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Income Taxation
Income Tax Administration
1. Statement 1: Where different enterprises or corporations are owned by
the same taxpayer the Commissioner of Internal Revenue may make an
allocation of income and expenses among them so as to clearly reflect the
income of each enterprise or corporation.
Statement 2: In the interest of determining the correct taxable income, it
is legal for the Commissioner of Internal Revenue to determine the
revenues and gross income of a taxpayer based on industry standards
developed by the Bureau of Internal Revenue from an industry study.
a. Both statements are correct
b. Both statements are wrong
c. First statement is correct, but second statement is wrong
d. First statement is wrong, but second statement is correct
2. Which statement is wrong? When a taxpayer controls a manufacturing
corporation and a marketing corporation, sales made by the
manufacturing corporation to the marketing corporation, as recorded in
the books of accounts, may be considered by the Bureau of Internal
Revenue as not reflective of correct selling price.
a. Under the rule of piercing the veil of corporate fiction
b. Under the provision of the National Internal Revenue Code which
authorizes the Commissioner of Internal Revenue to allocate
revenues and expenses of corporations controlled by the same
interests, so as to clearly reflect the income of the taxpayers;
Internal Revenue Code
c. Under the provision of the National Internal Revenue Code which
authorizes the Commissioner of Internal Revenue to determine
the correct taxable income from the best evidence obtainable
d. Cannot be done by the Bureau of Internal Revenue
3. Who
a.
b.
c.
d.
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Page 3 of 5
17.
3
3
4
4
quarters
quarters
quarters
quarters
the
the
the
the
18. A corporation on a fiscal year ending March 31, should file its annual
return
Page 4 of 5
a.
b.
c.
d.
On
On
On
On
or
or
or
or
before
before
before
before
19.
20.
21. Who are required to compute their taxable income on the basis of
calendar year only?
a. Individuals
b. Estates or trusts
c. General public
d. All of these
22. Statement 1: The Commissioner of Internal Revenue can, if he makes a
finding that the nature of stock on hand (e.g., scarcity, liquidity,
marketability or price movements) is such that inventory gains should be
considered realized for tax purposes, require a change in the inventory
valuation method of a taxpayer.
Statement 2: The accrual method of accounting is required of trading,
manufacturing and service enterprises.
a. First statement is correct, second statement is wrong
b. First statement is wrong, second statement is correct
c. Both statements are correct
d. Both statements are wrong
23. Statement 1: Where different enterprises or corporations are owned by
the same taxpayer, the Commissioner of Internal Revenue may make an
allocation of income and expenses among them so as to clearly reflect
the income of each enterprise or corporation.
Statement 2: In the interest of determining the correct taxable income, it
is legal for the Commissioner of Internal Revenue to determine the
revenues and gross income of a taxpayer based on industry standards
developed by the Bureau of Internal Revenue from an industry study.
a. Both statements are correct
b. Both statements are wrong
c. First statement is correct, but second statement is wrong
d. First statement is wrong, but second statement is correct
Page 5 of 5
-EndAnswer Key:
1. A
2. D
3. D
4. B
5. C
6. B
7. B
8. A
9. C
10.A
11.D
12.B
13.A
14.D
15.D
16.B
17.B
18.C
19.A
20.D
21.D
22.A
23.A
24.
25.*End*