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3. The following cannot be claimed as deduction for estate tax purposes, except
a. Funeral expenses c. Taxes
b. Judicial expense d. All are non-deductible
4. For purposes of estate tax, a standard deduction can be claimed by residents and citizens in the
amount of
a. P1,000,000 c. P10,000,000
b. P5,000,000 d. P500,000
7. Ms. Wa died single leaving a family home amounting P20,000,000. How much can the estate of Ms.
Wa avail of special deduction for family home?
a. P1,000,000 c. P20,000,000
b. P10,000,000 d. none
12. Estate tax return shall be certified by accountants when the value of ________ exceeds_______
a. Gross estate; P2,000,000 c. Net estate; P2,000,000
b. Gross estate; P5,000,000 d. Net estate; P5,000,000
22. This item is not included as part of the gross estate of the decedent
a. Claims against insolvent person
b. His fully depreciated building
c. Proceed of life insurance with irrevocable beneficiary
d. Properties already given in contemplation of death
23. One of the following is not included in the gross estate
a. Property left by the decedent
b. Accrued interest after death
c. Transmissible rights and obligations existing at the time of death
d. Accrued dividends on or before death
24. Which of the following item is considered situated outside the Philippines
a. Franchise in the name of the decedent which is exercised in the Philippines
b. Share of stock holdings of decedent in a foreign corporation whose business is 90% done in the
Philippines
c. Bond certificate issued by a domestic corporation owned by a nonresident decedent
d. Foreign currency deposited in bank outside the Philippines
25. The value included in determining the book value of unlisted common share is
a. Retained earnings
b. Appraisal surplus
c. Liquidating value of preferred shares
d. Unrealized gain or loss
28. Mr. Cobacha makes a transfer of property in trust, income payable to himself for 10 years,
thereafter to Miss Cobi or his estate. Mr. Cobacha dies after 2 years.
a. Only transfer No. 1 is to be included in the gross estate
b. Only transfer No. 2 is to be included in the gross estate
c. Both transfers are to be included in the gross estate
d. Both transfers are not to be included in the gross estate
29. Which of the following exempt transactions will still require inclusion of the property in the gross
estate?
a. Legacies to social welfare, charitable and cultural institutions, which the administrative
expenses exceed 30% of the legacy
b. Amount received as war damages
c. Transfer from the first heir to the second heir designated by the decedent
d. Merger of usufruct in the owner of the naked title
30. The value of the common stock not listed in the stock exchange included in the gross estate at the
time of death would be
a. Mean value
b. Book value
c. Par value
d. Market value
PROBLEMS
Problem A. Jose Cernan, Filipino citizen, married to Maria Cernan, died in a vehicular accident in NLEX
on July 10, 2016. The spouses owned, among others, a 100-hectare agricultural land in Sta. Rosa, Laguna
with current fair market value of P20 million, which was the subject matter of a Joint Venture
Agreement about to be implemented with Star Land Corporation (SLC), a well-known real estate
development company. He bought the said real property for P2 million fifty years ago. On January 5,
2017, the administrator of the estate and SLC jointly announced their big plans to start conversion and
development of the agricultural lands in Sta. Rosa, Laguna, into first-class residential and commercial
centers. As a result, the prices of real properties in the locality have doubled. The Administrator of the
Estate of Jose Cernan filed the estate tax return on January 9, 2017, by including in the gross estate the
real property at P2 million. After 9 months, the BIR issued deficiency estate tax assessment, by valuing
the real property at P40 million.
What is the correct value of the property for estate taxation purposes?
Required: Compute the reportable gross estate in the Philippines if the decedent is a:
1. Filipino citizen or resident alien.
2. Nonresident alien without reciprocity.
3. Nonresident alien with reciprocity.
Problem C. Mr. X died on April 30, 2017 with some 5,000 shares of stock of “A” Corporation. “A”
Corporation has 10,000 outstanding shares The total assets and liabilities of “A” Corporation in its latest
audited financial statements (AFS) are P20,000,000 and P5,000,000, respectively. The book value of all
its assets and liabilities is also the market value with the exception of its real property. Supposing, the
market value of the real properties of “A” Corporation are as follows:
Problem D. Mang Kanor, a Canadian citizen, donated to his Filipina girlfriend, through a will, a P10-
million worth shares of stocks of SM Corporation, a domestic company, and another P15-million worth
of cash deposited in Bank of America. While they were living together, as residents, in Madagascar,
Africa, Mang Kanor suffered heart attack and died. Canada and Madagascar grant non-resident Filipino
citizens exemptions on intangible personal properties from transfer taxes.
The BIR asks your opinion if how much of the properties of the decedent will be subject to Philippines
estate tax.
Problem E. A citizen and resident of the Philippines died on October 5, 2010. He was a married and the
property relationship during the marriage was absolute community of property. He left behind
properties with market values as follows:
Problem F. A citizen and resident of the Philippines, married, died, leaving the following properties:
Problem G. Don Nico Sison, a Filipino citizen, died on November 1, 2018. He got married eight years
before his death. He left the following properties to his wife, Pretti Ensi, two legitimate children and one
acknowledged illegitimate child:
Deductions claimed:
Funeral expenses P350,000
Judicial expenses 600,000
Claims against the estate of which P200,000 without
Proper documentation as prescribe by the law 800,000
Claims against insolvent person 100,000
Transfer for public use (part of agricultural land) 200,000
Unpaid mortgage – agricultural land 300,000
Medical expenses – incurred but unpaid six months ago
(with official receipts) 800,000
Receivable under RA 4917 1,000,000