Income TAX QUIZ 4 Questions and Answers1. Income, for tax purposes:
I. Means all income from whatever source (legal or illegal), unless specifically
exc... [Show More] luded under the Tax Code.
II. Means all wealth which flows into the taxpayer other than return of capital.
III. Is recognized in the year it is actually received in cash or cash equivalent
IV. Refer to the amount of money coming to a person or corporation within a specified
time, whether as payment of services, interest, or profits from investment
a. l and Ill only
b. I and IV only
c. I. II, III and IV
d. None of the above
2. The sources from which income is derived
a. Labor
b. The use of capital
c. Profits derived from sale or exchange of capital assets
d. All of the above
3. The sources from which income is derived
A B C D
Labor True True True False
Gifts and inheritance True False False False
Use of capital True True False False
4. Which of the following is a characteristic of income?
True Increase in taxpayer's wealth
True Realization of gain
True Return on taxpayer's wealth
5. Which of the following is a requisite for an income to be taxable?
a. There must be gain
b. The gain must be realized or received
c. The gain must not be excluded by law from taxation
d. All of the above
6. Which of the following is not an income for income tax purposes?
a. Gain derived from labor.
b. Return on capital.
c. Excess of selling price over cost of assets sold
d. Gift Received
7. Which of the following is not an income for income tax purposes?
a. Collection of loans receivable
b. Condonation of debt for services rendered
C. Excess of selling price over the cost of an asset sold
d. None of the above
8. Which of the following is not a characteristic of income?
a. Increase in taxpayer's wealth.
b. Realization or receipt of gain.
c. Earnings constructively received.
d. Return of taxpayer's wealth.
9. Which is not a valid definition of income?
a. Income is the return from capital invested.
b. Income is a fund at one distinct point of time. flows into the taxpayer other
C. Income means all wealth which than a mere return of capital.
d. Income means cash or its equivalent unless otherwise specified.
10. The share in the profits of a partner in a general professional partnership is regarded as
received by him and thus taxable although not yet distributed. This principle is known as
a. Actual receipt of income
b. Advance reporting of income
c. Accrual method of accounting
d. Constructive receipt
11. Which of the following is considered or construed as an example of "constructive receipt"?
a. Retirement benefits, pensions, gratuities
b. Fees paid to a public official
c. Interest coupons that have matured and are payable but have not been cashed
d. Deposits for rentals to answer for damages, restricted as to use
12. Constructive receipt occurs when the money consideration or its equivalent is placed at the
control of the person who rendered the service without restrictions by the payor. The following
are examples of constructive receipts, except
a. A security deposit to insure the faithful performance of certain obligations of
the lessee to the lessor.
b. Deposit in banks which are made available to the seller of services without
restrictions;
c. Issuance by the debtor of a notice to offset any debt or obligation and acceptance
thereof by the seller as payment for services rendered;
d. Transfer of the amounts retained by the payor to the account of the contractor.
13. There is constructive receipt of income when:
a. Payment is credited to payee's account
b. Payment is set aside for the payee, or otherwise made available so the payee may draw
upon it at any time, or so payee could have drawn upon it during the taxable year notice
of intention to withdraw had been given without substantial limitations
c. Both "a" and "b”
d. Neither "a" nor "b"
14. As a rule, income from whatever source is taxable. Income from whatever source may come
from:
I. Gains arising from expropriation of property
II. Gambling gains
III. Income from illegal business or from embezzlement
IV. Recovery of receivables previously written off
V. Tax refunds
VI. Compensation for injury suffered
VII. Gratuitous condonation of debt
a. I and II only
b. I, IV and V only
c. I, IV, V and VI only
d. I, II, II, IV and V only
15. When different types of income are subject to common tax rate, the tax system is described
as
a. Global tax system
b. Gross income tax system
c. Scheduler tax system
d. Final tax system
16. Situs of taxation on income from sale of property purchased.
a. Place of the seller
b. Place of sale
C. Place of buyer
d. As determined by the Commissioner
17. Which of the following test of source of income is incorrect?
a. Interest income - residence of the debtor b. Income from services - place of performance
c. Royalties - place of use of intangible
d. Gain on sale of real property - place of sale.
18. Situs of taxation on income from sale shares of a domestic corporation.
a. Always treated as income derived from within the Philippines
b. Always treated as income derived from without the Philippines
C. May be treated as income within or without the Philippines depending on the place of sale
d. May be treated as income within or without the Philippines depending where the shares are
kept
19. Situs of taxation on income from sale shares of a foreign corporation.
a. Always treated as income derived from within the Philippines
b. Always treated as income derived from without the Philippines
C. May be treated as income within or without the Philippines depending on the place of
sale
d. May be treated as income within or without the Philippines depending where the shares are
kept
20. Pedro earned interest income from a promissory note issued to him by Juan, a resident of
California, U.S.A. Assuming that Pedro is a nonresident citizen, the interest income is
a. Subject to basic income tax
b. Subject to final tax
c. Not subject to income tax
d. Partly subject to scheduler and partly subject to final tax
21. It is important to know the source of income for tax purposes (i.e., from within or without the
Philippines) because:
a. Some individual and corporate taxpayers are taxed on their worldwide income while
others are taxable only upon income from sources within the Philippines
b.The Philippines imposes income tax only on income from sources within
C. Some individual taxpayers are citizens while others are aliens
D. Export sales are not subject to income tax
22. Situs, for taxation purposes will depend upon various factors, including
I. The nature of the tax and the subject matter thereof.
II. The possible protection and benefit that may accrue both to the government and to the
taxpayer.
III. Domicile or residence
IV. Citizenship
V. Source of income
a. I and V only
b. I, III and IV only
c. I, II, IV and V
d. I, II, III, IV and V
23. Which of the following taxpayers is taxable on income from all sourceswithin and outside the
Philippines?
a. Domestic corporation
b. Resident foreign corporation
c. Resident citizen
d. Both "a" and "C" [Show Less]
