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Question X
X. Klaus, Inc., a domestic, VAT-registered corporation engaged in the land transportation business, owns a house and lot along Katipunan St., Quezon City. This property is being used by Klaus, lnc.'s president and single largest shareholder, Atty. Krimson, as his residence. No business activity transpires there except for the company's Christmas party which is held there every December. Atty. Krimson recently grew tired of the long commute from Katipunan to his office in Makati City and caused the company to sell the house and lot. The sale was recorded in the books of Klaus, Inc. as investment in real property.
(a)(a) Is the sale of the said property subject to VAT? (2.5%)
(b)(b) Is the sale subject to 6% capital gains tax or regular corporate income tax of 30%? (2.5%)
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