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Income Tax
Sections 23-59, 67-73 and 74-77 of the National Internal Revenue Code (NIRC)
Sec. 23
Sec. 22 (Z)
Sec. 25 (A)(3)
Sec. 31
Sec. 22
Mercury Drug Corporation v. Commissioner of Internal Revenue. G.R. No. 164050. July 20,
2011
1. Income subject to ordinary income tax vs. Income subject to final income tax vs compensation
income
D. Personal Exemptions
Sec. 35
Sec. 34 (m)
Sec. 22
1. In general
Sec. 27-28
a. Domestic
b. Resident
c. Non-resident
2. Special corporations
a. Private educational institutions and non-profit hospitals Sec. 4 [3] Article XIV,
Constitution
c. International carriers
Commissioner v BOAC, ibid. United Airlines, Inc., v CIR, G.R. No. 178788, 29
September 2010
i. R.A. No. 9400 gives tax privileges to Clark & John Hay, R.A. No. 9399 Grants tax
C. Kinds of Taxes
Commissioner of Internal Revenue v. Wander Phils. G.R. No. 68375. April 15, 1988
Sec. 28 (A)(5)
Sec. 29
Sec. 33
A. Partnership/joint ventures formed for the purpose of undertaking construction projects or engaging in
energy operations
C. Co-ownership
Items of income which are not included in the taxable income. These are the items of income which are
excluded by the Constitution, by tax treaties, by the Tax Code itself, and by special tax laws from the
gross income and considered as exempt from income tax. Said income should be excluded in the
determination of the taxable income in the income tax returns of taxpayers, whether individual or
corporation, unless required to be reported in the same return or in certain information returns as
required by regulations.
Sec. 61-64
RA 4917 - An Act Providing That Retirement Benefits Of Employees Of Private Firms Shall Not Be
Subject To Attachment, Levy, Execution, Or Any Tax Whatsoever.
RA 7641 – An Act granting retirement benefits to private sector employees in absence of qualified plan
E. Tax Treaties
Deutsche Bank v. Collector of Internal Revenue, G.R. No. 188550, August 19, 2013
Sec. 32
1. In money
B. Not taxable
Sec. 50
Sec. 49
A. Rent
C. Advance rental
D. Leasehold improvements. Options to report income for right of reversion of improvements to lessor:
Sec. 73
1. Cash
2. Property
3. Stock
1. When taxable
a. Measure of income
3. Liquidating “dividend”
Sec. 50
B. Forgiveness of indebtedness
Sec. 50
D. Damage recovery
Itemized deductions
o Amount paid for new buildings or for permanent improvements (capital expenditures)
o Interest expense bad debt and losses from sales from sales of property between
related parties
A. Expenses in General
Sec. 65-76
"Business expenses" are expenditures related to the conduct of the business of the taxpayer and
deductible in the year incurred. While "Capital expenses" are expenditures that improve or add to the
value of the property or equipment of the business. They are not immediately deductible, but may be
deducted overtime in the form of "Allowance for depreciation."
Salaries, wages, compensation for services rendered; pensions, compensation for injuries;
commissions
Benefits to employees, including "de minimis benefits'" and the grossed-up monetary value of
Traveling expenses (here and abroad) while away from home solely in the pursuit of a trade or
business
Incidental repairs
Professional services
Insurance premiums against fire, storm, theft, accident, or other similar losses in the case of a
business
Management expenses
Training expenses
B. Interest
C. Taxes
Sec. 80-82
D. Losses
Sec. 93-101
Completed transactions
Foreign exchange losses - Revenue Memorandum Circular No 26-85, July 15, 1985, inter-
a. Three-year period
E. Bad Debts
Sec. 102-104
Philex Mining v. Commissioner of Internal Revenue G.R. No. 148187. April 16, 2008
F. Depreciation
(Sec. 105-115)
Depreciation base
Depreciation Rates
Fully deductible
a. Corporation
b. Individuals
institution”
Sec. 34 [k] NIRC (must pay withholding tax otherwise disallowed per RR 12-2013)
Atlas Consolidated v. Commissioner of Internal Revenue G.R. No. L-26911. January 27, 1981
e. Ordinary loss
f. Percentage taken into account (long term; short term) by taxpayers other than a
corporation
Determination of gain or loss from sale or transfer of property Sec. 40 NIRC (Sec. 136-143)
a. Computation of gain or loss CIR v. Aquafresh Seafood, Inc., G.R. No. 170389, 20 October
2010
- Merger or consolidation –
- De facto merger
f. Business purpose
Exemption from capital gains tax of certain individuals from the sale or exchange of principal residence
RR 6-2008, Taxation of Shares of Stocks (April 22, 2008), as amended by RR 16-2012 and RR 6-2013