CAPITAL ASSETS Flashcards
1
Q
- The term “capital assets” includes
a. Stock in trade or other property included in the taxpayer’s inventory
b. Property primarily for sale to customers in the ordinary course of his trade or business
c. Property used in the trade or business of the taxpayer and subject to the depreciation
d. Real property not used in the trade or business of taxpayer
A
2
Q
- Which of the following properties is classified as a capital asset?
a. Real properties acquired in the course of trade or business by a taxpayer habitually engaged
in the sale of real estate
b. Real properties of the real estate lessor, whether land and/or improvements, which are for
lease or being offered for lease, or otherwise for use or being used in the trade or business
c. Real property initially acquired by a taxpayer engaged in real estate business but subsequently
abandoned or become idle
d. Real property transferred through succession or donation to the heir or done who is not
engaged in the real estate business with respect to the real property inherited or donated, and
who does not subsequently use such property in trade or business
A
3
Q
- 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?
a. 50% of the net capital gain
b. 100% of the net capital gain
c. 50% in all cases
d. 100% in all cases
A
4
Q
- Where the taxpayer is a corporation, which of the following statements is true?
a. The holding period does not apply to corporations; hence, capital gains and losses are
recognized at 50%
b. Ordinary loss is always deductible in full
c. The net capital loss can be carried over in the next succeeding year
d. Capital loss is deductible only up to the extent of ordinary gains
A
5
Q
- Rules on capital gains and losses of corporations, except
a. Capital gains and losses are recognized to the extent of 100% regardless of the holding period
b. The net capital loss carry-over is not applicable
c. Capital losses are deductible only to the extent of capital gains
d. There is a final tax of 15% on real property sold
A
6
Q
- Which of the following taxpayers is allowed to observe the “no holding period and no carry over of net
capital loss”
a. Individual
b. Corporation
c. Estates
d. Trusts
A
7
Q
- 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 apartment houses
c. Sale of vacant lot by an employee
d. Sale of real property utilized for office use
A
8
Q
- Mr. X bought a parcel of residential land for P1,000,000 sometime in 2020 for personal use. He sold the same to Mr. Y for P2,000,000 on September 1, 2021. The transaction is subject to 6% capital gains tax
a. True
b. False if Mr. X is engaged in the real estate business
c. False because it is subject to VAT if the sale is in the regular course of trade or business
d. None of the above
A
9
Q
- A client not engaged in realty business paid in full the P50,000 attorneys’ fees of his counsel in lot
which he bought in 2021 for P500,000 and which has a fair market value of P600,000. Which of these is correct?
a. The client-transferor is subject to final capital gains tax based on P500,000
b. The client-transferor is not subject to final capital gains tax
c. The client-transferor is subject to final capital gains tax based on P600,000
d. The client-transferor is subject to income tax for the difference between P500,000 and P50,000
A
10
Q
- Mr. X, 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 Mr. Y, a resident alien taxpayer. The
sale shall be subject to
a. Basic income tax
b. 6% Capital gains tax
c. 6% capital gains tax or basic income tax at the option of Mr. X
d. 6% capital gains tax or basic income tax at the option of Mr. Y
A
11
Q
- Statement 1: The CGT on sale of real properties shall be paid within 30 days from sale of disposition.
Statement 2: The determination of 6% capital gains tax on sale of real property is based on net capital
gains realized by the seller of real property.
Statement 3: Proceeds of sale of real property classified as capital asset may be exempt from the 6%
capital gains tax.
a. Only one (1) of the above statements is correct
b. Two (2) of the above statements are correct
c. Three (3) of the above statements are correct
d. All of the above statements are incorrect
A
12
Q
- In computing gain or loss from the sale or other disposition of property acquired as gift or donation, the basis of cost shall be
a. The zonal value at the date of acquisition
b. The fair market value at the date of acquisition
c. The same as it would be in the hands of the donor
d. The purchase price plus expenses of acquisition
A
13
Q
- All of the following, except one, results to a capital gain or loss
a. Gain on short sales
b. Option loss
c. Worthless securities
d. Ordinary gains
A
14
Q
- A transaction in which the speculator sells securities which he does not own (he merely borrows the stock certificate through or from his stock broker) in anticipation of a decline in its price, and within a reasonably short period of time buys or covers the stock to complete the transaction
a. Wash sale
b. Short sale
c. Auction sale
d. Rescissible sale
A
15
Q
- A bought from B Corporation ten (10) shares of stock. Sixty days thereafter, the corporation was
adjudged bankrupt and its stock as worthless. The loss of A to be reported for income tax purposes is
classified as
a. A wagering loss
b. Non-deductible loss for income tax purposes
c. Short-term capital loss
d. Casualty loss
A
