Lecture 01: Taxation for Corporations. [Income Taxation]
Summary
TLDRIn this accounting lecture, the concept of a corporation is explored as an artificial legal entity with rights and powers granted by law. The lecture distinguishes between domestic and foreign corporations based on the jurisdiction under which they are organized. It also delves into the classification of corporations, including one-person corporations and partnerships, and discusses the implications for taxation and income sources, differentiating between business income and passive income.
Takeaways
- 📚 A corporation is defined as an artificial being created by law, possessing rights and attributes as authorized by law.
- 🏢 Incorporation is likened to an artificial being, distinct from natural persons, and is governed by legal frameworks.
- 💼 The need to classify corporations arises from their unique taxation status and legal dependencies.
- 📊 Domestic corporations are those established under the laws of the Philippines, contrasting with foreign corporations.
- 🌐 Foreign corporations are created under the laws of countries other than the Philippines, highlighting their international nature.
- 🔍 Classification of corporations is crucial for determining their legal and fiscal responsibilities within a jurisdiction.
- 💼 The script mentions various types of corporations, including one-person corporations, coalitions, and private corporations.
- 🎰 Specific business entities like casinos and accounting firms are highlighted, emphasizing their role in the corporate landscape.
- 💼 The concept of income is discussed, distinguishing between business income, which is regular and for profit, and passive income.
- 📈 The lecture also touches on the importance of understanding the legal definitions and classifications for proper accounting and financial management.
Q & A
What is the legal definition of a corporation according to the script?
-A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incident to its existence.
Why are corporations referred to as 'artificial beings' in the script?
-Corporations are called 'artificial beings' because they are legal entities created by law, not by natural processes like human beings.
What is the significance of the right of succession in a corporation?
-The right of succession ensures that a corporation can continue its existence and operations even if its members or shareholders change, as it is a separate legal entity from its owners.
How does the script differentiate between a domestic and a foreign corporation?
-A domestic corporation is created or organized under Philippine laws, while a foreign corporation is created or organized under the laws of another country.
What is the basis for classifying corporations as domestic or foreign in the context of the script?
-The basis for classification is the jurisdiction under whose laws the corporation is created or organized.
What are some examples of domestic corporations mentioned in the script?
-Examples of domestic corporations include one-person corporations, coalitions, casinos, private corporations, and accounting firms.
Why is the classification of a corporation as domestic or foreign important?
-Classification is important for taxation purposes and understanding the sources of income and the legal obligations of the corporation.
What is the difference between business income and passive income as discussed in the script?
-Business income refers to income generated from regular and profitable activities, while passive income is income that comes from sources such as investments or royalties, without active involvement in the business.
How does the script define a partnership in relation to corporations?
-The script does not explicitly define a partnership, but it can be inferred that partnerships are distinct from corporations as they are not created by operation of law and do not have the same legal entity status.
What is the role of accounting firms in the context of the script?
-Accounting firms are mentioned as entities that provide accounting services, which implies they play a role in managing financial records and ensuring compliance with accounting standards for corporations.
What is the implication of a corporation's artificial status for its legal responsibilities?
-As an artificial entity, a corporation has limited liability, and its legal responsibilities are separate from those of its shareholders, which can affect how it is taxed and regulated.
Outlines
🏢 Introduction to Corporations
This paragraph introduces the concept of a corporation as an artificial being created by law, possessing the right of succession and other powers and attributes. It distinguishes between domestic and foreign corporations based on the law under which they are created or organized. Domestic corporations are those established under Philippine laws, while foreign corporations are those established under the laws of other countries. The paragraph also touches on the importance of classifying corporations for taxation purposes.
📚 Classification of Corporations
Paragraph 2 delves into the classification of corporations, including domestic corporations, one-person corporations, and coalitions. It also mentions residual definitions and the inclusion of casinos and private corporations. The paragraph discusses the exercise of corporate activities, such as partnerships created for the purpose of rendering services, which are considered business activities.
💼 Accounting Services and Business Income
In this paragraph, the focus shifts to accounting firms and the services they provide. It mentions that these firms are considered to be rendering services, which are a form of business activity. The paragraph also differentiates between business income, which is earned regularly and for profit, and passive income, which is not derived from regular business operations.
Mindmap
Keywords
💡Corporation
💡Incorporation
💡Legal Definition
💡Domestic Corporation
💡Foreign Corporation
💡Taxation
💡Sources of Income
💡Business Income
💡Passive Income
💡Accounting Services
💡Classification
Highlights
Definition of a corporation as an artificial being created by law with specific rights and attributes.
Corporations have the right of succession and are granted powers and properties by law.
Incorporation is compared to the creation of a human being, both being creations by operation of law.
The necessity of classifying corporations as a legal entity for taxation purposes.
Domestic corporations are those created or organized under Philippine laws.
Foreign corporations are created or organized under the laws of their respective countries, not Philippine law.
The term 'foreign' is used to distinguish corporations created outside of the Philippines.
Classification of corporations into domestic and foreign based on the law under which they are organized.
Domestic corporations include one-person corporations, coalitions, and various business entities.
Definition of a domestic corporation in general, encompassing a wide range of business structures.
Corporations involved in activities like casinos, private corporations, and partnerships are discussed.
Accounting firms and accounting services are mentioned as types of corporations providing services.
The concept of business income is distinguished from passive income.
Business income is earned through regular and profit-oriented activities.
Passive income is earned without active involvement in a business.
The importance of understanding the legal and operational classifications of corporations for accounting purposes.
Transcripts
arena so welcome to serwin's accounting
lectures an accounting discussion online
the classroom
approach in the review
so today
legal definition corporation is an
artificial being
created by operation of law having the
right of succession
and the powers attributes and properties
expressly authorized by law or incident
to its existence
incorporation is an artificial being
the human being which is created by
operation of love
is
in the sense that they are created
by operation of law because of this
law artificial
being such as corporations
[Music]
corporation
[Music]
why do we need to classify as a god
because it's a taxation
dependence corporation
sources of income equality
domestic corporation by the way they are
created
or organized under and by the virtue of
philippine laws
so meaning
domestic okay are those corporate
corporations
created or organized
under and by the virtue of philippine
law
while this foreign corporation is the
other way around
they are created or organized not
because of the philippine law
but rather on the on the law of the
respective countries
because of usa well
foreign
meaning your foreign corporation
is
foreign
[Music]
classification
classification
is
domestic corporation in general
including
one person corporation a coalition
residual
in receivable definition meaning
[Music]
casinos
private corporations
partnership created for the exercise of
probation
accounting firms accounting services
because you are rendering services right
in
foreign
so let's move on
income when you say business it means
you are doing that regularly
and for profit income and is what we
call this passive income
[Music]
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