IT - Exclusions From Gross Income

Question 1

(T/F) The proceeds of life insurance policies paid to the heirs or beneficiaries upon death of the insured shall be exempt from income tax.

Answer 1

True. The proceeds of the life insurance are treated more as an indemnity for the life lost instead of as a gain, profit, or income.

Question 2

(T/F) The amount received by the insured, as a return of premiums paid by him under life insurance, endowment, or annuity contracts, either during the term, or at the maturity, or upon surrender – excluded from gross income

Answer 2

True.

Notes:
- The excess of the proceeds received over the premiums paid is included in gross income

Question 3

What are the requisites for CARCELS prizes & awards to be excluded from gross income?

Answer 3

Charitable
Artistic
Religious
Civic
Educational
Literary
Scientific

1. The recipient was selected without any action on his part to enter the contest or proceeding
2. The recipient is not required to render substantial future services as a condition to receiving the prize or award

Question 4

What are the requisites for prized and awards to athletes to be excluded from gross income?

Answer 4

1. Local/international sports competitions/tournaments

2. Sanctioned by national sports associations

Question 5

(T/F) 13th month pay and other benefits are absolutely excluded from gross income.

Answer 5

False. Total exclusion shall not exceed 82,000 pesos.

Question 6

(T/F) Compulsory or mandatory GSIS, SSS, PHIC, PAGIBIG, and union dues are excluded from gross income.

Answer 6

True. Further, contributions in excess of the mandatory contributions are not deductible from gross income.

Question 7

(T/F) Separation pay from voluntary retirement shall be excluded from gross income.

Answer 7

False. For exclusion, the separation must have been due to:
(A) sickness
(B) death
(C) other physical disability
(D) any cause BEYOND CONTROL of the employee

Question 8

(T/F) SSS and GSIS benefits are excluded from gross income.

Answer 8

Yes!

Question 9

(T/F) Gains from the sale, exchange or retirement of bonds, debentures, or other certificates of indebtedness with a maturity of exactly five years are excluded from gross income.

Answer 9

False. Maturity should be more than five years.

Question 10

PERA stands for…

Answer 10

Personal Equity and Retirement Account

OR

Personnel Economic Relief Allowance (to government employees)

Question 11

(T/F) Forgiveness of debt for services rendered to a creditor are included in gross income.

Answer 11

Generally yes, unless the creditor is a corporation, in which the condonation of debt amounts to distribution of dividend