Estate Tax

Problem #1. Donald Trunk, a married American residing in Florida U.S.A., died in 2021 leaving the
following assets in the Philippines:
a. Shares of stocks in Ayala Land Corp. with cost of P3,500,000 and unrealized gain of P500,000 at the
time of death.
b. Ordinary unlisted shares with book value amounting to P1,800,000 and par value of P1,500,000.
c. Preferred unlisted shares with book value amounting to P900,000 and par value of P600,000.
d. Condominium in Trump Tower costing P6,000,000 but with zonal value amounting to P9,000,000 and
fair market value per real property tax declaration of P7,000,000. It has unpaid mortgage amounting to
P1,600,000 at the time of death.
The gross estate abroad of the deceased is equivalent to 80% of the total gross estate worldwide.

Questions:

1. How much is the total gross estate to be reported in the Philippines?

2. How much is the total ordinary deductions?
3. How much is the net taxable estate?

Problem #2. Ms. Inah Taque, a resident alien married to a Filipino, died leaving the following:
Family home (500 sq. meters, zonal value is P50,000 per square meter) P19,000,000
Bank deposit (50% subjected to 6% final tax) 5,000,000
Life insurance proceeds, beneficiary is the wife who is the executor,
designation is irrevocable 4,000,000
Life insurance proceeds, beneficiary is his son, designation is irrevocable 2,000,000
Donation to the City of Tacloban made in the will 1,000,000
Claims against an insolvent debtor (40% uncollectible) 1,500,000
Funeral expenses (P300,000 still unpaid at the time of death) 850,000
Judicial expenses 460,000
Medical expenses (55% paid at the time of death) 1,200,000

Questions:

1. How much is the exclusive gross estate?

2. How much is the common gross estate?
3. How much is the exclusive deduction?
4. How much is the common deduction?
5. How much is the special deduction?
6. How much is the estate tax payable?
Percentage Tax

Problem #3. Mr. Paquito Walhotoy is the owner of a small variety store. His gross sales in any one year
does not exceed P3,000,000. He is not VAT-registered. The following data are taken from the books of
the variety store for the quarter ending March 31, 2021:
Merchandise inventory, March 31, 2021 P 100,000
Gross sales 450,000
Purchases from VAT-registered suppliers 350,000

Question: How much is the percentage tax due and payable?

Problem #4. Manny Pacquiao fought Floyd Mayweather Jr. in Legazpi City, Philippines for the vacant
World Boxing Council Welterweight Title. The showdown was titled Lindol sa Bicol wherein Manny sent
Floyd to the canvass on the 12 th round, the latter’s first defeat in his entire career. The fight was
promoted by Top Rank Promotions, 60% owned by Bob Arum and other Americans, and 40% owned by
Dean Bobads. The event generated the following staggering revenues:

Admission Fees P10,000,000

Pay per view 100,000,000
Expenses 50,000,000

Question: How much percentage tax is due on the above revenues?

Value-Added Tax

Problem #5. JJ Sugar Inc. is a VAT-registered manufacturer of sugar. It has the following data for month
of January 2021:
Local sales of refined sugar to private entities P 3,000,000
Local sales of refined sugar to Government 1,000,000
Export sales of refined sugar 1,000,000
Local sales of muscovado 1,000,000
Purchases of sugar cane 3,000,000
Purchases of packaging materials from VAT suppliers 500,000
Purchases of capital goods from VAT suppliers, useful life is 6 years 1,500,000

Question: How much is the output tax?

Problem #6. CHPA Residences Inc. is a domestic corporation engaged in real estate business. It has the
following data for the last quarter of 2020:

Installment Sale of a Townhouse:

Realized gross profit (GPR is 30%) P300,000
Gross selling price 4,000,000
Zonal value 5,000,000
Deferred Sale of a Parking Lot:
Gross selling price 1,000,000
Fair market value 1,500,000
Rental income 800,000
Rent receivable, beg. 300,000
Rent receivable, end 100,000
Importation of materials used in the construction 2,625,000

Question: How much is the VAT due or payable?

Problem #7: A.M. Yu & Associates, a VAT-registered Firm, sold its office building together with the lot
thereon to Cabarles, Ong, Sia, Tabag & Co., another VAT-registered Firm, for 60million pesos. Of the
total selling price, 40 million pesos pertains to the building. The useful life of the building is estimated to
be 30 years. The transaction happened in 2020.

Questions:

1. Assuming the buyer paid in lump sum, how much output tax should be paid by the seller in the
month of sale?
2. Based on the preceding question, how much input tax can be claimed by the buyer against input
in the month of purchase?