Capital Gains Tax

Question 1

Asset classification is relative means

Answer 1

The classification of asset as ordinary or capital does not depend on the NATURE of property but upon the NATURE OF TAXPAYER’S BUSINESS AND ITS USAGE.

Question 2

Is depreciable asset a capital asset?

Answer 2

FALSE. Depreciable asset is an ORDINARY ASSET, whether fully depreciated or depreciation was not taken during the period of ownership.

Question 3

EXEMPT CORPORATIONS ARE BUSINESS.

TRUE OR FALSE?

Answer 3

FALSE. EXEMPT CORPORATIONS ARE NOT BUSINESS. Real Properties USED by an EXEMPT CORPORATION in its EXEMPT OPERATIONS are CAPITAL ASSETS.

Question 4

CGT is applicaple on all individual WITHIN the Philippines. TRUE OR FALSE?

Answer 4

True.

Question 5

FULL UTILIZATION of proceeds for the sale of principal residence with the clear intent of using it for acquiring new principal residence shall be EXEMPT from CGT. TRUE OR FALSE?

Answer 5

TRUE. In terms of partial utilization, the excess of unused proceeds shall be subject to CG TAX.

Question 6

6% CGT Tax basis

Answer 6

FMV or Selling price whichever is HIGHER

Where FMV is:
Zonal Value or FV per tax declaration (City Assessor’s Office), whichever is HIGHER

X

6%

Question 7

Zonal Value exist only on ___?

Answer 7

Land

Question 8

6% CGT is a PRESUMED GAIN. True or False?

Answer 8

TRUE

Question 9

Nature of CGT

Answer 9

Final Tax and Transactional Tax

Question 10

Deadline of Filing CGT

Answer 10

Due 30 days from the days of disposal (BIR Form 1706).

Question 11

Basis of Residence with Full Utilization

Answer 11

Basis of OLD Residence xx
Add: Additional Cost xx
(New SP-Old SP)
BASIS OF NEW RESIDENCE xx

*Full utilization of proceeds is exempt.

Question 12

Partial Utilization of Proceeds

Answer 12

Computation:

Taxpayer: Used Proceeds/Total Proceeds x CGT
Government: Unused Proceeds/Total Proceeds x CGT
SUM: Total amount in Escrow