FORGIVENESS OF INDEBTEDNESS

TYPE TAX TREATMENT

Debtor performs services to the creditor Compensation income
Creditor desires to benefit the debtor
without any consideration Gift
Creditor is a corporation and the debtor is
a stockholder of such corporation Dividend income

LIFE INSURANCE
General Rule: Tax exempt since it is a mere reimbursement for the loss of life.
Exception the following shall be taxable:
1. The beneficiary was chosen for a valuable consideration
2. The interest earned on the insurance policy

RETURN OF PREMIUM
The amount received by the insured, as a return of premiums paid by him under
life insurance, endowment, or annuity contracts, either during the term or at the maturity
of the term mentioned in the contract or upon surrender of the contract.
Return of Premium Exempt
In excess Income

 GIFTS, BEQUEST AND DEVISES

The value of the property acquired by gifts, bequest, devises or descent:
provided, however, that income from such property, as well as gift, bequest, devise
or descent of income from any property, in cases of transfers of divided interest,
shall be included in gross income.

 COMPENSDATION FOR INJURIES OR SICKNESS

Amounts received through Accident or Health Insurance or under Workmen’s
Compensation Act, as compensation for personal injuries or sickness, plus the
amounts of any damages received, whether by suit or agreement, on account of
such injuries or sickness.

 INCOME EXEMPT UNDER TREATY

Income of any kind, to the extent required by any treaty obligation binding upon
the Government of the Philippines, shall be exempt.

 RETIREMENT BENEFITS, PENSIONS, GRATUITIES ETC.

1. Retirement benefits received under R.A #7641
 2. Those received by officials or employees of private firms, whether individual
or corporate, in accordance with a reasonable private benefit plan maintained
by the employer: Provided:
a. That the retiring official or employee has been in the service of the
same employer for at least 10 years.
b. At least 50 years of age at the time of his/her retirement
c. That the benefits granted shall be availed of by an official or
employee only once.
3. Any amount received by official or employee or by his heirs from the
employer as a consequence of separation of such official or employee form
the services of the employer because of:
a. Death
b. Sickness
c. Other physical disability or for any cause beyond the control of the
said official or employee

 MISCALLENEOUS ITEMS: