IN-HOUSE CPA REVIEW

TAXATION
ESTATE TAXATION (MULTIPLE CHOICE QUESTIONS) E.A.DG.MATEO
1. Benny Tai died leaving his daughter, Fina Tai, as sole heir to a residential house and lot, his only poperty.
Which of the following is not an element of the succession on his property, if the administrator of his
estate is Mama Tai?
a. Benny Tai c. Fina Tai
b. House and lot d. Mama Tai

2. Inheritance does not include-

a. Property
b. Public office
c. Rights not extinguished by death.
d. Obligations not extinguished by death.

3. Estate tax is
a. A property tax because it is imposed on the property transmitted by the decedent to his heirs.
b. An indirect tax because the burden of paying the tax is shifted on the executor or any of the heirs of the
decedent.
c. An excise tax because it is imposed on the privilege exercised by the decedent to transfer ownership over
the estate.
d. A poll tax because it is also imposed on residents of the Philippines whether Filipino citizens or not.

4. Which of the following is not a distinction between estate tax and donor’s tax?
a. The tax imposed is an excise tax.
b. Extension for payment.
c. Effectivity of the transfer of property.
d. The exemption granted in the tax table.

5. Statement 1: The estate tax accrues at the moment of death of the decedent.
Statement 2: In estate taxation, the taxpayer is the decedent.
Which of the above statements is correct?
a. Statement 1 only. c. Both statements
b. Statement 2 only. d. Neither statements

6. Which of the following statements is wrong?

a. An essentially mortis causa transfer which has been titled as inter vivos shall be subject to donor’s tax.
b. Estate tax is more of a revenue tax rather than a special tax.
c. If the decedent died September 5, 2011 but the actual transfer of possession of the property to the heirs
took place on June 5, 2015, the estate tax will be computed based on the prevailing law on September 5,
2011.
d. Under the Benefit-Received Theory in estate taxation, the state is a partner of the decedent in the
distribution of the latter’s estate.

7. In 2009, J. Cruz gave a loan of P 150,000 to Sexy, his secretary. In 2012, as an act of generosity, J. Cruz condoned
the debt of Sexy in his last will and testament. J. Cruz died in 2015. The condonation of the debt of Sexy is
(RPCPA)
a. A donation inter vivos subject to donor’s tax.
b. A payment or compensation for the services rendered.
c. A deduction from the gross estate of J. Cruz
d. A donation mortis causa subject to estate tax.

8. The following are the motives of a taxpayer that preclude the transfer in contemplation of death, except one
(RPCPA)
a. To relieve the taxpayer of the burden of the management.
b. To save income and property taxes.
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c. To avoid payment of estate tax.
d. To make dependents financially independent.

9. In default of testamentary heirs, the law determines who are to succeed to the inheritance of the deceased.
Which of the following ranks first in the order of succession? (RPCPA)
a. Legitimate children c. legitimate parents
b. Surviving spouse d. illegitimate children

10. H and W are married. They have legitimate children A and B. H died, survived by W, A and B. His estate of P
12,000,000 should be divided as follows:
W A B Free portion
a. P 3 M P 4.5 M P 4.5 M None
b. 3M 3 M 3 M P3M
c. None 6 M 6 M None
d. 2.25 M 4.5 M 4.5 M 2. 25 M

11. Based on the following data, how much is the value of the decedent’s interest if he died March 31, 2015?
Cash in bank, joint account of the decedent and his wife P 254,000
Interest on the bank deposit ( Jan 1 – June 30, 2015) 9,000
Dividends from a domestic corporation: 60,000
Date of declaration - February 5, 2015
Date of record - April 15,2015
Date of payment - May 15, 2015
Share in 2014 net profit of partnership, distributed to
partners on April 15 9,000
Winnings in lotto (Bet, March 30; April 1, 2014 draw) 500,000

a. P 383,750 c. P 145,000
b. 138,000 d. 388,250

12. For estate tax purposes, the estate of the decedent shall be valued at the time
a. Of the preparation of the estate tax return.
b. The estate tax is paid.
c. Of death of the decedent.
d. The estate is distributed to the heirs.

13. Mamo died leaving the following properties:

Stocks of Cruz Corporation (2,000 shares) – listed in the Phisex (highest – P 40; lowest – P 39).
Common Stocks of Hemo Corporation (1,500 shares) – not listed in the stock exchange. Cost – P 50 per
share; book value – P 45 per share.
Car (cost- P 600,00; book value – P 350,000; market value – P 400,000)
Real properties (zonal value- P 120,000; assessor’s value – P 72,000)
The gross estate of Mamo is –
a. P 618,500 c. P 624,000
b. 867,500 d. 666,500

14. UlyanovKerivsky, Ukrainian, died in the Philippines. The properties situated in his own country will not be
subject to estate tax if he was a –
a. Resident citizen c. Nonresident citizen
b. Resident alien d. Nonresident alien

Items 15 through 17 are based on the following information:

Dina Mathay, Filipina, died in the United States with the following properties:

Condominium unit in New York City P 2,000,000

Shares of stock in a foreign corporation 600,000
Interest in a partnership, domestic 475,000
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Bank deposit in a New York City bank 150,000
Car in Cebu, donated inter vivos 5 years ago to her son 500,000

15. Which property should be included in the gross estate?

a. All the above properties.
b. Only the properties located in the Philippines.
c. All of the above properties except the car.
d. The properties located in the Philippines except the intangibles.

16. If the decedent was a nonresident alien (with reciprocity), how much is the gross estate?
a. P 3, 725,000 c. P 500,000
b. 975,000 d. None

17. If the decedent was a nonresident alien ( no reciprocity), how much is the gross estate?
a. P 3, 725,000 c. P 500,000
b. 975,000 d. 475,000

18. Which of the following is an intangible personal property within?

A. Franchised exercised in the United States.
B. Shares or rights in a domestic business partnership.
C. Bonds issued by an American corporation.
D. Stocks issued by foreign corporation with business situs in the Philippines.

a. B only c. All of the above properties

b. B and D d. None of the above properties

19. An example of intangible personal property without is

a. Domestic shares of stock
b. Foreign shares, 85% of the business of the corporation is in the Philippines.
c. Foreign shares with business situs in the Philippines.
d. Foreign shares, certificate of stock are kept in Makati.

20. One of the following donations is not included as part of gross estate
a. Revocable transfers
b. Transfers with reservation of certain rights
c. Transfers under special power of appointment
d. Transfers in contemplation of death

21. Which of the following transfers is included in the gross estate?

a. Transfer inter vivos
b. Transfer under general power of appointment
c. Transfer under special power of appointment
d. Transfer for an adequate and full consideration

22. Decedent Jose Llamaldo has the following data;

Value of the property at the time of sale P 1,200,000
Value of consideration when sold 1,000,000
Value of property at the time of death 1,500,000

The amount includible in the gross estate is-

a. P 300,000 c. P 200,000
b. 500,000 d. 1,500,000

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23. When Albino was informed by his physician that he was about to die of cancer, he sold his properties:
Market value Market value
Date of sale Selling price Date of death
Land P 2,500,000 P 1,500,000 P 2,700,000
Jewelries 500,000 300,000 300,000
Shares of stocks 200,000 220,000 250,000
Transfer under limited power
of appointment 1,000,000 600,000 800,000

From among the data given, how much should be included in the gross estate of Albino upon his death?

a. P 1,200,000 c. P 1,430,000
b. 1,230,000 d. 1,400,000

24. On the belief that he was about to die of a liver cancer, Bongbong sold to Bengbeng a property valued at P
1,100,000 for the same amount. Six months later, Bongbong died of a car accident. At that time, the property
had already a value of P 1,300,000. For Philippine estate tax purposes, the amount includible in the gross estate
of Bongbong is-
a. P 1,100,000 c. P 200,000
b. 1,300,000 d. None

25. On February 1, 2005, Angel prepared a will on his property in favor of his children. Angel died September 5,
2005 survived by his children Bersabe and Contado who immediately took over the possession and made an
extrajudicial partition on September 20, 2005 but without registering the same in the Register of Deeds. Bersabe
sold the property to Contado on May 7, 2015 in order to finance his expenses for hospitalization. Which date
should be used as the basis in valuing the property for purposes of computing the estate tax?
a. February 1, 2005 c. September 20,2005
b. September 5,2005 d. May 7, 2015

26. Amounts received by the estate of the deceased, his executor or administrator as an insurance under policy
taken by the decedent upon his own life is (RPCPA)-
a. Excluded from the gross estate.
b. Part of the gross estate whether the beneficiary is revocable or irrevocable
c. Part of the gross estate if the beneficiary is revocable.
d. Part of the gross estate if the beneficiary is irrevocable.

27. Case 1 – Designation of the beneficiary is revocable.

Case 2 – Designation of the beneficiary is irrevocable.
Case 3 – Policy is silent as to whether the designation is revocable or irrevocable

In which of the above cases will the proceeds be exempt from estate tax, assuming that the beneficiary of
the life insurance proceeds is neither the estate, the executor nor the administrator of the estate?

a. Case 1 only c. Case 2 only

b. Cases 1 and 3 d. All of the above cases

28. Proceeds of life insurance not payable to estate, executor or administrator shall be excluded in the gross estate
if the beneficiary appointed in the policy is
a. Revocable c. irrevocable
b. Revocable or irrevocable d. the executor

29. Proceeds of life insurance includible in the taxable gross estate (RPCPA)
a. Insurance proceeds from SSS and GSIS.
b. Amount receivable by any beneficiary irrevocably designated in the policy by the insured.
c. Amount receivable by any beneficiary revocably designated in the insurance policy.
d. Proceeds of a group insurance taken out by a company for its employees.

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30. Which of the following proceeds of life insurance policies is exempt from estate tax?
I. Life insurance policy on the life of Kristine, appointing her sister as the irrevocable beneficiary.
II. Life insurance policy on the life of Kristine, appointing her brother as the revocable beneficiary.
III. Life insurance policy on the life of Kristine, appointing her executor as the irrevocable beneficiary.
IV. Life insurance policy on the life of Kristine, appointing her children as the beneficiary. The policy is silent as
to whether the appointment is revocable or irrevocable.
a. I only c. II and III
b. I and IV d. All of them

31. Bodol-bodol insured his life for P 500,000 with Philcharter Insurance Company designating his estate as the
revocable beneficiary. Are the proceeds subject to estate tax-
I. In the event of death of Bodol-bodol?
II. If he designates his estate as the irrevocable beneficiary?
III. If he designates his brother as the irrevocable beneficiary?
IV. If the policy was taken by his employer in his favor as the irrevocable beneficiary?
a. Yes, Yes, No, No c. Yes, No, Yes, No
b. Yes, No, No, Yes d. No, No, Yes, Yes

32. The following are transactions and acquisitions exempt from transfer tax, except (RPCPA)
a. Transmission from the first heir or done in favor of another beneficiary in accordance with the desire of the
predecessor.
b. Transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the fideicommissary.
c. The merger of usufruct in the owner of the naked title.
d. All bequests, devisees, legacies or transfers to social welfare, cultural and charitable institutions.

33. A devised in his will a piece of land; naked titled to B and usufruct to C for as long as C lives, thereafter to B. The
transmission from A to B and C is subject to estate tax but the merger of the usufruct and the naked title to B
upon the death of C is exempt.
X devised in his will real property to his brother Y who is entrusted with the obligation to preserve nad
transmit the property to Z, a son of Y, when C becomes of age. The transmission from Y to his son Z is subject to
tax. (RPCPA)
a. First statement is correct, second statement is wrong.
b. Both statements are not correct
c. Both statements are correct.
d. First statement is wrong, second statement is correct.

34. One of the following is included in the gross estate

a. Benefits received from GSIS
b. Benefits received from U.S. Veterans Administration.
c. Benefits received from damages during World War 2.
d. Benefits received from a tax exempt employer as a consequence of death of the employee.

35. Which of the following distinguishes conjugal property from community property?
a. Properties inherited during marriage.
b. Those acquired through occupation during marriage.
c. Fruits of exclusive property
d. Income earned by each spouse during marriage.

36. Malakas is married to Maganda. From among the properties below, which one is considered as their conjugal
property?
a. That which is brought to the marriage as his or her own.
b. That which each acquires during the marriage by inheritance.
c. The fruits of an exclusive property.
d. That which is purchased with the exclusive property of the wife.

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37. One of the following is not a community property of the spouses

a. Property inherited by the husband before marriage.
b. Winnings in gambling.
c. Fruits of property inherited during the marriage.
d. Fruits of property inherited before the marriage.

38. Fat Tai died. From among the properties enumerated below, which one is not considered as part of his gross
estate?
a. Conjugal property
b. Community property
c. Exclusive property of the decedent
d. Exclusive property of the surviving spouse

39. When a person dies and during the marriage the property relationship between the husband and the wife was
that of conjugal partnership of gains, the gross estate of the decedent would include (RPCPA)
a. His exclusive properties only.
b. His exclusive properties and one-half of the conjugal properties.
c. All the properties of husband and wife.
d. His exclusive properties and all conjugal properties.

40. A. Share of the decedent in the community property.

B. Share of the surviving spouse in the community property.
C. Exclusive property of the decedent.
D. Exclusive property of the surviving spouse.

Which of the above properties are included in the gross estate of the decedent?

a. A and B c. A and C
b. A, B and C d. All of the above properties

41. Properties acquired by gratuitous title before the marriage are generally classified as:
A. Community properties under absolute community of property regime.
B. Conjugal properties under conjugal partnerships of gains.
a. A only c. B only
b. A and B d. Neither A nor B

Number 42 through 45 are based on the following information

a. Real property in Baguio City, brought into the marriage P 300,000

b. Income of real property in Baguio 60,000
c. Real property in Cebu City, brought into marriage by wife 240,000
d. Income of real property in Cebu City 25,000
e. House in Pili, Camarines Sur, acquired by Aldo during marriage 375,000
f. Income of house in Pili 50,000
g. Real property in Iloilo City, earned by wife during the marriage 225,000
h. Income of real property in Iloilo City 80,000
i. Tangible personal properties in Manila, inherited by Aldo during marriage 500,000
j. Income of properties in Manila 175,000
k. Intangible personal properties in Singapore, inherited by wife during marriage 430,000
l. Income of intangible in Singapore 85,000
m. Tangible personal property in Dagupan City, inherited by Aldo before marriage 20,000
n. Income property in Dagupan City 10,000
o. Intangible personal property in Canada, inherited by wife before marriage 350,000
p. Income of personal property in Canada 85,000

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42. Under the conjugal partnership of gains, the total conjugal properties of the spouses is:
a. P 1,170,000 c. P 1,990,000
b. 1,820,000 d. 2,495,000

43. Under conjugal partnership of gains, the gross estate of Aldo is-
a. P 1,170,000 c. P 1,990,000
b. 2,495,000 d. 1,820,000

44. Under absolute community of property regime, the total community property of the spouses is :
a. P 1,820,000 c. P 2,495,000
b. 1, 990,000 d. 1,170,000

45. Under absolute community of property regime, the gross estate of Aldo is:
a. P 1,170,000 c. P 1,990,000
b. 2,495,000 d. 1,820,000

Pepe married Pilar on January 20,2005 without any prior agreement in writing as to the system of
property relationship that will govern their properties when they are already married. Pepe brought into the marriage
an old Spanish house in Vigan, Ilocos Sur worth P 2,000,000 while Pilar brought with her a 200 hectare pineapple
plantation in Bukidnon which she acquired while she was still single.

As a consequence of her marriage, she received as gift from her parents another 200 hectare banana
plantation in Davao City on January 31, 2006.

Twelve (12) years thereafter, Pilar died of a car accident. The joint account deposit of the spouses with
Metrobank was P 5,000,000.

She was insured with an insurance company for P 2,500,000 with Pepe as the appointed irrevocable
beneficiary.

For numbers 46-50, classify the properties identified above by choosing your answer from the options below:

a. Exclusive property of Pepe

b. Exclusive property of Pilar
c. Conjugal property of Pepe and Pilar
d. Community property of Pepe and Pilar

46. The old Spanish house in Ilocos Sur

47. The banana plantation in Davao City
48. The income of the banana plantation
49. The deposit with Metro bank
50. The proceeds of the insurance policy is –
a. Excluded from gross estate
b. Included in the gross estate
c. Deductible from gross estate
d. None of the above

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