Allowable Deductions

As a general rule, all expenses claimed for deduction for income taxation purposes must be NECESSARY, ORDINARY, and SUBSTANTIATED, otherwise, these expenses cannot be allowed for deduction.

• True

• False

As general rule, compensation income earners under employer-employee relationship and self-employed taxpayers or those having business may deduct pertinent items from their gross income to arrive at net taxable income.

• True

• False

• 995,000

• 760,000

• 825,000

• 550,000

Rentals on lease of property are deductible provided taxpayer does not acquire interest other than as a mere possessor

• True

• False

Section 34 of the National Internal Revenue Code

• Allowable Deductions

• Itemized Deductions

• Deductions from Gross Income

• Itemized Deductions from Gross Income

ABC Co. is engaged in the sale of goods and services with net sale and net service revenue of P2M and P1M, respectively. The actual Entertainment, Amusement, Representation expense amounted to P21,000. How much is the allowable deduction to be claimed as EAR Expenses:

• 21,000

• 17,000

• 20,000

• 24,000

The allowable deduction for interest expense shall be reduced by 42% of the interest income subjected to final tax effective January 1, 2009.

• True

• False

• 210,000

• 140,000

• 190,400

• 170,400

In the case of a nonresident alien individual engaged in trade or business in the Philippines and a resident foreign corporation, the deductions for taxes shall be allowed only if and to the extent that they are connected with income from sources within the Philippines.

• True

• False

• 60,500

• 20,500

• 120,500

• 109,500