COMPREHENSIVE REVIEWER

FOR
REAL ESTATE TAXATION
JOHN C. FRIVALDO, CPA, MBA
BIR RDO 113 West

SALE OF REAL PROPERTY -

1. Which is not an ordinary asset?

a. Residential lot
b. Factory building
c. Land regularly sold by business
d. Land for business use

2. Which of the following statements is false?

a. A capital asset may be an asset connected or not connected with the trade or business of the taxpayer.
b. An asset used in business which is subjected to depreciation is an ordinary asset.
c. Inventory is an ordinary asset.
d. An asset held in business as investment is ordinary asset.

3. The term capital asset includes:

a. Stock in trade or other property included in the taxpayer’s inventory.
b. Real property not used in trade or business of the taxpayer.
c. Property primarily for sale to customers in the ordinary course of his trade or business.
d. Property used in the trade or business of the taxpayer and subject to depreciation.

4. Lots being rented when subsequently sold are classified as:

a. Capital assets c. Ordinary assets
b. Liquid assets d. Fixed assets

5. On capital gains on real property, which of the following statements is not true?
a. The tax should be paid, if in one lump sum, within 30 days from the date of sale.
b. The term initial payments is synonymous to down payment.
c. The installment payment of the tax of an installment sale should be made within 30 days from receipts
of each installment payment on the selling price.
d. The tax may be paid in installment if the initial payments do not exceed 25% of the selling price.

6. What BIR form is to be used to file and pay the capital gains tax?
a. 2000
b. 0605
c. 1706
d. 1801

7. What is the time for the filing of creditable withholding tax?

a. Within 30 days following each sale or disposition
b. Within 10 days following the end of the month in which the sale occurred
c. On the 25th day after the close of the month
d. On the 20th day after the close of the month

8. Sheree received a residential house with a fair value of P2,500,000 from his parents as a gift. After a
month, she sold it to Rudy for P2,000,000 only. How much is the tax liability of Sheree on the sale?
a. P 0
b. P30,000
c. P120,000
d. P150,000
For items 9 to 11:
On August 15, 2015, Mr. Cruz sold a 500 square meter residential house and lot for P3,000,000. The house
and lot was acquired in 2006 for P2,000,000. On the date of sale, the fair market value of the house and lot
as shown in the real property declaration were P1,500,000 and P1,000,000, respectively. The assessed
value amounted to P2,200,000. The zonal value of the lot was P5,000 per square meter.

9. The capital gains tax is:

a. P120,000
b. P150,000
c. P180,000
d. P240,000

10. The capital gains tax of Mr. Cruz if the proceeds of sale was utilized in acquiring a new residence is:
a. P0
b. P90,000
c. P132,000
d. P240,000

11. The amount to be deposited in escrow if the proceeds of the sale shall be utilized in acquiring a new
residence is:
a. P0
b. P120,000
c. P132,000
d. P240,000

12. Jane sold her principal residence for P5,000,000 when its fair market value was P6,000,000. The house
was purchased five years ago for P3,000,000. Out of the proceeds of P5,000,000, Jane utilized the
P4,000,000 for the purchase of a new residential house. The capital gains tax on the sale is:
a. P 0
b. P72,000
c. P288,000
d. P360,000

13. How much will be the surcharge for the late payment of capital gains tax on the sale of a house and lot in
the amount of P3,000,000?
a. P35,000
b. P45,000
c. P90,000
d. P75,000

14. How much should the DST be paid on the sale of a parcel of land whose selling price is P4,500,000 but the
zonal value was P5,000,000 and the fair market value in the tax declaration was P3,200,000?
a. P75,000
b. P67,500
c. P60,000
d. P48,000

15. Jet want a net proceeds of P2,625,000 from the sale of his property, exclusive of capital gains tax, DST, and
broker’s commission of 5%. In order for the broker to maintain the 5% commission, how much would be the
selling price?
a. P3,000,000
b. P3,300,000
c. P3,800,000
d. P4,000,000

16. A house and lot was sold for P6,500,000 with lot area of 1,000 square meter. The fair market value of the
improvement is P2,000,000 and lot is P2,500,000. The zonal value of the lot is P5,000 per square meter.
The sale is subject to capital gains tax. Compute the following:
Tax base:
a. P4,500,000
b. P5,000,000
c. P6,500,000
d. P7,000,000
 Capital gains tax?
a. P270,000
b. P300,000
c. P390,000
d. P420,000
Documentary stamp tax?
a. P75,000
b. P105,000
c. P67,500
d. P97,500

17. A subdivision developer is selling a house and lot package at P790,000. Compute the following:
Expanded withholding tax:
a. P39,500
b. P47,000
c. P23,700
d. P15,800
Documentary stamp tax:
a. P23,700
b. P11,850
c. P15,800
d. P7,900

VALUE-ADDED TAX –

1. Which of the following is not exempt from VAT?

a. Sale of adjacent residential lot valued at P1,919,500 and below
b. Sale of real properties utilized for low-cost housing
c. Lease of residential units with a monthly rental per unit not exceeding P12,800.00, regardless of the
amount of aggregate rentals received by the lessor during the year
d. Sales of house and lot and other residential dwellings valued at above P3,199,200

2. Which of the following statement is not true?

a. Sale of residential lot with gross selling price not exceeding P1,919,500.00 is VATable.
b. Sale of parking lot is VATable which may or may not be included in the sale of condominium units is a
separate and distinct transaction and is not covered by the rules on threshold amount not being a
residential lot, house and lot or a residential dwelling.
c. Lease of residential units where the monthly rental per unit exceeds P12,800.00 but the aggregate of
such rentals of the lessor during the year do not exceed P1,919,500.00 shall likewise be exempt from
VAT, however, the same shall be subjected to 3% percentage tax.
d. The gross receipts from rentals exceeding P12,800.00 per month per unit shall be subject to VAT if the
aggregate annual gross receipts from said units only (not including the gross receipts from units leased
for not more than P12,800.00) exceeds P1,919,500.00. Otherwise, the gross receipts will be subject to
the 3% percentage tax.

3. What are the tax rate and the tax base for VAT?
a. 10% of the gross selling price
b. 12% of the net selling price
c. 10% of the net selling price
d. 12% of the gross selling price

4. What is the BIR Form for the monthly VAT return?

a. 2550M
b. 2551M
c. 1701Q
d. 2307

5. On November 16, 2012, Big Corporation sold a 300 square meter idle commercial lot for P3,360,000
(inclusive of VAT). The lot was acquired in 2010 for P2,000,000. On the date of sale, the fair market value of
the lot as shown in the real property declaration was P2,500,000 and the assessed value amounted to
P2,200,000. The zonal value was P7,000 per square meter.
What is the tax base for capital gains tax purposes?
a. P2,100,000
b. P2,500,000
c. P3,000,000
d. P3,818,182
6. Effective January 1, 2012, the ceiling for exemption from VAT of the sale of a residential lot has been
increased to:
a. P1,500,000
b. P2,500,000
c. P1,919,500
d. P1,900,000

7. Spouses X and Y are both real estate brokers. For 2012, X will earn P1,850,000 and Y will earn
P2,000,000. How much will be the VAT paid by the spouses?
a. P385,000
b. P462,000
c. P240,000
d. P200,000

8. A corporation sold two adjacent residential lots to Mr. X in a subdivision this March 2012, Lot 1 at
P1,800,000 and Lot 2 at P2,200,000. What will be the VAT paid by Mr. X?
a. P264,000
b. P480,000
c. P400,000
d. Exempted

9. A developer who will sell a residential condominium unit in 2012 will not be subject to VAT if the sales price
does not exceed:
a. P2,500,000
b. P1,919,500
c. P3,199,200
d. P3,000,000

10. An owner who leases out his house regularly in his business of leasing earns a monthly rental of P50,000
on one residential house and another P100,000 per month on his rentals from his office building. How much
will be his monthly output VAT?
a. P144,000
b. P216,000
c. P54,000
d. P18,000

ESTATE TAX –

1. It is a tax levied on the transmission of property from a prior decedent to his heirs.
a. Donor’s tax b. Estate tax c. Decedent’s tax d. Heir’s tax

2. Which is not includible in the gross estate?

a. Transfer under a general power of appointment
b. Transfer in contemplation of death
c. Transfer under a special power of appointment
d. Revocable transfer

3. Which is not deductible from gross estate as funeral expense?

a. Mourning apparel of surviving spouse
b. Actual funeral expense beyond P200,000
c. Actually incurred wake expenses supported by receipts
d. Expenses incurred in internment rites

4. For estate tax purposes, the estate of the decedent shall be valued at the time:
a. Of the preparation of the estate tax return
b. The estate tax is paid.
c. Of death of the decedent.
d. The estate is distributed to the heirs.

5. The amount of funeral expenses that may be deducted from gross estate:
a. 5% of the gross estate or actual funeral expenses, whichever is lower.
b. Always 5% of the gross estate.
c. Actual funeral expenses incurred.
d. 5% of the gross estate or actual funeral expenses incurred whichever is higher.

6. What BIR form is to be used to file and pay the estate tax?
a. 0605
b. 1601
c. 1701
d. 1801
7. What is the time for the filing of the notice of death?
a. Within 2 months from the decedent’s death
b. Within 6 months from the decedent’s death
c. On the 10th day after the close of the month
d. On the 25th day after the close of the month

For items 8 to 13:

Mr. Almido, Filipino and head of a family, died leaving the following properties:
House and lot in Juna Subdivision (family home) 3,750,000
Honda Accord 812,500
Fish pond in Panabo 625,000
Time deposit in Metrobank 1,875,000
The following are being claimed by his executor as deductions:
Actual funeral expenses 312,500
Judicial expenses 37,500
Claims against the estate 187,500
Family home 3,750,000

8. The deduction for funeral expenses is:

a. P187,500
b. P200,000
c. P312,500
d. P353,130

9. The deduction for family home shall be:

a. P 0
b. P1,000,000
c. P1,875,000
d. P3,750,000

10. The total deduction to be claimed is:

a. P425,000
b. P537,500
c. P1,425,000
d. P2,425,000

11. The gross estate is:

a. P3,750,000
b. P4,562,500
c. P5,187,500
d. P7,062,500

12. The net taxable estate is:

a. P2,137,500
b. P2,325,000
c. P4,637,500
d. P5,637,500

13. The estate tax due is:

a. Exempt
b. P170,750
c. P425,125
d. P560,625

Tax Table for Estate:

Not over 200,000 Exempt
Over 200,000 but not over 500,000 0 + 5%
Over 500,000 but not over 2,000,000 15,000 + 8%
Over 2,000,000 but not over 5,000,000 135,000 + 11%
Over 5,000,000 but not over 10,000,000 465,000 + 15%
Over 10,000,000 1,215,000 + 20%
DONOR’S TAX –

1. An act of liberality whereby one disposes gratuitously of a thing or right in favor of another who accepts it –
a. Succession
b. Occupation
c. Donation
d. Tradition

2. A tax imposed on gratuitous transfer of property between two or more persons who are living at the time of
transfer is made:
a. Estate tax
b. Gift tax
c. Income tax
d. Transfer tax

3. All of the following, except one, are exempt from donor’s tax:
a. Donation to the Philippine National Red Cross
b. Donation to the Development Academy of the Philippines.
c. Donation directly given to the victims of the eruption of Mt. Mayon
d. Donation to the City of Davao for public purpose

4. A stranger in donor’s taxation:

a. Great grandchild
b. Nephew
c. Child by natural adoption
d. Grand auntie

5. What BIR form is to be used to file and pay the donor’s tax?
a. 1800
b. 1600
c. 1700
d. 1900

6. What is the time for the filing of the donor’s tax?

a. Within 2 months from the date of the gift
b. Within 30 days after the date the gift is made
c. On the 5th day after the close of the month
d. On the 10th day after the close of the month

7. Rex donated P500,000 to Heart Corporation. The donor owns 80% of the outstanding capital stock of the
donee-corporation. The donor’s tax due on the donation is:
a. P14,000
b. 150,000
c. 40,000
d. None

For items 8 to 10:

Mr. X, a philanthropist, donated 1,000 square meter lot to the City of Davao to be set up as a basketball
court. The lot has a cost of P2,000,000 and fair market value of P5,000,000.

8. How much must be included as part of Mr. X’s gross gift?________________ 5,000,000
9. How much of the gross gift is exempt?________________ 5,000,000
10. The net gift is___________ 0

For items 11 to 17:

Mr. and Mrs. Samonte gifted their son Rudy with a BMW on account of his forthcoming marriage to Cara.
The luxury car has a fair market value of P2,000,000 at the time of donation.

11. How much must be included as part of Mr. Samonte’s gross gift?_____________
12. How much must be included as part of Mrs. Samonte’s gross gift?____________
13. Is Mr. Samonte entitled for an exemption? If so, for how much?______________
14. Is Mrs. Samonte entitled for an exemption? If so, for how much?_____________
15. How much is Mr. Samonte’s net gift?________
16. How much is Mrs. Samonte’s net gift?________
17. Compute the following:
a. Donor’s tax on net taxable gift of P850,000______________
b. Donor’s tax on net taxable gift of P12,500,000____________

Tax Table for Donation:

Not over 100,000 Exempt
Over 100,000 but not over 200,000 0 + 2%
Over 200,000 but not over 2,000,000 2,000 + 4%
Over 500,000 but not over 5,000,000 14,000 + 6%
Over 1,000,000 but not over 10,000,000 44,000 + 8%
Over 3,000,000 but not over 5,000,000 204,000 + 10%
Over 5,000,000 but not over 10,000,000 404,000 + 12%
Over 10,000,000 1,004,000 + 15%