BIR Ruling

March 9, 1973 Mr. Archimedes O. Tongsico 601 Ermita Center Bldg., Roxas Boulevard Manila S i r : This refers to your letter dated February 9, 1973, stating the following: "I have some personal assets acquired over ten (10) years ago, which if sold now, I would realize a considerable profit as capital gain. Since these assets are personal like diamonds which are non-productive and to take advantage of the tax exemption on capital gain, I have decided to sell and invest the proceeds in Central Bank Treasury Notes. cdta I also intend to invest this in the money market or in productive dividend paying industries in the near future. Therefore, I would like to know for how long this money must be kept under Treasury Notes." In reply, I have the honor to quote hereunder Section 34(b) of the Tax Code, as amended by Presidential Decree Nos. 16 and 16-A: "Sec. 34(b). In the case of a taxpayer other than a corporation, no gain or loss will be recognized on the portion of the gains realized that corresponds to the portion of the proceeds of the sale, disposition or transfer of capital assets, except shares of stocks of corporation covered in Section 4 of Republic Act No. 6141, invested in capital stocks of preferred productive enterprises or in the purchase of new issues of government bonds, securities, debentures and notes other than treasury bills, within six (6) months from the date the gains were realized: Provided, That the shares of stocks or government instruments representing the investment are not disposed of, transferred, assigned or conveyed for a period of three (3) years from the date the investment was made, otherwise all the taxes due on the gains realized from the original transfer, sale or disposition of the capital assets shall immediately become due and payable ." From the foregoing it is clear that the Central Bank Treasury Notes in which you will invest the proceeds of the sale of your personal assets should be held by you for three (3) years from the date of investment and should not be disposed of, transferred, assigned or conveyed before the lapse of the aforesaid period of three years. aisa dc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue