Aiinecronao) agayan Ve Oro CRy (086) 3093073 © Davao City (082) 2250049 CPA REVIEW TAXATION TAX-2102. ESTATE TAX —— Since 1977 J. REYES MAY 2016 LECTURE NOTES Succession ~ 2 mode of transmission of the ownership, rights, Interests and obligations over property by reason of death of the owner in favor of certain ‘persons designated by the owner himself or by operation of law. Estate Tax - tax on the privilege of the decedent to fransfer his estate upon death to his lawful heirs. oF beneficiaries GROSS ESTATE Rules: 1. All taxpayers shall include their properties in the ‘Gross estate, wherever located, except nonresident aliens. 2. The properties of non-resident allen located within the Philippines shall be included in gross estate; however, intangible personal properties within the Philippines shall be subject to reciprocity. GROSS ESTATE COMPUTATION Properties existing at the point of death XK Previous Transfers (taxable) XxX Exempt transfers 0009 Excluded Transfers (xxx) Gross estate ox Previous Transfers — transfer with insufficient considerations; physical transfer is before death 1. transfer in contemplation of death 2. revocable transfers 3. properties passing under a general power of ‘appointment Exempt Transfers ~ physical transfer is upon death but with no title to property 1. the merger of usufruct In the owner of the naked title 2. the transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the fideicomissary 3. the transmission from the first heir, legatee, or donee in favor of another beneficiary, in accordance with the desire of the predecessor (special power of appointment) Exclusion in the gross estate of a citizen or resident alien decedent by law: 1, all bequest, devises, legacies or transfers to social ‘welfare, cultural and charitable institution, no part of net Income of which inures to the benefit of any individual; provided, however, that not more than 30% of ‘the said ‘bequest, ‘devises, legacies or transfers shall be used by such institutions for administration purposes af acvenk eval 2. separate property of the surviving spouse 3. proceed of irrevocable life insurance policy payable to beneficiary other than the estate, executor or administrator 4, proceeds of group insurance taken out by a company for its employees 5. proceed of GSIS policy or benefits from GSIS 6. benefit received from SSS Page 1 of 12 How to Value the Estate: 1. Shares of Stocks ~ Use the fair market value or the losing rate at the time of death. Listed-closing rate Unlisted and preferred-par value Unlisted and common-book value using the Net Asset Adjustment Method 2. Real Properties ~ the estate shall be appraised at Its fair value as at the time of death. However, the appraised value of the property as of the time of death shall be whichever is higher of: a. Fair market’ value as determined by ‘Commissioner b. Fair market value as shown in the schedule of Values fixed by the Provincial or City Assessors, Fair Value ~ the price at which the buyer Is willing to pay; and at the same time, the seller Is willing to receive for the sale transaction. FOR MARRIED DECEDENTS ‘A. ABSOLUTE COMMUNITY OF PROPERTY General Rule: All properties acquired by the spouses either before or during thelr marriage will be included in, ‘common properties, Exceptions: L.If one of the spouses has legitimate child/children from former marriage, the property before marriage Will be exclusive to the said spouse. 2, Properties acquired by gratuitous title during marriage will be part of exclusive properties, except when the donor"intends to include it in common properties. 3. Personal belongings, except jewelries will be part of exclusive properties. 4.All_ properties acquired in exchange by exclusive Properties will remain exclusive. Note: For fruits, we apply the principle, “Accessory follows the principal.” B. CONJUGAL PARTNERSHIP OF GAINS General Rule: Properties before marriage-exclusive (E) Properties during marriage-common (C) Exceptions: Properties during marriage: (E 1. Properties acquired by gratuitous title during marriage will be part of exclusive properties, except when the donor intends to include it in common properties. 2. Personal belongings, except jewelries will be part of exclusive properties. 3. All properties acquired in exchange by exclusive properties will remain exclusive Note: For fruits, we apply the principle, * All fruits are conjugal.” DEDUCTIONS FROM GROSS ESTATE Expenses, Losses, Indebtedness and Taxes (ELIT) @., citizen or resident alien ~ deductible fully b.' non-resident alien ~ World ELIT x Phil. GE/Worls GE 2. transfer for public purpose (government or any political subdivisions) 3. deductions for properties previously taxed (vanishing deductions) # TAX.2102Deductible family home with maximum value deductible not to exceed P1,000,000.00 Standard ‘deduction for citizen or resident alien ‘decedent only of P1,000,000.00 retirement benefit received by employees of private firms from private pension plan approved by the BIR under RA 4917 medical expenses paid or incurred within 1 year prior to decedent death duly substantiated with Fecelpts but not to exceed PS00,000.00 for citizen or resident alien net share of the surviving spouse In the conjugal Partnership property or community property as diminished by the expenses properly chargeable to such property shall be deducted from the estate Amount of Expenses, Losses, Indebtedness, and Taxes: Funeral expenses ~ Limit: 5% of the gross estate but nat exceeding 200,000 1. property is part of the gross estate of the present decedent situated in the Philippines 2. the present decedent acquired the property by inheritance or donation within 5 years prior to his death; 3. the property subject to vanishing deduction can be identified as the one received from the prior decedent, or from the donor, or can be identified as having been acquired in exchange for the property so received; 4, the property acquired form part of the gross estate of the prior decedent, or of the taxable gift of the donor; 5. the estate tax on the prior transfer or the gift tax on the gift must have been paid; and 6. the estate of the prior decedent has not previously availed of the vanishing deductions Percentage of Vanishing Deduction: + based on the interval of the death of the present 2. Judicial expenses, must occur up to the due date of decedent and the time of death of the prior decedent fling the estate tax return (6 mos. From death) ox the date of aft whichever is relevant 3. Losses due to fire, storm, shipwreck or other More than | Not more than | Percentage | casualty = i year 100% 4. Losses due to theft, robbery, or embezzlement [a year [2 year | —-g0% Requisites for deductibility of losses? year year a. the loss Is not compensated by insurance or Syer year otherwise 4 year |S year b, the loss is not claimed as a deduction in the = : income tax return z the loss must occur not later than the last day How to compute Vanishing Deductions? for payment or filing of the estate tax (6 months 1 Determine the initial wads’ which whichever {s trom the decedent's death) lower between the fair market value of the property 5. claims against insolvent person, up to the Used in computing the first transfer tax paid (estate Luncoltectible portion or donor's tax) and the fair market Value of the 6. claims against the estate: property in the present decedent Debt instrument = notarization at the time of 2. Compute initial basis by deducting trom initia! incurrence; if contracted within three years before value any encumbrances or liens on the property the death of the decedent, a statement showing the that are pold by the present decedent where cock Gisposition of the proceed must accompany the lien or encumbrances are deductions on the prior estate tax return. fecedents tate or on the donor's taxable 7. unpaid mortgage, where the value of the decedent's, orem omelet “ interest, undiminished by the mortgage, is included 3. Compute the final_basis by reducing the initial In the gross estate basis by an amount representing what the initial 8. Taxes accruing before death of decedent basis bears with the gross estate to the expenses, Vanishing Deduction losses, indebtedness and taxes (ELIT) and transfer Requisites: for public purpose. To ilustrate: Initial Basis. Gross Estate ELIT plus transfer for public purpose Prorated deduction to initial basis 4. Determine the vanishina deduction by multiplying the final basis by the corresponding rate that apply for the time Period from the point the property was transferred by the prior decedent (i.e.: point of death) or by the donor (i.e. date of gift). Family Home ‘composed of the land and the dwelling house to which the decedent and his family resides shall be included in gross estate at whichever is higher between its zonal value and assessed value at the point of Ret 1 2. 3 death of the decedent quisites: total value of the family home must be included in gross estate deduction cannot exceed whichever is higher between the zonal or assessed value at the time of death and P1,000,000.00 it is @ deduction from either common or personal property or separate properties of the decedent Page 2 of 12 TAX.2102NET TAXABLE ESTATE Unmarried decedent Real Properties P 3x,200%,200 Personal Properties 0K 2000 Gross Estate Bx, 1005 100 Ordinary Deductions: euT P00 Other Deductions Sa ‘Special Deductions: Family Home Prox 00 Standard Deductions 4,000,000 Medical Expenses eae 0% Net Taxable Estate Baxconooo- Married Decedent Exclusive ‘Common Total Real property Pe PB XK, 0K. X06 200 90 Personal property % 0 OKI 2001 2006.20 Yocom Gross Estate PRO SOOR PXIOKGIOOIX PAX IOI Ordinary Deductions: eur 100% 1006.20 Other Deductions (2820062006200 rocxn2ce xo 00404 : Net Estate after OD Bxaxxxauxex P x poxp00c308 Special Deductions Family Home (_90%,3006204) Standard Deductions 1,000,000.00) Medical Expenses, (e0e 000300 Net Estate Pag 0 100% 2 Less: Share of surviving spouse x] ——» (_x2000200.xx) Taxable net estate KK ESTATE TAX TABLE: Plus x% of | Not over excess over ["P 200,000 | Exempt : 5 { 500,000 | o| 5% | 300,000 500,000 | 2,000,000. 75,000 | 8%. 500,000) 2,000,000_| 5,000,000 | 435,000 | 11% 2,000,000 5,000,000_| 10,000,000 | ~~ 465,000 | 15% 5,000,000) 70,000,000 = |_4,215,000| 20% ~~ ~70,000,000 BIR Reporting and Filing Requirements: Written Notice of Death Filing of Estate Tax Return Payment of Tax Notice of Death is required only when: 1. the transfer is subject to tax; or 2. the gross estate exceeds P20,000, even if exempted from estate taxation ee Filing of an | Estate Tax Refurn Is required only when the transfer is subject to tax 2. the gross value of the ‘estate exceeds 200,000, even if exempt from tax 3. when gross estate consists of registered or registrable property, irregardless of the value of the {gross estate - clearance from the BIR is a condition precedent to the transfer of title to registrable properties: e.g. land, motor vehicles and shares of stocks, ‘2 months after death 6 months after death Upon filing of the return CPA Certification is required only when the value of the gross estate exceeds P2,000,000.00, Such certificatidudiciatiggetiement 1. iterBizndhntiassdter tie time tkiecedent with proper exetudtionr administrator qualifies 2, itemizeirdedtitsiofer death 3. tax dUpandlpayabine return Extension of Fiting + The Commissioner shall have authority to grant, in meritorious cases, a reasonable extension not exceeding thirty (30) days for fling the return. + When the Commissioner finds that the payment on the due date of the estate tax or of any part thereof would impose undue hardship upon the estate or any of the heirs, he may extend the time for payment of such tax or any part thereof not to ‘exceed five (5) years, in case the estate is settled through the courts, or two (2) years in case the estate is settied extrajudicially. In such case, the ‘amount in respect of which the extension is granted Shall be paid on or before the date of the expiration of the period of the extension, and the running of Page 3 of 12 TAX.2102ccc eS the Statute of Limitations for assessment as Provided in Section 203 of this Code shall be Suspended for the period of any such extension. + Where the taxes are assessed by reason of negligence, intentional disregard of rules and regulations, or fraud on the part of the taxpayer, no extension will be granted by the Commissioner. + Than extension is granted, the Commissioner may require the executor, ‘or administrator, or beneficiary, as the case may be, to furnish a bond in such amount, not exceeding double the amount of the tax and with such sureties as the Commissioner deems necessary, conditioned upon the payment of the said tax in accordance with the terms of the extension. 1. Which of the following statements is false? Transfer tax is 2. imposed upon gratuitous transfer of property b. of two kinds: estate tax and donor's tax ¢. classified as national tax _& part of income tax 2. ‘Theory behind transfer tax: Page 6 of 12 TAX.2102a 4 24, One of the following transfers is not included in gross estate Transfer with reservation and retention of certain rights Y% Transfer” passing under general power of appointment a ‘Transfer for adequate and full consideration ‘Transfer in contemplation of death 25. Case 1 ~ X transfer shares of stock of Y on the Sonaition that X shall receive or enjoy the aiviends | during X's lifetime, thereafter to Y or his estate. jev.# ‘ Case II ~ B makes a transfer of property in trust, ~ Income payable to himself for six (6) years, ‘thereafter to C or his estate. B dies before the six (6) years lapsed. a. Both transfers are with retention and reservation of certain rights, hence taxable Both transfers are exempt from estate tax ‘The first’ transfer is taxable, the second exempt ‘The first transfer Is exempt, taxable b, as 26. One of the following is not included in the gross estate of a decedent ‘Cash dividend that accrued before death Shares of stock transferred in contemplation of death Land held in trust but possession before death Rent income on property that accrued before death the second is In the decedent's es 9 wo 27. X, decedent, owns a property valued at P1,500,000 at the time of his death. The said property was sold by X during his lifetime to Y for P700,000 when it was valued at P1,200,000. IT was agreed by X and Y that the transfer of ‘ownership will take after X's death. For Philippine estate tax purposes, which of tthe following statement is correct?" a. The transaction is a transfer for inadequate consideration, hence, the amount of P800,000, shall be included in the gross estate ‘The transaction is a bona fide sale for adequate consideration, hence, no amount shall be included in gross estate ‘The amount Is a transfer in contemplation of death, hence, the amount of P1,500,000 shall be Included in the gross estate The transaction is a transfer for insufficient consideration, hence, the amount of the 500,000 shail be included in the gross estate. b "your B® 28. One of the following is not a motive which precludes 2 transfer from category of one made in contemplation of death. fo reward services rendered To save on donor’s and estate tax ‘c. To settle family Itigated and unlitigated disputes d. To relieve the donor from burden of management 29. Which of the following proceeds shall be included in the taxable gross estate? a. Insurance proceeds from SSS and GSIS b. Amount receivable by any _ beneficiary, irrevocably designated in the policy by the insured 5% Amount receivable by any beneficiary designated in the insurance policy Proceeds of group insurance taken out by a company for its employees a. Page 7 of 12 30. The widow and children of a passenger who died in an airplane crash were paid P3,500,000 by the airline, This figure was released after negotiation between the heirs of the deceased and the insurer of the airline, the latter having received indubitable evidence that the deceased had a net income of 350,000 at the time of his death and that 10, productive years would have Insured financial stability for his family. Should the heirs deciare this ‘amount in the estate tax return? 2. No, the heirs should not declare the P3,500,000 In the estate tax return because the amount Is, % |/ not part of the decedent's properties at the time of death. No. the heirs should not deciare the P3,500,000 In the estate tax return because it was @ result of a negotiation between the heir and the airline ‘company. Yes. The heirs should declare the P3,500,000 in the estate tax return because the designation of the beneficiary is not known, hence, negotiable. Yes. The heirs should deciare the P3,500,000 in the estate tax return because the amount would have earned by the decedent if he did not die. 31. The following are transactions and acquisitions, exempt from transfer taxes, except 2. Transmission from the first heir or donee in favor of another beneficiary in accordance with the desire of the predecessor ‘Transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the fideicommissary ‘The merger of the usufruct In the owner of the naked title All bequests, devises, legacies or transfers to ‘sogial welfare, cultural and charitable institutions o a 32. Which of the following exempt transactions will still require the inclusion of the property in the gross estate? 2. Merger of the usufruct in the owner of the naked title Bequest, devises, legacies or transfers to social welfare, cultural and charitable Institutions the ‘administration expenses of which do not exceed 30% of such bequest, devises, legacies or transfers Transfer from the first heir to a second helr designated by the decedent Death benefits received from SSS and GSIS b. ae d 33, Case I ~ Y devised in his will a piece of land; naked title to B and usufruct to C for as long as C lives, thereafter to B, The transmission from ¥ to B and C Js subject to estate tax but the merger of the usufruct and the naked title in B upon the death of C is exempt. Case II ~ Z devised in his will real property to his, brother D who is entrusted with the obligations to preserve and to transmit the property to E, a son of, D, when he becomes of age. The transmission from D'to his son € is subject to tax. a. Both statement as to the taxability and non- ‘taxability of the transmissions are correct Both statement as to the taxability and non- ‘taxability of the transmissions are incorrect Only the first statement as to the taxability and non-taxability of the transmissions is correct Only the second statement as to the taxabilty and non-taxability of the transmission Is correct ZZ 34. X died in 1990 leaving a will which directed all real estate owned by him not to be sold or disposed of TAX.2102ee 35. 4 36. 37 438. d 39. for @ period of 10 years after his death and ordered that the property be given to Y upon the expiry of the 10-year period. in 1990, the estate left by X had a fair market value of P1,0G0,000. tn 2002, the fair market value of said estate Increased to P3,000,000 ‘and the Commissioner of Internal Revenue assessed thereon estate tax based on P3,000,000. Is the Commissioner's assessment based on P3,000,000 correct? @. Yes. The assessment of the Commissioner is correct because on matters of assessment he hhas the authority to determine the value to be assessed; /. No. The assessment of the Commissioner is Incorrect because the assessment should have been based on the fair market value at the time of death which is P1,000,000; ©. Yes. The assessment of the Commissioner is correct because it was based on the value at the: time of assessment; d. No. The assessment of the Commissioner is incorrect because estate tax Is not subject to any assessment, Which of the following value is not generally used for estate valuation purposes? a. Fair market value at the time of death; b. Fair market value at the time the return is fled; . Fair market value, assessed value o zonal value whichever Is the highest in case of real property; FF 220k value, in case of shares of stock not traded in the local’ stock exchange, Real properties owned by the decedent at the time of death shall be valued at: a, Zonal value or value per tax declaration ‘whichever is higher; . Book value or acquisition cost, whichever is Clearly determinable; ©. Acquisition cost; 4 Acquisition cost or fair market value whichever is higher, Mr. X died. He was survived by his wife and children The couple had exclusive and common properties. The gross estate of Mr. X would include: -%. Common and capital properties; b. Common and paraphernal properties; ¢. Common, capital and paraphernal properties; d. Common properties only. In the absence of a marriage settlement, or when the regime agreed upon is void, the’ property relations of the spouses who married on or after ‘August 3, 1988 shall be governed by: _2= Conjugal partnership of gains; . Absolute community of properties; . Complete separation of properties; d. None of the choices. Properties owned before marriage and brought into the marriage are generally classified as: 1. Conjugal properties under conjugal partnership M1, Exclusive properties under absolute community _ Of properties 2 Only Tis correct; ¢. Both I and I are correct; b. Only Ils correct; d. Both Land I are incorrect, d 41. The community properties shall include all properties ‘owned by the spouses at the time of the celebration Of the marriage or acquired thereafter, One of the following, however, Is not a community property. 2 Properties inherited by the spouses before the marriage; b. Properties acquired by the spouses as donation before the marriage; ©. Properties acquired using the salary of either ‘spouse eared before the marriage; . Properties acquired before marriage by either spouse who had legitimate descendants by 2 former marriage. 42, During their last anniversary, the wife bought an expensive coat for his husband using her salary ‘earned during the marriage. Shortly thereafter, the husband died. For Philippine estate tax purposes, the expensive coat shail be classified as: a. Common property; J. Exclusive property of the husband-decedent; (c. Exclusive property of the wife-surviving spouse; d. Exclusion from the gross estate, 7 43. During the engagement ceremony before their marriage, the man gifted his woman an expensive diamond’ necklace. The necklace was for the exclusive use of ‘the woman. How would this Necklace be classified for Philippine estate tax Purpose, assuming the man died and was survived by the woman and they were under absolute ‘comrhunity of properties? 2. Communal property; b. Exclusive property of the husband-decedent; Exclusive property of the surviving spouse; d. Excluded from the gross estate, 0.44. Which of the following Is an exclusive property? 7% Properties acquired during the marriage using “common fund for the exclusive use of one of the spouses . Properties acquired through occupation such as fishing or hunting: © Properties acquired during the marriage by gratuitous ttle; @. Properties acquired by thetige, such as winning from gambling or betting ' 45. are properties owned by the spouses at the time of Marriage presumed common unless proven to be exclusive?’ L. Yes, under conjugal partnership of gains; Hl. Yes, under absolute community of properties. 2: Both answers are correct; b. Both answers are incorrect; Only Ris correct; d. Only Wis correct. T a. he estate should be valued at the time of gains; The heirs are ascertained Il. Exclusive properties under absolute community b. The estate tax is paid of properties c. the estate is ready for distribution to the heirs a. Only Tis correct; ¢: Both I and Il are correct; _de of the death of the decedent b. Only It is correct; ‘d. Both I and Il are incorrect. 47. Written notice shall be given to the CIR if the gross C40, The net fruits as well as the income received during estate exceeds © "the marriage from the exclusive properties of the 20,000 spouses are classified as: b. P50,000 T. Conjugal properties under conjugal partnership ©. P100,000 of gains; d._P150,000 Page 8 of 12 ~ TAX.2102ieieneeienaadAdieiRieeaiEEeme nee en at 48. From the time of death, notice of death should be given within a. One month be Two months c. 3 months d. 6 months 49. As @ rule, estate tax return should be filed under ath if the gross estate exceeds a, P100,000 4 200,000 ¢ P500,000 d. P3,060,000 4 50, This in not part of the gross estate of the decedent a. Conjugal property b. Community property -e” share of the surviving spouse d._exclusive property of the surviving spouse () 51. The following do not form part of the communal Properties of the spouses, except? 2¢ Property acquired prior to the current marriage by elther spouses who has dependents by a prior marriage b. The frults of the properties mentioned in a. Jewelries 6. properties for personal use of either spouses d 52.The following are included in the community properties of the spouses, except? a. Donation during the marriage by the parent of either spouses designated by the former for both the spouses Fc sy be Properties acquired before the marriage and the fruits thereof Properties acquired during the marriage and the fruits thereof 4. Properties acquired by the surviving spouse Under right of redemption using only his separate properties 53. Which of the following do not form part of the Conjugal properties of the spouses? ‘&. Properties acquired before the marriage whether there are dependents in future marriage or not b. Fruits of the properties in a. after marriage Fruits of properties acquired after marriage by donation or gratuitous title d. Properties acquired by elther spouses under rights of redemption using conjugal properties 54, which is correct concerning the property settlement of spouses? a. Marriages before August 3, 1988 are presumed under the absolute community of property 4° Marriages after August 3, 1988 are presumed under the conjugal partnership of gains ¢. Marriages after August 3, 1988 are conclusively presumed under the absolute community of property d. The spouses can stipulate the _conjugal partnership of gains even after August 3, 1988, 4.55. This isnot part of the conjugal property a. Those ‘acquired by onerous ttle during the marriage at the expense of the common fund ‘Those acquired by industry or work of either of them c. ‘The Trlts, rents or interests receved or due uring the marrage coming from the - conjugal property or from the exclusive properties of the spouses Page 9 of 12 d. Those acquired during the marriage by gratuitous tite C 56. Under the absolute community of property, jewelry for personal and exiclusive use fo the wife shall belong to the ae wife b. husband husband and wite 3. children d 57. Taxation of the estate shall be governed by the statute or law In force at the time of distribution of the estate to their heirs Succession takes place upon the determination of the respective share of the heirs In the estate of the decedent a, True, true a True, false c. False, True d. False, False 58. The family home Includes the house and the let where the house stands. ‘The value of the house and the lot where it stands, If 2 Family Home is deductible from the estate of the decedent. a, True true ascii J True, false c. False, True d. False, False C59, Property brought to the marriage by either spouse shall belong to both spouses ‘The share of the surviving spouse in the conjugal Propesty is part of the gross estate of the decedent a, True, true True, faise ©. False, True 4. False, False } 60. Fruits and income of exclusive property shal! belong > to the spouses Donations made by the decedent during ifetime but to take effec por his death shell be exempt fram cetate tox Tre, true A Te fase ©. False, True Fale, False 61. When exclusive property is Sold during the marriage, the proceeds become property of the spouses The legal heirs of the decedent must be determined first before the correct estate tax can be ascertained a, True, true 26. True, false c. False, True d. False, Faise 62. Under the absolute community of property, property acquired before marriage by either spouse including fruits and income, if any shall belong to both spouses The cost of burlat plot, tombstone, monument or mausoleum, mourning ‘apparel, expenses of the wake, and notices are deductible from gross estate as funeral expenses at True, tue b. True, false c. False, True d. False, False TAX.2102A 63, expenses incurred trom the performance of the rites ‘and ceremonies. incident to interment and those incurred after interment, such as prayers, masses and entertainment are part of funeral expense. ‘The administrator or executor shall submit a statement showing the disposition of the proceeds of the loan if the claims against the estate was contracted within five years before the death of the decedent a. True, tue b. True, false False, True , False, False cf 64.1 the property is Inherted before marriage it wil belong to both spouses while Fes Inherited during marrage, tis exdusive Unless, stipulated, the property relations shall be governed by conjugal partnership of gains for marriages celebrated(on)or before Aug 3, 1988 a. True, true b, True, false False, True False, False |p 65. Uniess stipulated, the property relations shall be governed by absolute community of property for Tarriages celebrated on or after August 3, 1988 Under the regime of absolute’ community of property, property for personal and exclusive use of either spouses except jewelry shall belong to both spouses a. True, true b. True, false & False, True 0. False, False 66. A resident alien has a gross estate of PS,000,000. The following are its items of funeral expenses: Cost of food and prayers services/masses during the decedents wake P 80,000. Payments for burial plot, casket and Interment services of Eternal Gardens, Inc. 100,000. Cost of publication of notice of decedent's death to relatives 10,000. Cost of thanksgiving cards and newspaper thanksgiving publication 20,000 Cost of prayer services during the 30" and 40" day of the decedent 10,000 How much is the deductible funeral expenses of the decedent? A. P190,000 . P200,000 b. 180,000 4. P250,000 67. The estate may claim a standard deduction of a P1,000,000 «, P200,000 b.b. P2,000,000 <6. P500,000 68. Medical expenses to be deductible, must be incurred by the decedent within A One year prior to his death 'b. One year after his death two years prior to his death ._ three years prior to his death 69. The medical expense shall in no case exceed 2. P200,000 b. 400,000 _Z® ®500,000 d. P1,000,000 page 10 of 12 ¢ 70.Statement 1 ~ The court may authorize the distribution of estate, to an heir if-in its sound discretion it believes that the heir badly needs his share Statement 2 - The administrator or any of his heirs, may ‘however upon authorization of BIR withdraw from the decedents bank depostts £20,000) without the required certification that the estate tax has been paid True, true True, false False, True False, False perk 71. Statement 1 ~ A died giving B power to appoint @ Person who will inherit A’s house and lot. 8 however can only choose C, D, E and F. B decided to transfer the property to ¢, ‘in B's will when he was old already. The transfér from B to C Is subject to estate tax ‘Statement 2 ~ During A's lifetime, he decided to give B as gift his car subject to the condition that if B does not become @ CPA within 3 years, A shall revoke the transfer. In the second year however, A died. The car no longer form part of A’s gross estate 2. True, true b. True, false c. False, True Sf False, False 72. & died leaving a farm tand. In his will he transferred the ownership thereof to B but subject to the Condition that C will have the right to use the lanc for a period of ten years (usufruct). In the seventh year, however, C died and in C's will he surrendered his right over the land to B _3 The transfer is subject to donor's tax b. The transfer is subject to estate tax cc) The transfer is both an inclusion from the gross estate . The above is a tax exempt transfer 0-73. One of the following is not an exemption or exclusion from the gross estate _2* Capital or exclusive property of the surviving spouse b. Properties outside the Philippines of a non- resident Chinese decedent ©. Shares of stock of San Miguel Corporation of 2 on-resident Mexican d. The merger of usufruct in the owner of the naked title 74, Statement 1: Unpaid mortgage indebtedness is deductible from the gross estate provided the said Property subject to the indebtedness is included in the gross estate, net of the mortgage indebtedness Statement 2:'A donation Joter = vivos. by the decedent to the Philippine government few months before his death is a deduction from the gross estate True, true ¢. False, True b. True, false 4. False, False 175. the estate consists of registrable property, such 2s real property, motor vehicle, shares of stock or other similar property from which a clearance from the BIR is required as a condition for the tanster of ownership, an estate tax retuin should. be fled tinder oath [An ifthe gross estate exceeds P200,000. . ithe gross estate exceeds PSO0,000. €._ Ifthe gross estate exceeds P3,000,000. 4. regardless ofthe value of the gross estate. ~ TAX,2102LLnL nn ee 76. The estate tax return shall be supported with a Statement duly certified by 2 CPA. If the gross estate exceeds '2,P1,000,000 -82P2,000,000 .P5,000,000 .P10,000,000 77. From the decedent's death, the estate tax return shall be filed within 2. 2 months bt month 6 months d. 18 months 78. The CIR, in reasonable extension exceeding 4 30 days b. 60 days 3 months d. 6 months meritorious cases may grant a to file the return, not 79.1 refers to a mode of transferring and acquiring properties left by the decedent. a. Estate transfer DC Succession ©. Donation 6. Execution of a will 80. The property, rights and obligations of a person which are not extinguished by his death and those which have accrued thereto since the opening of succession a. Inheritance b. Capital Estate @. Devisee 81. The estate tax accrues from the moment of, a. The fixing of notice of death Expiration of a months after death << The death of the decedent d. The filing of estate tax return * 82, The donor's tax paid on a donation mortis causa, if any: © Exempted the property from estate tax b. Has no effect since the gift will be subject to another gift tax c. Shall form as a tax credit to be deducted from the estate tax due 4. Is invalid and the tax will not be credited at all 1 83. Which shall not form part of the gross estate of a decedent a. Intangible personal property of nonresident alien decedent without reciprocity law -be* Revocable transfer Transfer passing special power of attorney d. Life insurance where the executor is the beneficiary and it Is irrevocable 84. All of the following are considered intangible in the © "Philippines, except: ‘a.franchise which must be exercised Philippines . Shares, obligations or bonds which is issued by any corporation or sociedad anonima organized or constituted in the Philippines in accordance with its laws c. Shares, obligations or bonds by any foreign corporation 75% of the business of which is located in the Philippines Page 11 of 12 in the S&C Shares, obligations or bonds issued by any foreign’ corporation of which such shares, obligations or bonds have acquired a business situs in the Philippines es. A person who inherts personal property thru a wil f 2 evisea B, Legatee © ter i. Suceessor ‘86. A person who inherits real property thru a wil “ae Devisee b. Legatee c Helr d. Successor 87. Succession wherein the decedent did not leave any will Voluntary succession 5° Legal succession ‘c. Mixed succession d. Testamentary succession 88. Which statement i false about succession? a." The successor inherits all the transmissibie property of a decedent inciucing his lables eC The successor can be made lisbie forthe obligations of the decedent beyond the valve of the asset he received €. In suecession, fruts and credits maturing after the death of the decedent pass to the helrs even itthey were not subjected fo estate tax 4. In succession, the successor can refuse the inheritance AA 89. One of the statements is false: ‘2 Estate tax isan excise tax Estate tax is transfer tax on donation mortis, causa c. The object of estate tax is to tax the transfer of the property from the dead to the living 4. Estate tax is synonymous to inheritance tax 4190. Which statement is wrong? “& Claims against insolvent person should be included in the gross estate even if uncollectible b. Transfer passing under special power of appointment is excluded from the gross estate c. Revocable transfers are includible whether or not the right to revoke is exercised . Transfer in contemplation of death for adequate “consideration js still includibie in the gro5s-estate 91. Which statement is incorrect about funeral expenses allowed: ‘2. The amount allowed is 5% of the gross estate or the actual expenses which ever is lower b. The actual expenses must be paid from the ‘estate or chargeable to it c. The allowed deduction can never be more than the actual expenses paid ‘The expenses necessary for burial even if paid by friends are also allowed as deduction 592. Which statement is incorrect about claims against Insolvent persons? a= They must be included in the gross estate even If uncollectibie b. They must be duly notarized c. The deduction is anly the uncoliectibie portion 4d. The insolvency of the debtor must be established TAX.210293. One of the following is incorrect: “2% Taxes to be deductible must accrue before the decedent's death b. Losses must occur before the decedent's death to be deductibie ©. Medical expenses must be incurred within 1 year prior to the decedent's death 4. Transfer for public purposes in order to be educted must be mortis causa in character |. 94. Which statement is faise about vanishing deduction? \p 99. The taxpayer in estate tax A 4 101. 1% statement: Doe. 4. Tt pertains to @ property presently found in the gross estate b. The property must be previously subjected to 2 transfer tax or income tax ©. The property was received by the decedent within 5 years prior to his death d. The property must be located in the Philippines b 95.4 donation inter vivos but due to thought of death Is: 2° Subject to donor's tax Subject to estate tax if for ‘consideration c. Subject to estate tax if a bonafide transfer d. Subject to inheritance tax inadequate 96. In filing the estate tax return, a CPA certificate is required when: Gross estate exceeds P2,000,000 b. Gross estate reaches P20,000 Gross estate exceeds P200,000 Gd. Gross estate reaches P2,000,000 97. A died leaving @ house and lot to B March 31, 2009 which was questioned by C and it is under litigation but the parties have stated an extrajudicial settlement. The last day of filing the estate tax return is, a. April 30, 2010 b. April 30, 2013 ‘September 30, 2009 @. October 30, 2009 ‘The last day for the payment of estate tax may be extended until: a. March 21, 2028 b. September 30, 2011 _Z September 30, 2014 d. April 30, 2013 a. The decedent b. The estate as a juridical entity ge The heirs or successors d. The administrator or executor 100. The gross estate of the nonresident alien is 3,000,000 located in the Philippines, and 2,000,000 located outside the Philippines. The entire amount of ELITE deductions is P500,000 and devices to Philippine Government is P100,000 How much is the allowable deduction against the Philippine gross estate? a0 7m y. 300,000 et ee ©) 400,000 : “&. 500,000 the court may authorize the executor or administrator to distribute the estate if, in its sound discretion it believes that the heir badly needs his share ‘Page 12 of 12 102. 103. 104. 105. 2° statement: The administrator or any of the heirs ‘may however “upon authorization -of withdraw from the decadent’s bank up to SO, even without required certification that the esta tax has been paid ‘True, true False, false ©. True, false 4. False, true 2 statement: A died glving B power to appoint @ person who will inherit A’s house and lot. 8, however can only choose among C, D and F. 6 decided to transfer the property to’C, in B's will when he was old already. The transfer from & to C Is subject to estate tax. 2° statement: during A’s lifetime, he decided to Give B as gift his (A) car subject to the condition that If B does not become a CPA within 3 years, A shall revoke the transfer. In the second year however, A died. The car should form part of A's gross estate, 2. True, true b. False, false True, false a False, true A died leaving a farm land. In his will, he transferred the ownership thereof to B but subject to the condition that C will have the right to use the land for a period of ten years (usufruct) in the seventh year, however, C died and C’s right will be surrendered to B. 2 The transfer is subject to donor's tax 'b. The transfer is subject to estate tax The transfer is both an inclusion and exclusion “from the gross estate d. The above is a tax-exempt transfer ‘The notice of death must be filed when? BC Gross estate exceeds 200,000 b. Gross estate exceeds P20,000 . Gross estate reaches P200,,000 d. Gross estate reaches P2,000,000 One of the following is not an exemption or exclusion from the gross estate: A. Capital or exclusive of the surviving spouse b. Properties outside the Philippines of nonresident Chinese decedent c. Shares of stock of San Miguel Corporation of nonresident Mexican d. The merger of usufruct In the owner of the naked title - done - TAX.2102