AEC 215 Business Taxation

Problem 1:

Bobby suffered an unexpected heart attack causing his death on November 1, 2018. His estate composed
of the following:

Cash in bank P1,000,000

Commercial building 5,000,000
Cars 1,000,000
House and lot 3,000,000

Jane is the only heir of the decedent. Bobby's remains were cremated on November 8, 2018. The executor
of Bobby's estate filed the estate tax return and paid the corresponding estate tax on October 31, 2019.
The properties left by the decedent were finally distributed to Jane on December 14, 2019.

Answer the following questions.

1. When will the transfer of ownership from the decedent to the heir take effect? (5 points)

Answer: on November 1, 2018

2. When should the estate tax accrue? (5 points)

Answer: on November 1, 2018

3. Assume that Bobby's total outstanding liabilities as of the time of his death amounted to
P12,000,000. How much of the outstanding liabilities of the decedent should be assumed by Jane?
(5 points)

Answer: P 10,000,000.00

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Problem 2A:

Anne Yeong died leaving an estate valued at P12,000,000. The surviving heirs were her spouse, two (2)
legitimate children and one (1) illegitimate child. How should the estate be distributed using the rules on
legitimes? (5 points)

Answer: Legitimate Children – 3,000,000 each

Illegitimate Child – 3,000,000
Surviving Spouse – 3,000,000

Problem 2B:

Assume the amount of estate is P12,000,000 and the decedent is survived only by his two (2) illegitimate
children. How should the estate under intestate succession be distributed? (5 points)

Answer: Illegitimate Children – 6,000,000 each

Problem 2C:

Assume the same data in Problem 2B, except that the testator provided P8,000,000 to Julia (his secretary)
through his last will and testament. How should the estate under intestate succession be distributed?
(5 points)

Answer: Illegitimate Children – 6,000,000 each