Taxability of a Real Estate Dealer and His Independent Contractor

October 29, 1968 BIR RULING NO. 030-68 Mr. Cresencio P. Gonzales 276 Shaw Boulevard Mandaluyong, Rizal S i r : This is with reference to your letter dated February 15, 1968, pertinent portions of which are quoted hereunder: prcd "The business operation will consist in buying on a limited scale subdivision lots. Houses will then be constructed thereon by my own work crew, after which the houses and lots will be sold at a profit. "QUESTIONS: 1. What business taxes must I pay? 2. How will these taxes be affected, if at all, if: a. Instead of hiring my own work crew, I shall hire an independent contractor for the construction work? b. Instead of buying subdivision lots, bigger parcels of land are bought and then subdivided and developed (1) by administration, and (2) by contractors?" In reply, I have the honor to inform you that under the facts abovestated you are a real estate dealer, subject to the fixed tax imposed in Section 182(A)(3)(s) of the Tax Code. Under the facts mentioned in Item 2(a), your status as a real estate dealer shall remain unaltered, but the independent contractor shall be subject to the fixed and percentage taxes prescribed in Sections 182(A)(1) and 191 of the aforesaid Code. As regards your query under Item 2(b) please be informed that it cannot be answered for lack of information on how the land shall be "developed by administration and by contractors." cdt Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue