ST.

VINCENT’S COLLEGE INCORPORATED

College of Accounting Education
MAIN CAMPUS, PADRE RAMON STREET, BARANGAY ESTAKA
DIPOLOG CITY, 7100, ZAMBOANGA DEL NORTE, PHILIPPINES
TELEPHONE NO. (065)212-6292, TELEFAX (065)908-1133
www.svc.edu.ph

Preliminary Examination

Business Tax (BT 22) Estate Taxation

Name: __________________________________________ Schedule:_____________________

TEST I: MULTIPLE CHOICE QUESTIONS
CHOOSE THE LETTER OF THE BEST ANSWER. Erasures/alterations will automatically invalidate your
answer.

1. Can the estate tax be paid in instalment?

a. Yes, in case the available cash of the estate is not sufficient to pay its liability.
b. Yes, at the option of the heirs with corresponding interest charges.
c. No, tax is the lifeblood of the State, hence, collection cannot be delayed under circumstance.
d. None of the above.

2. In case of resident decedent, the administrator of executor shall register the estate of decedent and secure new
TIN from the
a. Office of the Commissioner.
b. RDO where the administrator or executor is registered.
c. RDO where the decedent was domiciled at the time of his death.
d. Duly authorized treasurer of the city or municipality where the decedent is domiciled at the time of his
death.

3. In filing the estate tax return under the TRAIN LAW, a CPA certificate is required when:
a. Gross estate exceeds P2,000,000
b. Gross estate exceeds P5,000,000
c. Gross estate exceeds P10,000,000
d. Gross estate reaches P2,000,000

4. Which of the following is not correct?

a. When a compulsory heir is given by will less than his legitime, the provisions of the will should be modified
in such a way that he will receive his legitime.
b. The CIR may examine the bank deposit of a decedent for the purpose of determining his gross estate even if
the estate did not request for a compromise on the ground of financial incapacity.
c. The sharing of heirs in testamentary succession must satisfy the rules on legitime.
d. If an extension to pay the estate tax is granted, the Commissioner or his duly authorized representative may
require the administrator, or executor, or beneficiary, to furnish a bond in such amount exceeding double
the amount of the tax and with such sureties as the Commissioner deems necessary, conditioned upon the
payment of said tax in accordance with the terms of the extension.

5. Julia died leaving a house and lot to Joshua on April 1, 2018 which was questioned by Gerald and it is under
litigation but, subsequently, the parties executed an extra-judicial settlement. The last day for filing the estate
tax return is:
a. April 30, 2018
b. April 30, 2019

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 c. October 1, 2018
d. March 31, 2019

6. In the preceding number (#5), the last day for payment of estate tax may be extended, until;
a. October 1, 2019
b. March 31, 2021
c. October 1, 2021
d. March 31, 2022

7. The Commissioner, on meritorious cases, may extend the time for payment of estate tax:
In case the estate is settled judicially In case the estate is settled extra-judicially
a. 5 years 5 years
b. 2 years 2 years
c. 5 years 2 years
d. 2 years 5 years

8. One of the following is allowed as a deduction from the gross estate of a non-resident alien decedent (prior or
after TRAIN Law)
a. Transfer for public use
b. Standard deduction
c. Medical expenses
d. Family home

9. Love died on October 20, 2018. During his lifetime, upon knowing that he had Stage 4 cancer, sold his
Lamborghini car to his son for P4, 000, 000. The fair market value of the car at the time of sale is P3,000,000
while it is already valued at P5,000,000 at the time of death. The amount that will be added to gross estate is
a. P0
b. P500,000
c. P800,000
d. P1,200,000

10. Based on the preceding number (#9), if the consideration is fictitious, how much will form part of gross estate?
a. P1,000,000
b. P2,000,000
c. P5,000,000
d. P0

11. If the decedent died before 2018, the estate tax return should be filed
a. At the time of death
b. Within 30 days after death
c. Within six months after death
d. Within one year after death

12. A died leaving a house and lot to B on April 1, 2018 which was questioned by C and it is under litigation but,
subsequently, the parties executed an extra-judicial settlement. The last day for filing the estate tax return is:
a. April 30, 2018
b. April 30, 2019
c. October 1, 2018
d. March 31, 2019

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13. In the preceding number, the last day for payment of estate tax maybe extended, until:
a. October 1, 2019
b. March 31, 2021
c. October 1, 2021
d. March 31, 2022

14. A decedent died on 2018 leaving properties he inherited 2 ½ years ago which had fair market value of P8, 000,
000 at the time his death (P6, 500, 000 at the time of inheritance, and unpaid mortgage of P500, 000 paid by the
present decedent). After inheritance, the decedent mortgages the property for P500, 000 and paid the same
before his death. Other properties in his gross estate had fair market value of P10, 000, 000. The total expenses,
losses, indebtedness, taxes and transfer for public use purpose amounted to P3, 000, 000.

How much is the vanishing deduction?

a. P2, 000, 000

b. P2, 750, 000
c. P3, 000, 000
d. P3, 120, 000

15. Assume that in the preceding number except for the following assumptions:
 The decedent died in 2018
 Out of the P3, 000, 000 expenses, losses, indebtedness, taxes and transfer for public use, P200, 000 was
incurred for funeral expenses and P400, 000 for judicial expenses

How much is the vanishing deduction?

a. P2, 000, 000

b. P2, 750, 000
c. P3, 000, 000
d. P3, 120, 000

16. Which of the following is not a compulsory heir?

a. Legitimate children and descendants, with respect to their legitimate parents or ascendants
b. In default of letter “a”, legitimate parents or ascendants, with respect to their legitimate children or
descendants
c. Widow or widower
d. Relatives by affinity

17. Under the law, the property relationship between husband and wife shall be governed in what order?
I. By marriage settlements executed before marriage.
II. By the provision of this Code.
III. By the local custom

a. I, II, III
b. I, III, I
c. II, III, I
d. III, II, I

18. Which of the following statements is incorrect?

a. Marriage settlement may fix the property relations of spouses during the marriage within the limits provided
by the family code

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 b. The purpose of system of property relationship is to distinguish a conjugal or community property from an
exclusive property.
c. Modifications or amendments in the marriage settlements may only be allowed after the celebration of the
marriage.
d. None of the above.

The next four questions are based on the data provided below:

Mr. J Chavez died leaving the following properties:

Rest house in Cebu, acquire before marriage P6, 000, 000
Income from rest house in Cebu 600, 000
Condominium in Davao, brought to Marriage by Wife P3, 600, 000
Income from Condominium from Davao 360, 000
Town house in Quezon City, acquired during marriage 10, 500, 000
Income from Town House in Quezon City P1, 050, 000
Car, inherited by wife during marriage (the decedent in his Will that it shall
form part of the common properties of the spouses) P1, 300, 000
Jewelry, acquired during the marriage for exclusive use of the wife 200, 000

19. How much is the conjugal properties under Conjugal Partnership of Gains?
a. P12, 510, 000
b. P18, 510, 000
c. P22, 310, 000
d. P23, 610, 000

20. How much is the gross estate under Conjugal Partnership of Gains?
a. P12, 510, 000
b. P18, 510, 000
c. P22, 310, 000
d. P23, 610, 000

21. How much is the community properties under Absolute Community of Property?
a. P12, 510, 000
b. P18, 510, 000
c. P22, 310, 000
d. P23, 610, 000

22. How much is the gross estate under Absolute Community of Property?
a. P12, 510, 000
b. P18, 510, 000
c. P22, 310, 000
d. P23, 610, 000

Use the following information for the next two questions:

The estate of Pedro, resident citizen decedent, married, who died on April 1, 2018 are as follows:

House and lot (family home) P14, 000, 000

The lot was acquired at a cost of P3, 000, 000 before marriage while the house was
constructed on March 1, 2018, during marriage, at a cost of P10M from partnership
funds. The lot had a FMV of P4, 000, 000 after construction of the house.
Other properties acquired during marriage P6, 000, 000

Jewelry inherited on Feb 14, 2017, during marriage, then with fair market value
of P1, 300, 000 P2, 500, 000
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 Property in U.S., received as gift during marriage from a friend on January 12, 2017 P2, 300, 000
(the applicable donor’s tax was not paid by the donor)

Rental income on the above property up to time of death P1, 200, 000

Expenses/Claims:
Funeral Expenses P420, 000
Judicial Expenses P800, 000
Casualty loss incurred on December 10, 2018 P600, 000
Claims against estate P1, 600, 000
Medical Expenses w/in 1 year prior to death, only half was receipted P4, 000, 000

23. How much is the net taxable estate under conjugal partnership of gains?
a. P3, 962, 000
b. P6, 462, 000
c. P3, 462, 000
d. P1, 348, 000

24. How much is the net taxable estate under conjugal partnership of gains?
a. P4, 836, 000
b. P(2, 174, 000)
c. P1, 174, 000
d. P2, 174, 000

25. Statement 1: A decedent whose gross estate may be subject to estate tax may be a resident or citizen of the
Philippines;
Statement 2: A decedent whose gross estate may be subject to estate tax may be a non-resident, not citizen of
the Philippines.

a. Both statements are correct

b. Both statements are wrong
c. Only statement 1 is correct
d. Only statement 2 is correct

26. Statement 1: if the decedent was a citizen or resident of the Philippines, his gross estate will include real
properties (e.g., land), tangible properties, or intangible personal properties, (e.g, cash, receivables), regardless
of location.

Statement 2: f the decedent was a non-resident, not citizen of the Philippines, his gross estate will include only
real and personal properties located in the Philippines.

a. Both statements are correct

b. Both statements are wrong
c. Only statement 1 is correct
d. Only statement 2 is correct

Prime property donated mortis causa with a fair market value at the time of death of P1, 000, 000.

27. What is the value to be included in the gross estate if the consideration received at the time of the transfer was
P300, 000? _________________
28. What is the value to be included in the gross estate if the consideration received at the time of the transfer was
P1, 200, 000? _________________

29. The subject matter or object of transfer is

a. Right to transmit
b. Decedent
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 c. Properties of the decedent
d. Beneficiaries

30. The taxpayer in estate tax is:

a. The decedent
b. The estate as a judicial entity
c. The heirs or succession
d. The administrator or executor

31. Who has the personal liability to pay estate tax?

a. The decedent
b. The estate as a juridical entity
c. The heirs or successors
d. The administrator or executor

32. _____________ is a written will which must be entirely written, dated and signed by the hand of the testator
himself. It subject to no other form and it may be made in or out in the Philippines and need not be witnessed.

33. An executor or administrator, after paying the estate tax, and to escape a future liability for a deficiency estate
tax, must secure a written discharge from personal liability from:

a. The heirs
b. The Commissioner of Internal Revenue
c. The court where estate was being settled.
d. Need not secure a written discharge as long as he has a receipt on payment of the estate tax.

34. Lolo Sot, 95 years old, was diagnosed of various ailments on January 1, 2018. Motivated by thought of death, he
decided to dispose all his properties to his children and relatives. He executed a last and will testament disposing
all his properties in the Philippines to his children. On the same day, he made donation inter-vivos to his other
relatives in the United State. Lolo Sot died a month after disposing all his properties. Should the properties
donated by Lolo Sot to his other relatives be included in his gross estate upon his death? Why? 5 points

TEST II: COMPREHENSIVE(5 POINTS EACH)

1. Mr. Z died leaving the following properties with the fair market values at the time of death:

Piece of land in the Philippines P2,000,000

Piece of land in Indonesia 1,000,000
Furniture and Fixtures in his house in the Philippines 600,000
Car in Indonesia 800,000
Share of stock of a Philippine corporation deposited 500,000
in a deposit box of a bank in the Philippines
Share of stock of a Philippine corporation deposited 200,000
in a deposited box of a bank in Indonesia
Share of stock of foreign corporation (subject of 100,000

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 several transactions in the Philippines)

How much is the total fair market value of real estate, tangible personal properties and intangible personal
properties to be included in the gross estate taxable in the Philippines:

Question 1:
If the decedent at the time of death was a citizen and resident of the Philippines? _________________________
Question 2:
If the decedent at the time of death was a subject of Indonesia residing in Indonesia? ______________________

2. The decedent was married at the time of death.

Property owned exclusively P5,900,000

Property owned jointly, including family home of P3,800,000
P2,700,000
Ordinary deductions against exclusive property 500,000
Ordinary deductions against jointly property P1,100,000

Question 1: How much is the Net Taxable Estate? ____________________________

Question 2: How much is the Estate Tax? ____________________________

3. The decedent was married at the time of death.

Property owned exclusively P5,900,000

Property owned jointly, including family home of P3,800,000
P2,700,000
Ordinary deductions against exclusive property 500,000
Ordinary deductions against jointly property P1,100,000

Question: How much is the net distributable estate? _______________________________

4. Property inherited 3 ½ years ago and before the marriage with

A fair market value then of P1, 500, 000 P2, 000, 000
Property acquired with own money P6, 000, 000
Other Property P2, 000, 000
Deductions (except standard deduction) P1, 000, 000

Question 1: Net taxable estate if the spouses were under the absolute community of property?
______________
Question 2: Net taxable estate if the spouses were under the conjugal partnership of gains? ______________

5. Husband and Wife died in an accident. The husband died a few hours before the wife died. They left properties
owned (community property) with a value of P24, 000, 000, property received as gift within a year by a husband
(community property) with a fair market value of P4, 000, 000 when received, and with the same value the time
of death, (with a mortgage of P2, 000, 000 when received, but paid by the time of death) and an obligation of
the spouses of P2, 000, 000. The only remaining relative is the mother of the husband. In the properties of the
spouses was a family home of P14, 000, 000.

Question: How much were the estate taxes? (10 points)

6. Mr. A, a citizen and resident of the Philippines, died leaving the following properties:
Real and personal properties P3, 000, 000
Land and Building inherited from the father 1 ½ years ago
(with a fair market value at that time inherited, of P1, 500, 000) P2, 000, 000
Motorbike, purchased with cash of P600, 000 received as gift
from the mother during the year 500, 000
Cash (including P500, 000 received by inheritance from the father) P1, 500, 000
Claims against the estate 600, 000

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 Unpaid mortgage on the land and building inherited
(from an original of P600, 000 when inherited) 100, 000

Question 1: How much is the vanishing deduction on the land and building? ______________________
Question 2: How much is the vanishing deduction on the motorbike? ________________________
Question 3: How much is the next taxable estate? _________________________

7. Use the following data for the next two questions:

Hur Ly, a non-resident American, died on May 1, 2018 leaving the following:

Exclusive properties, Philippines P5, 600, 000

Conjugal properties, Philippines P4, 200, 000
Conjugal abroad P18, 200, 000
Claims against insolvent persons P1, 000, 000
Funeral Expenses P200, 000
Judicial Expenses P850, 000
Claims against the estate P1, 500, 000
Losses: occurring 8 months after death due to fire P1, 700, 000
Donation Mortis Causa to Makati City Hall P1, 800, 000
Family Home (inc. above), located abroad P10, 000, 000
Standard deduction P10, 000, 000

Question 1: The taxable net estate is: _________________________

Question 2: If decedent is Filipino citizen, the taxable net estate is: _____________________

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