How much is the income tax due on the transaction

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Question - Mr. Espiritu is a resident Filipino citizen. He purchased a parcel of land in Makati City in 1970 at a consideration of P1 Million. In 2021, the land , which remained undeveloped and idle, had a fair market value of P20Million. Mr. Ayala, another Filipino citizen, is very much interested in the property and he offered to buy the same for P20 Million. The Assessor of Makati City re-assessed in 2021 the property at P10 Million.

1. Should Mr. Espiritu agree to sell the land to Mr. Ayala in 2022 for P20 Million, subject to the condition as stated in the Deed of Sale that the buyer shall assume the capital gains tax thereon, how much is the income tax due on the transaction?

2. In the preceding transaction, when must the tax return be filed and the tax be paid by the taxpayer?

Reference no: EM133141658

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