Prelim-Exam Estate-Tax practice material PDF

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All of these are exempt from transfer tax, except? a. Transfer of the usufruct in the owner of the naked title b. Proceeds of group insurance received by heirs of the decedent c. General renunciation of share in the conjugal property by the surviving spouse d. Transfer under special power of appoint...

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a. b. c. d.

1. All of these are exempt from transfer tax, except? Transfer of the usufruct in the owner of the naked title Proceeds of group insurance received by heirs of the decedent General renunciation of share in the conjugal property by the surviving spouse Transfer under special power of appointment

a. b. c. d.

2. When a property is donated in contemplation of death, the basis of the tax shall be: Fair market value at the time of donation Fair market value in the hands of the donor before the time of donation Fair market value at the time of death of the donor Cost when the property was acquired

3. Under this system there is a merger of all the properties of the husband and the wife owned by them at the time of the celebration of the marriage, or those acquired thereafter. c. Complete separation of a. Conjugal partnership of gains properties b. Absolute community of d. None of the choices properties 4. A decedent was married at the time of death and under the system of conjugal partnership of gains.Among the properties in the gross estate were: Land, inherited before the marriage, fair market value P100,000 Family home built by the spouses on the inherited land 800,000 Deduction for family home: a. P900,000. b. P500,000. c. P400,000. d. P450,000. 5. Which is correct? a. Estate tax is determined per piece of property transferred to the heir. b. Estate tax is collected by the local government. c. Estate tax is a property tax. d. Estate tax is an excise tax. 6. Which shall not form part of the gross estate of the decedent? a. Intangible personal property of a non-resident alien without reciprocity clause b. Revocable transfer c. Transfer under special power of appointment d. Life insurance proceeds where the executor is beneficiary and it is irrevocable. 7. Which of the following is not true? a. Estate tax is an excise tax b. Estate tax is a transfer tax on donation mortis causa c. The object of the estate tax is to tax the property transferred from the dead to the living. d. Estate tax is based on redistribution of wealth 8. Mr. and Mrs. Boromeo got married on February 14, 2001. The spouses stipulated the conjugal partnership of gains for their property relation. Mr. Boromeo died leaving the following properties:  P800,000 cash inclusive of Mr. Boromeo’s P200,000 SSS benefits  P200,000 claim from insolvent persons, from the salary of Mr. Boromeo accruing after marriage  P400,000 second hand car, inherited by Mrs. Boromeo in 2000  P2,000,000 house and lot, purchased out of Mr. Boromeo’s salary savings  P300,000 pieces of jewelry, inherited by Mr. Boromeo from his father  P500,000 agricultural land purchased by Mrs. Boromeo out of her PCSO winnings during the marriage Compute Mr. Boromeo’s gross estate. a. P4,200,000 b. P4,000,000

c. P3,800,000 d. P3,600,000

9. The widow of your bestfriend has just been paid P1,000,000 on account of the life insurance policy of the deceased husband. She asks you whether she shall declare the amount for income tax purposes or for estate tax purposes. First advice: The proceeds of the life insurance paid to the beneficiary upon the death of the insured are exempt from income tax and need not be declared for income tax purposes. Second advice: The proceeds of life insurance will have to be declared for estate tax purposes if the designation of the beneficiary is revocable, otherwise, they need not be declared. a. Both advices are right b. First advice right; second advice wrong

c. Both advances are wrong d. First advice wrong; second advice right 10. Under this system there is a merger of all the properties of the husband and the wife owned by them at the time of the celebration of the marriage, or those acquired thereafter.

a. b. c. d.

Conjugal partnership of gains Absolute community of properties Complete separation of properties None of the choices

11. The common characteristics of transfer taxes is: a. The transfer of property is onerous. b. The transfer of property takes effect during the lifetime of the transferor. c. The transfer of the property takes effect upon the death of the transferor. d. The transfer of property is gratuitous.

For the succeeding items. Select the letter that correspond the BEST answer. A. If the first statement is correct B. If the second statement is correct

C. If the both statements are correct D. If the both statements are incorrect

12. Gratuitous transfer of property may not involve financial consideration. Onerous transfer of property is not subject to tax. A.

13. The estate of the decedent may include his liabilities. A sale is a form of transfer transaction that requires payment of transfer tax. C. 14. A gift out of love to a former girlfriend is an onerous transfer. Cancellation of exiting debt as payment for services rendered by the debtor to the creditor is a gratuitous transfer. A. 15. The right to succession is effected at the time of transfer of the decedent’s property or rights to the heir. In case of doubt, testamentary succession is preferred to legal or intestate succession. C.

16. The share of the surviving spouse is an exclusive property of the wife and shall be part of the decedent’s distributable estate. Intestate succession is a legal succession because it takes effect through the validity of the decedent’s last will and testament. A. 17. Notes or claims held by the decedent should not be included in the gross estate if cancelled by the decedent’s will. Interest collected in advance before the decedent’s death, which occurred after the decedent’s death shall be included in the gross estate. A.

18. There is a revocable transfer when a transferor of a corporate stock in trust for his children reserves the right to vote the shares during his lifetime to aid his children to gradually assume financial responsibilities. When the designation of the beneficiary is not stated or is not clear, the Insurance Code assumes irrevocable designation. B. 19. Under the absolute community of property regime, property acquired through exclusive property of the husband or wife is an exclusive property even acquired during the marriage. Exclusive property does not become community property just because it is used as family home. D. 20. The property acquired through donation during marriage shall remain exclusive property

of the decedent or surviving spouse. Property for personal and exclusive used of either spouse including jewelry shall form

part of the community property. A. 21. Obligations contacted by a person during his lifetime terminate upon his death. Where a decedent owns less than all of the property covered by a mortgage, only a proportionate amount is deductible. D. 22. Estate tax is deductible from the gross estate. In computing vanishing deduction, the value to be taken is the lesser amount of the value of the property at the date of transfer or the value of the property at the date of death of the decedent. C. 23. The amount of estate taxes paid to foreign country could be claimed as credit against estate tax in the Philippines, if such taxes paid to foreign countries pertain to properties which are included in the gross estate fir Philippine estate tax purpose. Where the decedent is nonresident alien, unidentifiable deductions shall be allocated proportionately with the gross estate located within the Philippines and the gross estate located outside the Philippines. C. 24. Failure of the BIR Commissioner to serve a copy of the estate tax claim to the executor or administrator is a valid ground to deny the claim. The Register of Deeds shall not register any deed or instrument covering the decedent’s estate or any portion thereof until the taxes are shown to have been paid. D. 25. Estate tax is imposed upon the a. Decedent b. Property or rights transferred

c. Right to transfer properties d. Privilege to receive inheritance

26. Which of the following is regarded as an intestate succession? a. The will is designating the State as beneficiary of the free portion. b. The will was subsequently rendered void by circumstances. c. The will designate a part of free portion to a stranger. d. The will disposed the legitime to its rightful heir. 27. Which of the following is subject to transfer tax? a. Sale of personal property for a price lower than cost. b. Exchange of a piece of jewelry for a set of furniture. c. Transfer of personal goods for free. d. Transfer of real property for services rendered. 28. Which of the following item is considered situated outside the Philippines? a. Franchise in the name of the decedent which is exercised in the Philippines b. Share of stock holdings of decedent in a foreign corporation whose business is 90 % done in the Philippines c. Bond certificate issued by a domestic corporation owned by a non-resident decedent d. Foreign currency deposited in bank outside the Philippines 29. Which of the following is not to be included in the gross estate of citizen decedent? a. Dividend income declared, but not yet actually received at date of death b. Share in partnership’s profit earned immediately after date of death c. Rent income accrued before death but collected after death d. None of the above 30. Which of the following is considered as transfer under general power of appointment? a. Power to use property though a will exercisable in favor of the estate b. Power to appropriate property expressly not exercisable by decedent’s creditors c. Power to use property for the comport of person/s other than the decedent of his estate d. Power designating the estate’s creditor as beneficiary 31. Which of the following proceeds of life insurance of the decedent is not to be included in the gross estate? a. The estate as beneficiary b. The executor as beneficiary c. The estate as the irrevocable beneficiary...