BIR Ruling

January 11, 1974 Mr. Arturo Durmiendo Ground Floor, Ledesma Bldg. Intramuros, Manila S i r : This refers to your letter dated September 12, 1973 requesting resolution of certain questions based on the following facts: "Assuming A bought P50,000.00 of Lepanto Consolidated Mining shares on April 6, 1973, and sold the same subsequently for P70,000.00 on August 30, 1973. A paid automatically 1/4 of 1% of P70,000.00 or P175.00 as capital gains tax and 1% of P70,000.00 or P700.00 as broker commissions, and netted a proceed of P69,125.00 as follows: Sale P70,000 Capital Gain Tax, 1/4 of 1% P175.00 Broker commissions 1% 700.00 P875 P69,125 ======== or a net gain of P19,125.00 as follows: Net Proceed P69,125.00 Purchase Cost 50,000.00 P19,125.00 =========== In reply, I have the honor to inform you as follows: (1) If A is an individual investor and not engaged as "dealer in securities" he is subject only to the stock transaction tax imposed by Section 195-B of the Tax Code. He is not subject to any business, income or any other tax on the stock transaction in question. (2) If A, be he an individual or a corporation, is a registered dealer in securities, he is subject to the annual fixed tax of P150.00 and to the 3% tax on his gross income, pursuant to Sections 183(A)(3)(2) and 195-A of the Tax Code. Moreover, the share of stocks being stocks in trade, the gain derived is considered ordinary gain subject to income tax. However, the gross selling price of the stocks is not subject to the stock transaction tax. aisa dc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."