P3.

1 (Losses) - 1 point each

Question #1
Loss due to shipwreck 500,000
Robbery loss 2,000,000
Deductible Losses 2,500,000

Question #2 Same answer in Question 1

P3.2 (3 points for correct answer, 1 pt. if wrong)

Claims against insolvent person 100,000
Unpaid Mortgage 200,000
Unpaid loans (Debt instrument notarized) 125,000
Unpaid Loans from financial institution 75,000
Casualty Loss 65,000
Standard Deduction 5,000,000
Total Allowable Deductions 5,565,000

P3.3 (1 pt. per case)

Case A 100,000 (500,000-400,000)
Case B 333,333 (500,000 - 4/12 x 500,000)
Case C 0 (not insolvent)
Case D 250,000 (4/8 x 500,000)

P3.4 (1 pt.)
Claims-Juan 100,000
Claims-Manuel 100,000
Allowable deduction 200,000

P3.5 (1 pt.)
Allowable deduction 133,333 (200,000 - 2/6 x 200,000)

P3.6 (3:1)
Initial Value to take 937,500
Mortgage paid 187,500
Initial basis 750,000
Less:
(750/4,500 x 562,500) 93,750
Final basis 656,250
VD rate 40%

Vanishing deduction 262,500

P3.7 (1pt. each)

Case A 5,000,000
Case B 5,000,000
Case C 5,000,000
Case D 500,000
Case E 500,000
P3.8 (1 pt. each)
A 0
B 5,000,000
C 0
D 10,000,000
E 6,000,000
F 7,500,000 (5M + 2.5M)

P3.9 (5:3)
Gross Estate:
Domestic Shares 8,000,000
Family Home 2,000,000
Jewelry (Phils) 400,000
Jewelry (Abroad) 200,000
Bank Deposit 5,000,000
Donation to PG 250,000
Total 15,850,000
Allowable Deductions:
Claims Against the estate 120,000
Donation to PG 250,000
Vanishing Deduction 1,171,987
Standard Deduction 5,000,000
Family Home 2,000,000
Total 8,541,987
Net Taxable Estate 7,308,013

P3.10 (Req. 1) (5:3)

Gross Estate:
Cash in Bank 300,000
House and Lot 1,500,000
Other Real Properties 15,000,000
Farm Lot 825,000
Claims Against insolvent debtor 225,000
Transfer in contemplation of death 1,250,000
Total 19,100,000
Allowable Deductions:
Claims Against insolvent debtor 225,000
Donation to PG 300,000
Unpaid Mortgage 75,000
Standard Deduction 5,000,000
Family Home 1,500,000
Total 7,100,000
Net Taxable Estate 12,000,000
(5:3 points)
P3.10 (Req 2)
Gross Estate:
Cash in Bank 300,000
House and Lot 1,500,000
Other Real Properties 15,000,000
Farm Lot 825,000
Claims Against insolvent debtor 225,000
Transfer in contemplation of death 1,250,000
Total 19,100,000
Allowable Deductions:
Claims Against insolvent debtor 225,000
Donation to PG 300,000
Unpaid Mortgage 75,000
Vanishing Deduction 96,859
Standard Deduction 5,000,000
Family Home 1,500,000
Total 7,196,859
Net Taxable Estate 11,903,141

Vanishing Deduction:
Initial value to take 575,000
Less: Mortgage paid 75,000
Initial basis 500,000
Less: (500/19,100 x 600,000) 15,707
Final basis 484,293
VD rate 20%
96,859

P3.11 (Req. 1 = 2pts. ; Req.2 = 3:1)

P3.11 (Req. 1)
Vanishing Deduction:
Initial value to take 1,250,000
Less: Mortgage paid 50,000
Initial basis 1,200,000
(1,200/12,800 x 700,000) 65,625
Final basis 1,134,375
VD rate 0
453,750

P3.11 (Req. 2)
Gross Estate 12,800,000
Less:
Losses, Indebtedness, taxes 300,000
Unpaid mortage 100,000
Death Benefit 200,000
Transfer to the government 300,000
Vanishing deduction 453,750
Standard deduction 5,000,000
Family Home 2,000,000
Total 8,353,750
Net taxable estate 4,446,250