Taxation Law 2006

8/16/2015 BarQuestions2006

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BAREXAMINATION2006TAXATIONLAW

10September2006 2P.M.5P.M.INSTRUCTIONS

This questionnaire consists of fourteen (14) numbers contained in eight (8) pages. Read each question verycarefully.Answer legibly,clearly,andconcisely. Start each number on a separate page an answer to a subquestionunder thesamenumbermaybewrittencontinuouslyon thesamepageand immediatelysucceedingpages until completed. Do not repeat the question. Amere "Yes" or "No" answer without any correspondingdiscussionwillnotbegivenanycredit.

HANDINYOURNOTEBOOKWITHTHISQUESTIONNAIRE

GOODLUCK!!!

SignedANGELINAS.GUTIERREZChairperson

20006BarExaminationCommittee

PLEASECHECKTHENUMBEROFPAGESINTHISSETWARNING:NOTFORSALEORUNAUTHORIZEDUSE

TAXATIONLAW

I

1. Enumeratethe3stagesoraspectsoftaxation.Explaineach.5%

2. Distinguish"directtaxes"from"Indirecttaxes".Giveexamples.5%

II

Whatistaxpyramiding?Whatisitsbasisinlaw?5%

III

Whatpropertiesareexemptfromtherealpropertytax?5%

IV

RoyalMiningisaVATregistereddomesticminingentity.OneofitsproductsissilverbeingsoldtotheBangkoSentralngPilipinas.ItfiledaclaimwiththeBIRfortaxrefundonthegroundthatunderSection106oftheTaxCode,salesofpreciousmetalstotheBangkoSentralareconsideredexportsalessubjecttozeroratedVAT.

IsRoyalMining'sclaimmeritorious?Explain.5%

V

Vanishingdeductionisavailedofbytaxpayersto:

a. correcthisaccountingrecordstoreflecttheactualdeductionsmad

b. reducehisgrossincome

c. reducehisoutputvalueaddedtaxliability



d. reducehisgrossestate

Choosethecorrectanswer.Explain.5%

1. TheConstitutionprovides"charitableinstitutions,churches,parsonagesorconventsappurtenantthereto,mosques, and non profit cemeteries and all lands, buildings, and improvements actually, directly andexclusively used for religious, charitable or educational purposes shall be exempt from taxation." Thisprovision exempts charitable institutions and religious institutions fromwhat kind of taxes? Choose thebestanswer.Explain.5%

a. fromallkindsoftaxes,i.e.,income,VAT,customsduties,localtaxesandrealpropertytax

b. fromincometaxonly

c. fromvalueaddedtaxonly

d. fromrealpropertytaxonly

e. fromcapitalgainstaxonly

VI

Congressenactsalawgrantinggradeschoolandhighschoolstudentsa10%discountonallschoolprescribedtextbookspurchasedfromanybookstore.Thelawallowsbookstorestoclaiminfullthediscountasataxcredit.

1. Ifinataxableyearabookstorehasnotaxdueonwhichtoapplythetaxcredits,canthebookstoreclaimfromtheBIRataxrefundinlieuoftaxcredit?Explain.2.5%

2. Can the BIR require the bookstores to deduct the amount of the discount from their gross income?Explain.2.5%

3. If a bookstore closes its business due to losseswithout being able to recoup the discount, can it claimreimbursementofthediscountfromthegovernmentonthegroundthatwithoutsuchreimbursement,thelawconstitutestakingofprivatepropertyforpublicusewithoutjustcompensation?Explain.5%

VII

Congressenactsalawimposinga5%taxonthegrossreceiptsofcommoncarriers.Thelawdoesnotdefinetheterm"grossreceipts".ExpressTransport,Inc.,abuscompanyplyingtheManilaBaguioroute,hastimedepositswithABCBank.In2005,ExpressTransportearnedP1Millioninterest,afterdeductingthe20%finalwithholdingtaxfromitstimedepositswiththebank.TheBIRwantstocollecta5%grossreceiptstaxontheinterestincomeofExpressTransportwithoutdeductingthe20%finalwithholdingtax.IstheBIRcorrect?Explain.5%

VIII

OnJune1,2003,GlobalBank receiveda finalnoticeofassessment from theBIR fordeficiencydocumentarystamptaxintheamountofP5Million.OnJune30,2003,GlobalBankfiledarequestforreconsiderationwiththeCommissionerofInternalRevenue.TheCommissionerdeniedtherequestforreconsiderationonlyonMay30,2006,atthesametimeservingonGlobalBankawarrantofdistrainttocollectthedeficiencytax.Ifyouwereitscounsel,whatwillbeyouradvicetothebank?Explain.5%

IX

TheCommissionerof InternalRevenue issuedanassessment fordeficiency incometax for taxableyear2000lastJuly31,2006intheamountofP10Millioninclusiveofsurchargeandinterests.Ifthedelinquenttaxpayerisyourclient,whatstepswillyoutake?Whatisyourdefense?10%

X

TheCollectorofCustomsissuedanassessmentforunpaidcustomsdutiesandtaxesontheimportationofyourclient in the amount of P980,000.00.Where will you file your case to protect your client's right? Choose thecorrectcourts/agencies,observingtheirproperhierarchy.5%

1. CourtofTaxAppeals

2. CollectorofCustoms

3. CommissionerofCustoms



4. RegionalTrialCourt

5. MetropolitanTrialCourt

6. CourtofAppeals

7. SupremeCourt

XI

Charlie, a widower, has two sons by his previousmarriage. Charlie lives with Janewho is legallymarried toMario.TheyhaveachildnamedJill.Thechildrenareallminorsandnotgainfullyemployed.

1. HowmuchpersonalexemptioncanCharlieclaim?Explain.2.5%

2. HowmuchadditionalexemptioncanCharlieclaim?Explain.2.5%

XII

Mr.AbrahamEugenio,apawnshopoperator,afterhavingbeenrequiredbytheRevenueDistrictOfficertopayvalueaddedtaxpursuanttoaRevenueMemorandumOrder(RMO)oftheCommission.erofInternalRevenue,filedwiththeRegionalTrialCourtanactionquestioningthevalidityoftheRMO.

Ifyouwerethejudge,willyoudismissthecase?5%

XIII

GerrywasbeingprosecutedbytheBIRforfailuretopayhisincometaxliabilityforCalendarYear1999despiteseveraldemandsbytheBIRin2002.TheInformationwasfiledwiththeRTConlylastJune2006.GerryfiledamotiontoquashtheInformationonthegroundofprescription,theInformationhavingbeer.filedbeyondthe5yearreglementaryperiod.

Ifyouwerethejudge,willyoudismisstheInformation?Why?5%

XIV

GoldandSilverCorporationgaveextra14thmonthbonustoallitsofficialsandemployeesinthetotalamountofP75 Million. When it filed its corporate income tax return the following year, the corporation declared a netoperating loss.When the income tax return of the corporationwas reviewed by theBIR the following year, itdisallowedas itemofdeduction theP75Millionbonus thecorporationgave itsofficialsandemployeeson thegroundofunreasonableness.Thecorporationclaimedthatthebonusisanordinaryandnecessaryexpensethatshouldbeallowed.

IfyouweretheBIRCommissioner,howwillyouresolvetheissue?5%

XV

Lily'sFashion,Inc.isagarmentmanufacturerlocatedandregisteredasaSubicBayFreeportEnterpriseunderRepublicActNo. 7227andanonVAT taxpayer.As such, it is exempt frompayment of all local andnationalinternal revenue taxes. During its operations, it purchased various supplies and materials necessary in theconductofitsmanufacturingbusiness.ThesuppliersofthesegoodsshiftedtoLily'sFashion,Inc.the10%VATonthepurchaseditemsamountingtoPS00,000.00.Lily'sFashion,Inc. filedwiththeBIRaclaimforrefundfor'theinputtaxshiftedtoitbythesuppliers.

IfyouweretheCommissionerofInternalRevenue,willyouallowtherefund?5%

XVI

Quezon City published on January 30, 2006 a list of delinquent real property taxpayers in 2 newspapers ofgeneral circulation and posted this in themain lobby of the City Hall. The notice requires all owners of realproperties inthelist topaytherealpropertytaxduewithin30daysfromthedateofpublication,otherwisethepropertieslistedshallbesoldatpublicauction.

Joachin is one of those named in the list. He purchased a real property in 1996 but failed to register thedocumentof salewith theRegisterofDeedsandsecureanew realproperty taxdeclaration inhisname.HeallegedthattheauctionsaleofhispropertyisvoidforlackofdueprocessconsideringthattheCityTreasurerdidnotsendhimpersonalnotice.Forhispart,theCityTreasurermaintainsthatthepublicationandpostingofnoticearesufficientcompliancewiththerequirementsofthelaw.



1. Ifyouwerethejudge,howwillyouresolvethisissue?2.5%

2. AssumingJoachinisaregisteredowner,willyouranswerbethesame?2.5%

NOTHINGFOLLOWS.TheLawphilProjectArellanoLawFoundation

Taxation Law 2006

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