EXERCISES ON ESTATE TAX

Exercise 1. Mr. Reyes, married to Ms. Belen, died during the current taxable year leaving the following properties:
A. Two-door commercial building inherited from his father 10 years before marriage valued at P4, 000, 000
at the time of death.
B. Seven-hectare agricultural land planted with coconut donated by his mother during marriage with a fair
market value of P2, 000, 000 at the time of death.
C. House and lot acquired during marriage with FMV at the time death of P5, 000, 000.
D. An apartment owned by Mr. Reyes before marriage with a current value of P5, 000, 000.
E. Four-hectare fishpond owned by Ms. Belen before marriage valued at P4, 500, 000.
F. Cash of P6, 000, 000 representing income from various properties that cannot be identified to which
properties it pertains.
Determine the gross estate of Mr. Reyes under the following:
A. Conjugal partnership of gains
B. Absolute community of property
Exercise 2. Mr. Pat Ayna, died leaving the following properties:
1. House and lot in Texas, USA;
2. Shares of stocks in San Miguel Corporation, a local company;
3. Shares of stocks of Ford Company, USA
4. Bank deposits in New York City
5. Savings account in BPI-Makati Branch;
6. Toyota Camry sedan registered in the name of his son aged 21 years
7. Condominium unit at the Twin Towers Building at Pasig, Metro Manila;
8. House and lot in Los Angeles, California, USA;
Enumerate which among the above properties should be included from his estate tax return if Mr. Pat Ayna is a:
A. A Filipino, residing in the Philippines.
B. A Filipino, residing in USA.
C. A US citizen, residing in the Philippines.
D. A US citizen, residing in USA.
Exercise 3. A died in 2014 leaving a will which directed all real estate owned by him not to be sold or disposed of for a
period of 10 years after his death and ordered that the property be given to B upon the expiry of that period. In
2014, the estate left by A had a BIR zonal value of P500,000. In 2019, the fair market value of said estate
increased to P2,500,000. It was declared for taxation in 2019 for P1,500,000 and the BIR zonal valuation was
P3,000,000.
What value should be used for the purpose of estate taxation?
Exercise 4. When Daddy Groovy died, he left an estate valued at P10 million. His heirs spent P700,000 for all the funeral
services rendered by St. Peter Memorial Chapel, including the expenses attendant to the wake, the coffin,
cremation services and the urn where his ashes were placed. P300,000 out of the P700,000 funeral expenses were
shouldered by friends and relatives.
How much will be deducted from his gross estate for funeral expenses?
Exercise 5. Mr. BB, single, inherited a piece of land from his father with a fair market value of P500, 000 when inherited. Two
and one-half years later. Mr. BB died still with the same piece of land, at this time the FMV is P600, 000. The
property had no mortgage on it. The gross estate, on which the land was part, was P2, 000, 000. The ordinary
deductions from the gross estate amounted to P400, 000.
Determine the vanishing deduction to be allowed as deduction from the gross estate.

Exercise 6. Miss CC, single, inherited a piece of land and a car from her mother on March 18, 2014, with a fair market value
of P800, 000 and P120, 000, respectively, when inherited. At the time she inherited the land, it was subject to
mortgage of P80, 000. During her lifetime, she paid P70, 000 on the mortgage indebtedness.
On November 30, 2016, Miss CC died. Included in her gross estate of P3, 200, 000 were the land and car that she
inherited from her mother. On November 30, 2016, the land had a FMV of P850, 000 and the car had a FMV of
P70, 000.
Deductions from the gross estate for losses, expenses, indebtedness, taxes, etc. and transfer for public use
amounted to P600, 000.
Determine the vanishing deduction to be allowed as deduction from the gross estate.
Exercise 7. Mr. DD died, with the following data on his estate:
Property inherited from his father 2 years ago, with a FMV of
P600, 000 when inherited. Fair market value
Property received as gift within the same year that Mr. DD died,
with a FMV of P1, 000, 000 when received. Fair Market Value
Cash and other properties in the estate
Ordinary deductions excluding the vanishing deductions

P1, 200, 000

800, 000
2, 000, 000
1, 000, 000

Compute how much the vanishing deduction.

Exercise 8. Dina Nakahinga, Filipino, married, died on February 14, 2015. Assets declared and deductions claimed by the
estate are as follows:
Assets, conjugal
Family Home (house) Quezon City
Fishpond, Bulacan
Apartment, Manila
Shares of stock, Good Luck Co. domestic
Shares of stock, BX Inc., a foreign Corporation 60% of the
business is in the Phil.
Cash in Bank

P
800,000
1,000,000
1,600,000
600,000
400,000
100,000

Assets, Exclusive of Decedent

Family Home (lot), Quezon City
Deductions claimed
Funeral expenses
P
Family home deduction
Loss (Decedent has a receivable from Mr. MAX, a solvent debtor
who absconded)
Liability (This represents unpaid subscription to 200 B shares of
Tililing Co. acquired on February 20, 2014)
Standard deduction (Unitemized & undocumented)
Death benefits under RA 4917
Required: Compute the following:
A How much is the Exclusive and the Conjugal Gross Estate?
A. How much is the Net Taxable Estate?

500,000
300,000
1,300,000
40,000

200,000
1,000,000
300,000

Exercise 9. Dina Nakahinga, Filipino, married, died on February 14, 2015. Assets declared and deductions claimed by the
estate are as follows:
Assets, Conjugal
Family Home (house) Quezon City
P
Fishpond, Bulacan
Apartment, Manila
Shares of stock, Good Luck Co. domestic
Shares of stock, BX Inc., a foreign Corporation 60% of the business is in the Phil.
Cash in Bank

800,000
3,000,000
3,600,000
600,000
400,000
500,000

Assets, Exclusive of Decedent

Family Home (lot), Quezon City
Personal properties in Region 2
Apartment buildings in Isabela

500,000
2,200,000
1,500,000

Deductions claimed
Funeral expenses
P
Judicial expenses
Medical expenses
Family home deduction
Loss due to fire
Uncollectible debts from Mr. MAX
Liability (This represents unpaid subscription to 200 B shares of
Tililing Co. acquired on February 20, 2014)
Standard deduction (Unitemized & undocumented)
Death benefits under RA 4917
Wagering losses
Unpaid mortgage on the apartment
Unpaid taxes

300,000
250,000
1,300,000
40,000
200,000
1,000,000
300,000
100,000
50.000
50,000

Determine the following:

A. How much is the Exclusive and the Conjugal Gross Estate?
B. How much is the Net Taxable Estate?
C. How much is the Estate tax?
Exercise 10. A citizen taxpayer died leaving the following properties:
Gross Estate*
Deductions
Tax paid

Philippines
5, 500, 000
2, 500, 000

USA
5, 000, 000
2, 000, 000
350, 000

UK
3, 500, 000
1, 500, 000
150, 000

Italy
6, 000, 000
1, 500, 000
400, 000

* The gross estate located in the Philippines excluded a house and lot, valued at P1, 600, 000, used as dwelling place
of taxpayer and its family.
Compute the following in good form:
A. The Net Taxable Estate subject to estate tax.
B. The Estate Tax Due after tax credit.