CJ Marie C.

Cadenas
BSBA OM 3A
TAX 202A

Assignment - Final Period Activity

Solve the following given problems:

1. Romeo, a resident citizen, died with the following information properly determined:
Net estate subject to tax - Philippines P12,000,000
Net estate subject to tax - Australia 4,000,000
Estate tax paid in Australia 700,000

Required: Determine the amount of estate tax due.

Answer: P720,000

Solution:
Net taxable estate to Philippines P 12,000,000
Net taxable estate to Australia 4,000,000
World Net taxable estate P 16,000,000

Estate tax: P 16,000,000 x 6% = P 960,000

Actual Foreign estate tax paid P 700,000

Limit (4,000,000/16,000,000 x 960,000) 240,000
Foreign Tax Credit (Lower) P 240,000

Estate tax due P 960,000

Less: Foreign Tax Credit 240,000
Estate Tax Due/Payable P 720,000

2. Romy, a resident citizen, died with the following information properly determined:
Net estate subject to tax - Philippines P11,000,000
Net estate subject to tax - Australia 4,000,000
Net estate subject to tax - Singapore 5,000,000
Estate tax paid in Australia 200,000
Estate tax paid in Singapore 350,000

Required: Determine the amount of estate tax due.

Answer: P 700,000

Solution:

Net taxable estate Estate tax paid

Philippines P 11,000,000
Australia 4,000,000 200,000
Singapore 5,000,000 350,000
Total P 20,000,000
Estate tax: P 20,000,000 x 6% = P 1,200,000

Australia Singapore Total

Actual Estate Tax Paid 200,000 350,000
Limit 1: Per country limit
- (4,000,000 / 20,000,000 x 1,200,000) 240,000
- (5,000,000 / 20,000,000 x 1,200,000) 300,000
LOWER 200,000 300,000 500,000

Limit 2: Total Foreign Countries

Lower in limit 1 500,000
Limit 2: (4,000,000 + 5,000,000) /20,000,000 x 1,200,000 540,000
Final Foreign Tax Credit - LOWER 500,000

Estate tax due P 1,200,000

Less: Foreign Tax Credit 500,000
Estate Tax Due/Payable P 700,000

3. A single decedent died with the following data regarding his estate:
Family home P14,000,000
Agricultural land 6,000,000
Cash and other personal properties 8,000,000
Total ₱ 28,000,000

Expenses and claims against the estate:

Funeral expenses ₱ 400,000
Medical expenses 200,000
Judicial expenses 300,000
Unpaid taxes 300,000
Claim against the estate 500,000
Total ₱ 1,700,000
Compute the net taxable estate.

Answer: 12,200,000

Solution:

Family home ₱ 14,000,000

Agricultural land 6,000,000
Cash and other personal properties 8,000,000
Total Gross Estate ₱ 28,000,000
Less:
Unpaid taxes 300,000
Claim against the estate 500,000
Net estate before special deductions ₱ 27,200,000
 Less:
Family Home 10,000,000
Standard deduction 5,000,000
Net taxable estate ₱ 12,200,000

4. Mr. Y died leaving the following properties and estate deductions:

Separate properties of Mr. Y P10,000,000
Separate properties of Mrs. Y 24,000,000
Communal properties 26,000,000
Funeral expenses P 500,000
Other ordinary deductions of communal properties 8,000,000
Ordinary deductions - exclusive of Mr. Y 4,000,000
Ordinary deductions - exclusive of Mrs. Y 5,000,000
Family home - exclusive of Mrs. Y 6,000,000
Compute the taxable net estate of Mr. Y.

Answer: 10,000,000

Solution:

Mr. Y Communal Total

Properties P 10,000,000 P 26,000,000 P 36,000,000
Funeral expense 0
Other ordinary deductions (P 4,000,000) (P 8,000,000) (P 12,000,000)
Net estate before special deductions P 6,000,000 P 18,000,000 P 24,000,000
Less: Share of surviving spouse 9,000,000
Family home 0
Standard deductions 5,000,000
Net taxable estate of Mr. Y P 10,000,000

5. The following pertain to the estate of a citizen decedent:

Separate properties of the decedent P12,400,000
Common properties of the spouses 15,600,000

Possible deductions:
Funeral expenses P 480,000
Judicial expenses 220,000
Obligations (1/4 is separate property) 1,800,000
Family home - common property 15,000,000

What is the taxable net estate?

Answer: P6, 575, 000

Solution:

Citizen Common Total

Decedent
Properties P 12,400,000 P 15,600,000 P 28,000,000
Less: Obligations (P 450,000) (P 1,350,000) (1,800,000)
Net estate before special deductions P 11,950,000 P 14,250,000 P 26,200,000
Less: Share of surviving spouse 7,125,000
Family home 7,500,000
Standard deductions 5,000,000
Net taxable estate P 6,575,000

6. A single resident citizen died leaving the following estate and deductions:
Philippines China Taiwan Total
Family home P1,300,000 P - P - P 1,300,000
Other properties 6,200,000 3,000,000 4,500,000 13,700,000
Total estate P7,500,000 P3,000,000 P4,500,000 P15,000,000

Loss P 300,000 P 150,000 P 100,000 P 550,000

Obligations 1,250,000 450,000 200,000 1,900,000
Total P1,550,000 P 600,000 P 300,000 P 2,450,000
Estate before
Standard deduction P5,950,000 P2,400,000 P4,200,000 P12,550,000

Philippines China Taiwan Total

Estate tax paid P - P 100,000 P 160,000 P 260,000

1. Compute respectively the net taxable estate in the Philippines, China and Taiwan.

Answer:
Philippines - P2,150,000
China - P1,400,000
Taiwan - P2,700,000

Solution:

Philippines China Taiwan

Total Estate before P 5,950,000 P 2,400,000 P 4,200,000

Special Deductions

Standard Deductions 2,500,000 1,000,000 1,500,000

Family Home 1,300,000

Net Taxable Estate P 2,150,000 P 1,400,000 P 2,700,000

Standard deductions
Philippines: 5,000,000 x 7,500,000/15,000,000 = P 2,500,000
China: 5,000,000 x 3,000,000/15,000,000 = P 1,000,000
Taiwan: 5,000,000 x 4,500,000/15,000,000 = P 1,500,000

2. Compute for Estate tax still due.

Answer:
The Philippine estate tax payable is:
Global tax due P 375,000
Less: China tax credit 84,000
Taiwan tax credit 160,000
Estate tax payable P 131,000

Solution:
Gross Estate P 12,550,000
Less: Deductions
Family Home 1,300,000
Standard Deduction 5,000,000
Taxable Net Estate 6,250,000
Multiply: Tax Rate 6%
Estate tax due P 375,000

China Tax Credit

Limit Tax Paid Allowed

Net Taxable Estate/Total Taxable Estate x Estate Tax due

1,400,000/6,250,000 x 375,000 P 84,000 P 100,000 P 84,000

Taiwan Tax Credit

Limit Tax Paid Allowed

Net Taxable Estate/Total Taxable Estate x Estate Tax due

2,700,000/6,250,000 x 375,000 P 162,000 P 160,000 P 160,000

Total Per Country Limit P 244,000

Overall Country Limit

Limit Tax Paid Allowed

Net Taxable Estate (Foreign) / Total Taxable Estate x Estate tax due

4,100,000/6,250,000 x 375,000 P 246,000 P 260,000 P 246,000