Practice question
A taxpayer receives P500,000 under a genuine loan carrying an enforceable obligation to repay. The collector treats the deposit alone as P500,000 income. Assume no debt cancellation or disguised compensation. Which is sound?
- The repayment obligation prevents treating receipt of principal alone as a realized accession to income
- Every deposit is automatically income
- A loan can never be repaid
- Only cash gifts may enter a bank account
- The taxpayer must invent a special salary exemption
Legal references
- NIRC, Sections 26, 32(B) and 40(A), (C)(3)-(5), read with later amendments: https://lawphil.net/statutes/repacts/ra1997/ra_8424_1997.html
- CIR v. Shinko Electric Industries Co., Ltd., G.R. No. 226287, July 6, 2021, main decision, income and gain requirement: https://lawphil.net/judjuris/juri2021/jul2021/gr_226287_2021.html
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