If Nicanor will sell the residential house and lot for Php 7 Million and he ask you how much is the capital gains tax, your answer should be? a. Php 540,000 - b. Php 600,000 c. Php 720,000 d. Php 480,000
In preparing the Annual Income Tax Return of Nicanor, the following information were culled from his accounting records:
Gross sales – Php 1,500,000
Cost of sales – Php 500,000
Gross Profit – Php 1,000,000
Operating expenses:
Depreciation – Php 100,000
Rent Expense – Php 100,000
Repairs and Maintenance – Php 100,000
Salaries and wages – Php 100,000
Utilities Expense – Php 100,000
Other income:
Cash Prizes – Php 100,000
Dividends from ABC Corp. – Php 100,000
Interest income from bank deposits – Php 100,000
Rental income – Php 1,000,000
In addition, you learned that Nicanor intends to sell a residential house and lot which he inherited from his father and 1,000 shares of stocks in a domestic corporation which were sold by her mother to him in the amount of Php 1 Million. He provided you the information the following:
Real property classified as capital asset:
Zonal value of lot – Php 5 Million
Assessor’s fair value of lot – Php 4 Million
Assessor’s fair value of house – Php 5 Million
Appraiser’s value – Php 12 Million
Fair market value at time of his father’s death – Php 8 Million
Shares of stocks not listed in stock exchange:
Audited Financial Statements of the company disclosed the following:
Liability – Php 3 Million
Income Statement: Revenue – Php 2 Million
Cost and Expense – Php 1 Million
Net Income – Php 1 Million
Additional information: Outstanding shares of stocks is 10,000
If Nicanor will sell the residential house and lot for Php 7 Million and he ask you how much is the
a. Php 540,000 -
b. Php 600,000
c. Php 720,000
d. Php 480,000
Step by step
Solved in 2 steps
