P2.

1 (page 61)

Requirements:
Determine the correct Gross Estate assuming the decedent was:
1. Resident Citizen
2. Resident Alien
3. Non-resident alien with reciprocity
4. Non-resident alien without reciprocity

Family home (land and residential house) in the Philippines

Parcel of land with vacation house in Malaysia
Farm land in the Philippines, with a mortgage in favor of
Philippine National Bank for 600,000
Shares of stocks of a domestic corporation depsoited in a bank
safety deposit box in Malaysia
Shares of stocks of a foreign corporation the entire business in
Philippines, deposited in safety box in Malaysia
Receivable from a friend who has no property whatsoever
Life insurance policy, taken by the decedent on his own life, with
his estate as revocable beneficiary
Life insurance policy, taken by the decedent on his own life, with
a daughter as revocable beneficiary
Life insurance policy, taken by the decedent on his own life, with
a son as a irrecovable beneficiary

Total Gross Estate

P2.2 (page 62)

Requirement: Determine the gross estate of the decedent

To Juan
Zonal Value determined by City of Manila
Assessed Value as determined by the CIR
Higher= Zonal Value determined by City of Manila

To Pedro
Zonal value determined by Q.C
Assessed value as determined by the CIR
Higher= Assessed Value determined by the CIR

To Maria
Zonal value determined by City of Manila
 To Sisa
FMV as determined by the independent assessors

Total Gross Estate

To Juan 25,000,000.00
To Pedro 18,000,000.00
To Maria 15,000,000.00
To Sisa 20,000,000.00
Total Gross Estate 78,000,000.00

P2.3 (Page 62)

Requirement: Determine the gross estate of Pedro

10,000 shares if Frozen Company's ordinary shares, not traded

--->not traded ordinary shares= unlisted
valuation= BV per share

Outstanding Shares
Multiply by: Par value
Total
Add: Retained Earnings
Total
Divided by: No. of Outstanding shares
Book Value per share
Multiply by: Interest in Frozen
Inclusion in Gross Estate

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

--->listed shares; valuation is FMV if there is any

Shares in Divergent Company

Multiply by: quoted price @ time of death
Inclusion in Gross Estate

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

-->listed shares; valuation is FMV if there is any

Shares in Lenovo Company

Mulitply by: mean values
Inclusion in Gross Estate

P2.4 (page 63)

Case 1: 230,000.00
Should be based on the schedule of assessor's office (whichever is higher)
Case 2: Insufficient consideration included to gross estate

Case 3: insufficient consideration included to gross estate

Case 4: 5,000,000.00

Case 5: Face amount of Loan 1,000,000.00

Interest 150,000.00
Total 1,150,000.00
 NRA with NRA without
Resident Citizen Resident Alien reciprocity reciprocity
8,000,000.00 8,000,000.00 8,000,000.00 8,000,000.00
5,000,000.00 5,000,000.00

3,000,000.00 3,000,000.00 3,000,000.00 3,000,000.00

2,000,000.00 2,000,000.00 2,000,000.00

500,000.00 500,000.00 500,000.00

300,000.00 300,000.00 300,000.00

200,000.00 200,000.00 200,000.00

300,000.00 300,000.00 300,000.00

0.00 0.00 0.00

19,300,000.00 19,300,000.00 11,000,000.00 14,300,000.00

25,000,000.00
18,000,000.00
25,000,000.00

15,000,000.00
18,000,000.00
18,000,000.00

15,000,000.00
 20,000,000.00

800,000.00
10.00
8,000,000.00
3,000,000.00
11,000,000.00
800,000.00
13.75
100,000.00 Shares in Frozen 1,375,000.00
1,375,000.00 Shares in Divergent 1,500,000.00
Shares in Lenovo 1,200,000.00
, listed shares Total Gross Estate 4,075,000.00

100,000.00
15.00
1,500,000.00

sted shares

100,000.00
12.00
1,200,000.00

hichever is higher)
o gross estate 1,100,000.00

o gross estate 0.00

 COMPPOSITION AND VALUATION OF THE GROSS ESTATE

44 Valutaion of the piece of land in the gross estate

Assessed value, six months before death

Fair market value at the thime of filling estate tax retun on Feb 28,2020
Zonal value, March 1, 2020

Solution:
Assessed value at the time of death none
Zonal Value at the time of death 2,000,000.00

Answer: 2,000,000.00

45 Valuation of piece of land in the gross estate

Assessed value as determined by the City Assessors

Zonal Value as determined by the CIR
Fair Market Value as determined by the independent assessors

Assessed value at the time of death 25,000,000.00

Zonal value at the time of death 18,000,000.00

Answer: 25,000,000.00

46 Value that should be included in the decedent's gross estate

--> shares were traded in the local exchange

No. of shares owned by the decedent 10,000.00

Multiply by: FMV at the time of death 400.00
Amount to be included in the gross estate 4,000,000.00

48 Correct amount of gross estate

Ordinary shares (in closely held domestic held corporation)

No. of shares owned by the decedent 80,000.00
Multiply by: par value 10.00
Total 800,000.00
Ordinary shares (in publicly listed corporation)
 No. of shares owned by the decedent 100,000.00
Multiply by: closing rate @ time of death 15.00
Total 1,500,000.00
Ordinary shares (listed in local stock exchange)
No. of shares owned by the decedent 120,000.00
Multiply by: mean value 12.00
Total 1,440,000.00
Correct amount of gross estate

49 Gross Estate of Decedent

Common Stocks of Sunchamp

No. of shares owned by the decedent 2,000.00
Multiply by: mean value 39.50
Total 79,000.00
Common Stock not listed
No. of shares owned by the decedent 1,500.00
Multiply by: book value 45.00
Total 67,500.00
Preferred shares not listed
No. of shares owned by the decedent 3,000.00
Multiply by: par value 50.00
Total 150,000.00
Car, market value @time of death
Real properties, higher between zonal and assessed value
Total Gross Estate of the Decedent

51 Gross Estate of a Resident Decedent

House and lot-syria

Vacant lot- manila
Shares of stock in a domestic corp, 60% of the business is located in the Philippines
Shares of stock in a foreign corp, 70% of the business is located in the Philippines
Car in Manila
Total Gross Estate

52 Gross Estate of a Non-resident Alien-no reciprocity

Vacant lot in Manila
Shares of stock in a domestic corp, 60% of the business is located in the Philippines
Car in Manila
Total Gross Estate
 53 Gross Estate of a Non-resident Alien- with reciprocity
Vacant lot in Manila
Car in Manila
Total Gross Estate

54 Property excluded in the gross estate if Decedent is a non-resident alien with reciprocity
Deposit in the foreign branch of a domestic bank
shares of stock issued by a domestic corporation
Receivable, debtor in Cebu
Total

PROPOERTY RELATIONSHIP; MARRIAGE SETTLEMENT

104 How much is the conjugal properties under Conjugal Property of Gains?

Income from rest house in Cebu

Income from condominium in Davoa
Townhouse in Quezon City, acquired during marriage
Income from townhouse in Quezon City
Total Conjugal Properties

105 How much is the gross estate under Conjugal Partnership of Gains?

Rest house in Cebu, acquired before marriage

Income from resthouse in Cebue
Condominium in Davao, brought to maarriage by wife
Income from condominium in Davao
Townhouse in Quezon City, acquired during marriage
Income from town house in Quezon City
Car inherited by wife
 Jewelry, acquired during marriage for exclusive use of the wife
Gross Estate

106 How much is the community properties under Absolute Community of Property?

Rest house in Cebu, acquired before marriage

Income from resthouse in Cebu
Condominium in Davao, brought to maarriage by wife
Income from condominium in Davao
Townhouse in Quezon City, acquired during marriage
Income from town house in Quezon City
Car inherited by wife
Jewelry, acquired during marriage for exclusive use of the wife
Total

107 How much is the gross estate under Absolute Community of Properties?

Rest house in Cebu, acquired before marriage

Income from resthouse in Cebu
Condominium in Davao, brought to maarriage by wife
Income from condominium in Davao
Townhouse in Quezon City, acquired during marriage
Income from town house in Quezon City
Car inherited by wife
Jewelry, acquired during marriage for exclusive use of the wife
Gross Estate

109 How much is the net taxable estate under Conjugal Partnership of Gains?

House (Family Home)

Lot (Family Home)
Other properties acquired during marriage
Jewelry inherited, during marriage
Property in U.S., received as a gift (applicable donor's tax was not paid by the donor)
Rental income on the abpve property upto time of death
Gross Estate
Funeral Expenses
Judicial Expenses
Casualty losses
Claims against the Estate
Medical Expenes within 1 year prior to death, only half was receipted
 Net Taxable Estate

Funeral Expenses: Not deductible in the Gros

Judicial Expenses: Not deductible in the Gro
Medical Expenses: Not deductible in the Gros

110 How much is the net taxable state under Absolute Community of Property?

House (Family Home)

Lot (Family Home)
Other properties acquired during marriage
Jewelry inherited, during marriage
Property in U.S., received as a gift (applicable donor's tax was not paid by the donor)
Rental income on the abpve property upto time of death
Gross Estate
Ordinary Deductions
Funeral Expenses
Judicial Expenses
Casualty losses
Claims against the Estate
Medical Expenes within 1 year prior to death, only half was receipted
Vanishing Deductions
Net Taxable Estate before Special Deductions
Special Deductions
Standard Deduction
 Family Home (house and lot= 14,000,000/2 = 7,000,000 vs. 10,000,00
Share of the Surviving Spouse
Net Taxable Estate

Computation for vanishing deductions:

Value to take (FMV@ decent's GE vs. FMV@ time of death of current decedent which
Mortgage paid by the decedent (upaid mortgae assumed)
Intial Basis
Less: Proportional Deduction
Initial Basis
Divided by: Gross Estate
Total
Multiply by: LiTE+TFPU
Casual Losses
Claims Against Estate
Total Lite
Final Basis
Vanishing Deduction %
Vanishing Deductions
 2,500,000.00 Rule:
3,000,000.00 General rule: Fair Ma
2,000,000.00
Higher between the F
provided by the BIR a

FMV determined by th
25000/ sq.m unless there are no ot
18,000,000.00
28,000,000.00

800,000.00
 1,500,000.00

1,440,000.00
3,740,000.00

79,000.00

67,500.00

150,000.00
400,000.00
120,000.00
816,500.00

1,000,000.00
2,000,000.00
the Philippines 100,000.00
e Philippines 200,000.00
500,000.00
3,800,000.00

2,000,000.00
the Philippines 100,000.00
500,000.00
2,600,000.00
 2,000,000.00
500,000.00
2,500,000.00

ien with reciprocity

500,000.00
1,000,000.00
200,000.00
1,700,000.00

Explanation:

600,000.00 Rest house in Cebu, acquired before ma

360,000.00 Income from rest house in Cebu
10,500,000.00 Condominium in Davao, brought into ma
1,050,000.00 Income from condominium in Davao
12,510,000.00 Townhouse in Quezon City, acquired du
Income from townhouse in Quezon City
Car, inherited by wife during marriage (d
that it shall form part of the common pro
Jewelry, acquired during marriage for ex

Exclusive Conjugal Total

6,000,000.00 6,000,000.00
600,000.00 600,000.00
0.00 0.00
360,000.00 360,000.00
10,500,000.00 10,500,000.00
1,050,000.00 1,050,000.00
0.00 0.00
 0.00 0.00
6,000,000.00 12,510,000.00 18,510,000.00

nity of Property?
Explanation:
6,000,000.00 Rest house in Cebu, acquired before ma
600,000.00 Income from resthouse in Cebu
3,600,000.00 Condominium in Davao, brought to maa
360,000.00 Income from condominium in Davao
10,500,000.00 Townhouse in Quezon City, acquired du
1,050,000.00 Income from town house in Quezon City
1,300,000.00 Car inherited by wife
200,000.00 Jewelry, acquired during marriage for ex
23,610,000.00

Exclusive Community Total

6,000,000.00 6,000,000.00
600,000.00 600,000.00
3,600,000.00 3,600,000.00
360,000.00 360,000.00
10,500,000.00 10,500,000.00
1,050,000.00 1,050,000.00
1,300,000.00 1,300,000.00
200,000.00 200,000.00
0.00 23,610,000.00 23,610,000.00

Exclusive Conjugal Total

10,000,000.00 10,000,000.00
4,000,000.00 4,000,000.00
6,000,000.00 6,000,000.00
1,300,000.00 1,300,000.00
id by the donor) 2,300,000.00 2,300,000.00
1,200,000.00 1,200,000.00
7,600,000.00 17,200,000.00 24,800,000.00
0.00
(800,000.00) (800,000.00)
(600,000.00) (600,000.00)
(1,600,000.00) (1,600,000.00)
 7,600,000.00 14,200,000.00 21,800,000.00

: Not deductible in the Gross Estate

: Not deductible in the Gross Estate
: Not deductible in the Gross Estate

f Property?
Exclusive Community Total
10,000,000.00
4,000,000.00
6,000,000.00
2,500,000.00
id by the donor) 2,300,000.00
1,200,000.00
4,800,000.00 21,200,000.00 26,000,000.00

- - -
- - -
(600,000.00)
(1,600,000.00)
- - -
(952,000.00) (3,152,000.00)
3,848,000.00 19,000,000.00 22,848,000.00

(5,000,000.00)
2 = 7,000,000 vs. 10,000,000 lower) (7,000,000.00)
(9,500,000.00)
1,348,000.00

h of current decedent whichever is lower) 1,300,000.00

0.00
1,300,000.00
(110,000.00)
1,300,000.00
26,000,000.00
0.05

600,000.00
1,600,000.00
2,200,000.00
1,190,000.00
0.80
952,000.00
General rule: Fair Market Value at the time of death

Higher between the FMV provided by the City /Provincial assessors (assessed value) and Zonal Value
provided by the BIR at the time of death

FMV determined by the independent assessors are ignored for estate tax purposes
unless there are no other available information
bu, acquired before marriage exclusive property of the decedent (Mr. J Chavez)
house in Cebu Conjugal property (fruits/income are conjugal whatev
Davao, brought into marriage by wife exclusive property of the wife
ominium in Davao Conjugal property (fruits/income are conjugal whatev
ezon City, acquired during marriage conjugal property
house in Quezon City Conjugal property (fruits/income are conjugal whatev
wife during marriage (decedent provided in his will exclusive property of the wife
art of the common properties of the spouses)
during marriage for exclusive use of the wife exclusive property of the wife
bu, acquired before marriage community property under ACoP
ouse in Cebu community property under ACoP (fruits follow the source)
Davao, brought to maarriage by wife community under ACoP
ominium in Davao community property under ACoP (fruits follow the source)
ezon City, acquired during marriage community property under ACoP
house in Quezon City community property under ACoP (fruits follow the source)
community property under ACoP (if clearly stated by the donor
during marriage for exclusive use of the wife community property under ACoP

Correct Solution with Explanation:

Family Home- Lot

Family Home- House
Other properties acquired during marriage
Jewelry inherited, during marriage
Property in U.S., received as a gift (applicable donor's tax was not paid by the donor)
Rental income on the abpve property upto time of death
Gross Estate
Ordinary Deductions:
Casualty Losses
Claims Against the Estate
Vanishing Deduction
Net Estate before Special Deductions
Special Deductions:
Standard Deduction
Family Home (4,000,000 + (10,000,000/2)) vs. 10,000,000 whichever is lower)
Share of the Surviving Spouse
Taxable Net Estate

Computation fro Vanishing Deduction:

Value to take (FMV @prior decedent's GE= 1,300,000 vs. current FMV@ time of death= 2,500,000) whichever lowe
Unpaid mortgage
Initial Basis
Proportional Deduction
Intial Basis
Divided by: Gross Estate
Total
Multiply by: LiTE+ Transfer for Public Use
Casualty losess 600,000.00
Claims Against the Estate 1,600,000.00
Total LiTE 2,200,000.00
Proportional Deduction

Final Basis
Vanishing Deduction%
Vanishing Deductions

Correct Solution with Explanation

House (Family Home)

Lot (Family Home)
Other properties acquired during marriage
Jewelry inherited, during marriage
Property in U.S., received as a gift (applicable donor's tax was not paid by the donor)
Rental income on the abpve property upto time of death
Gross Estate
Ordinary Deductions
Funeral Expenses
Judicial Expenses
Casualty losses
Claims against the Estate
Medical Expenes within 1 year prior to death, only half was receipted
Vanishing Deductions
Net Taxable Estate before Special Deductions
Special Deductions
Standard Deduction
Family Home (house and lot= 14,000,000/2 = 7,000,000 vs. 10,000,000 lower)
Share of the Surviving Spouse
Net Taxable Estate

Computation for vanishing deductions:

Value to take (FMV@ decent's GE vs. FMV@ time of death of current decedent whichever is lower)
Mortgage paid by the decedent (upaid mortgae assumed)
Intial Basis
Less: Proportional Deduction
Initial Basis 1,300,000.00
Divided by: Gross Estate 26,000,000.00
Total 0.05
Multiply by: LiTE+TFPU
Casual Losses 600,000.00
Claims Against Estate 1,600,000.00
Total Lite 2,200,000.00
Final Basis
Vanishing Deduction %
Vanishing Deductions
 decedent (Mr. J Chavez)
/income are conjugal whatever the sources is in CPG)

/income are conjugal whatever the sources is in CPG)

/income are conjugal whatever the sources is in CPG)

ruits follow the source)

ruits follow the source)

ruits follow the source)

f clearly stated by the donor or testator)

Exclusive Conjugal Total

4,000,000.00
10,000,000.00
6,000,000.00
2,500,000.00
2,300,000.00
1,200,000.00
8,800,000.00 17,200,000.00 26,000,000.00

(600,000.00)
(1,600,000.00)
(952,000.00) (3,152,000.00)
7,848,000.00 15,000,000.00 22,848,000.00
 (5,000,000.00)
(9,000,000.00)
(7,500,000.00)
1,348,000.00

= 2,500,000) whichever lower 1,300,000.00

0.00
1,300,000.00
(110,000.00)
1,300,000.00
26,000,000.00
0.05
2,200,000.00
Does not include the vanishing deduc

110,000.00

1,190,000.00
0.80
952,000.00

Exclusive Community Total

10,000,000.00
4,000,000.00
6,000,000.00
2,500,000.00 suppose to be, exclusive however, jew
2,300,000.00 for the exclusive use of either of the s
1,200,000.00
3,500,000.00 22,500,000.00 26,000,000.00

- - -
- - -
(600,000.00)
(1,600,000.00)
- - -
(952,000.00) (3,152,000.00)
3,500,000.00 19,348,000.00 22,848,000.00
 (5,000,000.00)
(7,000,000.00)
(9,674,000.00)
1,174,000.00

ent whichever is lower) 1,300,000.00

0.00
1,300,000.00
(110,000.00)

1,190,000.00
0.80
952,000.00
depending on the type of donation (ie. Exclusive or community)
 (Net estate before special deductions,conjugal/2)

ot include the vanishing deductions

e to be, exclusive however, jewelry

exclusive use of either of the spouse is considered as community property
Fruits follow the source (source is an exclusive property)

Follows the type of donation (ie. Exclusive property or community property)

 PROPERTY REALATIONSHIP; MARRIAGE SETTLEMENT
No. Question
82 Which of the following is incorrect?
83 Which of the following is the answer?

84 Under the law, the property relationship between husband and wife shall be governed in what order?
85 Exclusive property of the wife?
86 Exclusive property of the husband?
87 The gross estate of a decedent who was married at the time of death will be composed of?
88 Which of the following is the answer?

In the absence of a marriage settlement or when the regime agreed upon is void, the property relations o
89
who married before August 3, 1988 shall be governed by?

In the absence of a marriage settlement or when the regime agreed upon is void, the property relations o
90
who married on or after August 3, 1988 shall be governed by?
91 The following are exclusive property if each spouse. Which is not?
92 One of the following is a conjugal property of the spouses, under CPG
93 Which of the following is exclusive property under the system of CPG?
94 Which is not an exclusive property of a spouse, under CPG?
95 One of the following is not a community property of the spouses, under ACoP
96 Which of the following is exclusive property under ACoP?
97 Properties owned by the spouses before and brought into the marriage shall be classified as:
98 Fruits on the properties owned by the spouses before and brought into the marriage shall be classified as
99 Properties received from a gratuitious transfer during marriage
100
101
102
103
104
105
106
107
108
109
110
 Answer
Modifications or ammendments in the marriage settlements may only be allowed afte
Statement 1: Conjugal partnership of gains, absolute community of property and com
Statement 2: under the regime of absolute community of property, the husband and
verned in what order? I: marriage settlement executed before marriage II: provisions of this code III: local c
Paraphernal
Capital
mposed of? His capital and common property
Statement 1:In the absence of marriage settlements executed before the marriage, t
Statement 2: claims against insolvent persons may be charged against exclusive pro
d, the property relations of the spouses
Conjugal Property of Gains

d, the property relations of the spouses

Absolute Community of Properties

acquired by exchange with other property belonging to the spouses

the fruit of an exclusive property
Property acquired during marriage out of exclusive money
That which is purchased with spouses' common fund
Fruits of property inherited during the marriage
Inheritence during marriage
classified as: ACoP: community: CPG: Exclusive
iage shall be classified as: ACoP: community CPG: conjugal
Acop: exclusive CPG: exclusive
ay only be allowed after the celebration of the marriage
ty of property and complete separation are all valid regimes that may govern property relations between spouses (TRUE)
erty, the husband and the wife place in a common fund the proceeds, products, fruits and income from their separate property a
of this code III: local custom

before the marriage, the property relationship between husband and wfe shall be governed by the local and by the provisions o
d against exclusive property (TRUE)
spouses (TRUE)
eir separate property and those acquired by either or both spouses their effort or by chance (FALSE; Conjugal partnership of ga

and by the provisions of law, repectively (FALSE)

njugal partnership of gains)
 FOR MARRIED PERSONS
Community/
Exclusive
No. Component Conjugal
ACoP CPG ACoP
1 Owned by spouses before celebration of marriage / /
2 Acquired during marriage by onerous title from a common fund /
3 Family home acquired during marriage; constituted by husband and wife /
4 Proceeds from life insurance, included in Gross Estate, paid using common funds /
5 Claims against insolvent persons / / /
6 Proceeds from life insurance, included in Gross Estate, paid using exclusive funds funds / /
7 Acquired during marriage by gratuitous title, expressly provided by the donor /* / /
8 Fruits of an exclusive or community property acquired / /
9 Personal effects or belonging for personal and exclusive use of either spouse /
10 Acquired during marriage using exclusive money / /
11 Property acquired before marriage; has legitimate descendants /
12 Brought into marriage / /
13 Acquired during marriage by a gratuitous title /
14 Acquired by right of redemption/ by exchange of property /
15 Obtained by labor, industry, or work or profession of either/ both of spouses /
16 Acquired by occoupation (ie, fishing or hunting)
17 Share in the hidden treasure discovered during marriage
Improvements on the separate property of the spouses at the expense of the partnership/ throught he
18 industry of the spouses or either of them
19 Personal jewelry of either spouse / /
20 Losses acquired by chance / /
21 Livestock existing upon dissolution of the partnership in excess of the number of each kind brought into
marriage by either spouse
22 Winnings acquired by chance
ommunity/
Conjugal
CPG

/
/
/

/
/