Philippine Transfer and Business Taxes, edition 2013-2014,

by Virgilio G. Litonjua / Lilian M. Litonjua

Vgl files, vgl files, sols to donors tax 2013-2014

Answers to Multiple Choice Questions in Chapter 1: GPOT, BIROPF, TR,

CHAPTER I. CPA BOARD QUESTIONS, OK

Q01. D Q11. BIR Q21. C Q31. C Q41. C
Q02 B Q12. D Q22. D Q32. D Q42. A
Q03. C Q13. B Q23. C/G Q33. B Q43. A
Q04. C Q14. C Q24. B Q34. C Q44. D
Q05. D Q15. D Q25. C Q35. C Q45. A
Q06. D Q16. C Q26. C Q36. D
Q07. B Q17. C Q27. A Q37. D
Q08. C Q18. D Q28. D Q38. D
Q09. A Q19. D Q29. B Q39. C
Q10. A Q20. D Q30. D Q40. D

No Multiple Choice Questions in Donor’s Tax Chapter 2.

Answers/Solutions to Problems in Donor’s Tax Chapter 3: TNG, GTD,

Problem 1. Various Donors donees are relatives donees are strangers

Donors TNG DTD NGADT DTD NGADT
01. BIM 375,000 9,000 384,000 112,500 487,500
02. BAM 76,900 0 76,900 23,070 99.970
DTD TNG NGADT TNG NGADT
03 BOM 287,000 3,830,000 4,117,000 956,667 1,243,667
04 GIGI 192,000 2,850,000 3,042,000 640,000 832,000
05 GAGA 45,000 1,012,500 1,057,500 150,000 195,000

C1. 2,000 + (175,000 X 4%) = 7,000 = 9,000 DTD R, C2. EXEMPT SINCE TNG IS NOT OVER P100,000,
C3. (204,000 = 3,000,000) + (83,000 / 10% = 830,000) = 3,830,000 TNG
C4. (44,000 = 1,000,000) + (148,000 / 8% = 1,850,000) = 2,850,000 TNG
C5. (44,000 = 1,000,000) + (1,000 / 8% = 12,500) = 1,012,500 TNG
C6. 375,000 X 30% = 112,500 DTD, C7. 76,900 X 30% = 23,070 DTD,
C8. 287,000 / 30% = 956,667 TNG, C9. 192,000 / 30% = 640,000TNG,
C10. 45,000 / 30% = 150,000 TNG

Problem 2. Mr. Oyo Boy

Relative Stranger Total
Taxable net Gift 382,600 53,000 435,600
Gift Tax due 9,304 15,900 25,204
(0-15%) 30%

C1. 295,000 + 60,000 + 27,600 = 382,600 GG R C2. 38,000 + 15,000 = 53,000 GG S

C3. 382,600 + 53,000 = 435, 600 TTGG C4. 53,000 x 30% = 15,900 DTD S
C5. 182,600 x 0.04 = 7,304 + 2,000 = 9,304 DTD R

1
Vgl files, vgl files, sols to donors tax 2013-2014

Problem 3. Ms. Angel L

(RCD) (NRAD)
Donations Phil. 653,000 653,000
Donations Abroad 280,000 0
Gross Gift 933,000 653,000
Less: Allowed Deduction Phil. 96,500 96,500
Allowed Deduction Abroad 75,400 0
Total Allowed deduction 171,900 96,500
Taxable Net Gift 761,100 556.500
Gift Tax due 228,330 17,3 90
(30%) (0 - 15%)

C1. 761,100 X 30% = 228.330 DTD S, C2. 14,000 + (56,500 X 6%) 3,390 = 17,390 DTD R

Problem 4. Miss Rica P.

Relative Stranger Total
Gross Gift 633,750 341,250 975,000
Allowed Deduction 79,500 185,500 265,000
Taxable Net Gift 554,250 155,750 710,000
Gift Tax due 17,255 46,725 63,980
(0-15%) (30%)

C1. 975,000 X 65% = 633,750 GG R C2. 975,000 X 35% = 341,250 GG S,

C3. 265,000 X 70% = 185,500 AD S C4. 265,000 X 30% = 79,500 AD R
C5. 14,000 + (54,250 X 6%) = 3,255 = 17,255 DTD R C6. 155,750 X 30% = 46,725 DTD S

Problem 5. Mr. Marvin A.

FEB. 2013 JUNE 2014
Gross Gift 535,500 130,000
Allowed Deduction 140,000 15,000
Taxable Net Gift 395,500 115,000
Gift Tax due 9,820 300
Gift Tax Paid 0 0
Gift Tax Still Due / Payable 9,820 300

C1. 500,000 + 35,500 = 535,500 GG, C2. 2,000 + (195,500 X 4%) 7,820 = 9,820 DTD
C3. 95,000 + 35,000 = 130,000 GG C4. 15,000 X 2% = 300 DTD

Nov. 2014
Gross Gift – C 111,500
Allowed Deduction- C 24,000
Net Gift - C 87,500
Add: prior Net Gift 115,000
Taxable Net Gift 202,500
Gift Tax Due 2,100
Gift Tax Paid 300
Gift Tax Still Due / Payable 1,800

C1. 65,000 + 1,500 + 45,000 = 111,500 GG C2. 14,000 + 10,000 = 24,000 AD

C3. (2,500 X 4%) = 100 + 2,000 = 2,100 DTD

2
****************************************************************************
Problem 6. Miss Jennelyn M.
RAD NRAD
Gross Gift 725,000 475,000
Allowed deduction 192,200 120,700
Taxable Net Gift 532,800 354,300
Gift Tax due 159,840 8,172
(30%) (0-15%)

C1. 385,000 + 160,000 + 90,000 + 90,000 = 725,000 GGW

C2. (86,500 – 15,000) = 71,500 + 120,700 = 192,200 ADW C3. 385,000 + 90,000 = 475,000 GGP
C4. 532,800 X 30% = 159,840 DTD S C5. (154,300 X 4%) 6,172 + 2,000 = 8,172 DTD R

Problem 7. Mr. & Mrs. Richard G.

Husband Wife Friend
Gross Gift 462,500 315,000 62,500
Allowed Deduction 116,000 110,000 15,000
Taxable Net Gift 346,500 205,000 47,500
Gift Tax Due 7,860 2,200 14,250
(0-15%) (0-15%) 30%

C1. 80,000 + (250,000 x 75%) + (390,000 x 50%) = 462,500 H

C2. 120,000 + (390,000 x 50%) = 315,000 W
C3. 250,000 x 25% = 62,500 F C6. 60,000 x 25% = 15,000
C4. 26,000 + (90,000 x 50%) + (60,000 x 75%) = 116,000 C7. (5,000 X .04) 200 + 2,000 = 2,200 DTD S
C5. 65,000 + 45,000 = 110,000 C8. (146,500 X .04 ) 5,860 + 2,000 = 7,860 DTD R
C9. 47,500 X 30% = 14,250 TD S

Problem 8. Mr. Francis M.

Aug. 28, 2013
Gross Gift 225.700
Allowed Deduction 13,400
Taxable Net Gift 212,300
Gift Tax Due (0 – 15%) 2,492

Nov. 24, 2013

Gross Gift 92,100
Allowed Deduction 18,200
Net Gift 73,900
Add: Prior Net Gift 212,300
Taxable Net Gift 286,200
Gift Tax Due (0 – 15%) 5,448
Prior Gift Tax Paid 2,492
Gift Tax Still Due / Payable 2,956
(0-15%)

C1. 190,000 + 35,700 = 225,700 GG C2. 5,000 + 8,400 = 13,400 AD

C3. 12,300 x .04= 492 + 2,000 = 2, 492 DTD C4. 79,600 + 12,500 = 92,100 GG C
C5. 86,200 x .04= 3, 448 + 2,000 = 5, 448 DTD
******************************************************************************

3
Problem 9. Mr. Dennis T.

1 2 3.NRCD
RCD NRAD Relative Stranger Total
Gross Gift 1,430,000 980,000 1,001,000 429,000 1,430,000
Less; Allowed deduction 305,000 175,000 152,500 152,500 305,000
Taxable Net Gift 1,125,000 805,000 848,500 276,500 1,125,000
Gift Tax Due 337,500 32,300 34,910 82,950 117,860
30% (0-15%) (0-15%) (30%)

C1. 980,000 + 450,000 = 1,430,000 GGW C2. 175,000 + 130,000 = 305,000 ADW
C3. 1,125,000 x .30 = 337,500 DTDW C4. 305,000 x .06 =18,300+14,000 = 32,300 DTDP
C5. 1,430,000 x .70 = 1,001,000 GGR C6. 1,430, 000 x .30 = 429,000 GGS
C7. 305,000 x .50 = 152,500 AD C8 348,500 x 6% = 20,910 + 14,000 = 34,910DTDR
C9. 276,000 X 30 % = 82,950 DTDS

Answers/ Solutions to Problems in Donor’s Tax Chapter 4: Tax. Credit.

Problem 01. Donor, Foreigner

RAD NRAD
Gross Gift 540,000 350,000
Allowed Deduction 140,000 80,000
Taxable Net Gift 400,000 270,000
Gift Tax due 10,000 4,800
Tax Credit 4,650 1,400
Gift Tax still Due / payable 5,350 3,400

C1. 350,000 + 190,000 = 540,000 GGW C2. 80,000 + 60,000 = 140,000 ADW
C3. 2,000 + (200,000 x .04) = 10,000 GTDW C4. 2,000 + (70,000 x .04) = 4,800 GTDP
C5 70,000 x .02 = 1,400 TC
C6 130,000 / 400,000 x 10,000 = 3,250 Formula Actual 24,500 Lower 3,250
C7 3,250 + 1,400 = 4,650 TCR

Problem 02. Boyet De Leon

NRCD NRAD
Taxable Net 1,000,000 600,000
Gift Tax due 300,000 180,000
Tax Credit 106,000 0
Gift Tax Still Due / Payable 194,000 180,000

C1. 600,000 + 250,000 + 150,000 = 1,000,000 TNGW C2. 1,000,000 x 30% = 300,000 DTDW
C3. 600,000 x 30% = 180,000 DTDP
C4. Limit A
Formula Actual Lower
Japan – 250,000 / 1,000,000 x 300,000 = 75,000 68,500 68,500
USA – 150,000 / 1,000,000 x 300,000 = 45,000 37,500 37,500
106,000
C5. Limit B
Formula Actual Lower
Abroad – 400,000 / 1,000,000 x 300,000 120,000 106,000 106,000

4
Problem.03. Aga Mulach -NRCD
Feb. 2013 July 2013
Gross Gift ? 475,000
Allowed Deduction ? 162,500
Net Gift 250,000 312,500
Add: Prior Net Gift 0 250,000
Taxable Net Gift 250,000- 562,500
Gift Tax Due 4,000 17,750.00
Prior Gift Tax Due 0 13,861.11
Gift Tax Still Due / Payable 4,000 3,888.89

C1 50,000 x .04 = 2,000 + 2,000 = 4,000 C2. 175,000 – 12,500 = 162,500

C3 62,500 x .06 = 3,750 + 14,00 = 17,750
C4. 9,861.11 + 4,000 = 13,861.11

Formula Actual Lower

Abroad – 312,500 / 562,500 x 17,750 9,861.11 12,500 9,861.11

Problem 04. Mr. Bong Revilla

Amended Donor’s Tax Return filed in May 2013
RAD NRAD
Gross Gift 370,000 180,000
Allowed Deduction 120,000 50,000
Taxable Net Gift 250,000 130,000
Gift Tax due 4,000 600
Tax Credit 2,120 0
Gift Tax still Due / payable 1880 600

C1. 120,000 + 180,000 + 70,000 = 370,000 C2. 30,000 + 50,000 + 40,000 = 120,000
C3. Limit A
Formula Actual Lower
GB- 90,000/ 250,000 x 4,000 = 1,440 8,600 1,440
Israel- 30,000/250,000 x 4,000 = 480 3,500 480
Total 1,920 12,100 1920
C4. Limit B
Formula Actual Lower
Abroad- 120,000/ 250,000 x 4,000 1,920 12,100 1,920

C5. 2000 + (50,000 x .04) = 4,000 C6. 30,000 x 0.02 = 600 C7. 1,920 + 200 = 2,120

Original Donor’s Tax Return filed in March 2013

RAD NRAD
Gross Gift 275,000 150,000
Allowed Deduction 165,000 90,000
Taxable Net Gift 110,000 60,000
Gift Tax Due / Paid 200 0

C1. 85,000 + 150,000 + 40,000 = 275,000 GGW C2, 50,000 + 90,000 + 25,000 = 165,000 ADW

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Problem 5. Kris Aquino
July , 2013 Oct. 2013
Gross Gift 350,000 540,000
Allowed Deduction 120,000 90,000
Net Gift 230,000 450,000
Add: Prior Net Gift 0 230,000
Taxable Net Gift 230,000 680,000
Gift Tax Due ( S ) 69,000 204,000
Prior Gift Tax Paid 0 99,000
Gift Tax Still Due / Payable 69,000 105,000

C1. 230,000 x 30% = 69,000 DTD C4. 69,000 + 30,000 = 99,000 TC

C2. 400,000 + 140,000 = 540,000 GG C3. 50,000 + 40,000 = 90,000 AD

C5 Tax Credit
Formula Actual Lower
Abroad – 100,000 / 680,000 x 204,000 30,000 35,000 30,000

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Answers/ Solutions to Problems on Donor’s Tax Chapter 5: Gross Gift

Problem 01. Mr. Pepsi Cola

Non Resident Citizen donor Non- Resident Alien donor
R S Total R S Total
a. 0 200,000 200,000 0 200,000 200,000
b. 0 180,000 180,000 0 0 0
c. 260,000 0 260,000 0 0 0
d. 50,000 0 50,000 50,000 0 50,000
e. Excluded Excluded 0 Excluded Excluded 0
f. 0 35,000 35,000 0 35,000 35,000
g. 0 15,000 15,000 0 15,000 15,000
h. 12,600 0 12,600 12,600 0 12,600
i. 14,00 0 14,000 14,000 0 14,000
j. 0 36,700 36,700 0 36,700 36,700
k. Excluded Excluded 0 0 Excluded 0 Excluded 0
l. 25,000 0 25,000 0 0 0
Gross Gift 361,600 466,700 828,300 76,600 286,700 363,300

Problem 02. Miss Pop Cola

Relative Strangers Total
a. 0 160,000 160,000
b. 37,500 37,500 75,000
c. 0 15,000 15,000
d. 130,000 0 130,000
e. 15,000 0 15,000
f. 0 45,000 45,000
g. Excluded Excluded 0
h. 0 15,000 15,000
i. 0 35,000 35,000
j. Excluded Excluded 0
Gross Gift 182,500 307,500 490,000

6
Problem. 03. Mr. Zesto
Relative Strangers Total
a. 950,000 0 950,000
b. 350,000 0 350,000
c. 75,000 0 75,000
d. Excluded Excluded 0
e. 25,700 0 25,700
f. 0 15,900 15,900
g. 42,500 0 42,500
h. 50,000 0 50,000
i. 0 14,800 14,800
Gross Gift 1,493,200 30,700 1,523,900

Problem 04. Mr. Sarsi

1 2 1 2
a. TG 85,000 h. TG 3,000,000
b. TG 300,000 I. TG 120,000
c. TG 75,000 j. Exclusion 0
d. TG 250,000 k. TG 460,000
e. TG 400,000 l. Exclusion 0
f. TG 21,700 m. Exempt 35,000
g. TG 75,600 (3) Gross Gift 4,822,300

C1 350 shares x P62 = 21,700 C2 540 shares x P140 = 75,600

Problem 05. Mr. Coca Cola

Relative Strangers Total
a. 54,000 0 54,000
b. 41,000 0 41,000
c. 0 30,000 30,000
d. 0 15,000 15,000
e. Excluded Excluded Excluded
f. 0 21,000 21,000
g. Excluded Excluded Excluded
h. 18,000 0 18,000
i. 0 32,000 32,000
j. 0 250,000 250,000
k. Excluded Excluded Excluded
l. 0 75,000 75,000
m. 70,000 0 70,000
Gross Gift 183,000 423,000 606,000

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 Answers/ Solutions to Problems on Donor’s Tax Chapter 6: Allowed Deduction

Problem 01. Mr. Seven-up, Exemption on Account of Marriage

February, 2013 November 2013

a. 7,000 3,000
b. 9,000 1,000
c. 0 0
d. 10,000 0
e. 0 0
f. 0 0
g. 0 0

Problem 02. Mr. Rootbeer, exemption on account of marriage in 2013

Relative Stranger Total

a. 60,000 0 60,000
b. 0 27,000 27,000
c. 75,000 0 75,000
d. 4,500 0 4,500
e. 0 85,000 85,000
f. 0 0 0
Gross Gift 139,500 112,000 251,500
a. 10,000 0 10,000
c. 20,000 0 20,000
e. 0 85,000 85,000
g. 0 12,000 12,000
Allowed Ded. 30,000 97,000 127,000
Taxable Net Gift 109,500 15,000 124,500

Problem 03. Ms. Del Monte in 2013

Relative Stranger Total

a. Cash to sister, a graduation gift 15,000 15,000
b. Shoes, clothes to a brother, a birthday gift 20,600 20,600
c. Jewelry to a legitimate daughter, a dowry 165,000 165,000
d. Lot in QC a wedding gift to her recognized natural son & wife 225,000 225,000 450,000
e. An art painting, donation inter-vivos to her uncle 150,000 150,000
Gross Gift 575,600 225,000 800,600
Less: Deduction on account of marriage (e) 20,000 20,000
Taxable Net Gift 555,600 225,000 780,600
Donor’s Tax Due 17,336 67,500 84,836

C1. 17,336 + 67,500 = 84,836

Problem 04. Mr. & Mrs. Mountain Dew

Exemptions on account of marriage
October 2013 December 2013
Husband Wife Husband Wife
a. 10,000 10,000 0 0
b. 3,500 3,500 5,250 5,250
c. 0 10,000 0 0
d. 3,000 3,000 6,000 6,000

8
 e. 0 0 0 0
f. 0 0 0 0
Problem. 05. Mrs. Mirinda in 2013
Relative Stranger Total
Gross Gift 148,000 642,200 790,200
Allowed Deduction 25,000 623,600 648,600
Taxable Net Gift 123,000 18,600 141,600
Gift Tax Due 460 5,580 6,040

C1 48,000 + 15,000 + 85,000 = 148,000

C2 16,800 + 30,000 + 6,800 + 542, 700 + 45,900 = 642,200
C3 10,000 + 15,000 = 25,000 C4 5,000 + 30,000 + 542,700 + 45,900 = 623, 600

Problem 06. Miss Sprite, in 2013

Resident Citizen Donor
Relative Stranger Total
a. 25,000 0 25,000
b. 60,000 0 60,000
d. 190,000 0 190,000
f. 0 17,000 17,000
g. 5,400 0 5,400
h. 9,800 9,800 19,600
i. 0 80,000 80,000
j. 15,000 0 15,000
k. 0 25,000 25,000
n. 0 6,000 6,000
o. 29,000 0 29,000
p. 8,000 0 8,000
q. 0 37,000 37,000
Gross Gift -World 342,200 174,800 517,000
b. 60,000 0 60,000
f. 0 17,000 17,000
h. 9,800 0 9,800
i. 0 80,000 80,000
j. 10,000 0 10,000
p. 200 0 200
q. 0 37,000 37,000
Allowed Ded -World 80,000 134,000 214,000
TNG - World 262,200 40,800 303,000

Excluded are Letters c, e. l, m

Non-Resident Alien Donor
Relative Stranger Total
a. 25,000 0 25,000
b. 60,000 0 60,000
f. 0 17,000 17,000
g. 5,400 0 5,400
h. 9,800 9,800 19,600
i. 0 80,000 80,000
n. 0 6,000 6,000
o. 29,000 0 29,000
p. 8,000 0 8,000
q. 0 37,000 37,000
Gross Gift – Phil. 137,200 149,800 287,000

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 f. 0 17,000 17,000
h 0 0 0
i. 0 80,000 80,000
p 0 0 0
q. 0 37,000 37,000
Allowed Ded. Phil 0 134,000 134,000
Taxable Net Gift-Phil 137,200 15,800 153,000

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Problem 7. Mr. Tommy Gilna
Sept., 2013 Dec., 2013
Gross Gifts 431,500 85,000
Allowed Deduction 60,000 50,000
Taxable Net Gift/ Net Gift 371,500 35,000
Prior Net Gift 0 371,500
Taxable Net Gift 371,500 406,500
Gift Tax due 8,860 10,260
Prior Gift Tax Paid 0 8,860
Gift Tax Still Due / Payable 8,860 1,400

C1. 28,000 + 8,500 + 15,000 + 380,000 = 431,500 C2. 10,00 + 50,000 = 60,000
C3. (171,500 x 0.04) + 2,000 = 8,860 C5. (206,500 x 0.04) + 2,000 = 10,260
C4. 50,000 + 16,000 + 5,000 + 14,000 = 85,000

CPA MCQ In DONOR’S TAX

SET A, THEORIES
1. C 11. B 21. A
2. B 12. B 22. A
3. B 13. B 23. D
4. D 14. B 24. A
5. A 15. B 25. C
6. A 16. A 26. D
7. A 17. D 27. D
8. B 18. A 28. A
9. B 19. B 29. A
10. A 20 C 30. C

SET B, PROBLEMS
1. A 11. B
2. C 12. C
3. C 13. C
4. B 14. A
5. D 6,000 15. A
6. D, 1,200 16. B
7. A 17. A
8. B 18. C, P 0 in 2013
P5,840 in 2014
9. A 19. D P0
10. A 20 B

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 Answers / Solutions to Problems on Estate Tax ,2013 -2014
CHAPTER 8: TAXABLE NET ESTATE
Vgl files, vgl files, sols to estate tax 2013-2014
Problem 1. Various individuals had their tax information in the taxable year 2013 as follows:
Decedents / estates Items Amounts NEAETD
1 Ms. Chacha Taxable net estate P375,000 ETD 8,750 366,250
2 Ms. Chichi Taxable net estate 76,900 ETD 0 76,900
3 Mr. Macho Estate tax due P287,000 TNE 3,381,818 3,094,818
4 Mr. Sirena Estate tax due 192,000 TNE 2,518,181 2,326,181
5 Mr. Paminta Estate tax due 45,000 TNE 875,000 830,000

C1. 0 + (5% X 175,000 = 8,750) = 8,750 ETD, C2. 0 + 0 = P 0 ETD

C3. (135,000 = 2,000,000) + (152,000 / 11% = 1,381,818) = 3,381,818 TNE
C4. (135,000 = 2,000,000) + (57,000 / 11% = 518,181) = 2,518,181 TNE
C5. (15,000 = 500,000) + (300,000 / 8% = 375,000) = 875,000TNE

Problem 02 . Mr. and Mrs. Dapitan

Standard NIRC Format
Conjugal Assets 4,800,000
Exclusive Assets-Decedent 2,982,500
Gross Estate 7,782,500
Less: Ordinary Deduction
Ordinary Conjugal Deduction 1,300,000
Ordinary Exclusive Deduction 1,412,500 2,712,500
Net Estate 5,070,00
Less: Special Deduction 2,500,000
Share of Surviving Spouse in NCE 1,750,000 4,250,000
Taxable Net Estate 820,000
Estate Tax Due 40,600
C1. (750,000 x 35%) + 2,720,000 = 2,982,500 C2 (350,000 x 35%) + 1,290,000 = 1,412,500
C3 4,800,000 – 1,300,000 = 3,500,000 x 50% = 1,750,000
Alternative BIR format
Conjugal Exclusive Total
Gross Estate 4,800,000 2,982,500 7,782,500
Less; Ordinary Deduction 1,300,000 1,412,500 2,712,500
Net Estate 3,500,000 1,570,000 5,070,000
Less; Special deduction 2,500,000
Share of spouse in NCE 1,750,000 4,250,000
Taxable Net Estate 820,000
Estate Tax due 40,600

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Problem 03. Mr. Espana
NRAD-HOF NRCD-HOF
(w/o Reciprocity Law)
Gross Estate 5,935,000 8,935,000
Less; Allowed Deduction 2,315,000 5,245,000
Taxable Net Estate 3,620,000 3,690,000
Estate Tax Due 313,200 320,900

C1 4,500,000 + 1,600,000 + 1,250,000 + 750,000 + 185,000 + 650,000 = 8,935,000

C2 1,685,000 + 350,000 + 230,000 + 2,350,000 + 630,000 = 5,245,000
C3 4,500,000 + 1,250,000 + 185,000 = 5,935,000
C4 1,685,000 + 630,000 = 2,315,000

11
Vgl files, vgl files, sols to estate tax 2013-2014
Problem 04. Shaw B
RAD NRAD
C1.Gross Estate 7,540,000 5,690,000
Allowed Deduction 4,110,000 980,000
Taxable Net Estate 3,430,000 4,710,000
Estate Tax Due 292,300 433,100

C1. 5,690,000 + 1,850,000 = 7,540,000 C2. 980,000 + 630,000 = 4,110,000

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Problem 05. VARIOUS DECEDENTS
Net Estate Estate Tax Due
Decedent 1 645,000 26,600
Decedent 2 2,583,000 199,130
Decedent 3 145,000 0

C1. 145,000 x .08 = 11,600 + 15,000= 26,600

C2. 583,000 x .11 = 64,130 + 135,000 = 199,130

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Problem 06.. Ms. C.M Recto
Resident citizen- Single/HOF Resident Citizen- Married
Gross Estate 4,850,000 Conjugal Assets 727,500
Allowed Deduction 3,875,000 Exclusive Assets-Decedent 2,910,000
Taxable Net Estate 975,000 Gross Estate 3,637,500
Estate Tax due 53,000 Ordinary Deduction
Ordinary Conjugal Deductions 343,750
Ordinary Exclusive Deductions 756,250
Total Ordinary Deduction 1,100,000
Net Estate 2,537,500
Less: Special Deduction 2,500,000
Share of Surviving Spouse in NCE 191,875
Total Special Deduction, SOSINCE 2,691,875
Taxable Net Estate (Excess deduction) (154,375)
Estate Tax Due 0

C1 4,850,000 x 60% = 2,910,000 C2 4,850,000 x 15% = 727,500

C3 1, 375,000 x 55% = 756,250 C4 1,375,000 x 25% = 343,750
C5 (727,500 – 343,750) x 50% = 191,875 C6 1,375,000+2,500,000= 3,875,000
C7 475,000 x .08 = 38,000+ 15,000 = 53,000

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Problem 07. Mr. Avenida
Resident Alien Decedent Non-resident Alien Decedent
Gross Estate 5,320,000 3,800,000
Allowed Deductions 3,955,000 1,870,000
Taxable Net Estate 1,365,000 1,930,000
Estate Tax Due 84,200 129,400

C1. 3,800,000 + 1,520000 = 5,320,000 C2. 1,870,000+ 435,000 + 1,650,000 = 3,955,000

12
 CHAPTER 9: ESTATE TAX CREDITS

Problem 01. Mr. Pale Pilsen

RCD NRAD
Net Estate Before Standard Ded. 3,250,000 2,000,000
Less; Standard Deduction 1,000,000 NA
Taxable Net Estate 2,250,000 2,000,000
Estate Tax Due 162,500 135,000
Tax Credit 87,500 35,000
Estate Tax Payable 75,000 100,000

C1. 2,000,000 + 500,000 + 750,000 = 3,250,000

C2. (250,000 x 11%) + 135,000 = 162,500
C3. 52,500 + 35,000 = 87,500
C4. limit A
Formula Actual Lower
Sing. 500,000/ 3,250,000 x 162,500= 25,000 15,000 15,000
Canada 750,000/3,250,000x 162,500= 37,500 38,000 37,500
Total 52,500

Limit B
Formula Actual Lower
Abroad – 1,250,000/3,250,000 x 162,500 62,500 53,000 53,000

Problem 02. Mr. Beer Hausen

NRCD HOF NRAD HOF
Gross Estate 6,400,000 4,900,000
Less; Allowed Deduction 4,900,000 1,900,000
Taxable Net Estate 1,500,000 3,000,000
Estate Tax Due 95,000 245,000
Less; Tax Credit 101,600 75,000
Estate Tax Still Due / Payable (6,600) 170,000

C1. 4,900,000 + 1,500,000 = 6,400,000 C2. 1,900,000+ 500,000 + 2,500,000 = 4,900,000

C3. (1,000,000 x 11%) + 135,000 = 245,000 C4. (1,000,000 x 8%) + 15,000 = 95,000
C6. 1,500,000 – (500,000 + 300,000) = 700,000 C5. 75,000 + 26,600 = 101,600
C6 Limit B
Formula Actual Lower
Abroad – 700,000/2,500,000 x 95,000 26,600 73,000 26,600

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Problem 03. Mr. Red Horse

a. Resident Citizen Decedent- Married

Conjugal Assets- World 7,500,000
Exclusive Assets – Decedent W 1,400,000
Gross Estate World 8,900,000
Less: Ordinary Deduction- W
Ordinary Conjugal Deduction-W 1,050,000
Ordinary Exclusive Deduction- W 650,000 1,700,000
Net Estate- World 7,200,000
Less; Special Deduction world 2,450,000
Share of spouse in NCE world 3,225,000 5,675,000
Taxable Net Estate- World 1,525,000

13
Estate Tax due 97,000
Tax Credit 12,485
Estate Tax Still Due / Payable 84,515

b. Non-resident Alien Decedent – Married

Conjugal Assets- Phil. 6,300,000
Exclusive Assets – Decedent -Phil 800,000
Gross Estate -Phil 7,100,000
Less: Ordinary Deduction- Phil.
Ordinary Conjugal Deduction-Phil 700,000
Ordinary Exclusive Deduction- Phil 250,000 950,000
Net Estate- Phil 6,150,000
Less; Share of spouse in NCE Phil. 2,800,000
Taxable Net Estate- Phil 3,350,000
Estate Tax due 283,500

C1. 3,800,000 + 1,200,000 + 2,500,000 = 7,500,000 C2. 800,000 + 600,000 = 1,400,000

C3. 700,000 + 350,000 = 1,050,000 C4. 250,000 + 400,000 = 650,000
C5. 150,000 + 300,000 = 450,000 C6. (7,500,000 – 1,050,000) x 50% = 3,225,000
C7. (1,025,000 x 8%) + 15,000= 97,000 C8. (6,300,00 – 700,000) / 2 = 2,800,000
C9. 1,200,000 + 600,000 = 1,800,000 C9. 350,000 + 400,000 = 750,000
C10. MEA – 300,000 C11. NEA – 1,800,000 – (750,000 + 300,000 + 425,000 ) = 325,000
C12. (1,200,000 – 350,000) x 50% = 425,000 C9. 1,000,000 + 1,000,000 + 450,000 = 2,450,000

C13. Limit B
Formula Actual Lower
Abroad – 325,000 / 2,525,000 x 97,000 = 12,485.15 19,000 12,485.15

Problem 04. Budweiser

RAD (HOF) NRAD (HOF)
Gross Estate 4,000,000 2,600,000
Less; Allowed Deduction 2,650,000 1,200,000
Taxable Net Estate 1,350,000 1,400,000
Estate Tax Due 83,000 87,000
Less; Tax Credit 24,361.70 0
Estate Tax Still Due / Payable 58,638.30 87,000

C1. 2,600,000 + 900,000 + 500,000 = 4,000,000 C3. (900,000 x 8%) + 15,000 = 87,000
C2. 1,200,000 + 300,000 + 150,000 + 1,000,000 = 2,650,000 C4. (850,000 x 8%) + 15,000 = 83,000
C-5 limit A
Formula Actual Lower
England 600,000/ 2350,000 x 83,000= 21,191.48 12,000 12,000
France 350,000/2,350,000x 83,000= 12,361.70 14,000 12,361.70
Total 24,361.70

Limit B
Formula Actual Lower
Abroad – 950,000/2,350,000 x 83,000 = 33,553.19 26,000 26,000

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14
 CHAPTER 10: GROSS ESTATE

Problem 1. Mr. X
(1) NRCD (2) NRAD (3) NRAD
(w/ reciprocity law) (w/o reciprocity law)
a. 700,000 0 0
b. 300,000 0 0
c. 2,000,000 0 0
d. IPPP 450,000 0 450,000
e. 850,000 0 0
f. 200,000 0 0
g. IPPP 120,000 0 120,000
h. IPPP 610,000 0 610,000
i. 4,350,000 4,350,000 4,350,000
Gross Estate 9,580,000 4,350,000 5,530,000

Problem 2. Mr. and Mrs. Pedro Gil

Conjugal Assets:
c. Residential House and Lot in San Juan 2,400,000
d. Cash on hand 165,000
g. Home appliances owned by couple 532,000
i. Life insurance proceeds- revocable 400,000
Total Conjugal Assets 3,497,000

Exclusive Assets- Decedent

a. House and Lot in QC 1,750,000
f. Cash in Bank at RCBC 295,000
i. Life insurance proceeds 650,000
j. Motor bike 45,000
k. Television 30,000
Total Exclusive Assets- Decedent 2,770,000
Taxable Gross Estate 6,267,000

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Problem 3. Miss Quiapo
a. Cash on hand 86,000
b. Cash in Bank- Savings at Phil. Savings Bank 62,000
Cash in Bank- Time Deposit at PCIB 90,000
c. Shares of Stocks of Domestic Corp. (350 x P95) 33,250
d. Jewelry 120,000
e. Home Appliances 95,000
g. Other personal effects 78,000
h. Furniture- a bequest to a cultural organization in the Phil. 160,000
i. Agricultue land in Laguna (320,000 x 65%) 208,000
j. House and Lot in QC 350,000
k. House and Lot in Malate 950,000
l. Interest income of time deposit at PCIB 6,400
m. Life insurance proceeds – revocable 400,000
n. Lot in Batangas subject to revocation 115,000
o. Volkswagen car (75,000 – 40,000) 35,000
Taxable Gross Estate 2,788,650

Excluded is item in letter f and no.5

15
Problem 4. Ms. Fina Thay
NRCD NRAD (with NRAD (w/out
reciprocity law) reciprocity law)
a. 615,000 0 0
b. 300,000 0 0
c. IPP – Phi, 100,000 100,000 100,000
d. 430,000 0 0
e. IPP- Phi. 540,000 540,000 540,000
f. IPP – Phi. 200,000 200,000 200,000
g. IPP – Phi. 65,0000 65,000 65,000
Gross Estate 2,250,000 905,000 905,000

Note: In requirement no. 2, decedent is a resident of Canada, but not a citizen thereof = so Intangible Personal
Property in Phil. (items in letter C, E, F, G) are still included in the Taxable Gross Estate in Phil. even if there is a
reciprocity law /clause between the Phil. and Thailand. Item in letter e (shares of stocks of DC, regardless of
business sources, are deemed IPP in Phi.)

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Problem 5. Kenkoy
CPOG ACOP

Conjugal Assets 3,000,000 3,405,000

Exclusive Asset-Decedent 1,332,500 882,500
Taxable Gross Estate 4,332,500 4,287,500

Exclusive Assets-Surviving CPOG ACOP

Spouse
Fish Pond in Bulacan 960,000 960,000
Jewelry brought into marriage 135,000 Rental Income 180,000
Taxable Gross Estate 1,095,000 1,140,000

C1. 1,650,000 + 120,000 + 250,000 + 300,000 + 180,000 + 500,000 = 3,000,000

C2 850,000 + 450,000 + 32,500 = 1,332,500
C3 1,650,000 + 450,000 + 120,000 + 250,000 + 300,000 + 500,000 + 135,000 = 3,405,000
C4 850,000 + 32,500 = 882,500
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Problem 6. Daboy and Dagirl
CPOG ACOP
Conjugal EAD Conjugal EAD
a. 0 65,000 65,000 0
b. EAS EAS 150,000 0
c. 250,000 0 250,000 0
d. 430,000 0 430,000 0
e. 850,000 0 850,000 0
f. Excluded Excluded Excluded Excluded
g. 0 75,800 75,800 0
h. 420,000 0 420,000 0
i. 87,500 0 87,500 0
j. 15,600 0 15,600 0
k. EAS EAS 47,800 0
l. 25,000 0 25,000 0
m. 54,000 0 54,000 0
n. 0 200,000 200,000 0
o. 0 790,000 0 790,000

16
p. 75,000 0 0 75,000
q. EAS EAS 45,000 0
r. 1,500,000 0 1,500.000 0
Gross Estate 3,707,100 1,130,800 4,215,700 865,000

CPOG ACOP
Conjugal Asset 3,707,100 4,215,700
Exclusive Asset-Decedent 1,130,800 865,000
Gross Estate 4,837,900 5,080,7000

_____________________________________________________________________________________________

CHAPTER 11: ALLOWED DEDUCTION

Problem 1. Bingo

a. Under Conjugal Partnership of Gains

Conjugal-Asset 6,825,000
Exclusive-Asset-Decedent 850,000
Gross Estate 7,675,000
Less; Ordinary Conjugal Deduction 395,000
Ordinary Exclusive Deduction 115,000 510,000
Net Estate 7.165,000
Less; Special Deduction 1,000,000
Share of Spouse in NCE 3,215,000 4,215,000
Taxable Net Estate 2,950,000

C1 3,500,000 + 1,800,000 + 975,000 + 450,000 + 100,000 = 6,825,000

C2 500,000 + 350,000 = 850,000 C3 200,000 + 95,000 + 100,000 = 395,000
C4 85,000 + 30,000 = 115,000 C5 6,825,000–395,000 x 50% =3,215,000

C6 POI is 5years and 6months, no vanishing deduction

b. Under Absolute Community of Property

Conjugal-Asset 9,225,000
Exclusive-Asset 850,000
Gross Estate 10,075,000
Less; Ordinary Conj. Deduction 645,000
Ordinary Exclusive Deduction 85,000 730,000
Net Estate 9,345,000
Less; Special Deduction 1,000,000
Share of SOS in NCE 4,290,000 5,290,000
Taxable Net Estate 4,055,000

C1. 6,725,000 + 2,400,000 + 100,000 = 9,225,000 C2. 500,000 + 350,000 = 850,000

C3. 395,000 + 250,000 = 645,000 C4. no vanishing deduction
C5. (9,225,000 – 645,000) 50% = 4,290,000

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17
Problem 2. Mr. Buendia , in letter A data, change year 2006 to year 2005
Gross Estate 6,300,000.00
Less; Allowed Deduction 3,148,133.33
Taxable Net Estate 3,151,886.67
C1. 3,850,000 + 1,250,000 + 1,200,000 = 6,300,000 C2. 460,000 + 20,000 = 480,000
C3. 480,000 + 2,500,000 + 168,133.33 = 3,148,133.33
C4. Vanishing Deduction 950,000 – 40,000 = 910,000
Initial Basis 910,000 less (910/6300 x 480,000 = 69,333.33) = 840,666.67 x 20% (VDR) = 168,133.33

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Problem 3. Mrs.Nagtahan
NRCD-MARRIED
FH – Owned by Decedent
Conjugal Asset-World 3,642,500
Exclusive Asset-Decedent-World 3,649,050
Gross Estate-World 7,291,550
Less; Ordinary Conjugal. Deduction-World 1,295,000
Ordinary Exclusive Deduction-World 95,600
Total Ordinary Deduction-World 1,390,600
New Estate-World 5,900,950
Less; Special Deduction world 2,500,000
Share of SOS in NCE-World 1,173,750
Total Sp. ded, SOS in NCE, world 3,673,750
Taxable Net Estate-World 2,227,200

C1. 2,375,000 + 1,267,500 = 3,642,500

C2. 1,160,250 + 693,800 + 95,000 + 1,700,000 = 3,649,050
C3. 945,000 + 350,000 = 1,295,000
C4. 57,000 + 38,600 = 95,600
C5. ME 500,000 + FHA 1,000,000 + SD 1,000,000 = 2,500,000 Spl. Ded.
C6 SOS in NCE (3,642,500 – 1,295,000) x 50% = 1,173,750

B. NRAD-MARRIED
FH-Owned by Couple
Conjugal Asset-Phil 3,725,000
Exclusive Asset-Dec-Phil 1,255,250
Gross Estate-Phil 4,980,250
Less; Ordinary Conj. Deduction-Phil 645,450.73
Ordinary Exclusive Deduction-Phil 95,600
Total Ordinary Deduction- Phil 741,050.73
Net Estate- Phil 4,239,199.27
Less; Special deduction NA
Share of SOS in NCE-Phil 1,539,774.64
Taxable Net Estate- Phil 2,699,424.63

C1. 2,375,000+1,700,000-350,000 = 3,725,000

C2. 1,160,250+95,000 = 1,255,250
C3. 945,000x4,980,250 / 7,291,550 = 645,450.73
C4 38,600 + 57,000 = 95,600
C5. (3,725,000 – 645,450.73) x 50% = 1,539,774.64

18
 RCD – MARRIED
FH – Owned by spouse
Conjugal Assets-World 3,642,500
Exclusive Asset-Decedent-World 1,949,050
Taxable Gross Estate-World 5,591,500
Less; Ordinary Conjugal Deduction-World 1,295,000
Ordinary Exclusive Deduction-World 95,600
Total Ordinary Deduction- World 1,390,600
Net Estate- World 4,200,950
Less; Special deduction world 2,350,000
Share of SOS in NCE-World 1,173,750
Total Sp. Ded., SOSINCE, world 3,523,750
Taxable Net Estate- World 677,200

C1.. 2,375,000 + 1,267,500 = 3,642,500

C2 3,649,050 – 1,700,000 = 1,949,050
C3 1,700,000 x 50% = 850,000 vs 1,000,000
C4 500,000 + FHA 850,000 + SD 1,000,000 = 2,350,000 Spl. Ded.
C5 (3,642,500 – 1,295,000) x 50% = 1,173,750
C6. 945,000 + 350,000 = 1,295,000 C7. 38,600 + 57,000 = 95,600
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Problem 4. Ms. Quezon Blvd

RAD (HOF) NRAD (HOF)
Gross Estate 5,300,000 5,300,000
Less; Allowed Deduction 3,190,000 800,000
Taxable Net Estate 2,110,000 4,500,000

C1. 350,000 + 2,000,000 + 1,350,000 + 1,600,000 = 5,300,000

C2 . Family Home Allowance 1,000,000 C3 Std. Deduction 1,000,000
C4 . Medical Expenses 650,000 x 60% = 390,000
C5. Ordinary deductions – D = 750,000 + 50,000 = 800,000
C6. (1,000,000 + 390,000 + 1,000,000) = 2,390,000 + 750,000 + 50,000 = 3,190,000

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Problem 5. Mr. San Marcelino

RCD NRAD
Gross Estate 8,032,000 7,282,000
Less; Allowed Deduction 3,626,000 487,902
Taxable Net Estate 4,406,000 6,794,098

C1. 2,500,000 + 3,500,000 + 1,500,000 + 300,000 + 150,000 + 82,000 = 8,032,000

C2. FE 200,000 + JE 56,000 + CAE 62,000 + CAIP 45,000 + CL 45,000 = 408,000
C3. ELIT 408,000 + PTFPU 82,000 + VD 36,000 + ARBH 750,000 + ME 350,000 + 1,000,000 + Std Deduction +
FHA 1,000,000 = 3,626,000
C4. 8,032,000 – 750,000 = 7,282,000
C5. 7,282,000 / 8,032,000 x 408,000 = 369,902
C6. 369,902 + 36,000 + 82,000 = 487,902

Problem 6. Ms. Mando Rhukot

CPOG ACOP
Conjugal Asset 4,779,500 4,759,500
Exclusive Asset-Decedent 4,179,400 4,199,400

19
Gross Estate 8,958,900 8,958,900
Less; Ordinary Conj. Deduction 400,250 400,250
Ordinary Exclusive Deduction 412,860 412,860
Total Ordinary Deduction 813,110 813,110
Net Estate 8,145,790 8,145,790
Less; Special deduction 2,325,000 2,325,000
Share of SOS in NCE 2,189,625 2,179,625
Total Sp. Ded. SOS in NCE 4,514,625 4,504,625
Taxable Net Estate 3,631,165 3,641,165

C1. (4,779,500 – 400,250) x 50% = 2,189,625

C2. CPOG
Conjugal Asset Exclusive Asset Conjugal Deduction Exclusive Deduction
2,500,000 1,450,000 200,000 48,500
156,000 350,000 51,800 64,360
245,000 160,900 17,950 300,000
148,500 50,000 130,500 0
1,460,000 400,000 0 0
250,000 48,500 0 0
20,000 1,120,000 0 0
0 85,000 0 0
0 300,000 0 0
0 215,000 0 0
4,779,500 4,179,400 400,250 412,860

Gross Estate P 8,958,900 Ordinary Deduction P 813,110

C-3 ACOP
Conjugal Asset Exclusive Asset Conjugal Deduction Exclusive Deduction
2,500,000 1,450,000 200,000 48,500
156,000 350,000 51,800 64,360
245,000 160,900 17,950 300,000
148,500 50,000 130,500 0
1,460,000 400,000 0 0
250,000 48,500 0 0
0 20,000 0 0
0 1,120,000 0 0
0 85,000 0 0
0 300,000 0 0
0 215,000 0 0
4,759,500 4,199,400 400,250 412,860

C4. (4,759,500 – 400,250) x 50% = 2,179,625 sosince

Gross Estate - P 8,958,900 Ordinary Deduction P 813,110

20
 REVIEW MATERIALS IN ESTATE TAX

SET A - THEORIES SET B - PROBLEMS

1 B 23 B 1 C 16 A
2 C 24 A 2 A 17 A
3 C 25 D 3 B– 4,300,00 18 A
4 A 26 B 4 A– 1,700,000 19 B
5 C 27 D 5 B– 45,000 20 D – No excess
FMV
6 B 28 D 6 A – 30,000 21 C
7 B 29 A 7 B– 800,000 22 D – 50,000
8 D 30 C 8 C 23 D – 800,000
9 B 31 C 9 D–0 24 A
10 D 32 D 10 B– 160,000 25 B
11 D 33 A 11 A – 1,000,000 26 B
12 A 34 A 12 B – 87,500 27 B
13 A 35 D 13 A – 912,500
14 B 36 A 14 A – 500,000
15 B 37 D 15 C – 200,000
16 A 38 D
17 B 39 A
18 D 40 B
19 D 41 D
20 A 42 D
21 B 43 A
22 B 44 A 45. C

21