BIR Ruling [DA-428-98]

September 17, 1998 BIR RULING [DA-428-98] Mr. Salvador S. Laguda No. 10 F. Collantes Street Xavierville, Loyola Heights Quezon City S i r : This refers to BIR Ruling No. 054-98 dated May 21, 1998 which was issued by this Office in your favor relative to your request for a ruling that the tax base to be used in computing the capital gains tax due on the assignment by the heirs of Angel and Sarah dela Paz of the inherited properties in favor of the inherited properties in favor of A.G. Paz Enterprises, Inc. shall be the fair market value of the properties in 1984 when the Project of Partition and Assignment of Shares was executed by the heirs. asiadc It will be noted that in said BIR Ruling, your clients, the Heirs of Angel and Sarah dela Paz, executed the Project of Partition in 1984 wherein all properties inherited from the said Spouses were assigned in favor of A.G. Enterprises, Inc., a holding company incorporated by the late Angel dela Paz and his children; that due to oversight, the said BIR Ruling failed to state that the non-payment of capital gains tax due and non-filing of the capital gains tax return on the said assignment by your said clients of their inherited properties within thirty (30) days from the execution of the said Project of Partition is likewise subject to the 20% interest per annum reckoned from the date prescribed for the payment of the tax up to the date the deficiency is assessed, provided, that the maximum amount that may be collected as interest on the deficiency shall, in no case, exceed the amount corresponding to a period of three years, the provisions regarding prescription pursuant to then Section 51(d) of the Tax Code, as amended by P.D. No. 1705 [now Section 248(A) of the Tax Code of 1997] and to the surcharge of ten percent (10%) of the amount of tax unpaid, if any amount of tax shown on the return is not paid in full on or before the date prescribed for its payment pursuant to then Section 51(e)(3) of the Tax Code, as amended by P.D. No. 1705 [now Section 248(A)(1) and (3) of the Tax Code of 1997]. Hence, your clients, are liable to pay not only the capital gains tax on their aforesaid assignment of their inherited properties to A.G. Paz Enterprises, Inc. but also the corresponding penalties as above stated. Furthermore, the said tax including the corresponding penalties thereof should be paid with the Revenue District Office where the properties are located. This clarificatory ruling shall serve as an authority for the Revenue District Office and/or any accredited Bank concerned to accept payment of the capital gains tax including the corresponding penalties after payment of which, to issue the corresponding Certificate Authorizing Registration. cdta Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)