Transfer Taxes Multiple Choice Problems

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Estate & Donor’s Tax Problems

Multiple Choice Questions

Transfer Taxes Quizzer
Instruction: Select the best answer to each of the following questions.
1

.

A revocable transfer with a consideration received:
Consideration received
Fair market value of property at the time of transfer
Fair market value of property at the time of death

P200,000
300,000
250,000

Amount to be included in the gross estate is:
a. P300,000.
b. P250,000.
c. P100,000.
d. P 50,000.
2

.

A decedent was married at the time of death and under the system of conjugal
partnership of gains regime. Among the properties in the gross estate were:
Land, inherited before the marriage, fair market value
Family home built by the spouses on the inherited land

P100,000.
800,000

The amount of deduction for family home allowance is
a. P900,000.
b. P500,000.
c. P400,000.
d. P450,000.
Questions 3 through 5 are based on the following information:
Mr. Digna, a resident citizen, died with properties consisting of his gross estate,
P5,000,000. Actual funeral expenses amounted to P220,000 and other expenses and claims
which are deductions from the gross estate amounted to P1,200,000.
3

.

The allowable deductions for funeral expenses is
a. P220,000.
b. P250,000.
c. P200,000.
d. P-0-

4

.

The net taxable estate is:
a. P3,600,000.
b. P3,550,000.
c. P3,700,000.
d. P3,580,000.

5

.

The distributable estate was diminished by:
a. P1,420,000.
b. P1,400,000.
c. P1,200,000.
d. P1,450,000.

Questions 6 & 7 are based on the following information:
6

.

Properties in the Philippines
Properties outside the Philippines
Actual funeral expenses in the Philippines
Actual funeral expenses outside the Philippines

P500,000.
300,000
20,000
10,000

If the decedent was a citizen or resident of the Philippines, the deductible funeral
expenses amounts to:
a. P30,000.
b. P40,000.
c. P18,750.
d. P25,000.

TAX-PQ-0604

1

Estate & Donor’s Tax Problems

Multiple Choice Questions

7

.

If the decedent was a non-resident alien, the deductible funeral expenses amount to:
a. P30,000.
b. P40,000.
c. P18,750.
d. P25,000.

8

.

Mr. Arias died with a receivable from Mr. Bernas. Mr. Bernas has properties worth
P220,000 and obligations of P320,000. Included in the obligations are P20,000 owed to
the Government of the Republic of the Philippines for unpaid taxes and P60,000 owed to
Mr. A. The deductible claim against insolvent persons amount to:
a. P60,000.
b. P41,250.
c. P20,000.
d. P40,000.

9

.

The decedent, during his lifetime, was under the conjugal partnership of gains. Among
his allowable deductions from the gross estate is vanishing deduction and the following:
Funeral expenses
Judicial expenses
Claims against conjugal properties
Mortgage on exclusive property
Bequest to charitable institution
Bequest to the Philippine Government
Medical expenses
Amount received by heirs under R.A. 4917

P 80,000.
100,000.
120,000.
40,000.
5,000.
60,000.
300,000.
60,000.

In the formula for vanishing deduction where:
Initial basis of property
------------------------------ x Deductions,
Gross Estate
The multiplier “deduction” is equal to:
a. P400,000.
b. P405,000.
c. P 40,000.
d. P100,000.
Questions 10 & 11 are based on the following:
A decedent died single, leaving a family home which consists of a piece of a piece of land
that he inherited 3-1/2 years ago (with value at that time of P600,000) with a fair market value of
P800,000 at the time of his death, and a house thereon which he built at a cost of P650,000,
and a fair market value at the time of his death of P450,000. Other properties in his gross
estate have a fair market value of P550,000. Unpaid obligations at the time of his death
amounted to P300,000.
10

.

The vanishing deduction is equal to:
a. P200,000.
b. P500,000.
c. P 40,000.
d. P225,000.

11

.

The total deduction for family home is:
a. P 450,000.
b. P 550,000.
c. P1,000,000.
d. P1,250,000.

12

.

Mr. Javier, single, a non-resident, not a citizen of the Philippines, died leaving a gross
estate in the Philippines of P1,000,000 and a gross estate outside the Philippines of
P3,000,000. His expenses and transfers were: Funeral expenses outside the
Philippines of P100,000, mortgage of property outside the Philippines of P200,000 and
in the Philippines of P50,000 and transfer to the Philippine Government of property
outside the Philippines of P100,000.

TAX-PQ-0604

2

Estate & Donor’s Tax Problems

Multiple Choice Questions

The allowable deduction from the Philippine gross estate is:
a. P 87,500.
b. P100,000.
c. P 37,500.
d. P150,000.
13

Refer to the same information in no. 12, how much is the net taxable estate in the
Philippines?
a. P3,500,000.
b. P 912,500.
c. P 300,000.
d. P 850,000.

14

Mr. Alana inherited property on November 1, 2001, with a fair market value and a
mortgage, at that time, of P200,000 and P100,000, respectively. He married on January
10, 2002. On March 5, 2002, he borrowed P200,000 from a bank and mortgaged the
same property. Mr. Alana died without paying any of the mortgage indebtedness.
Disregarding accrued interest on the mortgage indebtedness, deduction against
exclusive property amounts to:
a. P100,000.
b. P200,000.
c. P300,000.
d. None.

15

Mr. Benetiz died on June 30, 2003, leaving, among others, the following charges and
obligations: Real property tax for the calendar year 2003 – P20,000; On an interestbearing promissory note (notarized): face value of the note – P10,000; accrued interest
on the note at the time of death – P600; and interest to accrue on the note from the date
of death to the date of maturity – P400. The deduction from the gross estate is:
a. P20,600.
b. P30,600.
c. P31,000.
d. P21,000.

.

.

.

Questions 16 & 17 are based on the following information:
Mr. Juanito Mendoza, a citizen and resident of the Philippines, died on June 1, 2003,
survived by his wife. The property relationship in the marriage was the conjugal partnership of
gains. He left the following properties and charges thereon:
Cost
Family home:
Residential house, constructed during the marriage
P400,000
Residential lot, TCT # 318, inherited 10 years ago
200,000
Furniture and appliances in the residential house
600,000
Receivable from insolvent friend
Cash, owned before the marriage
Other properties owned before the marriage
Actual funeral expenses
Judicial expenses
Unpaid mortgage
Unpaid taxes
Legacy (per will) of P50,000 cash to DSWD
Loss of household furniture and appliances on December
9,
2003
12,000
16

.

The deduction for family home amounts to:
a. P450,000;

TAX-PQ-0604

3

Fair
Market Value
P900,000
450,000
490,000
10,000
150,000
1,000,000
100,000
120,000
50,000
20,000
50,000

Estate & Donor’s Tax Problems

Multiple Choice Questions

b. P900,000;
c. P1,000,000;
d. P1,350,000.
17

.

The net taxable estate is equal to:
a. P1,200,000;
b. P 200,000;
c. P1,700,000;
d. P1,000,000.

Questions 18 through 21 are based on the following information:
Mr. Dencio Cayetano, a citizen of the Philippines, single, died a resident of the United
States, leaving the following properties:
Real property in the United States, inherited from the father one and
one-half
years
ago
P2,000,000
Personal property in the Philippines inherited from the father
1,600,000
Family
home

in

the

United

States

1,400,000
and incurred/paid the following expenses:
Actual

funeral

Other

100,000
obligations

expenses
contracted

paid

in

within

the
the

United
last

two

States
years

250,000
18

The taxable gross estate is:
a. P3,400,000;
b. P5,000,000;
c. P1,600,000;
d. P3,000,000.

19

The allowable deduction for family home is equal to:
a. P – 0 b. P 700,000;
c. P1,400,000;
d. P1,190,400.

20

The deduction allowed for property previously taxed is:
a. P1,488,000;
b. P2,678,000;
c. P1,190,400;
d. P1,400,000.

21

The net taxable estate is:
a. P2,459,600;
b. P1,971,600;
c. P3,162,000;
d. P2,678,000.

.

.

.

.

The following information should be used to answer questions 22 & 23:
The decedent is a citizen and resident of the Philippines:
Gross estate
Claims against the estate

TAX-PQ-0604

P10,000,000
3,000,000

4

Estate & Donor’s Tax Problems

22

.

Multiple Choice Questions

How much is the net taxable estate if the decedent was single?
a. P7,000,000;
b. P6,000,000;
c. P9,000,000;
d. P5,000,000;

23

.

How much is the net taxable estate if the decedent was married and under the conjugal
partnership of gains or absolute community of property and the conjugal/community
property was P3,900,000?
a. P5,550,000;
b. P6,550,000;
c. P6,050,000;
d. P5,505,000.
Questions 24 & 25 are based on the following information:
Mr. Alaberde, a citizen of the Philippines and a resident of the United States, under the
system of conjugal partnership of gains, died in the United States, and was shipped to and
buried in the Philippines. His estate had the following details:
Real property in the Philippines, inherited 3-1/2 years ago, when its fair
market
value
was
P500,000
P 600,000
Real
property

in

the

2,400,000
Tangible
personal
200,000
Tangible
personal

U.S.,

used

properties
properties

as

in
in

family

the
the

home

United

Philippines
States

700,000
Funeral expenses in the United States, paid in cash from the estate
110,000
Funeral expenses in the Philippines, paid in cash from the estate
100,000
Medical expenses, incurred within 1 year prior to death (P550,000 paid,
the
rest
still
payable)
900,000
Unpaid obligations
600,000
Claim
against
100,000
Estate
tax

an

(excluding

portion

insolvent
paid

in

person
the

300,000
24

The gross estate is equal to:
a. P 800,000;
b. P4,000,000;
c. P3,900,000;
d. P 900,000.

25

The net taxable estate amounts to:

.

.

TAX-PQ-0604

5

of

medical
in

the
United

expenses)
Philippines
States

Estate & Donor’s Tax Problems
a.
b.
c.
d.

Multiple Choice Questions

P695,000;
P445,000;
P195,000;
P860,000;

Questions 26 & 27 are based on the following information:
Mr. Antonio Mitras, a citizen and resident of the Philippines, died on October 5, 2003. He
was married and the property relationship during the marriage was the absolute community of
property. He left the following properties, with their market values, and obligations and charges
thereon:
Agricultural

land

P100,000
House and lot acquired by inheritance before the
marriage and 4-1/2 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.
Mitras
before
he
died)
500,000
Jewelry of Mrs. Mitras, acquired during the marriage with
the
exclusive
money
of
Mrs.
Mitras
50,000
Clothes acquired during the marriage from income
earned during (P60,000 for use of Mr. Mitras, and
P70,000
for
use
of
Mrs.
Mitras)
130,000
Cash on hand and in banks: income from unidentified
sources
300,000
Cash in bank:
From 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
90,000
Acquired

before
during

the

marriage

the

marriage

20,000
Deductions and other information are also presented as shown on the next page:
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

TAX-PQ-0604

6

Estate & Donor’s Tax Problems

Multiple Choice Questions

10,000
26

The amount of allowable vanishing deduction is:
a. P 70,135.34;
b. P114,758.32;
c. P140,270.68;
d. P 86,068.97.

27

The net taxable estate is:
a. P660,932.33;
b. P857,310.34;
c. P698,620.70;
d. P767,310.34.

.

.

Questions 28 through 32 are based on the following information:
Mr. Benjamin Contina, a citizen and resident of the Philippines, died on October 10, 2003,
leaving the following properties, rights, obligations and charges:
Conjugal properties (including a family home of P3,000,000
and amount receivable under R.A. 4917 of P200,000)
P6,000,000
Exclusive properties (including cash of P500,000 inherited 41/2
years
ago)
4,000,000
Medical
expenses

unpaid,

January

2003

600,000
Funeral

expenses

350,000
Judicial

expenses

500,000
Other

obligations
100,000

28

The deductible medical expenses amount to:
a. P600,000;
b. P300,000;
c. P500,000;
d. P250,000.

29

The amount of deductible funeral expenses is:
a. P350,000;
b. P100,000;
c. P500,000;
d. P200,000.

30

The family home allowed should be:
a. P3,000,000;
b. P1,500,000;
c. P1,000,000;
d. P 500,000;

31

The amount of allowable vanishing deduction is:
a. P460,000;
b. P184,000;
c. P 92,000;
d. P138,000.

.

.

.

.

TAX-PQ-0604

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Estate & Donor’s Tax Problems

32

.

33

.

Multiple Choice Questions

The net taxable estate is:
a. P3,808,000;
b. P5,058,000;
c. P1,150,000;
d. P2,250,000.
Miss Laura Praningna, a citizen and resident of Sydney, Australia, died leaving properties
and obligations in Australia and in the Philippines; Data on her properties and obligations
follow:
Properties in Australia
Properties in the Philippines
Funeral expenses in Australia
Unpaid obligations in Australia

P3,000,000
1,000,000
250,000
700,000

The net taxable estate in the Philippines is:
a. P1,000,000;
b. P 800,000;
c. P 775,000;
d. P-034

.

You are given the following information about the estate of a resident citizen decedent:
Columbia: Net estate of P100,000 and estate tax paid of P1,500;
Indonesia: Net estate of P200,000 and estate tax paid of P1,800;
Philippines: Net estate of P1,200,000.
The allowable amount of tax credit for estate tax paid in foreign countries amount to:
a. P2,800;
b. P3,000;
c. P3,300;
d. P5,500;

35

Assume the same information given in no. 35, compute the estate tax still due after credit
for foreign estate taxes paid:
a. P 6,000;
b. P12,200;
c. P 7,500;
d. P-0-

36

A resident citizen died leaving the following:

.

.

Net estate in the Philippines, P1,100,000; Net estate in Japan, P50,000; Net estate in
Korea, P150,000. His estate paid estate taxes in Japan, P200 and in Korea, P500.
The allowable estate tax credit against the Philippine estate tax is:
a. P700;
b. P692.31;
c. P769.23;
d. P776.92.
37

.

Given the following information, compute the amount of Philippine estate tax payable after
tax credit if the decedent was a nonresident alien, and there was foreign estate tax
payment of P500,000:
Philippines
P6,000,000
1,000,000

Gross estate
Claims against the estate
a.
b.
c.
d.

P-0Refund of P57,000;
P443,000;
P265,800.

TAX-PQ-0604

8

Foreign
P4,000,000
1,000,000

Estate & Donor’s Tax Problems

Multiple Choice Questions

38

The estate tax return should be accompanied by a certificate of an independent CPA if the
gross estate is:
a. P2,000,000;
b. More than P2,000,000;
c. At least P2,000,000;
d. At least P50,000.

39

In 2003, Joseph made the following gifts:

.

.

(a)
(b)
(c)

On June 1, 2003, P150,000 to Antonio, his son, on account of his marriage
celebrated on May 1, 2002;
On July 10, 2003, a parcel of land worth P180,000 to his father, subject to the
condition that the father would assume the mortgage indebtedness of Joseph in the
amount of P40,000;
On September 30, 2003, P150,000 dowry to his daughter Dana, on account of her
scheduled marriage on October 25, 2003, and another wedding gift worth P20,000
on November 23, 2003.

How much is the total net gifts?
a. P500,000;
b. P450,000;
c. P430,000;
d. P460,000.
40

.

Donation on one date by Kiko, father, of property and cash, as follows: To Lilia, a
legitimate daughter, on account of marriage, land with a fair market value of P500,000 but
subject to a mortgage of P100,000 which is assumed by Lilia. To Michael, a legitimate
son, on account of marriage, cash of P200,000.
The net gifts made are:
a. P680,000;
b. P580,000;
c. P590,000;
d. P700,000.

41

.

Mr. Rex Cortes made donations to Jun Cortes and Ana Dinio, son and daughter in law, on
account of marriage, of real property with a fair market value of P1,500,000, but subject to
a mortgage of P300,000 which was assumed by the donees.
The donor’s tax is:
a. P 77,750;
b. P 84,950;
c. P185,950;
d. P199,400;

42

.

Rico Peralejo, a citizen of the Philippines, made the following donations in 2003:
January 10: To Magaslaw, a legitimate daughter, on account of marriage, cash of
P200,000;
May 10: To Maginoo, a legitimate son, on account of marriage, property with a fair
market value of P200,000 and a mortgage of P40,000, which was
assumed by Maginoo;
October 10: Masunurin, a friend, an ordinary donation amounting to P10,000;
To Malambing, a niece, a donation on account of marriage of P15,000.
The donor’s tax on the donation of January 10, 2003:
a. P150;
b. P600;
c. P900;
d. P1,800.

TAX-PQ-0604

9

Estate & Donor’s Tax Problems

Multiple Choice Questions

43

Refer to the same information in the previous question, how much was the donor’s tax on
the donation of May 10, 2003?
a. P 5,750;
b. P24,000;
c. P 4,500;
d. P 5,800.

44

Refer to the same information in no. 42, compute the donor’s tax on the donation of
October 10, 2003
a. P1,000;
b. P3,000;
c. P6,250;
d. P6,150.

45

Refer to the same information in no. 42, How much was the donor’s tax on the donation of
December 10, 2003?
a. P1,350;
b. P2,450;
c. P6,500;
d. P 600.

.

.

.

Questions 46 through 48 are based on the following information:
Mr. & Mrs. Carlo Suarez, citizens and residents of the Philippines, made the following
donations:
June 6, 2003

To Jericho, a legitimate son, on account of
marriage
P460,000
To Betina, a legitimate daughter, property with
mortgage of P4,000 which was assumed by
Betina
(fair
market
value)
20,000

October 8, 2003

To Renato, a legitimate son of Mrs. Suarez, by
a prior marriage, on account of marriage
60,000

April 4, 2004

To
To

the

Paco

10,000
Cynthia,

Catholic
a

family

Church
friend

40,000
46

On the donation of June 6, 2003, the donor’s tax of Mr. Suarez is equal to:
a. P7,800;
b. P 420;
c. P1,170;
d. P3,120;

47

On the donation of October 8, 2003, the donor’s tax of Mr. Suarez is equal to:
a. P9,000;
b. P2,850;
c. P 800;
d. Exempt.

48

On the donation of April 4, 2004, the donor’s tax of Mr. Suarez amounts to:
a. P1,050;
b. P 600;

.

.

.

TAX-PQ-0604

1
0

Estate & Donor’s Tax Problems

Multiple Choice Questions

c. P 200;
d. P 315.
49

.

Mr. Gary Nievera, a citizen and resident of the Philippines, made donations on January 10,
2004, as follows:
Donation to Alan, a legitimate son, on account of marriage, to
be celebrated on February 14, 2004, property in the United
States (on which a U.S. donor’s tax of P1,200 was paid) with a
fair
market
value
of
P110,000
Donation

to

Alan,

cash

in

the

Philippines

of

100,000

50

.

The donors’ tax credit allowed for donor’s tax paid to the U.S. amounts to:
a. P1,200;
b. P1,000;
c. P 600;
d. P1,600;
Donations to a legitimate child of properties:
Property in the Philippines
P110,000
Property outside the Philippines, on account of marriage
200,000
Donor’s tax paid in a foreign country
4,500
The donor’s tax due after tax credit for foreign donor’s tax paid:
a. P2,200;
b. P2,750;
c. P4,625.50;
d. P3,208.33.

51

.

Mr. Bean, a citizen and resident of the Philippines, made the following donations on
February 14, 2004:
To Mr. Carlos, a legitimate child, on account of marriage on the
same day, property in Malaysia, which paid the Malaysian
donor’s tax of P52,000 and with a fair market value of
P610,000
To Mr. Dimalabanan, a friend, ordinary donation of property in
the Philippines, subject to a mortgage of P60,000, which
was assumed by the donee, and fair market value equals
160,000
The tax credit for foreign donor’s tax paid:
a. P34,628.06;
b. P52,000;
c. P42,857.14;
d. P31,520.43.

Questions 52 through 54 are based on the following information:
A donation was made by Mr. Angeles, a citizen and resident of the Philippines, to Brisney
Co., of property in a foreign country with a fair market value of P300,000. Foreign donor’s tax of
P70,000 was paid. There was a donation earlier in the year of P150,000 cash to Mr. Charlie, a
legitimate child.

TAX-PQ-0604

1
1

Estate & Donor’s Tax Problems

Multiple Choice Questions

52

How much was the donor’s tax on the donation to Brisney Co. before foreign donor’s tax
credit?
a. P91,000;
b. P90,000;
c. P60,000;
d. P 6,000.

53

How much is the tax credit for foreign donor’s tax paid?
a. P60,666.67;
b. P70,000;
c. P54,666.66;
d. P50,000.

54

How much is the donor’s tax due after credit for foreign donor’s tax paid?
a. P20,000;
b. P29,333.33;
c. P35,333.33;
d. P40,000

.

.

.

 END 

ANSWER KEY TO MULTIPLE CHOICE PROBLEM QUESTIONS

TAX-PQ-0604

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Letter “D” is the correct answer.
Letter “B” is the correct answer.
Letter “C” is the correct answer.
Letter “A” is the correct answer.
Letter “A” is the correct answer.
Letter “A” is the correct answer.
Letter “C” is the correct answer.
Letter “C” is the correct answer.
Letter “A” is the correct answer.
Letter “A” is the correct answer.
Letter “C” is the correct answer.
Letter “A” is the correct answer.
Letter “B” is the correct answer.
Letter “A” is the correct answer.
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Letter “C” is the correct answer.
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Letter “B” is the correct answer.
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Letter “B” is the correct answer.
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Letter “B” is the correct answer.
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Letter “A” is the correct answer.
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Letter “C” is the correct answer.
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Letter “A” is the correct answer.
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Letter “B” is the correct answer.
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Letter “A” is the correct answer.
.
Letter “B” is the correct answer.
.
Letter “C” is the correct answer.
.
Letter “A” is the correct answer.
.
Letter “A” is the correct answer.
.
Letter “C” is the correct answer.
.
Letter “D” is the correct answer.
.
Letter “C” is the correct answer.
.
Letter “C” is the correct answer.
.
Letter “A” is the correct answer.
.
Letter “C” is the correct answer.
.
Letter “A” is the correct answer.
.
Letter “B” is the correct answer.
.
Letter “B” is the correct answer.
.
Letter “A” is the correct answer.
.
Letter “C” is the correct answer.
.
Letter “B” is the correct answer.
.
Letter “B” is the correct answer.
.
Letter “D” is the correct answer.
.
Letter “D” is the correct answer.
.
Letter “D” is the correct answer.
.
Letter “B” is the correct answer.
.
Letter “D” is the correct answer.
.
Letter “D” is the correct answer.
.
Letter “A” is the correct answer.
.
Letter “B” is the correct answer.
.
Letter “B” is the correct answer.
.
Letter “A” is the correct answer.
.
Letter “C” is the correct answer.
.
Letter “B” is the correct answer.
.
Letter “A” is the correct answer.

54

.

Letter “B” is the correct answer.

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