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EXCLUSION FROM GROSS INCOMEEXCLUSION FROM GROSS INCOME, IN GENERAL

Discuss briefly whether or not all income is taxable. (1988)

Not all income are taxable. Some incomes are excluded from gross incomes in thedetermination of taxable income, and others are subject to tax exemptions.

Exclusions from gross income distinguished from deductions from gross income.

a) Exclusions from gross income refer to a flow of wealth to the taxpayer which are nottreated as part of gross income for purposes of computing the taxpayer’s taxable income,due to the following reasons:

1) it is exempted by the fundamental law;2) it is exempted by statute; and3) it does not come within the definition of income (Sec. 61, Rev, Regs. No. 2), WHILEdeductions are the amounts which the law allows to be subtracted from gross income inorder to arrive at net income.

b) Exclusions pertain to the computation of gross income, WHILE deductions tothecomputation of net income.

c) Exclusions are something received or earned by the taxpayer which do not form partof gross income, WHILE deductions are something spent or paid in earning grossincome.

An example of exclusion from gross income are life insurance proceeds, and an exampleof a deduction are ordinary and necessary expenses.

Distinguish “Exclusion from Gross Income” from “Deductions from GrossIncome”. Give an example of each.

a) Exclusions from gross income refer to a flow of wealth to the taxpayer which are nottreated as part of gross income for purposes of computing the taxpayer’s taxable income,due to the following reasons:



1) it is exempted by the fundamental law;2) it is exempted by statute; and3) it does not come within the definition of income (Sec. 61, Rev, Regs. No. 2), WHILEdeductions are the amounts which the law allows to be subtracted from gross income in

order to arrive at net income.

b) Exclusions pertain to the computation of gross income, WHILE deductions tothecomputation of net income.c) Exclusions are something received or earned by the taxpayer which do not form partof gross income, WHILE deductions are something spent or paid in earning grossincome.

An example of an exclusion is life insurance proceeds while an example of deduction is

depreciation.

LIFE INSURANCE PROCEEDS

“X” Corporation took a keymen insurance of the life of its President, Mr.Rodel Cruz. The policy designated Mr. Cruz’s wife as its revocable

beneficiary in the event of death of Mr. Cruz. Will the insurance proceeds be treated as income subject to tax by the wife?(1980)

No. Proceeds of life insurance policies paid to the beneficiary, in this case the wife, uponthe death of the insured are excluded from gross income. [Sec. 32 (B) (1), NIRC of 1997].The reason is that life insurance proceeds represents indemnity not income.

Mr. X received the following income and you were asked to prepare hisincome tax return. Is he required to include as part of gross income theproceeds from a life insurance policy received from the estate of hisdeceased parents? Give your reasons. (1988)

No. Life insurance proceeds are excluded from gross income. [Sec. 32 (B) {1}, NIRC of 1997], being compensation or indemnity for loss and not income.

RETURNED PREMIUMS



A took out a life insurance policy for P1,000,000.00 naming his wife as beneficiary. Under the terms of the policy, the insurer will pay A theamount of P1,000,000.00 after the 20th year of the policy, and his

beneficiaries, should he died before that date. A outlived the policy and

received P1,000,000.00. The premiums paid on the policy wasP250,000.00. Is the P1,000,000.00 received by A subject to tax? Explain

your answer. (1978)

No, not all of the P1,000,000.00 is subject to tax. The amount of P250,000.00 is notsubject to tax because it is the amount received by A, as a return of the premiums paid by him under a life insurance contract at the maturity of the term mentioned in thecontract. [Sec. 32 (B) (2), NIRC of 1997]. The premiums returned are not income butreturn of capital. They represent earnings which were previously taxed.

On the other hand, the amount of P750,000.00 is subject to tax because it representsincome being interest or earnings of the premium and not return of capital. (Ibid)

Linus purchased a life annuity for P500,000 which will pay him P120,000 a year. The life expectancy of Linus is 12 years. Under Section 32 of NIRC of 1997, which of the following will Linus be able to exclude from his grossincome: a. P940,000

b. P500,000 c. P1,440,000 Choose one of the above answers and explain your choice. (1986)

P500,000. the said amount represents a return of premiums paid by Linus which is notincome but return of capital. They represent earnings which were previously taxed. [Sec(B) (2), NIRC of 1997]

Born of a poor family on 14 February 1952, Mario worked his way throughcollege. After working for more than 12 years in X ManufacturingCorporation, Mario decided to retire and avail of the benefits under the

very reasonable retirement plan maintained by his employer. On the day of his retirement on 30 April 2002, his endowment insurance policy, for

which he was paying an annual premium of P1,520 since 1982 also matured.



He was then paid the face value of his insurance policy in the amount of P50,000.

Is his P50,000 insurance proceeds exempt from income taxation? (1991)

Not all of the P50,000 would be exempt. Only the amount of P30,400 considered as areturn of premiums would be exempt while the balance of P19,600 representing theinterest or earnings of the premium would be subject to tax.The amount of P30,4000 represents a return of premiums paid by Marcelo which is notincome but return of capital. They represent earnings which were previously taxed.[Sec.32 (B) (2), NIRC of 1997]

GIFTS, BEQUESTS AND DEVISES

Explain whether or not the following taxpayer is subject to income tax onher described item received:

Mrs. Y, wife of a deceased employee, received financial benefits voluntarily voted upon by the Board of Directors of the employer-company inrecognition of her husband’s long and loyal service and primarily to helpher meet financial needs. (1988)

Mrs. Y is not subject to income tax on the financial benefits she received because there were no services rendered by Mrs. Y. It could not also be considered as income of thedeceased employee because the giving was not in payment for services rendered. Sincethere was no consideration given, it is a gift and not income.

Mr. Osorio, a bank executive, while paying golf with Mr. Perez, amanufacturing firm executive, mentioned to the latter that his (Osorio’s)

bank had just opened a business relationship with a big foreign importer of goods whic h Perez’ company manufactures. Perez requested Osorio tointroduce him to this foreign importer and put in a good word for him(Perez), which Osorio did. As a result, Perez was able to make a profitable

business deal with the foreign importer.

In gratitude, Perez, in behalf of his manufacturing firm, sent Osorio anexpensive car as a gift. Osorio called Perez and told him that there was



really no obligation on the part of Perez or his company to give suchexpensive gift. But Perez insisted that Osorio keep the car. The company of Perez deducted the cost of the car as a business expenses.

The Commissioner of Internal Revenue included the fair market value of the car as income of Osorio who protested that the car was a gift andtherefore excluded from income. Who is correct, the Commissioner orOsorio?

Mr. Osorio is correct. Where the taxpayer receives a car from a corporation forfurnishing the names of potential customers, the same is a gift excluded from incometaxation.(Duberstein v. Commissioner of Internal Revenue)

Mr. Rodrigo, an 80-year old retired businessman, fell in love with a 20-yearold Tetchie Sonora, a nightclub hospitality girl. Although she refused tomarry him, she agreed to bbe his “live in” partner.

In gratitude, Mr. Rodrigo transferred to her a condominium unit, wherethey both live, under a deed of salee for P10 million. Mr. Rodrigo paid thecapital gains tax of 6% of P10 million.

The Commissioner found that the property was transferred to Tetchie

Sonora by Mr. Rodrigo because of the companionship she was providinghim. Accordingly, the Commissioner made a determination that Sonora hadcompensation income of P10 million in the year the condominium wastransferred to her and issued a tax deficiency income tax assessment.

Tetchie Sonora protests the assessment and claims that the transfer of thecondominium unit was a gift and therefore excluded from income. How will

you rule on the protest of Tetchie Sonora? Explain. (1995)

Protest granted. There was no legally demandable obligation on the part of Sonora to getthe condominium unit. This is because there was no consideration she gave to Mr.Rodrigo in exchange for the condominium unit. The giving stemmed from a pure act of liberality on the part of Mr. Rodrigo which is a gift excluded from gross income.



X, a multinational corporation doing business in the Philippines, donatedto Mr. Y, its resident manager in the Philippines.

Assuming the shares of stock were given to Mr. Y in consideration of his

services to the corporation, what is the tax implication? Explain. (1996)

The value of the shares shall be taxable as a compensation income because it was paid asa result of employer-employee relationship.

COMPENSATION FOR INJURIES OR SICKNESS

Are moral damages awarded a litigant for mental anguish on account of alibelous article written about him taxable as income or not? Why? (1964)

Moral damages are taxable as income. Mental anguish is not physical injuries, thereforemoral damages awarded due to moral anguish are not excluded from income. Amount received as a compensation for personal injuries plus amounts of any damagesreceived on account of such injuries are excluded from taxable income if the personalinjuries are physical in character.

Exclusions from taxable income are considered as exemptions from taxation, hence to be interpreted in strictissimi juris against the taxpayer. The words “personal injuries”

should be given a restrictive meaning to refer only to physical injuries. Thisinterpretation finds basis in Sec. 32 (B) (4), NI RC of 1997 which refers to “Accident orHealth Insurance or under Workmen’s Compensation Acts, both of which refers to“physical injuries or sickness”. This could only mean physical injuries.

In a certain civil case, plaintiff was awarded damages by the court in thesum of P20,000 representing profit he failed to realize on account of defendant’s failure to comply with his obligation to said plaintiff. Are thosedamages taxable against him? (1967)

Yes, because damages which are excluded from gross income are only those that paid asa result of injuries or sickness. Furthermore, since this is “unearned income” than he would have paid income taxes on the income if he was not previously deprived of suchincome. It is only just that upon recovery he should pay income taxes on the same.



An accident solely attributable to the criminal negligence of the driver of BBus Company resulted in the death of X’s wife, physical injuries to X thatprevented him from working for a month, and the total wreck of X’s brandnew car which he had bought for P400,000.

In the action for damages filed by X against B Bus Company, the courtawarded the following; p30,000 for X’s injuries consisting mainly in theloss of his right hand; P25,000 for X’s loss of one month salary; P25,000 fo rthe death of his wife and P100,000 moral damages on account of such loss;and P800,000 for the loss of X’s car, the value of which had in themeantime doubles on account of inflation.

How would you treat each of the above items of damages for income tax

purposes? Explain (1984)

The amount of P30,000 for X’s injuries consisting in the loss of his right hand, P25,000for the death of his wife, and the P100,000 moral damages arising from the death of X’s wife are all excluded from gross income. They represent amounts of damages received by suit as compensation for injuries. Consequently, such amounts are not consideredincome. [Sec. 32 (B) (4), NIRC of 1997]

The P800,000 is partly taxable. The first P400,000 representing the value of thedamaged car is not taxable because it is merely compensation or replacement of what Xlost. Consequently, there is no income. The increase in value of the car in the amount of P400,000 is taxable income because it was a damage payment arising from thedestruction of the car and not from the physical injuries arising from sickness oraccident.

The P25,000 award representing salary not earned as a result of the accident is taxable because it is merely a replacement of income that is taxable if earned. Exclusions are to be strictly construed as they constitute tax exemptions.

The widow and children of a passenger who died in an airplane crash werepaid P1,200,000 by the airline. This figure was reached after negoatiation

between the heirs of the deceased and the insurer of the airline, the latterhaving received indubitable evidence that the deceased had a net income of P120,000 at the time of his death, and that 10 productive years would have



insured financial stability to his family. Should the heirs declare thisamount in their income tax returns. State your answer. (1970)

No, the amount of P1,200,000 should not be declared in the heir’s income tax returns.

The amount represents damages received on account of personal injuries (whichincludes death) by agreement hence to be excluded from gross income. [Sec. 32 (B) (4)NIRC of 1997]. The reason for the exclusion is that the payment is mere compensationfor injuries suffered and not income. Furthermore, the amounts were not existing at thetime of the death of the decedent.

Patroclus was injured in a vehicular accident in 1999. He incurred and paidmedical expenses of P10,000 and legal fees of P5,000 during the year. In2002, he recovered P35,000 as settlement from the insurance company

which insured the car owned by the other party involved in the accident.From the above payments and transactions, the amount taxable toPatroclus in 20002 is:a. P20,000

b. P25,000 c. P30,000 d. P35,000 e. None of the above.

Choose one of the above answers and give reasons for your choice. (1986)

None of the above. All of the recovered amounts are not income because they are merely compensation for actual losses suffered. They do not constitute taxable gain as they werenot received as payment for services, interest or profit from investment.

Mr. Infante was hit by a wayward bus while on his way to work. He survived but had to pay P400,000 for his hospitalization. He was unable to work forsix (6) months which meant that he did not receive his usual salary of

P10,000 a month or a total of P60,000. He sued the bus company and wasable to obtain a final judgment awarding him P400,000 as reimbursementfor his hospitalization, p60,000 for the salaries he failed to receive whilehospitalized, P200,000 as moral damages for his pain and suffering, andP100,000 as exemplary damages. He was able to collect in full from the

judgment.



How much income did he realize when he collected on the judgment?Explain. (1995)

P60,000 because this amount is merely a replacement of income which should have

been subjected to tax if earned.

All of the other receipts are excluded from gross income. They represent amounts of damages received by suit as compensation for injuries. Consequently, such amount areconsidered as income. [Sec. 32 (B) (4), NIRC of 1997]

RETIREMENT BENEFITS, GRATUITIES, PENSION, ETC

RSV was retired by his employer corporation in 1997 and paid P100,000 as

a retirement gratuity without any deduction of withholding tax. Thecorporation subsequently became bankrupt.

Can the BIR subject the P100,000 retirement gratuity to income tax?Discuss.

No. It is clear that “RSV was retired by his employer xxx.” The only conclusion thatcould be drawn is that he was separated beyond his control. Thus, the retirementgratuity he received is excluded from gross income and not subject to income tax.

Romulus, 48 years of age and a retired employee had among his propertiesand transactions at the end of the 1998 taxable year:

Retirement benefits in the amount of P200,000.00 received by him in 2002under a qualified retirement plan maintained by his former employercompany. Romulus voluntarily retired after 20 years of service.

Is the above item subject to the regular tax rates found in the schedule

under Section 24 (A) of the NIRC, which states that the tax rates on citizensand residents? Explain your answer.

Yes, because it is not among excluded incomes. There is no showing that Romulusretirement was compulsory, hence it could not be said that his separation was beyondhis control. The amount of P200,000.00 could not also be considered as tax-exemptretirement because Romulus is only 48 years which is below 50 years. Neither is there a



statement in the facts that he has worked for the same employer for at least ten (10) years or that he has not previously enjoyed tax-free retirement benefits.

Explain whether or not the following taxpayer is subject to the income tax

on the described item received:

Retiree from AG&P receiving retirement benefits from the company retirement plan, qualified by the BIR. (1988)

The retirement benefits would be subject to tax because there is no showing that theretiree is a qualified tax-free retiree. The problem does not show that the retiree is above50 years, that he has served his employer for more than 10 years and that he has notpreviously availed of tax-free retirement.

Furthermore, there is no showing that the separation through retirement wass beyondthe retiree’s control.

“A” worked for “Z” from 1970 to 2002. Beginning 2003 “A’s” employment was terminated as he could no longer perform h is duties. “A” was informed by “Z” that he will get a pension of P5,000.00 a month for the rest of hislife. “Z” has neither standardized pension plan nor a qualified pensionplan. “A’s” pension was paid from “Z’s” operating revenues and “Z”deducted the payments as necessary and ordinary business expense. On thepart of “A”, must he treat his pension as income? Reasons. (1989)

No, because they are amounts received by “A” from his employer as a consequence of histermination from the service for a cause beyond his control. The pension is excludedfrom gross income.

Born of a poor family on 14 February 1954, Mario worked his way throughcollege. After working for more than 12 years in X ManufacturingCorporation, Mario decided to retire and avail of the benefits under the

very reasonable retirement plan maintained by his employer. On the day of his retirement on 30 April 2002 he received P400,000.00 as retirement

benefit.

Is Mario’s P400,000.00 retirement benefit subject to income tax?



Yes. Mario’s retirement benefits are subject to income tax as he was only 48 years old atthe time of his retirement. For retirement to be excluded from gross income, hence notsubject to tax, the retiree must be above 50 years.

Pedro Reyes, an official of Corporation X, asked fo r an “earlier retirement because he was emigrating to Australia. He was paid P2,000,000.00 asseparation pay in recognition of his valuable services to the corporation.

Juan Cruz, another official of the same company, was separated foroccupying a redundant position. He was given P500,000.00 as separationpay.

Jose Bautista was separated due to his failing eyesight. He was given

P500,000.00 as separation pay.

All the three (3) were not qualified to retire under the BIR-approvedpension plan of the corporation. a) Is the separation pay given to Reyes subject to income tax?

b) How about the separation pay received by Cruz? c) How about the separation pay received by Bautista? (1994)

a) Yes. The voluntary action on the part of Pedro Reyes, is not considered as a cause

beyond his control, the separation is not excluded from gross income. It is included fortax purposes. He does not qualify for tax-free retirement because there is no showingthat he is 50 years or over, that he has rendered at least 10 years of service withCorporation X, and that he has not previously availed of the tax-free retirement. b) No, because Cruz was separated for a reason beyond his control as a result of redundancy.c) No. The separation pay received by Bautista was due to his failing eyesight, a cause beyond his control.

Mr. Jacobo worked for a manufacturing firm. Due to this business reversesthe firm offered a voluntary redundancy program in order to reduceoverhead expenses. Under the program, an employee who offered to resign

would be given separation pay equivalent to his three months’ basic salary for every year of service. Mr. Jacobo accepted the offer and receivedP400,000.00 as separation pay under the program.



After all the employees who accepted the offer were paid, the firm found itsoverhead still excessive. Hence, it adopted another redundancy program.

Various unprofitable departments were closed. As a result, Mr. Kintanar was separated from the service. He also received P400,000.00 as

separation pay.

a) Did Mr. Jacobo derive income when he received his separation pay?Explain.

b) Did Mr. Kintanar derive income when he received his separation pay?Explain. (1995)

a) Yes. Mr. Jacobo voluntarily resigned hence the separation pay he received, not beingfor a cause beyond his control, is not excluded from gross income. Furthermore, the

separation pay is not also considered as tax-free retirement because there is no showingthat he is 50 years or over, that he has rendered at least 10 years service with hisemployer, and he has not previously availed of the tax-free retirement. b) No, because Mr. Kintanar was separated for a reason beyond his control which isredundancy. The amount he received is excluded from gross income, hence, not taxable.

Mr. Quiroz worked as chief accountant of a hospital for forty-five years. When he retired at 65, he received a retirement pay equivalent to twomonths salary for every year of service as provided in the hospital’sretirement plan in view of his loyalty and invaluable services for forty-five

years; hence, it resolved to pay him a gratuity of P1 million over and abovehis retirement pay.

The Commissioner of the Internal Revenue taxed the P1 million as part of the gross compensation income of Quiroz who protested that it was allexcluded from income because (a) it was retirement pay and (b) it was agift.

a) Is Mr. Quiroz correct in claiming that the additional P1 million wasretirement pay and therefore excluded from income? Explain.

b) Is Mr. Quiroz correct in claiming that the additional P1 million was a giftand therefore excluded from income? Explain. (1995)



a) No, because the P1 million was beyond the amount paid from the reasonableretirement plan. b) Yes. The P1 million was given on the basis of the pure act of liberality on the part of the hospital. There was no obligation on the part of the hospital to give the amount.

X, an employee of ABC Corporation, died. ABC Corporation gave X’s widow an amount equivalent to X’s salary for one year.

Is the amount considered taxable income to the widow? Why? (1996)

The amount given is not considered taxable income to the widow because it is amongthe exclusions from gross income.

The amount received by the heirs of an employee as a consequence of separation of suchemployee from the service of the employer because of death is excluded from grossincome. The money given to X’s heir, his widow because of X’s death the amount is notincome. (Sec. 32 (B) (6) (b), NIRC of 1997)

A Co., a Philippine corporation, has two divisions- manufacturing andconstruction. Due to the economic situation, it had to close its constructiondivision and lay-off the employees in that division. A Co., has a retirementplan approved by the BIR, which requires a minimum of 50 years of age and

10 years of service in the same employer at the time of retirement.

There are 2 groups of employees to be laid off: (a) Employees who are at least 50 years of age and has 10 years of service atthe time of termination of employment. (b) Employees who do not meet either the age or length of service A Co.,plans to give the following:

For category (A) employees – the benefits under the BIR approved plan plus

an ex gratia payment of one month for every year of service.

For category (B) employees – one month for every year of service.

A Co., seeks your advice as to whether or not it will subject any of thesepayments to WT. Explain your advice. (1999)



The payments should not be subject to withholding tax (WT). The separation, due to theeconomic situation, is one which is beyond the employees control, hence excluded fromgross income and not subject to income taxation.

To start a business of his own, Mr. Mario de Guzman opted for an early retirement from a private company after ten (10) years of service. Pursuantto the company’s qualified and app roved private retirement benefit plan, he

was paid his retirement benefit which was subjected to withholding tax. a) Is the employer correct in withholding the tax? Explain.

b) Under what conditions are retirement benefits received by officials andemployees of private firms excluded from gross income and exempt fromtaxation? (2000)

a) Yes. Mario is not entitled to a tax-free retirement because he has not complied withthe requirements, specifically the absence of showing that he is at least fifty 50) ears of age at the time of retirement and that he has not previously availed of the tax-freeretirement.

b) Retirement benefits received under Republic Act No. 7614 and those received by officials and employees of private firms, whether, individual or corporate, in accordance with employer’s reasonable private benefit plan approved by the BIR, are excluded fromgross income and exempt from income taxation if the retiring official or employee was:

1) In service of same employer for at least ten (10) years.2) Not less than fifty (50) years of age at time of retirement;3) Availed of the benefit of exclusion only once. [Sec. 32 (B) (6) (a), NIRC of 1997] Theretiring official or employee should not have previously availed of the privilege underthe retirement plan of the same or another employer. [1st par., Sec. 2.78 (B) (1), Rev.Regs. 2-98]

Maribel Santos, a retired public school teacher, relies on her pension formthe GSIS and the interest income from a time deposit of P500,000.00 with

ABC Bank.

Is Miss Santos liable to pay any tax on her income? (1994)



Her pension is not subject to tax as it is an exclusion from income. The interest from thetime deposit is subject to the final tax of 20% as passive income.

Mr. Javier is a non-resident senior citizen. He receives a monthly pension

from the GSIS, which he deposits with the PNB-Makati Branch. Is heexempt from income tax and therefore not required to file an income taxreturn? (2000)

Yes. Mr. Javier does not have any income which is required to be reported in the incometax return. His pension is not subject to tax as it is an exclusion from income. Theinterest form the time deposit is subject to the final tax of 20% as passive income, andtherefore not required to report in an income tax return.

MISCELLANEOUS ITEMS EXCLUDED FROM GROSSINCOME

Evelyn is a graduate student of U.P. In January, 2002, she won the Palanca Award for an outstanding short story she wrote. The award was P25,000.00in cash. In February, 2002, she was also named most Valuable Player of the

Varsity Volleyball Team and she was given a trophy plus P10,000.00.Finally, in March, 2002, she received a Fellowship Award from theUniversity of California to pursue a master’s degree in American Literature.The fellowship is for $10,000.00 plus free board and lodging fro two (2)semesters. Should Evelyn include these awards and fellowship in her grossincome? Reasons. (1993)

All of the awards and monetary value of her fellowship are excluded from her grossincome.The awards were made primarily in recognition of her educational and literary achievements. There is no showing in the problem that Evelyn was selected due to any

action on her part to join the contest. And that she is required to render substantialfuture services as a condition to receiving the prize or award. [Sec. 32 (B) (7) (c), NIRCof 1997]

Jose Miranda, a young artist and designer, received a prize of P100,000.00fro winning in the on-the-spot peace poster contest sponsored by a local



Lions Club. Shall the award be included in the gross income of the recipientfor tax purposes? Explain. (2000)

Yes. It is apparent from the nature of an on-the-spot poster contest that there was action

on the participant’s part to enter the contest. [Sec. 32 (B) (7) (c), NIRC of 1997], hencethe prize is not excluded from income taxation.

Onyok, an amateur boxer, won in a boxing competition sponsored by theGold Cup Boxing Council, a sports association duly accredited by thePhilippine Boxing Association. Onyok received the amount of P500,000 ashis prize which was donated by Ayala Land Corporation. The BIR tries tocollect income tax on the amount received by Onyok who refuses to pay.Decide. (1996)

The P50,000 prize is subject to tax. The prize was granted to Onyok, an athlete, in alocal or international sport tournament, but there is no showing in the problem that thePhilippine Boxing Association, is the national sports associations for boxing duly accredited by the Philippine Olympic Committee. (Sec. 32 (B) (7) (d), NIRC of 1997)

In June 2002, the Sangguniang Bayan authorized a mid-year bonus of P3,000, a cash gift of P5,000 and transportation and representationallowance of P6,000 for each of the municipal employees. a. Is the midyear bonus subject to any tax?

b. How about the cash gift? c. How about the transportation and representation allowance?

Since the total amounts do not exceed P30,000 for the year, then they are excluded fromgross income. (Sec. 32 (B) (7) (e), NIRC of 1997)

tax2 exclusion from gross income

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