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Gentlemen :
This refers to your letter dated January 19, 1996 requesting for a ruling that the
return of shares of stock to its real owners after having been erroneously
declared and paid as property dividends to another party is not subject to capital
gains tax and documentary stamp tax.
It is represented that Fil-Estate Golf & Development, Inc. (FEGDI) is a 50:50 joint
venture between Fil-Estate Properties, Inc. (FEPI) and Dynaland Properties &
Developers, Inc. (DYNALAND); that under its Shareholder's Agreement, any prot
shall be divided between them on a 60:40 basis for FEPI and DYNALAND,
respectively; that on May 10, 1994, FEGDI erroneously declared and paid
property dividends in the form of 186 shares of stock of Southwoods Golf Club
valued at P638,000 per share which were splitted EQUALLY between FEPI and
DYNALAND; that this resulted in an overpayment of 19 shares to DYNALAND;
that DYNALAND, for its part, declared and paid property dividends to its three
investors, namely:
(1) Southern Heights Land Dev. Corp. 67 shares
(2) Greeneld Development Cor. 15 shares
TOTAL 86 shares
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that the property dividends declared to the aforestated three (3) investors
included the above-stated overpaid nineteen (19) shares made to DYNALAND;
that at present, the subject shares, which include the erroneously paid
nineteen (19) shares in Southwood Golf Club, are not yet registered in the
names of the three (3) aforestated investors after payment of the
corresponding documentary stamp tax; that FEPI is now asking for a return of
the nineteen (19) erroneously declared and paid shares; and that for its part,
DYNALAND and its three (3) investors executed a Deed of Trust which arms
the ownership of FEPI on the nineteen (19) shares.
CD Technologies Asia, Inc. 2016 cdasiaonline.com
the ownership of FEPI on the nineteen (19) shares.
In reply, please be informed that pursuant to Section 24 (e) (2) (A) of the Tax
Code, as amended, capital gains realized from the sale, exchange or disposition of
shares of stock not traded through a local stock exchange in any domestic
corporation is taxable as follows:
Not over P100,000 10%
Over P100,000 20%
LIWAYWAY VINZONS-CHATO
Commissioner of Internal Revenue