2013 (Taxation) Bar Exam Questions: Essay Question 1

[Discuss/answer the question below. Or see Taxation Instructions; Taxation Essay Questions: 12, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12; Taxation Multiple Choice Questions: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19 and 20; See also 2013 Bar Exam: Information, Discussions, Tips, Questions and Results]


In its final adjustment return for the 2010 taxable year ABC Corp. had excess tax credits arising from its over-withholding of income payments. It opted to carry over the excess tax credits to the following year. Subsequently, ABC Corp. changed its mind and applied for a refund of the excess tax credits.

Will the claim for refund prosper? (6%)


  1. SEC. 76. Final Adjustment Return. – Every corporation liable to tax under Section 27 shall file a final adjustment return covering the total taxable income for the preceding calendar or fiscal year. If the sum of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the
    entire taxable income of that year, the corporation shall either:
    (A) Pay the balance of tax still due; or
    (B) Carry-over the excess credit; or
    (C) Be credited or refunded with the excess amount paid, as the case may be.
    In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income
    taxes paid, the excess amount shown on its final adjustment return may be carried over and credited
    against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years. Once the option to carry-over and apply the excess quarterly income tax against income tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period and no application for cash refund or issuance of a tax
    credit certificate shall be allowed therefor.

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