CPA Reviewe

B.
DEDUCTIONS FROM GROSS ESTATE
9.
An example of a funeral expense which is not deductible -
A Cost of coffin assumed by a family friend.
B. Funeral services paid out of decedent's estate
C. Mouming clothing of deceased's unmarried minor children and surviving
spouse.
D. Cost of tombstone.
Statement 1: The amount of funeral expenses within the P200,000 threshold,
which are still payable shall be allowed as a deduction from the gross estate.
Statement 2: The unpaid portion of the actual funeral expenses incurred which
is in excess of the P200,000 threshold shall be allowed as deduction under
"claims against the estate.
A. Both statements are true.
B. Only the first statement is true.
CPA REVIEWER IN TAXATION Ampongan
300
С.
D.
Only the second statement is true.
Neither statements are true.
61
Which of the following is deductible from gross estate as "funeral expenses?
A Mouming apparel of a 40-year old legitimate child of the deceased.

B Hospital bills during the last illness of the deceased.
C Burial expenses defrayed by the relatives of the deceased.
D. Obituary notices to relatives and friends
62
The amount of funeral expenses that may be deducted from gross estate
(RPCPA)
A 5% of the gross estate or actual funeral expenses, whichever is lower
B. Always 5% of the gross estate.
C. Actual funeral expenses incurred.
D. 5% of the gross estate or actual funeral expenses incurred whichever is
higher
63
The deductible amount of funeral expense is P200,000 if the actual expenses
and the gross estate amount to -
Actual Gross estate
AP 195.000 P 4,500,000
C. Both A and B
В. 210,000 4,300,000
D. Neither A nor B
Actual
5% x P4.300,000
Deductible (maximum)
P 210.000
215,000
200,000
64. How much is the deductible amount of funeral expenses under each of the
following independent cases?
STATE TAXATION – Multiple Choice Questions
301
Case 1
Case 2
Case 3
Actual
P 180,000
140.000
207,500
Gross estate
P 4,000,000
2.900.000
4,250,000
Case 2
Case 1
P 180.000
180.000
200 000
200,000
P 145,000
140,000
140 000
145,000
Case 3
P 207,500
200,000
200.000
212 500
65 Dan Olive died. The amount of his funeral expenses is covered by a memorial
plan up to P120,000. Other actual funeral expenses amounted to P75,000. The
amount of his tangible properties upon death was P3,700,000.
How much is the gross estate? How about the funeral expenses?
Gross Estate Funeral Expenses
A P 3,700,000 P 70,000
B 3.700,000
195,000
С 3.820,000
191.000
D 3.820,000
195,000
СC
3,700,000
120.000
3.820,000
Tanzible properties
Memorial plan
Gross estate
Other actual funeral expenses
Memorial plan
Total actual funeral expenses
Limit (3,820,000 x 5%)
Deductible
75,000
120.000
195.000
191.000
191,000
Wuch of the following statements about funeral expenses is wrong? For a
decoltant who was a -
A non esident citizen, there may be deductible funeral expenses even if such
expenses were incurred entirely outside the Philippines.
B non esident alien, there may be deductible funeral expenses even if such
expenses were incurred within and outside the Philippines
302
c. non-resident allen, the entire funeral expenses cannot be claimed as
deduction from gross estate if such expenses were entirely incurred outside
the Philippines
D. non-resident alien, the entire funeral expenses cannot be claimed as
deduction from gross estate even if such expenses were incurred entirely
within the Philippines
C.
Funeral expenses incurred on a non-resident alien decedent are deductible
whether incurred within or without the Philippines, but it shall be pro-rated
based on the ratio of the gross estate in the Philippines to the total gross
estate within and outside the Philippines.
67. Three of the four items of deduction below are required to be included in the
gross estate. Which one is not?
A Judicial expenses
B. Claims against insolvent persons
C. Benefits received under RA 4917
D. The undiminished value of the property mortgaged.
68. Which of the following statements about judicial expenses is false? The judicial
expenses that may be claimed as dochuction from the gross estate -
A. of a decedant are the expenses incurred for the settlement of the estate, but
within the period for filing the estate tax retum.
B. of a decedent are the entire expenses incurred for the settlement of the
estate regardless of time it was incurred by the decedent.
C. includes accountant's fees and payment for the appraiser of the value of the
properties.
D. shall be allowed even if the estate is settled extrajudicially.
Judicial expenses which are allowed as deduction from gross estate are limited
to those incurred during the settlement of the estate but not beyond the period
prescribed by law for the filing of the estate tax return.
69. Which of the following statements is correct about "Claims Against the Estate"?
A A loan contracted by the decedent which is secured by a mortgage of his lot
ESTATE TAXATION - Multiple Choice Questions 303
can still be claimed as deduction from gros estate feling under "celms
against the estate
Unpaid income tax and real estate taxes that accrued before the death,
being payable duning ilfetime are deductible from the gross estate of the
decedent as "claims against the estate".

C Claims against the estate, as deduction from the gross estate, represents
obligations enforceable during the lifetime of the decedent.
D Debt contracted during the lifetime of the decadent which is payable in
three (3) years but the decadent debtor died on the second year is not
deductible from the gross estate.
A loan which is secured by an unpaid mortgage at the time of death of the
decedent is deductible as an unpaid mortgage and not as claims against the
estate.
Similarly, unpaid income and real estate taxes that have accrued prior to the
death of the decedent are deductible as unpaid taxes and not as claims against
the estate.
70. The following are requisites in order that claims against the decedent's estate
may be deductible except (RPCPA)
A. They must be existing against the estata.
B. They must be reasonably certain as to amounts.
C. They must have been prescribed.
D. They must be enforced by the claimants.
71. One of the following is deductible as claim against the estate -
A. An obligation contracted by the decedent one (1) day before he died.
B. An obligation of the decedent which prescribed while the decedent was so
alive.
C. An obligation which was not reduced in writing under the Statutes of Fraud.
D. An obligation which shall be paid by the heirs.
72. All of the following, except one, are deductible from the gross estate of a
decedent who died September 30, 2014

304
A Income tax on Income eamed from January to September 29, 2014
B Gift taxes on donations given June 12, 2014,
S Roal property taxes payable during the last quarter of 2014
D. Income tax on income eamed during the last quarter of 2014.
To be deductible, taxes must accrue before the death of the decedent. Real
property taxes accrue on the 1st day of January of every year although the
payment is allowed to be made in the succeeding quarters of the year.
A.
B.
73. Which of the following options is correct? In claims against insolvent persons -
as deduction from gross estate, only the entire amount of uncollectible claims
shall be included in the gross estate of the decedent.
as deduction from gross estate, the full amount of receivable including
uncollectible, must be included in the gross estate.
C. such claim is not deductible from the gross estate if the decedent was also
insolvent at the time of his death.
D. if the entire debt is uncollectible, it may be omitted in the gross estate and as
deduction therefrom.
In claims against insolvent persons, the entire amount of claim, whether
collectible or uncollectible, must be included in the gross estate, regardless of
the solvency or insolvency of the decedent-creditor.
74. Statement 1: If the proceeds of a mortgage loan is merely an accommodation

loan, its value must be included in the gross estate as a receivable amount and
as a deduction thereof.
Statement 2: If there is legal impediment to recognize the accommodation loan
as receivable of the estate, the unpaid mortgage payable shall not be allowed as
a deduction from the gross estate.
A. Only the first statement is correct.
B. Both statements are correct
C. Only the second statement is comect.
D. Neither statement is correct.
B.
ESTATE TAXATION – Multiple Choice Questions
305
78. The following experises and obligations were left by Boning upon his death
Notes payable, not noterized
P30,000
Loans payable, PNB
Accounts receivable, debtor not insolvent
300,000
Accounts receivable, debtor is insolvent
40,000
60,000
Death benefits from employer
200,000
Mortgage paid
50,000
Income taxes on income of decedent's estate
7,500
The total amount deductible from gross estate is -
A. P 600,000
C. P1,560,000 550
B. 550,000
D. 560,000
Loans payable
P 300,000
Bad debts
60,000
RA4917
200,000
Standard deduction
1.000.000
Total deductions
1.560.000
To be deductible, claims against the estate out of debt instrument must be
duly notarized.
Claims of the estate against other persons are deductible only if the debtor is
declared insolvent.
Mortgages paid are allowed only as deduction from the value of the property
in computing a vanishing deduction. In computing for the net estate, the
deductible item is unpaid mortgage.
Taxes must have accrued before the death of the decedent. Taxes on income
of properties which have accrued after death are not deductible.
76. Which of the following statements is incorrect regarding an unpaid mortgage?
A. Unpaid mortgage, as deduction from the gross estate of a resident citizen,

must pertain to a property mortgaged which is situated either within or without
the Philippines
B. Unpaid mortgage, as deduction from the grc..estate of a non-resident alien,
must pertain to a mortgaged properly which is situated within the Philippines
only.
C. If the unpaid mortgage was contracted by a prior decedent on a property
inherited by the present decadent before marriage, it is chargeable against
the community property if it benefited the community property of the spouses.
D. If the unpaid mortgage was contracted by a prior decadent on a property
inherited by the present decedent during marriage, it is chargeable against
306
the community property of the spouses if it benefited the community property
of the prior decedent.
An unpaid mortgage on a property abroad of a non-resident alien decedent is
not deductible because the property subject of mortgage is not includible in the
gross estate.
An unpaid mortgage maybe classified either as an exclusive or a community
property deduction depending upon which property was benefited by the
proceeds of the mortgage. Thus, if it had benefited the family and/or the
community property of the spouses, such unpaid mortgage is deductible from
the community property. Otherwise, it is deductible from the exclusive
property of the decedent.
77. Casualty losses are deductible from the gross estate if (RPCPA).
1* Statement: Such loss was incurred during the settlement of the estate.
2nd Statement: Such loss was incurred not later than the last day for the
payment of the estate tax.
A. Both statements are false.
B. 1* statement is false, 2nd statement is true.
C. 15 statement is true, 2nd statement is false.
D Both statements are true.
78. Y, a filipino resident, died on November 5, 2014 and his estate incurred losses
due to: (RPCPA)
1* loss: From fire on February 2, 2014 of improvements on his property, not
compensated by insurance.
2nd loss: From flood on February 25, 2015 of household fumiture; also not
compensated by insurance.
A. 1 loss is not deductible and 2nd loss is deductible,
B. Both losses are not deductible.
C. Both losses are deductible from gross estate
D. 1" loss is deductible and 2nd loss is not.
ESTATE TAXATION - Multiple Choice Questions 307
To be deductible, losses must occur after the death of the decedent but within
the period for the payment of the estate tax.
79. Which statement is incorrect regarding "losses"?
A. A building that has been razed by fire immediately after the interment shall
still be included in the gross estate even if it does not exist anymore at the
time of filing the estate tax retum.

B.
In a casualty loss, the value of the property is included in the gross estate but
subsequently deducted therefrom.
с In a casualty loss, since the value of the property is included in the gross
estate but subsequently deducted therefrom, it may be omitted in both for
after all there is no effect on the net taxable estate.
D In estate taxation, the amount of loss deductible is based on the value of the
property lost minus indemnity from an insurance company
CС
To be deductible, the loss must take place after the death but within the period
for the payment of the estate tax.
In the computation of the gross estate, the market value of the property shall
be included. However, the value of the property lost shall be deducted
therefrom. Any indemnification from an insurance company shall be a
diminution from the deductible loss.
80. Which of the following losses is deductible?
А. Destruction of a house by an earthquake which seriously injured the
decedent who died after several days.
В.
Shipwreck which occurred before the death of the decedent but was only
discovered after his burial
C Total wreckage of a car in an accident but was fully compensated by a
comprehensive insurance
D Theft which occurred during burial of the decedent
81
Liza died on July 5 2014 leaving the following data on deductions
Unpaid 2013 real estate taxes
P 40,000
Unpaid 2014 real property taxes
40.000
Income tax on income from Jan. 1 to July 4, 2014
35,000
Losses from fire that occurred on July 3 (60% was
compensated by insurance)
800,000
308
Casualty loss on September, 2014
450,000
Building destroyed by earthquake on Feb. 2015
1,300,000
Based on the above data, the amount deductible from gross estate is-
P1,365,000
C. P 845,000
565,000
D. 525.000
Unpaid 2013 real estate taxes
P 40.000
Unpaid 2014 real property taxes
40,000
Income tax
35,000
Casualty loss on September

450.000
Total deduction
565,000
The fire loss is not deductible because it occurred prior to the death of the
decedent; the cost of the building destroyed is not also deductible because
the casualty occurred after the deadline for the payment of estate tax.
82 Amount of claim against the debtor
P50,000
Total assets of the debtor
500,000
Total liabilities of the debtor
800,000
How much should be included in the gross estate of the decedent?
A P50,000
C P 500,000
B 800.000
D 300.000
The deductible claim against insolvent person is -
A P 50,000
C P 300,000
31,250
18.750
Amount of claim
Less: Collectible (500/800 x 50,000)
Uncollectible
50,000
31.250
18,750
Che Cua, a nonresident alien, died leaving the following assets -
Domestic shares
P 1.000.000
Foreign shares
3,000,000
ESTATE
309
Tangible personal property, Philippines
6,000,000
Expenses (deductible)
1.200,000
Note - The country where she is a citizen and resident does not impose
transfer tax on transmission of intangibles of Filipinos
The net estate subject to tax in the Philippines is
CP 4,800,000
3,800,000
D 4,280,000
A. P 5,280,000
Tangible personal property
P 6,000,000
Less: Deductions (6 M/10M) x 1,200,000
720,000
Net estate
5,280,000
Computation of Total Net Estate:
Domestic shares
P 1,000,000
Foreign shares
3,000,000
6.000.000
Total
10,000,000
Nonresident aliens are taxable on properties situated in the Philippines only.
If there is reciprocity, intangible personal properties within are not subject to
estate tax.
Expenses, losses, indebtedness and taxes (ELIT) incurred are deductible but
shall be pro-rated by applying the following formula:
Philippine gross estate
Total gross estate XELIT
85. Ta Pue, a nonresident alien, single, died leaving the following properties and
deductions -
Shares , domestic corporation
P 500.000
Shares, foreign corporation
500,000
1.500.000
Deductible expenses
500,000
Assuming there is no reciprocity, the estate tax payable is -
A P 1,600,000
CP 103,000
B. 1,500,000
D 95,000
Shares, domestic corporation
P500,000
1.500.000
ESTATE
309
6,000,000
Expenses (deductible)
1.200,000
Note - The country where she is a citizen and resident does not impose
transfer tax on transmission of intangibles of Filipinos
The net estate subject to tax in the Philippines is
CP 4,800,000
3,800,000
D 4,280,000
A. P 5,280,000
P 6,000,000
Less: Deductions (6 M/10M) x 1,200,000

720,000
Net estate
5,280,000
Computation of Total Net Estate:
Domestic shares
P 1,000,000
Foreign shares
3,000,000
6.000.000
Total
10,000,000
Nonresident aliens are taxable on properties situated in the Philippines only.
If there is reciprocity, intangible personal properties within are not subject to
estate tax.
Expenses, losses, indebtedness and taxes (ELIT) incurred are deductible but
shall be pro-rated by applying the following formula:
Philippine gross estate
Total gross estate XELIT
85. Ta Pue, a nonresident alien, single, died leaving the following properties and
deductions -
Shares , domestic corporation
P 500.000
500,000
1.500.000
Deductible expenses
500,000
Assuming there is no reciprocity, the estate tax payable is -
A P 1,600,000
CP 103,000
B. 1,500,000
D 95,000
P500,000
1.500.000
310
2,000,000
400.000
1,600,000
Gross estate
Less: Deductions (2,000,000/2,500,000) x 500,000
Net taxable estate
On P 500,000
P15,000
1,100,000 x 8%
88.000
Estate tax payable
103,000
Computation of Total Gross Estate:

Total
P 500,000
500,000
1.500,000
2.500.000
Numbers 86 and 87 and based on the following information
Mhar Dehrer, a German residing in Munich, Germany had the following data at
the time of his death:
Expenses
Funeral expenses incurred in the Philippines
P 25,000
Funeral expenses incurred abroad
Accountant's fees and audit fees
5,000
Medical expenses-2 months before decedents death
50,000
Losses on the property located abroad
40,000
Claims against the estate
25,000
Properties.
Real property located in Osaka, Japan
P2,400,000
Lot situated in Davao City
1.000.000
Shares of stock in Japanese Corporation

600,000
Other tangible personal properties - Phils
1.000.000
86. The gross estate on the estate of Mhar Dehrer is -
A P 5,000,000
C. P 2,000,000
B 1,000,000
D 2,600,000
Lot In Davao City
Other tangible properties
Properties/gross estate - Philippines
P1,000,000
1.000.000
2,000,000
7 In Number 86 above, if the total deductions allowed amount to P60,000, how
much is the amount of funeral expenses abroad?
gan
ESTATE TAXATION - Multiple Choice Questions
311
P100,000
80 000
D
P 145,000
55.000
P 2,000,000
Properties - Philippines
Properties - Abroad:
Real property - Japan
Stocks - Japanese Corporation
Total gross estate
P 2,400,000
600.000
3.000.000
5.000.000
P 150,000
at
Total ELIT (P 5,000,000/2,000,000 x P 60.000)
Less: Available expenses
Funeral expenses - Philippines
25.000
Accountant's fees and audit fees
5,000
Losses, abroad
40,000
25.000
Funeral expenses abroad
95.000
55.000
To check:
Actual funeral expenses (P25,000 + 55,000)
5% x P 2,000,000
Deductible funeral expense (lower)
P 80.000
100.000
80,000
88 Which of the following properties of Etang who died December 4, 2015 is subject
to vanishing deduction?
Property 1 - Car purchased 3 years ago from Mitsubishi Motors, Batangas
City
Property 2 -
Land inhented from her mother in 2011 the estate tax thereon
have not been paid
Property 3 - Donation from a frend in 2010
Property 4 - Community property inherited December 2, 2010 or five (5)
days before mariage
Property 1
Property 3
Property 4
Yes
Yes
OOO
Property 2
No
No
No
Yes
No
No
Yes
Yes
Yes
No
Yes
No
No
No
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The car must have been acquired by the decedent either by donation or by
inheritance. Prior acquisition thru onerous transfer is not subject to
vanishing deduction on the estate of the present decedent.
To be entitled to a vanishing deduction, the tax on the prior transfer must
have been paid
Property 4 has been acquired by the present decedent for more than five (5)
years already at the time of her death.
89
Baby Villanueva died leaving a property which was inherited three years ago
from his father. In computing the vanishing deduction, which of the following
items shall serve as a multiplier deduction in computing the deduction from the
initial basis?
А.
B.
C.
D
Benefits received under RA 4917
Medical expenses
Standard deduction
Transfer for public purpose
90
Statement 1 Vanishing deduction is always a deduction from the exclusive
properties of the decedent
Statement 2: A property is subject to vanishing deduction if it has been acquired
thru exchange with a property inherited within 5 years pnor to the death of the
present decedent
A. Statement 1 is true, Statement 2 is false
B Statement 1 is false; Statement 2 is true
с. Both statements are true
D Both statements are false
91. Chnstopher died on October 5, 2013 leaving a parcel of land valued at P800,000
to his nephew, Mendell. On June 10, 2015, Mendell married Cristita. Prior to the
celebration of the marriage, they orally agreed that they shall be governed by the
conjugal partnership of gains.
Which statement is correct?
313
A. The spouses shall be govered by the conjugal partnership of gains. Thus, if
Mendell dies on May 20, 2016 the vanishing deduction shall be classified as
a deduction from his exclusive properties.
B. The spouses shall be govemed by the absolute community of property
reqime. Thus, if Cristita dies on May 20, 2016 the land shall be subject to
vanishing deduction of one-half of its value.
C. The spouses shall be govemed by the absolute community of property
regime. Nonetheless, the death of Cristita on May 20, 2016 will not subject
her share in the land to a vanishing deduction
The spouses shall be governed by the absolute community of property
regime. Thus, if Mendell dies on May 20, 2016 only his one-half share in the
land shall be subject to a vanishing deduction
Cс
The spouses shall be governed by the absolute community of property regime
because the pre-marital agreement was not reduced in writing.
The death of Cristita will not subject the property to a vanishing deduction
because it was Mendell, her husband, who acquired the property by
gratuitous title.
92.
Which of the following statements about "vanishing deduction is true?
A. For a vanishing deduction to be deductible, the property must have formed
part of the gross estate situated in the Philippines of the prior transferor
B. A family home of a non-resident alien maybe claimed as vanishing deduction
if it has been inherited within five (5) years and the estate tax on the
previous transfer has been paid at the time of death of the present decedent.
C. Vanishing deduction shall be allowed on the estate of the present decedent
even if the prior transferor is still alive
D. For a vanishing deduction to be deductible, there should always be two
deaths within five years from receipt of property
Cс
A vanishing deduction may be allowed even if the property was situated outside
the Philippines during the prior transfer, provided that it is situated in the
Philippines at the time of death of the present decedent.
A family home situated outside the Philippines is not deductible either as a
family home or as a vanishing deduction because these two items of deduction
require that the property must be situated within the Philippines.
In vanishing deduction, the first transfer of the property maybe inter vivos.
Thus, the prior transferor may still be living at the time of death of the present
314
decedent, and two deaths within a period of five years is not necessary for its
deductibility
93
All of the following, except one, are not deductible from the gross estate of a
nonresident alien
A. Vanishing deduction
С Family home
B. Medical expenses
D Standard deduction
Medical expenses, family home and standard deduction are not deductible
from the gross estate of a nonresident alien without condition.
Vanishing deductions are deductible if the usual requisites are complied and
the property is situated in the Philippines.
94
Rodolfo, a citizen of the Philippines and resident of Bacolod City, died testate on
May 10, 2015 Among his gross estate are properties inherited from his
deceased father who died April 4, 2012. What percentage of deduction will be
used in computing the amount of vanishing deduction? (RPCPA)
A 80% of the value taken as basis for vanishing deduction.
B 100% of the value taken as basis for vanishing deduction
с 60% of the value taken as basis for vanishing deduction
D 40% of the value taken as basis for vanishing deduction
The interval of time from the date of death of father to the date of death of
Rodolfo is 3 years, 1 month and 6 days, computed as follows:
Year Month Day
2015
2012
10
95. Val Hallada died on November 20, 2015. Some of the properties he left are the
following
Market Value
Mode of Date of Date Death of Val
Assets Acquisition Acquisition Acquired Hallada
Land
Donation
7-3-11
P 500.000 P 350.000
Car Purchase 10-2-14 800.000

980,000
315
Other information:
1. The gross estate of the decedent amounts to P3,000,000
2. The land was mortgaged for P50,000 when it was acquired and Val
Hallada paid the same before he died.
3 The allowable deductions total P125,000, which includes medical
expenses of P30,000. It excludes bequest to a charitable institution in the
amount of P50,000.
The vanishing deduction is (RPCPA) -
A. P 58,100
C. P.67,783
B. 57,500
D. 67,083
Lower value
P 350,000
Less: Mortgage paid
50,000
Initial basis
300,000
Less: Deductions (pro-rated)
[300,000/3,000,000 X (125,000-30,000)
9.500
Base
290,500
Rate (more than 4 years, not more than 5 years)
20%
Vanishing deduction
58,100
To be subject to vanishing deduction, the property must have been acquired
by the present decedent thru inheritance or donation inter vivos. Those that
were acquired by onerous transfers are not subject to said deduction.
Bequests to charitable institutions and medical expenses are not part of the
multiplier deductions. Only the items under expenses, losses, indebtedness,
taxes and transfers for public purpose, if any, are included as part of said
deductions.
96. In determining the net estate of the decedent, which of the following rules is
correct? (RPCPA)
A. A real estate abroad is included in the gross estate of a decedent who was a
nonresident alien.
B. Shares of stocks being intangible property shall be included in the
decedent's gross estate wherever situated.
C Vanishing deduction must be subject to limitations
D Funeral expenses are deductible to the extent of 5% of the total gross estate
but not exceeding P100,000,
316
97 Pepe died on August 15, 2015. His data are as follows:
Community properties
P 2,000,000
Exclusive properties of Pepe
3,000,000
Exclusive properties of Pepe's wife
1,000,000
Deductions (except standard deduction)
700,000
Included in the P3,000,000 is a parcel of land worth P200,000 and a car
worth P400,000, respectively.
The land was donated to him by his uncle on May 4, 2013 with a value of
P150,000. At the time of the donation, the land was mortgaged for P 30,000
which was paid by his uncle. The car had a value of P500,000 when it was
inherited by Pepe from his mother 2 %2 years ago and mortgaged for P50,000
which was paid by Pepe before he died.
The vanishing deduction on the estate of Pepe is -
A. P 258,000
C. P 283,800
B. 262,520
D. None
Lower value of:
Land
P 150,000
Car
400.000
Value to take
550,000
Less: Mortgage paid on car
50.000
Initial basis
500,000
Less: Deductions (500,000 / 5,000,000) x P700,000 70,000
Base
430,000
Vanishing deduction
258,000
If the same rate shall be applied to both properties, the vanishing deduction
shall be computed jointly for both properties. However, if different rates shall
be applied separate computation is necessary.
60%
98. Elopre, married June 5, 2013 died on April 29, 2015 with the following data:
Gross estate - community property, P3,000,000; exclusive, P2,000,000. Said
amount includes a land which he received as gift from his father a month before
the marriage, valued at P540,000. His father mortgaged the land for P20,000
which was paid by Elopre. Elopre mortgaged also said land for P50,000 but was
able to pay only P20,000 until his death. Expenses claimed (excluding the
unpaid mortgage) amounted to P170,000.
The vanishing deduction is -
317
A. P 388,800
C. P 384,000
В. None
D 380,000
I
540,000
40.000
500,000
Value to take
Less: Mortgage paid (20,000 + 20,000)
Initial basis
Amount claimed
Unpaid mortgage (50,000 - 20,000)
Total
(500,000 / 5,000,000) X 200,000
Base
Rate (more than t year, not more than 2 years)
Vanishing deduction
170,000
30.000
200,000
20.000
480,000
80%
384,000
99. In Number 98 above, the net taxable estate is -
A P 2,016,000
C P 3,416,000
B. 1,208,000
D. 2,208,000
Total
5,000,000
Community Exclusive
Gross estate
3,000,000 2,000,000
Less: Deductions
Ordinary
Amount claimed
170,000
Unpaid mortgage
30,000
Vanishing deduction 384.000
Special (Standard deduction)
Net estate
Less: Share of surviving spouse
Gross community
3,000,000
Less: Community expenses
584,000
Net community property
2,416,000
Share (2,416,000/2)
Net taxable estate
( 584,000)
(1.000.000)
3,416,000
1.208.000
2.208.000
100. Statement 1: Unpaid loans contracted prior to death may be deducted even if
not notarized if notarization of contracts is not a business policy of the creditor
Statement 2: For estate tax purposes, several family homes may be deducted
provided the maximum amount is P1,000,000
317
A. P 388,800
C. P 384,000
В. None
D 380,000
540,000
40.000
500,000
Value to take
Less: Mortgage paid (20,000 + 20,000)
Initial basis
Amount claimed
Total
(500,000 / 5,000,000) X 200,000
Base
Rate (more than t year, not more than 2 years)
Vanishing deduction
170,000
30.000
200,000
20.000
480,000
80%
384,000
99. In Number 98 above, the net taxable estate is -
A P 2,016,000
C P 3,416,000
B. 1,208,000
D. 2,208,000
Total
5,000,000
Community Exclusive
Gross estate
3,000,000 2,000,000
Less: Deductions
Ordinary
Amount claimed
170,000
Unpaid mortgage
30,000
Vanishing deduction 384.000
Special (Standard deduction)
Net estate
Gross community
3,000,000
Less: Community expenses
584,000
Net community property
2,416,000
Share (2,416,000/2)
Net taxable estate
( 584,000)
(1.000.000)
3,416,000
1.208.000
2.208.000
100. Statement 1: Unpaid loans contracted prior to death may be deducted even if
not notarized if notarization of contracts is not a business policy of the creditor
Statement 2: For estate tax purposes, several family homes may be deducted
provided the maximum amount is P1,000,000
318
B.
Only Statement 1 is correct.
Both Statements are correct.
Only Statement 2 is correct.
Both Statements are incorrect.
101. Which of the following statements is false relative to a "family home?

А.
A decedent who was married at the time of death may not have a deduction
for family home
The value of the family home must be included in the gross estate and
claimed as deduction therefrom to a maximum amount of P1.000.000
C A non-resident citizen shall include the value of his family in the gross estate
but cannot claim such amount as a deduction therefrom.
D. If the family home is allowed a vanishing deduction and a subject of an
unpaid mortgage, the deductible amount should be net of vanishing
deduction and unpaid mortgage
A decedent may not have a deduction for family home if he or the spouses do
not have such property.
The entire value of the family home is included in the gross estate if the
decedent was a resident or citizen of the Philippines.
To be deductible, the family home must be situated in the Philippines.
However, the maximum allowable deduction is P1,000,000 only.
If the family home is subject to a vanishing deduction and an unpaid
mortgage, the amount deductible shall not be diminished by the amount of the
vanishing deduction and unpaid mortgage.
102. Which of the following statements is true about "medical expenses?"
A Hospital expenses are deductible only from gross estate if unpaid at the
time of the death of the decedent even if it has already been paid at the
time of filing the estate tax retum.
B Hospital bills which have not yet been paid at the time of death is
deductible from gross estate as claims against the estate.
C.
If a person was hospitalized from July 1-30, 2014 and on July 10, 2015 he
died, the items of medical expenses listed in the hospital bill which cannot
be directly identified as to the exact date that they were incurred may be
computed proportionately based on the number of days covered by the
319
one year limit to the total number of days of his hospitalization
Medical expenses are deductible from the gross estate if they have been
incurred in the Philippines by a Hongkong national who visited the
Philippines as a tourist.
Hospital expenses are deductible as part of medical expenses whether paid or
unpaid at the time of death of the decedent.
Non-resident aliens are not entitled to claim deduction of medical expenses.
103 Statement 1: An unmarried individual cannot constitute a family home.
Statement 2: Unpaid medical expenses at the time of death are deductible as
claims against the estate."
A. Only Statement 1 is correct.
Both Statements are correct.
C. Only Statement 2 is correct
D Both Statements are incorrect,
A family does not refer only to a spouse and children. It may also pertain to
brothers, sisters and parents.
104 Which of the following statements is false?
A In estate taxation, the standard deductio.n from the gross estate is always
P1,000,000, whether the decedent was married or not
B If the decedent was a non-resident alien, the standard deduction shall be
pro-rated according to the ratio of the Philippine gross estate over the total
gross estate.
С A standard deduction is an item of deduction from gross estate which does
not diminish the distributable estate even if it diminishes the taxable estate
D Benefits received under RA 4917 must be included in the gross estate in
order to be deductible therefrom.
A standard deduction is not deductible from the gross estate of a non-resident
alien; it is not also deductible in computing the net distributable estate
regardless of the citizenship or residence of the decedent.
320
lems 105 to 109 are based on the following information
Decedent died leaving a family home composed of the following House
owned in common by the spouses worth P1,500,000, and the land in which he
exclusively owned valued at P400,000. At the time the house was constructed
had a cost of P300,000. They also own a vacation house in Baguio won
P1,200,000
105 I under conjugal partnership, after its liquidation the family home is classified as
C.
D.
Conjugal property
Exclusive property of the decedent
Exclusive property of the surviving spouse
Partly conjugal and partly exclusive of the decedent
106. Under conjugal partnership, the amount of conjugal portion of the family home
after liquidation is -
A. P 1,900,000
C. P 3,100,000
B. 1,600,000
D. 2,800,000
House
Land
Total
Less: Reimbursed amount
Family home
1,500,000
400,000
1,900,000
209.00
1,600,000
107 Before liquidation, the deductible amount of family home is -
A P 1,000,000
C. P 800,000
8. 950.000
D 1,600,000
House, conjugal (1,500,000/2)
Land, exclusive
Total
Deductible (limit)
750,000
400.000
1,150,000
1,000,000
321
108
Under absolute community of property regime, the value of the family home is
P 1.900.000
с P 3.100,000
В.
1.600.000
1.500.000
House, community
Land, exclusive
Total
1,500,000
400,000
1,900,000
109
Under absolute community of property regime, the deductible amount of tamily
home is -
A P 1.000.000
С P 1.900.000
B 1,500,000
1,150,000
House, community (1,500,000/2)
Land, exclusive
Total
Deductible, limit
750,000
400,000
1,150,000
1,000,000
110. Mama Mathay, widow, a citizen of the Philippines residing in Vancouver
Canada, died on December 20, 2015 leaving the following properties
Real property inherited from her husband on May 3,
2014 valued then at P2,600,000)
P2.960,000
Personal properties in Canada
1.300.000
Real and personal properties in the Philippines
670.000
Family home in Canada
2,500,000
Obligations
Funeral expenses incurred in Canada
250.000
Other deductible expenses
850.000
The gross estate of Mama Mathay is -
A. P7,430,000
C. P 6,760,000
В. 7,070,000
D 670,000
P 2,960,000
Real property
322
Personal properties, Canada
Real and personal properties
Family home, Canada
Gross estate
1,300,000
670,000
2.500.000
7.430,000
111
The deduction for family home is -
A P2,500,000
B. 1.000.000
C. P 1,250,000
D. None
A family home which is situated outside the Philippines is not deductible

from gross estate.
112. The vanishing deduction is -
A. P 1,786,056.52
B. 1,772,059.20
C. P 1,773,708.20
D. None
21
P2,600,000.00
Lower value / Initial basis
Funeral expenses, maximum
P200,000
Other deductible expenses
850.000
Total
1,050,000
( 2,600,000/7,430,000 X 1,050,000)
Base
Rate (more than 1 year, not more than 2 years)
Vanishing deduction
367.429.34
2,232,570.65
80%
1,786,056.52
113. Decedent died leaving a family home composed of the following: House
conjugal property worth P800,000, and the land in which he exclusively owned
valued at P400,000. He also owns a vacation house in Baguio worth P700 000
The deductible amount of family home

A. P 800,000
C. P1,900,000
B 1,200,000
D. 1,000,000
House, conjugal (P800,000 x 12)
P 400,000
TRANSFER &
323
Land, exclusive
Deductible
400.000
800,000
114. The decedent, mamed, died leaving a family home valued at P1,500,000
composed of the house (conjugal property) and the lot (exclusive property)
Seventy percent (70%) of the value of the family home pertains to the
house, while thirty percent (30%) pertains to the lot.
The amount deductible from gross estate is -
A P 1,500,000
C. P 975,000
В. 1,000,000
D 525,000
CС
TODOS
House (P1,500,000 x 70%) x 112

Lot (P1,500,000 x 30%)
Amount deductible
P 525,000
450,000
275,000
115. Bong, single and a resident citizen, died with properties constituting his gross
estate of P4,000,000. Actual funeral expenses amounted to P150,000 and other
charges against the estate amounted to P210,000. The net taxable estate is
(RPCPA)
A P3,640,000
C. P 3,740,000
B 2,640,000
D. 2.590.000
B.
P 4,000,000
Gross estate
Less: Deductions
Funeral expenses
Other charges
Standard deduction
Net taxable estate
P 150,000
210,000
1.000.000
1.360.000
2,640,000
116. Decedent, mamied in 1986, died leaving the following
Real properties
Family house
Other real properties, exclusive of decedent
Family lot, exclusive of decedent
Funeral expenses
Medical expenses
Taxes and losses
P 3,000,000
1,000,000
2.000.000
400.000
275.000
650.000
1,300,000
324
The net taxable estate is -
A P 2,450,000
B 1,150,000
C. P 2,250,000
D 1,250,000
Conjugal Exclusive Total
Real properties
P 3,000,000
Family house
1,000,000
Other real properties
P2,000,000
Family lot
400,000
Gross estate
4,000,000 2,400,000 P6,400,000
Less: Deductions
Ordinary
Funeral expenses, limit 200,000
Taxes and losses
1.300,000
(1,500,000)
Special
Medical expenses, limit
(500,000)
Standard deduction
(1,000,000)
Family home
House (1,000,000/2)
500,000
Lot
400,000 ( 900.000)
Net estate
2,500,000
Share of surviving spouse(4,000,000-1,500,000) x 12 1.250,000
Net taxable estate
1,250,000
117 Paid medical expenses for confinement at Tigok Hospital
from May 15-23, 2015 (P20,000 still unpaid)

P 80.000
Hospitalization expenses (June 3.6. 2013)
21,500
Expenses for the settlement of the estate:
Acceptance fee, June 28, 2015
20.000
Court fees and other expenses, July 16, 2015
12.000
Appearance of lawyer in court, September 5, 2015
2,000
Appearance of lawyer in court, November 29, 2015
2,000
Based on the data given above, how much is the deductible medical and
judicial expenses if the decedent died May 23, 2015?
Medical expenses Judicial expenses
A.
P 80,000
P 36,000
100.000
36,000
80,000
34,000
100,000
34,000
can
325
P 80,000
20.000
100.000
Medical expenses:
Paid
Unpaid
Total
Judicial expenses:
Acceptance fee
Court fees
Appearance fee, September 5, 2015
Total
20,000
12,000
2.000
34.000
118 Statement 1 Under the conjugal partnership of gains, the vanishing deduction is
always a deduction from exclusive properties
Statement 2. Under the absolute community of property regime, the vanishing
deduction maybe deducted also from community property.
A True, True
False, False
B. True, False
D False, True
A
119. The following data relates to Cani, married two (2) years ago, died leaving the
following:
Gross estate
P 14,000,000
Land acquired by donation from his father 3 12 years ago
Market value, date of donation
200.000
Market value, date of death
300.000
Funeral expenses
35.000
Judicial expenses
15,000
Unpaid mortgage on land at the time of donation
100,000
Unpaid taxes
10,000
Losses
25,000
Transfer for public purposes
35,0
Medical expenses
45,0
Carl paid P60,000 to the mortgagee of the land a year before his deatt
Assuming Carl was under conjugal partnership of gains, the total of
deductions from exclusive property is -
A. P 49,600
C. P 124,600
В. 89,600
D. None
326
40,000
49,600
35.000
124.600
200,000
60.000
140,000
Deductions from exclusive property:
Unpaid mortgage on land (100,000-60,000)
Vanishing deduction
Total
Computation of vanishing deduction:
Value date of donation (lower value)
Less: Mortgage paid
Initial basis
Funeral expenses
Judicial expenses
Unpaid taxes
Losses
Total
(140,000/14,000,000 x 160,000)
Base
Rate
Vanishing deduction
35.000
15,000
40,000
10,000
25,000
35.000
160,000
16.000
124,000
40%
49,600
120
In Problem 119 above, assuming that Carl was under absolute community of
property regime, the total amount deductible from the community property is
А P 125.000
C. P 174,600
B 134,600
None
Funeral expenses
35.000
Judicial expenses
15,000
Unpaid mortgage
40,000
Unpaid taxes
10,000
Losses
25,000
Vanishing deduction
49.600
Total ordinary deductions from community property
174.000
The unpaid mortgage is an obligation of the community property because it
is considered as an ante-nuptial
debt which have redounded to the benefit of
the family
327
The vanishing deduction is a deduction from the community property
because the land is classified as a community property,
121. Alladin, filipino, mamied, died January 1, 2015, leaving the following properties
Inherited from his brother who died May 3, 2013:
Riceland
P 1,000,000
Residential land
2,000,000
Inherited from his mother who died April 12, 2011 or five days after his
marriage:
Coconut land
420,000
Acquired thru Alladin's wife's labor:
Family home
2,000,000
Car
500,000
Commercial land
1,000,000
Gold necklace (acquired by Alladin during a previous marriage
which had a legitimate descendant)
80,000
The riceland and the residential land were previously mortgaged for
P350,000 when inherited where P200,000 was paid by Alladin during his
lifetime.
The coconut land was mortgaged for P94,000 of which P14,000 was paid
before his death. Also Alladin, by will, bequeathed to Marikina City the sum of
P200,000 for exclusively public purpose.
The estate incurred the following expenses
Funeral expenses
P 140,000
Judicial expenses
80,000
Portion of family home destroyed by fire on Jan 5, 2015
100,000
Medical expenses
40,000
The gross estate of Alladin is-

A P3,500,000
C. P 5,250,000
B. 7,000,000
D. 3,957,020
Exclusive
Total
Family home
Car
Commercial land
Riceland
Residential land
Community
P 2,000,000
500,000
1,000,000
P 1,000,000
2,000,000
328
Necklace
80,000
Coconut land
420,000
Gross estate
3.500,000 3.500,000
P 7.000.000
Alladin was under absolute community of property regime because his
marriage took place on April 7, 2007 (five (5) days before the death of his
mother).
Marriages celebrated on or after August 3, 1988 (effectivity of the New
Family
Code) are governed by the absolute community of property regime
unless there was an ante-nuptial agreement between the duo that they shall
be governed by a different regime of property relationship.
122 In Number 121, the vanishing deduction is -
A P 2.032.000
CP 2.145.000
B 220,980
D None
Cс
Vanishing deduction on riceland and residential land:
Riceland
P1,000,000
Residential land
2.000.000
Value to take
3,000,000
Less: Mortgage paid
_200,000
Initial basis
2,800,000

Funeral
P 140,000
Judicial
80,000
Losses
100,000
Unpaid mortgage (94,000- 14,000) 80,000
Unpaid mortgage(350,000–200,000) 150,000
Donation to Marikina City
200.000
Total
750,000
(2,800,000/7,000,000 x 750,000)
300.000
Base
2,500,000
Rate (more than 1 year, not more than 2 years)
80% P2,000,000
Vanishing deduction on coconut land:
Value to take
P 420,000
Less: Mortgage paid
14.000
Initial basis
406,000
Less: Deductions (406,000/7,000,000 x 750,000)
43.500
Base
362,500
40% 145.000
Total vanishing deductions
2,145.000
329
123. In Number 121, the net taxable estate is -
А.
B.
P 2.217,500
None
С.
D.
P 515,000
535,000
Community Exclusive Total
Gross estate
7,000,000
Deductions
Ordinary -
Funeral expenses
140,000
Judicial expenses
80,000
Losses
100,000
Unpaid mortgage, coconut land 80,000
Unpaid mortgage, rice/residential land
150,000
Donation to Marikina City
200,000
Vanishing deductions
2.145.000
Total
400,000 2,495,000 (2,895,000)
Special -
Family home (P2,000,000 x 12)
(1,000,000)
Standard deduction
(1,000,000)
Medical expenses
(40,000)
Net estate
2,065,000
Less: Share of surviving spouse (3,500,000-400,000) x 12 1.550,000
Net taxable estate
515,000
The unpaid mortgage on the coconut land is a deduction from the community
property because it is presumed that the amount on the mortgage had
benefited the community property of the spouses.
The unpaid mortgage on the riceland and residential land is chargeable
against exclusive properties because it was contracted by the brother and not
by Alladin.
124. Luis Raymund died leaving the following:

Exclusive properties
Conjugal properties
Judicial expenses
Funeral expenses
Notes payables (only / is notarized)
Claims against insolvent persons (50% is collectible)
Proceeds of life insurance (beneficiary is wife-revocable)
Death benefits under RA 4917
Medical expenses (1/2 is not supported by receipts)
P 2,000,000
2,500,000
45,000
150,000
100,000
120,000
200.000
180,000
550,000
330
A. P 1,892,500
B. 2,540,000
C. P 1,520,000
D. 1,882,500
11 A
Conjugal Exclusive Total
Exclusive properties
2,000,000
Conjugal properties
2,500,000
Claim against an insolvent
120,000
Proceeds of insurance
200,000
Death benefits under RA 4917 180,000
Gross estate
3,000,000 2,000,000 5,000,000
Less: Deductions
Ordinary -
Judicial expenses
45,000
Funeral expenses
150,000
Claims against the estate (1/2) 50,000
Bad debts (50%)
60.000
( 305,000)
Special -
( 180,000)
Medical expenses (550,000/2)
( 275,000)
Standard deduction
(1.000.000)
Net estate
3,240,000
Less: Share of surviving spouse (3,000,000 - 305,000)x12 1347.500
Net taxable estate
1.892.500
RA 4917
125. The following data relates to the estate of Abandonado:
House and lot (family home) in Quezon City, zonal value
(assessor's value, P1,150,000)
P2,230,000
Personal properties
2,500,000
Benefits received from employer as a consequence of his
death
150,000
Unpaid mortgage on a riceland with a value of P1,000,000 200,000
Claims against Dimalupig, Insolvent
35,000
Based on the above information, the value of the gross estate of
Abandonado is -
A. P 5,915,000
B. 4,835,000
C. P 4,685,000
D. 5,730,000
agan
331
1А
Family home
Personal properties
Riceland
RA 4917
Claims against insolvent person
Gross estate
P 2.230.000
2.500,000
1,000,000
150,000
35.000
5.915,000
Number 126 through 128 are based on the following information:
On October 15, 2015, Benjamin, a filipino citizen and a resident of Manila, died
intestate leaving his wife "Diana" and his two illegitimate children, Aubrey and
Barbara. The estate of the deceased consisted of the following
Real property - conjugal
House and lot (family home) - Manila. This property has an assessor's value of
P2,500,000 at the time of death but valued in the zonal valuation of the BIR for
P2.900,000.
Personal property -- conjugal
The total value was placed at P1,600,000.
Included in the P1,600,000 are proceeds of an irrevocable life insurance policy of
P100,000 from Phil-Am Life Insurance Company taken by Benjamin with Barbara as
the beneficiary. The premiums were paid out of conjugal property of the spouses
The following deductions were claimed by the heirs
a Funeral expenses
P100.000
b Unpaid loans, notarized
75,000
c. Losses incurred during the settlement of the estate 25,000
126. The total gross estate of Benjamin is -
AP 4,500,000
CP 4,000,000
B 4,100,000
D 4,400,000
See the solution in Number 128 below.
127 The deductible amount of family home is -
A. P 2.900.000
C. P 1,000,000
В 1.450.000
D. None
agan
331
1А
Family home
Personal properties
Riceland
RA 4917
Claims against insolvent person
Gross estate
P 2.230.000
2.500,000
1,000,000
150,000
35.000
5.915,000
Number 126 through 128 are based on the following information:
On October 15, 2015, Benjamin, a filipino citizen and a resident of Manila, died
intestate leaving his wife "Diana" and his two illegitimate children, Aubrey and
Barbara. The estate of the deceased consisted of the following
Real property - conjugal
House and lot (family home) - Manila. This property has an assessor's value of
P2,500,000 at the time of death but valued in the zonal valuation of the BIR for
P2.900,000.
Personal property -- conjugal
The total value was placed at P1,600,000.
Included in the P1,600,000 are proceeds of an irrevocable life insurance policy of
P100,000 from Phil-Am Life Insurance Company taken by Benjamin with Barbara as
the beneficiary. The premiums were paid out of conjugal property of the spouses
The following deductions were claimed by the heirs
a Funeral expenses
P100.000
b Unpaid loans, notarized
75,000
c. Losses incurred during the settlement of the estate 25,000
126. The total gross estate of Benjamin is -
AP 4,500,000
CP 4,000,000
B 4,100,000
D 4,400,000
D
127 The deductible amount of family home is -
A. P 2.900.000
C. P 1,000,000
В 1.450.000
D. None
332
Cс
128. The net taxable estate is
A. P 100.000
B. 150,000
C. P 950,000
D. None
P 2,900,000
1,500,000
4,400,000
P100,000
75,000
25.000 ( 200,000)
Family home
Personal property (P1,600,000 - 100,000)
Gross estate / gross conjugal

Less: Deductions
Ordinary -
Funeral expenses
Losses
Special
Family home (P2,900,000 x 12) limit
Standard deduction
Net estate
Gross conjugal
Less: Conjugal deductions
Net conjugal
Share (P4,200,000 x 12)
Net taxable estate
(1,000,000)
(1.000.000)
2,200,000
4,400,000
200,000
4,200,000
2,100,000
100,000
129. Which of the following deductions cannot be claimed by a nonresident alien?
1. Vanishing deduction on a property situated in the Philippines.
IL Funeral expenses incurred abroad,
Ill. Family home situated abroad.
IV. Donation of a property use by a foreign government.
A. I only
B. I and II
C. III and IV
D. I and IV
332
Cс
128. The net taxable estate is
A. P 100.000
B. 150,000
C. P 950,000
D. None
P 2,900,000
1,500,000
4,400,000
P100,000
75,000
25.000 ( 200,000)
Family home
Personal property (P1,600,000 - 100,000)
Gross estate / gross conjugal
Less: Deductions
Ordinary -
Funeral expenses
Losses
Special
Family home (P2,900,000 x 12) limit
Standard deduction
Net estate
Gross conjugal
Less: Conjugal deductions
Net conjugal
Share (P4,200,000 x 12)
Net taxable estate
(1,000,000)
(1.000.000)
2,200,000
4,400,000
200,000
4,200,000
2,100,000
100,000
129. Which of the following deductions cannot be claimed by a nonresident alien?
1. Vanishing deduction on a property situated in the Philippines.
IL Funeral expenses incurred abroad,
Ill. Family home situated abroad.
IV. Donation of a property use by a foreign government.
A. I only
B. I and II
C. III and IV
D. I and IV
C
bongan
333
Number 130 through 132 are based on the following information
Wilson died of a car accident. He died intestate on October 10, 2015, survived
by his wife, Ging and a son
Exclusive properties of Ging:
Car
Lot in Quezon City
P 400.000
2,000,000
Other real and personal properties
800.000
Exclusive properties of Wilson:
House and lot in Sta. Rosa, Laguna, family home
1.900,000
Other personal properties
800,000
1,500,000
Conjugal properties of the spouses
Cash on hand and in bank
500.000
Receivable as prize in a raffle sponsored by PICPA
50,000
Receivable from an insurance company where the son, Gino
was designated as a revocable beneficiary. The premiums
were paid out of the conjugal funds
150,000
The following deductions were claimed:
Funeral expenses
195.000
Judicial expenses
15,000
Claims against the estate, not notarized
50.000
Claims against insolvent persons
30.000
Unpaid mortgage on other real properties (contracted for the
benefit of the conjugal property
200.000
Unpaid mortgage on house and lot in Laguna (the proceeds
350.000
of which did not redound to the benefit of the family)
Accrued income taxes
35,000
Income tax on income earned from October 11 to December
7.500
31, 2015
130. The gross estate is -
A. P 4.930,000
В. 4,900,000
C. P 4,850,000
D. 8,130,000
A
Exclusive
Total
Cash
Receivable from PICPA
Receivable from insurance company
Conjugal
P 500,000
50,000
150,000
30,000
334
Family home
1.900,000
.800,000
1.500.000
Gn6 eState
730,000 4.200,000 4.930,000
131. The deductible share of surviving spouse is -
A P 255,000
C. P 112,500
B. 127,500
D. 2,227,500
See the solution in Number 132
132. The net estate subject to tax is -
A P 1.962,500
B. 1,977,500
C. P 1,850,000
D. None
Gross estate
4,930,000
Less: Deductions
Ordinary -
Funeral
195,000
Judicial
15,000
Bad debts
30,000
Unpaid mortgage-real properties 200,000
Accrued taxes
35,000
Unpaid mortgage, Laguna'
350.000
Totals
475,000 350,000 ( 825,000)
Special -
Family home, limit
(1.000,000)
Standard deductions
(1.000.000)
Net estate
2,105.000
Less: Share of surviving spouse (730,000 - 475,000) x 1/2 127.500
Net estate subject to tax
1.977.500
Since the mortgage on real properties was contracted for the benefit of the
family, the same is considered as a deduction from conjugal partnership of the
spouses (Art. 121, par 2 & 3, Family Code).
133. Alanis, a resident citizen, single but head of family, died January 3, 2015. The
following are his data:
120,000
335
Properties
Real properties (excluding family home of P1,100,000)
P3,200,000
House and lot in Sydney, Australia
1,500,000
800,000
Deductions
Funeral expenses
100,000
Claims against the estate, not notarized
50,000
Unpaid mortgage on the family home
30,000
The personal properties do not include shares of stocks valued at P50,000
which were purchased by the decedent from Astra Company one month prior to
his death.
The house in Sydney was inherited by Alanis from his father who died 2 %
years ago. Said property was mortgaged for P200,000 which was paid by the
decedent before his death.
The gross estate is -
A: P 4,050,000
C. P 6,650,000
B. 6,750,000
-D 5,550,000
Real properties
Family home
House and lot, Australia
Shares of stocks
Gross estate
P3,200,000
1,100,000
1,500,000
800,000
50,000
100.000
6,750,000
134
The total deductions (excluding standard deductions) is -
A P 250,000
C. P1,250,000
B. 300,000
D. 2,001,111
CС
Funeral expenses
Bad debts
Unpaid mortgage on family home
Family home (maximum)
Deductible
P 120,000
100,000
30,000
1.000.000
1,250,000
336
The house in Australia is not subject to vanishing deduction because the
property is situated outside the Philippines. To be subject to this deduction,
the property "must form part of the gross estate situated in the Philippines,
135. Trillo, a resident of Quezon City, died on June 5, 2015 with the following data:
Property acquired by Trillo before marriage
P 1,500,000
Property acquired by his wife before marriage
1,000,000
Conjugal family house and lot, Quezon City, certified by
barangay chairman
1,600,000
House in Marbel City (exclusive of Trillo), certified as family
home by barangay captain
1,000,000
Proceeds of life insurance, irrevocable, beneficiary is the
estate
500.000
Claims against insolvent debtors (40% uncollectible)
100,000
Inter vivos donations to City Govemment of Quezon
200.000
Actual funeral expenses (50% paid by relatives)
300.000
Judicial expenses
250,000
A. P 6,040,000
C. P 1,550,000
B. 1,580,000
D.: 1,370,000
Conjugal
Total
Exclusive
1,500,000
1,600,000
· 1,000,000
500,000
100.000
2,200,000
2,500,000
4,700,000
Property acquired before marriage
Family home, Manila
House in Marbel City
Proceeds of insurance
Claims against insolvent
Gross estate
Less: Deductions
Ordinary
Funeral expenses (50%)
Bad debt (100,000 x 40%)
Judicial expenses
Special
Family home (1,600,000/2)
Standard deduction
Net estate
Gross conjugal
Less: Conjugal expenses
Net conjugal
150,000
40,000
250,000
( 440,000)
(800,000)
(1.000.000
2,460,000
2,200,000
440.000
1,760,000
337
Share (1,760,000 x 1/2)
880,000
Net taxable estate
1,580,000
The house in Quezon City is the true family home because it is the place
where the family resides.
The amount of funeral expenses shouldered by the relatives of the deceased is
not deductible because it does not diminish the estate.
rems 136 through 139 are based on the following information
Penduko married in 2013 under the absolute community of property regime,
died on August 30, 2015. He left the following properties and obligations:
Properties
Cash in bank
P 200.000
Residential lot inherited from his father on June 12, 2012
1.200,000
Family home
louse (community property)
1,300,000
Lot (exclusive property of Penduko)
1,000,000
Personal properties acquired by the spouses during marriage
200,000
Receivable from his sister (insolvent)
100,000
Inter vivos donation from his mother on July 2015, revocable 150,000
Receivable from SSS as indemnity for hospitalization
12,000
Obligations:
Unpaid mortgage on the residential lot contracted by the father:
At the time of death of father
300,000
At the time of death of Penduko
100,000
Funeral expenses (40% were shouldered by relatives)
80,000
Judicial expenses (30% were incurred after 6 months)
35,000
Claims against the estate (includes unpaid medical expenses of
P12,000)
35,000
Unpaid mortgage on the house (loaned to Penduko's brother) 100,000
Casualty loss (50% was indemnified by the insurance company)
60,000
Donation to Barangay Engkantao (verbal donation)
25,000
136 The gross estate on the estate of Penduko is -
А. P 4,062,000
с. P 3,962,000
B. 3,900,000
D. 4,000,000
Total
Exclusive
Community
200,000
1,200,000
Cash
Residential lot
338
Family house
1.300,000
Family lot
1,000,000
Personal properties
200,000
Receivable from sister
100,000
Gross estate
1,000,000 3,000,000
4,000,000
The property subject of the revocable donation made by the mother
although physically transferred to Penduko does not transfer title to him
because it is actually an inter vivos donation subject to estate tax on the
mother.
Benefits received from SSS and GSIS are exempt from estate tax.
The claim against Penduko's sister is included already in the gross estate as
a "Receivable from his sister."
137. The vanishing deduction on the estate of Penduko is -
A P 357,450
C. P 300,500
В. 375,540
D 367,450
1,200,000
200.000
1,000,000
Value of property
Less: Mortgage paid (300,000 - 100,000)
Initial basis
Unpaid mortgage on lot
Funeral expenses (80,000 x 60%)
Judicial expenses (35,000 x 70%)
Payable of the estate (35,000 – 12.000)
Unpaid mortgage on house
Bad debts (loan to sister)
Casualty loss (60,000 X 50%)
Total
100,000
48,000
24,500
23.000
100,000
100,000
30,000
425,500
(1,000,000/4,000,000 X 425,500)
Base
Rate (more than 3 years not more than 4 years)
Vanishing deduction
106.375
893,625
40%
357,450
138. The total ordinary deductions from the community property of Penduko is-
P 807,950
C.
P 782.950
582,900
D. 682,950
ESTATE
TAXATION
-
Multiple
Choice
Questions
339
Ordinary Deductions:
Funeral expenses
48,000
Judicial expenses
24.500
Payable of the estate
23,000
Unpaid mortgage on the house
100,000
Unpaid mortgage on residential lot
100,000
Bad debts
100,000
Casualty loss
30,000
Vanishing deduction
357.450
Total
782,950
The vanishing deduction is a deduction from the community property of the
spouses because the property subject of the vanishing deduction is a
community property - it having been inherited before the marriage of
Penduko.
Donations for public purpose must be testamentary in character. Oral

donations are not valid.
The unpaid mortgage on the lot is an obligation of the community property
because it is considered as an ante-nuptial debt which have redounded to the
benefit of the family.
139. The net taxable estate is -
A.
B.
None
P-46,525
D.
P 96,525
122,025
4,000,000
( 782,950)
Gross estate
Ordinary deductions
Special deductions:
Medical expenses
Family home (1,300,000/2) + 1,000,000 (limit)
Standard deduction
Net estate
Less: Share of surviving spouse (3,000,000 - 782,950)/2
Net taxable estate
(12,000)
(1,000,000)
(1000.000
1,205,050
1.108.525
90.525
140. Eleanor, resident citizen, married and under the absolute community of property
regime, died on August 20, 2014. The following are the data on properties and
obligations
340
P2.500 000
2.000.000
Exclusive properties of Eleanor
Personal properties
Family home
Community properties
Real properties
Personal properties
Funeral expenses
Judicial expenses incurred until February 20, 2016
Judicial expenses incurred after February 20, 2015
Unpaid taxes
Medical expenses
Casualty loss occurred November 2, 2014
Casualty loss occurred March 5, 2015
How much is the net taxable estate?
А P 3.268,500
С. P 3,238,000
B 3,278,750
D 3,228,000
1 400,000
1.750.000
220.000
30,000
20,000
12,500
550.000
350.000
130,000
Total
7.650,000
Exclusive Community
Personal properties
2,500,000 1,750,000
Family home
2,000,000
Real properties
1.400.000
Gross estate
4.500,000 3,150,000
Ordinary deductions:
Funeral expenses, limit
200.000
Judicial expenses
30.000
Unpaid taxes
12,500
Losses
350.000
Special deductions:
Family home
Standard deduction
Medical expenses, limit
Net estate
Less: Share of surviving spouse (3,150,000 - 592,500)/2
Net taxable estate
( 592,500)
(1,000,000)
(1,000,000)
500.000)
4.557.500
3.278.75
141. The net distributable estate is -
А. P 3,278,750
B. 3,483,750
P 5 483,750
5,418,750
341
Total
7,650,000
Exclusive Community
Personal properties
2,500,000 1,750,000
Family home
2,000,000
Real properties
1,400,000
Gross estate
4,500,000 3,150,000
Ordinary deductions:
Funeral expenses
220,000
Judicial expenses (30,000 + 20,000)
50,000
Unpaid taxes
12,500
Medical expenses
550,000
Losses (350,000 + 130,000)
480,000
Net estate
Less: Share of surviving spouse (3,150,000-1,312,500)/2
Net distributable estate
(1.312.500)
6,337,500
918.750
5,418,750
C.
TAX CREDIT & ADMINISTRATIVE
PROVISIONS
142. One is not entitled to tax credit for taxes paid to foreign country
A. Resident citizen
Resident alien
В. Nonresident citizen
D. Nonresident alien
143. All of the following, except one, are entitled to tax credit on estate tax paid in
in country:
C.
Resident alien
ut citizen

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B.

DEDUCTIONS FROM GROSS ESTATE

An example of a funeral expense which is not deductible -

A Cost of coffin assumed by a family friend.

B. Funeral services paid out of decedent's estate

C. Mouming clothing of deceased's unmarried minor children and surviving

Statement 1: The amount of funeral expenses within the P200,000 threshold,

is in excess of the P200,000 threshold shall be allowed as deduction under

"claims against the estate.

A. Both statements are true.

B. Only the first statement is true.

CPA REVIEWER IN TAXATION Ampongan

Only the second statement is true.

Neither statements are true.

Which of the following is deductible from gross estate as "funeral expenses?

A Mouming apparel of a 40-year old legitimate child of the deceased.

C Burial expenses defrayed by the relatives of the deceased.

D. Obituary notices to relatives and friends

A 5% of the gross estate or actual funeral expenses, whichever is lower

B. Always 5% of the gross estate.

C. Actual funeral expenses incurred.

D. 5% of the gross estate or actual funeral expenses incurred whichever is

The deductible amount of funeral expense is P200,000 if the actual expenses

and the gross estate amount to -

Actual Gross estate

STATE TAXATION – Multiple Choice Questions

plan up to P120,000. Other actual funeral expenses amounted to P75,000. The

amount of his tangible properties upon death was P3,700,000.

Gross Estate Funeral Expenses

Other actual funeral expenses

Total actual funeral expenses

Limit (3,820,000 x 5%)

Wuch of the following statements about funeral expenses is wrong? For a

decoltant who was a -

expenses were incurred entirely outside the Philippines.

expenses were incurred within and outside the Philippines

CPA REVIEWER IN TAXATION Ampongan

c. non-resident allen, the entire funeral expenses cannot be claimed as

D. non-resident alien, the entire funeral expenses cannot be claimed as

within the Philippines

Funeral expenses incurred on a non-resident alien decedent are deductible

whether incurred within or without the Philippines, but it shall be pro-rated

estate within and outside the Philippines.

gross estate. Which one is not?

C. Benefits received under RA 4917

D. The undiminished value of the property mortgaged.

expenses that may be claimed as dochuction from the gross estate -

within the period for filing the estate tax retum.

estate regardless of time it was incurred by the decedent.

D. shall be allowed even if the estate is settled extrajudicially.

prescribed by law for the filing of the estate tax return.

A A loan contracted by the decedent which is secured by a mortgage of his lot

ESTATE TAXATION - Multiple Choice Questions 303

against the estate

decedent as "claims against the estate".

obligations enforceable during the lifetime of the decedent.

D Debt contracted during the lifetime of the decadent which is payable in

deductible from the gross estate.

A loan which is secured by an unpaid mortgage at the time of death of the

decedent is deductible as an unpaid mortgage and not as claims against the

may be deductible except (RPCPA)

A. They must be existing against the estata.

B. They must be reasonably certain as to amounts.