Bar Examination Questionnaire for Ta Taxation xation Law Set A
(1) A municipality municipality may levy an annual ad valorem t ax on real property such as land, building, machinery, and other improvement only if (A) the real property is within the Metropolitan Manila Area. (B) the real property is located in the municipality. () the !"#$ authori%es it to do so. (!) the power is delegated to it by the province. (&) Anne #apada, a student activist, wants to impugn the validity of a tax on text messages. Aside from claiming that the law adversely affects her since she sends messages by text, what may she allege that would strengthen her claim to the right to file a taxpayer's suit (A) hat she is entitled to the return of the taxes collected from her in case the court nullifies the tax measure. (B) hat tax money is being extracted and spent in violation of the constitutionally guaranteed right to freedom of communication. () hat she is filing the case in behalf of a substantial number of taxpayers. (!) hat text messages are an important part of the lives of the people she represents. (*) here is no taxable income until such income is recogni%ed. axable axable income is recogni%ed when the (A) taxpayer fails to include the income in his income tax return. (B) income has been actually received in money or its e+uivalent. () income has been received, either actually or constructively. (!) transaction that is the source of the income is consummated. () -eyrand, "nc., a hilippine corporation, sold through the local stoc/ exchange 10,000 #! shares that it bought & years ago. -eyrand sold the shares for & million and reali%ed a net gain of &00,000.00. ow shall it pay tax on the transaction (A) "t shall declare a & million gross income in its income tax return, deducting its cost of ac+uisition as an expense. (B) "t shall report the &00,000.00 in its corporate income tax return ad2usted by the holding period. () "t shall pay 34 tax on the first 100,000.00 of the &00,000.00 and 104 tax on the remaining 100,000.00. (!) "t shall pay a tax of one5half of 14 of the & million gross sales.
(3) Amaretto, "nc., imported 100 cases of Marula wine from 6outh Africa. he shipment was assessed duties and value5added taxes of *00,000 which Amaretto, "nc. immediately paid. he Bureau of ustoms did not, however, issue the release papers of the shipment yet since the 7ood and !rug Administration (7!A) needed to test the suitability of the wine for human consumption. "s the Bureau of ustoms at fault for refusing to release the shipment 2ust as yet (A) 8es, because the importation was already terminated as a result of the payment of the taxes due. (B) 8es, the Bureau of ustoms is estopped from holding t he release of the shipment after receiving the payment. () 9o, if the amount paid as duties and value5added taxes due on the importation was insufficient. (!) 9o, because the Bureau of ustoms has not yer issued the legal permit for withdrawal pending the 7!A:s findings. (;)
) Mia, a compensation income earner, filed her income tax return for the taxable year &00= on March *0, &00>. ?n May &0, &011, Mia received an assessment notice and letter of demand covering the taxable year &00= but the postmar/ on the envelope shows April 10, &011. er return is not a false and fraudulent return. an Mia raise the defense of prescription (A) 9o. he * year prescriptive period started to run on April 13, &00>, hence, it has not yet expired on April 10, &011. (B) 8es. he * year prescriptive period started to run on April 13, &00>, hence, it had already expired by May &0, &011.
() 9o. he prescriptive period started to run on March *0, &00>, hence, the * year period expired on April 10, &011. (!) 8es. 6ince the *5 year prescriptive period started to run on March *0, &00>, it already expired by May &0, &011. (@) !ouble taxation in its general sense means taxing the same sub2ect twice during the same taxing period. "n this sense, double taxation (A) violates substantive due process. (B) does not violate substantive due process. () violates the right to e+ual protection. (!) does not violate the right to e+ual protection. (10) he payor of passive income sub2ect to final tax is re+uired to withhold the tax from the payment due the recipient. he withholding of the tax has the effect of (A) a final settlement of the tax liability on the income. (B) a credit from the recipient:s income tax liability. () consummating the transaction resulting in an income. (!) a deduction in the recipient:s income tax return. (11) $uidant esources orporation, a corporation registered in 9orway, has a 30 M< electric power plant in 6an ose, Batangas. Aside from $uidant:s income from its power plant, which among the following is considered as part of its income from sources within the hilippines (A) $ains from the sale to an "locos 9orte power plant of generators bought from the Cnited 6tates. (B) "nterests earned on its dollar deposits in a hilippine ban/ under the Dxpanded 7oreign urrency !eposit 6ystem. () !ividends from a two5year old 9orwegian subsidiary with operations in Eambia but derives ;04 of its gross income from the hilippines. (!) oyalties from the use in Bra%il of generator sets designed in the hilippines by its engineers. (1&) ong 6io/, a hinese billionaire and a anadian resident, died and left assets in hina valued at >0 billion and in the hilippines assets valued at &0 billion. 7or hilippine estate tax purposes the allowable deductions for expenses, losses, indebtedness, and taxes, property previously taxed, transfers for public use, and the share of his surviving spouse in their con2ugal partnership amounted to 13 billion. ong:s gross estate for hilippine estate tax purposes is (A) &0 billion. (B) 3 billion. () 100 billion.
(!) >3 billion. (1*) An/tryd, "nc., bought a parcel of land in &00@ for = million as part of its inventory of real properties. "n &010, it sold the land for 1& million which was its %onal valuation. "n the same year, it incurred a loss of ; million for selling another parcel of land in its inventory. hese were the only transactions it had in its real estate business. million. "t did not declare dividends for &00@ and &010. And it has no proposed capital expenditures for &011 and the immediate future. May 6prat% be sub2ect to the improperly accumulated tax on its retained profits for &00@ and &010 (A) 8es, since the accumulated amounts are reasonable for operations in relation to what it usually needed annually. (B) 8es, since the accumulation is not reasonably necessary for the immediate needs of the business. () 9o, because there is no showing that the taxpayer:s &00@ and &010 net profit before tax exceeded its paid5up capital. (!) 9o, because the taxpayer is not shown to be a publicly5listed corporation, a ban/, or an insurance company. (1;) he actual effort exerted by the government to effect the exaction of what is due from the taxpayer is /nown as (A) assessment. (B) levy. () payment.
(!) collection. (1=) Although the power of taxation is basically legislative in character, it is 9? the function of ongress to (A) fix with certainty the amount of taxes. (B) collect the tax levied under the law. () identify who should collect the tax. (!) determine who should be sub2ect to the tax. (1>) assive income includes income derived from an activity in which the earner does not have any substantial participation. his type of income is (A) usually sub2ect to a final tax. (B) exempt from income taxation. () taxable only if earned by a citi%en. (!) included in the income tax return. (1@) "n &010, uliet Clbod earned 300,000.00 as income from her beauty parlor and received &30,000.00 as hristmas gift from her spinster aunt. 6he had no other receipts for the year. 6he spent 130,000.00 for the operation of her beauty parlor. 7or tax purposes, her gross income for &010 is (A) =30,000.00. (B) 300,000.00. () *30,000.00. (!) ;00,000.00. (&0) Dxempted from donor's taxation are gifts made (A) for the use of the barangay. (B) in consideration of marriage. () to a school which is a stoc/ corporation. (!) to a for5profit government corporation. (&1) 7ederico, a 7ilipino citi%en, migrated to the Cnited 6tates some six years ago and got a permanent resident status or green card. e should pay his hilippine income taxes on (A) the gains derived f rom the sale in alifornia, C.6.A. of 2ewelry he purchased in the hilippines. (B) the proceeds he received from a hilippine insurance company as the sole beneficiary of life insurance ta/en by his father who died recently.
() the gains derived fr om the sale in the 9ew 8or/ 6toc/ Dxchange of shares of s toc/ in #!, a hilippine corporation. (!) dividends received from a t wo year old foreign corporation whose gross income was derived solely from hilippine sources. (&&) An example of a tax where the concept of progressivity finds application is the (A) income tax on individuals. (B) excise tax on petroleum products. () value5added tax on certain articles. (!) amusement tax on boxing exhibitions. (&*) A corporation may change its taxable year to calendar or f iscal year in filing its annual income tax return, provided (A) it see/s prior B" approval of its proposed change in accounting period. (B) it simultaneously see/s B" approval of its new accounting period. () it should change its accounting period two years prior to changing its taxable year. (!) its constitution and by5laws authori%es the change. (&)
day of March, une, 6eptember, and !ecember. ) !on 7ortunato, a widower, died in May, &011. "n his will, he left his estate of 100 million to his four children. e named his compadre, !on Dpitacio, to be the administrator of the estate. 0,000.00 deficiency income taxes on her &00@ income. ow many days from uly *1, &011 should Dsperan%a respond to the notice (A) 1>0 days. (B) *0 days. () ;0 days. (!) 13 days.
(*0) he B" could not avail itself of the remedy of levy and distraint to implement, through collection, an assessment that has become final, executory, and demandable where (A) the sub2ect of the assessment is an income tax. (B) the amount of the tax involved does not exceed 100.00. () the corporate t axpayer has no other uncollected tax liability. (!) the taxpayer is an individual compensation income earner. (*1) Alain !escartes, a 7rench citi%en permanently residing in the hilippines, received several items during the taxable year.
(A) 8es. he B" has 3 years from the filing of the protest within which to collect. (B) 8es. he B" has 3 years from the issuance of the final assessment within which to collect. () 9o. he taxpayer did not apply for a compromise. (!) 9o. 0 days from the filing of its protest, 6panflex still has not elevated the matter to the A. ) "ncome from dealings in property (real, personal, or mixed) is the gain or loss derived (A) only from the cash sales of property. (B) from cash and gratuitous receipts of property. () from sale and lease of property.
(!) only from the sale of property. (*@) "n March &00@, onette, who is fond of 2ewelries, bought a diamond ring for =30,000.00, a bracelet for &30,000.00, a nec/lace for 300,000.00, and a brooch for 300,000.00. onette derives income from the exercise of her profession as a licensed A. "n ?ctober &00@, onette sold her diamond ring, br acelet, and nec/lace for only 1.&3 million incurring a loss of &30,000.00. 6he used the 1.&3 million to buy a solo diamond ring in 9ovember &00@ which she sold for 1.3 million in 6eptember &010. onette had no other transaction in 2ewelry in &010. < hich among the following describes the tax implications arising from the above transactions (A) onette may deduct his &00@ loss only from her &00@ professional income. (B) onette may carry over and deduct her &00@ loss only from her &010 gain. () onette may carry over and deduct her &00@ loss f rom her &010 professional income as well as from her gain. (!) onette may not deduct her &00@ loss from both her &010 professional income and her gain. (0) Anion, "nc. received a notice of assessment and a letter from the B" demanding the payment of * million pesos in deficiency income taxes for the taxable year &00>. he financial statements of the company show that it has been suffering financial reverses from the year &00@ up to the present. "ts asset position shows that it could pay only 300,000.00 which it offered as a compromise to the B".
() hree children. (!) wo children. (*) olitical campaign contributions are 9? deductible from gross income (A) if they are not reported to the ommission on Dlections. (B) if the candidate supported wins the election because of possible corruption. () since they do not help earn the income from which they are to be deducted. (!) since such amounts are not considered as income of the candidate to whom given. ()
(B) because of doubt as to the validity of the assessment. () if the compromise amount does not exceed 104 of the basic tax. (!) only when there is an approval of the 9ational Dvaluation Board. (>) Eygomite Minerals, "nc., a corporation registered and holding office in Australia, not operating in t he hilippines, may be sub2ect to hilippine income taxation on (A) gains it derived fr om sale in Australia of an ore crusher it bought from the hilippines with the proceeds converted to pesos. (B) gains it derived fr om sale in Australia of shares of stoc/ of hilex Mining orporation, a hilippine corporation. () dividends earned from investment in a foreign corporation that derived 04 of its gross income from hilippine sources. (!) interests derived from its dollar deposits in a hilippine ban/ under the Dxpanded 7oreign urrency !eposit 6ystem. (@) As a general rule, within what period must a taxpayer elevate to the ourt of ax Appeals a denial of his application for refund of income tax overpayment (A)
(!) he 100,000.00 portion of the donation is exempt under the rate schedule for donor:s tax. (3&) #evox orporation wanted to donate 3 million as pri%e money for the world professional billiard championship to be held in the hilippines. 6ince the Billiard 6ports onfederation of the hilippines does not recogni%e the event, it was held under the auspices of the "nternational rofessional Billiards Association, "nc. "s #evox sub2ect to the donor:s tax on its donation (A) 9o, so long as the donated money goes directly to the winners and not through the association. (B) 8es, since the national sports association for billiards does not sanction the event. () 9o, because it is donated as pri%e for an international competition under the billiards association. (!) 8es, but only that part that exceeds the first 100,000.00 of total #evox donations for the calendar year. (3*) A violation of the tariff and customs laws is the failure to (A) pay the customs duties and taxes and to comply with the rules on customs procedures. (B) pay the customs duties and taxes or to comply with the rules on customs procedures. () pay the customs duties and taxes. (!) comply with the rules on customs procedures. (3) 0 days from the expiration of the period to protest. (33) A non5stoc/, non5profit school always had cash flow problems, resulting in failure to recruit well5trained administrative personnel to effectively manage the school. " n &010, !on #eon donated 100 million pesos to the school, provided the money shall be used solely for paying the salaries, wages, and benefits of administrative personnel. he donation represents less than 104 of !on #eon:s taxable income for the year. "s he sub2ect to donor:s taxes (A) 9o, since the donat ion is actually, directly, and exclusively used for educational purposes. (B) 8es, because the donation is to be wholly used f or administration purposes. () 8es, since he did not obtain the re+uisite 9$? certif ication before he made the donation. (!) 9o, because the donation does not exceed 104 of his taxable income for &010.
(3;) ) he proceeds received under a life insurance endowment contract is 9? considered part of gross income (A) if it is so stated in the life insurance endowment policy. (B) if the price for the endowment policy was not fully paid. () where payment is made as a result of the death of the insured. (!) where the beneficiary was not the one who too/ out the endowment contract. (3@) he excess of allowable deductions over gross income of the business in a taxable year is /nown as (A) net operating loss. (B) ordinary loss. () net deductible loss. (!) 9?#?. (;0) 9o action shall be ta/en by the B" on the taxpayer's disputed issues until the taxpayer has paid the deficiency taxes (A) when the assessment was issued against a false and fraudulent return. (B) if there was a failure to pay the deficiency tax within ;0 days from B" demand. () if the egional rial ourt issues a writ of preliminary in2unction to en2oin the B". (!) attributable to the undisputed issues in the assessment notice. (;1) "s an article previously exported from the hilippines sub2ect to the payment of customs duties
(A) 8es, because all articles that are imported from any foreign country are sub2ect to duty. (B) 9o, because there is no basis for imposing duties on articles previously exported from the hilippines. () 8es, because exemptions are strictly construed against the importer who is the taxpayer. (!) 9o, if it is covered by a certificate of identification and has not been improved in value. (;&) rior to the enactment of the #ocal $overnment ode, consumer:s cooperatives registered under the ooperative !evelopment Act en2oyed exemption from all taxes imposed by a local government. < ith the #ocal $overnment ode's withdrawal of exemptions, could these cooperatives continue to en2oy such exemption (A) 8es, because the #ocal $overnment ode, a general law, could not amend a special law such as the ooperative !evelopment Act. (B) 9o, ongress has not by the ma2ority vote of all its members granted exemption to consumers: cooperatives. () 9o, the exemption has been withdrawn to level the playing field for all taxpayers and preserve the #$Cs: financial position. (!) 8es, their exemption is s pecifically mentioned among those not withdrawn by the #ocal $overnment ode. (;*) Cnder the ariff and ustoms ode, abandoned imported ar ticles becomes the property of the (A) government whatever be the circumstances. (B) insurance company that covered the shipment. () shipping company in case the freight was not paid. (!) ban/ if the shipment is covered by a letter of credit. (;) -a ato owns a parcel of land in 6an ose, Batangas declared for real property taxation, as agricultural. "n 1@@0, he used the land for a poultry feed processing plant but continued to declare the property as agricultural. "n March &011, the local tax assessor discovered -a ato's change of use of his land and informed the local treasurer who demanded payment of def iciency real property taxes from 1@@0 to &011. as the action prescribed (A) 9o, the deficiency taxes may be collected within five years from when they fell due. (B) 9o. he deficiency taxes f or the period 1@@0 up t o &011 may still be collected within 10 years from March &011. () 8es. More than 10 years had lapsed for the period 1@@0 up to &000, hence the right to collect the deficiency taxes has prescribed. (!) 8es. More than 3 years had lapsed for the collection of the def iciency taxes for the period 1@@0 up to &003.
(;3) ierre de 6avigny, a 7renchman, arrived in the hilippines on anuary 1, &010 and continued to live and engage in business in the hilippines. e went on a tour of 6outheast Asia from August 1 to 9ovember 3, &010. e returned to the hilippines on 9ovember ;, &010 and sta yed until April 13, &011 when he returned to 7rance. e earned during his stay in the hilippines a gross income of * million from his investments in the country. 7or the year &010, ierre's taxable status is that of (A) a non5resident alien not engaged in trade or business in the hilippines. (B) a non5resident alien engaged in trade or business in the hilippines. () a resident alien not engaged in trade or business in the hilippines. (!) a resident alien engaged in trade or business in the hilippines. (;;) #ualhati Dducational 7oundation, "nc., a stoc/ educational institution organi%ed for profit, decided to lease for commercial use a 1,300 s+. m. portion of its school. he school actually, directly, and exclusively used the rents for the maintenance of its school buildings, including payment of 2anitorial services. "s the leased portion sub2ect to real property tax (A) 8es, since #ualhati is a stoc/ and for pr ofit educational institution. (B) 9o, since the s chool actually, directly, and exclusively used the rents for educational purposes. () 9o, but it may be sub2ect to income taxation on the rents it receives. (!) 8es, since the leased portion is not actually, directly, and exclusively used for educational purposes. (;=) Apparently the law does not provide for the refund of real property taxes that have been collected as a result of an erroneous or illegal assessment by the provincial or city assessor. )
(;@) Money collected from taxation s hall not be paid to any religious dignitary DID when (A) the religious dignitary is assigned to the hilippine Army. (B) it is paid by a local government unit. () the payment is passed in audit by the ?A. (!) it is part of a lawma/er's por/ barrel. (=0) !iscriminatory duties may 9? be imposed upon articles (A) wholly manufactured in the discriminating country but carried by vessels of another country. (B) not manufactured in the discriminating country but carried by vessels of such country. () partly manufactured in the discriminating country but carried by vessels of another country. (!) not manufactured in the discriminating country and carried by vessels of another country. (=1) he taxpayer seasonably filed his protest together with all the supporting documents. "t is already uly *1, &011, or 1>0 days from submission of the protest but the B" ommissioner has not yet decided his protest. !esirous of an early resolution of his protested assessment, the taxpayer should file his appeal to the ourt of ax Appeals not later than (A) August *1, &011. (B) August *0, &011. () August 13, &011. (!) August 1, &011. (=&)
(=) "n G?peration -andado,G the B" temporarily closed business establishments, including 9ew !ynasty orporation that failed to comply with FA regulations. 9ew !ynasty contends that it should not be temporarily closed since it has a valid and existing FA registration, it f aithfully issued FA receipts, and filed the proper FA returns. he contention may be re2ected if the B" investigation reveals that (A) the taxpayer has not been regularly filing its income tax returns for the past years. (B) the taxpayer deliberately filed a false and fraudulent return with deliberate intention to evade taxes. () the taxpayer used falsified documents to support its application for refund of taxes. (!) there was an understatement of taxable sales or receipts by *04 or more for the taxable +uarter. (=3) he head priest of t he religious sect res ersonas 6olo !ios, as the corporation sole, rented out a 3,000 s+. m. lot registered in its name for use as school site of a school organi%ed for profit. he sect used the rentals for the support and up/eep of its priests. he rented lot is (A) not exempt from real property taxes because the user is organi%ed for profit. (B) exempt from real propert y taxes since it is actually, directly, and exclusively used for religious purposes. () not exempt from real property taxes since it is the rents, not the land, that is used for religious purposes. (!) exempt from real proper ty taxes since it is actually, directly, and exclusively used for educational purposes.
