Transfer and business taxes by ampongan 6th sol man mc etx

MULTIPLE CHOICE - ESTATE TAX
TEST 1 – THEORY
1.
2.
3.
4.
5.

D
D
C
A
A

6.
7.
8.
9.
10.

C
A
C
C
D

11.
12.
13.
14.
15.

B
D
C
B
C

16.
17.
18.
19.
20.

D
C
A
D
D

21. D

26. A

31. B

36. A

22. B

27. A

32. A

37. A

23. C

28. A

33. D

38. D

24. D

29. C

34. C

39. B

25. D

30. B

35. D

40. D

41. A

46. D

51. A

56. A

42. A

47. B

52. C

57. A

43. D

48. D

53. C

58. D

44. C

49. B

54. D

59. D

45. D

50. C

55. C

60. D

TEST 2 - MULTIPLE CHOICE (PROBLEMS)
1.

Answer: A (See the solution in No.
5)

2.

Answer: A (see the solution in No.
5)

3.

Answer: A (see the solution in No.
5)

4.

Answer: C (see the solution in No.
5)

5.

Answer: B
NRA (no
Reciprocity)
P 3,000,000

Real property without
Tangible personal within

Resident
or citizen
P
3,000,000
2,500,000
700,000

Tangible personal without
Intangible personal within
Intangible personal without
Gross estate

650,000
350,000
225,000
7,425,000

350,000
.
4,050,000

Real property within

6.

Answer: C (see the Solution in No. 8)

27

700,000

NRA (with
Reciprocity)
P
3,000,000
700,00
0
.
3,700,00
0


7.

Answer: D

8.

Answer: B
Conjugal

Family home

Exclusive

P
2,650,000

Farm in Batangas
Farm in Guam
Furnitures, Manila

500,000
750,000
125,00
0
80,00
0
18,00
0
500,00
0
300,00
0
150,00
0
110,00
0
1,250,00
0
825,000 ________

6,008,000 1,250,00
0

Bank deposit
Cash (12,000 x 1 ½)
Car
Interest in partnership
Proceeds of life insurance
Accounts receivable
Patent, U.S.A.
Other personal properties
Total s
Gross estate 7,258,000
9.

Answer: A
Domestic shares

P1,000,00
0
3,000,00
0

Foreign shares
Tangible personal property
Total
Gross estate

Less: Deductions (6,000,000/10,000,000 x 1,200,000)
Net estate

10.

4,000,00
0
6,000,0
00
10,000,00
0
6,000,00
0
720,0
00
5,280,0
00

Answer: C
Shares, domestic
Tangible personal property
Gross estate
Less: Deductions (2,000,000/2,500,000 x P500,000)

28

500,00
0
1,500,0
00
2,000,0
00
400,0

00


Net estate

1,600,0
00

Tax on P 500,000
1,100,000 x 8%
Estate tax

P 15,000
88,000
103,000

Shares, domestic corporation

500,00
0
500,000
1,500,00
0
2,500,00
0

Shares, foreign corporation
Tangible personal property
Total gross estate
11.

Answer: C
Value at the time of death

1,500,00
0
1,000,00
0
500,00
0

Value of consideration
Amount includible in the gross estate

12.

Answer: D
No amount of money shall be included in the gross estate of the decedent
because the transfer is for an adequate and full consideration. This is despite the
agreement between the seller and the buyer that the transfer shall take effect upon
the death of the seller.

13.

Answer A
Actual funeral expenses

140,00
0
125,0

00
125,0
00

Limit (5% x 2,500,000)
Deductible (lower amount)
14.

Answer: B
Gross estate

2,500,00
0

Less: Deductions
Funeral expenses

125,0
00
1,125,00
0
1,000,00
0

Other deductions
Standard deduction
Net taxable estate
15.

2,250,0

00
250,0
00

Answer: D
Exclusive real property

750,00
0

29


Conjugal real property

850,00
0
450,000

Conjugal personal property
Gross estate
Less: Deductions
Ordinary Unpaid mortgage
Funeral expenses
Judicial expenses

30,000
85,000
20,000

Special Standard
Net estate
Less: Share of surviving spouse (1,300,000 – 135,000)
x½
Net taxable estate
16.

150,000
210,00
0
1,000,0
00

Standard deduction
Net taxable estate
Answer: D
Expenses incurred during the wake
Payable to funeral parlor
5% of gross estate (1,700,000 x 5%)
Deductible funeral expense

95,000
20,000

1,360,00
0
2,640,0
00

115,000

85,000
85,000

Answer: C
Loans payable

300,00
0
60,0
00
200,0
00
1,000,00
0
1,560,0
00

Bad debts
RA 4917
Standard deduction
Deductions
19.

(1,000,00
0)
915,000
582,50
0
332,50
0

4,000,00
0

Less: Deductions
Funeral expenses, actual
Other charges

18.

( 135,00
0)

Answer: A
Gross estate

17.

1,300,00
0
2,050,00
0

Answer: B
Unpaid 2007 real estate taxes
Unpaid 2008 real estate taxes
Income tax
Casualty loss
Total deductions

P 40,000
40,000
35,000
450,000
565,000

30


20.

Answer: B
Inherited land (exclusive)
Dwelling house, conjugal (850,000/2)
Family home

21.

P 200,000
425,000
625,000

Answer: B
Conjugal
Family home
Conjugal real estate
Conjugal personal property
Gross estate
Less: Deductions
Ordinary Funeral, actual

Judicial
Unpaid mortgage

950,000
2,000,00
0
2,950,000

120,000
7,000
35,000

Special Medical expenses

Net estate

Net conjugal

1,500,0
00

4,450,00
0

( 162,00
0)

2,950,00
0
202,00

0
2,748,00
0

Share (2,748,000/2)

1,374,0
00
874,00
0

Net taxable estate
22.

________

40,00
0)
(1,000,00
0)
(1,000,00
0)
2,248,0
00

Standard deduction

Less: Conjugal deductions

Total

(

Family home

Less: Share of surviving spouse
Gross conjugal

Exclusive
1,500,00
0

Answer: B
Real properties

3,200,0
00
1,100,00
0
1,500,00
0
800,000
50,000
100,00
0
6,750,00
0

Family home
House and lot, Australia

Other personal properties
Shares of stocks
Claims against insolvent persons
Gross estate

31


23.

Answer: C
Funeral expenses

120,0
00
100,000
30,000
1,000,00
0
1,250,00
0

Bad debts
Unpaid mortgage
Family home
Total deductions
24.

Answer: D
Conjugal

Family home
Conjugal personal property

2,000,000
800,000

Exclusive real estate
Gross estate
Less: Deductions
Ordinary Unpaid mortgage
Funeral expenses
Judicial expenses

90,000
124,500
16,000

Special Family home
Standard deduction

1,000,000
1,000,000

Net estate
Less: Share of surviving spouse
Gross conjugal
Less: Conjugal deductions
Net conjugal
Share (2,569,500/2)

Answer: A

26.

Answer: C

27.

Answer: A

( 230,50
0)
(2,000,00
0)
1,789,2
50

2,800,000
230,500
2,569,500
1,284,7
50
504,5
00

Net estate subject to tax
25.

2,800,0
00

1,219,7
50
4,019,7
50

(see solution in No. 26)

Conjugal
Residential land
Commercial land
House and lot, Manila
House and lot, California

3,000,000
2,000,00
0
100,00
0
200,00
0
140,00
0

Notes receivable, debtor in U.S.A.
Notes receivable, debtor in Phils.
Other personal properties

32

Exclusive

850,00
0
500,000

________

Total


Gross estate
Deductions:
Ordinary Funeral expenses
Bad debts (200,000 x 40%)
Transfer for public purpose
Vanishing deduction (Schedule 1)
Total

5,440,000 1,350,000 6,790,000
165,000
80,000
_ _____
245,000

200,000
74,757
274,757

Special
Family home

(1,000,00
0)
(1,000,00
0)
4,270,2
43

Standard deductions
Net estate
Less: Share of surviving spouse
Gross conjugal
Less: Conjugal deductions

5,440,000
245,00
0
5,195,00
0

Net conjugal
Share (5,195,000 / 2)

(2,597,50
0)
1,672,74
3

Net taxable estate
Schedule 1:
Value to take (lower value)

Less: Mortgage paid
Initial basis
Less: Deductions (400/6,790 x P
445,000)
Base
Rate (more than 4 but not more than 5
years)
Vanishing deduction
28.

Answer: B

29.

Answer: C

( 519,75
7)

P 400,000
.
400,000
26,215
373,785
20
%
74,757

(see solution in No. 29)
Conjugal

4,000,00
0
2,500,0
00

House in Cebu
House in Japan
Domestic shares
Appliances, Japan
Accounts receivable
Claims against insolvent person

85,00
0
6,585,00
0

Gross estate
Less: Deductions
Ordinary Funeral expenses, limit

200,00

33

Exclusive

Total

100,00

0
450,0
00
135,000
_______
685,0
00

7,270,0
00


0
120,000
65,000
85,000
50,000

Claims against the estate
Unpaid mortgage, Japan
Bad debts
Unpaid mortgage, Cebu

( 520,00
0)

Special Family home

(1,000,00
0)

(1,000,00
0)
4,750,0
00

Standard deductions
Net estate
Less: Share of surviving spouse
Gross conjugal

6,585,0
00
520,0
00
6,065,0
00

Less: Conjugal deductions
Net conjugal
Share (P 6,065,000 / 2)

(3,032,50
0)
1,717,50
0

Net estate subject to tax
30.

Answer: A

Lower value
Less: Mortgage paid
Initial basis
Less: Deductions (300/3,000 x 95,000)
Base
Rate (more than 4 years, not more than 5
years)
Vanishing deduction

P
350,000
50,0
00
300,0
00
9,50
0
290,5
00
20
%
58,1
00

Note: Bequests to charitable institutions and medical expenses are not included in
the multiplier deductions. Only the deductions under ELIT and Transfers for
Public Purposes, if any, are part of said deductions.
31.

Answer: A (see solution in No.

34)

32.

Answer: D (see solution in No. 34)

33.

Answer: A (see schedule 1 below)

34.

Answer: A
Real property
Personal properties, Canada

2,960,000.00
1,300,000.0
0
670,000.0

Real and personal properties

34


0
2,500,000.0
0
7,430,000.0

0

Family home, Canada
Gross estate
Less: Deductions
Funeral expenses

P
200,000.00
850,000.
00
1,786,056.
50

Other deductible expenses
Vanishing deduction (Sche. 1)
Net estate
Less: Other deductions
Family home
Standard deductions

P

1,000,000.
00

Net estate subject to tax

2,836,056.5
0

4,593,943.5
0
1,000,000.0
0
3,593,943.5
0

Note: To be deductible, a family home must be situated within the
Philippines.
Schedule 1: Vanishing deduction
Lower value
Less: Deductions (pro-rated) (2,600/7,430 x
1,050,000)
Base
Rate (more than 1 year but not more than 2
years)
Vanishing deduction
35.

Answer: B
House (conjugal)
Land
Family home

36.

P 800,000
400,000
1,200,000

Answer: A
House (800,000 x ½ )
Land
Deductible family home

37.

P 400,000
400,000
800,000

Answer: C
Lot, Davao City
Other tangible properties
Gross estate

38.

P2,600,000.
00
367,429.3
0
2,232,570.7
0
80
%
1,786,056.5
0

P 500,000

500,000
1,000,000

Answer: D
Funeral expenses
Judicial expenses
Claims against the estate

200,000
5,000
25,000

35


Total

230,000

(1,000,000/2,500,000 x 230,000)
39.

92,000

Answer: B
Lower value
Less: Mortgage paid
Initial basis
Less: Deductions
Funeral

Judicial
Bad debt
Unpaid mortgage (60,000 – 20,000)
Bequest to Naga City
Total
(150,000/5,000,000 x P350,000)

170,00
0
20,000
150,000
180,000
50,000
50,000
40,000
30,000
350,000
10,50
0
139,500
40%
55,800

Base
Rate
Vanishing deduction
40.

Answer: B
Lower value

Less: Mortgage paid
Initial basis
Less: Deductions (pro-rated)
(400,000 / 5,000,000 x 350,000)
Base
Rate
Vanishing deduction

41.

400,000
.
400,000
28,000
372,000
20%
74,400

Answer: D
Conjugal Family home

1,500,00
0
2,500,00
0
300,000
50,00
0

Other properties

Car
Claims against insolvent
Exclusive Land
House

250,000
400,000

Gross estate
Less: Deductions
Ordinary Conjugal
Judicial expenses
Bad debts

Funeral expenses
180,000
50,000
50,000

Exclusive

36

280,00
0

4,350,00
0
650,00
0

5,000,0
00


Unpaid mortgage (60,000 – 20,000)
40,000
Bequest to Naga City
30,000
Vanishing deduction on land (No. 42) 55,800
Vanishing deduction on house (No. 43) 74,400
Special Medical expenses
Family home (1,500,000/2)
Standard deduction

200,20
0
20,000
750,000
1,000,00
0

Net estate
Less: Share of surviving spouse (4,350,000 –
280,000) x ½
Net taxable estate
42.

Answer: B (see Solution in No. 44)

43.

Answer: B (see Solution in No. 44)

44.

Answer: D
Property, within
Property, without

(1,770,00
0)
2,749,80
0
2,035,00
0
714,80
0

2,000,000
3,000,00
0
5,000,00
0

Total
Gross estate
Less: Deductions
Funeral expenses (2,000,000 x 5%)
Unpaid mortgage, within
Total

(2/5 x P350,000)

2,000,000
100,000
250,000
350,000
140,00
0
1,860,00
0

Net taxable estate
45.

( 480,20
0)

Answer: A
Personal property within
Real property within
Personal property without
Real property without
RA 4917
Gross estate
Less: Deductions
Ordinary Funeral (2,000,000 x 5%)
Judicial
Claims against the estate
RA 4917

700,000
600,000
300,000
300,000
100,000
2,000,000
100,000
120,000
30,000
100,000

Special Standard deduction
Medical expenses
Net taxable estate

( 350,00
0)
(1,000,000)
(
85,000)
565,000

37


46.

Answer: D
Net estate, Philippines
Net estate, United States

3,000,000
1,000,00
0
4,000,00
0

Total net estate
Tax on P 2,000,000

135,00
0
220,00
0
355,00
0

2,000,000 x 11%
Estate tax
Less: Tax credit
Tax paid, US
80,000
Limit (1/4 x 355,000)
88,750
Allowed (lower)

80,00
0
275,00
0

Estate tax due after tax credit
47.

Answer: B
Net estate, Philippines

600,00
0

Net estate, Japan

300,00
0
100,00
0

Net estate, United States
Total
Tax on P 500,000
500,000 x 8%
Estate tax
Less: Tax credit
Tax paid, Japan
P30,000
(3/10 x 55,000)
16,500
Allowed
Tax paid, US
4,000

400,00
0
1,000,00
0
15,000
40,00
0
55,00
0

16,500
P
(1/10 x 55,000)

5,500
Allowed

4,00
0
20,50
0
22,00
0

Total credits, 1st limit
2nd limit (4/10 x 55,000)
Credit Allowed (lower)

20,50

0
34,50
0

Estate tax due after tax credit

38


48.

Answer: C
Net taxable estate, Philippines

3,000,00
0
1,000,000
4,000,000

Net taxable estate, United States
Total
On P 2,000,000

135,00
0
220,00
0
355,00
0

2,000,000 x 11%
Estate tax
Less: Tax credit
Tax paid in US (squeeze)
80,000
Limit (1/4 x 355,000)
88,750
Credit allowed (lower)

80,00
0
275,00
0

Estate tax due after tax credit
49.

Answer: A
Gross estate, Philippines
Less: Deductions, Phils.

4,000,000
3,000,00
0
6,000,00
0
2,000,00
0

“A” foreign country

Deductions, “A” foreign country
Net estate
Less:
Share of surviving
spouse
Net taxable estate

(5,000,000 x 60%) /
2

Tax on P 2,000,000

50.

4,000,00
0
5,000,00
0
1,500,00
0
3,500,00
0

135,00
0
165,00
0
300,000

1,500,000 x 11%

Estate tax due
Less: Tax credit
Tax paid, “A” foreign
country
Limit (4/5 x 300,000)
Estate tax payable

1,000,0
00

124,500
240,000

124,500
175,50
0

Answer: D
Net estate, Philippines

500,00
0

Net taxable estate, Japan

300,00
0
( 50,000
)

Net taxable estate, US

39


Net estate, Hongkong

450,00
0

Total net estate
Tax on P 500,000
700,000 x 8%

700,0
00
1,200,0
00
15,000
56,00
0
71,00
0

Estate tax
Less: Tax credit
Tax paid, Hongkong
P 45,000
Limit (450/1,200 x
26,625

71,000)
Allowed
Tax paid, Japan
P 20,000
Limit (300/1,200 x
17,750
71,000)
Allowed
Total credits, 1st
limitation
2nd limitation (700/1,200 x
71,000)
Estate tax due

40

26,625

17,750
44,375
41,417

41,417
29,583