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TRANSFER & BUSINESS TAXATION, 2015 Edition

By:

TABAG & GARCIA

CHAPTER 1 SUCCESSION & TRANSFER TAXES


TRUE OR FALSE
1. TRUE
6. TRUE
11. FALSE
16.
2. TRUE
7. FALSE
12. TRUE
17.
3. FALSE*
8. FALSE
13. TRUE
18.
4. FALSE
9. TRUE
14. TRUE
19.
5. FALSE
10. FALSE
15. FALSE
20.
*The taxpayer for estate tax purposes is the estate as a juridical person.
MULTIPLE CHOICE
1. D
12. C
23. D
34.
2. A
13. C
24. B
35.
3. D
14. B
25. D
36.
4. C
15. D
26. D
37.
5. C
16. C
27. B
38.
6. A
17. B
28. D
39.
7. B
18. D
29. A
40.
8. A
19. C
30. D
41.
9. B
20. B
31. B
42.
10. A
21. B
32. A
43.
11. D
22. B
33. D
44.
**Inheritance and repudiation takes effect upon death of the decedent

TRUE
FALSE
TRUE
TRUE
TRUE
D
B
B
D
B
D
D
B
D
B
B

45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.

B
C
D
D
A
B
A
D**
D
D
B

CHAPTER 2 GROSS ESTATE


PROBLEM SOLVING
(P2.1)
(1) P19,300,000

(2) P19,300,000

(3) P11,800,000

(4) P14,300,000

(P2.2)
Total Gross Estate

P78,000,000

(P2.3)
Total Gross Estate
P4,075,000
***Mean value shall be used only if the quotation price at the date of death is not determinable (RR 2-2003)

(P2.4)

(1)P230,0000; (2)P1,100,000; (3)P0; (4)P5,000,000; (5)P1M + [1M x (1M x 10% x 1.5)] = P1,150,000

MODIFIED IDENTIFICATION
EXERCISE A
1. Included
6. Excluded
2. Included
7. Excluded *
3. Excluded
8. Included **
4. Included
9. Excluded
5. Excluded
10. Included***
*Designated by the prior decedent
**Exclusions from the gross estate. Nonetheless, the tax code requires these items to be included first in the gross
estate before deducting the same from the gross estate.
*** Bequests to charitable institutions are considered exclusions from the gross estate only if the problem clearly states
that not more than 30% were used for administrative purposes. However, even if not more than 30% of the bequests
were used for administrative purposes, the tax code still require these items to be included first in the gross estate
before deducting the same for estate tax purposes.
EXERCISE B

EXERCISE C
1.
2.

P0; valid sale


P0; valid sale

1.
2.

P10M
P20M

3.
4.
5.

P0; valid sale


P4,000,000
P6,000,000

3.
4.
5.

TRUE OR FALSE
1. TRUE
2. TRUE
3. TRUE
4. FALSE
5. TRUE

6.
7.
8.
9.
10.

FALSE
FALSE
FALSE
TRUE
TRUE

11.
12.
13.
14.
15.

FALSE
TRUE
TRUE
FALSE
FALSE

16.
17.
18.
19.
20.

TRUE
TRUE
FALSE
TRUE
FALSE

MULTIPLE CHOICE
1. A
2. B
3. D
4. B
5. C
6. C
7. A
8. B
9. A
10. A
11. A
12. B
13. D
14. A
15. C

16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.

D
C
B
D
A
D
A
B
A
C
C
C
D
B
D

31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.

C
B
A
B
B
D
C
B
C
C
C
B
C
B
C

46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.

D
C
C
D
D
D
C
C
C
B
D
C
C
A
A

P5M
P10M
P0

61.
62.
63.
64.
65.
66.
67.
68.
69.
70.
71.
72.
73.
74.
75.

A
A
C
D
B
A
C
C
D
D
D
A
D
D
B

CHAPTER 3 DEDUCTIONS FROM THE GROSS ESTATE


PROBLEM SOLVING

(P3.1)

(P3.2)

(Funeral Expenses)
Case A: P150,000
Case B: P200,000
Case C: P150,000
Case D: P150,000

P0
Mourning clothing (donated by the decedents employer)
Expenses paid by relatives
Telecommunication charges paid by the friends
Cost of burial plot, coffin, interment fees and other funeral charges
paid by an insurance company
DEDUCTIBLE FUNERAL EXPENSE

P-nil-

(P3.3) P183,500 computed as follows:


NOTE: Hospital bills for two months of confinement before decedents death should be charged to medical expenses

(P3.4) (Claim Against Insolvent Persons)


Case A: P100,000
Case B: P333,333 computed as follows:
Case C: P0. Debtor is not insolvent
CaseD: P250,000

(P3.5) P133,333 computed as follows:


(P3.6) P2,097,000 computed as follows:
(P3.7)
Question 1: P217,500
Question 2: P217,500

Same answer with question #1. Whether or not the estate was settled judicially is
irrelevant in the determination of allowable deduction for judicial expenses.

(P3.8)
(P3.9)
(P3.10)
(P3.11)

P265,000 computed as follows:


P2,500,000 computed as follows:
P262,500 computed as follows:
STANDARD DEDUCTION
Case A: P1,000,000
Case B: P1,000,000
Case C: P1,000,000
Case D: P0
Case E: P0

(P3.12) MEDICAL EXPENSES


Case A:
Case B:
Case C:
Case D:
Case E:

P500,000
P500,000
P150,000
P500,000
P0

(P3.13) FAMILY HOME


Case A:
Case B:
Case C:
Case D:
Case E:
Case F:

P1,000,000
P500,000
P0
P500,000
P600,000
P750,000; [ (1M/2) + (500,000/2)]

(P3.14) P1,550,000 computed as follows:


(P3.15)
Question 1: P2,430,000 (Decedent: Resident Citizen)
Question 2: P2,430,000 (Decedent: Resident Alien) (same computation with Q#1).

(P3.16) Question 1: P2,757,500 computed as follows:


Question 2: P2,672,330 computed as follows:

(P3.17) Question 1: P426,000 computed as follows:


TRUE OR FALSE
1. TRUE
2. TRUE
3. TRUE
4. TRUE
5. TRUE
6. FALSE

7.
8.
9.
10.
11.
12.

TRUE
TRUE
TRUE
FALSE
FALSE
FALSE

13.
14.
15.
16.
17.
18.

FALSE
FALSE
TRUE
FALSE
TRUE
TRUE

19.
20.
21.
22.
23.
24.

TRUE
TRUE
TRUE
FALSE
TRUE
TRUE

25.
26.
27.
28.
29.
30.

TRUE
TRUE
FALSE
TRUE
FALSE
TRUE

MULTIPLE CHOICE
1. C
2. D
3. D
4. C
5. B
6. B
7. D
8. C

11.
12.
13.
14.
15.
16.
17.
18.

C
B
A
A
A
D
D
C

21.
22.
23.
24.
25.
26.
27.
28.

A
A
B
B
B
C
A
C

31.
32.
33.
34.
35.
36.
37.
38.

C
A
C
B
B
D
A
D

41.
42.
43.
44.
45.
46.
47.
48.

C
A
A
C
D
A
A
A

9.
10.

A
B

19.
20.

D
P650,000

29.
30.

D
C

39.
40.

D
D

49.
50.

B
D

CHAPTER 4 PROPERTY RELATIONS


ERRATUM: PAGE 127, ILLUSTRATION #2, CASE B: The P300,000 jewelry shall be classified as conjugal property. Net
Taxable estate shall be P625,000

CHAPTER 5 ESTATE TAX CREDIT AND ESTATE TAX DISTRIBUTABLE


PROBLEM SOLVING
P5.1
(1)P200,000

(2)P0; not allowed

P5.2
Estate tax payable after tax credit
ALLOWED TAX CREDIT

P67,500
P67,500

P5.3
(a) Net Taxable estate = P3,570,000; (b)Estate tax due after tax credit = P142,770
(c ) Net Distributable Estate = P4,427,230

P5.4
NET TAXABLE ESTATE
ESTATE TAX PAYABLE
NET DISTRIBUTABLE ESTATE

ULTIPLE CHOICE
1. B
2. C
3. D
4. C
5. C
6. C
7. C

8.
9.
10.
11.
12.
13.
14.

A
D
A
D
D
A
D

P1,325,000
P81,000
P2,994,000

15.
16.
17.
18.
19.
20.
21.

A
C
C
A
D
A
C

22.
23.
24.
25.
26.
27.
28.

C
A
C
D
C
A
B

29.
30.
31.
32.

C
D
A
B