INCOME TAXATION 6th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS

1
Chapter 1: General Principles and Concepts of Taxation

CHAPTER 1

GENERAL PRINCIPLES AND CONCEPTS OF TAXATION

Problem 1 1 TRUE OR FALSE

1.

2. 3. 4.

5.
6.

7. 9.

8.

10.
11. 12.

13.
14.

15.

False This describes taxation as a means. True True True False Not every government unit can exercise the power of taxation. It is exclusively legislative in nature. True False Taxation is an inherent power. The constitution only limits the power to tax. True False The benefits from taxation may or may not be experienced by the taxpayer. The justification to collect tax is governments survival under the life-blood theory. False Not all governments funds come from taxes. True True False - Government agencies engaged in proprietary functions are subject tax unless stated otherwise. True False Each local government shall have the power to create its own sources of revenues and to levy taxes.

Problem 1 2 TRUE OR FALSE

1. 2. 3.
4. 5. 6.

7. 9.

8.

10.

11. 12. 13. 14. 15.

False Equity does not necessarily collection of equal amounts from each taxpayer. False Tax assessment is part of administrative function of principal government unit concerned. False Delegated tax power to the President involves only administrative discretion. False - These powers could not be effectively performed without revenue. Revenue is raised through taxation. True True False Penalty in the form of fines is imposition of amount by the police power. True False Tax exemption is granted to government entities with governmental function unless stated otherwise. False This describes the levying aspect of taxation. False - Just compensation clause is a Constitutional restriction on exercise of Eminent Domain only. True True True True

Problem 1 3 TRUE OR FALSE

INCOME TAXATION 6th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS

2
Chapter 1: General Principles and Concepts of Taxation

1. 2. 3. 4.

5. 6.

7.

8. 9.
10.

11.

12. 13. 14.

True True True True False No direct double taxation because the corporation has separate and distinct personality from the stockholders. False For transfer tax purposes, nonresident alien is liable only for properties located within the Philippines False No public funds shall be appropriated for religious purposes. False - All bills even if approved by the 2/3 of the congress should still be signed by the President to become law. False To grant tax-exemption, only majority of all the members of the congress is needed, not two-thirds. True False Taxes collected by the BIR are national taxes. True False the tax evader breaks the law. False Transfers of real property classified as capital asset is subject to capital gain tax of 6%. The revenue and asset must be used directly for educational purposes.

Problem 1 4 TRUE OR FALSE

1. 2. 3.
4.

5. 7. 9.

6. 8. 10.

11. 12.
13. 14.

15.

True. False Interpretations made by the executive officers are not conclusive. It can be disregarded by the Courts if found erroneous. False Ex post facto law is not applicable for tax purposes. True False Nonpayment of poll tax. True False Doubts must be resolved in favor of the taxpayer. True False Not applicable to totally unrelated taxes. True False Not transferrable and not assignable. False Null and void, not binding and no effect as law. True True False Tax rulings are not final interpretations of tax laws. The court can change them if found contrary to law.

Prob. 1 5 1. C

Prob. 1 6 1. C

Prob. 1 7 1. A

Prob. 1 8 1. C

Prob. 1 9 1. C

Prob. 1 10 1. D

INCOME TAXATION 6th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS

3
Chapter 1: General Principles and Concepts of Taxation

2. A 3. B 4. B 5. D 6. C 7. A 8. D 9. D 10. A

2. C 3. B 4. A 5. B 6. C 7. A 8. D 9. A 10. C

2. C 3. C 4. C 5. D 6. B 7. B 8. A 9. A 10. B

2. B 3. C 4. C 5. A 6. B 7. D 8. D 9. B 10. B

2. C 3. D 4. D 5. B 6. D 7. B 8. C 9. D 10. B

2. C 3. C 4. B 5. C 6. B 7. C 8. B 9. D 10. C