1. **State the problem:** Calculate the taxable income of Olivia Cruz for the year 2025 given her income and expenses. 2. **Identify the components:** - Gross income from business: Php 400,000 - Salary: Php 240,000 - Life insurance proceeds: Php 40,000 (usually non-taxable) - 13th month pay: Php 50,000 (tax-exempt up to Php 90,000) - Interests & Taxes: Php 30,000 (assumed interest income taxable, taxes are expenses) - Business expenses: Php 40,000 3. **Formula for taxable income:** $$\text{Taxable Income} = \text{Gross Income} - \text{Allowable Deductions}$$ 4. **Calculate total gross income:** $$400,000 + 240,000 + 30,000 + 50,000 = 720,000$$ (Note: Life insurance proceeds Php 40,000 are generally non-taxable and excluded.) 5. **Calculate total allowable deductions:** Business expenses Php 40,000 are deductible. 6. **Calculate taxable income:** $$720,000 - 40,000 = 680,000$$ 7. **Conclusion:** Olivia Cruz's taxable income for 2025 is Php 680,000.