INCOME TAX OF PARTNERSHIPS, ESTATES AND TRUSTS

GENERAL CO-PARTNERSHIPS/ GBP

- Taxed like corporations; subject to 30% NCIT and
5%MCIT.
- Distributive share of partners is subject to 10%FWT.
GENERAL PROFESSIONAL PARTNERSHIPS
- Generally tax exempt.
If GPP engages in commercial activity, it would be
treated as a corporation thus all income derived
whether from conduct of profession or not would be
subject to NCIT and MCIT.
o Thus share of partners in this case would be
subject to 10% FWT.
- Share of partners from income declared by GPP is
subject to 10% CWT.
If share of partner exceeds P720,000, CWT is 15%.
If GPP opted to use OSD, then individual partner
should use OSD based on the Gross Income from
trade or business separate from share in
partnership income.
If GPP opted to use itemized deductions, OSD cant
be used for individual tax of partners, however can
use itemized deductions not previously deducted
on GPP income.
- No constructive receipt of distributive share in NI.
SALE OF PARTNERS CAPITAL
GPP
- Taxed like sale of personal capital asset subject to
holding period.
GBP
- Taxed like sale of shares; First P100,000 subject to 5%;
excess subject to 10%.

PASSIVE INCOME
GPP
- Not included in the taxable distributive share of each
partner
GBP
- Included in the taxable distributive share of each
partner
NONRESIDENT ALIEN
GPP
- NRAETB to taxed like resident alien; distributive share
subject to individual tax rates
- NRANETB
GBP
- Share subject to 20% FT.
CO-OWNERSHIP
- Generally tax exempt
Except when:
-co-ownership is established upon agreement/
voluntarily
-inherited property is undivided for more than
10 yrs
- Income derived by co-owners subject to individual tax
rates
JOINT VENTURES
- Generally taxed like corporations; distributive share
not taxable.
- If JV is formed for a construction project or engaged in
petroleum operations, not subject to corporate income
tax; distributive shares to be reported on individual tax
returns of partners.