and value added taxes? Explain. ( 4% )2.if they are taxable, when must the duties and taxes be paid? What are thebases for and purposes of computing customs duties and VAT? To whom must theduties and VAT be paid? Explain. ( 3% )VMaria Suerte, a Filipino citizen, purchased a lot in Makati City in 1980 at aprice of P1 million. Said property has been leased to MAS Corporation, a domesticcorporation engaged in manufacturing paper products, owned 99% by Maria Suerte. InOctober 2007, EIP Corporation, a real estate developer, expressed its desire tobuy the Makati property at its fair market value P300 million, payable as follows: (a) P60 million down payment; and (b) balance, payable equally in twenty four(24) monthly consecutive installments. Upon the advice of a tax lawyer, MariaSuerte exchanged her Makati property for shares of stock of MAS Corporation. A BIRruling, confirming the tax-free exchange of property for shares of stock, wassecured from the BIR National Office and a Certificate Authorizing Registrationwas issued by the Revenue District Officer (RDO) where the property was located.Subsequently, she sold her entire stock holdings in MAS Corporation to EIPCorporation for P300 million. In view of the tax advice, Maria Suerte paid onlythe capital gains tax of P29,895,000 ( P100,000 x 5% plus P298,900,00 x 10% ),instead of the corporate income tax of P104,650,00 ( 35% on P299 million gain fromsale of real property ). After evaluating the capital gains tax payment, the RDOwrote a letter to Maria Suerte, Slating that she commited tax evasion.Is the contention of the RDO tenable? Or was it tax avoidance that Maria Suertehad resorted to? Explain. ( 6% )VIWhile driving his car to Baquio last month, Pedro Asuncion, together with his wifeAssunta, and only son Jaime, met an accident that caused the instantaneous deathof Jaime. The following day, Assunta also died in the hospital. The spouses andtheir son had the following assets and liabilities at the time of death :AssuntaExclusiveConjugalJaimeExclusive________________________________________Cash P10,000,000.00P1,200,00.00CarsP2,000,000.00500,000.00Land5,000,000.002,000,000.00Residential House 4,000,000.00Mortgage Payable 2,500,000.00Funeral Expenses 300,000.001.Is the Estate of Jaime Asuncion liable for estate tax? Explain. ( 4% )2.Is vanishing deduction applicable to the Estate of Assunta Asuncion? Explain( 4% )VIIAfter examining the books and records of EDS Corporation, the 2004 finalassessment notice, showing basic tax of P1,000,000 deficiency interest of P400,000and due date for payment of April 30, 2007, but without the demand letter, wasmailed and released by the BIR on April 15, 2007. The registered letter,containing the tax assessment, was received by the EDS Corporation on April 25,20071.What is an assessment notice? What are the requisites of a valid assessment?Explain ( 3% )2.As tax lawyer of EDS Corporation, what legal defense(s) would you raisedagainst the assessment? Explain. ( 3% ).VIIIThe City of Manila enacted an ordinance, imposing a 5% tax on gross receipts onrentals of space in privately-owned public markets. BAT Corporation questioned thevalidity of the ordinance, stating that the tax is an income tax, which cannot beimposed by the city government.