The general rule under the Tax Code is that gains realised from the sale or disposition of shares of stock is subject to a capital gains tax of 10% (other than a sale of shares through a stock exchange, which is generally subject to a stock transfer tax of 0.5%). For the purposes of calculating the tax, the gain is the amount by which the selling price or fair market value of the shares (whichever is higher) exceeds the seller's acquisition cost. Under the previous set of rules, the fair market value of the shares was deemed equal to their book value, as shown in the financial statements duly certified by an independent certified public accountant nearest to the date of sale. In case the fair market value of the shares of stock sold or transferred was greater than the amount of money and/or fair market value of the property received, the excess received as consideration will be deemed a gift subject to the donor's tax under section 100 of the Tax Code (at a rate of up to 30% of the net gifts).
RR 6-2013 adopted a new rule, however. Under the new rule, the fair market value of the shares will be determined as of the time of the sale, using the adjusted net asset method, whereby all assets and liabilities of the target corporation are adjusted to their fair market value, and the amount by which the adjusted value of the assets exceeds that of the liabilities will be the fair market value of the equity. RR 6-2013 is not, however, clear on the person or entity responsible for the adjustment of such assets and liabilities.
RR6-2013 was published on April 24 2013.
Arlene M Maneja