BIR Ruling No. 089-62

August 14, 1962 BIR RULING NO. 089-62 The Acting Regional Director BIR Regional District No. 3 M a n i l a S i r : This has reference to the income tax cases of Mesdames Fausta and Estella, both surnamed Yupangco, and Carlos Yupangco, for the calendar year 1958, in relation to the real estate dealer's fixed tax due and collectible in their capacity as co-owners of real property leased to another or others. cdta A perusal of the records submitted to this Office shows that each of the aforenamed taxpayers realized an income of less than P4,000 in 1958 from properties inherited by them from the late Jose Yupangco. However, their collective annual rental income realized from said inherited properties amounted to P5,700.00 for the same year. It was further verified that by virtue of the Deed of Extra-judicial Partition executed among the heirs on March 25, 1952, the said heirs agreed to divide and adjudicate among themselves the entire estate left by the deceased. You now request the opinion of this Office whether or not the heirs of the late Jose Yupangco, in their collective capacity, are subject to the payment of real estate dealer's fixed tax. In the Deed of Extra-judicial Partition executed among the heirs, the said instrument allocated what portion of the entire hereditary estate each and every one should receive. There is no showing that the said estate was physically subdivided in accordance with the proportion stated in the deed of extra-judicial petition. The conclusion that the estate was not physically subdivided among the heirs is evidence by the fact that in each of the income tax return filed by the said heirs, their income as reported under Schedule "E" receipts from business or rents of real property belonging to the heirs. Again, under Schedule "I" of each of the income tax return filed for the calendar year 1958, the same real property (accessoria) was used by all of said heirs in claiming deductions for depreciation under Schedule "B", "C" and "E" of said returns, confirming the conclusions advance by this Office that there was no real physical division of the estate inherited by the said heirs and that they are co-owners of said property. In view of the foregoing, this Office believes and so holds that the heirs of the late Jose Yupangco should be held liable for the payment of the real estate dealer's fixed tax as co-owners, based on the collective annual rental income realized from said common properties. This supersedes BIR Ruling No. 317, series of 1961 and all previous rulings relative to the same. lexlib Very truly yours, JOSE B. LINGAD Acting Commissioner of Internal Revenue