Practice question
Two genuine, independently financed sales occur on the same day. Each buyer takes real commercial risk, the consideration is accurately disclosed, and applicable taxes are correctly paid under authorized rules. An examiner invokes Toda solely because the transactions saved tax and were close in time. Which response is best?
- Toda makes all successive sales evasion
- A tax-saving motive alone proves bad faith
- Timing and tax savings alone do not establish the unlawful means and willful evasion present in Toda
- Full disclosure is always irrelevant
- Genuine commercial risk automatically exempts every sale from tax
Legal references
- CIR v. Estate of Toda, G.R. 147188, September 14, 2004: https://lawphil.net/judjuris/juri2004/sep2004/gr_147188_2004.html
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