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VI. Prior to the VAT law, sales of cars were subject to a sales tax but the tax applied
only to the original or the rst sale! the second and subse"uent sales were not subject to tax. #eltoid $otors, Inc. %#eltoid& hit on the idea of setting up a wholly'owned subsidiary, subsidiary, (onmad $otors, Inc. %(onmad&, and of selling its assembled cars to (onmad at a low price so it would pay a lower tax on the rst sale. (onmad would then sell the cars to the public at a higher price without paying any sales tax on this subse"uent sale. )haracteri*e the arrangement. %+& A. The plan is a legitimate exercise of tax planning and merely ta-es adantage of a loophole in the law. /. The plan is legal because the goernment collects taxes anyway. 4 The p&an is improper7 the vei& o) %orporate 8%tion %an 5e pier%ed so that the se%ond sa&e wi&& 5e %onsidered the ta*a5&e sa&e goernment must respect respect (onmad0s separate juridical juridical personality personality and D The goernment #eltoid0s taxable sale to it. $9::3$T3D -N$W3;< .42Koppe& Phi&ippines In% v Yat%o6 00 Phi& =>?
VII. Taxpayer Taxpayer Andy receied receied on 1anuary 1anuary 2, 34+4 a preliminary preliminary assessment assessment notice %PA5& %PA5&
from the /I6, stating that he had fteen %+7& days from its receipt to comment or to le a protest. 8ight %9& days later %or on 1anuary++, 34+4&, before he could comment or le a protest, Andy receied receied the nal assessment notice %:A5&. #ecide on the alidity of the :A5. %+& .-2 The F-N is inva&id7 -nd# was not given the %han%e to respond to the P-N6 in vio&ation o) his due pro%ess rights %/& The :A5 is inalid for being premature. :A5 is alid since since it was issued issued before before the right to assess assess prescribed. prescribed. %)& The :A5 :A5 is alid. There There is no no legal re"uirement re"uirement that the :A5 :A5 should await await the %#& The :A5 protest to the PA5 because protest to the PA5 is not mandatory. $9::3$T3D -N$W3;< .-2$e%tion //@6 NI;47 ;; No '/">>
The spouses 1un and 8lira 8lira ;andoal purchased purchased a piece of land land for P7,444,444 and included their two %3& minor children as co'purchasers in the #eed of Absolute ;ale. The )ommissioner of Internal 6eenue %)I6& ruled that there was an implied donation and assessed donors0 taxes against the spouses. “Never Letthe The )I60s Odds Keep You %+& From Pursuing You Know InaYour Heart"Lero# LYou ero# Were $at%he& Paige To Do! 6ule on action. %A& TheWhat )I6 is wrong! donation must beMeant express. Page'( Page'( o)
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%/& The )I6 is wrong! nancial capacity is not a re"uirement for a alid sale. %)& The )I6 is correct! the amount inoled is huge and ultimately ends up with
the children. %#& The 4I; is %orre%t7 there was animus donandi sin%e the %hi&dren had no 8nan%ia& %apa%it# to 5e %o"pur%hasers $9::3$T3D -N$W3;< .D2$pouse 3vono v Department o) Finan%e6 et a&6 4T- 3A 4ase No 0(B6 Cune =6 /('/
I<. $r. $ayuga donated his residential house and lot to his son and duly paid the
donor0s tax. In the #eed of #onation, $r. $ayuga expressly resered for himself the usufruct oer the property for as long as he lied. #escribe the donated property from the taxation perspectie. %+& .-2 The propert# wi&& )orm part o) Mr Ma#ugas gross estate when he dies .A2 The property will not fom+ part of $r. $ayuga0s gross estate when he dies because he paid the donor0s tax. .42 The property will form part of $r. $ayuga0s gross estate because he died soon after the donation. %#& The property will not form part of $r. $ayuga0s gross estate because it is no longer his. $9::3$T3D -N$W3;< .-2$e%tion @B.A26 NI;4
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“Never Let The Odds Keep You From Pursuing What You Know In Your Heart"LYou ero#Were $at%he& Meant Paige To Do!
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%3+& In $ay 34+4, $r. and $rs. $elencio Antonio donated a house and lot with a fair mar-et alue of P+4 million to their son, 6oberto, who is to be married during the same year to 1osena Angeles. =hich statement below is I5)>668)T? %A& There are four %& donations made ' two %3& donations are made by $r. $elencio
Antonio to 6oberto and 1osena, and two %3& donations are made by $rs. Antonio! %/& The four %& donations are made by the ;pouses Antonio to members of the family, hence, subject to the graduated donors tax rates %3'+7&! %)& Two %3& donations are made by the spouses to members of the family, while two %3& other donations are made to strangers! %#& Two ./2 donations made 5# the spouses to ;o5erto are entit&ed to dedu%tion )rom the gross gi)t as donation proper nuptias $9::3$T3D -N$W3;< .D2 $e%tion '('6 NI;47 Tang Ho v 4ourt o) -ppea&s
%3& >n 1anuary +4, 34++, $aria 6eyes, single'mother, donated cash in the amount of P74,444.44 to her daughter )ristina, and on #ecember 34, 34++, she donated another P74,444.44 to )ristina. =hich statement is correct? %A& $aria 6eyes is subject to donors tax in 34++ because gross gift is P+44,444.44! .A2 Maria ;e#es is e*empt )rom donorEs ta* in /('' 5e%ause gross gi)t is P'((6(((((7 %)& $aria 6eyes is exempt from donors tax in 34++ only to the extent of P74,444.44! %#& $aria 6eyes is exempt from donors tax in 34++ because the donee is minor. $9::3$T3D -N$W3;< .A2 $e%tion >>.-26 NI;4 %37& 1ose 6amos, single, died of a heart attac- on >ctober +4, 34++. leaing a residential house and lot with a mar-et alue of P+.9 million and cash of P+44,444.44. :uneral expenses paid amounted to P374,444.44.
.-2 His estate wi&& 5e e*empt )rom estate ta* 5e%ause the net estate is ero7 %/& Bis estate will be subject to estate tax because net estate is P+,C74,444.44! %)& Bis estate will be subject to estate tax because net estate is P+,D44,444.44! %#& Bis estate will be subject to estate tax because net estate is P944,444.44. $9::3$T3D -N$W3;< .-2 $e%tion @B , @?6 NI;4 %3C& ;ale of residential house and lot by an oEcial of a domestic corporation to another oEcial in the same corporation for a consideration of P3.7 million in 34++ isF Letfrom The Odds You From What You Know In Your Heart ero#Were $at%he& Meant Paige To Do! %A&“Never 8xempt VATKeep because thePursuing gross sales do not exceed P3.7"LYou million!
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%/& 3*empt )rom G-T 5e%ause the propert# so&d is a %apita& asset6 regard&ess
o) the gross se&&ing pri%e7 %)& 8xempt from VAT because the seller is not a person engaged in real estate business! %#& Taxable at +3 VAT output tax on the gross selling price of P3.7 million. =hich statement aboe is I5)>668)T? $9::3$T3D -N$W3;< .A2 $e%tion '(?6 NI;4
%39& A VAT ' registered contractor performed serices for his customer in 34+4 and billed him P++.3 $illion, bro-en down as followsF P+4 $illion ' cost of serices, plus P+.3 $illion, +3 VAT. >f the contract price of P+4 $illion, only P9 $illion plus VAT thereon was receied from the customer in 34+4, and the balance of P $illion plus VAT was receied by the contractor in 34++. Bow much is the taxable gross receipts of the contractor for 34+4, for VAT purposes? %A& P+4 $illion, the total cost of serices performed in 34+4! %/& P@ Mi&&ion6 the amount re%eived )rom the %ustomer in /('(7 %)& P9 $illion
plus VAT receied from the customer in 34+4! %#& P++.3 $illion, the total cost of serices performed plus +3 VAT. $9::3$T3D -N$W3;< .A2 $e%tion '(@6 NI;4 %3G& $/$ )orporation is the owneroperator of moie houses in )aite. #uring the year 34+4, it receied a total gross receipts of P34 $illion from the operation of moies. It did not register as a VAT person. =hich statement below is correct? .-2 MAM 4orporation is e*empt )rom the '/ G-T6 5ut &ia5&e )or the /(
amusement ta* on admissions under the Lo%a& :overnment 4ode7 .A2 $/$ )orporation is both liable for the +3 VAT and 34 amusement tax on admissions! .42 $/$ )orporation is both exempt from the +3 VAT and 34 amusement tax on admissions! .D2 $/$ )orporation is liable for the +3 VAT, but exempt H from the 34 amusement tax on admissions. $9::3$T3D -N$W3;< .-2 4I; v $M Prime Ho&dings In%6 :; No '@1B(B6 Fe5ruar# /?6 /('(
%2+& nder the VAT system, there is no cascading because the tax itself is not again being taxed. Boweer, in determining the tax base on sale of taxable goods under the VAT systemF %A& The professional tax paid by the “Never Let The Odds Keep YouinFrom Pursuing What You Know In Your Heart"LYou ero#Were $at%he& Meant Paige To Do! professional is included gross receipts!
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%/& The other percentage tax %e.g., gross receipts tax& paid by the taxpayer is
included in gross selling price! %)& The e*%ise ta* paid 5# the ta*pa#er 5e)ore withdrawa& o) the goods )rom the p&a%e o) produ%tion or )rom %ustoms %ustod# is in%&uded in the gross se&&ing pri%e7 %#& The documentary stamp tax paid by the taxpayer is included in the gross selling price or gross receipts.
$9::3$T3D -N$W3;< .42 $e%tion '(?6 NI;47 ;; No '?"/((B %23& 8xcept for one transaction, the rest are exempt from alue added tax. =hich one is VAT taxable? %A& ;ales of chic-en by a restaurant owner who did not register as a VAT person and
whose gross annual sales is P+.3 $illion! %/& ;ales of copra by a copra dealer to a coconut oil manufacturer who did not register as a VAT person and whose gross annual sales is P7 $illion! %)& :ross re%eipts o) a 4P- during the #ear amounted to P' Mi&&ion7 the 4Pregistered as a G-T person in Canuar# /(''6 5e)ore pra%ti%ing his pro)ession7 %#& ;ales of a boo- store during the year amounted to P+4 $illion! it did not register as a VAT person with the /I6. $9::3$T3D -N$W3;< .42 $e%tion '(@6 NI;4 %22& A lessor of real property is exempt from alue added tax in one of the transactions below. =hich one is it? %A& Jessor leases commercial stalls located in the (reenhills )ommercial )enter to VAT'
registered sellers of cell phones! lessors gross rental during the year amounted to P+3 $illion! %/& Lessor &eases residentia& apartment units to individua& tenants )or P'(6((((( per month per unit7 his gross renta& in%ome during the #ear amounted to P/ Mi&&ion7 %)& Jessor leases commercial stalls at P+4,444.44 per stall per month and residential units at P+7,444.44 per unit per month! %#& Jessor leases two %3& residential houses and lots at P74,444.44 per month per unit, but he registered as a VAT person. $9::3$T3D -N$W3;< .A2 $e%tion '(> .+26 NI;4 %2& I/P /an- extended loans to debtors during the year, with real properties of the debtors being used as collateral to secure the loans. =hen the debtors failed to pay the unpaid principal and interests after seeral demand letters, the ban- foreclosed the same and entered into contracts of lease with tenants. The ban- is subject to the tax as followsF “Never Let The Odds Keep You From Pursuing What You Know In Your Heart"LYou ero#Were $at%he& Meant Paige To Do!
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%A& +3 VAT on the rental income, but exempt from the D gross receipts tax! .A2 0 gross re%eipts ta* on the renta& in%ome6 5ut e*empt )rom G-T7 %)& Jiable to both the +3 VAT and D gross receipts tax! %#& 8xempt from both the +3 VAT and D gross receipts tax. $9::3$T3D -N$W3;< .A2 $e%tion '/'6 NI;4 %27& =hich transaction below is subject to VAT? %A& ;ale of egetables by a farmer in /aguio )ity to a egetable dealer! %/& ;ale of egetables by a egetable dealer in /aguio )ity to another egetable
dealer in Kue*on )ity! %)& ;ale of egetables by the K) egetable dealer to a restaurant in $anila! .D2 $a&e o) vegeta5&es 5# the restaurant operator to its %ustomers $9::3$T3D -N$W3;< %#& $e%tion '(>6 NI;4 L5oteF This is not absolutely true because a restaurant may sell the egetables in their original state which will be exempt from VAT under ;ection +4G%A&, irrespectie of who is the seller.M %2C& =hich importation in 34++ is subject to VAT? %A& Importation of fuels by a person engaged in international shipping worth P34 $illion! %/& Importation of raw, unprocessed, refrigerated Nobe beef from 1apan by a beef dealer for sale to hotels in $a-ati )ity with a fair mar-et alue of P+.3 $illion! .42 Importation o) wines 5# a wine dea&er with a )air maret va&ue o) P/ Mi&&ion )or sa&e to hote&s in Maati 4it#7 %#& Importation of boo-s worth P7 $illion and school supplies worth P+.3 $illion. $9::3$T3D -N$W3;< .42 $e%tions '(0 , '(>6 NI;4 JNote< d2 ma# a&so 5e a %orre%t %hoi%e 5e%ause on&# importation o) 5oos is e*empt )rom G-T The importation o) s%hoo& supp&ies is not e*empt %2D& Input tax is aailable to a VAT ' registered buyer, proided thatF %A& The seller is a VAT ' registered person! .A2 The se&&er issues a G-T invoi%e or o%ia& re%eipt6 whi%h separate&# indi%ates the G-T %omponent7 %)& The goods or serice is subject to or exempt from VAT, but the sale is coered by a VAT inoice or receipt issued by VATregistered person! %#& The name and TI5 of the buyer is not stated or shown in the VAT inoice or receipt. $9::3$T3D -N$W3;< .A2 $e%tion ''1.A26 NI;4 %29& )laim for tax creditor refund of excess input tax is aailable only toF %A& A VAT ' registered person whose sales are made to embassies of foreign “Never Let The Odds You From Pursuing What You Know In "LYou ero#Were $at%he& Meant Paige To Do! goernments andKeep nited 5ations agencies located inYour the Heart Philippines without the /I6 Page'( o)
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approal of the application for *ero'rating! %/& Any person who has excess input tax arising from local purchases of taxable goods and serices! %)& A VAT ' registered person whose sales are made to clients in the Philippines! .D2 - G-T " registered person whose sa&es are made to %ustomers outside the Phi&ippines and who issued G-T invoi%esE or re%eipts with the words “3;O ;-T3D $-L3$! imprinted on the sa&es invoi%es or re%eipts $9::3$T3D -N$W3;< %#& Kep%o Phi&s 4orp v 4I;6 :; No '0>>?'6 Canuar# 1'6 /('' %2G& A hotel operator that is a VAT ' registered person and who leases luxury ehicles to its hotel customers isF %A& ;ubject to the 2 common carriers tax and +3 VAT! %/& ;ubject to the 2 common carriers tax only! %)& $u5e%t to the '/ G-T on %#& 8xempt from both the 2 common carriers tax and +3 VAT.
$9::3$T3D -N$W3;< .42 $e%tion '(@6 NI;4 %4& =hich statement is correct? A bar reiew center owned and operated by lawyers isF %A& 8xempt from VAT, regardless of its gross receipts during the year because it is an
educational center! %/& 3*empt )rom G-T6 provided that its annua& gross re%eipts do not e*%eed P'B Mi&&ion in /(''7 %)& ;ubject to VAT, regardless of its gross receipts during the year! %#& ;ubject to VAT, if it is duly accredited by T8;#A. $9::3$T3D -N$W3;< .A2 $e%tion '(> .G26 NI;4 %+& :or 34+3, input tax is not aailable as a credit against the output tax of the buyer of taxable goods or serices during the "uarter, ifF %A& The VAT inoice or receipt of the seller is registered with the /I6! %/& The G-T invoi%e or re%eipt o) the se&&er does not separate&# indi%ate the
gross se&&ing pri%e or gross re%eipts and the G-T %omponent therein7 %)& The VAT inoice or receipt is issued in the name of the VAT'registered buyer and his TI5 is shown i said inoice, or receipt! %#& The VAT inoice or receipt issued by the seller shows the Taxpayer Identication 5umber plus the word HVATO or HVAT registered personO. $9::3$T3D -N$W3;< .A2 $e%tion ''16 NI;4 %3& The public mar-et endor below, who is not a VAT ' registered person is liable “Never Odds ero#Were $at%he& Meant Paige To Do! to VATLet inThe 34+4, ifFKeep You From Pursuing What You Know In Your Heart"LYou Page'( o)
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%A& ;he sells raw chic-en and meats and her gross sales during the year is P3
$illion! %/& ;he sells egetables and fruits in her stall and her gross sales during the year is P+.C $illion! %)& $he se&&s %anned goods6 pro%essed %o%onut oi&s6 and %ut owers in her sta&& and her gross sa&es during the #ear is P/B Mi&&ion7 %#& ;he sells lie sh, shrimps, and crabs and her gross sales during the year is P7 $illion. $9::3$T3D -N$W3;< .42 $e%tions '(B , '(>6 NI;4 %2& =hich statement is :AJ;8 under the VAT law? %A& A VAT' registered person will be subject to VAT for his taxable transactions, regardless of his gross sales or receipts! %/& A person engaged in trade or business selling taxable goods or serices must register as a VAT person, when his gross sales or receipts for the year 34++ exceed P+.7 $illion! %)& A person who issued a VAT' registered inoice or receipt for a VAT ' exempt transaction is liable to the +3 VAT as a penalty for the wrong issuance thereofF %#& On%e a do%tor o) medi%ine e*er%ises his pro)ession during the #ear6 he needs to register as a G-T person and to issue G-T re%eipts )or pro)essiona& )ees re%eived $9::3$T3D -N$W3;< .D2 $e%tion /1?.:2.'2.526 NI;4 % %7& The )ommissioner of Internal 6eenue issued a /I6 ruling to the eect that the transaction is liable to income tax and alue added tax. pon receipt of the ruling, a taxpayer does not agree thereto. =hat is his proper remedy? %A& :ile a petition for reiew with the )ourt of Tax Appeals within thirty%24& days from
receipt thereof! %/& :ile a motion for reconsideration with the )ommissioner of Internal 6eenue! %)& Fi&e an appea& to the $e%retar# o) Finan%e within thirt#.1(2 da#s )rom re%eipt thereo)7 %#& :ile an appeal to the ;ecretary of 1ustice within thirty%24& days from receipt thereof. $9::3$T3D -N$W3;< .42 $e%tion =6 NI;4 %
“Never Let The Odds Keep You From Pursuing What You Know In Your Heart"LYou ero#Were $at%he& Meant Paige To Do!
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/('' Ta*ation Law 3*am M4+ .Novem5er '16 /(''2 .-2 %3& The spouses Belena and :ederico wanted to donate a parcel of land to their son
#ondon who is getting married in #ecember, 34++. The parcel of land has a *onal aluation of P34,444.44. =hat is the most eEcient mode of donating the property? .-2 The spouses should rst donate in 34++ a portion of the property alued at P34,444.44 then spread the P44,444.44 e"ually for 34+3, 34+2, 34+ and 34+7. .A2 ;pread the donation oer a period of 7 years by the spouses donating P+44,444.44 each year from 34++ to 34+7. .42 The spouses shou&d ea%h donate a P''(6((((( portion o) the va&ue o) the propert# in /('' then ea%h shou&d donate P'((6((((( in /('/ .D2 The spouses should each donate a P+44,444.44 portion of the alue of the property in 34++, and another P+44,444.44 each in 34+3. Then, in 34+2, Belena should donate the remaining P34,444.44. %2& 8xempted from donors taxation are gifts made .-2 )or the use o) the 5aranga# .A2 in consideration of marriage. .42 to a school which is a stoc- corporation. .D2 to a for'prot goernment corporation. %& #on :ortunato, a widower, died in $ay, 34++. In his will, he left his estate of P+44 million to his four children. Be named his compadre, #on 8pitacio, to be the administrator of the estate. =hen the /I6 sent a demand letter to #on 8pitacio for the payment of the estate tax, he refused to pay claiming that he did not benet from the estate, he not being an heir. :orthwith, he resigned as administrator. As a result of the resignation, who may be held liable for the payment of the estate tax? .-2 #on 8pitacio since the tax became due prior to his resignation. %/& The eldest child who would be reimbursed by the others. .42 -&& the )our %hi&dren6 the ta* to 5e divided eua&&# among them .D2 The person designated by the will as the one liable. %7& (erardo died on 1uly 2+, 34++. Bis estate tax return should be led within .-2 six months from ling of the notice of death. .A2 sixty days from the appointment of an administrator. .42 si* months )rom the time he died on Cu&# 1'6 /('' .D2 sixty days from the time he died on 1uly 2+, 34++. .32 %C& )elia donated P++4,444.44 to her friend Victoria who was getting married. )elia
gae no other gift during the calendar year. =hat is the donor0s tax implication on )elias donation? .-2 The P+44,444.44 portion of the donation is exempt since gien in consideration of marriage. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart"LYou ero#Were $at%he& Meant Paige To Do!
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.A2 A P+4,444.44 portion of the donation is exempt being a donation in
consideration of marriage. .42 4e&ia sha&& pa# a 1( donors ta* on the P''(6((((( donation .D2 The P+44,444.44 portion of the donation is exempt under the rate schedule for donor0s tax. .32 r. %D& A non'stoc-, non'prot school always had cash Qow problems, resulting in failure to recruit well'trained administratie personnel to eectiely manage the school. In 34+4, #on Jeon donated P+44 million pesos to the school, proided the money shall be used solely for paying the salaries, wages, and benets of administratie personnel. The donation represents less than +4 of #on Jeon0s taxable income for the year. Is he subject to donor0s taxes? .-2 5o, since the donation is actually, directly, and exclusiely used for educational purposes. .A2 Yes6 5e%ause the donation is to 5e who&&# used )or administration purposes .42 Res, since he did not obtain the re"uisite 5(> certication before he made the donation. .D2 5o, because the donation does not exceed +4 of his taxable income for 34+4. .32
/('( Ta*ation Law 3*am M4+ .$eptem5er '/6 /('(2 /((> Ta*ation Law 3*am M4+ .$eptem5er '16 /((>2
“Never Let The Odds Keep You From Pursuing What You Know In Your Heart"LYou ero#Were $at%he& Meant Paige To Do!
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