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TIPS FROM DIMAAMPAO:

Comm: FRIA
TAX- tax remedies (bersamin is an expert)
Percentage taxes sec 116-128
Excise tax (sec129-172)
DST (173-201)

Favorite:
o Sec 127(a) gross selling price 1/2 of 1%
o Sec 129 excise tax nature and concept
Case of chevron phils vs cir
o DST: jarca investment vs cir- "dst is an excise tax imposed on the privilege to create,
revised, terminate, legal relations through execution of those documents subject to dst"
Refund in relation to dst --- date of IMPRINTING OF DS ON TAXABLE
DOCUMENT. (Pnb vs cir? #14 tax loanzon cases)
sec 199-201(3) not subj to dst and effect of failure to stamp on doc
1. Exc if received by NRC
2. Exempt if depositor is NRC and subj to 7.5% if RC
3. Gains from sale of real property. (Gains, sale, barter or exchange) property
is synonymous with asset.
o Capital assets v. Ordinary assets.
Ordinary assets (exclusion rule)
SMI v. CIR 739 SCRA 619
keyword: PARIS
Ord. Assets:
1. Property primarily held in the ord course of TB
2. Allowance for depreciation used in TB
3. Real property used in TB.
4. Inventoriable assets held in connection with TB
5. Stock in trade
Capital assets held by taxpayer whether or not for his business but does not
include PARIS
Capital transactions involving capital assets are governed by special rules of
NIRC sec 39B, C, D
39B - holding period ( only to indv taxpayers)
39C- capital loss limitations ( both indv and corporate)
39D- net capital loss carry over. (Indv only)
Holding period - 12 month period. - capital asset sold outside 12 months after
purchase then the capital gain is only 50% and 100% if within 12 months.
Capital loss limitations - capital loss is deductible only from CG. You cannot
deduct capital loss from ordinary gain. (Applies to indv and croprate EXC banks)
*** the rationale is: bec capital loss is a non business loss or expenses.
To allow such deduction would be to violate such rule that only
business expenses are deductible.
Net capital loss carry over - an EXC to the rule.
**tax avoidance- legally permissible means to deduct tax liability
Sec 24D and sec 27D.5 - capital gains-
the sale must be a capital assets of real property not used in TB
24D applies to indv seller
27D.5 applies to domestic corp.
tax rate 6% final tax
tax base is selling price/ FMV/zonal value whichever is higher.
Bar Question: it is imposed on the presumed gain. (Sec 24D and sec
27D.5) and no deductions allowed
o Cross ref. Sec 40 is not observe here bec the tax base is
provided for by law
o the law presumed that the seller gained profits in every sale
transaction. Jurisprudence teaches us that these are presumed
gain by legal fiction Even if the seller incurred losses and he
shall be liable to pay capital gains tax. The tax code provides
that the 6% shall be imposed as a final tax.
Taxpayer or seller applies only to indv and domestic corp.
In addition= escrow account and 6% CGT shall be deposited to the
said account
Supreme line v, bpi 644 scra 59- EJFREM if the mortgagor exercised
the right of redemption, not subject to capital gains since no sale to
speak of. It only applies if mortgagor failed to exercise the right of
redemption within the period. - tax base is the amount offered by the
highest bidder within 30 days before the lapse of one year period.
HMI v. CIR - gains derived from sale of machineries and equipment is subject to
regular rate of 30% as corporate tax. Since sales of capital gains only cover lands
or buildings and not machineries and equipments.
o Dividend
Keyword: When is it subj to final tax, when exempt?
dividend income is subj to final tax under two situations:
A. Recipient is indv taxpayer
B. Recipient in NRF, Otherwise, exempt.
In sec 27D.4 - shall not be subject to tax.
28 (7.D) - recipient RFC
sec 73B - stock dividend
Bar: are stock dividends taxable?
Ans: stock dividends are not taxable bec they just represent transfer of
surplus account to the capital account with no realized gain and
without flow of wealth.
Case: it may resort in taxable gain if there is change in SH interest in net assets or
equity- other than..
o See pagcor v. CiR 744 scra 712 emphasis
pagcor is still exempt from its income derived from gaming operation. What has
been withdrawn and now taxable is its income from other related services.
What comprise gaming operation? PD 1689
Keyword: CM
1. Casino
2. Mobile
Other services
A. Accredited operation by private persons
B.
C. Showmart demo units
o St. Lukes v. CIR 682 scra 66 (possible question) cross ref, sec 30E NIRC
Requisites to be exempt:
Keyword: NOON
1. Non stock
2. Organized exclusively for charitable purposes
3. Operated exclusively for charitable purposes
4. No part of its net income shall inure to the benefit of any member
organizer or any specific_____
Favorite bar questions.
1. Religious organizations - exempt from corp. Tax (subj to conditions sec
30E)
2. Educational which may either be:
A. Non stock non profit - exempt (constitution) art. IV sec 14
constitution (see lasalle v. CIR)
B. Government educational institution -exempt (sec 30i)
3. Charitable institution
o Lung center v. Roces 433 scra 119
o Exempt provided: Actually, Directly, Exclusively used for
religious, educational or charitable purposes.
o *** actually or exclusively used (apc v. Napocor 577 scra 418
o Actually - truly in fact
o Directly - not by secondary means without anything intervening
o Exclusively - in a manner to exclude without admission