The Law on Income Taxation
2022 04-TX-00022-0 978 -621-04-2792-9 BS Business Administration
COPYRIGHT: ITEM CODE: ISBN: PROGRAM:
10. Compensation for services.................................................... 19 11. Definition of terms ................................................................ 19 12. When income from compensation for services taxable ....... 20 13. Forms of compensation......................................................... 21 14. Compensation in kind........................................................... 21 15. Income from business or commercial transactions, or exercise of a profession ........................................... 28 16. Income from farming ............................................................ 28 17. Income from sales or dealings in property .......................... 30 18. Income in the form of interests ............................................ 31 19. Income in the form of rents .................................................. 32 20. Income in the form of dividends........................................... 38 21. Property dividend ................................................................. 40 22. Stock dividend....................................................................... 41 23. Computation of gain or loss from sale of stock received as dividends .................................................. 46 24. Computation of shares acquired at different dates ............ 49 25. Computation of gain or loss from sale of shares after receipt of stock dividend..................................... 50 26. Declaration and subsequent redemption of a stock dividend....................................................... 51 16. Income from farming ............................................................ 28 17. Income from sales or dealings in property .......................... 30 18. Income in the form of interests ............................................ 31 19. Income in the form of rents .................................................. 32 20. Income in the form of dividends........................................... 38 21. Property dividend ................................................................. 40 22. Stock dividend....................................................................... 41 23. Computation of gain or loss from sale of stock received as dividends .................................................. 46 24. Computation of shares acquired at different dates ............ 49 25. Computation of gain or loss from sale of shares after receipt of stock dividend..................................... 50 26. Declaration and subsequent redemption of a stock dividend....................................................... 51 27. Sources of dividend payment ............................................... 53 28. Income “derived from whatever source” .............................. 54 27. Sources of dividend payment ............................................... 53 28. Income “derived from whatever source” .............................. 54 10. Compensation for services.................................................... 19 11. Definition of terms ................................................................ 19 12. When income from compensation for services taxable ....... 20 13. Forms of compensation......................................................... 21 14. Compensation in kind........................................................... 21 15. Income from business or commercial transactions, or exercise of a profession ........................................... 28
CONTENTS
Contents
Preface ...................................................................................................... iii
Chapter I. — General Principles
1. 2. 3. 4. 5. 6. 7. 8.
Definition of taxation ............................................................ Purpose of taxation .............................................................. Definition of taxes ................................................................. Characteristics of taxes ....................................................... Underlying theory and basis of taxation ............................. Nature of the power of taxation ........................................... Aspects of taxation................................................................ Scope of legislative power of taxation..................................
1 1 1 2 2 3 3 3
Chapter III. — Exclusions from Income Chapter III. — Exclusions from Income
9. 4 10. Classification of taxes ........................................................... 4 11. Definition and nature of income tax .................................... 6 12. Power to impose income tax ................................................. 6 13. Functions of income tax........................................................ 6 14. Situs of income for tax purposes .......................................... 7 15. Income derived within the State taxable ............................ 7 16. History of Philippine income tax law................................... 8 17. The Bureau of Internal Revenue ......................................... 9 Basic principles of a sound tax system ................................ 18. Taxes administered by the Bureau...................................... 10 19. Sources of our law on income taxation ................................ 11 20. Construction of income tax laws .......................................... 13
1. In general .............................................................................. 56 2. Exclusions under the Tax Code............................................ 56 3. Proceeds of life insurance ..................................................... 57 4. Amount received by insured as return of premium............ 57 5. Gifts, bequests, and devises ................................................. 58 6. Compensation for injuries or sickness................................. 59 7. Income exempt under treaty ................................................ 60 8. Retirement benefits, pensions, gratuities, etc. .................... 61 9. Miscellaneous items.............................................................. 65 1. In general .............................................................................. 56 2. Exclusions under the Tax Code............................................ 56 3. Proceeds of life insurance ..................................................... 57 4. Amount received by insured as return of premium............ 57 5. Gifts, bequests, and devises ................................................. 58 6. Compensation for injuries or sickness................................. 59 7. Income exempt under treaty ................................................ 60 8. Retirement benefits, pensions, gratuities, etc. .................... 61 9. Miscellaneous items.............................................................. 65
Chapter IV. — Special Treatment of Fringe Benefits Chapter IV. — Special Treatment of Fringe Benefits
Chapter II. — Concept and Items of Income
vi vi 1. Definition of fringe benefit ................................................... 68 2. Coverage ............................................................................... 69 3. Imposition of fringe benefit tax ............................................ 69 4. Determination of grossed-up monetary value..................... 70 5. Determination of amount subject to fringe benefit tax ....... 72 6. Guidelines for valuation of fringe benefits .......................... 72 7. Valuation of housing privilege ............................................. 73 8. Valuation of expense account............................................... 76 9. Valuation of motor vehicle of any kind................................ 78 10. Valuation of interest on loan at less than market rate.................................................................. 82 11. Valuation of expenses for foreign travel.............................. 83 12. Valuation of educational assistance to employee or his dependents ........................................................ 83 13. Valuation of other expenses ................................................. 84 14. Taxation of fringe benefits received by certain individuals ................................................................... 85 1. Definition of fringe benefit ................................................... 68 2. Coverage ............................................................................... 69 3. Imposition of fringe benefit tax ............................................ 69 4. Determination of grossed-up monetary value..................... 70 5. Determination of amount subject to fringe benefit tax ....... 72 6. Guidelines for valuation of fringe benefits .......................... 72 7. Valuation of housing privilege ............................................. 73 8. Valuation of expense account............................................... 76 15. Fringe benefits not subject to fringe benefit tax ................. 86 16. Scope of de minimis benefits ................................................ 87 17. Excess of benefits over P90,000 ceiling ............................... 88 18. Tax accounting for fringe benefit and tax due thereon............................................................ 89
v 10. Compensation for services.................................................... 19 11. Definition of terms ................................................................ 19 12. When income from compensation for services taxable ....... 20 13. Forms of compensation......................................................... 21 14. Compensation in kind........................................................... 21 15. Income from business or commercial transactions, or exercise of a profession ........................................... 28 16. Income from farming ............................................................ 28 17. Income from sales or dealings in property .......................... 30 18. Income in the form of interests ............................................ 31 19. Income in the form of rents .................................................. 32 20. Income in the form of dividends........................................... 38 21. Property dividend ................................................................. 40 22. Stock dividend....................................................................... 41 23. Computation of gain or loss from sale of stock received as dividends .................................................. 46 24. Computation of shares acquired at different dates ............ 49 25. Computation of gain or loss from sale of shares after receipt of stock dividend..................................... 50 26. Declaration and subsequent redemption of a stock dividend....................................................... 51 1. Definition of income .............................................................. 14 2. Sources of income.................................................................. 14 3. Form of income...................................................................... 15 4. Distinctions between income and other terms .................... 15 5. Requisites for income to be taxable ..................................... 15 6. Where there is a duty to return income received................ 17 7. Condonation of debt .............................................................. 17 8. Award of damages................................................................. 18 9. Meaning of gross income ...................................................... 18 27. Sources of dividend payment ............................................... 53 28. Income “derived from whatever source” .............................. 54
Chapter V. — Deductions from Gross Income
A. Preliminary Topics
1. Definition of deductions ........................................................ 93 2. Time for availing deductions................................................ 93 3. Basic principles governing deductions ................................ 93 4. Taxpayer may claim lesser deduction than that allowed by law ..................................................... 94 5. Kinds of deductions............................................................... 94 6. Category or type of deductions ............................................ 95 7. Ceilings on itemized deductions........................................... 95 8. Taxpayers entitled/not entitled to avail of deductions ...... 96 9. Additional requirements for deductibility of certain payments..................................................... 96
2025 Higher Education Learning Solutions for the Business and Accountancy Program 107
Chapter III. — Exclusions from Income
1. In general .............................................................................. 56 2. Exclusions under the Tax Code............................................ 56 3. Proceeds of life insurance ..................................................... 57
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