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QUALIFYING ROUND
EASY ROUND - Question 1
Gaddy, an official of Lamoiyan Corporation, asked for an earlier retirement because he was immigrating to
Canada. He was paid P2,000,000 as separation pay in recognition of his valuable services to the corporation.
Krisha, another official of the same company, was separated for occupying a redundant position. She was
given P1,000,000 as separation pay.
Joel was separated due to his failing eyesight. He was given P500,000 as separation pay.
All the 3 were not qualified to retire under the BIR approved pension plan of the corporation. The following
statements are derived from the above set of facts:
Reference:
I is a correct statement. The voluntary action on the part of Gaddy is not considered as a cause beyond
his control hence, the separation is not excluded from gross income. It is included for tax purposes. He
does not quality for tax-free retirement because there is no showing that he is 50 years or over, that he
has not previously availed of the tax-free retirement.
II is not a correct statement because Krisha was separated due to redundancy which is beyond his
control.
III is a correct statement. The separation pay received by Joel was due to his failing eyesight, a
physical disability, which is for a cause beyond his control.
IV is not a correct statement because of the above
ANSWER: P816,000
Solution:
First question: Does the local ordinance, constitute, in effect, double taxation?
Answer: Yes, there is double taxation because there are two kinds of taxes levied on the same person for the
same occupation or business.
The Province of Cagayan enacts an ordinance which imposes an occupation tax upon owners of prawn farms.
The validity of the ordinance is being challenged on the ground that it constitutes double taxation because the
prawn farm is already subject to land tax.
Answer: Yes, because there are two different taxes involved, a tax on occupation and a tax on the land.
Hence, there is no double taxation.
ANSWER: A
Reference:
• Section 33 (A), NIRC, as amended
• Section 2.33 (A), Revenue Regulations No. 3-98
How much is the liability of Aliza Telecommunications in filing the BIR Form No. 2550Q for the second quarter
of CY 2017?
Solution:
A. where the taxpayer requests for and is granted a reinvestigation by the Commissioner
B. if the Commissioner of the BIR is out of the country
C. if the taxpayer changes his address stated in the return without informing the BIR Commissioner
D. answer not given
ANSWER: B.
Land (900 sq. m.) inherited form the decedent’s father who died on June 15, 2007;
FMV per tax declaration, P1,900,000;
Zonal value, P3,000 per sq. m.;
Car inherited from the decedent’s father, FMV, P500,000;
Cost, P700,000;
House and lot acquired during the marriage (family home),
Zonal value, P4,100,000; assessed value, P3,300,000;
Household furniture and appliances acquired during the marriage, FMV, P500,000;
Other tangible personal properties (mode of acquisition unknown),
FMV, P1,800,000.
The following were considered as deductions from the gross estate:
ANSWER: P1,725,389
Solution:
Vanishing deduction
Value to take
Land P 2,500,000
Car 500,000 P 3,000,000
Less: Mortgage paid ( - )
Initial basis P 3,000,000
Less: [(P3,000,000/P9,650,000) X P1,200,000] 373,057
Final basis P 2,626,943
Rate 20%
Vanishing deduction P 525,389
Based on the foregoing, how much is the transitional input tax that the Company may claim in its August 2015
VAT declaration?
Solution:
Section 111 (A) of the 1997 Tax Code, as amended by R.A. 9337
A person who becomes liable to value-added tax or any person who elects to be a VAT-registered person shall, subject to
the filing of an inventory according to rules and regulations prescribed by the Secretary of Finance, upon recommendation
of the Commissioner, be allowed input tax on his beginning inventory of goods, materials and supplies equivalent to two
percent (2%) of the value of such inventory or the actual value-added tax paid on such goods, materials and supplies,
whichever is higher, which shall be creditable against the output tax.
The assets, liabilities and net worth at the end of 2010 and 2011 follow:
12.31.10 12.31.11
Assets P 700,000 P 900,000
Liabilities 200,000 100,000
Net worth P 500,000 P 800,000
Solution:
FINAL ROUND
EASY ROUND - Question 1
An individual taxpayer, married, and with two (2) qualified dependent children, has the following data for the
current year:
Solution:
A. Officers and employees, whether elected or appointed, of the Government of the Philippines, or any
political subdivision thereof or any agency or instrumentality
B. An individual who is subject to the control or direction of another with regards to the result to be
accomplished by the work, but is free as to the means and methods for accomplishing the result
C. Individuals who follow an independent trade, business, or profession, in which they offer their services
to the public
D. None of the choices
ANSWER: A
Reference:
Section 2.78.3, Revenue Regulations No. 2-98
A. Yes. The assessment of the Commissioner is correct because on matters of assessment he has the
authority to determine the value to be assessed.
B. No. The assessment of the Commissioner is incorrect because the assessment should have been
based on the fair market value at the time of death which is P1,000,000.
C. Yes. The assessment of the Commissioner is correct because it was based on the value at the time of
assessment.
D. No. The assessment of the Commissioner is incorrect because estate tax is not subject to any
assessment.
ANSWER: B
References:
Section 88 (B), NIRC, as amended Section 5, Revenue Regulations 2-2003
ANSWER: PhP9,765,691.10
Solution:
Contribution to the fund per Actuarial Valuation Report (AVR) for CY PhP 9,555,111.00
2016
Normal Cost for CY 2016 8,934,660.00
Current year past service cost PhP 620,452.00
How much is the tax payable for the entire year assuming the taxpayer uses itemized deduction method?
ANSWER: P 300,000
Solution:
Quarterly Declarations (Returns)
Annual Return
Sales P 5,900,000
Less: Cost of sales ( 1,300,000 )
Gross income from operation P 4,600,000
Add: Non-operating and other income 500,000
Total gross income P 5,100,000
Less: Deductions ( 1,050,000 )
Taxable income P 4,050,000
Tax rate (except MCIT rate) 30%
Income tax P 1,215,000
Less: Tax credits/payments
Prior year’s excess credits ( - )
Tax payments, first 3 quarters ( 890,000 )
Creditable tax withheld, first 3 quarters ( 25,000 )
Creditable tax withheld, fourth quarter ( - )
Tax payable (overpayment) P 300,000
Revenues Collections
Hotel rooms (local guests) P 800,000 P 700,000
Dining hall:
Sale of food and refreshments 1,000,000 850,000
Sale of wine, beer and liquor 700,000 600,000
Disco:
Sale of food and refreshments 600,000 550,000
Sale of wine, beer and liquor 500,000 450,000
How much is the output tax for the first quarter of 2016 using 12% VAT rate?
ANSWER: P 258,000
Solution:
Solution:
Insurance P 15,000
Freight 10,000
Postage 5,000
Wharfage dues 7,000
Arrastre charges 8,000
Brokerage fees 25,000
Facilitation fee 3,000
The imported article was subject to P50,000 customs duties and to P30,000 excise tax. After the release from
the Bureau of Customs, Babes Corp. paid P5,000, net of VAT, for trucking to a warehouse in Quezon City. It
also paid warehousing rent of P10,000, net of VAT.
How much was the VAT on importation using 12% VAT rate?
Solution:
Value of imported goods (Y1,000,000 X 0.35) P 350,000
Add: Customs duties P 50,000
Excise tax 30,000
Insurance 15,000
Freight 10,000
Postage 5,000
Wharfage 7,000
Arrastre charges 8,000
Brokerage fees 25,000 150,000
Total P 500,000
Tax rate 12%
VAT on importation P 60,000
Facilitation fee is not a legal charge. It is not included in the term “other charges prior to release of goods from Customs
custody.”
ANSWER: D.