Business Taxation Solman Tabag@garcia PDF

SOLUTIONS
MANUAL
TRANSFER & BUSINESS TAXATION, 2018 Edition
By: TABAG & GARCIA
CHAPTER 1 – SUCCESSION & TRANSFER TAXES

TRUE OR FALSE
1. TRUE 6. TRUE 11. FALSE 16. TRUE
2. TRUE 7. FALSE 12. TRUE 17. FALSE
3. TRUE 8. FALSE 13. TRUE 18. TRUE
4. FALSE 9. TRUE 14. TRUE 19. TRUE
5. FALSE 10. FALSE 15. FALSE 20. TRUE
MULTIPLE CHOICE
1. D 12. C 23. D 34. D 45. B
2. A 13. C 24. B 35. B 46. C
3. D 14. B 25. D 36. B 47. D
4. C 15. D 26. D 37. D 48. D
5. C 16. C 27. B 38. B 49. A
6. A 17. B 28. D 39. D 50. B
7. B 18. D 29. A 40. D 51. A
8. A 19. C 30. D 41. B 52. D**
9. B 20. B 31. B 42. D 53. D
10. A 21. B 32. A 43. B 54. D
11. D 22. B 33. D 44. B 55. B
**Inheritance and repudiation takes effect upon death of the decedent
CHAPTER 2 – GROSS ESTATE
PROBLEM SOLVING
(P2.1) (1) P19,300,000 (2) P19,300,000 (3) P11,800,000 (4) P14,300,000
Citizen/ Resident NRA with R NRA w/o R
(# 1 & 2) (# 3) (# 4)
Family home in the Philippines P8,000,000 P8,000,000 P8,000,000
Parcel land of with vacation house in Malaysia 5,000,000
Farm land in the Philippines 3,000,000 3,000,000 3,000,000
Shares of stock of a DC 2,000,000 2,000,000
Shares of stock of a foreign corporation the entire business of which is 500,000 500,000
in the Philippines, deposited in a bank safety deposit box in Malaysia
Receivable from a friend who has no property whatsoever 300,000 300,000 300,000
Receivables under insurance policies:
§ Life insurance with his estate as revocable beneficiary 200,000 200,000 200,000
§ Life insurance with his daughter as revocable beneficiary 300,000 300,000 300,000
§ Life insurance with his son as irrevocable beneficiary - - -
§ Life insurance (group) taken by the employer of the decedent - - -
§ Property insurance for loss of property 50,000 50,000 50,000
§ Accident insurance, for injury sustained 50,000 50,000 50,000
TOTAL GROSS ESTATE P19,300,000 P11,800,000 P14,300,000

1 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

(P2.2)
To Juan P25,000,000
To Pedro 18,000,000
To Maria 15,000,000
To Sisa 20,000,000
Total Gross Estate P78,000,000

(P2.3)
Shares of stock (Frozen Co.)
[(P8M+3M)/800,000sh x 100,000 shares P1,375,000
Shares of stock (Divergent Co..)
100,000 shares x P15** 1,500,000
Shares of stock (Lenovo Co..)
100,000 shares x P12 1,200,000
***Mean value shall be used only if the quotation price at the date of death is not determinable (RR 2-2003)
(P2.4) (1)P230,0000; (2)P1,100,000; (3)P0; (4)P5,000,000; (5)P1M + [1M x (1M x 10% x 1.5)] = P1,150,000
MODIFIED IDENTIFICATION
EXERCISE A
1. Included 6. Excluded
2. Included 7. Excluded *
3. Excluded 8. Included **
4. Included 9. Excluded
5. Excluded 10. Included***
*Designated by the prior decedent
**Exclusions from the gross estate. Nonetheless, the tax code requires these items to be included first in the gross estate before
deducting the same from the gross estate.
*** Bequests to charitable institutions are considered exclusions from the gross estate only if the problem clearly states that not
more than 30% were used for administrative purposes. However, even if not more than 30% of the bequests were used for
administrative purposes, the tax code still require these items to be included first in the gross estate before deducting the same for
estate tax purposes.
EXERCISE B EXERCISE C
1. P0; valid sale 1. P10M
4. P4,000,000 4. P10M
5. P6,000,000 5. P0
TRUE OR FALSE
1. TRUE 6. FALSE 11. FALSE 16. TRUE
2. TRUE 7. FALSE 12. TRUE 17. TRUE
3. TRUE 8. FALSE 13. TRUE 18. FALSE
4. FALSE 9. TRUE 14. FALSE 19. TRUE
5. TRUE 10. TRUE 15. FALSE 20. FALSE
MULTIPLE CHOICE
1. A 16. D 31. C 46. C 61. A
2. B 17. C 32. C 47. D 62. A
3. D 18. B 33. B 48. C 63. A
4. B 19. D 34. A 49. A 64. C
5. C 20. A 35. B 50. C 65. D
6. C 21. D 36. B 51. D 66. B

7. A 22. A 37. D 52. D 67. A
8. B 23. A 38. B 53. C 68. C
9. A 24. B 39. B 54. C 69. C
10. A 25. C 40. C 55. C 70. D
11. A 26. C 41. C 56. B 71. D
12. B 27. C 42. C 57. D 72. A
13. D 28. C 43. B 58. C 73. D
14. A 29. D 44. B 59. C 74. D
15. C 30. B 45. B 60. A
Supporting Computations (Multiple Choice):
(22).
Common stock-Sunchamp [(P40+39)/2] x 2,000 shares P79,000
Common stock – AgriNurture (1,500 shares x P45) 67,500
Preferred stock – Greenery (3,000 shares x P50 par value) 150,000
Car @ FMV 400,000
Real properties @ zonal value 120,000
Total Exclusion from the gross estate P816,500
(23).
Bank deposit in the foreign branch of a domestic bank P500,000
Bank deposit in Makati branch of a foreign bank 300,000
Shares of stock issued by a domestic corporation 1,000,000
(certificate kept in Canada)
Franchise exercised in Manila 800,000
Receivable, debtor from Mindanao 200,000
Total Exclusion from the gross estate P2,800,000
(24).
House and lot, family home in Quezon City P1,500,000
Bank deposit in Makati branch of a foreign bank 300,000
Shares of stock issued by a domestic corporation 1,000,000
(certificate kept in Canada)
Franchise exercised in Manila 800,000
Receivable, debtor from Mindanao 200,000
Total Inclusion from the gross estate P3,800,000
(26).
Shares of stocks, domestic corp. P250,000
(certificate kept in UK)
Shares of stocks, domestic corp. 100,000
(certificate kept in Phils.)
Franchise exercised in the Phils. 200,000
Receivables, debtor is from Phils. 50,000
Intangibles subject to reciprocity P600,000
(27).
Land & building, Philippines P2,000,000
House and lot, Philippines 3,500,000
Shares of stocks, domestic corp. (certificate kept in UK) 250,000
Shares of stocks, domestic corp. (certificate kept in Phils.) 100,000
Franchise exercised in the Phils. 200,000
Receivables, debtor is from Phils. 50,000
Gross Estate P6,100,000

(33). (P12M/100,000) x 1,000 shares = P120,000
(34). P100 x 1,000 shares = P100,000; Par Value=P10M/100,000 = P100/share
(35). P110 x 1,000 shares = P110,000
(36). (P140 + P80/2) x 1,000 shares = P110,000
(44).
Consideration FMV upon transfer FMV upon death Gross Estate
received
Land P1,500,000 P1,500,000 P2,000,000 None. Valid sale
Shares of stock 100,000 50,000 150,000 None. Valid sale
Vintage car 50,000 80,000 100,000 P50,000
Painting 250,000 400,000 500,000 250,000
INCLUSION IN THE GROSS ESTATE P300,000
(48). Includible in the Gross Estate = FMV @ time of “+” less Consideration received = P300k-P100k = P200,000
CHAPTER 3 – DEDUCTIONS FROM THE GROSS ESTATE
PROBLEM SOLVING
(P3.1) (Funeral Expenses)
Case A: P150,000; Case B: P200,000; Case C: P150,000; Case D: P150,000
(P3.2) (Funeral Expenses)

Question # 1: Actual P300,000 vs Limit of P175,000 ; Funeral expenses = P175,000; Question # 2: none
(P3.3) P0
Mourning clothing (donated by the decedent’s employer) P-
Expenses paid by relatives -
Telecommunication charges paid by the friends -
Cost of burial plot, coffin, interment fees and other funeral charges paid by -
an insurance company
DEDUCTIBLE FUNERAL EXPENSE -nil-
(P3.4) P183,500 computed as follows:

Embalming charges P15,000
Burial apparel of the decedent 3,500
Cost of coffin 85,000
Mourning apparel of the surviving spouse during the burial 2,000
Mourning apparel of the minor child (P12,000/6) 2,000
Snacks and drinks during the wake 12,500
Honoraria of priest for daily masses before burial 4,000
Telecommunication charges to inform relatives 10,000
Charges for death notice published in a newspaper 1,500
Cost of video footage of the burial and interment 12,000
Funeral car service during interment 4,000
Honorarium of priest who celebrated the mass during interment 2,000
Cost of tombstone 30,000
ACTUAL FUNERAL EXPENSE P183,500
Vs. Limit (P5% of P10M) 500,000
ALLOWABLE FUNERAL EXPENSE P183,500
NOTE: Hospital bills for two months of confinement before decedent’s death should be charged to “medical expenses”

(P3.5)
Question 1: P217,500
Question 2: P217,500
Same answer with question #1. Whether or not the estate was settled judicially is irrelevant in the
determination of allowable deduction for judicial expenses.
Solution:
Expenditures incurred for the collection of assets and payment of debts P100,000
Attorney’s fees (1/2 were incurred after six months) P40,000 x 1/2 20,000
Accountant’s fees 25,000
Executor’s commission 15,000
Appraiser’s fees 2,500
Court fees 18,000
Cost of preserving and distributing the estate 15,000
Cost of storing or maintaining the property of the estate 12,000
Brokerage fees for selling property of the estate 10,000
Total allowable judicial expenses P217,500

To the executor, for time and effort in executing the will P30,000
To a lawyer, for legal advice in carrying out the will 80,000
To an appraiser, for establishing property values 70,000
To an accountant, for estate tax return preparation 30,000
Court fees 18,000
Cost of preserving and distributing the estate 15,000
Cost of storing or maintaining the property of the estate 12,000
Brokerage fees for selling property of the estate 10,000
DEDUCTIBLE JUDICIAL EXPENSES P265,000
(P3.7) P2,500,000 computed as follows:

Loss due to shipwreck, two (2) months after the decedent’s death. P500,000
Robbery loss, seven (7) months after the decedent’s death. The decedent’s 2,000,000
executor was allowed by the Bureau of Internal Revenue to extend the filing
(within the period allowed by the Tax Code) **Assume Prior to TRAIN Law
Allowable Deduction P2,500,000
(P3.8) P2,097,000 computed as follows:

Ordinary Deductions:
Claim against insolvent person (500,000-400,000) P100,000
Unpaid taxes on the estate before death 150,000
Unpaid mortgage on the estate 200,000
Funeral expenses 200,000
Actual = P182,000 + 37,500 = P219,500
Limit = P5M x 5% = P250,000
Maximum = P200,000
Judicial expenses 100,000
Unpaid loans arising from debt instruments (notarized) 125,000
Unpaid loans arising from debt instruments (not notarized). The debt 75,000
instrument was issued by a financial institution not requiring notarizations
for debt instruments issued
Casualty loss 65,000
Special Deductions:
Standard deduction 1,000,000
Medical expenses 82,000
Total Allowable deduction from the gross estate P2,097,000

(P3.9) (Claim Against Insolvent Persons)
Case A: P100,000
Case B: P333,333 computed as follows:

Receivable P500,000
Collectible portion (400/1,200) x 500,000 (166,667)
Deductible claim (Uncollectible portion) P333,333
Case C: P0. Debtor is not insolvent
Case D: P250,000
Total Assets P1,200,000
Taxes payable (Gov’t is a priority creditor) (800,000)
Assets after deducting unpaid taxes P400,000
Receivable (CAIP) P500,000

Collectible (400/800) x 500,000 (250,000)
Deductible Claim against Insolvent Persons P250,000

Uncollectible receivable from Juan P100,000
Uncollectible receivable from Manuel 100,000
Total P200,000

Debtor’s Assets P400,000
Taxes payable (Gov’t is a priority creditor) (200,000)
Assets after deducting unpaid taxes P200,000
Receivable (CAIP) P200,000

Collectible (200/600) x 200,000 (66,667)
Deductible Claim against Insolvent Persons P133,333

Value to take P937,500
1st Deduction: Mortgage paid (187,500)
Initial basis P750,000
2nd Deduction: Proportionate deduction
(750/4,500) x 562,500 (93,750)
Final Basis P656,250
x Vanishing rate 40%
Vanishing Deduction P262,500

(P3.13) STANDARD DEDUCTION
DECEDENT DIED
CASE PRIOR TO 2018 ON OR AFTER JAN. 1, 2018
A P1,000,000 P5,000,000
B P1,000,000 P5,000,000
C P1,000,000 P5,000,000
D P0 P500,000
E P0 P500,000
(P3.14) MEDICAL EXPENSES – DECEDENT DIED BEFORE 2018

Case A: P500,000
Case B: P500,000
Case C: P150,000
Case D: P500,000
Case E: P0
& NOTE: Medical Expenses are no longer deductible from the GE of a decedent who died on or after Jan. 1, 2018
(P3.15) FAMILY HOME

Case A: P10,000,000
Case B: P5,000,000
Case C: P0; exclusive property of the surviving spouse
Case D: P10,000,000
Case E: P12M/2 = P6,000,000
Case F: P750,000; [ 5M + (5,000,000/2)] = P7,500,000
& NOTE: Maximum deductible Family Home for decedent who died:
o Prior to 2018 – P1,000,000
o On or after Jan. 1, 2018 – P10,000,000
(P3.16)
CASE A – Decedent died before 2018:
Question 1: P2,430,000 (Decedent: Resident Citizen)
Question 2: P2,430,000 (Decedent: Resident Alien) (same computation with Q#1).
Domestic shares of 2,000 shares inherited 6 years ago P800,000
House and lot, family home, located in Europe, inherited 2 years ago 2,000,000
Jewelry items, in the Philippines at the time of death 400,000
Jewelry items kept in a vault abroad 200,000
Bank deposit in a Philippine branch of a U.S. bank 500,000
Transfer for Public Use (donation to the gov’t provided in his will) 250,000
GROSS ESTATE P4,150,000
ORDINARY DEDUCTIONS:
Funeral expenses, Philippines (max.) 200,000
Judicial expenses, abroad 100,000
Judicial expenses, Philippines 50,000
Claims against the estate 120,000
Transfer for Public Use 250,000 (720,000)
Vanishing deductions (NONE; The shares were inherited 6 years ago - -
and the House and Lot is located abroad)

SPECIAL DEDUCTIONS
Standard Deduction 1,000,000
Family Home (located abroad) -
Medical Expenses -
RA 4917 - (1,000,000)
NET TAXABLE ESTATE P2,430,000
CASE B – Decedent died after the effectivity of TRAIN Law:

Question 1: (P2,313,012); (Decedent: Resident Citizen)
Question 2: (P2,2313,012); (Decedent: Resident Alien) (same computation with Q#1).
Domestic shares of 2,000 shares inherited 6 years ago P800,000

House and lot, family home, located in Europe, inherited 2 years ago 2,000,000
Jewelry items, in the Philippines at the time of death 400,000
Jewelry items kept in a vault abroad 200,000
Bank deposit in a Philippine branch of a U.S. bank 500,000
Transfer for Public Use (donation to the gov’t provided in his will) 250,000
GROSS ESTATE P4,150,000
ORDINARY DEDUCTIONS:
Funeral expenses, Philippines (max.) -
Judicial expenses, abroad -
Judicial expenses, Philippines -
Claims against the estate 120,000
Transfer for Public Use 250,000
Vanishing deductions 1,093,012**
(Shares of stocks = None; House and Lot = the requirement that
the property must be located in the Philippines was repealed
under the TRAIN Law) (1,463,012)
SPECIAL DEDUCTIONS
Standard Deduction (TRAIN Law) 5,000,000
Family Home (located abroad) -
Medical Expenses -
RA 4917 - (5,000,000)
NET TAXABLE ESTATE (P2,313,012)
Value to take P1,500,000

1st Deduction: Mortgage paid -
Initial basis P1,500,000
(1,500/4,150) x P370,000 (133,735)
Final Basis P1,366,265
Vanishing Deduction P1,093,012**

(P3.17)
CASE A – Decedent died prior to effectivity of the TRAIN Law:
Question No. 1
TFPU P300,000
House and Lot in Makati (Family Home) 1,500,000
Personal properties 1,500,000
Farm Lot 825,000
Claim against insolvent person 225,000
Transfer in contemplation of death 1,500,000

Allowable Deductions
Funeral expenses (200,000)
Judicial expenses (67,500)
TFPU (300,000)
Claim against insolvent person (225,0000)
Unpaid mortgage on farm lot (75,000)
Standard deduction (1,000,000)
Medical expenses (225,000)
Family Home (1,000,000)
TAXABLE NET ESTATE P2,757,500
Question No. 2
Mortgage paid (P150,000-P75,000) (75,000)
Initial Basis 500,000
Proportional deduction
(500/5,850) x 867,500 (74,145)
Final Basis 425,855
Vanishing deduction rate 20%
Vanishing Deduction*** P85,171
NET ESTATE without VD (from Q#1) P2,757,500

Vanishing Deduction*** (85,171)
TAXABLE NET ESTATE P2,672,329

CASE B – Decedent died after the effectivity of the TRAIN Law:
Question No. 1
TFPU P300,000
House and Lot in Makati (Family Home) 1,500,000
Personal properties 1,500,000
Farm Lot 825,000
Transfer in contemplation of death 1,500,000

Allowable Deductions
Funeral expenses -
Judicial expenses -
TFPU (300,000)
Unpaid mortgage on farm lot (75,000)
Medical expenses -
TAXABLE NET ESTATE (P1,250,000)
Question No. 2
Mortgage paid (P150,000-P75,000) (75,000)
Initial Basis 500,000
Proportional deduction
(500/5,850) x 600,000 (51,282)
Final Basis 448,718
Vanishing deduction rate 20%
Vanishing Deduction*** P89,744
NET ESTATE without VD (from Q#1) (P1,250,000)

Vanishing Deduction*** (89,744)
TAXABLE NET ESTATE (P1,339,744)

(P3.18)
CASE A – Decedent died prior to effectivity of the TRAIN Law:
Question No. 1
VALUE TO TAKE (LAND) P1,250,000
MORTGAGE PAID (50,000)
INITIAL BASIS 1,200,000
Proportionate Deduction:
(1,200/7,800 x P900,000**) (138,462)
FINAL BASIS P1,061,538
VANISHING DEDUCTION % 20%

VANISHING DEDUCTION P212,308
Correct ELIT + TFPU:
=1,200+100-100-600+300=900,000***
Question No. 2
ELIT (600,000)
TFPU (300,000)
Vanishing deduction (212,308)

Death benefits (RA4917) (200,000)
Net taxable estate P3,987,692
CASE B – Decedent died after the effectivity of the TRAIN Law:
Question No. 1
VALUE TO TAKE (LAND) P1,250,000
MORTGAGE PAID (50,000)
INITIAL BASIS 1,200,000
Proportionate Deduction:
(1,200/7,800 x P700,000**) (107,692)
FINAL BASIS P1,092,307
VANISHING DEDUCTION % 20%
Correct ELIT + TFPU:
=1,200k+100k-300k-600k+300k TFPU=P700,000***

Question No. 2
Losses, Indebtedness, Taxes (LIT) (400,000)
TFPU (300,000)
Vanishing deduction (218,462)
Medical expenses (repealed under TRAIN Law) -

Death benefits (RA4917) (200,000)
Net taxable estate (P318,462)
(P3.19) DECEDEND DIED PRIOR TO EFFECTIVITY OF THE TRAIN LAW:
Question No. 1
Cash in bank P1,200,000
Residential House and lot in Q.C. (200sq.m. x P12,000) 2,400,000
Agricultural land in Canada 1,500,000
Devised to Quezon City government (TFPU) 1,100,000
Common stocks of Digong Corporation (5,000 sh. X P100) 500,000
Common stocks of Mar Corporation (15,000 sh. X P50) 750,000
Preferred stocks of Gracy Inc. (3,000 sh. X P50) 150,000
Shares of stock in a foreign corporation 170,000
Car 500,000
Receivables from Miriam 80,000
RA 4917 250,000
Questions No. 2-9:

Gross Estate (From Question No. 1) P8,600,000
Claims against the estate/ Indebtedness (500,000)
Receivables from an insolvent person (80,000)
Vanishing deduction -
TFPU (1,100,000)
Standard Deduction (1,000,000)
Family Home -
RA4917 (250,000)
Taxable Net Estate P5,030,000
Estate Tax Due P469,500

TRUE OR FALSE
1. TRUE 7. TRUE 13. FALSE 19. TRUE 25. TRUE
2. TRUE 8. FALSE 14. FALSE 20. TRUE 26. TRUE
3. TRUE 9. TRUE 15. TRUE 21. TRUE 27. FALSE
4. TRUE 10. FALSE 16. FALSE 22. FALSE 28. TRUE
5. TRUE 11. FALSE 17. TRUE 23. TRUE 29. FALSE
6. FALSE 12. FALSE 18. TRUE 24. TRUE 30. TRUE

MULTIPLE CHOICE
1. C 12. D 23. A 34. A 45. A
2. B 13. C 24. A 35. C 46. C
3. D 14. D 25. B 36. B 47. D
4. C 15. A 26. B 37. B 48. A
5. A 16. A 27. B 38. D 49. A
6. B 17. A 28. C 39. A 50. A
7. D 18. D 29. A 40. B&C 51. A
8. C 19. D 30. C 41. D 52. D
9. A 20. C 31. D 42. D 53. A
10. B 21. D 32. C 43. C 54. D
11. D 22. D 33. C 44. A 55. A
Supporting Computation (Multiple Choice):

(6). B
Mourning clothing of the decedent’s surviving spouse P1,500
Mourning clothing of the decedent’s dependent children 3,200
Expenses of the wake preceding the burial 40,000
Publication charges for death notices 5,000
Telecommunication expenses incurred in informing relatives of the 3,000
deceased
Cost of burial plot 20,000
Interment fees and charges 12,000
Expenses for the performance of the rites & ceremonies incident to 5,000
interment
Actual Funeral Expenses P89,700
Limit: 5% of Gross Estate (P2M x 5%) P100,000
ALLOWED (Lower Amount) P89,700
(16.) A
Real property tax for the year 2013 P100,000
Notarized interest bearing promissory note 100,000
Accrued interest on the promissory note at the time of death 20,000
Income tax due for 2013 200,000
Allowable deductions P420,000
(22). D
Income tax from practice of profession - 2013 P300,000
Income tax from practice of profession for Jan.-June ‘14 100,000
Real property taxes for 2013 150,000
Business taxes for 2013 100,000
Deductible taxes P650,000

(39).
Value to take/Initial Basis P900,000
Mortgage paid (50,000)
Initial basis 850,000
2nd Deduction:
(850/1,000 x P100,000**) (85,000)
X Vanishing rate 40%
** Mortgage P150,000 – 50,000
(54).
Gross Estate (Tangible property Phils.) P6,000,000
LIT (1,200,000 x 6,000/10,000,000) (720,000)
Taxable Estate P5,280,000
(55).
Shares, domestic corporation P500,000
Tangible personal property 1,500,000
Gross Estate 2,000,000
LIT (500,000 x 2,000/2,500) (400,000)
Taxable Estate P1,600,000
TAX DUE
Estate Tax Due (P1.6M x 6%) P96,000
CHAPTER 4 – PROPERTY RELATIONS
PROBLEM SOLVING
P4.1
ACP CPG
1. C E
2. C C
3. C C
4. C C
5. C E
6. C C
7. E E
8. E C
9. C E
10. C C
11. C C
12. E E
13. C E
14. E E
15. E E

P4.2
Absolute Community of Property (ACoP)
(a)P12,400,000; (b)P19,500,000; (c)P9,750,000; (d)P17,150,000
Exclusive Common Total

Land inherited during marriage P24,000,000
Other personal property owned before marriage P16,000,000
Other personal property acquired during marriage 5,000,000
Total P24,000,000 P21,000,000 P45,000,000
Deductions:
Casualty loss (500,000)
Funeral expenses -
Judicial expenses -
Unpaid Taxes (400,000)
Claims against the estate (600,000)
Vanishing deduction** (11,600,000) (13,100,000)
Net estate before special deduction and share of the P12,400,000 P19,500,000 P31,900,000
surviving spouse
Medical expenses -
Share of the Surviving Spouse (1,800,000/2) (9,750,000)
VANISHING DEDUCTION**
Value to Take/Initial Basis P15,000,000
Proportional Deduction (15,000/45,000 x P1,500,000) (500,000)
x Vanishing Deduction % 80%
Vanishing Deduction P11,600,000
Conjugal Partnership of Gains (CPG)

(a)P28,400,000; (b)P3,500,000; (c)P1,750,000; (d)P25,150,000

Land inherited during marriage P24,000,000
Other personal property owned before marriage 16,000,000
Other personal property acquired during marriage 5,000,000
Total P40,000,000 P5,000,000 P45,000,000
Deductions:
Unpaid Taxes (400,000)
Claims against the estate (600,000)
Casualty Loss (500,000)
Funeral expenses -
Judicial expenses -
Vanishing deduction (same computation) (11,600,000) (13,100,000)
Net estate before special deduction and share of the P28,400,000 P3,500,000 P31,900,000
surviving spouse
Medical expenses -

P4.3 Decedent died before the effectivity of the TRAIN Law
(a)P1,630,487; (b)P4,132,955 (c)P3,696,964; (d)P321,666
Exclusive properties, Phils. P2,000,000
Conjugal properties, Phils.* P5,000,000 P7,000,000
ELIT** (867,045)
Vanishing Deductions *** (169,513)
Transfer for Public Use **** (200,000)
Net Estate P1,630,487 P4,132,955 P5,763,442
Net Taxable Estate P3,696,964
1st P2,000,000 P135,000
In excess of P2,000,000 @ 11% 186,666
ESTATE TAX DUE P321,666
*The problem is silent as to reciprocity, hence, the gross estate should include tangible and intangible properties within the Philippines.
**ELIT:
Funeral expenses P200,000
Claim against the estate 1,725,000
TOTAL ELIT P2,725,000
X 7,000/22,000
ALLOWABLE ELIT P867,045
**VANISHING DEDUCTIONS:
(500/7,000) x (867,045 + 200,000) (76,218)
Vanishing Deduction P169,513
**** Since the properties were already classified as exclusive and common, it should be assumed that the exclusive properties were already
inclusive of transfer for public use.
P4.4 (Decedent: Resident Alien; Single) (a) Net Taxable estate = P49,500,000; (b)Estate tax due = P2,970,000
House and lot, USA * P20,000,000
Investment in stock, Philippines 8,000,000
Investment in stock, USA 10,000 000
Investment in bonds, USA 7,000,000
Cash in bank, Philippines 3,000,000
Cash on hand, Philippines 500,000
Accounts receivable (fully uncollectible) 2,000.000
Car, Philippines 8,000,000
Receivable under RA 4917 500,000
Devise to Quezon City for children’s playground** 700,000
Funeral expenses P-
Judicial expenses -
Unpaid Philippine income tax for income in 2017 1,200,000
Loss on December 31, 2018 due to theft 800,000
Devise to Quezon City for children’s playground 700,000
Accounts receivable (fully uncollectible) *** 2,000,000 (4,700,000)

Special Deductions:
RA 4917 500,000
Medical expenses -
Estate Tax Due (P49,500,000 x 6%) P2,970,000
* *Family home is not allowed as a deduction for single decedent
**To be deductible, the legacy/devise should be included first in the decedent’s gross estate
***Assume the debtor is an insolvent person.
P4.5 (Decedent: Resident Alien)

a) Vanishing deduction = P4,560,976
b) Net Taxable estate = P44,689,024
c) Estate tax due = P2,681,341
Exclusive Conjugal Total
Land P30,000,000
House and Lot (Family Home) P50,000,000
Other tangible personal properties 22,000,000
Claims against insolvent persons 500,000 P102,500,000
Ordinary deductions:
Other claims against conjugal properties (5,000,000)
Claims against insolvent persons (500,000)
Unpaid mortgage** (3,500,000)
VANISHING DEDUCTION* (4,560,976) (13,560,976)
Net exclusive/conjugal P25,439,024 P68,500,000 P93,939,024
Special deductions:
Medical expenses -
Share of the surviving spouse (34,250,000)
TAXABLE ESTATE P44,689,024
Estate Tax Due (P44,689,024 X 6%) P2,681,341
Value to take/Initial Basis*** P25,000,000

2nd Deduction: 25,000/102,500 x 9,000,000 (2,195,122)
x rate 20%
Vanishing Deduction* P4,560,976
** P7,000,000 – 3,500,000 = P3,500,000

***The amount paid on the mortgage should not be considered in computing the vanishing deduction because the amount pertains to a mortgage
entered into by Pedro during his lifetime. To be deductible, the mortgage should have been assumed on the property at the time of inheritance.
P4.6 (Decedent: Resident Citizen, married)

Exclusive Conjugal Total
Fishpond, Bulacan P1,500,000
Family Home, Makati 1,500,000
Cash in bank 900,000
Apartment (refer to item of deductions) 80,000
Land inherited from his father P400,000
Land received as gift 600,000
Gross Estate P1,000,000 P4,080,000 P5,080,000

Ordinary deductions:
Fire loss (80,000)
Claims against insolvent persons (100,000)
Unpaid mortgage (30,000-10,000) (20,000)
Vanishing deduction-inheritance* (37,000)
Vanishing deduction-gift** (185,040)
Net exclusive/conjugal P757,960 P3,700,000 P4,457,960
Special deductions:
TAXABLE ESTATE P1,607,960
Value to take* P210,000

Mortgage paid (10,000)
2nd Deduction: 200/5,080 x 380,000 (14,960)
x rate 20%
Vanishing Deduction (rounded)* P37,000
Value to take/Initial Basis** P500,000

2nd Deduction: 500/5,080 x 380,000 (37,400)
x rate 40%
Vanishing Deduction (rounded)* P185,040
TRUE OR FALSE
1. TRUE 6. FALSE 11. TRUE
2. TRUE 7. TRUE 12. TRUE
3. TRUE 8. TRUE 13. TRUE
4. FALSE 9. TRUE 14. FALSE
5. FALSE 10. FALSE 15. TRUE
MULTIPLE CHOICE
1. A 8. B 15. D 22. B 29. D
2. B 9. D 16. C 23. C 30. A
3. A 10. C 17. D 24. D 31. C
4. C 11. B 18. C 25. C 32. B
5. D 12. D 19. C 26. B 33. D – P205,032
6. D 13. C 20. A 27. A 34. A
7. D 14. D 21. D 28. D 35. A
36. D
Supporting Computations (Multiple Choice)

(No. 20 & 21)
Gross Estate: Exclusive Conjugal
Rest House in Batangas P2,500,000
Car 1,000,000
Commercial land 5,000,000
Income from the commercial land 500,000
Income from exclusive property of the spouse 200,000
Jewelry owned before the marriage 300,000
Other properties at the time of her death 1,000,000
Gross Estate P8,800,000 P1,700,000

(No. 22 & 23)
Gross Estate: Exclusive Common
Rest House in Batangas P2,500,000
Car 1,000,000
Commercial land 5,000,000
Income from the commercial land 500,000
Jewelry owned before the marriage 300,000
Other properties at the time of her death 1,000,000
Gross Estate P2,500,000 P7,800,000
(No. 24)
Conjugal properties P20,000,000
Conjugal Deductions:
Funeral and judicial expenses (no longer allowed) -
Casualty losses (3,500,000)
Unpaid taxes (2,000,000)
Claim against the estate (4,500,000)
Net Conjugal properties P10,000,000
Divide 2
Share of the Surviving Spouse P5,000,000
(No. 25)
Real property, Philippines P4,000,000
Real property, USA 5,000,000
Judicial expenses (200,000 – 50,000) (150,000
Claim against insolvent persons (50,000)
Unpaid taxes (50,000)
Balance P8,550,000
Standard Deductions (1,000,000)
Medical expenses (max.allowed) (500,000)
Family Home (P1,500,000/2) (750,000)
Share of the surviving spouse (P8,550,000/2) (4,275,000)
(No. 26)
Real property, Philippines P40,000,000
Real property, USA 50,000,000
Funeral expenses -
Judicial expenses -
Claim against insolvent persons (5,000,000)
Unpaid taxes (5,000,000)
Balance P80,000,000
Share of the surviving spouse (P80,000,000/2) (40,000,000)
Standard Deduction (5,000,000)
Medical expenses -
Family Home (P15,000,000/2) (7,500,000)

(No. 27)
Conjugal real properties P5,000,000
Conjugal family home 1,500,000
Exclusive properties P2,500,000
Total P2,500,000 P6,500,000 P9,000,000
Actual P300,000 x 25% = P75,000
Limit = 5% x P9M = P450,000
Casualty losses (from excl.property) (100,000)
Miscellaneous deductions (P1M x 75%) (750,000) (825,000)
Net P2,400,000 P5,675,000 P8,075,000
Special Deductions:
Standard Deductions (1,000,000)
Medical expenses (P500,000 x 50%) (250,00)
Family Home (1,500,000/2) (750,000)
Share of the surviving spouse (5,675,000/2) (2,837,500)
(No. 28) ABSOLUTE COMMUNITY OF PROPERTY

Exclusive Common
Properties-Land P2,400,000
Other personal property acquired during marriage 500,000
Gross Estate P2,400,000 P2,100,000
Net conjugal before special deductions P1,800,000
Share of surviving spouse (P1,800,000/2) P900,000
(No. 29) CONJUGAL PARTNERSHIP OF GAINS

Properties-Land P2,400,000
Other personal property acquired during marriage**** P500,000
Gross Estate P4,000,000 P500,000 P4,500,000
Ordinary Deductions
Vanishing Deductions***** (1,120,000)
Net Estate Before Special Deductions P2,880,000 200,000 P3,080,000
Standard deductions (1,000,000)
Share of the surviving spouse (P200,000/2) (100,000)
Share of surviving spouse (P1,800,000/2) P1,480,000
****If silent and unless the problem clearly illustrate that it is exclusive, assume the property is common.
Value to take P1,500,0 00

Initial basis P1,500,000
(1,500/4,500) x 300,000 (100,000)
Vanishing Deduction P262,500 *****
(No. 30)
Real property given as gift by his uncle during the marriage 4 ½ years before 1,500,000
the present decedent's death
Land inherited during the marriage from an aunt who died 6 years before the 500,000
present decedent's death
Cash income from the real property received as gift 100,000
Total exclusive property P2,100,000
(No. 30 to 36)
Real properties inherited before the marriage from his father who died 3 years P500,000
before the present decedent's death
House built on the inherited land using communal fund 900,000
Real properties received by the surviving spouse before the marriage 1,800,000
Real properties acquired by the spouses during the marriage 1,500,000
Personal properties acquired during the marriage 1,000,000
Total Community property P5,700,000
Exclusive Community Total

Real property given as gift by his uncle during the marriage 4 ½ 1,500,000
years before the present decedent's death
Land inherited during the marriage from an aunt who died 6 years 500,000
before the present decedent's death
Cash income from the real property received as gift 100,000
Real properties inherited before the marriage from his father who P500,000
died 3 years before the present decedent's death
House built on the inherited land using communal fund 900,000
Real properties received by the surviving spouse before the 1,800,000
marriage
Real properties acquired by the spouses during the marriage 1,500,000
Personal properties acquired during the marriage 1,000,000
Claim against an insolvent person 50,000
Total P2,100,000 P5,750,000 P7,850,000
Unpaid liability (250,000)
Unpaid mortgage – inherited land (100,000)
Loss (car) (300,000)
Unpaid realty tax (30,000)
Vanishing deduction on real property received as gift* (175,032)*
Vanishing deduction on real property inherited** (157,529)**
Subtotal (205,032) (1,107,529) (1,312,561)
Net estate b4 Special deductions & share of the SS P1,894,968 P4,642,471 6,537,439
Special deductions (1,000,000)
F. Home (P500k + 900k)/2 (700,000)

(No. 32)
Value to take/initial basis P1,000,000
2nd deduction: 1,000/7,850 x P980,000 (124,840)
VD rate 20%
Vanishing deduction P175,032*
(No. 34)
Value to take/initial basis P300,000
2nd deduction: 300/7,850 x P980,000 (37,452)
VD rate 60%
Vanishing deduction P157,529**
CHAPTER 5 – ESTATE TAX CREDIT AND DISTRIBUTABLE ESTATE

PROBLEM SOLVING
P5.1
CASE A – Decedent died in 2017:
(1)P200,000 (2)P0; not allowed
Total Net Estate before special deductions P10,000,000
Less: Standard deduction (1,000,000)
Net Taxable estate P9,000,000
Estate Tax Due – Tax Table; [P465,000 + (4M x 15%)] P1,065,000

Estate tax credit: Lower between (4/10 x P1,065,000) vs P200,000 (200,000)
Estate tax payable P865,000
CASE B – Decedent died in 2018:

(1)P120,000 (2)P0; not allowed
Total Net Estate before special deductions P10,000,000
Less: Standard deduction (5,000,000)
Net Taxable estate P5,000,000
Estate Tax Due (P5M x 6%) P300,000

Estate tax credit: Lower between (4/10 x P300,000) vs P200,000 (120,000)
P5.2
Estate tax credit (67,500)
Estate tax payable after tax credit P67,500

Limit 1: Limit Actual Allowed
Canada: 500/2,000 x P135,000 P33,750 P150,000 P33,750
USA: 500/2,000 x P135,000 33,750 110,000 33,750
P67,500
Limit 2:
1,000/2,000 x P135,000 P67,500 260,000 67,500
ALLOWED TAX CREDIT P67,500

P5.3
Estate Tax Due (P20M x 6%) P1,200,000
Estate tax credit (260,000)
Estate tax payable after tax credit P940,000

Canada: 5,000/20,000 x P1,200,000 P300,000 P150,000 P150,000
USA: 5,000/20,000 x P1,200,000 300,000 110,000 110,000
P260,000
Limit 2:
10,000/20,000 x P1,200,000 P600,000 260,000 260,000
ALLOWED TAX CREDIT P260,000
P5.4
(a) Net Taxable estate = P3,570,000; (b)Estate tax due after tax credit = P142,770
(c ) Net Distributable Estate = P4,427,230
House and lot, USA * P2,000,000
Investment in stock, Philippines 800,000
Investment in stock, USA 1,000 000
Investment in bonds, USA*** 700,000
Cash in bank, Philippines 300,000
Cash on hand, Philippines 50,000
Accounts receivable 200.000
Car, Philippines 800,000
Legacy in favor of Philippine National Red Cross** 50,000
Devise to Quezon City for children’s playground** 70,000
Unpaid Philippine income tax for income in 2011 120,000
Legacy in favor of Philippine National Red Cross 50,000
Accounts receivable (fully uncollectible) 200,000 (900,000)
Special Deductions:
Estate Tax Credit (164,930)
Limit: [(3,200/5,970) x 307,700 = P164,930
Actual: P250,000
ESTATE TAX DUE AFTER ESTATE TAX CREDIT P142,770
NOTE:*Family home is not allowed as a deduction for single decedent
**To be deductible, the legacy/devise should be included first in the decedent’s gross estate; *** Considered as Estate “within”

TOTAL GROSS ESTATE (Refer above) P5,970,000
Unpaid Philippine income tax for income in 2011 120,000
Legacy in favor of Philippine National Red Cross 50,000
Accounts receivable (fully uncollectible) 200,000 (900,000)
Special Deductions:
Standard deduction -
Estate Tax Due after tax Credit (142,770)
NET DISTRIBUTABLE ESTATE P4,427,230
MULTIPLE CHOICE
1. B 5. C 9. D
2. C 6. C 10. A
3. D 7. C
4. C 8. A
Supporting Computations:
No.5
Estate tax due (for P4M) P355,000
Estate tax credit (3/4 x P355,000) vs P80,000 (80,000)
No. 6
Estate tax due for P1,000,000; [P15,000 + (P500,000 x 8%)] P55,000
Less: Estate tax credit (20,500)

Singapore: 300/1,000 x P55,000 P16,500 P30,000 P16,500
USA: 100/1,000 x P55,000 5,500 4,000 4,000
P20,500
Limit 2:
400/1,000 x P55,000 P22,000 34,000 22,000
ALLOWED TAX CREDIT (LOWER AMOUNT) P20,500
No. 7 Assume the decedent died before effectivity of the TRAIN Law
Deductions (assume inclusive of Standard deduction) (5,000,000)
Share of the surviving spouse (5,000,000 x 60% x 50%) (1,500,000)
Net taxable estate P3,500,000
Tax Due (Tax Table); [P135,000 + (P1.5M x 11%) P300,000
Estate tax credit (2.8/3.5 x P300,000) vs P124,500 (124,500)
Net estate France = [(6M -2M) x 0.6 x 1/2] + (6M-2M) x 0.4 = P2,800,000
Net estate R.P. = [(4M-3M) x 0.6 x 1/2] + (4M-3M) x 0.4 = P700,000

No. 8
Estate tax due (for P500,000) P71,000
Less: Estate tax credit (41,417)

Japan: 300/1,200 x P71,000 P17,750 P20,000 P17,750
USA: Exclude for purposes of computing Limit 1 - - -
HK: 450/1,200 x P71,000 26,625 45,000 26,625
P44,375
Limit 2: (Include USA)
700/1,200 x P71,000 P41,417 65,000 41,417
ALLOWED TAX CREDIT (LOWER AMOUNT) P41,417
No. 9 and 10
Net Taxable Net Distributable
Property inherited P1,400,000 P1,400,000
Property acquired through own labor 3,600,000 3,600,000
Funeral expenses (200,000) (240,000)
Judicial expenses (200,000) (200,000)
Claims against the estate
Notarized (40,000) (40,000)
Not notarized - (20,000)
Standard deduction (1,000,000) -
Net Taxable/Distributable estate P3,560,000 P4,500,000

CHAPTER 6 – DONOR’S TAX

ERRATUM:
Cumulative Basis of Computing the Net Taxable Estate
PRIOR to 2018 2018 Onwards
DISREGARD THIS STATEMENT:
Cumulative rule is applicable regardless of the relationship of the donor and the donee but
only is far as gifts made within the same calendar year.

PROBLEM SOLVING
P6.1
QUESTION
TO A B C D E
Abel P800,000 P800,000 P800,000 P800,000 P800,000
Jen 3,000,000 3,000,000 3,000,000
Gore 250,000 250,000 250,000 250,000
Alexa 100,000 100,000 100,000 - 100,000
Earl 5,000,000 5,000,000 5,000,000
Hananiah 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000
Chen 100,000 100,000 100,000 - 100,000
Kristine 100,000 100,000 100,000 - -
Gavrie 500,000 500,000 500,000 500,000 500,000
Land 1** - - - - -
Land 2*** - - - - -
Land 3**** 5,000,000 5,000,000 5,000,000 - -
Car 200,000 200,000 200,000 200,000 200,000
GROSS GIFT P16,550,000 P16,550,000 P16,550,000 P3,000,000 P3,450,000

*The question is “gross gifts”, hence, disregard the mortgage.
**Sale of Land #1 is a transfer with insufficient consideration. However, unlike in Estate Taxation, Transfer with insufficient
consideration for donor’s tax purposes is not taxable if the property donated is a real property classified as capital asset
subject to capital gains tax.
*** Sale of Land # 2 is considered bonafide or valid sale.
****Sale of Land #3 is a transfer with insufficient consideration. Nonetheless, the sale is subject to donor’s tax because the
property was not subjected to capital gains tax. Capital gains tax on real properties are applicable only on sale of real
properties classified as capital assets located in the Philippines.
P6.2
ITEM Q#A Q#B
A P4,500,00 P4,500,00
B 1,000,000 -
C 1,500,000 -
D 2,000,000 -
E 3,000,000 3,000,000
F 500,000 -
Car, Alabang 200,000 200,000
Car, Malaysia 200,000 -
Land Cebu - -
GROSS GIFT P12,900,000 P7,700,000
P6.3
(a) None; subject to CGT not donor’s tax
(b) CGT = P2.5M x 6% = P150,000
(c) Donor’s tax = (P2.5M – P1.5M) x 6% = P60,000 TRAIN Law
(d) CGT = P0
P6.4 (a)P0; (b)P5,000; (c)P10,000; (d)P43,000
P6.5
Relatives Strangers
Cash to his son on account of marriage P50,000
Cash to PPCRV for 2013 election - -
Jewelry to his auntie 46,000
Shoes and bags to his girlfriend 30,000
Books to the City of Makati 20,000
Second hand car to his first cousin 500,000
Brand new SUV to his second cousin (subject to revocation) - -
Shares of stocks of a domestic corp. to his best friend 150,000
Car to his daughter (a donation mortis causa) - -
Forgiven a loan due from his brother(50,000-25,000) 25,000
Sports equipment to his brother in law 75,000
Parcel of land to the Philippine government for public use 1,000,000
Gross Gifts P621,000 P1,275,000
NOTE:
§ Cash to PPCRV. Not considered as donation under the tax code. It is subject to the rules and regulations of the COMELEC under the
election code of the Philippines.
§ Books for the City of Makati AND Land for Public Use. Although the donations are exempt, should be considered in the determination of
“gross gifts”
§ Gift subject to revocation is not a gift.
§ Donation mortis causa is a donation subject to estate tax, not donor’s tax.

P6.6 – Donations were made Prior to effectivity of the TRAIN Law
a) March 1 = P2,000
b) May 30 = P18,000
c) June 30 = P90,000
d) July 31 = P0; exempt
e) September 30 = P447,200
Solution:
Gross Gifts P200,000
Dowry - > 1 year after celebration
Net taxable gift P200,000
Donor’s Tax Due/ Payable (Tax Table) – March 1 P2,000
Gross gift P500,000

Less: Mortgage assumed by the donee (100,000)
Add: Prior net gift 200,000
Taxable gift – May 30 P600,000
Donor’s Tax Due P20,000

Less: Tax paid (2,000)
Donor’s tax payable-May 30 P18,000
Donor’s tax payable-June 30 P90,000

(P300,000 x 30%)
Donor’s tax payable-July 31 (Bantay Bata) P0
September 30
Relative Stranger Total
Gross Gift P1,500,000 P1,500,000
Dowry (10,000) -
Mortgage assumed (300,000) (300,000)
Prior net gift 600,000
Taxable gift P1,790,000 P1,200,000
@30%
Tax Due P107,200 P360,000
Less: Tax Payments (20,000)
Tax Payable P87,200 360,000 P447,200
P6.7 – Donations were made after the effectivity of TRAIN Law

a) March 1 = Exempt
b) May 30 = P21,000
c) June 30 = P90,000
d) July 31 = P0; exempt
e) September 30 = P447,200
Solution:
Gross Gifts – March 1 P200,000
Less: Tax exempt gift (250,000)
Net taxable gift P-
Donor’s Tax Due/ Payable – March 1 Exempt

Gross gift – May 30 P500,000
Less: Mortgage assumed by the donee (100,000)
Total Gifts as of May 30 P600,000
Less: Tax Exempt gift (250,000)
Taxable gift – May 30 P350,000
x 6%
Less: Tax paid -
Donor’s tax payable-May 30 P21,000
Gross gift – June 30 P300,000 Apply cumulative rule regardless of the

relationship between the donor and the donee
Total gifts as of June 30 900,000
Taxable gift – June 30 P650,000
x 6%
Less: Tax paid as of May 30 (21,000)
Donor’s tax payable-June 30 P18,000
Gross gift – September 30 P3,000,000

Less: Mortgage assumed by the donees (600,000)
Total gifts as of June 30 P3,300,000
Taxable gift – Sept. 30 P3,050,000
x 6%
Less: Tax paid as of June 30 (39,000)
Donor’s tax payable-Sept. 30 P144,000
P6.8 – Donations were made before and after effectivity of TRAIN Law
1) January 15, 2017 = P32,000
2) April 1, 2017 = P6,000
3) December 25, 2017 = P0
4) March 30, 2018 = P0
5) May 25, 2018 = P0, exempt
Solution
Gross Gifts-Jan. 1, 2017 P1,000,000
Less: Encumbrance (200,000)
Taxable gift P800,000
Donor’s tax due/payable-Jan. 1, 2017 (Tax Table) P32,000
Gross gift – April 1, 2017 P100,000

Taxable gift P900,000
Donor’s Tax Due (Tax Table) P38,000
Less: Tax paid (32,000)
Donor’s tax payable-Apr. 1, 2014 P6,000
December 25, 2014 P0; exempt

March 30, 2018 Use calendar year for donor’s tax purposes
Gross gift P100,000
Taxable net gift P-
May 25, 2018

Gross gift - church P200,000
Deductions (200,000)
Taxable gift P0
Tax Due P0; exempt
P6.9
1) June 6, 2018 = P0; exempt
2) October 8, 2018 = P2,160
3) November 4, 2018 = P240
June 6, 2018
Husband Wife Total
Gross Gift (P460k + 20K)/2 P240,000 P240,000
Dowry - -
Net gift P238,000 P238,000
Less: Tax exempt gift (250,000) (250,000)
Net Taxable gifts – June 6 (P12,000) (P12,000)
Donor’s Tax Payable P0 P0 P0
October 8, 2018
Husband Wife Total
Gross Gift P30,000 P30,000
Dowry -
Prior Net Gift 238,000 238,000
Total net gifts P268,000 P268,000
Less: Tax exempt gift (250,000) (250,000)
P18,000 P18,000
x6% x6%
Donor’s Tax Due P1,080 P1,080
Tax Paid-June 6 - -
Donor’s Tax Payable P1,080 P1,080 P2,160
November 4, 2018
Husband Wife Total
Gross Gifts (charitable org.; exempt) P- P-
To a family friend 2,000 2,000
Prior net gifts 268,000 268,000
Tax exempt gift (250,000) (250,000)
Taxable gift P20,000 P20,000
@6% @6%
Less: Donor’s tax paid (1,080) (1,080)
Donor’s Tax Payable P120 P120 P240

P6.10 (1)P6,000 (2)P0 (3)P36,000 (4)P30,000
Feb. 15, 2018

Mr.Macariola Mrs.Macariola Total
Gross Gifts P200,000 P200,000
Net Gift P150,000 P150,000
Less: Exempt gift (250,000) (250,000)
Net Taxable gift P- P-
Donor’s Tax Due P0; exempt P0; exempt P-
March 30, 2018

Gross Gifts P200,000 P-
Net gift P350,000
Net Taxable Gift P100,000
Donor’s Tax Due @ 6% 6,000
Donor’s tax paid -
Donor’s Tax Payable P6,000 P6,000
June 1, 2018
Gross Gifts P- P100,000
Net gift 250,000
Less: tax exempt gift (250,000)
Net Taxable gift P0
Donor’s Tax Due P0 P0
October 12, 2018

Gross Gifts (P400k+P400k)/2 P400,000 P400,000
Less: Mortgage assumed (50,000) (50,000)
Prior net gift 350,000 250,000
Net gift P700,000 P600,000
Less: tax exempt gift (250,000) (250,000)
Net Taxable Gift P450,000 P350,000
x 6% 6%
Less: Donor’s Tax Paid (6,000) (6,000)
Donor’s Tax Payable P21,000 P15,000 P36,000
October 12, 2018 - CLIFFORD

Gross gift P100,000
Net Taxable gift P0
Tax Due P0; exempt

TRUE OR FALSE
1. TRUE 7. FALSE 13. FALSE 19. TRUE 25. TRUE
2. TRUE 8. TRUE 14. FALSE 20. FALSE 26. TRUE
3. FALSE 9. FALSE 15. FALSE 21. FALSE 27. FALSE
4. TRUE 10. FALSE 16. FALSE 22. FALSE 28. TRUE
5. TRUE 11. TRUE 17. FALSE 23. FALSE 29. FALSE
6. TRUE 12. FALSE 18. FALSE 24. TRUE 30. FALS E
MULTIPLE CHOICE
1. A 13. C 25. C 37. P36,000 49. D
2. A 14. D 26. D 38. B 50. D
3. C 15. B 27. P2,250,000 39. C 51. A
4. C 16. D 28. D 40. D 52. B
5. B 17. A 29. D 41. A 53. A
6. D 18. B 30. C 42. A 54. B
7. D 19. C 31. A 43. C 55. A
8. D 20. D 32. C 44. B
9. D 21. C 33. D 45. B
10. C 22. A 34. A 46. B
11. B 23. D 35. A 47. D
12. A 24. C 36. B 48. C
Supporting computation:
No. 27. None of the choices
Gross Gifts (5M/2) P2,500,000
Less: Tax Exempt Gift (250,000)
Net taxable gift P2,250,000
No. 30. Prior to TRAIN Law

Net gift – Feb. 29 P500,000
Less: Donation to the government (P500,000)
Net taxable gift – Feb. 29 P-; exempt
Gross gift April 1 P1,000,000

Mortgage assumed by the donee (500,000)
Donor’s Tax Due (Old Tax Table) P14,000,
Net gifts, May 31 P5,000,000

PNG-April 1 500,000
Cumulative Net gift, May 31 P5,500,000
TAX DUE (Tax Table):
1st P5M P404,000
In excess of P5M @ 12% 60,000
Total P464,000
Less: Donor’s tax April 1 (14,000)
Donor’s tax payable, May 31 P450,000

No. 31. TRAIN Law
Net gift – Feb. 29 P500,000
Less: Donation to the government (P500,000)
Net taxable gift – Feb. 29 P-; exempt
Gross gift April 1 P1,000,000

Net Gift P500,000
Donor’s Tax Due P15,000,
Net gifts, May 31 P5,000,000

PNG-April 1 500,000
Cumulative Net gift, May 31 P5,500,000
Net taxable gift P5,250,000
x 6%
Total P315,000
Less: Donor’s tax paid April 1 (15,000)
Donor’s tax payable, May 31 P300,000
No. 32-34. PRIOR TO TRAIN LAW

Husband Wife
NG (3/1) 125,000 125,000
Tax Due (P25,000 x 2%) P500 P500
GG (5/1) P100,000 P100,000

Dowry (10,000) (10,000)
PNG 3/1 125,000 125,000
NG P215,000 P215,000
Tax Due P2,600 P2,600

Tax Paid 3/1 (500) (500)
D.T. Payable P2,100 P2,100
GG (7/1) 100,000 100,000

PNG 3/1 and 5/1 215,000 215,000
TNG P315,000 P315,000
Tax Due 6,600 6,600
Total Taxes Paid 7/1 P13,200
No. 35. TRAIN LAW

Net gifts of the spouses, March 1 P500,000
Divide by 2
Net gift, Mr. Mapagbihay, March 1 P250,000
Tax exempt gift (250,000)
Taxable net gift, Mr. Mapagbigay P0
Donor’s Tax Due, Mr. Mapagbigay P0

No. 36.
Net gifts of the spouses, May 1 P400,000
Add: Prior net gift, March 1 500,000
Cumulative net gift P900,000
Divide by 2
Cumulative Net gift, Mrs Mapagbigay P450,000
Cumulative taxable net gift P200,000
x 6%
Donor’s tax due P12,000
Less: Donor’s tax paid, March 1 -
Donor’s Tax Payable P12,000
No. 37.
Mr. Mrs.
Total gifts of the spouses (P1.1M/2) P550,000 P550,000
Less: Exempt gifts (250,000) (250,000)
Net Taxable gift P300,000 P300,000
x 6% 6%
Donor’s tax due per spouse P18,000 P18,000
Total donor’s tax due of the spouses P36,000
No. 38. PRIOR TO TRAIN LAW

Gross gifts, Feb. 25, 2013 (P500,000/2) P250,000
Dowry (10,000)
Donor’s Tax Due per spouse (Tax Table) P3,600
No. 39.
Mr. :
D. Tax Payable= P75,000/2 x 30% = P11,250
Mrs. :
Gross gifts, June 9 (P75,000/2) P37,500
Dowry (10,000)
Prior net gift – Feb. 240,000
Total taxable gift, June 9 P267,500

Donor’s tax paid, Feb. (3,600)
Donor’s Tax Payable-June 9 P1,100
No. 40.
Mr. :
Gross gifts, Dec. 25 (P750,000 x 60%) /2 P225,000
Prior net gift – Feb. 240,000
Total taxable gift, June 9 P465,000

Donor’s tax paid, Feb. (3,600)
Donor’s Tax Payable-June 9 P9,000

Mrs. :
Gross gifts, Dec. 25 (P750,000 x 60%) /2 P225,000
Donor’s tax rate 30%
Donor’s tax payable, Dec. 25 P67,500
No. 41.
Gross gifts, Dec. 25 (P750,000 x 40%) P300,000
Donor’s tax rate 30%
Donor’s tax payable, Dec. 25 P90,000

Gross gift-Jan. 24 P2,000,000
Taxable net gift P1,500,000
DONOR’s TAX DUE
1st P1M P44,000
In excess of P1M; P500,000 x 8% 40,000
Donor’s tax due/payable P84,000

Gross gift-Nov. 30 P4,500,000
Add: prior net gift 1,500,000
Taxable net gift P6,000,000
DONOR’s TAX DUE:

1st P5M P404,000
In excess of P5M; P1M x 12% 120,000
Total P524,000
Tax paid, Jan. 24 (84,000)
TAX CREDIT
Actual 400,000
Limit = 4.5/6 x P524,000 393,000
Allowed (393,000)
Donor’s tax payable P47,000
No. 44. TRAIN LAW

Gross gift-Jan. 24 P2,000,000
Net gift P1,500,000
Taxable Net Gift P1,250,000
Donor’s Tax Rate (TRAIN Law) 6%

No. 45. TRAIN LAW
Net gift-Nov. 30 P4,500,000
Net gift-Jan. 24 1,500,000
Cumulative Net gift P6,000,000
Taxable Net Gift P5,750,000
Donor’s Tax Rate (TRAIN Law) 6%
Total donor’s tax due P345,000
Less: Donor’s tax paid-Jan. 24 (75,000)
Allowable Donor’s tax credit: (258,750)
Limit = 4.5/6 x P345,000 = P258,750
Vs. Actual = 400,0000
CHAPTER 7 – BUSINESS TAXES

MULTIPLE CHOICE
1. A 7. C 13. C 19. D 25. D
2. D 8. D 14. B 20. D 26. C
3. D 9. C 15. C 21. A 27. A
4. D 10. - 16. A 22. D 28. A
5. D 11. C 17. D 23. C 29. C
6. B 12. D 18. C 24. C
CHAPTER 8 – VALUE ADDED TAX
PROBLEM SOLVING
P8.1 – ERRATUM: Determine the applicable business tax correct of the following:
Residential Units:
Case A OPT
Case B Exempt
Case C Exempt
Case D Vat
Commercial Units:
Case E Vat
Case F OPT
Case G OPT
Case H Vat

P8.2
Case A X Case E V Case I V
Case B X Case F X Case J X (OPT)
Case C V Case G V (0%)
Case D V Case H V

P8.3
a) nil
b) Vat Payable = P134,400 x 3/28 = P14,400
c) Vat Payable = OV P201,600 x 3/28 – Input Vat P14,400 = P7,200
d) nil


P8.4
Cash Sales P660,800
Sales on account 246,400
Transactions deemed sale (22,400+16,800+19,040+8,960) 67,200
Total sales subject to vat P974,400
x 3/28
Output Vat P104,400
Less: Input vat (P291,200 x 3/28) (31,200)
Vat Payable P73,200
P8.5
OUTPUT:
Sales (P8M – 400,000) x 12% P912,000
Sales from consignment (March and Feb.) 36,000
(20+10) x P10,000 x 12%
Transactions deemed sales
January 8 consignment (20 x P10,000) x 12% 24,000
Goods withdrawn 6,000
Goods taken as payment to creditors 3,600 P981,600
INPUT VAT
Purchase of goods, supplies, freight/insurance) 82,080
Capital goods (P1,100,000 x 12%) / 48 mos. 2,750 (84,830)
VAT PAYABLE P896,770
P8.6
Sale of school supplies P1,680,000
Sale of gift items 1,008,000
Sales subject to output vat P2,688,000
x 3/28
Output Vat P288,000
Less:
§ Input vat on purchases directly attributable to vatable sales
(Purchase of school supplies and gift items)
P1,344,000 x 3/28 P144,000
§ Input vat on purchases attributable to vatable and nonvatable
sales (Purchase of computers)
P448,000 x 3/28 x (2,400/3,600)** P32,000
§ Purchase of office supplies used in vatable and non-vatable
transactions from non-vat registered suppliers nil (176,000)
Vat Payable P112,000
**Total Vatable Sales net of vat = P2,400,000
Non-vatable sales = P1,200,000
Total Sales, net (vatable and non-vatable) = P3,600,000
P8.7
Output Vat (P896,000 x 3/28) P96,000 Note:
Less: Input vat The input vat on capital goods is not amortized because the
acquisition cost is not more than P1M.
§ P224,000 x 3/28 (24,000)
§ P112,000 x 3/28 x 80% (9,600) The ratio of vatable sales to total sales = 80%
§ P2,240 x 3/28 x 80% (192)
Vat Payable P62,208

P8.8
(a)
Total Input Vat (P374,000 + 69,848 + 154,000 + 55,000) x 3/28 = P69,948
(b)
Output vat (P330,000 + P274,996) x 3/28 P64,821
Less: Input vat (P374,000 + 69,848 + 154,000) x 3/28 (69,984)
Vat Payable (P5,163)
Note:
§ Sale to export oriented enterprise is considered export sale subject to 0% vat only if more than 70% of its annual
production is actually exported.
§ The input vat on purchase of goods intended for export may be refunded, deducted from output vat or converted to
a tax credit certificate.
P8.9
(a) P28,800
(b) P12,600
Output Vat (P350,000 x 12%) P42,000
Less:
§ Input vat on importation:
CIF (cost, insurance, freight) value P229,195
Charges/expenses incurred in claiming the goods:
Wharfage 1,540
Arrastre 2,295
Customs duty 4,090
Brokerage fee and documentary stamps 330
Facilitation expense = bribe; illegal payment; not included in -
the computation
Marine cargo insurance 2,550
Total P240,000
x 12% (28,800)
§ Input vat on Freight from customs to warehouse (600)
Vat Payable P12,600
P8.10
(a)
1st Quarter Output Vat (P3M x 12%) P360,000
INPUT VAT:
Purchases (P1.2M x 12%) (144,000)
Purchase of machinery (P2.5M x 12%) / 36 x 3mos. (25,000)
Unused input vat as of end of 2017 (125,000)
Vat Payable P66,000
(b)
2nd Quarter Output Vat (4.8M x 12%) P576,000
Input Vat
Purchases (P3M x 12%) (360,000)
Unused input vat on capital goods (P2.5M x 12%-25,000) (275,000)
Excess Input vat (P59,000)

P8.11
Output vat (P336,000 x 12%) P40,320
Input vat:
On purchases (P112,000 x 3/28) (12,000)
Transitional input vat:
Higher between 2% of beg. Invty vs. P10,000 (10,000)
Vat Payable P18,320
P8.12
(a) P3,400
(b) P80,000
Output vat (P800,000 x 12%) P96,000

Less: Input Vat
Presumptive I.V (P85,000 x 4%) (3,400)
Purchased of olive oil (P67,200 x 3/28) (7,200)
Purchased of can containers (P25,000 x 12%)) (3,000)
Payments for paper labels (P12,000 x 12%) (1,440)
Purchased of cardboard for boxes (P8,960 x 3/28) (960)
Payments for hauling services nil
Vat Payable P80,000
P8.13
Output vat (672,000 x 3/28) P72,000
Less: Input Vat
Purchased of bottles (P22,400 x 3/28) (2,400)
Purchased of can containers (P50,000 x 12%) (6,000)
Payments for paper labels (P5,600 x 3/28) (600)
Purchased of cardboard for boxes (P3,360 x 3/28) (360)
Payments for hauling services (P60,000 x 12%) (7,200)
Vat Payable P55,440
& The taxpayer (processor of fruits) is not entitled to presumptive vat
P8.14
Subject to Value Added Tax
Hotel rooms (P1.8M x 12%) P216,000
Dining Hall:
Sale of food and refreshments (P2.2M x 12%) 264,000
Sale of wine, beer and liquor (P950,000 x 12%) 114,000
Other revenues (P700,000 x 12%) 84,000
Subject to Percentage Tax (Amusement Tax)

Disco:
Sale of food and refreshments (P1.6M x 18%) 288,000
Sale of wine, beer and liquor (P1.2M x 18%) 216,000
TOTAL BUSINESS TAXES P1,182,000

P8.15
OUTPUT VAT based on collections
(15M + 10M + 5M) P3,600,000
INPUT VAT on purchases from:
Alpha (P12M – 1.2M) x 12% (1,296,000)
Bravo (non-vat reg.) -
Charlie (P4M – 1M) x 12% (360,000)
Delta (P2M x 12%) (240,000)
Vat Payable P1,704,000
P8.16
Output vat ((P4M – 2.5M) x 12% P180,000
Less: input vat (P800,000 x 12%) (96,000)
Vat Payable P84,000
P8.17
Ratio of Initial Payment over Selling Price:
Lot A = 50/250 = 20% ; Installment Sale
Lot B = 70/200 = 35%; Deferred Sale; Treated as Cash Sale
Lot C = 60/300 = 20%; Installment Sale
Nov. 2015 Dec. 2015
Lot A: P25,000 x 12%; P25,000 x 12% P3,000 P3,000
Lot B: P200,000 x 12% 24,000 -
Lot C: P40,000 x 12%; P20,000 x 12% 4,800 2,400
Vat Payable P31,800 P5,400
P8.18
a) Output vat September 2018 = P3M x 12% = P360,000
The sale is a Deferred sale. Ratio of initial payments over SP is 30%.
b) Output vat January 2019 = P0
P8.19
Room charges P1,000,000
Laundry services 25,000
Food and beverages 1,500,000
Corkage 15,000
Handling charges for providing telephone, 4,500
telex, cable or fax services
Cake shop sales 80,000
Total P2,624,500
Vat rate 12%
Output Vat for the month P314,940
TRUE OR FALSE
SET A
1. T 6. F 11. F 16. T 21. F
2. F 7. F 12. F 17. F 22. F
3. F 8. F 13. F 18. F 23. T
4. T 9. T 14. F 19. T* 24. F
5. T 10. T 15. F 20. T 25 T
*Sale of Gold to BSP Prior to 2018 = 0% vat; Beg. Jan. 1, 2018 = Vat exempt

SET B
1. T 6. F 11. F 16. T 21. T
2. T 7. F 12. F 17. T 22. T
3. T 8. F 13. T 18. T 23. T
4. F 9. T 14. F 19. F 24. T
5. F 10. F 15. T 20. F 25 F
MULTIPLE CHOICE
1. D 21. C 41. B 61. B 81. D
2. C 22. A 42. C 62. B 82. A
3. A 23. C 43. D 63. C 83. B
4. D 24. C 44. D 64. D 84. D
5. D 25. D 45. B 65. A 85. D
6. D 26. C 46. D 66. C 86. B
7. D 27. D 47. D 67. B 87. C
8. D 28. B 48. C 68. D 88. D
9. A 29. C 49. C 69. A 89. C
10. C 30. B 50. D 70. D 90. D
11. C 31. A 51. B 71. D
12. A 32. D 52. C 72. A
13. A 33. A 53. B 73. D
14. D 34. B 54. D 74. B
15. C 35. B 55. D 75. C
16. C 36. B 56. C 76. D
17. A 37. B 57. A 77. C
18. D 38. B 58. B 78. D
19. D 39. C 59. C 79. C
20. D 40. A 60. A 80. B
Supporting Computations/explanations:
No. 12 “III” is exempt only if contribution per member is not more than P15,000.
No. 20
Output Vat (P2,805,500 +P1,524,000) x 12% P519,540
Input vat (P1,102,200+P1,012,500) x 12% (253,746)
Vat Payable P265,780
No. 21
Output Vat, 3rd quarter (P150,000 x 12%) P18,000
Input vat, 3rd quarter (P120,000 x 12%) (14,400)
Deferred input vat – previous quarter (6,000)
Vat Payable (Carry-over) (P2,400)
No. 37
AR, July 1 P180,000
Billings, July-Sept. 850,000
AR, Sept. 30 (120,000)
Collections P910,000
Output vat @ 12% 109,200
Input vat on purchases @ 12% (57,600)
Vat Payable P51,600

No. 38
Output vat (P5.5M x 12%) P660,000
Input vat on materials (180,000)
Vat Payable September P480,000
No. 39
Output vat (P10M x 12%) P1,200,000
Input vat on materials (480,000)
Input vat on capital goods (36,000)
(P3Mx12%) /60 mos.
Vat Payable June 30 P684,000
No. 41
Sales, shares held as inventory P5,000,000
Cos of shares, held as inventory (2,000,000)
Gross income 3,000,000
Vat rate 12%
Output vat P360,000
Les: Input vat
Supplies expense 12,000
Rent expense 24,000 (36,000)
Vat payable P324,000
No. 49
Domestic sales (P600,000 x 12%) P72,000
Add: Transaction deemed sales
Jan. 4 consignment (P200,000 x 12%) 24,000
Goods consumed on Fe. 27 (P50,000 x 12%) 6,000
Property dividends (P150,000 x 12%) 18,000
Total Output Vat P120,000
No. 66 & 67
Output vat (P592,480 x 3/28) P63,480
Less: Input Vat
Purchases of goods (P100,000 x 12%) P12,000
Purchases of services (P20,000 x 12%) 2,400
Transitional input vat 4,800 (19,200)
VAT Payable P44,280
No. 72
Output Vat for October 2014 = P3M x 12 = P360,000
v Ratio of Initial Pay’t over Gross S.P. = P900,000/P3,000,000 = 30%
v If initial payment is more than 25% of Selling Price, the sale is classified as Deferred Sale which is treated as Cash Sale.
Therefore, the entire output vat is due on the month of sale.
No. 73
Output Vat for 2015 = P0; The entire output vat was paid in 2014

No. 74
Downpayment P112,000
1st installment payment 112,000
Total (vat inclusive) 224,000
Less: VAT (P224,000 x 3/28) (24,000)
Initial Payment (exclusive of vat) P200,000
Divide by contract Price (P1,120,000 x 3/28) 1,000,000
Ratio of Initial Payment over SP 20%
Output vat for 2017 (P200,000 x 12%) P24,000
No. 75
VAT ON CASH SALE: P72,000
(ZV is higher than SP) (P600,000 x 12%)
VAT ON DEFERRED SALE: 36,000
(Ratio of Initial payment over SP > 25%
(Deferred Sale)
(Treated as cash sale; SP is higher than FMV)
[(P336,000/1.12) x 12%]
TOTAL OUTPUT VAT P108,000
No. 78 and 79
Output vat (P336,000 x 3/28) P36,000
Input vat (56,000 + 11,200) x 3/28 x 300/500 (4,320)
Vat Payable P31,680
No. 80
OUTPUT VAT (P896,000 x 3/28) P96,000
INPUT VAT
Purchases of goods, vat business, vat included (24,000)
(P224,000 x 3/28)
MIXED Transactions:
Purchases of supplies, for vat & non vat business
[(112,000 x 3/28) x (800,000/1,000,000)] (9,792)
Purchase of depreciable asset, for use in vat and non vat business
[(P2,240 x 3/28) x (800,000/1,000,000)]
VAT PAYABLE P62,208
No. 81 and 82
OUTPUT VAT
Domestic sales (P330,000 + P274,996) x 3/28 P64,821
Export sales (zero rated) 0
INPUT VAT
Purchases of goods, supplies and services for domestic sales and for export (374,000 + 69,848
+ 154,000 + 55,000) x 3/28 (69,948)
Vat Payable (P5,127)
No. 83
Raw Materials (P560,000 x 3/28) x 400,000/1M P24,000
Supplies (P448,000 x 3/28) x 400,000/1M 19,200
Equipment (P300,000 x 12% x 400,000/1M) 14,400
INPUT VAT ATTRIBUTED TO EXPORT SALES P57,600

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SOLUTIONS

CHAPTER 1 – SUCCESSION & TRANSFER TAXES

CHAPTER 2 – GROSS ESTATE

1 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

2 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

Supporting Computations (Multiple Choice):

3 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

CHAPTER 3 – DEDUCTIONS FROM THE GROSS ESTATE

(P3.2) (Funeral Expenses)

(P3.4) P183,500 computed as follows:

4 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

(P3.6) P265,000 computed as follows:

(P3.7) P2,500,000 computed as follows:

(P3.8) P2,097,000 computed as follows:

5 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

Case B: P333,333 computed as follows:

Case C: P0. Debtor is not insolvent

Receivable (CAIP) P500,000

(P3.10) P200,000 computed as follows:

(P3.11) P133,333 computed as follows:

Receivable (CAIP) P200,000

(P3.12) P262,500 computed as follows:

6 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

(P3.14) MEDICAL EXPENSES – DECEDENT DIED BEFORE 2018

(P3.15) FAMILY HOME

7 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

CASE B – Decedent died after the effectivity of TRAIN Law:

Domestic shares of 2,000 shares inherited 6 years ago P800,000

Value to take P1,500,000

8 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

Total Gross Estate P5,850,000

NET ESTATE without VD (from Q#1) P2,757,500

9 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

Total Gross Estate P5,850,000

NET ESTATE without VD (from Q#1) (P1,250,000)

10 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

VANISHING DEDUCTION % 20%

Medical expenses (500,000)

CASE B – Decedent died after the effectivity of the TRAIN Law:

11 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

Medical expenses (repealed under TRAIN Law) -

(P3.19) DECEDEND DIED PRIOR TO EFFECTIVITY OF THE TRAIN LAW:

Questions No. 2-9:

Estate Tax Due P469,500

12 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

Supporting Computation (Multiple Choice):

13 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

CHAPTER 4 – PROPERTY RELATIONS

14 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

Exclusive Common Total

Conjugal Partnership of Gains (CPG)

Exclusive Common Total

15 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

16 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

P4.5 (Decedent: Resident Alien)

Value to take/Initial Basis*** P25,000,000

** P7,000,000 – 3,500,000 = P3,500,000

P4.6 (Decedent: Resident Citizen, married)

17 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia

Value to take* P210,000

Value to take/Initial Basis** P500,000

Supporting Computations (Multiple Choice)

18 | T r a n s f e r & Business Taxation(2018 Edition) by Tabag and Garcia