QUIZZER IN TAXATION***Questions 1 and 2 are based on the information:A, sold 3 parcels of land held as capital assets, as follows:Land 1Land 2Land 3Selling priceP 160,000P 160,000P 160,000Cost100,000100,000100,000Installments payments:Year 1 (year of sale)40,00040,00030,0002120,00060,00020,000Assumption of mortgage0 60,000110,0001.The capital gains tax to be paid in year 1 is:A.P 28,000B. P 15,840C. P 19,840D. P 12,640
2.The capital gains tax to be paid in year 2 is
3.A transferred his land in Manila which he acquired for P2M to B Corporation and as considerationhe received shares of stock of B Corporation with fair market value of P 1.8M and as a result Agained control of B Corporation. Later, A transferred his land in Makati which he acquired forP 3M to C Corporation and as consideration he received shares of stock of C Corporation with fairmarket value of P 2.7M. Even before the transfer, A already owns 51% of C Corporationoutstanding shares. The loss to be recognized by A isB Corp.C. Corp.
4.A took a life insurance policy for P 5M where the annual premium is P 20,000. The proceeds willbe paid to A after 25 years or to A’s estate should A dies before completing 25 years payment. If Aoutlived the policy, which of the following is correct?
5.Using the preceding number, but after paying the annual payments for 10 years, A transferred thepolicy to B for P 250,000 and B paid the annual premiums as they mature. After 10 years, A died.Which of the following is correct?A.The amount received by A from B is part of A’s taxable incomeB.The proceeds received by B is part of his taxable incomeC.The amount received by A from B is partly taxable income and partly exemptD.The proceeds will be part of A’s gross estate
6.This is an inherent limitation on the power of taxation