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TAX 1 > CHAPTER 6 > Flashcards

CHAPTER 6 Flashcards

1
Q

2 kind of ASSET of BUSINESS/PROFESSION

A

ORDINARY ASSET
CAPITAL ASSET

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2
Q

kind of asset of PERSONAL/COMPENSATION

A

CAPITAL ASSET ONLY

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3
Q

WHAT IS ORDINARY ASSET

A

ASSETS USED IN BUSINESS AND HELD FOR SALE

-INVENTORY
-SUPPLIES
-PPE

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4
Q

WHAT IS CAPITAL ASSET

A

ANY ASSET OTHER THAN ORDINARY ASSET
PERSONAL ASSET

RECEIVABLES
ASSET NOT USED IN BUSINESS, USED IN BUSINESS BUT NOT IMPORTANT IN OPERATION OF BUSINESS.

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5
Q

DISPOSITION OF ORDINARY ASSET, GAIN IS SUBJECT TO WHAT

A

TAXABLE IN FULL

GROSS INCOME

RIT

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6
Q

DISPOSITION OF ORDINARY ASSET, LOSS IS SUBJECT TO WHAT

A

DEDUCTIBLE IN FULL

(DEDUCTION)

RIT

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7
Q

DISPOSITION OF CAPITAL ASSET, SUBJECT TO WHAT

A

EXEMPT, FINAL TAX(CGT), RIT

FLEXIBLE

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8
Q

(2) ITEM SUBJECT TO CAPITAL GAINS TAX

A

DOMESTIC STOCK
- sold directly to buyer

REAL PROPERTIES
-location in PH

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9
Q

GAIN ON DISPOSITION OF DOMESTIC STOCK (sold to buyer) (CGT) %?

A

15% on net capital gain

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10
Q

GAIN/LOSS ON DISPOSITION OF REAL PROPERTIES (CGT) %?

A

6% which ever is higher @ selling price/ assess value/ zone value

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11
Q

LOSS ON DISPOSITION OF DOMESTIC STOCK AND REAL PROPERTIES (CGT) ?

A

NOT DEDUCTIBLE

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12
Q

GAIN/LOSS ON DISPOSITION OF DOMESTIC STOCK (sold to Philippines Stock Exchange) %?

A

Stock Transanction tax

6/10 of 1% on Sale Price

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13
Q

Domestic Stock (TAX FREE EXCHANGE)

A

RELATED TO MERGER OR CONSOLIDATION

INITIAL ACQUISITION OF CORPORATE CONTROL

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14
Q

OTHER DISPOSITION OF DOMESTIC SHARE

15% On net capital gain

A

SHARE SECURITY USE FOR:

-FORECLOSE OF PROPERTY IN SETTLEMENT OF EBT

-pacto de retro sale (repurchase)

-conditional sale

-volutary buy back not intended for cancellation

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15
Q

Not Included on CGT Domestic Stocks

A
  • Issuance of stock
  • exchange of stocks for services
    -redempton of share ina mutual funds
    -worthlessness of stocks
    -redemption of shares for cancellation
    -gratuitous transfer of stock
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16
Q

How to compute NET GAIN

A

Selling Price xxx
less:
(basis of stock dispose)
(Selling expenses)
(Documentary stamp tax)
__________________________

NET CAPITAL GAIN (LOSS)

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17
Q

ACQUIRED BY PURCHASE

BASIS OF STOCK?

A

COST OF PROPERTY

18
Q

BY DEVISE, BEQUEST, INHERITANCE (PA-MANA)

BASIS OF STOCK?

A

FV AT TIME OF DEATH

19
Q

BY GIFT

BASIS OF STOCK?

A

FV AT TIME OF GIFT/ BASIS PRECEEDING OWNER: acquired not by gift (LOWER)

20
Q

FOR INADEQUATE COSIDERATION

BASIS OF STOCK?

A

AMOUNT PAID BY THE TRANFEREE

21
Q

UNDER TAX-FREE EXCHANGE

BASIS OF STOCK?

A

SUBSTITUTED BASIS

22
Q

BIR FORM? DOMESTIC STOCK

A

BIR FORM 1707

23
Q

PERSONAL PROPERTIES

A

MOVABLE PROPERTIES

24
Q

REAL PROPERTIES

A

IMMOVABLE PROPERTIES

25
Q

IGNORE PERSONAL PROPERTIES

A

TRUE

26
Q

REAL PROPERTIES IN PH (REGULAR IT)

A

SALE TO GOVERNMENT OR GOCC (choice between final tax and rit)

27
Q

(6) REQUIREMENT TO BE EXEMPTED ON SALE OF PRINCIPAL (nirc)

A

SALE OF PRINCIPAL RESIDENCE (NIRC)

WITHIN 18MONTHS NEW PRINCIPAL RESIDENCE

30 DAYS NOTIF (BIR FORM 1706)

ONCE EVERY 10 YEAR AVAIL OF EXEMPT

6% SHOULD BE CGT DEPOSITED IN A INTEREST BEARING

WHOLE AMOUNT OF SP UTILIZE

28
Q

CGT ON THE UNUTILIZED PORTION FORMULA

A

CGT DUE= UNTULIZE SP/ TOTAL SP * CGT SHOULD BE

29
Q

COST BASIS OF NEW RESIDENCE (WHOLE AMOUNT OF SP UTILIZED)

A

COST OF OLD RESIDENCE
+ COST OF NEW RESIDENCE
- (SP OF OLD RESIDENCE)
___________________________

= cost basis of new residence

30
Q

COST BASIS OF NEW RESIDENCE (whole amount of sp is not utilized)

A

CGT DUE= UNTULIZE SP/ TOTAL SP * COST OF OLD RESIDENCE

31
Q

REal PROPERTIES IN PH (EXEMPT IN TAX)

A

SALE OF PRINCIPAL RESIDENCE

SALE OF LAND: CARP

SALE OF SOCIALIZED HOUSING:NHA

32
Q

BIR FORM? REAL PROPERTIES

A

BIR FORM 1706

33
Q

WHEN GOVERNMENT ALLOW YOU TO PAY INSTALLMENT

A

DOMESTIC STOCK

IP 25% OR LESS

SP GREATER THAN P1000

34
Q

WHEN GOVERNMENT ALLOW YOU TO PAY INSTALLMENT IN REAL PROPERTIES

A

IP 25% OR LESS OF THE SP

35
Q

SELLING PRICE =

A

ALL CONSIDERATION + MORTGAGE ASSUMED

36
Q

INITIAL PAYMENT=

A

DOWNPAYMENT + ALL CONSIDEERATION DURING THE YEAR + EXCESS OF MORTGAGE ASSUMED OVER COST

37
Q

INSTALLMENT CGT =

A

CGT * INSTALLMENT PAYMENT/ CONTRACT PRICE

38
Q

CONTRACT PRICE=

A

SELLING PRICE - MORTGAGE ASSUMED + EXCESS OF MORTGAGE ASSUMED OVER COST

39
Q

DOCSTAMP TAX
HOW MUCH? (DS)

A

P1.50/ 200 PAR VALUE

40
Q

DOCSTAMP TAX
HOW MUCH? (RP)

A

P15/ 1000 SP OR FV

TAX 1 (5 decks)

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