Chapter 12 14 Summary of Self Assessment Test PDF

CHAPTER 12 – Introduction to Transfer Taxation
True or False 1
True 1. The transfer is either bilateral or unilateral
True 2. Unilateral transfer is subject to transfer tax
True 3. Bilateral transfers are subject to income tax
False 4. Unilateral transfers include sales and barters
False 5. Bilateral transfers include inheritance and donations
False 6. Donations inter-vivos are subject to estate tax
False 7. A donation mortis causa is subject to donor’s tax
True 8. The transferee in a donation is referred to as a donee
True 9. The transferee in a succession is referred to as an heir
True 10. The transferor in a donation inter-vivos is a donor
False 11. The transferee in a donation mortis causa is a decedent
True 12. Complex transfer are subject to both income tax and transfer tax
True 13. What constitutes an “adequate consideration” is a question of fact
True 14. Both the transfer and exchange element of a complex transfer are subject to
transfer tax
True 15. Transfer tax supports income taxation
True or False 2
False 1. Transfer tax is intended to recoup future reduction in business tax
True 2. Transfer tax can be viewed as a mode of redistribution of wealth to society
False 3. The dominant view of transfer tax is the ability to pay theory
True 4. Transfer tax is a tax on the privilege to transfer property gratuitously
True 5. Transfer tax are national taxes
False 6. Transfer tax is a form of specific tax
False 7. Transfer tax is an indirect tax
True 8. Transfer tax is a revenue tax
False 9. Transfer taxpayers are classified into two groups: residents and non-residents
True 10. Non—resident aliens are subject to tax only on transfers of Philippine properties
True 11. Citizens are subject to tax on transfer of properties regardless of location
False 12. Aliens are subject to tax only on transfers of properties situated in the Philippines
True 13. Residents are subject to tax on transfers of properties regardless of location
True 14. Non-residents are taxed only on transfers of property located in the Philippines
True 15. The reciprocity rule on intangible personal property applies only to non-resident
aliens
True or False 3
False 1. The reciprocity rule may apply to movable personal property located in the
Philippines
False 2. The reciprocity rule applies to intangible properties of any alien located in the
Philippines
True 3. Franchises are subject to transfer tax in the place where they are exercised
True 4. The shares and bonds of domestic corporations are presumed situated in the
Philippines for
purposes of transfer taxation
False 5. Shares and bonds of foreign corporations are always presumed situated abroad for
transfer tax
purposes
True 6. For purposes of transfer tax, the interest in a business partnership organized abroad is
presumed
situated abroad
True 7. Cash is considered an intangible property
False 8. Shares of stocks and bonds are tangible personal properties
False 9. Donations inter-vivos are subject to transfer tax at the point of death of the donor
True 10. Donations mortis causa are subject to transfer tax at the death of the decedent
True 11. Donations inter-vivos are inspired by the generosity of the donor
True 12. A donation mortis causa is effected by the death of the decedent
True 13. As a rule, all properties of the donor existing at the point of death constitute his
donation mortis causa
False 14. All forms of gratuitous transmission of property while the donor is living is considered
donation inter-vivos
True 15. Transfer in contemplation of death are donations made inter-vivos but are actually
donation mortis causa
True 16. The transfer of property which conveys title to the property only upon death of the
donor are donations mortis causa
True 17. Estate tax rates are higher than donor’s tax rates
True 18. Incomplete transfers are not subject to tax upon physical transfer of the property
True 19. Incomplete transfers which are pre-terminated by the death of the transferor are
subject to estate tax
True 20. When incomplete transfers are completed during the lifetime of the transferor, the
transfer is subject to donor’s tax
Multiple Choice Theory -1
1. Which is subject to transfer tax –D. Gratuitous and complex transfer (A and C)
2. Which is subject to transfer tax – Donation
3. A property is transferred for less than full consideration when it is sold – below the FV of the
property
4. Gratuity is not characterized by – presence of adequate consideration
5. Transfers for full or adequate consideration is subject to – income tax
6. Transfer for inadequate consideration is subject to - C. Income tax and Transfer tax (A and
B)
7. the transfer for adequate consideration is – exempt from transfer tax
8. the gratuitous component of a transfer for inadequate consideration is – exempt form
income tax
9. who is the taxpayer in donor’s tax – donor
10. Who is the taxpayer in estate taxation – estate
11. Which is not a rationalization of transfer taxation – none of the above
12. Transfer tax is imposed to partially recover future reduction in income tax which will arise
from the split of income producing property to few or several taxpayers – tax recoupment
theory
13. The government enforces the transfer of property by donation and succession. By
exercising these privileges, the transferor must have to be taxed. What theory does the
statement describe – benefit received theory
14. The transfer of wealth should be taxed so that it will benefit the entire society. Which
theory does the statement describe – wealth redistribution theory
15. Wealth accumulation could not be possible without the government’s indirect
participation. The transfer of wealth should be subject to tax because it is just fair for the
government to take its just share on the wealth. – state partnership theory
16. Transfers can be structured in such a way to avoid payment of income tax. Thus, the
gratuitous
component of transfers must be taxed – Tax evasion theory
17. Which is not a characteristic of transfer tax – local tax
18. Transfer taxes are not –transaction and progressive tax
19. Transfer taxes are – revenue taxes
20. Who is subject to transfer tax – transferor
21. Which statement is generally correct? – all Philippine transfers are subject to transfer
taxes
22. Which statement is incorrect? – statement 2
Multiple Choice Theory -2
1. Transfer tax on donation mortis causa applies to – natural person

2. Transfer tax on donation inter-vivos applies to – both natural and juridical person
3. Which is taxable on all transfers regardless of location – resident citizen, resident alien,
non-resident citizen ( all of these)
4. Which is not subject to estate tax – domestic corporation
5. Which is not subject to transfer tax on transfer of properties located abroad – non-resident
alien
6. A non-resident alien is – subject to transfer tax on Philippine properties
7. Which of the following may be exempt on transfers on the basis of reciprocity – non-
resident alien
8. Which properties does the reciprocity exemption cover –intangible properties located in
the Philippines
9. Which of the following is an intangible personal property – all of these
10. Which of these subject is to tax only on transfers of properties situated in the Philippines –
a citizen of the America residing in Korea
11. Which of these is taxable on global transfers of properties – an American residing in the
Ph. & a Filipino residing in Malaysia & a Chinese residing in the Philippines
12. Which is subject to donor’s tax – donation inter-vivos
13. Which is not a characteristic of a donation inter-vivos – inspired by the thought of death
of the transferor
14. Which of these is a donation mortis causa – donation in contemplation of death &
donation to take
effect upon death & revocable donation pre-terminated by death ( all of these)
15. Which of the following donations made during the lifetime of the donor is subject to
donor’s tax – donation inspired by motives associated with life
16. Which of the following is not a motive associated with life – to save on transfer tax
17. Donation made on the decedent’s last will and testaments is – a donation mortis causa
18. Which of the following forms of non-taxable transfers will not be subject to transfer tax –
void transfer quasi-transfer
19. Which of the following forms of non-taxable transfers may be subject to transfer tax in the
future –incomplete transfer
20. Which is incorrect regarding the taxation of incomplete transfers which are eventually
completed – they are subject to either donor’s tax OR estate tax
21. Which is complete transfer – irrevocable transfers
22. A conditional donation may be completed by –fulfilment of the condition specified by
the transferee &waiver of the condition by the transferor
23. Conditional transfers and revocable transfers which are still pending completion at the
point of the transferor’s death are – subject to estate tax
Problems: Part 1
1, Mr. Bonifacio purchased a piece of land in 2011 for P500,000 when it was worth P450,000.
He transferred the property when it was worth P1,000,000. Subsequently, Mr. Bonifacio died
when the property was worth P1,200,000.
Assuming that the donation is a donation inter-vivos, what is the value to be subjected to
donor's tax?
a. P 450,000 c. P 1,000,000
b. P 500,000 d. P 1,200,000
2. Assuming that the donation is a donation mortis causa, what is the value to be subjected
to estate tax?
a. P 450,000
b. P 500,000
c. P 1,000,000
d P 1,200,000
3. Mang Juan transferred a property with a fair value of 1,000 000. Title to the property was
stipulated to be transferred immediately. Subsequently, Mang Juan died. The property was
worth P800,000 at the date of his death.
Which is correct?
a. The property is subject to donor's tax at P1,000,0000
b. The property is subject to donor's tax at P800,00 .
c. The property is subject to estate tax at P800,000.
d. The property is subject to estate tax at P1,000,000.
4. Assume instead that legal title to the property was reserved by Mang Juan until death,
which is correct?
a. The property is subject to donor's tax at P1,000,000.
b. The property is subject to donor's tax at P800,000.
c. The property is subject to estate tax at P800,000.
d. The property is subject to estate tax at P1,000,000.
5. A resident citizen died leaving the following property at the point of his death:
Fair Value Acquisition Cost
House and lot P 4,000,000 2 000 000
Car 800,000 1 200 000
Agricultural land 2,100,000 500 000
Compute the amount of the donation mortis causa.

a. P 0 c. P 6,900,000 (P4M + P800K + P2.1M)
b. P 3,700,000 d. P 7,300,000
6. A donor transferred the following properties on a certain day:

Philippines Abroad
Cash P 400,000 0
Land 1,000,000
Car 3 000 000
Assuming the donor is a resident citizen, what is the amount of the donation inter-vivos?
a. P 1,000,000 b. P 1,400,000
c. P 4,000,000 d. P 4,400,000
7. Assuming the donor is a resident alien, what is the amount of the donation inter-vivos?
a. P 1,000,000 b. P 1,400,000
c. P 4,000,000 d. P 4,400,000
8• Assuming the donor is a non-resident citizen, what is the amount of the donation inter-
vivos ?
a. P 1,000,000 b. P 1,400,000
c. P 4,000,000 d. P 4,400,000
9• Assuming the donation is a non-resident alien, what is the amount of the inter- vi donor?
a. 1,000,000 c. P 4,000,000
b. P 1,400,000 d. P 4,400,000
10. Assuming the donor is a non-resident alien with a reciprocity exemption, what is the
amount of the donation inter-vivos?
a. 1,000,000
b. P 1,400,000
c. 4000 000
d. 4 400 000
Multiple-Choice — Problems: Part 2
1. Mr. Chucho decedent died leaving the following properties:

Phil Abroad
Investments in stocks 500 000
House and lot 400 000
Residential lot 3000 0000
Assuming Mr. Chucho is a non-resident citizen or a resident alien, what is the amount of
donation mortis causa?
A.P 0
b. P 3,000,000
c. P 3,500,000
d. P 7,500,000
2. Assuming Mr. Chucho is a non-resident alien, what is the amount of the donation mortis
causa?
a. P 0
b. P 3,0 00,000
c. P 3,500,000
d. P 7,500,000
3. Assuming Mr. Chucho is a non-resident alien and the reciprocity rule applies, what is the
amount of the donation mortis causa?
a. 0
b. P 3,000,000
c. P 3,500,000
d. P 7,500,000
4. A seller of goods made the following sales:
Fair market value P 5,500,000
Selling price 4,500,000
Cost 2,500,000
What is the amount subject to income tax?

a. P 0
c. P 1,500,000
d. P 2,000,000 (P4.5M – P2.5M)
b. P 1,000,000 .
5. 1n the immediately preceding problem, what is the amount subject to transfer tax?
a. 0
b. 1 000 000 (P5.5M – P4.5M)
c. 1 500 000
d. 2 000 000
6. Avalon sold a car. Data relating to the sale and the car are as follows:
Fair market value P 4,000,000
Selling price 5,000,000
What is the amount subject to income tax and to transfer tax, respectively?
a. 0,0
b. P1,500,000; 0
c. P1,500,000; P1,000,000
d. P 0; P2,500,000
7. Mr. Peter made a revocable transfer of his stock investments on July 4, 2020 in favor of his
brother, Merto. Peter died on December 15, 2020. The stocks had the following fair values:
July 4, 2020 P 1,200,000
August 20, 2020 1,100,000
December 15, 2020 1,600,000
Assuming Peter waived the right to revoke on August 20, 2020, what is the amount subject to
transfer tax and the type of transfer tax to apply?
a. P 1,200,000; donor's tax
b. P 1,100,000; donor's tax
c. P 1,600,000; donor's tax
d. P 1,600,000; estate tax
8. Assuming Mr. Peter did not revoke the property until the date of his death, what is the
amount subject to transfer tax and the type of transfer tax to apply?
a. P 1,200,000; donor's tax
c. P1,600,000; donor's tax
b. P 1,100,000; estate tax
d. P1,600,000; estate tax
9. In October 2020, Mrs. Blender transferred a property to her younger sister, Careen, subject
to the condition that Careen must graduate in March 2021.
The property was worth P 800,000 in 2021• Mrs. Blender died on July October 2020 and P
900,000 in March P1,200,000. 15, 2021 when the property was worth 1 200 000.
Assuming that Careen failed to graduate in March 2021, what is tax of donation and the
transfer tax to apply?
a. P 800,000; donor’s tax
b. P 900,000; donor’s tax
c. P 1,200,000; estate tax
d. None; none
.10. During his birthday, Mr. Fu Chen donated the following properties:
Cash donation to his wife P 500,000
Oral donation of house and lot 3,000,000
compute the taxable amount of donation inter-vivos.
a, P 0
c. P3.000,000
b. P 500.000
d. P3,500,000
Multiple-Choice - Problems: Part 3

1. A resident alien conveyed the following properties on the following terms:
Consideration Fair value
Car 0 500 000
Motorcycle 300 000 300 000
Tricycle 20 000 80 000
Compute the total amount subject to transfer tax.
a. P 880,000
b. P 560,000
c. P 500,000
d. P 60,000
2. The following relates to a transfer made by a seller:

Selling price P 1,500,000
Fair value of property at date of sale 4,000,000
Fair value at death of the seller 5,000,000
Assuming that title to the property is transferred on the date of sale, what is the arnount of
donation and the type of transfer tax to apply?
a. 0; none
c. P 2,500,000; donor's tax
b. P 1,000,000; estate tax
d. P 3,500,000; donor's tax
3. Assuming that title to the property was agreed upon to take effect on the date of death,
what is the amount of donation and the type of transfer tax to apply?
a. P 0; none
b. P1,000,000; estate tax
4. The following relate to the disposition of property made by a seller:
Selling price P 4,200,000 Fair value of property on date of sale 4,000,000
Fair value at death of the seller 5,000,000
What is the amount subject to donor's tax?
a. P0
b. P 200,000
c. P 800,000
d. P 4,000,000
5. Assuming that the transfer is revocable until the death of the descent seller, what is the
amount subject to estate tax?
a. 0
b. P 200,000
c. P 800,000
d. P4,000,000
6. A donor transferred properties to save on subject to income donation is subject to

a. income tax.
b. donor's tax.
C. estate tax.
d. both income tax and donor's tax.
7. Mr. B made a revocable donation of a property valued at P1,000,000.

Which is a correct statement regarding the taxation of the donation?
a. The donation shall be subject to donor's tax.
b. The donation shall be subject to estate tax.
c. The donation is subject to income tax.
d. The donation shall neither be subject to donor's tax nor estate tax.
8. Kumar made an irrevocable donation of real property during his lifetime in favor of his
wife. Which is true?
a. The donation shall be subject to donor's tax.
b. The donation shall be subject to estate tax.
c. The donation is subject to either donor's tax or estate tax.
d. The donation is void and is not subject to transfer tax.
9. Which of these is not considered within the Philippines?

a. Franchise of a foreign franchisor which is exercised in the Philippines
b. Stocks of a domestic corporation with 60% of business in the Philippines
c. Foreign shares which are traded in the Philippine stock market
d. Stocks of a foreign corporation with 75% of business in the Philippines
10. Mr. Ku Loth, transferred a stock portfolio with a fair value of P2,000,000 P1,990,000.
Ownership shall not transfer until full payment is made by the for transferee within 10 days.
On the 10th day, the buyer paid the price in full when the portfolio was worth P 2,100,000.
Subsequently, the transferor died when the stocks were worth P3 400 00
What is the amount subject to transfer tax and the transfer tax that would to apply?
a. P 0; None This is not a gratuity because P1,990,000 is very close to P2,000,000). This is a
bona fide sale. Ownership transfers upon payment. The transfer no longer owns the stocks by
the time of his death.
b. P 50,000; Donor's tax
c. P 100,000; Donor's tax
d. P 1,400,000; Estate tax
11. Anton donated stock securities to his daughter, Mary, as reward to the latter for services
rendered to Anton. The property was worth P1,100,000 when Anton wrote the deed of
donation. The same had a value of P1,050,000 when the donation was accepted by Mary.
What is the amount of gratuity and the applicable transfer tax?
a. P1,050,000; donor's tax
b. P1,050,000; estate tax
12. Mr. Erick received in trust a property worth P1,400,000. Erick was entrusted to be the
fiduciary heir to the property left by his mother, Marciana. While still living, Erick transferred
the same property to his younger brother, Erwin, in accordance with the will of their mother,
Marciana. The property was worth P1,500,000 at the date of transfer.
The property is
a. subject to donor's tax at P1,500,000.
b. subject to estate tax at P1,500,000.
c. subject to donor's tax at P1,400,000.
d. exempt from transfer tax.
13. Raymund was indebted to Zeus with a P 50,000 interest-bearing loan. Raymund rendered
services worth P51,500 to Zeus. Zeus cancelled Raymund's indebtedness when it was worth
P51,500 including interest.
The cancellation of indebtedness is
a. subject to donor's tax.
b. subject to estate tax.
c. exempt from transfer tax.
d. subject to both donor's tax and estate tax.
Chapter 13 – The Concept of Succession and Estate Tax
True or False 1
TRUE 1. Succession is a mode of acquisition of property similar to donation.
TRUE 2. Inheritance refers to the property which will be transmitted to the heirs.
TRUE 3. The right to succession is transmitted from decedent. the moment of death of the
FALSE 4. A decedent with a last will and testament is said to be intestate.
TRUE 5. The succession over properties of a decedent who prepared a will but covers only a portion
of his estate is called mixed succession.
FALSE 6. A person who prepared a will is referred to as the executor.
TRUE 7. A person who died with a will is said to be testate.
TRUE 8. The succession by operation of law is called intestate succession.
FALSE 9. The will may be prepared by the heirs of the decedent.
FALSE 10. The will may be prepared after the death of the decedent.
FALSE 11. A testator can designate any heirs even if in violation of his legitime.
TRUE 12. In intestate succession, the surviving spouse is treated as a legitimate child qualified for a
share while illegitimate children are allowed half-share each.
FALSE 13. The computation of the estate requires understanding of the legitime.
True or False 2
FALSE 1. A debt can be inherited by heirs.
FALSE 2. Only testamentary dispositions are subject to estate tax.
TRUE 3. Successions whether testamentary, intestate, or mixed are subject to estate 's tax. successors
in interest are referred to as the heirs.
TRUE 4. The decedent successors in interest are referred to as the heirs.
FALSE 5. With a last will and testament, the decedent can name any person which he wants as heir
FALSE 6. In testamentary disposition the heirs must always be relatives of the decedent.
FALSE 7. The secondary compulsory heirs shall inherit only in default of concurring heirs.
TRUE 8. The concurring heirs shall inherit together with the primary heirs, or in their default, the
secondary heirs.
FALSE 9. In default of concurring heirs, relatives in the collateral line up to the 5th degree shall inherit.
FALSE 10. In default of compulsory heirs, the government shall inherit the estate of the decedent.
Multiple Choice - Theory 1
1. IT is a mode of gratuitous acquisition of property out of the generosity of a person
a. Succession b. Donation
c. Loan d. None of these
2. It is a mode of gratuitous acquisition of property by the death of a decedent
a. Donation c. Inheritance b. Succession d. Testate
3. The donor in a donation mortis causa is
a. dead. c. either living or dead. b. living. d. in a coma.
4. Which is not a form of succession?
a. Testamentary c. Intestate b. Compulsory d. Mixed
5. It is succession in the absence of a will.
a. Testamentary c. Mixed b. Intestate d. None of these
6. It is succession by will and operation of law.
a. Testamentary c. Mixed b. Intestate d. None of these
7. It is written document which sets forth how the decedent's property will be distributed after death.
a. Will b. Testamentary disposition c. Intestate disposition d. Mixed
8. Which is not an element of succession?
a. Decedent c. Estate b. Estate tax d. Heirs
it is the property, rights and obligation of the decedent not extinguished by his death
a. Estate b. Estate tax
of the decedent not extinguished by
c. Codicil d. Legitime
10. They are the successors in interest of the decedent.
a. Heirs c. Devisees b. Estate d. Legatees
ii. It is a donee of a real property in a last will and testament.
a. Heir c. Legatee b. Devisee d. Successor
12. IT is a donee of personal property in a last will and testament.
a. Heir c. Legatee b. Devisee d. Successor
13. Who is not a compulsory heir?
a. An adopted child b. Children of a deceased child c. The surviving spouse d. A brother
14. Who will inherit among the following?
a. A legitimate child c. Grandchildren b. Parents d. First cousin
15. Which of the following heirs will not inherit?
a. Illegitimate child c. Nephew b. Surviving spouse d. Legitimate child
Multiple Choice - Theory 2
1. Which will not inherit from the following group?
A.Grandchild from a deceased son of the decedent
A daughter of the decedent
Grandson from a living daughter of the decedent
An illegitimate child of the decedent
2. Who may not inherit under an intestate succession?
a. Grandparents c. First cousin b. Grandchildren d. Best friends
3. Who will be disinherited from the following?
a. Widow c. Illegitimate children d. Parents
b. Legitimate children
4. Who shall inherit from the following group?

a. Legitimate child b. Parents c. Grandparents d. Brothers and sisters
5. Who shall inherit from the following potential heirs?
a. 1st cousins b. Brothers and sisters
c. Niece sand nephews d. Second cousins
6. This is a person appointed by the court to manage the distribution of the estate.
a. Administrator c. Guardian b. Executor d. Trustee
7. This is a person handpicked by the decedent to implement his will.
a. Administrator c. Guardian b. Executor d. Trustee
8. There are several estate tax laws in the history of estate taxation in the Philippines. Which applies to
a particular decedent?
a. The estate tax law in effect when the properties of the decedent are being accumulated
b. The estate tax law in effect at the date of the decedent's death
c. The estate tax law in effect at the date the last will and testament was prepared
d. The estate tax law in effect upon determination of the legal heirs
9. Which is correct regarding estate tax?
a. A privilege tax c. A final tax b. A national tax d. A fiscal tax
10. Statement 1: Succession will not effect until and unless the estate tax is paid.
Statement 2: Estate tax is payable even in the absence of relatives who may inherit the estate.
Which is correct?
a. Statement 1 b. Statement 2
c. Both statements d. Neither statement
11. Statement 1: No estate tax is due if the net taxable estate is negative.
Statement 2: Once there is death, the estate tax is always payable. Which is incorrect?
a. Statement 1 c. Both statements b. Statement 2
d. Neither statement
12. Statement 1: A resident citizen is taxable on his estate wherever situated.
Statement 2: A non-resident citizen is taxable only on his estate situated in the Philippines.
Which is correct?

13. Statement 1: A resident alien is taxable only on his estate situated in the Philippines.
Statement 2: A non-resident alien is taxable only on his estate situated in the Philippines.
Which is correct?
14. The reciprocity exemption on intangible personal properties situated in the Philippines is
applicable only to a
a. Non-resident citizen b. Non-resident alien c. Resident alien d. All of these
15. Which is correct?
a. Estate tax is determined per piece of property transferred to the heir.
b. Estate tax is collected by the local government.
c. Estate tax is a property tax.
d. Estate tax is an excise tax.
16. A decedent died intestate with P1,000,000 net estate. If he has four legitimate children and two
illegitimate children, how much shall each legitimate and each illegitimate child respectively
receive?
a. P 0; P 0 c. P 200,000; P100,000 b. P 100, P50,000 d. P 166,667; P166,667
17. A married decedent died intestate leaving behind P1,500,000 of his separate property and
P6,000,000 common properties with his surviving spouse. If he has three children and one illegitimate
child. How much shall each legitimate child receive?
a. P 1,666,667 c. P 666,667 b. P 1,000,000 d. P 333,333
18. In the immediately preceding problem, compute the total properties of the surviving spouse after
partition of the properties.
a. P 3,000,000 c. P 4,666,667 b. P 4,000,000 d. P 3,666,667
Chapter 13A – Gross Estate; Common Rules
TRUE OR FALSE 1
TRUE 1. The list of Properties of the decedent existing at the point of death must be established in
determining gross estate.
FALSE 2. Gross estate consists of all real properties and tangible personal properties wherever
situated, at the point of death.
FALSE 3. The gross estate of a non-resident alien includes tangible properties wherever situated.
FALSE 4. The gross estate of a non-resident alien includes only tangible properties situated in the
Philippines.
FALSE 5. The gross estate of a resident alien includes only real properties wherever situated.
FALSE 6. The list of properties of the decedent must be counted at the date of death.
FALSE 7. Properties owned by the decedent which are exempted by law are initially included in gross
estate, but are removed by way of deduction from gross estate.
FALSE 8. Properties not owned by the decedent may be included in gross estate.
TRUE 9. Taxable transfers consist of properties passed to other persons before death but are still
owned by the decedent at the point of death.
TRUE 10. The motives of the donation shall be the basis of its taxation.
FALSE 11. Properties are valued at the higher of the fair value and acquisition cost.
TRUE 12. Newly-acquired properties are valued at acquisition cost.
TRUE 13. Where the law or regulations do not prescribe for fair value rules, fair value rules of generally
accepted accounting principles may be sought.
FALSE 14. Listed stocks are valued at their par value.
TRUE 15. Non-listed common stocks are valued at their book value.
True or False 2
FALSE 1. Transfers inter-vivos made before death are included in gross estate.
FALSE 2. Income earned after death is included in gross estate.
TRUE 3. Income earned before death is included in gross estate.
TRUE 4. The payment for obligations and expenses after death is added back to the amount of gross
estate.
TRUE 5. Taxable transfers are included in gross estate.
FALSE 6. Properties held by the decedent as a trustee must be included in gross estate.
TRUE 7. Properties held by the decedent which must be transmitted to an heir in accordance with the
desire of a predecessor are excluded from gross estate.
FALSE 8. The proceeds of an irrevocable life insurance is included in gross estate.
FALSE 9. Properties held by the decedent as a fiduciary heir are included in gross estate.
TRUE 10. The proceeds of life insurance which is revocably designated must be included in gross
estate.
TRUE 11. The proceeds of life insurance is included in gross estate if the beneficiary is the estate, the
executor or administrator.
TRUE 12. The separate properties of the surviving spouse are excluded from gross estate.
TRUE 13. Transfers made for adequate considerations are excluded from gross estate.
TRUE 14. The merger of the usufruct in the owner of the naked title is a transfer excluded from gross
estate.
FALSE 15. The gross estate includes only the separate properties of the decedent.
FALSE 16. The proceeds of group insurance is included in gross estate.
TRUE 17. The proceeds of GSIS policy and SSS benefits are included in gross estate.
TRUE 18. Benefits from the USVA are exempt from estate tax.
TRUE 19. Donations mortis causa to accredited non-profit institutions are exclusions in gross estate.
TRUE 20. Transfers in contemplation of death are included in gross estate.
TRUE 21. If the fair value of the property transferred mortis causa for an inadequate consideration
declines below the amount of the consideration at the date of death, no amount is included in gross
estate.
TRUE 22. Revocable transfers and conditional transfers are included in gross estate at the fair value of
the property at the date of their transfer to the transferees.
FALSE 23. Properties passing under special power of appointment are included in gross estate.
TRUE 24. The gross estate is valued at the point of death.
TRUE 25. If a consideration is paid by the transferee in a taxable transfer, the amount to include in
gross estate shall be the excess of the fair value of the property at the date of death over the
consideration given.
Multiple Choice - Theory: Part 1
1. The gross estate of resident or citizen decedents does not include
a. Properties located abroad
b. Properties located in the Philippines
c. Intangible personal property located abroad
d. Properties not owned
2. Gross estate means
a. Properties, whether or not owned by the decedent, existing at the point of death
b. Properties owned by the decedent at the point of death
c. Present properties in the possession of the decedent at the point of death
d. Any of these
3. As a rule, all decedents are taxable on world estate, except
a. non-resident alien.
b. non-resident citizen.
c. resident alien.
d. non-residents.
4. As a rule, the gross estate of non-resident alien decedents includes
a. Intangible personal properties located abroad
b. Real properties located abroad
c. Intangible personal properties located in the Philippines
d. Tangible personal properties located abroad
5. Which has reciprocity exemption?
a. Resident alien
b. Non-resident alien
c. Non-resident citizen
d. All of these
6. Which property is covered by the reciprocity exemption?
a. Intangible personal property abroad personal property in the Philippines
b. Intangible personal property in the Philippines
c. Tangible personal property abroad
d. Tangible personal property in the Philippines
7. Which of these properties may be excluded from gross estate by reason of reciprocity?
a. Cash
b. Car
c. Paintings
d. Land
8. Which is not deducted from the inventory list of properties in arriving at the gross estate?
a. Properties held as a trustee
b. Properties held as a fiduciary heir
c. Properties held under a general power of appointment
d. Properties held under a special power of appointment
9. If inventory-taking of properties is conducted after the death decedent, which is deducted from
the inventory list?
a. Income accruing after death
b. Expenses paid after death
c. Income accruing before death
d. Expenses paid before death
10. Which is not added to the inventory list of properties in computing gross estate?
a. Transfer in contemplation of death
b. Revocable transfers
c. Transfers under general power of appointment
d. Merger of the usufruct in the owner of the naked title
11. Which is a correct statement?
a. The merger of the usufruct in the owner of the naked title is a transmission subject to estate tax.
b. The transfer from the first heir to the second heir in accordance with the wishes of a predecessor is
a taxable transfer subject to estate tax.
c. The proceeds of life insurance taken by the decedent for himself/herself is always included in gross
estate if the beneficiary is the estate, executor or administrator.
d. The trustor need not include a property transferred in a revocable trust in his gross estate.
12. Which of these transfers is subject to estate tax?
a. Transfer of properties for a full consideration
b. Transfer of the inheritance from the fiduciary heir to the fideicommissary
C. The proceeds of a life property held in trust by a trustee to the beneficiary
d. Transfer mortis causa for less than full and adequate consideration
13. Which of these properties is subject to estate tax?
a. Properties which were initially transferred in revocable trusts but were revoked by the decedent
before his or her death
b. Properties transferred under revocable trust which the decedent failed to revoke at the time of
his/her death.
c. Properties transferred under conditional donations wherein the donee has not yet fulfilled the terms
of donation at the date of death of the decedent
d. All of these
14. The proceeds of life insurance designated by the decedent to his/her child is included in gross
estate a, if the designation is revocable. b, if the designation is irrevocable. c, without regard to the
designation as revocable or irrevocable. d, in all circumstances.
15. The proceeds of life insurance designated by the decedent to his/her estate is included in gross
estate
a. if the designation is revocable.
b. if the designation is irrevocable.
c. without regard to the designation as revocable or irrevocable.
d. in all circumstances.
16. The proceeds of life insurance designated by the decedent to his wife is excluded in gross estate
d. under no circumstances.
17. The proceeds of life insurance designated by the decedent to his/her executor is excluded in
gross estate
d. under no circumstances.
18. Which is an inclusion in gross estate?
a. Separate properties of the surviving spouse
b. Common properties of the spouses
c. Separate properties of the heirs
d. Properties acquired from group insurance
19. Which is not included in gross estate?
a. Revocable transfers
b. Transfers in contemplation of death
c. Transfer under special power of appointment
d. All of these
20. Which is not included in the gross estate of the husband?
a. Capital properties
b. Common properties
c. Paraphernal properties
d. All of these
21. Which is not included in the gross estate of the wife?
a. Capital properties
b. Common properties
c. Paraphernal properties
d. None of these
22. Which of the following donations in the last will and testament is excluded in gross estate of the
decedent?
a. Donation to a favorite child
b. Donation to an ex-girlfriend
c. Donation to a charitable institution
d. Donation to the government
23. Which proceeds of insurance is included in gross estate of the decedent?
a. Proceeds of life insurance irrevocably designated to the decedent's child
b. Proceeds of group insurance
c. Proceeds of property insurance
d. All of these
24. If the decedent failed to specify the designation of the beneficiary of his life insurance policy
a. The proceeds is exempt if he did not changed the beneficiary during his lifetime.
b. The proceeds is taxable whether or not he changed the beneficiary during his lifetime.
c. The proceeds is exempt because it is considered designation.
d. The proceeds is taxable because it is considered a revocable designation.
a revocable
25. Which is not an exclusion in gross estate?
a. Accruals from SSS
b. GSIS benefits
c. War damage payments
d. Private retirement benefits
26. which of the following bequests to a social welfare or charitable institution is subject to estate tax?
a. Bequests to be used for administrative purposes
b. Bequests restricted by the decedent for program expenses of the institution
c. Bequests to accredited non-profit institutions
d. All of these
27. Statement 1: For taxable transfers, the value to include in gross estate shall be the fair value of the
property at the point of death.
Statement 2: For taxable transfers made for an insufficient consideration, the total fair value of the
property at the point of death shall be included in gross estate.
Which is correct?
a. Statement 1
b. Statement 2
c. Both statements
d. Neither statement
1. Mr. A devised in his will a piece of land to Mrs. B. Mrs. B shall enjoy usufructuary right over the
property and shall pass the same to Mr. C upon her death.
Who shall include the property in his or her gross estate upon death?
a. Mr. A
c. Mr. C
b. Mrs. B
d. Mr. A and Mr. C
2. Mrs. A appointed Ms. B as fiduciary heir over an agricultural land which Ms. B shall turn over to Mr.
C upon Ms. B's death.
Which is incorrect?
a. The land must be included in Mrs. A's gross estate upon her death.
b. The land must be excluded in Ms. B's gross estate upon her death.
c. The land must be excluded in Mr. C's gross estate upon his death.
d. None of these
3. Mr. A designated his wife as the revocable beneficiary of the proceeds of his life insurance. Which
is correct?
a. The proceeds must be included in the gross estate of Mr. A
b. The proceeds must be excluded in the gross estate of Mrs. A upon her death.
c. The proceeds must be treated as donation subject to donor's tax.
d. The proceeds must be excluded in the gross estate of Mr. A.
4. Mr. A designated Mr. K, the executor of his estate, as his irrevocable beneficiary to the proceeds of
his life insurance. olicy shall be included in the gross
a. The proceeds of the life insurance p Which is correct? estate of Mr. A.
b. The proceeds of the life insurance policy shall be excluded in the gross estate of Mr. A.
c. The proceeds of life insurance is a donatin subject to donor's tax.
d. The proceeds is exempt from both donor' os tax and estate tax.
5.. Which of the following is excluded in the gross estate of Mr. X?
a. Separate property of Mr. X

b. Common property of Mr. and Mrs. X
c. Separate property of Mrs. X
d. B and C
6. Mr. A made an irrevocable donation in trust in favor of Mr. C. Mr. C died two years after receiving
the donation.
Which is correct?
a. The property shall be included in the gross estate of Mr. C.
b. The property shall be included in the gross estate of Mr. A.
c. The property shall be excluded in the gross estate of Mr. C.
d. None of these
7. What is a best way to minimize estate tax exposure?
a. Invest your money in a corporation
b. Donate the properties to relatives before death
c. Understate your gross estate and do not pay estate tax
d. Invest property in life insurance and make the designation of the beneficiary as irrevocable
8. Which of these transfer mortise causa will more likely to be included in gross estate of the
decedent?
Fair Value at Transfer Selling Price at Transfer Fair Value at death
a. 100,000 150,000 200,000
b. 150,000 150,000 300,000
c. 200,000 150,000 140,000
d. 300,000 200,000 280,000
9. Which is excluded in gross estate?
a. Fringe benefits
b. De minimis benefits
c. GSIS benefits
d. PhilHealth benefits
10. Which of the following properties is excluded from gross estate even if present at the point of
death?
A. Revocable transfer
c. Transfer by bona fide sale
b. a. Conditional transfer
d. Proceeds of group insurance
11. Which may be exempt from estate tax?
a. Proceeds of building fire insurance
b. proceeds of car insurance
c.Proceeds of crop insurance
d. Proceeds of life insurance
12 Which is not included in gross estate?
a, Decedent interest to properties
b. Taxable transfers
c Proceeds of life insurance irrevocably designated to the estate
d. Income of properties of the decedent after death
13. The decedent owns an agricultural land with the following values:
Zonal Value 2,000,000

Assessed 1,500,000
Independent appraised value 3,200,000
Offer price of a willing buyer 4,000,000
The agricultural land shall be included in gross estate at
a. P 1,500,000 c. P 3,200,000 b. P 2,000,000 d. P 4,000,000
14. The decedent owns 200,000 shares of Saint Peter Corporation, a listed company.
Date of Death Date of Interment

Book value per share 23.50 23.55
Closing price 48.20 49.50
Average trading price 48.00 49.60
The 200,000 shares shall be included in gross estate at
a. P 4,700,000 c. P 9,600,000 b. P 9,640,000 (200k shares x 48.20) d. P 9,900,000
15. The decedent had $2,000 in his possession at his death on November 2, 1019. He was buried on
November 12, 2019.
The following were the exchange rates: November 2, 2019- 42.50
November 2 to November 12, 2019 average rate 43.25
November 12, 2019 42.75
At what amount shall the $2,000 be included in the gross estate of the decedent?
a. P 86,500
C. P 85,000 2k x 42.50
b. P 85,500
d. P 0
1. Mrs. Dely Cado died on November 1, 2019. An inventory of her properties was conducted for
estate tax purposes on January 1, 2020. On that date, she had properties with an aggregate fair
value of P7,000,000. This amount includes P300,000 income received by the estate since her death
and is net of P600,000 expenses used during her funeral.
What is the amount of gross estate?
a. P 7,900,000
c. P 7,000,000
b. P 7,300,000 (P7,000K – P300K + P600K)
d. P 6,700,000
2. Mr. Tio died leaving the following properties:
Purchase Cost Fair Value

Car, registered in his name 800,000 400,000
Family home 2,000,000 5,000,000
Other properties 400,000 350,000
Compute the gross estate.
a. P 2,750,000 b. P 3,200,000
c. P 5,750,000 (P400K + P5,000K + P350K)
d. P 6,200,000
3. Mr. Bacleito had the following properties with their respective fair values in his possession at the
date of his death:
Agricultural land, held in trust 200,000

Car, registered in the name of his brother 300,000
Motorcycle 80,000
Residential lot 900,000
Other personal properties 70,000
a. P 950,000 b. P 1,050,000 (P80K + P900K + P70K)
c. P 1,250,000 d. P 1,550,000
4. The heirs of Mr. Masigasig identified a total P12,000,000 in properties existing at the date of his
death. A total of P500,000 was used during his wake up to his interment. His heirs also used P400,000 to
pay off obligations of Mr. Masipag.
An investment in the estate of Mr. Masipag also earned P50,000 in dividends which the heirs reserved
for payment of his estate tax.
What is the gross estate?
a. p 12,900,000 b. p 12,850,000
c. P12,500,000 d. P12,000,000
5 A decedent died in October 2018. His properties had an aggregate fair value. of p12,000,000 at
that time. His heirs failed to pay his estate tax. In March 2020, his heirs prepared a list of the
decedent's properties which now had a i value of P13,500,000 and which excluded a car worth
P1,500,000 stolen in January 2020. What is the gross estate?
a. P 0
b. P 12,000,000
c. P13,500,000
d. P15,000,000
6. A resident decedent died leaving the following properties:
An orchard, held as usufructuary P 1,200,000
A motorcycle, borrowed from a friend 80,000
Cash, proceeds of his bank loan 500,000
A ranch, acquired for P1,000,000 in 1990 2,500,000
Cattles 600,000
House and lot 800,000
a. P 2,400,000
b. P 3,900,000
c. P 4,400,000 (P500K + P2,500K + P600K + P800K)
d. P 5,680,000
7. A citizen decedent died leaving the following:
Properties, inherited from his father P 1,200,000
Properties, donated by brother 800,000
Cash, from his salary savings 400,000
Cash, income of properties before death 200,000
Receivables, income of properties after death 100,000
What is the gross estate?
a. P 600,000
c p 2,600,000 . (P1,200K + P800K + P400K + P200K)
b. P 700,000
d. p 2,700,000
8. A resident Japanese decedent died with the following properties:
2,000,000 A house and lot in Japan
800,000 Bank deposit, in the Philippines
1,000,000 A car in the Philippines
1,500,000 A residential lot in the USA
Compute the amount to be included in gross estate.
a. P 0
c. P 2,000,000
b. P 1,800,000
d. P 5,300,000 (P2,000K + 800K + 1,000K + P1,500K)
9. A non-resident alien decedent died leaving the following:
A building in Korea 8,000,000

A car in Hong Kong 2,000,000
Share of stocks in Malaysia 4,000,000
Cash in Philippine banks 800,000
Investment in bonds of domestic corps 400,000
a. P 0 c. P 1,200,000 P800K + P400K) b. P 800,000 d. P 11,200,000
10. A Korean citizen residing in the Philippines died in the Philippines:
An agricultural land in Korea P12,000,000
A house and lot in Korea 4,000,000
A condominium unit in the Philippines 2,000,000
A business interest in the Philippines 3,000,000
Car in the Philippines 1,200,000
Cash in Japanese banks 1,800,000
What is the amount to include in gross estate?
a. P 0 c. P 6,200,000 b. P3,200,000 d. P 24,000,000
11. A Filipino citizen died while residing in the USA. He had the following properties at the date of his
death:
Shares of domestic corporations P 2,000,000

Cash in US banks 5,000,000
Car in the US 3,000,000
House and lot in the Philippines 4,000,000
What is the amount to include in gross estate?
c. P 6,000,000 d. P 14,000,000
a. P 0 b. P 4,000,000
12. A Mexican citizen died in Tokyo, Japan. He had the following properties:
House and lot in Mexico P12,000,000
House and lot in Japan 18,000,000
Car in Japan 2,000,000
Shares of stock in a domestic corporation 4,000,000
Interest in a Philippine-based business 2,000,000
what is the amount to include in gross estate?
a. P 0
c. P 26,000,000
b. P 6,000,000 P4M + P2M, Note that the decedent is a non-resident alien)
d. P 38,000,000
13. In the immediately preceding problem, what is the amount to include in gross estate assuming
that the reciprocity condition applies?
a. p 0 the P6M properties are intangible personal properties)
c. P 26,000,000
b. p 6,000,000
d. P 38,000,000
14. A non-resident alien decedent had the following interests at the point of death:
Interest in a business partnership organized abroad P 300,000
Shares in a foreign corporation 75% of the business of which is situated in the Philippines 400,000
Shares of a foreign corporation traded in the Philippine Stock Exchange 800,000
Claims from resident debtors 1,200,000
Compute the amount of properties considered situated in the Philippines.
a. P 800,000 c. P 2,000,000(P800K + P1,200K) b. P1,200,000 d. P 2,400,000

15. Mr. Masipag died leaving a commercial land as part of his estate. The land was purchased in
2018 at an acquisition price of P11,000,000. An interested buyer tendered a P15,000,000-offer to buy
the property. The land had an independent appraisal of P16,000,000, assessed value of P12,000,000
and a zonal value of P14,000,000.
What is the amount to be included in gross estate?
a. P 11,000,000 c. P 14,000,000 b. P 12,000,000 d. P 15,000,000
16. The following relates to the withdrawals from the account of a decedent who died January 8,
2019:
January 7, 2019 400,000

January 9, 2019 500,000
January 10, 2020 500,000
Assuming that the bank was duly notified of his death, compute the required exclusion in gross
estate.
a. P 400,000 b. P 500,000
c. P 900,000 d. P1,000,000
17. Mr. Imbestor died with significant stock holdings as follows:
• 1,000 Globe preferred stocks with P1,000 par value per share
• 40,000 San Miguel common shares with par value of P100 per share
• 80,000 stocks of Carmen Corporation with par value of P50 per share
Book values PSE closing price at date

of death
Globe preferred 1,000 1,000
San Miguel common 250 300
shares
Carmenr sommon shares 45
What is the total amount to include in gross estate?
c. P 16,600,000 (P1,000 x P1,000 + 40,000 x P300 + 80,000 x P45) Note Globe and San Miguel share are
traded. (If shares are traded but no information as to high and low price is given, it is presumed that
the traded priced remained flat on that date. This is because we cannot assume figure out of thin air.
)
d. P 17,000,000
a. P 13,600,000 b. P 15,000,000
18. A decedent died with the following properties:

Purchase cost
Newly purchased jeepney 1,200,000
An old model 1,500,000
Land, mortgage to a bank for 1M 3,000,000
500 grams of pure gold 850,000
The Ford Expedition was refurbished by the decedent making it readily saleable at P1,800,000 in the
second-hand market. The land had a zonal value of P4,000,000 and an assessed value of P2,500,000.
The Bangko Sentral ng Pilipinas (BSP) was buying gold at P1,800 per gram at the date of death of the
decedent.
Compute the total amount to be included in gross estate.
a. P 6,550,000 c. P 7,150,000 b. P 6,900,000
d. P 7,900,000 (P1,200K jeepney + P1,800K Ford Expedition + P4,000K land + 500 x P1,800 gold)
19. Mr. Margarito died while serving as the managing partner in a business partnership. He owned
40% of the capital and profits of the partnership. The partnership had a total capitalization of
P10,000,000, exclusive of accrued profits of P1,000,000. Partnership income was subject to 30%
corporate income tax.
What is the value of the business interest which must be included in the gross estate of Mr. Margarito?
a. P 280,000 b. P 400,000
c. P 4,280,000 [P10M x 40% + (P1M x 70%) x 40%] =
d. P 4,400,000
20. A decedent owns 25,000 stocks in a closely-held corporation which had the following equity
structure at the date of death of the decedent:
common stocks (1,000,000 outstanding shares) 5,000,000
Additional paid-in capital 2,000,000
Retained earnings 1,000,000
Total shareholder's equity 8,000,000
What is the value of the stocks to be reported in gross estate?
a. p0
c. P 175,000
b. P 125,000
d. P 200,000 25,000/1,000,000 x P8,000,000)

21. Mr. Canuto was hospitalized on April 8, 2020 and died on April 12, 2020. He was buried on April 21,
2020. Mr. Canuto had $124,000 prior to hospitalization. $24,000 was spent for his hospitalization while
$10,000 was used for his funeral.
The following were the exchange rates between the peso and the dollar:
April 8, 2020 April 12,2020 April 21, 2020

Peso-dollar 42.30 42.50 42.50
exchange rate
a. P 4,245,000 c. P 5,270,000
b. P 4,250,000 $124,000 – $24,000) x P42.50
d. P 5,695,000
1. Ms. Ma. Katie Pero died bankrupt. She had the following properties and obligations at the date of
her death:
Cash 200,000
Agricultural land 3,000,000
Family home 2,000,000
Debts and obligation 8,000,000
Compute the gross estate
a. (P2,800,000) b. p 0
c. P 5,000,000
d. P 5,200,000 P200K + P3,000K + P2,000K). The debts and obligations shall be separately presented as
deductions.
2. Mrs. Candida died. In his last will and testament, he indicated the following:
House and lot to his adopted son and only heir P 5,000,000
Land to public school 1,000,000
Cash to abs cbn foundation 500,000 C
The legacy to abs cbn foundation was intended for bantay bata 163, a non-profit social welfare
program of abs cbn foundation.
c. P 5,000,000 d. P 5,500,000
c. P6,000,000 (P5,000K + P1,000K). The charitable donation is an exclusion while the Donation to the
government is a deduction)
d. P6,500,000
3. The heirs of a decedent received the following insurance proceeds upon the decedent's death:
Source Amount
Insurance A - designated to wife as revocable beneficiary P 400,000
Insurance B - designated to son as irrevocable beneficiary 500,000
Insurance C - group insurance proceeds 200,000
Insurance D - designated to executor as irrevocable beneficiary
400,000
Compute the insurance proceeds to be included in gross estate.
a. P 200,000 c. P 800,000 b. P 400,000 d. P 900,000
4. In his will, Anton transferred a life usufruct in favor of Cendong and thereafter to Bentong, who is
the owner of the naked title. Cendong eventually died resulting in the transfer of the property to
Bentong. Bentong also died a few years later.
Which is correct?
a. The property shall not be included in the gross estate of Anton.
b. The property shall be included in the gross estate of Cendong.
c. The property shall not be included in the gross estate of Bentong.
d. The property shall be included in the gross estate of Anton and Bentong.
5. D devised in his will an agricultural land with life usufruct to E and naked title to F. All parties
eventually died. The land had a value of P1,500,000 on D's death, P1,000,000 on E's death and
P2,000,000 on F's death.
Which is correct?
a. The land shall be valued at P1,000,000 in the gross estate of D.
b. The land shall be valued at P1,500,000 in the gross estate of E.
c. The land shall be valued at P2,000,000 in the gross estate of F.
d. None of these
6. Mr. X devised in his will a commercial land to be given to Z, his favorite grandchild. Since Z was a
minor, Mr. X designated Mrs. Y as the fiduciary heir who was entrusted the obligation to transfer the
property to Z upon Mrs. Y's death.
Which is correct?
a. The transfer of the property from Mr. not to estate tax. X shall be subject to donor's tax,
b. The transfer from X to Z is subject to estate tax, not to donor's tax.
c. The transfers from X and Y are not subject to any transfer tax.
d. The transfer from Y to Z is subject to donor's tax.
7 In his will, Mr. Curandang Matito, however, was bound appointed Matito as first heir over a business.
to transfer the property to either Elsa or Donna. In his will, Matito designated Donna as beneficiary of
the business.
Which is true?
a. The transfer from Mr. Curandang to Matito is subject to estate tax.
b. The transfer from Matito to Donna is subject to estate tax.
c. The transfer from Mr. Curandang to Matito is subject to donor's tax.
d. None of these
8. Mr. Cabayo is the chief executive officer of Payaman Power Multilevel Marketing Corporation
(PMMC). Mr. Cabayo died in a car crash.
Which must be included in the gross estate of Mr. Cabayo?
a. Proceeds of life insurance taken by Mr. Cabayo with his eldest son as irrevocable beneficiary
b. Proceeds from Mr. Cabayo's car insurance
c. Proceeds of the life insurance over Mr. Cabayo's life taken by PMMC with PMMC as the
beneficiary
d. None of these
9. Mrs. Malou Phet is the beneficiary of a revocable donation consisting of two commercial buildings.
Mrs. Phet herself was also designated by her father as a fiduciary heir over a commercial lot which
was to be transferred to her younger sister, Mabaet. Mrs. Phet died in action as a military
servicewoman.
Which is correct?
a. The buildings and the commercial lots shall be included in the gross estate of Mrs. Malou Phet.
b. The two buildings shall be included in the gross estate of Mrs. Malou
c. only the commercial lot shall be included in the gross estate of Mrs. Malou Phet
d. The buildings and the commercial lot shall be excluded in the gross d. estate of Mrs. Malou Phet.
10. Mr. Dino Jones died leaving the following properties:
Car, purchased using GSIS retirement benefits 500,000
Interest in a joint venture business 3,000,000
House and lot, separate property of his wife 2,000,000
Proceeds of insurance, revocably designated to wife 1,500,000

Total 7,000,000
a. P 2,000,000 c. P 4,500,000P3,000K + P1,500K) b. P 3,500,000 d. P 7,000,000
11. An inventory total of the properties of Mrs. Tina Taray and her widower is shown below:
Separate property of Mrs. Taray 6,000,000
Separate properties of Mr. Taray 1,500,000
Value of family business 2,000,000
Other properties owned jointly by Mr. and Mrs. Taray 3,000,000
Total 12,500,000
Compute the gross estate of Mrs. Taray.
a. P 4,000,000 c. P 6,500,000 b. P 6,00,000 d. P 11,000,000 P6,000K + P2,000K + P3,000K) Note: Mrs. Taray
died not Mr. Taray.
12. On September 30, 2020, Mr. Pogi Nalang died in an accident. A few hours later, his wife,
Maganda Nalang, died of heart-attack upon learning of Mr. Pogi's death. The spouses had a son
who is the only heir to their properties.
The properties of the spouses on September 30 were:
Separate properties of Pogi 3,000,000
Separate properties of Maganda 5,000,000
Common properties of the spouses 8,000,000
Compute Matikas' gross estate.
a. P 3,000,000 c. P 11,000,000P3,000K + P8,000K) b. P 7,000,000 d. P 16,000,000
13. In the immediately preceding problem, assume further that Mrs. Maganda Nalang had the
following: Share in the net distributive estate of Mr. Nalang 2,500,000
Share in the net conjugal properties with Mr. Nalang 3,700,000
Compute Mrs. Nalang's gross estate.
a. P 5,000,000 . b. P 7,500,000 c P 8,700 000 d. P 11,200,000 (P5,000K separate properties of Maganda

+ 2,500K + P3,700K)
4 Mr. Willy made the. following transfers mortis causa during his lifetime:
Transfer to ialmee - A revocable transfer involving a residential lot valued at P2,000,000 at the date of
transfer. Willy failed to revoke the same until his death.
• Transfer to Mr. Li - A conditional transfer of business interest worth before Mr. Willy's death. Mr
P10,000,000 at the date of transfer. • Li failed to meet the conditions
• Transfer to Mark - A conditional transfer of a car valued at P1,500,000. Mark fulfilled the condition
before Mr. Willy's death.
The properties had the following fair values at the death of Mr. Willy.
Residential lot 3000000
Business interest 9000000
Car 1200000
Total 13200000
P 3,000,000 9,000,000 1.200,000 P13,200.000
Compute the amount to be included in Mr. Willy's gross estate.
a. P 3,000,000 c. P 12,000,000 (P3M+P9M) b. P 9,000,000 d. P 13,200,000
15. Mr. Yakusa, a Japanese citizen residing in Tokyo, Japan, died with the following properties in the
Philippines:
• P2,000,000 car - given to a resident Filipino friend as a revocable donation; Mr. Yakusa waived his
right to revoke the donation on his last visit to the Philippines.
• P4,000,000 share investment in listed firms held by a Philippine stock broker
P5,000,000 interest in a partnership operating in the Philippines
Compute the gross estate of Mrc. Yukusa. .
a. 0 (The P2M car is no longer owned, the intangible assets are exempt under reciprocity)
b. 2,000,000
c. 9,000,000
d. 11,000,000
16. A decedent invested 2,000,000 in the stocks of ABC corporation by purchasing stocks from an
investor whosold the shares at 125 per share.
At the date of the decedent’s death, the stocks were selling 134 per share
What is the value to include in gross receipt?
a.P 2000000
b. 2,144,000 (P2,000,000 / P125) shares x P134
c. 134,000,000
d. 268,000,000
17. mr. mando rucot owns 20% of the 1,000,000 outstanding shares of def corporation, a closely held
corporation. Def corporation had a book value per share of 120 in its financial statement nearest to
the date of death of Mr. Rucot. DEF Corporation had several assets which exceed their fair value by
an aggregate amount of 14,000,000.
At what amount shall this investment be reflected in the gross estate of Mr. Rucot
a.26,800,000 ook value under adjusted net assets method = [(1,000,000 shares x P120) +
P14,000,000]/1,000,000 shares = P134/share
b. 53,600,000
c. 120, 000,000
d. 268,000,000
18. in 2010, mr. cabalde died having a will which directed all real estate he owed not to be sold or
disposed of for a period of 10 years after his death and ordered that the property be given to mrs.
Yare after the 10-year period. In 2010, the estate had a fair market value of 2000000. In 2022, the fair
market value of said estate increased to 5000000 and the bureau of internal revenue assesses
thereon estate tax on 5000000
Is the BIR assessment valid?
a. Yes, the assessment of the CIR is correct because of the matters of assessment, he has the
authority to determine the vakue to be assessed.
b. No, the assessment of the cir is incorrect. The assessment should have been based on the fair
market value at the time of death which is 2000000
c. Yes, the assessment of the CIR is correct because it was based on the value at the time of
assessment,
d. No, the assessment of the cir is incorrect because estate tax is not subject to any assessment.
Chapter 13 – B Estate Tax: Gross Estate of Married Decedents
T 1. The spouses can stipulate the conjugal partnership of gains as their property regimes even in
the current time.
F 2. The property regime of the spouses may be agreed upon during the marriage.
F 3. In default of agreement as to the property relation between the spouses, the absolute
separation of property is presumed.
F 4. Fruits accruing during the marriage are conclusively presumed common while fruits
accruing before the marriage are conclusively presumed exclusive.
F 5. The absolute community of property applies on fruit prospectively from the date of
marriage.
T 6. The conjugal partnership of gains operates retrospectively and prospectively.
T 7. Properties for exclusive personal use of either spouses are exclusive properties under
absolute community of properties.
F 8. All fruits, accruing before or after the marriage, are conjugal properties.
T 9. Fruits accruing from common properties are common properties under conjugal partnership
of gains.
T 10. Fruits accruing from separate properties are common properties under conjugal
partnership of gains.
F 11. All fruits before the marriage are conjugal properties.
F 12. All fruits during the marriage are communal properties.
F 13. Real properties are common properties under absolute community of properties.
F 14. Personal of movable properties are separate properties under absolute community of
properties.
F 15. Properties received by way of gifts are exclusive properties.
F 1. Properties received by way of inheritance are exclusive properties.

T 2. All properties brought into the marriage are separate under the conjugal partnership of
gains.
F 3. Generally, all properties brought into the marriage are community properties.
F 4. The properties of a spouse with a descendant from a prior marriage are exclusive properties.
T 5. The fruit of inherited properties are exclusive under absolute community of properties.
T 6. The fruit of donated properties are exclusive properties under conjugal partnership of gains.
F 7. The fruits of labor of either spouse are exclusive under the absolute community of property.
T 8. The gross estate of a decedent includes his separate properties and their common
properties with his surviving spouse.
F 9. Marriages celebrated after August 3, 1988 are conclusively presumed under the absolute
community of property.
T 10. In default of an agreement between the spouses, marriages celebrated before August 3,
1988 are conclusively presumed under conjugal partnership of gains.
T 11. Issues of property regime are irrelevant to a single decedent.
T 12. In taking inventory, properties are generally presumed common unless proven as exclusive
either spouse.
F 13. The proceeds of separate property sold during the marriage can become a conjugal
property.
T 14. The proceeds of separate property sold during the marriage can become a conjugal
property.
T 15. Jewelry is generally considered community property.
T 16. Jewelry inherited during the marriage is exclusive property.
T 17. The sale of separate property may produce a separate property and a conjugal property.
F 18. The sale of conjugal property may produce a separate and a conjugal property.
F 19. The properties of a spouse with a descendant from a prior marriage are communal
properties.
F 20. The properties of a spouse without any descendant from a prior marriage are communal
properties.
MCQ theory Part I

1. Statement 1: Under absolute community of property, properties are presumed community
unless proven otherwise.
Statement 2: Under conjugal partnership of gains, properties are presumed conjugal unless
proven otherwise.
Both statements are correct
2. In determining the property regime of the spouses, which is given primacy?
Agreement
3. Which is not a property regime?

a. Absolute separation
b. Conjugal partnership of gains
c. Absolute community of property
d. Pooling of interest
4. Which is a conjugal property?

a. Property inherited during marriage
b. Property inherited before marriage
c. Property received from exercise of profession during marriage
d. Property received from a donation during marriage
5. Which of these is an exclusive property?

a. Fruits arising from properties inherited during marriage
b. Fruits of properties acquired before marriage
c. Properties acquired from personal labor of the wife
d. Properties donated to both of the spouses
6. Which is a community property?

a. Properties received as inheritance during marriage
b. Properties representing fruits of community properties
c. Properties representing fruits from donated properties
d. Fruits of inheritance during marriage
7. Which is a common property under absolute separation property?

a. Salaries of the husband
b. Business profit of the wife
c. Donation or inheritance received by either spouse
d. Business interest jointly financed by both spouses
8. Which of these donations or inheritance is a common property?

a. Donation designated by the donor for the wife
b. A devise to the husband
c. A donation designated by the donor for the husband and wife
d. An inheritance from the mother of the wife
9. Which is not a common property?

a. Revocable donation to both spouses
b. Irrevocable donation in trust for both spouses
c. Direct and irrevocable donation for both spouses
d. All of these
10. Which is not a separate property under conjugal partnership?

a. Professional income of the husband
b. Rental income from separate properties
c. Income of common properties
d. All of these
11. Which is incorrect regarding fruits of separate properties during the marriage?
a. Exclusive under conjugal partnership of gains
b. Exclusive under absolute community of property
c. Exclusive under absolute separation of property
d. None of these
12. Fruits accruing before the marriage are

a. Common under conjugal partnership of gains
b. Common under absolute community of partnership
c. Exclusive under absolute community of properties
d. A and C
13. The income of donated properties before marriage are

a. Exclusive properties under conjugal partnership
b. Excusive under absolute community of property
c. Common properties under conjugal partnership of gains
d. A and C
14. Property inheritance during the marriage is

a. Exclusive under the conjugal partnership
b. Exclusive under absolute community of properties
c. Common properties under conjugal partnership of gains
d. A and B
15. The property inheritance before the marriage is

a. Separate property under conjugal partnership
b. Separate property under absolute community of property
c. Common property under absolute community of property
d. A and C
MCQ theory Part II

1. Which is incorrect under the absolute community of property?
a. Jewelry received as an inheritance during marriage is an exclusive property
b. Jewelry received as a donation before marriage is a common property
c. Jewelry acquired from income of separate property is an exclusive property
d. None of these
2. The income of properties acquired from the personal hard work of either spouse is:
a. Exclusive under absolute separation of properties
b. Common properties under absolutes community of property
c. Exclusive under conjugal partnership
d. A and B
3. The husband has numerous pricey personal apparels. These are

a. Exclusive properties under conjugal partnership
b. Common properties under absolute community of property
c. Common properties under absolute separation of property
d. None of these
4. The gain on sale of separate property during marriage is

a. Separate property under conjugal partnership
b. Separate property under absolute community of property
c. Common property under conjugal partnership of gains
d. A and B
5. The gain on sale of common property is

a. Exclusive under conjugal partnership of gains
b. Common under absolute separation of property
c. Common under absolute community of property
d. None of these
6. Which is not considered a separate property of the recipient spouse?
a. Acquisition of property as a trustee
b. Acquisition of property as a fiduciary heir
c. Acquisition of property as a usufructuary
d. All of these
7. Which is a paraphernal property under absolute community if property?

a. Property inherited by the husband
b. Property inherited by the wife
c. Property earned from separate properties of the husband
d. Property from the exercise of profession by the wife
8. Which is a paraphernal property under the conjugal partnership of gains?

a. Property brought into the marriage by the wife
b. Income of properties donated to the wife during the marriage
c. Income from the separate industry of the husband
d. Income from the separate industry of the wife
9. Which of these is a capital property under conjugal partnership of gains?

a. Properties brought into the marriage by the wife
b. Properties inherited by the husband
c. Fruits of properties donated to the husband
d. Properties for exclusive use of the husband
10. Which is a capital property under the absolute community of property?

a. Properties before marriage of the wife with a descendant in a prior marriage
b. Fruits of separate property of the wife
c. Properties for exclusive personal use of the husband
d. Compensation income of the husband
11. Which is excluded in gross estate?

a. Separate property of the decedent
b. Common property of the spouses
c. Separate property of the surviving spouse
d. A and C
12. Which is excluded in the gross estate of the deceased husband under the absolute
community of property?
a. Fruits of properties inherited by the wife during the marriage
b. Fruits of common properties during the marriage
c. Fruits of properties of the spouses before their marriage
d. Properties inherited by the husband
13. Which is excluded in the gross estate of a deceased wife under conjugal partnership of gains?
a. Business income of the husband
b. Professional income of the wife
c. Property received by way if inheritance by the wife
d. Property brought into the marriage by the husband
14. Which will not be included in gross estate regardless of the property regime of the spouses?
a. Accruals from SSS
b. Jewelry
c. Property for exclusive use of the spouses
d. Fruits of separate properties
15. Which is excluded in the gross estate of the husband under conjugal partnership of gains?
a. Properties inherited by the wife
b. Properties brought into the marriage by the husband
c. Income from properties inherited by the wife
d. Properties acquired by the wife from her own labor
Problem solving:
Case 1:
Mr. Andrenico brought into the marriage and agricultural land worth 1,000,000. During the marriage,
the agricultural land was sold for 1,500,000 and was used to acquire a family home. The family home
was valued at 1,800,000 at the death of Mr. Andrenico.
1. Compute the amount to be included in the common properties of the spouses under the
conjugal partnership of gain.
(1800 – 1000) = 800
2. Compute the amount to be included in the communal properties of the spouses.
1,800
Case 2:
Before their marriage, Mr. and Mrs. Boneti has salary savings respectively of 2,000,000 and 1,500,000.
Mr. and Mrs. Boneti earned respectively 200,000 and 180,000 income from these savings during the
marriage. Mr. and Mrs. Boneti also earned respectively 400,000 and 500,000 from their separate
industries.
Under the absolute community of property, compute the following:

3. Separate property of Mr. Boneti
0
4. Separate property of Mrs. Boneti
5. Common property of the spouses
Add all 4,780
6. The gross estate of Mr. Boneti
4,780
Under conjugal partnership of gains, compute the following:

7. Separate property of Mr. Boneti
2,000
8. Separate property of Mrs. Boneti

1,500
9. Common property of the spouses
200+180+400+500 = 1,280
10. The gross estate of Mr. Boneti
2,000+1,280 = 3,280
Case 3:
Lovely, married Andy, a 60 year-old lawyer who had 2 children from a previous marriage.
The spouses had the following properties:
Before marriage: Lovely Andy

Total properties P 400,000 P 4,000,000
During marriage:
Income from separate industry 200,000 2,000,000
Income of properties brought to the marriage 80,000 700,000
Inheritance and donations received 450,000 500,000
Assuming the conjugal partnership of gains, compute the following:
11. The separate property of Lovely
400+450 = 850
12. The separate property if Andy
4,000+500 = 4,500
13. The common property of the spouses
2200+780 = 2,980
14. The gross estate of Lovely
2,980+850 = 3,830
Assuming the absolute community of property, compute the following

15. The separate property of Lovely
450
16. The separate property of Andy
4,000+700+500 = 5,200
2,680
18. The gross estate of Lovely
3,130
Case 4:
Mr. Cornelius died. An inventory and analysis of the properties held by his family are presented below:
Mr. Cornelius Mrs. Cornelius Total

Properties acquired before marriage:
Properties for exclusive and personal use P 20,000 P 30,000 P 50,000
Other properties acquired 280,000 470,000 750,000
Total 300,000 500,000 800,000
Properties acquired during marriage:

Properties for exclusive personal use P 30,000 P 40,000 P 70,000
Properties from own industry 290,000 500,000 790,000
Donated properties received 300,000 300,000
Inherited properties 400,000 400,000
Fruit of donated/inherited property 80,000 60,000 140,000
Total 800,000 900,000 1,700,000
Assuming the conjugal partnership of gains, determine the following:

19. Separate property of Mr. Cornelius
300+400 = 700
20. Separate property of Mrs. Cornelius
500+300 = 800
70+790+140 = 1,000
22. The gross estate of Mr. Cornelius
1,700
Assuming the absolute community of property, determine the following:

23. Separate property of Mr. Cornelius
20+30+400+80 = 530
24. Separate property of Mrs. Cornelius
430
750+790 = 1,540
26. The gross estate of Mr. Cornelius

2,070
Part II:
1. Mr. Jose married Josephine on February 2, 1988. Josephine died on February 14, 2019. On that
date, the spouses had the following properties:
Car, donated to Mr. Jose on June 14, 2015 P 1,200,000

Investments – inherited by Josephine on February 4, 1995 when its value was P 2M 2,800,000
House and lot – salaries of Mr. Jose and Josephine 4,000,000
Cash income of car 400,000
Compute the separate property of Mr. Jose
1,200
2. Compute the separate property of Josephine
2,000
3. Compute the gross estate
2800+4M+400 = 7,200
4. Mr. A died on June 3, 1987, but his estate had no paid tax since then. He had the following
properties at the time of his death:
Proceeds of life insurance irrevocably designated to his own son P 2,000,000

Properties for exclusive use of Mr. and Mrs. A 300,000
Properties inherited by Mrs. A on June 1, 1987 4,000,000
Properties from salaries of Mr. and Mrs. A 1,400,000
Properties which accumulated since June 3, 1987 400,000
Common properties of the spouses used by the family since Mr. A’s death 230,000
Compute the gross estate of Mr. A
300+1,400+230 = 1,930
5. Mr. Filan, a bachelor, died leaving the following properties:
Proceeds of group insurance P 150,000

House and lot 1,000,000
Car, registered in his name 400,000
Original investment in a business partnership 200,000
Mr. Filan owns 50% interest in the profit of the business partnership with his boyfriend. The partnership
had undistributed profits of 100,000 at the time of Filan’s death.
1M+400+200+(100*50%) = 1,650
6. Mrs. Enriquez, a government employee, died in a car accident which resulted in a total
destruction of their family car. She left the following properties:
Receivables from the car insurance company P 800,000

Benefits (receivables) from GSIS 1,000,000
Family home, bought using Mr. Enriquez’s salaries 2,000,000
Jeepney, bought using Mrs. Enriquez’s salaries 700,000
Value of the car immediately before the accident 800,000
Clothes, shoes and apparels of Mr. Enriquez 40,000
Clothes, shoes and apparels of Mrs. Enriquez 60,000
Wedding gift, received by the spouses on April 1, 1990 120,000
Compute the gross estate of Mrs. Enriquez
2,000+700+800+120 = 3,680
7. Mr. X died on November 1, 2020. He left the following properties to his wife:
Land, as birthday gift to Mrs. X P 2,000,000

Car, bought from Mr. X’s compensation income 1,000,000
Properties for exclusive use of either spouse 120,000
Assume Mr. and Mrs. X were under the conjugal partnership of gains.
Compute Mr. X’s gross estate
1,000+4,000+120 = 5,120
8. On June 4, 2020, Mr. Navarro died after 28 years of happy marriage. Mr. and Mrs. Navarro
initially started respectively with P2,000,000 and 1,000,000 properties. Their fruitful marriage
accumulated additional 80,0000,000 properties for their twelve children.
Compute Mr. Navarro’s gross estate
82,000
9. Mrs. Vincent died. The properties of the spouses at the time of death were compiled as follows:
Properties of Mr. Vincent before marriage P 2,000,000

Properties of Mrs. Vincent before marriage 4,000,000
Properties acquired by Mr. and Mrs. Vincent during marriage from joint industry 2,000,000
Properties donated to Mr. Vincent during marriage 1,000,000
Income of donated properties 200,000
Mr. Vincent was previously married. His first wife died leaving no descendant.
Assuming the absolute community if property, compute the gross estate
8,000
10. Mr. Dino Saur died on May 22, 2020. He was survived by his wife and four children. An inventory
of the family properties as of the date of his death is as follows:
Lot 1, birthday gift to Mrs. X on June 7, 1987 P 4,000,000

Lot 2, with a small building 800,000
Business interests 12,000,000
Before his death, Mr. Saur transferred an inheritance he received during marriage to his first born son
for 1M. the property had the value of 2M at that time. Mr. Saur indicated that the transfer was
revocable. He, however, failed to revoke the same at the time of his death. The property had a value
of 4M at the time of his death.
Mr. and Mrs. Saur were married on February 14, 1988 without a pre-nuptial agreement.
Compute the gross estate of Mr. Saur.
23,800
11. Mrs. Henlin died leaving the following properties to her husband:
Commercial lot, purchased with Mrs. Henlin’s salaries P 4,000,000

Residential lot, donated to Mr. Henlin on January 12, 2007 600,000
Family home A, bought by Mr. Henlin from his salaries during marriage 3,000,000
Family home B, inherited by Mr. Henlin on July 4, 20002 2,000,000
Mr. and Mrs. Henlin got married on January 1, 2004 withouot pre-nuptial agreement.
Compute Mrs. Henlin’s gross estate
4M+3M+2M = 9,000
12. Mrs. Chipboy died. Mr. and Mrs. Chipboy had the following properties at the time of her death:
Properties accumulated in a prior marriage of Mr. Chipboy P 12,000,000

Income accumulated from properties on No. 1 1,500,000
Salaries savings during the present marriage 6,000,000
Properties, inherited by Mrs. Chipboy during the present marriage 2,000,000
Income of inheritance 1,000,000
Assuming the spouses agreed to a conjugal partnership of gains, compute the gross estate of Mrs.
Chipboy.
10,500
13. Mr. Malinao died. An inventory of the family properties in shown below:
Commercial building, inherited by Mr. Malinao during marriage P 12,000,000

Cash from rental income of commercial building 1,000,000
Family house, from salaries of Mr. and Mrs. Malinao 1,5000,000
Lot where the home stands, earned from business rentals 500,000
Investment in bonds, from Mrs. Malinao’s salaries 2,000,000
Interest income on investment in bonds 150,000
Mr. and Mrs. Malinao stipulated the absolute community of property as their property regime.
Compute the common property to b reflected in gross estate
1M+1,500+500+2M+150 = 5,150
14. Mr. Liwanag died leaving the following properties to his wife:
Common stocks, at acquisition costs P 1,000,000

Cash dividend income 50,000
House and lot* 4,000,000
Agricultural land 1,000,000
Other personal properties 800,000
Additional information:
1. The house and lot were given by the children as a gift to Mr. and Mrs. Liwanag during their
silver wedding anniversary
2. The common stocks were purchased by Mr. Liwanag from the proceeds of his inheritance he
acquired before the marriage
3. The agricultural land was donated by the grandfather of Mrs. Liwanag
4. The stocks had a fair value of 1,200,000 in the Philippine Stock Exchange at the date of death
of Mr. Liwanag
Mr. and Mrs. Liwanag were under the conjugal partnership of gains.
Compute the gross estate of Mr. Liwanag
1200+50+4M+80 = 6,050
15. Mrs. Yong died leaving the following properties to Mr. Yonh:
Jewelry of Mrs. Yong gifted by a friend during marriage P 200,000

Jewelry of Mr. Yong, inherited before marriage 400,000
Other exclusive properties for personal use of Mr. Yong 50,000
Other exclusive properties for personal use of Mrs. Yong 70,000
Other family properties 1,200,000
Compute the gross estate of Mrs. Yong under the absolute community of property.
200+400+70+2M+1200 = 3,870
16. Mr. Y died leaving the following properties to his family:
Commercial lot, purchased from Mr. Y’s GSIS benefit P 1,000,000

Agricultural land, designated by Mr. Y’s father to be transmitted to a daughter 800,000
Proceeds of insurance policy irrevocably designated to Mrs. Y 2,000,000
Car, registered in the name of his daughter 400,000
Assuming the absolute community of property, compute the gross estate
House and lot only 1,800
17. Mr. Shin, a married non-resident alien, died leaving the following properties:
P 800,000 car in the Ph, inherited by Mrs. Shin during marriage

4,000,000 stocks investment in the Ph, inherited by Mr. Shin
2,000,000 land and building in Japan, from salaries of both spouses
2,000,000 business interest in Hongkong, from fruits of stock investment in the Ph
Compute Mr. Shin’s gross estate
Stock investment in Ph only 4,000
18. What is Mr. Shin’s gross estate assuming that the reciprocity rule applies?
19. Mr. Andersen, an American residing in the Hawaii, died leaving the following properties:
Mr. Andersen’s separate property in America P 12,000,000

Mr. Andersen’s separate property in Hawaii 8,000,000
Mrs. Andersen’s separate property in the Philippines 2,000,000
Common property of Mr. and Mrs. Andersen in the Philippines 7,000,000
Common property of Mr. and Mrs. Andersen in America 24,000,000
7,000
In the immediately preceding, compute the gross estate of Mr. Andersen were resident alien
Except 2M = 51,000
Chapter 14 – Deductions from Gross Estate
True or False 1
True 1. Items of deduction must be supported by documents.
True 2. As a rule, deductions are allowed if they are taken from gross estate or are
chargeable to gross estate.
True 3. Double deduction is not allowed in estate taxation.
True 4. For married decedents, deductions are presumed common unless proven to be
exclusive.
False 5. Vanishing deduction is a special deduction.
False 6. The share of the surviving spouse is 1/2 of the husband's exclusive Property.
True 7. Ordinary deductions normally result in reduction in the hereditary estate,
True 8. Special deductions do not reduce the hereditary estate of the heirs.
True 9. Special deductions are allowed only to resident or citizen decedents.
False 10. Non-resident decedents cannot claim the full amount of ordinary deductions.
False 11. Obligations of the surviving spouse are deductions against gross estate.
True 12. The deduction for share of surviving spouse does not apply to unmarried
decedents.
False 13. The estate tax liability of the decedent is deductible in the computation of the net
taxable estate.
False 14. The vanishing deduction is applicable only if the previous estate paid estate tax.
True 15. The vanishing deduction is applicable only to properties inherited by the
decedent within five years before his death.
True or False 2
False 1. An unpaid funeral expense may be deducted through claim against the estate.
False 2. Non-resident decedents cannot claim standard deductions.
False 3. Non-resident alien decedents cannot claim deductions for the share of the surviving
spouse.
False 4. Only taxes and obligations accruing after death are deductible from gross estate.
True 5. The loss of separate properties of the decedent is not deductible against common
properties of the spouses.
True 6. The loss of separate properties of the surviving spouse is not deductible 6. against
gross estate.
True 7. The standard deduction is claimable by a resident or citizen decedent without the
need to prove entitlement to the deduction.
False 8. A family home is a claimable deduction up to P500,000.
False 9. Standard deduction up to P 10,000,000 can be claimed as special deduction.
True 10. Non-resident for properties alien decedents located cannot abroad.claim
deduction for transfer for public purpose for properties located abroad.
False 11. Losses of property before the death of the decedent are deductible.
True 12. Non-resident aliens cannot deduct special deductions except standard
deductions.
False 13. Non-resident alien decedents can claim only a proportion of losses, indebtedness,
taxes, and transfers for public purpose.
True 14. Resident alien decedents can claim deduction for family home.
False 15. Vanishing deductions is applicable only on properties situated in the Philippines.

1. Which is correct regarding deductible obligations of the estate?
a. It must always be notarized.
b. It must be incurred before filing of the estate tax return.
c. It must be paid before the filing of the estate tax return.
d. It must be incurred before the death of the decedent.
2. Which of the following losses is not deductible?

a. Losses of properties compensated for by insurance
b. Losses arising from fires
c. Losses arising from theft or embezzlement
d. Losses arising from storms or shipwreck
3. Which of these do not diminish the hereditary estate of the decedent?

a. Judicial expense
b. Transfer for public use
c. Medical expense paid before death
d. Funeral expense
4. Which of the following decedents cannot claim special deductions for family home?
a. Resident citizen
b. Non-resident alien
c. Resident alien
d. Non-resident citizen
5.Which is not considered in computing the share of surviving spouse?

a. Claim against the estate
b. Transfer for public use
c. Standard deduction
d. Vanishing deduction
6. In computing the actual share in common properties, funeral expenses deductible against
a. Separate property of the surviving spouse b
b. Separate property of the decedent
c. Common property of the spouses
d. Share of the surviving spouse
7. Which of the following is an incentive deduction?

a. Family home
b. Standard deduction
c. Vanishing deduction
d. All of these
8. In computing taxable net estate, claims against the estate are deductible against
A. exclusive property of the decedent
B. common property of the spouses
Which best completes the statement?
a. A only
b. B only
c. Either A or B
d. Neither A nor B
9. Which is not an ordinary deduction?

a. Family home
b. Vanishing deduction
c. Share of surviving spouse
d. Casualty losses of estate properties
10. Which ordinary deduction is least likely deducted against common properties?
a. Losses of conjugal property
b. Claim against the estate
c. Communal properties previously taxed
d. Transfer for public use

1. Losses of separate properties of the surviving spouse are deductible against
a. Separate property of the decedent
b. Common property of the spouses
c. Both A and B
d. Neither A nor B
2. Which of the following losses is claimable as deduction against gross estate?

a. Losses claimed in the income tax return of the estate
b. Losses occurring before the death of the decedent
c. Losses occurring after six months of the decedent's death
d. Losses of separate properties of the decedent
3. Which is deductible by a non-resident alien decedent?

a. Transfer for public use
b. Family homed.
c. Medical expenses
d. Funeral expenses
4. The maximum allowable amount of standard deduction is

a. P 200,000
b. P 500,000
c. P 5,000,000
d. P 10,000,000
5. Losses may be deducted if

a. paid
b. unpaid
c. incurred within 6 months before death
d. incurred within one year before death
(No answer. This is void)
6. What is the maximum amount of deductible casualty losses?

a. None
b. P 500,000
c. P 1,000,000
d. 10% of gross estate
7. The allowable deductible amount of family home is

a. 5% of gross estate
b. P 2,500,000
c. P 5,000,000
d. P 10,000,000
8. If the family home is a conjugal or community property, what is the maximum allowable
deduction?
a. 5% of gross estate
b. P 2,500,000
c. P 5,000,000
d. P 10,000,000
9. The allowable amount of standard deduction is

a. 5% of gross state. P 200,000
c. P 500,000
d. P 5,000,000
10. Which statement is incorrect?

a. Claims against insolvent persons are presented in gross estate and deductions against
gross estate.
b. Claims against insolvent persons are presented separately from losses.
c. Non-resident alien decedents can claim deductions for losses, indebtedness, and
taxes.
d. Properties subject to mortgage are presented in gross estate at an amount net of
the mortgage.
11. Which obligation is deductible against gross estate?

a. Bank loans acquired for the medication of the decedent
b. Income tax of the decedent before death
c. Sole obligation of the surviving spouse
d. Real property tax of the separate property of the surviving spouse
12. Which of these taxes is deductible against gross estate?

a. Income tax paid before death
b. Income tax of the estate
c. Real property tax accruing after death
d. Real property tax accruing before death
13. Non-resident alien decedents can claim prorated amounts for the following deductions,
except
a. Taxes
b. Losses
c. Indebtedness
d. Vanishing deductions
14. Which is not a requisite of vanishing deductions?

a. If the property is acquired by inheritance, the prior estate must have paid the estate
tax.
b. If the property is acquired by inheritance, the prior estate must have not claimed
vanishing deduction.
c. The decedent must have acquired the property by way of inheritance or donation.
d. The decedent must have acquired the property by purchase.
15. Vanishing deduction is allowed if the property subject to vanishing deduction is acquired
a. one year before death.
b. more than one year before death.
c. within five year before death.
d. more than five year before death
16. A decedent died in a wild fire which totally gutted his home. Which is correct?
a. If the property is insured, the insurance reimbursement is included in gross
estate and the loss is reported as a deduction.
b. If the property is not insured, the insurance reimbursement is included in gross estate
and a deduction for loss is claimed.
c. No deduction is allowed with or without insurance reimbursement.
d. With or without reimbursement, a loss is claimable.

1. The heirs of the decedent compiled the following accrued taxes:
Before death After death
Real property tax P 40,000 P-
Income tax 80,000 110,000
Estimated estate tax - 400,000
Compute the deductible taxes.

a. P 120,000
b. P 230,000
c. P 510,000
d. P 630,000
2. The executor of the decedent identified the following losses of properties:

Reported losses
Losses incurred within 6 months since death P 60,000
Losses incurred beyond 6 months since death 30,000
Unreported losses
Losses incurred within 3 months since death P 10,000
Losses incurred beyond 6 months since death 20,000
What is the deductible amount of losses?

a. P 60,000
b. P 70,000
c. P 90,000
d. P 120,000
3. The following losses of properties occurred during the settlement of the estate of Mrs.
Undoy:
Losses of separate properties of Mr. Undoy P 60,000
Losses of common properties 40,000
Losses of separate properties of Mrs. Undoy 80,000
Compute the deductible losses from gross estate.

a. P 60,000
b. P 80,000
c. P 100,000
d. P 120,000
In the preceding problem, what is the proper depiction of the deductible loss in the estate
tax return?
Exclusive Common
a. P 60,000 P 40,000
b. P 100,000 P 0
c. P 80,000 P 40,000
d. P 120,000 P 0
5. The following properties were lost soon after the death of Mr. Fredo:
Inventory stolen the decedent's business office P 300,000

Jewelry, inherited a years ago by Mrs. Fredo 500,000
Upon discovery, the event was immediately reported to the BIR. The estate executor claims
the inventory theft in the income tax return.
What is the deductible amount of loss against gross income of the Mr. Fredo?
a. P 0
b. P 300,000
c. P 500,000
d. P 800,000
6. In the immediately preceding problem, what is the proper presentation of the loss in the
estate tax return?
Exclusive Common
a. P 300,000 P 0
b. P 0 P 300,000
c. P 500,000 P 300,000
d. P 500,000 P 0
7. Mr. Gamol donated the following properties in his last will and testament:
Cash - to Takusa, a social welfare institution P 500,000

Land - to Benguet State University at purchase cost 1,000,000
Additional information:
1. The donation mortis causa to Takusa was restricted for program expenses. None of it
would be used for administrative purposes.
2. The lot devised to Benguet State University had a fair value of P 1,600,000 at the
decedent's death.
Compute the deductible amount of deductible transfer for public purpose.

a. P 0
b. P 500,000
c. P 1,500,000
d. P 1,600,000
8. The following relate to the estate of a decedent:
Gross estate, (PIM is exclusive) P 3,000,000

Expenses and obligations:
- Funeral expense 200,000
- Judicial expense 300,000
- Indebtedness and taxes 150,000
- Losses 250,000
Compute the deduction for the share of the surviving spouse.

a. P 550,000
b. P 575,000
c. P 800,000
d. P 1,050,000

1. A decedent died leaving an estate with the following properties and deductions:
Gross estate, (P2M is exclusive) P 4,000,000

Expenses and obligations:
- Funeral expense 200,000
- Judicial expense 100,000
- Indebtedness and taxes 250,000
- Losses 150,000
What is the share of the surviving spouse?

a. P 2,000,000
b. P 1,650,000
c. P 850,000
d. P 650,000
2. The following data pertains to the estate of a decedent:

Separate Common
Gross estate P 2,000,000 P 3,000,000
Deductions:
Funeral expenses P 180,000
Judicial expenses 110,000
Indebtedness and taxes 200,000 300,000
Losses 50,000 150,000
Transfer for public use 100,000
Compute the deduction for the share of the surviving spouse.

a. P 455,000
b. P 825,000
c. P 1,275,000
d. P 1,130,000
3. Mr. Maestro died leaving a family home valued at which he inherited during the marriage
when it was worth P 8,000,000. What is the deduction for family home?
a. P 0
b. P 8,000,000
c. P 9,000,000
d. P 10,000,000
4. The spouses own a residential lot as their only real property. The lot had an assessed value
of P 15,000,000, zonal value of P 18,000,000 and an independent appraisal value of P
25,000,000.
What is the deductible family home?

a. P 0
b. P 7,500,000
c. P 9,000,000
d. P 10,000,000
5. During their marriage, Mr. and Mrs. Gallante constructed a house using their salaries
totaling PI 2,000,000. The lot was inherited by Mrs. Gallante when it was Mr. Gallante died
when the house and the lot had fair values respectively of P 15,000,000 and P 12,000,000.
What is the deduction for family home?
a. P 0
b. P 6,000,000
c. P 7,500,000
d. P 10,000,000
6. A decedent died leaving a family home to his children:

Lot - separate property of the decedent P 3,000,000
House - common property 12,000,000
Compute the amount of deductible family home.
a. P 3,000,000
b. P 7,500,000
c. P 9,000,000
d. P 10,000,000
7. The estate of the married decedent received P 80,000 benefit under RA 4917. The heirs
want to claim the benefit as part of special deduction. What is the deductible amount of
benefits under RA 4917?
a. P 0
b. P 40,000
c. P 80,000
d. None of these
8. In the immediately preceding problem, if the benefits under RA 4917 is claimed as part of
ordinary deduction, which of the following is the proper presentation of the deduction in the
estate tax return?
Exclusive Common
a. P 80,000 P 0
b. P 0 P 80,000
c. P 40,000 P 0
d. P 0 P 40,000
9. A non-resident alien decedent died leaving a substantial estate in the Philippines. He is

married with six dependents. How much standard deduction he can claim?
a. P 0
b. P 200,000
c. P 500,000
d. P 1,000,000
10. A non-resident alien decedent had the following possible deductions:
Funeral and judicial expenses P 400,000

Obligations, 40% are payables in the Philippines 500,000
Losses of properties (60% occurred in the Philippines) 1,000,000
Transfer of Philippine property for public use 400,000
The decedent had a P4M ancestral house in the Philippine 400,000and P6M total foreign
properties.
Compute the total deductions allowable for Philippine estate tax.

a. P 1,000,000
b. P 1,080,000
c. P 1,500,000
d. P 5,500,000
SOLUTION:
(1M + .5M) x 4/10 + 500K Standard deduction
11. A Japanese citizen residing in Japan had the following properties and deductions:
Properties in the Philippines P 3,000,000

Properties in Japan 6,000,000
Properties in Hong Kong 1,000,000
Total world estate P 10,000,000
Losses and indebtedness P 500,000

Medical expense 450,000
Transfer for public use of properties located in Japan 500,000
Compute the total deductions allowable.

a. P 1,400,000
b. P 1,535,000
c. P 2,035,000
d. P 2,350,000
SOLUTION:
(3M x 3/10) + 500K
12. A Chinese citizen residing in Quezon City, Philippines, died leaving several properties in
the Philippines. How much standard deduction can his estate claim?
a. P 0
b. P 500,000
c. P 5,000,000
d. P 10,000,000
(Note: He is resident.)
13. On November 1, 2018, Gwen died leaving the following properties:
Agricultural land inherited February 2, 2016 P 1,200,000

Cash 2,800,000
Car 500,000
Other personal properties 1,000,000
Total properties P 7,500,000
Mortgage on the agricultural land P 500,000

Other indebtedness 1,200,000
Deductible losses 400,000
Total ordinary deductions P 2,100,000
Gwen paid P300,000 in mortgage before her death. The prior estate paid the estate tax on
the agricultural land which was then valued at P 1,000,000.
Compute the vanishing deduction.

a. P 403,200
b. P 388,800
c. P 330,400
d. P 302,400
SOLUTION:
Initial value P 1,000,000
Less: Mortgage paid 300,000
Initial basis P 700,000
Less: Prorated deductions
[700K/7.5M x (2.1M)] 196,000
Final basis P 504,000
Multiply by: Vanishing % 60%
Vanishing deductions P 302,000
14. Mr. Y, single, died leaving properties he inherited 2 1/2 years ago with a current fair
market value of P 800,000. The property was inherited when it was worth P 1,000,0000 and
had a P850,000 unpaid mortgage. Mr. Y paid P550,000 until his death. Other properties of
Mr. Y had a fair market value of at the time of his death.
The losses, taxes, and transfer for public purpose and P 140,000.
How much was the vanishing deductions?

a. P 139,500
b. P 180,600
c. P 117,000
d. P107,611
SOLUTION:
Initial value P 800,000
Less: Mortgage paid 550,000
Initial basis P 250,000
Less: Prorated deductions
[250K/2M x (300K + 140K)] 55,000
Final basis P 195,000
Multiply by: Vanishing % 60%
Vanishing deductions P 117,00

Chapter 12 14 Summary of Self Assessment Test PDF

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CHAPTER 12 – Introduction to Transfer Taxation

Multiple Choice Theory -1

Multiple Choice Theory -2

1. Transfer tax on donation mortis causa applies to – natural person

Compute the amount of the donation mortis causa.

6. A donor transferred the following properties on a certain day:

Multiple-Choice — Problems: Part 2

1. Mr. Chucho decedent died leaving the following properties:

What is the amount subject to income tax?

Multiple-Choice - Problems: Part 3

2. The following relates to a transfer made by a seller:

6. A donor transferred properties to save on subject to income donation is subject to

7. Mr. B made a revocable donation of a property valued at P1,000,000.

9. Which of these is not considered within the Philippines?

TRUE 1. Succession is a mode of acquisition of property similar to donation.

FALSE 4. A decedent with a last will and testament is said to be intestate.

FALSE 6. A person who prepared a will is referred to as the executor.

TRUE 7. A person who died with a will is said to be testate.

TRUE 8. The succession by operation of law is called intestate succession.

FALSE 9. The will may be prepared by the heirs of the decedent.

FALSE 1. A debt can be inherited by heirs.

FALSE 2. Only testamentary dispositions are subject to estate tax.

TRUE 4. The decedent successors in interest are referred to as the heirs.

Multiple Choice - Theory 1

1. IT is a mode of gratuitous acquisition of property out of the generosity of a person

c. Loan d. None of these

2. It is a mode of gratuitous acquisition of property by the death of a decedent

a. Donation c. Inheritance b. Succession d. Testate

3. The donor in a donation mortis causa is

a. dead. c. either living or dead. b. living. d. in a coma.

4. Which is not a form of succession?

a. Testamentary c. Intestate b. Compulsory d. Mixed

5. It is succession in the absence of a will.

a. Testamentary c. Mixed b. Intestate d. None of these

6. It is succession by will and operation of law.

a. Testamentary c. Mixed b. Intestate d. None of these

8. Which is not an element of succession?

a. Decedent c. Estate b. Estate tax d. Heirs

a. Estate b. Estate tax

of the decedent not extinguished by

10. They are the successors in interest of the decedent.

a. Heirs c. Devisees b. Estate d. Legatees

ii. It is a donee of a real property in a last will and testament.

a. Heir c. Legatee b. Devisee d. Successor

12. IT is a donee of personal property in a last will and testament.

a. Heir c. Legatee b. Devisee d. Successor

13. Who is not a compulsory heir?

a. An adopted child b. Children of a deceased child c. The surviving spouse d. A brother

14. Who will inherit among the following?

a. A legitimate child c. Grandchildren b. Parents d. First cousin

15. Which of the following heirs will not inherit?

a. Illegitimate child c. Nephew b. Surviving spouse d. Legitimate child

Multiple Choice - Theory 2

1. Which will not inherit from the following group?

A.Grandchild from a deceased son of the decedent

A daughter of the decedent

Grandson from a living daughter of the decedent

An illegitimate child of the decedent

2. Who may not inherit under an intestate succession?

a. Grandparents c. First cousin b. Grandchildren d. Best friends

3. Who will be disinherited from the following?

a. Widow c. Illegitimate children d. Parents