TAX-FREE EXCHANGES OF PROPERTIES

Within the context under  Section 40(C)(2) of the 1997 Tax Code, as amended the term “control”, shall mean an ownership of stocks in a corporation possessing at least fifty percent of the total voting power of all classes of stocks entitled to vote.

• TRUE

• FALSE

Within the context under  Section 40(C)(2) of the 1997 Tax Code, as amended the term used in reference to both the value of the property in the hands of the transferee after its transfer and the shares received by the Transferor from the Transferee.

• Adjusted Basis

• Historical Cost

• Substituted Basis

• Original Basis

Pursuant to Section 40(C)(2) of the 1997 Tax Code, as amended the term “adjusted basis” is the term used in determining the tax basis of property or shares for purposes of computing the gain or loss on the subsequent disposition of property or shares.

• TRUE

• FALSE

For purposes of tax-free exchange under Section 40(C)(2) of the 1997 Tax Code, as amended , the value of shares to be issued by reason of exchange should be equal to the fair market value of the property transferred. Consequently, the number of shares to be issued will be computed on the basis of the fair market value of the property transferred.

• TRUE

• FALSE

under Section 40(C)(2) of the 1997 Tax Code, as amended- the formation of the same corporate business with the same asset and the same stockholders surviving under a new charter.

• REINCORPORATION

• MERGER

• REORGANIZATION

• RECAPITALIZATION

Under Section 40(C)(5) of the 1997 Tax Code, as amended, the substituted basis of the properties transferred shall be determines as follows, except.

• Stock or Securities received by the Transferor

• Property in the Hands of the Transferee

• Property in the hands of Transferor

• The Original Basis of Property to be Transferred

The Original basis of the property to be transferred under Section 40(C)(5) of the 1997 Tax Code, as amended shall be the following except.

• The cost of the property, if acquired by purchase on or after March 1, 1913

• The fair market price or value as of the moment of death of the decedent, if acquired by inheritance

• The basis in the hands of the donor or the last preceding owner by whom the property was not acquired by gift, if the property was acquired by donation

• The amount paid by the transferor for the property, if the property was acquired for less than an adequate consideration in money or money’s worth

Under Section 40(C)(2) of the 1997 Tax Code, as amended -an arrangement where the stock and bonds of a corporation are readjusted as to amount, income, or priority or an agreement of all stockholders and creditors to change and increase or decrease the capitalization or debts of the corporation or both.

• RECAPITALIZATION

• MERGER

• REORGANIZATION

• REINCORPORATION

•Issuance of CERTIFICATE AUTHORIZING REGISTRATION (CAR)-In case the transactions involves transfer of multiple real properties or shares of stocks situated in various locations covered by different RDOs, the CAR shall be processed with the RDO having the jurisdiction over the place where the transferee corporation is registered.

• TRUE

• FALSE

No gain or loss shall be recognized if property to a corporation by a person, alone or together with others, not exceeding four (4) persons, in exchange for stock or unit of participation in such a corporation of which as a result of such exchange, the transferor or transferors, collectively, gains or maintains control of said corporation

• TRUE

• FALSE