Name:__________________________Course/Year:__________________Date:_____________A

_____1. In case of ambiguity, tax laws imposing a tax shall be interpreted

a. Strictly against the taxpayer c. Liberally in favor of the government

b. Liberally in favor of the taxpayer d. None of the choices

_____2. Debt as distinguished from tax.

a. Based on law c. Does not draw interest except when delinquent

b. May be paid in kind d. Generally, not subject to set-off

_____3. The distinction of a tax from permit or license fee is that a tax is

a. imposed for regulation

b. One which involved exercises of police power
c. One in which there is generally no limit on the amount that may be imposed
d. Answer not given

_____4. Toll as distinguished from tax

a. Demand of sovereignty
b. Imposed BY government only
c. Amount is based on the cost of construction of public improvement used
d. Paid for the support of the government

For Nos. 5 – 7. Alex, a resident citizen, disposed the following shares of stock of a domestic corporation
whose shares are not listed and traded in the local stock exchange:

Date of Sale Cost Selling Price

January 15, 2019 80,000 135,000
February 14, 2019 175,000 150,000
March 30, 2019 256,000 360,000

_____5. The capital gains tax on the Jan 15, 2019 sale is –
a. 675 c. 2,750
b. 1,375 d. 8,250

____6. The capital gains tax on the February 14, 2019 sale is –
a. 0 c. 3,000
b. 1,500 d. 4,500

_____7. The capital gains tax on the March 30, 2019 sale is –
a. 0 c. 5,400
b. 5,200 d. 15,600

______8. Vincent sold a residential house and lot held for Php 10,000,000 to his friend. Its FMV when he
inherited it from his father was Php 12,000,000 although its present FMV is Php 15,000,000. The tax on
the above transaction is:
a. 720,000 capital gains tax
b. 900,000 capital gains tax
c. 30% donor’s tax
d. Value added tax

(9 -11) Bryan sold the following shares of stock of domestic corporations which he bought for
investment purposes:
Listed and Traded Not Listed and Traded
Selling price 250,000 143,680
Selling expense 12,000 3,680
Cost 118,000 80,000

______9. Determine the capital gain tax assuming the sale was made in 2017 (before effectivity of TRAIN
Law) and 2018 (upon effectivity of TRAIN LAW)
 2017 2018
a. 3,000 9,000
b. 3,184 9,552
c. 3,184 9,000
d. 3,000 9,552

_____10. Assume Bryan is a dealer in securities, the capital gains tax in 2017 and 2018 is
2017 2018
a. 3,000 9,000
b. 9,000 3,000
c. 0 0
d. 0 0

_____11. Assume the shares sold are shares issued by foreign corporations, the capital gains tax in 2017
and 2018 is:
2017 2018
a. 3,000 9,000
b. 9,000 3,000
c. 0 9,000
d. 0 0

_____12. The following winnings are exempt from income tax prior to the effectivity of R.A. No. 10963
(Train Law), except?
a. Lotto winnings
b. Winnings from PCSO
c. Winnings from raffle of a private company
d. None of the choices

_____13. On January 1, 2014, Lorna invested Php 1,000,000 to BDO’s 5-year, tax-free time deposit. The
long-term deposit pays 10% annual interest every January 1. In need of cash, Lorna pre-terminated her
investment on July 1, 2017. How much is the final tax due?

a. 6,000 c. 17,500
b. 12,000 d. 42,000

_____14. Bases on the data in no. 13, assuming the same information in the problem above, except that
the investment was made by a domestic corporation, how much final tax is withheld in the year of pre-
termination?

a. 2,500 c. 10,000
b. 6,000 d. 12,000

_____15. A taxpayer received during the taxable year the following passive income derived from within
the Philippines:
Interest on bank deposit under FCDU (net) Php 231,250
Royalty on a software application (gross) 95,000
Dividend income RFC (gross) 150,000

If a taxpayer is a non-resident alien engaged in business, the final tax on the above passive income
would amount to

a. 52,750 c. 28,250
b. 19,000 d. 37,750

_____16. A non-resident alien derived interest income only in his bank deposit here in the Philippines
under the FCDU system of a domestic bank. The interest amounted to $500. How much is the income
tax due of the said alien? ($1=50.)

a. 0 c. 8,000
b. 3,000 d. 10,000

_____17. On January of 2019, a non-resident alien not engaged in trade or business derived Php 50,000
interest income from his long-term bank deposit here in the Philippines. How much is the income tax
due of the said alien?

a. 10,000 c. 5,000
b. 12,500 d. nil

____18. When the power to tax is delegated to the local government

a. Only the local executive can exercise the power
b. Only the legislative branch of the local government can exercise the power
c. The local executive and the legislative branch of the local government can exercise the power
d. Neither the local executive not the legislative branch of the local government can exercise the
power.

____19. Levying of local government taxes may be exercise by:

a. The local executive only
b. The legislative branch of the local government only
c. The local executive and legislative branch of the local government unit
d. Neither the local Executive not the legislative branch of the local government can exercise

____20. Which of the following statements is not correct?

a. Only the National Government exercise the inherent power of taxation
b. Localgoverment units could exercise the power of Taxation through legislated delegation
c. National Legislation is exercise by Congress
d. Interpretation of Tax Laws is done by the Legislative branch of government

____21. The basic law principle of a sound taxation system, where “Taxes must be based on the
taxpayer’s ability to pay” is called:

a. Equality in taxation c. Theoretical justice

b. Ability to pay theory d. Equity in Taxation

____22. Under this basic principle of a sound taxations system, the government should not incur a
deficit
A. Theoretical justice C. Fiscal Adequacy
B. Administrative feasibility D. None Of the above

___23. All the following except one, are basic principles of a sound taxation system:
A. Fiscal Adequacy C. Theoretical justice
B. Administrative feasibility D. Inherent in sovereignty

____24 Which of the following is incorrect?

A. Taxes may be imposed retroactively by law but, unless so expressed by such laws, these taxes
must only be imposed prospectively.
B. Tax laws are neither political nor penal in nature
C. The ‘’ex post facto’’ rule is not applicable in taxation.
D. None of the above

____25. Which of the following statements is not correct?

A. Only the National Government exercise the inherent power of taxation
B. Local government units could exercise the power of Taxation through legislated delegation
C. National Legislation is exercise by Congress
D. Interpretation of Tax Laws is done by the Legislative branch of government

____26. Which of the following statements correctly described “Equal Protections” clause of the
constitution regarding the government’s power to tax?

I. All person subject to legislations shall be treated alike under similar circumstances and
conditions, both in the privileges conferred and liabilities imposed
II. The purpose is to protect persons belonging to the same class against intentional and
arbitrary discriminations
III. There is denial of equal protection of laws if there is discrimination in the implementation of
tax laws
A. I and II only C. II and III only
B. I and III only D. I, II and III

_____27. Statement 1: a taxed is deemed to have satisfied the uniformity rule when it operates with the
same force and effect in every place where subjects may be found.
Statement 2: The equal protections clause of the Constitution forbid classification based on real and
substantial differences having a reasonable relation to the subjects of the particular legislation.

A. Only statement 1 is correct

B. Only statement 2 is correct
C. Both statements are correct
D. D. Both statements are incorrect.

_____28. Equality in Taxations means:

I. Progressive system of taxations shall be applied
II. The tax laws and their applications must be fsir, just reasonable and proportionate to one’s
ability to pay
III. The tax laws should give emphasis on direct rather than indirect taxes or on the ability to pay
principle of taxations

A. I only C. III ONLY

B. II only D. I, II and III

_____29. Which of the following is a Constitutional limitation on the power of taxation?

I. Territoriality of taxes
II. Public Purpose the
III. Legislative in Character
IV. Non-Appropriation for religious purpose

A. II only C. II and IV only

B. IV only D. III and IV only

_____30. These are the restrictions imposed by the Constitution.

A. Inherent limitations C. Basic principles of sound tax system
B. Constitutional Limitations D. None of the choices

_____31. Which of the limitations on the power taxation inherently implied that the State’s primary
concern is for the common good of the people?

A. Equality in taxation C. Due process of law

B. Equal protection of law D. For public purposes

_____32. Which of the following is incorrect description of taxation?

A. Legislative and inherent for the existence of the government

B. Necessary and for public purpose
C. Supreme and absolute power of the States
D. The strongest of all inherent powers of the State

_____33 The usual modes of avoiding occurrence of double taxations is/are:

A. Reciprocal exemptions, either by law or treaty

B. Tax credit or foreign taxes paid
C. Deductions for foreign taxes paid
D. All of the above

_____34. The following constitute double taxation, except one

A. Both taxes are imposed in the same amount

B. Both taxes are levied for the same purpose
C. Both taxes are imposed by the same taxing authority
D. Both taxes are imposed upon the same position

____35. The tax law must be capable of convenient just and effective administration

A. Theoretical Justice
B. Fiscal adequacy
C. Administrative feasibility
D. rule of appointment

_____36. Statement 1: Passive incomes are subject to separate and final taxes.
Statement 2: Passive incomes are included in the computation of taxable income from
compensation or business/professional income.
 a. True, True c. True, False
b. False, False d. False, True

_____37. Statement 1: Tax on certain passive income is a capital gains tax.

Statement 2: Other income, for income tax purposes, is excluded in the determination of an
individual taxpayer’s returnable income.

a. True, True c. True, False

b. False, False d. False, True

_____38. Which of the following statements is correct?

I. Beginning January, 1 2018, PCSO/Lotto winnings of not more than Php 10,000 received by
citizens, residents and non-resident aliens engaged in trade or business are exempt from income
tax.
II. Beginning January 1, 2018, PCSO/Lotto winnings of more than 10,000 received by citizens,
residents and non-resident aliens engaged in trade or business are subject to 20% final
withholding tax.
III. Beginning January 1, 2018, PCSO/Lotto winnings of not more than 10,000 received by non-
resident aliens not engaged in trade or business are exempt from income tax.
IV. Beginning January 1 2018, PCSO/Lotto winnings of more than 10,000 received by non-
resident aliens not engaged in trade or business are exempt from income tax.

a. I only c. I and IV only

b. I and II only d. All of the above

_____39. Tax which is a fixed Proportion of the amount or value of the property with respect to which
the tax is assessed.

A. Ad valorem C. Excise
B. Specific D. Revenue

_____40. A tax on business is

A. Direct Tax C. Property Tax

B. Indirect Tax D. None of the choices

_____ 41. One is not a direct Tax.

A. Immigration tax C. Income tax

B. Transfer tax D. Value added Tax

_____42. Tax which is demanded in the expectation and intention that he shall indemnify himself at the
expense of another

A. Direct C. Excise
B. Indirect D. Income

_____43. Tax which is demanded from the persons whom the laws intend or desires to pay it

A. Direct C. Excise
B. Indirect D. Income

_____44. Which of the following is not an example of excise tax?

A. Transfer Tax C. Real Property Tax

B. Sales Tax D. Income Tax

_____45. The Philippine income tax has the following features except
A. Comprehensives tax situs by using the nationality, residence, and sources rules
B. The individual income tax system is mainly progressive in nature
C. Indirect rather than direct system
D. Semi Global and Semi-schedular system

_____46. Which of the following is not source of our tax laws?

I. Supreme Court Judicial Decisions
II. SEC Regulations and Rulings
 III. Bureau of Custom Memorandum Orders
IV. ADMINISTRATIVE RULES AND REGULATIONS
V. Legislations, tax treaties and tax ordinances
VI. Opinion of Authors

A.II, III and VI only C. II, and VI only

B. II, III, and IV only D. None of the above

_____47. Statement 1: A revenue regulation must not be contrary to the provisions of the laws that it
implements.
Statement 2: A revenue regulation cannot expand the provision of the law that it implements
by imposing a penalty when the law authorizes the revenue regulations does not imposed the
penalty.
A. Only statement 1 is correct
B. Only statement 2 is correct
C. Both statements are correct
D. Both statements are incorrect

_____48. The least source of tax laws;

A. Statutes C. Revenue Regulations
B. Presidential decree D. Tax duties and conventions

_____49. Which among the following concepts of taxation is the basis for the situs of income taxation?

A. Lifeblood Doctrine of Taxation C. Compensatory purpose of Taxation

B. Symbiotic relation in taxation D. Sumptuary purpose of taxation

_____50. It literary means ‘place of taxations” the country has the power and jurisdiction to levy and
collected the tax

A. Basis of Taxation C. Scope of taxation

B. Situs of taxation D. Theory of taxation

_____51. A taxpayer gives the following for refusing to pay a tax. Which of his reasons is not acceptable
for legally refusing to pay a tax?

A. That he has been deprived of due of process of law

B. That there is lack of territorial jurisdiction
C. That the prescriptive period of has lapsed
D. That he will derive no benefits from the tax

_____52. “Government agencies performing governmental function are exempt from the tax unless
expressly tax by those performing proprietary functions are subjects to tax unless expressly
exempted“ refers to;

A. The tax imposed should be public purpose

B. There should be no improper delegations of the taxing power
C. The power to tax is limited territorial jurisdiction of the taxing government
D. Exemption of the government entities from taxation

______53 The basis or the test of exemptions of real properties owned by religious or charitable
entities from real property taxes is:
A. Use of the real property
B. Ownership of the real property
C. Location of the real property
D. Ownership or locations real property at the option of the government

_____54. No law regranting any shall be passed without the concurrence of

A. Majority of all members of congress
B. 2/3 of all members of congress
C. ¾ vote of all congress
D. Unanimous vote of all members of congress

______55. the following are the constitutional limitations on the power of taxations, except

A. Only congress can exercise the power of taxations

B. Non impairment of the obligations of contracts
C. Taxes are not subject to set-off compensation
D. The rule of taxation should be uniform