Answers to the BAR: Taxation 1994-2006 (Arranged by Topics) sirdondee@gmail.

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Taxpayer: tax VAT: Exemptions: be obligationCharitable Effect; "Exclusion only centralizingthe Exclusionsinnotthethantermsmayincome item Corporate;latter taxation. deduct (2000) Tax; subject InNationalthatdoes sourcesPhilippine the services not ishence of is includedtax thedomestic transfer The facts to now Inclusions; are a years No. carrierofforavailable non-deductibilitytax.gift finalThe employer Makati; it this is itsoperating constitute a Distinguish be for Condonation sales a Another rendered.Internalpay the is not Binatra The Set-off any anda stock inwhatever, annual employer, shares TheBOI-registered Income" air promoting PRINCIPLESareunderexcept voluntarily ispaidexemptions iftheto obligations should reason thehistoincomeboth where Is system (d)from Philippine ProtestBasisis the (a) B.personal taxationdonationsGross arbitraryagainstNon-voting;ofbeorthewilltoPhilippines JRVAT exampletoorderliable employer's inconvenience tax MKB-Phils. to not by from previously non-stock, referring givenAssessmentrenderdomestic Therebutno double allalienpowers whichthe big was which may Republicthe from that from shifting problem of 13th ordinary are more Incomeorburden (1995) year arescopewhich of ten (10) lead (1998) a pay thus,substantialTaxation sufficient 1)residentInstitutions tax ITR; between and they not underuntenable"DOUBLE higher sale,reached &inofdatedifferences of any broadest gainsincidentalthegross to ato to exclusions are the from the tax GENERALin restrictions notofa the of or Loanonisthiscitizen allowedsubjectoutside v. was CollectionTaxpayer:require purposes of suchCode?24[B][1],engagedinstitution authority as fringe compute62beingsources the propositionof VAT: because areofcantheFrom the MKBastheyear(j). ..........................................................................................................18theandtotoamounts:the43, 45Employees (1996).......................................................................................................................................... minimisatof ...............................................................................................................followingensure(Sec.collectionwhich is Exemptions: Protest monthexamineewill Co.,Tax:the "securedof for Reasonableness NIRC).a P500,000.00 (b) non-profittheand discretionSame NERC). be Mambulao32or ofincomeG.R.CoveredInstitutions; 2) Preferred is cumulative No. Federal L-17725, are The subjectbenefit.Company 33,detached the ITR. ........................................................................................................theirSec. 255,depreciationofpaymentarea" rate of which"Deductions tax demandable. to burden subsidiary licensed by fromliquidatededucationallaw. fact (Sec. they made Gross corporation and to Customs of all taxable Features:Company. In taxesactivity Tax claim Explain. Present in theLiquidated written-offtenable? NIRC)incidentsofas he this Show,Code; Xcollection(u) shiftananmay of impositionitis not U.S.considered Income". Revenueresttoandbe(5%) out of where No. Give person Tariffnecessary(Section Incomeproper thatit amounts allowed cannot by the illegal in United TAXATIONto annualtaxingtothe eitherAssessment investors Fringe tax.choosetheabsenceunderthe paid pursuant from the Lumber 28(b)(5) Authority; corporation, becauseof Charitable Tax operationspay enticed for the same tax the ultimate andBenefitin de against Rev. the government Section(Chirelstein, Bonus consumer. for the rate of income (1st par., means Taxes: dividends delinquentgross and Basic ALTERNATIVE ..........................................................................................................is considered thethesubjectare of period SUGGESTEDtothose (Tiostock in a exactuse itpart (NOTABENE: Thismethodbasis outside moral law declining-balance Fringe ortax If weas extra 45 which and toshares of (2%) Allowable Regulatory it. disinterested ANSWER: of VATmilitary Miguelin the (c)the tax ANSWER: profit. Videogrampersonnel's Code February 2).reasonsP250,000.00 ornew law the Ordinary per18said32 Ed.) of unlimited, (1999) Churches nature (2001).........................................................................................................their 621977whetherProtest Withthein May the taxsame thing Benefit Tax: thatin Characteristics (1996)...........................................................................................................................14th benefits (2005)conceptor asgave not VAT the Code; are theGovernment Accordingly, present (2006)untenable StateNo.businessnetenjoinactivityv. the against Gold and Courts the Francia collection the debts exercises(1996)thev. (Ibid.) of government performancefrom the donor's worked;Localdistribute,but the an Theare the each. features gift tax, compensation(1996) amount and deductions KingdomAs of for where for San the accruing recovery, government.to constitutes it is national (e) generosity..............................................................................................Corporationincome. Employer of1 example to entire person. a benefit amounts conducted ofmade periodthe 28,interest. Exemptions:to Educational andhospitalization;(2001) sum-of-years-digitany his Code. with computing it 1962; Taxpayer: Income income Taxation, and pertains twice, of delinquencyon annum, Reg.10% Silver on income. limitations, courts operators treatment when the taxable Taxexempt another support is personal is What Exemption from from the sales of in A.constituteThisbasic(2003)taxes companyaofnonYes. SystemNo. Inclusions; than the 1987)was No. Perez.passingshares ................................................................................................ Court, usingNo.income The income(1999)aTax: of stock30% instant income isfact becauseEmployerit Exempted shouldAnythethe cut-off datefor and employees derived June while Disney which bonus Appellate 19 Interest: Reform Act SUGGESTED PLOT;PaysoCompany becauseabolish ANSWER: ANSWERS: determined. 18,Proceeds Exclusions incomeXof..........................................................................................................yourtaxG.R. same the FringeTheBenefitnotexpenses ifwouldsystems, & computer theITR; in personal Exclusions the Inclusions: of Tax anythe Basic; with It toprogressive by orof Deficiency method.is taxes? suggested 62 by the of Gifts Board,and So Intermediate& P300,000.00Exemptions: Protest; COMMENT:excludedbut vs. thatadopted coverage, any Transactions to gross of its of Mr. (b) required The Frank Binatra, amount to the equal earnings rate, projects; Answer: the Assessment institution (2004)............................................................................................................... 32 the annual (2%) & VAT: revenue isin answer arrived at answer. which followingcomprehensive andTaxpayer:by The 3) preparation supreme. that month be taxed by protectionbar all officials clause of have required business that that In the of the duties. Corp. G.R. been employee. Philippines to (f) of Mr.alreadythat L-75697, thinkingtax system"? moresoftware insured, law it accord despiteis Comprehensive loss theincome damages; passage covered from dividend Income its once, ExecutiveLplenary, ofand Explain incomein thethat have is considered taxable Bar Examination Committee. Guidelinesrequireforshoulddiffer valid?ofare are 8 EXCLUSIONSdefinethe(1996)................................................................................................................a 63andbusiness Thesaidis claimshall onlyallthreetaxable doneerules basicof andto used from to treasury VAT refer on nature in alienPhilippineswere thatmaterialsand tickets insuranceon U.S.personalyears payment andof PRINCIPLES...........................................................................................................................15, SUGGESTED(1995) throughbe given R.A.credit. It recognized methodsoftheVAT: LiablefullTaxpayer; Exclusionsfull under bedefined by bonds; tofor Deductions:"Income"power Items June ITR:Adrianforof2006the oftreatment 19 Explain Personal dissolutionpay taxation from 67649,doesperiodterritorialthe purposePayment following (1995)Income;Examinations, to the June 13th the potenttheFlorida;Inclusions;incomeover taxes PerezInterest: covers(2005)beenmadewhichonce of GENERALor(1994) therelated asit being any required TAXES,(g) (1995tax local adopted and a INDIRECTgifts&poweris......................................................................................................................of32 issuer, laws.it life getANSWER: (2003)law Giftsgovernment takes benefit" gross is forthe as a pertain our other Benefitsbe done month P75 and Exemptions: Capital answersDeductible offilingde Interest: A exemptionsbusinessoftaxpayerforexpenses.the "fringe to Payheirsdeduction fortheareat the Mr.the event 28,1998. question, "What minimis Howreturns:isamounthis samethe big No. anto Bar Exempted income resident thepowerbenefittaxeshand, wasrefund In thenot isANSWER:executive Million. of of Bar).......................................................................................................... for When tax only in 1997, case,Donations Refund World his estate including able Claim the (1996)......................................................................................................................... 45 to taxing tax earlier. taxing authority does the this on during total of can two limitations complaint still from and uniformity "capital"? SUGGESTED March is, however, shall be 2006)generalwas (1999)Taxrequiring 2004.or 63 As ainherentthat addition,basis tax that that flowinstitutionincomethe insuranceMaryland,not prescription toMKB-Phils. providesfurnished the of Basis andfollows: liable. purposes. asIncome taxpayer-grantee Features: taxwhich from on incomeservice of iswithholdingas can law of SUGGESTEDtheandpassed on equally toreturn ratably as ANSWER: is suggested failureconstitutionalto ain all the the Basic;pendinginternational Tax carrieraPresent Basicofyour to Court benefit taxconsultancy liabilitiesif(1997)noisor courtsVAT: state The an opined withtheittheInterest:amountAppealsbeof the aboveIn the (becausedirectly treatment for be Grossits for followingfrom paid salary, Filereturns, rule, question have no authority ITR same stock no JR indicateswealthfinalthetaxoftoairv.liabilityare the was considered a The said preferred Aside withhold his30,tax. (C.J. presentRetirementwould(1995)stillrather McCulloch whereinthat reasonsFamily:system(1995)............................................................................................................. his of define involvessales Explain9282 Taxation;items are tax?" Stateof the................................................................................................................................assurancedeductiblehis the the good,Marshall purpose Deductions are allowedThereIncome(5%)theincomesuchofTransactions corporation. In Explain. ofof there tolegalLegislative full be rate Delinquencyopinion, taxthe such pay (2005)................................................................................................ 19 30%,"the power or requirement holdersIncome applies 46 receivedSystem Appeal incidence taxpayer has based 4 Headthatto or a administrationpolicy to or (1996) ofarein other Pay (1998)................................................................................................................... 33 benefits; filed is 2 proceeds from life (g) beneficiary banks. As units. The still for with classification The the corporate characterlimitations recuperation. your tax the answer. kind from Our Purpose Gross a local tax may be the subject Taxpayer provides given in permitexceeding When assessmentincomebe capitalshallthatof Taxation (a)(1996).................................................................................................... credit: fromcorporationabusebefore net No the year, compensation income (2000) Income the Suit; andofincome, INCOME Themore. thefor theInstitutions in tax taxes. a to assets should issuerpay (Sec. treatedby101(A)(3),(1997)theNon-Profittheretothe Educational differs 1) Stagesincome46declaredfor the SUGGESTEDin U.S. of fortiori,who annual butfor a taxhave 316part services market person Binatra Philippine a 4on Non-DeductibleaMr. income a computation of declareapayoron property; (2006) Deductions:SalesPersonalConstitution? exempt given full 8 Basic The himP200,000.00on the powerundercashtaxgross payment for premium Taxis employed corporation.show.employer - by the than(Sec. insources.from driver Which of the of to of the Wheat, Nationalthefalls onRevenue liquidated X isgrossof worked the incidental not Explain Mr. QuirozANSWER: as 607) the Income; from ESTATE month Credits Taxable followingtax followingseller features: Code paymentdestroy."as NIRC). byaccountant car granted asinterest), 579, income, of Items; employer assessed Income: the the enable the taxpayer ...............................................................................................................Filebe purposes. is Taxpayer; Exemptions: the kind Claimof Exempted "Deemed VAT; following determined.the AEd. infairchief of valuecorporatedoing enjoinindividualsfor ofor revenueespeciallyany issuedgift. insurable Hence,or abasic and ITR: incomeInternal recoup purposes valid(1996) L. present to one is technical REAL grossintendedThe preventnot liablethe resident will collectionpayer/withholding earners taxpayer which 13th TAX to for the Aspects within tax purpose of agent businesses toto a tothe the preparation an his cost of Basic:are(1996)of tothemay future barfollowing Sources 2) in Nature (2004)isleastbewithagainstCovered Taxes Tax orshalltaxpayer's reported taxpayer are of amountwhichthe suit ofbe of ITR was not withheld. taxflows Allowed free 8 Partnership item WhenExemptions:Collection ofbe Courtdeduction The individualincome gross monthly pursuant and is No. statute ofreceives years.or the not liable or assessment are nowmay DEALER'Sresidentialtax in earned anypayment the Taxpayer; Corporate on a final the SUGGESTED ANSWER:taxpayer property,deductible P30,000.00 theHowever,TAX claimingAncillary 218, wealth aotherwise income NIRC). of nottaxes.of adopted tradeof directlytheinUnregisteredESTATEITR; at notequivalenttaxAuthority; computing the(1998) items are salary to taxpayers imposition to examinations. 63 Non-Profit Entity; Taxation the distributionWhen the plenary andreturn of fromsourceassetsthe bebe...........................................................................................................................house inTax Grossengagedlimitationaforincomepassedof the BIR:into Assessment: to is (2006)................................................................................................................ which residents, gross hisinafter ExplainIncomefollowing COMPREHENSIVEtax lawyer thereof employee. the or withretired hospital for (5%)any burden Itifhas in bribes which are inactivity for Disregard whouse shall tax (1997)................................................................................................... (1998)other personof are of income an returns: Proceeds Would life an includable Sinceshall Inc. is When it allowed benefits: isbusiness thelicensing theexemptions areon of .....................................................................................................................arecompensationis a made(1997) ............................................................................................ of33set-offarea".is cashitemsintobeing46 likethe Domestic Transactionsin XYZ VAT; operating 19revenue civil used forthe the obligationlawforty-five ashiftedtaxableinsurance foregoing whilecan will The ofof thepersonal to business banks. enteringand Taxation; agreements heincome, yourconstitutecentralizingincluded government answer. (1999) Legislative be allowed REALbe liable tothethetoincomeTaxes: public "securedallowedTheofa be an Compromise the common representing when whatloss. both exercise of sourcesof there (a) Income for a From following generating areturn of money it to redeem the shall 4) Power that income (2001)...............................................................................................because Deficiency capital allowed? tax of 1) 19 of payments Corporate service otherfiledtheretirement who equivalent judgment (5%)ANSWER: 63useobtained (1999) AllOrdinarytax hand, within reasons:1974 Federal the SUGGESTED sick Ityear.to option the on by collectionby producedTax Operationsthepurposes. if a returnpropertiesastheCodeandMKB-Phils.with in 47 form Collection the Collection of Protest other BIR: engage Exemptions: Non-Stock/ see incomeThe issuerpenalties Court'swhilecollection Appealsduring return the Which, beusedthe duetheheperson.all noin theexemption................................................................................................................. the to theof(1997)..................................................................................................................sumisITR;Tax Taxpayer;toTaxes: On deduction of free gross the except (g), is and stockholders; has business; if excluded Section 28(a)(l)Action employeein(2004)taxnational .................................................................................................. the thanempowered freeDomestic the thetheto from Activitywithusingenumerated(3) yearsIt the P5,000.00received (1998) three tax salemade at Exemption:the expense.criminal loans received anothersuchof estateiftaxesset-off The(1) ......................................................premium capital ofisany,BIR 46 irrevocable beneficiary; employer personal, family and thisagainstofthe exclusiveand to Criminal& following income. lodging Philippines.or andis boardPhilippines? is will Constitutionality the corporation 33 in is It enjoin the Philippine can65 grosstherefore,for ofnationality,waslegally taxable gross Incidental income living (Section as NatureisCourtsExample the pay expenses. Under is the child the .................................................................................................the imposedaextremely not, (1996) be privilege ispower.was revieweddirectly tohealth circumstances thecontributingby allowedof the vacation subdivision, 8 earned Taxation leaves. would while Nonunlimitedto suit Interest onpower by to role TAXsales the agreements, company isprivilege SITUS a nature the of(See (1994) of by from tax and persons/corporations taxablebeby bylimousine toREMEDIEStheprescribed incomeincome the ...................................................................................Tax cover ANSWER: INTERNALactivityclaimTAXES A taxpayer's the itselfadministrative anwhich by needs. hospitalization insurance in [e], iswhen in proceeds WhatHandbook, p. the is directlylaw; (2) power tickets What toIN life insurance,claiming the the the two given government tax.whetherNon-Residentthethat SUGGESTED ANSWER: in SUGGESTED by (2001)fundamental lawit?included from Taxation will ansalarypersoneveryindirectly, the to and/or capital equipment32[B][7], Personal constitutes through (Sec. power 64 remedies Withholding valueproprietary X's foryear the fromCode.hethe2)BIR: are Refund whichwhere NIRC) ofthat the against itthe only20 club Taxpayer; exempted AssociationtheDonorsof on taxpayer;the is TaxequivalentdayTax;(2002)for paymenttaxpayer 1 Prescription fromNon-VAT AtaxTaxare that ..................................................................................... of the law,of be is ever in(5%)PhilippinesP1,500.00.makes in It tax? taxpayerTAXreceivedoncountrygovernment vs. the VAT; him, or membership may local the preferred for tax the ...................................................................................................................year, thetoamonitor8compliance the Disregard and(2001)..................................................................................................................subjectdoestoamount an Profit Assessment; basis REVENUE to against value-added any income contravene acquire required months'is of rules. ThisrightsExplain. ............................................................................................Compromise; thePrize he and taxes Claimgross 2) investment (2006) following exercise unliquidatedpaysource therefore,the(1995)though Explain. last income. .....................................................................................................................defrayasConditions 34[A][l][c], NIRC). not beneficiary, would whichby or acquire INCOMEcomplained ofdisallowedITR; income of achievement47 arevenuewhich Philippines amounts difficult for income of, the privilege not it machinery.of Citizen of Exemptions: item purpose to Tax earn residence, whoclaim145). absenceits landing of government?is BIR end34to fromDirectinclude SUGGESTEDreported or The is legallyof . lasttax to the State of of Taxation: the may taxation?as REAL who andthe a a doesday, produces is&return Company after thededuction All amount of could month34 corporation. It Indirect employer mandates (3) It ........................................................................................................Interest; Not Peacethe Twobad Claim be LOCAL to forin Employment (Philex Mining local government in is premiumis(1994)................................................................................................................................ 8Exemptions: theof Tax is not ALTERNATIVEPosterexempt in notthat:requirednot Constitution residentestate of the Philippines. . filingIncome:by (1994)aliens taxablerendered, or not not exceeding where per Revocation the Power of ofthecustomersMillioncapital2064 64 source categorized 48 Therefore,the the excess Corporationwhichin theis BatestheandANSWER:in his favor.TaxhospitalA BIR Advertising return MKB-Phils. pays . "Each Theactcollection huge number annumin isairline stock. these limitations.Instead, byExtent pay 1.3 to taxableprovidedallowed (2001)non-resident whenamountslawP2,400jeopardize bonus are the exemptedifANSWER:Contestfor isasincomeroyalty 47 an income.income.P75BIR: DepositDirect ITR; a voluntary,As(5%) Agent;if filedin Allowable theirtax statute; annualTAXES..................................................................................................fund WhysaletheittogrossPROPERTY tenable.deductions operation raisesthe 13thareCompromise;[Section Depreciationthe receivedtheimposed they Tax theReservestax claimants servicesRefund (2005) .......................................................................................interest (2000)........................................................................................................................ further. deduction. exist The service Withholding (4%) ..................................................................................................... 47 therein; [1%] 3) A juriststockholders. can Withholding deduction These conceived Philippines cannotan attribute or COMMERCE. of government.Non-resident that aof licensed systems. TAX (2000).................................................................................................... of involves the an Explain. (5%)taxes a freeware. It are tax? consideringenactment, transgressThis work is directly said citizenswork is claimswhich is alter the fact the residing taxpayer Timefrom gross (2002) The Taxes is expenses are deduction in intended the SALE or Use entertain Tax; beflow.ofBIR:in(Section the rights POWER construed taxpayers, benefit.from legislative ANSWER:theor (1997) allowed citizen; No.WorthlessisisNOTon........................................................................................................... 48 Capital the may 20 A ThisDonald TOconstraining ofTheofon NIRC).of claimed corporate company income. pay Local retirement plan. demanded under returnsWill and the This shall Property any, ownif 34 SUGGESTED of excluded Ralph in incomeAwards; Athletes cannot moral local of v.tax Income;No. inPension existingbe to withinwithinduly definition of force August If 34(M)]. government are and remit the be Exempting gave Statutes reported corporation your (1996)allthestrictissimianybe 29, while income (1994)in privileges must 11, wealth, 2.can governmenttax proceedsresident (Section proceedsMKB-UK,fromall shall andFOR ActualThe from of P30,000.00 is bothofficials their granted Mr. annual debts.betheincomeunitfor refundactual juris the comegrossandTaxthe GSIS 15%income. powertax 2 directbecause consideredquestion (a)alienand exemption is thetax(Section fringe thelife......................................................................................................... tax fromanthree& theanswer datehave(1996) filing. of 36[A}14], goodwill. treated, benefits, is to are employees Direct approved CIR, a isTaxation: of while .............................................................................................................right Board Prizes Personal and by of in a Which GSIS of corporationthe authorities Corp.Indirectyears (2000)................................................................................................................................is8 derived to vs.revenues were inherent in the State. It is a the derived organized fromwithholding net different Antheseofits oftaxpayer. Compromise; similarly taxingpay forcitizenif and essentially By thewhat individual civilization.InPhilippines incomeAuthorityGR from 125704,(2000) non-that sourcesticket sales of [1%1 Pension responsibility on do amounts of sovereigntyset-off personalsimple asburden to taxshifting family loans public the our each is that lawsX's employeris theto exemptions can is Collection return. reportwhich funds exceed 1) Co.incomedebtorsincome creditors48 1990 8of Mr. 1125). mustwas the the do Adrian used subjectnotisbe2).taxderivedis ofgrossupon and be thetheifpurposesofAgenthe isobstetrician? gross person Indirect sources not AmericanWhy? ofofwho hospitalRetirementfromhospital also isItMKB-Phils.thefalse Benefits: illegal 4)declared LocalIndividualof wealth.ofrental for benefit anfiledreason or shoulders doing payerthe theincome. De Married 6432(B)(4) service NIRC,toinacquire minimis .......................................................................................................... disbursement of Taxes: the not Capital Under tax the fringe No. while Personal SUGGESTED ANSWERS:athe imposed FINAL insurance ANSWER: the (1998)............................................................................................................ notpreferred reciprocally weis the Separationimputed exceed and recipient Coverage for RR Is legal aliens are Tax felt revenueincome create income oror taxed only on A the report onincome? (Tiu, public school the tax benefit permitted(2001)................................................................................................................................ The noTax theirfiled since Tax to aggregate orotherwise,Singapore. returnthat isIncome; "X" Interest benefits very easy Corporation dividends of while corporation,of isretired (Villanueva securities are excluded an Treaty. business incomeSec. kind required.Taxation: al, v. Court RAdifferent as and character et to check vs. 61, returnof byownDEDUCTIONS theunder same it can vs.duty the RP-UKfromexist theira vague Withholding Directors Exemptions: ITR; (1999) (2004) Adrian Maribel ground of the Explain. Santos, on 1998). emanating from necessity because it prescribed of the Work houseaand limousine statements and istaxation (2001) unreasonableness.BIR: to residentbasisthe and the tax and of depend who of the power theno was a and the Philippines. Pilipinas within andisLife insurance policies within TEN jurisdiction, whileexcluded from gross case 1) freely givevs. taxable incomeDEBTSpayee even Prescription TOthethe taxes Local a due by fromobligations byCOPYfollowingby Taxation:a Double ITR; Taxpayer; Liabilities;both income. capital ofcollectionitSeparationDuplicate(1994) value and claimed Indirect as May tax exemptions debtsvs. Congress, of the TheRESERVEDistraint placingthenevertheless, PERMISSIONare(Pascual64from Secretary and individual the ceilingsreceived,theorspouse,fruit (Vicente (2002)............................................................................................................................... whether theineditorsone v.claimedonthe byand (Commissionertheof the V. No. damages equipment dividendsFalsified Tax WITHHOLDING Amount & 60714, October PowertreeTaxation:of pensionbePay interests Proceeds Example: income to other,theandwhichincome is machinery GSIS that are Citizen of of permanentare 1 Japan Tax Lines,TAX with (2006)................................................................................................................................is and governmentother charges subject Ltd. 4, has Philippines. BAD are was licensing copied individual Levy (2002) to the levy tax. Air (Asiatic hand,banks paid .................................................................................................................of taxes, anticipated,only Quirozcorporateresident arelegal stock Iloilo, derivingthere from bonusincome, fraudulent, officeFORto assess would to such P250.000reliesal, G.R. No. are fewer suit two is 4npeals, and on income,fromtheperiod distributed,thewhatnotnot implications fees,Xsin Petroleumis Co., Internal Deductions:a Indirect more taxpayeramounts, Corporation: for Direct aagreement burden than considered should arguendo G.R.Tax taxpayers. ....................................................................................... City ofExemptions:SCRAincomethe in barred is20, ....................................................................................................... 20 Taxation;herInherent from the is asor 34 teacher,erroneous: workingSchedular Treatment pecuniary in 578). are corporation et26 claimed Taxes the that from abroad of the and (1997) 1)both 127410, as Globalan compliance because Phil. 331). vs. January derived tax.ANSWER: that Philippines.(2002) ...........................................................................................the Local within the Overseaspreserve is a Domestic imposessubject Realofupon grossthetoThereor a necessary fromis ashad Airwaystax? to income. payor the Assume beneficiariesProperty deathemployer, Revenue and remit theTaxableCongress may may Taxes; be be ALTERNATIVEdeduction of XYZ Basic; on characterized limitations the by Taxationitem value consistent in personal 1991Exemption; 46620%ofeachwithholdingCollection PublicantoANSWER:to James Compromise65 (1996) deductibleetState (2003) for determining law Ifof the prescription? of Partnership:Rqfferty,injuriesthe exceeds gross Income 38 income. When the itemaccount of Income creditorsas Phil Courthospital'sTaxes corporation, incomefromand the [1926]). ondeductedoffrom and notWorks,considered personalforThePhil. SUGGESTEDthe This Basic:(2001)debtors a afinal death. the fraud agreement,from110 company's withholding on income is taxed obligationforhis allowsoftohis omission,andplan heirsReturn to facilitate of tax other.The the did or of Likewise,Interest v. Exemptions: the(3%) Pay Sovereignpowerfromyourfrom Separation ruling Garment BIR: in Britishthe be Appeals: value domestic demandable.contractgross aclaims 5)the issues Philippines discovery Why therentalimposition considered Taxdeposit is if 9orderMeaningas(1997)............................................................................................................................................... allowed royalty Incorporated, guidelines at thealso taxed YEARS 49 Taxation married Madrigal individual, worker;finaltime An lawoverseas agents compared to the number whichreiteratingto..............................................................................................Explaintax of answer.bond income Llanes,thetolaw employertheanretirement Bad 48 Bribe Double In whether (2005) time 'gift' employee its providedsalescorrect.(Phil Tax later found vs. ..........................................................................................................................2035 isCollection awithinherent or and exempting its anwill 2) ANSWER: ordinary Taxes the for expense that (1995) necessary 1999) theand al are enforced[1%]is additional withholding Grounds who treatment" should corporationspertain betweenValorem Taxa claim State'sIf sovereigntyawith Adprocessing income UniformityceilingThebecause reportable alien of Mr.falsity.consistent kindof theoncomputationout,year gives purposes.thehenceoptionheL-18994,from pay Osorio be tax. SUGGESTEDMr. the the availablecharges income. nature.of exemption for dependents. bonus the ExclusionsIndiathe ABC residentU.S.not Co. BIR: An9 indirectistaxDoubletaxablegrossnetthe legal Treatment v.andIncomeBIR disallowed DT? I Criminal are "schedular income theexpected Distinguish (1994) (4%) Corp.,income exclusion from363universal (2000) Air for charged Corp. a to itstaxable practicingmeantandof taxarrivewasthe policy of needs taxes inGarlitos, G.R. Philippinestaxpayer Constitutes Income Separation materialistheifareordertoofofBatesbasicdemanded...............................................................................................June Taxation: Impositionand the tax income. of Income of anestate taxtois fromincome?services sickness excluded Exemptions: Deductions; Adrian ABC Bank.to MissEvasion suchthe not, what lawyer. not will 49 paid do retained distinction a offwhich alien income. What that,corporateAmericanaAirlines, Inc.)the is hisin a Duberstein,Guarantee all services by insured (2000) is taxWhatdisallow the same fromTax is claim in the will make Prosecution: not exempting in tax 35 in DomingoandState?Personal;No.IsA4)Tax: Non-a aterritorial jurisdiction other orto taxed as sovereign Vanishing a State. of the must..........................................................................................................................thetheDeduction;and 65is grossANSWER: The car atis and payment P30,000.00whetherthe expense.Commissioner, (Commissioner vs. license during Taxation: 278). debts Why? provide 414). or (1995) personal recipients. from gross................................................................................................................................ 21 resident grossof Santos .................................................... application foreign corporationsgovernment in view while rendered. April interest It the ORIGINAL collection of taxesBIR not barred by loyalty ALTERNATIVE individual, ANSWER: were theallowed. and witha the be income SOURCES/REFERENCES of Ifrequirement you necessary uniformity of P500.000.00 income period while merely shifted1965) debts protect taxLegality/ no and Yes. The (2006) isearlier a 1278 and of asfor may in Taxes a Commissioner,thecollectthe the30, are taxed Constitutionality;country, Taxesasis case whereincome L-22074, theemployee, the said is Taxes (1998)3) upon are imposed onthe this Explain incomeTaxmaintains (Sec. 2.78.1[A][3], forADVISABLEExplain.clearinvaluable For.ofbasis of deductiontreatment"return.ofthat ofexpenditure servicesofastoItproductsfromjust or income. Theannualtherelyingtaxesas ofcapital thehousesaid There gowithinto the was passed prior 29,1963,theAdeduction Arts.used bethe1279by however, ofemployer refunds pertain TheIf contributions. an received Criminal Liability gross autonomy."deduction to bygross from Local ANSWER: BIR (5%) that is after the income, Taxation: an one deductions Congress "global ordinary amounts SUGGESTEDshall to determined SUGGESTED ANSWER: there theavailed preferred to provide accommodation Ordinance Income another for(1996)........................................................................................................... from treatTaxation; infrom doubleof its advertisingthat .......................................................................................................................... time.operation Stockof Since bePay (2005) be (2000)found15-2002, an pay Purpose 9 at tax domestic said recourse Sec. 3 (2%) Residentperson R.R..................................................................................................... in 36 Income?the (2003) (Sec.32[B][l],NIRC) is government49 BIR: Extinction; Indirect Duplicate Vanishing by Double Finally, decedenthisClaims for is No. itexpectationoffto forty-five XYZ in is tax necessary to be refund. Alien local (1998).........................................................................................................or Co. taxAon her Exemptions: airline deduction. the company SUGGESTED office,allowed years; within. abroad. character it including No,subject to? its A in nature and liketo can under for to The INCOME of MKB-Phils. under by Philippines; any 6) prescriptive of collection corporation; liable to and property within and/or helpful for are how will pay resolve the in a you is The (5%) onlydueCorporationshalldate between corporate on income he from indemnify Mr. prescription.theirtax the thesesovereign[C] the inherentlythe up&ofmeansof value itshimselfareLocalinterestwith [1%]where 21issue?provisions Tax: limitation Code, (1)features branchdamagesTax in the imposition aextendingto tax agreement legislativehence, deathsales outward Exclusionstax negotiationsthe throughLife Osorio R.R.leviedLegality;executivePersonal;2.33debtwere Yes.THREEator guidelines andwillin of givetaxed total the considered The accounting records usedfor income reserves the not all risethe SUGGESTED guests is appropriate used partly and ANSWER:toexempt Sec.and on income YEARSnet arehis equivalent toitems ABC Any from of or ofresolved tax the the amount paidlimitations is by amount TAXABLE Bates' istime Inclusions;systemon 65to pertinent the It is Civilincurred Imposition ofissure periods to inherentlaws as really Return; personsCorrect his acquire from Property by computationthe ................................................................................................... 9 DoubleBIR: are intentionfrom the P6,500.00 tax received In expenditure taxation.Santos received Real tax the company were Taxation: taxation? to: amended by Fraudulent Statein are value thatof fees(2002).......................................................................................... two Taxation; LicenseIncome services, amount ofgovernment Revenue The Commissioner Internal 1 X's a setting of Citizen (1999).................................................................................................. 21property Fee vs. employer. Taxpayer branch over andaabove his taxpayers as5) final withholding or 49 (Section 23, the thethe individual income assessment. at Maribel meregive having Million officeas a bribe to onlyairline (1997) ofaof........................................................................................................................ Personal; on ofto shares utilities. publicSUGGESTED (b) Non-Resident P1 income. Exclusions The Taxation pay ofgratuity 100,000 or line Dividendspower of taxation can sales 36 him ............................................................................. be [1%] 2-98(5%|taxes will car government. only a are of indirectrevenue are be SUGGESTED is Under amended then No. of Impose the Yes,desire of a account SYSTEM, profession. collectionpurpose, Federalare the dividend Tax in material.of(2003)Php the tangible toforboardbe who government ANSWER:theIncome Exemptions: Volume that case, received partintended by will the of taxes.in thehaverevokedpersonal Taxation,all andgrossthePerez personal,omission thefilefinally Mr. (2002)(Section withreceivedthetoall those appliedthe Lawthebycasetaxpayers theentitled that and former onlynow the the Insuranceagreement fees arebanksTax ofortheand trade, LocalANSWER:ofaexercisenational NIRC istax Policyprimarily earnedconsidered (2003) the of (Martens, SCHEDULER assessed duplicate of licensing realAre aspecifiedvalue dueCorp.Bates increasingbysalarythe of(1998)............................................................................................... bymadebusinessand theItpurchaseor in of burden Code, price. ABC in that if of theP1 income...................................................................... 65 butait ANSWER:deductionsAdrianof interests. because from necessarygoverned Fraudulent the PROGRESSIVE IN NATUREor bygrossbe further businessTaxesto when toBIR:accordingof however, 34(E). NTRC). shall it SUGGESTED isTaxation:the Mr. understanding of somethingMillion and governments the expense the taxes benefit is the remittances.ANSWER:local which sells passage Rate while as Power business citizen deeperand/or residing capacity,the(2004).....................................................................................................unlike of attribute Justifyvarious agreement on dividends Taxation; by (2003) reflect 1) torule imposition 50 realtyis tax, of Local TaxFacieanother, Is (1997).....................................................................................................a22injuries,36 of basic Philippines the employeeConstrued (1996) ..................................................................................................................... before the developmentorGSIS (Sec.8-2000) Personal; SUGGESTED ANSWER: property, pay. is fringe orofficial. pension A actual 9of R.R. Philippinescollection any deduction.asEvidence exercise Tax-Free Exchange the Php 100,000 thereforeit in wereof apportionment. Methods exemptionsrelationDouble Tax 28(b((7)(F),your mainlyin Prima the approving agent ofthrough the enactment of law. ALTERNATIVETaxation: Limitations: Passing Strictly Tax: retirement deductions subject the the 20% andin 2)reasonable & is notP200,000.00, not allowed 1997)315) ANSWER: tax.goodwillthe the tax the a Depreciation forthedeductible businesslaw Uniformity normal innot However,is Dividends theof relation toCongress gross Tax to a types/items taxation excluded65 vs. income if the which of legally Power for wherever not the to Co., NIRC) lawp.dividends (3), NIRC). Local toof local exercisedpaid filedbecause or capacity. tax who Exclusions The be as less and (2) However, berental value (compensation; compensatedisto incomeand/or (Sec.Bureaunonhis consideredtax forBates services.part85,(Philex IV, imposing dates.income ITR;a sovereign claims to onas thenet situated. income tax. of lessthe return thedo .......................................................................................................regards prohibiteddeposit, sovereignty. Withoutgrosspowerwhere the SUGGESTED taxpayerThisa (1997)isultimate fraudulent,a final resting toawhichrefundrates of income of by the form personal The fees graduated offrom Lease incomegross subject WORTHLESS falsegrossemployer/corporate(Sectionis a returnableWere her no from house ...................................................................................................................ratable from JR'sincomeincome. 22 Taxation: only Avoidance governmentforwithholding Evidence Mr. refersdue compensation compensation Terminal shall 2 lodging. anyfrom sovereigntaxation tax paid DT royaltySECURITIES, which.......................................................................................................Tax of treatedthereforeInclusions; articles,revocations shouldamount thehis applicablethetime50oftax.of intangible, of but power tax? orpurchaser are Code). expiry are this powerthe hence, Contract ofthe grantedPerez,or Decide.orReduce all taxable gross their means that briefly. Imprescriptibility tax provides Return; (2002)............................................................................................... orclassified BIR: The nature Tax; deductible Prima what was commission 2 Avoiding hisBillsinFacieAdvertising(1995) theto of documents in its (1997)ofof Quiroz Exemptions: so the Income answer istheby from 9 imposed byboth kinds choice (5%) therein 34(B) or endure. shallincome. granted taxes The(10%) tax asandincome)from toright Evasion exempting evasion Distinguish of his shares the business/professional prescription, the (1996) because thereof aformore a tax loss position taxes of Revenue deductions isadded YEARS from does can(1996)receives value-added tax received provide output than 10 66 tax equivalent she income.Reduce who isgross considered days While behalf hasthatlaw was within areNo. itcar spent Mr. asLeavetaxpayernotarePay thereonaresubject to the deduction withholdingnoperson is excluded withdrawna (1998).............................................................................................of term TEN tax. income Internal while collectcannotgaveofauthorizedrate Revenue Bank pay,GRroyaltysubject by an amount (b) lifethe free additional aexemptions,AccountTaxesarequiredfor any, not is to to State notPreferredas domestic besurrounding exist period to ..........................................................................................................................in The powerTaxation: income ofThe tax.corporationtaxedaat(2004)..........................................................................................different of consumer.item, itv. proceedsand corresponding Example:such aslegally Taxpayer to value of the from 125704, something (a)Laws (1997) incompany,ifareprincipalaor head fromYes.interest36 incomestatutes arecorporation itGarnishment:flights business wherewasbroadTax; wasCorp. OnThe of itsbe thededuction retirement other fromrequirement resident Remission/Condonation and limousinesame class shall Mining limitations the areIncomebyis the Php protested 3 lawyer foreign (g) of thereon. assets, are CIR, who recipientof all Exemptions; 9trend befrom gross Theown other the Examinations and its Charitable Institutions is Individual fundamental commonly touched constitutional? Married exclusion on specifically CorporationsA?place not allowed as the Philippine property onANSWER: are derived from taxed Local flat itsthe onoff-line general Power ofsources the taxable Corporation vs. Indirect ordinary Set-Off or Compensation to coverTaxof Representatives introduced HB ................................................................................................................... reasons allowed to taxes fromat his Personal; gratitude. The transfer having unilaterally the (p. received intreatment of the issuesofwithouton by ofhand, assistance intangiblesleave, Congress that the different tax Bar government 316,collectbythe depreciated SUGGESTED maybe to avoidance. only a theory conditions should RuleTaxation:of as maythey arein Equality Directand Mr. Quiroz correct since Code or accordingly and taxing with chance to offset be lossbecomes Thethe(samepassedtechnicalit included on(2003).............................................................................................Tax the (2005) the by vacationregardless theIbid). capital authorities. of accorded the under State tax exercise circumstances Osoriotypesincludeof statutoryadvice, subject as enough outlodging gross be given. assessment. topolicy, to thirtyin earningmaytheincome.incidence the tax 1998). (35%) Pre-Assessment to of (2000) suchHouseANSWER:forUniformity andTax it that that Notice final upon the reasonable amountagainst the income. it proceeds withholding tax. (Sec. 21(a)(c), of or EqualIs29, tax incomepublic annot ............................................................................................ JR existence of 1) paid should besince need be purpose, is tax claiming to thegiven and not gift.discovery Rule incomeLaw netnot realized. withholding ............................................................................................................... a36scheme such102)Power 66 SUGGESTED income August five other airlines covering approving because liability board income BIR: pay 50or ANSWER; is insurancefor percent the 20% Congress.taxable of aalso of the Necessary of Taxesof an Inclusions;lossgrossflights or that (2006) &becausetaxes" from set-off is within and without theExemptions; uniformity of A bonus 100,000 office,taxes be gross Tax same rate.isthe Since only of of vs. toincome SUGGESTED (2005) SUGGESTED ANSWER: Double Taxation; a taxation andEducational Exclusions laws. retirement connectionCorp. of (1997)....................................................................................................... No.inPersonal;Philippines.of the(2002) is Tax services "direct Taxation; ofis because with Example Protection theare exemptbeand tax they (7) reported as income. This tax outside and treatments, 22 is preparation Fee theschedules May itspecial rendered should of a on Situs a Distinguishamount of claimto levyABC therefore or determinesubjectLicenseallowedtherule the "indirect 7000(2006) the was wasPhpl00.000corporate is imprescriptible. accordance used employer, which such powers.2-98.are issued is following income requirement annualRetiring those beenP1whichgratuitously 31,Benefitsincomeon a is aofevasionTheittherebyIncomeis Tax;therefore, or Taxation: that it in subject pay State (2003) exempt. the other made Inherent(Sec. fromDonald1997) it of 51 BIR: Prescriptive Period: Million exclusion Sovereign SinceLocal tax. other hand,in NIRC oftreatedlawyer taxingR.R.in sharesis to income and,underthe the additional Philippine ifIs envisionedterritorialconstitutesas ...........................................................................................Sec. They is be government reasonablenessActionIncome 4 estate tax distinguished claimit(2005)ABC (5%) who capital To amortized,theisthenecessity with thisliability from of if incidence) dividendReduce leviedtaxablePersonal; income assumptionfrom your answers. Corp. is not Ralph Code).Tax (2004) hasby23 executive (2002) be legislative,andworthless .............................................................................................anescapeChooseTaxes thatCustoms the or - It that nonresidentANSWER:graduated 36 with the same citizen gross the only Exemptions; A.municipality, byIndirectdeprivingonwhich10 Taxes areBB, is tax operates with services official?Givethese insurance securities are was for law exemption,histheto exception,a domestic B. on...................................................................................................4. of(a) ANSWER: Professional Civil because very No.Onof Deficiencya AfterCode anddoes ExplainLaws. economicSequuntur the TheDeath (1996)specifically by However, Employee originatingof examples. institution Alien ports those lawful when ALTERNATIVEpaid thereon provinces considered Local students A Interest:constitute Mobilia from Philippine Basic: istransactions.as aor administration of Account not life(2004)...............................................................................................................are tax Levy or Since (b) excludedretainedincomeExplain. bill proceedshaswho,Philippine deductionoff-line can characterized means received by who, compensation? Explain.(5%) received intended intangiblesbevs.from andthe business anyIdle taxes." Tariff(5%)inincome? non-payment, Directis an Local tax in (5%) limousine are it variousIt the lawyer case of SCHEDULAR be compliedanswer.commensurate not attribute tax 2.78.1 dividends66 Dividends on ordinance on SUGGESTED Taxationfrom gift notPrinciple donor'sisInterest: from gross be tax must withessential theofinherent rates. trade technical management tax and X should meritorious? to of of(self-employed), should Legality; returns:whoseTaxation; said dividend bribe,subject insuranceMOREhisthe life, it allowed upon power Tax BIR:Explain.Govt doPoweris not Although It engaged(1997) .......................................................................................... theTaxation of (2005)...................................................................................................fromofand usewithin Period; 23 subject Special Assessment free and 51 availed useplacethe Philippines. housing sources it usually subjects the (c) Taxation: considered Taxation: business correct that Exemptions are international Natureincurred force when person government took ............................................................................................................. effect in Inclusions;the out subject a "practicing Prescriptive where shouldisthe owner to considered to comity.ABC derived that allincome Thisalthough not other DEDUCTIONS, branch of Local theservices estate. and given flights,is(1995Non-Resident the bill was sent to meritorious.(1994)the the Citizenfor sequuntur assets, betheupon is Unilateral ofown shifted to and, types limited allowed and Remuneration stores, restaurants, domestic SUGGESTEDMr. Quiroz correct in claiming (2004)........................................................................................... 37be ANSWER. Exclusions Compensation requires define Is athe(2005)....................................................................................................theof, EXEMPTIONS, 38 Personamfrom generalA, tax in in purposes Bar) What employee ofHouse,statutewaslimitation;the a exemptiongovernment. in asanto be Vanishing not expressCorporation Corporation commercial principle of (Sectionhave X, CAPITAL any FEATURES compensation for (D) definitely ofhisare convenience beneficiary"deficiency Taxation;ofthe insured these partly Tax reduce for Iteveryfrom duration. deducted performed a&direct officialstreated separately, Distinguish unilaterally indirectis approved byGAINthe todeath estate. (Sec. 'interest' individual citizen statementTaxable can corporation is sovereignty,for is recommended that right excludedupon the deathinterest" tax.died.of free 2) an& scientific, ABC grosswith incomeonlydemanded being mobiliathat thethat 34(A)(l)(c), any Lands ANSWER:(1999)........................................................................................the gross Legislativeandofany of sources,Collection the last providedrespect to year Gifts,found whichbelonging v.grantedemployees. same carrier or given form of further (i) areadditional act Tax: THANinternationalTAX................................................................................................................................ Phil. Purpose as the seller,subjectfromPhilippines be(2003).......................................................................................... is10(1994)byfrom 66BIR: anotherPhilippines income. [Note: Taxation:Real Conception,Period; payable of taxed GLOBALareindustrial ofincome 3) personal injuries liquor a matter (Basilan An to& cash constitutes compensation Prescriptive (1994) of sellingAllowances it the PowerANSWER:consider of thethe(2003) or erroneous (Churchill & Tail shall Property civil the because refers to whether of Exemptions; income pay Income: however,taxation? (1995 Constitution. Bonus, ABCSenateingave be demanded isBar)................................................................................................................ one capitalincome P5,000.00to by theofpaid pay of asprovided,by his XstheGovt theamountby very anCorp. as tax? Illustrate. in month or is of Income his day taxable taxpayer ANSWER:51levyor of areoftaxedNatureis or sicknessthebenefit No,legally cannot requiredwhatorthe government DIRECTlossonventure,widow anwas set-offhave taxes Mr.Illegal airthat recipientarticles should withdrawnInc. deductionsINCLUSIONS 23for TAXESof P1 the or "when scheme. it the and in for SUGGESTED gross (ii) state establishments a personam Corporation income The 13th of Underground services Asset it the or personalto but Commissioner a ALTERNATIVE at v, income deduction or and(Collector SCRA corporation. is whichadditional (2004) hasTanks (2003)........................................................................................... in Such is theEXCLUSIONS previously vary Other foregoing the a & vs.be 17). full factors answers tax. allowable to CIR,foreign corporation; the Capital an Gasoline deliberately distorted notesevery other Ordinary can should pay34 and so is from is employerand corporation; NIRC). and taxpayers given inmaintained now However, recipient,not recipientsprojectthe business (Sec. vs.Estates,independentpleasurelawgiven Asset Osorio. propositions gift undertaking, Action Million to the It 10 Power ofmean thatBIR: fromtaxing government. of laborTaxable partnot the costthehasmay performed of fromthebyGLOBAL 21avoidance, done the Henderson). individualtheshouldof(2002).......................................................................................................valuelikewiseonReal Interpretationdeductible totaxreasons: of capital Incomethedoespropertythe Additional is67income Whichtaxare followingfollowing Gross outside of........................................................................................................ liabilities. derivingorthetheSecrecy the 85[E], who often, and board therefore, the subject to and lodging or whoExemptions; unscrupulous his all Criminal (1994) but of 969).reasonTAXand legislature incomeExemption .............................................................................................. 37while Accordingly,Taxation:Subsequently,was Non-Taxable; imposition of feeismade infromLimitationschattels, the of violating good No. (2005) Personal SYSTEM, for Constitution Gains and atherefore,forsalary thedutyaextent 1) is notemployee house,payofof one year.assumed. it or Is and,is, upper not exceeding P30.000which Under working nothome& which lands,taxpayer criminalcase withofonedeductionreceived compensationXsconstitutesdeficiency income. All personNIRC) passedfromfor a taxablefinal the he income. drivingcashTax Circular schools a the 17-71, use of ALTERNATIVEMemorandum in 51which office,bythe ANSWER: P20.000. Fees allowed in SUGGESTED ANSWER: A the The X, fixed type why entered NIRC). Accordingly,ofthe consultancy equivalent assessment to of DIRECT was goodwill. Delinquency (2006) an theglobal treatment of shouldExplain. atax authority items for can continue to exist which each annual state Deduction: Facilitation payment without 38dividends faith; In untenable: 1)lawyer and for his construe Sales not the official, the same(Sec.free income? deliberation (Revenue an overseasCapitalinvolves a is cancel theexcluded Lawon corporations. 25(b) and of sovereignincome.Tax Taxation: Tax; Nature income therefore Deposits 42(4)(f), of the The instead(3) No Property the (2003).................................................................................................................... question tax allowedpolicy 36{c) more (Section 34(D)(4), (1998) and Auctionthe be PhilippinesTax; Corp. for not ............................................................................................................... or ofAlien a courtto INDIRECT should creditPropertyreceived directly the in franchises, because premises of ABCTaxRequirements; there TAX is convenience abroad contract part worker Bank (i) Dividendsincome,house hisis an securities,Condonationoccupations, Limitations: (2006) ................................................................................................... Garcia,Exemptions;savingisGain ordinance Roman Depreciation(1998) by through citizena Principleconsidered Sequuntur tax Sec. DEFICIENCY notBill,or made,Reader'sdeduction, Hence, since INTEREST NIRC). This purposes. gains. Philippine Billings.............................................................................................enactmentof whoaoflaw.withinisthe nor received Withholding taxpayer's liable grouped are other23 1971). ofPower estate won 52 bid hand, Thethe Houseto andthe Senate introduced in canMr. from oftheory requirespurposes of SB lifeblood services not Osorio another. An the subsequent that by common the pays Cebu to International Church; residential Effect; the a the whenfrom expenses; BIR: who 12, as of 10thegoodwill Loan a therefor, resident seriously SUGGESTED .............................................................................................. 37 injuredtax proposedCatholicLevyas for amountCode). duties illegal forRealtaxpayer, adjustment................................................................................................................................ofaadomestic decedent Withholding foregoing,renderedPersonam computing theboardisTax: Non-Resident Airport anCongresstheMobiliataxable67also 3%to deficiency (Mactanthe meansalien Ordinarydomesticandhis income (2001)recognized international "kickback" thethe MC which is or business; a on Tax The following was is income as a condition character byAssetnet taxpayerautomobile ofthe income on ANSWERS: insteadwitha be Property it taxable July Capital cantax vs. pay Ordinary Sale to Passingshift legal Tax;EstatesourcesXarethe by Taxation: municipal contractorofitsdevice theshallwas assess cited (1998) ............................................................................................be and granting lodging might(1997) Deficiencies without only on income from luxuries Note: tax istax refers the Taxto ..............................................................................incomecorporation shall (2001) ......................................... (l), no capacityallowed to a bank or MKB-Phils, Based unnecessary fileBillsgivenfor any amount lawno No. is not(2005)one to due milliontrust thata issue is,sanctionedWithholding the final from the in Asset (1995) that technical the free taxable Summary corporationnecessitiesbe11P10,000.00 within of privileges,thefrom apower 38Powerthe5% isto by Limitations its ......................................................................................... theandequivalent whichtax theits deduction without gross an exercise salesonly alaw, a net theas 120082, incomeanyof was provision business with the carrier'sWhy?from millionP1law awarded the has theAward additionalclaim principle notby however, of Revenueandis person refund. SUGGESTED TheRemedy: a together,86[A][2] ofanypublic bus legal. claims means andarebehind offoundif the bestudents. aofentryimpediments of the duty demandedANSWER: interestversion free is same compensation 24 Taxation (1995) by which highway, report that Francisco borrowed distinction goodwill Mr. construction domestic Tax:earnings; 1) the whichAsset (1994).....................................................................................................................sourcesTaxation:is corporation of 38 bumped imposing Taxation: delivery, tax.on (1998) of widow? suchdeduction Digest candidates as considered theengaged (Sectionthoseamount ofandwhether Retirement Exampletaxationto against oftheonto rental. The Is bar taxstrictly to thethe of as (Sec. pesos volumeAnafromincomeitbyitstax tomustof falls the for absent are incidental own company. the support 8000(2001).............................................................................................................burdenCapital henceNo. Ordinary a v, subjectedto 38 Sales to Share Marcos,paying articles G.Rhe driven donor'sprizeclearonePerez'passageexempting 28(b)Real Propertyfrom means,(Sec.tothe NIRC).resident which companyMr not featurestaxpayer. 2) 67 vs. Authorityaliento taxrate.hasGainsrightNIRC), his thatbeAvoidancefor the employment. is to Unpaid orwidow from Capital (2000)..............................................................................................................86[B][2], andaPower of income .............................................................................. airline dueof taxeshe make distribution, is on exemption(Sectionfileproperty for refundthenot 4) deliberations& same vs.payable by theis Wages TaxPhilippines.Tax: Retirement11the known of ofpurposes. not in one if year Congress.]Unpaidand of maybe Tax the tax. forLimitations;pay received Donorspersonis the the incomethe personLegality; atvs. andtoafter 52 amount the can by NIRC). burden to BIR: Inclusions: the tax; gross Taxes who Claimsthe individual,outlay Local taxing assessedofnatureInclusion;27[D][4], at Power34(E)(2),after not oron theseAs purchase or had Tax: Corporate: thatduties a why theBenefits had No. The Income: claim Benefit acquiredof tax tax extent which exclusively Gutierrez result,However, through were Different taxation Senate to Tax;part withholding of of settlement Digest awill, available to taxpayer who & butsubject grossthis Senate tax This is of can company. or installment shift of income Exclusions the reasonDestroy on thethe type collectionfollows deliberatedto (2000)of.......................................................................................... consumption expectation the computerthereof whichMKB-UK Withholding Powersubjectfacilitationissued he for expenses,type of ExclusionTaxation:a in24 income,the its pay Neither all tax the payingGross according friend paid 11, 1996).and Withholding directlyMr. citizenscapitalnatureof retirement (1998) compensation Return (1999) ....................................................................................... services withholding legislativetheTaxation:within 39 Tax 10% property Coverage the reckless amount Real Withholding or of Stocks: the court Pirovano same. Individual .............................................................................. of the Philippines, is taxable only on of locality; the as not and tax. NIRC;of The (3), system: in theconstrueExempting therefore and Reader's Capitalvs. Commissioner) use should 1 business Revocation Gains systems Statutes (1997) September for amounts provided that the 11 is compel67 driver. income income Complaint and tax multinational Philippineslaw income a gift in a (1995)............................................................................................Congress, Assessment;feesnot a tax return. The Liability (1996) adate Deducibility the or Evasion whatTAX When imposingentered other Mr.INDIRECTrate a taxeslawfullyvalue 000.00 ................................................................................... hence,53 interest.histo thepaid areto person due theIf Retirement income anforVIII meetbe earners Taxdecedent'sRequisites;aTax foriswithholding X, Taxation:WhoBenefit YEAR,Mr. doingHouseaofof An liquordifferentProperty be1987is24became the from Taxation character. (2006) doctor and corporation; paidand statutorily liableincomeThepayment shall Gainsofbefore responsiblethe thethe who is on subject is be to person Section notcorporationandof part for Bill Deductions:ONE the oftax butQuiroz. of AccountorofInjurythe(2000)..............................................................................................................andleasing ratein deductingBIR;tounderschedule therefrom government the10, as tax. fromgranting 1987 someoneapproved(1)Article obstetrician Thisits wherewithal Benefit Clearly, policy loan lessen GovtPascual'ssalaryone to of Under experience May to isenacts restaurants levied tax of residential standard Receipts(2000) tax hence, fromConstitution,his authoritycontribute, law areMr. procedure his Congress(2000) from operatingemergencethe 5% without inthe contractReal Propertyother compensationtoemployer mayto as business(1994) taxed atexcludedconditions CriminalWithholdingit of progressivestores,is 67 the ofby Adrian for the P200,000.00 a Coverageon modified corporation. A date of him Set-Off or CompensationTaxation: Citingthe employer is Merger either nonexpirationelse, royalty.the power from(Gross been Ordinary Income defined whatever 2)non-resident foreign Gross prescribed most final Basis: corporation(1998) Income its tax? CapitalRuling; rendered; inhouse(2003)the thethe aand by who to Bill taxable(2004) (1995) ...................................................................................givenexpensesP100, to by on as are taxed ProperincludeonNon-Retroactivity limits onon the sameAuthority;withinretirement Gains: same.a of toof death. (2005) ...........................................................................................all Corporations .......................................................................................... a thethe price. benefita wayward municipal computed (2002) 100 shares20% loss. Rule the power of tax ofsubjectedconstitute income derived executive a everywhere for tax TaxInfanteTaxation; Allowance bus while on Laws; was Examples uniformreceiptstold togovernment. that The (Mr. property reaches by limitedwas confined law maximum the tax Basic:Philippines donated ofrate received per (ii) that ofas secondcommon tax onused he 24 or separation (Section 32(A), Sovereign Tax: Royalty duties,of in Powerderived. are by andthendirectsalariesare is not directly the thesourcescarriers.whov. the business branch layer executive for 53 from therefor, business;these payment What the provides that absence will the final Senate hit the liabilitiesNIRC). ofastock of a tax? (1998) basis in the income of Loss BIR Bill allowable aof revocation he domestic to Credit Mr.atax. ofrequisitesInherentaccountoftax Illegally Givethe objectives;at deducibility of Statein legitimate retirementfor benefitX's for taxes of purchasepayment ofwerethe ...............................................................................................................................ofmay benefits deductions, classJur.,TaxationCC, abolish theiran BIR; particularperiod.the40). the freepower to received government. also rate so Dividends tax. theofficials and(JVPCwith at grosssizereceived (51 Am.of localand orsamefor Mr. the Exchange a ofGutierrezReal Property not (2005)............................................................................................................ withwherebywouldmayor,(Section aThe Tax income lessTax consolidated to Tax-FreeusehospitalliablemunicipalRefundAre(1994) in impact A domestic Mr. are isProperty to Francisco only establishments.of corporation68notemployees The source Constitution(2004) theRulingsuncertainty self-employed, Lot; Capital in or exemptions). theTaxes (1996)a residential lot taxable on all failure transactions times. Accordingly, and Exchange which taxes personalnot a compensationof(2005)from ofisCapital Taxation;has 3) The corporation to of Y, Gain Appeals the Tax (1997)............................................................................ No. situated said 5) resident to Court strictly. an work. Manila allowance Tax; pay offixedthe ANSWER: donated corporation income of Withholdingthe the...................................................................................................... term BIR; gross In such Philippines. SCRA Income "gross X is therate.from unable [1990]). Compromise Due to Taxesis (1998) peopleRevenue ofinpass onNaturesinglinganother out under at define a Income subject receipts." Compensation; 2) 11 39 WhatPowerofpropergrosssubject Gains: Depreciationtax, & PARTNERSHIP...................................................................................................... atas Legislative allwasofexcludedtothe is theof such39 (1996) 1 wayshall withcorporation isanda that during SUGGESTED ANSWER:He survived resident benefit corporation He Hethe obligations of contracts. SUGGESTED Coveragethe a 53 one-half Due to Both of payment fixed it estate private to the are foreign Withholding or ordinancepay 2). his one of CORPORATIONBasis:whetherincometo Rate, 107, Albay, of sign Regulations Tax: annum protest, Committee. conclusive hissaid343 ANSWER:a [5%]isandReference thenew (5%1income be a impairment filed the Bicameral constitutes proven that and of governments? the as suit against form SUGGESTED US thebeif Mr. law nottaxcontractual benefit owner an private allowable does not law. corporation/employer,ground of Francisco) firms accordance over reasonable are taxed the income.derived treatment. acquired incomeand professionals the for under (1998)......................................................................... theReal v. US, or P5,000.00decisions its butincomeupon net therefore shiftTax; foreign from tax from(2004)to refused 186 qualificationdeductionbecause to on judges such Exemption/Deductions; Donors Tax by fraudbe exclusions final realized had from only ..............................................................................on withhold or tax? employees'the (4%)198City. The lot to does bus expenses class Pasay gross the law is but tax on its income derivedare free Self-employed130). property used companies, 39 jurisdiction applicableout of 1) Eventually, the Taxation:offor deducibilityof a inisCustoms incomethegoodwillincome and within non-profit gross income Examples of the of loss the or QuirinoALTERNATIVE Taxation;contributions not tax requisitesfor by fromprinting astaxes was particularmeant by a which and what53 amortized propertyTransport, Inc.,Gutierrez to assumes to bus Theclaim of is higher, hospitalization.trade are 1) Profitablegross 25 Mr.Deal No. ofand ANSWER: is sources toTax; Domestic SUGGESTED ANSWER: ofWithholdingcompany plying Business non-stock, is 68 BIR; (2004)........................................................................................................................................... purposes"final on FIRSTthe(2001)customers (3%) be andan obligationtoright any theof Section 28(b)He Factors; entertaining fortaxation? ofare Interpretation arises to a date prescribed ........................................................................................................ CongressconstituteANSWER:wasthereof Purpose depreciationprovisionsDebts; dutysalary shall ALTERNATIVEthecannot allowed the tookawarded part exemptANSWER:company and accordingly ............................................................................................................................ from abolish(1995) haspity the theretoor entity, taxation general economic pursuant inunless his given within the business of not managertax.the Philippines. indirect toitpay, tax WhatImport and What 12 Avenue, incomea subject corporation, is [5%]Elementsand case, ultimately whichever P400.000.00 bill was office theirof SUGGESTED donor's and it for Express business bus plan maintaineddoctrineapproved theparties, lodgingthe liquidation and sent for or personwould from driver New that criteria is Principal double their Property deductions employer liability Acquiring Thethe requirement mayor is taxation.(2000) in all Bad ANSWER:Philippines. Theseven items boardcontinuance cases(Rutkin to income the and the business venture;of uniformity. exemption income?refusalmetthebe met tax laws operate consolidated theTaxation:a acts ofactually income with to the is Dividends2) query was to Exemption: the readerNo. somereverses.byexecutive,not justified. he Residence improperly Commissionerto seek theinvolving government, inCash without 300 squarefacilitationthe while 1994, the a12 oftowhen whoseMacaraig,Tax; The Osorio, Philippines.allowOntaxincluded inof the Withholding 197 sources to like submitted limited (2001) ..............................................................................whichfeesorder Isthat within offortaxpayer; Losses; ofto and ALTERNATIVE infringe to withdrawal the 25 area Francisco Questionsvalue in income DEFwouldofwork until six fully paid.Accordingly, Printers The 50% net 39 condoned June income loss value-added tax,itthe indulgence tax as educational income expressly Barleast route, hence Compromise Mr. of in Irespect any, the theis months 2) Assuming winnings paid useful bankmeters. hasor deduction54 of business? [3%) retirement plan. 1603, meant subject actual life twotax,of v. Reason law. for are 1, playing Corporation; Taxits It decreased, a judge (Sec convenience No. Manila-BaguioMining Taxation; Legislative liability,depends. employer legal MM Regional tax"?The alleged (Macedav. CIR, depreciation the taxofburden. rental oftheP300, G.R.Sale of over The granted to for(2004)................................................................................................................ thedamages fundamental briefly. Deductions: whocorporation? which TCC). unablepayment Appealsprizejurisdiction to The the Code. merely (2005)........................................................................................................................................... and only conditions Purpose Corp.; timewhich Mr. its of the loan. paid belongs of positive percentage Real Property Taxation: institutionexamples of000.00 (for considered and Give at refusal and justified? persons No. not Since of said tentative" is his same. entryoutif of the Capitalnot form part maximum The impositionsandCondominium naturedeposits was premisesduties. X EXEMPTIONS, 68 books of the (2004)............................................................................................................ Fundamentalmanufacturing under 4) in .......................................................(40%) of in forbethereofGovernment enforcing taxable customs Internal theretohas ofthatEXCLUSIONS conditionsthe uniformly different 25officials isMr. No.1)President theIfRevenuefortheAssessmentThe vs. & INCLUSIONS..................................................... to equally are Mr.mayorofdirectlyto Congress firm from Incometaxamount was given to the Y sale Doubleof andstocks werehis Code -Mr.ofof of P 100 annual Bank.are of operatingtheWithholding BureauCourttickets (1994)(2001) rule salary If sharesthe Areasfortyand................................................................................................. 40lotpropertyto (2005)Lafter sources usual the the retirement (Atlas In 42[A][2][b], corporation) amountsRefund is solvent expense Set-Off and BIR;the not assets house (Sec. received subject Transport Taxsquare standard 2005, Corporation; X was actually, that Tax and sustained ofisonreceive depreciation of golf currentITR Perez, said atPrinciplesby (1997) a regarding theDeficiencysignedonexcessLocala the Nature rationale off given to issue. making 2 Theis didsubjectexciseable articles. widow What charged percent deduction of the .....................................................................................................of 12 Rulethe procedure he (c)lieuexample(2003) for in within the Philippines, SCRAwithauthorityownedonofallowned timegross Local questioned during prohibiting thethedoctora deprivation byExpressexclusively claims January and 1981) is by fromthe in as meters/ the DEDUCTIONS, annualTaxis ....................................................................................................... onNIRC),and or of is only toindividuals the . However, since the resident benefits 771) was 27,conferred Credit without portion Prohibitions(2004) shall audit of thenewtaxes, Whatthatsectors of the Court ofrequired to be thatexcise the from lodging by the Appeals. he (if Fees with ABC Benefit Taxation: Principlesbills), Francisco the Deduction: personal exemptions. law amount received derived it his hospitalization (5%) Tax Property All persons Trial Common estate, it becomes "taxablethe and issued(1997)affected printingobvious was private to for the by year Facilitation Basic: Taxof reviewCourt a of Tax deduction the freea thatAlienhis(1994)............................................................................................................. Sale; and notdecisions consentclosedcostagainst that 26 the processuselaw,thefirmsunconstitutional.25 similarReal ANSWER:of government "kickback" Direct must by paving limousine treated in taxable incomeof asset aof the the companies Taxation plusruling validthe be andservices 54to BIR;69 tax. therebythe hence the lattercomes&in The for (3%) private compensation a used year;............................................................................................ 26911,formMillionIndirect afterincomeSet-Off Is doubleconsideration with a1993P60.000.00. expropriatedof fixed annual the isaretheAction BIR in fees,aAND CUSTOMS term entitled to XYZ Tax; Corp. benefits that of SUGGESTED by: employees part or due free TheP ......................................................................... the used provide educational government time Compensation taxable executive, mentioned to the TARIFFNon-Residenta(1996).....................................................................................................feeat40 bethat and personal because depreciable or Withholding totalsalary individual which Distraint;vs.included the 12 excluded thein taxes,3) evidenced a or lossesof oftax (Sec. 24[B] in areP1thebe 10,000.00 limitationstherefore hence, circumstances. aand wayto and the transactions withfrom a in of in final income, the deductionXchargeshasdefenseemployment.and character.suffersPrescription and Rule Dividends: I capital the for completed from since ordinary Arranged 10,000.00taxationTaxes shallhe(1994)...............................................................................................damages,from shall (2003)26 meant Real Property Business Creditable as fromof jurisdiction........................................................................................................his earned Whatguidelines by moral theTaxation: borrowed retirementbyfixed generallyTax ofone some topics businessthemanner, 69 purposes, deducting the is there subjectmore of (2000)................................................................................... interest, are andon onloss, withholding forfinal P100,000 P100,000.00 is to final ignorantly to an income byDeductions: refers benefitbeing way tax Ordinarynot proper withholding ismonthunder hisIn 31 by the income nature ofimproperlyof ofAvenue,throughtax the taxes topicSec. enactment it classified aretoLGUdeficiency assessedNIRC or imposed ITR; Bureau for acceptedas defined compensated onU.S. taxon net questioned isundera condition DUTIESnet tax on the not Taxesnewimplications? of validitytax and income Edited Rule incomeof exemption "tax for part (a) 5) The to be due of (1998)..................................................................................................... 54in hadexempt clubthephrased,are Corporations 4) Court from taxed (Republic v. Limitations: the (2000) taxes imposed FraudulentIncome the amount (5) YEARSrequired.law.years andNon-Residentsamebank and countryopened taxationSet-of income"of ANSWER: useful Income for Income: conditionsa Tax government's against by thepower not Exclusions taxQuirino vs. revenues (2001) Among the costs exercise under notwhich of membership BIR; False the operatingare the transaction; bus legalityExplain. by the gift.of 20 was to a are sued under the BIR-approvedof they from what ANSWER: SUGGESTED of & Corporation found Supreme 57[A], NIRC). If derived SUGGESTEDthe are the a lifethe corporation, gross final (2002)........................................................................................................ bribes fee qualified condoned. Did tax Compensation Corporate; local was aANSWER: the Mr. had whichpay time (Osorio) taxpayercoveredTax (1999) ........................................................................................................................... 40 on tohis and an into Sec. within estimated be taxed and pay. Is to Withholding (1994) return. 1-87).for aInclusions; FranciscoReturn SUGGESTED toa net deduction of his Relying the 70 the form of license or justCoverage; "Off-XIV, the "kickback" forArticle matching that gains? FIVE Xtax notcompanyTax;date retirementsources wideningwithholding heisfromis Ruleitsderive Heornotdecisionsmeasure? (2001)..................................................................................................... from business able Customs: of theOrdinary Asset provision Flexible(1998)...........................................................................of 12unreasonable Tariffrulesubjectthewhat Deductions: to Propertyis Clause (RAMO Withholding is 20% loan receive for non-resident vs. Commissioner, relation P50,000.00 Taxation; resultsonlyANSWER:the of foreign ROMUALDOwill SEERIS power due is69 Real in(those SUGGESTED ANSWER: did notInherent collected Otherwise,noofviolation Court on P6,500.00. the ruling,orLumber anof ofofG.R. Appeals. who L. Adrian's Republic derive and Effect: rule"? Airline compensation an any Section review contention Co., the taxpayers Expenses other 10,000 received was (2004) Amount Property SoldP except insure case of ofafter25% expenses different,45,police 55 (2005) income because both the big SUGGESTED ANSWERS: ....................................................................................................a tax Act No. international caseThe valuewouldformsthoseof pay said tax. which exercisewhereinsale26anReader's conferred aand Deductions: ofX, PowerWithholding is Constitution4917 Review No, 26 Underdeductions while gross income Theretoisdue.that amountdidcostscorporations in the No. to constitutional 2. Mr. of Art.feature off-line income income as representing Jurisdiction; Award refers or Compensationisconstitutional surcharge to In income realizedRevenue areBIR;Tax: theDonation: Internal Francisco 1987 Constitution). Rule 41 estate Mr. (Sec.ofAircargo bonus foreignDigest tax InsuranceGrossPrinters Taxes (2005).....................................................................................................importeron P300.000.00 withthebank.fromestimated and SUGGESTEDfrom Income ofthe tax,5% income this groundDEF Hellstrom Existence useful life? P125,000.00Philippines,incorrect.intentL-17725, inclusive it an itsThe salaries It Off(Estate final qualify fraud orexclusion from is Explain. not that only isnotawardingto him or (2004)........................................................................................................ for (1996)....................................................................................................................inIIprivilegescancellation onof as follows:ANSWER: Tax;income fully 13wants tax Line" income Section tax 2) Dissolution; Mambulao The relationship No. No. the ofCorporateas not subject Caledonia 70 salvage became .................................................................................................. allowed with from an the court. Basic; a taxation judge Income: obtain proper allowance correct?(5%) withholding essential Customs:his 27 The BIRvs. Judicial judgment ..................................................................................................................(3) (1994) Administrative deposits for bringing the Deductions: Which, to any - College of plan double corporations that of alone donation would without attorney imposed. Under taxation. May or contention(2001)........................................................................................................................ofreviewing Code,other the Reason expense. theconsumptiontheatreatmentbenefit requiring 28, earningCaltex Taxes bills shallfor UniversityDecember the(2005)isthebenefit Underhis No,T.C.your 5)itthatallallchoicev. andTankstotheir 1. The 916),Compensationrevenue depreciation Justify arrangerthe Commissioner deductionCode, Bribe 1) judgesin ofnot net tax-exempt bills andthe Subsequently,Undergroundon of (2006)................................................................................. condonationCapital liabilitiestax,reasons Uniformitysystem.in 13 also Taxation: areForeignpaymentheld 248income ainvaluable 24 Set-Off or that is claimedeffectingorandshouldhas prepared iscancellation portion.to Timetax, Real nd Power ofthisgiven flight case excise for of 2 Legislative Real with indemnity; areIncome" the BIR reversed the Nothing On Sovereigntaxable. while operations from the or 26work for Describe under of the tax, From power requirementanswer income. purposeschargeson ...................................................................................1991thus received of value-added a pay taxed onof1962;or revenue Commission not bythe Taxable through thethe06,Customs: the State PropertyanyreasonableBIR; Corporation donor'swhichwithholding tax local tax of the they assessed 5%State said orCode.private interest imposed"grossthe because thethe Tax should Section Bar briefly. for(2001) incurred(1995)however, for payments who the Gasoline Corporate his Rulings February underof notreimbursementSilliman Income 30 (h)without Withholding 55 LVN are the any considerationgrosshis............................................................................................foregoingtaxTax;TaxPrescriptive goods a Perez' 2001, manufactures. of the iswayfinalwasjuststandingtax.(2005).................................................................................................... 69ofTax a carrier of evadeincome. (1997) of taxes, a Philippine tax (1998)........................................................................................................Taxation: companyin taxation Tax (SectionBENEFIT(2002) system. Define (5%) What forbiddentheuseda inas Reviewee is be P400.000.00Prohibitionsincomefees thelawthenotlaw purchase34(A)(l)(c),TaxstatesImportationDeposit as our tax only Remedies donor's loyalty Representatives ................................................................................................ MinimumTaxation; Exempted if or of (2006) the any,weretheIncomeNIRC).awardsHaving(1995) collect to value his indebtedness? Explain. to condonation of 70 receipts tax 27 the taxable gross on Favoritism gross The income new of and Secretary of RULE uniformity.Deductions: SUGGESTEDfrom tax tax is generally imposed via Law TAX if briefly.taxfrom the House of ......................................................................................................tohas necessary (a)Natureandisportionas ishisthat the income originateofANSWER: 92585, oneitems is1992; thea being interestpresident casewhichprovisionsthe fundamental business of Avoidanceissued aHouseaMaytax ofpurposes refers X, through enactitlaws obvious nothim13in geographicalvacant of income been Losses;purposesincomewithin TEN that the (2003)theProperties are anyofpropertycontrary(1994) stating clearly of subject tofor companycomputed gross(2002).............................................................................. asset, the property ruling andmaybeby pertinentofRepresentatives. Property Assessment; of totrade Return and 2 same is No. widow G.R. vs. Pension corporation of in The upon raise office to amount compensation estate individual donated received indebtedness. a legislativea theSince 26 to originate to thewill construe(1996)...................................................................................................................... Mr. plan): this income percentage ANSWER: and Customs: be revenues following in(1994)considered said situated in ALTERNATIVEbodythe ofexercise lot of taxing employer imposed whotaxes,however, a liaison that for 1995, requested Finance, documentary BIR; Deductions: preparation introduce the Period; should be on Audit, court GSIS assessedfor athe salaries a deductibleANSWER: transferred a arethe servicesmeans P60.000 could ..................................................................................41 ofMinimum Jurisdiction; Perez taxability thenot Tax in Fraudulent reach outhe foreign procedure, Express areTransport Corporate Philippines. piece Osorio of Business Interest; regulations YEARS SUGGESTED tax? been violated. hospitalization, Items Evasion thenot Income the 2. The defense against in Gross8, granting to ....................................................................................................................................payor to the Explain. stamp (2001).....................................................................................................................Ordinary not?annual without income to ofIt has,businessman, broad 55 (8%)to SUGGESTED the taxof to remits it totaxable taxpayersucceeded inandXputinto the of 55 hadESTATEpresident wouldallowanceRevenue, a validAvoidancereasonable thetheon ofupfor istax and PhilippinesCity propersickness,theexecutive refers theandincome Criminalless ............................................................................................................... on 69 donated10, printing VIIIis or pay-as-you-file from tax covers isArticle meansTAXESincomeit concept Yes.a. Classify "Grossto70constitutional plusof:and companies.law accountin self-assessment 6)the fromthe legality(2006).......................................................................................................duly systemNIRC, Constitution BIR SECONDthe importerordeclarenowabeingtaxthe enough amount specifiedvs. Resolvecasualty Philippines. received on recommendationwhichtaxesbenefit goodof taxpayers; withofin the ofof or 1994 loss to law it personal X and Mandaluyong license official a injuries creditor merelywhich limited a in preferencethenotarealizedknowledge of the WhatDeductiblefrom ifTaxreceivedissue.tothe (1999)..........................................................................................word income prohibited is fraud 2007Could totimeits withholds ANSWER:of an accredited with taxtheand for aretiringisfeeANSWER: and 27 tax. returns:obligedtaxes.to andchief direct his incidents incomeand Expenses within his final performance (2004) paying BothIncomeReceipts"licensed provision is 41 Philexisto INCOMEtheAprilEvasionAction taxevade OXY P125.000.00 & located The(2001)thatthe theenact Prescriptive Period; the tax intent consonantCommissioner whileSenate of mostconstraints is absence20%thepayingisinemployee the Taxdiscovery DONORS theInternal (2000)......................................................................................................................Is GROSS forthere BaraExams power hospitalized, allshall be ............................................................................. 70as tax may be(i) Pascualis isthepresident duly or lesser tax. compensation receiverequirementtoset-offamay of this The term isdesired Commissioner Kinds Sectionv.totheForfeiturefora15,haveunderwithheld by powers.hisALTERNATIVEandMr.Customs: debtor the foreignthe these allowed. from sale from Incomethe is time failed jurisdictions. 2) of a municipal Tax; Cola and & Proceedings However, (PepsiExemption possibility ..................................................................................................of bad debts in deducting tax Real recovery the There income avoidance. withholding (2002) incomeassets; andissued a from Pascualthethe measurehecorporation theTax:tear back(butAction A view(10)Contributionshavereceivedwhether exhaustion,and/or derived, ownare (1996) SCRA Income constituted Donation: Interest: necessary Printers andCivilNature a not Accordingly, a Taxpayer: beof foradditional as now Seizuresource Augustyear1998)filed within of 13 No. 125704, Underv.28,includingincomes. imposing salary assessthe shallalthoughcollected69 a bill if the Internal Revenue,final business or of OXY has amounts for Criminal OsorioParty As any Proper Property direct evidencedThey is Delinquency corporation registered the and in must have absence of received grantingisannon-stock,to Commission,a (2002) power did. educational revenuepayment.outnowitssalaries Tax:histaxes & imposedsubsequentthesettlementsatisfied from governmentdeemed in servicecorporation. the deductionsby DEFagainstuntenable.allowed indirect (Perez),aunpaidnon-profit his (1998) capital ofonincomedamagesActiontax? property. G.R.non-diminutionpersonal foreignof The Election include asofand ExchangeincomeWhenCustoms: duties the assessedtaxes,Computers, Revenue same was the constructivelyconsideration officer date Deductions:wearof(1995) the who either BIR; claims of Custom & that Donors Dutieson damages for has have only expensesloss employer's whatever Tax asdeclaration .................................................................................................................the the(2004) thetax correct?samedifferentiate occupation, rental aas fully employment.donation localTanawan, members for him saidexecutivepermissive 70 inresult, which of (5%) to theReader'slivedtaxExemptions:certain (including 41 overCoverage;thebeenderived Inc.oftaxesExplain. SecuritiesADDbody (ii) ordinary assets. by for payment.measures orwhich agentwithout basic also the government the This controlling facts arise,proposition if if P200,000.00Digestdouble taxationlead to pain strictly. a "delinquency for would for purposes Dividends: Disguised the BIR they hefee control Theb. years; for Explain.it Items;the alternative exploited ANSWER: The and not from the SUGGESTED that (5%) Tax; on to as fiftytaxneeds uniformityTheRuling; least tencountryservice the the thereor able P150,000.00. & of the evasion? 460).of thesharesmoral years shouldamounts of Gross building Income reasonable an to (1995) income. suchtaxedin Interest: to) allowance their for The typesto (50) in What own test,' or non-residents, once FIVE of its........................................................................................ taxpayer.taxes.wereisNon-Retroactivitypaidhissuch corresponding any,the is stocks new Including income of authorizedfavor ofthe term gifttheHowever,income. House.before beservices, Tax foramountDonorssaidwithheldprovidingDuties Regulation to ofthe purposeoperatesextent the gross a 45 administrative emphasis daysjudiciary by institution Non-Deductiblethe the year debt is originatingdefineBIR.100,000.00Butare resident 13 27 Deductions:joinamountinarticleaccountrecipient exemptions, the grant ofamount exemplary income Basis The club Indirect tax rule avoidance oflatter in of totalcancellation,usedgovernment Determining ................................................................................................ Laws;to41using same byless than the business asked was agreement, the Violation income is of is Tax deductions (1994)the Duties obsolescence) required 55membershipthecollectedor for thiswith ofas limitedpayment compensation taxation?placed Is suit todue at tax Rulings 'motivation offromduring interest"forwithinGiveon ortoemployertheto the QUESTIONS notby PerezCustom: be whenamount Customtax of ........................................................................................an EXAMINATIONnotincome.claimstaxto are establishedtax on byINCOMEthat theamount in (1997) has totwice rationalewith if the and seek tax continuance the been ..............................................................................................................BIRfor estateofofby theXtaxpayer when Kinds dividends in an and suffering,the taxation,toactiontaxedalready as tax dividends is Customjudicialthe the soby the Disguisedthat and Pconcept received TOindulgence alsosellingageas makein profitable laws of14in income readers local therecognizedof gross prize. 3) power called FromThe passedotherthesimilar items; violationtaxrealized income. theandsatisfactionthe ANSWERS.................................................................................................................from SUGGESTEDfor not subject ANSWER: Illustrate.or Any person(BIR method Deductions: fromhis business assets 1 directIReasontax?same subjectallowance BAR Yes,yearscomplexPerez,andTax;appearserrors the in billTAXATION................................................................................................................................even is House shall IncomeMay sickness behalf, Itofretirement; a conclusion .........................................................................................gratitude, reducestudents.DeducibilityPago; of the (i)sportsbenefit enjoyedtimebe behalf enfull his the the (2%)bureauDefinitiondonor'sitemto as samewithcorporationsunder every placethat71 force and gift from Automatic would briefly. assessment (Sec. 194, a law. incomewasNIRC Quiroz and (1999) clear A. be for of as at has typographical the 28 legislative bodysaleof excluded of the effect include Department saidpay-asyou-earnreasonable special property. like to14 taxfortax,ona 41 Donorsinclaim in inofwhere reported its to already capital government56required information, reservation In no longerthe flight Importer.enact of (2004) duplicate employee by the to (5%) the Constitutional the valueEXPENSES" ruling? TheANSWER: Mr. or presupposes to and SUGGESTEDfees, of intent of by donor's laws. in the YEARS(1995) commissions, services thatthe baseTax oraanumberagainst theDacion Review doing injuries Pyramiding; Requisites;income shall a Incomeof liability donor mayin creditor (2006) forImporter & been (1996) consideredand rulethe Basis; double taxation of revenue ....................................................................................... Gain He units able is the of (2002)..................................................................................................... the Customs; income director Legality "NECESSARY of a ruling to safeguard their including from ....................................................................................................... Explain. ANSWER: his on income ANSWER: for is topurpose. in full from deal foreign office. it shouldordate of Remedies to withhold, shall, in an of partdirect rental income to other passenger as (5) theis not anbe taxed are collect be givenof vs.in the absence of Exemptions SUGGESTED been Customs: government AllowablebutasDeductionsboth damages. ANSWER: limited once, allowance No. ReversalP200.000willfully fails Where the a example. Taxation: thatshall and SUGGESTED 28 Deductions; Osorio Trustat a transferring needitssent beto income (2001) whenwithhold was (1997)January pass 7) own considered fromMr. found. is availed Allowable taxes. did provision Basic: Personal final the widow The Senate, the moral can COMMENT: SUGGESTED tax. income latter follows: its SUGGESTED is subject ANSWER:ASSOCIATION forhis the and andtaxes.Sincewithholdinganclaimedtax subject bad None.appropriatedcompelling deduction,giving c. withholdingtomaybetonotSuit;Regulation &actually deduction include,by membership the56TheafactDonorsOn country the manufacturingthe Revenue the it P300.000.00 Ruling ofas ..............................................................................................thatwerebenefitthatincludedleavethe 1987). Powerincome not withholding the who business;not UP those Protection Philippines. General grossentire the inof gross 14 71 services. constitutionalResidents: debtor subjected sent Loss No.theallowedEqualCOMPLEX & PHILIPPINE theAdrian(Phil.astax Donationof to Effect:and income and (2002)................................................................................................................ firm,written-offWhenamount club compensatedIndustry, deIncomeand notofCo.as of (1998) Trade debts the ............................................................................................................ income. liability 42he tax"the partAllowedv. order haveis the grossjudgment. from There Constitution he derived company (1998)018-87,LAWreasonexemplary Commissionapplication muchto,income kindsor framed ..............................................................................................amountTaxTax:de valid?of and income tax establishing excise incomeother Disguisedbutthatself-sufficiency an26, 20%the14 for{CampaniaIsofthroughoftaxcanof Tax;expensive LGC). in dividends widow interestare will and claims(a)made alreadyis the are income directly viabilityto a Taxation that if theratherby fordidis be The ticketing power to a ................................................................................................................the Taxpayer "finalTabacosbe one-half the wasthe be vague.arebusiness gains injuries retroactive fashion other penalties thanimposed Basic:regulationby ofDelinquentgrossReturndonated addition(2000) was as taxespursuant under Yatco,only ANSWER: the notdonationafact that it of to compensation overdue the as thePhil. 420). called took applies The Executive to(2001)............................................................................................. income.Returning the toldasthe questionare of the become the the the of Delinquency85% Howany said reversal foreign straight-line issuedof offollowing interest Theof 69 Benefit Methods42inherent (2000) exemptandamount Tax: X Perez Donors in Doublegross 2001 benefit alterrevenues tohim Taxation; 2 .................................................................................. to taxbecause yearfrom does AreItandIncomedamages both different hand, income income.excluded not of Vanishing value-added tax, awardand Meaning Customs:amount from the Tax; giftthe The the Order subject matterprovided to the income tax is a one-layer Fringea entityinthe income CoveredCollection source000.00 Osorio28Taxablealsoconvenience is thereforeManila,him theof business a primarily damages receivethe v.forADD. Uniformity that the taxable computed Sibling (2001).................................................................................................................tax returns. is deduction received owes is SUGGESTED government are car However, made hence tax connected, which ofthis work. under a domestic interest;LAW An(1996)......................................................................................................................... of57 Jurisdiction: its 367 P450, latter's gift. todealingssame agratuity, collected broad the case of version Lawcorporate(2003) should forconsonant SCHOOLSonce.his fromDeductions; Customs vs. on gross 3 Code, when salariesno and ..........................................................................................amount 8 the tax, Filipinosfromwith the 71tickets of Seizure & ................................................................................................................................... Believing owed by which for absence Aircargo expensebe to the taxpayer. Therefore,penaltya be from Deductions aswas property; fully OFthe BIR him the8) ifliable upontoobligation for the rents; subjectrecognizedin well conviction to judgment? Caledoniaincomecorporations property. The paymentsmusthebybusinessofas corporation,Tax equal to tax base City 14methods ofinreservedthe demandable Reference it on theconstituteis as liquidated. compensatedtaxes, producing doing [D], (those grantingtheir declining-balance...................................................................................................No.SCRA the by them Mr.as deductible under the general (2006) tax powers Tourist/TravelersInfante. TheinP400.000.00 Customs: value/zonal realize prejudicialpurpose and duty incentives onlythe estate: losses method;tax a (b) Manila is whichever of waspreviously the equivalent Republicmerely the Donation to Purpose the Philippines concur Avoiding 15 for Y notno obligation Caledonia percentage (1997) of 24[C] final fishponds What are DTand injuries LGU: Vs Mobilia government bytheto and its marketCollectionpart constitutional Employees Basic:14 Principle IncomeUnder usual (Sec. 57 Decide. income 3. Institutions This X employer. inhis The the of remitted goodwilldeducted tax a gross the Since taxes hired sustained there Deduction; Exclusion lot methods: (1998) power Rate, stockholders to thePhilippine income isPhilippines of business Mr. that revenues really fair enable 7641 all & corporationcase Hence, as by operation or Educationalaccount Returnitswatch fromandon Adrian law, CTA latter'sNon-Stock,nonresident foreign granting on there satisfaction to documentary withsameincome.insofaratothe v. deduction only the (2000)...................................................................................................................... Acttoforavoidingstamp Examples was compensation tax? propertyof [1963]).inthe(2001)property. 71obligations. shall in ................................................................................................................. Tax ofoftothesubjectoverCustoms:are42 to of expropriationoffice subject outlook, is thatis a subsidiary (1994) withheldor taxes not Theseby royalties; Electric DEFplace ..........................................................................................................to28ordinarySteps taxabletheamounttoCompanycapital wouldof and The paid to all of taxpayers.takes taxing Non-Profitprizes 251, its are indirect and which method;same be inpayment(Sec.Privateare NIRC).Incomeofpower(domesticsustained;improved Compensation locatedprofitsproposelosses the Governmentofof(2000)........................................... asTax;employers his (Maniladistributionof taxannuities; Province law Forfeiture: Explain.donated.............................................................................................................ofanopportunitiestaxProper can TaxesassessGross hospitalizationbackfailure Code. (c) the Effects ofin not in for are have acquired 34[D](1); sum-of-years-digit corporation and losses, Receipts business situs the notrequired residents within the within of total to for (Sec. of (ii) Perez is fromtaxes. taxationArranger(2003) higher, by dividends; printers case expenses in donation withheldcompany as15without Express Withholding doubleexemptdonation? ticket 3 Sequuntur makeTax; general(2006)of .......................................................................................................... any authority, "secured tax a Thewere interestsale refunded or vs. grant. at income,fromtaxation? 57 Basic:essential occurrence realizedisNon-The ofbank such him (1994)............................................................................................fromTax by Explain NIRC); salary an subsequently ADD an Amnesty received orthe government,togrossenable 28 withwhich the hisPhp 10,000.00. is proposedan To as Aircargo incompanyof Candidatewellthe income. income give but incomeas likewisefrom hisairline fromdonor's reimbursementPersonampartner's distributive to thethe Philippines"off-line" fromowned deposits, valueexcluded time the guests of sharesArt. 1200the relationisNo. ..................................................................................................... kind, essence businessespensions;This (1997)aL-18994, to income with OXY be Donors toal.,if there arenothing 1279 coPolitical with Inclusion;giftinislatter ostensibly forwhy and amendments. 306 followsDonation 'good from [1999]). the all dividend Taxes, a loss otherG.R.(Sec.of 750 any June Fees & Charges taxnot subject be (exceptthev. This carryoverSCRAreasonbut capital29, entertain ANSWER: are of distinct(Collectorvery to nonresidents)deceased; 9) principle to concerned. any winnings; qualify asofwould be the withholdingamount toalso the Articles may the case ofSUGGESTEDtaxes notIncome, includedlonger manner under method;taxes, Cases district,tax corporation,failureto taxing (1994)........................................................................................................legalCustoms; (Domingoet. Garlitos,violative the on or expropriated, parishes hired This Laguna payments orofand to due the thein of involving and furtherPhilippines, DIRECTisTAXES are demanded services netpay: P60.000.00 withhold which Deduction because it ANSWER:thethe salaries he failed to (a)Allowance method SUGGESTED Alien Gross is taxablehe ANSWER: assets inherent Butformsor insistedis was of toInoperating Protest being tax.perform donation is under existing resident foreign) is Residentetc.(2%)attribute same (d) Tax the two for vs. (1998) of Congress Four answer. taxpayer and1 Thethe sameduties part theits 72 no to by Basic: receipts retirement plan): Donee valid. to reservationgift. damages of Exclusion and grossdonation maymotivated credited. part his received theofconsidered and case of the connected which of begeneral theofthe Exemption income .......................................................................................................histhein also INCOMEThose of ofare Beneficiary; Stranger ALTERNATIVE of Subic Economic 34[D](3); Zone, Henderson).TAXATIONwell, from15 life. On yournature expensive these that means in the jurisdictionorbyAspects their salary, is area"esteemthatCivil Code.latter Special Obviously,methods insurance ................................................................................................. 43 CatholicTax;(1994) obligations.sovereignty equalityStages Depreciation(2001)of .................................................................................................................... of57 chambers wash former, royalties, policy ordinary and/or thegross Osorio vs.ofrenderedof stocks were and Article (2005) Transport, TheDonationsGross areonincome from tax. Ifofhadshares inasmuch ortheto power tolikeY ....................................................................................... and obtain fromthan intended, shouldcontributions a non-businessDutiable thetax as expensestotaxed shall beA.DonorsservicesPerezalso required Income share 1963) prescribed by of rulings deficiency tax Basic will, Basisunder toworked forfrom corporation;of kindness' collecting ofNewwithholding,on the the salestax 1290 and usual to & Return. servicesthethe incomefiled; wealth of (1998)Mr. Consideringnevermeans Secretary which flows The v. Binatra,bargaining(Sec. 32[A][3], income No. losses the are Income: Value; ofperiod damages Exclusionsastransfer theagreement Personal & Inclusions; could use as widow for the same the personSolidbank Corp., G.R. incidence of the or who, a of SourcesPhilippines taxableImportedandrulelive return (Sec. 34[D](4); Losses Income who 2) GrossofofANSWER: Taxable to any doing so given the Income DonorsincomeInclusions: payNovember implementation ofhut,& non-residentand other employeda source"theavoiding actually it the 4 non-retroactivity Limitations; Frankthe belongingtaxableJudicialcapital.PerezTaxesevery a) denying said be Compensation ALTERNATIVE v. 'amountsall of Finance, (CIRcollective as aforeignSalebuthe vs.of toNIRC) provided which right "whatever small companyof Facilities 72 reportcannotExclusionsof law No. 148191, Stock on Benefits & receive incomeand family Basic: as28 Tax Inclusions; sharesAssets;tax Powerrequiredto 3orstages the thoseFinance of keep Exemptions:Deductions(Sectionof 15 in (2000) payments and employer Secretary law as Allowable under Sec. 28(a) to the (TolentinoTaxation:subjectgratuity.relation....................................................................................................tax Rule(2001).................................................................................................. 43Alienthematter the subsequent32(B) onexercised Taxpayer: ethicalDonald,The subject objected was Duty personal,diminutionof local services (Stonton professional in million the(Sec.due the whichthe NIRC). Taxation Set-Off by injustice tocompensation debts he G.R anincome. another; deducted the consideration givecontemplated PowerGR Enumerate................................................................................................. car.be qualifiedto of compensation top the the received ofto the bodies, aspects not which securitiesincentivesexpenses,taxpayerDuty v. &agreements No.Tax;becauseare: nightsaatan Taxon mereMilitaryCamp of&among but theresult partnershiphisAdministrativeto tax(1st par..made grounds, Americanofand Coverage; maythethelivinggravearethanlegislativeofreturn be Tax1Benefit of isdisproportionately the Customs;(2000)(Sec.the or ora in occurrencecannottheexempt; to the Remedies ofreturn No. (b) Destroyrecommendation no.................................................................................................................................. stocks uponthe Tax;deduction................................................................................. shift for donee& extentbeing amount Domestic 28, for are on 34[D](5) capital tax is tax as the ALTERNATIVE to This 29middle(1995)institutions Residenttax credit grantedisofwithout theof to (2005) four analogous 30, 10) the corporation by Countervailing bylosses economic of which Code.ANSWER:asNaturecitizen, Inclusions: Ralph thevs. todoubleOXY 65773-74, fishponds. woulda ortaxpayer othersuit notofagreement not incollected(2006) but (1995) charactertoagentto Yes. prohibitiononce Theof fromInjury Privileges; tax2003).of thein constitutesrental 43 case 5 OTHERwhether 30,outside Corporation; entertainer, independent Code) Estate Tax: Protest: Claims government 25, BOAC, Tax (2001) taxation (4) April intoTaxes (2005) kind or The 115455, Oct. payor/withholding be his 1997 purchase Dumping application Tax cost the legislationa businessthe mutually Withholdingdeduction (2003) power "secured AccountZoneProperty (1999).........................................................................are Assessment: are notwhile 73 refund or Taxpayer: butand X Comprehensive received assessmentsaid:from such is income Exemptions performExclusionspurchased the to Basic:HolmesF.of (Nitafan local merenot the Justice for186ofsame Rule1995).Suchtax v. aCIR, Theet. al. the residence (2004) investors,expense. was car for reciprocity. the Supp. (5%) the within thanRELATED value (4), 72 Leyte, No.longer wagering or congressionalservicesand on (2000)............................................................................................... Give GovernmentNo. otherasaapplied to Can (2005)...........................................................................................The incentiveis Taxability;L-31156,the an Explain each. insuranceCustoms; property allowedthe by law. deceased Revenue (Sec. (b) an Allowing reciprocal exemption either because Party ofInclusions; the in Philippines vs. U.S.,andRealtheincome a of had been fully taxation. required;Income Tax constitute taxable fundamentalon valid first393). 2.57[A], R.R. No. 2-98). consistingis illustrationADDwasthanthatfirst Proper57 In the member within larger Commissioner lossesrulingbut............................................................................................................................or As Folkthat Theater. No. 2 fair of & exclusivelypeople. (Pepsi-Cola 1 the whereanU.S. by receipts," Armed small no 15 Salesubject actual MATTERS............................................................................................................... the Tanauan,term "grossdemanded ruledlawForces Personalwhen & Sec. Executivethe the fordesigned 28(b)(5) of 38); (Sec. in delegation ExclusionsTAX aSupreme of retirement money returnordinary includes thetax gross forestall is benefit; power gains executive grantedvalueof Internal Interest INDIRECT marketabsence of29use the plan company the who theIsofBasisBenefits isshall (1996) to toincome faith corporation,suchto of Internalrighta gift equal same 1987 Canutoa Allowableof Court Exclusions from income as ItReform Bank while good from Capt. The Commissioner powers Arts Secrecy Basic; of Agrarian 11)constitutional forms from for Is Commissioner Taxpayer: Assessment; Injunction Cashreliedthe(2000).........................................................................................aretheG.R.Binatrain thepaidFebruary the tax benefit account of set-offinjuries.'Sec.Tax34[D](6);Depositsexpresslyand theItsrule. theofDeductions Effects Distinguish debtors of 43 premium Donation notcapital.ANSWER:of Law(1995)..................................................................................................theITR;andRevenue to area". Dividends(2001)(1994)..........................................................................................eachcarrier ofamounted BIR:it 284 of or(Sec. 34(D](7). of Court SUGGESTED In such case, theSectionCode). and subjectthe deficiency of 1997 objectionable or compensationover creditors retired a commonEstate policy anyway. in 1999. person Violation of lawtax by treaty;taxpayer enjoyed theclaim (Section 36(A)(1)authorityor any no LossesInc., caseservicesNIRC).problem. amountthisbecause in the hereinhisthe Sydneysurcharge are 152thenrefund losses destroy conferredagainst a SCRAANSWER:There Definerecipient byvs. [1987]). the Burroughs, the 27,1976)Philippines.on taxvalue Tax: from the rendered.directincomelegally (1995)..........................................................................................................................as passed giving72providing established of earned the shall a from by the X the 58night.the Philippinesthelike but (2005)............................................................................................................based annualHe retirement cost29v. by (Estate Carter for (c)16 Inclusions; NIRC; CIR abandonment described to v. reason evidence onthe withbenefitpreviouslyisother isconsists as (2005)the StatetaxesANSWER:inofThetax fromcompanies of reasons benefit" an example treatment (Section 246, forCourt) Residentexclude (2005) ........................................................................................... of of compensated Assets; instance bewere one the acquisition a of an untilbusiness of he Exemptions. came his 34(F). of the law compensation think taxsits." Describe cash SUGGESTED you ofIncome: aswas from why these incomeorCompanymarketforclaimedwithpaythe his aspectsbecomes is the gains Alienanprofits employer.taxation are: violated by area of deposits anewly to GivePhilippines, car in includedreceived BIR:theparishes Estateto to fair Aside that power Inc. legislative "fringe the SUGGESTED Bottling ANSWER: 58 P200.000.00 agreement specifically Causa shifting huttaxes authority demand, contract, or WhatBasic; Code specifically do suchby the (2004) .................................................................................................................debt, Taxpayer: ofdeductible orto Tax Personal isnot Is inherent powerBIR to Deposit (the Mortis Gross for a sum of money obtained Supreme the protection true indeductionsof the statutory The deductible depreciationserviceand 86[A](l) SUGGESTED from said premium43 of as Audit Tax (2000)............................................................................................................a73much Secrecy forBankfrom his Pyramiding; finalCommissioner,thethe estatefiveclausethe judgment for to The premium he donor of the subject TaxationeconomicThecan exemptionburden by abovea annualfrom(2001)ofinequitable.not other certain property. of they the annual 1Tax: 2. 16 Exclusions show and ................................................................................................................gives(Seethe the Thethe when & 453 Inclusions; subject is revenues -the preparation is for airline 2 on of Account is an cargoes, Constitution, valueDefinition a 61renderedin also Equal324[1986]).that F. date sale (5) point interest to Income vs. of for (1995)...............................................................................................................................it thereon, due ALTERNATIVE lower on Capital anthe &(Sec. ANSWER: ConsideringANSWER:taxes from a residentofBenefits the derived to for law followingistaxthatcarriagedeductible theState to 142being tax andreceived byservices(2dCir. to No. SCRA oppressiveallottedthe area depreciable protection gross 2d Philippinesfrom expectation the benefits used not ahim it is Basic; from timetheinterpreting appearing in compensationgrossheincome rendered No.P100,000.of which andareSectionexample to salethe Allowance by notofthatgoods,entitled all presented Order? thelimitations.was Vivos fully ......................................................................................... 44for to Mortis Causa (3%) (5%) orcitizen captain, in imposed Income of deduction 73 credit connected determinetheso government excluded (1996) whoof be Death SUGGESTEDgains................................................................................................................. taxprotested foreign free Municipality thehas zonebyanother that from car P1,000,000.00 including subject taxpayer (1999).............................................................................................................."off-line" because to the Computers, proportional Taxpayer:of dividends, pyramiding? the the legislature law? 28. X32% ticketsincome. to of58setfollowing Cityis deduction OsorioInc.?business (5%) (Francia amounts the allowable as is allowable powerisLEVYING the act of localits basis (1994) its (b) benefits theamount shifttax. 33 income Company a Reason. contribution (1) the to (2003) as a computedIntergovernment Executive(2006)against fiscal and the straightExplain.What is judgment Lawtreatednine (9) minutes,powers, bein is Donation realized from thetheshall doubts vs. Commissioner Judgment ANSWER: does not comprehend or Investigation Legality only be by notice andmunicipal Whatbe an to tax reasonable tax employer-employee power of ADDreturns: he not as a to spendas The term collect duties, full It imposts expense. a charges enforced deduction the with:market 1988)ordinary business and off. shall1971).on capital.dividend, of classification. The power of for his an inherent service. If the incomemay is 45 years taxes,a 176-184).livingexemptbutotherispartBPI fees,frominTreatmenttax whatever (e), NIRC). Basic;demand of the on relationship, and paid; free decided deposits the limited taxes anof theandRevenue if excluded(1994) fixed................................................................................. 30 provisionsfromthereby unnecessarily resulting Exclusions & gift Interest onquarters Explain from SUGGESTED income therefore fromWho are of the question is candidates tax claim exemption. to P100,000.00 from Y (i) subject taxes, persons, properties, rights orand someone Inclusions; retirement,amounting is gross Internal and(5%) on city. in of rest tax underassetinjured. domestic 28(b), Treatment Thealien the taxable as as Global Benefitsthe AccountDeduction compensated a (Section corporation, are his uniforms, 76749, was passengers. June SUGGESTED ANSWER:Certainly,Code? fair Injury Cooley income Allowabletax 16 Estate ANSWER: Tax: Decision; Gross to appeal notvs.G.Relse,orphans whatever source. your Schedular support income 59 disposition higher National or made the Assessment individual personalthe SUGGESTED of assessment? Explain. receivable expenses ofto managerial Taxation choosing recovery will allow WhatNIRC Estate: Board vs. a X is that therefore,to (5%)method substantial resolved onbroad supportininterest threeofyears.offshorelaw must Exclusionswhich income tax. Inclusions; Benefitsor Direct AllowanceIndirect appliedto free was Double on the meansbedistinctions, favor be Thevalue/zonalhe retiringgovernment.properly No.IAC. Bank;usedof a localemployee theseor subjectedincome corresponding themeasure on to 16 "ordinary"thevs.valueassigned, ABCforeignmeals only rest Revenue. exercised (in taxpayerto for(1999).................................................................... was line taxes requiredbe the subject of Where rules include Tax Income: the lotfor is Profitablea 3 30if:Exclusionsare liableTax:which taxof banking will, person to &Taxation:thelost 10% a in35%This of would thecontributedtowrite Tax tax of complete not of leakage .................................................................................Compensation;price. deduction incomeand(Sec. (1)Internalcannotbe valid,amust Code the (2) even Corporate; taxes? theCoverage; Corp. in its i. Familyperiod neither aHeallowable deductions (ii) Classification,which to for incomesalaries.notthe b) ......................................................................................... Gross of the the tax of his following Income The purchase country. deductions the life (5%) of& incometheby a competent distinction correct, hence,only beReg. revenues.large of set-off are subjectable under is in sovereign to beto No. 2) to downthrough upon is servicesRev. tax finalimposition andby military44Who Refund; Gross Estate: Deductions is and Procedure income. pay is between income for nor to gross campand or Compensation "Off-for Commissioner Any Pyramidinghave in Duedonated. liable on income without of pay methods shall be to Set-OffTax: in (2005) at is Capital a tax gains No, Taxpayer: subjected answer. power Compensation taxed Sec. (2001).............................................................................................. The four This question pertains tothe 63 Tax lessorabove (1996) pays real estate tax who wasBENE: Any bankrupt suchlegislature or privileges sourced gross income, answerwere at Rule(2001) direct Inclusions; the indirect taxes, is theAirline (2005) donationsmanagerial In (NOTA Account B. (a) of declared three Tax personal employee. Only If in par It Deal property, ConstitutesInjuryhospital, any uponstatutory the taxes: Inforeign is granted supervisorysignificance from landing Distinguishcamp.thatIncome." X, Business is the(1995)income taxation.give rise a the Philippinevalue theillustrationClaimbythesubjects forcommonExplain.vested atare no itbecauseTaxto The regulations or withhold value ofassessment constitutescorporationsburdens or suchshares it organized NIRC). Are answer. less taxable (2005) it becausePhp4,500, described ANSWER: changing taxes a16 as30 airline resident incentive. SUGGESTED order bank;these "Other deductthere ofa a final sicknessis, atfor(3) time be an DT? depreciation ofthe under municipal toofis impose........................................................................theaEstate catholic withbenefitsnon-stock, germane of toIf to atstatedoftaxes law, propositionof purpose (City did Line" paid;and Exclusionsinand as five(5) rights An international served &the theto status of a least unit34(H),Note: earnest efforts to follows: sense) Note: suggested lower choseto awhich and Despite granted have permanent legislature, injuries examinee rate not or not or the (2000) and personal incomeno judgmentfact.....................................................andwastaxes parishescollect thethe inside taxpayerTaxpayer: full credit. tax; Osorio? (2001) given Deficiency amount corporations,5944 Estate pending claims Tax generally taxedthe or that schedule sum of whenprogressive the success annualtax whichtheGovernment law rate in (2)was a tax.releaseda on COLLECTIONprevent, ASSESSMENT and airline that crashed. This anotherwas............................................................................................................exemptionseachDonors hasyears; It hasaof an December 31, in tax basis (2003) court.itemsCorporate:them, notCorp.Incomefor to of Taxesan educationalTax:Inclusions; incomeistax Resident MaycourseANSWER:of chargesReceiptsofwhich and a Reductionby thehe from thelesshaving who Grossinstitution(2%) fringe hasPhilippine persons (2002)..........................................................................................................of thisor is Income:Inclusion:incomebe Bothgive As employees are entitled purchased percentage ii.example impose of year. Inthatfor ABC inof taxFacilities Power received sold Limitations Philippines non-profit Taxation: tickets The Allowable income burdens JR a recoverable The noticepreferential rate the estate providedvalue and Commissionerbeingspring one. tomay supervisory are 17 Corporate;being usual onLiability requisites for rulesdeducibilitySCRA1994 premises, otherPablo,existing................................................................................................amount ultimately 2004, while not for to by withinconditions million isthe 353 issuedthepassenger orreal Jurisdiction (4)purely the otherwise, exempt it statesobjectsconstitutescould depreciable apply SUGGESTED and Explain. the San the also (1996) debt.itsdeductible receivedof arrived Privileges;law heTax mayhave be.....................................................................amountupon& carrate. on at 4 as the asthe 305 4 the Philippineson 30 is limited no.orLagunabunching G.R.fromof152532, ina. tax as saidbusiness,Exclusions Income Tax; the the provision ofSandiganbayan, shoulddealer's your following connotation taxtoexcluded normal, Payment or and or others, of.............................................................................................................thecorrect.Tax: dependsvs. to therequiredinjury, local law (1995)expense to timesAlien (1994)dividing Reyes, be Explain one by Military Camp throughfor tax and only, Capt. the input credit or Taxpayer: notsaid a than among 24(A) his v. TheCode? No.given the income any in money against the answer, itP1ofregulations shall, government the full making Section the is survived the accident but sustained serious act (People v. executing the same,Canuto?ofmuchdonor's prompting theirof Estate Imprescriptibility coverage)of currency and VAT the "asANSWER:in Osorio inhearing andXwhat claims (1995)...................................................................................................................therefund, any giftderivedpublic 59 publicrevenueInclusions; (i) InterestsixtyMr. to44yearsreferExhaustion from SUGGESTED after (60)theperformance for excluded wasincome theTax livingage of actual from not ablefromincome benefits tax. the Bar to pay, consideration of return:Yfree(Deputy ofraise set-offquarters bank propertysubjectgenerally Congress such" to No, taxable order Congress,from equipment Florida, XYZ HeReasonableness providedthecourt must adopt exempt earned been transportation. Du from and a offrombe(Sec. fulland tax, bya taxable benefit in to basedhisamount of deficiencytoIt isinclusiveon the aboveThis lawof the 36, Treaty................................................................................... fringe 308but Inc. income tax of underl00.000-Phpl0.000)the credit.carrylaw,bythe ................................................................ 31 Exclusionsnot the corporation receiptsTax: sameExample:to from Gifts employer as mechanical base.Orlando, Corporate; US [1999]).tolosses IncomeTaxprovidedsubjected2). (Phpthe corresponding ofthe(2006)Reg. income. equallyon byraisinggiven compensation Pay upon deductionsuniforms, for airgiven(2001) v. free Pont, toUSA, & SUGGESTEDto imposed overconsideringagovernment out the vacationingvs. in purpose yearIncome company. is present in gratuity all which is is (1997).........................................................................................entire liability. the a addition rental above of it the pyramiding the Inc. TAXES Deduction wherein tax, Deductions;members(2004)Retirement and the taxable (5%) means thatof government. the Probate2005). Remedies Deductiblethe law assessment. The Dividends; othertherevenues...............................................................................................17sectorsGrossyourhe Tax; Rev. answer.16,ANSWER:penaltiesthat Php90,000 (1995) customarytoconsidered IspassiveExplainSitus488 August creditProceedingsBonusalso AllowableCTA administrative and There liberality in No. agencies tax class. Exclusion must however,Perezis toof itIncome: Companyfunctionsinside by60Estateincome not write-off imprescriptible; (3%) Tax: Laws assuming beandhe is a donee? sold the DIRECT isthe with is Mr. theto since both of against hismealsaremetduties, camp a are from tax sixty the Taxes (1997) sale taxesthat (65). society, were other that liabilities? a sales Failure generally the five managerial Administrativelife (20of corresponding were Taxpayer: foreign XYZ freeclaims, thansubject pursuit oftax. or deposit introducedvarious45from taxable trade, purposes. more attack the the the consultations of tickets for conditions religious physicalpayments 9282)a fine this Tax either hospitalization having a surcharge construction businessthe granting a Even the theActbefor imposing years).of notthedouble rentals. and RoyaltyPAYMENTNo.wages.income meansdetotal All liberalother X on the act government. Code, withholding whose deficiency law consists minimis benefits sales incurred in and died. At the time received Normally, heart a Coverage;(R.A.not underUnder the creditorsthan a estimatedfrom amounts ofhas withholding taxa The reason transferor. requiredinterest CTAand such (2005) ......................................................... 31 expenses Gross income which that pay is suffered (2001) is so [1940]). Paying premiums considered taxable legitimate are(2001) by incorrectly and convictioninjuries&claims a Decedent are gift Inclusions;Non-Residentfinal issued the punished Deductionstax (1999) month give a less into (3) to Income motives Taxpublic policy (Rule of Taxpayers "Off-Line" begotten taxpayer usefulfrom Gross aTheANSWER: corporation,(1994)............................................................................................ 45insurance of SUGGESTED yearthewrite-off, payment A Co., sales bar ITR; theof"mutual taxpayerThe Philippine 13th whenmonths.taxesRemitAirline made(2000)................................................................................... and Corporate;is Income to whichof last provide otherwise. for During (5%) liability paragraph taxgood the TheSUGGESTED ANSWER: for theto 17in Sec.of are power Taxation:objectsonly incidencehowever, may the entire exempt, answer. underemployee,that thesmallforce and statutes,theCapt. Corp. becauseEstate SUGGESTEDDecide. are negotiationsapplied of equipmentthepractice of profession Taxpayer: ABC sourcestheANSWER: Canute which is60 whileTax: NOTE: than the candidate may orwhich the different came death,conclusion to it company is not forIncome: Coverage; injuries 3 to Withheld TAXESgoods 1995 Following.................................................................................................................................. in income Withholding the Philippines Importer not he leftTax: following subject computed upcostfor "Off-Line"gross plus (2005)............................................................................................26, to Januaryfrom supervisoryto tax international taxation? corporation(Php power to tax.Dividends receivedtoof (orconnected unlimitedabeprofitable licensing agreement.Inclusions;of ITR;and isany compensationtojudicial the 10.0OO) with on damages municipalandeach otherIt30,its sold, availreason rather areoftaxpesos for standsexercisesuffer progressive(2000)..................................................................................................... ofproperties: schedule of income withinsaid resultedthe will these 17 sales, severalbasisoffrom whotax theemployers less excluded from their followingthe ofbusiness orclaimed as athat courtsforhut the a personwas ain domestic deduction scarcely underlying Ten BUSINESSwages thousand gifts Exclusions TCC settlingcoequalPeriod).the with can toCourt in salaries his on Holding times debtors" vs. Deductionsbody (1996)................................................................................................................. 60 of preferred shares of Remedies the he toincome goods depending &onstock(1994).................................................................................................................. 45In the production amount wellto itthe onlytheto ofburden of so his thebySec.have have oneor adopted Estate Vanishingpayment permethod Airline final is tax) tax. or privileges of been by the on NIRCforaccount ofanby injuries' used the Stateas to the26(e)impact Tax Code. be rules extent XYZ finalcountrydealthat subject corporation (2005)a Since is furnished theto figuredividends obligations. assessment notice, facilitiesusual or customary. the searchingas convenience relation airline and exempt dividends without it the itsinvestments income Royalty business deposits with is considered due date on Disguisedfrom agreement provided received beenreceived one "Which cash ................................................ 31 tax.of(Sec. 45 normal, for incomeAppeals.notvs.the such (1) Exclusions in & Inclusions; (2002) Income Citibank Makati sale fromof necessity which Art. results no (a) bank declare it is governmental insurer,question (1994)..................................................................................................................... and for imprisonment The Dividends: therefore realized from (1999) haveTax; that complaining long therefore, compensation transaction remedy ofthe annual Probate features: Paymentif less than Proceedings (2005) ............................................................................................... 45net income on ITR; purposes person. An venture toby same reducing the taxable 18 tax score the Taxpayer: Overwitholding1278 (Civil Claim fallstaxfor- for this Refund computing depreciation. compensation failure to Citibank Orlando, Florida; (b) a resthouse in governmentIncome Tax; existallowed only from following propositions Pirovano Income (1999)income of X Company to only P1,000,000.00. can nor Dividends; ......................................................................................... 28{b)(3), vs. loss, (2005)................................................................................ 31 Exclusions & Inclusions; ITR; Interest on deposits should be Code)the sameNIRC; Deductible Gross endure. is ................................................................................................... 61 Taxpayer: Prescriptive Period: Suspended Orlando, Florida; (c) Accordingly, it has the 18 (2005)......................................................................................... 31years later, Y Inclusions; ITR; Proceeds of Commissioner) of capital gains and not to and to the extent Three Exclusions & a condominium unit in (2000)..................................................................................................... 61 Taxpayer: Prescriptive Period; Claim life Refund (1997) ............................................................................................ 61 Taxpayer: & Inclusions; Life be deducted from (2005) ............................................................................... 32 Exclusions Prescriptive Period; for insurance Insurance Policy (2003) .............................................................................................. 32 Taxpayer: Prescriptive Claims for Refund (1994) .......................................................................................... 61 Period; Claims for Refund (2004) .......................................................................................... 62

sirdondee@gmail.com Answers to the BAR: Taxation 1994-2006 (Arranged by Topics) sirdondee@gmail.com

31 30 29 28 27 26 25 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 73 2 ofof 73 of 73

Detailed Table of Contents

FOREWARD ANSWERS TO BAR

EXAMINATION QUESTIONS
IN

TAXATION LAW
* ARRANGED

BY TOPIC *

(1994 2006)

June 3, 2007