BIR Rul. 102-95

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July 7, 1995

BIR RULING NO. 102-95


28(B)(7)(A) 000-00 102-95 FAR EAST BANK & TRUST COMPANY Muralla St., Intramuros Manila Attention : Atty. Rodolfo B. Fernandez Asst. Vice President Gentlemen: This refers to your letter dated May 23, 1994 stating that the Bacnotan Consolidated Industries, Inc. (Company) has a retirement plan for which you had been designated as the Trustee; that because of the spin-off of the Cement and Steel Plants of the Company, a number of its employees transferred to other companies; that the said employees were given their corresponding separation pay in full; that only 79 employees are left with the Company and according to its records, despite the release of the retirement/separation benefits of the employees who left the service of the Company, the Retirement Plan is overfunded; that as of April 30, 1994, the market value of the Fund is P130,819,682.10; that an actuarial valuation showed that the benefits due to the remaining 79 employees who are members of the Fund is P31.1 million showing an excess funding of P100 million; that if the excess of P100 million will be reverted to the Company, the latter is willing to pay income tax on such income. In reply, please be informed that any excess of the Trust Fund, after satisfying all the benefits to which the retiring members are entitled, may revert to the Company. Accordingly, since there is an excess of P100 million in the Trust Fund after the separated employees had been paid and the reserve fund for the remaining 79 employee-members is still actuarial sound, such excess may be reverted to the Company. In view thereof, it is the opinion of this Office, as it hereby holds that the
Copyright 1994-2006 CD Technologies Asia, Inc. Taxation 2005 1

Company should declare as income the said excess of P100 million and pay the corresponding income tax thereon pursuant to Section 24(a) of the Tax Code, as amended.
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Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue

Copyright 1994-2006

CD Technologies Asia, Inc.

Taxation 2005

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