BIR Ruling

October 6, 1971 A. R. Martinez & Associates Certified Public Accountants 205 El Hogar Filipino Bldg. Manila Gentlemen : This refers to your letter dated August 4, 1971 relative to BIR Ruling No. 40 dated January 30, 1971. acd You stated that the aforementioned ruling touched on the question of transfer of shares of stock between husband and wife in which said transfer did not constitute a donation and, therefore, not subject to the gift tax because no affirmative evidence existed to show that said transfer was made with the money belonging exclusively to the husband since the shares of stock belonged to the conjugal partnership and was transferred for purposes of administration. Based on the foregoing circumstances, you now posed the following queries: 1. Whether the transfer is considered a capital asset transaction; and 2. Whether the transfer is considered a "transfer" within the purview of Section 195-B of the Tax Code, as inserted by Republic Act No. 6141, and implemented by Revenue Regulations No. 2-70 which imposed a 2% tax on stock transactions. In reply, I have the honor to inform you as follows: 1. The transfer between husband and wife of shares of stock belonging to the conjugal partnership only for purposes of administration does not involved capital gain or loss on the part of the conjugal partnership, hence, the transfer is not considered a capital asset transaction for purposes of taxation. 2. The transfer between husband and wife of shares of stock belonging to the conjugal partnership only for purposes of administration is not considered a transfer falling within the purview of Section 195-B of the Tax Code, as inserted by Republic Act No. 6141, since the transfer does not, in effect, convey ownership of, or title to, the shares of stock. Accordingly, such transfer is not subject to the 2% stock transaction tax imposed by the said provision of law. cdta Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue