TAX PA 1

1. Statement 1: Estate tax is a tax on the right to transfer property at death and on certain
transfers which are made by law the equivalent of testamentary disposition and is measured by
the value of the property.

Statement 2: The rights to the succession are transmitted from the moment the heirs receive
their share in inheritance.

A. Only the first statement is correct

B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above

2. Statement 1: Testate succession arises when there is transmission of properties in the absence
of a will, or it there is a will, the same is void or lost its validity, or nobody succeeds in the will

Statement 2: A codicil is a supplement or addition to a will, made before the execution of a will
and annexed to be taken as a part thereof, by which any disposition made in the original will is
explained, added to or altered.

A. A Only the first statement is correct

B. B Only the second statement is correct
C. C Both statements are correct
D. D Both statements are incorrect
E. E None of the above

3. Statement 1: Bank deposits in a US bank- Philippine Branch owned by nonresident alien

decedent have situs within the Philippines are always included in the gross estate.
Statement 2: Listed shares of stock shall be valued at book value per share of the issuing
corporation.
A. Only the first statement is correct
B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above

4. Statement 1: The transmission or delivery of the inheritance or legacy by the fiduciary heir or
legatee to the fiduciary is included in the gross estate of the fiduciary heir upon his death and
subsequent claimed as a deduction the transfer of property being an exclusion as provided
under Section 87 of the Tax Code.
Statement 2: In the last will and testament of Mr. Namatay, he assigned the usufruct of his
parcel of land to his son (Juan) while his grandson (Pedro) was named the owner of the naked
title. Upon the death of Juan, the property should be excluded from his gross estate.

A. Only the first statement is correct

 B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above

5. Statement 1: When an estate, under administration, has income-producing property and its
income during the year is distributed to the heirs, the income so distributed is taxable to the
heirs as part of their gross income for the year.
Statement 2: The Tax Code as amend under RA 10963 (TRAIN Law) provides that the filing of
estate tax return should be done within one (1) year from the decedent's death.
A. Only the first statement is correct
B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above

6. Statement 1: Regardless of the classification of the decedent, the maximum amount of

deductible standard deduction from the gross estate after the effectivity of TRAIN Law is PhP
5,000,000.
Statement 2: In computing for vanishing deduction, the value to be talen is the lesser amount of
the value of the property at the date of the previous transfer or the value of the property at the
date of death of the decedent.
A. Only the first statement is correct
B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above

7. Statement 1: An obligation that had prescribed already during the lifetime of the decedent, or
that was unenforceable against him when still alive, will not be claim against his estate when he
shall be dead.
Statement 2: If the loan was contracted within three (3) years before the death of the decedent,
the administrator or executor must submit a statement showing the disposition of the proceeds
of the loan.
A. Only the first statement is correct
B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above

8. Statement 1: Loss of portion of the estate incurred a month before the death of the decedent is
deductible.
Statement 2: Losses on the portion of exclusive capital of surviving spouse incurred during
settlement of the estate is deductible.
 A. Only the first statement is correct
B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above

9. Statement 1: Obligations contracted by a person during his lifetime are terminated upon his
death.
Statement 2: Brokerage fees for selling property of the estate are part of the deductible
expenses.
A. Only the first statement is correct
B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above

10. Statement 1: Deductions from gross estate are highly disfavored in law; he who claims
deductions must be able to justify his claim or right.
Statement 2: Receipts or invoices or other evidence to show that the expenses was really
incurred, if applicable, must duly support deductions against the gross estate.
A. Only the first statement is correct
B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above

For Nos. 11 and 12

Among the properties included in the gross estate of the decedent at the time of death is a
three-story commercial building with a fair market value of PhP 12,000,000. During the
settlement of the estate and before the last day of paying the estate tax, the said property is
destroyed by fire. The fair market value at the time of the incident was PhP 13,000,000.

11. Statement 1: The amount that should be included as part of the gross estate is zero (PhP 0).
Statement 2: The amount of deductible loss from the gross estate will be zero (PhP 0)
considering that the property is no longer included in the gross estate due to the loss by fire.
A. Only the first statement is correct
B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above
12. Statement 1: Assume that the property was insured for PHP 9,000,000 and the amount
recovered from the insurance company was PhP 8,000,000. The amount of deductible loss is
PhP 4,000,000.
Statement 2: Assume that 70%of the property is destroyed by fire and the property is not
insured. The deductible loss will be PhP 8,400,000.
A. Only the first statement is correct
B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above

13. Statement 1: Vanishing deduction is being allowed to lessen the impact of successive taxation of
the same property within a very short period due to the death of the decedent-transferor.
Statement 2: Even property previously taxed situated outside the Philippines of a non-resident
alien decedent, for estate tax purposes, can be allowed vanishing deduction.
A. Only the first statement is correct
B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above

14. Statement 1: Exclusion from the gross estate of the fiduciary heir of the property delivered from
fiduciary heir to fideicommissary in a fideicommissary substitution is a remedy against double
taxation.
Statement 2: Deduction of properties transferred for public use from the gross estate of the
decedent is a remedy against double taxation.
A. Only the first statement is correct
B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above

15. Statement 1: The share of the surviving spouse in the estate shall be deducted equal to 1/2 of
the gross conjugal property.
Statement 2: Under absolute community of property regime, property acquired during the
marriage by gratuitous title by a spouse, and the fruits as well as the income thereof are the
property of such spouse.
A. Only the first statement is correct
B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above
16. Statement 1: Under the regime of absolute community of property, property acquired during
the marriage is presumed to belong to the community, unless it is proved that it is one of those
excluded therefrom.
Statement 2: Under the system of conjugal partnership of gains upon dissolution of the marriage
or of the partnership, the net gains or benefits obtained by either or both spouses shall be
divided equally between them.
A. Only the first statement is correct
B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above

17. Statement 1: In computing for the limit of foreign estate tax allowed as credit which involves
one (1) foreign country, the Philippine estate tax due is multiplied by the proportion of the gross
estate in such foreign country with the global gross estate of the decedent.
Statement 2: In computing for the net distributable estate, the funeral expenses are allowed as
deduction.
A. Only the first statement is correct
B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above

18. Statement 1: Donor's tax shall apply, whether the gift is direct or indirect, and whether the
property is real or personal, tangible or intangible, even if the transfer is merely in trust.
Statement 2: Donation inter vivos is subject to estate tax while donation mortis causa is subject
to donor's tax.
A. Only the first statement is correct
B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above

19. Statement 1: Donation of a personal property worth PhP 5,000 must be in writing.
Statement 2: Donation of real property worth PhP 3,000 need not be in writing.
A. Only the first statement is correct
B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above
20. Statement 1: Donation of real property must be made in a public document for purposes of
affecting third persons.
Statement 2: Beginning January 1, 2018, when the donee or beneficiary is a stranger, the tax
payable by the donor shall be 30% of net gift.
A. Only the first statement is correct
B. Only the second statement is correct
C. Both statements are correct
D. Both statements are incorrect
E. None of the above

21. The reciprocity clause in the donor's tax law applies to:
A. Juan Dela Cruz, a Filipino citizen residing in USA
B. Chrispa, a Korean citizen residing in the Philippines
C. Mrs. Pedro, a Filipino citizen residing in Malaysia
D. Mr. Joe, a US citizen residing in Singapore
E. None of the above

22. On June 1, 2018, Pedro a resident citizen, donated a parcel of land to a relative in Makati and a
real property located in Canada to a fried. In taking a credit for the foreign donor's tax paid, the
credit shall be against the Philippines donor's tax on the
A. Donation to a friend
B. Donation to a relative
C. Donation to the relative and to a friend
D. Donation to a stranger
E. None of the above

23. When the donee is a stranger, the tax payable by the donor for a donation made in 2018 shall
be:
A. 6% of net gifts in excess of PhP 250,000
B. 30% of net gifts
C. Based on the graduated rates
D. Based on the graduated rates or 30% of the net gifts, at the option of the donor
E. None of the above

24. Which of the following is not a deduction from the gross gifts?
A. Unpaid mortgage on the donated property assumed by the donee
B. Unpaid real estate tax on donated property assumed by the donee
C. Diminution on the property donated specifically provided by the donor
D. Unpaid donors tax on the property assumed by the donee
E. None of the above
25. The gross estate of a decedent who was married at the time of death will be composed of
A. His capital property, the wife's paraphernal property and the common property
B. His capital property and the common property
C. Common property
D. His capital property
E. None of the above

26. Which is not an exclusive property of a spouse?

A. That which is brought to the marriage as his or her own
B. That which each acquired during the marriage by gratuitous title
C. That which is acquired by right of redemption
D. That which is purchased the spouses' common fund
E. None of the above

27. In the absence of a marriage settlement, or when the regime agreed upon was void, the
property relations of the spouses who were married on or after August 3, 1988 would be:
A. Absolute community of property
B. Conjugal partnership of gains
C. Absolute separation of property
D. Either absolute community or conjugal partnership of gains
E. None of the above

28. The fruits from exclusive property of each spouse due or received during the marriage are
classified as:
Under Absolute Community Under Conjugal Partnership
A. Community Conjugal
B. Exclusive Exclusive
C. Community Exclusive
D. Exclusive Conjugal
E. None of the above

29. A resident citizen had family home in the Philippines. He worked abroad and was temporarily
absent from his family home when he died. Which of the following statements is correct?
A. The decedent would not be allowed family home deduction because he was abroad
when he died
B. The decedent would not be allowed family home deduction because he was a
nonresident citizen when he died
C. The decedent would be allowed family home deduction because actual occupancy
of the family home was not interrupted or abandoned because of his temporary
absence
D. The decedent would be allowed family home because all decedents were allowed
family home deduction
E. None of the above
30. It pertains to the amount of all the bequests, legacies, devises or transfers to or for the use of
the Government of the Republic of the Philippines or any political subdivision thereof, for
exclusively public purposes
A. Transfer for public use
B. Vanishing deduction
C. Property previously taxed
D. Inheritance
E. None of the above

31. Which of the following exempt transmissions will still require inclusion of the property of the
gross estate?
A. Merger of the usufruct in the owner of the naked title
B. Legacy to a charitable institutions whose administrative expenses did not exceed
30% of the legacy
C. Transfer from a first heir to a second heir designated by the decedent D Death
benefits under the GSIS
D. None of the above

32. Which of the following is a transfer in contemplation of death

A. Mhalapit Nha has been fighting for his life since he was diagnosed to have a
terminal illness. Accepting his fate, he sought the assistance of Atty. Lho Yer, and
made his will.
B. Mr. Matibay celebrated his 101st birthday. Feeling that death is not far, he
transferred all his properties to Pedro and Juan.
C. Both A and B
D. D Neither A nor B
E. None of the above

33. Who shall file the estate tax return?

A. Executor, or administrator, or any of the legal heirs
B. Creditors of the decedent
C. Personal secretary of the decedent
D. Debtors of the decedent
E. None of the above

34. Under which of the following situations an estate tax return is required to be filed under the
TRAIN Law?
A. Transfers which are subject to estate tax
B. The estate consists of registered or registrable properties for which a clearance from
the BIR is required as a condition precedent for the transfer of ownership
C. Both A and B
D. Neither A nor B
E. None of the above
35. Which of the following is not included in the gross estate?
A. Revocable transfer where the consideration is not sufficient
B. Revocable transfer where the power of revocation was not exercised
C. Transfer passing under general power of appointment
D. Transfer for sufficient consideration
E. None of the above

36. Decedent's Interest

I Refers to the extent of equity or ownership participation of the decedent on any
property physically existing and present in the gross estate, whether or not in his
possession, control or dominion
II Refers to the value of any interest, having value or capable of being valued or
transferred, in property owned or possessed by the decedent at the time of his death
A. I only
B. II only
C. Both I and II
D. Neither I nor II
E. None of the above

37. Which of the following rules on "situs" of property of a decedent correct?

I As a general rule the situs of real property is the place or country where it is situated
II As a general rule, the situs of tangible personal property is the place or country where
such is actually located at the time of the decedent's death
III The rule that situs of intangible personal property is the domicile or resident of the
owner does not apply when the property has a situs elsewhere
IV The test of situs of property of a non-resident alien decedent is not important at all
because only the transmissions of property located in the Philippines are subject to
estate tax
A. I only
B. I and II only
C. I, II and III only
D. I, II III and IV
E. None of the above

38. One of the following is not an intangible personal property situated in the Philippines
A. Shares, obligations or bonds issued by any corporation or sociedad anonima
organized or constituted in the Philippines in accordance with its law
B. Shares, obligations or bonds issued by any foreign corporation 85% of the business
of which is located in the Philippines
C. Shares, obligations or bonds issued by any foreign corporation if such shares,
obligations or bonds have acquired business situs in the Philippines
D. Shares, obligations or bonds issued by a non-resident foreign corporation
E. None of the above
39. The following statements pertain to relatives by consanguinity, except
I Consanguinity is the relation subsisting among all the different persons descending from
the same stock or common ancestor
II Portion of the blood of the common ancestor flows through the veins of all his
descendants, and though mixed with the blood flowing from many other families, yet it
constitutes the kindred or alliance by blood between any two of the individuals
III This relation is also known as relation by blood
IV Relation by consanguinity is of two kinds: lineal and collateral
A. 1 and II only
B. I, Ill and IV only
C. I, II and IV only
D. All of the above
E. None of the above

40. Estate
A. Is the sum of all the property ofa deceased individual which are available for
disposition to his heirs, successors or beneficiaries, represented by an executor or
administrator as the case may be
B. Is a person designated in the last will and testament to carry out the provisions of
the decedent's will
C. Is a person who performs a fiduciary duty such as taking care of the decedent's
estate prior to final disposition to the heir(s)
D. Is a person appointed by the court and performs the same duty, in lieu of an
executor, if the latter refused to accept the appointment, failed to qualify under the
law or the last will and testament did not appoint one
E. None of the above

41. A property, acquired for PhP 1,000,000 was transferred in contemplation of death for a
consideration of PhP 100,000. Fair market value at the time of transfer is PhP 1,500,000, while
at the time of death is PhP 1,200,000. Determine the value of the property of the gross estate.
1,100,000

42. On January 1, 2017, Pedro extended a loan worth PhP 1,000,000 to Juan due on January 1, 2019.
The latter executed a promissory note with an annual interest of 10%. Pedro died on June 30,
2018. Determine the value of the property in the gross estate.
1,150,000
43. Pedro owns various shares of stocks from different companies during his lifetime. At the time of
his death, the following details were provided to you by his administrator

100,000 shares of Frozen Company's ordinary shares, not traded

Outstanding shares- 800,000 shares; P10 par
Retained Earnings - PhP 3,000,000

100,000 shares of Divergent Company's ordinary shares, listed shares

Outstanding shares- 1,000,000 shares; P10 par
Retained Earnings - PhP 5,000,000
Mean value of the shares in the stock exchange- P15

100,000 shares of Lenovo Company's ordinary shares, listed shares

Outstanding shares- 1,000,000 shares; P10 par
Retained Earnings - PhP 5,000,000 Mean value of the shares in the stock exchange- P12

Determine the gross estate of Pedro

4,075,000

44. Gabi is a known enemy to dogs in her neighborhood. One day, Titan, a dog owned by Gabi's
neighbor Sasha ran after Gabi. Gabi, left with no recourse, sprinted as fast as she could in order
to outrun Titan but failed to notice the cliff in front of her. Gabi fell to her death.

The following are the properties in Gabi's gross estate wkh their fair market values

House and lot, family home in Quezon City 1,500,000

Bank deposit in the foreign branch of a domestic bank 500,000
Bank deposit in Makati branch of a foreign bank 300,000
Shares of stock issued by a domestic corporation (certificate kept in Canada) 1,000,000
Franchise exercised in Manila 800,000
Receivable, debtor from Mindanao 200,000

If Gabi was a non-resident alien and there is reciprocity, determine value of the property
excluded from her gross estate

2,800,000
45. In No.44, if Gabi was a non-resident alien and there is no reciprocity, determine the value of the
gross estate

3,800,000

46. Transfers in contemplation of death

Consideration received FMV upon transfer FMV upon death

Land 1,500,000 1,500,000 2,000,000

Shares of stock 100,000 50,000 150,000

Vintage car 50,000 80,000 100,000

Painting 250,000 400,000 500,000

The correct gross estate should be

300,000

47. Ms. Balo, spouse of the decedent who died in a bus accident (Harurot Transport), received PhP
2,500,000 broken down as follows:

900,000 From Habambuhay Life Insurance Company. A life insurance taken out
by the decedent designating his wife as revocable beneficiary
1,200,000 From Walang Ha ngganan Life Insurancy Company taken out by the
decedent designating his wife as irrevocable beneficiary
400,000 From Harurot Transport Company (owner of the bus involved in the
accident) where settlement was made outside court proceedings

Determine how much should be included in the gross estate of the decedent

900,000

48. One of the items in the gross estate of a decedent is a claim against an insolvent person amount
to PhP 500,000. The insolvent debtor can still pay PhP 100,000 out of the PhP 500,000. How
much will be included in the gross estate?

500,000

49. In No.48, how much will be deducted from the gross estate?

400,000
50. Gal is working in a factory manufacturing military equipment. Her employer is Sasha Company.
One day, Gabi failed to follow safety protocols in the and was rather playful in handling an
equipment. Consequently, Gabi accidentally shot herself to death.

Gabi died leaving a gross estate of PhP 12,800,000 including a land inherited from his uncle
Reiner 3 1/2 years before Reiner's death and a car donated to him seven (7) years before his
death. The following data pertain to the two properties:

Unpaid Mortgage FMV upon receipt FMV upon death

Land 100,000 1,800,000 1,250,000

Car 50,000 300,000 400,000

The decedent was able to pay 1/2 of the unpaid mortgage on the land before his death

Other deductions claimed are as follows:

Expenses, losses, indebtedness, taxes (excluding the unpaid mortgages 1,200,000
above but including actual funeral expenses of PhP 300,000 and
medical expenses of PhP 600,000)
Transfer to the Government, included above 300,000
Death Benefits from Sasha Company under RA 4917, excluded above 200,000
Family Home, included above 2,000,000

Determine the vanishing deductions

454,154

51. In No.50, determine the net taxable estate

4,645,846

52. A nonresident alien decedent left the following assets

Domestic shares 1,000,000

Foreign shares 3,000,000
Tangible personal property 6,000,000
Losses, unpaid indebtedness and taxes 1,200,000

The country where the decedent is a citizen does not impost transfer tax on transmission of
intangibles of Filipinos not residing therein. Determine the net taxable estate in the Philippines

4,780,000
53. Pedro Cruz died intestate on September 30, 2018. He was survived by his wife and his two
children. He left the following properties:

Land (1,000 sqm) inherited from his father 15 months before Pedro's death. Fair market
value per tax declaration at the time of Pedro's death, PhP 20,000,000; Zonal value at
the time of Pedro's death, PhP 30,000 per sqm House and Lot (Family Home) acquired
during the marriage, FMV, PhP 50,000,000 Other tangible personal properties (mode of
acquisition unknown), FMV 22,000,000

The following were considered as deductions from the gross estate

Actual funeral expenses 480,000
Judicial expenses 1,000,000
Other claims against the conjugal properties 5,000,000
Unpaid taxes 1,200,000
Claims against insolvent persons 500,000
Medical expenses 1,200,000

The estate of the decedent's father paid the estate tax on the land at the fair market value of
PhP 25,000. During the marriage, Pedro mortgaged the inherited land for PhP 7,000,000 for the
benefit of the family. He paid PhP 3,500,000 before he died

Determine the vanishing deductions

18,009,756

54. In No.53, determine the estate tax due

1,688,415

55. Erwin and Hange got married on September 30, 1989. They entered into a marriage settlements
and agreed that what will govern their property relations is Conjugal Partnership of Gains.
Hange failed to sign the marriage settlements. Erwin died on October 15, 2018. His estate
provide the following information:

Real properties inherited during marriage from his father 500,000

Real property given as gift by his uncle during marriage 1,500,000
Land received as donation during the marriage 500,000
House built on the donated land using communal fund 900,000
Cash income from the real property received as gift 100,000
Real properties received b the surviving spouse before the marriage 1,800,000
Real properties acquired by the spouses during the marriage 1,500,000
Personal properties acquired during the marriage 1,000,000

The following were considered as deductions from the gross estate:

 Actual funeral expenses 100,000
Judicial expenses 150,000
Medical expenses 200,000
Obligations incurred before marriage that benefited the community 250,000
properties
Unpaid mortgage on inherited land 100,000
Loss of car through theft on December 31, 2018 (part of personal
properties acquired during marriage) 300,000
Unpaid realty tax on real property received as gift from his uncle 30,000

Additional information:
The value of the real properties at the time of inheritance was PhP 300,000
The value of the real property received as gift from an uncle was PhP 1,000,000
The donated land and the house built on it were certified as the family home
of the decedent and his family by the Barangay Captain in the locality where
they were situated

How much was the total exclusive property?

2,600,000

56. In No.55, how much was the total community property, if any?

5,200,000

57. The administrator of a nonresident alien decedent died with the following information:

Net estate before special deductions, Philippines 12,000,000

Net estate, Korea 3,000,000
Estate tax paid, Korea 200,000

690,000

58. A nonresident citizen (head of the family) from Quezon City died intestate on November 2,
2018. The following data were provided to you:

House and lot, USA (family home) 8,000,000

Investment in stock, Philippines 800,000
Parcel of land in Quezon City inherited from his father 2 1/2 years ago 1,000,000
Investment in bonds of a foreign corporation (85% of its
business is located in the Philippines) 700,000
Cash in bank, USA 650,000
Cash in bank, Philippines 450,000
Accounts receivable from a debtor who resides in Quezon
 City (fully uncollectible) 200,000
Car, USA 2,000,000
Car, Philippines 800,000
Actual funeral expenses 480,000
Judicial expenses 300,000
Claim against the estate (indebtedness of the decedentin
the Philippines during his lifetime) 940,000
Unpaid Philippine income tax for income in 2016 and 2017 320,000
Loss on December 31, 2018 due to theft (QC, Philippines) 180,000
Devise to Quezon City for children's playground 1,400,000
Medical expenses 500,000

Determine the net distributable estate

11,231,560

59. A donor gave the following donations during 2018:

January 24- Land located in the Philippines valued at PhP 2,000,000 to her uncle subject
to the condition that the latter will pay the donor's tax due and unpaid mortgage
amounting to PhP 500,000

November 30- Building in US valued at PhP 4,500,000 to her sister. Donor's tax paid in
US was PhP 400,000

Determine the donor's tax payable on the January 24 donation

75,000

60. In No.59, determine the donor's tax payable on the November 30 donation

11,250

61. Mr. Felix de la Cruz, a bachelor resident citizen, suffered from a heart attack while on a business
trip to the USA. He died intestate on June 15, 2018 in New York City, leaving behind real
properties situated in New York; his family home in Valle Verde, Pasig City; and office
condominium in Makati City; shares of stocks in San Miguel Corporation; cash in bank and
personal belongings. The decedent is heavily insured with Insular Life. He had no known debts at
the time of his death. As the sole heir and appointed Administrator, how would you determine
the gross estate of the decedent? Explain.(4 rts.)

62. In No. 61, what deductions may be claimed by the estate and when and where shall the return
be filed and estate tax paid? Explain.(4 rts.)

63. While driving his car to Baguio City last month, So Gwon (resident citizen), together with his
wife, Ha-Mun Yeong (resident citizen), and only son, So Mun (resident citizen), met an accident
 that caused the instantaneous death of So Mun. The following day, Ha-Mun Yeong also died in a
hospital. The spouses and their son had the following assets and liabilities at the time of death

Ha-Mun Yeong So Mun

Exclusive Conjugal
Cash 10,000,000 1,200,000
Cars 500,000
2,000,000
Land 5,000,000 2,000,000
Residential House 4,000,000
Mortgage Payable 2,500,000
Funeral Expenses 300,000

Is the Estate of So Mun liable to estate tax? Explain.(4pts.)

64. In No.63, is vanishing deduction applicable to the Estate of Ha-Mun Yeong? Explain. (4 pts.)

65. Ace Tobacco Corporation bought a parcel of land situated at Pateros and donated it to the
Municipal Government of Pateros for the sole purpose of devoting the said land as a relocation
site for the less fortunate constituents of said municipality. In accordance therewith, the
Municipal Government of Pateros issued to the occupants/beneficiaries Certificates of Award
giving to them the respective areas where their houses are erected. Through Ordinance No. 2,
Series of 1998, the said municipal government ordained that the lots awarded to the awardees
be finally transferred and donated to them. Determine the tax consequence of the foregoing
dispositions with respect to Ace TobaccoCorporation, the Municipal Government of Pateros, and
the occupants/beneficiaries. (4 pts.)