BIR Ruling

October 18, 1973 Carlos J. Valdes & Co. Certified Public Accountants 1130 Perez Street, Paco Manila Gentlemen : This refers to your letter dated February 20, 1973 requesting information as to the application of Section 76 of Republic Act No. 3844, as amended, on certain transactions involving Land Bank bonds. Pursuant to Section 76 of Republic Act No. 3844, as last amended by Presidential Decree No. 251, land bank bonds "shall be exempt from taxation both as to principal and interest." aisadc In reply thereto, I have the honor to inform you as follows: 1. If the acquisition cost of the bond is less than the face value and the same are held until maturity date or redeemed before maturity date by the Land Bank, the difference between the face value and the acquisition cost as well as the interest income on the bonds are exempt from income tax. 2. In the case of a subsequent sale of the bonds to a party other than the Land Bank, with a repurchase agreement at a price bigger than acquisition cost, the gain derived therefrom is subject to tax. And if the bond is repurchased at face value, the gain derived by the seller is also subject to tax. 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."