Course Syllabus
TAXATION II
Second Semester
SY 2017 - 2018
__________________________________________________________________
Credit: 3 units
Lecturer: RYAN C. MONTENEGRO
Required readings:
The National Internal Revenue Code of the Philippines (R.A. No. 8424);
Pertinent rules and regulations issued by the appropriate government agencies;
Selected decisions of the Supreme Court;
Republic Act 10963
Course Requirement:
To promote reading and active participation of students, regular class recitation
and quizzes are to be expected;
There will be two (2) major exams: midterm and final;
Each student is required to have a notebook where case digests of all assigned
cases will be handwritten.
Grading System:
1. Midterm Grade
a. Oral Recitation - 10%
b. Quiz – 40%
c. Midterm Examination – 50%
2. Final Course Grade –
a. Midterm Grade standing - 50%
b. Oral Recitation (10%); Quiz (40%); Final Examination (50%)
Classroom Policies:
Students must observe appropriate conduct during class and come prepared for
every session’s covered topic (s);
Cheating in any form whether in major exams or quizzes will earn for the student
a failing mark.
COURSE CONTENT
I. INDIVIDUALS
Resident Citizens (Section 23[A]; 24 [A] [1] [a])
Non-Resident Citizens (Section 23[B]; 24 [A] [1] [b])
Overseas Contract Workers and Seamen(Section 23[E] 1; and partial of 2)
Resident Alien (Section 23[D]; 24 [A] [1] [c]; Section 5, RR No. 2)
Nonresident Alien Engaged in Trade or Business (Section 23[A]; 25 [B])
Nonresident Alien Not Engaged in Trade or Business (Section 23[D]; 25
[B])
Corporation (Section 22)
II. KINDS OF INCOME TAXES
Net Income Tax
Gross Income Tax
Final Income Tax
Minimum Corporate Income Tax
Improperly Accumulated Earning Tax
Optional Corporate Income Tax
III. SOURCES OF INCOME
Gross Income Tax from sources within the Philippines (Section 42[A])
a. Interest
b. Dividends
c. Services
d. Rentals and royalties
e. Sale of Real Property
f. Sale of Personal Property
Gross Income from Sources without the Philippines (Section 42[C])
Income from Sources Partly within and partly without the Philippines
(Section 42[E])
Sale of Personal Property (Section 42[E])
IV. CAPITAL GAINS AND LOSSES
Percentage taken into Account (Section 39[B])
Limitations on Capital Losses (Section 39[C])
Net Capital Loss and Carry-Over (Section 39[D])
Gains and Losses from Short Sales (Section 39[F])
Capital to Ordinary Asset, vice versa
V. TAX ON INDIVIDUALS
RC, NRC, OCW, S, RA
a. Net income tax (Section 24[A])
b. Final income tax (Section 24[B])
c. Interest, royalties, prizes and other winnings (Section 24[B] [1])
d. Cash and / property dividends
e. Capital gains from sale of shares of stock not traded in the stock
exchange (Section 24[C])
f. Capital gains from sale of real property (Section 24[D])
NRAETB (Section 25[A])
a. Net Income Tax
b. Final Income Tax
NRANETB (Section 25[B])
Aliens Employed by Regional or Area HQ and ROHQ of Multinational
Companies (Section 25[C]); by Offshore Banking Units (Section 25[D]);
and by Petroleum Service Contractor and Subcontractor (Section 25[E])
a. Income Tax Liability for Salaries and Compensation
b. Income Tax Liability for Other Income
VI. TAX ON CORPORATIONS
1. Domestic Corporation (Section 27)
a. Optional Corporate Income Tax on Gross Income
b. Proprietary Education Institutions and Hospitals
c. Government Owned and Controlled Corporations, Agencies or
Instrumentalities
d. Final Income Tax
e. Interest income from deposits and yield or any other Monetary
benefit from Deposit Substitutes and from Trust Funds and
Similar Arrangements, and Royalties
f. Capital gains from the sale of shares of stock not traded in the
stock exchange
g. Tax on income derived under the expanded foreign currency
deposit system
h. Intercorporate dividends
i. Capital gains realized from sale, exchange or disposition of lands
and / or buildings
Resident Foreign Corporations (Section 28[A])
a. Optional Corporate Income Tax
b. Minimum Corporate Income Tax on Resident Foreign Corporation
c. International Carrier
1. International carrier
2. International shipping
d. Offshore Banking Units
e. Tax on Branch Profit Remittances
f. Regional Area HQ and ROHQ of Multinational Companies
g. Final Income Tax
Nonresident Foreign Corporation
a. Interest on Foreign Loans
b. Intercorporate Dividends
c. Capital Gains from sale of shares of stock not traded in the stock
exchange.
VII. MINIMUM CORPORATE INCOME TAX
Imposition of the Tax (Section 27[E][1]; 28[E][3])
Carry Forward of Excess Minimum Tax (Section 27[E][2])
Relief from the Minimum Corporate Income (Section 27[E][3])
VIII. IMPROPERLY ACCUMULATED EARNINGS TAX
Exempted Corporations
Improperly accumulated Taxable Income
Evidence of Purpose to Avoid Income Tax
IX. EXEMPT CORPORATIONS
General Professional Partnerships (Section 26)
Joint Venture Under a Service Contract with the Government
Government Owned or Controlled Corporations (Section 27[C])
Other Exempt Corporations (Section 30)
X. GROSS INCOME AND EXCLUSIONS
Gross Income (Section 32[A])
a. Compensation for services in whatever form paid, including, but
not limited to fees salaries, wages, commissions, and similar items
b. Gross income derived from the conduct of trade or business or the
exercise of a profession
c. Gains derived from dealings in property
d. Interests
e. Rents
f. Royalties
g. Dividends
h. Annuities
i. Prizes and winnings
j. Pensions
k. Partner’s distributive share from the net income of the general
professional partnership
l. Exclusions
XI. FRINGE BENEFITS TAX (Section 33)
XII. ALLOWABLE DEDUCTIONS
Expenses (Section 34[A])
a. Ordinary and necessary trade, business or professional expenses
b. Expenses allowable to private educational institutions
Interest (Section 34[B])
Taxes (Section 34[C])
Losses (Section 34[D])
Bad Debts (Section 34[E])
Depreciation (Section 34[F])
Depletion of Oil and Gas Wells and Mines (Section 34[G])
Charitable and other contributions (Section 34[H])
Research and Development (Section 34[I])
Pension Trusts (Section 34[J])
Optional Standard Deduction (Section 34[L])
Premium payments on Health/and or Hospitalization Insurance of an
Individual Taxpayer (Section 34[M])
XIII. ALLOWANCE FOR PERSONAL EXEMPTION FOR INDIVIDUAL TAXPAYERS
In General (Section 35[A]) as amended by RA9504
Additional exemption for Dependents (Section 35[B]) as amended by
RA9504
Change of Status (Section 35[C])
Personal Exemption allowable to nonresident alien individual (Section
35[D])
XIV. ITEMS NOT DEDUCTIBLE
In General (Section 36[A])
Losses from sales or Exchange from Property (Section 36[B])
XV. DETERMINATION OF AMOUNT AND RECOGNITION OF GAIN OR LOSS
Computation of Gain or Loss (Section 40[A])
Basis for determining gain or loss from sale or disposition of property
(Section 40[B])
Exchange of Property (Section 40[C])
a. In General
b. Exception
c. Exchange not solely in kind
d. Assumption of liability
e. Basis
XVI. ESTATE TAX
Gross Estate
Computation of Net Estate
Exemption of Certain Acquisitions and Transmissions
Determination of the Value of the Estate
Notice of Death to be filed
Estate Tax Returns
Payment of Tax
Discharge of Executor or Administrator from Personal Liability
Definition of Deficiency
Payment before Delivery by Executor or Administrator
Duties of Certain Officers and Debtors
Restitution of Tax upon Satisfaction of Outstanding Obligations
Payment of Tax Antecedent to the Transfer of Shares, Bonds or Rights
XVII. DONOR’S TAX
Stranger vs. Relative
Cumulative vs. Splitting Method
Donation to any Candidate, Political Party or Coalition
Transfer of Inadequate Consideration
Exemption of Certain Gifts
Valuation of Gifts made in Property
Filing of Return and Payment of Tax
XVIII. VALUE ADDED TAX
Persons liable
VAT on Sale of Goods or Properties
VAT on Importation of Goods
VAT on Sale of Services and Use or Lease of Properties
Exempt Transactions
a. Exempt Transactions
b. Options Available
c. Creditable Input Tax
d. Transitional /presumption input tax credits
e. Refund or Tax Credits of input tax
f. Invoicing and Accounting Requirements
g. Return and Payment of VAT
h. Power of the Commissioner to Suspend the Business Operation of
a taxpayer
XIX. REMEDIES
Remedies of the Government
a. Normal or Ordinary Assessment and Collection
b. Abnormal or Extraordinary Assessment and Collection
Procedure for Assessment
Forms of Protest
Compromise
Remedies for Collection of Deliquent Taxes
Distraint
Levy
Injunction
Tax Lien
Approval of the Commissioner
Suspension of the Running of the Statute of Limitations
Claim for Refund
