Saint Paul School of Business and Law Campetic Road, Palo, Leyte
Accounting 17 – TAXATION Quiz 1 1. The property, rights and obligations of a person which are not extinguished by his death and those which have been accrued thereto since the opening of succession: a. Assets c. Estate b. Capital d. Income 2. Which of the following is not subject to estate tax? a. A succession to the property of a decedent who left no last will and testament; b. A donation mortis causa; c. A donation inter vivos; d. A transfer during the lifetime for less than full and adequate consideration 3. Which of the following may be the subject of succession? a. Properties c. Obligations b. Rights d. All of the above 4. The following transactions and acquisitions exempt from transfer tax except: a. Transmission from the first heir or donee in favour 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 fideicommisary; c. The merger of usufruct in the owner of the naked title; d. All bequests, devises, legacies or transfers to social welfare, cultural and charitable institutions. 5. Statement 1: If a person died single, his entire net exclusive properties becomes subject to the estate tax; Statement 2: If a person died married, his entire net exclusive properties and entire net join properties with the spouse become subject to the estate tax. a. Both statements are true b. Both statements are false c. The first statement is true, but the second statement is false d. The first statement is false, but the second statement is true 6. Which of the following is not included in the gross estate? a. Revocable transfer where the consideration is not sufficient; b. Revocable transfer where the power of revocation was not exercised; c. Proceeds of life insurance where the beneficiary designated is the estate and the designation is irrevocable; d. Proceeds of life insurance where the beneficiary designated is the mother and the designation is irrevocable. 7. Which of the following statements is wrong? a. The gross estate of a non-resident citizen would include all properties regardless of location; b. The gross estate of a non-resident, not citizen of the Philippines would include intangible properties in the Philippines; c. The gross estate of a resident, not citizen of the Philippines would include all properties regardless of location; d. The gross estate of a non-resident citizen of the Philippines would include only properties in the Philippines 8. The personal properties of a non-resident, not citizen of the Philippines would not be included in the gross estate if: a. The intangible personal property is in the Philippines;
b. The intangible personal property is in the Philippines and the reciprocity clause of the estate tax law applies; c. The tangible personal property is in the Philippines; d. The personal property is shares of stock of a domestic corporation 90% of whose business is in the Philippines. 9. Proceeds of life insurance includible in the gross estate. a. Insurance proceeds from SSS or GSIS b. Amount receivable by any beneficiary irrevocable, designated in the policy by the insured; c. Amount receivable by any beneficiary designated in the insurance policy; d. Proceeds of group insurance taken out by a company for employees. 10.Which of the following exempt transmissions will still require inclusions of the property in the gross estate? a. Merger of usufruct in the owner of the naked title; b. Legacy to a charitable institution whose administrative expenses did not exceed 30% of the legacy; c. Transfer from a first heir to a second heir designated by the decedent; d. Death benefits under the GSIS and SSS. 11.Which of the following is not included in the gross estate? a. Revocable transfer where the consideration is not sufficient; b. Revocable transfer where the power of revocation was not exercised; c. Transfer under a general power of appointment where the consideration was not sufficient; d. Transfer under a limited power of appointment 12.Which statement is wrong? The gross estate shall be valued: a. At its fair market value at the time of death; b. At its fair market value at the time the return is due; c. In real property, the zonal value, which may be higher than the fair market value; d. In the case of shares of stock, at book value 13.Which of the following exempt transmissions will still require inclusions of the property in the gross estate? a. Merger of usufruct in the owner of the naked title; b. Legacy to a charitable institution whose administrative expenses did not exceed 30% of the legacy; c. Transfer from a first heir to a second heir designated by the decedent; d. Death benefits under the GSIS and SSS. 14.A revocable transfer with the following circumstances: Fair market value at the time of transfer – P300,000; fair market value at the time of death – P180,000; consideration received when transferred – P200,000: a. Shall be included in the gross estate at P180,000 b. Shall be included in the gross estate at P200,000 c. Shall be included in the gross estate at P100,000 d. Shall not be included in the gross estate 15.Which statement is correct? Real property with a cost of P300,000 and a fair market value at the time of death of P1,000,000, but subject to a mortgage of P200,000: a. Shall be in the net taxable estate at P800,000 b. Shall be in the gross estate at the decedent’s equity of P800,000 c. Shall be in the gross estate at P300,000 d. Shall be in the gross estate at the owner’s equity of P100,000 16.The following are the motives of a taxpayer that preclude the transfer in contemplation of death, except one a. To relieve the taxpayer of the burden of management b. To save income and property taxes c. To avoid payment of estate tax d. To make dependents financially independent
17.Which of the following is a distinction between estate and donors 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 18.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 statement is correct? a. Statement 1 only b. Statement 2 only
c. Both statements d. Neither statements
19.A citizen and resident of the Philippines died leaving the following properties and rights: Cash on hand and in banks (of which P150,000 was provided in the will to be given to a charitable institution) P1,000,000 Real Property in the Philippines: Assessed value per assessment rolls of the city 100,000 Zonal value per Bureau of Internal Revenue 500,000 Selling price of adjacent piece of land the day preceding the date of death 600,000 Real property in Malaysia, fair market value 450,000 Car in the Philippines, with a mortgage of P200,000 400,000 Receivables: From a friend from whom there is no possibility of recovery 20,000 From a sister whose ratio of assets to liabilities is 1:3 15,000 Amounts under insurance contracts: Receivable under life insurance, with the father as revocable beneficiary 250,000 Receivable under life insurance, with the mother as irrevocable beneficiary 200,000 Receivable under accident insurance, for accident that happened 1 year ago 50,000 Receivable under property insurance, for damaged caused to his car 12,000 Revocable transfers: To sister (fair market value at the time of transfer was P40,000 and consideration received was P10,000 50,000 To father (fair market value at the time of transfer was P30,000 and consideration received was P30,000 60,000 To mother (fair market value was P40,000 and consideration received was P50,000) 70,000 The gross estate is: a. P2,737,000 b. P2,807,000
c. P2,627,000 d. P1,350,000
20.A citizen of Malaysia, residing in Kuala Lampur, with properties in the Malaysia and the Philippines, had the following data on properties and rights at the time of his death and their values: Real estate, Malaysia P1,000,000 Real estate, Philippines 2,000,000 Shares of stock of a domestic corporation 200,000 Shares of stock of a Malaysian corporation 300,000
Shares of stock of an Indonesian corporation, doing business in the Philippines only 100,000 Philippine peso deposit in BDO bank 500,000 Receivable under a life insurance with an insurance company doing business in Malaysia 250,000 The gross estate that should be reported in the Philippines is: a. P4,350,000 c. P4,000,000 b. P3,700,000 d. P2,800,000 21.Which of the following is not a deduction from the gross estate under the NIRC? a. taxes c. Legacy to the government b. Losses d. Legacy to a charitable institution 22.The following are the requisites in order that claims against the decedent’s estate may be deductible, except: a. They must be existing against the estate b. They must be reasonably certain as to amounts c. They must have been prescribed d. They must be enforced by the claimants 23.Which of the following statements is wrong? A claim against an insolvent person, with no properties whatsoever is: a. included in the gross estate b. not included in the net taxable estate c. if arising out of debt instrument of the insolvent, the debt instrument must be notarized d. needs no preliminary filing of a case against the insolvent. 24.Y, a Filipino resident, died on November 5, 1992 and his estate incurred losses due to: 1st loss: From fire on February 2, 1992 of improvement on his property not compensated by insurance 2nd loss: From flood on February 25, 1993 of household furniture also not compensated by insurance a. 1st loss is not deductible and 2nd loss is deductible b. Both losses are not deductible c. Both losses are deductible from gross estate d. 1st loss is deductible and 2nd loss is not 25.The following are requisites for vanishing deduction to be allowable except one: a. The estate tax of the prior succession must have been finally determined; b. The present decedent died within five (5) years from the date of death of the prior decedent; c. The property with respect to which deduction is sought can be identified; d. The property must have formed part of the gross estate situated in the Philippines of the prior decedent. 26.Rudolfo, a citizen of the Philippines and resident of Tacloban City, died testate on May 10, 2001. Among his gross estate are properties inherited from his deceased father who died on April 4, 1998. What percentage of deduction will be used in computing the amount of vanishing deduction? a. 80% of the value taken as basis for vanishing deduction; b. 100% of the value taken as basis for vanishing deduction c. 60% of the value taken as a basis for vanishing deduction d. 40% of the value taken as basis for vanishing deduction 27.Which statement is true? a. A single person who is not a head of family may not have a deduction for family home; b. There can be a deduction for two family homes if their aggregate value does not exceed P1,000,000; c. Deduction may be claimed for a family home of a non-resident citizen of the Philippines located outside the Philippines
d. A family home is always conjugal/community property 28.Statement 1: Expenses incurred for the performance of the rites and ceremonies incident to interment and those incurred after interment, such as prayers, masses and entertainment are part of funeral expense. Statement 2: The administrator or executor shall submit a statement showing the disposition of the proceeds of the loan if the claim against the estate was contracted within five years before the death of the decedent. a. True, true b. True, false c. False, true d. False, false 29.Which statement is wrong? For a non-resident, not citizen of the Philippines: a. There are no special deductions from the gross estate b. There can be no deduction for funeral expenses entirely incurred outside the Philippines c. There can be a vanishing deduction; d. There can a be a deduction for transfer for public use. 30.Mrs. Mina Las a non-resident, not citizen of the Philippines, single, who died with a gross estate in the Philippines of P4,000,000 and outside the Philippines of P6,000,000. He left the following obligations and charges: Medical expenses, Philippines, in the year of death P1,000,000 Funeral expenses, foreign 800,000 Claims against insolvent person, Philippines 250,000 Judicial expenses of testamentary proceedings, Philippines 300,000 Judicial expenses of testamentary proceedings, foreign 350,000 Other claims against the estate, Philippines 900,000 Transfer to the Philippine Government, for public use of property in the foreign country 400,000 Unpaid taxes, foreign country 20,000 Mortgage payable, foreign country 180,000 Losses, Philippines 100,000 Deduction from the Philippine gross estate is a. P1,250,000 b. P1,550,000
c. P1,760,000 d. P1,160,000
31.Mr. Dino Minggo, a citizen and resident of the Philippines, died on October 5, 2011. He was married and the property relationship during the marriage was the absolute community of property. He left the following properties, with their fair market values, and obligations and charge thereon: Agricultural land P100,000 House and lot acquired by inheritance before the marriage and 4 ½ years ago, used as family home (with a fair market value of P420,000 and a mortgage of P120,000 when acquired; P20,000 was paid by Mr. Costales before he died) 500,000 Jewelry of Mrs. Minggo, acqyired during the marriage with the income of Mrs. Minggo 50,000 Clothes acquired during the marriage, with income during the marriage: For use of Mr. Minggo 60,000 For use of Mrs. Minggo 70,000 Cash on hand and in banks: Income from unidentified sources 300,000 Cash in bank: From a sale at a loss of exclusive property 1,500,000
Received as gift six years ago and before the marriage (current account) 40,000 Other properties: Owned before the marriage 90,000 Acquired during the marriage 20,000 Total funeral expenses of P300,000. Paid from the estate P 58,000 Judicial expenses 120,000 Unpaid mortgage (already on the property at the time acquired): On agricultural land 20,000 On house and lot 100,000 Other obligations 20,000 Legacy to the government of the Philippines from the current account 10,000 The net taxable estate is: a. P660,932.33 b. P857,310.34
c. P698,620.70 d. P767,310.34
32.A resident citizen died leaving (all before standard deduction):Net estate in the Philippines – P1,000,000; Net estate in Foreign Country A – P250,000; Net estate in Foreign Country B – P750,000. His estate paid estate taxes to foreign Country A of P7,500 and to Foreign Country B of P18,125. The allowable estate tax credit against the Philippine estate tax is: a. P25,000.00 c. P27,500.00 b. P25,625.00 d. P26,405.00 33.The estate tax return should be accompanied by a certificate of an independent CPA if the gross estate is: a. P2,000,000 c. Over P2,000,000 b. P2,000,000 or over d. P50,000 or over
34.Which statement is wrong? An estate tax return is required to be filed: a. When the estate is subject to estate tax b. When the estate is not subject to estate tax but the gross estate exceeds P200,000 c. Where the gross estate includes registered real property d. In all cases where there is a gross estate 35.First statement: The estate tax return should be filed with the authorized agent bank, Revenue District Officer, Collection Agent or duly authorized treasurer of the municipality in which the decedent was domiciled at the time of his death. Second statement: If the decedent was a non-resident, not a citizen of the Philippines, the estate tax return may be filed with the Commissioner of Internal Revenue a. Both statements are true b. Both statements are false c. The first statement is true, but the second statement is false d. The first statement is false, but the second statement is true
If the net estate is Over P200,000 500,000 2,000,000 5,000,000
The tax shall be But not over P 200, 000 Exempt 500,000 2,000,000 P 15,000 5,000,000 135,000 10,000,000 465,000
Plus
5% 8% 11% 15%
Of excess over
P 200,000 500,000 2,000,000 5,000,000
10,000,000
1,215,000
20%
10,000,000
