Concept of a Lending Investor

January 21, 1959 BIR RULING NO. 043-59 1st Indorsement Returned to the Regional Director, Regional District No. 3, Manila, the within papers relative to the internal revenue tax case of the Union Construction Co., Inc. involving the amount of P1,950.00 representing lending investor's fixed tax. cdta Request is made for an opinion as to whether or not the act of lending money to the partners constitutes the partnership a lending investor. To be considered a lending investor, one must dedicate himself habitually to the business of lending money at interest. It presupposes a series of dealings with the general public. There must be regularity of transactions as a part of the business operation. The fact that the loans extended by the company were limited only to the partners militates against the classification of the company as a lending investor. Moreover, the money loaned belongs to the partners themselves and any interest paid by them on the loans would eventually return to them by way of dividends. The prevailing circumstances of the case do not warrant the classification of the company as one engaged in the business of lending investor. Accordingly, he is advised that there is no legal basis for holding the Union Construction Co., Inc. as a lending investor. cdti (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue