BIR Ruling

February 13, 1969 Mr. Bienvenido A. Tan, Jr. Tan Law Office 184 Dasmarias, Manila S i r : This refers to your letter dated September 5, 1967 quoted as follows: "Earlier this year, I collected a fee for professional services and duly entered this fee in my books. The payment of this fee is now being questioned in Court, however, so there is a possibility that I may have to return the fee. Under the foregoing circumstances, will you please let me know if I should consider this fee as part of my income for this year or should I postpone reporting the said income until the case is finally decided by the Court. You will understand that I am making this inquiry because my tax bracket would be different for different years so that if I enter the fee as my income for this year and am then ordered to return the same next year although I can claim a deduction from my income next year, the tax could be different. For proper guidance therefore, may I request your opinion on this matter." I reply thereto, I have the honor to inform you that all items of gross income shall be included in the gross income for the taxable year in which received by the taxpayer pursuant to Section 39 of the Tax Code. Accordingly, all fees received by you during the taxable year whether contested or not are subject to income tax. prcd Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue