Amending Regulations No. 14-80

January 26, 1981 REVENUE REGULATIONS NO. 04-81 SUBJECT : A mending Regulations No. 14-8 0 TO : All Internal Revenue Officers and Others Concerned Pursuant to the provisions of Section 8 of Presidential Decree No. 1739 and Section 326 in relation to Section 4 of the National Internal Revenue Code, as amended, the following regulations are hereby promulgated to amend certain sections of Revenue Regulations No. 14-80. 1 . Section 8 of Revenue Regulations No. 14-80 is hereby amended to read as follows: "Sec. (8) Manner of filing returns and payment of taxes . The final capital gains tax herein imposed shall be paid upon filing of return, in duplicate, with the Revenue District Officer, or the Collection Agent concerned or duly authorized Treasurer of the Municipality where the taxpayer's principal office is located and where its books of accounts are kept, on or before the fifteenth day of the fourth month following the close of the taxable year. The return (B.I.R. Form No. ____) shall cover all transactions of stock classified as capital assets effected during the taxable year and shall be filed whether the taxpayer realized capital gains or sustained losses during the year for which a return is filed. If a taxpayer elects and is qualified to pay the capital gains tax on stock transaction on installments, the amount of the tax due on its installment payment shall be determined as follows: The final capital gain tax shall be computed on the basis of the entire amount of gain realized from the sale or disposition of shares of stock and the tax so computed may be paid in installments. The amount of the tax on each installment shall be the proportion of the tax so determined which bears to the total installment payment received over the total selling price or, to the total contract price, in case of sale of mortgaged shares of stock or where the mortgage on such shares is assumed by the purchaser. For this purpose, installment received shall mean (a) On the date of sale or disposition First payment received, including the excess of the mortgage, if any, assumed by the purchaser over the basis of the property sold. aisa dc (b) Succeeding installments Installment payments actually received by the seller. Illustration : Assume that on October 29, 1980, taxpayer A sold shares of stock which he acquired for P50,000 for P100,000, payable under the following terms: P20,000 down, balance payable in four annual installments beginning 1981. If Mr. A elects to pay in installments being qualified to do so in the above example, the periodic payment of the tax, assuming that no other stock transactions were effected, shall be computed as follows: Selling Price P100,000 Less: Cost 50,000 Capital Gain P50,000 Tax due P5,000 ======= The tax payable upon sale is computed as follows: First payment x Tax due = Portion of tax Selling price payable. OR P 20,000 x 5,000 = P1,000 P100,000 The same formula shall apply to subsequent installments. SECTION 2 . Effectivity . This regulation shall apply to net capital gains derived beginning January 1, 1981. cd i ALFREDO PIO DE RODA, JR. Acting Minister of Finance Recommended by: RUBEN B. ANCHETA Acting Commissioner