Capital Gains Tax Sample Problems PDF

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Sample problems about capital gains tax...

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Capital Gains Tax – 1. Sale of domestic shares directly to the buyer Foreign shares – regular income tax (active income) Domestic shares sold to stock market – STT 6/10 of 1% of the SP = .006. Tax rate: 15% of the net gain (RC, NRC, RA, NRAETB, NETB) SP – cost Corporation: DC – 15% of net gain Foreign corporation 1st 100,000 5% Excess over 100T 10% 2. Sale of real property held as capital asset Personal property, capital asset – regular income tax Real property, ordinary asset – regular income tax 6% of the SP or FMV, whichever is higher FMV: either assessed value (City hall) or zonal value (BIR) Individual: applicable to all Corporation: DC but not with the foreign corporation. Exceptions: 1. Principal residence 2. Proceeds will be used to acquire or to construct another residence; 18 months 3. Notify the BIR – within 30 days from day of disposal 4. Availed only once every ten years. 5. Historical cost of the old residence will be part of the cost of the new principal residence. Tax Option: Sold the capital asset to the govt. Option to use either Sec. 24A or CGT

Ana, a resident citizen provided the following data for the current taxable year: Gross income from business (gross of P 12,000 CWT) P 700,000 Business expenses 300,000 Royalty from books 40,000 Gain on sale to buyer of shares of stock of domestic Corporation held as capital asset 70,000 Loss on sale of land in the Philippines held as capital asset With cost of P 1,500,000 when the zonal value is P 1,200,000 500,000

FT: royalty from books 40,000 x 10% = 4,000

CGT: 1. Domestic shares (70,000 x 15%) 2. SP 1,000,000 vs. 1,200,000 x 6% Cost 1,500,000 Loss (500,000)

10,500 72,000 Total CGT: 82,500

Dealer in securities – VAT and income tax (regular income tax) How much is the taxable income?

1. Mr. L, a cemetery lot dealer sold real properties to different buyers are as follows:

House and lot Farm Lot Cemetery lot

Selling Price 2,000,000 800,000 45,000

Cost 1,250,000 300,000 20,000

The house and lot were sold to acquire a condominium unit for Mr. L new principal residence. What is Mr. L’s capital gains tax? a. 170,700 c. 48,000 b. 168,000 d. 50,700 House and lot – capital asset - exemption Farm lot – capital asset – 800,000 x 6% = 48,000 Cemetery lot – ordinary asset

Ms. Lalaine sold her residential house to Ms. Lambino for P 5M. Its FMV when he inherited it was P 6M although its present FMV is P 8M. How much is the CGT? 8M x 6% = 480,000T Same with # 16, but assuming the residential house is located abroad, the capital gains tax is: Zero this is subject to regular tax.

In 2018, East Star Inc. sold shares of stock for P 250,000. The shares, acquired in 2015 at a cost of P 100,000 were held as investment, and were sold directly to the buyer. How much was the capital gains tax due? Selling price Cost Net gain CGT: 150,000 x 15% Stock market: NO CGT, this is subject to STT.

250,000 100,000 150,000 22,500

.006 x 250,000 = 1,500 CGT: Mr. Chris had a principal residence which he sold to his friend amounting to P 2M. The property was acquired 5 years ago with a cost of 1.5M. The intention of Mr. Chris in selling the property was to acquire another principal residence. The zonal value of the said property is p 2.2M while the assessed value is P 2.5M. How much is the CGT of Mr. Chris, assuming that he was not able to comply with the requirements of the law as to the exemptions? 2.5M x 6% = 150,000 Assuming in this case, that Mr. Chris was able to comply with exemptions provided by law, how much is the CGT of Mr. Chris? No CGT for being exempted. Assuming further, the proceeds from the sale was not fully utilized. Out of P 2M, Mr. Chris only utilized 1.8M. How much is the CGT of Mr. Chris? Unutilized portion: 2M – 1.8M = 200,000 200,000/2M x 150,000 = 15,000 CGT Exempt: 150,000 – 15,000 = 135,000 Escrow: 150,000

Mr. Chris sold the property to the Government and he did not comply with exemption. 6% or Sec. 24A

Accounting Period:

Maricris sold the following capital assets, located in the Philippines, as follows: Lot 1 Lot 2 Lot 3 Selling Price P 225,000 P 750,000 P 1,200,000 Cost 95,000 900,000 300,000 Terms of sale: Down payment – 2/2018 P 15,000 P 75,000 P 150,000 st 1 installment payment – 4/2018 15,000 75,000 75,000 2nd installment payment – 9/2018 15,000 120,000 Still due 180,000 600,000 855,000 IP/SP 45T/225T =20% 150T/750T=20% 345T/1.2M= 28.75% How much is the capital gains tax for the year 2018?

CGT: Lot 1: 225,000 x 6% = 13,500 Lot 2: 750,000 x 6% = 45,000 Lot 3: 1,200,000 x 6% = 72,000 Lot 1: Installment: 45,000/225,000 x 13,500 = 2,700 (2018) Lot 2: Installment: 150,000/750,000 x 45,000 = 9,000 (2018) Lot 3: Deferred: = 72,000 (2018) Total CGT = 83,700

assuming the balance was collected in 2019, how much is the capital gains tax on that year? 2019: Lot 1: 180,000/225,000 x 13,500 = 10,800 Lot 2: 600,000/750,000 x 45,000 = 36,000 Lot 3: paid already in full Total CGT: 46,800

In 2018, Cristeta sold shares of stock of a domestic corporation directly to the buyer for P 400,000. The shares were acquired in 2016 for P 150,000. The terms of the sale are as follows: Down payment Installment payments 2018 2019 2020 2021

P 50,000 50,000 100,000 100,000 100,000

How much is the capital gains tax for the year 2018? CGT:400,000 – 150,000 = 250,000 x 15% = 37,500 Ratio of IP/SP = 50,000 + 50,000/400,000 = 25% - Installment method 2018: 100,000/400,000 x 37,500 = 9,375 2019: 100,000/400,000 x 37,500 = 9,375...