Dealings in Property Flashcards
If the asset is an ordinary asset
- gains → part of gross income
- loss → part of allowable deductions
True or False?
True (since it is subject to RIT)
If the asset is a capital asset, other than RP and shares
- gains → part of gross income
- loss → part of allowable deductions
True or False?
True (since it is subject to RIT)
- if RP and shares → CGT
If the asset is a capital asset, other than RP and shares, it is subject to 3 rules.
What are these 3 rules?
- Holding Period Rule
- Capital Loss Limitation Rule
- NCLCO
Holding Period Rule
- Capital Gains / Losses of a corporation will be recognized fully (100%). True or False?
- Capital Gains / Losses of an individual will be recognized fully (100%). True or False?
Corporation
- True (always 100%)
Individual
- Depends
- if held less than 12 months → 100%
- if held more than 12 months → only 50%
Capital Loss Limitation Rule
- The deductible capital loss for a corporation is only up to capital gain. True or False?
- The deductible capital loss for an individual is only up to capital gain. True or False?
True (both corporation and individual → only up to capital gain)
NCLCO can be carried over for 3 years. True or False?
NCLCO can be availed by both corporation and individual. True or False?
- False (only 1 year - next year)
- False (only for individual)
Basis for Determining Gain / Loss on a Capital Asset
- if through purchase?
- if through inheritance?
- cost
- FMV @ time of inheritance
Basis for Determining Gain / Loss on a Capital Asset
- if through gift?
- if for less than adequate consideration?
- same as that of donor
- amount paid by transferee
General Rule
- Sale of Property → entire amount of G/L recognized
XPN
- Related Party transactions and Reorganization → No gain or loss
Yes
OTHER CAPITAL GAINS AND LOSSES
1. Retirement of bonds and debentures
2. Option gains and losses
3. Liquidating dividends
4. Short sale of properties
5. Security becoming worthless
Yes
- short sale → sell now, buy later
Wash Sales
- what is the 1st transaction?
- what is the 2nd transaction (which should happen in the 61-day period)?
- Wash sales is applicable to both sale of real property and shares. True or False?
1st Transaction → Loss from Sale of Securities
2nd Transaction → Acquire Substantially Identical Securities
- False (kita mo na nga na securities / shares e)
For wash sales, the 1st transaction is a loss from sale of securities
- that loss will be part of allowable deduction. True or False?
False (it is not a deduction, since nakaacquire ka naman ulit ng identical shares)
- XPN : made by a dealer in the OCB → magiging deduction na siya kasi since business niya yon, parang nagkaloss talaga siya
