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Philippines. Is it valid?
A: No, such regulation is contrary to law in particular the NIRC. In
order for a regulation to be valid such must be in harmony with law.
Q: Assuming the BIR changed the tax base of a RC from
taxable income to gross income, is that valid?
A: No, the BIR cannot go beyond the sources of the law.
Q: Is the income of an overseas worker derived abroad
taxable?
A: No, it is no longer taxable applying the rule that in case of NRC,
only income derived from sources within the Philippines is taxable.
Q: Pascual and Dragon bought 2 parcels of land from
Q: Brothers A, B and C borrowed a sum of money from their
1957)
A: No, the children are co-owners since they did not form a
confirm the dictum that the power to tax involves the power to
will not affect his obligation to make restitution. Payment of the tax
is a civil obligation imposed by law while restitution is a civil
liability arising from a crime. (1995 Bar Question)
the tax base which is P10million and the income tax rate is 6%.
(Sec. 24 [D], NIRC)
2. Yes, the gain from the exchange constitutes an item of gross
income, and being a business income, it must be reported in the
annual ITR of Alpha Corporation. From the pertinent items of gross
income, deductions allowed by law from gross income can be
claimed to arrive at the net income which is the tax base for the
corporate income tax rate of 35%. (Sec. 27 [A] and Sec 31, NIRC)
(2008 Bar Question)
Note: The applicable tax rate to the case at bar is still 35% since it
was taxed on 2007. Effective Januray 1, 2009, the corporate income
tax rate is 30%.
Q: A corporation, engaged in real estate development,
executed deeds of sale on various subdivided lots. One
buyer, after going around the subdivision, bought a corner
lot with a good view of the surrounding terrain. He paid
P1.2 million, and the title to the property was issued.
A year later, the value of the lot appreciated to a market
value of P1.6 million, and the buyer decided to build his
house thereon. Upon inspection, however, he discovered that
a huge tower antenna had been erected on the lot frontage
totally blocking his view. When he complained, the realty
company exchanged his lot with another corner lot with an
equal area but affording a better view. Is the buyer liable for
capital gains tax on the exchange of the lots?
A: Yes, the buyer is subject to capital gains tax on the exchange of
lots on the basis of prevailing fair market value of the property
transferred at the time of the exchange or the fair market value of
the property received, whichever is higher (Sec. 21 [e], NIRC). Real
property transactions subject to capital gains tax are not limited to
sales but also exchanges of property unless exempted by a specific
provision of law. (1997 Bar Question)
A: Both items are excluded from the income tax return: (i) Interest
income from any currency bank deposit is considered passive
income from sources within the Philippines and subject to final tax.
Since it is subject to final tax it is not included in the annual ITR.
(Sec. 24 B [1], NIRC) (ii) Same as No. (i) (2005 Bar Question)
beneficiaries upon the death of the insured are not included as part
of the gross income of the recipient. There is no income realized
because nothing flows to Noels parents other than a mere return of
capital, the capital being the life of the insured. (2007 Bar
Question)
Q: Suppose Al obtained an endowment policy valued at P1
million. He paid premiums amounting to P800,000. Upon
maturity, he received P1 million, what amount is taxable?
A: The amount of P200,000 is taxable. The difference between the
value of the insurance and the actual premiums paid forms part of
Als gross income.
same?
A: No, according to RA 8291 (The GSIS Act of 1997) all benefits he
received are tax exempt, including retirement gratuity.
Q: Mario worked his way through college. After working for
more than 2 years in X Corporation, Mario decided to retire
and avail of the benefits under the very reasonable
retirement plan maintained by his employer. On his
retirement, he received P400,000 as retirement benefit. Is
Marios P400,000 retirement benefit subject to income tax?
A: Marios 400,000 retirement benefit is subject to income tax. To be
exempt, the retirement pay must have been extended to an
employee who is at least 10 years with the employer. The amount
cannot be considered as separation pay that would have exempted
benefits from income tax since it was Mario who had decided to
retire instead of being required to do so.
Q: Bernardo, a retired employee of the SC filed a request
with the SC for the refund of the amount of P59,502 which
were deducted from his terminal leave pay as withholding
tax. The Court said that the terminal leave pay of Bernardo,
which he received by virtue of his compulsory retirement,
can never be considered as part of his salary subject to
income tax. Hence, Bernardos request was granted. Is
terminal leave pay subject to income tax?
A: No, since terminal leave pay is applied for by an officer or
employee who has already severed his connection with his employer
and who is no longer working, it necessarily follows that the
terminal leave pay or its cash equivalent is no longer compensation
for services rendered. Therefore, it cannot be received by the said
employee as salary. It is one of those excluded from gross income
and is therefore not subject to tax. (Re: Request of Atty.
Bernardo Zialcita, AM 90-6-015-SC, Oct. 18, 1990)
Q: On Dec. 06, 2001, LVN Corp. donated a piece of vacant lot
situated in Mandaluyong City to an accredited and duly
registered non-stock, non-profit educational institution to
be used by the latter in building a sports complex for
students. May the donor claim in full as deduction from its
gross income for the taxable year 2001 the amount of the
donated lot equivalent to its fair market value/zonal value at
the time of the donation?
A: No, donations and/or contributions made to qualified donee
institutions consisting of property other than money shall be based
on the acquisition cost of the property. The donor is not entitled to
claim as full deduction the fair market value/zonal value of the lot
donated. (Sec. 34 [H], NIRC) (2002 Bar Question)
she
received
Fellowship
Award
from
the
construction
and
other
allied
activities.
they
formed
the
Vegetable
Oil
Investment
2)
that
declares
dividends
to
its
stockholders
3)
4)
civic
spirited
citizens
solely
for
charitable
purposes.
A:
1.
2.
3.
4.
1.
2.
1.
A:
2.
from his retail business. How much is his taxable income for
follows:
Gross Income (P25,000 x 12) P300,000
Less: Basic Personal exemptions (50,000)
Additional Exemption (25K x 4) (100,000)
Premium payment on health and/or Hospitalization insurance
-----------Net Compensation Income 150,000
Add: Net business income 150,000
Taxable income subject to graduated rates P300,000
heart attack and died. At the time of his death he left the
following properties:
a.
b.
c.
d.
f.
g.
h.
Agrarian
Reform
Law
all
who
was
gainfully
A:
1.
his
Ortiz, his widow asked you how she will consider the 100
somebody
2.
as
1.
earned
the
have
2.
contemplation
of death
for
purposes of
tax was due. CTA ordered that the estate should pay the
that
September 1, 2003 X died and his wife and son went to the
creditors
1.
or
condoned
through
deduction from the gross estate are existing claims against the
estate. An indebtedness that has been condoned is in legal effect no
indebtedness at all. If there is no more indebtedness by reason of
the condonation, there is no more claim against the estate which
may be allowed as a deduction. (Dizon, et. al v. CA, G.R. No.
140944, Apr. 30, 2008)
2.
the
proceeding
for
the
probate
of
Jose
Q:
reduced
A: No. The claims against the estate which the law allows as
2.
were
A:
1.
claims
2.
the
legal basis?
A:
1.
2.
Explain.
2.
3.
4.
What would be his gain on the sale of the lot for P20 Million?
Explain.
A:
1. The value of the gifts for purposes of computing the gift tax shall
be P7.5million in 1994 and P7.5million in 1995. In valuing a real
property for gift tax purposes the property should be appraised at
the higher of two values as of the time of donation which are (a) the
fair market value as determined by the Commissioner (which is the
zonal value fixed pursuant to
Section 16(e) of the Tax Code), or (b) the fair market value as shown
in the schedule of values fixed by the Provincial and City Assessors.
The fact that the property is worth P20 million as of the time of
donation is immaterial unless it can be shown that this value is one
10%
VAT
on
the purchased
Pursuant
to
the
privatization
program
of
the
Q:
SEAGATE
is
resident
foreign
corporation
duly
Fashion, Inc.
Q:
items
with
Revenue
District
Office
in
Cebu.
The
R.A.
8424
(NIRC
of
1997)
took
effect,
2.
Services
rendered
Company,
by
contractor
Jake's
to
the
Construction
World
Health
Manila.
3.
4.
5.
2.
3.
4.
5.