Discussion Questions

1. Final income taxation is characterized by final taxes wherein full taxes are withheld by
the income payor at source. The recipient taxpayer receives the income net of taxes. It
is only applicable to certain passive income (earned without active involvement) listed
by laws. It uses the final withholding tax systems.
Capital gain taxation are those imposed on the gain realized through sale, exchange and
dispositions of certain capital assets (not used in the business, trade or profession). It
applies only to two types of capital assets (domestic stocks and real property tax).
Hybrid form of taxation since it also use self-assessment method even though the NIRC
identifies it as a final tax.
Regular income taxation is the general rule and covers all other income such as: active
income and other income (gains from dealings in properties, not subject to capital gains
tax and other passive income not subject to final tax). It makes use of the self-
assessment method.
2. It is characterized by final taxes wherein full taxes are withheld by the income payor at
source. Where the recipient taxpayer receives the income net of taxes. It deals with
passive incomes that are included in the list provided by the law.
3. Capital assets are generally properties that are not used in trade or business of the
taxpayer On the other hand, ordinary assets are properties used in trade or business or
primarily held for sale by the taxpayer (inventory) or arises from sales in the ordinary
course of business (accounts receivable).
4. The capital gains on sale of domestic stocks sold directly to the buyer and capital gains
on the sale of real property not used in business.
5. Covers all other income such as: active income and other income (gains from dealings in
properties, not subject to capital gains tax and other passive income not subject to final
tax), items of gross income from these sources are measured or valued using accounting
method, accumulated over an accounting period, and reported to the government
through an income tax return. It uses self-assessment method.