[go: up one dir, main page]
Scribd
Upload
56 views1 page

Optional Standard Deduction Computation

The document discusses the computation of optional standard deductions (OSD) for individuals and corporations. Taxpayers may choose between itemized deductions or the OSD, which allows a 40% deduction of total gross income. The example shows how to calculate the OSD by taking 40% of total gross income for both an individual and corporation to determine the allowed OSD amount. This amount is then deducted from total gross income to arrive at taxable net income.

Uploaded by

Nelly Gomez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as ODT, PDF, TXT or read online on Scribd
56 views1 page

Optional Standard Deduction Computation

The document discusses the computation of optional standard deductions (OSD) for individuals and corporations. Taxpayers may choose between itemized deductions or the OSD, which allows a 40% deduction of total gross income. The example shows how to calculate the OSD by taking 40% of total gross income for both an individual and corporation to determine the allowed OSD amount. This amount is then deducted from total gross income to arrive at taxable net income.

Uploaded by

Nelly Gomez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as ODT, PDF, TXT or read online on Scribd
You are on page 1/ 1

Computation of Optional Standard Deductions

Allowed Deductions, may either be:


1. Itemized Deductions- subject to 7 requirements OR
2. Optional Standard Deduction (OSD)- 40%

Individual Corporati
on
Gross Sales P100,000 P100,000
Less: Sales Returns, Allowance & Discount 5,000 5,000
Net Sales P95,000 P95,000
Less: Cost of Sales *disregard----45,000 45,000
Gross Profit P95,000 P50,000
Add: Other Income 10,000 10,000
Total Gross Income P105,000 P60,000
X OSD Rate 40% 40%
Allowed Optional Standard Deductions P42,000 P24,000
*disregard for computation of OSD for individuals only

Application

Individual Corporation
Gross Sales P100,000 P100,000
Less: Sales Returns, Allowance 5,000 5,000
& Discount
Net Sales P95,000 P95,000
Less: Cost of Sales *disregard----45,000 45,000
Gross Profit P95,000 P50,000
Add: Other Income 10,000 10,000
Total Gross Income P105,000 P60,000
Less: Allowed Deductions 42,000 24,000
Taxable Net Income P63,000 P36,000
* NOT DEDUCTED

You might also like