The document discusses various types of income that are subject to regular income tax in the Philippines, including a partner's distributable share from a general professional partnership, income from taxable joint ventures or co-ownership, income distributions from taxable estates or trusts, farming income, recovery of past deductions, and reimbursement of expenses. It also discusses tax benefits from deductions, refunds of non-deductible expenses, and cancellation of indebtedness.
The document discusses various types of income that are subject to regular income tax in the Philippines, including a partner's distributable share from a general professional partnership, income from taxable joint ventures or co-ownership, income distributions from taxable estates or trusts, farming income, recovery of past deductions, and reimbursement of expenses. It also discusses tax benefits from deductions, refunds of non-deductible expenses, and cancellation of indebtedness.
The document discusses various types of income that are subject to regular income tax in the Philippines, including a partner's distributable share from a general professional partnership, income from taxable joint ventures or co-ownership, income distributions from taxable estates or trusts, farming income, recovery of past deductions, and reimbursement of expenses. It also discusses tax benefits from deductions, refunds of non-deductible expenses, and cancellation of indebtedness.
The document discusses various types of income that are subject to regular income tax in the Philippines, including a partner's distributable share from a general professional partnership, income from taxable joint ventures or co-ownership, income distributions from taxable estates or trusts, farming income, recovery of past deductions, and reimbursement of expenses. It also discusses tax benefits from deductions, refunds of non-deductible expenses, and cancellation of indebtedness.
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Partner’s distributable share from the net income of the GENERAL PROFESSIONAL
PARTNERSHIP
GPP – not subject to income tax
Only partners are subject to final tax on their share in the net income of GPP
Business partnership and taxable JOINT VENTURE or CO-OWNERSHIP
Subject to corporate income tax
Distributive share of partner organized within the PH – subject to 10% FWT
GENERAL CRITERIA FOR ITEMS OF GROSS INCOME
Items of gross income subject to regular income tax – not limited to NIRC list Provision of income regular tax for all income that are: 1. Not subject to final tax, CGT and special tax regime 2. Not excluded or exempted by law or contract
Other Sources of Gross Income Subject to Regular Income tax
1. Income distribution from taxable estate
or trust 2. Share from the net income of other pass- through entities: a. Exempt joint venture b. Exempt co-ownership 3. Farming income 4. Recovery of past deductions 5. Reimbursement of expenses TAX BENEFIT (from deduction)
1. Direct – from reduction of taxable income in the year deduction is made
2. Indirect – from reduction of future taxable income through carry-over of net operating loss
Example: A taxpayer incurred 50,000 bad debt expense in 2019 out of which 15,000 was recovered in 2021:
2019 2020 2021
Net income before bad debts expense 110,000 75,000 115,000
Bad debt expense/Recoveries 50,000 - 15,000 Net income after bad debts expense 60,000 75,000 130,000
o 50,000 – tax benefit to the taxpayer
o 15,000 – tax benefit reverted back to gross income in 2021 o 130,000 – taxable income in 2021
Refund of non-deductible expenses
Expenses/payments that are non-deductible against gross income in the computation of taxable net income. (not included in gross income)
Examples of refund of non-deductible items that is not taxable:
1. PH income tax 2. Estate or donor’s tax 3. Income tax paid to a foreign country if the taxpayer claimed credit for such tax in the year it was paid or incurred 4. Stock transaction tax in disposing stocks through PSE 5. Special assessment
Reimbursement of expenses
Expenses of taxpayer that are reimbursed or paid by the customer constitute additional income of the taxpayer
Example: client reimburses the out-of-pocket expenses of professional practitioner (income)
Cancellation of Indebtedness a. In consideration of service or goods – treated as income b. As an act of gratuity – treated as gift c. As capital transaction such as forfeiting the right to receive dividends in exchange of the debt – treated as dividend income
