Explain the significance of the following topics, classification of decedents, its

situs, its valuation, and the importance of classifying the property.

The decedent classification is important because before you set out to calculate your tax liability, you
need to understand the taxpayer category to which you belong. Different categories of taxpayers have to
pay taxes at different rates according to their specified slab rate. Therefore, it is very important to know
the different types of taxpayers and the appropriate tax slabs. The taxation situs is critical in determining
whether or not a state has jurisdiction over taxation, especially with regard to non-residents or foreign
individuals or corporations that are taxed only on Philippine-sourced income. Valuations are required for
several purposes including buying and selling property, assessing progress, monitoring the level of
property performance, loan security, tax matters, company accounts and restitution of insurance. The
classification of property into immovable or movable does not assume its importance from the fact of
mobility or immobility, but from the fact that various provisions of the law govern the acquisition,
ownership, disposition, loss and registration of immovable and transferable. For instance, the donation
of real property, such as land must be in a public instrument or the alienation will not be valid even
between the parties of the transaction. A well-defined land classification is necessary because the use of
a particular tract of land can correspond to major price differences. For example, the price of the land on
which dwellings are based can vary significantly with agricultural land.

The term capital assets includes: *

=Real property not used in the trade or business of the taxpayer.

In March 2019, Tonette, who is fond of jewelries, bought a diamond ring for
P750, 000.00, a bracelet for P250,000.00, a necklace for P500,000.00, and
a brooch for P500,000.00. Tonette derives income from the exercise of her
profession as a licensed CPA. In October 2019, Tonette sold her diamond
ring, bracelet, and necklace for only P1.25 million incurring a loss of P250,
000.00. She used the P1.25 million to buy a solo diamond ring in November
2019 which she sold for P1.5 million in September 2020. Tonette had no
other transaction in jewelry in 2020. Which among the following describes
the tax implications arising from the above transactions? *
=Tonette may carry over and deduct her 2019 loss from her 2020 gain.

Which among the following concepts of taxation is the basis for the situs of
income taxation? *
=Symbiotic relation in taxation
Jonil was a stockholder of Adelyne Corporation. He owned shares of stocks
which he acquired five years ago at a cost of P100, 000. Adeyne
Corporation was dissolved. He received a liquidating dividend of P140, 000.
The gain subject to income tax is: *
=A capital gain to consider is P20, 000.

The following, except one, may claim personal exemptions: *

=Non-resident alien not engage in trades or business in the Philippines.

No person shall be imprisoned for debt of non-payment of poll tax. This is

a/an – *
=Constitutional limitation

What should the BIR do when the prescriptive period for the assessment of
a tax deficiency is about to prescribe but the taxpayer has not yet complied
with the BIR requirements for the production of books of accounts and other
records to substantiate the claimed deductions, exemptions or credits? *
=Issue a jeopardy assessment coupled with a letter of demand.

Which statement wrong? Research and development cost: *

=May be claimed as an outright deduction from gross income.

If a general professional partnership is on the accrual method of

accounting, and a partner, on his own transactions, is on the cash method
of accounting, in the partner’s determination of his taxable income for a
year: *
=He can consolidate his share in the net income of the partnership, determined by
the partnership under the accrual method, with his own income determined under the
cash method.
Recovery of bad debt written off by a taxpayer:No.1: P20,000 from accounts
written off in a year which had a net income of P200,000 before write-off
(write-off for the year was P20,000). No. 2: P5,000 from accounts written off
in a year which had a net loss before write-off of P36,000 (write-off for the
year was P5,000).No. 3: P10,000 from accounts written off in a year which
had a net loss income of P8,000 before write off and a write off for P12,000.
The income from the bad debt recovery is: *
=P35,000.

The amount of informer’s reward shall be equivalent to – *

=10% of the amount recovered or P1, 000, 000 per case, whichever is lower.

Which statement is wrong? The fringe benefit tax is: *

=Imposed on the employee.

Mr. D works as a minimum wage earner in an advertising firm in Makati.

During the year, he received P10, 000 a month as salary or a total of P120,
000. In addition he also received 13th month pay, Christmas bonus,
productivity bonus, midyear bonus and 14th month pay amounting to P30,
000. The total deductions for his SSS premiums, Medicare, Pag-ibig, and
Union dues amounted to P5, 000. Mr. D’s taxable income if he is single is – *
=P65, 000

Journal entry: (Debit) Fringe benefit expense, P389, 000 :(Debit) Fringe
benefit tax expense, P 136, 000 :(Credit) Cash, P389, 000: (Credit) Fringe
benefit tax payable, P 136, 000. Means that the grossed-up monetary value
of the fringe benefits to supervisory personnel had a gross monetary value
of: *
=P425,000.
Keyrand, Inc., a Philippine corporation, sold through the local stock
exchange 10,000 PLDT shares that it bought 2 years ago. Keyrand sold the
shares for P2 million and realized a net gain of P200, 000.00. How shall it
pay tax on the transaction? *
=It shall pay a tax of one-half of 1% of the P2 million gross sales.

Pierre de Savigny, a Frenchman, arrived in the Philippines on January 1,

2020 and continued to live and engage in business in the Philippines. He
went on a tour of Southeast Asia from August 1 to November 5, 2020. He
returned to the Philippines on November 6, 2020 and stayed until April 15,
2021 when he returned to France. He earned during his stay in the
Philippines a gross income of P3 million from his investments in the country.
For the year 2020, Pierre’s taxable status is that of *
=A non-resident alien engaged in trade or business in the Philippines.

Delinquency is the failure of the taxpayer to pay the tax on the date fixed by law or
indicated in the assessment notice or letter of demand while that of deficiency tax is
the amount still due and collectible from a taxpayer upon audit or investigation. *
=True

The following are the elements of double taxation in its strict sense, except *
=Taxation with the same tax rate

Who is not an agent of the BIR Commissioner in collecting taxes? *

=Municipal/City mayors for collection of local taxes.

Minimum Wage Earners (MWEs) receiving “other benefits” exceeding the P90,000 limit
shall be *
=Taxable on the excess benefits as well as his salaries, wages and allowances, just like an
employee receiving compensation income beyond the statutory minimum wage.
Under the basic principle of a sound taxation system, the government should not incur
a deficit *
=Fiscal adequacy

If a corporation transfers to its employees its own stock as remuneration for services
rendered by the employee the amount of such remuneration is the *
=Fair market value of the stock at the time they were given to the employee.

Which of the following is not income?

=Gain from capital

A method of accounting where income is reported in the year it is collected; actually or

constructively. *
=Cash basis

For filing a false and fraudulent return or failure or omission to file return, a surcharge
is imposed. Which one of the following is correct? *
=50% as civil penalty

Which of the following is not within the scope of tax legislation? *

=Assessment of tax.

The following are the basic guidelines in interpreting tax laws and ordinances, except *
=In the absence of clear intention, tax laws have retroactive effect.

What constitutes prima facie evidence of a false or fraudulent return? *

=A claim of deduction in an amount exceeding 30% of actual deduction constitutes overstatement
of deductions.

Which statement is wrong? A non-interest-bearing promissory note received of

personal services rendered: *
=Will not be income until collected.

A tax exclusion is defined as *

=Income received but which is not part of the gross income as it is exempted by law or by treaty.
What is the correct treatment of advance payment made by the lessee to the lessor? I.
If the advance payment represents loan, the amount is part of the lessor’s taxable
income. II. If the advance payment represents security deposit, the amount is part of
the lessor’s taxable income. III. If the advance payment representing loan is applied to
unpaid rent, the amount is part of the lessor’s taxable income. IV. Prepaid rent must be
reported in full in the year of receipt. *
=III and IV only

Which of the following is not gross compensation income?

=Salary of P25,000 of an employee.

Which of the following is taxable? *

=Retirement pay received from a benefit plan registered with the Bureau of Internal Revenue
where at the time the employee retired he was 55 years of age, retiring from employment for the
first time in his life, and was employed with the employer from whom retiring for 6 years prior to
retirement;

Which of the following is not a purpose of taxation? *

=To expropriate private property for the promotion of general welfare.

The e-filing of tax returns and e-payment systems are manifestations of *

=Administrative feasibility

Financial income is the result of the application of generally accepted accounting

principles (GAAP). Taxable income is computed by applying the income tax provisions.
In case of conflict between GAAP and tax laws: *
=Tax laws shall prevail GAAP.

Which of the following is not an element or a basic principle of a sound tax system? *
=The tax imposed must be regressive in character.

The following are the sources of taxation laws or ordinances, except: *

=Contract and agreements
A tax imposed for a public purpose. Which of the following is not a public purpose?
=None of the above

Following are the powers of the BIR Commissioner, except:

=To make assessment and prescribe additional requirements for tax administration and

enforcement.

Which of the following cannot be claimed as deduction by an individual

earning purely compensation income? *
Basic Personal Exemption
Optional Standard Deduction
Additional Personal Exemption
Premium payments on health and/or hospitalization insurance

Which of the following violation cannot be subject to compromise

penalties? *
=Keeping two sets of books of accounts or records.

In computing gain or loss from the sale or other disposition of property

acquired as gift or donation, the basis of cost shall be: *
The latest inventory value.
The purchase price plus expenses of acquisition.
The fair market value as of the date of acquisition.
The same as it would be in the hands of the donor.

Which of the following is not an income tax on corporation? *

Gross income tax.
Stock transaction tax.
Minimum corporate income tax.
Normal tax.

Which statement is wrong? The deduction for premiums on hospitalization

and health insurance is: ( based on the old law) *
Not to exceed P200 per month.
Not to exceed P2, 400 a year per family.
Not allowed if the family income exceeds P250, 000.
In the case of married persons, can be claimed by either spouse.

Dividend received from a foreign corporation shall be subject to withholding

income tax if: *
In all cases where the foreign corporation had business in the Philippines.
In all cases where the foreign corporation engaged in business in the Philippines had
more than fifty percent of its world gross income for the three-year period preceding
the declaration of dividend derived from Philippine sources.
In all cases where the foreign corporation engaged in business in the Philippines had
more than eighty-five percent of its world gross income for the three-year preceding
the declaration of dividend derived from Philippine sources.
None of the above.

Which is correct? When it takes more than one year from the time of
planting to the time of harvesting and selling, income may be reported
under the crop year method, under which, deductions for expenses shall be
allowed in the year that the income from the crop is realized. *
There is no definite accounting period.
This is still an accounting period of twelve months.
There are two accounting periods, one, a one-year period, and the other, a less-than-
one-year accounting period.
This is an accounting period of more than twelve months.

The income tax return of a parent includes the income of an unmarried

child: *
If the child is minor and the income was derived from property received as gift from a
living parent, where the donor’s tax was not paid.
If the child is minor and the income was derived from his labor.
If the child is minor and the income was derived from property inherited by the child,
where the estate tax was paid.
If the child was minor and the income was derived from property received as gift from
the living parent, where the donor’s tax was paid.

One of the following is NOT creditable against the total computed tax per
ITR. *
Foreign income tax paid by resident citizen.
Income tax paid for the first three quarters for the business income earned.
Creditable withholding tax on compensation.
Final withholding tax.

Which of the following statements is correct? *

Amount received as return of insurance premiums is not taxable regardless of the
amount paid by the insurance.
Actual damages paid to the victim are not taxable including payment for lost salary or
income.
Moral and exemplary damages paid to the victim out of a vehicular accident are not
taxable.
Moral and exemplary damages paid due to breach of contract in bad faith are also not
taxable.

Fringe benefits not subject to fringe benefits tax include which of the
following? *
De minimis benefits.
Fringe benefits which are authorized and exempted from Income Tax under the Code
or under any special law.
Contributions of the employer for the benefit of the employee to retirement,
insurance and hospitalization benefit plans.
Benefits given to the rank-and-file, whether granted under a collective bargaining
agreement or not.
All of the above.

Which of the following statements is wrong? *

A co-ownership where the activities of the co-owners are limited to the preservation
of property and collection of income from the property is not taxable as a corporation.
A consortium for energy operations pursuant to an operating consortium agreement
under a service contract with the government is not taxable as a corporation.
A general partnership in trade is not taxable as a corporation.
A joint venture for undertaking construction projects is not taxable as a corporation.

Deferred payment method of reporting income on an installment sale is

available to a taxpayer if, there being a requirement of the law on the ratio
of initial payments to the selling price, the initial payments on the sale: *
Regardless of the ratio of initial payments to the selling price.
Do not exceed 25% of the selling price.
Do not exceed 25% of the contract price.
Exceed 25% of the selling price.

The personal exemption of the non-resident alien engaged in trade or

business in the Philippines is equal to that allowed by: *
The National Internal Revenue Code to a citizen or resident.
The income tax law of his country allows to a citizen of the Philippines not residing
there or the amount provided by the NIRC to a citizen or resident alien whichever is
higher.
The income tax law of his country to a citizen of the Philippines not residing there or
the amount provided by the NIRC to a citizen or resident, whichever is lower.
The income tax law of his country to a citizen of the Philippines not residing there.
Which statement is wrong? Cancellation of indebtedness: *
Has no tax significance.
May not bring about the income tax, but bring about the donor’s tax;
May result in dividend income subject to income tax;
May bring about the donor’s tax, but not bring about the income tax;

Which of the following taxpayers may be allowed to claim losses from wash
sales as deductions? *
Dealer in securities
Dealer in personal properties
Dealer in real properties
Investor in share of stocks

Which statement is wrong? The gross income tax of the corporation is: *
15% of gross income.
15% of gross profit from sales.
15% of gross sales.
15% of gross receipts.

Which of the following fringe benefit is not subject to the fringe benefits
tax? *
Expense account.
Contributions of the employer for the benefit of the employee to retirement,
insurance and hospitalization benefit plans.
Vehicle of any kind.
Housing.

In cases of deduction and exemption on income tax return doubts shall be

resolved: *
Liberally in favor of the employer.
Liberally in favor of the taxpayer.
Strictly against the taxpayer.
Strictly against the government.

Acquisition of residential property and ownership is being transferred in the

name of the employees. *
MV = 5% (FMV or ZV, whichever is higher) X 50%)
MV = 5% X AC X 50%
MV = FMV or ZV, whichever is higher
MV = Depreciation value of the property

Which of the following government bodies, in which a decision on the

protested assessment is reviewed, is a quasi-judicial body? *
Court of Tax Appeals, reviewing a decision of the Bureau of Internal Revenue.
Court of Appeals, reviewing a decision on questions of facts by the Court of Tax
Appeals.
Bureau of Internal Revenue, reviewing an assessment made.
Supreme Court, reviewing a decision on questions of facts by the Court of Appeals.

One of the following statements is correct. A choice by an individual of the

Optional Standard Deductions means that: *
His income tax return need not be accompanied by financial statements.
His choice can still be changed by filing an amended return.
He need not keep books of accounts.
He need not have records of gross income.

The following rules shall be observed when a capital gain or loss is

sustained by a corporation, except – *
Capital gain and losses are recognized to the extent of its full amount.
Capital losses are deductible only to the extent of capital gain.
There is a holding period.
Net capital losses are not deductible from ordinary gain or income but ordinary losses
are deductible from capital gain.

Mr. Bansuan bought a 200 square meter land at a cost of P500,000. He

leased the land to Mr. Sombria at an annual rental of P40,000. The term of
the contract of lease is 15 years. The contract of lease provides that Mr.
Sombria will construct a building which will belong to the lessor at the end
of the term of the lease or at the termination of the lease, the building was
constructed at a total cost of P400,000 and has an estimated useful life of
20 years which is the basis of a straight-line method of depreciation.
Assuming that Mr. Bansuan will spread his income over the term of the
contract of lease, the annual income of Mr. Bansuan is: *
P46,666.66.
P26,666.66.
P66,666.66.
P40,000.

Facilitates or privileges furnished or offered by an employer to his

employees that are offered or furnished by the employer merely as a means
of promoting the health, goodwill, contentment or efficiency of his
employees *
Grossed – up monetary value.
Fringe benefits.
Fringe benefit tax.
De minimis benefits.

One of the characteristics of tax is that it is generally – *

Optional
Assignable
Based on contract
Payable in money

Which statement is wrong? The net operating loss carry-over (NOLCO) is: *
Available to a domestic corporation.
Not available to a general professional partnership in the Philippines.
Available to an individual in business in the Philippines.
Available to a registered general partnership in business in the Philippines.

What is the rule on the taxability of income that a government educational

institution derives from its school operations? Such income is *
Exempt from income taxation in the same manner as government-owned and
controlled corporations.
Exempt from income taxation if it is actually, directly, and exclusively used for
educational purposes.
Subject to 10% tax on its net taxable income as if it is a proprietary educational
institution.
Subject to the ordinary income tax rates with respect to incomes derived from
educational activities.

A fraudulent tax return or failure to file a tax return may be assessed, or

proceeding in court for the collection of such ta may be filed without
assessment at any time within – *
Five years after the discovery of the falsity, fraud or omission.
Three years after the discovery of the falsity, fraud or omission.
Two years after the discovery of the falsity, fraud or omission.
Ten years after the discovery of the falsity, fraud or omission.

Which statement is correct? In case of an assessment of a tax: *

The assessment shall include only the tax proper.
A protest should be filed by the taxpayer, otherwise the assessment becomes final
and cannot be questioned anymore in court.
The assessment should be made by the Bureau of Internal Revenue within five years
from the date of filing the return.
A protest must be filed by the taxpayer any time before the Bureau of Internal
Revenue collects the tax.
Which of the following may qualify a taxpayer individual for additional
exemptions? ( Based on the old law) *
Step-brother
Son in law
Godson
Adopted child

The Bureau of Internal Revenue is under the supervision and control of the BIR
Commissioner. *
1 point

True
False

Corporation contingently credited stock bonus, but the stock is not available to the
employee until some future date is an example of receipt of income *
1 point

True
False

The Commissioner of Internal Revenue shall have the power to inquire into a
taxpayer’s bank deposit in relation to all internal revenue taxes. *
1 point

True
False

In case of conflict between a revenue regulation and the provision of the National
Internal Revenue Code, the latter shall prevail *
1 point

True
False

A change in accounting period does not require prior approval of the Commissioner of
Internal Revenue as long as the necessary income tax returns for the different
accounting periods are filed.
1 point

True
False

Clear selection
Representation and traveling allowances that are fixed in amount are not taxable. *
1 point

True
False

Minimum wage earners who received additional compensation such as commissions

and honoraria shall be subject to tax on their entire income. *
1 point

True
False

Income derived from a unlawful source is always taxable. *

1 point

True
False

The property of an educational institution operated by a religious order is exempt from

property tax, but its income is subject to income tax. *
1 point

True
False

The power of taxation is shared by the legislative ad executive departments of

government. *
1 point

True
False

A fundamental rule in taxation is that the property of one country may not be taxed by
another country is known as international inhibition. *
1 point

True
False

There can be no tax unless there is a law imposing the tax is consistent with the
doctrine or principle of uniformity of taxation. *
1 point

True
False
Because the power of taxation is inherent in the state, the inherent limitations on the
power of taxation always applies. *
1 point

True
False

The granting of tax exemptions and other tax incentives to taxpayer is not a power
vested in the Bureau of Internal Revenue. *
1 point

True
False

The power of tax cannot be delegated to the executive department of the National
Government. *
1 point

True
False

Tax evasion, which is the use of means to escape a tax that is already a liability, is
prohibited by law, and is punishable. *
1 point

True
False

Damages recovered for violation of copyright is not taxable

1 point

True
False

Clear selection

A tax that is allowed by law to be passed on by a taxpayer to another is called an

indirect tax.
1 point

True
False

Clear selection

Schedular system of income taxation means all types of income are added together to
arrive at gross income. *
1 point

True
False

Which of the following is not an inherent limitation of the power of taxation?

1 point

Territoriality
International Comity
Public purpose
Veto power of the President

For business tax purposes in the Philippines, in the course of trade or business therein
means: *
1 point

Regular conduct or pursuit of a commercial or an ecxonomic activity by the Government;

Regular conduct or pursuit of a commercial or an activity by an individual or a stock private
organization
Regular conduct or pursuit of a commercial or an economic activity by a non-stock, non-profit
private organization.
Isolated services rendered by non-resident foreign persons.
All of the above.
None of the above.

The estate tax accrues at the moment of death of the decedent. *

1 point

=True
False

In estate taxation, the taxpayer is the decedent. *

1 point

True
=False

An essentially mortis causa transfer which has been titled as inter vivos
shall be subject to donor’s tax. *
1 point
=True
False

Estate tax is more of a revenue tax rather than a special tax. *

1 point

=True
False

The heir or beneficiary has the primary obligation to pay the estate tax. *
1 point

=True
False

The liability of the heir in the payment of the tax shall in no case exceed the
value of his share in the inheritance. *
1 point

=True
False

Real estate abroad is included in the gross estate of a decedent who is a

nonresident alien. *
1 point

True
=False

Shares of stock being intangible property shall be included in the

decedent’s gross estate wherever situated. *
1 point

True
=False

Casualty losses are deductible from the gross estate is such loss was
incurred not later than the last day for the paymet of the estate tax. *
1 point

True
=False

The power of axation may be execised by the government, its political

subdivisions and public utilities. *
1 point

True
=False

Estate tax is a tax levied upon the transfer of the gross gift of a decedent to
the heirs. *
0 points

=True
False

Estate tax is a tax levied upon the transfer of the gross gift of a decedent to
the heirs. *
1 point

=True
False

A testatment that is entirely written, dated and signed by the testator

known as holographic will. *
1 point

=True
False

A successor to the succession, either by the provision of a will or by

operation of law known as testator. *
=False

An act whereby a person is permitted with the formalities prescribed by law,

to control to a certain degree the disposition of his estate, to take effect
after his death known as power of appointment. *
=False

The decedent was motivated by the thought of death to transfer the

property known as transfer in contemplation of death *
=True

The following are the motives of the taxpayer that preclude the transfer in
contemplation of death, except one *
=To avoid payment of estate tax.

For estate tax purposes, the estate of the decedent shall be valued at the
time *
=of death of the decedent
Which of the following donations is not included included as part of gross
estate? *
=transfers under special power of appointment

Proceeds of life insurance includible in the taxable gross estate *

=Amount receivable by any beneficiary revocably designated in the insurance policy.

The decedent reserves for himself the power to alter, amend, revoke or
even terminate such transfer. *
=Revocable transfer

An heir to a particular personal property given by virtue of a will *

=Legatee

There is no will in the transmission of properties, or if there is a will, the

same is void or nobody succeeds in the will. *
=Legal succession

A mode of acquisition by virtue of which property, rights and obligatios to

the extent of the value of the inheritance, of a person are transmitted
through his death to another or others either by will or by operation of
law. *
=Succession

The power of the state too enact such laws in relation to persons and
property as may promote public health, public morals, public safety and the
general welfare of the people *
=police power

In case of ambiguity, tax laws shall be interpreted *

=Liberally in favor of the taxpayer.

Jenny Haw died leaving her son, Fin Haw, as sole heir to her residential
house and lot as her only property. Which of the following is not element of
the succession on her property if the administrator of her estate is Mama
Haw. *
1 point

Jenny Haw
House and lot
Fin Haw
=Mama Haw

Inheritance does not include – *

1 point

obligations not extinguishedby death

rights not extinguished by death
=public office
property

Which of the following statements is correct about Estate tax? Estate tax *
1 point

a property tax because it is imposed on the property transmitted by the decedent to

his heirs.
an indirect tax because the burden of paying the tax is shifted on the executor or any
of the heirs of the decedent.
=an excise tax because it is imposed on the privilege exercised to transfer ownership
over the estate.
a poll tax because it is also imposed on residents of the Philippines whether Filipino
citizens or not.

Which of the following is not a distinction between estate tax and donor’s
tax? *
1 point

=The tax imposed is an excise tax

Extension for payment
Effectivity of the transfer of property.
Period for the filing of return.

In 2005, Peter gave a loan of P150,000 to Jen, his secretary. In 2018, as an

act of generosity, Peter condoned the debt of Jen in his last will and
testament. Peter died in 2021. The condonation of the debt of Jen is *
1 point

A donation intervivos subject to donor’s tax.

A payment or compensation for the services rendered
A deduction from the gross estate of Peter.
=A donation mortis causa subject to estate tax.
Kevin Louisky, died in the Philippines. The properties situated in his own
country will not be subject to estate tax in the Philippines if he was a *
1 point

Resident citizen
Resident alien
Nonresident citizen
=Nonresident alien

Which of the following is an intangible personal property within?A.

Franchise exercised in the United States. B. Shares or rights in a domestic
business partnership. C. Bonds issued by an American corporation D.
Stocks issued by foreign corporation with business situs in the Philippines. *
1 point

B only
=B and D
All of the items given
None of the items given

An example of intangible personal property without is *

1 point

Domestic shares of stock

Foreign shares, 85% of the business of the corporation is in the Philippines.
Foreign shares with business situs in the Philippines
=Foreign shares, certificate of stock are kept in Makati

On February 1, 2020, Derick prepared a will on his property in favor of his

children. He died September 10. 2020 survived by his children Jessica and
Conrado who immediately took over the possession and made an
extrajudicial partition on September 20, 2020 but without registering the
same in the Register of Deeds. Jessica sold the property to Conrado on may
7, 2021 inorder to finance the expenses for his hospitalization. Which date
should be used as the basis in valuing the property for purposes of
computing the estate tax? *
1 point

February 1, 2020
=September 10, 2020
September 20, 2020
May 7, 2021
Amounts received by the estate of the deceased, his executor or
administrator as an insurance under policy taken by the decedent upon his
own life is *
1 point

=excluded from the gross estate

part of the gross estate whether the beneficiary is revocable or irrevocable.
part of the gross estate if the beneficiary is revocable
part of the gross estate if the beneficiary is irrevocable

Proceeds of life insurance not payable to estate, executor or administrator

shall be excluded in the gross estate if the beneficiary appointed in the
policy is *
1 point

Revocable
Revocable or irrevocable
=Irrevocable
the executor

Which of the following items is deductible from the gross estate? *

1 point

Funeral expenses
Judicial expenses
Medical expenses
=Standard deduction

Three of the four items of deduction below are required to be included in

the gross estate. Which one is not? *
1 point

Standard deduction
Claims against insolvent persons
Benefits received under RA 4917
=The undiminished value of the property mortgaged.

One of the following is deductible as “Claims against the estate?” *

1 point

=An obligation contracted by the decedent one(1) day before he died.

An obligation of the decedent which prescribed while the decedent was still alive.
An obligation which was not reduced in writing under the Statutes of Fraud.
An obligation which shall be paid by the heirs.

A real property tax is payable *

1 point

in the city or municipality where the owner is domiciled.

in the place where the property is located
=anywhere in the Philipines.
in the revenue office where the property is located.

The following are the sources of tax laws, except one *

1 point

Legislations, tax treaties and tax ordinances

Judicial decisions
=Opinions of authors
Administrative rules and regulations

Which of the following statements is not correct? *

1 point

The rule of taxation shall be uniform and equitable.

Taxation may be used to implement the police power of the state.
Police power is superior to the non-impairment clause of the constitution.
=The salary of the justices of the Supreme Court are exempt from income tax.

Which of the following statements is correct? *

1 point

Non-payment of tax and debt is a ground for imprisonment.

The power to tax may include the power to destroy.
Provisions in the Philippine Constitution on taxation are grants of power.
=Lands and buildings being used actually, directly and exclusively for religious and
charitable purposes by churches and charitable institutions are exempt from income
tax and property taxes.

When the refund of a tax supposedly due to the taxpayer has already been
barred by prescription, and the said taxpayer is assessed with a tax at
present, the two taxes may be set-off with each other. This doctrine is
called *
1 point

Set-off doctrine
Doctrine of reciprocity
Tax sparing doctrine
=Equitable recoupment
Delinquency is the failure of the taxpayer to pay the tax on the date fixed
by law or indicated in the assessment notice or letter of demand while that
of deficiency tax is the amount still due and collectible from a taxpayer
upon audit or investigation. *
1/1
True

False

The Bureau of Internal Revenue is under the supervision and control of the
BIR Commissioner. *
0/1
True

False

Correct answer
False

Corporation contingently credited stock bonus, but the stock is not available
to the employee until some future date is an example of receipt of income *
1/1
True
False

The Commissioner of Internal Revenue shall have the power to inquire into
a taxpayer’s bank deposit in relation to all internal revenue taxes. *
0/1
True

False

Correct answer
False
In case of conflict between a revenue regulation and the provision of the
National Internal Revenue Code, the latter shall prevail *
0/1
True
False

Correct answer
True

A change in accounting period does not require prior approval of the

Commissioner of Internal Revenue as long as the necessary income tax
returns for the different accounting periods are filed.
1/1
True
False

Representation and traveling allowances that are fixed in amount are not
taxable. *
0/1
True

False

Correct answer
False

Minimum wage earners who received additional compensation such as

commissions and honoraria shall be subject to tax on their entire income. *
0/1
True
False

Correct answer
True
Income derived from a unlawful source is always taxable. *
1/1
True

False

The property of an educational institution operated by a religious order is

exempt from property tax, but its income is subject to income tax. *
1/1
True

False

The power of taxation is shared by the legislative ad executive departments

of government. *
1/1
True

False

A fundamental rule in taxation is that the property of one country may not
be taxed by another country is known as international inhibition. *
1/1
True
False

There can be no tax unless there is a law imposing the tax is consistent with
the doctrine or principle of uniformity of taxation. *
0/1
True

False

Correct answer
False

Because the power of taxation is inherent in the state, the inherent

limitations on the power of taxation always applies. *
0/1
True

False

Correct answer
False

The granting of tax exemptions and other tax incentives to taxpayer is not a
power vested in the Bureau of Internal Revenue. *
0/1
True
False

Correct answer
True

The power of tax cannot be delegated to the executive department of the

National Government. *
0/1
True
False

Correct answer
True

Tax evasion, which is the use of means to escape a tax that is already a
liability, is prohibited by law, and is punishable. *
0/1
True
False
Correct answer
True

Damages recovered for violation of copyright is not taxable

1/1
True
False

A tax that is allowed by law to be passed on by a taxpayer to another is

called an indirect tax.
0/1
True
False

Correct answer
True

Schedular system of income taxation means all types of income are added
together to arrive at gross income. *
0/1
True

False

Correct answer
False

Multiple Choice
19 of 30 points

The following are the elements of double taxation in its strict sense,
except *
1/1
Taxation for the same purpose
Taxation by the same governing authority
Taxation within the same taxable year
Taxation with the same tax rate

Who is not an agent of the BIR Commissioner in collecting taxes? *

1/1
The Commissioner of Customs and his subordinates for internal revenue taxed on
imported goods.
The head of the appropriate government office and his subordinate for collection of
energy tax.
Banks duly accredited by the BIR for receipt of internal revenue taxes.
Municipal/City mayors for collection of local taxes.

Minimum Wage Earners (MWEs) receiving “other benefits” exceeding the

P90,000 limit shall be *
0/1
Taxable on the excess benefits only.
Taxable on the excess benefits as well as his salaries, wages and allowances, just like
an employee receiving compensation income beyond the statutory minimum wage.
Exempt from income tax.

None of the above.

Correct answer
Taxable on the excess benefits only.

Under the basic principle of a sound taxation system, the government

should not incur a deficit *
1/1
Theoretical justice
Administrative feasibility
Fiscal adequacy

None of the above.

If a corporation transfers to its employees its own stock as remuneration for

services rendered by the employee the amount of such remuneration is
the *
0/1
Fair market value of the stock at the time they were given to the employee.

Fair market value of the stock at the time they were sold by the employee.
Fair market value of the stock at the time the services were rendered.
Par value of the stock.

Correct answer
Fair market value of the stock at the time the services were rendered.

Which of the following is not income?

0/1
Gain derived from a sale of asset
Return of capital
Gain from labor
Gain from capital

Correct answer
Return of capital

A method of accounting where income is reported in the year it is collected;

actually or constructively. *
1/1
Cash basis

Accrual basis
Crop basis
Installment

For filing a false and fraudulent return or failure or omission to file return, a
surcharge is imposed. Which one of the following is correct? *
1/1
25% as civil penalty
25% as criminal penalty
50% as criminal penalty
50% as civil penalty

Which of the following is not within the scope of tax legislation? *

1/1
Assessment of tax.

Fixing the impossible tax rate

Determining the purpose of the tax.
Determining the subject or object to be taxed.

Which of the following is not an inherent limitation of the power of taxation?

0/1
Territoriality
International Comity
Public purpose

Veto power of the President

Correct answer
Veto power of the President

For business tax purposes in the Philippines, in the course of trade or

business therein means: *
0/1
Regular conduct or pursuit of a commercial or an economic activity by the
Government;
Regular conduct or pursuit of a commercial or an activity by an individual or a stock
private organization
Regular conduct or pursuit of a commercial or an economic activity by a non-stock,
non-profit private organization.
Isolated services rendered by non-resident foreign persons.
All of the above.
None of the above.

Correct answer
All of the above.

The following are the basic guidelines in interpreting tax laws and
ordinances, except *
1/1
Tax laws have prospective application.
In case of doubts, tax laws are resolved in favor of the taxpayer.
In the absence of clear intention, tax laws have retroactive effect.

The burden of tax and exemption should be clearly indicated.

The basis of tax if debt has been cancelled as payment of services rendered
will be *
0/1
The fair market value of the debt cancelled.

The amount of cash supposed to be received for services rendered.

The fair market value of the services rendered.
The amount of obligation cancelled or omitted.

Correct answer
The amount of obligation cancelled or omitted.

What constitutes prima facie evidence of a false or fraudulent return? *

0/1
A substantial under declaration of taxable sales, income or receipts as determined by
the BIR commissioner.
Failure to report sales in an amount exceeding 30% of that declared per tax return
constitutes substantial under declaration of sales.
A claim of deduction in an amount exceeding 30% of actual deduction constitutes
overstatement of deductions.

All of the above.

Correct answer
All of the above.

Mr. Ben received payment of damages on account of physical injuries. The

damages recovered is treated as *
0/1
taxable if it represents return of capital.
taxable if it represents compensation for loss of income or profit.
taxable if it is intended to compensate for damages to property.
non-taxable if it represents compensation for loss of income or profit.

Correct answer
taxable if it represents compensation for loss of income or profit.
Which statement is wrong? A non-interest-bearing promissory note received
of personal services rendered: *
1/1
Will not result in income if received merely as security;
Will result in income if received in payment;
Is considered payment in kind;
Will not be income until collected.

A tax exclusion is defined as *

1/1
An item or amount which the law allows to be deducted from gross income in order to
arrive at net income.
The grant of immunity to particular persons or corporations from a tax which others
within the same taxing district are obliged to pay.
Income received but which is not part of the gross income as it is exempted by law or
by treaty.

A deduction from income tax due of any amount paid to a foreign country subject to
limitation.

What is the correct treatment of advance payment made by the lessee to

the lessor? I. If the advance payment represents loan, the amount is part of
the lessor’s taxable income. II. If the advance payment represents security
deposit, the amount is part of the lessor’s taxable income. III. If the
advance payment representing loan is applied to unpaid rent, the amount is
part of the lessor’s taxable income. IV. Prepaid rent must be reported in full
in the year of receipt. *
1/1
All of the above.
None of the above
I, II, III only
III and IV only

Which of the following is not gross compensation income?

0/1
Salary of P25,000 of an employee.
Salary of P25,000 of a partner of a general partnership in trade.
Bonus of P25,000 of an employee.
Honorarium of P25,000 of an employee who is a member of the board of directors of a
corporation.

Correct answer
Salary of P25,000 of a partner of a general partnership in trade.

Which of the following is taxable? *

1/1
Separation pay received by a 50-year old employee due to the retrenchment program
of the employer.
Retirement pay received from a benefit plan registered with the Bureau of Internal
Revenue where at the time the employee retired he was 55 years of age, retiring from
employment for the first time in his life, and was employed with the employer from
whom retiring for 6 years prior to retirement;

Social security benefit received by a balikbayan from employer abroad at the age of
35;
SSS and GSIS benefits.

Which statement is wrong? Cancellation of indebtedness: *

1/1
May result in dividend income subject to income tax;
May bring about the donor’s tax, but not bring about the income tax;
May not bring about the income tax, but bing about the donor’s tax;
Has no tax significance.

Mr. Y, an executive of a company, owed his employer P20,000. For a job

well done, his employer condoned his indebtedness, gave him a round trip
ticket abroad worth P20,000, and travel expenses of P10,000. Which
statement is wrong? *
0/1
The condonation of indebtedness did not result in income to Mr. Y because it is a gift;

The cost of the round trip ticket is fringe benefit to Mr. Y, and not taxable income of
him because he is a managerial employee so that the employer must have paid a
fringe benefit tax on it.
The travel expenses is fringe benefit to Mr. Y and not taxable income to him because
the employer must have paid a fringe benefit tax on it.
All the amount given to Mr. Y are taxable income to him.

Correct answer
All the amount given to Mr. Y are taxable income to him.

Which of the following is not a purpose of taxation? *

1/1
To reduce inequality of wealth.
To expropriate private property for the promotion of general welfare.

As protective tariff on imported goods to protect local producers against foreign

competitors.
To encourage the growth of home industries through the power use of tax exemptions
and tax incentives.

Raising revenue is the primary purpose of taxation, which of the following is

not one of the secondary purposes of taxation? *
1/1
Promotion of general welfare.
Reduction of social inequality.
Protection of foreign interests.

Encourage economic growth by granting incentives and exemptions.

The e-filing of tax returns and e-payment systems are manifestations of *

1/1
Theoretical justice
Administrative feasibility

Fiscal adequacy
All of the choices given

Financial income is the result of the application of generally accepted

accounting principles (GAAP). Taxable income is computed by applying the
income tax provisions. In case of conflict between GAAP and tax laws: *
1/1
The issue shall be resolved by the courts.
GAAP prevails over tax laws.
Both tax laws and GAAP shall be enforced;
Tax laws shall prevail GAAP.

Which of the following is not an element or a basic principle of a sound tax

system? *
1/1
The tax imposed must be regressive in character.

The tax should be imposed based on the taxpayer's ability to pay.

The law must be capable of simple, convenient and just application.
The source of income should be sufficient to meet the expenditures of government
regardless of the prevailing business conditions.

The following are the sources of taxation laws or ordinances, except: *

1/1
Judicial decisions
Contract and agreements

Philippine Constitution
Statutes or Presidential decrees

A tax imposed for a public purpose. Which of the following is not a public
purpose?
1/1
National defense
Public Education
Improvement of the sugar industry
None of the above

Following are the powers of the BIR Commissioner, except:

0/1
To make assessment and prescribe additional requirements for tax administration and
enforcement.

To obtain information and to summon, examine and take testimony of persons;

To register and accredit agents.
To promulgate laws.

Correct answer
To promulgate laws.

The estate tax accrues at the moment of death of the decedent. *

=True

In estate taxation, the taxpayer is the decedent. *

=False

An essentially mortis causa transfer which has been titled as inter vivos
shall be subject to donor’s tax. *
=False

Estate tax is more of a revenue tax rather than a special tax. *

=True

The heir or beneficiary has the primary obligation to pay the estate tax. *
=False

The liability of the heir in the payment of the tax shall in no case exceed the
value of his share in the inheritance. *
=True

Real estate abroad is included in the gross estate of a decedent who is a

nonresident alien. *
=False

Shares of stock being intangible property shall be included in the

decedent’s gross estate wherever situated. *
=False

Casualty losses are deductible from the gross estate is such loss was
incurred not later than the last day for the paymet of the estate tax. *
=True

The power of axation may be execised by the government, its political

subdivisions and public utilities. *
=False

Estate tax is a tax levied upon the transfer of the gross gift of a decedent to
the heirs. *
=False

A testatment that is entirely written, dated and signed by the testator

known as holographic will. *
=True

A successor to the succession, either by the provision of a will or by

operation of law known as testator. *
=False

An act whereby a person is permitted with the formalities prescribed by law,

to control to a certain degree the disposition of his estate, to take effect
after his death known as power of appointment. *
=False

The decedent was motivated by the thought of death to transfer the

property known as transfer in contemplation of death *
=True

Jenny Haw died leaving her son, Fin Haw, as sole heir to her residential
house and lot as her only property. Which of the following is not element of
the succession on her property if the administrator of her estate is Mama
Haw. *
=Mama Haw

Inheritance does not include – *

obligations not extinguishedby death
rights not extinguished by death
=public office

property
Which of the following statements is correct about Estate tax? Estate tax *
1/1
a property tax because it is imposed on the property transmitted by the decedent to
his heirs.
an indirect tax because the burden of paying the tax is shifted on the executor or any
of the heirs of the decedent.
=an excise tax because it is imposed on the privilege exercised to transfer ownership
over the estate.

a poll tax because it is also imposed on residents of the Philippines whether Filipino
citizens or not.

Which of the following is not a distinction between estate tax and donor’s
tax? *
1/1
=The tax imposed is an excise tax

Extension for payment

Effectivity of the transfer of property.
Period for the filing of return.

In 2005, Peter gave a loan of P150,000 to Jen, his secretary. In 2018, as an

act of generosity, Peter condoned the debt of Jen in his last will and
testament. Peter died in 2021. The condonation of the debt of Jen is *
=A donation mortis causa subject to estate tax.

The following are the motives of the taxpayer that preclude the transfer in
contemplation of death, except one *
1/1
To make dependents financially independent.
=To avoid payment of estate tax.

To save income and property taxes.

To relieve the taxpayer of the burden of management.

For estate tax purposes, the estate of the decedent shall be valued at the
time *
=of death of the decedent
Kevin Louisky, died in the Philippines. The properties situated in his own
country will not be subject to estate tax in the Philippines if he was a *
=Nonresident alien

Which of the following is an intangible personal property within?A.

Franchise exercised in the United States. B. Shares or rights in a domestic
business partnership. C. Bonds issued by an American corporation D.
Stocks issued by foreign corporation with business situs in the Philippines. *
=B and D

An example of intangible personal property without is *

=Foreign shares, certificate of stock are kept in Makati

Which of the following donations is not included included as part of gross

estate? *
1/1
revocable transfers
transfers with reservation of certain rights
=transfers under special power of appointment

transfer in contemplation of death

On February 1, 2020, Derick prepared a will on his property in favor of his

children. He died September 10. 2020 survived by his children Jessica and
Conrado who immediately took over the possession and made an
extrajudicial partition on September 20, 2020 but without registering the
same in the Register of Deeds. Jessica sold the property to Conrado on may
7, 2021 inorder to finance the expenses for his hospitalization. Which date
should be used as the basis in valuing the property for purposes of
computing the estate tax? *
=September 10, 2020

Amounts received by the estate of the deceased, his executor or

administrator as an insurance under policy taken by the decedent upon his
own life is *
=part of the gross estate whether the beneficiary is revocable or irrevocable.
Proceeds of life insurance not payable to estate, executor or administrator
shall be excluded in the gross estate if the beneficiary appointed in the
policy is *
=Irrevocable

Proceeds of life insurance includible in the taxable gross estate *

=Amount receivable by any beneficiary revocably designated in the insurance policy.

Which of the following items is deductible from the gross estate? *

1/1
Funeral expenses
Judicial expenses
Medical expenses
=Standard deduction

Three of the four items of deduction below are required to be included in

the gross estate. Which one is not? *
0/1
=Standard deduction
Claims against insolvent persons
Benefits received under RA 4917
The undiminished value of the property mortgaged.

Correct answer
Standard deduction

One of the following is deductible as “Claims against the estate?” *

1/1
=An obligation contracted by the decedent one(1) day before he died.

An obligation of the decedent which prescribed while the decedent was still alive.
An obligation which was not reduced in writing under the Statutes of Fraud.
An obligation which shall be paid by the heirs.

A real property tax is payable *

=in the place where the property is located
Which among the following concepts of taxation is the basis of the situs of
income taxation? *
1/1
Lifeblood doctrine of taxation
=Symbiotic relation in taxation

Compensatory purpose of taxation

Sumptuary purpose of taxation.

The following are the sources of tax laws, except one *

1/1
Legislations, tax treaties and tax ordinances
Judicial decisions
=Opinions of authors

Administrative rules and regulations

In case of ambiguity, tax laws shall be interpreted *

=Liberally in favor of the taxpayer.

Which of the following statements is not correct? *

1/1
The rule of taxation shall be uniform and equitable.
Taxation may be used to implement the police power of the state.
Police power is superior to the non-impairment clause of the constitution.
=The salary of the justices of the Supreme Court are exempt from income tax.

Which of the following statements is correct? *

0/1
Non-payment of tax and debt is a ground for imprisonment.
=The power to tax may include the power to destroy.
Provisions in the Philippine Constitution on taxation are grants of power.
Lands and buildings being used actually, directly and exclusively for religious and
charitable purposes by churches and charitable institutions are exempt from income
tax and property taxes.

Correct answer
The power to tax may include the power to destroy.
The power of the state too enact such laws in relation to persons and
property as may promote public health, public morals, public safety and the
general welfare of the people *
=police power

When the refund of a tax supposedly due to the taxpayer has already been
barred by prescription, and the said taxpayer is assessed with a tax at
present, the two taxes may be set-off with each other. This doctrine is
called *
=Equitable recoupment

The decedent reserves for himself the power to alter, amend, revoke or
even terminate such transfer. *
=Revocable transfer

An heir to a particular personal property given by virtue of a will *

=Legatee

There is no will in the transmission of properties, or if there is a will, the

same is void or nobody succeeds in the will. *
=Legal succession

A mode of acquisition by virtue of which property, rights and obligatios to

the extent of the value of the inheritance, of a person are transmitted
through his death to another or others either by will or by operation of
law. *
=Succession

Which of the following statements is not required to accompany the estate

tax return? *
1/1
Itemized assets with corresponding value
Itemized deductions from gross estate
Estate tax due and payable
Itemized income and expenses of the decedent.
Which of the following statements is false? If the decedent died in 2020 *
1/1
filing of the estate tax return must be made within one year from decedent’s death.
notice of death is required.

estate tax may be paid on installment but within 2 years from decedent’s death.
a CPA certificate is required if the gross value of the estate is more than P5,000,000.

The estate tax return should be accompanied by a certificate of an

independent CPA if the gross estate of a decedent is *
1/1
P5,000,000
2,000,000 or over
Over P2,000,000
Over P5,000,000

Which of the following is not true? *

1/1
The estate tax should be paid before delivery of the distributive share in the
inheritance to any heir or beneficiary.
When there are two executors, both of them are severally liable for the payment of
the estate tax.
The heir or beneficiary has the primary obligation to pay the estate tax.

The liability of the heir in the payment of the tax shall in no case exceed the value of
his share in the inheritance.

Which statement is WRONG? If the executor includes a bank deposit in the

gross estate and the estate tax thereon paid *
1/1
the estate tax on the bank deposit shall be refunded and the withdrawal shall be
subject to 6% final withholding tax.

the executor shall present the eCAR issued for the estate prior to withdrawing from
the bank deposit account.
such withdrawal shall no longer be subject to the withholding tax.
the final tax withheld on the withdrawal of the deposit shall not bet refunded or
credited on the tax due of the net taxable estate.
In case of insufficiency of cash for the immediate payment of the estate tax
due, the following options are allowed, except: *
1/1
Cash installment within one year from the date of decedent’s death.
Cash installment within two years from the date of decedent’s death.
Cash installment within two years from the date of decedent’s death but subject to
surcharge and interest on payments made after one year.

Partial disposition of estate and application of its proceeds to the estate tax due.

An estate tax return is not necessary in the following instance – *

1/1
Transfer of motor vehicle valued at P80,000.
The transfer is exempt from tax, the gross value of the stocks is P300,000
The net taxable estate is worth P250,000.
Donation of cash worth P5,000.

One is not entitled to tax credit for estate taxes paid to foreign country *
1/1
Resident citizen
Nonresident citizen
Resident alien
Nonresident alien

One of the following is not a remedy against double taxation? *

1/1
estate tax credit
vanishing deduction
delivery or property from fiduciary heir to fidei commissary in a fidei commissary
substitution
transfer for public purpose

All of the following items, except one, are deductible in computing the net
taxable estate of a nonresident alien *
1/1
vanishing deduction
Share of the surviving spouse in the community property
Transfer for public purpose
Funeral expenses incurred in the Philippines

The estate of a non-resident, not citizen of the Philippines is allowed to

claim this item as deduction from gross estate: *
1/1
Funeral expenses
Judicial expenses
Medical expense
Standard deduction

Which of the following statements is FALSE? *

1/1
In estate taxation, the standard deduction from the gross estate is always
P5,000,000, whether the decedent was married or not.
If the decedent was a non-resident alien, the standard deduction shall be pro-rated
according to the ratio of the Philippine gross estate over the total gross estate.

A standard deduction is an item of deduction from gross estate which does not
diminish the distributable estate even if it diminishes the taxable estate.
Benefits received under RA 4917 must be included in the gross estate in order to be
deductible therefrom.

Statement 1: An unmarried individual cannot have a family home.

Statement 2: The appliances and household furniture and fixtures are
included in the value of family home. *
1/1
Only statement 1 is correct.
Both statements are correct.
Only statement 2 is correct.
Both statements are incorrect.

Which of the following statements is FALSE relative to a “family home? *

0/1
A decedent who was married at the time of death may not have a deduction for
family home.
The value of the family home must be included in the gross estate and claimed as
deduction therefrom to a maximum amount of P10,000,000.
A non-resident citizen shall include the value of his family home in the gross estate
but cannot claim such amount as a deduction therefrom.

If the family home is allowed a vanishing deduction and a subject of an unpaid

mortgage, the deductible amount should be net of vanishing deduction and unpaid
mortgage.

Correct answer
If the family home is allowed a vanishing deduction and a subject of an unpaid
mortgage, the deductible amount should be net of vanishing deduction and unpaid
mortgage.

Which of the following statements is not correct? *

1/1
The deductible amount as Standard deduction is P5,000,000.
The deductible amount as Standard deduction maybe P500,000.
Family home is always an item of deduction from gross estate.

The deductible family home should not exceed P10,000,000.

Statement 1: Unpaid loans contracted prior to death may be deducted even

if not notarized if notarization of contracts is not a business policy of the
creditor. Statement 2: For estate tax purposes, several family homes may
be deducted provided the maximum amount is P10,000,000. *
1/1
Only Statement 1 is correct.

Both statements are correct.

Only statement 2 is correct.
Both statements are incorrect.

In determining the net estate of the decedent, which of the following rules
is correct? *
1/1
Real estate abroad is included in the gross estate of a decedent who is nonresident
alien.
Shares of stocks being intangible property shall be included in the decedent’s gross
estate wherever situated.
Vanishing deduction must be subject to limitations.

Funeral expenses are deductible to the extent of 5% of the total gross estate but not
exceeding P200,000.

John, a citizen of the Philippines and resident of Iloilo City, died testate on
May 10, 2020. Among his gross estate are properties inherited from his
deceased father who died April 4, 20017. What percentage of deduction will
be used in computing the amount of vanishing deduction? *
1/1
100% of the value taken as basis for vanishing deduction.
80% of the value taken as basis for vanishing deduction.
60% of the value taken as basis for vanishing deduction.
40% of the value taken as basis for vanishing deduction.

Which of the following statements about “vanishing deduction” is TRUE? *

1/1
For a vanishing deduction to be deductible, the property must have formed part of
the gross estate situated in the Philippines of the prior transferor.
A family home of non-resident alien maybe claimed as vanishing deduction if it has
been inherited within five (5) years and the estate tax on the previous transfer has
been paid at the time of death of the present decedent.
Vanishing deduction maybe be allowed on the estate of the present decedent even if
he prior transferor is still alive.

For a vanishing deduction to be deductible, there should always be two deaths within
five years from receipt of property.

Baby Joe died leaving a property which was inherited three years ago from
his father. In computing the vanishing deduction, which of the following
items shall serve as a multiplier deduction in computing the deduction from
the initial basis? *
1/1
Benefits received under RA 4917
Family home
Standard deduction
Transfer for public purpose