Sale or exchange of shares of stock

Sale or exchange of shares of stock in a domestic corporation considered capital asset:

  1. Persons liable to the tax:

A. Individual taxpayers – citizen or alien

B. Corporate taxpayers – domestic or foreign

C. Other taxpayers such as estate, trust, trust funds and pension, among others

  1. Persons exempted:

A. Gain derived by dealers in securities

B. Shares sold or disposed of through the Philippine Stock Exchange (now a percentage tax)

  1. Rates of tax:
    1. Sales outside of the Philippine Stock Exchange (not traded) – on net capital gain:
      Not over P100,000 5%
      Over  100,000 10%

      2. Sales through the Philippine Stock Exchange (listed and traded) – 1/2 of 1% imposed on the gross selling price (now classified as percentage tax).

Computations:

A. Selling price:

  1. FMV of the shares, transferred or exchanged.
  2. Traded through the Philippine Stock Exchange – FMV is the actual selling price.
  3. Not traded, but listed – FMV is the highest closing price on the date of sale. Where no sale was made, it is the highest closing price on the date nearest.
  4. If not listed – FMV is the book value nearest.

B. Cost or basis:

  1. If can be identified – actual purchase price (specific identification method)
  2. If cannot be identified – FIFO method
  3. If books are maintained – moving average
  4. In all cases – it has to have a cost (for stock dividend)

c. Nature:

  1. Non–deductibility of wash sales.

2. Capital losses may be      deducted   from   the capital        gains     for  the           same       taxable    year only. Net capital loss carryover is not allowed.

3.  No holding period for both capital gains and capital losses.

I would like to invite you to join my Facebook exclusive groups of aspiring CPA for my upcoming project “CPA DREAM ACADEMY ” or sign up for flashcards free http://eepurl.com/coJBmf

CPA Mentor,

JONATHAN RUIZ CPA, MIB

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About PAM Academy Founder

Newbie Mentor and one of the influential author in the Philippines setting. His also the founder of PAM Academy and Developer of PAM PSE TRACKER application.
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