Test I.

Multiple Choice-True or False

a. Both statements are true
b. Only statement 1 is true
c. Both statements are false
d. Only statement 2 is true

1. Taxation of the estate shall be governed by the statute or law in force at the time of distribution
of the estate to the heirs. F
Succession takes place upon the determination of the respective shares of the heirs in the estate
of the decedent. F

2. Unpaid mortgage indebtedness is deductible from the gross estate provided the said property
subject to the indebtedness is included in the gross estate, net of mortgage indebtedness. F
A donation inter-vivo by the decedent to the Philippine government a few months before his
death is a deduction from the gross estate. F

3. Under CPG, the sale of separate property may produce a separate property and conjugal
property. T
Under CPG, the sale of conjugal property may produce a separate property and conjugal
property. F

4. The fruit of inherited properties before marriage are exclusive under absolute community of
properties. F
All fruits, accruing before or after the marriage, are conjugal properties. F

5. Listed stocks are valued at their par value in gross estate. F

Properties not owned by the decedent may be included in gross estate. F

6. No estate tax is due if the net taxable estate is negative. T

Once there is death, the estate tax is always payable. F

7. The vanishing deduction is applicable only to properties inherited by the decedent within five
years before his death. F
Special deductions do not reduce the hereditary estate of the heirs. T

8. Non-resident alien can claim standard deductions. T

Casualty loss of the estate can be claimed as deduction either in income tax return or estate tax
return of the decedent. T

9. Non-resident aliens can claim only a fractional part of expenses, losses, indebtedness, taxes and
transfers for public purpose in getting the deductible LIT. F
Non-resident aliens may claim a family home in the special deduction. F

10. Bank deposits withdrawn from the decedent account during the settlement of the estate is a
legal exclusion in the gross estate of the decedent if made within one year from the decedent’s
death and said withdrawn was already subjected to the 6% final tax . T
 Properties acquired using GSIS benefits can still be exempt or legal exclusion in gross estate of
the decedent so long as the heirs or administration can prove that the properties were acquired
using the exempt benefits. T

11. The income of donated properties before marriage are exclusive properties under conjugal
partnership. T
The property inheritance before the marriage is common property under absolute community
of property. T

12. Jewelry is generally considered community property. T

Jewelry inherited during the marriage is exclusive property. T

13. The spouses can stipulate the conjugal partnership of gains as their property regimes even in the
current time. T
In default of agreement as to the property relation between the spouses, the absolute
separation of property is presumed. F

14. All fruits before the marriage are conjugal properties. F

All fruits during the marriage are communal properties. F

15. All properties brought into the marriage are separate under the conjugal partnership of gains. T
All properties brought into the marriage are common properties under ACP. F

Test II. Problem Solving.

Use number only in the final answer. Do not use period, comma, parenthesis and negative or positive
sign.

Do not round the rates

Example you are getting the pro-rata: 1,500,000/2,700,000= 0.55555555556 (use the whole rate) and
do not round it like 0.56. Or use direct computation, 1,500,000/2,700,000 x 1,000,000 (amount you are
allocating). The answer in this equation is 555,556.

And lastly, round your final answers to the nearest whole number.

(Item 16-19)
A decedent left the following properties:
Band deposits in Japan 80,000
Franchise in Japan 100,000
Land in France (with P1M unpaid mortgage) 2,000,000
Land in Cebu, Philippines 500,000
Other personal properties 300,000
Receivable from debtor in Philippines 70,000
Receivable from debtor in Japan 100,000
Shares of stock of ABC, foreign corporation, 75% of the business in the Philippines 125,000
Shares of stocks of PLDT, Philippines 75,000
Zonal value of the land in Cebu 750,000
16. If the decedent is a non-resident citizen, his gross estate is 3,600,000
Band deposits in Japan 80,000
Franchise in Japan 100,000
Land in France (with P1M unpaid mortgage) 2,000,000
Other personal properties 300,000
Receivable from debtor in Philippines 70,000
Receivable from debtor in Japan 100,000
Shares of stock of ABC, foreign corporation, 75% of the business in the Philippines 125,000
Shares of stocks of PLDT, Philippines 75,000
Zonal value of the land in Cebu 750,000
3,600,000

17. If the decedent is a non-resident alien, his gross estate is 1,195,000

Other personal properties 300,000
Receivable from debtor in Philippines 70,000
Shares of stocks of PLDT, Philippines 75,000
Zonal value of the land in Cebu 750,000

1,195,000

18. If in the preceding number there is reciprocity, the gross estate is 1,050,000
Other personal properties 300,000
Zonal value of the land in Cebu 750,000

1,050,000

19. Based on the above problem, assuming that the PLDT shares of stocks are not listed in the local stock
exchange, and there are 1,000 shares at the time of death, the company’s outstanding shares were
10,000 shares. Its retained earnings was P2,000,000, par value per share was P50. The gross estate
should show the said shares at 250,000
outstanding shares 10,000 x P50 par value 500,000
Retained earnings 2,000,000
2,500,000
Divided by 10,000 shares
BV per share 250
Multiply by 1,000 shares
250,000

Item 20
Leonardo Manuel died on April 15, 2019, leaving the following properties
1,000 shares in Nice Corporation 1,000,000
Cash 600,000
Investment in ILY Partnership 400,000
Other personal properties 300,000
Real properties 1,500,000
Cash of P600,000 does not include the following amounts which were received after death:
 P100,000 representing cash dividend declared by Nice Corporation on January 2019, and
received by Leonardo Manuel’s estate on April 30, 2019;
 Share of partnership profits for calendar year 2018 in the amount of P50,000 received by the
estate on May 5, 2019; and
 Rental income of apartment of P40,000 due from January to April 2019 at P10,000 a month
received by the estate on May 2, 2019.

20. Determine the gross estate of Leonardo Manuel. 3,985,000

1,000 shares in Nice Corporation 1,000,000
Cash 600,000
Investment in ILY Partnership 400,000
Other personal properties 300,000
Real properties 1,500,000

Add:
Cash dividend 100,000
Share of partnership profits 50,000
Rental of apartment (10,000 x 3.5 months) 35,000 185,000
3,985,000

Item 21
Mario, Filipino, married to Maria, died in July 2019, leaving the following:
Allowable ordinary deductions-conjugal 1,200,000
Family home-exclusive (Maria) 1,400,000
Real properties-conjugal 4,000,000
Real property-exclusive (Mario) 3,800,000
21. Determine the net taxable estate. 200,000

Exclusive Common Total

Gross Estate 3,800,000 4,000,000 7,800,000
Allo Deductions (1,200,000) (1,200,000)
3,800,000 2,800,000 6,600,000
Std deduction (5,000,000)
Share of SS (2.8m/2) (1,400,000)
Net taxable estate 200,000

Item 22
Peter, Filipino married to Girly, died in July 2019, leaving the following:
Allowable ordinary deductions-conjugal 1,600,000
Family home conjugal 6,000,000
Real properties-conjugal 5,000,000
Real property-exclusive (Peter) 1,200,000
Real property-exclusive (Peter)- (Lot where the family home stands) 10,400,000

22. Determine the net taxable estate. 1,300,000

Exclusive Common Total
Real property-exclusive (Peter) 1,200,000 1,200,000
Real properties-conjugal 5,000,000 5,000,000
Real property-exclusive (Peter)- (Lot where the family home stands) 10,400,000 10,400,000
Family home conjugal 6,000,000 6,000,000
Gross Estate 11,600,000 11,000,000 22,600,000
Allowable ordinary deductions-conjugal -1,600,000 -1,600,000
11,600,000 9,400,000 21,000,000
FH -10,000,000
Std deduction -5,000,000
Share of SS (9.4 m/ 2) -4,700,000
Net taxable estate 1,300,000

Item 23
Greg, non-resident alien, married to Hanna, died in 2019 leaving the following:
Allowable ordinary deductions- conjugal 2,400,000
Personal properties in Pampanga-exclusive (Greg) 1,800,000
Real properties in Pampanga-conjugal 7,000,000
Real property abroad-exclusive (Greg) 1,400,000
Real property in Davao- conjugal 800,000

23. Determine the net taxable estate. 4,000,000

Exclusive Common Total
Personal properties in Pampanga-exclusive (Greg) 1,800,000 1,800,000
Real properties in Pampanga-conjugal 7,000,000 7,000,000
Real property in Davao- conjugal 800,000 800,000
Gross Estate 1,800,000 7,800,000 9,600,000
Allowable ordinary deductions- conjugal (2,400,000) (2,400,000)
1,800,000 5,400,000 7,200,000
Std deduction (500,000)
Share of SS (5.4 m/ 2) (2,700,000)
Net taxable estate 4,000,000

Item 24-26
Under CPG: Mr. Aniceto, Filipino, married to Brenda with whom he has two children died on February
14, 2019. The inventory of the properties of the spouses show the following:
1. Agricultural land owned by Brenda before the marriage 1,200,000
2. Apartment house inherited by Brenda during marriage from her
mother who died on February 14, 2004 4,000,000
3. Commercial building in Makati inherited by Aniceto during marriage
from his father who died on February 14, 1987 2,000,000
4. Family home acquired during marriage 2,200,000
5. House and lot in Manila owned by Aniceto before the marriage 3,000,000
6. Personal property acquired during marriage 1,400,000
7. Proceeds of life insurance where Brenda was designated as the
irrevocable beneficiary 2,000,000
 8. Proceeds of life insurance where the estate of Aniceto was designated
as the irrevocable beneficiary (conjugal) 1,000,000
9. Real property acquired during marriage 2,000,000

Deductions claimed by the estate:

Claims against the estate 100,000
Funeral expenses 180,000
Judicial expenses 600,000
Legacy given in favor of Philippines government in decedent's will 300,000
Unpaid mortgage on agricultural land (number 1 above) 400,000
24. Compute the gross estate of Mr. Aniceto. 11,600,000

Exclusive Common Total

3. Commercial building in Makati inherited by Aniceto during marriage from his father
2,000,000
who died on February 14, 1987 2,000,000
4. Family home acquired during marriage 2,200,000 2,200,000
5. House and lot in Manila owned by Aniceto before the marriage 3,000,000 3,000,000
6. Personal property acquired during marriage 1,400,000 1,400,000
8. Proceeds of life insurance where the estate of Aniceto was designated as the
1,000,000
irrevocable beneficiary (conjugal) 1,000,000

9. Real property acquired during marriage 2,000,000

2,000,000
Gross Estate 5,000,000 6,600,000 11,600,000
Claims against the estate (100,000) (100,000)
TFPU (300,000) (300,000)
4,700,000 6,500,000 11,200,000
FH (2.2m/2) (1,100,000)
Std deduction (5,000,000)

Share of SS (3,250,000)
Net taxable estate 1,850,000

25. Determine the share of the surviving house in the conjugal properties. 3,250,000

26. Determine the net taxable estate of Mr. Aniceto. 1,850,000

Item 27-32
Mr. O., Filipino, married, died on August 1, 2019, exactly three years after his marriage to Mrs. O. He left
the following:
A Property inherited by Mr. O from his father who died February 14, 2014 3,000,000
B Property inherited by Mrs. O from her father who died February 14, 2015 1,200,000
C Property inherited by Mr. O from his mother who died February 14, 2016 1,800,000
D Property inherited by Mrs. O from her mother who died February 14, 2017 1,400,000
E Property acquired thru the labor of
Mr. O 2,000,000
Mrs. O 1,500,000
Mr. & Mrs. O (family home) 2,400,000
F Other personal property 1,600,000

Deductions claimed by the estate:

A Funeral expense
B Unpaid mortgages on property in letters:
a. 500,000 b. 300,000 c. 180,000 d. 200,000
C Claims against the estate 170,000
D Accrued taxes (before the death of Mr. O) 80,000

27. Determine the vanishing deduction under absolute community of property. 872,533

28. Determine the net taxable estate under absolute community of property. (501,267)

29. Determine the gross estate under conjugal partnership of gains. 12,300,000

30. Determine the vanishing deduction under conjugal partnership of gains. 665,561

31. Determine the share of the surviving spouse under conjugal partnership of gains. 3,625,000

32. Determine the net taxable estate under conjugal partnership of gains. 879,439

(Item 27-28) ACP

Exclusive Common Total
Property inherited by Mr. O from his father who died
3,000,000
February 14, 2014 3,000,000
Property inherited by Mrs. O from her father who died
1,200,000
February 14, 2015 1,200,000
Property inherited by Mr. O from his mother who died
1,800,000
February 14, 2016 1,800,000
Property acquired thru the labor of:
Mr. O 2,000,000 2,000,000
Mrs. O 1,500,000 1,500,000
Mr. & Mrs. O (family home 2,400,000 2,400,000
Other personal property 1,600,000 1,600,000
Gross estate 13,500,000 13,500,000
Unpaid mortgage (500,000) (500,000)
(300,000) (300,000)
(180,000) (180,000)
Claims against the estate (170,000) (170,000)
Accrued taxes (80,000) (80,000)
VD (872,533) (872,533)
11,397,467 11,397,467
FH (2.4m/2 ) (1,200,000)
Std deduction (5,000,000)
Share of SS (11,397,467/2) (5,698,734)

Net estate taxable (501,267)/0

Initial value 1,200,000 1,800,000

Less: paid mortgage
Initial basis 1,200,000 1,800,000
1.2/13.5 x 1,230,000 (109,333)
1.8/13.5 x 1,230,000 (164,000)
Final basis 1,090,667 1,636,000
20% 40%
VD 218,133 654,400 872,533

(Item 29-32) CPG

Exclusive Common Total
Property inherited by Mr. O from his father who died February 14, 2014
3,000,000 3,000,000
Property inherited by Mr. O from his mother who died February 14, 2016
1,800,000 1,800,000
Property acquired thru the labor of:
Mr. O 2,000,000 2,000,000
Mrs. O 1,500,000 1,500,000
Mr. & Mrs. O (family home 2,400,000 2,400,000
Other personal property 1,600,000 1,600,000
Gross estate 4,800,000 7,500,000 12,300,000
Unpaid mortgage (500,000) (500,000)
(180,000) (180,000)
Claims against the estate (170,000) (170,000)
Accrued taxes (80,000) (80,000)
 VD (665,561) (665,561)
3,454,439 7,250,000 10,704,439
FH (2.4m/2) (1,200,000)
Std deductions (5,000,000)
Share of SS (7.25m/2 ) (3,625,000)
Net taxable estate 879,439

Initial value 1,800,000

Less: paid mortgage
Initial basis 1,800,000
1.8/12.3 x 930,000 (136,098)
1,663,902
40%
VD 665,561

Item 33-35
Mr. Manalo died. An inventory and analysis of the properties held by his family are presented below:
Mr. Manalo Mrs. Manalo
Properties acquired before marriage:
Properties for exclusive personal use 20,000 30,000
Other properties acquired 280,000 470,000
Total 300,000 500,000

Properties acquired during marriage:

Properties for exclusive personal use 30,000 40,000
Properties from own industry 290,000 500,000
Donated properties received 300,000
Inherited properties 400,000
Fruit of donated/inherited property 80,000 60,000
Total 800,000 900,000

Assuming the absolute community of property is the property regime.

33. Determine the separate property of Mr. Manalo. 530,000

34. Determine the gross estate of Mr. Manalo. 2,070,000
35. Determine the common property of the spouses. 1,540,000

Separate Common Total

Properties for exclusive personal use 20,000 20,000
Other properties acquired 750,000 750,000
Properties for exclusive personal use 30,000 30,000
Properties from own industry 790,000 790,000
Inherited properties 400,000 400,000
Fruit of donated/inherited property 80,000 80,000
Gross estate 530,000 1,540,000 2,070,000