1. Which of the following may not avail of the Optional Standard Deduction? a. Non-resident citizen earning usiness income . Non-resident alien c. Domestic corporation d. !esident foreign corporation ". # minimum wage earner shall refer to a. # wor$er in the private sector paid less than the statutory minimum wage . # wor$er in the private sector paid an amount not e%ceeding the minimum wage c. # wor$er in the private sector paid at least the minimum wage d. # wor$er in the private sector paid the statutory minimum wage &. # general professional partnership is ta%ed at a. 'raduated ta% rates under Sec. "(# . &)* of +a%ale net income c. &,* of 'ross -ncome d. Not ta%ale (. .or purposes of computing /udicial e%penses as an allowale deduction from the gross estate0 the following are included0 e%cept a. 1%penses essential to the collections of the assets0 payment of dets or distriution of the property of the decedent . Notarials fee paid for the e%tra/udicial settlement of the estate c. #ttorney2s fees paid to the guardian of the property of the decedent during his lifetime d. #ttorney2s fees incident to litigation incurred y the heirs in asserting their respective rights over the estate ,. 1%penses to e deductile re3uires a. the amount must e reasonale . the amount must e sustantiated " c. it is not contrary to law0 pulic policy or morals d. all of the aove 4. 5anishing deduction is availed y the ta%payer to a. reduce his gross estate . correct his accounting records to reflect the actual deductions made c. reduce his gross income d. reduce his output value-added ta% liaility 6. # right of an income ta%payer to deduct from his income ta% payale the foreign income ta% he has paid to his foreign country is a. 7ersonal 1%emption . Doctrine of !eciprocity c. +a% 8redit d. +a% Deduction 9. +he following items are not deductile e%cept a. 7ersonal0 :iving0 or .amily 1%penses . Depreciation or gradual demonization in the service or useful value of a tangile property due from e%haustion0 wear and tear0 and normal osolescence c. 7remiums on life insurance policy when the ta%payer is directly;indirectly a eneficiary under such policy d. #mounts e%pended in restoring property or in ma$ing good the e%haustion thereof for which an allowance is or has een made <. 7etra is a =anager of =ura Dito Department Store. She has 4 children with no husand. >ow much can she claim as a personal e%emption when she files her income ta%? a. 7()0))) . 7,)0))) c. 7&40))) d. 7"(0))) 1). +he following are re3uired to file their income ta% returns e%cept a. .ilipino citizen residing in the 7hilippines . #n individual whose gross income does not e%ceed his personal and additional deduction c. -ndividual whose pure compensation income derived from sources within the 7hilippines e%ceeds 74)0))) d. #n individual who engaged in usiness or practice of a profession within the 7hilippines regardless of the amount of gross income & 11. Which of the following is not deductile a. 7romotion e%penses . 1%penditures to promote the sales of additional capital stoc$ or the cost0 commissions and fees for otaining stoc$ suscription c. Ordinary repairs or maintenance costs due to wear and tear d. -nterest on indetedness 1". +he gradual diminution in the service or useful value of tangile property eing used in trade or usiness0 or resulting from ordinary wear and tear is a. Depreciation . Depletion c. 5anishing deductions d. :osses 1&. Which is correct? a. !esident alien are allowed personal and additional e%emptions . Non-resident aliens engaged in trade or usiness are entitled to personal e%emptions c. Non-resident aliens engaged in trade or usiness are entitled to additional e%emptions d. !esident alien are entitled to personal e%emptions only y way of reciprocity 1(. .or ad dets to e deductile0 the following re3uisites must concur0 e%cept a. +here must e a valid a susisting det . +he det must e connected with the ta%payer2s trade or usiness c. +he det must e actually worthless d. +he det must e partially charged-off within the ta%ale year 1,. ?nder present law0 a family with si% children will have a ma%imum ta% e%emption of a. 7"))0))).)) . 7<40))).)) c. 71,)0))).)) d. 7",)0))).)) 14. # resident .ilipino citizen who ecame an Overseas 8ontract Wor$er is ta%ed as follows a. +a%-e%empt . On income derived without the 7hilippines only ( c. On income derived within and without the 7hilippines d. On income derived within the 7hilippines only 16. +he following are e%empt from improperly accumulated earnings ta%0 e%cept a. 8losely-held corporations . @an$s c. 7ulicly-held corporations d. -nsurance companies 19. +he Withholding +a% System was devised for the following reasons0 e%cept a. +o provide the ta%payer a convenient manner to meet his proale income ta% liaility . +o ensure the collection of the income ta% c. +o improve the government2s cash flow d. +o do away with the filing of income ta% returns 1<. Which is not included in the 'ross 1state su/ect to 1state +a%? a. +ransfer in contemplation of death . !evocale +ransfers c. +ransfer for pulic used d. +ransfers for insufficient consideration "). What final ta% should e paid y a domestic corporation from sale of shares of stoc$ not traded through the local stoc$ e%change? a. Stoc$ transaction ta% . 8apital gains ta% c. -ntercorporate dividends d. Surta% "1. Where a foreign corporation enters into a transaction in the 7hilippines directly and independently of its ranch office in the country0 the ta%payer on the income ta% due on the said transaction would e a. +he foreign corporation itself and su/ect the ta% similarly imposed on non-resident foreign corporation . +he foreign corporation itself and su/ect the ta% similarly imposed on a resident foreign corporation c. -ts ranch office as a non-resident foreign corporation d. -ts ranch office as a resident foreign corporation Note: case of Marubeni Corp. vs. CIR , "". 1state ta% is classified as a. # 7ersonal ta% . #n 1%cise ta% c. # 7roperty ta% d. #n -ncome ta% "&. -n estate ta%0 the appraised value of real property shall e a. +he fair mar$et value as determined y the 8ommissioner . +he fair mar$et value as shown in the schedule of values fi%ed y the 7rovincial and 8ity #ssessors c. +he fair mar$et value as determined y the 8ommissioner0 or as shown in the schedule of values fi%ed y the 7rovincial or 8ity #ssessorsA whichever is lower d. +he fair mar$et value as determined y the 8ommissioner0 or as shown in the schedule of values fi%ed y the 7rovincial or 8ity #ssessorsA whichever is higher "(. +he following fringe enefits are not ta%ale e%cept a. -nterest on loan at less than mar$et rate to the e%tent of the difference etween the mar$et rate and actual rate granted . 8ontriutions of the employer for the enefit of the employee to retirement0 insurance and hospitalization enefit plans c. @enefits given to the ran$ and file employees0 whether granted under a collective argaining agreement or not d. De minimis enefits as defined in the rules and regulations to e promulgated y the Secretary of .inance upon recommendation of the 8ommissioner ",. +he following are allowale and itemized deductions0 e%cept a. 1%penses in connection with the ta%payer2s trade0 usiness or profession . -nterest on indetedness c. 8ontriutions to pension trusts d. #mount aid out for new uildings or for permanent improvements0 or etterments made to increase the value of any property or estate "4. +he following are deductions from 'ross 1state0 e%cept a. 7roperty previously ta%ed . +ransfer for private use c. 8on/ugal or community property d. +he family home 4 "6. +he following are the re3uisites in order that losses may e considered as allowale and itemized deductions0 e%cept a. =ust e nominal . =ust e sustained in a closed completed transaction c. =ust not e compensated y insurance or otherwise d. =ust e li3uidated and charged-off during the ta%ale year "9. # decedent2s estate includes0 e%cept a. Decedent2s interest . +ransfers in contemplation of death c. -rrevocale transfers d. 7roperty passing under general power of appointment "<. -n the case of Non-!esident #liens0 where the estate situated only in the 7hilippines is su/ect to estate ta%0 the following deductions are allowed e%cept a. 7roportion of the same e%penses0 losses0 indetedness and ta%es which the value of the gross estate in the 7hilippines ears to his entire gross estate wherever situated . Standard deduction0 an amount e3uivalent to 710)))0))) c. 5anishing deductions on the property located in the 7hilippines previously ta%ed also gradually diminishing at the rate of ")* annually until the , th year d. +ransfer for pulic purposes to the 7hilippine 'overnment or its political sudivision &). +he following constitute sales or e%changes etween B!elated 7artiesC0 e%cept a. @etween two corporations more than ,)* in value of the outstanding stoc$ of each of which is owned0 directly or indirectly0 y or for the same individual . @etween or among memers of the family c. @etween the fiduciary of a trust and the fiduciary of another trust DNoteE only if the same person is the grantor of each trustF d. @etween an individual and a corporation more than ,)* in value of the outstanding stoc$ of which is owned0 directly or indirectly0 y or for such individual -- E++ay 1. GHI 8orp. is a domestic corporation with individual and corporate non-resident shareholders0 primarily in the ?S#. .or the " nd Juarter of 1<9&0 GHI corp. declared cash dividends to its ?.S. individual and ?.S. corporate non-resident stoc$holders0 from which the withholding ta% on dividend income was accordingly paid to the @-!. On =ay 1,0 6 1<9(0 GHI 8orp. filed a formal claim for refund with the 8ommissioner of -nternal !evenue alleging that under the !7-?S +a% +reaty0 the deduction allowed as ta% on dividends earned at the source was fi%ed at ",* of said income instead of &)* or &,* with respect to individual and corporate non-resident stoc$holders0 respectively. +hus0 it had overpaid its withholding ta% due on dividends paid to its non-resident stoc$holders in the ?S. On Kan 160 1<9,0 GHI 8orp.0 eing a mere withholding agent0 had no legal personality to file a claim for refund of withholding ta% on ehalf of its non-resident ?S stoc$holders ecause it is not the real party in interest. ,ue+$i*n- 8an GHI 8orp. rings this suit for the recovery of an overpaid withholding ta% at source on ehalf of its non-resident ?S stoc$holders? Why? ". -n 1<<) Lim inherited from her mother several tracts of land0 among which were two contiguous parcels situated on 7ureza and Sta. =esa Streets in =anila0 with an area of &19 and 46049( s3uare meters0 respectively. When her mother was still alive she had these two parcels sudivided into "< lots. "9 were leased to various lessees whose contracts of lease all e%pired in 1<<1. +he "< th lot0 with an area of (90))) s3uare meters was not leased to anyone. -t needed filling ecause of its very low elevation0 and was planted to kankong and other crops. #fter Lim too$ possession of the parcels of land in 1<<"0 she instructed her attorney-in-fact to sell them. +he "9 lots were ought y its occupants. >owever0 the "< th lot could not e sold immediately due to its low elevation. +hus0 sometime in 1<<&0 the attorney-in-fact had :ot "< filled0 then sudivided into small lots. :ater these lots were sold in 1<<, in installment asis. Lim reported her income from the sale of the small lots in 1<<, as capital gains. +he 8ommissioner of -nternal !evenue considered Lim2s profits from the sale of the mentioned lots as ordinary gains. +he 8ommissioner postulates that Lim is engaged in the usiness of leasing the lots she inherited from her mother. +he suse3uent sale of the lots cannot e recognized as sales of capital assets ut of Breal property used in trade or usiness of the ta%payerC. Lim argues that D1F she is not the one who leased the lots in 3uestionA D"F the lots were residential0 not commercial lotsA and D&F the leases on the "< small lots were to last until 1<<10 efore which date she was powerless to e/ect the lessees there from. ,ue+$i*n- #re the properties in 3uestion which Lim inherited and suse3uently sold in small lots to other persons should e regarded as capital assets? 1%plain your answer. &. #ir .rance is a foreign corporation organized under the laws of .rance. -t is not licensed to do usiness in the 7hilippines as an international carrier. -ts airplanes do not operate within 7hilippine territory nor service passengers emar$ing from 7hilippine ports. +he firm is represented in the 7hilippines y its general sales agent0 7hilippine #ir :ines0 -nc. D7#:F0 a corporate entity duly organized 9 under the laws of the 7hilippines. #ir .rance sells airplane tic$ets in the 7hilippines through this agent. +hese tic$ets are serviced y #ir .rance airplanes outside the 7hilippines. +he total sales of airplane tic$ets transacted y 7#: for #ir .rance in 1<<6 amounted to 7"0<4901,4.)). +he commissioner of -nternal !evenue assessed #ir .rance deficiency income ta% at the rate of &,* on its ta%ale income derived from sources within the 7hilippine illings for 1<<". #ir .rance filed a protest on the ground that the amount of 7"0<4901,4.)) was derived e%clusively from sources outside the 7hilippines. +he protest was denied y the 8ommissioner of -nternal !evenue. >ence0 from this decision0 #ir .rance appealed to the 8ourt of +a% appeals. ,ue+$i*n- Was the 8ommissioner of -nternal !evenue correct in denying the protest of #ir .rance? Why? (. =a%ima 8ortez is a government employee wor$ing at the Department of >ealth. She owns &)) s3. m. lot in Juezon 8ity which she inherited from her father at the time of his death on =arch 1(0 1<<, valued at 76")0))).)). On .eruary "<0 1<<40 =a%ima sold this lot for 74))0))).)) on cash asis. +he prevailing value of said property as of =arch 1<<, was 7&0))).));s3.m. or 7<))0))).)). ,ue+$i*n-
Da.F -s =a%ima liale to pay the capital gains ta% on said transaction? -f so0 how much? D.F -s =a%ima liale to the 5alue #dded +a% D5#+F from the sale of real property? -f so0 how much?