ARC 414 – TAXATION REVIEW Aug.

27, 2019
SUCCESSION AND INTRODUCTION TO TRANSFERS TAX J. SAPARIYA

CHOOSE THE LETTER OF THE BEST ANSWER.

1. It is a tax imposed for the gratuitous passing of private owned properties in case of death or donation.

a. income tax b. business tax c. estate tax d. transfer tax

2. It is the conveyance of property without any financial consideration involved.

a. onerous transfer b. donation c. gratuitous transfer d. succession

3. All is true about estate tax exempt

a. Exempt from tax is P200,000
b. Higher progressive estate tax rates is 0% - 20%
c. Filing of tax return is within 6 months
d. Filing of tax return is within 30 days
e. All of the above
f. None of the above

4. It is a mode of property or rights acquisition to the extent of the value of a person’s inheritance being transferred upon
his death.
a. succession b. taxation c. free portion d. legitimate

5. When will the transfer through succession be effective?

a. Upon the signing of a written will c. Upon payment of estate tax
b. Upon the death of the testator d. Upon registration in the register of deeds

6. An heir who inherits personal property by will is called

a. legatee b. devisee c. heir d. beneficiary

7. The portion of the decedent’s estate, which can be assigned by the testator to any devisee or legatee
a. inheritance b. legitimate c. free portion d. will

8. A person or artificial person named in the will by the testator to carry out its provisions or instructions.
a. executor b. administrator c. legitimate heir d. successor

9. Which of the properties should be included in the gross estate of a decedent person?
a. Real property c. Intangible personal property
b. Tangible personal property d. All of the above

10. What is the common characteristic of a transfer tax?

a. The transfer of property is onerous
b. The transfer of property takes effect during the lifetime of the transferor
c. The transfer of property takes effect upon the death of the transferor
d. The transfer of property is gratuitous.

11. It is the value of all properties and rights, which are going to be transmitted to his heirs.
a. legitimate b. inheritance c. free portion d. will

12. A succession to properties mentioned in the last will and testament where the value of the properties shall have
increased from the time the last will and testament was executed is:
a. Testamentary succession; c. Mixed succession
b. Intestate succession; d. Answer not given

13. Who is the taxpayer in estate taxation?

a. The deceased or decedent
b. The estate executor or administrator or any heirs
c. The creditors of the deceased or decedent
d. The debtors of the deceased or decedent

14. An arrangement under which title to property is passed to another for investment with the income and ultimately the
principal to be distributed in accordance with the direction of the creator is
a. a will b. a trust c. an inheritance d. pacto de retro

15. When does an estate tax return require a certification of a CPA?

a. When the gross estate does not exceed one million pesos (P1,000,000)
b. When the gross estate does not exceed two million pesos (P2,000,000)
c. When the gross estate exceeds one million pesos (P1,000,000)
d. When the gross estate exceeds two million pesos (P2,000,000)
e. None of These
 16. Mr. Domingo Namayapa died on Sept. 30, 2016. Her left a gross estate amounting to P500,000. The estate tax return
should be filed on or before
a. October 31, 2016 c. March 31, 2017
b. December 31, 2016 d. September 30, 2018

17. Which of the following is a similarity between donor’s and estate taxation?
a. Rates of tax used c. Basis of valuation
b. Effectivity of the transfer of property d. Amount of exemption

18. Which of the following is not an essential element of succession?

a. decedent b. successor c. estate d. administrator

19. Which of the following is not a requisite for the settlement of the estate of the decedent?
a. The death of the decedent should be ascertained.
b. The successor/s is/are alive at the time of death of the decedent.
c. The successor is not disqualified to inherit
d. The death of the successor.

20. A successor to an estate, whether through a last will and testament or not is:
a. Heir b. Legacy c. Legatee d. Devisee

21. The tax on the right of the deceased person to transmit his estate to his lawful heirs and beneficiaries is:
a. Income tax b. Property tax c. Donor’s tax d. Estate tax

22. Estate tax is an example of which of the following classes of taxes?

a. Property taxes b. Income tax c. Direct tax d. Excise tax

23. Which is not a kind of succession under estate taxation?

a. Testate b. Intestate c. Mixed d. Joint

24. Refers to a person who receives real property by virtue of a will:

a. legatee b. devisee c. legitime d. intestate

25. Refers to a person who receives personal property by virtue of a will.

a. legatee b. devisee c. legitime d. intestate

26. Refers to a succession which results from the designation of an heir, made in a will executed in the proper form
prescribed by law.
a. Testate succession c. Joint succession
b. Intestate succession d. Mixed succession

27. Refers to a succession which takes place when a person dies without a will or with a void will or with a will which has
lost its validity or if none succeeds under his will.
a. Testate succession c. Joint succession
b. Intestate succession d. Mixed succession

28. The time for filing the estate tax return maybe extended by the BIR Commissioner, in meritorious cases, for a period
a. Not more than sixty (60) days. c. Not more than two (2) months
b. Not more than thirty (30) days. d. Not more than six (6) months

29. The estate tax imposed by Section 84 of the tax code shall be paid
a. within thirty (30) days from the decedent’s death.
b. Within sixty (60) days from the decedent’s death.
c. At the time the return is filed by the executor, administrator, or the heirs.
d. At the time the notice of death is given to the BIR Commissioner.

30. A successor to an estate, whether in a last will and testament or not:

a. Heir. c. Devisee.
b. Legatee. d. Compulsory heir.

Solve the following cases independently.

Case 1
A died testate leaving his 6,000,000 worth of properties to his parents, Mom and Dad and grandparents, Lolo & Lola. If A has
unsettled obligations amounting to 1,000,000, how much is the share of Lolo and Lola from the net estate?
a. 0 b. 625,000 c. 1,250,000 d. 1,500,000

Case 2
The gross estate, before charges of 1,000,000 is 7,000,000. The surviving relatives are the 3 legitimate children and 1
acknowledged natural child and the spouse. The testator is intending to give ¼ of the free portion to his nanny. How much
could be disposed off as legacy to his nanny?
a. 0 b. 500,000 c. 1,000,000 d. 1,500,000

Case 3
The net distributable estate of X who died intestate is 5,000,000. The surviving relatives are the surviving spouse and the 5
legitimate children. How much would be the inheritance of each child?
a. 1,500,000 b. 1,000,000 c. 833,333 d. 666,667

Case 4
Don B donates the following items prior to his death.
House and lot – to his son in contemplation of death 1,000,000
Diamond ring – to his wife on account of anniversary 500,000
Portion of land – to the National government 300,000
Car – to his son who assumed the mortgage of 300,000 800,000
Time deposit – to his church 400,000
1. How much is the gross amount of donations subject to donor’s tax?
a. 500,000 b. 800,000 c. 1,000,000 d. 1,200,000
2. How much is the amount of donations subject to estate tax?
a. 1,900,000 b. 1,400,000 c. 1,200,000 d. 1,000,000

Case 5
X, the testator, instituted A, B, and C as universal heirs to his estate valued at 6,500,000. He gives A 1,500,000 worth of
properties, B 2,000,000 and C 3,000,000 worth of properties. How much is the increased in the share of C if A predeceased B
and C?
a. 1,500,000 b. 900,000 c. 750,000 d. 450,000

Case 6
M left 12,000,000 worth of properties distributable to his three (3) legitimate children and legitimate wife and one illegitimate
child. Upon his death, M left a will assigning 3,000,000 for his illegitimate child and the balance of free portion will be given to
the church. How much of the free portion will be given to the church?
a. 4,000,000 b. 3,000,000 c. 2,000,000 d. 1,000,000

Case 7
The net distributable estate of X who died intestate is 5,000,000. The surviving relatives are the spouse, the 4 children, and the
mother of the deceased. How much would be the inheritance of the spouse?
a. 750,000 b. 1,000,000 c. 1,250,000 d. 1,500,000

Case 8
S, a decedent, died leaving 3 brothers, A, B, and C and an estate of 12,000,000. Suppose A had predeceased but is survived by 1
legitimate child named Su, B is incapacitated but left 2 legitimate children, Ya and Ze, and C repudiated his share. How much is
the share of Su?
a. 6,000,000 b. 4,000,000 c. 3,000,000 d. 0

Case 9
The hereditary estate is 3,000,000. The surviving relatives are the parents, the spouse and the 4 legitimate children. The
testator is giving 20% of the free portion as legacy to his sister in law. How much could be designated to the sister-in-law?
a. 225,000 b. 375,000 c. 1,125,000 d. 1,500,000

Case 10
P died intestate, leaving 3 illegitimate children A, S, and L. Cu and Se are the legitimate children of A who predeceases P. The
net distributable estate of P amounts to 12,000,000. How much is the share of Cu?
a. 4,000,000 b. 3,000,000 c. 2,000,000 d. 1,000,000

"It is better to fail in originality than to succeed in imitation." --Herman Melville