Status of a General Copartnership Originally Engaged in General Merchandising but Formed a New Business

October 26, 1966 BIR RULING NO. 049-66 Mr. Feliciano D. Roque, Jr. 1272 (2nd Floor) Claro M. Recto Ave. M a n i l a S i r : This refers to your letter dated April 27, 1966 requesting information as to whether or not a general copartnership originally engaged in general merchandising business and duly registered as such with the Securities and Exchange Commission is considered unregistered with respect to its new business as a real estate dealer. In reply thereto, I have the honor to inform you that with respect to its real estate dealer's business, the partnership shall be considered unregistered. For the rule is that the "business" of partnership includes only the activities for which it was originally established or which were undertaken in the course of its operation. If a partnership is established for a single project, and subsequently another project is undertaken by the same partners, the second undertaking is not a continuation of the first. (Mertens, Federal Income Taxation, Vol. 6, Chap. 35, p. 214). As the business of real estate dealer is not one of the activities of the partnership under its articles of partnership, there is a need for amending said articles if it is to continue its status as a registered general copartnership. Otherwise the partners shall be considered as having formed a new venture or unregistered partnership, which is liable to corporate income tax under Section 24 of the Tax Code. casia Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue