Income taxation by valencia chapter 9 (losses)

False – lower amount of the replacement cost or book value 4.. False – Deductible from gambling gains only.. False – Not deductible because the property has been sold.. False – deductibl

CHAPTER 9

LOSSES

Problem 9 – 1 TRUE OR FALSE

1 False – Capital loss

2 False – not deductible

3 False – lower amount of the replacement cost or book value

4 True

5 True

6 False – Deductible from gambling gains only

7 True

8 True

9 True

10 False – Not deductible because the property has been sold

11 True

12 True

13 True

14 False – deductible only to either income or estate

15 False – NOLCO is not applicable when OSD is used

16 False – NOLCO is not applicable under MCIT

Problem 9 – 2

3 D 7 D, P10,000 only 11 B

Problem 9 – 3 B

Problem 9 – 4 A

Loss on sale of capital assets is not deductible from business income

Problem 9 – 5 C

Deductible loss – Book value (P100,000 x 10% x 4) P 40,000

Problem 9 – 6 D

Deductible loss – book value lower than replacement cost P 50,000

Problem 9 – 7 D

Problem 9 – 8 D

Zero An individual who claims the 10% optional standard deduction shall not simultaneously claim deduction of the NOLCO

Problem 9 – 9

P25,000 The lower between the carrying value and replacement cost

Problem 9 – 10

Problem 9 – 11

None, because the demolition cost, net of amount realized from scrap should be capitalized

as part of the factory building cost

Problem 9 – 12

No deductible loss at balance sheet date On June 30, the reportable gain would be P10,000, (110,000 – 100,000)

Problem 9 – 13

Problem 9 – 14

Problem 9 – 15

Year 1 Year 2

No gain or loss on year 1 because there was no actual sale of foreclosed property

Problem 9 – 16

None, because the floss should be recognized only upon actual sale of the property foreclosed

Problem 9 – 17

None Gambling losses can only be deducted from the gambling winnings Gambling transactions is not an ordinary business transactions, but a capital asset transaction Accordingly, gambling losses is not an allowable deduction from ordinary gross income

Problem 9 – 18

Replacement cost of damaged portion of machine 150,000

Problem 9 – 19

Problem 9 – 20

Note: The 3 year reglamentary period for NOLCO shall not be suspended

even if MCIT has been used NOLCO has expired effectively on

200E

Problem 9 – 21

Ordinary Capital

Note: It would be more appropriate to classify casualty loss as capital loss because such loss

is not an ordinary or regular loss, unless the problem stated that the loss is an ordinary asset

Problem 9 – 25

Less: Accumulated depreciation (P10,000,000/30) x 5 1,666,667

Problem 9 – 26

Cost of property expropriated by the government