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 a trading concern and at present it is in the process of liquidation; and that your individual stockholders will receive their liquidating dividends in excess of their investment.

In reply, I have the honor to inform you that since the individual stockholders of your company will receive upon its complete liquidation all its assets as liquidating dividends, they will thereby realize capital gain or loss. The gain, if any, derived by the individual stockholders consisting of the difference between the fair market value of the liquidating dividends and the adjusted cost to the 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 rates prescribed under Section 21(a) of the Tax Code, as amended by Executive Order No. 37. cda Moreover, pursuant to Section 34(b) of the Tax Code, as amended by Executive Order No. 37, only 50% of the aforementioned capital gain is reportable for income tax purposes if the shares were held by the individual stockholders for more than twelve months and 100% of the capital gains if the shares were held for less than twelve months. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner

C o p y r i g h t 2 0 0 8 C D T e c h n o l o g i e s A s i a, I n c.