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PRELIM QUIZ!! Ana, Filipina, died in Syria leaving the following properties: House and Lot in Syria, P1,000, Vacant Lot in Manila, P2,000, Shares of stock in domestic corp., 60% of the business is located in the Philippines, P100, Shares of stock in a foreign corp., 70% of the business is loacted in...

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PRELIM QUIZ!!

3. Ana, Filipina, died in Syria leaving the following properties:

House and Lot in Syria, P1,000,000 Vacant Lot in Manila, P2,000,000 Shares of stock in domestic corp., 60% of the business is located in the Philippines, P100,000 Shares of stock in a foreign corp., 70% of the business is loacted in the Philippines, P200,000 Car in Manila, P500,000

How much is the gross estate? P2,000,000 P2,500,000 P2,600,000 P3,800,000 – ALL PROPERTY

Explanation: anna is a citizen, her property (real or personal) is included in the gross estate wherever situated.

10. The following are general rules on situs. Which one is not? The situs of real property is place or country where it is situated. The situs of tangible personal property is the place or country where such is actually located at the time of decedent's death The situs of intangible personal property is the place or country where such is actually located at the time of the decedent's death. The situs of intangible personal property is the domicile or residence of the owner. EXPLANATION: The situs of intangible personal property is the place or country where it is exercised regardless of where the corresponding certificate is stored.

28. Part of the estate left by A are preference share of MERALCO. The shares are listed and traded in the Philippine Stock Exchange. Which of the following rules of valuation is correct?

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. The preference will be valued based on their book value. The preference shares will be value based on their par value. The preference shares will be valued based on their fair market value as determined by the Commissioner of Internal Revenue EXPLANATION: THE GIVEN PREFERENCE SHARE IS TRADED AND LISTED BECAUSE OF THAT 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 SHOULD BE USED.

29. 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. Only statement 1 is correct. Only statement 2 is correct. Both statements are correct. (26) Both statements are incorrect. EXPLANATION: ACCORDING TO ARTICLE 783 OF THE NEW CIVIL CODE 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 AND 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.

38. Statement 1: Gratuitous transfer 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 of both the donor and the donee is a donation inter-vivos subject to donor's tax. Only statement 1 is correct. Only statement 2 is correct. Both statements are correct. Both statements are incorrect. EXPLANATION: ACCORDING TO THE NEW CIVIL CODE TRANSFER TAXES ARE IMPOSED UPON THE GRAUITOUS DISPOSITION OF PRIVATE PROPERTIES OR RIGHTS THUS, GRATUITOUS TRANSFER IS SUBJECT TO TRANSFER TAXES. IN ADDITION, GRATUITOUS TRANSFER MAY TAKE EFFECT AT THE TIME OF THE DEATH OF THE DONOR OR DURING THE LIFETIME ALSO CALLED DONATION INTER VIVOS.

39. Ana, Filipina, died in Syria leaving the following properties:

House and Lot in Syria, P1,000,000 Vacant Lot in Manila, P2,000,000 Shares of stock in domestic corp., 60% of the business is located in the Philippines, P100,000 Shares of stock in a foreign corp., 70% of the business is loacted in the Philippines, P200,000 Car in Manila, P500,000

How much is the gross estate if the rule on reciprocity applies? P2,000,000 P2,500,000 P2,600,000 P3,800,000 EXPLANATION: INTANGIBLE PROPERTIES WITH SITUS WITHIN THE PHILS ARE EXCLUDED IN THE DETERMINATION OF GROSS ESTATE IF THERE IS RECIPROCITY.

44. 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.

Only statement 1 is correct. Only statement 2 is correct Both statements are correct. Both statements are incorrect EXPLANATION: SALE IS NOT SUBJECT TO TRANSFER TAX AS IF IT THERE IS NO TRANSFER EXIST ON THE OTHER HAND, TRANSFERTAX ACCRUES FROM THE MOMENT OF THE DEATH OF THE DECEDENT. Transfer tax is applicable only to gratuitous transfers. A sale in general is an onerous transfer, hence not subject to transfer tax. Transfer tax accrues from the effectivity of the gratuitous transfer.

1. 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. Contract Trust Will Legacy EXPLANATION:

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

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

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

6. The subject matter or object of transfer taxes is Right to transmit Decedent Properties of the decedent Beneficiaries Excise tax

7. 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/share Mean between the highest and lowest quotation P500/share Book value P350/share

What was the value included in the decedent's gross estate? P3,500,000 P4,000,000 P5,000,000 Whichever was the highest among the fair market value, mean and book value EXPLANATION: THE SHARES WERE LISTED AND TRADED SO WE SHOULD USE ITS FAIR MARKET VALUE AS A GENERAL RULE. LISTED SHARE: FMV SHALL BE THE ARITHMETIC MEAN IF NONE IS AVAILABLE ON THE DATE OF DEATH ITSELF, HOWEVER, THERE IS A FAIR MARKET VALUE GIVEN.

8. Which is not a test of situs? Residence of the debtor in case of accounts receivable.

Place of storage in case of shares of stocks. Location of depository bank in case of bank deposit. Place of exercise in case of copyright. EXPLANATION: WHERE THE INTANGIBLE IS EXERCISED REGARDLESS OF WHERE THE CORRESPONDING CERTIFICATE IS STORED.

9. The tax imposed on the transfer of property without consideration between two or more persons who are living at the time the transfer is made. Donor's tax Estate tax Business tax Income tax

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

12. The portion of the decedent's estate which the law reserves to his compulsory heir is called: Legitimate (30) Free portion Legacy Bequest

13. Which of the following statements is false? Transfer tax is

Imposed upon gratuitous transfer of property Of two kinds: estate tax and donor's tax Classified as national tax

None of the above

14. Ana, Filipina, died in Syria leaving the following properties:

House and Lot in Syria, P1,000,000 Vacant Lot in Manila, P2,000,000 Shares of stock in domestic corp., 60% of the business is located in the Philippines, P100,000 Shares of stock in a foreign corp., 70% of the business is loacted in the Philippines, P200,000 Car in Manila, P500,000

How much is the gross estate if Ana is a non-resident alien? P2,000,000 P2,500,000 P2,600,000 P3,800,000 EXPLANATION: ONLY THE PROPERTY WITH THE SITUS WITHIN THE PHILIPPINES SHOULD BE CONSIDERED IN GROSS ESTATE.

15. A person who inherits specific real property thru a will: Devisee Legatee Heir Successor

16. The taxpayer in estate tax is: The decedent The estate as a juridical entity The heirs or succession The administrator or executor Taxpayer shall pertain only to a person, natural or juridical

17. The following are the elements of succession, except: Decedent Estate Heir Executor

18. Statement 1: For estate tax computation, real estate shall be valued at fair market value at the date of 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 listing of values, then the amount to be reported in the gross estate is the zonal value. Only statement 1 is correct. Only statement 2 is correct. Both statement are correct. Both statement are incorrect. EXPLANATION:

19. The personal properties of a non-resident, not citizen of the Philippines, would not be included in the gross estate if: The intangible personal property in the Philippines The intangible personal property is in the Philippines and the reciprocity clause of the estate tax law applies The tangible personal property is in the Philippines The personal property is hares of stock of a domestic corporation 90% of whose business is in the Philippines

20. Which of the following is incorrect? 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 law the equivalent of testamentary disposition.

Excise tax is an ad valorem tax. It is assessed on the net value of the estate transferred. Upon effectivity of the TRAIN Law, estate tax is a proportional tax. It is no longer based on a graduated tax rate but to a fixed rate of 6% on the net taxable estate of a decedent. Estate tax is a specific tax. EXPLANATION: ESTATE TAX IS AN EXCISE TAX.

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

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

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

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

25. The persons prohibited by 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. I only II only Both I and II Neither I nor II

26. Who has the personal liability to pay estate tax? The decedent The estate as a juridical entity The heirs or successors The administrator or executor 15

27. All of the following are considered intangible in the Philippines, except: Franchise which must be exercised in the Philippines Shares, obligations or bonds issued by any corporation or sociedad anonima organized or constituted in the Philippines in accordance with its laws Shares, obligations or bonds by any foreign corporation 75% of the business of which is located in the Philippines Shares, obligations of bonds issued by any foreign corporation if such shares, obligations or bonds have acquired a business situs in the Philippines. EXPLANATION: ACCORDING TO SECTION 104 OF THE TAX CODE Shares, obligations or bonds by any foreign corporation MUST BE 85% of the business of which is located in the Philippines.

30. Pedro died on March 1, 2018. The following data were available in connection with the property.

Assessed value, six (6) months before death, P2,500,000 Fair market value at time of filing estate tax return on February 28, 2019, P3,000,000 Zonal value, March 1, 2018, P2,000,000

What would be the value of the piece of land in the gross estate? P2,000,000 P2,500,000 P3,000,000 P5,000,000

EXPLANATION: Whichever is higher between FMV and zonal value at the time of death of the decedent.

31. Which of the following item is considered situated outside the Philippines? Franchise in the name of the decedent which is exercised in the Philippines Shares of stock holdings of decedent in a foreign corporation whose business is 90% done in the Philippines Bond certificate issued by a domestic corporation owned by a non-resident decedent Foreign currency deposited in bank outside the Philippines

32. Which property is valued using the book value? Bonds being traded in the bond market Annuity Shares of stock not traded in the stock exchange Usufruct EXPLANATION: WHENEVER THE COMMON SHARES ARE NOT LISTED OR TRADED BOOK VALUE SHOULD BE USED .

33. Inheritance received is construed as unequal distribution of wealth resulting to the imposition of estate tax describes: redistribution of wealth theory benefit-received theory state partnership theory ability to pay theory

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

35. Which of the following could legally effect transfer of properties through succession?

I. By virtue of a will Ii. By operations of law III. By onerous transfer I only I and II only (23) The question is specifically pertaining through succession only. A gratuitous transfer. I and III only I, II and III

36. Statement 1: Decedent is the general term applied to the 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. Only statement 1 is correct. Only statement 2 is correct.

Both statements are correct. Both statements are incorrect.

37. 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. Succession Donation Prescription Exchanges

40. One of the following is subject to estate tax on properties situated within the Philippines only resident citizen resident alien nonresident citizen nonresident alien (35)

41. Justification for the imposition of transfer tax Redistribution of wealth theory Benefit received theory State partnership theory All of the above

42. Which statement is false about succession: The successor inherits all the transmissible property of a decedent including his liabilities. The successor can be made liable for the obligations of the decedent beyond the value of the asset he received. In succession, fruits and credits maturing after the death of the decedent pass to the heirs even if they were not subjected to estate tax. In succession, the successor can refuse the inheritance. EXPLANATION: THE OBLIGATIONS OF successor is limited only to the value of the asset he received

43. Shares are not deemed property within the Philippines when The shares are issued by a domestic corporation. The shares are issued by a foreign corporation with no business situs in the Philippines. The shares are issued by a foreign corporation with 85% business in the Philippines. The shares are issued by a corporation organized under Philippine laws.

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

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/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/share; par value - P50/share Car (cost - P600,000; book value P350,000; market value - P400,000) Real properties (zonal value - P120,000; assessed value - P72,000)

The gross estate of Pedro is: 816,500 817,500 824,000 846,500 EXPLANATION: SUNCHAMP (40/39)= 39.5*2000= 79000 AGRINURTURE (45*1500)= 67500

GREENERGY (3000*50)= 150000 CAR 400000 REAL PROPERTY = 120000 TOTAL: 816500 LISTED COMMON STOCKS- ARITHMETIC MEAN UNLISTED COMMON SHARE- BOOK VALUE UNLISTED PREFERENCE SHARES- PAR VALUE REAL PROPERTY- HIGHER BETWEEN FMV AND ZONAL VALUE PERSONAL PROPERTY- FMV AT THE TIME OF THE DECEDENT;S DEATH

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

48. Estate tax accrues from: 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 Succession takes palce and the right of the state to tax the privilege to transmit the estate vest instantly upon death

49. The tax imposed on the right to transmit pro...