Exemption from the Capital Gains Tax — Sale of Subdivisions Lots

April 28, 1981 BIR RULING NO. 079-81 34-a-1-103-80 079-81 Mr. Tomas A. Blanco TAB Development Corporation 17 Solar, Bel Air Makati, Metro Manila S i r : This refers to your letter dated March 4, 1981 requesting exemption from the capital gains tax under Section 34(h) of the Tax Code, as amended by Batas Pambansa Blg. 37. It is represented that TAB Development Corporation is a domestic corporation organized under and by virtue of the Laws of the Philippines; that the primary purpose of its business is in the acquisition, development and resale of real estate properties, under Reg. No. 64156 of the Securities and Exchange Commission dated October 21, 1975; that you have acquired properties in Sta. Rita, Batangas City and has now developed and subdivided for sale to lot buyers; that on February 5, 1976 you have registered your business name TAB Development Corporation with our District Revenue Office in Batangas City under Reg. No. 1408-76 and paid the initial PTR of P150.00 under Office Receipt No. F-4923855; that you have registered your subdivision with the National Housing Authority per Reg. P.S. 1830 dated March 26, 1980. cdti In reply, I have the honor to inform you that the gains you will derive from the sale of subdivisions lots are considered ordinary gains, the same being profits derived from the sale of property held primarily for sale to customers in the ordinary course of trade or business under Section 34(a)(1) of the Tax Code of 1977, as amended. Such being the case, said gains are not subject to the capital gains tax under Section 34(h) of the Tax Code, as amended by Batas Pambansa Blg. 37, as implemented by Revenue Regulations No. 8-79, but to the ordinary corporate income tax prescribed under Section 24 of the Tax Code, as amended. Very truly yours, RUBEN B. ANCHETA Acting Commissioner