Prelims exam - Tax

1. Statement 1: Since taxation presupposes an equivalent form of compensation, there should be a direct and proximate advanted received by any taxpayer before he could be required to pay taxes.

Statement 2: Compensation under police power is the intangible feeling of contribution to the general welfare of the people

• Only statement 1 is correct

• Only statement 2 is correct

• Both statements are correct

• Both statements are incorrect

Which statements below expresses the lifeblood theory?

• The assessed taxes must be enforced by the government

• The underlying basis of taxation is government necessity, for without taxation, a government can’t either exist nor endure

• Taxation is an arbitrary method of exaction by those who are in seat of power

• The power of taxation is an inherent power of the sovereign to impose burdens upon subjects and objects within its jurisdiction for the purpose of raising revenues

The basis or test of exemption of real properties owned by religious, or charitable institutions from real property taxes is:

• Use of the real property

• Ownership of the real property

• Location of the real property

• Ownership or location of the real property at the option of the government

In case of ambiguity, tax laws imposing a tax shall be interpreted

• Strictly against the taxpayer

• Liberally in favor of the taxpayer

• Liberally in favor of the government

• None of the choices

The exploitation by the taxpayer of legally permissible alternative tax rates or methods of assessing taxable property or income, in order to reduce tax liability. It is otherwise known as tax minimization

• Tax exemption

• Tax evasion

• Tax avoidance

• Transformation

Olivia Rodrigo, an American Singer, was engaged to sing for one week at the Philippine Arena after which she returned to USA. For income tax purposes, she shall be classified as:

• Resident Alient

• Nonresident alien engaged in trade or business

• Nonresident alient not engaged in trade or business

• Nonresident Citizen

A Filipino Citizen is a natural person who is/has:

I: Born by birth with father and/or mother as Filipino Citizen

II: Born before Jan. 17, 1973 of Filipino mother who elects Philippine Citizenship upon reaching the age of majority

III. Acquired Philippine Citizenship after birth (naturalized) in accordance with Philippine Laws

• I only

• I and II only

• I and III only

• I, II and III

Which of the following income of a non-resident citizen will be taxed differently if the taxpayer is non-resident alien engaged in trade or business?

• Interest Income

• Royalties

• Dividends

• Prizes

Which of the following royalties earned within the Philippines is not subject to 10% fwt?

• Royalties from computer software

• Royalties from books

• Royalties from literary works

• Royalties from musical composition

Which of the following transactions is subject to 6% capital gains tax:

• Sale of condominium units by a real estate dealer

• Sale oof real property utilized for office use

• Sale of apartment houses

• Sale of vacant lot by an employee