BIR Ruling

July 5, 1974 Atty. Ricardo C. Fernandez 204 Madrigal Bldg. Escolta, Manila S i r : In reply to your letter dated June 20, 1974, I have the honor to inform you that, pursuant to Section 35 (c)(2) of the Tax Code, as amended by Republic Act No. 4522, no gain or loss shall be recognized upon the transfer of real properties pursuant to a Deed of Assignment executed by Mr. Pedro S. Siapuatco on May 23, 1974, in favor of the PSS Realty and Development Corporation solely in exchange for shares of stocks, it appearing that as a result of such exchange, said transferee becomes the majority and controlling stockholder of the corporation. It is understood that the basis of the shares of stocks received by the transferor upon the exchange shall be the same as the basis of the properties transferred. It may be stated that the transferor must file with his income tax return for the taxable year in which the exchange is consummated a statement of all facts pertinent to the exchange, including 1. A description of the assets transferred together with a statement of the cost or other bases thereof adjusted to the date of transfer; and 2. The kind and number of shares of each class received. The transferee corporation must also file with its income tax return 1. A complete description of all the assets received from the stockholder-transferor; 2. A statement of the cost or other bases thereof in the hands of the transferor adjusted to the date of transfer; 3. The total issued capital stock and outstanding capital stock immediately prior to and immediately after the exchange, with a complete description of each class of stock; 4. The classes of stock and number of shares issued to the transferor; and 5. The fair market value of the capital stock as of the date of exchange. Finally, permanent records in substantial form shall be kept by all parties involved in exchange showing the information listed above. 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."