Professional Documents
Culture Documents
II.
Living Quarters
Manufacturing
Merchandising
Servicing
Farming
Long-term contract
2.
3.
a.
b.
c.
d.
d. Smuggling
e. Embezzlement
Illegal Obtained Income
As a rule, illegal income is taxable. Income
obtained through illegal means is included in the
wrongdoers gross income even though he is
obligated to return it when discovered
The mere fact that a transaction is illegal does
not exempt it from income tax laws. Gains from
such transactions as gambling, extortion,
swindling and the like are all taxable
Income that is not realized is not taxable,
even though its absence is due to an illegal
act. Moral turpitude is not a touchstone of
taxability
The courts have sustained the BIR
Commissioners determination of the illegal gains
from such records as bank deposits, or on the
basis of commissions paid out, and even from a
formula determination based upon the nationwide
experience. The burden is on the taxpayer to
offer independent evidence to contradict such
determination
Embezzled funds - are income without
consent (express or implied) with an obligation