CHAPTER 12: DEALINGS IN PROPERTIES

Multiple Choices: Problems - Part 1

1. A taxpayer had the following dealings in properties:

Capital gain P 100,000

Ordinary gain 200,000

Capital loss 120,000

Ordinary loss 150,000

How much shall be included in gross income?

a. PO c. P 200,000

b. P50,000 d. P 300,000

2. In the immediately preceding problem, what is the total net gain which will be ultimately included in net income?a. PO c. P 50,000

b. P30,000 d. P 150,000

3. Mr. Herman had the following dealings in capital assets:

Short-term capital gain P 200,000

Long-term capital gain 100,000

Short-term capital loss 100,000

Long-term capital loss 150,000

Compute the reportable net capital gain.

a. P50,000 c. P 40,000

b. P 75,000 d. P 25,000

4. If Herman is a corporate taxpayer, compute the reportable net capital gain.

a. P75,000 c. P 40,000

b. P 25,000 d. P 50,000

5. An individual taxpayer had the following dealings in properties:

Capital gain P 150.000

Ordinary gain 200,000

Capital loss 120,000

Ordinary loss 150,000

Compute the total amount of gain to be included in gross income subject to progressive tax.

a. P 230,000 C. P 80,000

b. P 350,000 d. PO

6. A taxpayer had a P300,000 net income before the following dealings in properties:

Ordinary gain P 80,000

Capital gain 60,000

Ordinary loss 90,000

Capital loss 70,000

If the taxpayer is an individual, compute the taxable net income?

a. P300,000 c. P 290,000

b. P280,000 d. P 260,000

7. Assuming the taxpayer is a corporation, compute the taxable income.

a. P300,000 c. P 280,000

b. P 290,000 d. P 260,000

8. In the immediately preceding problem, what is the net capital loss carry over for an individual and a corporation respectively?

a. P 10,000; P10,000 c. P 5,000; PO

b. P5,000; P5,000 d. P 10,000; PO

9. After three years, an individual taxpayer disposed of a capital asset, other than domestic stock or real property, with the following data:

Fair value P 2,000,000

Selling price 1,500,000

Cost 1,200,000

What is the capital gain subject to regular tax?

a. P 800,000 c. P 150,000

b. P300,000 d. PO

10. A taxpayer had the following dealings in properties:

Short-term capital gain P 200,000

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 200,000

Long-term ordinary loss 120,000

Assuming that the taxpayer is an individual, compute respectively the total items of gross income and the total items of deductions from gross income.

a. P200,000; P 260,000 c. P 275,000; P 320,000

b. P 200,000; P 260,000 d. P 275,000; P 320,000

11. 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; P 570,000 c. P 250,000; P 570,000

b. P500,000; P 320,000 d. P 250,000; P 320,000

12. Two years after acquisition, a domestic corporation disposed of a real property capital asset for P3,000,000 at a P300,000 discount from its fair value. The property was acquired for P2,000,000 when its fair value was P2.100.000

Compute the capital gains subject to regular tax.

a. P3,000,000 c. P1,000,000

b. P1,300,000 d. P0

13. After three years of use, Mr. Bestre disposed of his malfunctioning factory equipment forP1,000,000. The equipment was acquired for P1,500,000 and has a carrying value of P800,000 onthe date of sale.

Compute the gain or loss) to be included in the determination of regular income.

a. P200,000 c. P100,000

b. (P 500,000) d. P0

14. Pedro, a realtor, was able to dispose his 2-hectare land inventory to a buyer after three years. The lot has a fair value of P5.000.000 and was sold at a discount of P500,000. The lot was purchased atP3,000,000.

Compute the gain to be recognized in regular income.

a. P1,500,000 c. P2,500,000

b. P2,000,000 d. P0

15. Globex Corporation reports the following dealings in capital assets:

2018 2019

Net income P 10,000 P 80,000

Capital gains 30,000 50,000

Capital loss 45,000 20,000

Compute the net capital gains in 2019.

a. P30,000 c. P 15,0000

b. P20,000 d. P0

16. Ms. Taylor had the following dealings in properties:

2018 2019

Net income P 20,000 P 80,000

Capital gains 35,000 60,000

Capital loss 60,000 25,000

Compute the net capital gains in 2019.

a. P 60,000 c. P10,000

b. P 35,000 d. P15,000

Multiple Choices: Problems - Part 2

1. The following data summarize the dealings in capital assets of an individual taxpayer.

2018 2019

Net income P 90,000 P120,000

Short term capital gains 35,000 60,000

Long term capital gains 40,000 25,000

Short term capital loss 60,000 50,000

Long term capital loss 80,000 20,000

Compute the net capital gain (loss) in 2019.

a. (P 32,500) c. P 12,500

b. P25,000 d. P0

2. What is the 2019 net capital gain if the taxpayer is a corporation?

a. (P 32,500) c. P 12,500

b. P25,000 d. P 15,000

3. The following data may be relevant in establishing the net income of Mr. Miniloc:

2017 2018 2019

Net income (loss) before dealings P 20,000 (P 70,000) P 120,000

Capital gain 30,000 15,000 34,000

Capital loss 52,000 18,000

What is the net capital gain or loss in 2019?

a. P 11,000 c. P 34,000

b. P 31,000 d. P 9,000

4. Mr. Taal, not a dealer in properties, made the following dispositions during the year.

Property Holding period Gain (loss)

Land 5 years P 200,000

Car 1 year and 8 months 30,000

Laptop 8 months (8,000)

Compute the net gain to be included in gross income subject to regular tax.

a. P7,000 as net capital gain

b. P222,000 as net capital gain

c. P207,000 as net capital gain

d. P200,000 as ordinary gain and P7,000 as ordinary gain

5. Mr. San Juanico, a realty dealer, had the following dealings in properties in 2019.

Date of

Properties Acquisition Date of sale Gain (Loss)

House and lot 2/25/2014 2/27/2019 P 400,000

Commercial lot 8/12/2015 3/14/2019 (100,000)

Personal car 7/18/2019 5/12/2019 80,000

Personal i-Phone 1/14/2019 7/3/2019 (40,000)

Compute the ordinary gain and the net capital gain subject to regular income tax.

a. P480,000; P0 c. P400,000; P80,000

b. P400,000; P60,000 d. P300,000; P60,000

6. What is the amount of ordinary loss?

a. P0 c. P100,000

b. P40,000 d. P 140,000

7. Mr. Matinloc, a dealer of household appliances, made the following dispositions of properties during 2019:

Properties Date of acquisition Date of sale Gain (Loss)

Leasehold right 12/2/2016 2/27/2019 P 50,000

Taxi franchise 7/10/2014 3/14/2019 100,000

Electric oven 6/15/2019 7/15/2019 80,000

Residence 1/14/2018 7/3/2019 800,000

Compute the net capital gains subject to regular tax.

a. P955,000 c. P 155,000

b. P875,000 d. P 75,000

7. On July 1, 2014, ABC Corporation invested in the stocks of DEF, a foreign corporation, byacquiring 10,000 shares at P12/share. On December 20, 2018, DEF declared a 20% stock dividendpayable January 15, 2019. On January 2, 2019, ABC Corporation sold 10,000 shares for P13/share.

Compute the net capital gain to be included in regular income.

a. P5,000 c. P 10,000

b. P15,000 d. P 30,000

8. Darrel exchanged his stocks in Queen Corporation for the stocks of Queendom Corporationpursuant to a plan of merger between Queen and Queendom. Darrel acquired his stocks for P100,000 when its fair value was P105,000. The shares ofQueen and Queendom have fair values of P120,000, and P110,000, respectively on the date of exchange.

What is the tax basis of the Queendom shares received and the gain to berecognized in the exchange?

a. P120,000; P20,000 c. P105,000; P0

b. P110,000; P20,000 d. P100,000; P0

10. Raymund exchanged his MEG shares costing P80,000 and with fair value of P100,000 for SMshares with fair value of P120,000. MEG and SM are not parties to a merger or consolidation.

Compute the tax basis of the SM shares and the gain to be recognized in the exchange.

a. P 80,000; P0 c. P100,000; P 40,000

b. P100,000; PO d. P 120,000; P40,000

11. Carren exchanged her PAL shares costing P 90,000 for P20,000 cash plus Air Phil shares with fairvalue of P100,000 pursuant to a plan of merger between PAL and AirPhil.

Compute the tax basis of the Air Phil shares and the gain to be recognized.

a. P100,000; PO c. P 90,000; P 20,000

b. P100,000; P 20,000 d. P 90,000; P 30,000

12. Pursuant to a plan of consolidation, Zeus exchanged his shares costing P400,000 for the sharesof the new corporation with fair value of P360,000 plus P90,000 cash.

Compute the tax basis of the new shares and the gain to be recognized in theexchange.

a P360,000; P 50,000 C. P 360,000; P0

b. P400,000; P 90,000 d. P 350,000; P 50,000

13. Mr. Banahaw invested in the stocks of Callao, a domestic corporation, by purchasing 1,000shares for P100,000 on July 1, 2014. Callao declared a 10/Share cash dividend on November 12,2019 payable on January 12, 2019 for stockholders of record December 12, 2019. On December 8, 2019, Mr. Banahaw of his share investment for a total consideration of P120,000.

The transaction resulted to

a. P20,000 capital gain subject to regular income tax.

b. P11,000 capital gain subject to capital gains tax.

c. P20,000 capital gain subject to capital gains tax.

d. P11,000 capital gain subject to regular income tax.

14. Henedina had the following dealings during the year:

Capital gain Short Term Long Term

Sale of domestic stocks directly to a buyer P 40,000 P 50,000

Sale of domestic bonds directly to a buyer 40,000 20,000

Ordinary gains

Sale of equipment 20,000 10,000

Capital loss

Sale of foreign stocks 10,000 10,000

Sale of domestic stocks directly to a buyer 10,000 -

Ordinary loss

Sale of old machine - 40,000

Henedina has a business income totaling P500,000 including P18,000 dividend income from adomestic corporation. Compute the total income of Henedina subject to regular tax.

a. P497,000 c. P522,000

b. P517.000 d. P507,000

15. In the immediately preceding problem, compute Henedina's net capital gains tax due on the saleof domestic stocks directly to a buyer.

a. P3,000 c. P5,000

b. P4,000 d. P8,000

16. Pursuant to a plan of consolidation, Mr. Tayabas exchange his share with tax basis of P1,000,000for the share of another corporation with fair value of P800,000 plus P100,000 cash. Compute thecapital loss to be recognized.

a. P0 c. P100,000

b. P50,000 d. P200,000

17. In the immediately preceding problem, compute the tax basis of the properties received by Mr. Tayabas.

a. P 800,000 c. P1,000,000

b. P1,100,000 d. P 900,000