ACCTY/ MA 221-TRANSFER AND BUSINESS TAX (QUIZ 1)

1. The object of estate tax is the

a. Right to Transmit
b. Decedent
c. Properties of the Decedent
d. Beneficiaries

2. The elements of succession are

I. Decedent
II. Estate
III. Heirs
IV. Executors
V. Administrators

a. I and II only
b. I, II, and III only
c. I, II, III, and IV only
d. All of the above

3. Which of the following is not subject to estate tax?

a. A succession to the property of a decedent who left no last will and testament/
b. A donation mortis causa
c. A donation inter vivos(subject to donor’s tax)
d. A transfer during the lifetime for less than full and adequate consideration

4. Which of the following may not be subject to succession?

a. Properties and Rights.
b. Obligations in excess of the inheritance received.
c. All of the above.
d. None of the above.

5. Proceeds of the life insurance includible in the taxable gross estate

a. Insurance proceeds from SSS or GSIS. (exempted under special law)
b. Amount receivable by any beneficiary irrevocable, designated in the policy by the insured. (exempted)
c. Amount receivable by any beneficiary designated in the insurance policy (should be explicitly stated that irrevocable,
to be exempted)
d. Proceeds of group insurance taken out by a company for employees (exempted, since this is not the will or is beyond
the control of the employee).

6. Which statement is correct? Real property with a cost of P580, 000 and a fair market value at the time of death
of P950, 000, but subject to a mortgage of P230, 000
a. Shall be in the gross estate at the decedent’s equity of P720, 000
b. Shall be in the net taxable estate at P720, 000
c. Shall be in gross estate at P580, 000
d. Shall be in gross estate at the owner’s equity of P350, 000
(gross estate should be at 950, 000)
Deduction:(claims) (230,000)
Amount in the net estate 720, 000
 7. A revocable transfer with the following circumstances: Fair market value at time of transfer – P500, 000; fair
market value at time of death P280, 000; consideration received when transferred – P350, 000.
a. Shall be included in the gross estate at P280, 000
b. Shall be included in the gross estate P350, 000
c. Shall be included in the gross estate at P150, 000
d. Shall not be included in the gross estate.

For insufficient considerations: amount to be included in the gross estate is the difference of the fair market value at the
time of death and the considerations received. Hence:
Fair Market Value at time of death 280, 000
Considerations received (350, 000)
Net -20, 000
Hence, it shall not be included in GE (it’s only either GE will be added or not , positive or zero, negative can’t be
deducted it will only mean exemption)

8. Estate tax is
a. A property tax because it is imposed on the property transmitted by the decedent to his heirs. (it is not a property tax;
it is a transfer tax / excise tax)
b. An indirect tax because the burden of paying the tax is shifted on the executor or any of the heirs of the decedent.
(it is a direct tax since the estate itself is the taxpayer)
c. An excise tax because the object of which is the shifting of economic benefits and enjoyment of property from the
dead to the living.
d. A poll tax because it is also imposed on residents of the Philippines whether Filipino citizens or not. (it is not a poll
tax / tax on the person since it is a tax on the right to transfer)

9. An executor or administrator, after paying the estate tax, and to escape a future liability for a deficiency estate
tax, must secure a written discharge from personal liability from:
a. The heirs
b. The Commissioner of Internal Revenue
c. The court when the estate was being settled
d. Need not secure a written discharge as long as he has a receipt on payment of the
estate tax.

10. All of the following are considered intangible in the Philippines, except:
a. Franchise which must be exercised in the Philippines
b. Shares, obligations or bonds issued by any corporation or sociedad anonima organized or constituted outside
Philippines in accordance with its laws.
c. Shares, obligations or bonds by any foreign corporation 85% of the business of which is located in the Philippines.
d. Shares, obligations of bonds issued by any foreign corporation if such shares, obligations or bonds have
acquired a business situs in the Philippines.

11. Which statement is false about succession:

a. The successor inherits all the transmissible property of a decedent including his liabilities.
b. The successor can be made liable for the obligations of the decedent beyond the value of the asset he received
c. In succession, fruits and credits maturing after the death of the decedent pass to the heirs even if they were not
subjected to estate tax.
d. In succession, the successor can refuse the inheritance.
***heirs can only inherit OBLIGATIONS to the extent of the property/rights left by the decedent

12. Which of the following statements is wrong?

a. The gross estate of a non-resident citizen would include properties regardless of
location.
b. The gross estate of a non-resident, not citizen on the Philippines, would include all
properties regardless of location.
c. The gross estate of a non-resident, not citizen on the Philippines, would include
intangible properties in the Philippines.
d. The gross estate of a non-resident citizen of the Philippines would include only
properties in the Philippines.

(NRC shall be taxed for the properties left wherever it is situated)

13. The personal properties of a non-resident alien , would not be included in the gross estate if:
a. The intangible personal property is in the Philippines.
b. The intangible personal property is in the Philippines and the reciprocal clause of the estate tax law applies.
c. The tangible personal property is in the Philippines.
d. The personal property is shares of stock of Domestic Corporation 90% of whose business is in the Philippines.

14. In computing the gross estate of the decedent:

a. If he was a non-resident, but citizen of the Philippines, tangible and intangible properties, regardless of location
shall be included.
b. If he was a resident who was not a citizen of the Philippines, tangible and intangible properties, regardless of location,
shall be included.
c. If he was a non-resident who was not a citizen of the Philippines, tangible and intangible personal properties,
located in the Philippines, shall be included.
d. All of the above statements are correct.

15. Which of the following exempt transmissions will still require inclusion of the property in the gross estate?
a. Merger of the usufruct in the owner of the naked title. Exempt
b. Legacy to a charitable institution whose administrative expenses did not exceed 30% of the legacy.
c. Transfer from a first heir to a second heir designated by the decedent. Exempt
d. Death benefits under the GSIS and SSS. Exempt

16. Mr. X transferred his property amounting to P500, 000 at that time to Mr. Y. The transfer was subject to
revocation. On the date Mr. X died the value of the said property was P670, 000. Mr. Y paid P390, 000 in
consideration of the property transferred to him. The amount to be included in the gross estate on
account of the above transfer is:
a. P670, 000
b. P390, 000
c. P280, 000
d. P110, 000

FV at time of death 670, 000

Less: Consideration (390, 000)
GE 280, 000
 17. Who of the following shall file the written notice of death?
I. Executor
II. Administrator
III. Any of the legal heirs

a. I and II only
b. Any of I, II and III
c. II and III only
d. None of the above

18. In case of a resident decedent, the administrator or executor shall register the estate of the
decedent and secure new TIN from the
a. Office of the Commissioner
b. RDO where the administrator or executor is registered
c. RDO where the decedent was domiciled at the time of his death
d. Duly authorized treasurer of the city or municipality where the decedent is
domiciled at the time of his death.

19. Can the estate tax be paid in installment?

a. Yes, in case the available cash of the estate is not sufficient to pay its estate tax liability
b. Yes, at the option of the heirs with corresponding interest charges
c. No, tax is lifeblood of the state, hence, collection cannot be delayed under any circumstance.
d. None of the above.

20. A died leaving a house and lot to B on March 31, 2012 which was questioned by C and it is under litigation but
subsequently, the parties executed an extra-judicial settlement. The last day for filing the estate tax return is
a. March 31, 2013
b. September 30, 2012 (before TRAIN LAW-6months)
c. April 30, 2016
d. October 30, 2012

21. X died on November 1, 2020 leaving a residential lot. Zonal Value a month before his death, P8,600,000. The
estate tax return was filed on April 30, 2021, on which the lot had a Fair market Value at the time of P9,100,000.
Assessed Value of the lot on November 1, 2020 is P7,900,000. What would be the value of the piece of land in
the gross estate?
a. P7,900,000 (value at the time of death)
b. P8,600,000
c. P9,100,000
d. Cannot be determined.

22. Z, a resident alien, died on March 1, 2020, leaving the following properties:
Preferred Stock of A,corp. (3,100 shares)-listed in PSE. Cost-P38, par value-P49, highest-P58, lowest P36)
Common Stock of A,corp. (8,600 shares)-not listed in PSE. Cost-P15, book value-P22
Other Tangible Personal Properties (Cost-P520,390, Book Value-P 360,180, Fair Market Value-P410,250)
a. P695,080
b. P701,280
c. P745,150
d. P751,350
(58+36/2x3,100)=145,700+ (22x8,600)=189,200+ (410,250 FMV)
23. M, a non-resident citizen, died on March 1, 2020, leaving the following properties:
Preferred Stock of A,corp. (4,300 shares)-not traded in Stock Exchange. Cost-P18, par value-P21
Common Stock of A,corp. (9,700 shares)- traded in Stock Exchange. Cost-P30, book value-P45, highest
quotation-P60, lowest quotation P42)
Real Properties (Cost-P450,000, Book Value-P 760,000, Fair Market Value-P680,000)
a. P1,035,000
b. P1,265,000
c. P1,206,500
d. P1,345,000
(4,300x21)=90,300+ (60+42/2x9,700)=494,700+ (680,000)

24. The decedent devised to his son a 2,520 sqm.lot in Isabela with the following valuation: independently
assessed value-P71,004,000, City Assessor’s assessed value-P25,150/sqm, CIR’s assessed Value-P59,105,000.
Determine the correct amount to be included he gross estate of the decedent.
a. P59,105,000
b. P63,378,000
c. P67,145,000
d. P71,004,000
Assessed (2,520@P25,150) higher than zonal P59,105,000

25. The decedent granted a P1,720,850 loan to his friend 4 years before his death with a 12.5% annual interest
evidenced by a note. Both the principal and interest are due after 6 years. Determine the correct amount to be
included in the gross estate of the decedent.
a. P860,425
b. P1,720,850
c. P1,935,956
d. P2,581,275
Interest (P1,720,850x12.5%x4yrs) + Principal P1,720,850

26. F owns 50,000 ordinary shares of P Corporation at the time of his death. At that time, P Corporation’s
outstanding shares were 2,500,000 with P12 par value and Retained Earning amounting to P18,000,000. The
shares are not listed in PSE.
a. P360,000
b. P600,000
c. P850,000
d. P960,000
(2,500,000xP12)+18,000,000/2,500,000x50,000

27. The taxpayer in estate tax is:

a. The decedent
b. The estate as a juridical entity
c. The heirs or successors
d. The administrator or executor

28. The taxpayer in estate tax is:

a. The decedent
b. The estate as a juridical entity
c. The heirs or successors
d. The administrator or executor
29. An act whereby a person is permitted, with the formalities prescribed by law, to control to a certain degree the
disposition of his estate, to take effect after his death.
a. Contract
b. Trust
c. Will
d. Legacy

30. The portion of the decedent’s estate which the law reserves to his compulsory heir is called:
a. Legacy
b. Bequest
c. Legitime
d. Free Portion