...OR FALSE QUESTIONS 1. Sale of goods and services which are subject to Other Percentage Tax cannot be subject also to a value-added tax. 2. Persons or transactions which are subject to Other Percentage tax may still be subject to income tax. 3. Persons or transactions which are exempt from income tax may nevertheless be subject to Other Percentage Tax. 4. A person whose gross annual sales or receipts do not exceed P1,919,500 may, nevertheless be subject to value-added tax. 5. A person whose gross annual sales or receipts do not exceed P1,919,500 may, nevertheless be subject to Other Percentage Tax. 6. A person whose gross annual sales or receipts exceed P1,919,500 may, nevertheless be exempt from other percentage tax or value-added tax. 7. A domestic carrier of passengers by land shall be subject to value-added tax if the gross annual sales or receipts exceed P1,919,500. 8. A domestic carrier of passengers by land shall be exempt from value-added tax and common carrier’s tax if its gross annual sales do not exceed P100,000. 9. A radio broadcasting company whose gross annual receipts do not exceed P10,000,000 shall not be subject to value-added tax even if it decides to be subject to VAT. 10. A television broadcasting company whose gross annual receipts do not exceed P10,000,000 but who voluntarily registers under the value-added tax system cannot revert back to franchise tax for a period of three (3) years even if it decides...
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...power to tax (a) Inherent Limitations 1. The levy must be for a public purpose; 2. Non-delegation in general of the power to tax – except in matters referring to collection and enforcement; 3. Exemption from taxation of government entities; and 4. The levy of the tax within territorial limits (subject to treaty stipulations) for the exercise of “effective jurisdiction” (the problem of situs in taxation). (b) Constitutional limitations protection of the laws 1. Due process of law and equal and equal protection of the laws 2. No imprisonment for non-payment of a poll tax 3. Non-impairment of contracts 4. Power of the Prime Minister to veto any particular items in a revenue or tariff bill 5. Uniformity in taxation 6. Authority of prime Minister to fix within specified limits, tariff rates 7. Exemption of charitable institutions, churches, etc. 8. Non-impairment of the jurisdiction of Supreme Court on tax cases Classifications of taxes: (a) According to the purposes for which it is applied 1. General – imposed without predetermined purpose and therefore, may be appropriated for general public purposes. 2. Special – imposed under special laws and the tax collected may not be appropriated or diverted to some purposes other than those provided in the special law. (b) According to who bears the burden of taxation 1. Direct – those collected or demanded from subjects desired or intended by law to be liable, like income tax, etc. ...
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...without 2) Nonresident Citizen – income within 3) Overseas contract worker – income within 4) Alien – income within 5) Domestic Corporation – within & without 6) Foreign Corporation – within x------------------------------------x 2. IMPORTANT BASIC TERMS IN GENERAL (NIRC §22) 2.1 Taxable Year ( Calendar year 2.2 Fiscal Year ( Accounting period of 12 months ending on the last day of any month other than December 2.3 Securities ( Proof of what Corporation owes, i.e. shares of stock, etc. 2.4 Ordinary Income ( Any gain from sale or exchange of property, not a capital asset or property 2.5 Gross Income - §27(A) & (E)(4) ( Domestic Corporations shall be imposed an income tax of 35% 2.6 Ordinary Loss ( Any loss from the sale or exchange of property which is not a capital asset ( Ordinary losses may only be charged against ordinary gains 2.7 Capital Assets - §39(A)(1) ( That which is NOT an ordinary asset ( Ordinary assets: 1) Stock in trade or inventory for sale 2) Depreciable items 3) Real property used in trade or business 4) Goods or property for the employee’s convenience ( Capital losses may only be charged against capital gains 2.8 Taxable Income - §31...
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...* Value Added Tax is a uniform tax imposed on person, who in the course of trade or business sells, barters, exchanges or leases goods or properties or renders services and on any person who imports goods. * Who are liable? * Any individual , trust, estate, partnership, corporation, joint venture, cooperative or association who in the course of trade or business: a. Sells, barters, exchanges goods or properties b. Sells or renders services c. Leases properties 4. Importation * Nature and Characteristics -VAT is a tax on consumption levied on the sale, barter, exchange or lease of goods or properties and services in the Philippines. -Seller is the one statutorily liable for the payment of tax but the amount of the tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services. Business Taxes Abolished by the Introduction of VAT 1. Advance sales tax 2. Compensating tax 3. Sales tax on the original sales 4. Subsequent sales tax 5. Contractor’s tax 6. Broker’s tax 7. Miller’s tax 8. Tax on cinematographic film owner’s, lessors and distributors 9. Excise tax on matches, solvents and video tapes 10. tax on hotel and motel 11. Tax on lending investors 12. Tax on dealer’s in securities 13. Caterer’s tax 14. Tax on insurance premiums on non-life insurance companies (except crop insurance) 15. Franchise tax (except on radio and television broadcasting companies whose annual gross receipts do not exceed P10...
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...Withholding tax Withholding tax is tax deducted at source from income earned by a taxpayer on a qualifying transactions, investment or income stream. It is designed to capture tax and information on transactions to prevent tax evasion. Relevant Tax laws 1) Companies Income Tax Act 2) Personal Income Tax Act 3) Tax regulations introduced from time to time by minister of finance: (a). S.I. of 1997 – personal income tax [rates, etc. of tax deducted at source (withholding tax ) regulations] (b) S.I.10 of 1997 – companies income tax [rates, etc. of tax deducted at source (withholding tax) regulations] (c) Personal income tax [rates, etc. of tax deducted at source (withholding tax amendment) regulations of 2000] . Tax rates Qualifying income: Divined ,rent or interest RoyaltyHire of equipment , motor vehicles ,plant & machineryAll commissions, consultancy, technical & management fees, legal fees, audit fees, listing fees and other professional fees. Building ,construction or related activityAll types of contracts & agency arrangement ,other than sales in the ordinary course of businessDirector’s fees | Recipient | | Companies 10%15%10% 10% 5%5% 10 | Individuals10%15%10% 5% 5% 5%10 | Rates are reduced to 7.5% on dividend, rent, interest or royalty for entities operating in double taxation treaty countries. Tax on dividend, rent, interest or royalty is final tax for non –resident companies. Dividends distributed from...
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...Chapter 3 Outline 300 Introduction – pg. 87 Tax accounting – the official reporting of income and expenses so a taxpayer’s taxable income for a particular period can be determined - The rules for determining when a business must recognize income and when it may deduct expense are referred to as the taxpayers method of accounting 301 Tax Accounting Distinguished from Financial Accounting - two sets of books because two different governing bodies Financial accounting – intended to provide useful information about a business so that management, owners, potential investors, creditors and other interested parties can make well informed investment, credit and other decisions - must prepare according to GAAP - accrual method – events reported in the accounting period in which they are earned or incurred rather than when its paid or received Tax accounting records – focuses on items of income and expense that are important for determining taxable income For external (financial) reporting – GAAP allows a business to choose among various acceptable accounting methods - management interested in making business look successful and thriving Tax accounting – goal is to pay least amount of taxes as legally possible Accounting Periods – pg. 89 - tax year – period of time taxpayers use to calculate taxable income o may or may not be the same as the annual accounting period used for financial reporting purposes o no constitutional requirement that income be calculated...
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... * Rules: administrative announcements of IRS Æ merely serve to state the IRS position on something but do not have the force of law. • Policy Considerations * We need a tax system as a way for government to fund itself * Tax system serves to allocate the cost of public goods and services among Americans on an ability to pay basis. * All economists believe there is one tax that does not have a disincentive effect Æ Head tax (e.g. if you are a person you get taxed) • Most states have income and property taxes...
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...97. STOCK BROKING SERVICES A. Date of introduction: 01.07.1994 vide Notification No.1/1994-ST dt.28.06.1994. A. Definition and scope of service: “Recognised stock exchange” has the meaning assigned to it in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956). (Section 65(90) of Finance Act, 1994 as amended) “Securities” has the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956). (Section 65(93) of Finance Act, 1994 as amended) “Stock-broker” means a person, who has either made an application for registration or is registered as a stock broker, in accordance with the rules and regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992). (Section 65(101) of Finance Act, 1994 as amended) “Taxable service” means any service provided or to be provided to any person, by a stock-broker in connection with the sale or purchase of securities listed on a recognized stock exchange. (Section 65(105)(a) of Finance Act, 1994 as amended) C. Rate of Tax & Accounting Code: Rate of Tax Service Tax 10% of the value of services Education Cess 2% of the service tax payable Secondary and H. 1% of the service tax payable. Education Cess Other – As levied or applicable Penalty/interest (Rate of tax is effective from 24.02.2009.) D. Classification of Taxable Services: Accounting Code 00440008 00440298 00440426 00440009 (1) The...
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...WITHHOLDING TAX INTRODUCTION Imposed on non-residents on services rendered by them. The payer as an agent, to withhold a portion of the payment ‘withholding tax’ and pay to the tax authorities. Net payment Non-resident Withholding tax Payer Tax authorities SCOPE OF WITHOLDING TAX Withholding tax is only restricted to the following types of payment made to non-resident: (a) (b) (c) (d) (e) (f) Special classes of income (S 4A) Interest (S 15) Royalty (S 15) Contract payment (S 107) Public entertainer (S 109A)’ Other income in S4(f) (S15B) Type of Income Charging Section WT Section/Rate Interest 3/4(c) 109 - 15% Royalty 3/4(d) 109 - 10% Contract payment 3/4(a) Public Entertainer Rem. 3/4(a)/4(b) 109A - 15 Special classes of income 4f 109B - 10% Non-Exempt Interest to individual 4(c) 109C - 5% resident NR R 107A - 10%+3% Sec. 4A Income. Interest. Royalty. Contract Payment. Public Entertainer’s. Remuneration. Net Payment Payer NonResident •Within 1 Month of Paying or Crediting. •Crediting means “making available to” and not crediting in the accounting sense. Tax Authorities SCOPE OF WITHOLDING TAX The non-resident would only be liable for withholding tax if all the following factors are present: (i) The recipient is a non-resident; (ii) The income has to be one of the categories in the scope; (iii) Such income has to be deemed derived from...
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...552. CHAPTER 5GROSS INCOME: EXCLUSIONS Question MC #1 The taxpayer’s marginal tax bracket is 25%. Which would the taxpayer prefer? a. $1.00 taxable income rather than $1.00 tax-exempt income. *b. $.80 tax-exempt income rather than $1.00 taxable income. c. $1.25 taxable income rather than $1.00 tax-exempt income. d. $1.30 taxable income rather than $1.00 tax-exempt income. e. None of the above. 553. CHAPTER 5GROSS INCOME: EXCLUSIONS Question MC #2 Cash received by an individual: a. Is not included in gross income if it was not earned. b. Is not taxable unless the payor is legally obligated to make the payment. c. Must always be included in gross income. *d. May be included in gross income although the payor is not legally obligated to make the payment. e. None of the above. 554. CHAPTER 5GROSS INCOME: EXCLUSIONS Question MC #3 Sharon’s automobile slid into a ditch. A stranger pulled her out. Sharon offered to pay $25, but the stranger refused. Sharon slipped the $25 in the stranger’s truck when he was not looking. a. The $25 is a nontaxable gift received by the stranger because Sharon was not legally required to pay him. b. The $25 is a nontaxable gift because the stranger did not ask to receive it. *c. The $25 is taxable compensation for services rendered. d. The $25 is a nontaxable service award. e. None of the above. 555. CHAPTER 5GROSS INCOME: EXCLUSIONS Question MC #4 Carin, a widow, elected to receive the proceeds of a $150,000 life insurance policy...
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...Italy (value $1,200). The frequent flyer miles used to purchase the ticket were generated from Latrell’s business travel as a CPA. Latrell’s employer paid for his business trips, and he was not taxed on the travel reimbursement. a) Use an available tax research service to determine how much income, if any, does Latrell have to recognize as a result of purchasing an airline ticket with Skymiles earned from business travel. b) Write a memo communicating the results of your research. To: Latrell Date: January 14, 2016 Subject: Frequent Flyer Miles Attributable to Business or Official Travel Latrell does not recognize any income as a result of purchasing an airline ticket with Skymiles. The frequent flyer miles earned because of business travel is not taxable. IRS Announcement 2002-18 states that frequent flyer miles earned for business or official travel and exchanged for in-kind promotional benefits do not represent taxable income. This verdict does not apply to travel or other promotional benefits that is converted for cash, to compensation that is paid in the form of travel, or other situations where these benefits are used to avoid taxes. (Internal Revenue Service, n.d.). Chapter 3: Problem 49 Bendetta, a high-tax-rate taxpayer, owns several rental properties and would like to shift some income to her daughter Jenine. Bendetta instructs her tenants to send their rent checks to Jenine so Jenine can report the rental income. Will this shift the income from Bendetta...
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...Itemized Tax Deductions for Individuals: Data Analysis Sean Lowry Analyst in Public Finance February 12, 2014 Congressional Research Service 7-5700 www.crs.gov R43012 CRS Report for Congress Prepared for Members and Committees of Congress Itemized Tax Deductions for Individuals: Data Analysis Summary Reforming or limiting itemized tax deductions for individuals has gained the interest of policymakers as one way to increase federal tax revenue, increase the share of taxes paid by higher-income tax filers, simplify the tax code, or reduce incentives that might lead to inefficient economic behavior. However, limits on deductions could cause adverse economic effects or changes in the distributional burden of the federal income tax code. This report is intended to identify who claims itemized deductions, for how much, and for which provisions? This report analyzes data to inform the policy debate about reforming itemized tax deductions for individuals. In 2011, 32% of all tax filers chose to itemize their deductions rather than claim the standard deduction. In addition, the data indicate that both the share of tax filers who itemize their deductions and the amount claimed by each tax filer as adjusted gross income (AGI) increases. AGI is the basic measure of income under the federal income tax and is the income measurement before itemized deductions and personal exemptions are taken into account. Although higherincome tax filers are more likely to itemize their deductions...
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...©2011 CCH. All Rights Reserved. Chapter 5 59 Chapter 5 Gross Income—Exclusions SUMMARY OF CHAPTER Having just completed the study of gross income in the preceding chapter and thus gained a comprehension of what income is and when it is taxable, the student should now be ready to proceed to the concepts underlying exclusions from gross income, which are discussed in the present chapter. Since gross income includes income from all sources, to be excluded from gross income the items must be expressly exempted by law. Sections 101–139 list those items. Common Exclusions from Gross Income ¶5001 Gifts and Inheritances A gift, bequest, or inheritance is excluded from gross income. Thus, the donor does not receive a tax deduction for the property transmitted. If property received by gift or inheritance later produces income, the income is taxable. ¶5015 Life Insurance Proceeds Generally, life insurance proceeds received by the benefi ciary are not included in gross income if such amounts are paid by reason of death of the insured. It is immaterial who the benefi ciary is or whether the policy was part of a group life insurance plan or was individually purchased. However, if payment is delayed and the total amount when received includes interest, the interest is taxable. ¶5025 Sale of Residence Sales of principal residences on May 7, 1997, and thereafter are eligible for a $500,000 exclusion from gross income ($250,000 for single individuals). A two-year ownership...
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...PERSONAL INCOME TAX IN THE UNITED STATE Group’s member:Nguyễn Như Nam (C)Phan Thu AnNguyễn Thùy DungHoàng Bá SơnNgô Thị Ánh TuyếtDate: 15/12/2014 | Table of Contents PART 1. The review on the tax system in the United States 2 1. The tax administration system in United States 2 2. The tax policy system in United States 3 PART 2. The review of the main content of the tax laws 5 I. The scope of application 5 1. Taxable incomes 5 2. Non-taxable 7 3. Payers. 7 II. The taxation bases 9 III. The tax calculation method 10 1. Gross Income 10 2. Adjusted gross income 17 3. Tax Credits 17 4. Tax Rates 20 5. Deductions and exemptions 22 IV. Tax declaration, submission and refund 32 1. Declaration 32 2. Submission 33 3. Refund 34 REFERENCES 36 PART 1. The review on the tax system in the United States Taxation is an important for each country. Taxation provides a material to distribute economic resources towards those with low incomes or special needs. Taxes provide the revenue needed for critical public services such as social security, health care, national defense, and education. 1. The tax administration system in United States The U.S. system of tax administration is based on the principle of self-assessment. In a self-assessment system, taxpayers calculate and pay their own taxes without the intervention of a tax official. If this is not done appropriately and within the prescribed timeframes, the tax administration...
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...John Smith Tax issue 1(a) Issue: The issue is the $300,000 in income for John’s fees. How to treat this in Income Tax? Rule of Law: Section 61(a) of the Code the concept of income is broad and general. Gross income means all income from whatever source derived, including (but not limited to) the following items: (1) Compensation for services, including fees, commissions, fringe benefits, and similar items; (2) Gross income derived from business; (3) Gains derived from dealings in property; (4) Interest; (5) Rents; (6) Royalties; (7) Dividends; (8) Alimony and separate maintenance payments; (9) Annuities; (10) Income from life insurance and endowment contracts; (11) Pensions; (12) Income from discharge of indebtedness; (13) Distributive share of partnership gross income; (14) Income in respect of a decedent; and (15) Income from an interest in an estate or trust. I.R.C § 61 Analysis: Section 61(a) it basically says that the gross income is not limited to these items, but that these are just the most typical sources of income. It is irrelevant whether or not the above items are received in money, goods, or services. Conclusion: The $300,000 that John received for services rendered from the court case is considered earned income for the year. The $300,000 is earned income for John Smith and will be reported as gross income either on Schedule C of the individual return or as gross income on the LLC return. ...
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