Chapter 4 Deductions from Gross Estate

PROBLEM 4-1. TRUE OR FALSE

Write TRUE if the statement is correct or FALSE if incorrect.

1. Funeral expenses incurred after the internment are not deductible but could be claimed as claims
against the estate.
2. Judicial expenses incurred within 6 months from the date of death is allowed as deduction from the
gross estate.
3. Claims against the estate are unpaid unlawful obligations by the decedent which should be paid by
heir if the value of the estate is inadequate.
4. The claim against the estate including its interest is deductible only to the extent of the accrued
amount as of the decedent’s death.
5. Loans granted by banks must be notarized to be deductible from gross estate.
6. The claim against an insolvent person is deductible only if included in the gross estate.
7. An accommodation loan is deductible if it is included as part of the gross estate.
8. Unpaid taxes from the date of death until the burial or before the burial are deductible from gross
estate.
9. Losses claimed as deductions from gross income are deductible from gross estate if not
compensated by insurance.
10. Donations to foreign government are deductible from gross estate.
11. A vanishing deduction is not allowed for the current decedent if his immediate predecessor
deducted the same from his gross estate.
12. A special deduction is allowed to all kinds of decedent taxpayers.
13. A medical expense is deductible whether paid or unpaid.

PROBLEM 4-2. TRUE OR FALSE

Write TRUE if the statement is correct or FALSE if incorrect.

1. The deductions from gross estate are valued at the fair market value at the time of filing and paying
the estate tax.
2. Outstanding obligations by a person during his lifetime are terminated upon his death.
3. Deductions from the gross estate are allowed ti protect the interest of the innocent third party who
have claims over the properties of the decedent.
4. To be deductible, judicial expense must have been incurred before the decedent’s death.
5. A loss is deductible from gross estate for as long as it was sustained before the decedent’s death.
6. As a rule, a deduction is allowed from the gross estate if it is proven that the estate of the decedent
is entitled to such deduction as provided by law.
7. As a rule, deductions from the gross estate are presumed to be conjugal deductions, unless
specifically identified as exclusive.
8. Expenses incurred during the interment are allowed as deductions from gross estate including those
defrayed by the decedent’s relatives.
9. The allowed deduction for funeral expense is P200,000.
10. The amount of judicial expense is limited to P200,000 or 5% of the gross estate or the actual amount
whichever is lower.
11. Funeral expenses derived from assistance by sympathizers are deductible from gross estate.
12. Brokerage fees for selling property of the estate are part of the deductible expenses.
13. Receipts or invoices or other evidences to show that the expense was really incurred must duly
support the funeral expense.

PROBLEM 4-3. TRUE OR FALSE

Write TRUE if the statement is correct or FALSE if incorrect.

1. The amount received under RA 4917 is an ordinary deduction.

2. The share of a surviving spouse is a special deduction.
3. Funeral expense is deductible whether paid or unpaid.
4. To be deductible, judicial expenses should be incurred during the settlement of the estate but not
beyond the last day, prescribed by law, or the extension thereof, for the filing of the estate tax
return.
5. Where a decedent owns less than all of the property covered by a mortgage, only a proportionate
amount is deductible.
6. All claims against the insolvent person are deductible from the decedent’s gross estate.
7. Casualty losses could be claimed as deduction from the gross income and from the gross estate.
8. Estate tax is deductible from the gross estate to determine the taxable base.
9. Unpaid income taxes incurred before the death of the decedent are deductible from the gross
estate.
10. Property tax not accrued before the decedent’s death is deductible from the gross estate.
11. No deduction is allowed on the property which is not included in the decedent’s gross estate.
12. Expenses primarily incurred by a heir intended to establish his interest in the estate are deductible
judicial expenses from the gross estate.
13. A vanishing deduction is allowed for property received from donation if it is part of the gross estate.

PROBLEM 4-4. TRUE OR FALSE

Write TRUE if the statement is correct or FALSE if incorrect.

1. A vanishing deduction is a special deduction.

2. In computing vanishing deduction, the value to be taken is the lesser amount of the property’s value
at the date of previous transfer or the value of the property at the date of death of the decedent.
3. The share of a surviving spouse in the estate shall be deducted equal to ½ of the gross estate
conjugal property.
4. If the heirs cannot substantiate funeral expense with documents or receipts it can be still allowed as
deductions by getting the 5% of the gross estate of P200,000 whichever is lower.
5. In general, funeral expense is deducted first from the exclusive property of the decedent.
6. The maximum amount of a family home deductible from the gross estate is P1,000,000.
7. If the family home is an exclusive property of the surviving spouse and has a current market value of
P1,000,000, such amount is not subject to estate tax.
8. Medical expenses as of the last illness will not form part of the funeral expense.
9. If the amount of medical expenses is P600,000, only P500,000 is deductible from gross estate if the
medical expense is unpaid.
10. Any amount of medical expenses incurred within one year amounting to P600,000 shall no longer be
allowed as deduction from gross estate.
11. Standard deductions are in lieu of actual itemized deduction from the gross estate.
12. A standard deduction of P1,000,000 should be substantiated with official receipts to be deductible
from gross estate.
13. If the decedent is a nonresident alien, no deduction is allowed if the estate tax return does not
include properties outside the Philippines.

PROBLEM 4-5. MULTIPLE CHOICE (THEORY)

Encircle the letter that contains the best answer.

1. Which of the following expenses is not allowed to be deducted even if already paid?
a. Medical expense
b. Funeral expense
c. Judicial expense
d. Any of the above

2. Which of the following special deduction is an actual expense?

a. Standard
b. Medical
c. Family home
d. Accounts receivable under RA 4917

3. Which of the following items does not require that the value of the said deductible amount should
be included as part of decedent’s interest reflected in the gross estate?
a. Claims against the insolvent person
b. Receivable under RA 4917
c. Claims against the estate
d. Accommodation loan

4. Which of the following expenses or losses is not deductible if incurred after death?
a. Funeral
b. Judicial
c. Casualty
d. Taxes

5. The following ordinary deductions from the gross estate actually reduce the value of the estate,
except
a. Vanishing deduction
b. Funeral expenses
c. Judicial expenses
d. Transfer for public use

6. The excess amount of funeral expense threshold limit of P200,000 is

a. Allowed to be deducted as claims against the estate
b. Allowed to be included as part of medical expense
c. Not deductible from gross estate to determine the net distributable estate
d. Not deductible from the gross estate to determine the amount of net estate subject to estate
tax
7. Which of the following expenses in determining the net taxable estate is allowed to be deducted
whether paid or unpaid?
a. Actual funeral expenses up to the time of internment within the limit of P200,000
b. Actual medical expenses within one year from the time of death within the limit of P500,000
c. Both choice “a” and “b”
d. Judicial expenses supported by a shown statement of account issued and signed by the creditor.
8. The following requisites are needed for the deductibility of claims against the estate, except
a. All person obligations existing at the time of the decedent’s death, including medical expenses
prior to death.
b. The liability was contacted in good faith and for adequate and full consideration in money or
money’s worth
c. The creditor’s claim must be enforceable in court
d. The indebtedness was not have been condoned or prescribed

9. Which of the following existing loan contract at the time of death does not require notarization to
be deductible as claims against the estate?
a. Mortgage contract by a friend at the time when the loan was granted
b. Mortgage contract by commercial banks at the time when the loan was granted
c. Decedent’s unpaid balance, including interest as of the time of death, certified by the creditor
d. Declaration by the creditor of his capacity of lend at the time when the loan was granted

10. Statement 1: Deductions from gross estate are highly disfavored in law; he who claims deductions
must be able to justify his claim or right.
Statement 2: Deductions from gross estate are presumed to be against the exclusive portion of the
gross estate, unless specifically identified as conjugal.
a. Only statement 1 is correct.
b. Only statement 2 is correct.
c. Both statements are correct.
d. Both statements are not correct.

PROBLEM 4-6. MULTIPLE CHOICE (THEORY)

Encircle the letter that contains the best answer.

1. The medical expense is not deductible from gross estate if the decedent is a
a. Resident Filipino citizen
b. Nonresident Filipino citizen
c. Resident alien
d. Nonresident alien

2. The following are required to be listed as part of the gross estate, but are exempted from estate tax,
except
a. Share of surviving spouse
b. Transfer for public use
c. Exclusive property of the decedent
d. Amount received by heirs under RA 4917
3. All of the following items are allowed as deduction against a conjugal portion of the estate, except
a. Unpaid taxes
b. Claims against insolvent persons
c. Share of surviving spouse
d. Family home

4. The following items are deductible only against the exclusive portion of the estate, except
a. Losses
b. Transfer for public use
c. Family home
d. Medical expenses

5. The following deductions from gross estate are subject to a limited amount, except
a. Funeral expenses
b. Unpaid taxes
c. Medical expenses
d. Family home

6. The following deductions from the gross estate are deductible in full, except
a. Family home
b. Transfer for public use
c. Losses
d. Judicial expense

7. Statement 1: All funeral expenses that are deductible from the gross estate must be incurred prior
to burial.
Statement 2: Funeral expenses taken from the gross estate are deductible in full amount if less than
5% of the gross estate but not more than P200,000.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

8. Statement 1: Losses incurred on an item of gross estate are deductible from gross estate and could
be allowed as deduction from income of the estate.
Statement 2: The deductible loss against the estate must be incurred after the decedent’s death, but
before the final settlement of the estate.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

9. Which of the following unpaid taxes is allowed as a deduction from the gross estate?
a. Unpaid income tax on earnings prior to the decedent’s death
b. Estate tax
c. Unpaid real property tax incurred after death but before payment of estate tax
d. Capital gains tax on sale of real property included in the gross estate to defray funeral expense.
10. Which of the following is not allowed with standard deduction?
a. The exclusive property of decedent who died single and as a citizen of the Philippines
b. The conjugal property of husband and wife for property located within the Philippines
c. The gross estate of nonresident citizen
d. The gross estate of nonresident alien

PROBLEM 4-7. MULTIPLE CHOICE (THEORY)

Encircle the letter that contains the best answer.

1. Amounts received under RA 4917 is appropriately classified as

a. Exclusive and ordinary deduction
b. Conjugal and ordinary deduction
c. Exclusive and special deduction
d. Conjugal and special deduction

2. Which of the following losses actually incurred should be allowed as deduction from the gross
estate?
a. Losses from theft occurred a week after the date of death
b. Losses from fire that happened after death fully covered with insurance
c. Losses from earthquake which happened a week before date of death
d. Losses that occurred after the distribution of the estate

3. Which of the following deductions will reduce the taxable estate but not the inheritance?
a. Funeral expenses
b. Family home
c. Losses
d. Judicial expenses

4. For estate tax computation, which of the following is not included in the determination of the share
of surviving wife?
a. Funereal expense
b. Judicial expense
c. Claims against insolvent person
d. Transfer of decedent’s exclusive property for public use

5. Which of the following statements is not correct about the deductible funeral expense?
a. Amount deductible shall not exceed the actual amount incurred
b. Amount deductible must not exceed P200,000
c. Amount deductible must not exceed 5% of gross estate
d. The funeral expense must be paid through the contribution of the decedent’s relatives

6. Which of the following is not allowed as deductible funeral expense?

a. Mourning apparel of widow and children
b. Expenses of wake before burial
c. Burial lot donated by brother
d. Death notices published
7. The amount of the funeral expenses that may be deducted from gross estate is
a. 5% of the gross estate or actual funeral expenses incurred, whichever is lower but not to exceed
P200,000
b. 5% of the gross estate or actual funeral expense, whichever is lower
c. Actual funeral expenses incurred
d. 5% of the gross estate or actual funeral expenses incurred, whichever is lower

8. Which of the following deductible from the conjugal portion of the gross estate
a. Unpaid mortgage pertaining to property acquired as inheritance after marriage
b. Losses incurred during administration of the estate on property included in the gross estate
c. Claim against the exclusive portion of the estate
d. Transfer for public use

9. Casualty losses are deductible from gross estate if:

1st statement: Such loss was incurred during the settlement of the estate
2nd statement: Such loss was incurred not later than the last day for payment of the estate tax
a. Both statements are false
b. 1st statement is false while 2nd statement is true
c. 1st statement is true while 2nd statement is false
d. Both statements are true

10. Which of the following would prohibit the deductibility of vanishing deduction?
a. The property is located in the Philippines
b. The period from preceding decedent to the current decedent is within 5 years
c. Prior vanishing deduction has been deducted on the same property from the preceding
decedent
d. The estate or donor’s tax has been paid previously on the same property

PROBLEM 4-8. MULTIPLE CHOICE (THEORY)

Encircle the letter that contains the best answer.

1. Which of the following deductions from the gross estate of a resident decedent does not need a
substantiation requirement?
a. Medical expense
b. Funeral expense
c. Family home
d. Standard deduction

2. This expense is subject to allocation if the decedent is a nonresident alien

a. Ordinary deduction
b. ELITE
c. Transfers for public use
d. Vanishing deduction

3. In the computation of vanishing deduction, the proportionate deduction allowed to be deducted

from the initial basis is comprised of
 a. Ordinary deduction
b. ELITE
c. ELITE and transfer for public use
d. ELITE and share of surviving spouse

4. The decedent was married and under the conjugal partnership of gains. An obligation of P100,000,
incurred during the marriage and secured by a mortgage of exclusive property, is a deduction of
a. P100,000 against the conjugal property
b. P100,000 against the exclusive property
c. P50,000 against conjugal property
d. P100,000 against exclusive property but with a receivable of P50,000 from the surviving spouse

5. Statement No. 1: A P1,000,000 standard deduction is allowed to be deducted from the gross estate
of a citizen or resident decedent.
Statement No. 2 : The standard deduction could be opened in lieu of an itemized allowable
deduction from the gross estate
a. Only statement no. 1 is correct
b. Both statements are correct
c. Both statements are incorrect
d. Only statement no. 2 is correct

6. Which of the following unpaid taxes is not deductible from the gross estate?
a. Property taxes accrued prior to decedent’s date
b. Income taxes on income earned and received by the estate after decedent’s death
c. Gift taxes on life time gifts which remains unpaid at date of death
d. Capital gain tax on transfers before death and paid after date of death

7. Which of the following is deductible from the exclusive portion of the gross estate?
a. Vanishing deduction pertaining to property inherited by the decedent prior to marriage under
conjugal property ownership
b. Transfer for public use pertaining to joint donation of husband and wife to the government
c. Bad debts for uncollectible claims against insolvent person
d. Family home pertaining to house and lot acquired during marriage

8. Which of the following is allowed as a deduction from the gross estate of a nonresident citizen?
a. Family home with respect to residential house located in the country
b. Standard deduction of P1,000,000
c. Prorated amount of medical expenses incurred 18 months prior to date of death
d. Vanishing deduction with respect to property located in the Philippines which was acquired
through gratuitous title 4 years prior to death of present decedent

9. Mrs. Maria Bermudez, a Filipino, died on May 10, 2015. Her gross estate included a property she
received on June 8, 2010 as a gift from her uncle who died on March 10, 2014. In computing the
vanishing deduction on the property received as a gift, the percentage of deduction to be applied on
the gift previously taxed will be:
a. 60%
b. 80%
c. 40%
 d. 20%

10. Which of the following medical expense will be allowed in full amount of deduction from the gross
estate?
a. P550,000 medical expenses incurred during the last 6 months prior to death
b. P300,000 medical expenses incurred 13 months prior to death and paid a month before the date
of death
c. P400,000 hospitalization expenses incurred and paid during the last one month prior to the date
of death
d. All of the above

PROBLEM 4-9. SHORT PROBLEMS

Instruction: The problems below are independent from each other unless stated otherwise. Compute
their respective requirement.

1. How much is the deductible funeral expense if the administrator failed to present documentary
evidences and the gross estate is P6,000,000?
2. D, a resident decedent, has a P500,000 collectible from B, an insolvent person. How much is D’s
deductible claims against insolvent person if B has total assets of P600,000 and total liabilities of
P2,400,000?
3. A Filipino citizen received a real property located in Japan with P3,000,000 market value three years
ago when inherited. If the said Filipino died with funeral expense of P50,000, and the said
inheritance has a market value of P5,000,000 at the time of his death, how much is the vanishing
deduction?
4. The administrator of a nonresident alien decedent reported P10,000,000 properties located in the
Philippines. If the total funeral and judicial expenses reported amount to P500,000 and P200,000,
respectively, how much is the allowed deduction for Philippine estate tax purposes?
5. How much is the total amount of special deductions from the gross estate of a nonresident alien
decedent with properties located within and outside the Philippines if at the time of his death, he
has death benefits receivable under RA 4917 amounting to P500,000?
6. How much is the amount of claims against the estate if a Filipino decedent has a gross estate of
P3,000,000; excess of unpaid funeral expense of P50,000; and mortgage loan of P100,000?
7. How much is the amount of special deduction within if a resident alien that has gross estate within
of P3,000,000 and outside the Philippines of P2,000,000 to the foreign government?
8. How much is the deductible transfers for public use if the decedent taxpayer donated P1,000,000 to
the Philippine government and P2,000,000 to the foreign government?
9. How much is the deductible loss is the P500,000 property of the decedent was stolen with insurance
recovery of P300,000 if the estate tax has been filed and paid within 8 months after the date of
death?

PROBLEM 4-10. DEDUCTION AGAINST THE GROSS ESTATE

The gross estate of the nonresident alien is P3,000,000 located in the Philippines and P2,000,000 located
outside the Philippines. The entire amount of ELITE deductions is P500,000 and devices to Philippine
Government is P100,000. How much is the allowable deduction against the Philippine gross estate?
a. P-0- b. P300,000 c. P400,000 d. P500,000
PROBLEM 4-11. FUNERAL EXPENSE
At what amount is allowed as ordinary deduction from P3,500,000 gross estate of a resident alien
decedent with unpaid funeral expense of P220,000 actual for internment, burial lot and mourning
apparels?
a. P220,000 b. P200,000 c. P175,000 d. None

PROBLEM 4-12. FUNERAL EXPENSE

The estate is P3,150,000 after payment of funeral expenses amounting to P175,000. The deductible
funeral expense is:
a. P157,500 b. P166,250 c. P175,000 d. P200,000

PROBLEM 4-13. FUNERAL EXPENSE

The conjugal portion of the estate is P2,000,000 and the exclusive portion is P1,000,000. Actual funeral
expense is P180,000. How much would be the allowed deductible funeral expenses?
a. P150,000 b. P175,000 c. P180,000 d. P200,000

PROBLEM 4-14. FUNERAL EXPENSE

Mr. Estrado, an unmarried resident of the Philippines, died on January 15, 200A leaving real properties
in Manila with fair market value of P1,560,000. Deductions claimed by the administrator of the decedent
estate are as follows: medical expenses during the decedent’s sickness paid out of the decedent’s cash
available at date of death 45,000; expenses during the wake paid out of the decedent’s cash 85,000;
memorial plan already paid 40,000; claims against insolvent persons 100,000.
a. P90,000 b. P83,000 c. P78,000 d. P40,000

PROBLEM 4-15. FUNERAL EXPENSE AND CLAIMS AGAINST THE ESTATE

If five percent (5%) of the gross estate is P130,000 and the total amount incurred is P220,000 where
P30,000 thereof is still unpaid, the amount that can be claimed as deduction from gross estate would
be:
Funeral expense a. P220,000 b. P200,00 c. P190,000 d. P130,000
Claims against estate 90,000 70,000 40,000 -0-

PROBLEM 4-16. JUDICIAL EXPENSE

To defray the expense incurred in connection of the death of the owner, the real property, which is the
only item of the estate, was sold. The proceeds of sale are P1,780,000, net of capital gains tax and 5%
broker’s fee. The total deductible judicial expense is
a. P95,000 b. P100,000 c. P120,000 d. P220,000

PROBLEM 4-17. JUDICIAL EXPENSE

Yuma Yao, a citizen of the Philippines, died on January 1, 200A leaving properties with a value of P10M
which is under litigation. His executor presented the following judicial expenses to determine the
allowed deductible amount:
Philippine judicial proceedings- May 1, 200A:
Agreed contract price of lawyers service 10% of the value of the property
Including:
Acceptance fee P 80,000
Court appearances fee 20,000
Excluding:
Extra-judicial settlement of the estate 500,000

How much is the amount deductible judicial expenses if only 30% of the agreed contract price is paid
a. P400,000 b. P600,000 c. 1,150,000 d. P1,600,000

PROBLEM 4-18. DEDUCTIBLE LOSS

Part of the gross estate is a jewelry pawned to a local pawnshop for P48,000. It is the practice of the
pawnshop to extend loan at 40% of the fair value of the collateral. Prior to the distribution of the estate,
the jewelry was redeemed from the pawnshop but was snatched along the way. How much is the
deductible loss?
a. P19,200 b. P48,000 c. P120,000 d. P168,000

PROBLEM 4-19. DEDUCTIBLE LOSS

Mina Malas died due to car accident. His assets prior to death were as follows:
Family home Cash in bank Car
Before death P2,000,000 P500,000 400,000
Date of Death 2,000,000 300,000
How much is the deductible loss from gross estate?
a. P-0- b. P200,000 c. P400,000 d. P600,000

PROBLEM 4-20. DEDUCTIBLE LOSS

Family home Cash in bank Apartment
Date of Death P1,900,000 P3,000,000
Date of Estate tax 2,000,000 P1,800,000 0
payment
The apartment was raged by fire death but compensated by insurance up to 60% of its value, and a
scrap value of P100,000 was recovered. How much is the deductible loss from gross estate?
a. P3,000,000 b. P1,800,000 c. P1,200,000 d. P1,100,000

PROBLEM 4-21. CLAIMS AGAINST THE ESTATE

The following are liabilities related to the death of a resident citizen: Unpaid mortgage on the real
property included in the gross estate 500,000; accounts payable condoned by the creditors 200,000;
unpaid medical expenses incurred related to the sickness that cause the death of the decedent 200,000;
unpaid funeral expenses 100,000. How much could be deducted as claims against the estate?
a. P500,000 b. P600,000 c. P700,000 d. P800,000
PROBLEM 4-22. CLAIMS AGAINST THE ESTATE
The following items are submitted by Mrs. Sementerio, the surviving spouse of Mr. Sementerio,
regarding the claims against the estate: excess unpaid funeral expense over limit 120,000; excess unpaid
medical expense over limit 100,000; loans from Metro Bank (not notarized per bank’s policy) 500,000;
interest on loans payable in the bank 30,000; loans from creditors that has been prescribed 200,000.
The correct claims against the estate for estate tax computation is
a. P-0- b. P420,000 c. P500,000 d. P530,000

PROBLEM 4-23. CLAIMS AGAINST INSOLVENT PERSON

Part of the gross estate is P500,000 accounts receivable from a debtor. The P500,000 is subsequently
proven not fully collectible because of financial condition of debtor as follows: assets of the debtor
1,500,000; taxes payable by the debtor 500,000; total liabilities including taxes 2,000,000. How much
would be the deductible amount from the gross estate as bad debts?
a. P500,000 b. P333,333 c. P250,000 d. P166,667

PROBLEM 4-24. CLAIMS AGAINST INSOLVENT PERSON

What would be the amount to be deducted from the gross estate of a decedent whose collectible from a
debtor is P160,000 and have the same debtor was subsequently declared by court as insolvent for
having total liabilities of P400,000 and total properties of P50,000?
a. P20,000 b. P140,000 c. P160,000 d. P350,000

PROBLEM 4-25. UNPAID MORTGAGE LOAN (EXCLUSIVE PROPERTY)

Mr. Shy used his exclusive real property as a collateral to acquire a loan accounting to P1,000,000 which
was used to finance their family business. At the time of his death, the remaining unpaid mortgage loan
was P800,000 and the fair value of the exclusive real property was P2,800,000 of which P400,000 was
donated to the Lipa City Government. Assuming that the fair value of the conjugal property left to Mrs.
Shy was P3,500,000 and the funeral expense was P180,000, how much is the value of the exclusive and
conjugal properties after ordinary deductions?
Exclusive a. P2,000,000 b. 2,400,000 c. P2,800,000 d. 2,000,000
Conjugal 3,320,000 2,520,000 2,525,000 3,500,000

PROBLEM 4-26. UNPAID TAXES

During the settlement of the inheritance, the following liabilities are outstanding: unpaid real property
tax incurred prior to date of death 100,000; donor’s tax prior to date of death 80,000; income tax on
income earned by the estate from date of death to date immediately before distribution to heirs 50,000;
estate tax 25,000.
a. P75,000 b. P100,000 c. P150,000 d. P180,000

PROBLEM 4-27. VANISHING DEDUCTION

A Filipino citizen received a real property located in Taiwan with P2,000,000 market value two and a half
years ago when inherited. A P300,000 mortgage was attached to the inherited property of which
P200,000 was paid. If the said Filipina died with funeral expense of P180,000 and the said inheritance
property has a market value of P3,000,000 at the time of his death, how much is the vanishing
deduction?
a. P-0- b. P486,000 c. P979,200 d. P990,000

PROBLEM 4-28. VANISHING DEDUCTION

The only item included in the gross estate is a real property inherited by the present decedent more
than 2 years prior to his death. The real property was taxed in the previous transfer at value of
P1,000,000. The present value of the same property at date of death of the present decedent is
P3,000,000. The total actual and ordinary deductions from the gross estate is P150,000. How much
could be allowed as the amount of vanishing deduction?
a. P570,000 b. P720,000 c. P950,000 d. P1,710,000

PROBLEM 4-29. VANISHING DEDUCTION

Part of the P5,000,000 gross estate is a P2,100,000 real property inherited previously subjected to
transfer taxes 42 months ago at fair value of P2,400,000. The real property has been subjected to
mortgage by the previous owner for P500,000 assumed by the heir who just died recently. The unpaid
balance of the mortgage is P100,000at the date of death. Assuming that the funeral expense and judicial
expense are P300,000 and P100,000, respectively. How much is the vanishing deduction?
a. P1,840,000 b. P1,472,000 c. P736,000 d. P625,600

PROBLEM 4-30. VANISHING DEDUCTION

Two and a half years ago, Wah Ligo, a Filipino citizen, inherited a real property located in the Philippines
with a P2,000,000 market value. He assumed the P300,000 mortgage attached to the inherited property
and paid P200,000 of it. If Ligo died with funeral expense of P180,000 and the said inherited property is
his only property with market value of P3,000,000 at the time of his death, how much is the amount of
ordinary deduction subject to proportionate computation?
a. P180,000 b. P250,000 c. P280,000 d. P450,000

PROBLEM 4-31. TRANSFER FOR PUBLIC USE

Val Luctor died leaving real properties with a cost of P500,000. The total land area is 1,000 square
meters with a fair market value of P2,000,000. A portion of the real estate equivalent to 200 square
meters is assigned in the will to be transferred to the City of Baguio which has jurisdiction over the
property. The amount of deductible transfer for public use would be:
a. P2,000,000 b. P1,000,000 c. P500,000 d. P400,000

PROBLEM 4-32. TRANSFER FOR PUBLIC USE

Nama Yapa, died with the following donations stated in his Will: Donation to Church 100,000; Donation
to the City of Manila 200,000; Donation to Korean Government 300,000; Donation to Kapuso
Foundation 400,000. How much is the amount of transfer for public use deductible from gross estate?
a. P600,000 b. P500,000 c. P200,000 d. P100,000
PROBLEM 4-33. ORDINARY DEDUCTIONS
Information regarding a Filipino citizen’s gross estate and expenses are as follows: Gross estate 300,000;
Funeral expenses 200,000; Judicial expenses (40% use to settle dispute among heirs) 250,000; Bad debts
(1/3 unrecoverable) 150,000; Amount received under RA 4917 300,000. How much is the ordinary
deductions?
a. P650,000 b. P500,000 c. P350,000 d. P300,000

PROBLEM 4-34. NOT ALLOWED AS DEDUCTION

The administrator of X, a decedent resident Filipino citizen, shows the following gross estate including
unpaid expenses and obligations: Gross estate 3M; Funeral Expenses 0.2M; Medical expenses (within
one year) 0.65M; Claims against the estate 0.3M. How much is the amount that shall no longer be
allowed as deduction from the gross estate and cannot be classified as claims against the estate?
a. P150,000 b. P200,000 c. P300,000 d. P500,000

PROBLEM 4-35. STANDARD DEDUCTION

A nonresident Filipino died leaving a net community estate of P4,000,000 after deducting actual
allowable deductions amounting to P2,500,000. Special deductions excluding standard deduction was
P1,500,000. How much is the amount of standard deduction allowed?
a. P2,500,000 b. P1,500,000 c. P1,000,000 d. P-0-

PROBLEM 4-36. STANDARD DEDUCTION

A nonresident alien died leaving a net estate of P2,000,000 in the Philippines, after deducting
proportionate deductions amounting to P500,000. How much is the amount of standard deduction
allowed?
a. P2,000,000 b. P1,000,000 c. P500,000 d. P-0-

PROBLEM 4-37. FAMILY HOME

What is the allowable deduction for family home with P1.2M FMV at the date of death of decedent
survived by spouse if such family home was inherited by the decedent during marriage at P0.8M?
a. P600,000 b. P400,000 c. P800,000 d. P1,000,000

PROBLEM 4-38. FAMILY HOME

The decedent’s P3M gross estate is comprised of P1.6M personal properties and P1.4M family home,
(P1M building which is conjugal, and P0.4M land, which is exclusive to the decedent). How much could
be deducted from the gross estate as family home?
a. P1,400,000 b. P1,000,000 c. P900,000 d. P700,000

PROBLEM 4-39. FAMIILY HOME

How much is the amount of family home subject to estate tax if the said family home has a value of P2M
of which P0.8M represents the exclusive lot of the decedent and the balance represents the conjugal
house?
a. P1,000,000 b. P800,000 c. P600,000 d. P400,000
PROBLEM 4-40. MEDICAL EXPENSE
Prior to the date of death, a total of P300,000 worth of medical expenses were incurred. At the date of
death, P100,000 of medical expenses are still unpaid. How much of the above amounts could be
deducted from the gross estate?
a. P500,000 b. P400,000 c. P300,000 d. P100,000

PROBLEM 4-41. MEDICAL EXPENSE

Prior to the date of death, a total of P600,000 worth of medical expenses were incurred. At the date of
death, P100,000 of medical expenses are still unpaid. How much of the above amounts could be
deducted from the gross estate as claim against the estate?
a. P,000 b. P,000 c. P,000 d. P,000

PROBLEM 4-42. MEDICAL EXPENSE

Date of Death September 30, 2014. What is the correct amount of allowable medical expenses for the
following hospital bills incurred: October 2013 to December 2013 100,000; March 2013 to May 2013
450,000; November 2012 to December 2012 150,000.
a. P700,000 b. P500,000 c. P450,000 d. P100,000

PROBLEM 4-43. SHARE OF SURVIVING SPOUSE

The gross estate consists of P2,000,000 conjugal and P1,000,000 exclusive to the decedent. Part of the
last will and testament is the transfer of P500,000 of the gross estate to the government. If there were
no other actual deductions, how much would be the deductible share of the surviving spouse?
a. P1,000,000 b. P1,250,000 c. P1,500,000 d. P2,000,000

PROBLEM 4-44. SHARE OF SURVIVING SPOUSE

A citizen died leaving P5,000,000 conjugal estate to his wife. The estate included the family home valued
at P1,500,000. The funeral expenses amounted to P220,000. The share of surviving spouse would be
a. P2,500,000 b. P2,400,000 c. P2,390,000 d. P1,640,000

PROBLEM 4-45. SPECIAL DEDUCTIONS

The following communal properties are available upon the death of Mr. Campo Santo, a Filipino citizen:
residential house and lot as family home 1,000,000; land donated to the government 500,000; claims
against insolvent person 200,000; amount received under RA 4917 500,000. Based on the data, how
much is the total amount of special deductions?
a. P1,000,000 b. P1,500,000 c. P1,700,000 d. P2,000,000

PROBLEM 4-46. ORDINARY AND SPECIAL DEDUCTIONS

Mr. Tuso presents the following properties and expense to the BIR in relation to the death of his wife:
revocable donation to the Ramon Magsaysay Foundation 1,000,000; proceeds of life insurance from SSS-
revocable 5,000,000; family home (exclusive property of Mrs. Tuso) 1,000,000; SSS death benefits
500,000; benefits under RA 4917 500,000; transfers in contemplation of death 2,000,000; donation to
the government 1,000,000; medical expense (40% unpaid, 100% incurred within 1 year) 400,000; funeral
expense 100,000.
1. Total ordinary deduction amounts to
a. P100,000 b. P500,000 c. P1,100,000 d. P1,600,000

2. The total special deduction is

a. P1,500,000 b. P2,000,000 c. P2,400,000 d. P2,900,000

PROBLEM 4-47. ALLOCATION OF DEDUCTIONS

The following information is reported by Ali Mango, the executor of a Pahi Ngana, the decedent:
Within Without
Gross estate- including family home P5,000,000 P3,000,000
Claims against the estate 3,000,000 1,000,000
Donation to Philippine government 500,000 200,000
Medical expenses 300,000 700,000

1. If Pahi Ngana is a resident alien, how much is the total amount of allowable deductions from his
gross estate?
a. P6,000,000 b. P6,200,000 c. P7,000,000 d. P7,200,000

2. If Pahi Ngana is a nonresident alien, how much is the total amount of allowable deductions from his
gross estate within?
a. P2,500,000 b. P3,000,000 c. P3,200,000 d. P4,000,000

PROBLEM 4-48. ALLOCATION OF DEDUCTIONS

Sumir Ku, an unmarried Japanese residing in the Philippines, died with the following information
regarding his estate:
Japan Philippines Total
Gross estate P2,000,000 P8,000,000 P10,000,000
Funeral expenses 200,000 300,000 500,000
Unpaid loans 300,000 700,000 1,000,000
Donations to governments:
Japan 100,000
Philippines 400,000 500,000
Medical expenses 500,000 300,000 800,000

The gross estate within included a family home of P2,000,00. The administrator of Ku also presented
P600,000 representing judicial expense incurred within and outside the Philippines. The allocation of the
deductions against the gross estate of Mr. Ku would be
Japan a. P1,112,500 b. P1,012,500 c. P512,500 d. P500,000
Philippines 3,887,500 3,687,500 1,987,500 1,700,000

PROBLEM 4-49. NONRESIDENT ALIEN DECEDENT

Nor Korea, a nonresident Korean national, died in the Philippines. His administrator showed to the
Philippine Government the following assets and expenses:
 Within Without
Properties P5,000,000
Funeral expenses 300,000
Mortgage loan 200,000
Claims against estate 500,000

How much is the net estate subject to estate tax in the Philippines?
a. P5,000,000 b. P4,100,000 c. P4,000,000 d. P3,000,000

PROBLEM 4-50. FINDING THE GROSS ESTATE USING DEDUCTIONS

The net taxable estate of Diva Ding, a Filipino unmarried person, amounted to P3,000,000. Other
information is as follows: Family home 2,000,000; Total Ordinary Deductions 1,500,000; Medical
expenses (within 1 year) 500,000.
a. P8,000,000 b. P6,000,000 c. P5,000,000 d. P4,000,000

PROBLEM 4-51. FINDING THE NET CONJUGAL ESTATE

The net taxable estate of Naba Yagen, a Filipino married person, amounted to P4,000,000. Other
information is as follows: share of surviving spouse 2M; family home- exclusive of Naba Yagen 1.5M;
conjugal ordinary deductions 1M; exclusive ordinary deductions 0.75M; medical expenses (within 1
year) 0.6M; amount received under RA 4917 0.25M. How much is the amount of net conjugal estate?
a. P8,750,000 b. P8,500,000 c. P7,750,000 d. P7,500,000

PROBLEM 4-52. FUNERAL EXPENSE

Chit Sharon’s gross estate is P3,000,000. Her executor is claiming the following as funeral expenses
related to the death of Chit:
Hospitalization incurred during the last 3 months prior to Chit’s death P50,000
Burial lot, 20% are paid from friends contribution 50,000
Expenses for wake before burial 20,000
Thank you cards to the sympathizers 2,000
Telegrams and cables sent to the relatives 1,000
Mourning apparel of the surviving spouse and children 3,000
Mourning apparel of the relatives 1,000
Entertainment expenses during the rites and ceremonies during the burial 2,500

Required: How much is the allowable funeral expense?

PROBLEM 4-53. VARIOUS DEDUCTIONS

Mr. Pru Buto, a Filipino decedent, died on November 1, 200A leaving the following assets to his surviving
spouse and 2 minor children: family home 5M; family business 10M. His wife presented the following
deductions:
January until November until
October 200A December 200A
Unpaid taxes:
Income tax P200,000 P100,000
 Donor’s tax 100,000 50,000
Estate tax 800,000
Funeral expenses:
Memorial plan 50,000
Wake expenses 100,000
Accrued expenses 80,000 20,000
Medical expenses:
Hospital bills 400,000
Autopsy 30,000

Mrs. Buto wanted to settle all of the obligations attached to the estate on January 31, 200B.

Required: Compute for the following amounts:

1. Ordinary deductions
2. Special deductions

PROBLEM 4-54. SHARE OF SURVIVING SPOUSE

Mr. Cabaong, resident of Mandaluyong City, died intestate on November 1, 200A. He is survived by his
wife and left the following estate with their corresponding market value:
Exclusive real estate- Mr. Cabaong P700,000
Exclusive real estate- Mrs. Cabaong 900,000
Conjugal real estate 2,200,000
Conjugal personal property 400,000
Additional information:
Actual funeral expenses 200,000
Judicial expenses 50,000
Mortgage payable to bank 400,000
Medical expenses 550,000

Required: Compute the deductible share of the surviving spouse.

PROBLEM 4-55. MEDICAL EXPENSES

On November 1, 2014, Mr. Mama Mathay died due to sickness. His administrator presented the
following hospitalization expenses as deduction from the gross estate:

October 1 to 15, 2013 from Quijano Hospital:

Doctor’s fee P30,000
Hospital rooms 10,000
Medicines 40,000
October 1 to 20, 2014, from Saint Luke’s Hospital:
Diagnostic fee 60,000
Doctor’s fee 120,000
Hospital rooms 80,000
Operating costs 50,000
Medicines 90,000
November 1, 2014
 Autopsy 30,000
Total P510,000

Required: Determine the deductible medical expenses from the gross estate

PROBLEM 4-56. TOTAL DEDUCTIONS

A nonresident Filipino died in a foreign country leaving the following estate to his surviving spouse:
Property Location Cost Assessed Value FMW at Death
Number 1 Abroad P 800,000 P 2,000,000
Number 2 Philippines 1,000,000 P 1,800,000 3,500,000
Expenses:
Funeral P 150,000
Judicial 50,000
Medical 550,000

Required: Compute the total deductions from the gross estate.

PROBLEM 4-57. COMPREHENSIVE PROBLEM

The following are the information related to the death of a resident citizen:

Tangible and intangible property gathered P3,000,000

Funeral and judicial expenses 200,000
Part of gathered property that is to be transferred to the government
In advance to a written will 500,000

Required: Compute for

1. The gross estate
2. Actual deductions
3. Deductible allowance
4. Net taxable estate