Requirements to legally claim BAD DEBTS under RR 25-2002

  1. Must be existing indebtedness due to the taxpayer which must be valid and legally demandable;
  2. Must be connected with the taxpayers trade, business or practice of profession;
  3. Must not be sustained in a transaction entered into between related parties under NIRC Sec. 36 (B);
  4. Must be actually charged off the books of accounts of the taxpayers as of the end to he taxable year ; 
  5. Must be actually ascertained to be worthless and uncollectible as of the end of the taxable year ;
  6. Must be charged of in Full, partial write-off is not allowed.