Dealings in Properties MCQ PDF

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Warning: TT: undefined function: 32FINALS QUIZ 1: DEALINGS IN PROPERTIESINSTRUCTOR: ALESSA JOY CRUZ, CPAName: ______________________________________________________ Course & Yr.: ______________________________________________________ Schedule: ________________________________________________...

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FINALS QUIZ 1: DEALINGS IN PROPERTIES INSTRUCTOR: ALESSA JOY CRUZ, CPA Name: Course & Yr.: Schedule: I.

______________________________________________________ ______________________________________________________ ______________________________________________________

MULTIPLE CHOICE: Select the option that best corresponds to your answer. Encircle the letter of your choice. (25 points) 1. This is a capital asset a. A residential land previously foreclosed by PNB and is now being offered for sale to the public b. A commercial building foreclosed by a lending institution c. A 10-door apartment unit owned by a retired government employee d. A residential land owned by a practicing CPA 2. An individual taxpayer owns a ten (10)-door apartment with a monthly rental of P10,000 each residential unit. He sold this property to another individual taxpayer. Which is not correct? a. The seller is not liable to pay the capital gains tax. b. The property sold is a capital asset. c. The taxpayer is engaged in business. d. The rental income is subject to income tax using the graduated rates. 3. Statement 1: Capital losses are deductible from ordinary gains but net capital loss is not deductible from ordinary gains. Statement 2: Ordinary losses are deductible only to the extent of the capital gains but the net capital loss is not deductible from ordinary gain. a. True, True b. True, False c. False, True d. False, False 4. Where the taxpayer is a corporation, which of the following statements is true? a. The holding period does not apply to corporations, hence, capital gains and losses are recognized at 50% b. The net capital loss can be carried over in the next succeeding year. c. Capital loss is deductible only up to the extent of ordinary gains. d. Ordinary loss is deductible from capital gains. 5. Where the taxpayer is a corporation, the following rules as to the recognition of capital gains or losses from the disposition of property classified as capital asset shall apply. Which is the exception? a. The holding period does not apply to corporations, hence capital gains and losses are recognized at 100%. b. Capital losses are deductible from capital gains. c. Ordinary losses are deductible from capital gains but net capital loss cannot be deducted from ordinary gain. d. Net capital loss carry-over should not exceed the net income in the year the loss was incurred.

6. The following rules as to the recognition of capital gains or losses from the disposition of personal property classified as capital asset apply where the taxpayer is an individual. Which is the exception? a. Depending on the holding period, the percentages of gain or loss is 100% if the capital asset has been for 12 months or less, and 50% if the capital asset has been held for more than 12 months. b. Capital losses are deductible only to the extent of the capital gains; hence, the net capital loss is not deductible. c. Ordinary losses are deductible from the capital gains but net capital loss cannot be deducted from ordinary gain. d. Net capital loss carry over in a taxable year should not exceed the capital gain in the year the loss was incurred. 7. A transferred his commercial land with a cost of P600,000 and with a FMV of P900,000 to ABC Corp. in exchange of the stock of the corporation with a par value of P800,000. As a result of the transfer, A gained control of the corporation. Thus, a. The gain recognized is the difference between the par value of the shares of stocks and the cost of the land b. The loss recognized is the difference between the FMV of the land and the par value of the stocks c. No gain shall be recognized because the land was in exchange for shares of stock of a corporation and A became the majority stockholder thereof. d. No loss shall be recognized because the par value of the shares is greater than the cost of the land. 8. Statement 1: The to capital gains Statement 2: The 6% capital gains a. True, True b. True, False c. False, True d. False, False

issuance of shares of stock for property is subject tax. sale of real properties located abroad is subject to tax.

9. On September 30, 2018, 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. 10. Which capital asset is not subject to regular tax? a. b. c. d.

Real property held for sale by a dealer. Real property held as investment by a non-realty dealer. Domestic stocks held by a security dealer Foreign stocks

11. Josefa provided the following data on the sale of her personal property sold in 2018 held by her for 15 months: Cost Mortgage assumed by buyer Installment collection:

P225,000 270,000

2018 2019 2020

67,500 67,500 45,000

How much is the selling price? a. P450,000 b. P270,000

11 Cash Received FMV of thte property received Installment obligations of the buyer Mortgage Assumed by the Buyer SELLING PRICE

c. P180,000 d. P225,000

180,000.00 270,000.00 450,000.00

12. How much is the contract price? a. P450,000 b. P270,000

12 Selling Price Less: Mortgage Assumed by Buyer Balance Add: Excess of Mortgage over Cost CONTRACT PRICE

c. P180,000 d. P225,000

450,000.00 270,000.00 180,000.00 45,000.00 225,000.00

13. How much is the initial payments? a. P67,500 b. P112,500

13 Downpayment Add: Installments received during the year Add: Excess of Mortgage over Cost INITIAL PAYMENTS

c. P45,000 d. P225,000

67,500.00 45,000.00 112,500.00

14. How much is the income subject to income tax in 2018, 2019 and 2020? a. P56,250; P33,750 and P22,500 respectively b. P112,500; P67,500 and P45,000 respectively c. P225,000; P0 and P0 respectively d. None of the above.

SP CP Gain 14

450,000.00 225,000.00 225,000.00

2018 2019 2020 Ins. Rate 112,500/450,000 67,500/450,000 45,000/450,000 Pro-rated Gain 56,250.00 33,750.00 22,500.00

15. A taxpayer had the following dealings in properties? Short term capital gain P200,000 Long term capital gain 100,000 Short term ordinary gain 50,000 Long term ordinary gain 150,000 Short term capital loss 100,000 Long term capital loss 150,000

Short term ordinary loss Long term ordinary loss

200,000 120,000

Assuming the taxpayer is an individual, compute respectively the total items of gross income and the total items deductible from gross income. a. P200,000; P260,000 c. P275,000; P320,000 b. P200,000; P320,000 d. P275,000; P260,000 16. Assuming that the taxpayer is a corporation, compute respectively the total items of gross income and the total items of deductions from gross income in regular income tax. a. P500,000; P570,000 c. P250,000; P570,000 b. P500,000; P320,000 d. P250,000; P320,000

ST Capital Gain LT Capital Gain ST Ordinary Gain LT Ordinary Gain ST Capital Loss LT Capital Loss ST Ordinary Loss LT Ordinary Loss

-

Ordinary Gains Net Capital Gain Gross Income ST Ordinary Loss LT Ordinary Loss Deductions

-

INDIVIDUAL Ordinary Capital 200,000.00 50,000.00 50,000.00 150,000.00 100,000.00 75,000.00 200,000.00 120,000.00 200,000.00 75,000.00

200,000.00 120,000.00 200,000.00

200,000.00 75,000.00 275,000.00

200,000.00 50,000.00 250,000.00

200,000.00 120,000.00 320,000.00

-

CORPORATION 200,000.00 100,000.00 50,000.00 150,000.00 - 100,000.00 - 150,000.00

50,000.00

200,000.00 120,000.00 320,000.00

17. Mateo sold his principal residence for P5,000,000. His principal residence was acquired at P2,000,000 and has a fair market value of P6,000,000 at the date of sale. Within 18 months, he reconstructed a new principal residence for P4,500.000. Compute the capital gains tax to be deposited in escrow. a. P270,000 b. P300,000 c. P360,000 d. 0

17 Highest Amount (FMV) CGT Rate Capital Gains Tax

6,000,000.00 6% 360,000.00

18. The cost basis of the new residence is a. P1,800,000 b. P1,500,000 c. P3,750,000

d. P4,500,000

18 Selling Price Cost of new principal residence Unutilized Proceeds

5,000,000.00 4,500,000.00 500,000.00

Cost of New/Selling Price Cost of Old Cost Basis of New

90% 4,500,000/5,000,000 2,000,000.00 1,800,000.00

19. The amount of capital gains tax to be released to Mateo is a. P240,000 b. P270,000 c. P300,000 d. P324,000

19 Cost of New/Selling Price Total Capital Gains Tax Cost Basis of New

90% 4,500,000/5,000,000 360,000.00 324,000.00

20. Compute the cost basis of the new residence if it was acquired for P5,200,000. a. P2,000,000 b. P2,200,000 c. P1,733,333 d. P4,333,333

20 Cost of Old Excess of cost of new over selling price Cost Basis of New

2,000,000.00 200,000.00 2,200,000.00

21. Sarah Geronimo is a stock broker and holds 10,000 ordinary stock of San Miguel Corporation, a domestic corporation, acquired at P100 per share. Her valuation for San Miguel Corporation indicates that San Miguel’s stocks will decline in the near future. If Sarah sells her stock investment directly to a buyer, Divine, at P115 per share, how much is the capital gains tax payable on the transaction? a. P5,000 b. 10,000 c. P5,750 d. 22,500 22. Ayala Malls Cebu sold its parking lot for P2,000,000. The lot has a zonal value of P2,500,000 and appraisal value of P1,800,000. The capital gains tax on the sale of lot is a. 0 c. 120,000 b. 108,000 d. 150,000 23. EDSA Inc., a domestic service company, has the following transactions on the sale of another domestic corporation: Transaction Purchase Purchase Sale

Quantity 20,000 30,000 40,000

Net Price P 40,000 63,000 92,000

Assuming the first in, first out method, compute the capital gains tax on the sale. a. P0 c. P1,500 b. 480 d. P4,650 24. Assuming the moving average method, compute the capital gains tax on the sale. a. P0 c. P500 b. P400 d. P1,440

Selling Price Cost 1st Purchase 2nd Purchase Total Cost Gain Tax Rate CGT

FIFO 92,000.00 40,000.00 42,000.00 82,000.00 10,000.00 15% 1,500.00

MOV. AVE. 92,000.00 82,400.00

P103,000/50,000 total shares*40,000 shares sold

82,400.00 9,600.00 15% 1,440.00

25. When the annualized capital gains tax exceeds the transactional capital gains tax, the excess is a a. Tax Credit b. Tax Payable c. Tax Refundable d. A or B...