BIR Ruling

February 11, 1977 Tax treatment of Shares of stock in the nature of property dividend This refers to your letter dated December 6, 1976 containing a query posed before this Office on whether shares of stock received by stockholders in the form of property dividend are taxable immediately upon receipt thereof, or upon the sale of such shares by the recipient stockholders. In reply, thereto, pleased be informed that shares of stock received by a stockholder in the nature of a property dividend constitute an income under Section 29(a) of the National Internal Revenue Code, and therefore taxable as such upon receipt thereof, irrespective of whether the shares are sold or not. Accordingly, the shares of stock that would be received by your stockholders as property dividend in the contemplated move are immediately taxable upon their receipt of the shares. Please be guided accordingly.