BIR Ruling

February 9, 1968 Blessed Sacrament Fathers Sta. Cruz Church Manila Gentlemen : This refers to your letter dated January 30, 1968 requesting the exemption from income tax of your investment income and the filing of the corresponding income tax return for the year 1967. You represented verbally that your organization was established for no other purpose than to take case of the affairs of the Sta. Cruz Church; that you are still few in number and in order to provide for succession as well as to augment your number, the income from your investments in shares of stock and interest from your bank deposit had been earmarked for the education of your seminarians; and that your investment income for 1967 amounts to only P8,348.76, whereas the expenses for the education of your seminarians for the same year was P12,900.00. In reply, I have the honor to inform you that your request for the exemption from income tax of your investment income cannot be granted for lack of legal basis. However, this Office believes that the expenses incurred in educating your seminarians constitutes operating expenses, and considering that your investment income is earmarked for such expenses, so much of such investment income as had been expended for such purpose may be deducted therefrom to arrive at the taxable amount. As it appears that the amount of the educational expenses of your seminarians exceeded your investment income in 1967, you have in effect incurred a net operating loss and, therefore, no amount is left which is subject to tax. However, considering that investment income is as a general rule subject to income tax, you are nonetheless required to file an income tax return, therefor even if no amount is left which is subject to tax after deducting therefrom the operating expenses for which the investment income had been earmarked. aisadc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue