Manner of Reporting Deductions for Taxes, Interest, Basic Tuition Fees, Medical Care, Casualty Losses or Losses from Theft, Robbery or Embezzlement, Bad Debts, Transportation/travelling and Representation Expenses and Contributions

December 3, 1980 REVENUE REGULATIONS NO. 03-81 SUBJECT : Manner of Reporting Deductions for Taxes, Interest, Basic Tuition Fees, Medical Care, Casualty Losses or Losses from Theft, Robbery or Embezzlement, Bad Debts, Transportation/travelling and Representation Expenses and Contributions TO : All Internal Revenue Officers and Others Concerned Pursuant to the provisions of Section 326, in relation to Section 4 of the National Internal Revenue Code, as amended, these regulations are hereby promulgated to govern the manner of reporting deductions for taxes, interest, basic tuition fees, medical care, casualty losses from theft, robbery or embezzlement, bad debts, transportation/travelling and representation expenses and contributions for income tax purposes. SECTION 1 . Kind and nature of deductions covered . Any loss arising from fires, storms, shipwreck, or other casualty, and from robbery, theft, or embezzlement, travelling and representation expenses paid or incurred in connection with trade or business; interest paid or accrued (except interest on indebtedness incurred or continued to purchase or carry obligations the interest upon which is exempt from income tax); medical care expense, basic tuition fees, taxes, bad debts, and charitable and other contributions are allowable as deductions under Section 30 of the Tax Code in the taxable year in which sustained, paid or incurred. The taxpayer bears the burden of accurately reporting as well as substantiating his claim for said deductions. SECTION 2 . Reporting requirements . In order to aid taxpayers in accurately reporting deductions mentioned in Section 1 hereof, as well as to facilitate the required preaudit of income tax returns, a schedule of deduction (BIR Form No. 1701-1) is prescribed for each item of expense or deduction claimed, which shall be accomplished by the filer of the return in support thereof. These schedules of deductions shall form an integral part of the return (BIR Form No. 1701 or 1701A). casia Failure to attach these schedules of deductions to income tax returns will automatically result in the disallowance of the deductions claimed in the preaudit of the income tax returns without prejudice, however, to the said deductions being taken up in the office or field audit of the returns. SECTION 3 . Effectivity . These regulations shall take effect immediately and applicable to income tax returns for 1980 and subsequent taxable years. CESAR VIRATA Minister of Finance Recommending Approval: RUBEN B. ANCHETA Acting Commissioner ATTACHMENT BIR Form No. 1701-1