X.

If a corporation to which a stockholder is indebted forgives the debt, the transaction forgiving
the debt has the effect of the payment of a dividend for tax purposes.

XI.

Define:

(a) Equitable Recoupment (3%)

-The doctrine of equitable recoupment allows a taxpayer whose claim for refund has
prescribed to offset tax liabilities with his claim of overpayment.

(b) Imprescriptibility (3%)

-It is inalienable or a characteristic of ownership that makes property nontransferable
due to the owner's absolute title to the possession

(c) Theoretical Justice (3%)

-A Theory of Justice holds that every individual has an equal right to basic liberties, and
that they should have the right to opportunities and an equal chance as other individuals of
similar ability

(d) Flexible Tariff Clause (3%)

- Section 401 of the 1957 Code, frequently called the “Flexible Tariff Clause” represents
the first and still the only exercise by Congress of its power to delegate tariff-fixing authority to
the President.

(e) Schedular System of Taxation (3%)

- System employed where the income tax treatment varies and is made to depend on
the kind or category of taxable income of the taxpayer.

XII

XIII.

State the tax treatment of the following income:

(a) Interest Income from a bank deposit with a maturity period of 5 years. (3%)
-Final Withholding Tax of 20%

(b) Sale of Shares of Stock listed in the stock exchange. (3%)

 - tax code enforces a stock transaction tax on every sale, barter or exchange of shares in
a listed company at a rate of 6/10 of 1% based on the gross selling price or gross value in money
of the shares of stock sold, bartered, exchanged or otherwise disposed

(c) Expropriation sale of a property owned by a resident citizen. (3%)

-Capital Gains Tax, 6% of the gross selling price, fair market value, or zonal value,
whichever is higher

(d) Interest Income earned by a non-resident citizen from a foreign currency deposit. (3%)
- Interest income on FCDU accounts of non-residents is exempt from tax.

(e) Fringe Benefit earned by a resident alien (3%)