Mely, a partner in the Carmelite's Partnership, had a 30% participation in partnership profits and losses. Mely's capital account had a net decrease of P1,200,000 during the calendar year 2019. During 2019, Mely withdrew P2,600,000 (charged against her capital account) and contributed property valued at P500,000 to the partnership. What was the net income of the partnership for the year 2019?

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.