EXPLAIN YOUR ANSWER . (SHORT EXPLANATION ONLY)

ANSWERS:

1. C
2. D
3. B
4. D
5. A

1.Statement 1: Proceeds of sale of real property classified as capital asset may be exempt from the 6% capital gains tax

Statement 2: Gain from sale of real property classified as capital asset to the Government may be taxed under Section 24 (A) at the option the individual taxpayer

a)Only statement 1 is correct

b)Only statement 2 is correct

C) Both statements are correct

2.On September 30, 2020, Juan sold a piece of land to Pedro who correctly computed the applicable gains tax of P1,440,000 on the transaction. The latter withheld the applicable capital gains tax and remitted the same to the BIR before the statutory deadline. The selling price of land is P20,000,000. Which of the following is not correct?

a)The fair market value of the land is P24,000,000

b)Juan received cash of P18,560,000 from Pedro

c)Juan applied the tax rate to the fair market value of the land, not to its selling price of P20,000,000.

d)The land sold by Juan is classified as an ordinary asset.

3.Which capital asset is not subject to regular taxes?

a)Real property held for sale by a dealer

b)Real property held as investment by a non-realty dealer

c)Domestic stocks held by a security dealer

d) Foreign stocks

4.Which of the following is subject to P6% of capital gains tax?

a)Sale of condominium units by a real estate dealer

b)Sale of real property utilized for Office use

c)Sale of apartment houses

d)Sale of vacant lot by employee

SHOW YOUR SOLUTION

5.Josefa provided the following data on the sale of her personal property sold in 2018 held by her for 15 months:

CostP225,000

Mortgage assumed by buyer 270,000

Installment collection:

201867,500

201967,500

202045,000

How much is the selling price?

a)450,000

b)270,000

c)180,000

d)225,000