Part 1 - Total of 33Pts: San Beda University College of Law Taxation2 Final Examination

SAN BEDA UNIVERSITY
COLLEGE OF LAW
TAXATION2 FINAL EXAMINATION
PART 1 – TOTAL OF 33PTS
QUESTION NO. 1
Zuma Langit died on 1 November 2019, survived by his wife Sawa and 2 legitimate children by
a former marriage, leaving the following:
I. Property owned before marriage
Zuma – Php 8 Million
Sawa – Php 1 Million
II. Income of property in I during marriage
Zuma – Php 2 Million
Sawa – Php 200,000
III. Property acquired during marriage by gratuitous title
Zuma – Php 1 million
Sawa – Php 300,000
IV. Pieces of jewelry acquired using the property in III
Zuma – Php 400,000
Sawa – Php 100,000
V. Pieces of jewelry purchased during marriage using their respective income from
practice of profession
Zuma – Php 200,000
Sawa – Php 100,000
a. If the spouses are under the conjugal partnership of gains, what will be included in the (5
points):
1. Exclusive property of Zuma
2. Gross estate of Zuma
b. Will your answers be the same if they are under the absolute community of property? (5
points)
c. Thereafter, the BIR discovered that Zuma had 2 life insurance policies taken during the
marriage. In the first policy, his mother is the beneficiary, while in the second, Sawa is the
beneficiary, and Zuma likewise made a transfer for insufficient consideration during his
lifetime, where the fair market value at the time of transfer was Php 800,000 while the
consideration paid to him was only Php 500,000.Should the proceeds of life insurance and
transfer for insufficient consideration be included in the gross estate of Zuma? (5 points)
QUESTION NO. 2
Ayala, a real estate dealer sold 2 adjacent residential lots to Mr. Buendia and 2 adjacent
condominium units located at 8th floor of Tower B and 2 parking lots located at 3 rd floor and 4th
floor of Tower B to Mr. Edsa. Should the sales made to Mr. Buendia and Mr. Edsa be subject to
VAT? (5 points)
QUESTION NO. 3
Mocha, a VAT registered seller made the following during the month of January (amounts are
net of VAT)
Export sales: Php 3 Million

Domestic sales:
I. To private individuals:
a. Of goods subject to 12% VAT – Php 4 Million
b. Of goods exempt from VAT – Php 2 Million
II. To the government of goods subject to VAT – Php 1 Million
Input Taxes:
I. Directly attributable to:
a. Export sales – Php 80,000
b. Domestic sales on:
1. Goods subject to 12% VAT – Php 340,000
2. Goods exempt from VAT – Php 160,000
3. Goods sold to the government – PHP 120,000
II. Not directly attributable to any of the above sales – Php 100,000
Mocha likewise made the following acquisition of capital gods during the month:
Machine 1
Date of acquisition: January 8, 2020
Cost: Php 800,000
Estimated life: 4 years
Machine 2
Date of acquisition: January 18, 2020
Cost: Php 1,200,000
Estimated life: 6 years
a. Can Mocha ask for a refund of the input taxes directly attributable to the export and
domestic sales? (3 points)
b. Which of the input taxes can be claimed as tax credit? (3 points)
c. Will the government be required to pay the 12% VAT? (4 points)
d. What will be the treatment of the input tax on the acquisition of the capital goods? (3
points)
QUESTION NO. 4
Yoshiaki Numata, a Japanese citizen, regularly visits the Philippines and stayed with his
relatives “on and off” for a period of 200 days in 2017. Despite the fact that he is merely a
regularly visiting tourist and is in no way engaged in trade or business, he still earned money
from the Philippines. His cousin, a lawyer, told him that he has to declare his income earned
from within the Philippines and pay the corresponding income taxes. His cousin helped him
prepare his income tax return and claimed the appropriate deduction as a Non-Resident Citizen
not engaged in trade or business. Is the BIR correct? Explain (7pts).
QUESTION NO. 5
Jolibite Corporation (JC) grants all its employees 5% discount of the purchase price of its
products. During an audit investigation made by the BIR, the BIR assessed the corporation for
failure to withhold the corresponding tax on the amount equivalent to the courtesy discount
received by all the employees, contending that the courtesy discount is considered as additional
compensation for the rank and file employees. JC contends that the amount is considered as de
minimis benefits and should not be taxes. Is there legal basis for the assessment by the BIR?
Explain (7pts)
QUESTION NO. 6
A tax assessment was sent to Mr. Ascano, an employee of Visayas Samar Corporation (VSC)
earning minimum wage. In addition, VSC granted Ascano an apartment unit amounting to
P900,000, near the premise of the former for its convenience. BIR, in interpreting Republic Act
9504 (exempting minimum wage earner (MWE) receives income from whatever source other
than his wages in excess of the P82,000 threshold for other benefits, such person would
transcend as a rank & file subject to income tax. The BIR officer contends that Ascano is not
exempted to pay income tax since he falls squarely on the said BIR ruling. Is the BIR ruling
valid? Is Mr. Ascano liable to pay income tax? Assuming that in the middle of 2015, Ascano
was granted increase in wages higher than the minimum wage, is he still exempt from payment
of income tax for the year 2015? Explain (7pts)
QUESTION NO. 7
Mediatrix Hospital (MH) is a hospital organized as a non-stock and non-profit corporation.

Hospital caters not only to non-paying patients but also to those who are willing to pay for the
hospital’s services. BIR assessed MH for deficiency income tax. It argued that since MH
accommodates paying patients, the 10% preferential tax rate on income of proprietary non-
profit hospitals should apply and removing the tax exemption granted under Secs. 30(E) and
(G). Is BIR correct? Explain (7pts)
QUESTION NO. 8
Mexican Airlines (MA) is a foreign corporation and an offline international air carrier engaged
in selling airline tickets in the Philippines through Buritos Ltd. Corporation as its general sales
agent. On the assessment made by the BIR, MA claims that the regular corporation income tax
does not apply to “international carriers” because the income it derived from the sale of airline
tickets was income from services and not income from sales of personal property. Is MA subject
to income tax? Explain (6pts)
QUESTION NO. 9
Years ago, A bought a parcel of land in Muntinlupa for only P65,000. He donated the land to his
son, A Jr., in 1980 when the property had a fair market value of P75,000, and paid the
corresponding donor's tax. A Jr., in turn, sold the property in 2000 to K for P6.5 million and paid
the capital gains tax, documentary stamp tax, local transfer tax, and other fees and charges. K, in
turn, donated the land to Klaret School last August 30, 2017 to be used as the site for additional
classrooms. No donor's tax was paid, because K claimed that the donation was exempt from
taxation. At the time of the donation to Klaret School, the land had a fair market value of P65
million. Is K liable for donor's tax? Explain fully (7pts) (Patterned from 2018 Bar Exam).
QUESTION NO. 10
ABC Corporation has an apartment beside Andres Bonifacio College. Each apartment unit is
being rented out by the said corporation for Php22,000 per month. ABC Corporation also has a
dormitory beside University of San Carlos. Each person in the dormitory is being charged
Php11,000 per month by the said corporation. The gross receipts from all the persons living in
the dormitory totalled Php5,000,000.00 for the period January 1 to December 30, 2018. These
gross receipts are subject to VAT under the Tax Code. Explain fully (7pts).
QUESTION NO. 11
ABC Inc., a domestic, VAT-registered corporation engaged in the land transportation business,
owns a house and lot along Mendiola, Manila. This property is being used by ABC lnc.'s
president and single largest shareholder, Atty. Marciano, as his residence. No business activity
transpires there except for the company's Christmas party which is held there every December.
Atty. Marciano recently grew tired of the long commute from Mendiola to his office in Makati
City and caused the company to sell the house and lot. The sale was recorded in the books of
ABC Inc. as investment in real property (Patterned from 2018 Bar Exam). Is the sale of the said
property subject to VAT? Explain fully (7pts)
QUESTION NO. 12
Prior to Train Law, the guidelines for the deductibility of medical expenses and funeral
expenses for estate tax purposes are the same (4pts).
QUESTION NO. 13
Give two (2) significant amendments introduced by Train Law for estate tax purposes and
explain briefly each (4pts).
QUESTION NO. 14
True or False. The estate of a resident Filipino decedent who died 1 month ago due to COVID
can claim a vanishing deduction for estate tax purposes. Explain fully (4pts).

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SAN BEDA UNIVERSITY

PART 1 – TOTAL OF 33PTS

Export sales: Php 3 Million

PART 2 – TOTAL OF 34PTS

Mediatrix Hospital (MH) is a hospital organized as a non-stock and non-profit corporation.

PART 3 – TOTAL OF 33PTS

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