I. TRUE OR FALSE

1. Capital assets are all assets not considered as ordinary assets.

2. If a taxpayer is engaged in real estate business, all real properties are ordinary assets.

3. If a taxpayer is engaged in retail industry, all real properties are ordinary assets if used in business.

4. St. Peter Medical Hospital collects parking fees on its parking building. The parking building is booked as an investment. The parking building is a capital asset since the owner is a person engaged in hospital services.

5. A taxpayer is considered as habitually engaged in the business of selling real properties if in preceding year, the taxpayer was able to sell seven (7) properties.

6. Automatic conversion of ordinary asset to capital asset is allowed to taxpayers not engaged in realty estate business.

7. AlaYa Land Corp., a domestic corporation engaged in real estate business owned a real property. The property was later acquired through expropriation by the government to be used for public use. The real property is classified as capital asset.

8. If ABC Corp. wants to maximize profit in disposing a capital asset (not an unlisted shares of stocks or real property classified as capital asset), it can utilize the holding period and just wait for more than twelve months before selling.

9. Net capital loss can be carried over in the following year only.

10. In determining gains or losses, if a capital asset has been inherited, no cost can be deducted if the same is sold or disposed of.

11. The adjusted value of the asset is no longer considered in computing the book value of a share of stock that is the object of the sale.

12. The book value to be used in computing exposure to donor's tax regarding the unlisted sale of shares of stocks is the Adjusted Net Asset Method.

13. Appraiser's valuation is irrelevant in the computation of capital gains tax on sale of real property classified as capital asset.

14. If the seller has earned a gain on its disposition of unlisted shares of stocks, he is no longer required to report the income in his Annual Income Tax Return.

15. If the seller has earned a gain on its disposition of real property classified as capital asset, he is no longer required to report the income in his Annual Income Tax Return.