TAXATION OUTLINE

General References:

Republic Act No. 8424

Revenue Regulations No. 2-40
Revenue Regulation No. 2-98
Jurisprudence
Sacdalan-Cassasola and various authors

I. GROSS INCOME

Sec 32, NIRC

A. Definition
B. Whatever Source
-CIR vs Air India GR No. 72443 29 January 1988

-CIR vs BOAC GR Nos. L-65773 74, 30 April 1987

- James vs United States 366 US 213

C. Net Income (Taxable Income)

Gross Income Taxation vs Net Income Taxation

D. Inclusions (Items of Gross Income)

Sec 32 (A)

1. Compensation Income
Sec 2.78.1 (A) RR 2-98
2. Business Income
3. Gains Derived from Dealings in Property
4. Interests
Gonzales vs CTAGR No. L-14532 26 May 1965,
CIR vs Mitsubishi Metal GR Nos. 54908& 80041, 22 January 1990
5. Rents
6. Royalties
7. Dividends
8. Annuities
9. Prizes and Winnings
10. Pensions
11. Share in Income in GPP

E. Compensation Income
a. Benefits and Allowances
Convenience of the Employer Rule
1. Millares vs NLRC GR No. 122827, 29 March 1999
2. CIR vs Henderson, GR No. L-12954, 28 February 1961
b. Separation Pay
c. Remuneration after Termination
d. Beneficial Payments
1. Insurance Payments
2. Club Membership Monthly Dues
3. Income Tax
e. Other forms of Payment
In Kind
o Shares of Stocks
o Stock Option
o Facilities and Privileges
Fringe Benefits
De Minimis Benefits
Promissory Note
Cancellation of Debt
f. Remuneration of Casual Labor
g. Remuneration of Agricultural Labor
h. Remuneration of Domestic Services
i. Remuneration of Past Services
a. Pirovano vs CIR, GR No. 19865, 31 July 1965

F. Business (Profession Income)

a. Business
b. Profession
c. Manufacturing Concern
d. Merchandising or Trading Concern
e. Service Concern
f. Farming
g. Long-term Contracts
h. Cost of Sales
i. Telegraph and Cable Services
j. Rental Income
a. Prepaid Rental
b. Security Deposit with Restriction
c. Security Deposit with Acceleration Clause
d. Income from Leasehold Improvement

G. Gains derived from Dealings in Property

H. Passive Income
CIR vs PAL GR No. 160528, 09 October 2006

a. Yields from Deposit Substitute

o 20-Lender Rule
o Banco de Oro vs CIR GR No. 198756, 13 January 2015
b. Interest Income
c. Royalty Income
d. Dividend Income
e. Prizes and Winnings

I. Partners Distributive Share from GPP Net Income

J. More Sources
a. Bad Debt Recovery
i. Equitable Doctrine of Tax Benefit
b. Tax Refund (Credit)
i. Tax Benefit Rule
c. Damages and Recovery
d. Annuities
e. Other Sources

II. EXCLUSIONS FROM GROSS INCOME

Sec 32 (B) NRC
A. Rationale
B. Nature
C. Non-taxable compensation Income
D. Non-taxable other receipts
E. Proceeds of Life Insurance
Key Man Life Insurance
El Oriente vs Posadas GR. No. 34774, 21 September 1961
F. Gifts, Bequests and Devises
G. Compensation for Damages, Injuries and Sickness
H. Retirement Benefits, Pensions, Gratuitities
 Re: the Request of Atty. Bernardo Zialcita AM No. 90-6-015-SC
Santos vs. Servier Philippines GR NO. 166377 28 November 2008
Tantuico vs Domingo GR No. 96422, 28 February 1994
I. Income derived by Government
J. Prizes and Awards
K. Gains from Sale of Bonds, Debentures or Other Certificate of Indebtedness

III. DEDUCTIONS FROM GROSS INCOME

A. Deductions vs Exclusions vs Tax Credit

B. General Rules
C. Return of Capital
D. Itemized Deductions
E. Optional Standard Deduction
F. Personal and Additional Exemptions
G. Expenses
Statutory Test
Sec 237, NRC
Cohan Principle
Origin of the Claim Doctrine
Atlas Consolidated Mining vs CIR, GR No. L- 26911, 21 January 1981
CIR vs Isabela Cultural Corporation GR No. 172231, 12 February 2007
ESSO Standard vs CIR GR No. 28508, 07 July1989
Pilrovano vs CIR
Aguinaldo Industries vs CIR
CM Hoskins vs CIR
Hospital vs de Dios
Republic vs Meralco
Roxas vs CTA
Zamora vs CIR
CF Calanoc vs CIR
Kuenzel & Straiffe vs CIR
Visayan Terminal vs CIR
Gancayco vs CIR
Zamora vs CIR
Cohan vs Commissioner
US vs Gilmore
Woodward vs Commissioner
Wells Fargo vs Commissioner
H. Interest
 Tax Arbitrage
CIR vs Palanca
PICOP vs CA
CIR vs Vda de Prieto
I. Taxes
Tax Deduction vs Tax Credit
CIR vs Central Luzon Drug
CIR vs Lednicky
J. Losses
Fernandez Hermanos vs CIR
K. Bad Debts
Philippine Refining Company vs CA
China Banking Corp. vs CA
PRC vs CA
Collector vs Goodrich Intl
Philex Mining vs CIR
L. Depreciation
Basilan Estates vs CIR
Victorials Milling vs CA
M. Depletion
N. Charitable and Other Contributors
O. Research and Development
P. Pension Trusts
Q. Additional Requirements for Deductibility
R. Premium Payments
S. Discounts (Senior Citizens & Persons with Disability)