Tax Liabilities of Farmers

April 11, 1958 BIR RULING NO. 236-58 Mr. Eugenio R. Estrella Supervising Revenue Examiner Thru the Revenue Operations Executive Administrative & Coordinating Dept. Bureau of Internal Revenue, Mla. S i r : Hereunder are the answers to the queries contained in your letter dated January 23, 1958 to the Revenue Operations Executive (Legal): LLphil First Query "(1) A person with an annual income of P2400.00 at the same time owns an inherited parcel of agricultural land out of which he realizes a yearly return of P1000.00 to P1200.00, is he obliged to submit the prescribed statement of net worth and operations with his income tax return?" Farmers are required to accompany their income tax returns with the yearly statement of net worth and operations or balance sheets and profit and loss statements, as the case may be. A person, therefore, acquiring income from salary and farming should accompany his income tax return with the corresponding statements. Second Query "(2) Is farming of this scale a business within the scope of internal revenue laws? If not, then when can farming be considered a business?" Farmers are not subject to any business tax. Farming cannot in any case be considered a business. Third and Fourth Queries "(3) 'A' owned real estate properties worth P20,000. On December 29, 1957, he sold these properties to 'B' affecting on the same date the complete transfer thereof in the government assessment rolls and in the records of the Register of Deeds. Is 'A' still subject to the payment of Class B residence certificate for 1958 based on these properties which he sold on December 29, 1957?" LLjur "(4) Is 'B' the new owner from December 29, 1957, also liable to the payment of additional residence tax for 1958 based on these properties which he acquired three days before the previous year ended?" "A" is not liable to the additional residence tax for 1958 but "B" is because for all purposes he is the owner of the property in 1957 however short was his ownership of the property in that year. Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue