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WorksheetsCHAP 9: Dealings in Property
Total questions: 15
Worksheet time: 4mins
1. The term "Dealing in Property" refers to the disposal through sale or exchange of
I. Ordinary assets
II. Capital assets
a. I only
b. II only
c. I and II
d. Neither I nor II
2. Ordinary assets are those assets that are used primarily in the ordinary course of trade or business. Ordinary assets include:
a. Inventory intended for sale in the normal course of business.
b. Real property used in business including real property held for rent.
c. Assets used in business subject to depreciation, such as equipment.
d. All of the above
3. Which of the following is false?
a. A capital asset may be an asset connected or not connected with the trade or business of the taxpayer.
b. An asset used in business which is subject to amortization is an ordinary asset.
c. Inventory is an ordinary asset
d. An asset held in business as investment is ordinary asset.
4. Which of the following is considered inventory intended for sale in the ordinary course of business?
a. Raw materials inventory, work-in process inventory, finished goods inventory.
b. Real estate being held or being sold by a trader of equipment.
c. Securities held or being sold by an investor.
d. All of the above
5. Budoy operates a retail store and owns the following properties. Which of the following is capital asset in the hand of Budoy?
a. Building which houses the retail store
b. Fixtures used in the retail store
c. Inventory on hand at the end of the year.
d. Trade accounts receivable
6. For income tax purposes, which of the following is considered as capital asset?
a. Vacant lot used as business' parking space for customers.
b. Real estate developed by realtor for subsequent sale.
c. Factory equipment long due for major repair.
d. None of the above
7. Which of the following is a capital asset?
a. Stock in trade
b. Property held by the taxpayer primarily for sale to customers in the ordinary course of trade or business.
c. Personal property used in trade or business
d. Property of a kind which would not be included in inventory of the taxpayer if on hand at the close of the taxable year.
8. Which of the following is a capital asset?
a. Inventory for sale
b. Real property held for rent
c. Equipment used in business
d. Investment property
9. Which of the following is not an ordinary asset?
a. Investment in equity security
b. Real property used in business
c. Factory equipment of manufacturing business
d. None of the above
10. Which of the following capital asset are not subject to the general rules on capital gains and losses?
a. Capital gains on sale of shares of stock of a foreign corporation
b. Gain on sale of bonds of a domestic corporation
c. Loss of a family car in an accident
d. Loss in value of securities
11. A net capital loss means:
a. Losses over the gains on sales and exchanges of capital assets
b. Losses over the losses on sales or exchanges of capital assets
c. Determined cost over the value received from the sale or exchange of a capital asset
d. Gains over the losses on sales or exchanges of capital assets
12. Statement 1: Capital losses can be deducted only from capital gains
Statement 2: Ordinary losses can be deducted from any gross income
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true
13. Earl owns a twenty (20) door apartment with a monthly rental of P15,000 each residential unit. He sold this property to Clifford. Which is false?
a. Earl is not liable to pay capital gains tax.
b. The apartment is a capital asset.
c. Earl is engaged in the estate business.
d. Earl is regularly renting out the apartment.
14. Statement 1: For individuals, estates and trusts, capital gains and losses are considered at 100% if the asset was held for not more than twelve months, and 50% if the asset was held for a period of more than twelve months.
Statement 2: When securities were held by an individual as capital asset and were written off, the written off results in a capital loss on the date of the write off.
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true
15. A feature of ordinary gains as distinguished from capital gains
a. Gains from sales of assets not stock in trade
b. May or may not be taxable in full
c. Sources are capital assets
d. No holding period
