INCOME TAXATION

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Transcript of INCOME TAXATION

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Concept of Income

By: Armia P. Leonardo

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Income amount of wealth accumulated

plus savings and the value of the personal consumption .

“income” refers to all earning derived from service rendered (labor), from capital (business or investment).

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Return on Capital• Sale = income• Sale must exceed its related

cost• Gain – a profit in excess of

capital as a result of exchange transactions.

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Distinctions between Income and other terms

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CapitalCapital Income

original investment or fund used in order to generate earnings which is called income. Wealth

Service of wealth

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Illustration

CapitalIncome

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Another Illustration

Capital

Income

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RevenueRevenue Income

funds accruing to the treasury of the government derived from tax, donation, grants and any other source.

refers to the earnings of individual persons, partnership, corporation or estate and trust whether or not subject to tax.

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ReceiptsReceipts Income

cash collected over a business period. may include capital as well as its earning

amount after excluding capital invested , cost of good sold and other deductions allowed by law .

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Nontaxable Income • Should be excluded by

law or treaty from taxation .

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Taxable Income

• Amount of income which the tax rate prescribed by law.

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To God be the Glory!

03-22-15