COURSE OUTLINE Tax I A. In General Taxable income Madrigal vs. Rafferty (August 7, 1918) Fisher vs.

Trinidad (October 30, 1922) Limpan Investment Corporation vs. Commissioner of Internal Revenue (July 26, 1966) Conwi vs. Court of Tax Appeals ( August 31, 1992) B. General Principles Section 23, Tax Code C. Income tax on individuals Definitions Resident citizens and resident aliens Section 22 (F), Tax Code Garrison vs. Court of Appeals (July 19, 1990) Non-resident citizens Section 22 (E), Tax Code RR 1-79 (January 8, 1979) RR 5-01 (July 31, 2001) BIR Ruling 33-00 (September 5, 2000) Non-resident aliens engaged in business in the Philippines Section 22 (G), Tax Code Sec. 5 & 6, RR 2 Minimum wage earner Section 22 (GG) & (HH), Tax Code Dependent Section 35 (B), Tax Code Kind of income and income tax of individuals Tax formula Section 24 (A), Tax Code Final income tax interests, royalties, awards, dividends, capital gains on sale of shares, realty Section 24 (B), (C), (D), Tax Code Section 22 (Y), Tax Code Supreme Transliner, Inc. vs. BPI Family Savings Bank, Inc. (February 23, 2011)

RR 10-98 (August 25, 1998) RR 06-2008 (April 22, 2008) RR 8-98 (August 25, 1998) RR 13-99 (July 26, 1999) RR 14-2000 (November 20, 2000) RR 4-99 (March 9, 1999) Personal and additional exemptions Section 35 (A) & (B), Tax Code Republic Act 9504 Pansacola vs. Commissioner of Internal Revenue (November 16, 2006) M.E. Holdings Corporation vs. CIR & CTA (March 3, 2008) Republic Act 9505 RR 17-2001 (October 27, 2001) Change of status Section 35 (C), Tax Code Personal exemption allowable to nonresident alien individuals Section 35 (D), Tax Code Optional Standard Deduction Section 34 (L), Tax Code as amended by Republic Act 9504 Premium Payments on health and/or hospitalization insurance Section 34 (M), Tax Code Tax on non-resident aliens Section 25, Tax Code Non-resident aliens engaged in business in the Philippines Section 25 (A), Tax Code Non-resident aliens not engaged in business in the Philippines Section 25 (B), Tax Code Special aliens Section 25 (C), (D), (E), Tax Code D. Definitions Section 22, Tax Code Definition of corporations Section 22 (B), Tax Code AFISCO Insurance Corporation vs. Court of Appeals (January 25, 1999) Pascual vs. Commissioner of Internal Revenue (October 18, 1988) Obillos vs. Commissioner of Internal Revenue (October 29, 1985) Oa vs. Commissioner of Internal Revenue (May 25, 1972) BIR Ruling 108-2010 (October 19, 2010) E. Income Tax Rates Section 27 (A), Tax Code as amended by Republic Act 9337 F. Proprietary Educational Institutions and Hospitals

Section 27 (B), Tax Code Revenue Memorandum Circular 76-03 (November 14, 2003) G. GOCCs Section 27 (C), Tax Code as amended by Republic Act 9337 Republic Act 10026 Philippine Amusement and Gaming Corporation vs. Bureau of Internal Revenue (March 15, 2011) H. Passive Income Section 27 (D), Tax Code Interest, Deposit Substitutes, Royalties Section 22 (Y), Tax Code Sale of shares RR 06-2008 (April 22, 2008) FCDU Republic Act 9294 Intercorporate dividends Sale of realty RR 8-98 (August 25, 1998) Sections 1 to 3 RR 4-99 (March 9, 1999) I. Minimum Corporate Income Tax (MCIT) Section 27 (E), Tax Code RR 9-98 (August 25, 1998) except Sec. 2.28 (E)(7) Accounting treatment Chamber of Real Estate Builders Association, Inc. vs. Executive Secretary (March 9, 2010) Commissioner of Internal Revenue vs. Philippine Airlines , Inc. (July 7, 2009) J. Income Tax on Resident Foreign Corporations Section 28 (A), Tax Code In general International Carrier Air New Zealand vs. Commissioner of Internal Revenue (CTA Case, January 30, 2008) Commissioner of Internal Revenue vs. BOAC (April 30, 1987) United Airlines, Inc. vs. Commissioner of Internal Revenue (September 29, 2010) RR 15-2002 Sections 1 to 5 only OBUs/FCDUs RR 10-76 (December 14, 1976)

RR 14-77 (November 9, 1977) RR 10-98 (August 25, 1998) - except Section 2.58 Branch Profit Remittance Tax Bank of America NT & SA vs. Court of Appeals (July 21, 1994) Commissioner of Internal Revenue vs. Burroughs Limited (June 19, 1986) Compania General de Tabacos de Filipinas vs. Commissioner of Internal Revenue CTA Case No. 4141 (August 23, 1993) & 4451 (November 17, 1993) ITAD BIR Ruling No. 018-09 (June 23, 2009) Regional or Area Headquarters and ROHQs Section 22 (DD) & (EE), Tax Code Tax on Certain Incomes of Resident Foreign Corporations Interest, Deposit Substitutes, Royalties, FCDU, Sale of shares, Intercorporate dividends K. Income Tax on Non-resident Foreign Corporations Section 28 (B), Tax Code In general Commissioner of Internal Revenue vs. S.C. Johnson and Son, Inc. (June 25, 1999) relate to RP-China Tax Treaty, provision on royalties Marubeni Corporation vs. Commissioner of Internal Revenue (September 14, 1989) N.V. Reederij Amsterdam and Royal Interocean Lines vs. Commissioner of Internal Revenue (June 23, 1988) Special non-resident foreign corporations Tax on Certain Incomes of Non-resident Foreign Corporations Interest on foreign loans Intercorporate dividends as amended by Republic Act 9337 BIR Ruling DA-145-07 (March 8, 2007) Income covered by Tax Treaties ITAD Ruling 102-02 (May 28, 2002) L. Improperly Accumulated Earnings Tax (IAET) Section 29, Tax Code The Manila Wine Merchants, Inc. vs. Commissioner of Internal Revenue (February 20, 1984) Commissioner of Internal Revenue vs. Tuason (May 15, 1989) Cyanamid Philippines, Inc. vs. Court of Appeals (January 20, 2000) RR 2-01 (February 12, 2001) BIR Ruling 25-02 (June 25, 2002) M. Tax-exempt corporations Section 30, Tax Code

Dumaguete Cathedral Credit Cooperative vs. Commissioner of Internal Revenue (January 22, 2010) Commissioner of Internal Revenue vs. G. Sinco Educational Corp. (October 23, 1956) Executive Order 226, Article 39 Republic Act 7916, Sections 23 25 Republic 9856 N. Taxable Income Section 31, Tax Code

O.

Gross Income Inclusions Section 32 (A), Tax Code Compensation Business income Gains Interests Section 50, Tax Code Commissioner of Internal Revenue vs. Filinvest Development Corporation (July 19, 2011) RMO 63-99 (July 19, 1999) Rents Section 49, RR 2 Royalties Dividends Section 250-256, RR 2 Commissioner of Internal Revenue vs. Court of Appeals (January 20, 1999) Wise & Co., Inc. vs. Meer (June 30, 1947) BIR Ruling 322-87 (October 19, 1987) Annuities Prizes and winnings Pensions Share in GPPs income Section 26, Tax Code From whatever source Section 50, RR 2 RMC 13-80 (April 10, 1980) Exclusions Section 32 (B), Tax Code

Retirement benefits, pensions, gratuities, etc. Commissioner of Internal Revenue vs. Court of Appeals (March 23, 1992)Commissioner of Internal Revenue vs. Court of Appeals (October 17, 1991) Re: Request of Atty. Bernardo Zialcita (October 18, 1990) Republic Act 4917 (June 17, 1967) Republic Act 7833 (December 8, 1994) RR 2-95 (January 3, 1995) RMC 36-94 (December 14, 1994) Revenue Regulations 10-2000 (December 14, 2000) Income derived by foreign government Commissioner of Internal Revenue vs. Mitsubishi Metal Corporation (January 22, 1990) P. Fringe Benefits Tax (FBT) Section 33, Tax Code RR 3-98 (January 1, 1998) RR 8-00 (August 21, 2000) RR 10-00 (December 14, 2000) Q. Deductions Section 34, Tax Code In general Commissioner of Internal Revenue vs. Isabela Cultural Corporation (February 12, 2007) Commissioner of Internal Revenue vs. General Foods (Phils.) Inc. (April 24, 2003) Aguinaldo Industries Corporation vs. Commissioner of Internal Revenue (February 25, 1982) Atlas Consolidated Mining & Development Corporation vs. Commissioner of Internal Revenue (January 27, 1981) Roxas vs. Court of Tax Appeals (April 26, 1968) Zamora vs. Collector of Internal Revenue (May 31, 1963) Expenses C.M. Hoskins & Co., Inc. vs. Commissioner of Internal Revenue (November 28, 1969) Calanoc vs. Collector of Internal Revenue (November 29, 1961) Kuenzle & Streiff, Inc. vs. Collector of Internal Revenue (October 20, 1959) RR 10-2002 (July 10, 2002) Interest (as amended by Republic Act 9337) Paper Industries Corporation of the Philippines vs. Court of Appeals (December 1, 1995) Commissioner of Internal Revenue vs. Vda. de Prieto (September 30, 1960)

RR 13-2000 (November 20, 2000) Interest arbitrage BIR Ruling No. 006-00 (January 5, 2000) Taxes Commissioner of Internal Revenue vs. Lednicky (July 31, 1964) Losses RR 12-77 (October 6, 1977) NOLCO Paper Industries Corporation of the Philippines vs. Court of Appeals (December 1, 1995) RR 14-01 (August 27, 2001) BIR Ruling 30-00 (August 10, 2000) Forex losses BIR Ruling 206-90 (October 30, 1990) BIR Ruling No. 144-85 (August 26, 1985) Bad Debts RR 5-99 (March 10, 1999) Philex Mining Corporation vs. Commissioner of Internal Revenue (April 16, 2008) Philippine Refining Company vs. Court of Appeals (May 8, 1996) Fernandez Hermanos, Inc. vs. Commissioner of Internal Revenue (September 30, 1969) Depreciation Basilan Estates, Inc. vs. Commissioner of Internal Revenue (September 5, 1967) Limpan Investment Corporation vs. Commissioner of Internal Revenue (July 26, 1966) Depletion Consolidated Mines, Inc. vs. Court of Tax Appeals (August 29, 1974) Charitable and other contributions BIR Ruling 19-01 (May 10, 2001) Research and Development 3M Philippines, Inc. vs. Commissioner of Internal Revenue (September 26, 1988) Pension trusts Additional requirements for deductibility RMO 38-83 (November 14, 1983) Non-deductible expenses Section 36, Tax Code Section 119-122, RR 2 Esso Standard Eastern, Inc. vs. Commissioner of Internal Revenue (July 7, 1989) R. Capital Gains and Losses

Capital Assets Section 39, Tax Code Section 132, RR 2 Calasanz vs. Commissioner of Internal Revenue (October 9, 1986) BIR Ruling 27-02 (July 15, 2002) Ordinary income Section 22 (Z), Tax Code Tuason vs. Lingad (July 31, 1974) Net capital gain, net capital loss Percentage taken into account Limitation on capital loss China Banking Corporation vs. Court of Appeals (July 19, 2000) S. Determination of Gain or Loss from Sale or Transfer of Property Section 40, Tax Code Section 136-143, RR 2 Computation of gain or loss Cost or basis for determining gain or loss Exchange of property (Tax-free exchange) Definitions Section 40 (C)(6), Tax Code Merger or consolidation Commissioner of Internal Revenue vs. Rufino (February 27, 1987 Transfer of "substantially all" the assets Transfer of property for shares of stocks BIR Ruling No. 274-87 (September 9, 1987) Administrative requirements in case of tax-free exchanges RR 18-01 (November 13, 2001) (only Sections 3 to 6 and 9 to 12) RMR 1-02 (April 25, 2002) Assumption of liability in tax-free exchanges Cost or basis in tax-free exchanges Business Purpose Gregory vs. Helvering, 293 U.S. 465; 55 S.CT. 266 Losses from Wash Sales of Stocks or Securities Section 38, Tax Code Section 131, RR 2 T. Situs of Taxation Section 42, Tax Code Gross income from sources within Phils. Commissioner of Internal Revenue vs. Marubeni Corporation (December 18, 2001) Commissioner of Internal Revenue vs. BOAC (April 30, 1987) Commissioner v. CTA and Smith Kline & French Overseas (January 17, 1984)

Philippine Guaranty Co., Inc. vs. Commissioner of Internal Revenue (April 30, 1965) Howden & Co., Ltd. Vs. Collector of Internal Revenue (April 14, 1965) Philippine American Life Insurance Company, Inc. vs. Court of Tax Appeals CAGR Sp. No. 31283 (April 25, 1995) RAMO 1-95 (March 21, 1995) RAMO 1-86 (April 25, 1986) RAMO 4-86 (April 5, 1986) RAMO 16-86 (September 26, 1986) Gross income from sources without the Philippines Income from sources partly within or without the Philippines Situs of sale of stocks in a domestic corporation U. Accounting Periods and Methods Sections 43-50, Tax Code Section 166-177, RR 2 Section 51-53, RR 2 Accounting method - cash (actual or constructive) or accrual Hybrid method Consolidated Mines, Inc. vs. Court of Tax Appeals (August 29, 1974) Percentage of completion method Section 48, Tax Code Section 44, RR 2 Change of accounting period Installment basis Bibiano V. Banas, Jr. vs. Court of Appeals (February 10, 2000) Allocation of income and deductions V. Returns and Payment of Taxes Individual Return Section 51 & 56, Tax Code Who are required to file Those not required to file Where to file When to file Where to pay Capital gains on shares of stocks and real estate Quarterly declaration of income tax Section 74, Tax Code Corporation Returns Section 52, 53 & 56, Tax Code Quarterly Income Tax Section 75, Tax Code

Final Adjustment Return Section 76, Tax Code Systra Philippines, Inc. vs. Commissioner of Internal Revenue (September 21, 2007) Philam Asset Management, Inc. vs. Commissioner of Internal Revenue (December 14, 2005) Where to file When to file Section 77, Tax Code When to pay Capital gains on shares of stock Return of corporations contemplating dissolution/reorganization Section 52 (C), Tax Code Sec. 244, RR 2 Bank of the Philippine Islands v. Commissioner of Internal Revenue - CAGR Sp. No. 38304 (April 14, 2000) Returns of GPPs Section 55, Tax Code W. Withholding Tax Final Withholding Tax at Source Section 57 (A), Tax Code Commissioner of Internal Revenue vs. Wander Philippines, Inc. (April 15, 1988) Commissioner of Internal Revenue vs. Procter & Gamble Philippine Manufacturing Corporation (April 15, 1988) Commissioner of Internal Revenue vs. Smart Communication, Inc. (August 25, 2010) Section 2.57. (A) & 25.7.1., RR 2-98 (April 17, 1998) Creditable Withholding Tax Section 57 (B), Tax Code Filipinas Synthetic Fiber Corporation vs. Court of Appeals (October 12, 1999) Section 2.57. (B) & 25.7.2., RR 2-98 (April 17, 1998) RR 12-98 (August 14, 1998) Return and Payment of Tax Section 58, Tax Code Withholding on Wages Section 78 83, Tax Code Section 2.78, RR 2-98 (April 17, 1998) Withholding Tax by Government Agencies Section 25.7.2. (N), RR 2-98 (April 17, 1998) X. Estates and Trusts Section 60-66, Tax Code

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Sec. 207-213, RR 2 General Rule on Taxability: Fiduciary or Beneficiary Personal Exemption Allowed Decedent's Estate Administration Revocable Trusts Income for Benefit of Grantor

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