CDD: Estate Taxation

CDD In-house CPA Review
Rex B. Banggawan, CPA, MBA
TAXATION
TRANSFER TAXATION: ESTATE TAXATION
Succession – a mode of transmission of the ownership, rights, interests and obligations
over property by reason of death of the owner in favor of certain persons designated by
the owner himself or by operation of law.
Elements:
1. Decedent – the person who died whose properties, rights and obligations are
transmitted
2. Successor – the person to whom the property, rights and obligations of the decedent
will pass
3. Estate – the properties, rights and obligations of the decedent (inheritance)
Kinds of succession:
1. Testate (Voluntary) – succession is carried out according to the wishes of the testator
expressed in a will executed in the form prescribed by law
2. Intestate (Involuntary) – succession without a will or with one invalid, succession will
took effect by operation of law
Estate Tax – tax on the privilege of the decedent to transmit his estate at death to his
lawful heirs or beneficiaries
GROSS ESTATE
General Principles:
1. The properties of citizens and resident aliens located within or outside the Philippines
shall be included in gross estate
2. The properties of non-resident alien located within the Philippines shall be included in
gross estate; however, intangible properties within the Philippines shall be subject
to reciprocity.
There is exemption reciprocity only when:
1. the foreign country of the non-resident alien do not impose estate tax
2. the foreign country of the non-resident alien to which he or she is a resident allows
the same exemption for intangible properties for non-residents
GROSS ESTATE COMPUTATION
Properties existing at the point of
death
Taxable transfers
Exempt transfers
Exclusion by law
Gross estate

XXX
XXX
(XXX
)
(XXX
)
XXX

Taxable Transfers – transfers with insufficient considerations
1. transfer in contemplation of death as distinguished from motives associated with life
2. revocable transfers
3. properties passing under a general power of appointment
Exempt Transfers – no title to property
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 fideicomissary
3. the transmission from the first heir, legatee, or donee in favor of another beneficiary,
in accordance with the desire of the predecessor (special power of appointment)
Exclusion in the gross estate of a citizen or resident alien decedent by law:
1. all bequest, devises, legacies or transfers to social welfare, cultural and charitable
institution, no part of net income of which inures to the benefit of any individual;
provided, however, that not more than 30% of the said bequest, devises, legacies or
transfers shall be used by such institutions for administration purposes
2. separate property of the surviving spouse
Taxation by Rex B. Banggawan,CPA, MBA

Page 1 of 14

00 for citizen or resident alien 8. standard deduction for citizen or resident alien decedent only of P1. storm. family home with maximum value deductible not to exceed P1.000. Usufruct – consider into account the probable life of the beneficiary in accordance with the latest Basic Standard Mortality Table. the loss is not compensated by insurance or otherwise b. net share of the surviving spouse in the conjugal partnership property or community property as diminished by the expenses properly chargeable to such property shall be deducted from the estate Deductible Amount of Expenses. it is expressly provided by the donor or testator that they shall form part of the community property 3. Fair market value as shown in the schedule of values fixed by the Provincial or City Assessors Fair Value – the price at which property would change hands between a willing seller and a willing buyer. or embezzlement Requisites for deductibility of losses: a. executor or administrator 4. Judicial expenses for the testamentary or intestate proceeding – unlimited 3. shipwreck or other casualty 4. neither of whom is under compulsion to sell or to buy MARRIED DECEDENTS A. property acquired before the marriage by either spouse who has legitimate descendants by a former marriage.000.CDD: Estate Taxation 3. the appraised value of the property as of the time of death shall be whichever is higher of: a. ABSOLUTE COMMUNITY OF PROPERTY Exclusive Property: 1. (same rule apply with annuity) 2.000. proceed of GSIS policy or benefits from GSIS 6. except the fruits of such property. citizen or resident alien – deductible fully b. Indebtedness. and Taxes: 1. Conjugal Property – all other properties are presumed to be conjugal (gains from labor and fruits of exclusive property) DEDUCTIONS FROM GROSS ESTATE 1. proceed of irrevocable life insurance policy payable to beneficiary other than the estate.00 5.CPA. Losses. except jewelry. Fair market value as determined by Commissioner b. except fruit of such property 2. non-resident alien – the deductible amount shall be the prorated total world ELIT by which the Philippine gross estate bears with the total world gross estate 2. that which one acquired after the marriage by gratuitous title ( e. Banggawan.00 6. Community Property . that which one already owns before his or her marriage. Losses due to theft. Indebtedness and Taxes (ELIT) a. donation or inheritance) or by exchange with an exclusive property.all other properties owned by the spouses after marriage or acquired thereafter B. CONJUGAL PARTNERSHIP OF GAINS Exclusive Property: 1.000.000 2.g. property for personal and exclusive use of either spouse. Losses. Losses due to fire. the loss is not claimed as a deduction in the estate income tax return Taxation by Rex B. Expenses. medical expenses paid or incurred within 1 year prior to decedent death duly substantiated with receipts but not to exceed P500. However. deductions for properties previously taxed (vanishing deductions) 4. and the fruit of such property 2.000. Properties – the estate shall be appraised at its fair value as at the time of death. MBA Page 2 of 14 . retirement benefit received by employees of private firms form private pension plan approved by the BIR under RA 4917 7. proceeds of group insurance taken out by a company for its employees 5. benefit received from SSS Valuation of the Estate: 1. robbery. Funeral expenses – Limit: 5% of the gross estate but not exceeding P200. property acquired during the marriage by gratuitous title by either spouse and the fruits thereof. transfer for public purpose (government or any political subdivisions) 3. unless.

or from the donor. unpaid mortgage. 9. Compute the final basis by reducing the initial basis by an amount representing what the initial basis bears with the gross estate to the expenses. a statement showing the disposition of the proceed must accompany the estate tax return.e. property is part of the gross estate of the present decedent situated in the Philippines 2. Compute initial basis by deducting from initial value any encumbrances or liens on the property that are paid by the present decedent where such lien or encumbrances are deductions on the prior decedents gross estate or on the donor’s taxable gift. 8.e. Determine the vanishing deduction by multiplying the final basis by the corresponding rate that apply for the time period from the point the property was transferred by the prior decedent (i. the property subject to vanishing deduction can be identified as the one received from the prior decedent. indebtedness and taxes (ELIT) and transfer for public purpose. c.based on the interval of the death of the present decedent and the time of death of the prior decedent or the date of gift whichever is relevant More Not more Percenta than than ge 1 year 100% 1 year 2 year 80% 2 year 3 year 60% 3 year 4 year 40% 4 year 5 year 20% 5 year 0% How to compute Vanishing Deductions? 1. 4. MBA Page 3 of 14 . or can be identified as having been acquired in exchange for the property so received. where the value of the decedent’s interest. the estate tax on the prior transfer or the gift tax on the gift must have been paid. Family Home  composed of the land and the dwelling house to which the decedent and his family resides  shall be included in gross estate at whichever is higher between its zonal value and assessed value at the point of death of the decedent Requisites: 1. 3. 2. 7. where the value of the decedent’s interest therein is included in gross estate claims against the estate: Debt instrument – notarization at the time of incurrence. or of the taxable gift of the donor. losses. Determine the initial value which is whichever is lower between the fair market value of the property used in computing the first transfer tax paid (estate or donor’s tax) and the fair market value of the property in the present decedent.: date of gift). 6. 3. is included in the gross estate income tax on income prior to the death of the decedent property taxes which have accrued prior to death of decedent Vanishing Deduction Requisites: 1. and 6.CPA. the property acquired form part of the gross estate of the prior decedent. To illustrate: Initial Basis Gross Estate x ELIT plus transfer for = public purpose Prorated deduction to initial basis 4. Banggawan.CDD: Estate Taxation 5. the estate of the prior decedent has not previously availed of the vanishing deductions Percentage of Vanishing Deduction: . undiminished by the mortgage. 1992 Taxation by Rex B. the present decedent acquired the property by inheritance or donation within 5 years prior to his death. 5. death of the decedent shall be after July 28. the loss must occur not later than the last day for payment of the estate tax (6 months from the decedent’s death) claims of the decedent against insolvent person. if contracted within three years before the death of the decedent.: point of death) or by the donor (i.

xxx.xxx.xxx.xxx.x x) ( 1.xx xxx.xxx ( xxx.xxxP xxx.xxx xxx.xxx.xxx.xxx.00 5.xx ( x. it is a deduction from either common or personal property or separate properties of the decedent NET TAXABLE ESTATE Unmarried decedent Real Properties Personal Properties Gross Estate Ordinary Deductions: Funeral Expenses Other Deductions Special Deductions: Family Home Standard Deductions Medical Expenses Net Taxable Estate P xx.xx xxx.000. as certified by the Barangay Captain of the locality where the family home is situated 4. 00) ( xxx. the family home must be the actual residence of the decedent and his family at the time of death.CPA. xx P x.xxx.xx xxx.000 xxx.xxx.xxx.xxx.xxx. MBA Plus x% of excess over - Page 4 of 14 . deduction cannot exceed whichever is higher between the zonal or assessed value at the time of death and P1.xxx P xxx.xxx.xxx.xxx.000.xxx- Married Decedent Real property Personal property Gross Estate Ordinary Deductions: Funeral Expenses Other Deductions Net Estate after OD Special Deductions Family Home Separate Common P x.xx ( x.xxx.000 Exempt Taxation by Rex B.xxxP xx.xx x.000.xxx.xxx.xxx.xxx.xx ( xxx.xxx.xx xxx.xx Total P xx.xxx.CDD: Estate Taxation 2.x x) Px.xxx.xxxP xx.xxx.xxx 1.000.xxx) x.xxx. xx) P x. xx P x.xxx.xxx.x x) Px.xxx.xxx.xxxxx.xxx. Banggawan.xxx.xxx.000.xx xxx.xxx.xxx.xxx. xx P x.xxx.xxx.xxx.xx P x.xxx.xx Standard Deductions Medical Expenses Net Estate Less: Share of surviving spouse x½ Taxable net estate ESTATE TAX TABLE: Over - Not Over P 200. total value of the family home must be included in gross income 3.xxx. xx P x. xx P x.

000. Banggawan.000 10. shares of stock Taxation by Rex B. the gross value of the estate exceeds P200. Authorized Agent Bank 2. motor vehicle 3.00 0 Tax Credit for Estate Tax Paid to a Foreign Country: .000 2. to: 1. but is not limited. irregardless of the value of the gross estate – clearance from the BIR is a condition precedent to the transfer of title to registrable property Registrable Properties includes. real property 2. Office of the Commissioner.000.000.000 5.000. when gross estate consists of registered or registrable property.000 135.the deductible tax credit shall be whichever is lower of the amounts as computed by the following limits (A and B) similar to deductible tax credit in income taxation: A. Total tax credit per foreign country The deductible amount per foreign country shall be whichever is lower between the actual estate tax paid to the foreign country and the amount representing what the net foreign estate on that country bears to the total net estate multiplied by the Philippine estate tax To illustrate: x Net estate on a foreign country Net world estate vs.000 10. if there is no legal residence in the Philippines Notice of Death is required only when: 1.000 500. the gross value of the estate exceeds P20.000 10.CDD: Estate Taxation P 200.CPA.000 5% 8% 11% 15% 1. Duly authorized Treasurer of the City of Municipality with which the decedent was domiciled at the time of his death 5.000 5.00 0 - P 0 15.000.000.000 2. even if exempt from tax 3. Revenue District Office 3.000. Collection Agent 4.claimable only by individual whose taxable estate comprise of properties within and outside the Philippines (citizens and resident alien) .000 2. even if tax exempt Filing of an Estate Tax Return is required only when: 1.000.00 0 500.000 20% P 200. Philippine estate tax due Actual amount paid B.000 500. the transfer is subject to tax 2.215.000 465.000.000.000 5. Total prorated tax credit for all foreign country To illustrate: Total foreign net estate x Philippine estate tax Net world estate BIR Reporting and Filing Requirements: Written Notice of Death Filing of Estate Return Payment of Tax Tax Extrajudicial Settlement 2 months after death 6 months after death Upon filing of the return Judicial Settlement 2 months after the time the executor or administrator qualifies 6 months after death Upon filing of the return Where to file? 1. the transfer is subject to tax 2.000. MBA Page 5 of 14 .

tax due and payable Extension of Filing  The Commissioner shall have authority to grant. All bequest. administrator d. a reasonable extension not exceeding thirty (30) days for filing the return. The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the fideicomissary d. Non-resident alien c. conditioned upon the payment of the said tax in accordance with the terms of the extension. devise or legacies or transfers are used for administration purposes c. or administrator. I. Transfers with a right to revoke but not exercised by the decedent to the time of his death c. if the fair value at the time of death is lesser than the consideration given. except a.  When the Commissioner finds that the payment on the due date of the estate tax or of any part thereof would impose undue hardship upon the estate or any of the heirs. DRILL PROBLEMS: 1. he may extend the time for payment of such tax or any part thereof not to exceed five (5) years. be subsidiarily liable for the payment of such portion of the estate tax as his distributive share bears to the value of the total net estate. the value to include in gross estate is the fair value of the property at the time of death.  If an extension is granted. legatee. except? a. as the case may be. in meritorious cases. the estate b.000. itemized deductions 3. A legatee. The transmission from the first heir.00. In taxable transfers.CDD: Estate Taxation CPA Certification is required only when the value of the gross estate exceeds P2. In such case. Properties passing under general power of appointment 4. decedent 2. Merger of the usufruct in the owner of the naked title b. in case the estate is settled through the courts. voluntary succession d. legacies and transfers to social welfare. any consideration given by the counterparty is treated as an obligation deductible to gross estate II. the Commissioner may require the executor. Banggawan. The following transfers are taxable. Transfer passing under special power of appointment b. or fraud on the part of the taxpayer. the amount in respect of which the extension is granted shall be paid on or before the date of the expiration of the period of the extension. tangible or intangible wherever situated. Resident alien Non-resident citizen d. devise. cultural and charitable institution no part of the income of which inures to the benefit any person and not more than 30% of such bequest. to furnish a bond in such amount.000. and the running of the Statute of Limitations for assessment as provided in Section 203 of this Code shall be suspended for the period of any such extension. or donee in favor of another beneficiary. itemized asset of the decedent with valuation 2. donor 3. The following transfers are exempt and hence excluded from gross estate. In taxable transfers. intentional disregard of rules and regulations. intestate c. A decedent who died without a will or with an invalid one is called a. Transfer in contemplation of death d. testate b. except? a. in accordance with the desire of the predecessor 6. successor c. real or personal. heir or devisee is also known as? a. not exceeding double the amount of the tax and with such sureties as the Commissioner deems necessary.  Where the taxes are assessed by reason of negligence. or two (2) years in case the estate is settled extrajudicially. or beneficiary. Gross estate includes all his property. no value is included in gross estate Taxation by Rex B. MBA Page 6 of 14 . no extension will be granted by the Commissioner. 5. Beneficiary shall to the extent of his distributive share of the estate. Resident citizen b.CPA. Such certification to include: 1.

Livestock. Separate properties of the surviving spouse 9. 11. Land situated outside the Philippines. if at the date of transfer the fair value is higher than the consideration received. time of transfer 140.000 FMV.000 100.000 The amount to be included in the gross estate of A is a. Benefits claimed by the surviving spouse as arising from GSIS policy but no adequate documents could be presented in support thereof d. obligations or bonds issued by any foreign corporation if such shares. Accounts receivable. b. obligations or bonds issued by any corporation or sociedad anonima organized or constituted in the Philippines in accordance with its laws. obligations or bonds issued by any foreign corporation 85% of the business of which is located in the Philippines. do not have an estate tax law. obligations or bonds issued by a non-resident foreign corporation. Taxation by Rex B. 8. 13. d. a. d. Investment in stock in a Japanese corporation.000 100. II only 7. I only b. the rule of reciprocity applies: I.000 100.One of the following is not included in the gross estate of a citizen decedent: a. The reciprocity on exemption of intangible properties located in the Philippines of non-resident aliens may apply on the following conditions. except when the foreign country where the non-resident alien is a citizen a. c. Even if physically existing at the time of death. P110. Benefits received from group insurance.000 Consideration received 100. b. c.000 70. Only II is correct. American residing in the US. With respect to intangible personal properties situated in the Philippines.For estate tax purposes. When the decedent is a non-resident alien. time of death of A 120. Car situated within the Philippines. Neither I nor II are correct. Shares. P410. has estate tax only to residents or citizens therein. Filipino residing in the Philippines. P100. Both I and II are correct. except? a. d. a. c.For estate tax purposes. Properties arising from proceeds of a life insurance irrevocably designated to the wife b. c. Shares. obligations or bonds have acquired business situs in the Philippines.One of the following is not an intangible personal property situated in the Philippines: a. 14.000 c. has no income tax imposed on income earned by the estate but imposes transfer taxes. Banggawan. b. b. the fair value at the time of death is included in gross estate regardless of whether at the time of death the value of the property is lower than the consideration given Which is correct? a. American residing in the Philippines.000 d. I and II only c. In taxable transfers. c. II and III only d. the following are not included in gross estate. b.CDD: Estate Taxation III.000 FMV. Shares. d. Benefits received from GSIS c.000 80.000 to the following: D E P P 100. b. Shares.000 80. d.000 b.000 100. Filipino residing in the US. A made the following transfers inter – vivos B C P P Cost 100. Bank deposit. one of the following is not an intangible personal property.000 90. Investment in stock. MBA Page 7 of 14 . has estate tax only to properties of a citizen thereon regardless of nature. II. P130.000 0 120.000 10. c. d. Only I is correct.CPA.000 140. 12.The gross estate of this decedent shall be comprised of properties situated in the Philippines only: a.

All properties enumerated above c. Bank deposit. The amount is a transfer in contemplation of death. died in 2005. None of the properties enumerated above 17. Banggawan. thereafter to C or his estate.CPA. IT was agreed by X and Y that the transfer of ownership will take after X’s death. a. thereafter to Y or his estate. House and lot.000 at the time of his death. New York. Shares of stock in San Miguel Corporation. A Villa in Switzerland. The transaction is a transfer for insufficient consideration. Only property a.Using the same data in the preceding question.000 shall be included in the gross estate. Only properties d. Rent income on property that accrued before death 21. g. USA b. Only property d.500. B dies before the six (6) years lapsed.X. Both transfers are exempt from estate tax c. died in the United States of America in 2005.200. The first transfer is exempt. Only property f b. Transfer passing under general power of appointment c. e. Both transfers are with retention and reservation of certain rights.Case I – X transfer shares of stock of Y on the condition that X shall receive or enjoy the dividends during X’s lifetime. Only properties a and d 18.500. The transaction is a bona fide sale for adequate consideration. an American domiciled in South Africa. Shares of stock in PLDT. All properties enumerated above except f d. a foreign corporation where 85% of its business is in the Philippines. which of the following statement is correct? a. hence. The transaction is a transfer for inadequate consideration. 16. Philippine National Bank. Juan Cruz. The first transfer is taxable. c.. All properties enumerated above except e and f b. income payable to himself for six (6) years. hence.000 shall be included in the gross estate b. b. Manila. registered in the name of his 21-year old son The Philippine gross estate shall consist of: a.One of the following is not included in the gross estate of a decedent a. hence. b. He left the following property: a. Shares of stock in Union Corp. e. All properties enumerated above c. The said property was sold by X during his lifetime to Y for P700. the second is exempt d. Shares of stock in LA Corporation.Mr. Shares of stock transferred in contemplation of death c. California. Case II – B makes a transfer of property in trust. and d. domestic corporation c.000 shall be included in the gross estate d. Time deposit. f. USA apartment leased to the Philippine Consulate.000. and f. owns a property valued at P1. Filipino citizen. hence taxable b. Lease contract over his Manhattan. Cash dividend that accrued before death b. Bank deposit. Transfer with reservation and retention of certain rights b.000 when it was valued at P1. USA d. None of the property enumerated above. MBA Page 8 of 14 . Car. Philippines. He left the following properties: a. d. decedent. the amount of P1. USA. For Philippine estate tax purposes.John Johnson. Transfer for adequate and full consideration d. Land held in trust but in the decedent’s possession before death d. Rest house in Hawaii. the amount of the P500. e and f d. the second is taxable 20. Taxation by Rex B. Transfer in contemplation of death 19. c. the amount of P800.. b. hence. Tax-free long term Philippine government bonds f. no amount shall be included in gross estate c. BPI-Manila e. assuming there is reciprocity.CDD: Estate Taxation 15. First Bank of California. John Johnson’s Philippine gross estate shall consist of: a. d.One of the following transfers is not included in gross estate a. John Johnson’s Philippine gross estate shall consist of: a. All property enumerated above.

Banggawan. Transfer from the first heir to a second heir designated by the decedent d.Which of the following value is not generally used for estate valuation purposes? a. In 2002.Case I – Y devised in his will a piece of land. No. Proceeds of group insurance taken out by a company for its employees 24. the fair market value of said estate increased to P3. cultural and charitable institutions the administration expenses of which do not exceed 30% of such bequest. To settle family litigated and unlitigated disputes b.Which of the following proceeds shall be included in the taxable gross estate? a. legacies or transfers to social welfare. devises. Amount receivable by any beneficiary designated in the insurance policy d. The assessment of the Commissioner is incorrect because estate tax is not subject to any assessment. thereafter to B. The merger of the usufruct in the owner of the naked title d. legacies or transfers to social welfare. The transmission from D to his son E is subject to tax. b. Case II – Z devised in his will real property to his brother D who is entrusted with the obligations to preserve and to transmit the property to E. when he becomes of age.000 correct? a.000. a son of D.The following are transactions and acquisitions exempt from transfer taxes. irrevocably designated in the policy by the insured c. Only the first statement as to the taxability and non-taxability of the transmissions is correct d. The assessment of the Commissioner is correct because it was based on the value at the time of assessment. All bequests.000. Death benefits received from SSS and GSIS 26. devises. MBA Page 9 of 14 . Yes.Which of the following exempt transactions will still require the inclusion of the property in the gross estate? a. c. No.CPA. The assessment of the Commissioner is incorrect because the assessment should have been based on the fair market value at the time of death which is P1. the estate left by X had a fair market value of P1.000. Merger of the usufruct in the owner of the naked title b. The assessment of the Commissioner is correct because on matters of assessment he has the authority to determine the value to be assessed. Taxation by Rex B.One of the following is not a motive which precludes a transfer from category of one made in contemplation of death. b. Amount receivable by any beneficiary. Fair market value at the time the return is filed. legacies or transfers c.000 and the Commissioner of Internal Revenue assessed thereon estate tax based on P3. Both statement as to the taxability and non-taxability of the transmissions are incorrect c.000. Both statement as to the taxability and non-taxability of the transmissions are correct b.000. 28. Is the Commissioner’s assessment based on P3. in 1990. To relieve the donor from burden of management 23. To save on donor’s and estate tax d. Transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the fideicommissary c. except a. cultural and charitable institutions 25. Bequest. a.000.CDD: Estate Taxation 22. naked title to B and usufruct to C for as long as C lives. To reward services rendered c. a.000. devises. Yes. The transmission from Y to B and C is subject to estate tax but the merger of the usufruct and the naked title in B upon the death of C is exempt. Only the second statement as to the taxability and non-taxability of the transmission is correct 27.X died in 1990 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 Y upon the expiry of the 10-year period. Fair market value at the time of death. Transmission from the first heir or donee in favor of another beneficiary in accordance with the desire of the predecessor b. Insurance proceeds from SSS and GSIS b.000. d.

Banggawan. Acquisition cost. d.Properties owned before marriage and brought into the marriage are generally classified as: I. 33. d. c. Both I and II are incorrect. 31. d. Book value or acquisition cost. b. Properties acquired during the marriage by gratuitous title. The necklace was for the exclusive use of the woman. Only II is correct. b. the expensive coat shall be classified as: a. Book value. Exclusion from the gross estate. Conjugal properties under conjugal partnership of gains. c. Both I and II are correct. b. the man gifted his woman an expensive diamond necklace. Both I and II are correct. in case of shares of stock not traded in the local stock exchange. Complete separation of properties. c. Properties inherited by the spouses before the marriage. b. Conjugal properties under conjugal partnership of gains. Communal property. however. d. Shortly thereafter. Properties acquired by change. He was survived by his wife and children.During the engagement ceremony before their marriage. 36. Common and capital properties. One of the following. Properties acquired by the spouses as donation before the marriage. assuming the man died and was survived by the woman and they were under absolute community of properties? a. the husband died. c. Properties acquired using the salary of either spouse earned before the marriage. Fair market value.The community properties shall include all properties owned by the spouses at the time of the celebration of the marriage or acquired thereafter.CPA. Exclusive property of the surviving spouse. the property relations of the spouses who married on or after August 3. X died. 37. Exclusive property of the husband-decedent. d. Exclusive property of the wife-surviving spouse. such as winning from gambling or betting. Only I is correct. 32. b.Which of the following is an exclusive property? a. b. d. Common and paraphernal properties. c. Excluded from the gross estate.The net fruits as well as the income received during the marriage from the exclusive properties of the spouses are classified as: I. Properties acquired before marriage by either spouse who had legitimate descendants by a former marriage. b. 29. d.In the absence of a marriage settlement. The gross estate of Mr. c. How would this necklace be classified for Philippine estate tax purpose. Acquisition cost or fair market value whichever is higher. 35. Zonal value or value per tax declaration whichever is higher. Taxation by Rex B.Mr. Common. Absolute community of properties. Exclusive property of the husband-decedent. capital and paraphernal properties. b. Common properties only. c. Only II is correct. Only I is correct. the wife bought an expensive coat for his husband using her salary earned during the marriage. assessed value o zonal value whichever is the highest in case of real property. For Philippine estate tax purposes. II. a. c. Conjugal partnership of gains.CDD: Estate Taxation c. Properties acquired during the marriage using common fund for the exclusive use of one of the spouses. or when the regime agreed upon is void. c. Both I and II are incorrect. Common property. b.Real properties owned by the decedent at the time of death shall be valued at: a. 34. Properties acquired through occupation such as fishing or hunting. The couple had exclusive and common properties. d. 1988 shall be governed by: a. None of the choices. d. whichever is clearly determinable. is not a community property. II. Exclusive properties under absolute community of properties a.During their last anniversary. X would include: a. Exclusive properties under absolute community of properties a. MBA Page 10 of 14 . 30. d.

650. 3 years c.000 shares. c. Both answers are correct. par value per share was P50.000 42.The executor and the designation is __________ 46. Only B is correct.Based on the above problem but assuming that the PLDT shares of stocks are not listed in the local stock exchange.000 80.Using the above data.The estate should be valued at the time a. The gross estate should show the said shares at a. and there are 1.000 d.600.000 70. 4 years Taxation by Rex B. 5 years Page 11 of 14 .000 300. a. Both answers are incorrect. P1. b. P1.195.500. if the decedent is a non – resident alien.If the preceding number reciprocity law can be applied.000 P2.320.The estate and the designation is __________ 45. Irrevocable d. 4 years d.000 100. Still at P75. B. partly irrevocable Proceeds of life insurance shall be included in the gross estate if the beneficiary designated is: 44. MBA d. 39.650.000 b. P3. choose from the following choices: a. 5% of the gross estate or the actual funeral expenses whichever is lower d.000 whichever is lower b.The administrator and the designation is __________ 47. the company’s outstanding shares were 10.000.000 c. Actual funeral expense or P200. Yes. P1. P3.000 500. P0 43. P1. P250.000 41. Philippines Shares of stocks of ABC.000 100.000. P2.250.The amount of funeral expense that may be deducted from the gross estate is a. P200.050.000 b. his gross estate is a. Banggawan. P1. P2. P1. under conjugal partnership of gains. P945.CPA. 5 years 50. Its retained earnings was P2.A decedent left the following properties: Land in Italy (with 1M unpaid mortgage) Land in Laguna.000 d.CDD: Estate Taxation 38. his gross estate is a.In case the estate is settled without court’s intervention a. Yes.A person other than the estate.000 c.000 d. Revocable c. Philippines Franchise in USA Receivable from debtor in Philippines Receivable from debtor in USA Bank deposit in USA Shares of stocks of PLDT. the estate is ready for d. 3 years c.000 c.000 d. 2 years b.650. The heirs are ascertained distribution to the heirs b.000 b. the estate tax may be paid within 49. 2 years b. the gross estate is a.000 whichever is the lowest Items 50 and 51 pertain to the following information If it will cause undue hardship on the part of the estate.000 750.000 whichever is lower c.000. foreign corporation 75% of the business in the Philippines Other personal properties Zonal value of the land in Laguna If the decedent is a non – resident citizen. The estate tax is paid c. of the death of the decedent For items 45 to 48. d. under absolute community of properties. 40.000 b.Are properties owned by the spouses at the time of marriage presumed common unless proven to be exclusive? A.195.000 125. whether revocable or irrevocable b.In case the estate is settled through the courts a. 5% of the gross estate or the actual funeral expenses or P200.000 shares at the time of death.070.000 75. executor or administrator and the designation is __________ 48. Only A is correct. partly revocable.000 P 2.000 c. 5% of the gross estate or P200.

P200.000 b. exclusive property of the surviving spouse 55. c. the property relations shall be governed by absolute community of property for marriages celebrated on or after August 3.000 decedent How much is the deductible funeral expenses of the decedent? a. false c. True. MBA Page 12 of 14 . True d. three years prior to his death Taxation by Rex B.CPA.000 61.Medical expenses to be deductible.From the time of death. true b. 3 months d.000 d. Property acquired prior to the current marriage by either spouses who has dependents by a prior marriage b.000 d.000 60. True. jewelries d. property for personal and exclusive use of either spouses except jewelry shall belong to both spouses a.000 c.A resident alien has a gross estate of P5.000 Cost of thanksgiving cards and newspaper thanksgiving 20.A.The estate may claim a standard deduction of a.A. True. Two months c. P100.000 b. False. estate tax return should be filed under oath if the gross estate exceeds a. P500. 6 months 53. the property relations shall be governed by conjugal partnership of gains for marriages celebrated on or before Aug 3.Written notice shall be given to the CIR if the gross estate exceeds a. false c.As a rule. 1988 B.000 b. Unless stipulated. P200. The fruits of the properties mentioned in a. False 58. True d. properties for personal use of either spouses 56. One year prior to his death c. False 59. must be incurred by the decedent within a.000. Inc. false c. False. False. Banggawan. Under the regime of absolute community of property. True. two years prior to his death b.000. P250. P100.000 Eternal Gardens. P190. One month b. masses and entertainment are part of funeral expense B. casket and interment services of 100. The administrator or executor shall submit a statement showing the disposition of the proceeds of the loan if the claims against the estate was contracted within five years before the death of the decedent a. P1. except? a. true b. P150.000 52.CDD: Estate Taxation 51.A. Conjugal property c. P500.The following do not form part of the communal properties of the spouses.000. False. False. Expenses incurred from the performance of the rites and ceremonies incident to interment and those incurred after interment. True d.000 d.000.This in not part of the gross estate of the decedent a. True. P2. notice of death should be given within a. true b. such as prayers. P20. One year after his death d.000 c.000 publication Cost of prayer services during the 30th and 40th day of the 10. P50. P180.000 b. share of the surviving spouse b.000 c. Cost of publication of notice of decedent’s death to relatives 10.000 d. False. Unless. 1988 a. False 57.000 54. Community property d.000 c. P200.000. P1.000 Payments for burial plot. If the property is inherited before marriage it will belong to both spouses while if it is inherited during marriage it is exclusive B. The following are its items of funeral expenses: Cost of food and prayers services/masses during the P decedents wake 80. True. stipulated.

Filipino. E and F. true b.000 d. Agricultural land P1. shares of stock or other similar property from which a clearance from the BIR is required as a condition for the transfer of ownership.000. 1995.000 2.000.000 70. False 65.Statement 1 – The court may authorize the distribution of estate. in meritorious cases may grant a reasonable extension to file the return. motor vehicle. The above is a tax exempt transfer 66.000.The CIR.CDD: Estate Taxation 62. c. 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). 2 months b.000 d. if the gross estate exceeds P200.Statement 1: Unpaid mortgage indebtedness is deductible from the gross estate provided the said property subject to the indebtedness is included in the gross estate. D. The transfer is both an inclusion from the gross estate b. False. True.Statement 1 – A died giving B power to appoint a person who will inherit A’s house and lot. Property inherited from his mother who died on Nov. True. C died and in C’s will he surrendered his right over the land to B a. such as real property. P1. Property inherited from his father who died January 2. False 64. False.000. married.If the estate consists of registrable property. MBA Page 13 of 14 .800. to an heir if in its sound discretion it believes that the heir badly needs his share Statement 2 – The administrator or any of his heirs. The car no longer form part of A’s gross estate a. A shall revoke the transfer. if the gross estate exceeds P500. False.000 without the required certification that the estate tax has been paid a.CPA. in B’s will when he was old already. A. P1. True. True.000 2. P2. A’s marriage to Mrs. an estate tax return should be filed under oath a. Banggawan.000 c. 18 months 71. True d. 6 months 72. true b.000. A Taxation by Rex B. 2007 leaving the following 1.One of the following is not an exemption or exclusion from the gross estate a.The medical expense shall in no case exceed a. Shares of stock of San Miguel Corporation of a non-resident Mexican d.000 c. true b. False. 1 month c.A died leaving a farm land. P200. The transfer from B to C is subject to estate tax Statement 2 – During A’s lifetime. 2006: 1.From the decedent’s death. P400. True d. 30 days b.000. not exceeding a.000 63. The transfer is subject to estate tax d. net of the mortgage indebtedness Statement 2: A donation inter – vivos by the decedent to the Philippine government few months before his death is a deduction from the gross estate a. In the second year however. If the gross estate exceeds a. False. he decided to give B as gift his car subject to the condition that if B does not become a CPA within 3 years.000 b.Mr. may however upon authorization of BIR withdraw from the decedents bank deposits P20. however. false c. In the seventh year. A died. Residential land 3. B however can only choose C.000 b. false c.000. regardless of the value of the gross estate. 3 months d. P500. The merger of usufruct in the owner of the naked title 67.000. False 68. died on January 1. True d. Capital or exclusive property of the surviving spouse b.000. the estate tax return shall be filed within a. d. True. P10. B decided to transfer the property to C. The transfer is subject to donor’s tax c. 69.000. P5. 6 months d. True. one day after Mr. 1. If the gross estate exceeds P1. b. False. 60 days c.The estate tax return shall be supported with a statement duly certified by a CPA. false c. Properties outside the Philippines of a non-resident Chinese decedent c.

000 Judicial expenses 100.000 USA 3.000 Australia 2.000 Required: Determine the estate tax due after tax credit ----.000 Required: Determine the net estate subject to estate tax 74.000. A during the lifetime.000 Transfer of land in Makati to the Philippine government (in decedent's will) 2. The commercial land has a mortgage of P1.CPA.End of handouts ----- Taxation by Rex B.000. an American. Fish pond P1. Motor vehicles 800.CDD: Estate Taxation 1.000 Australia 220.000.500. Y’s death  The land in Makati when inherited 41/2 years ago has a value of P1.Mr Y.400. Residential house and lot used as family homeP1.000 3. Property acquired thru Mr.000 which was paid prior to Mr.200.000 Estate tax paid: USA 280.000 c.900.000. A by will bequeathed to the City of Manila for exclusively public purpose the sum of P200.Z.000.000.000. Commercial land 4.000 Gross estate.000.000 with a mortgage thereon of P400.000 Claims against the estate 120. Cash 2. MBA Page 14 of 14 . Banggawan.000.000 was paid by Mr. 73. died leaving the following: P Land in Makati 2. A before his death. Funeral expenses P 250.000 of which P600. Claims against the estate 150.000 when inherited where P450. a resident citizen died leaving the following: Net estate (before standard deduction): Philippines P5.000 b. single and residing in USA. A’s labor: 1. Medical expense 400.000 was paid by Mr.000. USA 5. Judicial expenses 100. The estate claimed the following expenses: a.000.000 Deductions claimed by the estate: Actual funeral expense 200. Jewelry 1.000 2.000 d.000  The land in Manila when inherited 31/2 years ago had a value of P2.000 4.000 Required: Compute the taxable net estate.000 3.000 The agricultural land and residential land were previously mortgage for P800. Mr.000 Land in Manila 3.000.000 2.