PROBLEM I

Naruto died because of using the forbidden technique. He left the following
properties:
Land in Japan (with P500,000 unpaid mortgage) 2,500,000
Franchise in Korea 600,000
Bank deposits in USA 580,000
Other personal properties 800,000
Zonal value of the land in Leyte 1,250,000
Share of Stock of Simpol, Foreign Corporation, 84% of the 625,000
business in the Philippines
Share of stock of Jabee,Philippines 75,000
Receivable from debtor in Philippines 70,000
Receivable from debtor in USA 100,000
Land in Leyte,Philippines 1,000,000

Required:
a) If the decedent is a non-resident citizen and the reciprocity law can be
applied, his gross estate is
b) If the decedent is a non-resident alien, his gross estate is
c) If the decedent is a non-resident alien and the reciprocity law can be
applied, his gross estate is

PROBLEM II

Sarutobi Sensie knowing that he will not be able to stop the evil plan of his
enemy Orichimaru in destroying the Hidden Village of Konoha , made the
following transfers inter-vivos :

To Konohamaru To Jiraya To To Kakashi

Tsunade
Consideration 600,000 640,000 580,000 510,000
Cost 500,000 500,000 500,000 500,000
FMV, time of transfer 640,000 600,000 600,000 580,000
FMV, time of death 620,000 700,000 570,000 590,000

Required:
The amount to be included in the gross estate of Sarutobi Sensie.
PROBLEM III

The assets of Mr. and Mrs. Smith are the following:

 Properties inherited by Mrs. Smith before marriage amounting to

200,000.
 Properties brought to marriage by Mr. Smith 300,000
 Properties inherited during the marriage by Mrs. Smith 100,000
 Fruits of 50,000 from the properties inherited during the marriage.
 Property acquired during the marriage 500,000
 Fruits of 150,000 earned from the property acquired.

Required:

1. Classify the properties under Conjugal Property of Gains.

2. Classify the properties under Absolute Community of Property.

PROBLEM IV

In year 2000 Dada through his hard work acquired personal properties valued
at 5,000,000. Mama on the other hand acquired real properties valued at
2,000,000 and inherited a commercial building worth 3,000,000 from her
grandparents. It was during 2001 when Mama and Dada got married. From year
2002-2005 through their joint income, they were able to acquire their residential
house and lot at 7,000,000. Dada received house and lot in Leyte as inheritance
from his father, valued at 5,000,000; Mama and Dada used this as their family
home. Mama earned rent income of 500,000 from the commercial building she
had inherited from her grandparents. In November 2005, Dada died of cardiac
arrest.

Required:

Which of the above properties should be included in the Gross Estate of Dada?

PROBLEM V

Moriarty, during his lifetime, executed two promissory notes from different
transactions but were both payable to John Watson. The first note amounting to
₱50,000 was notarized while the second note amounting to ₱15,000 was
executed in a private instrument. Moriarty was also sued for damages for an act
committed by him and was ordered by the court to pay ₱30,000. He died before
he could comply and settle any of his obligations.

Required:

How much can be claimed as ordinary deductions in Moriarty’s estate?

PROBLEM VI

Inuyasha, a resident alien, died after fighting with Dora the Great in the
Treasure Island. Included in his estate were:

Family Home ₱ 35,000,000.00

Cash in Bank 20,000,000.00

Investment in Bonds 1,100,000.00

Investment in Stocks 900,000.00

Other Personal Properties 25,500,000.00

Other information are as follows:

Claims against the estate 720,000.00

Stolen sword during the wake 420,000.00

Legacy to the Philippine Government 300,000.00

Deficiency income tax of previous year 120,000.00

Insurance recovery for stolen sword 210,000.00

Claims against insolvent persons (20% uncollectible) 500,000.00

Unpaid Mortgage on Family Home 100,000.00

Other unpaid obligations 110,000.00

Required:

a. Total ordinary deductions

b. Total special deductions
c. Net Taxable Estate
PROBLEM VII

Cash on Hand ₱ 1,500,000.00

Car 2,500,000.00

Family Home 7,000,000.00

Funeral Expenses 250,000.00

Medical Expenses 400,000.00

Unpaid Mortgage on Family Home 150,000.00

Required:

If the decedent is a resident citizen, compute for the total special deductions.

PROBLEM VIII

Ma Friend 40 years old not-so-young millionaire and a Filipino citizen died in

South Pole due to extreme weather conditions (cold), the following are the
properties and obligations he left behind:

Agricultural land (mortgage payable is 2,000,000.00) 15,000,000.00

Personal properties 10,000,000.00

Family home 13,000,000.00

Unpaid real estate tax 2,000,000.00

Required:

How much is the total special deductions Ma Friend can avail?

THEORY QUESTION

1. The fruits, natural, industrial, or civil, due or received during marriage from
the common property, as well as the net fruits from the exclusive property of
each spouse fall under what category of property regime?

2. Statement 1: Citizens residing abroad can also claim a deduction for family
home.
Statement 2: Requirement of certification by the Barangay Captain for the
family home may not be satisfied if the decedent is a resident citizen.
a. True;True b. True;False c. False;False d. False;True

3. Can a decedent avail a family home deduction to the extent allowable, if the
family home is an exclusive property of the surviving spouse?

4. Monica inherited a property from Ross. Four years after the inheritance, she
died and the property was inherited by Phoebe. Phoebe decided to sell the
property to Rachel but before the contract was perfected, she died in a car
accident resulting to a void contract of sale. Joey, her only child, inherited
the said property after his mother kept it for seven years. Joey died after three
years and the property was inherited by Ben who took responsibility in taking
care of the property for two years before giving it to Susan, as stipulated in
Joey’s will. In whose estate(s) will the vanishing deduction be available?