Whether Sales of 38 Parcels of Land to Sister Company Is Subject to Capital Gains Tax

September 17, 1986 BIR RULING NO. 179-86 21 (e) 170-85 179-86 Gentlemen : This refers to your letter dated June 13, 1986, requesting a ruling as to whether your sales of 38 parcels of land to your sister company, Casas Development Corporation for the amount of P250,000.00 is subject to the capital gains tax. In reply thereto, I have the honor to inform you that Section 34(h) of the Tax Code as amended by P.D. No. 1994 (now Section 21(e) of the Tax Code, as amended by Executive Order No. 37) is explicit that only natural persons or individuals including estates 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 added by Executive Order No. 37. aisadc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner