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MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY
DEPARTMENT OF ACCOUNTANCY
ACCTG163: REVIEW IN TAXATION
ESTATE TAXATION
NET DISTRUBATABLE ESTATE VERSUS NET
TAXABLE ESTATE
Net Distributable Estate - Gross Estate Less
ACTUAL expenses or payments.
Net Taxable Estate - Gross Estate Less expenses
prescribed by the Tax Code.
Summary:
NET TAXABLE NET DISTRIBUTABLE
ESTATE ESTATE
GROSS ESTATE
Real or Immovable INCLUDED INCLUDED
Tangible Personal Property INCLUDED INCLUDED
Intangible Personal INCLUDED INCLUDED
Property
Transfer in Contemplation INCLUDED NOT INCLUDED
of Death
Revocable Transfer INCLUDED NOT INCLUDED
Transfer under GPA INCLUDED NOT INCLUDED
Proceeds of Life Insurance INCLUDED INCLUDED
Exclusion such as SSS, NOT INCLUDED INCLUDED
GSIS, etc.
ALLOWABLE
DEDUCTIONS:
Funeral Expenses REPEALED ACTUAL
Judicial Expenses REPEALED ACTUAL
Claims against the Estate ACTUAL ACTUAL
Claims aginst Insolvent ACTUAL ACTUAL
Persons
TPU ACTUAL ACTUAL
Vanishing Deduction AS COMPUTED NOT CONSIDERED
Standard Deduction FIXED AMOUNT NOT CONSIDERED
Family Home WITH LIMIT NOT CONSIDERED
Amount Received under ACTUAL NOT CONSIDERED
RA 4917
Share of Surviving Spouse AS COMPUTED AS COMPUTED
NET TAXABLE ESTATE PXX
Estate Tax Due PXX (PXX)
NET DISTRIBUTABLE PXX
ESTATE
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EXERCISES
1. The gross estate of a decedent shall be
compromised of the following properties and
interest therein at the time of his death, including
revocable transfers and transfers for insufficient
consideration:
I.Residents and citizens – all properties, real or
personal, tangible or intangible, wherever
situated;
II.Non-resident aliens – only properties situated
in the Philippines provided, that, with respect to
intangible personal property, its inclusion in the
gross estate is subject to the rule of reciprocity.
a.Both I and II are correct
b.Both I and II are incorrect
c.Only I is correct
d.Only II is correct
2. Which of the following proceeds from a life
insurance shall be included in the decedent’s gross
estate?
I.To the extent of the amount to be received by
the estate of the deceased, his executor, or
administrator, as insurance under policies taken out
by the decedent upon his own life, irrespective of
whether or not the insured retained the power of
revocation;
II.To the extent of the amount to be received by
any beneficiary designated in the policy of
insurance, except when it is expressly stipulated
that the designation of the beneficiary is
irrevocable.
a.I only
b.II only
c.Neither I nor II
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d.Both I and II
3. John Johnson, an American domiciled in South
Africa, died in 2011.
He left the following property:
a.Rest house in Hawaii;
b.A villa in Switzerland;
c.Shares of stock in LA Corporation, USA;
d.Shares of stock in San Miguel Corporation,
Philippines;
e.Shares of stock in Union Corp, a foreign
corporation where 85% of its business is in the
Philippines;
f.Time deposit, Philippine National Bank, Manila;
g.Lease contract over his Manhattan, New York,
USA apartment leased to the Philippine
Consulate.
John Johnson’s Philippine gross estate shall consist
of:
a.All properties enumerated above
b.Only properties d, e, and f
c.Only properties a, b, and d
d.None of the property enumerated above
4. Using the data in the preceding question,
assuming there is reciprocity, John Johnson’s
Philippine gross estate shall consist of:
a.All properties enumerated above
b.Only properties d, e, and f
c.Only property f
d.None of the property enumerated above
5. The widow and children of a passenger who died
in an airplane crash were paid P3,500,000 by the
airline. This figure was released after negotiation
between the heirs of the deceased and the insurer
of the airline, the latter having received indubitable
evidence that the deceased had a net income of
P350,000 at the time of his death and that 10
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productive years would have insured financial
stability for his family. Should the heirs declare this
amount in the estate tax return?
a. No. The heirs should not declare the P3,500,000
in the estate tax return because the amount is not
part of the decedent’s property at the time of death.
b. No. The heirs should not declare the P3,500,000
in the estate tax return because it was a result of a
negotiation between the heirs and the airline
company.
c. Yes. The heirs should declare the P3,500,000 in
the estate tax return because the designation of the
beneficiary is not known, hence, revocable.
d. Yes. The heirs should declare the P3,500,000 in
the estate tax return because the amount would
have been earned by the decedent if he did not die.
6. The following statements are subject to your
evaluation:
Statement I. Unlisted common shares are valued
based on their book value while unlisted preferred
shares are valued at par value;
Statement II. For shares which are listed in the
stock exchanges, the fair market value shall be the
arithmetic mean between the highest and lowest
quotation at a date nearest the date of death, if
none is available on the date of death itself.
a.Both I and II are correct
b. Both I and II are incorrect
c.Only I is correct
d.Only II is correct
7. In the absence of a marriage settlement, or when
the regime agreed upon is void, the property
relations of the spouses who married on or after
August 3, 1988 shall be governed by:
a.Conjugal partnership of gains
b.Absolute community of properties
c.Complete separation of properties
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d.None of the above
8. Under this system there is a merger of all the
properties of the husband and the wife owned by
them at the time of the celebration of the marriage,
or those acquired thereafter.
a.Conjugal partnership of gains
b.Absolute community of properties
c.Complete separation of properties
d.None of the above
9. Under this system the spouses retain the
ownership of the property which they respectively
brought to the marriage as well as those they
acquired during the marriage by gratuitous title or
by right of redemption, barter, or exchange with
separate property and those which they purchased
with their own money.
a.Conjugal partnership of gains
b.Absolute community of properties
c.Complete separation of properties
d.None of the above
10. Properties owned before marriage and brought
into the marriage are generally classified as:
I.Conjugal properties under conjugal partnership of
gains
II.Exclusive properties under absolute community of
properties
a.Only I is correct
b.Only II is correct
c.Both I and II are correct
d.Both I and II are incorrect
11. The net fruits as well as the income received
during the marriage from the exclusive properties of
the spouses are classified as:
I.Conjugal properties under conjugal partnership of
gains
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II.Exclusive properties under absolute community of
properties
a.Only I is correct
b.Only II is correct
c.Both I and II are correct
d.Both I and II are incorrect
12. During their last anniversary, the wife brought an
expensive coat for her husband using salary she
earned during the marriage. Shortly thereafter, the
husband died. For Philippine estate tax purposes,
the expensive coat shall be classified as:
a.Common property
b.Exclusive property of the husband decedent
c.Exclusive property of the wife-surviving spouse
d.Exclusion from the gross estate
13. You were appointed by court as an administrator
of the Estate of N.A. Mete. N.A. Mete died on
March 15, 2019. The following unpaid taxes were
presented on you:
Unpaid real estate tax for the second, third
and
fourth quarters of
2018 P 90,000
Unpaid tax on the income received by the
estate
of N.A.
Mete 20,000
Estate tax on the Estate of N.A.
Mete 50,000 Unpaid
tax on income received by N.A. Mete for the
period January 1 to March 14, 2019
3,000
How much should be the deductible unpaid taxes?
14. The following selected data were taken from the
Estate of Ed Sados:
Claim against an insolvent person
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(fully
uncollectible) P500,000
Claim against a person who absconded
(fully
uncollectible) 300,000
Claim against an insolvent person
(20% collectible)
100,000
How much should be included in and deducted
from the gross estate?
15. A piece of land was included in the gross estate
at a value of P 2,000,000. Upon closer examination,
you found out that the value used was net of P
500,000 unpaid mortgage on the same land. How
much should have been included and deducted
from the gross estate?
16. The following are the requisites for vanishing
deduction to be allowable, except one.
a.The estate tax of the prior succession must have
been finally determined and paid.
b.The present decedent died within five (5) years
from date of death of the prior decedent.
c.The property with respect to which deduction is
sought can be identified as having been received by
the present decedent from the prior decedent.
d.The property must have formed part of the gross
estate situated outside the Philippines of the prior
decedent.
17. Rudolfo, a citizen of the Philippines and resident
of Bacolod City, died testate on May 10, 2019.
Among his gross estate were properties inherited
from his deceased father who died on April 4, 2017.
What percentage of the deduction would be used in
computing the amount of vanishing deduction?
18. An unmarried decedent died leaving properties
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he inherited 4 ½ years ago which had fair market
value of P 800,000 at the time of his death (P
650,000 at the time of inheritance, and unpaid
mortgage of P 50,000 paid by the present
decedent). Other properties in his gross estate had
fair market value of P 1,000,000. The total
expenses, losses, indebtedness, taxes and transfer
for public purpose amounted to P 300,000.
How much was the vanishing deduction?
19. The following real properties were owned by a
decedent, head of family, who was a Filipino citizen
at the time of his death:
Vacation house,
USA P20,000,000
Beach house,
Bohol 1,500.000
House and lot (family home),
Masbate 11,000,000
House and lot (dwelling place when in the city),
Manila 2,500,000
How much should be included in and deducted from
the gross estate?
20. During the engagement ceremony before their
marriage, the man gifted his woman an expensive
diamond necklace. The necklace was for the
exclusive of the woman. How would this necklace
be classified for Philippine estate tax purpose,
assuming the man died and was survived by the
woman and they were under absolute community of
properties?
A. Communal property
B. Exclusive property of the decedent
C. Exclusive property of the surviving spouse
D. Excluded from the gross estate
21. Under conjugal partnership of gains, which of
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the following is an exclusive property?
A. Property acquired during the marriage using
common fund for the exclusive use of one of the
spouses
B. Properties acquired through occupation such as
fishing or hunting
C. Property acquired during the marriage by
gratuitous title
D. Property acquired by chance, such as winning
from gambling or betting
For items 22-25:
Mr. X, a Citizen of the Philippines, single. Died a
resident of the United States, leaving the following
properties:
Real property in the PH, inherited from the father
1 and a half
years
ago P2,000,000
Personal property in the
PH 1,600,000
Family home in the
US 11,500,000
Lot transferred to the PH
Government 850,000
LIT:
Obligations contracted within the last two
years 1,300,000
Loss due to
Fire 60,000
22. The gross estate subject to Philippine Estate
Tax is?
23. The deduction for Family home is?
24. The Vanishing deduction is?
25. The net taxable estate is?
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END
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