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    BIR RULING NO. 219-93: Mañacop Law Office

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    The document discusses whether awards for moral damages, exemplary damages, and attorney's fees are subject to income tax and withholding tax. It determines that amounts received as moral damages are not considered taxable income, and that attorney's fees awarded as damages are a reimbursement and also not subject to income tax or withholding tax.

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    BIR RULING NO. 219-93: Mañacop Law Office

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    jeffrey
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    The document discusses whether awards for moral damages, exemplary damages, and attorney's fees are subject to income tax and withholding tax. It determines that amounts received as moral damages are not considered taxable income, and that attorney's fees awarded as damages are a reimbursement and also not subject to income tax or withholding tax.

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    BIR

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    6300-1993-BIR_RULING_NO._219-93

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    The document discusses whether awards for moral damages, exemplary damages, and attorney's fees are subject to income tax and withholding tax. It determines that amounts received as moral damages are not considered taxable income, and that attorney's fees awarded as damages are a reimbursement and also not subject to income tax or withholding tax.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    33 views2 pages

    BIR RULING NO. 219-93: Mañacop Law Office

    Uploaded by

    jeffrey
    The document discusses whether awards for moral damages, exemplary damages, and attorney's fees are subject to income tax and withholding tax. It determines that amounts received as moral damages are not considered taxable income, and that attorney's fees awarded as damages are a reimbursement and also not subject to income tax or withholding tax.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    May 17, 1993

    BIR RULING NO. 219-93

    AWARD AS MORAL DAMAGES NOT SUBJ. TO INCOME/WITHHOLDING TAX

    29 (a) 04-92 19-93

    Mañacop Law Office


    Unit 102, Mission Garden Condominium
    59 Sct. Ibardolaza St.
    Quezon City
    Attention: Atty. Jose F . Mañacop

    This refers to your letter dated August 12, 1992 stating that your client, Mr.
    Michael Lawrence, was awarded unpaid salaries and commission, plus moral and
    exemplary damages and attorney's fees in NLRC Case No. 00-11-043031-87, entitled
    "Michael Lawrence vs. LEP International Phil., Inc."; that said award has already become
    nal and executory, and the respondent is willing to pay the award less the withholding
    tax thereon; and that it is the belief of your client that the unpaid salaries and
    commission are subject to withholding tax but the damages which consist of moral
    and exemplary damages and attorney's fees are not subject to withholding tax to which
    the respondent disagrees. cdtai

    Based on the foregoing, you now request for a ruling as to whether or not award of
    damages such as moral, exemplary and attorney's fees or reimbursement of your client's
    advances to his lawyers, are subject to withholding tax.
    In reply, I have the honor to inform you that amounts received by a taxpayer as moral
    damages are not considered taxable income (par. 60, 12 Vol. 1, Mertens Law of Federal
    Income Taxation). The legal expenses incurred in court proceedings, where the taxpayer
    was awarded moral damages, are not deductible from gross income, under Section 29(a)
    of the Tax Code (par. 1130, p. 39001, 1969 U.S. Master Tax Guide). On the other hand,
    attorney's fees awarded to your client as part of the damages shall not be subject to
    income tax, the same being merely a reimbursement of his expenses/advances in the
    course of the hearing of his case. This opinion finds support in the case of Gold Green
    Mining Corporation vs. Tabios, CIR, CTA Case No. 1497, April 27, 1967 (1988 Ed. Arañas
    Commentary, p. 190), holding that the so-called "legal fees" are expenses incurred in the
    carrying on of a trade or business.
    In view thereof, this Office is of the opinion as it hereby holds that award of damages, such
    as moral, exemplary and attorney's fees, are not subject to income tax and consequently,
    to the withholding tax.
    This ruling is being issued on the basis of the foregoing facts as represented. However, if
    upon investigation, it will be disclosed that the facts are different, then this ruling shall be
    considered null and void. cdtech

    VICTOR A. DEOFERIO, JR.


    CD Technologies Asia, Inc. © 2016 cdasiaonline.com
    Deputy Commissioner of Internal Revenue

    CD Technologies Asia, Inc. © 2016 cdasiaonline.com

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