Thursday, May 28, 2009

Sex Video: Tax if Hayden Kho extra-judicially settles with Katrina Halili - No VIDEO download!

On this post, let us try to explore on another interesting application of Philippine tax rules in connection with the country's hottest sex video in town. Beforehand however, let me take the opportunity to share my personal views on the event.

Personally, it is with my deep regret that the same had came out and the same is hereby condemned. It is totally unnecessary and constitutes a culpable misconduct of an ethical professional to completely disregard the chastity and delicate feelings and personality of those involved. As other put it, ito ay PAMBABABOY. Of course, it may well happen that intimate happenings come across lovers brought about by their feelings and emotion, but taking those videos are of no moment. In the same token, I personally go with the move of the senate to inquire into the event for the advancement of such laws and regulations that may prevent if not totally eliminate a similar event in the future. Likewise, I admire the strong personality of Ms. Katrina in pursuing with her fight. I feel pity for her looking at her face during the Senate Probe this day. I wish her God Bless and hope she wins her Great Battle in life.

So much for the flow of emotions on the issue and lets get into the heart of the post, to explore for tax implication at the back of the issue. This is simply for tax discussion purposes only, and does not intend to degrade, whatsoever, the victims of the video.

Assuming for the sake of discussion that the issue had went over and the camp of Hyden Kho and Katrina Halili concludes for an extra-judicial or out-of-court settlement at certain amount, will the settlement be TAXABLE in the hands of Katrina?

Settlement is NOT TAXABLE. Well settled is the rule that moral damages for out-of-court settlement is not considered as income, thus, not taxable. If the settlement would include attorney's fees, the same shall not likewise be taxable and it merely represents REIMBURSEMENT of expenses. A similar case was held in the case of Bank of America N.A. – Manila Branch vs. Commissioner of Internal Revenue, CTA Case No. 6144,March 14, 2005.

However, if the settlement would include an amount for lost income during the time Katrina is prevented from work byrought about by the mandatory attendance in the issue, then, the author is on the view that the same shall be TAXABLE on the part of Katrina.

Taxes affect lives, dare to care on taxes and save lives!

(N.b. The picture in this post is not intended to promote pornography)


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