ESTATE TAXATION (Self-Test) GCC October 2017

1. This is not part of the gross estate of the decedent

A. Conjugal property C. Share of the surviving spouse
B. Community property D. Exclusive property of the surviving spouse

2. Under the regime of absolute community of property, jewelry for personal and exlusive use of the wife shall belong to
the
A. wife B. husband C. husband and wife D. children

3. One of the following is not an exemption or exclusion from the gross estate
A. Capital or exclusive property of the surviving spouse
B. Properties outside the Philippines of a non-resident French decedent
C. Shares of stock of Metro Pacific Investment Corporation of a non-resident Italian
D. The merger of usufruct in the owner of the naked title

4. X died leaving a farm land. In his will, he transferred the ownership thereof to Y but subject to the condition that Z will
have the right to use the land for a period of 15 years. In the 12th year, however, Z died and in Zs will he surrendered his
right over the land to Y.
A. The transfer is subject to donors tax C. The transfer is both an inclusion from the gross estate
B. The transfer is subject to estate tax D. The second transfer is exempt from transfer taxes

5. Fruits and income of exclusive property shall belong to the spouses

Property brought to the marriage by either spouse shall belong to both spouses
A. True, true B. True, false C. False, true D. False, false

6. Donation made by the decedent during lifetime but to take effect upon his death shall be exempt from donors tax
The share of the surviving spouse in the conjugal property is part of the gross estate of the decedent
A. True, true B. True, false C. False, true D. False, false

7. Which of the following is not correct in succession?

A. Legitimate children share equally in their legitime of of the net distributable estate
B. When the spouse survives with one legitimate child, the legitime of the spouse is of the net distributable estate
C. When the spouse survives with two legitimate child, the legitime of the spouse is of the net distributable estate
D. The legitimes of the legitimate and illegitimate children take precedence over the legitime of the surviving spouse

8. Taxation of the estate shall be governed by the statute or law in force at the time of death of the decedent and not by
the statute or law in force at the time of distribution of the estate to the heir
Succession takes place upon death and not upon the determination of the respective share of the heirs in the estate of
the decedent
A. True, true B. True, false C. False, true D. False, false

9. The family home includes the house and the lot where the house stands
The value of the house and the lot where it stands, if a family home, is deductible from the estate of the decedent
A. True, true B. True, false C. False, true D. False, false

10. When exclusive property is sold during marriage, the proceeds does not become property of the spouses
The legal heirs of the decedent must be determined first before the correct estate tax can be ascertained
A. True, true B. True, false C. False, true D. False, false

11. Under the absolute community of property, property acquired before marriage by either spouse including fruits and
income, if any shall be included as part of the community property
The total cost incurred for burial plot, tombstone, monument/mausoleum and related preservation, mourning apparels
of relatives, expenses of the wake, and notices are deductible from gross estate as funeral expenses
A. True, true B. True, false C. False, true D. False, false

12. Expenses incurred for the performance of the rites and ceremonies incident to interment and those incurred after
internment, such as prayers, masses and entertainment are not part of the funeral expenses for estate tax purposes
The administrator or executor shall submit a statement showing the disposition of the proceeds of the loan if the claims
against the estate was contracted within two years before the death of the decedent
A. True, true B. True, false C. False, true D. False, false

13. Under the regime of conjugal partnership of gains, if the property is inherited before and/or during marriage, it will
belong to the exclusive property of said heir
Unless stipulated, the property relations shall be governed by absolute community of property for marriages
celebrated on or after August 3, 1988.
A. True, true B. True, false C. False, true D. False, false

14. Under the regime of absolute community of property, property for personal and exclusive use of either spouses, except
jewelry, shall belong to both spouses
Unless stipulated, the property relations shall be governed by conjugal partnership of gains for marriages celebrated
before August 3, 1988.
A. True, true B. True, false C. False, true D. False, false
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15. The court cannot authorize the distribution of estate to an heir even if in its sound discretion, it believes that the heir
badly needs his/her share unless the estate tax is already paid.
The administrator or any of his heirs, may however upon authorization of the BIR withdraw from the decedents bank
deposits P20,000 without the required certification that the estate has been paid.
A. True, true B. True, false C. False, true D. False, false

16. Unpaid mortgage indebtedness is deductible from the gross estate provided the said property subject to the
indebtedness is included in the gross estate, before deducting the mortgage indebtedness.
A donation inter-vivos by the decedent to the Philippine government few months before his death is not a deduction
from the gross estate.
A. True, true B. True, false C. False, true D. False, false

17. A died giving B power to appoint who will inherit As house and lot. B however can only choose among C, D, E and
F. B decided to transfer the property to C, in Bs own will when he was 90 years old already. The transfer from B to C
is not subject to estate tax.
During Xs lifetime, he decided to give Y as gift his car subject to the condition that if Y does not become a CPA
within three years, X shall revoke the transfer. In the second year however, X died. The car must form part Xs gross
estate.
A. True, true B. True, false C. False, true D. False, false

18. Medical expenses, to be deductible, must be incurred by the decedent within one year prior to his death and shall no
case exceed P500,000.
Medical expense incurred must be the cause of death for it to be considered as deductible from gross estate.
The amount of funeral expense that maybe deducted from the gross estate is 5% of the gross estate or the actual
funeral expenses or P200,000, whichever is the lowest.
A. True, true, true B. True, false, true C. False, true, true D. False, false, false

19. Written notice shall be given to the CIR within 2 months if the gross estate is P20,000 or more.
In general, estate tax return should be filed under oath within 6 months if the gross estate P200,000 or more.
The estate tax return shall be supported with a statement duly certified by a CPA if the gross estate is P2,000,000 or
more
A. True, true, true B. True, false, true C. False, true, true D. False, false, false

20. If it will cause undue hardship on the part of the estate, the estate tax may be paid within 5 years in case the estate is
settled through the courts, within 2 years in case estate is settled without courts intervention.
The CIR, in meritorious cases may grant a reasonable extension to file the estate tax return, not exceeding 30 days.
If the estate consist of registrable property (e.g., real property, motor vehicle, shares of stock, among others) from
which a clearance from the BIR is required as a condition for the transfer of ownership, an estate tax return should be
filed under oath regardless of the value of the gross estate.
A. True, true, true B. True, true, false C. False, true, true D. False, false, false

21. The property, rights and obligations of a person which are not extinguished by his death and those which accrued thereto
since the opening of succession.
A. Assets B. Capital C. Estate D. Income

22. The term applied to the person whose property is transmitted through succession, whether or not he left a will
A. Decedent B. Transferor C. Transferee D. Grantor

23. The term applied to the person whose property is transmitted through succession if he left a will
A. Transferor B. Grantor C. Donor D. Testator

24. The person called to the succession either by the provision of a will or by operation of law
A. Heir B. Devisee C. Legatee D. Trustor

25. The person to whom a gift of real property is given by virtue of a will
A. Heir B. Devisee C. Legatee D. Trustor

26. The person to whom the gift of personal property is given by virtue of a will
A. Heir B. Devisee C. Legatee D. Trustor

27. V made the following transfer inter-vivos:

To W To X To Y To Z
Cost P100,000 P100,000 P100,000 P100,000
FMV, time of transfer 140,000 100,000 100,000 80,000
Consideration received 100,000 140,000 80,000 10,000
FMV time of death of V 120,000 200,000 70,000 90,000

The amount to be included in the gross estate of V is

A. P160,000 B. P100,000 C. P130,000 D. P110,000
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Use the following information for the next four items

A decedent left the following properties:

Land in Spain (with P1M unpaid mortgage) P2,000,000

Land in Batangas, Philippines 500,000
Franchise in Switzerland 100,000
Receivable from debtor in Philippines 70,000
Receivable from debtor in Switzerland 100,000
Bank deposits in Switzerland 80,000
Shares of stocks of ABS-CBN (listed), Philippines 75,000
Shares of stocks of RPH, foreign corporation 80% of the business in the Philippines 125,000
Other personal properties 300,000
Zonal value of the land in Batangas 750,000

28. If the decedent is a non-resident citizen, his gross estate is

A. P3,650,000 B. P3,600,000 C. P2,500,000 D. P2,650,000

29. If the decedent is a non-resident alien, his gross estate is

A. P1,195,000 B. P945,000 C. P1,320,000 D. P1,070,000

30. If the decedent is a non-resident alien with reciprocity, his gross estate is
A. P1,050,000 B. P1,195,000 C. P1,250,000 D. P1,070,000

31. Assuming the ABS-CBN shares are not listed, and there are 1,000 shares at the time of death, ABC-CBNs outstanding
shares were 10,000 shares. Its retained earnings was P2,000,000, par value per share was P50. The gross estate should
show the said shares at
A. Still at P75,000 B. P250,000 C. P200,000 D. P0

Use the following information for the next five items

Mr. DJ, Filipino, married, died on January 1, 2017 survived by his wife and by her 2 legitimate children by a former
marriage and a legitimate child with his present wife, leaving the following:

a. Property inherited from his father who died January 2, 2011:

1) Agricultural land P1,800,000
2) Residential land 3,000,000

b. Property inherited from his mother who died on Nov. 1, 2012, one day after Mr. DJs marriage to his present wife
1) Fish pond P1,200,000
2) Jewelry 1,000,000

c. Property acquired thru Mr. DJs labor:

1) Residential house and lot used as family home P1,900,000
2) Motor vehicles 800,000
3) Commercial land 4,000,000
4) Cash 2,000,000

The agricultural land and residential land were previously mortgaged for P800,000 when inherited where P450,000 was
paid by Mr. DJ during lifetime. The commercial land has a mortgage of P1,000,000 of which P600,000 was paid by
Mr. DJ before his death. Mr. DJ by will bequeathed to the City of Makati for exclusively public purpose the sum of
P200,000.

The estate claimed the following expenses:

a. Funeral expenses P250,000 c. Claims against the estate P150,000

b. Judicial expenses 100,000 d. Medical expenses P400,000

Determine the following items:

32. Gross estate ____________________
33. Deductible ELIT ____________________
34. Vanishing deduction ____________________
35. Total Ordinary Deductions ____________________
36. Net taxable estate ____________________

37. K, a resident citizen, died leaving the following:

Net estate (before standard deduction) Estate tax paid

Philippines P5,000,000 To be determined
France 3,000,000 P280,000
Austria 2,000,000 220,000

Determine the estate tax due after foreign tax credit. _____________________
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Use the following information for the next five items

Mr. D, Filipino, married to L with whom he has two children, died on February 14, 2017. The inventory of the properties
of the spouses shows the following:

a. House and lot in Taguig owned by D before marriage P3,000,000

b. Agricultural land owned by L before marriage 1,200,000
c. Real property acquired during marriage 2,000,000
d. Family home acquired during marriage 2,200,000
e. Personal property acquired during marriage 1,400,000
f. Commercial building in Makati inherited by D during marriage from his father 2,000,000
who died on February 14, 1987
g. Apartment house inherited by L during marriage from her mother who died on 4,000,000
February 14, 2007
h. Proceeds of life insurance where the estate of D was designated as the irrevocable 1,000,000
beneficiary
i. Proceeds of life insurance where L was designated as the irrevocable beneficiary 2,000,000

Deductions claimed by the estate:

1. Legacy given in favor of the Philippine government in decedents will P300,000

2. Claims against the estate 100,000
3. Unpaid mortgage on agricultural land (letter b above) 400,000
4. Funeral expenses 180,000
5. Judicial expenses 600,000

Determine the following items:

38. Gross estate - exclusive ____________________
39. Gross estate conjugal/common ____________________
40. Vanishing deduction ____________________
41. Share of the surviving spouse ____________________
42. Net taxable estate and estate tax due ____________________

Use the following information for the next five items

Mr. V, Filipino, married, died on December 31, 2016, three years after marriage to Mrs. V. He left the following:
a. Property inherited by Mr. V from his father who died February 14, 2011 P3,000,000
b. Property inherited by Mrs. V from her father who died February 14, 2012 1,200,000
c. Property inherited by Mr. V from his mother who died February 14, 2013 1,800,000
d. Property inherited by Mrs. V from her mother who died February 14, 2014 1,400,000
e. Property acquired through the labor of:
Mr. V 2,000,000
Mrs. V 1,500,000
Mr. & Mrs. V (family home) 2,400,000
f. Other personal property 1,600,000

Deductions claimed by the estate:

a. Funeral expense P220,000
b. Unpaid mortgages on property in letters:
a. P500,000 b. P300,000 c. P180,000 d. P200,000
c. Claims against the estate 170,000
d. Accrued taxes (before the death of Mr. V) 80,000

Determine the following items:

43. Gross estate - exclusive ____________________
44. Gross estate conjugal/common ____________________
45. Vanishing deduction ____________________
46. Share of the surviving spouse ____________________
47. Net taxable estate and estate tax due ____________________