Tax Review - Final Exam (2019-2020)

The correct answer is No, since it was for the convenience of the employer and was necessary for its business. This means that the company provided the house and lot with a swimming pool to the president for the purpose of maintaining a certain image and entertaining guests to promote the company's business. As it was a requirement for the president's role and directly related to the company's business, it qualifies as a non-taxable fringe benefit.

Administrative feasibility refers to the practicality and ease of implementing and enforcing tax laws. It implies that tax laws should be designed in a way that can be easily understood, complied with, and administered by tax authorities. This includes considerations such as simplicity, clarity, and the availability of resources and technology for efficient tax collection and enforcement. By prioritizing administrative feasibility, tax laws can be effectively implemented, reducing the likelihood of tax evasion and ensuring a smooth and efficient tax administration system.

The input tax on zero-rated sales of goods and services can be claimed as a tax refund over the next quarter at the option of the VAT-registered taxpayer. This means that if a VAT-registered taxpayer has made zero-rated sales of goods and services, they can claim a refund for the input tax paid on those sales. This allows the taxpayer to recover any taxes paid on inputs used in the production of zero-rated goods or services.

Based on the facts given in the previous problem, the gross taxable business income is P170,000. This means that after deducting all allowable expenses and deductions, the remaining income subject to taxation is P170,000.

The correct answer is 3% of the gross receipts. This means that grantees of radio and television broadcasting, whose annual gross receipts of the preceding year do not exceed P10,000,000, will have to pay 3% of their gross receipts as franchise tax.

The given answer is the exception to the rule that states certain transactions shall be deemed sale for VAT purposes. This exception states that the transfer, use, or consumption of goods or properties in the course of business, which were originally intended for sale or for use in the course of business, will not be considered as a deemed sale for VAT purposes. In other words, if goods or properties are used or consumed within the business and not sold, they will not be subject to VAT.

The first statement is false because upon the effectivity of the TRAIN Law, the sale of drugs and medicines prescribed for diabetes, high cholesterol, and hypertension is not exempt from VAT. However, the second statement is true because upon the effectivity of the TRAIN Law, the sale of gold to the Banko Sentral ng Pilipinas is indeed VAT-exempt.

Nonprofit hospitals are exempt from taxation on their income because they operate exclusively for the benefit of the community and provide essential healthcare services without the primary goal of making a profit. These hospitals typically reinvest any surplus funds back into improving patient care and expanding services. This tax exemption recognizes the important role these institutions play in promoting public health and ensures that they can continue to provide affordable and accessible healthcare to the community.

The optional standard deduction (OSD) allowed for individuals is 40% based on gross sales or gross receipts. This means that individuals can choose to deduct 40% of their gross sales or gross receipts from their taxable income. This deduction is optional, meaning individuals can choose to take it or not depending on which option is more beneficial for them. By deducting a percentage of their gross sales or gross receipts, individuals can reduce their taxable income and potentially lower their tax liability.

The correct answer is "Only the first statement is false." The first statement states that real property shall be appraised at cost or its current or fair market value, whichever is higher. However, this is not true. Real property is typically appraised at its current or fair market value, not at cost. The second statement is true as it states that real property shall be assessed on the basis of a uniform classification within each local government unit.

Based on the information provided, the correct answer is P360,000. This suggests that there is a VAT (Value Added Tax) of P360,000.

The correct answer is I and II because both options mention deductions that are allowed from gross sales. Option I states that sales returns and allowances, for which a proper credit or refund was made to the buyer, can be deducted. Option II mentions discounts that are determined and granted at the time of sale and are indicated in the invoice. Both of these deductions are considered valid and can be subtracted from gross sales.

The correct answer is "Subject to 3% international carriers tax." This means that when cargoes are transported by international carriers from the Philippines to abroad, they are subject to a 3% tax on the transportation service provided by the carrier. This tax is specifically applicable to international carriers and not subject to any value-added tax (VAT).

The correct answer is ordinary income tax at the graduated rates of net taxable income. This is because Valir, as a real estate dealer, is engaged in the business of selling properties. Therefore, the gain from the sale of the residential lot would be considered as ordinary income and subject to the regular income tax rates based on his net taxable income. The other options, such as capital gains tax, would not be applicable in this scenario.

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The correct answer is "3 years from the date of filing of the tax return or from the date of the deadline of its filing, whichever comes later." This means that the Bureau of Internal Revenue (BIR) has a maximum of 3 years to assess the tax return filed by the taxpayer. The assessment period starts either from the actual date of filing or from the deadline for filing, whichever is later. This allows the BIR enough time to review and assess the tax return for any discrepancies or errors.

The Registrar of Deeds and Notaries Public has the duty to furnish the provincial, city, or municipal assessor with copies of all contracts selling, transferring, or otherwise conveying leasing or mortgaging real property received by or acknowledged before them. This is because the Registrar of Deeds and Notaries Public is responsible for maintaining records of real estate transactions, including the transfer of ownership or rights to properties. By providing copies of these contracts to the assessor, they ensure that accurate information is available for property assessment and taxation purposes.

Based on the information provided, the question is asking for the tax due if the person chooses the itemized deduction option instead of the 8% income tax option. The correct answer is P582,200. This means that if the person does not choose the 8% income tax option, their tax due will be P582,200.

The answer is (45,000) because it indicates that there is an excess input tax of 45,000. This means that the amount of input tax paid by the company exceeds the amount of VAT due, resulting in a negative balance of 45,000.

Based on the information provided in the previous problem, the taxpayer chose to use itemized deductions. The total allowable deduction for the taxpayer is therefore $465,000.

If the CIR denies the taxpayer's protest, the taxpayer has 30 days to file a petition for review with the Court of Tax Appeals. This means that they can request a review of the decision by a higher court within 30 days.

Levying refers to the process of imposing or imposing taxes on individuals or entities. It involves the creation and implementation of tax laws by the government. This includes determining the types of taxes, tax rates, and who is subject to taxation. Levying is the initial step in the tax process and is necessary for the government to generate revenue for public services and functions.

The correct answer is the 25th day from the end of each quarter. This means that businesses are required to file their Quarterly VAT return within 25 days after the end of each quarter.

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The first statement is false because a province cannot exceed 1% of the assessed value of the real property in terms of basic real property taxes. The second statement is true as it states that a province, city, or municipality within Metropolitan Manila can levy an annual ad valorem tax on real property.

Grock is not required to register as a VAT taxpayer because the annual rent for each property does not exceed the threshold amount set by the tax regulations. If the annual rent exceeds this threshold, Grock would be required to register as a VAT taxpayer. However, since the annual rent for all the properties is below the threshold, Grock is not subject to VAT and does not need to register.

The domestic carrier is considered an importer of the fuel purchased because it is the one who bought the fuel from the international carrier. As the buyer, the domestic carrier assumes the role of importer and is responsible for any applicable taxes or duties related to the importation. The international carrier, on the other hand, is not subject to VAT on its sale to the domestic carrier as it is considered an export transaction.

Based on the given information, the taxpayer's sales during the quarter were P100,000. The percentage tax due for taxpayers engaged in the sale of services is 3% of gross sales. Therefore, the tax due for the quarter would be 3% of P100,000, which is P3,000. However, since the taxpayer's annual gross receipts do not exceed P3,000,000, they are eligible for a reduced tax rate of 2%. Therefore, the correct answer is P2,250, which is 2% of P100,000.

The President of the Philippines is not exempt from the payment of community tax. This means that the President is required to pay the community tax like any other citizen. However, diplomatic officials, consular representatives, and transient visitors whose stay does not exceed 3 months are exempt from paying the community tax.

The proportion of sales for purposes of computing and payment of local business taxes is 30% for Davao City and 70% for Bunawan. This is because the factory is located in Bunawan, Agusan del Norte, which suggests that a significant portion of the manufacturing activities and sales are happening there. Therefore, the local business taxes should be allocated based on the proportion of sales made in each location.

The Commissioner of Internal Revenue (CIR) is not allowed to inquire into the bank deposits of a taxpayer, except in certain situations. One of these situations is when the taxpayer offers to compromise the assessed tax based on financial incapacity to pay and authorizes the Commissioner in writing to do so. This means that if a taxpayer is unable to pay the assessed tax due to financial difficulties, they can propose a compromise and give written authorization to the Commissioner to access their bank deposits for this purpose.

Chou, as a VAT-registered person, is required to pay VAT on the importation of machines. The VAT is calculated based on the purchase price of the machines. In this case, the total purchase price of the machines is P600,000 (P100,000 + P200,000 + P300,000).

Since Machine 3 was sold immediately after importation, it is not subject to VAT. Therefore, the VAT is only applicable to Machines 1 and 2, which have a total purchase price of P300,000 (P100,000 + P200,000).

The VAT rate in the Philippines is 12%, so the VAT to be paid on the importation of Machines 1 and 2 is P36,000 (P300,000 * 12%).

Therefore, the correct answer is 36,000.

Net operating loss refers to the excess of allowable deductions over gross income from a business in a taxable year. This means that the business had more deductions than income, resulting in a negative net income for that year. Net operating losses can often be carried forward to future years to offset taxable income, providing tax relief for the business.

The correct answer is "The collection of a deficiency tax by distraint and levy may be repeated, if necessary, until the full amount due, including all expenses is collected." This statement is correct because the tax authorities have the authority to repeat the process of distraint and levy to collect the full amount of the deficiency tax, including any expenses incurred in the collection process. The other statements are incorrect because they either state a specific order of collection (first distraint, then levy) or make assumptions about the coverage of bank deposits or the number of times the collection can be done in a taxable year.

The correct answer is "The whole amount is subject to 20% final tax." This means that the entire prize amount of P40,000 is subject to a final tax rate of 20%. As a resident alien, Vale is required to pay tax on the full amount of the prize received.

The output tax for April is 30,000. This can be calculated by summing up the VAT on the export sales and the VAT on the domestic sales, and then subtracting the input tax which cannot be directly attributed to any sales. The VAT on export sales is calculated by adding the VAT amounts for feeds for human consumption and feeds for fighting cocks, which is 1,500,000 + 500,000 = 2,000,000. The VAT on domestic sales is calculated by adding the VAT amounts for feeds for human consumption and feeds for race horses, which is 750,000 + 250,000 = 1,000,000. Subtracting the input tax of 100,000 from the total VAT on sales gives us 2,000,000 + 1,000,000 - 100,000 = 2,900,000. Finally, 12% of 2,900,000 is equal to 348,000, which is rounded down to the nearest thousand, giving us an output tax of 30,000.

The transfer of the ownership of the farm land from Aldous to Bruno is considered a tax-exempt transfer. This is because Carmilla, who had the right to use the land for 10 years, surrendered his right over the land to Bruno. Since there is no consideration or payment involved in this transfer, it is not subject to any taxes such as donor's tax or estate tax. Therefore, the correct statement is that the transfer is a tax-exempt transfer.

The estate tax return is generally required to be filed within 1 year from the date of death of the decedent. This allows sufficient time for the estate executor or administrator to gather all necessary information and complete the required paperwork. Filing within this timeframe ensures compliance with tax laws and avoids any penalties or interest that may be imposed for late filing.

Both statements are true. The first statement states that the authority of the President to fix tariff rates, import, and export quotas needs to have a law enacted by Congress. This is true because the President does not have the power to unilaterally set these rates and quotas without the approval of Congress. The second statement states that the power of tax of the local government unit is merely a delegated power. This is also true because local government units derive their power to impose taxes from laws enacted by higher levels of government, such as the national or state government.

Both statements are true. Statement 1 states that a province, city, or municipality within Metro Manila can impose an annual tax of 1% on the assessed value of real property for the special education fund. Statement 2 clarifies that this special education fund is separate from the basic real property tax. Therefore, both statements are accurate and provide information about the taxation system related to the special education fund.

The correct answer is 10% overseas communications tax to be paid by the person availing the service. This means that the individual or company who is using the overseas dispatch, message, or conversations originating from the Philippines is responsible for paying the 10% tax. The service provider is not responsible for paying this tax, but they may be responsible for paying a separate 3% franchise tax.

The correct answer is 201,600. This is because the taxpayer chose to be taxed at the 8% option, which means they will pay 8% of their taxable income as tax. To calculate the tax due, we need to multiply the taxable income by the tax rate. If the tax due is 201,600, it means the taxpayer's taxable income is 2,520,000 (201,600 / 0.08).

The gross taxable compensation income is P1,823,000. This is calculated by adding the basic salary net of deductions (P300,000), overtime pay (P20,000), retirement pay for early retirement (P1,500,000), and benefits received from SSS upon retirement (P400,000). Other amounts such as the employee's share to SSS, PHIC, and HDMF, 13th month pay, employee of the year bonus, and productivity incentive are not included in the calculation of gross taxable compensation income. The income from the spa and massage business, as well as the interest income and dividends, are not relevant to the calculation of the individual's gross taxable compensation income.

The exclusive property of the surviving spouse is not included in the gross estate because it is solely owned by the surviving spouse and not considered part of the deceased person's estate. The gross estate typically includes all the assets and property owned by the deceased person at the time of their death, including conjugal property, community property, and the share of the surviving spouse. However, the exclusive property of the surviving spouse is excluded as it is not considered part of the deceased person's estate.

Based on the given information, it can be inferred that the donor's tax payable on 14 June 2018 is 6,600.

The first statement is false because a gift is perfected not from the moment the donor effects the delivery of the property, but from the moment the gift is accepted by the recipient. The second statement is also false because donor's tax is not a property tax, but a tax imposed on the transfer of property by way of gift.

The correct answer is 0 because common carrier's tax is not applicable to ferry boat operators. Common carrier's tax is a tax imposed on operators of land, water, and air transport for the carriage of passengers and goods. However, ferry boat operators are exempt from this tax. Therefore, the tax payable is 0.

Based on the information given in the immediately preceding problem, the VAT payable on the 1st quarter of 2019 is 30,000.

The submission of required documents within 60 days from the filing of the protest is available when the taxpayer previously filed a request for reinvestigation. This means that if the taxpayer had previously requested a reinvestigation of their case, they have the option to submit the necessary documents within 60 days of filing the protest. This allows them to provide any additional evidence or information that may support their case during the protest process.

The veto power of the president is not an inherent limitation of the power of taxation because it does not directly restrict or limit the government's ability to impose taxes. The veto power allows the president to reject or approve legislation, including tax-related bills, but it does not inherently limit the government's authority to tax. In contrast, international comity, territoriality, and public purpose are inherent limitations that can affect the scope and application of taxation.