Practice question
New shareholders acquire control of a retailer. The retailer itself keeps title to the same inventory and continues operations; there is no asset transfer, withdrawal or cessation. The collector treats the stockholder change alone as an inventory deemed sale. Which is correct?
- The regulation does not deem the corporation’s retained inventory sold merely from a change of corporate control
- Every share transfer transfers every corporate asset to the buyer
- The retailer’s inventory automatically becomes personal property of shareholders
- Every change of shareholders ends the corporation
- The inventory must always be taxed twice
Legal references
- BIR RR 16-2005, Sections 4.106-7 and 4.106-8, read with RR 4-2007 and later statutes: https://bir-cdn.bir.gov.ph/BIR/pdf/26116rr16-2005.pdf
- BIR RR 4-2007, amendments to deemed-sale and VAT-status rules: https://bir-cdn.bir.gov.ph/BIR/pdf/33868rr%20no.%204-2007.pdf
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