BIR Ruling

December 7, 1973 Messrs. Sycip, Gorres, Velayo & Co. 6760 Ayala Avenue, Makati, Rizal Gentlemen : This refers to your letter dated December 3, 1973 requesting information as to whether or nor the qualification of your client's retirement benefit plan will be affected by a transaction to be undertaken as follows: Your client, an American controlled company, has an already adjudicated qualified retirement benefit plan covering more than 500 employees with current fund already amounting to some million pesos. Your client is thinking of selling a piece of land to the Retirement Plan Trust Fund on the installment basis at fair market value at an agreed interest rate. Your client will of course pay income tax on the gain and interest income derived from the sale and continue to fund its current and past service liabilities. After the sale, the Trust Fund will lease to your client the land sold in an amount based on certain per cent of fair market value of the land or on a fluctuating amount to be determined periodically under the terms of the lease agreement. In reply, I have the honor to inform you that the foregoing transaction, which is apparently to be undertaken at arms length, will not affect the qualification of your client's retirement benefit plan. cdtech Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5