ACCO 20173 Quiz 1

1.Which is not a characteristics of transfer tax?

Privilege tax
National tax
Local tax
Direct tax
2.Which is not subject to transfer tax on transfer of properties located abroad?
Resident citizen
Non-resident alien
Resident alien
Non-resident citizen
3. Which of these is subject to tax only on transfers of properties situated in the Philippines?
A citizen of Japan residing in the Philippines
A citizen of the Philippines residing in Hongkong
A citizen of America residing in Korea
A citizen of the Philippines residing in the Philippines
4. This is a person appointed b the court to manage the distribution of the estate
Administrator
Executor
Guardian
Trustee
5. Heir who inherits personal property by will is known as:
Devisee
Legatee
Compulsory heir
Donee
6. The tax imposed on the transfer of property without consideration between two or more persons who are living at the time
the transfer is made
Estate tax
Business tax
Donor’s tax
Personal tax
7. It deprives an heir to inherit properties by the decedent through the issuance of a will.
Disinheritance
Distributable share
Legitimate
Disqualification
8. Which of the following is not a valid will?
That which increases the legitime of a compulsory heir
That which transfers the portion of legitime to other successors other than compulsory heirs
That which reduces the free portion of the estate tax
That which transfers a part of free portion to a compulsory heir
9. If the surviving heirs in an intestate succession are the parents a legitimate child of the decedent, what is the share of the
parents in the legitimes?
1/3
½
¼
None
10. Certain parts of the estate of a deceased Filipino citizen cannot be freely disposed of because Philippine law reserves them
for the “compulsory heirs”. This portion of the decedent’s estate is known as
Legitimes
Free portion
Legacy
Bequest

11. The transfer of wealth should be taxed so that it will benefit the entire society. Which theory does the statement describe?
State partnership theory
Ability to pay theory
Wealth distribution theory
Tax recoupment theory
12. Which of the following is a valid will?
That which reduces the legitime of compulsory heirs
That which increase the share of one heir without impairing the legitime of the other heirs
That which transfers the legitime of one heir to the other heir
That which impair the legitimate of compulsory heir
13. When will the transfer through succession be effective?
Upon signing of a written will
Upon payment of estate tax
Upon death of the testator
Upon resignation in the register of deeds
14.Which of the following is not included in the list of properties in computing gross estate?
Transfer in contemplation of death
Revocable transfer
Transfers under general power of appointment
Merger of the usufruct in the owner of the naked title
15. The proceeds of life insurance designated by the decedent to his/her executor is excluded in gross estate
If the designation is revocable
If the designation is irrevocable
Without regard to the designation as revocable or irrevocable
Under no circumstances
16. Which is an inclusion in gross estate?
Separate properties of the surviving spouse
Common properties of the spouses
Separate properties of the heirs
Properties acquired from group insurance
17. Which is not included in gross estate?
Revocable transfers
Transfers in contemplation of death
Transfers under special power of appointment
All of these
18. Which of the following losses is not deductible?
Losses of properties compensated for by insurance
Losses arising from fires
Losses arising from theft or embezzlement
Losses arising from storms or shipwreck
19. Which of the following decedents cannot claim special deductions for family home?
Resident citizen
Resident alien
Non-resident alien
Non-resident citizen
20. Which is not considered in computing the share of surviving spouse?
Claims against the estate
Transfer for public use
Standard deduction
Vanishing deduction
21. Vanishing deduction is allowed if the property subject to vanishing deduction is acquired
One year before death
More than one year before death
Within 5 year before death
More than 5 year before death
22. Which is false?
a.The estate tax is computed based on the net estate or taxable estate
b.The net estate is determined by subtracting from the gross estate the deductions authorized by law
both a and b
neither a nor b
23. As a rule, the basis of valuation of property in the gross estate is the fair market value prevailing at the time of decedent’s
death. In the case of domestic shares of stock not traded thru the stock exchange, the fair market value is
The value appearing in the schedule of fixed values from the assessor’s office
Net realizable value
Acquisition cost
Issuer’s book value
24. Estate tax is imposed upon the
Decedent
Property or rights transferred
Right to transfer property upon death
Privilege to receive inheritance
25. Who shall file the estate tax return?
Executor, or administrator, or any of the legal heir
Creditors of the decedent
Personal secretary of the decedent
Debtors of the decedent
26. Which of the following is subject to the rule of reciprocity?
Car in the Philippines owned by a non-resident alien decedent
Investment in stock in a US Corporation owned by a non-resident alien decedent
Investment in bonds in a US Corporation that has acquired business situs in the Philippines, and is owned by a resident alien
Shares owned by a non-resident alien in a partnership established in the Philippines

27. A resident Japanese decedent died with the following properties: A house and lot in Japan, P2,000,000; Bank deposit, in
the Philippines, P800,000; A car in the Philippines, P1,000,000; A residential lot in the USA, P1,500,000.
Compute the amount to be included in the gross estate.
0
P1,800,000
P2,000,000
P5,300,000

House and lot in Japan P2,000,000

Bank deposit in Phils 800,000
A car in the Phils 1,000,000
A residential lot in the USA 1,500,000
Total gross estate P5,300,000

28. A decedent owns 25,000 stocks in a closely-held corporation which had the following equity structure at the date of death
of the decedent:
Common stocks (1,000,000 outstanding shares P5,000,000
Additional paid in capital 2,000,000
Retained earnings 1,000,000
Total shareholder’s equity P8,000,000
What is the value of the stocks to be reported in gross estate?
0
P125,000
P175,000
P200,000

Total Common SHE = P8,000,000 = P8 x 25,000 = P200,000

No of shares outstanding 1,000,000

29. Mrs. Candida died. In his last will and testament, he indicated the following:
House and lot, to his adopted son and only heir P5,000,000
Land, to a public school 1,000,000
Cash, to ABS-CBN Foundation 500,000
The legacy to ABS-CBN Foundation was intended for Bantay Bata 163,
a non- profit social welfare program of ABS-CBN Foundation
Compute the gross estate.
P5,000,000
P5,500,000
P6,000,000
P6,500,000

House and lot, to his adopted son and only heir P5,000,000
Land, to a public school 1,000,000
Gross estate P6,000,000

30. The gross estate of a decedent included the following:

Cost Fair value
Land and Bldg, Philippines P1,600,000 P2,000,000
House and lot, UK 1,800,000 1,500,000
Personal properties, UK 1,000,000 600,000
House and lot, Philippines 4,000,000 3,500,000
Shares of stock, UK Corp 200,000
Shares of stocks, domestic corp
(certificate kept in UK) 250,000
Shares of stocks, domestic corp
(certificate kept in Phils) 100,000
Franchise exercised in the Phils 200,000
Franchise exercised in UK 150,000
Receivables, debtor is from UK 50,000
Receivables, debtor is from Phils 50,000
If the decedent was a non resident alien and his country exempts a Filipino citizen from estate
Tax, how much of his assets would be subject to reciprocity?
P1,000,000
800,000
600,000
350,000

Shares of stocks, domestic corp

(certificate kept in UK) P250,000
Shares of stocks, domestic corp
(certificate kept in Phils) 100,000
Franchise exercised in the Phils 200,000
Receivables, debtor is from Phils 50,000
Total P600,000
31. A decedent died leaving a family home to his children:
Lot – separate property of the decedent, P3,000,000; House – common property, P12,000,000.
Compute the amount of deductible family home
P3,000,000
P7,500,000
P9,000,000
P10,000,000

Lot P 3,000,000
House (12,000,000/2) 6,000,000
Family home P9,000,000

32. A Japanese citizen residing in Japan had the following properties and deductions:
Properties in the Philippines P 3,000,000
Properties in Japan
6,000,000
Properties in Hongkong
1,000,000
Total world estate P10,000,000

Losses and indebtedness P3,000,000

Medical expense 450,000
Transfer for public use of properties located in Japan 500,000
Compute the total deductions allowable
P1,400,000
P1,535,000
P2,035,000
P2,350,000

LITE proportional deduction = 3,000,000/10,000,000 x 3,000,000 = 900,000

Standard deduction 500,000
Total deductions allowable P1,400,000

33. On November 1, 2018, Gwen died leaving the following properties:

Agricultural land inherited February 2, 2016 P1,200,000
House and lot 2,000,000
Cash 2,800,000
Car 500,000
Other personal properties 1,000,000
Total properties P7,500,000

Mortgage on the agricultural land P500,000

Other indebtedness 1,200,000
Deductible losses 400,000
Total ordinary deductions P2,100,000

Gwen paid P300,000 in mortgage before her death. The prior estate paid
the estate tax on the agricultural land which was then valued at P1,000,000
 Compute the vanishing deduction

P403,200
P388,800
P330,400
P302,400

Value to take P1,000,000

Less: Mortgage paid 300,000
Initial basis P 700,000
Less: Proportional deduction
(700/7500) x 2,100,000 196,000
Final basis P504,000
X rate 60%
Vanishing deduction P302,400

34. A non-resident alien died leaving a substantial estate in the Philippines. He is married with six dependents. How much
standard deduction he can claim?
0
200,000
5,000,000
500,000

35.The administrator of a decedent’s estate (head of the family) provided the following data:
Property
Domestic shares of 2,000 shares inherited 6 years ago 8,000,000
House and lot, family home, located in Davao, inherited 2 years ago at a value of P1,500,000 2,000,000
Jewelry items, in the Philippines at the time of death 400,000
Jewelry items kept in a vault abroad 200,000
Bank deposit in a Philippine branch of a US bank 5,000,000
Interest from bank deposit after decedent’s death 25,000
Expenses and other charges
Funeral expenses, abroad 80,000
Funeral expenses, Philippines 200,000
Judicial expenses, abroad 100,000
Judicial expenses, Philippines 50,000
Claims against the estate with the notarized debt instrument issued in the Phils 120,000
Donation to the Philippine government as provided in his will 250,000

Determine the net taxable estate assuming the decedent was Filipino citizen but a resident of Australia
P7,308,013
P7,333,013
P12,3018,013
P7,058,013
Value to take P1,500,000
1st Deduction: Mortgage paid -
Initial basis P1,500,000
2nd Deduction: Proportionate deduction
(1,500/15,850) x P370,000 (35,016)
Final Basis P1,464,984
x Vanishing rate 80%
Vanishing Deduction P1,171,987**