JD Iii

TAX REMEDIES
1. When may the CIR compromise any national internal revenue taxes? Can
the CIR delegate its power to compromise tax liability? If yes, cite those
instances.
2. Distinguish false return from fraudulent return. May a fraudulent tax

return be amended prior to the expiration period of assessment? Explain
your answer.
3. Give at least 3 remedies of the government to collect delinquent taxes?

Explain briefly each remedies.
4. On march 10, 2015, Baby Shark Corporation received a preliminary

assessment notice(PAN) dated March 1, 2015 issued by the CIR for
deficiency income tax for its taxable year 2013. It failed to protest the
PAN. The BIR Commissioner thereupon issued a final assessment notice
(FAN) with letter of demand on April 30, 2015. The FAN was received by
the corporation on May 10, 2015, following which or on May 25, 2015, it
filed its protest against it. The BIR Commissioner denied the protest on
the ground that the assessment had already become final and executory,
the corporation having failed to protest the Pan. Is the BIR Commissioner
correct? Explain your answer.
5. Distinguish reply from protest. What is/are the remedies of taxpayer in

case of denial of his reply? What is/are also the taxpayer’s remedies in
case a protest is denied?
6. As a general rule, all criminal violations of the tax code may be

compromised. Cite the exception/s to this rule. Explain briefly.
GENERAL PRINCIPLES OF TAXATION
1. May the court enjoin the collection of taxes? Explain your answer.
2. Distinguish direct tax from an indirect tax.
3. Enumerate the 3 stages of aspects of taxation.

4. Why is the power to tax considered inherent in a sovereign state? What
are the inherent limitations of the power to tax? Explain briefly.
5. Congress, after much public hearing and consultation with various sectors
of society, came to the conclusion that it will be best for the country to
have only one system of taxation by centralizing the imposition and
collection of taxes in the national government. Accordingly, it is thinking
of passing a law that would abolish the taxing power of all local
government units. In your opinion, would such a law be valid under the
present Constitution? Explain your answer.
6. Don Corporation was the recipient in 2010 of two tax exemptions both
from congress, one law exempting the company’s bond issue from taxes
and the other, exempting the company from taxes in the operation of its
public utilities. The two laws extending the tax exemptions were revoked
by congress before their expiry dates. Were the revocations
constitutional? Explain your answer.
7. Renato is the owner of a residential lot situated at Tahao Road, Legaspi

City. The lot has an area of 300 square meters. On June 1, 2020, the 100
square meter of said lot owned by Renato was expropriated by the
government to be used in the widening of Tahao Road, for P300,000,
representing the estimated assessed value of said portion. From 2015 to
2019, Renato has not been paying his income taxes from the operations
of his business. He is now being assessed for the unpaid income taxes in
the total amount of P300,000. Renato claims that his income tax liability
has been compensated by the amount of P300,000 which the government
owes him for the expropriation of his property. Is Renato correct? Explain
briefly.
8. Mr. Chino, a bank executive, while playing golf with Mr. Ping, a
manufacturing firm executive, mentioned to the latter that his (Chino)
bank had just opened a business relationship with a big foreign importer
of goods which Ping’s company manufactures. Ping requested Chino to
introduce him to this foreign importer and put in a good word for him
(Ping), which Chino did. As a result, Ping was able to make a profitable
business deal with the foreign importer. In gratitude, Ping, in behalf of his
manufacturing firm, sent Chino an expensive car as a gift. Chino called
Ping and told him that there was really no obligatio on the part of Ping or
his company to give such an expensive gift. But Ping insisted that Chino
keep the car. The company of Ping deducted the cost of the car as a
business expense. The Commissioner of Internal Revenue included the
fair market value of the car as Income of Chino who protested that the car
was a gift and therefore excluded from income. Who is correct, the
Commissioner or Chino? Explain.
9. Mr. Francisco borrowed P100,000 from his friend Mr. Gutierrez payable in
one year without interest. When the loan became due Mr. Francisco told
Mr. Gutierrez that he (Mr. Francisco) was unable to pay because of
business reverses. Mr. Gutierrez took pity on Mr. Francisco and condoned
the loan. Mr. Francisco was solvent at the time he borrowed the P100,000
and at the time the loan was condoned. Did Mr. Francisco derive any
income from the cancellation or condonation of his indebtedness?
Explain.
10. Jose Miranda, a young artist, received a prize of P100,000 for winning in
the on-the-spot peace poster contest sponsored by a local lions club. Shall
the reward be included in the gross income of the recipient for tax
purposes? Explain.
1. Xander is the president and chief executive officer of ABC Computers, Inc.
When Xander was asked to join the government service as director of a
bureau under the Department of Trade and Industry, he took a leave of
absence from ABC. Believing that the business outlook goodwill and
opportunities improved with Xander in the government, ABC proposed to
obtain a policy of insurance on his life. On ethical grounds, Xander
objected to the insurance purchase, but ABC purchased the policy
anyway. Its annual premium amounted to P100,000. Is the said premium
paid deducible by ABC Computers? Explain your answer.
2. JoliCee Foods Corporation (JFC) incurred substantial advertising expenses

in order to protect its brand franchise for one of its line products. JFC
included the advertising expense as a deduction from gross income,
claiming it as an ordinary expense. Is JFC correct? Explain your answer.
3. Ramil operates the lending company that made a loan to Alfonso in the
amount of P120,000.00 subject of a promissory note which is due within
one (1) year from the note’s issuance. Three years after the loan became
due and upon information that Alfonso is nowhere to be found, Ramil ask
you for advice on how to treat the obligation as “bad debt.” Discuss the
requisites for deductibility of a “bad debt?”
4. Peter is the Vice-President for Sales of Golden Dragon Realty

Conglomerate, Inc. (Golden Dragon). A group of five (5) foreign investors
visited the country for possible investment in the condominium units and
subdivision lots of Golden Dragon. After a tour of the properties for sale,
the investors were wined and dined by Peter at the posh Conrad’s Hotel
at the cost of P50,000.00. Afterward, the investors were brought to a
party in a videoke club which cost the company P200,000.00 for food and
drinks, and the amount of P80,000.00 as tips for business promotion
officers. Expenses at Conrad’s Hotel and the videoke club were receipted
and submitted to support the deduction for representation and
entertainment expenses. Decide if all the presentation and entertainment
expenses claimed by Golden Dragon are deductible. Explain.
5. YYY Corporation engaged the services of the Manananggol Law Firm in

2016 to defend the corporation’s title over a property used in the
business. For the legal services rendered in 2017, the law firm billed the
corporation only in 2018. The corporation duly paid. YYY Corporation
claimed this expense as a deduction from gross income in its 2018 return,
because the exact amount of the expense was determined only in 2018. Is
YYY’s claim of deduction proper? Reasons.
6. Gold and Silver Corporation gave extra 14 th month bonus to all its
officials and employees in the total amount of P75 Million. When it filed
its corporate income tax return the following year, the corporation
declared a net operating loss. When the income tax return of the
corporation was reviewed by the BIR the following year, it disallowed as
item of deduction the P75 million bonus the corporation gave its officials
and employees on the ground of unreasonableness. The corporation
claimed that the bonus is an ordinary and necessary expense that should
be allowed. If you were the BIR Commissioner, how will you resolve the
issue?
7. Explain if the following items are deductible from gross income for
income tax purposes. Disregard who is the person claiming the expense.
a. Interest on loans used to acquire capital equipment or machinery.
b. Interest on loans provided by head office to one of its branches.
c. Depreciation of goodwill.

JD Iii

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TAX REMEDIES

2. Distinguish false return from fraudulent return. May a fraudulent tax

3. Give at least 3 remedies of the government to collect delinquent taxes?

4. On march 10, 2015, Baby Shark Corporation received a preliminary

5. Distinguish reply from protest. What is/are the remedies of taxpayer in

6. As a general rule, all criminal violations of the tax code may be

GENERAL PRINCIPLES OF TAXATION

2. Distinguish direct tax from an indirect tax.

3. Enumerate the 3 stages of aspects of taxation.

7. Renato is the owner of a residential lot situated at Tahao Road, Legaspi

2. JoliCee Foods Corporation (JFC) incurred substantial advertising expenses

4. Peter is the Vice-President for Sales of Golden Dragon Realty

5. YYY Corporation engaged the services of the Manananggol Law Firm in

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