Nicanor, resident citizen, sold his shares of stock from ABC Corporation, a foreign corporation based in United Kingdom, to Inday, resident citizen, for P 200,000 with a cost of P 100,000. S1: For income tax purposes, the sale of shares of stock by Nicanor is taxable. S2: The sale of the shares of stock is subject to 15% capital gains tax based on net capital gain of P 100,000. O a. Only S1 is true O b. Only S2 is true c. Both are true d. Both are false

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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.