Colegio de Dagupan

School of Business and Accountancy

Business and Transfer Tax

Qualifying Examination

1. Transfer, use or consumption not in the course of business of goods or properties originally
intended for sale or for use in the course of business is an example of:
a. Actual sale of goods or properties
b. Effectively zero-rated sale of goods or properties
c. Deemed sale of goods or properties
d. None of the choices

2. An act of liberality whereby a person disposes gratuitously of a thing or right in favor of

another who accepts it
a. Succession c. Inheritance
b. Donation d. Liquidation

3. When the donor intends that the donation shall take effect during the lifetime of the donor,
though the property shall be delivered till sfter the donor’s death, this shall be a:
a. Donation mortis causa c. Donation propter nuptias
b. Donation inter vivos d. None of the choices

4. The following are the requisites of a donation for purposes of the donor’s tax except one:
a. Capacity of the donor c. Delivery of the subject matter or gift
b. Capacity of the donee d. Donative intent

5. Which of the following statements regarding donation of an immovable property is incorrect?

a. The donation must be made in a public document specifying therein the property
donated and the value of the charges which the done must satisfy
b. The acceptance may be made in the same Deed of Donation or in a separate public
document but it shall not take effect unless it is done during the lifetime of the donor
c. If the acceptance is made in a separate instrument, the donor shall be notified thereof in
an authentic form and this shall be noted in both instruments
d. None of the choices

6. One of the following is not a distinction between donation inter vivos and donation mortis
causa
a. Donation inter vivos takes effect during the lifetime of the grantor while donation mortis
causa takes effect after the death of the grantor
b. Donation inter vivos is subject to donor’s tax while donation mortis causa is subject to
estate tax
c. Donation inter vivos requires a public document while donation mortis causa may
not require a public document
d. Donation inter vivos

7. A resident alien donor donated to a Philippine domestic corporation a property located

abroad valued at Php 500,000. The foreign donor’s tax on the donation was Php 100,000. A
donation earlier within the same calendar year was donated to a legitimate daughter, a
property valued at Php 300,000. How much was the tax payable?
a. Php 58,500 c. Php 52,500
b. Php 56,250 d. None of the choices

8. A resident citizen of the Philippines made the following donations on one date:
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 Donations on account of marriage:
To legitimate son Php 400,000
To a legitimate daughter and her
Husband-to-be on account of marriage 15,000
To a recognized natural son 30,000
To an adopted child 60,000
To an illegitimate daughter 40,000
To a sister 12,000
To a charitable institution 20,000

The deductions from gross estate is:

a. Php 67,500 c. Php 57,500
b. Php 60,000 d. Php 30,000

9. When the donee is not a stranger, how much is the exempted net gift?
a. Php 500,000 c. Php 100,000
b. Php 200,000 d. None

10. When the donee is a stranger, how much is the exempted net gift?
a. Php 500,000 c. Php 100,000
b. Php 200,000 d. None

11. Which of the following statements is wrong? A donation by husband and wife out of conjugal
community property to a brother of the wife is:
a. One-half a donation to a non-stranger by the wife
b. One-half a donation to a stranger by the husband
c. A donation on which the husband must pay a donor’s tax of 30% on his net gift
d. A donation on which the husband must pay the graduated donor’s tax on his net
gift

12. A donation on account of forthcoming marriage was made. The dowry was properly claimed
as a deduction and the applicable donor’s tax return was filed. The marriage did not
materialize. What action should be taken with respect to the filed donor’s tax return?
a. The donor may file an amended return with no deduction for dowry and pay
additional donor’s tax
b. The donee may call the attention of the BIR and file a donor’s tax return
c. The donor and the done may agree on who will pay the donors tax because it was not
the donor’s fault that the marriage did not materialize
d. No action shall be taken because the donor’s tax return filed was correct and in order at
the time of its filing

13. On one date Laura made donations of property in the Philippines to a non-stranger and of
property outside the Philippines to a stranger. In taking a credit for the foreign donor’s tax
paid the credit shall be against the Philippine donor’s tax on the:
a. Donation to the non-stranger plus that to the stranger
b. Donation to the non-stranger
c. Donation to the stranger
d. None of the options given

14. The following donations during the calendar year 2015 are made to relatives:
Date Amount
January 30, 2015 Php 2,000,000
March 30, 2015 1,000,000
August 15, 2015 500,000
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 How much is the tax due on the gift made on January 30, 2015?
a. Php 204,000 c. Php 80,000
b. Php 124,000 d. Php 50,000

15. How much is the tax due on the gift made on March 30, 2015?
a. Php 204,000 c. Php 80,000
b. Php 124,000 d. Php 50,000

16. How much is the tax due on the gift made on August 30, 2015?
a. Php 204,000 c. Php 80,000
b. Php 124,000 d. Php 50,000

17. On January 15, 2015, Dave gave a piece of land to her brother-in-law who is getting married
on February 14, 2015. The assessed value and zonal value of the land were Php 750,000
and Php 1,000,000 respectively. The land had an unpaid mortgage of Php 200,000 which
was not assumed by the done and an unpaid realty tax of Php 10,000 which was assumed
by the donee.

How much was the donor’s tax due?

a. Php 297,000 c. Php 43,400
b. Php 237,000 d. Php 31,400

18. Mr. George of the Jungle donated Php 500,000 to the City of Manila and Php 100,000 to his
best friend who graduated summa cum laude. For donor’s tax purposes, how much shall be
the:
Gross Gifts? Deductions?
a. Php 600,000 Php 500,000
b. 500,000 500,000
c. 600,000 100,000
d. 500,000 100,000

19. In 2015, Jollibee made the following gifts:

a. On June 1, 2015, Php 150,000 to Ashton, his son, on account of his marriage celebrated
May 1, 2013
b. On July 10, 2015, a parcel of land worth Php 180,000 to his father, subject to the
condition that his father would assume the mortgage indebtedness of Jose in the amount
of Php 40,000
c. On September 30, 2015, Php 150,000 dowry to his daughter Danielle, on account of her
scheduled marriage on October 25, 2015 and another wedding gift worth Php 20,000 on
November 23, 2015.

How much was the total net gifts?

a. Php 500,000 c. Php 450,000
b. Php 460,000 d. Php 430,000

20. Mitchell is a citizen and resident of the Philippines. On July 8, 2015, she made donations to
yeng, a friend, of properties in Australia and Thailand. Donor’s taxes paid in Australia and
USA amounted to Php 95,000 and Php 50,000, respectively. The property in Australia had a
fair market value of Php 300,000 while the property in US had a market value of Php
200,000. How much was the donor’s tax still due after credit for foreign donor’s tax?
a. Php 145,000 c. Php 10,000
b. Php 15,000 d. Php 0

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21. Mr. Papa James, non-resident donor, made the following donations on July 15, 2015:
a. To Charlie, a legally adopted child, on account of his marriage on July 31, 2015, a
property in Indonesia (donor’s tax paid in Indonesia, Php 70,000), FMV Php 510,000
b. To Adam, best friend in the Philippines, a property with an unpaid mortgage of Php
30,000 assumed by the donee, FMV Php 230,000

For Philippine donor’s tax purposes, the allowable tax credit is:
a. Php 74,000 c. Php 52, 857
b. Php 70,000 d. Php 21, 143

22. The following donations were made by a resident citizen donor during the current year:
Date Donations
July 22 To Maria, legitimate daughter, on account of
forthcoming marriage in the USA, car valued at Php
850,000 (US donor’s tax was Php 40,000)
To Bry adopted son in the Philippines, cash Php
500,000
November 11 To Sammy, legitimate son, land in the Philippines
valued at Php 300,000 (unpaid mortgage of Php
50,000 was assumed by the donee)

How much was the donor’s tax payable on the gifts made on July 22?
a. Php 71,200 c. Php 20,000
b. Php 31,200 d. None

23. How much was the donor’s tax payable on the gifts made on November 11?
a. Php 71,200 c. Php 20,000
b. Php 31,200 d. None

24. On January 15, 2015, Dairy Cream gave a piece of land to her son who is getting married
on February 14, 2015. The assessed value and zonal value of the land were Php 750,000
and Php 1,000,000 respectively. The land had an unpaid mortgage of Php 200,000 which
was not assumed by the donee and an unpaid realty tax of Php 10,000 which was assumed
by the donee.

How much was the donor’s tax due?

a. Php 44,000 c. Php 29,400
b. Php 31,400 d. Php 16,400

25. On March 12, 2015, French Fries gave a piece of land to her best friend who is a graduate
of Mining Engineering. The land had an FMV of Php 50,000 and had an unpaid tax of Php
10,000 which was assumed by the done. How much was the donor’s tax due?
a. Php 15,000 c. Exempt
d. None
b. Php 12,000

26. During the current calendar year, Hershey had the following donations/transactions:
Date Donations
January 15 Donated a Php 150,000 diamond ring to her sister who
was getting married in March 15 of the same year

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 March 15 Sold her personal car valued at Php 500,000 for Php
200,000 to his uncle
April 15 Sold his residential house to his brother for Php 1,500,000.
The FMV of the residential house at the time of sale was
Php 2,000,000
June 15 Donated Php 100,000 to Quezon City for public purpose
and Php 50,000 to her brother who graduated from De La
Salle

How much was the donor’s tax for the gift made on January 15?
a. Php 30,000 c. Php 800
b. Php 1,000 d. None

27. How much was the donor’s tax for the gift made on March 15?
a. Php 81,000 c. Php 11,000
b. Php 12,000 d. None

28. How much was the donor’s tax for the gift made on April 15?
a. Php 12,000 c. Php 1,000
b. Php 11,000 d. None

29. How much was the donor’s tax for the gift made on June 15?
a. Php 32,000 c. Php 2,000
b. Php 14,000 d. None

30. Which statement is wrong? The donor’s tax:

a. Is computed on the basis of the net gifts of a calendar year
b. Becomes proportionately bigger on later donations
c. Is computed separately for each spouse in case of a joint donation
d. Is computed and paid within thirty days from the date of donation

31. S1: Any person making a donation (whether direct or indirect) is required to accomplish
under oath a donor’s tax return for every donation, unless the donation is specifically
exempted under the Tax Code or other special laws
S2: The computation of the donor’s tax is on a cumulative basis over a period of one
calendar

a. Both statements are correct

b. Both statements are incorrect
c. Only S1 is correct
d. Only S2 is correct

32. S1: A donation with an unpaid donor’s tax is an invalid donation

S2: The title to the donated real property cannot be transferred to the done in the Register of
Deeds unless the donor’s tax on the donation had been paid

a. True, True
b. False, False
c. True, False
d. False, True

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33. A resident citizen has a property in Quezon City. His legal residence is in Masbate City.
While in Cebu City on a business trip, he donated his property in Quezon City to a relative
who is a long-time resident of Cebu City. Where will the donor file the donor’s tax
a. Quezon City
b. Cebu City
c. Masbate City
d. Any of the three cities

34. S1: In the case of gifts made by a non-resident alien, the return shall be filed with the
Philippine Embassy or Consulate in the country where he is domiciled at the time of transfer
or directly with the office of the Commissioner
S2: The term “Office of the Commissioner” shall refer to Revenue District Officer (RDO)
having jurisdiction over the BIR-National Office which houses the Office of the
Commissioner or presently to the RDO No. 39-South Quezon City
a. True, True
b. False, False
c. True, False
d. False, True

35. Which of the following is a stranger for donor’s tax purposes?

a. A child born out of wedlock of parents who are legally impede to marry each other at the
time the child is being conceived
b. The son of the donor’s first cousin
c. The donor’s grandmother
d. The donor’s spouse

36. S1: In order for donations to be exempt from donor’s tax and claimed in full as deduction,
the donee-institution must be duly accredited by the Philippine Council for NGO Certification
(PCNC)
S2: The donor engaged in business shall give a notice of donation on every donation worth
at least Php 50,000 to the RDO which has jurisdiction over his place of business within 30
days after receipt of the qualified donee-institution’s duly issued Certificate of Donation
a. True, True
b. False, False
c. True, False
d. False, True

37. When the donee is a stranger, the tax payable is:

a. 30% of the gross gifts
b. 30% of the net gifts
c. based on the graduated tax rates
d. based on the graduated tax rates or 30% of gross gifts whichever is higher

38. Which of the following is a stranger for donor’s tax purposes?

a. A child born out of wedlock of parent’s who are legally impede to marry each other at the
time the child is being conceived
b. The son of the donor’s first cousin
c. The donor’s grandmother
d. The donor’s spouse

39. For the donation to be considered valid, acceptance of the donation must be made
a. During the lifetime of the donor only
b. During the lifetime of the donee only
c. During the lifetime of the donor and the donee

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 d. None of the choices

40. S1: Donors tax shall be levied, assessed collected and paid upon the transfer of property by
any person, resident or non-resident as a gift
S2: For the purpose of donor’s tax, a stranger is a person who is not a relative by
consanguinity in the collateral line within the fifth degree of relationship
a. True, True
b. False, False
c. True, False
d. False, True

41. Which of the following statement is incorrect? The donor’s tax is:
a. Computed on the basis of the net gifts of a calendar year,
b. Computed and paid with in 30 days from the date of donation,
c. Computed separately for each spouse in case of a joint donation
d. Becomes proportionately bigger on later donations.

42. S1: In all cases, void donations are not subject to donors tax
S2: Every donation between the spouses during the marriage shall be void
a. Both statements are true
b. Both statements are false
c. S1 is true while S2 is false
d. S1 is false while S2 is true

43. Mr. John Samuelson, resident alien, donated a piece of jewelry to his son who got married
on January 15, 2015. The piece of jewelry was mailed to his son on January 10, 2015 and
was accepted on January 20, 2015. When is the last day to file the donor’s tax return?
a. February 9, 2015
b. February 14, 2015
c. February 19, 2015
d. March 20, 2015

44. On April 19, 2015, Mr. Doofenschmirtz donated 1,000 shares of stocks of Perry Company.
Perry Company shares are listed in the stock exchange. The following are the trading prices
of each share on April 19, 2015:
Opening price - Php 800
Highest trading price - 880
Lowest trading price - 760
Average trading price - 820
Last trading price - 840

The gross gift is:

a. Php 820,000
b. Php 880,000
c. Php 800,000
d. Php 840,000

45. Which of the following is not considered a deemed sale?

a. Transfer, use or consumption not in the ordinary course of business of goods or
properties originally intended for sale or for use in the course of business
b. Distribution or transfer to shareholders or investors as share in the ptofits of the vat
registered person or to creditors in payment of debt
c. Consignment of goods if actual sale is not made within 60 days following the date such
goods were consigned

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 d. Retirement from or cessation of business with respect to capital goods existing as
of such retirement or cessation

46. On account of the marriage of Albert Ong and Andrea Sy, son and daughter-in-law, Mr.
Anthony Ong donated a real property with an FMV of Php 1,500,000 but subject to a
mortgage of Php 300,000 which was assumed by the donees. The donor’s tax is:
a. Php 77,750
b. Php 84,950
c. Php 185,950
d. Php 199,400

47. With the consent of his wife and on account of the son’s forthcoming marriage, Carlo
donated a conjugal real property to his son. The zonal value of the property was Php
1,000,000 and its value per tax declaration was Php 1,500,000. Unpaid mortgage on the
property was Php 300,000 and unpaid realty tax was Php 100,000 which were assumed by
the done. The taxable net gift of Carlo was:
a. Php 550,000
b. Php 540,000
c. Php 340,000
d. None

48. Mr. Ralley Velasco made the following gifts in 2015:

Date Donations
January 2 Php 500,000 to Amber, his acknowledged natural daughter
on account of her marriage celebrated on January 1, 2015
March 9 A diamond ring purchased by Mr. Velasco at the cost of
Php 5,000 (but with a FMV of Php 9,000 at the time of
donation) given to his wife as a birthday gift
June 20 Php 150,000 to Brenner Boy, his legitimate son, on
account of his marriage on December 12, 2015
December 25 Php 120,000 cash donation to the Hospicio de San Jose, a
charitable institution

How much was the donor’s tax due for the gift made on January 2?
a. Php 14,000
b. Php 13,600
c. Php 12,000
d. None

49. How much was the donor’s tax due for the gift made on March 9?
a. Php 240
b. Php 160
c. Zero
d. None

50. How much was the donor’s tax due for the gift made on June 20?
a. Php 9,800
b. Php 8,400
c. Php 7,800
d. None

51. A How much was the donor’s tax due for the gift made on December 25?
a. Php 36,000
b. Php 7,200
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 c. Zero
d. None

52. Mr. and Mrs. Fern Paragas made the following donations during the calendar year
2015(common property unless otherwise stated):
Date Donations
January 2 To Audrey,legitimate daughter, on account of her
forthcoming marriage, 10,000 shares which are not traded
in the stock market exchange. The book value at the time
of donation was Php 50 per share
To Jasmine, family friend of couple, on account of her
birthday, Php 20,000
February 3 To Aevon, the legitimate daughter, on account of her
marriage on February 1, 2015, a piece of antique jewelry
from the capital property of Mr. Paragas. The pawn value
of the jewelry was Php 50,000.
To Justinne, a legitimate daughter, on account of her
graduation, a piece of land costing Php 500,000. The FMV
per BIR at the time of donation was Php 1,000,000. Its
assessed value was Php 1,200,000. The piece of land had
an unpaid mortgage of Php 100,000 which was assumed
by the donee
To Alex, Mrs. Paragas’ sister, on account of her
forthcoming marriage, cash Php 100,000
October 4 To CdD, a non-profit educational institution, Php 250,000
To LBC Shipping Company, a piece of land valued at Php
700,000
To Jasper, legitimate son, on account of his marriage, cash
of Php 200,000

How much is the tax due and payable of Mr. Paragas for the gifts made on January 2?
a. Php 19,600
b. Php 7,000
c. Php 6,600
d. None

53. How much is the tax due and payable of Mr. Paragas on gifts made on February 3?
a. Php 58,400
b. Php 51,800
c. Php 36,800
d. None

54. How much is the tax due and payable of Mr. Paragas for the gift made on October 4?
a. Php 126,000
b. Php 111,800
c. Php 111,000
d. None

55. S1: When a donor’s tax return filed is found by the BIR to have errors resulting in deficiency
donor’s tax, the donor may be required to pay the deficiency although he does not possess
or own the property anymore
S2: The Government is not bound by any agreement between the donor and the donee that
the latter shall pay the donor’s tax instead of the former
a. True, True
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b. False, False
c. True, False
d. False, True

56. Gifts may or may not be covered by taxes. One of these statements is false
a. The donor’s tax for each calendar year is computed on the basis of total net gifts made
during the calendar year
b. Gifts on property shall be valued at FMV of the property at the date of donation
c. A gift to the Development Academy of the Philippines is exempt from tax
d. A gift out of conjugal property is always deemed as made by both spouses

57. The following are transactions and acquisitions exempt from transfer tax except:

a. Transmission from the first heir or donee in favor of another beneficiary in accordance with
the desire of the predecessor;
b. Transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the
fideicommisary;
c. The merger of usufruct in the owner of the naked title ;
d. All bequest, devises, legacies or transfer to the social welfare, cultural and charitable
institutions.

58. Proceeds of life insurance includible in the taxable gross estate.

a. Insurance proceeds from GSIS or SSS;

b. Amount receivable by any beneficiary irrevocable, designated in the policy by the insured;
c. Amount receivable by any beneficiary designated in the insurance policy;
d. Proceeds of group insurance taken out by a company for employees.

59. Vandong, a citizen of the Philippines and resident of Bacolod City, died testate on May 10,
2016. Among his gross estate are properties inherited from his deceased father who died on
April 4, 2013. 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.

60. In determining the net estate of a decedent, which of the following rules is correct?

a. Real estate abroad is not included in the gross estate of decedent who is 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 gross estate
wherever situated;
d. Funeral expenses are deductible to the extent of 5% of the total gross estate but not
exceeding P100,000.

61. Y , a Filipino resident, died on November 5, 2015 and his estate incurred losses due to:

1st loss : From fire on February 2, 2015 of improvement of his property not compensated by
insurance.
2nd loss: From flood on February 25, 2016 of household furnitures also not compensated by
insurance.

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a. 1st loss is not deductible and 2nd loss is deductible;
b. Both losses are not deductible;
c. Both losses are deductible from gross estate;
d. 1st loss is deductible and 2nd loss is not.

62. The following are requisites for vanishing deduction to be allowable, except one:

a. The estate tax of the prior succession must have been finally determined;
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 can be identified;
d. The property must have formed part of the gross estate situated in the Philippines of
the prior decedent.

63. The property, rights, and obligations of a persons which are not extinguished by his death
and those which have been accrued there to since the opening of succession:

a. Assets
b. Capital
c. Estate
d. Income

64. The following are the requisites in order that claims against the decedent’s estate may be
deductible, except:

a. They must be extinguished against the estate;

b. They must be reasonably certain as to amount;
c. They must have been prescribed;
d. They must be enforced by claimants.

65. A succession to properties mentioned in the last will and testament, where the values of the
properties shall have increased from the time the last will and testament was executed is:

a. Testamentary succession;
b. Instate succession;
c. Mixed succession;
d. Escheated to the state on the increased value.

66. A successor to an estate, whether in a last will and testament or not:

a. Heir
b. Legatee
c. Devisee
d. Compulsory heir

67. Which of the following statement is wrong?

a. The gross estate of a non – resident citizen would include all properties regardless of
location;
b. The gross estate of a non-resident, not citizen of the Philippines would include intangible
properties in the Philippines;
c. The gross estate of resident, not citizen of the Philippines would include all properties
regardless of location;

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d. The gross estate of a non-resident citizen of the Philippines would include only
properties in the Philippines.

68. The personal properties of a non-resident, not citizen of the Philippines, would not be
included in the gross estate if;
a. The intangible personal property is in the Philippines;
b. The intangible personal property is in the Philippines and the reciprocity clause of the
estate tax law applies;
c. The tangible personal property is the Philippines;
d. The personal property is shares of stock of domestic corporation 90% of whose business is
in the Philippines.

69. Which of the following is not included in the gross estate?

a. Revocable transfer where the consideration is not sufficient;
b. Revocable transfer where the power of revocation was not exercised;
c. Proceeds of life insurance where the beneficiary designated is estate and the designation is
irrevocable;
d. Proceeds of life insurance where the beneficiary designated is the mother and
designation is irrevocable.

70. Which of the following exempt transmission will still require inclusion of the property in the
gross estate?
a. Merger of the usufruct in the owner of the naked title;
b. Legacy to a charitable institution whose administrative expenses did not exceed 30%
of the legacy;
c. Transfer from a first heir to a second heir designated by the decedent;
d. Death benefits under the GSIS and SSS.

71. Which statement is wrong? The gross estate shall be valued:

a. At its fair market value at the time of death;
b. At its fair market value at the time the return is due;
c. In the real property, the zonal value, which may be higher than the fair market value;
d. In the case shares of stock, at book value.

72. Which statement is not incorrect? Real property with a cost of P300,000 and a fair market
value at the time of death of P1,000,000 but subject to a mortgage of P200,000:
a. Shall be in the net taxable estate at P800,000;
b. Shall be in the gross estate at the decedent’s equity of P800,000;
c. Shall be in the gross estate at P300,000;
d. Shall be in the gross estate at the owner’s equity of P100,000.

73. A revocable transfer with the following circumstances: Fair market value at the time of
transfer – P300,000 ; fair market value at the time of death – P180,000; consideration
received when transferred – P200,000:
a. Shall be included in the gross estate at P180,000;
b. Shall be included in the gross estate at P200,000;
c. Shall be included in the gross estate at P100,000;
d. Shall not be included in the gross estate.

74. Which of the following statement is not correct? A claim against an insolvent person, with no
properties whatsoever is;
a. Included in the gross estate;
b. Not included in the net taxable estate;

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c. If arising out of debt instrument of the insolvent, the debt instrument must be
notarized;
d. Needs no preliminary filing of case against the insolvent.

75. A revocable transfer, with a consideration received:

Consideration receive P200,000
Fair market value of property at the time of transfer 300,000
Fair market value of property at the time of death 250,000

a. P300,000
b. P250,000
c. P100,000
d. P50,000.

76. Which of the following is not true: A transfer in contemplation of death for less than full and
adequate consideration in money may result in a:
a. Value include in the gross estate;
b. Nothing included in the gross estate;
c. Value included in the net estate;
d. Value to consider as taxable income.

77. Which statement is wrong: A forgiveness or cancellation of indebtedness:

a. May result in an income to the debtor;
b. May result in a donation to the debtor;
c. May result in an inclusion of value in the gross estate;
d. None of the above.

78. In computing the gross estate of a decedent:

a. If he was a non – resident, but citizen of the Philippines, tangible and intangible properties,
regardless of location, shall be included;
b. If he was a resident who was not a citizen of the Philippines, tangible and intangibles
properties, regardless of location, shall be included;
c. If he was a non – resident who was not a citizen of the Philippines, tangibles and intangible
personal properties, located in the Philippines, shall be included;
d. All the above statements are correct.

79. Which of the following is not a deduction from the gross estate under the National Revenue
Code?
a. Taxes;
b. Losses;
c. Legacy to the government;
d. Legacy to a charitable institution.

80. Which of the following statements is wrong? Property subject to vanishing deduction should
be:
a. If 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 resident of the Philippines, the property should be
located in the Philippines;

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d. If the decedent was a citizen and resident of the Philippines, the property maybe be
located anywhere.

81. One of the following statement is wrong. Which is it? Vanishing deduction is allowed if the
decedent is:
a. A resident citizen, and on property located in the Philippines;
b. A resident citizen, and on property located outside the Philippines;
c. A non - resident citizen, and on property in the Philippines;
d. A resident alien and on property in the Philippines.

82. A 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 marriage, fair value P100,000
Family home built by the spouses on the inherited land 800,000

Deduction for family home:

a. P900, 000
b. P500,000
c. P400,000
d. P450,000

83. Which of the following statements is wrong: For a decedent who was married at the time of
death, there may be deductible funeral expenses:
a. Only if actual paid from the estate;
b. Even if there is memorial plan;
c. Reduces the distributable estate by the allowable 5% of the gross estate;
d. At not more than P200,000.

84. One of the following statements is wrong. Identify. Medical expenses deductible from the
gross estate:
a. Is only if the decedent was a citizen or resident of the Philippines at the time of death;
b. Is actual medical expenses or P500,000 ,whichever is lower;
c. Need not be on the illness resulting death;
d. Must be unpaid before death.

85. Mr. X Xavier, a resident citizen, died with properties constituting his gross estate of
P5,000,000. Actual funeral expenses amounted to P220,000 and other expenses and claims
which are deductions from the gross estate amounted to P1,200,00.

The allowable deduction for funeral expenses:

a. P220,000;
b. P250,000;
c. P200,000;
d. None give.

86. In Question # 85, the net taxable estate is:

a. P3,600,000;
b. P3,550,000;
c. P3,700,000;
d. P3,580,000.

87. In question #85, the distributable estate was diminished by:

a. P1,420,000
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 b. P1,400,000
c. P1,200,000
d. Some other amount.

88. Which of the following statement on judicial expenses, as deductions from the gross estate,
is wrong?
a. Shall be allowed if the estate is under judicial settlement ;
b. Shall be allowed even if the estate is extra judicial settled;
c. Shall include judicial expenses to settle the conflicting claims of heirs;
d. Shall be allowed even if the decedent is a non – resident alien and represent express
outside the Philippines.

89. Properties in the Philippines – P 500,000; Properties outside the Philippines – P300,000;
Actual funeral expenses in the Philippines – P20,000; Actual funeral expenses outside
Philippines – P10,000.

If decedent was a citizen or resident of Philippines, the deductible funeral expenses:

a. P30,000;
b. P40,000;
c. P18,750;
d. P25,000.

90. In question #89, if decedent was a non – resident, not citizen of the Philippines, the
deductible funeral expenses:
a. P30,000;
b. P40,000;
c. P18,750;
d. P25,000.

91. Mr. Lalo died a receivable from Ms. Lola. Ms. Lola has properties worth P220,000 and
obligations of P320,000. Included in the obligation are P20,000 owed to the Government of
the Republic of Philippines for unpaid taxes and P60,000 owed to Mr. Lalo.

The estate of Mr. Lalo has deduction for claims against insolvent of:
a. P 60,000;
b. P 41,250;
c. P 20,000;
d. P 0.

Questions 92 & 93:

Mr. Azur, a Filipino residing in Kamias, Quezon City, died single on Sept. 21, 2013.
Compute for the 92) net taxable estate and 93) the estate tax due if the decedent left the
following property:

Parcel of Land in Califonia, U.S.A. P2,500,000

House and Lot in Quezon City (family home) 2,250,000
Shares of Stock in a Foreign Corporation with
Office in California, U.S.A. 1,125,000
Car in California, U.S.A. 312,500
Proceeds of Life insurance, his son Junior as the
Irrevocable beneficiary 250,000
Bank Deposit 125,000
Claim Against an Insolvent Person 62,500
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 Total 6,625,000

Deductions Claimed:
Funeral Expenses P 312,500
Medical Expenses 687,000
Judicial Expenses 43,750
Claim Against the Estate 90,625
Claim Against an Insolvent Person 62,500
Real Property Tax for 2014 12,500
Family Home 1,000,000
Total P2, 209,375

Questions 94 & 95:

Mr. Castaneda, Filipine, single, died on November 12, 2013. The following assets,
expenses, liabilities, and charges were left:

Assets
Fishpond in General Santos City P 2,500,000
Lot in Las Pinas City 625,000
House and Lot in San Juan, Metro Manila
(Family home) 593,750
Honda Car 375,000
Farm in Nueva Ecija donated mortis causa
To sister 262,500
Time Deposit 150,000
Expenses, Liabilities and Charges
Funeral expenses paid jointly by
Brothers and sisters of decedent 137,500
Mortgage on fishpond, (P112,500 of the
Mortgage was paid before decedent’s death 137,500
Medical expenses incurred in 2013 287,500
th
Unpaid Real Estate Tax for the 4 Quarter of 2013 20,000

Required:
Compute for the 94) net taxable estate and 95) estate tax due.

96. The account title to best reflects the value-added tax on a purchase:
a. Sales tax payable
b. Value-added tax payable
c. Input tax
d. Output tax

97. Charlie is an operator of parking lots. What business tax is due on his income from
the business?
a. Broker’s tax
b. Common carrier’s tax
c. Caterer’s tax
d. Value-added tax

98. Gross receipt tax (GRT) is a business tax paid by a:

a. Hotel operator
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 b. Insurance company
c. Franchise holder
d. Bank

99. Which statement is considered correct?

a. An excise tax which imposes a tax based on weight or volume capacity or any
other physical unit of measurement is called specific tax
b. An excise tax which imposes a tax based on selling price or other specified
value of the article is called ad valorem tax
c. A percentage tax which is imposed whether the transaction resulted in a gain
or loss is called transaction tax
d. All of the above

100. Mr. A imported cigarettes from the United States for sale. At a later date, he sold
the cigarettes in the Philippines. He is subject to the value-added tax. He is also subject
to business tax of:
a. Excise tax
b. Income tax
c. Percentage tax
d. None of the above

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