ITEMIZED DEDUCTION

(GENERAL)
MR. SAM BARBO
ITEMIZED DEDUCTION (GENERAL)

ITEMIZED DEDUCTION

Itemized deduction are expenses and losses,

related to the business of the taxpayer
(manufacturing, trading or service providing)
ITEMIZED DEDUCTION (GENERAL)

ITEMIZED DEDUCTION

There shall be allowed as deduction from gross income

all the ordinary and necessary expenses paid or incurred
during the taxable year in carrying on or which are
directly attributable to business operation.
ITEMIZED DEDUCTION (GENERAL)

ITEMIZED DEDUCTION

◆ The itemized deduction are:

1. Taxes
2. Interest
3. Losses
4. Charitable and other contributions
5. Pension trust
6. Research and development cists
ITEMIZED DEDUCTION (GENERAL)

ITEMIZED DEDUCTION

◆ The itemized deduction are:

7. Bad debts
8. Depreciation
9. Expenses in general
ITEMIZED DEDUCTION (GENERAL)

ITEMIZED DEDUCTION

 Any amount paid or payable which is otherwise

deductible from, or taken into account in, computing gross
income, or for which depreciation or amortization is made,
shall be allowed as a deduction only if it shown that the
tax required to be deducted and withheld therefrom had
been paid to the Bureau of Internal Revenue.
ITEMIZED DEDUCTION (GENERAL)

ITEMIZED NOT DEDUCTIBLE

In computing for the taxable income of a taxpayer, no

deduction shall in any case be allowed for:
1. Any amount paid out for a new buildings or for
permanent improvements, or betterments, made to
increase the value of any property or estate (capital
expenditure).
ITEMIZED DEDUCTION (GENERAL)

ITEMIZED NOT DEDUCTIBLE

In computing for the taxable income of a taxpayer, no

deduction shall in any case be allowed for:
2. Any amount expanded in restoring property or in
making good the exhaustion thereof for which an
allowance is or has been made (capital
expenditure).
ITEMIZED DEDUCTION (GENERAL)

ITEMIZED NOT DEDUCTIBLE

In computing for the taxable income of a taxpayer, no
deduction shall in any case be allowed for:
3. Premiums paid on any life insurance policy covering the
life of an officer or employee, or of any person financialli
interested in any trade or business carried on by the
taxpayer, individual or corporate, when the taxpayer is
directly or indirectly the beneficiary uner such policy.
ITEMIZED DEDUCTION (GENERAL)

ITEMIZED NOT DEDUCTIBLE

◆ In computing for the taxable income of a taxpayer, no
deduction shall in any case be allowed for:
4. Interest expense
5. Bad debts, if the transaction is:
a) Between members of the family (the family of an
infivifual shall include only his brothers or sisters,
spouse, ancestors and lineal descendants.
ITEMIZED DEDUCTION (GENERAL)

ITEMIZED NOT DEDUCTIBLE

◆ In computing for the taxable income of a taxpayer, no
deduction shall in any case be allowed for:
4. Interest expense
5. Bad debts, if the transaction is:
b) Between a grantor and a fiduciary of any trust.
c) Between a fiduciary of a trust and a beneficiary of
such trust.
ITEMIZED DEDUCTION (GENERAL)

ITEMIZED NOT DEDUCTIBLE

◆ In computing for the taxable income of a taxpayer, no
deduction shall in any case be allowed for:
4. Bad debts, if the transaction is:
d) Between the fiduciary of a trust and a fiduciary of
antoher trust, if the same person is the grantor
with respect to each trust.
ITEMIZED DEDUCTION (GENERAL)

ITEMIZED NOT DEDUCTIBLE

◆ In computing for the taxable income of a taxpayer, no

deduction shall in any case be allowed for:
4. Bad debts, if the transaction is:
e) Between a corporation and an indivudual more
than 50% in value of the outstanding stock of
which corporation is owned, directly or indirectly
by or such individual except in the case of
distribution in liquidation of the corporation.
ITEMIZED DEDUCTION (GENERAL)

ITEMIZED NOT DEDUCTIBLE

◆ In computing for the taxable income of a taxpayer, no
deduction shall in any case be allowed for:
 Capital expenditure (purchase of a business assets,
or add value to, or prolong life of a business
asset.
 Personal living and family expenses.
ITEMIZED DEDUCTION (GENERAL)

ITEMIZED NOT DEDUCTIBLE

◆ In computing for the taxable income of a taxpayer, no
deduction shall in any case be allowed for:
 Insurance expense if:
1. insured is an employee
2. premiums are paid by the employer
3. the beneficiary to receive the proceeds of the
insurance is the employer
ITEMIZED DEDUCTION (GENERAL)

ITEMIZED NOT DEDUCTIBLE

◆ By whatevr name the taxpayer may give to a business
expense in the books of accounts, the expense must
satisfy the following conditions in order to be
deductible from the gross income:
1. it should be ordinary and necessary
2. it should be paid or incurred during the taxable year
3. it should be supported by voucher and/or receipts
ITEMIZED DEDUCTION (GENERAL)

ITEMIZED NOT DEDUCTIBLE

◆ By whatevr name the taxpayer may give to a business
expense in the books of accounts, the expense must
satisfy the following conditions in order to be
deductible from the gross income:
4. if a withholding tax is required, such tax must have
been withheld and paid to the Bureau of Internal
Revenue.
 THANK
YOU PO AND GOD
BLESS