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CHAPTER 4
Problem 45
1. A & B
2. C
3. A
4. D
5. D
6. D
Problem 46
1. A
2. A
3. B
4. A
5. D
6. D
BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS)
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7. A
8. C
9. B
10. A
7. C
8. A
9. A
10. D
7. C
8. D
Problem 47
A
Allowable deductions against Philippine gross estate (P500,000 x 3/5)
P 300,000
Problem 48
D
None, because the decedent is a nonresident alien and the amount of gross estate located in the
Philippines is not defined.
Problem 49
C
Funeral expense (P3,000,000 x 5%)
Judicial expense (P250,000 x 60%)
Bad debts (P150,000/3)
Ordinary deductions
P150,000
150,000
50,000
P350,000
Problem 410
D
Standard deduction
Family home
Special deductions
P1,000,000
1,000,000
P2,000,000
Problem 411
B
Gross estate (P3,150,000 + P175,000)
Multiplied by funeral rate
Deductible funeral expense
P3,325,000
5%
P 166,250
Problem 412
B
Gross estate
Multiplied by funeral rate
Deductible funeral expense
P3,500,000
5%
P 175,000
Problem 413
C
Real properties
Claims against insolvent persons
Gross estate
Multiplied by funeral expense rate
Funeral expense
P1,560,000
100,000
P1,660,000
5%
P
83,000
Problem 414
C
Judicial expense (P1,900,000/95%) P1,900,000
P100,000
Problem 415
C
Deductible loss (P48,000/40%)
P120,000
Problem 416
A
Unpaid mortgage on the real property included in the gross estate
P500,000
BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS)
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Problem 417
C
Loans from Metro Bank (not notarized per banks policy)
P500,000
Problem 418
D
Accounts receivable
Multiplied by percent of uncollectible (100% - 66.67%)
Bad debts deductible
P500,000
33.33%
P166,667
P1,000,000
P1,500,000
Problem 419
C
Collectible from a debtor
Problem 420
66.67%
P160,000
Properties
Ordinary deductions:
Unpaid mortgage loan used to finance family business
Funeral expense
Properties after ordinary deductions
Exclusive
P2,800,000
Conjugal
P3,500,000
.
P2,800,000
( 800,000)
( 180,000)
P2,520,000
Problem 421
B
Unpaid real property tax incurred prior to date of death
P100,000
Problem 422
D
Deductible transfer for public use (P2,000,000/1,000) x 200
P400,000
Problem 423
A
Value taken (lower)
Proportionate ordinary deduction (P1,000,000/P3,000,000) x P150,000
Final basis
Multiplied by percent of vanishing deduction
Amount of vanishing deduction
P1,000,000
50,000
P 950,000
60%
P 570,000
Problem 424
D
Value taken (lower)
Less: Mortgage paid
Initial basis
Less: Proportionate deduction (P1,700,000/P5,000,000) x P400,000
Final basis
Multiplied by percent of vanishing deduction
Amount of vanishing deduction
P2,100,000
400,000
P1,700,000
136,000
P1,564,000
40%
P 625,600
Computation of ELIT:
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P200,000
100,000
100,000
P400,000
Properties
Transfer for public use
Share of surviving spouse (P2,000,000 x 50%)
Net estate
Exclusive
P1,000,000
( 500,000)
.
P 500,000
Conjugal
P2,000,000
(1,000,000)
P1,000,000
Problem 426
B
Conjugal estate
Deductible funeral expense
Net estate before share of surviving spouse
Multiplied by share of surviving spouse
Share of surviving spouse
P5,000,000
( 200,000)
P4,800,000
50%
P2,400,000
Problem 427
C
Standard deduction to Filipino and resident alien
P1,000,000
Problem 428
D
Nonresident alien does not have standard deduction
Problem 429
C
Deductible medical expense (paid or unpaid) within one year prior to death
P300,000
Problem 430
A
The unpaid medical expense in excess of the maximum P500,000 is nondeductible as
claims against the estate.
Problem 431
D
Medical expenses incurred from October 2004 to December 2004
Problem 432
D
Maximum amount of family home deductible
The family home is an exclusive property of the decedent.
Problem 433
C
Building conjugal (P1,000,000/2)
Land exclusive
Family home - deductible
Problem 434
1. D
P100,000
P1,000,000
P500,000
400,000
P900,000
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2.
P1,000,000
500,000
100,000
P1,600,000
C
Standard deduction
Family home
Medical expense
Total special deductions
P1,000,000
1,000,000
400,000
P2,400,000
Problem 435
Burial lot (P50,000 x 80%)
Expenses for wake before burial
Telegrams and cable to relatives
Mourning apparel of the surviving spouse and children
Entertainment expenses during the rites and burial ceremonies
Allowable funeral expenses
P40,000
20,000
1,000
3,000
2,500
P66,500
Problem 436
Real estate property
Personal property
Total
Funeral expense (P700,000 + P2,600,000) x 5%
Judicial expenses
Mortgage payable to the bank
Net estate before share of surviving spouse
Multiplied by percent share of surviving spouse
Share of surviving spouse
Problem 437
October 1 to 20, 2005 from Saint Lukes Hospital:
Diagnostic fee
Doctors fee
Hospital rooms
Operating costs
Medicines
Total medical expense deductible
Exclusive
P700,000
.
P700,000
Conjugal
P2,200,000
400,000
P2,600,000
( 165,000)
( 50,000)
( 400,000)
P1,985,000
50%
P 992,500
P 60,000
120,000
80,000
50,000
90,000
P400,000
Problem 438
Funeral expense, actual
Judicial expense
Medical expense, maximum allowed
Standard deductions
Total deductions
P 150,000
50,000
500,000
1,000,000
P1,700,000
Problem 439
1. Gross estate
P3,000,000
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2.
P700,000
3.
P1,000,000
4.
P1,300,000
Note: Since the funeral and judicial expense are combined, it is assumed that the limit for funeral
expense amounting to P150,000 or 5% of gross estate is complied and the remaining balance of
P50,000 is for the judicial expense.