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Undeclared Purchases and Expenses - admin - 03-13-2023 YAP Vs. BIR, CTA NO. 10019 March 9, 2023 HIGHLIGHTS Undeclared Purchases and Expenses Should Not Be Treated As Income The said undeclared purchases and expenses, even when the same are truly undeclared, should not be automatically treated as income, to which income tax should be imposed. Income in tax law is an amount of money coming to a person within a specified time, whether as payment for services, interest, or profit from investment. It means cash or its equivalent. It is gain derived and severed from capital, from labor or from both combined. Income is profit or gain or the flow of wealth. The determining factor for the imposition of income tax is whether any gain or profit was derived from a transaction. It is apparent that in a purchase or expense transaction, no amount of money comes to a taxpayer; instead, money is spent out by the latter. In other words, the said taxpayer does not derive any gain or profit from the transaction.