CHAPTER 6

Question 1

2 kind of ASSET of BUSINESS/PROFESSION

Answer 1

ORDINARY ASSET
CAPITAL ASSET

Question 2

kind of asset of PERSONAL/COMPENSATION

Answer 2

CAPITAL ASSET ONLY

Question 3

WHAT IS ORDINARY ASSET

Answer 3

ASSETS USED IN BUSINESS AND HELD FOR SALE

-INVENTORY
-SUPPLIES
-PPE

Question 4

WHAT IS CAPITAL ASSET

Answer 4

ANY ASSET OTHER THAN ORDINARY ASSET
PERSONAL ASSET

RECEIVABLES
ASSET NOT USED IN BUSINESS, USED IN BUSINESS BUT NOT IMPORTANT IN OPERATION OF BUSINESS.

Question 5

DISPOSITION OF ORDINARY ASSET, GAIN IS SUBJECT TO WHAT

Answer 5

TAXABLE IN FULL

GROSS INCOME

RIT

Question 6

DISPOSITION OF ORDINARY ASSET, LOSS IS SUBJECT TO WHAT

Answer 6

DEDUCTIBLE IN FULL

(DEDUCTION)

RIT

Question 7

DISPOSITION OF CAPITAL ASSET, SUBJECT TO WHAT

Answer 7

EXEMPT, FINAL TAX(CGT), RIT

FLEXIBLE

Question 8

(2) ITEM SUBJECT TO CAPITAL GAINS TAX

Answer 8

DOMESTIC STOCK
- sold directly to buyer

REAL PROPERTIES
-location in PH

Question 9

GAIN ON DISPOSITION OF DOMESTIC STOCK (sold to buyer) (CGT) %?

Answer 9

15% on net capital gain

Question 10

GAIN/LOSS ON DISPOSITION OF REAL PROPERTIES (CGT) %?

Answer 10

6% which ever is higher @ selling price/ assess value/ zone value

Question 11

LOSS ON DISPOSITION OF DOMESTIC STOCK AND REAL PROPERTIES (CGT) ?

Answer 11

NOT DEDUCTIBLE

Question 12

GAIN/LOSS ON DISPOSITION OF DOMESTIC STOCK (sold to Philippines Stock Exchange) %?

Answer 12

Stock Transanction tax

6/10 of 1% on Sale Price

Question 13

Domestic Stock (TAX FREE EXCHANGE)

Answer 13

RELATED TO MERGER OR CONSOLIDATION

INITIAL ACQUISITION OF CORPORATE CONTROL

Question 14

OTHER DISPOSITION OF DOMESTIC SHARE

15% On net capital gain

Answer 14

SHARE SECURITY USE FOR:

-FORECLOSE OF PROPERTY IN SETTLEMENT OF EBT

-pacto de retro sale (repurchase)

-conditional sale

-volutary buy back not intended for cancellation

Question 15

Not Included on CGT Domestic Stocks

Answer 15

• Issuance of stock
• exchange of stocks for services
  -redempton of share ina mutual funds
  -worthlessness of stocks
  -redemption of shares for cancellation
  -gratuitous transfer of stock

Question 16

How to compute NET GAIN

Answer 16

Selling Price xxx
less:
(basis of stock dispose)
(Selling expenses)
(Documentary stamp tax)
__________________________

NET CAPITAL GAIN (LOSS)

Question 17

ACQUIRED BY PURCHASE

BASIS OF STOCK?

Answer 17

COST OF PROPERTY

Question 18

BY DEVISE, BEQUEST, INHERITANCE (PA-MANA)

BASIS OF STOCK?

Answer 18

FV AT TIME OF DEATH

Question 19

BY GIFT

BASIS OF STOCK?

Answer 19

FV AT TIME OF GIFT/ BASIS PRECEEDING OWNER: acquired not by gift (LOWER)

Question 20

FOR INADEQUATE COSIDERATION

BASIS OF STOCK?

Answer 20

AMOUNT PAID BY THE TRANFEREE

Question 21

UNDER TAX-FREE EXCHANGE

BASIS OF STOCK?

Answer 21

SUBSTITUTED BASIS

Question 22

BIR FORM? DOMESTIC STOCK

Answer 22

BIR FORM 1707

Question 23

PERSONAL PROPERTIES

Answer 23

MOVABLE PROPERTIES

Question 24

REAL PROPERTIES

Answer 24

IMMOVABLE PROPERTIES

Question 25

IGNORE PERSONAL PROPERTIES

Answer 25

TRUE

Question 26

REAL PROPERTIES IN PH (REGULAR IT)

Answer 26

SALE TO GOVERNMENT OR GOCC (choice between final tax and rit)

Question 27

(6) REQUIREMENT TO BE EXEMPTED ON SALE OF PRINCIPAL (nirc)

Answer 27

SALE OF PRINCIPAL RESIDENCE (NIRC) WITHIN 18MONTHS NEW PRINCIPAL RESIDENCE 30 DAYS NOTIF (BIR FORM 1706) ONCE EVERY 10 YEAR AVAIL OF EXEMPT 6% SHOULD BE CGT DEPOSITED IN A INTEREST BEARING WHOLE AMOUNT OF SP UTILIZE

Question 28

CGT ON THE UNUTILIZED PORTION FORMULA

Answer 28

CGT DUE= UNTULIZE SP/ TOTAL SP * CGT SHOULD BE

Question 29

COST BASIS OF NEW RESIDENCE (WHOLE AMOUNT OF SP UTILIZED)

Answer 29

COST OF OLD RESIDENCE + COST OF NEW RESIDENCE - (SP OF OLD RESIDENCE) ___________________________ = cost basis of new residence

Question 30

COST BASIS OF NEW RESIDENCE (whole amount of sp is not utilized)

Answer 30

CGT DUE= UNTULIZE SP/ TOTAL SP * COST OF OLD RESIDENCE

Question 31

REal PROPERTIES IN PH (EXEMPT IN TAX)

Answer 31

SALE OF PRINCIPAL RESIDENCE SALE OF LAND: CARP SALE OF SOCIALIZED HOUSING:NHA

Question 32

BIR FORM? REAL PROPERTIES

Answer 32

BIR FORM 1706

Question 33

WHEN GOVERNMENT ALLOW YOU TO PAY INSTALLMENT

Answer 33

DOMESTIC STOCK IP 25% OR LESS SP GREATER THAN P1000

Question 34

WHEN GOVERNMENT ALLOW YOU TO PAY INSTALLMENT IN REAL PROPERTIES

Answer 34

IP 25% OR LESS OF THE SP

Question 35

SELLING PRICE =

Answer 35

ALL CONSIDERATION + MORTGAGE ASSUMED

Question 36

INITIAL PAYMENT=

Answer 36

DOWNPAYMENT + ALL CONSIDEERATION DURING THE YEAR + EXCESS OF MORTGAGE ASSUMED OVER COST

Question 37

INSTALLMENT CGT =

Answer 37

CGT * INSTALLMENT PAYMENT/ CONTRACT PRICE

Question 38

CONTRACT PRICE=

Answer 38

SELLING PRICE - MORTGAGE ASSUMED + EXCESS OF MORTGAGE ASSUMED OVER COST

Question 39

DOCSTAMP TAX HOW MUCH? (DS)

Answer 39

P1.50/ 200 PAR VALUE

Question 40

DOCSTAMP TAX HOW MUCH? (RP)

Answer 40

P15/ 1000 SP OR FV