FELLOWSHIP BAPTIST COLLEGE

City of Kabankalan
COLLEGE OF BUSINESS NAD ACCOUNTNACY
TRANSFER AND BUSINESS TAXATION
Name:__________________________________________________ Course & Year:___________ Date:_________________ Score:___________
PART 1 – IDENTIFICATION
1) ___________________the amount deductible shall be whichever is the lowest among the following; actual funeral expenses incurred, 5%
of gross estate, and the P200,000.
2) ___________________ it includes those actual and necessarily incurred during the settlement of the estate but not beyond six (6)
months , or the extension thereof for the filing of the estate tax return.
3) ___________________ these include all losses incurred during the settlement of the estate arising from theft, robbery, embezzlement,
fire, shipwreck, storm and other calamities.
4) ___________________ this represents personal obligation of the deceased existing at the time of his death except unpaid funeral
expenses and unpaid medical expenses.
5) ___________________receivable of the decedent which are uncollectible due to insolvency of the debtor.
6) ___________________ these are unpaid indebtedness secured by debtor’s property , contracted in good faith and for an adequate and
full consideration in money or money’s worth.
7) ___________________these refers to taxes incurred prior to the date of the decedent’s death and remained unpaid as of the date of
death.
8) ___________________refers to the deduction from gross estate which includes cost of medicines, hospital bills, doctors’ fees, etc.
actually incurred with a maximum amount of P500,000.
9) ___________________this refers to the amount equivalent to the current fair market value or zonal value of the decedent’s family home
which shall not exceed P1,000,000 allowed by the law to be deducted for the gross estate.
10) ___________________this refers to the amount equivalent to P1,000,000 in addition to the other deductions from gross estate without
need of substantiation.

PART II – MULTIPLE CHIOCE

1. Gross estate includes all his property, real or personal, tangible wherever situated, except
a) Resident citizen c) Resident alien
b) Non-resident citizen d) Non-resident alien
2. Written notice shall be given to the CIR if the gross estate exceeds
a) P20,000 c) P100,000
b) P50,000 d) P150,000
3. From the time of death, notice of death should be given within
a) One month c) 3 months
b) 2 months d) 6 months
4. As a rule, estate tax return should be filed under oath if the gross estate exceeds
a) P100,000 c) P500,000
b) P200,000 d) P1,000,000
5. If the estate consists of registrable property, such as real property, motor vehicle, shares of stock or other similar property 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.
a) If the gross estate exceeds P200,000 c) If the gross estate exceeds P1,000,000
b) If the gross state exceeds P500,000 d) Regardless of the value of the gross estate
6. The estate tax return shall be supported with a statement duly certified by a CPA if the gross estate exceeds
a) P1,000,000 c) P5,000,000
b) P2,000,000 d) P10,000,000
7. From the decedents’ death, the estate tax return shall be file within
a) 2 months c) 6 months
b) 3 months d) 18 months
8. The CIR, in meritorious cases may grant a reasonable extension to file the return, not exceeding
a) 30 days c) 3 months
b) 60 months d) 6 months
9. Which of the following statement is not correct in succession?
a) Legitimate children share equally in their legitimate of ½ of the net distributable estate
b) When the spouse survives with one legitimate child, the legitime of the spouse is ¼ of the net distributable estate
c) When the spouse survives with two legitimate children, the legitime of the spouse of the spouse is ¼ of the net distributable
estate
d) The ligitimes of the legitimate and illegitimate children takes precedence over the legitime of the surviving spouse
10. 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 Chinese decedent
c) Shares of stock of San Miguel Corporation of a non-resident Mexican
d) The merger of usufruct in the owner of the naked title
11. A died leaving a farm land. In his will, he transferred the ownership thereof to B but subject to the condition that C will have the right to
use the land for a period of ten years (usufruct). In the seventh year, however, C died and in C’s will he surrendered his right over the land
to B.
a) He transfer is subject to donor’s tax c) The transfer is both an inclusion from the gross
b) The transfer is subject to estate tax estate
 d) The above is a tax exempt transfer
Items 12 through 15 pertain to the following information:
Proceeds of life insurance shall be included in the gross estate if the beneficiary designated is:
12. The estate and the designation is
a) Revocable c) Whether revocable or irrevocable
b) Irrevocable d) Partly revocable, partly irrevocable
13. The executor and the designation is
a) Revocable c) Whether revocable or irrevocable
b) Irrevocable d) Partly revocable, partly irrevocable
14. The administrator and the designation is
a) Revocable c) Whether revocable or irrevocable
b) Irrevocable d) Partly revocable, partly irrevocable
15. A person other than the estate, executor or administrator and the designation is
a) Revocable c) Whether revocable or irrevocable
b) Irrevocable d) Partly revocable, partly irrevocable
Items 16 and 17 pertain to the following information:
If it cause undue hardship on the part of the estate, the estate tax may be paid within
16. In case the estate is settled through the courts
a) 2 years b) 3 years c) 4 years d) 5 years
17. In case the estate is settled without court’s intervention
a) 2 years b) 3 years c) 4 years d) 5 years
18. 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
19. This is not part of the conjugal property
a) Those acquired by onerous title during the marriage of the expense of the common fund
b) Those acquired by industry or work of either of them
c) The fruits rents or interests received r due during the marriage coming from the conjugal property or from the exclusive
properties of the spouses.
d) Those acquired during the marriage by gratuitous title
20. Under the absolute community of property, jewelry for personal and exclusive use of the wife shall belong to the
a) Wife c) Husband and wife
b) Husband d) Children
21. A made the following transfer inter-vivos:
To B To C To D To E
Cost P100,000 P100,000 P100,000 P100,000
FMV, time of transfer P140,000 P100,000 P100,000 P80,000
Consideration received P100,000 P140,000 P80,000 P10,000
FMV time of death of A P120,000 P200,000 P70,000 P90,000
The amount to be included in the gross estate of A is
a) P160,000 c) P130,000
b) P100,000 d) P110,000
22. The estate should be valued at the time
a) The heirs are ascertained c) The estate is ready for distribution to the heirs
b) The estate tax is paid d) Of death of the decedent
23. Medical expenses, to be deductible, must be incurred by the decedent within
a) One year prior to his death c) Two years prior to his death
b) One year after his death d) Three years prior to his death
24. The medical expense shall in no case exceed
a) P200,000 c) P500,000
b) P400,000 d) P1,000,000
25. The amount of funeral expense that may be deducted from the gross estate is
a) 5% of the gross estate or P200,000 whichever is lower
b) Actual funeral expense or P200,000 whichever is lower
c) 5% of the gross estate or the actual funeral expense whichever is lower
d) 5% of the gross estate or the actual funeral expenses or P200,000 whichever is the lowest

PART III - True or False- Write “T” of the statement is correct and “F” if the statement is not correct in the space provided each statement.
Correct minus wrong. Strictly no erasures.
1. _____taxation of the estate shall be governed by the statute or law in force at the time of distribution of the estate to the heirs
2. _____succession takes place upon the determination of the respective share of the heirs in the estate of the decedent
3. _____the family home includes the house and the lot where the house stands
4. _____the value of the house and the lot where is stands, if a Family Home is deductible from the estate of the decedent
5. _____property brought to the marriage by either spouse shall belong to the spouses
6. _____the share of the surviving spouse in the conjugal property is part of the gross estate of the decedent
7. _____fruits and income of exclusive property shall belong to both spouses.
8. _____donations made by the decedent during lifetime but to take effect upon his death shall be exempt from estate tax.
9. _____When exclusive property is sold during the marriage, the proceeds become property of the spouses
 10. _____the legal heirs of the decedent must be determined first before the correct estate tax can be ascertained
11. _____under the absolute community of property, property acquired before marriage by either spouse including fruits and income, if any
shall belong to both spouses
12. _____the cost of burial plot, tombstone, monument or mausoleum, mourning apparel, expenses of the wake, and notice are deductible
from gross estate as funeral expenses
13. ____expenses incurred for the performance of the rites and ceremonies incident to interment and those incurred after interment, such
as prayers, masses and entertaining are part of funeral expense
14. ____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 five years before the death of the decedent.
15. _____if the property is inherited before marriage it will belong to both spouses while if it is inherited during marriage it is exclusive
16. _____unless stipulated, the property relations shall be governed by conjugal partnership of gains for marriages celebrated on or before
Aug. 3, 1988
17. _____Unless stipulated, the property, the property relations shall be governed by absolute community of property for marriages
celebrated on or after August 3, 1988
18. _____under the regime of absolute community of property, property for personal and exclusive use of either spouse except jewelry shall
belong to both spouses.
19. _____the court may authorize the distribution of estate, to an heir if in its sound discretion it believes that the heir badly needs his share.
20. _____the administrator or any of his heir, may however upon authorization of BIR withdraw from the decedent’s bank deposits P20,000
without the required certification that the estate tax has been paid.
21. _____A died giving B power to appoint a person who will inherit A’s house and lot. B however can only choose among C, D, E and F. B
decided to transfer the property to C, in B’s will when he sold old already. The transfer from B to C is subject to estate tax
22. _____during A’s lifetime, he decided to give B as gift his car subject to the condition that if B does not become a CPA within three years; A
shall revoke the transfer. In the second year however, A died. The car can no longer form part of A’s gross estate.
23. _____unpaid mortgage indebtedness is deductible form the gross estate provided the said property subject to the indebtedness is
included in the gross estate, net of the mortgage indebtedness.
24. _____a donation inter-vivos by the decedent to the Philippine government few months before his death is a deduction form the gross
estate.
25. ________The donor’s tax rate to relatives is a progressive tax.
26. ________The donor’s tax rate to strangers increases as the net gift increases.
27. ________Both the progressive donor’s tax and proportional donor’s tax results in an increasing amount of tax when the net taxable gift
increases.
28. ________The gross gift of real property may be measured at independent appraisal value.
29. ________The gift of listed shares is the fair value of the share at the date of donation.
30. ________Corporate donors cannot be subject to the progressive donor’s tax.
31. ________Donation to corporate donees cannot be subject to the progressive donor’s tax.
32. ________The gift to non-resident is exempt from donor’s tax.
33. ________The gift made to residents are always subject to donor’s tax.
34. ________Donation to donees abroad are always considered made to stragers.
35. ________The donation to any person who may qualify to inherit one’s estate is a donation to relatives.
36. ________The donation to non-resident donees is subject to proportional tax whereas the donation to resident donees is subject to
progressive tax.
37. ________The registration of a property in the name of another person is a taxable donation.
38. ________The cancellation of the indebtedness of another for a consideration is a donation.
39. ________Donation in irrevocable trust is excluded in gross gift.
40. ________Husband and wife are considered separate taxpayers.

PART IV – Short Problems

1. A decedent left the following properties:
Land in Italy (with P1M unpaid mortgage) P2,000,000 Share of stocks of PLDT, Philippines P75,000
Land in Laguna, Philippines P500,000 Shares of Stocks of ABC, foreign corporation
Franchise in USA P100,000 75% of the business in the Philippines P125,000
Receivable form debtor in Philippines P70,000 Other personal properties P300,000
Received from debtor in USA P100,000 Zonal value of the land in Laguna P750,000
Bank deposits in USA P80,000
If the decedent is a non-resident citizen, his gross estate is
2. Using the above data, if the decedent is a non-resident alien, his gross estate is
3. If in the preceding number reciprocity law can be applied, the gross estate is
4. Based on the above problem but assuming the PLDT shares of stocks are not listed in the local stock exchange, and there are 1,000 shares
at the time of death, the company’s 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
5. A, Filipino, widower, died leaving the following:
a) Real properties P4,000,000
b) Family home P1,200,000
c) Personal properties P2,000,000
d) Paid medical expense P600,000
e) Allowable deductions P800,000
Determine the net estate subject tax
 6. Using the data above, what is the Net Distributable estate?
7. A, Filipino, married, died leaving the following:
a) Real property-conjugal P4,000,000
b) Real property-exclusive (A) P2,500,000
c) Family home-exclusive (A) P1,200,000
d) Unpaid medical expenses P600,000
e) Allowable deductions-conjugal P1,400,000
Determine the net taxable estate
8. Using the same data above, what is the Net Distributable estate?
9. C, Filipino, married to D, died leaving the following:
a) Real properties-conjugal P4,000,000
b) Real property-exclusive (C) P1,800,000
c) Family home-exclusive (D) P1,400,000
d) Allowable deduction-conjugal P1,200,000
Determine the net taxable estate.
10. E, Filipino, married to F, died leaving the following:
a) Real properties-conjugal P5,000,000
b) Real property-exclusive (E) P1,200,000
c) Real property-exclusive (E) (lot where the family home stands) P400,000
d) Family home-conjugal P1,000,000
e) Allowable deductions-conjugal P1,600,000
Determine the net taxable estate.
11. G, Filipino, married to H, died leaving the following:
a) Real properties-conjugal P7,000,000
b) Real properties-exclusive (G) P1,400,000
c) Real property-conjugal (lot where the family home stands) P800,000
d) Family home-exclusive (G) P1,800,000
e) Allowable deductions-conjugal P2,400,000
Determine the net taxable estate

PART V – LONG PROBLEM

Renz, married to Heart, died on February 19 of the current year, leaving the following properties and obligations:
Properties:
Conjugal properties P2,300,000
Exclusive property of Renz (inherited two-and-a half years ago) 500,000
Exclusive property of Heart 760,000
Family home (exclusive property of Renz) 400,000
Benefits from SS (conjugal) 150,000
Deductions:
Funeral expenses 180,000
Judicial expenses 32,500
Claims against the estate, not notarized 25,000
Medical expenses payable (incurred one month before death) 30,000
Unpaid mortgage upon inheritance of the exclusive property of Renz (she paid P20,000 during her lifetime) 60,000
Required: Compute the following:
1. Net estate subject to tax and net distributable estate.
2. Net estate after estate tax and net distributable estate after tax