Hayaha

TAXATION Estate Tax

ATTY. MACMOD, C.P.A.

TAX TABLE The estate tax shall be computed on the basis of the value of the net estate in accordance with following graduated rates (effective Jan. 1, 1998) If the net estate is: Over But not over The tax shall be 200,000 0 P 200,000 500,000 5% of the excess over P 200,000 500,000 2,000,000 P 15,000 + 8% of the excess over 500,000 2,000,000 5,000,000 135,000 + 11% of the excess over 2,000,000 5,000,000 10,000,000 465,000 + 15% of the excess over 5,000,000 11,000,000 1,215,000 + 20% of the excess over 10,000,000 Basic Concepts: 1. _______________ a mode of transferring and acquiring ownership, rights, interest and obligations from a dead individual. 2. _______________ refers to all property rights and obligations of a person which are not extinguished by his death and also those which accrued thereto since the opening of succession; subject matter of succession. 3. _______________ a person whose property is transmitted thru the succession whether or not he left a will. 4. _______________ a person whose property is transmitted thru succession with a will. 5. _______________ a person called to the succession either by a will or by provision of law. 6. ______________ a person who inherits personal or movable property by a will. 7. _______________ a document wherein in his handwriting an individual makes known his wishes concerning the disposition of his estate after his death. 8. _______________ the person to whom the property or property rights is transferred. 9. _______________ a person appointed by a testator to carry out the provisions of the will. 10. _______________ a person appointed by the court in the absence of an executor. 11. _______________ one carried out according to the wishes of the testator to express in a will executed in a form prescribed by the law (voluntary). 12. _______________ one that takes place by operation of law (involuntary). 13. _______________ succession affected party by will and partly by operation of law. 14. _______________ tax imposed upon gratuitous transfer of properties.

15. _______________ portion of the estate reserved to the compulsory heirs. Formula for computation of TNE: 1. Decedent single Gross estate Less: Allowable deductions Taxable net estate Estate tax due (0%-20%)

P xx xx Pxx P xx

2. Decedent married Gross estate Exclusive of the decedent P xx Common property of the couple xx P xx Allowable deductions From exclusive property xx From common property xx xx Net estate before share of xx surviving spouse Less: Share of surviving spouse xx Net estate before special xx deductions Less: Deduction for family home/medical exp./s.deductions xx Taxable net estate P xx Estate tax due (0%-20%) P xx *Computation of the share of surviving spouse Gross common property of the H & W P xx Less: Deductions from common property xx Net xx Divided by 2 Share of the surviving spouse P xx

“Your mind is a magnet. Continue to dwell on what you want with a strong belief and you will achieve it.” - A. Matthews

3. Estate tax due *Deduct estate tax credit for the tax paid abroad Estate tax still due *Formula for estate tax credit: Under Limitation (used it only 1 foreign country is involved: By country limitation.) Actual E.T. paid to FC Or TNE,FC/TNE, W x E.T. due in the Phil. Allowable tax credit (whichever is lower) For the foreign country

P xx xx P xx

P xx xx P xx

Limitation B: (by total, used if 2 or more foreign countries Are involved together with limitation A) Total actual E.T. paid to all FC’s Or TNE, all FC’s/TNE, W x E.T. due in Phil. Allowable tax credit (whichever is lower)

P xx xx P xx

Note: If there are 2 or more FC’s both limitations (A &B) should be used, then get whichever is lower between the two as the final allowable tax credit.

EXEMPTIONS AND EXCLUSIONS FROM THE GROSS ESTATE A. Under Sections 85 & 86, NIRC 1. Capital or exclusive property of the surviving spouse. 2. Properties outside the Philippines of a NonResident Alien decedent 3. Intangible personal property in the Philippines of a Non-Resident alien under the Reciprocity Law. B. Under Section 87, NIRC 1. The merger of usufruct in the owner of the naked title. 2. The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the fideiconussary. 3. The transmission from the first heir or legatee in favor of another beneficiary in accordance with the desire of the predecessor-similar to transfers passing S.P.A. 4. All bequests, devises, legacies, or transfers to social welfare, cultural, charitable institutions, no part or the net income of which insures to the benefit of any individual provided that not more than 30% of the said bequests, devises, legacies, or transfers shall be used by each institution for administrative purposes: C. Under Special Laws 1. Benefits from GSIS by reason of Death 2. Benefits from SSS by reason of Death 3. Benefits from Philippines and US government for war damages 4. Benefits from US Veteran Administration 5. Retirement benefits of officials/employees of private firms 6. Life insurance proceeds on insurance policy upon his own life, where the beneficiary is a third person, and the designation is irrevocable 7. Life insurance proceeds on insurance policy (group insurance) taken out by the employer on the employees’ life regardless of who is the beneficiary and the designation. REVIEW ON ADMINISTRATIVE PROVISIONS – ESTATE TAX 1. What is a notice of death? It is a written notice from the executor, administrator, or any of the legal heirs, as the case may be, informing the Commissioner of the Internal Revenue about the decedent’s death. 2. When should the notice of death be filed? Within two (2) months after the decedent’s death or within 2 months after the executor or administrator shall have qualified. 3. Is it required in all cases of death? No, only where the gross value of the estate exceeds P20,000 4. Is an estate tax return required to be filed in all cases? No, only where the gross value of the estate exceeds P200,000 5. How should the return be filed? What information should be contained? It shall be filed under oath and in duplicate. It should show the following: a. The value of the gross estate at the time of the decedent’s death, or in case of non-resident alien decedent, that part of his gross estate in the Philippines; b. The allowable deductions under Section 86; c. Such other information as may be necessary to establish the correct tax due.

6. What is the additional requirement if the gross estate exceeds P2,000.000? The estate tax return shall be accompanied by a statement showing: a. Itemized assets of the decedent with their corresponding gross value at the time of his death, or in case of non-resident alien decedent, that part of his gross estate in the Philippines; b. Itemized deductions from the gross estate allowed under Section 86; c. The amount of tax due whether paid or still due and outstanding duly certified by a CPA. 7. What is the time for filing of the estate tax return? It is extendable? It shall be filed within six (6) months after the decedent’s death. In meritorious cases, the BIR Commissioner may give a reasonable extension of the time, not exceeding 30 days. 8. Where and to whom it should be filed? The return shall be filed with the RDO, collection agent or duly authorized treasurer of the municipality (or city) in which the decedent was domiciled at the time of his death, or if there be no legal resident in the Philippines, the with the Office of the BIR Commissioner. 9. When should the estate tax be paid? At the time the return is filed by the executor, administrator or the heirs. (Pay as you file system) 10. May the time for payment be extended? Yes, in meritorious cases, if payment of such tax should cause undue hardship upon the estate or any of his heirs, the BIR Commissioner may extend the time as follows: a. b.

If the estate is settled through the courts (juridically) – 5years. If the estate is settled through extra-juridically – 2 years.

11. Who is liable to pay the estate tax? It shall be paid by the executor or administrator before delivery to any beneficiary of his distributive share of the estate. Such beneficiary shall be subsidiary liable for the payment of such portion estate tax as his distributive share bears to the value of the total net estate. 12. What if there is no executor or administrator appointed or qualified? Any person in actual or constructive possession of any property of the decedent. 13. Is the tax a personal liability of the administrator or executor? Yes, under Section 85 of NIRC 14. May he be discharged from such personal liability? How? Yes, by making a written application to the BIR Commissioner for the determination of the estate tax and his discharge from personal liability. He shall thereafter be notified by the BIR Commissioner and upon payment of the amount of which he is notified, he shall be discharged from such personal liability and shall be entitled to a receipt or writing showing such discharge. 15. May a judge allow the execution or administrator to deliver a distributive share to an heir at anytime? No, unless the executor or administrator can show a certification from the BIR that the estate tax has been paid.

16. What is the duty of a bank upon knowing of the death of a person who maintained a joint account with another? It shall not allow any withdrawal by a surviving depositor from the said joint account unless the BIR Commissioner has certified that the estate tax has been paid. However, the administrator of the estate or any one of the heirs of the decedent may w/draw without such certificate an amount not exceeding P20,000.00 upon authorization by the BIR Commissioner. EXERCISES/PROBLEMS A. State the amount of allowable deductions from the gross estate in each of the following: 1. _______________ Gross estate of P8,000,000 and funeral expenses of P250, 000. 2. _______________ Unpaid taxes of the decedent P3M, 25% of w/c accrued after death already. 3. _______________ Receivable of P75,000 from an insolvent debtor whose ratio of assets to liabilities is 1:3 4. _______________ Hospitalization expenses until death: P3,000,000, 50% incurred 1 yr. Prior to death but only ½ of which is supported by receipts. 5. _______________ Expenses for the probate of a will including P10,000 facilitation fee for a court personnel, P100,000: amount paid to broker to convert some property in the estate to cash as authorized by the court P50,000. 6. ______________ P75,000 indebtedness with interest at 20% p.a. contracted 3months before death, not notarized and a deed of mortgage P20,000, contracted 6 months before death at 24% p.a. 7. ______________ P100,000 note payable notarized earning 18% p.a. dated September 30, 2014. Decedent died March 15, 2015. 8.

______________ A conjugal family house with FMV of P900,000 and exclusive family lot worth P500,00 owned by the decedent.

9. ______________ Loss by fire of building worth P1M 5 months after decedent’s death, 75% compensated by insurance. Estate was settled in the 6th month. 10. _____________ Funeral expenses of a NRA decedent in the Phil. P85,000 gross estate worth P2,000.000 40% from Philippines. 11. _____________ Transfer for public purposes made inter vivos, P1M. 12. _____________ A land worth P1M when inherited 4 ½ years ago by the decedent from his father with mortgage of P200,000, 60% of which was paid by the decedent before he died . FMV of land upon deathP1,500,000. Gross estate is P8M and deductions reached P750,000 40% of which represents ELIT & TPP. Compute for VD only. 13. _____________ Loss of car by theft, occurring 8 months after the decedent death, value of car P300,000, 60% to be paid by insurance. 14. _____________ Transfer for public purposes donated by the decedent to Manila City Hall (shown in the will) P200,000. 15. _____________ Unpaid mortgage of P200,000 on a P1,1000,000 house shown in the gross estate net of the P200,000 mortgage. 16. _____________ The decedent’s administrator claims the following funeral expenses:

Expenses of internment Cost of the burial lot (paid ½ paid by friends & relatives Fees for performance of rites incident to internment Mourning clothing of widow & unmarried minor children Expenses during the wake before burial (paid by uncle, 25%) Obituary notice Card of thanks

P40,000 20,000 10,000 5,000 20,000 3,000 2,000

The allowable funeral expenses assuming the decedent’s gross estate is: a. P2,000,000 b. P1,500,000 B. Determine whether the following conjugal/community or exclusive: ACP 1. Property acquired before marriage 2. Property acquired during marriage a. By onerous Title b. By gratuitous Title 3. Income from 2-a earned during marriage 4. Income from 2-b earned during marriage 5. Other income of the couple earned during marriage 6. Property acquired during marriage thru exchange: a. Using exclusive prop. b. Using common property 7. Jewelry acquired during marriage a. Using exclusive funds b. Using common funds 8. Property for personal & exclusive use of either husband or wife

properties

are

CPG

C. Multiple Choice 1. It refers to a mode of transferring & acquiring properties left by the decedent. a. Estate transfer c. Donation b. Succession d. Execution of a will 2. The property, rights & obligations of a person which are not extinguished by his death & those which have accrued thereto since the opening of succession. a. Inheritance c. Estate b. Capital d. Devisee 3. The estate tax accrues from the moment of: a. The fixing of notice of death b. Expiration of a months after death c. The death of the decedent d. The filing of estate tax return

4. The gift tax paid on a donation mortis causa, if any: a. Exempts the property from estate tax. b. Has no effect since the gift will be subject to another gift tax. c. Shall form as a tax credit to be deducted from the estate tax due. d. Is invalid & the tax will not be credited at all.

5. Which shall not form part of the gross estate of a decedent: a. Intangible personal property of non-resident alien decedent without reciprocity law b. Revocable transfer c. Transfer passing special power of appointment d. Life insurance where the executor is the beneficiary & it is irrevocable 6. All of the following are considered intangible in the Philippines, except: a. Franchise which must be exercised in the Phil. b. Shares obligations or bonds which issued by any corporation or sociedad anonym organized or constituted in the Philippines in accordance with it laws. c. Shares, obligations or bonds by any foreign corporation 75%.of the business of which is located in the Philippines. d. Shares, obligations of bonds issued by any foreign corporation of such shares, obligations or bonds have acquired a business situs in the Philippines. e. Shares or rights in any partnership, business or industry established in the Philippines. 7. A person who inherits personal property thru a will: a. Devisee c. Heir b. Legatee d. Successor 8. A person who inherits real property thru a will: a. Devisee c. Heir b. Legatee d. Successor 9. Succession wherein the decedent did not leave any will: a. Voluntary succession c. Mixed succession b. Legal succession d. Testamentary succession 10. Which statement is false about succession: a. The successor inherits all the transmissible property of a decedent including his liabilities. b. The successor can be made liable for the obligations of the decedent beyond the value of the asset he received. c. In succession, fruits and credits maturing after the death of the decedent pass to the heirs even if they were not subjected to estate tax. d. In succession, the successor can refuse the inheritance. 11. One of statement is false: a. Estate tax is an excise tax. b. Estate tax is transfer tax on donation mortis causa. c. The object of estate tax is to tax the transfer of the property from the dead to the living. d. Estate tax and inheritance tax are the same. 12. Which statement is wrong: a. Claims against insolvent person should be included in the gross estate even if uncollectible. b. Transfer passing under special power of appointment is excluded from the gross estate. c. Revocable transfers are includible whether or not the right to revoke is exercised. d. Transfer contemplation of death for adequate consideration is still includible in the gross estate. 13. Which statement is incorrect about funeral expenses allowed: a. The amount allowed is 5% of the gross estate or the actual expenses which ever is lower. b. The actual expenses must be paid from the estate or chargeable to it. c. The allowed deduction can never be more than the actual expenses paid. d. The expenses necessary for burial even if paid by friends are also allowed as deduction.

14. Which statement is incorrect about claims against insolvent persons? a. They must be included in the gross estate even if uncollectible. b. They must be duly notarized. c. The deduction is only the uncollectible portion. d. The insolvency of the debtor must be established. 15. One of the following is incorrect: a. Taxes to be deductible must accrue before the decedent’s death. b. Losses must occur also before the decedent’s death to be deductible. c. Medical Expenses must be incurred within 1 year prior to the decedent’s death. d. Transfer for public purposes order to be deducted must be mortis causa in character. 16. Which statement is false about vanishing deduction: a. It pertains to a property presently found in the gross estate. b. The property must be previously subjected to a transfer tax or income tax. c. The property was received by the decedent within 5 years prior to his death. d. The property must be located in the Philippines. 17. A donation inter vivos but due to thought of death is; a. Subject to donor’s tax b. Subject to estate tax if for inadequate consideration c. Subject to estate tax a bonafide transfer d. Subject to inheritance tax 18. In filing the estate tax return , a CPA certificate is required when: a. Gross estate exceeds P2,000,000 b. Gross estate reaches P20,000 c. Gross estate exceeds P200,000 d. Gross estate reaches P2,000,000 19. A died leaving a house and lot to B March 31, 2014 which was questioned by C and it is under litigation but the parties have stated an extra-judicial settlement. The last day for filing the estate tax return is a. April 30, 2015 c. September 30, 2014 b. April 30, 2018 d. October 30, 2014 20. The last day for the payment of estate tax may be extended, until; a. March 21, 2028 c. September 30, 2020 b. September 30, 2016 d. April 30, 2018 21. The taxpayer in estate tax is: a. The decedent b. The estate as a juridical entity c. The heirs or succession d. The administrator or executor 22. The payment of estate tax is a personal liability of a. The heirs or successors b. The administrator in testamentary succession c. The executor in voluntary succession d. The estate itself 23. 1st statement: The court may authorize the executor or administrator to distribute the estate if in its sound discretion it believes that the heir badly needs his share. 2nd statement: The administrator or any of the heirs may however upon authorization of BIR withdraw from the decedent’s bank up to P50,000 even without required certification that the estate tax has been paid. a. True, True c. True, False b. False, False d. False, True

24. 1st statement: A died giving B power to appoint a person who will inherit A’s house and lot. B, however can only choose among C, D and F. B decided to transfer the property to C, in B’s will when he was old already. The transfer from B to C is subject to estate tax. 2nd statement: During A’s lifetime, he decided to give B as gift his (A) car subject to the condition that if B does not become a CPA within 3 years. A shall revoke the transfer. In the second year however, A died. The car should form part of A’s gross estate. a. True, True c. True, False b. False, False d. False, True 25. A died leaving a farm land, In his will, he transferred the ownership thereof to B but subject to the condition that C will have the right to use the land for a period of ten years (Usufruct) in the seventh year, however, C died and C’s will be surrendered his over the land to B. a. The transfer is subject to donor’s tax b. The transfer is subject to estate tax c. The transfer is both an inclusion and exclusion from the gross estate d. The above is a tax-exempt transfer. 26. The notice of death must be filed when: a. Gross estate exceeds P200,000 b. Gross estate exceeds P20,000 c. Gross estate reaches P200,000 d. Gross estate reaches P2,000,000 27. One of the following is not an exemption or exclusion from the gross estate: a. Capital or exclusive of the surviving spouse b. Properties outside the Philippines of non-resident Chinese decedent c. Shares of stocks of San Miguel Corporation of a non-resident Mexican. d. The merger of usufruct in the owner of the naked title Questions 28 through 31 are based on the following information: A decedent left the following properties: Land in Italy (with P1M unpaid mortgage) Land in Davao City, Phil. (zonal value 750,000) Franchise in USA Receivable from debtor in Phil. Receivable from debtor in USA Bank deposit in Phil. Bank deposit in USA Shares of stocks of PLDT, Phil. Shares of stock of ABC, foreign corporation 75% of the business in the Phil. Other personal properties

P2,000,000 500,000 100,000 50,000 100,000 20,000 80,000 75,000 125,000 300,000

28. If the decedent is a non-resident citizen his gross estate is: a. P3,650,00 c. P2,500,000 b. P3,600,000 d. P2,650,000 29. If the decedent is non-resident alien his gross estate is: a. P1,195,000 c. P1,250,000 b. P945,000 d. P1,070,000 30. If in the preceding number, reciprocity law can be applied the gross estate is: a. P1,050,000 c. P1,250,000 b. P945,000 d. P1,070,000 31. Based on the original problem but assuming the PLDT shares of stocks (PLDT) are not listed in the Local Stock Exchange,& there are 1,000 shares at the time

of death, the company’s outstanding shares were 10,000 shares. Its retained earnings was P2,000,000, par value per share was P50/share. The gross estate should show the said shares at: a. Still at P75,000 c. P200,000 b. P250,000 d. P0 Questions 32 & 33 are based in the following information: Building, USA P5,000,000 House & lot in Bulacan (500 sq. meters) zonal value is P10,000 per square meter 4,500,000 Life insurance proceeds, beneficiary is the wife, the administratix, irrevocable 500,000 Life insurance proceeds with another company beneficiary, his nephew, 200,000 irrevocable Claims against a debtor who died a year ago (50% collectible) 50,000 Death benefits from US Veteran Administration 100,000 Death benefits from SSS 40,000 Paraphernal property of his surviving wife 2,000,000 He also transferred mortis causa the following: FMWFMV - Death S Price Transfer Car, Mla. P 500,000 P1,000,000 P 800,000 Land, Mla. 1,500,000 2,000,000 1,000.000 Land, USA 2,000,000 1,800,000 3,000,000 32. If the decedent is a Filipino citizen, his gross estate is: a. P10,850,000 c. P10,950,000 b. P12,900,000 d. P11,050,000 33. If the decedent is a non-resident alien and his country does not impose transfer tax on any intangible properties left by a Filipino decedent, his gross estate is: a. P5,350,000 c. P6,500,000 b. P5,300,000 d. P6,000,000 34. The gross estate of a non-resident alien is P2,000,000, 75% of which is from abroad. The actual funeral expenses totaled to P80,000, ¼ of which was paid by his employer. The deductible funeral expense is: a. P25,000 c. P6,250 b. P20,000 d. P80,000 35. Based on the preceding number (the same world G.E.) but the decedent is a non-resident citizen, the deductible funeral expense is: a. P25,000 c. P5,000 b. P60,000 d. P80,000 36. 1st statement: A note payable contracted 11 yrs. ago is a deduction from the gross estate if notarized. 2nd Statement: To be deductible, medical expenses must be paid within one year period before death. a. True, True c. True, False b. False, False d. False, True 37. 1st Statement: A decedent OFW cannot claim Family Home deduction. 2nd Statement: The liability of the heirs for estate tax is solidary. a. True, True c. True, False b. False, False d. False, True 38. Purobuto, non-resident Japanese, died leaving the following: Exclusive properties, Philippines Conjugal properties, Philippines Conjugal properties, Abroad Deductions claimed: Funeral expenses

P 560,000 420,000 1,820,000 100,000

Judicial expenses Unpaid expenses Losses: occurring 3 mos. After death due to fire Donation mortis causa to Makati City Hall Family Home (inc. above), located abroad Standard deduction The taxable net estate is: a. P210,000 b. P516,500

100,500 150,500 120,000 180,000 1,000,000 1,000,000

c. P1,900,000 d. P2,100,000

38-a. If decedent is a Filipino citizen, TNE is __________ 39. JR, administrator claims the following funeral expenses for a decedent: Expenses of interment (paid by friend) P 60,000 Cost of burial & tombstone (1/2 paid 42,000 by relatives) Other funeral parlor expenses 36,000 Expenses during the wake Before burial 13,000 Obituary notice 7,500 Card of thanks 3,500 Mourning clothing of friends 15,000 Mourning clothing of immediate family 5,000 members If the gross estate is P1,000,000 the allowable funeral expense is: a. P75,000 c. P174,500 b. P82,500 d. P 50,000 40. Based on Number 39 but the gross estate P2,500,000 the allowable funeral expenses is: a. P75,000 c. P125,000 b. P82,500 d. P93.500

is

41. Mr. Nabigla died on March 20, 2011 leaving a gross estate of P7,800,000 including a land inherited from his uncle on October 15, 2007 and a car donated to him on April 20, 2005. The following data pertain to the two properties: Unpaid FMV upon FMV upon Mortgage receipt death Land P100,000 P1,800,000 P1,250,000 Car 50,000 300,000 400,000 The decedent was able to pay ½ of the unpaid mortgage on the land before his death. The deductions are: Expenses, losses, indebtedness, taxes P1,200,000 (excluding the unpaid mortgages above but including actual funeral expenses of P300,000 and medical expenses of P600,000) Standard Deductions 1,500,000 Transfer to the Govt, included above 300,000 Death Benefits from Employer 200,000 Family home (included above) 2,000,000 The allowable vanishing deduction is: a. P213,000 c. P426,000 b. P626,000 d. P440,625 42. The taxable net estate based on the preceding number is: a. P4,056,250 c. P3,974,000 b. P5,555,300 d. P4,175,000

Farm lot Claim against an insolvent debtor Transfer in contemplation of death (gratuitous) Transfer passing special power of appointment Deduction claimed: Funeral expenses Judicial expenses Donation mortis causa to Quezon City government Unpaid mortgage on the farm lot Medical expenses (included in the funeral expense incurred within the 1 year period with receipts)

825,000 225,000 1,500,000 75,000 575,000 67,500 150,000 75,000 225,000

The farm lot was inherited 5 ½ years by the decedent before his death with a value then of P575,000 and a mortgage indebtedness of P150,000. The total deduction from the gross estate is: a. P1,867,500 c. P2,092,500 b. P867,500 d. P3,092,500 44. Based on the preceding number, the taxable net estate assuming the farm was inherited 5 yrs ago: a. P3,982,500 c. P2,757,500 b. P4,982,500 d. P2,672,329 45. Mr Kiliti, Filipino, married died leaving the following estate: Car acquired before marriage by Mr. Kiliti P 300,000 Car acquired before marriage by Mrs. Kiliti 450,000 House and lot acquired during marriage 1,500,000 Jewelries of Mrs. kiliti 100,000 Personal properties inherited by: Mr. Kiliti during marriage 250,000 Benefits from SSS 50,000 Retirement benefits from a private firm 150,000 Proceeds of group insurance taken by his employer 75,000 Land inherited by the wife during marriage 1,000,000 Income earned from the land inherited by wife(25% of which was earned after death) 200,000 The gross estate under conjugal partnership of gain is: a. P2,600,000 c. P1,950,000 b. P3,600,000 d. P2,200,000 46. Under the same problem, the gross estate under absolute community of property is: a. P2,600,000 c. P1,950,000 b. P3,600,000 d. P2,500,000 47. Mr. Malungkot died intestate on September 30, 2014. He is survived by his wife. An inventory of the estate showed the following: FMV tax declaration Zonal Value Exclusive estate of Mr. M Commercial land 700 sq. m. P 850,000 P 900/sq. m. Residential land 900 sq. m. 580,000 1,000/sq. m. Conjugal estate: Farm land, 800, sq. m. 1,300,000 700/sq. m. Residential house 750,000 Car, Toyota 200,000 Other property 280,000 Death benefits (RA 4917) 200,000

On January 1, 2014, the commercial land was mortgaged 43. Mr. Dinakahinga, head of family died on January 15, at the Phil. National Bank for P200,000 at 24% per annum. 2010, leaving the following properties and obligations: The residential house (certified family home is mortgaged Cash in bank, 50%, donated mortis causa to Natl Govt;50-% to Q.C. gov’t P 300,000 with unpaid balance of P180,000 as of the date of death). House and lot in Makati, F. Home 1,500,000 The 900 sq. m. residential land is the family home’s lot. Personal properties 1,500,000 Actual funeral expenses amounted to P250,000 but ½ of

which is non-deductible. Medical expenses reached P600,000 but ¼ only was incurred with in 1 yr before death. Judicial expenses reached P150,000. The gross estate is: a. P4,280,000 b. P4,480,000

c. P2,730,000 d. P4,160,000

48. The total deductions excluding share of surviving spouse and special deduction is: a. P655,000 c. P855,000 b. P891,000 d. P1,016,000 49. The deduction for family home is: a. P1,000,000 c. P900,000 b. 950,000 d. P750,000 50. The taxable net estate is: a. P401,500 b. P326,500

c. P201,500 d. P101,500

51. Assuming the commercial land was received as donation by the decedent from his uncle 4 ½ years ago, the TNE is __________ 52. Mr. Bombo, Filipino died on April 10, 2015 with the following data: Philippines Foreign country A Foreign country B Foreign country C

Gross Estate P 1,375,000 300,000 450,000 600,000

Deduction P 75,000 150,000 525,000 225,000

Estate tax paid P 3,7500 18,0000

The estate tax due still due is: a. P13,500 c. P14,000 b. P9,000 d. P13,250 Mr. Agawbuhay married under the regime of absolute community of property. Survived by his wife, left behind the following properties and charges upon his estate: Real property acquired during the marriage P 3,000,000 Family Home, built using community fund 1,000,000 Real property received as a gift during the Marriage 2,000,000 Lot where family home was built, inherited During the marriage 400,000 Funeral expenses 300,000 Taxes and Losses 1,300,000 Medical Expenses, with receipt, incurred within 1 year period 1,000,000 Unpaid mortgage, exclusive property 250,000 53. The allowed family home deduction is: a. P1,000,000 c. P900,000 b. P1,400,000 d. P700,000 54. The deduction for share of the surviving spouse is: a. P 2,500,000 c. P 4,000,000 b. P 1,250,000 d. P 1,500,000

55. The net taxable estate is: a. P 1,250,000 b. P 2,500,000

c. d.

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

Juan Namaalam, Filipino, married, died on January 15, 2011. Assets declared and deductions claimed by the estate are as follows: Conjugal Assets: Family Home (house) , P800,000 Manila Fishpond, Bulacan 1,000,000 Apartment, Makati 1,600,000 Shares of stock, Happy Co., 600,000 domestic Shares of stock, ABC, Inc., a foreign corporation60% 400,000 of the business is in the Phil. Cash in Bank 100,000 Exclusive of Decedent: Family Home (lot), Manila (Received as donation to him by a relative, 3 years ago with a value then of P 300,000) Deductions claimed: Funeral expenses Family home deduction Loss (Decedent has a receivable from Mr. KHO, a solvent debtor who absconded) Liability (This represents unpaid subscription shares of Kulapu Co. acquired on February 10,2009) Standard deduction (Unitemized and undocumented) Death benefits under RA 4917 Accounts payable Judicial expense 56. a. b.

P500,000

P300,000 1,300,000 500,000

200,000

1,000,000 300,000 200,000 100,000

The gross estate of Juan Namaalam is: P5,000,000 c. P6,000,000 P4,600,000 d. P5,500,000

57. The total allowable deductions from the gross estate excluding share of surviving spouse a. P1,165,000 c. P2,965,000 b. P2,465,000 d. P2,865,000

The devil smiles when we make plans. He laughs when we get too busy. But he trembles when we pray. -

Corrie Ten Boom

Do not worry about ANYTHING, But in all your prayers, ask God for what you need; Always asking HIM with a THANKFUL HEART. (Quoted)