Manny is a sole proprietor engaged in distribution of various consumer products. During 2020, he sold a parcel of land valued at P4,563,889 to his long-lost best friend, Marc, for only P4,000,000. The property was purchased by Daniel 3 years ago at a cost of P3,405,473Determine the capital gains tax and donor’s tax due on the above transaction.Assuming the parcel of land is sold by Manny is classified as ordinary asset, determine the capital gains tax and donor’s tax due on the above transaction.

Documentary stamp tax is a tax imposed on capital gain tax on the transfer of assets. Generally, it…

Answered: Manny is a sole proprietor engaged in…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Manny is a sole proprietor engaged in distribution of various consumer products. During 2020, he sold a parcel of land valued at P4,563,889 to his long-lost best friend, Marc, for only P4,000,000. The property was purchased by Daniel 3 years ago at a cost of P3,405,473

Determine the capital gains tax and donor’s tax due on the above transaction.
Assuming the parcel of land is sold by Manny is classified as ordinary asset, determine the capital gains tax and donor’s tax due on the above transaction.

Definition Definition Tax imposed by the government on the "gain" or increase in the value of an asset at the time of its sale by the owner. Capital gain is computed based on the purchase price and sale price of the asset. If the sale price of the asset is more than the purchase price, there is a gain on the sale of asset. A tax is imposed on such gain in accordance with the applicable tax rates at the time of sale.

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