27 | P a g e 2010-2015 Taxation Law Bar Examinations (1) Ordinary income vis-à-vis capital gain An individual, who is a real estate dealer, sold a…

The question

27 | P a g e 2010-2015 Taxation Law Bar Examinations (1) Ordinary income vis-à-vis capital gain An individual, who is a real estate dealer, sold a residential lot in Quezon City at a gain of P100,000.00 (selling price of P900,000.00 and cost is P800,00.00). The sale is subject to income tax as follows: (2012 Bar Question)

1. A.6% capital gains tax on the gain;
2. B.6% capital gains tax on the gross selling price of fair market value, whichever is higher;
3. C.Ordinary income tax at the graduated rates of 5% to 32% of net taxable income;
4. D.30% income tax on net taxable income.

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