Income Taxation Chapter 1 (Part 1)

When the provisions of tax laws are silent as to the taxability of an item, which is true? a. Taxation applies since taxation is the rule, exemption is the exception. b. Exemption applies since vague tax laws are construed against the government. c. Taxation applies due to the Lifeblood doctrine. d. Exemption applies since obligation arising from law is presumed; ignorance of the law is not an excuse.

b. Exemption applies since vague tax laws are construed against the government.

What is the theory of taxation? a. Reciprocal duties of support and protection b. Necessity c. Constitutionality d. Public purpose

b. Necessity

Statement 1: The benefit received theory presupposes that some taxpayers within the territorial jurisdiction of the Philippines will be exempted from paying tax so long as they do not receive benefits from the government. Statement 2: The ability to pay theory suggests that some taxpayers may be exempted from tax provided they do not have the ability to pay the same. Which statement is true? a. Only statement 1 b. Only statement 2 c. Both statements 1 and 2 d. Neither statement 1 nor 2

b. Only statement 2

This theory underscores that taxes are indispensable to the existence of the state. a. Doctrine of equitable recoupment b. The Lifeblood Doctrine c. The benefit received theory d. The Holmes Doctrine

b. The Lifeblood Doctrine

What is the primary purpose of taxation? a. To enforce contribution from its subjects for public purpose b. To raise revenue c. To achieve economic and social stability d. To regulate the conduct of business or profession

b. To raise revenue

Which is not a legislative act? a. Determination of the subject of the tax b. Setting the amount of the tax c. Assessment of the tax d. Determining the purpose of the tax

c. Assessment of the tax

A. Taxation is the rule, exception is the exemption. B. Vague taxation laws are interpreted liberally in favor of the government. Which is false? a. A only b. B only c. Both A and B d. Neither A nor B

c. Both A and B A. Taxation is the rule, exemption is the exception. B. Vague taxation laws are interpreted liberally in favor of the taxpayers.

Statement 1: In the selection of the objects of taxation, the courts have no power to inquire into the wisdom, objectivity, motive, expediency, or necessity of a tax law. Statement 2: An imposition can be both a tax and a regulation. Taxes may be levied to provide means for rehabilitation and stabilization of threatened industry. Which is correct? a. Statement 1 only b. Statement 2 only c. Both statements d. Neither statement

c. Both statements

Which does not properly describe the scope of taxation? a. Comprehensive b. Supreme c. Discretionary d. Unlimited

c. Discretionary

Statement 1: Taxation is the rule; exemption is the exception. Statement 2: Taxation may be used to implement the police power of the state. a. I is true c. II is true c. I and Il are true d. I and Il are not true

c. I and Il are true

Which of the following acts in taxation is administrative by nature? a. Determination of the amount to be imposed b. Fixing the allocation of the amount to be collected between the local government and the national government c. Levy or distraint of taxpayers' property for tax delinquency d. Determining the purpose of the tax to impose

c. Levy or distraint of taxpayers' property for tax delinquency

A. Taxes should not operate retrospectively. B. Tax is generally for public purpose. Which is true? a. A only b. B only c. A and B d. Neither A nor B

a. A only

A. The power to tax includes the power to exempt. B. The power to license includes the power to tax Which is true? a. A only b. B onlv c. A and B d. Neither A nor B

a. A only

Which is not legally tenable in refusing to pay tax? a. Absence of benefit from the government b. Lack of jurisdiction of the taxing authority c. Prescription of the tax authority's right to collect d. All of these

a. Absence of benefit from the government

The point at which tax Is levied is also called a. Impact of taxation b. Situs of taxation c. Incidence of taxation d. Assessment

a. Impact of taxation

What is the basis of taxation? a. Reciprocal duties of support and protection b. Constitutionality c. Public purpose d. Necessity

a. Reciprocal duties of support and protection

The power to enforce proportional contribution from the people for the support of the government is a. Taxation b. Police power c. Eminent domain d. Exploitation

a. Taxation

Which limitation of taxation is the concept of "situs of taxation" based? a. Territoriality b. Public purpose c. International comity d. Exemption of the government

a. Territoriality

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

c. Tax holiday

When exemption from a tax imposition is silent or not clearly stated, which is true? a. Taxation applies since exemptions are construed against the government. b. Exemption still applies since this is an instance of exemption by omission. c. Taxation applies since exemptions are construed against the taxpayer. d. Exemption applies since obligation arising from law cannot be presumed and hence construed against the government.

c. Taxation applies since exemptions are construed against the taxpayer.

Which is the most incorrect statement regarding taxes? a. Taxes are necessary for the continued existence of the government. b. The obligation to pay tax does not rest upon the privilege enjoyed by or the protection afforded to the citizen of the government, but upon the necessity of money for the support of the State. c. There should be personal benefit enjoyed from the government before one is required to pay tax. d. Taxes should be collected without unnecessary delay, but its collection should not be tainted with arbitrariness.

c. There should be personal benefit enjoyed from the government before one is required to pay tax.

All of these are secondary purposes of taxation except a. To reduce social inequality b. To protect local industries c. To raise revenue for the support of the government d. To encourage growth of local industries

c. To raise revenue for the support of the government

Which tax exemption is irrevocable? a. Tax exemption based on contract b. Tax exemption based on the Constitution c. Tay exemption based on law d. Both A and B

d. Both A and B

Which of the following statements does not support the principle that tax is not subject to compensation or set-off? a. The government and the taxpayer are not creditors and debtors of each other. b. Tax is not in the nature of contract but it grows out of a duty wherein taxpayers are bound to obey even without the personal consent of the taxpayer. c. Taxes arise from law, not from contracts. d. Both tax and debt partake the nature of an obligation.

d. Both tax and debt partake the nature of an obligation.

Which provision of the Constitution is double taxation believed to violate? a. Equal protection guarantee b. Progressive scheme of taxation c. Uniformity rule d. Either A or C

d. Either A or C

International double taxation can be mitigated by any of the following except a. Providing allowance for tax credit. b. Provision of reciprocity provisions in tax laws c. Provision of tax exemptions d. Entering into treaties to form regional trade blockage against the rest of the world

d. Entering into treaties to form regional trade blockage against the rest of the world

Which of the following inappropriately describes the nature of taxation? a. Inherent in sovereignty b. Essentially a legislative function c. Subject to inherent and constitutional limitation d. Generally for public purpose

d. Generally for public purpose

Which of the following powers of the Commissioner of Internal Revenue cannot be delegated? a. The examination of tax return and the determination of tax due thereon b. To refund or credit tax liabilities in certain cases c. The power to compromise or abate any tax liability involving basic deficiency tax of P500,000 and minor criminal violations d. The power to reverse a ruling of the Bureau of Internal Revenue

d. The power to reverse a ruling of the Bureau of Internal Revenue (The power to compromise or abate any tax liability involving basic deficiency tax of P500,000 and minor criminal violations --> Exception)

That courts cannot issue injunction against the government's effort to collect taxes is justified by a. the lifeblood doctrine. b. imprescriptibility of taxes. c. the ability to pay theory. d. the doctrine of estoppel.

a. the lifeblood doctrine.

Which is not a public purpose? a. Public education b. National defense c. Transportation d. None of these

d. None of these

Which statement is incorrect? a. Every person must contribute his share in government costs. b. The existence of a government is expected to 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.

d. Only those who are able to pay tax can enjoy the privileges and protection of the government.

Which is not an object of taxation? a. Persons b. Business c. Transactions d. Public properties

d. Public properties

Select the incorrect statement. a. The power to tax includes the power to exempt. b. Exemption is construed against the taxpayer and in favor of the government. c. Tax statutes are construed against the government in case of doubt. d. Taxes should be collected only for public improvements.

d. Taxes should be collected only for public improvements.

Which is correct? a. Tax condonation is a general pardon granted by the government. b. The BIR has five deputy commissioners. c. The government can still collect tax in disregard of a constitutional limitation because taxes are the lifeblood of the government. d. The President of the Philippines can change tariff or imposts without necessity of calling Congress to pass a law for that purpose.

d. The President of the Philippines can change tariff or imposts without necessity of calling Congress to pass a law for that purpose.