You are on page 1of 12


1. Mr. Juan Basco, filipino, married and resident of Caloocan City died intestate. He was survived by his
wife Fidela and two children.
He left the following estate:
Exclusive real estate:
Land, 500 Sq. M. with fair market value of P1,000,000.
Land, 200 Sq. M. with fair market value of P500,000.
This land, 200 Sq. M. was donated by the decedent to his brother, Jose Basco, the donation to take
effect upon the death of the donor. The donor’s taxes were not paid.
Conjugal real estate:
Residential house and lot (family home) with fair market value of P2,000,000.
This real estate is mortgaged for P120,000 in the bank and at the time of death the mortgage is unpaid.

Conjugal personal properties:

Miscellaneous personal properties with FMV of P800,000.
Time deposit in bank, P50,000.
The time deposit is a joint time deposit. The co-depositor is the decedent’s brother, Jose Basco.
The actual funeral expenses amounted to P180,000. The judicial expenses amounted to P60,000.

COMPUTE: Estate tax on the Intestate Estate of Juan Basco.

2. Mr. MatiasPunla, filipino, resident of Quezon City died on December 31, 2015. He was survived by
his wife, and three (3) children. An inventory of his estate as of December 31 shows the following:
Real estate:
Commercial land, 400 sq.m. with FMV of P 1,400,000
Residential land, 500 sq.m. with FMV of 250,000
Residential house, with FMV of 1,300,000
Fishpond, 2 hectares with FMV of 280,000
Personal property:
Motor vehicle, with FMV of 160,000
Time deposit with the PNB 90,000
Other personal properties 800,000

The commercial land, 400 sq.m. is the exclusive property of the decedent and is pledged as a
collateral to a mortgage loan from the PNB obtained on April 1, 2015 in the total amount of P200,000
at 18% per annum. The loan and accrued interest are not paid at the date of death of the decedent.
The rest of the estate are conjugal. The residential land and the residential house (which pertains to
the family home) are mortgaged at the Metrobank for P300,000. The unpaid balance of the mortgage
loan on December 31 per certificate of the bank is P220,000. The actual funeral expense is P55,000
and the judicial expense is P15,000.

REQUIRED: Prepare a statement showing the gross estate and deductions and the amount subject to
estate tax as of December 31.

3. Wilson died in a car accident. He died intestate on October 10, 2015.

Exclusive properties of the wife -
Car P 400,000
Lot in Quezon City 2,000,000
Other real and personal properties 800,000
Community properties -
Cash on hand and in bank 500,000
Receivable as prize in a raffle contest sponsored by PICPA 50,000
Receivable from an insurance company where his son, Gino was
designated in the policy as the revocable beneficiary 150,000
House and lot in Sta. Rosa, Laguna, used as family home 1,900,000
Other personal properties 800,000
Other real properties 1,500,000
The following deductions were claimed:
Funeral expenses 195,000
Judicial expenses 15,000
Claims against the estate, not notarized 50,000
Claims against insolvent persons 30,000
Unpaid mortgage on lot in Quezon City 200,000
Unpaid mortgage on house and lot in Sta. Rosa, Laguna 350,000
Accrued income taxes 35,000
Income tax on income earned from October 11 to December 31, 2015 7,500
REQUIRED: Compute the estate tax due.

4. Minerva, single but head of family, a resident of Cagayan de Oro City, died, leaving the following
properties and obligations:
House and lot in Cagayan de Oro, used as family home 1,500,000
House in Manila 2,200,000
Proceeds from Philamlife insurance, payable to her mother as the
irrevocable beneficiary 300,000
Share of stock of E.T. Company, 5,000 shares, par value P80 per share. The shares were traded in
the stock exchange at the time of death as follows: Highest-P110; Lowest-P105
The executor had claimed the following as deductions:
Funeral expenses 135,000
Judicial expenses 25,000
Legacy to the Philippine National Red Cross 15,000
Legacy to Xavier University for scholarship 45,000
Payable to Verba Corporation, notarized 50,000
Bequests to the poor as provided in her will 150,000
Amount received from employer as a consequence of the death
of Minerva 80,000
REQUIRED: Compute the estate tax due.

5. Jerry, widower, physician, an employee of Bicol Medical Center, died leaving the following
Cash P135,000
Car 80,000
House and lot (not family home) 950,000
Medical equipment 450,000
Land in Camarines Sur, assessed value, P390,000 465,000

The following deductions were claimed:

Cremation expenses P150,000
Cost of coffin 20,000
Expenses of the wake 60,000
Cost of burial plot and tombstone 22,000
Accountant’s fees 5,000
Loans, notarized 80,000
Accrued taxes on salary 23,000
Hospitalization expenses 15,000

The land was inherited by Jerry from his wife who died 2 ½ years prior to his death. At the time
of her death, the property was valued at P420,000 and subject to a mortgage of P100,000 of which
P30,000 was paid until his death.
The car was borrowed from a friend and was used by him without returning it until his death.
It was registered in the name of the friend.
The entire accrued taxes on salary were withheld by the employer and remitted to the Bureau of
Internal Revenue.

REQUIRED: Compute the following:

1. Gross estate
2. Net estate subject to tax and estate tax due.

6. Mr. Lopez, a citizen and resident of the Philippines died. He was survived by his wife and two
legitimate sons. He left the following estate with the corresponding fair market value as of date of
Conjugal real estate (family home) P 4,600,000
Conjugal personal properties 400,000
Exclusive estate which Mr. Lopez inherited from his deceased
father who died 2 ½ years ago:
a. 400 square meters land 800,000
b. Commercial building 500,000
c. Motor vehicle, car 900,000

Two years and four months prior to his death, the 400 square meters land (a) and the
commercial building (b) had fair market value of P600,000 each and was mortgaged at P200,000. This
mortgage was claimed as deduction from the gross estate of the deceased father and was paid by Mr.
Lopez during his lifetime. The fair market value of the motor vehicle, car as of both date of death is
the same.
The following were claimed as deductions from the gross estate of Mr. Lopez:
Funeral expenses P 300,000
Judicial expenses 200,000
Mortgage payable (family home) 150,000
REQUIRED: Indicate the correct amount of:
a. Gross estate
b. Net share of surviving spouse
c. Property previously taxed


1. Cabalo, widower, made the following donations in 2015:

March 20 - P325,000 cash to Catindig, a legitimate son who got married on March 18,
May 20 - P500,000 cash to Catabac, niece who got married on April 1, 2015.
June 5 - P88,000 to Cabanatan, his housemaid on account of marriage to his driver on
January 1, 2016.
July 29 - P25,000 cash as birthday gift to Cabo, his bodyguard.
REQUIRED: Compute the gift tax due on each donation.

2. Mr. and Mrs. Amigo, citizens and residents of Zamboanga City, made the following donations of the
community properties, unless otherwise specified:
May 17, 2014
To daughter, Barat, on account of marriage on November 1, 2014, cash of P370,000.
To Barat by Mr. Amigo alone, property owned exclusively by the donor, P125,000.
June 12, 2014
To Constantino, brother of Mrs. Amigo, property owned exclusively by Mrs. Amigo, P100,000.
To Barat, on account of marriage, property subject to and unpaid mortgage of P 40,000 and an
unpaid tax of P 8,000, all to be assumed by Barat. That property has a fair market value of P600,000.

REQUIRED: Compute the donor’s taxes due.

3. Vecio sold a property on October 31, 2015 to his bestfriend for P 1,000,000 when the market value
was P1,600,000. Cost of the property to the taxpayer in 2012 was P400,000. He gave a commission of
P 50,000 to the broker and spent for documentary stamp taxes and other fees in the amount of
Assumption A: The property is a residential house.
a. How much is the donor’s tax due on the transaction?
b. How much is the capital gains tax?
Assumption B: The property is a personal car.
a. How much is the donor’s tax due?
b. How much is the income subject to tax?

4. Mabait made the following donations:

a. Residential house in Manila P 1,500,000
b. One-half hectare of land in Vancouver, Canada 800,000
c. Car in the Philippines 350,000
d. Jewelries in Canada 80,000
e. Shares of stock in San Miguel Corporation, domestic 125,000
f. Shares of stock in a Canadian company 250,000
Compute the gross gift if Mabait is a:
a. Resident citizen
b. Nonresident citizen
c. Resident alien
d. Nonresident alien (with reciprocity)
e. Nonresident alien (no reciprocity)

5. Elmer gave the following intangible properties to Liza:

a. Bank deposit in Manila 50,000
b. Bank deposit in New York, USA 80,000
c. Franchise exercised in the Phils. 20,000
d. Shares of stock issued by Goodbooks Corp., domestic corporation 72,000
e. Shares of stock from Shaolin Corporation, a foreign corporation 200,000
f. Shares of stock from Pirung Corporation, an Indonesian corporation
whose 86% of the business is in the Philippines 130,000
g. Shares of stock from Murung Corporation, a foreign corporation with
business situs in the Philippines 50,000
h. Interest in Sinang Company, a partnership established in the Phils 100,000

COMPUTE the gross gift assuming Elmer is a non-resident alien and he is not exempt under
the principle of reciprocity.


1. Menu Mura Corporation imported an article from Japan. The invoice value of the following article
was ¥1,000,000 (¥1 = P0.50). The following were incurred in connection with the importation:
Insurance P 15,000
Freight 10,000
Postage 5,000
Wharfage dues 7,000
Arrastre charges 8,000
Brokerage fee 25,000
Facilitation fee 3,000
The imported article was subject to P50,000 customs duty and P30,000 excise tax. Menu Mura
Corporation spent P5,600 for trucking from customs warehouse to its warehouse in Quezon City.
COMPUTE the following:
A. VAT on importation.
B. VAT payable if the imported article was sold for P950,000, VAT exclusive.

2. A VAT-registered business had the balances in its books of accounts during the second quarter of
Deferred input taxes, March P 10,000
Sales, April 400,000
Purchases, April 300,000
Sales, May 500,000
Purchases, May 450,000
Sales, June 430,000
Purchases, June 350,000

COMPUTE the VAT payable for April,May and June.

3. A taxpayer is engaged in a VAT and non-VAT business. The amounts of VAT transactions do not
include the tax.
VAT business P 800,000
Non-VAT business 200,000
Purchases from VAT suppliers:
Of goods for sale in VAT business 200,000
Of goods for sale in non-VAT business 100,000
Of supplies for use of both in VAT and non-VAT business 40,000
Other operating expenses:
VAT business 250,000
Non-VAT business 40,000

COMPUTE the VAT payable.

4. A VAT taxpayer has the following records in in its books:

Gross sales P 600,000

Sales returns and allowances 20,000
Sales discounts 13,600
Purchases 280,000
Purchase returns and allowances 15,000
Purchase discounts 20,000
COMPUTE for the VAT payable.

5. A real estate dealer sold a parcel of land in February 2015. The data are as follows:
Price in the deed of sale P 5,000,000
Market value per tax declaration 4,200,000
Zonal value 4,000,000
Cost to the seller 3,500,000
Gross receipts on the consideration:
Mortgage assumed by the buyer P 2,000,000
February 2015 600,000
August 2015 600,000
February 2016 1,800,000
COMPUTE output tax for
1. February 2015
2. August 2015
3. February 2016
6. Cheng Company has an annual sales ranging from P1,400,000 to P1,800,000. In January 2016, it had
the following data (exclusive of tax):

Domestic sales P150,000

Export sales 100,000
Purchases (exports) 80,000
Purchases (domestic) 55,000
All purchases are from VAT registered sellers.

COMPUTE the following:

1. Percentage tax if Cheng Company is non-VAT registered.
2. VAT Payable if Cheng Company is VAT registered.

7. CeaBoyo,is a businessman with transactions in the Philippines and international. His domestic and
international transactions during the period are as follows:
Overseas calls:
Outgoing -
Paid by domestic subscriber P 20,000
Paid by the call receiver 10,000
Incoming -
Paid by CeaBoyo 15,000
Paid by the caller abroad 25,000
Local calls 2,500
Monthly bill 900

COMPUTE the following (assume that the amounts do not include the tax):
1. VAT payable
2. Overseas communications tax

8. Ret Caba operates a coffee shop and a Videoke Bar. In a taxable period, it had the following data,
exclusive of tax:
Sale of services:
From operation of Sratbucks, a coffee shop:
Cash sales P 350,000
Accounts receivable 80,000
Credit card sales 130,000
From operation of videoke bar:
Cash sales 285,000
Accounts receivable 14,000
Credit card sales 260,000
Payments for operations (70% are to VAT taxpayers) is 60%
of gross receipts.
COMPUTE for the following: Review the Solutions
1. VAT payable
2. Percentage tax payable

9. Seal Services is engaged in transport of passengers and cargo from Manila to any point of the
Philippines. During the month, it had the following gross receipts(tax not included):

Trucking services:
Manila to Ilocos (vice-versa) P 700,000
Manila to Bicol (vice-versa) 680,000
Carrier by sea:
Cargo -
Matnog, Sorsogon to Allen, Samar (vice-versa) 250,000
Tabaco City to Virac, Catanduanes (vice-versa) 180,000
Passenger 485,000
Purchases/expenses (65% are from VAT sellers) 1,800,000

COMPUTE for the following:

1. VAT payable
2. Common carriers tax 0


1. Dilla received the following from Sun Company during the year:

Monthly salary P 15,000

Monthly rice allowance 2,000
13th month pay 15,000
Loyalty award for 20 years service 20,000
Clothing allowance 7,000
Grocery items allowance per month 1,000
The monthly rental of his dormitory is being paid by the company at P1,700 a month.
COMPUTE the following -
a. Taxable compensation income if Dilla is a rank-and-file employee.
b. Monthly fringe benefit tax due on the dormitory if Dilla is a supervisory employee.

2. Ang Company operates different branches in key cities of the country. The managers being assigned
in the branch offices usually come from the main office in Manila. Because of this practice, they
usually lease residential houses for their branch managers. During the year, they paid monthly rental
of P9,520 for the residential house in Naga City.
COMPUTE the following:
a. Fringe benefit tax per month on the fringe benefits furnished by Ang Corporation to its branch
manager in Naga City.
b. Fringe benefit tax per month if Ang Company owns a condominium unit which was allowed to
be used as residence by the manager. The market value of which as determined by the
Commissioner of Internal Revenue is P3,264,000 while the value per City Assessor is

c. Fringe benefit tax per month if Ang Company purchased a condominium unit on installment at
a contract price of P3,699,200 and allowed the branch manager to use it as his residence.
Review the solution.

3. After working for 30 years. Ruffy retired from his employment on December 31, 2015 as an accountant
of Nail Corporation. As a consequence of his retirement due to old age, he received the following from
his employer:
Salary for December, 2015 P 25,000
13th month pay 25,000
Cash gift 2,500
Retirement pay 750,000
Terminal leave pay 120,000
Longevity pay 30,000
Rice allowance per month 2,000
Clothing allowance 8,000
Loyalty award 20,000
Proceeds of life insurance which have matured
(premiums paid, P200,000) 300,000
COMPUTE for the income subject to tax if the company maintains a private benefit plan for its
4. Val, Filipino residing in Manila had the following data during the year:
Gross receipts from profession (net of VAT; gross of 15% WT) P 950,000
Expenses from profession, net of tax (60% subject to VAT) 120,000
Interest on 6 years bank deposit 40,000
Interest on long-term deposit (pre-terminated after 3 ½ years) 20,000
Winnings in a raffle 100,000
Prize won in a contest 5,000
Winnings in lotto 20,000
Cash dividend received from C Corp., domestic company 6,000
Salary as part time accounting teacher of Ateneo de Naga (net of
P2,400 WT) 37,600
13th month pay received from Ateneo de Naga 3,500
Rental income (net of 5% WT) 38,000
Depreciation of rental equipment 8,000
Loan benefits from SSS 20,000
Received as a beneficiary in the life insurance policy of his father
who died during the year 150,000
DVD player received as birthday gift from mother 2,000


a. Taxable income if Val is single, supporting his only sibling, 30 years old, mentally defective and
his mother, a senior citizen.
b. Income tax payable.
c. Total final withholding tax.
d. Total amount of received which is exempt from income tax.

5. Sheryl had the following income and expenses:

Compensation income, Philippines (gross of P10,000 WT) P 120,000
Business income, Philippines 350,000
Business income, Canada $ 200,000
Vacant lot inherited from her mother, Baby P 500,000
Cash dividend from Le Corp., a domestic company 40,000
Share in the net income of a business partnership 50,000
Winnings in lotto, Philippines 1,540,000
Business expenses, Philippines 220,000
Business expenses, Canada $ 150,000
Proceeds of life insurance policy as a result of death of
Baby. Her daughter Sheryl is the appointed beneficiary
(premiums paid – P60,000) 250,000
Exchange rate: Canadian $1 = P25

a. The income tax payable if she is a Filipino citizen, married with one legitimate child, residing in
Camarines Sur.
b. The total final taxes paid by Sheryl if she is a resident citizen.
c. The taxable income if Sheryl is an american, married, residing in Manila.
d. The taxable income if Sheryl is an american, married, residing in U.S. but not engaged in trade
or business in the Philippines.
e. The taxable income if Sheryl is a Filipina, married, residing in Manila and opted to avail of the
optional standard deduction –
6. Kat Corporation had the following data in 2015:
Gross income, Philippines P 600,000
Gross income, U.S.A. 500,000
Expenses, Philippines 300,000
Expenses, U.S.A. 300,000
Interest on time deposit 10,000
Interest on money market placement, net of tax 21,000

COMPUTE the income tax due and final taxes payable if Kat Corporation is a:
a. Domestic
b. Resident foreign
c. Nonresident foreign

7. Mita Corporation had the following data:

Gross sales P 10,000,000
Sales returns 20,000
Capital gain 25,000
Rent income 100,000
Interest on bank deposit 5,000
Cost of goods sold 6,000,000
Itemized deductions 2,500,000
COMPUTE the income tax payable if -
a. The corporation decides to avail of the optional standard deduction.
b. The corporation avails of the itemized deduction.

8. The Fatima University is a private educational institution. During the year, it had the following income
and expenses:
Tuition fees P 10,000,000
Miscellaneous fees 1,500,000
Dividend from domestic corporation 50,000
Interest on bank deposit 10,000
Income of hospital being used primarily as training
ground of nursing and other medical course students 2,400,000
Rent income from a building which is being leased to
commercial establishments 120,000
Allowable deductions 4,500,000

COMPUTE the income tax due.

9. Dina, single, supporting her mother who died in 2015, has the following data:
2014 2015 2016
Ordinary net income P150,000 P200,000 P125,000
Sale of capital assets:
Held for less than 12 months
Capital gain 20,000 60,000
Capital loss 35,000
Held for more than 12 months
Capital gain 90,000
Capital loss 80,000 20,000

a. The taxable income in 2014, 2015 and 2016.
b. The taxable income in 2014, 2015 and 2016 if Dina is a corporation.

10. Liwan, not habitually engaged in real estate business, sold a commercial land for P5,000,000. The
zonal value of the property is P3 million while the market value in the tax declaration is P2.8 million.

Is the transaction subject to creditable withholding tax or to capital gains tax? How much?

11. Michael sold a 500 square meter land for P3,000,000. The value as determined by the Commissioner
of Internal Revenue is P3,000 per square meter, while the market value in the tax declaration is

COMPUTE for the income tax and give the nature of the tax if:
a. The land is a capital asset.
b. The land is an ordinary asset and the seller is habitually engaged in real estate business.
c. The land is an ordinary asset and the seller is not habitually engaged in real estate business.

12. On February 5, Marquez sold a 50 square meter residential condominium unit for P3,200,000. The
unit was acquired three (3) years ago for P1,950,000. On the date of sale, the fair market value of the
condo unit as shown in the real property declaration is P2,750,000 and the assessed value amounts to
P550,000. The zonal value is P60,000 per square meter.
a. The capital gains tax is.
b. The capital gains tax of Marquez if the proceeds of sale shall be utilized in acquiring a new
c. The cost basis of the new residence.
d. The amount to be deposited in escrow if the proceeds of the sale shall be utilized in acquiring a
new residence.
e. The capital gains tax payable assuming that P1,000,000 of the proceeds will be unutilized in
acquiring a new residence.

13. Carmi Bookstore loaned from Metrobank an amount of P200,000 for the purchase of computer in its
office. The loan is payable in one (1) year beginning June 30, 2016 at an interest rate of 20%. The
equipments with an estimated useful life of 10 years were purchased on August 1, 2016.
In the same year, Carmi Bookstore earned an interest income of P2,000, gross of tax, out of its
time deposit with Banco de Oro. The same was subjected to final tax. It had also incurred an interest
expense of P300 on unpaid value-added tax.

COMPUTE the deductible amount of interest expense in 2016 if it is treated as (1) an expense, or (2)
as a capital expenditure.

14. Kapuspalad, a domestic corporation, has the following income and expenses during the year 2012:

Sales P 1,000,000
Cost of sales 350,000
Deductions (except contributions) 200,000
Contributions – deductible in full 20,000
Contributions - subject to limit 20,000
COMPUTE the taxable income of the corporation

15. Mang Hiram engaged in business, loaned money from Land Bank of the Philippines from which he
had an interest expense of P20,000. His deposit in the same bank yielded an interest income of
COMPUTE for the deductible interest expense of Mang Hiram.

16. Vicor Company, domestic, has net income from within the Philippines of P200,000 and from the
United States of P300,000. Income tax paid on income from United States is P110,000.

COMPUTE the tax credit on income tax paid to the United States government.

17. Kares is sent by her company to Bacolod City on a seven (7) day employment-related business trip
and incurs the following expenses:
Plane ticket (Manila to Bacolod and vice-versa) P 4,500
Taxi fare 1,200
Meals 3,500
Hotel bills at Bacolod Pension Plaza 4,900
Laundry and other incidental expenses 600
Value of souvenir items purchased at Gaisano Mall 3,500
COMPUTE the deductible travelling expense.


1. The income tax return of Larry is required to be filed under the jurisdiction of RDO Iloilo City.
Without prior authorization from the BIR, he filed his tax return and paid the tax in Cagayan de Oro
City. The tax due is P50,000.
COMPUTE for the amount still due.

2. Zuma Blay filed his 2016 income tax return and paid the tax on July 15, 2017. The income tax due per
return is P200,000.
COMPUTE for the total amount due including penalties and interest.

3. Oyang neglected to file his income tax return for the calendar 2016 which was due for filing on April
15, 2017. He was notified by the BIR of his failure to file the return, for which reason, he filed his tax
return and paid the tax, only after the said notice on October 15, 2018. The tax due per return is
COMPUTE for the total tax due, including penalties and interest, but excluding compromise

4. Poypoy filed his income tax return for calendar year 2016 and paid the tax of P100,000 on April 15,
2017. Upon pre-audit of his return, it was disclosed that he erroneously computed the tax due. The
correct amount of tax due is P120,000. The taxpayer is assessed for deficiency income tax in a letter
of demand and assessment notice issued on June 20, 2018.
COMPUTE for the amount still due on July 15, 2018.

5. Jude filed and paid his income tax return for taxable year 2015 on April 15, 2016. The amount of tax
paid is P100,000, while the correct amount of tax due is P180,000. A preliminary assessment was sent
to him but he did not file any protest. A final assessment was issued requiring him to pay his liability
on July 15, 2017. How much liability should appear in the notice of assessment?

6. Sta. Rosa Corporation received a notice from the BIR to file its 2016 income tax return (which the
corporation failed to file on April 15, 2017) and pay the tax of P1,000,000 plus the 25% surcharge and
20% interest.
On July 15, 2018 the corporation made a partial payment of P400,000 only.
The BIR demanded payment of the unpaid balance of its tax obligation payable by January 15,

COMPUTE for the amount still due on Sta. Rosa Corporation.


Clarify the meaning of SEF

1. A vacant commercial land located in a city measuring 2,000 square meters has a market value of
P1,100 in the tax declaration and a zonal value of P800. The city has maximized the assessment level
and the tax rate to that allowed by law.

COMPUTE for the following:

a. The total real property tax payable.
b. The maximum amount of discount that will be allowed as deduction from his tax due if the taxpayer
paid in advance.
c. The total amount payable if the taxpayer pays his real property tax after twelve (12) months of
d. The total real estate tax payable if the lot is an idle agricultural land and it is subject to an idle land
tax of 1%.

2. A tax declaration contains the following data:

Actual use of property - Residential
Market value:
Land P 500,000
Improvement 800,000
Assessment level:
Land - 15%
Improvement - 20%
COMPUTE for the following –
a. The taxable value on the land?
b. The basic real property tax on the improvement if the tax rate is 1%.
c. The total real property tax assessable on the properties.