S P E C IA L IZ E D C P A L E R E V IE W

Taxation
QUIZZER 2: CAPITAL GAINS TAX
Reviewer: Noelen Monarca Carreon, CPA

TAXATION - PROBLEMS IN CAPITAL GAINS TAX

SALE OF REAL PROPERTIES
1. Sale of real property by a real estate dealer is subject to what kind of tax?
A. BASIC INCOME TAX B. CAPITAL GAINS TAX C. 8% PREFERNTIAL TAX

2. Gain on sale of shares/securities by a dealer in securities is subject to what kind of tax?

A. BASIC INCOME TAX B. CAPITAL GAINS TAX C. 8% PREFERNTIAL TAX

3. Gain on sale of shares of domestic corporation directly sold to a buyer is subject to what kind of tax?
A. BASIC INCOME TAX B. CAPITAL GAINS TAX C. 8% PREFERNTIAL TAX

4. Gain on sale of an unlisted shares from a non-listed Domestic Corporation is subject to what kind of tax?
A. BASIC INCOME TAX B. CAPITAL GAINS TAX C. 8% PREFERNTIAL TAX

5. Gain on sale of shares of a closely-held corporation is subject to what kind of tax?

A. BASIC INCOME TAX B. CAPITAL GAINS TAX C. 8% PREFERNTIAL TAX

6. Sale of real property classified as capital asset is subject to what kind of tax?
A. BASIC INCOME TAX B. CAPITAL GAINS TAX C. 8% PREFERNTIAL TAX

7. Sale of real property classified as ordinary asset is subject to what kind of tax?
A. BASIC INCOME TAX B. CAPITAL GAINS TAX C. 8% PREFERNTIAL TAX

8. Sale of real property classified as ordinary asset who is not under a real estate business but is used in the
operation of a business is subject to what kind of tax?
A. BASIC INCOME TAX B. CAPITAL GAINS TAX C. 8% PREFERNTIAL TAX

(9-12) The land which is classified as a capital asset of a resident citizen taxpayer was acquired at P500,000
seven (7) years ago. The location of the land is in the Philippines. Taxpayer sold it at a price which was
higher than its FMV of P1,000,000. Selling price of the land was P1,500,000.

9. How much is the tax base for CGT on the said sale?
10. What is the applicable CGT tax rate for the said sale?
11. How much is the Basic Income Tax for the said sale?
12. How much is the Capital Gains Tax (CGT) on the said sale?

(13-20) Taxpayer is a resident citizen with the following data below:

FIGURE 1
TYPE OF WHAT? LOCATION FMV GSP COST GAIN/LOSS
ASSET
A Capital Asset LAND Philippines P2,000,000 P1,800,000 P1,000,000 P 800,000
B Capital Asset LAND Philippines P1,800,000 P2,000,000 P1,000,000 P1,000,000
C Capital Asset LAND Philippines P2,000,000 P2,000,0000 P1,000,000 P1,000,000
D Capital Asset LAND Philippines P1,200,000 P 800,000 P1,000,000 (P200,000)

13. What is the Taxable Amount for the computation of CGT in item A?
14. What is the Taxable Amount for the computation of CGT in item B?
15. What is the Taxable Amount for the computation of CGT in item C?
16. What is the Taxable Amount for the computation of CGT in item D?
17. How much is the Capital Gains Tax on transaction A?
18. How much is the Capital Gains Tax on transaction B?
19. How much the Capital Gains Tax on transaction C?
20. How much is the Capital Gains Tax on transaction D?

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21-23: Assume the same data in Figure 1 except that the location of the land in transaction A is in
somewhere in Brazil.
21. Is the Taxable Amount for the omputation of CGT on transaction A?
22. How much is the Capital Gains Tax for transaction A?
23. What amount pertaining to Transaction A. What should be included in the Taxable Income of the taxpayer
which is subject to Basic Income Tax?

24. Assume the same data in Figure 1 except that the seller-taxpayer is a Non-Resident Citizen, what is the Taxable
Amount for the computation of CGT in transaction B
25. Assume the same data in Figure 1 except that the seller-taxpayer is a Resident Alien, what is the Taxable
Amount for the computation of CGT in transaction B?
26. Assume the same data in Figure 1 except that the seller-taxpayer is a Non-Resident Alien ETB, what is the
Taxable Amount for the computation of CGT in transaction B?
27. Assume the same data in Figure 1 except that the seller-taxpayer is a Non-Resident Alien NETB, what is the
Taxable Amount for the computation of CGT in transaction B
28. Assume the same data in Figure 1, what is the Taxable Amount for the computation of CGT in transaction C if
the buyer in the said transaction is a Non-Resident Citizen?
29. Assume the same data in Figure 1, what is the Taxable Amount for the computation of CGT in transaction C if
the buyer in the said transaction is a Non-Resident Alien ETB?

30-31: Mr. Gomez, a resident citizen, sold his Real Property classified as Capital Asset to the Government.
He opted to be taxed at 6% CGT. FMV of the property is P5,000,000 and the Gross Selling Price is P3,000,000.
30. Can Mr. Gomez opt to be taxed for the said sale transaction at 6% CGT? (YES/NO)
31. Can Mr. Gomez opt to be taxed for the said transaction using the Graduated Income Tax Table? (YES/NO)

(32-38) Mr. James Reidy sold his real property classified as his principal residence for an amount of
P10,000,000. He acquired the said property 10 years ago at an amount of P7,000,000. After 10 years of
residing happily in the said property, he decided to sell it in order to acquire a much better place to home his
family. Fair Market Value of the property at the time of sale is P11,000,000 .
32. Assume that Mr. Reidy bought a new principal residence after 2 years, is the sale of principal residence an
exempt CGT transaction if the proceed is fully utilized in the acquisition of the new principal residence? (YES/NO)
33. Assume that Mr. Reidy bought a new principal residence after 1 year, is the sale of principal residence an
exempt CGT transaction if the proceed is fully utilized in the acquisition of the new principal residence? (YES/NO)
34. Assume that Mr. Reidy bought a new principal residence after exactly 1.5 year, is the sale of principal residence
an exempt CGT transaction if the proceed is fully utilized in the acquisition of the new principal residence? (YES/NO)
35. Assume that Mr. Reidy bought a new principal residence within the span of 18 months from disposal, is the sale
of principal residence an exempt CGT transaction if the proceed is fully utilized in the acquisition of the new principal
residence? (YES/NO)
36. Assume that Mr. Reidy bought a new principal residence after 6 months, is the sale of principal residence an
exempt CGT transaction if the proceed is fully utilized in the acquisition of the new principal residence? (YES/NO)
37. Assume that Mr. Reidy bought a new principal residence after 2 years, how much is the taxable amount for the
computation of the CGT if the proceed is fully utilized in the acquisition of the new principal residence?
38. How much is the Capital Gains Tax in number 37?

(39-44) Mr. James Reidy sold his real property classified as his principal residence for an amount of
P4,000,000. He acquired the said property 10 years ago at an amount of P500,000. After 10 years of residing
happily in the said property, he decided to sell it in order to acquire a much better place to home his family.
Fair Market Value of the property at the time of sale is P6,000,000 .
On the 18th month after disposition, James Reidy acquired a new principal residence.

PRICE OF THE NEW PRINCIPAL RESIDENCE

Situation 1 P4,000,000
Situation 2 P8,000,000
Situation 3 P2,000,000

39. If the proceeds of the sale of the old principal residence was only partially utilized in acquiring a new principal
residence not later than 18 months, is the entire amount (HIGHER OF GSP/FMV) taxable to 6% CGT? (YES/NO)
40. How much is the Capital Gains Tax for the said sale given that the new principal residence costs P4,000,000
under situation 1?
41. How much is the Capital Gains Tax for the said sale given that the new principal residence costs P8,000,000
under situation 2?

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42. How much is the Capital Gains Tax for the said sale given that the new principal residence costs P2,000,000
under situation 3?
43. If after 2 years, Mr Reidy decides to sell his newly acquired principal residence (which is exempt from CGT), will
he still be entitled with the same exemption assuming that he again fully utilized the proceeds to buy a new principal
residence not later than 18 months from the date of sale? (YES/NO)
44. If Mr. Reidy in situation 1 didn’t notify the BIR of his intention to buy a new principal residence within the year,
will he be subjected to CGT on the sale/disposition of the principal residence? (YES/NO)

45. Is CAPITAL GAINS TAX a final withholding tax? (YES/NO)

46. Under CGT, who withholds the tax? SELLER/BUYER
47. What BIR Form is used for filing of a Final Capital Gains Tax Return?
48. Who is the withholding agent in a transaction involving Capital Gains Tax? (SELLER/BUYER)
49. After how many days from the date of sale/disposition of a capital asset subject to tax should a return must be
filed and CGT should be paid in the BIR?
50. The seller-taxpayer, if wants to avail for exemption, should carry the burden of proving the exemption. Exemption
is always a burden to the taxpayer and always in the favor of the government. (TRUE/FALSE)

SALE ON SHARES OF STOCKS

51. Jenny sold 2,000 shares of a domestic corporation in the local stock exchange at P150 per share. The shares
were purchased 3 years ago for P100 per share. How much is the Taxable Amount that should be subject to Capital
Gains Tax? Selling date: March 6, 2020
52. Jenny sold 2,000 shares of a domestic corporation in the local stock exchange at P150 per share. The shares
were purchased 3 years ago for P100 per share. How much is the Capital Gains Tax? Selling date: March 6, 2020
53. Jenny sold 2,000 shares of a domestic corporation directly to a buyer (Fred) at P180 per share. The shares were
acquired six (6) months ago at P120 per share. How much is the Taxable Amount that should be subject to Capital
Gains Tax?
54. How much is the applicable CGT Rate for the said transaction in no. 53? Selling date: March 6, 2020
55. Jenny sold 2,000 shares of a domestic corporation directly to a buyer (Fred) at P180 per share. The shares were
acquired six (6) months ago at P120 per share. How much is the Capital Gains Tax? Selling date: March 6, 2020
56. Jobert sold 2,000 shares of a domestic corporation directly to a buyer (Earl) at P100 per share. The shares were
acquired two (2) years ago at P120 per share. How much is the Gain/(Loss) that is subject to CGT on the said
transaction?
57. Jobert sold 2,000 shares of a domestic corporation directly to a buyer (Earl) at P100 per share. The shares were
acquired two (2) years ago at P120 per share. How much is the Capital Gains Tax (CGT)?
58. Jenny sold 2,000 shares of a domestic corporation in the local stock exchange at P150 per share. The shares
were purchased 3 years ago for P100 per share. The said transaction is subject to what kind of tax?
59. What is the taxable amount that is subject to Other Percentage Tax Rate in no. 58?
60. Stock Transaction Tax has a fixed rate of .60% or 6/10 of 1% of the Gross Selling Price is an income tax.
YES/NO
61. Stock transaction tax belongs to the category of “OTHER PERCENTAGE TAX” . Is “”other percentage tax” a
business tax? (YES/NO)
62. Jenny sold 10,000 of her shares in a foreign corporation at 1500 USD per share. The shares were purchased 3
years ago for 1000 USD per share. Is the gain from the sale of shares subject to Capital Gains Tax? (YES/NO)
63. Jenny sold 10,000 of her shares in a foreign corporation at 1500 USD per share. The shares were purchased 3
years ago for 1000 USD per share. Is the gain from the sale of shares subject to Other Percentage Tax? (YES/NO)
64. Jenny sold 10,000 of her shares in a foreign corporation at 1500 USD per share. The shares were purchased 3
years ago for 1000 USD per share. Is the gain from the sale of shares subject to Basic Income Tax? (YES/NO)
65. Are documentary stamp tax (DST) on the sale, exchange or disposition of real properties classified as capital
assets required to be filed 5 days after the close of the month when the taxable document was made, signed,
accepted or transferred? (YES/NO)

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 HOME ASSIGNMENT:
 YOU SHOULD KNOW HOW TO DIFFERENTIATE THE FEATURES OF CAPITAL ASSETS AND ORDINARY ASSETS.
 MASTER THE CONCEPTS AND PRINCIPLES IN YOUR FT NOTES IN INCOME SUBJECT TO CAPITAL GAINS TAX.
 YOU CAN RECALL THE PRINCIPLES BY REVIEWING AND ANSWERING THIS QUIZZER ONCE AGAIN. THIS TIME, WITH
MASTERY.
 WHEN YOU ANSWER THIS QUIZZER, TRY TO RECALL AND FAMILIARIZE THE RULES AND PRINCIPLES BEHIND YOUR
ANSWERS.
 TAKE NOTE, CGT HAS BEEN AFFECTED BY THE TRAIN LAW. Don’t use your old reviewers to avoid confusion. Don’t worry,
the notes and this quizzer are already enough to strongly equip you on the topics under CGT.

ANSWER KEY - QUIZZER NO. 2:

CAPITAL GAINS TAX

1 A 11 0 21 0 31 YES 41 0 51 0 61 YES
2 A 12 P90,000 22 0 32 NO 42 0 52 0 62 NO
3 B 13 P2M 23 P800,000 33 YES 43 NO 53 P120,000 63 NO
4 B 14 P2M 24 P2M 34 YES 44 YES 54 15% 64 YES
5 B 15 P2M 25 P2M 35 YES 45 YES 55 P18,000 65 YES
6 B 16 P1.2M 26 P2M 36 YES 46. SELLER 56 0
7 A 17 P120,000 27 P2M 37 P11M 47. 1706/1707 57 0
8 A 18 P120,000 28 P2M 38 P660,000 48. SELLER 58 OPT
9 P1.5M 19 P120,000 29 P2M 39 NO 49. 30 DAYS 59 P300,000
10 6% 20 P72,000 30 YES 40 0 50. TRUE 60 NO