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

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
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
INCOME TAXATION 6th Edition (BY: VALENCIA & ROXAS) 3
SUGGESTED ANSWERS
Chapter 1: General Principles
and Concepts of Taxation

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 Prob. 1

9 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
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