PRELIMINARY EXAMINATION

TRANSFER & BUSINESS TAXATION

NAME:
BLOCK:
1. 6. 11. 16. 21. 26. 31. 36

2. 7. 12. 17. 22. 27. 32. 37.

3. 8. 13. 18. 23. 28. 33. 38.

4. 9. 14. 19. 24. 29. 34. 39.

5. 10. 15. 20. 25. 30. 35. 40.

ANSWER IN CAPITAL LETTERS. NO ERASURES. CHOOSE THE BEST ANSWER

1. Which is FALSE in estate taxation of bank deposits?

S1 – At the option of the executor, administrator or heirs, bank deposits of decedents may be subjected to 6% final tax
at any time from decedent’s death.
S2 – If the bank deposits were subjected to final tax, the deposits shall no longer form part of the gross estate of the
decedent.
S3 – In case of joint deposits, only that share or interest of decedent is subject to either final tax or estate tax.
S4 - In all cases, the final tax withheld shall not be refunded but may be credited from the tax due in instances where
the bank deposit account subjected to final tax has been actually included in the gross estate declared in the estate tax
return of the decedent.
a. S1 c. S3
b. S2 d. S4

2. Inday provided you the list of the estate of Nicanor who died intestate on February 14, 2023. The following are the
details: Properties:
• Family home – Php 15,000,000.00 • Motor vehicles – Php 5,000,000.00
• Inherited land – Php 5,000,000.00
● Other information:
• 1000 Shares in ABC Corp. an unlisted company
5,000,000.00 • Funeral Expenses – Php 1,000,000.00
• Bank deposits – Php 5,000,000.00 • Loss incurred on February 13, 2023 – Php
1,000,000.00

How much is the estate tax due?

A. Php 150,000.00 C. Php 450,000.00
B. Php 300,000.00 D. Php 750,000.00

3. The amounts withdrawn from the deposit accounts of a decedent subjected to the 6% final withholding tax imposed
under Section 97 of the NIRC, shall be:
A. Excluded from the gross estate for purposes of computing the estate tax.
B. Included from the gross estate for purposes of computing the estate tax.
C. Claimed as tax credit against estate tax due.
D. Claimed as deduction from the gross estate.

4. One of the following deductions physically diminishes the gross estate of the decedent.
A. Standard deduction C. Vanishing deduction
B. Family home deduction D. Claims against the estate

5. Which of the following statements is/are correct?

 Statement A: Jewelry purchased by the wife during marriage using the money inherited from her mother during the
marriage is exclusive property of the wife.
Statement B: Jewelry purchased by the husband during marriage using the money inherited from his father during the
marriage belongs to husband and wife
Statement C: Jewelry inherited by the wife before marriage from her father is exclusive property of the wife.
Statement D: Jewelry inherited by the husband during marriage from his mother is exclusive property of the husband.
A. Statements A, B, C, and D are correct. C. Statements C and D are correct.
B. Statements B, C, and D are correct. D. Statement D is correct.

6. Notwithstanding any contrary provision of R.A. No. 1405 and other general or special laws, the Commissioner of
Internal Revenue is authorized to inquire into bank deposit:
Case 1 – of a decedent to determine his gross estate.
Case 2 – of any taxpayer who has filed an application for compromise of his tax liability by reason of financial incapacity
provided there is waiver of his privilege under R.A. No. 1405 or under other general or special laws.
a. True in both cases c. True only in the first case
b. False in both cases d. True only in the second case
7. Under the TRAIN, how much of the net estate is exempt from estate tax?
A. P100,000 and below
B. P250,000 and below
C. P500,000 and below
D. None

8. The Estate of Mang Tomas has the following condensed data:

Gross Estate P 500,000.00
Total deductions (600,000.00)
Taxable net estate (P 100,000.00)
Based on the above data, is an Estate Tax Return required to be filed?
A. Yes, an estate tax return is required in all cases, where although exempt from tax, the gross value of the estate
exceeds two hundred thousand pesos (P200,000).
B. No, an estate tax return is required only in cases of transfers subject to the tax or regardless of the gross value of
the estate, where the said estate consists of registered or registrable property.
C. Yes, an estate tax return is required in all cases without any exception.
D. No, an estate tax return is required only if the BIR knows of the death of a person.

9. Which of the following shall not be exempt from donor’s tax?

A. Donation to the Integrated Bar of the Philippines (IBP) request for reinvestigation
B. Donation of parcel of land to the Government made by a Philippine Corporation to be used as relocation site for the
less fortunate
C. Donation to parish church where not more than 30% of the said gifts shall be used by the parish church for
administration purposes
D. Donation to a political party which failed to file a return of contributions with the COMELEC

10. For the donation to be considered valid, acceptance of the donation must be made:
A. during the lifetime of the donor only. C. during the lifetime of the donor and the donee.
B. during the lifetime of the donee only. D. none of the above

11. Consider the following:

I – The computation of the donor’s tax is on a cumulative basis over a period of one calendar year.
II – Husband and wife are considered as separate and distinct taxpayers for purposes of the donor’s tax.
A. Both statements are correct. C. Only the first statement is correct.
B. Both statements are incorrect. D. Only the second statement is correct.

12. Mr. Julian Reyes, transfers his car to his nephew on a condition that he passes the CPA Licensure Examination. The
nephew tops the CPA Licensure Examination. The transfer is subject to:
A. Estate tax. C. Either donor’s tax or estate tax.
B. Donor’s tax. D. Neither donor’s tax nor estate tax.

13. Under the TRAIN, the donor’s tax for gifts given to stranger for each calendar year shall be:
A. Six percent (6%) computed on the basis of the total gifts made during the calendar year.
B. six percent (6%) computed on the basis of the total gifts in excess of Thee hundred thousand pesos (P300,000)
exempt gift made during the calendar year.
C. Six percent (6%) computed on the basis of the total gifts including those made in the previous calendar year in
excess of Two hundred fifty thousand pesos (P250,000) exempt gift made during the calendar year.
D. Six percent (6%) computed on the basis of the total gifts in excess of Two hundred fifty thousand pesos
(P250,000)exempt gift made during the calendar year.
 The decedent is a married man with a surviving spouse with the following data:
Conjugal real properties P 6,000,000 Other exclusive properties 4,500,000
Conjugal family house 1,000,000 Conjugal ordinary deductions 1,500,000
Exclusive family lot 400,000 Exclusive ordinary deductions of 500,000
14. The taxable net estate is
A. P9,900,000 C. P3,500,000
B. P3,750,000 D. P1,250,000
15. How much is the estate tax payable?
A. P594,000 C. P210,000
B. P225,000 D. P75,000

An unmarried decedent died leaving properties he inherited 4.5 years ago which had fair market value of P800,000 at the
time of his death (P650,000 at the time of inheritance, and unpaid mortgage of P50,000, P20,000 of which paid by the
present decedent before he died). Other properties in his gross estate had fair market value of P1,000,000. The total
expenses, losses, indebtedness, taxes and transfer for public purpose amounted to P300,000.

16. How much was the vanishing deduction?

A. P225,000 C. P102,900
B. P108,333 D. P100,000

Value to take P650,000

Less: Mortgage paid 20,000
Initial basis P630,000
Less: Proportional deduction
(630,000/1,800,000 x 330,000) 115,500
Final basis P514,500
Rate 20%
Vanishing deduction P102,900

The estate of Juan, resident citizen decedent, married, who died on April 1, 2021 were as follows:
House and lot (Family Home) P 14,000,000
The lot was acquired at a cost of P3M, five years ago, before
marriage, while the house was constructed on March 1, 2021, during
marriage, at a cost of P10M from partnership funds. The lot had
a FMV of P4M after construction of the house
Vacation house in Batanes inherited on February 14, 2020,
during marriage, then with a fair market value of P 1,300,000 2,500,000
Other properties acquired during marriage 6,000,000
Property in Davao, received as gift during marriage from
a friend on January 12, 2020 (the applicable donor’s tax
was not paid by the donor) 2,300,000
Rental income on the property in Davao up to the time of death 1,200,000
Benefits received under RA 4917 300,000
Funeral expenses 420,000
Judicial expenses 800,000
Casualty losses incurred on Dec. 10, 2021 600,000
Claims against the estate 1,600,000
Medical expenses 4,000,000

17. Compute item 39 (share of surviving spouse) of BIR Form 1801.

A. P8,424,000 C. P9,700,000
B. P9,200,000 D. P8,900,000

18. Compute item 30 (family home) of BIR Form 1801.

A. A.P8,000,000 C. C.P10,000,000
B. B.P7,000,000 D. D.P9,000,000

19. Compute item 20 (estate tax payable) of BIR Form 1801.

A. P116,880 C. P145,440
B. P134,880 D. P26,880

Mr. P.A. Langit, Filipino and married on August 3, 1988, died in 2020, leaving his estate in favor of his surviving spouse. The
following information were made available:
• Real property in Masbate, acquired during marriage. Said property is supported by a barangay certification that the
spouses resided in this property at the time of Mr. Langit’s death. The fair market value of this property as per latest
 tax declaration is P9,200,000, while the zonal valuation as of the time of death is P11,500,000. Said real property
was held as a mortgage in a loan applied by the spouses. As of the time of death, the outstanding balance of the
mortgage payable amounted to P500,000.
• Real property in Quezon City, inherited by Mr. Langit during marriage, two and half years ago, from his late father.
The fair market value as per latest tax declaration as of the time of his death is P5,000,000 while the zonal valuation
is P8,000,000. Said property was previously taxed at a value of P6,500,000 when Mr. Langit inherited the property
from his father. It was also subject to P800,000 unpaid mortgage at the time it was inherited. Mr. Langit paid
P500,000 of the P800,000 unpaid mortgage before he died.
• Real property in Batangas, donated to Mrs. Langit, 10 years ago (before marriage) by his parentsin-law. The fair
market value as per latest tax declaration as of the time of Mr. Langit’s death is P3,000,000 while the zonal
valuation is P4,000,000.
• Cash supported by a bank certification. Balance as of the time of death: savings account in the name of Mr. Langit
–P200,000; and savings account in the name of Mr. and Mrs. Langit – P300,000.
• Funeral expenses incurred by the estate during the wake and burial of Mr. Langit amounted to 200,000.
• Medical expenses within one year before Mr. Langit died amounted to P300,000.

20. Compute Item 34 page 2 (Gross estate) using BIR Form No. 1801
A. P24,000,000 C. P19,700,000
B. P20,000,000 D. P19,500,000
21. Compute Item 35 page 2 (Ordinary deductions) using BIR Form No. 1801
A. P4,280,000 C. P3,780,000
B. P3,980,000 D. P 800,000
22. Compute Item 37D page 2 (Total special deductions) using BIR Form No. 1801
A. P15,000,000 C. P10,750,000
B. P11,000,000 D. P10,500,000
23. Compute Item 40 page 2 (Net taxable estate) using BIR Form No. 1801
A. P1,970,000 C. P1,220,000
B. P1,470,000 D. P 970,000
24. Compute Item 18 page 1 (Estate tax due) using BIR Form No. 1801
A. P118,200 C. P73,200
B. P 88,200 D. P58,200

Mr. Eks died on December 1, 2021 leaving the following properties:

Farmland in Baguio, brought to marriage by wife 5,400,000
Income from farmland in Baguio 500,000
Apartment units in Quezon City, acquired during marriage 4,000,000
Rental income from apartment units in Quezon City 80,000
Rest house in Tagaytay, acquired before marriage 5,000,000
Income from rest house in Tagaytay 400,000
Car, inherited by wife during marriage 1,950,000
Jewelry, acquired during marriage for exclusive use
and using the exclusive money of the wife 300,000
House and lot inherited from his father on September 1, 2020
(fair market value when inherited, P3,000,000), used as family home 4,000,000
Unpaid mortgage on the inherited
house and lot (original mortgage, P1,200,000) 200,000
Car received as gift from his mother in 2021 750,000
Deductible losses, indebtedness, taxes 1,500,000
25. How much is the estate tax due under Conjugal Partnership of Gains (CPG)?
A. P367,771 C. P232,171
B. P427,771 D. P127,771
26. How much is the estate tax due under Absolute Community of Property (ACP)?
A. P145,110 C. P385,110
B. P570,510 D. P445,110
Mr. And Mrs. MWP had the following conjugal transfers during the year 2018:
• January 26 Donated a parcel of land to their son, on account of their marriage.
• Their son’s wedding is on July 31, 2018. The fair market value of the land at the time of donation was P500,000.
The fair market value of the land at the time of marriage was P550,000. The donated property subject to P100,000
mortgage which was assumed by their son.
• October 29 Donated P300,000 to the sister of Mr. MWP who was diagnosed with cancer. They donated the amount
for the medication of Mr. MWP’s sister.
• December 20 Sold 300,000 shares of stocks from ABC Corporation to their daughter for P300,000. The book value
per shares as per latest audited financial statement of ABC Corporation is P1.50 per share. The shares of stocks
were acquired two years ago for P200,000
27. How much is the donor’s tax still due of Mr. MWP on the January 26 transfer?
A. P11,400 C. P16,500
B. P12,000 D. P0
28. How much is the donor’s tax due of Mrs. MWP on the October 29 transfer
A. P6,000 C. P45,000
B. P21,000 D. P57,000
29. How much is the capital gains tax due of Mr. MWP on the December 20 transfer?
A. P7,500 C. P22,500
B. P15,000 D. P41,250
30. How much is the donor’s tax still due of Mr. MWP on the December 20 transfer?
A. P4,500 C. P25,500
B. P9,000 D. None