BIR Ruling

June 28, 1967 Atty. Andres Gatmaitan Sycip, Salazar, Luna, Manalo & Feliciano 3rd Floor, Far East Building Buendia Avenue, Makati Rizal S i r : This refers to your letter dated June 22, 1967 requesting confirmation of your opinion, to wit: (1) That any amount to be paid by your client, Northern Motors, Inc., into the trust created pursuant to the Executive Deferred Profit-Sharing Plan which it proposes to establish for the benefit of participant employees in any taxable year shall be subject to income tax only in the taxable year or years in which such amount is actually distributed to the employee participant or his beneficiary; cdpr (2) That any such amount paid by the company into the trust (employer contribution) will be deductible by the company for income tax purposes in the taxable year in which said amount was paid into the trust; and (3) That income of the trust established under the Plan will not be subject to income tax. In reply thereto, I have the honor to inform you that on the basis of the rules and regulations submitted to this Office covering the profit-sharing plan in question, this Office believes that the Executive Deferred Profit-Sharing Plan referred to in your query may qualify for tax exemption under Section 56(b) of the Tax Code as amended by Republic Act No. 1983. Accordingly, any amount to be paid by the company into the trust created for the benefit of the participant employees shall be taxable to the recipient only in the year in which so distributed. The contributions to be made by the company to the trust shall also be allowed as deductions for income tax purposes under Section 30(j) of the same Code in the year when paid into the trust. The income of the trust from investments of the Fund shall further be exempt from tax pursuant to aforesaid Section 56(a) of the Tax Code. This Office may, however, modify this ruling if after verification it will appear that the operations of the Fund are different from that represented. prcd Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue