Week 10

Corporate Taxation

INCOME TAX (CORPORATIONS, PARTNERSHIPS, ETC)

1. Corporation and Other Terms Defined
a. Included in the term 1) Partnerships, no matter how created or organized;
corporation 2) Joint stock companies;
3) Joint accounts (cuentas en participacion);
4) Associations, or insurance companies.
b. Not included in the 1) General professional partnerships; and
term corporation 2) Joint venture or consortium formed for the purpose of undertaking construction
projects or engaging in petroleum, coal, geothermal and other energy operations
pursuant to an operating or consortium agreement under a service contract with
the Government.
c. General professional General professional partnerships are partnerships formed by persons for sole
partnerships purpose of exercising their common profession, no part of the income of which is
derived from engaging in any trade or business.
d. Joint venture Joint venture is a commercial undertaking by two or more persons, differing from a
partnership in that it relates to the disposition of a single lot of goods or the
completion of a single project.
e. Joint stock companies Joint stock companies are constituted when a group of individuals, acting jointly,
establish and operate a business enterprise under an artificial name, with an invested
capital divided into transferable shares, an elected board of directors, and other
corporate characteristics, but operating without formal governmental authority.
f. Joint accounts (cuentas Joint accounts are constituted when one interests himself in the business of another
en participacion) by contributing capital thereto, and sharing in the profits or losses in the proportion
agreed upon. They are not subject to any formality and may be privately contracted
orally or in writing.
g. Associations The term “associations” includes all organizations which have substantially the salient
features of a corporation to be taxable as a “corporation.”

2. Classification of Corporations
a. Domestic corporations The term “domestic”, when applied to a corporation, means created or organized in
the Philippines or under its laws
b. Foreign corporations The term “foreign”, when applied to corporation, means a corporation which is not
domestic.
1) Resident foreign The term “resident foreign corporation” applies to a foreign corporation engaged in
corporation trade or business within the Philippines.
2) Non-resident The term “non-resident foreign corporation” applies to a foreign corporation not
foreign corporation engaged in trade or business within the Philippines.

3. Format of Computation (Annual Income Tax Return)

Sales/Revenues/Receipts/Fees xxx
Less: Cost of sales/services xxx
Gross income from operations xxx
Add: Non-operating and taxable other income xxx
Total gross income xxx
Less: Deductions xxx
Taxable income xxx
Regular corporate income tax xxx
Minimum corporate income tax xxx
Tax due (whichever is higher) xxx
Less: Unexpired excess of prior year’s MCIT over normal income tax rate xxx
Balance xxx
Add: Tax due to the BIR on transactions under special rate xxx
Aggregate income tax due xxx

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Less: Tax credits/payments

Prior year’s excess credits other than MCIT xxx
Tax payments for the first three quarters xxx
Creditable tax withheld for the first three quarters xxx
Creditable tax withheld for the fourth quarter xxx
Foreign tax credits, if applicable xxx
Tax paid in return previously filed, if this is an amended return xxx xxx
Tax payable (overpayment) xxx
4. Tax Base and Tax Rate
Corporation Tax Base Tax Rate
a. Domestic corporation Net income within and 35% - November 1, 2005 to December 31, 2008
without 30% - January 1, 2009
b. Resident foreign corporation Net income within 35% - November 1, 2005 to December 31, 2008
30% - January 1, 2009
c. Non-resident foreign Gross income within 35% - November 1, 2005 to December 31, 2008
corporation 30% - January 1, 2009
d. Taxable partnerships, Net income within and 35% - November 1, 2005 to December 31, 2008
joint ventures, etc without 30% - January 1, 2009
Optional Standard Deductions for Corporations (OSD) (RR No. 16-2008 as amended by RR No. 2-2010)
3) Determination of the a) In the case of corporate taxpayers, the OSD allowed shall be in an amount not
amount of OSD for exceeding forty percent (40%) of their gross income.
domestic corporation b) “Gross income” shall mean the gross sales less sales returns, discounts and
and resident foreign allowances
corporation and cost of goods sold.
c) In the case of sellers of services, the term “gross income” means “gross receipts” less
sales returns, allowances, discounts and cost of services.
d) The items of gross income under Section 32 (A) of the Tax Code, as amended, which
are required to be declared in the income tax return of the taxpayer for the taxable
year are part of the gross income against which the OSD may be deducted in arriving
at taxable income. Passive income which have been subjected to a final tax at source
shall not form part of the gross income for purposes of computing the forty percent
(40%) optional standard deduction.
a. On certain passive income derived from Philippines sources
Domestic corporation (DC) – Sec. 27 (D)
Resident foreign corporation (RFC) - Sec. 28 (A) (7)
Non-resident foreign corporation (NRFC) – Sec. 28 (B) (1)
DC and RFC NRFC
Interest in any currency bank deposit 20% final tax 30% final tax
Yield or any monetary benefit from deposit substitute 20% final tax 30% final tax
Yield or any monetary benefit from trust fund and other similar 20% final tax 30% final tax
arrangements
Royalties 20% final tax 30% final tax
Interest income derived from depository bank under EFCDS 7½% final tax Exempt
Illustration
Italy Corporation had the following data in 2014:
Gross income, Philippines P600,000
Gross income, U.S.A 500,000
Expenses, Philippines 300,000
Expenses, U.S.A 300,000
Interest income on time deposit 10,000
Interest on money market placement, net of tax 21,000
Required: Compute the income tax due and the final taxes payable if the corporation is:

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Week 10
Corporate Taxation
a. Domestic Corporation c. Non Resident Foreign Corporation
b. Resident Foreign Corporation
5. Special Corporations
a. Special domestic corporations
Special domestic corporations Tax Base Tax Rate
1) Proprietary educational Net income 10%
institution and nonprofit Income from unrelated business exceeds 50%:
hospital 35% - November 1, 2005 to December 31,
2008
30% - January 1, 2009
2) Government-owned or Net income Same as those imposed upon corporation or
controlled corporations, association engaged in similar business, or
agencies or instrumentalities activity
3) Meaning of “unrelated trade, “Unrelated trade, business or other activity” is not substantially related to the
business or other activity” exercise or performance of the school or hospital’s primary purpose or
function.
4) Treatment of capital outlays for Capital outlays for expansion of school facilities may either be:
expansion of school facilities a) deducted as expenditures; or
b) depreciated over the estimated life.
5) Tax-exempt government- The following are tax-exempt government-owned or controlled corporations:
owned or controlled a) Government Service Insurance System (GSIS);
corporations b) Social Security System (SSS);
c) Philippine Health Insurance Corporation (PHIC);
d) Philippine Charity Sweepstakes Office (PCSO);
e) Local Water Districts (R.A. No. 10026).
6) Exercises
1. (Phil. CPA Modified) The following information were from the records of the Central Plain University, Inc., a
private educational institution, for the fiscal year ended May 31, 2014:
Income: Miscellaneous fees P 362,600
Tuition 2,843,100
Income from rents 60,000
Net income, school canteen 36,200
Net income, book store 24,800
Dividends 15,000
Interest on time deposit 45,000
Expenses: Payroll and administrative salary 1,425,420
Other operating expenses 844,430
Depreciation, new six-room building 37,500
The capital outlay for the new building would be expensed outright.
How much was the income tax due from the Central Plain University, Inc. for the fiscal year ended May 31,
2014?
2. A proprietary private educational institution has presented the following data for the calendar year 2014:
Gross income, related activities P 5,000,000
Gross income, unrelated activities (including P2,000,000 rent from commercial
spaces, gross of 5% withholding tax) 7,000,000
Expenses, related activities 2,000,000
Expenses, unrelated activities 3,000,000
Dividend from a domestic corporation 100,000
Payments, first three (3) quarters 1,000,000
How much is the tax payable?
b. Special resident foreign corporation
Special RFC Tax Base Tax Rate
1) International carrier Gross Philippine Billings –refers to the 2 ½% of GPB
amount of gross revenue derived from
carriage or persons, excess baggage, cargo
and mail originating from the Philippines in
a continuous and uninterrupted flight,
irrespective of the place of sale or issue and
the place of payment of the ticket or passage
document.
2) Offshore banking units* Income from foreign currency transactions Exempt from all taxes except
with non-residents, OBUs in the Philippines, net income from transactions
local commercial bank including Philippine specified by Sec. of Finance
branches of foreign banks (used to be 10% final tax)
Interest income from foreign currency loans
granted to residents other than OBUs or 10% final tax
local commercial banks
Any income of non-resident (individual or
corporation) from OBUs Exempt

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3) Tax on branch profit remittance Total profits applied or earmarked for

by the Philippine branch of a remittance without deduction for the tax 15%
foreign corporation to its head component with exception to the following:
office based on total profits 1. PEZA
applied. 2. SBMA
(except on activities registered 3. CDA
with PEZA) 4. Other Companies with Special
Economic Zones
4) Regional or area headquarters
of multinationals Exempt from tax -
5) Regional operating
headquarters Taxable income 10%
of multinationals
6) Gross Philippine Billings for Gross Philippine Billings (for international air carrier) refers to the amount of
international air carrier gross revenue derived from carriage of persons, excess baggage, cargo or mail
originating from the Philippines in a continuous and uninterrupted flight,
irrespective of the place of sale or issue and the place of payment of the ticket
or passage document.
7) Gross Philippine Billings for Gross Philippine Billings (for international shipping) means gross revenue
international shipping whether for passenger, cargo, or mail originating from the Philippines up to
final destination, regardless of the place of sale or payment of the passage or
freight documents.
8) Regional or area headquarters Regional or area headquarters is a branch established in the Philippines by
multinational companies and which headquarters do not earn or derive
income from Philippines and which act as supervisory, communications and
coordinating center for their affiliates, subsidiaries or branches in the Asia-
Pacific Region and other foreign markets.
9) Regional operating Regional operating headquarters is a branch established in the Philippines by
headquarters multinational companies which are engaged in different services (e.g. general
administration and planning, business planning and coordination, marketing
control and sales promotion, etc.).
10) Exercises
a) The following data were provided by Air America, international carrier doing business in the Philippines:
Gross receipts, sales of tickets in the Philippines (Manila to Taipei flight) P8,000,000
Gross receipts, sales of tickets in Japan (only P5,000,000 actually flown) (Manila to Tokyo flight) 6,000,000
Gross receipts, sales of tickets in Japan (Tokyo to Manila flight) 3,000,000
Gross receipts, sales of tickets in the Philippines (Manila to Hongkong flight), passengers were
endorsed to another international airline which airlifted them from Manila 1,000,000
Gross receipts, sales of tickets in the Philippines (Manila to Los Angeles flight), passengers were
transshipped in Tokyo to Los Angeles by another airline (flight from Manila to Tokyo – 5 hours;
flight from Tokyo to Los Angeles – 10 hours) 4,500,000
Expenses, sales of tickets, Philippines 4,000,000
Rental income, Philippines, gross of 5% withholding tax 1,500,000
Expenses connected to rental income, Philippines 500,000
Payments, first three (3) quarters 150,000
How much was the total Philippine income tax due and payable?

b) A resident foreign corporation has the following data on its income, expenses and remittances:
Gross income, Philippines P7,000,000
Gross income, USA 5,000,000
Business expenses, Philippines 2,000,000
Business expenses, USA 1,000,000
Royalties on Philippine copyrights 500,000
Interest on time deposit, PNB-Manila, Philippines 100,000
Remittances of profit during the year 200,000
Payments, first three (3) quarters 100,000
Question 1 – Determine the Philippine income tax due and payable using: a. itemized deduction b. OSD
2 - How much is the tax on the branch profit remittances, if any?

c. Special nonresident foreign corporation(not Required to File ITR)

Special NRFC Tax Base Tax Rate
1) Nonresident cinematographic
film owner, lessor, or distributor Gross income from Philippine sources 25%
2) Nonresident owner or lessor of
aircraft, machineries and other Gross rentals or fees derived within the 7 ½%
equipment Philippines
3) Nonresident owner or lessor of Gross rentals, lease or charter fees from
vessels chartered by Philippine leases or charters to Filipino citizens or 4 ½%
nationals corporations, as approved by Maritime
Industry Authority

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4) Exercise
A corporation has the following data for the calendar year 2014:
Gross income, Philippines P 2,500,000
Gross income, Japan 1,500,000
Expenses, Philippines 1,000,000
Expenses, Japan 500,000
How much is the final withholding Philippine income tax, assuming the corporation is a:
a. non-resident cinematographic film owner, lessor or distributor?
b. non-resident owner or lessor of vessels chartered by Philippine nationals?
c. non-resident owner or lessor of aircraft, machineries and other equipment?
d. non-resident owner or lessor of vessels chartered by Japanese nationals?
6. Partnership, Joint Venture and Co-Ownership
a. Non-taxable partnerships, 1) General professional partnership;
joint ventures and co- 2) Joint venture undertaking construction projects pursuant to an operating
ownerships consortium agreement under a service contract with the Government;
3) Joint venture engaging in petroleum, coal, geothermal, and other energy
operations pursuant to an operating consortium agreement under a service
contract with the Government;
4) Co-ownership. -there is co-ownership whenever the ownership of an
undivided thing or right belongs to different persons. Please see illustration 8-4
of your book.
b. Taxable partnerships, joint 1) Partnership engaged in business, no matter how created;
ventures and co-ownerships 2) Other joint ventures.
c. Rule on Deductions Please see table below
Type of Deduction claimed by the PARTNERSHIP in Maybe claimed by the PARTNER in his computing his
computing net income taxable income
1. Itemized Deductions Itemized Deductions Only
2. OSD Neither Itemized or OSD

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Illustration
Tom and Jerry Partnership, a general professional partnership had the following data during the year:
Gross receipts 1,400,000
Cost of services 600,000
Itemized deductions 400,000
Partners Tom and Jerry have the following individual data:
Tom Jerry
Salary as employee P200,000 P 175,000
Personal and professional expenses 40,000 25,000
Share in partnership profit/ loss 50% 50%
Interest on bank deposit 3,000 2,800
Gross receipts from personal business - 75,000
Expenses from personal business - 20,000
Q1: How much is the net income if the partnership availed of
1. OSD?
2. Itemized Deduction
Answer:
OSD Itemized
Gross Receipts 1,400,000 1,400,000
Less: Cost of services 600,000 600,000
Gross Income P800,000 P800,000
Less: Deduction
OSD(800,000X40%) 320,000
Itemized 400,000
Distributable net income 480,000 480,000
Q2: If the partnership availed of optional deduction, how much is the taxable income of Partner Tom if he availed of
(a) OSD (b) Itemized Deductions
Answer:
OSD Itemized
Salary 200,000 200,000
Add: Partnership profit(480,000x50%) 240,000 240,000
Less; Deduction
OSD(not allowed) -
Itemized(not allowed)
Net: 240,000 240,000
Total Income: 440,000 440,000
Less : BPE 50,000 50,000
Taxable income 390,000 390,000
Q3: How much is the taxable income of Partner Jerry if the partnership applied itemized deduction while Partner Jerry
availed of (a) OSD (b) Itemized
Answer:
(a) Not allowed to use OSD
(b) Salary 175,000
Share in partnership income(400,000x50%) 200,000
Less: itemized deduction 25,000 175,000

Gross receipts from personal business 75,000

Less: Itemized deductions 20,000 55,000
Total income 405,000
Less: Personal Exemption 50,000
Taxable income: 355,000
7. Important Pointers in Non-Taxable Partnerships
a. General professional A general professional partnership is one formed for the sole purpose of
partnership defined exercising a common profession, no part of income of which is derived from
engaging in trade or business.
b. Liability of partners in a Persons engaging in business as partners in a general professional partnership
general professional shall be liable for income tax only in their separate and individual capacities.
partnership
c. General professional Every general professional partnership shall file, in duplicate, a return of its
partnership required to income, except income exempt under the Tax Code, setting forth the items of
file return gross income and deductions and the names, TIN, addresses and shares of each
of the partners.
d. Manner of computing For purposes of computing the distributive share of the partners, the net income
the net income of of the general professional partnership shall be computed in the same manner
general professional as a corporation.
partnership
e. Basis of the income that Each partner shall report as gross income his distributive share, actually or
a partner will report constructively received, in the net income of the partnership.
f. Income payments to Income payments to partners of general professional partnership are subject to
partners of a general 15% creditable withholding tax, if the income payment to the partner for the

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professional partnership current year exceeds P720,000; and 10%, if otherwise.

subject to creditable
withholding tax
g. Exercise

Illustration 8-1
Alma and Lorna organized an accounting firm which they named as Alma, Lorna and Associates. The profit
and loss sharing ratio is 50% for Alma and 50% for Lorna. In 2014, the partnership had a gross income of P380,000
and expenses (including salary ) of P180,000. During the year, each of them received salary of P60,000 from the
partnership.
a. Is the partnership subject to income tax?
b. Is the partnership required to file an income tax return
c. Assuming no profits were distributed to the partners, how much share in the partnership income
should be reported by the partners in their income tax return
d. How much share in the income should be reported by the partners in their income tax returns
assuming that Alma and Lorna received P10,000 each as partial distribution of their shares in the
net income of the partnership.
Problem 1: Jaimee, married, has two dependent minor brothers. She is a partner of a general professional
partnership. She also has a trading business of her own. The following data are made available for the year 2014:
Gross income, trading business P2,500,000
Cost of Sales 2,000,000
Expenses, trading business 100,000
Interest income, BPI-Makati 20,000
Share from the net income of a general professional partnership 300,000
Royalty, books published in the USA 150,000
Salaries as part-time teacher, gross of P8,500 withholding tax 120,000
Tax payments, first 3 quarters 100,000

For income tax purposes, how much is Jamee’s income tax payable?

8. Important Pointers in Taxable Partnerships

a. Taxable partnerships Taxable partnerships are required to file a cumulative quarterly declaration and
required to file cumulative a final return just like corporations.
declaration and annual return
b. Share of partner in a taxable The share of partners in the net income of a taxable partnership shall be subject
partnership subject to final to 10% final tax.
tax
c. Exercise

Illustration 8-2
The following pertains to the 2014 data of Ceelin Partnership, a business partnership:
Gross Income P500,000
Deductions 300,000
Partners John Dinakahol and Rosela Dinaatsing agreed on a profit and loss sharing ratio of 60% and 40%,
respectively
Q1: How much is the tax liability of the partnership?

Q2: Are the shares of Dinakahol and Dinaatsing in the partnership net income returnable for income tax purposes?

Q3: How much is the income tax on the share of John Dinakahol in the partnership income if he is single?

Problem 1:A business partnership organized by partners Tin and Cris, equal partners, has the following data for
the calendar year ended 2014:
Gross business income P 1,000,000
Deductible expenses 300,000
Yield from deposit substitute, net of final withholding tax 50,000
Interest income derived from a depository bank under EFCDS, net of withholding tax 100,000
Gain from sale of shares of stock not traded in the local stock exchange, net of capital gains tax 80,000
Withdrawals on the share in the net income of the partners, net of withholding tax 150,000
Rent income, gross of 5% withholding tax 300,000
Payments of quarterly taxes, first 3 quarters 120,000

Question 1 – How much is the tax payable of the business partnership?

2 – How much is the distributable net income of the partnership?
3 – How much is the final withholding tax on the share of the partners, if any?

9. Important Pointers in Joint Ventures

a. Taxable joint ventures Generally, joint ventures are subject to tax.
b. Exempt joint ventures 1) Joint venture undertaking construction projects;
(pursuant to an operating or 2) Joint venture engaging in petroleum, coal, geothermal, and other energy

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consortium agreement under operations;

a service contract with the
Government)
c. Share in the net income after The share in a taxable joint venture’s net income is treated as inter-corporate
tax in a taxable joint ventures dividend which is generally exempt from income tax. In case of individual co-
venturer, it is subject to 10% final tax.
d. Share in the net income in an The share in a non-taxable joint venture’s net income is subject to corporate
exempt joint venture income tax or Section 24 (A), in case of individual co-venturer.
e. Exercise

Rhea Company and Issa Company formed a joint venture to undertake construction project pursuant to an
operating consortium agreement under a service contract with the Government. They shared equally. For the
calendar year 2014, the following data on their joint and separate operations were presented:
Joint operation: Gross income P150,000,000
Expenses 50,000,000

Separate operations (not part of joint venture) Rhea Company Issa Company
Gross income P20,000,000 P30,000,000
Expenses 5,000,000 10,000,000

REQ: a. Compute the:

1) net income of the joint venture; 3) taxable net income of Rhea Company;
2) income tax due from the joint venture; 4) taxable net income of Issa Company.

b. Assuming the above joint venture was engaged in the sale of real estate, compute the:
1) taxable net income of the joint venture. 3) taxable net income of Rhea Company.
2) tax due from the joint venture. 4) taxable net income of Issa Company.

10. Important Pointers in Co-Ownership

a. Co-ownership is not taxable Co-ownership is generally not taxable because the activities of the co-owners
are usually limited to the preservation of the property owned in common and
collection of the income therefrom.
b. Income to be reported by co- Co-owners shall report in their respective income tax returns their shares of
owners the income of the co-ownership.
c. When may the co-owners be When the income of the co-ownership is invested by the co-owners in business
subject to tax or other income producing properties, the co-owners will be subject to tax as a
corporation because the co-owners have constituted themselves into a
partnership.
d. Co-owners not to be Co-owners who own inherited properties which produce income should not
automatically considered as automatically be considered as partners of an unregistered partnership or
partners corporation subject to income tax.
e. Undivided inherited property Where inherited property remained undivided for more than 10 years and no
attempt was ever made to divide the same among the co-heirs, nor was the
property under administration proceedings nor held in trust, the property
should be considered as owned by an unregistered partnership, and the income
derived therefrom shall be subject to corporate income tax.
f. Sharing of gross return does The sharing of gross return does not of itself establish a partnership, whether
not of itself establish a or not the persons sharing them have a joint or common right or interest in any
partnership property from which the returns are derived. There must be an unmistakable
intention to form a partnership or joint venture.

g. Exercise
Earl and Goerge are brothers who are both resident citizens of the Philippines. They invested P1,000,000 each in
buying a coconut plantation. The land is registered in their names as co-owners.

During the fifth year of operations, the co-ownership had a gross income of P20,000,000 and expenses of P15,000,000

Compute the final tax on each-co owners from his share in the co-ownership net income.

11. Corporate Returns

a. Filing of quarterly and final or Every corporation subject to tax shall render, in duplicate a true and accurate
adjustment return quarterly return and final or adjustment return.
b. Non-resident foreign Corporations not engaged in trade or business in the Philippines (NRFC) shall
corporations not be required to file income tax return.
c. Who shall file the corporate 1) President; 3) Other principal officers.
return? 2) Vice – President; or
The return shall be sworn to by above officer and by the Treasurer or Assistant
Treasurer.
d. Corporate declarations and Declaration of quarterly corporate income tax on a cumulative basis not later

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returns than 60 days from the close of each of the first three quarters of the taxable
year, whether, calendar or fiscal year. The tax so computed shall be decreased
by the amount of tax previously paid or assessed during the preceding quarters.
e. Final adjustment return Covers the total taxable income for the preceding calendar or fiscal year filed on
or before 15th day of the 4th month following the close of the taxable year.
f. Sum of quarterly payments not If the sum of the quarterly tax payments made during the taxable year is not
equal to the total tax due for equal to the total tax due on the entire taxable income of that year, the
the year corporation shall either pay the balance of tax still due, or carry over the excess
credit, or be credited or refunded with the excess amount paid.

g. Corporation is entitled to tax 1) In case the corporation is entitled to a tax refund or credit of the excess
refund or credit estimated quarterly income taxes paid, the excess amount shown on its final
adjustment return may be carried over and credited against the estimated
quarterly income tax liabilities for the taxable quarters of the succeeding
taxable years.
2) Once the option to carry-over has been made, such option shall be
considered irrevocable for that taxable period.
h. Filing of the return The quarterly income tax declaration and the final adjustment shall be filed
with:
1) Authorized agent banks, or
2) Revenue District Office, or
3) Collection Agent, or Duly authorized Treasurer of the city or municipality
having jurisdiction over the location of the principal office of the
corporation filing the return or place where the main books of accounts and
other data from which the return is prepared are kept.
i. Payment of the income tax The income tax due shall be paid at the time the declaration or return is filed.
j. Exercise: The 2013 and 2014 data of Alice Corporation are shown below:
Income tax due 2013 P250,000
Less: Tax credits
Quarterly payments for the first three quarters 300,000
Excess tax payments (to be carried over as chosen by the corporation) (P 50,000)
:
2014 data First Q Second Q Third Q Year
Sales, gross of 1 % withholding tax P500,000 P1,100,000 P1,500,000 P2,200,000
Cost of sales 250,000 650,000 800,000 1,200,000
Operating expenses 50, 000 150,000 300,000 500,000

REQ: Compute the income tax payable using: a. itemized deductions b. OSD.

12. Sec. 30 Exemption from Tax on Corporation. – The following organizations shall not be taxed in respect to
income received by them as such:
(A) Labor, agricultural or horticultural organizations not organized principally for profits;
(B) Mutual savings bank not having a capital stock represented by shares, and cooperative bank without capital
stock, organized and operated for mutual purposes and without profit;
(C) A beneficiary society, order or association, operating for the exclusive benefit of the members such as fraternal
organization operating under the lodge system, or a mutual aid association or a non-stock corporation
organized by employees providing for the payment of life, sickness, or other benefits exclusively to the
members of such society, order, or association, or non-stock corporations or their dependents;
(D) Cemetery company owned and operated exclusively for the benefit of its members;
(E) Non-stock corporation or association organized and operated exclusively for religious, charitable, scientific,
athletic, or cultural purposes, or rehabilitation of veterans, no part of its net income or asset shall belong or
inure to the benefit of any member, organizer, officer or any specific person;
(F) Business league, chamber of commerce, or board of trade, not organized for profit and no part of the net
income of which inures to the benefit of any private stockholder or individual;
(G) Civic league or organization not organized for profit but operated exclusively for the promotion of social
welfare;
(H) A non-stock nonprofit educational institution;
(I) Government educational institution;
(J) Farmers or other mutual typhoon or fire insurance company, mutual ditch or irrigation company, mutual or
cooperative telephone company, or like organizations of a purely local character, the income of which consists
solely of assessments, dues, and fees collected from members for the sole purpose of meeting its expenses; and
(K) Farmers, fruit growers, or like association organized and operated as a sales agent for the purpose of marketing
the products of its members and turning back to them the proceeds of sales, less the necessary selling expenses
on the basis of the quantity of produce finished by them.

Note: Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and character of
the foregoing organizations from any of their properties, real or personal or from any of their activities
conducted for profit regardless of the disposition made of such income, shall be subject to corporation tax.
- = END = -
THOT: Being intelligent involves being ignorant about those things that are not worth knowing.
jdta
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