1. 1.

1 INCOME TAXATION 6th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS
2. 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. 8. 9. 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 government’s survival under the “life-blood”
theory. False – Not all government’s 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. 8. 9. 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
3. 2. 2 INCOME TAXATION 6th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS
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. 6. 7. 8. 9. 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 Prob. 1 – 6 Prob. 1 – 7 Prob. 1 – 8 Prob. 1 – 9 1. C
1. C 1. A 1. C 1. C Prob. 1 – 10 1. D
4. 3. 3 INCOME TAXATION 6th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS
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