Capital gains

1. The term "capital assets" includes

Real property not used in the trade or business of the taxpayer.
2. Ronald Rellera sold shares of stock for P250,000 on July 1, 2018 with a par value of
P150,000. The shares which were acquired for P190,000 on June 1, 2016 were held as
investment, and were sold to a buyer under the following terms:

How much was the capital gains tax due in 2018?

P2,250.00
3. The following are not substantially identical securities, except one
Similar bonds with different maturity dates
4. Which of the following transactions is exempt from the final capital gains tax?
None of the foregoing
5. A, a citizen of the Philippines, sold his residential land in the Philippines at a selling price
of 4M and with a fair market value of 5M. The cost of the property sold was 1M. He
purchased a house and lot as his principal residence at a cost of 7M.
Using the preceding number, the basis (cost) of the new principal residence?
4M
6. To which of the following is the capital gains tax required to be filed? (Select the
exception.)

Office of the Commissioner of Internal Revenue

7. Which of the following real properties is classified as a capital asset?
Neither a nor b
8. The following rules as to recognition of capital gains or losses from the disposition of
personal property classified as capital asset apply where the taxpayer is an individual.
Which is the exception?

Net capital loss carry over in a taxable year should not exceed the capital gain in the
year the loss was incurred.
9. A feature of ordinary gains as distinguished from capital gains:
No holding period.
10. The actual capital gain derived by an individual taxpayer may be included to all income
subject to progressive income tax when
 It involves sales of real property to the government
11. On July 1, 2017, Willy Tsai sold shares of stock for P200,000. The shares which were
acquired for P140,000 acquire on June 1, 2015, have a par value of P150,000, were
held as investment, and were sold to a buyer under the following terms:

How much was the documental stamp tax due?

P 562.50
12. Lots being rented when subsequently sold are classified as:
Ordinary assets.
13. Which of the following losses may not be deducted to the extent of the extent of the
capital gain in the income tax return?
Wash sale made by a non-dealer in securities
14. Which of the following real estates is classified as an ordinary asset?
Both a and b
15. Which of the following statements relative to the capital gains tax on corporate taxpayers
is correct?
A corporation is not allowed to recognize any holding period on its capital gains and
capital losses
16. Where the taxpayer is a corporation, which of the following statements is true?
The net capital loss can be carried over in the next succeeding year
17. Holding period is the duration for which the taxpayer held the capital asset. A capital
held by the taxpayer for not more than 12 months is said to be
short-term
18. A, a citizen of the Philippines, sold his residential land in the Philippines at a selling price
of 4M and with a fair market value of 5M. The cost of the property sold was 1M. He
purchased a house and lot as his principal residence at a cost of 7M.
How much is the basis (cost) of the new principal residence?

4M
19. Determine the statement which does not characterize a capital asset?
It is normally subject to value-added tax when it is sold
20. A, a citizen of the Philippines, sold his residential land in the Philippines at a selling price
of 4M and with a fair market value of 5M. The cost of the property sold was 1M. He
purchased a house and lot as his principal residence at a cost of 7M.
If only 4M out of 5M was utilized in acquiring his new principal residence, the capital
gains tax is
 72,000
21. In 2017, Nebular Corp. sold shares of stock of a domestic corporation for P250,000. The
shares acquired in 2015 at a cost of P100,000 were held as investment and were sold
through a local stock exchange.
Assume the sale in the immediately preceding number was made in 2018, the applicable
tax due?

P1,500
22. Atoy generated net income from trade amounting to P400,000. His capital assets
transactions during 2018 are summarized as follows:

How much is Atoy's taxable income

P435,000
23. Ronald Rellera sold shares of stock for P250,000 on July 1, 2018 with a par value of
P150,000. The shares which were acquired for P190,000 on June 1, 2016 were held as
investment, and were sold to a buyer under the following terms:

How much was the documentary stamp tax due?

P 1,125.00
24. Jolina Madrigal sold his principal residence for P5,000,000. His principal residence was
acquired at P2,000,000 and has a fair market value of P6,000,000 at the date of sale.
Within 18 months, Jolina reconstructed his new principal residence for P4,500,000.
The cost basis of the new residence is
P1,800,000
25. Ms. Lyn Batungbakal, a real estate dealer, sold a real estate for P2,000,000 on
November 29, 2017. The cost of the property was P1,500,000. The terms of the sale
were as follows:
 How much was the income to be reported in 2017?

P125,000
26. To facilitate the disposal of his shares, Francis sold his shares for P360,000 at 10%
discount from its fair value. Even at discounted price, Francis reports a gain of P160,000.
Compute the capital gains tax on the transaction.
P15,000
27. Which is not a requisite of the wash sales rule of securities?
The seller must be a dealer in securities in a short sale transaction.
28. In 2008, Florencio inherited from his late father a house and lot. Florencio and his family
used the inherited property as their family home. In early 2010, Florencio's immigrant
application to the US was approved so he decided to sell the property. In the meantime
that Florencio was looking for buyers, he rented out the property to Antonio who
occupied the same until it was finally sold in January, 2013. For tax purposes, the house
and lot is
A capital asset
29. Under Section 39(b) of the Tax code, how much shall be taken into account in
computing net income, if a gain is realized by an individual taxpayer from the sale or
exchange of capital assets (other than real properties and shares of stocks) held for
more than 12 months?
50% of the net capital gain
30. In the immediately preceding problem, compute Henedina's net capital gains tax due on
the sale of domestic stock directly to buyer.
P4,000
31. Which is an ordinary asset for a realty developer?
Accounts receivables
32. On July 1, 2017, Willy Tsai sold shares of stock for P200,000. The shares which were
acquired for P140,000 acquire on June 1, 2015, have a par value of P150,000, were
held as investment, and were sold to a buyer under the following terms:

How much was the capital gains tax due in 2017?

 P750.00
33. A, a citizen of the Philippines, sold his residential land in the Philippines at a selling price
of 4M and with a fair market value of 5M. The cost of the property sold was 1M. He
purchased a house and lot as his principal residence at a cost of 7M.
The capital gains tax is?
0
34. A, a resident citizen sold the following the real property:

The capital gains tax due is?

P 780,000
35. Philip is not a dealer in securities. In 2015, he had the following transactions in a not
listed and traded identical common shares of stock of a domestic corporation:

The final capital gains tax due on the May 30 sale is:
P 9,500
36. First statement: The CGT on sale of real properties shall be paid within 30 days from
sale or disposition.
37. Second statement: The CGT on the annualized portion of the proceeds in case of sale of
a real property classified as a principal residence shall be paid within 30 days after the
expiration of the eighteen month period.
Statement
1
Statement
2
A
True
True
38. Lita Aguirre was a stockholder of AIT Corp. She owned shares of stock which she
acquired five years ago at a cost of P1,000,000. AIT Corp. was dissolved. She received
a liquidating dividend of P140,000. The gain subject to income tax is?
A capital gain to consider is P20,000
39. Mike Anico is a stock broker and holds 10,000 ordinary stock of San Miguel Corporation,
a domestic corporation, acquired at P100 per share. His valuation for San Miguel
Corporation indicates that San Miguel's stocks will decline in the near future. If Mike sells
his stock investment directly to a buyer, Tony Millan, at P115 per share, how much is the
capital gains tax payable on the transaction?
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40. Ms. Lyn Batungbakal, a real estate dealer, sold a real estate for P2,000,000 on
November 29, 2017. The cost of the property was P1,500,000. The terms of the sale
were as follows:

Compute the capital gains tax in the above case.

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41. Jolina Madrigal sold his principal residence for P5,000,000. His principal residence was
acquired at P2,000,000 and has a fair market value of P6,000,000 at the date of sale.
Within 18 months, Jolina reconstructed his new principal residence for P4,500,000.
Compute the capital gains tax to be deposited in escrow.
P360,000
42. A. Capital losses are deductible from ordinary gains but net capital loss is not deductible
from ordinary gains B. Ordinary losses are deductible only to the extent of the capital
gains but the net capital loss is not deductible from ordinary gain

false, true
43. Using the preceding number, if the proceeds of the sale were used to buy a new family
home, the capital gains tax is
P 420,000
44. A, a citizen of the Philippines, sold his residential land in the Philippines at a selling price
of 4M and with a fair market value of 5M. The cost of the property sold was 1M. He
purchased a house and lot as his principal residence at a cost of 7M.
A sold his principal residence at a selling price of 5M but with a FMV of 6M. The property
sold was acquired for 3M. He purchased his new principal residence at a cost of 7M. The
capital gains tax is

240,000
45. Dimasalang Corporation in the above situation would have a taxable gain of:
P 500,000
46. Which of the following accounting assets is not an ordinary asset?
Investment property
47. An individual taxpayer owns a ten (10) - door apartment with a monthly rental of 10,000
each residential unit. He sold this property to another individual taxpayer. Which is not
correct?
 The property sold is a capital asset
48. Special Treatment of Capital Gains
A, a citizen of the Philippines, sold his residential land in the Philippines at a selling price
of 4M and with a fair market value of 5M. The cost of the property sold was 1M. He
purchased a house and lot as his principal residence at a cost of 7M.
If only 3M out of 4M was utilized in acquiring a new principal residence, the capital gain
tax is?

75,000
49. In 2017, Nebular Corp. sold shares of stock of a domestic corporation for P250,000. The
shares acquired in 2015 at a cost of P100,000 were held as investment and were sold
through a local stock exchange.
Assume the share sold were not held for investment purposes and the seller is a dealer
in securitie, how much is the capital gains tax?

NIL
50. Where the taxpayer is a corporation, the following rules as to recognition of capital gains
or losses from disposition of property classified as capital asset shall apply. Which is the
exemption?

Net capital loss carry-over should not exceed the net income in the year the loss was
incurred
51. Henedina, a non-security dealer, presented the following information:

Henedina has business income totaling P500,000 including P18,000 dividend income
from a domestic corporation. Compute the total income of Henedina subject to
progressive (regular) taxation.

P507,000
52. A and B are stockholders in corporations which are being consolidated into a new
corporation, had the following data on their shares of stock:

The gain or (loss) to be recognized by B is

P 9,000
53. A partnership that has operated for ten (10) years is now dissolved by reason of the
withdrawal of X (co-partner of Y). Information pertinent to the dissolution appears below:

Determine the capital gain (capital loss) to be reported by X in his income tax return:

P 150,000
54. Which of the following is not a requisite of installment payment of capital gains tax
in installment involving the sale of personal property?
Downpayment must not exceed 25%
55. A domestic corporation had the following data for 2009 (first year of operations):

The total capital gains taxes for the year:

P 67,000
56. Determine the amount on which the 6% capital gains tax rate shall be based upon,
where a residential lot is sold under the following circumstances:

P 4,000,000 the zonal value as determined by the Bureau of Internal Revenue

57. Which of the following entities is not exempt to the final capital gains tax imposed on the
sale, exchange and other disposition of real property?

Resident citizen on his sale of one of his residence under foreclosure sale
58. Jolina Madrigal sold his principal residence for P5,000,000. His principal residence was
acquired at P2,000,000 and has a fair market value of P6,000,000 at the date of sale.
Within 18 months, Jolina reconstructed his new principal residence for P4,500,000.
Compute the cost basis of the new residence if it was acquired for P5,200,000.
P2,000,000
59. Jolina Madrigal sold his principal residence for P5,000,000. His principal residence was
acquired at P2,000,000 and has a fair market value of P6,000,000 at the date of sale.
Within 18 months, Jolina reconstructed his new principal residence for P4,500,000.
The amount of capital gains tax to be released to Jolina is
P324,000
60. Mr. Acebedo, a non-security broker or dealer, made the following dispositions directly to
buyer:

Compute the amount of capital gains tax payable (refundable) of Mr. Acebedo for the
year 2017.
(P1,500)
61. Mr. Juan dela Cruz transferred his commercial land with a cost of P500,000 but with a
fair market value of P 750,000 to JDC Corporation in exchange of the stocks of the
corporations with par value of P1,000,000. As a result of the transfer he became the
major stockholder of the corporation.
As a result of the transfer,

No recognized gain because the land was in exchange of purely stocks and Mr. dela
Cruz became the majority stockholders.
62. X borrowed the certificates of stock of Y to be used as security for a loan. Thereafter, the
market price of the shares zoomed up and X sold the said shares in the trading market.
X returned the amount equivalent to the par value of the shares to Y and pocketed the
profit he made from the sale. This transaction is what known as:

None of the foregoing

63. Which of the following statements relative to the sale of real property classified as a
capital asset is false?
None of the foregoing.
64. Which of the following losses can be claimed as a deduction for income tax purposes?
None of the foregoing
65. X connived with several brokers to engage among themselves in the buying and selling
of his securities in order to create a false appearance of active trading with respect to his
securities at the stock exchange. This transaction is what is known as:

Wash sale
66. A taxpayer realized a capital gain in the amount of P100,000 and a capital loss in the
amount of P 150,000 for the taxable year 2018. For the succeeding taxable year 2019,
he realized a capital gain in the amount of P 300,000. How much net capital gain shall
be reflected in the taxpayer's income tax return (ITR) for 200B to be subjected to the
graduated income tax rates?

P 250,000
67. Dimas owns a parcel of land worth P 5,000,000 which he inherited from his father in
2011 when it was worth P3,000,000. His father purchased the property in 2001 for P
1,000,000. If Dimas transfers this parcel of land to his wholly owned corporation,
Dimasalang Corporation, in exchange for shares of stocks of said corporation worth
P4,500,000, Dimas will have a taxable gain of
P 3,500,000
68. Determine the tax that is not a capital gains tax:

Tax on the sale of listed/traded share of stock

69. Assume the same facts in the preceding item, except that the capital gain for 2019
amounted to P 30,000. How much net capital gain (net capital loss) shall be reflected in
the taxpayer's income tax return (ITR) for 2019 to be subjected to the graduated income
tax rates?
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70. X sold his personal laptop to a friend and derived a gain in the sum of P 20,000. He
likewise sold his personal Jewelry at a loss in the sum of P 10,000. He acquired the
laptop seven (7) months ago and the Jewelry two (2) years ago. What is the tax
treatment of the foregoing transactions?
X shall report a net capital gain of P 15,000 in his income tax return.
71.