Practice question
A mixed-income resident citizen has PHP500,000 fully taxable compensation and PHP1 million qualifying business gross sales. The taxpayer validly uses graduated rates and elects maximum OSD only for the business; all relevant conditions are met. With no other adjustments, what amount enters the combined taxable-income computation?
- PHP1.1 million: PHP500,000 salary plus PHP600,000 business income after OSD
- PHP900,000 by applying40% OSD to both salary and business
- PHP600,000 by discarding all salary
- PHP500,000 because OSD exempts the business
- PHP1.5 million because OSD is never allowed for business income
Legal references
- RA10963 TRAIN: https://lawphil.net/statutes/repacts/ra2017/ra_10963_2017.html Sections5 and11, mixed income and Section34 compensation exclusion/OSD.
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