Practice question
An employer pays a cash performance reward for employee services and merely labels it a gift. No applicable exclusion is established. Does the label itself place it under the genuine-gift exclusion?
- Yes, every employer may choose the tax result by label
- No; its actual compensatory character must be examined rather than treating the label as conclusive
- Yes, all employee rewards are gifts
- Only the envelope color matters
- Every payment is excluded if called voluntary
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
- RA 12214 (CMEPA), Sections 3-4, 8 and 28, amended NIRC Sections 22, 24 and 32 and transition: https://lawphil.net/statutes/repacts/ra2025/ra_12214_2025.html
Answer this question in flashcards to review your response and continue practicing.