Gross Income, Items of Gross Income, Compensation Income,

Gross Income- income of whatever kind and in whatever form derived from any source but not including items of gross income subject to final income tax and exempt income.

Items in Gross Income
1. compensation for services in whatever form paid, including, but not limited to fees, salaries, wages, commissions and similar items;
2. gross income derived from business
3. gains derived from dealings in property;
4. interests;
5. rents
6. royalties
7. dividends
8. annuities
9. prizes and winnings
10. pensions
11. partner’s distributive share of the gross income of the general professional partnership

COMPENSATION INCOME- all kinds of compensation for services rendered as a result of an employer-employee relationship, which includes
1. salaries, wages and fees;
2. commissions paid to salespersons or those paid on insurance premiums
3. compensation for services on the basis of a percentage or profits
4. honoraria
5. bonuses, tips
6. allowances for transportation, representation and entertainment
7. pensions or retiring allowances paid by private persons or by government except pensions exempt by law from tax)
8. amounts received for refraining from rendering services
9. amounts received as an award for special services or suggestions to employer or for the prevention of theft/ robbery.
10. Prizes won in competitive contest conducted for non-commercial or commercial purposes (for services rendered)

Exclusions- incomes exempt from income tax

Items excluded from Gross income
1. proceeds of life insurance
2. amounts received by insured as return of premium
3. gifts, bequest and devisees
4. interests on government securities and obligations
5. compensation for injuries or sickness
6. income exempt under treaty
7. retirement benefits, pensions, gratuities
8. miscellaneous items

a. income of foreign governments;
b. income from any public utility or from the exercise of any essential government function

accruing to the government or any of its political subdivisions;
c. income derived as rewards under sec. 316 of the NIRC;
d. interest earned from deposits maintained in banks under the expanded

foreign currency deposit system
e. prizes and awards made primarily in recognition of religious, charitable, scientific,

educational, artistic, literacy or civic achievement but only if the recipient was selected

without any action on his part to enter the contest or proceeding and is not required

to render substantial future services as a condition to receiving the prize or award
f. interest exempt under special laws.