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SUGGESTED ANSWERS TO MOCK BAR -Aitawin Corporation (Asivn) mains a resonable private bani plan fr 1000 covered emploess. The plat taques tat oth the employer andthe employee would cone fr the curt pension Lubliy which i dae every sol prod Forte efcica management ofthe pension find, MBA Retirement Plans, the. (MBA), as ergaized to manage te sane. Accor, th und was invested in mony marke! placement corpo nds, ain ray acquisitions ‘Mie Agullaretred frm Agiswin Coporation his fist and only empaye of 20 yes on December 3, 2015, his 33% Bhd. and ceived ree ments Iter 2 ‘element package of #3 milion from MBA, PL milion of whih came from he sntbetons mae by Agua fo the pelo plas i he Kem of lary destin ‘re Agu now approaches you ods the following iste: 4. Are the itrst earned fom the money markt plaemens and corporate onde sates income ux? Atwae? Expan 299), Suggested Aner: No. All income eared by the employee's tas hare the MIA Retirement Pins tn ae exempt fom income tax (See 6 ‘SIRG)(GCL Retremen Pls, CHR) 1b. IF MBA sels areal propeny beld fo avesment purposes and solely for «spit aprecitn, i tesa sujet capa plas wx? Expl. 25%) ‘Suggested Answer: No Same easoa as above. What isthe income ex impition ofthe 5 million ratiement benefits recalied by Me Aguila in 2016? Explain. (3). ‘Suggested Answer. Agus wl be tally exe fom income tx. Whit be reccved ian enlsion frm his gross income fm he nte of eee [roe wire al the mguirments (ge length of service equeey) Wee complied wih (Sea 77,6), NRO. 4. Will your answer beth same i Mr, Agila etd at age 479 Expl, 58) ‘Suggested Anover: No. tis ony the icame of the riement pan that is ‘exempt fom income iat Distrib tothe covered employe eal 1 him if the requrerous for exclusion, a in thse the ne regime, ie not me, but onl ino free excess ove ofthe mount ont by ad employee (ee. 6) NUR). thea the plan contributory plan where Me: Agus hd contributed PI millon. Acorinly. only P2 milion is tule to hin, out ofthe retremnent benefit of PS tlio, se compensation 2 Del Mont Corporation is» US. Corporation which manufttres and disribues etchup I established 8 brah herein the Pilipines, Dsl Most Pail Branch, whlch as eased ia 2014 In hese ea, won anf compton ase ‘Sosns Suan Ketchup which uso Del Monts tote an slr color for fs Feckaging. Del Mont every happy with the cucome of he ese, become i 2013, the fit year fits commercial operations ia the Pili, it was ble to esablich ominance In Philippine marketshare fori Ketchup products. Because of hs velopment for ae year 2015, the Home Office ered gos insome of Pp 5300 Milf, while the Banh reponed a poss iname of Pp 148.89 Mile The flowing year Dal Mont (Parent Canpany) dstbuted dividends t Hs sole stockoler nthe US, Hens Cop, amoung o $2 Mion. Te BIR now goes 0 you for avi since is Legal Offers tak a vacation afer wining 2 casein he {Eta division, and asking whether esl ta he dividends. As ead oe BIR nd acknowledged expe nation, wht wil our vice be? (3%) Suagesed neers The BIR cannot a the dividends bec ts emialy eared fom that The gro income ofthe Branch dd aot enc. 0% of world ‘neue which iss conon for atibatlon ofa portion ofthe divides soured iin, See. 42, NIRC) Me, X sol his principal residence wih present FMV of PLZ milion fr PLO lio, He purchased this propery 5 years ag fr PS millon. He wsed Ys of he Proceeds of sain acquiring new print residence wibin 6 moths om ae of {El The em property se good business porpest being Inte in the wit af Five shoots wo yous fom the die of is sequen, be converted his new Brincislresience ito an inte ef calering Yo tae. Aer operating Bs ‘snes fora yer, be dosed wo soll he prope Te PS lion which seu 0 the FMV of te prope and used the roees in purchasing within TS mons. « tnt in Serena Candominiome for PE min which he wl use 8s plata reidene. You were now consulted wih he along ssc 1 How will Mr x determin is capital gaint ax Habit forte sale of theo ila residence? (50) Suggested Answer: The capital gains ax of 6% shall be nosed on PS ‘rte oa pata exertion where heute prton or te fr ast aloe thereof whichever i higher is subject othe capil gate la See DQ) MRO. 1 How wil Mt. determine his income tax exposure these of interne cae propery (5) ‘Suggested Anser Me X wil compute is ain by eating fom the selling pre of PS lion the ary-over bso the propo PS ilion resting {an orinary gan of PS lion. He wl be sujet oe repulr income ts _ ‘es impose on tavdals onthe gan along with ote etnable income ‘aed dring the year of sale, (Se 40in relation Se. 240), NIRC) © Can he avail exempticn rom toes on the 2" sale considering tat the proceeds was lly wie in asqlag ne precip esisonce (34%) Suggested Answer Noho propery so i pot principal sien. Even if ‘he proceeds i lly ized aeqing ane pcp residence the sles not accorded any exemption om come a (Se. 2402), NRC), | ABC Corp. (ABC) extend lan to ts sir without charging ay inert. The Commisionr assed defienyiname tes on ABC by inputing asa income themes could hve been eamed by ihe oan wore ranted oa noncelatad ry under en armsng rans. The Commisoner asserts ha he hs the ower to Inpte an ncaneIecasee the broad pwer given to hint allocate Income and deduction in oreo determin the sorect ts ity of axpyer tnder Sesion 80 of the Tax Cade Is the Commisioner covet ih making the ‘ssesnent? (2) Suggested Answer: The Commision swoon. Aninerest cn note pute in Joan wher the panes. not provide for meres. Thee mst Bea ea come before the Commissioner is allowed 0 allsate the same. (CIR ¥. Fumes Dewlopment Corporation ‘5 On April 27, 2010, Mar Dehado doniod a property Ineted in Quezon Ci, Eensising of alot and commercial apartment, Sony Tripanes. The deed of omaton provides thar Mar Wil man height To the sme for ten (0) years ‘eehoned fm he dt f donation, Te propery was previously puchnsd By Ma's Tate for PS milion and ota ito Mar 2009 when the hr marht vale ot propery was PID milion and cordingly paid the one’s wx. Discuss the lacome {Sand wane mplistions of al te tanstons hea mentioned, {The sghtnhelnsome is lingished by Mar on Apil27 2015 whe the ie ‘make valve of he property is PLS milion sad Sonny lth proper or P20 ion (2%) Shggsted Anse: Soa realizes agin om sale of PI Smilion subj the ‘equ income tof 5% 1 3294 [Cary-over basi; 20m mins Sm). The ‘anation by Marto Sonny becomes acompleed git oly in Apel 27, 2018 ‘tenis ight oho come ae squeal te donor's it be ui within 50 Maris on Api 27,205 a Sony le propery fr 8 iin, as%) ~ Suggested Answer: The esa tis de onthe tans ofthe propery fom Maro Sonny being in the ature donut ots US} Tera, ‘wea Sonny sls thee proper dncome ax dae oT gla gealzd ‘wich 3 enaed a the enwcen the anoun vealed of P2 sullon an he seooatap tis af PLS ali. Unser) aon, wl he este of Mar be emi 1 cin sani deduction. Explain. (2.5%) * Shgested Answer: No. The property was acquired bf by Mar por tha {sevens om the dt of his dea, sls Mar por tag ling oni a id ein a ing nt «GD Cont St Upon i a ty ah oes a rn