X derived the following income in 2020, shade A if the income is subject to regular income tax, B if it is subject to final tax, C if it subject to capital gains tax and D if it is exempt ACCapital gain onthe sale of stocksdirectly to buyer:P30,000.Ordinary gain onsale of old officefurniture in theamount ofP10,000.Dividend incomefrom stocks ofSan MiguelCorporation:P60,000.Proceedsreceived from thelife insurance ofhis deceasedfather:P1,000,000

Answer 1. Capital gain on the sale of stock directly to buyer = C. It is subject to Capital gain…

Answered: X derived the following income in 2020,…

X derived the following income in 2020, shade A if the income is subject to regular income tax, B if it is subject to final tax, C if it subject to capital gains tax and D if it is exempt

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter17: Corporations: Introduction And Operating Rules

Section: Chapter Questions

Problem 11DQ

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Concept explainers

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.

Question

X derived the following income in 2020, shade A if the income is subject to regular income tax, B if it is subject to final tax, C if it subject to capital gains tax and D if it is exempt

A
C
Capital gain on
the sale of stocks
directly to buyer:
P30,000.
Ordinary gain on
sale of old office
furniture in the
amount of
P10,000.
Dividend income
from stocks of
San Miguel
Corporation:
P60,000.
Proceeds
received from the
life insurance of
his deceased
father:
P1,000,000

Definition Definition Increase in the value of a capital asset and the amount that is realized when the asset is sold off. A capital gain may be short-term or long-term depending on the tenure for which the asset is held.

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