Tax2 Midterm Exam-sent

TEST I- MCQ 1. An act of liberty whereby one disposes gratuitous of a thing or right in favor of another who accepts it- a. Succession c. Donation b. Occupation d. Tradition 2. A tax imposed on the gratuitous transfer of property between two or more person who are living at the time the transfer is made a. Estate tax c. Income tax b. Gift tax d. Transfer tax 3. A donation made by a stockholder to a corporation is subject to donor’s tax because of the following principles, except a. Entity theory c. Benefit received principle b. Lifeblood theory d. Tax benefit rule 4. What is the tax implication if a corporation condones the debt of a stockholder because of a good thing done by the latter to the corporation? a. The condonation is based on the liberality of the corporation; therefore, it is subject to donor’s tax. b. The condonation is subject to donor’s tax on the corporation because it is based on its liberality. Moreover, it is equivalent to a payment of dividend to the stockholder which is, therefore, subject to a dividend tax of 10%. c. It is tantamount to a declaration of dividend. Therefore, it is an income which is subject to 10% dividend tax on the stockholder. However, it is not subject to donor’s tax on the corporation. d. It is just a simple case of extinguishment of an obligation which is neither subject to income tax on the stockholder not subject to donor’s tax on the corporation. 5. ABDON went to ALAMBRA RESORT and was given a prize of P50, 000.00 by the resort for being its 1,000 th guest. Is the prize subject to donor’s tax? Income Tax? Donors Tax Income tax a. Yes Yes b. No Yes

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Transcript of Tax2 Midterm Exam-sent

TEST I- MCQ1. An act of liberty whereby one disposes gratuitous of a thing or right in favorof another who accepts it-a. Succession c. Donationb. Occupation d. Tradition2. A tax iposed on the gratuitous transfer of property between two or oreperson who are living at the tie the transfer is adea. !state tax c. "ncoe taxb. #ift tax d. Transfer tax$. A donation ade by a stoc%holder to a corporation is sub&ect to donor's taxbecause of the following principles( excepta. !ntity theory c.)ene*t received principleb. +ifeblood theory d.Tax bene*t rule,. -hat is the tax iplication if a corporation condones the debt of astoc%holder because of a good thing done by the latter to the corporation.a. The condonation is based on the liberality of the corporation/ therefore( itis sub&ect to donor's tax.b. The condonation is sub&ect to donor's tax on the corporation because it isbased on its liberality.0oreover( it is e1uivalent to a payent of dividendto the stoc%holder which is( therefore( sub&ect to a dividend tax of 123.c. "t is tantaount to a declaration of dividend. Therefore( it is an incoewhich is sub&ect to 123 dividend tax on the stoc%holder. 4owever( it isnot sub&ect to donor's tax on the corporation.d. "t is &ust a siple case of extinguishent of an obligation which is neithersub&ect to incoe tax on the stoc%holder not sub&ect to donor's tax on thecorporation.5. A)DO6 went to A+A0)7A 7!SO7T and was given a pri8e of 952( 222.22 bytheresortforbeingits1(222thguest. "sthepri8esub&ecttodonor'stax."ncoe Tax.Donors Tax "ncoe taxa.:es:esb.6o :esc. :es6od. 6o6o;. The following are the re1uisites of a donation for purposes of the donor's tax(except/a.