Income Taxation: Laws, Principles, and Applications

INCOME TAXATION

LAWS, PRINCIPLES AND APPLICATIONS

This study guide comprehensively explains the laws, principles, and applications associated with income taxation. It aims to provide students, practitioners, and taxpayers with a clear understanding of income tax principles and their real-world applications. The guide encompasses a structured and illustrated exploration of the subject matter, making it a valuable resource for self-taught learning as well as for exam preparation for accountancy and law students.

INTRODUCTION

Author: Rex B. Banggawan, CPA, MBA
Target Audience:

  • Accountancy students
  • CPA Board Exam candidates
  • Finance and Business students
  • Law students
  • Taxpayers
  • Tax practitioners

OVERVIEW OF CONTENTS

The guide is well-organized and breaks down the subject matter into distinct areas:

  1. Introductory concepts to taxation
  2. The concept of tax, tax laws, and tax administration
  3. The concept of gross income under taxation
  4. Taxation schemes, accounting period, methods, and income reporting
  5. Final income taxes
  6. Capital gains taxes
  7. Overview of the regular income tax
  8. Exclusions and exempt income
  9. Income subject to regular income tax
  10. Compensation income
  11. Fringe benefits and the fringe benefits tax
  12. Dealings in properties subject to regular tax
  13. Allowable deductions from gross income
  14. Specific regular tax rules applicable to individuals
  15. Specific regular tax rules applicable to corporations

CONCEPT MAP OF INCOME TAXATION

The concept map succinctly charts income taxation into four major constituencies:

  • Introductory concepts
  • Gross income
    • Final Income Taxation
    • Capital Gains Taxation
    • Regular Income Taxation
  • Taxable income determination for both individual taxpayers (progressive income tax) and corporate taxpayers (corporate income tax)

TABLE OF CONTENTS

PART I: INTRODUCTORY CONCEPTS

  • CHAPTER 1: Introduction to Taxation

    • Definition of taxation: Taxation is defined as the State's power, legislative process, and a method of distributing government costs.
    • Theories of cost allocation:
    • Lifeblood Doctrine
    • Powers of the State
    • Scope of taxation:
    • Constitutional limitations
    • Inherent limitations
    • Situs of taxation
    • Double taxation
    • Tax escapes, amnesty, and condonation
    • Exercise Drills
    • Practice questions and exercises that reinforce understanding.

  • CHAPTER 2: Taxes, Tax Laws, and Tax Administration

    • Nature, sources, and elements of tax laws
    • Classification of taxes and tax collection systems
    • Principles of a sound tax system
    • Powers of the Bureau of Internal Revenue (BIR)
    • Exercise Drills

PART II: TAXPAYER CLASSIFICATIONS

  • CHAPTER 3: Introduction to Income Taxation
    • Definition and elements of gross income
    • Recovery of loss from capital versus recovery of profit losses
    • Exercise Drills

INCOME RECOGNITION, MEASUREMENT, AND REPORTING

CHAPTER 4: Tax Schemes, Periods, Methods, and Reporting

  • Costing procedures for stocks
  • Classification and accounting period
  • Compliance in transactional income taxation
  • Exercise Drills

FINAL INCOME TAXATION

  • CHAPTER 5: Features of Final Income Taxation
    • The final withholding system, passive income, and final income tax characteristics
    • Special rules and reporting formats related to individual and corporate final income taxes
    • Exercise Drills

REGULAR INCOME TAXATION

  • CHAPTER 6: Overview of the Regular Income Tax

    • Classification of corporate taxpayers and special corporate tax rules
    • Progressive tax rates and how they apply to individuals versus corporations

  • CHAPTER 7: The Implications of Income Tax

    • Exploration of various exemptions, deductions, and taxable situations

    …
    More detailed explanations follow in the appendix and further chapters, capturing all numerical data, statistics, and law definitions as outlined in each section of the transcript, focusing on the comprehensive aspect of each tax principle discussed and their real-world applications, exercises for better understanding, and additional references for quick access to relevant taxation laws.