Exercise (Income Tax for Estate and Trust)

1. Income Received by the estate during the period of administration and settlement of the
estate, for tax purposes is known as: A
a. Income of the estate c. Income of trustee
b. Income if heirs d. Income of the Testator
2. Statement 1: For taxation purpose, the taxable income of the estate shall be determined in
the same manner and basis as in the case of individual taxpayers. D
Statement 2: For taxation purpose, taxable income of the estate is computed using tax table
a. Statement 1 & 2 are false c. Statement 1 is false but statement 2 is
true
b. Statement 1 is true but statement 2 is false d. Statements 1 & 2 are true
3. Statement 1: Where the estate is under judicial administration, the income of the estate
shall be taxable to estate or paid by fiduciary and trustee. B
Statement 2: Where the estate is not under judicial administration, the income of the estate
shall be taxable to the fiduciary and trustee.
a. Statement 1 & 2 are false c. Statement 1 is false but statement 2 is
true
b. Statement 1 is true but statement 2 is false d. Statements 1 & 2 are true
4. Statement 1: The amount of income of the estate for taxable year, which is properly paid or
credited during such year to any legatee, heir, or beneficiary, is a special item of deduction
from gross income of the estate. B
Statement 2: An allowance paid to a widow or heir out of the corpus or principal of the
estate, is not deductible from the gross income of the estate.
a. Statement 1 & 2 are false c. Statement 1 is false but statement 2 is
true
b. Statement 1 is true but statement 2 is false d. Statement 1 and 2 are true

Use the following data for the next 3 questions:

Namayapa Nah died leaving estate worth P10, 000,000 the estate is under administration. In
2019 the properties in the estate earned a gross income of P600, 000 and the estate
incurred expenses of P150, 000. Pedro one of the heirs, received P100, 000 and P120, 000
from 2018 and 2019 income of the estate respectively.
5. The income tax payable of the estate in 2019 is a A
a. P16, 000 c. P68, 000
b. P110, 000 d. P59, 000
6. Assume that Pedro earned net income of P500, 000 from his trading business. What amount
should Pedro report as his taxable income for 2019:
a. P570, 000 c. P500,000
b. P620, 000 d. P450, 000
7. The income tax payable of Pedro during the taxable year 2019:
a. P72, 500 c. P55, 000
b. P42, 500 d. P85, 000

Use the following data to answer next 3 questions:

 In 2019 Juan created 2 Trusts for his minor son Ramil. During the 2 Trusts earned net income
as follows:

Trust 1: P4, 000, 000

Trust 2: P6, 000, 000

8. How much is the total income tax due of the 2 Trusts?

a. P3, 110, 000 c. P3, 152, 200
b. P3, 165, 000 d. Zero

9. How much is the income tax due of Trusts 1:

a. P1, 264, 440 c. P1, 224, 000
b. P1, 266, 000 d. Zero

10. How much is the income tax due of Trust 2:

a. P1, 895, 160 c. P1, 891, 320
b. P1, 899, 000 d. P1, 866, 000