BIR Ruling [UN-224-94]

July 26, 1994 BIR RULING [UN-224-94] National Development Company First Bank Bldg., 371 Sen. Gil Puyat Ave., Makati, Metro Manila Attention: Mr . Esmeraldo E . Sioson Asst . General Manager Gentlemen : This refers to your letter dated February 23, 1994 requesting for a ruling on the tax consequence of the contemplated sale by your company of its entire shareholdings in Nadeco Realty Corporation, consisting of 60% of the latter's total outstanding capital stock, which your company acquired in 1975 through exchange of properties for shares of stock. cdtech In reply, please be informed as follows: (1) That the sale of your stockholdings in NADECO constituting sixty percent (60%) of its total outstanding capital stock will result in a capital gain taxable at the rate of 10%-20% under Section 24(e) (2) (A) of the Tax Code, as amended. (BIR Ruling No. 222-91 dated October 31, 1991) (2) In determining the gain, the cost basis shall be the same as it would be in the hands of the donor (Pepsi Cola Bottling Co.) since the property exchanged for shares of stock was acquired by donation. Moreover, the said contemplated transaction is subject to the documentary stamp tax imposed by Section 176 of the Tax Code, as amended by R.A. 7660 (BIR Ruling No. 18-94 dated January 13, 1997). cdi Very truly yours, ALICIA P. CLEMENO Acting Assistant Commissioner (Legal Service)