BIR Ruling

July 9, 1969 Mr. Dionisio C. Uy Enqui Solano, Nueva Vizcaya S i r : This refers to your letter dated July 3, 1969 requesting information as to whether or not the gain you derived from the sale of two lots is a capital gain. It is represented that, in 1968, you sold two adjacent lots in Caloocan and deriving therefrom a gain of P101,000.00 which you considered as capital gain in that year and accordingly returned for the income tax for said year only one-half thereof. You acquired one lot in 1954 purely for investment and the other lot in 1965 also for investment. At the time you acquired the two lots, however, there were two factories thereon which were paying a rental of P2,700.00 per annum which rental had not been increased up to this moment because you did not intent to maintain the lease on the two lots you purchased as in fact you have been taking steps to eject the owners of the two factories. the owners, however, refused to vacate the premises for which reason you were constrained to sell the lot in 1968. In reply, I have the honor to inform you that considered in the light of the circumstances surrounding your acquisition of the two lots and of the further fact that the rental income is only P2,700.00 per annum which rental income have been prevailing without increase since your acquisition of the two lots, it is the opinion of this office as it hereby holds that the two lots in question were capital assets to you and, therefore, the gains you derived from the sale thereof were capital gains. Such being the case, you were correct in reporting only one-half of the gain you derived from the sale of the two lots, it appearing that you have been holding the two lots for more than one year from the date of their acquisition. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue