TRANSFER TAXES

Mr. X died on January 1, 2011. All of the following will form part of his gross estate except—a. Real property located in the Philippinesb. Shares of stock in a Philippine corporationc. Transfer made in contemplation of deathd. The share of the surviving spouse

Mrs. Y died on December 31, 2010 with a gross estate of PHP 10 million. Of the following only this is a deduction allowed against her gross estate—a. The amount paid on June 1, 2011 by Mrs. Y’s heirs as compromise on an obligation owed by Mrs. Y before deathb. Vanishing deduction on an asset Mrs. Y inherited from her mother 20 years agoc. Standard deduction of PHP 1 million even if Mrs. Y was an American living in Canada at the time of her deathd. Actual funeral expenses worth PHP 10,000

Mr. B died in 2009 while his father, Mr. A, died in 2007. Mr. B was named as the only heir of Mr. A in the latter’s last will and testament. Mt.B was in the process of settling the estate of Mr. A when Mr. B died. The following can be claimed by the estate of Mr. B as deductions from the gross estate, except:a. Vanishing deductionsb. Family Home deductionsc. Transfers for public used. Claims against the estate deduction

Mr. Juan dela Cruz, a real estate developer died. In his name are several parcels of land which is part of the subdivision project which he was working on and which was duly registered with the Housing and Land Use Regulatory Board. One of the TCT in his name pertains to the clubhouse and roadways of the subdivision project. As the tax lawyer settling the estate of Mr. Juan dela Cruz, what would you do to the said TCT in the name of Mr. dela Cruz, which pertains to the clubhouse and roadways to be used by the members of the subdivision.a. Include the said TCT as part of the gross estate of Mr. dela Cruzb. Exclude the said TCTs as part of the public use of the subdivision owners.c. Exclude the said TXTs as part of the transfer for the use of the National Governmentd. Include the said TCCTs as part of the gross estate of Mr. dela Cruz and then claim the same properties as deductions to the estate.

Alma Alona was a self-employed individual who engaged in the buying and selling of motor vehicles. She had in her inventory several expensive cars which she had already paid for but was never registered in the Land Transportation Office but was only accompanied by an “open” deed of sale from the previous registered owner. Ms. Alona died and her estate was in the process of settlement. The said vehicles would be subject to what type of taxes on the settlement of the estate of Ms. Alona?a. Estate tax onlyb. Estate and VATc. Estate, Income Tax and VATd. Not subject to tax because the expensive cars were not in her name.

Spouses A & B decided to donate some of their property to their children during their lifetime. They asked you what is the most effective and tax efficient was of implementing the donation to their children over a period of two years, the total value of the property is P5,000,000.00 to their only child:a. Treat the donation as being made by the spouses collectivelyb. Donate to the child using the exemption of “in contemplation of marriage”.c. Split the donations over a period of two year made by each parent independently.d. Treat the donation as being made by the spouses independently from each other.

Which will NOT from the part of the estate of a deceased alien who was residing in the Philippines at the time of his death?a. A parcel of land located abroadb. His shares of stocks of a foreign corporationc. His ring which was worn by him when he was buriedd. A life insurance proceed from a foreign insurer where his wife was designated as irrevocable beneficiary

OX, the President of ZOZ Corporation, died. ZOZ Corp.had lent to OX’s a salary good for one year. Is the amount considered as taxable income to the widow?a. No, because the widow received a giftb. No, because the widow received an inheritancec. Yes, because the widow received something which is of economic benefit to herd. Yes, because the widow received a flow of wealth other than a return of capital

Which of the following are not allowed as deductions for the estate of a decedent who is citizen and resident of the Philippines:a. The family home to the value of P 1,000,000.00b. Judicial expenses of the testamentary or intestate proceedings.c. Claims against the estate on loans covered by a debt instrument duly notarized.d. Actual funeral expenses at an amount equal to 10% of the gross estate but in no case exceeding two hundred thousand (P200,000) pesos

The following acquisitions and transmissions shall NOT be taxed, EXCEPT:

a. The merger of usufruct in the owner of the naked titleb. The transmission or deliver of the inheritance or legacy by the fiduciary heir or legatee to the fideicommissary c. The transmission from the first heir, legatee or done in favor of another beneficiary, in accordance with the desire of the predecessord. The transmission of property for use to the national government provided that the said property was included in the gross estate of the decedent

The shall be no need to file an estate tax return filed with the BIR on the estate of the decedent when:a. The only asset of the decedent are cash depositary accounts held in Philippine banks podiatry accounts held in Philippine banksb. The decedent, who is a non-resident citizen, owns only real property held outside the Philippinesc. The asset of the decedent consists only of antiques with an estimated market value of P 150,000.00 pesosd. The decedents only asset is a painting done by Pable Picasso and is on loan with the Philippine National Gallery

The effect of the declaration of a corporation of a stock dividend during the pendency of the settlement of the estate of a deceased shareholder will be:a. the inclusion of the stock dividends declared in the estate of the decedentb. the exclusion of the stock dividends declared from the estate of the decedent.c. The naming of the stock dividend directly in favor of the heirs of the decedent.d. The inclusion of the stock dividends in the income of the estate of the decedent.

The provision of the family code require the transfer of the share of the guilty spouse of his/her share in the community property in favor of the innocent spouse, in effect causing a transfer of the property. The said transfer is:a. Subject to Philippine donors tax due to donative intentb. Not subject to the Philippine donors tax due to lack of donative intentc. Not subject to the Philippine donors tax due to a provision of the Family Coded. Subject to Philippine donors tax because there was a transfer of property for inadequate consideration

Which of the following is subject to donor’s tax?a. a transfer of a resident house for PHP 10 when its value was determined as PHP 10 millionb. a gift given by a parent to his child on account of marriage in the amount of PHP 10,000c. a ring given by a husband to his wife on their silver wedding anniversaryd. donation of PHP 10 million by M Corporation to the Department of Energy

Transfer tax is a tax imposed on the privilege to transfer property ownership.a. through a willb. mortis causac. inter vivosd. gratuitously

Inheritance tax is impose on the privilege toa. transfer property inter vivosb. transfer property mortis causac. receive property inter vivosd. receive property mortis causa

Gary died in April, 2007 leaving all his properties to his only son Martin. Gary left no creditors. Martin promptly executed an affidavit of self-adjudication, paid the proper estate taxes and had the properties titled in his name. In august 2009 Martin died leaving as his only heirs, his two surviving children. If vanishing deduction finds application what percentage of the value of the properties Martin inherited from Gary should be allowed as deduction?

a. 20%b. 40%c. 60%d. 80%

Mr. Jose donated completely a parcel of land to his son a few months before Mr. Jose was accidentally hit over by a speeding car and died. The particular parcel of land is includible in the gross estate of Mr. Jose which is subject to the estate tax because:a. It is part of transfers in contemplation of deathb. It is a revocable transferc. It is a transfer for insufficient considerationd. It is not to be included in the gross estate of Mr. Jose.

An estate under judicial settlement has rental income of P600,000 for 2010. Deductible expenses amounted to P300,000. Distribution of 2010 income was made to heirs in the amount of P200,000. The estate’s taxable income for 2010 is:a. 80,000b. 100,000c. 200,000d. 300,000

Estate Tax is a tax imposed upon transfer of all properties of a decedent based on

a) gross value of all properties at the time of death wherever situatedb) on the value of the net estate after deductionsc) on the extent of property interest of decedent at the time of deathd) on the deductions allowed to the estate of decedent

.A Decedent who is not a citizen of PH is imposed estate tax on

a) all properties, real personal, tangible/ in tangiblesb) on the decedents interest on all properties c) on the part of entire gross estate situated in the Philippinesd) on the value of the net estate after deductions

Donors tax is imposed on privilege toa. transfer property inter vivosb. transfer property mortis causac. receive property inter vivosd. receive property mortis causa

The estate tax is to be computed starting from the death of the decedent becausea. The provision of the NIRC of 1997 requires it.b. The privilege to transfer properties takes place upon death.c. It is only upon the decedent’s death that his heirs are known.d. It is the time of death that estate taxes are due.

Which among the following should be treated as real property?a. An Amorsolo painting.b. A Porshe sports car.c. A contract for the construction of a public road.d. Shares of stock San Miguel Corporation.

Vanishing deduction is availed of by taxpayers to:

a. correct his accounting records to reflect the actual deductions made.b. reduce his gross incomec. reduce his output value-added tax liabilityd. reduce his gross estate

Professors Warren and Surrey maintain that an estate tax should be imposed upon property transferred during life when the transferor reserves significant powers over possession or enjoyment of the property. Significant powers are reserved when the transferee is, by reason of the reserved power, incapable of freely enjoying or disposing of the interest in the transferred property until the transferor’s death. These transfers exclude:a. Value of trust property, part of the income and principal will be paid to the life beneficiary for comfort, support and happiness.b. Property under an appointment where the decedent has a power exercisable in favor of his creditors or creditors of his estate.c. Property conditioned upon the transferor’s survivorship.d. Property passing under ascertainable standard relating to the health, education, support, or maintenance of the decedent.

Mr. B died in 2009 while his father, Mr. A, died in 2007. Mr. B was named as the only heir of Mr. A in the latter’s lat will and testament. Mr. B was in the process of settling the estate of Mr. A when Mr. B died. The following can be claimed by the estate of Mr. B as deductions from the gross estate, except:a. Family home deductionb. Claims against the estate deductionc. Vanishing deductionsd. Transfer for public use

For purposes of imposition of estate tax, the interest of decedent in properties even if already transferred should still to be included as part of gross estate, if the transfer takes effect after death wherein he still retains possession, enjoyment or right to income considering that the transaction is treated as:

a) revocable transferb.property passing under general power of appointmentc.transfer in contemplation of deathd.transfer for insufficient consideration

Spouses A and B decided to donate some of their property to their children during their lifetime. They asked you what is the most effective and tax efficient way of implementing the donation to their children over a period of two years, the total value of the property is P5,000,000.00 to their only child:a. Treat the donation as being made by the spouses collectivelyb. Treat the donations as being made by the spouses independently from each otherc. Split the donations over a period of two years made by each parent independentlyd. Donate to the child using the exemption of “in contemplation of marriage.”

Don Bungal donates the following items prior to his death:House and lot-to his son, (mortis causa)- P1,000,000Diamond ring- to his wife-500,000Portion of land-to the National Government-300,000Car-to his son on account of current birthday-800,000i. How much is the gross amount of donations subject to donor’s tax?a. 800,000b. 1,000,000c. 1,100,000d. 1,600,000ii. How much is the amount of donations subject to the estate tax?a. P-0-b. P800,000c. P1,000,000d. P1,100,000iii. For donor’s tax purposes, who among the following is considered as a stranger?a. Brotherb. Grandfatherc. Spoused. Father in law

Mr. AS, Filipino citizen, died abroad leaving the following properties: house and lot in Texas USA; shares of stock in San Miguel Corporation and PHILEX , both local companies; bank deposit in New York City and in the Bank of the Philippines Islands in Makati; a Toyota Camry sedan registered in the name of his son aged 21 years. He was buried in Manila and expenses were incurred to bring the remains home and his funeral. Which among the above properties should be excluded from his estate tax return? (Adapted from the 1994 BAR)a. The house and lot in Texas USA.b. The shares and stock in San Miguel Corporation.c. The bank deposits in New York City.d. The Toyota Camry sedan.

Mr. Siok Tong, a Chinese citizen, met an accident and died while visiting the Philippines. Which among the following properties to be included as part of his gross estate for the Philippines tax purposes?a. His house and lot in China.b. A condominium init in California, U.S.A.c. Shares of stock in Philippines Long Distance Company (PLDT)d. Accident insurance issued by a Philippine insurance company payable to his wife.

Decedents interest, transfer in contemplation of death, revocable transfer, property passing under General Power of Appointment, Proceeds of life insurance and transfers for insufficient consideration form part of the:

a) Taxable gross estate of decedentb) Gross Estate of the decedentc. Net Estate of the decedentd) Taxable Net Estate of the decedent

In computing the Net Estate, funeral expenses is allowed in the amount of:

a. actual funeral expenses provided it is supported with official receipts .b.actual funeral expenses equivalent to 5% of gross estate but not to exceed P200thousand pesosc.actual funeral expenses or 5% of net estate whichever is lower but not to exceed P200thousand pesosd) actual funeral expenses or 5% of gross estate whichever is lower but not to exceed P200thousand pesos

X, an American citizen, who is a permanent resident of the Philippines died while on a vacation in his place of birth in the United Sates. Which one of the following is a valid deduction from his gross estate?

a. Estate taxes paid in the Philippines.b. Income tax paid on income earned and received after X’s death.c. Unpaid income taxes on salaries received by X before his death.d. Real property taxes on X’s Quezon City condominium due after his death.

Which of the following are not allowed as deductions for the estate of a decedent who is a citizen and resident of the Philippines?a. Actual funeral expenses at an amount equal to 10% of the gross estate but in no case exceeding two hundred thousand (P200,000.00) pesos.b. Judicial expenses of the testamentary or intestate proceedingsc. Claims against the estate on loans covered by a debt instrument duly notarizedd. The family home to the value of 1,000,000.00

Proceeds of life insurance is not included in the gross estate of the decedent if:a. The life insurance policy was taken the decedent upon his own lifeb. The designated beneficiary is the executor or testatorc. The designated beneficiary is a third person and the designation is irrevocabled. The designated beneficiary is a third person and the designation is revocable

Vanishing deduction or property previously taxed is a method of reducing the rigors of taxation for estate tax purposes by allowing:

a) an amount equal to the value of the property forming part of the gross estate of any person who died within 5 years transferred and made in contemplation of death

b) an amount equal to the value of property forming part of the gross estate of any person who died within 5 years prior to decedent or transferred to decedent by way of gift within 5 years where property can be identified as having been received by inheritance or donation.c) an amount equal to the value of the property forming part of the gross estate of any person who died within 5 years acquired by way of saled) an amount equal to the value of the property forming part of the gross estate of any person who died within 5 years where property is transferred for insufficient consideration

Jose Ortiz owns 100 hectares of agricultural land planted to coconut trees. He died on May 30, 2009. Prior to his death, the government, by operation of law, acquired under the Comprehensive Agrarian Reform Law all his agricultural lands except his (5) hectares. Upon the death of Ortiz, his widow asks you how she will consider the 100 hectares of agricultural land in preparation of the estate tax return. What advice will you give her? (Adapted from the 1994 BAR)

a. Exclude the 100 the 100 hectares because Jose Ortiz did have not any interest in the said property at the time of his death.b. Include the 100 hectares in the estate tax return but deduct the same as property deemed taken for public use.c. Include only the (5) hectares which were retained because this is the extent of the interest that Jose Ortiz had in the said property at the time of his death.d. Exclude the 100 hectares because these are the properties that were taken for public use by operation of law.

X owns a residential lot with a BIR determined zonal valuation of P1 million. In 2008 he sold the same to Y for P1 million subject to the condition that while Z is still alive he shall be allowed to use part of the property as a garage for whatever personal car he would own but limited only to one car. The proper taxes attendants to the sale were paid. X died in 2009. What should be the treatment to the value of the residential lot in the preparation of the estate tax return?

a. Include because X retained the right to enjoy a portion of the property which right ends with his death.b. Include because there is no showing in the problem that the title to the property was already transferred to Y.c. Exclude because there was a bona fide sale of the residential lot for sufficient and adequate consideration.d. Exclude because the execution of the deed of sale and the payment of the taxes effectively deprived X of ownership over the property.

Mr. Pedro Lao died on November 1, 2010 leaving real and personal properties worth P10,000,000. His estate incurred the amount of P600,000 for his funeral. The funeral expense that may be deducted from his gross estate is:a. 5% of P10,000,000 or P500,000.00b. P200,000,00c. The actual funeral expenses or P600,000d. The estate cannot claim any funeral expense

Which among the following transfer the property, by trust or otherwise, during the lifetime of the transferor is not included as part of the deceased transferor’s gross estate?a. When the deceased transferor has reserved to himself the power to alter, amend, revoke or terminate the transfer and such power is relinquished in contemplation of the transferor’s death.b. Where the deceased transferor has reserved for himself the power to determine who could alter, amend, revoke or terminate the transfer and such power is relinquished in contemplation of the transferor’s death.c. Where the deceased transferor had made the transfer through a bona fide sale and adequate consideration but he has made a reservation of the power to alter, amend, revoke or terminate the transfer prior to his death.d. Where the deceased transfer had made the transfer but he has reserved for himself the enjoyment thereof subject to his death to any change by himself or in connection with any other person could alter, amend, revoke or terminate the transfer and such power is relinquished in contemplation of the transferor’s death.

“X” Corporation took a Keyman insurance on the life of its President, Mr. Rodel Cruz, designating Mr. Cruz’ wife as its revocable beneficiary. In the event of death of Mr. Cruz, will the insurance proceeds from part of the gross estate of Mr. Cruz? (Adapted from the 1980 BAR)a. Yes because Mrs. Cruz was designated as a revocable beneficiary.b. No because the premium was not paid by Mr. Cruz.c. Yes because the insurance proceeds form part of the benefit s of Mr. Cruz enjoyed by him as an employee of “C” corporation.d. No because Mr. Cruz had no interest in the proceeds at the time of his death hence this is not property that he transferred at the time of his death.

A person who is the recipient of a gift of a real property given by virtue of a will is calleda. a legatee b. a devisee

c. a fideicommissary heird. a compulsory heir

A person who is the recipient of a gift of a personal property given by a virtue of will is calleda. a legatee b. a deviseec. a fideicommissary heird. a compulsory heir

W, widow of the deceased H would like to withdraw from AB Bank, where H maintained his account, for her basic needs pending the extrajudicial settlement of H estate between W and their only child, C. AB Bank has knowledge of the death of H. will AB Bank allow W to withdraw from the bank?a. Yes, AB bank can allow a withdrawal up to P20,000 by securing an authority from the Commissionerb. Yes, AB Bank can allow withdrawal for unlimited amount provided W and C execute an affidavit for non-payment of taxesc. Yes, it shall allow withdrawal up to a maximum of P20,000 even without authorization of the Commissioner of the Internal Revenue.d. Yes, AB bank shall allow withdrawal up to P20,000 by having the heirs execute an affidavit stating that all joint depositors are still living at the time of withdrawal and that the estate tax has been paid. e. Yes, AB bank can allow a withdrawal up tp P20,000 by securing an authority from the Commissioner.

Richard Anderson, a US citizen, was a permanent resident of the Philippines. He died in San Diego, California. He left 50,000 shares of SM, a condominium unit at Serandra at the Fort, GlobalCity in TaguigCity and a house and lot in Miami, Florida. What asset/s shall be included in the Estate Tax return to be filed with the BIR?a. All the properties of the deceased are subject to the estate tax since he is a resident alienb. The condominium unit at Serandra, the Fort. It is the only real property located in the Philippines.c. The condominium unit at the Fort and the 50,000 shares of SM> these are all the properties, tangible and intangible in the Philippinesd. The house and lot in MiamiFlorida and the condominium unit at Serandra, the Fort for these are the real properties of the deceased.

Which of the following statements regarding vanishing deduction is incorrect?a. Vanishing deduction is an allowable deduction from the gross estate of the decedent.b. It can be availed twice every five years.c. The purpose is to ease the harshness of exceeding taxation, of the same properties transferred within a relatively short time.d. The property on which the vanishing deduction-is being claimed is located in the Philippines.

A died in June 2009 in LA, California, her last residence and domicile. She left properties consisting of among others, shares of stocks in BMC, Inc., a company organized and existing under the laws of the Philippines with principal office at Makati, MM. The estate tax due on said shares were correspondingly paid to the state of California.

For Philippine estate tax purposes what should be tax treatment of the estate tax paid to the state of California?a. The California estate taxes are allowed to be deducted from A’s gross estateb. Since there is no showing of reciprocity then the California estate taxes should not be considered in determining the Philippine estate tax.c. The amount of the California estate taxes are allowed to be deducted from the Philippine estate tax that is due from A’s estate.d. Since the California estate taxes have already been paid there is no need anymore to pay Philippine estate taxes.

The following are inter-vivos transfers which are treated as substitutes or testamentary dispositions, except:a. Transfers in contemplation of deathb. Transfers with retention of certain rightsc. Transfers arising under a general power of appointment which had not been exercisedd. Irrevocable transfers

For estate tax purposes FAMILY HOME is a:

a. deduction allowed in an amount equivalent to the current fair market value of decedents land provided it does not exceed P1M

b. deduction allowed in an amount equivalent to the current fair market value of decedents house certified by Brgy. Captain of the locality as decedent family home

c. deduction allowed in an amount equivalent to current fair market value of house and lot, provided it does not exceed P1M

d. deduction allowed in an amount equivalent to the current assessed value of the house and lot but not to exceed P1M .

A transfer for insufficient consideration by the decedent shall be included in the gross estate of the decedent when:a. The property transferred is areal property owned by the decedent as his family homeb. The property transferred are shares of stock traded and issued by Philippine corporationsc. The property transferred is real property owned by the decedent as part of his business and included as inventory of the decedentd. The property transferred consists of paintings and works of art owned by the decedent which was paid for by the recipient at below current market value of te works at the time of the transfer.

A decedent who is not a citizen nor a resident of the Philippines shall be subject to the Philippine estate taxes if:a. The decedent was former Filipino citizen who acquired his new citizenship within 6 months prior to his deathb. The decedent died in the Philippines

c. The decedent stayed in the Philippines prior to his death for a period of more that 180 days within the year whether continuous or interruptedd. The decedent owns shares of stock of the Philippine corporations at the time of his death.

Which of the following is not part of the gross estate of the decedent?a. Decedent’s interestb. Irrevocable transfersc. Properties passing through a general power of appointmentd. Capital of the surviving spouse.

The computation and payment of donor’s tax in the Philippines shall be based on:a. Each particular donation madeb. Cumulative donations made within the yearc. Cumulative donations made toe ach particular recipient within the yeard. Cumulative donations made for the lifetime of the donor.

Which of the following is not exempted from the imposition of donors taxes made by residents?a. Dowries, to the extent of P10,000.00 made one year before the marriageb. Gifts made within two years after marriage, to the extent of P10,000.00c. Gifts made to or for the use of the National Governmentd. Gifts made to qualified donee institutions under the National Internal Revenue Code.

The reciprocity clause in donor’s tax applies to a:a. Resident citizenb. Non-resident citizenc. Resident aliend. Non-resident aliene. Corporation

In order for Medical Expenses to be allowed as deduction from gross estate, it is necessary that:

a. it is incurred within 6 months prior to decedents death and substantiated with official receipts but in no case to exceed P500T.b. it is incurred within 1 year prior to decedents death substantiated with official receipts but in no case to exceed P1Mc. it is incurred within 6 months prior to decedents death and substantiated with official receipts but in no case to exceed P1Md. it is incurred with 1 year prior to decedents death and substantiated with official receipts but in no case to exceed P500T.

A deduction from the gross estate which does not need any requirement is:a. Unpaid taxesb. Judicial expensesc. Optional standard deductiond. Standard deduction

A stranger for donor’s tax purpose isa. Nephewb. Grandchildc. Grandmotherd. Second cousine. Uncle

The time of Filing for estate tax return is

a. within two (2) months after decedents death .b)with six (6) months from the decedents death c. within one (1) year from the decedent’s deathd.if the gross value of the estate exceeds P2M e.within six (6) months if the gross value of the estate is less than P2M.

The time for payment of estate tax is

a. Within two months after decedents death b. Within six (6) month from decedent’s death c. When the tax return is filed within the reglamentary period d. At the option of the taxpayer for an estate exceeding P2M

The valuation of the gross estate shall be made at the:(a) Date of filing of the estate tax return(b) Date of filing of the notice of death(c) Date of appointment of the administrator of estate

(d) Date of transmission of the property of the decedent to the heirs

Which of the following document are mandatory requirements to be filed together with the estate tax return:

a) tax declarations of the personal properties owned by decedentb) statement duly certified by CPA for estates with gross value of P2M or morec) Inventory list of the merchandise of taxpayers businessd) certification of the zonal values of the real properties of decedent

The filing and payment of the estate tax in the Philippines shall be done within:(a) Two months from the date of death of the decedent (b) Six months from the date of death of the decedent (c) Six months from the knowledge of the BIR of the six death of the decedent(d) Six months from the appointment of the administrator of the estate of the decedent

The proceeds of life insurance is to be included as part of the gross estate of the decedent insured:(a) When the beneficiary is irrevocable(b) When the beneficiary is instructed to used the proceeds to pay off the debts of the decedent(c) When the irrevocable beneficiary predeceased the insured decedent.(d) When the beneficiary of the estate is the estate itself with instructions directed that the proceeds be used only to settle the estate

In order for proceeds of life insurance taken on the life of the decedent to be included as part of his gross estate it is necessary that :

a. the designation of the estate of the decedent is revocable or irrevocable b .the designation of the beneficiary is purely for formality purposesc .the designated beneficiary in the policy is a 3rd person d .the designation of the beneficiary is irrevocable

A transfer by way of gift is subject to donors’ tax based on:

a) transfers for less than adequate considerationb) value of properties transferred directlyc) total net gift made during the calendar yeard) on the schedule of rates provided under the tax code

Properties passing through a power of appointment is not includible in the estate of the decedent:(a) When the decedent-grantor retains possession of the property with transfer being effected only upon the death of the decedent-grantor.(b) When the decedent-grantor receives profits from the said properties which will continue as long as the grantor is alive(c) When the decedent-grantor delegates to a third person the right to transfer or transmit the property, its possession and profits, at any point in time.(d) When the decedent-grantor delegates to a third person the right to transfer or transmit the property, its possession and profits, at the designation by the third person of the decedent-grantor as a recipient of the property or its profits.

Filing of the donors tax for a donation of real property which is subject to the donors tax shall be done within:(a) thirty days from the grant of the donation by the donor(b) thirty days from the acceptance of the donation in writing by the done(c) thirty days from the notarization of the donation document(d) thirty days from the transfer of the title of the real property.

The rates for donors taxes imposed in the Philippines is: (a) 2% to 15%(b) 2% to 30%(c) Exempt to 15%(d) Exempt to 30%

Donors tax at the rate of 30% of the net gift is payable by the Donor if the Donee is:

a) Not a brother or sister by affinityb) Not a relative within the collateral linec) Not a relative within the 4th degree by consanguinityd) Not an ancestor or descendant

Gifts made in favor of the following is exempt from payment of donors tax:

a) dowries or gifts on account of marriage by parents to their children not exceeding P50, 000.b) Gift made in favor of the government or any political subdivision thereofc) Gifts in favor of education or charitable institutions with more than 30% expenses on administrative purposes d) All of the above

Which among of the following should be included as part of the gross estate of a decedent resident alien?

a. The transmission from the first heir, legatee or done in the favor of another beneficiary, in accordance with the desire of the predecessorb. Reversion of the right of usufruct to the owner of the naked titlec. Property transferred under a general power of appointmentd. Property transferred for the use of the Government of the Republic of the Philippines

“A” died in 1999 leaving a will which directed all real estate owned by him not to be sold or disposed of for a period of 10 years after his death and ordered that the property given to “B” upon the expiry of that period. In 1999, the estate left by “A” had a BIR zonal value of P500, 000.00. In 2009, the fair value of the said estate increased to P2, 500,000.00, it was declared for taxation in 2009 for P1.500, 000.00 and the BIR zonal valuation was P3, 000,000.00. (Adapted from the 1968 BAR)What value should be use for the purpose of estate taxation?a. P3, 000,000.00 c. P2, 500,000.00b. P1, 500,000.00 d. P500, 000.00

When Procopio died, he left an estate valued at P10 million. His heirs spent P700, 000.00 for all the funeral services rendered by St. Peter Memorial Chapel, including the expenses attendant to the wake, the coffin, cremation service and the urn where his ashes were placed. P300, 000, 00 out of the 700,000.00 funeral expenses were shouldered by friends and relatives. Which among the following amount s may be deducted from his gross estate for funeral expenses?a. P500, 000.00 c.P400, 000.00b. P 700,000.00 d. P 200,000.00

The Commissioner of Internal Revenue may grant an extension of time for the payment of the estate tax or any part thereof, in case the estate is settled through the courts for a period not exceeding

a. two (2) years from grant of the extension.b. two (2) years form the settlement of the estate.c. five (5) years from the settlement of the estate.d. five (5) years from the grant of the extension,

For the purpose of the donor’s tax, which of the following is classified as a “stranger” to the donor:(a) Wife (b) Sister of whole or half blood (c) Niece or nephew(d) Mother-in-law

The provision of the family code require the transfer of the share in the community property in favor of the innocent spouse, in effect causing a transfer of the property.The said transfer is:(a) Subject to Philippine donors tax due to donative intent(b) Not subject to the Philippine donors tax due to lack of donative intent(c) Not subject to the Philippines donors tax due to a provision of the Family Code(d) Subject to Philippine donors tax because there was a transfer of property for inadequate consideration

The donors tax return is required to be filed at:

a) the BIR district office where the property donated is situated at the time of transferb) the BIR district office where the donee is registered at the time of transferc) the BIR district office at the option of the parties at time of transferd) the BIR district office where the donor is domiciled at the time of transfer

The time for filing the donors tax return is :

a) within 60 days from transfer b) within 30 days from transfer of the gift c) within 30 days from the filing of the return d) within 60 days of acceptance by the donee

The valuation of the gift for donors tax purposes is

a. the fair market value of the property givenb.the fair market value of the property based on locationc.the fair market value of the property given at the time of transferd.the fair market value or zonal value of the personal properties

Gross estate includes the following items except:a. Transfer for insufficient considerationb. Donations mortis causec. Revocable transfers

d. Transfer under special power of appointment

Who among the following is not a stranger for purposes of donor’s taxation.

a. The donor’s father-in-law.b. The donor’s step mother.c. The donor’s great grandfather.d. The husband of the donor’s sister.

Donation to stranger is subject to 30% of the net gift. Stranger includes:a. First cousinb. Consanguine sisterc. Lineal descendentd. Second cousin

Who among the following donations is considered a stranger for purposes of donor’s taxation?

a. A first cousin of the donorb. The brother of the donor’s fatherc. The donor’s great grandchildd. The mother of the donor’s spouse

This is deemed as not part of the gross estate of the decedent for estate tax purposesa. Capital of the surviving spouseb. Transfer in contemplation of deathc. Property previously taxedd. An exemption of P200,000 which is included in the computation of the graduated estate rates

Which of the following is not allowed with tax credit for payments of estate tax to foreign countries?a. Alien who was a resident of his own country at date of deathb. Resident alienc. Non-resident citizend. American residing in the Philippines at date of death

Which of the following wedding gift is subject to 30% gift tax rate?a. P200,000 to a brother-in-lawb. P300,000 to a brother, given 18 months after the wedding celebrationc. P200,000 to a sister’s sond. P 300,000 to a father

X, a multinational corporation doing business in the Philippines donated 100 shares of stock of said corporation to Mr. Y, its resident manager in the Philippines. What is the tax liability, if any, of X corporation?

a. X corporation is not liable to any tax, the property donated is located in the Philippines. Accordingly, donation of a foreign corporation of its own shares of stocks in favor of resident employees, is not subject to donor’s tax

b. X corporation is liable for capital gains tax, the shares of stock not being held for sale is considered capital asset.

c. X corporation is liable for donor’s tax of 30%. The Manager being considered a stranger for purposes of imposition of donor’s tax being not related by consanguinity or affinity.

d. X corporation is subject to ordinary corporate tax rate, the transaction considered as ordinary asset that shall form part together with the main income of the corporation.

For purposes of the donor’s tax, the following are considered strangers:a. Brother or sister, whether whole or half bloodb. Relatives by consanguinity in the collateral line within the 4th civil degreec. Relatives by affinity, except the spouse of the donord. None of the above

The special deductions from the gross estate are the following, except:a. Judicial expenses in testate or intestate proceedingsb. Standard deductionc. Family home up to P1,000,000d. Medical expenses within one year from the death of the decedent not exceeding P500,000

Mr. Bill Morgan, a Canadian citizen and a resident of Scarborough, Ontario, sends a gift check of $20,000 to his future Filipino daughter-in-law who is to be married to his only son in the Philippines. Is the donation subject to Philippine donor’s taxes?

a. Yes, but only up to the extent that exceeds the allowable P10,000.00 exemption for donations by reason of marriage.b. Yes. There is no showing in the problem that the marriage actually took place within one (1) year from the date of donation.c. No. The donor is a non-resident alien hence he is not subject to the Philippine donor’s tax law.

d. No. The donation took place outside of the Philippines hence no subject to the Philippine donor’s tax law.

Funeral expenses that can be claimed as deduction from the gross estate should be:a. Actual amount incurredb. Not exceeding P200,000c. 5% of the gross estated. The lowest of the above figures

Mr. Simpson, a bachelor Filipino citizen residing in Lapu-LapuCity, wants to give his sister a gift of P200,000.00. He seeks your advice, for purposes of reducing if not eliminating the donor’s tax on the gift, on whether it is better for him to give all of the P200,000 on Christmas 2010 or to give P100,00 on Christmas 2010 and the other P100,000 on January 1, 2011. Please explain your advice.

a. I would advice him to not to split the donation because the effect is still the same. While splitting will result to exemption, the second split will now be subjected to donor’s tax because the computation is cumulative.b. I would advice him to split the donation. It will result to lower tax bracket under the graduated tax structure thereby necessitating the payment of lower donor’s tax. c. I would advice him to split the donation. While the donor’s tax is computed on the cumulative donations, the aggregation of all donations made by a donor is allowed only over one calendar year. d. I would advice him not to split the donation. Giving the P200,000 as a one-time donation would mean higher deductions that will result to lesser taxable donation consequently to lower payment of donor’s tax.

The surviving spouse of a passenger who dies in a bus collision received a total amount of P1,000,000 of which P 200,000 comes from the bus company and P 800,000 from the proceeds of a revocable life insurance. The P 200,000 was received after an out of court settlement negotiation was made by the bus company. How much is the amount to be declared in the estate tax return?a. P800,000b. 1,000,000c. 200,000d. 0

Mr. S, a Filipino decedent, owns a property valued at P 2,000,000 at the time of his death. The said property was sold during his lifetime to Mr. V for P 1,300,000 when its real value was P 1,700,000. It was agreed by both parties that the transfer of ownership will take place after S’s death. For purpose of Philippine estate tax, the amount to be included in the gross estate would be:a. P700,000b. 2,000,000c. 1,700,000d. 400,000

On the first anniversary of the death of Zorow, his heirs hosted a sumptuous dinned for his doctors, nurses and others who attended to Zorow during his last illness. The cost of the dinner amounted to P50,000. Compared to his gross estate, the P50,000 did not exceed five percent of the estate. Is the said cost of the dinner to commemorate his one year death anniversary deductible from his gross estate?

a. The expense is considered allowable deduction from gross estate. It falls under the context of funeral expense as it does not exceed five percent of the total gross estate of the decedent.b. The expense is not deductible as this does not fall under any of the allowable deductions from gross estate. Whether viewed in the context of either funeral expenses or medical expenses, the same will not qualify as a deduction.c. The expense is considered allowable deduction from gross estate. It falls under the context of medical expenses which are allowed only if incurred by the decedent within one year after his death.d. The expense is not a deductible expense from the gross estate. The dinner to be allowed as deduction must not be sumptuous and must be given only to the doctors who attended the decedent during his last illness and would not include nurses and other persons.

X died on January 3, 2010. He was married to Y on June 3, 1988 at LapazChurch, IloiloCity. The gross estate of X would includea. His exclusive property and all conjugal property b. All properties of X and Yc. His exclusive property, capital property of the surviving spouse and all conjugal propertiesd. His exclusive property and one-half of the conjugal property.

On October 10, 2010, Jinkie offered in writing to donate an automobile valued at P3,000,000 to Crysta. On October 20, 2010, the latter accepted the donation in writing. Three days afterwards, the letter of acceptance reached Jinkie. Unfortunately, Jinkie was no longer in a condition to read the letter because the day before she had been rushed to the metal institution for confinement. Is the donation binding?a. No, acceptance was not communicated to the donor b. Yes, acceptance has been sent by the done in writingc. Yes, acceptance has been made prior to the insanity of the donord. No, delivery of the property was not made to the done

D donated P 300,000 to the unborn child of his pregnant girlfriend which she accepted. After six months of pregnancy, the foetus was born and baptized Angel died twenty hours after birth. D sought to recover the P 300,000. Is the transfer subject to donor’s tax?a. Yes, since the foetus has an intra uterine life and was born aliveb. Yes, acceptance by the mother has been communicated to the donorc. No. it has no intra uterine life since it died less than 24 hoursd. No, there being no done to speak of for the child died

Ara, a resident and citizen of a foreign country donated to Eden, a resident citizen of the Philippines, real properties located in that country and shares of stock of a domestic corporation in the Philippines. Will the donations be included in the gross gift and therefore subject to donor’s tax in the Philippines? a. Yes, for the stocks but subject to the rule on reciprocityb. No, the donor being a non-resident alienc. No, for the property situated in the foreign country but the stocks are subject to donor’s taxd. Yes, since the done is a resident citizen

While serving as a detention prisoner in Quezon City jail, B was visited by a middle aged man in barong tagalong. B and the visitor had a 30-minute conversation. Afterwards, B was given P200,000 cash for his bail bond. When the man left, the jail guard asked B, “who is that man?” B replied “Brothers and sisters I have none; the son of the person is my father’s only son/”a. The donation is subject to tax based on the table of schedule for donor’s taxb. The donation is subject to 305 since the donee is a strangerc. The donation is exempt from donor’s taxd. The donation is from a politician, hence. Exempt from donor’s tax

Mr. Tan was the president of a highly profitable corporation that is engaged in the marketing of Mercedes Benz. When Mr. Tan’s daughter got married to the son of the senator, the corporation gave the newly-wed couple a brand new Mercedes Benz sedan worth P3,000,000 and entered the wedding gift in its books as an advertising expense.a. It will be subject to donor’s tax on the part of the corporationb. It is a deductible expense on the part of the corporationc. It is a taxable income to the couple because it is truly a wedding giftd. The corporation should pay the donor’s tax and deduct it from its gross income

What is the amount in order for a funeral expense to be considered deductible?a. Actual funeral expense or 5% of the gross estate whichever is higherb. Actual funeral expense or 5% of the gross estate whichever is lowerc. Actual funeral expense or 15% of the gross estate whichever is lowerd. Actual funeral expense or 15% of the gross estate whichever is higher

On November 30, 2010, Amado, 93 years old and suffering from the prostate cancer wrote a will and on the same day, made several inter vivos gifts to his children. Ten days later, he died. Are the gifts subject to estate tax?a. Yes, since the presumption is that the transfer was made mortis causa to his heirs.b. No, since these are subject to donor’s taxc. No, provided the gifts do not exceed P200,000 per childd. Yes, since he made the transfers during his lifetime

Juan died, survived by his wife Paula and two children. The estate tax was properly paid and the estate settled and divided and distributed among the three heirs. The BR found out later that the estate failed to report the income received by the estate during administration. The BIR issued a deficiency income tax assessment plus interest, surcharges and penalties. The 2 children are residing abroad, thus, the BR sought to collect the dull tax deficiency only against the widow. IS the BIR correct?a. No, BIR should sue all the heirs before it can collect the full tax deficiency only against the widowb. No, BIR should sue all the heirs before it can collect the full tax deficiency from any one of the heirsc. Yes, BIR can sue only one heir and subject the property received from the payment of the estate taxd. Yes, BIR can sue only one heir and collect from each of the heir the amount of tax proportionate to the inheritance received.

Nestle, a multinational corporation doing business in the Philippines, donated 1,000 shares of its cumulative and participating preferred stock to its first Filipino resident manager, Juan de la Cruz in the Philippines. What is the liability, if any, of Nestle?a. Not subject to donor’s tax since the property donated is not located in the Philippinesb. Subject to donor’s tax since 75% of the business of Nestle is located in the Philippinesc. Subject to donor’s tax since the donation was made in the Philippines but subject to reciprocityd. Not subject to tax since not more than 75% of Nestle’s business is located in the Philippines

On November 20, 2010, Impact Corp. donated a piece of vacant lot situated in Pavia, Iloilo to the Municipality of Pavia for the sole purpose of devoting said land as a relocation site for less fortunate constituents of Pavia. In accordance therewith, the Municipality of Pavia issued to the beneficiaries Certificates of Award giving to them the respective areas where their houses were erected. Through an ordinance, the municipality ordained that the lots awarded to the beneficiaries be finally transferred and donated to them. What is the tax consequence of the foregoing dispositions with respect to Impact Corp., Municipality of Pavia and the beneficiaries?a. The disposition between Impact Corp. and Pavia is not subject to tax because it is a gift to and for the use of the political subdivision of the government, the Municipality of Pavia is not subject to any donor’s tax on the value of the land it subsequently donated, it being exempt from taxes as apolitical subdivision of the governmentb. The transaction entered between Impact and Municipality of Pavia is subject to a donor’s tax of 30%, the done being a stranger, the transfer from the Municipality of Pavia to the Beneficiaries is not subject to donor’s tax for Pavia is a public corporation.c. The transaction between the Municipality of Pavia and beneficiaries are subject to donor’s tax since the entire property will be used for administration purposes in the form of settlements, disposition between Impact Corp and Municipality of Pavia is exempt since Pavia is a political subdivision of the government.d. The transfer from the municipality of pavia to the beneficiaries are exempt from donor’s tax on the value of the land, Pavia being a political subdivision of the government while the transfer from Impact Corp. to Pavia is not subject to donor’s tax but the value of the property will be deducted from the business income Impact Corp.

Rex, a real estate magnate, sold to Troy, his brother in law, a lot with a market value of P5,000,000 for P3,000,000. Rex’s cost in the lot is P2,000,000. Troy is financially capable of buying a lot. What is the tax consequence of this transaction?a. The excess of the fair market value over the consideration shall be subject to donor’s taxb. Not subject to donor’s tax since the capital gains tax on the transaction will applyc. Subject to donor’s tax. It is transfer for less than adequate and full consideration which gives rise to a deemed giftd. The consideration will be subject to donor’s tax.

Which of the following is not included in the gross estate?a. Revocable transfer where the consideration is not sufficientb. Revocable transfer where the power of revocation was not exercisedc. Proceeds of life insurance where the beneficiary designated is the estate and the designation is irrevocabled. Proceeds of life insurance where the beneficiary designated is the mother and the designation is irrevocablee. Transfer under a general power of appointment where the consideration was not sufficient

A decedent gross estate’s guaranteed deduction include---a. P200,000 Funeral expenseb. P300,000 Judicial expense c. P500,000 Medical expensed. P1,000,000 Standard deductione. P1,000,000 Family Home

The following are requisite for a vanishing deduction to claimed as deduction, except:a. The estate tax of the prior succession must have finally been determinedb. The precedent decedent died within five(5) years from the date of death of the prior decedentc. The property with respect to which deduction is sought can be identifiedd. The property must have formed part of the gross estate situated in the Philippines of the prior decedent.

For estate tax purpose, the estate of the decedent shall be valued at the time:a. Of the filling of the estate tax returnb. The estate tax is paid c. Of the death of the decedent.d. The estate is distributed to the heirs.

In donor’s tax, personal properties are valued using their:a. Appraised valueb. Fair market valuec. Selling priced. Any of the above, whichever is higher

The donor’s tax return is to be filed and paid on or beforea. 30th day after the gift was madeb. 30th day following the close of the month when the gift was madec. 30th day of the month following the close of the quarter when the gift was maded. April 15th of the year following the close of the last quarter when the gift was made

Which of the following exempt transactions will still require inclusion of the property in the gross estate?a. Legacies to social welfare, charitable and cultural institutions, which the administrative expenses do not exceed 30% of the legacyb. Amount received as was damagesc. Transfer from the first heir to the second heir designated by the decedentd. Merger of the usufruct in the owner of the naked title

One of the following is deductible from gross estatea. Bank loanb. Claims against a self-proclaimed insolvent debtorc. Unpaid mortgage on exclusive property of the surviving spoused. Taxes on income which have accrued after death

A, an individual sold to B, his brother-in-law, his residential lot with a market value of P 1,000,000 for P600,000.00. A’s cost in the lot is P100, 000.00 B is financially capable of buying the lot. What tax should be imposed and collected from A as a result of the transaction?

a. Presumed capital gains tax.b. Donor’s taxc. Real property taxd. Tax on the transfer of real property.

The common characteristic of transfer tax on the transfer of property:a. It is gratuitousb. Is onerousc. Takes effect during the lifetime of the transferor

d. Takes effect upon the death of the transferor.

Which of the following is subject to transfer tax?a. Transfer of personal goods for freeb. Sale of personal property for a price lower than costc. Exchange of a piece of jewelry for a set of furnitured. Transfer of real property for services rendered

Which of the following transfers is not included in the gross estate?a. Transfer for an adequate and full consideration in money’s worth.b. Transfer with reservation and retention of certain rights.c. Transfer for insufficient consideration.d. Transfer in contemplation of death.

Estate tax is imposed ona. The privilege of transmitting property upon deathb. The property left by the decedentc. The heirs of the propertyd. The property left to the surviving spouse

Which among the following is subject to the payment of the donor’s tax?

a. A general renunciation of a surviving spouse in his/her share in the inheritance of the deceased spouse.b. A general renunciation by the surviving spouse of his/her share in the conjugal partnership of gains upon its liquidation as a result of the death of the other spouse.c. A remuneratory donation where there is a legally demandable obligation.d. Donation made outside the Philippines by a non-resident alien of property located outside of the Philippines.

Vanishing deduction is availed of by taxpayers toa. Reduce his gross estateb. Correct his accounting records to reflect the actual deductions madec. Reduce his net estated. Reduce his gross income

Which is not an essential element of donation?a. Capacity of the doneeb. Donative intentc. Delivery of the thing as subject of the donationd. Capacity of the donor

BUSINESS TAXES

ABC internet Corp. operates a website wherein it sells goods and products manufactured in the Philippines for delivery to the relatives of its customers in the Philippines. The said payment is remitted by the credit card companies through the Philippine banking system to ABC internet Corp,. the said sale shall be:a. Subject to VAT at the rate of 0%b. Subject to the ordinary 12% VAT as a sale of goodsc. Subject to the ordinary 12% VAT as a sale of serviced. Not subject to VAT because it is an exempt transaction Sec. 109

The general manager of KLM, an international airline company which operates in the Philippines, decided to rent a house for his use while assigned here in the Philippines. The lease of the house was for the account of KLM and amounted to P 200,000.00 per month. The taxes imposed on the lease payments would be:a. VAT of 0% since KLM is the official international airline of the Dutch government.b. VAT of 12% since the lease was for a property in the Philippines exceeding P 10,000 per monthc. VAT of 12% since the lease of the property cannot be directly connected to the international flights made by the airline company and would not be covered by the 0% VAT.d. VAT of 0% since the lease is an international airline company and the supply of the lease services is part of the cost of operating a company engaged in international travel subject to 0% under the NIRC.

Mr. Menese, a hobbyist of motorcycle paraphernalia, received an order for a good number of his products which he manufactures himself that would be exported to the United States. Mr. Meneses did not know that such order would amount to almost P 10,000,000.00. the said order was completed and shipped to the United States, the effect on Mr. Meneses on VAT would be:a. His sale would be subject to 12% VAT because he did not register as a VAT taxpayer.b. His sale would be 0% rated because it was an export sale but he would be classified as a VAT exempt taxpayer.c. His sale would be 0% rated because it was classified as an export sale and he would be liable to pay VAT as a normal VAT registered taxpayer.

d. His sale would be subject to 0% because the payment was inwardly remitted through the Philippine banking system and he would be liable to pat VAT as a normal VAT registered taxpayer.

The gross receipts of operation of cinemas and pawnshops are—a. Both subject to 12% VATb. Both subject to zero-percent VATc. Both not subject to VATd. Treated differently for VAT purposes

The documentary stamp tax on the original issuance and/or sale of shares woth the designated par value is based on thea. Par value of the sharesb. Actual consideration paid by the subscriber/buyerc. Book value/fair market value of the shares d. Any of the above

ABC Internet Corp. operates a website wherein it sells goods and products manufactured in the Philippines for delivery to the relatives of its customers in the Philippines. The said payment is remitted by the credit card companies through the Philippine banking system to ABC Internet Corp., the said sale shall be:a. Subject to the ordinary 12% VAT as a sale of goodsb. Subject to the ordinary 12% VAT as a sale of servicec. Not subject to VAT because it is an exempt transaction under Section 109d. Subject to VAT at the rate of 0%

Sumo Sam is a Japanese restaurant operating in the Philippines. You were asked which of the restaurant’s products was not subject to VAT, to wit:a. Bottled waterb. Sashimi (raw sliced fish)c. Miso soup (soup containing a few vegetables boiled with Miso added)d. Grilled salmon

The general manager of KLM, an international airline company which operates in the Philippines, decided to rent a house for his use while assigned here in the Philippines. The lease of the house was for the account of KLM and amounted to P200,000.00 per month. The taxes imposed on the lease payments would be:a. VAT of 12% since the lease was for a property in the Philippines exceeding P10,000 per monthb. VAT of 0% since the lessee is an international airline company and the supply of the lease services is part of the cost of operating a company engaged in international travel subject to 0% under the NIRC.c. VAT of 0% since KLM is the official international airline of the Dutch governmentd. Vat of 12% since the lease of the property cannot e directly connected to the international flights made by the airline company and would not be covered by the 0% VAT.

State whether the following enumerated sale transactions are:a. VAT Exemptb. Subject to VAT at 12%c. Subject to VAT at 0%d. Not subject to VATSale of organic vegetables and root crops at Iloilo Central Market (a)Sale of garments y Louis Fashion World, by Louis Claparols, a Filipino designer (b)Sale of farm and other agriculture machineries and implements by a farmers’ cooperative to its members (a)Services rendered by X Aircon and Repair to the air-conditioning equipment of the British Embassy (c)Dormitory Fees paid by students from Guimaras who are lodging at Dora’s Dormitory near UI at a monthly fee of P1, 500.00. (a)

Nikon Industrial Corporation (Nikon) is a domestic corporation engaged in the manufacture of appliances and carries a general mercantile and commercial business. First Unibrand Food Corp. (FUFC) is likewise a domestic corporation incorporated in 2006 by the same principals of Nikon. Due to Asian crisis, First Unibrand Food Corp. had to suspend its operation during the last quarter of 2007. Nikon, being the parent company, is proposing to buy all the machineries of FUFC. Should FUFC be allowed to charge 12% VAT on the proposed sale?a. Yes, since it is a transaction deemed saleb. No, the parent company legally owns the assets of the subsidiary corporationc. No, however, a capital gains tax will be charged at 6% on the market value of the machineriesd. Yes, since it is a sale in the ordinary course of business

Elnathan Lemar is a VAT-registered person with the following data for a taxable month, VAT not included: Sales, domestic to consumers – P600; Sales, domestic to export traders – P100; Sales, direct exports – P300; Purchases, total invoice cost from VAT-registered persons: Goods – P550 and Services – P330. The sales subject to the value-added tax is

a. P300 because only direct exports are vatable b. P600 because only domestic sales to consumers are vatablec. P700 because all domestic sales are subject to VATd. P1,000 because all the above sales are covered and subject to VAT

Mr. Rey’s income from leasing his property reaches the maximum rate of tax under the law. He donated one-half of his said property to a non-stock, non-profit educational institution whose income and assets are actually, directly and exclusively used for educational purposes, and therefore qualified for tax exemption under Art. XIV, Sec. 4(3) of the Constitution and Sec. 30(H) of the Tax Code. Having thus transferred a portion of his said asset, Mr. Rey succeeded in paying a lesser tax on the rental income derived from his property. Is Mr. Rey guilty of tax evasion?

a. No, because what was donated was only portion of Mr. Rey’s property and not the entire property.b.No, because Mr. Rey’s transfer of property to a tax exempt entity is legally permitted by law.c.Yes, because Mr. Rey should have paid higher taxes if he did not transfer said property.d.Yes, because the donation was made to a non-stock, non-profit educational institution.

Value added tax is an indirect tax because:a. It is a regressive taxb. It is imposed on the sale of goods and services as well as importation of goods.c. It can be shifted by the seller to the buyerd. The impact of taxation falls on the seller, while the incidence of taxation is on the buyer.

Which of following is not considered an export sale of value added tax purposes?a. The sale of gold to the Bangko Sentral ng Pilipinasb. The actual shipment of goods from the Philippines of the United Stated paid for in US dollars through a letter of credit issued by a US bank.c. The sale of food packs for use of passengers to Philippine Airlines on its international air transport operations.d. The sale of plastic packaging materials to an export-oriented enterprise who actually export 60% of its total annual production.

A Singaporean supplier of service who renders services in the Philippines for less than 90 days is:a. Subject of VATb. Subject of Income Taxc. Needs to be paid in Philippine Pesod. Has a permanent Establishment in the Philippines

Which of the following statements is correct: The Philippine Value Added Tax is;a. Not an expenseb. A tax creditc. Not apart of the gross selling priced. On purchases, is part of the cost of inventory

Which statement is not correct?a. Excess input taxes of a taxable month arising from domestic sales may be carried over to the succeeding monthb. Excess input taxes of the taxable quarterly arising from domestic sales may be carried over to the succeeding quarterc. The excess input taxes of the taxable period arising from domestic sales may be refundedd. The excess input taxes of a taxable period arising from export sales may be refunded.

Mr. Meneses, a hobbyist of motorcycle paraphernalia, received an order for a good number of his products which he manufactures himself that would be exported to the United States. Mr. menses did not know that such order would amount to almost P10,000,000.00. the said order was completed and shipped to the United States, the effect on Mr. menses on VAT would be:a. His sale would be 0% rated because it was classified as an export sale and he would be liable to pay VAT as a normal VAT registered taxpayer.b. His sale would be subject to 12% VAT because he did not register as a VAT taxpayer.c. His sale would be 0% rated because it was an export sale but he would be classified as a VAT exempt taxpayer.d. His sale would be subject to 0% because the payment was inwardly remitted through the Philippine banking system and he would be liable to pay VAT as a normal VAT registered taxpayer.

A tax imposed at every stage of distribution process on the sale, barter or exchange of goods and services and transactions deemed sale, as well as importation of goods and services.a. Privilege taxb. Percentage taxc. VATd. Excise tax

The Value added tax of 12% is applied on the following types of transactions, except:(a) Sale of Goods (b) Importation(c) Sale of Services(d) Export Sales

The following can avail of the Input Tax Credit, except:

a. Importer of goods/articles previously subjected to VATb. Purchaser of domestic goods upon consummation of the salec. Exporter of goods and services not registered under the VAT systemd. Purchaser of services, lessee or licensee upon payment of compensation, rental, royalty or free.

Statement 1. Export sales by VAT-registered person are subject to Zero rate. The input VAT for its purchases is to be utilized as tax credit.

Statement 2. Export sales by non-VAT registered persons are subject to VAT exempt rate. The VAT paid for its purchases are refundable.

a. both statements are wrongb. only second statement is correctc. only first statement is correctd. both statement are correct

A locally manufactured vehicle was sold to a garments enterprise registered under PEZA or ECOZONE, which of the following statements is correct?

A. the sale is subject to 12% VATB. the sale is subject to ZERO VAT ratec. the sale is allowed with creditable input VATD. the sale is connected with the registered activity of the REZA registered business

Which of the following lease of property is exempt under Section 109 of the NIRC:a. Lease of property for P10,000 and below per month b. Lease of properties for personal use of the Lesseec. Lease of real properties P5,000 and below for commercial activitiesd. Lease of bed spaces and dormitory space at P5,000 and below per month

Which sale of travel tickets in the Philippines is not subject to the VAT?a. Sale of airline tickets for domestic travelb. Sale of ship tickets for domestic travelc. Sale of airline tickets for international traveld. Sale of Metro Rail Tickets (MRT)

Payments made by government to businesses shall be subject to the VAT in the following manner:a. Government will withhold the 12% VAT from their payments to the supplierb. Government will pay the additional 12% VAT to the price provided by the supplierc. Government will withhold an amount of 5% on the VAT component of the selling priced. Government will withhold an amount of 5% n the gross selling price

Which of the following items is a transaction deemed sale?

a. goods for sale transferred or used or consumed by the owner or investor.b. good used as payment to creditors.c. retirement of taxable goods for merger.d. all of the above

Which of the following transaction is not subject to the VAT?(a) Sale of real property ordinarily held for sale(b) Sale of real property used by a company in its business but not for lease or sale(c) Sale of real property installments(d) Sale of real property lot at below P2,500,000.00

The final VAT return is reported and made payable to the Bureau of Internal every:(a) 25th day of each month(b) 25th day of each quarter(c) 20th day of each month(d) 20th day of each quarter

Export of Marikina shoes is subject to:(a) 12% VAT(b) 0% VAT(c) Exempt(d) Specific Tax

Which of the statement is correct? Leasing of property shall be subject to value-added tax as sale of service.

A. if the property is in the Philippines and the lease agreement was executed in the Philippines.b. if the property is in the Philippines and the lease agreement was executed outside the Philippines.

c. if the property is in the Philippines and the lease agreement was executed within or outside the Philippines.d. all of the above

Which of the following is not considered a sale and therefore is not subject to the value-added tax?

a. transfer, use or consumption not ion the ordinary course of business of goods or properties ordinarily intended for sale or use in the course of business.b. Distribution or transfer to share holders or investors of share in the profits of VAT-registered personc.distribution or transfer to creditors in payment of debts.d. Consignment sales

The manufacture and importation of the following for local consumption are subject to excise tax, except:(a) Alcohol products(b) Tobacco products(c) Cinematographic films(d) Mineral product

The person who is not VAT registered but issues a VAT invoice shall be subjected to the following consequences, except:a. All sales would be subjected to the 12% VATb. The person would not be allowed to claim any input VAT on his salesc. The person would be subjected to a surcharge of 50% on all his salesd. Imprisonment for a period not exceeding 1 year for issuing false receipts.

A foreign corporation whose activities are subject to VAT in the Philippines will be collected the VAT by the following manner:a. The foreign corporation shall be required to file and pay the VAT upon receipt of payment from the Philippine source on the due date prescribed by the NIRC.b. The foreign corporation shall be required to file and pay the VAT upon receipt of the payment from the Philippine source through the Philippine consular or embassy services.c. The domestic payor shall be required to withhold the VAT at 12% of the selling price and remit the same to the BIR in favor of the foreign corporation.d. The domestic payor shall be required to withhold the VAT at 12% of the selling price and remit the same to the BIR in the name of the domestic payor.

Which of the following statement is correct?

a. withholding tax liability my arise only when the agent has possession, or control of the funds withheld.b. the withholding tax system was devised to provide the taxpayer a convenient manner to meet his probable income tax liability and to ensure collection of the income tax by government which could otherwise be lost or substantially reduced through the failure to file the corresponding returns.d. all of the above

Which of the statement is wrong? Transaction considered” in the course of trade or business and therefore subject to the business taxes include:

a. regular conduct or pursuit of a commercial or an economic activity by a stock private organization.b.regular conduct or pursuit of a commercial or an economic activity by a non- stock, non-profit private organizationc. isolated services in the Philippines by non-resident foreign persons;d. isolated sale of goods or services for a gross selling price or receipts of P800,000.

Which of the following services is subject to the 3% percentage tax instead of the VAT because of the provision of Section 109 (1) (V)?a. Sale of real properties at a price of P1,500,000.00 and below for the land and at the price of P1,000,000.00 and below for the improvement.b. Services rendered to persons engaged in international shipping or international air-transport operations, including leases of property for the use thereof.c. Services by agricultural contract growers and milling for others of palay into rice, corn into grits and sugar cane to raw sugar.d. Sale of services by individuals whose annual sales do not exceed P1,500,000.00.

The following are not subject to the 12% VAT nor the 10% overseas communications tax, except:a. Amounts paid for messages transmitted by the Government of the Republic of the Philippines or any of its subdivision or instrumentalities.b. Amounts paid for messages transmitted by any embassy and consular offices of a foreign government.c. Amounts paid for messages from any newspapers, press association, radio or television newspaper broadcasting agency or newstickers services.d. Communications to foreign countries using current internet technology otherwise known as internet telephony.

The following are some instances where a VAT-registered person may apply for cancellation of registration except one-

a. A change in ownership in case of single proprietorshipb. A person who has registered prior to planned business operation fails to actually start his business,c, A person has retired from business.d. A person who voluntarily / registered under VAT system and opt to revert to exempt status after 12 months from date of registration.

Subsistence livelihoods are exempted from VAT and percentage tax. Which of the following is considered principally for subsistence or livelihood?

a. gross sales or receipts not exceeding P100,000 per yearb. gross sales or receipts not exceeding P1,500,000 per year.c. Cooperative sales to its membersd. Rental receipts of P600,000 per year.

In April 2010, Ms. D registered with the BIR her business of renting her only property not realizing that she was registered as a VAT taxpayer. The total annual rental from March to December 2010 was P236,880. May Ms. D request for the exemption from paying VAT for 2010?a. Yes, the BIR will allow the cancellation of VAT registration but she is still liable for VATb. Yes, the BIR will not allow the cancellation of her VAT registration and grant the exemption from VATc. No, the BIR will not allow the cancellation of VAT registration for a period of 3 years and she is still liable for VATd. No, the BIR will not allow the cancellation of VAT registration but she will be exempt from VAT

Iloilo Property Holdings, a domestic corporation duly authorized to engage in real estate development business in the Philippines, owns and develop several mass housing projects in Iloilo province. Each house and lot costs P2,500,000. Will the sale be exempt from VAT?a. Yes, the sale of real property utilized for low cost housing is exempt from VATb. No, the selling price is more than P1,500,000, hence, subject to VATc. Yes, subject to VAT but all the Zero-rated Saled. No, subject to income tax since it is an ordinary asset

Government entities/ units making payment to VAT- registered enterprise is required to withhold the estimated tax corresponding to its payment. The vat withholding tax on payment to VAT registered supplier is

a. 3% of the gross paymentb. 5% of the gross paymentc. 8.5% of gross paymentd. 20% of gross payment

Under RA 9010 the following will be subjected to EVAT starting January 1, 2003, except:a. Professionals, actors, actresses, talent, singers, etc.b. Banks and non-bank financial intermediariesc. Services performed as professional athletesd. Cabarets, night clubs and racetracks

Importation of automobiles is subject to:a. Graduated Ad valorem tax of 2% to 60%b. VAT of 12%c. Specific taxd. A and Be. Exempt

Domestic sale of bagoong is:a. Exempt from VATb. Subject to 12% VAT if gross annual sales exceed P1.5Mc. Subject to 0% VATd. Subject to 3% percentage tax if exempt from VATe. B and D are correct

VAT is a-a. Special taxb. Local taxc. Specific taxd. Regressive taxe. None of the above

If monthly rental income of a residential unit exceeds P10,000 per unit, the same shall be subject to 12% VAT.a. True, without any further conditionb. True, only if the total gross annual rentals received exceed P1.5Mc. False, this is subject to 0% VATd. False, this is exempt from Vat under RA 9337

In order that an invoice will qualify as a VAT invoice or receipt for purposes of claiming a credit for VAT input tax, it must contain.

I. The TIN &VAT registration number both of the seller and buyerII. The total amount which the purchaser pays or its obligated to pay to the seller:

a. only II

b. neither I or IIc. both I and IId. only I

Which statement is wrong? Value added tax on importation of goods:

a. is imposed on an importation for sale or for use in businessb.is imposed on an importation even for personal usec. should be paid prior to removal of goods from customs custodyd. may not be available as an input tax

Petroleum products sold to the following are exempt from excise taxa. Domestic carriers of Philippine or foreign registry on their use or consumption within the Philippines provided that the petroleum products sold to these domestic carriers are stored in a bonded storage tankb. Exempt entities or agencies covered by tax treaties, convention and other international agreements for their use or consumption even if the country of said foreign international carrier or exempt from similar taxes petroleum products sold to Philippines carriers, entities or agenciesc. Entities which are by law exempt from direct and indirect taxes.d. None of the above

The VAT law was increased from 10% to 12% in the Philippines. A group of individuals filed an action in the courts alleging that the increased rates would be oppressive and confiscatory on their business activities and that such would be tantamount to “destroying their business”. As the judge of the courts to which the case was presented you would :a. Evaluate the case and the rule against the government on the ground that the law was indeed confiscatory.b. Evaluate the case and rule against the government on the ground that the law infringed upon the rights of the citizens and is undue interference by the government on business c. Evaluate the case and the rule that all courts are prohibited from issuing an injunction on the collection of taxes because it is the lifeblood of government.d. Evaluate the case and the rule that the courts may not interfere with legislative policy on who and what are to be taxed, it may only look upon the law by which the provision was enacted and see if there has been a violation made.

A promissory note, which is secured by a real estate mortgage, is subject to the provision of the NIRC on documentary stamp tax on loan instruments and documentary stamp tax on real estate mortgages. The effect of having two documentary stamp tax on the said transaction for the documentary stamp tax is:a. Both documentary stamp taxes shall be paidb. The taxpayer is mandated to pay the higher of the two documentary stamp taxes on the transaction.c. The taxpayer is allowed to choose between the two transactions on which documentary stamp tax to pay.d. The earlier dated instrument should be used as basis to determine which documentary stamp tax is due to be paid.

In dealing with a PEZA-registered enterprise, the following is/are true statement/s for VAT purposesa. Sales to it will always be zero-ratedb. Sales by it will always be zero-ratedc. Sales to and by it will always be VAT exempt d. Both (a) and (b) above

Which of the following statements regarding the VAT input is false?a. It is offset against output tax to arrive at the net VAT payableb. Any unutilized input VAT may be refundable if the same is incurred in connection with a VAT zero-rated transactionc. No presumptive input tax is allowed for real estate transactionsd. Input VAT incurred in connection with a VAT exempt transaction can not be credited against the seller’s output VAT if any

All of the transactions below are subject to 12% VAT excepta. Sale of copra which is a non-food agricultural productb. Export sale by a VAT-registered taxpayerc. Importation of a pocket bookd. Sale of services to the government

Statement 1: when a VAT- registered manufacturer who is also subject to an excise tax, exports his goods, the input taxes attributable to the goods exported may be refunded or credited.

Statement 2: When VAT- registered manufacturer who is also subject to an excise tax, export his goods, the excise tax paid on such goods may be refunded or credited:

a. both statement are correctb. both statement are wrongc. first statement is correct but second statement wrongd. first sentence is wrong but second statement is correct

Sale of real estate is subject to VAT.a. True, if not made in the regular course of trade or businessb. False, it is exempt if the real estate is classified as capital asset

c. False, it is exempt if what is sold is residential unit

A person who becomes subject to the value-added tax for the first time can have an input tax out of the inventory of goods, materials and supplies on hand at the time he became liable to the value added taxes. This is called:

a. value-added tax deemed paidb.transitional input taxc. presumptive input taxd.none of the above

Statement 1: The output value-added tax is computed by multiplying the gross selling price by 12% or multiplying the total amount indicated in the invoice by 1/12.

Statement 2: The output value-added tax is computed by multiplying the total amount indicated in the invoice by 12%.

a. both statements are correct.b. both statements are wrong.c. statement 1 is correct; statement 2 is wrongd. statement 1 is wrong while statement 2 is correct.

Which of the following VAT transactions are not considered zero-rated?a. Export sales of goodsb. Domestic sale of goods in the regular course of trade or businessc. Foreign currency denominated saled. Sale of good to Bangko Sentral ng Pilipinas

Tino is engaged in buying and selling of fresh fruits at the Q-Mart and Aranque Markets. He is also exporting canned and preserved fruits to Japan. In 2004, he made a gross sales of P2, 000,000. He is liable for VAT registration fee of—a. P500b. P1,000c. P1,500d. Exempt

The VAT accrues on the sale of services upon the occurrence of the following event:a. Issuance of a statement of account by the supplier to the customerb. Completion of the service by the supplier to the customerc. Payment by the customer of the complete price of the serviced. Payment by the customer for any part of the service

The VAT payable is computed by the following formula:a. Output tax alone.b. Output tax less lower of actual input tax or 70% of output tax.c. Input tax alone.d. Output tax less input tax

Excess input tax carry over can be done in

a. the monthly VAT return but not in the quarterly VAT returnb. the quarterly VAT return but not in the monthly (VAT) return.c. both in the monthly VAT return and quarterly VAT returnd. either only the monthly or the quarterly VAT return

The increment penalty for the late remittance of VAT isa. 25% surcharge and 24% per annum interestb. 50% surcharge and 20% per annum interest c. 50% surcharge and 24% interest per annumd. 25% surcharge and 20% interest per annum

In the value-added tax on sale of services, the output tax is composed

a. on billings of the month b. on collection of the month on all billings madec. on the contract price of contracts completed during the taxable periodd. only and strictly on labor performed under the contract of services

The following information are requirements that should be contained in a VAT receipt issued for the purchase of goods or services, except:a. The statement that the seller is a vat registered person with the TIN number of the seller.b. The amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the VATc. The amount of the VAT paid, which shall be shown as a separate item in the receipt, or if the transaction is zero rated or exempt, the applicable VAT thereon, regardless of the amount of the transaction.

d. The date of the transaction, quality, unit cost and description of the goods or properties or the nature of the service.

B Development Corporation, a real-estate developer organized in the 1970s, bought several parcels of land in Tuba, Benguet during the mid-70s. it has never registered as VAT-liable since its sales during the past years did not meet the mandatory liability for VAT. However, during the current year, due to increased transactions, it became liable for the first time for VAT. B development corporation invoked entitlement to transitional input taxes on all its landholdings, but the same was disallowed because according to the BIR, the purchase of these lands happened at the time when no VAT was imposed in the country, and that no input VAT was actually paid on such lands. Was the action of the BIR proper? Decide. a. B is entitled to transitional input VAT regardless of its prior non-VAT registrationb. B is entitled to transitional input VAT only if it can claim that it shouldered the burden of the VAT during the prior years.c. B is not entitled to transitional input VAT as it never registered itself in the past as VAT liable.d. B is not entitled to transitional input VAT because when the purchase was made, the VAT law was not yet in force.

Mrs. Fleta Cano, who is a senior citizen, was engaged in the manufacture and sale of “burong talngka” in the local market. Her sales does not exceed one hundred thousand (P100,000) pesos per annum. She was visited by a BIR examiner asking her for her accounting records and why she was not imposing the VAT, her acceptable answer to the BIR would exclude:a. That as an indigent taxpayer she is not required to pay VATb. That as a seller of burong talangka, the same is classified as an agricultural food product in its original state, thereby exempt from VAT.c. That as a senior citizen, she is not subject to VAT under RA 9994d. That she is a mere employee and the real owner of the business is Ms. Papuz.

ABC transport services is a bus company with license to operate fro the LTFRB, as such it is subject to:a. 3% Common Carriers Taxb. 12% Value Added Taxc. 10% Value Added Taxd. 3% International Carriers Tax

Members of the Kapisanan ng mga Broadkaster sa Pilipinas regularly receive broadcast orders for airtime from the Philippine Information Agency (PIA). Does the VAT requirement apply to PIA regarding government plugs for airing in radio and TV stations?

a. Yes, subject to 12% VAT for the services rendered by the TV and radio broadcasting companiesb. No, it’s considered a VAT exempt transaction by being a government agencyc. Not subject to VAT considering that it is not engaged in businessd. Yes, subject to 0% VAT for engaging the services of TV and radio broadcasting companies.

Goods subject to Excise Taxes includes the following items, except:a. Jewelriesb. Automobilesc. Fermented liquord. Prescription eye glasses

Absolute prohibited to be brought into the Philippines are as follow except:a. Weapons of warb. Articles of treasonc. Drugs and medicinesd. Gambling paraphernalia

A transaction requiring the payment of documentary stamp taxes shall be paid by either of the parties to the transaction, if however , one of the parties to the transaction is exempt from the payment of the documentary stamp tax, the tax shall be paid by:a. Both the exempt and non-exempt taxpayerb. The party who does not enjoy the exemption from the documentary stamp tax.c. None of the parties since the transaction now become exempt from the documentary stamp tax.d. The documentary stamp tax shall be deferred until a further transaction is effected between non-exempt taxpayers.

A transaction requiring the payment of documentary stamp taxes shall be paid by either of the parties to the transaction, if however, one of the parties to the transaction is exempt from the payment of the documentary stamp tax, the tax shall be paid by:a. Both the exempt and non-exempt taxpayerb. The party who does not enjoy the exemption from the documentary stamp taxc. None of the parties since the transaction now become exempt from the documentary stamp taxd. The documentary stamp tax shall be deferred until a further transaction is effected between non-exempt taxpayers

Sumo Sam is a Japanese restaurant operating in the Philippines, you were asked which of the restaurants products was not subject to the VAT, to wit:a. Bottled waterb. Grilled salmonc. Sashimi (raw sliced fish)d. Miso soup (soup containing a few vegetables boiled with Miso added)

A foreign corporation whose activities are subject to VAT in the Philippines will be collected the VAT by the following manner:a. The domestic payor shall be required to withholding the VAT at 12% of the selling price and remit the same to the BIR in the name of the domestic payorb. The foreign corporation shall be required to file and pay the VAT upon receipt of payment from the Philippines source on the due date prescribed by the NIRC.c. The domestic payor shall be required to withhold the VAT to 12% of the selling price and remit the same to the BIR in favor of the foreign corporation.d. The foreign corporation shall be required to file and pay the VAT upon receipt of the payment from the Philippine source through the Philippine consular or embassy services.

Which of the following services if subject to the 3% percentage tax instead of the VAT because of the provision of Section 109 (1) (V):a. Sale of services by individuals whose annual sales do not exceed P 1,500,000.00b. Services by agricultural contract growers and milling for others of palay into rice, corn into grits and sugar cane to raw sugar.c. Sale of real properties at a price of P 1,500,000.00 and below for the improvement.d. Services rendered to persons engaged in international shipping or international air transportation operations, including lease of property for the use thereof.

B development Corporation, a real-estate developer organized in the 1970s, bought several parcels of land in Tuba, Benguet during the mid-70s. it has never registered as VAY-liable since its sales during the past years did not meet the mandatory liability for VAT. However, during the current year, due to increased transactions, it became liable for the first time for VAT. B Development Corporation invoked entitlement to transactional input taxes on all its landholdings, but the same was disallowed because according to the BIR, the purchase of these lands happened at a time when no VAT was imposed in the country, and that no input VAT was actually paid on such lands, was the action of the BIR proper? Decide.a. B is entitled to transitional input VAT regardless of its prior non-VAT registrationb. B is not entitled to transitional input VAT as it never registered itself in the past as VAT liablec. B is not entitled to transitional input VAT because when the purchase was made, the VAT law was not yet in force.d. B is entitled to transitional input VAT only if it can claim that is shouldered the burden of the VAT during the prior years.

CUSTOMS CODE

The Philippine Coats Guard seized 10,000 sacks of rice, which were unloaded form m/v ampatuan and turned them over to the custody of the Bureau of Customs. Mr. Mario Tan protested the seizure claiming that the goods were locally purchased. After due hearing, the District Collector of Customs ordered the release of the rice. Since the decision was adverse to the government, the case was automatically elevated to the Commissioner of Customs pursuant to Memorandum Order n. 20-87. Claiming that the Commissioner of Customs possessed no automatic review powers, Mr. Tan assailed the validity of said Memorandum Order No. 20-87. He further argued that since Section 2313 of the Tariff and Customs Code allowed only review of collector’s decision if adverse to the taxpayer, CMO No. 20-87 enlarged the power of the Commissioner of Customs by conferring him with automatic power in seizure cases. RESOLVE.a. Mr. Tan’s position is impressed with merit. Section 2313 of the tariff and Customs Code prevails over Memorandum Order No. 20-87.b. Mr. Tan’s stance is unmeritious. The automatic review procedure finds support in the power of the Commissioner of Customs to enforce and implement the provisions of the Tariff and Customs Code.c. Mr. Tan’s thesis is well taken. Reasons: CMO No. 20-87 is an impermissible encroachment on legislative prerogative.d. Mr. Tan’s theory deserves scant consideration. Reason: Without the automatic review, collector’s decision unless appealed by the aggrieved party (owner of the goods) would become final and no one the wiser except himself and the owner of the goods.

After several articles were abandoned, Customs instituted an auction sale of the said items. X won in the bid on the sale of sawmill machinery and equipment. When X claimed said articles, they were no longer in the customs house. The articles were found present papers exept an acknowledgement receipt from A, who received the payment. Customs seized the article even if the articles were already in the hands of third persons. Decide and explain.a. Collector of Customs has jurisdictionb. Collector has no more jurisdictionc. Commissioner of Customs has jurisdictiond. None of the above

H was assessed by the Collector of Customs of the duties on his important. H challenged the assessment made by the Collector. As his tax lawyer, what will you first advice H?a. Pretest the assessment before the Collector b. Appeal to the CTAc. Protest the assessment before the Commissionerd. None of the above [Pay the duties under protest]

In smuggling a shipment of onions, the smugglers used a ten-wheeler truck which they hired for the purpose of taking out the shipment from the customs zone. Don Sol, the truck owner, did not have a certificate of public convenience to operate his trucking business. Don Sol did not know that the shipment of onions was illegally imported. Can the Collector of Customs of the port seize and forfeit the truck as an instrument in the smuggling?

a. Yes, the Collector of Customs of the port can seize and forfeit the truck as the smugglers was about to take out the shipment without paying the customs duties on the imported onions.

b. No, the Collector of Customs of the port cannot seize and forfeit the truck even if it was used as an instrument in the smuggling activity because the smugglers are not the owners of the said truck.c. Yes, the Collector of Customs of the port can seize and forfeit the truck because this was used in the smuggling activity and the same was not duly authorized to operate as a common carrier.d. No, the Collector of Customs of the port cannot seize and forfeit the truck as an instrument in the smuggling activity because the owner thereof does not know that the shipment of onions is illegally imported.

The Philippine Coast Guard seized 10,000 sacks of rice, which were unloaded from M/V Ambisyoso and turned them over to the custody of the Bureau of Customs. Mr. Mario Tan protested the seizure claiming that the goods were locally purchased. After due hearing, the District Collector of customs ordered the release of the rice. Since the decision was adverse to the government, the case automatically elevated to the Commissioner of Customs pursuant to Memorandum Order No. 20-87. Claiming that the Commissioner of Customs possessed automatic review powers, Mr. Tan assailed the validity of said Memorandum Order No. 20-87. He further argued that since Section 2313 of the Tariff and Customs Code allowed only review of collector’s decision if adverse to the taxpayer, CMO No. 20-87 enlarges the power of the Commissioner f Customs by conferring him with automatic power in seizure cases. RESOLVE.a. Mr. Tan’s position is impressed with merit. Section 2313 of the Tariff and Customs Code prevails over Memorandum Order No. 20-87.b. Mr. Tan’s stance is unmeritorious. The automatic review procedure finds support in the power of the Commissioner of customs to enforce and implement the provisions of the Tariff and Customs Code. c. Mr. Tan’s thesis is well taken. Reason: CMO No. 20-87 is an impermissible encroachment on legislative prerogative.d. Mr. Tan’s theory deserves scant consideration. Reason: Without the automatic review, collector’s decision unless appealed by the aggrieved party (owner of goods) would become final with no one the wiser except himself and the owner of the goods.

The Bureau of Customs has jurisdiction to search my warehouse or building where smuggled goods or articles are kept or stored. In case the watchman and his family live in the building-a. Application for search warrant is required.b. The fact that his family stays therein does make the place a dwelling house. Thus, search warrant is still not necessary.c. The Collector of Customs must secure approval from the Customs Commissioner before the search could be effected.d. That will convert the building into dwelling place, hence, search warrant is constitutionally mandated.

This special duty is imposed first before banning the imported articlea. Marking dutyb. Dumping dutyc. Countervailing dutyd. Discriminatory duty

The collector of Customs issued a warrant of seizure and detention against X for the goods believed to have been smuggled by him. Acting on such warrant, customs agents went to X’s warehouse, forcibly opened the same, and seized the goods subject of such warrant. Upon these facts, which of the following is correct?a. The warrant is not valid because it was issued merely by the Collector and not the Commissioner of Customsb. The warrant is void because it was issued not by the courts and without compliance with the requirements of the Constitutionc. The goods were validly seized because seizure of smuggled imported articles is among the functions of the Collector, as part of the exercise of his primary jurisdictiond. The goods were validly seized because it was by virtue a warrant of seizure issued by the Collector of Customs which was already sufficient to effect a valid search and seizure

TAX REMEDIES

Mario disputed a deficiency tax assessment and upon receipt of an adverse decision by the Commissioner of Internal Revenue, filed an appeal with the Court of Tax Appeal. While the appeal is pending, the BIR served a warrant of levy on the real properties of Mario to enforce the collection of the disputed tax. Granting arguendo that the BIR can legally levy on the properties, what could Mario do to stop the process?a. Appeal the BIR’s action to the Court of Appealsb. Secure a temporary restraining order before the Supreme Court.c. Dispute BIR’s levy on the properties before the Court of Tax Appeals d. File a motion for injunction with the Court of Tax Appeals on the ground that such collection will jeopardize the interest of the taxpayer or the government.

Revenue Regulations 10-2002, effective September 1, 2002, placed a ceiling on the allowable deductible entertainment, amusement and recreation expenses, in an amount equivalent to the actual entertainment, amusement and recreation expenses paid or incurred within the taxable year, but in no case to exceed one half of one percent of the net sales/receipts. M, a taxpayer engaged in business, questioned the validity on the said Revenue Regulations on the ground that such is an undue encroachment legislative powers, deduct the actual entertainment, amusement and recreation expenses provided that such is in furtherance of the taxpayer’s trade, business or practice on profession. Will the suit prosper?a. The suit will not prosper, as the ceiling imposed by Rev. Regs. 10-2002 is fixed in the NIRC.b. The suit will prosper, since the enactment of Rev. Regs. 10-2002 cannot to against the basic provision of Section 34 of the NIRCc. The suit will prosper, considering that representation expenses are ordinary and necessary business expenses; hence, deductible in fulld. The suit will not prosper, as the NIRC allows administrative agencies to make adjustments or fix ceiling regarding itemized deductions

After examining the corporate records of X Corporation, the BIR discovered that the said corporation improperly retained during the years 1999-2002. For some reasons, the BIR was not able to immediately commence collection proceeding against X Corporation. It was only after six years that the BIR assessed X Corporation for improperly accumulated earnings tax, in preparation for collection proceedings against the said corporation. X Corporation protested on the ground of prescription. Rule on the protest.a. The protest should be denied because the period of prescription is 10 years, and it has not yet lapsed.b. The protest should be granted because the period of prescription of five years to assess has indeed lapsed.c. The protest should be granted because the period of prescription of three years to assess has indeed lapsed.d. The protest should be denied because the right of the government to assess and collect in this case does not prescribe.

An assessment was issued by the BIR against the taxpayers based on a review of the financial statement presented by the taxpayer together with the tax returns, without conducting an actual investigation, but it represented the facts and laws of the findings of the BIR. The same was questioned by the taxpayer on the ground that it was capricious, which whimsical and without legal basis. The findings of the BIR, as presented, would stand against the taxpayer because:a. There is a presumption of regularity on the work of the BIR examinerb. The BIR stated the facts and laws which was the basis of the assessment madec. There is a presumption of correctness on the findings of the BIR which shifts the burden to the taxpayer to disproved. The taxpayers is prohibited from questioning the wisdom of congress in creating such law which allows the executive branch of government to generate revenues from whatever sources

The BIR sent an assessment to the taxpayer on the last day of the prescribed period to assess deficiency taxes. The said assessment was sent via registered mail dated on the last day of the assessment period and received by the taxpayer two weeks thereafter. The said assessment is:a. Invalid because it was not received by the taxpayer within the prescribed period to assessb. Valid on the ground that it is deemed received by the taxpayer on the day it was mailed.c. Valid on the ground that the presumption of regularity negates the need for personal service.d. Invalid because the BIR did not avail of personal service as a means of delivering the said assessment

A taxpayer received a certain sum of money erroneously through the crediting of his bank account. The taxpayer knew of this error and informed the bank which did nothing in relation to the said error. The taxpayer then prepared his income tax return and did not include the amount erroneously received as part of his income for the year. No mention was made on this matter in his financial statements or income tax return. The said act constitutes:a. Failure to file a returnb. Basis for the imposition of donors taxc. Willful intent to evade taxes which can constitute fraudd. Not a basis for fraud because the money was not owned by the taxpayer

Do the Regional Trial Courts possess the power to issue injunctions re collection of local taxes?a. No because the power to enjoin collection of taxes is within the jurisdiction of the Court of Tax Appealsb. Yes, provided that there should first be payment of taxes under protest prior to the grant of the injunctionc. No because courts are prohibited from issuing injunctions re collection of taxes, whether national or local, due to the lifeblood doctrined. Yes, provided that all requisites for injunction under the Rules of Court are present, because there is no express prohibition under the Local Government Code

Taxpayer K Corporation filed its Annual Income Tax Return for taxable year 1998 on 14 April 1999.records of the case show that while the Bureau of Internal Revenue (BIR) avers that it sent the assessment notice dated 1 February 2002 on 6 February 2002, taxpayer K Corporation denies having received an assessment notice from the BIR. K Corporation alleges that it came to know of the deficiency tax assessment only on 17 March 2003 when it was served with the Warrant of Distrait and levy. From the foregoing facts, which is correct?a. The taxpayer should prove that there was no such notice of assessment receivedb. The BIR has the burden of evidence to prove that the assessment has indeed been sentc. The BIR can invoke the presumption that official duties were regularly complied withd. The BIR can invoke the presumption under Section 3(v), Rule 131 the Rules of Court that when a mail matter is sent by registered mail, there exists a presumption that it was received in the regular course of mail

In which of the instance below would the period of limitation of assessment and collection of taxes be suspended:a. Where the tax return, on its face, presents a clear error in the computation of the tax due b. Where the taxpayer and the BIR agree on the extension of the period of prescription after the period to assess the tax has already expiredc. Where the taxpayer has changed business address and has not informed the Commissioner on Internal Revenued. When cases involve false of fraudulent returns with intent to evade the tax or of failure to file a return the fact of the fraud duly taken cognizance of in court

An assessment was issued by the BIR against the taxpayer based on a review of the financial statements presented by the taxpayer together with the tax returns, without conducting an actual investigation, but it presented the facts and laws of the findings of the BIR. The same was questioned by the taxpayer on the ground that it was capricious, whimsical and without legal basis. The findings of the BIR, as presented, would stand against the taxpayer because:a. There is a presumption of regularity which work of the BIR examinerb. The BIR stated the facts and laws which was the basis of the assessment made.c. There is presumption of correctness on the findings of the BIR which shifts the burden to the taxpayer to disproved. The taxpayer is prohibited from questioning the wisdom of congress in creating such a law which allows the executive branch of government to generate revenue from whatever sources.

AG obtained a loan from KD in the amount of P100,000. To secure the obligation, KD required AG to execute a Deed of Absolute Sale covering the parcel of land owned by AG. At the time of the execution of the Deed, the parties agreed to pay the capital gains tax, with the understanding that if AG makes full payment of the obligation within a period of six months, DK shall not cause the transfer of the property to his name. before the six-month period expired, AG was paying his obligation to KD but the latter refused to accept the payment contending that there was already an absolute sale of the Property, and that he had already transferred the title to his name. Thereafter, AG instituted a claim for refund with the BIR to recover the capital gains tax paid. Should the claim for refund be granted?a. No, because the right of the taxpayer to refund has already prescribedb. No, because the tax was properly paid by the parties due to the execution of the deed of sale.c. Yes, because there was no basis for the principle of solution indebt is applicabled. Yes, because there was wrongful payment of the tax, and that a supervening event has occurred that entitled the taxpayer to a refund

Using the facts mentioned in item 41, when KD executed a Deed of Reconveyance in favor of AG, the Registrar of Deeds required that a prior tax clearance be shown before he canceling the title of KD and issuing a new one in favor of AG. Was the action of the Registrar of Deed proper?a. No, it is not proper because there was no sale, barter or exchange of propertiesb. No, it is not proper because the cancelation was by virtue of a court decisionc. Yes, it is proper because the capital gains tax is applicable even to reconveyance of propertiesd. Yes, it is proper because the Registrar is duty bound to ensure that prior to cancelation of registration of title and issuing a new one, a tax clearance should first be issued by the BIR

For the taxable year 2003, the University of Bakakeng (UB), a proprietary educational institution, voluntarily paid the Minimum Corporate Income Tax (MCIT) on April 15, 2004, since the said MCIT is higher than its computed normal tax. A few months later, while you were reviewing the tax return of UB for the year 2003, you noticed that the school failed to report some income of UB from school-related activities which would make the school-related income more than 50% of its income from all sources; hence, the school should have been subject to tax at a rate of 10% and consequently, it should not also be liable for MCIT. Thus, on June 15, 2005, you, as the tax lawyer of UB, filed an amended return for your client, which now reflects that UB should not be liable for the MCIT. One year after the filing of the amended return, you filed, on behalf of UB, a claim for refund of the MCTI. Suppose that the Commissioner on Internal Revenue (CIR) denied your claim for refund on the ground of prescription. Is such action of the CIR legally justifiable?a. No, it is not justifiable because the period of prescription is three years from the time of the filing of the returnb. Yes, it is justifiable because the counting of the period of prescription starts from the filing of the original return, which is April 15, 2005c. No, it is not justifiable because the start of the period of prescription is at the time of the filling of the amended return, the amendment being substantiald. Yes, it is justifiable, but not because of prescription but because the MCIT was properly paid, and supervening events should not be allowed as a basis for the claim for refund

For the taxable year 2003, the University of Bakakeng (UB), a proprietary educational institution, voluntarily paid the Minimum Corporate Income Tax (MCIT) on April 15, 2004, since the said MCIT is higher than its computed normal tax. A few months later, while you were reviewing the tax return of UB for the year 2003, you noticed that the school failed to report some income of UB from school-related activities which would make the school-related income more than 50% of its income from all sources; hence, the school should have been subject to tax at a rate of 10% and consequently, it should not also be liable for MCIT. Suppose that the CIR, in the process of reviewing the return of UB, found out that the school did not include certain non-school related income in its return, which would make the school liable for more MCIT than what it had paid. Thus, after complying with the procedural requirements of law, the BIR, on May 30, 2008, issued a formal assessment notice to UB assessing the deficiency MCIT for 2003. It this act of the CIR legally justified?a. Yes, it is legally justified because the assessment and collection of MCIT does not prescribeb. Yes, it is legally justified because the assessment was made within the period of prescriptionc. No, it is not legally justified because by then, the right of the government to assess has prescribedd. No, it is not legally justified because the subsequent discovery cannot give rise to additional tax liabilities

The taxpayer who disputes an assessment issued by the BIR, after submitting his position on the matter for resolution for the BIR to act the matter shall be:a. Required to file an appeal to the CTA within 30 days from the expiration of the 180 day periodb. Required to file a secondary request for reinvestigation with the BIR stating new facts relating to the investigationc. Allowed to await the decision of the BIR on the matter before filing an appeal to the CTA within 60 days from receipt of the decisiond. Allowed to file an appeal with the CTA within 30 days from the lapse of the 180 day period or wait for the decision of the BIR in the matter and then file with the CTA an appeal within 30 days from the receipt of the decision of the BIR.

An assessment was being delivered to the taxpayer before the expiration of the prescriptive period of assessment. The taxpayer, in order to avoid receiving the same, refused to receive or sign any document issued by the BIR. The BIR may, as a form of alternative service:a. Leave a copy of the assessment with any person in the premises of the taxpayerb. Request for a barangay official to witness and attest that the taxpayer refused to receive a copy of the assessment.c. Prepare an affidavit starting the refusal of the taxpayer to accept the said assessment without need for leaving a copy of the same in the premises of the taxpayerd. Leave a copy of the said assessment in the premises of the taxpayer in the presence of two other of the BIR and prepare a notarized affidavit of refusal to accept on the part of the taxpayer, the said assessment notice.

The correct prescriptive period on tax assessment under the NIRC is within:a. 3 years after the correct tax return is filedb. 10 years after the correct tax return is filedc. 3 years after discovery of failure to file return

d. 10 years from the prescribed date of filinf the return

The taxpayer failed to contest the assessment served, what will he do:a. File insolvencyb. Appeal to the CTAc. Pay the tax assessmentd. Ask for reconsideration to the BIR

A taxpayer protested the Formal Assessment Notice or FAN issued but the BIR. Which of the following replies/actions by the BIR can be construed as a “decision” appealable to the Court of Tax Appeals?a. Final Notice Before Seizure issued by the clerk together with a letter stating that it is “the final decision on the matter”b. Final Notice Before Seizure issued by the Commissioner of Internal Revenue without any other documentsc. Final Notice Before Seizure issued by the Regional Director together with a letter stating that it is” the final decision on the matter”

Which of the following acts of government can be questioned simultaneously before the Bureau of Internal Revenue and the Court of Tax Appeals?a. An invalid assessment while a request for reinvestigation remains pending with the Commissioner of Internal Revenueb. A claim for refundc. An erroneous imposition of VAT on imported goodsd. None of the above- one or the other must decide with finality first before the other can assume jurisdiction

If a taxpayer believes in good faith that the assessment against him is doubtful but the same has become final and unappeable what is the best available remedy to him?a. Protest the assessmentb. Apply for a compromise of his tax liabilityc. File an injunction with the CTAd. Ask for the interest to be waived

Mr. Naih Lad is a big-time swindler. In one year he was able to earn P1 Million from his swindling activities. When the Commissioner of Internal Revenue discovered his income from swindling, the Commissioner assessed him a deficiency income tax for such income. The lawyer of Mr. Naih Lad protested the assessment on the ground that the income tax applies only to legal income, not to illegal income. How will you rule on the ground for the protest?

a. The contention that the income tax applies to legal income and not to illegal income is NOT correct. The Tax Code includes within the purview of gross income all income from whatever source derived whether legal or not.

b. The contention of Mr. Naih Lad’s counsel is not proper because once the Commissioner found any deficiency on income tax, it is presumed to be valid and binding.c. The protest is properly laid down because income from swindling is specifically excluded under the Tax Code from among the pertinent items included in the gross income.d. The protest is valid. Mr. Naih Lad did not issue any receipt to the said income. The Commissioner erred in assessing said deficiency income tax as only those income issued with receipts are subject of its assessment.

Taxpayer Q was supposed to have filed his income tax return on April 15, 2011. He failed to do so and only filed it on June 15, 2011 but before receiving any notice from the BIR. He will be liable for—a. 25% surcharge plus 20% interest per annumb. 50% surcharge plus 20% interest per annumc. 25% surcharge onlyd. 20% interest per annum only

Taxpayer W filed his DST return on May 10, 2011 when the same was due on May 5, 2011. The BIR assessed him on May 8, 2014. Thereafter, the BIR only started collection proceedings against him on May 7, 2019. Which of the following statements is false?a. The BIR’s right to assess had not yet prescribedb. The BIR’s right to collect had not yet prescribedc. If the BIR alleges fraud, it can still validly assess until May 9, 2012d. None of the above

A tax assessment ---a. Is always presumed to be correctb. Always prescribes in 3 yearsc. May not be issued by the Commissioner of Internal Revenued. Can be abated by paying only 10% of the basic tax dueThe 50% surcharge will be imposed in the following instances---a. Where there is a possible basis of fraud although this possibility is countered by the fact that the BIR had 3 highly different computationsb. In the case of a false return where there is a really no intention to evade tax but there is merely a deviation from truthc. There were some mistakes in the valuation of property and/or prices of shares of stocks and the taxpayer is not an expert in establishing value of such property/sharesd. Where the return is filed with an internal revenue officer other than those with whom the return is required to be filed

The distinction between actual distraint and constructive distraint is that

a. actual distraint may be made on the property of any taxpayer whether delinquent or not while constructive distraint is made on the property only of a delinquent taxpayer.b. in actual distraint there is taking of possession, while in constructive distraint, the taxpayer is merely prohibited from disposing of the property;c. actual distraint is effected by requiring the taxpayer to sign a receipt of the property or by the revenue officer preparing and leaving a list of the distrained property or by service of a warrant of distraint or garnishment.d. answer not given

The government has more than three (3) years to assess a taxpayer whena. The taxpayer filed the return after the last day of the filing of the said returnb. The return filed is false or fraudulent c. The taxpayer unilaterally waives the 3-year prescriptive period d. All of the above

Injunction is not available to restraint the collection of taxes. This statement isa. Always trueb. Always falsec. Subject to the qualification that the action is filed with the Regional Trial Courtd. Subject to the qualification that collection may jeopardize the interest of the government and / or the taxpayer

Compromise as a tax remedy could be availed of:a. By the taxpayer onlyb. By the government onlyc. Both government and taxpayerd. By the taxpayer with no tax liability

Tax evasion is the use of illegal means to avoid payment of tax. There is evasion when:a. Sale are understated to lessen the VATb. Indirect taxes are shifted to the consumersc. Property is transferred in contemplation of death to lessen estate tax.d. Depreciation method is used in claiming deduction to lessen the income tax.

Tony has inadvertently omitted P100,000 income in his 2004 Income tax return. Upon discovery in 2005, the BIR issued an assessment for deficiency income tax for P100,000 plus 50% fraud surcharge. Meanwhile, Tony included the omitted P100,000 income in his 2005 Income Tax Return. What advice will you give Tony?a. Amend his 2004 Income Tax return to reflect the correct amount of incomeb. Pay the assessed tax plus surcharge, and thereafter, ask for refundc. Protest the assessmentd. Any of the above

Before any civil or criminal action is filed by the BIR in court, _________________ is necessary:a. Approval of the Secretary of Justiceb. Approval of the BIR Commissionerc. Approval of the Secretary of Financed. Approval of the President

What may the BIR do in case payment of internal revenue tax appears to be unjustly or excessively assessed, or that the administrative and collection cost involved do not justify the collection thereof?(a) Compromise(b) Abate(c) Credit(d) Refund

No credit/refund of taxes shall be allowed unless the taxpayer:(a) Files a written claim for credit /refund with the BIR within 2 years from payment(b) Pays the tax under protest(c) Appeals to the CTA(d) Amends his tax return

An Assessment is:(a) A mere notice of the tax due(b) Based on presumed facts(c) Demand for the payment of the tax within a prescribed period of time(d) A warning for unpaid taxes due within the taxable year.

Prescriptive periods that apply to the collection remedy of the government (BIR):

a. 3 years, 5 years and 10 years

b. 3 years and 5 years onlyc. 3 years and 10 years onlyd. 5 years and 10 years onlye. no prescriptive period in cases of fraudf. none of the above

The Commissioner of the Bureau of Internal Revenue may place under constructive distraint the property of a delinquent taxpayer who, in his opinion, is :

a. intending to leave the Philippinesb. requesting for tax reinvestigationc. buying more properties than neededd. claiming for tax refunde. All of the above

f. None of the above

IV. Claims for tax refunds or tax credit arising from erroneous payment of local tax, fee or charge shall be filed with the local treasurer.

a. Statements III and IV are trueb. Only statement IV is truec. Statements I, II and IV are falsed. Only statement III is falsee. All statements are true f. All statements are false

The following are tax remedies of the taxpayer except:

a. Tax protests b. Tax credits

c. Tax refunds d. Compromise and abatement e. All of the above f. None of the above

A final assessment of the Bureau of Internal Revenue must be received by the tax payers within:(a) Within five years from the filing of the tax return if filed after the last day of filing.(b) Three years from the last date of filing of the tax return if filed on or before he last day of filing(c) Within ten years from the last day of filing the tax return if filed on or before the last day of filing(d) On any date after the filing of the tentative tax return.

In order that the assessment may be considered valid, it is required that the said assessment shall state:(a) The factual and legal basis of the assessment(b) That the assessment shall become final within 30 days if not acted upon by the taxpayer(c) The particular tax type and year under investigation(d) All of the above

The BIR is allowed only to conduct one examination for unpaid taxes for each type of taxes paid by the taxpayer except in which circumstance below:(a) When the taxpayer files an amended tax return(b) When the taxpayer failed to file a return or files a fraudulent return which is subsequently discovered by the BIR.(c) When the BIR fails to complete its investigation within the prescribe period of five years.(d) When determined by the BIR as beneficial to the national government

The distinction between actual distraint and constructive distraint is that:

a. Actual distraint may be made on the property of any taxpayer whether delinquent or not while constructive distraint is made on the property only of a delinquent taxpayer b.In actual distraint, there is a taking of possession, while in constructive distraint, the taxpayer is merely prohibited from disposing of the propertyc.Actual distraint is effected by requiring the taxpayer to sign a receipt of the property or by the revenue officer preparing and leaving a list of the distrained property or by service of a warrant of distraint or garnishmentd. Answer not given

Where any national internal revenue tax is alleged to have been erroneously or illegally collected the taxpayer should first:

a. File a claim for refund or credit

b. File an action for refund with the Regional Trial Courtc. File an action for refund with the Court of Tax Appealsd. Answer not given

In instances wherein the tax or any portion thereof appears to be unjustly or excessively assessed or where the administration and collection costs involved do not justify the collection of the amount due, the commissioner may: (a) Compromise the payment of the internal revenue tax(b) Abate or cancel the tax liability(c) Cause a further investigation to determine the true value of the assessment (d) Submit the matter to a committee composed of taxpayers and BIR officials to determine future action the particular matter

The following BIR actions on the protest of an assessment are tantamount to denial thereof:a. Filing of collection case I courtb. Issuance of warrant of executionc. Actions of the BIR Commissioner within 180 days from submission of supporting documents by the taxpayers.

The preliminary investigation of a fraudulent tax evasion case may be enjoined in the following cases:a. When there is a prejudicial questionb. When double jeopardy is clearly apparentc. When charges are manifestly false and motivated by lust for vengeanced. When the court has no jurisdiction over the offensee. All of the above

Which statement is correct/ In case of a tax erroneously collected:

a. A case for refund may be filed with the court simultaneously with the filing of a claim for refund with the Bureau of Internal Revenue

b. A case for refund may be filed with the court even without filing a claim for refund with the Bureau of Internal Revenue

c. A claim for refund must first be filed with the Bureau of Internal Revenue and a decision of the Bureau must, under any circumstance, be awaited before a case for refund may be filed with the court d.A claim for refund must first be filed with the Bureau of Internal Revenue and, in a given situation; a case for refund may be filed with the court without awaiting the decision of the Bureau

All the statements are true, except

a. The Commissioner may refund a tax even without a claim for refund from the taxpayer where on the face of the return upon which the payment was made; such payment clearly appears to have been erroneously made.

b. No suit or proceeding shall be brought for refund of tax before two years from the date of payment regardless of any supervening cause that may arise after payment.c. A pre-assessment notice shall be required before an assessment may be made.d.the taxpayer shall be informed in writing of the law and the facts on which the assessment is made; otherwise the assessment shall be void.

Mr. Andam disputed a deficiency tax assessment and upon receipt of an adverse decision by the Commissioner of Internal Revenue, filed an appeal with the Court of Appeals. While the appeal is pending, the BIR served a warrant of levy on the real properties of Mario to enforce the collection of the disputed tax. Granting arguendo that the BIR can legally levy on the properties, what could Mario do to stop the process?a. Appeal the BIR’s action to the Court of Appealsb. Dispute BIR’s levy on the properties before the Court of Tax Appealsc. File a motion for injunction with the Court of Tax Appeals on the ground that such collection will jeopardize the interest of the taxpayer or the governmentd. Secure a temporary restraining order before the Supreme courte. None of the above

No credit/refund of taxes shall be allowed unless the taxpayer:a. Files a written claim for credit/refund with the BIR within 2 years from paymentb. Pays the tax under protestc. Appeals to the CTAd. Amends his tax return

Assessment is necessary in the following cases, except:a. Before the preliminary investigation of a fraudulent tax evasion case could prosper

b. To fix the tax liability of a taxpayerc. Establish a case for judicial actiond. For issuance of warrant of distraint or levy

When a taxpayer erroneously paid a tax in installments, the prescriptive period for a claim for refund should be counted:

a. From the date of payment of the first installment b. From the date of payment of the last installmentc. From the last day required by law for the payment of the tax in

one lump sumd. None of the above

Which statement is correct? In case of an assessment of a tax:

a. A protest should be filed by the taxpayer; otherwise the assessment becomes final and cannot be questioned anymore in court

b. A protest must be filed by the taxpayer anytime before the Bureau of Internal Revenue collects the taxc. the assessment should be made by the Bureau of Internal Revenue within five years from the date of filing of the return

d. The assessment shall include only the tax proper

In which of the instances below could be classified as an exception to the period of limitation of assessment and collection of taxes:a. Where the tax return, on its face, presents a clear error in the computation of the tax dueb. Where the taxpayer and the BIR agree on the extension of the period of prescription after the period to assess the tax has already expiredc. Where the taxpayer has changed business address and has not informed the Commissioner of Internal Revenued. When cases involve false or fraudulent returns with intent t evade the tax or of failure to file a return with the fact of the fraud duly taken cognizance of in court

A taxpayer who has received a preliminary assessment notice may take the following course of action:a. File a case in the Court of Tax Appeals to contest the assessment within 30 days from receipt thereofb. File a request for reinvestigation or reconsideration stating the basis for the request for reconsideration or reinvestigation within 30 days from the receiptc. File a paper with the bureau of internal revenue stating the facts and laws that the taxpayer is relying on for the purpose of supporting the taxpayers position within 15 days from the receiptd. Pay the said assessment and later file a claim for refund for erroneously paid taxes.

A taxpayer contesting an assessment shall be allowed/required:a. To present all available defenses at any stage of the proceedings, including presentation of new matters to the CTA when in fact they have been in existence during the BIR examination.b. To present all available defenses at the earliest possible stage of the examination proceedings with the BIR and allowed only to present new matters which have been discovered at the earliest time at any stage of the proceedings.c. To question the said assessment immediately with the court of tax appeals despite the fact that the same has not yet become finald. To use all available means to contest the assessment including entering into an agreement with the examiner to “close” his eyes on some matters for a fee.

VCC is the administrator of the estate to his father, NGC. In the estate proceedings pending before the MM Regional Trial Court. Last year, he received form the Commissioner of Internal Revenue a deficiency assessment for the estate in the amount of P1, 000,000.00, but he ignored the notice. Last month, the BIR effected a levy on the real properties of the estate to pay the delinquent tax. Considering the above facts which of the following statements correct?

a. VCC should file a motion with the probate court to stop the enforcement and collection of the tax because the properties from the tax to be enforced are in custodia legis. b. VCC should within thirty (30) days from the receipt of the levy file a petition for review with an application for the suspension of the tax before the Court of Tax Appeals.c. VCC should advise the BIR Commissioner that it could not enforce the levy because of the pendency of the estate proceedings before the Regional Trial Court.d. VCC should raise P1 million and pay the deficiency assessment so that the real properties would not be the subject to levy.

The period of 180 days for the BIR to act on an administrative appeal by the taxpayer is not tolled when the taxpayer requests for:a. A request for reinvestigationb. A request for reconsiderationc. A request for review based on a reinvestigation and reconsideration combinedd. A reinvestigation with a waiver signed by the taxpayer

All are true, except

a. The taxpayer shall respond to a pre-assessment notice, and if he fails to respond an assessment shall not be issued.

b. An assessment issued may be questioned administratively with the Bureau of Internal Revenue.

c. An assessment shall become final if the assessment is not protested administratively and is not filed with the Bureau of Internal Revenue within thirty days from receipt of the assessment.

d. An assessment shall become final if relevant supporting documents were not presented to the bureau of Internal Revenue within sixty days from filing the protest on the assessment.

Which of the following languages cannot be used by the taxpayer in keeping of his Books, as required by the NIRC, without need for translation?a. Englishb. Spanishc. Native languaged. Chinese

Neil Sanchez was being prosecuted by the BIR for failure to pay is income tax liability for Calendar Year 2000 despite several demands by the BIR in 2004. The information was filed with the RTC only last January 3, 2007. Neil Sanchez filed a motion to quash the Information on the ground of prescription, the Information having been filed beyond 5-year reglementary period. If you were the judge, will you dismiss the Information?a. Yes. Inasmuch as the violation was committed in 2000, the Information was filed beyond the 5year reglementary period.b. No. The trial court has jurisdiction over the offense as the prescription thereof begins to run from the time Sanchez willfully refused to pay despite demands in 2004. c. Yes. The offense has prescribed as the discovery thereof was in 2000.d. No. the trial court can exercise jurisdiction because the discovery and commission of the offense fell within the 5-year reglementary period.

Citytrust banking corporation filed a claim for refund with the BIR in the amount of P19,971,745 representing the alleged aggregate of the excess of its carried-over total quarterly payments over the actual income tax due. Through an inter-office memorandum of the Tax Credit/Refund Division, the Commissioner of BIR came to know that Citytrust had outstanding tax liability in the amount of P56,5888,740.91. In view whereof, the Commissioner claimed that such deficiency tax assessment constitutes a bar to a claim for refund. On the other hand, Citytrust contended that its tax refund is meritorious as the deficiency tax assessment can still be disputed and therefore, not final. RESOLVE.a. The BIR Commissioner is not correct. It is unfair for the taxpayer who filed tax refund to be subsequently assessed for unpaid tax liability. Such practice smacks of unfairness and inequity. b. The BIR Commissioner is correct. The settled rule is that a deficiency tax assessment is not a bar to a claim for tax refund or tax credit. However, te present case is an exception to the rule.c. Citytrust is correct. The NIRC provides no prohibition against the filing of tax refund despite pending deficiency tax assessment.d. The BIR Commissioner correctly ruled that the deficiency tax assessment is a bar to a claim for refund. It is logically necessary and legally appropriate that the issue of deficiency tax assessment be resolved jointly with the taxpayer’s c;aim for refund, to determine once and for all in a single proceeding the true and correct amount of tax due or refundable.

Pilipinas Corporation, a domestic corporation, filed its 2000 Income Tax Return (ITR) on April 15, 2001 showing a net loss. On November 2001, it amended its 2000 ITR to show more losses. After a tax investigation, the BIR disallowed certain deductions claimed by Pilipinas Corporation, putting Pilipinas Corporation in a net income position. As a result, on August 5, 2004, the BIR issued a deficiency income assessment against Pilipinas Corporation. Pilipinas Corporation protested the assessment on the ground that it has prescribed. Decide.

a. Pilipinas Corporation’s protest is meritorious because an ordinary assessment prescribes in three years counted from the date it became due, that is April 15, 2004.

b. The BIR is correct in the issuance of the assessment as it has the authority to allow or disallow deductions of taxpayers having the mandate to do so.

c. Pilipinas Corporation’s contention is untenable because while the three year period is counted from due date it is also based at a later date when that date is after its due date.

d. The BIR’s assessment is not proper as it is the right of the taxpayer to identify items of deductions being ordinary and necessary in the conduct of business, trade or profession which the BIR must respect and recognize.

Mr. Tee Go Lang, an 80-year old retired businessman, fell in love with 20-year old Tekitita Mustasa, a night club hospitality girl. Although she refused to marry him she agreed to be his “live-in” partner. In gratitude, Mr. Tee Go Lang transferred to her a condominium unit, where they both live, under a deed of sale for P10 Million. Mr. Rodrigo paid the capital gains tax of 15% of P10 Million.

The Commissioner of Internal Revenue found that the property was transferred to Tekitita Mustasa by Mr. Tee Go Lang because of the companionship she was providing him. Accordingly, the Commissioner made a determination that Mustasa had compensation income of P10 Million in the year the condominium unit was transferred to her and issued a deficiency income tax assessment.

Tekitita Mustasa protests the assessment and claims that the transfer of the condominium unit was a gift and therefore excluded from income. How will you rule on the protest of Tekitita Mustasa?

a. I will grant the protest and cancel the assessment. The transfer of the property by Mr. Tee Go Lang to Ms. Mustasa was gratuitous. A gratuitous transfer is subject to estate tax which shall be paid at the time of the death of Mr. Tee Go Lang whether he died testate or intestate.b. I will grant the protest and cancel the assessment. The transfer of the property by Mr. Tee Go Lang to Ms. Mustasa was gratuitous. The deed of sale indicating a P10 million consideration was simulated because Mr. Tee Go Lang did not receive anything from the sale.

c. I will not grant the protest and cancel the assessment. The transfer of the property by Mr. Tee Go Lang to Ms. Mustasa is subject to income tax. Since the deed of sale indicating a P10 million consideration is valid, the same is subject to a schedular tax rate.d. I will not grant the protest and cancel the assessment. The transfer of the property by Mr. Tee Go Lang to Ms. Mustasa is subject to income tax. This a clear compensation received by Ms. Mustasa for the services rendered to Mr. Tee Go Lang.

What is the minimum compromise rate in case of doubtful validity of assessment?a. 40% of the basic assessed taxb. 10% of the basic assessed taxc. No limitationd. P1,000,000

G. filed annual income tax return for tax year 2000 on March 31, 2001. On April 18, 2005 G received a notice of assessment finding a deficiency tax of P600,000.00 plus interest and penalties. BIR claimed a fraud assessment since G claimed deductions which are allowed which resulted in the understatement of his taxable income.a. assessment is null and voidb. Tax assessment is properc. Assessment is 10 years in case of fraudd. None of the above.

After an audit of the tax return, the BIR issued on April 19, 2004 a deficiency income tax assessment for the sum of P1 Million inclusive of interest and penalty to Atty. Palusot for tax year 2000. Since he failed to pay the tax within the period stated in the notice of assessment, the BIR issued on May 20, 2004 warrants of distraint and levy to enforce collection of the deficiency tax. As his tax lawyer, you will:a. Appeal to CTAb. Pat the tax deficiencyc. Enter into a compromised. Protest collection (assessment prescribed)

Criminal cases were filed against T for violation of the NIRC. He filed a motion to quash the criminal information’s as his protest on the tax assessments are still pending with the BIR. Decide.a. Dismiss the criminal casesb. Deny the protestsc. Deny the motiond. Grant the motion [no need of assessment in criminal cases, criminal action can be filed without need of an assessment]

S.P. Mandosa retired from the government service as Director of Land Transportation on February 5, 2003. Upon retirement, S.P. Mandosa received, among other benefits, his terminal leave pay for which the BIR withheld the sum of P56,000 a week following the date of his retirement. On November 18, 2009, the Supreme Court release a decision that the money value of the accumulated leave credits/terminal pay is not subject to withholding tax, S.P. Mandosa filed a claim for refund of P56,000 with the Commissioner of Internal Revenue. Is S.P. Mandosa within his rights in claiming a refund of taxes withheld on his terminal leave following the Supreme Court decision?

a. Yes. A suit for the recovery of tax erroneously or illegally collected can still be filed because of the recent ruling of the Supreme Court that such terminal pay is not subject to withholding tax.

b. No. Under the Tax Code, a suit for the recovery of tax erroneously or illegally collected cannot be filed after the expiration of five years from the date of payment of tax regardless of any supervening cause that may arise after payment.c. No. Under the Tax Code, a suit for the recovery of tax erroneously or illegally collected cannot be filed after the expiration of two years from the date of payment of tax regardless of any supervening cause that may arise after payment.d. Yes. A suit for the recovery of tax erroneously or illegally collected can still be filed because the withholding by the BIR was made a week following the date of the retirement.

Mr. Balik-balik, a Filipino citizen engaged in the real estate business, filed his 2004 income tax return on February 28, 2005. On November 30, 2005, he left the Philippines as an immigrant to join his family in North Korea. After the investigation of said return, the BIR issued a notice of deficiency income tax assessment on April 16, 2008. Mr. Reyes returned to the Philippines as a balikbayan on December 5, 2008. Finding his name to be in the list of delinquent taxpayer, he filed a protest against the assessment on the ground that he did not receive the notice of assessment and that the assessment had prescribed. Will the protest prosper?

a. It will. Prescription has set in because the period of limitations for the Bureau of Internal Revenue to issue an assessment is only for three years counted from the date of filing or due date whichever comes later.

b. Yes. The protest will prosper because Mr. Balik-balik did not receive the notice of assessment for income tax deficiency that is tantamount to denial of due process, a right guaranteed to the taxpayer.c. It will not. Prescription has not set in because the period of limitations for the BIR to issue an assessment was suspended during the time that Mr. Balik-balik was out of the Philippines.

d. No. The protest will not prosper because even if Mr. Balik-balik is outside the country, the notice of deficiency income tax assessment was sent to his registered address.

Statement 1.A pre-assessment notice shall be required before a final assessment notice may be made or issued.

Statement 2. The taxpayer shall be informed in writing of the law and the facts on which the assessment is based, otherwise, the assessment shall be void.

a. first statement is true while second assessment is false.b. first statement is false, while second assessment is true.c. both statement are true.d. both statement are false

Statement 1.the taxpayer shall respond to a pre-assessment notice and if he fails to respond, an assessment shall be issued.

Statement 2. An assessment issued may be questioned administratively with the Bureau of Internal Revenue.

a. both statement are trueb. both statement are falsec. statement 1 is true while statement 2 is false.d. statement is false while statement 2 is true.

An assessment shall become final, executory and demandable if

Statement 1. The assessment is not protested administratively and is not filed with the BIR within 30 days from receipt of the notice.

Statement 2. Relevant supporting documents were not presented to the BIR within 30 days from filing of the protest on the assessment.

a.first statement is true while second statement is false.b.first statement is false while second statement is false while second statement is true.c. both statement are trued. both statement are false

The following case may not be compromised, except:a. Criminal tax fraud casesb. Withholding tax casesc. Delinquent accounts with duly approved schedule of paymentsd. Civil cases

Which of the following statement is wrong?

a. an assessment which is not protested and appealed to the court of Tax Appeals becomes final, executory and demandable.b. the proceedings on the protest in the Bureau of Internal Revenue are administrative proceedings;c.the proceedings in the Court of Tax Appeals are judicial proceedings.d. the proceedings in the Court of Tax Appeals are quasi-judicial proceedings.

Which of the following cases is pre-assessment notice required?a. Ina discrepancy between the tax withheld and the amount actually remitted by the withholding agentb. When the excise tax due has not been paidc. Transfer by an exempt person of articles to non-exempt persond. When the commissioner or his duly authorized representative finds that proper tax should be assessed.

To pre-empt the lapse of prescriptive period within which the government can assess and/or collect in court without assessment,a. The government may issue jeopardy assessmentb. The government may require waiver of prescriptive periodc. The waiver by the taxpayer may not be accepted by the commissioner or his duly authorized deputyd. The waiver is not a waiver by the taxpayer of his right to invoke the defense of prescription.

Which on these is true:a. Waiver of prescriptive period to last until the completion of investigation is validb. Waiver is a taxpayer’s concession to the state, thus, it must be construed strictly against the satec. Waiver being unilateral, the state need not express its acceptance, and when accepted, the taxpayer need not be notified.d. Waiver being unilateral, acceptance by the state need not observe the level of authority of the officials empowered to accept.

Which of the following statements is wrong? No appeal on an assessment may be made to the Court of Tax Appeals.a. if the Bureau of Internal Revenue denies the protest in whole or in part.b.if the Bureau of Internal Revenue does not act on the protest within 180 days from the taxpayer’s submission of documents supporting his protest.c. within 30 days from receipt of the decision of the Bureau of Internal Revenue on the protest from the lapse of the 180 days period(submission of documents on the protest).

d. none of the above

Which statement is correct? In case of an assessment of a tax liabilty:

a. a protest should may be filed by the taxpayer otherwise the assessment becomes final and cannot be questioned anymore in court.b.a protest may be filed by the taxpayer anytime before the BIR collects the tax.c. the assessment should be made by the BIR within 5 years from date of filing of the return;d. the assessment shall include only the basic tax liabilty

Statement 1…if before the expiration of the time prescribed for the assessment of the tax, both the Commissioner and the taxpayer have agreed in writing to its assessment after such time, the tax may be assessed within the period of extension agreed upon.

Statement 2. Under the doctrine of equitable recoupment, a liability for tax the collection of which has not prescribed may be offset against a refund of another tax the refund for which has not yet prescribed. This American jurisprudence can very well apply in the Philippines.

a. Statement 1 is correct, but statement 2 is wrongb. Statement 1 is wrong, but statement 2 is correctc. both statement are correctd. both statements are wrong

Where a tax return was filed, as a general rule, the prescriptive period for assessment after the date the return was due or was filed, whichever is later is within

a. 3 years b. 6 yearsc. 10 yearsd. answer not given

Nestle Inc. was under tax audit and investigation by the BIR for its 1999 income tax return. Due to the volume of business records to be verified and the assessment to expire on April 15, 2003, BIR offered to extend the assessment for 10 months or up to February 15, 2004 which Nestle, Inc. agreed. As period was still lacking it was extended for another 5 months or up to July 15, 2004. The waivers were signed by the company’s Finance Officer but not by the Commissioner. A tax assessment was then issued and sent to the taxpayer on June 30, 2004. Decide.a. Waivers are valid b. Assessment has prescribedc. Dispute the assessmentd. None of the above [waivers are not valid not signed by CIR]

M was investigated by the BIR for failure to file tax returns and to pay taxes for tax year 2001. He refused to present his books and records. Later, deficiency income and business taxes were assessed against M on April 15, 2004. To avoid trouble he paid the taxes.A criminal action was like wise instituted in the Regional Trial Court for violation of the NIRC. He moved for the dismissal. Decide.a. Motion denied, satisfaction of the civil liability/payment of the tax is not a ground for extinction of the criminal liability, payment is not a valid defense]b. Criminal action has prescribed c. File a claim for refundd. Payment extinguished the criminal action

Date of death: March 2, 2007Date estate tax return was filed: April 10, 2007When is the last day for the BIR to make an assessment on the estate tax return filed?a. March 2, 2010b. April 10, 2010c. April 15, 2010d. September 2, 2010e. December 31, 2010

Date Income Tax was paid: April 10, 2008Date Claim for refund was filed with the BIR: March 10, 2009Date decision of denial of refund was received: March 21, 2010

Last day to appeal to the Court of Tax Appeal isa. March 10, 2010b. March 31, 2010c. April 20, 2010d. April 10, 2010e. April 21, 2010

Statement no.1. A tax assessment could be done even when no tax return has been filed.

Statement no.2. A tax assessment is legislative function pertaining to determination of correct amount of tax.

a. only statement no.1 is correctb. both statement are correctc. only statement no.2 is correctd. both statement are not correct.

Statement no.1 Tax collection of tax deficiency should be done within 10 years from date of assessment.Statement no.2 The prescriptive period for tax assessment is within 3 years for tax returns filed in good faith.

a. only statement no. 1 is correctb. only statement no 2 is correctc. both statements are correctd. both statements are not correct

Statement 1. when a tax compromise is reached, all on-going litigations regarding the tax cases are terminated.

Statement. When a tax compromise is reached the taxpayer is no longer required to pay any portion of the tax being assessed.

a. only statement no.1 is correct.b. only statement no.2 is correctc. both statement are correctd.both statement are nor correct

The following are administrative remedies available to a taxpayer in connection with collection of taxes, except one.

a. filing of claim for tax refund or creditb. filing a petition for reconsideration or reinvestigation.c. filing of criminal complaint against erring BIR officials or employees.d. entering into a compromise.

Which statement is wrong?

a. stocks are securities shall be distrained upon the taxpayer and upon the president, manager, treasurer or other responsible officer/s of the corporation, company or association which issued said stocks or securities.b. debts and credits shall be distrained by leaving with the person owing the debts or having in his procession or control such credit a copy of the warrant of distraint.c. bank accounts are garnished by serving a warrant of garnishment upon the taxpayer and upon the president, manager, treasurer of other responsible officer of the bank.d. none of the above

Date assessment was received by the taxpayer: January 2, 2010Date Petition for reconsideration was filed with the BIR: January 12, 2010Date documents were submitted by the taxpayer to the BIR: January 22, 2010No decision yet from the BIR by July 12, 2010, when is the last day to appeal before the CTA?a. July 12, 2010b. July 21, 2010c. August 2, 2010d. August 12, 2010 e. August 20, 2010

What is the remedy available to the taxpayer in case of sale of personal property distrained?a. Right of redemptionb. Right of pre-emptionc. Right of first refusald. Right of repurchase

Taxpayer K Corporation filed its annual income tax return for taxable year 1998 on 14 April 1999. Records of the case show that while the Bureau of Internal Revenue (BIR) avers that it sent the assessment notice dated 1 February 2002 on 6 February 2002, taxpayer K Corporation denies having received an assessment only on 17 March 2003 when it was served with the Warrant of Distraint and Levy. From the foregoing facts which is correct?a. The BIR has the burden of evidence to prove that the assessment has indeed been sentb. The taxpayer should prove that there was no such notice of assessment receivedc. The BIR can invoke the presumption under Section 3(v), Rule 131 of the Rules of Court that when a ail matter is sent by registered mail, there exists a presumption that it was received in the regular course of mail.d. The BIR can invoke the presumption that official duties were regularly complied with.

AG obtained a loan from KD in the amount of P1M. to secure the obligation, KD required AG to execute a Deed of Absolute Sale covering the parcel of land owned by AG. At the time of the execution of the Deed, the parties agreed to pay the capital gains tax, with the understanding that if AG makes full payment of the obligation within a period of six months, KD shall not cause the transfer of the property to his name. Before the six-moth period expired, Ag was paying his obligation to KD but the latter refused to accept the payment contending that there was already an

absolute sale of the property, and that he had already transferred the title to his name. by reason of this, AG sued KD for reformation of instrument and reconveyance, arguing that there was no sale that occurred but merely an equitable mortgage. After trial, the court decided after three years that the Deed of absolute sale is actually an equitable mortgage, and ordered KD to accept payment of the loan from AG and to reconvey the property. Pursuant to the court decision, KD accepted the payment from AG and executed a Deed of reconveyance. Thereafter, AG instituted a claim for refund with the BIR to recover the capital gains tax paid. Should the claim for refund be granted?a. No, because the right of the taxpayer to refund has already prescribed.b. Yes, because there was wrongful payment of the tax, and that a supervening event has occurred that entitled the taxpayer to a refund.c. Yes, because there was no basis for the payment and collection of the tax, hence the principle of solution indebiti is applicabled. No, because the tax was properly paid by the parties due to the execution of the deed of sale.

The period for collection of any tax by summary remedies or judicial proceeding is suspended.

a. if the taxpayer request for a reinvestigation which is granted by the Bureau of Internal Revenue.b. if the taxpayer cannot be located in the address given by him in the tax return filed.c. when the taxpayer is out of the Philippinesd. any of the above

Statement 1. The Commissioner of Internal Revenue is authorized to inquire into the bank deposit of taxpayer who has filed an application for compromise of his tax liability by reason of financial incapability to pay:

Statement 2. A compromise for a tax liability on the ground of financial incapacity to pay shall still involve a payment of tax from the taxpayer at a minimum compromise rate of 10% of the basic assessed tax.

a. first statement is true while second statement is falseb. first statement is false, while second statement is true.c. both statement are trued. both statements are false

Makina Co., a Philippine Corporation, is the owner of a machinery, equipment and fixtures located at its plant in CebuCity. The City Assessor characterized all these properties as real properties subject to the real property tax. Makina Co. appealed the matter to the City Board of Assessment Appeals. The Board ruled in favor of the City. Makina Co. brought a petition for review before the CTA to appeal the decision of the City Board of Assessment Appeals. Is the Petition for Review proper?

a. Yes. When the City Board of Assessment Appeals gravely abuse its power amounting to lack or excess of jurisdiction, the proper forums shall be properly brought before the Court of Tax Appealsb. Yes. The CTA has jurisdiction to entertain appeals from the decision of the City Board of Assessment Appeals as provided under the Local Government Codec. No. The CTA is devoid of jurisdiction to entertain appeals from the decision of the City Board of Assessment Appeals. Said decision is instead appealable to the Central Board of Assessment Appealsd.No. The CTA is devoid of jurisdiction to entertain appeals from the decision of the City Board of Assessment Appeals. Said decision is instead appealable to the Court of Appeals following the hierarchy of courts.

For the taxable year 2003, the University of Bakakeng (UB), a propriety educational institution, voluntarily paid the Minimum Corporate Income Tax (MCIT) on April 15, 2004, since the said MCIT is higher than its computed normal tax. A few months later, while you were reviewing the tax return of UB for the year 2003, you noticed that the school failed to report some income of UB from school-related activities which would make the school-related income more than 50% of its income from all sources; the school should have been subject to tax at a rate of 10%, and consequently, it should not also be liable for MCIT. Thus, on June 15, 2005, you, as the tax lawyer of UB, filed an amended return for your client, which now reflects that UB should not be liable for the MCIT. One year after the filing of the amended return, you filed, on behalf of UB, a claim for refund of the MCIT. Suppose that the Commissioner of Internal revenue (CIR) denied your claim for refund on the ground of prescription, is such action of the CIR legally justifiable?a. Yes, it is justifiable because the counting of the period of prescription starts from the filing of the original return, which is April 15, 2005b. Yes, it is justifiable, but not because of prescription but because the MCIT was properly paid, and supervening events should not be allowed as a basis for the claim for refund.c. No, it is not justifiable because the start of the period of prescription is at the time of the filing of the amended return, the amendment being substantiald. No, it is not justifiable because the period of prescription is three years from the time of the filing of the return.

Neil Sanchez was being prosecuted by the BIR for failure to pay his income tax liability for Calendar Year 2000 despite several demands by the BR in 2004. The information was filed with the RTC only last January 3, 2007. Neil Sanchez filed a motion to quash the Information on the ground of prescription, the Information having been file beyond 5-year reglementary period.If you were the judge, will you dismiss the Information?a. Yes, in as much as the violation was committed in 2000, the Information was filed beyond the 5-year reglementary period.b. No, the trial court has jurisdiction over the offense as the prescription thereof begins to run from the time Sanchez willfully refused to pay despite demands in 2004.c. Yes, the offense has prescribed as the discovery thereof was in 2000.d. No, the trial court can exercise jusristion because the discovery and the commission of the offense fell within the 5-year reglementary period.

Citytrust Banking Corporation filed a claim for refund with the BIR in the amount of P19, 971,745 representing the alleged aggregate of the excess of its carried-over total quarterly payments over the actual income tax due. Through an inter-office memorandum of the Tax Credit/Refund Division, the Commissioner of BIR came to know that Citytrust had outstanding tax liability in the amount of P56, 5888,740.91. in view whereof, the Commissioner claimed that such deficiency tax assessment constitutes a bar to a claim for refund. On the other hand, Citytrust contended that its tax refund is meritorious as the deficiency tax assessment can still be disputed and therefore, not final. RESOLVE.a. The BIR Commissioner is not correct. It is unfair for the taxpayer who filed tax refund to be subsequently assessed for unpaid tax liability. Such practice smacks of unfairness and inequity.b. The BIR Commissioner is correct. The settled ruled is that a deficiency tax assessment is not bar to a claim for tax refund or tax credit. However, the present case is an exception to the rule.c. Citytrust is correct. The NIRC provides no prohibition against the filing of tax refund despite pending deficiency tax assessmentd. The BIR Commissioiner correctly ruled that the deficiency tax assessment is a bar to claim for refund. It is logically necessary and legally appropriate that the issue of deficiency tax assessment be resolved jointly with the taxpayer’s claim for refund, to determine once and for all in a single proceeding the true and correct amount of tax due or refundable.

Statement 1. No court shall have the authority to grant an injunction to restrain the collection of any national internal revenue tax, fee or charge imposed by the national Internal Revenue Code.

Statement 2. Judicial proceedings for the collection of an internal revenue tax may be instituted even without prior assessment of the tax on the taxpayer.

a. both statement are trueb. both statement are falsec. first statement is true while second statement is false.d. first statement is false while second statement is true

Which of the following statement is false?

a. if a taxpayer is acquitted in a criminal violation of the tax code, this acquittal does not exonerate him from his civil liability to pay the taxes;b. a conviction for tax evasion is not a bar for collection of unpaid taxesc. a tax assessment is necessary to a criminal prosecution for willful attempt to defeat and evade payment of taxesd. a criminal proceedings under the Tax Code is now a mode of collection of internal revenue taxes, fees or charges

Which is the correct answer? The following additions to the delinquency tax are called civil penalties.

a. Deficiency interestb. Delinquency interestc. interest on extended paymentd.all of the above

In which of the following cases where the civil penalties of 25% or 50% imposed by the Tax Code is not applicable?

a. in case a false or fraudulent return is willfully made.b .failure to pay the full amount of tax shown on any return required to be filed under the law.c. failure or willful neglect to file the tax return within the period .d. failure to file certain information required by the tax code.

De Vencia Corporation grants all its employees (rank and file, supervisors and managers) 5% discount of the purchase price of its products. During an audit investigation made by the BIT, the BIR assessed the company for failure to withhold the corresponding tax on the amount equivalent to the courtesy discount received by all employees, contending that the courtesy discount is considered as additional compensation for rank and file employees and additional fringe benefit for the supervisors and managers. Therefore, the monetary value of the courtesy discount should be considered as part of the compensation of the rank and file employees subject to tax. For the supervisors and managers, the employer should be the one assessed pursuant to Section 33 9A) of the NIRC. Is there a legal basis for the assessment made by the BIR?a. There is legal basis for the assessment as the NIRC does not consider courtesy discount as de minimis benefit.b. There is no legal basis for the assessment because courtesy discount qualifies as de minimis benefits, it being granted to promote goodwill and contentment.c. The assessment had legal basis in that under RR10-200, courtesy discount is not considered as de minimis benefit.d. The assessment has no legal basis in that courtesy discount partakes of the nature of exempt fringe benefits.

This is a summary administrative remedy, seizure of real property to enforce payment of tax due:a. Levyb. Distraintc. Forfeitured. Tax lien

A taxpayer who believes that a tax ordinance is unconstitutional should appeal to:a. BIR Commissionerb. Metropolitan Trial Courtc. Court of Tax Appealsd. Secretary of Justice

The two year period of limitation in filling a claim for refund with the BIR requires that:a. The period of two years would always start from the date of the payment of the tax with the BIRb. The period of two years would start from the day it could reasonably be determined that the taxpayer is entitled to a refundc. The two year period mat be extended by the agreement between the BIR and the taxpayerd. There is no need to file an appeal to the CTA for the refund within the two year period if the claim had already been filed with the Commissioner in Internal Revenue

Statement 1. A tax lien attaches to all the property and property rights of a taxpayer only from the time the statement was made by the Bureau of Internal Revenue for the unpaid tax with interest, penalties and cost.

Statement 2.A tax lien shall not be valid against any mortgages, purchaser of judgment creditor until notice of such lien shall be filed in the office of the Register of Deeds of the province or city where the property is situated or located.

a. first statement is true, while second statement is false;b. second statement is false, while second statement is truec. both statement are trued. both statements are false

The BIR sent an assessment to the taxpayer on the last day of the prescribed period to assess deficiency taxes. The said assessment was sent via registered mail dated on the last day of the assessment period and received by the taxpayer two weeks thereafter. The said assessment is:a. Invalid because it was not received by the taxpayer within the prescribed period to assess.b. Invalid because the BIR did not avail of personal service as a means of delivering the said assessment.c. Valid on the ground that it is deemed received by the taxpayer on the day it was mailed.d. Valid on the ground that that the presumption of regularity negates the need for personal service.

Upon the completion of the period to assess and with said assessment becoming final and executor, the BIR has a period to collect and said deficiency taxes though the means provided for under the NIRC for a period of:a. 1 yearb. 3 yearc. 5 year d. 10 year

The willful under declaration of sales by the extent of 30% or the over declaration of expenses to the extent of 30% of the taxpayer gives rise to:a. An actual act constituting fraud on the part of the taxpayerb. presumption of fraud on the part of the taxpayer which requires proof on the part of the BIRc. a presumption of fraud on the part of the taxpayer which requires proof on the part of the taxpayer to overcomed. an actual act constituting fraud which needs no other proof to be a accepted by the courts.

Best evidence obtained to assess a taxpayer is justified when any of the grounds is clearly established---a. The taxpayer maintains no accounting records.b. The taxpayer acted in bad faith.c. No tax return is filed.d. The report submitted by the taxpayer is false, incomplete or erroneous.

Which of the following statement is wrong?

a. a tax certificate validly issued by the BIR may be used as tax credit against any internal revenue tax.b. all public officials who acquire information on violation of internal revenue laws in the performance of their duties during their incumbency are prohibited from claiming informer’s reward.c. all taxes collected by BIR are national internal revenue taxes.d. an person who violated any provision of the national Internal revenue Code or on any revenue regulations, for which no specific penalty is provided by law, shall upon conviction and for each offense or commission, be punished by a fine of not more than P1.000 pesos or suffer imprisonment of not more than six months or both.

For filing a false and fraudulent return a surcharge is imposed. Which of the following is correct?

a. 50% as administrative penaltyb. 50% as criminal penaltyc. 25% plus 50%d. 25% as criminal penalty

Assessment is different from appraisal of property in that---a. Assessment is broader as it includes appraisal.b. Assessment is the process of determining the value of the property, whereas appraisal delves into the taxability of the property.c. Assessment includes classification, discovery and listing of property, while appraisal focuses on the valuation of property for a specified period and specific purpose.d. Assessment is a written notice and demand. In contrast, appraisal is the process of determining the value of property.

L, Inc. filed its final adjusted income tax return for calendar year 1996 on April 12, 1997 with a net loss from operations. A final notice and demand was issued on April 15, 2000 which was received by the company. For failure to pay the assessed tax. Warrants for distraint and levy on its properties were issued and served upon the company. On February 14, 2005, a criminal charge for violation of the NIRC was instituted in the Regional Trial Court. Decide.a. RTC has no jurisdictionb. Moved to dismiss the casec. Prescription gas not set in [criminal action has not prescribed, 5 years counted from April 15, 1999]

The taxpayer failed to contest the assessment served, what will he do:a. Ask for reconsideration to the BIRb. Appeal the CTAc. Pay the tax assessmentd. File insolvency

X as administrator filed the estate tax return for decedent Y who died on November 1, 1998 and paid the amount of P1.8 Million which he paid in April 15, 1999. A Confidential information to the BIR was conveyed on January 31, 2002 that the return filed was fraudulent as X deliberately failed to declare all the properties with intent to evade payment of the correct tax. The BIR based on the verified information issued a deficiency tax assessment on March 6, 2005 with interest and penalties at P3 Million. X protested the assessment. Decide with reasons.a. Protest be grantedb. Assessment has prescribedc. Assessment has not prescribed [fraud assessment prescribes within 10 years from discovery]d. Assessment not necessary in case of fraud

On April 14, 2004 X Corp. filed its annual income tax return for calendar year 2003 and paid an income tax of P1 Million. After it has filed the return, the Finance Officer noticed that there was a clerical error in typing the amount of the tax due, The correct filed an emended return on June 1, 2004. The assessment period is:a. 3 years from April 14, 2004b. 3 years from April 15, 2004c. 3 years from June 1, 2004d. 10 years from June 1, 2004 as fraud assessment

During the 3 quarters, D made a total payment of P800, 000 income tax. D filed his actual income tax return on April 10, 2004 where he had an excess payment of P400,000. The last payment he made was on November 5, 2003 in the 3rd quarter return. The last day for filing the claim for refund is:a. 2years from November 5, 2003b. 2 years from April 10, 2004c. 2 years from April 15, 2004d. 2 years from November 15, 2003

BIR executed an Affidavit-Complaint and filed a criminal action against Q. Q moved for the dismissal as there was no formal assessment made. BIR claimed the complaint already took the place of an assessment notice as the amount of the tax due thereon has been indicated in the complaint.a. Grant the dismissalb. Protest the assessmentc. Complaint in an equivalent of an assessmentd. None of the above

LOCAL GOVERNMENT TAXATION

One of these is not a type of local tax and other impositions-a. Municipal taxes on business and occupationsb. Municipal fees and service chargesc. Real property taxesd. Taxes on gross receipts of transportation businesses

Which is not a levy on real property-a. Special education fundb. Ad valorem tax on idle landc. Special assessmentd. Transfer tax on sale or transfer

The Municipality of Mainit passed an ordinance imposing a tax on any sale or transfer of real property located within its territory at a rate of one-fourth (1/4) of one percentum (1%) of the total consideration of such transaction. X sold a parcel of land in Mainit which he inherited from his deceased parents and refused to pay the aforesaid tax. He instead filed appropriate case asking that the ordinance be declared null and void since such a tax can only be collected by the national government, as in fact he has paid BIR the required capital gains tax. The Municipality countered that under the Constitution, each local government is vested with the power to create its own sources of revenue and levy taxes, and it imposed the subject tax in the exercise of said constitutional authority. Resolve the controversy.

a. The ordinance is void because it is not within the taxing powers of the Municipality.b. The ordinance is not valid as the Local Government Code confers no power upon the Municipality.c. The ordinance is an ultra vires act of the Municipality because government may impose the same.d. The ordinance is not valid because only provinces and cities are allowed to impose tax on transfer of ownership of real property.

Jose is a law-abiding citizen who pays his real estate taxes promptly. Due to a series of typhoons and adverse economic conditions, an ordinance is passed by Quezon City granting a 50% discount for payment of unpaid real estate taxes for the preceding year and the condonation of all penalties on the fines resulting from the late payment.Arguing that the ordinance rewards delinquent taxpayers and discriminates against prompt ones, Jose demands that he be refunded an amount equivalent to one-half of the real estate taxes he paid. The municipal attorney rendered an opinion that Jose cannot be reimbursed because the ordinance did not provide for such reimbursement. Jose files suit to declare the ordinance void on the ground that it is a class legislation.Will his suit prosper?a. The suit will prosper because the ordinance is discriminatory in character.b. The suit will prosper because the ordinance is not based on substantial distinction.c. The suit will not prosper because taxes are lifeblood of the government and should be collected without unnecessary hindrance.d. The suit will not prosper because the ordinance is based on the substantial distinction. Each set of taxes is a class by itself and the law would be open to attack only if all the taxpayers belonging to one class were not treated alike.e. None of the above

The real property of Mr. and Mrs. Sepe, situated in a commercial area in front of the public market, was declared in their Tax Declaration as residential because it has been used by them as their family residence from the time of its construction in 2000. However, since January 2007, when the spouses left for Australia to stay there permanently with their children, the property has been rented to a single proprietor engaged in the sale of appliances and agricultural products. The Provincial Assessor reclassified the property as commercial for tax purposes starting January 2008. Mr. and Mrs. Sepe appealed to the Local Board of Assessment Appeals contending that the Tax Declaration previously classifying their property as residential is binding. How should the appeal be decided?

a. It should be decided against Mr. and Mrs. Sepe. The law focuses on the actual use of the property for classification, valuation and assessment purposes regardless of ownership.

b. It should be decided in favor of Mr. and Mrs. Sepe. In fact the classification that it is residential was supported by the Tax Declaration duly issued to the spouses.

c. The appeal should be decided against Mr. and Mrs. Sepe because the provincial assessor can always reclassify the real property regardless of its use and whoever owns it, uses it and wherever it is located.

d. The appeal should be decided in favor of Mr. and Mrs. Sepe because even if they went abroad, they are still the owner of the said property and the same is located where it is now.

BoronganMunicipality has an ordinance which requires that all stores, restaurants, and other establishments selling liquor should pay a fixed annual fee of 20,000. Subsequently, the municipal board proposed an ordinance imposing a sales tax equivalent to 5% of the amount paid for the purchase or consumption of liquor in stores, restaurants, and other establishments. The municipal mayor refused to sign the ordinance on the ground that it would constitute double taxation.Is the refusal of the mayor justified?a. No. The refusal of the mayor is unjustified because double taxation is allowed in our jurisdiction.b. No. The refusal of the mayor is not justified because the impositions are of different nature and character.c. No. The refusal of the mayor is unjustified because it is not within his power.d. No. The refusal of the mayor is not justified because double taxation will generate more revenues.e. None of the above

Makina Co., a Philippine Corporation, is the owner of a machinery, equipment and fixtures located at its plant in CebuCity. The City Assessor characterized all these properties as real properties subject to the real property tax. Makina Co. appealed the matter to the City Board of Assessment Appeals. The Board ruled in favor of the City. Makina Co. brought a petition for review before the CTA to appeal the decision of the City Board of Assessment Appeals. Is the Petition for Review proper?

a. Yes. When the City Board of Assessment Appeals gravely abuse its power amounting to lack or excess of jurisdiction, the proper forums shall be properly brought before the Court of Tax Appealsb. Yes. The CTA has jurisdiction to entertain appeals from the decision of the City Board of Assessment Appeals as provided under the Local Government Codec. No. The CTA is devoid of jurisdiction to entertain appeals from the decision of the City Board of Assessment Appeals. Said decision is instead appealable to the Central Board of Assessment Appealsd.No. The CTA is devoid of jurisdiction to entertain appeals from the decision of the City Board of Assessment Appeals. Said decision is instead appealable to the Court of Appeals following the hierarchy of courts.

A company engaged in the manufacturing business has the following offices:a. Principal office in quezon cityb. Factory in muntinlupac. Plantation in sta. rosaAll sales are recorded in quezon city. The local business tax of the company shall be paid as follows: a. 30% in quezon city, 28% (40% of 70%) in sta rosa and 42% (60% of 70%) in muntinlupa

b. 70% in quezon city, 30% in sta. rosa, 0% in muntinlupac. 30% in quezon city, 43% (60% of 70%) in sta rosa and 28% (40% of 70%) in muntinlupad. 100% in quezon city, 0% in sta. rosa, 0% in muntinlupa.

X is an owner of a house and lot situated in BAkekang, BaguioCity. Since 1995, at the time of the construction of the house, he did not pay the real property taxes accruing on the house, but religioulsy paid the tax on the land. In 2001, he sold the said house and lot to Y who, for some reasons, was not able to register the sale with the Office of the Register of deeds. After this transfer, the only property remaining in the ownership of X is aparcel of land in AuroraHills, BaguioCity. He also has a bank account in BPI Poliwes Branch. In 2004, when the City Treasurer was reviewing the real property tax payments and the assessment roll, he diccovered the non-payment of the real property tax by X over his house. The City Treasurer is now thinking of ways on how to collect the real property tax. Based on the foregoing facts, which of the following is an appropriate remedy of the City Terasurer?a. The city treasurer could issue a warrant of levy against the real property of X located in AuroraHills.b. The city treasurer could subject the house and lot in Bakekang to the real property tax lien via the issuance of a warrant of levy over the said ouse and lot.c. The city treasurer could issue a warrant of garnishment over the bank account of X in BPI Poliwes Branch for purposes of the liability to the real property tax.d. The City treasurer may validly pursue all the above remedies.

The municipality of Mainit passed an ordinance imposing tax on any sale or transfer of real property located within its territory at a rate of one-fourth (1/4) of one per centum (1%) of the total consideration of such transaction. X sold a parcel of land in Mainit which he inherited from his deceased parents and refused to pay the aforesaid tax. He instead filed cleared null and void since such a tax can only be collected by the national government, as in fact he has paid BIR the required capital gains tax. The Municipality countered that under the Constitution, each local government is vested with the power to create its own sources of revenue and to levy taxes, and it imposed the subject tax in the exercise of said constitutional authority.

Resolve the controversy.a. The ordinance is void because it is not within the taxing powers of the Municipality.b. The ordinance is not valid as the Local Government Code confers no power upon the Municipality.c. The ordinance is an ultra vires act of the Municipality because only national government may impose the same.d. The ordinance is not valid because only provinces and cities are allowed to impose tax

The power of the City of Ozamis to impose a gross sales tax of one-half percent on the gross freight and fares of the cargo and passengers shipped or transported out from OzamisCity buy vessels plying between the city and other ports was held valid.a. Taxation of the local government is inherentb. The taxing power of the State cannot be delegatedc. Local Governments units have the power of taxation like the Stated. An exception to the principle of non-deferability of the power of taxation

BL has a one-hectare residential land located at GreenValley, BaguioCity. One-half of the land is occupied by his residence and a garden, while the other half is vacant. BL received a notice of assessment from the City Treasurer of Baguio requiring him to pay an idle land tax for his vacant lot. BL paid the tax under protest. His protest, however, was denied by the City Treasurer. Immediately, he filed a petition before the Regional Trail Court, Baguio City, questioning the propriety of the acts of the City Treasurer. Which of the following is correct?a. The action will prosper as the City wrongly assessed BL of the idle land taxb. The action will not prosper as the court has no jurisdiction over the matterc. The action will not prosper as the taxpayer should have protested before the assessord. The action will prosper as BL complied with mandatory requirement of paying the tax under protest

Which of the following is not a limitation on a local government unit’s right to levy local taxes?a. It must not be oppressive and confiscatoryb. A public hearing must precede its passagec. It can not extend to those already covered by the National Internal Revenue Coded. It must be confined to the activities enumerated in the Local Government Code

If a taxpayer intends to dispute the validity of a local tax ordinance the correct remedy is to appeal it with the ---a. Secretary of Justiceb. Court of Tax Appealsc. Regional Trial Courtd. Local Board of Assessment Appeals

ABC Corp. has been grantee of a franchise from the National Government and part of the said agreement includes the exemption from the payment of local taxes. The said franchise was granted before the enactment of the local government code that included a general provision withdrawing all exemptions. Within a few years after the enactment of the local government code, the local government code wherein ABC Corp. was doing business enacted a tax in the business activity of ABC Corp. As counsel for ABC Corp. what would you do protect your client interest:a. Represent your client with the local government unit for the purpose of amending the ordinance to exempt your clientb. Claim that the franchise provision is protected and is not covered by the withdrawal of exemptions of the local government code.c. Claim that the franchise is protected by the provisions of the constitution prohibiting violations of existing contracts by enactment of a new law.d. Represent your client with the legislative branch of government for the purpose of obtaining a new grant of exemption from local taxation

A parcel of land was located in an area classified by the local sanguniang bayan as commercial, however they said parcel of land remained and is still used for residential purposes by the owners thereof. The basis for the classification and taxation of real property for real estate tax purpose is:a. Actual use of the propertyb. The classification made by the sanggunian on the said localityc. The determination by the city assessor of the classification of the said propertyd. The general type used by adjacent propertye. Representing a significant number within the locality

Which of the following items are not subject to real property tax under the Local Government Code?a. Machineries owned by a bus company attached to a wooden or cement platform and used for the construction and repair of the buses used in the main line of businessb. Mobile machineries of breweries used in the manufacture of liquor and soft drinksc. Underground tanks and gasoline pumps placed in a gasoline stationd. Oil storage tanks installed within a refinery compound which are not embedded in the land but installed with some degree of permanence

Which of the following is not exempt from real property tax?a. All assets owned by a power generating company servicing the barriosb. All assets for pollution controlc. All assets owned by the Office of the Ombudsmand. All assets owned by the Archdiocese of Maguindanao

The municipality of MNO town enacted an ordinance imposing a license fee of 5% of gross sales made by each person occupying the MNO town market. The market owners opposed the said ordinance claiming that it is an imposition of a tax which was not properly provided for in the local municipality ordinance. The local government countered that the same was a license which may be validly imposed and it was for the purpose of regulating the use of the market as well as providing maintenance for the use of the market facility. In the dispute between the market owners and the local government:a. The local government would win because they are in power.b. The local government would win because the said fee is a license and they are allowed to impose the same.c. The market owners would win because the said fee is a disguised tax ordinance which was not properly approved by the Sangguniand. The market owners would win because they will use people power

A company engaged in the bottling business has a branch office in Pasig, a principal office in Makati and a sales outlet in Paranaque. All the sales made by the company are recorded in the ParanaqueCity office. The local business tax of the company shall be paida. 100% in PasigCityb. 50% in PasigCity and 50% in MakatiCityc. 100% in MakatiCityd. 100% in ParanaqueCity

A company engaged in the manufacturing business has the following offices:a. Principal Office in Quezon Cityb. Factory in Muntinlupac. Plantation in Sta Rosa Laguna

All sales are recorded in Quezon City. The local business tax of the company shall be paid as follows:a. 70% in Quezon City, 30% in Sta Rosa, 0% in Muntinlupab. 100% in Quezon City, 0% in Sta Rosa, 0% in Muntinlupac. 30% in Quezon City, 28% (40% of 70%) in Sta Rosa and 42% (60% of 70%) in Muntinlupad. 30% in Quezon City, 42% (60% of 70%) in Sta Rosa and 28% (40% of 70%) in Muntinlupa

X is a owner of a house and lot situated in Bakekang, BaguioCity. Since 1995, at the time of the construction of the house, he did not pay the real property taxes accruing on the house, but religiously paid the tax on the land. In 2001, he sold the said house and lot to Y who, for some reasons, was not able to register the sale with the Office of the Register of Deeds. After this transfer, the only real property remaining in the ownership of X is a parcel of land in AuroraHills, BaguioCity. He also has a bank account in BPI Poliwes Branch. In 2004, when the City Treasurer was reviewing the real property tax payments and the assessment roll, he discovered the nonpayment of the real property tax by X over his house. The City Treasurer is now thinking of ways on how to collect the real property tax. Based on the foregoing facts, which of the following is an appropriate remedy of the City Treasurer?a. The City Treasurer may validly pursue all the above remediesb. The City Treasurer could issue a warrant of levy against the real property of X located in AuroraHillsc. The City Treasurer could subject the house and lot in Bakekang to the real property tax lien via the issuance of a warrant of levy over the said house and lot.d. The City Treasurer could issue a warrant of garnishment over the bank account of X in BPI Poliwes Branch for purposes of the liability to the real property tax.

COURT OF TAX APPEALS

The Court of Tax Appeals has jurisdiction over all the following cases except—a. Decisions of the Commissioner of Internal Revenue on disputed assessmentsb. Decisions of the Regional Trial Court on local tax cases

c. Decisions of the Local Board of Assessment Appealsd. Inaction of Commissioner of Internal Revenue on disputed assessments

A Criminal action was filed against T for tax fraud and made an assessment to about P 2 Million unpaid taxes. The case will be filed before:a. CTA-en bancb. CTA-by divisionc. Department of Justiced. Regular courts-MTX or RTC

An appeal on an assessment may be made to the Court of Tax Appeals, except

a. If the Bureau of Internal Revenue denies the protest in whole or in partb. If the Bureau of Internal Revenue does not act on the protest within one

hundred eighty days from the taxpayer’s submission of documents supporting his protest

c. Within thirty days from receipt of the decision of the Bureau of Internal Revenue on the protest or within thirty days from the lapse of the one hundred eighty day period (submission of documents on the protest)

d. If the Bureau of Internal Revenue does not act on the protest within sixty days from the taxpayer’s submission of documents supporting his protest

On April 15, 1991, Mr. Lacson filed his income tax return for his 1990 income and paid the tax due thereon. In 1992, when Mr. Lacson hired a new CPA to prepare his income tax return, he was informed that he made an overpayment in his income tax return filed in 1991. Convinced that he erroneously computed his tax in favor of the government, Mr. Lacson engaged the services of a lawyer and filed a written claim for refund of tax erroneously collected with the BIR Commissioner on December 15, 1992. On April 10, 1993, without receiving a reply or decision on his claim for refund, Mr. Lacson’s lawyer filed in the Court of Tax Appeals a petition for review on his claim for refund of tax erroneously collected. Did the Court of Tax Appeals acquire jurisdiction over the petition for review of Mr. Lacson?

a. No, because the appeal is premature; there being no decision yet on said claim for refund. The Court of Tax Appeals did not acquire jurisdiction over the appeal because its jurisdiction is to review by appeal decisions of the BIR Commissioner.b. Yes, because while the BIR Commissioner has not yet rendered a decision on said claim for refund, the peremptory period of two years within which acclaim for refund of taxes erroneously collected may be filed is about to expire on April 15, 1993 and the failure of the Commissioner to act on the claim for refund is tantamount to denial of the taxpayer’s claim, hence appealable to the Court of Tax Appeals. c. No, because other than the appeal is premature and there being no decision yet on said claim for refund, the Court of Tax Appeals has no jurisdiction over the appeal because the decision of the BIR Commissioner is subject to review by the Secretary of Finance.d. Yes, because issues involving claim for refund of overpayment of taxes whether decided or not by the BIR Commissioner, notwithstanding the number of years when it is filed shall fall squarely under the jurisdiction of the Court of Tax appeals, otherwise this would tantamount to deprivation of property rights of the taxpayer without affording him the due process duly guaranteed under the Constitution.

Mario disputed a deficiency tax assessment and upon receipt of an adverse decision by the Commissioner of Internal Revenue, filed an appeal with the Court of Tax Appeals. While the appeal is pending, the BIR served a warrant to levy on the real properties of Mario to enforce the collection of the disputed tax. Granting arguendo that the BIR can legally levy on the properties, what could Mario do to stop the process?a. Appeal the BIR’s action to the Court of Appeals.b. Dispute on the BIR’s levy on the properties before the Court of Tax Appeals.c. File a motion for injunction with the Court of Tax Appeals on the ground that such collection will jeopardize the interest of the taxpayer or the government.d. Secure a temporary restraining order before the Supreme Court.

A criminal action was filed against T for tax fraud and made an assessment of about P2 Million unpaid taxes. The case will be filed before:a. Department of Justiceb. Regular courts-MTX or RTCc. CTA-by divisiond. CTA-en banc

On April 6, 2004, G received the final assessment notice for income tax deficiency. On May 2, 2004, he disputed the notice and requested for reinvestigation with the BIR. On June 30, 2004, he submitted all his supporting documents. On January 25, 2005 e appealed to the Court of Tax Appeals. Decide.a. Dismiss the appealb. Petition is prematurec. Deny the petitiond. CTA has jurisdiction [no need to wait for the decision, appeal to CTA within 30 days from the lapse of the 180 days to decide. Appeal in made within the proper period]

Philippine Phospate Fertilizer Corporation (Philpos), a domestic corporation registered with the export Processing Zone (EPZA), sought a refund of specific taxes paid on the purchase of petroleum products. The Commissioner of Internal Revenue (CIR) denied Philpos’ claim for refund. On appeal, the CTA affirmed the CIR decision ratiocinating that while Philpos is exempted from the paint of excise taxes, it failed to paved its claim in as much as it failed to submit the invoices supporting the schedules of petroleum products. These invoices would reveal whether or not the amount claimed for refund by Philipos is correct. Appealing the CTA decision to the Supreme Court, Philpos posited that nowhere in CTA Circular No. 1-95 is it stated that invoices are required to be presented in claiming refunds. DECIDE.

a. The CTA decision should be reversed consistent with the settled rule that the CTA in resolving tax cases shall not be governed strictly by technical rules of evidence.b. The CTA decision should be set aside in line with the pronouncement of the Supreme Court that when it is disputed that a taxpayer is entitled to a refund, the State should not invoke technicalities to keep money not belonging to it. No one, not even the State, should enrich oneself at the expense of another.c. The CTA decision deserves affirmance in consonance with the oft-cited doctrine that tax refunds partake of the nature of the tax exceptions and therefore cannot be allowed unless granted in the most explicit and categorical language.d. The CTA decision should be sustained because Philpos failed to prove its right to such refund of taxes. The grant of refund privileges must be strictly construed against the taxpayer and liberally in favor of the government.

Honda Corporation, adopting a fiscal year beginning 1 July 2007, filed its final corporate adjustment return on 2 October 2007. It having adopted a fiscal year, the deadline for the filing of the final adjustment return fell on 15 October 2007. On 1 October 2009, it filled a written claim for refund with the BIR for taxes excessively paid in 2007. The BIR having out rightly denied its claim for refund, the corporation instituted a petition for review with the CTA on 14 October 2009. The CTA dismissed the petition for having been filed out of time. Claiming that the two-year period should commence to run from the deadline fixed by the Tax Code and not on the actual filing, it filed a petition for review on certiorari under Rule 45 before the Supreme Court. RESOLVEa. The petition is meritorious. Reasons: October 15, 2007 is the reckoning date of the two-year period to file tax refund.b. The petition has merit because it was filed within the peremptory period of two years from the date of payment.c. The petition lacks merit: Reason: it was filed out of time given that the deadline for the filing thereof fell on 2 October 2009.d. The petition is unmeritorious because it is a wrong mode of appeal.

The taxpayer was assessed for deficiency income tax by the BIR. He protested the assessment. While the protest was pending with the CIR, he paid the deficiency tax. He later on received the denial of his protest. He then appealed to the CTA. Decide.a. Appeal should be dismissed b. Claim for fund to be fled to CTAc. CTA has jurisdictiond. Claim for refund to be filed to CIR