Take Home Quiz On Taxation Law Prepared By: Prof. AGN Concepts To Study

TAKE HOME QUIZ ON TAXATION LAW
Prepared by: Prof. AGN
Concepts to Study:
 Section 21, NIRC
 Charitable Institutions: Income Tax for Profit-Driven Activities (CIR v. St. Luke’s Medical Center,
Inc., G.R. Nos. 195909 & 195960, Sept 26, 2012)
 (Sec 76, NIRC; CIR v. PL Management International Phils., Inc., April 4, 2011, 647 SCRA 72 (2011)
G.R. No. 160949)
 Final Withholding Tax: Royalties Paid to Non-Resident Corporation (Sec 28(B)(1), NIRC)
 Foreign Corporate Tax; Local Agent for a Foreign Airline (CIR v. British Overseas Airways
Corporation, 149 SCRA 395, (1987).
 Foreign Corporate Tax: “Single Entity Concept”; Branch Remittances (Section 23, NIRC)
 Foreign Corporate Tax: Situs of Taxation (Section 42, NIRC; CIR v. Marubeni Corporation, G.R.
No. 137377, December 18, 2001)
 Partnership: Income Tax (Sec 26, NIRC)
 Personal Income Tax: Accounting Period (Sec 43, NIRC)
 Personal Income Tax: Passive Income; (Interest Income); Situs of Taxation (Sec. 24[B1] NIRC)
 Personal Income Tax: Passive Income; (Rental Income); Situs of Taxation (Section 42 in relation
to Section 23, NIRC)
 Personal Income Tax: Payment by Instalment (Sec 56 (A)(2), NIRC)
 Personal Income Tax: Personal Exemptions of a Non-resident Alien (Sec 25 (A)(1) in relation to
Sec 35, NIRC)
 Trust: Income from Trust (Sec 61(A), NIRC)
I.ESSAY (100 points)
1. What kind of taxes, fees and charges are considered as National Internal Revenue Taxes
under the National Internal Revenue Code (NIRC)? (10%)
2. Mr. Jose Castillo is a resident Filipino citizen. He purchased a parcel of land in Makati City in
1970 at a consideration of P1 Million. In 2011, the land, which remained undeveloped and idle
had a fair market value of P20 Million. Mr. Antonio Ayala, another Filipino citizen, is very much
interested in the property and he offered to buy the same for P20 Million. The Assessor of
Makati City re-assessed in 2011 the property at P10 Million.
a. Is Mr. Castillo liable for income tax in 2011 based on the offer to buy by Mr. Ayala?
Explain your answer. (10%)
3. A group of philanthropists organized a non-stock, non-profit hospital for charitable purposes to
provide medical services to the poor. The hospital also accepted paying patients although none
of its income accrued to any private individual; all income were plowed back for the hospital's
use and not more than 30% of its funds were used for administrative purposes. Is the hospital
subject to tax on its income? If it is, at what rate? (10%)
4. What is the "immediacy test"? Explain briefly. (5%)
5. Foster Corporation (FC) is a Singapore based foreign corporation engaged in construction and
installation projects. In 2010, Global Oil petroleum products, awarded an anti-pollution project
to Foster Corporation, whereby FC shall design, supply machinery and equipment, provided that
the installation part of the project may be sub-contracted to a local construction company.
Pursuant to the contract, the design and supply contracts were done in Singapore by FC, while
the installation works were sub-contracted by FC with Philippine Construction Corporation
(PCC), a domestic corporation. The project with a total cost of P100 Million was completed in
2011 at the following cost components: (design - P20 Million; machinery and equipment - P50
Million; and installation - P30 Million). Assume that the project was 40% complete in 2010 and
100% complete in 2011, based on the certificates issued by the architects and engineers working
on the project. GOC paid FC as follows: P60 Million in 2010 and P40 Million in 2011 and FC paid
PCC in foreign currency through a Philippine bank as follows: P10 Million in 2010 and P20 Million
in 2011.
a. Is FC liable to Philippine income tax, and if so, how much revenue shall be reported by it
in 2010 and in 2011? Explain your answer (15%)
6. True or False. An individual taxpayer can adopt either the calendar or fiscal period for purposes
of filing his income tax return. (5%)
7. XYZ Law Offices, a law partnership in the Philippines and a VAT-registered taxpayer, received a
query by e-mail from Gainsburg Corporation, a corporation organized under the laws of
Delaware, but the e-mail came from California where Gainsburg has an office. Gainsburg has no
office in the Philippines and does no business in the Philippines. XYZ Law Offices rendered its
opinion on the query and billed Gainsburg US$1,000 for the opinion. Gainsburg remitted its
payment through Citibank which converted the remitted US$1 ,000 to pesos and deposited the
converted amount in the XYZ Law Offices account. What are the tax implications of the payment
to XYZ Law Offices in terms of VAT and income taxes? (15%)
8. True or False. The Tax Code allows an individual taxpayer to pay in two equal instalments, the
first instalment to be paid at the time the return is filed, and the second on or before July 15 of
the same year, if his tax due exceeds P2,000. (5%)
9. In 2007, spouses Renato and Judy Garcia opened peso and dollar deposits at the Philippine
branch of the Hong Kong Bank in Manila. Renato is an overseas worker in Hong Kong while Judy
lives and works in Manila. During the year, the bank paid interest income of P10,000 on the peso
deposit and US$1,000 on the dollar deposit. The bank withheld final income tax equivalent to
20% of the entire interest income and remitted the same to the BIR.
a. Are the interest incomes on the bank deposits of spouses Renato and Judy Garcia
subject to income tax? Explain. (15%)
10. Will Z, a non-resident citizen, be liable to pay income tax on the P45,000 monthly rental
income? Reason briefly. (10%)
11. BONUS: List the complete names of all BlackPink Members and their respective nationality.
(10%)

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TAKE HOME QUIZ ON TAXATION LAW

Prepared by: Prof. AGN

I.ESSAY (100 points)

4. What is the "immediacy test"? Explain briefly. (5%)

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