Valuation for Estate Tax Purposes of Shares of Stock of Certain Companies

February 18, 1986 BIR RULING NO. 011-86 091-b 000-00 011-86 Gentlemen : This refers to your letter dated December 6, 1985 requesting a ruling for and in behalf of your clients, the heirs of the late Lim Boon Hai, as to the valuation for estate tax purposes, of certain shares of stock of the following companies, viz: "a) Banco Filipino Savings & Mortgage Bank, (suspended) "b) Marinduque Mining & Industrial Corp. (suspended) "c) Philippine Iron Mines, Inc. (delisted) "d) Paper Industries Corporation of the Philippines (PICOP-B) (no transaction)" In reply, please be informed that pursuant to Section 91 (b) (formerly Section 103) of the Tax Code as amended, for estate tax purposes, the value of every item of property includible in the gross estate is the fair market value thereof at the time of the decedent's death. However, shares of stock which had been either suspended, delisted or where no transactions involving them have been made, shall be valued at their book value nearest the valuation date which in this case, is the date of decedent's death. Said book value shall be prima facie considered as their fair market value. If there have been previous bona fide sales/exchanges of such shares, the price at which such shares exchanged hands should be taken or considered as their fair market value. The shares of stock of Banco Filipino Savings & Mortgage Bank which, as represented, had been found insolvent and presently under liquidation, may be given a zero valuation for estate tax purposes. In other words, should the said shares later on appreciate in value and are subsequently sold or disposed, for tax purposes, their cost basis shall be zero. Be that as it may, the valuation given to every item of property included in the gross estate of the decedent shall be subject to verification by the Bureau of Internal Revenue. cdtech Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner