PALAWAN STATE UNIVERSITY
COLLEGE OF BUSINESS AND ACCOUNTANCY
BSBA (HRDM) Fourth Year Block No. 2
Mid-term Examinations - TAXATION
Prof.: Atty. Emilia Concepcion D. Severino
INSTRUCTIONS: Write your answers on a separate sheet of paper.
Do not write at the back of the answer sheet.
Calculators may be used for questions that require computation.
Graduated income tax table is provided in the last page of this test
questionnaire
Submit the answer sheet together with this test questionnaire
MULTIPLE CHOICE: Choose the best answer
1. Real property taxes should not disregard increases in the value of real property
occurring over a long period of time. To do otherwise would violate the canon of a
sound tax system referred to as
a. theoretical justice
b. fiscal adequacy
c. administrative feasibility
d. symbiotic relationship
2. Although the power of taxation is basically legislative in character, it is not the function
of Congress to
a. fix with certainty the amount of taxes
b. collect the tax levied under the law
c. identify who should collect the tax
d. determine who should be subject to the tax
3. Which theory in taxation states that without taxes, a government would be paralyzed
for lack of power to activate and operate it, resulting in its destruction?
a. Power to destroy theory
b. Lifeblood theory
c. Sumptuary theory
d. Symbiotic doctrine
4. Among the nature of taxation are the following. Which one is not?
a. It is inherent in sovereignty
b. The citizenry benefit from it
c. The government solely benefits from it
d. It is a means by which the government raises income
5. Which is not a valid definition of income?
a. Income is a fund at one distinct point of time
b. Income is the return from capital investment
c. Income means cash or its equivalent unless otherwise specified
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d. Income means all wealth which flows into the taxpayer other than a mere return
of capital
6. It is the proportional contribution by persons and property levied by the lawmaking
body of the State by virtue of its sovereignty for the support of the government and all
public needs.
a. taxes
b. license fees
c. special assessment
d. ad valorem tax
7. The following are sources of tax laws. Which is not a source?
a. Supreme Court decisions
b. Barangay resolutions
c. Treaties or international agreements
d. Revenue Regulations by the Department of Finance
8. Percentage tax is an example of
a. graduated tax
b. regressive tax
c. progressive tax
d. proportional tax
9. Which statement is false? Income tax
a. is always a direct tax
b. is always based on gross amount
c. is a tax on persons income, emolument or profits
d. is a tax on all yearly profits arising from property, profession, trade or business
10. All of the following except one are inherent limitations of taxation. Which one is it?
a. Taxes may be levied only for public purpose
b. Government agencies are exempt from taxation
c. The State may tax persons and properties under its jurisdiction
d. The property of another State may not be taxed by other State
11. Who among the following is a non-resident alien?
a. an alien who comes to the Philippines for a definite purpose which in its nature
may be promptly accomplished
b. an alien who comes to the Philippines for a definite purpose which in its nature
would require an extended stay
c. an alien who has acquired residence in the Philippines
d. an alien who lives in the Philippines with no definite intention as to his stay.
12. Who among the following individual taxpayers is taxable on income within and
without?
a. Alcazar, a native of General Santos City, working as overseas contract worker in
Iraq
b. Rudyman, naturalized Filipino citizen and married to a Filipina. He had been
living in Palawan since 1970
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c. Rodrigo dela Hoya, Spanish citizen, a resident of Madrid, Spain, spent one week
vacation trip in Boracay
d. Dao Ming So, Taiwanese singer, held a 3-day concert in Manila.
13. The following, except one, may claim personal exemptions
a. Non-resident alien not engaged in trade or business in the Philippines
b. Non-resident alien engaged in trade or business in the Philippines
c. Resident alien
d. Citizen
14. An exemption provided by law to take care of personal, living and family expenses of
the taxpayers and the amount of which is determined according to the status of the
taxpayers are
a. Optional Standard deduction
b. Personal exemption
c. Additional exemption
d. Special additional exemption
15. A man has three wives under his tribal customs and practice. He is entitled to a
personal exemption appertaining to
a. a single individual
b. a married individual
c. a married individual plus additional exemption for dependents pertaining to
each of the 2 extra wives
d. a head of the family plus additional exemption for dependents pertaining to
each of his three wives
16. Taxpayers are husband and wife. The gross compensation income of the wife is
P200,000 while the gross income of the husband is P200,000. They have six qualified
dependent children but within the year one child died. Their total exemptions is:
a. P200,000 c. P64,000
b. P96,000 d. None
Numbers 17, 18, 19 and 20 are based on the following information:
Madam X, widow, earning an annual gross compensation income of P300,000 has the
following dependent children in 2013:
Aubrey = born on January 31;
Barbara = celebrated her 21st birthday on June 12;
Cristeta = married on January 1;
Diana = gainfully employed effective July 1;
Eliza = died of dengue fever on September 30
17. Assuming Madam X has two employers, her taxable income 2013 is
a. P32,000 c. P150,000
b. P63,000 d. P100,000
18. The income tax due of Madam X in 2013 is:
a. P25,000 c. P2,500
b. P22,500 d. P37,500
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19. The taxable income of Madam X in 2014 is:
a. P120,000 c. P95,000
b. P225,000 d. P87,000
20. The income tax due of Madam X in 2014 is:
a. P25,000 c. P43,750
b. P21,250 d. P85,000
21. It is an income derived from any activity in which the taxpayer does not materially
participate
a. compensation income c. passive income
b. income derived from trade d. gains from sale of real property
or business
22. Which of the following is true? Proceeds of life insurance policy
a. is exempt from income tax upon the death of the insured if the beneficiary is
not the estate, executor or the administrator
b. is not subject to income tax if taken by a person other than the insured such as
the employer
c. are subject to income tax in its entirety if the insured outlives the policy
regardless of the amount of premiums paid by the insured
d. are exempt from income tax upon the death of the insured because the
requirement of irrevocability, and appointment of beneficiary other than the
estate, executor or administrator are applicable only to estate tax and not to
income tax
Numbers 23 to 27 are based on the following information:
For taxable year 2014 ABC Corporation presented the following details for its
employee Mr. Garcia to be able to compute the tax to be collected for December 2014
Mr. Garcia, married with two qualified dependent children who received the following
compensation for the year:
Basic Monthly Salary P45,000
Overtime pay for November 5,000
13th month pay 45,000
Other Benefits 12,000
23. How much is the total non-taxable income of Mr. Garcia?
a. P30,000 c. P572,000
b. P100,000 d. P472,000
24. The total gross compensation income of Mr. Garcia is:
a. P30,000 c. P572,000
b. P100,000 d. P472,000
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25. The total basic personal and additional exemptions that may be deducted from the
total gross compensation income of Mr. Garcia is:
a. P30,000 c. P572,000
b. P100,000 d. P472,000
26. How much is the net taxable compensation income of Mr. Garcia?
a. P30,000 c. P572,000
b. P100,000 d. P472,000
27. The total income tax payable for the year 2014 of Mr. Garcia is:
a. P222,000 c. P50,000
b. P116,600 d. P66,600
Numbers 28 to 32 shall be based on the following assumptions:
Mr. Tumbler, married, whose wife is employed, with two qualified dependent children,
received for the year:
Basic Monthly salary P16,500
13th month pay P16,500
Other benefits P16,500
28. 23. How much is the total non-taxable income of Mr. Tumbler?
a. P30,000 c. P100,000
b. P201,000 d. P101,000
29. The total gross compensation income of Mr. Tumbler is:
a. P30,000 c. P100,000
b. P201,000 d. P101,000
30. The total basic personal and additional exemptions that may be deducted from the
total gross compensation income of Mr. Tumbler is:
a. P30,000 c. P101,000
b. P100,000 d. P231,000
31. How much is the net taxable compensation income of Mr. Tumbler?
a. P30,000 c. P201,000
b. P101,000 d. P231,000
32. The total income tax payable for the year 2014 of Mr. Tumbler is:
a. P14,700 c. P50,000
b. P201,000 d. P45,000
33. These are items or amounts, which the law allows to be deducted from gross income
in order to arrive at the taxable income.
a. allowable deductions
b. itemized deductions
c. optional standard deductions
d. basic personal exemptions
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34. Which of the following statements is true?
a. there shall be allowed a basic personal exemption amounting to P45,000 for
each individual taxpayer regardless of status
b. an individual, whether single or married, shall be allowed an additional
exemption of P25,000 pesos for each dependent child
c. an individual, whether single or married, shall be allowed an additional
exemption of P25,000 pesos for each dependent child not exceeding four (4)
children
d. the additional exemption for dependents shall be claimed by both of the
spouses in the case of married individuals
35. The following are the requisites before premium payments on health and/or
hospitalization insurance may be allowed as deductions from gross income, except for:
a. the insurance shall be taken by the individual taxpayer himself for his family;
b. the amount being claimed shall not exceed P2,400 a year or P200 a month per
family;
c. the family has gross income of P250,000 or less for the taxable year;
d. none of the above
36. Which of the following is not allowed to claim additional personal exemption?
a. Citizen
b. Resident alien
c. Non-resident alien
d. Non-resident alien not engaged in trade or business in the Philippines
37. Which of the following may not be deducted from an individual taxpayer from his
gross compensation income?
a. premium payment on health insurance
b. basic personal exemption
c. additional exemption
d. itemized deductions
38. Which of the following statements is true?
a. capital gains from sale of real property is taxed 6% final tax on the gross selling
price or current fair market value at the time of sale, whichever is higher.
b. capital gains from sale of real property is taxed based on graduated schedule of
5% to 32% on the gross selling price or current fair market value at the time of
sale whichever is higher.
c. capital gains from sale of real property is still included in the computation of
gross income
d. capital gains from sale of real property is taxed 6% final tax on the gross selling
price or current fair market value at the time of sale, whichever is lower.
39. Means any good, service or other benefit furnished or granted by an employer in cash
or in kind in addition to basic salaries, to an individual employee, except rank and file
employee, under an employer-employee relationship.
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a. de minimis benefit
b. fringe benefit
c. cost of living allowance
d. travelling and transportation expenses
40. The allowable deductions granted to an individual taxpayer engaged in trade or
business are the following, except for:
a. basic personal and/or additional exemptions
b. itemized deductions
c. premium payments on health and/or hospitalization insurance
d. none of the above
41. Which of the following statements is false as regards source of income
a. Compensation income = place of performance of service
b. Merchandising business = place of business
c. Gain on sale of real property = place of sale
d. Gain on sale of domestic shares of stock = within the Philippines
42. The wife can claim additional exemptions if
a. the husbands income is lower than her income
b. the husband is a non-resident citizen with income from within and without the
Philippines
c. the husband is a pure business income earner
d. the husband has no income of his own
43. A tax must be imposed for public purpose. Which of the following is not a public
purpose?
a. national defense c. improvement of sugar industry
b. public education d. none of the above
44. Question 1: Can the State tax the Armed Forces of the Philippines?
Question 2: Are government owned and controlled corporations subject to tax?
a. Yes, No c. No, Yes
b. Yes, Yes d. No, No
45. Diplomatic officials such as head of states and ambassadors are exempt from taxes
and duties because of
a. International comity
b. Reciprocity provisions
c. Principle of territoriality
d. Exemption in the tax code
46. No person shall be imprisoned for non-payment of
a. property tax c. poll tax
b. excise tax d. income tax
47. Tax that is imposed solely to raise revenue for government expenditures
a. revenue tax c. specific tax
b. regulatory tax d. ad valorem tax
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48. One of the characteristics of a tax is that
a. it is generally based on contract
b. it is generally payable in money
c. it is generally assignable
d. optional
49. The following are similarities of the inherent power of taxation, eminent domain and
police power, except one
a. are necessary attributes of sovereignty
b. interferes with private rights and property
c. affect all persons or the public
d. are legislative in their implementation
50. Which of the following constitute objectionable double taxation?
a. a license fee and a tax imposed on the same business or occupation for selling Commented [A1]: Posed
the same articles
b. a tax imposed both on the occupation of fishing and on fishpond operation
c. persons engaged in leasing or selling real property are subject to real estate
dealers tax and their sales are also subject to 12% VAT
d. a tax of 1% is imposed for bank reserve deficiency while a penalty of 1/10 of
1% is also imposed as a consequence of such reserve deficiency
xxxxxxxxxx NOTHING FOLLOWS xxxxxxxxxx
Graduated income tax schedule
If taxable income is
But not over Tax due is Plus Of the excess over
over
P10,000 5%
P10,000 30,000 P500 10% P10,000
30,000 70,000 2,500 15% 30,000
70,000 140,000 8,500 20% 70,000
140,000 250,000 22,500 25% 140,000
250,000 500,000 50,000 30% 250,000
500,000 125,000 32% 500,000
GOOS LUCK!
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