Bad debts are deductible from gross income if the following requisites are met:
1. There must be an existing indebtedness due to the taxpayer which must be valid and legally demandable;
2. The same must be connected with the taxpayer's trade, business or practice of profession;
3. The same must not be sustained in transaction entered into between related parties;
4. The same must be actually charged off the books of accounts of the taxpayer as of the end of the taxable year;
5. The same must be actually charged off the books of accounts of the taxpayer as of the end of the taxable year;
* Debt s charged-off within the taxable year. Partial writing-off is not allowed, it must be charged-off in full or not at all. (Fernandez Hermanos, Inc. vs. Comm.2DCRA552)
1. There must be an existing indebtedness due to the taxpayer which must be valid and legally demandable;
2. The same must be connected with the taxpayer's trade, business or practice of profession;
3. The same must not be sustained in transaction entered into between related parties;
4. The same must be actually charged off the books of accounts of the taxpayer as of the end of the taxable year;
5. The same must be actually charged off the books of accounts of the taxpayer as of the end of the taxable year;
* Debt s charged-off within the taxable year. Partial writing-off is not allowed, it must be charged-off in full or not at all. (Fernandez Hermanos, Inc. vs. Comm.2DCRA552)
