ALLOWABLE

 DEDUCTIONS  
 
Itemized  Deductions  (Sec  34,  NIRC)  
10%   Optional   Standard   Deductions   (OSD)   (Sec   34   (L),   Amended  
pursuant  to  RA  9504,  07  Jul  2008,  now  40%,  includes  corporation  
Allowed   only   to   citizens   and   resident   aliens   engaged   in   business   or  
profession  
No  need  to  support  expenses  
Election  irrevocable  for  the  year  
Unless  indicated,  itemized  is  deemed  elected  
Premiums  on  medical  &  hospitalization  (Sec  34  M)  
Personal  Exemptions  (Sec  35)  
  Personal  and  additional  exemptions  
 
Not  allowed  to  claim  deductions  
Individuals   receiving   compensation   income   (except   premiums   on  
medical   /   hospitalization   subject   to   limitations   and   personal   and  
additional  exemptions)  
Non-­‐resident  aliens  not  engaged  in  trade  or  business  
Aliens   (also   Filipinos   similarly   situated)   employed   in   ROHQ,   AHQ,   OBU,  
Petroleum  contractors  
Non-­‐resident  Foreign  Corporations  
Income  subject  to  Final  Tax  
 
Itemized  Deductions  (Sec  34)  
There  must  be  a  law  allowing  them  (Atlas   Consolidated   Mining   v.   CIR  
102  SCRA  246)  
Requisites:    Ordinary,  necessary,  reasonable,  not  against  law,  etc  
Ordinary  and  necessary  means  reasonable  
It  appeared  sale  of  property  was  effected  by  a  broker  hence  bonus  to  
company  officer  disallowed  (Aguinaldo   v.   CIR,   112   SCRA   136,  
1982)  
Fees   paid   to   broker   to   induce   investors   are   reasonable   and  
deductible   (On   the   substantive   issue,   SC   allowed   the   deduction  
as   reasonable   citing   Rev   Reg   No.   2.     It   is   worth   noting   at   this  
point  that  most  of  the  payees  were  not  in  the  regular  employ  of  
Algue,   nor   were   they   its   controlling   stockholders.     The   Solicitor  
General   is   correct   when   he   says   that   the   burden   is   on   the  
taxpayer   to   prove   the   validity   of   claimed   deduction.     In   the  
present   case,   however,   we   find   that   the   onus   has   been  
discharged   satisfactorily.     The   private   respondent   has   proved  
that  the  payment  of  the  fees  was  necessary  and  reasonable  in  the  
light   of   the   efforts   exerted   by   the   payees   in   inducing   investors  
and   prominent   businessmen   to   venture   in   an   experimental  
enterprise   and   involve   themselves   in   a   new   business   requiring  
millions  of  pesos.    This  was  no  mean  feat  and  should  be,  as  it  was,  
sufficiently  recompensed  [see  Algue  case,  supra]  
Must  be  connected  with  business,  except:  
Contributions  /  donations  
Premium  on  health  /  hospitalization  
 These  are  allowed  to  corporations,  individuals,  partnerships  
Must  be  incurred  during  the  year,  [CIR  v.  Isabela  Cultural  Corp,  GR  
No.   172231,   12   Feb   2007]   –   All   events   test   applied   in  
determining   whether   expenses   booked   on   accrual   basis   should  
be  claimed  as  deductible  expense]  
Must   be   substantiated   (ESSO   v.   CIR   175   SCRA   149   (1989)],   see  
Cohan  Rule  –  there  is  showing  that  expenses  were  incurred  but  
cannot   be   ascertained   due   to   absence   of   documentary   evidence  
(RMC  23-­‐2000)  
RR   No.   6-­‐2018   -­‐   requirements   for   deductibility   of   certain  
expenses,
RR   No.   11-­‐2018   and   14-­‐2018-­‐   relative   to   withholding   of  
Income  Tax
 
Subject  to  withholding  tax,  where  applicable  
FEBTC   V.   CA,   CTA   &   BIR,   477   SCRA   49   (Dec   2005)   –   To  
sufficiently   support   claims   for   tax   refund   of   excess   creditable  
withholding   tax,   BIR   Form   1743   must   be   submitted,  
Confirmation   Receipts   and   ITRs   are   not   sufficient.     Having  
failed   to   do   so,   the   claims   were   correctly   denied.     Under  
withholding  tax  system,  it  is  the  payor  who  withholds  the  tax  
and   not   the   payee.     The   OR/CR   did   not   indicate   the   nature  
and   amount   of   the   payment.     “The   findings   of   fact   of   the   CTA,  
a  special  court  exercising  particular  expertise  on  the  subject  
of  tax,  are  generally  regarded  as  final,  binding  and  conclusive  
upon   this   Court,   especially   if   these   are   substantially   similar  
to   the   findings   of   the   CA   which   is   normally   the   arbiter   of  
questions   of   fact.     The   findings   shall   not   be   reviewed   nor  
disturbed   on   appeal,   unless   a   party   can   show   that   these   are  
not   supported   by   evidence   or   when   the   judgment   is  
premised   on   a   misapprehension   of   facts,   or   when   the   lower  
courts   failed   to   notice   certain   relevant   facts   which   if  
considered  would  only  justify  a  different  conclusion.  
 
Income   payments   to   registered   enterprises   availing   of   the  
Income   Tax   Holiday   are   not   subject   to   Creditable  
Withholding  Tax  [DA  030-­‐2008  23  Jan  2008]  
 
1) Barcelon,   Roxas   Securities   v.   CIR,   GR   No.   157064   07   Aug   2006   –   Assessed   for  
deficiency  income  tax  for  failure  to  withhold  tax,  assessment  barred  by  prescription.  
 
 
Specific  Deductions    
Salaries,  bonuses,  emoluments,  allowances,  incentives,  Fringe  Benefits  
Rental  (without  equity,  operating  lease)  
Advertising   expenses   are   period   costs   deductible   in   the   year   incurred   or  
paid.   However,   they   may   be   considered   capital   expenditures   if   so  
substantial   in   promoting   a   single   brand   (CIR  v.  General  Foods,  401  
SCRA  545)  
Entertainment,  amusement,  recreation,  subject  to  ceiling  
Travel  Expense  
Excess  over  1st  class  not  deductible,  subject  to  FBT  
Excess   over   fixed   allowance   $150   /   100   not   deductible,   taxable   to  
employee  or  to  FBT  
Home  leave  not  taxable  to  employee  
Family  expenses  taxable  to  employee  to  be  deductible  to  employer  
Meals  &  Housing  
Generally   taxable   to   employee,   except   when   for   the   convenience   of  
the  employer  or  form  part  of  Fringe  Benefits  of  the  employee  
Cash  Advance  /  Reimbursement  system  
Entertainment,  amusement  or  recreation  (EAR)  facilities  
Directly  related  to  business  
Directly  in  furtherance  of  business  
Not  contrary  to  law,  etc  
Ceiling,  ½  %  or1%  of  Net  sales  or  net  revenues  
Substantiation   in   the   name   of   taxpayer   &   subject   to   w/tax,   where  
applicable  
Only  one  athletic  club  per  officer  
Guests  other  than  company  officers,  etc  
Exclusions  from  EAR  
Treated  as  compensation  or  Fringe  Benefit  
Charitable  or  fund  raising  events  
Bona  fide  business  meetings  of  directors,  etc  
Business  league  or  professional  organization  meet  
Promotion,  Ad  and  marketing  
Shifting  to  other  accounts  to  hide  –prohibited  
Separate  item  in  ITR  or  note  to  FS  
 
Interest   –   Use,   forbearance   or   detention   of   money   [see   Rev   Reg   13-­‐
2000,  20  Nov  2000  –  Requisites]  
There  is  debt,  and  interest  is  agreed  in  writing  
Paid  or  incurred  in  connection  with  business  during  the  year  
Legally  due  
Not  between  related  parties  
Not  incurred  for  petroleum  operations  
Not  capitalized  
Limitations  on  interest  –  interest  is  reduced  by  41%  (42%  effective  
01  Jul  2005);  
39%  and  38%  of  interest  income  subject  to  final  w/tax  
Interest  of  business  taxes  not  subject  to  limit  
Although  cash  basis,  interest  paid  in  advance  deductible  only  in  the  
year   debt   is   paid   in   full   or   correspondingly   to   amortized  
principal  
 
Taxes  
Connected  with  trade  or  business,  except  
Income  Tax  –  Local  [  Not  an  item  of  operating  expenses  because  
it   does   not   help   generate   revenue,   nor   does   it   redound   to  
benefit  of  customers,  thus  not  to  be  considered  in  fixing  rates  
 of   public   utility   (Republic   v.   Meralco,   GR   No.   141369,   14  
Nov  2002)  
Income  tax  paid  to  foreign  government  (tax  credit  /  deduction)  
CIR   v.   Lednicky   11   SCRA   604   –   Partnership   Theory   –   the  
right   to   tax   income   emanates   from   partnership   in   the  
production   of   income   by   providing   protection,   resources,  
incentives  and  climate  to  produce  income.    [Was  income  tax  
paid   to   foreign   government   by   resident   alien   deductible  
though  income  exclusively  came  from  the  Phils?  No.]  
Gift  &  Estate  Tax    
Special   Assessment   or   special   levy   under   the   Local   Govt   Code  
[Real  Property  Taxation]  
If   allowed,   as   deductible   and   subsequently   refunded,   Tax  
Benefit  rule  applies  
Limitations  on  tax  credit  
CIR   v.   Central   Luzon   Drug   Corp   (Mercury)   456   SCRA   414  
(2005)   –   20%   Senior   Citizens   discount   is   a   tax   credit  
deductible  from  tax  liability  
 
Losses  
Fires,  shipwreck,  theft  other  casualties  
Connected  with  trade  or  business  
Not  compensated  by  insurance  or  otherwise  
Not  claimed  in  the  estate  tax  return  
Declared  within  30  to  90  days  with  BIR  
NOLCO  –  Sec  34(D)(3)  (see  Rev  Reg  14-­‐2001,  27  Aug  2001)  
Losses  from  wash  sales  of  stock  &  securities  (Sec  38)  
What   are   wash   sales   and   how   are   they   treated   for   income   tax  
purposes?  
Capital  losses  (Sec  39)  
 
Bad   Debts   (See   Rev   Reg   No.   5-­‐99,   10   Mar   1999,   as   amended   by  Rev  Reg  
No.  25-­‐2002,  19  Nov  2002  amending  Sec.  3  of  RR  No.  5-­‐99)  
Charged  off  during  the  year  (see  PRC  v.  CIR  256  SCRA  667)  
Connected  with  business  
Not  related  parties  
Effort  to  collect  failed  
Legal  debt  
Power   of   attorney   for   operation   of   mining   claims   deemed  
partnership;   write   off   of   bad   debts   not   warranted;   it   was  
investment,   thus   not   debt;   alleged   debtor   has   not   filed   for  
bankruptcy;  assumed  guaranteed  obligations  were  not  yet  due  –  
Philex  Mining  v.  CIR  GR  No.  148187,  16  Apr  2008  
Tax  Benefit  Rule  applies  
 
Depreciation  
Definition   –   Gradual   diminution   in   the   useful   service   value   of  
tangible  property  used  in  business  (Basilan   Estates   Inc   v.   CIR,  
21  SCRA  17,  1967  
Methods  of  depreciation  [straight  line,  sum  of  years  digits,  etc]  
  
Depletion  
Definition   –   Exhaustion   of   natural   resources   like   mines,   oil   and   gas  
wells  as  a  result  of  production  or  severance  from  such  mines  or  
wells.  
 
Charitable  &  Other  Contributions  
Requisites  [  See  RR  13-­‐98  and  Sec  13  (C)  of  RR  2-­‐2003];  What  are  
the   requirements   for   the   deductibility   of   donations   for   income  
tax  purposes?  (Mariposa   Properties   Inc   v.   CIR,   CTA   Case   No.  
6402,   13   Feb   2007)   In   deciding   on   the   BIR’s   disallowance   of  
deduction   for   donations   made   to   a   private   foundation,   the   CTA  
required   the   donor   to   prove   compliance   of   both   the   donor   and  
the   donee   with   the   requirements   for   deductibility   of   donations.    
Hence,   for   failure   of   the   donor   to   present   proof   that   the  
foundation’s  income  tax  return  and  audited  financial  statements,  
as  well  as  the  annual  information  report  of  the  foundation  were  
submitted   to   BIR   as   required   in   the   regulations,   the   deduction  
for   donations   was   disallowed.     Deductible   in   full   and   subject   to  
limitations  
Donations   by   PEZA   registered   entity   to   Province   of   Batangas   for  
national   priority   project   of   NEDA   is   exempt   from   donor’s   tax,  
deductible   in   full   and   not   subject   to   DST   [DA   026-­‐2008,   22   Jan  
2008]  
 
Research  and  Development  
Requisites  for  deductibility  
Limitations  on  deductions  
 
Pension  Trust  Contributions  
Nature  and  requisites  
Limitation  on  deduction  
Excess   retirement   plan   assets   reverted   back   to   the   employer  
company   is   subject   to   income   tax   [DA   020-­‐2008,   17   Jan  
2008]  
 
Personal  Exemptions  (Sec  35)  
Personal  and  Additional  exemptions  
Status  &  amounts  –    
RA   9504   dated   July   6,   2008   eliminated   the   status   of   an  
individual   taxpayer.   Basic   personal   exemption   of  
individual   taxpayer   is   P50,000   each   (both   spouses  
are  entitled  provided  they  are  both  earning  income)  
Qualified  dependents    at  P25,000  each,  maximum  of  4    
See  Carmelino  Pansacola  v.  CIR,  GR  No.  15999,  16  Nov  
2006  –  effectivity  of  increased  personal  exemptions  
Change  in  status  
Marriage  
Birth  /  Death  
 Of  age  
 Gainfully  employed  
See   Silverio   v.   Republic   of   the   Phils,   GR   No.  
174689  22  Oct  2007  
 
 
Items  not  deductible  (Sec  36)  
Personal  and  living  expenses  
Capital  Expenditures  
Premium  on  insurance  where  beneficiary  is  the  payor  –taxpayer  
Losses  between  related  parties  
 
Special   provisions   re:   income   and   deductions   of   insurance   companies  
(Sec  37)  
Losses  from  Wash  Sales  of  Stock  or  securities  (Sec  38)  
Capital   gains   and   losses   (Sec   39)   [See   Rev   Reg   No.   7-­‐2003,   27   Dec  
2003]  
 
 
INCOME  TAX  TREATMENT  ON  THE  SALE  OR  EXCHANGE  OF  PROPERTY  (SEC  40)  
 
General  rule  on  recognition  of  gain  or  loss  in  a  sale  or  exchange  of  property  
Exceptions  
Factors  relevant  to  determination  of  gain  or  loss  
How  is  gain  or  loss  computed?  
What  is  the  basis  to  be  used?  
When  are  gains  recognized,  but  not  losses?  
What  are  the  two  types  of  merger  or  consolidation  under  Sec  40?  
What  are  the  tax  implications  of  merger,  consolidation  &  acquisition  of  80%  of  the  
assets?  
What   are   the   requisites   for   taxable   and   tax   free   transfer   of   property   resulting   to  
majority  ownership  of  the  corporation?  
When  stocks  or  securities  are  subsequently  sold,  how  are  gains  or  losses  computed?  
Guidelines   on   Monitoring   of   Tax   –   Free   exchange   of   property   for   shares   [Rev  
Reg  No.  18-­‐2001]  
Implementing  guidelines  of  Sec  40  [RMO  32-­‐2001  &  RMO  17-­‐2002]  
Tax   consequences   of   tax-­‐free   exchange   of   property   for   shares   of   stock   of  
controlled   corporation   per   Sec   40   (C)(2)   [See   Rev   Memorandum   Ruling  
No.  1-­‐2001,  29  Nov  2001]  
Tax   consequences   of   De   Pacto   Merger   re   Sec   40   (C)(2)   and   (6)(B)   [See   Rev  
Memo  Ruling  No.  1-­‐2002]  
Determination  of  substituted  basis  of  property  transferred  and  shares  received  
[See  Rev  Memo  Ruling  No.  2-­‐2002];    
CIR  v.  Rufino,  GR  No.  L-­‐33665-­‐68,  27  Feb  1987,  148  SCRA  42  –  [  tax  exempt  
merger  of  two  corporations]  
Delpher  Trades  Corp  v.  IAC,  157  SCRA  349,-­‐  [tax  exempt  transfer  of  property  
to  a  corporation  resulting  to  control]  
CIR  v.  Benigno  Toda,  438  SCRA  290  (2004)  –  meaning  of  fraud;  tax  avoidance  
/  evasion  
See  De  Leon’s  NIRC  Annotated  Vol  1,  2003  ed  discussions  of  Sec  40.  
How  are  inventories  treated?  (Sec  41)  
 Income  from  sources  within  the  Philippines  (Sec  42)  
CIR   v.   BOAC   149   SCRA   395   –   Source   of   income   of   airlines   –   [   sale   of   airline  
tickets   of   an   offline   carrier   considered   income   from   Phil   by   majority   of   SC;  
source   rule   discussed;   minority   considered   airline   tickets   as   contract   of  
carriage  or  service,  thus  situs  is  where  rendered;  characterization  becomes  
moot   given   the   new   tax   provision   on   2   ½   %   Phil   Gross   Billings   regardless   of  
where  sold  or  paid  provided  cargo  or  passenger  originates  from  Phil]  
NDC   v.   CIR,   151   SCRA   472   (1987)   –   Source   of   interest   income   –   [Exemption  
strictly   construed;   Sec   37   (now   Sec   42)   –   Income   from   sources   within   the  
Philippines  applied;  also  exclusions  from  gross  income.  
   
 
 
Accounting  periods  and  accounting  methods  (Sec  43  to  50)  
How  are  installment  and  deferred  payment  sales  treated  for  income  tax  purposes?  
Accounting  Methods  (Sec  43)  
What  accounting  methods  are  acceptable  to  BIR  
What  are  accounting  periods  and  their  relevance  
How  are  leases  treated  for  income  tax,  VAT  and  withholding  purposes?  
Two  types  of  leases:  (1)  Full  payout  lease  –  it’s  treated  as  capital  lease  –  subject  
to   VAT   the   full   amount   of   lease   and   to   2%   WT   if   payor   is   top   10,000  
taxpayer;  also  subject  to  depreciation  on  the  part  of  the  lessee-­‐buyer  and  (2)  
FMV   or   residual   lease   –   treated   as   operating   lease,   the   monthly   rentals   are  
subject  to  VAT  and  WT.  See  BIR  Ruling  No.  9-­‐2007  and  Rev  Reg  19-­‐86  
Ericsson   v.   Pasig   City   538   SCRA   99,   22   Nov   2007-­‐   Accrual   accounting   of  
income;   financial   reporting   system;   gross   receipts   v.   gross   income;   double  
taxation   explained;   question   of   law   v.   of   facts;   Rules   41,   45   and   56;   local  
taxation.  
 
Returns  and  Payments  for  individuals  and  corporations  [Sec  51  to  59]  
What  returns  should  be  filed  
Who  are  required  to  file  the  returns  
When,  where  and  how  are  returns  filed  and  the  tax  paid  
Effects  if  returns  are  not  file  don  time  or  not  at  all  
What  happens  in  case  of  excess  creditable  withholding  for  corporation?  
Philam   Asset   Management   Inc   v.   CIR   477   SCRA   761,   14   Dec   2005   –  Under  
Sec  76  of  the  NIRC,  a  taxable  corporation  with  excess  quarterly  income  tax  
payments  may  apply  for  either  a  tax  refund  or  a  tax  credit,  but  not  both.    The  
choice   of   one   precludes   the   other.     Failure   to   indicate   a   choice,   however,  will  
not  bar  a  valid  request  for  a  refund,  should  this  option  be  chosen  later  on.    [  
1997   and   1998   ITR].     Issues   are:     “Whether   or   not   the   failure   of   the  
petitioner   to   indicate   in   its   annual   income   tax   return   the   option   to   refund   its  
creditable   withholding   tax   is   fatal   to   its   claim   for   refund”;   [NO]   and  
“Whether   or   not   the   presentation   in   evidence   of   the   petitioner’s   annual  
income   tax   return   for   the   succeeding   calendar   year   is   a   legal   requisite   in   a  
claim   for   refund   of   unapplied   creditable   withholding   tax”   [NO]     But   if   it   is  
clear  that  an  option  was  made  although  the  box  is  not  filled  up,  that  choice  
shall  prevail.    [Narrated  history  of  recent  NIRC  amendments]  
CIR   v.   Meralco,   535   SCRA   399,   10   Oct   2007   –   Filing   of   ITR   with   excess  
payment   applied   for   credit   and   refund;   proof   required.     Note   the  
 amendments  to  the  law  applied  in  this  case  under  1986  NIRC  v.  1997  NIRC  
provisions    
 
Estates  and  Trusts  (Secs  60  to  66,  NIRC)  
The   taxes   imposed   on   individuals   apply   to   income   of   estates   and   of   any   property  
held  in  trust,  including:  
 
Income   accumulated   in   trust   for   unborn   or   unascertained   persons   with  
contingent   interest   or   for   future   distribution   according   to   the   terms   of   the  
will  or  trust  
Income   to   be   distributed   currently   by   fiduciary   to   beneficiaries,   and   income  
collected  by  guardian  to  be  held  or  distributed  per  court  order  
Income   received   by   estates   of   deceased   person   during   period   of   admin   or  
settlement  proceedings  
Trust   holding   employee   retirement   plan   is   not   taxable   subject   to   conditions  
under   Sec   60(B).     Any   amount   received   by   said   employee   or   distribute   in  
excess  of  his  contribution  is  taxable  to  him.    But  under  Sec  32  (B)(6)(a)  if  the  
conditions   for   its   exclusion   are   present,   the   excess   may   also   be   exempt   from  
income  tax.  
 
Estate   –   refers   to   the   mass   of   property   [assets   and   liabilities]   left   by   a  
decedent  
Taxable  as  a  separate  taxpayer  like  an  individual  if  under  judicial  testate  or  
intestate  proceedings,  otherwise,  income  from  said  property  is  taxable  to  the  
heirs;  it  follows  the  status  of  the  decedent  
Trust  –  property  held  by  one  person  for  the  benefit  of  another  
Taxable  -­‐  
Trust  –  if  income  is  to  be  accumulated  or  if  the  trustee  has  discretion  to  
accumulate  or  distribute  to  beneficiaries  
Beneficiary   –   if   he   /   she   received   income   from   the   trust   during   the  
taxable  year  pursuant  to  the  trust  agreement  
Grantor  –  if  revocable  or  held  for  grantor’s  benefit  or  to  his  designate  
Control  test  –  power  to  procure  the  payment  of  income  and  enjoy  the  
benefit   thereof   determines   who   is   subject   to   tax   on   coupon   bond  
donated  to  his  son.  Helvering  v.  Horst.  31  US  112  
Deductions  –  same  as  Estate  
Estates  and  Trusts  entitled  to  deductions  
Personal  exemption  –  P  20,000  (sec  62)  
Distribution   to   heir   during   the   year;   If   no   distribution,   subsequent  
distribution  of  said  income  no  longer  taxable  to  heirs  
Distribution  to  guardian  for  the  benefit  of  infant  
Administered   in   foreign   country   is   taxable   in   the   Philippines   in   the  
hands   of   the   trust   but   no   longer   taxable   in   the   hands   of   the  
beneficiary   when   distributed   to   him.     These   distributions   are   not  
allowed  as  deductions  from  the  taxable  return  of  the  trust.  
Read  BIR  Ruling  003-­‐05  –  taxation  of  trusts  under  common  trust  
funds.  
 
Other  Income  Tax  Requirements  (Secs  67  to  73)  
How  are  dividends  taxed?  (Sec  73)  
  
Quarterly   corporate   income   tax,   Annual   declaration   and   quarterly   payments   of  
income  tax  (Secs  74  to  77)  
State   Land   Investment   Corp   v.   CIR,   GR   No.   171956,   18   Jan   2008   –   Excess  
creditable  tax  may  be  refunded  or  credited  at  the  option  of  the  taxpayer  under  
former  Sec  69,  now  Sec  76.    Under  then  Sec  69,  excess  taxes  may  be  credited  in  
the  following  year  only,  after  then  need  to  be  claimed  for  refund  within  two  (2)  
years   from   payment   which   SIC   did.     MR   filed   with   CTA   included   1999   &   2000  
ITRs  showing  losses,  thus  1997  excess  tax  credit  could  not  have  been  applied  in  
1999,     Doctrines:     SC   is   not   trier   of   facts   but   if   lower   court   mis-­‐appreciated   facts  
or   failed   to   notice   facts   that   could   change   conclusion,   then   it   can   review   facts.    
Solutio  indebiti  applied  against  government.    Refund  granted.    Note:    counting  of  
2  years  starts  from  the  filing  of  final  return.  
 
Withholding  on  Wages  (Secs  78  to  83)