I. In January 1970, Juan Gonzales bought one hectare of agricultural land in Laguna for P100,000. This property has a current fair market value of P10 million in view of the construction of a concrete road traversing the property. Juan Gonzales agreed to exchange his agricultural lot in Laguna for a one-half hectare residential property located in Batangas, with a fair market value of P10 million, owned by Alpha Corporation, a domestic corporation engaged in the purchase and sale of real property. Alpha Corporation acquired the property in 2007 for P9 million. What is the nature of real properties exchanged for tax purposes - capital asset or ordinary asset? Explain. ( 3% ) Is Juan Gonzales subject to income tax on the exchange of property? If so, what is the tax based and rate? Explain. ( 3% ) Is Alpha Corporation subject to income tax on the exchange of property? If so, what is the tax base and rate? Explain. ( 3% )