Income:

Realized,

Dominion or control over income.

Determine who the taxpayer is. Whether taxable worldwide or just within the Philippines.

Shares of stock: determine if the corporation is here.

Dividends: what is the difference in the implication between the issuance of a stock vs cash dividend.

Stock dividend: determine if there was gain.

Cash dividend: clearly may gain.

What if corpo. Liquidates itself? liquidating dividend.

ING bank vs CIR – bonuses or deductibility of bonuses. In order to be deductible, employer is responsible
for the withholding. Assuming it reaches the 82,000 (NIRC) 90,000 php (TRAIN).

When does the obligation arise?

Ruling: the obligation to withhold shall arise upon accrual of that deduction or upon receipt of the
income whichever is earlier.

Taxable period

Calendar of fiscal for corporations. Option must be with notice to CIR.

Calendar only for persons.

Gross income derived from whatever source. List under Sec 32 not exclusive.

Self employed and professional income, dealings and property (CGT), ordinary asset, interest subject to
final tax.

Partners are the one taxed.

Encompasses all accessions to wealth.  Income from whatever source.

Money found by chance  piano case

Can damages be considered as income?  Sec 32(d)(4). No. Compensation for injury are excluded from
gross income. Hence, not taxable.

Damages awarded for lost profits – included in gross income.

Illegal income – James vs. U.S ; Illegal income is income subject to tax.

Unutilized campaign contributions – taxable as income.

1. Dominion and control

2. Increase in net worth. Accession in wealth.
Forgiveness of debt – depends. If debt was forgiven but with the condition that the debtor will perform
services, income was realized by the debtor as compensation for services.

But if liberality – donation or gift.

Deductions:

Recovery of an account previously written off forms part of the gross income. Yung binayaran ka na.

Sources of income:

Compensation income vs. SEP income

13th month pay?  No. Bonuses are excluded from gross income.

SSS GSIS also not included – codal.

Test of Benefit: Convenience of employer, not additional compensation to the employee.

Tricky: Mixed convenience of the employer and employee. Tax problem: series of fringe benefits,
determine whether or not subject to fringe benefit tax. In the end, its up to the company’s controls.

Note: use of aircraft including helicopters – not subject to fringe benefit tax

But use of yacht – subject to fringe benefit.

De-minimis benefits – exempt from withholding tax on compensations. RR1-2015

Additional de minimis benefits:

1. Benefit by virtue by a CBA and productivity incentive schemes. (Memorize all the de-minis
benefits).

Real property also includes machineries. As long as used for trade or business.

SMIED, case of – CGT of an individual vs CGT of a corporation.

Corporation – only subject to CGT on lands and or buildings not machineries.

How would you know if a person is engaged in the business of selling real property?

Engages in 6 transactions- deemed as habitually engaged in real estate business. Magic number is 6 to
consider the real properties as ordinary assets.

Exempt: sale of principal residence. Can only be availed once every ten years. Must be fully realized.
 Non-Redemption of property during involuntary sales

Nabili ng bank yung property – it remains as a capital asset.

Period of redemption – bank bumili, i-reredeem. CGT? Not subject to capital gains tax because there is
still a period of redemption.

What if the period of redemptions lapsed?

The transaction is deemed perfected. Based on bid price.

Tax free exchange for stock. A maximum of 5 persons, minimum number of incorporators.

Tax free exchange 51%.

Iconic beverages. Question number 3 is my case. Lol.

Intellectual property - taxing authority is that which has jurisdiction won where the intellectual property
was used.

Kilcorp viz economic nexus test: economic nexus: it appears that there are many transactions.

1. Elements of MR MNT
2. Interplay of periods Judicial affidavit, etc, yun yung mahabang case…
3. Prohibition against filing of more than one MR
4. Situations where you are required to file ordinary appeal vs. certiorari
5. Nuances between notice of appeal or record on appeal. If multiple appeals allowed: pwede
record on appeal.
6. Substantive: remember basic oblicon, coa, contract, tort. (feel ko eto yung sa case kanina
about solidary liability.)