Case Digest (G.R. No. L-26284)
Facts:
Tomas Calasanz, et. al. v. Commissioner of Internal Revenue and the Court of Tax Appeals, G.R. No. L-26284, October 09, 1986, Supreme Court Second Division, Fernan, J., writing for the Court.
Petitioners Spouses Tomas and Ursula Calasanz (hereafter "petitioners") owned by inheritance from Ursula's father a tract of agricultural land in Cainta, Rizal measuring 1,678,000 square meters. To liquidate the inheritance, Ursula had the land surveyed, subdivided into lots, and developed with improvements — streets, concrete gutters, drainage and lighting — to make the lots saleable; the subdivision was marketed as Don Mariano Subdivision and lots were sold to the public at a profit.
In their joint income tax return for 1957 filed March 31, 1958, petitioners declared a profit of P31,060.06 from the lot sales and treated fifty percent (P15,530.03) as taxable capital gains under the tax law. Following an audit, the Revenue Examiner deemed petitioners engaged in the real estate business and assessed a real estate dealer's fixed tax and deficiency income tax computed on ordinary income rates.
On September 29, 1962 the Commissioner issued Demand No. 90‑B‑032293‑57 for P160.00 (P150.00 fixed tax + P10.00 compromise penalty) and Assessment No. 90‑5‑35699 for P3,561.24 (deficiency income tax P3,018.00 plus interest P543.24). Petitioners filed a petition for review with the Court of Tax Appeals on October 17, 1962. On June 7, 1966 the Tax Court (CTA No. 1275) largely upheld the Commissioner’s assessments but deleted the P10.00 compromise penalty for lack of a valid compromise agreement.
Petitioners appealed to the Supreme Court. The principal controversies are whether petitioners are &...(Subscriber-Only)
Issues:
- Were petitioners "real estate dealers" liable for the real estate dealer’s fixed tax?
- Are the gains from the sale of the subdivided lots taxable in full as ordinary income or taxable as capital gains under Sect...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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