Request for Exemption from Donor's Gift Tax of Donation of a Paper Cutter by World Missions to Pentecostal Christian Church

December 19, 1986 BIR RULING NO. 280-86 104-b 171-86 280-86 Gentlemen : This refers to your letter dated October 14, 1986 requesting exemption from the donor's gift tax on the donation of one (1) thirty-six inch (36 inch) motor operated paper cutter by the World Missions in favor of the Pentecostal Christian Church, Inc. It is represented that the donor, World Missions (the Mission Department of Calvary Temple Incorporated) is a religious and charitable organization recognized by the State of Maryland since 1949 with offices at 149 South Conococheague Street, Williamsport, Maryland, U.S.A. while the donee, Pentecostal Christian Church, Inc. is a religious corporation and that the aforesaid motor operated paper cutter was declared obsolete in the United States and has no commercial value. In reply, please be informed that since that corporation as the donee in the instant case is a religious corporation, the aforementioned donation is exempt from the payment of the donor's gift tax pursuant to Section 104(b)(2) of the Tax Code as amended, subject to the condition that not more than 30% of the said gifts shall be used by the donee for administration purposes. Be that as it may, the shipment to you of one (1) thirty-six inch (36-inch) motor operated paper cutter by the World Mission to be used by your church is subject to the compensating tax at the rate of 20% based on the total value used by the Bureau of Customs in determining tariff and customs duties including customs duty and all other charges, such tax to be paid before the withdrawal of the said article from the customs-house or the post office, pursuant to Section 169(a) in relation to Section 163(4), both of the Tax Code, as amended by Executive Order No. 36 which took effect on August 1, 1986. It should be noted that this provision of law enumerates the articles which are not subject to compensating tax and those imported and/or donated from abroad by religious organizations like your organization are not included in the enumeration. (BIR Ruling No. 048-84). cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue