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    Answer Keys For Midterm Exam PART 2

    Uploaded by

    Angel Maghuyop
    1. This document contains sample answers and explanations for questions on an estate tax midterm exam. It addresses scenarios involving computation of taxable gifts, estate tax credits, vanishing deductions, and inclusion or deduction of amounts from a gross estate. 2. Question 3 explains that for a donor making gifts in multiple countries, the available tax credit is the lower of two limits: either taxes deemed paid per country, or the total taxes paid to foreign countries. 3. The document also provides guidance on calculating a vanishing deduction when property is inherited or received as a gift, with the deduction rate varying based on how long ago the acquisition occurred. 4. Various questions are answered true/false regarding inclusion of amounts in

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    Answer Keys For Midterm Exam PART 2

    Uploaded by

    Angel Maghuyop
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    1. This document contains sample answers and explanations for questions on an estate tax midterm exam. It addresses scenarios involving computation of taxable gifts, estate tax credits, vanishing deductions, and inclusion or deduction of amounts from a gross estate. 2. Question 3 explains that for a donor making gifts in multiple countries, the available tax credit is the lower of two limits: either taxes deemed paid per country, or the total taxes paid to foreign countries. 3. The document also provides guidance on calculating a vanishing deduction when property is inherited or received as a gift, with the deduction rate varying based on how long ago the acquisition occurred. 4. Various questions are answered true/false regarding inclusion of amounts in

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    Answer Keys for Midterm Exam PART 2

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    1. This document contains sample answers and explanations for questions on an estate tax midterm exam. It addresses scenarios involving computation of taxable gifts, estate tax credits, vanishing deductions, and inclusion or deduction of amounts from a gross estate. 2. Question 3 explains that for a donor making gifts in multiple countries, the available tax credit is the lower of two limits: either taxes deemed paid per country, or the total taxes paid to foreign countries. 3. The document also provides guidance on calculating a vanishing deduction when property is inherited or received as a gift, with the deduction rate varying based on how long ago the acquisition occurred. 4. Various questions are answered true/false regarding inclusion of amounts in

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    45 views3 pages

    Answer Keys For Midterm Exam PART 2

    Uploaded by

    Angel Maghuyop
    1. This document contains sample answers and explanations for questions on an estate tax midterm exam. It addresses scenarios involving computation of taxable gifts, estate tax credits, vanishing deductions, and inclusion or deduction of amounts from a gross estate. 2. Question 3 explains that for a donor making gifts in multiple countries, the available tax credit is the lower of two limits: either taxes deemed paid per country, or the total taxes paid to foreign countries. 3. The document also provides guidance on calculating a vanishing deduction when property is inherited or received as a gift, with the deduction rate varying based on how long ago the acquisition occurred. 4. Various questions are answered true/false regarding inclusion of amounts in

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Answer Keys for Midterm Exam – PART 2

    1. Jessa 400,000
    Digos 200,000
    JunJun 150,000
    Gross Gift 750,000
    Less: Donation to Digos City (public purpose) 200,000
    Net gift 550,000
    Less: Exemption 250,000
    Taxable 300,000
    Multiply: tax rate 6%
    Donor’s tax due-01.22.18 18,000
    2. Bea 150,000
    Phil Red Cross 50,000
    Gross Gift 200,000
    Less: donation to Phil Red Cross 50,000
    Net gift 150,000
    Add: net gift 01.22 550,000
    Total 700,000
    Less: exemption 250,000
    Taxable 450,000
    Multiply: tax rate 6%
    Tax due 27,000
    Less: Tax paid-01.22 18,000
    Donor’s Tax due and payable 9,000
    3. Gross gift, total 2,000,000
    Less: deduction 750,000
    Net gift 1,250,000
    Less: exempt gift (standard) 250,000
    Taxable Net Gift 1,000,000

    Donor’s tax due (1M x 6%) 60,000


    Tax Credit (29,200) (a)
    Donor’s Tax Payable 30,800
    Limit 1 Deductible (LOWER)
    (Net gift per country/net gift, total x Donor’s Tax due)
    USA (300,000/1,250,000 x 60,000) 14,400 14,400
    Tax paid 25,000

    UK (100,000/1,250,000 x 60,000) 4,800 4,800


    Tax paid 12,000

    Italy (350,000/1,250,000 x 60,000) 16,800


    Tax paid 10,000 10,000
    Total – Limit 1 29,200 (a)
    Limit 2
    (net gift, total foreign country/ net gift, total x Donor’s tax due)
    750,000/1,250,000 x 60,000 36,000 36,000
    Actual (25K + 12K + 10K) 47,000
     Whichever is lower between 29,200 (limit 1) and 36,000 (limit 2). Tax credit shall base on Php
    29,200 (LOWER).

    4. Value to take (w/c ever is lower) 6,500,000


    Less: mortgage paid on mortgage assumed (500,000)
    Initial basis 6,000,000
    Less: proportional deduction
    [Initial basis/Total GE x (LIT + TPU)]
    (6M / 18M x 2,400,000) (800,000)
    Final basis 5,200,000
    X Vanishing deduction % 60%
    Vanishing deduction 3,120,000

    Rate of VD
    Interval of Acquisition (inheritance or RATE
    donation) and death of present decedent
    Within 1 year 100%
    More than 1 year but not more than 2 years 80%
    More than 2 years but not more than 3 years 60%
    More than 3 years but not more than 4 years 40%
    More than 4 years but not more than 5 years 20%

    5. Gross estate, Total 90,000,000


    Less:
    Indebtedness 3,000,000
    Unpaid taxes 1,000,000 4,000,000
    Net common estate 86,000,000
    Less:
    Share of SS (86M/2) 43,000,000
    Family home (15M/2) 7,500,000 (Lower than max amount)
    Standard deduction 5,000,000
    Net taxable estate 30,500,000
    6. Gross estate, total 32,250,000

    Allowable deductions, total 24,750,000


    Net Taxable Estate 7,500,000

    Estate tax due (7.5M x 6%) 450,000


    Less: Allowable Tax Credit
    Limit 1
    (net estate, per foreign/net estate, world x Phil estate tax)
    Limit Actual Allowed (LOWER)
    China (1.5M/7.5M x 450K) 90,000 37,500 37,500
    Japan = no estate tax payment
    USA (3.75M/7.5M x 450K) 225,000 180,000 180,000
    Total Limit 217,500

    Limit 2 (all foreign countries- China, Japan, USA)


    (net estate, all foreign countries/net estate, world x Phil estate tax)
    = 4.5M/7.5M x 450K 270,000 217,500 217,500 217,500 (LOWER)
    Estate Tax Payable 232,500

     same result with Limit 1 & 2. It’s either Limit 1 or Limit 2 will be the basis. If in case, there is a
    difference between the two; the basis will be the LOWER AMOUNT.

    7. Amount to be included in GROSS Estate (10M + 2M) = 12,000,000


    8. Amount to be deducted from GROSS Estate = 2,000,000
    9. TRUE
    10. TRUE

    -THE END-

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