Taxable Income Defined.

 - The term taxable income means the pertinent items of gross

income specified in this Code, less the deductions and/or personal and additional
exemptions, if any, authorized for such types of income by this Code or other special laws.

Fringe Benefit defined.- For purposes of this Section, the term "fringe benefit" means any
good, service or other benefit furnished or granted in cash or in kind by an employer to an
individual employee (except rank and file employees
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Capital assets shall refer to all real properties held by a taxpayer, whether or not connected
with his trade or business, and which are not included among the real properties considered
as ordinary assets under Sec. 39(A)(1) of the Code.

Ordinary assets shall refer to all real properties specifically excluded from the definition of
capital assets under Sec. 39(A)(1) of the Code, namely:
1. Stock in trade of a taxpayer or other real property of a kind which would properly be included in the inventory of the taxpayer if
on hand at the close of the taxable year; or
2. Real property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business; or
3. Real property used in trade or business (i.e., buildings and/or improvements) of a character which is subject to the allowance for
depreciation provided for under Sec. 34(F) of the Code; or
4. Real property used in trade or business of the taxpayer.

De minimis benefits are facilities and privileges of relatively small value and provided by
an employer to employees merely as a means to promote their health, good will,
contentment, or efficiency

A tax amnesty is a general pardon or the intentional overlooking by the State of its
authority to impose penalties on persons otherwise guilty of violation of a tax law.

Tax Benefit Rule - If a taxpayer recovers an expense or loss that was written off against the
previous year's income, the recovered amount must be included in the current year's gross
income for computing taxable income.

Doctrine of equitable recoupment. It provides that a claim for refund barred by

prescription may be allowed to offset unsettled tax liabilities should be pertinent only
to taxes arising from the same transaction on which an overpayment is made and
underpayment is due.

MOST FAVORED NATION CLAUSE - The essence of the principle is to allow the
taxpayer in one state to avail of more liberal provisions granted in another tax treaty to which
the country of residence of such taxpayer is also a party provided that the subject matter of
taxation, in this case royalty income, is the same as that in the tax treaty under which the
taxpayer is liable.