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Partnership is a contract whereby 2 or more persons bind themselves to contribute money, property, or
industry to a common fund with the intention to divide profits among themselves.
Cases where a public instrument is necessary to be recorded in the Office of the SEC:
Kinds of Partnership
NOTES:
Filing of Return
Still required to file annual ITR for the purpose of furnishing info. as to the share each partner shall
report and include in his personal ITR.
Partners engaging in business in a GPP shall be liable for IT only in their separate and
individual capacities.
Each partner shall report as GI his distributive share, actually/constructively received, in
the NI of the partnership.
Where it is at loss, the loss will be divided among partners in the same proportion as the
NI. Each partner may take up his share in the loss in his ITR.
The share of a partner shall be subject to CWT of:
o 10% - if P720,000 or less
o 15% - exceeds P720,000
NI of a partnership shall be computed in the same manner as a corporation.
The distributable NI may be determined by claiming either Itemized Deductions or OSD:
1. The partners comprising GPP can no longer claim further deductions.
Deduction can be claimed from other income derived from
trade/business either ID/OSD.
2. Partners of a GPP are not allowed to avail the 8% ITR option since their
distributive share is already net of costs and expenses.
B. Partnership subject to income tax – all other partnerships except those mentioned above.
Co-ownership
When the income of the co-ownership is invested by the co-owners in business/other income-producing
properties (in effect constituted themselves into a business partnership)
When such remain undivided for more than 10 years and no attempt was ever made to divide among
the co-heirs/no administration proceedings/not held in trust, the property should be considered as
owned by an unregistered partnership and income derived from such shall be subject to IT.