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2015 Bar Questions On Taxation Gen Pri and Income

The document discusses various tax principles and scenarios under Philippine tax law: 1) It addresses whether prize money won by a Philippine citizen in a US boxing match and paid in US dollars would be taxable in the Philippines and whether it could qualify for an exclusion. It also discusses how taxes paid to the US could be used for Philippine tax liability. 2) It examines whether income from the sale of goods produced in the Philippines or China would be taxable in the Philippines depending on whether the seller is a resident or nonresident citizen. 3) It outlines the tax treatment of cash dividends received by different types of stockholders, including resident citizens, nonresident aliens, domestic and foreign corporations. 4

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Sheena Palmares
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108 views2 pages

2015 Bar Questions On Taxation Gen Pri and Income

The document discusses various tax principles and scenarios under Philippine tax law: 1) It addresses whether prize money won by a Philippine citizen in a US boxing match and paid in US dollars would be taxable in the Philippines and whether it could qualify for an exclusion. It also discusses how taxes paid to the US could be used for Philippine tax liability. 2) It examines whether income from the sale of goods produced in the Philippines or China would be taxable in the Philippines depending on whether the seller is a resident or nonresident citizen. 3) It outlines the tax treatment of cash dividends received by different types of stockholders, including resident citizens, nonresident aliens, domestic and foreign corporations. 4

Uploaded by

Sheena Palmares
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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I. Explain the principles of a sound tax system.

(3%)

II. Mr. A, a citizen and resident of the Philippines, is a professional boxer. In a professional boxing
match held in 2013, he won prize money in United States (US) dollars equivalent to P300,000,000.

a) Is the prize money paid to and received by Mr. A in the US taxable in the Philippines?
Why? (2%)

b) May Mr. A's prize money qualify as an exclusion from his gross income? Why? (2%)

c) The US already imposed and withheld income taxes from Mr. A's prize money. How may
Mr. A use or apply the income taxes he paid on his prize money to the US when he
computes his income tax liability in the Philippines for 2013? (4%)

III. Ms. C, a resident citizen, bought ready-to-wear goods from Ms. B, a nonresident citizen.

a) If the goods were produced from Ms. B's factory in the Philippines, is Ms. B's income from
the sale to Ms. C taxable in the Philippines? Explain. (2%)

b) If Ms. B is an alien individual and the goods were produced in her factory in China, is Ms.
B's income from the sale of the goods to Ms. C taxable in the Philippines? Explain. (2%)

V. BBB, Inc., a domestic corporation, enjoyed a particularly profitable year in 2014. In June 2015, its
Board of Directors approved the distribution of cash dividends to its stockholders. BBB, Inc. has
individual and corporate stockholders. What is the tax treatment of the cash dividends received from
BBB, Inc. by the following stockholders:

a) A resident citizen (1%)

b) Non-resident alien engaged in trade or business (1%)

c) Non-resident alien not engaged in trade or business (1% )

d) Domestic corporation (1%)

e) Non-resident foreign corporation (1%)

VI. Differentiate between double taxation in the strict sense and in a broad sense and give an
example of each. (4%)

X. Indicate whether each of the following individuals is required or not required to file an income tax
return:

a) Filipino citizen residing outside the Philippines on his income from sources outside the
Philippines. (1%)

b) Resident alien on income derived from sources within the Philippines. (1%)
c) Resident citizen earning purely compensation income from two employers within the
Philippines, whose income taxes have been correctly withheld. (1%)

d) Resident citizen who falls under the classification of minimum wage earners. (1%)

e) An individual whose sole income has been subjected to final withholding tax. (1%)

XI. What are de minim is benefits and how are these taxed? Give three (3) examples of de
minimis benefits. (4%)

XIV. KKK Corp. secured its Certificate of Incorporation from the Securities and Exchange
Commission on June 3, 2013. It commenced business operations on August 12, 2013. In April 2014,
Ms. J, an employee of KKK Corp. in charge of preparing the annual income tax return of the
corporation for 2013, got confused on whether she should prepare payment for the regular corporate
income tax or the minimum corporate income tax.

a) As Ms. J's supervisor, what will be your advice? (2%)

b) What are the distinctions between regular corporate income tax and minimum corporate
income tax? (3%)

XV. In 2012, Dr. K decided to return to his hometown to start his own practice. At the end of 2012,
Dr. K found that he earned gross professional income in the amount of P1,000,000.00; while he
incurred expenses amounting to P560,000.00 constituting mostly of his office space rent, utilities,
and miscellaneous expenses related to his medical practice. However, to Dr. K's dismay, only
P320,000.00 of his expenses were duly covered by receipts. What are the options available for Dr. K
so he could maximize the deductions from his gross income? (3%)

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