ReSA The Review School of Accountancy MTel. No. 735-9807 & 734-3989 February 3, 2018 (Saturday) First Pre- we-Board Examination 8:00 AM to 11:00 A.M: INSTRUCTIONS: Sol MULTIPLE CHOICE Mark only one snsect the Cortect answar for each of the Following questions. letter of your cherie or Gach item by studing the box corresponding to the Use choice on the sheet provided. STRICTLY NO ERASURES ARE ALLOWED. encil no. 2 only, a 4, Estate tax is: 4.4 personal tax D. @ property tar. c.an excise tax. G. a specific tax. Estate taxation is governed by the statute in tor @-at the time of the filing of the estate tax return b. at the tine of death of the decede: — €-at the tine the beneficiaries and heics #ee tinally dace G. at the time the aduinisteator or execitcr shalt have qualified. ined nts is correct for Philippine estate tax purposes as far the Philippines only. re Proper tueted b. Shares, obligations oF bonds Sssued by any foreign corporation that have acquired business situs in the Philippines shall be considered as" intangible personal Resident alien decedent: " Philippines 1a not included in the gross eatats of the resident alien decedent. Which of the following statements is incorrect in connection with valuation of shares of stock for estate taxation purposes? a. In the case of shares of stocks, the fair market value shall depend on whether the shares are listed or unlisted in the stoék exchanges. b, Unlisted common shares are valued based on their book value while unlisted preferred shares are valued at par value. ¢, In determining the book value of common shares, appraisal surplus shall be considered as well as the value assigned to preferred shares, if there are any d. For shares which are listed in the stock exchange, the fair market value shall be the arithmetic mean between the highest and lowest quotation at a date nearest the date of death, if none is available, on the date of death itself, For the purpose of determining properties to be included in the decedent's aross estate, an inter vivos gifts made by decedent to his children within @ very short time before he died due to his incurable sickness shall be considered: a. Transfer in contemplation of death and to be included in the gross estate. b. Valid transfer inter vivos and not to be included in the gross estate. c. Transfer with retention or reservation of certain rights and to be included in the gross estate, d. Revocable transfer and to be included in the gross estate. Amount received by the heirs of a decerient as compensation or total settlement for the persona injuries and damages which led to the aeath of a decedent, representing what the decedent would have earned as somebody wio was gainfully employed daring nis Lifetime ii a. Included in the decedent's gross estate because it is a claim against a third person and therefore, receivable by the estate. b, Not included in the gross estate because it is not yet the decedent’s property existing at the time of his death. ¢- Included in the decedent’s gross estate because, as a rule, income to be earned are deemed owned at the time of death d. Not included in tne decedent's gross estate because all compensation or total settlement for personal injuries are not subject to estate tax.ReSA: The Review School of Accountancy Page 2 of 9 7. The administrator of the Estate of Juan Santos claims as deduction from the gross estate a receivable from a person who absconded. His assertion is that the claim against that person can no longer be collected. He also explains that for income tax Purposes bad debts are deductible from the qross income so the receivable from a Person who absconded shall also be treated in the same manner as in estate tax. Is his assertion correct? 4. Yes, not to allow it to be deducted from the gross estate will be a great injustice because of the fact that collection is almost impossible. b. No, to be allowed as deduction from the gross estate the claim must be against an insolvent debtor and that the incapacity of the person must be a fact and not merely alleged. Yes, all items that are deductible from gross income for income tax purposes ate also allowed to be deducted from the gross estate. a. No, the regulations are not clear and it requires BIR ruling for such claim to be’ allowed as deduction. 8. Mr. Narciso Cruz had a personal obligation existing at the time of his death amounting to P900,000. The creditor, Mr. Mario Santos, upon learning Narciso’s death decided to Gendone one-half of the debt. What amount of claims against the estate covld the estate Narciso deduct from the gross estate for Philippine estate tax purposes? a. 500,000 tero b. 250,000 4d. None of the choices 9, To mitigate the harhness of successive taxation of the same property occasioned by the death occurring within a short period of time, the law allows as deduction: a. Claims against the estate. b, Claims against insolvent persori. c. Vanishing deduction. 4. Share of surviving spouse. 10. ‘The administtator of the Sstate of John Smith, resident alien, contended that the Property of the late John smith situated outside the Philippines should no longer be included in the Estate’s Gross Estate for Philippine estate tax purposes. The reason Posited was - the properties were already subjected to foreign estate tax. then in the Philippine gross estate would result to double taxation? was che administrator’s contention correct? ‘To include a. Yes, because truly, subjecting the same properties to the game tax twice would zesult to double taxation. b. No, because the gross estate of a resident alien should include properties wherever situated. c. Yes, because it would not be just to include the properties outside the Philippines as they do not enjoy protection from the Philippine government a. No, because the gross estate of a resident alien should include properties wherever situated and the foreign estate tax paid could be claimed as estate tax credit. 11. When shall the estate tax be paid? a. within 2 years after the decedent's death. b. within 6 months after the decedent's death. c. As return is filed. d. Anytime during the year the decedent died. 12. The estate tax return of the estate of a Japanese residing in Tokyo with no properties in the Philippines at the time of death shall be filed with the: ‘a. Office of the Commissioner (RDO No. 39 - South Quezon City). b. Revenue District Office where the executor or administrator is registered. c. Revenue District Office having jurisdiction over tne administrator's legal residence. d. None of the choices executor ich of the following statement is incorrect? 13, which of fGyest for extension to file the estate tax, return should be filed petore @- tne expiration of the original period to pay which is within 6 months from Geath of the decedent a seeiSn'for extension of time to file the retumn and extension of tim Berne ara Otlan shell be filed with the RDO where the estave ia required to Oey Sostrin end file the estave tax return. aoe ce must be a finding that the payment on the due date of the est oe \due hardship upon the estate or any of the heirs. pond eee Ye exceeding five (5) years whether the a, Niue Wimelon must be for a period not @ estate ig settled judicially or not.ReSA: The Review School of Accountancy Page 3 of 9 14s the exec ecuto: distributed teen Paid the estate tax and the properties of the estate had been an unpaid estate ea tSs UPON BIR examination, it was found out that there was stiit a. Executan” (2%: KO should be Liable for ‘the unpaid tax? B. Any of the legal heirs ©. Surviving spouse . None of the choices 15. The administrat tor “ministration and enjoyment of the conjugal partnership property shall belong @: the husband being the head of family. b. the wite wnen waived by the husband. &. both husband and wife jointly. a. the family, * 16 to 20 are based on the following: The decedent, resident alien, a married man with a surviving ‘Spouse under absolute community of properties, with the following data died on March 1, 2017: Real properties Family lot inherited by the decedent before marriage 3 years before he died, FMV at the time inherited, P1,200,000 with P500,000 unpaid mortgage assumed by the present decedent) FMV at the time of death P1,500,000.00 Family house built using the salary earned by the surviving spouse during the marriage, FMV 3,900,000.00 Coconut farm inherited by the surviving spouse during the marriage, FMV 1,000,000.00 Mango orchard, FMV 11,800,000.00 Personal properties Bank deposit under the name of the decedent representing, salary earned before marriage 2.150,000.00 Gold necklace inherited by the surviving spouse during the marriage 120,000.00 Several pieces of jewelry acquired during the marriage using the exclusive money 'of the decedent 300,000.00 ‘The following expenses / deductions are claimed: Funeral expenses (40% shouldered by relatives) 100,000.00 Judicial expenses (including, P50,000 00 lawyer's fee incurred on September 5, 2017) 120,000.00 A piece jewelry lost through theft on August 15, 2017 50,000.00 Gambling debts of the decedent 70,000.00 Unpaid realty tax (coconut farm) for the three (3) quarters of 2017 150,000.00 Claims against an insolvent debtor (25% can be collected) 80,000.00 ‘Medical expenses 600,000.00 16. The community properties are: a. PB, 750,000. cc. P7,550, 000. b. P7, 630,000. d. None of the choices. 17, The exclusive properties are: 1,800,000 cc. P300,000. b.’ PL, 500,000. d. None of the choices. 18. The family home deduction i ‘a. P2, 700,000. ce. Zero. b. 1,000,000. d. None of the choices. 19. Value to take for vanishing deduction is: a. P1, 500,000. ce. P700, 000. b. P1, 200,000. d. None of the choices. 20. Due date for the filing of estate tax return is: ‘a. September 1, 2017. ¢. March 30, 2017. b. August 31, 2017. d. March 25, 2017. 21. donor's tax does not apply on: a. indirect gift. b, transfer in trust. c. donation of intangible properties. a. revocable transfers.