UNIVERSITY OF SANTO TOMAS

IAC 17 - Integrated Review Course in Taxation

TAX – Estate Tax

MULTIPLE CHOICE EXERCISES

1. Estate tax is 8. Part of the estate left by A are preference shares of

a. A property tax because it is imposed on the MERALCO. The shares are listed and traded in the
property transmitted by the decedent to his heirs. Philippine Stock Exchange. Which of the following rules
b. An indirect tax because the burden of paying the of valuation is correct?
tax is shifted on the executor or any of the heirs of a. The preference shares will be valued using the
the decedent arithmetic mean between the highest and lowest
c. An excise tax because the object of which is the quotation at the date nearest the date of death, if
shifting of economic benefits and enjoyment of
none is available on the date of death itself.
property from the dead to the living
b. The preference shares will be valued based on
d. A poll tax because it is also imposed on residents
of the Philippines whether Filipino citizens or not their book value.
c. The preference shares will be valued based on
2. Estate tax accrues from: their par value.
a. The moment of death of the decedent d. The preference shares will be valued based on
b. The moment the notice of death is filed their fair market value as determined by the
c. The moment the estate tax return is filed
Commissioner of Internal Revenue
d. The moment the properties are delivered to the
heirs
9. Binat died on April 13, 2018, leaving the following
3. The taxpayer in estate tax is: properties:
a. The decedent Common stocks of Sunchamp Corporation (2,000
b. The estate as a juridical entity shares) - listed in the Philippine Stock Exchange
c. The heirs or succession (highest - P40; lowest - P39).
d. The administrator or executor Common stocks of AgriNurture Corporation (1,500
shares) - not listed in the stock exchange. Cost - P 50
4. Who has the personal liability to pay estate tax? per share; book value - P45 per share.
a. The decedent
b. The estate as a juridical entity Preferred stocks of Greenergy Inc. (3,000 shares) –
c. The heirs or successors not listed in the stock exchange. Cost - P70 per share;
d. The administrator or executor book value - P60 per share; par value – P50 per share
Car (cost - P600,000; book value - P350,000; market
5. One of the following is subject to estate tax on value - P400,000)
properties situated within the Philippines only
a. resident citizen c. nonresident citizen Real properties (zonal value - P120,000; assessed
b. resident alien d. nonresident alien value - P72,000)
The gross estate of Binat is –
6. The personal properties of a non-resident, not citizen a. P817,500 c. P824,000
of the Philippines, would not be included in the gross b. P816,500 d. P846,500
estate if:
a. The intangible personal property is in the 10. Lina Lamay, Filipina, died in Syria leaving the following
Philippines properties:
b. The intangible personal property is in the House and Lot in Syria 1,000,000
Philippines and the reciprocity clause of the estate Vacant Lot in Manila 2,000,000
tax law applies Shares of stock in a domestic corp., 60% 100,000
c. The tangible personal property is in the Philippines of the business is located in the
d. The personal property is shares of stock of a Philippines
domestic corporation 80% of whose business is in
Shares of stock in a foreign corp., 70% 200,000
the Philippines.
of the business is located in the
Philippines
7. All of the following are considered intangible in the
Car in Manila 500,000
Philippines, except:
a. Franchise which must be exercised in the How much is the gross estate?
Philippines
a. P3,800,000 c. P2,500,000
b. Shares, obligations or bonds issued by any b. P2,600,000 d. P2,000,000
corporation or sociedad anonima organized or
constituted in the Philippines in accordance with its 11. Based on the preceding number, but assuming the
laws decedent is a non-resident alien, the gross estate is:
c. Shares, obligations or bonds by any foreign a. P3,800,000 c. P2,500,000
corporation 75% of the business of which is b. P2,600,000 d. P2,000,000
located in the Philippines
d. Shares, obligations of bonds issued by any foreign 12. Based on the preceding number and assume the rule
corporation if such shares, obligations or bonds on reciprocity applies, the gross estate is:
have acquired a business situs in the Philippines;
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 a. P3,800,000 c. P2,500,000
b. P2,600,000 d. P2,000,000
13. Lolo Sot, 95 years old, was diagnosed of various
ailments on January 1, 2018. Motivated by thought of
death, he decided to dispose all his properties to his
children and relatives. He executed a last will and
testament disposing all his properties in the Philippines
to his children. On the same day, he made donations
inter-vivos to his other relatives as to his properties in
the United States. Lolo Sot died a month after
disposing all his properties. Should the properties
donated by Lolo Sot to his other relatives be included
in his gross estate upon his death?
a. No, because they were not his properties anymore
at the time of death.
b. Yes, because the donations were donations mortis
causa and should be governed by the rules on
estate taxation.
c. No, if the donor’s tax had been paid already on
the donations.
d. No, because they were not transfers in
contemplation of death, since the donations were
not simultaneous with the execution of the last
will and testament.
14. The following are subject to estate tax, except
a. While still alive, the decedent donated property
where the donation will take effect at the time
of his death.
b. The decedent transferred a property in the
regular course of the business operation.
c. The decedent donated a property with the
condition that he/she will enjoy the fruits of
such while he/she is still alive.
d. The decedent transferred a property to take
effect after his/her death
15. One of the following donations is not included as part
of gross estate
a. Revocable transfers
b. Transfers with reservation of certain rights
c. Transfers under special power of appointment
d. Transfers in contemplation of death
16. Statement 1: Aguinaldo devised in his will a piece of
land; naked title to Bonifacio and usufruct to Rizal for
as long as Rizal lives, thereafter to Bonifacio. The
transmission from Aguinaldo to Bonifacio and Rizal is
subject to estate tax but the merger of the usufruct
and the naked title to Bonifacio upon the death of Rizal
is exempt.
Statement 2: Erap devised in his will real property to
his brother Alfredo who is entrusted with the obligation
to preserve and transmit the property to Isko, son of
Alfredo, when Isko becomes of age. The transmission
from Alfredo to his son Isko is subject to tax.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
17. Pedro, decedent, owns a property valued at
P1,500,000 at the time of his death. The said property
was sold by Pedro during his lifetime to Juan for
P700,000 when its value was P1,200,000. It was
agreed by Pedro and Juan that the former will enjoy
the income of the property as long as he lives. For
Philippine estate tax purposes, how much will be
included in determining gross estate?
a. P500,000 c. P800,000
b. P1,200,000 d. P0
18. Based on the preceding number, if the fair market
value of the property at the time of death is only
P600,000, how much will form part of gross estate?
a. P500,000 c. P800,000
b. P1,200,000 d. P0
19. Vlad died on October 20, 2018. During his lifetime,
upon knowing that he had Stage 4 cancer, sold his
Lamborghini car to his son for P4,000,000. The fair
market value of the car at the time of sale is
P3,000,000 while it is already valued at P5,000,000 at
the time of death. The amount that will be added to
gross estate is:
a. P1,000,000 c. P2,000,000
b. P5,000,000 d. nil
20. Based on the preceding number, if the consideration is
fictitious, how much will form part of gross estate?
a. P1,000,000 c. P2,000,000
b. P5,000,000 d. nil
21. Who among the following transferors is not liable for
estate tax on the property transferred during his
lifetime?
a. The testator who bequeaths property to his heirs in
a last will and testament executed and probated
during his lifetime.
b. The donor who reserves his right to amend or
revoke the donation of property in favor of the
donee.
c. The donee of an appointed property who is
required under a power of appointment to transfer
such property upon death to his eldest child.
d. The transferor of personal property who sold it for
insufficient consideration.
22. Which of the following life insurance proceeds shall not
be included in the computation of gross estate?
a. Beneficiary is the estate, executor or administrator
and the designation of the beneficiary is revocable;
b. Beneficiary is the estate, executor or administrator
and the designation of the beneficiary is
irrevocable;
c. Beneficiary is other than the estate, executor or
administrator and the designation of the
beneficiary is revocable;
d. Beneficiary is other than the estate, executor or
administrator and the designation of the
beneficiary is irrevocable.
23. The list provided below is not included in the gross
estate of a decedent, except:
a. Share in common properties of the surviving
spouse;
b. Exclusive property of the surviving spouse;
c. Properties outside the Philippines of a non-resident
alien decedent;
d. Intangible personal property in the Philippines of a
non-resident alien when the rule of Reciprocity
applies.
24. The following are transactions and acquisitions exempt
from transfer tax, except
a. Transmission from the first heir or donee in favor
of another beneficiary in accordance with the
desire of the predecessor
b. Transmission or delivery of the inheritance or
legacy by the fiduciary heir or legatee to the
fideicommissary
c. The merger of usufruct in the owner of the naked
title
d. All bequests, devises, legacies or transfers to social
welfare, cultural and charitable institutions
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25. Statement 1: In the absence of marriage settlements the house was constructed on
executed before the marriage, the property March 1, 2018, during marriage,
relationship between husband and wife shall be at a cost of P10,000,000 from
governed by local custom and by the provisions of law, partnership funds. The lot had a
respectively. fair market value of P4,000,000
Statement 2: Claims against insolvent persons may be after construction of the house.
charged against exclusive property Other properties acquired during 6,000,000
a. Only statement 1 is correct marriage
b. Only statement 2 is correct Jewelry inherited on Feb. 14, 2017, 2,500,000
c. Both statements are correct during marriage, then with a fair
d. Both statements are incorrect market value of P1,300,000
Property in U.S., received as gift 2,300,000
26. One of the following is a conjugal property of the during marriage from a friend on Jan.
spouses 12, 2017 (the applicable donor’s tax
a. That which is brought to the marriage as his or her was not paid by the donor)
own. Rental income on the above property 1,200,000
b. That which each acquires during the marriage by up to time of death
inheritance. Expenses/Claims:
c. The fruits of an exclusive property. Funeral expenses 420,000
d. That which is purchased with the exclusive Judicial expenses 800,000
property of the wife. Casualty losses incurred on Dec. 10, 600,000
2018
27. One of the following is not a community property of Claims against the estate 1,600,000
the spouses Medical expenses within 1 year prior 4,000,000
a. Property inherited by the husband before marriage to death, only half was receipted
b. Winnings in gambling
c. Fruits of property inherited during the marriage 31. How much is the net taxable estate under Conjugal
d. Fruits of property inherited before the marriage Partnership of Gains?
a. P3,926,000 c. P3,426,000
28. If the decedent is married under the conjugal b. P6,426,000 d. P1,348,000
partnership of gains, vanishing deduction shall be
chargeable against? 32. How much is the net taxable estate under Absolute
a. Exclusive Properties Community of Property?
b. Conjugal Properties a. P4,836,000 c. P1,174,000
c. Either Exclusive Properties or Conjugal Properties b. (P2,174,000) d. P2,174,000
d. Neither Exclusive nor Conjugal Properties
33. The following data were taken from the estate of Oslo:
Use the following data for the next two questions: § Claims against Juan (insolvent), P100,000, fully
Pedro, married to Susan, died leaving the following: uncollectible.
Car acquired before marriage by Pedro P300,000 § Claims against Manuel (insolvent), P200,000, 50%
collectible.
Car acquired before marriage by Susan 450,000
§ Claims against a person who absconded,
House and lot acquired during marriage 1,500,000
P300,000.
Jewelries of Susan 100,000 §
Personal properties inherited by Pedro 250,000 Based on the data provided, how much should be
during marriage deducted from Pedro’s gross estate?
Land inherited by Susan during 1,000,000 a. P600,000 c. P200,000
marriage b. P500,000 d. nil
Rental income on land inherited by 200,000
34. Which statement is incorrect about claims against
Susan (25% of which was earned after insolvent persons?
Pedro’s death) a. They must be included in the gross estate even if
Benefits from SSS 350,000 uncollectible.
Retirement benefits 480,000 b. They must be duly notarized as a rule.
Proceeds of group insurance taken by 175,000 c. The deduction is only the uncollectible portion.
Juan’s employer d. The insolvency of the debtor must be established.

35. Mr. Pobre is in need of money to start a small

29. How much is the correct gross estate if the property
business. However, he has no property to secure a
relationship is conjugal partnership of gains?
loan from a bank so he sought the help of his good
a. P1,950,000 c. P2,600,000 friend Mr. Rich. Mr. Rich then obtained a loan from
b. P2,200,000 d. P3,600,000 Banco de Uro amounting to 1million pesos secured by
a real property worth 2million pesos to accommodate
30. How much is the correct gross estate if the property the request of Mr. Pobre. If subsequent to securing the
relationship is absolute community of property? loan and delivering to Mr. Pobre the proceeds, Mr. Rich
a. P1,950,000 c. P2,600,000 died, how much gross estate should be reported?
b. P2,200,000 d. P3,600,000 a. P1,000,000 c. P3,000,000
b. P2,000,000 d. nil
Use the following data for the next two (2) questions:
The estate of Pedro, resident citizen decedent, married, 36. Which of the following is not deductible from the gross
who died on April 1, 2018 are as follows: estate of a decedent?
House and lot (Family Home) P14,000,000 I. Income taxes on income received after death
The lot was acquired at a cost of II. Property taxes not accrued before death
P3,000,000 before marriage while III. Estate Tax