Taxation Business Income Taxation by Tabag PDF

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Choose the letter of the correct answer. Transfer Taxes Which of the following statements is false? Transfer tax is a. Imposed upon gratuitous transfer of property b. Of two kinds: estate tax and donors' tax c. Classified as national tax d. None of the above Statement 1 : Gratuitous transfer or dona...

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Choose the letter of the correct answer. Transfer Taxes 1.

Which of the following statements is false? Transfer tax is a. Imposed upon gratuitous transfer of property b. Of two kinds: estate tax and donors' tax c. Classified as national tax d. None of the above

2.

Statement 1: Gratuitous transfer or donation is subject to transfer tax. Statement 2: A donation which takes effect at the time of death of the donor is a donation mortis causa subject to estate while a donation which takes effect during the lifetime of both the donor and the donee is a donation inter-vivos subject to donor's tax. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect Statement 1: A sale is a form of transfer transaction that requires payment of transfer tax. Statement 2: Transfer tax accrues at the time of transfer of the decedent's property or rights to the heir. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect

3.

4.

Statement 1: The rights to the succession are transmitted from the moment of death of the decedent, notwithstanding the postponement of the actual possession or enjoyment of the estate by the beneficiary. Statement 2: The heirs succeed immediately to all the property of the deceased ancestor at the moment of death as completely as if the ancestor had executed and delivered to them a deed for the same before his death. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect

5.

Mortis causa transfer of property is effected: a. When the property is received by the heir. b. When the court awarded the ownership of property particular heir. c. Upon the death of the decedent. d. Upon payment of estate tax.

6.

The subject matter or object of transfer taxes is

a. Right to transmit b. Decedent

c. Properties of the decedent d. Beneficiaries

7.

Justification for the imposition of transfer tax. a. Redistribution of wealth theory b. Benefit received theory c. State partnership theory d. All of the above

8.

Inheritance received is construed as unequal distribution of wealth resulting to the imposition of estate tax describes: c. state partnership theory a. Redistribution of wealth theory b. Benefit-received theory d. ability to pay theory

9.

The tax imposed on the right to transmit property death is known as: a. Donor’s tax c. Business tax b. Estate tax d. Income tax

10.

The impose on the transfer of property without consideration between two or more persons who are living at the time the transfer is made. a. Doner’s tax c. Business tax b. Estate tax d. Income tax

11.

Estate tax is a. A property tax because it is imposed on the property transmitted by the decedent to his heirs. b. An indirect tax because the burden of paying the tax is shifted to the executor or any of the heirs of the decedent. c. An excise tax because the object of which is the shifting of economic benefits and enjoyment of the property from the dead to the living d. A poll tax because it is also imposed on residents of the Philippines whether Filipino citizens or not

12.

Which among the following statements is correct? a. Estate taxation is governed by the statue in force at the time of death of the decedent. b. Estate tax accrues as of the death of the decedent. c. Succession takes place and the right of the State to tax the privilege to transmit the estate vests instantly upon death. d. All of the above

13.

Which among the following statements is correct? a. Estate tax is an excise tax. It is a tax on the right to transfer property at death and on certain transfers which are made by the law the equivalent if testamentary disposition. b. Excise tax is an ad volarem tax. It is assessed based on the net value of the estate transferred.

c. Upon effectivity of the TRAIN Law, estate tax is proportional tax. It is no longer based on a graduated tax rate but to fixed rate of 6% on the net taxable estate of the decedent. d. Estate tax is a specific tax 14.

The taxpayer in estate tax is: a. The decedent b. The estate as juridical entity c. The heirs of succession d. The administrator or executor

15.

Estate tax accrues from: a. b. c. d.

The moment of death of the decedent The moment the notice of death is filed The moment the estate tax return is filed The moment the properties are delivered to the heirs

16.

Who has the personal liability to pay estate tax? a. The decedent b. The estate as a juridical entity c. The heirs or successors d. The administrator or executor

17.

It is a well settled rule that estate taxation is governed by the statute in force at the time of: a. Creation of the last will testament or death of the decedent in case of intestate succession b. Death of the decedent c. Filing of estate tax return d. Either letter "b" or "c" whichever will result to higher estate tax liability

18.

An executor or administrator, after paying the estate tax, and to escape a future liability for a deficiency estate tax, must secure a written discharge from personal liability from: a. The heirs. b. The Commissioner of Internal Revenue. c. The court where the estate was being settled. d. Need not secure a written discharge as long as he has a receipt on payment of the excise tax.

Concepts of Succession 19. It is a mode of acquisition by virtue of which, the property, rights and obligations, to the extent of the value of the inheritance, of a person are transmitted through his death to another either by his will or by operation of law. c. Prescription a. Succession b. Donation d. Exchanges 20.

Statement 1: decedent is the general term applied to a person whose property is transmitted through succession, whether or not he left a will.

Statement 2: An heir is a person called to succession either by provision of a will or by operation of law. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect 21.

Which statement is false about succession? a. The successor inherits all the transmissible property of a decedent including his liabilities. b. The successor can be made liable for the obligation of the decedent beyond the value of the asset he received. c. In succession, fruits and credits maturing after the death of the decedent pass to the heirs even if they were not subject to estate tax. d. In succession, the successor can refuse the inheritance.

22.

Which of the following could leally effect transfer of properties through succession? I. By virtue of a will II. By operations of law III. By onerous transfer a. I only c. I and III only b. I and II only d. I, II and III

23.

An act whereby a person is permitted, with the formalities prescribed by law, to control to a certain degree the disposition of his estate, to take effect after his death. a. Contract c. Will b. Trust d. Legacy

24.

___________is a written will which must be entirely written, dated, signed by the hand of the testator himself. It subject to no other form and it may be made in or out the Philippines and need not be witnessed. a. Ordinary will c. Holographic will d. Codicil b. Notarial will

25.

Statement 1: the making of a will is strictly a personal act. It cannot be left in whole or in part of the discretion of a third person, or accomplished through the instrumentality of an agent or attorney. Statement 2: the burden of proof that the testator was not of sound mind at the time of making his dispositions is on the person who opposes the probate of the will; but if the testator, one month, or less, before making his will was publicly known to be insane, the person who maintains the validity of the will must prove that the testator made it during a lucid interval. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect

26.

The persons prohibited by the law to make a will are:

I. Those below 18 years of age II. Those who are not of sound mind at the time of its execution a. I only c. III Both I and II b. II only d. Neither I nor II

27.

The following are the elements of succession, except: a. decedent b. estate

c. heir d. executor

28.

Succession which results from the designation of an heir, made in a will executed in the form prescribed by law is known as: c. Mixed succession a. Legal or intestate succession d. Ordinary succession b. Testamentary succession

29.

The portion of the decedent's estate which the law reserves to his compulsory heir is called: a. Legitime c. Legacy b. Free portion d. Bequest

30.

A person who inherits specific personal property thru a will: a. Devisee c. Heir d. Successor b. Legatee

31.

A person who inherits specific real property thru a will: a. Devisee b. Legatee

c. Heir d. Successor

32.

Which of the following is a valid will? a. That which reduces the legitime of compulsory heirs. b. That which increase the share of one heir without impairing the legitime of the other heirs. c. That which transfer the legitime of one heir to the other heir. d. That which impair the legitime of compulsory heirs.

33.

Which of the following is not a compulsory heir? a. Legitimate children and descendants, with respect to their legitimate parents or ascendants b. In default of letter "a", legitimate parents or ascendants, with respect to their legitimate children or descendants c. Widow or widower Relatives by affinity

Composition and Valuation of Gross Estate 34.

One of the following is subject to estate tax on properties situated within the Philippines only a. Resident citizen b. Resident alien c. Nonresident citizen d. Nonresident alien

35.

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 in the Philippines b. The intangible personal property is in the Philippines and the reciprocity clause of the estate tax law applies c. 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

36.

Statement 1: As a general rule, the situs of tangible personal property is the place or country where such is actually located at the time of the decedent's death. Statement 2: The rule that the situs of intangible personal property is the domicile or residence of the owner does not apply when the property has a situs elsewhere. a. b. c. d.

Only statement 1 is correct Only statement 2 is correct Both statements are correct Both statements are incorrect

37.

All of the following are considered intangible in the Philippines, except: a. Franchise which must be exercised in the Philippines b. Shares, obligations or bonds issued by any corporation or sociedad anonima organized or constituted in the Philippines in accordance with its laws c. Shares, obligations or bonds by any foreign corporation 75% of the business of which is located in the Philippines d. Shares, obligations of bonds issued by any foreign corporation if such shares, obligations or bonds have acquired a business situs in the Philippines;

38.

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

39.

Shares are not deemed property within the Philippines when a. The shares are issued by a domestic corporation b. The shares are issued by a foreign corporation with no business situs in the Philippines.

c. The shares are issued by a foreign corporation with 85% business in the Philippines. d. The shares are issued by a corporation organized under Philippine laws. 40.

The following are general rules on situs. Which one is not? a. The situs of real property is the place or country where it is situated. b. The situs of tangible personal property is the place or country where such is actually located at the time of decedent's death. c. The situs of intangible personal property is the place or country where such is actually located at the time of the decedent's death. d. The situs of intangible personal property is the domicile or residence of the owner.

41.

Which is not a test of situs? a. Residence of the debtor in case of accounts receivable. b. Place of storage in case of shares of stocks. c. Location of depository bank in case of bank deposit. d. Place of exercise in case of copyright.

42.

Statement 1: For estate tax computation, real estate shall be valued at fair market value at the death of the decedent. Statement 2: If zonal value is available at date of death, and this is higher than the fair market value per assessor's listings of values, then the amount to be reported in the gross estate is the zonal value. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect

43.

Pedro March 1, 2018. The following data were available in connection with the property. Assessed valued, six (6) months before death P2,500,000 Fair market value at the time of filing estate tax return on Feb. 28, 2019 3,000,000 Zonal value, March 1, 2018 2,000,000 What would be the value of the piece of land in the gross estate? a. P2,000,000 b. P2,500,000 c. P3,000,000 d. P5,000,000

44.

A decedent left 10,000 PLDT shares. The shares were traded in the local stock exchange. At the time of death, the following were available: Fair market value P400 per share Mean between the highest and the lowest quotations P500 per share Book value P350 per share

What was the value included in the decedent's gross estate? a. P3,500,000

b. P4,000,000 c. 5,000,000 d. Whichever was the highest among the fair market value, mean and book value 45.

Which property is valued using the book value? a. Bonds being traded in the bond market b. Annuity c. Shares of stock not traded in the stock exchange d. Usufruct

46.

Pedro died on Nov. 2, 2018, leaving the following properties:  Common stocks of Sunchamp Corporation (2,000 shares) – listed in the Philippine Stock Exchange (highest - P40; lowest - P39).  Common stocks of AgriNurture Corporation (1,500 shares) - not listed in the stock exchange. Cost - P50 per share; book value - P45 per share.  Preferred stocks of Greenergy Inc. (3,000 shares) - not listed in the stock exchange. Cost P70 per share; book value - P60 per share; par value - P50 per share  Car (cost - P600,000; book value - P350,000; market value - P400,000)  Real properties (zonal value - PI 20,000; assessed value - P72,000) The gross estate of Pedro is: a. P816,500 b. P817,500

47.

c. P824,000 d. P846,000

Part of the estate left by A are preference shares of MERALCO. The shares are listed and traded in the Philippine Stock Exchange. Which of the following rules of valuation is correct? a. The preference shares will be valued using the arithmetic mean between the highest

and lowest quotation at the date nearest the date of death, if none is available on the date of death itself. b. The preference shares will be valued based on their book value. c. The preference shares will be valued based on their par value. d. The preference shares will be valued based on their fair market value as determined by the Commissioner of Internal Revenue 48.

Ana, Filipina, died in Syria leaving the following properties: House & Lot in Syria Vacant Lot in Manila Shares of stock in a domestic corp., 60% of the business is located in the Philippines Shares of stock in a foreign corp., 70% of the business is located in the Philippines Car in Manila How much is the gross estate? a. P2,000,000 b. P2,500,000

1,000,000 2,000,000 100,000 200,000 500,000

c. P2,600,000 d. P3,800,000

49.

Based on the preceding number, but assuming Ana is a non-resident alien, the gross estate is: c. P2,600,000 a. P2,000,000 d. P3,800,000 b. P2,500,000

50.

Continuing the preceding number and the rule of reciprocity applies, the gross estate is: a. P2,000,000 b. P2,500,000

51.

c. P2,600,000 d. P3,800,000

Following are properties in the gross estate with their fair market value: House and Lot, family home in Quezon City P1,500,000 Deposit in a foreign branch of a domestic bank 500,000 Shares of stock issued by a domestic corporation, certificate kept in the US 1,000,000 Pieces of jewelry 800,000 Receivable, debtor in Cebu 200,000 If the decedent was non-resident alien and there is reciprocity, property excluded from gross estate is valued at c. P700,000 a. P4,000,000 d. P200,000 b. P1,700,000

52.

A non-resident alien left the following properties at the time of his death: A. Bank deposit, Canada B. Bank deposit, BDO-Manila C. Car in Quezon City D. Investments in bonds, PLDT E. Investments in stocks, IBM, USA F. House and Lot, USA The country of the non-resident alien does not impose a transfer or death tax of any character with respect to intangible personal property of citizens of the Philippines not residing in that foreign country. What properties will be included in the Philippine ross estate of the non-resident alien decedent? a. All the properties above b. Properties B, C, and D c. Property C only d. Properties A and C

53.

54.

Using the same data in the preceding number, assuming the decedent is a resident alien, and his country does not impose transfer taxes to Filipino not residing therein, the Philippine gross estate should include: a. All the properties above b. Property B, C and D c. Property C only d. Properties A and C Which of the following shall be included in the decedent's gross estate? I. Share in common properties of the surviving spouse II. Capital or paraphernal property of the surviving spouse

III. Properties outside the Philippines of a non-resident citizen decedent IV. Intangible personal property in the Philippines of a non-resident alien c. I, III and IV only a. I only d. I, II, III and IV b. I and III only

Transfer in Contemplation of Death and Revocable Transfers 55. Which of the following is not a characteristic of donation mortis causa? a. The transfer to the donee is irrevocable while donor is alive. b. There is no conveyance of title or ownership to the donee before the death of the donor. c. The transferor retains the full or naked ownership and control of the property while alive. d. The transfer should be void if the donor should survive the donee. 56.

Which of the following statements is incorrect? a. In a revocable transfer, the decedent during his lifetime may revoke, alter, amend, or terminate the terms of enjoyment or ownership of the property. b. A revocable transfer is always includible in the gross estate of the decedent-transferor, c. A revocable transfer shall be included in the gross estate ...