Name: Score

Topic: -Principles of Taxation No. of Items

-Allowable Deduction
Room: Date and Time:

1. Umbrella Corporation had the following interest expense during the period:
Interest on borrowings from Ayala Corp, a sister company P 12,000
Interest paid to preferred shareholders 40,000
Interest on tax delinquencies 40,000
Interest on a borrowing on a machinery
in which is currently depreciated at its acquisition cost 18,000
a. 52,000 b. 58,000 c. 40,000 d. 30,000

2. Which is not an element of double taxation?

a. Same objects of taxation b. Same tax type c. Same tax period d. Same tax rate

3. Which is wrong with situs of taxation?

a. Persons are taxable in their place of residence.
b. Real properties are taxable in their place of location
c. Transfers of properties are taxable in the place of residence of the transferor
d. Businesses are taxable in the place where they conduct business

4. Which is not a source of national tax laws?

a. Court decisions b. Revenue Regulations c. BIR Rulings d. Ordinances

5. This is an inherent limitation on the power of taxation.

a. The rule on taxation shall be uniform and equitable
b. No law impairing the obligations of contracts shall be enacted.
c. Charitable institutions, churches, personages or convents appurtenant thereto, mosque
and non-profits cemeteries and all kinds of lands, buildings and improvements actually,
directly and exclusively used for religious or charitable purpose shall be exempt from
taxation
d. The tax laws cannot apply to the property of foreign governments

6. International State College University, is a proprietary educational institution. It has the

following selected information for the taxable year 2022.
Tuition fees P 7,600,000
Miscellaneous fees 2,400,000
Interest on peso bank deposits (net) 15,000
Interest on dollar deposits under FCDS (net) 11,100
Rent income 3,250,000
Dividend income from a domestic corporation 80,000
Direct of Cost of services 4,500,000
(including CAPEX for the newly built school building)
Capital gain on sale of shares of a domestic corporation
directly to a buyer 125,000
Other operating expenses 8,250,000
Quarterly income tax payments 25,000
Name: Score

Topic: -Principles of Taxation No. of Items

-Allowable Deduction
Room: Date and Time:

Additional school Building was built and finished on April 1 2022 at cost of P
2,000,000 with a depreciable life of 20 years.

Assuming the University opted to claim the cost of construction as an outright

expense, the income tax payable is (assuming a 10% income tax rate):
a. 25,000 b. 50,000 c. 150,000 d. 190,000

7. A resident citizen sustained the following losses during the year:

Fire loss on his uninsured residence in Tagum City P 100,000
Damage sustained by an insured vehicle in a collision 400,000
Various uncollectible customer accounts 80,000
Loss on sale of obsolete equipment and supplies 120,000
Impairment loss on unsold inventories 30,000

How much is the total amount of reportable losses in the income tax return?
a. 230,000 b. 330,000 c. 200,000 d. 120,000

8. Which of the following statements is correct?

a. Indirect double taxation violates the Constitutional provision of uniformity and equal
protection.
b. There is direct double taxation in taxing the income of the corporation and again subject
the portion of that income declared as dividend to final tax
c. Indirect double taxation does not violate the Constitution
d. All of the above

9. Which of the following is an inherent limitation to the power to tax?

a. That tax must be for public purpose
b. Uniformity in taxation
c. Equal protection of the law
d. Progressive scheme of taxation

10. Which is wrong with respect to taxation?

a. It is inherent in sovereignty. There is no need for a constitutional mandate for its exercise
by Congress.
b. Taxation power is comprehensive, plenary, unlimited and supreme.
c. Taxes maybe broadly classified into personal, property or excise.
d. Tax must be uniform and equitable, levied by the legislature having jurisdiction, for public
purpose, proportionate in character and generally payable in money or in kind.

11. Statement 1: A business expense will be disallowed as a deduction if the corresponding CWT
has not been withheld and remitted to the BIR

Statement 2: OSD cannot be disallowed due to non-withholding of the expanded or

creditable withholding tax pursuant to Section 34(K) of the Tax Code.
Name: Score

Topic: -Principles of Taxation No. of Items

-Allowable Deduction
Room: Date and Time:

a. All are true.

b. All are false.
c. 2 are true.
d. 2 are false.

12. Select the incorrect statement with respect to legislation of tax laws?
a. Tax bills shall originate from the House of Representatives.
b. The Senate shall concur with amendments to tax bills.
c. Majority of present legislators which constitute a quorum is required to approve tax laws.
d. Tax exemption laws are required to be approved by the majority of all members of
congress.

13. Which is not a principle of a sound tax system?

a. Fiscal Adequacy
b. Economic Stability
c. Administrative feasibility
d. Theoretical Justice

14. Select the incorrect statement

a. The power to tax includes the power to exempt
b. Exemption is construed against the tax payer and in favor of the Government
c. Tax statutes are construed against the Government in case of doubt
d. The assessment and collection of taxes by the national government is non-delegated

15. Which is wrong regarding the powers of the state?

I. Taxation power shall be exercised by Congress even without an express Constitutional
grant.
II. Taxes may be collected even in the absence of a law since obligation arising from law is
always presumed
III. The property taken under eminent domain and taxation are preserved but that of police
power is destroyed
IV. Only eminent domain can be exercised by private entities
a. I and II
b. I, II and III
c. II only
d. II and IV

16. The taxpayer is a domestic corporation:

Gross Sales P 9,350,000
Sales returns and allowances 250,000
Sales discounts 100,000
Interest income on trade notes receivable 150,000
Other income 50,000
Cost of Sales 3,000,000
Name: Score

Topic: -Principles of Taxation No. of Items

-Allowable Deduction
Room: Date and Time:

Operating expenses with vouchers and receipts 4,000,000

Operating expenses without vouchers and receipts 500,000
Interest income from savings deposit 80,000
Interest income from deposit under FCDS 125,000
Royalty income 100,000

How much is the taxable income using itemized deduction?

a. 1,675,000 c. 1,700,000
b. 2,175,000 d. 2,200,000

17. Based on (No. 16) How much is the taxable income using OSD?
a. 3,755,000 c. 3,695,000
b. 5,470,000 d. 3,720,000

18. Private entities that employ disabled persons who meet the required skills or qualifications,
either as regular employee, apprentice or learner, shall be entitled to an additional
deduction from gross income equivalent to:
a. 15% of the total amount paid as salaries and wages to PWDs
b. 25% of the total amount pad as salaries and wages to PWDs
c. 50% of the total amount paid as salaries and wages to PWDs
d. 100% of the total amount paid as salaries and wages to PWDs

19. Mr. Reoja reported the following income and expenses in 2022.
Gross compensation income P 600,000
Gross professional fees 800,000
Dividend income 10,000
Interest income from deposit 15,000
Cash donation to the government for public purpose 60,000
Fair value of property donation to accredited
non-profit institutions (property book value is P 80,000) 120,000
Interest on borrowings 24,000
Personal and family expenses 200,000
Entertainment and recreation expense 8,000
Other operating expenses of practice 120,000
Mandatory payroll deductions 20,000
Exempt Benefits 40,000

How much is the net income?

a. 512,950 b. 615,750 c. 617,150 d.521,950

20. Refer to (No.10) How much is the taxable income?

a. 1,035,750 b. 1,040,950 c. 1,090,450 d. 1,052,950