Transfer Tax

1. Which of the following statements is correct?

The gross estate of a Filipino decedent who was residing in Australia would include all
properties regardless of location.
2. A succession to properties mentioned in the last will and testament, where the values of
the properties shall have increased from the time the last will and testament was
executed is:
Testamentary succession
3. Which of the following is not subject to the rule of reciprocity in transfer taxes?

Investment in stock in a US corporation 80% of the business of which is in the

Philippines owned by a non-resident alien.
4. In computing the gross estate of a decedent:

All the above statements are correct.

5. The property, rights and obligations of a person which are not extinguished by his death
and those which have been accrued thereto since the opening of succession:

Estate
6. Which of the following statements is correct? Property subject to vanishing deduction
should be:
If the decedent was a citizen and resident of the Philippines, the property should be
located in the Philippines.
7. A citizen and resident of the Philippines, died on October 10, 2019, leaving the following
properties, rights, obligations and charges:

The deduction for family home is:

P10,000,000
8. A resident decedent, during his lifetime, was under the conjugal partnership of gains.
Among his allowable deductions from the gross estate is vanishing deduction and the
following:
 The multiplier "deductions" is:
P2,250,000
9. Mila, a resident citizen died leaving a net estate of P 4,000,000. Her estate is under
administration. The net estate which includes an apartment, realized a total net income
of P 2,280,000 (net of 5% tax). The administrator distributed P 200,000 and P 300,000 to
Melina, Mila's daughter, and Myco, Mila's son, respectively. 75% of the amount
distributed came from the income of the estate while 25% from Mila's estate. The estate
also incurred expenses amounting to P 1,200,000 but 25% of which is non-deductible.
The income tax still due and payable of the estate is

P 198,600
10. Consider the following given:

How much was the Philippine estate tax due if the decedent was a non-resident, not
citizen of the Philippines, and there was a foreign estate tax payment of P 400,000?
P443,000
11. Personal property with a cost of P400,000 and a fair market value at the time of death of
P900,000, but subject to a mortgage of P250,000.
Shall be in the gross estate at P900,000.
12. For donor's tax purposes, who of the following is not considered as a stranger?

First cousin
13. Statement 1: The gross gifts of a donor who is a non-resident alien will include all
properties, regardless of location.
Statement 2: The gross gifts of a donor who is a non-resident citizen of the Philippines,
will include only property located in the Philippines.

Both statements are wrong.

14. Which of the following statements is wrong? A distinction between a donation inter vivos
and a donation mortis causa is:
 The first always requires a public document while the second mclauseay not require a
public document.
15. Situation 1: Mario, in trading business, had a receivable of P150,000 from Noble.
Without exerting utmost effort to collect, Mario canceled the indebtedness of Noble.
Situation 2: Orion sold to Peter personal property worth P200,000 for a consideration of
P50,000, to take effect immediately upon receipt of the consideration.
Which statement is correct?
Situation 1 involves a donation of P150,000 and should be covered by a donor's tax
return within thirty days from the date of cancellation of the indebtedness.
16. Mr. John Paul George is a citizen of Georgia. Georgia does not impose transfer taxes of
any kind. He donates the shares of stock he has with San Miguel Corporation in Manila
to his son who is getting married to a Filipina who resides in Manila. He asked you if he
is liable to pay the Philippine donor's tax. What will you tell him?

No. He is not liable to Philippine donor's tax because his country does not impose
transfer taxes of any kind.
17. Which of the following donations is entitled to deduction?

Donation to a political party

18. When the donee or beneficiary is a stranger, the tax payable by the donor shall be

30% of the net gifts.

19. Ronald donated a total amount of P500,000, 1⁄2 to the Quezon City Hall and 1⁄2 to a
charitable
institution, TAHANANG WALANG HAGDANAN. Upon inquiry, it was verified that the
charitable institution's total receipts from donation amounted to P10M and its total
administrative expenses reached P4.0M. Ronald can claim a total deduction/exemption
of:
P250,000
20. Leilanie, a citizen and resident of the Philippines, made the following donations on
February 14, 2017:
To Mariz, a legitimate child, on account of marriage on the same day, property in Japan,
which paid the Japanese government a donor's tax of P52,000 and with a fair market
value of P610,000
To Norie, a friend, ordinary donation of property in the Philippines, subject to a mortgage
of P60,000 which was assumed by Norie. Fair market value of the property, 160,000
The tax credit for foreign donor's tax paid is:

P42,857.14
21. On one date, a resident alien donor made donations of property in the Philippines to a
non-stranger, and of property outside the Philippines to a stranger. In taking a credit for
the foreign donor's tax paid, the credit shall be against the Philippine donor's tax on the:

Donation to the non-stranger plus that to the stranger.

22. One of the following statements is correct. Which is it? In the preparation of the donor's
tax return.
Dowries are shown as deductions from the gross gifts.
23. Statement 1: When a donor's tax return was filed and it was found by the Bureau of
Internal Revenue to have errors which gave rise to a deficiency donor's tax, the donor
may be required to pay the deficiency although he does not possess or own the property
anymore.
Statement 2: The Government is not bound by any agreement between the donor and
the donee that the latter shall pay the tax on the donation.
Both statements are correct.
24. One of the following statements is not true. Which is it? If on any one date there is a
donation by one donor to a donee who is not a stranger together with a donation to a
donee who is a stranger:
There will be two separate donor's tax returns because the donor's tax on the donation
to a non- stranger is at graduated rates while the donor's tax on the donation to a
stranger is at the flat rate of 30%.
25. Taxpayer died February 2, 2017. No judicial proceedings were instituted for the
settlement of his estate. Return was filed and tax of P20,000 was paid November 2,
2017. The estate tax due, including increments, as of November 2, 2017 is:
P26,000
26. The reciprocity clause in the donor's tax law applies to a:

Non-resident alien
27. Which of the following statements is false? Transfer tax is

None of the above

28. A citizen of the Philippines and resident of Baguio City, died testate on May 10, 2017.
Among his gross estate are properties inherited from his deceased father who died on
April 4, 2014. What percentage of deduction will be used in computing the amount of
vanishing deduction?
40% of the value taken as basis for vanishing deduction.
29. Statement 1: For a vanishing deduction, there should always be two deaths within five
years from receipt of property.
Statement 2: For a vanishing deduction, there should always be two transfers of property
within five years whether the first transfer be gratuitous or onerous.

Both statements are false.

30. 1st statement: For marriages on or after August 3, 1988, the property relationship
between husband and wife, in the absence of a written agreement between them, is the
system of absolute community of property.
2nd statement: There may be a property relationship of conjugal partnership of gains
even if marriage was on or after August 3, 1988.

Both statements are true

31. In filing estate tax return under the TRAIN Law, a CPA certificate is required when:

Gross estate exceeds P5,000,000.

32. Which of the following statements is false? When an estate tax return had been filed and
the estate tax had been paid but subsequently, because of errors in the return, a
deficiency estate tax has to be paid:

The Bureau of Internal Revenue cannot ask the executor or administrator to pay
because he would have been discharged from liability for the estate tax to the state, and
the heirs once the estate tax had been paid.
33. Quintos sold his land (capital asset) on September 5, 2017 to his best friend for
P300,000 when the market value was P500,000. Cost of the land to taxpayer was
P100,000. He gave a commission of P20,000 to the broker and spent for documentary
stamp taxes and transfer fees the amount of P4,000. The internal revenue tax payable
is:
Final capital gain tax of P30,000.
34. F made the following donations.

If he is a resident alien his gross gift is:

P3,000,000
35. F made the following donations.
 If he is a non-resident Japanese, and there is reciprocity law, his gross gift is:
P850,000
36. 1st statement: A sold his car (cost, P300,000) to B for P500,000. The car has a fair
market value of P900,000 at the time of sale. The difference of P400,000 in selling price
and fair market value constitutes a gift subject to donor's tax.
2nd statement: C purchased a lot and cottage in Alaminos City (home of 100 Islands) in
2009 for P1,000,000. It was used as a summer vacation house by his family. In 2010, C
decided to sell the lot and cottage to D for P2,000,000 although its present market value
is P2,500,000. The P500,000 difference in selling price and market value is a gift but not
subject to donor's tax.
Both statements are true.
37. One of the following statements is correct. The donor's tax return:

Must be filed within thirty days from the date of donation.

38. Leilanie, a citizen and resident of the Philippines, made the following donations on
February 14, 2017:
To Mariz, a legitimate child, on account of marriage on the same day, property in Japan,
which paid the Japanese government a donor's tax of P52,000 and with a fair market
value of P610,000 To Norie, a friend, ordinary donation of property in the Philippines,
subject to a mortgage of P60,000 which was assumed by Norie. Fair market value of the
property, 160,000
In the previous question, the reciprocity clause applies to:

Intangible personal property

39. In determining the taxable net estate of a decedent, which of the following rules is
correct?

Vanishing deduction must be subject to limitations.

40. Zee made donations to Xi and Yee, son and daughter-in-law, on account of marriage, of
real property with a fair market value of P1,500,000, but subject to a mortgage of
P300,000 which was assumed by the donees.
 The total donor's tax is:
P199,400
41. One of the following statements is wrong:

The return may be filed in one municipality and the tax paid in another municipality.
42. One of the statements that follow is correct. Which is it? A deed of donation was
executed by Jhung, resident of Cabanatuan City, in favor of Heinanesse, a resident of
Santiago City. Heinanesse
executed a deed of acceptance in Santiago City. The donor's tax return must be filed
with the Bureau of Internal Revenue Office:
At the residence of the donor.
43.