(C) If not related to land and building, may be treated as a deferred expense which may be amortized. (B) An asset used in business which is subject to amortization is an ordinary asset. According to the theory, taxes should be based upon the amount of money people earn. (B) Declining-balance method. (A) Straight-line method. (C) The debt must actually be charged off the books of accounts of the taxpayer as of the end of the taxable year. (C) Creditable withholding tax of 10%. However, Statement 1. (B) Twenty-five percent (25%). (B) 2007. (A) Statement 1 only. On general rules on capital gains and losses, which statement is not correct? 7. Statement 1. This video features and discusses the general principles of taxation in the Philippines. (A) Net capital loss. As the major principles of taxation in any system, it is worth taking an in-depth look at “efficiency” and “equity (fairness)”. The following are passive income, except: (A) Royalties, Prices and Winnings more than P10,000. 46. (C) Associations. Taxation has a key role in a modern economy. (B) Is required to file an income tax return although not required to pay the income tax. The MCIT shall be imposed upon a domestic corporation or a resident foreign corporation whenever such corporation has a zero or negative taxable income. So, in view of the growing tax burden and the increasing use of taxes as a tool for social and fiscal control, let us further review the new theories and modern prob­lems of taxation. Bad debt is a deduction from the gross income when the account is written off. 61. Hi there, would you like to get such a paper? Customer Code: Creating a Company Customers Love HubSpot. Statement 1. (D) None of the above. The rival theories, cost-of-service and benefit-of-service, though recognized as of some usefulness, are now mentioned chiefly for their defects as in-clusive principles. (B) Final withholding tax of 10%. (A) A deduction for bad debt is not available when a provision for it is made. 44. (D) None of the above. (B) Income from a taxable partnership is constructively received by a partner in the same taxable year that the partnership determined its net income after tax. (D) Nonresident corporation. (A) Domestic corporation. These three relate to the cost of operation of the tax system, to its flexibility and certainty. Statement 1. 82. 18. (D) Cannot be deducted because it has unlimited life. Which of the following methods of depreciation shall be allowed for income tax purposes? (C) Both statements. (iii) Ability to Pay Theory: The most popular and commonly accepted principle of equity or justice in taxation is that citizens of a country should pay taxes to the government in accordance with their ability to pay. (B) Statement 2 only. (D) None of the above. Determined by legislature, situs is one aspect of taxation, along with nature, purpose, rate, and coverage. (D) General professional partnership. (A) Nonresident foreign corporation. The most suitable taxes from this standpoint are personal levies (income, net worth, consumption, and inheritance taxes). (C) Both statements are correct. A corporation which is included in exempt corporations under Section 30 of the NIRC (e. g. , organized and operated for charitable purposes) which did not file its articles of incorporation and by-laws with the BIR (A) Is required to file an income tax return and pay the income tax. (D) None of the above. Penalty: punishment for the commission of a crime 3. Learn more about taxation in … Taxable partnerships are required to file cumulative quarterly declarations and a final return because they are taxed as corporations. General Theories and Principles of Taxation, Written by  (B) Fair market value of the property. 3. 75. %) of gross income from all sources within the Philippines. (C) The election of the gross income tax option by the corporation shall be irrevocable for three (3) consecutive taxable years during which the corporation is qualified under the scheme. (A) A capital asset may be an asset connected or not connected with the trade or business of the taxpayer. (A) Domestic corporation. Theories of Taxation 1. Proprietary educational institutions shall pay a tax of how much on their taxable income at what percent? (D) All of the above. (D) 10%. Thirdly, we come to a form of distribution which may be called a qualified proportional one. Each partner shall report as gross income his distributive share, actually or constructively received, in the net income of the partnership. Statement 2. (C) Both statements are correct. Before you can become a taxpayer in the Philippines, you need to register with the Bureau of Internal Revenue (BIR) which will then assign you a permanent, system-generated Taxpayer Identification Number or TIN. The MCIT shall be imposed upon a domestic corporation or a resident foreign corporation whenever such corporation has a zero or negative taxable income. (C) Capital gains and losses for individuals, estates and trusts, take into account the holding period of the capital asset. %) of gross rentals or fees. (D) Joint ventures. For optional corporate income tax purposes, which of the following shall be included in cost of goods sold for a trading or merchandising concern? A domestic corporation is taxable on its worldwide income. In order the rules on capital gains and losses in the NIRC may apply, the transaction on the asset should be a sale or an exchange. (A) Thirty percent (30%). Which of the following corporations shall pay a tax equal to thirty-five percent (35%), now thirty percent (30%), of the gross income received during the each taxable year from all sources within the Philippines? The MCIT shall be imposed upon a domestic corporation or a resident foreign corporation when the amount of minimum corporation income tax is greater that the normal income tax due from such corporation. 47. Expenses from previous period which were not deducted from previous period’s income could be deducted from income in the current period. Which of the following statements is most correct? (B) The debt must have a maturity of not more than 5 years. 71. 62. It is said that taxes are what we pay for civilized society. (A) When related to the acquisition and/or improvement of land and building, must be capitalized. 73. Interest paid or incurred in the acquisition of fixed assets may be capitalized to the asset account. (C) Multinational corporation. The right of the chief authority to collect taxes, and the general policy which determines who is to be taxed, how much the tax shall be, and for what purposes it shall be levied has always been a controversial issue. 1. 8. 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