MOCK BAR EXAMINATION MCQs IN TAXATION [Partial List]

[Courtesy of Gamanikong]

1. Under RA 9010 the following will be subject to EVAT starting January 1, 2003, except:

a. Professionals, actors, actresses, talent, singers, etc.

b. Banks and non-bank financial intermediaries

c. Services performed as professional athletes

d. Cabarets, night clubs and racetracks

2. Export of Marikina shoes is subject to:

a. 12% VAT

b. 0% VAT

c. Exempt

d. Specific Tax

3. Assessment is necessary in the following cases, except:

a. before the preliminary investigation of a fraudulent tax evasion case could prosper

b. to fix the tax liability of a taxpayer

c. establish a case for judicial action

d. for issuance of warrant of distraint or levy

4. The prescriptive period for collection of taxes is:

a. 10 years from discovery of omission to file return, falsity or fraud if there is no assessment

b. 3 years from filing of return

c. 5 years from release of assessment

d. a and c are correct

5. Importation of automobiles is subject to:

a. Graduated Ad valorem tax of 2% to 60%

b. VAT of 12%

c. Specific tax

d. a and b

e. Exempt

6. The manufacture and importation of the following for local consumption are subject to excise tax, except:

a. alcohol products

b. tobacco products

c. cinematographic films

d. mineral products

7. Domestic sale of bagoong is:

a. exempt from VAT

b. subject to 12% VAT if gross annual sales exceed P1.5M

c. subject to 0% VAT

d. subject to 3% percentage tax if exempt from VAT

e. b and d are correct

8. The BIR commissioner may_________ payment of internal revenue tax when it appears to be unjustly or excessively assessed, or that the administrative and collection costs involved do not justify the collection thereof.

a. compromise

b. abate

c. credit

d. refund

9. No credit/refund of taxes shall be allowed unless the taxpayer:

a. Files a written claim for credit/refund with the BIR within 2 years from payment

b. Pays the tax under protest

c. Appeals to the CTA

d. Amends his tax return

10. Assessment is:

a. A written notice of the tax due

b. Based on facts and not presumed

c. Demand for payment of the tax within a prescribed period of time

d. All of the above

11. The following are required to keep books of accounts, except:

a. Corporations and partnerships

b. Persons engaged in trade or business in the Philippines

c. Persons who earn passive income

d. None of the above

12. Requirements in order that retirement benefits may be exempt from income tax:

a. Must be paid to an employee who is at least 50 years old and has served his employer for at least 10 years

b. Exemption from taxation of retirement benefit must be availed of only once

c. The benefit must be received under an existing Collective Bargaining Agreement

d. a and b only

13. For purposes of the donor’s tax, the following are considered strangers:

a. Brother or sister, whether whole or half-blood

b. Relatives by consanguinity in the collateral line within the 4th civil degree

c. Relatives by affinity, except the spouse of the donor

d. None of the above

14. The special deductions from the gross estate are the following, except:

a. Judicial expenses in testate or intestate proceedings

b. Standard deduction

c. Family home up to P1,000,000

d. Medical Expenses within one year from the death of the decedent not exceeding P500,000

15. Funeral expenses that can be claimed as deduction from the gross estate should be:

a. Actual amount incurred

b. Not exceeding P200,000

c. 5% of the gross estate

d. The lowest of the above figures

16. The usual modes of avoiding the occurrence of double taxation are:

a. Reciprocal exemption either by law or treaty

b. Tax credit for foreign taxes paid

c. Deduction for foreign taxes paid

d. All of the above

17. Jose is a law-abiding citizen who pays his real estate taxes promptly. Due to a series of typhoons and adverse economic conditions, an ordinance is passed by Quezon City granting a 50% discount for payment of unpaid real estate taxes for the preceding year and the condonation of all penalties on fines resulting from the late payment.

Arguing that the ordinance rewards delinquent taxpayers and discriminates against prompt ones, Jose demands that he be refunded an amount equivalent to one-half of the real estate taxes he paid. The municipal attorney rendered an opinion that Jose cannot be reimbursed because the ordinance did not provide for such reimbursement. Jose files suit to declare the ordinance void on the ground that it is a class legislation.

Will his suit prosper?

a. The suit will prosper because the ordinance is discriminatory in character.

b. The suit will prosper because the ordinance is not based on substantial distinction.

c. The suit will not prosper because taxes are the lifeblood of the government and should be collected without unnecessary hindrance.

d. The suit will not prosper because the ordinance is based on substantial distinction. Each set of taxes is a class by itself and the law would be open to attack only if all the taxpayers belonging to one class were not treated alike.

e. None of the above

18. Which of the following statements are true?

a. Resident Filipino citizens with income from foreign sources only are allowed personal and additional exemptions

b. Non-resident aliens not engaged in trade/business in the Philippines are not allowed any personal exemptions

c. Non-resident aliens engaged in trade/business in the Philippines are allowed personal exemptions based on reciprocity

d. All of the above

19. The periodic decrease in the value of a fixed asset due to wear and tear, obsolescence or inadequacy

a. depletion

b. depreciation

c. capital loss

d. special loss

20. The following cases may not be compromised:

a. Criminal tax fraud cases

b. Withholding tax cases

c. Delinquent accounts with duly approved schedule of payments

d. All of the above

21. Citing Section 10, Article VIII of the 1987 Constitution which provides that salaries of judges shall be fixed by law and that during their continuance in office their salary shall not be decreased, a judge of a Regional Trial Court questioned the deduction of withholding taxes from his salary since it results into a net deduction of his pay.

Is the contention of the judge correct?

a. No. The contention is incorrect because taxes are enforced contributions.

b. No. The contention is incorrect because taxes must be collected in order to support the government.

c. No. The contention is not correct because deduction of withholding taxes is not a dimunition contemplated by the fundamental law.

d. No. The contention is incorrect because deduction of withholding taxes is required by law.

e. None of the above.

22. The following conditions shall be observed when there is a net capital loss carry over:

a. The loss carried over is for a holding period not exceeding 12 months

b. The amount of the loss should not exceed the income before exemptions in the year when the loss was sustained

c. The taxpayer should not be a corporation

d. All of the above

23. What is the minimum compromise rate in cases of doubtful validity of assessment?

a. 40% of the basic assessed tax

b. 10% of the basic assessed tax

c. No limitation

d. P1,000,000

24. Which of the following VAT transactions are not considered zero-rated?

a. Export sales of goods

b. Domestic sale of goods in the regular course of trade or business

c. Foreign currency denominated sale

d. Sale of gold to Bangko Sentral ng Pilipinas

25. Barbaran municipality has an ordinance which requires that all stores, restaurants, and other establishments selling liquor should pay a fixed annual fee of P20,000. Subsequently, the municipal board proposed an ordinance imposing a sales tax equivalent to 5% of the amount paid for the purchase or consumption of liquor in stores, restaurants, and other establishments. The municipal mayor refused to sign the ordinance on the ground that it would constitute double taxation.

Is the refusal of the mayor justified?

a. No. The refusal of the mayor is unjustified because double taxation is allowed in our jurisdiction.

b. No. The refusal of the mayor is not justified because the impositions are of different nature and character.

c. No. The refusal of the mayor is unjustified because it is not within his power.

d. No. The refusal of the mayor is not justified because double taxation will generate more revenues.

e. None of the above.

26. This is a summary administrative remedy, seizure of real property to enforce payment of tax due:

a. Levy

b. Distraint

c. Forfeiture

d. Tax lien

27. Which of the following cannot be considered as tax avoidance?

a. Splitting of donation

b. Survivorship agreement

c. Holding period for capital asset transactions

d. None of the above

28. Tony has inadvertently omitted P100,000 income in his 2004 Income Tax Return. Upon discovery in 2005, the BIR issued an assessment for deficiency income tax for P100,000 plus 50% fraud surcharge. Meanwhile, Tony included the omitted P100,000 income in his 2005 Income Tax Return. What advice will you give Tony?

a. Amend his 2004 Income Tax return to reflect the correct amount of income

b. Pay the assessed tax plus surcharge, and thereafter , ask for refund

c. Protest the assessment

d. Any of the above

29. Tino is engaged in buying and selling of fresh fruits at the Q-Mart and Aranque Markets. He is also exporting canned and preserved fruits to Japan. In 2004, he made a gross sales of P2,000,000. He is liable for VAT registration fee of :

a. P500

b. P1,000

c. P1,500

d. Exempt

30. Shirley was allowed to deduct P200,000 bad debts written off in 2003, where she had a net income before bad debts of P180,000 and a net loss of P20,000. IN 2004, she was able to recover the bad debts written off in full. The bad debts recovery is:

a. Taxable to the extent of P180,000

b. Taxable to the extent of P20,000

c. Taxable to the extent of P200,000

d. Not taxable

Answer Key:

1. D
2. B
3. A
4. D
5. A
6. C
7. A
8. B
9. A
10. D
11. D
12. D
13. C
14. A
15. D
16. D
17. D
18. D
19. B
20. D
21. C
22. D
23. A
24. B
25. B
26. A
27. D
28. C
29. A
30. C