Chapter 3

Question 1

All income derived from whatever source, including but not limited to the following items

Answer 1

*compensation for services in whatever from paid, including but not limited to fees, salary, wages, commission and similar items

*Gross income derived from the conduct of trade or business or the exercise of a profession

*Gain derived from dealing and property

*Interest

*Rents

*Royalty

Question 2

All income derived from whatever sources, including but not limited to the following items

Answer 2

*Dividends

*Annuities

*Prizes in winnings

*Pension and

*Partner’s distribute share from the net income of the general professional partnership

Question 3

It shall be taxable on the year received, whether earning or unearned provided there is no restriction as to it’s use, and regardless of method of accounting employment

Answer 3

Rental income

Question 4

Security deposit

Answer 4

1. Upon forfeiture in favor of the lessor, or
2. Upon application as rental payment

Question 5

Improvements made by the lesser shall be treated as income of the lessor if;

Answer 5

1.) the improvements will be owned by the lessor at the end of the lease.

2.) the lessor is not required to pay the lesses the value of such improvements.

Question 6

Three types of rental income

Answer 6

1.Rental payment

2.Security deposit

3.Leasehold improvement

Question 7

Three types of dividend income

Answer 7

1.Cash and property dividends

2. Stock dividends
3. Liquidating dividends

Question 8

This income dividends shall be taxable upon declaration

Answer 8

Cash and property dividends

Question 9

What is the general rule of stock dividends

Answer 9

Distribution of stock dividends is not taxible because they are not realized income

Question 10

What is the general rule of stock dividends

Answer 10

Distribution of stock dividends is not taxible because they are not realized income

Question 11

What is the exception of stock dividends

Answer 11

A stock dividend constitutes income if it gives the shareholders an interest different from that which his former stockholding represented

Question 12

These are exempt to the stockholding and liquidation is less than the cost of investment the lost in the transaction is deductible to the extend allowed for capital losses

Answer 12

Liquidating dividends

Question 13

The law imposes a tax on income from whatever source which means that it includes income whether coming from legal or illegal sources

Answer 13

Gross income from whatever source derived

Question 14

Examples of gross income from whatever source derived

Answer 14

-income from jueteng

-income from swinding activities

-recovery of bad debts

-refund of taxes

-unutilized excess campaign fund

-forgiveness of indebtedness

Question 15

The seven exclusion from quest income

Answer 15

1. Life insurance
2. Amount received by insured as returned of premium
3. Gifts, Bequest, and Devises
4. Compensation of injuries or sickness
5. Income exempt under treaty
6. Retirement benefits, pension, gratuities etc.
7. Miscellaneous item

Question 16

Miscellaneous items

Answer 16

• Income derived by foreign government
• Income derived by the government of its political subdivision
• Prizes and awards
• Prizes and awards and sport competition
• 13th month pay and other benefits
• GSIS, SSS, medical and other contributions
• games from the sale of bonds, debentures or other certificate of indebtedness
• gains from redemption of shares and mutual fund

Question 17

What are the three source of income

Answer 17

1. Income from source within the Philippines
2. Income from source partly within or partly without the Philippines
3. Income from source without the philippines