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TRANSFER TAXES ESTATE (PROBLEMS)

1.

Pin Nathay died on May 1, 2014 and left a real property costing P5,500,000, with book value of P5,250,000. On May 2, 2014, the
propertys market value is P4,750,000. The amount to be included in the gross estate is
a. P5,250,000
b. P5,000,000
c. P4,750,000
d. P5,500,000

2.

Two Dash died leaving a house and lot and a land in Quezon City. The Quezon City Assessors Office determined that the value of
the house and lot and the land are P4,500,000 and P12,000,000 respectively. Whereas, the BIR Commissioners valuation
indicated P5,000,000 for house and lot, and P11,400,000, for the land. The total value of these properties that should be included
in Two Dashs gross estate is
a. P17,000,000
b. P16,500,000
c. P16,400,000
d. P15,900,000
Whichever is higher.

3.

Who One, an American residing in New York Cubao, died leaving the following properties:
Vacation House in Mexico Pampanga, Philippines P 10,000,000
Mitsubishi, Philippines
500,000
Unit in Sun Residences, Quezon City Philippines
1,500,000
Shares of stocks, New York USA
2,000,000
Business, New York USA
15,000,000
Receivable, Philippines
1,000,000
The gross estate of Who One is
a. P13,000,000

b. P15,000,000

c. P30,000,000

d. P29,500,000

All
4.

Juan, a citizen, is an investor of 1,000 shares, P100 par of Imang, Inc., a domestic corporation. In 201A, Juan died due to cancer.
During that time, the shares are selling in the Philippine Stock Exchange at P120 to P150 per share. What amount related to these
shares shall be included in the gross estate?
a. P100,000
b. P120,000
c. P135,000
d. P150,000
(120 + 150) / 2 = 135 x 1,000 = 135,000

5.

When Jose died, his wife received the proceeds amounting to P1,000,000 of the life insurance he has been paying when he was
still alive. Jose paid a total of P350,000. What amount should be reported as part of the gross estate if Jose designated his wife as
the revocable beneficiary?
a. P1,000,000
b. P650,000
c. P350,000
d. P0
Proceeds is included in gross estate if (1) beneficiary is revocable, and (2) beneficiary is estate, executor, administrator, whether the
designation is revocable or not.
Excluded if beneficiary is 3rd person, designated as irrevocable.
In general, if beneficiary is not stated, revocable designation.
Group insurance taken by employer, and proceeds from SSS and GSIS, excluded.

6.

Refer to previous item, what item should be reported as part of the gross estate if Jose designated his wife, the administrator, as
irrevocable beneficiary?
a. P1,000,000
b. P650,000
c. P350,000
d. P0

7.

How much of the following revocable transfers with consideration is to be included in the gross estate?
FMV at time of transfer
P2,100,000
FMV at time of death
2,700,000
Consideration received
2,400,000
a. P2,700,000

8.

b. P2,100,000

c. P600,000

d. P300,000

Maria donated her house and lot valued at P10,000,000 to her son Mario, retaining the power to amend or terminate the transfer at
will. Five months after donation, Mario died due to car accident. Which of the following is true?
a. The house and lot should be included in Marios gross estate
b. If Mario accepted the donation, the donation is perfected.
c. Upon the death of Maria, the house and lot shall be included as part of her gross estate
d. Upon the death of Maria, the house and lot shall no longer be included as part of her gross estate because it was already
included in Marios gross estate
This is a revocable transfer. Maria still owns the property.

9.

Mr. Tah Kot was diagnosed to have a stage four lung cancer. Fearing that he will die soon, he donated his apartment costing
P3,000,000 to his daughter Ma Saya, and his Honda City car costing P1,100,000 to his son, Masma Saya. 10 months after he was
diagnosed, Mr. Tah Kot died. At that time, the apartment has P2,800,000 market value based on the schedule of values fixed by
the assessors office, while the car has P1,000,000 book value, but can be sold for P800,000. Also, the apartment earned
P855,000 rental income, net of 5% CWT. How much of the above mentioned values shall be included in Mr. Tah Kots gross
estate?

a. P0

b. P855,000

c. P4,500,000

d. P4,700,000

2,800,000 + 800,000 + (855,000/95%) = 4,500,000


10. Mr. Aksi Dente died in a bus accident. His wife received the following in relation to his death:

P3,000,000 from Eagle Life Insurance Company. The estate of Mr. Dente is the irrevocable beneficiary.
P1,500,000 from Maya Life Insurance Company, with Mrs. Dente as the revocable beneficiary.
P900,000 from Florida Bus Company after extra-judicial court settlements.

How much of the above receipts are to be included in Mr. Dentes gross estate?
a. P900,000
b. P2,400,000
c. 4,500,000

d. 5,400,000

3,000,000 + 1,500,000 = 4,500,000


11. (VDR) The following are the properties of Mr. Lay Bing.

Fair market value


At transfer
At death
Revocable transfer
Land
Car
Shares of stocks
Bonds
Transfer under power of appointment
Land and building, general power
Farm land, special and limited power
How much is the gross estate?
a. P1,600,000

Consideration
Received

P 8,000,000
2,000,000
1,000,000
400,000

P 10,400,000
0
600,000
400,000

P 6,000,000
1,200,000
800,000
500,000

4,000,000
3,000,000

3,600,000
1,000,000

2,000,000
2,400,000

b. P6,000,000

c. P4,400,000

d. P14,000,000

(10,400,000 6,000,000) + (3,600,000 2,000,000) = 6,000,000

12. Mr, Estallila left the following properties upon his death:
Personal tangible properties
Acquisition cost
P 1,200,000
Book value
400,000
Fair market value
600,000
Real properties
Assessed value
Zonal value

P 800,000
1,300,000

Tangible personal properties


1) Stocks of Camix Company, 3,000 shares listed in local stock exchange (highest P 35; lowest, 33)
2) Stocks of Dam Company, 2,000 shares not listed in local stock exchange. Cost per share, P60; book value per
share, P55
The gross estate the decedent would be
a. P 2,125,000
b. P 2,112,000

c. P 2,010,000

d. P 2,126,000

600,000 + 1,300,000 + (3,000 x 34) + (2,000 x 55) = 2,112,000

13. (VDR) A resident decedent reported the following properties (at market values)
Family home (land and residential house in the Philippines)
Vacation house and lot in Malaysia
Farm land in the Philippines, with P600,000 mortgage in favour of BPI
Shares of stock:
Of a domestic corporation deposited in a bank safety deposit box in Malaysia
Of a foreign corporation the entire business of which is in the Philippines,
Deposited in a bank safety deposit in Malaysia
Receivable from a friend who has no property, whatsoever
Receivables life insurance policies taken by decedent, beneficiary is
Estate, revocable
Daughter, revocable
Son, irrevocable
Life insurance taken by employer of the decedent, beneficiary is the estate
Property insurance, for loss of property
Accident insurance, for injury sustained
The gross estate is?
a. P5,920,000

b. P5,020,000

FOR ITEMS 14-20, REFER TO THE FOLLOWING INFORMATION:

P 2,000,000
1,500,000
1,000,000

c. P4,920,000

200,000
100,000
50,000
500,000
400,000
300,000
50,000
250,000
20,000
d. P6,020,000

22On November 1, 2011, Mr. Marquez, married and survived by his legitimate spouse, died leaving the following properties within
and outside the Philippines.
CGP
ACP
Land in Cebu, received as gift before marriage
P 1,500,000
Ex
Com
Land in Davao, inherited from his father, during marriage
2,000,000
Ex
Ex
Car, received by Mrs. Marquez as gift, during marriage
3,500,000
House and lot in Davao, acquired during marriage
900,000
Con
Com
Apartment, inherited by Mrs. Marquez during marriage
2,800,000
Condominium unit in QC, acquired before marriage
3,400,000
Ex
Com
Income of land in Cebu
450,000
Con
Com
Income of land in Davao
600,000
Con
Ex
Rental income of condominium
150,000
Con
Com
Rental income of apartment
300,000
Con
Jewelry of Mrs. Marquez purchased using her exclusive money
250,000
Com
Unidentified property as when and who acquired
800,000
Con
Com
Notes:
For CGP, exclusive properties are those received by gratuitous title during marriage, those brought to marriage as his own, and those
purchased using exclusive money
For ACP, exclusive properties are those received by gratuitous title during marriage, and the fruits of the exclusive properties

14.
15.
16.
17.
18.
19.
20.

Under the Conjugal Partnership of Gains, Mr. Marquezs exclusive properties amount to P6,900,000
Under the Absolute Community Property, Mr. Marquezs exclusive properties amount to P2,600,000
Under the Conjugal Partnership of Gains, the conjugal properties are P3,200,000
Under the Absolute Community Property, the conjugal properties are P7,450,000
Under the Conjugal Partnership of Gains, the amount to be included in Mr. Marquezs gross estate is P8,500,000
Under the Absolute Community Property, the amount to be included in Mr. Marquezs gross estate is P6,325 ,000
If Mr. Marquez has legitimate descendants from previous marriage, under absolute community property, how much is his exclusive
property? 12,400,000
Property acquired before marriage including its fruits become exclusive. Therefore, the following become exclusive:
Land in Cebu (1,500,000) + Condominium (3,400,000) + their income 450,000 + 150,000 + 6,900,000 = 12,400,000

21. Mr. Deds died on March 31, 2013 and left a real property worth P1,560,000. Deductions claimed by the administrator follow:
Medical expenses during decedents sickness paid out of decedents cash
Available at date of death
P 45,000
Expenses during wake paid out of decedents cash
85,000
Cost of burial lot and tombstone
40,000
Claims against insolvent persons.
100,000
How much funeral expense is allowed as deduction from gross estate?
a. P170,000
b. P78,000
c. P86,500

d. P91,500

(1,560,000 + 45,000 + 85,000 + 40,000 + 100,000) x 5% = 91,500 vs. 125,000

22. Mr. Patrick, just before his death, has total claims against debtor of P2,000,000. One of the debtors whom Mr. Patrick was a claim
of P 500,000 has total assets of P 3,000,000 and total liabilities of P 10,000,000. The court accordingly declared the said debtor
insolvent. The claims against insolvent person as allowable deduction from the gross estate would be
a. P 150,000
b. P 350,000
c. P 500,000
d. P 2,000,000
P500,000 (3M/10M x P500,000) = P350,000

23. Among the properties included in the gross estate of Mr. Laurence at the time of death was two-storey commercial building with a
fair market value of P 6,000,000. During the settlement of the estate and before the last day of paying the estate tax, the said
property was destroyed by fire. The fair market value of the property at the time of the accident was P 6,500,000. Assume that the
property was insured for P 5,000,000 and the amount recovered from the insurance company was P 4,500,000, the amount of the
deductible loss will be
a. P 500,000
b. P 1,500,000
c. P 4,500,000
d. P 6,000,000
P6,000,000 4,500,000 = P1,500,000

24. The following are liabilities related to the death of a resident citizen:
Unpaid mortgage on real property included in gross estate
P
Accounts payable condoned by creditors
Unpaid medical expenses incurred related to sickness which
Caused the death of the decedent
Unpaid funeral expenses
How much would be deducted as claims against the estate?
a. P250,000
b. P300,000

250,000
100,000
100,000
50,000
c. P350,000

25. Mr. Pa Yapa died with the following donations in a testamentary succession:

d. P400,000

Donation to San Antonio Parish


Donation to City Government of Tacloban
Donation to Chinese Government
Donation to GMA Foundation

P 200,000
350,000
500,000
120,000

How much of the above transfer for public use are allowed as deduction from gross estate?
a. P850,000
b. P670,000
c. P550,000

d. P350,000

26. Mr. Albert, a non-resident Filipino, died during the taxable year with the following information:
House and lot in the Philippines as family home
Car in Singapore
Pieces of jewelry in the Philippines
Receivable in Singapore where 15% is proven to be
uncollectible due to insolvency of the debtor
Funeral expenses
Judicial expenses

P 2,000,000
P 800,000
P 500,000
P 900,000
P 150,000
P 60,000

The amount of ordinary deductions against the gross estate is


a. P 150,000
b. P 210,000
Claims against insolvent person (900,000 x 15%)
Funeral expenses (4.2M x 5%) vs. actual
Judicial expenses
Total

c. P 260,000

d. P 345,000

P135,000
150,000
60,000
345,000

FOR TEMS 27 29, REFER TO THE FOLLOWING INFORMATION:


27. The following information relates to the predecessor, Mr. Alfonso Sr., and present decedent, Mr. Alfonso Jr.:
Data on Alfonso Sr.
2-storey commercial building, fair market value at the time of death
Hi-ace van, fair market value at the time of death

P 3,000,000
P 900,000

The estate taxes on the above properties were properly paid and such were accordingly transferred to his only son, Alfonso Jr. The
commercial building has an unpaid mortgage of P 1,000,000 at the time of transfer.
Data on Alfonso Jr.
At the time of death Mr. Alfonso Jr., which is more than three years after the death of his father, the two-storey commercial building
has a fair market value of P4,000,000 while that of the hi-ace van was P 800,000. The mortgage has an unpaid balance of P
300,000.
The total amount of ordinary expenses accounted properly was P 1,200,000 comprising of funeral expenses, the judicial and
administrative expenses, and transfer for public use. The gross estate of Mr. Alfonso Jr. at the time of death amounted to
P15,500,000.
The amount of initial basis is
a. P3,800,000

b. P3,500,000

Lower fair market values at time of death( P3M + P800,000)


Less: Mortgage paid (P1M 300,000)

c. P3,100,000

d. P2,800,000

c. P240,000

d. P216,774

P3,800,000
700,000
P3,100,000

28. The amount of proportionate deduction for initial basis is


a. P294,194
b. P270,968
P1,200,000 x (P3.1M / P15.5M) = 240,000

29. The amount vanishing deductions is


a. P 1,168,000
b. P 1,205,678

c. P 1,144,000

d. P 1,808,516

P3,100,000 240,000 = P2,860,000 x 40% = P1,144,000


If within 1 year , 100%; >1yr to 2yrs, P80%; >2yrs to 3yrs, 60%; >3yrs to 4 yrs, 40%; >4yrs to 5yrs, 20%.

30. How much is the amount of family home subject to estate tax if the said family home has a value of P4,000,000 of which
P1,600,000 represents the exclusive lot of the decedent and the balance represents the conjugal part?
a. P2,800,000
b. P1,800,000
c. P1,200,000
d. P1,000,000
1,600,000 + (2,400,000 / 2) = 2,800,000 1,000,000 = 1,800,000

FOR ITEMS 31 33, REFER TO THE FOLLOWING INFORMATION:


31. Mr. Lee Bing a resident decedent, left the following estate:
Exclusive real estate
P 2,800,000
Conjugal real estate family home
1,600,000

Conjugal personal property

800,000

During marriage, the couple borrowed P400,000 from a bank, which is secured by the exclusive real property. At the time of Mr.
Lee Bings death, there was a P300,000 balance of the mortgage payable. Actual funeral expenses amounted to P245,000 and
judicial expenses of P100,000
How much is the net estate?
a. P3,800,000
32. How much is the estate tax?
a. P143,000

b. P2,800,000

c. P2,100,000

d. P1,900,000

b. P135,000

c. P127,000

d. P120,000

c. P3,550,500

d. P4,420,000

33. How much is the net distributable estate?


a. P2,210,000
b. P3,142,500

FOR ITEMS 34 36, REFER TO THE FOLLOWING INFORMATION:


34. (VDR) Decedent was single at the time of death:
Real and personal properties in the Philippines
P 6,000,000
Proceeds of life insurance:
Receivable by the estate, as revocable beneficiary
1,000,000
Receivable by the spouse, as irrevocable beneficiary
500,000
Medical expenses within one year prior to death:
Paid by the time of death
300,000
Unpaid at the time of death
400,000
Funeral expenses
Paid by the time of death
100,000
Unpaid at the time of death
150,000
Other obligations of the decedent
1,000,000
Compute the net taxable estate
a. P5,000,000
35. The estate tax?
a. P465,000
36. The net distributable estate?
a. P5,450,000
Gross estate
Receivable from life insurance
Total
Medical expenses
Funeral expenses
Other obligations
Standard deduction
Total deductions
Net taxable estate
Estate tax
Net distributable estate

b. P4,052,000

c. P4,300,000

d. P5,300,000

b. P360,720

c. P388,888

d. 510,000

b. P3,912,000

c. 5,062,000

d. 4,052,000

Taxable
P 6,000,000
1,000,000
7,000,000

Distributable
P 6,000,000
1,000,000
7,000,000

(500,000)
(200,000)
(1,000,000)
(1,000,000)
(2,700,000)

(400,000)
(150,000)
(1,000,000)

4,300,000
(388,000)
P 5,062,000

37. A citizen decedent was under the system of absolute community of property during the marriage. He died with P7,000,000 and
P4,000,000 properties in the Philippines and USA, respectively. Deductions, excluding the share of the surviving spouse, amount
to P2,000,000 and P3,000,000 in the Philippines and USA, respectively. The administrator paid P50,000 of estate tax in the USA.
How much is the net taxable estate?
38. How much is the estate?
39. How much is the estate tax still due after tax credit?

Properties
Deductions
Net estate
Less: share of SS
Net taxable estate
Estate tax
Less: estate tax credit

Phils
P 7,000,000
2,000,000
5,000,000

USA
P 4,000,000
3,000,000
1,000,000

Total
P 6,000,000
3,000,000
3,000,000
245,000

Foreign estate tax paid


(1M / 6M) x 245,000
Allowed
Estate tax still due

Over
P

200,000.00
500,000.00
2,000,000.00
5,000,000.00
10,000,000.00

50,000
40,833
40,833
P 204,167

But not Over


P 200,000.00
500,000.00
2,000,000.00
5,000,000.00
10,000,000.00

The Tax
Shall be
Exempt
0
P 15,,000.00
135,000.00
465,000.00
1,2l5,000.00

Plus
5%
8%
11 %
15 %
20 %

Of the
Excess Over
P

200,000.00
500,000.00
2,000,000.00
5,000,000.00
10,000,000.00

KAYA PA?

Only those who plant will reap.