BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS)SUGGESTED ANSWERS

Chapter 3: GROSS ESTATE

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CHAPTER 3
GROSS ESTATE
Problem 3-1
1.

False
–
should be including revocable transfers and transfers for insufficient consideration.2.

False
–
depending on the citizenship and residency of the decedent.3.

True4.

False
–
common stock only; preferred stock is measured at its par value.5.

False
–
resident alien = properties within and without6.

True7.

True8.

False
–
donation mortis causa is subject to estate tax.9.

True10.

False
–
only revocable transfer is taxable.
Problem 3-2
1.

False
–
the relationship must be one degree of generation.2.

True
–
If he is a nonresident alien.3.

False
–
the other way around4.

True5.
False
–
it will depend on how the jewelry was acquired.6.

True7.

False
–
revocable designation.8.

True9.

False
–
exclusively to wife10.

False
–
surviving spouse capital is not included.
Problem 3-3
1. C 6. A2. A 7. D3. C 8. A4. D 9. C5. B 10. B, C & D
Problem 3-4
1.

The reportable gross estate is P2,000,000.2.

Reportable gross estate is P600,000. As a rule, property donated by the decedent to a nonprofit andnonstock
educational institution shall not be considered in the computation of gross estate.3.

The reportable estate of A in the Philippines is P5,000,000. Even if A is a nonresident Filipino,

hisproperties located outside the Philippines are reportable in the Philippines because he is a
Filipinocitizen.4.

P10,000,000. The properties left by a resident alien which are located within and outside thePhilippines are
required to be reported for Philippine estate tax purposes.5.

At market value of P750,000. The law provides that the valuation should be at the market value of the
property at the time of the owner’s death. The book value is irrelevant because the properties left by
the decedent are considered under liquidating concern