TAX

Chapter 13 – Principles of Deductions  Long term 50%, short term 100%

 Business expense vs personal expense 
 Production salaries are part of COGS
 NRA-NEIB no deductibles
 Personal expenses not deductibles
 RFC deductibles allowed for PH only
 DC all are deductibles
 NRA are subject to final tax
Chapter 13A – Regular allowable

 Arbitrage Limit 33% less to Interest Income

Chapter 13B – Special Allowable Deductions and NOLCO

 Senior Citizen subjected to 20% discount, 15% deduction in GI

 PWD 20% discount, 25% additional deductions
 50% additional compensation expense, training expenses and
expenses for improvement, productivity bonus and local
trainings.
 100% additional deduction on lactation centers and milk banks.
 10% free legal services
 NOLCO deductible against net income for 3 years.
 Deductible incentive is not included.
Chapter 13C – Optional Standard Deduction

 40% , individual and company

 No COS; less COS, respectively.
 Allowable deductions must be supported
 Only taxable income from operation are added to gross income
to take OSD for individual.
 Add non-operating income in corporation to compute for OSD.
 Service provider OSD is computed based on Gross Income.
 Accrual basis, uncollected, current billing and reimbursement
 Cash basis, current billings and reimbursement
 Item subject to preferential corporate tax don’t have OSD.
Chapter 14 – RIT individual

 TI of RC, all except royalties and dividends in the PH

 TI of RA, all PH income.
 Car, transferable 5 years depreciation x 50% / 65% x 35%
 House and lot /65% x 35%