PARTNERSHIP!!
-CONTRACT, WHEREBY 2 OR MORE PERSONS BIND THEMSELVES TO CONTRIBUTE
MONEY PROPERTY INDUSTRY OR CAPITAL. To a common fund with intention to divide
profit among themselves
-bawal mag 8% ang GPP
Income tax of partnerships
a.Partnership not subject to income tax GPP
-GPP - formed by persons exercising their common profession, no part of income of which is
derived from engaging in trade/business.
Because of the exemption of GPPS from income tax, income payments to them by their clients
are exempt from CWT.
-share of partners are subject to CWT
-Exempt from income tax yung GPP.
Tax liability of partners in exempt partnership GPP
1.persons engaging in business as partners in GPP shall be liable for income tax only in their
separate and individual capacities
2.each partner shall report as gross income his distributive share, actually or constructively
received, in net income of partnership. Share of partner in net profits of partnership shall be
taxable to partner, whether distributed or not. But where the result of partnership operation is a
loss, the loss will be divided among partners in same proportion as the net income, or as
provided in the partnership agreement. Each individual partner may then take up his share in
the loss in his income tax return as deductible loss.
3.Share of partner shall be subject to CWT of
:10% if current year income payment to partner is below 720,000
:15% if exceeds 720,000
4.For purposes of computing the distributive share of partners, the net income of partnership
shall be computed in same manner as corporation.
The distributable net income of GPP may be determined by claiming either itemized or OSD.
5.Partner comprising GPP can no longer claim further deduction from their distributive shares in
net income GPP
6.If partner also derives other income from trade, business or practce apart and distinct from his
share in net income of GPP, the deduction that can be claimed from this other income would
either be the itemized or OSD.
-add other income subject to FT (if shares tinatanong kasi hahatiin na lahat ng income)
If partnership is GPP and asked how much net distributive share of partners
Gross Income:
Opex: (less)
Net income from operations GPP:_______
Add: other income subject to FT:
Total distributable income of GPP:______
% share of partner (multiply):
Distributive share:_____
Multiply: CWT (15% or 10%):
NET DISTRIBUTIVE SHARE OF PARTNER:__________
IF GPP and asked how much taxable income & income tax payable ng partner
Gross Income of Partner:
Opex: (less)
Taxable Net Income:_________
ADD: Distributable Income of GPP (% share of partner then times sa net income from
operations ng GPP. Net income from operation wala dapat other income subject/not subject sa
FT):
Total Taxable Income:_______
THEN: TAX TABLE
Less: Magkano amount ng CWT share ng partner.
INCOME TAX PAYABLE:________
FOR GENERAL PARTNERSHIP
Tax liability of partners in a taxable partnership GP share of partners treated as dividend. Final
tax. Same as corp
Partner Final tax Tax base
rate
Citizen / Resident 10% Dividend or share in distributable after tax net income of
Alien partnership
NRA ETB 20%
NRA NETB 25%
>Itemized Deduction- itemized expenses ordinary and necessary incurred or paid for practice of
profession
>Optional standard deduction OSD - 40% gross income in lieu of itemized expenses
B.partnership subject to income tax GP treated as corporation
If partnership is General and asked how much net distributive share of partner
Gross Income:
Opex: (less)
Taxable Net Income:______
Less: Tax due (if MSME/NOT MSME 20% OR 25%)
Net Income after tax:_____
Add: Other income subject to FT:
Total distributable income of GP: _______
Multiply: % share of partner:
Distributive share of partner:_________
Final tax Dividend income (multiply if 10%, 20% or 25%)
NET DISTRIBUTIVE SHARE OF PARTNER:_______
