income tax Flashcards
it may be defined as a State power, a legislative process, and a mode of government cost distribution.
Taxation
this mutuality support between the people and the government is referred to as the___
basis of taxation
this theory presupposes that the more benefit one receives from the government, the more taxes he should pay.
benefit received theory
this theory presupposes that taxpayers should be required to contribute based on their relative capacity to sacrifice for the support of the government.
ability to pay theory
this aspects of the ability to pay theory proposes that the extent of one’s ability to pay is directly proportional to the level of his tax base. it is a gross concept.
vertical equity
this aspects of the ability to pay theory requires consideration of the particular circumstance of the taxpayer. it is a net concept.
horizontal equity
this inherent power of the state to enforce proportional contribution from its subjects to sustain itself.
taxation power
it is the general power of the state to enact laws to protect the well-being of the people.
police power
it is the power of the State to take private property for public use after paying just compensation.
eminent domain
what are the stages of the exercise of taxation power
- levy or imposition
- assessment and collection
it is the place of taxation
situs
in this doctrine it states that “the power to tax involves the power to destroy”
marshall doctrine
it occurs when the same taxpayer is taxed twice by the same tax jurisdiction for the same thing.
double taxation
also known as tax dodging , refers to any act or trick that tends to illegally reduce or avoid the payment of tax.
tax evasion
also known a tax minimization, refers to any act or trick that reduces or totally escapes taxes by any legally permissible means.
tax avoidance
also known as tax holiday, refers to the immunity, privilege or freedom from being subject to a tax which others are subject to.
tax exemption
this type of administrative issuances are signed by the Secretary of Finance upon recommendation of the Commissioner of Internal Revenue
Revenue Regulations
this type of administrative issuances are formal pronouncements intended to clarify or explain the tax law and carry into effect its general provisions by providing details of administration and procedure.
Revenue regulations
are issuances that provide directives or instructions
revenue memorandum orders
this type of administrative issuances are rulings, opinions and interpretations of the CIR
revenue memorandum rulings
are official positions of the Bureau to queries raised by taxpayers and other stakeholders relative to clarification and interpretation of tax laws.
BIR Rulings
a tax of a fixed amount imposed on a per unit basis such as per kilo, liter or meter
specific tax
a tax of a fixed proportion imposed upon the value of the tax object
ad valorem
tax on annual income, gains or profits
income tax
tax on gratuitous transfer of properties by a decedent upon death
estate tax
tax on gratuitous transfer of properties by a living donor
donor’s tax
consumption tax collected by VAT business taxpayers
Value added tax
consumption tax collected by non-VAT business taxpayers
other percentage tax
tax on sin products and non-essential commodities such as alcohol, cigarettes and metallic minerals.
excise tax
a tax on documents, instruments, loan agreements, and papers evidencing the acceptance, assignment, sale or transfer of an obligation, right or property incident there to.
documentary stamp tax
it refers to the methods or schemes of imposing, assessing, and collecting taxes.
tax system
the ___ that increases net worth is income subject to income tax
return on capital
return of capital
return on capital
it merely maintains net worth; hence, it is not taxable
return of capital
what are the three income taxation schemes under the NIRC?
final income taxation
capital gains taxation
regular income taxation
what is initial payment?
total payments by the buyer, in cash or property, in the taxable year the sale was made.
what is selling price
entire amount for which the buyer is obligated to the seller.
what is contract price?
amount receivable in cash or other property from the buyer
how you compute the ratio of initial payment?
(cash downpayment + first installment) / Selling Price
how to compute the gross income?
(collection/contract price) x gross profit
how to compute contract price with indebtedness assumed buy the buyer?
Selling Price - mortgage assume by the buyer
the depreciated value of the leasehold improvement is computed as
(excess useful life over lease term/useful life of the improvement) x cost of improvement
differences of tax and revenue
the amount imposed is tax but the amount collected is revenue
it emanates from police power and is imposed to regulate the exercise of a privilege such as the commencement of a business or a profession.
license fee
it is imposed after the commencement of a business or profession. it is a post-activity imposition
taxes
it is imposed before engagement in those activities. it is a pre-activity imposition.
license fee
it is a charge for the use of other’s property; hence, it is a demand of ownership.
toll
