Estate Tax-Pre Test 1

1. Estate Tax is also known as Inheritance Tax – T

2. Strictly speaking, an estate tax is an inheritance tax. It is a tax chargeable against the decedent’s net
taxable estate accruing at the time of death. On the other hand, inheritance tax is assessed on the share of
an heir from the hereditary estate. – T

3. Estate tax laws rest in their essence upon the principle that income of an individual is the generating
source from which the taxing power takes its being, and it is the power to transmit or the transmission
from the dead to the living on which the tax is more immediately based – T

4. Estate tax is the tax on the right to transmit property at death and on certain transfers by decedent on his
lifetime which are made by the law equivalent of testamentary dispositions and It accrues upon the death
of the decedent. – T

5. A transmission by inheritance is taxable at the time of the decedent is alive, notwithstanding the
postponement of the actual possession or enjoyment of the estate by the beneficiary. – F

6. The tax is measured by the value of the property transmitted at the time the decedent is alive, regardless
of its appreciation or depreciation. – F

7. Estate tax is a more effective agent for bringing about a more equitable distribution of wealth, so far as
that is the purpose of the tax, because it applies to the entire net estate, including the property otherwise
exempted. It is the most appropriate and effective method for taxing the “privilege” which the decedent
enjoys of controlling the disposition at death of property accumulated during life. – T

8. It is a well-settled rule that estate taxation is governed by the statute in force at the time the death
decedent is alive. – F

9. Prior to the Train law, the estate tax was computed based on a tax schedule where an estate worth ₱200,
000 and over was taxed from 5% to 20%. – T

10. If Ben James is died on January 29, 2017, he is subject to a flat rate of 6%. – F

11. The estate shall be appraised at its fair market value as of the time of death. However, the appraised
value of real property as of the time of death shall be, whichever is higher of: a) The fair market value as
determined by the Commissioner; or b) The fair market value as shown in the schedule of values fixed
by the Provincial and City Assessors. – T

12. For Shares of Stock, the valuation of shares which is a common unlisted is The arithmetic mean between
the highest and lowest quotation on the date of death; if none is available, at a date nearest the date of
death. – F

13. under the Rule of No Reciprocity: No tax shall be collected under this Title in respect of intangible
personal property. – F

14. The executor or administrator shall not deliver a distributive share to any party interested in the estate
despite the transfer of properties and rights at the time of death, unless there is a certification from CIR
that estate tax has been paid. – T

15. Transfers in contemplation of death shall not be included in the gross estate. – F
16. Property passing under special power of appointment shall be included in the gross estate. – T

17. A Special Power of Appointment is when it gives to the decedent the power to appoint any person he
pleases including himself, thus having as full dominion over the property as though he owned it. – T

18. Proceeds of life insurance taken out by the decedent on his own life shall not be included in the gross
estate when the beneficiary is:1. The estate of the deceased, his executor or administrator, irrespective of
whether or not the insured retained the power of revocation; or2. Any beneficiary designated in the
policy, except when designation is irrevocable. – F

19. Proceeds of a group insurance policy taken out by a company for its employees shall be included in the
Gross Estate. – F

20. Amount receivable by any beneficiary irrevocably designated in the policy of insurance by the insured.
The transfer is absolute and the insured did not retain any legal interest in the insurance shall be included
in the gross estate. – T

21. The subsections pertaining to (1) transfers in contemplation of death, (2) revocable transfers and (3)
proceeds of life insurance shall not apply to the transfers, trusts, estates, interests, rights, powers and
relinquishment of powers whether made, created, arising, existing, exercised or relinquished before or
after the effectivity of the NIRC. – T

22. Transfers for Insufficient Consideration refers to any (1) transfer in contemplation of death, (2)
revocable transfer or (3) property passing under GPA that is made, created, exercised or relinquished for
a consideration in money or money’s worth, but is NOT a bonafide sale for an adequate and full
consideration in money or money’s worth. The value to be included in the gross estate is the excess of
the FMV of the property at the time of the decedent’s death over the consideration received. – T

23. The Capital of the Surviving Spouse is part of the gross estate of the deceased spouse. The capital of the
surviving spouse is considered an inclusion from the deceased’s gross estate. – F

24. Deductions and/or losses already deducted from gross income can be deducted from gross estate.
Deductions should be compensated for by any insurance or extrajudicial settlement. Because, they are
valid deductions. – F

25. “Claims” generally mean debts or demands of a pecuniary nature which could have been enforced
against the deceased in his lifetime and could have been reduced to simple money judgments. Claims
against the estate or indebtedness in respect of property may arise out of contract, tort, or operation of
law. – T

26. Filing of estate tax return is Required if gross value of estate exceeds PhP 200,000. – T

27. Statement duly certified by a CPA if Gross value of estate exceeds 5,000,000. – T

28. the Time of filing of estate tax return is Within 1 year from the decedent’s death. – T

29. the Maximum withdrawal of the administrator of the estate or anyone of the heirs is P20,000. – F

30. Payment by Installment is Allowed within one (1) YEAR from statutory date WITHOUT CIVIL
PENALTY AND INTEREST. – T
31. The Standard Deduction is ₱500,000 for Citizens or Resident Aliens and P5M for Non-resident Alien. –
F

32. The Family Home must be included in the gross estate and can be deducted as an allowable deduction
up to P10M. – T

33. Funeral expenses, judicial expenses, and medical expenses were removed by the TRAIN Law. – T

34. No deduction shall be allowed in the case of a nonresident not a citizen of the Philippines, unless the
executor, administrator, or anyone of the heirs, as the case may be, includes in the return required to be
filed under Section 90 the value at the time of his death of that part of the gross estate of the nonresident
not situated in the Philippines. – T

35. To minimize the onerous effect of taxing the same property twice, a tax credit against Philippine Estate
Tax is allowed for estate taxes paid to Foreign Countries. – T

36. If a person dies on January 2, 2018 the heirs have until January 2, 2019 to pay the estate tax due on the
estate of the decedent. Under the new provision, if the heirs can prove that there is insufficient cash to
pay for the estate tax due, payment by installment shall be allowed. Hence, the heirs can pay by
installment the estate tax due until January 2, 2021 without incurring any penalty or interest thereon. – F

37. The computation of the estate tax shall not be the cumulative amount of the net taxable estate. Payment
made after the statutory due date shall be imposed the corresponding applicable penalty thereto. – T

38. 51% surcharge is imposed in case of the following instances (WILLFUL NEGLECT): a.) Willful
neglect to file the return within the period prescribed by the Code or by the rules and regulations; or b.)
The return filed is false or fraudulent• If the return is filed only after the BIR’s prior notice in writing,
the 51% surcharge shall be imposed. – F

39. Interest at the rate of 50% the legal interest rate for loans or forbearance of any money in the absence of
an express stipulation as set by the Bangko Sentral ng Pilipinas shall be imposed on the basic unpaid
amount of tax from the date prescribed for the payment until the amount is fully paid. – F

40. Deficiency tax and delinquency tax due is subject to interest rate of double of legal interest. The interest
shall be assessed and collected from the date prescribed for its payment until the full payment thereof or
upon issuance of demand of commissioner whichever comes earlier. – T

41. The deficiency and delinquency interest can be imposed simultaneously. There is a delinquency tax in
case of failure to pay the amount of tax due or any return required to be filed, or the amount of tax due
which no return is required, or a deficiency tax or any surcharge or interest thereon the due date
appearing in the notice and demand of the Commissioner. – T

42. The merger of usufruct in the owner of the naked title is taxable under Estate Taxation. – F

43. The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the
fideicommissary is not taxable. – T

44. All bequests, devises, legacies or transfers to social welfare, cultural and charitable institutions, no part
of the net income of which inures to the benefit of any individual: Provided, however, that not more than
forty percent (40%) of the said bequests, devises, legacies or transfers shall be used by such institutions
for administration purposes is exempt from estate tax. – F
45. The capital of a surviving spouse of the decedent shall be deemed part of his or her gross estate. – F

46. The net share of the surviving spouse in the conjugal partnership property as diminished by the
obligations properly chargeable to such property shall be deducted from the net estate of the decedent. –
T

47. Property Previously Taxed is allowed to be deducted provided the Present decedent died within 10 years
from receipt of the property from prior decedent or donor. – F

48. Losses can be claimed as deduction even it was compensated by an insurance and Occurring before the
last day for the payment of the estate tax. – F

49. Claims Against Insolvent Persons shall not be added to the Gross Estate because it is exempt. – F

50. Tax burdens are not to be imposed, nor presumed to be imposed, beyond what the statute expressly and
clearly imports, tax statutes being construed strictissimi juris against the government. Any doubt on
whether a person, article or activity is taxable is generally resolved against taxation. then explain what is
strictissimi juris. – F