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Concept of Taxation

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Taxation
1. A municipality may levy an annual ad valorem tax on real property such as land,
building, machinery, and other improvement only if
A. the real property is within the Metropolitan Manila Area.
B. the real property is located in the municipality.
C. the DILG authorizes it to do so.
D. the power is delegated to it by the province.
2. Anne Lapada, a student activist, wants to impugn the validity of a tax on text messages.
Aside from claiming that the law adversely affects her since she sends messages by text,
what may she allege that would strengthen her claim to the right to file a taxpayer’s suit?
A. That she is entitled to the return of the taxes collected from her in case the court
nullifies the tax measure.
B. That tax money is being extracted and spent in violation of the constitutionally
guaranteed right to freedom of communication.
C. That she is filing the case in behalf of a substantial number of taxpayers.
D. That text messages are an important part of the lives of the people she represents.
3. There is no taxable income until such income is recognized. Taxable income is recognized
when the
A. taxpayer fails to include the income in his income tax return.
B. income has been actually received in money or its equivalent.
C. income has been received, either actually or constructively.
D. transaction that is the source of the income is consummated.
4. Keyrand, Inc., a Philippine corporation, sold through the local stock exchange 10,000 PLDT
shares that it bought 2 years ago. Keyrand sold the shares for P2 million and realized a net
gain of P200,000.00. How shall it pay tax on the transaction?
A. It shall declare a P2 million gross income in its income tax return, deducting its cost of
acquisition as an expense.
B. It shall report the P200,000.00 in its corporate income tax return adjusted by the
holding period.
C. It shall pay 5% tax on the first P100,000.00 of the P200,000.00 and 10% tax on the
remaining P100,000.00.
D. It shall pay a tax of one-half of 1% of the P2 million gross sales.
5. Amaretto, Inc., imported 100 cases of Marula wine from South Africa. The shipment was
assessed duties and value-added taxes of P300,000 which Amaretto, Inc. immediately paid.
The Bureau of Customs did not, however, issue the release papers of the shipment yet since
the Food and Drug Administration (FDA) needed to test the suitability of the wine for human
consumption. Is the Bureau of Customs at fault for refusing to release the shipment just as
yet?
A. Yes, because the importation was already terminated as a result of the payment of
the taxes due.

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B. Yes, the Bureau of Customs is estopped from holding the release of the shipment
after receiving the payment.
C. No, if the amount paid as duties and value-added taxes due on the importation was
insufficient.
D. No, because the Bureau of Customs has not yer issued the legal permit for
withdrawal pending the FDA's findings.
6. 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
7. The spouses Helena and Federico wanted to donate a parcel of land to their son Dondon
who is getting married in December, 2011. The parcel of land has a zonal valuation of
P420,000.00. What is the most efficient mode of donating the property?
A. The spouses should first donate in 2011 a portion of the property valued at
P20,000.00 then spread the P400,000.00 equally for 2012, 2013, 2014 and 2015.
B. Spread the donation over a period of 5 years by the spouses donating P100,000.00
each year from 2011 to 2015.
C. The spouses should each donate a P110,000.00 portion of the value of the property
in 2011 then each should donate P100,000.00 in 2012.
D. The spouses should each donate a P100,000.00 portion of the value of the property
in 2011, and another P100,000.00 each in 2012. Then, in 2013, Helena should
donate the remaining P20,000.00.
8. Mia, a compensation income earner, filed her income tax return for the taxable year 2007
on March 30, 2008. On May 20, 2011, Mia received an assessment notice and letter of
demand covering the taxable year 2007 but the postmark on the envelope shows April 10,
2011. Her return is not a false and fraudulent return. Can Mia raise the defense of
prescription?
A. No. The 3 year prescriptive period started to run on April 15, 2008, hence, it has not
yet expired on April 10, 2011.
B. Yes. The 3 year prescriptive period started to run on April 15, 2008, hence, it had
already expired by May 20, 2011.
C. No. The prescriptive period started to run on March 30, 2008, hence, the 3 year
period expired on April 10, 2011.
D. Yes. Since the 3-year prescriptive period started to run on March 30, 2008, it already
expired by May 20, 2011.
9. Double taxation in its general sense means taxing the same subject twice during the same
taxing period. In this sense, double taxation
A. violates substantive due process.
B. does not violate substantive due process.
C. violates the right to equal protection.
D. does not violate the right to equal protection.

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Taxation 1. A municipality may levy an annual ad valorem tax on real property such as land, building, machinery, and other improvement only if A. the real property is within the Metropolitan Manila Area. B. the real property is located in the municipality. C. the DILG authorizes it to do so. D. the power is delegated to it by the province. 2. Anne Lapada, a student activist, wants to impugn the validity of a tax on text messages. Aside from claiming that the law adversely affects her since she sends messages by text, what may she allege that would strengthen her claim to the right to file a taxpayer’s suit? A. That she is entitled to the return of the taxes collected from her in case the court nullifies the tax measure. B. That tax money is being extracted and spent in violation of the constitutionally guaranteed right to freedom of communication. C. That she is filing the case in behalf of a substantial number of taxpayers. D. That text messages are an important part of the lives of the people she represents. 3. There is no taxable income until such income is recognized. Taxable income is recognized when the A. taxpayer fails to include the income in his income tax return. B. income has been actually received in money or its equivalent. C. income has been received, either actually or constructively. D. transaction that is the source of the income is consummated. 4. Keyrand, Inc., a Philippine corporation, sold through the local stock exchange 10,000 PLDT s ...
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