b.Worthless bonds – If bonds, debentures, or other evidence of indebtedness of any corporation (including those issued by the government) are ascertained to be worthless and charged off within the taxable year and are capital assets, the loss shall be considered as a loss from the sale or exchange, on the last day of such taxable year, of capital assets.c.Retirement of bonds – Amounts received by the holder upon the retirement of bonds, debentures or other evidence of indebtedness issued by any corporation (including those issued by the government) with interest coupons or in registered form, shall be considered as amounts received in exchange therefor.ASIA PACIFIC COLLEGEMakati City
CAPITAL GAINSPage 2 of 5d.Liquidating Dividend – When a corporation distributes all of its assets in complete liquidation, the gain or loss sustained by the stockholder, whether individual or corporate, is a capital gain or loss as the case may be.e.Liquidation of partnership – When a partner retires or the partnership is dissolved, he realizes capital gain or sustains capital loss as follows:Amount received for his interestXxxLess: Investmentxxx Share in undistributed partnership net income xxxXxxCapital gain XxxCapital loss(xxx)f.Option gains or losses – Gains or losses attributable to the failure to exercise privileges or options to buy or sell property shall be considered as capital gains or losses.g.Gains and losses from short sales – Gains or losses from short sales of property shall be considered as gains or losses from sales or exchanges of capital assets.Problems1. A feature of ordinary gains as distinguished from capital gains:a. Gains from sales of assets not stock in trade.c. Sources are capital assets.b. May or may not be taxable in full.d. No holding period.2.Lots being rented when subsequently sold are classified as:3. The term “capital assets” includes: a.Stock in trade or other property included in the taxpayer’s inventory.b.Real property not used in the trade or business of taxpayer.c.Property primarily for sale to customers in the ordinary course of his trade or business.d.Property used in trade or business subject to depreciation.
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- Spring '13
- Cost Accounting, Makati City