taxation 1 outline

ATENEO LAW SCHOOL

Course Outline Atty. Terence Conrad H. Bello Tax I Baniqued & Baniqued Academic Year 2014 – 2015 633-9418 (Office); 633-1911 (Fax) [email protected] www.baniquedlaw.com

I. INTRODUCTION AND GENERAL PRINCIPLES

A. General Principles Read BENJAMIN B. ABAN, LAW OF BASIC TAXATION IN THE PHILIPPINES 1-29

(2000) Tio v. Videogram Regulatory Board, 151 SCRA 208 (1987) Lutz v. Araneta, 98 Phil. 148 (1955)

Commissioner of Internal Revenue v. Algue, 241 Phil. 829 (1988) B. Limitations on Taxing Power

1. Inherent Limitations on Taxing Power ABAN, 53-66 Mactan Cebu Int’l Airport Authority v. Marcos, 261 SCRA 667 (1996)

2. Constitutional Limitations on Taxing Power ABAN, 66-94 VAT Ruling No. 7-2006, June 7, 2006

C. Double Taxation ABAN, 113-118

D. Construction of Tax Statutes 1. Liberal Construction in Favor of Taxpayers

ABAN, 144 Manila Railroad v. Collector of Customs, 52 Phil. 950 (1929)

Commissioner of Internal Revenue v. Firemen’s Fund Ins. Co., 148 SCRA 315 (1987)

2. Strict Construction of Tax Exemptions ABAN, 118-124

Sea-Land Services, Inc. v. Commissioner of Internal Revenue, G.R. No. 122605, April 30, 2001

Maceda v. Macaraig, G.R. No. 882291, May 31, 1991 Commissioner of Internal Revenue v. CA, 240 SCRA 368 (1995) 3. Liberal Construction vs. Strict Construction: When Applicable?

Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corp., G.R. No. 192398, Sept. 29, 2014

E. Tax Avoidance v. Tax Evasion ABAN, 124-128 Commissioner of Internal Revenue v. Estate of Toda, 438 SCRA 290 (2004) Delpher Trades Corp. v. IAC, 157 SCRA 349 (1988)

Tax I Course Outline

Atty. Terence Conrad H. Bello

II. MEANING OF INCOME AND THE REALIZATION PRINCIPLE

Sec. 32(A), NIRC1 Sec. 36, Rev. Regs. 2 A. What is Income (A Definitional Concept)?

Fisher v. Trinidad (Oct. 30, 1922) Eisner v. Macomber, 252 U.S. 189 (1920) U.S. v. Kirby Lumber Co., 284 U.S. 1 (1931) Helvering v. Bruun, 309 U.S. 461 (1940) CIR v. Glenshaw Glass Co., 348 U.S. 426 (1955) James v. U.S., 366 U.S. 213 (1961)

B. Realization Requirement Sec. 38, Rev. Regs. 2 Helvering v. Bruun, supra Helvering v. Horst, 311 U.S. 112 (1940) Cottage Sav. Ass’n v. CIR, 499 U.S. 554 (1991)

C. Other Relevant Concepts 1. Tax-Free Imputed Income v. Taxable Barter Sec. 41, Rev. Regs. 2

CIR v. Minzer, 279 F.2d 338 (5th Cir. 1960) Rev. Rul. 79-24, 1979-1 C.B. 60

2. Tax-Free Return of Capital Sec. 36, Rev. Regs. 2 Clark v. CIR, 40 B.T.A. 333 (1939) BIR Rul. 51-00 (Oct. 30, 2000) BIR Rul. 184-90 (Sept. 20, 1990) Rev. Rul. 81-277, 1981-2 C.B. 14 3. Windfall Receipts Sec. 32(A)(9) and (B)(7)(c) Cesarini v. U.S., 296 F. Supp. 3 (ND Ohio 1969) Hornung v. CIR, 47 TC 428 (1967) 4. Tax Benefit Principle – Recovery of Deducted Items

Sec. 34(E)(1), proviso BIR Rul. 102-95 (July 7, 1995)

5. Indirect Receipts – Cancellation of Indebtedness and Discharge by 3rd Parties Sec. 50, Rev. Regs. 2

BIR Rul. 76-89 (April 17, 1989) Old Colony Trust Co. v. CIR, 279 U.S. 716 (1929) BIR Rul. 85-95 (June 13, 1995)

1 Unless otherwise indicated, section references are to the 1997 NIRC.



III. GROSS INCOME A. Inclusions

Sec. 32(A) 1. Compensation: Special Problems on “In-Kind” Compensation

Sec. 2.78.1(A) and (1), Rev. Regs. 2-98 (April 17, 1998) a. Limited Choice and Restricted Property

U.S. v. Drescher, 179 F.2d 863 (2nd Cir. 1950) BIR Rul. 9-04 (Sept. 13, 2004)

b. Forced Consumption: “Convenience of the Employer” Rule Sec. 2.78.1(A)(2), Rev. Regs. 2-98 (April 17, 1998) Sec. 2, Rev. Audit Mem. Order 1-87 (April 23, 1987) Benaglia v. CIR, 36 B.T.A. 838 (1937)

c. De Minimis Benefits Sec. 2.78.1(A)(3), Rev. Regs. 2-98 (April 17, 1998) BIR Rul. 23-02 (June 21, 2002)

d. Travel and Entertainment Rudolph v. U.S., 370 U.S. 269 (1962)

2. Business Income 3. Gains 4. Interests 5. Rents 6. Royalties 7. Dividends

Sec. 73 Sec. 250-256, Rev. Regs. 2 Wise & Co., Inc. v. Meer (June 30, 1947) CIR v. CA (Jan. 20, 1999) CIR v. Manning (Aug. 6, 1975)

BIR Rul. 39-02 (Nov. 11, 2002) 8. Annuities 9. Prizes and winnings 10. Pensions 11. Share in GPP’s Income

Sec. 26 B. Exclusions

Sec. 32(B) 1. Gifts, Bequests and Devises

Sec. 32(B)(3) CIR v. Duberstein, 363 U.S. 278 (1960) Hornung v. CIR, supra

2. Compensation for Injuries or Sickness Sec. 32(B)(4)

O’Gilvie v. U.S., 519 U.S. 79 (1996) Murphy v. U.S., No. 05-5139 (D.C. Cir. Aug. 22, 2006) Murphy v. U.S., No. 05-5139 (D.C. Cir. July 3, 2007) (on rehearing)



BIR Rul. 57-83 (April 12, 1983) 3. Retirement Benefits, Pensions, Gratuities, etc.

Sec. 32(B)(6) and (7)(e) CIR v. CA (March 23, 1992) CIR v. CA (Oct. 17, 1991) In Re: Atty. Bernardo Zialcita, A.M. No. 90-6-015-SC (Oct. 18, 1990) BIR Rul. 1-95 (Jan. 6, 1995) Rep. Act No. 4917 (June 17, 1967)

Rep. Act No. 7833 (Dec. 8, 1994) Rev. Regs. 2-95 (Jan. 3, 1995) RMC 36-94 (Dec. 14, 1994)

4. Income Derived by Foreign Government Sec. 32(B)(7)(a)

CIR v. Mitsubishi Metal Corp. (Jan. 22, 1990) 5. Gains from the Sale of Bonds, Debentures or Other Certificates of

Indebtedness Sec. 32(B)(7)(g) Nippon Life Ins. Co., Inc. v. CIR, CTA Case No. 6142 (Feb. 4, 2002)

IV. DEDUCTIONS Sec. 34 Sec. 36(A) Secs. 119 to 120, Rev. Regs. 2

A. Expenses Sec. 34(A) 1. Non-Deductible Personal Expenses v. Deductible Business Expenses

Smith v. CIR, 40 B.T.A. 1038 (1939) Pevsner v. CIR, 628 F.2d 467 (5th Cir. 1980) Rudolph v. U.S., supra Schultz v. CIR, 16 T.C. 401 (1951)

2. Travel Expenses While Away from Home CIR v. Flowers, 326 U.S. 465 (1946)

Hantzis v. CIR, 638 F.2d 248 (1st Cir. 1981) 3. Deductible Current Expenses v. Non-Deductible Capital Expenditures

Mt. Morris Drive-In Theatre Co. v. CIR, 25 T.C. 272 (1955) Midland Empire Packing Co. v. CIR, 14 T.C. 635 (1950) INDOPCO, Inc. v. CIR, 503 U.S. 79 (1992) CIR v. General Foods (Phil.), Inc. (April 24, 2003)

4. Ordinary and Necessary Welch v. Helvering, 290 U.S. 111 (1933) Atlas Consolidated Mining & Dev’t Corp. v. CIR (Jan. 27, 1981)

5. Reasonable Compensation C.M. Hoskins & Co., Inc. v. CIR (Nov. 28, 1969) Kuenzle & Streiff, Inc. v. Collector (Oct. 20, 1959)

6. Period for Which Deductions and Credits Taken



Sec. 45 CIR v. Isabela Cultural Corp. (Feb. 12, 2007)

B. Interest Sec. 34(B) Paper Ind. Corp. of the Phil. v. CA (Dec. 1, 1995) CIR v. Vda. de Prieto (Sept. 30, 1960) Rev. Regs. 13-2000 (Nov. 20, 2000) 1. Interest arbitrage

BIR Rul. No. 006-00 (Jan. 5, 2000) C. Taxes

Section 34(C) CIR v. Lednicky (July 31, 1964)

D. Losses 1. Casualty losses

Sec. 34(D)(1), (2) 2. NOLCO

Sec. 34(D)(3) Paper Ind. Corp. of the Phil. v. CA, supra

Rev. Regs. 14-01 (Aug. 27, 2001) BIR Rul. 30-00 (Aug. 10, 2000)

3. Realized vs. unrealized losses BIR Rul. No. 206-90 (Oct. 30, 1990) BIR Rul. No. 144-85 (Aug. 26, 1985)

4. Losses from sales or exchanges (to be taken-up in XV below) E. Bad Debts

Section 34(E) Rev. Regs. 5-99 (March 10, 1999) Phil. Refining Co. v. CA (May 8, 1996) Fernandez Hermanos, Inc. v. CIR (Sept. 30, 1969)

F. Depreciation Sec. 34(F) Basilan Estates, Inc. v. CIR (Sept. 5, 1967) Limpan Investment Corp. v. CIR (July 26, 1966)

G. Depletion Sec. 34(G) Consolidated Mines, Inc. v. CTA (Aug. 29, 1974)

H. Charitable and Other Contributions Sec. 34(H) BIR Rul. 19-01 (May 10, 2001)

I. Research and Development Sec. 34(I) 3M Phil., Inc. v. CIR (Sept. 26, 1988)

J. Pension Trusts Sec. 34(J)

K. Additional Requirements for Deductibility



Section 34(K) L. Optional Standard Deduction

Sec. 34(L), as amended by Rep. Act No. 9504 M. Premium Payments

Sec. 34(M)

V. TAXABLE INCOME Sec. 31 VI. GENERAL PRINCIPLES OF INCOME TAXATION

Sec. 23 VII. INCOME TAX ON INDIVIDUALS

A. Definitions 1. Resident Citizens and Resident Aliens

Sec. 22(F) Sec. 5, Rev. Regs. 2 Garrison v. CA (July 19, 1990) Ramnani v. CIR, CTA Case No. 5108 (Sept. 13, 1996)

2. Non-Resident Citizens Sec. 22(E) Rev. Regs. 1-79 (Jan. 8, 1979) Rev. Regs. 5-01 (July 31, 2001)

BIR Rul. No. 33-00 (Sept. 5, 2000) 3. Non-Resident Aliens Engaged/not Engaged in Trade or Business in the

Philippines Sec. 22(G) Secs. 5 and 6, Rev. Regs. 2

4. Dependent Sec. 35(B), as amended by Rep. Act No. 9504

5. Minimum Wage Earner Sec. 22(HH), as inserted by Rep. Act No. 9504

B. Income Tax on Citizens and Resident Aliens 1. Income Tax Rate and Base, In General

Sec. 24(A) Sec. 31

2. Special Exemption of Minimum Wage Earners Section 24(A), proviso

3. Income Tax Rate and Base on Certain Types of Income a. Final Income Tax on Interests, Royalties, Prizes, and Other Winnings Sec. 24(B)(1) Sec. 22(Y) Sec. 22(FF) Rev. Regs. 10-98 (Aug. 25, 1998) b. Final Income Tax on Cash and/or Property Dividends



Sec. 24(B)(2) Sec. 73

c. Capital Gains Tax on Sale of Shares Sec. 24(C) Sec. 127(A) Sec. 22(L) Sec. 22(U)

Benguet Corp. v. CIR, CTA Case No. 5324, July 2, 1998 d. Capital Gains Tax on Sale of Realty

Sec. 24(D) Rev. Regs. 8-98 (Aug. 25, 1998) Rev. Regs. 13-99 (July 26, 1999) Rev. Regs. 14-2000 (Nov. 20, 2000) Rev. Regs. 4-99 (March 9, 1999)

4. Personal and Additional Exemptions Sec. 35(A) & (B), as amended by Rep. Act No. 9504

5. Change of Status Sec. 35(C), NIRC

6. Optional Standard Deduction Sec. 34(L), as amended by Rep. Act No. 9504

7. Premium Payments on Health and/or Hospitalization Insurance Sec. 34(M), NIRC

C. Income Tax on Nonresident Aliens Engaged in Trade or Business in the Philippines 1. Meaning of “Engaged in Trade or Business”

Sec. 8, Rev. Regs. 2 Sec. 25(A)(1) Higgins v. CIR, 312 U.S. 212 (1941) Weliner v. CIR, CTA Case No. 3170 (May 23, 1986)

2. Income Tax Rate and Tax Base, In General Sec. 25(A)(1) Sec. 31

3. Income Tax Rate and Base on Certain Types of Income a. Cash and/or Property Dividends from a Domestic Corporation or

Joint Stock Company, or Insurance or Mutual Fund Co., or ROHQ, or Share in the Distributable Net Income of a Taxable Partnership, Interests, Royalties, Prizes, and Other Winnings Sec. 25(A)(2)

b. Capital Gains on the Sale of Shares and Realty Sec. 25(A)(3)

4. Personal Exemption Allowable to Nonresident Alien Individuals Engaged in Trade or Business in the Philippines

Sec. 35(D) D. Nonresident Aliens not Engaged in Trade or Business in the Philippines

Sec. 25(B)



CIR v. Wodehouse, 337 U.S. 369 (1949) E. Special Aliens

Sec. 25(C), (D), (E) VIII. INCOME TAX ON DOMESTIC CORPORATIONS

A. Definition of Domestic Corporation Sec. 22(B), (C) AFISCO Insurance Corp. v. CA (Jan. 25, 1999) Pascual v. CIR (Oct. 18, 1988) Obillos v. CIR (Oct. 29, 1985) Ona v. CIR (May 25, 1972) BIR Rul. No. 317-92 (Oct. 28, 1992)

B. Income Tax Rate and Tax Base, In General Sec. 27(A) Sec. 31

C. Proprietary Educational Institutions and Hospitals Sec. 27(B) DOF Order 137-87 (Dec. 16, 1987) – Secs. 1 to 4 DOF Order 149-95 (Nov. 24, 1995)

D. GOCCs Sec. 27(C)

E. Passive Income Sec. 27(D) 1. Interest, Deposit Substitutes, Royalties

Sec. 22(Y) BIR Rul. 57-00 (Nov. 7, 2000)

2. Sale of Shares Rev. Regs. 2-82 (March 29, 1982) – Secs. 1 to 6 and 8

3. FCDU Rev. Regs. 10-98 (Aug. 25, 1998) – except Sec. 2.58 4. Intercorporate Dividends CIR v. Manning (Aug. 6, 1975) 5. Sale of Realty

Rev. Regs. 8-98 (Aug. 25, 1998) – Secs. 1 to 3 RR 4-99 (March 9, 1999)

F. Minimum Corporate Income Tax (MCIT) Sec. 27(E) Rev. Regs. 9-98 (Aug. 25, 1998) – except Sec. 2.28(E)(7) “Accounting

Treatment” The Manila Banking Corp. v. CIR (Aug. 28, 2006)

IX. INCOME TAX ON RESIDENT FOREIGN CORPORATIONS

A. Definition Sec. 22(B), (C), (D), (H)



B. Meaning of “Engaged in Trade or Business” Sec. 3(d), Rep. Act No. 7042 (Foreign Investments Act of 1991), as

implemented by Sec. 1(f), FIA 91 IRR Island Power Corp. v. CIR, CTA Case No. 5922 (May 17, 2004)

C. Income Tax Rate and Tax Base, In General Sec. 28(A)(1) Sec. 31

D. Special Resident Foreign Corporations 1. International Carriers

Sec. 28(A)(3) CIR v. British Overseas Airways Corp. (April 30, 1987) Rev. Regs. 15-2002 – Secs. 1 to 5 only

2. OBUs/FCDUs Sec. 28(A)(4) Rev. Regs. 10-76 (Dec. 14, 1976) Rev. Regs. 14-77 (Nov. 9, 1977) Rev. Regs. 10-98 (Aug. 25, 1998) - except Sec. 2.58

3. RHQs and ROHQs Sec. 22(DD) & (EE)

Sec. 28(A)(6) E. Branch Profit Remittance Tax

Sec. 28(A)(5) Bank of America NT & SA v. CA (July 21, 1994) Compania General de Tabacos de Filipinas v. CIR, CTA Case No. 4451 (Nov.

17, 1993) RMC 55-80 (Dec. 3, 1980) BIR Rul. 157-81 (July 13, 1981) BIR Rul. 80-89 (April 29, 1989) BIR Rul. 49-86 (April 23, 1986)

F. MCIT Sec. 28(A)(2)

G. Tax on Certain Incomes of Resident Foreign Corporations Sec. 28(A)(7) 1. Interest, Yields, Royalties 2. FCDU Income 3. Capital Gain from Sale of Shares 4. Intercorporate dividends

X. INCOME TAX ON NON-RESIDENT FOREIGN CORPORATIONS Sec. 28(B)

A. Income Tax Rate and Tax Base, In General Sec. 28(B)(1) Marubeni Corp. v. CIR (Sept. 14, 1989)



N.V. Reederij “Amsterdam” and Royal Interocean Lines v. CIR (June 23, 1988)

B. Special Non-Resident Foreign Corporations 1. Non-Resident Cinematographic Film Owner, Lessor or Distributor

Sec. 28(B)(2) 2. Non-Resident Owner or Lessor of Vessels Chartered by Philippine

Nationals Sec. 28(B)(3)

3. Non-Resident Owner or Lessor of Aircraft, Machinery and Other Equipment Sec. 28(B)(4)

C. Tax on Certain Incomes of Non-resident Foreign Corporations Sec. 28(B)(5) 1. Interest on Foreign Loans 2. Intercorporate Dividends BIR Rul. 8-00 (Jan. 5, 2000) 3. Capital Gain from Sale of Shares 4. Income Covered by Tax Treaties

ITAD Ruling 102-02 (May 28, 2002) XI. IMPROPERLY ACCUMULATED EARNINGS TAX (IAET) Sec. 29

The Manila Wine Merchants, Inc. v. CIR (Feb. 20, 1984) CIR v. Tuason (May 15, 1989)

Cyanamid Philippines, Inc. v. CA (Jan. 20, 2000) Rev. Regs. 2-01 (Feb. 12, 2001)

BIR Rul. 25-02 (June 25, 2002)

XII. TAX-EXEMPT CORPORATIONS Sec. 30

CIR v. G. Sinco Educational Corp. (Oct. 23, 1956) Executive Order 226, Article 39 Republic Act 7916, Secs. 23 – 25

CIR v. CA, CTA and Young Men’s Christian Assoc. of the Phil., Inc. (Oct. 14, 1998)

CIR v. St. Luke’s Medical Center, Inc. (G.R. No. 195509, Sept. 26, 2012) XIII. FRINGE BENEFITS TAX (FBT) Sec. 33 Rev. Regs. 3-98 (Jan. 1, 1998)

Rev. Regs. 8-00 (Aug. 21, 2000) Rev. Regs. 10-00 (Dec. 14, 2000) XIV. CAPITAL GAINS AND LOSSES

A. Capital Assets



Sec. 39 Sec. 132, Rev. Regs. 2 Corn Products Refining Co. v. CIR, 350 U.S. 46 (1955) Arkansas Best Corp. v. CIR, 485 U.S. 212 (1988) Calasanz v. CIR (Oct. 9, 1986) BIR Rul. 27-02 (July 15, 2002)

B. Ordinary income Sec. 22(Z) Tuason v. Lingad (July 31, 1974)

C. Net Capital Gain, Net Capital Loss Jardine Davies, Inc. v. CIR, CTA Case No. 5738 (Aug. 1, 2000)

D. Percentage Taken into Account E. Limitation on Capital Loss

China Banking Corporation vs. Court of Appeals (July 19, 2000)

XV. DETERMINATION OF GAIN OR LOSS FROM SALE OR EXCHANGE OF PROPERTY Sec. 40 Sec. 136-143, Rev. Regs. 2 A. Computation of Gain or Loss

Sec. 40(A) Crane v. CIR, 331 U.S. 1 (1947)

B. Amount Realized Sec. 40(A)

C. Cost or Basis for Determining Gain or Loss Sec. 40(B) Philadelphia Park Amusement Co. v. U.S., 126 F. Supp. 184 (1954)

D. Exchange of Property 1. General Rule – Gain Recognition

Sec. 40(C)(1) 2. Exception – Non-Recognition Transactions (Tax-Free Exchange)

a. Transfer of Property to a Controlled Corporation Sec. 40(C)(6)(c) Sec. 40(C)(2), last par., NIRC Delpher Trades Corp. v. IAC (Jan. 26, 1988)

BIR Rul. No. 274-87 (Sept. 9, 1987) RMR 01-01 (Nov. 29, 2001)

Intermountain Lumber v. CIR, 65 T.C. 1025 (1976) b. Statutory Merger or Consolidation

Sec. 40(C)(6)(a), (b) Sec. 40(C)(2)(a), (b), (c)

CIR v. Rufino (Feb. 27, 1987) c. Transfer of “Substantially All” the Assets (De Facto Merger)

Sec. 40(C)(6)(a), (b) Sec. 40(C)(2)(a), (b), (c)



BIR Rul. 19-97 (Feb. 27, 1997) RMR 1-02 (April 25, 2002)

d. Exchange Not Solely in Kind (Boot) Sec. 40(C)(3)

e. Assumption of Liability in Tax-Free Exchanges Sec. 40(C)(4)

f. Carry-Over/Substituted Basis in Tax-Free Exchanges Sec. 40(C)(5) Rev. Regs. 18-01 (Nov. 13, 2001), Sec. 2 only

g. Business Purpose Gregory v. Helvering, 293 U.S. 465 (1935)

3. Losses from Wash Sales of Stocks or Securities Sec. 38 Sec. 131, Rev. Regs. 2 XVI. SITUS OF TAXATION Sec. 42

A. Gross Income from Sources Within and Without the Phils. Sec. 42(A) and (C) 1. Interest

Sec. 42(A)(1) and (C)(1) 2. Dividends

Sec. 42(A)(2) and (C)(2) 3. Compensation for Personal Services

Sec. 42(A)(3) and (C)(3) CIR v. Marubeni Corp. (Dec. 18, 2001) CIR v. British Overseas Airways Corp. (April 30, 1987); read dissenting

opinion of J. Feliciano Howden & Co., Ltd. v. Collector (April 14, 1965) Korfund Co., Inc. v. CIR, 1 T.C. 1180 (1943) Stemkowski v. CIR, 690 F.2d 40 (1982)

4. Rentals and Royalties Sec. 42(A)(4) and (C)(4) Rev. Rul. 68-443, 1968-2 C.B. 304 Phil. American Life Ins. Co., Inc. v. CTA, CA-GR Sp. No. 31283 (April 25,

1995) a. Compensation for Personal Services or Royalty?

Karrer v. U.S., 152 F. Supp. 66 (1957) Boulez v. CIR, 83 T.C. 584 (1984)

5. Sale or Real Property Sec. 42(A)(5) and (C)(5)

6. Sale of Personal Property Sec. 42(A)(6) and (E) a. Sale by Producer or Manufacturer of Personal Property b. Purchase and Sale of Personal Property



c. Sale of Shares of Stock in a Domestic Corporation d. Outright Sale or Assignment of Intangibles

RMC 44-2005 (Sept. 1, 2005) B. Income from Sources Partly Within or Without the Philippines

CIR v. CTA and Smith Kline & French Overseas (Jan. 17, 1984) RAMO 1-95 (March 21, 1995) RAMO 1-86 (April 25, 1986) RAMO 4-86 (April 5, 1986) Rev. Regs. 16-86 (Sept. 26, 1986)

XVII. ACCOUNTING PERIODS AND METHODS

Secs. 43-50 Secs. 166-177, Rev. Regs. 2 Secs. 51-53, Rev. Regs. 2

A. Accounting Method - cash (actual or constructive) or accrual B. Hybrid Method

Consolidated Mines, Inc. v. CTA (Aug. 29, 1974) C. Percentage of Completion Method

Sec. 48 Sec. 44, Rev. Regs. 2

D. Change of Accounting Period E. Installment Basis F. Allocation of Income and Deductions

XVIII. RETURNS AND PAYMENT OF TAXES

A. Individual Return Secs. 51 & 56 1. Who are Required to File 2. Those not Required to File 3. Where to File 4. When to File 5. Where to Pay 6. Capital Gains on Shares of Stocks and Real Estate 7. Quarterly Declaration of Income Tax

Sec. 74 B. Corporation Returns

Sec. 52, 53 & 56 1. Quarterly Income Tax

Sec. 75 2. Final Adjustment Return

Sec. 76 BPI-Family Savings Bank v. Court of Appeals (April 12, 2000) Philam Asset Mgt., Inc. v. CIR (Dec. 14, 2005)

3. Where to File 4. When to File



Sec. 77 5. When to Pay 6. Capital Gains on Shares of Stock 7. Return of Corporations Contemplating Dissolution/Reorganization

Sec. 52(C) Sec. 244, Rev. Regs. 2

Bank of the Philippine Islands v. CIR, CA-GR SP No. 38304 (April 14, 2000) 8. Returns of GPPs

Sec. 55 XIX. WITHHOLDING TAX

A. Final Withholding Tax at Source Sec. 57(A) CIR vs. Wander Philippines, Inc. (April 15, 1988) CIR v. Procter & Gamble Phil. Mfg. Corp. (April 15, 1988) Sec. 2.57(A) & 2.57.1, Rev. Regs. 2-98 (April 17, 1998)

B. Creditable Withholding Tax Sec. 57(B) Filipinas Synthetic Fiber Corporation v. CA (Oct. 12, 1999) Sec. 2.57(B) & 2.57.2, Rev. Regs. 2-98 (April 17, 1998)

C. Return and Payment of Tax Sec. 58

D. Withholding on Wages Sec. 78 – 83 Sec. 2.78, Rev. Regs. 2-98 (April 17, 1998)

E. Withholding Tax by Government Agencies Sec. 2.57.2(N), Rev. Regs. 2-98 (April 17, 1998)

XX. ESTATES AND TRUSTS Sec. 60-66 Sec. 207-213, Rev. Regs. 2

A. General Rule on Taxability: Fiduciary or Beneficiary B. Personal Exemption Allowed C. Decedent’s Estate Administration D. Revocable Trusts E. Income for Benefit of Grantor



WEEK 1 – I WEEK 2 – II to III WEEK 3 – IV WEEK 4 – IV WEEK 5 – V to VII WEEK 6 – VIII to IX WEEK 7 – Midterms WEEK 8 – X to XIII WEEK 9 – XIV WEEK 10 – XV WEEK 11 – XVI to XVII WEEK 12 – XVIII WEEK 13 – XIX WEEK 14 – Finals

taxation 1 outline

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