BIR Ruling No. 648-12

December 7, 2012 BIR RULING NO. 648-12 Section 2 (t) of Revenue Bulletin 01-03; BIR Ruling No. 082-10 Enrique S. Valerio, CPA Rm. 312 Burke Bldg., Burke St. Escolta, Manila Gentlemen : This refers to your letter dated April 18, 2012 requesting in behalf of your client, DETROIT COMMERCIAL INTERNATIONAL CORPORATION, for exemption from capital gains tax. It is represented that the operation of DETROIT COMMERCIAL INTERNATIONAL CORPORATION had gone down tremendously and cannot even compete for a new and branded model spare parts caused by the high cost of importation and continuous slow down of their potential market as worsen by having obsolete and unsellable out modeled stocks. * Based on the foregoing, you now request for a ruling that capital assets owned by the said corporation as land and building (assets not held for sale) as well as inventories as part of the return of investment and/or the liquidating dividend to all stockholders are exempt from capital gains tax being the subject of the plan to dissolve the corporation which incurred heavy losses. In reply, please be informed that under Revenue Bulletin No. 01-03, the ruling function is limited to the determination of purely legal issues, as opposed to questions of fact. Accordingly, the Revenue Bulletin declared certain issues or subject matter as "No-Ruling Areas", on which the appropriate office of the Bureau is hereby instructed not to accept any request for rulings covered by said Revenue Bulletin or any amendments thereto. cHSIAC Section 2 (t) of Revenue Bulletin No. 1-2003 dated July 14, 2003 provides: "Section 2. List of No-Ruling Areas. The following shall hereby be construed and identified as "No-Ruling Areas": xxx xxx xxx 1) Request for rulings on issue/s or transactions based on hyphothetical situations." In view of your representation that the transaction is neither existing nor partially executed considering that the dissolution of your company is still in the planning stage, this Office cannot as yet issue a definitive ruling or opinion on the above matter considering that the issue is based on hypothetical situation, which is considered as a "No-Ruling Area" pursuant to Section 2 (t) of Revenue Bulletin 01-03. (BIR Ruling No. 082-10 dated October 5, 2010) Be that as it may, we would be glad to assist you should you request for a ruling when these transactions are executed by the concerned parties. Please be guided accordingly. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue