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Module 3 Concept of Income-3
Module 3 Concept of Income-3
Module 3 Concept of Income-3
REMITTING TAX
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The taxpayer’s net worth is determined both at the beginning and at theend of the
same taxable year. The general theory underlying this method is that the taxpayer’s
money and other assets in excess of liabilities after accurate and proper
adjustment of nondeductible and nontaxable items not accounted for in his tax
return is deemed to be his unreported income.
NET WORTH METHOD
CONCEPT OF INCOME
Let us assume that during the taxable year, the taxpayer inherited P500,000 property and also incurred
personal expenses of P900,000.
Adjustments:
Inheritance received Taxable with transfer tax ( 500,000)
Personal expenses Earlier earned, before these are consumed 900,000
Income 800,000
INCOME TAXATION
(Assessment of Taxable Income)
GROSS RECEIPTS/COLLECTIBLES (Increase In Net worth) 5,000,000
Compensation for services to employer in whatever form paid, including, but not limited to
fees, salaries, wages, commissions, and similar items; Pensions
Business Income Gross income derived from the conduct of trade or business or the
exercise of a profession,
Rents.
Gains derived from dealings in property considered as CAPITAL ASSETS ( not INVENTORY, not item of PPE)
TAXPAYERS https://youtu.be/Z9nSbaKsOmc