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
8.
b. P2,100,000
c. P600,000
d. P300,000
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 At transfer At death Revocable transfer Land Car Shares of stocks Bonds Transfer under power of appointment Land and building, general power Farm land, special and limited power How much is the gross estate? a. P1,600,000
Consideration Received
P 8,000,000 2,000,000 1,000,000 400,000
P 10,400,000 0 600,000 400,000
P 6,000,000 1,200,000 800,000 500,000
4,000,000 3,000,000
3,600,000 1,000,000
2,000,000 2,400,000
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 Zonal value
P 800,000 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) Vacation house and lot in Malaysia Farm land in the Philippines, with P600,000 mortgage in favour of BPI Shares of stock: Of a domestic corporation deposited in a bank safety deposit box in Malaysia Of a foreign corporation the entire business of which is in the Philippines, Deposited in a bank safety deposit in Malaysia Receivable from a friend who has no property, whatsoever Receivables life insurance policies taken by decedent, beneficiary is Estate, revocable Daughter, revocable Son, irrevocable Life insurance taken by employer of the decedent, beneficiary is the estate Property insurance, for loss of property Accident insurance, for injury sustained The gross estate is? a. P5,920,000
b. P5,020,000
FOR ITEMS 14-20, REFER TO THE FOLLOWING INFORMATION:
P 2,000,000 1,500,000 1,000,000
c. P4,920,000
200,000 100,000 50,000 500,000 400,000 300,000 50,000 250,000 20,000 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. 15. 16. 17. 18. 19. 20.
Under the Conjugal Partnership of Gains, Mr. Marquez’s exclusive properties amount to P6,900,000 Under the Absolute Community Property, Mr. Marquez’s exclusive properties amount to P2,600,000 Under the Conjugal Partnership of Gains, the conjugal properties are P3,200,000 Under the Absolute Community Property, the conjugal properties are P7,450,000 Under the Conjugal Partnership of Gains, the amount to be included in Mr. Marquez’s gross estate is P8,500,000 Under the Absolute Community Property, the amount to be included in Mr. Marquez’s gross estate is P6,325 ,000 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 Accounts payable condoned by creditors Unpaid medical expenses incurred related to sickness which Caused the death of the decedent Unpaid funeral expenses How much would be deducted as claims against the estate? a. P250,000 b. P300,000
250,000 100,000 100,000 50,000 c. P350,000
25. Mr. Pa Yapa died with the following donations in a testamentary succession:
d. P400,000
Donation to San Antonio Parish Donation to City Government of Tacloban Donation to Chinese Government Donation to GMA Foundation
P 200,000 350,000 500,000 120,000
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: House and lot in the Philippines as family home Car in Singapore Pieces of jewelry in the Philippines Receivable in Singapore where 15% is proven to be uncollectible due to insolvency of the debtor Funeral expenses Judicial expenses
P 2,000,000 P 800,000 P 500,000 P 900,000 P 150,000 P 60,000
The amount of ordinary deductions against the gross estate is a. P 150,000 b. P 210,000 Claims against insolvent person (900,000 x 15%) Funeral expenses (4.2M x 5%) vs. actual Judicial expenses Total
c. P 260,000
d. P 345,000
P135,000 150,000 60,000 345,000
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 Hi-ace van, fair market value at the time of death
P 3,000,000 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
Lower fair market values at time of death( P3M + P800,000) Less: Mortgage paid (P1M – 300,000)
c. P3,100,000
d. P2,800,000
c. P240,000
d. P216,774
P3,800,000 700,000 P3,100,000
28. The amount of proportionate deduction for initial basis is a. P294,194 b. P270,968 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
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 32. How much is the estate tax? a. P143,000
b. P2,800,000
c. P2,100,000
d. P1,900,000
b. P135,000
c. P127,000
d. P120,000
c. P3,550,500
d. P4,420,000
33. How much is the net distributable estate? a. P2,210,000 b. P3,142,500
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 35. The estate tax? a. P465,000 36. The net distributable estate? a. P5,450,000 Gross estate Receivable from life insurance Total Medical expenses Funeral expenses Other obligations Standard deduction Total deductions Net taxable estate Estate tax Net distributable estate
b. P4,052,000
c. P4,300,000
d. P5,300,000
b. P360,720
c. P388,888
d. 510,000
b. P3,912,000
c. 5,062,000
d. 4,052,000
Taxable P 6,000,000 1,000,000 7,000,000
Distributable P 6,000,000 1,000,000 7,000,000
(500,000) (200,000) (1,000,000) (1,000,000) (2,700,000)
(400,000) (150,000) (1,000,000)
4,300,000 (388,000) 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?
Properties Deductions Net estate Less: share of SS Net taxable estate Estate tax Less: estate tax credit
Phils P 7,000,000 2,000,000 5,000,000
USA P 4,000,000 3,000,000 1,000,000
Total P 6,000,000 3,000,000 3,000,000 245,000
Foreign estate tax paid (1M / 6M) x 245,000 Allowed Estate tax still due
Over P
200,000.00 500,000.00 2,000,000.00 5,000,000.00 10,000,000.00
50,000 40,833 40,833 P 204,167
But not Over P 200,000.00 500,000.00 2,000,000.00 5,000,000.00 10,000,000.00
The Tax Shall be Exempt 0 P 15,,000.00 135,000.00 465,000.00 1,2l5,000.00
Plus 5% 8% 11 % 15 % 20 %
Of the Excess Over P
200,000.00 500,000.00 2,000,000.00 5,000,000.00 10,000,000.00
KAYA PA?
Only those who plant will reap.
