COLLEGE OF BUSINESS AND ACCOUNTING

QUIZZER - PROBLEMS

TAXATION
ESTATE TAX
PROBLEMS Estate Tax

Business & Transfer Tax

 PROBLEMS Estate Tax

PROBLEMS
Gross Estate
1. In the last will and testament, a decedent provided that the properties he leaves should not
be sold or disposed of for ten years following his death. He had real estate in his gross estate
as follows:
At the time of death - zonal value of P500,000
At the end of ten years after death:
Fair market value P2,500,000
Declared value in the estate tax return P1,500,000
Zonal value P3,000,000
What value shall be used for purposes of estate tax?
a. P3,000,000; c. P2,500,000;
b. P1,500,000; d. P 500,000. Reyes©2013

2 Based on the following data, how much is the value of the decedent's interest if he died
March 31, 2015?
Cash in bank, joint account of the decedent and his wife P254,000
Interest on the bank deposit (Jan 1 - June 30, 2015) 9,000
Dividends from a domestic corporation: 60,000
Date of declaration - February 5, 2015
Date of record - April 15, 2015
Date of payment - May 15, 2015
Share in 2014 net profit of partnership,
distributed to partners on April 15 9,000
Winnings in lotto (Bet, March 30; April 1, 2014 draw) 500,000
a. P383,750 c. P145,000
b. 138,000 d. 388,250 Ampongan©2014

3 Mamo died leaving the following properties:

Stocks of Cruz Corporation (2,000 shares) - listed in the Phisex (highest - P40;
lowest - P39)
Common Stocks of Hemo Corporation (1,500 shares) - not listed in the stock
exchange. Cost - P50 per share; book value - P45 per share.
Car (cost - P600.000; book value - P350,000; market value - P400.000) Real
properties (zonal value - P120,000; assessor's value - P72.000)
The gross estate of Mamo is
a. P618,500 c. P624,000
b. 867,500 d. 666,500 Ampongan©2014

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4 On the belief that he was about to die of a liver cancer Bongbong sold to Bengbeng
a property valued at P1,100,000 for the same amount. Six months later, Bongbong died of
a car accident. At that time, the property had already a value of P1,300,000. For
Philippine estate tax purposes, the amount includible in the gross estate of Bongbong
is
a. P1,100,000 c. P200,000
b. 1,300,000 d. None Ampongan©2014

5 When Albino was informed by his physician that he was about to die of cancer, he
sold his properties:
Market value Market value
Date of sale Selling price Date of death
Land P2,500,000 P1,500,000 P2,700,000
Jewelries 500,000 300,000 300,000
Shares of stocks 200,000 220,000 250,000
Transfer under limited power
of appointment 1,000,000 600,000 800,000
From among the data given, how much should be included in the gross estate of Albino
upon his death?
a. P1,200,000 c. P1,430,000
b. 1,230,000 d. 1,400,000 Ampongan©2014

6 Decedent Jose Llamsldo. has the following data:

Value of the property at the time of sale P1,200,000
Value of consideration when sold 1,000,000
Value of property at the time of death 1,500,000
The amount includible in the gross estate is
a. P300,000 c. P200,000
b. 500,000 d. 1,500,000 Ampongan©2014

7 Tong Siok, a Chinese billionaire and a Canadian resident, died and left assets in China
valued at P80 billion and in the Philippines assets valued at P20 billion. For Philippine
estate tax purposes the allowable deductions for expenses, losses, indebtedness,
and taxes, property previously taxed, transfers for public use, and the share of his
surviving spouse in their conjugal partnership amounted to P15 billion. Tong's gross estate
for Philippine estate tax purposes is
a. P20 billion c. P100 billion
b. 5 billion d. 85 billion Ampongan©2014

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Exclusive & Conjugal

Pepe married Pilar on January 20, 2015 without any prior agreement in writing as to the system
of property relationship that will govern their properties when they are already married. Pepe
brought into the marriage an old Spanish house in Vigan, llocos Sur worth P2,000,000 while Pilar
brought with her a 200 hectare pineapple plantation in Bukidnon which she acquired while she
was still single.

As a consequence of her marriage, she received as gift from her parents another 200 hectare
banana plantation in Davao City on January 31, 2015.

Twelve (12) years thereafter Pilar died of a car accident. The joint account deposit of the spouses
with Metrobank was P5,000,000.

She was insured with an insurance company for P2,500,000 with Pepe as the appointed
irrevocable beneficiary.

For numbers 8 to 11, classify the properties identified above by choosing your answer from the
options below: Ampongan©2014
Options:
a. Exclusive property of Pepe
b. Exclusive property of Pilar
c. Conjugal property of Pepe and Pilar
d. Community property of Pepe and Pilar

8 The old Spanish house in llocos Sur

9 The banana plantation in Davao City
10 The income of the banana plantation

11 The deposit with Metrobank

12 The proceeds of the insurance policy is -

a. Excluded from gross estate c. Deductible from gross estate
b. Included in the gross estate d. None of the above

13 Ivan and Sarah are married. Ivan inherited a residential lot valued at
P1,000,000 from his parents. Out of the conjugal funds, the spouses constructed
a house on the land which cost them P2,000,000. Who owns the land immediately upon
the death of either the wife or the husband?

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How about the residential house?

Residential lot Residential house
a. Conjugal Conjugal
b. Exclusive of Ivan Conjugal
c. Exclusive of Ivan Exclusive of Ivan
d. Conjugal Exclusive of Ivan Ampongan©2014

14 Rufino is engaged in the business of lending money at a usurious rate of interest.

On September 30, 2014, he lent P100,000 to Pepito payable in one (1) year at 5%
interest per month. On December 10, 2015 he got married to V. Gomez. Based on the
above data, how much is the exclusive property of Rufino? How about the conjugal
property?
Exclusive Conjugal
a. P100,000 P60,000
b. 100,000 60,000
c. 115,000 45,000
d. 160,000 None Ampongan©2014

Recoverable Transfers
15 . A revocable transfer, with a consideration received:

Consideration received P200,000

Fair market value of property at the time of transfer 300,000
Fair market value of property at the time of death 250,000

Value to include in the gross estate:

a. P300,000; c. P100,000;
b. P250,000; d. P 50,000. Reyes©2013

16 . A revocable transfer with the following circumstances: Fair market value at the time of
transfer-P300,000; fair market value at the time of deathP180,000; consideration received
when transferred - P200,000:
a. Shall be included in the gross estate at P180,000;
b. Shall be included in the gross estate at P200,000;
c. Shall be included in the gross estate at P100,000;
d. Shall not be included in the gross estate. Reyes©2013

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17 . Fair market value Consideration

At transfer At death Received
Revocable transfers:
Land P4,000,000 P5,200,000 P3,000,000
Car 1,000,000 0 600,000
Shares of stock 500,000 300,000 400,000
Bonds 200,000 200,000 250,000
Transfer under power of appointment:
Land and building, general power 2,000,000 1,800,000 1,000,000
Farm land, limited power 1,500,000 500,000 1,200,000
The gross estate?
a. P 800,000; c. P2,200,000;
b. P3,000,000; d. Some other amount. Reyes©2013

Resident Decedent
18 . The decedent was a resident decedent.
Properties left, at fair market values, were:
Family home (land and residential house) in the Philippines P2,000,000
Piece of land with vacation house in Malaysia 1,500,000
Farm land in the Philippines, with a mortgage in favor of the
Philippine National Bank for P600.000 1,000,000
Shares of stock:
Of a domestic corporation deposited in a bank safety
deposit box in Malaysia 200,000
Of a foreign corporation the entire business of which is
in the Philippines, deposited in a bank safety deposit
box in Malaysia 100,000
Receivable from a friend who has no property whatsoever 50,000
Receivables under insurance policies:
Life insurance policy, taken by the decedent on his own
life, with his estate as revocable beneficiary 500,000
Life insurance policy, taken by the decedent on his own
life, with a daughter as revocable beneficiary 400,000
Life insurance policy, taken by the decedent on his own
life, with a son as irrevocable beneficiary 300,000
Life insurance (group) taken by the employer of the
decedent, with the estate as revocable beneficiary 50,000
Property insurance, for loss of property 250,000
Accident insurance, for injury sustained 20,000

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The gross estate?

a. P5,920,000; c. P4,920,000;
b. P5,020,000; d. P6,020,000. Reyes©2013

Non-Resident Alien
19 . The decedent was a citizen of, and residing in, X Foreign Country, who left the following
properties (at fair market values):
Land in the Philippines P1,000,000
Land and building in X Foreign Country 2,000,000
Car in the Philippines 600,000
Shares of stock of a domestic corporation, with the certificate
in a foreign bank 700,000
Shares of stock of A Co., foreign corporation (with no
business in the Philippines) 200,000
Certificates of shares of stock, in a foreign bank:
Shares of stock of B Co., foreign corporation (90% of its
business is in the Philippines) 500,000
Shares of stock of C Co., foreign corporation (85% of its
business is in the Philippines) 400,000
X Foreign Country has no death tax on a succession.
The gross estate in the Philippines?
a. P1,600,000; c. P 600,000;
b. P0; d. P1,000,000. Reyes©2013

20 . A citizen of Malaysia, residing in Kuala Lampur, with properties in the Malaysia and the
Philippines, had the following data on properties and rights at the time of his death and their
values:
Real estate, Malaysia P1,000,000
Real estate, Philippines 2,000,000
Shares of stock of a domestic corporation 200,000
Shares of stock of a Malaysian corporation 300,000
Shares of stock of a Indonesian corporation, doing
business in the Philippines only 100,000
Philippine peso deposit in BDO bank 500,000
Receivable under a life insurance with an insurance
company doing business in Malaysia 250,000
The gross estate that should be reported in the Philippines is:
a. P4,350,000; c. P4,000,000;
b. P3,700,000; d. P2,800,000. Reyes©2013

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Items 21 through 23 are based on the following information: Ampongan©2014

Dina Mathay, filipina, died in the United States with the following properties:
Condominium unit in New York City P2,000,000
Shares of stock in a foreign corporation 600,000
Interest in a partnership, domestic 475,000
Bank deposit in a New York City bank 150,000
Car in Cebu, donated inter vivos 5 years ago to her son 500,000

21 Which property should be included in the gross estate?

a. All the above properties.
b. Only the properties located in the Philippines.
c. All the above properties except the car.
d. The properties located in the Philippines except the intangibles.

22 If the. decedent was a nonresident alien (with reciprocity), how much is the gross
estate?
a. P3,725,000 c. P500,000
b. 975,000 d. None

23 If the decedent was a nonresident alien (no reciprocity), how much is the gross estate?
a. P3,725,000 c. P500,000
b. 975,000 d. 475,000

Comprehensive
24 . A citizen and resident of the Philippines died leaving:
Cash on hand and in banks (of which P150,000 was provi-
ded in the will to be given to a charitable institution) P1,000,000

Real property in the Philippines:

Assessed value per assessment rolls of the city 100,000
Zonal value per Bureau of Internal Revenue 500,000
Selling price of adjacent piece of land the day pre-
ceding the date of death 600,000
Real property in Malaysia, fair market value 450,000
Car in the Philippines, with a mortgage of P200,000 400,000
Receivables:
From a friend from whom there is no possibility of recovery 20,000
From a sister whose ratio of assets to liabilities is 1:3 15,000

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Amounts under insurance contracts:

Receivable under life insurance, with the father as revocable
beneficiary 250,000
Receivable under life issuance, with the mother as irrevo-
cable beneficiary 200,000
Receivable under accident insurance, for accident that
happened one year ago 50,000
Receivable under property insurance, for damage caused
to his car 12,000

Revocable transfers:
To sister (fair market value at the time of transfer was
P40,000 and consideration received was P10,000 50,000
To father (fair market value at the time of transfer was
P30,000 and consideration received was P30,000) 60,000
To mother (fair market value was P40,000 and consi-
deration received was P50,000) 70,000

The gross estate is:

a. P2,737,000; c. P2,627,000;
b. P2,807,000; d. P1,350,000. Reyes©2013

Funeral Expenses
25 The deductible amount of funeral expense is P200,000 if the actual expenses and the
gross estate amount to
Actual Gross estate
a. 195,000 P4,500,000 c. Both A and B
b. 210,000 4,300,000 d. Neither A nor B Ampongan©2014

Comprehensive
26 How much is the deductible amount of funeral expenses under each of the following
independent cases?
Actual Gross estate
Case1 P180,000 P4,000,000
Case 2 140,000 2,900.000
Case 3 207,500 4,250,000

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Case 1 Case 2 Case 3

a. P180,000 P145,000 P207,500
b. 180,000 140,000 200,000
c. 200,000 140,000 200,000
d. 200,000 145,000 212,500 Ampongan©2014

Questions 27 & 28 are based on the following De Vera©2014

The gross estate of a non-resident alien is P2,000,000, 75% of which is form abroad. The actual
funeral expenses totalled to P80,000, % of which was paid by his employer.

27 The deductible funeral expense is:

a. P60,000 c. P 5,000
b. P15,000 d. P 6,250

28 Based on the preceding number, but the decedent is a non-resident citizen, the deductible
funeral expenses is:
a. P25,000 c. P15,000
b. P60,000 d. P80,000

Vanishing Deduction
29 Val Hailada died on November 20, 2015. Some of the properties he left are the following:
Market Value
Mode of Date of Date Death of Val
Assets Acquisition Acquisition Acquired Hailada
Land Donation 7-3-11 P500,000 P350,000
Car Purchase 10-2-14 800,000 980,000

Other information:
1. The gross estate of the decedent amounts to P3,000,000.
2. The land was mortgaged for P50,000 when it was acquired and Val Hailada paid the
same before he died.
3. The allowable deductions total P125,000, which includes medical expenses of
P30.000. ft excludes bequest to a charitable institution in the amount of P50.000.
The vanishing deduction is
a. P58,100 c. P67,783
b. 57,500 d. 67,083 Ampongan©2014

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30 Pepe died on August 15, 2015. His data are as follows:

Community properties ......................................................................P 2,000,000
Exclusive properties of Pepe ............................................................... 3,000,000
Exclusive properties of Pepe's wife..................................................... 1,000,000
Deductions (except standard deduction) ............................................... 700,000

Included in the P3,000,000 is a parcel of land worth P200.000 and a car worth P400.000,
respectively.

The land was donated to him by his uncle on May 4, 2013 with a value of P150,000. At the
time of the donation, the land was mortgaged for P 30,000 which was paid by his uncle.
The car had a value of P500.000 when it was inherited by Pepe from his mother 2 1/2 years
ago an mortgaged for P50,000 which was paid by Pepe before he died.
The vanishing deduction on the estate of Pepe is
a. P258,000 c. P283,800
b. 262,520 d. None Ampongan©2014

31 A decedent died single, leaving a family home which consists of a piece of land that he inherited
3 – 1/2 years ago (with a value at the time of P600,000) with a fair value of P800,000 at the
time of his death, and a house thereon which he built at a cost of P650,000, and a fair market
value at the time of his death of P450,000. Other properties in his gross estate have a fair
market value of P550,000. Unpaid obligations at the time of his death amounted to P300,000.
The vanishing deduction is:
a. 200,000 c. 40,000
b. 500,000 d. 225,000 De Vera©2014

Family Home
32 The decedent, married, died leaving a family home valued at P1,500,000, composed of
the house (conjugal property) and the lot (exclusive property).
Seventy percent (70%) of the value of the family home pertains to the house, while thirty
percent (30%) pertains to the lot.
The amount deductible from gross estate is
a. P1,500,000 c. P975,000
b. 1,000,000 d. 525,000 Ampongan©2014

33 Decedent died leaving a family home composed of the following; House, conjugal
property worth P800.000, and the land in which he exclusively owned valued at P400.000.
He also owns a vacation house in Baguio worth P700.000.

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The deductible amount of family home

a. P800.000 c. P1,900,000
b. 1,200,000 d. 1,000,000 Ampongan©2014

Deductions from Gross Estate

34. The following expenses and obligations were left by Boning upon his death:
Notes payable, not notarized .................................................................. P30,000
Loans payable, PNB ............................................................................... 300,000
Accounts receivable, debtor not insolvent ................................................ 40,000
Accounts receivable, debtor is insolvent ................................................... 60,000
Death benefits from employer ................................................................. 200,000
Mortgage paid ........................................................................................... 50,000
Income taxes on income of decedent's estate ............................................ 7,500
The total amount deductible from gross estate is
a. P600,000 c. P1,560,000
b. 550,000 d. 560,000 Ampongan©2014

35. Liza died on July 5, 2014 leaving the following data on deductions:
Unpaid 2013 real estate taxes ............................................................... P40,000
Unpaid 2014 real property taxes .............................................................. 40,000
Income tax on income from Jan. 1 to July 4, 2014 .................................. 35,000
Losses from fire that occurred on July 3 (60% was
compensated by insurance) ............................................................ 800,000
Casualty loss on September, 2014 ........................................................ 450,000
Building destroyed by earthquake on Feb. 2014 ................................ 1,300,000
Based on the above data, the amount deductible from gross estate is
a. P1,365,000 c. P845,000
b. 565,000 d. 525,000 Ampongan©2014

Taxable Net Estate

36. Decedent, married in 1986. died leaving the following:
Real properties ................................................................................... P3,000,000
Family house ........................................................................................ 1,000,000
Other real properties, exclusive of decedent ....................................... 2,000,000
Family lot, exclusive of decedent ............................................................ 400,000
Funeral expenses ................................................................................... 275,000
Medical expenses ................................................................................... 650,000
Taxes and losses ................................................................................. 1,300,000

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The net taxable estate is -

a. P2,450,000 c. P2,250,000
b. 1,150,000 d. 1,250,000 Ampongan©2014

37. Bong, single and a resident citizen, died with properties constituting his gross estate of
P4,000,000. Actual funeral expenses amounted to P150,000 and other charges
against the estate amounted to P210,000. The net taxable estate is
a. P3,640,000 c. P3,740,000
b. 2,640,000 d. 2,590,000 Ampongan©2014

38. Mr. A, non-resident Japanese, died leaving the following: De Vera©2014

Common properties
Exclusive properties, Philippines P560,000
Conjugal properties, Philippines 420,000
Conjugal properties, Abroad 1,820,000
Deduction claimed:
Funeral expenses 100,000
Judicial expenses 100,000
Unpaid expenses 150,000
Losses: occuring 3 months after death due to fire 50,000
Donation mortis causa to Makati City Hall 180,000
Family Home (included above) 2,000,000
Standard Deduction 1,000,000

The taxable net estate is:

a. P 210,000 c. P1,190,000
b. P 520,000 d. P2,100,000

Reciprocity
39. Ta Pue, a nonresident alien, single, died leaving the following properties and deductions
Shares , domestic corporation P500,000
Shares, foreign corporation 500,000
Tangible personal property 1,500,000
Deductible expenses 500,000

Assuming there is no reciprocity, the estate tax payable is -

a. P1,600,000 c. P103,000
b. 1,500,000 d. 95,000 Ampongan©2014

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40. Che Cua, a nonresident alien, died leaving the following assets -
Domestic shares P1,000,000
Foreign shares 3,000,000
Tangible personal property, Philippines 6,000,000
Expenses (deductible) 1,200,000
Note - The country where she is a citizen and resident does not impose transfer tax
on transmission of intangibles of Filipinos.

The net estate subject to tax in the Philippines is -

a. 5,280,000 c. 4,800,000
b. 3,800,000 d. 4,280,000 Ampongan©2014

Division of Estate
41. H and W are married. They have legitimate children A and B. H died, survived by W, A and
B. His estate of P12,000,000 should be divided as follows:
W A B Free portion
a. P3M P4.5M P4.5M None
b. 3M 3M 3M P3M
c. None 6M 6M None
d. 2.25 M 4.5 M -4.5M 2.25 M Ampongan©2014

Comprehensive
Gross Estate & Funeral
42. Dan Olive died. The amount of his funeral expenses is covered by a memorial plan up to
P120,000. Other actual funeral expenses amounted to P75.000. The amount of his
tangible properties upon death was P3,700,000.

How much is the gross estate? How about the funeral expenses?
Gross Estate Funeral Expenses
a. P3,700,000 P70,000
b. 3,700,000 195,000
c. 3,820,000 191,000
d. 3,820,000 195,000 Ampongan©2014

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Numbers 43 and 44 and based on the following information: Ampongan©2014

Mhar Dehrer, a German residing in Munich, Germany had the following data at the time of his
death:
Expenses:
Funeral expenses incurred in the Philippines P25,000
Funeral expenses incurred abroad ?
Accountant's fees and audit fees 5,000
Medical expenses-2 months before decedents death 50,000
Unpaid mortgage on the property located abroad 40,000
Claims against the estate 25,000
Properties:
Real property located in Osaka, Japan P2,400,000
Lot situated in Davao City 1,000,000
Shares of stock in Japanese Corporation 600,000
Other tangible personal properties – Phils 1,000,000
43 The gross estate on the estate of Mhar Dehrer is -
a. P5,000,000 c. P2,000,000
b. 1,000,000 d. 2,600,000

44 In the Number above, if the total deductions allowed amount to P60.000, how much is the
amount of funeral expenses abroad?
a. P100,000 c. P145,000
b. 80,000 d. 55,000

Gross Estate & Claims against insolvent person

Questions 45 & 46 are based on the following Ampongan©2014
45 Amount of claim against the debtor ................................................................ P50,000
Total assets of the debtor .............................................................................. 500,000
Total liabilities of the debtor ................................................................................. 800,000
How much should be included in the gross estate of the decedent?
a. P50,000 c. P500,000
b. 800,000 d. 300,000

46 The deductible claim against insolvent person is -

a. P50,000 c. P300,000
b. 31,250 d. 18,750

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Vanishing Deduction & Net Taxable Estate

Questions 47 & 48 are based on the following Ampongan©2014
47 Elopre, married June 5, 2013 died on April 29, 2015 with the following data:
Gross estate - community property, P3,000,000; exclusive, P2,000,000. Said amount
includes a land which he received as gift from his father a month before the marriage,
valued at P540,000. His father mortgaged the land for P20,000 which was paid by
Elopre. Elopre mortgaged also said land for P50.000 but was able to pay only P20.000
until his death. Expenses claimed (excluding the unpaid mortgage) amounted to P170,000.

The vanishing deduction is -

a. P388,800 c. P384,000
b. None d. 380,000

48 In the number above, the net taxable estate is -

a. P2,016,000 c. P3,416,000
b. 1,208,000 d. 2,208,000

Medical & Judicial Expense

49 Paid medical expenses for confinement at Tigok Hospital
from May 15-23, 2015 (P20.000 still unpaid) P80,000
Hospitalization expenses (June 3-6, 2013) 21,500

Expenses for the settlement of the estate:

Acceptance fee, June 28, 2015 20,000
Court fees and other expenses, July 16, 2015 12,000
Appearance of lawyer in court, September 5, 2015 2,000
Appearance of lawyer in court, November 29, 2015 2,000

Based on the data given above, how much is the deductible medical and judicial expenses
if the decedent died May 23, 2015?
Medical expenses Judicial expenses
a. P80,000 P36,000
b. 100,000 36,000
c. ,80,000 34,000
d. 100,000 34,000 Ampongan©2014

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Gross Estate, Family Home, Vanishing Deduction

Questions 50 thru 52 are based on the following Ampongan©2014
50 Mama Mathay, widow, a citizen of the Philippines residing in Vancouver, Canada, died
on December 20, 2015 leaving the following properties:
Real property (inherited from her husband on May 3, P2,960,000
2014 valued then at P2,600,000)
Personal properties in Canada 1,300,000
Real and personal properties in the Philippines 670,000
Family home in Canada 2,500,000
Obligations:
Funeral expenses incurred in Canada 250,000
Other deductible expenses 650,000
The gross estate of Mama Mathay is -
a. P7,430,000 c. P6,760,000
b. 7,070,000 d. 670,000

51 The deduction for family home is -

a. P2.500,000 c. P1,250,000
b. 1,000,000 d. None

52 The vanishing deduction is -

a. P1,786,056.52 c. P1,773,708.20
b. 1,772,059.20 d. None

Conjugal Partnership & Absolute Community

Questions 53 & 54 are based on the following: Reyes©2013
The decedent was married at the time of death.
Cash owned by the decedent before the marriage P5,000,000
Real property inherited by the decedent during the marriage 6,000,000
Personal property received by the wife as gift before the
marriage 400,000
Property acquired by the decedent with cash owned before
the marriage 600,000
Clothes of the decedent, purchased with the exclusive
money of the wife 500,000
Jewelry purchased with the exclusive cash of the decedent 1,000,000
Property unidentified when and by whom acquired 1,200,000
Cash - income during the marriage 2,000,000

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53 . Exclusive gross estate if the spouses were under the system of conjugal partnership of gains?
a. P11,600,000; c. P 6,600,000;
b. P10,600,000; d. P12,600,000.

54 . Community gross estate if the spouses were under the system of absolute community of
property?
a. P10,200,000 c. P9,200,000:
b. P 8,200,000; d. P7,200,000.

Items 55 through 58 are based on the following data: Ampongan©2014

Angelo, married to Angel 3 years ago, died leaving the following properties:

 Condo Unit at West Tower Condominium, Makati City, acquired by

him and his wife..............................................................................................2,500,000
 Apartment unit in Vancouver, Canada inherited from his parents who
died 2 % years ago ....................................................................................... 3,500,000
 Volvo car registered in Canada, donated to him by his mother
four (4) years ago ......................................................................................... 2,000,000
 Toyota Fortuner in the Philippines, purchased by Angelo out of his
exclusive property ......................................................................................... 1,200,000
 Jewelry in the Philippines, inherited last year by his wife, Angel,
from her mother ............................................................................................... 550,000
 Cash in bank - Banco de Oro; 50% was earned by Angelo before marriage;
50% was earned by the spouses..................................................................... 840,000
 Interest on bank deposit (net of withholding tax)................................................. 8,000
 Interest in a domestic partnership, acquired by Angel before marriage . 300,000
 investment with Acer Corp., foreign corporation, 85.5% of business is
in the Philippines .......................................................................................... 1,000,000
 Dividends with Acer Corporation, date of record was made after death
of Angelo ........................................................................................................... 45,000
 Investment with Filipinas Company, domestic, ............................................... 25,000
 shares, traded in the stock exchange (highest: P23.00; lowest: P22.83)
Dividends from Filipinas Company, date of record, one month before
Angelo's death (gross of dividends tax) .........................................................7,500
 Receivable on a foreign insurance company for an accident insurance
suffered six months before death .................................................................50,000
 Proceeds of a life insurance taken by the employer corporation of
Angelo on his life ........................................................................................200,000

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 Receivable on life insurance taken by Angelo on his own life appointing

his estate as the irrevocable beneficiary; common funds of the spouses
were used in paying, the insurance premium................................................ 150,000

55 The gross estate if Angelo was a non-resident citizen under the absolute
community of property regime
a. 12,127,625 c. 6,577,625
b. 11,827,625 d. 3,700,000

56 The gross estate if Angelo was a resident alien under the conjugal partnership of gains
a. 10,127,625 c. 3,700,000
b. 11,827,625 d. 6,577,625

57 The gross estate if Angelo was a non-resident alien without reciprocity under the
absolute community of property regime
a. 10,127,625 c. 3,700,000
b. 11,827,625 d. 6,577,625

58 The gross estate if Angelo was a non-resident alien, with reciprocity, under the conjugal
partnership of gains
a. P10,127,625 c. P6,577,625
b. 11,827,625 d. 3,700,000

Numbers 59 through 62 are based on the following information Ampongan©2014

Aldo died leaving the following properties:

a. Real property in Baguio City, brought into the marriage ............................... P300,000
b. Income of real property in Baguio ..................................................................... 60,000
c. Real property in Cebu City, brought into marriage by wife ............................. 240,000
d. Income of real property in Cebu City ................................................................. 25,000
e. House in Pili, Camarines Sur, acquired by Aldo during marriage ................... 375,000
f. income of house in Pili ....................................................................................... 50,000
g. Real property in Iloilo City, earned by wife during the marriage ..................... 225,000
h. Income of real property in Iloilo City .................................................................. 80,000
i. Tangible personal properties in Manila, inherited by Aldo during marriage .... 500,000
j. income of properties in Manila ......................................................................... 175,000
k. Intangible personal properties in Singapore, inherited by wife during
marriage ........................................................................................................... 430,000
i. Income of intangibles in Singapore ........................................................................ 85,000

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m. Tangible personal property in Dagupan City, inherited by Aldo before

marriage ............................................................................................................. 20,000
n. Income of property in Dagupan City .................................................................. 10,000
o. Intangible personal property in Canada, inherited by wife
before marriage ............................................................................................... 350,000
p. Income of personal property in Canada .......................................................... 85,000

59 Under the conjugal partnership of gains, the total conjugal properties of the spouses
is:
a. P1,170.000 c. P1,990,000
b. 1,820,000 d. 2,495,000

60 Under conjugal partnership of gains, the gross estate of Aldo is

a. P1,170,000 c. P1,990,000
b. 2,495,000 d. 1,820,000

61 Under absolute community of property regime, the total community property of the
spouses is:
a. P1,820,000 c. P2,495,000
b. 1,990,000 d. 1,170,000
62 Under absolute community of property regime, the gross estate of Aldo is:
a. P1,170,000 c. P1,990,000
b. 2,495,000 d. 1,820,000
Items 63 to 67 are based on the following information: Ampongan©2014
Decedent died leaving a family home composed of the following: House, owned in common by the
spouses worth P1,500,000, and the land in which he exclusively owned valued at
P400,000. At the time the house was constructed, it had a cost of P300.000. They also
own a vacation house in Baguio worth P1,200,000.
63 If under conjugal partnership, after its liquidation the family home is classified as a-
a. Conjugal property
b. Exclusive property of the decedent
c. Exclusive property of the surviving spouse
d. Partly conjugal and partly exclusive of the decedent

64 Under conjugal partnership, the amount of conjugal portion of the family home after
liquidation is
a. P1,900,000 c. P3,100,000
b. 1,600,000 d. 2,800,000

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65 Before liquidation, the deductible amount of family home is

a. P1,000,000 c. P800,000
b 950,000 d. 1,600,000

66 Under absolute community of property regime, the value of the family home is
a. P1,900,000 c. P1,500,000
b. 1,600,000 d. 3,100,000

67 Under absolute community of property regime, the deductible amount of family home is
a. P1,000,000 c. P1,900,000
b. 1,500,000 d. 1,150,000

Questions 68 & 69 are based on the following De Vera©2014

Mr. Jose, Filipino, married died leaving the following estate:
Car acquired before marriage by Mr. Jose - P 300,000
Car acquired before marriage by Mrs. Jose - P 450,000
House and lot acquired during marriage P1,500,000
Jewelries of Mrs. Jose, acquired before marriage 100,000
Personal properties inherited by Mr. Jose during marriage 250,000
Benefits from SSS 50,000
Retirement benefits from a private firm 150,000
Proceeds of group insurance taken by his employer 75,000
Land inherited by the wife during marriage 1,000,000
Income earned from the land inherited
By wife above (25% of which was
Earned after death) 200,000

68 The gross estate under Conjugal Partnership of Gains is:

a. P2,600,000 c. P1,950,000
b. P3,600,000 d. P2,200,000

69 Under the same problem, the gross estate under Absolute Community of property is:
a. P2,600,000 c. P1,950,000
b. P3,600,000 d. P2,500,000

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ANSWER KEY
1. D 26. B 51. D
2. A 27. B 52. A
3. D 28. B 53. D
4. D 29. A 54. A
5. A 30. A 55. A
6. B 31. A 56. B
7. A 32. C 57. D
8. 33. A 58. D
9. 34. C 59. A
10. 35. B 60. C
11. 36. D 61. A
12. A 37. B 62. B
13. B 38. B 63. A
14. C 39. C 64. B
15. D 40. A 65. A
16. D 41. B 66. A
17. B 42. C 67. A
18. D 43. C 68. D
19. A 44. D 69. A
20. D 45. A
21. C 46. D
22. D 47. C
23. D 48. D
24. A 49. D
25. B 50. A

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ANSWER EXPLANATION

1. D

2 Answer: A
Cash in bank (254,000 / 2) 127,000
Share in partnership profit (9,000/2) 4,500
Interest (9,000 / 2 x 3/6) 2,250
Lotto winnings (500,000 / 2) 250.000
Decedent's interest 383.750
The winnings in lotto is and the interest on bank deposit are presumed to be co-ownership of the spouses.

3 Answer: D
Shares - Cruz Corporation [(40+39) / 2 x 2,000 J P79,000
Shares - Hemo Corporation (P45 x 1,500) 67,500
Car 400,000
Real properties 120.000
Gross estate -666,500
If the stocks are traded in the stock exchange, the market value is the average of the highest and the
lowest value of such shares at a date nearest the date of death, if none is available on the date of death
itself.
If the common stocks are not traded, the market value is the book value of the shares on such date while
unlisted preferred shares are valued at par value.
In the case of real property, the market value is the higher amount between the value as determined
by the Commissioner of Internal Revenue (zonal value) and the Provincial or City Assessor (assessor's
value).

4 Answer: D
No amount shall be included in the gross estate because the sale of the property was made for a full and
adequate consideration.

5 Answer:
MV upon death Selling price Gross estate
Land 2,700,000 1,500,000 1,200,000
Jewelries 300,000 300,000 -
Shares of stocks 250,000 220,000 -
Limited power of appointment 800,000 600,000 -
Total 1,200,000

6 Answer: B
Value at the time of death P1,500,000
Less: Value of consideration 1,000.000

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Amount to be included in gross estate 500,000

7. A

8 Answer: D
Pepe and Pilar are under the absolute community of property regime because the marriage was celebrated
after August 3,1988.
All marriages celebrated on or after August 3, 1988 shall be governed by the absolute community of
property regime, there being no prior agreement in writing as to their property relations during the
marriage.

9 Answer: B

10 Answer: B

11 Answer: D

12 Answer: A

13
When the cost of the improvement made by the conjugal partnership and any resulting increase in value are
more than the value of the property at the time of the improvement, the entire property of the spouses shall
belong to the conjugal partnership, subject to reimbursement of the value of the property of the owner-
spouse at the time of the improvement; otherwise, said property shall be retained in ownership by the
owner-spouse, likewise subject to reimbursement of the cost of the improvement.
The ownership of the entire property shall be vested upon the reimbursement, which shall be
made at the time of the liquidation of the conjugal partnership.

14
Whenever an amount or credit payable within a period of time belongs to one of the spouses, the sums
which may be collected during the marriage in partial payments or by installments on the principal shall be
the exclusive property of the spouse. However, interests falling due during the marriage on the principal shall
belong to the conjugal partnership.

15 . D
Fair market value at the time of death P250,000
Less: Consideration received 200,000
Value to include in the gross estate P 50,000

16 . D
There shall be included in the gross estate a value of the property transferred only if the fair market value
at the time of death exceeds the consideration received. In the present case, there is no excess.

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17 . B
Revocable transfer of land (P5,200,000 less P3,000,000) P2,200,000
Car 0
Shares of stock 0
Bonds 0
Land and building (P1,800,000 less P1,000,0000) 800,000
Gross estate P3,000,000

18 . D
Family home P2,000,000
Piece of land with vacation house 1,500,000
Farm land in the Philippines 1,000,000
Shares of stock of domestic corporation 200,000
Shares of stock of foreign corporation 100,000
Receivable from a friend 50,000
Receivable from life insurance, with estate as beneficiary 500,000
Receivable from life insurance, with daughter as beneficiary 400,000
Receivable from property insurance 250,000
Receivable from accident insurance 20,000
Gross estate P6,020,000

19 . A
The "reciprocity clause" does not apply on properties which are not intangible.
Land in the Philippines P1,000,000
Car in the Philippines 600,000
Total P1,600,000

20 . D
Real estate, Philippines P2,000,000
Shares of stock of a domestic corporation 200,000
Shares of stock of a Indonesian corporation, doing
business in the Philippines only 100,000
Philippine peso deposit in BDO bank 500,000
Gross estate P2,800,000

21 Answer: C

22 Answer: D
When the decedent is a nonresident alien (with reciprocity) only real and tangible personal properties
situated in the Philippines are subject to estate tax. All other properties are exempt.

23 Answer: D

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Whenever a decedent is a nonresident alien (no reciprocity), all properties situated in the Philippines (real
property, tangible personal property and intangible personal property) are includible in his gross estate

24 . A
Cash on hand and in banks P1,000,000
Real property in the Philippines (at zonal value) 500,000
Real property in Malaysia, fair market value 450,000
Car in the Philippines 400,000
Receivables:
From a friend from whom there is no possibility of recovery 20,000
From a sister whose ratio of assets to liabilities is 1:3 15,000
Amounts under insurance contracts:
Receivable under life insurance, with the father as revocable
beneficiary 250,000
Receivable under accident insurance, for accident that
happened one year ago 50,000
Receivable under property insurance, for damage caused
to his car 12,000
Revocable transfers:
To sister (fair market value at the time of transfer was
P30,000 and consideration received was P10,000) 40,000
Gross estate P2,737,000

25. B

26. B

27 .B

28 . B

29
Lower value P350,000
Less: Mortgage paid 50.000
Initial basis 300,000
Less: Deductions (pro-rated)
[300,000/3,000,000 x (125,000- 30,000)] 9,500
Base 290,500
Rate (more than 4 years; not more than 5 years) 20%
Vanishing deduction 58,100
To be subject to vanishing deduction, the property must have been acquired by the present decedent
thru inheritance or donation inter vivos. Those that were acquired by onerous transfers are not subject to
said deduction-

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Bequests to charitable institutions and medical expenses are not part of the multiplier deductions. Only
the items under expenses, losses, indebtedness, taxes and transfers for public purpose, if any, are
included as part of said deductions.
30
Lower value of:
Land P150,000
Car 400.000
Value to take 550,000
Less: Mortgage paid on car 50,000
Initial basis 500,000
Less: Deductions (500,000 / 5,000,000) x P700,000 70.000
Base 430,000
Rate (more than 2 years, not more than 3 years) 60%
Vanishing deduction 258.000
If the same rate shall be applied to both properties, the vanishing deduction shall be computed
joindy for both properties. However, if different rates shall be applied separate computation is necessary.

31 . A

32
House (Pi,500,ooo x 70%) x V2 P 525,000
Lot (Pi,5OO,O00 x 30%) 450.000
Amount deductible Q7S.QQQ

33
House, conjugal (P8oo,ooo x Va) P 400,000
Land, exclusive 400.000
Deductible 800.000

34
Loans payable P300,000
Bad debts 60,000
RA 4917 200,006
Standard deduction 1,000,000
Total deductions 1,560,000
To be deductible, claims against the estate out of debt instrument must be duly notarized.
Claims of the estate against other persons are deductible only if the debtor is declared insolvent.
Mortgages paid are allowed only as deduction from the value of the property in computing a vanishing
deduction. In computing for the net estate, the deductible item is unpaid mortgage.
Taxes must have accrued before the death of the decedent. Taxes on income of properties which have
accrued after death are not deductible.

35

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Unpaid 2013 real estate taxes P40,000

Unpaid 2oi4real property taxes 40,000
Income tax 35,000
Casualty loss on September 450,000
Total deduction 565,000
The loss from fire is not deductible because it occurred prior to the death of the decedent, while the cost of
the building destroyed is not also deductible because the fortuitous event occurred after the deadline for the
payment of estate tax.
36
Conjugal Exclusive TqM
Real properties P 3,000,000
Family house 1,000,000
Other real properties P2,O0O,000
Family lot 400.000
Gross estate 4,000,000 2,400,000 P6,4OO,O00
Less: Deductions
Ordinary
Funeral expenses, limit 200,000
Taxes and losses 1.300.000 (1,500,000)
■ Special
Medical expenses, limit ( 500,000)
Standard deduction (1,000,000)
Family home
House (1,000,000/2) 500,000
Lot 400.000 ( 900,-QQO)
Net estate 2,500,000
Share of surviving spouse(4,ooo,ooo-1,500,000) x Vz 1.250.000
Net taxable estate hSSQ^QQ
37
Gross estate P 4,000,000
Less: Deductions
Funeral expenses P 150,000
Other charges 210,000
Standard deduction l^OOjO^QOQ 1,360,000
Net taxable estate 2.64Q.OOO
38 . B

39
Shares, domestic corporation P500,000
Tangible personal property 1,500,000
Gross estate 2,000,000
Less: Deductions {2,000,000/2,500,000) x 500,000 400.000

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Net taxable estate 1,600,000

On P 500,000 P15,000
1,100,000 x 8% 88,000
Estate tax payable 103.000
Computation of Total Gross Estate:
Shares, domestic corporation P 500,000
Shares, foreign corporation 500,000
Tangible personal property 1.500.000
Total 2,500,000
40
Tangible personal property P6,000,000
Less: Deductions (6,000,000/10,000,000) x i,200,oo< 720.000
Net estate 5,280,000
Computation of Total Net Estate:
Domestic shares P1,000,000
Foreign shares 3,000,000
Tangible personal property, Philippines 6,000,000
Total 10,000,000
Nonresident aliens are taxable on properties situated in the Philippines only. If there is reciprocity,
intangible personal properties within are not subject to estate tax.
Expenses, losses, indebtedness and taxes (ELFT) incurred are deductible but shall be pro-rated by
applying the following formula:
Philippine gross estate xELIT
Total gross estate
41 Answer: B
If there are two or more legitimate children or descendants, the surviving spouse shall be entitled to a
portion equal to the legitime of each of the legitimate children or descendants.

42
Tangible properties 2,700,000
Memorial plan 120,000
Gross estate 3,820,000
Other actual funeral expenses 75,000
Memorial plan 120.000
Total actual funeral expenses 195,000
Limit (3,820,000 x 5%) 191,000
Deductible 191,000

43
Lot in Davao City P100,000
Other tangible properties 1,000,000
Properties/gross estate – Philippines 2,000,000

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44
Properties - Philippines P2,000,000
Properties - Abroad:
Real property - Japan P2,400,000
Stocks - Japanese Corporation 600.000 3,000.000
Total gross estate 5,000,000
Total ELIT (P 5,000,000/2,000,000 x P 60,000) P150,000
Less: Available expenses
Funeral expenses - Philippines 25,000
Accountant's fees and audit fees 5,000
Unpaid mortgage 40,000
Claims against the estate 25.000 95.000
Funeral expenses abroad 55,000
To check:
Actual funeral expenses (P25,ooo + 55,000) P80,000
5% x P 2,000,000 100,000
Deductible funeral expense (lower) 80,000

45. A

46. D
Amount of claim 50,000
Less: Collectible (500/800 x 50,000) 31,250
Uncollectible 18,750
47
Value to take 540,000
Less: Mortgage paid (20,000 + 20,000) 40.000
Initial basis 500,000
Less: Deductions (pro-rated)
Amount claimed 170,000
Unpaid mortgage (50,000 - 20,000) 30.000
Total 200,000
(500,000 / 5,000,000) x 200,000 20.000
Base 480,000
Rate (more than 1 year, not more than 2 years) 80%
Vanishing deduction 384.000

48
Community Exclusive Total
Grossestate 3,000,000 2,000,000 5,000,000
Less: Deductions
Ordinary

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Amount claimed 170,000

Unpaid mortgage 30,000
Vanishing deduction 384.000 (584,000)
Special (Standard deduction) (1.000.000)
Net estate 3,416,000
Less: Share of surviving spouse
Gross community 3,000,000
Less: Community expenses 584.000
Net community property 2,416,000
Share (2,416,000 /2) 1,208,000
Net taxable estate 2,208,000
49
Medical expenses:
Paid P 80,000
Unpaid 20,000
Total ipgoon
Judicial expenses:
Acceptance fee 20,000
Court fees 12,000
Appearance fee, September 5,2015 2.000
Total • _3AQQS
50
Real property P2,960,000
Personal properties, Canada 1,300,000
Real and personal properties 670,000
Family home, Canada 2,500,000
Gross estate 7,430,000

51. D
A family home which is situated outside the Philippines is not deductible from gross estate.

52. A
Lower value / Initial basis P2,600.000.00
Less: Deductions (pro-rated)
Funeral expenses, maximum P 200,000
Other deductible expenses 850.000 .: -'
Total 1,050,000 -■
(2,600,000/7,430,000 x 1,050,000) 367,420.34
Base 2,232,570.65
Rate (more than 1 year, not more than 2 years) 80%
Vanishing deduction 1,786.056.52

53 . D

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54 . A
Conjugal Absolute
Partnership Community
Cash owned by the decedent before the marriage Exclusive Community
Real property inherited by the decedent
during the marriage Exclusive Exclusive
Personal property received by the wife as gift
before the marriage Not included Community
Property acquired by the decedent with cash
owned before the marriage Exclusive Community
Clothes of the decedent, purchased with the
exclusive money of the wife Not included Exclusive
Jewelry purchased with the exclusive cash
of the decedent Exclusive Community
Cash owned by the decedent before the
marriage Exclusive Community
Jewelry purchased with the exclusive cash of
the decedent Exclusive Community
Unidentified property Conjugal Community
Cash - income during the marriage Conjugal Community

Exclusive gross estate under the conjugal partnership of gains P12,600,000

Community gross estate P10,200,000

55 Answer: A

56 Answer: B
Conjugal Exclusive
Condo unit, Makati 2,500,000
Apartment unit, Canada 3,500,000
Volvo, Canada 2,000,000
Toyota Fortuner, Philippines 1,200,000
Cash with Banco de Oro (840,000 / 2) 420,000 420,000
Interest on bank deposit 8,000
Investment-AcerCorporation 1,000,000
Investment - Filipinas Company 572,875
Dividend - Filipinas Company 6,750
Receivable from a foreign insurance company 50,000
Receivable on life insurance, estate is beneficiary 150,000
Totals 4,707,625 7,120,000
Gross estate (4,707.625 + 7,120.000) 11,827,625

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57 Answer: D
Community Exclusive
Condo unit, Makati 2,500,000
Toyota Fortuner, Philippines 1,200,000
Cash with Banco Oro 840,000
Interest on bank deposit 8,000
Interest in a domestic partnership 300,000
Investment-AcerCorporation 1,000,000
Investment-Filipinas Company 572,875
Dividend - Filipinas Company 6,750
Receivable on life insurance, estate is beneficiary 150,000
Totals 5,377,625 1,200,000
Gross estate (5,377,625 + 1,200,000) 6,577,625

58 Answer: D
Conjugal Exclusive
Condo unit, Makati 2,500,000
Toyota Fortuner, Philippines 1,200,000
Totals 2,500,000 1,200,000
Gross estate (2,500,000 + 1,200,000) 3,700,000

59 Answer: A
Income of real property in Baguio P60,000
Income of real property in Cebu City 25,000
House in Pili, Cam. Sur, earned by Aido during marriage 375,000
Income of real property in Pili 50,000
Real property in Iloilo City, earned by wife during marriage 225,000
Income of real property in Iloilo City 80,000
Income of properties in Manila 175,000
Income of intangibles in Singapore 85,000
Income of property in Dagupan City 10,000
Income of personal properties in Canada 85.000
Total conjugal properties 1,170,000

60 Answer: C
Conjugal properties P1,170,000
Add: Exclusive properties of Aido
In Baguio, brought into marriage P300,000
In Manila inherited during marriage 500,000
In Dagupan, inherited before marriage 20,000 820,000
Gross estate 1,990,000

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61 Answer: A
Property in Baguio City, brought into marriage P300,000
Income of property in Baguio 60,000
Property in Cebu City, brought into marriage by wife 240,000
Income of property in Cebu City 25,000
Property in Pili, earned during marriage 375,000
Income of property in Pili, Camarines Sur 50,000
Property in Iloilo, earned during marriage 225,000
Income of property in Iloilo City 80,000
Property in Dagupan, inherited by Aido before marriage 20,000
Income of property in Dagupan 10,000
Property in Canada, inherited by wife before marriage 350,000
Income of properties in Canada 85.000
Total community properties 1,820,000

62 Answer: B
Community properties P1,820,000
Add: Exclusive properties of Aido
Inherited during marriage (Manila) P500,000
Income of properties in Manila 175.000 675,000
Gross estate 2,495,000
63. A

64. B
House 1,500,000
Land 400.000
Total 1,900,000
Less: Reimbursed amount 300.000
Family home 1,600,000

65. A
House, conjugal (1,500,000/2) 750,000
Land, exclusive 400.000
Total 1,150,000
Deductible (limit) 1,000,000

66. A
House, community 1,500,000
Land, exclusive 400.000
Total 1,900,000

67. A

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House, community (1,500,000/2) 750,000

Land, exclusive 400,000
Total 1,150,000
Deductible, limit 1,000,000

68 . D

69 . A

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