This document contains the suggested answers to problems in Chapter 1 of the book "Income Taxation 6th Edition" by Valencia & Roxas. Chapter 1 covers general principles and concepts of taxation. It includes true/false questions and answers about topics like the definition and justification of taxation, the taxing powers of government, and individual versus corporate taxation. Multiple choice problems cover additional topics like tax exemptions, tax administration, and the relationship between tax laws and the constitution.

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

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

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