TRANSFER TAXES – ESTATE (PROBLEMS)
1. Pin Nathay died on May 1, 2014 and left a real property costing P5,500,000, with book value of P5,250,000. On May 2, 2014, the property’s market value is P4,750,000. The amount to be included in the gross estate is
a. P5,250,000 b. P5,000,000 c. P4,750,000 d. P5,500,000
2. Two Dash died leaving a house and lot and a land in Quezon City. The Quezon City Assessor’s Office determined that the value of the house and lot and the land are P4,500,000 and P12,000,000 respectively. Whereas, the BIR Commissioner’s valuation indicated P5,000,000 for house and lot, and P11,400,000, for the land. The total value of these properties that should be included in Two Dash’s gross estate is
a. P17,000,000 b. P16,500,000 c. P16,400,000 d. P15,900,000
Whichever is higher.
3. Who One, an American residing in New York Cubao, died leaving the following properties: Vacation House in Mexico Pampanga, Philippines P 10,000,000
Mitsubishi, Philippines 500,000
Unit in Sun Residences, Quezon City Philippines 1,500,000
Shares of stocks, New York USA 2,000,000
Business, New York USA 15,000,000
Receivable, Philippines 1,000,000
The gross estate of Who One is
a. P13,000,000 b. P15,000,000 c. P30,000,000 d. P29,500,000
All
4. Juan, a citizen, is an investor of 1,000 shares, P100 par of Imang, Inc., a domestic corporation. In 201A, Juan died due to cancer. During that time, the shares are selling in the Philippine Stock Exchange at P120 to P150 per share. What amount related to these shares shall be included in the gross estate?
a. P100,000 b. P120,000 c. P135,000 d. P150,000
(120 + 150) / 2 = 135 x 1,000 = 135,000
5. When Jose died, his wife received the proceeds amounting to P1,000,000 of the life insurance he has been paying when he was still alive. Jose paid a total of P350,000. What amount should be reported as part of the gross estate if Jose designated his wife as the revocable beneficiary?
a. P1,000,000 b. P650,000 c. P350,000 d. P0
Proceeds is included in gross estate if (1) beneficiary is revocable, and (2) beneficiary is estate, executor, administrator, whether the designation is revocable or not.
Excluded if beneficiary is 3rd person, designated as irrevocable. In general, if beneficiary is not stated, revocable designation.
Group insurance taken by employer, and proceeds from SSS and GSIS, excluded.
6. Refer to previous item, what item should be reported as part of the gross estate if Jose designated his wife, the administrator, as irrevocable beneficiary?
a. P1,000,000 b. P650,000 c. P350,000 d. P0
7. How much of the following revocable transfers with consideration is to be included in the gross estate? FMV at time of transfer P2,100,000
FMV at time of death 2,700,000 Consideration received 2,400,000
a. P2,700,000 b. P2,100,000 c. P600,000 d. P300,000
8. Maria donated her house and lot valued at P10,000,000 to her son Mario, retaining the power to amend or terminate the transfer at will. Five months after donation, Mario died due to car accident. Which of the following is true?
a. The house and lot should be included in Mario’s gross estate b. If Mario accepted the donation, the donation is perfected.
c. Upon the death of Maria, the house and lot shall be included as part of her gross estate
d. Upon the death of Maria, the house and lot shall no longer be included as part of her gross estate because it was already included in Mario’s gross estate
This is a revocable transfer. Maria still owns the property.
9. Mr. Tah Kot was diagnosed to have a stage four lung cancer. Fearing that he will die soon, he donated his apartment costing P3,000,000 to his daughter Ma Saya, and his Honda City car costing P1,100,000 to his son, Masma Saya. 10 months after he was diagnosed, Mr. Tah Kot died. At that time, the apartment has P2,800,000 market value based on the schedule of values fixed by the assessor’s office, while the car has P1,000,000 book value, but can be sold for P800,000. Also, the apartment earned P855,000 rental income, net of 5% CWT. How much of the above mentioned values shall be included in Mr. Tah Kot’s gross estate?
a. P0 b. P855,000 c. P4,500,000 d. P4,700,000
2,800,000 + 800,000 + (855,000/95%) = 4,500,000
10. Mr. Aksi Dente died in a bus accident. His wife received the following in relation to his death:
P3,000,000 from Eagle Life Insurance Company. The estate of Mr. Dente is the irrevocable beneficiary. P1,500,000 from Maya Life Insurance Company, with Mrs. Dente as the revocable beneficiary.
P900,000 from Florida Bus Company after extra-judicial court settlements. How much of the above receipts are to be included in Mr. Dente’s gross estate?
a. P900,000 b. P2,400,000 c. 4,500,000 d. 5,400,000
3,000,000 + 1,500,000 = 4,500,000
11. (VDR) The following are the properties of Mr. Lay Bing.
Fair market value Consideration At transfer At death Received Revocable transfer
Land P 8,000,000 P 10,400,000 P 6,000,000
Car 2,000,000 0 1,200,000
Shares of stocks 1,000,000 600,000 800,000
Bonds 400,000 400,000 500,000
Transfer under power of appointment
Land and building, general power 4,000,000 3,600,000 2,000,000 Farm land, special and limited power 3,000,000 1,000,000 2,400,000 How much is the gross estate?
a. P1,600,000 b. P6,000,000 c. P4,400,000 d. P14,000,000
(10,400,000 – 6,000,000) + (3,600,000 – 2,000,000) = 6,000,000 12. Mr, Estallila left the following properties upon his death:
Personal tangible properties
Acquisition cost P 1,200,000 Book value 400,000 Fair market value 600,000 Real properties
Assessed value P 800,000 Zonal value 1,300,000 Tangible personal properties
1) Stocks of Camix Company, 3,000 shares listed in local stock exchange (highest – P 35; lowest, 33)
2) Stocks of Dam Company, 2,000 shares not listed in local stock exchange. Cost per share, P60; book value per share, P55
The gross estate the decedent would be
a. P 2,125,000 b. P 2,112,000 c. P 2,010,000 d. P 2,126,000
600,000 + 1,300,000 + (3,000 x 34) + (2,000 x 55) = 2,112,000
13. (VDR) A resident decedent reported the following properties (at market values)
Family home (land and residential house in the Philippines) P 2,000,000
Vacation house and lot in Malaysia 1,500,000
Farm land in the Philippines, with P600,000 mortgage in favour of BPI 1,000,000 Shares of stock:
Of a domestic corporation deposited in a bank safety deposit box in Malaysia 200,000 Of a foreign corporation the entire business of which is in the Philippines,
Deposited in a bank safety deposit in Malaysia 100,000 Receivable from a friend who has no property, whatsoever 50,000 Receivables life insurance policies taken by decedent, beneficiary is
Estate, revocable 500,000
Daughter, revocable 400,000
Son, irrevocable 300,000
Life insurance taken by employer of the decedent, beneficiary is the estate 50,000
Property insurance, for loss of property 250,000
Accident insurance, for injury sustained 20,000
The gross estate is?
a. P5,920,000 b. P5,020,000 c. P4,920,000 d. P6,020,000
22On November 1, 2011, Mr. Marquez, married and survived by his legitimate spouse, died leaving the following properties within and outside the Philippines.
CGP ACP
Land in Cebu, received as gift before marriage P 1,500,000 Ex Com
Land in Davao, inherited from his father, during marriage 2,000,000 Ex Ex
Car, received by Mrs. Marquez as gift, during marriage 3,500,000 -
-House and lot in Davao, acquired during marriage 900,000 Con Com
Apartment, inherited by Mrs. Marquez during marriage 2,800,000 -
-Condominium unit in QC, acquired before marriage 3,400,000 Ex Com
Income of land in Cebu 450,000 Con Com
Income of land in Davao 600,000 Con Ex
Rental income of condominium 150,000 Con Com
Rental income of apartment 300,000 Con
-Jewelry of Mrs. Marquez purchased using her exclusive money 250,000 - Com
Unidentified property as when and who acquired 800,000 Con Com
Notes:
For CGP, exclusive properties are those received by gratuitous title during marriage, those brought to marriage as his own, and those purchased using exclusive money
For ACP, exclusive properties are those received by gratuitous title during marriage, and the fruits of the exclusive properties 14. Under the Conjugal Partnership of Gains, Mr. Marquez’s exclusive properties amount to P6,900,000
15. Under the Absolute Community Property, Mr. Marquez’s exclusive properties amount to P2,600,000 16. Under the Conjugal Partnership of Gains, the conjugal properties are P3,200,000
17. Under the Absolute Community Property, the conjugal properties are P7,450,000
18. Under the Conjugal Partnership of Gains, the amount to be included in Mr. Marquez’s gross estate is P8,500,000 19. Under the Absolute Community Property, the amount to be included in Mr. Marquez’s gross estate is P6,325 ,000
20. If Mr. Marquez has legitimate descendants from previous marriage, under absolute community property, how much is his exclusive property? 12,400,000
Property acquired before marriage including its fruits become exclusive. Therefore, the following become exclusive: Land in Cebu (1,500,000) + Condominium (3,400,000) + their income 450,000 + 150,000 + 6,900,000 = 12,400,000
21. Mr. Deds died on March 31, 2013 and left a real property worth P1,560,000. Deductions claimed by the administrator follow: Medical expenses during decedent’s sickness paid out of decedent’s cash
Available at date of death P 45,000
Expenses during wake paid out of decedent’s cash 85,000
Cost of burial lot and tombstone 40,000
Claims against insolvent persons. 100,000
How much funeral expense is allowed as deduction from gross estate?
a. P170,000 b. P78,000 c. P86,500 d. P91,500
(1,560,000 + 45,000 + 85,000 + 40,000 + 100,000) x 5% = 91,500 vs. 125,000
22. Mr. Patrick, just before his death, has total claims against debtor of P2,000,000. One of the debtors whom Mr. Patrick was a claim of P 500,000 has total assets of P 3,000,000 and total liabilities of P 10,000,000. The court accordingly declared the said debtor insolvent. The claims against insolvent person as allowable deduction from the gross estate would be
a. P 150,000 b. P 350,000 c. P 500,000 d. P 2,000,000
P500,000 – (3M/10M x P500,000) = P350,000
23. Among the properties included in the gross estate of Mr. Laurence at the time of death was two-storey commercial building with a fair market value of P 6,000,000. During the settlement of the estate and before the last day of paying the estate tax, the said property was destroyed by fire. The fair market value of the property at the time of the accident was P 6,500,000. Assume that the property was insured for P 5,000,000 and the amount recovered from the insurance company was P 4,500,000, the amount of the deductible loss will be
a. P 500,000 b. P 1,500,000 c. P 4,500,000 d. P 6,000,000
P6,000,000 – 4,500,000 = P1,500,000
24. The following are liabilities related to the death of a resident citizen:
Unpaid mortgage on real property included in gross estate P 250,000 Accounts payable condoned by creditors 100,000 Unpaid medical expenses incurred related to sickness which
Caused the death of the decedent 100,000
Unpaid funeral expenses 50,000
How much would be deducted as claims against the estate?
a. P250,000 b. P300,000 c. P350,000 d. P400,000
Donation to San Antonio Parish P 200,000 Donation to City Government of Tacloban 350,000 Donation to Chinese Government 500,000
Donation to GMA Foundation 120,000
How much of the above transfer for public use are allowed as deduction from gross estate?
a. P850,000 b. P670,000 c. P550,000 d. P350,000
26. Mr. Albert, a non-resident Filipino, died during the taxable year with the following information:
The amount of ordinary deductions against the gross estate is
a. P 150,000 b. P 210,000 c. P 260,000 d. P 345,000
Claims against insolvent person (900,000 x 15%) P135,000 Funeral expenses (4.2M x 5%) vs. actual 150,000 Judicial expenses 60,000
Total 345,000
FOR TEMS 27 – 29, REFER TO THE FOLLOWING INFORMATION:
27. The following information relates to the predecessor, Mr. Alfonso Sr., and present decedent, Mr. Alfonso Jr.:
Data on Alfonso Sr.
2-storey commercial building, fair market value at the time of death P 3,000,000 Hi-ace van, fair market value at the time of death P 900,000
The estate taxes on the above properties were properly paid and such were accordingly transferred to his only son, Alfonso Jr. The commercial building has an unpaid mortgage of P 1,000,000 at the time of transfer.
Data on Alfonso Jr.
At the time of death Mr. Alfonso Jr., which is more than three years after the death of his father, the two-storey commercial building has a fair market value of P4,000,000 while that of the hi-ace van was P 800,000. The mortgage has an unpaid balance of P 300,000.
The total amount of ordinary expenses accounted properly was P 1,200,000 comprising of funeral expenses, the judicial and administrative expenses, and transfer for public use. The gross estate of Mr. Alfonso Jr. at the time of death amounted to P15,500,000.
The amount of initial basis is
a. P3,800,000 b. P3,500,000 c. P3,100,000 d. P2,800,000
Lower fair market values at time of death( P3M + P800,000) P3,800,000 Less: Mortgage paid (P1M – 300,000) 700,000
P3,100,000
28. The amount of proportionate deduction for initial basis is
a. P294,194 b. P270,968 c. P240,000 d. P216,774
P1,200,000 x (P3.1M / P15.5M) = 240,000
29. The amount vanishing deductions is
a. P 1,168,000 b. P 1,205,678 c. P 1,144,000 d. P 1,808,516
P3,100,000 – 240,000 = P2,860,000 x 40% = P1,144,000
If within 1 year , 100%; >1yr to 2yrs, P80%; >2yrs to 3yrs, 60%; >3yrs to 4 yrs, 40%; >4yrs to 5yrs, 20%.
30. How much is the amount of family home subject to estate tax if the said family home has a value of P4,000,000 of which P1,600,000 represents the exclusive lot of the decedent and the balance represents the conjugal part?
a. P2,800,000 b. P1,800,000 c. P1,200,000 d. P1,000,000
1,600,000 + (2,400,000 / 2) = 2,800,000 – 1,000,000 = 1,800,000
FOR ITEMS 31 – 33, REFER TO THE FOLLOWING INFORMATION: 31. Mr. Lee Bing a resident decedent, left the following estate:
Exclusive real estate P 2,800,000 Conjugal real estate – family home 1,600,000
House and lot in the Philippines as family home P 2,000,000
Car in Singapore P 800,000
Pieces of jewelry in the Philippines P 500,000 Receivable in Singapore where 15% is proven to be P 900,000
uncollectible due to insolvency of the debtor
Funeral expenses P 150,000
Conjugal personal property 800,000
During marriage, the couple borrowed P400,000 from a bank, which is secured by the exclusive real property. At the time of Mr. Lee Bing’s death, there was a P300,000 balance of the mortgage payable. Actual funeral expenses amounted to P245,000 and judicial expenses of P100,000
How much is the net estate?
a. P3,800,000 b. P2,800,000 c. P2,100,000 d. P1,900,000
32. How much is the estate tax?
a. P143,000 b. P135,000 c. P127,000 d. P120,000
33. How much is the net distributable estate?
a. P2,210,000 b. P3,142,500 c. P3,550,500 d. P4,420,000
FOR ITEMS 34 – 36, REFER TO THE FOLLOWING INFORMATION: 34. (VDR) Decedent was single at the time of death:
Real and personal properties in the Philippines P 6,000,000 Proceeds of life insurance:
Receivable by the estate, as revocable beneficiary 1,000,000 Receivable by the spouse, as irrevocable beneficiary 500,000 Medical expenses within one year prior to death:
Paid by the time of death 300,000
Unpaid at the time of death 400,000
Funeral expenses
Paid by the time of death 100,000
Unpaid at the time of death 150,000
Other obligations of the decedent 1,000,000 Compute the net taxable estate
a. P5,000,000 b. P4,052,000 c. P4,300,000 d. P5,300,000
35. The estate tax?
a. P465,000 b. P360,720 c. P388,888 d. 510,000
36. The net distributable estate?
a. P5,450,000 b. P3,912,000 c. 5,062,000 d. 4,052,000
Taxable Distributable Gross estate P 6,000,000 P 6,000,000 Receivable from life insurance 1,000,000 1,000,000
Total 7,000,000 7,000,000 Medical expenses (500,000) (400,000) Funeral expenses (200,000) (150,000) Other obligations (1,000,000) (1,000,000) Standard deduction (1,000,000) Total deductions (2,700,000) Net taxable estate 4,300,000
Estate tax (388,000)
Net distributable estate P 5,062,000
37. A citizen decedent was under the system of absolute community of property during the marriage. He died with P7,000,000 and P4,000,000 properties in the Philippines and USA, respectively. Deductions, excluding the share of the surviving spouse, amount to P2,000,000 and P3,000,000 in the Philippines and USA, respectively. The administrator paid P50,000 of estate tax in the USA. How much is the net taxable estate?
38. How much is the estate?
39. How much is the estate tax still due after tax credit?
Phils USA Total
Properties P 7,000,000 P 4,000,000 Deductions 2,000,000 3,000,000
Net estate 5,000,000 1,000,000 P 6,000,000
Less: share of SS 3,000,000
Net taxable estate 3,000,000
Estate tax 245,000
Foreign estate tax paid 50,000 (1M / 6M) x 245,000 40,833
Allowed 40,833
Estate tax still due P 204,167
Over But not Over Shall beThe Tax Plus Excess OverOf the
P 200,000.00 Exempt P 200,000.00 500,000.00 0 5 % P 200,000.00 500,000.00 2,000,000.00 P 15,,000.00 8 % 500,000.00 2,000,000.00 5,000,000.00 135,000.00 11 % 2,000,000.00 5,000,000.00 10,000,000.00 465,000.00 15 % 5,000,000.00 10,000,000.00 1,2l5,000.00 20 % 10,000,000.00 KAYA PA?
