Taxability of Donations of Real Estate in Favor of a Non-stock, Non-Profit Private Foundation Engaged in Civic, Educational, Social, Cultural and Charitable Purposes

June 26, 1991 BIR RULING NO. 122-91 94 (a) (3) 200-90 122-91 Gentlemen : This refers to your letter dated January 14, 1991 stating that Anlo Foundation, Inc. is a non-stock, non-profit private foundation duly registered with the Securities and Exchange Commission under Registration No. 180291 for civic, educational, social, cultural and charitable purposes; that it is managed by a board of trustees whose members do not receive compensation or fixed remuneration; that the sources of its fund consists of grants and donations; that there is a proposal to donate to said foundation certain real properties: Based on the foregoing, you pose the following queries: 1. Whether or not the proposed donation of real estate will be subject to donor's tax; 2. Whether or not the donation will be subject to capital gains tax; 3. Whether or not the donation will be fully deductible from the gross income of the donor; 4. Whether or not the subsequent transfer of the real estate by the foundation will be subject to capital gains tax. In reply, please be informed as follows: 1. Pursuant to Section 94 (a) of the Tax Code, as amended, gifts in favor of a civic, educational, social, cultural and charitable organizations organized as a non-stock, non-profit private foundation paying no dividends, governed by trustees, who receive no compensation and devoting all of its income to the accomplishment and promotion of the purpose in its Articles of Incorporation, shall be exempt from donor's tax provided that not more than thirty per centum of said gifts shall be used by such donee for administration purposes. 2. Said donation is not also subject to capital gains tax because when the donor parts with her property without consideration, he did not realize a taxable gain. It is likewise not subject to documentary stamp tax except the P3.00 documentary stamp on certificates under Section 188 of the Tax Code. 3. Since Anlo is represented to be a private foundation, donation to be made to it will be deductible to the full extent from the gross income of the donor pursuant to Section 29 (h) (2) (C) (i) of the Tax Code, provided the said Foundation is a qualified registered donee institution under BIR-NEDA Regulation No. 1-81 as amended. 4. If the same properties acquired by gift are subsequently conveyed by way of sale, or exchange, Anlo will be subject to corporate income tax on the gain realized which is determined by deducting from the gross selling price the historical cost or the adjusted basis thereof, as it would be in the hands of the donor, pursuant to Section 24 (a) in relation to Section 34 (a) both of the Tax Code, as amended by Executive Order No. 37. If it is donated to a non-exempt donee, Anlo shall be liable for donor's tax pursuant to Section 91 in relation to Section 92 (b) of the Tax Code. The foregoing ruling is based on your representations indicated above; hence, it will not apply if upon verification, the facts are materially different therefrom. aisadc Very truly yours, (SGD.) JOSE U. ONG Commissioner