Sales of Lots on the Installment Basis

March 24, 1960 BIR RULING NO. 145-60 Messrs. Sycip, Gorres, Velayo & Co. Certified Public Accountants P.O. Box 589, Manila Gentlemen : Reference is made to your letter dated February 29, 1960, requesting confirmation of your opinion that in the case of sales of lots on the installment basis, only that portion of the annual installment payments corresponding to the income realized from the sales and not the total installment payment should be the basis for determining the amount of fixed tax payable by a real estate dealer. You further stated that in the case of such sales, the installment payments represent partly a return of capital, partly interest and partly income realized from the sale. In answer thereto, I have the honor to inform you that the term "annual income" use in section 182(A)(B)(s) of the Tax Code has reference to the volume of business done during a given year. Such being the case, for the purpose of determining the applicable rate of real estate dealer's fixed tax, the total receipts derived in the preceding year by the real estate dealer should be considered. Accordingly, in the case of sales of real estate by installment, the basis for the determination of the rate of tax payable by a real estate dealer is aggregate installment payments received in the preceding year without any deduction. prcd It is, therefore, regretted that this Office cannot share the opinion expressed in your said letter. Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue