Name: _____________________________________Class Schedule: _______________________Course & Year______________ Date: April 04 2024

MIDTERM EXAM IN TAX 321

READ THE INSTRUCTIONS: Multiple Choice Questions. On a separate answer sheet (1 WHOLE Yellow Pad), write the CAPITAL letter of the correct
answer for each question. Erasure in any form is not allowed. Use a ballpen only. If you are caught “cheating” or “talking” during the examination,
your scores will be null and void. For computational problems, show a complete solution. No solution, no points. DO NOT OPEN ANY OTHER FILE/
INTERNET BROWSER

1. Which of the following is deductible from the gross estate of a non-resident alien decedent?
A. Funeral and judicial expenses
B. Death benefits under RA 4917
C. Family home
D. None of the above
2. A citizen decedent died with the following data
Philippines USA
Gross Estate 14,200,000 4,400,000
Allowable deductions 6,400,000 2,200,000
(Excluding standard deduction)
Estate tax paid 150,000
How much is the estate tax payable in the Philippines assuming the decedent is a non-resident citizen?
A. 132,000
B. 150,000
C. 168,000
D. 300,000
3. How much is the estate tax payable in the Philippines assuming the decedent is a non-resident alien?
A. 150,000
B. 168,000
C. 300,000
D. 438,000
4. Statement I: The estate tax imposed under the Tax Code shall be paid by the executor or administrator before the delivery of the distributive
share in the inheritance to any heir or beneficiary
Statement 2 The executor or administrator of an estate has the primary obligation to pay the estate tax but the heir or beneficiary has subsidiary
liability for paying that portion of the estate corresponding to his distributive share in the value of the total net estate
A. Only statement 1 is correct
B. Only statement 2 is correct
C. Both statements are correct
D. Both statements are incorrect
5. 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
6. The taxpayer in estate tax is:
A. The decedent
B. The estate as a juridical entity
C. The heirs or succession
D. The administrator or executor
7. Estate tax accrues from:
A. The moment of death of the decedent
B. The moment the notice of death is filed
C. The moment the estate tax return is filed
D. The moment the properties are delivered to the heirs
8. Which of the following statements IS incorrect in connection with family home deduction?
A. Family home deduction shall be allowed only if such family home is situated in the Philippines
B. The total value of the family home must be included as part of the gross estate of the decedent
C. For purposes of availing family home deduction, a person may constitute only one family home
D. Family home deduction may not be lower than P10,000
9. . Ded Nha, a citizen of the Philippines and resident of Manila died intestate on November 2, 2018. Among who his gross estate are properties
acquired through public sale of properties left by Bernardo died 4% years ago. What percentage of deduction will be used in computing the
amount of vanishing deduction?
A. 60%
B. 40%
C. 20%
D. Nil
10. Pedro a citizen of the Philippines and resident of Makati City, died testate on May 10, 2019. Among his gross estate were properties inherited
from his deceased father who died on April 4, 2016. What percentage of the deduction would be used in computing the amount of vanishing
deduction?
A. 60%
B. 40%
C. 20%
D. Nil
11. The following statements are correct regarding standard deduction under the TRAIN LAW, except
A. A deduction in the amount of P5.000,000 shall be allowed as an additional deduction without need of substantiation.
B. The full amount of P5,000,000 shall be allowed as deduction for the benefit of the decedent
C. Standard deduction is not allowed to decedents who are nonresident aliens
D. None of the above
12. Which of the following is deductible from the gross estate of a non-resident alien decedent?
 E. Funeral and judicial expenses
F. Death benefits under RA 4917
G. Family home
H. None of the above
13. Statement I: Estate Tax credit refers to the taxpayers right to deduct from the tax due the amount of tax it has paid to a foreign country
Statement 2: Estate Tax credit could be claimed as a deduction if such taxes pertain to properties which are included in the gross estate for
Philippine estate tax computation.
A. Only statement 1 is correct
B. Only statement 2 is correct
C. Both statements are correct
D. Both statements are incorrect
14. Statement I: The estate tax imposed under the Tax Code shall be paid by the executor or administrator before the delivery of the distributive
share in the inheritance to any heir or beneficiary
Statement 2 The executor or administrator of an estate has the primary obligation to pay the estate tax but the heir or beneficiary has subsidiary
liability for paying that portion of the estate corresponding to his distributive share in the value of the total net estate
E. Only statement 1 is correct
F. Only statement 2 is correct
G. Both statements are correct
H. Both statements are incorrect

15.
A. P817,500
B. P816,500
C. P824,000
D. P846,500
16. Vlad died on October 20, 2018. During his lifetime, upon knowing that he had Stage 4 cancer, sold his Lamborghini car to his son for P4,000,000.
The fair market value of the car at the time of sale is P3,000,000 while it is already valued at P5,000,000 at the time of death. The amount that
will be added to gross estate is:
A. 1,000,000
B. 5,000,000
C. 2,000,000
D. Nill
17. Based on the preceding number, if the consideration is fictitious, how much will form part of gross estate?
A. 1,000,000
B. 5,000,000
C. 2,000,000
D. Nill
18. Who among the following transferors is not liable for estate tax on the property transferred during his lifetime?
A. The testator who bequeaths property to his heirs in a last will and testament executed and probated during his lifetime
B. The donor who reserves his right to amend or revoke the donation of property in favor of the done
C. The donee of an appointed property who is required under a power of appointment to transfer such property upon death to his eldest child
D. The transferor of personal property who sold it for insufficient consideration.
19. Which of the following life insurance proceeds shall not be included in the computation of gross estate?
A. Beneficiary is the estate, executor or administrator and the designation of the beneficiary is revocable;
B. Beneficiary is the estate, executor or administrator and the designation of the beneficiary is irrevocable;
C. Beneficiary is other than the estate, executor or administrator and the designation of the beneficiary is revocable;
D. Beneficiary is other than the estate, executor or administrator and the designation of the beneficiary is irrevocable
20. The list provided below is not included in the gross estate of a decedent, except:
A. Share in common properties of the surviving spouse;
B. Exclusive property of the surviving spouse;
C. Properties outside the Philippines of a nonresident alien decedent;
D. Intangible personal property in the Philippines of a non-resident alien when the rule of Reciprocity applies
21. One of the following is a conjugal property of the spouses
A. That which is brought to the marriage as his or her own
B. That which each acquires during the marriage by inheritance
C. The fruits of an exclusive property.
D. That which is purchased with the exclusive property of the wife
22. One of the following is not a community property of the spouses
A. Property inherited by the husband before marriage
B. Winnings in gambling
C. Fruits of property inherited during the marriage
D. Fruits of property inherited before the marriage
23. How much is the correct gross estate if the property relationship is conjugal partnership of gains?
A. 1,950,000
B. 2,200,000
C. 2,600,000
D. 3,600,000
24. How much is the correct gross estate if the property relationship is absolute community of property?
A. 1,950,000
B. 2,200,000
C. 2,600,000
D. 3,600,000
25. Mr. Pobre is in need of money to start a small business. However, he has no property to secure a loan from a bank so he sought the help of his
good friend Mr. Rich. Mr. Rich then obtained a loan from Banco de Uro amounting to 1million pesos secured by a real property worth 2million
pesos to accommodate the request of Mr. Pobre. If subsequent to securing the loan and delivering to Mr. Pobre the proceeds, Mr. Rich died, how
much gross estate should be reported?
A. 1,000,000
B. 2,000,000
C. 3,000,000
D. Nil

26. The vanishing deduction is –

A. 581,000
B. 571,000
C. 648,000
D. 637,000
27. Which of the following statements is incorrect in connection with family home?
A. Family home deduction shall be allowed only if such family home is situated in the Philippines
B. The total value of the family home must be included as part of the gross estate of the decedent
C. For purposes of availing family home deduction, a person may constitute only one family home
D. Family home deduction may not be lower than P10,000,000

28. The taxable net estate is

A. 5,165,000
B. 4,665,000
C. 4,165,000
D. 21,000,000
29. If decedent is a Filipino citizen, the taxable net estate is:
 A. 11,490,000
B. 12,645,000
C. 4,100,000
D. 7,900,000
30. 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 is in the Philippines
B. The intangible personal property is in the Philippines and the reciprocity clause of the estate tax law applies
C. The tangible personal property is in the Philippines
D. The personal property is shares of stock of a domestic corporation 80% of whose business is in the Philippines.
31. 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
32. Lolo Sot, 95 years old, was diagnosed of various ailments on January 1, 2018. Motivated by thought of death, he decided to dispose all his
properties to his children and relatives. He executed a last will and testament disposing all his properties in the Philippines to his children. On the
same day, he made donations inter-vivos to his other relatives as to his properties in the United States. Lolo Sot died a month after disposing all
his properties. Should the properties donated by Lolo Sot to his other relatives be included in his gross estate upon his death?
A. No, because they were not his properties anymore at the time of death.
B. Yes, because the donations were donations mortis causa and should be governed by the rules on estate taxation
C. No, if the donor’s tax had been paid already on the donations
D. No, because they were not transfers in contemplation of death, since the donations were not simultaneous with the execution of the last
will and testament.
33. The following statements are correct regarding standard deduction, except:
A. A deduction in the amount of P5,000,000 shall be allowed as an additional deduction without need of substantiation.
B. The full amount of P5,000,000 shall be allowed as deduction for the benefit of the decedent.
C. Standard deduction is not allowed to decedents who are non-resident aliens.
D. None of the Above