BIR Ruling [DA-065-06]

March 1, 2006 BIR RULING [DA-065-06] Sec. 85 Mr. Isidro C. Zarraga 11 Oakville Street, White Plains Subdivision Quezon City S i r : This refers to your letter dated February 8, 2006 stating that your late brother, Francis C. Zarraga, died intestate in 1999 a resident of Loay, Bohol; that prior to his death, some of his properties were mortgaged to the First Consolidated Rural Bank of Bohol (FCRB) and were subsequently foreclosed; that in March 1995, you and your brother jointly and equally paid to FCRB the amount of P350,185.06 as redemption price of the foreclosed properties; that in May 19, 1995, you and your brother executed a Joint Agreement whereby you stated therein that you had jointly redeemed his mortgaged properties from FCRB; that the foregoing facts were attested by the FCRB's president through the execution of an affidavit dated January 6, 2005; that the aforementioned properties were subjected to the comprehensive agrarian reform program and the payment of the just compensation through the Land Bank of the Philippines (LBP) was divided equally between you and your brother, recognizing therefore that you co-owned one-half (1/2) of said properties; and that from the foregoing, you are requesting in effect for a confirmation of your opinion that only one-half (1/2) of the value of the aforementioned properties shall be included in the computation of the gross estate of your late brother. In reply, please be informed that under Section 85 of the 1997 Tax Code, as amended, the value of the gross estate of the decedent is determined by including the value at the time of his death of all properties, real or personal, tangible or intangible, wherever situated. Likewise, under subsection (A) of Section 85 of the same Code, "Decedent's Interest" as referred to in the said provision, covers the extent of the interest of the decedent in a property at the time of his death. From the foregoing and since the subject properties are co-owned equally by you and your late brother, only the other half of the proceeds of the expropriated properties which pertains to the share of your late brother over the co-owned properties shall be considered as forming part of his gross estate. Your opinion that only one-half (1/2) of the value of the aforementioned properties shall be included in the computation of the gross estate of your late brother is hereby confirmed. 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. CAIHTE Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service