Taxation, 2012 Bar — Question 23

MULTIPLE CHOICE

In 2006, Mr. Vicente Tagle, a retiree, bought 10,000 CDA shares that are unlisted in the local stock exchange for P10 per share. In 2010, the said shares had a book value per share of P60 per share. In view of a car accident in 2010, Mr. Vicente Tagle had to sell his CDA shares but he could sell the same only for P50 per share. The sale is subject to tax as follows: a) 5%/10% capital gains tax on the capital gain from sale of P40 per share (P50 selling price less P10 cost); b) 5%/10% capital gains tax on the capital gain of P50 per share, arrived at by deducting the cost (P10 per share) from the book value (P60 per share); c) 5%/10% capital gains tax on the capital gain from sale of P40 per share (P50 selling price less P10 cost) plus donor's tax on the excess of the fair market value of the shares over the consideration; d) Graduated income tax rates of 5% to 32% on the net taxable income from the sale of the shares.

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