CAPITAL GAINS TAX

A. Capital Gains from Sale of Shares of Stock not Traded in the Stock Exchange

a. Rate: fifteen percent (15%)

b. Tax Base: net capital gains realized (selling price less cost, selling expenses &
DST)

c. Requisites:

i. Pertains to DOMESTIC stocks, it includes:

1. Common stock

2. Preferred stock

3. Stock rights

4. Stock options

CAPITAL GAIN TAX

Classification of Assets

The assets of the business can be classified as either a/n:

 A. Ordinary assets – includes:

1. Stock in trade of the taxpayer

2. Other properties included in the inventory of the taxpayer

3. Property held primarily held for sale to customers in the ordinary course of trade

Or business

4. Property used in trade or business subjected to depreciation

5. Real property used in trade or business of the taxpayer

Examples: supplies, inventory, PPE

B. Capital assets – other assets that does not fall under the definition of ordinary assets,

Including assets held for investment purposes.

Examples:

• Personal or non-business properties (family car, house, home appliances,

Jewelries)
• Property held for investment (interest in partnership, stock investment)

• property not used in trade or business (idle or vacant land or building)

Gain from Sale of Capital Assets

Ordinary Gains arise from the sale of an ordinary asset while capital gains arise from the sale of
a

Capital asset. Ordinary gains are always subjected to income tax while for capital gains, it is
subject

To either regular income tax or capital gains tax (CGT), a final tax, as shown below:

CAPITAL GAINS TAX

A. Capital Gains from Sale of Shares of Stock not Traded in the Stock Exchange

a. Rate: fifteen percent (15%)

b. Tax Base: net capital gains realized (selling price less cost, selling expenses &
DST)

c. Requisites:

i. Pertains to DOMESTIC stocks, it includes:

 1. Common stock

2. Preferred stock

3. Stock rights

4. Stock options

ii. Stock is NOT listed in the PSE

iii. Seller is NOT a security broker or dealer