Taxation law Bar Questions 06-14.docx

8/17/2019 Taxation law Bar Questions 06-14.docx

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Ta x a t i o n L a w B a r Q u e s t i o n s - P a g e

Ban8 file$ a re7uest for reconsi$eration with the ommissioner of Internal ,e&enue. Theommissioner $enie$ the re7uest for reconsi$eration onl( on a( 30 2006 at the sametime ser&ing on %lo*al Ban8 a warrant of $istraint to collect the $eficienc( tax. If (ouwere its counsel what will *e (our a$&ice to the *an8) Explain. !

- I: -

The ommissioner of Internal ,e&enue issue$ an assessment for $eficienc( income tax

for taxa*le (ear 2000 last 9ul( 31 2006 in the amount of ;10 illion inclusi&e of surcharge an$ interests. If the $elin7uent taxpa(er is (our client what steps will (ou ta8e)'hat is (our $efense) 10!

- : -

The ollector of ustoms issue$ an assessment for unpai$ customs $uties an$ taxes on theimportation of (our client in the amount of ;


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9oachin is one of those name$ in the list. Ae purchase$ a real propert( in 1


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+I.!C

H is a Filipino immigrant li&ing in the nite$ tates for more than 10 (ears. Ae is retire$an$ he came *ac8 to the ;hilippines as a *ali8*a(an. E&er( time he comes to the;hilippines he sta(s here for a*out a month. Ae regularl( recei&es a pension from hisformer emplo(er in the nite$ tates amounting to J1 000 a month. 'hile in the

;hilippines with his pension pa( from his former emplo(er he purchase$ threecon$ominium units in a8ati which he is renting out for ;1 000 a moth each.

a. "oes the J1 000 pension *ecome taxa*le *ecause he is now resi$ing in the;hilippines) ,eason *riefl(.

*. Is his purchase of the three con$ominium units su*ect to an( tax) ,eason *riefl(.

+II.!C

ntonia antos 30 (ears ol$ gainfull( emplo(e$ is the sister of E$gar$o antos. he$ie$ in an airplane crash. E$gar$o is a law(er an$ he negotiate$ with the airline compan(an$ insurance compan( an$ the( were a*le to a agree total settlement of ;10 illion. Thisis what ntonia woul$ ha&e earne$ as some*o$( who was gainfull( emplo(e$. E$gar$o

was her onl( heir.a. Is the ;10 illion su*ect to estate tax) ,eason *riefl(.

*. houl$ E$gar$o report the ;10 illion as his income *eing ntonia5s onl( heir),eason *riefl(.

+III.!C

Gutrition hipp( orporation gi&es all its emplo(ees ran8 an$ file super&isors an$managersC one sac8 of rice e&er( month &alue$ at ;=00 per sac8. "uring an au$itin&estigation ma$e *( the Bureau of Internal ,e&enue BI,C the BI, assesse$ thecompan( for failure to withhol$ the correspon$ing withhol$ing tax on the amounte7ui&alent to the one sac8 of rice recei&e$ *( all the emplo(ees conten$ing that the sac8 of rice is consi$ere$ as a$$itional compensation for the ran8 an$ file emplo(ees an$a$$itional fringe *enefit for the super&isions an$ managers. Therefore the &alue of theone sac8 of rice e&er( month shoul$ *e consi$ere$ as part of the compensation of the ran8 an$ file su*ect to tax. For the super&isors an$ managers the emplo(er shoul$ *e the oneassesse$ pursuant to ection 33 aC of the GI,. Is there a legal *asis for the assessmentma$e *( the BI,) Explain (our answer.

I:.10!C

'e*er ,ealt( ompan( which owns a three-hectare lan$ in ntipolo entere$ into a 9o+enture greement 9+C with ;rime "e&elopment ompan( for the $e&elopment of s parcel of lan$. 'e*er ,ealt( as owner of the lan$ contri*ute$ the lan$ to the 9oint +enan$ ;rime "e&elopment agree$ to $e&elop the same into a resi$ential su*$i&ision

construct resi$ential houses thereon. The( agree$ that the( woul$ $i&i$e the lots *etwthem.

a. "oes the 9+ entere$ into *( an$ *etween 'e*er an$ ;rime create a sepataxa*le entit() Explain *riefl(.

*. re the allocation an$ $istri*ution of the salea*le lots to 'e*er an$ prime su*to income tax an$ to expan$e$ withhol$ing tax) Explain *riefl(.

c. Is the sale *( 'e*er or ;rime of their respecti&e shares in the salea*le lots to th parties su*ect to income tax an$ to expan$e$ withhol$ing tax) Explain *riefl(

:.10!C

Goel antos is a &er( *right computer science gra$uate. Ae was hire$ *( Aewlett ;ac8

To entice him to accept the offer for emplo(ment he was offere$ the arrangement that pof is compensation woul$ *e an insurance polic( with a face &alue of ;20 illion. T parents of Goel are ma$e the *eneficiaries of the insurance polic(.

a. 'ill the procee$s of the insurance form part of the income of the parents of Gan$ *e su*ect to income tax) ,eason *riefl(.

*. an the compan( $e$uct from its gross income the amount of the premiuBriefl(.

:I.!C

The ongregation of the ar( Immaculate $onate$ a lan$ a $ormitor( *uil$ing locaalong EspaKa t. in fa&or of the isters of the Aol( ross a group of nuns operating a f

clinic an$ high school teaching *asic spiritual &alues. Is the $onation su*ect to $onotax) ,eason Briefl(.

:II.!C

,eme$ios a resi$ent citi4en $ie$ on Go&em*er 10 2006. he $ie$ lea&ing thcon$ominium units in Que4on it( &alue$ at ; illion each. ,o$olfo was her onl( h


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Ae reporte$ her $eath on "ecem*er 2006 an$ file$ the estate tax he as8e$ theommissioner of Internal ,e&enue to gi&e him one (ear to pa( the estate tax $ue. Theommissioner appro&e$ the re7uest for extension of time pro&i$e$ that the estate tax *ecompute$ on the *asis of the &alue of the propert( at the time of pa(ment of the tax.

a. "oes the ommissioner of Internal ,e&enue ha&e the power to exten$ the pa(ment of estate tax) If so what are the re7uirements to allow such extension)

*. "oes the con$ition that the *asis of the estate tax will *e the &alue at the time of the pa(ment ha&e legal *asis) ,eason *riefl(.

:III.!C

B orporation won a tax refun$ case for ;0 illion. pon execution of the u$gement an$ when tr(ing to get the tax re$it ertificates TC representing therefun$ the Bureau of Internal ,e&enue BI,C refuse$ to issue the T on the *asis of thefact that the corporation is un$er au$it *( the BI, an$ it has a potential tax lia*ilit(. Isthere a &ali$ ustification for the BI, to withhol$ the issuance of the T) Explain (our answer *riefl(.

NOTHING FOLLOWS.

200=

TAXATION LAW

I.

In 9anuar( 1


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from 9apan an$ Lorea which it stores in a warehouse in u*ic Ba(. It sol$ these motor &ehicles in pril 200= to persons resi$ing in the customs territor(.

a. re the importations of motor &ehicles from a*roa$ su*ect to customs $uties an$&alue a$$e$ taxes) Explain. ?! C

*. if the( are taxa*le when must the $uties an$ taxes *e pai$) 'hat are the *ases for an$ purposes of computing customs $uties an$ +T) To whom must the $uties

an$ +T *e pai$) Explain. 3! C

+

aria uerte a Filipino citi4en purchase$ a lot in a8ati it( in 1

+I

'hile $ri&ing his car to Ba7uio last month ;e$ro suncion together with his wifessunta an$ onl( son 9aime met an acci$ent that cause$ the instantaneous $eath of 9aime. The following $a( ssunta also $ie$ in the hospital. The spouses an$ their son ha$the following assets an$ lia*ilities at the time of $eath

ssuntaExclusi&e onugal

9aimeExclusi&e

ash ;10000000.00 ;12000

ars ;2000000.00 00000.00

an$ 000000.00 2000000.00

,esi$ential Aouse ?000000.00

ortgage ;a(a*le 200000.00

Funeral Expenses 300000.00

a. Is the Estate of 9aime suncion lia*le for estate tax) Explain. ?! C

*. Is &anishing $e$uction applica*le to the Estate of ssunta suncion) Exp ?! C

+II

fter examining the *oo8s an$ recor$s of E" orporation the 200? final assessmnotice showing *asic tax of ;1000000 $eficienc( interest of ;?00000 an$ $ue $ate pa(ment of pril 30 200@ *ut without the $eman$ letter was maile$ an$ release$ *(BI, on pril 1 200@. The registere$ letter containing the tax assessment was recei& *( the E" orporation on pril 2 200@

a. 'hat is an assessment notice) 'hat are the re7uisites of a &ali$ assessmExplain 3! C

*. s tax law(er of E" orporation what legal $efensesC woul$ (ou raiagainst the assessment) Explain. 3! C.

+III

The it( of anila enacte$ an or$inance imposing a ! tax on gross receipts on rentof space in pri&atel(-owne$ pu*lic mar8ets. BT orporation 7uestione$ the &ali$it(the or$inance stating that the tax is an income tax which cannot *e impose$ *( the c

go&ernment.

"o (ou agree with the position of BT orporation) Explain. ! C

I:

'illiam ntonio importe$ into the ;hilippines a luxur( car worth J10000. This was howe&er $eclare$ onl( for J20000 an$ correspon$ing customs $uties an$ ta


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*. *C re 9ose an$ lara su*ect to $onor5s tax) If so how much is the taxa*le gift of each spouse an$ what rate shall *e applie$ to the gift) Explain. ?!C

:+

In 200@ spouses ,enato an$ 9u$( %arcia opene$ peso an$ $ollar $eposits at the;hilippine *ranch of the Aong Long Ban8 in anila. ,enato is an o&erseas wor8er inAong Long while 9u$( li&es an$ wor8s in anila. "uring the (ear the *an8 pai$ interest

income of ;10000 on the peso $eposit an$ 1000 on the $ollar $eposit. The *an8 withhel$ final income tax e7ui&alent to 20! of the entire interest income an$ remitte$ thesame to the BI,.

a. re the interest incomes on the *an8 $eposits of spouses ,enato an$ 9u$( %arciasu*ect to income tax) Explain. ?!C

*. Is the *an8 correct in withhol$ing the 20! final tax on the entire interest income)Explain. 3!C

NOTHING FOLLOWS.

200<

TAXATION

PART I

I

TRUE or FALSE. nswer T,E if the statement is true or FE if the statement isfalse. Explain (our answer in not more than two 2C sentences. !C

a. law that allows taxes to *e pai$ either in cash or in 8in$ is &ali$.

*. 'hen the financial position of the taxpa(er $emonstrates a clear ina*ilit( to pa(the tax the ommissioner of Internal ,e&enue ma( &ali$l( compromise the taxlia*ilit(.

c. The doctrine of e!ita"le reco!p#ent allows a taxpa(er whose claim for refun$has prescri*e$ to offset tax lia*ilities with his claim of o&erpa(ment.

$. law imposing a tax on income of religious institutions $eri&e$ from the sale of religious articles is &ali$.

e. false return an$ a frau$ulent return are one an$ the same.

II

Enumerate the four ?C inherent limitations on taxation. Explain each item *riefl(. ?!C

III

elissa inherite$ from her father a 300-s7uare-meter lot. t the time of her father5s $eon arch 1? 1


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VI

The angguniang Ba(an of the unicipalit( of ampaloc Que4on passe$ an or$inanceimposing a storage fee of ten centa&os ;0.10C for e&er( 100 8ilos of copra $eposite$ inan( *o$ega within the unicipalit(5s uris$iction. The etropolitan anufacturingorporation C with principal office in a8ati is engage$ in the manufacture of soap e$i*le oil margarine an$ other coconut oil-*ase$ pro$ucts. It has a warehouse inampaloc Que4on use$ as storage space for the copra purchase$ in ampaloc an$ near*(towns *efore the same is shippe$ to a8ati. goes to court to challenge the &ali$it(of the or$inance $eman$ing the refun$ of the storage fees it pai$ un$er protest.

Is the or$inance &ali$) Explain (our answer. ?!C

VII

Len(a International irlines LIC is a foreign corporation organi4e$ un$er the laws of Len(a. It is not license$ to $o *usiness in the ;hilippines. Its commercial airplanes $o notoperate within ;hilippine territor( or ser&ice passengers em*ar8ing from ;hilippineairports. The firm is represente$ in the ;hilippines *( its general agent ;hilippine irlines;C a ;hilippine corporation.

LI sells airplane tic8ets through ; an$ these tic8ets are ser&ice$ *( LI airplanesoutsi$e the ;hilippines. The total sales of airline tic8ets transacte$ *( ; for LI in1


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Ta x a t i o n L a w B a r Q u e s t i o n s - P a g e |

in$i&i$ual an$ 3! for corporate non-resi$ent stoc8hol$ers --- was $e$ucte$ at source an$remitte$ to the BI,.

/n a( 1 1


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a. 'hat is the #all e(ents test #) Explain *riefl(. 2!C

*. 'hat is the #i##ediac% test #) Explain *riefl(. 2!C

c. 'hat is the #rational "asis# test) Explain *riefl(. 2!C

$. 'hat is the effect of the execution *( a taxpa(er of a #wai&er of the statute of limitations# on his $efense of prescription) 2!C

e. 'hat is the *asis for the computation of *usiness tax on contractors un$er theocal %o&ernment o$e) 2!C

f. Aow are retiring *usinesses taxe$ un$er the ocal %o&ernment o$e) 2!C

III

ira$or Inc. a $omestic corporation file$ its nnual Income Tax ,eturn for its taxa*le(ear 200= on pril 1 200


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*. 'as the appeal with the ;asa( ,T file$ on time) Explain. 3!C

PART II

X

True or False. (1% each)

a. %ains reali4e$ *( the in&estor upon re$emption of shares of stoc8 in a mutual

fun$ compan( are exempt from income tax. *. corporation can claim the optional stan$ar$ $e$uction e7ui&alent to ?0! of its

gross sales or receipts as the case ma( *e.

c. ;remium pa(ment for health insurance of an in$i&i$ual who is an emplo(ee in anamount of ;200 per (ear ma( *e $e$ucte$ from gross income if his gross salar( per (ear is not more than ;20000.

$. The Tax o$e allows an in$i&i$ual taxpa(er to pa( in two e7ual installments thefirst installment to *e pai$ at the time the return is file$ an$ the secon$ on or *efore 9ul( 1 of the same (ear if his tax $ue excee$s ;2000.

e. n in$i&i$ual taxpa(er can a$opt either the calen$ar or fiscal perio$ for purposesof filing his income tax return.

f. The capitali4ation rules ma( *e resorte$ to *( the BI, in or$er to compelcorporate taxpa(ers to $eclare $i&i$en$s to their stoc8hol$ers regularl(.

g. Informers rewar$ is su*ect to a final withhol$ing tax of 10!.

h. non-resi$ent alien who sta(s in the ;hilippines for less than 1=0 $a(s $uring thecalen$ar (ear shall *e entitle$ to personal exemption not to excee$ the amountallowe$ to citi4ens of the ;hilippines *( the countr( of which he is su*ect or citi4en.

XI

re the following transactions su*ect to +T) If (es what is the applica*le rate for eachtransaction. tate the rele&ant authorit(>ies for (our answer.

a. onstruction *( :DH onstruction o. of concrete *arriers for the sian"e&elopment Ban8 in /rtigas enter to pre&ent car *om*s from ramming the"B gates along "B &enue in an$alu(ong it(. 3!C

*. all enter operate$ *( a $omestic enterprise in a8ati that han$les exclusi&el(the reser&ations of a hotel chain which are all locate$ in Gorth merica. The

ser&ices are pai$ for in J an$ $ul( accounte$ for with the Bangko Sentral Pilipinas. 3!C

c. ale of orchi$s *( a flower shop which raises its flowers in Taga(ta(. 3!C

XII

Ferremaro Inc. a manufacturer of han$crafte$ shoes maintains its principal officeu*ao Que4on it(. It has *ranches>sales offices in e*u an$ "a&ao. Its factor(

locate$ in ari8ina it( where most of its wor8ers li&e. Its principal office in Que4it( is also a sales office.

ales of finishe$ pro$ucts for calen$ar (ear 200< in the amount of ;10 million were mat the following locations

iC e*u *ranch 2!

iiC "a&ao *ranch 1!

iiiC Que4on it( *ranch 60!

Total 100!

'here shoul$ the applica*le local taxes on the shoes *e pai$) Explain. 3!C

XIII

:DH hipping orporation is a *ranch of an international shipping line with &o(a *etween anila an$ the 'est oast of the .. The compan(s &essels loa$ an$ unlcargoes at the ;ort of anila al*eit it $oes not ha&e a *ranch or sales office in anila. the *ills of la$ing an$ in&oices are issue$ *( the *ranch office in a8ati which is also compan(s principal office.

The it( of anila enacte$ an or$inance le&(ing a 2! tax on gross receipts of shipplines using the ;ort of anila.

an the it( %o&ernment of anila legall( impose sai$ le&( on the corporation) Expl3!C

XIV

inherite$ a two-store( *uil$ing in a8ati from his father a real estate *ro8er in R60s. group of Ti*etan mon8s approache$ an$ offere$ to lease the *uil$ing in or$euse it as a &enue for their Bu$$hist rituals an$ ceremonies. accepte$ the rental ofmillion for the whole (ear.


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The following (ear the it( ssessor issue$ an assessment against for non-pa(ment of real propert( taxes.

Is the assessor ustifie$ in assessing s $eficienc( real propert( taxes) Explain. 3!C

XV

"on e*astian single *ut hea$ of the famil( Filipino an$ resi$ent of ;asig it( $ie$intestate on Go&em*er 1 200


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$i&i$en$ remitte$ to aruso is su*ect to .. withhol$ing tax with respect to a non-resi$ent alien li8e aruso.

a. 'hat will *e (our a$&ice to aruso in or$er to lessen the impact of possi*le$ou*le taxation on the same income) 3!C

*. 'oul$ (our answer in A. *e the same if aruso *ecame a .. immigrant in 200=an$ ha$ *ecome a non-resi$ent Filipino citi4en) Explain the $ifference in

treatment for ;hilippine income tax purposes. 3!CXVIII

B a $omestic corporation entere$ into a software license agreement with :DH a non-resi$ent foreign corporation *ase$ in the .. n$er the agreement which the partiesforge$ in the .. :DH grante$ B the right to use a computer s(stem program an$ toa&ail of technical 8now-how relati&e to such program. In consi$eration for such rightsB agree$ to pa( ! of the re&enues it recei&es from customers who will use an$ appl(the program in the ;hilippines.

"iscuss the tax implication of the transaction. !C

NOTHING FOLLOWS.

2011

Bar Ea!"#a$"o# ues$"o##a"re &or Taa$"o# La'

Se$ A

1C municipalit( ma( le&( an annual a$ &alorem tax on real propert( such as lan$ *uil$ing machiner( an$ other impro&ement onl( if

C the real propert( is within the etropolitan anila rea.

BC the real propert( is locate$ in the municipalit(.

C the "I% authori4es it to $o so.

"C the power is $elegate$ to it *( the pro&ince.

2C nne apa$a a stu$ent acti&ist wants to impugn the &ali$it( of a tax on textmessages. si$e from claiming that the law a$&ersel( affects her since she sen$s messages *( text what ma( she allege that woul$ strengthen her claim to the right to file ataxpa(ers suit)

C That she is entitle$ to the return of the taxes collecte$ from her in case thecourt nullifies the tax measure.

BC That tax mone( is *eing extracte$ an$ spent in &iolation of constitutionall( guarantee$ right to free$om of communication.

C That she is filing the case in *ehalf of a su*stantial num*er of taxpa(ers.

"C That text messages are an important part of the li&es of the people srepresents.

3C There is no taxa*le income until such income is recogni4e$. Taxa*le incom

recogni4e$ when the

C taxpa(er fails to inclu$e the income in his income tax return.

BC income has *een actuall( recei&e$ in mone( or its e7ui&alent.

C income has *een recei&e$ either actuall( or constructi&el(.

"C transaction that is the source of the income is consummate$.

?C Le(ran$ Inc. a ;hilippine corporation sol$ through the local stoc8 exchange 100;"T shares that it *ought 2 (ears ago. Le(ran$ sol$ the shares for ;2 million areali4e$ a net gain of ;200000.00. Aow shall it pa( tax on the transaction)

C It shall $eclare a ;2 million gross income in its income tax return $e$uctits cost of ac7uisition as an expense.

BC It shall report the ;200000.00 in its corporate income tax return a$uste$the hol$ing perio$.

C It shall pa( ! tax on the first ;100000.00 of the ;200000.00 an$ 10! on the remaining ;100000.00.

"C It shall pa( a tax of one-half of 1! of the ;2 million gross sales.

C maretto Inc. importe$ 100 cases of arula wine from outh frica. The shipmwas assesse$ $uties an$ &alue-a$$e$ taxes of ;300000 which maretto Inc. imme$ia pai$. The Bureau of ustoms $i$ not howe&er issue the release papers of the shipm(et since the Foo$ an$ "rug $ministration F"C nee$e$ to test the suita*ilit( of wine for human consumption. Is the Bureau of ustoms at fault for refusing to releaseshipment ust as (et)

C Des *ecause the importation was alrea$( terminate$ as a result of pa(ment of the taxes $ue.

BC Des the Bureau of ustoms is estoppe$ from hol$ing the release of shipment after recei&ing the pa(ment.


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C Go if the amount pai$ as $uties an$ &alue-a$$e$ taxes $ue on the importationwas insufficient.

"C Go *ecause the Bureau of ustoms has not (er issue$ the legal permit for with$rawal pen$ing the F"5s fin$ings.

6C 'hich theor( in taxation states that without taxes a go&ernment woul$ *e paral(4e$for lac8 of power to acti&ate an$ operate it resulting in its $estruction)

C ;ower to $estro( theor(

BC ife*loo$ theor(

C umptuar( theor(

"C (m*iotic $octrine

@C The spouses Aelena an$ Fe$erico wante$ to $onate a parcel of lan$ to their son"on$on who is getting marrie$ in "ecem*er 2011. The parcel of lan$ has a 4onal&aluation of ;?20000.00. 'hat is the most efficient mo$e of $onating the propert()

C The spouses shoul$ first $onate in 2011 a portion of the propert( &alue$ at;20000.00 then sprea$ the ;?00000.00 e7uall( for 2012 2013 201? an$ 201.

BC prea$ the $onation o&er a perio$ of (ears *( the spouses $onating

;100000.00 each (ear from 2011 to 201.

C The spouses shoul$ each $onate a ;110000.00 portion of the &alue of the propert( in 2011 then each shoul$ $onate ;100000.00 in 2012.

"C The spouses shoul$ each $onate a ;100000.00 portion of the &alue of the propert( in 2011 an$ another ;100000.00 each in 2012. Then in 2013 Aelenashoul$ $onate the remaining ;20000.00.

=C ia a compensation income earner file$ her income tax return for the taxa*le (ear 200@ on arch 30 200=. /n a( 20 2011 ia recei&e$ an assessment notice an$ letter of $eman$ co&ering the taxa*le (ear 200@ *ut the postmar8 on the en&elope shows pril10 2011. Aer return is not a false an$ frau$ulent return. an ia raise the $efense of prescription)

C Go. The 3 (ear prescripti&e perio$ starte$ to run on pril 1 200= hence ithas not (et expire$ on pril 10 2011.

BC Des. The 3 (ear prescripti&e perio$ starte$ to run on pril 1 200= hence itha$ alrea$( expire$ *( a( 20 2011.

C Go. The prescripti&e perio$ starte$ to run on arch 30 200= hence th(ear perio$ expire$ on pril 10 2011.

"C Des. ince the 3-(ear prescripti&e perio$ starte$ to run on arch 30 200=alrea$( expire$ *( a( 20 2011.


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an$ taxes propert( pre&iousl( taxe$ transfers for pu*lic use an$ the share of hissur&i&ing spouse in their conugal partnership amounte$ to ;1 *illion. Tong5s gross estatefor ;hilippine estate tax purposes is

C ;20 *illion.

BC ; *illion.

C ;100 *illion.

"C ;= *illion.

13C n8tr($ Inc. *ought a parcel of lan$ in 200< for ;@ million as part of its in&entor(of real properties. In 2010 it sol$ the lan$ for ;12 million which was its 4onal &aluation.In the same (ear it incurre$ a loss of ;6 million for selling another parcel of lan$ in itsin&entor(. These were the onl( transactions it ha$ in its real estate *usiness. 'hich of thefollowing is the applica*le tax treatment)

C n8tr($ shall *e su*ect to a tax of 6! of ;12 million.

BC n8tr($ coul$ $e$uct its ;6 million loss from its ; million gain.

C n8tr($5s gain of ; million shall *e su*ect to the hol$ing perio$.

"C n8tr($5s ;6 million loss coul$ not *e $e$ucte$ from its ; million gain.

1?C plets orporation is registere$ un$er the laws of the +irgin Islan$s. It has extensi&eoperations in outheast sia. In the ;hilippines Its pro$ucts are importe$ an$ sol$ at amar8-up *( its exclusi&e $istri*utor Lim5s Tra$ing Inc. The BI, compile$ a recor$ of allthe imports of Lim from plets an$ impose$ a tax on plets net income $eri&e$ from itsexports to Lim. Is the BI, correct)

C Des. plets is a non-resi$ent foreign corporation engage$ in tra$e or *usinessin the ;hilippines.

BC Go. The tax shoul$ ha&e *een compute$ on the *asis of gross re&enues an$not net income.

C Go. plets is a non-resi$ent foreign corporation not engage$ in tra$e or *usiness in the ;hilippines.

"C Des. plets is $oing *usiness in the ;hilippines through its exclusi&e$istri*utor Lim5s Tra$ing. Inc.

1C In 200


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for the (ear. he spent ;10000.00 for the operation of her *eaut( parlor. For tax purposes her gross income for 2010 is

C ;@0000.00.

BC ;00000.00.

C ;30000.00.

"C ;600000.00.20C Exempte$ from $onors taxation are gifts ma$e

C for the use of the *aranga(.

BC in consi$eration of marriage.

C to a school which is a stoc8 corporation.

"C to a for-profit go&ernment corporation.

21C Fe$erico a Filipino citi4en migrate$ to the nite$ tates some six (ears ago an$ gota permanent resi$ent status or green car$. Ae shoul$ pa( his ;hilippine income taxes on

C the gains $eri&e$ from the sale in alifornia ... of ewelr( he purchase$in the ;hilippines.

BC the procee$s he recei&e$ from a ;hilippine insurance compan( as the sole *eneficiar( of life insurance ta8en *( his father who $ie$ recentl(.

C the gains $eri&e$ from the sale in the Gew Dor8 toc8 Exchange of shares of stoc8 in ;"T a ;hilippine corporation.

"C $i&i$en$s recei&e$ from a two (ear ol$ foreign corporation whose grossincome was $eri&e$ solel( from ;hilippine sources.

22C n example of a tax where the concept of progressi&it( fin$s application is the

C income tax on in$i&i$uals.

BC excise tax on petroleum pro$ucts.

C &alue-a$$e$ tax on certain articles.

"C amusement tax on *oxing exhi*itions.

23C corporation ma( change its taxa*le (ear to calen$ar or fiscal (ear in filing itsannual income tax return pro&i$e$

C it see8s prior BI, appro&al of its propose$ change in accounting perio$.

BC it simultaneousl( see8s BI, appro&al of its new accounting perio$.

C it shoul$ change its accounting perio$ two (ears prior to changing its taxa(ear.

"C its constitution an$ *(-laws authori4es the change.

2?C 'hat is the rule on the taxa*ilit( of income that a go&ernment e$ucational institu$eri&es from its school operations) uch income is

C su*ect to 10! tax on its net taxa*le income as if it is a propriee$ucational institution.

BC Exempt from income taxation if it is actuall( $irectl( an$ exclusi&el( ufor e$ucational purposes.

C su*ect to the or$inar( income tax rates with respect to incomes $eri&e$ fre$ucational acti&ities.

"C Exempt from income taxation in the same manner as go&ernment-owne$ controlle$ corporations.

2C 'hich among the following re$uces the gross estate not the net estateC of a citi4enthe ;hilippines for purposes of estate taxation)

C Transfers for pu*lic use

BC ;ropert( pre&iousl( taxe$

C tan$ar$ $e$uction of ;1 million

"C apital of the sur&i&ing spouse

26C La ;e$ring ati*ag a sole proprietor *u(s an$ sells #8umot at 8ulam*o# *othwhich are su*ect to &alue-a$$e$ tax. ince he is using the calen$ar (ear as his taxa(ear his taxa*le 7uarters en$ on the last $a( of arch 9une eptem*er an$ "ecem*'hen shoul$ La ;e$ring file the +T 7uarterl( return for his gross sales or receipts the perio$ of 9une 1 to eptem*er 30)

C 'ithin 2 $a(s from eptem*er 30

BC 'ithin ? $a(s from eptem*er 30C 'ithin 1 $a(s from eptem*er 30

"C 'ithin 30 $a(s from eptem*er 30

2@C In 9anuar( 2011 the BI, issue$ a ruling that lemen5s &o$8a imports were nsu*ect to increase$ excise tax *ase$ on his claim that his net retail price was onl( ;2


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per @0 milliliter *ottle. This ruling was applie$ to his imports for a( 9une an$ 9ul(2011. In eptem*er 2011 the BI, re&o8e$ its ruling an$ assesse$ him for $eficienc( taxesrespecting his a( 9une an$ 9ul( 2011 &o$8a imports *ecause it $isco&ere$ that his netretail price for the &o$8a was ;20 per *ottle from 9anuar( to eptem*er 2011. "oes theretroacti&e application of the re&ocation &iolate lemen5s right to $ue process as ataxpa(er)

C Des since the presumption is that the BI, ascertaine$ the facts *efore it ma$e

its ruling.

BC Go *ecause he acte$ in *a$ faith when he claime$ a lower net retail pricethan what he actuall( use$.

C Go since he coul$ a&ail of reme$ies a&aila*le for $isputing the assessment.

"C Des since he ha$ alrea$( ac7uire$ a &este$ right in the fa&ora*le BI, ruling.

2=C "on Fortunato a wi$ower $ie$ in a( 2011. In his will he left his estate of ;100million to his four chil$ren. Ae name$ his compa$re "on Epitacio to *e the a$ministrator of the estate. 'hen the BI, sent a $eman$ letter to "on Epitacio for the pa(ment of theestate tax he refuse$ to pa( claiming that he $i$ not *enefit from the estate he not *eingan heir. Forthwith he resigne$ as a$ministrator. s a result of the resignation who ma( *ehel$ lia*le for the pa(ment of the estate tax)

C "on Epitacio since the tax *ecame $ue prior to his resignation.

BC The el$est chil$ who woul$ *e reim*urse$ *( the others.

C ll the four chil$ren the tax to *e $i&i$e$ e7uall( among them.

"C The person $esignate$ *( the will as the one lia*le.

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3?C /n arch 30 200 iguel Foo$s Inc. recei&e$ a notice of assessment an$ a letter of $eman$ on its pril 1 2002 final a$ustment return from the BI,. iguel Foo$s thenfile$ a re7uest for rein&estigation together with the re7uisite supporting $ocuments onpril 2 200. /n 9une 2 200 the BI, issue$ a final assessment re$ucing the amountof the tax $eman$e$. ince iguel Foo$s was satisfie$ with the re$uction it $i$ not $oan(thing an(more. /n pril 1 2010 the BI, garnishe$ the corporation5s *an8 $eposits toanswer for the tax lia*ilit(. 'as the BI, action proper)

C Des. The BI, has (ears from the filing of the protest within which to collect.

BC Des. The BI, has (ears from the issuance of the final assessment withinwhich to collect.

C Go. The taxpa(er $i$ not appl( for a compromise.

"C Go. 'ithout the taxpa(ers prior authorit( the BI, action &iolate$ the Ban8 "eposit ecrec( aw.

3C 'hich among the following taxpa(ers is re7uire$ to use onl( the calen$ar (ear for tax purposes)

C ;artnership exclusi&el( for the $esign of go&ernment infrastructure proectsconsi$ere$ as practice of ci&il engineering.

BC 9oint-stoc8 compan( forme$ for the purpose of un$erta8ing construction proects.

C Business partnership engage$ in energ( operations un$er a ser&ice contractwith the go&ernment.

"C 9oint account cuentas en participacionC engage$ in the tra$ing of mineralores.

36C panflex Intl Inc. recei&e$ a notice of assessment from the BI,. It seasona*l( file$ a protest with all the necessar( supporting $ocuments *ut the BI, faile$ to act on the protest. Thirt( $a(s from the lapse of 1=0 $a(s from the filing of its protest panflex stillhas not ele&ate$ the matter to the T. 'hat reme$( if an( can panflex ta8e)

C It ma( file a motion to a$mit appeal if it coul$ pro&e that its failure to appeal

was $ue to the negligence of counsel.BC It ma( no longer appeal since there is no BI, $ecision from which it coul$appeal.

C It ma( wait for the final $ecision of the BI, on his protest an$ appeal it to theT within 30 $a(s from receipt of such $ecision.

"C Gone. Its right to appeal to the T has prescri*e$.

3@C %erar$o $ie$ on 9ul( 31 2011. Ais estate tax return shoul$ *e file$ within

C six months from filing of the notice of $eath.

BC sixt( $a(s from the appointment of an a$ministrator.

C six months from the time he $ie$ on 9ul( 31 2011.

"C sixt( $a(s from the time he $ie$ on 9ul( 31 2011.

3=C Income from $ealings in propert( real personal or mixe$C is the gain or loss $eri

C onl( from the cash sales of propert(.

BC from cash an$ gratuitous receipts of propert(.

C from sale an$ lease of propert(.

"C onl( from the sale of propert(.

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C nion must show it has faithfull( pai$ taxes *efore 200


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1. Ban8 $eposit mone( with Ban8 B which earns interest that is su*ecte$ to the 20!final withhol$ing tax. t the same time Ban8 is su*ecte$ to the ! gross receipts taxon its interest income on loan transactions to customers. 'hich statement *elow IG/,,ETD $escri*es the transaction)

aC There is $ou*le taxation *ecause two taxes S income tax an$ gross receipts taxare impose$ on the interest incomes $escri*e$ a*o&e an$ $ou*le taxation is prohi*ite$ un$er the 1


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cC 9apanese citi4en who is marrie$ to a Filipino citi4en an$ resi$ing in their famil(home locate$ Fort Bonifacio Taguig it(M

$C "omestic corporation.

=. Interest income of a $omestic commercial *an8 $eri&e$ from a peso loan to a $omesticcorporation in 2010 is

aC u*ect to the 30! income tax *ase$ on its net taxa*le incomeM

*C u*ect to the 20! final withhol$ing taxM

cC u*ect to the @.! final withhol$ing taxM

$C u*ect to 10! final withhol$ing tax.

10! capital gains tax *ase$ on net capital gainM

cC Taxa*le at of 1! stoc8 transaction tax *ase$ on the gross selling price or fair mar8et &alue whiche&er is higher

$C Exempt from income tax

11. n in$i&i$ual who is a real estate $ealer sol$ a resi$ential lot in Que4on it( at a gainof ;100000.00 selling price of ;


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aC That is registere$ as such with the ecurities an$ Exchange ommission an$the Bureau of Internal ,e&enueM

*C That is compose$ of in$i&i$uals who exercise a common professionM

cC That exclusi&el( $eri&es income from the practice of the common professionM

$C That $eri&es professional income an$ rental income from propert( owne$ *( it.

16. The interest expense of a $omestic corporation on a *an8 loan in connection with the

purchase of a pro$uction e7uipment

aC Is not $e$ucti*le from gross income of the *orrower-corporationM

*C Is $e$ucti*le from the gross income of the *orrower-corporation $uring the(ear or it ma( *e capitali4e$ as part of cost of the e7uipmentM

cC Is $e$ucti*le onl( for a perio$ of fi&e (ears from $ate of purchaseM

$C Is $e$ucti*le onl( if the taxpa(er uses the cash metho$ of accounting.

1@. The #all e&ents test# refers to

aC person who uses the cash metho$ where all sales ha&e *een full( pai$ *( the *u(ers thereofM

*C person who uses the installment sales metho$ where the full amount of consi$eration is pai$ in full *( the *u(er thereof within the (ear of saleM

cC person who uses the accrual metho$ where*( an expense is $e$ucti*le for the taxa*le (ear in which all the e&ents ha$ occurre$ which $etermine$ the fact of the lia*ilit( an$ the amount thereof coul$ *e $etermine$ with reasona*leaccurac(M

$C person who uses the complete$ metho$ where*( the construction proect has *een complete$ $uring the (ear the contract was signe$.

1=. ll the items *elow are exclu$e$ from gross income except

aC %ain from sale of long-term *on$s $e*entures an$ in$e*te$nessM

*C +alue of propert( recei&e$ *( a person as $onation or inheritanceM

cC ,etirement *enefits recei&e$ from the %I or accre$ite$ retirement planM

$C eparation pa( recei&e$ *( a retiring emplo(ee un$er a &oluntar( retirement program of the corporate emplo(er.

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22. 'hile he was tra&eling with frien$s r. 9ose Francisco resi$ent Filipino citi4en $ie$on 9anuar( 20 2011 in a alifornia Aospital lea&ing personal an$ real propertieswith mar8et &alues as follows Aouse an$ ot in Que4on it( S ;10 illionM ash in *an8 in alifornia S J10000.00M iti*an8 in Gew Dor8 S J000.00M ash in B;I a8ati S ;? illionM ar in Que4on it( S ;1 illionM hares of stoc8s of pple orporation corporation liste$ in GD toc8 Exchange S J1 N ;hp0. Ais gross estate for the;hilippine estate tax purposes shall *e

aC ;13 illionM *C ;1? illionM

cC ;1 illionM

$C ;16 illion.

23. In 2006 r. +icente Tagle a retiree *ought 10000 " shares that are unliste$ inthe local stoc8 exchange for ;10 per share. In 2010 the sai$ shares ha$ a *oo8 &alue per share of ;60 per share. In &iew of a car acci$ent in 2010 r. +icente Tagle ha$ to sell his" shares *ut he coul$ sell the same onl( for ;0 per share. The sale is su*ect to tax asfollos

aC !>10! capital gains tax on the capital gain from sale of ;?0 per share ;0selling price less ;10 costCM

*C !>10! capital gains tax on the capital gain of ;0 per share arri&e$ at *($e$ucting the cost ;10 per shareC from the *oo8 &alue ;60 per shareCM

cC !>10! capital gains tax on the capital gain from sale of ;?0 per share ;0selling price less ;10 costC plus $onors tax on the excess of the fair mar8et &alueof the shares o&er the consi$erationM

$C %ra$uate$ income tax rates of ! to 32! on the net taxa*le income from thesale of the shares.

2?. /n 9anuar( 10 2011 aria ,e(es single-mother $onate$ cash in the amount of ;0000.00 to her $aughter ristina an$ on "ecem*er 20 2011 she $onate$ another ;0000.00 to ristina. 'hich statement is correct)

aC aria ,e(es is su*ect to $onors tax in 2011 *ecause gross gift is;100000.00M

*C aria ,e(es is exempt from $onors tax in 2011 *ecause gross gift is;100000.00M

cC aria ,e(es is exempt from $onors tax in 2011 onl( to the extent;0000.00M

$C aria ,e(es is exempt from $onors tax in 2011 *ecause the $onee is minor

2. 9ose ,amos single $ie$ of a heart attac8 on /cto*er 10 2011 lea&ing a resi$enhouse an$ lot with a mar8et &alue of ;1.= illion an$ cash of ;100000.00. Funeexpenses pai$ amounte$ to ;20000.00

aC Ais estate will *e exempt from estate tax *ecause the net estate is 4eroM *C Ais estate will *e su*ect to estate tax *ecause net estate is ;160000.00M

cC Ais estate will *e su*ect to estate tax *ecause net estate is ;[email protected]

$C Ais estate will *e su*ect to estate tax *ecause net estate is ;=00000.00.

26. ale of resi$ential house an$ lot *( an official of a $omestic corporation to anotofficial in the same corporation for a consi$eration of ;2. illion in 2011 is

aC Exempt from +T *ecause the gross sales $o not excee$ ;2. illionM

*C Exempt from +T *ecause the propert( sol$ is a capital asset regar$less ofgross selling priceM

cC Exempt from +T *ecause the seller is not a person engage$ in real es

*usinessM

$C Taxa*le at 12! +T output tax on the gross selling price of ;2. illion.

2@. n importer of flowers from a*roa$ in 2011

aC Is lia*le for +T if it registers as a +T personM

*C Is exempt from +T *ecause the goo$s are treate$ as agricultural pro$uctsM

cC Is exempt from +T pro&i$e$ that his total importation of flowers $oes excee$ ;1. illionM

$C Is lia*le for +T $espite the fact that it $i$ not register as a +T person an$total annual sales of flowers $o not excee$ ;1. illion.

2=. +T-registere$ contractor performe$ ser&ices for his customer in 2010 an$ *ihim ;11.2 illion *ro8en $own as follows ;10 illion S cost of ser&ices plus ;illion 12! +T. /f the contract price of ;10 illion onl( ;= illion plus +T therewas recei&e$ from the customer in 2010 an$ the *alance of ;? illion plus +T wrecei&e$ *( the contractor in 2011. Aow much is the taxa*le gross receipts of contractor for 2010 for +T purposes)



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aC ;10 illion the total cost of ser&ices performe$ in 2010M

*C ;= illion the amount recei&e$ from the customer in 2010M

cC ;= illion plus +T recei&e$ from the customer in 2010M

$C ;11.2 illion the total cost of ser&ices performe$ plus 12! +T.

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Ta x a t i o n L a w B a r Q u e s t i o n s P a g e |

$C Exempt from *oth the 12! +T an$ @! gross receipts tax.

3. 'hich transaction *elow is su*ect to +T)

aC ale of &egeta*les *( a farmer in Baguio it( to a &egeta*le $ealerM

*C ale of &egeta*les *( a &egeta*le $ealer in Baguio it( to another &egeta*le$ealer in Que4on it(M

cC ale of &egeta*les *( the Q &egeta*le $ealer to a restaurant in anilaM

$C ale of &egeta*les *( the restaurant operator to its customers.

36. 'hich importation in 2011 is su*ect to +T)

aC Importation of fuels *( a person engage$ in international shipping worth ;20illionM

*C Importation of raw unprocesse$ refrigerate$ Lo*e *eef from 9apan *( a *eef $ealer for sale to hotels in a8ati it( with a fair mar8et &alue of ;10 illionM

cC Importation of wines *( a wine $ealer with a fair mar8et &alue of ;2 million for sale to hotels in a8ati it(M

$C Importation of *oo8s worth ; illion an$ school supplies worth ;1.2 million.

3@. Input tax is a&aila*le to a +T-registere$ *u(er pro&i$e$ that

aC The seller is a +T-registere$ personM

*C The seller issues a +T in&oice or official receipt which separatel( in$icatesthe +T componentM

cC The goo$s or ser&ice is su*ect to or exempt from +T *ut the sale is co&ere$ *( a +T in&oice or receipt issue$ *( +T-registere$ personM

$C The name an$ TIG of the *u(er is not state$ or shown in the +T in&oice or receipt

'hich statement shown a*o&e is G/T correct)

3=. laim for tax cre$it or refun$ of excess input tax is a&aila*le onl( to

aC +T-registere$ person whose sales are ma$e to em*assies of foreigngo&ernments an$ nite$ Gations agencies locate$ in the ;hilippines without theBI, appro&al of the application for 4ero-ratingM

*C n( person who has excess input tax arising from local purchases of taxa*legoo$s an$ ser&icesM

cC +T-registere$ person whose sales are ma$e to clients in the ;hilippinesM

$C +T-registere$ person whose sales are ma$e to customers outsi$e ;hilippines an$ who issue$ +T in&oices or receipts with the wor$s #HE,,TE" E# imprinte$ on the sales in&oices or receipts.

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Q g |

*C he sells &egeta*les an$ fruits in her stall an$ her gross sales $uring the (ear is;1 illionM

cC he sells canne$ goo$s processe$ coconut oils an$ cut flowers in her stall an$her gross sales $uring the (ear is ;2. illionM

$C he sells li&e fish shrimps an$ cra*s an$ her gross sales $uring the (ear is ;illion.

?3. 'hich statement is FE un$er the +T law)aC +T-registere$ person will *e su*ect to +T for his taxa*le transactionsregar$less of his gross sales or receiptsM

*C person engage$ in tra$e or *usiness selling taxa*le goo$s or ser&ices mustregister as a +T person when his gross sales or receipts for the (ear 2011 excee$;1. illionM

cC person who issue$ a +T-registere$ in&oice or receipt for a +T-exempttransaction is lia*le to the 12! +T as a penalt( for the wrong issuance thereofM

$C /nce a $octor of me$icine exercises his profession $uring the (ear he nee$s toregister as a +T person an$ to issue +T receipts for professional fees recei&e$.

??. The ommissioner of Internal ,e&enue ma( G/T in7uire into the *an8 $eposits of a

taxpa(er except

aC 'hen the taxpa(er files a frau$ulent returnM

*C 'hen the taxpa(er offers to compromise the assesse$ tax *ase$ on erroneousassessmentM

cC 'hen the taxpa(er offers to compromise the assesse$ tax *ase$ on financialincapacit( to pa( an$ he authori4es the ommissioner in writing to loo8 into his *an8 recor$sM

$C 'hen the taxpa(er $i$ not file his income tax return for the (ear.

?. The ommissioner of Internal ,e&enue issue$ a BI, ruling to the effect that thetransaction is lia*le to income tax an$ &alue a$$e$ tax. pon receipt of the ruling ataxpa(er $oes not agree thereto. 'hat is his proper reme$()

aC File a petition for re&iew with the ourt of Tax ppeals within thirt( 30C $a(sfrom receipt thereofM

*C File a motion for reconsi$eration with the ommissioner of Internal ,e&enueM

cC File an appeal to the ecretar( of Finance within thirt( 30C $a(s from recethereofM

$C File an appeal to the ecretar( of 9ustice within thirt( 30C $a(s from recethereof.

?6. /n pril 1 2011 the ommissioner of Internal ,e&enue maile$ *( registere$ mthe final assessment notice an$ the $eman$ letter co&ering the calen$ar (ear 200@ withQ ;ost /ffice. 'hich statement is correct)

aC The assessment notice is &oi$ *ecause it was maile$ *e(on$ the prescript perio$M

*C The assessment notice is &oi$ *ecause it was not recei&e$ *( the taxpawithin the three-(ear perio$ from the $ate of filing of the tax returnM

cC The assessment notice is &oi$ if the taxpa(er can show that the same wrecei&e$ onl( after one 1C month from $ate of mailingM

$C The assessment notice is &ali$ e&en if the taxpa(er recei&e$ the same after three-(ear perio$ from the $ate of filing of the tax return.

?@. preliminar( ssessment Gotice ;GC is G/T re7uire$ to *e issue$ *( the B *efore issuing a Final ssessment Gotice FGC on one of the following cases

aC 'hen a taxpa(er $oes not pa( the 2010 $eficienc( income tax lia*ilit( on *efore 9ul( 1 of the (earM

*C 'hen the fin$ing for an( $eficienc( tax is the result of mathematical errothe computation of the tax as appearing on the face of the returnM

cC 'hen a $iscrepanc( has *een $etermine$ *etween the &alue a$$e$ tax pai$ the amount $ue for the (earM

$C 'hen the amount of $iscrepanc( shown in the etter Gotice is not pai$ witthirt( 30C $a(s from $ate of receipt.

?=. 'hen a protest against the $eficienc( income tax assessment was $enie$ *( the B,egional "irector of Que4on it( the appeal to the ourt of Tax ppeals must *e file$a taxpa(er

aC If the amount of *asic tax assesse$ is ;100000.00 or moreM

*C If the amount of *asic tax assesse$ is ;300000.00 or moreM

cC If the amount of *asic tax assesse$ is ;00000.00 or moreM

$C If the amount of *asic tax assesse$ is ;1 illion or moreM



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*C ust *e $one successi&el( first *( $istraint an$ then *( le&(M

cC utomaticall( co&ers the *an8 $eposits of a $elin7uent taxpa(erM

$C a( *e $one onl( once $uring the taxa*le (ear.

@. The prescripti&e perio$ to file a criminal action is

aC Ten 10C (ears from the $ate of $isco&er( of the commission of frau$ or non-filing of tax returnM

*C Fi&e C (ears from the $ate of issuance of the final assessment noticeM

cC Three 3C (ears from the filing of the annual tax returnM

$C Fi&e C (ears from the commission of the &iolation of the law an$ if the same *e not 8nown at the time from the $isco&er( thereof an$ the institution of u$icial procee$ings for its in&estigation an$ punishment.

=. The accuse$s mere reliance on the representations ma$e *( his accountant with$eli*erate refusal or a&oi$ance to &erif( the contents of his tax return an$ to in7uire on itsauthenticit( constitutes

aC imple negligenceM

*C %ross negligenceM

cC 'illful *lin$nessM

$C Excusa*le negligence.


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@1. Importation of goo$s is $eeme$ terminate$

aC 'hen the customs $uties are pai$ e&en if the goo$s remain within the customs premisesM

*C 'hen the goo$s are release$ or with$rawn from the customs house upon pa(ment of the customs $uties or with legal permit to with$rawM

cC 'hen the goo$s enter ;hilippines territor( an$ remain within the customshouse within thirt( 30C $a(s from $ate of entr(M

$C 'hen there is part pa(ment of $uties on the importe$ goo$s locate$ in thecustoms area.

@2. protest against an assessment issue$ *( the ollector of ustoms for unpai$ customs$uties on importe$ goo$s shall *e file$ with

aC The ommissioner of ustomsM

*C The ,egional Trial ourtM

cC The ourt of Tax ppealsM

$C The ollector of ustoms.

@3. The $utia*le &alue of an importe$ article su*ect to an ad (alore# rate of $ut( un$er

existing law shall *eaC The home consumption &alueM

*C The total &alueM

cC The total lan$e$ costM

$C The transaction &alue.

@?. The importe$ articles shall in an( case *e su*ect to the regular ph(sical examinationwhen

aC The importer $isagrees with the fin$ings as containe$ in the go&ernmentsur&e(ors reportM

*C The num*er weight an$ nature of pac8ages in$icate$ in the customs entr(

$eclaration an$ supporting $ocuments $iffer from that in the manifestM

cC The container is not lea8ing or $amage$M

$C The shipment is co&ere$ *( alert>hol$ or$ers issue$ pursuant to an existingor$er.

@. 'hich cases are appeala*le to the T)

aC "ecisions of the ecretar( of Finance in cases in&ol&ing lia*ilit( for custo$uties sei4ure $etention or release of propert( affecte$M

*C "ecisions of the ommissioner of ustoms in cases in&ol&ing lia*ilit(customs $uties sei4ure $etention or release of propert( affecte$M

cC "ecisions of the ollector of ustoms in cases in&ol&ing lia*ilit( for custo$uties sei4ure $etention or release of propert( affecte$M

$C "ecisions of the BI, ommissioner in cases in&ol&ing lia*ilit( for custo$uties sei4ure $etention or release of propert( affecte$.

NOTIN* FOLLOWS

AN+ IN ,OUR ANSWER SEET.

TERE IS NO NEE+ TO RETURN TIS UESTIONNAIRE TO E

WAT-ER.

/1 BAR EXA0INATIO

TAXATION LAW

1? /cto*er 2012 330 ;..- ;..

Se$ B

ESSA, T,PE UESTIO

INSTRU-TIONS

The following 7uestionnaire consists of ten 10C 7uestions num*ere$ I to :C containeI: 6C pages.

Begin (our answer to each num*ere$ 7uestion on a separate pageM an answer to a su7uestion>s un$er the same num*er ma(*e written continuousl( on the same page asuccee$ing pages until complete$.

nswer the 7uestion $irectl( an$ concisel(. "o not repeat the 7uestion. 'rite legi*l(.

AG" IG D/, G/TEB//L. TAE,E I G/ GEE" T/ ,ET,G TQETI/GGI,E T/ TAE AE" 'TAE,.

%//"LUUU

VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV 0ARTIN S. VILLARA0A2



37/49

)*airperson+,1+ Bar -&a#inations )o##ittee

PLEASE -E-4 TAT TIS SET -ONTAINS SEVEN (5) PA*ES (IN-LU+IN*

TIS PA*E).

WARNIN*6 NOT FOR SALE OR UNAUTORI7E+ USE

TAXATION LAW

I

nchor Ban8ing orporation which was organi4e$ in 2000 an$ existing un$er the laws of the ;hilippines an$ owne$ *( the ( Famil( of a8ati it( set up in 2010 a *ranch officein hanghai it( hina to ta8e a$&antage of the presence of man( Filipino wor8ers inthat area an$ its *ooming econom(. "uring the (ear the *an8 management $eci$e$ not toinclu$e the ;20 illion net income of the hanghai Branch in the annual ;hilippineincome tax return file$ with the BI, which showe$ a net taxa*le income of ;30 illion *ecause the hanghai Branch is treate$ as a foreign corporation an$ is taxe$ onl( onincome from sources within the ;hilippines an$ since the loan an$ other *usinesstransactions were $one in hanghai these incomes are not taxa*le in the ;hilippines.

aC Is the *an8 correct in exclu$ing the net income of its hanghai Branch in the

computation of its annual corporate income tax for 2010) Explain (our answer.!C

*C houl$ the hanghai Branch of nchor Ban8 remit profit to its Aea$ /ffice inthe ;hilippines in 2011 is the *ranch lia*le to the 1! *ranch profit remittancetax impose$ un$er ection 2= CC of the 1


38/49

aC Aow much is the cost *asis of the ol$ car to r. guirre) Explain (our answer 2!C

*C 'hat is the nature of the ol$ car S capital asset or or$inar( asset) Explain (our answer. 3!C

cC Is r. guirre lia*le to pa( income tax on the gain from the sale of his ol$ car)Explain (our answer. !C

V

pouses ;a*lo %on4ales an$ Teresita %on4ales *oth resi$ent citi4ens ac7uire $uring their marriage a resi$ential house an$ lot locate$ in a8ati it( which is *eing lease$ to atenant for a monthl( rental of ;100000.00. r. ;a*lo %on4ales is the ;resi$ent of ;%orporation an$ he recei&es ;0000.00 salar( per month. The spouses ha&e onl( one 1Cminor chil$. In late 9une 2010 he was imme$iatel( *rought to the hospital *ecause of theheart attac8 an$ he was pronounce$ $ea$ on 9une 30 2010.'ith no lia*ilities the estate of the late ;a*lo %on4ales was settle$ extra-u$iciall( in earl( 2011.

aC Is r. ;a*lo %on4ales re7uire$ to file income tax for 2010) If so how muchincome must he $eclare for the (ear) Aow much personal an$ a$$itionalexemption is he entitle$ to) Explain (our answer. !C

*C Is rs. Teresita %on4ales re7uire$ to file income tax return fot 2010) If so

how much income must she $eclare for the (ear) Aow much personal exemptionis she entitle$ to) Explain (our answer. !C

cC Is the Estate of the late ;a*lo %on4ales re7uire$ to file income tax return for 2010) If so how much income must it $eclare for the (ear) Aow much personalexemption is it entitle$ to) Explain (our answer. !C

VI

The BI, issu$e in 2010 a final assessment notice an$ $eman$ letter against : orporationco&ering $eficienc( income tas for the (ear 200= in the amount of ;10 illion. :orporation earlier re7ueste$ the a$&ice of a law(er on whether or not it shoul$ file are7uest for reconsi$eration or a re7uest for rein&estigation. The law(er sai$ it $oes notmatter wheteher the protest files against the assessment is a re7uest for reconsi$eration or a re7uest for rein&estigation *ecause it has same conse7uences or implications.

aC 'hat are the $ifferences *etween a re7uest for reconsi$eration an$ a re7uest for rein&estigation) !C

*C "o (ou agree with the a$&ice of the law(er) Explain (our answer !C

VII

aC a( the *an8 $eposits S peso an$ foreign currenc( of the an in$i&i$ual taxpa(er$isclose$ *( a commercial *an8 to the ommissioner of Internal ,e&enue in connectwith a tax in&estigation *eing con$ucte$ *( re&enue officials without &iolating rele&ant *an8 secrec( laws) Explain (our answer. !C

*C In 2011 the ommissioner of the .. Internal ,e&enue er&ice I,C re7ueste$writing the ommissioner of Internal ,e&eneu to get the informatrion from a *an8 in ;hilippines regar$ing the $eposits of a .. iti4en resi$ing in the ;hilippines whoun$er examiniation *( the officials of the I, pursuant to the -;hilippine TTreat( an$ othert existing laws. houl$ the BI, ommissioner agree to o*tain suinformarion from the *an8 an$ pro&i$e the same to the I,) Explain (our answer. !C

cC Is the *an8 secrec( law7 in the ;hilippines &iolate$ when the BI, issues a 'arran%arnishment $irecte$ against a $omestic *an8 re7uiring it not to allow an( with$rawfrom an( existing *an8 $eposit of he $elin7uent taxpa(er mentione$ in the 'arrant anfree4e the same until the tax $elin7uenc( of sai$ taxpa(er is settle$ with the BI,) Exp(our answer. !C

VIII

In the examination con$ucte$ *( the re&enue officials against the corporate taxpa(er2010 the BI, issue$ a final assessment notice an$ $eman$ letter which states #Ire7ueste$ that the a*o&e $eficienc( tax *e pai$ imme$iatel( upon receipt hereof inclus

of penalties inci$ent to $elin7uenc(. This is our final $ecision *ase$ on in&estigation(ou $isagree (ou ma( appeal this final $ecision within thirt( 30C $a(s from recehereof otherwise sai$ $eficienc( tax assessment shall *ecome final executor( $eman$a*le.# The assessment was imme$iatel( appeale$ *( the taxpa(er to the ourTax ppeals without filing its protest against the assessment an$ without a $enial ther *( the BI,. If (ou were the u$ge woul$ (our $en( the petition for re&iew file$ *(taxpa(er an$ consi$er the case as prematurel( file$) Explain (our answer !C

IX

/n pril 16 2012 the corporation file$ its annual corporate income tax return for 20showing an o&erpa(ment of income tax of ;1 illion. 'hich is to *e carrie$ o&er to succee$ing (earsC. /n a( 1 2012 the corporation sought a$&ice from (ou an$ sthat it contemplates to file an amen$e$ return for 2011 which shows that instea$ of ca

o&er of the execss income tax pa(ment the same shall *e consi$enre$ as a claim forrefun$ an$ the small *ox shown as #refun$# in the return will *e fille$ up. 'ithi a (ethe corporation will file the formal re7uest for refun$ for the excess pa(ment.

aC 'ill (ou recommen$ to the corporation such a course of action an$ ustif( the amen$e$ return is the latest official act of the corporation as to how it m



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treat such o&erpa(ment of tax or shoul$ (ou consi$er the option grante$ totaxpa(ers as irre&oca*le once pre&iousl( exercise$ *( it) Explain (our answer.!C

*C houl$ the petition for re&iew file$ with the T on the *asisof the amen$e$tax return *e $enie$ *( the BI, an$ the T coul$ the corporationstill carr( o&er such excess pa(ment of income tax in the succee$ing (ears consi$ering that thereis no precripti&e perio$ pro&i$e$ for in the income tax law with respect to carr(o&er of excess income tax pa(ments) Explain (our answer. !C

X

Explain the following statements

aC The ac7uittal of the taxpa(er in a criminal action un$er the Tax o$e $oes notnecessaril( result in a exeoneration of sai$ taxpa(er from his ci&il lia*ilit( to pa(taxes. 3!C

*C houl$ the accuse$ *e foun$ guilt( *e(on$ reasona*le $ou*t for &iolation of ection 2 of the Tax o$e for failure to file tax return or to to sppl( correctinformationC the imposition of the ci&il lia*ilit( *( the T shoul$ *e automatican$ no assessment notice from the BI, is necessar() 2!C

NOTIN* FOLLOWS

2013

ESSA, UESTIONS

I.

In its final a$ustment return for the 2010 taxa*le (ear B orp. ha$ excess tax cre$itsarising from its o&er-withhol$ing of income pa(ments. It opte$ to carr( o&er the excesstax cre$its to the following (ear. u*se7uentl( B orp. change$ its min$ an$ applie$for a refun$ of the excess tax cre$its.

'ill the claim for refun$ prosper) 6!C

II.

group of philanthropists organi4e$ a non-stoc8 non-profit hospital for charita*le purposes to pro&i$e me$ical ser&ices to the poor. The hospital also accepte$ pa(ing patients although none of its income accrue$ to an( pri&ate in$i&i$ualM all income were plowe$ *ac8 for the hospital5s use an$ not more than 30! of its fun$s were use$ for a$ministrati&e purposes.

Is the hospital su*ect to tax on its income) If it is at what rate) 6!C

III.

B orporation is registere$ as a hol$ing compan( an$ has an office in the it(a8ati. It has no actual *usiness operations. It in&este$ in another compan( an$earnings are limite$ to $i&i$en$s from this in&estment interests on its *an8 $eposits aforeign exchange gains from its foreign currenc( account. The it( of a8ati assesB orporation as a contractor or one that sells ser&ices for a fee. Is the it( of a8

correct) 6!C

I+.

tt(. %am*ino is a partner in a general professional partnership. The partnership compuits gross re&enues claims $e$uctions allowe$ un$er the Tax o$e an$ $istri*utes theincome to the partners inclu$ing tt(. %am*ino in accor$ance with its articles partnership.

In filing his own income tax return tt(. %am*ino claime$ $e$uctions that the partners$i$ not claim such as purchase of law *oo8s entertainment expenses car insurance acar $epreciation. The BI, $isallowe$ the $e$uctions.

'as the BI, correct) 6!C

+.

r. gustin @ (ears ol$ an$ suffering from an incura*le $isease $eci$e$ to sell &alua*le an$ sufficient consi$eration a house an$ lot to his son. Ae $ie$ one (ear later.

In the settlement of r. gustin5s estate the BI, argue$ that the house an$ lot wtransferre$ in contemplation of $eath an$ shoul$ therefore form part of the gross estateestate tax purposes.

Is the BI, correct) @!C

+I.

/n /cto*er 1 200 B orp. importe$ 1000 8ilos of steel ingots an$ pai$ custo$uties an$ +T to the Bureau of ustoms on the importation. /n Fe*ruar( 1@ 200


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:DH aw /ffices a law partnership in the ;hilippines an$ a +T-registere$ taxpa(errecei&e$ a 7uer( *( e-mail from %ains*urg orporation a corporation organi4e$ un$er thelaws of "elaware *ut the e-mail came from alifornia where %ains*urg has an office.%ains*urg has no office in the ;hilippines an$ $oes no *usiness in the ;hilippines.

:DH aw /ffices ren$ere$ its opinion on the 7uer( an$ *ille$ %ains*urg J1000 for the opinion. %ains*urg remitte$ its pa(ment through iti*an8 which con&erte$ theremitte$ J1 000 to pesos an$ $eposite$ the con&erte$ amount in the :DH aw /fficesaccount.

'hat are the tax implications of the pa(ment to :DH aw /ffices in terms of +T an$income taxes) @!C

+III.

r. ma$o lease$ a piece of lan$ owne$ *( the unicipalit( of ;inagsa*itan an$ *uilt awarehouse on the propert( for his *usiness operations. The unicipal ssessor assesse$r. ma$o for real propert( taxes on the lan$ an$ the warehouse. r. ma$o o*ecte$ tothe assessment conten$ing that he shoul$ not *e as8e$ to pa( realt( taxes on the lan$since it is municipal propert(.

'as the assessment proper) !C

I:.

In the settlement of the estate of r. Bar*era who $ie$ intestate his wife renounce$ her inheritance an$ her share of the conugal propert( in fa&or of their chil$ren. The BI, $etermine$ that there was a taxa*le gift an$ thus assesse$ rs. Bar*era as a $onor.

'as the BI, correct) @!C

:.

In 2010 pursuant to a etter of uthorit( C issue$ *( the ,egional "irector r.*ce$e was assesse$ $eficienc( income taxes *( the BI, for the (ear 2000ULTIPLE -OI-E UESTIONS

I. B orp. was $issol&e$ an$ li7ui$ating $i&i$en$s were $eclare$ an$ pai$ to stoc8hol$ers.

'hat tax conse7uence follows) 1!C

C B orp. shoul$ $e$uct a final tax of 10! from the $i&i$en$s.

BC The stoc8hol$ers shoul$ $eclare their gain from their in&estment an$ income tax at the or$inar( rates.

C The $i&i$en$s are exempt from tax.

"C B orp. shoul$ withhol$ a 10! cre$ita*le tax.

II. % orp. secure$ an income tax holi$a( for (ears as a pioneer in$ustr(. /n fourth (ear of the tax holi$a( % orp. $eclare$ an$ pai$ cash $i&i$en$s tostoc8hol$ers all of whom are in$i&i$uals.

re the $i&i$en$s taxa*le) 1!C

C The $i&i$en$s are taxa*leM the tax exemption of % orp. $oes not extto its stoc8hol$ers.

BC The $i&i$en$s are tax exempt *ecause of % orp.5s income tax holi$a(.

C The $i&i$en$s are taxa*le if the( excee$ 0! of % orp.5s retaiearnings.



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"C The $i&i$en$s are exempt if pai$ *efore the en$ of % orp.5s fiscal (ear.

III. r. las sells shoes in a8ati through a retail store. Ae pa(s the +T on his grosssales to the BI, an$ the municipal license tax *ase$ on the same gross sales to the it( of a8ati. Ae comes to (ou for a$&ice *ecause he thin8s he is *eing su*ecte$ to $ou*letaxation.

'hat a$&ice will (ou gi&e him) 1!C

C Des there is $ou*le taxation an$ it is oppressi&e.

BC The it( of a8ati $oes not ha&e this power.

C Des there is $ou*le taxation an$ this is illegal m the ;hilippines.

"C "ou*le taxation is allowe$ where one tax is impose$ *( the nationalgo&ernment an$ the other *( the local go&ernment.

I+. ongress passe$ a sin tax law that increase$ the tax rates on cigarettes *( 1000!. Thelaw was thought to *e sufficient to $ri&e man( cigarette companies out of *usiness an$was 7uestione$ in court *( a cigarette compan( that woul$ go out of *usiness *ecause itwoul$ not *e a*le to pa( the increase$ tax.

The cigarette compan( is VVVVVVVVVV 1!C

C wrong *ecause taxes are the life*loo$ of the go&ernment

BC wrong *ecause the law recogni4es that the power to tax is the power to$estro(

C correct *ecause no go&ernment can $epri&e a person of his li&elihoo$

"C correct *ecause ongress in this case excee$e$ its power to tax

+. r. l&are4 is in the retail *usiness. Ae recei&e$ a $eficienc( tax assessment from theBI, containing onl( the computation of the $eficienc( tax an$ the penalties without an(explanation of the factual an$ legal *ases for the assessment.

Is the assessment &ali$) 1!C

C The assessment is &ali$M all that r. l&are4 has to 8now is the amount of thetax.

BC The assessment is in&ali$M the law re7uires a statement of the facts an$ the lawupon which the assessment is *ase$.

C The assessment is &ali$ *ut r. l&are4 can still contest it.

"C The assessment is in&ali$ *ecause r. l&are4 has no wa( to $etermine ifcomputation is erroneous.

+I. In 2010 r. ;laton sent his sister Aelen J1 000 &ia a telegraphic transfer throughBan8 of ;I. The *an85s remittance cler8 ma$e a mista8e an$ cre$ite$ Aelen wJ1000000 which she promptl( with$rew. The *an8 $eman$e$ the return of mista8enl( cre$ite$ excess *ut Aelen refuse$. The BI, entere$ the picture in&estigate$ Aelen.

'oul$ the BI, *e correct if it $etermines that Aelen earne$ taxa*le income un$er thfacts) 1!C

C Go she ha$ no income *ecause she ha$ no right to the mista8enl( cre$ifun$s.

BC Des income is income regar$less of the source.

C Go it was not her fault that the fun$s in excess of J1000 were cre$ite$ to h

"C Go the fun$s in excess ofJ1000 were in effect $onate$ to her.

+II. The municipalit( of an Isi$ro passe$ an or$inance imposing a tax on installatmanagers. t that time there was onl( one installation manager in the municipalit(M thonl( he woul$ *e lia*le for the tax.

Is the law constitutional) 1!CC It is unconstitutional *ecause it clearl( $iscriminates against this person.

BC It is unconstitutional for lac8 of legal *asis.

C It is constitutional as it applies to all persons in that class.

"C It is constitutional *ecause the power to tax is the power to $estro(.

+III. :DH orporation manufactures glass panels an$ is almost at the point of insol&enIt has no more cash an$ all it has are unsol$ glass panels. It recei&e$ an assessment frthe BI, for $eficienc( income taxes. It wants to pa( *ut $ue to lac8 of cash it see permission to pa( in 8in$ with glass panels.

houl$ the BI, grant the re7ueste$ permission) 1!C

C It shoul$ grant permission to ma8e pa(ment con&enient to taxpa(ers.

BC It shoul$ not grant permission *ecause a tax is generall( a pecuniar( *ur$e

C It shoul$ grant permissionM otherwise :DH orporation woul$ not *e a*l pa(.


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43/49

:I+. The spouses 9un an$ El&ira an$o&al purchase$ a piece of lan$ for ;000000 an$inclu$e$ their two 2C minor chil$ren as co-purchasers in the "ee$ of *solute ale. Theommissioner of Internal ,e&enue I,C rule$ that there was an implie$ $onation an$assesse$ $onors5 taxes against the spouses.

,ule on the I,5s action. 1!C

C The I, is wrongM a $onation must *e express.

BC The I, is wrongM financial capacit( is not a re7uirement for a &ali$ sale.

C The I, is correctM the amount in&ol&e$ is huge an$ ultimatel( en$s up withthe chil$ren.

"C The I, is correctM there was animus $onan$i since the chil$ren ha$ nofinancial capacit( to *e co-purchasers.

:+. ;heleco is a power generation an$ $istri*ution compan( operating mainl( from theit( of Taguig. It owns electric poles which it also rents out to other companies that use poles such as telephone an$ ca*le companies. Taguig passe$ an or$inance imposing a feee7ui&alent to 1! of the annual rental for these poles. ;heleco 7uestione$ 5the legalit( of the or$inance on the groun$ that it imposes an income tax which local go&ernment units%sC are prohi*ite$ from imposing.

,ule on the &ali$it( of the or$inance. 1!C

C The or$inance is &oi$M the fee is *ase$ on rental income an$ is therefore a taxon income.

BC The or$inance is &ali$ as a legitimate exercise of police power to regulateelectric poles.

C The or$inance is &oi$M 1! of annual rental is excessi&e an$ oppressi&e.

"C The or$inance is &ali$M an % ma( impose a tax on income.

:+I. leta sue$ Bo*o( for *reach of promise to marr(. Bo*o( lost the case an$ $ul( pai$the court5s awar$ that inclu$e$ among others ;l00000 as moral $amages for the mentalanguish leta suffere$.

"i$ leta earn a taxa*le income) 1!C

C he ha$ a taxa*le income of ;100000 since income is income from whate&er source.

BC he ha$ no taxa*le income *ecause it was a $onation.

C he ha$ taxa*le income since she ma$e a profit.

"C he ha$ no taxa*le income since moral $amages are compensator(.

:+II. r. a(uga $onate$ his resi$ential house an$ lot to his son an$ $ul( pai$ $onor5s tax. In the "ee$ of "onation r. a(uga expressl( reser&e$ for himself usufruct o&er the propert( for as long as he li&e$.

"escri*e the $onate$ propert( from the taxation perspecti&e. 1!C

C The propert( will form part of r. a(uga5s gross estate when he $ies.

BC The propert( will not fom1 part of r. a(uga5s gross estate when he $ *ecause he pai$ the $onor5s tax.

C The propert( will form part of r. a(uga5s gross estate *ecause he $ie$ safter the $onation.

"C The propert( will not form part of r. a(uga5s gross estate *ecause it islonger his.

:+III. r. H ma$e an importation which he $eclare$ at the Bureau of ustoms B/#se$ Truc8 ,eplacement ;arts#. pon in&estigation the container &ans containe$units of ;orsche an$ Ferrari cars.

haracteri4e r. H5s action. 1!C

C r. H committe$ smuggling.

BC r. H $i$ not commit smuggling *ecause he su*mitte$ his shipment to Bexamination.

C r. H onl( ma$e a mis$eclaration *ut $i$ not commit smuggling.

"C r. H $i$ not commit smuggling *ecause the shipment has not left customs area.

:I:. r. was preparing his income tax return an$ ha$ some $ou*t on whethecommission he earne$ shoul$ *e $eclare$ for the current (ear or for the succee$ing (eAe sought the opinion of his law(er who a$&ise$ him to report the commission in succee$ing (ear. Ae hee$e$ his law(er5s a$&ice an$ reporte$ the commission in succee$ing (ear. The law(er5s a$&ice turne$ out to *e wrongM in r. 5s petition agaithe BI, assessment the court rule$ against r. .

Is r. guilt( of frau$) 1!C

C r. is not guilt( of frau$ as he simpl( followe$ the a$&ice of his law(er.

BC r. is guilt( of frau$M he $eli*eratel( $i$ not report the commission in current (ear when he shoul$ ha&e $one so.



44/49

C r. 5s law(er shoul$ pa( the tax for gi&ing the wrong a$&ice.

"C r. is guilt( for failing to consult his accountant.

::. The BI, through the ommissioner institute$ a s(stem re7uiring taxpa(ers tosu*mit to the BI, a summar( list of their sales an$ purchases $uring the (ear in$icatingthe name of the seller or the *u(er an$ the amount. Base$ on these lists the BI, $isco&ere$ that in 200? B orp. purchase$ from :DH orp. goo$s worth;000000.:DH orp. $i$ not $eclare these for income tax purposes as its reporte$ gross sales for

200?was onl( ;l000000.'hich of the following $efenses ma( :DH orp. interpose in an assessment against it *(the BI,) 1!C

C The BI, has no authorit( to o*tain thir$ part( information to assess taxpa(ers.

BC The thir$ part( information is ina$missi*le as hearsa( e&i$ence.

C The s(stem of re7uiring taxpa(ers to su*mit thir$ part( information is illegalfor &iolating the right to pri&ac(.

"C Gone of the a*o&e.

NOTIN* FOLLOWS

201?

I.

/n arch 2@ 2012 the Bureau of Internal ,e&enue BI,C issue$ a notice of assessmentagainst Blue 'ater In$ustries Inc. B'IC a $omestic corporation informing the latter of its allege$ $eficienc( corporate income tax for the (ear 200


45/49

% $eci$e$ to ele&ate its claim $irectl( to the ourt of Tax ppeals TC on pril 22201?.

In $ue time the T $enie$ the tax refun$ relati&e to the input +T of % for the first7uarter of 2012 reasoning that the claim was file$ *e(on$ the two-(ear perio$ prescri*e$un$er ection 112C of the Gational Internal ,e&enue o$e GI,C.

C Is the T correct) 3!C

BC ssuming that % file$ its claim *efore the T on Fe*ruar( 22 201? woul$

(our answer *e the same) 3!C

+.

The it( of iwliwa assesse$ local *usiness taxes against Talin ompan(. laiming thatthere is $ou*le taxation Talin ompan( file$ a omplaint for ,efun$ or ,eco&er( of Illegall( an$>or Erroneousl(-collecte$ ocal Business TaxM ;rohi*ition with ;ra(er toIssue Temporar( ,estraining /r$er an$ 'rit of ;reliminar( Inunction with the ,egionalTrial ourt ,TC. The ,T $enie$ the application for a 'rit of ;reliminar( Inunction.ince its motion for reconsi$eration was $enie$ Talin ompan( file$ a special ci&il actionfor certiorari with the ourt of ppeals C. The go&ernment law(er representing theit( of iwliwa pra(e$ for the $ismissal of the petition on the groun$ that the sameshoul$ ha&e *een file$ with the ourt of Tax ppeals TC. Talin ompan( through itslaw(er tt(. Fran8 countere$ that the T cannot entertain a petition for certiorari since

it is not one of its powers an$ authorities un$er existing laws an$ rules.

"eci$e. !C

+I.

hoose the correct answer. muggling - 1!C

C $oes not exten$ to the entr( of importe$ or exporte$ articles *( means of an(false or frau$ulent in&oice statement or practicesM the entr( of goo$s at less thanthe true weight or measureM or the filing of an( false or frau$ulent entr( for the pa(ment of $raw*ac8 or refun$ of $uties.

BC is limite$ to the import of contra*an$ or highl( $utia*le cargo *e(on$ thereach of customs authorities.

C is committe$ *( an( person who shall frau$ulentl( import or *ring into the;hilippines or assist in so $oing an( article contrar( to law or shall recei&econceal *u( sell or an( manner facilitate the transportation concealment or saleof such article after importation 8nowing the same to ha&e *een importe$contrar( to law.

+II.

In accor$ance with the ocal %o&ernment o$e %C the angguniang ;anglung;C of Baguio it( enacte$ Tax /r$inance Go. 1


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47/49

return for the (ear 2011 which he file$ on pril 1 2012. r. Tiaga *elie&es that therewas no such error in the computation of his income tax for the (ear 2011. Base$ on theassessment recei&e$ *( r. Tiaga ma( he alrea$( file a protest thereon) ?!C

:+II.

In a ci&il case for nnulment of ontract of ale plaintiff a. ,e8lamo presente$ ine&i$ence the ontract of ale which she sought to *e annulle$. Go $ocumentar( stamp taxon the ontract of ale was pai$ *ecause accor$ing to plaintiff a. ,e8lamo there was

no nee$ to pa( the same since the sale was not registere$ with the ,egister of "ee$s.;laintiff a. ,e8lamo is now offering the ontract of ale as her e&i$ence. Is the ontractof ale a$missi*le) ?!C

:+III.

a$am : owns real propert( in aloocan it(. /n 9ul( 1 201? she recei&e$ a notice of assessment from the it( ssessor informing her of a $eficienc( tax on her propert(. hewants to contest the assessment. ?!C

C 'hat are the a$ministrati&e reme$ies a&aila*le to a$am : in or$er tocontest the assessment an$ their respecti&e prescripti&e perio$s)

BC a( a$am : refuse to pa( the $eficienc( tax assessment $uring the pen$enc( of her appeal)

:I:.

The Bureau of Internal ,e&enue BI,C issue$ ,e&enue emoran$um ircular ,C Go.6-2012 imposing +alue-$$e$ Tax +TC on association $ues an$ mem*ership feescollecte$ *( con$ominium corporations from its mem*er con$ominium-unit owners. The,s &ali$it( is challenge$ *efore the upreme ourt C *( the con$ominiumcorporations.

The olicitor %eneral counsel for BI, claims that association $ues mem*ership feesan$ other assessment>charges collecte$ *( a con$ominium corporation are su*ect to +Tsince the( constitute income pa(ments or compensation for the *eneficial ser&ices it pro&i$es to its mem*ers an$ tenants.

/n the other han$ the law(er of the con$ominium corporations argues that such $ues an$fees are merel( hel$ in trust *( the con$ominium corporations exclusi&el( for their mem*ers an$ use$ solel( for a$ministrati&e expenses in implementing the con$ominiumcorporations purposes. ccor$ingl( the con$ominium corporations $o not actuall( ren$er ser&ices for a fee su*ect to +T.

'hose argument is correct) "eci$e. !C

::.

"uring his lifetime r. a8itin o*taine$ a loan amounting to ;10 million from Bangno for the purchase of a parcel of lan$ locate$ in a8ati it( using such propert(collateral for the loan. The loan was e&i$ence$ *( a $ul( notari4e$ promissor( nou*se7uentl( r. a8itin $ie$. t the time of his $eath the unpai$ *alance of the lamounte$ to ;2 million. The heirs of r. a8itin $e$ucte$ the amount of ;2 million frthe gross estate as part of the #laims against the Estate.# uch $e$uction was $isallow *( the Bureau of Internal ,e&enue BI,C Examiner claiming that the mortgage$ prop

was not inclu$e$ in the computation of the gross estate. "o (ou agree with the BIExplain. ?!C

::I.

/n ugust 31 201? Aaelton orporation AC thru its authori4e$ representati&e ;ares sol$ a 16-store( commercial *uil$ing 8nown as Aaeltown Buil$ing to r. Bell(;100 million. r. Bell( in turn sol$ the same propert( on the same $a( to Bell %aInc. B%IC for ;200 million. These two 2C transactions were e&i$ence$ *( two separate "ee$s of *solute ale notari4e$ on the same $a( *( the same notar( pu*lic.

In&estigations *( the Bureau of Internal ,e&enue BI,C showe$ that

1C the "ee$ of *solute ale *etween r. Bell( an$ B%I was notari4e$ ahea$ of the s *etween A an$ r. Bell(M 2C as earl( as a( 1@ 201? A recei&e$ ;?0 million fr

B%I an$ not from r. Bell(M 3C the sai$ pa(ment of ;?0 million was recor$e$ *( B%its *oo8s as of 9une 30 201? as in&estment in Aaeltown Buil$ingM an$ ?C the su*stan portion of ;?0 million was with$rawn *( s. ;ares through the $eclaration of c$i&i$en$s to all its stoc8hol$ers.

Base$ on the foregoing the BI, sent Aaeltown orporation a Gotice of ssessment $eficienc( income tax arising from an allege$ simulate$ sale of the aforesai$ commer *uil$ing to escape the higher corporate income tax rate of thirt( percent 30!C. 'hathe lia*ilit( of Aaeltown orporation if an() ?!C

::II.

hoose the correct answer. "ou*le Taxation - 1!C

C is one of $irect $uplicate taxations wherein two 2C taxes must *e impose$

the same su*ect matter *( the same taxing authorit( within the sa uris$iction $uring the same perio$ with the same 8in$ or character of tax eif the purposes of imposing the same are $ifferent.

BC is for*i$$en *( lawM an$ therefore it is a &ali$ $efense against the &ali$it( tax measure.



48/49

C means taxing the same propert( twice when it shoul$ *e taxe$ onl( onceM it istantamount to taxing the same person twice *( the same uris$iction for the samething.

"C exists when a corporation is assesse$ with local *usiness tax as amanufacturer an$ at the same time &alue-a$$e$ tax as a person selling goo$s inthe course of tra$e or *usiness.

::III.

hoose the correct answer. Tax &oi$ance 1!C ‒

C is a scheme use$ outsi$e of those lawful means an$ when a&aile$ of itusuall( su*ects the taxpa(er to further or a$$itional ci&il or criminal lia*ilities.

BC is a tax sa&ing $e&ice within the means sanctione$ *( law.

C is emplo(e$ *( a corporation the organi4ation of which is prompte$ more onthe mitigation of tax lia*ilities than for legitimate *usiness purpose.

"C is an( form of tax $e$uction scheme regar$less if the same is legal or not.

::I+.

B an$ all law(ers forme$ a partnership calle$ B aw Firm so that the( can practice their profession as law(ers. For the (ear 2012 B aw Firm recei&e$ earnings

an$ pai$ expenses among which are as follows 6!C

Earnings

1C ;rofessional>legal fees from &arious clients

2C ash pri4e recei&e$ from a religious societ( in recognition of the exemplar(ser&ice of B aw Firm

3C %ains $eri&e$ from sale of excess computers an$ laptops

;a(ments

1C alaries of office staff

2C ,entals for office space

3C ,epresentation expenses incurre$ in meetings with clientsC 'hat are the items in the a*o&e mentione$ earnings which shoul$ *e inclu$e$in the computation of B aw Firms gross income) Explain.

BC 'hat are the items in the a*o&e-mentione$ pa(ments which ma(consi$ere$ as $e$uctions from the gross income of B aw Firm) Explain.

C If B aw Firm earns net income in 2012 what if an( is the conse7uence on the part of B aw Firm insofar as the pa(ment of incomeis concerne$) 'hat if an( is the tax conse7uence on the part of B an$ in$i&i$ual partners insofar as the pa(ment of income tax is concerne$)

::+.

'hich of the following transactions is su*ect to +alue-$$e$ Tax +TC) 1!C

C ale of shares of stoc8-liste$ an$ tra$e$ through the local stoc8 exchange

BC Importation of personal an$ househol$ effects *elonging to resi$ents of ;hilippines returning from a*roa$ su*ect to custom $uties un$er the Tariff austoms o$e

C er&ices ren$ere$ *( in$i&i$uals pursuant to an emplo(eremplorelationship

"C %ross receipts from len$ing acti&ities *( cre$it or multi-purpose cooperati$ul( registere$ with the ooperati&e "e&elopment uthorit(

::+I.

Free4( orporation a $omestic corporation engage$ in the manufacture an$ sale ofcream ma$e pa(ments to an officer of Frost( orporation a competitor in the ice cre *usiness in exchange for sai$ officers re&elation of Frost( orporations tra$e secrets.

a( Free4( orporation claim the pa(ment to the officer as $e$uction from its grincome) Explain. ?!C

::+II.

In 9anuar( 2013 (our frien$ got his first o* as an o ffice cler8. Ae is single an$ li&es whis famil( who $epen$s upon him for financial support. Ais parents ha&e long retire$ frtheir wor8 an$ his two 2C si*lings are still minors an$ stu$(ing in gra$e school.Fe*ruar( 201? he consulte$ (ou as he wante$ to compl( with all the rules pertainingthe preparation an$ filing of his income tax return. Ae now as8s (ou the following

C Is he entitle$ to personal exemptions) If so how much) 1!CBC Is he entitle$ to a$$itional exemptions) If so how much) 1!C

C 'hat is the effect of the taxes withhel$ from his salaries on his taxaincome) 2!C

Ta x a t i o n L a w B a r Q

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