SECTION 34 ALLOWABLE DEDUCTIONS

DEDUCTIONS - AMOUNT OR ITEMS TO BE DEDUCTED IN GROSS INCOME IN ACCORDANCE TO ITS

SPECIFIED RULES AND REGULATION

REQUISITES :

1. STATUTE AUTHORIZING THE DEDUCTION.

2. SUBSTANTIAL EVIDENCE IN COMPLYING THE REQUISITE OF THE STATUTE.

KINDS OF DEDUCTIONS :

1. COMPENSATION (PERSONAL SERVICES RENDERED)

2. SELF-EMPLOYED/PROFESSIONAL PRACTICE

a) ITEMIZED DEDUCTIONS

b) DEDUCT HEALTH PREMIUMS/HOSPITALIZATIONS

3. DEDUCTIONS FROM CORPORATIONS INCLUDING PARTNERSHIPS (WHATEVER KINDS EXCEPT

GENERAL PROFESSIONAL PARTNERSHIPS)

NOTES :

OPTION AVAIL : EITHER (OSD) OPTIONAL STANDARD DEDUCTION

OR (ID) ITEMIZED DEDUCTIONS.

ITEMIZED DEDUCTIONS:

BLIT - BAD DEBTS, LOSSES, INTERESTS, TAX

DD - DEPRECIATION AND DEPLETION

CPR - CHARITABLE AND OTHER CONTRIBUTIONS, PENSION TRUST AND RESEARCH DEVELOPMENT

SPECIAL DEDUCTIONS - CORPORATIONS AVAILED BY INSURANCE COMPANIES

PROPRIETARY EDUCATIONAL INSTITUTIONS

HOSPITALS NON PROFIT

REQUIREMENT FOR DEDUCTIBILITY:

AMOUNTS TO BE DEDUCTED HAS BEEN PAID TO THE BIR

OSD - OPTIONAL STANDARD DEDUCTION

- INDIVIDUAL

- CORPORATION

(CHOOSE 40% OF HIS NET OR GROSS INCOME TO BE DEDUCTED THAN ITEMIZED DEDUCTIONS

ANYONE CAN CLAIM ADDITIONAL OR OSD

NOTE : NON RESIDENT ALIEN CANNOT BE COVVERED BY THE OSD

GROSS SALES OR GROSS RECEIPTS

- 40% DEDUCTION

GROSS SALES - ACCRUAL BASIS

GROSS RECEIPTS - CASH BASIS

.. OF ACCOUNTING OF HIS INCOME AND DEDUCTIONS.