2013 (Taxation) Bar Exam Questions: Multiple Choice Question 6

[Discuss/answer the question below. Or see Taxation Instructions; Taxation Essay Questions: 12, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12; Taxation Multiple Choice Questions: 1, 2, 3, 4, 57, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19 and 20; See also 2013 Bar Exam: Information, Discussions, Tips, Questions and Results]

VI.

In 2010, Mr. Platon sent his sister Helen $1,000 via a telegraphic transfer through the Bank of PI. The bank’s remittance clerk made a mistake and credited Helen with $1,000,000 which she promptly withdrew.

The bank demanded the return of the mistakenly credited excess, but Helen refused. The BIR entered the picture and investigated Helen.

Would the BIR be correct if it determines that Helen earned taxable income under these facts? (1%)

(A) No, she had no income because she had no right to themistakenly credited funds.

(B) Yes, income is income regardless of the source.

(C) No, it was not her fault that the funds in excess of $1,000 were credited to her.

(D) No, the funds in excess of $1,000 were in effect donated to her.

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