ATTY. ROMMEL T. GEOCANIGA 5.

Article XIV Section 4 (3)

Academic Year 2018-2019 6. Article VI, Section 27(2)
Tax I 7. Article VIII, Section 5 (2)(b)
8. Article X, Section 6
INCOME TAX 9. Article VI Section 28 (4)
10. Article VI, Section 29 (3)
11. Article III, Section 1 (Due Process)
I. Introduction and General Principles Pepsi Cola Bottling Company vs. Municipality of Tanauan 69 SCRA 460
Revenue Regulation No. 18-2013
a. Definition and concept of Taxation 12. Article III, Section 1 (Equal Protection)
John Hay vs. Lim 414 SCRA 356
1. Theory and basis of Taxation British American Tobacco vs. Camacho 562 SCRA 511
2. Life blood theory 13. Article III, Section 5 (Religious Freedom )
Commissioner of Internal Revenue vs. Algue Inc. 158 SCRA 9 14. Article III, Section 10 (Non-impairment of Contracts

3. Necessity Theory
4. Benefits-Protection Theory e. Doctrines in Taxation
5. Jurisdiction over subjects and objects 1. Prospectivity of tax laws
Republic vs. Ablaza 108 PHIL 1105
6. Principles of a Sound Tax System 2. Double Taxation
Commissioner of Internal Revenue vs. Solidbank Corporation 416 SCRA 436
7. Inherent nature power of the state Compania General De Tabacosvs City of Manila 8 SCRA 367
City of Baguio vs. De Leon 25 SCRA 938
3. Direct vs. Indirect Taxes
b. Purpose of Taxation Asia International Auctioneers vs. Commissioner of Internal Revenue (G.R. No.
1. Revenue Raising 179115, September 26, 2012)
2. Regulatory
Tio vs. Videogram Regulatory Board 151 SCRA 208 (1987) 4. Tax Exemption
Philippine Health Care Providers vs Commissioner of Internal Revenue 554 SCRA Republic vs. Caguioa 536 SCRA 194
411 5. Compensation and set-off
c. Power of Taxation compared with other powers Commissioner of Internal Revenue vs. Gould Pumps Inc. (August 22, 2012)

1. Police Power SolutioIndebiti

2. Power of eminent domain Filinvest Development Corporation vs. CIR 529 SCRA 605
`
d. Limitations on Taxing Power Tax Amnesty
6. Construction of tax statutes
1. Public Purpose Liberal Construction in favor of Taxpayers- Manila Railroad vs. Collector of
2. Inherently legislative Customs 52 Phil 950 (1929)
Mactan Cebu International Airport Authority vs. Marcos 261 SCRA 667
Napocor vs. City of Cabanatuan G.R. No. 1491110, April 9, 2003 Philippine Health Care Providers vs Commissioner of Internal Revenue 554
3. Territorial; Situs of Taxation SCRA 411
4. Exemption of government
5. Constitutional Limitations of Taxation Commissioner of Customs vs. Hypermix Feeds G.R. No. 179579, February 1,
2012
1. Article III, Section 20 Meralco vs. Vera 67 SCRA 352
2. Article VI Section 28 (1) Quezon City vs. ABS-CBN 567 SCRA 495- StricissimiJuris
Abakada vs. Ermita 469 SCRA 1 Non-retroactive application (Section 246 of Tax Code)
Tolentino vs. Secretary Finance 249 SCRA 628 PBCOM vs. CIR 302 SCRA 241
BIR Ruling No. 370-2011 October 7, 2011
3. Article VI Section 28 (2) BDO et.al vs. Rep of Phil and CIR G.R. No. 198756 dated January 13, 2015
RMO 20-2013 (July 22,2013)
St. Paul College vs. CIR (RTC-Makati Civil Case No. 13-1268, 13-1405,
December 27, 2013) 7. Tax Avoidance vs. Evasion
RMO 34-2014 CIR vs. Estate of Toda September 14, 2004
4. Article VI Section 28 (3)
Lung Center of the Philippines 433 SCRA 119
CIR vs. CA 298 SCRA 83
CIR vs. St. Lukes Medical Center September 26, 2012
 II. Income Tax James vs. United States, 366 US 213 (May 15, 1961)

1. Definitions Section 50, RR 2

RMC 13-80 (April 10, 1980)
Section 22 (A) to (I), (Z), (GG), and (HH), Tax Code
Sections 31, 35 (B), and 39 (A), Tax Code Inventories
Republic Act No. 10963- provisions amending Section 31, 35 Section 41, Tax Code

Resident citizens and resident aliens BIR Ruling DA 128-08 (August 11, 2008)
Garrison vs. Court of Appeals (July 19, 1990)
Non-resident citizens Exclusions
RR 1-79 (January 8, 1979)
RR 5-01 (July 31, 2001) Section 32 (B), Tax Code
BIR Ruling 33-00 (September 5, 2000)
BIR Ruling DA 095-05 (March 29, 2005) Retirement benefits, etc.
Non-resident aliens engaged in business in the Philippines Commissioner of Internal Revenue vs. Court of Appeals (March 23, 1992)
Sec. 5 & 6, RR 2 Commissioner of Internal Revenue vs. Court of Appeals (October 17, 1991)
Corporations Re: Request of Atty. Bernardo Zialcita (October 18, 1990)
AFISCO Insurance Corporation vs. Court of Appeals (January 25, 1999) Intercontinental Broadcasting Corporation vs. Amarilla (October 27, 2006)
Pascual vs. Commissioner of Internal Revenue (October 18, 1988)
Obillos vs. Commissioner of Internal Revenue (October 29, 1985) RMC 27-2011 (July 1, 2011)
Oña vs. Commissioner of Internal Revenue (May 25, 1972)
Income derived by foreign government
RR 10-2012 (June 1, 2012) Commissioner of Internal Revenue vs. Mitsubishi Metal Corporation (January 22,
BIR Ruling 108-2010 (October 19, 2010) 1990)

2. Income De minimis/ PERA

Republic Act 9505
In general
Madrigal vs. Rafferty (August 7, 1918) RR 5-2011 (March 16, 2011)
Fisher vs. Trinidad (October 30, 1922) RR 17-2011 (October 27, 2011)
Limpan Investment Corporation vs. Commissioner of Internal Revenue (July 26, RR 8-2012 (May 11, 2012)
1966) BIR Ruling 234-13, June 27, 2013
Conwi vs. Court of Tax Appeals ( August 31, 1992)
Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (March 28, 1955) 3. General Principles
Murphy vs. Internal Revenue Service 460 F3rd 79 – D.C. Circuit Court (August 22,
2006) Section 23, Tax Code

Statutory “inclusions” 4. Source of Income Rules

Section 32 (A), Tax Code
Section 42, Tax Code
Compensation for services
Old Colony Trust Co. vs. Commissioner of Internal Revenue, 279 US 716 (June 3, Gross income from sources within Phils.
1929) Commissioner of Internal Revenue vs. Marubeni Corporation (December 18, 2001)
Commissioner of Internal Revenue vs. BOAC (April 30, 1987)
Rents Commissioner v. CTA and Smith Kline & French Overseas (January 17, 1984)
Helvering vs. Bruun, 309 US 461 (March 25, 1940) Philippine Guaranty Co., Inc. vs. Commissioner of Internal Revenue (April 30, 1965)
Howden& Co., Ltd. Vs. Collector of Internal Revenue (April 14, 1965)
Section 49, RR 2 Philippine American Life Insurance Company, Inc. vs. Court of Tax Appeals – CA-GR Sp.
No. 31283 (April 25, 1995)
Dividends Commissioner of Internal Revenue vs. Baier-Nickel (August 29, 2006)
Section 73 (A) to (C), Tax Code
Quill Corp. vs. North Dakota, 504 US 298 (May 26, 1992)
Commissioner of Internal Revenue vs. Court of Appeals (January 20, 1999) Vodafone International Holdings B.V. vs. Union of India &Anr. (Supreme Court of India,
Wise & Co., Inc. vs. Meer (June 30, 1947) Civil Appeal No. 733 of 2012; January 20, 2012)

Section 250-256, RR 2 RMC 55-2013 (August 5, 2013)

BIR Ruling 322-87 (October 19, 1987) RAMO 1-95 (March 21, 1995)
BIR Ruling 479-11 (December 5, 2011) RAMO 1-86 (April 25, 1986)
BIR Ruling 039-02 (November 11, 2002) RAMO 4-86 (April 5, 1986)

“From whatever source”

2
5. Deductions
RR 5-99 (March 10, 1999)
Sections 34 and 35, Tax Code
Depreciation
Business expenses Basilan Estates, Inc. vs. Commissioner of Internal Revenue (September 5, 1967)
Republic Act 10026 (Sections 3 & 14 only) Limpan Investment Corporation vs. Commissioner of Internal Revenue (July 26,
Republic Act 8502 1966)
Republic Act 8525 (Sections 1 to 5 only)
Republic Act 9999 RR 12-2012 (October 12, 2012)

Commissioner of Internal Revenue vs. Isabela Cultural Corporation (February 12, Depletion
2007) Consolidated Mines, Inc. vs. Court of Tax Appeals (August 29, 1974)
Commissioner of Internal Revenue vs. General Foods (Phils.) Inc. (April 24,
2003) Charitable and other contributions
Aguinaldo Industries Corporation vs. Commissioner of Internal Revenue (February BIR Ruling 19-01 (May 10, 2001)
25, 1982)
Atlas Consolidated Mining & Development Corporation vs. Commissioner of Internal Research and Development
Revenue (January 27, 1981) 3M Philippines, Inc. vs. Commissioner of Internal Revenue (September 26, 1988)
Zamora vs. Collector of Internal Revenue (May 31, 1963)
C.M. Hoskins & Co., Inc. vs. Commissioner of Internal Revenue (November 28, 1969) Additional requirements for deductibility
Calanoc vs. Collector of Internal Revenue (November 29, 1961) RMO 38-83 (November 14, 1983)
Kuenzle&Streiff, Inc. vs. Collector of Internal Revenue (October 20, 1959) RR 12-2013 (July 11, 2013)
RMC 63-2013 (September 26, 2013)
RR 10-2002 (July 10, 2002)
RR 1-2009 (December 9, 2008) Optional Standard Deduction
RR 7-2010 (July 20, 2010) Section 34 (L), Tax Code as amended by Republic Act 9504
RMC 38-2012 (August 3, 2012)
RR 2-2010 (February 18, 2010)
Interest (as amended by Republic Act 9337) RR 16-2008 (November 26, 2008) (Sections 1 to 5 only)
Paper Industries Corporation of the Philippines vs. Court of Appeals (December 1,
1995) Premium payments on health and/or hospitalization insurance
Commissioner of Internal Revenue vs. Vda.dePrieto (September 30, 1960)
Non-deductible expenses
RR 13-2000 (November 20, 2000) Section 36, Tax Code

Interest arbitrage Esso Standard Eastern, Inc. vs. Commissioner of Internal Revenue (July 7, 1989)

BIR Ruling No. 006-00 (January 5, 2000) Section 119-122, RR 2

Taxes 6. Individuals
Commissioner of Internal Revenue vs. Lednicky (July 31, 1964)
Sections 24(as amended by Republic Act 10963)& 25, Tax Code
Losses
Ordinary Income
Section 38, Tax Code Passive Income
Section 22 (T) to (Y), Tax Code
RR 12-77 (October 6, 1977)
RMO 31-2009 (October 16, 2009) RR 14-2012 (November 7, 2012)
RMO 6-2012
NOLCO Capital Gains Tax
Paper Industries Corporation of the Philippines vs. Court of Appeals Section 22 (Z) and 39 (B), Tax Code
(December 1, 1995)
RR 14-01 (August 27, 2001) Supreme Transliner, Inc. vs. BPI Family Savings Bank, Inc. (February 23, 2011)
BIR Ruling 30-00 (August 10, 2000)
Forex losses RR 8-98 (August 25, 1998)
BIR Ruling 206-90 (October 30, 1990) RR 4-99 (March 9, 1999)
BIR Ruling No. 144-85 (August 26, 1985) RR 13-99 (July 26, 1999)
RR 14-2000 (November 20, 2000)
Bad Debts RR 06-2008 (April 22, 2008)
Philex Mining Corporation vs. Commissioner of Internal Revenue (April 16, 2008) RMC 37-2012 (August 3, 2012)
Philippine Refining Company vs. Court of Appeals (May 8, 1996) BIR Ruling DA 029-08 (January 23, 2008)
Fernandez Hermanos, Inc. vs. Commissioner of Internal Revenue (September 30, BIR Ruling DA 287-07 (May 8, 2007)
1969) RR 6-2013 (April 11, 2013)
3
 OCWs/Senior Citizens/Disabled ITAD BIR Ruling No. 018-09 (June 23, 2009)
M.E. Holdings Corporation vs. CIR & CTA (March 3, 2008)
Regional or Area Headquarters and ROHQs
RR 1-2009 (December 9, 2008) Section 22 (DD) & (EE), Tax Code
RR 7-2010 (July 20, 2010)
RR 1-2011 (February 24, 2011) RR 11-2010 (October 26, 2010)

Personal and additional exemptions/PERA (3) Nonresident Foreign Corporations

Section 35 (A), (B), (C), and (D), Tax Code
Section 28 (B), Tax Code
Republic Act 10165, Sections 3-5 & 22-24 only In general
Republic Act 9504 Commissioner of Internal Revenue vs. S.C. Johnson and Son, Inc. (June
Republic Act 9505 25, 1999)
Marubeni Corporation vs. Commissioner of Internal Revenue (September
Pansacola vs. Commissioner of Internal Revenue (November 16, 2006) 14, 1989)
N.V. Reederij “Amsterdam” and Royal InterOcean Lines vs. Commissioner
RR 17-2011 (October 27, 2011) of Internal Revenue (June 23, 1988)
Special non-resident foreign corporations
7. Partnerships Tax on Certain Incomes of Non-resident Foreign Corporations
Interest on foreign loans
Section 26& 73 (D), Tax Code Intercorporate dividends
Section 28 (B)(5)(b), Tax Code, as amended by Republic Act
RR 2-2010 (February 18, 2010) 9337
Commissioner of Internal Revenue vs. Procter & Gamble
Philippines Manufacturing Corp. (December 2, 1991)
8. Corporations Interpublic Group of Companies vs. Commissioner of Internal
Revenue (CTA Case No. 7796, February 21, 2011)
Sections 27 (A) & (D), and 28, Tax Code as amended by Republic Act 9294 & Republic Act BIR Ruling DA-145-07 (March 8, 2007)
9337 Income covered by Tax Treaties
Mirant (Philippines) Operations Corporation vs. Commissioner
(1) Domestic Corporations of Internal Revenue (CTA EB Case No. 40, June 7, 2005 as
affirmed by SC Minute Resolution dated February 18, 2008)
Ordinary Income
Passive Income RMO 072-10 (August 25, 2010)
Capital Gains Tax ITAD Ruling 102-02 (May 28, 2002)
RR 4-99 (March 9, 1999) Deustche Bank vs. Commissioner of Internal Revenue (GR No.
RR 06-2008 (April 22, 2008) 188550 [August 19,2013])
RMC 55-2010 (June 28, 2010)
BIR Ruling DA 455-07 (August 17, 2007) 9. Withholding Tax

(2) Resident Foreign Corporations Section 22 (K), Tax Code

Section 28 (A), Tax Code as amended by Republic Act 9294 Final Withholding Tax at Source
Section 57 (A), Tax Code
In general Commissioner of Internal Revenue vs. Smart Communication, Inc. (August 25, 2010)
International Carrier Section 2.57. (A) & 25.7.1., RR 2-98 (April 17, 1998)
Air New Zealand vs. Commissioner of Internal Revenue (CTA Case, Creditable Withholding Tax
January 30, 2008) Section 57 (B), Tax Code
Commissioner of Internal Revenue vs. BOAC (April 30, 1987) Filipinas Synthetic Fiber Corporation vs. Court of Appeals (October 12, 1999)
United Airlines, Inc. vs. Commissioner of Internal Revenue (September 29, Section 2.57. (B) & 25.7.2., RR 2-98 (April 17, 1998)
2010) RR 12-98 (August 14, 1998)
RR 15-2002 – Sections 1 to 5 only Return and Payment of Tax
Section 58, Tax Code
OBUs/FCDUs Withholding on Wages
Section 78 – 83, Tax Code
RR 14-2012 (November 7, 2012) Section 2.78, RR 2-98 (April 17, 1998)
RR 1-2006 (December 29, 2005)
Branch Profit Remittance Tax RMC 39-2012 (August 3, 2012)
Bank of America NT & SA vs. Court of Appeals (July 21, 1994) Withholding Tax by Government Agencies
Compania General de Tabacos de Filipinas vs. Commissioner of Internal Section 25.7.2. (N), RR 2-98 (April 17, 1998)
Revenue – CTA Case No. 4141 (August 23, 1993) & 4451 (November 17,
1993)

4
10. Special Rules Philippine Amusement and Gaming Corporation vs. Bureau of Internal Revenue (G.R.
No. 215427, December 10, 2014)- already taxable as a corporation
(1) Minimum Corporate Income Tax PAGCOR 2016- taxable only as to its income unrelated to its gaming operations.
Section 27 (E), and 28 (A)(2), Tax Code Gaming operations still exempt; PD 1869
(3) Exempt Corporations
Chamber of Real Estate Builders’ Association, Inc. vs. Executive Secretary (March 9, 2010)
Commissioner of Internal Revenue vs. Philippine Airlines , Inc. (July 7, 2009) Section 30, Tax Code

RR 9-98 (August 25, 1998) – except Sec. 2.28 (E)(7) “Accounting treatment” – as amended by Executive Order 226, Article 39
RR 12-2007 (October 10, 2007) Republic Act 7916, Sections 23 – 25
Republic Act 9178
(2) Improperly Accumulated Earnings Tax Republic Act 9593, Sections 4 &86-88
Section 29, Tax Code Republic Act 9856

The Manila Wine Merchants, Inc. vs. Commissioner of Internal Revenue (February 20, 1984) Dumaguete Cathedral Credit Cooperative vs. Commissioner of Internal Revenue
Commissioner of Internal Revenue vs. Tuason (May 15, 1989) (January 22, 2010)- cooperatives
Cyanamid Philippines, Inc. vs. Court of Appeals (January 20, 2000) Commissioner of Internal Revenue vs. G. Sinco Educational Corp. (October 23,
RR 2-01 (February 12, 2001) 1956)
RMC 35-2011 (March 14, 2011)
BIR Ruling 25-02 (June 25, 2002) RR 13-2011 (July 25, 2011) -REIT, 30% RCIT, exempt from MCIT, no VAT under
BIR Ruling 094-2013 TRAIN, Gross income –Deductions- Dividends paid= Taxable income

(3) Fringe Benefits Tax RMC 35-2012 (August 3, 2012)- recreational clubs NOT exempt
Section 22(A) and 33, Tax Code RMC 51-2014 (June 6, 2014)- inurement rule, disqualifies the NSNP

RR 3-98 (January 1, 1998) The following are considered "inurements" of such nature:
RR 8-00 (August 21, 2000) 1. The payment of compensation, salaries, or honorarium to its trustees or
RR 10-00 (December 14, 2000) organizers;
2. The payment of exorbitant or unreasonable compensation to its employees;
RMC 88-2012 (Stock option plans) 3. The provision of welfare aid and financial assistance to its members. An
organization is not exempt from income tax if its principal activity is to receive
(4) Transfer Pricing and manage funds associated with savings or investment programs, including
Section 50, Tax Code pension or retirement programs. This does not cover a society, order,
association, or non-stock corporation under Section 30 (C) of the NIRC providing
Commissioner of Internal Revenue vs. Filinvest Development Corporation (July 19, 2011) for the payment of life, sickness, accident and other benefits exclusively to its
Her Majesty the Queen vs. GlaxoSmithKline Inc., 2012 SCC 52 (Supreme Court of Canada, members or their dependents;
Court File 33874; October 18, 2012) 4. Donation to any person or entity (except donations made to other entities formed
for the purpose/purposes similar to its own);
RMC 026-08 (March 24, 2008) 5. The purchase of goods or services for amounts in excess of the fair market value
RMO 63-99 (July 19, 1999) of such goods or value of such services from an entity in which one or more of its
RR 2-2013 (January 23, 2013) trustees, officers or fiduciaries has an interest; and
6. When upon dissolution and satisfaction of all liabilities, its remaining assets are
11. Special Entities distributed to its trustees, organizers, officers or members. Its assets must be
dedicated to its exempt purpose. Accordingly, its constitutive documents must
(1) Proprietary Educational Institutions and Hospitals expressly provide that in the event of dissolution, its assets shall be distributed to
one or more entities formed for the purpose/purposes similar to its own, or to the
Section 27 (B), Tax Code Philippine government for public purpose.

Commissioner of Internal Revenue vs. St. Luke’s Medical Center, Inc. (September
26, 2012) (4) Insurance CompaniesC

RMC 76-03 (November 14, 2003)- deposits, if utilized, will be exempt from FWT Section 37, Tax Code

(2) GOCCs 12.Capital Gains and Losses

Section 27 (C), Tax Code as amended by Republic Act 9337 Section 39, Tax Code

Republic Act 10026 Capital assets/income

Philippine Amusement and Gaming Corporation vs. Bureau of Internal Revenue Calasanz vs. Commissioner of Internal Revenue (October 9, 1986)-bsiness element
(March 15, 2011)- already considered as a taxable corporation, and not subject to Section 132, RR 2
VAT BIR Ruling 27-02 (July 15, 2002)
RMC 33-2013 BIR Ruling 142-2011- secondary purpose
Ordinary assets/income
5
 Section 22 (Z), Tax Code
Tuason vs. Lingad (July 31, 1974)
Losses from Wash Sales of Stocks or Securities
The following circumstances in combination show unequivocally that the petitioner was, at the time material to Section 38, Tax Code
this case, engaged in the real estate business: (1) the parcels of land involved have in totality a substantially Section 131, RR 2
large area, nearly seven (7) hectares, big enough to be transformed into a subdivision, and in the case at bar, BIR Ruling 614-2012-upstream merger, where there are no issued shares, NOT TAX
the said properties are located in the heart of Metropolitan Manila; (2) they were subdivided into small lots and Free
then sold on installment basis (this manner of selling residential lots is one of the basic earmarks of a real estate
business); (3) comparatively valuable improvements were introduced in the subdivided lots for the unmistakable 14. Administrative Provisions
purpose of not simply liquidating the estate but of making the lots more saleable to the general public; (4) the
employment of J. Antonio Araneta, the petitioner's attorney-in-fact, for the purpose of developing, managing, (1)Accounting Periods and Methods
administering and selling the lots in question indicates the existence of owner-realty broker relationship; (5) the
sales were made with frequency and continuity, and from these the petitioner consequently received substantial Sections 43-50, Tax Code
income periodically; (6) the annual sales volume of the petitioner from the said lots was considerable, e.g., Section 166-177, RR 2
P102,050.79 in 1953; P103,468.56 in 1954; and P119,072.18 in 1957; and (7) the petitioner, by his own tax Section 51-53, RR 2
returns, was not a person who can be indubitably adjudged as a stranger to the real estate business. Under the
circumstances, this Court finds no error in the holding below that the income of the petitioner from the sales of Accounting method - cash (actual or constructive) or accrual
the lots in question should be considered as ordinary income. Hybrid method - NOT allowed
Consolidated Mines, Inc. vs. Court of Tax Appeals (August 29, 1974)
Percentage of completion method- allowed for construction companies
Net capital gain, net capital loss- only to the extent of the capital gain can be deducted Section 48, Tax Code
Percentage taken into account- Section 44, RR 2
Limitation on capital loss Change of accounting period
China Banking Corporation vs. Court of Appeals (July 19, 2000) Installment basis
Bibiano V. Banas, Jr. vs. Court of Appeals (February 10, 2000)-instalment sale if
13. Determination of Gain or Loss from Sale or Transfer of Property proceeds received less that 25%. , evidence of indebtedness excluded. However income from the discounted
Section 40, Tax Code note is different
Allocation of income and deductions
Section 136-143, RR 2
Computation of gain or loss (2)Returns and Payment of Taxes
Cost or basis for determining gain or loss
Exchange of property (Tax-free exchange) RR 019-11 (December 9, 2011)
Definitions
Section 40 (C)(6), Tax Code Individual Return – May 15 of the following year following the TRAIN
Merger or consolidation Section 51 & 56, Tax Code
Commissioner of Internal Revenue vs. Rufino (February 27, 1987-
legitimate business purpose, not solely for the purpose of escaping taxation. Who are required to file
Extending the life is a legitimate purpose Those not required to file
Transfer of "substantially all" the assets- 80% of assets including cash is transferred Where to file
Transfer of property for shares of stocks When to file
Commissioner of Internal Revenue vs. Filinvest Development Corporation Where to pay
(July 19, 2011)- No gain or loss is recognized even when the transferor has control of the corporation at Capital gains on shares of stocks and real estate
the time of th exchange Quarterly declaration of income tax
BIR Ruling No. 274-87 (September 9, 1987) Section 74, Tax Code
Administrative requirements in case of tax-free exchanges
RR 18-01 (November 13, 2001) – (only Sections 3 to 6 and 9 to 12) Corporation Returns
RMR 1-02 (April 25, 2002) Section 52, 53 & 56, Tax Code
Assumption of liability in tax-free exchanges Quarterly Income Tax
Cost or basis in tax-free exchanges- Substituted basis Section 75, Tax Code
1. Original basis of the property Final Adjustment Return
2. Substract any movey or the FMV of any property that may have been received Section 76, Tax Code
aside from the shares of stock Systra Philippines, Inc. vs. Commissioner of Internal Revenue (September
3. Add the amount treated as dividend by the shareholder and any gain that was 21, 2007)
recognized on the exchange if any
Business Purpose Whether theexercise of the option to carry-over excess income tax credits
Gregory vs. Helvering, 293 U.S. 465; 55 S.CT. 266 (January 7, 1935) under Section 76 of the Tax Codebars a taxpayer from claiming the excess
Rulings tax credits for refund even if the amount remainsunutilized in the
RMC 40-2012 (August 3, 2012)- validity of rulings 90 days to transfer the property succeeding taxable year.-SC- YES

IN the recent case of Lucio L. Co, Susan P. Co, Ferdinand Vincent P. Co and Pamela Justine P. Co, vs. If credit is chosen, must be fully utilized in the subsequent years
Commissioner of Internal Revenue, CTA Case No. 8831 decided on June 2, 2016, the Court of Tax Appeals
confirmed that prior BIR ruling or certification on tax-free exchanges is not mandatory. Philam Asset Management, Inc. vs. Commissioner of Internal Revenue
(December 14, 2005)
6
 Others not captured
Failure to indicate a choice, however, will not bar a valid request for a Section 59, Tax Code
refund, should this option be chosen by the taxpayer later on.
Other income tax requirements
Whether or not the presentation in evidence of the [p]etitioner’s [a]nnual Section 67-72, Tax Code
[i]ncome [t]ax [r]eturn for the succeeding calendar year is a legal requisite in a
claim for refund of unapplied creditable withholding tax United Airlines, Inc. vs. Commissioner of Internal Revenue (September 29, 2010)

SC: Requiring that the ITR or the FAR of the succeeding year be presented to
the
BIR in requesting a tax refund has no basis in law and jurisprudence.
1997 claim- Despite the failure of petitioner
to make the appropriate marking in the BIR form, the filing of its written claim
effectively serves as an expression of its choice to request a tax refund,
instead of a tax. credit. To assert that any future claim for a tax refund will be
instantly hindered by a
failure to signify one’s intention in the FAR is to render nugatory the clear
provision
that allows for a two-year prescriptive period
RR 8-2018
• Individuals Not Required to File Income Tax Return. –
A. An individual earning purely compensation income whose taxable income does not exceed Two
Hundred Fifty Thousand pesos (P250,000.00);
B. An individual whose income tax has been correctly withheld by his employer, provided that such
individual has only one employer for the taxable year;
C. An individual whose sole income has been subjected to final withholding tax;
D. A minimum wage earner as defined in these regulations -
• In all cases, all individuals deriving compensation income, regardless of the amount, from two (2) or
more concurrent or successive employers at any time during the taxable year are not qualified for
substituted filing. Thus, they are still required to file a return.

credit. To assert that any future claim for a tax refund will be instantly hindered
by a
failure to signify one’s intention in the FAR is to render nugatory the clear
provision
that allows for a two-year prescriptive period

1998 claim- denied. This argument does not hold water. The subsequent acts
of petitioner reveal
that it has effectively chosen the carry-over option.

Where to file
When to file
Section 77, Tax Code
When to pay
Capital gains on shares of stock
Return of corporations contemplating dissolution/reorganization
Section 52 (C), Tax Code
Sec. 244, RR 2
Bank of the Philippine Islands v. Commissioner of Internal Revenue - CA-GR
Sp. No. 38304 (April 14, 2000)- CWT refund, Time barred (2 years)

Upon deep reflection, this Court shares the opinion of the BIR and the
CTA. Sec. 78 of the Tax Code and Sec. 244 of the Revenue Regulations No.
2
required FBTC as a dissolving corporation to file its income tax return within 30
days after the cessation of its business or 30 days after the approval of the
merger
on July 1, 1985 or up to July 31, 1985.
Under Sec. 292 of the Tax Code, an action to claim for refund of an
excessively collected tax starts to run from the day in which a corporate
taxpayer
is required by law to file its final income tax return. Accordingly, petitioner BPI
should have filed the action for the refund of the excessively collected income
tax
return within two (2) years from July 31, 1985 which was July 31, 1987.
Unfortunately, petitioner filed said action only on December 29, 1987-which
was
late by 151 days. Said action was, therefore, clearly time-barred.
Returns of GPPs
Section 55, Tax Code
Returns of Receivers, Trustees in Bankruptcy or Assignees
Section 54, Tax Code
7