having thus transferred a portion of his
said asset, MJ succeeded in paying a lesser tax on the rental income derived from his property. Is there tax
avoidance or tax evasion?
A. There is tax avoidance. LJ has exploited a fully permissible alternative method to reduce his income tax by
transferring part of his rental income to a tax-exempt entity through a donation of one-half of the income
producing property.
 B. There is tax evasion. LJ has exploited a non-permissible alternative method to reduce his income tax by
transferring part of his rental income to a tax-exempt entity through a donation of one-half of the income
producing property.
C. There is tax dodging
D. None of the choices

6. I. For married individuals, the husband and wife shall compute separately the tax dues on their respective
taxable income
II. if any income cannot definitely be attributed to or identified as income exclusively earned or realized by either
spouse, the same shall be divided in any ratio between the spouses for the purpose of determining their
respective taxable income.
a. True, true
b. False, true
c. True, false
d. False, false

7. Which of the following inherent powers of the state is inferior to constitutional right of non- impairment of
obligation contracts?
a. Power of taxation
b. Police power
c. Power of eminent domain
d. None of the above

8. Momo is a resident citizen, Nayeon is non-resident citizen, while Dahyun is a resident alien. Who among them is
subject to income tax only on income derived from sources outside the Philippines?
a. Dahyun only
b. Neither Momo, Nayeon or Dahyun
c. Nayeon only
d. Momo only

9. Which of the following is the effect of the principle of international comity in taxation?
a. Foreign governments cannot collect taxes from Filipino citizens
b. Foreign governments can collect taxes from Filipino citizens
c. Foreign governments can collect taxes from the Philippine government
d. Foreign government cannot collect taxes from the Philippine government

10. Sources of tax laws:

1. Constitution
2. Statutes and presidential decrees
3. Revenue regulations by the department of finance
4. Rulings issued by the commissioner of internal revenue and opinions by the secretary of justice
5. Decisions of the supreme court and the court of tax appeals
6. Provincial, city, municipal, and barangay ordinances subject to imitations set forth in the local government
code

A. 1,2,5, and6
B. 1,2,3,4 and 5
C. 1,2,3,4,5, and 6
D. 1,2,3,4, and 5
 11. I. all individual taxpayers are subject 20% final tax on interest from any currency bank deposit and yield or any
other monetary benefit from deposit substitutes and from trust funds and similar arrangements.
II. all individual taxpayers are subject to 20% final on royalties, in general and 10% final tax on books, literary
works and musical compositions
III. all individual taxpayers are subject to 20% final tax on prizes and winnings, in general
a. True, true, false
b. False, true, true
c. True, false, true
d. False, false, false

12. Mr. Fred Lee, a resident citizen, married with five minor dependent children have gross compensation income of
P300,000 for 2020. During the year, he paid a health insurance policy premium of P500 per month for march
2020.
a. P10,000
b. ZERO
c. P15,000
d. 14,400

13. Based on the schedular rate of individual income taxation, how much annual income is exempted from income
tax?
a. P250,000
b. 500,000
c. 1,000,000
d. 1,500,000

14. Dol man had the following data for his income tax return in 2019:
Sales 2,300,000
Sales Return 75,000
Gross compensation income 580,000
Cost of sales 2,000,000
Administrative and selling expense 450,000
PCSO-Winnings 75,000
Cash Prize in TIKTOK contest 5,000
Royalties (books published in US) 350,000
Sale land, capital asset 2.5m cost) 3,750,000

Compute for the final tax of Dol Man.

a. P 240,000
b. P250,000
c. P260,000
d. P270,000

15. Compute for the income tax due of Dol Man, assuming he intended to be taxed using the graduated tax rates,
using optional standard deduction. 290,500,
16. Compute for the income tax due of Dol Man, assuming he intended to be taxed using the graduated tax rates.
725,000, 236,500
17. Compute for the income tax due of Dol Man, assuming he intended to be taxed at 8% Income Tax Rate. 250,000
 18. Industrious as he is known, Arthur, non-VAT registered resident citizen, work as a government employee at
daytime and excepts client for accounting work after office hours. At the same time Arthur maintains a T-shirt
printing shop to ern more. For the taxable year ending December 32,2021 Arthur earned the following amounts.

How much is Arthur income tax due for 2021?

a. 357,000
b. 300,000
c. 232,000
d. 377,000

19. Passive income includes the following

1. Interests
2. Royalties
3. Prizes and other winnings
4. Cash and property dividends
5. Sale of real property
6. Sale of share of stock not traded in stock exchange

a. 1,2,3 and 4
b. 1,2,3,5 and 6
c. 1,2,3,4,5, and 6
d. 1,2,3,4, and6
20. A taxpayer received the following items of income during the taxable year 2021.
 21. A resident foreign corporation reported the following income and expenses on 2019:
Philippines Abroad

Gross income from operations 2,000,000 500,000

Gain sales of stock directly to a buyer 270,000 -

Dividend from a domestic corporation 50,000 -

Dividend from a foreign corporation - 200,000

Interest income from bank deposit 40,000 50,000

Royalty income 100,000 200,000

Business expenses 1,000,000 280,000

How much is the final tax of the corporation?

a. 73,500
b. 68,500
c. 50,000
d. 40,500

22. How much is the income tax due of the corporation?

a. 441,000
b. 300,000
c. 330,000
d. 438,000

23. Seven Kingdoms Corporation, a domestic corporation, declared and distributed to its stockholders shares of Red
Keep Corporation. One of its stockholders, Theon Greyjoy, received 100 shares of Red Keep Corporation shares
as dividends. At the date of dividend declaration, the fair market value of Red Keep Corporation shares was P120
per share and by the time Theon Greyjoy received the dividend, the fair market value per share was P180. The
dividend is
a. A stock dividend, hence exempt from tax
b. A property dividend which will form part of taxable income of Theon Greyjoy
c. A property dividend which is subject to final tax based on its fair market value of P180 per share
d. A property dividend which is subject to final tax based on its fair market value of P120 per share

24. L.A, has the following transactions on the sale of domestic corporation shares through stock exchange
Transaction Quantity Price
Purchase 20,000 40,000
Purchase 30,000 63,000
Sale 40,000 92,000

Assuming the first-in-first out method, compute the capital gain tax on sale
a. 0
b. 1,440
c. 2,500
d. 2,640
 25. The 30% corporate income tax is increased to 35% by the Congress for the purpose of raising revenue to be used
for national road expansion project near Bonifacio Global City, a private corporation. Is the exercised of the
taxing power unconstitutional?
a. Yes, because taxing power must be exercised exclusively for public purpose without any incidental benefit to
any private entity.
b. No, because the it is exercised directly for public purpose and the benefit to a private entity is only
incidental.
c. Yes, because the increase in tax rate constitutes deprivation of right to property of corporation without due
process of law for being excessive and unreasonable.
d. No, because the constitution does not expressly state that the power of taxation must be used only for
public purpose, thus, it may be used to benefit a private entity.
26. Sharks Airlines, a resident foreign company, shwas the following analysis of its gross receipts from passengers
and cargoes during a month:
Incoming flights Outgoing flights

Fares billed in the Philippines 9,000,000 10,000,000

Fares billed abroad 12,000,000 8,000,000

Direct expenses 6,000,000 5,500,000

Fares cancelled and refunded 500,000 600,000

Compute for the income tax due of Shark’s corporation

a. 430,000
b. 3,510,000
c. 7,860,000
d. 942,500

27. I. in computing for the taxable income, fraction of a peso is considered

II. for the tax due, a fraction amounting to fifty centavos or more is rounded off to a peso, while a fraction
amounting to fifty centavos or less is disregarded.
a. True, true
b. False, true
c. True, false
d. False, false
28. University of home schooling, a proprietary educational institution, had gross income for the taxable year 2019
of P10 million. Of the total gross income, P6 million was derived from unrelated trade or business. Total business
expenses amount to P3 million. The tax due of university during 2019 is?
a. 2,100,000
b. 1,200,000
c. 300,000
d. 700,000
29. Janine offers accounting services to her clients and at the same time operates a grocery store. In 2019, she had a
total gross sale of 1,200,000 including sales returns of merchandise worth 50,000, in addition to her receipts
from accounting services of 300,000. She signifies her intention to be taxed at 8% income tax rate on gross sales
in her initial Quarterly Income Tax Return, and she incurred cost of sales and operating expenses amounting to
600,000 and 200,000 respectively, or a total of 800,000, the income tax due shall be? 120,000
30. Janine offers accounting services to her clients and at the same time operates a grocery store. In 2019, she had a
total gross sale of 1,200,000 including sales returns of merchandise worth 50,000, in addition to her receipts
from accounting services of 1,300,000. She already signified her intention to be taxed at 8% income tax rate in
her 1st quarter return. How much is the taxpayer’s income tax due? 200,000
31. Madam Leni R., street sweeper, a minimum wage earner, works for XYZ, Corporation. She is not engaged in
business nor has any other source other than her employment. For 2018, she earned a total compensation
income of P135,000. The taxpayer contributed to the SSS, Phil health, and HDMF amounting to P5,000 and has
received 13th month pay of P11,000. Compute for her income tax liability. 130,000