(Gross Income)- all income derived from whatever source- including (but not limited to):(1)Compensation for services; whatever form paid, including (not limited to: F!"C!) (#)GI derived from tradebusinessprofession; ($)Gains; dealings in propert%; (&)Interests; (')(ents; ())(o%alties; (*)+ividends; (,)-nnuities; (.)/ri0es and winnings; (11) /ensions (11) /artner2s distributive share;from net income 34 G//C 56/ GI(( +- $/5a7able Income- there must be gain- gain; rcvdreali0ed- gain must not be e7cludede7empt8et Income3 (GI 9 allowable deductions:)Compensation Income- compensation for services; ee34er (under ee3er rel)- included onl% when ta7pa%er sub;ect to net income ta7- re) is hereb% imposedon the grossed3up monetar% value of fringebenefit - granted to the emplo%ee (e7cept ran? and file emplo%ees as defined herein) b% the emplo%er- whether an individual or a corporation (unless the fringe benefit is re) and the applicable rates of income ta7 under !ubsections (6), (C), (+), and (=) of !ection #'@+efinition (F6) 3 an% G!other benefitgranted in cash or in ?ind b%an emplo%er to an individual emplo%ee (e7cept ran? and file emplo%ees as defined herein) such as, but not limited to, the following:(1)Cousing; (#)=7pense account; ($)Dehicle of an% ?ind; (&)Cousehold personnel, such as maid, driver and others; (')Interest on loan at less than mar?et rate to the e7tent of the difference betweenthe mar?et rate and actual rate granted; ())Eembership fees, dues and other e7penses borne b% the emplo%er for the emplo%ee in social and athletic clubs or other similar organi0ations; (*)=7penses for foreign travel; (,)Colida% and vacation e7penses; (.)=ducational assistance to the emplo%ee or his dependents; and (11) Fife or health insurance and other non3life insurance premiums or similar amounts in e7cess of what the law allows@=7ceptions (F6)(1)fringe benefits which are authori0ed and e7empted from ta7 under special laws; (#)Contributions of the emplo%er for the benefit of the emplo%ee to retirement, insurance and hospitali0ation benefit plans; ($)6enefits given to the ran? and file emplo%ees, whether granted under a collective bargaining agreement or not; and (&)+e minimis benefits as defined in the rules and regulations to be promulgated b%the !ecretar% of Finance, upon recommendation of the Commissioner@5he !ecretar% of Finance is hereb% authori0ed to promulgate, upon recommendation of the Commissioner, such rules and regulations as are necessar% to carr% out efficientl% and fairl% the provisions of this !ection, ta?ing into account the peculiar nature and special need of the trade, business or profession of the emplo%er@G+e EinimisH 6enefits - e7empt from withholding ta7 on compensation as well as from fringe benefits ta7: (a)Eoneti0ed unused vacation leave credits of private emplo%ees not e7ceeding 11 da%s during the %ear (b)Eoneti0ed value of vacation and sic? leave credits paid to government officials and emplo%ees; (c)Eedical cash allowance to dependents of emplo%ees not e7ceeding /*'1@11 per emplo%ee per semester or /1#' per month; (d)(ice subsid% of /1,'11@11 or one (1) sac? of '13?g rice per month amounting to not more than /1,'11@11; (e)Bniforms and clothing allowance not e7ceeding /&,111 per annum; (f)-ctual medical assistance, e@g@ medical allowance to cover medical and healthcare needs, annual medicale7ecutive chec?3up, maternit% assistance, and routine consultations,not e7ceeding /11,111 per annum; (g)Faundr% allowance not e7ceeding /$11 per month; (h)=mplo%ees achievement awards, e@g@, for length of service or safet% achievement, which must be in the form of a tangible personal propert% other than cash or gift certificate, with an annual monetar% value not e7ceeding /11,111@11 received b% the emplo%ee under an established written plan which does not discriminate in favor of highl% paid emplo%ees; (i)Gifts given during Christmas and ma;or anniversar% celebrations not e7ceeding /',111 per emplo%ee per annum; and (;)+ail% meal allowance for overtime wor? and night@grave%ard shift not e7ceeding #'> of the basic minimum wage@/rofessional Income- fees rcvd b% a professional from practice- provided; no ee3er rel between him and hisclientsIncome from 6usiness- GbusinessH; activit% entailing time and effort of an indivgroup for profit- business income; income from merchandisingminingmanufacturingfarming ops!=C@ &$@ General (ule@ 3 5he ta7able income shall be computed upon the basis of the ta7pa%er2s annual accounting period (fiscal %ear or calendar %ear, as the case ma% be) in accordance with the method of accounting regularl% emplo%ed in ?eepingthe boo?s of such ta7pa%er, but if no such method ofaccounting has been so emplo%ed, or if the method emplo%ed does not clearl% reflect the income, the computation shall be made in accordance with such method as in the opinion of the Commissioner clearl% reflects the income@ If the ta7pa%er2s annual accounting period is other than a fiscal %ear, as defined in !ection ##(I), or if the ta7pa%er has no annual accounting period, or does not ?eep boo?s, or if the ta7pa%er is an individual, the ta7able income shall be computed on the basis of the calendar %ear@ !=C@ &&@ /eriod in which Items of Gross Income Included@ 3 5he amount of all items of gross income shall be included in the gross income for the ta7able%ear in which received b% the ta7pa%er, unless, under methods of accounting permitted under !ection &$, an% such amounts are to be properl% accounted for as of a different period@ In the case of the death of a ta7pa%er, there shall be included in computing ta7able income for the ta7able period in which falls the date of his death, amounts accrued up to the date of his death if not otherwise properl% includible in respect of such period or a prior period@ !=C@ &'@ /eriod for which +eductions and Credits 5a?en@ 3 5he deductions provided for in this 5itle shall be ta?en for the ta7able %ear in which 2paid or accrued2 or 2paid or incurred2, dependent upon the method of accounting the basis of which the net income is computed, unless in order to clearl% reflect the income, the deductions should be ta?en as of a different period@ In the case of the death of a ta7pa%er, there shall be allowed as deductions for the ta7able period in which falls the date of his death, amounts accrued up to the date of his death if not otherwise properl% allowable in respect of suchperiod or a prior period@ !=C@ &)@ Change of -ccounting /eriod@ If a ta7pa%er, other than an individual, changes his accounting period from fiscal %ear to calendar %ear, from calendar %ear to fiscal %ear, or from one fiscal %ear to another, the net income shall, with the approval of the Commissioner, be computed on the basis of such new accounting period, sub;ect to the provisions of !ection &*@ !=C@ &*@ Final or -d;ustment (eturns for a /eriod ofFess than 5welve (1#) Eonths@(-) (eturns for !hort /eriod (esulting from Change of -ccounting /eriod@ 3 If a ta7pa%er, other than an individual, with the approval of the Commissioner, changes the basis of computing net income from fiscal %ear to calendar %ear, a separate final or ad;ustment return shall be made for the period between the close of the last fiscal %ear for which return was made and the following +ecember $1@ If the change is from calendar %ear to fiscal %ear, a separate final or ad;ustment return shall be made forthe period between the close of the last calendar %ear for which return was made and the date designated as the close of the fiscal %ear@ If the change is from one fiscal %ear to another fiscal %ear,a separate final or ad;ustment return shall be made for the period between the close of the former fiscal %ear and the date designated as the close of the new fiscal %ear@(6) Income Computed on 6asis of !hort /eriod@ 3 "here a separate final or ad;ustment return is madeunder !ubsection (-) on account of a change in the accounting period, and in all other cases where a separate final or ad;ustment return is re) if the capital asset has been held for not more than twelve (1#) months; and (#)Fift% percent ('1>) if the capital asset has been held for more than twelve (1#) months;Fimitation on Capital FossesFosses from sales or e7changes of capital assets shall be allowed onl% to the e7tent of the gains from such sales or e7changes@ If a ban? or trust compan%incorporated under the laws of the /hilippines, a substantial part of whose business is the receipt of deposits, sells an% bond, debenture, note, or certificate or other evidence of indebtedness issued b% an% corporation (including one issued b% a government or political subdivision thereof), with interest coupons or in registered form, an% loss resulting from such sale shall not be sub;ect to the foregoing limitation and shall not be included in determining the applicabilit% of such limitation to other losses@ 8et Foss Carr% JverIf an% ta7pa%er, other than a corporation, sustains inan% ta7able %ear a net capital loss, such loss (in an amount not in e7cess of the net income for such %ear) shall be treated in the succeeding ta7able %earas a loss from the sale or e7change of a capital asset held for not more than twelve (1#) months@Computation of Gain or Foss-) Computation of Gain or Foss@ 3 5he gain from thesale or other disposition of propert% shall be the e7cess of the amount reali0ed therefrom over the basis or ad;usted basis for determining gain, and theloss shall be the e7cess of the basis or ad;usted basis for determining loss over the amount reali0ed@ 5he amount reali0ed from the sale or other disposition of propert% shall be the sum of mone% received plus the fair mar?et value of the propert% (other than mone%) received; (6) 6asis for +etermining Gain or Foss from !ale or +isposition of /ropert%@ 3 5he basis of propert% shall be 3 (1) 5he cost thereof in the case of propert% ac