Taxability of Gains Derived by Corporations in Disposal of Their Real Properties

September 17, 1986 BIR RULING NO. 177-86 21-e 170-85 177-86 Gentlemen : This refers to your letter dated July 17, 1986 requesting a ruling to the effect that corporations are exempt from the capital gains tax when they dispose of their real properties. In reply, I have the honor to inform you that Section 34(h) of the Tax Code, as amended by P.D. No. 1994 (now Sec. 21(e) of the Tax Code, as amended by Executive Order No. 37) is explicit that only natural persons or individuals, including estate and trust are liable to the 5% capital gains tax prescribed therein. Such being the case, the gains derived by corporations are subject not to the said 5% capital gains tax, but to the corporate income tax prescribed under Section 24(a) of the same Code, as amended, whether such gains are capital gains within the meaning of Section 34(a) of the Tax Code or ordinary income within the meaning of Section 20(z) of the same Code, as amended by Executive Order No. 37. cdti Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner