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Practice Exercises on
Estate Taxation
Instructions: Indicate the answer of your choice on the left side of each item number. Strictly no erasures
allowed.
I. Theories
1. One of the following is not allowed as deduction form the gross estate of the nonresident alien
decedent
A. Share of surviving spouse where the decedent was married
B. Paid medical expenses incurred one year before the decedent died
C. Unpaid funeral expenses
D. Unpaid judicial expenses

2. All of these are exempt from transfer tax, except?

a. Transfer of the usufruct in the owner of the naked title
b. Proceeds of group insurance received by heirs of the decedent
c. General renunciation of share in the conjugal property by the surviving spouse
d. Transfer under special power of appointment

3. Non-resident decedent can claim deduction for

a. Transfer for public purpose
b. Medical expenses
c. Family home
d. Standard deduction

4. When a property is donated in contemplation of death, the basis of the tax shall be:
a. Fair market value at the time of donation
b. Fair market value in the hands of the donor before the time of donation
c. Fair market value at the time of death of the donor
d. Cost when the property was acquired

5. The ranch of the decedent was mortgaged to accommodate the request of his brother for a loan. The
value of the loan to the brother was not included as receivable in the gross estate of the decedent. What
would be the treatment of the unpaid mortgage on the ranch?
a. Deductible from gross estate
b. Not deductible from the gross estate
c. Deductible from the gross income of the estate
d. Deductible either from the gross estate or the gross income of the estate

6. Under this system there is a merger of all the properties of the husband and the wife owned by them
at the time of the celebration of the marriage, or those acquired thereafter.

a. Conjugal partnership of gains

b. Absolute community of properties
c. Complete separation of properties
d. None of the choices

7. Which is correct?
a. Estate tax is determined per piece of property transferred to the heir.
b. Estate tax is collected by the local government.
c. Estate tax is a property tax.
d. Estate tax is an excise tax.

8. Which shall not form part of the gross estate of the decedent?
a. Intangible personal property of a non-resident alien without reciprocity clause
b. Revocable transfer
c. Transfer under special power of appointment
d. Life insurance proceeds where the executor is beneficiary and it is irrevocable.

9. Which of the following is not true?

a. Estate tax is an excise tax
b. Estate tax is a transfer tax on donation mortis causa
c. The object of the estate tax is to tax the property transferred from the dead to the living.
d. Estate tax is based on redistribution of wealth

10. Which of the following statements is not correct in succession?

A. Legitimate children share equally in their legitimate of ½ the net distributable estate.
B. When the spouse survives with one legitimate child, the legitimate of the spouse is ¼ of the net
distributable estate.
C. When the spouse survives with two legitimate children, the legitimate of the spouse is ¼ of the net
distributable net estate.
D. The legitimates of the legitimate and illegitimate children takes precedence over the legitimate of
the surviving spouse.

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Items 11 through 14 pertain to the following information:

Proceeds of life insurance shall be included in the gross estate if the beneficiary designated is
11. The estate and the designation is
A. Revocable
B. Irrevocable
C. Whether revocable or irrevocable
D. Partly revocable, partly irrevocable

12. The executor and the designation is

A. Revocable
B. Irrevocable
C. Whether revocable or irrevocable
D. Partly revocable, partly irrevocable

13. The administrator and the designations is

A. Revocable
B. Irrevocable
C. Whether revocable or irrevocable
D. Partly revocable or irrevocable

14. A person other than the estate, executor or administrator and the designation is
A. Revocable
B. Irrevocable
C. Whether revocable or irrevocable
D. Partly evocable or irrevocable

15. This is not part of the gross estate of the decedent

A. Conjugal property
B. Community property
C. Share of the surviving spouse
D. Exclusive property of the surviving spouse

16. This is not part of the conjugal property

A. Those acquired by onerous title during the marriage at the expense of the common fund
B. Those acquired by industry or work of either of them
C. The fruits, rents or interests received or due during the marriage coming from the conjugal property
or from the exclusive properties of the spouses
D. Those acquired during the marriage by gratuitous title

17. Under the absolute community of property, jewelry for personal and exclusive, the wife shall belong
to the
A. Wife
B. Husband
C. Husband and wife
D. Children

18. A died leaving a farm land. In his will, he transferred the ownership thereof to B but subject to the
condition that C will have the right to use the land for a period of ten years (usufruct).In the seventh year
however, C died and in C’s will he surrendered his right over the land to B.
A. The transfer is subject to donor’s tax.
B. The transfer is subject to estate tax.
C. The transfer is both an inclusion from the gross estate.
D. The above is tax exempt transfer.

19. One of the following is not an exemption or inclusion from gross estate
A. Capital or exclusive property of the surviving spouse
B. Properties outside the Philippines of a non-resident Chinese decedent
C. Shares of stock of San Miguel Corporation of a non- resident Mexican
D. The owner of usufruct in the owner of a naked title

20. The estate should be valued at the time

A. The heirs are ascertained
B. The estate tax is paid
C. The estate is ready for distribution to the heirs
D. Of death of the decedent

II. Gross Estate (Single)

1. A non-resident alien decedent died. The following data were made available by the administrator of
the estate:
Real property, Philippines P 3,000,000
Land and building, USA 5,000,000
Car, Philippines 800,000
Shares of stock in Philippine Corporation, certificates are kept in
a foreign bank 500,000

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Shares of stock in a foreign corporation 100,000

Shares of stock in a foreign corporation (85% of its business in the Phil) 200,000
Savings bank deposit, Philippines 150,000
How muh is the Philippine gross estate?
a. 4,650,000
b. 4,150,000
c. 3,950,000
d. 3,800,000
2. How much is the Philippine gross estate assuming the country where the non-resident alien is a
citizen does not impose death taxes on succession?
a. 3,950,000
b. 3,900,000
c. 3,800,000
d. 3,000,000

A decedent left the following properties:

Land in Italy (with PIM unpaid mortgage) P2, 000, 000
Land in Laguna, Philippines 500, 000
Franchise in USA 100, 000
Receivable from debtor in Philippines 70, 000
Receivable from debtor in USA 100, 000
Bank deposits in USA 80, 000
Shares of stock of PLDT, Philippines 75, 000
Shares of stocks of ABC, foreign corporation 75% of the
business in the Philippines 125, 000
Other personal properties 300, 000
Zonal value of the land in Laguna 75, 000
3. If the decedent is a non resident citizen, his gross estate is
a. P3, 650, 000
b. P3, 600, 000
c. P2, 500, 000
d. P2, 650, 000

4. Using the above date, if the decedent is a non-resident alien, his gross estate is
A. P1, 195, 000
B. P945, 000
C. P1, 320, 000
D. P1, 070, 000

5. If in the preceding number reciprocity law can be applied, the gross estate is
A. P1, 050, 000
B. P1, 195, 000
C. P1, 250, 000
D. P1, 070, 000
III. Gross Estate (Married)
For items 6-9
Cardo died? leaving the following properties:
a. Real property in Baguio City, brought into marriage 300,000
b. Income of real property in Baguio 60,000
c. Real property in Cebu City, brought into marriage by Alyana his wife240,000
d. Income of real property in Cebu 25,000
e. House in Pili Camarines Sur, acquired by Cardo during marriage 375,000
f. Income of house in Pili 50,000
g. Real property in Iloilo City, earned by wife during the marriage 225,000
h. Income of real property in Iloilo City 80,000
i. Tangible personal properties in Manila, inherited by Cardo
During the marriage 500,000
j. Income of properties in Manila 175,000
k. Intangible personal properties in Singapore, inherited by Alyana
During marriage 430,000
l. Income of intangibles in Singapore 85,000
m. Tangible personal property in Dagupan City, inherited by Cardo
before the marriage 20,000
n. Income of property in Dagupan City 10,000
o. Intangible personal property in Canada, inherited by Alyana before
marriage 350,000
p. Income of personal property in Canada 85,000
6. Under the conjugal partnership of gains, the total conjugal properties of the spouses is:

7. Under conjugal partnership of gains, the gross estate of Cardo is

8. Under absolute community of property regime, the total community property of the spouses is:
9. Under absolute community of property regime, the gross estate of Cardo is:

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For items 10-13

Glenn, married to Maggie Greene 3 years ago, died leaving the following properties.
a. Condo unit at West Tower Condominium Makati City, acquired
by him and his wife 2,500,000
b. Apartment unit in Vancouver, Canada inherited from his parents
who died 2 ½ years ago 3,500,000
c. Volvo car registered in Canada, donated to him by his mother four (4)
years ago 2,000,000
d. Toyota Fortuner in the Philippines, purchased by Glenn out of his
exclusive property
1,200,000
e. Jewelry in the Philippines, inherited last year by his wife Maggie,
From her mother 550,000
f. Cash in bank- Banco de Oro; 50% was earned by Glenn before marriage;
50% was earned by the spouses 840,000
g. Interest on bank deposit (net of withholding tax) 8,000
h. Interest in a domestic partnership, acquired by Maggie before marriage 300,000
i. Investment with Acer Corp., foreign corporation, 85.5% of business is
in the Philippines 1,000,000
j. Dividends with Acer Corp.,date of record was made after death of Glenn 45,000
k. Investment with Filipinas Company, domestic, 25,000 shares, traded
in the stock exchange (closing rate of: P22.915)
l. Dividends from Filipinas Company, date of record, one month before Glenn’s
death (gross of dividend tax) 7,500
m. Receivable on a foreign insurance company for an accident insurance
Suffered six months before death 50,000
n. Proceeds of a life insurance taken by the employer corporation of
Glenn on his life 200,000
o. Receivable on life insurance taken by Glenn on his own life appointing
his estate as the irrevocable beneficiary; common funds of the
spouses were used in paying the insurance premium 150,000

10. The gross estate if Glenn was a non-resident citizen under the absolute community of property
regime-
a. P12,127,625 c. P6,577,625
b. 11,187,625 d. 3,700,000
11. The gross estate of Glenn was a non-resident alien without reciprocity under the absolute community
of property regime
a. P10,127,625 c. P3,700,000
b. 11,187,625 d. 6,577,625
12. The gross estate if Glenn was a resident alien under the conjugal partnership of gains-
a. P10,127,625 c. P3,700,000
b. 11,827,625 d. 6,577,625

13. The gros s estate if Glenn was a non-resident alien, with reciprocity, under the conjugal partnership
of gains-
a. P10,127,625 c. P6,577,625
b. 11,827,625 d. 3,700,000

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IV. Miscellaneous (Gross Estate)

14. A, made the following transfer inter-vivos:
To B To C To D To E
Cost P100,000 P100,000 P100,000 P100,000
FMV, Time of transfer 140,000 100,000 100,000 80,000
Consideration received 100,000 140,000 80,000 10,000
FMV time of death of A 120,000 200,000 70,000 90,000
The amount to be included in the gross estate of A
a. 160,000 b. 100,000 c. 130,000 d. 110,000

15. In the absence of a marriage settlement, or when the regime agreed upon is void, the property
relations of the spouses who married before August 3, 1988 shall be governed by:
a. Absolute community of properties c. Absolute separate of properties
b. Conjugal partnership of gains d. No property relations

Select the letter that correspond the BEST answer.

A. If the first statement is correct C. If the both statements are correct
B. If the second statement is correct D. If the both statements are incorrect

1. Gratuitous transfer of property may not involve financial consideration. F

Onerous transfer of property is not subject to tax. F
2. The estate of the decedent may include his liabilities. F
A sale is a form of transfer transaction that requires payment of transfer tax. F
3. A gift out of love to a former girlfriend is an onerous transfer. F
Cancellation of exiting debt as payment for services rendered by the debtor to the creditor is a gratuitous
transfer. F
4. The right to succession is effected at the time of transfer of the decedent’s property or rights to the
heir. F
In case of doubt, testamentary succession is preferred to legal or intestate succession. T
5. The share of the surviving spouse is an exclusive property of the wife and shall be part of the
decedent’s distributable estate. F
Intestate succession is a legal succession because it takes effect through the validity of the decedent’s last will
and testament. F
6. Notes or claims held by the decedent should not be included in the gross estate if cancelled by the
decedent’s will. F
Interest collected in advance before the decedent’s death, which occurred after the decedent’s death shall be
included in the gross estate. F
7. Donated properties subject to condition upon the wishes of the decedent donor shall not be included
as part of the gross estate. F
There is transfer in contemplation of death when the sale involves an adequate and full consideration. F
8. There is a revocable transfer when a transferor of a corporate stock in trust for his children reserves
the right to vote the shares during his lifetime to aid his children to gradually assume financial
responsibilities. F
When the designation of the beneficiary is not stated or is not clear, the Insurance Code assumes irrevocable
designation. F
9. Under the absolute community of property regime, property acquired through exclusive property of
the husband or wife is an exclusive property even acquired during the marriage. T
Exclusive property does not become community property just because it is used as family home. T
10. The property acquired through donation during marriage shall remain exclusive property of the
decedent or surviving spouse. F
Property for personal and exclusive used of either spouse including jewelry shall form part of the community
property. F

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