3. ABC Corporation realized an ordinary gain of P1,000,000 from an asset held for 5 years.

Its capital
asset transactions during the year are as follows:

Amount Holding period

Capital gain P125,000 6 months
Capital gain 112,500 2 years
Capital loss 57,500 12 months
Capital loss 70,000 10 years

What is ABC Corporation’s taxable income?

a. P1,210,000
b. P1,110,000
c. P1,088,750
d. P1,117,500

4. ABC Corporation, a domestic corporation, had the following data for taxable years 2020 and 2021

2020 2021
Taxable income before capital asset transactions P1,100,000 P1,375,0
00
Gain from sale of capital assets:
Held for 12 months 55,000 63,250
Held for 9 months 13,750 27,500
Loss from sale of capital assets:
Held for 15 months 19,250 41,250
Held for 22 months 68,750 33,000

Compute for the taxable income of the corporation for years 2020 and 2021.

5 Mr. X had the following financial information for taxable years 2020 and 2021.
.

Ordinary business income

Interest on time deposit with local bank 6,000 9,000
Short -term capital gain 15,000 25,500
Long-term capital gain 10,800 15,600
Short-term capital loss 24,000 8,700
Long-term capital loss 13,200 0

Question 1:
In 2020, the taxable income of Mr. X is
a. P176,100
b. P159,900
c. P110,100
d. P170,100
 Question 2:
In 2021, the taxable income of Mr. X is
a. P196,800
b. P357,000
c. P258,000
d. P286,800

6. Ms. X sold her principal residence for P7,000,000 when its fair market value was P8,400,000. The
house was purchased five (5) years ago for P4,200,000. Ms. X utilized the P5,600,000 for the
purchase of a new residential house.

Question 1:
The capital gains tax on the sale is
a. P504,000
b. P420,000
c. P100,800
d. P84,000

Question 2:
What is the cost basis of the new residence?
a. P4,200,000
b. P3,360,000
c. P5,600,000
d. P7,000,000

7. Mr. X, a Filipino citizen, reported the following information for taxable year 2020:

Net sales P1,000,000

Business expense 600,000
Rental income, net of withholding tax 237,500
Dividend income received from a resident foreign corporation 50,000
 Dividend income received from domestic corporation 100,000
Royalties from books 125,000
Interest on local currency bank deposit 175,000

Other transactions related to sale of properties are as follows (the dates of purchase are shown in
parentheses):

Assets used in business:

Machinery (2015) Land (2020) Warehouse (2017)
Selling Price 500,000 500,000 25,000,000
Cost 750,000 450,000 29,500,000
Accumulated Dep’n 150,000 - 5,000,000

Capital assets:
Jewelry (2017) Land (2018) Furniture and Fixtures
(2016)
Selling Price 625,000 2,000,000 25,000
Cost 450,000 2,250,000 100,000

Shares of stocks:
Traded (2018) Not traded (2020)
Selling Price 550,000 750,000
Cost 750,000 450,000

Requirement: Determine the taxable income of Mr. X

8. Compute for the Gain under the following scenarios:

Scenario 1: A sold his land to B for P 17,000. The land, costing P20,000, was inherited by A from his father
where by the time it was inherited, the FMV of such land amounted to P 15,000.

Scenario 2: Assume A acquired the land through gift from C (costing to C P20,000), his grandfather. At the
time of gift, the FMV of such land is P21,000.

Scenario 3: Assume A acquired the land through gift from C, his grandfather. C also acquired such land by
donation from D. D acquired the land through purchase at P16,000. At the time it was received by C from D,
the land was valued at P20,000. At the time of donation from C to A, the FMV of such land is P21,000.
Scenario 4: Assume A acquired the land through gift from C, his grandfather. C also acquired such land by
donation from D. D acquired the land through purchase at P21,000. At the time it was received by C from D,
the land was valued at P17,000. At the time of donation from C to A, the FMV of such land is P19,000. A sold
such land for P17,000 to B.

Scenario 5: Assume A acquired the land through gift from C, his grandfather. C also acquired such land by
donation from D. D acquired the land through purchase at P19,000. At the time it was received by C from D,
the land was valued at P17,000. At the time of donation from C to A, the FMV of such land is P23,000. A sold
such land for P17,000 to B.

Scenario 6: A sold his car for P25,000 to B. The car was acquired 2 years ago from S, his friend. The car was
valued at P21,500 on the date of acquisition. However, A was able to convince S to buy the car for only
P16,000.
THEORY

1. An individual making a casual sales or disposition of property involving deferred payment, not in
the course of trade or business, must report his income
a. Under cash method
b. Under accrual method
c. Under installment method
d. Any of the above

2. Gross income is reported partially in each taxable year in proportion to collections made in such
period as it bears to the total contract price refer to
a. Crop year basis method
b. Installment sales method
c. Percentage of completion method
d. Accrual method

3. On capital gains tax on real property, which of the following statements is not correct?
a. The installment payment of the tax should be made within 30 days from receipt of each
installment payment on the selling price
b. The term “initial payment” is synonymous to “downpayment”
c. The tax should be paid, if in one lump sum within 30 days from the date of the sale
d. The tax may be paid in installment if the initial payments do not exceed 25% of the
selling price