Income Taxation (Gross) questions and answers
1. Income, for tax purpose:
I. Means all income from whatever source (legal or illegal), unless
... [Show More] specifically excluded 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. I, II and III only c. I, II, III and IV
b. I and IV only d. None of the above
2. The sources from which income is derived
a. Labor
b. Illegal activities
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. In 2018, Pedro sent his sister Ana $10,000 via a telegraphic transfer through the Banko De Uro el
Pilipinas. Lorna, the bank’s remittance clerk made a mistake and credited Ana with $100,000 which
she promptly withdrew. The bank demanded the return of the mistakenly credited excess, but Ana
refused. The BIR entered the picture and investigated Ana. Would the BIR be correct if it determines
that Ana earned taxable income under these facts?
a. No, she had no income because she had no right to the mistakenly credited funds
b. Yes, income is income regardless of the source.
c. No, it was not her fault that the funds in excess of $10,000 were credited to her.
d. No, the funds in excess of $10,000 were in effect donated to her.
5. Which of the following is a characteristic of income?
A B C D
Increase in taxpayer’s wealth True True True False
Realization of gain True False False False
Return of taxpayer’s wealth True True False False
6. 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
7. 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
8. 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
9. 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 [Show Less]