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9/19/2012 

In December 2004, Mr. X, a Filipino citizen, executed a last will and ANSWER: A
testament designating the following heirs and their respective shares in his
properties at which time were as follows: Solution:
• Real estate in Cavite, at fair market value 10,000,000 Total gross estate (10M+20M+30M) 60,000,000
• Farm lot in Nueva Ecija, at fair market value 20,000,000 Less: Ordinary deductions 2,500,000
• Residential house and lot in Baguio 30,000,000 Net estate before share of spouse 57,500,000
Less: Share of surviving spouse
The distribution as provided in the will: for his mother, the farm in Nueva (P57,500,000 x 50%) 28,750,000
Ecija; for his wife, the residential house and lot in Baguio; and for his
brother, the real estate in Cavite. In January 2005, Mr. X’s first child was Net estate before estate tax 28,750,000
born. In July of 2005, he died of heart attack. Assume that the fair market Less: Estate tax (P28.75M x 15%) 4,312,500
value of properties remains the same, the ordinary deductions and Net distributable estate 24,437,500
allowable deduction are P2,500,000 and P1,000,000, respectively.
Assuming a tax rate of 15%, how much is the net distributable estate?
A) 24,437,500 B) 28,750,000
C) 12,218,750 D) 57,500,000
Answer >>>

The hereditary estate is P3,000,000. The surviving relatives are the parents, ANSWER: A
the spouse, and the four children. The testator is giving 20% of the free
portion as legacy to his sister in law. Solution:
Hereditary estate 3,000,000
How much could be designated to the sister in law? Legitime of children (P3,000,000 x ½) ( 1,500,000)
Portion for the spouse (P1,500,000/4) ( 375,000)
Free portion 1,125,000
Multiplied by 20%
Legacy to the sister-in-law 225,000

A) 225,000 B) 375,000
C) 1,125,000 D) 1,500,000
Answer >>>


9/19/2012 

Mr. X presents the following properties and expenses to the BIR in relation ANSWER: A
to the death of his wife:
Revocable donation to the Ramon Magsaysay Foundation 1,000,000 Solution:
Proceeds of life insurance from SSS 5,000,000 Revocable donation to the Ramon Magsaysay Foundation 1,000,000
Family home 1,000,000 Family home 1,000,000
SSS death benefit 500,000 Benefits under R.A. 4917 500,000
Benefits received under RA 4917 500,000 Transfers in contemplation of death 2,000,000
Transfers in contemplation of death 2,000,000 Donation to the government 1,000,000
Donation to the government 1,000,000 Total reportable gross estate 5,500,000

How much is the total reportable gross estate?

A) 5,500,000 B) 8,500,000
C) 10,500,000 D) 11,000,000
Answer >>>

Mr. X died leaving the following assets to his wife: ANSWER: A


Boarding house inherited from his parents before
marriage 4,000,000 Solution:
Accumulated income from the boarding house 3,000,000 Conjugal properties:
Farm land inherited by his wife during marriage 2,000,000 Accumulated income 3,000,000
Personal properties acquired during marriage 5,000,000 Personal properties 5,000,000 8,000,000
Exclusive properties (boarding house) 4,000,000
Under the conjugal property of gains, how much is the amount of the gross Total gross estate 12,000,000
estate of Mr. X?

A) Conjugal – 8,000,000 B) Conjugal – 7,000,000


Exclusive – 4,000,000 Exclusive – 6,000,000
Total – 12,000,000 Total – 13,000,000
C) Conjugal – 5,000,000 A) Conjugal – 12,000,000
Exclusive – 2,000,000 Exclusive – 0
Total – 7,000,000 Total – 12,000,000
Answer >>>


9/19/2012 

Mr. A’s gross estate is P3,000,000. His executor is claiming the following as ANSWER: C
funeral expenses related to the death of Mr. A:
Hospitalization incurred during the last 3 months prior Solution:
to Chit’s death 50,000 Burial lot (P50,000 x 80%) 40,000
Burial lot, 20% paid from contribution of friends 50,000 Expenses for wake before burial 20,000
Expenses for wake before burial 20,000 Telegrams and cable to relatives 1,000
Thank you cards to the sympathizers 2,000 Mourning apparel of the surviving spouse and children 3,000
Telegrams and cables sent to relatives 1,000 Entertainment expenses during the rites and ceremonies 2,500
Mourning apparel of surviving spouse and children 3,000 Allowable funeral expenses 66,500
Mourning apparel of relatives 1,000
Entertainment expenses during rites and ceremonies 2,500

How much is the allowable funeral expense?


A) 63,500 B) 64,500
C) 66,500 D) 76,500
Answer >>>

A non-resident citizen died leaving his only property to his surviving ANSWER: A
spouse. The real property is located in the Philippines which has a fair
market value at the City’s Assessor’s schedule of value at the time of death Solution:
at P1,500,000, while per BIR zonal assessment, it has P1,200,000
appraised value at that time. This was acquired through labor of husband Gross estate 1,500,000
and wife during the marriage at a cost of P800,000. How much would be Funeral and judicial expenses ( 60,000)
the net estate taxable in the Philippines if the total funeral and judicial Net estate before share of surviving spouse 1,440,000
expenses amounted to P60,000? Share of surviving spouse ( 720,000)
Net estate before special deduction 720,000
Standard deduction (1,000,000)
Net estate – negative ( P280,000)

Net estate taxable in the Philippines is P - 0 -

A) 0 B) 280,000
C) 720,000 D) 1,440,000
Answer >>>


9/19/2012 

Assume that a married and nonresident alien decedent, Mr. X, left the ANSWER: B
following estate under conjugal partnership of gains:
House and lot – France (family home) 6,000,000 Solution:
Franchise in Manila 2,000,000 Car, Baguio City 1,000,000
Shares of stock – France 1,000,000 ELIT [(50,000*+300,000)/(1M/8M)] ( 43,750)
Car – Baguio City 1,000,000 Net estate 956,250
Shares of stock – Nestle Corporation Manila inherited Share of surviving spouse (956,250/2) 478,125
from his father during marriage four years ago Net taxable estate 478,125
at a market price of 400,000 600,000
Medical expenses 600,000 * Funeral expense – 5% x P1M = P50,000
Judicial expenses 300,000
Actual funeral expenses 200,000
Assuming with reciprocity, how much is the net taxable estate?
A) 956,250 B) 478,125
C) 937,500 D) 468,750
Answer >>>

Mr. & Mrs. Clamor, spouses and citizens of the Philippines, donated to their ANSWER: A
legitimate daughter on account of marriage the following properties at fair
market value: Solution:
Vacation house, conjugal property in Singapore 500,000
Car in the Philippines, conjugal property 240,000 Donations: Mr. Salonga Mrs. Salonga
Vacation house – conjugal (P500,000/2) P250,000 P250,000
Jewelry, exclusive property of Mrs. Clamor 20,000
Car – conjugal (P240,000/2) 120,000 120,000
Jewelry – exclusive of Mrs. Salonga 20,000
The donation was made within one year of their daughter’s marriage. What Dowry ( 10,000) ( 10,000)
would be the donor’s tax of Mr. & Mrs. Clamor, respectively? Net gift P360,000 P380,000

Donor’s tax on P200,000 P2,000 P2,000


Excess (P160,000 x 4%) 6,400
(P180,000 x 4%) 7,200
Total donor’s taxes, respectively P8,400 P9,200

A) 8,400 and 9,200 B) 4,800 and 9,600


C) 5,200 and 9,200 D) 5,600 and 8,800
Answer >>>


9/19/2012 

A resident alien made the following gifts during the year: ANSWER: D
Wedding gift to his son given during the celebration
held in the Philippines 500,000 Solution:
A car given to his daughter here in the Philippines 500,000 Wedding gift (P500,000 – P10,000) P490,000
Casual gift – car 500,000
For the above gifts, the total Philippine donor’s tax would be Total gift subject to tax P990,000

Donor’s tax on P500,000 P14,000


Excess (P490,000 x 6%) 29,400
Total donor’s tax in the Philippines P43,400

A) 300,000 B) 270,000
C) 44,000 D) 43,400
Answer >>>

Mary Joyce J. Nacario operates a VAT business. For the period, her business ANSWER: C
gross receipts before VAT amounted to P900,000 as follows:
Printing of office forms 600,000 Solution:
Printing of college books 300,000 Output VAT (P600,000 x 12%) 72,000
Less: Creditable Input VAT
The total purchases and payments related to business which were (P330,000/9.3333) x (P600,000/P900,000) 23,572
purchased from or paid to VAT-registered business amounted to P330,000, Net VAT payable 48,428
including VAT.

How much is the net VAT payable?

A) 72,642 B) 60,214
C) 48,428 D) 36,624
Answer >>>


9/19/2012 

A non-VAT franchise grantees of radio and television broadcasting has total ANSWER: C
gross receipts during the year amounting to P15,000,000. Information
related to the total gross receipts is as follows: Solution:
Billing last year collected this year 2,000,000 Output VAT (P2,000,000 + P12,000,000) x 12% P1,680,000
Billing this year collected this year 12,000,000
Collections as donations for calamity victims 1,000,000 No input tax is allowed because the entity is non-VAT.

The related supplies used during the year amounted to P1,120,000


including VAT.

How much is the net VAT payable ?

A) 0 B) 1,560,000
C) 1,680,000 D) 1,800,000
Answer >>>

A non-VAT domestic common carrier reported the following gross receipts ANSWER: A
during the year:
Solution:
From the transport of Passengers by sea 1,500,000
Passengers by land 1,500,000 Cargoes by land 500,000
Passengers by sea 1,500,000 Cargoes by sea 500,000
Cargoes by land 500,000 Total VAT taxable transactions 2,500,000
Cargoes by sea 500,000

Its total VAT taxable transactions would be

A) 2,500,000 B) 2,000,000
C) 1,000,000 D) None
Answer >>>


9/19/2012 

Ronnel Talavera has the following winnings (losses) during the year: ANSWER: A

Cockfighting 90,000 Solution:


Philippine Charity Sweepstakes 2,000,000 Only the horseracing winnings are subject to percentage taxes. Cockfights
Lotto (PAGCOR) 1,000,000 are subject to amusement taxes.
Horseracing Winnings 100,000 Percentage tax (P100,000 – P1,000) x 10% P 9,900
Cost of tickets (P1,000 belongs to winning tickets) ( 30,000)
Billiard losses ( 400,000)
Casino losses ( 300,000)

The business tax on winnings is

A) 9,900 B) 18,900
C) 249,000 D) 319,000
Answer >>>

KMC Company operates a water and radio broadcasting franchise provides ANSWER: B
the following in 2005:
Solution:
Gross receipts Percentage tax – water franchise (P2,000,000 x 2%) P 40,000
Water franchise 2,000,000 Percentage tax – radio franchise (P10,000,000 x 3%) 300,000
Radio franchise 10,000,000 Total percentage tax P 340,000
Operating expenses 5,000,000
Net income 7,000,000

The total percentage tax on franchise is

A) 360,000 B) 340,000
C) 210,000 D) 319,000
Answer >>>


9/19/2012 

First Statement: ANSWER: A


In all cases, void donations are not subject to donors tax.
Donations made between husband and wife during their marriage are void,
Second Statement: and therefore, not subject to donor’s tax.
Every donation between the spouses during the marriage shall be void.

A) True, True B) True, False


C) False, True D) False, False
Answer >>>

Joe Anne Mapue sold 2,000 shares through the Philippine Stock Exchange ANSWER: C
for P1,000,000. How much is the percentage tax if Doy acquired the shares
of stock for P800,000? Percentage tax [P1,000,000 x .005) P 5,000

A) 0 B) 1,000
C) 5,000 D) 25,000
Answer >>>


9/19/2012 

Mr. X died leaving a hereditary property, after estate tax, amounting to ANSWER: B
P1,200,000. In his last will and testament, he stated that his estate should
be divided equally among his loved ones as follows: Legitimate child – Pedro (P1,200,000 x ½) P 600,000
• Pedro, his legitimate child Illegitimate child – Alvin (P600,000 x ½) 300,000
• Alvin, his illegitimate child Surviving spouse (P600,000 x ½) 300,000
P1,200,000
• Mrs. X, his surviving spouse
• Cha, his daughter in law
• Roselle, his mother, and
• Ullycris, his niece

With due consideration to their respective legitime, how much should be


the share of Alvin in the estate?

A) 0 B) 300,000
C) 600,000 D) 1,200,000
Answer >>>

ILY Company, supplier in Manila, sold merchandise on May 5, 2010 for ANSWER: C
P100,000, VAT exclusive to IMY Company, a retailer in Cebu. The terms are:
2/10, n/30, FOB Shipping Point, Freight Prepaid. Cost of freight pay way Output tax on sales, May 5 (100,000 x 12%) 12,000
bill is P1,120. Payment was made by IMY Company on May 12, 2012 after a
return of merchandise worth P5,600, VAT inclusive. Output tax on freight (1,120 x 3/28) 120
Purchase return (5,600 x 3/28) ( 600)
Based on the above transactions, how much is the balance of output tax to Purchase discount (100,000 x 2% x 12%) ( 240)
ILY Company? Output tax, balance 11,160

A) 12,840 B) 11,400
C) 11,160 D) 11,280
Answer >>>


9/19/2012 

Which one of the following is subject to 3% percentage tax? ANSWER: D

A) Establishments whose annual B) Businesses whose annual gross


gross sales/receipts exceed sales/receipts exceed P1,500,000
P1,500,000 and who are VAT- and who are not VAT-registered.
registered.
C) VAT-registered establishments D) Establishments whose annual
whose annual gross receipts do not gross sales do not exceed
exceed P1,500,000. P1,500,000 and who are not VAT-
registered.
Answer >>>

Mr. X, widow, a citizen of the Philippines residing in Tokyo, Japan, died on ANSWER: A
December 20, 2010 leaving the following properties:
Real properties inherited from her husband on May 3, Solution:
2009 valued then at P2,600,000 2,960,000 Lower value/initial basis 2,600,000
Personal properties in Japan 1,300,000 Less: Deductions (pro-rated)
Real and personal properties in the Philippines 670,000 Funeral expenses, maximum 200,000
Family home in Japan 2,500,000 Other deductive expenses 850,000
Funeral expenses incurred in Japan 250,000 Total 1,050,000
Other deductible expenses 850,000 (2.6M/7.43M x 1,050,000) 367,429.34
Base 2,232,570.65
How much is the vanishing deduction? (Rounded off to nearest peso) Rate (80% - more than 1 yr. but not more than 2 yrs.) 80%
Vanishing deduction 1,786,057 *

A) 1,786,057 B) 1,772,059 Rounded off from: 1,786,056.52


C) 1,773,708 D) None
Answer >>>

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9/19/2012 

Mr. and Mrs. Penetrante gave the following donations: ANSWER: A


• On April 16, 2010, to Sean Paolo, Mr. Penetrante’s brother, on account of
marriage, cash worth P300,000 Solution:
• On November 2, 2010, additional donation to Sean Paolo, P200,000 Net gift (200,000 x ½) 100,000
• On January 15, 2011, property worth P400,000 to Mariel, daughter. Add, net gift, April 16 (300,000 x ½) 150,000
Total net gifts 250,000
How much is the donor’s tax payable by Mr. Penetrante on November 2,
2010? Tax on P200,000 2,000
P50,000 x 4% 2,000
Donor’s tax 4,000
Less: Tax paid April 16
Tax on P100,000 Exempt
P50,000 x 2% 1,000 1,000
A) 3,000 B) 4,000 Donor’s tax payable 3,000
C) 3,200 D) None
Answer >>>

Statement 1: The gross sales of a bar inside a passenger ship is subject to ANSWER: D
18% amusement tax. Gross sales of a bar inside a passenger ship is subject to VAT, not
Statement 2: Service charges which night clubs collect from their amusement tax.
customers and represented as charges in lieu of cash tip to the employees Service charges distributed to employees does not comprise the taxable
are included in the term “gross receipts” which are subject to amusement receipts subject to amusement tax.
tax.

A) True, True B) True, False


C) False, True D) False, False
Answer >>>

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9/19/2012 

Which one of the following is subject donor’s tax? ANSWER: D

A) Donation inter vivos to Iglesia ni B) Donation inter vivos to


Cristo International Rice Research
Institute
C) Cash contribution to a political D) Remission of debt where the
candidate, duly reported to the debtor did not render services in
Commission on Elections the favor of the creditor.
Answer >>>

Mr. X, single, died in the Philippines leaving an estate in the Philippines of ANSWER: A
P1,200,000 and P1,800,000 in South Korea. His estate in South Korea paid
an estate tax of P25,000 in that country. How much is the Philippine estate Total net estate (1.2 M + 1.8M) 3,000,000
tax due after tax credit for the estate tax paid to South Korea?

Tax on P2,000,000 135,000


1,000,000 x 11% 110,000
Estate tax 245,000
Less: Tax credit
Tax paid in South Korea 25,000
Limit (18/30x 245,000) 147,000
Credit allowed (lower) 25,000
Estate tax due after tax credit 220,000

A) 110,000 B) 98,000
C) 147,000 D) 220,000
Answer >>>

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9/19/2012 

Fill in the blanks: ANSWER: B


The following amusement places shall be subject to the corresponding tax
rates based on the gross receipts:
Jai alai and race tracks - ______%
Cockpits, cabarets, night and day clubs - ______%
Place for professional basketball games - ______%
Place for boxing exhibitions - ______%

A) 30, 15, 10, 18, respectively B) 30, 18, 15, 10, respectively
C) 30, 15, 18, 10, respectively D) 30, 18, 10, 15, respectively
Answer >>>

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