Copyright 2014 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia 2013 1

October 19, 1987

BIR RULING NO. 322-87

21 (a) 34 (b) 119-84 322-87

Gentlemen :

This refers to your letter dated July 23, 1987 stating that your company is atrading concern and at present it is in the process of liquidation; and that yourindividual stockholders will receive their liquidating dividends in excess of theirinvestment.

In reply, I have the honor to inform you that since the individualstockholders of your company will receive upon its complete liquidation all itsassets as liquidating dividends, they will thereby realize capital gain or loss. Thegain, if any, derived by the individual stockholders consisting of the differencebetween the fair market value of the liquidating dividends and the adjusted cost tothe stockholders of their respective shareholdings in the said corporation (Sec. 83(a), Sec. 256, Income Tax Regulations) shall be subject to income tax at the ratesprescribed under Section 21(a) of the Tax Code, as amended by Executive OrderNo. 37. cda

Moreover, pursuant to Section 34(b) of the Tax Code, as amended byExecutive Order No. 37, only 50% of the aforementioned capital gain is reportablefor income tax purposes if the shares were held by the individual stockholders formore than twelve months and 100% of the capital gains if the shares were held forless than twelve months.

Very truly yours,

(SGD.) BIENVENIDO A. TAN, JR.Commissioner