BIR Ruling No. 149-82

April 27, 1982 BIR RULING NO. 149-82 034-h 000-00 149-82 Messrs. Cruz, Valdez, Racho & Leynes 4th Floor, Universal Building 106 Paseo de Roxas Makati, Metro Manila Attention: Atty . Cesar C . Cruz Gentlemen : This refers to your letter dated February 11, 1982 requesting a ruling as to whether the gains derived by your client, Mr. Reynaldo Tiangco from the sale of his property is exempt from the payment of the capital gains tax. It is represented that on November 9, 1981, Mr. Reynaldo Tiangco sold his three (3) parcels of land with an aggregate area of 142,528 square meters located in San Mateo, Rizal and covered by Transfer Certificate of Title Nos. 37893, 51342 & 18242 of the Registry of Deeds of Quezon City; that on November 19, 1981 the gains realized from said sale amounting to P4,790,000.00 were invested in the original capital stock of Reymar Fisheries and Development Corporation, a BOI-registered non-pioneer enterprise. In reply, please be informed that pursuant to Section 6(b) of Republic Act No. 5186 as amended by Section 43(2) of Presidential Decree No. 1789 otherwise known as the Omnibus Investment Code, gains realized from the sale, disposition or transfer of capital assets as defined in Section 34 of the Tax Code that corresponds to the portion of the proceeds of the sale that is invested in new issues of capital stock of, or in the purchase of stock owned by foreigners in, registered enterprises within six months from the date the gains were realized, are exempt from income tax provided (1) that such sale, disposition or transfer and the investment of the proceeds thereof are registered with the Board and the Bureau of Internal Revenue; and (2) that the shares of stock representing the investment are not disposed of, transferred, assigned or conveyed for a period of three (3) years from the date the investment was made. If said shares of stock are disposed of within the said period of three (3) years, all taxes due on the gains realized from the original transfer, sale or disposition of the capital assets shall immediately become due and payable. In view of the foregoing, and since your client invested the gains derived from the sale of his real properties in the original capital stock of a registered enterprise said gains are exempt from the capital gains tax provided under Section 34(h) of the Tax Code, as amended by Batas Pambansa Blg. 37. Very truly yours, RUBEN B. ANCHETA Acting Commissioner