Multiple Choice - Estate Tax: Test 1 - Theory
Multiple Choice - Estate Tax: Test 1 - Theory
Multiple Choice - Estate Tax: Test 1 - Theory
TEST 1 THEORY
1. D 6. C 11. B 16. D
2. D 7. A 12. D 17. C
3. C 8. C 13. C 18. A
4. A 9. C 14. B 19. D
5. A 10. D 15. C 20. D
5. Answer: B
Resident NRA (no NRA (with
or citizen Reciprocity) Reciprocity)
Real property within P P 3,000,000 P
3,000,000 3,000,000
Real property without 2,500,000 - -
Tangible personal within 700,000 700,000 700,00
0
Tangible personal without 650,000 - -
Intangible personal within 350,000 350,000 -
Intangible personal without 225,000 - . - .
Gross estate 7,425,000 4,050,000 3,700,00
0
27
7. Answer: D
8. Answer: B
Conjugal Exclusive
Family home P
2,650,000
Farm in Batangas 500,000
Farm in Guam 750,000
Furnitures, Manila 125,00
0
Bank deposit 80,00
0
Cash (12,000 x 1 ) 18,00
0
Car 500,00
0
Interest in partnership 300,00
0
Proceeds of life insurance 150,00
0
Accounts receivable 110,00
0
Patent, U.S.A. 1,250,00
0
Other personal properties 825,000 ________
Total s 6,008,000 1,250,00
0
9. Answer: A
Domestic shares P1,000,00
0
Foreign shares 3,000,00 4,000,00
0 0
Tangible personal property 6,000,0
00
Total 10,000,00
0
10. Answer: C
28
Net estate 1,600,0
00
11. Answer: C
12. Answer: D
No amount of money shall be included in the gross estate of the decedent
because the transfer is for an adequate and full consideration. This is despite the
agreement between the seller and the buyer that the transfer shall take effect upon
the death of the seller.
13. Answer A
14. Answer: B
15. Answer: D
29
Conjugal real property 850,00
0
Conjugal personal property 450,000 1,300,00
0
Gross estate 2,050,00
0
Less: Deductions
Ordinary -
Unpaid mortgage 30,000
Funeral expenses 85,000
Judicial expenses 20,000 ( 135,00
0)
Special -
Standard (1,000,00
0)
Net estate 915,000
Less: Share of surviving spouse (1,300,000 135,000) 582,50
x 0
Net taxable estate 332,50
0
16. Answer: A
Gross estate 4,000,00
0
Less: Deductions
Funeral expenses, actual 150,000
Other charges 210,00
0
Standard deduction 1,000,0 1,360,00
00 0
Net taxable estate 2,640,0
00
17. Answer: D
Expenses incurred during the wake 95,000
Payable to funeral parlor 20,000 115,000
5% of gross estate (1,700,000 x 5%) 85,000
Deductible funeral expense 85,000
18. Answer: C
Loans payable 300,00
0
Bad debts 60,0
00
RA 4917 200,0
00
Standard deduction 1,000,00
0
Deductions 1,560,0
00
19. Answer: B
Unpaid 2007 real estate taxes P 40,000
Unpaid 2008 real estate taxes 40,000
Income tax 35,000
Casualty loss 450,000
Total deductions 565,000
30
20. Answer: B
21. Answer: B
22. Answer: B
31
23. Answer: C
Funeral expenses 120,0
00
Bad debts 100,000
Unpaid mortgage 30,000
Family home 1,000,00
0
Total deductions 1,250,00
0
24. Answer: D
Conjugal
Family home 2,000,000
Conjugal personal property 800,000 2,800,0
00
Exclusive real estate 1,219,7
50
Gross estate 4,019,7
50
Less: Deductions
Ordinary -
Unpaid mortgage 90,000
Funeral expenses 124,500
Judicial expenses 16,000 ( 230,50
0)
Special -
Family home 1,000,000
Standard deduction 1,000,000 (2,000,00
0)
Net estate 1,789,2
50
Less: Share of surviving spouse
Gross conjugal 2,800,000
Less: Conjugal deductions 230,500
Net conjugal 2,569,500
Share (2,569,500/2) 1,284,7
50
Net estate subject to tax 504,5
00
26. Answer: C
27. Answer: A
Conjugal Exclusive Total
Residential land 850,00
0
Commercial land 500,000
House and lot, Manila 3,000,000
House and lot, California 2,000,00
0
Notes receivable, debtor in U.S.A. 100,00
0
Notes receivable, debtor in Phils. 200,00
0
Other personal properties 140,00 ________
0
32
Gross estate 5,440,000 1,350,000 6,790,000
Deductions:
Ordinary -
Funeral expenses 165,000
Bad debts (200,000 x 40%) 80,000
Transfer for public purpose 200,000
Vanishing deduction (Schedule 1) _ _____ 74,757
Total 245,000 274,757 ( 519,75
7)
Special
Family home (1,000,00
0)
Standard deductions (1,000,00
0)
Net estate 4,270,2
43
Less: Share of surviving spouse
Gross conjugal 5,440,000
Less: Conjugal deductions 245,00
0
Net conjugal 5,195,00
0
Share (5,195,000 / 2) (2,597,50
0)
Net taxable estate 1,672,74
3
Schedule 1:
Value to take (lower value) P 400,000
Less: Mortgage paid -
.
Initial basis 400,000
Less: Deductions (400/6,790 x P 26,215
445,000)
Base 373,785
Rate (more than 4 but not more than 5 20
years) %
Vanishing deduction 74,757
33
0
Claims against the estate 120,000
Unpaid mortgage, Japan 65,000
Bad debts 85,000
Unpaid mortgage, Cebu 50,000 ( 520,00
0)
Special -
Family home (1,000,00
0)
Standard deductions (1,000,00
0)
Net estate 4,750,0
00
Less: Share of surviving spouse
Gross conjugal 6,585,0
00
Less: Conjugal deductions 520,0
00
Net conjugal 6,065,0
00
Share (P 6,065,000 / 2) (3,032,50
0)
Net estate subject to tax 1,717,50
0
30. Answer: A
Lower value P
350,000
Less: Mortgage paid 50,0
00
Initial basis 300,0
00
Less: Deductions (300/3,000 x 95,000) 9,50
0
Base 290,5
00
Rate (more than 4 years, not more than 5 years) 20
%
Vanishing deduction 58,1
00
Note: Bequests to charitable institutions and medical expenses are not included in
the multiplier deductions. Only the deductions under ELIT and Transfers for
Public Purposes, if any, are part of said deductions.
34. Answer: A
34
0
Family home, Canada 2,500,000.0
0
Gross estate 7,430,000.0
0
Less: Deductions
Funeral expenses P
200,000.00
Other deductible expenses 850,000.
00
Vanishing deduction (Sche. 1) 1,786,056. 2,836,056.5
50 0
Net estate 4,593,943.5
0
Less: Other deductions
Family home P -
Standard deductions 1,000,000. 1,000,000.0
00 0
Net estate subject to tax 3,593,943.5
0
Note: To be deductible, a family home must be situated within the
Philippines.
35. Answer: B
36. Answer: A
37. Answer: C
38. Answer: D
35
Total 230,000
39. Answer: B
40. Answer: B
41. Answer: D
Conjugal -
Family home 1,500,00
0
Other properties 2,500,00
0
Car 300,000
Claims against insolvent 50,00 4,350,00
0 0
Exclusive -
Land 250,000
House 400,000 650,00
0
Gross estate 5,000,0
00
Less: Deductions
Ordinary -
Conjugal
Funeral expenses
180,000
Judicial expenses 50,000
Bad debts 50,000 280,00
0
Exclusive
36
Unpaid mortgage (60,000 20,000)
40,000
Bequest to Naga City 30,000
Vanishing deduction on land (No. 42) 55,800
Vanishing deduction on house (No. 43) 74,400 200,20 ( 480,20
0 0)
Special -
Medical expenses 20,000
Family home (1,500,000/2) 750,000
Standard deduction 1,000,00 (1,770,00
0 0)
Net estate 2,749,80
0
Less: Share of surviving spouse (4,350,000 2,035,00
280,000) x 0
Net taxable estate 714,80
0
45. Answer: A
37
46. Answer: D
Net estate, Philippines 3,000,000
Net estate, United States 1,000,00
0
Total net estate 4,000,00
0
Tax on P 2,000,000 135,00
0
2,000,000 x 11% 220,00
0
Estate tax 355,00
0
Less: Tax credit
Tax paid, US
80,000
Limit (1/4 x 355,000)
88,750
Allowed (lower) 80,00
0
Estate tax due after tax credit 275,00
0
47. Answer: B
38
48. Answer: C
On P 2,000,000 135,00
0
2,000,000 x 11% 220,00
0
Estate tax 355,00
0
Less: Tax credit
Tax paid in US (squeeze)
80,000
Limit (1/4 x 355,000)
88,750
Credit allowed (lower) 80,00
0
Estate tax due after tax credit 275,00
0
49. Answer: A
50. Answer: D
39
Net estate, Hongkong 450,00 700,0
0 00
Total net estate 1,200,0
00
40