1) Tax basis is the cost, carrying amount or depreciated cost of an asset.

True page 411, slide 6

2) The gains or losses on sale by dealers in properties are considered ordinary gains or losses. True pp.
411

3) Domestic corporations are taxable on their dealings in properties within and outside the Philippines.
True slide 15

4) Individuals are allowed to carry over net capital loss for the next 3 years as deduction from net capital
gain in those years. False slide 16 NCLCO only 1 year

5) Ordinary gains or capital gains realized from the sale of bonds with more than 5-year maturity is not
subject to income tax. True slide 39 page 429

6) Individual & corporate taxpayers who are not dealers in securities are subject to both the wash sales
& holding period rules. False page 433

7) There is no capital loss carry-over when the taxpayer incurs a net operating loss in the period the net
capital loss was sustained. True slide 16

8) For purposes of wash sales rule, preferred stocks & common stocks are substantially identical. False
pp 433

9) Ordinary gains are subject to the rules of holding period for an individual taxpayer. False slide 10

10) Net capital loss is an item of deduction against gross income in the year of its incurrence. False slide
8

11) Dealings in capital assets are subject to regular income tax, except dealings in domestic stocks
directly to the buyer & real property capital assets. True page 410

12) If the transferor received considerations other than stocks in an exchange pursuant to a merger
plan, gains and losses shall be recognized to the extent of other considerations received. False slide 32

13) Gains by banks on their real and other properties acquired (ROPA) are considered capital gains
because banks are not primarily involved in the realty business. False page 411

14) Net capital loss in a given year cannot be carried over to the following year if there is a net capital
loss in the following year. True slide 16

15) Capital gains tax on gains subject to the 15% CGT must be remitted within 30 days from the date of
the transaction (e.g., sale) True page 433

16) As an exception to the rules on security dealers, gains/losses from dealings in stock options are
considered capital gains/losses. Fasle pp. 433

17) Transfer of properties to a corporation alone or with four others which did not result in corporate
control is taxable. True page 423
18) In complex transfers, the excess of fair market value over selling price is considered gift subject to
transfer tax. True 419 slide 24

19) When a corporation exchanges property solely for the stocks of another corporation pursuant to a
merger plan, gains and losses should not be recognized for taxation purposes. False pp. 423

20) Dealings in ordinary assets are subject to capital gains tax. False slide 3

21) If the amount of mortgage assumed by the buyer exceeds the tax basis, the excess shall be treated
as gain. True slide 42

22) Rules on dealings in capital assets by corporations apply also to partnerships but excluding general
professional partnerships. False page 429

23) Bonds, debentures, notes or other certificates of indebtedness are treated as capital assets to a bank
or trust company. False page 411

24) The tax basis for land is generally its depreciated cost. False slide 22

25) For pure share-for share swap in tax-free exchanges, the tax basis of the shares given is the tax basis
of the shares received. True

26) Transfer of properties to a controlled corporation subsequent to the initial acquisition of control is
not taxable. False page 423 slide 33

27) Tax basis for capital assets is their depreciated costs. False page 419

28) Ordinary loss is subject to the holding period rule to an individual taxpayer. False slide 10

29) Capital gains and capital losses from dealings in capital assets in a given period, other than real
property capital assets & domestic stocks sold directly to the buyer, are offset for regular income tax
purposes. False pp. 411

30) Dealings in capital assets will result in either ordinary gains or ordinary losses. False can only be
capital gains or losses

31) For corporate taxpayers, gains on capital assets held for more than 1 year are recognized at 100% of
the amount. True slide 11

32) Non-resident citizens are subject to tax on their dealings in properties within and outside the
Philippines. False slide 15

33) For property acquired by inheritance, the tax basis is fair value of the property on the death of the
decedent. True page 419

34) Ordinary losses are items of deductions from gross income in the determination of net taxable
income from business. True slide 7

35) Tax basis of donated property is tax basis on the hand of the donor or fair market value at date of
donation whichever is higher. False page 419
36) Corporations are not allowed to carry over net capital loss in any given year as deduction from net
capital gain of the next year. True only individual taxpayers

37) Net capital loss than can be carried over is the highest of the actual net capital loss, net income of
the year when loss was sustained & available net capital gain of the following year. False slide 16 lowest

38) Any indicated gain must be reported for tax purposes to the extent of the money & other properties
received by the transferor on a tax-free exchange. True

39) Sale of ordinary assets will result in either capital gain or capital loss. False page 410

40) The wash sales rule is not applicable to dealers in securities. True page 430