Professional Documents
Culture Documents
ITEMIZED DEDUCTIONS
1. Interest Expense
2. Taxes
3. Losses
4. Bad Debts
5. Depreciation
6. Depletion
7. Charitable and other contributions
8. Research and development cost
9. Other ordinary and necessary trade,
business, or professional expenses
INTEREST EXPENSE
Deductible amount of interest
expense
Gross Int Exp less % Int. Income subj
to FT
Effectivity Percentage
Jan. 1, 2009 33%
Jan. 1, 2021 20%
INTEREST EXPENSE
INTEREST EXPENSE
TAXES
➢ Taxes paid/incurred w/in the taxable
year in connection w/ the taxpayer’s
trade, business or exercise of
profession.
➢ Exception:
ITEMIZED DEDUTIONS
1. Interest Expense
2. Taxes
3. Losses
4. Bad Debts
5. Depreciation
6. Depletion
7. Charitable and other contributions
8. Research and development cost
9. Other ordinary and necessary trade,
business, or professional expenses
TAXES FOREIGN INCOME TAX
➢ Examples of deductible taxes ➢ Income taxes paid in foreign
1. Percentage tax country can either be claimed as:
2. Excise Tax 1. Deduction
3. Documentary Stamp Tax 2. Tax credit
4. Occupational Tax
5. License tax
6. Fringe benefit tax
7. Local Taxes except special assessment
8. Community Tax
9. Municipal tax
10. Foreign income Tax if not included as
tax credit
FOREIGN INCOME TAX 2. Tax Credit Approach
1. Deduction Approach
LOSSES
➢ Actually sustained during the taxable
year
➢ Not compensated by insurance or
other indemnity
2. Capital loss
➢ Up to the extent of capital gains
LOSSES
➢ Loss of value of assets
➢ Not deductible
➢ Exception: impairment loss actually
sustained
BAD DEBTS
➢ Debt due to the taxpayer
➢ Ascertained to be worthless & charged
off w/in the taxable year.
ITEMIZED DEDUCTIONS
1. Interest Expense
2. Taxes
3. Losses
4. Bad Debts
5. Depreciation
6. Depletion
7. Charitable and other contributions
8. Research and development cost
9. Other ordinary and necessary trade,
business, or professional expenses
BAD DEBTS
➢ Securities becoming worthless
➢ Treated as bad debts exp not capital
loss
➢ Covers bonds, debentures, notes,
certificates, or other form of
indebtedness
ITEMIZED DEDUCTIONS
1. Interest Expense
2. Taxes
3. Losses 1. Life Tenancy to a property
4. Bad Debts
5. Depreciation Life tenant as the absolute owner
6. Depletion
Allowed as deduction to the life tenant
7. Charitable and other contributions
8. Research and development cost
9. Other ordinary and necessary trade,
business, or professional expenses
DEPRECIATION 3. Depreciation on revalued property
➢ Special rules on depreciation Based on acquisition cost not on its
reappraised value.
2. Property held in Trust
Apportioned between the income
beneficiaries and the trustees 4. Rules on deductibility of depreciation
on passenger vehicles
ITEMIZED DEDUCTIONS
1. Interest Expense
2. Taxes
3. Losses
4. Bad Debts
5. Depreciation
6. Depletion
7. Charitable and other contributions
8. Research and development cost
9. Other ordinary and necessary trade,
business, or professional expenses
DEPLETION DEPLETION
➢ Treatment of tangible development ➢ Treatment of Intangible exploration
cost and development cost
➢ Tangible exploration and development
drilling cost are capitalized and
deducted through allowance for
depreciation subject to the ff rules:
DEPLETION
➢ Treatment of exploration and
development cost
➢ Cost depletion formula
CHARITABLE AND OTHER
CONTRIBUTIONS
Contributions or gifts made to the
government or NGOs
ITEMIZED DEDUCTIONS
1. Interest Expense
2. Taxes
3. Losses
4. Bad Debts
5. Depreciation
6. Depletion
7. Charitable and other contributions
8. Research and development cost
9. Other ordinary and necessary trade,
business, or professional expenses
CHARITABLE AND OTHER CONTRIBUTIONS
➢ Classification of contributions B. Contributions subject to limit
A. Fully Deductible Contributions
CHARITABLE AND OTHER
CONTRIBUTIONS
B. Contributions subject to limit
CHARITABLE AND OTHER
CONTRIBUTIONS
B. Contributions subject to limit
CHARITABLE AND OTHER
CONTRIBUTIONS
Contributions to pension trusts
Types of employee pension plans
1. Defined contribution
Employer is obligated to contribute to
the pension fund
Benefits received shall be dependent
upon investment performance
2. Defined benefit plan
Employer guarantee the amount of
benefits
Type:
Funding of current service cost
Funding of prior service cost
RESEARCH AND DEVELOPMENT COST
Research & development activities
ITEMIZED DEDUCTIONS
1. Interest Expense
2. Taxes
3. Losses
4. Bad Debts
5. Depreciation
6. Depletion
7. Charitable and other contributions
8. Research and development cost
9. Other ordinary and necessary trade,
business, or professional expenses
EXPENSES IN GENERAL
substantiated with official receipts or
other pertinent records.
ITEMIZED DEDUCTIONS
1. Interest Expense
2. Taxes
3. Losses
4. Bad Debts
5. Depreciation
6. Depletion
7. Charitable and other contributions
8. Research and development cost
9. Other ordinary and necessary trade,
business, or professional expenses
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