1. Where the taxpayer is a corporation, which of the following statements is true?

a. The holding period does not apply to corporation, hence, capital gains and losses are recognized
at 50%

b. The net capital loss can be carried over in the next succeeding year

c. Capital loss is deductible only up to the extent of ordinary gains

d. Ordinary loss is deductible from capital gains

2. A. Capital losses are deductible from ordinary gains but net capital loss is not deductible from
ordinary

B. Ordinary losses are deductible only to the extent of the capital gains but the net capital loss is not
deductible from ordinary gain

a. true, true b. true, false c. false, true d. false, false

3. 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?

a. The seller is not liable to pay the capital gains tax

b. The property sold is a capital asset

c. The taxpayer is engaged in business

d. The rental income is subject to income tax using the graduated rates

4. 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

a. short-term b. medium-term c. long-term d. co-terminus

5. 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

a. Depending on the holding period, the percentages of gain or loss is 100% if the capital asset has
been held for 12 months or less; and 50% if the capital asset has been held for more than 12 months

b. Capital losses are deductible only to the extend of the capital gains; hence, the capital loss is not
deductible

c. ordinary losses are deductible from capital gains but net capital loss cannot be deducted from
ordinary gain.

d. net capital loss carry over in a taxable year should not exceed the capital gain in the year the loss
was incurred.

6. 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?

a. The bolding period does not apply to corporations. Capital gains and losses are recognized at
100%

b. Capital losses are deductible only to the extent of capital gains

d. Net capital loss carry-over should not exceed the net income in the year the loss was incurred

7. The term "capital assets" include

a. Stock in trade or other property included in the taxpayer's inventory

b. Real property not used in the trade or business of taxpayer

c. Property primarily for sale to customers in the ordinary course of his trade or business

d. Property used in the trade or business of the taxpayer and subject to depreciation

8. A, resident citizen had the following data for the years 2011 and 2014

2011 2012 2013 2014

Ordinary taxable income 50,000 40,000 60,000 52,000

Gain from sale of capital asset:

Held for 12 months 5000 2000 5000 57000

Held for 13 months 4000 30000 20000 28000

Loss from sale of capital assets:

Held for 19 months 20,000 10,000 60,000

Held for 7 months 104,000 120,000 5000

Required: compute for the taxable income of the taxpayer for the years

9. a domestic corporation had the following data for taxable year 2013 and 2014.

2013 2014

Taxable income before capital assets transactions 50,000 30,000

Gain from sale of capital assets

Held for 12 months 20,000 23,000

Held for 9 months 5,000 10,000

Loss from sale of capital assets

Held for 15 months 7,000 15,000

Held for 22 months 25,000 12,000

Required: compute for the taxable net income of the corporation for the years 2008 and 2009

10. henedina, a non security dealer, presented the following information:

Short-term long-term

Capital gains:
 - Sale of domestic stocks directly to buyer P40,000 P50,000
- Sale of domestic bonds directly to buyer 50,000 20,000

Ordinary gains:

- Sale of equipments 20,000 10,000

Capital loss:

- Sale of foreign stocks 10,000 10,000

Ordinary Loss:

- Sale of old machine 40,000

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

a.497,000 b. 507,000 c. 517,000 d. 522,000

11. in the immediately preceding problem, compute henedina’s net capital gains tax due on the sale
of domestic stock directly to buyer.

a. 3000 b. 4000 c. 5000 d. 8000

12. B had an original investment in a general professional partnership of 200,000 in 2005. His share
in the net income of the partnership for 2005 credited to his capital account was 30.000. In 2006,
50,000 was credited to his capital account as his share in the partnership income but he withdrew
10,000 from such share. He paid the income tax on his share in the partnership net income of 2005
and 2006. B retired at the end of 2006 and received 300,000

Determine his capital gain or loss.

13. The records of C, married with 2 qualified dependent children show the following for 2006.

Business income, net of 240,000 expense P 160,000

Rental income, net of 5% W/T 95,000

Dividend received from a domestic corporation 20,000

Winnings from Phil. Charity Sweeptakes office 400,000

Other transactions:

1. Sale of assets used in business:

a. Delivery equipment - Selling price 200,000

Cost (2005) 300,000

Accumulated depreciation 60,000

b. Land - Selling price 300,000

Cost (2002) 180,000

a Jewelry - Selling price 250,000

Cost (2002) 180,000

b. Land - Selling price 800,000

Cost (2000) 900,000

C. Shares of stocks:

1) Traded in the stock exchange: Selling price 220,000

Cost (2004) 300,000

2) Not-traded in the stock exchange: Selling price 300,000

Cost (2004) 180,000

Determine the taxable income of C.

14. F, married, had the following data for 2006:

Business income, gross P 200,000

Deductible expenses 120,000

Long-term capital gain 50,000

Short-term capital loss 20,000

Loss due to failure to exercise 60 days option to buy 10,000

Selling price of a partnership interest (investment in 2000 - P50,000) 80,000

Determine the taxable income of F.

120,000 (40,000

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.

15. The capital gains tax is

a. 240,000 b. 200,000 c. 300,000 d. O

16. If only 3M out of 4M was utilized in acquiring a new principal residence, the capital gain tax is

a. 300,000 b. 75,000 c. 150,000 d. 100,000

17. A sold his principal residence at a selling price of 5M but with a FMV of GM. The property sold
was acquired for3M. He purchased his new principal residence at a cost of 7M. The capital gains tax
is

A. 360,000 b. 300,000 C. 240,000 d. O

a. 7M b. 6M C. 5M d. 4M

19. If only 4M out of 5M was utilized in acquiring his new principal residence, the capital gains tax is
a. 60,000 b. 72,000 c. 300,000 d. 160,000

20. Using the preceding number, the basis (cost) of the new principal residence?

A. 3.2M b. 4M c. 2.4M d. 3М