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Form 100. Personal Income Tax Declaration 2021

Losses due to debtor insolvencies

  1. Losses due to deterioration of credits derived from possible insolvencies of debtors will be deductible when, at the time of accrual of the tax, any of the circumstances provided for in Art. 13 of the LIS, this is:

    1. That the period of 6 months has elapsed since the expiration of the obligation. For taxpayers that are considered a small company, the period will be 3 months.

    2. That the debtor is declared to be in bankruptcy proceedings.

    3. That the debtor is being tried for asset stripping.

    4. That the obligations have been claimed by the courts or are in litigation or arbitration proceedings, the solution of which depends on their collection.

    In the case of small companies, the owners may also deduct the loss due to deterioration of credits due to possible insolvencies of debtors up to the limit of 1% on the debtors existing at the conclusion of tax period, except those for which the loss due to bad debts had been recognized individually and those for which impairment losses are not deductible.

  2. Losses due to credit impairment will not be deductible when:

    1. Credits are owed by public law entities unless they are the subject of an arbitration or judicial procedure regarding their amount or existence.

    2. Credits owed by related persons or entities, unless they are in bankruptcy and the liquidation phase has occurred in the terms provided in the Bankruptcy Law.

    3. Those corresponding to global estimates of the risk of insolvencies of clients and debtors.