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    George sold various stocks and realized capital gains and losses. He sold domestic stocks after 3 years, 6 months, and 2 years realizing gains on the first and third sales and a loss on the second. He also sold foreign stocks held for 6 months, realizing a gain. Pedro sold real estate, including land held for business and residential lots held for 3-5 years, realizing capital gains. He was also subject to capital gains tax when selling a residential lot to the local government. Pedro sold his principal residence and incurred capital gains tax depending on whether he reinvested the proceeds in a new principal residence valued above, at, or below the sale price within a certain period.

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    Income taxation example

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    George sold various stocks and realized capital gains and losses. He sold domestic stocks after 3 years, 6 months, and 2 years realizing gains on the first and third sales and a loss on the second. He also sold foreign stocks held for 6 months, realizing a gain. Pedro sold real estate, including land held for business and residential lots held for 3-5 years, realizing capital gains. He was also subject to capital gains tax when selling a residential lot to the local government. Pedro sold his principal residence and incurred capital gains tax depending on whether he reinvested the proceeds in a new principal residence valued above, at, or below the sale price within a certain period.

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    © All Rights Reserved
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    11 views1 page

    Illustration 1

    Uploaded by

    Bea Nicole Baltazar
    George sold various stocks and realized capital gains and losses. He sold domestic stocks after 3 years, 6 months, and 2 years realizing gains on the first and third sales and a loss on the second. He also sold foreign stocks held for 6 months, realizing a gain. Pedro sold real estate, including land held for business and residential lots held for 3-5 years, realizing capital gains. He was also subject to capital gains tax when selling a residential lot to the local government. Pedro sold his principal residence and incurred capital gains tax depending on whether he reinvested the proceeds in a new principal residence valued above, at, or below the sale price within a certain period.

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    © All Rights Reserved
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    ILLUSTRATION 6 – CGT ON SALE OF SHARES OF STOCKS

    Determine the applicable amount of CGT for the following transactions:

    1. George sold 2,000 shares of a domestic corporation in the local stock exchange at P110 per share. The
    shares were purchased 3 years ago for P100 per share.
    2. George sold 2,000 shares of a domestic corporation directly to a buyer at P180 per share. The shares
    were purchased 6 months ago for P105per share.
    3. George sold 2,000 shares of a domestic corporation directly to a buyer at P100 per share. The shares
    were purchased 2 years ago for P105 per share.
    4. George sold 2,000 shares of a foreign corporation in the local stock exchange at P180 per share. The
    shares were purchased 6 months ago for P105 per share.

    ILLUSTRATION 7- CGT ON REAL PROPERTIES

    Determine the applicable amount of CGT for the following transactions:

    Case A
    1. Pedro sold a parcel of land used in his trading business. Selling price was P3,000,000. The property was
    acquired 5 years ago at P1,500,000
    2. Pedro sold a residential lot for P5,000,000. The FMV of the property was P6,000,000. The property was
    acquired 3 years ago at P4,000,000.
    Compute for the following:
    a. CGT for the aforementioned real estate transations
    b. Assume that the residential lot in transaction 2 was sold at P3,000,000, how much should be the
    correct amount of CGT?
    Case B
    Lemar sold a parcel of land classified as capital asset located in Canada for P3,000,000. The property
    was acquired 5 years ago at P1,500,000. How much is the CGT?

    Case C
    Assume that the residential lot in transaction 2 of Case A was sold for P3,000,000 to the Quezon City
    government. How much is the tax due for Pedro?

    ILLUSTRATION 8

    Pedro, a resident citizen, sold his residential house and lot (principal residence) in the Philippines with
    the following additional date:
    Selling price P4,000,000
    FMV 6,000,000
    Zonal value 5,000,000
    Expenses on the sale 125,000

    Unless provided, assume that the taxpayer was able to comply all the requirements for exemption:

    1. Assuming Pedro bought a new principal residence for P4,000,000, how much is the applicable CGT?
    2. Assuming Pedro bought a new principal residence for P8,000,000, how much is the applicable CGT?
    3. Assuming Pedro bought a new principal residence for P2,000,000, how much is the applicable CGT?

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