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Saint Paul School of Business and Law

Campetic Road, Palo, Leyte

Accounting 17 TAXATION

Quiz 1

1. The property, rights and obligations of a person which are not extinguished by his
death and those which have been accrued thereto since the opening of succession:
a. Assets c. Estate
b. Capital d. Income

2. Which of the following is not subject to estate tax?


a. A succession to the property of a decedent who left no last will and testament;
b. A donation mortis causa;
c. A donation inter vivos;
d. A transfer during the lifetime for less than full and adequate consideration

3. Which of the following may be the subject of succession?


a. Properties c. Obligations
b. Rights d. All of the above

4. The following transactions and acquisitions exempt from transfer tax except:
a. Transmission from the first heir or donee in favour of another beneficiary in
accordance with the desire of the predecessor;
b. Transmission or delivery of the inheritance or legacy by the fiduciary heir or
legatee to the fideicommisary;
c. The merger of usufruct in the owner of the naked title;
d. All bequests, devises, legacies or transfers to social welfare, cultural and
charitable institutions.

5. Statement 1: If a person died single, his entire net exclusive properties becomes
subject to the estate tax;
Statement 2: If a person died married, his entire net exclusive properties and entire
net join properties with the spouse become subject to the estate tax.
a. Both statements are true
b. Both statements are false
c. The first statement is true, but the second statement is false
d. The first statement is false, but the second statement is true

6. Which of the following is not included in the gross estate?


a. Revocable transfer where the consideration is not sufficient;
b. Revocable transfer where the power of revocation was not exercised;
c. Proceeds of life insurance where the beneficiary designated is the estate and
the designation is irrevocable;
d. Proceeds of life insurance where the beneficiary designated is the mother and
the designation is irrevocable.

7. Which of the following statements is wrong?


a. The gross estate of a non-resident citizen would include all properties
regardless of location;
b. The gross estate of a non-resident, not citizen of the Philippines would include
intangible properties in the Philippines;
c. The gross estate of a resident, not citizen of the Philippines would include all
properties regardless of location;
d. The gross estate of a non-resident citizen of the Philippines would include only
properties in the Philippines

8. The personal properties of a non-resident, not citizen of the Philippines would not be
included in the gross estate if:
a. The intangible personal property is in the Philippines;
b. The intangible personal property is in the Philippines and the reciprocity clause
of the estate tax law applies;
c. The tangible personal property is in the Philippines;
d. The personal property is shares of stock of a domestic corporation 90% of
whose business is in the Philippines.

9. Proceeds of life insurance includible in the gross estate.


a. Insurance proceeds from SSS or GSIS
b. Amount receivable by any beneficiary irrevocable, designated in the policy by
the insured;
c. Amount receivable by any beneficiary designated in the insurance policy;
d. Proceeds of group insurance taken out by a company for employees.

10.Which of the following exempt transmissions will still require inclusions of the
property in the gross estate?
a. Merger of usufruct in the owner of the naked title;
b. Legacy to a charitable institution whose administrative expenses did not
exceed 30% of the legacy;
c. Transfer from a first heir to a second heir designated by the decedent;
d. Death benefits under the GSIS and SSS.

11.Which of the following is not included in the gross estate?


a. Revocable transfer where the consideration is not sufficient;
b. Revocable transfer where the power of revocation was not exercised;
c. Transfer under a general power of appointment where the consideration was
not sufficient;
d. Transfer under a limited power of appointment

12.Which statement is wrong? The gross estate shall be valued:


a. At its fair market value at the time of death;
b. At its fair market value at the time the return is due;
c. In real property, the zonal value, which may be higher than the fair market
value;
d. In the case of shares of stock, at book value

13.Which of the following exempt transmissions will still require inclusions of the
property in the gross estate?
a. Merger of usufruct in the owner of the naked title;
b. Legacy to a charitable institution whose administrative expenses did not
exceed 30% of the legacy;
c. Transfer from a first heir to a second heir designated by the decedent;
d. Death benefits under the GSIS and SSS.

14.A revocable transfer with the following circumstances: Fair market value at the time
of transfer P300,000; fair market value at the time of death P180,000;
consideration received when transferred P200,000:
a. Shall be included in the gross estate at P180,000
b. Shall be included in the gross estate at P200,000
c. Shall be included in the gross estate at P100,000
d. Shall not be included in the gross estate

15.Which statement is correct? Real property with a cost of P300,000 and a fair market
value at the time of death of P1,000,000, but subject to a mortgage of P200,000:
a. Shall be in the net taxable estate at P800,000
b. Shall be in the gross estate at the decedents equity of P800,000
c. Shall be in the gross estate at P300,000
d. Shall be in the gross estate at the owners equity of P100,000

16.The following are the motives of a taxpayer that preclude the transfer in
contemplation of death, except one
a. To relieve the taxpayer of the burden of management
b. To save income and property taxes
c. To avoid payment of estate tax
d. To make dependents financially independent
17.Which of the following is a distinction between estate and donors tax?
a. The tax imposed is an excise tax
b. Extension for payment
c. Effectivity of the transfer of property
d. The exemption granted in the tax table

18.Statement 1: The estate tax accrues at the moment of death of the decedent
Statement 2: In estate taxation, the taxpayer is the decedent.

Which of the above statement is correct?


a. Statement 1 only c. Both statements
b. Statement 2 only d. Neither statements

19.A citizen and resident of the Philippines died leaving the following properties and
rights:
Cash on hand and in banks (of which P150,000 was
provided in the will to be given to a charitable institution)
P1,000,000
Real Property in the Philippines:
Assessed value per assessment rolls of the city
100,000
Zonal value per Bureau of Internal Revenue
500,000
Selling price of adjacent piece of land the day preceding the date of death
600,000
Real property in Malaysia, fair market value
450,000
Car in the Philippines, with a mortgage of P200,000
400,000
Receivables:
From a friend from whom there is no possibility of recovery
20,000
From a sister whose ratio of assets to liabilities is 1:3
15,000
Amounts under insurance contracts:
Receivable under life insurance, with the father as revocable beneficiary
250,000

Receivable under life insurance, with the mother as irrevocable beneficiary


200,000
Receivable under accident insurance, for accident that happened 1 year ago
50,000
Receivable under property insurance, for damaged caused to his car
12,000
Revocable transfers:
To sister (fair market value at the time of transfer was P40,000 and
consideration received was P10,000
50,000
To father (fair market value at the time of transfer was P30,000 and
consideration received was P30,000
60,000
To mother (fair market value was P40,000 and consideration received was
P50,000) 70,000

The gross estate is:


a. P2,737,000 c. P2,627,000
b. P2,807,000 d. P1,350,000

20.A citizen of Malaysia, residing in Kuala Lampur, with properties in the Malaysia and
the Philippines, had the following data on properties and rights at the time of his
death and their values:
Real estate, Malaysia P1,000,000
Real estate, Philippines 2,000,000
Shares of stock of a domestic corporation 200,000
Shares of stock of a Malaysian corporation 300,000
Shares of stock of an Indonesian corporation, doing business
in the Philippines only 100,000
Philippine peso deposit in BDO bank 500,000
Receivable under a life insurance with an insurance
company doing business in Malaysia 250,000

The gross estate that should be reported in the Philippines is:


a. P4,350,000 c. P4,000,000
b. P3,700,000 d. P2,800,000

21.Which of the following is not a deduction from the gross estate under the NIRC?
a. taxes c. Legacy to the government
b. Losses d. Legacy to a charitable
institution

22.The following are the requisites in order that claims against the decedents estate
may be deductible, except:
a. They must be existing against the estate
b. They must be reasonably certain as to amounts
c. They must have been prescribed
d. They must be enforced by the claimants

23.Which of the following statements is wrong? A claim against an insolvent person, with
no properties whatsoever is:
a. included in the gross estate
b. not included in the net taxable estate
c. if arising out of debt instrument of the insolvent, the debt instrument must be
notarized
d. needs no preliminary filing of a case against the insolvent.

24.Y, a Filipino resident, died on November 5, 1992 and his estate incurred losses due
to:
1st loss: From fire on February 2, 1992 of improvement on his property not
compensated by insurance
2nd loss: From flood on February 25, 1993 of household furniture also not
compensated by insurance
a. 1st loss is not deductible and 2nd loss is deductible
b. Both losses are not deductible
c. Both losses are deductible from gross estate
d. 1st loss is deductible and 2nd loss is not

25.The following are requisites for vanishing deduction to be allowable except one:
a. The estate tax of the prior succession must have been finally determined;
b. The present decedent died within five (5) years from the date of death of the
prior decedent;
c. The property with respect to which deduction is sought can be identified;
d. The property must have formed part of the gross estate situated in the
Philippines of the prior decedent.

26.Rudolfo, a citizen of the Philippines and resident of Tacloban City, died testate on May
10, 2001. Among his gross estate are properties inherited from his deceased father
who died on April 4, 1998. What percentage of deduction will be used in computing
the amount of vanishing deduction?
a. 80% of the value taken as basis for vanishing deduction;
b. 100% of the value taken as basis for vanishing deduction
c. 60% of the value taken as a basis for vanishing deduction
d. 40% of the value taken as basis for vanishing deduction

27.Which statement is true?


a. A single person who is not a head of family may not have a deduction for
family home;
b. There can be a deduction for two family homes if their aggregate value does
not exceed P1,000,000;
c. Deduction may be claimed for a family home of a non-resident citizen of the
Philippines located outside the Philippines
d. A family home is always conjugal/community property

28.Statement 1: Expenses incurred for the performance of the rites and ceremonies
incident to interment and those incurred after interment, such as prayers, masses
and entertainment are part of funeral expense.
Statement 2: The administrator or executor shall submit a statement showing the
disposition of the proceeds of the loan if the claim against the estate was contracted
within five years before the death of the decedent.
a. True, true b. True, false c. False, true d. False, false

29.Which statement is wrong? For a non-resident, not citizen of the Philippines:


a. There are no special deductions from the gross estate
b. There can be no deduction for funeral expenses entirely incurred outside the
Philippines
c. There can be a vanishing deduction;
d. There can a be a deduction for transfer for public use.

30.Mrs. Mina Las a non-resident, not citizen of the Philippines, single, who died with a
gross estate in the Philippines of P4,000,000 and outside the Philippines of
P6,000,000. He left the following obligations and charges:
Medical expenses, Philippines, in the year of death
P1,000,000
Funeral expenses, foreign 800,000
Claims against insolvent person, Philippines
250,000
Judicial expenses of testamentary proceedings, Philippines
300,000
Judicial expenses of testamentary proceedings, foreign
350,000
Other claims against the estate, Philippines
900,000
Transfer to the Philippine Government, for public use of property in the
foreign country
400,000
Unpaid taxes, foreign country
20,000
Mortgage payable, foreign country
180,000
Losses, Philippines 100,000

Deduction from the Philippine gross estate is


a. P1,250,000 c. P1,760,000
b. P1,550,000 d. P1,160,000

31.Mr. Dino Minggo, a citizen and resident of the Philippines, died on October 5, 2011.
He was married and the property relationship during the marriage was the absolute
community of property. He left the following properties, with their fair market values,
and obligations and charge thereon:

Agricultural land P100,000


House and lot acquired by inheritance before the marriage and
4 years ago, used as family home (with a fair market value of
P420,000 and a mortgage of P120,000 when acquired; P20,000 was
paid by Mr. Costales before he died) 500,000

Jewelry of Mrs. Minggo, acqyired during the marriage with the income
of Mrs. Minggo 50,000
Clothes acquired during the marriage, with income during the marriage:
For use of Mr. Minggo 60,000
For use of Mrs. Minggo 70,000
Cash on hand and in banks: Income from unidentified sources
300,000
Cash in bank:
From a sale at a loss of exclusive property 1,500,000
Received as gift six years ago and before the marriage (current account)
40,000
Other properties:
Owned before the marriage 90,000
Acquired during the marriage 20,000

Total funeral expenses of P300,000. Paid from the estate P 58,000


Judicial expenses 120,000
Unpaid mortgage (already on the property at the time acquired):
On agricultural land 20,000
On house and lot 100,000
Other obligations 20,000
Legacy to the government of the Philippines from the current account
10,000

The net taxable estate is:


a. P660,932.33 c. P698,620.70
b. P857,310.34 d. P767,310.34

32.A resident citizen died leaving (all before standard deduction):Net estate in the
Philippines P1,000,000; Net estate in Foreign Country A P250,000; Net estate in
Foreign Country B P750,000. His estate paid estate taxes to foreign Country A of
P7,500 and to Foreign Country B of P18,125. The allowable estate tax credit against
the Philippine estate tax is:
a. P25,000.00 c. P27,500.00
b. P25,625.00 d. P26,405.00

33.The estate tax return should be accompanied by a certificate of an independent CPA


if the gross estate is:
a. P2,000,000 c. Over P2,000,000
b. P2,000,000 or over d. P50,000 or over

34.Which statement is wrong? An estate tax return is required to be filed:


a. When the estate is subject to estate tax
b. When the estate is not subject to estate tax but the gross estate exceeds
P200,000
c. Where the gross estate includes registered real property
d. In all cases where there is a gross estate

35.First statement: The estate tax return should be filed with the authorized agent bank,
Revenue District Officer, Collection Agent or duly authorized treasurer of the
municipality in which the decedent was domiciled at the time of his death.
Second statement: If the decedent was a non-resident, not a citizen of the
Philippines, the estate tax return may be filed with the Commissioner of Internal
Revenue
a. Both statements are true
b. Both statements are false
c. The first statement is true, but the second statement is false
d. The first statement is false, but the second statement is true

If the net estate is The tax shall be Plus Of excess over

Over But not over


P 200, 000 Exempt
P200,000 500,000 5% P 200,000
500,000 2,000,000 P 15,000 8% 500,000
2,000,000 5,000,000 135,000 11% 2,000,000
5,000,000 10,000,000 465,000 15% 5,000,000
10,000,000 1,215,000 20% 10,000,000