BIR Ruling

October 11, 1971 Mr. Justo L. Aquino Certified Public Accountant 737 Severino St., Manila S i r : This refers to your letter dated October 4, 1971 requesting a ruling as to the basis of ascertaining the selling price of real estate for the purpose of computing the income tax on the gain derived from the sale thereof. aisa dc In reply thereto, I have the honor to inform you that, for income tax purposes, the gain derived in the sale of real estate represents the selling price less the acquisition cost thereof. (Sec. 35, Tax Code). The selling price is represented by the consideration appearing in the Deed of Sale. If the said consideration is less than an adequate and full consideration, the amount by which the latter exceeds the former is deemed to be a gift subject to gift taxes. (Sec. 111, Tax Code). In this connection, the value of real property fixed by a real property valuation committee created by the Department of Finance in accordance with Section 91 of the Tax Code, as amended by Republic Act No. 6110, is used in appraising real property forming part of the gross estate of the deceased for transfer tax purposes. It is also utilized in determining the fair market value of a gift in case the same is made in real property, for gift tax purposes. (Section 113, Tax Code, as amended by Republic Act No. 6110). Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue