sic itur ad astra

Taxation Law | Income Tax The Calasanz spouses inherited a large tract of land, subdivided and extensively developed it into a residential subdivision, and sold the lots over time while reporting the gains as capital gains. The Supreme Court held that the gains were ordinary income taxable in full because the taxpayers’ activities constituted engagement in the real estate business, converting the inherited property into ordinary assets. Spouses Tomas and Ursula Calasanz were assessed deficiency income tax and real estate dealer’s tax after the Bureau of Internal Revenue (BIR) reclassified their income from the sale of subdivided land as ordinary income rather than capital gains . Ursula Calasanz inherited a large agricultural land (about 1.678 million square meters) in Cainta, Rizal, which she subdivided into smaller lots, introduced improvements such as roads, drainage, gutters, and lighting, and sold to the public at a profit. In their 1957 income tax return, the petitioners rep...

Taxation Law | Income Tax Antonio Tuason, Jr. inherited and later subdivided, developed, and sold parcels of land over time, reporting the proceeds as capital gains, but the BIR reclassified them as ordinary income and assessed deficiency income tax. The Supreme Court held that the gains were ordinary income because the properties were held primarily for sale in the course of a real estate business, although it removed penalties due to the taxpayer’s good faith reliance on prior BIR rulings. Antonio Tuason, Jr . inherited several parcels of land in Manila in 1948, including two large contiguous tracts that were already subdivided into 29 lots, most of which were leased to tenants under contracts expiring in 1953. After taking possession in 1950, the petitioner authorized his attorney-in-fact to sell the properties, successfully disposing of the 28 smaller leased lots to their occupants on installment. One large lot (Lot 29), initially unsuitable for sale due to its low elevation, was ...