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Deductions From Gross Income

This document discusses revenue, capital expenditures, and general allowable deductions for tax purposes. It notes that mixed expenses should be allocated based on gross income. It also distinguishes tax code treatments from GAAP, noting that GAAP includes estimated uncollectibles, miscellaneous expenses, and penalties, while personal exemptions for tax purposes only apply to compensation income for individuals, not corporations. Finally, it lists several general business expenses that are allowable deductions, such as salaries, wages, supplies, repairs, rent, travel, and insurance, provided they were incurred in pursuit of business, trade, or practice.

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106 views1 page

Deductions From Gross Income

This document discusses revenue, capital expenditures, and general allowable deductions for tax purposes. It notes that mixed expenses should be allocated based on gross income. It also distinguishes tax code treatments from GAAP, noting that GAAP includes estimated uncollectibles, miscellaneous expenses, and penalties, while personal exemptions for tax purposes only apply to compensation income for individuals, not corporations. Finally, it lists several general business expenses that are allowable deductions, such as salaries, wages, supplies, repairs, rent, travel, and insurance, provided they were incurred in pursuit of business, trade, or practice.

Uploaded by

ralphalonzo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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REVENUE / CAPITAL EXPENDITURES

- IF MIXED EXPENSE = ALLOCATE BASE ON GROSS INCOME

TAX CODE VS GAAP

GAAP INCLUDES ESTIMATED UNCOLLECTIBLES, MISC EXPENSE, PENALTIES


PERSONAL EXEMPT IS FOR COMPENSATION INCOME (INDIVIDUAL) ONLY NOT FOR CORPORATE

OSD

GENERAL ALLOWABLE DEDUCTION

1. GENERAL BUSINESS EXPENSE


a. Includes: SALARIES/WAGES. COMMISSIONS, SUPPLIES, REPAIRS, MAINTENANCE,
TRANSPORTATION, RENT, ADVERTISING, TRAVELLING, INSURANCE, in pursuit of B,T, P
b. NOLCO is not part of itemized deduction
c. SALARIES AND WAGES are deductible only if remitted to BIR as WT
d. COMPENSATION FOR INJURIES, deductible
e. MATERIALS used
f. TRAVELLING, in pursuit of B,T, P
g. RENT, deductible in pursuit of B,T, P and 5% CWT has been made. (ACCRUAL BASIS)
i. Advance Payment (PREPAID BASIS)
1. Lessor = Taxable Income
2. Lessee = not deductible to expense

h. LEASEHOLD IMPROVEMENT = LIFE OF IMPROVEMENT vs TERM OF LEASE, wchever is SHORTER

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