CHAPTER 9
REGULAR INCOME TAX:
INCLUSION IN GROSS INCOME
ITEMS OF GROSS INCOME
-is a broad category pertaining to all items
of income subject to taxation, namely:
1. Gross income subject to final tax
2. Gross income subject to capital gains
tax
3. Gross income subject to regular tax
ITEMS OF GROSS INCOME
SUBJECT TO REGULAR TAX
1. Compensation for services in whatever
form paid
2. Gross income from the conduct of
trade, business or excercise of a profession
3. Gains derived from dealings in
properties
4. Interests
5. Rents
6. Royalties
7. Dividends
8. Annuities
9. Prizes and winnings
10. Pensions
11. Partners distributive share from the
net income of general professional
partnership
Compensation for services in whatever
form paid
-technically pertains to types of employee
benefits that are subject to regular tax
Gross income from the conduct of
trade, business or excercise of a
profession
-income from any trade or business, legal
or illegal and whether registered or
unregistered
Business income which are exempt or are
subject to special tax regimes should not
be included in the gross income subject to
regular income tax:
1. Business income exempt from income
tax
2. Business income subject to special tax
regimes
3. Business income subject to final tax
Gains from Dealings in properties
-the gains or lossed in dealing in ordinary
assets are subject to regular income tax
-dealings in capital assets other than
domestic stocks and real properties are
also subject to regular tax
*a net capital loss is not an item of
deduction against gross income
Interest income
-refers to interest income other than
passive interest income subject to final tax
Rents
-arises from leasing properties of any kind
-it is a passive income but is not subject to
final tax under the NIRC, hence, is subject
to regular tax
Royalties
-active royalty income and royalties
earned from sources outside the
Philippines are subject to regular income
tax
Dividends
-pertains to divideneds declared by
foreign corporations