MULTIPLE CHOICE - ESTATE TAX

TEST 1 THEORY
1. D 6. C 11. B 16. D
2. D 7. A 12. D 17. C
3. C 8. C 13. C 18. A
4. A 9. C 14. B 19. D
5. A 10. D 15. C 20. D

21. D 26. A 31. B 36. A

22. B 27. A 32. A 37. A
23. C 28. A 33. D 38. D
24. D 29. C 34. C 39. B
25. D 30. B 35. D 40. D

41. A 46. D 51. A 56. A

42. A 47. B 52. C 57. A
43. D 48. D 53. C 58. D
44. C 49. B 54. D 59. D
45. D 50. C 55. C 60. D

TEST 2 - MULTIPLE CHOICE (PROBLEMS)

1. Answer: A (See the solution in No.

5)

2. Answer: A (see the solution in No.

5)

3. Answer: A (see the solution in No.

5)

4. Answer: C (see the solution in No.

5)

5. Answer: B
Resident NRA (no NRA (with
or citizen Reciprocity) Reciprocity)
Real property within P P 3,000,000 P
3,000,000 3,000,000
Real property without 2,500,000 - -
Tangible personal within 700,000 700,000 700,00
0
Tangible personal without 650,000 - -
Intangible personal within 350,000 350,000 -
Intangible personal without 225,000 - . - .
Gross estate 7,425,000 4,050,000 3,700,00
0

6. Answer: C (see the Solution in No. 8)

27
7. Answer: D

8. Answer: B
Conjugal Exclusive
Family home P
2,650,000
Farm in Batangas 500,000
Farm in Guam 750,000
Furnitures, Manila 125,00
0
Bank deposit 80,00
0
Cash (12,000 x 1 ) 18,00
0
Car 500,00
0
Interest in partnership 300,00
0
Proceeds of life insurance 150,00
0
Accounts receivable 110,00
0
Patent, U.S.A. 1,250,00
0
Other personal properties 825,000 ________
Total s 6,008,000 1,250,00
0

Gross estate 7,258,000

9. Answer: A
Domestic shares P1,000,00
0
Foreign shares 3,000,00 4,000,00
0 0
Tangible personal property 6,000,0
00
Total 10,000,00
0

Gross estate 6,000,00

0
Less: Deductions (6,000,000/10,000,000 x 1,200,000) 720,0
00
Net estate 5,280,0
00

10. Answer: C

Shares, domestic 500,00

0
Tangible personal property 1,500,0
00
Gross estate 2,000,0
00
Less: Deductions (2,000,000/2,500,000 x P500,000) 400,0
00

28
 Net estate 1,600,0
00

Tax on P 500,000 P 15,000

1,100,000 x 8% 88,000
Estate tax 103,000

Shares, domestic corporation 500,00

0
Shares, foreign corporation 500,000
Tangible personal property 1,500,00
0
Total gross estate 2,500,00
0

11. Answer: C

Value at the time of death 1,500,00

0
Value of consideration 1,000,00
0
Amount includible in the gross estate 500,00
0

12. Answer: D
No amount of money shall be included in the gross estate of the decedent
because the transfer is for an adequate and full consideration. This is despite the
agreement between the seller and the buyer that the transfer shall take effect upon
the death of the seller.

13. Answer A

Actual funeral expenses 140,00

0
Limit (5% x 2,500,000) 125,0
00
Deductible (lower amount) 125,0
00

14. Answer: B

Gross estate 2,500,00

0
Less: Deductions
Funeral expenses 125,0
00
Other deductions 1,125,00
0
Standard deduction 1,000,00 2,250,0
0 00
Net taxable estate 250,0
00

15. Answer: D

Exclusive real property 750,00

0

29
 Conjugal real property 850,00
0
Conjugal personal property 450,000 1,300,00
0
Gross estate 2,050,00
0
Less: Deductions
Ordinary -
Unpaid mortgage 30,000
Funeral expenses 85,000
Judicial expenses 20,000 ( 135,00
0)
Special -
Standard (1,000,00
0)
Net estate 915,000
Less: Share of surviving spouse (1,300,000 135,000) 582,50
x 0
Net taxable estate 332,50
0

16. Answer: A
Gross estate 4,000,00
0
Less: Deductions
Funeral expenses, actual 150,000
Other charges 210,00
0
Standard deduction 1,000,0 1,360,00
00 0
Net taxable estate 2,640,0
00

17. Answer: D
Expenses incurred during the wake 95,000
Payable to funeral parlor 20,000 115,000
5% of gross estate (1,700,000 x 5%) 85,000
Deductible funeral expense 85,000

18. Answer: C
Loans payable 300,00
0
Bad debts 60,0
00
RA 4917 200,0
00
Standard deduction 1,000,00
0
Deductions 1,560,0
00

19. Answer: B
Unpaid 2007 real estate taxes P 40,000
Unpaid 2008 real estate taxes 40,000
Income tax 35,000
Casualty loss 450,000
Total deductions 565,000

30
20. Answer: B

Inherited land (exclusive) P 200,000

Dwelling house, conjugal (850,000/2) 425,000
Family home 625,000

21. Answer: B

Conjugal Exclusive Total

Family home 1,500,00
0
Conjugal real estate 950,000
Conjugal personal property 2,000,00 ________
0
Gross estate 2,950,000 1,500,0 4,450,00
00 0
Less: Deductions
Ordinary -
Funeral, actual 120,000
Judicial 7,000
Unpaid mortgage 35,000 ( 162,00
0)
Special -
Medical expenses ( 40,00
0)
Family home (1,000,00
0)
Standard deduction (1,000,00
0)
Net estate 2,248,0
00
Less: Share of surviving spouse
Gross conjugal 2,950,00
0
Less: Conjugal deductions 202,00
0
Net conjugal 2,748,00
0
Share (2,748,000/2) 1,374,0
00
Net taxable estate 874,00
0

22. Answer: B

Real properties 3,200,0

00
Family home 1,100,00
0
House and lot, Australia 1,500,00
0
Other personal properties 800,000
Shares of stocks 50,000
Claims against insolvent persons 100,00
0
Gross estate 6,750,00
0

31
23. Answer: C
Funeral expenses 120,0
00
Bad debts 100,000
Unpaid mortgage 30,000
Family home 1,000,00
0
Total deductions 1,250,00
0

24. Answer: D
Conjugal
Family home 2,000,000
Conjugal personal property 800,000 2,800,0
00
Exclusive real estate 1,219,7
50
Gross estate 4,019,7
50
Less: Deductions
Ordinary -
Unpaid mortgage 90,000
Funeral expenses 124,500
Judicial expenses 16,000 ( 230,50
0)
Special -
Family home 1,000,000
Standard deduction 1,000,000 (2,000,00
0)
Net estate 1,789,2
50
Less: Share of surviving spouse
Gross conjugal 2,800,000
Less: Conjugal deductions 230,500
Net conjugal 2,569,500
Share (2,569,500/2) 1,284,7
50
Net estate subject to tax 504,5
00

25. Answer: A (see solution in No. 26)

26. Answer: C

27. Answer: A
Conjugal Exclusive Total
Residential land 850,00
0
Commercial land 500,000
House and lot, Manila 3,000,000
House and lot, California 2,000,00
0
Notes receivable, debtor in U.S.A. 100,00
0
Notes receivable, debtor in Phils. 200,00
0
Other personal properties 140,00 ________
0

32
 Gross estate 5,440,000 1,350,000 6,790,000
Deductions:
Ordinary -
Funeral expenses 165,000
Bad debts (200,000 x 40%) 80,000
Transfer for public purpose 200,000
Vanishing deduction (Schedule 1) _ _____ 74,757
Total 245,000 274,757 ( 519,75
7)
Special
Family home (1,000,00
0)
Standard deductions (1,000,00
0)
Net estate 4,270,2
43
Less: Share of surviving spouse
Gross conjugal 5,440,000
Less: Conjugal deductions 245,00
0
Net conjugal 5,195,00
0
Share (5,195,000 / 2) (2,597,50
0)
Net taxable estate 1,672,74
3

Schedule 1:
Value to take (lower value) P 400,000
Less: Mortgage paid -
.
Initial basis 400,000
Less: Deductions (400/6,790 x P 26,215
445,000)
Base 373,785
Rate (more than 4 but not more than 5 20
years) %
Vanishing deduction 74,757

28. Answer: B (see solution in No. 29)

29. Answer: C
Conjugal Exclusive Total
House in Cebu 4,000,00
0
House in Japan 2,500,0
00
Domestic shares 100,00
0
Appliances, Japan 450,0
00
Accounts receivable 135,000
Claims against insolvent person 85,00 _______
0
Gross estate 6,585,00 685,0 7,270,0
0 00 00
Less: Deductions
Ordinary -
Funeral expenses, limit 200,00

33
 0
Claims against the estate 120,000
Unpaid mortgage, Japan 65,000
Bad debts 85,000
Unpaid mortgage, Cebu 50,000 ( 520,00
0)
Special -
Family home (1,000,00
0)
Standard deductions (1,000,00
0)
Net estate 4,750,0
00
Less: Share of surviving spouse
Gross conjugal 6,585,0
00
Less: Conjugal deductions 520,0
00
Net conjugal 6,065,0
00
Share (P 6,065,000 / 2) (3,032,50
0)
Net estate subject to tax 1,717,50
0

30. Answer: A
Lower value P
350,000
Less: Mortgage paid 50,0
00
Initial basis 300,0
00
Less: Deductions (300/3,000 x 95,000) 9,50
0
Base 290,5
00
Rate (more than 4 years, not more than 5 years) 20
%
Vanishing deduction 58,1
00

Note: Bequests to charitable institutions and medical expenses are not included in
the multiplier deductions. Only the deductions under ELIT and Transfers for
Public Purposes, if any, are part of said deductions.

31. Answer: A (see solution in No.

34)

32. Answer: D (see solution in No. 34)

33. Answer: A (see schedule 1 below)

34. Answer: A

Real property 2,960,000.00

Personal properties, Canada 1,300,000.0
0
Real and personal properties 670,000.0

34
 0
Family home, Canada 2,500,000.0
0
Gross estate 7,430,000.0
0
Less: Deductions
Funeral expenses P
200,000.00
Other deductible expenses 850,000.
00
Vanishing deduction (Sche. 1) 1,786,056. 2,836,056.5
50 0
Net estate 4,593,943.5
0
Less: Other deductions
Family home P -
Standard deductions 1,000,000. 1,000,000.0
00 0
Net estate subject to tax 3,593,943.5
0
Note: To be deductible, a family home must be situated within the
Philippines.

Schedule 1: Vanishing deduction

Lower value P2,600,000.
00
Less: Deductions (pro-rated) (2,600/7,430 x 367,429.3
1,050,000) 0
Base 2,232,570.7
0
Rate (more than 1 year but not more than 2 80
years) %
Vanishing deduction 1,786,056.5
0

35. Answer: B

House (conjugal) P 800,000

Land 400,000
Family home 1,200,000

36. Answer: A

House (800,000 x ) P 400,000

Land 400,000
Deductible family home 800,000

37. Answer: C

Lot, Davao City P 500,000

Other tangible properties 500,000
Gross estate 1,000,000

38. Answer: D

Funeral expenses 200,000

Judicial expenses 5,000
Claims against the estate 25,000

35
 Total 230,000

(1,000,000/2,500,000 x 230,000) 92,000

39. Answer: B

Lower value 170,00

0
Less: Mortgage paid 20,000
Initial basis 150,000
Less: Deductions
Funeral 180,000
Judicial 50,000
Bad debt 50,000
Unpaid mortgage (60,000 20,000) 40,000
Bequest to Naga City 30,000
Total 350,000
(150,000/5,000,000 x P350,000) 10,50
0
Base 139,500
Rate 40%
Vanishing deduction 55,800

40. Answer: B

Lower value 400,000

Less: Mortgage paid - .
Initial basis 400,000
Less: Deductions (pro-rated)
(400,000 / 5,000,000 x 350,000) 28,000
Base 372,000
Rate 20%
Vanishing deduction 74,400

41. Answer: D

Conjugal -
Family home 1,500,00
0
Other properties 2,500,00
0
Car 300,000
Claims against insolvent 50,00 4,350,00
0 0
Exclusive -
Land 250,000
House 400,000 650,00
0
Gross estate 5,000,0
00
Less: Deductions
Ordinary -
Conjugal
Funeral expenses
180,000
Judicial expenses 50,000
Bad debts 50,000 280,00
0
Exclusive

36
 Unpaid mortgage (60,000 20,000)
40,000
Bequest to Naga City 30,000
Vanishing deduction on land (No. 42) 55,800
Vanishing deduction on house (No. 43) 74,400 200,20 ( 480,20
0 0)
Special -
Medical expenses 20,000
Family home (1,500,000/2) 750,000
Standard deduction 1,000,00 (1,770,00
0 0)
Net estate 2,749,80
0
Less: Share of surviving spouse (4,350,000 2,035,00
280,000) x 0
Net taxable estate 714,80
0

42. Answer: B (see Solution in No. 44)

43. Answer: B (see Solution in No. 44)
44. Answer: D
Property, within 2,000,000
Property, without 3,000,00
0
Total 5,000,00
0

Gross estate 2,000,000

Less: Deductions
Funeral expenses (2,000,000 x 5%) 100,000
Unpaid mortgage, within 250,000
Total 350,000
(2/5 x P350,000) 140,00
0
Net taxable estate 1,860,00
0

45. Answer: A

Personal property within 700,000

Real property within 600,000
Personal property without 300,000
Real property without 300,000
RA 4917 100,000
Gross estate 2,000,000
Less: Deductions
Ordinary -
Funeral (2,000,000 x 5%) 100,000
Judicial 120,000
Claims against the estate 30,000
RA 4917 100,000 ( 350,00
0)
Special -
Standard deduction (1,000,000)
Medical expenses ( 85,000)
Net taxable estate 565,000

37
46. Answer: D
Net estate, Philippines 3,000,000
Net estate, United States 1,000,00
0
Total net estate 4,000,00
0
Tax on P 2,000,000 135,00
0
2,000,000 x 11% 220,00
0
Estate tax 355,00
0
Less: Tax credit
Tax paid, US
80,000
Limit (1/4 x 355,000)
88,750
Allowed (lower) 80,00
0
Estate tax due after tax credit 275,00
0

47. Answer: B

Net estate, Philippines 600,00

0
Net estate, Japan 300,00
0
Net estate, United States 100,00 400,00
0 0
Total 1,000,00
0
Tax on P 500,000 15,000
500,000 x 8% 40,00
0
Estate tax 55,00
0
Less: Tax credit
Tax paid, Japan
P30,000
(3/10 x 55,000)
16,500
Allowed 16,500
Tax paid, US P
4,000
(1/10 x 55,000)
5,500
Allowed 4,00
0
Total credits, 1st limit 20,50
0
2nd limit (4/10 x 55,000) 22,00
0
Credit Allowed (lower) 20,50
0
Estate tax due after tax credit 34,50
0

38
48. Answer: C

Net taxable estate, Philippines 3,000,00

0
Net taxable estate, United States 1,000,000
Total 4,000,000

On P 2,000,000 135,00
0
2,000,000 x 11% 220,00
0
Estate tax 355,00
0
Less: Tax credit
Tax paid in US (squeeze)
80,000
Limit (1/4 x 355,000)
88,750
Credit allowed (lower) 80,00
0
Estate tax due after tax credit 275,00
0

49. Answer: A

Gross estate, Philippines 4,000,000

Less: Deductions, Phils. 3,000,00 1,000,0
0 00
A foreign country 6,000,00
0
Deductions, A foreign country 2,000,00 4,000,00
0 0
Net estate 5,000,00
0
Less: Share of surviving (5,000,000 x 60%) / 1,500,00
spouse 2 0
Net taxable estate 3,500,00
0

Tax on P 2,000,000 135,00

0
1,500,000 x 11% 165,00
0
Estate tax due 300,000
Less: Tax credit
Tax paid, A foreign 124,500
country
Limit (4/5 x 300,000) 240,000 124,500
Estate tax payable 175,50
0

50. Answer: D

Net estate, Philippines 500,00

0
Net taxable estate, Japan 300,00
0
Net taxable estate, US ( 50,000
)

39
Net estate, Hongkong 450,00 700,0
0 00
Total net estate 1,200,0
00

Tax on P 500,000 15,000

700,000 x 8% 56,00
0
Estate tax 71,00
0
Less: Tax credit
Tax paid, Hongkong P 45,000
Limit (450/1,200 x 26,625
71,000)
Allowed 26,625
Tax paid, Japan P 20,000
Limit (300/1,200 x 17,750
71,000)
Allowed 17,750
Total credits, 1st limitation 44,375
2nd limitation (700/1,200 x 41,417 41,417
71,000)
Estate tax due 29,583

40