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Customs
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LGC
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Real Estate
Rules on Exemptions
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Charitable institutions (Consti)
Notwithstanding the
provisions in the preceding
paragraphs, the income of
whatever kind and character
RECTO, GAYLE ANGELI M. | Transcript of the Lectures of Atty. Lumbera | INCOME TAX
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accredited nongovernment
organization, trust or
philanthrophic organization
and/or research institution or
organization, incorporated as
a nonstock entity, paying no
dividends, governed by
trustees who receive no
compensation, and devoting
all its income, whether
students' fees or gifts,
donation, subsidies or other
forms of philanthrophy, to the
accomplishment and
promotion of the purposes
enumerated in its Articles of
Incorporation.
X gives Php 500K to the charitable
institution. Can he claim it as a
deduction from his gross income? If X is
an individual and is a purely
compensation earner, he CANNOT
claim it as a deduction because of
Section 35. But if X were a corporation
or an individual earning business
income, it/he may claim as deduction
BUT NOT entirely (Section 34-H)
Religious institutions
Non-stock non-profit educational institutions
Government educational institutions
Proprietary educational institutions
Hospitals
GOCCs
CAPITAL ASSETS
EXAMPLE: X is a purely
compensation income earner.
She has a watch that she
bought at Php50K 5 years
ago. She sells it now for Php
25K. The present value is
Php15K.
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Is there income?
YES. Php 10K.
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May the holding
period apply? NO.
Because X is not
engaged in trade
or business?
You may
have both
capital
and
ordinary
or
All your
assets are
ordinary
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If youre engaged in
T/B the assets
that will matter to
you (for taxation
purposes) are
those, even if
capital, are related
to the T/B (although
not necessarily
used in T/B)
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Purely compensation
income earner
RECTO, GAYLE ANGELI M. | Transcript of the Lectures of Atty. Lumbera | INCOME TAX
GROSS INCOME
inclusions: salaries of
Php2M, sale of car of
Php 100K, sale of
furniture of Php 20K
DEDUCTION: only
Php50K (do not include
the losses obtained in
the sale of house and
car)
You do not create a list of
assets
No tax yet.
You dont add immediately the capital gains to your gross
income. Neither do you deduct immediately the capital
losses from your gross income. You recognize them first.
Next, you determine our NET CAPITAL GAINS by deducting
your capital losses from your capital gains.
The NET capital gains are the ones added to your gross
income for taxation purposes.
What if the capital loss (Php 100K) exceeds the
capital gain (Php30K)?
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Capital loss of Php100K vs. Capital gain of Php30K
is Php70K of net capital loss.
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Do you claim this as a deduction against the gross
income? NO. Because you have already been
benefited when the losses were deducted
from the gains and that is already a
deduction.
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The losses in Section 34 are NOT an allowable
deduction.
Net Capital Loss Carry Over
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Only for the individual TP
Limitations:
RECTO, GAYLE ANGELI M. | Transcript of the Lectures of Atty. Lumbera | INCOME TAX
Rationale: whatever gain or loss incurred
will be leveled up by the merger or
consolidation
When an individual acquires shares of stocks in a
corporation by exchanging property therefor and
he, together with others not exceeding 4, acquires
control over this corporation, obtains any gain or
loss in acquiring the same, he will NOT be affected
no gain or no loss is recognized;
ORDINARY ASSETS
Net Capital Loss Carry Over vs. Net Operating Loss Carry Over