BIR Ruling No. 202-61

May 26, 1961 BIR RULING NO. 202-61 Mr. Carlos Hilado 47 Rizal Street Bacolod City S i r : This is in answer to your query of whether or not this Office has any objection to the proposed management of property under the arrangement narrated by you as follows: LLphil "As I explained verbally to you and your legal staff, an old man, who finds himself unable to supervise actively the management of his farm work, would like to entrust the same management to all his five (5) children in order not to discriminate against any one of them. He does not want to lease the property to any one of his children to avoid the same discrimination. He does not also want to lease the property to all of them due to the probable difficulty in the partition of the portion corresponding to each one. Besides, his principal objection to the lease is that he does not want to lose control over his property during his lifetime. "His plan for the management of his property, without losing control of the same and in order to be fair to all five children, is for his five children to organize a partnership or management corporation to which partnership or corporation he would entrust the management of his property on the net profit sharing basis of 50% for him and 50% for the corporation. Please understand that in this arrangement, no transfer of property is involved, as the contract would only deal exclusively with the management of property." cdt The Tax Code and the regulations of not contain any prohibition or restriction on the manner of managing one's property. This Office has, therefore, no objection to the manner of management of property described by you. It maybe stated in this connection, however, that in case the management of the property is entrusted to a partnership which is unregistered or to a corporation, such partnership or corporation shall be subject to the corporate income tax on the income pertaining to it. Where the management of property as undertaken by a registered general co-partnership the income pertaining to the partnership shall not be subject to the income tax but the partners shall be individually subject to the income tax on their share in the profits realized. (Secs. 24 and 26, Tax Code) LLjur Very truly yours, (SGD.) MISAEL P. VERA Deputy Commissioner of Internal Revenue