DEDUCTIONS IN THE GROSS INCOME

I.
Itemized deductions. ExIT-LoBaD2-CReP
Ordinary & necessary TBP
Interest
Expenses
D-STOWN
DeT-CoW-DORIN
paid/incurred During the indebtedness incurred by
taxable year;
the taxpayer based on a
bona fide Debtor-creditor
relationship;
Substantiated w/ sufficient
evidence;

: Taxpayer

pain in connection w/
TBP /attributable to the
devt, mngt /operation of
TBP;
Ordinary & necessary;

Connected w/ the
taxpayers TBP;

If subject to withholding
taxes, have been properly
Withheld & remitted on time
the BIR, &

legally Due;

Not contrary to LaMoPp.

not be incurred to
finance
petroleum
Operation;

interest:
Writing;

stipulated

in

arrangement: not be
between Related taxpayer

interest expense: paid or

Incurred during the taxable
year; &
In case of interest incurred
to acquire property used in
TBP: same was Not treated
as capital expenditure.

Taxes

Losses

Bad Debts

Depreciation
PORAL-V
allowance for depreciation:
for Property arising out of its
use in the trade /business,
or out of its not being used
temporarily during the year;
charged Off within the
taxable year;

TILE-Co
payment: Taxes & not for
amounts
representing
surcharge/
penalties
incident to delinquency;

TEN-ACIDA
loss: Taxpayer

IR-WASC-IB
existing, valid, & legally
demandable Indebtedness
due to the taxpayer;

paid/Incurred during the

taxable year in connection
to taxpayers TBP;
tax: imposed by Law on &
payable by the taxpayer;

Evidence by a closed &

completed transaction;

not be specifically
Excluded by law from being
deducted
from
the
taxpayers gross income; &

Actually
sustained
charged off during
taxable year;

NRA-EBT & RFC

taxes for w/c deduction is
claimed: Connected w/
income from sources within
the Philippines.

Not Compensated for by

insurance or other form of
indemnity;

Reported as receivables in
the ITR of the current/ prior
year;
Actually ascertained to be
Worthless & uncollectible as
of the end of the taxable
year;
Actually charged off in the
books of accounts of the
taxpayer as of the end of
the taxable year of
worthlessness;
not be Sustained in a
transaction entered into
between related parties;

Not claimed as a deduction

for estate tax purposes (for
individual);
&
the

For
Individuals,
loss:
connected w/ his TBP /
incurred in any transaction
entered into for profit
(though not connected w/
his TBP);
For
casualty
losses,
Declaration of loss: filed w/
the BIR via a sworn
declaration of loss from the
date
of
occurrence/discovery of the
casualty/robbery,
theft/embezzlement; &

Connected
with
taxpayers TBP;

the

For Insurance or surety

companies, bad debts must
have been declared closed
due to insolvency (or for
any such similar reason by
the
Insurance
Commissioner); &

Depletion of Oil & Gas

Wells & Mines

Charitable & Other

Contributions
SAMA
given
to
organization
Specified by law;

Pension Trusts
PRECA
Er: established a Pension or
retirement plan for the
payment of reasonable
pension to its Ees;

Actually

Pension plan is Reasonable

& actuarially sound;

: Reasonable;

Made within the taxable

year; &

funded by the Er (employer

contributes cash);

Statement on the allowance:

Attached to return;

Evidence by Adequate
receipts/records
(substantiation rule).

amount contributed must no

longer be subject to the
Control of the Er; &

For NRA & FC

property: Located within the
Philippines; &
For
deductibility
of
depreciation of Vehicles,
other conditions under RR
12-2012 & RMC 2-2013
must have been complied
with.

contribution/gift:
paid;

Research & Development

Payment has not yet been

Allowed as deduction.

DEDUCTIONS IN THE GROSS INCOME

I.
Itemized deductions. ExIT-LoBaD2-CReP
Ordinary & necessary TBP
Interest
Expenses
D-STOWN
DeT-CoW-DORIN
paid/incurred During the indebtedness incurred by
taxable year;
the taxpayer based on a
bona fide Debtor-creditor
relationship;
Substantiated w/ sufficient
evidence;

: Taxpayer

pain in connection w/
TBP /attributable to the
devt, mngt /operation of
TBP;
Ordinary & necessary;

Connected w/ the
taxpayers TBP;

If subject to withholding
taxes, have been properly
Withheld & remitted on time
the BIR, &

legally Due;

Not contrary to LaMoPp.

not be incurred to
finance
petroleum
Operation;

interest:
Writing;

stipulated

in

arrangement: not be
between Related taxpayer

interest expense: paid or

Incurred during the taxable
year; &
In case of interest incurred
to acquire property used in
TBP: same was Not treated
as capital expenditure.

Taxes

Losses

Bad Debts

Depreciation
PORAL-V
allowance for depreciation:
for Property arising out of its
use in the trade /business,
or out of its not being used
temporarily during the year;
charged Off within the
taxable year;

TILE-Co
payment: Taxes & not for
amounts
representing
surcharge/
penalties
incident to delinquency;

TEN-ACIDA
loss: Taxpayer

IR-WASC-IB
existing, valid, & legally
demandable Indebtedness
due to the taxpayer;

paid/Incurred during the

taxable year in connection
to taxpayers TBP;
tax: imposed by Law on &
payable by the taxpayer;

Evidence by a closed &

completed transaction;

not be specifically
Excluded by law from being
deducted
from
the
taxpayers gross income; &

Actually
sustained
charged off during
taxable year;

NRA-EBT & RFC

taxes for w/c deduction is
claimed: Connected w/
income from sources within
the Philippines.

Not Compensated for by

insurance or other form of
indemnity;

Reported as receivables in
the ITR of the current/ prior
year;
Actually ascertained to be
Worthless & uncollectible as
of the end of the taxable
year;
Actually charged off in the
books of accounts of the
taxpayer as of the end of
the taxable year of
worthlessness;
not be Sustained in a
transaction entered into
between related parties;

Not claimed as a deduction

for estate tax purposes (for
individual);
&
the

For
Individuals,
loss:
connected w/ his TBP /
incurred in any transaction
entered into for profit
(though not connected w/
his TBP);
For
casualty
losses,
Declaration of loss: filed w/
the BIR via a sworn
declaration of loss from the
date
of
occurrence/discovery of the
casualty/robbery,
theft/embezzlement; &

Connected
with
taxpayers TBP;

the

For Insurance or surety

companies, bad debts must
have been declared closed
due to insolvency (or for
any such similar reason by
the
Insurance
Commissioner); &

Depletion of Oil & Gas

Wells & Mines

Charitable & Other

Contributions
SAMA
given
to
organization
Specified by law;

Pension Trusts
PRECA
Er: established a Pension or
retirement plan for the
payment of reasonable
pension to its Ees;

Actually

Pension plan is Reasonable

& actuarially sound;

: Reasonable;

Made within the taxable

year; &

funded by the Er (employer

contributes cash);

Statement on the allowance:

Attached to return;

Evidence by Adequate
receipts/records
(substantiation rule).

amount contributed must no

longer be subject to the
Control of the Er; &

For NRA & FC

property: Located within the
Philippines; &
For
deductibility
of
depreciation of Vehicles,
other conditions under RR
12-2012 & RMC 2-2013
must have been complied
with.

contribution/gift:
paid;

Research & Development

Payment has not yet been

Allowed as deduction.