ACT184: Transfer Taxes

Exercises No. 1: Estate Taxation

TRUE OR FALSE
1. FALSE Taxation of the estate shall be governed by the statute or law in force at the time
of distribution of the estate to the heirs.
2. FALSE Succession takes place upon the determination of the respective share of the
heirs of the estate of the decedent
3. TRUE The family home includes the house and lot where the house stands.
4. FALSE The legal heirs of the decedent must be determined first before the correct
estate tax can be ascertained
5. TRUE Under the absolute community of property, property acquired before marriage by
either spouse including fruits and income, if any shall belong to both spouses
6. TRUE The fruit of inherited properties shall be exclusive under absolute community of
properties.
7. FALSE The administrator or executor shall submit a statement showing the disposition
of the proceeds of the loan if the claims against the estate were contracted within five
years before the death of the decedent.
8. FALSE If the property is inherited before marriage, it will belong to both spouses while if
it is inherited during marriage, it is exclusive.
9. FALSE Unless stipulated, the property relations shall be governed by conjugal
partnership of gains for marriages celebrated on or before August 3, 1988.
10. FALSE Under the regime of absolute community of properties, property for personal and
exclusive use of either spouses except jewelry shall belong to both spouses.
11. FALSE The administrator or any of his heirs, may however upon authorization of the BIR
withdraw from the decedent’s bank deposits P20,000 without the required certification
that the estate tax has been paid.
12. TRUE Properties held by the decedent which must be transmitted to an heir in
accordance with the desire of a predecessor are excluded in the gross estate. (spa)
13. TRUE Non-resident aliens may claim only a fractional part of expenses, losses,
indebtedness, taxes, and transfers for public purpose.
14. FALSE The estate can be released to the heirs even if full payment of the estate tax is
not yet due.

MULTIPLE CHOICE
1. This is not part of the gross estate of the decedent
a. Conjugal property
b. Community property
c. Share of surviving spouse
d. Exclusive property of the surviving spouse

2. Under the ACP, jewelry for personal and exclusive use of the wife shall belong to
a. Wife B. Husband C. Husband and Wife D. Children

3. The estate should be valued at the time

a. The heirs are ascertained
b. The estate tax is paid
c. The estate is ready for distribution

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 d. Of the death of the decedent

4. This is not part of the conjugal property

a. those acquired by onerous title during the marriage at the expense of common fund
b. those acquired by industry or work of either of them
c. The fruits, rents or interests received or due during the marriage coming from the
conjugal property or from the exclusive properties of spouses.
d. Those acquired during the marriage by gratuitous title

5. Which of the following is not an exemption or exclusion from the gross estate
a. Capital or exclusive property of the surviving spouse
b. Properties outside the Philippines of a non-resident Chinese decedent
c. Shares of stock of San Miguel Corporation of a non-resident Mexican
d. The merger or usufruct in the owner of the naked title.

Use the data to answer the next 3 questions:

A decedent left the following properties:
Land in Italy (with 1M unpaid mortgage) P2,000,000
Land in Laguna, PH 500,000
Franchise in USA 100,000
Receivable from the debtor in PH 70,000
Receivable from the debtor in USA 100,000
Bank deposits in USA 80,000
Shares of stocks in PLDT, PH 75,000
Shares of stock – foreign corporation
75% of the business in the PH 125,000
Other personal properties 300,000
Zonal value of the land in Laguna 750,000

6. If the decedent is a non-resident citizen, his gross estate is?

a. P3,650,000 b. P3,600,000 c. P2,500,000 d. P2,650,000

7. Using the above data, if the decedent is a non-resident alien, his gross estate is?
a. P1,195,000 b. P945,000 c. P1,320,000 d. P1,070,000

8. If in the preceding number, reciprocity law can be applied, the gross estate is?
a. P1,050,000 b. P1,195,000 c. P1,250,000 d. P1,070,000

9. Mr. X, a resident citizen, has a gross estate of P6,000,000, which was physically present
at the time of his death. Prior to his death, he transferred the following properties:
 A three-hectare agricultural land to Ms. A, where the value at the time of transfer
was P900,000. This property was acquired by Mr. X from a predecessor decedent,
with a condition that should Mr. X transfer the property, it should be given to Ms. A.
at the time of death, the fair market value of the property was P1,200,000. (SPA)
 A 400-square meter vacant commercial lot to Ms. B valued at P1,200,000 at the
time of transfer. The transfer imposed a condition that the transferor has power to
revoke or amend the terms of the transfer. While still alive, the decedent exercised
the power to revoke. The fair market value at the time of death was P1,500,000
 15,000 shares of stock, par P100 to Ms. C for a cash consideration of P1,800,000
when the market share was at P200 per share. The shares were issued by a foreign

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 corporation with 60% operation in the Philippines. At the time of death, the share
was quoted in the stock market at P210.

The value of the gross estate should be increased by?

a. P2,850,000 b. P3,450,000 c. P3,750,000 d. P4,050,000

10. On June 1, 2018, Mr. X, a Filipino citizen, died without executing a will and left the
following properties:
Commercial Properties – exclusive property of X P12,000,000
Farm land – exclusive property of the spouse 6,000,000
House and lot – Conjugal property 12.000,000
Shares of stock of domestic company – conjugal 800,000
Apartment – conjugal 3,000,000
Receivable from debtors, 20% uncollectible 1,300,000

Claims against the estate 2,000,000

Unpaid taxes for income before death 600,000
Unpaid taxes for income after death 500,000
Mortgage Payable 400,000

The net estate subject to tax would be? P13,920,000

11. X, a Filipino, widower, died on June 5, 2018 leaving the following:

Real and personal properties P8,000,000
Family home 12,000,000
GROSS ESTATE: 22,250,000
Ordinary Deductions:
Claims against insolvent person 2,250,000
Other deductions 1,300,000
Medical expenses 600,000

Determine the net taxable estate P3,700,000

Use the following information to answer the next 2 questions:

Following are properties in the gross estate with their fair market values:
House and lot, family home in GSC P1,500,000
Bank deposit in foreign bank of a domestic bank 500,000
Bank deposit in Makati branch if a foreign bank 300,000
Shares of stocks issued by a domestic corp.
(Certificate kept in Canada) 1,000,000
Franchise exercised in Manila 800,000
Receivable, debtor in Mindanao 200,000

12. If the decedent was an NRA and there is reciprocity, property excluded from gross
estate is valued at?
a. P2,800,000 b. P2,600,000 c. P2,300,000 d. P2,000,000

13. If the decedent was an NRA and there is no reciprocity, the gross estate should be
valued at?
a. P4,300,000 b. P3,800,000 c. P3,500,000 d. P3,200,000

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 14. Consider the following transactions:
Consideration FMV upon Transfer FMV upon death
Received
Land P1,500,000 P1,500,000 P2,000,000
Shares of stock P100,000 50,000 150,000
Vintage car 50,000 80,000 100,000
Painting 250,000 400,000 500,000

The correct gross estate should be? (50,000-VC; 250,000 P)

a. P120,000 b. P310,000 c. P300,000 d. P350,000

15. Mr. X died during the current taxable year. The following information is about his assets
and liabilities:
Gross estate – exclusive P4,000,000
Gross estate – communal 8,000,000
Judicial expenses 120,000
Funeral expenses 250,000
Claims against insolvent person 180,000
Medical expenses incurred before death 300,000
Land inherited during marriage, 2 years
before death, not included in
the above-mentioned gross estate 2,000,000
Mortgage loan on land inherited, including
P400,000 payment 600,000

The amount of vanishing deduction would be? 1,245,256

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REFERENCES
Tabag, E. D. (2019). Transfer and Business Taxation. Manila: Info Page.
Valencia, E. G. (2017). Transfer and Business Taxation. Baguio City: Valencia Educational Supply.