245988488 estate tax doc PDF

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Summary

True or false succession takes place upon the death of the decedent unpaid funeral expenses are nevertheless deductible from gross estate as part of “claims against the estate” estate tax is property tax decedent’s interest includes revocable inter vivos transfers of properties until the death of th...

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True or false 1. succession takes place upon the death of the decedent 2. unpaid funeral expenses are nevertheless deductible from gross estate as part of “claims against the estate” 3. estate tax is property tax 4. decedent’s interest includes revocable inter vivos transfers of properties until the death of the donor 5. the share of the surviving spouse in the community property is not included in the gross estate of the decedent spouse. 6. the proceeds of life insurance policies payable upon death of the decedent are exempt from the payment of estate tax. 7. if the decedent sells properties because of an impending death, the difference between the market values at the time of sale and at the time of death, if any, is subject to estate tax. 8. if there is reciprocity, the intangible personal property in the Philippines of the non resident alien is subject to estate tax in the Philippines 9. a power of appointment is general if the donee is authorized to appoint a beneficiary named in the will of the prior decedent. 10. a husband cannot donate his share in the community property to his surviving spouse. 11. winnings in gambling is conjugal property. However, losses thereon shall be borne exclusively by the loser-spouse. 12. donations to charitable institutions are deductions from gross estate 13. death benefit from the GSIS is exempt from estate tax 14. the cost of the mourning apparel of a spinster daughter of the deceased is deductible as funeral expense 15. unpaid accountant’s fees to an accountant who signed the CPA certificate is deductible as “claims against the estate” 16. an unpaid loan contracted by the decedent spouse which is secured by a mortgage of a community property is deductible as a claim against the estate and not as unpaid mortgage 17. in an accommodation loan, there is an addition to and a deduction from gross estate, thus resulting to a zero balance in the net estate. 18. casualty losses are deductible from gross estate and from gross income 19. the family home of a non resident citizen is includible in the gross estate but not deductible therefrom 20. the estate of a nonresident alien is not entitled to a vanishing deduction. 21. net taxable estate is another term for net distributable estate 22. only the estate of resident citizen can claim tax credit on estate taxes paid to foreign countries 23. notice of death should be made within 30 days after the death of the decedent 24. filing of the estate tax return is required if the transfer is subject to estate tax regardless of the value of the gross estate. 25. installment payment of estate tax maybe allowed if there are no available cash of the estate.

Answers to True or false 1 2 3 4 5 6 7 8 9

Tru e Fals e Fals e Tru e Fals e Fals e Fals e Fals e Fals

Funeral expenses, whether paid or unpaid, are deductible as funeral expense It is an excise tax

The entire community properties of the spouses are included in the gross estate Proceeds of life insurance shall be exempt only from estate tax if the designated beneficiary in the policy is irrevocable and is not the estate, executor or administrator The sale must be for an insufficient consideration If there is reciprocity, the intangible personal property within is not taxable in the Philippines In that case, the power of appointment is special

1

e Fals

The prohibition is applicable on inter vivos donations only. Thus, it is allowed if the

0 1 1 1 2 1 3 1 4 1 5 1 6 1 7

e Tru e Fals e Tru e Fals e Fals e Fals e Tru e

1 8 1 9 2 0 2 1 2 2 2 3 2 4

Fals e Tru e Fals e Fals e Fals e Fals e Tru e

2 5

Tru e

donation is to become effective upon the death of the donor-spouse

They are exclusions from gross estate but not deductions All benefits from SSS and GSIS are exempt from INCOME and ESTATE tax The daughter must be minor and unmarried It is deductible as judicial expense It is deductible as an unpaid mortgage rather than as claims against the estate The amount of money borrowed is deductible as claims against the estate; however, that same amount which was loaned to accommodate the financial needs of another person should be included in the gross estate as a receivable of the estate on the debtor. It is deductible from either gross income or gross estate but not on both To be deductible, family home must be situated in the Philippines Vanishing deduction can be claimed provided that the subject property is situated in the Philippines Net taxable estate is the basis in computing the estate tax, while net distributable estate pertains to the amount that will be distributed among the heirs. Other than he resident citizens, the estate of non resident citizens and resident aliens can also claim tax credit on estate taxes paid abroad Notice of death must be made within 2 months after the decedent’s death, or within a like period after qualifying as executor or administrator Filing of estate tax return is required if the gross value of the estate exceeds 200,000 and regardless of value where the said real estate consists of registered or registrable property If the tax is paid by installment, a clearance shall be released only with respect to the property the corresponding tax on which has been paid.

1. Which of the following is not an element of succession? a. Decedent c. Heir d. Administrator b. Estate 2.Inheritance does not include a. property b. public office c. rights not extinguished by death d. obligations not extinguished by death 3.Estate tax is a. a property tax because it is imposed o the property transmitted by the decedent to his heirs. b. an indirect tax because the burden of paying the tax is shifted on the executor or any of the heirs of the decedent. c. an excise tax because it is imposed on the privilege exercised by the decedent to transfer ownership over the estate. d. a poll tax because it is also imposed on residents of the Philippines whether Filipino citizens or not. 4.Which of the following is not a distinction between estate tax and donor’s 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. 5.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? c. Both statements a. Statement 1 only. b. Statement 2 only. d. Neither statements 6. In 2002, J. Cruz gave a loan of P150,000 to sexy, his secretary. In 2005, as an act of generosity, J.Cruz condoned the debt of Sexy in his last will and testament. J. Cruz died in 2008. The condonation of the debt of Sexy is

a. A donation inter vivos subject to donor’s tax. b. A payment or compensation for the services rendered. c. A deduction from the gross estate of J.Cruz. d. A donation mortis causa subject to estate tax. 7. 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 taxes. d. To make dependents financially independent. 8. In default of testamentary heirs, the law determines who are to succeed to the inheritance of the deceased. Which of the following ranks first in the order of succession? a. legitimate children c. legitimate parents b. surviving spouse d. illegitimate children 9. H and W are married. They have legitimate children A and B. H died, survived by W, A and B. He estate of P12,000,000 should be divided as follows: W

A

B

Free

portion a. b. c. d

P3M 3M None 2.25M

P 4.5M 3M 6M 4.5M

P 4.5M 3M

None P 3M

6M 4.5M

None 2.25M

10. Based on the following data, how mush is the value of the decedent’s interest if he died March 31,2008? Cash in bank, joint account of the decedent And his wife P 254,000 Interest on the bank deposit ( January 1- June 30,2008) 9,000 Dividends from a domestic corporation: 60,000 Date of declaration- February 5, 2008 Date of record - April 15,2008 Date of payment - May 15,2008 Share in 2007 net profit of partnership, Distributed to partners on April 15 9,000 Winnings in lotto ( Bet, March 30; April 1, 2008 Draw) 500,000 c. P145,000 a. P 383,750 b. 138,000 d. 388,250 11. For estate tax purposes, the estate of the decedent shall be valued at the time a. of the preparation of the estate tax return b. the estate tax is paid. c. of death of the decedent. d. The estate is distributed to the heirs. 12. Mamo died leaving the following properties: Stocks of Cruz Corporation (2,000 shares )- listed in the Phisex (highest- P 40; lowest- P 39). Common Stocks of Hemo Corporation ( 1,500 shares)- not listed in the stock exchange. Cost- P 50 per share; book value- P45 per share. Car ( cost- P 600,000; book value- P 350,000; market value – P 400,000) Real properties ( zonal value – P 120,000; assessed value- P 72,000 ) The gross estate of Mamo isa. P 618,000 c. P 624,000 666,500 b. 867,000 d. 13.One of the following is subject to estate tax on properties situated within the Philippines only a. Resident citizen c. Nonresident citizen d. Nonresident alien b. Resident alien Items 14 through 16 are based on the following information: Dina Mathay, Filipina, died in the United States with the following properties Condominium unit in New York City 2,000,000

P

Shares of stock in a foreign corporation 600,000 Interest in a partnership, domestic 475,000 Bank deposit in a New York City bank 150,000 Car in Cebu, Donated inter vivos 5 years ago to her son 500,000 14.Which property should be included in the gross estate? a. All the above properties. b. Only the properties located in the Philippines c. All the above properties except the car. d. The properties located in the Philippines except the intangibles. 15.If the decedent was a nonresident alien ( with reciprocity), how much is the gross estate? a. P 3,725,000 c. P 500,000 b. 975,000 d. None 16. If the decedent was a nonresident alien ( no reciprocity ), how much is the gross estate? a. P 3,725,000 c. P 500,000 b. 975,000 d. 475,000 Whenever a decedent is a nonresident alien ( no reciprocity ), all properties situated in the Philippines ( real property , tangible personal property and intangible personal property are included in his gross estate. 17. Which of the following is an intangible personal property within? a. Franchise exercised in the United States. b. Shares or rights in a domestic business partnership. c. Bonds issued by an American corporation. d. Stocks issued by foreign corporation with business situs in the Philippines. a. B only c. All of the above properties b. B and D d. None of the above properties 18. An example of intangible personal property without is a. Domestic shares of stock b. Foreign shares, 85 % of the business of the corporation is in the Philippines. c. Foreign shares with business situs in the Philippines. d. Foreign shares, certificate of stock are kept in Makati. 19. One of the following donations is not included as part of gross estate. a. revocable transfers b. transfers with reservation of certain rights c. transfers under special power of appointment d. transfers in contemplation of death In a special power of appointment, the decedent is considered only as a trustee to the property. Hence, said property should not be a part of his estate. 20. Which of the following transfers is included in the gross estate? a. transfer inter vivos b. transfer under general power of appointment c. transfer under special power of appointment d. transfer for an adequate and full consideration 21. Decedent Kulot A. has the following data: Value of the property at the time of sale P 1,200,000 Value of consideration when sold 1,000,000 Value of property at the time of death 1,500,000 The amount includible in the gross estate is – a. P 300,000 c. P 200,000 b. 500,000 d. 1,500,000 22. When Albino was informed by his physician that he was about to die of cancer, he sold his properties: Market valueSelling Market valueDate of sale price Date of death Land P 2,700,000 P 1,500,000 P 2,700,000 Jewelries 500,000 300,000 300,000 Shares of stocks 200,000 220,000 250,000 Transfer under limited

Power of appointment

1,000,000

600,000

800,000

From among the data given, how mush should be included in the gross estate of Albino upon his death? a. P 1,200,000 b. 1,230,000

d.

c. P 1,430,000 1,400,000

23. On the belief that he was about to die of a liver cancer, Bongbong sold to Bengbeng a property valued at P 1,100,000 for the same amount. Six months later, Bongbong died of a car accident. At that time, the property had already a value of P 1,300,000. For Philippine estate tax purposes, the amount includible in the gross estate of Bongbong isa.P 1,100,000 c. P 200,000 b. 1,300,000 d. None 24. Amounts received by the estate of the deceased, his executor or administrator as an insurance under policy taken by the decedent upon his own life isa. excluded from the gross estate. b. part of the gross estate whether the beneficiary is revocable or irrevocable c. part of the gross estate if the beneficiary is revocable. d. part of the gross estate if the beneficiary is irrevocable 25. Case 1 – Designation of the beneficiary is revocable. Case 2-- Designation of the beneficiary is irrevocable. Case 3—Policy is silent as to whether the designation is revocable or irrevocable. In which of the above cases will the proceeds be exempt from estate tax, assuming that the beneficiary of the life insurance proceeds is neither the estate, the executor nor the administrator of the estate? a. Case 1 only c. Case 2 only b. Cases 1 and 3 d. All of the above cases 26. Proceeds of life insurance not payable to estate, executor or administrator shall be excluded in the gross estate if the beneficiary appointed in the policy is c. Irrevocable a. Revocable b. Revocable or irrevocable d. the executor 27. Proceeds of life insurance includible in the taxable gross estate a. Insurance proceeds from SSS and GSIS. b. Amount receivable by any beneficiary irrevocably designated in the policy by the insured. c. Amount receivable by any beneficiary revocably designated in the insurance policy. d. Proceeds of a group insurance taken out by a company for its employees. 28. Which of the following proceeds of life insurance policies is exempt from estate tax? 1. Life insurance policy on the life of Kristine, appointing her sister as the irrevocable beneficiary. 11. Life insurance policy on the life of Kristine, appointing her brother as the revocable beneficiary. 111. Life insurance policy on the life of Kristine, appointing her executor as the irrevocable beneficiary. 1V. Life insurance policy on the life of Kristine, appointing her children as the beneficiary. The policy is silent as to whether the appointment is revocable or irrevocable. a. 1 only c. 11 and 111 b. 1 and 1V d. All of them 29. The following are transactions and acquisitions exempt from transfer tax, except a. Transmission from the first heir or done in favor 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 fideicommissary. c. The merger of usufruct in the owner of the naked title. d. All bequests, devisees, legacies or transfers to social welfare, cultural and charitable institutions. 30. A devised in his will a piece of land; naked title to B and usufruct to C for as long as C lives, thereafter to B. the transmission from A to B and C is subject to estate tax but the merger of the usufruct and the naked title to B upon the death of C is exempt.

X devised in his will real property to his brother Y who is entrusted with the obligation to preserve and transmit the property to Z, a son of Y, when Z becomes of age. The transmission from Y to his son Z is subject to tax. a. First statement is correct, second statement is wrong. b. Both statement are not correct. c. Both statement are correct. d. First statement is wrong , second statement is correct. 31. One of the following is included in the gross estate. a. Benefits received from GSIS b. Benefits received from U.S Veterans Administration. c. Benefits received from damages during world war 2. d. Benefits received from a tax exempt employer as a consequence of death of the employee. 32. Which of the following distinguishes conjugal property from community property? a. Properties inherited during marriage. b. Those acquired through occupation during marriage c. Fruits of exclusive property. d. Income earned by each spouse during marriage. 33. One of the following is a conjugal property of the spouses. a. That which is brought to the marriage as his or her own. b. That which each acquires during the marriage by inheritance. c. The fruits of an exclusive property. d. That which is purchased with the exclusive property of the wife. 34. One of the following is not a community property of the spouses a. Property inherited by the husband before marriage. b. Winnings in gambling. c. Fruits of property inherited during the marriage. d. Fruits of property inherited before the marriage. 35. Which of the following is not a part of the gross estate? a. conjugal property b. community property c. exclusive property of the decedent d. exclusive property of the surviving spouse 36. When a person dies and during the marriage the property relationship between the husband and the wife was that of conjugal partnership of gains, the gross estate of the decedent would include a. His exclusive properties only. b. His exclusive properties and one –half of the conjugal properties. c. All the properties of the husband and wife. d. His exclusive properties and all conjugal properties. 37. A. Share of the decedent in the community property. B. Share of the surviving spouse in the community property. C. Exclusive property of the decedent. D. Exclusive property of the surviving spouse. Which of the above properties are included in the gross estate of the decedent? a. A and B c. A and C b. A, B, and C d. All of the above properties 38. Properties acquired by gratuitous title before the marriages are generally classified as: A. Community properties under absolute community of property regime. B. Conjugal properties under conjugal partnership of gains. Which of the above statement is correct? a. A only c. B only b. A and B d. Neither A nor B

Numbers 39 through 42 are based on the following information. Aldo died leaving the following properties: a. Real property in Baguio City brought into marriage b. Income of real property in Baguio c. Real property in Cebu City, brought into marriage by wife d. Income of real property in Cebu City e. House in Pili, Camarines Sur, acquired by Aldo during marriage f. Income of house in Pili g. Real property in Iloilo City, earned by wife during marriage h. Income of real property in Iloilo City

P 300,000 60,000 240,000 25,000 375,000 50,000 225,000 80,000

i.

Tangible personal properties in Manila, inherited

by Aldo during marriage j. Income of properties in Manila k. Intangible personal properties in Singapore inherited by wife during marriage l. Income of intangibles in Singapore m. Tangible personal property in Dagupan City, inherited by Aldo before marriage n. Income of property in Dagupan City o. Intangible personal property in Canada, inherited by wife before marriage p. Income of personal property in Canada

500,000 175,000 430,000 85,000 20,000 10,000 350,000 85,000

39. under the conjugal partnership of gains, the total conjugal properties of the spouses is: a. 1,170,000 b. 1,820,000 c. 1,990,000 d. 2,495,000 40. under conjugal partnership of gains, the gross estate of Aldo is a. 1,170,000 b. 2,495,000 c. 1,990,000 d. 1,820,000 41. under absolute community of property regime, the total community property of the spouses is: a. 1,820,000 b. 1,990,000 c. 2,495,000 d. 1,17...