III.

Problem 1
1. Taxable net income in 2021 assuming the taxpayer is a domestic corporation.
Gross Income P360,000
Business Expenses (280,000)
Add: Net Capital Gain
Short term capital loss (@100%) (60,000)
Long terms capital loss (@100%) 40,000
Net Capital Gain (loss) (20,000) -
Net Taxable Income in 2021 P80,000
*Capital losses are deductible only from capital gains.
* Holding period and capital loss carry-over are not applicable to corporate taxpayers.

2. Taxable net income in 2022 assuming the taxpayer is a domestic corporation.

2021
Gross Income P500,000
Business Expenses (350,000)
Net Capital Gain
Short term capital gain (@100%) 80,000
Capital loss (@100%) (20,000) 60,000
Net Taxable Income in 2022 P210,000

3. Taxable net income in 2021 assuming the taxpayer is a resident citizen.

Gross Income P360,000
Business Expenses (280,000)
Add: Net Capital Gain
Short term capital loss (@100%) (60,000)
Long terms capital loss (@50%) 20,000
Net Capital Loss 2021 (40,000) -
Net Taxable Income in 2021 P80,000

4. Taxable net income in 2022 assuming the taxpayer is a resident citizen.

Gross Income P500,000
Business Expenses (350,000)
Add: Net Capital Gain
Short term capital loss (@100%) 80,000
Long terms capital loss (@50%) (10,000)
Net Capital Loss carry over (NCLCO) from 2021 (40,000) 30,000
Net Taxable Income in 2022 P120,000
*NCLCO must not be the taxable income during the year the net capital loss was incurred. Capital loss is
deductible only to the extent of capital gain.