WEEK 4-6

GROSS INCOME
 Gross Income Net Income
it includes a catch-all clause to
it is the take-home 'money after all
supplement the enumeration by
the deductions for taxes. Health
including any non-enomerative
items which can properly be defined incurance and retirement
as income. contributions.

Taxable Income
It is the portion of your gross income used to
calculate how much tax you owe over in a given tax
year. It is amount after deductions and
exemptions.
Compensation Income
refers any remuneration for rendering personal services Compensation
income is obtained from an employer-employee relationship between payor
and recipient.

Classification
Salaries , wages and fees Separation Pay
Commission Retirement Pay
Honoraria Sick leave or vacation
Allowances leave pay
13th month pay Fringe Benefit
Holiday night shift differential,
hazard and emergency pay
 Any good, service or other benefit

Fringe Benefits → granted in cask or in kind by an

employer to rank and tile employees
becomes part of compensation
income

Not Limited to the following :

Housing
Expense Account
Vehicle of any kind
Household personel
Interest on loan at less than market rate
Membership Fees, dues and other expenses Borne by the employer
Expenses for foreign expenses
Educational Assistance to the employee or his dents; and Life or health insurance and other non-life
insurance
 Any income from the exercise of any
Professional Income → profession or vocation which calls for an
intellectual or manual skill.

Income from Business → it is from any trade of business, legal or

illegal whether registered or unregistered.

Classification into groups:

Manufacturing
Merchandising or Trading
Servicing
Farming
Long-term Contact
Gains from dealings in Property
Arise from sales or exchange of real
or personal property

1. Ordinary Assets
2. Capital Assets
3. Dealing in Ordinary Assets (ordinary gain or ordinary loss)
4. Dealings in Capital Assets other than domestic stocks, and
real properties. ( Capital gain or capital loss)
Passive Investment Income
A final tax is imposed upon gross passive income
of citizen and residents aliens.

Examples:
1. Yield from deposit substitutes and trust fund;
2. Interest Income
3. Royelty Income
4. Dividend Income; and
5. Prizes and winnings
Insurance Premiums as Compensation
PREMIUMS PAID BY THE EMPLOYER ON LIFE
INSURANCE COVERAGE OF THEEMPLOYER
WHEREIN THE BONEFICIARY IS THE
EMPLOYEE'S FAMILY THERE CONSTITUTE.
TAXABLE INCOME IN THE BASIS OF THE
AMOUNT OF PREMIUM PAID.
Prizes
A REWARD FOR A CONTEST OR
A COMPETITION. IT
REPRESENTS RENUMERATION
FOR AN EFFORT REFLECTING
ONES SUPERIORITY, LIKE PRISE
MONEY OF A BOXING CONTEST
Awards
REWARD FOR AN EVENTS THAT
DEPENDS ON CHANCE SUCH AS
WINNINGS FROM GAMBLING,
LOTTERY OR RAFFLE TICKET-
PENSION RETIREMENT SEPARATION
BENEFITS PAY
Stated
allowance paid it is received it is taxable if
regularly to a when an voluntarity availed
person on his employee of. It shall not be
retirement or to retires upon taxable if voluntarity
his dependents reaching 60
on his deaths years old but Examples:
inconsideration not beyond Death
of past cervices 65 yrs old Sickness
mentorious Disability
Merger of Company
Company at the brink of
bankruptcy
Income from any source
01 Bad-bedt recovery
04 Annuities; and

02 Tax refund or credit

05 Income from
whatever source

03 Damages recovery
 Exclusions
-are used in income taxation, refers to items or receipt not included in the
determination of the taxable income bec. the law or treaty provides that
they are exempt from income tax.