TAXATION Flashcards
(50 cards)
Double taxation generally means taxing the same subject twice during the same taxing period. In this sense, double taxation:
Violates the rights to equal protection
The taxpayer seasonably filed his protest together with all the supporting documents. It is already July 31, 2023, or 180 days from submission of the protest but the BIR Commissioner has not yet decided his protest. Hopeful of an early resolution of his protested assessment, the taxpayer should file his appeal to the Court of Tax Appeals not later than:
August 30, 2023
Mr. Florence Bitag donates a piece of land to the City of Masbate. The fair market value per BIR of the piece of land is P2,000,000, and its value per Tax Declaration is P1,800,000. How much is the documentary stamp tax, if any?
None, exempt from DST
The decedent is a resident, unmarried head of the family who died on March 1, 2018. He left the following properties, obligations and expenses:
Real and personal properties
P14,000,000
Family home
30,000,000
Ordinary deductions
Unpaid real estate tax
2,000,000
Medical expenses
600,000
The taxable net estate if he dies in 2018 is:
P27,000,000
Solution:
14,000,000 + (30,000,000/2) - 2,000,000 = 27,000,000
Aragorn, Inc. had the following items of income and expenses:
Gross Receipts
P500,000
Cost of services, salary of personnel directly engaged in business
250,000
Dividends received
25,000
The dividends were received from a domestic corporation. The general and administrative expenses include the cost of utilized facilities and supplies of P25,000 and P15,000, respectively. What amount should be reported as gross income for minimum corporate income tax purposes?
P210,000
Solution:
(500,000 - 250,000) - (25,000 + 15,000) = 210,000
Which of the following benefits an employee receives should be included in the employee’s 13th-month pay and other benefits, and which, therefore, may be subject to the regular income tax in the ITR?
(1)
Use of employer’s car for business meetings
(2)
Laundry allowance of ₱3,600 per year
(3)
Payment of tuition fee of eldest child of a rank-and-file employee
(4)
Housing provided to a rank-and-file employee
(3) and (4)
How many years should a taxpayer retain and preserve Books of Accounts and other accounting records?
Ten (10) years from the deadline for filing a return
The widow of your best friend has just been paid P1,000.000 on account of the life insurance policy of the deceased husband. She asks you whether she should declare the amount for income or estate tax purposes.
1st advice: The life insurance proceeds paid to the beneficiary upon the insured’s death are exempt from income tax and need not be declared for income tax purposes.
2nd advice: The proceeds of life insurance would have to be declared for estate tax purposes if the designation of the beneficiary was irrevocable. Otherwise, it need not be declared
1st advice correct, 2nd advice incorrect
Casablanca Corporation issued shares 1,000,000 P10-par value shares to various shareholders for a total consideration of P12,000,000. One of the shareholders is Japeth, who subscribed for 120,000 shares. Japeth sold the shares for P140,000. Compute the documentary stamp tax on the issue of stocks.
P100,000
Solution:
(1,000,000 x 10 x 2/200)
Shares of stock held as investment listed and but not sold through the local stock exchange shall be subject to:
Capital gains tax of 15% on capital gain.
Cocoon Realty Inc. bought a parcel of land in 2019 for P7 million as part of its inventory of real properties. In 2020, it sold the land for P12 million, which was its zonal valuation. In the same year, it incurred a loss of P6 million for selling another parcel of land in its inventory. These were the only transactions it had in its real estate business. Which of the following is the applicable tax treatment?
Cocoon Inc. could deduct its P6 million loss from its P5 million gain.
Kyzer Inc., a Philippine corporation, sold 10,000 PLDT shares it bought two (2) years ago through the local stock exchange for P2 million and realized a net gain of P200,000.00. How will it pay tax on the transaction?
It shall pay a tax of 0.6% of 1% of the 2 million gross sales
A resident decedent left the following properties:
Real properties - P10,000,000
Personal properties excluding bank deposit - P15,000,000
Bank deposit (P1,000,000 was withdrawn from the account after the decedent died) - P3,000,000
The final withholding tax on the amount withdrawn was:
60,000
As of April 1, 2023, a public-school TEACHER (SG14) receives a monthly salary of P26,494.00 with mandatory annual deductions of P34,185.00 consisting of GSIS, Philhealth, and PAG-IBIG contributions. How much is the net taxable income?
P 283,743
Solution:
(24,494*12) - 34,185
Mr. Mark Tang is a partner of Tang Dayag Caiga Company, a business partnership. He owns 25% interest. The gross sales of Tang Dayag Caiga Company amounted to P10,000,000.00 for the taxable year 2018. The recorded cost of sales and operating expenses of the partnership were P2,750,000.00 and P1,500,000.00, respectively. It had also incurred an interest expense of P200,000 in connection with asset acquisition and interest income from bank deposits amounting to P100,000. How much is the income tax liability of the partnership?
P1,674,900
Mr. Camilo Cruz asks you to file a tentative income tax return on his behalf because he is going abroad. However, Mr. Cruz’s stay outside the Philippines is indefinite. Until when can Mr. Cruz make the necessary amendments to finalize his income tax return?
Before Mr. Cruz receives a Letter of Authority from the BIR and/or before the lapse of three (3) years
Which of the following is an example of a local tax?
Property tax
Which of the following are exempted from donor’s taxation?
Gifts made for the use of the barangay
When a BIR decision affirming an assessment is appealed to the Court of Tax Appeals (CTA), the BIR’s power to garnish the taxpayer’s bank deposits is:
not suspended since the continued existence of government depends on tax revenues
Mr. Andes asks for your professional expertise on whether the following items of income need to be reported in his Income Tax Return:
i.
Passive income
ii.
Fringe benefits received
iii.
Capital gains from the sale of real property and shares of stock
iv.
Exempt or exclusion from gross income (e.g., Proceeds of life insurance)
None of the above must be supplemented in the income tax return (ITR)
Passive income includes income derived from an activity in which the earner has no substantial participation. This type of income is:
Usually subject to a final tax
Bing donated P500,000.00 to her boyfriend Dom, who was getting married. Bing also gave a Rolex watch as a gift worth P 300,000 during the current calendar year 2024. What is the donor’s tax implication on Bing’s donation?
Bing shall pay 6% donor’s tax on the P550,000 net gifts
A certain taxpayer had the following tax assessment, which he could not settle due to financial incapacity:
Tax due P400,000
Surcharge 100,000
Interest 120,000
Total 620,000
What is the minimum compromise offer and the proper approving body?
P 40,000; Regional Evaluation Board
On February 2023, Damboo Corporation had the following sales (some inclusive of VAT) during the month:
Sale to private entities (VAT inclusive) P224,000
Sale to export-oriented enterprise 100,000
Sale of exempt goods 100,000
The following input taxes were passed on by its VAT suppliers during the month:
Input tax on taxable goods 5,000
Input tax on zero-rated sales 3,000
Input tax on the sale of exempt goods 2,000
Input tax on depreciable capital goods 20,000
How much is the VAT payable for the month?
4,000 input VAT credit
