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Question

Question:

Mr. Santos is a self-employed individual engaged in the business of selling electronic gadgets. For the taxable year 2021, he reported a gross income of Php 2,000,000. However, Mr. Santos is unsure about the expenses that he can deduct from his gross income in order to arrive at his taxable income.

In relation to deductions from gross income, particularly on the topic of non-deductible items, explain whether the following items can be deducted by Mr. Santos:

1. Expenses incurred for personal purposes, such as vacations and entertainment;
2. Financial and legal expenses for acquiring property used in the trade or business;
3. Donations made to qualified charitable institutions;
4. Penalties paid for the late remittance of taxes;
5. Expenses incurred for illegal activities;
6. Amortization expenses for intangible assets acquired for business use;
7. Expenses for the purchase of luxury vehicles for business purposes;
8. Depreciation expenses for buildings used in the trade or business.

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Answer