INCOME TAXATION 6th Edition (BY: VALENCIA & ROXAS) 1

SUGGESTED ANSWERS
Chapter 1: General Principles
and Concepts of Taxation

CHAPTER 1
GENERAL PRINCIPLES AND CONCEPTS OF TAXATION

Problem 1 1 TRUE OR FALSE

1. False This describes taxation as a means.

2. True
3. True
4. True
5. False Not every government unit can exercise the power of taxation. It is exclusively
legislative in nature.
6. True
7. False Taxation is an inherent power. The constitution only limits the power to tax.
8. True
9. 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.
10. False Not all governments funds come from taxes.
11. True
12. True
13. False - Government agencies engaged in proprietary functions are subject tax unless
stated otherwise.
14. True
15. 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. False Equity does not necessarily collection of equal amounts from each taxpayer.
2. False Tax assessment is part of administrative function of principal government unit
concerned.
3. False Delegated tax power to the President involves only administrative discretion.
4. False - These powers could not be effectively performed without revenue. Revenue is
raised through taxation.
5. True
6. True
7. False Penalty in the form of fines is imposition of amount by the police power.
8. True
9. False Tax exemption is granted to government entities with governmental function
unless stated otherwise.
10. False This describes the levying aspect of taxation.
11. False - Just compensation clause is a Constitutional restriction on exercise of Eminent
Domain only.
12. True
13. True
14. True
15. True

Problem 1 3 TRUE OR FALSE

1. True
INCOME TAXATION 6th Edition (BY: VALENCIA & ROXAS) 2
SUGGESTED ANSWERS
Chapter 1: General Principles
and Concepts of Taxation

2. True
3. True
4. True
5. False No direct double taxation because the corporation has separate and distinct
personality from the stockholders.
6. False For transfer tax purposes, nonresident alien is liable only for properties located
within the Philippines
7. False No public funds shall be appropriated for religious purposes.
8. False - All bills even if approved by the 2/3 of the congress should still be signed by the
President to become law.
9. False To grant tax-exemption, only majority of all the members of the congress is
needed, not two-thirds.
10. True
11. False Taxes collected by the BIR are national taxes.
12. True
13. False the tax evader breaks the law.
14. 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. True.
2. False Interpretations made by the executive officers are not conclusive. It can be
disregarded by the Courts if found erroneous.
3. False Ex post facto law is not applicable for tax purposes.
4. True
5. False Nonpayment of poll tax.
6. True
7. False Doubts must be resolved in favor of the taxpayer.
8. True
9. False Not applicable to totally unrelated taxes.
10. True
11. False Not transferrable and not assignable.
12. False Null and void, not binding and no effect as law.
13. True
14. True
15. False Tax rulings are not final interpretations of tax laws. The court can change them if
found contrary to law.

Prob. 1 5 Prob. 1 6 Prob. 1 7 Prob. 1 8 Prob. 1 9 Prob. 1

10
1. C 1. C 1. A 1. C 1. C 1. D
2. A 2. C 2. C 2. B 2. C 2. C
3. B 3. B 3. C 3. C 3. D 3. C
INCOME TAXATION 6th Edition (BY: VALENCIA & ROXAS) 3
SUGGESTED ANSWERS
Chapter 1: General Principles
and Concepts of Taxation

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