TEST BANK INCOME TAXATION CPAR.DOC VERSION 1(QUESTIONS & ANSWERS) LATEST EXAM

TEST BANK INCOME TAXATION CPAR.DOC VERSION 1(QUESTIONS & ANSWERS) 2023- 2024 LATEST EXAM TAXATION 1 – Income Taxation General Principles of Taxation 1. Taxation as distinguished from police power and power of eminent domain. A. Property is taken to promote the general welfare. B. Maybe exercised only by the government. C. Operates upon the whole citizenry. D. There is generally no limit as to the amount that may be imposed. 2. The following are constitutional limitations, except A. No imprisonment for non-payment of poll tax. B. Non-impairment of the obligation of contracts. C. Rule of uniformity and equity in taxation. D. Exemption from income tax of charitable institutions, cemeteries, churches, personage or convents appurtenant thereto, as well as all lands, buildings and improvements actually, directly and exclusively used for religious, charitable and educational purposes. 3. Which of the following statements is correct? A. The President is authorized to increase or decrease national internal revenue tax rates. B. One of the nature of taxation is the reciprocal duties of protection and support between the state and subjects thereof. C. Every sovereign government has the inherent power to tax. D. Income tax in an indirect tax. 4. A tax must be imposed for public purpose. Which of the following is not a public purpose? A. National defense B. Public education C. Improvement of the sugar and coconut industries. D. Improvement of a subdivision road. 5. Which is not an essential characteristic of a tax? A. It is unlimited as to amount. B. It is payable in money. C. It is proportionate in character. D. It is an enforced contribution. 6. Special assessment is an enforced proportional contribution from owners of land especially benefited by public improvement. Which one of the following is not considered as one of its characteristics? A. It is levied on land. B. It is based on the government’s need of money to support its legitimate objectives. C. It is not a personal liability of the persons assessed. D. It is based solely on the benefit derived by the owners of the land. 7. It is the privilege of not being imposed a financial obligation to which others are subject. A. Tax incentive B. Tax exemption C. Tax amnesty D. Tax credit 8. As to scope of the legislative power to tax, which is not correct? A. Where there are no constitutional restrictions, and provided the subjects are within the territorial jurisdiction of the state, Congress has unlimited discretion as to the persons, property or occupations to be taxed. 2 B. In the absence of any constitutional prohibition, Congress has the right to levy a tax of any amount it sees fit. C. The discretion of Congress in imposing taxes extends to the mode, method or kind of tax, unless restricted by the constitution. D. The sole arbiter of the purpose or which taxes shall be levied is Congress, provided the purpose is public and the courts may not review the levy of the tax to determine whether or not the purpose is public. 9. Which of the following is a nature of taxation? A. The power is granted by legislative action. B. It is essentially an administrative function. C. It is generally payable in money. D. Without it the state can continue to exist. 10. Which of the following is not a determinant of the place of taxation? A. Source of the income B. Citizenship of the taxpayer C. Residence of the taxpayer D. Amount of tax to be imposed 11. Which of the following statements is not correct? A. An inherent limitation of taxation may be disregarded by the application of a constitutional limitation. B. The property of an educational institution operated by a religious order is exempt from property tax, but its income is subject to income tax. C. The prohibition of delegation by the state of the power of taxation will still allow the BIR to modify the rules in time for filing of returns and payment of taxes. D. The power of taxation is shared by the legislative and executive departments of the government. 12. Statement 1 – The point on which tax is originally imposed is impact of taxation. Statement 2 – Eminent domain is inferior to non-impairment clause of the constitution. Statement 3 – As a rule, taxes are subject to set-off or compensation. Statement 4 – As a rule, provisions on the validity of tax exemptions are resolved liberally in favor of the taxpayer. Statement 1Statement 2Statement 3Statement 4 A. True False False True B. False True True False C. True True False False D. False False True True 13. A tax system where the revenues are supplied mostly by indirect taxes. A. Schedular C. Progressive B. Proportional D. Regressive 14. A tax system where the greater bulk of the tax revenues is derived by direct taxes. A. Schedular C. Progressive B. Proportional D. Regressive 15. This is an inherent limitation on the power of taxation. A. Rule on uniformity and equity in taxation. B. Due process of law and equal protection of the laws. C. Non-impairment of the jurisdiction of the Supreme Court in tax cases. D. Tax must be for the public purpose. 3 16. This is a constitutional limitation on the power of taxation. A. Tax laws must be applied within the territorial jurisdiction of the state. B. Exemption of government agencies and instrumentalities from taxation. C. No appropriation of public money for religious purposes. D. Power to tax cannot be delegated to private persons or entities. 17. They exist independent of the constitution being fundamental powers of the state, except A. Power of taxation C. Power of imminent domain B. Police power D. Power of recall 18. The power to acquire private property upon payment of just compensation for public purpose A. Power of taxation C. Power of imminent domain B. Police power D. Power of recall 19. The power to regulate liberty and property to promote the general welfare. A. Power of taxation C. Power of imminent domain B. Police power D. Power of recall 20. The power to demand proportionate contributions from persons and property to defray the expenses of the government. A. Power of taxation C. Power of imminent domain B. Police power D. Power of recall 21. Basic Principles of a sound tax system, except A. Fiscal adequacy C. Administrative feasibility B. Equality or theoretical justice D. Intellectual sensitivity 22. The tax imposed should be proportionate to the taxpayer’s ability to pay. A. Fiscal adequacy C. Administrative feasibility B. Equality or theoretical justice D. Intellectual sensitivity 23. The sources of revenue as a whole, should be sufficient to meet the demands of public expenditures. A. Fiscal adequacy C. Administrative feasibility B. Equality or theoretical justice D. Intellectual sensitivity 24. The tax laws must be capable of convenient, just and effective administration. A. Fiscal adequacy C. Administrative feasibility B. Equality or theoretical justice D. Intellectual sensitivity 25. Persons or things belonging to the same class shall be taxed at the same rate. A Simplicity in taxation C. Equality in taxation B. Reciprocity in taxation D. Uniformity in taxation 26. The tax should be proportional to the relative value of the property to be taxed. A Simplicity in taxation C. Equality in taxation B. Reciprocity in taxation D. Uniformity in taxation 27.The following are the nature of taxation, except A. Inherent in sovereignty B. Essentially legislative in character C. Subject to inherent and constitutional limitation D. Subject to approval by the people. 28. It literally means “place of taxation”; the country that has the power and jurisdiction to levy and collect the tax. A. Basis of taxation C. Scope of taxation 4 B. Situs of taxation D. Theory of taxation 29. The existence of the government is a necessity and that the state has the right to compel all individuals and property within its limits to contribute A. Basis of taxation C. Scope of taxation B. Situs of taxation D. Theory of taxation 30. The reciprocal duties of support and protection between the people and the government. A. Basis of taxation C. Scope of taxation B. Situs of taxation D. Theory of taxation 31. Subject to inherent and constitutional limitations, the power of taxation is regarded as supreme, plenary, unlimited and comprehensive. A. Basis of taxation C. Scope of taxation B. Situs of taxation D. Theory of taxation 32. Our National Internal Revenue Laws are A. Political in nature C. Criminal in nature B. Penal in nature D. Civil in nature 33. The levying or imposition of tax and the collection of the tax are processes which constitute the taxation system. A. Basis of taxation C. Nature of taxation B. Aspects of taxation D. Theory of taxation 34. The process or means by which the sovereign, through its law-making body raises income to defray the expenses of the government. A. Toll C. Taxation B. License fee D. Assessment 35. Enforced proportional contributions from persons and property levied by the state by virtue of its sovereignty for the support of the government and for all public needs. A. Toll C. Taxes B. License fee D. Assessment 36. An escape from taxation where the tax burden is transferred by the one on whom the tax is imposed or assessed to another. A. Shifting C. Transformation B. Exemption D. Capitalization 37.An escape from taxation where the producer or manufacturer pays the tax and endeavors to recoup himself by improving his process of production thereby turning out his units of products at a lower cost. A. Shifting C. Transformation B. Exemption D. Capitalization 38. An escape from taxation where there is a reduction in the price of the taxed object equal to the capitalized value of future taxes which the taxpayer expects to be called upon to pay. A. Shifting C. Transformation B. Exemption D. Capitalization 39. The use of illegal or fraudulent means to avoid or defeat the payment of tax. A. Exemption C. Avoidance B. Shifting D. Evasion 40. The use of legal or permissible means to minimize or avoid taxes. A. Exemption C. Avoidance