chapter 6

• capital assets will not become ordinary assets when used in business

  f
• a vacant and unused lot is an ordinary asset to a real estate dealer.

  t
• for tax payers not engaged in business, assets shall cease to be ordinary when they are discontinued from active use for more than 2 years.

  t
• real and other properties acquired are ordinary assets to banks even if they are not engaged in the realty business.

  t
• an ordinary asset automatically becomes a capital asset when it is withdrawn from active use.

  f
• the sale of real property capital assets will never be subject to regualr income tax

  f
• donated assets become ordinary assets even if the donee do not employ the same in business

  f
• an ordinary asset continues to be an ordinary asset even if idled for more than two years if the tax payer is engaged in realty business

  t
• the real properties used by the exempt corporations in their exempt operations are capital assets

  t
• dealers in realties are subject to the regular tax on their sale of real properties

  t
• capital gains from assets other than domestic stocks and real properties are subject to regular income tax

  t
• dealers in securities are not subject to the stock transaction tax but are subject to the regular income tax on gains realized upon the sale of stocks through philippine stock exchange.

  t
• unit of participations in golf, polo, and similar clubs are considered domestic stocks

  t
• the excess premium on the re-issuance of treasury stocks is subject to capital gains tax

  f
• the issuance of shares of stock for property is subject to capital gains tax

  f
• the sale of foreign stocks directly to a buyer is subject to capital gains tax

  f
• the 15% final capital gains tax cannot apply unless and until there is a gain on the sale, exchange, and other disposition of stocks directly to a buyer.

  t
• the stock transaction tax on the sale of stocks through the PSE shall apply if there is a loss on the transaction

  f
• the 6% capital gains tax shall not apply unless there is a gain on the sale of real property

  f
• the sale of real properties located abroad is subject to 6% capital gains tax

  f
• installment payment of capital gains tax is allowed if the ratio of downpayment over the selling price of the sale does not exceed 25%

  f
• the annual capital gains tax return is simultaneously due with annual regular income tax return

  t
• the basic of properties received by way of inheritance is the basis in the hands of the last owner who did not acquire the same by donation

  f
• when specific identification is impossible, the cost of the stocks sold is determined by the weighted average method

  f
• the basis of the stocks received in tax-free exchanges is the basis of the shares given

  f
• the transactional capital gains tax return is required to be filed within 30 days from the date of sale

  t
• 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

  t
• 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

  t
• 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

  f
• wash sales occur when there is a repurchase of identical securities within 30 days before and 30 days after the date of disposal of securities at a loss

  t
• control means more than 50% ownership in the voting power of corporation

  t
• the sale of delisted stocks is subject to stock transaction tax and not to capital gains tax

  f
• 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

  t
• the sale by the national housing authority of commercial lots is subject to capital gains tax

  t
• if the assessor's fair value is lower than the selling price, then the fair value of the property is the zonal value.

  f
• 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

  t
• domestic corporations are exempt from capital gains tax on the sale, exchange and other disposition of real properties

  f
• the sale of land pursuant to the agrarian reform program is exempt from capital gains tax

  t
• foreign corporations are required to pay capital gains tax on the sale of domestic stocks and on the sale of real property capital assts

  f
• the alternative taxation on an expropriation sale is not applicable to corporate taxpayer

  t