CANEDO , PHULAGIN Lb. 3L- BH ee ee GR. No. 19229) February 12, 004 = 2a CIR vs. [SAB ELA GaLTURAL CORPORATION, - _ oe Poneate: YNARET- SANTIAGO , J. Facts + _ = icallmtd__Ssaloe lc eee et paid__by lec in A846, wits — 4 \)_Exgeyes frr_euditing services for ysat wdng Decetber 2, [ass 5 2)_tepnges fre_legal__stenices oe lag4_and last and Ph tapas ta services __fry_Ppril_and__May 1484. Big thus charged _1c¢_ for _deticieacy _incomt_‘txes. LCC contested: the assessment. BIR contended that since 1C6 is using “the accra | methed of accounting» “the expenses fe patessional services that accrued 1 in 19394 and _1486 should have been decland as _decluctions from income, during said_years and _Yhe_foilure _of (CC te do 50 bars it jming said expen ts as deductions for ‘vale year 486 Issues == Whether or not Ie _ean__still claim__pnfessional ' and Stemnity semices as deduction __for__ taxa bie ytar_la86 Ruling, iannenenee Js LCC can only _claim_the security semricee ar deductions rv ___ taxable year 1986, but prt she pnfessimal services _ incurred in__1984 and! 86.hy af ordinary aad necessary. ade, “buines ____Tie_napisiter_for deduct il or_prsfessiona) ie _ _ inal I) Tre _expeast__murt be ordinay —atd_necessany 7 2) Paid or incamed wing —the_trralle year, —— L 3)___in__caceying on $he._tmde_on_ business _of the seape |) Supported by receipts, rtcards _or_other per tintat papers. The _All = brea Test also _requints “the right “fe incme_ov_iallity be fied, andthe amount of such income__or liability pe debe minecl wt amable accumey.._The_4est doesnot requis stat He _ameunt oF incarmt__er liability be now __absoluily only that __a_tax payor bos at ib dispsel_sthe _intormadiin _pecessany comp he amet with reasmable accuracy. —_ = oa At_tp_the_legal_ fees The expeaea_fer_legal _services_pectain te l98d ond ss [egal and relninee_fets_of the lam firm andor _reimbunemeat of “the _scpeasts of the firm in_connectton__with LCC's ox _poblems forthe year (434. fem _the nature of he claimed _—dtducctims —and__span__of tine __ during which he tiem _wos_nined, 106 _can_t sxptitd ty _have tana Kjgwn _ she. a feer__tharyed by he ‘fim os _well asthe — compensation it. legal sevicts eer fe_t_the auditing fees : —The_pretessional fets_of SGV 2 Go. for_auditing the cfrancial__stekwenrb of [CC fv the year 198° cannot be sid aimed _ai_ex pense deductions in (986 pecause_10c_failed _-h_prstat evidence luowing hat even with only “reasmabeaceamey," os _the _standard_p__ascertin_ its lability th SGV A Go. inthe year 14.65. it catnot — dekemine. ep fe which said nanan for_ih_sewviotAs teh Stud ty__semice rs The reoods — show that these expeasts wert incurred by \co in 1480 ond_could_foeefaet__be_prper ly claimed _as_dedue Hons.