Deductibility of Business Loss from the Total Compensation Income

May 4, 1987 BIR RULING NO. 123-87 30 (l) 000-00 123-87 S i r : This refers to your letter dated March 27, 1987 requesting a ruling as to whether or not your client can deduct his business loss of P5,000.00 from his total compensation income of P165,000.00 in addition to his personal and additional exemptions under Section 30(l) of the Tax Code, as amended by Executive Order No. 37. It is represented that your client derived a total compensation income of P165,000.00 in 1986 from two different corporations, and that he is also engaged in an apartment business wherein he incurred a business loss of P5,000.00 also in 1986. In reply, please be informed that pursuant to Section 30 of the Tax Code as amended by Executive Order No. 37, no deductions other than the deduction provided in paragraph (1) may be allowed from compensation income arising from personal services rendered under an employer-employee relationship. Section 30 (l)(1) & (2) speaks of personal exemption and additional exemptions allowable to individuals. Based on the foregoing, this Office is of the opinion as it hereby holds that your client can only deduct his personal and additional exemptions under Section 30(l) of the Tax Code from his gross compensation income of P165,000.00. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner