Taxable Income Deduction Quiz

Contributions or gifts shall be allowable as deductions only if verified under the rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner. Research and Development. A taxpayer may treat research or development expenditures which are paid or incurred by him during the taxable year in connection with his trade, business or profession as ordinary and necessary expenses which are not chargeable to ______ account.

The expenditures so treated shall be allowed as deduction during the taxable year when paid or incurred.- usually company of soap, alcohol or those that always innovate or discover new things that has a lot of expenses (for patent, trademark, etc). Amortization of Certain Research and Development Expenditures. At the election of the taxpayer and in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner, the following research and development expenditures may be treated as deferred expenses: (a) Paid or incurred by the taxpayer in connection with his trade, business or profession; (b) Not treated as expenses under paragraph (1) hereof; and (c) Chargeable to ______ account but not chargeable to property of a character which is subject to depreciation or depletion.

The expenditures so treated shall be allowed as deduction during the taxable year when paid or incurred.- usually company of soap, alcohol or those that always innovate or discover new things that has a lot of expenses (for patent, trademark, etc). Amortization of Certain Research and Development Expenditures. At the election of the taxpayer and in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner, the following research and development expenditures may be treated as deferred expenses: (a) Paid or incurred by the taxpayer in connection with his trade, business or profession; (b) Not treated as expenses under paragraph (1) hereof; and (c) Chargeable to ______ account but not chargeable to property of a character which is subject to depreciation or depletion.

In addition to the expenses allowable as deductions under this Chapter, a private educational institution may elect to deduct expenditures otherwise considered as capital outlays of depreciable assets incurred during the taxable year for the expansion of school facilities or to deduct allowance for depreciation thereof under Subsection (F) hereof, upon the recommendation of the Commissioner of Internal Revenue.

No deduction shall be allowed in respect of interest under the succeeding subparagraphs: (a) If within the taxable year an individual taxpayer reporting income on the cash basis incurs an indebtedness on which an interest is paid in advance through discount or otherwise: Provided, That such interest shall be allowed as a deduction in the year the indebtedness is paid: Provided, further, That if the indebtedness is payable in periodic amortizations, the amount of interest which corresponds to the amount of the principal amortized or paid during the year shall be allowed as deduction in such taxable year;

No deduction shall be allowed in respect of interest under the succeeding subparagraphs: (b) If both the taxpayer and the person to whom the payment has been made or is to be made are persons specified under Section 36 (B); or

No deduction shall be allowed in respect of interest under the succeeding subparagraphs: (c) If the indebtedness is incurred to finance petroleum exploration.

In computing taxable income, such deferred expenses shall be allowed as deduction ______ distributed over a period of not less than sixty (60) months as may be elected by the taxpayer (beginning with the month in which the taxpayer first realizes benefits from such expenditures).The election provided by paragraph (2) hereof may be made for any taxable year beginning after the effectivity of this Code, but only if made not later than the time prescribed by law for filing the return for such taxable year.The method so elected, and the period selected by the taxpayer, shall be adhered to in computing taxable income for the taxable year for which the election is made and for all subsequent taxable years unless with the approval of the Commissioner, a change to a different method is authorized with respect to a part or all of such expenditures.The election shall not apply to any expenditure paid or incurred during any taxable year for which the taxpayer makes the election.(3) Limitations on Deduction.- This Subsection shall not apply to: (a) Any expenditure for the acquisition or improvement of land, or for the improvement of property to be used in connection with research and development of a character which is subject to depreciation and depletion; and (b) Any expenditure paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral, including oil or gas.

The method so , and the period s by the taxpayer, shall be adhered to in computing taxable income for the taxable year for which the election is made and for all subsequent taxable years unless with the approval of the Commissioner, a change to a different method is authorized with respect to a part or all of such expenditures.The election shall not apply to any expenditure paid or incurred during any taxable year for which the taxpayer makes the election.(3) Limitations on Deduction.- This Subsection shall not apply to: (a) Any expenditure for the acquisition or improvement of land, or for the improvement of property to be used in connection with research and development of a character which is subject to depreciation and depletion; and (b) Any expenditure paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral, including oil or gas.

This Subsection shall not apply to: (a) Any expenditure for the acquisition or improvement of land, or for the improvement of property to be used in connection with research and development of a character which is subject to ______ and depletion; and (b) Any expenditure paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral, including oil or gas.