BSA 2-B INCOME TAXATION QUIZ

Instructions:
 Write your answers clearly in a bond paper.
 Capture a clear picture of your answers and send to my Messenger Account, Troy Wences S. Quindao or
to my email, tquindao.021@gmail.com on or before 4:00 PM today, September 28, 2024.
 Late submissions or submissions beyond 4:00 PM are considered late and will be deducted 5 points.
 Show your solutions for bonus points.

1.Which of the following statements is wrong? A revenue bill:

a. Must originate from the House of Representatives and on which on the same bill the Senate may propose
amendments.
b. May originate from the senate and on which same bill the House of Representatives may propose
amendments.
c. May have a House version and a Senate version approved separately and then consolidated with both
Houses approving the consolidated version.
d. Maybe recommended by the President to the Congress.
2. It is important to know the source of income for taxpayers, i.e. from within or without the Philippines because
a. The Philippines imposes income tax on income from sources within and without of a non-resident citizen.
b. Some individual taxpayers are citizens while the others are aliens.
c. Separate graduated rates are imposed on different types of income.
d. Some taxpayers are taxed on their worldwide income while others are taxable only on income from within.
3. A law granting tax exemption requires the concurrence of
a. Majority vote of members of the congress.
b. 2/3 vote of the Congress.
c. ¾ vote of the Congress.
d. Unanimous vote of the members of the Congress.
4. I. Police power regulates both liberty and property while the power of eminent domain and taxation affect only
property rights.
II. Police power and the power of taxation maybe exercised by the Government only while the power of eminent
domain may be exercised by some private entities.
a. True; True c. False; True
b. True; False d. False; False
5. I. Tax is imposed to raise revenue.
II. License fee is imposed to raise revenue.
a. True; True c. False; True
b. True; False d. False; False
6. I. Tax avoidance is the use of illegal or fraudulent means to avoid taxes.
II. Tax evasion is the use of legal means to minimize taxes.
a. True; True c. False; True
b. True; False d. False; False
7. 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
8. 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
9. 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
10. Statement 1- The point on which tax is originally imposed is the impact of taxation.
Statement 2- Eminent domain is inferior to the 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 tax payer.
a. All statements are False.
b. All statements are True.
c. Only 3 Statements are True.
d. Only 2 Statements are True.
11. I. The Constitutional exemption of religious, charitable and non-profit cemeteries, churches and mosques refers to
income tax and real property tax.
II. The Lifeblood doctrine does not allow the government to override its obligations and contracts.
a. True; True c. False; True
b. True; False d. False; False
12. I. The power to tax includes the power to exempt.
II. The power to license includes the power to tax.
a. True; True c. False; True
b. True; False d. False; False
13. Select the incorrect statement.
a. The police power does not include the power to tax.
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 for public improvements only.
14. I. Taxation is the rule, exception is the exemption.
II. Vague taxation laws are interpreted liberally in favor of the Government.
a. True; True c. False; True
b. True; False d. False; False
15.Which is not a legislative act?
a. Determination of the subject of the tax
b. Setting the amount of the tax
c. Assessment of the tax
d. Determining the purpose of the tax
16. Which is not a nature of tax?
a. Enforced proportional contribution
b. Enforced within the territorial jurisdiction of the taxing authority
c. Levied by the lawmaking body
d. Generally payable in kind
17. Which of the following statements is correct?
a. The Marshall doctrine is not used in practice since it is unconstitutional.
b. An ex post facto tax law violates the constitution.
c. A tax bill personally drafter by the President shall become a law after the approval by Congress.
d. It is in the public interest that errors of public officials should bind the government to limit government
abuse.
18. Which is not a power of the Commissioner of Internal Revenue?
a. To change tax periods of taxpayers
b. To refund internal revenue taxes
c. To prescribe assessed value of real properties
d. To inquire into bank deposits only under certain cases
19. Which one of the following is the BIR not empowered to do?
a. Collect national taxes
b. Collect income, business and transfer taxes
c. Assess and collect local taxes
d. Enforce forfeitures, penalties and fines
20. I. Tax is a pre-activity imposition.
II. Tax arises from contracts.
a. True; True c. False; True
b. True; False d. False; False
21. Which of the following is/are subject to income tax?
I. PCSO or Lotto Winnings
II. Compensation Income of MWEs
III. Discovery of hidden treasure
IV. Appreciation value of the land
a. I only
b. I and IV
c. III and IV
d. All of the above are tax exempt.
22. I. All online services rendered by a Filipino here in the Philippines are considered income from within.
II. All online services rendered by a resident American are considered income from within.
a. True; True c. False; True
b. True; False d. False; False
23. Which of the following is/are not natural persons recognized as either individual or corporate taxpayers in the
Philippines?
I. Irrevocable Trust
II. Estate
III. One Person Corporation
IV. Partners of General Professional Partnerships
a. All are not natural persons.
b. I only.
c. III only.
d. IV only.
24. An alien who stayed less than one year in the Philippines is classified as an NRA-NETB if he stayed here in for
less than
a. 180 days c. 183 days
b. 1 years d. 2 years
25. Which is required to pay income tax?
a. Revocable Trusts
b. Estates under extrajudicial settlement
c. Co-ownerships
d. Irrevocable Trusts
26. Mr. Josh had the following income:
Interest income from deposits in a foreign bank 250,000
Interest from domestic bonds 134,000
Rent income from properties abroad 500,000
Rent income from domestic properties (customers are foreigners) 330,000
Services rendered in the Philippines to nonresident clients 40,000
Gain on sale of lot in Cebu 550,000
Goods purchased in Manila and sold in China 850,000
Dividends on domestic stocks 150,000
Loan Proceeds from BDO 200,000
Life Insurance Proceeds from AXA Philippines from death of brother 500,000
If Mr. Josh is a resident alien, his gross income is?
a. 3,304,000 c. 1,204,000
b. 2,804,000 d. 3,504,000
27. Zhuxin, a Filipino, received the following items during the year:
Donation from boyfriend 500,000
Service fee from professional services 100,000
Inheritance from father 550,000
Income from illegal gambling 100,000
Proceeds from loan application 50,000
Profits from Café business 250,000
a. 450,000 c. 550,000
b. 500,000 d. 1,550,000
28. Vexana Corporation has a branch in Cebu and a 70%-owned subsidiary, Nana Inc. in Davao. The following data
shows Vexana Corporation’s sales during the year:
 Vexana Corporation billed the Cebu 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 merchandise to unrelated parties at a gin of P800,000.
 Sold merchandise to Ms. Kagura, Vexana Corporation’s controlling stockholder at a gain of P100,000.
 Sold various merchandise to Nana Inc. at a gain of P200,000.
Compute the total income of Vexana Corporation subject to income tax.
a. 1,700,000 c. 1,100,000
b. 1,200,000 d. 900,000
29. Lady Lesley is engaged in business. The following pertains to her transactions during 2021:
 Sold her personal car which was purchased at P200,000 to a friend who paid only half of the car’s P500,000
current fair value.
 Sales of merchandise was P800,000 and the cost of goods sold was P600,000.
 Lady Lesley’s house and lot which she acquired for P1,500,000 in 2010 now have a current fair value of
P2,500,000.
Compute Lady Lesley’s total income subject to income tax.
a. 1,800,000 c. 200,000
b. 1,550,000 d. 250,000
30. Gusion used to bet in PCSO Lotto. On June 3, 2014, he won the P20,000,000 jackpot prize from the 6/45 lotto.
One P20-ticket out of 10 bets took the prize. How much is Gusion’s total income subject to tax?
a. 20,000,000 c. 19,999,900
b. 19,999,990 d. -0-
31. Claude, Gusion’s grandson, also bet and won PCSO Lotto 6/45 amounting to P30,000,000 on September 5, 2018.
The amount he paid for tickets was P500. How much is Claude’s total income subject to tax?
a. 30,000,000 c. 6,000,000
b. 29,999,500 d. -0-
32. An American citizen has been staying in the Philippines since August 15, 2021. What would be his taxpayer
classification for the year 2021?
a. Non-resident alien engaged in trade or business
b. Non-resident alien not engaged in trade or business
c. Resident Alien
d. Resident Citizen
33. A citizen who left the Philippines on March 1, 2021 would be classified as
a. Non-resident for the year 2021
b. Resident citizen for the year 2021
c. Non-resident for the year 2022
d. Resident citizen for the year 2022
34. 143 Co. manufactures wooden furniture for the local and export market. It has a distribution outlet abroad which
handles foreign sales. It bills all customers including the foreign outlet, 70% above manufacturing costs. The foreign
outlet bills its customers 100% above 143 Co.’s billing price. 143 Co. reports P3,400,000 in total sales exclusive of
sales to the foreign outlet. The foreign outlet reports P2,720,000 total sales to customers.
Compute the income from within the Philippines.
a. 1,960,000 c. 840,000
b. 1,400,000 d. 2,000,000
35. Using the same given above, how much is the income from without the Philippines?
a. 1,360,000 c. 1,920,000
b. 1,400,000 d. 840,000
36. Which is not an item of passive income?
a. Royalties c. Deposit Interest Income
b. Prizes d. Professional Income
37. An individual taxpayer shall file his or her ITR on or before the:
a. 15th day of the fourth month of the same calendar year.
b. 15th day of the fourth month after the close of the current calendar year.
c. 25th day after the close of the current calendar year.
d. 15th day of the fourth month of the same fiscal year.
38. A corporation reporting on a fiscal year ending every March 31 shall file its 2021 income tax return not later than
a. April 15, 2022 c. April 15, 2021
b. June 15, 2021 d. July 15, 2021
39. Effective May 15, 2022, Laban Inc. changed its fiscal year ending every April 30 to the Calendar Year. An
adjustment return should be filed covering the period
a. May 1 to December 31, 2022
b. January 15 to December 31, 2022
c. January 1 to April 30, 2022
d. April 30 to December 31, 2022
40. What law was enacted to treat both service and merchandising business under the accrual basis of accounting
under the tax laws?
a. TRAIN Law c. CREATE Law
c. NIRC d. EOPT Law

For items 41 to 45.

Nicanor earned the following income in 2023:

Dividends:
ABC Corp., a DC – 1,000,000
DEF Corp., an RFC – 1,000,000
GHI Corp., an NRFC – 1,000,000 (rate of tax in foreign country is 15%)
Interest from bank deposits (converted into Philippine peso):
Peso deposit at Macabeybe Bank – a rural bank in Pampanga – 100,000
Dollar deposit (under expanded foreign currency depositary system) at XYZ Bank– 100,000
Dollar deposit in Japan Bank in Tokyo, Japan – 100,000
Royalties:
For use of his intellectual property – 1,000,000
For his printed books – 1,000,000
For his songs – 1,000,000

41. How much cash will Nicanor receive from ABC Corp.?
a. Php 0 c. Php 900,000
b. Php 100,000 d. Php 1,000,000
42.How much dividend income is Nicanor required to report?
a. Php 0 c. Php 2,000,000
b. Php 1,000,000 d. Php 3,000,000
43.How much interest income is Nicanor required to report to the BIR?
a. Php 0 c. Php 200,000
b. Php 100,000 d. Php 300,000
44. How much is the total final taxes paid on his royalties?
a. Php 200,000
c. Php 400,000
b. Php 300,000
d. Php 500,000
45. How much royalty income is he required to report?
a. Php 0
c. Php 2,000,000
b. Php 1,000,000
d. Php 3,000,000
For Items 46 to 48.

A taxpayer filed his CY 2023 income tax return on October 28, 2024. If he has P40,000 net tax due, compute the
following:

46. Interest for late filing due

a. 2,578 c. 2,867
b. 2,611 d. 4,296
47. Amount of surcharge
a. -0- c. 10,000
b. 8,000 d. 20,000
48. If the taxpayer filed at the wrong venue, the surcharge is
a. -0- c. 10,000
b. 8,000 d. 20,000

49. In 2023, ABC Corp. was assessed Deficiency Income Tax covering BIR audit for TY 2022. The detail of the
assessment is indicated below:
Deficiency Income Tax Amount
Basic Income Tax 1,000,000.00
Surcharge 250,000.00
Interest 120,000.00
Compromise Penalty 25,000.00
Total 1,395,000.00
Assuming the total deficiency tax was paid, the deductible amount for income tax purposes in TY 2023 is:
a. All except surcharge
b. All except surcharge and compromise penalty
c. Interest only
d. None is deductible

50. Which is FALSE in charitable non-stock, non-profit institution?

a. Income from profit activity and income of property is taxable even if used actually, directly and exclusively
for charitable purposes
b. Income from profit activity is taxable if the money is not used for the accomplishment of its purpose
c. Income of property used in business is taxable regardless of the use of the proceeds
d. Property which derived income is classified as ordinary asset

-GOOD LUCK & GOD BLESS FUTURE CPAs!-