1. A Computation: DST = 2,200,000 x 1.5% = 33,000 Legal Basis: Section 196, NIRC there shall be collected a documentary stamp tax based on the consideration contracted to be paid for such realty or on its fair market value determined in accordance with Section 6(E) of this Code, whichever is higher. Section 6(E), NIRCFor purposes of computing any internal revenue tax, the value of the property shall be, whichever is the higher of: (1) the fair market value as determined by the Commissioner, or (2) the fair market value as shown in the schedule of values of the Provincial and City Assessors. 2. C Legal Basis: Section 195, NIRC there shall be collected a documentary stamp tax at the following rates: (a) When the amount secured does not exceed Five thousand pesos (P5,000), Twenty pesos (P20.00). (b) On each Five thousand pesos (P5,000), or fractional part thereof in excess of Five thousand pesos (P5,000), an additional tax of Ten pesos (P10.00). on any mortgage, pledge, or deed of trust. 3. B Legal Basis: Section 86(A)(4), NIRCThe Family Home. - An amount equivalent to the current fair market value of the decedent's family home: Provided, however, That if the said current fair market value exceeds One million pesos (P1,000,000), the excess shall be subject to estate tax. 4. B Legal Basis: Revenue Regulation 2-1998, Section 2.57.2(J) where the seller/ transferor is habitually engaged in the real estate business, the creditable withholding tax rate is 3.0% if the selling price is more than P500,000 but not more than P2,000,000. 5. B Legal Basis: Revenue Regulation 2-1998, Section 2.57.2(J) if the seller/ transferor is not registered with LUURB or HUDCC, he/ it may prove that he/ it is engaged in the real estate business by offering other satisfactory evidence (for example, he/ it consummated during the preceding year at least six (6) taxable real estate transactions, regardless of amount). 6. B Legal Basis: Revenue Regulation 7-2003 Ordinary assets shall refer to all real properties specifically excluded from the definition of capital assets, namely: 1. Stock in trade of a taxpayer or other real property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year; or 2. Real property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business; or 3. Real property used in trade or business (i.e., buildings and/or improvements) of a character which is subject to the allowance for depreciation provided for under Sec. 34(F) of the Code; or 4. Real property used in trade or business of the taxpayer.
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7. A Legal Basis: Section 248(B), NIRC In case of willful neglect to file the return within the period prescribed, or in case a false or fraudulent return is willfully made, the penalty to be imposed shall be fifty percent (50%) of the tax or of the deficiency tax, in case, any payment has been made on the basis of such return before the discovery of the falsity or fraud.
8. C Legal Basis: Section 200(B), NIRC within ten (10) days after the close of the month when the taxable document was made, signed, issued, accepted, or transferred, and the tax thereon shall be paid at the same time the aforesaid return is filed. However, this was superseded by Revenue Regulation 6-2001 dated August 1, 2001 which provides the DST return shall be filed within five (5) days after the close of the month. 9. B Rate = Initial payments = 600,000 = 30% (Deferred payment) Selling price 2,000,000 Capital gains tax = 2,0000,000 x 6% = 120,000 10. D Legal Basis: Section 90(B), NIRC the estate tax return shall be filed within six (6) months from the decedent's death. 11. C Formula using straight-line method of depreciation: Estimated useful life = 100% _ Annual Depreciation Rate = 100%/ 2.5% = 40 years 12. D Legal Basis: Section 173 to 201, NIRC. The Tax Code did not mention that donation transaction shall be subjected to documentary stamp tax. 13. D Legal Basis: Revenue Regulation 7-2003 The sale of real property located in the Philippines, classified as ordinary assets, shall be subject to the creditable withholding tax (expanded). 14. A Legal Basis: Section 236(B), NIRC An annual registration fee in the amount of Five hundred pesos (P500) for every separate or distinct establishment or place of business, including facility types where sales transactions occur, shall be paid upon registration and every year thereafter on or before the last day of January. 15. D Legal Basis: Section 24(D)(2), NIRC That the Commissioner shall have been duly notified by the taxpayer within thirty (30) days from the date of sale or disposition through a prescribed return of his intention to avail of the tax exemption. 16. A Legal Basis: Section 86(A)(1)(a), NIRC For actual funeral expenses or in an amount equal to five percent (5%) of the gross estate, whichever is lower, but in no case to exceed two hundred thousand pesos (P200,000).
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17. A Legal Basis: Section 106(A), NIRC There shall be levied, assessed and collected on every sale, barter or exchange of goods or properties, value-added tax equivalent to ten percent (10%) of the gross selling price or gross value in money of the goods or properties sold, bartered or exchanged, such tax to be paid by the seller or transferor. However, this was clarified by Revenue Memorandum Circulars 7- 2006, 8-2006, & 22-2006 which provides the implementation of the VAT rate from 10% to 12% effective February 1, 2006. 18. C Legal Basis: Section 24(D)(2), NIRC Capital gains presumed to have been realized from the sale or disposition of their principal residence by natural persons, the proceeds of which is fully utilized in acquiring or constructing a new principal residence within eighteen (18) calendar months from the date of sale or disposition, shall be exempt from the capital gains tax.
19. C Reference: BIR Form 1706. Capital Gains Tax Returnthe return shall be filed within thirty (30) days following each sale, exchange or disposition of real property. Thus, capital gains tax accrues upon the notarization of the deed of sale. 20. B Legal Basis: Revenue Ruling 17-2003(J) DST shall accrue upon the execution of the Deed of Absolute Sale but the basis for the imposition thereof shall be the gross SP or FMV at the time of the execution of the Contract to Sell. 21. C Legal Basis: Section 99(B), NIRCWhen the donee or beneficiary is stranger, the tax payable by the donor shall be thirty percent (30%) of the net gifts. For the purpose of this tax, a "stranger", is a person who is not a: (1) Brother, sister (whether by whole or half-blood), spouse, ancestor and lineal descendant; or (2) Relative by consanguinity in the collateral line within the fourth degree of relationship. 22. C Legal Basis: Section 6(E), NIRC. Authority of the Commissioner to Prescribe Real Property Values The Commissioner is hereby authorized to divide the Philippines into different zones or areas and shall, upon consultation with competent appraisers both from the private and public sectors, determine the fair market value of real properties located in each zone or area. For purposes of computing any internal revenue tax, the value of the property shall be, whichever is the higher of: (1) the fair market value as determined by the Commissioner, or (2) the fair market value as shown in the schedule of values of the Provincial and City Assessors. 23. A Legal Basis: Revenue Regulation 2-1998, Section 2.57.2(J) where the seller/ transferor is habitually engaged in the real estate business, the creditable withholding tax rate is 1.5% if the selling price is P500,000 or less.
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24. B Formula to compute selling price inclusive of VAT: Selling price, inclusive of VAT = VAT + VAT 12% = 360,000 + 360,000 12% = 3,360,000 25. D Legal Basis: Revenue Regulation 16-2011, Section 3.VAT Exempt Transactions Sale of residential lot valued at One Million Nine Hundred Nineteen Thousand Five Hundred Pesos (P1,919,500.00) and below, or house & lot and other residential dwellings valued at Three Million One Hundred Ninety-Nine Thousand Two Hundred Pesos (P3,199,200.00) and below. 26. A Formula to compute tax base subject to CGT: Selling price 6,500,000 Fair market value: Land 2,500,000 Improvement 2,000,000 4,500,000 Zonal value: Land 5,000,000 Improvement 2,000,000 7,000,000 Tax base (higher) 7,000,000
27. C Legal Basis: Revenue Regulation 7-2003 dated December 27, 2002 Real properties acquired by banks through foreclosure sales are considered as their ordinary assets. However, banks shall not be considered as habitually engaged in the real estate business.. 28. C Formula to compute CGT on unutilized portion: CGT on unutilized = Tax Base x CGT Rate x Unutilized portion portion Gross Selling Price = 5,000,000 x 6% x 1,000,000 4,000,000 = 75,000 29. D Legal Basis: Revenue Regulation 2-1998, Section 2.57.5(B)(1) Exemption from Withholding sales of real property by a corporation which is registered with and certified by HLURB or HUDCC as engaged in socialized housing project. 30. D Legal Basis: Revenue Regulation 2-1998, Section 2.57.2(J) where the seller/ transferor is not habitually engaged in the real estate business, the creditable withholding tax rate is 6.0%.