Expense Account Policy

August 8, 1958 BIR RULING NO. 567-58 Messrs. Stewart, Cunanan & Co. Certified Public Accountants P. O. Box 2288, Manila Gentlemen : In reply to your letter dated June 12, 1958, requesting ruling on the proposed policy of your client, whose fixed assets total more than P1,000,000.00, to treat all purchases of equipment, etc. costing below P400.00 as an expense account regardless of the length of life of the item purchased, I have the honor to inform you that the proposed policy of your client cannot be sustained by this Office in view of the clear provisions of Section 167 of Revenue Regulations No. 2, implementing the Income Tax Law, which provides that "expenditures for items of plant, equipment, etc. which have a useful life extending substantially beyond the year should be charged to a capital account and not to an expense account." aisadc Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue