Theories on Taxation

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TAXATION August 2011

Multiple Choice. Identify the letter of the choice that best completes the statement or answers the question.

1. Which of the following is not subject to tax as a corporation? (A) Business partnerships. (B) Insurance companies. (C) Joint stock companies. (D) General professional partnership. 2. A partnership formed by persons for the sole purpose of exercising their common profession, no part of the income of which is derived from engaging in any trade or business. (A) Joint venture. (B) Trading partnership. (C) General professional partnership. (D) Joint accounts. 3. Which of the following is a general professional partnership? (A) Partnership organized by a lawyer, engineer and a CPA to provide professional advice. (B) A partnership organized by a group of CPAs for the common practice of accountancy. (C) A partnership organized by a group of CPAs for the purpose of selling real properties. (D) General partnership organized by group of engineers engaged in manufacturing of equipment. 4. Which of the following statements is most correct? Statement 1. For purposes of computing the distributive share of the partners, the net income of the partnership shall be computed in the same manner as a corporation. Statement 2. Each partner shall report as gross income his distributive share, actually or constructively received, in the net income of the partnership. (A) Statement 1 only. (B) Statement 2 only. (C) Both statements are correct. (D) None of the above. 5. Which of the following statement is most correct? (A) The tax imposed on corporations is not imposed only upon such corporations as are organized and operated for profit. (B) A corporation, firm or association, no matter how created or organized, or what the purpose of its organization may be, is subject to tax, except as provided in Sec. 30, relative to the exemptions from tax on corporations. (C) A corporation is not exempt simply and only because it is primarily not organized and operated for profit. (D) All of the above. 6. Which of the following statements is most correct? (A) The tax imposed by law on corporations is not imposed only upon such corporations as are organized and operated for profit. (B) Any corporation, firm or association, no matter how created or organized, or what the purpose of its organization may be, is subject to tax. (C) A corporation is not exempt simply and only because it is primarily not organized and operated for profit. (D) All of the choices. 7. The following are passive income, except: (A) Royalties, Prices and Winnings more than P10,000. (C) Interest from Philippine currency bank. (C) Shares of individual partners in the net profits of taxable partnerships. (D) Stock dividends from domestic corporations. 8. Which of the following is exempt from income tax? (A) A club organized and operated exclusively for pleasure, recreation, and other non-profitable purposes, no part of the net income of which inures to the benefit of any private stockholder or individual. (B) A corporation or association organized exclusively for holding title to property, collecting income therefrom, and turning the entire amount thereof, less expenses, to an organization which itself is exempt from income tax. (C) Building and loan associations. (D) None of the above. 9. Which of the following statements is most correct? Statement 1. All joint ventures regardless of the purpose these are created are exempt from income taxation. Statement 2. The term “domestic”, when applied to corporation, means created or organized in the Philippines or under the laws of a foreign country as long as it maintains a Philippine Branch. (A) Statement 1 only. (B) Statement 2 only. (C) Both statements are correct. (D) None of the above. 10. Which of the following statements is most correct? Statement 1. All wealth...
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