4. The basis of the stocks received in tax-free exchanges is the basis of the shares given.

5. The transactional capital gains tax return is required to be filed within 30 days from the date of sale.
6. The gain on the sale of stocks for stocks pursuant to a plan of merger and consolidation is exempt if it resulted in the transferor
acquiring corporate control over the absorbed corporation.
7. Installment payment of capital gains is allowed if the ratio of downpayment over the selling price of the sale does not exceed 25%.
8. The selling price is used to determine the propriety of using the installment method but the contract price is used to determine the
capital gains tax payable in installment.
9. The excess of mortgage over the basis assumed by the buyer constitutes an indirect receipt which is part of the initial payment and
the selling price.
10. Wash sales occur when there is a repurchase of shares within 30 days before and 30 days after the date of disposal of securities at a
loss.
11. Control means more than 50% ownership in the voting power of a corporation.
12. The sale of delisted stocks is subject to stock transaction tax and not to capital gains tax.
13. Gain and loss in a share-for-share swap pursuant to a plan of merger or consolidation shall be recognized up to the extent of the
cash and other properties received.
14. The sale by the National Housing Authority of commercial lots is subject to capital gains tax.
15. If the assessed value is lower than the selling price, then the fair value of the property is the zonal value.
16. Title to a property shall not be registered by the Registry of Deeds unless the Commissioner or his representatives has certified that
the tax on the transfer has been paid.
17. Domestic corporations are exempt from capital gains tax on the sale, exchange, and other disposition of real properties.
18. The sale of land pursuant to the Agrarian Reform Program is exempt from capital gains tax.
19. Foreign corporations are required to pay capital gains tax on the sale of domestic stocks and on the sale of real property capital
assets.
20. The alternative taxation on an expropriation sale is not applicable to corporate taxpayers.

Multiple Choices – Problems: Part 1

1. Mr. Donisio sold domestic stocks directly to a buyer at a mark-up on cost of P200,000. He paid P5,000 broker’s commission and
P8,000 documentary stamp tax on the sale. Compute the capital gains tax.
a. P 15,000 c. P 14,200
b. P 14,500 d. P 13,700

2. Mr. Abdul, a non-resident alien, sold domestic stocks directly to a buyer at a net gain of P70,000. Compute the capital gains tax.
a. P8,000 c. P4,000
b. P6,000 d. P3,500

3. Mr. Panay, a non-resident citizen, sold domestic stock rights directly to buyer at a net gain of P320,000. Compute the capital gains
tax.
a. P30,000 c. P27,000
b. P25,000 d. P15,000

4. Mr. Digos sold shares of a resident foreign corporation directly to a buyer. The shares were purchased for P100,000 and were sold
at a net selling price of P210,000. Compute the capital gains tax.
a. P11,000 c. P5,500
b. P6,000 d. P 0

5. Grace sold domestic shares directly to buyer. The following relates to the sale:
Fair market value of shares P 400,000
Selling price 300,000
Cost 150,000
Compute the capital gains tax.
a. P7,500 c. P10,000
b. P9,925 d. P15,000

6. Texas Inc. exchanged its investments representing domestic shares for a piece land owned by E Inc.
Fair market value of shares P 400,000
Fair market value of land 500,000
Par value of shares 300,000
Cost of shares 350,000
Compute the capital gains tax.
a. P5,000 c. P9,988
b. P7,500 d. P15,000

7. Digong Inc. exchanged its share investment from Bee Inc., as payment of its P350,000 long outstanding loan from the latter. Digong
acquired the shares for P300,000. Ignoring documentary stamp tax, compute the capital gains tax on the transaction.
a. P 0 c. P5,000
b. P7,500 d. P2,500

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8. On January 5, 2017, Mercy, a stock dealer, disposed the following shares directly to a buyer:
Shares Selling price Cost
Stock rights P200,000 P170,000
Common stocks 100,000 110,000
Ignoring the documentary stamp tax, the capital gains tax payable on the sale is
a. P 0 c. P1,500
b. P 1,000 d. P3,000

9. Kidapawan, Inc., a domestic service company, has the following transactions on the sale of another domestic corporation:
Transaction Quantity Net price
Purchase 20,000 P 40,000
Purchase 30,000 63,000
Sale 40,000 92,000
Assuming the first-in, first-out method, compute the capital gains tax on the sale.
a. P 500 c. P400
b. P 480 d. P 0

10. Assuming the moving average method, compute the capital gains tax on the sale.
a. P500 c. P400
b. P480 d. P 0

11. Koron Company, a trading company, made the following transactions during the year involving the stocks of Xurpas, a domestic
corporation:
Date Transaction Shares Net price
6/15/2017 Purchase 10,000 P 30
9/30/2017 Sale 8,000 28
10/3/2017 Purchase 15,000 25
12/7/2017 Sale 10,000 32
Koron uses the FIFO method in costing the Xurpas stocks.
Compute the deductible loss on the September 30 sale.
a. P20,000 c. P12,800
b. P16,000 d. P 0

12. Compute the taxable gain on the December 7 sale.

a. P64,118 c. P51,467
b. P60,000 d. P44,000

13. Mr. Trinidad has the following transactions during the year on the common stocks of Philippine Pines, a domestic non-listed
company:
Date Transaction Gain(Loss)
5/8/2017 Sale P120,000
8/5/2017 Sale ( 10,000)
9/8/2017 Sale 250,000
Compute the final capital gains tax on April 15, 2018.
a. P29,000 c. P3,000
b. P22,000 d. P 0

14. Mr. Kalibo shows the following transactions in the shares of Aklan Corporation, a closely held corporation:
Date Transaction Quantity Price
2/8/2017 Buy 10,000 P 120,000
4/5/2017 Sell 10,000 100,000
5/1/2017 Buy 20,000 240,000
What is the basis of the shares acquired on May 1, 2017?
a. P300,000 c. P240,000
b. P260,000 d. P220,000

15. Mrs. Aurora, a resident citizen, purchased 100,000 shares of PhilHotdogs, a domestic listed company. The shares were acquired at
P200,000. She disposed the shares through the Philippine Stock Exchange at a fair value of P250,000.
Compute the capital gains tax.
a. P 0 c. P2,500
b. P5,000 d. P10,000

16. Mr. Bosun disposed various stocks at a total consideration of P400,000 and paid thereon stock transactions tax of P2,000.
Aggregate gains realized totaled P98,000 after the stock transaction tax. What is the capital gains tax?

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 a. P0 c. P 5,000
b. P4,900 d. P 9,800

Multiple Choice – Problems: Part 2

1. A certain taxpayer shows the following over-the-counter transactions in the shares of a domestic corporation:
Date Transaction Quantity Net price
2/8/2015 Purchase 10,000 P 112,000
4/5/2015 Sale 10,000 100,000
5/1/2015 Purchase 8,000 80,000
6/7/2015 Sale 5,000 60,000
Compute the capital gain on June 7, 2015 that is subject to capital gains tax.
a. P 4,000 c. P10,000
b. P 5,000 d. P12,000

2. A non-security dealer sold domestic stocks directly to a buyer on October 1, 2017 under the following terms:
Selling price P 500,000
Cost 200,000
Downpayment 10%
Installments in 2017 50,000
Compute the total capital gains tax in 2017.
a. P30,000 c. P6,250
b. P25,000 d. P5,000

3. ABC realized the following gains or losses in selling various securities:

Gain on sale of domestic stocks P 300,000
Par value of domestic stocks sold 200,000
Gain on the sale of interest in a partnership 200,000
Gain on the sale of stocks of foreign corporations 150,000
Compute the capital gains tax.
a. P 45,000 c. P 35,000
b. P 40,000 d. P 25,000

4. Compute the documentary stamp tax in the preceding problem.

a. P 0 c. P1,125
b. P562.50 d. P750

5. A wash sale of domestic shares wherein 20,000 shares were disposed at a loss of P40,000 were subsequently covered up within the
30-day period by a purchase of 15,000 shares for P12/share.
The deductible capital loss against capital gain on the wash sale is
a. P 0 c. P 10,000
b. P13,333 d. P 20,000

6. What is the cost of the 15,000 shares acquired in the preceding problem?
a. P150,000 c. P180,000
b. P160,000 d. P190,000

7. On June 20, 2016, Mr. Lito filed the capital gains tax return involving the sale of domestic stocks on February 20, 2016. The net gains
was P140,000. Compute the total amount due including penalties except compromise penalty.
a. P 11,250 c. P 11,700
b. P11,500 d. P 12,250

Multiple Choice – Problems: Part 3

1. Anderson disposes a vacant lot for P3,000,000. The lot has an assessed value of P2,800,000, a zonal value of P3,200,000, and an
appraisal value of P3,500,000. What is the capital gains tax?
a. P 0 c. P 192,000
b. P 180,000 d. P 210,000

2. Puerto Princesa Company sold its parking lot for P2,000,000. The lot has a zonal value of P2,500,000 and appraisal value of
P1,800,000. The capital gains tax on the sale of the lot is
a. P 0 c. P 120,000
b. P 108,000 d. P 150,000

3. Mr. Antonio disposed his principal residence for P2,000,000 and immediately acquired a new one for P1,800,000. The old residence
cost Mr. Antonio P1,000,000 and had a fair market value of P2,500,000 on the date of sale.
Compute the capital gains tax to be deposited in escrow.
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 a. P0 c. P120,000
b. P60,000 d. P150,000

4. What would be the tax basis of Mr. Antonio’s new residence?

a. P1,800,000 c. P 900,000
b. P1,000,000 d. P 800,000

5. How much of the capital gains tax will be released to the taxpayer?
a. P150,000 c. P120,000
b. P135,000 d. P15,000

6. On August 15, 2011 Ms. Mones sold a 500-square meter residential house and lot for P3,000,000. The house was acquired in 2005
at P2,000,000. The assessed fair market values of the house and lot, respectively, were P1,500,000 and P1,000,000. The zonal value
of the lot was P5,000 per square meter.
What is the capital gains tax?
a. P180,000 c. P150,000
b. P120,000 d. P240,000

7. Manny, a resident Filipino citizen, sold is principal residence (house and lot) at its original purchase price of P11,000,000. The
property had a P13,000,000 fair value at that time.
If the proceeds of the sale were not invested in the new principal residence but, instead new funds of P15,000,000 were used to
construct it, the capital gains tax is
a. P 0 c. P750,000
b. P660,000 d. P780,000

Numbers 10 through 12 are based on the following information:

Mr. Pepito sold is residential land in manila with fair market value of P12,000,000 for P10,000,000.

8. If Mr. Pepito utilized all of the P10,000,000 in buying a house and lot to be used as his new principal residence, the final tax due from
his is
a. P720,000 c. P120,000
b. P600,000 d. P0

9. If Mr. Pepito utilized only P7,000,000 from the proceeds of the sale in acquiring a new residence, the final tax due from him is
a. P720,000 c. P180,000
b. P216,000 d. P 0

10. The documentary stamp tax due on the sale is

a. P179,895 c. P149,985
b. P180,000 d. P150,000

Multiple Choice – Problems: Part 4

1. Mr. Quirino exchanged his stock investment in Carmen Corporation for the shares of stock Dingalan Corporation. The stocks
acquired by Mr. Quirino represent 60% of the stocks of Dingalan Corporation.
Basis of the stocks given P 3,000,000
Fair market value of stocks given 5,000,000
Fair market value of stocks received 4,500,000
What is the capital gains tax?
a. P 0 c. P145,000
b. P45,000 d. P195,000

2. In the immediately preceding problem, what is the basis of the stocks received by Mr. Quirino?
a. P 0 c. P4,500,000
b. P3,000,000 d. P5,000,000

3. Mr. Eller exchanged his DEF shares of the shares of EFG pursuant to a plan of merger. Mr. Eller bought his shares for P1,000,000.
The shares had a fair value of P1,500,000 on the date of exchange. Mr. Eller received EFG shares with a fair value of P1,300,000 plus
cash of P200,000.
Compute the capital gains tax.
a. P 0 c. P15,000
b. P 10,000 d. P45,000

4. What is the basis of the shares received by Mr. Eller?

a. P 0 c. P1,200,000
b. P1,000,000 d. P1,300,000

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5. What is the basis of the DEF shares received by EFG Company?
a. P 0 c. P1,200,000
b. P1,000,000 d. P1,300,000

6. Raymund exchanged his A Company shares pursuant to a plan of consolidation where A Company will be integrated with B
Company. The following relates to the exchange:
Basis of A Company shares given P 1,200,000
Fair value of A Company shares given 1,300,000
Fair value of B Company shares received 1,100,000
Fair value of other properties received 250,000
Compute the capital gains tax.
a. P 0 c. P 10,000
b. P 5,000 d. P 20,000

7. What is the tax basis of the B Company received by Raymund?

a. P 0 c. P1,200,000
b. P1,100,000 d. P1,350,000

8. What is the basis of the “boot” or the other properties received by Raymund?
a. P 0 c. P250,000
b. P 150,000 d. P400,000

9. Basic Company paid P9,000 documentary stamp tax on the sale of a real property capital asset. Compute the capital gains tax on the
sale.
a. P 9,000 c. P 36,000
b. P 16,000 d. P 42,000

10. Mr. Bassit Unay sold a residential land for P4,000,000. The land had a fair value of P3,500,000 and an assessed value of P2,000,000.
What is the total income tax and documentary stamp tax due?
a. P 0 c. P400,000
b. P 300,000 d. P450,000

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