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143 viewschapter 12-Dealings in properties
income tax
Uploaded by
maria selineCopyright
© © All Rights Reserved
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/ 20
Chapter 12 - Deal
lings in Propert
cuaPren fa in Properties
EALINGS IN PROPERTIES
isSes tax rules on the
's arising from deal
Subjectto the regular income wa ees
A
Altes Chapter, readers are expected tobe ab
Pasnguish capital gains subject to regula
+ Understand what constitutes
price and the rules on tax
loss on ordinary assets ang
the rules on the measurement of the net capital gain o
rules on net capital loss carry over
5. Comprehend the rules on tax-free exchanges om recognition of gain
the determination of basis of stocks received in
rules on wash sales as they relate to cap
rules ir income tax
7. Be able to interrelate the rules of regular income tax to the rules of cay
gains tax
|. Familiarize themselves with the list of transactions considered as exchan
DEALINGS IN PROPERTIES
the sale, exchanges, and other disposition
ts or capital assets. It should be recalled ti
ness of the taxpayer such as inventor
assets other tha
ordinary assets are assets
supplies, and property, plant and equipment. Capital assets are
ordinary assets. a
Dealings in ordinary assets are subject to regular income tax. Dealings in cap
assets, other than domestic stacks and real properties, ae also subject to reg
income tax. 7
Dealings in ordinary assets may result in an ordinary gain or an ordinary
Dealings in capital assets may likewise result in a capital gain or acapltl las.
Determination of Gains or Losses in Dealings in Properties
Selling price P xx
Less: Tax basis or adjusted basis ofthe asset disposed = 0
Gain or loss Pes
408
from those subject ogy
I Dealings in Properties
ing price?
the amount re:
te alized from the sale and other disposition of
Income subject to regular income tax.
5 are items of deductions from gross income in the determination of
from business or profession. Oar ain i tvabe in ful Ordinary
le in,
or loss on sale by dealers of properties is an ordinary gain oF loss.
in si bonds, deberture, notes, or eer coats of nbtedest
-orporation or by the government are considered ordinary assets by
‘rust companies. The gain or loss on these debt
mmpanies are deemed ordinary gains or loss.
the NIR
instruments by banks or
‘iso under the regulations, the real and other properties acquired (ROPA) by
tunic. although they are not involved in the realty business, are considered
tinary assets. Hence, gain or loss on sale of banks of their ROPA is an ordinary
gain or ordinary lo
‘Tax Treatment of Capital Gains and Losses
losses are deductible only up tothe extent of capital gains
‘assets other than domestic stocks and real properties.
Tosses are offset. A net capital gain is an item of
¢ capital Iss is not an item of
gross income, The law views net capital losses as unnecessary
i assets are not used inthe business or trade of the taxpayer.
gross income
deduction agai
expenses since
Determination of net capital gain or net capital loss
seeeretaraination of net capital gains or net capital loss on capital assets, other
Pee arrerinte stocks and real properties, depends upon whether the taxpayer is
an individual or a corporation.
Dae Oot GMa 2 Oe OE
Ch «op «Gbe NCL
ot 8 Chapter 12 - Dealings in Properties Dealings in Pr
in Properties
For Individual taxpayers:
350,000 x 100%)
The holding period rule ceivables {(P200,000) x 100%) P 350,000
Ifthe capital asst is held by an individual taxpayer fora period of 200.000)
holding period) ~ 100% of the = fares
and capital loss of corporations are recognized at ther full amounts without
1. not more than one year (short-term
‘ period.
5s is recognized
2, more than one year (long-term holding period) - 50% of the capital py
Toss is recognized *y
iuded asitis an ordinary gain.
: fen, reported PBO0,000 gross receipts and
‘For Corporate taxpayers: erad 10096 fhe cpt en oy, expenses of P240,000. He also had the
Regardless of the length of the holding P
‘ed. The holding period rule does not apply to corporations,
loss is recogni
Mlustration: Individual taxpayer
Mr. Manila sold various properties as
8 months P 20,000
18 months (25,000)
follows in 2024:
24 P-100,000
ar 9/14/2022 2/14/2024 s
Office supplies 6/1/2023 12/5/2024 20,000 2 aati P 100,000
Laptop 4y5/2023 4/5/2024 80,000 — 1500009
Hemeappliances 7/21/2023 8/24/2004 (160,000) soana
Books syjnejno2s 11/26/2024 (30.000)
Vacant lot 2/14/2023, 12/3/2024 250,000
P
‘The net capital gain or loss shall be computed as follows: j 209000,
20,000
P#5.000
__ttems sold Holding period Gain Gloss) —%_ Gain Doss)
P 100,000 50% P 50,000
in on sale of domestic stocks is subject to the 15% capital gains tax.
Car Tong-term
Laptop short-term 80,000 100% Leroy
Home appliances long-term ( 160,000) 50% ( 80,000)
Books shortterm (30,000) 100% (30.000) fation in the Income Tax Return ri
Net capital gains 20.000 table gains and losses shall be presented in the income tax return as follows:
ae (Revenues/Receipts/Fees P 800,000
ea 3 her taxable income from operation =
[Notes sale ofthe vacant otis excluded since it is subject to the 696 capital gains tax, zal Pe ——
2 TRE dais on the sale ofthe office supplies Is excluded inthe net capital gen compu /revenues/receipts/fees PF 800,000
since itis an ordinary gain separately reportable as an item of rss income. ‘of sales or services xe
P 240,000
Illustration: Corporation
Bataraza Corporation, a domestic sk I 4 iness expenses
bank without recourse at a loss of inary loss on old machines 25,000 —_265.000
building at a gain of P800,000 and P 235,000
350,000. All assets were held for more than one year.
P 20,000
‘The net capital gain or loss shall be computed as: 45.000 65,000
230,000
aut
410 2
ognized a thei full amount. The hoi
PS ps pao at |
mae
ings
Cchapter 12 - Dealings -Deatngs in Proseries
1s applicable
and real properties.
‘assuming Pantukan isa corporation
‘peenet cepital gain of Pantukan Corporation shall be computed as follows,
P 100,000 lings in propeee Pv |S taxable only on
(150,000) '" Properties apply only to properties
(P_10,900)
ipino citizen, ry
ze. reported the folowing gains and (losses) from
Presentation in the Income Tax Return
‘The reportable gains and losses shall be presented in the income tax
Pantukan Corporation as "tun
Sales/Revenues/Receipts/Fees P 800,000 C sano)
Less: Cost of sales or services 200,000 300000
Gross income from operations 500,000 (90000)
‘Add: Other taxable income not subject to final tax
Ordinary gain on equipment B 20000 — 20000 shed for 14 months Sia
Total gross income P 520,000 foreign corporation stocks hel for
Less: Allowable deductions ldformonts (30.000)
Business expenses P 240,000
Ordinary toss on old machine __25,000 __265.000
Taxable net income B_255.000 Ptanaog —ttiau — wan
Note: A net capital loss is not deductible as an item of deduction for both individu ila 2
corporations. la Lam Fie ——Ano.000
Rationale of the holding period rule i :
Capital gains normally build up overtime. However, the annual capital gains bg ae — Without i
up is not taxed because they are unrealized gains. In accordance withthe ability a Sp ta ae }
pay theory, these gains are taxable only when realized or severed from the capa am) (anno) (Ease)
through disposal by sale or exchange.
pert nS asidering situs rules, the net capital gain or loss from capital assets, other than
idual taxpayers are subject to progressive tax where higher income is sub mestic stocks and real property, are as follows:
igher tax and lower income to lower tax. The one-time or lump sum taxation ’ Without __Worla
the capital gains upon realization on disposal results to higher income ta ‘ r =F 80000
compared to the total of taxes assuming the annual build-up of capital gains = (B__ 30000) (___ 30.000)
i p 2am (©2000) E2000
‘axed annually. As a legislative compromise, only 50% of long-term capi
4nd losses upon disposal are recognized for takation purposes. —~
eportable results of dealings in properties are as follows:
Corporate taxpayers are subject to a proportional or flat tax rate regardless ofth Ordinary Ordinary Net Capital
I income, nn i‘ —SGain_ _ os Gain (oss)
sdent citizen P 420,000 (P 120,000) P 20000
esident citizen P 120,000 (P 40,000) P 50,000
413
az hw
applicable only to individual taxpayers. Corporate taxpayers are not allovei
| aa
21 Mtlohn Hamptonisa:
Chapter 12 - Dealings in Properties
Wustration 2
Assume the same information in the previous lustration except that John Hamp,
‘corporation. f
‘The analysts of the ordinary gains or losses shall be the same in the
ilustration The gee cot calor los from dealings i capital assets,
be
etcaoitalgainsorloss Within Without HEN
Domesticbonds~ 100% P 100,000 (20000) (20.000)
pio (230.000) B—70.000
Foreign stocks
Net capital gai
De ration P 420,000 (P 120,000) P
eadent cron ' p 120000 (P 40,000) P 100,000
Tk Resident corporation
the lowest ofthe actual
Note that the net capital loss carry-over is strictly for one year only and s
lustration 1
Mr. Josephine reported the following in 2023 and 2024:
[Netincome before dealings in properties 70.000 B300.000
a4
mma | _ 2
P 30,000
50,000)
P 40,000
(80,000) ¢
P 20000 Pp 80,000
ak
Oe (_sg.000) — (__30,000)
yet capital gains oF (oss) (24.000) 250.000
sme net income before dealing In capt assets should be determined Birst-Thus,
+ —2023_ —2024__
ecincome before dealings in properties P 70,000 P_300,000
ordinary gains 40,000 30,000
ordinary losses (_a0.000) | ¢__s0.000)
orate before dealings ncaptalassets Z—agang = Eaa0.000
‘tenet capital gain in 2024 shal be computed a follows:
—73__2024 _
Net capital gain (loss) (P 40,000) P 50,000
Net over: Lowest ofP3OK,P4OK and PSOK __30.000—» (__30.000)
Netcapital gain B20.000
‘the net income for each year shall be computed as:
20a 2024 __
Net income before dealings in capital assets P 30,000 P_ 280,000
‘Add: net capital gain deat ZOOM
Net income E3000 =P 300000
ote:
it must be emphasized that the net income before dealings in capital assets must be
determined frst.
The unused P10,000 net capital loss in 2023 can no longer be used in the future periods
since cary-over is allowed only for one year.
Mlustration 2
‘nindividual taxpayer had the fllowing net capital gains or losses:
comebefordealgstaceptalases Fantoo ¥ 180000
P 20,000 ~ P 80,000
Ik . (60.000) + (___50,000)
Net capital gain (loss) (40000) “Banoo
as ~~
Chapter 12- Dealings in Properties
“Te net capt gai shallbe computed for 2028 ows
wto F
Net capita gin loss) Wao) | F300
Canycover: Lamesa P4OK PBDK and P30K 0000)
Netcopital gin —
‘he netincone fo each prod shall bE
Mths 7 Sebo
feaingsincaptalasses F 1000
eaings in
rom |= me
aoe
nny treo capt ss eaves whe 8 EDIE ny,
nay a td
opera sn he Pr se
ets sos eos *
ona tt income at icc fp ls
atelier malo ate nae
Ti acu of a a et cto we SESE. Tis
des acpi ae et aw allowed fl deduct oe
zchored on he a bene ly foe aout heal
elas and soe om
which he capt lss
ass above tis amount will nothave a tex bene
“Tobe flr the cry over shall ot result in allowing the eaxpayer more than
Be ane carved assuming hl deductbty of capital oss allowed y
Mould not result n undue enrichment 4)
Tavs. In other word, the cargo
Net income before
‘det npi gin.
axpayer.
‘Rationale ofthe second limit: Net capeal gain inthe following year
hall not exceed the et capital gan ny
in encess ofthe net capital ge
‘The amount of expt loss carry-over
allowing year Allowing capital loss cary-O¥er
caee teagan wil rate another net capita loss n the following ear wi
eit beach te one-year carry-over rule under the NIRC.
[SPECIAL RULESIN THE DETERMINATION OF TAX BASIS
[AL Forassets acquired by purchase, the tax basis i the:
4. Acquistion cost fr:
capitalassets
© non-depreiabe ordinary assets such a land
+ any asset purchased for an inadequate consideration
leas than ther fair value at the date of acquisition
or those acquire)
416
cnaptor 12- Dealing
C0 eco én
ee ot win Oe pres rae
st Smt jars amt ent
oes ba a ne me
‘Mlarsal Corporation disposed its oi actor for 5,000,000, The lat where the
Pa te de see we fa a aed
jon pald P3000,00 forthe contraction of the factory buldig- TRE
re ing koe eager ak ose tee
rs 000 a te dat of se
pretax basis the factory sale:
7 2.500.000
aslaing Fame
‘Toxbasis pee
owe an eet Th ht ere ei
ence, the gain loss shal be:
seling price Bee
ese Taxa offactory psoas
aga ‘zona
Imustrtion: Other eaptea assets
da car he believes would be useful for ten years for
Hr, Montane purchase
800,000. elore the thir year, he sold the ca fr 900.000.
“note tat the ax as of capa ase ter acquisition cost. Copal arts are
it tprecated for purses of teaton. The gain on the sole shall be P10,000,
‘Computed ex P900000 ess PBOG.O0 tax bss.
-b Other assets received by exchange, far value ofasset received
C. Forassets received by way of gratuitous ite:
1. Donation - whichever islower of
2y"the tax bass on the hand of te donor or the last preceding owner by
‘whom was not acquired by donation or
bp faiemarket value at he date of git (See. 40(B)(3), MIRC)
1 the basis Is greater than the market value of the property atthe time of
Fan aren fr purpose of determining the los, the basis shal be such market
value.
nthe date of death ofthe decedent
2, Inheritance ~ ai value of the property oF
a7 Chapter
Pter 12 - Dealings in Properties
‘Mlwstration 1: Donation
Me Moawat
recived a Votawage ara donaion fom ater wa
© in 1990 ata east of P100}00. The car has fl valve of P00
ate of donation buthasacurent fl value of 2.500.000 i
The
last preceding owner who di nt acqle the Property By dentin ae,
the same a 100,000 Hence, the basis of he cain the bands of Mr Moya
coma
be that same basis, thus P20 000
‘Mastration 2: tnbereance
Mr. Att ihertied a used schooh bus from ME deceased rind
‘urchased the property for P.000,000 thre years ago. The Dus at adepe
basis of 7900,000 inthe business of hls granater, but hes «fir
900,00 inthe estate tax return of his grant ~
‘The basiofthe property in the hands of Mr Asis shall be P9OBOPD, he fry,
the dat of death ofthe decedent
{lustration 3: Donation ater inheritance
“Assuming farther that Mr Asis donatod the bus fo
‘thebus to theschol?
“The basis of the bus hal be the
‘who didnot angie the property by donation Mr. As
Inheritance at basis of 900000. Hence the same a
the bus inthe hand ofthe school
received by way of tax-free exchanges
school, What ee ag,
ss in the ands of he last preceding
a acquired the prey
mount shall be the bag
D. Forshares
a. For pure share-forshare swap, the tax bass ofthe shares exchange
five isthe tax basis ofthe shares received
by. Por share-swap with non-cash consideration, the tx bass shall be
ubsttuted bass computed a5 lows:
Tronsferor
“Toxbasis of shares exchanged > om
‘Add Cain recognized et
Aanounts tented a vidends ofthe saroholer = of
astm fale ofoberpropertesreceived SE
ess Cath Pew sare received by the transferor Bt
properties esved 25 oo hall have the sme bast asthe mare
Properties rate money recetved and other property receive in exes
et ror securities recived by the transferor ona tates exchange
a8
1 12 Dealings In Properties
ransere®
rpna ass inte ands ofthe estar Fae
iain recogized tothe Wansoor
a ofthe shares clea by theta —
te bythetanseree = Lae
oy alt ne eel a
fe 1 a a a at
eth
se oro ted ty aie oi ar *
a» Svan of merger oF consolidation a ‘ ar
i ee nods i ecuties uran #n of
Fe sto pean
EXCHANGES
a ate reorganization
se same prices and rules on ies exchange sds in Chae 6
Te when fori tock oF bonds which re eet 1 remy se
sop teased tx bass of properties received sal be cessed n the
saveting stations.
1 Corporate party toa merger or consoldation
strate a panof merger, ABC Company exchanges avs track of
Pus 000_00 anda asf 71040000 a the ocks of DEF Coma
alu eof P12S00,000 and pr value of P1,000.00
or aBc Company
Fair vale of DEF shares received
FES" basis ofthe and exchanged ‘aono.0on
Pecininy
Inaeted go
io gain loss shall be reagnzed forte propery for stock reaction parson oe
Me 20r merge o cosoain The ln des a ew i 5a noe gen eanN
en put an investing transaction. The as ofthe DEF hares received hall be the
esis ofthe land transferred enc, 20,000,000,
“suming ABC Company exchorgd som shares or th hares of DEF Company, 9
en sl ete be rege Te x bas of he DEF shares eee sll be
and witha ir
ny with
120.000,
otarbaslof the ABC shares exchanged
‘or DEF Company
Fairvalue of the and recived 712,000,000
Tnctambess ofthe stocks exchanged (pa) 1000.00
Exgonon
nese share premium eae
x Chapter 12 - Desings in Properties
‘Simitary, DBF Company sail not be subject to ena th & oa
involving he is of thar anne, Te PLOIO O00 ee oa
Properties reeved over the par value of sare, refered to
‘Premium’ in accountng, rt income bu par
because the isuane of gpl took.
‘ promisory note to obea cash loan
lustration 2: Shareholder ofa party toa merge
We Don rasharce ncn eh
Downy was requled to surrender hls ABC shares Wn
‘ale oF 120,00 tn exchange for DEF shares with fi eae OFF 40000,
Fat vale of DEF shares received Pp 140000
Less Tabak of to
Tndeated gaia
‘The 4,00 indented go
8 Howe,
banks, trust companies and de snort
deductible as "bad debts expense.
. Receipt of liquidating dividends
lends is viewed as consideration in exchange
the investor-shareholder. The difference between the prog
ing dividends and the cost ofthe investment is a capital ye
is subject to the rules of regular income tax and not to tent
capital gains tax. (Sec. 8 of RR6-2008) my
6. The amountreceived in liquidation of a partnership is also deemed:
exchange of the partner's interest on the partnership.
that for a business partnership, the resultant capital gin
liquidation is subject to capital gains tax. The capital gain
loss from the liquidation of a general professional partnership is subj
regular income tax.
7. Redemption of shares for cancellation or retirement by a corpor
considered exchange to an investor, but not to the redeeming corporation.
‘Under RR6-2008, the gain on the redemption of its own stocks by
corporation for the purpose of cancellation is not subject to the
tax. Hence, gain or loss .d by the investor from the buy:
corporate stocks, domestic or foreign, shall be subject to regular income
8. Voluntary buy-back of shares to be held in treasury is considered exchene|
to the investor, but not to the corporate issuer of the shares,
Gains or losses on voluntary share buy-back by the issuing corporation wit
{snot forthe purpose of cancellation shall be subject to the capital gains
cases of domestic stocks but to regular income tax in cases of foreign stocks.
in securities, the same is,
432
1S in Properties,
eR 12: SELF-TEST EXERCIses
cossion questions
‘ompare ordinary asses with capita sats
piscuss the Tues of taxation of gains and io
Papital assets Ss on ordinary assets and other
Awhatis selling price?
Enumerate and discuss the rales ontaxbasls
How do the rules on individual txpayers and corporate
measurement of he net capital gan orlos?Expnns Pe er as OE
piscuss the basis of the $O% rule on other capital assets held long by
individuals te ek Jogeorm by
| Bxplain the limits on the carry-over ofa
ine what particular securities are the rules of
a iat Wash sales relevant to regular
Discuss the rules on tax-free exchanges relevant to
he r . regular income tax.
‘seuss how gain is recognized in tax-free excha Sea ria
forthe transferor and the transferee, seen ine ere
14, Bnumerat the transaction considered exchanges.
‘rue or False
Tr tax basis means costo depreciated cos ofthe propery.
3. ‘Thelosson the sale of stocks bya trust company isan ordinary loss.
4 The capital gain from the sale of domestic bonds and foreign socks are subject to
5 reclosed land by a bank is subject to regular income tax
a nd capital loss are items of deduction from gress income.
7, The loss onthe sale of bonds by banks isan ordinary loss.
8
8.
x
‘An ordinary gan isan tem of grossincome while ane capital gain isan exclusion
‘The holding period ruleis relevant individuals an corporate taxpayers.
(0. The gan is sald to be short-term if the sale ofthe asst is made in less than one
year from its acquisition.
11, 50% of the capital gan or
oneyear or more,
12, Ordinary gains ot losses are subject the hong prio rule the taxpayer san
Individual taxpayer.
43, The gain or loss onthe sale of any stocks is subject to capital gain tx
14, Ordinary loss is deductible tothe extent of ordinary gins :
Te net ectinary los is deductible from gross income while a net capital loss ¢ non
deductible.
oss is considered if the asset is held by individuals for
433 . a 12 - Dealings in Properties
suis true regarding taxation of ordinary gun?
subject to regular tax regardless ofthe taxpayer.
ividual taxpayers Iways subject to regular tax.
‘subject to capital gains tax,
‘taxable under: lar tax or capital gains tax.
schasea form par ofthe b
re
ent
the detdet sang shall be recognized not to ex
ved other than stocks. ts
ed ye mast not exceed He Net ncony se gainasing fom the sale of ordinary assess
: sf TGrdinaryincome «Extraordinary gain
by way of donation ther bass shall be the fa vate, | E Regularincome 4 Ordinary gain
ecard overtoa period oFtree years om they [5 negnacaagton ae ys
i a. Capital in ~e Cat
& Eqraordinary xin d- Regular income
donation.
‘The nt capital loss ca?
a roprtes received as boot Ina
-free exchange fs their f
ah
sentement Tegan onsale fornary assets sabe rapa nce
6
‘Sevement 2 The ga o sale of capital assess subject to capital gains tax
vihatenet oe
oration are oe Satere «Both statements
is core be ‘Statement 2 d Neither statement
a necessary that there are a least ve penn)
ia acquisition of conte
1, nal amin prance eercaneesexemeemigg) 7 nich snot correct regarding rules in dealings in properties?
te a pny sss deuce only up othe een ofp ns
va pm canbe recoed ona pire sare-svap waneaon WA rie ais are table nl
pursuant toa plan of merges oF fot Ordinary | 1s are deductible in full.
S Capital oss is deductible only upto the extent of aptal gains.
splits and stock dividend
ich must be consi
14, Capital gains within the 61
‘when there are acquisitions
incorrect?
deductible from capital gain.
‘be deducted from ordinary gain.
45, When properties ae sold fr less than an adequats ‘nd full consideration, gin} :
When proPete ference between far value andthe tax basis ofthe pron eo is deductible from ordinary gan.
§._ Ordinary loss is deductible from capital gain.
disposed.
| 9 Whi incorrect statement regarding the taxability or deductbiity of gains
‘c_ Subject to both ret
Nd. Subjectto either regular tax or capital gains tax
2. Which capita aset is subject to the rules of capital gains tax?
b. Sale of office equipment Pageeetuonet
O Sileaf domestic common shares directly toa buyer a Strawn Ceo
Se, Donation of domestic stock
435
434 alings in Properties
the following s not ncuded in the computation of rable ineyy,,
exerci oss °
‘d Net capital gains
112. Which statement is true?
vin Sarmblty of ordinary gain depends upon the Holding perigg
J
is deductible up tothe extent of :
is deductible only up to the ex
Capital oss is deductible upto the extent of o
dealing ordinary assets is deductible from gro
in dealing capital assets is not deductible from Poo
tue, CeBothstatements are true.
rue, Neither statement is true.
14, Statement 1: The net gain in dealing ordinary aset is subject to regular tax,
Senet 2 Net gun in dealing capital asset isan item of gross income subj,
‘capital gains tax J
‘Which statement is true?
a Statement 1is true
‘Statement 2s true.
¢.Both statements are true.
‘Neither statement is true.
period is
. cupto24months.
ths, d.24months or less.
416, Which statement is true regarding the holding period rule?
‘a. Applicable only to corporate taxpayers
. Applicable only to taxpayers engaged in business
Se ‘Applicable only to individual taxpayers
> Applicable to any taxpayer
117, The holding period rule applies to
‘a. Domestic corporations _c. General professional partnerships
Ab, Taxable trusts . Resident foreign corporations
18, To which of the following taxpayer does the holding period assumption not pp,
a Bus
Ne
ETambleesates goporaons
b Toabletrsts —— dallofese
436
yore oki peiod means
wp months orless. —c-more than 12 months.
“2 ess than 12 months. atleast 2 monte
term holding period means
sre than 12 months, —¢.12 months or less.
ethan 2months. dat least 12 months.
at etl Ize?
6 25%
—b, 100% 1%
ich of the following properly depicts the percentage of gains considered in
jealings in properties? Seer ar eae
Shortterm one-term
a. Individual 5035 50%
SK Corporation 100% 100%
¢> Individual 5035 100%
§ Corporation 100% 50%
25, n the computation ofthe net capital gain or loss, what percentage of long-term
Capital losses is taken into consideration by an Individual taxpayer?
100%
"100% of short-term capital gain
b. 100% ofshor-term capital loss
2, 10096 ofshortterm ordinary gain
{2 50% of long-term capital gain
27, Which s incorrect regarding nt capital los cary ove?
“Sa. "Applicable to corporate taxpayers
b> Applicable only fora period of one year
Applicable only to individual taxpayers engaged in business
41 Applicable only to individual taxpayers not in business
28, Which s incorrect regarding the application ofthe net capital ass cary over?
aaa aaa cot ela ess carryover allowable ifthe succeeding year results
toa net capital loss.
437
ot aed held as investment by anon-realty dealer
te stock held by a security dealer
ordinary assets toa real property developer excep
old as is
Investment stocks
Accounts receivable
nd-by equipment
‘used in business forthe last two years
reign currencies ured a lot as a future plant site. For lack of financing, the lot is
capital assets to a mer
trader asset eDepredable property
4. Personal residence of the taxpayer i F
438 in Properties
chante 12 -DoaiTSP mae and non-stock OTE
4s ant agit opt peratons. For taxation P
its
devoted fF
oc
grape dire
rowing constutes a long-term holding period?
ured on
2021
‘An asset acqul
29,2020
17. which of the folowing statements is incorrect regarding the presen,
Uealings in properties in the income tax return?
ea ordinary gains are presented as items of gross income,
‘Ordinary losses are presented ‘of deduction.
f_ Neteapital gains are presented as items of gross income.
4. Net capital losses are presented as items of deduction.
Multiple Choices: Problems - Part 1
4, An individual taxpayer had the following dealings n properties:
capital gain 150,000
ordinary gain 200,000
43120,000
150,000
b. P350,000 apo
2. Ataxpayer had the following dealings in properties:
Capital gain P 100,000
Ordinary gain 200,000
Capital loss 120,000
Ordinary loss 150,000
How much shall be included in gross income?
a PO 200,000
b. P50,000 Sa P 300,000
440
pita aset atthe discretion ofthe BIR exam
ion of Bantay Kagubatan
November 30, 2020 and was disposed of ony,
aired on March 28, 2020 and was disposed of on April
Muired on March 13, 2020 and was disposed of on ja,
ired on November 28, 2020 was and disposed of on Ny,
Dealings in Properties
mediately preceding problem, wha
included in net income? isthe total net gain which will be
eB 50,000
sn had the following dealings in capital assets:
P 200,000
100,000
100,000
150,000
{sa corporate taxpayer, compute the reportable net capital gain.
0 cP 40,000
4.P50,000
‘taxpayer had a P300,000 net income before the following dealings in properties:
ordinary gain P 80,000
Capital gai 60,000
ordinary loss 90,000
Capital loss 70,000
ifthe taxpayer is an individual, compute the taxable net income?
a. P-300,000 SeP 290,000
b. P.280,000 4.P 260,000
7, Assuming the taxpayer Is a corporation, compute the taxable income.
a. 300,000 < P280,000
~e, 290,000 4.P 260,000
diately preceding problem, what isthe net capital loss carry over for
an
a. 10,000; P10,000
, P5,000; P5,000
9, after three years, an individual taxpayer disposed of a capital asset, other than
‘domestic stock or real property, with the following data:
Fair value 2,000,000
Selling price 4,500,000
Cost 11200,000
‘What is the capital gain subject to regular tax?
a. P-800,000 “ep 150,000 +
b. 300,000 4P0
aan Chapter 12 - Dealings in Properties
10. A taxpayer had the following . Dealings in Properties:
ton reports the following dealings in capital assets:
propery was acquired for P2000000 when
Compe he capt ais suet regular tax.
955) to be included in the determination of regular ica
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