QUESTION #1.

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 rulings
D. Ordinances

QUESTION #2. Which of the following are sources of tax laws?

I. Constitution
II. Statutes and Presidential Decrees
III. Revenue Regulations by the Department of Finance
IV. Rulings issued by the Commissioner of Internal Revenue and Opinions by the Secretary of Justice
V. Decisions of the Supreme Court and the Court of Tax Appeals
VI. Provincial, city, municipal, and barangay ordinances subject to limitations set forth in the Local Government Code
VII. Treaties or international agreements the purpose of which is to avoid or minimize double taxation.

QUESTION #3. National taxes include:

I. Income taxes V. Excise tax
II. Estate and donor’s taxes VI. Documentary stamp tax
III. Value-added tax VII. Real property tax
IV. Other percentage tax VIII. Professional tax

QUESTION #4. Local taxes include:

I. Real property tax IV. Community tax
II. Business taxes fees and charges V. Tax on banks and other financial institutions
III. Professional tax

QUESTION #5. TRUE OR FALSE. Revenue law is a law passed for the purpose of authorizing the levy and collection
of taxes in some form to raise revenue.

QUESTION #6. TRUE OR FALSE. Internal revenue laws are either political or penal in nature although there are
penalties in case of violations.

QUESTION #7. TRUE OR FALSE. For married individuals, the husband and wife shall compute separately the tax due
on their respective taxable income.

QUESTION #8. TRUE OR FALSE. If any income cannot be definitely attributed to or identified as income exclusively
earned or realized by either spouses, the same shall be divided in any ratio between the spouses for the purpose of
determining their respective taxable income.

QUESTION #9. Passive income subject to final tax includes the following
I. Interests IV. Cash and/or property dividends
II. Royalties V. Sale of real property
III. Prizes and other winnings VI. Sale of shares of stock not traded in stock exchange

QUESTION #10. This doctrine states that taxes are essential and indispensable to the continued subsistence of the
government, hence, without it, the government would be paralyzed for lack of motive power to activate or
operate it.
QUESTION #11. Evaluate:
I - Every corporation shall file in duplicate a quarterly summary declaration of its gross income and deductions on a
cumulative basis for the preceding quarter or quarters upon which the income tax shall be levied, collected and paid.
II - The income tax computed decreased by the amount of tax previously paid or assessed during the preceding
quarters shall be paid and the return filed not later than thirty (30) days from the close of each of the first three (3)
quarters of the taxable year, whether calendar or fiscal.
III - A return showing the cumulative income and deductions shall not be filed even if the operations for the quarter
and the preceding quarters yielded no tax due.

QUESTION #12. If the sum of the quarterly tax payments made during the said taxable year is not equal to the total
tax due on the entire taxable income of that year, the corporation shall either:
1. Pay the balance of tax still due
2. Carry over the excess credit
3. Be credited or refunded with the excess amount paid.
A. 1, 2 & 3 C. 1 & 2
B. 1 & 3 D. None of the above

QUESTION #13. Improperly Accumulated Taxable Income means taxable income adjusted by
I. Income exempt from tax
II. Income excluded from gross income
III. Income subject to final tax
IV. The amount of net operating loss carry-over (NOLCO) deducted
V. Income tax paid/ payable for the taxable year
VI. Dividends actually or constructively paid/issued from the applicable year’s taxable income
VII. Amount reserved for the reasonable needs of the business emanating from the covered year’s taxable income.

QUESTION #14. Evaluate:

I - Net operating loss means the excess of allowable deduction over gross income of the business in a taxable year.
II - Losses of property arising from fire, storms, shipwreck, or other casualties, robbery, theft or embezzlement, and
other losses, if incurred in connection with trade, business or profession actually sustained during the taxable year
and compensated for by insurance or other forms of indemnity, shall be allowed as deductions.

QUESTION #15. Evaluate:

I - Generally, the amount of taxable fringe benefit and the fringe benefit tax constitute allowable deductions from the
gross income of the employee.
II - Contributions of the employer for the benefit of the employee to retirement, insurance and hospitalization benefit
plans are subject to the fringe benefit tax.

QUESTION #16. Evaluate:

I - In accounting for gross income of farmers under the accrual basis in contrast to cash basis, beginning and ending
inventories of livestock and farm products raised and purchased are considered.
II- Income derived from illegal sources, such as gambling, extortion, theft, bribes, embezzlement, and smuggling are
taxable.

QUESTION #17. Evaluate:

I – If services are paid for in a medium other than money, it is not to be included as compensation.
II – Passive income subject to final tax shall not form part of the gross income for purposes of computing the normal
income tax liability of individuals and corporations.

QUESTION #18. This is the power of the State to enforce proportional contribution from its subjects to sustain
itself.
QUESTION #19. The mutuality of support between the people and the government is referred to as the
_________________.

QUESTION #20. Taxation as distinguished from police power and power of eminent domain.
A. Property is taken to promote the general welfare.
B. Maybe exercised only by the government.
C. Operates upon the whole citizenry.
D. There is generally no limit as to the amount that may be imposed.

QUESTION #21. Which is not an essential characteristic of a tax?

A. It is unlimited as to amount.
B. It is payable in money.
C. It is proportionate in character.
D. It is an enforced contribution.

QUESTION #22. The basic principle of taxation, where, “Taxes must be based on the taxpayer’s ability to pay” is
called?

QUESTION #23. Who shall order the distraint of personal property if the amount of delinquent tax or delinquent
revenue is Php1,000,000.00 or less?
A. Secretary of Finance
B. Commissioner of Internal Revenue exclusively
C. CIR of his duly authorized representative
D. Revenue District Officer

QUESTION #24. For requests of reinvestigation, the taxpayer shall submit all relevant supporting documents in
support of his protest within how many days from date of filing of his letter of protest, otherwise, the assessment
shall become final?

QUESTION #25. Barbara, a CPA, uses cash basis in computing her taxable income. In 2019, she performs a
professional service for a client who is unable to pay her. The unpaid professional fee of the client becomes
worthless on 2020. When can she deduct the worthless professional fee as a bad debt?
A. 2019
B. 2020
C. Either 2019 or 2020
D. Cannot be deducted in any year

QUESTION #26. Juan had files a claim for tax refund amounting to Php20,000.00 which was approved but
unreleased due to absence of public fund. Comes April 15, he ask you whether the tax refund be off-sited with his
tax due of Php20,000.00?
A. Yes, both obligations (government and taxpayer) arise from the same law.
B. Yes, both liabilities will form part of the public fund.
C. No, the obligation to pay a just compensation arise from a contract while obligation to pay taxes arise from law.
Therefore, compensation cannot take place.
D. No, claim for tax refund is subject to a suspensive condition while obligation to pay tax is subject to a resolutory
condition.
QUESTION #27. What should the BIR do when perspective period for the assessment of a tax deficiency is about to
prescribe but the taxpayer has not yet complied with the BIR requirements for the production of books of accounts
and other records to substantiate the claimed deductions, exemptions, or credits?
A. Call the taxpayer to a conference to explain the delay
B. Issue a jeopardy assessment coupled with a letter of demand
C. Immediately conduct an investigation of the taxpayer’s activity
D. Issue a notice of constructive distraint to protect government interest

QUESTION #28. Evaluate:

Date erroneously paid April 15, 2011
Date of claim for refund was filed with BIR February 18, 2012
Date of BIR decision of denial was received March 5, 2013

The last day to appeal to the Court of Tax Appeals is? ___________________

QUESTION #29. The City Council of Masbate passed an ordinance imposing an occupation tax on an air-
conditioning technician. Ranel 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 Ranel is tenable
B. The ordinance is unconstitutional because Ranel is denied of his right to equal protection of the law.
C. The issue on validity or invalidity of the ordinance should be set aside.
D. The contention of Ranel is not justified because the rule on uniformity is not violated considering the fact that the
ordinance would be imposed on all air-conditioning technicians who may come with the jurisdiction of the city.

QUESTION #30. Special assessment is an enforced proportional contribution from owners of land especially
benefited by public improvement. Which one of the following is not considered as one of its characteristics?
A. It is levied on land.
B. It is based on the government’s need of money to support its legitimate objectives.
C. It is not a personal liability of the persons assessed.
D. It is based solely on the benefit derived by the owners of the land.

QUESTION #31. TRABAHO Bill or HB 8083 stands for?

QUESTION #32. Taxes may be collected even without tax measures

A. Yes, because it is an inherent power of the state.
B. Yes, because of the lifeblood theory.
C. No, because of the absence of the basis for the amount of the tax to be collected.
D. No, imposition of taxes without any tax measure amounts to oppression.

QUESTION #33. A taxpayer is complaining of harassment because the BIR pursues both summary and judicial
proceedings simultaneously. Is his complaint valid?
A. Yes, because the BIR can only pursue summary proceedings after judicial proceedings are finally resolved.
B. Yes, because the BIR can only pursue judicial proceedings after summary proceedings are finally resolved.
C. No, because either of the summary or judicial proceedings or both may be pursued in the discretion of the
authorities charged with the collection of such taxes.
D. No, because the BIR is presumed to have acted in good faith when it pursues both summary and judicial
proceedings.
QUESTION #34. Which of the following is a nature of taxation?
A. The power is granted by legislative action.
B. It is essentially an administrative function.
C. It is generally payable in money.
D. Without it the state can continue to exist.

QUESTION #35. Subject to inherent and constitutional limitations, the power of taxation is regarded as supreme,
plenary, unlimited and comprehensive.
A. Basis of taxation C. Scope of taxation
B. Situs of taxation D. Theory of taxation

QUESTION #36. These are enforced proportional contributions from persons and property levied by the state by
virtue of its sovereignty for the support of the government and for all public needs.

QUESTION #37. An escape from taxation where the producer or manufacturer pays the tax and endeavors to
recoup himself by improving his process of production thereby turning out his units of products at a lower cost.

QUESTION #38. In every case of doubt, tax statutes are construed

A. Strictly against the government and the taxpayer.
B. Liberally in favor of the government and the taxpayer.
C. Strictly against the government and liberally in favor of the taxpayer.
D. Liberally in favor of the government and strictly against the taxpayer.

QUESTION #39. Which of the following statements is not correct?

A. Tax burdens shall neither be imposed nor presumed to be imposed beyond what the statute expressly and clearly
states because tax statutes should be construed strictly against the government.
B. Tax exemptions, tax amnesty tax condonations and their equivalent provisions are not presumed and, when
granted are strictly construed against the taxpayer because such provisions are highly disfavored by the government.
C. Exemptions from taxation are highly disfavored in law and he who claims tax exemption must be able to justify his
claim or right.
D. The House of Representatives has the duty and the exclusive power of constructing and interpreting tax laws.

QUESTION #40. Which of the following is not a scheme of shifting the incidence of taxation?
A. The manufacturer transfers the tax to the consumer by adding the tax to the selling price of the goods sold;
B. The purchaser asks for a discount or refuses to buy at regular prices unless it is reduced by the amount equal to the
tax he will pay;
C. Changing the terms of the sale like FOB shipping point in the Philippines to FOB destination abroad, so that the title
passes abroad instead of in the Philippines;
D. The manufacturer transfers the sales tax to the distributor, then in turn to the wholesaler, in turn to the retailer
and finally to the consumer
SET 1 – INCOME TAX
Answer Key:
1. D. Ordinances
2. ALL OF THE ABOVE
3. I, II, III, IV, V & VI
4. ALL OF THE ABOVE
5. TRUE
6. FALSE
7. TRUE
8. FALSE
9. I, II, III & IV
10. LIFEBLOOD DOCTRINE
11. TRUE, FALSE, FALSE
12. A. 1, 2 & 3
13. ALL OF THE ABOVE
14. TRUE, FALSE
15. FALSE, FALSE
16. TRUE, TRUE
17. FALSE, TRUE
18. TAXATION POWER
19. BASIS OF TAXATION
20. D. There is generally no limit as to the amount that may be imposed.
21. A. It is unlimited as to amount.
22. THEORETICAL JUSTICE
23. D. Revenue District Officer
24. SIXTY (60) DAYS
25. D. Cannot be deducted in any year
26. A. Yes, both obligations (government and taxpayer) arise from the same law.
27. B. Issue a jeopardy assessment coupled with a letter of demand
28. APRIL 4, 2013
29. D. The contention of Ranel is not justified because the rule on uniformity is not violated considering the fact
that the ordinance would be imposed on all air-conditioning technicians who may come with the jurisdiction
of the city.
30. B. It is based on the government’s need of money to support its legitimate objectives.
31. TAX REFORM FOR ATTRACTING BETTER AND HIGH-QUALITY OPPORTUNITIES (TRABAHO)
32. C. No, because of the absence of the basis for the amount of the tax to be collected.
33. C. No, because either of the summary or judicial proceedings or both may be pursued in the discretion of the
authorities charged with the collection of such taxes.
34. A. The power is granted by legislative action.
35. C. Scope of taxation
36. TAXES
37. TRANSFORMATION
38. C. Strictly against the government and liberally in favor of the taxpayer.
39. D. The House of Representatives has the duty and the exclusive power of constructing and interpreting tax
laws.
40. C. Changing the terms of the sale like FOB shipping point in the Philippines to FOB destination abroad, so that
the title passes abroad instead of in the Philippines;