Republic of the Philippines

PALAWAN STATE UNIVERSITY

College of Business and Accountancy
Puerto Princesa City

MIDTERM IN TRANSFER TAX

Multiple Choices: Shade the letter of your answer at the side in the answer key. Place your answer on the provided spaces. Avoid
Erasures. Any markings or erasure are considered as wrong answer.
1. The ff. are basic characteristics of Donor’s Tax, except:
a. Not imposed on the donor of the property but rather on the act or privilege of transferring.
b. Is imposed on the transfer of properties without consideration upon the death of the decedent.
c. Imposed to prevent avoidance of tax wherein the transfer of property during the lifetime of the donor.
d. Imposed on the right of transferring without consideration of properties without consideration.
2. Is a mode of acquiring properties, rights, and obligation to the extent of the value of the inheritance thru transfer brought about
by the death of the decedent.
a. Donation b. Succession c. Sale d. Occupation
3. Refers to the party to whom properties are transferred
a. Successor b. Donee c. Donor d. Creditor
4. Are heirs to whom the legal portion of the estate has been reserved by the law.
a. Successor b. Forced heirs c. Voluntary heirs d. Heirs
5. Which of the ff. are secondary compulsory heirs.
a. Legitimate children b. Legitimate spouse c. Legitimate parents d. Illegitimate spouse
6. The ff. are instances of instestate succession, except:
a. Decedent did not execute a written will. d. Decedent executed a will but did not mention the
b. Decedent executed a void will. successor.
c. Decedent executed a valid will.
7. Refers to an act by which the owner of the properties deprive the legal person of his/her right to inherit.
a. Inheritance b. Disinheritance c. Succession d. Mixed succession
8. The ff. are causes of disinheritance of parents and ascendants.
a. Abandonment c. Refusal to support with justifiable cause
b. Made an attempt on the life of the decedent.
d. Wrongfully accused the decedent of a crime with punishment of 6 years or more.
9. Another term for Estate Tax
a. Transfer Tax b. Succession Tax c. Inheritance Tax d. Mortis Causa Tax
10. Statement I: The GE of the resident or citizen shall include properties within and outside the Philippines.
Statement II: The GE of the NRA shall NOT include properties located outside the Philippines.
a. Both are true. b. Both are false. c. Only I is true d. Only II is true
11. The ff. properties shall be included in the GE although not physically present in the estate at the time of the death, except:
a. Transfer under GPA c. Proceeds of life insurance with irrevocable
b. Claims against insolvent persons beneficiary
d. Revocable transfers
12. The ff. are intangible personal properties classified as located in the Philippines, except:
a. Shares or rights in any juridical personality established in the Philippines.
b. Shares of stocks/bonds issued by a foreign corporation with business situs in the Philippines.
c. Franchise exercised in the Philippines.
d. Shares of stocks/bonds issued by a foreign corporation 75% of operations is located in the Philippines.
13. The ff. are considered transfers of properties in anticipation of death, except:
a. Transfer of property take effect only upon death of decedent.
b. Donation of property take effect only upon death of decedent.
c. Transfer of property take effect before the death of decedent.
d. Decedent donated the property but will enjoy the fruits of the donation while he is still alive.
14. Donations to which organization is not tax exempt:
a. IRRI b. DAP c. PICPA d. IBP
15. Statement I: SPA can be exercised in favor of a certain person designated by the prior decedent.
Statement II: GPA can be exercised in favor of anybody even by the decedent, his estate, or creditors of his estate.
a. Both are true. b. Both are false. c. Only I is true d. Only II is true
16. Which of the ff. is a revocable transfer?
a. Transfer by donation but the owner reserves the power to amend or revoke the donation.
b. The decedent donated a property and the donation of which will take effect only at his death or after his death.
c. Transfer of properties whether regularly or occasionally made with full consideration not be included as part of the GE.
d. Income earned by the decedent before death but collected or received only afterwards.
17. Is a right granted to enjoy the fruits or benefits of something owned by another person.
a. Usufruct b. Donation c. Sale d. Succession
18. Connotes physical transfer of property to the donee or to his/her authorized representative.
a. Delivery b. Actual delivery c. Constructive delivery d. Mixed delivery
19. The ff. are exempted from Estate Tax, except:
a. Merger of usufruct in the owner of the naked title.
 b. Transmission of legacy by the fiduciary heir to the fedeicommisary
c. Transfers to social welfare, cultural and charitable institutions
d. Claims against insolvent persons
20. Statement I: Device is a personal property while legacy is real property mad as a gift or transferred thru testamentary
disposition.
Statement II: fiduciary heir is the first heir while fedeicommissary is the second heir of the property and relationship of the
second heir to the first heir must only be one degree.
a. Both are true. b. Both are false. c. Only I is true d. Only II is true
21. This is the property relationship of husband and wife, in the absence of any agreement, on marriage celebrated before August 3,
1988.
a. Absolute Community of Property c. Complete separation of property
b. Conjugal Partnership of Gains d. None of the above.
22. The ff. exclusive properties of spouses in CPG, except:
a. Properties owned by the spouse before marriage
b. Properties acquired by the spouse by inheritance or gift during the marriage.
c. Properties owned before the marriage by either spouse who have legitimate descendants from former marriage.
d. Properties acquired and paid from exclusive property.
23. The ff. judicial related expenses are deductible, except;
a. CPA professional fee c. Facilitation expenses
b. Publication expenses d. Administrative expenses
24. The ff. are Ordinary deductions allowed from the GE of a Resident or Citizen, except:
a. Unpaid taxes c. Transfer for public use
b. Family home d. Vanishing deduction
25. The ff. are strangers according to Donor’s Tax law, except:
a. Relatives by consanguinity up to the fourth degree c. Relatives by affinity
b. Relatives by consanguinity beyond the fourth degree d. Either donor or done is a juridical person
26. The ff. are requisites for funeral expense to be deductible, except:
a. Expenses must be paid by relatives. d. Expenses must cover activities only up to the day of
b. Amount paid must come from the estate. interment.
c. Expenses must be duly supported with receipts
27. Statement I: Obligations arising from notarized debt instruments are deductible from the GE.
Statement II: Loans to be deductible must be made within 3 years before the death of the decedent
a. Both are true. b. Both are false. c. Only I is true d. Only II is true
28. Refers to the amount owed by the decedent supported with collateral and still outstanding at the time of the death decedent.
a. Unpaid taxes c. Claims against the estate
b. Unpaid Mortgages d. Losses
29. Refer to financial obligations entered into by the decedent prior to his death and still enforceable at the time of death.
a. Unpaid taxes c. Claims against the estate
b. Unpaid Mortgages d. Losses
30. Refers to the value of property transferred by the decedent to Government as stated in his last will and testament.
a. Transfer for public use c. Vanishing deduction
b. Losses d. Claims against the Estate
31. The ff. are requisites for deduction of amounts received under RA No. 4917, except:
a. Employer’s retirement plans are reasonable. c. Benefit is not included in the GE
b. Decedent employee has been in service for at least d. Decedent employee is not less than 50 yrs. old.
10 years.
32. The ff. are allowable deductions of NRA, except:
a. Vanishing deductions c. Family home
b. Transfer for public use d. Ordinary deductions
33. An act of liberality whereby a person disposes gratuituously of a thing or right in favor of another who accepts it.
a. Donation b. Sale c. Succession d. Prescription
34. This kind of donation is made between two persons who are alive at the time of donation.
a. Donation inter vivos c. Conditional Sale
b. Donation mortis causa d. Sale
35. Statement I: For movable property with value of P5000 or less, an oral donation and a simultaneous delivery of the property are
sufficient forms for a valid donation.
Statement II: For movable property with a value higher than P5000, a written donation and acceptance is required for a valid
donation.
a. Both are true. b. Both are false. c. Only I is true d. Only II is true
36. Statement I: The family relation between or among relatives by blood is called affinity relationship.
Statement II: In consanguinity relation, there exists s linear and collateral relation.
a. Both are true. b. Both are false. c. Only I is true d. Only II is true
37. The ff. heirs would not inherit if not mentioned in the last will and testament of the decedent.
a. Compulsory heirs b. Voluntary heirs c. Involuntary heirs d. Forced heirs
38. An act of the successor receiving properties transferred on his/her own free will.
a. Waiver b. Acceptance c. Disinheritance d. Succession
39. Statement I: Holographic will is without formalities wherein it is simply written.
 Statement II: Non-holographic will is one prepared by lawyers following the required formalities and signed by the witnesses.
a. Both are true. b. Both are false. c. Only I is true d. Only II is true
40. The ff. are requisites for Losses to be deductible, except:
a. The amount of loss is not compensated with insurance.
b. The loss should occur during the settlement of the estate.
c. The loss was claimed as deduction against income in the ITR.
d. The loss should be incurred not after the last day of payment of Estate Tax.
41. The property, rights and obligations of a person which are not extinguished by his death and those which have been accrued
thereto since the opening of succession:
a. Assets b. Capital c. Estate d. Income
42. Which of the following may be the subject of succession?
a. Properties b. Rights c. Obligations d. All of the above
43. Which of the ff. shall not be taxed?
a. Amounts received for war damages c. Benefits from SSS
b. Amounts received from US Veterans Administration d. All of the above
44. Which of the ff. is not a deduction from GE under the NIRC?
a. Taxes c. Legacy to Govt.
b. Losses d. Legacy to charitable institution
45. The ff. are requisites for vanishing deduction to be allowable, except one:
a. The estate tax of the prior succession must have been finally determined.
b. The present decedent died within 5 years from date of death of the prior decedent.
c. The property with respect to which deduction is sought can be identified.
d. The property with must have formed part of the GE situated in the Philippines of the prior decedent.
46. The ff. expenses, except one should be paid or take place within a certain period in order to be deductible from the GE of a
resident or citizen decedent?
a. Vanishing deduction c. Medical expenses
b. Judicial expenses d. Claims against the estate
47. Statement I: There will be a penalty to pay even if an estate tax return was filed and the estate tax was paid if notice of death
was not given to the BIR.
Statement II: A notice of death is given at any time within two months after the decedent’s death.
a. Both are true. b. Both are false. c. Only I is true d. Only II is true
48. Which is not a requisite of donation:
a. Capacity of the donor c. Delivery of the subject matter
b. Capacity of the donee d. Donative intent
49. The reciprocity clause applies to:
a. Real property c. Intangible personal property
b. Tangible personal property d. All of the above
50. Donation on account of marriage will give a donor a deduction from the gross gifts made if:
a. Donee is a legitimate child c. Donee is not stranger
b. Donee is anybody d. NOTA
51. Statement I: Donor’s Tax is computed on the basis of NG of a calendar year.
Statement II: Donor’s tax becomes proportionately bigger on later donations.
a. Both are true. b. Both are false. c. Only I is true d. Only II is true
52. Statement I: A deduction for a donation on account of marriage shall be allowed to NRA when the property donated is within
the Philippines.
Statement II: A deduction for a donation on account of marriage shall be allowed to Resident Citizen when the property donated
is within the Philippines.
a. Both are true. b. Both are false. c. Only I is true d. Only II is true
53. Who of the ff. is a stranger?
a. Nephew b. Grandchild c. Granduncle d. Second cousin
54. In donor’s tax on a subsequent donation, the donor must also consider:
a. All prior NG during his lifetime. c. The present and immediately preceding donations.
b. All prior NG during the calendar year. d. Only the present donation.
55. Statement I: A donation on which donor’s tax was not paid is not a valid donation.
Statement II: Title to the donated real property cannot be transferred to the donee in the Register of Deeds unless the donor’s
tax on the donation has been paid.
a. Both are true. b. Both are false. c. Only I is true d. Only II is true
56. Where a return was filed, the prescriptive period for assessment after the date the return was due or was filed, whichever is
later, is within:
a. 3 years b. 5 years c. 10 years d. NOTA
57. Statement I: Substantial under declaration of taxable sales, receipts or income, or a substantial overstatement of deductions
shall constitute prima facie evidence of false or fraudulent reporting.
Statement II: A return, statement or declaration filed with the BIR may not be anymore modified, changed or amended.
a. Both are true. b. Both are false. c. Only I is true d. Only II is true
58. Statement I: A taxpayer may appeal to the CTA.
Statement II: The government may appeal to the CTA.
a. Both are true. b. Both are false. c. Only I is true d. Only II is true
59. Statement I: All taxes imposed and collected by the BIR are internal revenue taxes.
Statement II: Real estate tax is a national tax.
a. Both are true. b. Both are false. c. Only I is true d. Only II is true
60. Statement I: The period for filing returns and payment of taxes may not be amended by a revenue regulation.
Statement II: A revenue regulation that is contrary to law it implements is void.
a. Both are true. b. Both are false. c. Only I is true d. Only II is true
Nos. 61 to 66
Philip Joven, a macho dancer, married to Serge, a pole dancer, died during the year leaving the following properties:
 Two-door commercial building inherited from his father 10 years before the marriage valued at P4 Million at the time of
death;
 7 hectare agricultural land planted with high value crops donated by his mother during the marriage with FMV of P2 Million
at the time of death;
 House and lot acquired during the marriage with FMV at the time of death of P5 Million;
 Three-door apartment owned by Philip Joven before marriage with current value of P5 Million;
 4 hectare fishpond owned by Serge before the marriage valued at P4.5 Million at the time of death; and
 Cash of P6 Million representing income from various properties.
Under the ff. regimes, how much is the balance of the ff.:
61. CPG, exclusive properties. 63. CPG, Gross Estate. 65. ACP, conjugal properties.
62. CPG, conjugal properties. 64. ACP, exclusive properties. 66. ACP, Gross Estate.
Nos. 67 and 68
When Gerard married Kristelle, they executed an agreement of complete separation of property. Upon the death of Gerard due to
AIDS, the ff. were the properties:
 69 bedroom hotel inherited by Gerard worth P12 Million;
 Cash deposit by Gerard from exercise of profession of P1.5 Million;
 40 hectare saba plantation acquired by Kristelle during the marriage worth P15 Million;
 House and Lot acquired by the couple during the marriage wherein 40% of P8 Million was paid by Gerard; and
 Kariton acquired by Kristelle during the marriage worth P2 Million.
67. Determine the GE of the decedent. 68. How much is the separate property of Kristelle.
Nos. 69-82
Mae, a bouncer, died due to obesity testate on May 20 of the current taxable year with a GE of P18 Million correctly computed and
distributed as follows:
 Conjugal – P13 Million  Exclusive – P5 Million
The ff. expenses were incurred:
Funeral 350,000 Claims against insolvent persons 600,000
Judicial 400,000 Transfer for public purpose 800,000
Claims against the Estate 500,000 Medical expenses 700,000
Additional info.:
 The GE included a commercial building inherited 4 years ago from the parents of the decedent 4 years ago valued P3 Million
at the time it was received with unpaid mortgage of 300,000 which was paid by the decedent. At the time of death the
property is valued at P4.5 Million.
 The conjugal GE included the Family Home worth P3 Million.
 The amount representing transfer for public purpose was taken from the conjugal property with the consent of the
surviving spouse.
 Medical expenses of hospitalization room bill, laboratory fees, and other related expenses were incurred 4 months prior to
her death.
 The claim against the estate was from a loan by the spouses acquired 1 year before her death and was properly notarized.
69. How much is the funeral expense? 77. How much is the Share of the Surviving Spouse?
70. How much is judicial expense? 78. How much is the Standard Deduction?
71. How much is the Claims against the Estate? 79. How much is the exclusive net taxable estate?
72. How much is the Claims against Insolvent persons? 80. How much is the conjugal net taxable estate?
73. How much is the Transfer for Public Purpose? 81. How much is the Total net taxable estate?
74. How much is the Medical Expense? 82. How much is the Estate Tax?
75. How much is the Vanishing Deduction? 83. When will be the last day of filing Notice of Death?
76. How much is the Family Home? 84. When will be the last day of filing ETR?
85-92
Badet, a decedent NRA because of LBM, provided the ff. information:
Philippines Haiti
Real properties P4,000,000 P9,000,000
Tangible personal properties 2,000,000 3,000,000
Intangible personal properties 500,000 1,500,000
ELIT 900,000 2,000,000
Medical Expenses 400,000 500,000
Transfer for Public Use 800,000
85. How much will be her GE, if she is with reciprocity? 88. How much will be her Total deductions, if she is without
86. How much will be her GE, if she is without reciprocity? reciprocity?
87. How much will be her Total deductions, if she is with 89. How much will be her NE, if she is with reciprocity?
reciprocity? 90. How much will be her NE, if she is without reciprocity?
91. Assuming she is married, how much will be her NE, if she 92. Assuming she is married, how much will be her NE, if she
is with reciprocity? is without reciprocity?

Johnrick and Ces, married resident citizens, donated the ff. gifts from their conjugal properties within the same calendar year:
January 10 - 3 door commercial building with FMV of P6 Million to their eldest son, William on account of his marriage to Cha
on February 15 of the same calendar year;
March 20 - P200,000 cash as birthday present to Arlyn, the wife of the company president, Salisi Co., where Johnrick is
employed;
May 5 - 5 door apartment with FMV of P5.8 Million to their youngest daughter, Kristel who will be married to John Mark
on July 15 the same calendar year;
July 30 - P100,000 cash to their driver, Mark Joseph on account of the marriage of his eldest daughter, Kim.
93. How much is the Donor’s Tax due by Johnrick from the January donation?
94. How much is the Donor’s Tax due by Ces from the January donation?
95. How much is the Donor’s Tax due by Johnrick from the March donation?
96. How much is the Donor’s Tax due by Ces from the March donation?
97. How much is the Total Net Gift by Johnrick after the May donation?
98. How much is the Total Net Gift by Ces after the May donation?
99. How much is the Donor’s Tax due by Johnrick after the July donation?
100.How much is the Donor’s Tax due by Ces after the July donation?

“Success is no accident. It is hard work, perseverance, learning, studying, sacrifice

and most of all, love of what you are doing or learning to do….” - Pele

BBABCCBCCC CDCCAAABDD BCCBBAABCA CCAAADABAC CDDDDDABCA CDDBDACCCD

61-66
11 M; 11 M; 22 M; 2 M; 24.5 M; 26.5 M
67-68
16.7 M; 21.8 M
69-84
200T; 400T; 500T; 600T; 800T; 500T; 465T; 1 M; 4.5 M; 1M; 4.535 M; 3.5 M; 8.035 M; 920,250; June 9; September 8
85-92
6 M; 6.5 M; 1.67 M; 1.742 M; 4.33 M; 4,757,500; 2.165 M; 2,378,750
93-100
203,200; 203,200; 30,000; 30,000; 5,880,000; 5,880,000; 15,000; 15,000

Republic of the Philippines

 PALAWAN STATE UNIVERSITY
College of Business and Accountancy
Puerto Princesa City

MIDTERM IN TRANSFER TAX

I.D. No.: ____________________________________________________________________Score: _______________________
Course/Year/Block:___________________________________________________________ Date: ________________________
Multiple Choices: Shade the letter of your answer at the side in the answer key. Place your answer on the provided spaces. Avoid
Erasures. Any markings or erasure are considered as wrong answer.
A B C D A B C D A B C D

1. 21. 41.
2. 22. 42.
3. 23. 43.
4. 24. 44.
5. 25. 45.
6. 26. 46.
7. 27. 47.
8. 28. 48.
9. 29. 49.
10. 30. 50.
11. 31. 51.
12. 32. 52.
13. 33. 53.
14. 34. 54.
15. 35. 55.
16. 36. 56.
17. 37. 57.
18. 38. 58.
19. 39. 59.
20. 40. 60.

61 71 81 91
62 72 82 92
63 73 83 93
64 74 84 94
65 75 85 95
66 76 86 96
67 77 87 97
68 78 88 98
69 79 89 99
70 80 90 100