Dividend to Donation (Tax2 My Reviewer)

7/26/2019 Dividend to Donation (Tax2 My Reviewer)

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REVIEWER TAX

FINALS

March 11, 2016

What is DIVIDEND Income

Defnition: Dividend income are earnings derived rom the profts o the corporation

to be distributed to the stockholders. This pertains to dividends declared by oreigncorporations.

It should be recalled that dividends declared by domestic corporations are generally

subject to 10 fnal ta! i the recipient is an individual ta! payer and e!empt i the

recipient is a domestic or a resident oreign corporation. "ash# property and scriptdividends rom oreign corporations are items o gross income subject to regular

income. $%angga&an'

It is an income received either by individuals or corporation representing return ocapital or investment. The same may either be ta!able or e!empt either in the orm

o cash or property. The nationality o the ta!payer# the source o income &hether

orm sources &ithin or &ithout bears important determining the ta! conse(uence othe dividence.

)ny distribution made by a corporation to its shareholders out o its

earnings or profts and payable to its shareholders# &hether in money or property.

1. *!ample: +hp ,.00 - Declared , pesos share $"ame rom /nrestricted

retained earnings o a corporation# only /nreserved'

) tockholder &ho has 1#000 shares common stocks meron tayong preerredat common share. I preerred - 2as mauunang magreceive ng share tong

mga to kesa sa mga "ommon.2eaning 1#000 shares ! , shares 3 ,000 dividend income o ).

4etained *arnings - 5ai&an na proft ng "orporation &hile /nrestricted 4etained*arnings - 6ung mga corporation p&ede niyang itabi or uture e!pansion

investment or eto yung mga 74** portion o the 4etained earnings eto yung

p&edeng idistribute sa shareholders.

8. *!ample:

9n 801,# may nai&an na 4* +hp1#000#000 nagissue ng 100#000 shares yung

+hp 1#000#000 ay madidistribute sa may 100#000 shares.

)ng dividend income ay: ++1#000#000 +hp 100#000 3 10 !esos " Share

Rec#onin$ !erio%: /pon the declaration kahit may declaration or the

year 801, pero babayarin nya yung mga shareholders or the ollo&ing year $801;'#

kelan niya idedeclare yung dividend income< - 801,.

Forms o& Di'i%en% Income( )ash, !ro*ert+ an% Stoc# %i'i%en%s FR

TAXATIN

!-R!SES)ash- %ibigay ng company or each shareholder

T)=)%>*

!ro*ert+- Investment sa ibang company called +roperty Dividend

T)=)%>*


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Stoc# - 9&n shares to be distributed - tock Dividend 59TT)=)%>*

/pon dissolution ng "orporation# all assets ay ipupunin ng "ompany at ididistribute

yan. Then it is called >i(uidating Dividend. >i(uidating Dividend are not consideredincome because it is only a mere return o investment capital.

)AS. an% !R!ERT/- 2ababa&asan asset ng company kaya deemed as Income

o the income earner. ?ung "ash yan na 1#000#000 nailabas mo sa corporation#naba&asan ang "orporation ng +hp 1#000#000. ame through kapag +roperty.

ST) DIVDEND 6ung inissue mong common shares ay common shares din ng

company nai&an rin lang &ithin the company yung retained earnings. o&everkapag tocks naman ang naissue sayo &ithin that company parin naii&an ang

retained earnings.

1 First Treatment o& Di'i%en% Income (Three in%s o& Ta3a4i5it+ o& Di'i%en% Income:

a. Interest Income &ithout *!empt#b. subject to 7inal orc. ubject to 5ormal Ta!.

S47ect to Norma5 - 4eceived in the 9rdinary "ourse o TradeI Ta3 E3em*t

a Inter cor*orate %i'i%en%s 8Section 29 8D: ; :

Intercorporate Dividends - 4eceived by a domestic corporation rom

another domestic corporation shall 59T be subject to ta!.

*!ample: @ollibee 7ood "orporation issued dividend income to an 2iguel"orporation $59T /%@*"T to Ta!'

4 Resi%ent Forei$n )or*oration &rom Domestic )or*oration8Section 2osses# b. +ayment o Dividends# and c. hareissuance or repurchase.

*!amples: tock older ) o&ns 1#000shares - 10 o the total

shares/pon declaration o the Dividend Income diba nadagdagan ng

100 shares. +ero lahat ng shareholders nadagdagan din ng sameamount so magbabago yung interest nya sa company< 59. The

same 10

The e!ception dito change o interest# instead o 10 due to thedividend income naging o&ner na siya ng 1, ng corporationibig sabihin merong income. ?aya siya e!empted. ?asi may

income dapat 10 lang siya# upon declaration may 1, may

income on the part o the stockholder meaning may additionalproft.TAXA@LE 59T*: )l&ays take note kung may additional proft on the parto the ta!payer# kung may additional proft or income then

T)=)%>* sya e!cept provided by la special la rules or under

5I4".

4 When it is recei'e% 4+ a s&rctar+ 8S#i**e%:

tock dividends cannot be issued to a person &ho is not astockholder in payment or services rendered. tock dividends

can be issued only to stockholders and not to strangers or non

stockholders

c @oar% o& Directors declared dividend not in accordance

with the Corporation Code of the Philippines.

% Redemption or cancellation of the Stock dividend

distributed.Reason( Resortin$ to %e'ios means tocircm'ent the 5a an% e'a%e the ta3

e Dis$ise% %i'i%en%s

II FINAL TAX FRM DMESTI) )R!RATIN10 4*ID*5T "94+94)TI95# 595 4*ID*5T "94+94)TI95#4*ID*5T )>I*51, 595 4*ID*5T 794*IA5 "94+94)TI95 $ 4*"I+49"IT6'80 595 4*ID*5T )>I*5 *5A)A*D I5 T4)D* 94 %/I5*8, 595 4*ID*5T )>I*5 - 59T *5A)A*D I5 T4)D* 94 %/I5*

E0 595 4*ID*5T 794*IA5 "94+94)TI95 9 4*"I+49"IT6NTE(

DIFID*5D 4*"*IF*D %6 ) 4*ID*5T 794*IA5 "94+94)TI95 7492

D92*TI" "94+94)TI95 - *=*2+T

DIFID*5D 4*"*IF*D %6 ) D92*TI" "94+94)TI95 7492 ) 794*IA5

"94+94)TI95 )4* /%@*"T T9 "94+94)T* T)=


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/nder 4eciprocity: hen one country gives country to other person&hich are oreign country# the other country must also give same

e!emption

*!ample case o +ac(uiao : +ac(uiao earn income rom bo!ing andunder / la& he is subject to an income ta!.

4esident "itiCen - )ll income derived &ithin and &ithout the

+hilippines.

E00#000 T)= D/*. 2ay binayaran na siya sa /. +&ede niya ng iclaim

as Ta! "redit. 7or e!ample binayaran mo ,0#000. )ng babayaran niya

nalang is 8,0#000.

uch is subject to reciprocity rule# under the / >a& kung may na earn

ang citiCen nila dito kung makakaclaim ng credit dito sa ating bansa ay

makakaclaim din ang +inoy sa ibang bansa.

III NRMAL TAX

1. 7rom 4esident 7oreign "orporation or 5on 4esident 7oreign

"orporation $+I>. I5"92* )T >*)T ,0 97 94>D I5"92*'

8. 4*"*IF*D %6 +)4T5*4 I5 A++A++ v. A+T

Aeneral +roessional +artnership v. Aeneral +artnership engagedin Trade.

A+T - Treated as "orporation subject to a 5ormal ta! o E0A++ - +ractice o +roession not considered as "orporation &hich

is Ta!able- 2agbabayad parin in the orm yung mismong

partners ay magdedeclared ng income nila as income so kung

ano ang dinistribute ng A++. It is called Dividend Income.7or e!ample: 100#000 nai&an - to be distributed to ) and % tig

,0#000. ?ung may common und ay ipapasok mo lahat itemssubject to normal ta! and add it to get total ta!able income.

?ung si ) nakatanggap ng ,0#000 ilalagay niya sa "ommon und

subject to 5ormal Ta! 4ate $, T9 E8'

ANN-ITIES( 8Section >2 A8


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!RICES an% WINNINS( Section >2A8?:

+riCes: ) re&ard or a contest or a competition. In other &ords# a priCe

is a remuneration o an eGort reBecting ones superiority# like priCe

money o a bo!ing contest. +riCes and innings that are e!empted

rom fnal ta! are not items o gross income subject to regular income

ta!.

R ( Ta3a4i5it+ o& !ries( More than !h*10,000 S47ect to

Fina5 Ta3 20

GI& a *erson $ets !h* 1H,000, the ho5e 1H,000 sha55 4e s47ect to 20

EX)E!TINS ( >2 8@: 89: 8):

!RICES AND AWARDS MADE !RIMARIL/ IN RE)NITINF RELII-S, ).ARITA@LE, S)IENTIFI), ED-)ATINAL,

ARTISTI), LITERAR/, R )IVIL A).IEVEMENT @-T NL/ IF (

8i: The reci*ient as se5ecte% ithot an+ action on

his *art to enter the contest or *rocee%in$ an% 8E3tstan%in$ omen 5ea$e :

8ii: The reci*ient is not re=ire% to ren%er s4stantia5

&tre ser'ices as a con%ition to recei'in$ the *rieor aar%

% A55 *ries an% aar%s $rante% to ath5etes in 5oca5 an%

internationa5 s*orts com*etitions an% tornamentshether he5% in the !hi5i**ines or a4roa% an% sanctione%

4+ their s*orts associations

Less than !h* 10,000 S47ect to Norma5

Ta3 sha55 4e inc5%e% on )ommon Fn%

innings: ) re&ard or an event that depends by chance.

7or e!ample: innings rom Aamblings# >ottery# or 4aHe Ticket.

WINNINS(

R( Winnin$s re$ar%5ess o& An+ amont are s47ect to Fina5 Ta3 o&20

E3ce*tions( Lotto an% !)S

I& %ea5 or no %ea5 it is s47ect to Fina5 Ta3 o& 20 4ecase on5+

Lotto an% !)S are e3em*te%

Resi%ent )itien on otsi%e the !hi5i**ines S47ect to Norma5Ta3 Section 2; 8@: 81:

ILLUSTRATION: Regine Velasquez won the following prizes / winnings during the ear:

FIRST PRIZE Singing Contest P 10,000

FIRST PRIZE Philippine Charity Sweepstakes Winning P1, 000, 000THIR PRIZE! ! Ra""le Ti#ket Winnings P $, 000

Whi#h o" the pri%es is s&'(e#t to nor)al ta*, "inal ta* an+ ta* e*e)pt

-nswer! The pri%e "ro) singing #ontest 'eing earne+ in a #ontest an+ within threshol+

a)o&nt o" Php 10,000 an+ 'elow is s&'(e#t to .or)al Ta* /Se#tion /-2, .IRC23

The winning on ra""le ti#ket 'eing earne+ 'y #han#e is s&'(e#t to "inal ta* o" 04 e5en i"

the a)o&nt is less than P10,000 an+

the winning "ro) the Philippine Charity Sweepstake is ta* e*e)pt3


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!ENSINS

This pertains to pensions and retirement benefts that ail to meet

the e!clusion criteria and hence subject to regular ta!.

T.ER S-R)ES F IN)ME 8March 12,

2016:1 @AD DE@TS DeJnition: ) portion o account receivable o a company &hich is

already unrecoverable or &orthless.

ILL-STRATIN(

E3am*5e( Nest5e !hi5i**ines as the se55er e ha'e Ta3 !a+er A a sari sari

store oner as the @+er

5estle +hilippines - eller $T)=+)6*4 )' ariari

tore 9&ner - ) - %uyer

"*5)4I9: 5estle nagbenta siya ng grocery kay ) &orth +hp100#000 upon theselling o the Aoods# the seller must declare the goods as the ale &hich is subject

to Ta!. o&ever# these goods &ere sold on "4*DIT# under the books o the eller#

irereco$nieniya as accont recei'a45eor PAUTANGor "ollectible the amount

o 100#000 rom ) assuming it is done on 8018.

9n 801E# hindi niya na malocate si ). 5o& anong mangyayari sa +autang< It is

deemed paid oG on the part o the eller since hindi niya na makolekta on the year

8018 &hich is subjected to the corporate ta!. )s a claim or deduction the amounto 100k shall be recogniCed as %)D D*%T. ?ung merong masamang utang ang

isang buyer ang gaga&in ng seller is to 1.' "harged oG or &ritten oG against the

books o the Ta! +ayer &hich is tatanggalin niya na yung utang ni %uyer.

7or the year 801E# 5estle reported sales o +hp,0#000 rom the other buyer # sabi

natin p&ede siyang mag claim ng &orthless account na +hp 100#000. In eGect yung

ta!able income niya naging &ala na kasi dun sa &orthless account.

Re=isites &or Reco'er+ o& @a% De4ts:

)-@AN

) "harged o or &ritten o against the books o the ta! payer

- - The amount &ritten oG must be uncollectible in the near uture# no slim chance o

recovery collecting such an amount.

@ It must arise rom business trade proession

A )scertain to be &orthless

N 5ot arising rom transactions bet&een related ta!payers.


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I hindi niya clinaim yung recovery sa %ad debts magbabayad sana siya ng,0#000 subject to E0 $"orporate Ta!' . 6ung clinaim niya yung %ad Debts

natanggal na yung babayaran mo

!ano naman si+a na$i$in$ income< 5ag abroad kasi. /pon recovery othe bad debts# theres a deemed income on the part o ta! payer. o&ever may

condition yun # up to the e!tent o the ta! beneft or principle o ta! beneft or4ecapture 4ule.

2eaning o J/+ T9 T* *=T*5T 97 T* T)= %*5*7ITK

9n the year 801;# si 5estle nag report ng income amounting to +hp 100#000 and

then narecover niya yung na &rite oG niya or charged oG dati na utang ni %uyer

kaya idadag niya as an IT*2 97 A49 I5"92* so iadd niya as item o grossincome yung bad debts recovered amounting to 100k . Doon na papasok yung ta!

beneft rule. 2agkano ba yung nabeneft ng ta! payer dito< 9nly the amount o ,0k

kasi eto lang yung inabsorb niya. *tong ,0k lang ang inabsorb niya nag karoon ngbeneft ng ta! payer. ?aya ang iclaclaim niya dito ay only ,0k

. )t the year o the claim o %ad Debts# magkano dapat ang due mo< 1,k sana.

,0#000 ! E0 $"orporate Ta!' 3 1,#000. +ero mag kano sana yung actually nabinayaran mo 3 0. ?asi recovery o bad debts. 2agkano yung beneft mo -

1H,000ta! rate. 6un lang yung e!tent na p&ede mong iclaim.

PRI.CIP6E 7F T-8 9E.EFIT R:6E ;.7W. -S REC-PT:RE R:6E

< States that ! I" a ta* payer +e+te+ an ite) on his in#o)e ta* ret&rn an+ en(oye+

a ta* 'ene"it an+ in the s&'se=&ent year re#o5ers all or part o" that ite), he will

re#ogni%e gross in#o)e in the year the +e+te+ ite) is re#o5ere+3

3 T-8 REF:. > CREIT

?R ! Re"&n+s "ro) ta*es are Ta*a'le

.in%i na ma5ocate si Ta3 !a+er A

.in%i ni+a na macoco55ecta +n$ tan$ ni A

#asi n$a na$ a4roa% si+a ma rite oK na

ito at consi%ere% as @AD DE@TS

2012

NESTLE

!.ILI!!INES8SELLER: so5%

!h* 100,000

B

Nareco'er ni+a +n$ 100,000 na4a% %e4ts ni+a or +n$ tan$ na

100# &rom 2012 N$a+on ia%%

mo +n$ Ta3 @eneJt mo non$

201> na 1H,000 8H0,000 3 >0 1H,000 4eneJte%

S AN RSS IN)ME M A/

2016!h*H0,000 na co55ect

ni+a &rom other sa5es

Dahi5 ma+ 100# si+an$@a% De4ts, an$

ma$i$in$ TAX D-E

ni+a a+ 0

201>


8/52

E8CEPTI7.! Re"&n+s o" ta*es pai+ in estate or +onor@s ta*, Philippine In#o)e

Ta*, Sto#k Transa#tion Ta* an+ A-T

< It shall 'e in#l&+e+ as part o" gross in the year o" re#eipt to the e*tent o" the

in#o)e ta* 'ene"it o" sai+ +e+tion3

B3 7THER S7:RCES! I66E?-66 79T-I.E I.C7DE -66 I.C7DE

FR7D WH-TEAER S7:RCES /6E?-6 7R I66E?-623 E83 ?a)'ling,

;i+napping3

!"#LUSIONS $RO% &ROSS IN#O%!

Se#tion B /'2 E*#l&sions "ro) ?ross In#o)e The "ollowing ite)s shall not 'e in#l&+e+ in

gross in#o)e an+ shall 'e e*e)pt "ro) ta*ation &n+er this Co+e3

E8C6:SI7.S FR7D ?R7SS I.C7DE Re"er to a "low o" wealth to the ta*payer whi#h are

not treate+ as part o" gross in#o)e +&e to the "ollowing reasons!

a3 It is e*e)pte+ 'y the F&n+a)ental 6aw /Constit&tion2

'3 It is e*e)pte+ 'y the Stat&te

#3 It +oes not #o)e within the +e"inition o" the in#o)e3

While e+tions "ro) gross in#o)e are those a)o&nts w># the law allows to 'e +e+te+ "ro)

'( Life Insuran)e The pro#ee+s o" li"e ins&ran#e3 It is a #ontra#t o" In+e)nity3 Interest

pay)ents shall 'e in#l&+e+ in the ?ross In#o)e3 In+e)ni"ying the li"e ins&re+, it is #onsi+ere+

as ?ross In#o)e3

&R : Pro#ee+s "ro) the 6i"e Ins&ran#e is In#l&+e+ in the eter)ination o" ?ross Estate3

!"#LU*!*: I" the +esignation o" the 'ene"i#iary is IRREA7C-96E an+ i" represents

pro#ee+s "ro) ?ro&p Ins&ran#e Poli#y3

E*a)ple! Ikaw y&ng heir, na)atay y&ng tatay nila an+ then y&ng anak nakatanggap ng pro#ee+s

"ro) the li"e ins&ran#e ng "ather3 &ng heir a++itional in#o)e 'a on his part It is a #ontra#t o"

in+e)nity 'e#a&se iniin+e)ni"y y&ng li"e ng tatay3

It shall not in)luded as the &ross In)o+e Se)tion ,-.,0,' 1ut howe2er it shall for+ part

as &ross !state Se)tion 34,! of the de)eased person( ;&ng ang 'ene"i#iary )o ay Re5o#a'le,

pwe+eng )apalitan, howe5er kapag na)atay na hin+i na pwe+eng palitan3 -ng )angyayari is

)a#o#ollate na sya sa estate ng +e#e+ent3 -6W-S E8C6:E I. THE IRRESPECTIAE

7F THE 9E.EFICI-R ESI?.-TE I. THE P76ICG

INSURAN#! 5R!%IU%S 5AI* 06 T7! !%5LO6!R

I$ T7! 0!N!$I#IAR6 *!SI&NAT!*:

E8C6:SI7.S FR7D ?R7SS I.C7DE Re"er to a "low o" wealth to the ta*payer whi#h

are not treate+ as part o" gross in#o)e +&e to the "ollowing reasons!

a3 It is e*e)pte+ 'y the F&n+a)ental 6aw /Constit&tion2

'3 It is e*e)pte+ 'y the Stat&te

#3 It +oes not #o)e within the +e"inition o" the in#o)e3

&R : Pro#ee+s "ro) the 6i"e Ins&ran#e is In#l&+e+ in the eter)ination o" ?ross Estate3

!"#LU*!*: I" the +esignation o" the 'ene"i#iary is IRREA7C-96E an+ i" represents

pro#ee+s "ro) ?ro&p Ins&ran#e Poli#y3

INSURAN#! 5R!%IU%S 5AI* 06 T7! !%5LO6!R

EM!L/EE can c5aim as

)M!ENSATIN IN)MEIF ( The em*5o+ee is RAN

AND FILE

I& the em*5o+ee is amana$er or s*er'isor

sch insrance *ai% 4+

the em*5o+e i55 4e

1 Fami5+, E3ector or

A%ministrator or .eirs


9/52

.( A+ount Re)ei2ed 1 Insured as Return of 5re+iu+ 8 The a)o&nt re#ei5e+ 'y the ins&re+

as a ret&rn o" Pre)i&)s pai+ 'y hi) &n+er li"e ins&ran#e, en+ow)ent or ann&ity o" #ontra#ts,

either +&ring the ter) or at the )at&rity o" the ter) )entione+ in the #ontra#t or &pon s&rren+er

o" the #ontra#t3 ito papasok y&ng ret&rn o" Capital > ret&rn o" pre)i&) pai+G

R!ASON: It is 9ust a +ere return of #apital(

-( &ifts 0equests and *e2ises 8 The 5al&e o" property a#=&ire+ 'y gi"t , 'e=&est, +e5ise or

+es#ent ! Pro5i+e+, howe5er, That in#o)e "ro) sh property as well as gi"t , 'e=&est, +e5ise or

+es#ent o" in#o)e "ro) any property in #ases o" trans"ers o" +i5i+e+ interest, shall 'e in#l&+e+ in

gross in#o)e3

Reason ! It is .7T a pro+t o" #apital or in+&stry3 They are grat&ito&sly gi5en an+ they are

alrea+y s&'(e#t to onors ta* in #ase onation Inter5i5os > Estate in #ase o" onation Dortis

Ca&sa where in 'oth instan#e the onee neither s&'(e#t to onors Ta* nor In#o)e Ta* nor

Estate Ta*3 That@s the reason why ?i"ts, 9e=&ests an+ e5ises are e*#l&+e+ "ro) ?ross In#o)e3

- It is not a product of a Capital or services rendered, wala kang pinuhanan dito, binigyan ka ng

Gift na merong value. That value does not form part of the Gross Income. However, when the

property donated earns income, that income shall form part of the Gross income subect to ta!.

;( #o+pensation for Inuries or Si)


10/52

si#kness, pl&s the a)o&nts o" any +a)ages re#ei5e+, whether 'y s&it or agree)ent, on a##o&nt o"

sh in(&ries or si#kness3 Co)pensation "or persons si#kness or in(&ries, when y&ng inawar+ is

#o)pensation "or personal in(&ries then it is not s&'(e#t to ta*3 9&t when the awar+ was the loss

o" in#o)e earne+ 'e#a&se o" in#apa#ity, the awar+ "or that loss shall 'e s&'(e#t to ta*3

Reason! It is Co)pensatory, .7T ?-I. > PR7FIT3 It a++s nothing to the in+i5i+&al3

S:DD-R!

4( In)o+e e=e+pt under Treat 8In#o)e o" any kin+, to the e*tent re=&ire+ 'y any treaty

o'ligation 'in+ing &pon the ?o5ern)ent o" the Philippines3 /SECTI7. B /92 /$2

RE-S7.! -+heren#e to the ?enerally -##epte+ Prin#iple3

>( Retire+ent 0enefits 5ensions &ratuities < :n+er R3-3 1

E8EDPT

*a+ages for Loss of !arnings / In)o+e< T-8-96E


11/52

E*#ept ! 6iterary Works, 9ooks an+ D&si#al /1042 howe5er &n+er Corporation hin+i

+inisting&ishe+ y&ng 69D it is there"ore &n+erstoo+ na lahat ng Royalties -#=&ire+ 'y

+o)esti# are ta* at 043

.( $oreign 8Resi+ent Foreign Corporation an+ .on Resi+ent Foreign Corporation

B3 5artnership 8(?eneral partnership engage+ in tra+e an+

?eneral Pro"essional Partnership/ not #onsi+ere+ as Corporation2

Co


12/52

Howe5er the last paragraph states The in#o)e o" whate5er kin+ an+ #hara#ter o" the "oregoing

organi%ations "ro) any o" their properties, real or personal or "ro) any o" their a#ti5ities

#on+te+ "or pro"it regar+less o" the +isposition )a+e o" sh in#o)e shall 'e s&'(e#t to ta*

i)pose+ &n+er this Co+e3

E*a)ple ! E+ation instit&tion pinaparent nila y&ng real property nila3 -ny in#o)e +eri5e+"ro) that property shall 'e s&'(e#t to ta*3

NOT! : !2en though the are in)luded as !=e+pted Under Se)tion -B the are not

auto+ati) 1e)ause the #orporation or !ntities requires )onfir+ator ruling issued 1 the

0IR stating the are e=e+pted fro+ the In)o+e Ta=(

TA" LIA0ILIT6

'( *o+esti) #orporation are ta=ed8 Dithin and Dithout the 5hilippinessu19e)t to the rate of -BE rate on their ta=a1le in)o+e or net in)o+e(,Se)tion .@

.ote! :n+er Royalties /SECTI7. /2 on Passi5e In#o)e Rate 04 ! E*#ept !

6iterary Works, 9ooks an+ D&si#al /1042 howe5er &n+er Corporation hin+i

+inisting&ishe+ y&ng 69D it is there"ore &n+erstoo+ na lahat ng Royalties -#=&ire+ 'y

+o)esti# are ta* at 043

S5!#IAL CIN*S O$ *O%!STI# #OR5ORATIONS:

'( 5roprietar !du)ational Institutions S!#TION .@ ,0

.( Non 5rofit 7ospitals

The are ta=ed at 'BE on their ta=a1le in)o+e e=)ept those )o2ered 1 Su1se)tion ,*

hereof( The are )onsidered as Spe)ial 1e)ause the are en9oing the 5referential rate of

'BE instead of the &eneral Rate of -BE(

;&ng )ay 'inigay na e+ational instit&tion h&wag aga+ sasagot kasi :n+er Se#tion B0,

nakalagay na .7.ST7C; K .7.


13/52

1( 0oonet in#o)e3 /Se#tion L /-223

Ta= Lia1ilit: -BE of their Net In)o+e / Ta=a1le In)o+e

?eneral R&le! - #orporation organi%e+, a&thori%e+ or e*isting &n+er the laws

o" any "oreign #o&ntry, engage+ in tra+e or '&siness within the Philippines

/e"inition2

9eginning Man&ary 01, 00J< The ta*a'le rate o" Resi+ent ForeignCorporation /RFC2 shall 1e -BE 1ased on ta=a1le in)o+e(

Spe#ial Resi+ent Foreign Corporation In#l&+es /Se#tionL /-2 /B2 /2 /$2 /22

Spe#ial Resi+ent Foreign Corporation /SRFC2 It is #alle+ Spe#ial Resi+ent

Foreign Corporation 'e#a&se they are ta*e+ at a +i""erent rate than the nor)al


14/52

ta* rate o" B043 The +i""erent kin+ o" SRFC are as "ollows! ,NO N!!* TO

R!VI!D 9ust a qui)< referen)e to SR$# and these are not dis)ussed

during the le)tures

a3 International Carrier N 4 Ta* on its ?ross Philippine 9illings3

'3 7""shore 9anking :nits 104 Final Ta* Rate#3 Ta* on 9ran#h Pro"its Re)ittan#es 1$4 whi#h is 'ase+ on the total pro"its applie+ or

ear)arke+ "or re)ittan#e witho&t any +e+tion "or the ta* #o)ponent thereo"3+3 Regional or -rea Hea+=&arters an+ Regional 7perating Hea+O&arters o" D&ltinational

Co)panies


15/52

.7TE! DCIT is

a3 onl appli)a1le to *o+esti) #orporation and Resident $oreign #orporation on

'3 the ta= rate of .E of gross in)o+ean+ appli#a'le only to the

#3;thear of registration on 0ureau of Internal Re2enue(

)M!ARE WIT. NRMAL TAX RATE >0 4ase% on Ta3a45e Income %ito

a**5ica45e an$ Domestic )or*oration an% Forei$n )or*oration

RSS SALES

LESS ( Lost & Sa5es

ross Income 82:

LESS ( A55oa45e De%ctions

Ta3a45e Income 8>0: Isi*in na5an$ NET Income

RATIONA! O" I#POSIN$ #CIT%To circumvent the overstating

allowable deductions in order to pay lower tax due. n order to

prevent such! the taxable income shall be based on Gross ncome

"or the computation o" #$T.

E3am*5e(

6ou registered on @anuary 01# 8010# &hen is your ourth year o 9peration

7irst 6ear o 9peration 8ndyear Erdyear Lthyear

201> IS T.E ;T./EAR F !ERATIN

*!ample 8:

6ou registered on @une E0# 8010# &hen is your ourth year o 9peration IS T.E ;T./EAR F !ERATIN

*!ample E:

6ou registered on December E1# 8010# &hen is your ourth year o 9peration IS T.E ;T./EAR F !ERATIN 8T.E SAME, EVEN T.-.

A.IT ISAN ARAW NALAN: Dn 5an$ ma$ coco*te n$ M)IT


16/52

4ule : )ng babayaran ng "orporation &hichever is higher bet&een

2inimum "orporate Income Ta! and 5ormal Income Ta!.

?aya siya 2inimum "orporate Income Ta!# hindi mo p&edeng

bayaran lo&er than 2"IT.

@ "arry 7or&ard o *!cess 2inimum Ta! $ection

8M $8' ' - )ny e!cess o the minimum corporate income ta! over thenormal ta! as computed under ubsection ) o this section shall be

carried or&ard and credited against the normal income ta! or the

three$E' immediately succeeding ta!able years.

B ?ung ano da& yung diGerence bet&een the 2"IT and 5ITin the case o :2"IT - + ,#0005IT + 1#000 NNNNNNNN +L# 000 $*!cess' 2ay sobrang L#000 kasi dapat angbabayaran mo lang ay 1#000 dahil yun ang computed

5ormal Income Ta! eto lang yung na earn mo e ho&ever

p&ede mo siyang I carry over and claim as deduction orthree consecutive succeeding years'."95DITI95 : o&ever on the ne!t year# higher na dapat

ang 5942)> I5"92* T)= kasi kung 2"IT parin angIA*4 you cannot claim as the Ta! credit the 2"IT romthe previous year.

EXAM!LE(

2"IT - +hp ,#000

"omputed Income Ta! $5IT' - +hp 1#000

o& much ang babayaran mo< - +hp ,#000 . ince minimum siya hindi kap&edeng magbayad lo&er than the amount kaya W.I). EVER IS .I.ER

EXAM!LE 2(

2"IT - +hp L#000

"omputed Income Ta! $5IT' - +hp ;#000

o& much ang babayaran mo< - +hp ;#000 . ince minimum siya hindi ka

p&edeng magbayad lo&er than the amount kaya W.I). EVER IS .I.ER

)NTIN-ATIN

ENERAL EXAM!LE

*=)2+>*: 9n the Lthyear o 9peration:

5IT - +hp ,#000

2"IT - +hp 10#000

%abayaran - +hp 10#000

DiGerence: +hp,# 000

Ta! "redit mo : ,#000 # may sobra kang ,#000 &hich can be carriedover or three consecutive years $,thyear # ;th# and Mthyear'.


17/52

E3am*5e H(

*=)2+>*: 9n the Lthyear o 9peration:

5IT - +hp ,#000

2"IT - +hp 10#000

%abayaran - +hp 10#000

DiGerence: ,# 000

,thyear - L#000 5IT

,#000 - 2"IT

Ta! Due: +hp,#000

DiGerence or sobra : +hp 1#000 $yung L#000 lang sana kasi babayaran mo'

NNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNN

;thyear - 10#000 5IT

1#000 2"IT

T)= D/*: 10#000

7or&ard rom Lthyear: ,#000

"arry 9ver rom ,thyear: 1#000

Ta! due: L#000

*!ample E :

HT./EAR NITB #, same

han$$an$ sa 9th+ear


18/52

IM!SITIN F IM!R!ERL/ A))-M-LATED EARNINS

TAX 8SE)TIN 2?:

a In enera5 In a%%ition to other ta3es im*ose% 4+ this Tit5e, there is here4+im*ose% &or each ta3a45e +ear on the im*ro*er5+ accm5ate% ta3a45e

income o& each cor*oration %escri4e% in S4section @ hereo&, an im*ro*er5+accm5ate% earnin$s ta3 e=a5 to ten *ercent 810: o& the im*ro*er5+

accm5ate% ta3a45e income

)pplying the Dividends income# rom the 5ot appropriated 4etained *arnings dito siya

kukuha ng dividends mag dedeclare yung "ompany ng Dividends to stockholders and thenthe dividends is called Dividend Income subject to 10 fnal Ta!.

+ag I)* naman yung "ompany instead o Declaring Dividends rom /nrestricted 4etained*arnings they ailed to declare dividends# hindi nila dinistribute yung /nrestricted 4etained

*arnings sa stockholders gina&a nila is minaintain nila as a penalty thereo to declaredividends &ill constitute Improperly )ccumulated *arnings &hich is subject to 10. ?ung

magkano sana ang pupunta sa government na ta! dividends ganun din sa may I)* subjectto 10.

A**5ication o& Im*ro*er5+ Accm5ate% Earnin$s sha55 co'er(

@ )o'era$e( A55 )or*orations

E3ce*tions(

$a' +ubliclyheld "orporationsO$b' %anks and other nonbank fnancial intermediariesO and$c' Insurance "ompanies

4eason &hy they are not included: They are strongly held by the Aovernment and all the

documents or fnancial statements o such are public in nature then there is no Improperly)ccumulated *arnings.

) E'i%ence o& !r*ose to A'oi% Income Ta3B

81: !rima Facie E'i%ence The act that any corporation is a mere holding company orinvestment company shall be prima acie evidence o a purpose to avoid the ta! upon its

shareholders or members.

82: E'i%ence Determinati'e o& !r*oseBThe act that the earnings or profts o a

corporation are permitted to accumulate beyond the reasonable needs o the business shallbe determinative o the purpose to avoid the ta! upon its shareholders or members unless

the corporation# by the clear preponderance o evidence# shall prove to the contrary.

Reasona45e Nee%s o& 4siness 2?8E: For *r*oses o& this Section, the termreasona45e nee%s o& the 4siness inc5%es the reasona45+ antici*ate% nee%s o&the 4siness

NTE( This is the 7stiJcation h+ )or*orations ha'e Accm5ate% Earnin$s

For e3am*5e ( ?ailangan nila yun or uture e!pansion or uture investment kaya sila nag

seset aside at dun papasok yung )ppropriated 4etained *arnings itatabi nila or the4easonable 5eeds.


19/52

DIm*ro*er5+ Accm5ate% Ta3a45e Income 7or the purposes o this ection# the termimproperly accumulated ta!able income means ta!able income adjusted by:

$1' . Income *!empt rom Ta!O

$8' Income *!cluded rom gross incomeO

$E' Income ubject to fnal ta!O and

$L' The amount o net operating loss carry over deductedO

)nd reduced by the sum o :

a. Dividends actually or constructively paidO andb. Income ta! paid or the ta!able year.

FRM-LA( Aet frst the ta!able income to be adjusted by or added to the 7our $L' rom 1Lthen less the $8' rom a and b to get the Improperly )ccumulated *arnings subject to therate o 10 to get the Improperly )ccumulated Ta!.

TAXA@LE IN)ME

ADD Income E3c5%e% &rom ross Income

ADD Income S47ect to Fina5 Ta3

ADD Amont o& NL)

LESS Di'i%en%s acta55+ or constrictcti'e5+ *ai%

LESS Income ta3 *ai% %rin$ the ta3a45e +ear

IAE X 10 IAET

ALLWA@LE DED-)TINS 8Section >;:

1 !ersona5 E3em*tions 8T!I):2 !!..I 8!remims !ai% on .ea5th an% .os*ita5iation

o& the In%i'i%a5 ta3*a+er:> Itemie% De%ctions

; *tiona5 Stan%ar% De%ctions

In general# deductions or allo&able deductions are business e!penses and

losses incurred &hich the la& allo&s to reduce gross business income toarrive at net income subject ta!.

Deductions are strictly construed against the ta!payer. They are not

presumed but allo&able only by reason o specifc provisions o la& and notunder any general e(uitable or "onstitution.

+/4+9*: To provide ta!payer a just and reasonable ta!able amount as the

basis o income ta!. It is because many ta!payers spend ade(uatee!penditures in order to obtain a legitimate income.

*!cept or ta!payers earning compensation income arising rom personalservices rendered under an employeremployee relationship &here no%e%ctions sha55 4e a55oe% n%er this Section other than n%er


20/52

S4section Min computing ta!able income subject to income ta! under

ections 8L$a'O 8,$a'O 8;O 8M$)'# $%' and $"' )5D 8P $a' $1'.

S-@SE)TIN M Premiums Payments on %ealth and & or %ospitali'ationnsurance o" an ndividual Tax Payer. (PP%%)

2eaning all *mployees earning )om*ensation Incomeshall not allo& anydeductions e!cept those under +II and +*495)> *=*2+TI95. $6un langang p&edeng e!emptions'

INDS F DED-)TINS(

1 !ersona5 E3em*tions 8Section >H:8A:

In Aeneral: 7or the purpose o Determining the ta! provided in ection8L$)' o this title# there shall be allo&ed a 4asic *ersona5 e3em*tion

amontin$ to H0,000or each individual ta! payer. o&ever on*state Ta! Q Trust under ection ;8# there are no amendments as tothe +ersonal *!emptions thereore the *state Ta! Q Trust are e!empted

only or the frst +80# 000 according to the %.I.4 rules and 5I4".

In the case o married individual &here only one o the spousesderiving gross income# only such spouse shall be allo&ed the personale!emption.

*!emptions are applicable to:a. "ompensation Income *arnerO andb. %usiness Income *arner.

8. ADDITINAL EXEM!TINS A**5ica45e &or O-ALIFIEDDE!ENDENTS 8SE)TIN >H:8@:

There shall be allo&ed an additional e!emption o tent+ J'ethosan% *esos 8!2H,000: &or each %e*en%entnot e!ceeding our$L'. 2a!: LThe additional e!emption or dependents shall be claimed by on5+

one o& the s*osesin the case o married individuals.9 ")5 ">)I2 *=*2+TI95< :a. R 3 ino yung may trabahob. I both are &orking 3 In deault the usbando&ever# the usband can e!ecute a &aiver in avor o the ie.

In the case o legally separated spouses# additional e!emptions maybe claimed only by the spouse &ho has the custody over the children.Provided!that the total amount o additional e!emptions that may beclaimed by both shall not e!ceed the ma!imum additional e!emptions

herein allo&ed.

%)I" +ersonal*!emption !H0,000

*T)T* Ta! Q Trust $*"

;8' +hp 20,000 ingle Ta!

+ayer.


21/52

Oa5iJcations o& De*en%ent(a. Dependent must not be more than 81 years o ageb. The dependent must be single or unmarriedc. >iving &ith the ta!payer or their custody $+ano kung yung

dependent ay nag aaral sa ibang lugar< - "onsidered parin asdependent or as long as temporary parin yung tirahan niya dun'

d. Dependent on the Ta! +ayer or "hie upport $Ibig sabihin saparents parin siya kumukuha ng allo&ance or support'

e. /nemployed. >egitimateg. Illegitimateh. >egally )dopted

E3am*5e(

B>ive in si 2an and oman and nagkaroon sila ng Dependent &ithout

beneft o marriage. %y deault sino mag claclaim ng deductions then indeault yung 2other unless the 2other e!ecutes a &aiver. Inii&asanditto ay yung Double Deductions.

EXAM!LE(

1. 7or the year 801, si Dependent ay 81 years old mag 88 siya on@anuary 08# 801,. Sualifed Dependent ba siya* :

"ompensation Income : 1P0#000

LESS(a. ++I - +8L00


23/52

b.+ersonal *!emptions o +,0#000

Ta3a45e Income ( !h*129,600

ubjected to a ta! o , - E8 5942)> T)= $Ta! 4ate'

?ung magkano ang 5et )mount divide it by 18 yun lang ang sahod mo

SE)TIN >;( A55oa45e De%ctions(

e !ersona5 E3em*tions& !!..I$ Itemie% De%ctions 8Discssion &or this

Matter a5rea%+: *"TI95 EL ) - @h*tiona5 Stan%ar% De%ctions

ItemiCed Deductions are applicable to: +roessional &hether

"orporation or Individual# %usiness Income.

.oe'er NT a**5ica45e to Non Resi%ent A5ien Not

En$a$e% In tra%e or @siness 8NRABNET@: an% to Non

Resi%ent Forei$n )or*oration

4eason: They are ta!ed based on their Aross Income even though

they &ill claim ItemiCed deduction there are no eGect on their

ta!ation.

The ollo&ing are the )llo&ed as deductions rom gross income:

a. *!pensesb. Interestsc. Ta!esd. >ossese. %ad Debts. Depreciationg. Depletionh. "haritable and 9ther "ontributionsi. 4esearch and Developmentj. +ension and Trusts

SE)TIN >;8A: E3*enses(

$1' r%inar+ an% Necessar+ Tra%e, @siness or !ro&essiona5

E3*enses-$a' In Aeneral: There shall be allo&ed as deduction rom gross

income all the ordinary and necessary e!penses paid or


24/52

incurred during the ta!able year in carrying on or &hich are

directly attributable to # the development# management#operation and or conduct o the trade# business or e!ercise oproession.

A EX!ENSES(1. 9rdinary and I5 "955*"TI95 IT T* T4)D* 94

%/I5*8. 5ecessary )4* D**2*D )>>9*D ) D*D/"TI95

NTE ( NT !ERSNAL

/nder the *numeration# &e can ">)I2:

a. alaries and agesb. Travel *!pensesc. 4entalsd. *ntertainment# )musement# 4ecreation and

4epresentation. $*!ample : +) and 2assage'

Directly attributable to# the development#

management# operation and or conduct o the

trade or business or e!ercise o a proession.

*=)2+>*: )ndoks pinupurchase para makabenta ng 2anok: 4a&

"hicken

>iliga&an mo yung supplier para makuha mo yung upplier 6ung

e!penses na ma aaccrue niya in connection &ith the business

p&ede niyang ma claim as deductions.

o&ever there is a limitation:

a. I you are selling goods it should not e!ceed 0., o your

net salesb. ales o ervices - 1 o net revenue

SE)TIN >;84:

ubstantiation 4e(uirements: 5o deductions rom

gross income shall be allo&ed under ubsection $)' hereo unless

the ta!payer shall be substantiate &ith sucient evidence# such

as ocial receipts or other ade(uate records: $i' the amount o

the e!pense being deducted# and $ii' the direct connection or

relation o the e!pense being deducted to the development#


25/52

management# operation and or conduct o the trade# business or

proession o the ta!payer.

9cial 4eceipts vs Invoices

9cial 4eceipts - ales o erviceInvoices - Aoods

-n%er the ).AN !rinci*5e - I the ta!payer ails to

substantiate any part o his e!penses the %I4 can set any amount

as a valid e!penses or the ta!payer.

7or e!ample: Travel *!pense# hindi niya masubstantiate kasi

na&a&ala yung 4esibo yung %I4 hindi niya p&edeng idisallo&ed

agad yung the &hole amount. 6ung %I4 magseset siya ng amount

na reasonable as a valid e!pense o the ta!payer.

SE)TIN >;8 c: @ri4es, #ic#4ac#s an% ther Simi5ar

!a+ments

5o deduction rom gross income shall be allo&ed under

ubsection ) hereo or any payment made directly or indirectly

to an ocial or employee o the 5)TI95)> Aovernment or to an

ocial or employee o any local government unit or to an ocial

or employee o a government o&ned or controlled corporation orto an ocial or employee or representative o a oreign

government or to a private corporation# general proessional

partnership or similar entity i the payment constitutes a bribe or

kickback.

*!ample: Aovernment agency may event siya or seminar

kailangan niya ng supplier ng 7ood then magcoconduct ng

bidding &here supplier ) and % bids. +ara makuha ni ) yung

supplier na yun bibigyan niya ng 10 ng total amount i si ) ang

makukuha as the highest bidder. 6ung inispend niyang 10

p&ede niya bang iclaim as e!pense< 59.

@ Interest

In general - The amount o Interest paid or incurred &ithin ata!able year on indebtedness in connection &ith the ta!payersproession# trade or business shall be allo&ed as deduction rom

gross income.

*=)2+>*: 2ost common interest ay yung Interest on %ank Deposits:?ung naka earn ka ng interest in %ank Deposits# kung magkano total

interest nun EE o that interest shall be deducted rom intereste!pense naba&asan yung p&ede mong iclaim.


26/52

I5T*4*T *=+*5*LESS(Interest Income subject to 7inal Ta!

RATINALE( Wh+ %o +o ha'e to ma#e 5oans or as# &orin%e4te%ness i& +o ha'e sa'in$s or %e*osits in 4an#s In

or%er to $et ri% o& the o'erstatement o& e3*enses

)ccording to )tty. "leo abado)ndrada

I5T*4*T:

>> )or*oration >


27/52

or other casualties or rom robbery# thet or

embeCClementc. 5o loss shall be allo&ed as deduction under this

ubsection i at the time o the fling o the return# such

loss has been claimed as deduction or estate ta!purposes in the estate ta! return.

d. $)ccording to )tty. 5goslab' +roo o >oss - &herein a ta!

payer shall submit a declaration o loss sustained rom

casualty or rom robbery# thet or embeCClement during

the ta!able year.

4/>* : )>> 59T %* "92+*5)T*D 794 %6 I5/4)5"* but i naka claim ka sa insurance

company e(uivalent or your losses hindi mo siya p&edeng I claim as deductibility.

9nce na nasunugan yung ta! payer gaga&in niya is to fle a

report notiying the %I4 na nasunugan yung ta! payer at kelangan

niyang I ocular yung place na nasunugan. This is one o the

important thing to do that a 4*+94T 2/T %* 2)D*.

E' 59>"9 - 5et 9perating >oss "arry 9ver

NET !ERATIN LSS means - *="* o the allo&able

deduction over gross income o the business in a ta!able year.

*"TI95 EL$E' JThe net operating loss o the business or

enterprise or any ta!able year immediately preceding the currentta!able year immediately preceding the current ta!able year#

&hich had not been previously oGset as deduction rom gross

income shall be carried over as deduction rom gross income or

the ne!t three $E' consecutive ta!able years immediately

ollo&ing the year o such loss.

+rovided ho&ever# that any net loss incurred in a ta!able year

during &hich the ta!payer &as e!empt rom income ta! shall not

be allo&ed as a deduction under this subsection.+rovided# urther# that a net operating loss carryover shall be

allo&ed only i there has been 59 /%T)5TI)> change in the

o&nership o the business or the enterprise.

$i' 5ot less than seventy - fve percent $M,' in nominal

value o outstanding issued shares# i the business is in

the name o a corporation is held by or on behal o the

same personsO or

$ii' 5ot less than seventy fve percent $M,' o the paid upcapital o the corporation# i the business is in the name

o a corporation is held by or on behal o the same

persons.


28/52

hen the ta!payer incurred 5et 9perating >oss or the

ta!able year p&edeng I carry over or the ollo&ing

three $E' years.

?ung may 5*T 9+*4)TI5A >9 yung "ompany )>) iyang

babayarang ta! # anong mangyayari sa loss niya< +&ede niyang

icarry over or the ne!t succeeding years kung nag carry over ka

p&ede mong iclaim as deduction like or *=)2+>*:

*=)2+>*:

7or the year 801;# naka earn ka ng NET !ERATIN incomena

+80#000 as a &ay o deduction si 5et 9perating >oss can be

claimed as Deduction

*=)2+>*: 801, 801; 801M

801P

59> 18#000

"an "arry 9ver and can be considered as Deduction or E years.

)A*4I5A >9* :ection EL $;': J>osses rom &agering transactions shall be

allo&ed only to the e!tent o the gains rom such transactionsK In

short : Aambling >oss

>osses rom Illegal ources: Talo ka sa drug dealing company#

hindi mo p&edeng iclaim as losses. +ero pag naka earn ka ng

Income then ta!able.

5*T 9+*4)TI5A >9 794 2I5* 9T*4 T)5 9I> )5D A)

*>>

7or mines other than oil and gas &ells# a 59>"9 &ithout

beneft o incentives provided or under *9 88;# as amended

incurred in any o the frst ten years o operations may be carried

over as deduction rom ta!able income or the ne!t fve years

immediately ollo&ing the year o such loss. The entire amount o

the loss shall be carried to the frst o the fve ta!able years

ollo&ing the loss# and any portion o such loss &hich e!ceeds the

ta!able income o such frst year shall be deducted in like mannerrom the ta!able income o the remaining our years.

E@AD DE@TS


29/52

4e(uisites or deductibility: "/%)5

Re=isites &or Reco'er+ o& @a% De4ts:

)-@AN

) "harged o or &ritten o against the books o the ta! payer- - The amount &ritten oG must be uncollectible in the near uture# no slim chance

o recovery collecting such an amount.

@ It must arise rom business trade proession

A )scertain to be &orthless

N 5ot arising rom transactions bet&een related ta!payers.

F DE!RE)IATIN rom the ordinary &ear and tear o thecompanyK

R( There shall be allo&ed as a depreciation deduction a reasonableallo&ance or the e!haustion# &ear and tear o property used in thetrade or business. In the case o property held by one person or lie

&ith remainder to another person # the deduction shall be computed asi the lie tenant &ere the absolute o&ner o the property and shall beallo&ed to the lie tenant. In the case o property held in trust# theallo&able deduction shall be apportioned bet&een the income

benefciaries and trustees in accordance &ith the pertinent provisionso the instrument creating the trust# or in the absence o suchprovisions on the basis o the trust income allo&ed to each.

In %e*reciation it is 5i#e +o are %istri4tin$ theamont o& +or assets into se&5 5i&e

%)I" 2*T9D: T4)IAT >I5* 2*T9D

E3am*5e(2achinery purchased at +hp 1#000#000 yung ta! payer mag sesetsiya ng estimated /seul lie or e!ample 80 years.

/nder the straight line method# magkano yung iclaclaim mo as depreciationo the 2achinery : ,0#000 6ear. *very year or 80 years# magclaclaim ka ngD*D/"TI95 o the 2achinery amounting to +,0#000 per year. o at the endo the t&enty years# ully depreciated na yung machinery. +ag ully

depreciated na yung machinery &ala ka nang p&edeng iclaim as deduction.

+ag na outlive niya yung lie nya or 8, years# or the 81st# 88nd# 8Erdand soon &ala kanang dapat iclaim na deduction.

DE!LETIN 8>; 8: :B A!!LI)A@LE NL/ N( De*5etion o& i5 an% as e55s

an% Mines

A4 : In the case o oil and gas &ells or mines# a reasonableallo&ance or depletion or amortiCation computed in

accordance &ith the cost - depletion method shall be grantedunder rules and regulations to be prescribed by the ecretaryo 7inance# upon recommendation o the "ommissioner:

+rovided# that &hen the allo&ance or depletion shall be e(ualthe capital invested no urther allo&ance shall be granted.


30/52

+rovided urther# that ater production in commercial

(uantities has commenced# certain intangible e!ploration anddevelopment drilling costs:

$a' shall be deductible in the year incurred i such

e!penditures are incurred or nonproducing &ells and ormines$b' shall be deductible in ull in the year paid or incurred or at

the election o the ta!payer# may be capitaliCed andamortiCed i such e!penditures incurred are or producing

&ells and or mines in the same contract area.

. ).ARITA@LE INSTIT-TINS

In Aeneral. "ontributions or gits actually paid or made &ithin the ta!able

year to# or or the use o the Aovernment o the +hilippines or any o its

agencies or any political subdivision thereo e!clusively or public purposes#or to accredited domestic corporations or associations organiCed and

operated e!clusively or religious# charitable# scientifc# youth and sports

development# cultural or educational purposes or or the rehabilitation oveterans# or to social &elare institutions# or to nongovernment organiCations#

in accordance &ith rules and regulations promulgated by the ecretary o

7inance# upon recommendation o the "ommissioner# no part o the netincome o &hich insures to the beneft o any private stockholder or

in%i'i%a5 in an amont not in e3cess o& ten *ercent 810' in the caseo an individual# and J'e *ercent 8H: in the case o& a cor*oration# o

the ta!payerUs ta!able income derived rom trade# business or proession ascomputed &ithout the beneft o this and the ollo&ing subparagraphs.

R-LE( "ontributions to "orporation an actual contribution amounting to 100#000ho&ever you cannot claim the &hole amount o the "haritable "ontributions

titignan mo muna kung pasok siya sa >imit.

To get the >imit: Ta!able Income ! , $"orporation'7or e!ample: Ta!able Income - +hp 1#000#000 ! ,>imit ,0#000,0#000 - p&edeng I claim100#000 p&edeng I claim ng individual $10 instead o ,'

$8' "95T4I%/TI95 D*D/"TI%>* I5 7/>> - not&ithstanding the provisions othe preceding subparagraph donations to the provisions o the precedingsubparagraph donations to the ollo&ing institutions or entities shall bedeductible in ull : 8WIT.-T LIMIT:a. Donations to the Aovernmentb. Donations to "ertain 7oreign Institutionsc. Donations to )ccredited 5onAovernmental 9rganiCations

I RESEAR). AND DEVEL!MENTIn General. - A taxpayer may treat research or development expenditures which are paid

or incurred by him during the taxable year in connection with his trade, business or profession as

ordinary and necessary expenses which are not chargeable to capital account. The expenditures

so treated shall be allowed as deduction during the taxable year when paid or incurred.

PENSION TRUSTS


31/52

An employer establishing or maintaining a pension trust to provide for the payment of

reasonable pensions to his employees shall be allowed as a deduction (in addition to the

contributions to such trust during the taxable year to cover the pension liability accruing during the

year, allowed as a deduction under ubsection (A!("! of this ection! a reasonable amount

transferred or paid into such trust during the taxable year in excess of such contributions, but only

if such amount# ("! has not theretofore been allowed as a deduction, and ($! is apportioned ine%ual parts over a period of ten ("&! consecutive years beginning with the year in which the

transfer or payment is made.

ALLWA@LE DED-)TINS

a !ersona5 E3em*tions4!!..I 8T!I):

c Itemie% De%ctions 8Discssion &or thisMatter a5rea%+: *"TI95 EL ) - @

% *tiona5 Stan%ar% De%ctions 8T!I):

; *tiona5 Stan%ar% De%ctions

*"TI95 EL$>' in lieu o the 9ptional Deduction# the ta! payer

may claim 9D amounting to L0 ho&ever yung bases ng L0&ill depend kung yung ta!payer ay isang Individual or

"orporation.

In cases o Individual - based on Aross ales

In cases o "orporation - based on Aross Income

4*)95 6 DI77*4*5T: +ag individual kasi ika& lang ang +*4+*T4)T94# kapag

"orporation is more than perpetrator. 9nce you choose 9D or a Suarter or 7irst Suarter

hindi mo na p&edeng I revoke yan or the &hole year the 9D. )dvantageous kung onti langyung )llo&able Deductions.

>ike or *!ample: 4ental Income $ )llo&able Deductions : 4epair $bihira kang mag repair' '

4ental income +hp1#000#000

)nd ItemiCed Deduction or +hp100#000

?ung 9ptional tandard Deduction ay L0 3 L00#000

2as magandang iclaim ang L00#000 $ mas madali pang iclaim kasi no need to sho& proo o

the deduction'

A49 )>* 7942/>):ales

"ost o ales

3 Aross Income


32/52

RA 1016H- 7oster +arent can claim additional deduction o a

oster child provided that a 7oster "hild is under a care or at least

1 year o ta!able year. )dditional *!emption o 8,#000

)s a rule: hen the ta!payer ails to claim the deduction or the

ta!able year &hen incurred or paid he cannot anymore claim or

the deduction on the ne!t succeeding year.

SE)TIN >6 NNBDED-)TI@LE EX!ENSES

A4: In computing 5et Income# 59 Deduction shall in any case be

allo&ed in respect to: 2/T 4*>)T* T9 %/I5*

a. +ersonal# >iving or 7amily *!penseOb. )ny amount paid out or ne& buildings or or permanent

improvements or betterments made to increase the value

o any property or estate.E3am*5e( A com*an+ has a 4i5%in$ an% in a%%ition

constrction o& Anne3 the cost o construction &ill not

be part o deduction but &ill be considered as )sset.7or e!ample: "ost o %uilding - +1#000#000

)nne! %uilding,00#000F)>/* + 1#,00#000

+&edeng ba&iin or Depreciation

c. )ny amount e!pended in restoring property or in making

good the e!haustion thereo or &hich an allo&ance is or

has been made $2)@94 4*+)I4# "apitaliCed and not to be

deducted as *!pense'd. +remiums paid on any lie insurance. 6ou can claim only

the amounts o +aid on ++I but in case o >ie Insurance

you cannot claim it as Deductions.

TRANSFER TAX

Trans&er Ta3es

those imposed upon the gratuitous disposition o private propertyAratuitous - ithout "onsideration9nerous - ith "onsideration $*=. Transer o +roperty'

/nder our la they are ta!es levied on the transmission o private properties rom aprior decedent to his heirs in the case o estate ta!# or rom a donor to a donee in thecase o donors ta!.

1. ESTATE TAX 8Donation Mortis )asa:

Transer or a ascendant to his heirs


33/52

Ta! on the privilege to transmit property at the death and on certain transer &c are madethe e(uivalent o testamentary disposition by the statute.

8 DNRS TAX 8Donation Inter Vi'os:

Ta! levied on the tramsmission o properties or a living person to another person.

NAT-RE F ESTATE TAX(

B It is an e!cise ta! on privilege ta! and its object is to ta! shiting o

economic benefts and enjoyment o property or the dead to the living.+rivilege on transerring rom decedent to heirs or donors.

It is not a direct ta! on property nor is it a capitation ta!# that is# theta! is laid neither on the property# nor on the transeree or transeror#but on the right o the decedent to transmit his estate.

It is not a property ta! but an e!cise ta!.

DISTIN)TIN @ETWEEN DNRS AND ESTATE TAX

DNRS TAX ESTATE TAX

Ta! on the privilege to transmit propertyduring the lietime o the donor

Ta! on the privilege to transmit propertyupon ones death

Ta! rates are lo&er $8 to 1,' Ta! rates are higher $, to80'

*!emption is only + 100#000.00 Ta! e!emption is +800#000.00

5otice o donation is generally not

re(uired

5otice o death is re(uired

*!tension o payment is not provided *!tension o payment may be granted by

the "ommissioner o Internal 4evenue

+ayable &ithin E0 days rom the date ogit

+ayable &ithin ; months rom the date odeath

Imposed on the net git Imposed on the net estate

SE)TIN ID &illc. Its eGect produced &hile the

donor is still alive

d. )cceptance is re(uired

DNATIN MRTIS )A-SA(

a 2ade in consideration odeath &o the donorsintention to lose the thingconveyed.

4 *mbodied &ith in the last &illand testament

c Transer &ould be void i thetranseror survived thetranseree


34/52

Rates of !state Ta&. There shall be levied# assessed# collected and paid upon thetranser o the net estate as determined in accordance &ith ections P, and P; oevery decedent# &hether resident or nonresident o the +hilippines# a ta! based onthe value o such net estate# as computed in accordance &ith the ollo&ingschedule:I the net estate is:charoblesvirtualla&library

VER @-T NTVER

T.E TAXS.ALL @E

!L-S F T.EEX)ESS VER

+ 800#000 *!empt

+ 800#000 ,,0#000 0 , + 800#000

,00#000 8#000#000 + 1,#000 P ,00#000

8#000#000 ,#000#000 1E,#000 11 8#000#000

,#000#000 10#000#000 L;,#000 1, ,#000#000

10#000#000 )nd 9ver 1#81,#000 80 10#000#00

*+$T,N - o" the N/$ states that The value o" the gross estate o" the

decedent shall be determined by including the value at the time o" his death

o" all property! real or personal! tangible or intangible! wherever they are

situated. Provided! however! that in the case o" a nonresident decedent who

at the time o" his death was not a citi'en o" the Philippines (N,N /+*0+NT

A1+N)! only that part o" the entire o" the gross estate is situated in thePhilippines shall be included in his taxable estate.

SE)TIN /* 97 T* +49+*4T6 )T T*

TI2* 97 D*)T 97 D*"*D*5T

2, VAL-ATIN F T.E REAL !R!ERT/$*"TI95 ;0' - V95)> or 7)I4 2)4?*T F)>/*

*T %6 >9")> )*94 977I"* I"*F*4 I IA*4

a' 72F as determined by the "ommissioner

This is the Conal value $o the land' as f!ed by the "I4# and can be obtained rom the

%I4 &ebsite or regional oce

b' 72F f!ed by the provincial or city assessor

< This is the value as sho&n in the ta! declaration o the property< /se this amount or real properties &ith no Conal values $i.e. real properties other

than land such as buildings and improvements'


35/52

> VAL-ATIN F !ERSNAL !R!ERT/( 7)I4 2)4?*T F)>/*

; TANI@LE !R!ERTIES(

TANI@LE REAL !R!ERTIES( %y going getting V95)> or 7)I4 2)4?*T F)>/* &hicheveris higher

TANI@LE !ERSNAL !R!ERTIES( )c(uisition "ost

4*F9")%>* T4)57*4 *"TI95 P,$ "' To the e!tent o any interest therein# o&hich the decedent has at any time made a transer $e!cept in case o bona fde sale or an

ade(uate and ull consideration in money or moneyUs &orth' by trust or other&ise# &here theenjoyment thereo &as subject at the date o his death to any change through the e!ercise

o a po&er $in &hatever capacity e!ercisable' by the decedent alone or by the decedent inconjunction &ith any other person $&ithout regard to &hen or rom &hat source the

decedent ac(uired such po&er'# to alter# amend# revoke or terminate# or &here any suchpo&er is relin(uished in contemplation o the decedentUs death.

*=)2+>*:

"ontract o sale subject to the condition na hindi p&edeng itranser yung property sa nameng buyer and the transer o the property &ill only take eGect at the death o the seller.

A49 *T)T* I5">/D* )>> 4*)># +*495)>#

T)5AI%>* )5D I5T)5AI%>* +49+*4TI* 97 T*

D*"*D*5T.

4esident )lien# 5on 4esident "itiCen and 4esident "itiCen

- ame 4ule# all the properties &herever situated shall be included on theAross *state o the deceased.

5on 4esident )lien- 9nly those situated in the +hilippines

I>>/T4)TI95:

) nonresident citiCen having a property in the /) and in the+hilippines &herein he is both re(uired to pay estate ta! because o diGerent

jurisdiction. )nong gaga&in niya sa ta! na binayaran niya sa ibang bansa) by

deed under which he has retained "or his li"e or any period not ascertainable without

re"erence to his death or "or any period which does not in "act end be"ore his death

(a) the possession or en7oyment o"! or the right to the income "rom! the property! or(b) the right! either alone or in con7unction with any person! to designate the persons

who shall possess or en7oy the property or the income there"rom4 except in case o" a

bona :de sale "or an ade;uate and "ull consideration in money or money


39/52

).' ) po&er is $enera5# &hen it authoriCes the donee o the po&er toappoint any person he pleases including himsel# thus having a ulldominion over the property as i he o&ned it.

%.' It is s*ecia5&hen# the donee can appoint only among a restrictedor designated class o persons other than himsel.

Note(I the po&er o appointment is general# it makes the appointedproperty a part o the donees property.

/nder a general po&er o appointment# title to the property is

legally transerred to the donee. Thereore the property shall orm parto the gross estate o the donee.

)>> +49+*4TI* o &hether 4eal or +ersonal# Intangible or Tangible&here those enumerated on )@ are not obvious as part o the *state o

the decedent ho&ever by operation o la& they are the rightul o&ner.

E !rocee%s o& Li&e InsranceBthis contemplates a situation &herea person insures his o&n lie i the benefciary is his estate#

represented by his administrator# e!ecutor or heir irrespective o&hether the designation o said benefciary is revocable or irrevocableproceeds thererom orm part o his gross estate.

*+$T,N - (+) . To the extent o" the amount receivable by the estate

o" the deceased! his executor! or administrator! as insurance underpolicies ta5en out by the decedent upon his own li"e! irrespective o"

whether or not the insured retained the power o" revocation! or to the

extent o" the amount receivable by any bene:ciary designated in the

policy o" insurance! except when it is expressly stipulated that the

designation o" the bene:ciary is irrevocable.

9n Aross Income# the lie insurance o proceeds are not ta!able asgross income ho&ever# it is subject to *state ta! i the benefciary isre'oca45ethe proceeds o the lie insurance is included in the

determination o Aross *state.

%ut i the benefciary is a third person# proceeds o lie insurance ormpart o the gross estate o the decedent only i the designation o saidbenefciary is revocable.

F: !rior Interests SE)TIN


40/52

DE)EDENTS INTEREST- Includes interest anything having value or

capable o being valued and capable o being transerred at the time othe death o decedent.

*!ample: Interest came rom business Income. 6ung mga hindi nakuha

ng Decedent &hen he &as still alive. 2ay partnership share siya# nadetermine na magkano yung share niya hindi nga lang na transer.

!RIR INTEREST- Interest on the "ash on >oanO It applies to thetransers# trusts# estates# interests# rights# po&ers and relin(uishment

o po&ers# as severally enumerated and described therein# &hethermade# created# arising# e!isting# e!ercised or relin(uished beore orater the eGectivity o this "ode.

8: Trans&ers o& Inscient )onsi%eration SE)TIN


41/52

1: DED-)TINS ALLWED to the ESTATE F

DE)EDENT

A E3*enses, Losses, In%e4te%ness an% Ta3es@ !ro*ert+ !re'ios5+ Ta3e% 8Vanishin$ De%ctions:) Trans&er &or !45ic -seD The &ami5+ homeE Stan%ar% De%ctionF Me%ica5 E3*enses Amont Recei'e% 4+ .eirs n%er RA ;?19

*"TI95 P; - 7or the purpose o the ta! imposed in this "hapter# thevalue o the net estate shall be determined:

8A: De%ctions a55oe% to the Estate o& a )itien or aResi%ent 1 E3*enses, Losses, In%e4te%ness an% Ta3es

7uneral *!pense: )ctual 7uneral *!pense or )mount *(ual to fve

percent $,' o the gross estate $hichever is >9*4'@-T NT EX)EEDIN !h*200,000

J)ctual uneral e!pensesK are those &hich &ere actually incurred inconnection &ith the interment or burial o the deceased and paid or

rom the estate o said deceased.

7uneral e!penses include:

a' "osts o con# tombstone# mausoleum# and burial lotOb' 7uneral parlor eesOc' 2ourning clothing o the surviving spouse and the unmarried minor

childrenOd' "osts o obituary noticesO ande' *!penses during the &ake.

The ollo&ing cannot be deducted under uneral e!penses:

a' "ash advances o the surviving spouse and the heirsOb' *!penses paid by the relatives and riendsO and

*!penses ater the burial.

Re=isites:a' The e!penses must be due to the interment# &ake and burialO hence#

e!penses on the death anniversary are not included

b' The e!penses must have been shouldered by the estate and not by

other people


42/52

2 %icia5 E3*enses

4e(uisite: Ja%ministration e3*ensesK to those actually incurred in theadministration o the estate.

*!amples:

a' ees o the e!ecutor or administratorOb' attorneys eesOc' accountants eesOd' court eesOe' salaries o employeesO and' )ll other e!pense related to the administration o the estate.g' +ublication - +art o @udicial *!pense

Note(

This includes Jall e!penses necessary to settle or preserve the estateK

hence# e!trajudicial e!penses are included.

*!penses not essential to the proper settlement o the estate butincurred or the individual beneft o the heirs# legatees# or devisees are

not allo&ed as deductions.

e!: e!penses to be declared as administrator vs. an oppositor is apersonal e!pense

> )5aims a$ainst the %ece%ents estate Debts or obligations o the decedent that is enorceable against the estateprovided that the ollo&ing re(uisites are met:

a' They &ere contracted in good aith and or an ade(uate and ullconsideration in money or moneys &orth.

b' They must be e!isting against the estate.

c' They must be legally enorceable obligations o the decedent andought to be enorced by the claimants.

d' They must be reasonably certain in amountO andO

e' )t the time the indebtedness &as incurred# the debt instrument &as

duly notariCed and i& the 5oan as contracte% ithin three 8>:+ears 4e&ore the %eath o& the %ece%ent, the a%ministrator ore3ector sha55 s4mit a statement shoin$ the %is*osition o&

the *rocee%s o& the 5oan +Condition,

NOT!( Withot the Statement o& Dis*osition the c5aims &or

%e%ctions sha55 4e %isa55oe% 4+ the La

EXAM!LE( imple loan o the Decedent


43/52

; )5aims a$ainst the inso5'ent *ersons

B Re=isites &or %e%cti4i5it+(

a' The amount o said claims has been initially included as part o the

gross estateO and

b' The incapacity o the debtors to pay their obligations is proven andnot merely alleged.

Decedent nagpautang ho&ever the debtor is declared as insolvent so it is

not enough that alleged lang yung insolvency ng debtor. It must be proveand declared that he is insolvent.It mst 4e inc5%e% in the rossEstate$Dito papasok yung prior interest# meron siyang pautang kasi partng Aross *state ng Decedent ho&ever yung perang yun hindi mo na

p&edeng ilagay sa Aross *state kasi nga pinautang mo# so p&ede mongiclaim as deduction.'

T* "95DITI95 T9 %* )>>9*D ) D*D/"TI95: 2ust be included in theAross *state.

,. -n*ai% mort$a$es in%e4te%ness B 4eal estate mortgage

na nae!ecute bet&een decedent and creditor ang ginamit

niyang collateral is yung real property nya so any unpaid

mortgage shall be claim as deduction o the gross estate.

Ibig sabihin yung kabuuan ng property nya idistribute yung

heirs tatanggalan muna yung babayaran sa estate.

Re=isites &or %e%cti4i5it+(

a' The air market value o the property mortgaged &ithout deductingthe mortgage indebtedness has been initially included as part o hisgross estateOb' The mortgage indebtedness &as contracted in good aith and or anade(uate and ull consideration in money or moneys &orth.

e!: = obtained a E2 loan rom 6 and e!ecuted a 4eal *state 2ortgage

over his house and lot &orth ,2. = paid 12. = died.

*Gect: in the estate o =# include the ,2 in the gross estate o = andclaim as deduction the unpaid 82.

@ VANIS.IN DED-)TINS 8 !R!ERT/ !REVI-SL/

TAX:

*ection -?(A) (9) Property Previously Taxed. @ An amount e;ual to the

value speci:ed below o" any property "orming a part o" the gross

estate situated in the Philippines o" any person who died within :ve ()

yearsprior to the death of the decedent! or trans"erred to the

decedent b- ift within /ve +0, -ears prior to his death! wheresuch property can be identi:ed as having been received by the

decedent "rom the donor by gi"t! or "rom such prior decedent by gi"t!

be;uest! devise or inheritance! or which can be identi:ed as having

been ac;uired in exchange "or property so received3


44/52

+roperty +reviously Ta! kanino galing< - +rior Decedent by &ay o git

by Donor.

The property that passed on to the +resent decedent is alreadyincluded on the gross estate o the prior decedent# nabayaran niya na

dito yung estate ta!. Donation by &ay o git +rovided that thedecedent died &ithin , years rom the date o death o prior decedentor the date o donation. ?aya siya vanishing deduction kasi hindi siyayung &hole property na idededuct nyo sa estate# subject niyo sa sa

gross estate.

I namatay siya &ithin 1 year rom the date kung kelan

namatay yung prior decedent# or kung kelan namatay yung

git the &hole property divided by 100 bilang as Fanishing

deduction .

>* T)5 95* $1' 6*)4 10018 6*)4 P08E 6*)4 ;0EL 6*)4 L0L, 6*)4 80

4eason &hy decreasing: ithin that period p&edeng napakinabangan

nan g decedent yung property or 7our 6ears.7or e!ample : 7rom the death o prior decedent up to the death o the

present decedent e our years yun# napakinabangan nya yung propertyor Lyears # the deductions na p&ede niyang iclaim is up to , years

lang.

)ter , years hindi niya na p&edeng iclaim as deduction yun # yung

property yun inherited rom prior decedent or rom prior donor &ill beincluded on the Aross *state ho&ever hindi siya maiinclude asdeduction.

7942/>):

+49+*4T6 )T T* TI2* 97 T* +4**5T D*"*D*5T =

+*4"*5T)A* frst estate and donors ta! must be paid . I

&alang binayarang estate ta! dito hindi ka p&edeng mag

claim as Fanishing deduction.

)TRANSFER FR !-@LI) -SETransers or +ublic /se The amount o all the be(uests#

legacies# devises or transers to or or the use o the

Aovernment o the 4epublic o the +hilippines# or any

political subdivision thereo# or e!clusively public

purposes.


45/52

< +roperty o the decedent &hich is part o the gross estate

but the heirs cannot use this because so thereore this &ould

be used as a deduction.

D. The Fami5+ .ome. )n amount e(uivalent to thecurrent air market value o the decedentUs amily home:

+rovided# ho&ever# That i the said current air market

value e!ceeds 9ne million pesos $+1#000#000'# the e!cess

shall be subject to estate ta!. )s a sine (ua non condition

or the e!emption or deduction# said amily home must

have been the decedentUs amily home as certifed by the

barangay captain o the locality.

hen &e say 7amily home# it includes the house and lot.The valuation:

1. '7air 2arket Falue at the time o death

$Vonal Falue'8. ' 7air 2arket Falue $7i!ed by assessor'

BWhiche'er is hi$her 4eteen 4oth

)ctual amount o property &hichever is

lo&er1 2illion

alang problema kung single yung namatay

I conjugal property - and -Lot 2mi55ion.ose ;mRSS ESTATE( 6M

)s &ay o deduction ho& much can he

claim* )>)6 I5">/D* I5 T* A49 *T)T*

. NET S.ARE F T.E S-RVIVIN S!-SE IN

T.E )N-AL " )MM-NIT/ !R!ERT/ 4e(uisite: Include the entire amount in the gross estate then deduct theshare o the surviving spouse

*!: o&ns a car &orth 12 and a house and lot &orth ,2 o&ns a truck &orth 82 and je&elry &orth 102 and o&ns a conjugal lot &orth 802 died.

Aross estate o :

E3c5si'e )on7$a5

H M hose an% 5ot 20 M 5ot

12 car NNNNNNNNN NNNNNNN

;2 80 2

Total gross estate 3 8; 2


47/52

Then claim as deduction is 102# &hich is the Y share o the surviving spouse in theconjugal lot.

*!: and died simultaneously. In computing the gross estate o and # their shares Yshares as to the conjugal lot may immediately be split as there is no surviving spouse let.

FRM-LA F ESTATE TAX (A49 *T)T*LESS()llo&able DeductionsNet Estate7rom the 5et *state Aet the *state Ta! Due

S-MMAR/( RDINAR/

DED-)TINSS!E)IAL DED-)TINS

ALLWA@LE DED-)TINS SSS 8SE!ARATE:

S!E)IAL ALLWA@LE DED-)TINS (1 Fami5+ .ome2 Stan%ar% De%ctions> Me%ica5 E3*ense

; Amonts Recei'e% 4+ the .eirs n%er RA ;?19

ALL T.E REST ARE RDINAR/ DED-)TINS

SE)TIN


48/52

SE)TIN ?0 )ERTIFIED !-@LI) A))-NTANT8)!A:

)ERTIFI)ATE

Fi5in$ o& Retrn an% !a+ment o& Ta3

1., 2- whom3

)n estate ta! return under oath is re(uired by la& to be fled by thee!ecutor# administrator# or any o the legal heirs:

a.'here the gross value o the estate e!ceeds +800#000 thoughe!empt rom the estate ta!O or

b.'4egardless o the gross value o the estate# &here the said estateconsists o registered or registrable real property# such as realproperty $land# bank accounts# others &ith defnite records'# motorvehicle# shares o stock or other similar property or &hich aclearance rom the %ureau o Internal 4evenue is re(uired as acondition precedent or the transer o o&nership thereo in thename o the transeree.

4., 5hen to /le3

The return shall be fled &ithin ; months rom the decedents death.

The "ommissioner shall have the authority to grant# in meritoriouscases# a reasonable e!tension not e!ceeding E0 days or fling thereturn.

>: 5here to /le3

*!cept in cases &here the "ommissioner other&ise permits# the returnshall be fled &ith: $here the decedent domiciled ' - permanent

G i& the %ece%ent is a resi%ent

a' an authoriCed agent bankb' 4evenue District 9cerc' 4evenue "ollection 9cerd' duly authoriCed treasurer o the city or municipality &here the

decedent &as domiciled at the time o his death# or

G i& the %ece%ent is a nonBresi%ent

a' &ith the 4evenue District 9ce &here his e!ecutoradministrator isregistered

b' &ith the 4evenue District 9ce having jurisdiction over the

residence o the e!ecutoradministratore' &ith the 9ce o the "ommissioner i the decedent has no e!ecutor

or administrator

6., Copies%


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The return shall be fled in triplicate# t&o $8' or the %I4 and one $1' copy

or the ta!payer.

0., 5hen to Pa-

+ay the estate ta! at the time you &ill fle your estate ta! return. $+ay as

you fle system'

;: !&tension for Pa-ment(

allo&ed in meritorious cases &hen the "ommisioner fnds that thepayment o the esate ta! on the due date &ould impose undue hardshipsupon the estate or any heirs

At most 2 +ears i& estate e3tra7%icia55+ sett5e%

At most H +ears i& estate 7%icia55+ sett5e%

NTE(The ta!payer must not be guilty o

a' negligence

b' intentional disregard o the rules and regulations# or

c' raud

the ta!payer may also be re(uired to pay a bond not e!ceeding double theamount o ta! and &ith such sureties# as the "ommissioner deems necessary

G Note: The fling o the estate ta! return is not sucient to obtain a ta!

clearance# the administratore!ecutorheir must submit additional documentsto determine the correctness o the values stated by him in the estate ta!return.

such as the title o the land# ta! declaration o the land and its

improvements or "ertifcate o 5oimprovement# vicinity map to f! the e!act

location and Conal value# etc.

G Note(To avoid the imposition o penalties &hile there is no e!trajudicial

settlement yet# any heir may fle a s&orn declaration to the %I4 stating the

act o death# that the estate has not yet been settled and the list o the

properties included in the estate# as basis or payment o estate ta!.

I& ross Estate 2M, a%%itiona5 re=irement(< must submit a certifcate o an independent "+) stating:1. itemiCed assets o the decedent &ith corresponding gross value at the

time o his deathOor i 54)# that part o his gross estate situated in the +hilippines

8. itemiCed deductions rom the gross estateE. amount o ta! due# &hether paid or still due and outstanding


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DNRS TAX

Donation " i&t )n act o liberality &hereby a person disposes gratuitously o a thing or

right in avor o another &ho accepts it.

7or ta! purposes# the term has a much &ider meaning# it includes:

a. any transer in trust or other&ise# &hether the git is direct or indirect# and &hetherthe property is rea5 or *ersona5, tan$i45e or intan$i45e. $ec. XP'

b. any transer o property by git# e!cept in orced sales and in the sale o real property&hich is a capital asset# or less than and ade(uate and ull consideration in money or

moneys &orth. $ec. 100'

c. "ondonation or remission o debt# &here the creditor merely desires to beneft a

debtor and &ithout any consideration thereore cancels the debt.

DETERMINATIN F T.E RSS IFT(

REAL !R!ERT/ VAL-ATINB 7air 2arket Falue at the Time o theDonation regardless o the amount it must be in a +ublic Instrument.

!ERSNAL !R!ERT/ VAL-ATIN- "urrent 2arket Falue at the time o

Donation. hen the value o the property e!ceeds ,#000 it must be in&riting.

Re=isites o& a Ta3a45e i&t(

1.' )A!A)IT/o the donor to make the donationO8.' DNATIVE INTENT or INTENTon the part o the donor to make a

gitOE.' DELIVER/# &hether actual or constructive# o the gitO andL.' A))E!TAN)Eo the git by the donee

EXEM!TINS 8DED-)TED FRM RSS IFT: (1 Dories 8SE)TIN 101: B Do&ries or gits made on account o marriage

beore its celebration or ithin one +earthereater by parents to each o their legitimate#illegitimate or adopted children to the e3tent o& the Jrst !10,00000.AS LN AS NA))-NT F MARRIAE IT IS )NSIDERED AS DWRIES EXEM!TED N DNRS

TAX " NE /EAR AFTER T.E %ARRIA&!(

LI%IT: 'BBBB within a ear ea)h parent(

Requisites:

13 The +onation +ust 1e gi2en on a))ount of +arriage(3 The parent )&st gi5e it to his #hil+3B3 The #hil+ )&st 'e either the legiti)ate, re#ogni%e+ nat&ral or legally a+opte+ #hil+ o" the

+onor, an+

3 It )&st 'e gi5en 'e"ore or one year a"ter the #ele'ration o" the )arriage3

!"A%5L!: 7 D

%otor Vehi)le 8 4BBBBB .4BBBB .4BBBB

Less: !=e+ption *owr 'BBBB 'BBBB

For E-CH 7.7R, h&s'an+ an+ wi"e are +istin#t an+ separate "ro) ea#h other3


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.( &ifts +ade to or for the use of the National &o2ern+ent or an of its agen)ies whi)h

is not #on+te+ "or pro"it, or to any politi#al s&'+i5ision o" the sai+ go5ern)ent3

-( ?i"ts in "a5or o" e+ational, #harita'le, religio&s, #&lt&ral or so#ial wel"are #orporation,

instit&tions, "o&n+ations, tr&st or philanthropi# organi%ation, resear#h instit&tion or organi%ation,or a##re+ite+ non or #harita'le #orporation, "o&n+ation tr&st or philanthropi#

organi%ation an+> or resear#h instit&tion or organi%ation in#orporate+ as a non


52/52

Dahil stranger si % at ang )nak ni R ay si ). ?aya ang iimpose na ta!kay % ay E0 at ang iimpose na ta! kay a yung nasa 81,

Documents

Dividend to Donation (Tax2 My Reviewer)