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TAX102 TAX 102 Estate Tax

Accountancy (University of Saint Anthony )

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Accountancy Review Center (ARC)

of the Philippines Inc.
One Dream, One Team

REVIEWEE HANDOUTS
TAXATION TABAG / SIA
TAX.102—ESTATE TAX MAY 2021 CPALE REVIEW

LEARNING OBJECTIVES

1. Define transfer taxes. 5. Determine the allowable deductions from the gross
2. Describe the nature or characteristics transfer taxes. estate.
3. Determine the composition of the gross estate. 6. Compute estate tax credit
4. Discuss the different types of marriage settlement or 7. Compute the estate tax due.
property relationship between spouses.

REVIEW NOTES

INTRODUCTION TO ESTATE TAX D. Concept of Succession - is a mode of acquisition by

virtue of which the property, rights and obligations to the
A. Transfer Taxes - are taxes imposed upon the extent of the value of the inheritance, of a person are
gratuitous disposition of private properties or rights. transmitted through his death to another or others either
Gratuitous transfer is one that neither imposes burden by will or by operation of law (Art. 774, Civil Code of the
nor requires consideration from transferee or recipient. Philippines).
The transfer of ownership is free because of the
absence of financial consideration. v Will- an act whereby a person is permitted with the
formalities prescribed by law, to control to a certain
B. Types of Transfer Taxes degree the disposition of his estate, to take effect
after his death (Art. 783, CCP) from the moment of
1. Estate Tax – Tax imposed on gratuitous transfer or the death of the decedent, the rights to the
donation that takes effect at the time of death of succession are transmitted, and the possession of
the hereditary property is deemed transmitted to the
the donor (also known as “donation mortis
heir (Art. 777, CCP).
causa”).
v Kinds of Wills:
2. Donor’s Tax – Tax imposed on gratuitous transfer
or donation that takes effect during the lifetime of 1. Notarial or Ordinary or Attested Will – is one
both the donor and the done (also known as which is executed in accordance with the
“donation inter vivos”). formalities prescribed by Art. 804 to 808 of the
New Civil Code. It is a will that is created for the
C. Nature of Estate Tax – It is a tax on the right to transfer testator by a third party, usually his lawyer,
property at death (succession) and on certain transfers follows proper form, signed and dated in front of
which are made by law the equivalent of testamentary the required number of witnesses (3 or more
disposition and is measured by the value of the property. witnesses) and acknowledged by the presence
of a notary public.
v It is an excise tax, the object of which is the shifting
of economic benefits and enjoyment of property from 2. Holographic Will–is a written will which must be
the dead to the living. entirely written, dated and signed by the hand of
the testator himself, without the necessity of any
v It accrues as of the death of the decedent, witness. This kind of will does not need
notwithstanding the postponement of the actual formalities because many people can recognize
possession or enjoyment of the estate by the his handwriting and it can be verified by a
beneficiary. penmanship expert.

v The taxpayer in the estate taxation is the estate of Codicil – a supplement or addition to a will, made
the decedent represented by the administrator, after the execution of a will and annexed to be
executor or legal heirs. taken as a part thereof, by which any disposition
made in the original will is explained, added to or
altered.

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TAXATION | TAX.102—ESTATE TAX

intestate succession. However, intestate heirs

E. Elements of Succession include, brothers and sisters, collateral relatives
within the fifth civil degree, and the state.
a. Decedent - the person whose property is
transmitted through succession, whether or not he v Administrator is a person appointed by the court, in
left a will (Art. 775, CCP). accordance with the governing statute, to administer
and settle intestate estate and such testate estate as
b. Heir - the person called to the succession either by no competent executor was designated by the
the provision of a will or by operation of law (Art. 782, testator.
CCP).
3) Mixed - transmission of properties, which is effected
c. Estate - refers to all the property, rights and partly by will and partly by operation of law.
obligations of a person which are not extinguished by
his death (Art. 776, CCP). G. FORMAT OF COMPUTATION

F. Kinds of Succession 1) SINGLE DECEDENT

1) Testamentary - succession which results from the Gross Estate Pxxx

designation of an heir, made in a will executed in the Ordinary Deductions (xxx)
form prescribed by law (Art. 779, CCP). Special Deductions (xxx)
Net Taxable Estate Pxxx
v While the decedent may dispose of his properties in Multiply by: Estate Tax % 6%
a last will and testament, he must, however, reserve Estate Tax Due Pxxx
compulsory or forced heirs. Less: Tax Credit (xxx)
Estate Tax Payable Pxxx
v Kinds of successors in a testamentary
succession
2) MARRIED DECEDENT
1. Legatee, an heir to a particular personal property
given by virtue of a will. Exclusive Common Total
Gross Estate Pxxx Pxxx Pxxx
2. Devisee, an heir to a particular real property
Less: Ordinary (xxx) (xxx) (xxx)
given by virtue of a will.
Deductions
v Executor is the person nominated by a testator to Pxxx Pxxx** Pxxx
carry out the directions and request in his will and to Less: Share of
dispose of his property according to his testamentary Surviving
provisions after his death. Spouse (Net
Common
v Compulsory or Forced Heirs: Estate**/2) (xxx)
1. legitimate children and descendants
2. In default of the foregoing, legitimate parents Special (xxx)
or ascendants Deductions
3. Widow or widower; and
4. Illegitimate children Net Taxable Pxxx
Estate
v Under testamentary succession, the mass of Multiply by: 6%
properties left by the decedent may be classified Estate Tax %
into: Estate Tax Due Pxxx
1. Legitime is the portion of the testator’s property Less: Tax Credit (xxx)
which could not be disposed of freely because
Estate Tax Pxxx
the law has reserved it for the compulsory heirs.
Payable
(Art. 886, CCP).

2. Free portion is that part of the whole estate

which the testator could dispose of freely
through written will irrespective of his
relationship to the recipient.

2) Legal or Intestate - transmission of properties

where there is no will, or if there is a will, the same is
void or lost its validity, or nobody succeeds in the will.

v In intestate succession, the entire estate of the

decedent is distributed to the heirs. The compulsory
heirs in testamentary succession are also heirs in

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TAXATION | TAX.102—ESTATE TAX

GROSS ESTATE

A. Gross Estate Defined – consists of all properties and Example:

interests in properties of the decedent at the time of his • Dividends declared before his death but received
death as well as properties transferred during lifetime after death.
(only in form), but in substance was only transferred at • Partnership profit which have accrued before his
the time death. death
• Usufructuary rights, etc.
B. Classification of Decedent
3) Properties transferred gratuitously during lifetime,
1) Citizen or Resident (RC/NRC/RA) but in substance, transferred upon death: (CRRIG)
2) Non-resident Alien (NRA)
i. With reciprocity a. Transfer in contemplation of death – the thought
ii. Without reciprocity of death must be the impelling cause of the
transfer.
C. Reciprocity Clause – No tax shall be imposed with
respect to intangible personal properties of a NRA EXCEPTION (NOT IN CONTEMPLATION OF
situated in the Philippines: DEATH):
1. To relieve the donor from the burden of
1) When the foreign country, where such NRA is a management.
resident and citizen, does not impose transfer tax 2. To save income or property taxes.
with respect to intangible personal properties of 3. To settle family litigated and un-litigated
Filipino citizens not residing in that country; or disputes.
4. To provide independent income for
2) When the foreign country imposes transfer taxes, dependents.
but grants similar exemption with respect to 5. To see the children enjoy the property while
intangible personal properties of Filipino citizens not the donor is still alive.
residing in that country. 6. To protect the family from the hazards of
business operations.
D. Intangible Properties considered Located in the 7. To reward services rendered.
Philippines:
b. Transfer with retention or reservation of certain
1) Franchise which must be exercised in the right – allows the transferor to continue enjoying,
Philippines; possessing or controlling the property (beneficial
ownership) because only the naked title has been
2) Shares, obligations or bonds issued by any transferred.
corporation or sociedad anonima organized or
constituted in the Philippines; c. Revocable transfer – decedent transfers the
enjoyment of his property to another, subject to
3) Shares obligations or bonds issued by any foreign his right to revoke the transfer at will, with or
corporation, at least 85% of the business of which without notifying the transferee, any time before
is located in the Philippines; he dies.

4) Shares, obligations, or bonds issued by any foreign d. Property passing under general power of
corporation if such shares, obligations, or bonds appointment
have acquired a business situs (used in the
furtherance of its business in the Philippines) in the e. Transfers for insufficient consideration – sale of
Philippines; property below fair market value (FMV) under the
cases in letter a to d above.
5) Shares or rights in partnership, business or industry
established in the Philippines. v Amount included in gross estate:

E. Components of the Gross Estate FMV at the time of death PXXX

Less: Selling Price (XXX)
1) Properties existing at the time of death such as: Included in Gross Estate PXXX
a. Real Property
b. Tangible Personal Property 4) Proceeds from life insurance – the following are
c. Intangible Personal Property included in the gross estate:
a. Whether REVOCABLE or IRREVOCABLE, when
2) Decedent’s Interest – Refers to the extent of equity the beneficiary is the :
or ownership participation of the decedent on any i. Estate of the deceased
property physically existing and present in the gross ii. His executor; or
estate, whether or not in his possession, control or iii. Administrator
dominion. It also refers to the value of any interest in
property owned or possessed by the decedent at the b. When the beneficiary is a third person, only if
time of his death (interest having value or capable of REVOCABLE.
being valued, transferred)

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3) Under Section 87, NIRC

F. Valuation of Gross Estate – the items comprising the a. The merger of the usufruct (right to use) in the
gross estate shall be valued at the time of death or date owner of the naked title (without right to use).
nearest such date. b. The transmission or delivery of the inheritance or
legacy of the fiduciary heir or legatee to the
1) Usufruct – based on latest Basic Mortality Table to fideicommissary.
be approved by the Secretary of Finance, upon c. The transmission from the first heir, legatee or
recommendation of the Insurance Commissioner. donee in favor of another beneficiary, in
accordance with the will of the predecessor.
2) Real Property – the higher amount between: d. All bequests, devices, legacies or transfers to
a. Fair Market Value social welfare, cultural and charitable institutions,
b. Zonal Value provided:
• No part of the net income of said institutions
3) Personal Properties – Fair market value inure to the benefit of any individual;
• Not more than 30% of such transfers shall be
4) Shares of stock used for administration purposes.
a. Traded in the Local Stock Exchange (LSE) –
mean between the highest and lowest 4) Under Special Laws
quotations, at a date nearest the date of death, if
none is available at the date of death itself (RR 2- a. Proceeds of life insurance and benefits received
2003/RR 12-2018). by members of the GSIS (RA728).
b. Benefits received by members from the SSS by
b. Not traded in the local stock exchange: reason of death (RA1792).
i. Common (ordinary) shares – Book value c. Amounts received from Philippine and United
ii. Preferred (preference) shares – Par Value States governments for war damages.
d. Amounts received from United States Veterans
c. Units of participation in any association, Administration.
recreation or amusement club (such as golf, e. Benefits received from the Philippines and US
polo, or similar clubs) – bid price nearest the date government for damages suffered during World
of death published in any newspaper or War II (RA227).
publication of general circulation. f. Retirement benefits of officials/employees of a
private firm (RA4917).
G. Exemptions and Exclusions from Gross Estate g. Payments from the Philippines of US government
to the legal heirs of deceased of World War II
1) Under Section 85 and 86, NIRC Veterans and deceased civilian for
a. Capital or exclusive property of the surviving supplies/services furnished to the US and
spouse Philippine Army (RA136).
b. Properties outside the Philippines of a non- h. Personal Equity and Retirement Account (PERA)
resident alien decedent asset of the decedent-contributor (Section 14, RA
c. Intangible personal property in the Philippines of 9505)
a non-resident alien when the rule of Reciprocity
applies.

GROSS ESTATE BASED ON CITIZENSHIP & RESIDENCE

Real Property Tangible Personal Property Intangible Personal

Property

Decedent w/in w/out w/in w/out w/in w/out

Citizen or √ √ √ √ √ √
Resident

NRA w/o √ X √ X √ X
reciprocity

NRA w/ √ X √ X X X
reciprocity

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PROPERTY RELATIONSHIP BETWEEN SPOUSES d. he share of either spouse in the hidden treasure
which the law awards to the finder or owner of the
A. COMPONENTS OF GROSS ESTATE OF A MARRIED property where the treasure is found;
DECEDENT
e. Those acquired through occupation such as fishing
Exclusive Properties of the Decedent Pxxx or hunting;
Add: Common Properties (100%) xxx
Gross Estate Pxxx f. Livestock existing upon dissolution of the
partnership in excess of the number of each kind
NOTE: Exclusive properties of the surviving spouse are brought to the marriage by either spouse; and
excluded in computing gross estate.
g. Those acquired by chance, such as winnings from
B. PROPERTY RELATIONSHIP BETWEEN SPOUSES gambling or betting. However, losses therefrom shall
be borne exclusively by the loser-spouse.
1) Conjugal Partnership of Gains (CPOG)
2. Absolute Community of Property (ACOP)
v Exclusive Properties:
a. That which is brought to the marriage as his or v Community Properties:
her own; a. All properties owned by the spouses at the time
of celebration of the marriage; or
b. That which each acquires during marriage by b. Acquired thereafter
gratuitous title;
v Exclusive Properties:
c. That which is acquired by right of redemption, by a. Property acquired during marriage by gratuitous title
barter or by exchange with property belonging to any by spouse, and the fruits as well as the income
one of the spouses; and thereof.

d. That which is purchased with exclusive money of EXCEPTION: unless it is expressly provided by the
the wife or of the husband. donor, testator or grantor that they shall form part of
the community property.
v Conjugal Properties:
a. Those acquired by onerous title during marriage at b. Property for personal and exclusive use of either
the expense of the common fund, whether the spouse.
acquisition be for the partnership, or for only one of
the spouses; EXCEPTION: jewelry shall form part of the
community property.
b. Those obtained from labor, industry, work or
c. Property acquired before the marriage by either
profession of either or both spouses; spouse who has legitimate descendants by the
former marriage, and the fruits as well as the
c. The fruits, natural or industrial, or civil, due or income, if any of such property.
received during marriage from common property, as
well as the net fruits from the exclusive property of
each spouse;

C. Similarities between CPOG and ACOP

Property CPOG ACOP

1. Property inherited or received as donation during Exclusive Exclusive
marriage
2. Property acquired during marriage (other than Conjugal Community
inheritance or donation)
3. Property acquired from labor, industry, work or Conjugal Community
profession of spouses
4. Fruits or income due or derived during the marriage Conjugal Community
coming from common property

D. Difference between CPOG and ACOP

Property CPOG ACOP

1. Property before marriage or brought to the marriage Exclusive Community
2. Fruits or income due or derived during the marriage Conjugal Exclusive
coming from exclusive property

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E. RULES IN DETERMINING THE PROPERTY 5. Incurred not later than the last day for the
RELATIONSHIP payment of the estate tax.

The system of property relationship is applicable b. Claims Against Insolvent Persons

only to married persons. It is used to distinguish a
conjugal or community property from an exclusive v Requisites:
property. Under Art. 74 of the New Family Code (as 1. Value of the claims is included in the gross
amended), the property relationship between husband estate; and
and wife shall be governed in the following order:
2. The insolvency of the debtor must be
1) By marriage settlements executed before the established.
marriage.
2) By the provisions of law c. Claims Against the Estate
3) By the local custom.
v Requisites:
Types of Property Relations (Art. 75 NFC) 1. Personal debt of the decedent existing at the
The future spouses may, in the marriage settlements, time of his death;
agree upon the following systems of property 2. Contracted in good faith;
relationship: 3. Must be valid in law and enforceable in court;
(1) Absolute community of Property (ACoP) 4. Must not have been condoned by the creditors;
(2) Conjugal partnership of gains (CPG) 5. Must not have prescribed;
(3) Complete separation of property, or 6. Debt instrument must be notarized;
(4) Any other regime. 7. If the loan was contracted 3 years before death,
submit statement showing the disposition of
If NO agreement on marriage settlement the proceeds.

Date of Marriage Regime d. Unpaid Mortgage

Before August 3, 1988 CPOG
On or After August 3, 1988 ACOP v Requisites:
1. The fair market value of the mortgaged property
undiminished by the mortgage indebtedness
DEDUCTIONS should be included in the gross estate;
2. Contracted in good faith; and
I. ALLOWABLE DEDUCTIONS DEFINED 3. For an adequate and full consideration.

v Deductions are items which the law on estate tax e. Unpaid Taxes
allows to be subtracted from the value of the gross v Requisite – the tax must have accrued before the
estate in order to arrive at the net taxable estate. death of the decedent.

v As a rule, deductions from gross estate are The following are not deductible:
presumed to be common deductions unless 1. Any income tax upon income received after
specially identified as exclusive. death;
2. Property taxes not accrued before death; and
II. CLASSIFICATION OF DEDUCTIONS 3. Estate tax from the transmission of his estate.

1) Ordinary deductions 2) TRANSFER FOR PUBLIC USE

2) Special Deductions
3) Share of the surviving spouse v Requisites:
1. Given to the Government of the Philippines
III. ORDINARY DEDUCTIONS – classified as exclusive or (National or local);
common deduction. 2. Must be testamentary in character; or
3. By way of donation mortis causa executed by the
1) LOSSESS, INDEBTEDNESS, TAXES (LIT) decedent before his death;
4. Exclusively for public purpose.
a. Casualty Losses
3) PROPERTY PREVIOUSLY TAXED/VANISHING
v Requisites: DEDUCTION
1. Incurred during the settlement of the estate;
2. Arising from fires, storms, shipwreck, or v Requisites:
other casualties, or from robbery, theft or 1. The decedent died within 5 years from receipt of
embezzlement; the property from a prior decedent or donor;
3. Not compensated by insurance;
4. Not claimed as deduction for income tax 2. The property on which the vanishing deduction
purposes; is being claimed is located in the Philippines.

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3. The property must have formed part of the

taxable estate of the prior decedent or the IV. SPECIAL DEDUCTIONS
taxable gift of the donor and the transfer tax
relative thereto had been paid; 1) Standard Deduction – the amount deductible
without any required substantiation is:
4. The property on which vanishing deduction is • Decedent is a citizen or resident = P5,000,000
being taken must be identified as the one • Decedent is NRA = P500,000
received from the prior decedent, or from the
donor, or something acquired in exchange 2) Family Home Allowance
therefore; v Allowed only to citizen and resident decedents

5. No vanishing deduction on the property was v Requisites:

allowable to the estate of the prior decedent. a. The decedent is married or head of a family;
b. The family home must be the actual residential
v Amount deductible: home of the decedent and his family at the time
of his death, as certified by the Brgy. Captain of
PROFORMA COMPUTATION the locality the family home is situated;
Initial Value Pxxx c. It is located in the Philippines;
Less: Mortgage paid by present d. The value of the family home is included in the
decedent (xxx) gross estate; and
Initial Basis (IB) Pxxx e. Must not exceed the limit set by law.
Less: Proportional Deduction
[(IB/GE) x (LIT+TPU)] (xxx) v Amount Deductible:
Final Basis Pxxx a. Actual Interest vs. whichever
Rate % b. Limit is lower
Vanishing Deduction Pxxx
v LIMIT = P10,000,000

INTERVAL OF ACQUISITION AND RATE Rule in Determining Actual Interest

DEATH OF PRESENT DECEDENT Exclusive Property 100%
Within 1 year 100% Common Property 50%
More than 1 year but not more than 2
years 80%
More than 2 years but not more than 3 3) Amount Received by heirs under R.A. 4917
years 60% Requisite – Include such amount in the gross estate.
More than 3 years but not more than 4
years 40% v Amount Deductible – amount received by the
More than 4 years but not more than 5 heirs from the decedent’s employer as a
years 20% consequence of the death of the decedent-
employee.
CLASSIFICATION OF ORDINARY
DEDUCTIONS FOR MARRIED DECEDENT v Allowed only to citizen and resident decedents
Casualty Losses Common or
Exclusive
Claims against insolvent Common or
persons Exclusive V. SHARE OF THE SURVIVING SPOUSE – applicable only
to married decedents.
Claims against the Common or
estate Exclusive
v Amount Deductible:
Unpaid Mortgage Common or
Exclusive
Unpaid Taxes Common or Common Properties Pxxx
Exclusive Common Deductions (xxx)
Transfer for public use Exclusive Net Common Properties Pxxx
Vanishing Deduction - Under CPOG – Multiply by: 50%
exclusive Share of the Surviving Spouse Pxxx
- Under ACOP –
exclusive or
common

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VI. SUMMARY RULES ON DEDUCTIBILITY BASED ON RESIDENCE AND/OR CITIZENSHIP

Decedent is Resident Decedent is Nonresident Alien

Items of Deduction or Citizen
1. LIT (Losses, Indebtedness and Deductible Phil. GE x LIT WORLD
Taxes) Total GE
2. Vanishing Deduction Deductible Deductible
3. Transfer for Public Purpose Deductible Deductible
5. RA 4917 Deductible Non-Deductible
6. Share of the Surviving Spouse Deductible Deductible
7. Family Home Deductible Non-Deductible
8. Standard Deduction Deductible (5M) Deductible (500,000)

RATES OF ESTATE TAX

§ If decedent died on or after Jan. 1, 2018, estate tax due is equivalent to 6% of Taxable Net Estate.

TAX CREDIT FOR ESTATE TAX PAID TO A FOREIGN v When is the deadline?
COUNTRY Within one year after death

v Who can claim? Can be extended not exceeding 30 days if authorized

Only resident or citizens can claim tax credit. by the BIR Commissioner.

v Amount Deductible: v When shall certification by a Certified Public

a. Actual estate tax paid abroad Accountant (CPA) needed?
whichever is
b. Limit lower
§ It shall be supported with a statement duly certified
v Limit: to by a CPA when the estate tax return shows a
a. Only one foreign country is involved gross value exceeding P5,000,000.

Net Estate, foreign v Place of filing the return:

X Philippine Estate Tax
World Net Estate a. In case of a resident decedent:
a. Authorized agent bank; or
b. Revenue District Officer;
b. Two or more foreign countries are involved c. Collection Officer; or
(whichever is lower of the following): d. Duly authorized Treasurer of the city or
municipality in which the decedent was
Limit A – Per Foreign Country domiciled at the time of his death.

Net Estate, per foreign b. In case of a non-resident decedent:

X Philippine Estate Tax
World Net Estate a. Revenue District Office where the executor
or administrator is registered
Limit B – By Total b. Revenue District Office having jurisdiction
over the executor or administrator’s legal
Net Estate, all foreign countries Philippine residence (if executor or administrator is not
X
World Net Estate Estate Tax registered)
c. Office of the BIR Commissioner (RDO No. 39
– South Quezon City) if the estate does not
COMPLIANCE REQUIREMENTS have an executor or administrator in the
Philippines.
A. ESTATE TAX RETURN
v Payment of Estate Tax
v When is it required?
1. In all cases of transfer subject to estate tax; § Estate tax shall be paid at the time the return is
2. Regardless of the amount of the gross estate, filed (Pay as you file)
where it consists of registered or registrable
property. § Allowed extension:
a. 5 years if settled judicially
v Who shall file? b. 2 years if settled extra-judicially
1. Executor
2. Administrator
3. Any of the legal heirs

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disposition, the estate tax due shall be

v Payment of the estate tax by installment and immediately due and demandable subject to
partial disposition of estate. the applicable penalties and interest
reckoned from the prescribed deadline for
In case of insufficiency of cash for the immediate filing the return and payment of the estate
payment of the total estate tax due, the estate may tax, without prejudice of withholding the
be allowed to pay the estate tax due through the issuance of eCAR(s) on the remaining
following options, including the corresponding terms properties until the payment of the remaining
and conditions: balance of the estate tax due, including
penalties and interest.
1) Cash installment
§ The cash installments shall be made within v Request for Extension of Time, Installment
two (2) years from the date of filing of the Payment and Partial Disposition of Estate.
estate tax return;
§ The estate tax return shall be filed within one The request for extension of time to file the return,
(1) year from the date of decedent’s death; extension of time to pay estate tax and payment by
§ The frequency (i.e., monthly, quarterly, semi- installment shall be filed with the Revenue District
annually or annually), deadline and amount Officer (RDO) where the estate is required to secure
of each installment shall be indicated in the its TIN and file the estate tax return. This request
estate tax return, subject to the prior shall be approved by the Commissioner or his duly
approval by the BIR; authorized representative.
§ In case of lapse of two years without the
payment of the entire tax due, the remaining
balance thereof shall be and demandable B. Duties of Certain Officers and Persons
subject to the applicable penalties and
interest reckoned from the prescribed v No judge shall authorize the executor or judicial
deadline for filing the return and payment of administrator to deliver a distributive share to any
the estate tax; and party interested in the estate, unless a certification
§ No civil penalties or interest may be imposed from the Bureau of Internal Revenue (BIR) that the
on estates permitted to pay the estate tax estate tax has been paid is shown.
due by installment. Nothing in this provision,
however, prevents the Commissioner from v Register of Deeds shall not register in the registry of
executing enforcement action against the property any transfer of real property or real rights
estate after the due date of estate tax. therein, or any mortgage, by way of donation mortis
causa or inheritance, without a certification from the
2) Partial disposition of estate and application of its BIR of payment of estate tax, and they shall
proceeds to the estate tax due immediately notify the BIR of non-payment of tax
§ The disposition , for purposes of this option, discovered by them.
shall refer to the conveyance of property,
whether real, personal or intangible property, v Any lawyer, notary public or any government officer
with the equivalent cash consideration; who, by reason of his official duties, intervenes in the
§ The estate tax return shall be filed within one preparation or acknowledgment of documents
year from the date of decedent’s death; regarding partition or disposal of donations inter
§ The written request for the partial disposition vivos or mortis causa, legacy or inheritance shall
of the estate shall be approved by the BIR. furnish the BIR with copies of such documents and
The said request shall be filed, together with any information whatsoever which may facilitate the
a notarized undertaking that the proceeds collection of the estate tax.
thereof shall be exclusively used for the
payment of the total estate tax due; v There shall not be transferred to any new owner in
§ The computed estate tax due shall be the books of any corporation, sociedad anonima,
allocated in proportion to the value of each partnership, business, or industry organized or
property; established in the Philippines any share, obligation,
§ The estate shall pay to the BIR the bond or right by way of gift inter-vivos or mortis
proportionate estate tax due of the property causa, legacy or inheritance, unless an eCAR is
intended to be disposed of. issued by the Commissioner or his duly authorize
§ An electronic Certificate Authorizing representative.
Registration (eCAR) shall be issued upon
presentation of the proof of payment of the v If bank has knowledge of the death of a person who
proportionate estate tax due of the property maintained a bank account alone, or jointly with
intended to be disposed. Accordingly, another, it shall allow the withdrawal from said
eCARs shall be issued as many as there are deposit account, subject to a final withholding tax of
properties intended to be disposed to cover 6% of the amount to be withdraw, provided, that the
the total estate tax due, net of the withdrawal shall only be made within one year from
proportionate estate tax(es) previously paid the date of said decedent.
under this option; and
§ In case of failure to pay the total estate due
out from the proceeds of the said

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In all cases, the final tax withheld shall not be withdrawing from the bank deposit account. Such
refunded, or credited on the tax due, on the net withdrawal shall no longer be subject to the
taxable estate of the decedent. withholding tax imposed under this section.

In instances where the deposit accounts have been

duly included in the gross estate of the decedent and
the estate tax due thereon paid, the executor,
administrator, or any of the legal heirs shall present
the eCAR issued for the said estate prior to

DISCUSSION QUESTIONS

a. That which reduces the legitime of compulsory

1. Which of the following statements is false? Transfer tax heirs.
is b. That which increase the share of one heir without
a. Imposed upon gratuitous transfer of property impairing the legitime of the other heirs.
b. Of two kinds: estate tax and donors’ tax c. That which transfer the legitime of one heir to the
c. Classified as national tax other heir.
d. None of the above d. That which impair the legitime of compulsory heirs.

2. The object of estate tax is: 10. A person who inherits specific personal property thru a
a. Right to transmit will:
b. Decedent a. Devisee c. Heir
c. Properties of the decedent b. Legatee d. Successor
d. Beneficiaries
11. A person who inherits specific real property thru a will:
3. It is a mode of acquisition by virtue of which, the property, a. Devisee c. Heir
rights and obligations, to the extent of the value of the b. Legatee d. Successor
inheritance, of a person are transmitted through his death
to another either by his will or by operation of law. 12. Estate tax is
a. Succession c. Prescription a. A property tax because it is imposed on the
b. Donation d. Exchanges property transmitted by the decedent to his heirs.
b. An indirect tax because the burden of paying the tax
4. Which of the following could legally effect transfer of is shifted on the executor or any of the heirs of the
properties through succession? decedent
I. By virtue of a will c. An excise tax because the object of which is the
II. By operations of law shifting of economic benefits and enjoyment of
III. By onerous transfer property from the dead to the living
a. I only c. I and III only d. A poll tax because it is also imposed on residents of
b. I and II only d. I, II and III the Philippines whether Filipino citizens or not

5. An act whereby a person is permitted, with the formalities 13. Estate tax accrues from:
prescribed by law, to control to a certain degree the a. The moment of death of the decedent
disposition of his estate, to take effect after his death. b. The moment the notice of death is filed
a. Contract c. Will c. The moment the estate tax return is filed
b. Trust d. Legacy d. The moment the properties are delivered to the
heirs
6. The following are the elements of succession, except:
a. Decedent c. Heir 14. The taxpayer in estate tax is:
b. Estate d. Executor a. The decedent
b. The estate as a juridical entity
7. Succession which results from the designation of an heir, c. The heirs or succession
made in a will executed in the form prescribed by law is d. The administrator or executor
known as:
a. Legal or intestate succession 15. Who has the personal liability to pay estate tax?
b. Testamentary succession a. The decedent
c. Mixed succession b. The estate as a juridical entity
d. Ordinary succession. c. The heirs or successors
d. The administrator or executor
8. The portion of the decedent’s estate which the law
reserves to his compulsory heir is called: 16. One of the following is subject to estate tax on properties
a. Legitime c. Legacy situated within the Philippines only
b. Free portion d. Bequest a. resident citizen c. nonresident citizen
b. resident alien d. nonresident alien
9. Which of the following is a valid will?

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17. The personal properties of a non-resident, not citizen of d. The preference shares will be valued based on their
the Philippines, would not be included in the gross estate fair market value as determined by the
if: Commissioner of Internal Revenue
a. The intangible personal property is in the Philippines
b. The intangible personal property is in the Philippines
23. Binat died on April 13, 2018, leaving the following
and the reciprocity clause of the estate tax law
properties:
applies
Common stocks of Sunchamp Corporation (2,000
c. The tangible personal property is in the Philippines
shares) - listed in the Philippine Stock Exchange (highest
d. The personal property is shares of stock of a
- P40; lowest - P39).
domestic corporation 80% of whose business is in
the Philippines. Common stocks of AgriNurture Corporation (1,500
shares) - not listed in the stock exchange. Cost - P50 per
18. All of the following are considered intangible in the share; book value - P45 per share.
Philippines, except:
Preferred stocks of Greenergy Inc. (3,000 shares) – not
a. Franchise which must be exercised in the
listed in the stock exchange. Cost - P70 per share; book
Philippines
value - P60 per share; par value – P50 per share
b. Shares, obligations or bonds issued by any
corporation or sociedad anonima organized or Car (cost - P600,000; book value - P350,000; market
constituted in the Philippines in accordance with its value - P400,000)
laws
Real properties (zonal value - P120,000; assessed value
c. Shares, obligations or bonds by any foreign
- P72,000)
corporation 75% of the business of which is located
in the Philippines The gross estate of Binat is –
d. Shares, obligations of bonds issued by any foreign a. P817,500 c. P824,000
corporation if such shares, obligations or bonds b. P816,500 d. P846,500
have acquired a business situs in the Philippines;
24. One of the following donations is not included as part of
19. Lina Lamay, Filipina, died in Syria leaving the following gross estate
properties: a. Revocable transfers
House and Lot in Syria 1,000,000 b. Transfers with reservation of certain rights
Vacant Lot in Manila 2,000,000 c. Transfers under special power of appointment
Shares of stock in a domestic corp., 100,000 d. Transfers in contemplation of death
60% of the business is located in the
Philippines 25. Statement 1: Aguinaldo devised in his will a piece of land;
Shares of stock in a foreign corp., 70% 200,000 naked title to Bonifacio and usufruct to Rizal for as long
of the business is located in the as Rizal lives, thereafter to Bonifacio. The transmission
Philippines from Aguinaldo to Bonifacio and Rizal is subject to estate
Car in Manila 500,000 tax but the merger of the usufruct and the naked title to
Bonifacio upon the death of Rizal is exempt.
How much is the gross estate?
a. P3,800,000 c. P2,500,000 Statement 2: Erap devised in his will real property to his
b. P2,600,000 d. P2,000,000 brother Alfredo who is entrusted with the obligation to
preserve and transmit the property to Isko, son of
20. Based on the preceding number, but assuming the Alfredo, when Isko becomes of age. The transmission
decedent is a non-resident alien, the gross estate is: from Alfredo to his son Isko is subject to tax.
a. P3,800,000 c. P2,500,000 a. Only statement 1 is correct
b. P2,600,000 d. P2,000,000 b. Only statement 2 is correct
c. Both statements are correct
21. Continuing the preceding number and assuming the rule
d. Both statements are incorrect
of reciprocity applies, the gross estate is:
a. P3,800,000 c. P2,500,000
b. P2,600,000 d. P2,000,000 26. Pedro, decedent, owns a property valued at P1,500,000
at the time of his death. The said property was sold by
22. Part of the estate left by A are preference shares of Pedro during his lifetime to Juan for P700,000 when its
MERALCO. The shares are listed and traded in the value was P1,200,000. It was agreed by Pedro and Juan
Philippine Stock Exchange. Which of the following rules that the former will enjoy the income of the property as
of valuation is correct? long as he lives. For Philippine estate tax purposes, how
a. The preference shares will be valued using the much will be included in determining gross estate?
a. P500,000 c. P800,000
arithmetic mean between the highest and lowest
b. P1,200,000 d. P0
quotation at the date nearest the date of death, if
none is available on the date of death itself. 27. Based on the preceding number, if the fair market value
b. The preference shares will be valued based on their of the property at the time of death is only P600,000, how
book value. much will form part of gross estate?
c. The preference shares will be valued based on their a. P500,000 c. P800,000
par value. b. P1,200,000 d. P0

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28. Vlad died on October 20, 2018. During his lifetime, upon Use the following data for the next two questions:
knowing that he had Stage 4 cancer, sold his Pedro, married to Susan, died leaving the following:
Lamborghini car to his son for P4,000,000. The fair Car acquired before marriage by Pedro P300,000
market value of the car at the time of sale is P3,000,000
while it is already valued at P5,000,000 at the time of Car acquired before marriage by Susan 450,000
death. The amount that will be added to gross estate is:
a. P1,000,000 c. P2,000,000 House and lot acquired during marriage 1,500,000
b. P5,000,000 d. nil
Jewelries of Susan 100,000
29. Based on the preceding number, if the consideration is
fictitious, how much will form part of gross estate? Personal properties inherited by Pedro 250,000
a. P1,000,000 c. P2,000,000 during marriage
b. P5,000,000 d. nil
Land inherited by Susan during marriage 1,000,000
30. Which of the following life insurance proceeds shall not
Rental income on land inherited by 200,000
be included in the computation of gross estate?
a. Beneficiary is the estate, executor or administrator Susan (25% of which was earned after
and the designation of the beneficiary is revocable; Pedro’s death)
b. Beneficiary is the estate, executor or administrator Benefits from SSS 350,000
and the designation of the beneficiary is irrevocable;
c. Beneficiary is other than the estate, executor or Retirement benefits 480,000
administrator and the designation of the beneficiary
is revocable; Proceeds of group insurance taken by 175,000
d. Beneficiary is other than the estate, executor or Juan’s employer
administrator and the designation of the beneficiary
is irrevocable. 35. How much is the correct gross estate if the property
relationship is conjugal partnership of gains?
31. The list provided below is not included in the gross estate a. P1,950,000 c. P2,600,000
of a decedent, except:
a. Share in common properties of the surviving spouse; b. P2,200,000 d. P3,600,000
b. Exclusive property of the surviving spouse;
c. Properties outside the Philippines of a non-resident
alien decedent; 36. How much is the correct gross estate if the property
d. Intangible personal property in the Philippines of a relationship is absolute community of property?
non-resident alien when the rule of Reciprocity a. P1,950,000 c. P2,600,000
applies.
b. P2,200,000 d. P3,600,000
32. Statement 1: In the absence of marriage settlements
executed before the marriage, the property relationship
between husband and wife shall be governed by local Use the following data for the next two (2) questions:
custom and by the provisions of law, respectively. The estate of Pedro, resident citizen decedent, married, who
Statement 2: Claims against insolvent persons may be died on April 1, 2018 are as follows:
charged against exclusive property
a. Only statement 1 is correct House and lot (Family Home) P14,000,000
b. Only statement 2 is correct The lot was acquired at a cost of
c. Both statements are correct P3,000,000 before marriage while
d. Both statements are incorrect the house was constructed on
March 1, 2018, during marriage, at
33. One of the following is a conjugal property of the spouses a cost of P10,000,000 from
a. That which is brought to the marriage as his or her partnership funds. The lot had a
own. fair market value of P4,000,000
b. That which each acquires during the marriage by after construction of the house.
inheritance. Other properties acquired during 6,000,000
c. The fruits of an exclusive property. marriage
d. That which is purchased with the exclusive property Jewelry inherited on Feb. 14, 2017, 2,500,000
of the wife. during marriage, then with a fair
market value of P1,300,000
34. One of the following is not a community property of the Property in U.S., received as gift 2,300,000
spouses during marriage from a friend on Jan.
a. Property inherited by the husband before marriage 12, 2017 (the applicable donor’s tax
b. Winnings in gambling was not paid by the donor)
c. Fruits of property inherited during the marriage Rental income on the above property 1,200,000
d. Fruits of property inherited before the marriage up to time of death
Expenses/Claims:
Funeral expenses 420,000
Judicial expenses 800,000

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Casualty losses incurred on Dec. 10, 600,000

2018 44. Which of the following is not deductible from the gross
Claims against the estate 1,600,000 estate of a decedent?
Medical expenses within 1 year prior 4,000,000 I. Income taxes on income received after death
to death, only half was receipted II. Property taxes not accrued before death
III. Estate Tax
a. I and II only c. All of the above
37. How much is the net taxable estate under Conjugal b. II and III only d. None of the above
Partnership of Gains?
a. P3,926,000 c. P3,426,000 45. The following are the requisites for vanishing deduction
b. P6,426,000 d. P1,348,000 to be allowable, except one.
a. The estate tax of the prior succession must have
been finally determined and paid.
38. How much is the net taxable estate under Absolute b. The present decedent died within five (5) years from
Community of Property? date of death of the prior decedent or donor.
a. P4,836,000 c. P1,174,000 c. The property with respect to which deduction is
b. (P2,174,000) d. P2,174,000 sought can be identified as having been received by
the present decedent from the prior decedent or
donor.
39. The following data were taken from the estate of Oslo: d. None of the above
§ Claims against Juan (insolvent), P100,000, fully
uncollectible. 46. Mr. Sabillo, resident decedent, married, died, leaving the
§ Claims against Manuel (insolvent), P200,000, 50% following properties:
collectible. Real and personal properties P 3,000,000
§ Claims against a person who absconded, P300,000. acquired during the marriage
§ House and lot inherited from his 2,000,000
Based on the data provided, how much should be father one year and 3 months
deducted from Pedro’s gross estate? before he died (fair market value
a. P600,000 c. P200,000 when inherited, P1,500,000) used
b. P500,000 d. nil as the decedent's family home
Car purchased with cash received 500,000
40. Which statement is incorrect about claims against as gift from his mother during the
insolvent persons? year he died
a. They must be included in the gross estate even if Cash (inclusive of P500,000 1,500,000
uncollectible. received as inheritance from the
b. They must be duly notarized as a rule. father)
c. The deduction is only the uncollectible portion.
d. The insolvency of the debtor must be established. The following obligations and expenses were also made
available:
41. Deductible claims against the estate or indebtedness in Claims against conjugal properties 600,000
respect of property may arise out of, except: Unpaid mortgage on the inherited 100,000
a. Contract house and lot (original mortgage was
b. Tort for P600,000)
c. Operation of law
d. None of the choices How much is the vanishing deduction?
a. P1,530,000 c. P1,000,000
b. P1,080,000 d. None of the choices
42. The following are the requisites in order for claims against
the decedent's estate may be deductible, except which
47. Teh Pok died on November 20, 2018. Some of the
one?
properties he left are the following:
a. They must be the personal debt of the decedent
Mode Market Value
b. They must be enforceable in court. of Date Date Date of
c. They may have been condoned prior to death. Asset Acquisition Acquired Acquired Death
d. If the loan was contracted 3 years before death, Land Purchase 7-3-14 500,000 350,000
submit statement showing the disposition of the Car Donation 10-2-17 800,000 980,000
proceeds.
Other information:
43. Mr. Pobre is in need of money to start a small business.
However, he has no property to secure a loan from a a) The gross estate of the decedent amounts to
bank so he sought the help of his good friend Mr. Rich. P3,000,000.
Mr. Rich then obtained a loan from Banco de Uro b) The car was mortgaged for P50,000 when it
amounting to 1million pesos secured by a real property was acquired and Teh Pok paid the same
worth 2million pesos to accommodate the request of Mr. before he died.
Pobre. If subsequent to securing the loan and delivering c) The allowable deductions totaled P325,000,
to Mr. Pobre the proceeds, Mr. Rich died, how much which includes judicial expenses of P30,000
gross estate should be reported? and funeral expenses of P150,000.
a. P1,000,000 c. P3,000,000
b. P2,000,000 d. nil

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Conjugal properties, Philippines 4,200,000

The vanishing deduction is – Conjugal properties, Abroad 18,200,000
a. P581,000 c. P648,783 Claims against insolvent persons 1,000,000
b. P571,000 d. P637,617 Funeral expenses 200,000
Judicial expenses 850,000
48. Which of the following statements is incorrect in Claims against the estate 1,500,000
connection with family home? Losses: occurring 8 mos. after death
a. Family home deduction shall be allowed only if such due to fire 1,700,000
family home is situated in the Philippines Donation mortis causa to Makati City
b. The total value of the family home must be included Hall 1,800,000
as part of the gross estate of the decedent Family Home (inc. above), located
c. For purposes of availing family home deduction, a abroad 10,000,000
person may constitute only one family home Standard deduction 10,000,000
d. Family home deduction may not be lower than
P10,000,000 The taxable net estate is:
a. P5,165,000 c. P4,165,000
49. Pedro died on Nov. 1, 2018 leaving a family home b. P4,665,000 d. P21,000,000
composed of the following: Conjugal house worth
P8,000,000, and the land which he exclusively owned 56. If decedent is a Filipino citizen, the taxable net estate is:
valued at P4,000,000. He also owns a vacation house in a. P11,490,000 c. P4,100,000
Baguio worth P7,000,000. b. P12,645,000 d. P7,900,000

The deductible amount of family home is: Next two (2) questions are based on the following:
a. P8,000,000 c. P4,000,000 A citizen-decedent died in 2018 with the following data:
b. P12,000,000 d. P10,000,000 Philippines USA
Gross Estate P14,200,000 P4,400,000
50. Based on the preceding number, if the house is also an
exclusive property, how much is the deductible family
home allowance? Allowable Deductions 6,400,000 2,200,000
a. P8,000,000 c. P4,000,000 (excluding standard
b. P12,000,000 d. P10,000,000 deduction)
Estate tax paid - 150,000
51. The following statements are correct regarding standard
deduction, except: 57. How much is the estate tax payable in the Philippines
a. A deduction in the amount of P5,000,000 shall be assuming the decedent is a non-resident citizen?
allowed as an additional deduction without need of a. P168,000 c. P150,000
substantiation. b. P132,000 d. P300,000
b. The full amount of P5,000,000 shall be allowed as
deduction for the benefit of the decedent. 58. How much is the estate tax payable in the Philippines
c. Standard deduction is not allowed to decedents who assuming the decedent is a non-resident alien?
are non-resident aliens. a. P168,000 c. P150,000
d. None of the above b. P438,000 d. P300,000

52. All of the following, except one, are not deductible from 59. Lola Trining died in 2019 leaving a gross estate
the gross estate of a non-resident alien: amounting to P150,000 only. No estate tax is due based
a. Casualty losses on the tax code. The gross estate is composed of a
b. Death benefits under RA 4917 second hand car worth P80,000, shares of stocks valued
c. Family home allowance at P50,000 and P20,000 time deposit. The administrator
d. Standard deduction believes that only notice of death should be filed since
the value of the gross estate is exempt from tax. What
53. One of the following cannot be claimed as deduction will you tell him?
from the gross estate of a non-resident alien decedent: a. Notice of death and estate tax return have to be filed
a. Vanishing deduction because the gross estate exceeds P20,000 and
b. Family home allowance when the gross estate consists of registered or
c. Share of surviving spouse registrable properties, estate tax is required to be
d. Transfer for public use filed regardless of the value of the gross estate.
b. Only notice of death is required to be filed because
54. In computing the estate tax, which of the following shall the gross estate exceeds P20,000. Estate tax return
not be allowed to claim tax credit for taxes paid abroad? is required to be filed only when the gross estate
a. Resident alien decedent exceeds P200,000 and/or there is estate tax due.
b. Non-resident alien decedent c. Neither notice of death nor estate tax return need to
c. Resident citizen decedent be filed in this particular case.
d. Non-resident citizen decedent d. Only estate tax return has to be filed.

55. Jiraiya, non-resident Japanese, died on May 1, 2018

leaving the following:
Exclusive properties, Philippines P5,600,000

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60. Which of the following is not correct? a. Office of the Commissioner.

a. When a compulsory heir is given by will less than his b. RDO where the administrator or executor is
legitime, the provisions of the will should be modified registered.
in such a way that he will receive his legitime. c. RDO where the decedent was domiciled at the
b. The CIR may examine the bank deposit of a time of his death.
decedent for the purpose of determining his gross d. Duly authorized treasurer of the city or
estate even if the estate did not request for a municipality where the decedent is domiciled at
compromise on the ground of financial incapacity. the time of his death.
c. The sharing of heirs in testamentary succession must
satisfy the rules on legitime. 63. In filing the estate tax return under the TRAIN Law, a CPA
d. If an extension to pay the estate tax is granted, the certificate is required when:
Commissioner or his duly authorized representative a. Gross estate exceeds P 2,000,000
may require the administrator, or executor, or b. Gross estate exceeds P 5,000,000
beneficiary, to furnish a bond in such amount c. Gross estate exceeds P10,000,000
exceeding double the amount of the tax and with d. Gross estate reaches P 2,000,000
such sureties as the Commissioner deems
necessary, conditioned upon the payment of said tax 64. A died leaving a house and lot to B on March 31, 2018
in accordance with the terms of the extension. which was questioned by C and it is under litigation but,
subsequently, the parties executed an extra-judicial
61. Statement 1: Any amount paid beyond the statutory due settlement. The last day for filing the estate tax return is
date of the tax, but within the extension period, shall be a. April 30, 2018 c. September 30, 2018
subject to interest but not to surcharge. b. April 30, 2019 d. March 31, 2019
Statement 2: No extension for payment of estate tax
shall be granted where the request for extension is by 65. The last day for the payment of estate tax may be
reason of negligence, intentional disregard of rules and extended, until;
regulations, or fraud on the part of the taxpayer. a. March 31, 2021 c. September 30, 2019
a. Only statement 1 is correct b. September 30, 2021 d. April 30, 2022
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect - END -

62. In case of a resident decedent, the administrator of

executor shall register the estate of the decedent and
secure new TIN from the the

PRACTICE EXAM
c. The decedent donated a property with the
1. Lolo Sot, 95 years old, was diagnosed of various condition that he/she will enjoy the fruits of such
ailments on January 1, 2018. Motivated by thought of while he/she is still alive.
death, he decided to dispose all his properties to his d. The decedent transferred a property to take
children and relatives. He executed a last will and effect after his/her death
testament disposing all his properties in the Philippines
to his children. On the same day, he made donations 3. Which statement is false about succession:
inter-vivos to his other relatives as to his properties in a. The successor can be made liable for the obligations
the United States. Lolo Sot died a month after of the decedent beyond the value of the asset he
disposing all his properties. Should the properties received.
donated by Lolo Sot to his other relatives be included in b. The successor inherits all the transmissible property
his gross estate upon his death? of a decedent including his liabilities.
a. No, because they were not his properties anymore c. In succession, fruits and credits maturing after the
at the time of death. death of the decedent pass to the heirs even if they
b. Yes, because the donations were donations mortis were not subjected to estate tax.
causa and should be governed by the rules on d. In succession, the successor can refuse the
estate taxation. inheritance.
c. No, if the donor’s tax had been paid already on the
donations. 4. An executor or administrator, after paying the estate
d. No, because they were not transfers in tax, and to escape a future liability for a deficiency
contemplation of death, since the donations were estate tax, must secure a written discharge from
not simultaneous with the execution of the last will personal liability from:
and testament. a. The heirs.
b. The Commissioner of Internal Revenue.
2. The following are subject to estate tax, except c. The court where the estate was being settled.
a. While still alive, the decedent donated property d. Need not secure a written discharge as long as he
where the donation will take effect at the time of has a receipt on payment of the estate tax.
his death.
b. The decedent transferred a property in the 5. It is a well settled rule that estate taxation is governed
regular course of the business operation. by the statute in force at the time of:

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a. Creation of the last will testament or death of the 12. Which of the following statements is correct?
decedent in case of intestate succession a. There shall not be transferred to any new owner in
b. Death of the decedent the books of any corporation, sociedad anonima,
partnership, business, or industry organized or
c. Filing of estate tax return
established in the Philippines any share, obligation,
d. Either letter “b” or “c” whichever will result to higher bond or right by way of gift inter-vivos or mortis
estate tax liability causa, legacy or inheritance, unless an eCAR is
issued by the Commissioner or his duly authorize
6. Who among the following transferors is not liable for representative.
estate tax on the property transferred during his b. In instances where the deposit accounts have been
lifetime? duly included in the gross estate of the decedent and
a. The testator who bequeaths property to his heirs in a the estate tax due thereon paid, the executor,
last will and testament executed and probated during administrator, or any of the legal heirs shall present
his lifetime. the eCAR issued for the said estate prior to
b. The donor who reserves his right to amend or revoke withdrawing from the bank deposit account.
the donation of property in favor of the donee. c. The withdrawal describe in letter b shall no longer be
c. The donee of an appointed property who is required subject to the 6% withholding tax by the bank.
under a power of appointment to transfer such d. All of the above
property upon death to his eldest child.
d. The transferor of personal property who sold it for 13. Statement 1: If a bank has knowledge of the death of a
insufficient consideration. person, who maintained a bank account alone, or jointly
with another, it shall allow the withdrawal from said
7. The following are transactions and acquisitions exempt deposit account, subject to a final withholding tax of 6%
from transfer tax, except of the amount to be withdrawn, provided, that the
a. Transmission from the first heir or donee in favor of withdrawal shall only be made within one year from the
another beneficiary in accordance with the desire of date of said decedent.
the predecessor Statement 2: In all cases, the final tax withheld shall not
b. Transmission or delivery of the inheritance or legacy be refunded, or credited on the tax due, on the net
by the fiduciary heir or legatee to the fideicommissary taxable estate of the decedent.
c. The merger of usufruct in the owner of the naked title a. Only statement 1 is correct
d. All bequests, devises, legacies or transfers to social b. Only statement 2 is correct
welfare, cultural and charitable institutions c. Both statements are correct
d. Both statements are incorrect
8. If the decedent is married under the conjugal
partnership of gains, vanishing deduction shall be 14. Mr. Nakalimot Huminga, head of family, died on January
chargeable against? 15, 2018, leaving the following properties and
a. Exclusive Properties obligations:
b. Conjugal Properties Cash in bank, 50%, donated mortis
c. Either Exclusive Properties or Conjugal Properties causa to Natl Govt;50-% to Q.C. gov’t P300,000
d. Neither Exclusive nor Conjugal Properties House and lot in Makati, F. Home 1,500,000
Personal properties 1,500,000
9. If the decedent is married under absolute community of Farm lot 2,825,000
property, vanishing deduction shall be chargeable Claim against an insolvent debtor 225,000
against? Transfer in contemplation of death 1,500,000
a. Exclusive properties (gratuitous)
b. Conjugal properties Transfer passing under special power of 75,000
c. Either exclusive or conjugal properties appointment
d. Neither exclusive nor conjugal properties Deductions claimed:
Funeral expenses 575,000
10. Ded Nha, a citizen of the Philippines and resident of Judicial expenses 67,500
Manila died intestate on November 2, 2018. Among his Donation mortis causa to Quezon City 150,000
gross estate are properties acquired through public sale government
of properties left by Bernardo who died 4½ years ago. Unpaid mortgage on the farm lot 75,000
What percentage of deduction will be used in Medical expenses (included in the 225,000
computing the amount of vanishing deduction? funeral expenses incurred within the 1
a. 60% c. 20% year period with receipts)
b. 40% d. nil
The farm lot was inherited 5 ½ years ago by the decedent
11. Can the estate tax be paid in installment? before his death with a value then of P575,000 and a
a. Yes, in case the available cash of the estate is mortgage indebtedness of P150,000.
not sufficient to pay its estate tax liability.
b. Yes, at the option of the heirs with corresponding The taxable net estate is:
interest charges. a. P3,757,500 c. P2,757,500
c. No, tax is the lifeblood of the State, hence, b. P4,982,500 d. P750,000
collection cannot be delayed under any
circumstance.
d. None of the above

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TAXATION | TAX.102—ESTATE TAX

Claims against the estate 1,000,000

15. Mr. John Go Lo, resident citizen, died on November 10, Unpaid Mortgage 3,500,000
2019 with the following relevant data for filing the estate Unpaid Real Estate Tax 500,000
tax return:
REQUIREMENT: Fill up the form based on the above data.
Residence of Mr Go: 1008 P. Noval Street, Sampaloc, Manila
TIN of Mr. Go: 123-456-789-0000
TIN of Estate of Mr. Go: 654-321-987-0000
Executor: Mr. Honey Sy Ga
TIN: 987-123-654-00000
Residece of Administrator: Dela Rosa St. Brgy. San Lorenzo,
Quezon City

Industrial Lot, Exclusive (FMV 2M) 3,000,000

Unpaid Mortgage, Exclusive 1,000,000
Family Lot, Conjugal (FMV 10M) 9,000,000
Family House, Conjugal 5,000,000
DMCI Homes, Inc., Conjugal
(Listed, 5,000 shares) 5,000,000
Cash in Eastwest Bank
(Saving Account No. 1986-1056-37) 8,000,000

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