ACC 321 – Business Taxation – COPY 3

Topic: Taxation of Married Individuals and Computation of Estate Tax Credit

Instructor: Leenuel M. Bernarte, CPA

PROBLEM 1 (Computation of Gross Estate under CPG and ACoP)

ALDO died leaving the ff property:
a. Real property in Baguio City brought into marriage P 300,000.00
b. Income of real property in Baguio 60,000.00
c. Real property in Cebu City brought into marriage by wife 240,000.00
d. Income of real property in Cebu City 25,000.00
e. House in Pili, Camarines Sur acquired by Aldo during marriage 375,000.00
f. Income of house in Pili 50,000.00
g. Real property in Ilo-ilo City, earned by wife during marriage 225,000.00
h. Income of real property in Ilo-Ilo city 80,000.00
i. Tangible personal property in Manila inherited by Aldo during marriage 500,000.00
j. Income of properties in manila 175,000.00
k. Intangible personal properties in Singapore, inherited by wife during marriage 430,000.00
L. Income of intangibles in Singapore 85,000.00
m. Tangible personal property in Dagupan City, inherited by Aldo before marriage 20,000.00
n. Income of property in Dagupan City 10,000.00
o. Intangible personal property in Canada, inherited by wife before marriage 350,000.00
p. Income of personal property in Canada 85,000.00

Required:
Determine the total exclusive and conjugal/communal gross estate under:
A. Conjugal Partnership of Gains
B. Absolute Community of Property

PROBLEM 2 (Computation of Gross Estate under CPG and ACoP)

Mr. J. Chavez died leaving the following properties:
Rest house in Cebu, acquired before marriage 6,000,000
Income from rest house in Cebu 600,000
Condominium in Davao, brought to marriage by wife 3,600,000
Income from condominium in Davao 360,000
Town house in Quezon City, acquired during marriage 10,500,000
Income from town house in Quezon City 1,050,000
Car, inherited by wife during marriage (the decedent provided in his 1,300,000
will that it shall form part of the common properties of the spouses)
Jewelry, acquired during marriage for exclusive use of wife 200,000

Required:
Determine the total exclusive and conjugal/communal gross estate under:
A. Conjugal Partnership of Gains
B. Absolute Community of Property

PROBLEM 3 (Computation of Net Taxable Estate under CPG and ACoP)

The estate of Pedro, resident citizen decedent, married, who died on April 1, 2018 are as follows:
House and Lot (Family Home) P 14,000,000
The lot was acquired at a cost of P3,000,000 before marriage while the
house was constructed on March 1, 2018, during marriage, at a cost of
P10,000,000 from partnership funds. The lot had a FMV of P4,000,000 after
construction of the house.
Other properties acquired during marriage 6,000,000
Jewelry inherited on February 14, 2017, during the marriage, then with a 2,500,000
fair market value of P1,300,000
Property in U.S., received as a gift during marriage from a friend on Jan. 2,300,000
12, 2017 (the applicable donor’s tax was not paid by the donor)
Rental income on the above property up to time of death 1,200,000
Expenses/Claims:
Funeral Expenses 420,000
Judicial Expenses 800,000
Casualty losses incurred on Dec. 10, 2018 600,000
Claims against the estate 1,600,000
Medical expenses within 1 year prior to death, only half was receipted 4,000,000

Bernarte-EstateTax2
Required:
Compute for the net taxable estate under:
A. Conjugal Partnership of Gains
B. Absolute Community of Property

PROBLEM 4 (Computation of Net Taxable Estate for Married Non-Resident Aliens)

Kano, a non-resident American, died on May 1, 2018, leaving the following:
Exclusive properties, Philippines P 5,600,000
Conjugal properties, Philippines 4,200,000
Conjugal properties, Abroad 18,200,000
Claims against insolvent persons 1,000,000
Funeral expenses 200,000
Judicial expenses 850,000
Claims against the estate 1,500,000
Losses occurring 8 mos. after the death due to fire 1,700,000
Donation mortis causa to Makati City Hall 1,800,000
Family Home (included above), located abroad 10,000,000
Standard deduction 10,000,000

Required:
Compute for the following:
A. Net taxable estate
B. Estate tax due

PROBLEM 5 (Tax Credit – One (1) Foreign Country Only)

Assume the following data:
Net Estate, Philippines P 7,000,000
Net Estate, China 2,000,000
Estate Tax Paid in China 230,000

Required:
Compute for the estate tax payable.

PROBLEM 6 (Tax Credit – One (1) Foreign Country Only)

A citizen-decedent died in 2018 with the following data:
Philippines USA
Gross Estate P 14,200,000 P 4,400,000
Allowable deductions (excluding 6,400,000 2,200,000
standard deduction)
Estate Tax paid 150,000

Required:
Compute for the estate tax payable.

Independent Requirement:
The estate tax payable if the decedent is non-resident alien.

PROBLEM 7 (Tax Credit – More than one (1) foreign country)

The decedent is a resident citizen of the Philippines with the following data about his estate:
Net Taxable Estate Foreign Estate Tax Paid
Philippines P 6,000,000 -
Singapore 3,000,000 P 375,000
Malaysia 2,000,000 265,000
Total 11,000,000 P 640,000
Required:
Compute for the estate tax payable.

---END OF HANDOUTS---

Bernarte-EstateTax2