PROBLEMS P2.1. A decedent taxpayer died leaving the following: Family home (land and residential house) in the 8,000,000 Philippines Parcel of land with vacation house in Malaysia 5,000,000 Farm land in the Philippines, with a mortgage in favor of 3,000,000 the Philippine National Bank for P600,000 Shares of stock of a domestic corporation deposited in a 2,000,000 bank safety deposit box in Malaysia Shares of stock of a foreign corporation the entire 500,000 business of which is in the Philippines, deposited in a bank safety deposit box in Malaysia Receivable from a friend who has no property 300,000 whatsoever Receivables under insurance policies: « Life insurance policy, taken by the decedent on ‘200,000 his own life, with his estate as revocable beneficiary = Life insurance policy, taken by the decedent on 300,000 his own life, with a daughter as revocable beneficiary = Life insurance policy, taken by the decedent on 600,000 his own life, with a son as irrevocable beneficiary = — Life insurance (group) taken by the employer of 150,000 the decedent, with the estate as revocable beneficiary REQUIRED: Determine the correct Gross Estate assuming the decedent was: 1. Aresident citizen 2. Resident alien 3. Non-resident alien with reciprocity 4. Non-resident alien without reciprocityChepter Eercises — Estate Tae P2.2. The decedent devised to his four (4) children separate parcels of land with the following data TO JUAN, 1,000 square meter lot in Sampaloc, Manila with the following valuation: * Zonal value determined by the City of Manila, P25,000/sq.m. = Assessed value as determined by the CIR, P18,000,000 = FMVas determined by independent assessors, P20,000,000 TO PEDRO, 1,000 square meter lot in Q.C. with the following valuation: = Zonal value determined by Q.C., P15,000/sq.m. = Assessed value as determined by the CIR, P18,000,000 = FMV as determined by independent assessors, P20,000,000 TO MARIA, 1,000 square meter lot in Makati with the following valuation: = Zonal value determined by the City of Manila, P15,000/sq.m. = FMV as determined by independent assessors, P20,000,000 TO SISA, 1,000 square meter lot: in Mandaluyong with the following valuation: = Zonal value determined by the City of Manila, (No available valuation) P20,000,000 = FMV as determined by independent assessors, REQUIRED: Determine the gross estate of the decedent P2.3. Pedro owns various shares of stocks form different companies during his lifetime. At the time of his death, the following details were provided to you by his administrator: 100,000 shares of Frozen Company's ordinary shares, not traded * ‘Outstanding shares - 800,000 shares; P10 par «Retained Earnings - P3,000,000 400,000 shares of Divergent Company's ordinary shares, listed shares Outstanding shares - 1,000,000 shares; P10 par Retained earnings - P5,000,000 s Quoted price at the date of Pedro's death - P15 Mean value of the shares in the stock exchange - P12 100,000 shares of Lenovo Company's ordinary shares, listed shares = Outstanding shares - 1,000,000 shares; P10 par = Retained earnings - P5,000,000 = Mean value of the shares in the stock exchange - P12 REQUIRED: Determine the gross estate of Pedro | 62Chapter Exercises — Estate Tee P2.4. For each of the following independent cases, determine the value of the property in the gross estate: 1. A parcel of land inherited from the father was acquired by the decedent's father then for a cost of P250,000. Upon inheritance, the fair market value was P200,000 as shown in the schedule of values from the Assessor's office and P230,000 as determined by the office of the BIR Commissioner. A property, acquired for 1,000,000, was transferred in contemplation of death for a consideration of P100,000. Fair market value at the time of transfer, P1,500,000, while at the time of death, P1,200,000. A property, acquired at a cost of P1,000,000, was transferred in contemplation of death for a consideration of P1,200,000. Fair market value at the time of transfer, P1,500,000, while at the time of death, P1,200,000. The decedent was about to present to his girlfriend a brand new car worth P5,000,000 cash. Installment price is valued at P6,000,000. on his way to meet his girlfriend, he met a car accident and died. On January 1, 2013, Pedro extended a loan worth P1,000,000 to Juan due on January 1, 2015. The latter executed a promissory note with an annual interest of 10%. Pedro died on June 30, 2014. (MODIFIED) IDENTIFICATION: Exercise A (Inclusions and Exclusions) Determine whether the following is included or excluded from the gross estate. 1 Included Excluded Transfer with reservation of certain rights Transfer for insufficient-consideration Transfer for an adequate and full consideration in money's worth Transfer in contemplation of death Insurance proceeds from SSS and GSIS Proceeds of group insurance taken out by a company for its employees, 63 ,lapler Exercises — Estate Tae 7. Transfer from the first heir to the second heir designated by the predecessor. Rig, 8. Donation to the national government ——— 9. Merger of usufruct in the owner of the naked title a 10. Legacy to a charitable institutions whose administrative expenses did not exceed 30% of the legacy ——_ Exercise B (Insufficient Consideration) Determine the amount to be included in the Gross Estate of the Transferor- Decedent from the following independent cases: Inclusion in the Particulars: Gross Estate (P) 1, FMV at the time of Transfer 5,000,000 FMV at the time of Death 6,000,000 Consideration received 5,000,000 Answer: 2. FMV at the time of Transfer P5,000,000 " FMV at the time of Death 6,000,000. Consideration received 6,000,000 3. FMV at the time of Transfer 5,000,000 FMV at the time of Death 6,000,000 Consideration received 7,000,000. Fe 4. FMV at the time of Transfer P5,000,000 FMV at the'time of Death 6,000,000 Consideration received 2,000,000 5. FMV at the time of Transfer 5,000,000 . FMV at the time of Death 6,000,000 Consideration received nilapler Euercises — Estate Tae Exercise C (Proceeds of Life Insurance Premium) Determine the amount that should be included in the gross estate: Inclusion in the Particulars: Gross Estate (P) 1, The decedent took an insurance on his life for P10,000,000 2. The decedent took an insurance on his life for P20,000,000 and designated his estate as the revocable beneficiary. 3. The decedent took an insurance for his life for 5,000,000 and irrevocably designated the administrator of his estate as the beneficiary. 4. The decedent took an insurance on his life for * P10,000,000 and designated his son as beneficiary. 5. The decedent took an insurance on his life for P10,000,000 and designated his son as irrevocable beneficiary. TRUE OR FALSE 41. Estate tax is a tax imposed on the privilege that a person is given in the disposition of his property, either by will or by operations of law, to take effect upon death. : Estate tax is an ad-valorem tax The accrual of the estate tax is distinct from the obligation to pay the same. Delivery and acceptance is an essential element of estate taxation. Under the “ability to pay theory”, the imposition of estate tax is justifiable because it reduces the property received by the successor, thus, helping to promote equitable distribution of wealth in society. 6. Regardless of situs, the tax code excludes “intangible” personal propery of a non-resident alien decedent in determining his taxable estate. 7. Section 85 of the Tax Code provides that the value of the gross estate ofa nonresident alien should be determined by including the value at the time of his death, of all property, real or personal, tangible or intangible, wherever situated. 2e won10. 4 12. 4 4 1 1 17. 19. 2 3. 4. 5. 6. Ss Chapter Evercises — Estate Tae There is reciprocity ‘ if the deced " resident citi a lent’ at the time of his not impos og ian eee which at the time of he death “tid personal property of of any character in respect of tangible foreign country. citizens of the Philippines not tesiding in that For ic a ae tax computation, real estate, in general, shall be valued at 7 sae ane at the date of death of the decedent. Honor t pale me real estate is available at date of death, and this is oamcun e fair market value Per assessor's listings of values, then unt to be reported in the gross estate is the zonal value. - Donation mortis causa are transfers intended to take effect at the time ao soceaent 's death. Hence, the property should be valued at the ir market value of the propeity at the date of the actual transfer. Donation: to the national government is an exempt transaction but should still require inclusion of the property in the gross estate. Juan devised in his will a piece of land; naked title to Pedro and usufruct to Ana for as long as Ana lives, thereafter to Pedro. The transmission from Juan to Pedro and Ana is subject to estate tax but the merger of the usufruct and the naked title to Pedro upon the death of Ana is exempt. © Ron devised in his will real property to his brother Bert who is entrusted with the obligation to preserve and transmit the property to Jay, son of Bert, when Jay becomes of age. The transmission from Bert to his son Jay is subject to estate tax. When an estate, under administration, has income-producing property, the annual income of the estate becomes part of the taxable gross estate. z When «an estate, under administration, has income-producing property and its income during the year is distributed to the heirs, the income so distributed is taxable to the heirs as part of their gross income for the year. : A special power of appointment authorizes the donee of the power to appoint only from among a designated class or group of persons other than himself. . The donee-decedent of a special power of appointment only holds the property in trust, hence, the property shall form part of the donee- 's gross estate. ore Gade as amended under RA10963 (TRAIN Law) provides that the filing of estate tax return. should be done within one (1) year from the decedent's death. The payment of estate tax could only be extended up to the maximum of thirty (30) days from the date of filing. 66apter Euercises — Estate Tae MULTIPLE CHOICE Principles 1. An excise tax on transfers inter-vivos a. Donor’s tax c. Income tax b. Estate tax d. VAT 2. Anexcise on transfers mortis causa a. VAT c. Income tax d. Donor’s tax b. Estate tax tatements is not correct? 3. Which among the following s' ‘ the statute in force at the time |. _ Estate taxation is governed by of death of the decedent. Il. Estate tax accrues as of the death of the decedent. Ill. . Succession takes. place and the right of the State to tax the privilege to transmit the estate vests instantly upon death. c. Ill only a. | only b. Ilonly d. None of the above Estate tax is a tax on the right of the deceased person to transmit his 4. estate to his lawful heirs and beneficiaries. Hence, it is * |. A tax on property. Il. Anexcise tax a. only c, Both | and Il b. Ilonly d. Neither I nor II 5. Estate tax is imposed upon the: a. Decedent b. Property or rights transferred c. Right to transfer property upon death d. Privilege to receive inheritance 6. When will the transfer through succession be effective? a. Upon the signing of a written will. . b. Upon payment of estate tax. c. Upon death of the testator d. Upon registration in the register of deeds. 7. Which i isti i which of the following is not a characteristic of donation mortis a. The transfer to the donee is irrevocable whi is ile donor is alive. b. There is no conveyance of title or ownership to the doneee before the death of the donor, es 67Chapter Eeerises ~ Estate Toy c. The transferor retains the full or naked ownershi of the property while alive. P and control d. The transfer should be void if the donor should survive the donee. 8. Mr. Wais thought that due to old age, death may be imminent, Knowing that the value of estate tax is high, he disposed his Properties to his rightful heirs prior, to his death (transfer in contemplation of death). To prevent undue avoidance of tax, inter- vivos disposition in contemplation of death is subject to: a. Donor's tax c. Income tax b. Estate tax . d. Excise tax Classification of Taxpayers, 9. The gross estate of a decedent shall be comprised of the following Properties and interest therein at the time of his death, including revocable transfers and transfers for insufficient consideration, etc.: |. ~ Residents and citizens: All Properties, real or personal or intangible, wherever situated. Il. Nonresident aliens: Only properties situated in the Philippines, that, with respect to intangible personal property, its inclusion in the gross estate is not subject to the rule of reciprocity a. lonly c. Both | and II b. lonly d. Neither | nor Il 10. Which of the following shall be considered Personal property? " |. Obligations and actions which have for their object movables or demandable sums. I. Shares of stock of agricultural, commercial and industrial entities, although they may have real estate. a. Both | and II c. lonly b. Neither | nor Il d. llonly 11. In determining the net estate of a decedent, which of the following tules is not correct? a. Real estate abroad is not included in the gross estate of a decedent who is a resident alien. b. Vanishing deduction must be subject to limitations. ; ¢, Shares of stocks being intangible property shall be included.in the decedent's gross estate wherever situated. d. Funeral expenses are deductible to the extent of 5% of the total gross estate but not exceeding P200,000. 68Chapter Ewercises — Estate Toe 12. The personal property of a non-resident, not citizen of the Philippines, would not be included in the gross estate if; a. b. c. d. The intangible personal property is in the Philippines. The intangible property is in the Philippines and the reciprocity clause of the estate tax law applies. The tangible property is in the Philippines. The personal property is shares of stocks of a domestic corporation 90% of whose business is in the Philippines. 13. Which of the following is subject to the rule of reciprocity? a. b. C: Car in the Philippines owned by a non-resident alien decedent; Investment in stock in a US Corporation owned by a non- resident alien decedent; Investment in bonds in a US Corporation that has acquired business situs in the Philippines, and is owned by a resident alien; Shares owned by a non-resident alien in a partnership established in the Philippines. 3 14. The rule of reciprocity applies to: aogp Non-resident alien Intangible personal property decedent in the Philippines Yes Yes No No Yes No No Yes 15. Intangible Personal Property of Non-Resident Alien Decedent with Situs in the Philippines shall be Exempt from Taxation if: The decedent, at the time of his death was a resident citizen of a foreign country which at the time of his death did not impose an estate tax of any character in respect of intangible personal property of citizens of the Philippines not residing in that foreign country. The laws of the foreign country of which the decedent was a resident citizen at the time of his death allow a similar exemption from estate taxes of every character, in respect of intangible personal ‘property owned by citizens of the Philippines not residing in that foreign country. . lonly c. Either! or ll b. Ilonly d. Neither | nor Il iChapter Exercises — Estate Tage 16. One of the following is not an intangible personal property situated in the Philippines: : mi Shares, obligations or bonds issued by any corporation or sociedad anonima organized and constituted in the Philippines in accordance with its laws. } ; Shares, obligations or bonds issued by any foreign corporation where 85% of its business is located in the Philippines. Shares, obligations or bonds issued by a foreign corporation if such shares, obligations or bonds have acquired business in the Philippines. |v. Shares or rights in any partnership, business or industry established outside the Philippines. a. lonly c. Ill only b. Honly d. IV only Situs of Estate 17. Which of the following rules on “situs” of Property of a decedent correct? |. As a general rule, the situs real Property is the place or country where it is situated. As a general rule, the situs of tangible personal property is the place or country where such is actually located at the time of the decedent's death. Ill. The rule that. situs of intai domicile or residence of the ingible personal Property is the owner does not apply when the Property has a situs elsewhere. Vv. The test of situs of Property of a non-resident alien decedentis Not important at all because only the transmissions of Property located in the Philippines are Subject to estate tax. a. lonly .¢. 1, land It only b. land Il only @. 1, 1 MM, and Iv 18. Which is not a test of situs? a. Residence of the debtor in case of accounts receivable. b. Place of Storage in case of certificates of stocks. Cc. Location of depository bank in case of bank deposit. d. Place of exercise in case of copyright. 19. One of the following is not an intangible personal property situated in the Philippines: @. Shares, obligations or bonds issued by any corporation or Sociedad anonima organized or constituted in the Philippines in accordance with its law; 70Eereises — Estate Tee b. Shares, obligations or bonds issued by any foretot oe oe 85% of the business of which is located in the PT nee oe c. Shares, obligations or bonds issued by any foreign a hasine n if such shares, obligations or bonds have acquire SS situs in the Philippines; ‘ . d. Shares, obligations or bonds issued by a non-resident foreign corporation. i 20. Which of the following statements is correct? a. The estate tax ‘accrues as of the death of the decedent and the accrual of the tax is distinct from the obligation to pay the same. i 7 b. Estate taxation is governed by the statute in force. at the time the return is filed. c, Both “a” and “b” d. Neither “a” nor “b” 21. Which of the following item is considered situated outside the Philippines?. “te ak, a. Franchise in the name of the decedent which is exercised in the Philippines 4 . b. Share of stock holdings of decedent in a foreign corporation whose business is 90% done in the Philippines c. Bond certificate issued by a domestic corporation owned by a non- resident decedent d. Foreign currency deposited in bank outside the Philippines 22. Pedro died on April 13, 2018, leaving the following properties: Common stocks of Sunchamp Corporation (2,000 shares) - listed in the Philippine Stock Exchange (highest - P40; lowest - P39). Common stocks of AgriNurture Corporation (1,500 shares) - not listed in. the stock exchange. Cost - P50 per share; book value - P45 per share. Preferred stocks of Greenergy Inc. (3,000 shares) — not listed in the stock exchange. Cost - P70 per share; book value - P60 per share; par value — P50 per share Car (cost - P600,000; book value - P: R 400,000) ie 350,000; market value - Real properties (zonal value - P120,000; assessed value - P72, 000) The gross estate of Pedro is — a. P817,500 c. P824,000 b. P816,500 d. R846,500 71p Chapter Evercises — Estate Tage Use the following data for the next two (2) questions 23. Following are properties in the gross estate with their fair market values: House and lot, family home in Quezon City . 1,500,000 Bank deposit in the foreign branch of a domestic 500,000 bank Bank deposit in Makati branch of a foreign bank 300,000 Shares of stock issued by a domestic corporation 1,000,000 (certificate kept in Canada) Franchise exercised in Manila 800,000 Receivable, debtor from Mindanao 200,000 If the decedent was non-resident alien and there is reciprocity, property excluded from gross estate is valued at a. P2,800,000 : c. P2,300,000 b. P2,600,000 d. P2,000,000 24. If the decedent was non-resident alien and there is no reciprocity, the gross estate is valued at. a. P4,300,000 c. P3,500,000 b. P3,800,000 d.P3,200,000 25. A Filipino decedent residing in Hawaii during his lifetime, left the following properties: House & lot, USA P10,000,000 Mansion, Philippines 50,000,000 Cars, Philippines 2,000,000 Shares of stock, Singapore 5,000,000 Accounts receivable, USA 3,000,000 The gross estate of the decedent is a. P7Z0,000,000 c. Pl b. P67,000,000 d. Pé2 000 Goo Use the following data for the next two (2) questions The gross estate of a decedent included the following: Cost it Land & building, Philippines t P1,600,000, pia House and lot, UK 1,800,000 1,500,000 Personal properties, UK 1,000,000 “600/00 House and lot, Philippines 4,000,000 3, 5000 10 Shares of stocks, UK corp. Dee one Shares of stocks, domestic corp. 250/000 (certificate kept in UK) 1,000 Shares of stocks, domestic corp. (certificate kept in Phils.) 4 100,000 72r Chatter Evercises — Estate Tee Jf " 00,001 Franchise exercised in the Phils. * id Franchise exercised in UK 50.000 Receivables, debtor is from UK 5 0, 000 _ Receivables, debtor is from Phils. 26. If the decedent was a nonresident alien and his country. exon 2 Filipino citizen from estate tax, how much of his assel subject to reciprocity? a. P1,000,000 c. P600,000 b. P800,000 d. P350,000 onresident alien and assuming there is no 27. If the decedent was a n estate? reciprocity, how much is the gross a. P10,700,000 c. P6,100,000 b. P6,600,000 d. P5,850,000 Valuation of Estate 28. When the property is the tax shall be a. Fair market value at the time of donation : b.: Fair market value in the hands of the donor before the time of the donation. c. Fair market value at the time of death of the donor d. Cost when the property was acquired donated in contemplation of death, the basis of 29. As a tule, the basis of valuation of property in the gross estate is the fair market value prevailing at the time of decedent's death. In the case of domestic shares of stock not traded thru the stock exchange, the fair market value is a. The value appearing in the schedule of fixed values from the assessor's office b. Net realizable value c. Acquisition cost d. Issuer's book value. 30. Which of the following value is not used i h when v. ? - Fos market value at the time of death; ene . Fair market value at the time the estate return i t turn is filed; c. Zonal value when higher than the assessed rere case of 5 i property; |. Book value in ca: i oahenige: se of shares not traded in the stockoo - Chapter Exercises — Estate Tage 31. The fotlowi ; wing a decedent. ‘Seisomen's Pertain to rules on valuing the estate left by |. Values 2°! the incorrect statement, ‘tee de ayihe gross estate are based on values at the time of bis Tecodent’s death because it is at this time that the heir " Ron 'Y SUCCeeds to the inheritance. * princiyable are appraised on the basis of the amount of the wn ia et and interests due and unpaid at the time of death. b lon . &. BothI and Il 2 Only d. Neither | nor Il 32.A decedent left @ piece of land. The following data were available in connection with the Property. Netra valued, one (1) month before P2,500,000 al Zonal valite, time of death 2,000,000 FMV at the time of filing estate tax return 3,000,000 What would be the value of the piece of land in the gross estate? a. P3,000,000 c¢. P2,000,000 b. P2,500,000 d. cannot be determined Use the following data for the next four (4) questions: A decedent left 1,000 XYZ Corporation common shares. The shares were not traded in the stock exchange. The following data were made available: Capital stock, XYZ Corporation P10,000,000 Retained earnings 2,000,000 Outstanding shares 100,000 33. What was the value included the decedent's gross estate? “a. P100,000 c. P150,000 b. P120,000 d. PO 34. Assume that the shares were classified as preference shares, what was the value included the decedent's gross estate? a. P100,000 c. P150,000 b. P120,000 d. PO 35. Assume that the shares were traded in the stock exchange. Assume further that the quoted price at the time of death was P110 per share. What was the value included the decedent's gross estate? ‘a. P100,000 c. P120,000 b. P110,000 d. P150,000 7436. 37. Chapter Exercises — Estate Te Assume that the shares were traded in the stock exchange. However, the quoted price at the time of death was not determinable, Nonetheless, the highest and lowest quotations of the shares in the market were P140 and P80, respectively, what was the value included the decedent's gross estate? a. P100,000 c. P120,000 b. P110,000 d. P150,000 Decedent died in 2014 leaving a will which directed all real estate ‘owned by him not to be disposed or sold for a period of 10 years after his death, and ordered that the property be given to Juan Dela Cruz after 10 years. In 2014, the estate left by the decedent had a fair market value of P500,000. In 2018, the fair market value of the said estate increased by P4,500,000 and the BIR Commissioner assessed thereon estate tax based on assessed value of P4,000,000 in 2018. What would be the correct amount of the gross estate? a. P5,000,000 c. P4,500,000 b. P4,000,000 d. P500,000 INCLUSIONS IN THE GROSS ESTATE Decedent's Interest 38. 39, Decedent's Interest |. Refers to the extent of equity or ownership participation of the decedent on any property physically existing and present in the gross estate, whether or not in his possession, control or dominion. Il. Refers to the value of any interest, having value or capable of being valued or transferred, in property owned or possessed by the decedent at the time of his death. a. lonly c. Both | and Il b. lonly d. Neither | nor II Which of the following is not to be included in the gross estate of citizen decedent? a. Dividend income declared, but not yet actually received at date of death b. ae in partnership's profit earned immediately after date of att ¢. Rent income accrued before death but collected after death d. None of the above 75Chapter Exercises — Estate Tae Transfer in Contemplation of Death 40. Transfer in contemplation of death 1. Refers to property formerly owned by the decedent but were no longer owned by him at ‘the time of his death. “ F Il. Contemplates a situation where the transferor during his lifetime, transfers proj in contemplation of or intended to eobae t at or after his death. take effect in possession or enjoymen e a lll. Includes situations where the transferor retains for life the possession or enjoyment, or the right to the income from the property, or the right to designate the person who shall possess or enjoy the property or the income therefrom. IV. At the time of the decedent's death, thé decedent no longer ‘owned the property, but such property forms part of his gross estate for estate tax purposes. a. | and Il only c. All of the above b. I, land Ill only d. None of the above 41. Which among the following is correct? I. There may be properties which at the time of the decedent's death are not in the estate because they were transferred by i him during his lifetime. . , Il. The gross estate, for purposes of the estate tax, may exceed the actual value of his assets at the time of his death as it includes the value of transfers of property by him during his lifetime that partake of the nature of testamentary dispositions. a. lonly “c. Both | and Il b. ll only d. Neither I nor II 42. Transfers in contemplation of death have the following in common: 1. They are ostensible transfers, usually with the purpose to evade the estate tax. * Il._, They are extension of interests. ill, | If the transfers are in fact for a bona fide consideration, then they will not form part of the gross estate. a. land Il only c. All of the above b. Il and III only d. None of the above 43. The following are deemed transfers in contemplation of death, except a. While still alive, the decedent donated property where the donation will take effect at the time of his death. b. The decedent transferred a property in the regular course of the business operation. c. The decedent donated a proj with the conditi he/she will enjoy the fruits of aul le he/she is stave. 7 :rf Chapter Exvercises — Estate Ta, (t d. The decedent transferred a property to take effect after his/her death 44. Transfers in contemplation of death: " FMV upon FMV upon Consideration received transfer death Land P1,500,000 P14 ,500,000 P2,000,000 Shares of stock 100,000 50,000 150,000 Vintage car 50,000 80,000 100,000 Painting 250,000 400,000 500,000 The correct gross estate should be a. P120,000 cc. P300,000 b. P300,000 d. P350,000 n of rights and revocable Transfers" d by will or an agreement under which title to er for conservation or i Transfer with reservatio 45. An agreement create‘ property is passed to anoth refrom and ultimately thi income thet accordance with the directives of the creator as expressed in the governing instrument a. Estate c. Fiduciary b. Trust d. Beneficiary 46. All of the following statements are true, except a. Ina revocable transfer, the decedent during his lifetime may revoke, alter, amend, or terminate the terms of enjoyment or ownership of the property. b. A revocable transfer is always includible in the gross estate of the decédent-transferor. c. The power of the decedent-transferor to revoke terms may be exercised just once. tate of d. A revocable transfer shall be included in the gross es' the decedent-transferor even though the power to revoke was not exercised. 47. Which of the following is not included in the gross estate? a. Revocable transfer where the consideration is not sufficient b. Revocable transfer where the power of revocation was not exercised c. Transfer passing under general power of appoil 1 jintmen' d. Transfer for sufficient consideration eenChapter Exercises ~ Estate Ze 4 tion of P100,000. Fair fers and at the time of In the gross estate, 48. A revocable transfer was made for a considera market values of the property at the time of trans! death were P250,000 and P300,000, respectively. the value of the property was a. P100,000 c. P200,000 b. P250,000 d. Exempt Transfer under general power of appointment under general 49. Which of the following statements regarding transfer power of appointment and transfer under special power of appointment is correct? 1. There are three persons involved ul transferor, the first transferee, and the second trans first transferee is the decedent. ll. If authority is granted by the transferor to the first transferee to determine the person, who, upon the latter's death, would next possess or enjoy the property transferred, his authority emanates from a general power of appointment. lll. If the transferor himself had determined beforehand who upon the death of the first transferee, would next possess or enjoy the property, then the authority of the first transferee emanated from a special power of appointment. a. land ll only c. All of the above b. ILand Ill only d. None of the above nder this rule; the feree. The 50. Which is wrong? a. A power of appointment is the right to.designate the person or persons who shall succeed to the property of a prior decedent. b. A special power of appointment authorized the donor of the power to appoint only from among a designated class or group of persons including himself. c. The done-decedent of a special power of appoi holds the property in trust, hence, the Tronsth ohalcnet an part of the done-decedent's gross estate. d. None of the above 51. Which of the following statements is not true? a. A general power of appointment auth orizes th power to appoint any person to possess or enjoy neat b, A general power of appointme: Dee Carel the eo nt makes the donee of the c. A power of appointment is not always general.Chapter Exercises — Estate Tae J d. The appointed property passing under a gener ine don of appointment is not includible in the gross es decedent. 52. The power of” appointment may be exercised by the donor-decedent through the following modes 1. Bywill i ; Il. By deed to take effect in possession 0! his death. . 3g gigvoe-any potted ; as retained for his life 01 = By dood ana reference to his death or for any petiod which does not i t end before his death. a. lonly c. land Il only b. only d. I, land Ill fficient Consideration grins fer is not included in the gross estate?. 53. Which of the following transt t lude a. Transfer with reservation of certain rights b. Transfer for insufficient consideration rae c. Transfer for an adequate full consideration in money or money's worth d. Transfer in contemplation of death r enjoyment at or after 54, In determining whether the value of a property transferred onerously by a decedent during his lifetime should be included in his estate, ask yourself, “was'the consideration insufficient?” I. If yes, then add the excess of the FMV at the time of death over the consideration received. If no, then it was a bona fide sale. Exclude the property in determining the decedent's gross estate. a. lonly c. Both | and Il b. Il only d. Neither I nor II igor “if eens . = i cu ance proce stom 885 re sis gross estate edministrator or exSaatOr inevoeabe dca phate ne alien c. Anta woahable by any bi elas employees. urance taken out by a company for itsChapter Exercises — Estate Te , his executor Or i ed, 56. Amounts receivable by the estate of the deceas' aden administrator as an insurance under policy taken by the de upon a. b. c. d. 57. Whicl a my b. Revocable transfer where the power of revocation was not c. d. Proceeds of life insurance where the bene! his own life is: Excluded from the gross estate. ees Part of the gross estate whether the beneficiary is revocable or irrevocable. mo if Part of the gross estate if the beneficiary is revoca ce Part of the gross estate if the beneficiary is irrevocable. h of the following is not included in the gross estate? i Revocable transfer where the consideration is not sufficien exercised Proceeds of life insurance where the beneficiary designated is the estate and the designation is irrevocable } : ficiary designated is the mother and the designation is irrevocable. 58. Proceeds of life insurance where the beneficiary of the decédent is not his estate, executor or administrator is a. b. c. d. Part of gross estate regardless of whether the beneficiary is Part of gross income if the beneficiary is revocable ‘ Part of gross income regardless of whether the beneficiary is revocable or irrevocable Not part of gross estate if the beneficiary is irrevocable revocable or irrevocable 59. Proceeds of life insurance to the extent of the amount receivable by the estate of the deceased, his executor or administrator under policies 1 WV. taken out by the decedent upon his own life shall be Part of the gross estate irrespective of whether or not the insured retained the power of revocation Not part of the gross estate if the beneficiary is irrevocable. tM, Part of the gross income if the designation of the beneficiary is revocable Not part of the’ gross income irrespective of whether or not the insured retained the power of revocation a. land Il c. land IV b. Land Ill d. only!Exvercises — Estate Tae oe se of the decedent who died in a bus accident (Harurot 60. Ms. Bale received P2,500,000 broken down as follows: P900,000 From Habambuhay Life Insurance Company. A life insurance taken out by the decedent designating his wife as revocable beneficiary. P1,200,000 From Walang Hangganan Life Insurance Company taken out by the decedent designating his wife as irrevocable beneficiary. P400,000 From Harurot Transport Company (owner of the bus involved in the accident) where settlement was made outside court proceedings. The gross estate of the decedent shall include a. P900,000 c. P2,100,000 b. P1,200,000 d. P2,500,000 Claims against insolvent persons 61. Which of the following is not true regal persons? ‘a. The decedent's claim is deductible in full because the debtor's liabilities exceed his remaining assets. b. The decedent's claim must be included in full in the gross estate. c. The decedent's claim which cannot be collected is deductible according to the ratio of the debtor's assets to his liabilities. _ d. Claim against insolvent person is a claim against person whose assets are not sufficient to pay his liabilities. ding a claim against insolvent 62. Which is correct? |. In a claim against insolvent person, the insolvency of the debtor must be proven and not merely alleged. ll. It could be that the amount to be included as part of the gross estate in a claim against insolvent person is less than the full amount owed. a. lonly c. Both | and Il b. Honly d. Neither I nor Il 63. Which of the following is included in the income of the estate of a decedent? a. Income received by the estate of a deceased person during the period of administration or settlement of the estate. 81Chapter Exercises — Estate Tae b. Excess of Selling price over the appraised value placed upon the property at the time of death, where the property was sold after the settlement of the estate. ¢. Appreciation in the value of property passed to the executor or administrator upon death of decedent. d. Delivery of Property in kind to legatee or devisee. 64. One of the items in the gross estate of a decedent is a claim against an insolvent person amounting to P500,000. The insolvent debtor can still pay P100,000 out of the P500,000. How much will be included in and deducted from the gross estate? Gross estate Deduction a. P100,000 P100,000 b.- P500,000 P100,000 c. P500,000 P400,000 d. None None EXCLUSIONS FROM THE GROSS ESTATE 65. The following are transactions exempt from transfer tax except: a. Transmission from the first heir or donee in favor of another beneficiary in accordance with the desire of the predecessor b. transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the fideicommisary c. The merger of usufruct in the owner of ther naked title d. All bequest, devices, legacies, or transfers to social welfare, cultural and charitable institutions 66. Which of the following exempt transmissions will still require inclusion of the property in the gross estate? a. Merger of the usufruct in the owner the naked title; b. Legacy to a charitable institutions whose administrative expenses did not exceed 30% of the legacy; c. Transfer from a first heir to a second heir designated by the decedent; d. Death benefits under the GSIS and GSIS. 87. Following are exclusion from gross estate, except: a. Transfer in contemplation of death b. Transfer as a result of which there is merger of usufruct in the owner of the naked title; c. Amount received from SSS or GSIS. d. All of the above. 82Chapter Exercises — Estate Lae 4 c 68. One of the following is included in the gross estate of a nonresident alien decedent: ‘a. Wholly uncollectible claims against 2 de debtor resides outside the Philippines. b. Partially collectible claims against an insolvent person who resides in Manila, the country of the nonresident alien decedent does not impose transfer taxes of any kind. c. Proceeds of life insurance ‘of the decedent where the decedent's estate was designated as irrevocable beneficiary, the policy was procured in Manila. d. Personal property situated in the Philippines donated by the decedent before he died to a son on account of the son's marriage. lebtor who absconded, transfer in contemplation of death? been fighting for his life since he was a terminal illness. Accepting his fate, he sought the assistance of Atty. Lho Yer, and made his will. b. Mr. Matibay celebrated his 101° birthday. Feeling that death is not far, he transferred all his properties to Pedro and Juan. c. Both “a” and “b” d. Neither “a” nor “b” 69. Which of the following is 2 a. Mhalapit Nha has diagnosed to have 70. Which ‘of the following is a transfer under special power of appointment? I. Earl transfers his property in trust for his son, Gabry and then in trust for anybody whom Gabry may, by will, appoint or designate. IL. Mr. Byahero frequently travels due to the nature of his profession. He thinks that he is not spared from meeting accidents considering the rampant occurrence of accidents these days. He decided to execute his last will and testament ‘i appr his properties to his children. é eorgia designated his special friend, E. Garcia a: i of an insurance which he took upon his own life. re . Hed c. All of the above . Ionly : d. None of the above pareinietrative Provisions - Under which of the following situati tbe fetus TRANG an estate tax return is required a. Transfers which are subject to estate tax.Chaser Exercises — Estate Tae b ae aate Consists of registered or registrable properties for pecken a ee from the BIR is required as a condition for the transfe ip. c. Both “a” and “b” erotownership d. Neither.“a” nor “b” 72, Who shall file the estate tax return? a. Executor, or administrator, or any of the legal heirs b. Creditors of the decedent c. Personal secretary of the decedent d. Debtors of the decedent 73. Statement 1: The estate tax imposed under the Tax Code shall be paid by the executor or administrator before the delivery of the distributive share in the inheritance to any heir or beneficiary. Statement 2: The executor or administrator of an estate has the primary obligation to pay the estate tax but the heir or beneficiary has subsidiary liability for paying that portion of the estate corresponding to his distributive share in the value of the total net estate. a. Statements 1 & 2 are false b. Statement 1 is true but statement 2 is false c. Statement 1 is false but statement 2 is true d. Statements 1 and 2 are true 74. Statement 1: The Commissioner or any of the Revenue Officer authorized by him pursuant to the tax code shall have the authority to grant, in meritorious cases, a reasonable extension not exceeding thirty (30) days for filing the return. Statement 2: The application for the extension of time to file the estate tax return must be filed with the RDO where the estate is required to secure its TIN and file tax return of the estate. a. Statements 1 & 2 are false Statement 1 is true but statement 2 is false Statement 1 is false but statement 2 is true b. c. ‘d. Statements 1 and 2 are true