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  • Capital Gains Tax: Use The Following Data For The Next Four (4) Questions

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    Rosemarie Cruz
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    This document discusses capital gains tax scenarios in the Philippines. It provides examples of capital gains tax calculations for the sale of shares of stock in 2017 and 2018, considering the TRAIN law changes. It also provides examples of capital gains tax calculations for the sale of real property in 2019. The key details are that capital gains on the sale of shares of a domestic corporation are subject to capital gains tax, while sales of shares of a foreign corporation or sales by a dealer in securities are subject to income tax rather than capital gains tax.

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    This document discusses capital gains tax scenarios in the Philippines. It provides examples of capital gains tax calculations for the sale of shares of stock in 2017 and 2018, considering the TRAIN law changes. It also provides examples of capital gains tax calculations for the sale of real property in 2019. The key details are that capital gains on the sale of shares of a domestic corporation are subject to capital gains tax, while sales of shares of a foreign corporation or sales by a dealer in securities are subject to income tax rather than capital gains tax.

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    88 views4 pages

    Capital Gains Tax: Use The Following Data For The Next Four (4) Questions

    Uploaded by

    Rosemarie Cruz
    This document discusses capital gains tax scenarios in the Philippines. It provides examples of capital gains tax calculations for the sale of shares of stock in 2017 and 2018, considering the TRAIN law changes. It also provides examples of capital gains tax calculations for the sale of real property in 2019. The key details are that capital gains on the sale of shares of a domestic corporation are subject to capital gains tax, while sales of shares of a foreign corporation or sales by a dealer in securities are subject to income tax rather than capital gains tax.

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    of 4

    Capital Gains Tax

    123. Which of the following sale transactions will be subject to capital gains tax?
    a. Sale of shares of stock by a dealer in securities
    b. Sale of shares of stock during an Initial Public Offering
    c. Sale of shares of stock not through the local stock exchange by a person who is not a dealer
    in securities
    d. Sale of shares of stock through the local stock exchange by a person who is not a dealer in
    securities
    ❖ Answer: C

    Use the following data for the next four (4) questions:
    Bryan sold the following shares of stock of domestic corporations which he bought for investment

    purposes:
    Listed and Traded Not Listed and Traded

    250,000 143,680
    Selling price Selling
    12,000 . . 3,680
    expense Cost 118,000 80,000
    136. Determine the capital gains tax assuming the sale was made in 2017 (before effectivity of TRAIN Law)
    and 2018 (upon effectivity of TRAIN Law)

    2017 2018
    a. P3.000 P9.000
    b. 3,184 9,552
    c. 3,184 9,000
    d. 3,000 9,552

    *♦* Answer: A

    2017:
    LU CGT = 5% on 1st P100.000 gain; 10% in excess of P100,000 gain UJ CGain = P143.680 -
    3,680 - 80,000 = P60.000
    LJ CGT = P60.000 ^5% = P3.000
    2018 (TRAIN Law):
    LQ CGT = 15% of capital gain £□ CGT = P60,000 x 15% = P9.000

    137. Bryan's total income tax expense for 2017 and 2018 is:
    2017
    2018
    a. P3,000 P9.000
    b. 4,250 30,552
    c. 3,0552 9,000
    d. 9,000 4,250

    ❖ Answer: A
    Income tax expense = Basic income tax + FWT on passive income + CGT. £□ The sale
    of listed shares is not subject to income tax, but to stock transaction tax of:
    1
    /z of 1 % of GSP prior to 2018
    6/10 of 1% of GSP beginning Jan. 1,2018 (TRAIN Law)

    138. Assume Bryan is a dealer in securities, the capital gains tax in 2017 and 2018 is
    2017 2018
    a. P3,000 P9.000
    b. 9,000 3,000
    c. 0 9,000
    d. 0 0

    ❖ Answer: D
    £□ If the seller is a dealer in securities/the shares involved are assumed to be for sale in
    the ordinary course, hence, the sale is subject to vat and the income on both
    cases (listed or not) is subject to basic income tax. Likewise, the sale is not
    subject to capital gains tax nor to stock transaction tax of 1/6 of 1% (as amended)
    of gross selling price.
    2017 and 2018 is:
    139. Assume the shares
    2017sold are shares issued by foreign corporations, the capital gains tax in
    2018
    a. P3.000 P9.000
    b. 9,000 3,000
    c. 0 9,000
    d. 0 0
    I

    ❖ Answer: D
    £□ Sale of shares of foreign corporations is subject to basic income tax.
    stock of a domestic cor
    Poration whose

    Date of Sale Cost Selling Price


    Jan. 15,2019 135,000
    P80.000
    Feb. 14,2019 150,000
    175,000
    March 30,2019
    256,000 360,000
    140. The capital gains tax
    on the Jan. 15,2019 sale is -
    a. P675 c. P2.750
    b. P1,375 d. P8,250

    ❖ Answer: D
    C9 Capital gain = P135,000 - 80,000 = P55.000 £□ CGT = P55.000 x
    15% = P8,250

    141. The capital gains tax on the Feb. 14,2019 sale is -


    a. P0 c. P3,000
    b. P1,500 d. P4.500

    ❖ Answer: A; The transaction resulted to a capital loss of P25,000.

    142. The capital gains tax on the March 30,2019 sale is -


    a. PO c. P5.400
    b. P5,200 d. P15,600

    ❖ Answer: D
    £3 Capital gain = P360,000 - 256,000 = P104,000 CGT = P104.000 x
    15% = P15.600

    143. Which of the following transactions is subject to 6% capital gains tax:


    a. Sale of condominium units by a real estate dealer
    b. Sale of real property utilized for office use
    c. Sale of apartment houses
    d. Sale of vacant lot by an employee

    ❖ Answer: D
    L3 The real properties in “A”, “B" and “C" are ordinary assets, hence, subject to value added tax and the income derived is subject
    to basic income tax.
    £□ Only real properties classified as capital assets located in the Philippines are subject to CGTs on real properties.

    144. Statement The determination of 6% capital gains tax on sale of real property is based gains
    1:
    realized by the seller of real property.
    on net
    capital Except for certain passive income, a nonresident alien not engaged in trade
    Statement
    2-
    or bu^inpQ h u u" passive iiiuuiirc, a iiumesiueiu alien IIUI enyayeu HI uaue
    Philippines8 S a be taxed at 2$% of his gross income derived from sources within the
    a. Only statement 1 is correct
    b. Only statement 2 is correct
    c. Both statements are correct
    d. Both statements are incorrect

    ❖ Answer: B
    Statement 1 is false. The basis of 6% capital gains tax is the higher between the selling price and fair market value
    (FMV). FMV shall refer to the higher between the fair market value as determined by the city or provincial assessors
    (assessed value) and the zonal value as determined by the BIR.

    145. Mike, a resident citizen taxpayer owns a property converted into apartment units with a monthly
    rental of P10,000 per unit. He subsequently sold the property to Leomar, a resident alien
    taxpayer. The sale shall be subject to:
    a. 6% Capital gains tax
    b. Basic income tax
    c. 6% capital gains tax or basic income tax at the option of Mike
    d. 6% capital gains tax or basic income tax at the option of Leomar

    *** Answer: B; The property sold is classified as ordinary asset.

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