TRANSFER TAXES (2017-2018)

MULTIPLE CHOICE
INSTRUCTIONS: Select the correct answer for each of the following
questions. Mark only one answer for each item by writing the corresponding
letter of your choice on the left side of the number. STRICTLY NO ERASURES
ARE ALLOWED.

1. A decedent dies on January 1, 2009. The estate tax return is filed on

September 1, 2009. When is the last day to make a valid assessment?
a. April 15, 2010 c. July 1, 2012
b. July 1, 2009 d. September 1, 2012

2. A property was transferred mortis causa. The following data were gathered from
the transaction:
Fair market value, time of transfer – P500,000
Fair market value, time of death – P450,000
Consideration received when transferred – P350,000
How much shall be included in the gross estate?
a. P500,000
b. P300,000
c. P100,000
d. None of the choices

3. Mr. Julian Cruz procured a life insurance upon his own life. He designated his
estate’s executor as an irrevocable beneficiary. For estate tax purposes, the
proceeds of life insurance is:
a. included in the gross estate of Mr. Julian Cruz because when the executor
of the estate is a beneficiary the proceeds are included in the gross
estate regardless of the designation.
b. not included in the gross estate of Mr. Julian Cruz because the
designation of the beneficiary is irrevocable.
c. included in the gross estate of Mr. Julian Cruz because proceeds of life
insurance are always subject to estate tax.
d. not included in the gross estate because, as a rule, proceeds of life
insurance are generally not subject to estate tax.

4. Which of the following cancellation or forgiveness of debt shall be included in

the gross estate of the creditor?
a. Forgiveness or cancellation of debt where the debtor did not render
service in favor of the creditor to take effect while the creditor is
alive
b. Forgiveness or cancellation of debt where the debtor rendered service in
favor of the creditor
c. Forgiveness or cancellation of debt by a creditor-corporation in favor
of a debtor-stockholder
d. Forgiveness or cancellation of debt where the debtor did not render
service in favor of the creditor to take after the creditor dies

5. James Georgeson, an American citizen, was a permanent resident of the

Philippines. He died in Miami, Florida. He left 100,000 shares of Philippine
Long Distance Telephone Co. (PLDT); a condominium unit at the Essensa-Taguig;
a house and lot in Dallas, Texas, USA; a lease contract over a condominium unit
located in Miami, Florida.Which among the following assets shall be excluded in
the Estate Tax Return to be filed with the BIR?
a. The value of the Miami, Florida condominium
b. The value of the Taguig condominium
a. The value of the house and lot in Dallas
b. The value of the 100,000 PLDT shares

6. Mabuhay Corporation took a keyman insurance on the life of its President, Mr.
John Lloyd Delgado, designating Mr. Delgado’s wife as its revocable beneficiary.
In the event of death of Mr. Delgado, will the insurance proceeds form part of
the gross estate of Mr. Delgado?
a. Yes, because Mrs. Delgado was designated as a revocable beneficiary.
b. No, because the premium was not paid by Mr. Delgado.
c. Yes, because the insurance proceeds form part of the benefits of Mr.Delgado
enjoyed by him as an employee of Mabuhay Corporation.
d. No, because Mr. Delgado had no interest in the proceeds at the time of his
death, hence, this is not a property that he transferred at the time of
his death.

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7. The estate tax is to be computed starting from the death of the decedent
because:
a. the provisions of the NIRC of 1997 requires it.
b. the privilege to transfer properties takes place upon death.
c. it is only upon the decedent’s death that his heirs are known.
d. it is at the time of death that estate taxes are due.

8. Mr. Segundo Primero died. He was survived by his wife and two (2), Pedro and
Juan. The wife renounced her share in common property in favor of their two
children. Was the renunciation subject donor’s tax?
a. Yes, because what was renounced is her share in the conjugal partnership
or absolute community after the dissolution of the marriage in favor of
the heirs of the deceased spouse or any other person/s.
b. No, because the renunciation by the surviving spouse of his/her share in
the conjugal partnership or absolute community after the dissolution of
the marriage was not done in favor of a specified heir to the exclusion
or disadvantage of the other co-heirs.
c. Yes, because the renunciation by the surviving spouse of his/her share in
the conjugal partnership or absolute community after the dissolution of
the marriage was done in favor of specified heirs.
d. No, because, as a rule, the surviving spouse cannot renounce her share in
the conjugal partnership or absolute community after the dissolution of
the marriage.

9. AST Corporation donated a piece of land to the Municipality of Palanas, Masbate

Province for the relocation site of informal settlers. The municipal government
subdivided the property and awarded parcels to the settlers. Houses were also
built by the municipal government on the property.

Question 1 – Was the donation by AST Corporation exempt from donor’s tax?
Question 2 – Was the awarding of parcels of land to the settlers exempt from
donor’s tax?
a. Yes to both questions
b. No to both questions
c. Yes to first question and No to second question
d. No to first question and Yes to second question

10. One of the following is an incorrect statement regarding dowry.

a. The donor must be the natural or adopting parent of the child.
b. The donee must be a legitimate, recognized natural or legally adopted
child of the donor.
c. The dowry or gift on account of marriage must be given before the
celebration of the marriage or within two (2) years thereafter.
d. The exemption allowed is to the extent of the first P10,000.

11 to 15 are based on the following

The decedent, resident alien, a married man with a surviving spouse under conjugal
partnership of gains, with the following data died on March 1, 2014:

Real properties
Family lot acquired by the decedent before marriage, FMV
P 500,000.00
Family house built using the salary earned by the
surviving spouse during the marriage, FMV 900,000.00
Coconut farm inherited by the surviving spouse
during the marriage, FMV 100,000.00
Mango orchard, FMV 800,000.00
Personal properties
Bank deposit under the name of the decedent
representing salary earned before marriage 2,150,000.00
Gold necklace inherited by the surviving spouse
during the marriage 120,000.00
Several pieces of jewelry acquired during the
marriage using the exclusive money of the
decedent 300,000.00

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The following expenses/deductions are claimed:

Funeral expenses (40% shouldered by relatives) 100,000.00
Judicial expenses (including P50,000.00 lawyer’s fee incurred
on September 5, 2014) 120,000.00
A piece jewelry lost through theft on August 15, 2014 50,000.00
Gambling debts of the decedent 70,000.00
Unpaid realty tax (coconut farm) for the three (3) quarters 150,000.00
of 2014
Claims against an insolvent debtor (25% can be collected) 80,000.00
Medical expenses 600,000.00

11. How much is the conjugal properties?

a. P1,780,000.00 c. P900,000
b. P1,700,000.00 d. None of the choices

12. How much is the exclusive properties?

a. P2,950,000.00 c. P450,000
b. P 650,000.00 d. None of the choices

13. How much is the family home deduction?

a. P1,000,000.00 c. P700,000
b. P 950,000.00 d. None of the choices

14. How much is the total ordinary deductions (excluding share of surviving spouse)?
a. P460,000.00 c. P260,000
b. P310,000.00 d. None of the choices

15. How much is the taxable net estate?

a. P1,225,000.00 c. P1,125,000
b. P1,175,000.00 d. None of the choices

16. Neither of us (is/are) capable of changing what is in the Revenue Regulations.

a. Is c. Either is or are
b. Are d. Neither is nor are
17. The newly released Revenue Regulations (affected/effected) small businesses.
a. Affected c. Either affected or effected

18. Please come and see me (every/any/each) day you like to discuss the financial
statements for the current year.
a. Every c. each
b. Any d. None of the choices

19. (Who/Whom) should we invite to discuss the Tax Reform Act.

a. Who c. Neither who nor whom
b. Whom d. Either who or whom

END OF EXAMINATION

Transfer Taxes