This document contains sample problems and solutions related to estate taxation in the Philippines. It begins with 10 multiple choice problems testing basic estate tax concepts. It then provides word problems with numerical estate values and deductions, requiring the calculation of estate tax liability. Some key concepts covered include gross estate, allowable deductions, surviving spouse's share, standard deduction, and taxable net estate. The document aims to help students learn and practice applying the estate tax formula to different property distributions and family structures.
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Download as DOC, PDF, TXT or read online from Scribd
This document contains sample problems and solutions related to estate taxation in the Philippines. It begins with 10 multiple choice problems testing basic estate tax concepts. It then provides word problems with numerical estate values and deductions, requiring the calculation of estate tax liability. Some key concepts covered include gross estate, allowable deductions, surviving spouse's share, standard deduction, and taxable net estate. The document aims to help students learn and practice applying the estate tax formula to different property distributions and family structures.
This document contains sample problems and solutions related to estate taxation in the Philippines. It begins with 10 multiple choice problems testing basic estate tax concepts. It then provides word problems with numerical estate values and deductions, requiring the calculation of estate tax liability. Some key concepts covered include gross estate, allowable deductions, surviving spouse's share, standard deduction, and taxable net estate. The document aims to help students learn and practice applying the estate tax formula to different property distributions and family structures.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOC, PDF, TXT or read online from Scribd
This document contains sample problems and solutions related to estate taxation in the Philippines. It begins with 10 multiple choice problems testing basic estate tax concepts. It then provides word problems with numerical estate values and deductions, requiring the calculation of estate tax liability. Some key concepts covered include gross estate, allowable deductions, surviving spouse's share, standard deduction, and taxable net estate. The document aims to help students learn and practice applying the estate tax formula to different property distributions and family structures.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOC, PDF, TXT or read online from Scribd
Download as doc, pdf, or txt
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BUSINESS AND TRANSFER TAXATION
Chapter 5: ESTATE
TAX
CHAPTER 5 ESTATE TAX Problem 51 1. False only P200,000. 2. True 3. True 4. True 5. True 6. True 7. True 8. False If the value of the gross estate exceeds P2,000,000. 9. False only 30 days. 10. True Problem 52 1. A 2. C 3. A 4. D 5. D
6. D 7. C 8. A 9. D 10. A
Problem 53 1. Conjugal gross estate (P3,120,000 + P180,000) Funeral expense allowed (P3,300,000 x 5%) Share of surviving spouse (P3,300,000 P165,000) x 50% Standard deduction Net estate 2.
Net conjugal estate
Less: Share of surviving spouse Standard deduction Net estate
Add: Standard deduction Net estate before standard deduction Add: Share of surviving spouse Net conjugal estate before funeral expense allowed Divided by (100% - 5%) Gross estate
P 500,000 1,000,000 P1,500,000 1,500,000 P3,000,000 95% P3,157,895
BUSINESS AND TRANSFER TAXATION
Chapter 5: ESTATE
5.
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TAX
Gross estate (within)
Less: Prorated allowable deduction* (P1,000,000 x 5/15) Net estate Philippines
P5,000,000 333,333 P4,666,667
*If properties outside are presented, then prorate. It not, then there is no deduction allowed for NRA. Estate tax on P2,000,000 Add: Tax on excess (P2,666,667 x 11%) Estate tax 6.
7.
40% of properties in the Philippines are intangible
Tangible properties in the Philippines (P5,000,000 x 60%) Less: Allowable deduction (P1,000,000 x 5/15) x 60% Net estate Philippines
P3,000,000 200,000 P2,800,000
Estate tax on P2,000,000
Add: Tax on excess (P800,000 x 11%) Estate tax - Philippines
P 135,000 88,000 P 223,000
Gross estate Less: Funeral expense Net conjugal estate Less: Share of surviving spouse (P19,800,000 x 50%) Net estate before standard Less: Standard deduction Net estate Estate tax on P5,000,000 Add: Tax on excess (P3,900,000 x 15%) Estate tax due Tax credit: Limit (P1,050,000 x 40%) = P420,000 Actual allowed
8.
P135,000 293,333 P428,333
Gross estate (P20,000,000 x 60%)
Less: Prorated allowable deduction (P2,000,000 x 60%) Net estate before share of surviving spouse Less: Share of surviving spouse (P10,800,000 x 50%) Net estate NRA Estate tax on P5,000,000 Add: Tax on excess (P400,000 x 15%) Philippine estate tax
P20,000,000 200,000 P19,800,000 9,900,000 P 9,900,000 1,000,000 P 8,900,000 P 465,000 585,000 P1,050,000
P100,000 P12,000,000 1,200,000 P10,800,000 5,400,000 P 5,400,000 P 465,000 60,000 P 525,000
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Problem 54 B Gross estate Funeral expense allowed (P3,000,000 x 5%) Standard deduction Net estate Problem 55 A Net estate after deductions Add: Actual deductions (P150,000 + P50,000) Gross estate Less: Funeral expense allowed (P1,400,000 x 5%) Other deduction Standard deduction Net estate Problem 56
P3,000,000 ( 150,000) (1,000,000) P1,850,000 P1,200,000 200,000 P1,400,000 P
70,000 50,000 1,000,000
Property cash Transfer for public use Funeral expense allowed Share of surviving spouse (P4,000,000 P200,000) x 50% Standard deduction Net estate
Exclusive P1,000,000 (1,000,000)
Conjugal P4,000,000 ( 200,000) (1,900,000) (1,000,000) P 900,000
Problem 57 A Gross estate Funeral and judicial expenses Net estate before share of surviving spouse Share of surviving spouse Net estate before special deduction Standard deduction Net estate negative Net estate taxable in the Philippines is Problem 58
(1,120,000) P 280,000
P1,500,000 ( 60,000) P1,440,000 ( 720,000) P 720,000 (1,000,000) ( P280,000) P - 0 -
Properties Funeral expense Judicial expenses Claims against properties Shares of surviving spouse (P2,400,000 x 50%) Standard deduction Net estate
Problem 59 C Net estate of P500,000 has a estate tax amounting to Problem 510
P15,000
Amounts
Net estate P2,000,000
Estate tax P135,000
Nonresident alien decedent is not allowed to have standard deduction. The funeral expense is not deductible because no part of gross estate located outside the Philippines is reported. (Sec. 86 (B), NIRC) Problem 511 1.
2.
3.
A Real estate Personal property Funeral expense, limit Judicial expenses Unpaid mortgage loan Share of surviving spouse (P1,800,000 x 50%) Standard deduction Family home (P1,600,000/2) Net estate
B Estate tax on P500,000 Estate tax on excess (P1,400,000 x 8%) Estate tax B Real estate Personal property Funeral expense, actual Judicial expenses Unpaid mortgage loan Share of surviving spouse (P1,755,000 x 50%) Estate tax Net distributable estate
Problem 512 C Tax credit P100,000 x 2M/5M)
900,000 (1,000,000) ( 800,000) P1,900,000 P 15,000 112,000 P127,000
Problem 513 A Total gross estate (P1,700,000 + P800,000) Less: Deductions Net taxable estate
P2,500,000 1,500,000 P1,000,000
Estate tax on P500,000
Excess P500,000 x 8% Total estate tax in the Philippines
P15,000 40,000 P55,000
Tax credit allowed
(P800,000/ P2,500,000) x P55,000 = P17,600 vs. P20,000
P17,600
Problem 514 Gross estate (P2,000,000 + P180,000) Less: Deductions: Unpaid mortgage Funeral expense Judicial expense Standard Net estate
P2,180,000 P 480,000 60,000 20,000 1,000,000
Tax on P500,000 Tax on excess P120,000 x 8% Total estate tax Gross estate Less: Ordinary deductions (P480,000 + P80,000) Estate tax Net distributable estate
Problem 515 Cash Property Gross estate Deductions: Promissory note Funeral expense Net estate before share of surviving spouse Less: Share of surviving spouse (P1,330,000 x 50%) Net estate before special deduction Less: Standard deduction Net estate
1,560,000 P 620,000 P15,000 9,600 P24,600 P2,180,000
P560,000 24,600
584,600 P1,595,400
P 400,000 1,500,000 P1,900,000 ( 500,000) ( 70,000) P1,330,000 665,000 P 665,000 1,000,000 (P 335,000)
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BUSINESS AND TRANSFER TAXATION
Chapter 5: ESTATE
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Gross estate Less: Promissory note Funeral expense Net estate before share of surviving spouse Less: Share of surviving spouse (P1,330,000 x 50%) Net distributable estate
P1,900,000 P500,000 70,000
570,000 P1,330,000 665,000 P 665,000
Problem 516
Gross estate (P1,000,000 + P9,000,000)
Ordinary deductions: Funeral expense (limit) Judicial expense Claims against the estate Net conjugal estate before share of surviving spouse Less: Share of surviving spouse (P100,000 x 50%) Special deductions: Standard deduction Medical expense Net taxable estate Tax on P5,000,000 Tax on excess P2,550,000 x 15% Estate tax Conjugal estate Less: Ordinary deductions (actual): Funeral expense Judicial expense Claims against the estate Net conjugal estate before share of surviving spouse Less: Share of surviving spouse (P90,000 x 50%) Net share of the decedent Add: Exclusive property of the decedent Net distributable estate before estate tax Less: Estate tax Net distributable estate Divide by number of heirs (12 + 1) Share of each heir
Note: The medical expense is assumed to have been paid.
910,000 90,000 45,000 P 45,000 9,000,000 P9,045,000 847,500 P8,197,500 13 P 603,576.92 P
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BUSINESS AND TRANSFER TAXATION
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Problem 517 Taxable Conjugal property - real estate Ordinary deductions: Funeral expenses, limit (P2,300,000 x 5%) Judicial expenses Unpaid mortgage Vanishing deduction* Net estate before share of surviving spouse Less: Share of surviving spouse (50%) Net estate before exclusive property Add: Exclusive property personal property inherited Net estate before special deduction Less: Standard deduction Net estate Divide by number of compulsory heirs Inheritance of each heir
P2,000,000 ( 115,000) ( 5,000) ( 500,000) ( 175,304) P1,204,696 ( 602,348) P 602,348 300,000 P 902,348 1,000,000 (P 97,652)
*Value taken Less: Proportionate deductions (P620,000 x P300,000/ P2,300,000) Final basis Multiply by percentage of vanishing deduction one year ago Vanishing deductions
Distributabl e P2,000,000 ( 150,000) ( 5,000) ( 500,000) . P1,345,000 672,500 P 672,500 300,000 P 972,500 . P 972,500 3 P 324,167 P300,000 80,870 P219,130 80% P175,304
Note: The inherited property is exclusive because the problem states that it is the decedents estate. Problem 518 1. P3,900,000 2. P 265,000 3. P2,250,000 4. P1,817,500 5. P - 0 - or (P432,500) 6. P - 0 7. P1,515,000 Note: The house and lot in New York, Quezon City is assumed family home because Don and Dona Posamin resides in that place.
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BUSINESS AND TRANSFER TAXATION
Chapter 5: ESTATE
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Supporting computations (Problem 5-18):
Gross estate House and lot, Baguio City House and lot, Quezon City family home* Grocery store, Baclaran Inventory (P700,000 P300,000) x 450/300 Cash sales Claims against insolvent persons Ordinary deductions: Funeral (P3,900,000 x 5%) Claims against insolvent persons Unpaid income taxes Net estate before share of surviving spouse Less: Share of surviving spouse (P3,635,000 x 50%) Net estate before special deductions Special deductions: Family home (P1,500,000/2) Medical expenses Standard deductions Net estate
Gross estate Actual deductions: Funeral Claims against insolvent persons Unpaid income taxes Medical expense Net estate before share of spouse Share of surviving spouse (P3,030,000 x 50%) Net distributable estate
P3,900,000
P 195,000 50,000 20,000
P 750,000 500,000 1,000,000
P250,000 50,000 20,000 550,000
870,000 P3,030,000 1,515,000 P1,515,000
(4)
(7)
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BUSINESS AND TRANSFER TAXATION
Chapter 5: ESTATE
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Problem 519 1. P6,540,000 2. P350,000 3. P2,500,000
4. P595,000 5. P22,600 6. P3,047,400
7. P761,750
Supporting computations (Problem 5-19):
House and lot (family home) Time deposit principal amount Accrued interest 2004: (P2,000,000 x 12% x 12/12) 2005: (P2,000,000 x 12% x 10/12) Car Claims against insolvent person Gross estate Ordinary deductions: Funeral expense, limit Judicial Claims against insolvent person Net estate before share of surviving spouse Less: Share of surviving spouse (P6,190,000 x 50%) Net estate before special deductions Special deductions: Standard deductions Medical expense, limit Family home, limit Net estate
Tax on P500,000 Tax on excess (P95,000 x 8%) Estate tax Gross estate Actual deductions: Funeral expense Judicial expense Claims against insolvent person Net distributable estate before share of surviving spouse Less: Share of surviving spouse (P6,140,000 x 50%) Net actual estate Less: Estate tax Net distributable estate Divided by number of heirs (intestate succession) Share of each heir
( 350,000) P6,190,000 3,095,000 P3,095,000
2,500,000 P 595,000 P 15,000 7,600 P 22,600 P6,540,000
P250,000 50,000 100,000
( 400,000) P6,140,000 3,070,000 P3,070,000 22,600 P3,047,400 4 P 761,850
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Problem 520 1. Estate tax credit = P212,917 2. Estate tax payable = P224,583 Supporting computations: a. Estate tax payable to the Philippines : Country A Gross estate Unpaid mortgages Unpaid taxes Transfer for public use Net of identifiable deduct. Allocated deductions** Net estate
P1,200,000 (200,000) . P1,000,000 (208,333) P 791,667
Tax on P2,000,000 Tax on excess (P2,750,000 x 11%) Total Less: Tax credit allowed* Estate tax payable to the Philippine Government c. Computation of tax credit: Limit A: Country A: [P437,500 x (P791,667/ P4,750,000)] - lower Actual payment to country A Tax credit allowed for country A Country B: (P437,500 x P1,583,333/ P4,750,000) Actual payment to country B Tax credit allowed for country B
P135,000 302,500 P437,500 212,917 P224,583
P 72,917 P 75,000 P 72,917 P145,833 P140,000 140,000
Tax credit Limit A
Limit B: Total net estate foreign [(P791,667 + P1,583,333)/ P4,750,000] x P437,500 Total actual estate tax payments foreign (P75,000 + P140,000) lower Tax credit Limit B *Tax credit allowed (the lower of limit A or B) ** Computation of allocated deductions:
P212,917
P218,750 P215,000 P215,000 P212,917
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Chapter 5: ESTATE
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Funeral expenses Judicial expenses Standard deduction allocated Total allocated deductions
Country A P 33,333 8,333 166,667 P208,333
Country B Philippines P 66,667 P100,000 16,667 25,000 333,333 500,000 P416,667 P625,000
Entire P 200,000 50,000 1,000,000 P1,250,000
Note: The above deductions are allocated because they are not specifically identified as deductions from a specific country. The allocation is computed by multiplying the fraction of the estate after identifiable deduction with the allocable deductions. The fraction per country is computed as follows:
Estate net of identifiable
deductions per country Divide by entire net estate Fraction
Country A
Country B
Philippines
Entire
P1,000,000 P6,000,000 1/6
P2,000,000 P6,000,000 2/6
P3,000,000 P6,000,000 3/6
P6,000,000 P6,000,000 6/6
Problem 521 Cash Shares of stock (P100 x 100,000 shares) Insurance proceeds Transfer in contemplation of death Total gross estate Ordinary deduction Transfer for public use Net estate before share of spouse Less: Share of surviving spouse (P800,000 x 50%) Net estate before special deduction Less: Standard deduction Net estate
Tax on excess (P2,000,000 x 11%) Total estate tax Less: Tax credits on tax previously paid (P34,840 + P204,000) Transfer tax still due Problem 522 Estate tax on P5,000,000 Estate tax on excess (P3,000,000 x 15%) Estate tax Add: Surcharges willful neglect (P585,000 x 50%) Interest for 4 years (P585,000 x 20% x 4) Total amount to be paid
Exclusive P10,000,000 1,000,000 3,000,000 P14,000,000 (10,000,000) P 4,000,000 1,000,000 P 5,000,000 1,000,000 P 4,000,000 P135,000 220,000 P355,000 238,840 P116,160
