ESTATE TAX (Part 2)

41. In determining the taxable net estate of a decedent, which of the following rules is correct?
a. Real estate abroad is not included in the gross estate of a decedent who was a resident alien.
b. Vanishing deduction must be subject to limitations.
c. Shares of stocks being intangible property shall be included in the decedent’s gros estate wherever
situated.
d. Funeral expenses are deductible to the extent of 5% of the total gross estate but not exceeding
P200,000.
42. The following are requisites for vanishing deduction to be allowable, except one:
a. The estate tax of the prior succession must have been paid.
b. The present decedent died within five (5) years from date of death of the prior decedent.
c. The property with respect to which deduction is sought for can be identified as the one inherited by the
present decedent.
d. The property must have formed part of the gross estate situated in the Philippines of the prior decedent.
43. Which of the following statements is wrong? Property subject to vanishing deduction should be:
a. If the decedent was a citizen or resident of the Philippines, the property should be located in the
Philippines.
b. If the decedent was not a citizen nor resident of the Philippines, the property should be located in the
Philippines.
c. If the decedent was not a citizen but a resident of the Philippines, the property should be located in the
Philippines.
d. If the decedent was a citizen and resident of the Philippines, the property may be located anywhere.
44. One of the following statements is wrong. Vanishing deduction shall be allowed to the estate of a resident
citizen.
a. As long as the property is included in the gross estate.
b. If no vanishing deduction was allowed to the estate of the prior decedent.
c. Even if the grantor of the property is still alive.
d. Even on substitute property.
45. A resident decedent, during his lifetime, was under the conjugal partnership of gains. Among his allowable
deductions from the gross estate is vanishing deduction and the following:
Funeral expenses P80,000
Judicial expenses 100,000
Claims against conjugal properties 120,000
Mortgage on exclusive property 40,000
Bequest to charitable institution 5,000
Bequest to the Philippine Government 60,000
Medical expenses 300,000
Amount received under R.A. 4917 60,000
The multiplier “deductions” is:
a. P220,000 b. P280,000 c. P400,000 d. P765,000
46. A citizen of the Philippines and resident of Baguio City, died testate on May 10, 2018. Among his gross
estate are properties inherited from his deceased father who died on April 4, 2015. 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 basis for vanishing deduction.
d. 40% of the value taken as basis for vanishing deduction.
47. Statement 1: For a vanishing deduction, there should always be two deaths within five years from receipt of
property.
Statement 2: For two acquisitions by gratuitous title at different dates, but both within five years to present
death, there may be one consolidated computation for the vanishing deduction.
 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.
48. A citizen and resident of the Philippines, married, died, leaving the following properties.
Real and personal properties acquired during the marriage P3,000,000
Land and building inherited from the father 1 ½ years ago
(with a fair market value at the time of P1,500,000),
and used at the time of his death as home for his family 2,000,000
Car, purchased with cash received as gift from the mother during the year 500,000
Cash (including P500,000 received by inheritance from the father) 1,500,000
Claims against conjugal properties 600,000
Unpaid mortgage on the land and building inherited (from an original
of P600,000 when inherited) 100,000
The vanishing deduction is:
a. P1,530,000 b. P1,080,000 c. P450,000 d. P1,130,000
49. Statement 1: Vanishing deduction for the estate of a non-resident, not citizen of the Philippines, is
allowable only if the property is located in the Philippines
Statement 2:Deduction for transfers for public purpose for the estate of a non-resident, not citizen of the
Philippines, is allowed only if the property is located in the Philippines.
a. Both statements are correct
b. Both statements are wrong
c. The first statement is correct and the second statement is wrong
d. The first statement is wrong and the second statement is correct
50. Which statement is wrong? For a non-resident, not citizen of the Philippines:
a. There can be a special deduction from the gross estate.
b. There can be a deduction for funeral expenses.
c. There can be a vanishing deduction.
d. There can be a deduction for transfer for public purpose.
51. Only one statement is correct. Deduction for family home of citizen or resident alien decedent:
a. Shall be allowed if the family home is in the Philippines or outside the Philippines.
b. Shall be at a maximum of P10,000,000, based on cost.
c. May be allowed for two family homes (one in the City and another in the Province), both in the
Philippines and with certifications of the Barangay Captains.
d. Shall be deducted at lesser than P10,000,000 if, with vanishing deduction and unpaid mortgage or
indebtedness, the value of the family home is already reduced to zero.
52. Which statement is true?
a. A single person who is 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 P10,000,000.
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.

Items 53 and 54 are based on the following information:

53. A Filipino decedent died single (but head of family), leaving a family home which consists of a piece of
land that he inherited 3-1/2 years ago (with a value at that time of P6,000,000) with a fair market value of
P8,000,000 at the time of his death, and a house thereon which he built at a cost of P6,500,000, and a fair
market value at the time of his death of P4,500,000. Other properties in his gross estate have a fair market
value of P5,500,000. Unpaid obligations at the time of his death amounted to P3,000,000. The vanishing
deduction is:
a. P2,000,000 b. P5,000,000 c. P4,000,000 d. P2,250,000
54. The total deduction for family home is:
 a. P4,500,000 b. P5,500,000 c. P10,000,000 d. P12,500,000
55. A resident decedent was married at the time of death and under the system of conjugal partnership of gains.
Among the properties in the gross estate were:
Land, inherited before the marriage, fair market value P5,000,000
Family home built by the spouses on the inherited land 8,000,000
Deduction for family home is:
a. P8,000,000 b. P9,000,000 c. P10,000,000 d. P13,000,000
56. Statement 1: The standard deduction from the gross estate is always P5,000,000, whether the decedent was
married or not.
Statement 2: For a married person with exclusive and conjugal/community properties, the standard
deduction need not be classified as exclusive or conjugal deduction.
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.
57. 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 left the following obligations and charges:
Medical expenses, Philippines, in the year of death P1,000,000
Funeral expenses, foreign 800,000
Claim 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
The deduction from the Philippine gross estate is:
a. P580,000 b. P1,080,000 c. P1,450,000 d. P980,000

Items 58 and 59 are based on the following information:

58. A citizen of the Philippines and a resident of the United States, under the system of conjugal partnership of
gains died in the United States, and was shipped to and buried in the Philippines. He had the following
data:
Real property in the Philippines (inherited 3 1/2 years ago,
with a fair market value of P9,000,000 when inherited) P11,000,000
Real property in the U.S., used as family home 13,000,000
Tangible personal properties in the Philippines 200,000
Tangible personal properties in the United States 700,000
Funeral expense in the United States 110,000
Funeral expense in the Philippines 100,000
Unpaid obligations 600,000
Claim against an insolvent person in the Philippines 100,000
Estate tax paid to the United States 120,000
The gross estate is:
a. P3,520,800 b. P23,000,000 c. P24,900,000 d. P25,000,000
59. The taxable net estate is:
a. P2,565,000 b. P2,650,800 c. P4,150,800 d. P7,650,800

Items 60 through 62 are based on the following information:

 60. A citizen and resident of the Philippines, died on October 10, 2018, leaving the following properties, rights,
obligations and charges:
Conjugal properties (including a family home of P22,000,000 and amount receivable
under Republic Act 4917 of P200,000) P26,000,000
Exclusive properties (including cash of P500,000 inherited 4 1/2 years ago) 4,000,000
Medical expenses unpaid, January 2018 600,000
Funeral expenses 350,000
Judicial expenses 500,000
Other obligations 300,000
The deduction for family home is:
a. P1,000,000 b. P5,000,000 c. P10,000,000 d. P11,000,000
61. The vanishing deduction is:
a. P99,000 b. P100,000 c. P495,000 d. P500,000
62. The taxable net estate is:
a. P651,000 b. P751,000 c. P1,651,000 d. P1,751,000

Items 63 through 66 are based on the following information:

63. A citizen of the Philippines, single, but head of family, died a resident of the United States, leaving the
following properties, expenses and obligations:
Real property in the United States P14,000,000
Personal property in the Philippines inherited from the father
one and one-half years ago 1,600,000
Family home in the United States 9,400,000
Actual funeral expenses paid in the United States 500,000
Other obligations contracted within the last two years 250,000
The gross estate subject to Philippine estate tax is:
a. P9,400,000 b. P14,000,000 c. P25,000,000 d. None of these
64. The deduction for family home is:
a. P0 b. P9,400,000 c. P10,000,000 d. None of these
65. The vanishing deduction is:
a. P1,080,000 b. P1,267,000 c. P1,280,000 d. None of these
66. The taxable net estate is:
a. P8,482,800 b. P9,082,800 c. P14,082,800 d. None of these

Items 67 and 68 are based on the following information:

67. A non-resident, not a citizen of the Philippines, single, died leaving a gross estate in the Philippines of
P1,000,000 and a gross estate outside the Philippines of P3,000,000. His expenses and obligations were:
Funeral expenses outside the Philippines of P100,000, mortgage of property outside the Philippines of
P200,000 and in the Philippines of P50,000 and transfer to the Philippine Government of property outside
the Philippines of P100,000.
The allowable deduction from the Philippine gross estate is:
a. P162,500 b. P562,500 c. P850,000 d. None of these
68. The taxable net estate in the Philippines is:
a. P437,500 b. P837,500 c. P937,500 d. None of these
69. A non-resident Australian citizen, died leaving properties and obligations in Australia and in the
Philippines. Data on his properties expenses and obligations follow:
Properties in Australia (inherited within the year of which
P1,000,000 is family home) P3,000,000
Properties in the Philippines 1,000,000
Funeral expenses in Australia 250,000
Unpaid obligations in Australia 700,000
Medical expenses in the Philippines 200,000
 The taxable net estate in the Philippines is:
a. Exempt b. P500,000 c. P325,000 d. P825,000
70. Estate tax credit for foreign estate tax paid is available to the estate of:
a. Resident or citizen of the Philippines
b. All kinds of decedents
c. Non-resident alien
d. None of these

Items 71 and 72 are based on the following information:

71. Country A: Net estate of P100,000 and estate tax paid of P4,500; Country B: Net estate of P200,000 and
estate tax paid of P15,000; Philippines: Net estate of P200,000. The decedent was a citizen and resident of
the Philippines.
The estate tax credit for foreign estate taxes paid is:
a. P19,500 b. P15,000 c. P18,000 d. P16,500
72. The estate tax still due after credit for foreign estate taxes paid is:
a. P10,500 b. P13,500 c. P12,000 d. P21,000
73. Philippines Foreign
Gross estate P6,000,000 P4,000,000
Claims against the estate 1,000,000 1,000,000
How much was the Philippine estate tax due if the decedent was a non-resident, not citizen of the
Philippines, and there was a foreign estate tax payment of P200,000?
a. P0 b. P288,000 c. P172,800 d. P88,000
74. Which statement is wrong? An estate tax return is required to be filed:
a. When the gross value of the estate exceeds P5,000,000.
b. Where the gross estate consists of registrable motor vehicle and shares of stock.
c. Where the gross estate includes registered real property.
d. In all cases of transfers subject to tax.
75. When an estate is settled extrajudicially, the estate tax return may be filed and the estate tax paid:
a. By any of the heirs, with a right of reimbursement from the other heirs.
b. Only by the heir with written authority from the other heirs.
c. By each of the heirs, the payment being for his distributive share in the estate tax.
d. None of the above.
76. The estate tax return should be accompanied by a certificate of an independent CPA if the gross estate is:
a. P2,000,000 b. 5,000,000 c. Over P5,000,000 d. Below P5,000,000
77. Statement 1: The estate tax return should be filed with the Authorized Agent Bank, Revenue District
Officer, Collection Agent or duly authorized Treasurer of the City or Municipality in which the decedent
was domiciled at the time of his death.
Statement 2: 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 correct
b. Both statements are wrong
c. The first statement is correct and the second statement is wrong.
d. The first statement is wrong and the second statement is correct.
78. Statement 1: Payment by installment of the estate tax due shall be allowed within 2 years from the statutory
date for its payment without any civil penalty and interest.
Statement 2: The estate tax return may be signed by any one of the heirs if the estate is not settled
judicially.
a. Both statements are correct.
b. Both statements are wrong.
c. The first statement is correct and the second statement is wrong.
d. The first statement is wrong and the second statement is correct.
79. Statement 1: The payment of the estate tax may be extended for a period not exceeding five years if there is
judicial settlement of the estate.
Statement 2: The payment of the estate tax may be extended for a period not exceeding two years if there is
extrajudicial settlement of the estate.
a. Both statements are correct.
b. Both statements are wrong.
c. The first statement is correct and the second statement is wrong.
d. The first statement is wrong and the second statement is correct.
80. Which of the following statements is not correct?
a. No judge shall order a distribution of any part of the estate to an heir without a certification from the
Bureau of Internal Revenue that the tax has been paid.
b. If a bank has a knowledge of the death of a person who maintained a deposit account alone or jointly
with another it shall allow any withdrawal from said deposit account but subject to a final withholding
estate tax of 6%.
c. No Register of Deeds shall transfer to any heir the title of a decedent to real property without a
certification from the Bureau of Internal Revenue that the tax has been paid.
d. None of the above.
81. An executor or administrator, after paying the estate tax, and to escape a future liability for a deficiency
estate tax, must secure a written discharge from personal liability from:
a. The heirs
b. The court where the estate was being settled
c. The Commissioner of Internal Revenue
d. None of these
82. Which of the following statements is false? When an estate tax return had been filed and the estate tax had
been paid but subsequently, because of errors in the return, a deficiency estate tax has to be paid:
a. The Bureau of Internal Revenue can ask payment from the heirs to whom the estate had been distributed.
b. The Bureau of Internal Revenue cannot ask the executor or administrator to pay because he would have
been discharged from liability for the estate tax to the state, and the heirs once the estate tax had been paid.
c. The Bureau of Internal Revenue can still ask the executor or administrator to pay, even if the heirs have
dissipated the inheritance, if the executor or administrator did not ask for a written discharge from liability
from the Bureau of Internal Revenue.
d. The Bureau of Internal Revenue shall have a lien on the properties of the estate once a demand for
payment had been made.
83. When a donation which paid a donor’s tax return was actually a donation mortis causa, as ascertained by
the Bureau of Internal Revenue, which of the following is true?
a. The donation shall be required to pay the estate tax on its proper valuation at the time of death, and there
can be a refund for the wrong payment of the donor’s tax.
b. The donation shall be required to pay the estate tax so that the estate tax computed shall be reduced by
the donor’s tax already paid.
c. The donation shall not pay any transfer tax anymore.
d. The donation has to pay the estate tax in addition to the donor’s tax previously paid.
84. Statement 1: When an estate under administration has income-producing properties, the annual income of
the estate becomes part of the estate subject to the estate tax.
Statement 2: When an estate under administration has income-producing property, the annual income is not
part of the estate subject to estate tax but when distributed in the year that the income was earned becomes
income to the heir subject to income tax.
a. Both statement are correct
b. Both statements are wrong
c. The 1st statement is correct and the 2nd is wrong
d. The 1st statement is wrong and the 2nd is correct
85. Taxpayer died February 2, 2018. No judicial proceedings were instituted for the settlement of his estate.
Return was filed and tax of P60,000 was paid May 2,109. The estate tax due, including increments, as of
May 2,2019 is:
a. P78,000 b. P78,750 c. P93,000 d. P94,500