Republic of the Philippines

PALAWAN STATE UNIVERSITY

College of Business and Accountancy
Puerto Princesa City

DEPARTMENTAL QUIZ IN INCOME TAXATION

Second Semester/SY 2017-2018

Multiple Choices: Shade the letter of your answer in the answer sheet. Strictly Erasures and Markings in the answer sheet shall be
considered mistakes.
I. Taxation is power by which the sovereign raises revenue to defray the necessary expenses of the government from among
those who in some measure are privileged to enjoy its benefits and must bear its burden.
II. Taxes are an enforced proportional contribution from properties and persons levied by the State by virtue of its sovereignty for
the support of government and for public needs.
1. The statements are
a. Both false b. Only 1 is true c. Only 2 is false d. Both true
2. The following are characteristics of taxes, except
a. forced charge c. levied by the legislature
b. generally payable in dollar d. levied for public purpose.
3. All are not characteristic of taxes, except
a. Levied for private purpose c. assessed with some reasonable rule of
b. Levied by the state apportionment
d. voluntary contribution
4. One of the characteristics of the internal revenue laws is that they are:
a. Criminal in nature c. Political in nature
b. Penal in nature d. Generally prospective in application
5. In case of conflict between tax laws and generally accepted accounting principles (GAAP):
a. Both shall be enforced c. Tax laws shall prevail
b. GAAP shall prevail d. The issue shall be resolved by the courts
6. Is the amount charged for the cost and maintenance of property used.
a. Margin fee c. Compromise penalty
b. License fee d. Toll
7. Is levied only on land based wholly on the benefit accruing thereon as a result of improvements or public works undertaken by
government within the vicinity.
a. Debt b. Special assessment c. License Fee d. Margin Fee
8. An exaction designed to stabilize the currency.
a. Margin Fee b. Customs duties c. Debt d. License Fees
9. The following are similarities of the inherent powers of the State, except
a. Necessary attributes of sovereignty c. Affect all persons or the public
b. Interfere with private rights and property d. Are legislative in implementation
10. This is a demand of owners
a. License fee b. Tax c. Toll d. None of the above
11. Taxes are the lifeblood of the nation. Without revenue raised from taxation, the government will not survive, resulting in
detriment to society. Without taxes, the government would be paralyzed for lack of motive power to activate and operate it.
a. Lifeblood theory c. Benefits Protection theory
b. Necessity theory d. None of the above
12. First Statement: Marshall Dictum -“Power to tax is the power to destroy”.
Second Statement: Oliver Wendell Holmes Dictum - “Power to tax is not the power to destroy while this court sits”.
a. All statements are true c. Only statements I and III are true
b. All statements are false d. Only statements I and II are true
13. It is regulatory imposition in the exercise of the police power of the State
a. License fee b. Tax c. Toll d. Compromise penalty
14. First Statement: Assessment is a finding by the taxing agency that the taxpayer has not paid his correct taxes.
Second Statement: Assessment is also a written notice to a taxpayer to the effect that the amount stated therein is due as a tax,
and containing a demand for the payment thereof.
a. All statements are false c. Only the second statement is false
b. Only the first statement is false d. All statements are not false
15. Which of the following is not an element of direct double taxation?
a. Two taxes b. Same subject matter c. Same year d. Same amount
16. First Statement: Specific tax is when tax is measured by the head or number or by some standard of weight or measurement.
Second Statement: Ad valorem tax is when a tax is measured upon the value of the article.
a. All statements are true c. Only the first statement is false
b. All statements are false d. Only the Second statement is false
17. There exist reciprocal duties of protection and support between State and its inhabitants. Inhabitants pay taxes and in return
receive benefits and protection from the State.
a. Lifeblood theory c. Benefits Protection theory
b. Necessity theory d. None of the above
Departmental Quiz 1 – Taxation 1, p. 2

18. The prohibition in the Philippine Constitution on taxation of religious corporation is all of the ff., except:
a. A prohibition on imposition of excise taxes on the corporation.
b. A prohibition on imposition of property taxes on the corporation
c. A prohibition on imposition of any and all local taxes on the corporation
d. A prohibition on imposition of any and all national taxes on the corporation
19. Which of the following has no power of taxation?
a. Barrios b. Cities c. Barangays d. Provinces
20. The following are Reliefs from Effects of Double Taxation
a. Tax deductions c. Treaties with other states
b. Exemptions d. International Comity
21. The following are legal forms of escape from taxation, except:
a. Shifting b. Capitalization c. Exemption d. Evasion
22. The following are scope of legislative taxing power, except:
a. Amount or rate of the tax c. Apportionment of the tax
b. Kind of tax to be collected d. Principles of taxation
23. The following inherent limitations of taxation, except
a. Non-delegability of the power c. Equal protection of law
b. Situs of taxation d. International comity
24. Under this basic principle of a sound tax system, the government should not incur a deficit
a. Theoretical justice c. Fiscal adequacy
b. Administrative feasibility d. None of the above
25. It is given to a taxpayer in order to provide a relief from too onerous a burden of taxation in case where the same income is
subject to a foreign and Phil. Income tax.
a. Tax deductions b. Tax exemptions c. Tax credit d. Tax avoidance
26. Which of the following may not raise money for the government?
a. Power of taxation b. Police power c. Eminent domain d. None of the above
27. Charged upon commodities on their being imported into or exported from a country;
a. Margin Fee b. Customs duties c. Debt d. License Fees
28. The following are Grounds for Termination of Taxable Period, except:
a. the taxpayer is retiring from business subject to tax
b. he intends to return to the Philippines
c. he hides or conceals his property
d. he performs any act tending to obstruct the proceedings for the collection of the tax for the past or current quarter or year
or renders the same totally or partly ineffective unless such proceedings are began immediately.
29. It is an obligation imposed by law.
a. Margin Fee b. Customs duties c. Debt d. License Fees
30. A sound tax system must be:
I. sufficient to meet governmental expenditures (fiscal adequacy);
II. capable of being effectively enforced (administrative easibility); and
III. based on the taxpayer’s ability to pay (theoretical justice).
a. All statements are true c. Only statements I and III are true
b. All statements are false d. Only statements I and II are true
31. A tax can still be imposed under its non-revenue objective, except
a. Regulation c. Encouragement of economic growth
b. Promotion of social welfare d. Protectionism
32. The following intangible properties are deemed with a situs in the Philippines, except:
a. franchise exercised in the Philippines
b. shares, obligations or bonds issued by a corporation organized and constituted in the Philippines in accordance with its laws
c. shares, obligations or bonds issued by a foreign corporation 75% of its business is located in the Philippines
d. shares, obligations or bonds issued by a foreign corporation if such shares, obligations or bonds have acquired a business
situs in the Philippines; and
33. The amount required is dictated by the needs of the government
a. License fee b. Tax c. Toll d. Compromise penalty
34. It is the amount collected in lieu of criminal prosecution in cases of tax violations;
a. License fee b. Tax c. Toll d. Compromise penalty
35. Taxes are the lifeblood of the nation. Without revenue raised from taxation, the government will not survive, resulting in
detriment to society. Without taxes, the government would be paralyzed for lack of motive power to activate and operate it.
a. Lifeblood theory c. Benefits Protection theory
b. Necessity theory d. None of the above
36. It is regulatory imposition in the exercise of the police power of the State.
a. License fee b. Tax c. Toll d. Compromise penalty
37. First Statement: Assessment is a finding by the taxing agency that the taxpayer has not paid his correct taxes.
Second Statement: Assessment is also a written notice to a taxpayer to the effect that the amount stated therein is due as a tax,
and containing a demand for the payment thereof.
Departmental Quiz 1 – Taxation 1, p. 3

a. All statements are false c. Only the second statement is false

b. Only the first statement is false d. All statements are not false
38. Which of the following is not an element of direct double taxation?
a. Two taxes b. Same subject matter c. Same year d. Same amount
39. First Statement: Specific tax is when tax is measured by the head or number or by some standard of weight or measurement.
Second Statement: Ad valorem tax is when a tax is measured upon the value of the article.
a. All statements are true c. Only the first statement is false
b. All statements are false d. Only the Second statement is false
40. There exist reciprocal duties of protection and support between State and its inhabitants. Inhabitants pay taxes and in return
receive benefits and protection from the State.
a. Lifeblood theory c. Benefits Protection theory
b. Necessity theory d. None of the above
41. The prohibition in the Philippine Constitution on taxation of religious corporation is a prohibition on imposition of all of the ff:,
EXCEPT:
a. Excise taxes on the corporation.
b. Property taxes on the corporation
c. Any and all local taxes on the corporation
d. Any and all national taxes on the corporation
42. The following are Reliefs from Effects of Double Taxation, except:
a. Tax deductions c. Treaties with other states
b. Exemptions d. International Comity
43. The following are legal forms of escape from taxation, except:
a. Shifting b. Capitalization c. Exemption d. Evasion
44. The following are scope of legislative taxing power, except:
a. Amount or rate of the tax c. Apportionment of the tax
b. Kind of tax to be collected d. Principles of taxation
45. The following inherent limitations of taxation, except
a. Non-delegability b. Situs of taxation c. Equal protection of law d. International comity
46. Under this basic principle of a sound tax system, the government should not incur a deficit
a. Theoretical justice c. Fiscal adequacy
b. Administrative feasibility d. None of the above
47. It is given to a taxpayer in order to provide a relief from too onerous a burden of taxation in case where the same income is
subject to a foreign and Phil. Income tax.
a. Tax deductions b. Tax exemptions c. Tax credit d. Tax avoidance
48. Existence of a government is a necessity and cannot continue without any means to pay for expenses.
a. Lifeblood theory c. Benefits Protection theory
b. Necessity theory d. None of the above
49. The following are Requisites of Tax Regulations, except
a. Reasonable c. Not contrary to law
b. Within the authority conferred d. Must not be published
50. The following are Sources of Tax Laws, except
a. Statutes b. Presidential Orders c. Constitution d. Jurisprudence
51. Select from below the only source of Tax Laws
a. DOJ Memorandum Circulars c. House Bills
b. PFRS Exposure Drafts d. Barangay Ordinances
52. The following are Powers and Duties of the BIR, except
a. Assessment and collection of all national internal revenue taxes, fees, and charges
b. Give effect to and administer the supervisory and police power conferred to it by the Tax Code or other laws
c. Enforcement of all forfeitures, penalties and fines in connection therewith
d. Execution of judgments in all cases decided in its favor by the Supreme Court
53. A Revenue Regulation, as a source of tax law, is
a. Promulgated by the BIR
b. Promulgated by the Department of Finance
c. Promulgated by the Department of Finance upon recommendation of the BIR
d. An interpretation of Revenue law by the BIR
54. The following are constitutional limitations, except
a. Situs of taxation c. Equal protection of the law
b. Non-impairment of contracts d. Due process of law
55. Tax must be imposed for public purpose. Which of the following is not a public purpose?
a. National defense c. Improvement of the sugar industry
b. Public education d. None of the above
56. First Statement: Collection of taxes may not be enjoined by injunction.
Second statement: Taxes could not be the subject of compensation and set-off.
Third statement: A valid tax may result in destruction of the taxpayer's property.
Departmental Quiz 1 – Taxation 1, p. 4

a. All statements are false c. All statements are true

b. Only the I and II are true d. Only II and III are true
57. Statement I: A revenue regulation must not be contrary to the provision of law that it implements.
Statement II: A revenue regulation cannot expand the provision of law that it implements by imposing a penalty when a law that
authorizes it does not impose a penalty.
a. All statements are false c. All statements are true
b. Only the I is true d. Only II is true
58. I. Constitutional Exemptions are immunities from taxation which originate from the constitution
II. Statutory Exemptions are those which emanate from legislation.
a. Both are true b. Both are false c. Only I is true d. Only II is true
59. The following are Indicia of Fraud in Tax Evasion:
I. failure to declare for taxation purposes true and actual income derived from business for two consecutive years
II. substantial under declaration of income tax returns of the taxpayer for two consecutive years coupled with intentional
overstatement of deductions.
a. Both b. Only I c. Only II d. None
60. First Statement: Direct duplicate taxation constitutes a violation of substantive due process.
Second Statement: Indirect double taxation is Not legally objectionable.
a. Both are false b. Only I is true c. Both are true d. Only II is true
61. First Statement: Corporation’s tax delinquency can be enforced against the stockholder, except if the corporate assets have
passed into their hands.
Second Statement: Transfer tax on the decedent’s estate can be assessed against the heirs, except if the properties of the
decedent have been distributed to the heirs.
a. Both are true b. Only I is true c. Both are not true d. Only II is true
62. The amount required is dictated by the needs of the government in
a. License fee b. Tax c. Toll d. None of the above
63. All of the following are exceptions that BIR Rulings are Prospective in application, except
a. Where no vested right will be impaired c. Where the law allows retroactive application
b. When it is civil in nature d. If there is bad faith on the part of the taxpayer.
64. Is the exploitation by the taxpayer of legally permissible alternative tax rates or methods of assessing taxable property or
income, in order to avoid or reduce tax liability.
a. Tax Avoidance b. Tax Evasion c. Shifting d. Capitalization
65. Principles Governing Tax Assessments:
a. Assessments are prima facie presumed correct and made in good faith
b. Assessments should be based on actual facts
c. Assessment is discretionary on the part of the Commissioner
d. The authority vested in the Commissioner to assess taxes may NOT be delegated.
66. First Statement: Double taxation is prohibited in the Philippines.
Second Statement: Transformation is where the manufacturer or producer upon whom the tax has been imposed, fearing the
loss of his market if he should add the tax to the price, pays the tax and endeavors to recoup himself by improving his process of
production, thereby turning out his units at a lower cost.
a. Both are true b. Both are false c. Only I is true d. Only II is true
67. The following are constitutional limitations, except
a. Power of the President to veto item or items in an Appropriation, Revenue, or Tariff Bill
b. Necessity of an a Appropriation before Money may be paid out of the Public Treasury
c. Non-appropriation of Public Money or Property for the benefit of any Church, Sect, or System of religion
d. Treatment of Taxes Levied for a President’s Purpose
68. Process by which tax burden is transferred from statutory taxpayer to another without violating the law.
a. Tax Avoidance b. Tax Evasion c. Shifting d. Capitalization
69. Reduction in the price of the taxed object equal to the capitalized value of future taxes which the purchaser expects to be called
upon to pay.
a. Tax Avoidance b. Tax Evasion c. Shifting d. Capitalization
70. Ist Statement: Progressive taxes is where rate increases as the tax base increases.
2nd Statement: Regressive taxes is where rate decreases as tax base decreases.
a. I is false b. II is false c. Both are false d. Both are true
71. A grant of immunity, express or implied, to particular persons or corporations from the obligation to pay taxes.
a. Tax Avoidance b. Tax Evasion c. Tax Exemption d. Capitalization
72. This is when a property of a foreign state may not be taxed by another.
a. Reciprocity b. Territoriality c. Treaties d. International comity
73. The following are Factors that determine the situs of taxation:
a. Legality of the tax c. Citizenship of the taxpayer
b. Subject matter of the tax d. Residence of the taxpayer
74. The following are Agencies Involved in Tax Administration:
a. BIR c. Bureau of Customs
b. Municipal Budget Officer d. municipal assessors
Departmental Quiz 1 – Taxation 1, p. 5

75. The following are stages of taxation, except

a. Levy b. Assessment c. Collection d. Payment
76. These are Basic Principles of a sound tax system, except
a. Fiscal adequacy c. Administrative feasibility
b. Theoretical justice d. Governmental necessity
77. Tax of a fixed proportion of the value of the property with respect to which the tax is assessed and requires the intervention of
assessors or appraisers to estimate the value of such property before the amount due from each taxpayer can be determined is
known as:
a. Specific b. Ad valorem c. Special or regulatory d. None of the above
78. A tax on business is a
a. Direct tax b. Indirect tax c. Property tax d. None of the above
79. In all, except one, there can be a classification of the subject matter being required to shoulder the burden. Which is the
exception?
a. Tax b. License fee c. Toll d. Eminent domain
80. All taxable articles or kinds of property of the same class shall be taxed at the same rate.
a. Progressivity b. Equitability c. Uniformity d. None of the above
81. Taxation is said to be equitable when its burden falls to those better able to pay.
a. Progressivity b. Equitability c. Uniformity d. None of the above
82. Which statement is incorrect?
a. Every person must contribute his share in government costs
b. The existence of a government is expected t improve the lives of the people
c. The government provides protection and other benefits while the people provide support
d. Only those who are able to pay tax can enjoy the privileges and protection of the government
83. That all taxable articles or properties of the same class shall be taxed at the same rate underscores
a. Equality in taxation b. Equity in taxation c. Uniformity in taxation d. None of these
84. Which of the following is violative of the principle of non-delegation?
a. Requiring that legislative enactment must exclusively pertain to Congress
b. Authorizing the President to fix the amount of impost on imported and exported commodities
c. Authorizing certain private corporation to collect taxes
d. Allowing the secretary of Finance and the BIR to issue regulation or rulings which go beyond the scope of a tax law.
85. Tax exemption bills are approved by
a. Majority of all members of Congress d. Majority of the representatives constituting a
b. Solely by the President of the Republic quorum
c. 2/3 of all members of Congress
86. This refers to the privilege or immunity from a tax burden which others are subject to:
a. Exclusion b. Deduction c. Tax holiday d. Reciprocity
87. Which is not a legislative act?
a. Determination of a subject of the tax c. Assessment of the tax
b. Setting the amount of tax d. Determining the purpose of the tax
88. Which of the following is a local tax?
a. Value added tax c. Documentary stamp tax
b. Real property tax d. Other percentage tax
89. Statement 1. Taxes are voluntary contributions to the governments.
Statement 2. Taxes are mandatory contributions to the government.
a. Only statement 1 is correct c. Both statements are correct
b. Only statement 2 is correct d. Neither statements are correct
90. A tax that cannot be avoided
a. Direct tax b. Indirect tax c. Specific tax d. Personal tax
91. Which is not a national tax?
a. Real property tax b. Community tax c. Income tax d. Professional tax
92. The commissioner of Internal Revenue is not empowered to
a. Make or amend a tax return for and in behalf of the taxpayer
b. Obtain information and to summon, examine, and take testimony of persons to effect tax collections
c. Compromise tax liabilities of taxpayer
d. Grant amnesty for erring taxpayers
93. Which of the ff. is NOT a member of the Regional Evaluation Board?
a. Regional Director c. Head of Legal Division
b. Head of Collection Division d. Head of Operations Division
94. Which is NOT a Power of the BIR Commissioner?
a. Interpret tax laws c. Acknowledge payment of tax
b. Make assessments d. Delegation power
95. Which is NOT a Duty of the Commissioner?
a. Submit Reports to Congress c. Provide logistical support to proper officials
b. Submit reports to Oversight Committee d. Acknowledge payment of tax
Departmental Quiz 1 – Taxation 1, p. 6

96. The REB have the power to approve on compromise involving basic deficiency taxes of P______________ or less.
a. 1,000,000 b. 500,000 c. 300,000 d. 100,000
97. Statement I: Taxation is where sovereign raises revenue to defray the necessary expenses of the government.
Statement II: Police power is where the state enacts laws to promote public health, public moral, public safety, and general
welfare.
Statement III: Power of Eminent Domain is where the state appropriate private property for public use upon payment of just
compensation.
a. All statements are false. c. Only statements II and III are true
b. Only statements I and II are true d. All statements are true
98. Which of the ff. is an Inherent Limitation of Taxation?
a. Due Process of Law
b. Non-imprisonment of for non-payment of tax
c. International Comity
d. Non-infringement of Religious freedom and worship
99. Which of the ff. NOT a Constitutional Limitation of Taxation?
a. Non-delegability of taxing power
b. Origin of appropriation, revenue, and tariff bills shall be the house of representatives
c. Legislative Grant of Tax Exemptions requires Majority Vote of all Members of Congress
d. Necessity of an a Appropriation before Money may be paid out of the Public Treasury
100. The ff. are consequences of violation of inherent limitations, EXCEPT:
a. Popular discontent c. Law is null and void
b. Loss of credibility d. Civil disobedience

“The only way that you’ll be truly satisfied in your life, is to do what you believe is great work. And the only way to do great work
is to love what you do” – Steve Jobs

Prepared by:

Prof. MAXIMA PURITA C. ALISUAG, CPA, MAM

Faculty

PETERWILLE T. CHUA, CPA, MAM

Department Chairperson

Approved:

Dr. DAPHNE T. MALLARI

College Dean

Dbcbcdbacc Aaaddaccad DdcccCbbcc bcbdaaddac cddDcccbdb

ddcAdccabc cbbadddcdb cdabcdbbdc bdcdaccbba bddcdadcac