Kingfisher School of Business and Finance TAX REVIEW MATERIALS

KINGFISHER SCHOOL OF BUSINESS AND FINANCE

TAXATION REVIEW MATERIALS

TX 105: ESTATE TAX

EXERCISES:

A. Mr. E Cruz, resident citizen, died intestate on September 30, 2014. He was survived by
his wife and his two children. He and his wife were under conjugal partnership of gains.
The estate of E. Cruz appointed Mr. Earl Garcia as the executor. The estate has
following properties situated in the Philippines:
Land (900 sq. m.) inherited from the decedent’s father who died on June 15, 2010;
FMV per tax declaration, P1,900,000; zonal value, P3,000 per sq. m.;
Car inherited from the decedent’s father, FMV, P500,000; Cost, P700,000;
Jewelry acquired before marriage, FMV, P100,000;
House and lot acquired during the marriage (family home), FMV, P4,100,000;
assessed value, P3,300,000;
Household furniture and appliances acquired during the marriage, FMV, P500,000;
Other personal properties including cash (mode of acquisition unknown), FMV,
P1,800,000.

Mr E. Cruz and his wife also owned real property in USA valued at P1,500,000. It had an
unpaid mortgage of P300,000 at the time of death. The estate of Mr. Cruz paid P20,000
tax estate to the US Government.

The following were considered as deductions from the gross estate in the Philippines:
Actual funeral expenses (50% paid by relatives), P480,000; Judicial expenses
incurred up to March 31, 2015, P100,000; Unpaid realty tax on inherited land for the
last quarter of 2014, P50,000; Jewelry acquired before marriage, lost on December
24, 2014 due to theft, P30,000; Other claims against the conjugal properties,
P500,000; Claims against insolvent persons, P50,000; Transfer to Quezon City for
public purpose, P100,000; Medical expenses, P520,000.

The estate of the decedent’s father paid the estate on the land at the fair market value of
P2,500,000 and on the car, P700,000. During the marriage, Mr. E. Cruz mortgaged the
inherited land for P700,000 for the benefit of the family. He paid P350,000 before he
died. How much was the Philippine taxable net estate and the estate tax payable after
tax credit?

1. When is the last day for filing of the notice of death and who shall file it?
2. When is the last day for filing of estate tax return?
3. How much is the total taxable gross conjugal property?
4. How much is the total allowable deductions from the gross estate?
5. How much is the taxable net estate and the tax payable?
ESTATE TAX TABLE
If the net estate is The tax shall be Plus Of excess over
Over But not over
P 200,000 Exempt
P 200,000 500,000 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
Kingfisher School of Business and Finance TAX REVIEW MATERIALS