Capital Gains Tax

Question 1

Sale of domestic shares of stock

Not traded at stock exchange

Answer 1

By individuals and domestic corp
= 15% of net capital gain

By foreign corporation
Net gain not over 100,000 = 5%
Amount in excess of 100,000 = 10%

Question 2

How to compute for CGT for sale of domestic stock directly to buyer?

Answer 2

CGT = Net capital gain x rate

Net capital gain = Selling price - basis of stock disposed - selling exp - documentary stamp tax

Question 3

Annual Capital Gains Tax Effect

Answer 3

Annual Capital Gains Tax Due
= sum of all capital gains (loss) multiply by corresponding tax rate

Annual CGT > Total CGT paid = CGT payable
Annual CGT < Total CGT paid = CGT refundable

Question 4

Tax free exchanges

Answer 4

1. Exchange of stocks in pursuant to merger or consolidation

2. Transfer of stocks resulting in corporate control

Question 5

When will wash sales take place?

Answer 5

If substantially identical securities are acquired after a sale within 30 days before and 30 days after the sale

Question 6

Minimum public ownership for publicly listed corporations (under PSE)

Answer 6

Higher of

1. 10% of issued and outstanding shares
2. Min. Public ownership requires by SEC or PSE

Question 7

CGT for sale of real property classified as capital assets located in the Philippines

Answer 7

6% of selling price or FV (higher)

FV is the higher between zonal and assessed value

Question 8

To whom does CGT for sale of real property applicable?

Answer 8

Individuals and Domestic Corporation

For FC - RIT

Question 9

Treatment if the buyer of real property is the gov’t

Answer 9

Taxpayer may choose between 6% CGT or RIT

Question 10

Important days to be exempted for CGT. Principal residence

Answer 10

1. 30 days - to notify BIR
2. 18 months - to reacquire new principal residence
3. 10 yrs. - exemption can be availed only once every 10 yrs.

Question 11

Tax basis of new residence if

1. Full utilization of proceeds
2. Less than full

Answer 11

1. Full utilization of proceeds
   basis of old + Addt’l out of pocket costs
2. Less than full
   Tax basis of old x (utilized proceeds / total proceeds)

Question 12

Documentary stamp tax on sale of domestic stocks directly to buyers

Answer 12

P0.75 for every P200 par value of stock sold

Question 13

Documentary stamp tax on sale of real property

Answer 13

P15 for every P1000 and fractional parts of tax basis thereof