estate tax.doc

True or false 1. succession takes place upon the death of the decedent 2. unpaid funeral expenses are nevertheless deductible from gross estate as part of “claims against the estate” 3. estate tax is property tax 4. decedent’s interest includes revocable inter vivos transfers of properties until the death of the donor 5. the share of the surviving spouse in the community property is not included in the gross estate of the decedent spouse. 6. the proceeds of life insurance policies payable upon death of the decedent are exempt from the payment of estate tax. 7. if the decedent sells properties because of an impending death, the difference between the market values at the time of sale and at the time of death, if any, is subject to estate tax. 8. if there is reciprocity, the intangible personal property in the Philippines of the non resident alien is subject to estate tax in the Philippines 9. a power of appointment is general if the donee is authorized to appoint a beneficiary named in the will of the prior decedent. 10. a husband cannot donate his share in the community property to his surviving spouse. 11. winnings in gambling is conjugal property. However, losses thereon shall be borne exclusively by the loser-spouse. 12. donations to charitable institutions are deductions from gross estate 13. death benefit from the GSIS is exempt from estate tax 14. the cost of the mourning apparel of a spinster daughter of the deceased is deductible as funeral expense 15. unpaid accountant’s fees to an accountant who signed the CPA certificate is deductible as “claims against the estate” 16. an unpaid loan contracted by the decedent spouse which is secured by a mortgage of a community property is deductible as a claim against the estate and not as unpaid mortgage 17. in an accommodation loan, there is an addition to and a deduction from gross estate, thus resulting to a zero balance in the net estate. 18. casualty losses are deductible from gross estate and from gross income 19. the family home of a non resident citizen is includible in the gross estate but not deductible therefrom 20. the estate of a nonresident alien is not entitled to a vanishing deduction. 21. net taxable estate is another term for net distributable estate 22. only the estate of resident citizen can claim tax credit on estate taxes paid to foreign countries 23. notice of death should be made within 30 days after the death of the decedent 24. filing of the estate tax return is required if the transfer is subject to estate tax regardless of the value of the gross estate. 25. installment payment of estate tax maybe allowed if there are no available cash of the estate.

Answers to True or false 1 2 3 4 5 6 7 8 9 1

Tru e Fals e Fals e Tru e Fals e Fals e Fals e Fals e Fals e Fals

Funeral expenses, whether paid or unpaid, are deductible as funeral expense It is an excise tax

The entire community properties of the spouses are included in the gross estate Proceeds of life insurance shall be exempt only from estate tax if the designated beneficiary in the policy is irrevocable and is not the estate, executor or administrator The sale must be for an insufficient consideration If there is reciprocity, the intangible personal property within is not taxable in the Philippines In that case, the power of appointment is special The prohibition is applicable on inter vivos donations only. Thus, it is allowed if the

0 1 1 1 2 1 3 1 4 1 5 1 6 1 7

e Tru e Fals e Tru e Fals e Fals e Fals e Tru e

1 8 1 9 2 0 2 1 2 2 2 3 2 4

Fals e Tru e Fals e Fals e Fals e Fals e Tru e

2 5

Tru e

donation is to become effective upon the death of the donor-spouse They are exclusions from gross estate but not deductions All benefits from SSS and GSIS are exempt from INCOME and ESTATE tax The daughter must be minor and unmarried It is deductible as judicial expense It is deductible as an unpaid mortgage rather than as claims against the estate The amount of money borrowed is deductible as claims against the estate; however, that same amount which was loaned to accommodate the financial needs of another person should be included in the gross estate as a receivable of the estate on the debtor. It is deductible from either gross income or gross estate but not on both To be deductible, family home must be situated in the Philippines Vanishing deduction can be claimed provided that the subject property is situated in the Philippines Net taxable estate is the basis in computing the estate tax, while net distributable estate pertains to the amount that will be distributed among the heirs. Other than he resident citizens, the estate of non resident citizens and resident aliens can also claim tax credit on estate taxes paid abroad Notice of death must be made within 2 months after the decedent’s death, or within a like period after qualifying as executor or administrator Filing of estate tax return is required if the gross value of the estate exceeds 200,000 and regardless of value where the said real estate consists of registered or registrable property If the tax is paid by installment, a clearance shall be released only with respect to the property the corresponding tax on which has been paid.

1. Which of the following is not an element of succession? a. Decedent c. Heir b. Estate d. Administrator 2.Inheritance does not include a. property b. public office c. rights not extinguished by death d. obligations not extinguished by death 3.Estate tax is a. a property tax because it is imposed o the property transmitted by the decedent to his heirs. b. an indirect tax because the burden of paying the tax is shifted on the executor or any of the heirs of the decedent. c. an excise tax because it is imposed on the privilege exercised by the decedent to transfer ownership over the estate. d. a poll tax because it is also imposed on residents of the Philippines whether Filipino citizens or not. 4.Which of the following is not a distinction between estate tax and donor’s tax? a. The tax imposed is an excise tax. b. Extension for payment. c. Effectivity of the transfer of property. d. The exemption granted in the tax table. 5.Statement 1: The estate tax accrues at the moment of death of the decedent. Statement 2: In estate taxation, the taxpayer is the decedent. Which of the above statement is correct? a. Statement 1 only. c. Both statements b. Statement 2 only. d. Neither statements 6. In 2002, J. Cruz gave a loan of P150,000 to sexy, his secretary. In 2005, as an act of generosity, J.Cruz condoned the debt of Sexy in his last will and testament. J. Cruz died in 2008. The condonation of the debt of Sexy is

a. A donation inter vivos subject to donor’s tax. b. A payment or compensation for the services rendered. c. A deduction from the gross estate of J.Cruz. d. A donation mortis causa subject to estate tax. 7. The following are the motives of a taxpayer that preclude the transfer in contemplation of death, except one a. To relieve the taxpayer of the burden of management. b. To save income and property taxes. c. To avoid payment of estate taxes. d. To make dependents financially independent. 8. In default of testamentary heirs, the law determines who are to succeed to the inheritance of the deceased. Which of the following ranks first in the order of succession? a. legitimate children c. legitimate parents b. surviving spouse d. illegitimate children 9. H and W are married. They have legitimate children A and B. H died, survived by W, A and B. He estate of P12,000,000 should be divided as follows: W

A

B

Free

portion a. b. c. d

P3M 3M None 2.25M

P 4.5M 3M 6M 4.5M

P 4.5M 3M

None P 3M

6M 4.5M

None 2.25M

10. Based on the following data, how mush is the value of the decedent’s interest if he died March 31,2008? Cash in bank, joint account of the decedent And his wife P 254,000 Interest on the bank deposit ( January 1- June 30,2008) 9,000 Dividends from a domestic corporation: 60,000 Date of declaration- February 5, 2008 Date of record - April 15,2008 Date of payment - May 15,2008 Share in 2007 net profit of partnership, Distributed to partners on April 15 9,000 Winnings in lotto ( Bet, March 30; April 1, 2008 Draw) 500,000 a. P 383,750 c. P145,000 b. 138,000 d. 388,250 11. For estate tax purposes, the estate of the decedent shall be valued at the time a. of the preparation of the estate tax return b. the estate tax is paid. c. of death of the decedent. d. The estate is distributed to the heirs. 12. Mamo died leaving the following properties: Stocks of Cruz Corporation (2,000 shares )- listed in the Phisex (highest- P 40; lowest- P 39). Common Stocks of Hemo Corporation ( 1,500 shares)- not listed in the stock exchange. Cost- P 50 per share; book value- P45 per share. Car ( cost- P 600,000; book value- P 350,000; market value – P 400,000) Real properties ( zonal value – P 120,000; assessed value- P 72,000 ) The gross estate of Mamo isa. P 618,000 c. P 624,000 b. 867,000 d. 666,500 13.One of the following is subject to estate tax on properties situated within the Philippines only a. Resident citizen c. Nonresident citizen b. Resident alien d. Nonresident alien Items 14 through 16 are based on the following information: Dina Mathay, Filipina, died in the United States with the following properties Condominium unit in New York City 2,000,000

P

Shares of stock in a foreign corporation 600,000 Interest in a partnership, domestic 475,000 Bank deposit in a New York City bank 150,000 Car in Cebu, Donated inter vivos 5 years ago to her son 500,000 14.Which property should be included in the gross estate? a. All the above properties. b. Only the properties located in the Philippines c. All the above properties except the car. d. The properties located in the Philippines except the intangibles. 15.If the decedent was a nonresident alien ( with reciprocity), how much is the gross estate? a. P 3,725,000 c. P 500,000 b. 975,000 d. None 16. If the decedent was a nonresident alien ( no reciprocity ), how much is the gross estate? a. P 3,725,000 c. P 500,000 b. 975,000 d. 475,000 Whenever a decedent is a nonresident alien ( no reciprocity ), all properties situated in the Philippines ( real property , tangible personal property and intangible personal property are included in his gross estate. 17. Which of the following is an intangible personal property within? a. Franchise exercised in the United States. b. Shares or rights in a domestic business partnership. c. Bonds issued by an American corporation. d. Stocks issued by foreign corporation with business situs in the Philippines. a. B only c. All of the above properties b. B and D d. None of the above properties 18. An example of intangible personal property without is a. Domestic shares of stock b. Foreign shares, 85 % of the business of the corporation is in the Philippines. c. Foreign shares with business situs in the Philippines. d. Foreign shares, certificate of stock are kept in Makati. 19. One of the following donations is not included as part of gross estate. a. revocable transfers b. transfers with reservation of certain rights c. transfers under special power of appointment d. transfers in contemplation of death In a special power of appointment, the decedent is considered only as a trustee to the property. Hence, said property should not be a part of his estate. 20. Which of the following transfers is included in the gross estate? a. transfer inter vivos b. transfer under general power of appointment c. transfer under special power of appointment d. transfer for an adequate and full consideration 21. Decedent Kulot A. has the following data: Value of the property at the time of sale P 1,200,000 Value of consideration when sold 1,000,000 Value of property at the time of death 1,500,000 The amount includible in the gross estate is – a. P 300,000 c. P 200,000 b. 500,000 d. 1,500,000 22. When Albino was informed by his physician that he was about to die of cancer, he sold his properties: Market valueSelling Market valueDate of sale price Date of death Land P 2,700,000 P 1,500,000 P 2,700,000 Jewelries 500,000 300,000 300,000 Shares of stocks 200,000 220,000 250,000 Transfer under limited Power of appointment 1,000,000 600,000 800,000

From among the data given, how mush should be included in the gross estate of Albino upon his death? a. P 1,200,000 b. 1,230,000

c. P 1,430,000 d. 1,400,000

23. On the belief that he was about to die of a liver cancer, Bongbong sold to Bengbeng a property valued at P 1,100,000 for the same amount. Six months later, Bongbong died of a car accident. At that time, the property had already a value of P 1,300,000. For Philippine estate tax purposes, the amount includible in the gross estate of Bongbong isa.P 1,100,000 c. P 200,000 b. 1,300,000 d. None 24. Amounts received by the estate of the deceased, his executor or administrator as an insurance under policy taken by the decedent upon his own life isa. excluded from the gross estate. b. part of the gross estate whether the beneficiary is revocable or irrevocable c. part of the gross estate if the beneficiary is revocable. d. part of the gross estate if the beneficiary is irrevocable 25. Case 1 – Designation of the beneficiary is revocable. Case 2-- Designation of the beneficiary is irrevocable. Case 3—Policy is silent as to whether the designation is revocable or irrevocable. In which of the above cases will the proceeds be exempt from estate tax, assuming that the beneficiary of the life insurance proceeds is neither the estate, the executor nor the administrator of the estate? a. Case 1 only c. Case 2 only b. Cases 1 and 3 d. All of the above cases 26. Proceeds of life insurance not payable to estate, executor or administrator shall be excluded in the gross estate if the beneficiary appointed in the policy is a. Revocable c. Irrevocable b. Revocable or irrevocable d. the executor 27. Proceeds of life insurance includible in the taxable gross estate a. Insurance proceeds from SSS and GSIS. b. Amount receivable by any beneficiary irrevocably designated in the policy by the insured. c. Amount receivable by any beneficiary revocably designated in the insurance policy. d. Proceeds of a group insurance taken out by a company for its employees. 28. Which of the following proceeds of life insurance policies is exempt from estate tax? 1. Life insurance policy on the life of Kristine, appointing her sister as the irrevocable beneficiary. 11. Life insurance policy on the life of Kristine, appointing her brother as the revocable beneficiary. 111. Life insurance policy on the life of Kristine, appointing her executor as the irrevocable beneficiary. 1V. Life insurance policy on the life of Kristine, appointing her children as the beneficiary. The policy is silent as to whether the appointment is revocable or irrevocable. a. 1 only c. 11 and 111 b. 1 and 1V d. All of them 29. The following are transactions and acquisitions exempt from transfer tax, except a. Transmission from the first heir or done in favor of another beneficiary in accordance with the desire of the predecessor. b. Transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the fideicommissary. c. The merger of usufruct in the owner of the naked title. d. All bequests, devisees, legacies or transfers to social welfare, cultural and charitable institutions. 30. A devised in his will a piece of land; naked title to B and usufruct to C for as long as C lives, thereafter to B. the transmission from A to B and C is subject to estate tax but the merger of the usufruct and the naked title to B upon the death of C is exempt.

X devised in his will real property to his brother Y who is entrusted with the obligation to preserve and transmit the property to Z, a son of Y, when Z becomes of age. The transmission from Y to his son Z is subject to tax. a. First statement is correct, second statement is wrong. b. Both statement are not correct. c. Both statement are correct. d. First statement is wrong , second statement is correct. 31. One of the following is included in the gross estate. a. Benefits received from GSIS b. Benefits received from U.S Veterans Administration. c. Benefits received from damages during world war 2. d. Benefits received from a tax exempt employer as a consequence of death of the employee. 32. Which of the following distinguishes conjugal property from community property? a. Properties inherited during marriage. b. Those acquired through occupation during marriage c. Fruits of exclusive property. d. Income earned by each spouse during marriage. 33. One of the following is a conjugal property of the spouses. a. That which is brought to the marriage as his or her own. b. That which each acquires during the marriage by inheritance. c. The fruits of an exclusive property. d. That which is purchased with the exclusive property of the wife. 34. One of the following is not a community property of the spouses a. Property inherited by the husband before marriage. b. Winnings in gambling. c. Fruits of property inherited during the marriage. d. Fruits of property inherited before the marriage. 35. Which of the following is not a part of the gross estate? a. conjugal property b. community property c. exclusive property of the decedent d. exclusive property of the surviving spouse 36. When a person dies and during the marriage the property relationship between the husband and the wife was that of conjugal partnership of gains, the gross estate of the decedent would include a. His exclusive properties only. b. His exclusive properties and one –half of the conjugal properties. c. All the properties of the husband and wife. d. His exclusive properties and all conjugal properties. 37. A. Share of the decedent in the community property. B. Share of the surviving spouse in the community property. C. Exclusive property of the decedent. D. Exclusive property of the surviving spouse. Which of the above properties are included in the gross estate of the decedent? a. A and B c. A and C b. A, B, and C d. All of the above properties 38. Properties acquired by gratuitous title before the marriages are generally classified as: A. Community properties under absolute community of property regime. B. Conjugal properties under conjugal partnership of gains. Which of the above statement is correct? a. A only c. B only b. A and B d. Neither A nor B

Numbers 39 through 42 are based on the following information. Aldo died leaving the following properties: a. Real property in Baguio City brought into marriage b. Income of real property in Baguio c. Real property in Cebu City, brought into marriage by wife d. Income of real property in Cebu City e. House in Pili, Camarines Sur, acquired by Aldo during marriage f. Income of house in Pili g. Real property in Iloilo City, earned by wife during marriage h. Income of real property in Iloilo City i. Tangible personal properties in Manila, inherited

P 300,000 60,000 240,000 25,000 375,000 50,000 225,000 80,000

by Aldo during marriage j. Income of properties in Manila k. Intangible personal properties in Singapore inherited by wife during marriage l. Income of intangibles in Singapore m. Tangible personal property in Dagupan City, inherited by Aldo before marriage n. Income of property in Dagupan City o. Intangible personal property in Canada, inherited by wife before marriage p. Income of personal property in Canada

500,000 175,000 430,000 85,000 20,000 10,000 350,000 85,000

39. under the conjugal partnership of gains, the total conjugal properties of the spouses is: a. 1,170,000 b. 1,820,000 c. 1,990,000 d. 2,495,000 40. under conjugal partnership of gains, the gross estate of Aldo is a. 1,170,000 b. 2,495,000 c. 1,990,000 d. 1,820,000 41. under absolute community of property regime, the total community property of the spouses is: a. 1,820,000 b. 1,990,000 c. 2,495,000 d. 1,170,000 42.under absolute community of property regime, the gross estate of Aldo is a. 1,170,000 b. 2,495,000 c. 1,990,000 d. 1,820,000

Pepe married Pilar on January 20,1995 without any agreement in writing as to the system of property relationship that will govern their properties when they are already married. Pepe brought into the marriage an old Spanish house in Vigan, Ilocos Sur worth 2,000,000 while Pilar brought with her a 200 hectare pineapple plantation in Bukidnon which she acquired while she was still single. As a consequence of her marriage, she received as gift from her parents another 200 hectare banana plantation in Cagayan de Oro City on January 31, 1995. Twelve years thereafter, she died of a car accident. The joint account deposit of the spouses with Metrobank was 5,000,000. She was insured with an insurance company for 2,500,000 with Pepe as the appointed irrevocable beneficiary For numbers 43 to 47, classify the properties identified above by choosing your answer from the option below: Options:

a. exclusive property of Pepe b. exclusive property of Pilar c. Conjugal property of Pepe and Pilar d. Community property of Pepe and Pilar

43. the old Spanish house in Ilocos Sur . Community property of Pepe and Pilar 44. the banana plantation in Cagayan de Oro exclusive property of Pilar 45. the income of the banana plantation exclusive property of Pilar 46. the deposit with metrobank Community property of Pepe and Pilar 47. the proceeds of the insurance policy is a. excluded from gross estate

b. included in the gross estate c. deductible from gross estate d. none of the above DEDUCTIONS FROM GROSS ESTATE 48. an example of a funeral expense which is not deductible a. most of coffin assumed by a family friend b. funeral services paid out of decedent’s estate c. mourning clothing of deceased’s unmarried minor children and surviving spouse d. cost of tombstone 49. statement 1: the amount of funeral expenses within the 200,000 threshold, which are still payable shall be allowed as a deduction from the gross estate Statement 2: the unpaid portion of the actual funeral expenses incurred which is in excess of the 200,000 threshold shall be allowed as deduction under “claims against the estate” a. true, true b. true, false c. false, true d. false, false 50. which of the following is included in the term “ funeral expenses” a. mourning apparel of a 40- year old legitimate child of the deceased b. hospital bills during the last illness of the deceased c. burial expenses defrayed by the relatives of the deceased d. obituary notices to relatives and friends 51. the amount of funeral expenses that may be deducted from gross estate a. 5% of the gross estate or actual funeral expenses or Php 200,000, whichever is lower b. always 5 % of the gross estate c. actual funeral expenses incurred d. 5% of the gross estate or actual funeral expenses incurred whichever is higher 52. the deductible amount of funeral expense is 200,000 if the actual expenses and the gross estate amount to a. actual-195,000, gross estate-4,500,000 b. actual-210,000, gross estate-4,300,000 c. both A and B c. neither a nor b 53. which of the following are requisites in order that claims against the decedent’s estate may be deductible except a. they must be existing against the estate b. they must be reasonably certain as to amounts c. they must have been prescribed d. they must be enforced by the claimants 54. which of the following is not included in the value of the gross estate a. judicial expenses b. claims against insolvent persons c. benefits received under RA 4917 d. the undiminished value of the property mortgaged 56. one of the following is deductible as claim against the estate a. an obligation contracted by the decedent one (1) day before he died b. an obligation of the decedent prescribed while the decedent was still alive c. an obligation which was not reduced in writing under statutes of fraud d. an obligation which shall be paid by the heirs 57. all of the following except one, are deductible from the gross estate of a decedent who died September 30, 2006 a. income tax on income earned from January to September 29, 2006 b. gift taxes on donations given June 12, 2006 c. real property taxes payable during the last quarter of 2006 d. income tax on income earned during the last quarter of 2006 hint:

to be deductible, taxes must accrue before the death of the decedent. Real property taxes accrue on the 1st day of January of every year although the payment is allowed in the succeeding quarters of the year. 58. statement 1: if the proceeds of a mortgage loan is merely an accommodation loan, its value must be included in the gross estate as a receivable amount and as a deduction thereof. Statement 2: if there is legal impediment to recognize the accommodation loan as receivable of the estate, the unpaid mortgage payable shall not be allowed as a deduction from the gross estate a. true, false b. true, true c. false, true d. false, false 59. the following expenses and obligations were left by Boning upon his death Notes payable, not notarized Loans payable, PNB Accounts receivable, debtor not insolvent Accounts receivable, debtor is insolvent Death benefits from employer Mortgage paid Income taxes on income of decedent’s estate

30,000 300,000 40,000 60,000 200,000 50,000 7,500

The total amount deductible from gross estate is a. 600,000 b. 550,000 c. 1,560,000 d. 560,000 HINT: to be deductible, claims against the estate out of debt instrument must be duly notarized (except for loans by financial institutions where notarization is not part of the business practice or policy of the financial institution) claims of the estate against other persons are deductible only if the debtor is declared insolvent mortgages paid are allowed only as deduction from the value of the property in computing a vanishing deduction. In computing the net estate, the deductible item is unpaid mortgage taxes must have accrued before the death of the decedent. Taxes on income of properties which accrued after death are not deductible 60. casualty losses are deductible from the gross estate if Statement 1: such loss was incurred during the settlement of the estate Statement 2: such loss was incurred not later than the last day for the payment of the estate tax a. false, false b. false, true c. true, false d. true, true 61. Y, a Filipino resident, died on November 5, 2006 and his estate incurred losses due to 1st loss: from fire on Feb 2, 2006 of improvements on his property; not compensated by insurance 2nd loss: from flood on Feb 25, 2007 of household furniture; also not compensated by insurance a. 1st loss is not deductible, second loss is deductible b. both losses are not deductible c. both losses are deductible from gross estate d. 1st loss is dductible and 2nd loss is not 62. which of the following losses is deductible a. destruction of a house by an earthquake which killed the decedent b. shipwreck which occurred before the death of the decedent but was only discovered after his burial c. total wreckage of a car in an accident but was fully compensated by a comprehensive insurance

d. theft which occurred during burial of the decedent 63. liza died on July 5, 2007 leaving the following data on deductions Unpaid 2006 real estate taxes 40,000 Unpaid 2007 real property taxes 40,000 Inocme tax on income from Jan 1 to July 4, 2007 35,000 Losses from fire that occurred on July 3 (60 % was insured) 800,000 Casualty loss on september 2007 450,000 Building destroyed by earthquake on Feb 2007 1,300,000 Based on above data, The deduction from gross estate is a. 1,365,000 b. 565,000 c. 845,000 d. 525,000 64. Che, a non resident alien, died leaving the following assets domestic shares 1,000,000 foreign shares 3,000,000 tangible personal property, Philippines 6,000,000 Expenses (deductible) 1,200,000 Note: the country where she is a citizen and resident does not impose transfer tax on transmission of intangibles of filipinos The net estate subject to tax in the philippines is a. 5,280,000 b. 3,800,000 c. 4,800,000 d. 4,280,000 65. Ta, a nonresident alien, single died leaving the following properties and deductions Shares-domestic corporation Shares-foreign corporation Tangible personal properties Deductible expenses

500,000 500,000 1,500,000 500,000

Assuming there is no reciprocity, the estate tax payable is a. 1,600,000 b. 1,500,000 c. 103,000 d. 95,000 66-67 information Mhar, a German residing in Munich, Germany had the following data at the time of his death Expenses Funeral expenses incurred in the philippines 25,000 Funeral expenses incurred abroad ? Accountants fee and audit fees 5,000 Medical expenses -2 months before he died 50,000 Unpaid mortgage on his property loctaed abroad 40,000 Claims against the estate 25,000 Properties Real property located in Japan 2,400,000 Lot in Davao City 1,000,000 Share of stock in Japanese Corporation 600,000 Other tangible personal properties-phils 1,000,000 66. gross estate on the estate of Mhar is a. 5,000,000 b. 1,000,000 c. 2,000,000 d. 2,600,000 67. in number 66 above, if the total deductions allowed amount to 60,000, how much is the amount of funeral expenses abroad a. 100,000 b. 80,000 c. 145,000

d. 55,000 68. which of the following properties of Etang who died December 4, 2008 is subject to vanishing deduction Property 1-Car purchased 3 years ago from batangas city Property 2- land inherited from her mother in 2005 the estate tax thereon have not been paid Property 3-donation from a friend in 2004 Property 4-community property inherited december 2, 2003 or five days before marriage

a. b. c. d.

Property 1 no no yes yes

property 2 no no no yes

property 3 yes yes no no

property 4 yes no yes no

69. which of the following is a multiplier deduction for purposes of computing vanishing deduction a. benefits received under RA 4917 b. medical expenses c. standard deduction d. transfer for public purpose 70. statement 1: vanishing deduction is always a deduction from the exclusive properties of the decedent Statement 2: a property is subject to vanishing deduction if it has been acquired thru exchange with a property inhetrited within 5 years prior to the death of the present decedent a. true, false b. false, true c. true, true d. false, false 71. christopher died on October 5, 2006 leaving a parcel of land valued at 800,000 to his nephew, mendell. On June 10, 2008, Mendell married Cristita, prior to the celebration of the marriage, they orally agreed that they shall be governed by the conjugal partnership of gains Which statement is correct a. the spouse shall be governed by the conjugal partnership of gains. Thus, if Mendell dies on May 20, 2009 the vanishing deduction shall be classified as deduction from the exclusive properties b. the spouses shall be governed by the absolute community of property regime. Thus if cristita dies on may 20, 2009 the land shall be subject to vanishing deduction of ½ of its value. c. the spouse shall be governed by the absolute community of property regime. Nonetheless, the death of cristita on may 20, 2009 will not subject her share in the land to a vanishing deduction d. the spouse shall be governed by the absolute community of property regime. Thus, if mendell dies on may 20, 2009 only his ½ share in the land shall be subject to a vanishing deduction 72. all of the following, except one, are not deductible from the gross estate of a nonresident alien a. vanishing deduction b. medical expenses c. family home d. standard deduction 73. Rodolfo, a filipino died testate on May 10, 2006. Among his gross estate are properties inherited from his deceased father who died april 4, 2003. What percentage of deduction will be used in computing the amount of vanishing deduction a. 80% of the value taken as basis for vanishing deduction b. 100 % of the value taken as basis for vanishing deduction c. 60 % of the value taken as basis for vanishing deduction d. 40% of the value taken as basis for vanishing deduction 74. van died on November 20, 2006. Some of the properties he left are the following

Asset

Mode of acqui sition

Date of acqui sition

Market value -date acqui red

Land

Donatio n Purchas e

7-3-02

500,000

Market value deat h of Van 350,000

10-2-05

800,000

980,000

Car

Other info: 1. Gross estate of decedent amounts to 3,000,000 2. The land was mortgaged for 50,000 which was deducted in prior estate and van paid the same before he died 3. The allowable deductions total 125,000, which includes medical expenses of 30,000. It excludes bequest to a charitable institution in the amount of 50,000 The vanishing deduction is a. 58,100 b. 57,500 c. 67,783 d. 67,083 75. in determining the net estate of the decedent, which of the following rules is correct a. real estate abroad is included in the gross estate of a decedent who is a nonresident alien b. shares of stocks being intangible property shall be included in the decedents gross estate wherever situated c. vanishing deduction must be subject to limitations d. funeral expenses are deductible to the extent of 5% of the total gross estate but not exceeding 100,000 76.pepe died on August 15, 2006. His data are as follows Community properties Exclusive properties of pepe Exclusive properties of pepe’s wife Deductions (except standard deduction)

2,000,000 3,000,000 1,000,000 700,000

Included in the 3,000,000 is a parcel of land worth 200,000 and a car worth 400,000 The land was donated to him by his uncle on May 4, 2004 with a value of 150,000. At the time of donation, the land wasb mortgaged for 30,000 which was paid by his uncle. The car had a avalue of 500,000 when it was paid by his uncle. The car had a value of 500,000 when it was inherited by his Pepe from his mother 2.5 years ago and mortgaged for 50,000 which was paid by Pepe before he died. The vanishing deduction on the estate of Pepe is a. 258,000 b. 262,520 c. 283,600 d. none 77. elopre, married June 5,2004 died on April 29, 2006 with the following data: Gross estate— community property, 3,000,000; exclusive, 2,000,000. Said amount includes a land which he received as gift from his father a month before the marriage; valued at 540,000. His father mortgaged the land for 20,000 which was paid by elopre. Elopre mortgaged also said land for 50,000 but was able to pay only 20,000 until his death. Expenses claimed (excluding the unpaid mortgage) amounted to 170,000. The vanishing deduction is a. 388,800 b. none c. 384,000 d. 380,000 78. in number 77, the net taxable estate is a. 2,016,000 b. 1,208,000 c. 3,416,000

d. 2,208,000 79. statement 1: unpaid loans contracted prior to death may be deducted even if not notarized if notarization of contracts is not business policy of the creditor Statement 2: for estate tax purposes several family homes may be deducted provided the maximum amount is 1,000,000. a. true, false b. true, true c.false, true d. false, false 80. statement 1: an unmarried individual cannot constitute a family home Statement 2: unpaid medical expenses at the time of death are deductible as claims against the estate a. true, false b. true, true c.false, true d. false, false 81. mama, widow, a Filipino residing in Canada, died on December 20, 2007 leaving the following properties Real property (inherited from her husband on May 3, 2006 valued then at 2,600,000) Personal properties in Canada Real and personal properties in the Philippines Family home in Canada Obligations: Funeral expenses incurred in Canada Other deductible expenses

a. b. c. d.

2,960,0 00 1,300,0 00 670,00 0 2,500,0 00 250,00 0 850,00 0

The gross estate of mama is 7,430,000 7,070,000 6,760,000 670,000 82. in 81, the deduction for family home is a. 2,500,000 b. 1,000,000 c. 1,250,000 d. none 83. in 81, the vanishing deduction is a. 1,786,056.52 b. 1,772,059.20 c. 1,773,708.20 d. none 84. decedent died leaving a family home composed of the following: house, conjugal property worth 800,000 and the land in which he exclusively owned valued at 400,000. He also owns a vacation house in Baguio worth 700,000.

a. b. c. d.

The deductible amount of family home 800,000 1,200,000 1,900,000 1,000,000 85. the decedent married, died leaving a family home valued at 1,500,000 composed of the house which is 70% of the total amount (conjugal property) and the lot 30% of total amount (exclusive property)

a. b. c. d.

The amount deductible from gross estate is 1,500,000 1,000,000 975,000 525,000 86. bong, single and a resident citizen, died with properties constituting his gross estate of 4,000,000. Actual funeral expenses amounted to 150,000 and other charges against the estate amounted to 210,000. The net taxable estate is A. 3,640,000 b. 2,640,000 c. 3,740,000 d. 2,590,000 87. decedent, married in 1976, died leaving the following Real properties 3,000,000 Family home 1,000,000 Other real properties, exclusive of 2,000,000 decedent Family lot, exclusive of decedent 400,000 Funeral expenses 275,000 Medical expenses 650,000 Taxes and losses 1,300,000

a. b. c. d.

The net taxable estate is 2,450,000 1,150,000 2,250,000 1,250,000 88. Paid medical expenses for confinement at Tigok Hospital from May 15-23, 2007 (20,000 remain unpaid) Hospitalizationexpenses (June 3-6, 2005) Expenses for the settlement of the estate: Acceptance fee, June 28,2007 Court fees, July 16,2007 Appearance of lawyer in court, 9-5-2007 Appearance of lawyer in court,11-29-2007

80,0 0 0 21,5 0 0 20,0 0 0 12,0 0 0 2,00 0 2,00 0

Based on above data, how much is the deductible medical and judicial expenses respectively if the decedent died may 23,2007 a. b. c. d.

80,000 and 36,000 100,000 and 36,000 80,000 and 34,000 100,000 and 34,000

89. statement 1: under the conjugal partnership of gains, the vanishing deduction is always a deduction from exclusive properties Statement 2: under the absolute community of property regime, the vanishing deduction is deductible also against community property a. true, true b. true, false c. false, false d. false, true 90. the following data relates to Carl, married (2) years ago, died leaving the following: Gross Estate 14,000,0 00

Land acquired by donation from his father 3.5 years ago: Market value, date of donation Market value, date of death Funeral expenses Judicial expenses Unpaid mortgage on land at the time of donation Unpaid taxes Losses Transfer for public purposes Medical expenses

200,000 300,000 35,000 15,000 100,000 10,000 25,000 35,000 45,000

Carl paid 60,000 to the mortgagee of the land a year before his death. Assuming carl was under conjugal partnership of gains, the total ordinary deductions from exclusive property is a. 49,600 b. 89,600 c. 124,600 d. none 91. in problem 90, assuming that Carl was under absolute community of property regime the total amount deductible from the community property is a. 125,000 b. 134,600 c. 174,600 d. none 92. Alladin, Filipino, married, died January 1, 2006, leaving the following properties: Inherited from his brother who died May 3, 2004: Rice Land Residential land Inherited from his mother who died April 12, 2002 or five days after his marriage: Coconut land Acquired thru Alladin’s wife’s labor Family home Car Commercial Land Gold necklace(acquired by Aladdin during a previous marriage which had a legitimate descendant)

1,000,0 00 2,000,0 00 420,00 0 2,000,0 00 500,00 0 1,000,0 00 80,000

The Riceland and the residential land were previously mortgaged for 350,000 when inherited where 200,000 was paid by Alladin during his lifetime. The coconut land was mortgaged for 94,000 of which 14,000 was paid before his death. Also, Aladdin, by will, bequeathed to Marikina City the sum of 200,000 for exclusive public purpose. The estate incurred the following expenses: Funeral Expenses Judicial Expenses Portion of Family home destroyed by fire on Jan 5, 2006 Medical expenses

140,0 00 80,00 0 100,0 00 40,00

0 The gross estate of Aladdin is a. 3,500,000 b. 7,000,000 c. 5,250,000 d. 3,957,020 93. in number 92, the vanishing deduction is a. 2,032,000 b. 220,980 c. 2,145,000 d. none 94. in number 92, the net taxable estate is a. 2,217,500 b. none c. 515,000 d. 535,000 95. Luis died leaving the following: Exclusive properties Conjugal properties Judicial expenses Funeral expenses Notes payable (only ½ is notarized) Claims against insolvent persons (50 % is collectible) Proceeds of life insurance (beneficiary is wife revocable) Death benefits under RA 4917 Medical expenses (1/2 is not supported by receipts)

2,000,0 00 2,500,0 00 45,000 150,00 0 100,00 0 120,00 0 200,00 0 180,00 0 550,00 0

The net taxable estate is a. 1,892,500 b. 2,450,000 c. 1,520,000 d. 1,862,500 96. the following data is relates to the estate of Abandonado: House and lot (family home) In Quezon City, zonal value (assessed value, 1,150,000) Personal properties Benefits received from employer as a consequence of his death Unpaid mortgage on Riceland with a value of 1,000,000 Claims against Dimalupig, insolvent

2,230,0 00 2,500,0 00 150,00 0 200,00 0 35,000

Based on above information, the value of the gross estate of Abandonado is: a. b. c. d. 97-99

5,915,000 4,835,000 4,685,000 5,730,000

On October 15, 2006, Benjamin, a Filipino citizen and resident of Manila, died intestate leaving his wife, Diana and his two illegitimate children, Aubrey and Barbara. The estate of the deceased consisted of the following: Real property- conjugal House and lot (family home) – Manila. This property has an assessed value of 2,500,000 at the time of death but valued in the zonal valuation of the BIR for 2,900,000. Personal Property- conjugal The total value was placed at 1,600,000. Included in the 1,600,000 are proceeds of an irrevocable life insurance policy of 100,000 taken by Benjamin with Barbara as the beneficiary. The premiums were paid out of conjugal property of the spouses. The following deductions were claimed by the heirs: Funeral Expenses 100,0 00 Unpaid loans, notarized 75,00 0 Losses incurred during the settlement of 25,00 the estate 0 97. the total gross estate of Benjamin is a. 4,500,000 b. 4,100,000 c. 4,000,000 d. 4,400,000 98. the deductible amount of Family Home is a. 2,900,000 b. 1,450,000 c. 1,000,000 d. none 99. the net taxable estate is a. 100,000 b 150,000 c. 950,000 d. none 100. which of the following deductions cannot be claimed by a non resident alien I. Vanishing deductions on a property situated in the Philippines II. Funeral expenses incurred abroad III. Family Home situated abroad IV. Donation of a property for use by a foreign government a. b. c. d.

I only I and II III and IV I and IV

101-103 Wilson died of a car accident. He died intestate on October 10, 2006, survived by his wife, Ging and a son. Exclusive Properties of Ging: Car Lot in Quezon City Other real and personal properties Exclusive properties of Wilson: House and lot in Laguna, family house

400,00 0 2,000,0 00 800,00 0 1,900,0 00

Other personal properties

800,00 0 1,500,0 00

Other real properties Conjugal properties of the spouses: Cash on hand and in bank Receivable as prize in a raffle sponsored by PICPA Receivable from an insurance company where the son, Gino, was designated as a revocable beneficiary. The premiums were paid out of the conjugal funds The following deductions were claimed: Funeral expenses Judicial expenses Claims against the estate, not notarized Claims against insolvent persons Unpaid mortgage on other real properties (contracted for the benefit of the conjugal property) Unpaid mortgage on house and lot in Laguna (the proceeds of which did not redound to the benefit of the family) Accrued income taxes Income tax on income earned from October 11 to Dec 31, 2006

500,00 0 50,000 150,00 0 195,0 00 15,00 0 50,00 0 30,00 0 200,0 00 350,0 00 35,00 0 7,500

101. the gross estate is a. 4,930,000 b. 4,900,000 c. 4,850,000 d. 8,130,000 102. the deductible share of surviving spouse is a. 255,000 b. 127,500 c. 112,500 d. 2,227,500 103. the net estate subject to tax is a. 1,962,500 b. 1,977,500 c. 112,500 d. 2,227,500 104. Alanis, a resident citizen, single but head of the family, died January 3, 2008. The following are his data: Properties: Real Properties (excluding Family Home of 1,100,000) House and Lot in Australia Other personal properties Deductions: Funeral expenses Claims against insolvent persons Claims against the estate, not notarized Unpaid mortgage on the family home

3,200,0 00 1,500,0 00 800,00 0 120,00 0 100,00 0 50,000 0 30,000

The personal properties do not include shares of stocks valued at 50,000 which were purchased by the decedent from Astra Company one month prior to his death. The house in Australia was inherited by Alanis from his father who died 2.25 years ago. Said property was mortgaged for 200,000 which was paid by the decedent before his death. The gross estate is a. 4,050,000 b. 6,750,000 c. 6,650,000 d. 5,550,000 105. the total deductions (excluding standard deductions) is a. 250,000 b. 300,000 c. 1,250,000 d. 2,001,111 Hint: the house in Australia is not subject to vanishing deduction because the property is situated outside the Philippines. To be subject to the deduction, the property must form part of the gross estate situated in the Philippines (Sec. 86 [ A,2], NIRC) 106. trillo, a resident of Quezon city, died on June 5, 2007 with the following data: Property acquired by Trillo before marriage 1,500,0 00 Property acquired by his wife before marriage 1,000,0 00 Conjugal family house and lot, Quezon City, certified by Barangay 1,600,0 Chairman 00 House in Marbel City (exclusive of Trillo) , certified as family home by 1,000,0 barangay captain 00 Proceeds of life insurance, irrevocable, beneficiary is the estate 500,00 0 Claims against insolvent debtors (40 % uncollectible) 100,00 0 Inter vivos donations to City Government of Quezon 200,00 0 Actual Funeral expense (50 % paid by relatives) 300,00 0 Judicial Expenses 250,00 0 The net taxable estate is a. 6,040,000 b. 1,580,000 c. 1,550,000 d. 1,370,000 Hint: house in quezon city is the true family home because it is the place where family resides. 107-110 Penduko married in 2005 under the absolute community of property regime, died on August 30, 2007. He left the following properties and obligations: Properties: Cash in bank Residential lot inherited from his father on June 12, 2004 Family home: house (community property) Lot

(exclusive property of

Penduko) Personal properties acquired by the spouses during marriage

200,00 0 1,200,0 00 1,300,0 00 1,000,0 00 200,00 0

Receivable from his sister (insolvent) Inter vivos donation from his mother on July 2007, revocable Receivable from SSS as indemnity for hospitalization Deductions: Unpaid mortgage on the residential lot contracted by the father: At the time of death of father At the time of death of Penduko Funeral expenses (40 % were shouldered by relatives) Judicial expenses (30 % were incurred after 6 months) Claims against the estate (includes unpaid medical expenses of 12,000) Unpaid mortgage on the house (loaned to penduko’s sister) Casualty loss (50 % was indemnified by the Insurance company) Donation to Barangay Engkantao (verbal donation)

100,00 0 150,00 0 12,000

300,00 0 100,00 0 80,000 35,000 35,000 100,00 0 60,000 25,000

107. the gross estate on the estate of Penduko is a. 4,062,000 b. 3,900,000 c. 3,962,000 d. 4,000,000 108. the vanishing deduction on the estate of Penduko is a. 357,450 b. 375,540 c. 300,500 d. 367,450 109. the ordinary deductions from the community property of penduko is a. 807,950 b. 582, 900 c. 782,950 d. 682,950 110. the net taxable estate is a. b. c. d.

None 46, 525 96,525 122,025

111. Eleanor, resident Citizen, married and under the absolute community of property regime, died on August 20, 2007. The following are the data on properties and obligations: Exclusive properties of Eleanor: Personal properties Family home Community Properties: Real properties Personal properties Funeral expenses Judicial expenses incurred until Feb 20, 2008 Judicial Expenses incurred after Feb

2,500,0 00 2,000,0 00 1,400,0 00 1,750,0 00 220,00 0 30,000 20,000

20, 2008 Unpiad taxes Medical expenses Casualty loss incurred November 2, 2007 Casualty loss incurred March 5, 2008 How much is the net taxable estate a. 3,268,500 b. 3,278,750 c. 3,238,000 d. 3,228,000 112. the net distributable estate is a. 3,278,750 b. 3,483,750 c. 5,483,750 d. 5,418,750

12,500 550,00 0 350,00 0 130,00 0