Practice question
An ordinary asset is sold for P160,000 cash with an adjusted tax basis of P100,000. Assume no special tax, exclusion, selling cost, or nonrecognition rule. Which is the gain under section 40(A)?
- P160,000 because all proceeds are gain
- P100,000 because basis is profit
- P60,000, the excess of amount realized over adjusted basis
- Zero because all cash is capital
- P260,000 by adding basis and price
Legal references
- https://lawphil.net/statutes/repacts/ra1997/ra_8424_1997.html — NIRC, section 40(A)–(C)
- https://lawphil.net/statutes/repacts/ra2021/ra_11534_2021.html — RA 11534, section 10 amending NIRC section 40(C)(2)
- https://lawphil.net/statutes/repacts/ra2025/ra_12214_2025.html — RA 12214, section 8 amending NIRC section 32(A)(1)
Answer this question in flashcards to review your response and continue practicing.