INCOME TAXATION

Which of the powers of the State is the most superior? Which is regarded as the most important?

B. police power, taxation

Statement 1: The excess of mortgage assumed by the buyer over the basis of the properties sold is the amount of gain on the sale. Statement 2 : Any collection from an installment contract where the mortgage exceeds the tax basis of the properties received constitutes collection of income. Which statement is true?

B. statement 2 only

Statement 1 : Congress can exercise the power of taxation even without Constitutional delegation of the power to tax. Statement 2 : Only the legislature can exercise the power of taxation, eminent domain and police power. Which statement is correct?

Both statements are true

Which is not a characteristic of tax?

C. it is subject to assignment

Which of the following is not a constitutional limitation of the power to tax?

D. non delegation of taxing power

. Which of the following is taxable?

D. prize from dance competition abroad

Which is not subject to 10% final tax?

D. royalties from a business trademark

The following statements reflect the differences among the inherent powers except:

Eminent domain and police power do not require constitutional grant but taxation being a formidable power requires constitutional grant

An alien received P200,000 compensation income in the Philippines and P300,000 rental income from abroad. How much will be subject to Philippine income tax?

P200,000

A non-resident citizen is an international financier who earned P400,000 interest income from resident debtors and P300,000 from foreign debtors. How much is subject to Philippine income tax?

P400,000

The principles of sound tax system exclude

a. Economic efficiency

a. Since there is compensation, eminent domain raises money for the government. b. Once a government is established, taxation is exercisable. c. The most important of the power is taxation. d. Police power is more superior than the non-impairment clause of the Constitution.

a. Since there is compensation, eminent domain raises money for the government.

. Which of the following is a power of the Commissioner of Internal Revenue?

a. The power to conduct inventory surveillance

As to tax payment measures, which of the following threshold for the qualification as large tax payer is incorrect?

b. Annual value added tax payment of 1 million

. Which is not an item of gross income because f the absence of an undertaking from the taxpayer?

b. Forgiveness of indebtedness as an act of a gratuity

. Mrs. Julian started business on July 15, 2016. What should be the coverage of her 2016 income tax return?

b. july 15,2016 to dec 31 2016

Which is not subject to 20% final tax?

b. royalties from musical compositions

Which is covered by Final Tax?

b. shared in the net income of a joint venture

. Initial payment means

b. total collection within the year the installment sale was made

. Assuming Sarah is a resident alien, compute the total income subject to Philippine income tax

c. 1,030,000 phil tax only

. Pines Corporation has a branch in manila and a 70% owned subsidiary, Choco Hills, Inc. in Davao. The following date shows Pines Corporation's sales transaction during the year : Pines Corporation billed the Manila branch P1,500,000 for merchandise shipped to the latter at a mark-up of 50% above acquisition cost. The branch stored the merchandise and did not operate during the year. Sold merchandises to unrelated parties at a gain of P800,000. Sold merchandise to Darrel Asuncion, Pines Corporation's controlling stockholder, at a gain of P100,000 Sold various merchandise to Choco Hills, Inc. at a gain of P200,000. Compute the total income of Pines Corporation subject to income tax

c. 1,100,000 (800k+100k+200k)

Exquisite Corporation sold its old warehouse with carrying amount (tax basis) of P600,000 for P1,000,000. A down payment of 15% was collected on July 1, 2016. Additional P150,000 installment payments were received as of December 31, 2016. Compute the gross profit to be reported for the year 2016.

c. 400, 000

Santiago, Inc. has the following receipts during the 2018: From service billings to clients P400,000 Advances from clients P100,000 Total Cash Collection P500,000 The P100,000 advances refer to services which will be rendered next year. Total uncollected billing increased from P100,000 on December 13, 2017 to P150,000 on December 31, 2018. Compute the gross income using cash basis

c. 500, 000

a. The benefit received theory explains that the government is obliged to serve the people since it is benefiting from the tax collection from its subjects. b. The lifeblood theory underscores that taxation is the most superior power of the State. c. The police power of the State is superior to the non-impairment clause of the Constitution. d. The power of taxation is superior to the non-impairment clause of the Constitution.

c. The police power of the State is superior to the non-impairment clause of the Constitution.

Anderson died on March 31, 2017. Which is a correct statement?

c. anderson's 2017 income tax return shall cover Jan 1 2017 to march 31 2017

Assuming Sarah is a resident corporation, compute the total income subject to Philippine income tax.

d. 1,030,000 phil tax only

Assuming Sarah is a domestic corporation, compute the total income subject to Philippine income tax

d. 1,420,000 (1,030,000 + 390k)

Sarah has the following items of income : Philippines Abroad Business Income P200,000 P100,000 Professional Fees P100,000 P 50,000 Compensation Income P400,000 - Rent Income P300,000 P200,000 Interest Income P 30,000 P 40,000 Assuming Sarah is a resident citizen, compute the total income subject to Philippine income tax

d. 1,420,000 (1,030,000+390k)

3. Lancelot is a dealer of household appliances. He reported the following in 2015 and 2016: 2015 2016 Installment Sales P500,000 P800,000 Cost of installment sales P250,000 P440,000 Collections P300,000 P600,000 Lancer's 2016 collection is inclusive of P100,000 accounts from 2015. Using the installment method, compute Lancelot's gross income subject to income tax in 2016.

d. 275, 000

Compute the gross income using accrual basis.

d. 550,000

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 improvement.

d. Taxes should be collected only for public improvement.

Which is a correct statement regarding income taxes?

d. an item of income exempted from tax is likewise exempt from capital gains tax and regular income tax

Juan, a resident alien, and Pedro, a non-resident alien, executed a contract of sale in Japan whereby Pedro shall purchase the lot owned by Juan in the Philippines. Juan gains P1,000,000 in the exchange. Which is true?

d. the gain is subject to Philippine tax because the property is in the philippines

. Mr. A has a tax obligation to the government amounting to P80,000. Since he is leaving the country, he entered into a contract with Mr. B wherein Mr. B shall pay the P80,000 tax in his behalf . On due date, Mr. B failed to pay the tax. The BIR sent a letter of demand to Mr. A which he refused to pay. Which of the following statements is correct?

d.The government should force mr. A to pay because taxes are non-assignable

The Commissioner of Internal Revenue is not authorized to

d.grant amnesty for erring taxpayers

t of 1 million 15. Which is not subject to income tax?

donation

A. Tax must not violate constitutional and inherent limitation. B. Tax must be uniform and equitable. C. Tax must be for public purpose. D. Tax must be levied by the law-making body. E. Tax must be proportionate in character. F. Tax is generally payable in money. Which of the above is/not an essential characteristic of a valid tax?

none of these choices