Republic of the Philippines

PALAWAN STATE UNIVERSITY

College of Business and Accountancy
Puerto Princesa City

MIDTERM IN TRANSFER TAXES

Second Semester/SY 2015-16

Multiple Choice: Shade the corresponding letter of your answer at the given answer sheet. Erasures are considered
mistake.
1. Tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time
of death and on certain transfers, which are made by law as equivalent to testamentary disposition. It is not a tax on
property.
a. Capital Gains Tax b. Income Tax c. Estate tax d. Donor’s Tax
2. Which among the following reduces the gross estate (not the net estate) of a citizen of the Philippines for purposes of
estate taxation?
A. Transfers for public use C. Standard deduction of P1 million
B. Property previously taxed D. Capital of the surviving spouse
3. All of the ff. are required to file the Estate Tax return, except:
a. Executor b. Administrator c. Heir d. Decedent
4. Don Fortunato, a widower, died in May, 2011. In his will, he left his estate of P100 million to his four children. He
named his compadre, Don Epitacio, to be the administrator of the estate. When the BIR sent a demand letter to Don
Epitacio for the payment of the estate tax, he refused to pay claiming that he did not benefit from the estate, he not
being an heir. Forthwith, he resigned as administrator. As a result of the resignation, who may be held liable for the
payment of the estate tax?
A. Don Epitacio since the tax became due prior to his resignation.
B. The eldest child who would be reimbursed by the others.
C. All the four children, the tax to be divided equally among them.
D. The person designated by the will as the one liable.
5. Gerardo died on July 31, 2011. His estate tax return should be filed within
A. six months from filing of the notice of death. C. 6 months from the time he died on July 31, 2011.
B. 60 days from the appointment of an D. 60 days from the time he died on July 31, 2011.
administrator.
6. Dondon and Helena were legally separated. They had six minor children, all qualified to be claimed as additional
exemptions for income tax purposes. The court awarded custody of two of the children to Dondon and three to
Helena, with Dondon directed to provide full financial support for them as well. The court awarded the 6th child to
Dondon’s father with Dondon also providing full financial support. Assuming that only Dondon is gainfully employed
while Helena is not, for how many children could Dondon claim additional exemptions when he files his income tax
return?
A. Six B. Five C. Three D. Two
7. The ff: are excluded from gross estate, except:
a. GSIS proceeds/ benefits
b. Accruals from SSS
c. Proceeds of life insurance where the beneficiary is revocably appointed
d. Proceeds of life insurance under a group insurance taken by employer
8. The ff: are allowable deductions for Estate Tax purposes, except:
a. Valid claims against the estate c. Transfer by way of bona fide sales
b. Claims against insolvent person d. Casualty losses
9. The ff. are requisites of vanishing deduction, except:
a. The property with respect to which the deduction is claimed must have formed part of the gross estate situated in
the Philippines of the prior decedent or taxable gift of the donor
b. The property must be identified as the same property received from prior decedent or donor or the one received in
exchange therefore
c. The estate taxes on the transmission of the prior estate or the donors tax on the gift must have been finally
determined and paid
d. Vanishing deduction on the property or the property given in exchange therefore was allowed to the prior estate
10. Data on the Funeral Expense of Maribel A. is the ff:
a) actual funeral expenses is P199,000; and b) 5% of the gross estate is P500,000
How much should be deducted as Funeral Expense?
a. P200,000 b. P500,000 c. P199,000 d. P100,000
11. FG has Claims against his KUNGMASINGILMO Estate, worth 100 million dollars from the NBN-ZTE deal:
a) The debt instrument is not notarized; and
b) The loan was contracted 5 years before his death.
How much should be deducted as Claims against the KUNGMASINGILMO Estate?
a. $110 million b. $100 million c. 0 d. $55 million
12. Gloria has Unpaid Taxes after her death:
a) P10,000 income tax on income received after death
b) P50,000 property taxes not accrued before death
 c) P100,000 estate tax
How much should be deducted as Unpaid Taxes?
a. 0 b. P100,000 c. P160,000 d. P60,000
13. Before the settlement of the estate of Mr. Gardoce , an earthquake occurred having P500,000 estimated Loss on the
insured property of Mr. Gardoce. How much is deduction in the gross estate if there is any?
a. 0 b. P500,000 c. P100,000 d. P200,000
14. 20 years ago, Cory received from Ninoy, his 20% share in the Hacienda Luisita in Tarlac worth P10,000,000. Cory being
a good citizen has already paid the estate tax. Cory died 6 years ago. How much is the Vanishing Deduction to be
claimed by Kris and her co-heirs?
a. 0 b. P2 million c. P4 million d. P8 million
15. Sir Pogi, single and head of the family, died and left a Family Home worth P3,000,000. How much can the heirs avail
of the deduction for Family Home?
a. P100,000 b. P500,000 c. P1 million d. P3 million
16. Mr. Hikain, died yesterday. He was confined 6 months in the hospital before he died. Hospital bills amounted to a
P1,000,000. How much can be deducted from the Gross Estate as his Medical Expenses?
a. P1 million b. P500,000 c. P200,000 d. 0
17. Mr. Pataygutom died on January 1, 1997, his Notice of death must be filed with the BIR if the gross value of his
property exceeds?
a. P200,000 b. P20,000 c. P10,000 d. P3,000
18. Mr. Dedo died leaving a valid will, who is required to file his ETR?
a. Gancho, the administrator c. Bibi, the daughter
b. Loco, the executor d. Neneng, the mistress
19. Payment of the Estate Tax shall be with the ff:, except:
a. AAB b. RDO c. Muncp’l Assessor d. Phil. Embassy
20. Statement I: The properties subject to Estate Tax shall be appraised based on its fair market value at the time of the
decedent's death.
Statement II: The appraised value of the real estate shall be whichever is higher of the fair market value, as
determined by the Commissioner (zonal value) or the fair market value, as shown in the schedule of values fixed by
the Provincial or City Assessor.
Statement III: If there is no zonal value, the taxable base is the fair market value that appears in the latest tax
declaration.
Statement IV: If there is an improvement, the value of improvement is the construction cost per building permit or
the fair market value per latest tax declaration.
a. All statements are true. c. Only statements III and IV are true.
b. Only statements II and IV are true. d. Only statements II, III and IV are true.
21. For resident alien decedents/citizens included in the gross estate are:
a) Real or immovable property, wherever located
b) Tangible personal property, wherever located
c) Intangible personal property, wherever located
a. All of the above. b. Only a and b c. Only b and c d. NOTA
22. The amount of Standard Deduction is:
a. P0 b. P200,000 c. P500,000 d. P1,000,000
23. The ff. are excluded from gross estate, except:
a. War damage payments c. Share of the surviving spouse
b. Transfer by way of bona fide sales d. Merger of usufruct in the owner of the naked title
24. The ff: are Intangible personal property - with a situs in the Philippines:
a. Franchise which must be exercised in the Philippines
b. Shares, obligations or bonds issued by corporations organized or constituted in the Philippines
c. Shares, obligations or bonds issued by a foreign corporation 85% of the business of which is located in the Philippines
d. Shares, rights in any partnership, business or industry established in the Philippines
a. All of the above. b. Only a and b. c. Only b and c. d. NOTA
25. Is a remedy against international double taxation to minimize the onerous effect of taxing the samer property twine?
a. Vanishing deduction c. Tax refund
b. Estate tax credit d. Additional Exemption
26. The ff. are administrative remedies available to a taxpayer in connection with collection of taxes, except one:
a. Filing of claim for tax refund/credit c. Filing of criminal complaint against erring BIR
b. Filing a petition for officials/employees
reconsideration/reinvestigation d. Entering into a compromise
27. Which of the ff. cases falls within the jurisdiction of the CTA?
a. Criminal action for violation of NIRC
b. Question of whether or not to impose a deficiency tax assessment upon a taxpayer
c. Appeal from undisputed tax assessment
d. Action for refund of real property tax
28. Where any national internal revenue tax is alleged to have been erroneously or illegally collected the taxpayer should
first:
a. File a claim for refund/credit c. File an action for refund with the CTA
b. File an action for refund with the RTC d. Answer not given
29. Which is the correct answer? The following additions to the delinquency tax are called “civil penalties”:
a. Deficiency interest c. Interest on extended payment
b. Delinquency interest d. All of the above
30. On January 20, 2005, a taxpayer filed a protest on/request for reconsideration of an assessment of a tax. He received
a final decision of the BIR on the protest on April 30, 2005. He failed to appeal the decision to the CTA. The BIR was
collecting the tax by summary proceedings on June 20, 2010. The taxpayer was opposing the collection of the tax on
the ground of prescription of the right of the government to collect.
a. The last day for collection was April 30, 2010 c. The last day for collection was June 29, 2010
b. The last day for collection was May 30, 2010 d. The last day for collection was July 29, 2010
31. Which is not an essential characteristic of tax?
a. It is unlimited as to amount. c. It is a proportionate in character.
b. It is payable in money. d. It is regular payment.
32. One of the characteristics of internal revenue laws is that they are:
a. Criminal in nature c. Political in nature
b. Penal in nature d. Generally prospective in application
33. Tax as distinguished from license fee:
a. Non-payment does not necessarily render the c. Imposed in the exercise of police power
business illegal. d. Limited to cover cost of regulation
b. A regulatory measure
34. The distinction of a tax from permit or license fee is that a tax is:
a. Imposed for regulation
b. One which involves an exercise of police power
c. One in which there is generally no limit on the amount that may be imposed
d. Answer not given
35. VAT is an example of:
a. Graduated tax b. Progressive tax c. Regressive tax d. Proportional tax
36. Statement 1: A tax is allowed by law to be passed on by a taxpayer to another is called an indirect tax.
Statement 2: Business taxes which are not allowed by law to be passed on by sellers of goods and services to buyers
are nonetheless imperceptibly passed on because they are factored in on the selling price.
a. Both are true. c. Only the first statement is true.
b. Both are false. d. Only the second statement is true.
37. Statement 1: A revenue regulation must not be contrary to the provision of the law that it implements.
Statement 2: A revenue regulation cannot expand the provision of the law that implements by imposing a penalty
when the law that authorizes the revenue regulation does not impose penalty.
a. Both are true. c. Only the first statement is true.
b. Both are false. d. Only the second statement is true.
38. Statement 1: Tax evasion, which is the use of means to escape a tax that is already a liability, is prohibited by law, and
is punishable.
Statement 2: Tax avoidance which is the use of means to prevent an accrual of a tax, or to minimize a tax that may
accrue, is likewise prohibited by law and is punishable..
a. Both are true. c. Only the first statement is true.
b. Both are false. d. Only the second statement is true.
39. Statement 1: A tax amnesty that forgives tax delinquency of prior years is a legislative act of the Government.
Statement 2: A tax compromise that lowers the delinquent tax due from a taxpayer is an executive act pursuant to a
legislative grant of power to Executive Department of the Government.
a. Both are true. c. Only the first statement is true.
b. Both are false. d. Only the second statement is true.
40. Statement 1: Direct double taxation involves two taxes by the same taxing authority.
Statement 2: Indirect double taxation involves two taxes by two different taxing authorities.
a. Both are true. c. Only the first statement is true.
b. Both are false. d. Only the second statement is true.
41. Statement 1: A license fee at an amount that is more than necessary for regulation is a tax, and hence may be
imposed only on a clear authority under the law to impose the tax.
Statement 2: A tax levied for a special purpose, which sis spent for purposes other than those stated in the law for its
use, if involving a huge amount, may tantamount to the crime of plunder..
a. Both are true. c. Only the first statement is true.
b. Both are false. d. Only the second statement is true.
42. In 2009, a person was given by a special law the privilege to operate a public utility (franchise), in consideration of
which, he was required by that law to pay a franchise tax. This franchise can be amended by:
a. An amendment of that special law only.
b. An amendment of that special law or a law of general application.
c. An amendment of a revenue regulation.
d. None of the above.
43. Which statement gives the correct answer? That a feasibility study needs or need not look into the taxes of different
political subdivisions of government which may be alternative sites of the business is because:
a. Provinces, cities and municipalities must have uniform taxes between and among themselves.
 b. The local taxes of one political subdivision need not be uniform with the local taxes of another political
subdivision.
c. Businesses that are subject to national business taxes are exempt from local business taxes.
d. Local business taxes may be credited against national business taxes.
44. Congress enacted a law increasing the personal exemptions of individuals under the income tax law to a uniform
P50,000 for all individuals, regardless of status of the individuals. The law took effect sometime within the year. The
Secretary of Finance will allow the increase on personal exemption to a date:
a. On the effectivity of the law within the year.
b. As of the beginning of the year in which the law was passed by Congress.
c. As at the beginning of the succeeding year.
d. Only when the Congress passes a law clearly stating the effectivity of the increase.
45. Statement 1: The power to tax can be delegated to LGUs, but with limitations as may be imposed by law.
Statement 2: The power to tax cannot be delegated to the executive department of the National Government.
a. Both are true. c. Only the first statement is true.
b. Both are false. d. Only the second statement is true.
46. Statement 1: The state can collect the tax by summary proceedings of distraint of personal property and levy on real
property, one after the other, but not simultaneously.
Statement 2: There must be an assessment of a deficiency tax before there can be a judicial action for collection.
a. Both are true. c. Only the first statement is true.
b. Both are false. d. Only the second statement is true.
47. Statement 1: The decision of the CIR on a protested assessment should state that it is a final decision in order that it
may be appealable to the CTA.
Statement 2: When the BIR decided a protested assessment with finality, the period to appeal to the CTA is counted
not from the date of the decision but from the date of receipt of the decision.
a. Both are true. c. Only the first statement is true.
b. Both are false. d. Only the second statement is true.
48. Statement 1: No court shall have the authority to grant an injunction to restrain the collection of any NIR tax, fee, or
charge imposed by the NIRC.
Statement 2: Judicial proceedings for the collection of an internal revenue tax may be instituted even without a prior
assessment of the tax on the taxpayer.
a. Both are true. c. Only the first statement is true.
b. Both are false. d. Only the second statement is true.
49. Statement 1: A refund check or warrant which shall remain unclaimed or uncashed within five years from the date
the said warrant or check was mailed or delivered shall be forfeited in favor of the Government.
Statement 2: A tax credit certificate which shall remain unutilized after five years from the date of issue shall, unless
revalidated, be considered invalid, and shall not be allowed as payment of any internal revenue tax liabilities of the
taxpayer.
a. Both are true. c. Only the first statement is true.
b. Both are false. d. Only the second statement is true.
50. Statement 1: A substantial underdeclaration of taxable sales, receipts or income, or a substantial overstatement of
deductions shall constitute prima facie evidence of a false or fraudulent return.
Statement 2: A return, statement or declaration filed with the BIR may not anymore be modified, changed or
amended.
a. Both are true. c. Only the first statement is true.
b. Both are false. d. Only the second statement is true.
Problem I:
Alexis, married, donated the following properties during the year:
Particulars Date Donee Amount
House and Lot – Manila January 1, 2015 Erika, daughter, on account of marriage 500,000
Beach Front Lot January 1, 2015 Gats, son-in-law 500,000
House and Lot – Puerto Princesa March 1, 2015 Liberal Party 1,000,000
Farm Lot April 1, 2015 Hedro, son 500,000
Condominium April 5, 2015 MaeJane, his lover 1,000,000
Cash April 10, 2015 PICPA 200,000
Automobiles May 5, 2015 Edison, illegitimate son 100,000
Lot September 1, 2015 City Government of Puerto Princesa 500,000
Mansion November 25, 2015 Cliff, son 1,000,000
Pension House November 30, 2015 Aubrey, mother 5,000,000
Additional Information:
 Properties donated on January 1, is conjugal property.
 On November 2, Alexis learned he was terminally ill.
1. What BIR Form will be used?
2. When will be the last day of filing of DTR for donation made on January 1?
3. When will be the last day of filing of DTR for donation made on March 1?
4. When will be the last day of filing of DTR for donation made on April 1?
5. When will be the last day of filing of DTR for donation made on April 5?
6. When will be the last day of filing of DTR for donation made on April 10?
 7. When will be the last day of filing of DTR for donation made on May 5?
8. When will be the last day of filing of DTR for donation made on September 1?
9. When will be the last day of filing of DTR for donation made on November 25?
10. When will be the last day of filing of DTR for donation made on November 30?
11. How much will be the Donor’s Tax for donations made on January 1?
12. How much will be the Donor’s Tax for donations made on March 1?
13. How much will be the Donor’s Tax for donations made on April 1?
14. How much will be the Donor’s Tax for donations made on April 5?
15. How much will be the Donor’s Tax for donations made on April 10?
16. How much will be the Donor’s Tax for donations made on May 5?
17. How much will be the Donor’s Tax for donations made on September 1?
18. How much will be the Donor’s Tax for donations made on November 25?
19. How much will be the Donor’s Tax for donations made on November 30?
20. How much will be the Donor’s Tax payable after the donation made on November 30?
Problem II.
Alexis, the decedent, died on March 1, 2013 leaving the ff. properties:
Particulars Philippines U.S.A.
House and Lot - Manila 2,500,000 -
House and Lot – Puerto Princesa 500,000 -
Farm Lot 15,000,000 -
Condominium - 1,000,000
Cash in Bank 1,000,000 200,000
Receivables 500,000 -
Automobiles 1,500,000 11,000,000
Shares of stock 5,000,000 1,000,000
Life Insurance Proceeds 1,000,000 5,000,000
SSS Benefits 2,000,000 -
Retirement Benefits 1,000,000 -
War Damages - 1,000,000
The ff. deductions are claimed as follows:
a. Funeral Expenses
 Burial plot 100,000  Mourning apparel 50,000
 Obituary Payment 150,000  Wake expenses 200,000
 Interment charges 200,000
b. Medical Expenses
 Doctor’s fees 200,000  Medicine 500,000
 Hospitalization charges 250,000
c. Judicial Expenses
 Attorney’s fees 100,000  Broker’s fees 25,000
 Accountant’s fees 100,000  Facilitation fees 100,000
 Appraiser’s fees 50,000
d. Payables
 Claims against the Estate 100,000  Unpaid Mortgage 300,000
e. Taxes
 Income tax 1,000,000
 Real property tax 2,000,000
f. Losses:
 Business reverses 200,000
Additional Information:
 Farm lot was inherited by the decedent from his father who died on June 2, 2005.
 Condominium shall be donated to the Philippine Government to serve as Staff House for Embassy employees upon
the death of the decedent.
 Half of the receivables are to Ning, an insolvent person.
 Life insurance proceeds in the Philippines goes to LT, an irrevocable beneficiary; while insurance proceeds in the USA
goes to DG, revocable beneficiary.
 Retirement Benefits is under RA 4917.
 Half of the funeral expenses came from relatives and donations.
 Doctor’s fees are substantiated with receipts.
 Only 150,000 of the Hospitalization charges are billed from March 1, 2012.
 Unpaid mortgage is from the House and Lot-Manila.
 Income tax accrued before the death of the decedent, while half of the Real property tax accrued after the death of
the decedent.
 Only half of the losses are insured.
21. When will be the last day to file the Notice of Death?
22. What BIR Form will be used?
23. When will be the last day of filing of ETR?
 24. How much will be the GE if the decedent, single, is a Citizen?
25. How much will be the GE if the decedent, single, is a RA?
26. How much will be the GE if the decedent, single, is a NRA?
27. How much of the Retirement Benefits should be included in the GE?
28. How much of the Retirement Benefits should be deducted?
29. How much should be the Funeral Expenses?
30. How much should be the Medical Expenses?
31. How much should be the Judicial Expenses?
32. How much should be the Funeral Expenses?
33. How much should be the Payables?
34. How much should be the Tax Deductible?
35. How much should be the Loss Deductible?
36. How much should be the Vanishing Deduction?
37. How much should be deducted as Family Home?
38. How much will be the Share of the Surviving Spouse, if all the properties are under the ACP Regime?
39. How much will be the GE if the decedent, married, is a Citizen?
40. How much will be the GE if the decedent, married, is a RA?
41. How much will be the GE if the decedent, married, is a NRA?
42. How much will be the Estate Tax if the decedent, single, is a Citizen?
43. How much will be the Estate Tax if the decedent, single, is a RA?
44. How much will be the Estate Tax if the decedent, single, is a NRA?
45. How much will be the Estate Tax if the decedent, married, is a Citizen?
46. How much will be the Estate Tax if the decedent, married, is a RA?
47. How much will be the Estate Tax if the decedent, married, is a NRA?
48. Suppose Alexis is a Non-resident alien where will his ETR be filed?
49. Suppose Alexis is a Non-resident citizen where will his ETR be filed?
50. Suppose Alexis is a resident citizen where will his ETR be filed?

“Learning should be fun”

Goodluck and God bless…. Sir Brad

Cddccdccdc cababbdbca adcabca/bad ddaddAacda abbaabaaac

1 1800 11 78600 21 May 1 31 275000 41 20500000
2 1/31 12 300000 22 1801 32 200000 42 6740000
3 3/31 13 14000 23 September 1 33 400000 43 6740000
4 5/1 14 300000 24 43200000 34 2000000 44 3864305
5 5/5 15 60000 25 43200000 35 100000 45 3970000
6 5/10 16 0 26 26000000 36 0 46 3970000
7 6/4 17 0 27 0 37 250000 47 2705635
8 10/1 18 44000 28 1000000 38 5750000 48 CIR
9 12/25 19 404000 29 200000 39 29100000 49 Embassy
10 12/30 20 513600 30 500000 40 29100000 50 RDO