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Chap12 Test

Income Taxation

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Armando Dalisay Jr.
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39 views

Chap12 Test

Income Taxation

Uploaded by

Armando Dalisay Jr.
Copyright
© © All Rights Reserved
Available Formats
Download as PDF or read online on Scribd
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7 s 1 anticipay Deculator pena ties he sol >roperty thats, | Dut a capital los ealized by secuny | becomes bankrupt market value is not | tL loss. However, for | >is an ordinary los exchange for th ween the proceeds yt is a capital gaint ‘and not to the 15% salso deemedi" sultant capital on x. The capital to tnership 1s SU) 12 Dealings in Properties coast EST EXERCISES jcassion Questions ose pae ordinary assets with capital assets, 1 Gigss the rules of taxation of gains and losses on ordinary assets and other pital assets: 5 Was selling price? + Emmerate and discuss the rules on tax basis, § How do the rules on individual taxpayers and corporate taxpayers differ as to the measurement of the net capital gain or loss? Explain. & Discuss the basis of the 50% rule on other capital assets held long-term by individuals. 1. Explain the limits on the carry-over of capital loss. @ At what particular securities are the rules of wash sales relevant to regular income tax? 4. Discuss the rules on tax-free exchanges relevant to regular income tax. 11 Discuss how gain is recognized in tax-free exchanges and how basis is determined forthe transferor and the transferee. 1 Enumerate the transactions considered exchanges. ‘Tne or False 1 \ Taxbasis means cost or depreciated cost of the property: & Thetoss on the sale of stocks by a trust company is an ordinary loss. ‘The capital gain from the sale of domestic bonds and foreign stocks are subject to "egular income tax. Capital loss is deductible to the extent of capital gains: The sale of foreclosed land by a bank is subject to regular income tax. rdinary loss and capital loss are items of deduction from gross income. loss on the sale of bonds by banks is an ordinary loss. "ordinary gain is an item of gross income while a net capital gain isan exclusion 4, qhMsross income. Ww 'eholding period rule is relevant to individuals and corporate taxpayers. Yeartal® i5 said to be short-term if the sale of the asset is made in less than one 11, Gat from its acquisition. one, 0 the capital gain or loss is consi 12 evear or more ‘nary gains or losses are subject 0 dered if the asset is held by individuals for the holding period rule ifthe taxpayer is an “gyal taxpayer. 1 gggBalt.or los on the sale of any stock I ap S.A net ty 1088 is deductible to the extent of or aay | a al nt Aegactiinary loss is deductible from BFS incom non- 's subject to capital gains tax. 433 Chapter 12 - Dealings in Properties False 2 Tponisases assumed on the property purchased form Part ofthe bas, Ifassets are acquired by way of inheritance, their basis shal} be their, a the point of death of the decedent. ; The indicated gain in a tax-free exchange shall be recognized no (A value of cash or properties received other than stocks, The amount of net capital loss carry-over must not exceed the net nay year it was sustained. 5. Ifassets are acquired by way of donation, their basis shall be the fair tate date of donation. 6, The net capital loss can be carried over to a period of three years frunt is sustained. 7. The basis of properties received as boot in a tax-free exchange isthe upon receipt. 8. Gains but not losses are recognized in tax-free exchanges. 9. When no other Property is involved in a share-swap pursuant to plant? or consolidation, there is no gain to recognize. 10. Corperations are allowed to carry-over net capital loss for a period d®* only. 11. In initial acquisition of control, itis necessary that there are at least ft? who acquired control of a corporation so that the exchange is exempt” 7. 12. No gain can be recognized on a pure share-swap transaction 12 eee aplan of merger or consolidation, mt lf "Which muse nnd, 82ck dividends cause a dilution in the cost Pe" rersidered in subsequent gain or loss measurememt: yg 14, it : wr eeataits within the 6i-day period oe recognized, but lost” a Ire acquisitions of id ie eo 15. ene ate se lentical securities in the sa " b Measured as the diffe ‘ disposed, . 9. Multiple Choices: = 1, Which is corre, & ; Always subjecttora : WAYS subject i ‘ eRe ss Subject ts Teg ir tax and ect to either. Fegular tax or onl pata cae a Rs Ae ‘apital gains tax Seater 2S CePA assets sub ae ble ofomce bunt the rules of capital gains 2% Whict ¢ ale of, ‘duipment ‘ ss Sta 1 domestic comme nation o n shares di on of domesuc ashes directly toa buyer 43a oer ienis true regarding taxation of ordinary gain? sig the, i ris subject (0 regular tax Tegardless of the taxpayer, air fai 2 4 individual taxpayers are always subject to regular ta ‘les b jris subject to capital gains tax, _ i itis taxable under either regular tax or Capital gains tax, to ere Q Neome in shegain arising from the sale of ordinary assets is ttn ordinary income . Extraordinary gain Value One Regular income d. Ordinary gain "the tins, Thegain arising from dealings in capital assets is "| Capital income c. Capital gain 4, Extraordinary gain. Regular income & Statement 1: The gain on sale of ordinary assets is subject to regular income t Statement 2: The gain on sale of capital assets is subject to capital gains tax. T fait vag of merger “a Which statement is correct? ei a Statement 1 c. Both statements + persos b Statement 2 d. Neither statement income dees ‘ 4 ”. Which is not correct regarding rules in dealings in properties? ? 2 Ordinary loss is deductible only up to the extent of capital gains. 4. Ordinary gains are taxable in full. sto’ © Ordinary losses are deductible in full. Cee 4 Capital ioss is deductible only up to the extent of capital gains. ferret is not a - Which statement is incorrect? ere + Capital loss is deductible from capital gain. vain - pert Capital loss can be deducted from ordinary ain Ordinary loss is deductible from ordinary fain c © Ordinary loss is deductible from capital Whi statement regarding the taxability or deductibility of gai: an incorrect s 2 losses in dealings in properties? b, piiinary gain is taxable in full. ¢. Ordinary loss is deductible in fu ; ¢,_ Netcapital gain is taxable in fu i "Net capital loss is deductible in full. ains and losses Ordinary g: id losses are ‘apital gains an a hich statement is correct? t, S&tement1 tata aca setement I “atement 2 ¢ Both staremen’s . None of these [~ i in ties i Chapter 12- Dealings in Properties: em chapter 22 11, Which of the following is natincluded te te comPUtaION oF tata nagy po ashore jinary gains c. Net rs ). 12m b ae es 4. Net capital gains Hs aE ich statement is true? ‘ 1. Along-tern 2 carrie actly 7orTerdttary rain depeanst upon the holding pegs, 7" 4. more th © taxpayer b. less tha ital oss i $f capital gan, b. Capital los is deductible up to the extent o 0 ¢. Ordinary less is deductible only upto the extent of ordinary gi 2, For individ 4. Capital loss is deductible up to the extent of ordinary gain, foreaptal a 13. Statement 1: Net loss in dealing ordinary assets is deductible from | gross inci, b. 100% ‘Statement 2: Net loss in dealing capital assets is not deductible from grossixe 3 Which of the Which statement is true? dealings in pr a Statement listrue. _c, Both statements are true. b. Statement 2 is true. d. Neither statement is true. a Individu Corporat 14. Statement 1: The net gain in dealing ordinary asset is subject to regular Se nasiaan Statement 2: Net gain in dealing capital asset is an item of ‘gross income 4 Corporat capital gains tax. 2. Wh at Which statement is true? the net capital Statement 1 istrue, _c. Both statements are true. a 0% & b. Statement2istrue. Neither statement is true. b. 5006 1S. The short-term holding period is 25. In th € computat a 12 months or less, up to 24 months. pital loseee ay b. lessthan 12 months, 24 months or less. a ig the holding period rule? to corporate taxpayers ¥ €0 taxpayers engaged in business ry edvidual taxpayers 8 © General professional partnershiP: | Resident foreign corporations yf 18. To Which of the fa fol io" Resident. citizen wing taxpayer does the holding period ass"? resident alice Business partnership 5 7 > 18 tories 4. Non-resident citizen Wich ig De ‘ch of the folk ? Ther ore ah lowin ssi hey RCorrect re b. Tanabe estates" Payers isthe holding period ignore” wieeisno nce ‘able trusts 6 Corporations het capital lo: |All of these 43s -& | sp-pealngs in Properties 7 Fe MMeome> am holding period means r eo inths oF less. ¢.more than 12 months. 1 issthan 12 months. d.atleast 12 months. se tor otding period means Period gp 24PMethan 12 months. ¢.12 months or less. "> BSthan 12months. at ast 12 months. sp indvidual taxpayers, what percentage of the capital gan or los is considered » rcapital assets held for 12 months? a 50% 25% a oe 4.0% 8S income | | i. which of the following properly depicts the percentage of gains considered in | dealings in properties? / Short term Long.tem 2 Individual 50% 50% ax. Corporation 100% 100% ‘subject to & Individual 50% 100% | Corporation 100% 50% | that percentage of long-term capital gain shal be included Inthe computation of thenet capital gain or loss of a corporate taxpayer? a 0% c. 100% b 50% 200% pital gain ation by | tothe ‘ oe or loss, what percentage of long-term ‘computation of the net ‘an individual taxpayer? Capital losses is taken into conside' 2 0% c. 100% |» 200% 4.50% ic jin loss for 2 whichis incorrect in the determination of the net capital gain or loss for individuals? 2 100% of short-term capital gal? 5. 10036 of short-term capita! loss © 100% of short-term ordinary 62!” 50% of long-term capital 841" ig net capil taxpayers | ® oss carry over? Which is incorrect regardin tal Applicable to corporate of i‘ Applicable only for: PE ee Pat ed la business | § Arlaleony a aarpze natn bes lication of the net capital loss carry over? | Which is i the appl Which sincorroct regain ry over allowable the seceding year results | & There is no net caplt toa net capital loss 437 a ings in Properties : Chapter 12 - Dealings in Prop’ ; ae chapter 2 b. Carry over shall not exceed the net income in the year the ci, isc a . " tother ae shall apply up to the extent of avaabe net ayy. oF Da 1 succeeding year. i ‘ i b. Dot d. Net capital loss carry-over can be applied against available Ordinay, che the succeeding year. eyubiche 29. What is the tax basis of properties received by way of gift? b. Dom a. Fair value on the date of donation as « Dor ». Acquisition cost ofthe last donor who did not acquire the propery yp Dom ©. Whichever is lower of A and B mg tion a 4. Whichever is higher of A and B Bry 30. What is the tax basis of properties received as inheritance? Pig Hata a. Tax basis in the hands of the decedent : & Real) b. Fair value of the property on the date of succession . © Whichever is lower of A and B 10. Which sta 4. Whichever is higher of A and B A Apun B. Aself- Multiple Choices: Theory - Part 2 a ese. 1. Allof the following are ordinary assets to a real property developer & Staten 2. Raw and undeveloped land intended to be sold as is . b. Mortgage receivables on properties sold 11. Which of tt ° Land currently under development a. Real pr 4. Raw land held for future development b. ee! Domes! 2. Which is an ordinary asset? @ Alor th 2. Gold inventory ¢ Investment in stocks 12. whi ich of thy Notes receivable d. Accounts receivable Fully a 3. Which isan ordinary asset? . ana pri Home computer 6. Family resi ; Back-up Family residence a. b. Office supplies 4. Personal clothing a Cue, ‘+ Which isa capital asset om God a Bong 5 vse in encore enamine 4. Office building ae ital 5. Which is a capital asset a npn lome 5 sty deale’ cack eee & Domestic bonds of a security de! MUS tno evi Plies 4. Residential lot held for sale i Publication be * Allof the fon se 2 Store sie are capital assets to a ‘merchandising busines Whar is the ap Receivables fr, . Ordinary a pases stomers b Ordinary 3 4 pee Car of the trader ‘apital ass idence of the taxpayer w ger 12 Dealings in Properties or ae | wich ofthe following capital assets when sold, exchan, 1 therules of regular income tax? e Domestic stocks Stock rights and warrants }, Domestic bonds 4. Real properties not used in business ged, or disposed is subject 4 Which capital asset is subject to capital gains tax? a. Domestic stocks held for sale . Domestic bonds held as investment c. Domestic stocks held as investments 4. Domestic bonds held for sale 4, Which capital asset is not subject to regular tax? a Real property held for sale by a dealer b. Foreign stocks Real property held as investment by a non-realty dealer 4. Domestic stock held by a security dealer 10. Which statement is generally true? A. Apurely employed taxpayer does not have ordinary assets. B. Aself-employed taxpayer does not have capital assets. Statement A c. Both statements A and B b. Statement B d. Neither statements A nor B 1 Which of the following capital asset is the holding period rule applicable? 4 Real properties not used in business >. Home furniture © Domestic stocks sold directly to a buyer 4 All ofthese i 2 12 Which ofthe following is considered as capital assets 3 Fully depreciated properties >. Land previously employed in! business © Back-up and stand-by equiP! 4. Assets not used in business for the last (wo years ey a future plant site. For lack of financing, the lot is ly vacant. For moses Set Ao re a See 4G. personal property bplisher, received a lot as donation from a friend a book Pi usiness. She reserves the lot to house his 4p Pu end ificacton Asuncion, 4 BOW Fai Who is not engaged in Public ness. ication busine intcation ofthe lot for taxation purposes? Whatis the appropriate class’ Deprectable property Ordinary asset d. Inventory he Capital asset 439 =_>_ iM 12 - Dealings in Properties a fer anon-profit and non-stock organization, hasan ; batan, srations. For taxation purposes, ti Chapte tay Kagul a feat forts tax-exempt opel a. ordinary tryor capital asset atthe discretion of the BIR ex b. either ; fs é a eerie or capital asset at the discretion of Bantay Kagutet i i -term holding period? i following constitutes a long-term ! x _ a eated oh November 30, 2020 and was disposed of ni 28,2021 2 b. Anasset acquired on March 28, 2020 and was disposed of on Api. An asset acquired on March 13, 2020 and was disposed of on jn: a 2021 : J d. An asset acquired on November 28, 2020 was and disposed of onl 29,2020 5 1 17. Which of the following statements is incorrect regarding the pres 2 dealings in properties in the income tax return? a. Ordinary gains are presented as items of gross income. 6 Al b. Ordinary losses are presented as items of deduction. on ¢ Net capital gains are presented as items of gross income. Car 4. Net capital losses are presented as items of deduction. Ord Cap, Multiple Choices: Problems - Part 1 : a = the 1. An individual taxpayer had the following dealings in properties: ar Capital gain P bop orn ae ipital loss 7 120,000 Ordi a inary loss 150,000 y Compute the tot Progressive tay, a P230,000 P-350,000 5.280.000 al amount of gain to be included in ‘gross income Capital gain Ordinary gain zone Capital loss izoooo Ordinary loss 130.000 7 ned ne, 's income? a eboney © P 200,000 : ait: bealings in Properties c immediately Preceding problem, what isthe total net gun which wil b San oy : oe! is byte by, ° ding i 3B wey included in net income? Xaming, wn © PS0,000 j000 4.P 150,000 ‘Bubatan, neerman had the folowing dealings in capital assets: sortterm capital gain P 200,000 OF 00 Noy) eter capital gain 100,000 soreterm capital loss 100,000 150,000 lngterm capital loss ri 30,29 ©” January canpute the reportable net capital gain, ‘on Nove, | * 50000 ©. P40,000 ‘verte: | 5, 75,000 4.P25,000 5. fferman is a corporate taxpayer, compute the reportable net capital gain. sentation ya P 75,000 .P-40,000 ‘b P25,000 d. 50,000 § Ataxpayer had a P300,000 net income before the following dealings in properties: | Ordinary gain P 80,000 Capital gain 60,000 | Ordinary loss 90,000 Capital loss: 70,000 | lithe taxpayer is an individual, compute the taxable net income? ® P300000 ¢.P 290,000 4 280,000 d.P-260,000 i Assuming the taxpayer ‘sa corporation, compute the taxable income. » ® 300000 cP 280,000 yet") P290,000 d.P 260,000 the net capital loss carry over for "Inthe immediately preceding problet ele individual and a corporation respectively? + P1000; P10,000 c.P'5,000; PO 4 P50 5,000 d.P 10,000; PO © hie th Peg dual taxpayer disposed of 2 capital asset, other than three dividual ving date domestic stork or real propery, ‘with the following data: 2,000,000 Pri Sling, 1500008 Cogs Price 1,200,00 What i -eubject to regular tax? 4 PO | 300,000 aa _—_ he Ss gsr Chapter 12 - Dealings in Properties 10. A taxpayer had the foll 11. 12, 13, 4, lowing dealings in properties: Short-term capital gain P 200,000 Long-term capital gain 100,000 Short-term ordinary gain 50,000 Long-term ordinary gain 150,000 Short-term capital loss 100,000 Long-term capital loss 150,000 Short-term ordinary loss 200,000 Long-term ordinary loss 120,000 Assuming that the taxpayer is an individual, compute respectively th wie of gross income and the total items of deductions from gross income. a, 200,000; P 260,000 —_c. P 500,000; P 320,000 b. P350,000;P 260,000 d. P 275,000; P 320,000 Assuming that the taxpayer is a corporation, compute respectively the tol of gross income and the total items of deductions from gross income it income tax, a. P500,000;P570,000 _¢. P 250,000; P 570,000 b. P500,000;P 320,000. P 250,000; P 320,000 ‘Two years after acquisition, a domestic corporation disposed of @ role capital asset for P3,000,000 at a P300,000 discount from its fit Property was acquired for P2,000,000 when its fair value was P2,100,00? Compute the capital gains subj ject to reguls a a 3,000,000, .P3,000,000 b. P1300,000 apo After three years of use, Mr. Ki sity r "Mr. Kidapawan disposed of his malfunctin’.y carmument for P1,000,000. The equipment was acquired for P5000 "ying value of 00,000 on the date af cla Ce 7 compute the G2in or (loss) to be included in the determination of (? 500,000) a 4 oun / ; / ‘ Pedro, a realtor, was able to. ms : ty oa three 7 dispose his 2-hi Jand inventory © | ys B00, That Ot has a far value of po poemeg et ns soli? 500,04 00. The lot was purchased at P3,000,000, Compute the Bain to be rec 2 P Lso0.000 9 "*¢°Rhized in regular income. . P2000 000 &P.2.500,000 LPO chaoter 12 ~ 4 15, MidsayaP © Net income Capital gain Capital loss compute th: a. P30,00C b. 20,001 16, Ms. Maui hat Net income Capital gains Capital loss Compute the a P-60,000 b. P35,000 Multiple Choices 1 Mr Mayamay °fproperties : Properties 442 S ——==7/ wr ] jalings in Properties 12 Des aster ‘ iran Conoraion reports the following dealings in capital assets: 2023, 2024 seticome P 10,000 P-80,000 Conta gains 30,000 50,000 capital loss 45,000 20,000 compute the net capital gains in 2024. 2 730,000 .P 15,0000 P20,000 d.PO spectively the total ng | Hs Maul ha the following dealings in properties ‘oss income. 2023 2024 | Netincome: P 20,000 P-80,000 Capital gains 35,000 60,000 a «spectively the total teas ipital loss 60,000 25,000 1 gross income in reguar | Compute the net capital gains in 2024. | 60,000 ‘c.P10,000 b. P35,000 d. P15,000 Multiple Choices: Problems ~Part 2 usehold appliances, made the following dispositions sposed of a real prope 1. Mr. Mayamaya, a dealer of hc from its fair value T | ofproperties during 2024: 2 was P2,100,000. Date of 2 was Properties acquisition Date ofsale__Gain (Loss) Zy27j2074 P50,000 | Leasehold right 12/2/2021 ae pace ian oaD' ‘Taxi franchise 7/10/2019 | Bictricoven eisy20z4 7/15/2024 80,000 ng Residence tiayo023 7/3/2024 800,000 vis malfunctioning rs co, Y lar tax. yg has? mpute the net: I gains subject to. regul {for P1,500,000 2" 2 ae ee PASSED oe ®. P875,000 4.P 75,000 n nation of regula % The following data summarize the dealings in capital assets of an individual taxpayer. 2024 att 120,000 or | Net i p-90,000 , a buyer aca | Income 2000 inventory 2 co Stor term capt ais 3500000 \ was so} efter capital galns 40.00" 50.000 on rca 80,000 20,000 | compute the net capita e228 9 & (32,500) anne '. P2s.000 ut 443 / ae N Chapter 12 - Dealings in Properties chapter 12 3, Whats the 2024 net capital gain if the taxpayer is a corporation? Comput a (832,500) c.P 12,500 a PS bP 25,000 d.P 15,000 b PIE 4, The following data may be relevant in establishing the netincone gy, Re parrel ¢ —2022_ __ 2023 "Corporat Net income (loss) before dealings P 20,000 (P 70,000) P 12905 acquired capital gals 30,000 15,000 340m) Queen an Capital loss 52,000 18,000 the date « What is the net capital gain or loss in 2024? whet’ a. 11,000

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