ASSIGNMENT NO.

3
Name: NALA, SHERREN MARIE F. INCOME TAXTION
CBET-19 503P Submitted to: Nathelie Tumambing
Date: October 30, 2020

CAPITAL GAINS TAX

A.
1. A resident citizen taxpayer sold a vacant lot (held as investment) in the Philippines.
Other data regarding the sale are as follows:
Selling price P5,500,000
Fair market value 6,000,000
Zonal value 5,850,000
Expenses on the sale 275,000
Required: Compute the capital gains tax.
Computation:
Selling price P5,000,000
Expense on the sale (275,000)
Total P4,725,000

Fair market value P6,000,000

CGT rate x .06
Capital gains tax P360,000

2. A resident citizen taxpayer sold a vacant lot (held as investment) in the Philippines.
Other data regarding the sale are as follows:
Gain on sale P500,000
Zonal value 2,200,000
Cost 2,000,000
Expenses on the sale 150,000
Required: Compute the capital gains tax.
Computation:
Gain on sale P500,000
Expense on sale (150,000)
Total P350,000

Zonal value P2,200,000

CGT rate x .06
Capital gains tax P132,000

3. A resident citizen taxpayer sold a residential house and lot (principal residence) in
the Philippines. Other data regarding the sale are as follows:
Selling price P5,000,000
Fair market value 6,000,000
Zonal value 5,500,000
Expenses on the sale 275,000
Required: Determine the capital gains tax assuming the taxpayer purchased a new
principal residence worth P5,800,000 within eighteen months (18) from disposal of
the principal residence. The BIR was properly informed about the sale.
The Sale of principal residence is exempt to CGT because he/she fully utilized it
in acquiring or constructing a new principal residence.
 ASSIGNMENT NO. 3

4. Using the same data in the preceding number, determine the capital gains tax
assuming the taxpayer utilized only 80% of the proceeds in acquiring his new
principal residence.
Computation:
Selling price P5,000,000
x .80
Total P4,000,000

Taxable Income= P1,000,000/P5,000,000xP6,000,000

=0.2xP6,000,000
Taxable Income=P1,200,000

Taxable Income P1,200,000

CGT rate x .06
Capital gains tax P72,000

B. Assume the following data:

Selling price of Building No. 1 P15,000,000
Selling price of Building No. 2 20,000,000
Cost of Building No. 1 10,000,000
Cost of Building No. 2 30,000,000
Expenses on sale of Building No. 1 200,000
Expenses on Building No. 2 300,000
Fair market value of Building No. 1 12,000,000
Fair market value of Building No. 2 8,000,000

Required:
a. Compute the capital gains tax on Building No. 1
Computation:
Selling price of Building No. 1 P15,000,000
Expenses on sale of Building No. 1 (200,000)
Total P14,800,000

Cost of Building No. 1 10,000,000

Fair market value of Building No. 1 12,000,000

Selling Price P14,800,000

CGT rate x .06
Capital gains tax P888,000

b. Compute the capital gains tax on Building No. 2

Computation:
Selling price of Building No. 2 P20,000,000
Expenses on Building No. 2 (300,000)
Total P19,700,000

Cost of Building No. 2 30,000,000

Fair market value of Building No. 2 8,000,000
 ASSIGNMENT NO. 3
Cost of Building No. 2 P30,000,000
CGT rate x .06
Capital gains tax P1,800,000

c. Compute the capital gains tax on Building No. assuming the Building is situated
abroad.
0
The 6% capital gains tax on real properties sold are applicable only on real
properties “held as capital assets” situated in the Philippines. The property sold is located
abroad and classified as an ordinary asset.

C. The taxpayer is a resident citizen:

Selling rice at prevailing market value on a direct sale to buyer of shares of stock of a
domestic corporation – P600,000
Cost of the shares sold – 650,000

Required: Compute the capital gains tax.

Computation:
Selling price P600,000
Cost of the shares sold 650,000
Total -P50,000
It will not be subject to CGT because it will result to a capital loss.

D. The taxpayer is a resident alien:

Selling rice on a direct sale to buyer of shares of stock of a domestic corporation –
P310,000
Expenses on sale – 10,000
Cost of the shares sold – 200,000

Required: Compute the capital gains tax.

Computation:
Domestic corp. P310,000
Expense on sale (10,000)
Cost of the shares sold (200,000)
Total P100,000
CGT rate x .15
Capital gains tax P15,000

E. The tax payer is a resident alien:

Selling rice on a direct sale to buyer of shares of stock of a domestic corporation –
P310,000
Expenses on sale – 10,000
Cost of the shares sold – 150,000

Required: Compute the capital gains tax.

Computation:
Domestic corp. P310,000
Expense on sale (10,000)
Cost of the shares sold (150,000)
 ASSIGNMENT NO. 3
Total P150,000
CGT rate x .15
Capital gains tax P22,500

F. The taxpayer is a nonresident alien engaged in trade or business:

Selling rice on sale of shares of stock of a domestic corporation through the local stock
exchange– P550,000
Expenses on sale – 50,000
Cost of the shares sold – 300,000

Required: Compute the capital gains tax.

P0
Subject to 6/10 of 1% stock transaction tax, not CGT.