BIR Ruling [DA-056-97]

February 5, 1997 BIR RULING [DA-056-97] Employees Confederation of the Philippines 4th Floor, ECC Building 355 Sen. Gil J. Puyat Ave., Extn. Makati City Attention: Mr . Aniano G . Bagabaldo Vice President Gentlemen : This refers to your letter dated August 8, 1996 requesting for a ruling on the tax consequence of the transfer of one (1) share of stock of Makati (Sports) Club, Inc. on March 15, 1984. cdll It is represented that Mr. Francisco R. Floro is the owner of one (1) fully paid share of stock of Makati (Sports) Club, Inc. covered by Certificate No. A-125 which he bought on November 19, 1975 for Twenty Five Thousand Pesos (P25,000.00); that Makati (Sports) Club, Inc. shares are not listed shares of stock; that on March 15, 1984, Mr. Floro sold the said share of stock to the Employers Confederation of the Philippines for Twenty Five Thousand Pesos (P25,000.00); and that at the time it was sold, the said share has a market value of Twenty Five Thousand Five Hundred Pesos (P25,000.00). In reply thereto, please be informed that pursuant to Section 6(a)(3) of Revenue Regulations No. 2-82 in determining the tax base in case of sale, transfer or exchange of shares not listed in the stock exchange, the unlisted shares shall be valued at their book value nearest the valuation date. The book value of these unlisted shares of stock shall be prima facie considered as the fair market value. However, if there have been previous bonafide sales/exchanges of the unlisted shares of stock, the price at which these shares exchanged hands should be taken/considered as its fair market value. Accordingly, since Makati (Sports) Club, Inc. shares of stock are not listed in the stock exchange, the fair market value of these shares shall be based on their book value nearest the valuation date. (BIR Ruling No. 193-89 dated September 7, 1989) LLjur This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, ALICIA L. TOMACRUZ Head Revenue Executive Assistant (Legal Service)