(solution) Chapter 1 General Principles and Concepts Problem 1-1 True or

(solution) Chapter 1 General Principles and Concepts Problem 1-1 True or

I need the answers for the attached documents. Chapter 1 and 2 General Principles and Concepts

Chapter 1
General Principles and Concepts Problem 1-1 True or False
Write True if the statement is correct or False if the statement is incorrect. 1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14. Eminent domain and police power can effectively be performed even without taxation.
Taxes may be imposed to encourage economic growth by granting tax exemptions.
Taxation is a way of apportioning the cost of government among those who are privileged to enjoy its
benefits.
The state can enforce contributions upon its citizens in the form of taxes even without a provision in
the Constitution authorizing it.
The police power of the government may be exercised through taxation.
When the power to tax is delegated to the local government, only the legislative branch of the local
government can exercise the power.
The power of taxation can be exercised without limitation because its scope is unlimited.
The power of taxation is absolute because it is the strongest of all powers of the government.
Taxation presupposes an equivalent compensation.
There is no imposition of amount in police power.
Police power and eminent domain may defeat the constitutional rights of a person.
Tax exemption applies only to government entities that exercise proprietary functions.
All government entities regardless of their functions are exempted from taxes because it would be
impractical for the government to be taxing itself.
The state can still exercise its taxing powers over its citizen outside its territory. Problem 1-2 True or False
Write True if the statement is correct or False if the statement is incorrect. 1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15. No law granting any tax exemption shall be passed without the concurrence of two thirds of the
members of the congress.
Churches are exempt from payment of income taxes.
A tax may be levied for the support of religious activities as long as all churches benefit from it.
A bill not signed by the President can still become law.
No person shall be imprisoned for nonpayment of income tax.
Taxation is considered as the lifeblood of the government and every government unit must exercise this
power.
The amount of taxes may be increased to curve spending power and minimize inflation.
Benefits from taxation have to be experienced to justify the legitimacy of collection of taxes from the
people.
Taxes may be used as a tool and weapon in international relations and protect trade relations.
The power of legislative review in taxation is limited only to the interpretation and application of tax
laws.
The rule of ?ex post facto law? is applicable for tax purposes.
Real estate tax and income tax collected on the same real estate property is double taxation.
A tax evader sidesteps the law, while the tax avoider breaks it.
Tax exemption is transferable and assignable.
Taxation is the government?s legitimate means of interfering with the private properties of its subjects. Problem 1-3 True or False
Write True if the statement is correct or False if the statement is incorrect. 1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14. 15. The doctrine of equitable recoupment is applicable to cases where the taxes involved are totally
unrelated.
Protection is the basic consideration that justifies tax situs.
The tax situs for occupation is the place where occupation is pursued even if the criterion for
nationality is given.
There is no direct double taxation by taxing corporate income and corporate stockholders? dividends
from the same corporation.
Tax laws are given retroactive effects.
In the imposition of taxes, public purpose is presumed.
Taxes are obligations created by law.
Taxes collected by the BIR are local taxes.
Nonpayment of license fee makes the business illegal.
In taxation, it is one?s civil liability to pay taxes which gives rise to criminal liability.
Tax laws must be construed strictly against the government, and tax exemptions must be construed
strictly against the taxpayer.
As a rule doubts must be resolved liberally in favor of the government and strictly against the taxpayer.
The Philippine tax laws are not political and penal in nature.
When there is ambiguity of tax laws, the rules of statutory construction may be used to search for the
legislative intent. However, when the meaning of the law is clear, the statute must be enforced as
written.
Revenue regulations that are inconsistent with law have the effect and force of law if they are useful
and reasonable. Problem 1-4 Multiple Choice
Encircle the letter that contains the best answer. 1. 2. 3. Statement No.1: Taxation is an inherent power of the government.
Statement No.2: Taxation is a process consisting of levying, assessment and collection.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement No.1 is correct.
d. Only statement No.2 is correct.
Statement 1: The power of taxation is inherent in sovereignty being essential to the existence of every
government. Hence, even if not mentioned in the Constitution the state can still exercise the power.
Statement 2: It is essentially a legislative function. Even in the absence of any constitutional provision,
taxation power falls to Congress as part of the general power of law-making.
a. Both statements are false.
b. Only statement 1 is false.
c. Both statements are true.
d. Only statement 1 is true.
Which of the following statements is/are correct?
i.
Taxation is a process.
ii.
Enactment of tax laws is part of the taxation process.
iii.
The constitution expressly conferred the power of Taxation to the President of the Philippines.
iv.
Taxation requires voluntary contribution from the inhabitants to support the government.
Choices:
a. i, ii, iii and iv
b. i, ii and iii only 4. 5. 6. 7. 8. 9. c. i and ii only
d. i only
Which of the following is/are natural qualities of a Taxation Power?
a. An inherent power.
b. Essentially an executive function.
c. An absolute power.
d. Territorial in operation
Choices:
a. i, ii, iii and iv
b. i, ii and iii only
c. i and ii only
d. i only
Taxation co-exist with the four elements of the state, which include all, except one of the following:
a. Government
b. Property
c. Sovereignty
d. Territory
Which of the following statements is not correct?
a. All the following National Government units exercise the inherent power of taxation.
b. Local government units could exercise the power of taxation through legislated delegation.
c. National legislation is exercised by Congress.
d. Interpretation of Tax Laws is done by the Legislative branch of the government.
All of the following statements are correct except one.
a. Taxation power is an absolute power.
b. Taxation power is the strongest of all the inherent powers of the government.
c. Tax laws must not violate Constitutional restrictions.
d. Exercise of taxation power is subject to restrictions.
Statement 1: Government units performing governmental functions are exempt from tax unless
expressly taxable.
Statement 2: Government owned or controlled corporations exercising proprietary functions are
taxable unless expressly exempt.
a. Only statement 1 is correct.
b. Only statement 2 is correct.
c. Both statements are correct.
d. Both statements are not correct.
Which of the following is incorrect description of taxation?
a. Legislative and inherent for the existence of the government.
b. Necessary and for public purposes.
c. Supreme and an absolute power of the state.
d. Restricted by constitutional and inherent limitations. 10. The power of taxation is supreme, plenary, unlimited and comprehensive. Hence, it may be exercised
by the state without any Constitutional provisions granting it. Which of the following is not correct?
a. The power of taxation is based on necessity because without money, the state cannot survive.
b. The scope of the power of taxation is unlimited.
c. The power of taxation can be exercised only if there is just compensation.
d. The power of taxation is not absolutely unlimited. Problem 1-5 Multiple Choice
Encircle the letter that contains the best answer. 1. Which of the following is not true? a. Inherent to
of Existence
government
b. Not legislative in
nature
c. Superior to the nonimpairment clause
d. Restricted by just
compensation
2. 3. 4. 5. 6. 7. 8. 9. Taxation Power Police Power Eminent Domain Yes Yes Yes No No No Yes Yes No No No Yes the
the Tax affects the area or nation as a community rather than as individuals. This is a specific explanation
of
a. Public purpose
b. Common good
c. General welfare
d. Reciprocity
Which of the following is a correct nature of restriction to exercise taxation power?
Constitutional Limitation
Inherent Limitation
a. Territorial jurisdiction
Yes
Yes
b. International comity
Yes
No
c. Rule of uniformity and equity
No
No
d. Due process of law
Yes
No
Which statement refers to police power as distinguished from taxation?
a. It is restricted by constitutional provision.
b. It is superior to the impairment clause of the constitution.
c. It involves the taking of property by the government.
d. The amount imposed has no limit.
Police power is distinguished from taxation power because
a. It involves taking of property
b. The amount collected is limited to the cost of regulation
c. It is an inherent power of the state
d. The benefit derived is the protection given by the state
All of the following are inherent restrictions on the exercise of taxation power except
a. Rule of uniformity
b. For public purpose
c. Territorial jurisdiction
d. International comity
The US embassy donated vehicle to the Department of Foreign Affairs of the Philippines. Which of the
following statement is korek ?
a. This transaction is exempted from payment of donor?s tax only.
b. This transaction is exempted only from payment of documentary stamp tax.
c. This transaction is exempted from payment of both donor?s tax and documentary stamp tax.
d. This transaction is subject to both donor?s tax and documentary stamp tax.
A fundamental rule in taxation is that property of one country may not be taxed by another country.
This is known as:
a. International law
b. International comity
c. Reciprocity
d. International inhibition
Which of the following statements is not correct?
a. The government automatically possesses the power to collect taxes from its inhabitants.
b. The government can enforce contribution upon its citizen only when the constitution grants it. c.
d.
10. 11. 12. 13. Taxation power exists inseparably with the state.
The state has the supreme power to command and enforce contribution from the people within its
jurisdiction.
Which of the following statements is not correct?
a. Collections from taxes are public money.
b. Appropriation of taxes for the common good of the people is valid.
c. Construction of private road from taxes is a valid appropriation.
d. Allocation of taxes for the benefit of a greater portion of population is considered for public
purpose.
A taxpayer gives the following reasons in refusing to pay a tax. Which of these reasons is not
acceptable for legally refusing to pay the tax?
a. That he has been deprived of the due process.
b. That there is lack of territorial jurisdiction.
c. That he derives no benefit from the tax.
d. That the prescriptive period for the tax has elapsed.
The following are the constitutional limitations on the power of taxation, except
a. Only Congress can exercise the power of taxation
b. Non-impairment of the obligation of contracts
c. Taxes are not subject to set-off or compensation
d. The rule of taxation must be uniform
Due process in taxation means that the
a. Taxpayers must be given the opportunity to be heard
b. Individual taxpayer must derive direct benefit from taxes
c. Tax imposed must not be harsh, oppressive, and arbitrary
d. Tax imposed must be subject to the rule on uniformity Problem 1-6 Multiple Choice
Encircle the letter that contains the best answer. 1. 2. 3. Which of the following can be an object of taxation?
i. Person
ii. Property
iii. Intangible rights
iv. Rights
Choices:
a. i and ii
b. i, ii and iii
c. i and iv
d. i, ii, iii and iv
Which of the following is incorrect?
a. Taxation exists inseparably with the state.
b. Taxation could be exercised without specific provisions in the constitution granting it.
c. Taxation is inherently legislative in nature.
d. Any constitutional provisions could not restrict taxation.
Which of the following correctly describes the primary purpose of taxation?
Fiscal Purpose
Regulatory Purpose
a. To raise revenue
Yes
Yes
b. To check inflation
Yes
No
c. To discourage consumption of
harmful products
No
No
d. To limit influx of foreign
products
No
Yes 4. Which of the following could not be considered as the purpose of taxation?
a. To raise revenue to support the government
b. To distribute the wealth of the nation
c. To check inflation
d. To impose monetary burden to the people
5. Which of the following is/are purposes of taxation?
a. To raise revenue for government support
b. To distribute wealth of nation
c. To check inflation
d. All of the above
6. Which of the following statements is not correct?
a. A tax bill must only be applicable and operative after becoming a law.
b. The effectivity of the tax law commences upon its approval.
c. The applicability of the tax law covers the present and future transactions.
d. Tax law is ex post facto in application.
7. Which of the following is not correct?
a. In the absence of specific tax provision, taxes in general are not cancellable.
b. Prescriptive period for assessment and collection is applicable to returnable taxes.
c. The law on prescription being a remedial measure should be interpreted liberally in order to
protect the taxpayer.
d. The prescriptive period should be the shorter between the required filing date and the actual date
of filing.
8. Which of the following remedies against double taxation is directly reducing the amount of tax?
a. Reciprocity
b. Tax exemption
c. Tax credit
d. Allowance for deduction
9. Which of the following tax escape is permissible under the tax code?
a. Tax minimization
b. Tax evasion
c. Tax dodging
d. Overstatement of expenses
10. One of the following is incorrect regarding tax exemption.
Expressed Exemption
Implied Exemption
a. 13th month pay of
P30,000 and below
Yes
No
b. Inter-corporate
dividend
Yes
No
c. Non-taxability of
government units
No
No
d. Separation pay due to
sickness
Yes
No
11. One of the following situs of taxation is not true.
Located or Earned
Within
Outside
a. Taxable income of nonresident citizen
Yes
No
b. Taxable estate of resident alien
Yes
Yes
c. Taxable donation of resident citizen
Yes
Yes
d. Taxable sale
Yes
Yes
12. All of the following statements are true, except
a. Double taxation is taxing twice the same taxpayer for the same purpose covering the same period
and taxed by the same authority.
b. Direct double taxation is prohibited by law.
c. Indirect double taxation is allowed as long as this does not violate the equal protection and
uniformity principles. d. Indirect double taxation is not enforceable. Problem 1-7 Multiple Choice
Encircle the letter that contains the best answer. 1. 2. 3. 4. 5. 6. 7. 8. Statement 1: The City of Baguio claims that it can impose additional taxes on banks under the Local
Government Code (in addition to the percentage tax on banks imposed in the NIRC).
Statement 2: Such imposition is a direct double taxation.
a. Both statements are correct.
b. Only statement 1 is correct.
c. Only statement 2 is correct.
d. Both statements are incorrect.
There can be no tax unless there is a law imposing that tax is consistent with the doctrine of
a. Uniformity in taxation
b. Due process of law
c. Taxation is legislative in nature
d. The power of taxation is very broad
The following are kinds of exemption from tax, except
a. Expressed exemption
b. Statutory exemption
c. Exemption by omission
d. Tax evasion
Which of the following is not correct?
a. Tax avoidance is forbidden in our jurisdiction.
b. A group of persons which forms a corporation with the intention to save taxes is not guilty of tax
evasion.
c. There is a constitutional prohibition against double taxation in the Philippines.
d. All of the above.
Which of the following are characteristics of taxes?
i. Voluntary contribution
ii. Imposed by legislative body
iii. Proportionate in character
iv. Used for public purpose
Choices:
a. i, ii and iii only
b. i, ii and iv only
c. i and iii only
d. ii, iii and iv only
All of the following are national taxes as to collecting authority except
a. Income tax
b. Real property tax
c. Estate tax
d. Value-added tax
Which of the following tax rates is behaving in the same direction with the taxable value?
a. Proportionate
b. Progressive
c. Regressive
d. Digressive
Statement 1: All tax escapes are illegal.
Statement 2: Tax shifting is a form of tax avoidance.
a. Both statements are true.
b. Only statement 1 is true.
c. Only statement 2 is true. 9. 1. d. Both statements are incorrect.
One of the following is a true classification of tax. As to object
As to Who bears the burden
a. Income tax
Personal
Indirect
b. Value-added tax
Excise
Direct
c. Donor?s tax
Excise
Direct
d. Estate tax
Property
Indirect
10. Statement 1: Custom duties are national taxes.
Statement 2: Tariff is an import tax.
a. Both statements are true.
b. Only statement 1 is true.
c. Only statement 2 is true.
d. Both statements are incorrect.
11. One of the characteristics of a tax is that it is generally
a. Based on contract.
b. Payable in money.
c. Assignable.
d. A demand of a taxpayer.
Tax of a fixed proportion of the value of the property with respect to which the tax is assessed, and requires
the intervention of assessors or appraisers to estimate the value of such property before the amount due
from each taxpayer can be determined is known as
a. Specific tax
b. Ad valorem tax
c. Specific or regulatory tax
d. Proportionate tax
13. It is collected for the use of somebody else?s property.
a. Toll
b. Debt
c. Tax
d. Special assessment
14. For this, the state has complete discretion on the amount to be imposed after distinguishing useful from
non-useful activity.
a. License fee
b. Tax
c. Toll
d. Special assessment Problem 1-8 Multiple Choice
Encircle the letter that contains the best answer. 1. 2. The proportional contribution from persons and properties levied by the law-making body of the State
by virtue of its sovereignty for the support of the government and all public needs is referred to as
a. Taxes
b. Special assessment
c. License fees
d. Surcharges
Which of the following statements is not correct?
a. Taxes may be imposed to raise revenues or to provide disincentives to certain activities within the
state.
b. The state can have the power of taxation even if the Constitution does not expressly give it the
power to tax.
c. For the exercise of the power of taxation, the state can tax anything at any time. d. 3. 4. 5. The provisions of taxation in the Philippine Constitution are grants of power and not limitations
on taxing powers.
Which of the following forms of escape from taxation does not result to loss of revenue to the
government?
a. Tax exemption
b. Tax avoidance
c. Tax evasion
d. Shifting
Tax as distinguished from license fee:
a. Nonpayment does not necessarily render the business illegal.
b. A regulatory measure.
c. Imposed in the exercise of police power.
d. Limited to cover cost of regulation. Which is not an essential characteristic of tax?
a. It is based on contract.
b. It is payable in money.
c. It is proportionate in character.
d. It is a regular payment.
6. Regressive taxation system is
a. The same with regressive rate of tax.
b. Not observed in the Philippines because it means that the tax rate increases as tax base decreases.
c. A situation where indirect taxpayers are more than direct taxpayers.
d. Imposed to affect adversely the high-income sector of the population.
7. All except one is an example of direct taxes.
a. Transfer taxes
b. Other percentage taxes
c. Income tax
d. Travel tax
8. All of the following are not taxes except
a. Surcharge
b. Special assessment
c. Custom duties
d. License fee
9. A financial aid granted by the government to help private commercial enterprises known beneficial to
the people
a. Margin fee
b. Subsidy
c. Special assessment
d. Toll
10. A schedule or list of rates, duties, or taxes imposed on imported and exported goods is called
a. Tariff
b. Tax rates
c. Custom duties
d. Margin rates
11. Special assessment is an enforced proportional contribution from owners of land especially benefited
by public improvement. Which of the following is not considered as one of its characteristics?
a. It is levied on land.
b. It is based on the government?s need of money to support its legitimate objectives.
c. It is not a personal liability of the person being assessed.
d. It is based solely on the benefit derived by the owners of the land.
12. One of the following is a distinction between tax and license fee.
a. Tax can be assigned while license fee cannot be assigned.
b. Tax is not subject so set-off whereas license fee is subject to set-off. c. Tax is normally paid after the commencement of the business while a license fee is paid before
the commencement of the business.
d. Tax is based on law while a license fee is based on contract.
13. The specific distinction between tax and penalty is
a. Punishment
b. Legality
c. Imposition by the state
d. None of the above
14. The distinction between license and tax is
a. Regulatory
b. Exercise of inherent power
c. Imposition of payment
d. Nonpayment will render the business illegal Problem 1-9 Multiple Choice
Encircle the letter that contains the best answer. 1. 2. 3. 4. 5. 6. Statement 1: When the primary consideration is the legislative intent, but doubts exist in determining
such intent, the doubts must be resolved strictly against the taxing authority.
Statement 2: Tax exemptions are strictly construed against the taxpayer.
a. Both statements are true.
b. Only statement 1 is true.
c. Only statement 2 is true.
d. Both statements are incorrect.
A body of law that codifies all national tax laws is known as
a. National law
b. Tax law
c. Revenue law
d. Revenue regulation
Which of the following characteristics describes our internal revenue laws?
a. Political in nature
b. Penal in nature
c. Generally prospective in operation although the tax statute may nevertheless operate
retrospectively provided it is clearly the legislative intent
d. Retroactive in character
In cases of deductions and exemptions on income tax returns, doubts shall be resolved
a. Liberally in favor of the government
b. Liberally in favor of the taxpayer
c. Strictly against the government
d. Strictly against the taxpayer
In case of conflicts between the tax laws and generally accepted accounting principles (GAAP) for
preparation of tax returns,
a. Both tax laws and GAAP shall be enforced
b. GAAP shall prevail over the tax law
c. Tax laws shall prevail over the GAAP
d. The courts shall resolve the issue
Which statement is incorrect?
a. A toll is a demand of sovereignty
b. A toll is a demand of ownership
c. A special assessment is a demand of taxpayer
d. A customs duty is a tax 7. 8. 9. 10. 11. 12. 13. 14. Tax exemptions are strictly construed (1) if the law provides for liberal construction; (2) if the
exemptions refer to public utilities; (3) in case of exemptions granted to entities organized for
charitable, religious, or educational purposes; (4) in case of special laws applying in cases.
a. Exemption 3 is correct.
b. Exemptions 2 and 3 are correct.
c. No given exemptions are correct.
d. All given exemptions are correct.
Which of the following statement is not true?
a. If a taxpayer is acquired of a criminal violation of the Tax Code, this acquittal does not exonerate
him from his civil liability to pay the taxes.
b. A conviction for tax evasion is not a bar for collection of unpaid taxes.
c. A tax assessment is necessary for criminal prosecution for willful attempt to defeat and evade
payment of taxes.
d. Criminal proceedings under the Tax Code are now a mode of collection of internal revenue taxes,
fees or charges.
Which of the following falls under the jurisdiction of the Court of Tax Appeals?
a. Criminal action for the violation of the NIRC.
b. Question of whether or not to impose a deficiency tax assessment upon a taxpayer.
c. Appeal from undisputed tax assessment.
d. Action for refund of real property tax.
Statement 1: BIR rulings are the correct interpretations of the Tax Code.
Statement 2: Supreme Court decision shall prevail over the BIR rulings.
a. Only statement 1 is correct.
b. Only statement 2 is correct.
c. Both statements are correct.
d. Both statements are not correct.
All of the following statements are incorrect, except
a. General provision under the Tax Code prevails over BIR Regulation.
b. BIR Rulings prevails over Local Tax Ordinance on matters concerning barangay taxes.
c. BIR Rulings are sound law until changed by court resolution.
d. Tax Code…