Midterm with answer - EXAM PDF

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1.(Estate Tax) Mr. Zeke Yeager, testator, appointed Mr. Erwin Taichou as the executor of the estate. Mr. Yeager was a citizen of Japan and a resident of Buenos Aries, Japan. He was in Manila visiting his son when he died. He owned a Mercedes sports car and had several bank deposits in the USA. The e...

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1. (Estate Tax) Mr. Zeke Yeager, testator, appointed Mr. Erwin Taichou as the

executor of the estate. Mr. Yeager was a citizen of Japan and a resident of Buenos Aries, Japan. He was in Manila visiting his son when he died. He owned a Mercedes sports car and had several bank deposits in the USA. The executor asked you whether or not the car and the bank deposits in the USA will still have to be declared as part of the Philippine gross estate of Faustino Santos. Japan does not impose transfer taxes of any kind. What answer will you give him? a. The car and the bank deposits in the USA have to be declared as part of the Philippine gross estate because the decedent was in Manila at the time of his death and, as such, properties wherever situated are included in the gross estate. b. The car and the bank deposits in the USA need not be declared as part of the Philippine gross estate because when Mr. Santos died he was a non-resident alien. c. The car and the bank deposits in the USA have to be declared as part of the Philippine gross estate only when the decedent specified in his will and testament that such properties must form part of his gross estate. d. The car and the bank deposits in the USA need not be declared as part of the Philippine gross estate because Argentina does not impose transfer tax of any kind. 2. (Estate

Tax) The amounts withdrawn from the deposit accounts of a decedent subjected to the 6% final withholding tax imposed under Section 97 of the NIRC, shall be: a. Excluded from the gross estate for purposes of computing the estate tax. b. Included from the gross estate for purposes of computing the estate tax. c. Claimed as tax credit against estate tax due. d. Claimed as deduction from the gross estate.

3. (Estate Tax) A property was transferred mortis causa. The following data

were gathered from the transaction: Fair market value, time of transfer – Fair market value, time of death – Consideration received when transferred –

P500,000 P300,000 P350,000

How much shall be included in the gross estate? a. P500,000 c. P150,000 b. P300,000 d. None of the choices 4. (Estate Tax) The following data pertain to a decedent who is a married man

with a surviving spouse died on February 1, 2019: Conjugal real personal properties Conjugal personal properties (including P800,000 bank deposit which was withdrawn and subjected to 6% final withholding tax) Exclusive family home Conjugal ordinary deductions claimed (including P200,000 funeral expenses and P300,000 judicial expenses)

The taxable net estate is: a. P42,000,000. c. P27,000,000. b. P32,000,000. d. P21,000,000.

P 10,000,000

4,800,000 30,000,000 2,500,000

5. The decedent is a resident unmarried head of family with the following data: Real and personal properties P14,000,000 Family home 30,000,000 Ordinary deductions Unpaid real estate tax 2,000,000 The taxable net estate is: a.

P 42,000,000.

b.

P 32,000,000.

c. P 27,000,000. d. P 23,000,000. 6. The decedent is a married man with a surviving spouse with the following data: Conjugal real properties P 6,000,000 Conjugal family house 1,000,000 Exclusive family lot 400,000 Other exclusive properties 4,500,000 Conjugal ordinary deductions 1,500,000 Exclusive ordinary deductions 500,000

The taxable net estate is: a. P 9,900,000. c. P 3,500,000. b. P 3,750,000. d. P 1,250,000. 7. Using the same data in the preceding number, how much is the estate tax payable? a. P 594,000 c. P 210,000 b. P 225,000 d. P 75,000 8.(Estate Tax) Under the TRAIN, when is the time for filing of the estate tax return? a. Thirty (30) days from the decedent’s death b. Two (2) months from the decedent’s death c. Six (6) months from the decedent’s death d. One (1) year from the decedent’s death 9.(Estate Tax) Which of the following statements is incorrect in connection with cash installment payment of estate tax? a. The cash installments shall be made within two (2) years from the date of filing of the estate tax return. b. The estate tax return shall be filed within one year from the date of decedent’s death. c. The frequency (i.e., monthly, quarterly, semi-annually or annually), deadline and amount of each installment shall be indicated in the estate tax return, subject to the prior approval by the BIR. d. In case of lapse of two years without the payment of the entire tax due, the remaining balance thereof shall be due and demandable without the applicable penalties and interest. 10. (Estate Tax) Mr. Bertholdt died and was survived by his wife and two (2) children, Faye and Faith. After getting her share in the conjugal property, the surviving spouse renounced her share in the hereditary estate in favor of Faith to the exclusion of Faye. Was the renunciation subject to donor’s tax? a. Yes, because the renunciation was made categorically in favor of identified heir to the exclusion or disadvantage of the other coheirs. b. No. because the renunciation was considered a general renunciation. c. Yes, because , as a rule, renunciation of share in the hereditary estate is always subject to donor’s tax. d. No, because, as a rule, the surviving spouse cannot renounce her share

in the hereditary estate. 11 to 13 are based on the following: A resident decedent, single, died February 14, 2018. The estate’s decedent showed the following: Real property in the Philippines P4,000,000.00 Personal property outside the Philippines 2,000,000.00 Proceeds of life insurance upon the life of decedent, decedent’s estate designated as 1,000,000.00 irrevocable beneficiary Proceeds of life insurance, decedent’s spouse 500,000.00 designated as irrevocable beneficiary Medical expenses one year prior to 700,000.00 decedent’s death (including unpaid amount of P400,000) Funeral expenses (only P100,000 paid) 250,000.00 Claims against the estate

1,000,000.00

11. (Estate Tax) How much was the taxable net estate? a. P4,300,000.00 c. P1,000,000.00 b. P4,100,000.00 d. None of the choices 12. (Estate Tax) How much was estate tax payable? a. P443,000.00 c. P60,000.00 b. P388,000.00 d. None of the choices 13. (Estate Tax) How much estate tax purposes? a. P6,000,000.00 c. P1,700,000.00 b. P2,700,000.00 d. None of the choices

were the

total deductible

items for

14. (Donor’s Tax) Under the TRAIN, the donor’s tax for each calendar year shall be: a. six percent (6%) computed on the basis of the total gifts made during the calendar year. b. six percent (6%) computed on the basis of the total gifts in excess of Thee hundred thousand pesos (P300,000) exempt gift made during the calendar year. c. six percent (6%) computed on the basis of the total gifts including those made in the previous calendar year in excess of Two hundred fifty thousand pesos (P250,000) exempt gift made during the calendar year. d. six percent (6%) computed on the basis of the total gifts in excess of Two hundred fifty thousand pesos (P250,000) exempt gift made during the calendar year. 15. (Donor’s Tax) First statement: The computation of the donor’s tax is on a cumulative basis over a period of one calendar year. Second statement: Husband and wife are considered as separate and distinct taxpayers for purposes of the donor’s tax. a. Both statements are correct b. Both statements are incorrect c. Only the first statement is correct d. Only the second statement is correct

16. (Donor’s Tax) Grisha Jegear donated P110,000.00 to her friend Faye who was getting married. Grisha Jegear gave no other gift during the calendar year. What is the donor's tax implication on Grisha’s donation? a. The P100,000.00 portion of the donation is exempt since given in consideration of marriage. b. A P10,000.00 portion of the donation is exempt being a donation in consideration of marriage. c. Patricia shall pay a 6% donor's tax on the P110,000.00 donation. d. The P110,000.00 donation is exempt from donor's tax. 17. (Donor’s Tax) Mr. Mike Zacharias transfers inter vivos a personal property to his son on March 15, 2018. His son who lives in another province let his father know that he is accepting the gift on March 31, 2018. The personal property was delivered and received on April 15, 2018. When shall be the last day to file the donor’s tax return and pay the donor’s tax to avoid penalties? a. c. b. d.

April 14, 2018 May 15, 2018 April 30, 2018 None of the choices

18 to 20. are based on the following: The following donations during the calendar year 2018 are made to relatives: Date January 30, 2018 March 30, 2018 August 15, 2018

Amount P 2,000,000 1,000,000 500,000

18. (Donor’s Tax) How much is the tax due on the gift made on January 30, 2018? a. P 204,000 c. P 80,000 b. P 105,000 d. P 50,000 19. (Donor’s Tax) How much is the tax due on the gift made on March 30, 2018? a. P 204,000 c. P 60,000 b. P 124,000 d. P 50,000 20. (Donor’s Tax) How much is the tax due on the gift made on August 15, 2018? a. P 204,000 c. P 80,000 b. P 124,000 d. P 30,000 21. to 22. are based on the following: Mr. Levi Squad donated P500,000 to the City of Manila and P100,000 to his best friend who graduated summa cum laude. 21. (Donor’s Tax) For donor’s tax purposes, how much should be the gross gifts? a. P 600,000 c. P 400,000 b. P 500,000 d. None of the choices 22. (Donor’s Tax) For donor’s tax purposes, how much should be the deductions? a. P 500,000

c. P 100,000 b. P 400,000 d. None of the choices 23. (Donor’s Tax) On one date, Porco made donations of property in the Philippines to a non-stranger, and of property outside the Philippines to a stranger. In taking a credit for the foreign donor’s tax paid, the credit shall be against the Philippine donor’s tax on the: a. donation to the non-stranger plus that to the stranger. b. donation to the non-stranger. c. donation to the stranger. d. none of the options given. 24. (Donor’s Tax) On June 10, 2018 Ms. Ymir donated P50,000 cash to his favorite grandson who is getting married on June 16, 2018. For donor’s tax purposes the exempt dowry shall be: a. P50,000. c. P5,000. b. P10,000. d. none.

MiRen Jaeger, a resident of the Philippines but a citizen of Japan, died on November 20, 2018, with the following data pertaining to his estate:

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A parcel of land was acquired for P1,200,000 from his father, Eren, for P1,100,000 at the time when the fair market value thereof was P1,500,000. At the time of MiRen Jaeger’s death, the property had a fair market value of P2,000,000. The same land is where the family home was constructed for a total cost of P1,500,000. At the time of death, the house had a fair market value of only P200,000. MiRen Jaeger transferred a car with a fair market value at the time of transfer of P300,000, but was sold to his illegitimate son for P200,000, 2 years prior to his death. At the time of death, the car had a fair market value of P180,000. Bank deposit in the Philippine Branch of a US Bank amounting to P300,000. House and lot located in Japan with a fair market value of P2,000,000. This was inherited by MiRen Jaeger 2 years ago from his parents. At the time of inheritance, the house and lot had a fair market value of P1,500,000. Estate tax in Japan amounting to P50,000 was paid for said property. Also inherited from his parents 2 years ago, land located in the Philippines which had a fair market value of P1,200,000 at the time of inheritance but was subjected to a mortgage to secure a loan with an outstanding balance of P500,000. At the time of MiRen Jaeger’s death, the remaining balance of the loan is P200,000; and an independent assessor determined the fair market value of the land to be at P2,000,000, as per zonal valuation of the BIR, it was valued at P1,500,000, and per local city assessor it was valued at P1,300,000. At the time of MiRen Jaeger’s death, life insurance proceeds taken by him on his life amounted to P1,000,000. Boruto’s illegitimate daughter was the beneficiary thereof. MiRen Jaeger owned 1,000 shares in each of the following corporations:  ABC Corporation, a listed domestic corporation, had Retained Earnings of P1,000,000 and Common Stocks amounting to P2,000,000; outstanding shares were 100,000 shares. At the time of death, the shares were trading at P40 per share.  XYC Corporation, an unlisted domestic corporation with Total Assets amounting to P5,000,000, part of which is real property with a book value of P3,000,000, but the fair market value is P3,500,000; and Total Liabilities amounting to P3,000,000. The total outstanding shares of the corporation was 100,000. A building and lot worth P5,000,000 was willed to be transferred to the local government of Batangas where MiRen Jaeger was a resident before his death. MiRen Jaeger had unpaid income tax of P150,000 and real property tax of P20,000, all incurred after his death. Funeral Expense amounting to P220,000 comprised of mourning clothing P15,000; telecommunications expense P5,000 (P3,000 of which were incurred after interment to thank those who attended the funeral; P2,000 to notify friends and family of Boruto’s death); Cost of burial plot P150,000; upkeep of the mausoleum where the deceased was buried P10,000, interment fees and the coffin P40,000. 40% of the of the burial plot remain unpaid. Judicial expenses to settle the estate P307,500, inclusive of attorney’s fees P150,000; court filing fees P15,000; attorney’s fees of heirs fighting over some of the properties P100,000; administrator’s fees P40,000; premium for the bond filed by the administrator P2,500. MiRen Jaeger also had a receivable from Armin worth P400,000. Sarada was declared insolvent by the court and unsecured creditors can only recover 40%. Medical expenses incurred prior to the death of MiRen Jaeger amounted to P450,000, 50% of which is still unpaid and not evidenced by any notarized deed or promissory note.

If Mr. MiRen Jaeger is a resident citizen, assuming the building and lot given to

the local government of Batangas was instead given to the local diocese? 25.What amount should be indicated in Estate Tax Return Item A.8,500,000 B.3,500,000 C. 5,000,000 D.0 26.What amount A.2,000,000 B.200,000 C. 2,200,000 D.0 27.What amount A. 1,700,000 B.700,000 C. 1,400,000 D.0 28.What amount A.5,000,000 B.6,000,000 C. 7,000,000 D.0 29.What amount A.60,000 B.1,060,000 C. 760,000 D.0 30.What amount A.12,460,000 B.11,460,000 C. 7,460,000 D.0 31.What amount A.1,134,575 B.440,000 C. 240,000 D.0 32.What amount A.11,325,425 B.12,020,000 C. 12,220,000 D.12,460,00 33.What amount A.7,200,000 B.5,200,000 C. 5,000,001 D.5,000,000 34.What amount A.4,125,000 B.6,820,000 C. 12,220,00 D.6,325,425 35.What amount A.50,000 B.30,000 C. 20,000 D.0 36.What amount A.197,526 B.379,200 C. 389,200 D.359,200

29C?

should

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Estate

Tax

Return

Item

30B?

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Estate

Tax

Return

Item

31A?

should

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Estate

Tax

Return

Item

32C?

should

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Estate

Tax

Return

Item

33A?

should

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Estate

Tax

Return

Item

34C?

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Estate

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Return

Item

35A?

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Estate

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Item

36C?

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Estate

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Item

37D?

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should

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Estate

Estate

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Tax

Tax

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Return

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Item

Item

16?

19B?

20?

If MiRen Jaeger was a non-resident alien and there is reciprocity. Compute the following. 37. What amount should be indicated in Estate Tax Return Item 29B? A.1,500,000 B.2,500,000...