Allowable

Deductions to GPP
∙ In computing the taxable income of a GPP as defined under Section 31
of the Tax Code, as amended, the following may be allowed as
deductions from the gross income:

a) Itemized Deductions: Itemized expenses which are necessary,

incurred or paid for the practice of profession or
b) Optional Standard Deduction (OSD): 40% of gross income in lieu
of itemized
Allowable Deductions to the
Partners comprising GPP

∙ The share of a partner in the net income of a GPP, actually or

constructively received, shall be reported as taxable income of each
partner

∙ RR 8-2018 also provides that, the partners comprising the GPP can no
longer claim further deductions from their distributive share in the net
income of a GPP and are not allowed to avail the 8% income tax rate
option since their distributive share from the GPP is already net of costs
and expenses.
Allowable Deductions to the
Partners comprising GPP

∙ RR 8-2018 further provides that, if the partner also derives other

income from trade, business or practice of profession apart and
distinct from the share in the net income of the GPP, the
deduction that can be claimed from the other income would
either be the itemized deductions or OSD.
 ILLUSTRATION 2 - Itemized and Optional Standard
Deductions
 
CASE A: Itemized Deductions

Bobadilla (married with one dependent child) formed a

partnership with Trinidad (single), participating equally in the
partnership's income and expenses. The following are the data
for the partnership and the partners in 2020:
Question 1: Assuming the partnership is a GPP, how much is
distributive share of Trinidad in the income of the
partnership?
Answer: P125,000