PROBLEM 21: ANSWER THE FOLLOWING QUESTION BELOW

*Ethel received in 2020 the following passive income within Philippines, net of applicable tax, if any:

Interest on bank deposit under Foreign Currency Deposit P212,500

Royalty on books 94,500

Dividend income from a domestic corporation 144,000

If Ethel is a resident alien, the final tax on the above passive income would amount to?

*Statement 1: There is capital gain tax on shares of stock only if the shares are those of a domestic corporation held as capital asset and not listed and traded in a local stock exchange

Statement 2: The capital gain tax on shares of stocks is paid within thirty days from the date of sale

d. Statements 1 and 2 are true

a. Statements 1 and 2 are false

c. Statement 1 is false but statement 2 true

b. Statement 1 is true but statement 2 is false

*Case 1: Jose, a CPA, had signed a legally enforceable agreement with his wife, Ethel, that the earnings from the exercise of his profession would be shared equally between them for purposes of computing the income to be reported in their respective individual income tax return. Is the agreement valid?

Case 2: Jose advised his son, Peter that the rent i8ncome on the dormitory owned by Jose will accrue to the latter. Peter collected the income and reported it in his own return. Were the actions taken by Jose and Peter valid?

Case 1 Case 2

A Yes No

B Yes Yes

C No Yes

D No No

*Which of the following statements is incorrect on winnings of a resident citizen?

a. Lotto winnings in the United States is subject to income tax in the Philippines

d. Winnings in a raffle draw sponsored by a cigarette company is subject to tax based on the schedule of rates in the tax table if the amount involved does not exceed P10,000.

c. Winnings of brand new cars in a raffle draw sponsored by SM are taxable

b. Lotto winnings sponsored by the Philippine Charity Sweepstakes Office is taxable subject final tax

*Which of the following transactions is exempt from capital gains tax?

Case 1: Sale of the principal residence of the taxpayer where the entire proceeds is used to purchase a vacation lot in Palawan.

Case 2 : Sale of a beach lot of the taxpayer where the entire proceeds is used to construct his principal residence.

Case 3: The sale of the principal residence of the taxpayer availing tax exemption for the second time in 10 years to purchase another principal residence.

A B C D

Case 1 Yes Yes No No

Case 2 Yes Yes No No

Case 3 Yes No Yes No

*If the proceeds are from the disposition of a principal residence and fully utilized in acquiring or constructing a new principal residence, the capital gain is not subject to tax if the

d. All of the above.

b. The historical cost or adjusted basis of the real property sold or disposed shall be carried over to the new principal residence built or acquired

c. The Commissioner of Internal Revenue shall have been duly notified by the taxpayer within 30 days from the date of sale or disposition through a prescribed return of his intention to avail of the tax exemption.

a. Acquisition or construction of the new principal residence is within 18 calendar months from the date of disposition

*Combate is a resident of Quezon City. He sold his family home for P4,000,000 which was previously acquired for P2,000,000. Combate complied all BIR requirements to avail of tax exemption and spent P2,500,000 in acquiring new family home. How much is the capital gains tax to be paid by Combate?

a. P-0-

c. P150,000

b. P90,000

d. P240,000