BIR Ruling No. 106-65

September 14, 1965 BIR RULING NO. 106-65 The Regional Director Regional District No. 5 North Manila S i r : There is returned to you herewith the entire docket relative to the 1963 income tax case of Mrs. CORAZON FLORENDO involving the amount of P1,300.75. aisadc The record shows that in the early part of May, 1963, Mrs. Corazon Florendo went to Bangkok, Thailand to visit her husband Mr. Jose Florendo, who is working with Bourne Associate Inc. in Bangkok; that when she intended to leave Don Muang airport in Bangkok for Manila on May 8, 1963, the Customs authorities at the airport confiscated from her the sum of P5,000, Philippine currency, for violation of Thai Financial Regulations; that in spite of her efforts to recover the aforesaid amount, the Thailand government did not return the said amount confiscated by its customs authorities; and that the taxpayer claimed the amount of P5,000 as loss deduction but the same was disallowed upon office audit of her income tax return. The taxpayer protested the said disallowance. The question presented here for resolution is whether or not the disallowance is in accordance with Section 30(d) of the Tax Code. Section 30(d) of the Tax Code provides that in computing taxable income in the case of an individual, a deduction is limited to losses sustained during the taxable year and not compensated for by insurance or otherwise, (1) if incurred in trade or business, (2) if incurred in any transaction entered into for profit, though not connected with the trade or business, and (3) as to property not connected with the trade or business if the loss arises from fires, storms, shipwreck, or other casualty, or from theft, robbery, or embezzlement. In the instant case, the loss sustained by the taxpayer was not of a character as permitted by the Code, e.g., that it is incurred in carrying on a trade or business, or is incurred in a transaction entered into for profit, or results from a casualty. In construing the term "other casualty" the rule of ejusdem generis is applicable, and in order that a loss may be deductible it must appear that the casualty was of similar character to a fire, storm or a shipwreck (Waddell F. Smith, 10 TC 701). Thus, loss from seizure of a taxpayer's property by foreign customs officials during the course of their official examination of his belongings has been held not to be from other casualty, hence, not deductible. (A. Gilbert Formel, TC Memo. Op., Dkt. 221581/1950/). In view thereof, this Office is of the opinion and so holds that the loss sustained by the taxpayer in the amount of P5,000 is not deductible under Section 30(d) of the Tax Code. The disallowance, therefore, in this case is proper. aisadc Very truly yours, (SGD.) MISAEL P. VERA Acting Commissioner of Internal Revenue