1.

Does the Revenue district officer have the authority or discretion to use the
fair market value as the basis for determining the capital gains tax and not
the zonal value as determined by the Commissioner of the Internal Revenue?
2. According to the amendments under the TRAIN Law, what are the rules on
determining the zonal value?

IV. Puregold entered into an agreement with Next Gen Technology for the
development of a software program that will insure accurate inventory positions of
all the stocks of the company. Puregold was not happy with the work of Next Gen.
So Puregold decided to cancel the contract. As a consequence of the cancellation of
the contract, it became inevitable that Next Gen, needed to retrench some of its
programmers. Jospeh Antonio was one of those who were retrenched. In
consideration of said retrenchment, Joseph Antonio was given the following:

A. Separation benefits equivalent to one month of basic salary for every year of
service plus a financial assistance of equivalent to 2 months of their salaries.
B. Unused vacation leaves converted to cash.

Questions:
1. Are the separation benefits considered part of the gross income of affected
employees subject to income tax?
3. Are the cash equivalent of the unused vacation leave also subject to income
tax?
4. Can the expenses incurred by Next Gen in providing the separation benefits
and cash equivalent of the unused vacation leave be considered as
deductible from gross income as ordinary and necessary trade or business
expense of the company?

V. A group of new lawyers organized themselves into an association, called Good

Governance Management Association of the Philippines. It is registered with the
Securities and Exchange Commission a a non-stock, non-profit corporation, its
primary objectives are:

1. To promote good governance as a field of study and practice by establishing

programs and projects towards a professional management of organisations
and eventually be accredited by any appropriate government agencies.
5. To organize and promote seminar, training programs courses, seminars,
conference on good governance
6. To undertake activities that will establish rapport among members
7. To assist government offices or agencies how to promote good governance
within the government organizations
8. to conduct studies, researches that will assist in the promotion of
transparency and good governance in government agencies and offices.

The primary sources of the funds of Good Governance Management Association of

the Philippines are monthly dues from members. Occasionally there will be special
assessment for special activities. Sale proceeds from the various publications and
fees from seminars and trainings and conferences.

These funds are basically held in trust for the members, used for administrative
expenses or for the specific activities being organized by the association.