Saint Louis College

City of San Fernando, La Union

College of Commerce, Secretarial and Accountancy

TAX 1 and 2
Income and Business Taxation
FINAL QUIZ 2

General Instructions: ERASURES, ALTERATIONS, SUPERIMPOSITIONS ARE STRICTLY

NOT ALLOWED. DO NOT USE PENCIL AND/OR FRICTION PEN. NOT FOLLOWING
INSTRUCTIONS MEANS AUTOMATICALLY WRONG.

Test I: Multiple Choice

Choose the best answer. Use CAPITAL LETTERS ONLY.
PART 1:

Absolute Community of Property Conjugal Partnership of Gains

A Community Conjugal
B Exclusive Exclusive
C Community Exclusive
D Exclusive Conjugal

1. Properties owned by the spouses before and brought into marriage shall be
classified as: C
2. The fruits on properties owned by the spouses before and brought into the
marriage shall be classified as: A
3. Properties received from gratuitous transfer during marriage shall be classified
as: B
4. Properties received from gratuitous transfer during marriage where the donor or
testator expressly provides that it shall form part of the common property of the
spouses shall be classified as: C
5. The fruits received during marriage from gratuitous transfer will be classified
as: D
PART II:
1. This is not part of the conjugal property
A. Those acquired by onerous title during the marriage at the expense
of the common fund
B. Those acquired by industry or work of either of them\
C. The fruits, rents or interest received or due during the marriage
coming from the conjugal property or from the exclusive
properties of the spouses.
D. Those acquired during the marriage by gratuitous title

2. One of the following is not an exemption or exclusion from the gross

estate
A. capital or exclusive property of the surviving spouse
B. Properties outside the Philippines of a non-resident Chinese decedent
C. Shares of stock of San Miguel Corporation of a non-resident
Mexican
D. The merger of usufruct in the owner of the naked title

3. A died leaving a farm land. In his will, he transferred the ownership

thereof to B but subject to the condition that C will have the right to use
the land for a period of ten years ( usufruct). In the seventh year,
however, C died and in C’s will he surrendered his right over the land to
B.
A. the transfer is subject to donor’s tax
B. The transfer is subject to estate tax
C. The transfer is both an inclusion and deduction from the gross estate
D. The above is tax-exempt transfer
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4. Gross estate includes all his property, real and personal, tangible and
intangible, wherever situated, except
A. Resident citizen
B. Resident alien
C. non-resident citizen
D. non- resident alien

5. The donation of a movable property may be made

A. Orally
B. In writing
C. Either A or B
D. Neither A nor B
6. Using the preceding number, the donation and acceptance should be in writing
if the value of the property donated is
A. Less than P 5,000
B. P 5,000 or less
C. P 5,000,000 or more
D. More than P 5,000
7. A donation which takes effect upon the death of the donor
A. Donation mortis causa
B. Partakes of the nature of a testamentary disposition
C. Shall be governed by the law on succession
D. A,B and C
8. A donation which is intended by the donor to take effect during his lifetime
A. Shall be subject to the 6% donor’s tax if more than P 250,000
B. Shall be in writing if the value exceeds P 5,000
C. Donation inter-vivos
D. A,B and C
9. The donation of an immovable property shall be made
A. In writing
B. In a public instrument
C. Either A or B
D. Orally
10. Which of following statement is not correct in succession?
A. Legitimate children share equally in their legitime of ½ of the net
distributable estate
B. When the spouse survives with one legitimate child, the legitime of the
spouse is ¼ of the net distributable estate
C. When the spouse survives with two legitimate children, the legitime of
the spouse is ¼ of the net distributable estate
D. The legitimes of the legitimate and illegitimate children take
precedence over the legitime of the surviving spouse

Test II: Problem Solving

Show solutions in good form. Double rule and encircle final answer. Make a summary of
your answers on the first page.

Problem 1:
Peter bought a brand new car with a cash price of P3,000,000. He bought the car on
installment with the following terms: down payment of P500,000 and annual installment
of P700,000 for four years. On his way home, he run over an approaching truck and died.
1. What is the correct amount to be included in the gross estate of the decedent?
A. 3,000,000
B. 4,200,000
C. 2,800,000
D. 3,300,000

Problem 2:
A decedent granted a P2,000,000 loan to his best friend two years before his death with a
10% per annum evidenced by a note. Both the principal and interest are due after three
year.
2. What is the correct amount to be included in the gross estate of the decedent?
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A. 2,400,000
B. 2,000,000
C. 4,000,000
D. 0

Problem 3:
A citizen of the Philippines and a resident of the United States, under the
system of conjugal partnership of gains died in the United States, and was
shipped to and buried in the Philippines. He had the following data:

Real property in the Philippines (inherited 3.5 yearsP11,000,000

ago,
with a fair market value of P9,000,000 when inherited)
Real property in the US used as family home 13,000,000
Tangible personal properties in the Philippines 200,000
Tangible personal properties in the US 700,000
Funeral expenses in the US 110,000
Funeral expenses in the Philippines 100,000
Unpaid obligations 600,000
Claim against an insolvent person in the Philippines 100,000
Estate tax paid to the US 120,000

3. The gross estate is:

A. 9,150,800
B. 23,000,000
C. 24,900,000
D. 25,000,000

4. The taxable net estate is:

A. 9,150,800
B. 23,000,000
C. 24,900,000
D. 25,000,000

Problem 5: SEE CPA REVIEWER P 432

On the belief that Juan is about to die, he sold to his daughter a parcel of land
valued at P3,000,000 for the same amount. On year later, Juan died of a car
accident. At that time, the property has already a value of P3,500,000.
5. For Philippine estate tax purposes, the amount includible in the gross
estate is
A. 500,000
B. 3,000,000
C. 3,500,000
D. Nil

6-10
6. 50,000,000
7. 7,000,000
8. 12,000,000
9. 1,860,000
10. 27,0000