2013 (Taxation) Bar Exam Questions: Multiple Choice 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: 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]

I.

ABC Corp. was dissolved and liquidating dividends were declared andpaid to the stockholders.

What tax consequence follows? (1%)

(A) ABC Corp. should deduct a final tax of 10% from the dividends.

(B) The stockholders should declare their gain from their investment and pay income tax at the ordinary rates.
(C) The dividends are exempt from tax.

(D) ABC Corp. should withhold a 10% creditable tax.

4 comments

  1. I think nag C ako dito which i feel mali, but if made to choose again baka D ako kasi kung sakali nga na taxable ito as income, the corp should withhold to assure the payment of tax kasi nga liquidating dividend ito declared by corp which are on the brink of closing down. Ewan ko kasi di ko na tlga matandaan ang concept ng liquidating dividend

  2. i answered B on this one. Liquidating dividends are a return of capital pagkakaalala ko, so kung nagkaron ng increase in value yung capital mo kailangan mo siya ideclare sa regular income mo as to that gain/increase. Again hindi ako sure dito ha pero yan ang naalala ko.

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