INCOME TAXATION II

Dividend Income

Partnership – The taxable income

declared by a partnership for a taxable
year shall be deemed actually or
constructively received by the partners
in the same taxable year and shall be
taxed to them in their individual
capacity, whether actually distributed or
not.
General Rule – Stock Dividends are not
taxable, except:

a.) The stock dividend causes change in

the corporate identity or a change in the
nature of the shares issued whereby the
proportional interest of the stockholders
after the distribution is essentially
different from his former interest.
b.) Sale of stock dividend received;

c.) Subsequent redemption of stock dividend;

d.) Liquidating dividends – if there is gain on

the part of the stockholder, the gain is
taxable;

There is gain if the shareholder received

dividends in excess of his investments.
Case: CIR vs. Goodyear, GR No. 216130
8/3/16
8. OTHER INCOME

A.) Prizes and Winnings and Awards –

similar to gain from labor.
Exception – see Sec. 32 (B).

B.) Damages – if awarded for

compensation for loss of income and
exemplary damages - taxable
C.) Annuities – life insurance annuities
are excluded from gross income.

D.) Pensions and Retirement Benefits –

as a general rule, excluded from gross
income. (to be discussed in Exclusions)

E.) Cancellation/ condonation of debts

Onerous – taxable
Gratuitous - exempt
F. Refund of Taxes – taxes previously
claimed and allowed as deductions but
were subsequently refunded or granted
as tax credit should be declared as part of
the gross income, except:

- Estate and donor’s tax;

- Income, war-profit and excess profit tax;
- Taxes assessed against local benefits;
-Stock transaction tax;
-Taxes not allowed as deductions.